Annual report
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2024Annual and Sustainability Report
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Handelsbanken was founded in 1871. Today, a little over 150 years later, we are one of the world’s strongest banks. Our idea of how to run our Bank is based on trust and respect for individuals, both customers and employees. Through personal relationships, a long-term approach and a strong local presence, we create value in every customer meeting. Our ambition is to provide the best bank offering within financing, savings and advisory services. With satisfied customers, we see potential for continued strong business development and profitable growth at a low risk. Our home markets are Sweden, Norway, the UK and the Netherlands, with business also conducted in Luxembourg and the USA. Since 1871 Introduction
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Brief information Annual General Meeting 2025 Handelsbanken’s Annual General Meeting (AGM) for 2025 will be held on Wednesday, 26 March 2025. Shareholders wishing to attend the AGM must be entered in the register of shareholders kept by Euroclear Sweden AB on 18 March 2025. In addition, shareholders must either have registered to attend the meeting or cast their vote in advance (postal vote) no later than 20 March 2025. Nominee-registered shares must also be registered in the shareholder’s own name by no later than 20 March 2025 in order for the shareholder to be entitled to vote at the meeting. For more information, please visit https://www.handelsbanken.com/ agm. Dividend The Board proposes an ordinary dividend of SEK 7.50 per share and a special dividend of SEK 7.50 per share. The proposed record day for the dividend is 28 March 2025, which means that the share will be traded ex-dividend from 27 March 2025. Assuming that the meeting resolves to accept the proposal, the dividend is expected to be disbursed by Euroclear on 2 April 2025. Financial calendar 2025 5 February Ha ndelsbanken’s Highlights of the Annual Report 2024 26 March An nual General Meeting 30 April In terim report January – Ma rch 2025 16 July In terim report January – Ju ne 2025 22 October In terim report January – Se ptember 2025 Financial information The following reports can be downloaded from handelsbanken.com: • Annual and Sustainability Reports • Interim Reports • Risk and Capital Management Reports • Climate Reports • Corporate Governance Reports • Remuneration reports • Factbooks • Sustainability and Stewardship Reports. Distribution The Annual and Sustainability Report can be ordered from Investor Relations, phone +46 (0)8 701 10 00 or at handelsbanken.com/ir. Handelsbanken’s Sustainability Report 2024 Handelsbanken’s 2024 Sustainability Report is presented on pages 259–370 and has been prepared in accordance with the requirements of the European Sustainability Reporting Standards (ESRS), with the exception that the Sustainability Report is presented outside the administration report and it is the Executive Team of the Bank that is responsible for preparing the Report. Parts of this Report also constitute the Bank’s statutory sustainability report, which also includes the Taxonomy reporting. The Sustainability Report has been examined by the external auditors. The auditor’s Limited Assurance Report on the Sustainability Report is presented on page 372 of the 2024 Annual and Sustainability Report. Svenska Handelsbanken AB (publ) Corporate identity no.: 502007-7862 Domicile: Stockholm handelsbanken.com This report is also available in Swedish. Every care has been taken in this translation into English. In the event of discrepancies, the Swedish original takes precedence over the English version.
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The Board of Directors proposes an ordinary dividend of SEK 7.50 (6.50) per share and a special dividend of SEK 7.50 (6.50) per share. No comparable bank in the world has a higher combined credit rating from S&P, Moody’s and Fitch. Handelsbanken was named “Business Bank of the Y ear” and “Small Enterprise Bank” by the independent Finansbarometern survey in 2024. Handelsbanken has been ranked as the safest commercial bank in Europe in Global Finance’s ranking of 500 banks. SEK 35,016m Operating profit decreased by 4% to SEK 35,016m (36,322). Adjusted for items affecting comparability, the decrease was 2%. SEK 13.86 Earnings per share amounted to SEK 13.86 (14.70). 14.6% Return on equity was 14.6% (15.9). 40.4% The C/I ratio was 4 0.4% (37. 2). -0.02% The credit loss ratio was -0.02% (0.01). 18.8% The common equity tier 1 ratio was 18.8% (18.8). The year in brief
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Banking our way With our people-first approach and decentralised working method, and a unique, long-term perspective, we create customer relationships that last through all stages of business and life. We offer our customers: One of the world’s safest banks Financial strength and consistent stability make Handels banken a bank to rely on, regardless of the business cycle. As a result, we have been ranked as the safest commercial bank in Europe and the fifth safest globally by Global Finance. Handels banken is the only major Swedish bank that has not sought financial support from either taxpayers or shareholders in times of financial crisis, and no other privately owned bank in the world has a higher overall rating than Handels banken. Community engagement for knowledge and sustainability We pursue a long-held tradition of commitment to the communities and markets in which we operate. The focus of our community engagement is creating and sharing knowledge about what we do best – finances. This is how we help give our customers the best ability to make well-informed decisions, and contribute to strong and stable communities. For us, sustainability is an integral part of our long-term approach to banking, and we support our customers in handling both the opportunities and the challenges related to, for example, the climate transition. Value in each customer meeting For us, long-term relationships start with meetings between people. Customer meetings are therefore at the core of everything Handels - banken does, whether it is providing day-to-day assistance via digital services or giving expert advice in connection with major life events. In every meeting, we listen and learn, to ensure that our offering serves our customers’ needs. This leads to better decisions and more satisfied customers. Unique long-term perspective We always give our customers the best long-term advice, regardless of what is most profitable for the Bank in the short term. The Bank has no volume requirements, budgets or centrally determined sales targets. Handels banken measures its success on the basis of customer satisfaction, cost efficiency and profitability. Our employees who meet customers in the branch operations do not receive variable remuneration – no bonuses or commissions. This gives our business a unique, long-term perspective.
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Contents 1.0
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1.0 Introduction 8 1.1 Chief Executive Of ficer’s Comments 8 2.0 Administration r eport, Group 10 2.1 Our bank 12 2.2 Review of operations 18 2.3 Corporate Gover nance Report 40 2.4 Administration r eport, parent company 58 3.0 Financial statements 60 3.1 Gr oup 62 Notes, Gr oup 68 3.2 Par ent company 190 Notes, par ent company 198 3.3 Signatur es of the Board and CEO 247 3.4 Auditor’ s report 248 4.0 Sustainability at Handelsbanken 254 4.1 Introduction 256 Sustainability Report 259 4.2 General information 260 4.3 Envir onmental information 284 4.4 Social information 298 4.5 Gover nance information 318 4.3 cont. EU T axonomy – continued 326 4.6 Auditor's r eport on the review of Svenska Handelsbanken AB's (publ) sustainability report 372 5.0 Other 374 5.1 Definitions and explanations 376 5.2 Branches and branch managers 380
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1.1 Chief Executive Of ficer’s Comments1.0 Introduction Even more Handelsbanken Stockholm, February 2025 Michael Green, Chief Executive Officer and President Dear reader, Handelsbanken is developing as it should. Over the past year, we have strengthened our competitiveness, and we are now in a better position to continue to achieve our corporate goal of a higher return on equity than peer competitors in our home markets. And – most importantly of all – our customers remain satisfied with their bank. The accounts present the results of the past year in precise facts and figures. But behind these figures hide the people who have specifically chosen our bank as their bank, and the employees who in thousands of meetings have created value for our customers and thereby laid the foun- dation for our results. So why did 2024 turn out the way it did? The answer is that every day, we endeavoured to support our customers just a little better than we did the day before. That is how we build our bank – not by frantically chasing the latest trend, but based on our successful business model, step by step making a good bank even better. My focus during my first year as Chief Executive Officer and President was to further strengthen what already sets Handelsbanken apart. Why, you might well ask? The answer is simple: Our hallmark – local connection with decentralised decision-making, customer focus and trust in our employees’ determination and ability to take responsibility and make decisions as close to our customers as possible – gives us a decisive advantage in the increasingly fierce competition to win the confidence and business of customers. Focus on reorganisation A customer and business focus combined with high efficiency are the prerequisites that enable us to meet our customers’ expectations for advisory services, products and meeting places with a competitive offer- ing. For me, it’s about common sense. High efficiency provides the basis for favourable profitability and thus the possibility for long-term growth with stable value appreciation. By keeping costs down, it is easier for us to have very attractive offerings for our customers. And attractive offer- ings and a high level of service are in turn essential for ensuring that our customers are satisfied with their bank. With this in mind, we started the year by identifying areas in the Bank that required improvement, and action was then taken. Or, if you prefer, we devoted greater focus to becoming “even more Handels ba nken.” We furth er honed our business focus and streamlined the Bank to meet customer needs even more clearly, based on our decentralised business model. We restructured the organisation and brought business support func- tions closer to our customers, while eliminating duplication. The number of employees in central units was reduced, while the number of colleagues carrying out our day-to-day business and interacting with customers in our branches increased. We are now gradually seeing the results of this. Profits in our home markets have improved quarter by quarter. Income in- creased and cost efficiency also improved in the second half of the year as a result of these structural measures. In other words, during the year, we further strengthened and expanded on what works well and ceased activities that do not create value, just as it should be here at Handels ba nken. Efficiency improvements have resulted in more time for the customer, time that could be used for better customer meetings and establishing deeper business relationships with our customers. At Handels ba nken, the branches decide where and how we meet customers and how we can best respond to customer demand for such meetings. In 2024, branch managers across Sweden decided to improve accessibility to the Bank, by introducing the availability of personal meet- ings for both new and existing customers at some 20 new locations around the country. Customer confidence Banking operations are essentially relatively simple, but are becoming increasingly complex in certain areas, with rapid technological advances, increasingly stringent regulatory requirements and an increasingly inter- connected world in which local economies are affected by real-time global events. “ It’ s a matter of inspiring such confidence through the responsible and reassuring way we manage capital, that we can then convert this into lending.” 8 Handelsbanken Annual and Sustainability Report 2024 1.1 Introduction Chief Executive Officer’s Comments Administration report Financial statements Sustainability Other
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So at their core, the operations of our Bank are the same – as timeless as they always have been. It's a matter of inspiring such confidence through the responsible and reassuring way we manage capital, that we can then convert this into lending. This confidence should not be taken lightly. Every day, we help people achieve their financial goals and turn their ideas and dreams into reality. For a company, this could be the ability to make investments for growth. For a young family, it could be about buying the ideal home. And to help our customers make informed decisions, we provide assistance in finan- cial literacy and our best advice. This is meaningful and honourable work. And it is quite an undertaking. We are a bank, nothing more, nothing less. And we are not trying to be anything other than what we essentially are: a bank that manages our customers’ capital in way that inspires confi - dence, makes everyday life a little easier for customers and, thanks to our financial stability, is there to support our customers regardless of the economic climate – and thereby do our bit for the long-term positive and sustainable development of society. Banking our way At the same time, we are not like any other bank. Our distinctive nature, which I have devoted the last year to strengthening, is based on trust in the individual. It may sound simple but it is anything but. It is easy, particu- larly in a large organisation, to wait for someone else to solve a problem or set the direction. But that’s not the way we do banking. On the contrary, by assuming responsibility, our employees ensure that we have more satisfied customers and lower costs. Our decentralised way of working is not an organisational chart – it is a corporate culture that enables us to generate profitability over time and have unique financial robustness. It is no coincidence that we are the bank with the highest combined global rating from Fitch, Moody’s and S&P, the world’s leading rating agen- cies, and that in Global Finance’s ranking of more than 500 banks in the world we were once again named Europe’s safest bank. Nor is it a coinci- dence that we were named Business Bank of the Year and Sweden’s Small Enterprise Bank, that our Private Banking offering was ranked second best in Sweden by Prospera and that, according to SQI’s annual survey, we have the most satisfied customers among peer banks in all of our home markets. This is all the result of the same thing – our unique way of bank- ing. The foundation is laid at our 420 branches, which are located where our customers live and share their daily lives and realities, making our decisions better. Another aspect of our distinctive nature is our low risk tolerance and our tireless efforts to build up a robust bank that is financially strong and sustainable in the long term. Our business model serves the Bank well. The model ensures both stability of earnings and independence. In times of sharp macroeconomic downturns, the Bank has not needed assistance or guarantees from governments or from shareholders in the form of diluting new share issues. On the contrary, the Bank has in the past lent significant amounts to public institutions during financial crises. To this very day, the Bank still lends to public sector actors such as municipali- ties, sovereigns and central banks, and thereby contributes to strong and stable societies. Our community engagement Handels banken has always chosen its own path and over time this has contributed to financial stability, solid growth in profits and satisfied customers. Our operations are based on broad and in-depth knowledge of finances. We know that our customers are increasingly looking for this kind of insight into finances and what is happening in the financial markets. A well-informed, knowledgeable customer with accurate infor- mation does more and better business. We therefore established a struc- ture during the year and focused our community engagement on what we do best – finances. A new unit, Foundations and Publishing, was created to coordinate the work of generating and sharing knowledge regarding financial and social issues. The unit is home to the independent research foundations affili- ated with the Bank, as well as the autonomous media house EFN, and also supports bank branches in raising financial literacy in the local community. The aim is to share insights that reach and benefit many people. This is how we best create value for our customers while providing significant benefits to society. To conclude, I would like to extend my sincere gratitude to all the customers who have entrusted us to be their bank, to all my colleagues for their hard work during the year and to all our shareholders for their trust in Handels banken. We will nurture that trust by improving our service, enhancing our local decision-making, developing our digital offering, avoiding costs that do not strengthen our competitiveness and, above all, being responsive to our customers’ needs – and constantly evolving the Bank to meet and ideally exceed their expectations. Always in our own way – personal, close and long-term – and always with the aim of being a little better, every day. Quite simply, even more Handels banken. 9 Handelsbanken Annual and Sustainability Report 2024 1.1
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2.0 Administration r eport, Group Administration report, Group 10 Handelsbanken Annual and Sustainability Report 2024 2.0 10 Handelsbanken Annual and Sustainability Report 2024
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2.0 Administration report, Group 10 2.1 Our bank 12 Concept and goal 12 Our working methods 13 Goals and goal achievement 16 2.2 Review of operations 18 Financial overview 2024 18 Review of operations 19 Five-year overview, Group 22 Key metrics per year 24 Quarterly performance 25 Segment reporting 26 Sweden 28 UK 30 Norway 32 The Netherlands 34 Markets 36 Other units not reported in the business segments 37 The Handelsbanken share and shareholders 38 2.3 Corporate Governance Report 40 Board 54 Executive Team 57 2.4 Administration report, parent company 58 Handelsbanken's statutory sustainability reporting by area according to Chapter 6 of the Annual Accounts Act Area General Environment Social conditions and personnel Respect for human rights Anti-corruption Business model 13–15, 266–268 285 Policy and its results 262–264 287–289 300–301 264, 308 263–264, 319 Risks and risk management 79, 119–121 274–277, 286–287 299–301 309–311 320 Targets and results 16–17, 278 289–291 304–306 311–312 321 EU Taxonomy 293–295, 326–370 11 Handelsbanken Annual and Sustainability Report 202411 Handelsbanken Annual and Sustainability Report 2024
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2.1 Our bank Concept and goal Concept Handelsbanken creates value through unique customer meetings. Through trust in the individual, a strong local commitment and a decentralised way of working, we create long-term customer relationships. By running the Bank in a responsible and sustainable manner, with stable finances, Handelsbanken earns the confidence of customers, shareholders and the wider world around us. More satisfied customers, income growing at a faster rate than expenses, and a low risk tolerance create sustainable profitability and the capacity to grow our business and customer offerings, regardless of the situation in the world and economy around us. Goal Handelsbanken’s goal is to have higher profitability than the average of peer competitors in its home markets. Handelsbanken’s profitability goal is intended to offer shareholders long-term, high growth in value, with increasing earnings per share over a business cycle. With stable finances, the Bank can also provide support to its customers whatever the prevailing business environment. Profitability and sound, sustainable business operations are critical to shareholders who have invested in the Bank. In addition, these go hand in hand with low funding costs, positive growth and the Bank being seen as an attractive employer. This goal is mainly to be achieved by having more satisfied customers and lower costs than its competitors. 12 Handelsbanken Annual and Sustainability Report 2024 2.1 Introduction Administration report Our bank Financial statements Sustainability Other
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Our working methods Our working methods Handelsbanken is one of the world’s strongest banks. Our business rests on the pillars of a strong local presence, a decentralised way of working, stable finances and low risk. Through our customer meetings, we create and cultivate long-term customer relationships. Customer meetings are also where we lay the foundations for the development of the Bank’s business in line with customer demand. We always strive to pro vide the best bank offering within financing, savings and advisory services. We run our Bank responsibly and sustainably, with concern and care for customers and society. Running our bank responsibly and with the best interests of our customers front of mind is also the starting point for our approach to sus- tainability. We help our customers generate good returns on their savings and take social, governance and environmental issues as well as other factors into account in our asset man- agement. Our advice and products helps to enhance customers’ ability to meet regulations and requirements related to climate change and other sustainability risks. Sustainability is nothing new or strange to us. This is how we have run our bank for over 150 years. Stable finances Our stable finances serve as the basis for cre- ating lasting value for customers and owners, while also contributing to the positive develop- ment of society. With such stable finances, we can support our customers no matter the eco- nomic conditions or external factors. Yet to maintain our stable finances, we also need to embrace the opportunities and manage the risks that sustainability brings. We are part of society and we want to contribute to sustaina- ble development. For us, the customer meeting is central. We offer personal customer meetings regardless of whether the customer chooses to contact 13 Handelsbanken Annual and Sustainability Report 2024 2 .1
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us digitally, by phone or by visiting one of our branches. That is why the overall customer responsibility always lies with the branch clos- est to the customer’s geographical location. In recent years, we have also strengthened the specialist skills of the local branches, while ensuring that they always have access to the full range of the Bank’s business-support expertise, in such areas as financial advice, private banking and sustainability. The fact that our customers are able to meet the person making the final decision contrib- utes to the quality of the customer meeting, and helps ensure faster, better decisions and more satisfied customers. A customer’s trust in the Bank is built up over time, but is nurtured and helped on the way at every customer meeting. Customer meetings are key We also view the customer meeting as key to our contribution to the sustainable develop- ment of society. Demand is growing for prod- ucts and services that support the transition to a sustainable society. Consequently, we are continuously working to develop our offering in line with these needs, be it financing, savings, investments or advisory services. Handelsbanken’s decentralised way of working is implemented throughout the Bank. The independence of the branches enables a very strong local connection and long-term customer relationships, which have helped the Bank carve out a unique position as a robust and stable bank that benefits both the Bank’s customers and the rest of society. Short deci- sion-making channels enable us to more quickly adapt to various changes in local markets, and to quickly take advantage of new business opportunities. Support and knowledge Handelsbanken is involved locally through initia tives and activities in clubs, associations and charities, often focusing on raising knowl- edge about finances in schools and universi- ties. Since the early 1960s, Handels banken has awarded grants for economic research, mainly through allocations to two independent research foundations: Tore Browaldhs stiftelse and Jan Wallanders och Tom Hedelius stiftelse. These foundations are some of the most im - portant funding bodies for economic research in Sweden. In 2024, 243 grants were awarded for research and knowledge sharing at univer- sities across Sweden, for a total amount of SEK 265 million. We endeavour to create the best possible conditions for our customers to make informed financial decisions, because we know that good understanding of finances results in more satisfied customers. We offer support and know-how on both big and small finan- cial issues through the personal advice we provide at our branches, quick help on social media and news via the EFN channel. Gender equality, diversity and an inclusive corporate culture are naturally incorporated into our core values and daily work. These efforts foster a good and inclusive work envi- ronment in which different backgrounds, experiences and education lend valuable per- spectives to the company. The Bank has a long-term view of its relationships with both customers and employees, and every recruit- ment is meaningful. No matter the meeting place, the customer is always given the best advice, regardless of what product is most profitable for the Bank in the short term. By always giving the best advice, we build trusting relationships with our customers. Products and services are continu- ously developed to ensure a competitive offer- ing, and thus to improve profitability while maintaining a low level of risk. Sustainability 14 Handelsbanken Annual and Sustainability Report 2024 2.1 Introduction Administration report Our bank Financial statements Sustainability Other
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is clearly integrated into both customer rela- tionships and the offering. Following a structured approach based on the Bank’s concept and way of working, we are robust in crises and more attractive to investors, to customers and as an employer. This is why we can support customers in their green transition and help Sweden achieve net- zero emissions by 2045 and the Paris Agree- ment’s goal of limiting global warming to close to 1.5°C. Regardless of where work is per- formed in the Bank, it shall be instinctive for employees of Handels banken to support new sustainability regulations and other initiatives for sustainable business, such as the Global Compact. We are working continuously to reduce emissions from our own operations and offer products, services and advice that pro- mote a sustainable transition for our customers. The employees at our branches who meet customers are not eligible to receive variable remuneration – no bonuses or commissions – and thus have no personal financial incentive to offer customers a certain service or product. The Bank has no volume requirements, budgets or centrally determined sales targets. Instead, the Bank measures its success on the basis of customer satisfaction, cost efficiency and profitability. Stable finances are a prerequisite for doing all the business the Bank and our customers want to do – on good terms. With stable finances, we can support our customers no matter what is happening in the business environment. Financial stability not only allows for flexibility and the freedom to do more busi- ness, but also ensures lower funding costs and, consequently, contributes to higher profit- ability. Handels banken manages its finances entirely on commercial terms, and has not needed financial support from governments, central banks or shareholders in times of trou- ble in the financial markets. Handels banken is the bank with the highest credit rating of all comparable privately owned banks and has the highest combined global rating from the Fitch, Moody’s and S&P rating agencies. One of the world’s safest banks Handels banken’s high ranking in Global Finance’s list of the World’s Safest Banks pro- vides confirmation that our business model, with low risk tolerance and high credit quality, is both sustainable and successful. The Bank’s low risk tolerance means that we deliberately avoid high-risk transactions, even if the financial reward may be large at that moment. This low risk tolerance is main- tained through a strong risk culture that is sustainable in the long term and applies to all areas of the Group. It is important to the Bank that the grant ing of credit is based on an assessment of each individual customer’s repayment capacity. Our credit policy, based on our low risk tolerance, and our policy for sustainability lay the foundation to enable us to be a bank that not only strives for better profitability but can also integrate sustainability as an integral part of our business. This includes how we address climate risks, for example, by assessing the impact of flood risks, global warming, transi- tion risks for corporate customers and other sustainability-related challenges that may affect both our assets and our customers’ collateral. Over the years, our model has often been put to the test. Boom or bust, in good times and bad, our model has worked. But it is not – and never has been – static. We must always be evolving and meet the needs of our cus- tomers. So we will continue to create growth, with a high level of efficiency and responsive- ness to external factors – and generate good profitability and sizeable returns for our share- holders. A specification of Handelsbanken’s statutory sustaina- bility report by area in accordance with Chapter 6 of the Annual Accounts Act can be found in the table on page 11. 15 Handelsbanken Annual and Sustainability Report 2024 2 .1
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Goals and goal achievement Goals and goal achievement Corporate goal Return on equity 1973–20241) Handels banken’s goal is to have higher profita- bility than the average of peer competitors in its home markets. Goal achievement In the Bank’s opinion, Handels banken achieved its corporate goal of having higher profitability than the average of peer competitors in its home markets again in 2024. A preliminary provision was made for the Oktogonen profit - sharing scheme for the earnings year 2024, which amounted to SEK -96 million (-83). 1) Only Swedish banks are included for the period up to and including 2002, and only Nordic banks for the period 2003–2012. 2) Not all banks in the comparison group had published their annual accounts for 2024 as of the date of approval of this Annual and Sustainability Report by the Board. Most satisfied customers To achieve the corporate goal, the Bank must, for example, have more satisfied customers than its peer competitors. The quality of products and services must therefore meet customer expectations, at a minimum, and preferably exceed them. Outcome Handels banken retained its stable and strong position in terms of customer satisfaction by having more satisfied private and corporate customers than the average for the banking sector in all of its home markets. Satisfied customers and stable relationships are proof that the Bank’s way of working is effective. Cost efficiency The corporate goal will also be achieved through higher cost efficiency than peer competitors. Outcome Handels banken’s expenses relative to income were 40.4% (37.2). The equivalent key metric for an weighted average of peer banks is estimated to approximately 40.6% (38.9). Costs/income, 2020–2024 0 20 40 60 80 100 The NetherlandsNorwayUKSweden 0 20 40 60 80 100 The NetherlandsNorwayUKSweden Handelsbanken Sector average Source: SKI/EPSI 2024 Handelsbanken Sector average Source: SKI/EPSI 2024 Handelsbanken Weighted average peer banks in the home markets2) Handelsbanken Weighted average peer banks in the home markets -10 -5 0 5 10 15 20 25 30 -24-22-20-18-16-14-12-10-08-06-04-02-00-98-96-94-92-90-88-86-84-82-80-78-76-74 -92-90 0 10 20 30 40 50 60 70 20242023202220212020 Customer satisfaction, private customers 2024 Index Customer satisfaction, corporate customers 2024 Index 16 Handelsbanken Annual and Sustainability Report 2024 2.1 Introduction Administration report Our bank Financial statements Sustainability Other
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Rating Handels banken is to have a high rating with the external rating agencies. Outcome No comparable bank in the world has a higher combined credit rating from S&P , Moody’s and Fitch. All of the Bank’s credit ratings were con- firmed as unchanged in 2024. Capital The Bank’s capital goal is that its common equity tier 1 ratio should, under normal circumstances, exceed the common equity tier 1 capital requirement communicated to the Bank by the Swedish Financial Supervisory Authority by 1–3 percentage points. Additionally, the Bank must fulfil any other capital requirements set by the regulators. Outcome At the end of the year, the common equity tier 1 ratio was 18.8% (18.8). In the Bank’s assessment, the overall common equity tier 1 capital require ment according to the Swedish Financial Supervisory Authority was 14.85% at the end of the year. Credit quality Handels banken has a low risk tolerance. This means that the quality of credits must never be neglected in favour of achieving higher volume or a higher margin. Outcome Credit losses consisted of net reversals and amounted to SEK 601 million (-141). Credit losses as a proportion of lending were -0.02% (0.01). For the past ten years – that is, since 2015 – the Bank’s average credit loss ratio has been 0.04%. This can be compared with the average for the other major Nordic banks during the same period: 0.09%. Common equity tier 1 ratio, 2020–2024Nordic bank ratings Handelsbanken Other Nordic banks 0 5 10 15 20 25 20242023202220212020 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 202420232022202120202019201820172016201520142013201220112010200920082007 Credit losses as % of loans 2007–2024 % Standard & Poor’s Fitch Moody’s 31 December 2024 Long term Short term Long term Short term Long term Short term Handelsbanken AA- A-1+ AA F1+ Aa2 P-1 DNB AA- A-1+ Aa2 P-1 Nordea AA- A-1+ AA- F1+ Aa3 P-1 SEB A+ A-1 AA F1+ Aa3 P-1 Swedbank A+ A-1 AA F1+ Aa3 P-1 Danske Bank A+ A-1 AA- F1 A1 P-1 Source: SNL 17 Handelsbanken Annual and Sustainability Report 2024 2 .1
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2.2 Review of operations Financial overview 2024 Financial overview 2024 SEK 13.86 Earnings per share amounted to SEK 13.86 (14.70). 14.6% Return on equity was 14.6% (15.9). 40.4% The C/I ratio was 40.4% (37.2). -0.02% The credit loss ratio was -0.02% (0.01). 18.8% The common equity tier 1 was 18.8% (18.8). SEK 15 The Board of Directors proposes an ordinary dividend of SEK 7.50 (6.50) per share and a special dividend of SEK 7.50 (6.50) per share. Stable profitability based on robust income and improved cost effectiveness Operating profit improved continuously from the year’s first quarter onward. Income grew, measures were taken to improve cost efficiency and net credit loss reversals increased. Net interest income was stable in spite of the negative margin effects due to reduced central bank policy rates. A continued strong development of the savings business contributed to net fee and commission income reaching its highest ever level during the year. In order to strengthen Bank’s efficiency and competitiveness, efforts have been made since the start of the year to identify potential efficiency improvements, mainly within central and business support units, and to then implement these. The Bank’s total staffing (i.e. the number of employees plus external resources) decreased by a net amount of 778 people, or 6%, from the first quarter, despite increased staffing in the branch operations as a response to increasing customer activity. The majority of the identified efficiency initiatives had been implemented by the end of the year, not only reducing the overall level of costs but also further strengthening the Bank’s cost culture. Enhanced local presence at around 20 new locations and business growth with satisfied customers During the year, the Bank was the largest player in terms of net inflows in the Swedish mutual fund market. Customer and advisory activity for both private and corporate customers increased during the year, and during Q4 lending volumes again increased in all of the home markets – for the first time in almost 5 years. Increased customer activity and demand to physically meet the Bank locally, led to the Bank expanding the availability of advisory meetings and other services at some 20 new locations across Sweden during the year. The Bank also continued to strengthen the availability of specialists at local branches, in areas such as Private Banking and occupational pensions. Inde- pendent surveys show that the Bank also in 2024 had more satisfied customers than the average among comparable peers in the home markets, among both private and corporate customers. Handels banken was also named Sweden’s “Business Bank of the Year” and – for the thirteenth consecutive year – “Small Enterprise Bank”. Increased dividend and strong financial position The Bank distinguishes itself as one of the world’s most stable banks, which is reflected in the fact that no other privately owned bank in the world has a higher overall credit rating from the leading rating agencies. The explanation lies in a locally connected, long-term oriented, and customer-centric business model with a low risk tolerance and a strong financial position. The Bank’s long term target range for the common equity tier 1 ratio is 1–3 percentage points above the regulatory requirement set by the Swedish Financial Supervisory Authority. Given the prevail- ing surrounding environment and in order to underscore Handels banken’s position as a first-class counterparty and one of the world’s safest banks, the dividend proposed to the Annual General Meeting is at a level entailing a common equity tier 1 ratio just under 4 percentage points above the regulatory requirement. Re-assessments of the appropriate capital level will be made on an ongoing basis. 18 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Review of operations Review of operations Operating profit decreased by 4% to SEK 35,016m (36,322). Adjusted for items affecting comparability, the decrease was 2%. Income increased to SEK 62,345m (62,249). Expenses amounted to SEK -25,209m (-23,182). The C/I ratio was 40.4% (37.2). The credit loss ratio was -0.02% (0.01). Profit for the period amounted to SEK 27,456m (29,114). Earnings per share amounted to SEK 13.86 (14.70). Return on equity was 14.6% (15.9). After deductions for the paid and proposed dividends, the common equity tier 1 ratio was 18.8% (18.8). Income SEK m Full year 2024 Full year 2023 Change Net interest income 46,841 47,578 -2% Net fee and commission income 11,726 11,139 5% Net gains/losses on financial trans. 3,103 2,661 17% Other 675 871 -23% Total income 62,345 62,249 0% Net interest income went down by 2%, or SEK 737m, to SEK 46,841m (47,578). Foreign exchange effects contributed SEK 163m. All in all, the net effect of margins and funding costs had a SEK -591m impact. Lower business volumes had an impact of SEK -380m on net interest income. The day effect was SEK 99m. Lower costs for deposit guarantee schemes had an impact of SEK 10m. Other effects amounted to SEK -38m. Net fee and commission income increased by 5% to SEK 11,726m (11,139). Fund man- agement, custody and other asset manage- ment fees increased by 9% to SEK 7,151m (6,531), which included an 8% increase in mutual fund commissions to SEK 5,980m (5,534). Brokerage income increased by 7% to SEK 449m (420). Net payment commissions increased by 3% to SEK 1,802m (1,758), of which card commissions constituted SEK 995m (1,053). Lending and deposit commis- sions fell by 12% to SEK 1,017m (1,156). Insurance commissions increased to SEK 776m (673). Advisory commissions were SEK 208m (236). Other net fee and commis- sion income amounted to SEK 324m (365). Net gains/losses on financial transactions went up by 17%, or SEK 442m, to SEK 3,103m (2,661). The customer-driven business in Handels banken Markets increased its profit by SEK 129m to SEK 1,220m (1,091). The con- tribution from the Bank’s liquidity portfolio rose by SEK 58m to SEK 253m (195). The realisa- tion of the translation reserve in the Finnish subsidiary Rahoitus, in conjunction with the liquidation of the company, contributed SEK 178m. Other net gains/losses on financial transactions, primarily related to ineffective- ness in the Bank’s hedging relationships, as well as changes in the market values of deriva- tives used to manage interest rate and foreign exchange risk in the Bank’s funding, amounted to SEK 1,452m (1,375). Net insurance result decreased by SEK -71m to SEK 422m (493). The return on assets held on behalf of policyholders fell by SEK -39m and amounted to SEK 297m (336). Insurance result was SEK 126m (157). Remaining income items totalled SEK 252m (379). Expenses Staff costs rose by 15%, or SEK 2,089m, to SEK -15,731m (-13,642). A restructuring charge relating to employment termination agreements was recognised during the year, amounting to SEK -472m. The provision for Oktogonen was SEK -255m (-285), of which SEK -159m related to the 2023 accounting year. Foreign exchange effects totalled SEK -50m. Adjusted for the restructuring charge, Oktogonen and foreign exchange effects, staff costs increased by 12%. The increase was due to an increase in employee numbers, annual salary adjustments, the conversion of external resources to permanent employees and higher expenses for the earning of pen- sions, which arose due to a lower discount rate at the start of the year compared to the previous year. At the end of the year, the number of em- ployees totalled 11,976 (12,017), while the total staffing (i.e. including external resources) decreased by 705 people, or 5%, to 12,571 (13,276). The decrease since the first quarter was 778 people, or 6%. The average number of employees grew by 5% during the year to 12,224 (11,683). Of this increase, 4 percentage points were attributable to additional employees working in the branch operations, and 1 per- centage points to the Bank’s IT development (through the replacement of consultants with salaried employees). Other expenses fell by 4% to SEK -7,474m (-7,796), mainly due to the use of fewer exter- nal resources. Depreciation, amortisation and impairments of property, equipment and intangible assets rose by 15% to SEK -2,004m (-1,743). Credit losses SEK m Full year 2024 Full year 2023 Change Net credit losses 601 -141 742 Credit loss ratio as % of loans to the public -0.02 0.01 Credit losses consisted of net reversals of SEK 601m (-141), with SEK 455m referring to a reversal of an expert-based provision, which amounted to SEK 149m (604) at the end of the year. The credit loss ratio was -0.02% (0.01). Regulatory fees Regulatory fees totalled SEK -2,733m (-2,624). The risk tax totalled SEK -1,655m (-1,644). The resolution fee totalled SEK -1,031m (-980). The Bank of England Levy was SEK -47m (-). Taxes The effective tax rate in continuing operations was 22.3% (23.2). The difference between this rate and the corporate tax rate in Sweden of 20.6% derives primarily from the higher tax rate in the UK operations, as well as from non - deductible costs on subordinated liabilities. The effective tax rate in total operations (including discontinued operations) was 22.3% (22.8). 19 Handelsbanken Annual and Sustainability Report 2024 2.2
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Discontinued operations On 31 May 2023, Handelsbanken signed an agreement regarding the divestment of its business operations in Finland relating to pri- vate customers, life insurance and SMEs. The part of the agreement concerning SMEs was finalised in early September 2024. The sale of the business relating to private customers and life insurance in Finland was finalised in early December 2024. Profit from discontinued operations, after tax, amounted to SEK 234m (1,209). The capital gains/losses relating to the sale of the operations, excluding selling costs, amounted to SEK 4m (-). The depreciation of property and equipment in the disposal group amounted to SEK -446m (-). Income fell by 19% to SEK 2,284m (2,829), of which net interest income decreased by 20% to SEK 1,895m (2,368). Expenses rose by 5% to SEK -1,369m (-1,306). Credit losses consisted of net reversals and amounted to SEK 53m (41). Non-recurring items and special items in operating profit SEK m Full year 2024 Full year 2023 Special items Oktogonen: adjustment of allocation previous year (staff costs) -159 -202 Oktogonen: provision current year (staff costs) -96 -83 Non-recurring items Restructuring charge (staff costs) -472 Reversal of value added tax paid when divesting card acquiring business (Income) 158 Total -727 -127 Foreign exchange effects Foreign exchange effects vs. previous year SEK m Full year 2024 Net interest income 163 Net fee and commission income 7 Net gains/losses on financial transactions 0 Other income 0 Total income 171 Staff costs -50 Other expenses -25 Depreciation and amortisation -3 Total expenses -78 Net loan losses -2 Gains/losses on disposal of property, equipment and intangible assets 0 Regluatory fees 5 Operating profit 95 Business development The average volume of loans to the public in the home markets totalled SEK 2,254bn (2,277). The average volume of deposits and bor- rowing from the public in the home markets was SEK 1,253bn (1,255). Total assets under management in the Group increased by 16% over the past 12 months and at the end of the period amounted to SEK 1,192bn (1,028), of which SEK 1,107bn (949) was invested in the Bank’s mutual funds. The net flow to the Bank’s mutual funds in Sweden amounted to SEK 35.1bn (17.3). Of the net flow in the Swedish mutual fund market during the year, a total of 18% was invested in Handels- banken’s funds, making Handels banken the largest player for new savings in the Swedish mutual fund market. The Bank’s share of the Swedish mutual fund market was 11.6%. Rating SEK m Long- term Short- term Counter- party risk rating Standard & Poor’s AA- A-1+ AA- Fitch AA F1+ AA+ Moody’s Aa2 P-1- Aa1 The Bank’s strong credit ratings entail that no other privately owned bank in the world has a higher overall rating from the three leading rating agencies. All of the Bank’s ratings have been confirmed as unchanged during 2024. In June 2024, Moody’s changed the outlook for the Bank to stable (negative). The outlooks from Fitch and Standard & Poor’s are also stable. Funding and liquidity For decades, Handelsbanken has adopted a prudent approach to funding, with a low risk profile. The funding strategy is based on a diversified, balanced utilisation of several stable funding sources, comprising deposits from households and SMEs, deposits from non - financial entities and market funding diversified across different types of debt instruments in multiple currencies. Non-current assets are funded with stable non-current liabilities in the form of stable market funding and long-term stable deposits and borrowing from the public. Current liabilities, in the form of other deposits and borrowing from the public and short-term market funding, are matched by current assets and a liquidity reserve of SEK 777bn (763 at year-end 2023). Of this reserve, 92% is deposited with central banks and holdings of government bonds. The majority of the remainder is invested in hold- ings of liquid covered bonds. The interest rate risk in the bond holdings is hedged using deriv ative instruments, and the entirety of the holdings is measured at market value on an ongoing basis. The Bank’s low pledging ratio of its assets creates an unutilised issue amount of covered bonds, which serves in practice as an addi- tional buffer from a liquidity perspective. The low pledging ratio also serves as a layer of pro- tection for holders of the Bank’s senior bonds. The ratio of non-encumbered assets to unse- cured market funding decreased to 252% (261% at year-end 2023). At the end of the year, the Group’s liquidity coverage ratio, (LCR), calculated according to the European Commission’s delegated regula- tion, was 207% (210% at the end of 2023). At year-end, the net stable funding ratio (NSFR) according to CRR2 was 124% (120% at the end of 2023). Bond issues during the year amounted to a total of SEK 161bn (239), of which SEK 121bn (163) was in covered bonds and SEK 34bn (67) was in senior bonds, of which SEK 17bn (11) constituted eligible liabilities. A non-perpetual subordinated loan of SEK 6bn (9) was issued during the year. Of the total volume of long- term bonds issued during the year, SEK 29bn (22) was issued under the Bank’s Green Bond Framework – in the majority of debt classes. 20 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Capital After the proposed dividend, the common equity tier 1 ratio was 18.82% at the end of the year. The Bank’s assessment is that the com- mon equity tier 1 capital requirement, including Pillar 2 guidance, amounted to 14.85% (SEK 123bn) on the same date. The common equity tier 1 capital requirement in Pillar 2 is 1.7 per- centage points (0.5 percentage points Pillar 2 guidance and 1.2 percentage points Pillar 2 requirement), corresponding to SEK 14bn. The countercyclical buffer requirement was 2.0%. At the end of the quarter, the total capital ratio was 23.4%. The Bank’s estimation is that the total capital requirement, including Pillar 2 guidance, amounted to 19.0% (SEK 157bn) on the same date. The total capital requirement in Pillar 2, including Pillar 2 guidance, com - prises 2.3 percentage points, corresponding to SEK 19bn. The Bank’s capital goal is that its common equity tier 1 ratio should, under normal circum- stances, exceed the common equity tier 1 capital requirement, including Pillar 2 guid- ance, by 1–3 percentage points. The Bank’s capitalisation was thus above the target range. Financial strength creates security and breeds confidence, and is a prerequisite for growth. From the profit for the full year 2024, a dividend of SEK 15.00 per share is proposed to the Annual General Meeting. The proposed dividend implies an extra capital buffer of 0.97 percentage points over the long-term target range of 1–3 percentage points above the requirement set by the Swedish Financial Supervisory Authority. This level differentiates Handelsbanken as a first-class counterparty in uncertain times, and contributes to cementing the Bank’s financial position as one of the world’s safest banks according to the leading international credit rating agencies. The extra buffer also means that, regardless of surround- ing developments, the Bank has greater capac- ity to take significant responsibility for the sup- ply of credit and to grow its business in pace with customer demand. The Bank will make regular reassessments of the appropriate buffer, depending on the prevailing business environment. On 1 January 2025, the first parts of the new EU Banking Package will be introduced, repre- senting the final components of the Basel 3 agreement. In its previous interim report, the Bank estimated that the day 1 effect was assessed as entailing a marginal decrease to the risk exposure amount. Capital for consolidated situation Total own funds were SEK 193bn (200), and the total capital ratio amounted to 23.4% (23.9). The common equity tier 1 capital was SEK 155bn (158), while the common equity tier 1 ratio was 18.8% (18.8). SEK m 31 Dec 2024 31 Dec 2023 Change Common equity tier 1 ratio (%) 18.8% 18.8% 0.0 Total capital ratio (%) 23.4% 23.9% -0.5 Total risk-weighted exposure amount 825,457 836,790 -1% Common equity tier 1 (CET1) capital 155,345 157,576 -1% Total capital 193,191 200,081 -3% Total equity 210,027 205,085 2% Profit for the period increased the common equity tier 1 ratio by 3.0 percentage points. Paid and proposed dividends had an impact of -3.5 percentage points. Volume changes had a 0.1 percentage points impact. Credit risk migrations had a neutral impact, while the net effect of differing credit qualities for inflows and outflows was 0.2 percentage points. Risk weight floors had an impact of -0.3 percentage points. Foreign exchange effects were neutral. The sale of the operations in Finland had an effect of 0.3 percentage points. Other effects had a 0.2 percentage points impact. Economic capital and available financial resources The Bank’s internal assessment of its need for capital is based on the Bank’s capital requirement, stress tests, and the Bank’s model for economic capital (EC). This is meas- ured in relation to the Bank’s available financial resources (AFR). The Board stipulates that the AFR/EC ratio for the Group must exceed 120%. At the end of the year, Group EC totalled SEK 58.9bn (65.5), while AFR was SEK 225.7bn (239.6). Thus, the ratio between AFR and EC was 383% (366). For the consolidated situa- tion, EC totalled SEK 32.7bn (38.4), and AFR was SEK 215.8bn (232.6). Sustainability During the first quarter, the major Sustainable Brand Index survey found that Handelsbanken was considered the banking sector’s most sustainable brand by consumers in Sweden. Handelsbanken published its Green Bond Impact Report for 2023 in the second quarter, in which it was explained how the Bank’s green bonds contributed to reducing, and eliminating, carbon dioxide emissions of just over 90,000 tonnes during the year. During the third quarter, Handelsbanken published its first “Nature and Biodiversity progress report”, based on the Taskforce on Nature-related Financial Disclosures (TNFD) framework. The EU’s Sustainable Finance Disclosures Regulation (SFDR) means that asset managers must be transparent in how their mutual funds are classified under the SFDR. At the end of the quarter, 14 of the Group’s funds, represent- ing 22% of assets under management, were reported in the highest category (article 9), i.e. a fund that has sustainable investment as its objective. A total of 107 funds, representing 74% of the managed fund volume, were reported in the second highest category (article 8), i.e. funds that promote environ- mental or social characteristics. Business volumes linked to the Bank’s sustainability activities continued to grow. Compared with the corresponding period of the previous year, the volume of green loans increased by 42% to SEK 123bn (87); as part of this total, green mortgages grew by 17% to SEK 41bn (35). In addition, sustainability-linked loan facilities increased to SEK 144bn (105). Handelsbanken’s Annual General Meeting 2025 The Annual General Meeting will take place on 26 March 2025. The Board of Directors proposes to the Annual General Meeting an ordinary dividend of SEK 7.50 (6.50) per share and a special dividend of SEK 7.50 (6.50) per share. The Board proposes that the record day for the dividend be 28 March 2025, which means that the Handels banken share will be traded ex-dividend on 27 March 2025, and that the dividend is then expected to be dis- bursed by Euroclear on 2 April 2025. In addition, the Board proposes to the annual general meeting that the current repur- chase programme of a maximum 120 million shares be extended by a further year, and that the meeting authorise the Board to be able to issue convertible debt instruments in the form of AT1 bonds, in order to adapt the Bank’s capital structure to capital requirements pre- vailing at any time. 21 Handelsbanken Annual and Sustainability Report 2024 2.2
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Five-year overview, Group Five-year overview Group Consolidated income statement SEK m 2024 2023 2022 2021 2020 Net interest income 46,841 47,578 36,614 30,321 29,963 Net fee and commission income 11,726 11,139 10,981 11,458 9,670 Net gains/losses on financial transactions 3,103 2,661 1,540 1,699 1,217 Risk result – insurance 179 194 Net insurance result 422 493 -11 Other dividend income 16 3 17 2 53 Share of profit of associates and joint ventures 27 51 -13 63 18 Other income 209 325 1,246 555 137 Total income 62,345 62,249 50,375 44,277 41,252 Staff costs -15,731 -13,642 -13,040 -12,452 -13,907 Other expenses -7,474 -7,796 -6,526 -5,577 -5,245 Depreciation, amortisation and impairment of property, equipment and intangible assets -2,004 -1,743 -1,646 -1,814 -1,775 Total expenses -25,209 -23,182 -21,212 -19,843 -20,927 Profit before credit losses and regulatory fees 37,136 39,067 29,163 24,434 20,325 Net credit losses 601 -141 -47 -43 -649 Gains/losses on disposal of property, equipment and intangible assets 13 20 24 14 5 Regulatory fees -2,733 -2,624 -2,311 -930 -884 Operating profit 35,016 36,322 26,829 23,475 18,797 Taxes -7,795 -8,417 -5,431 -4,627 -4,240 Profit for the year from continuing operations 27,221 27,905 21,398 18,848 14,557 Profit for the year from discontinued operations, after tax 234 1,209 280 695 1,031 Profit for the year 27,456 29,114 21,678 19,543 15,588 attributable to Shareholders in Svenska Handelsbanken AB 27,451 29,107 21,676 19,527 15,585 of which from continuing operations 27,217 27,898 21,395 18,834 14,556 of which from discontinued operations 234 1,209 281 693 1,029 Non-controlling interest 5 8 1 16 3 Earnings per share, total operations, SEK 13.86 14.70 10.95 9.86 7.87 after dilution 13.86 14.70 10.95 9.86 7.87 Earnings per share, continuing operations, SEK 13.75 14.09 10.81 9.51 7.35 after dilution 13.75 14.09 10.81 9.51 7.35 Earnings per share, discontinued operations, SEK 0.12 0.61 0.14 0.35 0.52 after dilution 0.12 0.61 0.14 0.35 0.52 A five-year overview for the parent company is presented on pages 196–197. 22 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Consolidated statement of comprehensive income SEK m 2024 2023 2022 2021 2020 Profit for the year 27,456 29,114 21,678 19,543 15,588 Other comprehensive income Items that will not be reclassified to the income statement Defined benefit pension plans 344 -2,226 3,049 6,820 1,523 Equity instruments measured at fair value through other comprehensive income 207 63 41 62 -583 Tax on items that will not be reclassified to the income statement -77 439 -642 -1,401 -256 of which defined benefit pension plans -36 450 -622 -1,398 -267 of which equity instruments measured at fair value through other comprehensive income -41 -11 -19 -3 11 Total items that will not be reclassified to the income statement 475 -1,724 2,448 5,481 684 Items that may subsequently be reclassified to the income statement Cash flow hedges 160 614 -2,640 -1,970 -1,124 Debt instruments measured at fair value through other comprehensive income 6 25 -60 6 7 Insurance contracts 66 -396 793 Translation difference for the year 1,758 -1,078 2,312 3,201 -4,269 of which hedges of net investments in foreign operations -230 31 -297 -910 848 Tax on items that may subsequently be reclassified to the income statement -52 113 -15 595 93 of which cash flow hedges -33 -127 544 406 274 of which debt instruments measured at fair value through other comprehensive income -1 -5 6 -1 -1 of which hedges of net investments in foreign operations 47 -6 61 190 -180 of which tax on translation difference -65 251 -626 Total items that may subsequently be reclassified to the income statement 1,937 -722 390 1,832 -5,293 Total other comprehensive income 2,412 -2,447 2,838 7,313 -4,609 Total comprehensive income for the year 29,868 26,667 24,516 26,856 10,979 attributable to Shareholders in Svenska Handelsbanken AB 29,870 26,662 24,516 26,840 10,976 Non-controlling interest -2 5 1 16 3 Consolidated balance sheet SEK m 2024 2023 2022 2021 2020 Assets Cash and central banks 542,542 482,453 480,472 292,839 418,968 Loans to other credit institutions 18,922 19,294 9,411 21,745 21,920 Loans to the public 2,291,479 2,282,151 2,299,202 2,161,235 2,269,637 Interest-bearing securities 220,114 249,215 165,475 133,855 143,699 Assets held for sale 74,506 178,590 191,916 421,417 1,657 Other assets 391,611 326,088 307,242 315,673 279,407 Total assets 3,539,173 3,537,792 3,453,718 3,346,764 3,135,288 Liabilities and equity Due to credit institutions 84,280 90,143 81,693 83,034 124,723 Deposits and borrowing from the public 1,310,739 1,298,480 1,318,925 1,286,637 1,229,763 Issued securities 1,550,027 1,523,481 1,474,801 1,353,768 1,310,737 Liabilities held for sale 10,623 63,721 68,938 133,922 Subordinated liabilities 37,054 43,117 42,404 32,257 41,082 Other liabilities 336,424 313,763 272,932 275,415 257,510 Equity 210,027 205,085 194,024 181,731 171,473 Total liabilities and equity 3,539,173 3,537,792 3,453,718 3,346,764 3,135,288 23 Handelsbanken Annual and Sustainability Report 2024 2.2
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Key metrics per year Key metrics per year Key metrics for the Handelsbanken Group 2024 2023 2022 2021 2020 Profit before credit losses and regulatory fees, continuing operations, SEK m 37,136 39,067 29,163 24,434 20,326 Net credit losses, continuing operations, SEK m 601 -141 -47 -43 -649 Operating profit, continuing operations, SEK m 35,016 36,322 26,829 23,475 18,797 Profit for the year, total operations, SEK m 27,456 29,114 21,678 19,543 15,588 Profit for the year, continuing operations, SEK m 27,221 27,905 21,398 18,848 14,557 Profit for the year, discontinued operations, SEK m 234 1,209 280 695 1,031 Total assets, SEK m 3,539,173 3,537,792 3,453,718 3,346,764 3,135,288 Equity, SEK m 210,027 205,085 194,024 181,731 171,473 Return on equity, total operations, % 14.6 15.9 12.8 11.8 10.0 Return on equity, continuing operations, % 14.5 15.3 12.6 11.4 9.3 Return on total assets, % 0.75 0.81 0.61 0.58 0.47 C/I ratio, continuing operations, % 40.4 37.2 42.1 44.8 50.7 Credit loss ratio, continuing operations, % -0.02 0.01 0.00 0.00 0.02 Earnings per share, total operations, SEK 13.86 14.70 10.95 9.86 7.87 after dilution 13.86 14.70 10.95 9.86 7.87 Earnings per share, continuing operations, SEK 13.75 14.09 10.81 9.51 7.35 after dilution 13.75 14.09 10.81 9.51 7.35 Earnings per share, discontinued operations, SEK 0.12 0.61 0.14 0.35 0.52 after dilution 0.12 0.61 0.14 0.35 0.52 Ordinary dividend per share, SEK 7.501) 6.50 5.50 5.00 4.10 Total dividend per share, SEK 15.001) 13.00 8.00 5.00 8.42 Adjusted equity per share, SEK 105.91 103.48 98.14 90.87 84.90 No. of shares as at 31 December, millions 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 of which outstanding 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 Average number of outstanding shares, millions 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 after dilution 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 Common equity tier 1 ratio, % according to CRR 18.8 18.8 19.6 19.4 20.3 Tier 1 ratio, % according to CRR 20.2 20.6 21.5 21.1 21.9 Total capital ratio, % according to CRR 23.4 23.9 23.8 23.3 24.3 Average number of employees, total operations 12,703 12,216 12,030 12,240 12,563 of which continuing operations 12,224 11,683 10,954 11,039 11,354 1) Dividend as recommended by the Board. For definitions of alternative performance measures, see page 376 and, for the calculation of these measures, see the Fact Book which is available at handelsbanken.com/ir. 24 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Quarterly performance Quarterly performance Quarterly performance for the Handelsbanken Group SEK m Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2023 Interest income 40,206 42,746 44,180 43,993 45,665 Interest expenses -28,461 -30,983 -32,434 -32,406 -33,443 Net interest income 11,745 11,763 11,746 11,587 12,222 Fee and commission income 3,475 3,352 3,307 3,118 3,145 Fee and commission expenses -409 -384 -369 -364 -346 Net fee and commission income 3,067 2,966 2,939 2,754 2,800 Net gains/losses on financial transactions 1,147 626 580 750 579 Insurance result 37 21 41 27 24 Return on assets held on behalf of policyholders -6 108 97 98 183 Net insurance result 30 129 138 125 207 Other dividend income 13 1 0 2 1 Share of profit of associates and joint ventures -50 3 6 68 -17 Other income 73 55 49 32 64 Total income 16,025 15,545 15,457 15,318 15,854 Staff costs -3,981 -3,825 -3,990 -3,935 -3,531 Other expenses -1,860 -1,632 -1,926 -2,056 -2,152 Depreciation, amortisation and impairment of property, equipment and intangible assets -523 -498 -504 -479 -402 Total expenses -6,363 -5,956 -6,420 -6,470 -6,086 Profit before credit losses and regulatory fees 9,662 9,589 9,037 8,848 9,768 Net credit losses 232 141 133 95 -52 Gains/losses on disposal of property, equipment and intangible assets 3 2 4 4 6 Regulatory fees -719 -671 -663 -680 -664 Operating profit 9,177 9,061 8,511 8,267 9,057 Taxes -1,976 -2,024 -1,921 -1,874 -2,093 Profit for the year from continuing operations 7,201 7,037 6,590 6,393 6,965 Profit for the year from discontinued operations, after tax -354 173 204 211 280 Profit for the year 6,848 7,210 6,794 6,604 7,244 attributable to Shareholders in Svenska Handelsbanken AB 6,845 7,210 6,793 6,603 7,240 Non-controlling interest 3 0 1 1 6 Earnings per share, total operations, SEK 3.46 3.64 3.43 3.33 3.66 after dilution 3.46 3.64 3.43 3.33 3.66 Earnings per share, continuing operations, SEK 3.64 3.55 3.33 3.23 3.51 after dilution 3.64 3.55 3.33 3.23 3.51 Earnings per share, discontinued operations, SEK -0.18 0.09 0.10 0.11 0.14 after dilution -0.18 0.09 0.10 0.11 0.14 25 Handelsbanken Annual and Sustainability Report 2024 2.2
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Segment reporting Segment reporting Segment reporting 2024 SEK m Sweden UK Norway The Netherlands Markets Other Adjustments and eliminations Total Net interest income 29,003 10,729 5,162 1,967 -17 -3 46,841 Net fee and commission income 9,066 869 695 188 621 288 11,726 Net gains/losses on financial transactions 959 225 80 18 1,220 602 3,103 Net insurance result 423 -1 422 Share of profit of associates and joint ventures 27 27 Other income 84 15 21 3 3 99 225 Total income 39,535 11,837 5,957 2,176 1,826 1,015 62,345 Staff costs -5,073 -3,579 -1,307 -611 -985 -4,428 252 -15,731 Other expenses -1,173 -841 -517 -145 -509 -4,290 -7,474 Internal purchased and sold services -4,899 -1,445 -809 -322 72 7,404 Depreciation, amortisation and impairment of property, equipment and intangible assets -773 -378 -106 -58 -145 -520 -24 -2,004 Total expenses -11,918 -6,242 -2,739 -1,136 -1,567 -1,834 228 -25,209 Profit before credit losses and regulatory fees 27,617 5,595 3,217 1,040 259 -819 228 37,136 Net credit losses 377 139 72 2 0 12 601 Gains/losses on disposal of property, equipment and intangible assets 8 0 5 0 0 13 Regulatory fees -2,033 -47 -411 -132 -25 -86 -2,733 Operating profit 25,969 5,686 2,883 910 234 -893 228 35,016 Profit allocation 371 49 61 0 -423 -58 Operating profit after profit allocation 26,339 5,736 2,943 910 -189 -951 228 35,016 Internal income 5,009 4,045 -10,458 -152 -156 1,712 C/I ratio, % 29.9 52.5 45.5 52.2 111.7 40.4 Credit loss ratio, % -0.02 -0.06 -0.02 0.00 0.00 -0.02 Loans to the public 1,589,948 246,790 320,705 104,604 15,335 20,496 2,297,878 Deposits and borrowing from the public 848,854 289,072 97,713 44,743 711 29,671 -25 1,310,739 Allocated capital 123,381 27,866 22,684 5,690 1,831 5,915 22,660 210,027 Return on allocated capital, % 17.3 17.1 10.4 13.0 -9.1 14.5 Average number of employees 4,764 2,842 993 425 470 2,729 12,224 Applied principles for segment reporting and a description of the items shown in the Other and Adjustments and eliminations columns are explained further in note G46. The “Other” column includes allocated capital attributable to the disposal group in Finland. 26 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Segment reporting 2023 SEK m Sweden UK Norway The Netherlands Markets Other Adjustments and eliminations Total Net interest income 30,222 11,010 4,624 1,941 -50 -170 47,578 Net fee and commission income 8,460 845 659 198 592 385 11,139 Net gains/losses on financial transactions 1,185 253 79 17 1,091 37 2,661 Net insurance result 494 0 493 Share of profit of associates and joint ventures 51 51 Other income 214 13 5 1 1 94 328 Total income 40,575 12,121 5,366 2,157 1,634 397 62,249 Staff costs -4,783 -3,149 -1,103 -537 -954 -3,519 403 -13,642 Other expenses -1,353 -907 -493 -136 -461 -4,446 -7,796 Internal purchased and sold services -4,738 -1,414 -708 -277 17 7,120 Depreciation, amortisation and impairment of property, equipment and intangible assets -665 -310 -97 -59 -131 -457 -24 -1,743 Total expenses -11,538 -5,780 -2,401 -1,009 -1,530 -1,303 379 -23,182 Profit before credit losses and regulatory fees 29,037 6,340 2,965 1,148 104 -906 379 39,067 Net credit losses -142 -51 37 13 3 -141 Gains/losses on disposal of property, equipment and intangible assets 14 -1 6 0 20 Regulatory fees -1,919 -393 -113 -20 -179 -2,624 Operating profit 26,990 6,289 2,615 1,048 83 -1,082 379 36,322 Profit allocation 406 52 47 0 -421 -83 Operating profit after profit allocation 27,395 6,340 2,662 1,048 -338 -1,165 379 36,322 Internal income 5,767 2,999 -8,567 -98 667 -768 C/I ratio, % 28.2 47.5 44.4 46.8 126.1 37.2 Credit loss ratio, % 0.01 0.03 -0.01 -0.01 0.01 Loans to the public 1,600,862 230,692 313,267 97,110 12,467 38,553 -1,142 2,291,808 Deposits and borrowing from the public 854,313 260,595 90,206 35,945 26,243 31,204 -25 1,298,480 Allocated capital 123,899 25,856 23,339 5,177 1,686 6,904 18,224 205,085 Return on allocated capital, % 18.2 21.2 9.4 16.9 -17.6 15.3 Average number of employees 4,695 2,707 828 388 479 2,587 11,683 Applied principles for segment reporting and a description of the items shown in the Other and Adjustments and eliminations columns are explained further in note G46. The “Other” column includes allocated capital attributable to the disposal groups in Finland. A reorganisation was carried out in the second quarter of 2024 with the objective to create a more efficient and business-oriented organisation. Parts of the former central HR, Finance and Communication units, as well as the Financial Crime Prevention unit, which were previously included in Other, and parts of the business support unit, which were previously included in the segment Handelsbanken Markets, have been transferred to Handelsbanken Sweden. The operations in Luxembourg and New York, i.e. operations outside the home markets, have been transferred from Handelsbanken Markets to Other. In addition, parts of Handelsbanken’s IT department, which were previously reported under Other, have been transferred to Handelsbanken Markets. Comparative figures in the segment reporting have been restated due to this reorganisation. 27 Handelsbanken Annual and Sustainability Report 2024 2.2
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Sweden Sweden Quarterly performance SEK m 2024:4 2024:3 2024:2 2024:1 Total 2024 Total 2023 Change, % Net interest income 7,056 7,292 7,328 7,327 29,003 30,222 -4 Net fee and commission income 2,358 2,294 2,290 2,124 9,066 8,460 7 Net gains/losses on financial transactions 209 171 249 330 959 1,185 -19 Net insurance result 30 129 139 125 423 494 -14 Other income 32 13 26 13 84 214 -61 Total income 9,685 9,900 10,031 9,919 39,535 40,575 -3 Staff costs -1,292 -1,259 -1,269 -1,253 -5,073 -4,783 6 Other expenses -314 -235 -303 -321 -1,173 -1,353 -13 Internal purchased and sold services -1,152 -1,125 -1,295 -1,327 -4,899 -4,738 3 Depreciation, amortisation and impairments of property, equipment and intangible assets -228 -182 -180 -183 -773 -665 16 Total expenses -2,985 -2,801 -3,047 -3,085 -11,918 -11,538 3 Profit before credit losses and regulatory fees 6,699 7,099 6,984 6,835 27,617 29,037 -5 Net credit losses 183 99 29 66 377 -142 Gains/losses on disposal of property, equipment and intangible assets 2 2 2 2 8 14 -43 Regulatory fees -509 -508 -505 -511 -2,033 -1,919 6 Operating profit 6,375 6,692 6,510 6,392 25,969 26,990 -4 Profit allocation 94 103 80 94 371 406 -9 Operating profit after profit allocation 6,468 6,796 6,589 6,486 26,339 27,395 -4 Internal income 900 1,289 1,414 1,406 5,009 5,767 -13 Cost/income ratio, % 30.5 28.0 30.1 30.8 29.9 28.2 Credit loss ratio, % -0.03 -0.02 -0.01 -0.01 -0.02 0.01 Loans to the public 1,589,948 1,592,838 1,598,205 1,598,891 1,589,948 1,660,862 -4 Deposits and borrowing from the public 848,854 845,130 857,522 850,864 848,854 854,313 -1 Allocated capital 123,381 118,793 114,065 127,599 123,381 123,899 0 Return on allocated capital, % 16.7 18.2 18.3 16.1 17.3 18.2 Average number of employees 4,655 4,852 4,790 4,760 4,764 4,695 1 Business volumes, Sweden Average volumes SEK bn 2024 2023 Change, % Loans to the public1) 1,593 1,625 -2 of which households 967 981 -1 of which mortgage loans 940 948 -1 of which corporates 626 644 -3 of which mortgage loans 452 439 3 Deposits and borrowing from the public 836 848 -1 of which households 480 483 -1 of which corporates 356 365 -2 1) Excluding loans to the National Debt Office. 28 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Financial performance Operating profit decreased by 4% to SEK 25,969m (26,990). Return on allocated capital was 17.3% (18.2). The C/I ratio was 29.9% (28.2). Income decreased by 3% to SEK 39,535m (40,575). Expenses rose by 3% to SEK -11,918m (-11,538). Net interest income went down by 4% to SEK 29,003m (30,222). Lower business vol- umes had an impact of SEK -416m. The net amount of changed margins and funding costs had an impact of SEK -809m. The day effect contributed SEK 59m. Lower fees for the deposit guarantee scheme contributed SEK 9m and other effects in net interest income had an impact of SEK -62m. Net fee and commission income increased by 7% to SEK 9,066m (8,460). Mutual fund commissions increased by 10% to SEK 5,211m (4,747). Custody and other asset management fees increased by 20% to SEK 870m (725). Brokerage and other securities commissions increased by 6% to SEK 164m (154). Insur- ance commissions increased by 13% to SEK 756m (670). Commission income from loans and deposits and from guarantees amounted to SEK 734m (826). Net payment commissions grew by 3% to SEK 1,344m (1,300), with net card commissions totalling SEK 871m (916). Net gains/losses on financial transactions totalled SEK 959m (1,185). Net insurance result was SEK 423m (494). Other income amounted to SEK 84m (214). Staff costs rose by 6% to SEK -5,073m (-4,783). The increase was due to annual salary adjustments and a 1% increase in the average number of employees to 4,764 (4,695), arising due to additional employees in the branch operations hired to address increased cus- tomer activity. Other expense items rose by 1% to SEK -6,845m (-6,756). Credit losses consisted of net reversals of SEK 377m (-142) and the credit loss ratio was -0.02% (0.01). Regulatory fees totalled SEK -2,033m (-1,919), of which risk tax amounted to SEK -1,220m (-1,199), and the resolution fee amounted to SEK -812m (-719). Business development Handelsbanken held on to its position as the best bank for business in this year’s indepen- dent Finansbarometern survey, which again named Handelsbanken “Business Bank of the Year” and – for the thirteenth consecutive year – “Sweden’s Small Enterprise Bank”. The major survey of customer satisfaction in the banking sector carried out by the Swedish Quality Index (SKI) showed that, of the major players, Handelsbanken received the highest rating from its customers. Among private cus- tomers, Handelsbanken received the score of 69.9, which can be compared with the scores of the other banks, which were in the 66.8–68.5 range, and the sector average of 69.0. Corpo- rate customer gave Handelsbanken a score of 70.4, whereas other banks were in the 65.9– 70.4 range, and the sector average was 69.1. The total average volume of lending fell by 2% to SEK 1,593bn (1,625). Household lend- ing decreased by 1% to SEK 967bn (981) and corporate lending decreased by 3% to SEK 626bn (644). The total average volume of deposits fell by 1% to SEK 836bn (848). Household deposits went down by 1% to SEK 480bn (483), while corporate deposits decreased by 2% to SEK 356bn (365). Total assets under management in Sweden increased to SEK 1,040bn (888) at the end of the period, of which the managed fund volume increased to SEK 974bn (837). The net flow in the Bank’s mutual funds in Sweden during the period totalled SEK 37.9bn (17.4). Of the net flow in the Swedish mutual fund market during the year, a total of 18% was invested in Handels- banken’s funds, making Handelsbanken the largest player for new savings in the Swedish mutual fund market. The Bank’s share of the Swedish mutual fund market was 11.6%. 29 Handelsbanken Annual and Sustainability Report 2024 2.2
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UK UK Quarterly performance SEK m 2024:4 2024:3 2024:2 2024:1 Total 2024 Total 2023 Change, % Net interest income 2,736 2,680 2,688 2,625 10,729 11,010 -3 Net fee and commission income 216 229 220 204 869 845 3 Net gains/losses on financial transactions 63 52 53 57 225 253 -11 Other income 15 0 0 0 15 13 15 Total income 3,029 2,960 2,962 2,886 11,837 12,121 -2 Staff costs -915 -913 -884 -867 -3,579 -3,149 14 Other expenses -174 -221 -232 -214 -841 -907 -7 Internal purchased and sold services -355 -349 -363 -378 -1,445 -1,414 2 Depreciation, amortisation and impairments of property, equipment and intangible assets -96 -94 -104 -84 -378 -310 22 Total expenses -1,540 -1,576 -1,583 -1,543 -6,242 -5,780 8 Profit before credit losses and regulatory fees 1,489 1,384 1,379 1,343 5,595 6,340 -12 Net credit losses -18 41 61 55 139 -51 Gains/losses on disposal of property, equipment and intangible assets 0 0 0 0 0 -1 Regulatory fees -47 -47 Operating profit 1,423 1,425 1,440 1,398 5,686 6,289 -10 Profit allocation 12 15 10 12 49 52 -6 Operating profit after profit allocation 1,436 1,440 1,449 1,411 5,736 6,340 -10 Internal income 1,094 1,052 998 901 4,045 2,999 35 Cost/income ratio, % 50.6 53.0 53.3 53.2 52.5 47.5 Credit loss ratio, % 0.02 -0.07 -0.10 -0.10 -0.06 0.03 Loans to the public 246,790 239,989 238,072 241,089 246,790 230,692 7 Deposits and borrowing from the public 289,072 279,614 273,510 266,148 289,072 260,595 11 Allocated capital 27,866 26,456 25,518 26,399 27,866 25,856 8 Return on allocated capital, % 16.4 17.3 18.0 17.0 17.1 21.2 Average number of employees 2,829 2,866 2,852 2,821 2,842 2,707 5 Business volumes, UK Average volumes GBP m 2024 2023 Change, % Loans to the public 17,865 18,621 -4 of which households 5,120 5,520 -7 of which corporates 12,745 13,101 -3 Deposits and borrowing from the public 20,592 20,365 1 of which households 5,300 5,441 -3 of which corporates 15,292 14,924 2 30 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Financial performance Operating profit decreased by 10% to SEK 5,686m (6,289). In local currency terms, profit decreased by 12%. Return on allocated capital was 17.1% (21.2). The C/I ratio worsened to 52.5% (47.5). Income decreased by 2% to SEK 11,837m (12,121). Foreign exchange effects amounted to SEK 266m, and in local currency terms, income fell by 5%. Expenses increased by 8% to SEK -6,242m (-5,780). In local currency terms, expenses increased by 6%. Net interest income went down by 3% to SEK 10,729m (11,010). Foreign exchange effects amounted to SEK 240m, and in local currency terms, net interest income went down by 5%. Lower business volumes had an impact of SEK -78m. The net amount of changed mar- gins and funding costs reduced net interest income by SEK 451m. The day effect contrib- uted SEK 28m. Other effects had a SEK -20m impact on net interest income. Net fee and commission income increased by 3% to SEK 869m (845). In local currency terms, net fee and commission income was unchanged. Commission income from fund management, custody and other asset man- agement fees, including brokerage and advi- sory services, increased by 3% to SEK 444m (433). Net fee and commission income from payments increased by 4% to SEK 293m (281). Staff costs rose by 14% to SEK -3,579m (-3,149). Expressed in local currency, staff costs rose by 11%. The increase was due to annual salary adjustments and a 5% increase in the average number of employees to 2,842 (2,707). The increase in the average number of employees was due mainly to further recruit- ments in the branch operations, in IT and busi- ness development, as well as within financial crime prevention. Other expense items rose by 1% to SEK -2,664m (-2,631). Expressed in local currency, other expense items decreased by 1%, which was partly due to the aforementioned changes regarding the Bank of England Levy. Regulatory fees, comprised of the Bank of England Levy, were SEK -47m (-). Credit losses consisted of net reversals of SEK 139m (-51). The credit loss ratio was -0.06% (0.03). Business development According to the annual EPSI survey of cus- tomer satisfaction in the banking industry, Handelsbanken – similar to previous years – had the most satisfied customers among all UK banks in the survey. Private customers gave Handelsbanken an index score of 84.2, as compared with the sector average of 75.0. Corporate customers gave the Bank an index score of 81.9, as compared with the sector average of 67.1. The total average volume of lending de- creased by 4% to GBP 17.9bn (18.6). House- hold lending decreased by 7% to GBP 5.1bn (5.5), and corporate lending decreased by 3% to GBP 12.7bn (13.1). The total average volume of deposits in- creased by 1% to GBP 20.6bn (20.4). House- hold deposits decreased by 3% to GBP 5.3bn (5.4), and corporate deposits increased by 2% to GBP 15.3bn (14.9). The volume of assets under management in Handelsbanken Wealth & Asset Management increased to GBP 4.5bn (4.3) at the end of the year. New savings totalled net GBP -31m (60). 31 Handelsbanken Annual and Sustainability Report 2024 2.2
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Norway Norway Quarterly performance SEK m 2024:4 2024:3 2024:2 2024:1 Total 2024 Total 2023 Change, % Net interest income 1,365 1,324 1,274 1,199 5,162 4,624 12 Net fee and commission income 189 175 175 156 695 659 5 Net gains/losses on financial transactions 20 18 22 20 80 79 1 Net insurance result 0 -1 -1 0 Other income 13 4 3 1 21 5 320 Total income 1,586 1,523 1,473 1,375 5,957 5,366 11 Staff costs -331 -340 -313 -323 -1,307 -1,103 18 Other expenses -106 -99 -146 -166 -517 -493 5 Internal purchased and sold services -198 -204 -206 -201 -809 -708 14 Depreciation, amortisation and impairments of property, equipment and intangible assets -26 -26 -27 -27 -106 -97 9 Total expenses -662 -669 -691 -717 -2,739 -2,401 14 Profit before credit losses and regulatory fees 923 854 782 658 3,217 2,965 8 Net credit losses 62 -6 44 -28 72 37 95 Gains/losses on disposal of property, equipment and intangible assets 2 0 1 2 5 6 -17 Regulatory fees -104 -102 -102 -103 -411 -393 5 Operating profit 883 746 726 528 2,883 2,615 10 Profit allocation 19 15 17 10 61 47 30 Operating profit after profit allocation 901 761 744 537 2,943 2,662 11 Internal income -2,542 -2,556 -2,691 -2,669 -10,458 -8,567 -22 Cost/income ratio, % 41.2 43.5 46.4 51.8 45.5 44.4 Credit loss ratio, % -0.07 0.01 -0.04 0.04 -0.02 -0.01 Loans to the public 320,705 314,893 323,467 316,793 320,705 313,267 2 Deposits and borrowing from the public 97,713 97,118 98,455 92,367 97,713 90,206 8 Allocated capital 22,684 22,303 21,622 23,689 22,684 23,339 -3 Return on allocated capital, % 12.6 10.8 10.9 7.2 10.4 9.4 Average number of employees 1,006 1,021 980 966 993 828 20 Business volumes, Norway Average volumes NOK bn 2024 2023 Change, % Average volumes 323.8 306.3 6 of which households 133.6 114.3 17 of which corporates 190.2 192.0 -1 Deposits and borrowing from the public 97.1 97.0 0 of which households 41.5 32.4 28 of which corporates 55.7 64.6 -14 32 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Financial performance Operating profit increased by 10% to SEK 2,883m (2,615). Foreign exchange effects on operating profit amounted to SEK -49m, and in local currency terms, operating profit increased by 13%. Return on allocated capital increased to 10.4% (9.4). The C/I ratio was 45.5% (44.4). Income grew by 11% to SEK 5,957m (5,366). Expressed in local currency, income growth was 13%. Expenses increased by 14% to SEK -2,739m (-2,401). Expressed in local currency, expenses increased by 17%. Net interest income increased by 12% to SEK 5,162m (4,624). Foreign exchange effects amounted to SEK -89m, and in local currency terms, net interest income rose by 14%. Changed business volumes made a contribu- tion of SEK 48m. The net effect of changes to margins and funding costs had an impact of SEK 582m. The day effect contributed SEK 10m. Other effects had a SEK -13m impact. Net fee and commission income increased by 5% to SEK 695m (659). Expressed in local currency, net fee and commission income increased by 8%. Commission income from the fund management, custody and other asset management fees, brokerage, advisory ser- vices and insurance increased by 10% to SEK 390m (356). Net payment commissions decreased by 5% to SEK 178m (187). Net gains/losses on financial transactions totalled SEK 80m (79). Net insurance result was SEK -1m (0) and Other income increased to SEK 21m (5). Staff costs rose by 18% to SEK -1,307m (-1,103). In local currency terms, the increase was 21%. The increase was mainly due to annual salary adjustments and a 20% increase in the average number of employees to 993 (828). The increase in the average number of employ- ees was primarily because of the hiring of additional staff in the digital business develop- ment area and within financial crime prevention. Other expense items increased by 10% to SEK -1,432m (-1,298). In local currency terms, the increase was 13%. The increase was mainly due to the aforementioned ongoing investment in strengthening the digital offering and avail- ability for new and existing private customers. Credit losses consisted of net reversals of SEK 72m (37). The credit loss ratio was -0.02% (-0.01). Regulatory fees amounted to SEK -411m (-393), of which the risk tax amounted to SEK -234m (-230) and the resolution fee to SEK -177m (-163). Business development The annual EPSI customer satisfaction survey of the Norwegian banking market once again showed that Handelsbanken’s customers were significantly more satisfied than the sector average. Private customers gave the Bank an index score of 74.9, as compared with the sec- tor average of 66.8. Corporate customers gave the Bank an index score of 70.0, as compared with the sector average of 66.1. The total average volume of lending increased by 6% to NOK 323.8bn (306.3). Household lending increased by 17% to NOK 133.6bn (114.3), and corporate lending decreased by 1% to NOK 190.2bn (192.0). The total average volume of deposits increased marginally to NOK 97.1bn (97.0). Household deposits increased by 28% to NOK 41.5bn (32.4), and corporate deposits decreased by 14% to NOK 55.7bn (64.6). Total assets under management increased to SEK 53bn (42) at the end of the year, of which the managed fund volume increased to SEK 51bn (40). The net flow to the Bank’s mutual funds in Norway amounted to SEK 7.1bn (1.5). 33 Handelsbanken Annual and Sustainability Report 2024 2.2
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The Netherlands The Netherlands Quarterly performance SEK m 2024:4 2024:3 2024:2 2024:1 Total 2024 Total 2023 Change, % Net interest income 493 496 498 480 1,967 1,941 1 Net fee and commission income 60 43 42 43 188 198 -5 Net gains/losses on financial transactions 5 4 3 6 18 17 6 Other income 1 1 0 1 3 1 200 Total income 558 545 544 529 2,176 2,157 1 Staff costs -153 -152 -159 -147 -611 -537 14 Other expenses -30 -31 -43 -41 -145 -136 7 Internal purchased and sold services -85 -79 -81 -77 -322 -277 16 Depreciation, amortisation and impairments of property, equipment and intangible assets -15 -14 -15 -14 -58 -59 -2 Total expenses -283 -276 -298 -279 -1,136 -1,009 13 Profit before credit losses and regulatory fees 276 267 247 250 1,040 1,148 -9 Net credit losses 0 1 0 1 2 13 -85 Gains/losses on disposal of property, equipment and intangible assets Regulatory fees -33 -33 -33 -33 -132 -113 17 Operating profit 243 235 214 218 910 1,048 -13 Profit allocation 0 0 0 0 0 0 0 Operating profit after profit allocation 243 235 214 218 910 1,048 -13 Internal income -50 -43 -18 -41 -152 -98 -55 Cost/income ratio, % 50.7 50.6 54.8 52.7 52.2 46.8 Credit loss ratio, % 0.00 0.00 0.00 0.00 0.00 -0.01 Loans to the public 104,604 100,599 100,330 101,278 104,604 97,110 8 Deposits and borrowing from the public 44,743 42,393 39,658 41,148 44,743 35,945 24 Allocated capital 5,690 5,517 5,334 5,688 5,690 5,177 10 Return on allocated capital, % 13.6 13.5 12.8 12.1 13.0 16.9 Average number of employees 431 430 426 415 425 388 10 Business volumes, The Netherlands Average volumes EUR m 2024 2023 Change, % Loans to the public 8,848 8,664 2 of which households 4,900 4,891 0 of which corporates 3,947 3,773 5 Deposits and borrowing from the public 3,704 3,537 5 of which households 828 679 22 of which corporates 2,876 2,858 1 34 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Financial performance Operating profit decreased by 13% to SEK 910m (1,048). Expressed in local currency, operating profit declined by 13%. Return on allocated capital was 13.0% (16.9), and the C/I ratio was 52.2% (46.8). Income grew by 1% to SEK 2,176m (2,157). Expenses rose by 13% to SEK -1,136m (-1,009). Foreign exchange effects on both income and expenses were marginal. Net interest income increased by 1% to SEK 1,967m (1,941). Foreign exchange effects on net interest income amounted to SEK -7m, and in local currency terms, net interest income rose by 2%. Changed business volumes made a contribution of SEK 66m. The net amount of changed margins and funding costs had an impact of SEK -37m. The day effect made a positive contribution of SEK 2m. Other effects made a contribution of SEK 2m. Net fee and commission income declined by 5% to SEK 188m (198), due entirely to lower performance fees in Optimix, which amounted to SEK 14m (31). Net commission income from the fund management, custody and other asset management fees, including brokerage, de - creased by 3% to SEK 192m (198). Staff costs rose by 14% to SEK -611m (-537). The higher figure was due to annual salary adjustments, a 10% increase in the average number of employees to 425 (388) – due mainly to further recruitments within financial crime prevention – and to the expansion of the business. Other expense items rose by 11% to SEK -525m (-472). The increase was primarily attrib- utable to increased IT development, business growth and general cost inflation in purchased services. Credit losses consisted of net reversals of SEK 2m (13). The credit loss ratio was 0.00% (-0.01). Regulatory fees amounted to SEK -132m (-113), of which the risk tax amounted to SEK -73m (-70) and the resolution fee to SEK -58m (-43). Business development According to the annual EPSI survey of cus- tomer satisfaction in the banking industry, Handelsbanken – similar to previous years – had the most satisfied customers among all the Dutch banks in the survey. Private custom- ers gave Handelsbanken an index score of 78.6, as compared with the sector average of 68.2. Corporate customers gave the Bank an index score of 78.4, as compared with the sector average of 66.2. The total average volume of lending in - creased by 2% to EUR 8.8bn (8.7). Household lending increased marginally to EUR 4.9bn (4.9), while corporate lending increased by 5% to EUR 3.9bn (3.8). The total average volume of deposits in- creased by 5% to EUR 3.7bn (3.5). Household deposits increased by 22% to EUR 0.8bn (0.7), and corporate deposits increased by 1% to EUR 2.9bn (2.9). Assets under management at Optimix, in- cluding the company’s own mutual funds, increased to EUR 2.2bn (2.0) at the end of the period. New savings in Optimix during the year totalled net EUR -47m (-31). 35 Handelsbanken Annual and Sustainability Report 2024 2.2
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Markets Markets Quarterly performance SEK m 2024:4 2024:3 2024:2 2024:1 Total 2024 Total 2023 Change, % Net interest income 8 -9 -5 -11 -17 -50 -66 Net fee and commission income 195 159 126 141 621 592 5 Net gains/losses on financial transactions 327 279 287 327 1,220 1,091 12 Other income 1 1 0 1 3 1 200 Total income 530 430 409 457 1,826 1,634 12 Staff costs -252 -240 -240 -253 -985 -954 3 Other expenses -124 -123 -151 -111 -509 -461 10 Internal purchased and sold services 1 20 52 -1 72 17 324 Depreciation, amortisation and impairments of property, equipment and intangible assets -36 -38 -38 -33 -145 -131 11 Total expenses -411 -380 -378 -398 -1,567 -1,530 2 Profit before credit losses and regulatory fees 119 49 32 59 259 104 149 Net credit losses 0 0 0 Gains/losses on disposal of property, equipment and intangible assets 0 0 Regulatory fees -6 -6 -2 -11 -25 -20 25 Operating profit 113 43 29 49 234 83 182 Profit allocation -118 -112 -97 -96 -423 -421 0 Operating profit after profit allocation -5 -69 -67 -48 -189 -338 -44 Internal income -206 -55 -78 183 -156 667 Cost/income ratio, % 99.8 119.5 121.2 110.2 111.7 126.1 Credit loss ratio, % 0.00 0.00 0.00 Loans to the public 15,335 18,978 13,071 12,436 15,335 12,467 23 Deposits and borrowing from the public 711 34,354 31,415 54,751 711 26,243 -97 Allocated capital 1,831 1,575 1,673 1,495 1,831 1,686 9 Return on allocated capital, % -0.9 -13.9 -12.9 -10.1 -9.1 -17.6 Average number of employees 448 464 486 485 470 479 -2 Financial performance Operating profit increased to SEK 234m (83). Income grew by 12% to SEK 1,826m (1,634). Expenses rose by 2% to SEK -1,567m (-1,530). Net interest income totalled SEK -17m (-50). Net fee and commission income increased by 5% to SEK 621m (592). Net gains/losses on financial transactions increased by 12% to SEK 1220m (1091). Staff costs rose by 3% to SEK -985m (-954), as a result of annual salary adjustments. The average number of employees decreased to 470 (479). Other expense items amounted to SEK -582m (-575). Regulatory fees totalled SEK -25m (-20). 36 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Other units not reported in the business segments Other units not reported in the business segments Quarterly performance SEK m 2024:4 2024:3 2024:2 2024:1 Total 2024 Total 2023 Change, % Net interest income 88 -21 -37 -33 -3 -170 -98 Net fee and commission income 50 66 86 86 288 385 -25 Net gains/losses on financial transactions 524 102 -35 11 602 37 Share of profit of associates and joint ventures -50 3 6 68 27 51 -47 Other income 22 39 20 18 99 94 5 Total income 636 190 38 151 1,015 397 156 Staff costs -1,101 -975 -1,187 -1,165 -4,428 -3,519 26 Other expenses -1,113 -923 -1,052 -1,202 -4,290 -4,446 -4 Internal purchased and sold services 1,792 1,734 1,893 1,985 7,404 7,120 4 Depreciation, amortisation and impairments of property, equipment and intangible assets -115 -138 -135 -132 -520 -457 14 Total expenses -537 -302 -481 -514 -1,834 -1,303 41 Profit before credit losses and regulatory fees 99 -112 -444 -362 -819 -906 -10 Net credit losses 6 6 -2 2 12 3 300 Gains/losses on disposal of property, equipment and intangible assets 0 0 0 0 0 0 Regulatory fees -21 -22 -22 -21 -86 -179 -52 Operating profit 84 -129 -466 -382 -893 -1,082 -17 Profit allocation -7 -22 -9 -20 -58 -83 -30 Operating profit after profit allocation 76 -149 -476 -402 -951 -1,165 -18 Internal income 804 313 375 220 1,712 -768 Loans to the public 20,496 27,055 29,956 27,752 20,496 38,553 -47 Deposits and borrowing from the public 29,671 86,337 115,789 116,815 29,671 31,204 -5 Allocated capital Finland 5,915 6,168 6,143 6,731 5,915 6,904 -14 Average number of employees 2,696 2,706 2,762 2,753 2,729 2,587 5 Below is an account of income and expense items attributable to units not reported in the business seg ments, including the Group’s IT department, pro visions for Oktogonen and central business support units. Financial performance Operating profit improved to SEK -893m (-1,082). Income increased to SEK 1,015m (397). Expenses rose to SEK -1,834m (-1,303). Staff costs rose by 26% to SEK -4,428m (-3,519). The provision for Oktogonen was SEK -255m (-285), of which SEK -159m related to the 2023 accounting year. The rest of the increase was due to an increase in employee numbers, annual salary adjustments and higher expenses for the earning of pensions, which arose due to a lower discount rate at the start of the year compared to the previous year. The average number of employees grew by 5% to 2,729 (2,587), with the number of employees at the Bank’s IT department total- ling 2,008 (1,883). Other expenses fell by 4% to SEK -4,290m (-4,446). Depreciation, amortisation and impairment of property, equipment and intangible assets amounted to SEK -520m (-457). 37 Handelsbanken Annual and Sustainability Report 2024 2.2
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The Handelsbanken share and shareholders The Handelsbanken share and shareholders Handelsbanken’s share has traded on the Stockholm stock exchange since 1871, making the Bank’s share the oldest currently listed on the exchange. There are two classes of Handelsbanken’s share: class A and class B. Class A shares are by far the most common and represent more than 98% of all shares, both in terms of the number of shares and the turnover. Class A shares each carry one vote, while class B shares have one-tenth of a vote. Both classes of share entail the same right to dividends. Each share represents SEK 1.55 of the share capital. At year-end, there were a total of 1,980,028,494 shares (1,980,028,494). The share capital was SEK 3,069 million (3,069). Stock exchange trading Handelsbanken’s share has traded on the Stockholm stock exchange since 1871, and has been traded on several different market places for many years. During the year, Nasdaq Stockholm accounted for 33% of total trading in class A shares and 67% of trading in class B shares. The Chicago Board Options Exchange (Cboe) was largest among other marketplaces, representing 49% of total trading in class A shares, while the London Stock Exchange rep- resented 13%. For many years, the Handels- banken share has been included in numerous sustainability indexes. Dividend Where dividends are concerned, Handels- banken’s policy is that the dividend level must not lead to the capital ratios falling below a level of 1 percentage point above the requirements communicated by the Swedish Financial Supervisory Authority. At the ordinary Annual General Meeting on 20 March 2024, the shareholders resolved to approve the Board’s proposal of a dividend of SEK 13 per share, of which an ordinary dividend of SEK 6.50. The Board proposes that the 2025 AGM resolve on an ordinary dividend of SEK 7.50 per share (6.50), and a special dividend of SEK 7.50 per share (6.50). The complete proposal on share dividends is presented on page 202. Handelsbanken’s shares 2024 2023 2022 2021 2020 Earnings per share, total operations, SEK 13.86 14.70 10.95 9.86 7.87 after dilution 13.86 14.70 10.95 9.86 7.87 Earnings per share, continuing operations, SEK 13.75 14.09 10.81 9.51 7.35 after dilution 13.75 14.09 10.81 9.51 7.35 Earnings per share, discontinued operations, SEK 0.12 0.61 0.14 0.35 0.52 after dilution 0.12 0.61 0.14 0.35 0.52 Ordinary dividend per share, SEK 7.501) 6.50 5.50 5.00 4.10 Total dividend per share, SEK 15.001) 13.00 8.00 5.00 8.42 Dividend growth, ordinary dividend, % 15.41) 18.2 10 22 Price of class A share, 31 December, SEK 114.20 109.45 105.10 97.86 82.60 Price of class B share, 31 December, SEK 148.70 130.20 122.20 107.80 92.20 Highest share price during year, SEK 125.95 112.80 106.45 107.35 112.30 Lowest share price during year, SEK 95.22 84.14 84.46 82.10 72.12 Share price performance, % 4 4 7 18 -18 Total return, % 16 12 13 29 -18 Dividend yield, %2) 13.11) 11.9 7.6 5.1 10.2 Adjusted equity per share, SEK 105.91 103.48 98.14 90.87 84.90 Stock exchange price/equity, % 108 106 107 108 97 Average daily turnover on Nasdaq OMX (no. of shares) Class A 5,101,123 5,395,478 4,249,523 4,150,923 5,225,498 Class B 108,764 154,095 107,544 105,539 120,754 P/E ratio 8.2 7.4 9.6 9.9 10.5 Market capitalisation, SEK bn 227 217 209 194 164 No. of converted shares from the convertible subordinated loan issued in 2014, millions No. of shares as at 31 December, millions 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 Holding of repurchased own shares, millions Holding of own shares in trading book, millions Number of outstanding shares as at 31 December, millions 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 Dilution effect, end of period, millions 0.0 0.0 0.0 0.0 0.0 Number of outstanding shares after dilution, millions 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 Average number of outstanding shares, millions 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 after dilution 1,980.0 1,980.0 1,980.0 1,980.0 1,980.0 1) Dividend as recommended by the Board. 2) Total dividend per share in relation to the share price of the class A share at year-end. 38 Handelsbanken Annual and Sustainability Report 2024 2.2 Introduction Administration report Review of operations Financial statements Sustainability Other
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Creating shareholder value As at 31 December 2024, Handelsbanken’s market capitalisation was SEK 227 billion (217). The market capitalisation thus increased by SEK 10 billion (8) during the year, while the Bank also distributed SEK 25.7 billion (15.8) in dividends. In the past five-year period, Handelsbanken has paid SEK 68 billion in dividends, while the market capitalisation has increased by SEK 27 billion. Share price performance The Swedish stock market (OMX Stockholm 30 index) increased by 4% during the year. The Stockholm stock exchange’s bank index increased by 7%. Handelsbanken’s class A shares closed at SEK 114.20 (109.45), an increase of 4%. Including dividends, the total return was 16%. Repurchase of shares At the AGM in March 2024, the Board received a mandate to repurchase a maximum of 120 million shares during the period until the AGM in March 2025. This mandate was not used in 2024. Ownership structure Over the past five years, the number of share- holders in Handelsbanken has increased from just over to 120,000 to more than 220,000 shareholders. In the same period, the percent- age of foreign ownership in the Bank has de- clined from 48% to 38%. Three -quarters of the owners owned fewer than 1,001 shares. The 1.4% of the shareholders who each owned more than 20,001 shares together hold 88% of the share capital. The largest Swedish shareholders 31 December 2024 Number of shares % of votes % of capital Industrivärden 228,200,000 11.5 11.7 Oktogonen Foundation 159,225,141 8.0 8.2 Lundberg-gruppen 90,575,000 4.6 4.6 Handelsbankens Fonder 44,807,037 2.3 2.3 SEB Fonder 33,034,172 1.7 1.7 Swedbank Robur Fonder 22,476,359 1.1 1.2 J. Wallanders & T. Hedelius stiftelse, T. Browaldhs stiftelse 18,160,000 0.9 0.9 Avanza Fonder 17,312,485 0.9 0.9 Storebrand Fonder (SPP Fonder) 15,211,511 0.8 0.8 Avanza Pension 14,970,737 0.8 0.8 Carnegie Fonder 14,759,996 0.7 0.8 Länsförsäkringar Fonder 14,651,747 0.7 0.8 Första AP-fonden (AP1) 14,461,106 0.7 0.7 Folksam 14,394,159 0.7 0.7 Nordea Fonder 13,105,438 0.7 0.7 Shareholdings per shareholder 31 December 2024 Number of shares Shareholders Number Shareholdings Number of class A shares Number of class B shares % of share capital % of votes 1–500 shares 137,698 15,028,109 4,617,265 1.0 0.8 501–1,000 shares 27,896 17,982,882 3,819,326 1.1 0.9 1,001–5,000 shares 39,863 83,137,999 10,308,844 4.7 4.3 5,001–20,000 shares 11,796 103,091,555 8,068,034 5.6 5.3 20,001–shares 3,016 1,725,536,620 8,437,860 87.6 88.6 Total 220,269 1,944,777,165 35,251,329 100.0 100.0 Shares divided into share classes 31 December 2024 Share class Number % of capital % of votes Average prices/ repurchased amount Share capital Class A 1,944,777,165 98.22 99.82 3,014,404,606 Class B 35,251,329 1.78 0.18 54,639,560 Total 1,980,028,494 100.00 100.00 3,069,044,166 50 75 100 125 150 175 OMX Stockholm / Banks - SS OMX Stockholm 30 SHB A dec -24dec -23dec -22dec -21dec -20dec -19 SHB A OMX Stockholm 30 OMX Stockholm/Banks PI Five-year share price performance Index 100 = 31 December 2019 0 5 10 15 24232221201918171615 Ordinary dividend Special dividend 2024 according to Board proposal. Share dividends in the past 10 years SEK per share 39 Handelsbanken Annual and Sustainability Report 2024 2.2
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2.3 Corporate Governance Report Corporate Governance Report Handelsbanken is a Swedish public limited company whose shares are listed on Nasdaq Stockholm. The Board hereby submits its Corporate Governance Report for 2024. The Corporate Governance Report has been prepared in accordance with the Annual Accounts Act and the Swedish Corporate Governance Code. Handelsbanken applies the Swedish Corporate Governance Code with no deviations. Corporate governance at Handelsbanken Group Corporate governance in the Handelsbanken Group is aimed at creating a clear, fit-for-pur- pose organisational structure which ensures that operations can be carried out in a sound, effective manner and in accordance with exter- nal and internal rules, which facilitates the effective monitoring and management of the risks that arise. A clear allocation of responsi- bilities meets the Bank’s needs as regards internal control, risk control and compliance, and is also key to enabling the operations to be followed up in the best possible manner, from a business perspective. Good gover- nance must run through all operations, and it therefore affects all employees of the Handels- banken Group. At the heart of corporate governance are the goals and steering documents issued by the Board and the Chief Executive Officer. Handelsbanken’s corporate culture, work method and remuneration system are also important for ensuring effective corporate governance, as is the ability to manage any risks that arise in the business operations. Risk management is described in detail in a separate risk section in the Annual Report, note G2 on pages 80–122, in the Bank’s Pillar 3 report, and also briefly in this Corporate Governance Report. The Bank’s goals, mission and culture Handelsbanken’s goal is to have higher profit- ability than the average of peer competitors in its home markets. The Bank’s profitability goal is intended to offer shareholders long-term, high growth in value, with increasing earnings per share over a business cycle. With stable finances, the Bank can also provide support to its customers whatever the prevailing business environment. High profitability and sound, sustainable business operations are critical to shareholders that have invested in the Bank. In addition, these go hand in hand with low funding costs, positive growth and the Bank being seen as an attractive employer. This goal is mainly to be achieved by the Bank having more satisfied customers and lower costs than its competitors. Handelsbanken creates value through unique customer meetings. Through trust in the individual, a strong local commitment and a decentralised way of working, the Bank cre- ates long-term customer relationships. By run- ning the Bank in a responsible and sustainable manner and with stable finances, Handels- banken earns confidence from customers, shareholders and the wider world. Satisfied customers, income growing at a faster rate than expenses, and a low risk tolerance create sustainable profitability and the capacity to grow the Bank’s business and customer offer- ings, regardless of the prevailing business and economic climate. Handelsbanken always considers the situation of the individual customer, regardless of which customer segment the customer belongs to, which channel the customer chooses when dealing with the Bank, or which product the customer needs. Handelsbanken always strives for long-term customer profitability, and the customer’s needs determine what business should be done with the customer, not the products that currently generate the highest profitability. The customer decides which distribution channel is best suited to the situation. The overall customer responsibility always lies with the branch closest to the customer’s geographical location. Handelsbanken’s decentralised approach means that each part of the business opera- tions bears full responsibility for its business, based on the allocation of responsibilities and the directions established in the steering docu- ments. The Bank’s approach is characterised by trust and respect for customers and em- ployees alike. Handelsbanken aims to develop the competency and skills of its employees and create the conditions to encourage long- term employment relations. All operations within the Group shall observe high ethical standards. 40 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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Regulations The operations of Swedish banks are regulated by law, and banking operations may only be run with a licence from the Swedish Financial Supervisory Authority. The regulations for the Bank’s operations are extensive. The most pertinent of these include: • The Swedish Companies Act • The Swedish Banking and Financing Business Act • Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms (CRR) • Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse • The Swedish Credit Institutions and Securities Companies (Special Supervision) Act • The Swedish Money Laundering and Terrorist Financing (Prevention) Act • The Swedish Securities Market Act • Extensive regulation of mutual fund and insurance operations In addition, there are also a number of regula- tions and guidelines as well as general advice of crucial importance from the Swedish Finan- cial Supervisory Authority and other authorities. Handelsbanken’s main principle is that operations outside Sweden are subject both to Swedish regulations and to the host country’s regulations, if these are stricter or require devi- ations from Swedish rules. Handelsbanken applies the Swedish Corpo- rate Governance Code with no deviations. The code is available on the Swedish Corporate Governance Board’s website, bolagsstyrning.se. Handelsbanken also applies internal regula- tions. The steering documents issued by the Board and the Chief Executive Officer state the most important and fundamental principles, and also establish a framework for the Group’s business operations, including the require- ments for ensuring internal control for the busi- ness operations. These steering documents are complemented by other internal rules that provide more detailed instructions and guid- ance on how the business operations are to be conducted. The Board’s policies include: • Policy on governance and steering documents • Credit policy • Policy for risk control • Policy for operational risk • Capital policy • Financial policy • Communication policy • Policy for sustainability • Policy for ethical standards • Policy for management of conflicts of interest • Policy against corruption • Policy for remuneration • Policies for suitability assessment • Policy for group audit operations • Policy for managing and reporting events of material significance • Policy for the use of external auditors • Policy for compliance • Policy for complaints management • Policy for employees’ transactions in financial instruments • Accounting policy • Policy for products and services • Policy on measures against financial crime A summary of the Board’s policies can be found on handelsbanken.com. Certain policies are also available in their entirety on the website. More information More information about Handels banken’s corporate gover - nance is available at handelsbanken. com. The site includes the following information: • Previous Corporate Governance Reports from 2008 onwards • Previous Sustainability Reports from 2010 onwards • Articles of Association • Information about the Nomination committee • Minutes from shareholders’ meetings from 2012 onwards. 41 Handelsbanken Annual and Sustainability Report 2024 2.3
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Corporate governance structure 1. Shareholders and shareholders’ meetings Shareholders exercise their right to decide on matters concerning Handelsbanken at shareholders’ meetings, which are the Bank’s highest decision-making body. Every year, an Annual General Meeting (AGM) is held, which among other things appoints the Board, the Chairman of the Board and auditors. 2. Nomination committee The Nomination committee’s task is to prepare and submit proposals to the AGM regarding the appointment of the Chairman and other members of the Board and fees to the Chair- man and other members of the Board. As pre- scribed by the Swedish Corporate Governance Code, the Nomination committee also submits proposals regarding the appointment of auditors and fees to the auditors. The AGM decides how the Nomination committee will be appointed. 3. External auditors The external auditors are appointed by the AGM for the period until the end of the follow- ing year’s AGM. The auditors are accountable to the shareholders. They carry out an audit and submit an audit report covering matters such as the Annual Report, including this Cor- porate Governance Report, and the adminis- tration of the Board and the Chief Executive Officer. In addition, the auditors report orally and in writing to the Board’s Audit committee concerning how their audit was conducted. The auditors also submit a summary report of their audit to the Board as a whole. 4. The Board The Board is responsible for the Bank’s organi- sation and manages the Bank’s affairs on behalf of its shareholders. The Board must continuously assess the Bank’s financial situa- tion and ensure that the Bank is organised in such a way that the accounting records, management of funds and other aspects of the Bank’s financial circumstances are satisfacto- rily controlled. The Board establishes policies and instructions on how this is to be executed, and establishes rules of procedure for the Board and also an instruction for the Chief Executive Officer. These steering documents state how responsibility and authority are allocated among the Board as a whole, the committees, the Chairman of the Board and the Chief Executive Officer. The appointments made by the Board include the Chief Executive Officer, Executive Vice Presidents, the Chief Risk Offi- cer, the Chief Compliance Officer and the Chief Audit Executive, and the Board also stipulates the employment terms for these persons. The Chairman is responsible for evaluating the Board’s work and informs the Nomination committee of the results of this evaluation. 5. Credit committee 9. UK committee 4. The Board 2. Nomination committee 3. External auditors 11. Chief Executive Officer 1. Shareholders and shareholders’ meetings 6. Audit committee 8. Remuneration committee7. Risk committee Shareholders External auditors Other committees 10. Handelsbanken Internal Audit12. Handelsbanken Risk Control 13. Handelsbanken Compliance Control functions The Board and committees Selects/appoints/initiates Informs/reports 42 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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5. Credit committee The Board has set up a Credit committee which decides on credit cases where the amount exceeds the decision limit that the Board has delegated to another unit. Cases of special importance and credits to Board members and certain persons in managerial positions are decided upon by the Board as a whole. 6. Audit committee The Board’s Audit committee monitors the Bank’s financial reporting by examining important accounting matters and other fac- tors that may affect the qualitative content of the financial reports. The committee also monitors the effectiveness of the Bank’s and Group’s internal control, internal audit and risk management with regard to financial reporting, as well as the external auditors’ impartiality and independence. The committee is also pre- sented with a report on the Group’s work with and reporting on sustainability matters. In addition, the committee evaluates the audit activities and submits a recommendation to the Nomination committee in the matter of the appointment of auditors. The Audit committee also receives reports from the Bank’s internal and external auditors. 7. Risk committee The Board’s Risk committee monitors the effectiveness of the Handelsbanken Group’s risk control and risk management. The com- mittee prepares decisions in the Board regard- ing the Bank’s risk strategy, risk tolerance, etc., and examines reports from Handelsbanken Compliance and Handelsbanken Risk Control. The committee also makes decisions inde- pendently, including decisions on the signifi- cant parts of the Bank’s risk rating and estima- tion processes linked to the IRB approach. 8. Remuneration committee The Board’s Remuneration committee evalu- ates the employment conditions for the Bank’s executive officers in the light of prevailing mar- ket terms. The committee’s tasks also include preparing the Board’s proposals to the AGM concerning guidelines for remuneration to executive officers, monitoring and evaluating the application of these guidelines, and pre- paring the Board’s decisions on remuneration and other terms of employment for, among others, executive officers, as well as for the Chief Audit Executive. The guidelines for re- muneration to executive officers are presented on page 51. The committee also makes an assessment of Handelsbanken’s remuneration policy and remuneration system. 9. UK committee The Board’s UK Committee monitors the operations of Handelsbanken plc. 10. Handelsbanken Internal Audit Handelsbanken Internal Audit performs an independent, impartial audit of the operations and financial reporting of the Group. A key task is to assess and verify processes for risk man- agement, internal control and corporate gover- nance. The Chief Audit Executive is appointed by the Board. 11. Chief Executive Officer The Chief Executive Officer is appointed by the Board to lead Handelsbanken’s day-to-day operations. In addition to instructions from the Board, the Chief Executive Officer is obliged to comply with the provisions of the Swedish Companies Act and a number of other statutes concerning, among other things, the Bank’s accounting, management of funds and opera- tional control. 12. Handelsbanken Risk Control Handelsbanken Risk Control is responsible for verifying that all material risks in the Group are identified and managed by the relevant functions, and for analysing and reporting these risks. The Chief Risk Officer reports directly to the Chief Executive Officer and is the Head of Handelsbanken Risk Control. 13. Handelsbanken Compliance Handelsbanken Compliance is responsible for monitoring and controlling compliance, providing advice and support on measures to be taken by the business in order to ensure compliance, and for the reporting of material deficiencies and risks. The Chief Compliance Officer reports directly to the Chief Executive Officer and is the Head of Handelsbanken Compliance. 43 Handelsbanken Annual and Sustainability Report 2024 2.3
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Shareholders and shareholders’ meetings Shareholder rights At the end of 2024, Handelsbanken had just over 220,000 shareholders. Shareholders’ rights to decide on matters concerning the company’s affairs are exercised at regular shareholders’ meetings, the AGM and extra- ordinary general meetings. Handelsbanken has two classes of shares: class A and class B. Class A shares are by far the most common and represented more than 98 per cent of all shares outstanding at the end of 2024. Class A shares and class B shares entitle holders to the same proportion of the profit. Each class A share entitles the holder to one vote, while each class B share entitles the holder to one- tenth of a vote. A shareholder wishing to have a matter con- sidered by the AGM must submit a written request to the Board, in time for the matter to be included in the notice of the meeting. The Bank’s website, handelsbanken.com, contains information as to when this request must have reached the Board. At the AGM, the Bank’s shareholders make various decisions of major importance to the Bank’s governance. Shareholders’ decisions include: • adopting the income statement and balance sheet • appropriation of profits • discharge from liability for the Board and the Chief Executive Officer for the past financial year • the number of Board members and auditors of the Bank, and the election of Board mem- bers and auditors • determining fees to Board members and auditors • guidelines for remuneration to executive officers. The shareholders at a shareholders’ meeting can also make decisions on the Bank’s Articles of Association. The Articles of Association constitute the fundamental steering document for the Bank. They specify which operations the Bank is to conduct, the limits on the amount of share capital, the right of shareholders to participate at shareholders’ meetings and the items to be presented at the AGM. The Articles of Association also state that the number of Board members must be at least eight and at most 15. They are elected for one year at a time. Information in preparation for meetings is published at handelsbanken.com. Minutes of previous meetings are also available in both Swedish and English. Major shareholders At the end of 2024, the holdings of one share- holder represented more than 10 per cent of the votes: AB Industrivärden, with 11.7 per cent. Detailed information on the Bank’s largest Swedish shareholders can be found on page 39. Annual General Meeting 2024 Handelsbanken’s AGM was held on 20 March 2024. 1,697 shareholders were represented at the meeting. They represented approximately 54.6 per cent of all votes in the Bank. The Chairman of the meeting was lawyer Patrik Marcelius. The decisions made by the shareholders at the meeting included: • An ordinary dividend of SEK 6.50 per share and a special dividend of SEK 6.50 per share, with the remaining amount at the disposal of the meeting to be carried forward. • Authorisation for the Board to decide on the acquisition of not more than 120 million shares in the Bank, as well as divestment of shares. • Authorisation for the Board to decide on the issuance of convertible tier 1 capital instru- ments. • Amendment of the Articles of Association removing the provision on limitation on voting rights. • Amendment to the guidelines for remunera- tion to executive officers. • The Board is to consist of nine members, excluding deputy members. • The re-election of eight Board members and the election of Louise Lindh as new Board member for the period until the conclusion of the next AGM. • The election of Pär Boman as Chairman of the Board. • Fees to be paid to the Board members: SEK 3,900,000 to the Chairman of the Board, SEK 1,110,000 to the Deputy Chair- man, and SEK 795,000 to the other Board members. For committee work, fees of SEK 475,000 are to be paid to each member of the Credit committee, the Risk committee and the Audit committee, fees of 450,000 are to be paid to each member of the UK committee, and fees of SEK 140,000 are to be paid to each member of the Remunera- tion committee. Furthermore, it was decided that the fee of SEK 600,000 would be paid to the Chair of the Risk committee and the Audit committee, that SEK 140,000 would be paid to the Chair of the Remuneration committee, that SEK 540,000 would be paid to the Chair of the Credit committee, and that SEK 510,000 would be paid to the Chair of the UK committee. Board members who are employees of Handelsbanken shall not receive a fee. • The AGM re-elected Pricewaterhouse- Coopers AB and Deloitte AB to serve as auditors until the end of the AGM to be held in 2025. Auditors Magnus Svensson Henryson has been an authorised public accountant since 2001 and has been the auditor-in-charge for Pricewater- houseCoopers AB at Handelsbanken since 2024. Magnus Svensson Henryson is also an auditor for Bure Equity, Embracer, Holmen, L E Lundbergföretagen and Hufvudstaden. Magnus Svensson Henryson was born in 1969. Malin Lüning has been an authorised public accountant since 2008 and has been auditor- in-charge for Deloitte AB at Handelsbanken since 2023. She is also an auditor for SBAB and Söderberg & Partners. Malin Lüning was born in 1980. Nomination committee The shareholders at the 2022 AGM resolved to establish an instruction for how the Nomina- tion committee is to be appointed. According to the decision, the instruction will apply until it 0 400 800 1,200 1,600 2,000 202420232022202120202019 0 20 40 60 80 100 No. of shareholders present/represented Proportion of votes Attendance at AGMs 2019–2024 Number % 44 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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is amended by a future AGM. The instruction states that the Nomination committee shall comprise five members: the Chairman of the Board and one representative from each of the Bank’s four largest shareholders on 31 August the year before the AGM is held. However, the Nomination committee must not include representatives of companies which are significant competitors of the Bank in any of its main areas of operations. It is the Chairman of the Board’s task to contact the largest owners, so that they will appoint one representative each to sit on the Nomination committee, together with the Chairman. The 2025 Nomination committee comprises: Representative Shareholders Voting power %, 31 August 2024 Helena Stjernholm, Chair Industrivärden 11.71 Maria Sjöstedt Oktogonen Foundation 8.17 Claes Boustedt Lundberg ownership group 4.65 Anna Magnusson Första AP-fonden (AP1) 0.72 Pär Boman, Board Chairman Information on the composition of the Nomina- tion committee has been available at handels- banken.com since 19 September 2024. The Nomination committee’s task in prepa- ration for the AGM on 26 March 2025 is to submit proposals for the election of a chairman of the AGM, the Chairman of the Board and other members of the Board, the fees to the Chairman and other members of the Board, and remuneration for committee work. The Nomination committee is also to submit pro- posals regarding the election of and fees to auditors. In its work, the Nomination committee takes into account the Board’s diversity policy. The policy stipulates that to promote independent opinions and critical questioning, it is desirable that the Board should be characterised by appropriate diversity and breadth in terms of its members’ qualifications, experience and background and an even gender balance. When formulating its proposal to the AGM, the Nomination committee considers relevant parts of the Board’s policy regarding the suit- ability assessment of Board members and the Chief Executive Officer. In compiling the pro- posal, the Nomination committee also consid- ers the evaluation of the Board carried out by the Chairman of the Board. Board After the shareholders at the 2024 AGM had appointed Pär Boman to be Chairman of the Board, Fredrik Lundberg was appointed as Deputy Chairman at the first Board meeting after the AGM. At the same time, the Board appointed members of the Credit committee, Audit committee, Risk committee, Remunera- tion committee and UK committee. Information about the Board is shown on pages 54–56. Composition of the Board The Board was composed of nine elected members during the 2024 financial year. When the Board is to be elected, the Nomination committee proposes members. The Board also includes two members and two deputy mem- bers who are employee representatives, in accordance with applicable legislation. The Board members have broad and exten- sive experience from the business community. Several are, or have been, chief executive officers of major companies, and most of them are also board members of major com- panies. Several members have worked on the Bank’s Board for a long time and are very familiar with the Bank’s operations. The Nomination committee’s proposals at previous AGMs, including their reasons, are available at handelsbanken.com. Suitability assessments of individual Board members are undertaken, and of the Board as a whole. The suitability assessment of the Board is carried out at least annually, as well as prior to changes in the composition of the Board, or when it is otherwise deemed neces- sary. This ensures that the Board has the knowledge, skills and experience required to fulfil its duties, which include establishing strategies and risk tolerances, and under- standing and challenging decisions and pro- posals by executive management on the basis of their consequences. During the 2024 financial year, the percent- age of women on the Board of the Bank was 44 per cent of the elected members, and the percentage of the elected members with a dif- ferent geographical origin than the country where Handelsbanken is domiciled was 11 per cent. The proportion of elected members who were independent of the Bank, its manage- ment and major shareholders was 78 per cent. The Swedish Corporate Governance Code stipulates that the majority of Board members elected by the AGM must be independent of the Bank and the Bank’s management, and that at least two of the independent Board members must also be independent of those of the company’s shareholders that control 10 per cent or more of the shares and votes in the Bank. The composition of the Board fulfils the Code’s requirements for independence. Regulations governing the Board’s work The fundamental rules regarding the distribu- tion of tasks among the Board, the Board committees, the Chairman, the Chief Executive Officer and Handelsbanken Internal Audit are in accordance with the Swedish Companies Act and the Swedish Corporate Governance Code, and are expressed in the Board’s rules of procedure, as well as in its instructions to the Chief Executive Officer and to the Chief Audit Executive. Chairman of the Board The Board’s rules of procedure state that the Chairman shall ensure that the Board carries out its work efficiently and that it fulfils its duties. This involves organising and managing the Board’s work and creating the best possi- ble conditions for this work. The Chairman must also ensure that the Board members continually update and expand their knowl- edge of the Bank’s operations, and that new members receive appropriate introduction and training. The Chairman must be available to the Chief Executive Officer as an advisor and discussion partner, but must also prepare the Board’s evaluation of the Chief Executive Officer’s work. The Chairman’s duties include being chair of the Credit committee, Remuneration com- mittee and UK committee, as well as being a member of the Audit committee and Risk com- mittee. The Chairman is responsible for ensur- ing that the Board’s work is evaluated annually. The 2024 Board evaluation took place via questionnaires and by the Chairman holding interviews with each Board member. The Dep- uty Chairman was responsible for the evalua- tion of the Chairman. The findings of the evalu- ation were presented to and discussed by the Board. The Chairman also informed the Nomi- nation committee about the Board evaluation. The Chairman is responsible for maintaining contact with the major shareholders concern- ing ownership matters. There is no other regular division of work for the Board except as concerns the committees. Board work The Board is the company’s highest adminis- trative body and is responsible for establishing the overall goals and strategy of the company. 45 Handelsbanken Annual and Sustainability Report 2024 2.3
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Summary of focus areas in the Board’s committees (excluding the Credit committee) Committee Members Duties Other focus areas in 2024 Audit committee Ulf Riese (Chair) Jon Fredrik Baksaas Hans Biörck Pär Boman The work of the Audit committee includes the following: • monitoring the financial reporting, as well as the effectiveness of the Bank’s internal control, internal audit and risk management systems in relation to financial reporting • providing recommendations and proposals concerning the financial reporting • preparing the Board’s decision regarding an audit plan for the work of Handelsbanken Internal Audit and taking into account reports from Handelsbanken Internal Audit • having regular contact with the external auditors. These auditors report to the committee on significant matters that have emerged from the statutory audit • keeping up to date with the audit of the Annual Report and consolidated accounts and the Swedish Supervisory Board of Public Accountants’ quality control • assisting the Nomination committee in the matter of proposing auditors and thereafter submitting a recommendation regarding the election of auditors • informing the Board of the results of the audit and of the manner in which the audit has contributed to the reliability of the financial reports • monitoring and verifying the external auditors’ impartiality and independence, with a particular focus on whether the auditors provide any services other than auditing to the company • receiving reports on the Group’s work as well as reports on sustainability matters • receiving reports on productivity measures and so forth for material products and processes as well as performance targets and control systems relating to major IT investments. All interim reports and year-end reports are reviewed by the Audit committee. Items are presented by the Chief Executive Officer, the Chief Financial Officer, the Chief Audit Executive and the persons with main responsibility from the audit companies appointed by the AGM. The members of the committee can also ask questions to the Chief Audit Executive and external auditors when members of Bank management are not present. The Board’s report on internal control over financial reporting can be found on page 52. During the year, the Audit com- mittee engaged in its usual work relating to financial reporting, auditing, etc. The Committee also addressed matters relating to management changes and the Bank’s sustainability agenda and alignment with CSRD. Risk committee Kerstin Hessius (Chair) Hans Biörck Pär Boman Ulf Riese Hélène Barnekow The work of the Risk committee includes the following: • processing reports from the Chief Risk Officer (CRO) and Chief Compliance Officer • preparing the Board’s decisions regarding the establishment of the internal capital adequacy and liquidity adequacy assessment • processing the validation and evaluation of the internal risk rating system • preparing the Board’s decisions regarding risk tolerance and risk strategy • processing the evaluation of the risk calculation methods used for limiting financial risks, calculating capital requirements and calculating economic capital • preparing the Board’s decisions regarding the establishment of Handelsbanken’s recovery plan. The Chief Risk Officer and Chief Compliance Officer present their reports to the Risk committee. The members of the committee can also ask questions to the Chief Risk Officer and Chief Compliance Officer when members of Bank management are not pres- ent. The Bank’s Chief Executive Officer and Chief Financial Officer also attend meetings of the Risk committee. The three lines of defence for risk management are described on pages 48–49. During the year, the Risk committee regularly addressed matters relating to risk tolerance, including credit risk, counterparty risk and liquidity risk, as well as the development of the Bank’s IRB models. In addition, the committee discussed risk and compliance issues linked to, among other things, IT security, the Digital Operational Resilience Act (DORA) and operational risks, and anti-money laundering work. The committee also dis cussed the economic conditions and their effects on the Bank’s business operations and its risks. Remuneration committee Pär Boman (Chair) Jon Fredrik Baksaas Hans Biörck The tasks of the Remuneration committee include making an independent assessment of Handelsbanken’s remuneration policy and remuneration system. In addition, the Remuneration committee prepares matters regarding remuneration to be decided on by the Board and the AGM. After the shareholders at the AGM have decided on guidelines for remuneration to executive officers, the Board decides on remuneration to, among others, these officers and the heads of the control functions: Handelsbanken Internal Audit, Handelsbanken Risk Control and Handelsbanken Compliance. Each year, the Remuneration committee evaluates Handelsbanken’s guidelines as well as its remuneration structures and levels in accordance with the Swedish Corporate Governance Code. The Board’s remuneration report is available at handelsbanken.com. The Remuneration committee has engaged in its usual work concerning matters relating to remuneration. In addition, the committee has addressed cases involving the appointment of senior managers. UK committee Pär Boman (Chair) Ulf Riese Michael Green Carl Cederschiöld Every quarter, the committee for UK operations receives information about the performance and position of the UK operations, and every year, information about the business plan for the UK operations, etc. The UK committee has followed the operations of Handelsbanken plc, in terms of its financial reporting and its business situation. 46 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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The Board addresses many important matters during the year as part of carrying out its duties. This includes regularly occurring items to ensure sound risk management and reliable financial reporting. Other matters resulting from external regulatory requirements are also addressed, for example, adopting the Bank’s internal capital adequacy and liquidity adequacy assessment (ICAAP/ILAAP) and recovery plan. The Board receives and examines the quarterly reporting from the company’s control func- tions. This is an important part of the Board’s control and overall efforts to ensure that the company is managed responsibly based on sound risk-taking and a high level of compli- ance. In addition, the Board addresses regu- larly occurring items such as the Bank’s credit risks and credit losses, capital assessments, IT systems, IT security, audits, sustainability and the Bank’s work on anti-money laundering and combating fraud. Furthermore, matters dis- cussed at Remuneration, Risk and Audit com- mittee meetings are reported at the next Board meeting. At the first Board meeting after the AGM, the Board appoints a Deputy Chairman and the members and Chairs of its various Board committees. At this meeting, the Board also adopts the policies and other internal steering documents that regulate governance and internal control at the Bank. The Board had 12 meetings in 2024, includ- ing two extended strategy meetings. Committee work Credit committee The Credit committee consisted of the Chair- man of the Board (Pär Boman, who also chairs the committee), the Deputy Chairman (Fredrik Lundberg), the Chief Executive Officer (Michael Green), the Chief Credit Officer (Per Beckman), and six Board members appointed by the Board (Jon Fredrik Baksaas, Stina Bergfors, Hans Biörck, Kerstin Hessius, Ulf Riese and Louise Lindh). The Credit committee normally holds one meeting every month to take decisions on credit cases that exceed a set limit and that are not decided on by the whole Board due to the importance of these cases or legal require- ments. The Country General Managers and County Managers, and the Head of Handels- banken Global Banking presented cases to the Credit committee from their own units in 2024 and participated when other cases were pre- sented, with the objective of providing them with a good picture of the Board’s approach to risk. Credit cases that are decided upon by the whole Board are presented by the Chief Credit Officer. If a delay in the credit decision would inconvenience the Bank or the borrower, the credit instructions allow the Chief Execu- tive Officer and the Chief Credit Officer to decide on credit cases during the interval between Credit committee meetings. In 2024, the Credit committee had ten meetings. Audit committee The Audit committee comprised the Chairman of the Board (Pär Boman) and three Board members appointed by the Board (Jon Fredrik Baksaas, Hans Biörck and Ulf Riese). The latter members are independent of major sharehold- ers, and of the Bank and its management. Ulf Riese was appointed to chair the committee. In 2024, the Audit committee had nine meetings. Risk committee The Risk committee comprised the Chairman of the Board (Pär Boman) and four Board members appointed by the Board (Hans Biörck, Kerstin Hessius, Ulf Riese and Hélène Barnekow). The latter members are indepen- dent of major shareholders, and of the Bank and its management. Kerstin Hessius was appointed to chair the committee. In 2024, the Risk committee had nine meetings. Remuneration committee The Remuneration committee comprised the Chairman of the Board (Pär Boman, who also chairs the committee) and two Board members appointed by the Board (Jon Fredrik Baksaas and Hans Biörck). The latter members are independent of the Bank, its management, and major shareholders. In 2024, the Remuneration committee had eight meetings. UK committee The UK committee comprised the Chairman of the Board, (Pär Boman, who also chairs the committee), the Chief Executive Officer (Michael Green), the Chief Financial Officer (Carl Cederschiöld) and a member appointed by the Board (Ulf Riese). In 2024, the UK committee had four meetings. The Bank’s management Chief Executive Officer During the 2024 financial year, Michael Green served as the Chief Executive Officer and President of Handelsbanken. Michael Green was born in 1966 and his academic qualifica- tions include studies in business administra- tion, economics and law. Michael Green joined the Gothenburg branch of the Bank as a cor- porate advisor in 1994 and he subsequently served in various roles, such as the Head of the US operations, Head of Handelsbanken in Western Sweden and Head of Capital Markets. In 2020, Michael Green was appointed General Manager of Handelsbanken Sweden. Along- side his employment at Handelsbanken, Michael Green is also a board member of the Stockholm Chamber of Commerce, ICC Sweden and Finance Sweden. On 31 Decem- ber 2024, Michael Green’s shareholdings in Handelsbanken and those of related parties amounted to 111,405, of which 85,000 class A shares in direct holdings and 26,405 in indirect holdings via the Oktogonen profit-sharing scheme. Neither Michael Green nor his related parties has any material shareholdings or other ownership interests in companies with which the Bank has significant business relationships. Decision-making process As a general rule, responsibilities and powers of authority at Handelsbanken under the Chief Executive Officer have been assigned to indi- vidual members of staff, rather than groups or committees. However, collective decisions are made, in the form of credit decisions made in Credit committees and the national boards. It is required that the members are unanimous regarding these decisions. Chief Executive Officer’s forum The Chief Executive Officer has several forums at his disposal to address various matters, in- cluding the Executive Team and the Risk and Compliance committee. Executive Team On 1 April 2024, Handelsbanken adopted a new management structure with an Executive Team that replaced the previous Executive Management to coordinate the strategic gov- ernance of the Group on an ongoing basis, and address operational Group-wide issues and other critical matters from a Group perspective. Before decisions are made on such matters by the Chief Executive Officer or other officers, 47 Handelsbanken Annual and Sustainability Report 2024 2.3
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these are, as a general rule, discussed by the Executive Team. For more information on the members of the Executive Team and former executive management, refer to page 57. The Risk and Compliance committee The Risk and Compliance committee has been set up by the Chief Executive Officer for follow-up of risk management within several areas and for in-depth discussions regarding the Bank’s overall risk situation prior to such matters being addressed by the Risk commit- tee and the Board. In addition to the Chief Executive Officer, the Risk and Compliance committee comprises, among others, the heads of business support units and control functions. Operational structure Handelsbanken’s overall organisational struc- ture follows a geographical governance model. The Bank has long employed decentralised working methods, with important business decisions made locally close to the customer. Customer responsibility is geographical, meaning that all of the Group’s customers are affiliated with a physical branch, regardless of which products or services the customer needs, or which channels the customer chooses. The Handelsbanken Group’s home markets are Sweden, Norway, the UK and the Nether- lands, but the Group also has business opera- tions in other markets. Outside Sweden, oper- ations are mainly conducted via international branches, except in the UK, where the Bank has a subsidiary for its British operations. In 2021, the decision was made to initiate a process to divest the operations in Finland. In 2023, an agreement was signed to sell the Finnish private, SME and life insurance opera- tions. These transactions were completed in 2024. Handelsbanken’s remaining operations in Finland are being handled in a separate sales process. The starting point is that Country General Managers have overall responsibility for the Bank’s activities in their respective countries. This responsibility includes a distribution responsibility for products and services, as well as a customer responsibility. The Chief Executive Officer has corresponding responsi- bility for operations in Sweden. Business operations in the countries are supported by a number of units with Group- wide responsibility. Product managers constitute central busi- ness support for a given product area. Product responsibility includes, according to a Group- wide approval process, developing, managing and phasing out products and services, as well as coordinating and supporting the distribution of the products and services. Function managers have Group-wide respon- sibility for a given area. Function responsibility includes ensuring that work within the area functions well and is conducted in accordance with internal and external rules and regulations. The responsibility also includes providing guid- ance and support relating to the area. Three lines of defence for risk management Handelsbanken has three lines of defence for risk management, follow-up and internal Chief Executive Officer Selects/appoints/initiates Informs/reports Control functions Handelsbanken Internal Audit Handelsbanken Risk Control Handelsbanken Compliance Handelsbanken Global Banking Handelsbanken Netherlands Handelsbanken Norway Handelsbanken UK Swedish Branch Network Handelsbanken HR Handelsbanken Foundations and Publishing Handelsbanken Finance Handelsbanken Credit Handelsbanken Communication Handelsbanken Sustainability Handelsbanken Savings and Financing Handelsbanken Operations Handelsbanken Markets Handelsbanken Legal Business support units Business-operating units The Board Handelsbanken IT 48 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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control of the Bank’s risks. These are described in more detail below. First line of defence The business operations and the units that support the business operations constitute the first line of defence, with responsibility for managing and restricting the risks facing the business in accordance with external and internal rules. Responsibility for ensuring that the appropriate procedures, systems and pro- cesses are in place such that the operations can be conducted in accordance with external and internal rules regarding internal control, risk control and regulatory compliance in each respective unit has been delegated by the Chief Executive Officer to managers who report directly to the Chief Executive Officer. In turn, these managers may delegate opera- tional responsibility for meeting these require- ments to managers who report to them. Among other things, this responsibility means that fit- for-purpose instructions and procedures for the operation must be in place, and compli- ance with these procedures must be monitored regularly. Thus, internal control, risk control and compliance are integral parts of managers’ responsibility at all levels in the Bank. Second line of defence The Handelsbanken Risk Control and Handels- banken Compliance control functions consti- tute the second line of defence. Both functions are independent and organisationally separated from the activities they monitor and control. Handelsbanken Compliance Handelsbanken Compliance identifies, moni- tors, controls and reports on compliance risks within the Group. This includes controlling and assessing the suitability and effectiveness of the procedures in place and actions taken to minimise the risk of non-compliance with applicable rules. In addition, Handelsbanken Compliance provides advice and support about compliance to employees, the Chief Executive Officer and the Board, and continu- ally informs the units concerned about the risks which may arise in the operations due to non-compliance. Handelsbanken Compliance also monitors the risk level relative to the risk tolerance for compliance risks established by the Board. The function includes the Appointed Officer for Controlling and Reporting Obligations according to the applicable money laundering and terrorist financing regulations, and the Data Protection Officer (DPO) according to the applicable regulations on data protection and personal data processing. The Chief Compliance Officer is appointed by the Board and reports directly and regularly to the Chief Executive Officer on matters regarding compliance in the Group, as well as quarterly to the Risk committee and the Board. This includes the report from the Appointed Officer regarding risks linked to financial crime, as well as the report from the DPO on data protection risks. Handelsbanken Risk Control Handelsbanken Risk Control identifies, mea- sures, analyses and reports all the Group’s material risks. This includes monitoring and checking the Group’s risk management and assessing that Handelsbanken’s risk manage- ment framework is efficient and fit-for-purpose. Handelsbanken Risk Control also checks that the risks and risk management comply with the Bank’s risk strategy, and fall within the risk tolerance established by the Board. The Chief Risk Officer is appointed by the Board and reports directly and regularly to the Chief Executive Officer and the Board. In 2024, the Chief Risk Officer attended all meetings of the Risk committee and most meetings of the Board and the Board’s Credit Committee. A more detailed description of the Bank’s risk management and control is contained in note G2 on pages 80–122, and also in the Bank’s Pillar 3 Report. Third line of defence The third line of defence is Handelsbanken Internal Audit, the Board’s controlling body. The Chief Audit Executive is appointed by and reports to the Board. Handelsbanken Internal Audit is tasked with performing an independent, impartial audit of the operations and financial reporting of the Group. This includes assessing, evaluating and verifying processes for risk management, inter- nal control and corporate governance. The assignment is based on a policy established by the Board and is performed on the basis of a risk-based methodology in accordance with internationally accepted standards issued by the Institute of Internal Auditors (IIA). The planned auditing activities are documented every year in an audit plan which is established by the Board. Handelsbanken Internal Audit’s conclusions, the actions to be taken and their status are reported regularly to the Audit com- mittee and every year to the Board as a whole. The Chief Audit Executive is also a recipient of reports made via Handelsbanken’s separate system for whistleblowing. Handelsbanken Internal Audit is regularly sub- ject to independent external quality reviews. In addition, the Bank’s external auditors perform an annual quality review of the work of Handels- banken Internal Audit. Principles for remuneration at Handelsbanken The remuneration policy establishes the Bank’s principles for remuneration to employees. The policy stipulates that Handelsbanken’s remu- neration system must be fit-for-purpose and consistent with the Bank’s business objectives and business culture, which are based on sound, sustainable operations, in which employees observe high ethical standards, good administrative order and regulatory com- pliance. Remuneration must also be structured in a manner that promotes a healthy and effi- cient management of sustainability risks. Remuneration must be on market terms, ena- bling Handelsbanken to attract, recruit, retain and develop skilled staff, and ensuring good management succession, thus contributing to the achievement of the Handelsbanken Group’s corporate goal. In general, Handelsbanken has low tolerance of risk and holds the opinion that fixed remuneration contributes to healthy operations. This is, therefore, the main princi- ple. The Bank’s executive officers and employ- ees who make decisions on credits or limits, or who work at the Bank’s control functions, are paid fixed remuneration together with the possibility of further remuneration from the Oktogonen profit-sharing scheme. This also applies to employees who are assessed as having a material impact on the Bank’s risk profile, called “risk-takers” in the Bank. The main principle of the remuneration policy is that remuneration is paid in the form of fixed remuneration. However, the policy allows for variable remuneration to be paid. The Board decides on the total amount. In certain countries, Handelsbanken is party to collective bargaining agreements on general terms and conditions of employment and con- ditions for pensions. The policy does not affect rights and obligations under collective bargain- ing agreements; nor does it affect obligations under applicable contract law or labour law. Handelsbanken HR is responsible for verifying that remuneration in Handelsbanken is compliant with external and internal rules. The independent control functions monitor and analyse the remuneration system and report 49 Handelsbanken Annual and Sustainability Report 2024 2.3
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material risks and flaws to the Board’s Remu- neration and Risk committees. A detailed description of fixed and variable remuneration at Handelsbanken is given below. Other information concerning remuneration paid by the Bank in accordance with the current regulations is presented in note G8 on pages 126–131, and in the Bank’s remuneration report which is available at handelsbanken.com. This note and the Remuneration Report also pro- vide information about amounts for salaries, pensions and other benefits, and loans to executive officers. Fixed remuneration The Bank takes a long-term view of its staff’s employment. Remuneration for work per- formed is set individually for each employee, and is paid in the form of a fixed salary, cus- tomary salary benefits and pension. The main principle is that salaries are set locally in salary reviews between employees and their line manager. These principles have been applied for many years with great suc- cess. They mean that managers at all levels participate regularly in the salary process, and take responsibility for the Bank’s salary policy and the growth in their own unit’s staff costs. Salaries are based on factors known in advance: the nature and level of difficulty of the work, competency and skills, work perfor- mance and results achieved, leadership, and being a cultural ambassador for the Bank. In Sweden and certain other countries, the Bank is party to collective bargaining agree- ments on general terms and conditions of employment during the employment period and on terms and conditions of pensions after employees have reached retirement age. The aim of the Bank’s policy on salaries is to increase the Bank’s competitiveness and profitability, to enable the Bank to attract, recruit, retain and develop skilled staff, and to ensure good management succession plan- ning. Good profitability and productivity per- formance at the Bank creates the necessary conditions for salary growth for the Bank’s employees. Variable remuneration The Oktogonen profit-sharing scheme covers all employees in the Handelsbanken Group. The provision is classified as variable remuner- ation and is based on profitability metrics linked to Handelsbanken’s corporate goals being met and the Board’s overall assessment regarding the Bank’s performance. Disburse- ments are mainly made in cash to the employ- ees, or alternatively to a pension plan, a savings plan or a combination of the two. Performance-based variable remuneration is applied with great caution and to a very limited extent. It is only offered to employees in the Capital Markets business area and in mutual fund and asset management operations. In these operations, performance-based variable remuneration may only be paid to employees at units whose profits derive from commis- sions or intermediary transactions that take place without the Bank being subject to credit risk, market risk or liquidity risk. Performance- based variable remuneration is not offered to employees who, in their professional roles, have a material impact on the Bank’s risk pro- file. 1.1 per cent of the Group’s employees are eligible to receive performance-based variable remuneration. The total amount reserved for performance-based variable remuneration to employees in the Handelsbanken Group must not exceed 0.4 per cent of the Bank’s common equity tier 1 capital during any given year. For 2024, a total of SEK 49 million was allocated for performance-based variable remuneration, corresponding to approximately 0.4 per cent of total salaries and approximately 0.03 per cent of the Bank’s common equity tier 1 capital. Performance-based variable remuneration is based on Handelsbanken’s factors for setting salaries and it must be designed so that it does not encourage unhealthy risk-taking. The financial result on which the performance -based variable remuneration is based is adjusted for risk and charged with the actual cost of the capital and liquidity required by the operations. Normally, performance-based variable remu- neration is only paid in cash. In subsidiaries which conduct mutual fund operations and in Handelsbanken Wealth & Asset Management Ltd, the performance-based variable remuner- ation is entirely or partially paid out as mutual fund units. The main rule for performance-based vari- able remuneration is that at least 40 per cent is to be deferred for at least four years. For par- ticularly large amounts of performance-based variable remuneration, 60 per cent is deferred. Payment and the right of ownership of the vari- able remuneration do not accrue to the person with the entitlement until after the end of the deferment period. Deferred variable remunera- tion can be removed or reduced if losses, increased risks or increased expenses arise during the deferment period, or if payment is deemed to be unjustifiable in view of the Bank’s financial situation. Employees may not receive performance-based variable remuner- ation amounting to more than 100 per cent of their fixed remuneration. Handelsbanken complies with the Swedish Financial Supervisory Authority’s regulations regarding remuneration structures, which include provisions for formulating and adopt- ing remuneration policies. The heads of the areas concerned, as well as the Chief Risk Officer and Chief Compliance Officer, take part in the Remuneration committee’s preparation and assessment of the Board’s remuneration policy and the Bank’s remuneration system. Remuneration to executive officers The shareholders at the AGM decide on guide- lines for remuneration to the Chief Executive Officer, Executive Vice Presidents and other members of the Executive Team. The Board decides on remuneration to the officers who are subject to the Annual General Meeting’s (AGM) remuneration guidelines (a total of nine individuals as at 31 December 2024). The Board also decides on remunera- tion to the Chief Audit Executive, among others. Executive officers in Handelsbanken are Board members, the Chief Executive Officer, Executive Vice Presidents, and other members of the Executive Team. 50 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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Guidelines for remuneration to executive officers of Svenska Handelsbanken AB These guidelines shall be applied to remu- neration to the Chief Executive Officer, Exec- utive Vice President, and other members of the Executive Team (below referred to as “executive officers”). The guidelines shall also apply to any remuneration to members of the Board which is paid in addition to fees for assignment to the Board of the Bank. The guidelines shall be applied to new agreements, and shall not affect remunera- tion previously decided for executive offi- cers. The guidelines are not applicable to remuneration that is decided upon by the annual general meeting. Handelsbanken’s goal is to have higher profitability than the average of peer com- petitors in its home markets. This goal is mainly to be achieved by more satisfied cus- tomers and lower costs than its competitors. Handelsbanken’s business strategy is pre- sented in the Annual Report. To contribute to the Bank’s goal; remuneration must reflect a long-term view of employment at the Bank, and also be in keeping with the Bank’s gen- erally low risk tolerance. Principles for remuneration to employees of Handelsbanken Handelsbanken’s principles for remuneration to employees are long-established. In the pol- icy for remuneration in the Handelsbanken Group, the Board has established that the Bank’s remuneration system must be consis- tent with the Bank’s business objectives and business culture, which are based on sound, sustainable operations. In addition, the remuneration policy states that fixed remuneration is fit-for-purpose for sound, sustainable operations, and is there- fore applied as a basic principle. Variable remuneration is applied with great caution. Remuneration for work performed is set indi- vidually for each employee, and is paid in the form of a fixed salary, pension allocation and customary salary benefits (which can take the form of a car allowance, housing associated with the position, disability insurance, house- hold assistance services, etc.). Salaries are based on factors known in advance, such as those set out in the remuneration policy. Taking into account the above approach, an employee’s total remuneration must be on market terms and gender-neutral, enabling Handelsbanken to attract, recruit, retain and develop skilled employees, and ensuring good management succession. Remuneration to executive officers In the preparation of the Board’s proposals for these guidelines, Handelsbanken’s remu- neration policy and the above principles for remuneration to employees have been taken into account; this contributes to the Bank’s business strategy, long-term interests and sustainability: • The aggregated total remuneration shall be on market terms. • Remuneration is paid in the form of a fixed cash salary, pension provision and cus- tomary benefits. • The executive officers in question are included in the Oktogonen profit-sharing system on the same terms as all employ- ees of the Bank. • Pension benefits are defined contribution, may correspond to a maximum of 35 per cent of the annual fixed cash salary, and may be payable in addition to pension plans under collective agreements. Other salary benefits may per year in total corre- spond to a maximum of 35 per cent of the annual fixed salary. • Employment contracts are to apply until further notice or for a fixed term. The period of notice on the part of an execu- tive officer is six months, and on the part of Handelsbanken a maximum of twelve months. If the Bank terminates the employment contract later than five years after the person becomes one of the Bank’s executive officers, the period of notice is a maximum of twenty-four months. No other termination benefits are paid. Other time periods may apply due to col- lective agreements or labour legislation. Concerning employment conditions that are subject to non-Swedish regulations: with regard to pension benefits and other bene- fits, the relevant adjustments may be made to comply with such mandatory regulations or fixed local practice. In doing this, the overall aims of these guidelines shall be ful- filled as far as possible. Fees to Board members Members of the Board who are elected by the general meeting shall in special circum- stances be able to be compensated for ser- vices provided within their respective area of competence (including assignments to the board of another group company) which do not constitute services to the Board of the Bank. Such duties of service shall be han- dled in accordance with applicable internal rules and by due consideration of possible conflicts of interest. These services shall be compensated for by market-based remuner- ation. Information about any remuneration for such services shall be included in the annual report and the remuneration report. Decision process The Board has set up a remuneration com- mittee. The committee’s tasks include pre- paring the Board’s proposals concerning guidelines for remuneration to executive offi- cers. When the need for material changes arises – and at least every four years – the Board shall draw up a proposal for new guidelines and present it for a resolution at the annual general meeting. The guidelines shall apply until new guidelines have been adopted by the annual general meeting. The remuneration committee must also monitor and evaluate the application of the guide- lines for remuneration for executive officers, as well as the prevailing structures and levels of remuneration at the Bank. All members of the remuneration committee are indepen- dent of the Bank and its management. The Chief Executive Officer also attends the committee’s meetings, although not when the committee is discussing and deciding upon remuneration-related matters that concern the Chief Executive Officer himself/ herself. Deviation from the guidelines The Board may decide, temporarily, to deviate partly or wholly from the guidelines, if there are particular reasons for this in an individual case, and a deviation is necessary to satisfy the Bank’s long-term interests and sustainability, or to ensure the Bank’s finan- cial viability. As stated above, preparing the Board’s resolutions in matters of remunera- tion is part of the remuneration committee’s tasks, and this includes decisions regarding deviations from the guidelines. The guidelines adopted by the AGM on 20 March 2024 are presented below. 51 Handelsbanken Annual and Sustainability Report 2024 2.3
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The Board’s report on internal control over financial reporting The presentation of Handelsbanken’s process for internal control over the financial reporting is based on the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which covers the following components: control environment, risk assessment, control activities, information and communication, and monitoring activities. The process was designed to ensure compli- ance with the Bank’s principles for financial reporting and internal control, and to ensure that the financial reporting has been prepared pursuant to the law, applicable accounting standards, and other requirements related to listed companies. Control environment To ensure reliable financial reporting, Handels- banken’s internal control process for financial reporting is based on the control environment. The control environment is fundamental to other components of the process and has been described earlier in the Corporate Gover- nance Report: i.e. organisational structure, division of responsibilities and steering docu- ments. An important aspect of the control environment is that decision-making channels, powers of authority and responsibilities are clearly defined and communicated, and that steering documents established by the Board and Chief Executive Officer provide clear guid- ance and are complied with. Risk assessment Risk assessment aims to identify, manage and follow up risks with the potential to affect the financial reporting. Handelsbanken Finance is responsible for performing a risk assessment at Group level, in order to identify units for which the need for internal control is assessed as being of material significance to minimise the risk of material error in the financial report- ing. Units that Handelsbanken Finance deems must be covered by the process are required to draw up general documentation of their pro- cesses for internal control over the financial reporting. This general documentation must describe the processes that generate the unit’s most significant balance sheet and profit and loss items, risks, procedures for preparing the accounts, and identified control activities. The identified control activities are carried out each quarter to ensure that the financial reporting is correct, in all material respects. The self-evaluations carried out annually within the parent company and subsidiaries are an essential part of the Bank’s total risk assessment. Risks in the financial reporting are part of this total analysis. Other aspects of Handelsbanken’s risk management are detailed in note G2 on pages 80–122 and in the Bank’s Pillar 3 report. Control activities Various control activities are incorporated into the entire financial reporting process. Handelsbanken Finance bears the overall responsibility for the financial reporting, the consolidated accounts and consolidated financial reports, and for financial and adminis- trative control systems. The unit’s responsibili- ties also include the Group’s liquidity, the inter- nal bank, own funds, tax analysis and Group - wide reporting to public authorities. Handelsbanken Finance has the overall responsibility for ensuring that a fit-for-purpose process is in place for reporting on internal control over the financial reporting. For the units that Handelsbanken Finance has deemed must be covered by the process for internal control over the financial reporting, control activities are identified which are aimed at pre- venting, detecting and correcting errors and deviations in the financial reporting. Handels- banken Finance has established a number of financial control activities linked to the gen- eral ledger and the process of preparing the accounts, which all finance departments within the parent company and subsidiaries are required to carry out in conjunction with every quarterly closing of accounts. These include, for example, the reconciliation and verification of reported amounts, and analyses of income statements and balance sheets. In addition to financial control activities, units selected by Handelsbanken Finance are responsible for identifying and evaluating operational control activities. These include controls performed in, for example, business processes and systems, which are assessed as being of material signif- icance to minimise the risk of material error in the financial reporting. Heads of accounting and control at the respective units are respon- sible for ensuring that the control activities in the financial reporting for their unit are fit-for- purpose – i.e. that they are designed to pre- vent, detect and correct errors and deviations – and are in compliance with steering docu- ments and instructions. At each quarterly closing of the accounts, the units certify to Handels banken Finance that the control activities have been carried out, and that their balance sheets and income statements are correct. Based on Handelsbanken Finance’s follow-up of the units’ reports, the CFO reports the status of the internal control of financial reporting to the Audit committee at each quar- terly closing of accounts. The CFO is responsible for setting up and maintaining a Valuation committee. The com- mittee’s role is to support the decision-making processes for valuation and reporting matters. The committee deals with the valuation of financial assets and liabilities, including deriva- tives at fair value and also financial guarantees. The valuations refer to both own holdings and holdings on behalf of others. The committee must ensure that the valuation complies with external regulations, steering documents and current market practices. High information security is a precondition for good internal control over the financial reporting. Thus there are regulations and steer- ing documents to ensure availability, accuracy, confidentiality and traceability of information in the business systems. Information and communication The Bank has information and communication paths with the aim of achieving completeness and correctness in its financial reports. Handels- banken Finance must ensure that the staff concerned are aware of and have access to instructions of significance to the financial reporting. The Group’s general accounting instructions and special procedures for pro- ducing financial reports, and the process for internal control over the financial reporting, are communicated to the staff concerned via the Group’s intranet. The system used for financial reporting encompasses the entire Group. Monitoring activities The respective accounting and financial departments at the Bank monitor and verify compliance with applicable rules in the form of internal steering documents which affect the financial reporting, as the responsibility for internal control is an integral part of the mana- gerial responsibility. Handelsbanken Risk Control is responsible for identifying, checking and reporting risks of errors in the Bank’s assumptions and assess- ments that form the basis of the Bank’s finan- cial reporting. Handelsbanken Risk Control is described in more detail on pages 43 and 49. Handelsbanken Internal Audit is assigned to examine internal governance and control, and to evaluate the reliability of the Group’s finan- cial reporting. Handelsbanken Internal Audit is described in more detail on pages 43 and 49. As part of the quality control work for finan- cial reporting, the Board has set up an Audit committee. Among other responsibilities, the committee processes critical accounting matters and the financial reports produced by the Bank. The committee also supervises the effectiveness of the internal control, internal audit and the process for internal control over the financial reporting. The Audit committee is described in more detail on page 43. The Group’s information and communication paths are monitored continually to ensure that they are fit-for-purpose for the financial reporting. 52 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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Board Board Elected by the AGM 1) As of 20 February 2025. 2) The presented remuneration to the Board is resolved on by the AGM and relates to the annual remuneration between the 2024 AGM and the 2025 AGM. Total remuneration to the Board amounted to SEK 20,345,000. 3) Became a member of the committee in March 2024. 4) Became a Board member and a member of the committee in March 2024. 5) Refers to indirect shareholdings in Handelsbanken via the Oktogonen profit-sharing scheme. Name Pär Boman Chairman Fredrik Lundberg Deputy Chairman Jon Fredrik Baksaas Board member Hélène Barnekow Board member Stina Bergfors Board member Year elected 2006 2002 2003 2022 2021 Year of birth 1961 1951 1954 1964 1972 Nationality Swedish Swedish Norwegian Swedish Swedish Position and significant board assignments1) Chairman of AB Volvo Deputy Chairman of AB Industrivärden Board member of Skanska AB Chairman Pensionskassan SHB, Jan Wallanders och Tom Hedelius stiftelse and Tore Browaldhs stiftelse. President and CEO of L E Lundbergföretagen AB Chairman of Holmen AB, Hufvudstaden AB and AB Industrivärden Board mem- ber of L E Lundbergföretagen AB and Skanska AB. Chairman of DNV Group AS Board member of Telefon- aktiebolaget LM Ericsson and Scale Leap Capital AS. Chairman of Mindler AB and Storytel AB Board member of GN Store Nord A/S. Board member of H&M Hennes & Mauritz AB and Tele2 AB. Background 2006–2015 President and Chief Executive Officer of Handelsbanken. President of L E Lundberg- företagen AB since 1981 Active at Lundbergs since 1977. 2008–2016 GSM Association member, Chairman 2013–2016 2002–2015 Telenor Group, President and CEO 1989– 2002 Telenor Group, various positions within finance, finan- cial control and management 1988–1989 Aker AS 1985– 1988 Stolt Nielsen Seaway AS 1979–1985 Det Norske Veritas, Norway and Japan. 2018–2022 CEO of Microsoft Sweden 2014–2018 CEO and various management roles, Telia Sverige 2009– 2014 Various market leader roles, EMC Corporation (UK and USA) 2001–2009 Various market leader roles, etc., Sony Ericsson Mobile Communica- tions (USA, UK, Sweden) 1999–2001 Market leader, Novo Nordisk (Denmark) 1995–1999 Various manage- ment roles, Ericsson 1993– 1995 Market leader, Microsoft Corporation (Malta) 1991– 1993 Project manager/ consultant, DLF Sweden. 2013–2018 Co-founder and CEO, other roles, United Screens 2008–2013 Country Director, Google and Youtube 2004–2007 CEO and other roles, Carat 2000–2004 Director, other roles, OMD Worldwide 1999–1999 Account Manager, TV3 Sweden, Modern Times Group. Education Engineer and Business/ Economics degree, Dr. h.c. econ. Graduate Engineer and Gradu- ate in Economics/Business Administration, Dr. h.c. mult. Graduate in Economics/ Business Administration and PED from IMD. Graduate in Economics/ Business Administration. Graduate in economics/ administration, Dr. h.c. phil. Remuneration 20242) SEK 6,040,000 SEK 1,585,000 SEK 1,885,000 SEK 1,270,000 SEK 1,270,000 Credit committee Participation Chair 10/10 10/10 9/10 – 10/10 Audit committee Participation 9/9 – 8/9 – – Remuneration committee Participation Chair 8/8 – 8/8 – – Risk committee Participation 9/9 – – 6/93) – UK committee Participation Chair 4/4 – – – – Board meetings Participation 12/12 12/12 12/12 12/12 12/12 Own shareholdings and those of related parties, 31 December 2024 165,682, of which 130,000 class A shares in direct hold- ings and 35,682 in indirect holdings5) 82,275,000 class A shares 3,800 class A shares 1,000 class A shares 4,300 class A shares Dependent/ independent Independent of the Bank and its management. Not independent of major shareholders (Deputy Chair- man of AB Industrivärden). Independent of the Bank and its management. Not independent of major shareholders (Chairman of AB Industrivärden). Independent of the Bank, its management and major shareholders. Independent of the Bank, its management and major shareholders. Independent of the Bank, its management and major shareholders. 54 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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Name Hans Biörck Board member Kerstin Hessius Board member Louise Lindh Board member Ulf Riese Board member Year elected 2018 2016 2024 2020 Year of birth 1951 1958 1979 1959 Nationality Swedish Swedish Swedish Swedish Position and significant board assignments1) Chairman of Skanska AB. Chairman of Hemsö Fastighets AB. Board member of Lumera AB. Chairman of J2L Holding AB and Fastighets AB L E Lundberg Board member L E Lundberg- företagen AB, Hufvudstaden AB and Holmen AB. Board member Jan Wallanders och Tom Hedelius stiftelse and Tore Browaldhs stiftelse. Background 2001–2011 Skanska, Executive Vice President and CFO 1998– 2001 Autoliv, CFO 1997–1998 Self- employed 1977–1997 Various positions in Esselte. 2004–2022 AP3 Third National Swedish Pension Fund, CEO 2001–2004 Stockholm Stock Exchange, CEO 1999–2000 Sveriges Riksbank, Deputy Governor of the central bank 1998 Danske Bank, CEO, Asset Management 1990–1997 ABN Amro Bank/Alfred Berg 1989– 1990 Finanstidningen 1986–1989 Swedish National Debt Office 1985–1986 Sveriges Riksbank (central bank) 1984–1985 Swedish Agency for Public Management. 2017–2024 President and CEO, Fastighets AB L E Lundberg 2005–2017 Various positions, including assistant to the CEO, Executive Vice President and Regional Manager, Fastighets AB L E Lundberg 2003–2005 audit assistant, KPMG. Various positions at Handels- banken 2016–2018 Senior Advi- sor 2007–2016 CFO 2004–2007 Head of Handelsbanken Asset Management 2004 Executive Vice President of Handelsbanken Employed at Handelsbanken 1983. Education Graduate in Economics/ Business Administration. Graduate in Economics/ Business Administration. Graduate in Economics/ Business Administration. Graduate in Economics/ Business Administration. Remuneration 20242) SEK 2,360,000 SEK 1,870,000 1,270,000 kr SEK 2,795,000 Credit committee Participation 10/10 10/10 8/104) 10/10 Audit committee Participation 9/9 – – Chair 9/9 Remuneration committee Participation 8/8 – – – Risk committee Participation 9/9 Chair 9/9 – 9/9 UK committee Participation – – – 4/4 Board meetings Participation 12/12 12/12 9/124) 12/12 Own shareholdings and those of related parties, 31 December 2024 10,000 class A shares 47,213 class A shares 3,051,000 class A shares 200,000 class A shares Dependent/ independent Independent of the Bank, its management and major shareholders. Independent of the Bank, its management and major shareholders. Independent of the Bank, its management and major shareholders. Independent of the Bank, its management and major shareholders. Board cont. 55 Handelsbanken Annual and Sustainability Report 2024 2.3
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Name Anna Hjelmberg Employee representative Lena Renström Employee representative Stefan Henricson Employee representative, Deputy member Mikael Almvret Employee representative, Deputy member Year elected 2020 2020 2020 2023 Year of birth 1969 1965 1970 1969 Nationality Swedish Swedish Swedish Swedish Position and significant board assignments1) Chair of Finansförbundet’s Handelsbanken union club Board member of Pensions- kassan SHB. Chair of Finansförbundet’s Handelsbanken SE-union club. Board member of Finans- förbundet’s Handelsbanken SE-union club. Chair of Akademikerföreningen (Association for graduate profes- sionals) at Handelsbanken. Background Insurance officer at Handels- banken Liv, union roles in the Handelsbanken Group. Advisory services in Handels- banken’s branch operations. Managerial and advisory services at branches and regional head offices at Handelsbanken. Specialist, System Owner and Business and Operations devel- oper within Anti-Money Launder- ing, International operations, and Trading. Education Economics Programme at upper secondary school. Graduate in Economics/Business Administration. Economics Programme at upper secondary school. Graduate in Economics/Business Administration. Remuneration 20242) SEK 0 SEK 0 SEK 0 SEK 0 Credit committee Participation – – – – Audit committee Participation – – – – Remuneration committee Participation – – – – Risk committee Participation – – – – UK committee Participation – – – – Board meetings Participation 11/12 12/12 12/12 12/12 Own shareholdings and those of related parties, 31 December 2024 0 0 38,784, of which 38,784 in indirect holdings3) 29,527, of which 29,527 in indirect holdings3) Dependent/ independent Not independent of the Bank and its management (employee). Independent of major shareholders. Not independent of the Bank and its management (employee). Independent of major shareholders. Not independent of the Bank and its management (employee). Independent of major shareholders. Not independent of the Bank and its management (employee). Independent of major shareholders. 1) As of 20 February 2025. 2) The presented remuneration to the Board is resolved on by the AGM and relates to the annual remuneration between the 2024 AGM and the 2025 AGM. Total remuneration to the Board amounted to SEK 20,345,000. 3) Refers to indirect shareholdings in Handelsbanken via the Oktogonen profit-sharing scheme. Board cont. 56 Handelsbanken Annual and Sustainability Report 2024 2.3 Introduction Administration report Corporate Governance Report Financial statements Sustainability Other
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Executive Team Executive Team Executive Team1) Name Position Year of birth Employed Shareholdings Per Beckman Chief Credit Officer and Executive Vice President 1962 1993 Shareholdings 20,170, of which 20,170 in indirect holdings6) Carl Cederschiöld2) Chief Financial Officer and Executive Vice President 1973 1998 Shareholdings 34,526, of which 16,600 class A shares in direct holdings5) and 17,926 in indirect holdings6) Pernilla Eldestrand3) Chief Communication Officer 1969 1989 Shareholdings 40,987, of which 40,987 in indirect holdings6) Michael Green President and Chief Executive Officer 1966 1994 Shareholdings 111,405, of which 85,000 class A shares in direct holdings5) and 26,405 in indirect holdings6) Maria Hedin Chief Risk Officer 1964 2010 Shareholdings 6,592, of which 246 class B shares in direct holdings5) and 6,346 in indirect holdings6) Dan Lindwall Responsible for subsidiaries and group-wide matters 1965 2000 Shareholdings 7,356, of which 7,356 in indirect holdings6) Cecilia Lundin Chief Human Resources Officer 1970 2023 Shareholdings 55, of which 55 class B shares in direct holdings5) Anton Romare Keller4) Chief Information Officer 1982 2007 Shareholdings 12,766, of which 2,772 class A shares in direct holdings5) and 9,994 in indirect holdings6) 1) The table shows the Executive Team as per 20 February 2025. Until 31 March 2024, the Executive Team consisted of the Bank’s executive management, which, in addition to the Chief Executive Officer (Michael Green) also included the Chief Financial Officer (Carl Cederschiöld), Chief Information Officer (Mattias Forsberg), Chief Credit Officer (Per Beckman), Chief Human Resources Officer (Cecilia Lundin), Head of Capital Markets (Dan Lindwall), Chief Sustainability and Climate Officer (Catharina Belfrage Sahlstrand), Chief Strategy Officer (Martin Noréus), Head of Products and Offerings (Anna Possne), Chief Risk Officer (Maria Hedin), the Country General Manager of Norway (Arild Andersen) and the Chief Executive Officer of Handelsbanken plc (Mikael Sörensen). The Chief Legal Officer (Martin Wasteson) and Chief Compliance Officer (Monika Bergström) was co-opted to the executive management. On 31 July 2024, Mattias Forsberg left the Executive Team in conjunction with stepping down from his position as Chief Information Officer. Catharina Belfrage Sahlstrand left the Executive Team on 21 January 2025 when she stepped down from her position as Chief Sustainability Officer. 2) Also Acting Chief Sustainability Officer since 21 January 2025. 3) Took office on 1 October 2024. 4) Took office on 1 August 2024. 5) Direct shareholdings refer to own and related party’s shareholdings in Handelsbanken on 31 December 2024. 6) Refers to indirect shareholdings in Handelsbanken via the Oktogonen profit-sharing scheme on 31 December 2024. 57 Handelsbanken Annual and Sustainability Report 2024 2.3
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2.4 Administration r eport, parent company Administration report, parent company Performance in the parent company The parent company’s accounts cover parts of the operations that, in organisational terms, are included in branch operations within and outside Sweden, Markets and central business support units. Although most of Handels - banken’s business comes from the local branches and is co-ordinated by them, in legal terms a sizeable part of business volumes are outside the parent company in wholly owned subsidiaries – particularly in the Stadshypotek AB mortgage institution and Handelsbanken plc. Thus, the performance of the parent com- pany is not equivalent to the performance of business operations in the Group as a whole. For information on the divestment of operations in Finland, see the introduction to Note P46. The parent company’s operating profit grew by 15 per cent to SEK 32,454 million (28,110) compared with last year, mainly due to higher dividends received. The primary reason for the 36 per cent increase in dividends received to SEK 21,673 million (15,957) was that the par- ent company received dividends of approxi- mately SEK 8,200 million from the subsidiary Handelsbanken plc. The item net gains/losses on financial transactions also increased. The main reason that net gains/losses on financial transactions increased by 65 per cent to SEK 2,880 million (1,745) is that the Bank’s holdings of subordinated loans issued by the subsidiary Stadshypotek, which are measured at fair value on the balance sheet and income state- ment, were positively impacted by narrower spreads in the market. Net interest income declined by 2 per cent to SEK 25,416 million (25,946). Net fee and commission income in- creased by 4 per cent to SEK 4,771 million (4,573). Profit for the year grew by 24 per cent to SEK 27,659 million (22,363). Since year-end 2023, the parent company’s equity has in- creased to SEK 160,189 million (158,431). For the parent company’s five-year overview, see pages 196–197. Risk management Handelsbanken has a low risk tolerance that is maintained through a strong risk culture which is sustainable in the long term and applies to all areas of the Group. For a detailed descrip- tion of the Bank’s exposure to risks, and the management of these, see note G2. Principles for remuneration to executive officers Handelsbanken’s principles for remuneration to executive officers are set out in note G8 and in the Remuneration to executive officers section of the Corporate Governance Report, see page 51. Proposed appropriation of profits In accordance with the balance sheet for Handelsbanken, profits totalling SEK 151,454 million are at the disposal of the AGM. The Board proposes that the profit be appropriated as follows: Dividend per share paid to the shareholders SEK 15.00, of which SEK 7.50 in ordinary dividend (SEK 13.00, of which SEK 6.50 in ordinary dividend for 2023) 29,700 Balance carried forward to the next year 121,754 Total allocated 151,454 The Board’s assessment is that the amount of the proposed dividend, totalling SEK 29,700 million, is justifiable in view of the nature of operations, their scope, consolidation require- ment, risk-taking, liquidity, and the general position both in the Bank and in the rest of the Group. Unrealised changes in assets and liabilities at fair value had a net impact on equity of SEK 4,630 million. The total capitalisation of the parent com- pany and the consolidated situation at year- end, minus the proposed dividend based on completed conversions and other material changes since the year-end, exceeded the statutory minimum requirement pursuant to EU Regulation 575/2013 and Directive 2013/36/EU and other relevant requirements established for the Bank by public authorities. The Handelsbanken share Shares divided into share classes 31 December 2024 Share class Number % of capital % of votes Class A 1,944,777,165 98.22 99.82 Class B 35,251,329 1.78 0.18 Total 1,980,028,494 100.00 100.00 At the end of 2024, the holdings of one share- holder represented more than 10 per cent of the votes: AB Industrivärden. Detailed informa- tion on the Bank’s largest Swedish sharehold- ers can be found on page 39. For more infor- mation on shareholders and the general meeting, refer to the information beginning on page 44. At the AGM in March 2024, the Board received a mandate to repurchase a maximum of 120 million shares during the period until the AGM in March 2025. This mandate was not used in 2024. For more information on the share and the shareholders, refer to the infor- mation beginning on page 38. Other Handelsbanken has a long-term perspective for its business, and sustainability is deeply embedded in both the corporate culture and the working methods. Sustainability is not only an engagement with environmental or social issues, but also something to be integrated into all parts of our business and organisation. For information on sustainability at Handels- banken, refer to the information beginning on page 254. Handelsbanken strives for its decentralised working method and belief in the individual to be integral to its operations. For a more detailed description of corporate governance at the Bank, refer to the information beginning on page 40. 58 Handelsbanken Annual and Sustainability Report 2024 2.4 Introduction Administration report Parent company Financial statements Sustainability Other
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3.0 Financial statements Financial statements 60 Handelsbanken Annual and Sustainability Report 2024 3.0
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3.0 Financial statements 60 3.1 Group 62 Income statement 62 Statement of comprehensive income 63 Balance sheet 64 Statement of changes in equity 65 Statement of cash flows 66 Notes, Group 68 3.2 Parent company 190 Income statement 190 Statement of comprehensive income 191 Balance sheet 192 Statement of changes in equity 193 Statement of cash flows 194 Five-year overview 196 Notes, parent company 198 3.3 Signatures of the Board and CEO 247 3.4 Auditor’s report 248 61 Handelsbanken Annual and Sustainability Report 2024
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3.1 Group Income statement Income statement, Group SEK m Note 2024 2023 Interest income G3 171,125 159,805 of which interest income according to effective interest method and interest on derivatives in hedge accounting 150,587 133,602 Interest expenses G3 -124,284 -112,227 Net interest income 46,841 47,578 Fee and commission income G4 13,252 12,559 Fee and commission expenses G4 -1,526 -1,421 Net fee and commission income 11,726 11,139 Net gains/losses on financial transactions G5 3,103 2,661 Insurance result 126 157 Return on assets held on behalf of policyholders 297 336 Net insurance result G6 422 493 Other dividend income 16 3 Share of profit of associates and joint ventures G20 27 51 Other income G7 209 325 Total income 62,345 62,249 Staff costs G8 -15,731 -13,642 Other expenses G9 -7,474 -7,796 Depreciation, amortisation and impairment of property, equipment and intangible assets G25, G26 -2,004 -1,743 Total expenses -25,209 -23,182 Profit before credit losses and regulatory fees 37,136 39,067 Net credit losses G10 601 -141 Gains/losses on disposal of property, equipment and intangible assets G11 13 20 Regulatory fees G12 -2,733 -2,624 Operating profit 35,016 36,322 Taxes G35 -7,795 -8,417 Profit for the year from continuing operations 27,221 27,905 Profit for the year from discontinued operations, after tax G14 234 1,209 Profit for the year 27,456 29,114 attributable to Shareholders in Svenska Handelsbanken AB 27,451 29,107 of which from continuing operations 27,217 27,898 of which from discontinued operations 234 1,209 Non-controlling interest 5 8 Earnings per share, total operations, SEK G13 13.86 14.70 after dilution G13 13.86 14.70 Earnings per share, continuing operations, SEK G13 13.75 14.09 after dilution G13 13.75 14.09 Earnings per share, discontinued operations, SEK G13 0.12 0.61 after dilution G13 0.12 0.61 62 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Statement of comprehensive income Statement of comprehensive income, Group SEK m 2024 2023 Profit for the year 27,456 29,114 Other comprehensive income Items that will not be reclassified to the income statement Defined benefit pension plans 344 -2,226 Equity instruments measured at fair value through other comprehensive income 207 63 Tax on items that will not be reclassified to the income statement -77 439 of which defined benefit pension plans -36 450 of which equity instruments measured at fair value through other comprehensive income -41 -11 Total items that will not be reclassified to the income statement 475 -1,724 Items that may subsequently be reclassified to the income statement Cash flow hedges 160 614 Debt instruments measured at fair value through other comprehensive income 6 25 Insurance contracts 66 -396 Translation difference for the year 1,758 -1,078 of which hedges of net investments in foreign operations -230 31 Tax on items that may subsequently be reclassified to the income statement -52 113 of which cash flow hedges -33 -127 of which debt instruments measured at fair value through other comprehensive income -1 -5 of which hedges of net investments in foreign operations 47 -6 of which translation difference -65 251 Total items that may subsequently be reclassified to the income statement 1,937 -722 Total other comprehensive income 2,412 -2,447 Total comprehensive income for the year 29,868 26,667 attributable to Shareholders in Svenska Handelsbanken AB 29,870 26,662 Non-controlling interest -2 5 The year’s reclassifications to the income statement are presented in the Statement of changes in equity. For January-December 2024, other comprehensive income amounted to SEK 2,412 million (-2,447) after tax. Defined benefit pension plans were positively affected by SEK 308 million (-1,776) after tax during the period. Pension obligations increased despite the discount rate pertaining to the Swedish pension obligation amounting to 3.6% compared with 3.5% at the end of last year. The increase was due to changes in assumptions that increased the obligations. However, the change in the value of plan assets was positive, which is why the net is positive for the year. The translation of foreign operations had a positive effect of SEK 1,740 million (-833) after tax, which resulted from the SEK weakening from year-end against most currencies in the countries in which the Group operates. 63 Handelsbanken Annual and Sustainability Report 2024 3.1
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Balance sheet Balance sheet, Group SEK m Note 2024 2023 Assets Cash and balances with central banks 529,995 476,171 Other loans to central banks G15 12,547 6,282 Interest-bearing securities eligible as collateral with central banks G18 172,606 199,128 Loans to other credit institutions G16 18,922 19,294 Loans to the public G17 2,297,878 2,291,808 Value change of interest-hedged item in portfolio hedge -6,399 -9,657 Bonds and other interest-bearing securities G18 47,508 50,087 Shares G19 14,746 12,216 Investments in associates and joint ventures G20 860 657 Assets where the customer bears the value change risk G21 287,984 244,893 Derivative instruments G22 47,069 30,110 Intangible assets G25 8,426 8,567 Property and equipment G26 4,803 4,777 Current tax assets 100 203 Deferred tax assets G35 157 358 Pension assets G8 13,102 11,699 Assets held for sale G14 74,506 178,590 Other assets G27 11,896 10,276 Prepaid expenses and accrued income G28 2,468 2,331 Total assets G41 3,539,173 3,537,792 Liabilities and equity Due to credit institutions G29 84,280 90,143 Deposits and borrowing from the public G30 1,310,739 1,298,480 Liabilities where the customer bears the value change risk G31 288,263 245,100 Issued securities G32 1,550,027 1,523,481 Derivative instruments G22 15,956 34,238 Short positions G33 1,007 2,364 Insurance liabilities G34 7,808 8,407 Current tax liabilities 957 1,211 Deferred tax liabilities G35 3,744 3,969 Provisions G36 378 601 Liabilities held for sale G14 10,623 63,721 Other liabilities G37 15,376 14,882 Accrued expenses and deferred income G38 2,935 2,990 Subordinated liabilities G39 37,054 43,117 Total liabilities G41 3,329,146 3,332,706 Non-controlling interest 6 8 Share capital 3,069 3,069 Share premium reserve 8,758 8,758 Provisions G40 18,659 16,239 Retained earnings 152,085 147,905 Profit for the year (attributable to shareholders of Svenska Handelsbanken AB) 27,451 29,107 Total equity 210,027 205,085 Total liabilities and equity 3,539,173 3,537,792 64 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Statement of changes in equity Statement of changes in equity, Group 2024 SEK m Share capital Share premium reserve Other reserves Retained earnings incl. profit for the year Non- controlling interest Total Defined benefit pension plans Cash flow hedges Fair value through other com- prehensive income Insurance contracts Translation foreign operations Opening equity 2024 3,069 8,758 11,963 181 197 396 3,502 177,011 8 205,085 Profit for the year 27,451 5 27,456 Other comprehensive income 308 127 171 66 1,747 -7 2,412 of which reclassification within equity -3 -811 -814 Total comprehensive income for the year 308 127 171 66 1,747 27,451 -2 29,868 Reclassified to retained earnings 814 814 Dividend1) -25,740 -25,740 Share-based payment to employees at Handelsbanken plc2) 54 54 Hedge of share-based payments to employees2) -54 -54 Change in non-controlling interest Closing equity 2024 3,069 8,758 12,271 308 369 462 5,249 179,535 6 210,027 2023 SEK m Share capital Share premium reserve Other reserves Retained earnings incl. profit for the year Non- controlling interest Total Defined benefit pension plans Cash flow hedges Fair value through other com- prehensive income Insurance contracts Translation foreign operations Opening equity 2023 3,069 8,758 13,739 -307 126 793 4,332 163,510 3 194,024 Profit for the year 29,107 8 29,114 Other comprehensive income -1,776 488 71 -396 -831 -3 -2,447 of which reclassification within equity 49 -284 -235 Total comprehensive income for the year -1,776 488 71 -396 -831 29,107 5 26,667 Reclassified to retained earnings 235 235 Dividend1) -15,840 -15,840 Share-based payment to employees at Handelsbanken plc2) 79 79 Hedge of share-based payments to employees2) -79 -79 Change in non-controlling interest Closing equity 2023 3,069 8,758 11,963 181 197 396 3,502 177,011 8 205,085 1) The dividend paid in 2024 pertaining to 2023 amounted to SEK 13 per share. The dividend paid in 2023 pertaining to 2022 amounted to SEK 8 per share. 2) As of the 2020 earnings year, all employees at Handelsbanken plc are covered by a Share Incentive Plan (“SIP”). 65 Handelsbanken Annual and Sustainability Report 2024 3.1
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Statement of cash flows Statement of cash flows, Group SEK m 2024 2023 Operating activities Operating profit 35,016 36,322 Profit from discontinued operations, before tax 307 1,394 of which paid-in interest 178,825 162,813 of which paid-out interest -127,203 -112,316 of which paid-in dividends 191 47 Adjustment from operating activities to investing activities 1,767 of which to Divestment of operations and subsidiaries 1,767 Adjustment for non-cash items in operating profit and profit for the year from discontinued operations Credit losses -576 254 Unrealised value changes -89 -1,095 Amortisation and impairment 2,435 1,748 Paid income tax -8,519 -7,681 Changes in the assets and liabilities of operating activities Other loans to central banks 19,598 475 Loans to other credit institutions 374 -9,882 Loans to the public 25,303 27,892 Interest-bearing securities and shares 26,332 -80,826 Due to credit institutions -6,596 8,752 Deposits and borrowing from the public -14,402 -26,249 Issued securities 26,545 48,680 Derivative instruments, net positions -35,153 11,559 Short positions -1,260 209 Claims and liabilities on investment banking settlements -2,027 7,396 Other -24,526 4,178 Cash flow from operating activities 44,529 23,125 Investing activities Divestment of operations and subsidiaries 17,147 Acquisitions of and contributions to associates and joint ventures -175 -53 Sales of shares 6 Acquisitions of property and equipment -949 -832 Disposals of property and equipment 398 326 Acquisitions of intangible assets -678 -957 Cash flow from investing activities 15,748 -1,517 Financing activities Repayment of subordinated liabilities -13,371 -8,351 Issued subordinated liabilities 5,704 8,635 Dividend paid -25,740 -15,840 Cash flow from financing activities -33,407 -15,556 Cash flow for the year 26,870 6,052 Cash and cash equivalents at beginning of year 476,181 475,882 Cash flow from operating activities 44,529 23,125 Cash flow from investing activities 15,748 -1,517 Cash flow from financing activities -33,407 -15,556 Exchange difference on cash and cash equivalents 26,957 -5,753 Cash and cash equivalents at end of year 530,009 476,181 The statement of cash flows has been prepared in accordance with the indirect method, which means that operating profit and profit for the year from discontinued operations have been adjusted for transactions that did not entail paid-in or paid-out cash, such as depreciation/amortisation and credit losses. The statement of cash flows in the above table includes the discontinued operations in Finland, see note G14. 66 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Change in liabilities in financing activities SEK m 2024 2023 Opening balance 43,117 42,404 Cash flow -7,667 284 Non-cash changes, foreign exchange fluctuations 1,908 -770 Non-cash changes, foreign exchange hedges -16 1,153 Non-cash changes, accrued interest -287 46 Total liabilities in financing activities 37,054 43,117 Divestment of operations and subsidiaries SEK m 2024 Purchase price Total purchase price 18,843 Claim on purchaser -1,696 Payment received 17,147 Divested assets and liabilities Loans to the public 34,119 Other assets 6 Total assets 34,124 Deposits and borrowing from the public 15,170 Other liabilities 40 Total liabilities 15,210 Cash flow from operating activities -1,766 The purchase price in its entirety is received in the form of cash and cash equivalents. Statement of cash flows, Group, cont. 67 Handelsbanken Annual and Sustainability Report 2024 3.1
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Notes, Group Notes, Group G1 Material accounting policies 69 G2 Risk and capital management 80 G3 Net interest income 123 G4 Net fee and commission income 123 G5 Net gains/losses on financial transactions 125 G6 Net insurance result 125 G7 Other income 125 G8 Staff costs 126 G9 Other expenses 132 G10 Credit losses 132 G11 Gains/losses on disposal of property, equipment and intangible assets 139 G12 Regulatory fees 139 G13 Earnings per share 139 G14 Assets and liabilities held for sale, and discontinued operations 140 G15 Other loans to central banks 142 G16 Loans to other credit institutions 143 G17 Loans to the public 143 G18 Interest-bearing securities 144 G19 Shares 144 G20 Investments in associates and joint ventures 145 G21 Assets where the customer bears the value change risk 145 G22 Derivative instruments 146 G23 Hedge accounting 147 G24 Offsetting of financial instruments 152 G25 Intangible assets 153 G26 Property and equipment 155 G27 Other assets 156 G28 Prepaid expenses and accrued income 156 G29 Due to credit institutions 156 G30 Deposits and borrowing from the public 157 G31 Liabilities where the customer bears the value change risk 157 G32 Issued securities 158 G33 Short positions 158 G34 Insurance liabilities 159 G35 Taxes 164 G36 Provisions 166 G37 Other liabilities 166 G38 Accrued expenses and deferred income 167 G39 Subordinated liabilities 167 G40 Specification of changes in equity 168 G41 Classification of financial assets and liabilities 169 G42 Fair value measurement of financial instruments 171 G43 Pledged assets, collateral received and transferred financial assets 174 G44 Contingent liabilities 175 G45 Leases 176 G46 Segment reporting 177 G47 Geographical information 179 G48 Assets and liabilities by currency 180 G49 Interests in unconsolidated structured entities 181 G50 Related-party disclosures 182 G51 Events after the balance sheet date 182 G52 Capital adequacy 183 68 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G1 Material accounting policies Contents 1. Statement of compliance 2. Changed accounting policies 3. Changes in IFRS which are yet to be applied 4. Financial instruments 5. Principles for fair value measurement of financial assets and liabilities 6. Credit losses 7. Hedge accounting 8. Insurance operations 9. Assets held for sale and accounting of discontinued operations 10. Equity 11. Income 12. Employee benefits 13. Material assessments and estimates 1. Statement of compliance Basis of accounting The consolidated accounts have been prepared in accordance with IFRS® Accounting Standards and interpretations of these standards as adopted by the EU. In addition, the accounting policies also adhere to the Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559), and the regulations and general guidelines issued by the Swedish Financial Supervisory Authority in FFFS 2008:25, Annual Reports in Credit Institutions and Securities Companies. RFR 1 Supplementary Accounting Rules for Groups, and statements from the Swedish Corporate Reporting Board, are also applied in the consolidated accounts. The pre- sentation currency is the Swedish krona and all figures are rounded to the nearest million kronor (SEK m) unless otherwise stated. The parent company’s accounting policies are shown in note P1. Issuing and adoption of Annual Report and company information Svenska Handels banken Aktiebolag’s Annual Report and consolidated accounts for the period 1 January 2024–31 December 2024 were approved for issue by the Board and Chief Executive Officer on 20 February 2025 and will be presented for adoption by the AGM on 26 March 2025. The parent company, Svenska Handels banken AB (publ), is domiciled in Stockholm at the address Kungsträdgårdsgatan 2, 106 70 Stockholm, Sweden. Handels banken is a credit institution that offers financial services and products in its home markets, Sweden, the UK, Norway and the Netherlands. The operations are described in more detail in the Administra- tion report. 2. Changed accounting policies The changes in accounting regulations applic- able from 1 January 2024 have not had any impact on Handels banken’s financial state- ments, capital adequacy, large exposures or other circumstances according to applicable operating regulations. The accounting policies and calculation methods applied by the Group during the finan- cial year are consistent with the policies applied in the Annual and Sustainability Report for 2023. 3. Changes in IFRS which are yet to be applied Presentation and Disclosure in Financial Statements (IFRS 18) In April 2024, the IASB published the new stan- dard IFRS 18 Presentation and Disclosures in Financial Statements, which replaces IAS 1 Presentation of Financial Statements. Provided that the EU endorses IFRS 18, and the effective date proposed by the IASB is not changed, the standard will be applied from the 2027 financial year. IFRS 18 introduces new requirements for the presentation and disclosure of information in financial statements, particularly focusing on the structure of the income statement and the disclosure of management-defined perfor- mance measures. The standard is not expected to have any financial impact on Handels banken since IFRS 18 does not entail any new valuation principles and instead focuses on the presentation and disclosures in the financial statements. The Bank has started work to analyse the effects of the new standard. Amendments to the classification and measurement of financial instruments (IFRS 9 and IFRS 7) In May 2024, the IASB published amendments to the classification and measurement of finan- cial instruments in IFRS 9 and IFRS 7. Provided that the EU endorses the amendments, and the effective date proposed by the IASB is not changed, the amendments to the standards will be applied from the 2026 financial year. The amendments to IFRS 9 mainly clarify assessing whether contractual cash flows in financial assets, which include terms that are dependent on future events, meet the criteria for solely payments of principal and interest (SPPI criteria). The amendments mainly provide guidance for assessing whether the SPPI criteria are met for loans with ESG-linked features. In some cases, a contingent event gives rise to contractual cash flows that meet the SPPI criteria, both before and after the change in cash flows, but the nature of the contingent event does not relate directly to changes in basic lending risks and costs. An example is loans with ESG-linked features under which the interest rate according to the contractual terms is adjusted based on the reduction in the borrower’s carbon emis- sions. In such a case, the SPPI criteria are met only if the contractual cash flows in all potential scenarios are not materially different from a financial asset with identical contractual cash flows but without such a contingent event. Fur- thermore, clarification is provided that contrac- tual cash flows do not meet the SPPI criteria if they are based on a variable that does not con- stitute basic lending risks and costs, for exam- ple, follows an equity index or commodity index, or if they represent a share of the borrower’s income or profit, even if such terms and condi- tions are common in the market. The amendments to IFRS 7 include providing qualitative and quantitative disclosures about the effect of contractual terms that could change the amount of contractual cash flows dependent on the occurrence (or non-occur- rence) of a contingent event that does not relate directly to changes in basic lending risks and costs. The disclosure requirements encompass financial assets measured at amortised cost or fair value through other comprehensive income and financial liabilities measured at amortised cost. The amendments to IFRS 9 also clarify the date of initial recognition of financial assets and liabilities, and the date of derecognition of financial assets and liabilities from the state- ment of financial position. The amendments 69 Handelsbanken Annual and Sustainability Report 2024 3.1
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also include an optional exemption whereby financial liabilities settled using an electronic payment system can be derecognised from the statement of financial position before the obligation is extinguished, i.e., before the con- tractual obligation is discharged, cancelled or expires, provided that certain criteria specified in the regulations are met. The Bank has started work to analyse the effects of the amendments to IFRS 9 and IFRS 7. The assessment at the current time is that these amendments will not have any material impact on Handels banken’s financial state- ments, capital adequacy, large exposures or other circumstances according to applicable operating regulations. Other future changes in accounting regulations Other future changes in accounting regulations issued for application are not deemed to have any material impact on Handels banken’s finan- cial statements, capital adequacy, large expo- sures or other circumstances according to applicable operating regulations. 4. Financial instruments (IFRS 9 Financial Instruments, IAS 32 Financial Instruments: Presentation) Recognition and derecognition Purchases and sales of equities and money market and capital market instruments on the spot market are recognised on the trade date. The same applies to derivatives. Other financial assets and liabilities are normally recognised on the settlement date. Financial assets are derecognised from the balance sheet when the contractual rights to the cash flows originating from the asset expire or when all risks and rewards related to the asset are transferred to another party. A finan- cial liability is derecognised from the balance sheet when the obligation is fulfilled, ceases or is cancelled. Measurement categories Financial assets are allocated to one of the following measurement categories: 1. amortised cost 2. fair value through other comprehensive income 3. fair value through profit or loss a) mandatory b) fair value option. The starting points for the classification of financial assets into the respective measure- ment categories is the company’s business model for managing such assets and the asset’s contractual terms. Financial liabilities are allocated to one of the following measurement categories: 1. amortised cost 2. fair value through profit or loss a) mandatory b) fair value option. As a general rule, financial liabilities are rec- ognised at amortised cost. The exceptions are financial liabilities which are required to be measured at fair value through profit or loss, such as derivatives, and liabilities which, upon initial recognition, are irrevocably identified as being measured at fair value (fair value option). Financial assets and liabilities recognised on the same row on the balance sheet may be classified in different measurement categories, see note G41. Upon initial recognition, all financial assets and liabilities are recognised at fair value. For financial instruments at fair value through profit or loss, the transaction costs are recognised in the income statement on the acquisition date. For other financial instruments, the transaction costs are included in the acquisition cost. Assessment of the business model for financial assets The assessment of the business model for managing financial assets defines classification into measurement categories. For the purposes of the business model, Handels banken has divided its financial assets into portfolios on the basis of how they are managed, reported and evaluated by the Bank’s management. When the business model is determined for the respective portfolio, the factors considered include established guidelines and objectives with a portfolio and how these are implemented in the operations, the risks which affect the per- formance of the portfolio and how the risks are managed, as well as the frequency, volume, reasons for and times of sales. Assessment of financial assets’ contractual terms The assessment of whether contractual cash flows constitute solely payments of principal and interest, and thus are consistent with a basic lending arrangement, is significant for the classification into measurement categories. For the purposes of this assessment, “principal” is defined as the financial asset’s fair value upon initial recognition. “Interest” is defined as con- sideration for the time value of money, credit risk, other fundamental lending risks (such as liquidity risk) and costs (such as administrative expenses), as well as a profit margin. If the financial asset has contractual terms that could change the timing or amounts of the contractual cash flows, modify the consideration for the time value of money, cause leverage or entail extra costs for prepayment and extension, then the cash flows are assessed as not constituting solely payments of principal and interest. The Bank offers corporate customers loans with ESG-linked features, which provide incentives for borrowers to achieve improvements within predetermined sustainability targets by adjust- ing the interest rate based on the borrower’s fulfillment of these sustainability targets. The difference compared with loans without ESG- linked features is that the interest rate is adjusted by a percentage stated in the contract (mainly between 1.5–5.0 basis points) based on the borrower meeting these sustainability targets. The sustainability-related targets are thus spe- cific to each borrower. The Bank has evaluated the loans with ESG-linked features and the con- tractual cash flows are deemed to consist solely of payments of principal and interest. The con- tractual cash flows are thus considered to be consistent with a basic lending arrangement and the loans with ESG-linked features are measured at amortised cost. Amortised cost A financial asset is to be measured at amortised cost if both of the following conditions are met: • The objective of the business model is to col- lect contractual cash flows. • The contractual cash flows constitute solely payments of principal and interest. Financial assets recognised in this measurement category consist of loans and holdings of inter- est-bearing securities. These assets are subject to impairment testing. Financial liabilities rec- ognised in this measurement category consist primarily of liabilities due to credit institutions, deposits and borrowing from the public, and issued securities. Amortised cost consists of the discounted present value of all future cash flows relating to the instrument where the discount rate is the instrument’s effective interest rate at the time of acquisition. Interest and credit losses are recognised in the income statement items Net interest income and Credit losses, respectively. Early repayment charges for loans redeemed ahead of time, capital gains/losses generated from repurchases of the Bank’s own issued securities, and foreign exchange effects are recognised in the income statement under Net gains/losses on financial transactions. Fair value through other comprehensive income A financial asset is to be measured at fair value through other comprehensive income if both of the following conditions are met: • The objective of the business model is both to collect contractual cash flows and to sell the asset. • The contractual cash flows constitute solely payments of principal and interest. Holdings of interest-bearing securities in the Bank’s liquidity portfolio which satisfy the above conditions are recognised in this mea- G1 cont. 70 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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surement category. These assets are subject to impairment testing. Interest income is rec- ognised under Net interest income. Foreign exchange effects and credit losses are rec- ognised under Net gains/losses on financial transactions. Unrealised changes in value are recognised in other comprehensive income and reclassified to the income statement in conjunc- tion with a sale, under the item Net gains/losses on financial transactions. Upon initial recognition, equity instruments that are not held for trading may be irrevocably classified as measured at fair value through other comprehensive income. This valuation principle is applied for certain shareholdings in companies which engage in activities to sup- port the Bank, such as participating interests in clearing organisations and infrastructure collab- oration in the Bank’s home markets. Subse- quent changes in value, both realised and un- realised and including exchange gains/losses, are recognised in other comprehensive income. Realised changes in value are reclassified in equity to retained earnings, i.e. not to the income statement. Only dividend income from these holdings is recognised in the income statement. Fair value through profit or loss, mandatory If a financial asset does not meet the conditions for measurement at amortised cost or for mea- surement at fair value through other compre- hensive income, measurement at fair value through profit or loss is mandatory. Financial assets and liabilities held for trading are always classified as measured at fair value through profit or loss, as are financial assets managed and evaluated on a fair value basis. This measurement category mainly consists of listed shares, units in mutual funds, interest - bearing securities and derivatives. Interest, divi- dends, foreign exchange effects, and realised and unrealised changes in value are recognised under Net gains/losses on financial transactions. For the recognition of derivatives through hedge accounting, see section 7. Fair value through profit or loss, fair value option There is an option, at initial recognition, to irrev- ocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measure- ment or recognition inconsistency (“accounting mismatch”) that would otherwise arise from measuring the asset. There is a corresponding option to irrevoca- bly designate, at initial recognition, a financial liability as measured at fair value through profit or loss if either of the following conditions is met: • It eliminates or significantly reduces a measurement or recognition inconsistency (“accounting mismatch”) that would other- wise arise from measuring the liability. • A group of financial liabilities, or a group of both financial assets and financial liabilities, is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. Information about these instruments is provided internally to the Bank’s manage- ment on that same basis. This valuation principle has been applied to avoid inconsistencies when measuring assets and liabilities which are counter-positions of each other and which are managed on a port- folio basis, such as liabilities resulting from unit- linked insurance contracts and certain holdings in the liquidity portfolio which are hedged with economic hedges. Unrealised and realised changes in value are recognised under Net gains/losses on financial transactions. Interest is recognised under Net interest income. Reclassifications of financial instruments As a general rule, financial assets are not reclassified after initial recognition. Reclassifi- cation is permitted in the rare case that the Bank changes the business model it applies for the management of a portfolio of financial assets. The reclassification of financial liabilities is not permitted after initial recognition. Financial guarantees and loan commitments Issued financial guarantees entail an obligation to reimburse the holder of a debt instrument (loan or interest-bearing security) for losses incurred in the event that a specified borrower fails to make a payment when due in accor- dance with the contractual terms, for example, a credit guarantee. The fair value of an issued guarantee is the same as the premium received when it was issued. Upon initial recognition, the premium received for the guarantee is rec- ognised as a liability under Accrued expenses and deferred income on the balance sheet. The guarantee is subsequently measured at the higher of the amortised premium or the provi- sion for the expected loss. Premiums for issued financial guarantees are amortised under Net fee and commission income over the validity period of the guarantee. In addition, the total guaranteed amount relating to guarantees issued is reported off-balance as a contingent liability, see note G44. Loan commitments are reported off-balance until the settlement date of the loan, see note G44. Fees received for loan commitments are accrued under net fee and commission income over the maturity of the commitment unless it is highly probable that the commitment will be fulfilled, in which case the fee is included in the loan’s effective interest. Financial guarantees and irrevocable loan commitments are subject to impairment testing. Compound financial instruments A compound financial instrument consists of a derivative component known as an embedded derivative, and a non-derivative host contract. If the host contract in a compound financial instrument is a financial liability, an embedded derivative must be separated from the host contract and recognised as a derivative if all of the following terms are met: • The economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract. • A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. • The compound financial instrument is not measured at fair value through profit or loss. Consequently, derivatives embedded in financial liabilities measured at fair value through profit or loss are not recognised separately. Separate recognition is applied, for example, to the embedded derivative in issues of equity - linked bonds and other structured products. Embedded derivatives in financial assets are not recognised separately. Financial assets with embedded derivatives are regarded as a whole when assessing whether their contractual cash flows constitute solely payments of principal and interest. The inherent value of the option to convert in issued convertible debt instruments is rec- ognised separately in equity. The value of the equity component is determined at the time of issue as the difference between the fair value of the convertible debt instrument in its entirety reduced by the fair value of the liability com- ponent. The carrying amount of the equity component is not adjusted during the life of the convertible debt instrument. The liability com- ponent is measured and recognised at fair value on the balance sheet at the time of issue. After initial recognition, the liability component is rec- ognised at amortised cost based on the original effective interest rate. Repurchase transactions Repurchase agreements, or repo transactions, refer to agreements where the parties simulta- neously agree on the sale of specific securities and the repurchase of these securities at a pre-determined price. Securities sold in a repo transaction (repurchase agreement) remain on the balance sheet during the life of the transac- tion, as the Group is exposed to the value change risk applying to the security during this period. The sold instrument is also reported off-balance as a pledged asset, see note G43. Depending on the counterparty, payment received is rec- ognised under Due to credit institutions or as Deposits and borrowing from the public. Secu- rities bought in a repo transaction (reverse repurchase agreement) are accounted for in G1 cont. 71 Handelsbanken Annual and Sustainability Report 2024 3.1
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the corresponding way, i.e. they are not rec- ognised on the balance sheet during the life of the transaction. Depending on the counterparty, the payment made is recognised under Other loans to central banks, Loans to other credit institutions or Loans to the public. Collateral received which is sold on under repurchase agreements is recognised off-balance as a commitment, see note G44. Securities loans Lent securities remain on the balance sheet, as the Group is still exposed to the value change risk applying to the security, as well as being reported off-balance as pledged assets, see note G43. Borrowed securities are not recog- nised on the balance sheet unless they are sold (known as shortselling). If they are sold, a value corresponding to the sold instrument’s fair value is recognised as a liability. Borrowed securities which are lent to a third party are recognised off-balance as commitments, see note G44. Derivative instruments All derivatives are measured at fair value on the balance sheet. Derivatives with positive fair values are recognised on the assets side under Derivative instruments. Derivatives with nega- tive fair values are recognised on the liabilities side under Derivative instruments. Realised and unrealised gains and losses on derivatives are recognised in the income statement under Net gains/losses on financial transactions. For the recognition of derivatives through hedge accounting, see section 7. Offset of financial assets and liabilities Financial assets and liabilities are offset and reported at a net amount on the balance sheet if the Bank has a contractual right to offset, in its operating activities and in the event of bank- ruptcy, and if the intention is to settle the items on a net basis or to simultaneously liquidate the asset and settle the liability. Further information about set-off of financial assets and liabilities is provided in note G24. 5. Principles for fair value measurement of financial assets and liabilities (IFRS 13 Fair Value Measurement) Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent market participants. For financial instruments traded on an active market, the fair value is the same as the quoted market price. An active market is one where quoted prices are readily and regularly available from a regulated market, execution venue, reli- able news service or equivalent, and where the price information can be verified by means of regularly occurring transactions. The current market price corresponds to the price between the bid price and the offer price which is most representative of fair value under the circum- stances. For groups of financial instruments which are managed on the basis of the Bank’s net exposure to market risk, the current market price is presumed to be the same as the price which would be received or paid if the net posi- tion were divested. When there is no reliable information about market prices for financial instruments, fair value is established using valuation models. The valuation models used are based on input data which essentially can be verified using market observations such as market interest rates and share prices. If necessary, an adjust- ment is made for other variables which a market participant would be expected to take into con- sideration when setting a price. The assump- tions used in the valuation are based on market practice and are continuously reviewed by the risk control function, as well as being compared with the counterparty valuation. Interest-bearing securities Interest-bearing securities issued by govern- ments and Swedish mortgage bonds are valued using current market prices. Corporate bonds are valued using valuation techniques based on market yields for the corresponding maturity adjusted for credit and liquidity risk. The values are regularly reviewed in order to ensure that they reflect the current market price. The reviews are mainly performed by obtaining prices from several independent price sources and by rec- onciliation with recently performed transactions in the same or equivalent instruments. Shares Shares listed on an active market are valued at market price. When valuing unlisted shares and participations, the choice of model is deter- mined by what is deemed appropriate for the individual instrument. Holdings of unlisted shares mainly consist of shares in companies which engage in activities to support the Bank. In all material respects, unlisted shares are clas- sified at fair value through other comprehensive income. In general, such holdings are valued at the Bank’s share of the company’s net asset value. For unlisted shares for which the com- pany agreement regulates the price at which the shares can be divested, the holdings are valued at the predetermined divestment price. Derivatives Derivatives which are traded on an active mar- ket are valued at market price. Most of the Group’s derivative contracts, including interest rate swaps and various types of linear currency derivatives, are valued using valuation models based on market rates and other market prices. The valuation of non-linear derivative contracts that are not actively traded is also based on a reasonable assumption of market-based input data such as volatility. When performing model valuation for deriva- tives, in some cases there are differences between the transaction price and the value measured by a valuation model upon initial rec- ognition. Such differences occur when the applied valuation model does not fully incorpo- rate all the components that affect the value of the derivative. Unrealised results due to positive differences between the transaction price and the value measured by a valuation model (known as day 1 gains/losses) are comprised of the Bank’s profit margin and compensation to cover, for example, the cost of capital and administrative expenses. Unrealised positive day 1 gains/losses are not recognised in profit/ loss upon initial recognition, but are amortised over the life of the derivative. Assets and liabilities where the customer bears the value change risk Assets where the customer bears the value change risk mainly comprise mutual fund units in unit-linked insurance contracts. These mutual fund units are valued using the fund’s current market value (NAV). Each asset corresponds to a liability where the customer bears the value change risk. The valuation of these liabilities reflects the valuation of the assets. Since the policyholders/unit holders have prior rights to the assets, there is no motive to adjust the valu- ation for credit risk. Assets and liabilities where the customer bears the value change risk have essentially been classified at fair value through profit or loss. 6. Credit losses (IFRS 9 Financial Instruments) Expected credit losses The impairment rules presented in IFRS 9 apply to financial assets at amortised cost, financial assets at fair value through other comprehen- sive income, as well as financial guarantees and irrevocable loan commitments, and are based on a model for the recognition of expected credit losses. This model stipulates that the provision must reflect a probability- weighted amount determined through the evaluation of a number of potential outcomes, with consideration given to all reasonable and verifiable information available on the reporting date without unreasonable expense or exertion. The assessment takes into account historical, current and future-oriented factors. The assets to be tested for impairment are divided into the following three stages, depending on the degree of credit impairment: • Stage 1 comprises financial assets with no significant increase in credit risk since initial recognition. G1 cont. 72 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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• Stage 2 comprises financial assets with a significant increase in credit risk since initial recognition, but for which there is no objective evidence that the claim is credit-impaired at the time of reporting. • Stage 3 comprises financial assets for which objective circumstances have been identified indicating that the claim is credit-impaired. In Stage 1, provisions are to be recognised which correspond to the loss expected to occur within 12 months as a result of default. In Stage 2 and Stage 3, provisions are to be recognised corresponding to the loss expected to occur at some time during the whole of the remaining maturity of the asset as a result of default. For agreements in Stage 1 and Stage 2, there is a Group-wide, central process using model-based calculation. The process begins for all agreements with an assessment of whether there has been a significant increase in the credit risk since initial recognition (start date of the agreement). For a detailed description of significant increases in credit risk, see the “Credit risks” section of note G2. The provisions in the different impairment stages are calculated on an individual basis. Manual calculation is used for agreements in Stage 3, with the exception of a small portfolio of homogeneous claims which have a model-calculated provision in Stage 3. In conjunction with each reporting date, an assessment is made at agreement level as to whether an agreement will be subject to a model - based calculation or a manual calculation. The calculations of expected credit losses are primarily affected by the risk parameters “probability of default” (PD), “exposure at default” (EAD) and “loss given default” (LGD). Expected credit losses are determined by cal- culating PD, EAD and LGD up to the expected final maturity date of the agreement. The three risk parameters are multiplied and adjusted by the survival probability or, alternatively, the probability that a credit exposure has not defaulted or been repaid in advance. The esti- mated expected credit losses are then dis- counted back to the reporting date using the original effective interest rate and are totalled. Total credit losses in Stage 1 is calculated using the probability of default during the coming 12-month period. For Stage 2 and Stage 3, credit losses are calculated using the probabil- ity of default during the asset’s remaining time to maturity. Model-based calculation The calculation of the expected credit losses takes into consideration at least three macro- economic scenarios (one neutral, one upturn and one downturn scenario) with relevant mac- roeconomic risk factors, such as unemploy- ment, key/central bank rates, GDP , inflation and property prices, by country. The various scena- rios are used to adjust the risk parameters. Every macroeconomic scenario is assigned a probability, and the expected credit losses are obtained as a probability-weighted average of the expected credit losses for each scenario. For additional information on the models used to calculate expected credit losses for agreements in Stage 1 and Stage 2, and for an explanation of concepts such as PD, EAD and LGD, expected maturity, significant increase in credit risk and macroeconomic information, see the “Credit risks” section in note G2. For sensi- tivity analyses for expected credit losses, see note G10. Manual calculation Assets in Stage 3 are tested for impairment on an individual basis using a manual calculation. This testing is carried out on a regular basis and in conjunction with every reporting date by the local branch with business responsibility (unit with customer and credit responsibility) and is decided by the local and central credit departments. Impairment testing is carried out when there are objective circumstances which indicate that the counterparty will not be able to fulfil its con- tractual obligations, according to the definition of default. Such objective circumstances could be, for example, late payment, non-payment or an indication of unlikely payment. Impairment testing involves an estimation of the future cash flows and the value of the collat- eral (including guarantees). Consideration is normally given to at least two forward-looking scenarios for expected cash flows, based on both the customer’s repayment capacity and the value of the collateral. The outcome of these scenarios is probability-weighted and discounted with the loan’s original effective interest rate. The scenarios used can take into account both macroeconomic and agreement - specific factors, depending on what is deemed to affect the individual counterparty’s repay- ment capacity and the value of the collateral. The assessment takes into account the specific characteristics of the individual counterparty. An impairment loss is recognised if the esti- mated recoverable amount is less than the car- rying amount. Expert-based calculation Expert-based calculation is carried out for credit losses, in order to incorporate the esti- mated impact of factors not deemed to have been considered in the model (Stage 1 and Stage 2), or which have not been considered in manual calculations (Stage 3). The model - based calculations are constructed with the ambition of making as accurate estimations as possible of the individual contributions to the overall provision requirement. However, it is very difficult to incorporate all of the particular characteristics that define an individual agree- ment into a general model. For this reason, a manual analysis is carried out of the agree- ments which give the largest contributions to the overall provision requirement. The manual analysis aims to apply expert knowledge about the individual credits to an assessment of whether the model-based or manual calcula- tions need to be replaced with an expert-based calculation. An expert-based calculation may entail either a higher or lower provision require- ment than the original calculation. Expert-based calculation can also be carried out at a more aggregate level to adjust the model-based calculations for a sub-portfolio or similar. These adjustments are distributed proportionally over the agreements involved. An expert-based calculation may entail either a higher or lower provision requirement than the original calculation. Recognition and presentation of credit losses • Financial assets measured at amortised cost are recognised on the balance sheet at their net amount, after the deduction of expected credit losses. • Off-balance sheet items (financial guarantees and irrevocable loan commitments) are rec- ognised at their nominal amounts. Provisions for expected credit losses on these instru- ments are recognised as a provision on the balance sheet. • Financial assets at fair value through other comprehensive income are measured at fair value on the balance sheet. Provisions for expected credit losses on these instruments are recognised in the fair value reserve in equity and do not, therefore, reduce the car- rying amount of the instrument. • For financial assets measured at amortised cost and off-balance sheet items, the peri- od’s credit losses (expected and actual) are recognised in the income statement under the item Credit losses. The item Credit losses consists of the period’s provisions for expected credit losses, less reversals of pre- vious provisions, as well as write-offs and recoveries during the period. • For financial assets measured at fair value through other comprehensive income, the credit losses for the period (expected and actual) are recognised in the income state- ment under the item Net gains/losses on financial transactions. G1 cont. 73 Handelsbanken Annual and Sustainability Report 2024 3.1
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• Write-offs consist of actual credit losses, less reversals of previous provisions for expected credit losses in Stage 3 and may refer to either the entirety or parts of a financial asset. Write-offs are recorded when there is deemed to be no realistic possibility of repayment. Following a write-off, the claim on the bor- rower and any guarantor normally remains and is thereafter, as a rule, subject to enforce- ment activities. Enforcement activities are not pursued in certain situations, such as when a trustee in bankruptcy has submitted their final accounts of the distribution of assets in conjunction with the bankruptcy, when a scheme of arrangement has been accepted or when a claim has been conceded in its entirety. Claims for which a concession is granted in conjunction with a restructuring of financial assets are always recognised as actual credit losses. • Payments to the Bank in relation to written - off financial assets are recognised in income as recoveries. Further information on credit losses is provided in note G10. Default/Credit-impaired asset The Bank’s definition of default is identical to the definition applied in the Capital Require- ments Regulation (CRR), entailing either that the counterparty is over 90 days overdue with a payment or that an assessment has been made that the counterparty will be unable to fulfil its contractual payment obligations. Such an assessment implies that it is deemed to be more likely that the borrower will be unable to pay than that they will be able to pay. The assessment is founded on all available informa- tion about the borrower’s repayment capacity. Consideration is given to indicators of insol- vency such as insufficient liquidity, late and cancelled payments, records of non-payment or other signs of impaired repayment capacity. Other signals may include the borrower entering into bankruptcy or the granting of a substantial forbearance measure entailing a decrease in the value of the Bank’s claim on the borrower. The probability of default is calculated before each reporting date and is incorporated in the assessment of whether there has been a signifi- cant increase in the credit risk since the initial recognition, as well as in the calculation of expected credit losses for financial assets in Stage 1 and Stage 2. A credit-impaired financial asset, which is an exposure in Stage 3, is defined as an exposure in default. This means that the assessment for accounting purposes is consistent with the assessment used in the Group’s credit risk management. Interest In Stage 1 and Stage 2, recognition of interest income attributable to items on the balance sheet is based on gross accounting, which means that the full amount of interest income is recognised under Net interest income. In Stage 3, interest income is recognised net, that is, taking into account impairment. Interest rate effects arising due to discounting effects, attrib- utable to the decrease of the period until the expected payment, result in a reversal of previ- ously provisioned amounts and are recognised as interest income in accordance with the effec- tive interest method. Valuation of repossessed property and equipment to protect claims Upon initial recognition, repossessed property and equipment is recognised at fair value on the balance sheet. Repossessed property and equipment (including repossessed lease assets) which is expected to be divested in the near future is valued at the lower of the carrying amount and fair value less costs to sell. Unlisted shareholdings taken over to protect claims are normally recognised at fair value through profit or loss. Modified financial assets A loan is seen as modified when the terms and provisions which determine the cash flows are amended relative to those in the original agree- ment as the result of forbearance measures or commercial renegotiations. Forbearance mea- sures refer to changes in terms and conditions in conjunction with restructurings or other financial relief measures. Such changes are implemented with the objective of securing repayment in full, or of maximising the repay- ment of the outstanding loan amount, from lenders experiencing, or facing, financial diffi- culties. Commercial renegotiations refer to changes to terms and conditions which are not related to a borrower’s financial difficulties, such as changes in the cash flow for a loan arising due to changes in the market conditions for repayment or interest. If the cash flows from a financial asset which is classified as measured at amortised cost have been modified, but the cash flows have not significantly changed, the modification does not normally cause the financial asset to be derecognised from the balance sheet. In such cases, the gross carrying amount is recalcu- lated on the basis of the changed cash flows of the financial asset, and the adjustment amount is recognised in the income statement. As there may be various reasons for carrying out a modification, there is no unconditional connection between modifications and assessed credit risk. When a financial asset is subject to forbearance measures and the asset remains on the balance sheet, it is classified in Stage 2 or Stage 3, based on the outcome of the assessment made when granting the for- bearance measure. The assessment involves a check of whether a provision is required for credit loss, or other circumstances which result in classification in Stage 3. If a financial asset is modified in a way that results in significantly changed cash flows, the modified financial asset is derecognised from the balance sheet and replaced with a new agreement. In such cases, the modification date constitutes the initial recognition date for the new agreement and this date is used there- after for the calculation of expected credit losses and for the assessment of whether there has been a significant increase in the credit risk since the initial recognition. 7. Hedge accounting (IAS 39 Financial Instruments: Recognition and Measurement) Handels banken has elected to continue to apply the hedge accounting rules in IAS 39, in accordance with the transitional rules in IFRS 9. The Group applies different methods for hedge accounting, depending on the purpose of the hedge. Derivatives – mainly interest rate swaps and cross-currency interest rate swaps – are used as hedging instruments. When hedging foreign exchange risks related to net invest - ments in foreign operations, liabilities in the functional currency of the respective foreign operation are used as a hedging instrument. As part of the Group’s hedging strategies, the value changes of a hedging instrument are sometimes divided into separate components and included in more than one hedging relation- ship. Therefore, one and the same hedging instrument can hedge different risks. Division of hedging instruments is only done if the hedged risks can clearly be identified, the efficiency can be reliably measured, and the total value change of the hedging instrument is included in any hedging relationship. Fair value hedges are used to protect the Group against undesirable impact on profit/loss due to exposure to changes in market prices. Fair value hedges are applied for individual assets and liabilities and for portfolios of finan- cial instruments. Hedged risks in hedging rela- tionships at fair value comprise the interest rate risk on lending and funding at fixed interest rates. The hedging instruments in these hedging relationships consist of interest rate swaps. In the case of fair value hedges, the hedging instrument and hedged risk are both recognised at fair value. Changes in value are recognised directly in the income statement under Net gains/losses on financial transactions. When portfolio hedging is applied, the value of the hedged item is reported as a separate line item in the balance sheet in conjunction with Loans to the public. When fair value hedges are terminated early, the accrued value change on the hedged item is amortised under Net gains/losses on financial transactions during the remaining time to maturity. When a fair value hedge is terminated early, and the hedged item G1 cont. 74 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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no longer exists, the value change generated is reversed directly under Net gains/losses on financial transactions. Cash flow hedges are applied to manage exposures to variations in cash flows relating to changes in the floating interest rates on lending and funding. The expected maturity for this type of lending and funding is normally much longer than the interest rate adjustment period, which is very short. Cash flow hedging is also used to hedge foreign exchange risk in future cash flows deriving from lending and funding. For- eign exchange risks deriving from intra-group monetary items can also be subject to this type of hedging, if they give rise to currency expo- sures which are not fully eliminated on consoli- dation. Derivatives which are hedging instru- ments in cash flow hedges are measured at fair value. If the derivative’s value change is effec- tive – that is, it corresponds to future cash flows related to the hedged item – it is recognised as a component of Other comprehensive income and in the hedge reserve in equity. Ineffective components of the derivative’s value change are recognised in the income statement under Net gains/losses on financial transactions. When a cash flow hedge is terminated early, the cumulative gain or loss on the hedging instru- ment previously recognised in other compre- hensive income is amortised under Net gains/ losses on financial transactions during the period in which the hedged cash flows are expected to occur. If cash flow hedges are terminated early and the hedged cash flows are no longer expected to occur, the accumulated value change in the hedge reserve is reclassi- fied to Net gains/losses on financial transactions. Hedging of net investments in foreign entities is applied to protect the Group from exchange differences due to operations abroad. Loans in foreign currencies are used as hedging instru- ments. The hedged item in these hedges com- prises the exposure in the foreign currency attributable to the carrying amount of the initial portion of the net assets in a foreign operation. Loans in foreign currency that hedge net invest- ments in foreign operations are recognised in the Group at the exchange rate on the balance sheet date. The effective part of the exchange differences for such loans is recognised as a component of Other comprehensive income and in the translation reserve in equity. The ineffec- tive components of hedges of net investments in foreign operations are recognised in the income statement under Net gains/losses on financial transactions. For more information, see note G23 Hedge accounting. 8. Insurance operations Classification Handels banken’s insurance contracts can be comprised of risk insurance components, sav- ings insurance components, or both. Classifica- tion as an insurance contract or an investment contract is determined by the specific insurance components (savings insurance components/ risk insurance components) in the contract, as these have differing financial implications. The savings insurance components of traditional life insurance contracts, as well as risk insurance contracts and risk insurance components sepa- rated from combined traditional life insurance contracts and unit-linked insurance contracts, transfer significant insurance risk and are clas- sified, measured and recognised as insurance contracts. The savings insurance component in unit-linked insurance contracts and portfolio bond insurance contracts is classified as an investment contract and recognised in accor- dance with IFRS 9. Insurance contracts’ level of aggregation Handels banken has identified portfolios of insurance contracts on the basis of the insur- ance risks to which they expose the Bank. For the savings insurance components of the tradi- tional life insurance contracts, all contracts have been deemed to be profitable. Further- more, a significant amount of time has elapsed since these contracts were signed and it is no longer possible to sign new contracts of this product type, which is why only one portfolio and grouping have been identified. For risk insurance contracts and risk insurance compo- nents, each respective insurance product con- stitutes a separate portfolio. Since all contracts have been deemed to be profitable, only one grouping per portfolio has been identified. These groupings have been separated further based on the contracts signed more than one year apart not being included in the same grouping. Measurement of insurance contracts Handels banken applies the general measure- ment model when measuring the liability for the remaining insurance coverage for the savings insurance components of the traditional life insurance contracts. The reason that the gen- eral measurement model is applied is that these contracts have tenors that are significantly lon- ger than one year, and the high benefits in the contracts results in non-conditional disburse- ments of supplementary amounts, which are those that vary according to the returns on the underlying assets, that are not expected to comprise a material proportion of the total dis- bursements. Under the general measurement model, the liability for remaining coverage is measured as the total of the expected present value of future cash flows, a risk adjustment and a contractual service margin. Handels- banken has not identified onerous contracts. Liability for incurred claims are measured as the total of the expected present value of future cash flows and a risk adjustment. However, claims with an expected settlement date within 12 months are not discounted. For a more detailed description of the expected present value of future cash flows, risk adjustment and contractual service margin, see note G34. Handels banken applies the premium alloca- tion approach when measuring the liability for remaining coverage in risk insurance contracts and risk insurance components separated from combined traditional life insurance contracts and unit-linked insurance contracts, and for reinsurance contracts. The reason that the pre- mium allocation approach is applied is that these contracts have a tenor of a maximum of one year. The liability for remaining coverage is not discounted and instead is measured at received, but not yet earned premiums. Re- ceived premiums are recognised as income on a straight-line basis as the coverage is provided. Handels banken has not identified onerous contracts. Recognition of insurance contracts and reinsurance contracts held The liability for remaining coverage and liability for incurred claims are recognised under the balance-sheet item Insurance liabilities. Assets and liabilities relating to reinsurance contracts held are recognised in the items Other assets and Other liabilities, respectively. The net result from insurance contracts is presented as a total under the item Net insurance result in profit or loss. Net insurance result includes the items Insurance result and Return on assets held on behalf of policyholders. The line Insurance result includes income and expenses attribut- able to insurance contracts as well as operating expenses. The line Return on assets held on behalf of policyholders is recognised in accor- dance with IFRS 9, but is included in net insur- ance result since the assets are attributable to contracts that are recognised as insurance con- tracts. The effects of a changed discount rate when measuring the savings insurance compo- nent of traditional life insurance contracts, which are accumulated in the item Insurance contracts in equity, are recognised in Other comprehensive income. Upon the transition to IFRS 17, the amount in Other comprehensive income was zero. Recognition and measurement of investment contracts The savings insurance component in unit-linked insurance contracts and portfolio bond insur- ance contracts comprises investment con- tracts. These contracts and the associated investment assets are measured at fair value through profit or loss. These items are rec- G1 cont. 75 Handelsbanken Annual and Sustainability Report 2024 3.1
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ognised on the balance sheet under Assets and Liabilities where the customer bears the value change risk, respectively. Premium fees, asset fees and other administrative charges from investment contracts are recognised in the income statement under Fee and commission income. Acquisition costs are also recognised directly in the income statement. Changes in the values of assets and liabilities are rec- ognised under Net gains/losses on financial transactions. 9. Assets held for sale and accounting of discontinued operations (IFRS 5) Non-current Assets Held for Sale and Discontinued Operations Non-current assets or a group of assets, pos- sibly with some directly associated liabilities, (disposal group) are classified as held for sale when the carrying amount will be mainly recov- ered through a sale and when a sale is highly probable. If an asset is classified as held for sale, special valuation principles are applied. These principles essentially mean that, with the exception of items such as financial assets and liabilities (see point 4), assets held for sale and disposal groups are measured at the lower of the carrying amount and fair value less costs to sell. Thus, property and equipment or intangible assets held for sale are not depreciated or amortised. Any impairment losses and sub- sequent revaluations are recognised directly in the income statement. However, a gain is not reported to the extent that it exceeds previously recognised accumulated impairment. Assets and liabilities held for sale are reported as a separate item on the Group’s balance sheet until the time of sale. Independent operations of a material nature which can be clearly differentiated from the Group’s other operations, and which have either been divested or are classified as held for sale using the policies described above, are rec- ognised as discontinued operations. In recogni- tion as a discontinued operation, the opera- tion’s profit is reported on a separate line in the income statement, separately from other profit/ loss items. Profit or loss from discontinued operations comprises the profit or loss after tax of discontinued operations, the profit or loss after tax that arises when valuing the assets held for sale/disposal groups that are included in discontinued operations at fair value less costs to sell, and realised gains/losses from the disposal of discontinued operations. For disclosures regarding assets and liabilities held for sale and discontinued operations, see note G14. 10. Equity Equity comprises the components described here. Share capital There are two classes of Handels banken’s share: class A and class B. Class A shares each carry one vote, while class B shares have one- tenth of a vote. Both classes of share entail the same right to dividends. Share premium reserve The share premium reserve comprises the options component of issued convertible debt instruments and the amount that in the issue of shares and conversion of convertible debt instruments exceeds the quota value of the shares issued. Other reserves Defined benefit pension plans The item Defined benefit pension plans is com- prised of actuarial gains and losses on the pen- sion obligation, as well as the return on plan assets that exceeds or falls below the return based on the discount rate. Cash flow hedges Unrealised changes in the value of derivative instruments which comprise hedging instru- ments in cash flow hedges are reported in the item Cash flow hedges (Hedge reserve) to the extent that the hedge is effective, that is to say, has corresponding future cash flows attribut- able to the hedged item. Fair value through other comprehensive income Unrealised changes in the value of financial assets classified as measured at fair value through other comprehensive income are rec- ognised in the item Fair value through other comprehensive income (Fair value reserve). Furthermore, the item includes provisions for expected credit losses on debt instruments classified as measured at fair value through other comprehensive income. Realised changes in the value of debt instruments classified as measured at fair value through other compre- hensive income are reclassified from the item fair value through other comprehensive income to profit or loss. Realised changes in the value of equity instruments classified as measured at fair value through other comprehensive income are reclassified from the item fair value through other comprehensive income to retained earnings. Insurance contracts The effects of a changed discount rate when measuring the savings insurance component of traditional life insurance contracts are rec- ognised in the item Insurance contracts. Translation of foreign operations The item Translation foreign currencies (Trans- lation reserve) comprises unrealised foreign exchange effects arising due to translation of foreign entities to the presentation currency of the consolidated accounts. In addition, effective parts of hedges of net investments in foreign operations are recognised in the item, as well as translation differences that have arisen from non-monetary items classified as measured at fair value through other comprehensive income. Retained earnings including profit for the year Retained earnings comprise the profits gener- ated from the current and previous financial years. Dividends and repurchases of own shares are reported as deductions from retained earnings. Realised gains/losses attributable to equity instruments classified as measured at fair value through other comprehensive income are re- classified from the item fair value through other comprehensive income to retained earnings. Non-controlling interest Non-controlling interest consists of the portion of the Group’s net assets that is not directly or indirectly owned by holders of the parent com- pany’s ordinary shares. Non-controlling interest is recorded as a separate component of equity. 11. Income Net interest income Interest income and interest expenses are rec- ognised as Net interest income in the income statement, with the exception of interest flows deriving from financial instruments mandatorily measured at fair value through profit or loss, which are recognised under Net gains/losses on financial transactions, where the overall activity in the trading book is recognised. Interest income and interest expenses for financial instruments at amortised cost are cal- culated and recognised by applying the effec- tive interest method or, where considered appropriate, by applying a method that results in an amount constituting a reasonable estimate of the results of a calculation based on the effective interest method. Effective interest includes fees which are considered an integral part of the effective interest rate of a financial instrument (generally fees compensating for risk). The effective interest rate corresponds to the rate used to discount future contractual cash flows to the carrying amount of the finan- cial asset or liability. Net interest income also includes interest from derivative instruments recognised through hedge accounting and interest from derivatives in economic hedges, as these hedge items for G1 cont. 76 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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which the interest flows are recognised under Net interest income. In addition to interest income and interest expenses, net interest income includes fees for deposit insurance. Net fee and commission income Fee and commission income is recognised at the point in time at which the performance obligation is satisfied, which corresponds to the transfer of control over the service to the customer. The total income is divided between each service and recognition in income depends on whether the services are fulfilled at a specific point in time, or over time. Fee and commission income in the form of, for example, management fees in asset management, is usually recog- nised at the rate these services are performed. Fee and commission income in the form of, for example, brokerage, card fees or payment commissions, is generally recognised when the service has been performed, i.e. at a specific point in time. When the income includes vari- able remuneration, such as a refund, bonus or performance-based element, the income is rec- ognised only when it is highly probable that no repayment of the amount will take place. Lend- ing fees not included in the effective interest are recognised as fee and commission income. Fee and commission expenses are transaction - based and directly related to transactions for which the income is recognised as Fee and commission income. Net gains/losses on financial transactions Net gains/losses on financial transactions includes all items with an impact on profit or loss that arise when measuring financial assets and liabilities at fair value through profit or loss, and when financial assets and liabilities are realised (with the exception of equity instruments classified as measured at fair value through other comprehensive income). • Gains/losses on financial instruments at amortised cost consist of realised gains and losses on financial assets and liabilities clas- sified as measured at amortised cost, such as early repayment charges for loans redeemed ahead of time, and capital gains/ losses generated from repurchases of the Bank’s own issued securities. • Gains/losses on financial instruments at fair value through other comprehensive income consist of realised gains and losses on inter- est-bearing securities classified as measured at fair value through other comprehensive in- come. Realised gains and losses are reclas- sified from other comprehensive income to Net gains/losses on financial transactions in conjunction with a divestment/sale. The item also includes credit losses (expected and actual) on these assets. • Gains/losses on financial instruments mea- sured at fair value through profit or loss, fair value option, consist of unrealised and real- ised changes in the value of financial assets and liabilities that upon initial recognition were identified as measured at fair value through profit or loss. • Gains/losses on financial instruments mea- sured at fair value through profit or loss, mandatory, consist of unrealised and realised changes in value, dividend income and inter- est (with the exception of interest deriving from derivatives used to hedge items for which the interest flow is recognised in net interest income) on financial assets and liabil- ities held for trading, or which are managed and evaluated on the basis of fair value. • Fair value hedges consist of unrealised and realised changes in the value of hedging instruments, and the hedged risk component in financial assets and liabilities which consti- tute hedged items in fair value hedges. In- effective portion of cash flow hedges con- sists of changes in the value of hedging instruments which do not correspond to future cash flows attributable to the hedged item. • Gains and losses arising as a result of trans- lating monetary items in foreign currencies (meaning a different currency to the func- tional currency), and non-monetary items in foreign currencies that are measured at fair value, using the prevailing closing rate on the balance sheet date. Gains/losses on financial assets and liabilities in foreign currencies measured at amortised cost, translated at the prevailing closing rate on the balance sheet date, are thus recognised under Net gains/ losses on financial transactions. • Return on assets held on behalf of policy- holders are deducted from Net gains/losses on financial transactions since they are included in Net insurance result. Dividend Dividends on shares measured at fair value through other comprehensive income are rec- ognised in the income statement under the item Other dividend income. Dividends on shares measured at fair value through profit or loss are recognised in the income statement under the item Net gains/losses on financial transactions. Any dividends from associates and joint ventures are deducted from the carrying amount of the investments in associates and joint ventures. 12. Employee benefits (IAS 19 Employee Benefits) Staff costs Staff costs consist of salaries, pension costs and other forms of direct staff costs including social security costs, special payroll tax on pension costs and other forms of payroll over- heads. Any remuneration in connection with terminated employment is recognised as a lia- bility when the agreement is reached and amor- tised over the remaining employment period. Accounting for pensions The Bank’s post-employment benefits consist of pension obligations that are classified as either defined contribution plans or defined benefit plans. For defined contribution plans, the Bank pays fixed premiums into a separate legal entity, and the employee bears the value change risk until the funds are paid out. For these plans, the Bank has no further obligations after the premiums have been paid. Premiums paid for defined contribution plans are rec- ognised in the income statement as staff costs as they arise, by means of the employee ren- dering services to the Bank. Other pension obligations are classified as defined benefit plans. For defined benefit pen- sion plans, the pension payable is based on the salary and period of employment, implying that the Bank bears all the material risks for ful- filling the pension obligation. The Projected Unit Credit Method is applied to calculate the pension obligations and associated costs, and the present value of the pension commitment is recognised as a pension obligation. For the majority of defined benefit plans, the Group has kept plan assets, for the purpose of cover- ing the obligation, separately in pension foun- dations and a pension fund or similar. The pension obligations minus the fair value of the plan assets are reported as net pensions on the balance sheet. The pension costs for defined benefit plans are recognised in the income statement as staff costs, which com- prises the cost of the pension rights earned during the year, interest expense on the pen- sion obligation and interest income on the plan assets. The calculation of pension rights earned during the year is based on an estimated final salary and is subject to actuarial assumptions, and refers to the proportion of the calculated final total pension payment for the year. The same interest rate is applied in calculating interest expense and interest income for the year as is used for the current corporate bond rate (the rate at the start of the year) for matur- ities corresponding to the period remaining until the pension liability is due to be disbursed. Actual gains and losses on the pension obliga- G1 cont. 77 Handelsbanken Annual and Sustainability Report 2024 3.1
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tion arising when the actual outcome deviates from assumptions are recognised in other comprehensive income, as is the difference between actual return and estimated interest income on the plan assets. Calculation of costs and obligations resulting from the Group’s defined benefit plans depends on several assessments and assumptions which may have a considerable impact on the amounts reported. A more detailed description of these assumptions and assessments is pro- vided in section 13 and in note G8. 13. Material assessments and estimates In certain cases, the application of the Group’s accounting policies means that management must make assessments (in addition to those applying to estimates) that have a material impact on amounts reported. The amounts reported are also affected, in a number of cases, by assumptions about the future and estimates. Assumptions and sources of uncer- tainty in estimates always imply a risk for adjustment of the carrying amount of assets and liabilities. The assessments, assumptions about the future and estimates applied always reflect management’s best and fairest assess- ments and are continually subject to examina- tion and validation. The assessments, assumptions about the future and estimates that have had a material impact on the financial reports are described below. Consolidated accounts A structured entity is an entity that has been formed to achieve a limited and well-defined purpose, and designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Handels banken’s inter- ests in structured entities are limited to holdings in funds. Funds for which the Bank is the asset man- ager and in which the Bank holds more than 50% of the units are consolidated. The Bank’s interests in the fund are recognised at fair value on the line Shares in the balance sheet. The remaining portion of the fund’s fair value is con- solidated and recognised in the line items Assets where the customer bears the value change risk and Liabilities where the customer bears the value change risk in the balance sheet. Hold- ings ranging between 20% and 50% are con- solidated in certain cases if the circumstances indicate that the Bank has control of them, for example, because the fund has a broad man- agement mandate and generates a high propor- tion of variable returns. Interests under unit-linked insurance con- tracts are not assessed as entailing that the Group is exposed to variable returns. These interests are excluded from the assessment of whether control over the fund exists. Units in funds under unit-linked insurance contracts are recognised as Assets where the customer bears the value change risk, while the corre- sponding liability for unit-linked insurance contracts is recognised as Liabilities where the customer bears the value change risk. For further information about interests in unconsolidated structured entities, see note G49. Financial instruments at fair value The categorisation of financial instruments at fair value in level 1, level 2 and level 3 requires assessments of the degree of transparency regarding market data used in the valuation. Financial instruments measured at current market prices in an active market are included in level 1. The financial instruments measured based on valuation models using inputs that essentially can be verified using market obser- vations are included in level 2. Financial instru- ments measured based on valuation models that to a material extent are affected by input data that cannot be verified using external mar- ket data are categorised as level 3. Accordingly, assessments have been made to identify the financial instruments that do not have an active market. Furthermore, assessments were made in selecting the valuation models to be applied and which inputs are to be used in the valuation models. The starting point is that inputs used in the valuation models can essentially be verified using market observations, such as quoted share prices and interest rates. Whenever the inputs for a valuation model cannot be verified to a material extent using external market data, it is necessary for management to apply its own assumptions and estimates for calculating the fair value. However, the Bank’s holdings of financial assets classified in Level 3 represent only a minor share of total financial assets mea- sured at fair value. The Bank has an established control environment for determining the fair val- ues of financial instruments which includes a review of valuation models and market prices performed by the risk control function. The car- rying amounts of financial instruments at fair value are presented in note G42 Fair value mea- surement of financial instruments. For more information about material assess- ments for the fair value measurement of finan- cial instruments and the assumptions applied, see note G1 section 5 Principles for fair value measurement of financial assets and liabilities and note G42 Fair value measurement of finan- cial instruments. Classification of insurance contracts and calculation of insurance liabilities Under IFRS 17, the basis of application of the standard is the legal insurance contract if this is deemed to transfer a significant insurance risk. The Bank has assessed that the classifica- tion as an insurance contract or an investment contract is to be determined by the specific insurance components (savings insurance components/risk insurance components) in the contract, as these have differing financial impli- cations. A separation of the savings insurance and risk insurance components provides the most correct reporting since only the latter transfers significant insurance risk. The Bank’s assessment is that it would have a marginal effect on the Bank’s financial position or earn- ings if all combined unit-linked insurance con- tracts had been recognised in accordance with IFRS 17, due to the short contract tenors. The contracts refer to long-term savings but, according to the accounting judgement, have only short contract tenors (up to one year) since the price can be adjusted on an ongoing basis. Assumptions about the future are applied when calculating the expected present value of future cash flows for the insurance liability, which entails that the calculation is associated with uncertainty. The carrying amounts of insurance liabilities are presented in note G34 Insurance liabilities. For more information about material assess- ments and the assumptions and estimates applied to the calculation of insurance liabilities, and the decision-making process, see note G34 Insurance liabilities. Actuarial calculation of defined benefit pension plans Calculation of the Group’s expense and obliga- tions for defined benefit pensions is based on a number of actuarial, demographic and financial assumptions that management has deemed have a significant impact on the carrying amount. Note G8 Staff costs presents a list of the most significant assumptions used when calculating this year’s provision. The discount rate for defined benefit pensions is assessed every quarter and other assumptions are assessed annually or when a material change has occurred. The discount rate used by the Bank in the calculation is based on a number of first-class, liquid corporate bonds with varying maturities. For corporate bonds with maturities corre- sponding to the estimate average maturity of the pension obligation, this currently being 20 years, the discount rate is determined of the basis of market interest rates. In order to create a stable base of bonds, when the selection of corporate bonds with maturities corresponding to that of the pension liability is inadequate, corporate bonds with a maturity shorter than that of the pension liability are also used as the basis for determining the discount rate. For these, the discount rate is determined on the basis of a yield curve. The yield curve is con- structed as a spread over the Swedish swap curve. The spread, which is based on corporate G1 cont. 78 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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bonds, excluding own issues, is applied to the swap curve. In this way, a yield curve is mod- elled and a 20-year yield can be derived from this. The carrying amounts of pension obliga- tions are presented in note G8 Staff costs. Note G8 Staff costs provides a sensitivity analysis of the Group’s pension obligations for all major actuarial assumptions. This shows how the obligation would have been affected by rea- sonably feasible changes in these assumptions. Credit losses Material assessments, assumptions about the future and estimates were made when calculat- ing expected credit losses. The valuation of expected credit losses is inherently associated with a certain degree of uncertainty. Areas involving a high degree of assessments and estimates are described below under the respective headings. Future-oriented information in macroeconomic scenarios Handels banken continuously monitors macro- economic developments, with a particular focus on the home markets. Through this monitoring, the Bank develops the macroeconomic scenar- ios which form the basis for the future-oriented information used in the model-based calcula- tion of expected credit losses. The capacity of the Bank’s customers to fulfil their contractual payments varies in line with macroeconomic developments. Consequently, future macro- economic developments have an impact on the Bank’s view of the provision needed to cover expected losses. The calculation of the provi- sion requirement for expected credit losses is based on the neutral scenario proposed by the Bank’s macroeconomic research unit. As the losses may be more highly affected by a future deterioration of economic trends than by the equivalent improvement, the Bank uses at least two alternative scenarios to take into account the non-linear aspects of expected credit losses. These alternative sce- narios represent conceivable developments, one significantly worse and one significantly better than the neutral scenario. The most sig- nificant macroeconomic risk factors have been selected on the basis of the Bank’s loss history over the past decade, supplemented with experience-based assessments. These macro- economic risk factors are then used in the Bank’s quantitative statistical models for fore- casting migrations, defaults, loss rates and exposures. The macroeconomic risk factors include unemployment, key/central bank rates, GDP , inflation and property prices. The Bank’s business model, to offer credit to customers with a high repayment capacity, means that the connection between the macroeconomic developments and the provision requirement is not always especially pronounced. For a more detailed description of macroeconomic infor- mation, see the “Credit risks” section of note G2. The calculation of expected credit losses applies forward-looking information in the form of macro economic scenarios. A change in the macroeconomic scenarios, or in the probability weights applied, affects both the assessment of significant increases in credit risk and the estimated expected credit losses. The carrying amounts of provisions for expected credit losses are presented in note G10 Credit losses. For a description and the outcome of sensitivity analyses, see note G10 Credit losses. Significant increase in credit risk The Bank makes an assessment at agreement level at the end of each reporting period as to whether there has been a significant increase in credit risk since initial recognition. For a more detailed description of significant increases in credit risk, see the “Credit risks” section of note G2. Model-based calculation The quantitative models which form the basis for the calculation of expected credit losses for agreements in Stage 1 and Stage 2 make use of several assumptions and assessments. One key assumption is that the quantifiable relation- ships between macroeconomic risk factors and risk parameters in historical data are represen- tative of future events. The quantitative models applied are based on a history of approximately ten years, although this history varies by prod- uct and region due to inconsistency in the avail- ability of historical outcomes. The quantitative models have been constructed with the help of econometric models, applying the assumption that the observations are independently condi- tioned by the risk factors. This means that the risk parameters can be predicted without dis- tortion. Furthermore, a selection of the most significant macroeconomic risk factors is made on the basis of the macroeconomic risk factors’ explanatory power in relation to individual risk parameters. The selection of the macroeconomic risk factors and specification of the model are made to achieve a balance between simplicity, demonstrative ability and stability. Currently, no climate-related factors have been included in the models, but the matter is subject to con- tinuous assessment. Climate-related risks, and certain other environmental risks, are assessed in the credit process and are included in the internal rating at counterparty level, which com- prises a risk factor that impacts the calculation of forward-looking probabilities for the risk param- eters PD, LGD and EAD. For a more detailed description of models and model validations, see the “Credit risks” section of note G2. Manual and expert-based calculation Assets in Stage 3 are tested for impairment at agreement level using a manual calculation. For impairment testing, material assessments are made regarding such factors as future cash flows, the scenarios to be applied and the probability of the various scenarios occurring, and to assess the value of the collateral. For a more detailed description of manual calcula- tions, see point 6 under the heading “Manual calculation” and the “Credit risks” section of note G2. Expert-based calculation is carried out for model outcomes on agreements in Stage 1 and Stage 2, in order to incorporate the estimated impact of factors not deemed to have been considered in the model, as well as for manually assessed agreements in Stage 3. Expert-based calculations are performed based on expert knowledge of individual loans and/or sub-port- folios, which involves making material assess- ments. For a more detailed description of expert-based calculations, see point 6 under the heading “Expert-based calculation.” Other assessments Sustainability risks When preparing the annual report, material assessments were made regarding the extent to which sustainability risks, mainly climate- related and certain other environmental risks, have impacted the financial statements and the estimates and assumptions applied. The assessment is that it is essentially expected credit losses that could potentially be impacted by climate and other environmental risks (see Credit losses above). The Bank continuously performs assessments of whether sustainability risks could potentially impact other areas of the financial statements, which mainly consist of fair value measurement of financial instruments and provisions and contingent liabilities. These assessments did not identify any requirement to consider sustainability risks for areas other than expected credit losses. The Bank’s overall assessment is that sustainability risks have not had a material impact on the financial state- ments for 2024. G1 cont. 79 Handelsbanken Annual and Sustainability Report 2024 3.1
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G2 Risk and capital management Handels banken’s low risk tolerance is a central element of the Bank’s business concept. The low risk tolerance, together with a decentral- ised way of working, stable finances, and accountability, make up the foundation of Handels banken’s long-term customer relation- ships. The information in this note includes the dis- posal groups in Finland, which have been re- classified to Assets held for sale and Liabilities held for sale on the balance sheet, respec- tively, and which constitutes discontinued operations, see note G14. Resilient risk management The aim of Handels banken’s capital and liquid- ity planning is to ensure that the Bank remains a going concern in both normal conditions and under stress. The result of this is a strong capital and liquidity situation and continuous access to the financial markets via the Bank’s short-term and long-term funding programmes. The Bank has a large and high-quality liquid- ity reserve, which provides a good degree of resistance to possible disruptions in the finan- cial markets. Handels banken Treasury’s liquid- ity portfolio, which is part of the Bank’s liquidity reserve, has a low risk profile and primarily consists of balances with central banks, gov- ernment bonds and covered bonds. In addi- tion, there is a comprehensive unutilised issue amount for covered bonds at Stadshypotek. Liquidity reserves are kept in all currencies that are important to the Bank. Operations can thus be maintained for a considerable period of time even in an extreme situation when mar- kets are closed. The total liquidity reserve including the unutilised issue amount covers the Bank’s liquidity requirements for more than three years in a stressed scenario. The Bank’s capital situation remains strong. Good earnings and low credit losses during the year have contributed to this. The Bank performs special stress tests, which consider such factors as the macroeco- nomic and geopolitical situation, the prevailing market situation and the effects of climate change to be able to act at an early stage if the liquidity or capital situation were to deteriorate. The geopolitical security situation has heightened the risk of different types of attacks on critical infrastructure in society. The Bank’s security department is monitoring develop- ments and assesses the risk of various scena- rios on an ongoing basis. Risk tolerance Handels banken has a low risk tolerance based on an overall strategy of avoiding or minimising risk and thereby remaining a stable business partner for its customers regardless of the eco- nomic climate or market situation. The low risk tolerance is the foundation of the risk manage- ment framework applied by the Bank. This framework comprises the strategies, processes, limits, controls and reporting procedures that are stipulated in steering documents at various levels in the Group. The Bank’s business model is centred on taking and managing credit risks in the branch operations with the aim of establishing long- term relationships with customers that have a good repayment capacity and strong financial position. The quality requirement must never be neglected in favour of higher credit volumes, higher prices or market share. For the past few decades, Handels banken’s credit loss ratio has been significantly lower than the average of other Nordic banks. The Bank’s starting point is that no credit shall lead to a loss. This approach governs how the branches grant and follow up credits. In order to keep the Bank’s exposure to market and liquidity risks within the low risk tolerance, such risks are only to occur as a natural part of customer business, in connec- tion with the Bank’s funding and liquidity management, and in its role as market maker. These risks are limited by matching interest rate adjustment periods and cash flows in dif- ferent currencies, hedging open positions and maintaining a liquidity reserve of high quality. The Bank’s low tolerance for market risk has resulted in a comparatively low proportion of the Bank’s earnings coming from net gains/ losses on financial transactions. In line with the low risk tolerance, the Bank endeavours to prevent operational risk and compliance risk as far as possible. The risk tolerance for sustainability risks is also low and these risks are managed as an integral part of the Bank’s traditional risk areas. -0.2 0.0 0.2 0.4 0.6 0.8 1.0 242322212019181716151413121110090807 Handelsbanken Other Nordic banks Credit losses as % of loans 2007–2024 % 0 5 10 15 20 25 24232221201918171)161)151)141)13121110090807 1) Excluding non-recurring items. Net gains/losses on financial transactions as a proportion of profit 2007–2024 % 80 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Risks at Handelsbanken Risk Description Credit risk The risk of the Bank facing economic loss because the Bank’s counterparties cannot fulfil their contractual obligations. Credit risk also includes counterparty risk in connection with transactions in currency, fixed-income, commodity and equities markets, meaning the risk that the counterparty is unable to meet its commitments. Market risk The risks arises from price and volatility changes in the financial markets. Market risks are divided into interest rate risk, equity price risk, foreign exchange risk and commodity price risk. Liquidity risk The risk that the Bank will not be able to meet its payment obligations when they fall due without being affected by unacceptable costs or losses. Operational risk The risk of loss due to inadequate or failed internal processes, human error, erroneous systems or external events. The definition includes legal risk, model risk, and information and communication technology (ICT) risk. Compliance risk The risk associated with the Bank’s failure to comply with external and internal rules and regulations, accepted market practice and relevant standards that are applicable to the Bank’s licensed operations, and the consequences that this could have for the Bank in the form of sanctions, material financial loss or loss of reputation. Remuneration risk The risk of loss or other damage arising due to the remuneration system. Insurance risk The risk in the outcome of an insurance that depends on the insured party’s longevity or health. Sustainability risk The risk of financial loss or a tarnished reputation due to factors related to the environment and climate, social responsibility including human rights and labour, as well as governance issues. Sustainability risks are an integral part of the Bank’s traditional risk areas above and may arise in own operations and through the Bank’s business, such as granting credit and investments. Risk strategy The Bank’s operations entail a variety of risks that are systematically identified, measured, managed and reported in all parts of the Group. Handels banken’s restrictive approach to risk means that the Bank deliberately avoids high- risk transactions, even if the expected financial reward may be high at the time. The risk strategy is founded on a strong risk culture that is sustainable in the long term and applies to all areas of the Group. The risk cul- ture is an integral part of the Bank’s work and is deeply rooted among all employees. The Bank is characterised by a clear division of responsibility where each part of the business operations bears full responsibility for its busi- ness and for risk management. This results in high levels of risk awareness and prudence in the business operations. However, the decen- tralised business model is combined with both a centralised credit process and strong internal controls. The low risk tolerance is also reflected in the Bank’s view on remuneration. The main principle is that remuneration must be fixed since this contributes to the long-term per- spective which is a central element of Handels- banken’s business model. Performance- based variable remuneration is not offered to employ- ees who, in their professional roles, have a material impact on the Bank’s risk profile. Lending has a strong local anchoring, where the close customer relationship and local knowledge promote low credit risks. In addi- tion, the Group must be well capitalised in rela- tion to its risks and hold liquid assets so that it can meet its payment obligations when they fall due, including in situations of financial stress when funding is not possible in the financial markets. Handels banken thus aims for a business model which is not affected by fluctuations in the business cycle. This restrictive approach to risk over time means that the Bank is a stable and long-term business partner for its customers, regardless of the economic climate and market situation. It contributes to good risk management and to sustaining a high service level even when operations and the markets where the Bank operates are subject to strain. The same prin- ciples for the Bank’s approach to risk apply in all countries where the Bank operates. For a more detailed description of how the Bank manages various risk areas, capital and liquid- ity, refer to the relevant sections of this note. Handelsbanken’s risk management and risk control Business operations Capital and liquidity planning Handelsbanken Risk Control Handelsbanken Compliance Handelsbanken Internal Audit G2 cont. 81 Handelsbanken Annual and Sustainability Report 2024 3.1
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Risk organisation Handels banken applies the three lines of defence principle for the management, fol- low-up and control of the Bank’s risks. The business operations and the units that support the business operations constitute the first line of defence, with responsibility for managing and restricting the risks facing the business in accordance with external and internal rules. The control functions Handels banken Risk Control and Handels banken Compliance con- stitute the second line of defence, and monitor and control the Group’s risks, the work of the business operations, and compliance with applicable rules and regulations. The third line of defence is Handels banken Internal Audit, which examines all of the Bank’s operations, including risk management, the work of the control functions and corporate governance. For additional information about the Bank’s three lines of defence for risk management, refer to Handels banken’s Corporate Govern- ance Report on pages 40–58. Handels banken’s Board has overall respon- sibility for the Bank’s risk management and establishes internal rules for this. The Board establishes policies and the CEO establishes guidelines describing how various risks should be managed and reported. The Board has established a Credit committee (composed of the CEO and the Chief Credit Officer, together with several Board members) to decide on cer- tain credit cases, and a UK committee (com- posed of the Chairman of the Board, the CEO, CFO and an additional Board member) to facil- itate follow-up of the operations in the UK. The Board has also established a Risk com- mittee, an Audit committee and a Remunera- tion committee, whose duties include prepar- ing matters to be decided by the Board. The Risk committee also makes decisions such as on the significant parts of the Bank’s risk rat- ing and estimation processes linked to the IRB approach. The members of the Risk committee, Audit committee and Remuneration committee are comprised entirely of Board members. In addition, the CEO has established a Risk and Compliance committee for follow-up of risk management and for in-depth discussions regarding the Bank’s overall risk situation prior to such matters being addressed by the Risk committee and the Board. For a more detailed description of the work of the committees and sub-committees, see Handels banken’s Cor- porate Governance Report on pages 40–58. The Bank also has additional committees, such as the CFO’s Asset and Liability committee (ALCO) and associated liquidity, capital, finan- cial control and valuation sub-committees. Reporting and monitoring of the risk and capital situation In 2024, the CRO reported the Group’s risks, except for compliance risks (see below), to the CEO, the Board’s Risk committee and the Board at least quarterly. The reports have also been presented to the CEO’s Risk and Com- pliance committee. The Group risk reports describe and analyse the Bank’s risk profile and include the CRO’s assessment of the Group’s material risks and an assessment of whether there are significant deficiencies in the operation to report and address. The Group risk reports also include forward-looking risk assessments and must make possible an assessment of whether Handels banken is ful- filling the risk tolerance and the risk strategy decided by the Board. The Group risk reports are formulated in accordance with the Board’s policy for risk control. In addition to the afore- mentioned Group risk reports, Handels banken Risk Control and Handels banken Credit report on both an ongoing and annual basis on the Bank’s credit risk situation (including counter- party risks) and the IRB approach to the Bank’s Executive Team, the CEO’s Risk and Compli- ance committee, the Risk committee and the Board, as well as the boards of relevant sub- sidiaries. These reports include volume devel- opment and credits with heightened risk. The reporting includes evaluations of the internal risk rating processes, evaluations of the Bank’s IRB models and observations from the valida- tion of the Bank’s IRB models. Limit utilisation for market and liquidity risks is compiled and controlled on a daily basis by Handels banken Risk Control. Exceeded limits are immediately reported to the person who makes the decision about the limits. The liquidity risk is summarised and reported daily to the CFO and the CEO and to the Board at every regular Board meeting. The Liquidity committee, chaired by the Head of Handels- banken Treasury, meets before each regular Board meeting and on other occasions when necessary. In Liquidity committee meetings, reports are presented on the current liquidity situation, on the results of stress tests, sce - nario analyses, and other information which is relevant for the assessment of the Group’s liquidity situation. The Bank’s capital situation is reported weekly to the CFO and the CEO. In the event of a threshold being exceeded, or if the Head of Handels banken Capital Management or the CFO deems it appropriate for some other rea- son, proposals for appropriate measures must be presented to the CEO. The capital situation in a medium- and long-term perspective is summarised quarterly by the Capital commit- tee. Handels banken Capital Management per- forms a complete update of the capital fore- cast on a quarterly basis, or when there are significant changes at the Bank. The capital situation, utilisation of market risk limits and the liquidity situation are reported to the Board at least quarterly. Operational risks and incidents which have occurred are reported continuously by branches and units throughout the Group to Handels banken Risk Control, where they are monitored. In turn, Handels banken Risk Control reports operational risk and incidents which have occurred to the CEO, the Board’s Risk committee and the Board. Risks in the remuneration system are evaluated on an annual basis and reported to the Board’s Remuneration committee and Risk committee. Operational risk reporting includes information regarding significant events, major losses, important proactive measures and an aggre- gated risk assessment at Group level. In addi- tion, Handels banken Risk Control monitors that the actions which have been decided are implemented. In 2024, the Chief Compliance Officer reported compliance risks at least quarterly to the CEO, the Board’s Risk committee and the Board. These reports included compliance risks linked to financial crime, as well as data protection risks. The reports have also been presented in the CEO’s Risk and Compliance committee. G2 cont. 82 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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The Board’s risk declaration and risk statement The Board has decided on the following risk declaration and risk statement: Risk declaration: Handels banken has satisfactory arrange- ments for risk management which are fit for purpose in relation to the Bank’s business goal, the risk tolerance and risk strategy which the Board has decided for the opera- tions and the Bank’s overall risk profile. Risk statement: Handels banken’s business goal is to have higher profitability than the average of peer competitors in our home markets. This goal is mainly to be achieved by having more satisfied customers and lower costs than its competitors. Handels banken is a bank with a strong local presence and a decentralised way of working. The Bank’s low risk tolerance means that its overall risk profile is to be low. The Group must also be well capitalised at all times in relation to the risks, fulfil all requirements imposed by the authorities, and hold liquid assets so that it can meet its payment obli- gations, including in situations of financial stress in the short and long term. The Bank must also have appropriate protection and incident management capabilities in the event of an attack, disruption or interruption to the Bank’s critical operations. The risk tolerance and the risk strategy support Handels banken’s aim to have a business model that is independent of changes in the business cycle. The Bank has, and will maintain, a low level of credit risk. The Bank’s tolerance of credit risk is reflected in the expectation that the Bank will be able to have good capacity for granting credit without government sup- port, even in a serious recession. This is achieved by such measures as its strong local presence and close customer relations. The quality of credits must never be neglected in favour of achieving higher volume or a higher margin. The Bank is selective when choosing customers with the requirement that borrowers have a good repayment capacity. As a consequence of this, the credit portfolio has a clear concentration on risk classes where the probability of loss is low. This consistent approach is reflected in the Bank’s low credit losses over time. In 2024, credit losses were -0.02% (0.01) of loans to the public. To ensure that the Bank is well capitalised in relation to the risks and has a good liquid- ity situation, the Board stipulates the Bank’s risk tolerance for capitalisation and liquidity. When the risk tolerance for capitalisation is decided, the capital measure is set partly in relation to the statutory requirements and partly in relation to Handels banken’s as- sessed capital requirement based on the Bank’s model for economic capital (EC), which encompasses all of the Group’s risks in one single metric. The risk tolerance for the Bank’s liquidity risk is decided on the one hand through requirements that the Bank under stressed circumstances must have a sufficiently large liquidity reserve in the form of liquid assets and assets which can be pledged, including liquidity-generating measures to be able to continue its opera- tions during determined time periods, and on the other hand through requirements regard- ing the accumulated net amount of incoming and outgoing cash flows in different time intervals. The common equity tier 1 ratio must, under normal circumstances, exceed the total common equity tier 1 capital requirement communicated by the Swedish Financial Supervisory Authority by at least 1 percent- age point. The leverage ratio must exceed the total capital requirement communicated by the Swedish Financial Supervisory Authority by at least 0.6 percentage points. The ratio between AFR (Available Financial Resources) and EC must exceed 120%. The Bank’s assessment of the Swedish Financial Supervisory Authority’s common equity tier 1 capital requirement at year-end 2024 was 14.9% (14.8), including the Swedish Financial Supervisory Authority’s guidance of 0.5% within the framework of Pillar 2. Similarly, the Bank’s assessment of the leverage ratio requirement was 3.5% (3.5), including the Swedish Financial Supervisory Authority’s guidance of 0.5% within the framework of Pillar 2. At the end of 2024, the Bank’s common equity tier 1 ratio was 18.8% (18.8) and the AFR/EC ratio was 383% (366). The Bank must have accumulated positive net cash flows over a period of at least one year, taking into account the liquidity reserve, and with the assumption that parts of the non-fixed-term deposits from households and companies disappear during the first month. With Handels banken’s total liquidity reserve, including liquidity-generating measures, the liquidity requirement would be covered for over three years during such stressed conditions. The Bank’s risk profile is in accordance with the risk tolerance and risk strategy established by the Board. G2 cont. Credit risk Credit risk is defined as the risk of the Bank facing economic loss because the Bank’s counterparties cannot fulfil their contractual obligations. Credit risk strategy Handels banken’s credit process is centralised and shared by the whole Group, although individual business decisions are made on a decentralised basis. The credit process is based on a conviction that a decentralised organisation with a local presence ensures high quality in credit decisions. The Bank is a relationship bank whose branches maintain regular contact with the customer. This gives the branch an in-depth knowledge of each individual customer and a continually updated picture of the customer’s financial situation. Rather than being a mass market bank, Handels banken is selective in its choice of customers, which means it seeks customers with a high creditworthiness. The quality requirement is never neglected in favour of higher credit volumes or to achieve higher returns. The Bank also avoids participating in financing that involves complex customer constellations, complex and opaque transac- tions, or high ESG risks. When Handels banken assesses the credit risk of a specific customer, the assessment must start with the borrower’s repayment capacity. The assessment includes an analysis of the customer’s financial position, as well as the risks to which the customer is exposed and which could affect the stability of the cus- tomer’s financial position over time. Part of the risk analysis is the Bank’s assessment of how the customer is affected by ESG risks, includ- ing climate-related risk – both physical risks and transition risks. One of the first steps in analysing the repayment capacity is deter- mining which sector the customer belongs to. We have to understand the challenges and the risks that are specific to the sector in question before we can analyse our individual customer. A weak repayment capacity can never be 83 Handelsbanken Annual and Sustainability Report 2024 3.1
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accepted on the grounds that good collateral has been offered to the Bank. Collateral may, however, substantially reduce the Bank’s loss if the borrower cannot fulfil their obligations. Credits must therefore normally be adequately secured. The branch’s local presence and close rela- tionships with its customers enable the branch to quickly identify any problems and take action. In many cases, this means that the Bank can take action more rapidly than would have been possible with a more centralised management of problem loans. The branch also has full financial responsibility for granting credits. Therefore, it addresses problems that arise when a customer has repayment difficul- ties and also bears any credit losses. If neces- sary, the local branch obtains support from the local credit department and central depart- ments. The Bank’s working methods make sure that all employees whose work involves transactions linked to credit risk acquire a solid and well-founded approach to this type of risk. This approach forms an important part of the Bank’s culture. The work method and approach described are important reasons for the Bank reporting very low credit losses over a long period. Credit organisation In Handels banken’s decentralised organisa- tion, each branch responsible for customers has total credit responsibility. Customer and credit responsibility lies with the branch man- ager or with the employees at the local branch to whom the manager delegates this task. In Handels banken’s decentralised organisa- tion, the documentation that forms the basis for credit decisions is always prepared by the branch responsible for the credit, regardless of whether the final decision is to be made at the branch, at county or national level, in the Board’s Credit committee or by the Board. Credit decision documentation includes gen- eral and financial information regarding the borrower, and an assessment of their repay- ment capacity, loans and credit terms, as well as a valuation of collateral. For national boards, the Board’s Credit committee and the Board, the credit decision refers to the total amount of the credit limit with possible headroom for unsecured credits. For borrowers whose total loans exceed SEK 5 million, the credit decision is made in the form of a credit limit. In the case of loans to private individuals against collateral in the resi- dential property, a limit requirement comes into play for amounts exceeding SEK 12 mil- lion. For loans to housing co-operative associ- ations against collateral in the residential prop- erty, a limit is required for amounts exceeding SEK 12 million. Credit limits granted are usually valid for a period of one year. However, certain circum- stances allow for credit limits for housing co-operative associations to apply for up to a maximum of three years. When extending a credit limit, the decision procedure required is the same as for a new credit limit. Branch managers and most branch staff have personal decision limits allowing them to de- cide on credits to the customers they manage. For decisions on larger credit limits, there are decision-making bodies at county and national level, as well as at the central level. Each additional level of decision adds credit expertise. Each decision level has the right to reject credit limits within their own decision level and also credit limits which would other- wise have been decided at a higher level. All persons throughout the decision-making pro- cess who are responsible for granting credits, regardless of level, must be in agreement in order to positively decide on a credit limit. If there is the slightest doubt among any of these persons, the credit application is rejected. The largest credits have been reviewed by Handels banken Credit and decided by the Board or the Credit committee established by the Board. However, no credit application may be processed in the Bank without the recom- mendation of the branch manager who is responsible for the credit, with the exception of credit decisions made via automatic modelling. The decision procedure for credits and credit limits is illustrated in the figure Credit process and decision levels at Handels banken. The figure also shows the percentage of credit limit decisions and amounts at the various decision levels. In Handels banken’s decentralised organisa- tion, where a large proportion of the credit and credit limit decisions are made by individual branches, a well-functioning review process G2 cont. Branch level National/county level Central level Credit process and decision levels at Handelsbanken Breakdown of limit decisions2) Proportion of number of limits 69% 29% 2% Proportion of limit amount 12% 30% 58% 1) Decides only if the case is assessed to be of special or general interest and decides on credits to Board members and certain executive officers. 2) Excluding sovereign and bank limits decided at central level and Handelsbanken plc. DecisionProposal Account manager Branch manager Local credit department, credit specialist National Board Handels- banken Credit The Board’s Credit Committee The Board1) County manager with head of credit or National credit committee 84 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Credit exposures, geographical breakdown 2024 SEK m Note Sweden UK Norway Finland The Netherlands Other countries Total Balance sheet items Cash and balances with central banks 63,478 125,771 4,160 14 203,650 132,936 530,009 Other loans to central banks G15 3,352 9,195 12,547 Loans to other credit institutions G16 17,552 372 49 3 396 551 18,923 Loans to the public G17 1,616,388 246,788 320,698 75,362 104,604 8,246 2,372,086 Interest-bearing securities eligible as collateral with central banks G18 172,606 172,606 Bonds and other interest-bearing securities G18 47,508 47,508 Derivative instruments G22 47,042 27 47,069 Total 1,967,926 372,931 334,103 75,379 308,650 141,759 3,200,749 Off-balance sheet items Contingent liabilities G44 341,667 56,293 62,680 2,018 2,970 32,640 498,268 of which contingent liabilities 25,955 6,949 4,666 985 78 17,121 55,754 of which obligations 315,712 49,344 58,014 1,032 2,892 15,520 442,514 Total 341,667 56,293 62,680 2,018 2,970 32,640 498,268 Total on- and off-balance sheet items 2,309,594 429,224 396,782 77,397 311,620 174,400 3,699,017 Credit exposures, geographical breakdown 2023 SEK m Note Sweden UK Norway Finland The Netherlands Other countries Total Balance sheet items Cash and balances with central banks 67,895 113,645 4,776 10 128,696 161,159 476,181 Other loans to central banks G15 3,464 1,131 1,687 25,863 32,145 Loans to other credit institutions G16 17,467 766 208 3 335 519 19,297 Loans to the public G17 1,639,614 230,671 313,265 144,563 97,110 8,993 2,434,217 Interest-bearing securities eligible as collateral with central banks G18 199,128 199,128 Bonds and other interest-bearing securities G18 50,087 50,087 Derivative instruments G22 29,961 149 30,110 Total 2,007,615 346,214 319,937 170,438 226,141 170,820 3,241,165 Off-balance sheet items Contingent liabilities G44 321,298 47,077 61,722 23,911 3,094 28,883 485,985 of which contingent liabilities 28,601 6,439 3,807 3,907 100 15,266 58,120 of which obligations 292,697 40,638 57,915 20,004 2,995 13,616 427,865 Total 321,298 47,077 61,722 23,911 3,094 28,883 485,985 Total on- and off-balance sheet items 2,328,914 393,291 381,658 194,349 229,235 199,703 3,727,150 The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. Geographical breakdown refers to the country in which the exposures are reported. Loans to the public subject to impairment testing, geographical breakdown 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Sweden 1,570,355 43,122 3,633 -73 -135 -514 1,616,388 UK 231,215 12,856 2,968 -88 -95 -68 246,788 Norway 312,409 7,536 956 -31 -55 -117 320,698 Finland 63,063 11,795 897 -16 -43 -334 75,362 The Netherlands 103,335 1,255 19 -1 -1 -3 104,604 Other countries 8,213 16 52 0 0 -35 8,246 Total 2,288,590 76,580 8,525 -210 -328 -1,071 2,372,086 Loans to the public subject to impairment testing, geographical breakdown 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Sweden 1,549,709 88,182 2,862 -143 -458 -538 1,639,614 UK 209,855 19,130 2,084 -162 -196 -40 230,671 Norway 300,653 12,348 527 -73 -96 -94 313,265 Finland 131,957 11,636 1,522 -44 -66 -442 144,563 The Netherlands 91,603 5,505 9 -3 -1 -3 97,110 Other countries 8,922 47 58 -1 0 -33 8,993 Total 2,292,700 136,848 7,064 -426 -819 -1,150 2,434,217 The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 85 Handelsbanken Annual and Sustainability Report 2024 3.1
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is crucial for ensuring high-quality decision - making. The branch manager examines the quality of the staff’s decisions and the local credit departments examine the quality of decisions made by branch managers. The purpose of the quality review is to ensure that the Bank’s credit policy and inter- nal instructions are complied with, that credit quality is maintained, and that credit and credit limit decisions show that there is good credit judgement and a sound business approach. A corresponding quality review is also per- formed for credit limit decisions made at higher levels in the Bank. Credit limits granted by County Managers in tandem with the head of the local credit department or national Credit committees and national boards are examined by Handels banken Credit, which also prepares and examines credit limits decided by the Board or the Credit committee established by the Board. Handels banken Credit also ensures that credit assessments are consistent through out the Group and that loans are granted in accordance with the credit policy decided by the Board. Ecster The subsidiary Ecster AB has offered payment solutions via selected sales companies and con- sumer financing in Sweden and Finland. The company has been discontinued since Febru- ary 2023. No new credits or loans have been granted since the spring of 2024 and the loan stock has since been a pure run-off portfolio. Loans to the public subject to impairment testing, broken down by sector and industry 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Private individuals 1,144,251 23,713 5,017 -52 -67 -588 1,172,274 of which mortgage loans 992,020 18,724 2,406 -15 -23 -58 1,013,054 of which other loans with property mortgages 129,982 3,957 1,437 -5 -5 -93 135,273 of which other loans, private individuals 22,249 1,032 1,174 -32 -39 -437 23,947 Housing co-operative associations 275,905 7,019 123 -1 -9 -8 283,029 of which mortgage loans 263,786 4,545 46 -1 -4 -7 268,365 Property management 690,119 37,156 2,565 -99 -113 -108 729,520 Manufacturing 29,983 1,634 45 -5 -6 -26 31,625 Retail 24,545 493 107 -8 -7 -69 25,061 Hotel and restaurant 6,873 819 144 -4 -7 -23 7,802 Passenger and goods transport by sea 243 2 0 0 0 0 245 Other transport and communication 5,602 164 18 -2 -2 -15 5,765 Construction 12,471 3,083 260 -16 -83 -143 15,572 Electricity, gas and water 9,903 5 11 -1 0 -3 9,915 Agriculture, hunting and forestry 20,888 883 93 -4 -6 -11 21,843 Other services 13,943 892 44 -7 -7 -17 14,848 Holding, investment, insurance companies, mutual funds, etc. 27,465 386 6 -5 -2 -4 27,846 Sovereigns and municipalities 1,483 94 0 -1 1,576 of which the Swedish National Debt Office 1,547 1,547 Other corporate lending 24,916 237 92 -6 -18 -56 25,165 Total 2,288,590 76,580 8,525 -210 -328 -1,071 2,372,086 Loans to the public subject to impairment testing, broken down by sector and industry 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Private individuals 1,158,428 28,771 4,159 -143 -132 -589 1,190,494 of which mortgage loans 991,247 21,664 1,592 -38 -43 -44 1,014,378 of which other loans with property mortgages 139,030 5,631 1,310 -44 -40 -93 145,794 of which other loans, private individuals 28,151 1,476 1,257 -61 -49 -452 30,322 Housing co-operative associations 283,134 11,367 13 -4 -20 -9 294,481 of which mortgage loans 265,549 5,291 12 -1 -1 -8 270,842 Property management 648,688 81,834 1,984 -130 -249 -159 731,968 Manufacturing 19,210 4,150 72 -24 -105 -46 23,257 Retail 30,214 671 108 -13 -9 -62 30,909 Hotel and restaurant 4,333 1,803 101 -4 -9 -6 6,218 Passenger and goods transport by sea 1,289 1 0 0 0 1,290 Other transport and communication 11,985 178 18 -5 -2 -15 12,159 Construction 14,238 4,429 281 -56 -264 -93 18,535 Electricity, gas and water 15,941 33 7 -2 0 -3 15,976 Agriculture, hunting and forestry 20,390 1,507 81 -7 -8 -3 21,960 Other services 20,965 818 143 -11 -9 -85 21,821 Holding, investment, insurance companies, mutual funds, etc. 23,154 878 12 -6 -5 -3 24,030 Sovereigns and municipalities 12,278 64 0 0 12,342 of which the Swedish National Debt Office 6,748 6,748 Other corporate lending 28,453 344 85 -21 -7 -77 28,777 Total 2,292,700 136,848 7,064 -426 -819 -1,150 2,434,217 The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 86 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Credit portfolio The Bank’s credit portfolio is presented in this section based on the categorisation of balance sheet items. The section Capital requirements for credit risks presents the credit portfolio based on CRR. Based on the consolidated balance sheet, credits are categorised as loans to the public or loans to credit institutions, while off-balance sheet items are broken down by product type. “Exposure” refers to the sum of on- and off - balance sheet items. Loans to the public is the dominant item. See table Credit exposures, geographical breakdown. Handels banken strives to maintain its histor- ically low level of credit losses compared to other banks, thus contributing to the Bank’s profitability goal and retaining its sound finan- cial position. Handels banken regularly evalu- ates the quality of the credit portfolio in order to identify and limit impairment requirements. In granting credits, the Bank never strives toward goals such as a predetermined volume or market share in particular sectors, and is instead selective when choosing its customers, adopting the mindset that credit customers Loans to the public subject to impairment testing, geographical breakdown by sector 2024 SEK m Sweden UK Norway Finland The Netherlands Other countries Total Private individuals 922,364 69,358 140,493 1,539 33,772 4,748 1,172,274 of which mortgage loans 902,318 110,712 24 1,013,054 of which other loans with property mortgages 2,888 66,714 27,987 132 33,070 4,482 135,273 of which other loans, private individuals 17,158 2,644 1,794 1,383 702 266 23,947 Housing co-operative associations 221,688 29,186 32,155 283,029 of which mortgage loans 218,047 28,154 22,164 268,365 Property management 333,378 156,845 128,021 40,222 70,035 1,019 729,520 Manufacturing 25,313 2,923 2,579 35 1 774 31,625 Retail 16,537 2,577 4,815 102 8 1,022 25,061 Hotel and restaurant 2,011 3,390 2,340 60 1 7,802 Passenger and goods transport by sea 228 12 5 245 Other transport and communication 4,549 568 250 353 45 5,765 Construction 6,945 2,023 6,597 1 6 15,572 Electricity, gas and water 6,137 322 3,226 115 115 9,915 Agriculture, hunting and forestry 19,877 1,743 223 0 21,843 Other services 9,260 3,757 1,411 366 15 39 14,848 Holding, investment, insurance companies, mutual funds etc. 24,167 2,847 593 36 202 1 27,846 Sovereigns and municipalities 660 177 739 1,576 of which the Swedish National Debt Office 1,547 1,547 Other corporate lending 23,274 423 782 52 37 597 25,165 Net loans to the public 1,616,388 246,788 320,698 75,362 104,604 8,246 2,372,086 of which total provisions for expected credit losses (Stage 1–3) -722 -250 -203 -393 -5 -35 -1,608 Total loans to the public 1,617,110 247,038 320,901 75,755 104,609 8,282 2,373,695 Loans to the public subject to impairment testing, geographical breakdown by sector 2023 SEK m Sweden UK Norway Finland The Netherlands Other countries Total Private individuals 928,455 67,678 119,527 39,633 29,800 5,401 1,190,494 of which mortgage loans 905,229 92,266 16,883 1,014,378 of which other loans with property mortgages 3,548 64,882 25,603 17,145 29,555 5,061 145,794 of which other loans, private individuals 19,678 2,796 1,658 5,605 245 340 30,322 Housing co-operative associations 220,222 28,339 45,920 294,481 of which mortgage loans 211,610 27,672 31,560 270,842 Property management 330,257 144,438 139,703 50,114 66,462 994 731,968 Manufacturing 16,511 1,457 2,634 1,036 1 1,618 23,257 Retail 23,205 2,213 4,397 335 2 757 30,909 Hotel and restaurant 2,310 3,482 349 17 60 6,218 Passenger and goods transport by sea 1,162 13 4 111 1,290 Other transport and communication 9,497 428 1,215 557 461 1 12,159 Construction 7,226 1,812 9,054 431 7 5 18,535 Electricity, gas and water 9,946 303 3,619 1,997 111 15,976 Agriculture, hunting and forestry 20,049 1,511 240 156 4 21,960 Other services 14,229 4,231 2,527 807 22 5 21,821 Holding, investment, insurance companies, mutual funds etc. 19,857 2,946 506 623 96 2 24,030 Sovereigns and municipalities 10,238 222 1,882 12,342 of which the Swedish National Debt Office 6,748 6,748 Other corporate lending 26,451 159 929 944 88 206 28,777 Net loans to the public 1,639,614 230,671 313,265 144,563 97,110 8,993 2,434,217 of which total provisions for expected credit losses (Stage 1–3) -1,139 -399 -264 -552 -7 -35 -2,395 Total loans to the public 1,640,753 231,070 313,529 145,115 97,117 9,028 2,436,612 The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 87 Handelsbanken Annual and Sustainability Report 2024 3.1
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must be of high quality. The demands on quality must never be neglected in favour of achieving a high credit volume. This is clearly stated in the Bank’s credit policy, endorsed each year by the Board. Following the high inflation and rising inter- est rates in prior years, macroeconomic condi- tions have normalised to a certain extent, which is reflected in the model-based provisions in Stage 1 and Stage 2. Based on climate scenarios, the Bank has analysed physical climate risks, focusing on flood risks, in the credit portfolio’s real estate exposures in the Bank’s four home markets. These analyses indicated limited exposure to these risks. There is generally a higher risk of flooding in the UK than in the other home markets. For more information see, ESRS 2 IRO-1 E1. Scenario analyses were also carried out to investigate how the introduction of energy efficiency requirements for buildings could impact property companies in the Bank’s credit portfolio in Sweden and Norway as well as Swedish households. They analyse the impact on the value of the collateral and show a low risk of credit losses related to these transition risks. For more information see, ESRS 2 IRO-1 E1. Collateral The Bank’s credit policy states that credits must normally have satisfactory collateral. A weak repayment capacity can never be accepted on the grounds that good collateral has been offered to the Bank. Collateral may, however, substantially reduce the Bank’s loss if the borrower cannot fulfil their obligations. The Bank’s measures to limit its credit risk include the acceptance of collateral from cus- tomers. The primary means of reducing credit risk in the Bank are the pledging of immovable property, such as residential properties and other real estate, floating charges on assets, guarantees (including guarantor commitments) and the use of netting agreements (see the section on Counterparty risks for more infor- mation). The basic principle applied in property finance is that credits must be covered by col- lateral in the form of properties. For exposures Credit exposures, breakdown by type of collateral 2024 SEK m Note Residential property1) Other property Sovereigns, municipalities and county councils2) Guarantees as for own debt3) Financial collateral Collateral in assets Other collateral Unsecured Total Balance sheet items Cash and balances with central banks 530,009 530,009 Other loans to central banks G15 12,547 12,547 Loans to other credit institutions G16 18,923 18,923 Loans to the public G17 1,780,542 384,401 40,257 7,015 12,419 16,513 6,080 124,859 2,372,086 Interest-bearing securities eligible as collateral with central banks G18 170,604 2,002 172,606 Bonds and other interest-bearing securities G18 3,784 43,724 47,508 Derivative instruments G22 391 1,138 6,853 383 87 38,217 47,069 Total 1,780,933 385,539 764,054 7,398 12,506 16,513 6,080 227,725 3,200,749 Off-balance sheet items Contingent liabilities G44 86,470 61,944 26,041 2,778 10,319 563 6,943 303,210 498,268 of which contingent liabilities 262 556 2,401 188 777 596 50,974 55,754 of which obligations 86,208 61,388 23,640 2,590 9,542 563 6,347 252,236 442,514 Total 86,470 61,944 26,041 2,778 10,319 563 6,943 303,210 498,268 Total on- and off-balance sheet items 1,867,403 447,483 790,095 10,176 22,825 17,076 13,023 530,935 3,699,017 Credit exposures, breakdown by type of collateral 2023 SEK m Note Residential property1) Other property Sovereigns, municipalities and county councils2) Guarantees as for own debt3) Financial collateral Collateral in assets Other collateral Unsecured Total Balance sheet items Cash and balances with central banks 476,181 476,181 Other loans to central banks G15 32,145 32,145 Loans to other credit institutions G16 19,297 19,297 Loans to the public G17 1,802,548 381,314 83,954 12,275 13,072 18,300 7,181 115,573 2,434,217 Interest-bearing securities eligible as collateral with central banks G18 197,348 543 1,237 199,128 Bonds and other interest-bearing securities G18 3,838 239 46,010 50,087 Derivative instruments G22 442 43 29,625 30,110 Total 1,802,548 381,314 793,908 13,057 13,115 18,300 7,181 211,742 3,241,165 Off-balance sheet items Contingent liabilities G44 71,689 57,200 27,281 3,325 12,720 376 7,504 305,890 485,985 of which contingent liabilities 525 1,061 2,239 228 918 795 52,354 58,120 of which obligations 71,164 56,139 25,042 3,097 11,802 376 6,709 253,536 427,865 Total 71,689 57,200 27,281 3,325 12,720 376 7,504 305,890 485,985 Total on- and off-balance sheet items 1,874,237 438,514 821,189 16,382 25,835 18,676 14,685 517,632 3,727,150 1) Including housing co-operative apartments. 2) Refers to direct exposures to sovereigns and municipalities and government guarantees. 3) Does not include government guarantees. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 88 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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On- and off-balance sheet items subject to impairment testing, breakdown by type of collateral 2024 Gross Provisions SEK m Note Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Balance sheet items Cash and balances with central banks 530,003 Sovereigns, municipalities and county councils1) 530,003 Other loans to central banks G15 12,547 Sovereigns, municipalities and county councils1) 12,547 Loans to other credit institutions G16 18,872 55 -1 -3 Sovereigns, municipalities and county councils1) Guarantees as for own debt2) Unsecured 18,872 55 -1 -3 Loans to the public G17 2,288,590 76,580 8,525 -210 -328 -1,071 Residential property3) 1,722,581 52,800 5,560 -76 -119 -204 Other property 372,266 10,995 1,474 -59 -86 -189 Sovereigns, municipalities and county councils1) 33,223 7,026 24 -1 -15 0 Guarantees as for own debt2) 6,778 242 -2 -3 Financial collateral 11,680 743 1 -2 -3 0 Collateral in assets 15,734 774 68 -17 -30 -16 Other collateral 5,423 634 167 -4 -23 -117 Unsecured 120,905 3,366 1,231 -49 -49 -545 Interest-bearing securities eligible as collateral with central banks G18 Bonds and other interest-bearing securities G18 13,259 -2 Total 2,863,270 76,635 8,525 -213 -331 -1,071 Off-balance sheet items Contingent liabilities G44 292,278 6,282 159 -39 -90 -26 of which contingent liabilities 54,384 1,315 55 -6 -12 -26 Residential property3) 233 23 6 0 0 -5 Other property 539 15 2 0 0 -1 Sovereigns, municipalities and county councils1) 2,391 10 0 0 Guarantees as for own debt2) 166 22 0 0 Financial collateral 693 79 4 0 0 0 Collateral in assets Other collateral 509 73 13 0 -1 -6 Unsecured 49,853 1,093 30 -6 -11 -14 of which obligations 237,894 4,967 104 -33 -78 0 Residential property3) 85,291 882 34 -8 -2 0 Other property 60,816 551 21 -3 -3 0 Sovereigns, municipalities and county councils1) 23,632 5 3 0 0 0 Guarantees as for own debt2) 2,555 35 0 -4 Financial collateral 9,430 113 0 -1 Collateral in assets 554 9 0 0 Other collateral 5,721 604 22 -2 -18 0 Unsecured 49,895 2,768 24 -20 -50 0 Total 292,278 6,282 159 -39 -90 -26 Total on- and off-balance sheet items 3,155,548 82,917 8,684 -252 -421 -1,097 1) Refers to direct exposures to sovereigns and municipalities and government guarantees. 2) Does not include government guarantees. 3) Including housing co-operative apartments. G2 cont. with properties as collateral, an LTV ratio is calculated by dividing the credit exposure by the value of the collateral. The Bank follows internal recommendations and external regula- tions which limit the maximum amount of a loan for which the collateral is property. The value of the properties is reviewed at least annually, and is based on the estimated market value. Checks are performed more often if market conditions have changed significantly. Since collateral is not generally utilised until a borrower faces serious repayment difficulties, the valuation of collateral focuses on the expected value in the case of a sale in unfavourable circumstances in connection with insolvency. For unsecured long-term credit commit- ments to companies, the Bank often enters into an agreement with the customer on spe- cial credit terms which allow the Bank to re- negotiate or terminate the loan in the case of unfavourable performance. In special circumstances, the Bank may buy credit derivatives or financial guarantees to hedge the credit risk in claims, but this is not part of the Bank’s normal lending process. A minor part of loans to credit institutions consists of reverse repos. A reverse repo is a repurchase transaction in which the Bank buys interest-bearing securities or equities with a special agreement that the security will be resold to the seller at a specific price on a specific date. Handels banken regards reverse repos as secured lending. Only collateral used in the calculation of the capital requirement for credit risk is specified in the table “Credit exposures, breakdown by type of collateral.” 89 Handelsbanken Annual and Sustainability Report 2024 3.1
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On- and off-balance sheet items subject to impairment testing, breakdown by type of collateral 2023 Gross Provisions SEK m Note Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Balance sheet items Cash and balances with central banks 476,162 Sovereigns, municipalities and county councils1) 476,162 Other loans to central banks G15 32,145 Sovereigns, municipalities and county councils1) 32,145 Loans to other credit institutions G16 19,289 11 -1 -1 Sovereigns, municipalities and county councils1) Guarantees as for own debt2) Unsecured 19,289 11 -1 -1 Loans to the public G17 2,292,700 136,848 7,064 -426 -819 -1,150 Residential property3) 1,711,455 87,744 4,001 -155 -313 -184 Other property 349,131 31,606 994 -109 -174 -134 Sovereigns, municipalities and county councils1) 78,564 5,040 365 -2 -13 0 Guarantees as for own debt2) 8,979 3,330 2 -5 -31 0 Financial collateral 12,252 829 2 -6 -5 0 Collateral in assets 17,165 1,158 64 -27 -43 -17 Other collateral 6,322 868 302 -15 -65 -231 Unsecured 108,832 6,273 1,334 -107 -175 -584 Interest-bearing securities eligible as collateral with central banks G18 Bonds and other interest-bearing securities G18 12,709 -2 Total 2,833,004 136,859 7,064 -429 -820 -1,150 Off-balance sheet items Contingent liabilities G44 284,693 11,262 164 -94 -203 -42 of which contingent liabilities 56,464 1,596 60 -11 -40 -22 Residential property3) 439 78 8 0 -3 -4 Other property 998 62 1 0 -1 0 Sovereigns, municipalities and county councils1) 2,168 70 1 0 -1 0 Guarantees as for own debt2) 147 80 0 -1 Financial collateral 802 113 3 0 -1 0 Collateral in assets Other collateral 699 88 7 0 -3 0 Unsecured 51,211 1,105 40 -11 -30 -18 of which obligations 228,229 9,666 104 -83 -163 -20 Residential property3) 69,911 1,207 46 -11 -6 -18 Other property 54,519 1,613 8 -7 -12 0 Sovereigns, municipalities and county councils1) 24,955 86 0 0 Guarantees as for own debt2) 2,296 800 -1 -6 Financial collateral 11,612 186 3 0 -1 0 Collateral in assets 353 21 2 0 -1 0 Other collateral 5,860 841 8 -8 -49 -1 Unsecured 58,723 4,912 37 -56 -88 -1 Total 284,693 11,262 164 -94 -203 -42 Total on- and off-balance sheet items 3,117,697 148,121 7,228 -523 -1,023 -1,192 1) Refers to direct exposures to sovereigns and municipalities and government guarantees. 2) Does not include government guarantees. 3) Including housing co-operative apartments. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 90 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Credit risk concentrations Handels banken’s branches focus strongly on establishing long-term relationships with cus- tomers of sound creditworthiness. If a branch identifies a good customer, it should be able to do business with this customer, irrespective of whether the Bank as a whole has a major exposure to the business sector that the cus- tomer represents. As a consequence, the Bank has relatively large concentrations in some individual sectors. However, the Bank monitors the performance and quality of the credit port- folio and calculates concentrations for various business sectors and geographic areas. The Bank also measures and monitors exposures to major individual counterparties. Special lim- its are applied to restrict the maximum credit exposure to individual counterparties, to aug- ment the credit risk assessment. If the credit portfolio has a concentration in a particular sector or counterparty that can be assumed to increase risk, this concentration is monitored. Concentration risks are identified in the Bank’s calculation of economic capital for credit risks and in the stress tests conducted in the inter- nal capital adequacy assessment and as a part of the follow-up of the Bank’s risk tolerance. The Swedish Financial Supervisory Authority also calculates a separate capital adequacy requirement under Pillar 2 for concentration risks in the credit portfolio. This ensures that Handels banken has sufficient capital, also taking into account concentration risks. If the concentration risks are judged to be excessive, the Bank has the opportunity and capacity to apply various risk mitigation measures. In addition to mortgage loans and lending to housing co-operative associations, Handels- banken has significant lending to property management of SEK 730 billion (732). Here, “property management” refers to all compa- nies classified as “property companies” for risk assessment purposes. It is common for groups operating in other industries to have subsidiar- ies managing the properties in which the group conducts business, and such property com- panies are also considered here to belong to property management. However, the under- lying credit risk in such cases is not solely property-related, because the counterparty’s repayment capacity is determined by business operations other than property management. Also, private individuals with substantial prop- erty holdings are classified as property com- panies for risk-assessment purposes. A very large part of property lending con- sists of property mortgages with low LTVs, which reduces the Bank’s credit loss risk. In addition, a large proportion of property lending is to government-owned property companies, Loans to the public subject to impairment testing, Property management 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Loans in Sweden State-owned property companies 11,200 0 11,200 Municipally owned property companies 8,378 132 0 0 8,510 Residential property companies 149,035 12,928 159 -7 -21 -20 162,074 of which mortgage loans 140,174 12,436 155 -6 -21 -17 152,721 Other property management 147,033 4,415 191 -5 -8 -32 151,594 of which mortgage loans 84,124 2,301 65 -2 -4 -10 86,474 Total 315,646 17,475 350 -12 -29 -52 333,378 Loans outside Sweden UK 147,258 8,151 1,567 -70 -58 -3 156,845 Norway 124,504 3,073 500 -15 -8 -33 128,021 Finland 32,794 7,318 148 -1 -17 -20 40,222 The Netherlands 68,898 1,139 -1 -1 70,035 Other countries 1,019 0 1,019 Total 374,473 19,681 2,215 -87 -84 -56 396,142 Total property management within loans to the public 690,119 37,156 2,565 -99 -113 -108 729,520 Loans to the public subject to impairment testing, Property management 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Loans in Sweden State-owned property companies 11,306 0 11,306 Municipally owned property companies 7,311 515 0 0 7,826 Residential property companies 129,563 30,200 64 -7 -68 -13 159,739 of which mortgage loans 121,606 28,574 56 -6 -64 -7 150,159 Other property management 131,093 20,222 164 -11 -30 -52 151,386 of which mortgage loans 72,794 10,836 63 -3 -17 -21 83,652 Total 279,273 50,937 228 -18 -98 -65 330,257 Loans outside Sweden UK 129,672 13,876 1,132 -87 -129 -26 144,438 Norway 133,310 6,364 91 -22 -12 -28 139,703 Finland 44,389 5,249 522 -2 -9 -35 50,114 The Netherlands 61,056 5,408 -1 -1 66,462 Other countries 988 11 0 -5 994 Total 369,415 30,897 1,756 -112 -151 -94 401,711 Total property management within loans to the public 648,688 81,834 1,984 -130 -249 -159 731,968 The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 91 Handelsbanken Annual and Sustainability Report 2024 3.1
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municipal housing companies and other housing -related operations where the borrow- ers consistently have strong, stable cash flows and thus very high creditworthiness. Thus a large part of lending to the property sector is to companies with a very low probability of encountering financial difficulties. The Bank’s exposure to the property sector is specified in the tables below. The proportion of exposures to property counterparties (property companies and hous- ing co-operative associations) with a lower rating than the Bank’s risk class 5 (normal risk) is low. 94.6% (93.8) of total property lending in Sweden is in risk class 5 or better. The equiva- lent figure for property lending in Norway is 98.6% (97.9) and in Finland is 96.2% (97.3). The capital requirement for the UK and the Netherlands is calculated using the standard- ised approach with prescribed risk weights – meaning that the risk classes are irrelevant to the calculation of the capital requirement. For counterparties in lower risk classes than normal, the majority are in risk classes 6 and 7 with only low volumes in the higher risk classes 8 and 9. For information about Handels banken’s risk ratings, see the section Calculation of capital requirements for credit risks in note G2. Handels banken’s lending to property com- panies declined over the past year. In local currencies, the portfolios in Sweden, UK and the Netherlands have grown, while the port folios in Norway and Finland have shrunk. Handels banken applies the same strict require- ments on repayment capacity, LTVs and collat- eral quality in all markets. Loans to the public, Property management, type of collateral and country (gross) 2024 2023 SEK m Loans Sovereigns and munici- palities1) Residential property Commercial property and other collateral Unsecured Loans Sovereigns and munici- palities1) Residential property Commercial property and other collateral Unsecured Sweden 333,471 20,219 182,053 124,229 6,972 330,438 19,667 182,787 118,746 9,238 UK 156,976 3 81,792 72,696 2,485 144,680 6 80,478 63,178 1,018 Norway 128,077 23 18,454 102,125 7,475 139,765 24 19,345 111,245 9,151 Finland 40,260 28,962 5,204 6,071 23 50,160 30,360 7,598 11,683 519 The Netherlands 70,037 47,527 22,428 82 66,464 47,829 18,594 41 Other countries 1,019 445 574 999 431 557 11 Total 729,840 49,207 335,475 328,123 17,037 732,506 50,057 338,468 324,003 19,978 1) Companies owned by sovereigns and municipalities/property lending guaranteed by sovereigns and municipalities. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. Loans to the public, Property management, risk class and country 2024 SEK m Sweden UK Norway Finland The Netherlands Other countries Total % Risk class 1 11,282 601 7,978 19,861 2.72 2 72,529 10,041 4,391 86,961 11.92 3 121,031 70,408 12,424 203,863 27.93 4 72,310 33,565 5,683 111,558 15.29 5 38,125 11,704 8,241 58,070 7.96 6 16,035 944 679 17,658 2.42 7 1,132 297 77 1,506 0.21 8 176 2 95 273 0.04 9 336 9 543 888 0.12 Defaults 350 500 148 998 0.14 Standardised approach1) 165 156,976 6 1 70,037 1,019 228,204 31.27 Total 333,471 156,976 128,077 40,260 70,037 1,019 729,840 100 Loans to the public, Property management, risk class and country 2023 SEK m Sweden UK Norway Finland The Netherlands Other countries Total % Risk class 1 10,967 637 11,895 23,499 3.21 2 71,060 16,990 5,590 93,640 12.78 3 108,232 71,103 14,488 193,823 26.46 4 78,149 39,482 11,985 129,616 17.69 5 41,524 8,554 4,760 54,838 7.49 6 16,619 2,571 510 19,700 2.69 7 3,137 299 176 3,612 0.49 8 129 2 145 276 0.04 9 390 9 20 419 0.06 Defaults 228 91 522 841 0.11 Standardised approach1) 3 144,680 27 69 66,464 999 212,242 28.97 Total 330,438 144,680 139,765 50,160 66,464 999 732,506 100 1) The standardised approach uses predetermined risk weights, for which reason risk classes are not relevant. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 92 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Loans to the public, Property management, risk class and collateral 2024 Loans Collateral SEK m Residential property Commercial property Sovereigns and municipalities1) Other collateral Unsecured Risk class 1 19,861 5,388 3,076 9,959 680 758 2 86,961 43,464 23,159 17,683 101 2,554 3 203,863 66,445 118,702 10,464 1,345 6,906 4 111,558 47,466 57,610 4,227 184 2,071 5 58,070 28,188 22,547 5,924 726 688 6 17,658 12,918 3,039 500 24 1,177 7 1,506 989 404 7 106 8 273 87 123 47 2 14 9 888 419 57 400 3 9 Defaults 998 345 633 1 19 Standardised approach1) 228,204 129,766 95,382 3 318 2,735 Total 729,840 335,475 324,732 49,207 3,391 17,037 Loans to the public, Property management, risk class and collateral 2023 Loans Collateral SEK m Residential property Commercial property Sovereigns and municipalities1) Other collateral Unsecured Risk class 1 23,499 6,349 4,293 11,704 369 784 2 93,640 43,522 29,089 18,782 140 2,107 3 193,823 68,451 107,695 8,984 464 8,229 4 129,616 49,143 67,137 7,120 811 5,405 5 54,838 27,943 21,952 2,577 662 1,704 6 19,700 11,414 7,424 376 13 473 7 3,612 2,230 1,257 54 8 63 8 276 87 68 118 3 9 419 350 51 5 13 Defaults 841 228 240 336 3 34 Standardised approach1) 212,242 128,751 81,861 6 461 1,163 Total 732,506 338,468 321,067 50,057 2,936 19,978 1) The standardised approach uses predetermined risk weights, for which reason risk classes are not relevant. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. Calculation of capital requirements for credit risks Risk rating system The capital requirement for credit risk is calcu- lated according to the standardised approach and the IRB approach in accordance with reg- ulation (EU) No 575/2013 (CRR). The standard- ised approach means that the risk weights used when calculating the capital requirement for credit risk are specified in the regulations. The IRB approach entails that the institution, in its calculation of capital requirement for credit risk, estimates risk parameters through the use of its own IRB models (internal risk rating sys- tems). When applying the IRB approach, there are two different methods: the foundation IRB approach and the advanced IRB approach. In the foundation IRB approach, probability of default (PD) is calculated using the Bank’s own IRB models, while the figures for loss given default (LGD) and credit conversion factor (CCF) are specified in the regulations. CCF is used when calculating the exposure amount for off-balance sheet commitments. In the advanced IRB approach, PD, LGD and CCF are each calculated using the Bank’s own IRB models. Handels banken’s internal risk rating system (or the IRB approach) comprises a number of different systems, methods, pro- cesses and procedures to support the Bank’s classification and quantification of credit risk. When performing a credit assessment of a customer, the customer is assigned a rating. This rating, together with other risk rating crite- ria, determines how exposures are assessed with regard to the IRB approach’s division into risk classes. Sustainability is taken into account in the rating process for corporates. The two dimensions of the rating are risk of financial strain (A) and the counterparty’s financial powers of resistance in the case of such strain (B). The rating is based on a five- point scale from very low risk to very high risk. The rating is converted to an internal risk class for the application of the IRB approach (A+B-1) for corporates and exposures to insti- tutions, as well as for exposures to sovereigns and central banks (sovereign exposures). However, for government agencies and muni- cipalities, the risk class is set as the lower of (A+B) or 9. Accordingly, a municipality with the same rating as a sovereign is assigned a risk class lower than the sovereign. This is to take into account the fact that the risk for govern- ment agencies and municipalities is higher than for sovereign exposures. The rating for retail exposures comprises a number on a scale of one to five, and is not converted directly into a risk class as for cor- porate exposures; instead, the different expo- sures are sorted into a number of smaller groups on the basis of certain factors. Such factors include the type of credit, the coun- ter-party’s debt-servicing record and whether there are one or more borrowers. An average default rate is calculated for each of the smaller groups, and on the basis of this, the groups are sorted into one of the ten risk classes. Different models are used for expo- sures to private individuals and SMEs (that are also classified as retail exposures), but the principle is the same. G2 cont. 93 Handelsbanken Annual and Sustainability Report 2024 3.1
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The risk classes applied in the IRB approach are thus distributed over several scales of 1 to 10. A clear majority of the Bank’s exposures are in risk classes 1–4, which means that the average risk level in the credit portfolio is significantly lower than the level which is assessed as normal risk. Risk class 5 corre- sponds to normal risk and risk class 10 is for counterparties in default. Exposure classes The number of exposure classes depends on the method used to calculate the credit risk. Exposures to be calculated according to the standardised approach can be allocated to 17 different exposure classes, while there are seven exposure classes in the IRB approach. The overall division into exposure classes in the IRB approach comprises sovereign, insti- tutional, corporate, retail and equity expo- sures, as well as positions in securitisations. In addition there are also non-credit-obligation assets, which do not require any performance by the counterparty, such as property, plant and equipment. Exposures to sovereigns, central banks, government agencies and municipalities are classed as sovereign exposures. Exposures to institutions refer to exposures to counter- parties defined as banks and other credit institu tions, and certain investment firms. Retail exposures include both exposures to private individuals and to SMEs, where the total exposure within the Group does not exceed SEK 5 million (excluding mortgage loans). Retail exposures are divided into two sub-groups: property loans and other retail exposures. Corporate exposures refer to exposures to non-financial undertakings, consisting of legal entities with a total exposure within the Group in excess of SEK 5 million (excluding housing financing) or where the company’s turnover is more than SEK 50 million, and SMEs with a total exposure within the Group in excess of SEK 5 million. Apart from ordinary non - financial undertakings, the exposure class includes insurance companies, housing co-operative associations and exposure in the form of “specialised lending”. Equity exposures refer to the Bank’s hold- ings of shares that are not in the trading book. For division into exposure classes according to the standardised approach, the Bank’s volumes are put into the following exposure classes: multilateral development banks, inter- national organisations, institutions, corpora- tions, retail, exposures with collateral in prop- erty, exposures in default, other items and equities. Credit exposures by risk class 2024 Balance sheet items Off-balance sheet items SEK m Loans to the public Loans to other credit institutions Cash and balances with central banks Other loans to central banks Derivative instruments Interest- bearing securities Contingent liabilities Obligations Total Risk class 1 482,720 4,337 404,232 12,547 19,948 164,741 8,605 54,529 1,151,659 2 545,789 4,967 16,974 52,362 16,836 109,889 746,817 3 560,238 218 5,673 909 16,783 117,450 701,271 4 235,433 2 1,385 7,006 45,701 289,527 5 107,202 57 287 3,787 18,985 130,318 6 26,641 40 103 6,304 33,088 7 29,152 50 927 7,226 37,355 8 931 33 5,207 6,171 9 8,185 6 2,795 10,986 Defaults 4,109 37 58 4,204 Standardised approach1) 371,686 9,342 125,771 2,712 2,102 1,631 74,370 587,614 Total 2,372,086 18,923 530,003 12,547 47,069 220,114 55,754 442,514 3,699,010 Credit exposures by risk class 2023 Balance sheet items Off-balance sheet items SEK m Loans to the public Loans to other credit institutions Cash and balances with central banks Other loans to central banks Derivative instruments Interest- bearing securities Contingent liabilities Obligations Total Risk class 1 541,178 97 362,536 31,014 5,988 193,697 5,333 54,492 1,194,335 2 555,325 17,131 13,612 54,399 20,548 105,764 766,779 3 548,122 1,803 5,160 1,119 20,053 110,167 686,424 4 268,250 1 1,830 8,440 51,496 330,017 5 80,479 3 257 1,612 21,136 103,487 6 35,688 2 61 161 6,463 42,375 7 36,405 120 690 5,928 43,143 8 1,490 43 3,368 4,901 9 8,656 13 2,422 11,091 Defaults 3,398 28 127 3,553 Standardised approach1) 355,226 260 113,645 1,131 3,082 1,199 66,502 541,045 Total 2,434,217 19,297 476,181 32,145 30,110 249,215 58,120 427,865 3,727,150 1) The standardised approach uses predetermined risk weights, for which reason risk classes are not relevant. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 94 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Risk rating methods In order to quantify the Bank’s credit risks, calculations are made of PD, EAD and LGD. Default is considered to have occurred when the borrower is more than 90 days past due with a significant payment, or when the Bank deems it unlikely that the borrower will be able to fulfil its commitments to the Bank. The PD value is expressed as a percentage where, for example, a PD value of 0.5% means that one borrower of 200 with the same PD value is expected to default within one year. Corporate exposures are divided into four counterparty types and sovereign exposures into two counterparty types based on the busi- ness evaluation template used for the counter- party. PD is calculated individually for each risk class and counterparty type. For expo- sures that are subject to a capital requirement according to the foundation IRB approach, prescribed values are applied for LGD. The prescribed value that may be used is deter - mined by the collateral provided for each exposure. For retail exposures as well, an average default rate is calculated for each of the risk classes. Different models are used for exposures to pri- vate individuals and SMEs (that are also classi- fied as retail exposures), but the principle is the same. For retail exposures and for corporate expo- sures such as medium-sized enterprises, property companies and housing co-operative associations, the LGD is determined using the Bank’s own loss history. For exposures to large corporates that are subject to a capital require- ment using the advanced IRB approach, the LGD is determined on the basis of historical losses and external observations. For retail exposures secured by property in Sweden and for real estate exposures to medium-sized enterprises, property companies and housing co-operative associations (corporate), different LGD values are applied depending on the LTV of the collateral. For other exposures, the LGD value is determined by factors that may depend on the existence and valuation of collateral the product type and similar factors. For each exposure class, the PD is calculated for each of the risk classes that refer to non - defaulted counterparties or agreements. PD is based on calculations of the historical percent- age of defaults for different types of exposures. The average default rate is then adjusted by various margins of conservatism. When establishing LGD, the risk measure must reflect the loss rates during economically unfavourable circumstances, known as down- turn LGD. For corporate exposures in the IRB approach with own estimates of LGD and CCF , the LGD is adjusted for downturns so that the Bank’s observed losses in the crisis years of 1991–1996 are taken into account. The LGD is, in many cases, estimated on the basis of the property’s LTV. Given that the value of proper- ties, and thereby also the LTV, usually varies in line with the business cycle, this means that the capital requirement will also demonstrate a certain correlation with the business cycle. For other collateral relating to retail exposures, observed LGD is adjusted for downturns by a factor which depends on the PD and type of product. Balance sheet items subject to impairment testing, breakdown by risk class 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Risk class 1 821,158 1,815 -2 -2 2 643,271 2,834 -9 -3 3 556,715 6,345 -15 -6 4 229,582 5,883 -24 -6 5 91,880 15,748 -29 -55 6 17,336 9,382 -13 -27 7 17,930 11,326 -2 -52 8 222 723 0 -14 9 335 7,889 -1 -38 Defaults 4,842 -733 Standardised approach1) 484,841 14,690 3,683 -118 -128 -338 Total 2,863,270 76,635 8,525 -213 -331 -1,071 Balance sheet items subject to impairment testing, breakdown by risk class 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Risk class 1 885,295 1,982 -5 -3 2 604,664 4,633 -19 -6 3 546,591 8,169 -42 -14 4 246,184 23,991 -78 -16 5 61,640 32,578 -35 -151 6 17,908 17,968 -23 -101 7 24,235 12,481 -7 -184 8 220 1,306 -1 -35 9 303 8,428 -1 -73 Defaults 4,240 -839 Standardised approach1) 445,964 25,323 2,824 -218 -237 -311 Total 2,833,004 136,859 7,064 -429 -820 -1,150 1) The standardised approach uses predetermined risk weights, for which reason risk classes are not relevant. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 95 Handelsbanken Annual and Sustainability Report 2024 3.1
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When the exposure amount (EAD) is to be calculated, certain adjustments are made to the carrying amount. Examples of this are revolving credits, where the Bank agrees with the customer that the customer may borrow up to a certain amount in the future. This type of commitment constitutes a credit risk that must also be covered by adequate capital. Normally, this means that the credit granted is adjusted using a certain credit conversion factor for the part of the credit that is unutilised at the time of reporting. For certain product categories for corporate exposures and expo- sures to institutions, the credit conversion fac- tors are determined by the regulatory code, while for retail exposures and certain product categories for large corporates, medium-sized enterprises, property companies and housing co-operative associations, the Bank uses its own calculated conversion factors. Which con- version factor is used is primarily governed by the product referred to, but the utilisation level may also be of relevance. The capital requirements for equity exposures in the IRB approach are calculated according to the simple risk weight approach. In addition to the capital adequacy calcula- tion, the risk parameters (PD, EAD, LGD) are used to calculate the cost of capital in each individual transaction and to calculate eco- nomic capital (EC). Regarding the Bank’s IRB models, which use historical data to generate risk estimates, the Bank does not currently have sufficient historical data to include sustainability risks as a risk driver. However, sustainability risks are addressed for corporates by setting the internal rating that forms the basis of the PD risk class. Work is being undertaken with the aim of including sustainability risks as a risk driver in future IRB models when sufficient historical data is available. Quality assurance of the credit risk model The Bank performs an annual review of its risk rating systems. The review checks that the internal ratings on which the Bank’s risk ratings are based are applied in a consistent, correct and fit-for-purpose manner (evaluation) and also that the models used measure risk in a satisfactory manner (validation). Calculation of expected credit losses The impairment rules presented in IFRS 9 apply to financial assets at amortised cost, financial assets at fair value through other compre hen- sive income, as well as financial guarantees and irrevocable commitments. This section pro - vides descriptions of the processes and methods applied in Handels banken’s model - based calculations of provisions for expected credit losses (ECL). Estimations of expected credit losses are made at agreement level, whereby the charac- teristics of the agreement and the counterparty govern the classification and quantification of the provision requirement. The estimation is Loans to the public subject to impairment testing, breakdown by risk class 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Risk class 1 480,909 1,815 -2 -2 2 542,966 2,833 -7 -3 3 553,914 6,345 -15 -6 4 229,581 5,882 -24 -6 5 91,590 15,695 -28 -55 6 17,296 9,382 -13 -24 7 17,880 11,326 -2 -52 8 222 723 0 -14 9 335 7,889 -1 -38 Defaults 4,842 -733 Standardised approach1) 353,897 14,690 3,683 -118 -128 -338 Total 2,288,590 76,580 8,525 -210 -328 -1,071 Loans to the public subject to impairment testing, breakdown by risk class 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Risk class 1 539,204 1,982 -5 -3 2 550,714 4,633 -16 -6 3 540,009 8,169 -42 -14 4 244,353 23,991 -78 -16 5 48,097 32,567 -35 -150 6 17,844 17,968 -23 -101 7 24,115 12,481 -7 -184 8 220 1,306 -1 -35 9 302 8,428 -1 -73 Defaults 4,237 -839 Standardised approach1) 327,842 25,323 2,827 -218 -237 -311 Total 2,292,700 136,848 7,064 -426 -819 -1,150 1) The standardised approach uses predetermined risk weights, for which reason risk classes are not relevant. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 96 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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made using either a model-based or manual calculation, with the choice of method mainly dependent on whether the agreement is deemed to be credit impaired. For information pertaining to the recognition and measurement of expected credit losses and for definitions, see note G1, section 6, Credit losses. Model-based calculations for agreements in Stage 1 and Stage 2 Handels banken’s Group-wide, central process for model-based calculations of expected credit losses incorporates a number of differ- ent processes and methods which support the quantification of the provision requirement in Stage 1 and Stage 2. The model-based calculations factor in historical, current and forward-looking data. Historical data forms the basis for the con- struction of the model and parameters applied, current data comprises the prevailing balances on the reporting date (as included in the cal- culation requirements) and forward-looking data refers to the macroeconomic scenarios used to calculate future risk parameters and exposures. The models use the same historical risk data as the IRB models, meaning that the accounting of provisions and calculations of capital requirements are based on the same basic loss history. Similar to how the risk rating system affects capital adequacy calculations, the internal rating (from which the risk rating derives) is a significant part of the models for calculating expected credit losses. The cal- culations are primarily affected by the risk parameters known as PD, EAD and LGD. The expected credit loss in a future period is obtained by multiplying the present value of the EAD by the PD and by the LGD. In contrast to the calculation of credit losses in the Capital Requirements Regulation, which also uses the risk parameters PD, EAD and LGD, the estimation of expected credit losses pursuant to IFRS 9 is based on current forward-looking assessments. As the regulations have different purposes, the calculation models differ in terms of how the risk parameters are set and in how they are constructed. The main differ- ences between IFRS 9 and the IRB approach are presented in table Differences between IFRS 9 and the IRB approach. Macroeconomic information The calculations regarding model-based assessments of significant increases in credit risk and expected credit losses are made with the application of models for the respective risk parameters (PD, EAD and LGD). In order to ensure that the calculations take into account non-linear aspects, three forward - looking macroeconomic scenarios are used in the models (one base case, one downturn and one upturn) for exposures outside the UK. For exposures in the UK, four scenarios are used (one base case, two downturn and one upturn). Each scenario includes significant macroeconomic risk factors, such as unem- ployment, GDP , property prices, key/central bank rates and inflation, by country. The sig- nificant macroeconomic risk factors have been Off-balance sheet items that are subject to impairment testing, breakdown by risk class 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Risk class 1 33,043 52 0 0 2 58,035 204 -4 0 3 47,901 266 -5 -1 4 42,364 351 -7 -1 5 16,483 1,329 -11 -29 6 6,060 346 -2 -8 7 5,686 2,466 -1 -21 8 5,063 176 -2 -2 9 2,647 153 -1 -4 Defaults 94 -26 Standardised approach1) 74,996 939 65 -6 -24 0 Total 292,278 6,282 159 -39 -90 -26 Off-balance sheet items that are subject to impairment testing, breakdown by risk class 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Risk class 1 31,681 76 0 0 2 64,466 152 -10 0 3 66,056 468 -16 -1 4 31,261 989 -23 -2 5 8,668 5,754 -8 -73 6 6,015 528 -3 -17 7 5,199 1,379 -3 -58 8 3,034 295 -1 -16 9 2,149 199 -2 -12 Defaults 96 -41 Standardised approach1) 66,164 1,422 68 -28 -24 -1 Total 284,693 11,262 164 -94 -203 -42 1) The standardised approach uses predetermined risk weights, for which reason risk classes are not relevant. The table above includes the disposal groups in Finland, which has been reclassified to Assets held for sale on the balance sheet, see note G14. G2 cont. 97 Handelsbanken Annual and Sustainability Report 2024 3.1
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identified from an assessment of the Bank’s historical data and the relation to the risk param- eters is estimated using the same historical material. The various scenarios are used to adjust the risk parameters in question. Each macroeconomic scenario represents a proba- bility determined by the Bank. These probabili- ties are currently set at 70% (70) for the base case scenario, 15% (15) for the upturn scena- rio and 15% (15) for the downturn scenario. For exposures in the UK, the weightings are 60% (60) for the base case scenario, 5% (5) for the upturn and 20% (20) for the downturn, with 15% (15) assigned to the severe downturn sce- nario. Expected credit losses are recognised as a probability-weighted average of the expected credit losses for the respective scenarios. All of the macroeconomic scenarios have been produced by the Bank’s economic re- search unit, which is responsible for all eco- nomic analysis delivered by Handels banken, whether for internal or external use. These macroeconomic scenarios comprise region - specific, 30-year forecasts for Sweden, Norway, Finland, the UK, the Eurozone and the USA, together with a global forecast. The Bank does not apply any specific scenarios related to sustainability risks in the expected credit loss calculations, but the impact of this type of risk, primarily climate-related risks, is partly in- cluded in the macroeconomic scenarios applied. A change in the macroeconomic sce- narios, or in the probability weights applied, affects both the assessment of significant increases in credit risk and the estimated expected credit losses. The scenarios are updated on a quarterly basis by the Bank’s economic research unit and are presented for approval to the relevant decision-makers before being applied in the ECL calculations. Portfolio segmenting Statistical models are used in the model-based assessment. These have been developed for different segments in the portfolio, with each segment being comprised of similar risk expo- sures, and the risk parameters can be esti- mated on the basis of a common set of risk factors. For retail exposures the portfolio seg- menting is based on product type and for other exposures it is based on counterparty type. The segments have been identified on the basis of statistical analysis and expert assess- ment. For retail exposures the portfolio has the following nine segments: exposures with resi- dential property as collateral for private individ- uals, revolving credits including credit card exposures for private individuals and for SMEs, other exposures for private individuals and for SMEs, card credits for retail financial services for private individuals and for SMEs, and hire purchase for retail financial services for private individuals and for SMEs. Other exposures are split into the following six seg- ments: property companies, housing co-oper- ative associations, other large non-financial undertakings, other non-financial undertak- ings, sovereigns as well as financial companies and banks. Within the respective portfolio segments, the agreements are further categorised into different states, based on risk factors such as internal rating, payment history, country affilia- tion, collateral type and LTV. These states have been determined on the basis of statisti- cal analysis of historical outcomes. For every state, statistical models are used for migra- tions between states in order to calculate the forward-looking probabilities for the risk para- meters PD, LGD and EAD. One important risk factor for the states is the counterparty’s inter- nal rating, which is set in conjunction with the credit decision and which is updated at least annually, or whenever there are indications that the counterparty’s repayment capacity has changed. Climate-related risks, and certain other environmental risks, are assessed in the credit process and affect the internal rating at counterparty level. There are states for “not in default”, “in default” and “early repayment” exposures. Retail exposures are divided into nine different states and other exposures into 12 states. Significant increase in credit risk A significant increase in credit risk reflects the risk of default and is a measurement by which the agreement’s relative change in credit risk since initial recognition is measured. For calcu- lating significant increases in credit risks, the same underlying model is used in Handels- banken as is used for the calculation of expected credit losses, with consideration given to historical, current and future-oriented information. Collateral is not taken into account in the assessment. At each reporting date, the Group-wide, central, model-based process begins for all agreements with an assessment of whether there has been a significant in - crease in the credit risk since initial recognition (start date of the agreement). This assessment then determines whether the expected credit loss is assessed over a 12-month horizon after the reporting date (Stage 1) or during the agreement’s remaining lifetime (Stage 2). An important aspect which affects the size of the provision for credit losses is therefore which factors and thresholds are defined as triggers for the transfer of assets from Stage 1 to Stage 2. The Bank’s definition of a significant in- crease in credit risk, which is decisive in the transfer of agreements to Stage 2, is based on both qualitative and quantitative factors. The quantitative indicator which is primarily used to assess the change in credit risk is the relative change, between the instrument’s initial recognition and up to the most recent reporting date, in the PD during the agree- ment’s remaining lifetime. In cases where an unreasonable expense or exertion was required to establish the PD in conjunction with the initial recognition of an instrument, changes in the counterparty’s or the agree- ment’s internal rating or risk rating since initial recognition have been used to assess the significant change in the credit risk. For agree- ments recognised initially on or after 1 January 2018, the forecasts regarding the risk of default are based on three scenarios. For agreements recognised before 1 January 2018, the same criteria are applied but using a scenario based on the Bank’s most recently published eco- nomic analysis at the time of initial recognition. The primary criterion when assessing whether an agreement is deemed to have incurred a significant increase in credit risk and is thus transferred to Stage 2 is, as defined by Handels banken, that the estimated remaining PD on the reporting date is greater than a mul- tiple of 2.5 times the corresponding probability of default upon initial recognition. The thresh- old value of 2.5 is based on statistical analysis of the Bank’s historical data and compares the increase in the remaining risk that the counter- party will default with the corresponding esti- mated risk upon the initial recognition of the agreement. In addition, there are other qualita- tive factors which the Bank has assessed as entailing a significant increase in credit risk, such as the agreement having payments that are more than 30 days overdue, or that coun- terparty having been granted concessions as the result of a deteriorated credit rating. If a significant increase in credit risk has arisen since initial recognition, a provision is recognised which corresponds to the expected credit losses for the entirety of the remaining lifetime of the asset and the financial instru- ment is transferred to Stage 2. The model is symmetrical, meaning that, if the financial instrument’s credit risk decreases and there is therefore no longer a significant increase in credit risk since initial recognition, the financial asset is transferred back to Stage 1. Models for risk parameters and expected lifetime The risk parameters PD, LGD and EAD are calculated for every agreement and future point in time, based on statistical models. These models are, as far as possible, founded on the relationships between the significant risk factors and relevant risk outcomes identifi- able in the Bank’s own loss history. The major- ity of risk parameters which are quantified are based on approximately ten years of internal data. In cases where the Bank lacks sufficient G2 cont. 98 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Differences between IFRS 9 and the IRB approach Risk parameter IRB IFRS 9 PD, probability of default Average risk of default within 12 months over one business cycle, including statistical margins of conservatism and regulatory floors. Business cycle-dependent (“point-in-time”) risk of default within 12 months. “Lifetime PD” refers to the risk of default during the agreement’s expected remaining lifetime. LGD, loss given default The maximum value of expected loss rate on exposure at default within 12 months in the long term and in conjunction with an eco- nomic downturn, including statistical margins of conservatism and regulatory floors. The quantification of loss for corporate exposures is based on recoveries within 12 months and remaining reserves (24 months for retail exposures). Business cycle-dependent expected loss rate on exposure at default. LGD is adjusted on the basis of forward-looking macro- economic scenarios. EAD, exposure at default The maximum value of expected exposure at default within 12 months in the long term and in conjunction with an economic downturn, including statistical margins of conservatism and regulatory floors. Business cycle-dependent expected exposure at default within 12 months. EAD is adjusted on the basis of contractual terms and conditions and forward-looking macroeconomic scenarios, and is updated for each future 12-month period. Term The agreement’s contractual maturity, with consideration given to the customer’s option to extend. Expected lifetime. The agreement’s contractual maturity, with consideration given to the probability of early repayment. Forecast horizon 12 months. Up to 12 months for agreements in stage 1 or the remaining lifetime for agreements in Stage 2–3. Discounting Forecast losses are not discounted to the reporting date. When quantifying the recovery rate, observed recoveries are discounted to the date of default using the average cost of capital. Forecast losses are discounted to the reporting date using the agreement’s contractual interest rate on the reporting date. information due to, for example, too few defaults, the data is complemented with ex- ternal information. The historical outcomes are analysed with regard to the covariation in agreement-specific, counterparty-specific and region-specific risk factors, such as product type, internal rating, length of customer rela- tionship, collateral type, LTV, unemployment, interest rates and GDP growth. The risk factors identified as significant for a specific risk param eter are included in the model and the historical correlation is quantified. Probability of default (PD) PD refers to the probability that a customer or an agreement will go into default at a given point in time during the asset’s remaining life- time. 12-month PD refers to the probability of default during the coming 12-month period. Lifetime PD refers to the probability of default during the asset’s remaining lifetime (up to a maximum of 30 years). The future PDs are fore- cast on the reporting date, using forward - looking macroeconomic scenarios and cur- rent agreement and counterparty information. The forecast risk of default takes into account the development of scenarios and the proba- bility of migrations between different states over time. The models calculate annual migra- tion and default probabilities, whereby the migration model presents a probability that the agreement will belong to a particular state with a given risk of default in the future. The agreement’s expected PD for a given year is calculated as the probability-weighted PD over all conceivable states and scenarios. Expected PD for the remaining lifetime is based on the annual expected default fore- casts and the probability that the agreement will be subject to early repayment. The degra- dation of an economic outlook based on fore- cast macroeconomic risk factors for each scenario, or an increase in the probability that the downturn scenario will be realised, nor - mally results in a higher PD. Exposure at default (EAD) EAD refers to the expected credit exposure at default. On the reporting date, future exposure at default is forecast on the basis of current re- payment plans, the probability of early repay- ment and the expected utilisation of, for exam- ple, credit facilities, financial guarantees and loan commitments. EAD is forecast on an annual basis and comprises the amount at which losses and recoveries take place in con- junction with future defaults. Expected lifetime An instrument’s expected lifetime is relevant to both the assessment of significant increase in credit risk, which takes into account changes in PD during the expected remaining lifetime, and the measurement of expected credit losses for the asset’s expected remaining life- time. The expected lifetime is considered when calculating the remaining PD by weighing the forecast annual PD values during the agree- ment’s contractual duration against the proba- bility that the agreement will not be subject to early repayment before defaulting. The probability of the agreement being sub- ject to early repayment is based on statistical analysis and on the Bank’s internal history for approximately the past ten years, and is in- cluded as a component of the model for EAD. Potential risk factors in the form of agreement, counterparty and macroeconomic risk factors have been assessed in the analysis. The risk factors identified as significant are included in the model. For revolving credits with no maturity date, such as credit cards, a 30-year maturity from the reporting date is applied. The same 30-year maturity from the reporting date is also applied to mortgage loans with interest-rate fixing periods of a maximum of three months. On these maturities probability of early repayment according to the above is applied. Loss given default (LGD) LGD reflects the financial loss which the Bank expects to incur in the event of default. The most important risk factors when calculating LGD are the value and type of collateral, and the characteristics of the counterparty. Forward - looking macroeconomic risk factors are reflected in the LGD calculations through their impact on the value of collateral and the LTV. The quantification of the loss is divided between a probability that the counterparty recovers without causing the Bank any finan- cial loss, and a recovery rate if the counter- party does not recover. The recovery rate is affected by the LTV, in that a higher LTV is associated with a lower recovery rate. The collateral value of properties, and thus the LTV and the recovery rate, is affected by the price trend for the property, whereby an expected decline in real estate values pushes up the LTV and the expected loss given default. G2 cont. 99 Handelsbanken Annual and Sustainability Report 2024 3.1
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Differences between IFRS 9 and the IRB approach Handels banken’s IFRS 9 models are based on the same historical data and the same overall model-based approach as the Bank’s IRB models, which use the risk parameters PD, LGD and EAD. As the regulations have different purposes, the calculation models differ in terms of how the risk parameters are set and in how they are constructed and in certain cases sep- arate models have been implemented to fulfil the requirements of IFRS 9. The main differ- ences between IFRS 9 and the IRB approach are presented in the table Differences between IFRS 9 and the IRB approach. Validation of IFRS 9 models and model-based calculations The models and the risk parameters used in them are regularly validated by Handels banken Risk Control according to established princi - ples, independently of the units responsible for developing the models. The purpose of the validations is to ensure that at several aggre- gation levels the model-based calculations demonstrate a good forecasting accuracy, without any unexpected deviations between forecasts and the most recent outcomes. The inputs used in the calculations are also verified to ensure that they are of high quality and that the design of the models is fit for purpose. The results of the validation are reported to the Chief Credit Officer, the CRO and the CFO. No sig- nificant deviations with a material effect on the Bank’s provisions were identified in the most recent validation that was conducted in 2023. Manual calculations for agreements in Stage 3 Assets in Stage 3 are tested for impairment at the individual level using a manual calcula- tion (with the exception of a small portfolio of homogeneous claims which have a model - calculated provision in Stage 3). This testing is performed on a regular basis and in conjunc- tion with every reporting date by the local branch with business responsibility (unit with customer and credit responsibility) and is decided at county level and by the national Credit committee or Handels banken Credit. Impairment testing is carried out when there are objective circumstances which indicate that the counterparty will not be able to fulfil its contractual obligations, according to the defi- nition of default. Such objective circumstances could be, for example, late or non-payment or an indication of unlikely payment. Impairment testing involves an estimation of the future cash flows and the value of the col- lateral (including guarantees). Consideration is normally given to at least two forward-looking scenarios for expected cash flows, based on both the customer’s repayment capacity and the value of the collateral. The outcome of these scenarios is probability-weighted and discounted with the loan’s original effective interest rate. The scenarios used can take into account both macroeconomic and agree - ment-specific factors, depending on what is deemed to affect the individual counterparty’s repayment capacity and the value of the collat- eral. The assessment takes into account the specific characteristics of the individual coun- terparty. An impairment loss is recognised if the estimated recoverable amount is less than the carrying amount. Governance and internal control For calculating the expected credit losses on agreements in Stage 1 and Stage 2, Handels- banken has a Group-wide, central process using internally developed statistical models (model-based calculation). Manual calculation is used for agreements in Stage 3. The descrip- tion below primarily refers to the model-cal- culated provisions for expected credit losses. This process is covered by a number of inter- nal controls, which are described below. The various stages of the process also entail differ- ent approvals/adoptions, creating a govern- ance structure, which is also described below. Verification of input data in reports On each reporting date, the information which constitutes the basis for the calculations of expected credit losses is checked for correct- ness and completeness. This is carried out in the form of automatic reconciliation of loaded data from delivery sources. Furthermore, a rea- sonability assessment is undertaken, whereby system balances are compared with the bal- ances recorded on the previous reporting date. The balances which are ultimately used are then reconciled against the volumes recorded in the general ledger. Models Before a new quantitative model is included in the overall model system, it is subject to val- idation and must be approved for use by the Chief Credit Officer. The quantitative models which form the basis for the calculations of expected credit losses involve several assumptions and assessments. Examples include the assump- tion that the quantifiable aspects of relation- ships between macroeconomic risk factors and risk parameters in historical data are rep- resentative for future events, and the assump- tion that an agreement’s expected lifetime can be based on historical behavioural data. Whether these historical relationships and their representativeness of the future are affected by climate-related risks is assessed in the modelling process. As of the reporting date, no such climate-related factors have been specifi- cally included in the models, but the matter is subject to continuous assessment. A selection of the most significant macroeconomic risk factors is made on the basis of the macro- economic risk factors’ explanatory power in relation to individual risk parameters. The selection of the macroeconomic risk factors and specification of the model are made to achieve a balance between simplicity, demon- strative ability and stability. All assumptions and discretionary decisions are presented to the Chief Credit Officer for approval. Any expert-assessed changes to provisions in model-calculated agreements in Stage 1 and Stage 2 require the approval of the CFO and are decided on by the Chief Credit Officer before they are applied. Macroeconomic scenarios The macroeconomic scenarios have been produced by the Bank’s economic research unit, based on instructions issued by the Chief Credit Officer. These instructions specify the desired macroeconomic risk factors, geo- graphical areas to be included, and the num- ber of scenarios and probability-weighting between them. Before every reporting date, the current macroeconomic scenarios are presented to the Chief Credit Officer and the CFO, who approve the scenarios for use in the reporting process. Size of the provisions The total estimated provisions in Stage 1 and Stage 2 require the approval of the CFO and are decided on by the Chief Credit Officer. Estimated provisions in Stage 3 are proposed by the Bank branch with business responsibil- ity (unit with customer and credit responsibility) and are approved at the county level and by the national Credit committee or a central unit, depending on the size of the provision. Of the credit provisions in Stage 3 which are approved locally, a selection is subsequently reviewed/ quality assured by Handels banken Credit. In addition, Handels banken Risk Control submits an independent review on every reporting date of a selection of the credit provisions in Stage 3 which are approved centrally. G2 cont. 100 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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The role of the control functions Handels banken Risk Control determines the validation principles and ensures that models are validated. An independent review is con- ducted on every reporting date of a selection of the credit provisions in Stage 3 which are approved centrally. Handels banken Risk Control is described in more detail on pages 43 and 49. Handels banken Internal Audit reviews the estimations of expected credit losses as part of its assignment to indepen- dently examine internal governance and con- trol, and to evaluate the reliability of the Group’s financial reporting. Handels banken Internal Audit is described in more detail on pages 43 and 49. Counterparty risk Counterparty risk arises when the Bank has entered into derivative contracts or contracts with a counterparty regarding loans of securi- ties. In addition to derivatives, the capital adequacy regulations therefore treat both repurchase transactions and equity loans as counterparty risks. In calculating both the capital requirement and EC, counterparty exposures are taken into account based on the exposure amounts stipulated by the capital adequacy regulations. Handels banken applies the standardised approach for counterparty risk (SA-CCR) to calculate exposure amounts on derivative con- tracts for capital adequacy purposes. Counter- party risk is regarded as a credit risk where the market value of the contract determines the size of the exposure. If the contract has a positive value, the default of the counterparty means a potential loss for the Bank. Reduction of counterparty risk Counterparty risk arises from the trade date until the date of delivery, whereby the Bank could be charged a termination fee if the coun- terparty is unable to meet its commitments. This risk exists in all derivative transactions and in securities transactions where the Bank has not secured payment in advance. The size of counterparty exposures is restricted by setting credit limits in the regular credit process. The size of the exposures may vary substantially due to fluctuations in the price of the underlying asset. In order to take account of the risk that the exposure may increase, supplements are added to the value of the exposure when setting credit limits. The exposures are calculated and followed up daily. The counterparty risk in derivatives is reduced through close-out netting agreements, which involve setting off positive values against negative values in all derivative transactions with the same counterparty. Netting agree- ments are supplemented with agreements for issuing collateral for the net exposure (credit support annex, CSA), which further reduce the credit risk. The collateral for these transactions is mainly cash, but government securities are also used. Due to the high proportion of cash, the concentration risks in the collateral are lim- ited. The majority of Handels banken’s agree- ments include close-out netting, and the agreements with the largest exposures, which are to financial institutions, also include CSAs. Derivatives which are cleared via central counterparties also give rise to capital require- ments. Central counterparties are clearing houses which act as the counterparty for both the buyer and seller in various transactions, and thus assume the responsibility for fulfilling the parties’ obligations. All parties which use a central counterparty must provide collateral for all transactions. In most cases, the risk weight for centrally cleared derivatives is considerably lower than for other types of derivatives. G2 cont. 101 Handelsbanken Annual and Sustainability Report 2024 3.1
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Market risk The risks arise from price and vola- tility changes in the financial mar- kets. Market risks are divided into interest rate risk, equity price risk, foreign exchange risk and com- modity price risk. Financial markets were affected by a number of macroeconomic factors during the year, such as the efforts of central banks to tackle inflation and the rate of recovery in the global economy. In August, the Bank of Japan’s deci- sion to raise its policy rate caused significant volatility in global markets. Although this vola- tility stabilised shortly thereafter, it remained at a higher level than in the first half of 2024. Indi- cations of a hard or soft landing in the global economy occasionally led to higher market volatility during the year. The outcome of the US presidential election was the focus of the autumn. The tense geopolitical situation also contributed to continued uncertainty. The Bank’s risk utilisation remained low during the year, in line with the risk tolerance, and the impact on the business was thus limited. Market risks arise in Handelsbanken’s oper- ations in the non-trading book primarily as a result of interest rate and currency positions, which arise in the Bank’s funding and lending activities. Market risk arises in cases when these positions cannot be perfectly matched. In addition to customer-driven positions, mar- ket risks may also originate from positions required for conducting banking operations, such as Handelsbanken Treasury’s liquidity portfolio. Market risks in the trading book arise pri- marily within Handelsbanken Markets, to meet customers’ demand for financial instruments with exposure to the fixed-income, currency, equities or commodity markets. Furthermore, market risks may also arise in connection with the Bank’s market maker function. In addition to the above, market risks also arise as a part of Handelsbanken Liv’s opera- tions. The market risks in Handelsbanken Liv are described in a separate section of this note. Consequently, the information on market risks given in this section refers to risks excluding Handelsbanken Liv. Market risk strategy Handelsbanken has a restrictive view of mar- ket risks. Market risks in the banking opera- tions are primarily taken as part of meeting customers’ investment and risk management needs. Market risks must be limited by match- ing cash flows and interest rate adjustment periods, hedging open positions and taking other actions to limit risk. Market risks at Handelsbanken are thus very low. As a result of the Bank’s market risk strat- egy, only a small fraction of the Bank’s earn- ings comes from net gains/losses on financial transactions. Organisational structure Handelsbanken’s Board has overall responsi- bility for the Bank’s management of market risks and establishes policy documents for this. Guidelines from the CEO and instructions from the CFO concretise these policies. Within this framework, each part of the business operations bears the responsibility for its own business activities and its management of all risks. The risks that arise in conjunction with funding and liquidity management are, how- ever, centralised to Handelsbanken Treasury under the CFO, and Handelsbanken Markets manages the majority of the risks in the trading book. The control functions monitor that the business operations are conducted within the Bank’s risk tolerance, and report on the risks to the Board and Executive Team. The Bank’s limit system restricts the size of the exposure to market risks. Measurement methods and limits are established by the Board. The CFO has the functional responsibil- ity for liquidity and funding, while the Head of Handelsbanken Treasury, who reports to the CFO, is responsible for the Group’s liquidity and funding. This responsibility includes managing the Group’s interest rate, foreign exchange and liquidity risks in its banking operations. The limits for interest rate, foreign exchange and liquidity risk are allocated by the CEO and the CFO to the Head of Handels- banken Treasury, who in turn allocates these to the business-operating units. Limits for equity price risk and commodity price risk are allo- cated directly to Handelsbanken Markets by the CFO. The CEO and the CFO also decide on sup- plementary risk measures, intraday limits and detailed guidelines. The supplementary limit measures aim to reduce the Bank’s sensitivity to volatility changes in the financial markets, and to limit the risks of specific holdings and the liquidity risk per currency. These measures also limit the risks from a maturity perspective. The Board, CEO and CFO regularly receive reports on the market risks and utilisation of the limits. The Board CEO CFO Handelsbanken Treasury Handelsbanken Markets Handelsbanken Finans Stadshypotek Handelsbanken plc Ecster Local treasury units Decision levels for market and liquidity risks G2 cont. 102 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Market risks at Handelsbanken Market risks are measured using several differ- ent methods. The sensitivity measures used show which changes in value would occur in the event of predefined changes in prices and volatilities. Position-related risk measures and probability-based Value at Risk (VaR) models are also used. VaR VaR is calculated for the portfolios at Handels- banken Markets and Treasury which are classi- fied as trading book. VaR is a probability- based measure and expresses the losses in Swedish kronor from risk positions that cannot be ex- pected to be exceeded due to movements in the underlying markets over a specified hold- ing period and for a given confidence level. VaR is calculated using historical simulation and is determined for individual risk factors, risk classes and at portfolio level with a 99% confidence level and a one-day holding period. This means that the Bank would be expected to make a loss exceeding the VaR outcome on one out of every 100 trading days. The model means that different risk classes can be handled in a uniform way so that they can be compared and aggregated into a total market risk. The overall risk in the portfolios which are classified as trading book was SEK 5 million (12) at year- end. VaR is reported on a regular basis to the Board, CEO and CFO. The VaR model uses historically observed outcomes and thus does not cover all potential outcomes, such as in the case of extreme, rapid market movements. The calculations are therefore supplemented with stress tests where the portfolios are tested against scenarios based on events in the financial markets since 1994. The outcome of these stress tests was SEK 61 million (52) at year-end. The results of these stress tests are also reported to the Board, CEO and CFO. Value at Risk for trading book – Handelsbanken Markets and Treasury1) Total Equities Interest rate Currency Commodities SEK m 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Average 9 14 0 1 10 14 1 2 0 0 Maximum 15 22 2 5 16 23 3 7 0 0 Minimum 5 8 0 0 5 8 0 1 0 0 Year-end 5 12 0 0 5 13 1 1 0 0 1) Portfolios classified as trading book are subject to special instructions and guidelines. Worst outcome in stress test for trading book – Handelsbanken Markets and Treasury SEK m 2024 2023 Average 61 51 Maximum 217 139 Minimum 16 15 Year-end 61 52 Interest rate risk Interest rate risk is measured in several ways at the Bank. General interest rate risk is mea- sured daily, and limits are set as the absolute sum of the least favourable changes in fair value per currency in the case of instantaneous upward or downward parallel shifts of 1 per- centage point for all interest rates. At year-end, the Bank’s total general interest rate risk was SEK 1,274 million (1,069). Interest rate adjust- ment periods for non-maturity deposits are established according to an internal method. The starting point for such deposits is the esti- mated interest-fixing period, whereby the lon- ger interest rate adjustment period is applied to the part that can be regarded as stable and insensitive to interest-rate movements based on historical observations. The risk measure includes interest-bearing items measured at market value as well as items not measured at market value and is therefore not appropriate when assessing the impact on the balance sheet and income statement. Instead, supple- mentary measures and limits capture this for the respective business types. Specific interest rate risk is measured and limited by using sensitivity to changes in credit spreads, that is, the difference between the interest on the current holding and the yield on a government bond with the same maturity. This risk arises at Handelsbanken Markets and in Treasury’s liquidity portfolio. The risk is measured and limits are set on the basis of different rating classes and is calculated as the least favourable change in market value in the case of an upward or downward shift of one basis point in all credit spreads. This is per- formed for each individual counterparty and the outcomes are summed as an absolute total. Total specific interest rate risk at year- end was SEK 5 million (6). Changes in the risks in the case of hypothet- ical changes in various interest rate curves, such as steepening, flattening and basis risk, are measured and followed up on a regular basis. Interest rate risk in the trading book The trading book comprises Handelsbanken Markets’ portfolios and one portfolio at Handelsbanken Treasury classified as trading book. At year-end, the general interest rate risk in the trading book was SEK 34 million (46) and the specific interest rate risk was SEK 1 million (2). The non-linear interest rate risk, for example, part of the risk in interest rate options, is measured and a limit set with pre-defined stress scenarios expressed in matrices. This means that the risk is mea- sured as changes in underlying market inter- est rates and volatilities. VaR and other risk measures are also used for the trading book, supplemented by various stress scenarios. G2 cont. 103 Handelsbanken Annual and Sustainability Report 2024 3.1
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Interest rate risk in the non-trading book Interest rate risk arises as a result of the lend- ing partly having different interest rate adjust- ment periods than the funding. Interest rate risk is mainly managed by means of interest rate swaps. Interest rate risk also arises in Handelsbanken Treasury’s liquidity portfolio, and is managed via bond futures and interest rate swaps. At year-end, the general interest rate risk in the non-trading book was SEK 1) The risk for 2023 differs from previously reported amounts due to a change in method. 1,291 million (1,061) and the specific interest rate risk was SEK 4 million (4). To estimate the effect of interest rate changes on the income statement, the net interest income risk is also measured. The net interest income risk is measured as the least favourable change in net interest income over a 12-month period in the case of a 1 percent- age point increase or decrease in market rates. This effect reflects the differences in interest rate adjustment periods and volume composi- tion between assets, liabilities and derivatives outside the trading book, assuming that the size of the balance sheet is constant. In this calculation, interest rate adjustment periods for non-maturity deposits are established according to an internal method. This model is based on historical observations and only adjusting the portion that is stable and insensi- tive to interest-rate movements. The net inter- est income risk at year-end was SEK 2,141 million (3,808)1). General interest rate risk in the non-trading book (change in fair value as the worst outcome in the case of a 1 percentage point parallel shift of all interest rates) SEK m 2024 20231) SEK 670 392 EUR 124 285 NOK 94 12 USD 161 290 GBP 236 68 Other currencies 6 13 Total 1,291 1,061 1) From 2024, DKK is included in Other currencies. This is the reason for the difference compared with the figure for Other currencies in 2023. Interest rate adjustment periods for assets and liabilities 2024 The table shows the interest rate adjustment periods for interest-rate related assets and liabilities as at 31 December 2024. SEK m Up to 3 mths 3–6 mths 6–12 mths 1–5 yrs Over 5 yrs Total Cash and balances with central banks 542,556 542,556 Bonds and other interest-bearing securities 147,668 2,424 930 62,898 6,195 220,115 Loans to credit institutions 18,921 1 1 18,923 Loans to the public 1,638,434 104,460 146,645 426,091 56,456 2,372,086 Other assets 385,493 385,493 Total assets 2,733,071 106,886 147,575 488,989 62,651 3,539,173 Due to credit institutions 53,893 28,596 1,110 659 270 84,528 Deposits and borrowing from the public 1,099,711 64,466 57,425 91,305 7,573 1,320,481 Issued securities 459,018 157,583 222,691 662,642 85,146 1,587,081 Other liabilities 547,083 547,083 Total liabilities 2,159,706 250,645 281,226 754,606 92,989 3,539,173 Off-balance sheet items -380,326 3,823 26,343 355,666 35,859 41,366 Interest rate adjustment periods for assets and liabilities 2023 SEK m Up to 3 mths 3–6 mths 6–12 mths 1–5 yrs Over 5 yrs Total Cash and balances with central banks 508,326 508,326 Bonds and other interest-bearing securities 182,277 1,011 1,609 58,374 5,944 249,215 Loans to credit institutions 19,297 19,297 Loans to the public 1,623,097 110,023 165,208 474,768 61,121 2,434,217 Other assets 326,737 326,737 Total assets 2,659,735 111,034 166,817 533,141 67,064 3,537,792 Due to credit institutions 83,062 3,416 3,125 326 1,195 91,124 Deposits and borrowing from the public 1,072,730 65,816 38,907 172,535 49 1,350,037 Issued securities 439,292 182,444 224,314 615,376 105,173 1,566,599 Other liabilities 530,033 530,033 Total liabilities 2,125,116 251,676 266,346 788,237 106,416 3,537,792 Off-balance sheet items -347,183 17,665 48,978 260,653 54,713 34,827 Assets and liabilities in the table above include the disposal groups in Finland, which have been reclassified to Assets held for sale and Liabilities held for sale on the balance sheet, respectively (see note G14). G2 cont. 104 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Equity price risk The Bank’s equity price risk mainly arises at Handelsbanken Markets through customer trading and in the Bank’s own equity portfolio. The risk is measured as the market value change in the Bank’s total equity positions in the case of an instantaneous change in equity prices of +/-10% and in volatilities of +/-25%. At year-end, the Bank’s worst case outcome for this risk was SEK 66 million (40). The largest exposure in equities comes from the UK market. Equity price risk in the trading book The equity price risk at Handelsbanken Mar- kets arises in customer-driven transactions. Handelsbanken has market maker commit- ments in securities, equity derivatives and exchange-traded funds (ETFs). Equity price risk arises primarily from these commitments. The Bank limits and measures the equity price risk at Handelsbanken Markets using matrices. The advantage of this method is that it effectively identifies equity price risk includ- ing the non-linear risk. VaR is used, together with other risk measures and stress scenarios, as a complement when measuring the equity price risk. At year-end, the Bank’s VaR for equity price risk in the trading book was SEK 0 million (0). Equity price risk outside the trading book The Group’s holdings of equities outside the trading book include level 3 shares, mainly consisting of various types of Bank-wide oper- ations related to the Bank’s core business. The holdings are classified as measured at fair value through other comprehensive income and are measured at fair value on the balance sheet. In general, such holdings are valued at the Bank’s share of the company’s net asset value, or alternatively at the price of the last com- pleted transaction. The equity price risk is low. Equity price risk Change in equity price SEK m Change in volatility 2024 2023 -25% 0% 25% -25% 0% 25% 10% 70 69 67 55 58 60 -10% -66 -64 -62 -40 -37 -35 Equity exposures outside the trading book SEK m 2024 2023 Holdings classified as measured at fair value through other comprehensive income 804 601 of which Levels 1 and 2 642 445 of which Level 3 162 156 Holdings classified as measured at fair value through other comprehensive income 804 601 of which business-related 271 256 of which other holdings 533 345 Fair value reserve at beginning of year 273 221 Unrealised market value change during the year for retained and new holdings 170 52 Realised due to sales and settlements during the period -3 0 Fair value reserve at end of year 440 273 Included in tier 2 capital 0 0 G2 cont. 105 Handelsbanken Annual and Sustainability Report 2024 3.1
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Commodity price risk Trading in commodities is conducted exclu- sively at Handelsbanken Markets. Exposure in commodity-related instruments only occurs as a result of customer-driven trading in the inter- national commodity markets. Commodity price risk, both linear and non-linear, is measured as the absolute total of risk for all commodities to which the Bank is exposed. At year-end, the commodity price risk was SEK 1 million (0), measured as the maximum loss on price changes up to 20% in underlying commodities and changes in volatility up to 35%. At year- end, the Bank’s VaR for commodity price risk was SEK 0 million (0). Other market risks Market risk also arises in the Bank’s pension system (pension risk). The risk comprises the risk of changes in the value of the pension assets securing the Bank’s pension obliga- tions, together with changes in discount rates that affect the present value of the pension obligations. Fair value measurement The business operations are responsible for the correct valuation of financial instruments, and these valuations are then verified by Handelsbanken Risk Control. This validation responsibility includes ensuring the checking of market data upon which the valuation is based and ensuring that this check is indepen- dent of the risk-taking parties. Sources of market data are independent of the business operations. When market data has been obtained from the business opera- tions, documented controls are performed against external sources to assess whether the data is reasonable. Market prices and market data for models must be verified at least once a month but are also essentially verified daily. Valuation models are validated by Handels- banken risk control which is independent of the developer of the model. The Valuation committee, whose purpose is to coordinate valuation matters in the Handelsbanken Group, fulfils an important function in ensuring that each valuation is correct and adheres to current market practices. The valuation of financial instruments mea- sured at fair value is performed in accordance with IFRS 13. See note G42 for more informa- tion about the assets and liabilities measured at fair value and for additional information on the Bank’s valuation process. Prudent valuation In accordance with the valuation rules in the CRR, Handelsbanken makes a quarterly adjustment to own funds relating to uncer- tainty in the valuation of positions at fair value. This adjustment aims to assess the minimum value of own funds to the Bank with 90% accuracy in the event of a sale or the closing of the positions. The adjustment is calculated as the difference between a prudent valuation and the carrying amount representing the most probable value. The adjustments are based on various factors, including assessments of uncertainty in market data, concentrated positions and model risks. G2 cont. Foreign exchange risk As the Bank has lending in several different currencies, foreign exchange exposure of a structural nature arises, because the Group’s accounts are presented in Swedish kronor. This structural risk is managed by considering the trade-off between the respective impacts of foreign exchange movements on either cap- ital ratios or equity. The Board has established the maximum impact on equity which the struc- tural foreign exchange position is permitted to give rise to in the hedging of the common equity tier 1 ratio, and the maximum permitted position and sensitivity in the common equity tier 1 ratio due to fluctuations in exchange rates. The other foreign exchange movements that affect the Bank’s equity are shown in the table Statement of changes in equity, Group, on page 65. The Bank’s direct foreign exchange expo- sure arises as a consequence of customer - driven, intra-day trading in the international foreign exchange markets. This trading is con- ducted at Handelsbanken Markets. The Board, CEO and CFO have set VaR limits for this for- eign exchange risk. Some foreign exchange exposure also arises in the normal banking operations as part of managing customer payment flows and in funding operations at Handelsbanken Treasury. The Board, CEO and CFO have set position limits for these risks. At year-end, the aggre- gate net position amounted to SEK 162 million (337), not including the structural currency position. This foreign exchange risk does not depend on trends for an individual currency or group of currencies, because the positions are very short and arise in management of cus- tomer-driven flows. The total foreign exchange risk in the non-trading book was SEK 12 mil- lion (20), measured as the impact of an instan- taneous 5% change in the Swedish krona on the Bank’s reported profit. Exchange rate sensitivity in the non-trading book (Worst outcome +/-5% change in SEK against the respective currency) SEK m 2024 20231) EUR 8 18 NOK 3 2 USD 0 2 GBP 3 2 Other currencies 3 4 1) The risk for 2023 differs from previously reported amounts due to a change in method. 106 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Funding and liquidity risk The risk that the Bank will not be able to meet its payment obligations when they fall due without being affected by unacceptable costs or losses. Funding strategy Handelsbanken has a low tolerance of liquidity risks, both at aggregate level and in each individual currency. The aim is to have good access to liquidity, low variation in results and a considerable capacity to meet customers’ funding needs, even in difficult times. This is achieved by maintaining a good matching of incoming and outgoing cash flows over time in all currencies essential to the Bank and by maintaining large liquidity reserves of good quality. The Bank thus minimises the economic risks in funding and can thereby maintain sta- ble and long-term funding for the business- operating units. The Bank strives for a balanced usage of deposit and market funding. Furthermore, the Bank aims for breadth in its funding pro- grammes and their use. This ensures that the Bank can keep its core business intact for a long period of time, even if there is extensive disruption in the financial markets. The result of this work is a well-matched balance sheet, where illiquid assets are financed using stable funding. The illiquid assets comprise credits to households and companies; these credits constitute the Bank’s core business. The long-term stable funding of these assets consists of covered bonds issued by Stadshypotek, senior bonds issued by Handelsbanken, deposits from households and a certain amount of deposits from compa- nies, subordinated liabilities and equity. A balance sheet is a snapshot of assets and liabilities. To ensure that the Bank’s obligations to customers and investors are fulfilled, it is important to adopt a forward looking perspec- tive in funding and liquidity risk management. The balance sheet is therefore structured in such a way that the real economy participants in the form of companies and households and their needs for credit can be supported even during lengthy periods of stress in the financial markets. Short-term assets cover short-term liabilities by a good margin. The figure Composition of the balance sheet from a maturity perspective describes the balance sheet in a stressed scenario where 20% of deposits are assumed to disappear within one year and all access to new market funding dis- appears. Despite the stress, short-term assets are estimated to exceed short term liabilities by a considerable amount at year-end. A long- term crisis could result in a reduced balance sheet with retained core business, whereby the volume of short-term assets is gradually used to pay back maturing short-term liabilities. In the event of a more serious crisis, measures have been prepared to generate liquidity which will provide more support to the business operations. The market has great confidence in Handelsbanken, and its assessment is that Handelsbanken has a low credit risk. The Bank stands out as one of the most stable banks in the world, as reflected in the fact that no other privately-owned bank in the world has a higher combined credit rating from the leading credit rating agencies. The high level of confidence is also reflected in the fact that the Bank has continued to have access to all of its preferred funding markets on reasonable terms com- pared to the Bank’s competitors. Good diversification between different types of funding sources in various markets, curren- cies and forms of funding instruments is a key component of the funding strategy. This reduces the significance of individual markets or sources of funding. Most of the long-term market funding comprises issues of covered bonds through Stadshypotek. This funding takes place in Swedish kronor, Norwegian kroner and euro. Handelsbanken’s long-term senior international funding is geographically well diversified, and the Bank issued signifi- cant volumes of bonds in US dollars and euro during the year. The most important sources of funding are deposits from households and Composition of the balance sheet from a maturity perspective, SEK bn 0 500 1 000 1 500 2 000 2 500 3 000 3 500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Short-term assets, SEK 1,433 bn Cash and balances with central banks Bonds and other liquid securities including derivatives Loans to banks < 1 year Loans repaid and amortised within 1 year1) Loans to general public 1–5 years Loans to general public > 5 years Other assets Short-term liabilities, SEK 1,107 bn Liabilities to banks < 1 year Issued covered bonds < 1 year Issued other securities < 1 year Stress on deposits: 20% of deposits leaving Other liabilities < 1 year including derivatives Issued securities > 1 year Remaining deposits after stress Other liabilities Equity Assets Liabilities 1) Scheduled amortisations, contractual maturities and estimated additional loan repayments. G2 cont. 107 Handelsbanken Annual and Sustainability Report 2024 3.1
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G2 cont. companies as well as covered and senior bonds. The short-term funding mainly com- prises deposits from financial companies and institutions as well as issues of commercial papers and certificates of deposit. Handels- banken Treasury has a number of different funding programmes for market funding at its disposal. Bonds, certificates and commercial papers are issued under these programmes in the Bank’s, Stadshypotek’s and Handels- banken plc’s names. The funding programmes ensure well-diversified access to funding in terms of different currencies, the number of investors, debt types and geographic breakdown. Organisational structure Handelsbanken has a decentralised business model, but all funding and liquidity manage- ment in the Group is centralised to Handels- banken Treasury. No branch, county, district or country organisation is permitted to assume liquidity risk. Funding and liquidity manage- ment is governed by policies established by the Board, which also decides on limits. Instructions from the CFO concretise these policies. The instructions establish parameters such as limits, the composition of the funding, and benchmarks in the case of disruptions in the funding markets. Furthermore, all liquidity risk limits are channelled to the operations via Handelsbanken Treasury. Handelsbanken Treasury is also responsible for the Bank’s liquidity reserve, including the pledged assets that must be kept in different payment and clearing systems, and monitors liquidity flows during the day to ensure that the Bank has sufficient collateral in its payment systems at any given time to meet the Bank’s payment obligations. The size of collateral in the clearing systems is determined on the basis of what the Bank deems is required to fulfil its obligations, both in normal circumstances and in stressed situa- tions. If these circumstances change, the size of collateral and liquidity is adjusted, and in times of crisis, collateral can also be redistrib- uted and the liquidity reserve can be utilised. The operations also ensure marginal require- ments from central and bilateral counterparties as regards derivative exposures. The Bank secures liquidity in its central bank and nostro accounts for expected payment and settle- ment undertakings through active liquidity planning and monitoring in all currencies. Market funding – composition During the year, Handelsbanken issued a total of SEK 157 billion (227) in long-term market funding in the Bank’s most important funding currencies. An important component of the long-term market funding is issues of covered bonds. The breakdown by currency of the volume outstanding is presented in the table Market funding of covered bonds by currency. Short-term funding is mainly raised by issuing certificates of deposit and commercial papers in Europe and the USA. This funding is supple- mented by fixed-term deposits from large corporates, both financial and non-financial. In connection with the funding operations, the Bank continued to meet investors to the same extent as previously, updated its funding pro- grammes and also in other respects main- tained the conditions for bond funding in all relevant global funding markets. This enabled the funding operations to continue as normal during the year. Maturity profile of long-term market funding Refers to issued securities as at 31 December 2024 with a long-term1) original maturity. SEK bn 2025 2026 2027 2028 2029 2030 2031 >2032 Covered bonds 100 114 178 134 112 39 2 3 Senior bonds 31 44 49 37 9 0 1 0 Senior non-preferred bonds (SNP) 0 20 6 11 11 11 9 10 Subordinated liabilities 0 0 0 0 0 0 0 0 Others 3 0 0 0 0 0 0 0 1) Long-term maturity refers to a maturity equal to or in excess of one year and one month. Short-term market funding by currency 2024 Refers to breakdown by currency as at 31 December 2024 for issued securities with a short-term2) original maturity. SEK bn % Amount SEK 0 0 EUR 32 202 USD 62 383 Others 6 35 2) Short-term maturity refers to a maturity of less than one year and one month. Long-term market funding by instrument 2024 Refers to breakdown by instrument as at 31 December 2024 for issued securities with a long-term4) original maturity. SEK bn % Amount Covered bonds 73 683 Senior bonds 18 170 Senior non-preferred bonds 9 78 Others 0 3 4) Long-term maturity refers to a maturity equal to or in excess of one year and one month. Market funding of covered bonds by currency 2024 Refers to the currency breakdown as at 31 December 2024 for issued covered bonds. SEK bn % Amount SEK 82 561 EUR 14 94 Others 4 28 Long-term market funding by currency 2024 Refers to breakdown by currency as at 31 December 2024 for issued securities with a long-term3) original maturity. SEK bn % Amount SEK 60 561 EUR 27 249 USD 8 74 Others 5 50 3) Long-term maturity refers to a maturity equal to or in excess of one year and one month. 108 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Encumbered assets and cover pools Another important part of Handelsbanken’s liquidity management consists of retaining significant volumes of unutilised collateral that can be used in the event of disruptions in the financial markets. One prerequisite for being able to pledge additional collateral is for the Bank to have unutilised collateral at its dis- posal from the outset. The Bank therefore retains substantial volumes of non-encum- bered assets that could be used as collateral in the issue of covered bonds and liquid secu- rities with very high credit ratings. The Bank is restrictive about entering into agreements, such as CSA agreements, that stipulate that the Bank, according to certain criteria, may be forced to provide collateral to a counterparty. Such agreements are generally only signed with credit institutions. Cash col- lateral pledged under CSA agreements for out- standing derivatives totalled SEK 4,800 million (18,705). For more information about the Bank’s encumbered assets, see the Assets pledged table in Handelsbanken’s Fact Book. In addi- tion to securing the Bank’s liquidity, this restric- tive approach contributes to limiting the extent to which the Bank’s senior lenders have lower priority than lenders who invest in covered bonds, known as subordination. To assess the degree of subordination between investors of unsecured funding and secured funding, the volume and credit quality of the non-encumbered assets are the relevant factors. Handelsbanken’s restrictive approach to risk-taking means that the non-encumbered assets are of high quality. Since Handels- banken aims to have a balanced utilisation of covered and senior bonds, there is a large volume of mortgage loans which are not encumbered. The table Non-encumbered/non-pledged assets shows that the volume of non-encum- bered assets for Handelsbanken is 252% (261) of the outstanding volume of unsecured funding. The majority of the encumbered assets con- sist of Stadshypotek’s cover pools, which comprise mortgage loans provided as collat- eral for outstanding covered bonds. The Bank also has voluntary OC (over-collateralisation) – extra assets in addition to those which are needed to cover the issued bonds, and in addition to the 2% statutory requirement of 8% which is included in the pool. These extra assets are in the pool in case the value of the mortgage loans were to fall to a level such that further assets are needed to match the volume of outstanding bonds. When assessing the risk that it will be nec- essary to add further assets, the loan to value (LTV) of the mortgage loans in the cover pool is of fundamental importance. The lower the LTV, the lower the risk that more mortgage loans are required in the pool if prices fall in the property market. Handelsbanken’s average volume-weighted LTV – LTV Max – was 54.3% (54.0) in the Swedish pool and 58.5% (58.4) in the Norwegian pool. This shows that the Bank can withstand substantial drops in prices of underlying property assets before further mort- gage loans have to be added to the pools. The assets which the Bank has chosen to keep outside the cover pools are shown in the table Non-encumbered/non-pledged assets and can be used for issues of covered bonds if necessary. Non-encumbered/non-pledged assets 2024 2023 SEK bn NEA1) Accumulated share of non- encumbered funding, %2) NEA Accumulated share of non- encumbered funding, % Cash and balances with central banks 538 57 505 55 Liquid bonds in liquidity portfolio3) 239 82 258 83 Household lending incl. derivatives 439 466 of which mortgage loans 302 114 325 118 of which loans secured by collateral in property 2 114 2 118 of which other household lending 135 128 139 133 Corporate lending incl. derivatives 1,166 1,168 of which mortgage loans 493 180 455 182 of which loans to housing co-operative associations excl. mortgage loans 64 187 83 191 of which loans to property companies excl. mortgage loans - risk class 1–3 256 214 250 219 - risk class 4–5 190 234 192 239 - of which risk class > 5 10 235 16 241 of which other corporate lending - risk class 1–3 95 245 100 252 - risk class 4–5 49 250 61 259 - risk class > 5 9 251 11 260 Loans to credit institutions incl. derivatives 3 5 - risk class 1–3 2 252 4 260 - risk class > 3 1 252 1 260 Other lending 0 252 5 261 Other assets 0 252 0 261 Total 2,385 252 2,407 261 Encumbered assets without underlying liabilities4) 69 70 Encumbered assets with underlying liabilities 1,085 1,062 Total assets, Group 3,539 3,538 1) NEA: Non-encumbered assets. 2) Issued short and long non-secured funding and liabilities due to credit institutions. 3) Relates to eligible as collateral value in central banks. 4) Over-collateralisation (OC) in cover pool and assets to cover Operational Continuity in Resolution requirement in the UK (as of 2021). G2 cont. 109 Handelsbanken Annual and Sustainability Report 2024 3.1
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Cover pool data Sweden Norway SEK m 2024 2023 2024 2023 Stadshypotek total lending, public 1,407,203 1,394,877 146,185 125,975 Available assets for cover pool 1,298,858 1,281,717 137,562 117,137 Utilised assets in cover pool 671,531 692,099 78,979 73,414 Substitute assets, cash on a blocked account 500 300 500 120 Maximum LTV %, weighted average ASCB definition1) 54.32 54.02 58.55 58.43 LTV, breakdown 0–10% 22.0 22.6 21.6 21.5 10–20% 20.0 19.9 19.4 19.4 20–30% 17.5 17.2 17.0 16.9 30–40% 14.7 14.4 14.4 14.3 40–50% 11.3 11.2 11.6 11.6 50–60% 7.8 7.9 8.5 8.7 60–70% 5.0 5.1 5.6 5.7 70–75% 1.6 1.7 1.9 1.9 Loan amount, weighted average, SEK 809,200 820,600 3,035,345 2,822,572 Loan term, weighted average, no. of months2) 80.0 76.0 26.0 29.0 Interest rate adjustment periods, breakdown Floating rate, % 61.1 51.2 91.9 95.0 Fixed rate, % 38.9 48.8 8.1 5.0 1) Association of Swedish Covered Bond issuers. 2) Calculated from the date on which the loan is granted. Liquidity risk The Bank handles a large number of incoming and outgoing cash flows as part of its opera- tions. In order to limit risk in liquidity manage- ment, the Bank has a robust risk tolerance framework including both limits and qualitative targets for liquidity risk. Handelsbanken Risk Control is responsible for measuring risks and reports risk utilisation daily to the CEO and the CFO, and on a regular basis to the Board. Liquidity planning is based on an analysis of cash flows for the respective currency. As a general rule, a larger exposure is permitted in currencies with high liquidity than in currencies where the liquidity is low. The funding strategy is that illiquid assets are financed in a stable and long-term manner, and that a positive liquidity position (cash flows plus liquid assets) must be maintained – even in stressed conditions. The governance of the Bank’s liquidity situ- ation is therefore based on stress tests, which are performed at an aggregate level and also individually for the currencies that are essen- tial to the Bank. The stress tests ensure that the Bank has sufficient liquidity, from both a short-term and long-term perspective, in various stressed scenarios and with various liquidity-generating measures. The stress tests are carried out with the application of both market-wide and idiosyncratic stress on a daily basis. These are also supplemented with scenario analyses which consider sub- stantial falls in housing prices. In these stress tests, it is assumed that the Bank does not have access to market funding, at the same time as some deposits from households and companies gradually disappear in the first month. It is further assumed that the Bank will continue to conduct its core business by renewing loans to households and companies at maturity and that customers will partly uti- lise issued commitments and credit facilities. The stress tests assume that the cash assets in the liquidity reserve are used and that securities can immediately supply liquidity if provided as collateral, primarily in the market and as a last resort in central banks. In addition, the Bank can generate liquidity through the unutilised issue amount for cov- ered bonds and by implementing other liquidi- ty-generating measures to gradually provide the Bank with liquidity. The volume and quality of unutilised collateral must be such that in a crisis situation it can provide the Bank with the necessary liquidity. With these conditions, the Bank will be liquid for more than three years. Thus, the Bank has major powers of resistance to serious, long-term stress. The table Maturity analysis for financial assets and liabilities shows undiscounted cash flows for the contracted payment obligations, including interest flows, due for payment at the latest within the stated time intervals. The table shows holdings of bonds and other interest - bearing securities in the time intervals in which they can be converted to liquidity if they are pledged as collateral or sold. Furthermore, 300 600 900 1,200 2025-01-01 2025-01-17 2025-02-04 2025-02-19 2025-03-06 2025-03-24 2025-05-13 2025-11-30 2026-11-28 Stress test of liquidity, including liquidity-generating measures – accumulated liquidity position SEK bn G2 cont. 110 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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assets, liabilities and interest flows that mature are shown in the time intervals corresponding to the contractual maturity dates. Financial guarantees, loan commitments and unutilised overdraft facilities are reported in their entirety in the time interval up to 30 days. The total outstanding amount of these commitments does not necessarily represent future funding requirements. For derivative instruments, cash flows are reported on a net basis. Cash flows on a gross basis are reported in the separate table Derivatives. The liquidity coverage ratio (LCR) states the ratio between the Bank’s liquidity buffer and net cash flows in a very stressed scenario during a 30-day period. The requirement applies to LCR at aggregate level and the ratio must be at least 100%. The Swedish Financial Supervi- sory Authority also stipulates LCR in individual currencies within the framework of the supervi- sory review and evaluation process in Pillar 2. At year-end, the Group’s aggregated LCR was 207% (210), which shows that the Bank has a high level of resistance to short-term disrup- tions in the funding markets. The minimum requirement for the structural liquidity measure, the net stable funding ratio (NSFR) – the ratio between available stable funding and required stable funding – requires the Bank to have sufficient stable funding to cover its funding needs under both normal and stressed circumstances during lengthy peri- ods. The minimum requirement applies at aggregate level and the ratio must be at least 100%. At year-end 2024, NSFR was 124% (120) at Group level. Pricing of liquidity risk An important part of liquidity risk management is that deposits and lending are priced inter- nally, taking into account the liquidity risks that they give rise to. When the Bank grants a loan with a long maturity, this creates the need to obtain additional long-term funding – which is normally more expensive than short-term funding. This is because investors who pur- chase the Bank’s long-term bonds normally demand higher compensation for the maturity. This is taken into account in the Bank’s internal pricing, which takes place based on the price that internal units in the Bank have to pay for the funding they receive from Handelsbanken Treasury. The internal pricing is important in order to create the right incentive and to avoid unsound risk-taking. The Bank has applied maturity-based internal interest rates for a long time which ensures that the price at contract level takes into account the funding cost and liquidity risk that the agreement has given rise to. Liquidity coverage ratio (LCR) – subcomponents SEK m 2024 2023 High-quality liquidity assets 772,623 758,587 Cash outflows 419,464 424,831 Retail deposits and deposits from small business customers 59,319 55,996 Unsecured wholesale funding 278,914 255,923 Secured wholesale funding 2,452 4,266 Other cash outflows 78,779 108,646 Cash inflows 45,871 63,449 Inflows from fully performing exposures 33,911 40,108 Other cash inflows 11,960 23,341 Liquidity coverage ratio (LCR), % 207 210 The subcomponents are defined as stated in Commission Delegated Regulation (EU) 2015/61. Net stable funding ratio (NSFR) – subcomponents SEK m 2024 2023 Available stable funding 2,143,849 2,101,503 Capital items and instruments 219,139 208,436 Retail deposits 708,715 709,447 Wholesale funding 1,212,274 1,179,688 Other liabilities 3,722 3,931 Required stable funding 1,734,333 1,758,065 Total high-quality liquid assets 7,019 6,063 Assets encumbered for a residual maturity of one year or more in a cover pool 499,810 487,444 Performing loans and securities 1,136,619 1,178,603 Other assets 68,494 63,915 Off-balance sheet items 22,391 22,040 Net stable funding ratio (NSFR), % 124 120 G2 cont. 111 Handelsbanken Annual and Sustainability Report 2024 3.1
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For deposit volumes, the column “Unspecified maturity” refers to deposits payable on demand. The table contains interest flows, which means that the balance sheet items are not reconcilable with the Group’s balance sheet. Maturity tables without interest flows, including maturity tables in foreign currencies, can be found in the Fact Book at handelsbanken.com/ir. Maturity analysis for financial assets and liabilities 2024 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Unspecified maturity Total Cash and balances with central banks 542,808 542,808 Interest-bearing securities eligible as collateral with central banks1) 172,606 172,606 Bonds and other interest-bearing securities2) 47,508 47,508 Loans to credit institutions 16,704 163 161 588 793 865 19,274 of which reverse repos 11,291 11,291 Loans to the public 76,230 327,674 238,805 299,417 462,128 1,293,888 2,698,142 of which reverse repos 17,995 17,995 Other 20,056 365,437 385,493 of which shares and participating interests 14,746 14,746 of which assets from unsettled trades 5,310 5,310 Total assets 875,911 327,837 238,966 300,005 462,921 1,294,754 365,437 3,865,831 Due to credit institutions 38,239 33,459 1,462 120 904 349 11,192 85,726 of which repos of which deposits from central banks 12,943 247 13,190 Deposits and borrowing from the public 88,382 163,368 8,871 2,064 1,203 179 1,059,731 1,323,798 of which repos Issued securities3) 91,156 383,727 303,623 194,999 578,061 78,764 1,630,331 of which covered bonds 377 13,204 100,840 126,656 449,922 45,219 736,218 of which certificates of deposit (CDs) with original maturity of less than one year 41,693 172,414 56,211 270,318 of which commercial paper (CPs) with original maturity of less than one year 48,020 158,976 142,232 349,227 of which certificates of deposit (CDs) and commercial paper (CPs) with original maturity of over one year 2,876 718 3,594 of which senior non-preferred bonds 918 729 20,937 31,425 32,600 86,609 of which senior bonds and other securities with original maturity of over one year 429 32,818 2,327 47,990 99,678 1,120 184,363 Subordinated liabilities 849 799 1,647 29,918 11,707 44,920 Other 4,039 219 329 626 1,258 572 540,040 547,083 of which short positions 1,007 1,007 of which liabilities from unsettled trades 2,865 2,865 Total liabilities 221,816 581,622 315,084 199,456 611,345 91,571 1,610,963 3,631,858 Off-balance sheet items Financial guarantees and unutilised loan commitments 442,514 Derivatives 2024 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Total Total derivatives inflow 234,647 488,324 107,772 155,359 253,407 82,081 1,321,590 Total derivatives outflow 232,617 477,157 106,862 147,381 242,625 75,086 1,281,728 Net 2,030 11,167 910 7,978 10,782 6,995 39,862 G2 cont. 112 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Maturity analysis for financial assets and liabilities 2023 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Unspecified maturity Total Cash and balances with central banks 508,710 508,710 Interest-bearing securities eligible as collateral with central banks1) 199,274 199,274 Bonds and other interest-bearing securities2) 50,435 50,435 Loans to credit institutions 17,401 521 788 1,304 3,129 2,306 25,448 of which reverse repos 9,623 9,623 Loans to the public 92,630 327,172 258,418 279,380 465,330 1,227,112 2,650,042 of which reverse repos 17,404 17,404 Other 17,847 308,890 326,737 of which shares and participating interests 12,218 12,218 of which assets from unsettled trades 5,629 5,629 Total assets 886,297 327,693 259,207 280,683 468,458 1,229,417 308,890 3,760,646 Due to credit institutions 39,546 35,766 1,783 703 381 1,001 13,115 92,295 of which repos of which deposits from central banks 11,741 20,288 32,029 Deposits and borrowing from the public 72,616 188,060 33,509 4,994 1,623 157 1,049,740 1,350,699 of which repos Issued securities3) 73,317 437,143 271,904 145,936 569,336 94,931 1,592,568 of which covered bonds 336 54,466 76,896 104,626 390,687 55,744 682,756 of which certificates of deposit (CDs) with original maturity of less than one year 28,975 127,206 46,503 202,684 of which commercial paper (CPs) with original maturity of less than one year 47,841 225,686 136,389 409,916 of which certificates of deposit (CDs) and commercial paper (CPs) with original maturity of over one year 99 19,024 14,117 33,240 of which senior non-preferred bonds 557 414 970 37,871 25,674 65,486 of which senior bonds and other securities with original maturity of over one year 109 27,489 2,886 35,008 121,494 11,500 198,487 Subordinated liabilities 14,022 565 1,353 20,192 14,367 50,499 Other 7,750 220 377 654 1,383 638 519,013 530,035 of which short positions 2,366 2,366 of which liabilities from unsettled trades 5,210 5,210 Total liabilities 193,229 675,212 308,139 153,640 592,916 111,093 1,581,867 3,616,096 Off-balance sheet items Financial guarantees and unutilised loan commitments 427,865 Derivatives 2023 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Total Total derivatives inflow 130,988 462,290 124,514 93,751 265,217 89,804 1,166,564 Total derivatives outflow 131,898 468,845 127,404 92,031 252,501 81,931 1,154,610 Net -910 -6,555 -2,890 1,720 12,716 7,873 11,954 1) SEK 138,235 million (169,372) of the amount (excl. interest) has a time to maturity of less than one year. 2) SEK 6,865 million (3,334) of the amount (excl. interest) has a time to maturity of less than one year. 3) SEK 750,403 million (758,321) of the amount (excl. interest) has a time to maturity of less than one year. Assets and liabilities in the table above include the disposal groups in Finland, which have been reclassified to Assets held for sale and Liabilities held for sale on the balance sheet, respectively (see note G14). G2 cont. 113 Handelsbanken Annual and Sustainability Report 2024 3.1
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Liquidity reserve To ensure sufficient liquidity to support its core business in stressed financial conditions, the Bank holds large liquidity reserves in all curren- cies of relevance to the Bank. The liquidity reserve which is independent of funding and foreign exchange markets can provide liquidity to the Bank at any time. The liquidity reserve comprises several dif- ferent parts. Cash, balances and other lending to central banks are components which can provide the Bank with immediate liquidity. The reserve also comprises liquid securities such as government bonds, covered bonds and other securities of very high credit quality which are liquid and eligible as collateral with central banks. These can also provide the Bank with immediate liquidity. The remainder of the liquidity reserve comprises an unutilised issue amount for covered bonds and other liquidity-generating measures. Holdings with central banks, and securities holdings in the liquidity reserve, market value 2024 SEK m SEK EUR USD Other Total Level 1 assets 252,323 210,426 142,411 171,044 776,204 Cash and balances with central banks 62,533 204,795 132,563 138,239 538,130 Securities issued or guaranteed by sovereigns, central banks, MDBs and international organisations 154,706 5,516 9,848 3,115 173,185 Securities issued by municipalities and PSEs 19 19 Extremely high-quality covered bonds 35,066 115 29,690 64,871 Level 2 assets 912 163 121 1,196 Level 2A assets 909 121 1,030 Securities issued or guaranteed by sovereigns, central banks, municipalities and PSEs 95 95 High-quality covered bonds 909 27 936 Corporate debt securities (lowest rating AA-) Level 2B assets 2 163 165 Asset-backed securities High-quality covered bonds Corporate debt securities (rated A+ to BBB-) 2 163 165 Shares (major stock index) Total liquid assets 253,235 210,590 142,411 171,165 777,401 Holdings with central banks, and securities holdings in the liquidity reserve, market value 2023 SEK m SEK EUR USD Other Total Level 1 assets 282,713 162,484 165,828 151,125 762,150 Cash and balances with central banks 66,978 157,868 160,806 119,288 504,940 Securities issued or guaranteed by sovereigns, central banks, MDBs and international organisations 181,594 4,556 5,022 1,758 192,930 Securities issued by municipalities and PSEs 209 209 Extremely high-quality covered bonds 33,932 60 30,079 64,071 Level 2 assets 207 280 502 120 1,109 Level 2A assets 207 221 502 120 1,050 Securities issued or guaranteed by sovereigns, central banks, municipalities and PSEs 36 36 High-quality covered bonds 207 221 502 84 1,014 Corporate debt securities (lowest rating AA-) Level 2B assets 60 60 Asset-backed securities High-quality covered bonds Corporate debt securities (rated A+ to BBB-) 60 60 Shares (major stock index) Total liquid assets 282,920 162,764 166,330 151,245 763,259 G2 cont. 114 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Operational risk Operational risk refers to the risk of loss due to inadequate or failed internal processes, human error, erroneous systems or external events. The definition includes legal risk, model risk, and information and communication technology (ICT) risk. The Board establishes the Handelsbanken Group’s tolerance of operational risk. Handels- banken has a low tolerance for operational risk, although this risk is an inevitable compo- nent in all operations. As far as possible, Handelsbanken must endeavour to prevent these risks. Operational losses must be low. An operational risk which could have serious adverse consequences for the Bank, the Bank’s customers or the financial system in the event of an incident must be reduced to a lower risk level. Risk mitigation measures must be taken so that the risk is made acceptable. Losses resulting from an operational risk event can be covered by insurance or other solu- tions. Risk assessments are conducted by assessing the impact and probability of events occurring, based on a scale from 1 to 5. The assessed impact, coupled with the assessed probability of the event, will determine the scope of the risk limitation measures required. If an action plan is missing or if Risk Control considers that the work is taking too long or not progressing according to plan, the risk is outside of the Bank’s risk tolerance. The Chief Executive Officer decides on limits for opera- tional risks. In 2024, Handelsbanken’s recognised oper- ational losses, which comprise expected and recognised losses exceeding SEK 25,000, and any recoveries, totalled SEK 119 million (102). Organisational structure The responsibility for identifying, assessing and managing operational risk is an integral part of managerial responsibility at all levels in the Handelsbanken Group. The Bank’s decen- tralised way of working and cost-conscious- ness promote good management of opera- tional risk, which leads to vigilance against potential loss risks in daily procedures and events. Operational risk is managed in the business operations, and this management is controlled by Risk Control. Specially appointed local coordinators for operational risk (local OpRisk coordinators) are in place to assist managers in their management of operational risk. The local OpRisk coordinators are responsible for supporting the business operations on opera- tional risks, incident management, risk indica- tors, action plans, limits and reporting. Handelsbanken Risk Control is responsible for regularly evaluating the various methods, processes and procedures used by the opera- tions for identifying, assessing, managing and reporting operational risks, and for verify- ing that the operations monitor the implemen- tation of the actions which have been decided. Handels banken Risk Control is also responsi- ble for ensuring that risks are evaluated before decisions are made concerning new or materi- ally changed products, services, markets, pro- cesses and IT systems or in the case of major changes in the Group’s operations or organisa- tional structure. In addition, Handelsbanken Risk Control is responsible for identifying, assessing, analysing, and reporting at the Group level all material operational risks and their development to management and the Board. The risk reports presented to manage- ment and the Board also contain information about material incidents and risk mitigation measures. Methods for identifying, assessing and managing operational risk The business operations are responsible for owning and managing risks associated with day-to-day operational activities within their units. The Bank monitors the development of operational risk according to different catego- ries, including the following: • execution, delivery and process management • business disruptions and system failures • clients, products and business practices • external crime • damage to physical assets • employment practices and workplace safety • internal fraud. The Group-wide methods for identifying, assessing and managing operational risk are incident reporting, risk indicators and self- assessment of operational risk. Incident reporting Reporting of operational risk incidents which have resulted in direct financial losses in excess of SEK 25,000 is mandatory. Other incidents illustrating operational risk must also be reported, and risk facts must be collected. Risk indicators Risk indicators are monitored in order to warn of heightened operational risk. If a threshold for a risk indicator is exceeded, a risk assess- ment must be carried out to serve as a basis for assessing any risk management measures to be taken. For certain risk indicators, the threshold is determined by the CEO. Self-assessment for operational risk The Group-wide operational risk process sup- ports a systematic risk inventory in the entities’ areas of responsibility and is used to assess identified operational risks according to a 1b Local coordinator for operational risk 2 Handelsbanken Risk Control 3 Handelsbanken Internal Audit1a Business operations Exchange of experience Three lines of defence G2 cont. 115 Handelsbanken Annual and Sustainability Report 2024 3.1
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Group-wide assessment scale, document in a risk register and report operational risks. All units regularly carry out this process. The risk assessment can also be event driven, and the procedure shall be performed in case of seri- ous incidents, threshold or limit breaches or serious external events. ORX The Bank is a member of the Operational Riskdata eXchange Association (ORX). The main purpose of ORX is for participating banks to exchange anonymised data concerning incidents leading to operational losses. ORX also has an important function in standardising and ensuring the quality of data on operational risk. Extensive research is being done on methods regarding operational risk, and ORX is an important forum for the exchange of experiences. IT operations in the Handelsbanken Group The Bank’s operations are dependent on the availability and security of its IT services. The technological development and digitalisation of banking services mean that this area is increasing in significance. The CEO estab- lishes guidelines relating to the overall goal and strategy of IT operations in the Handels- banken Group. Operational risk in this area is managed according to the same procedures as in other parts of the Bank, with the addition of special procedures for managing specific types of risk within the area. These include: • monitoring IT systems in production • management of IT incidents • management of new or changed IT systems • management of cyber risk • implementation of security tests • implementation of risk analyses of IT systems • reviewing outsourcing agreements and other supplier arrangements in terms of IT and security • continuity management of IT systems. Security and data protection Security work at Handelsbanken aims to safe- guard the safety, security and privacy of both employees and customers, and to protect cus- tomers’ and the Bank’s assets, and the good name and reputation of the Group. In its oper- ations, a bank continuously processes sensi- tive information about customers and custo- mer relationships. The overall aim of Handels- banken’s information security and data protection efforts is to protect this information based on its availability, accuracy, confidential- ity and traceability. Information and business systems must be available based on the busi- ness requirements of the operations. The CEO establishes guidelines for security and data protection at Handelsbanken. All employees of the Bank are responsible for compliance with the rules for protection of information, and all managers are responsible for compliance with the rules on security and data protection in their own area of responsibility. The Bank engages in systematic data protection and security work that meets requirements and heads off possible threats and risks, and there are procedures for managing changes in the IT and physical environment that could have a negative impact. In the case of deficient man- agement, or if information were to be leaked by mistake, the consequences could be serious, including weakened confidence in the Bank or financial losses. Within the framework of the systematic work, structured development is under way to increase the level of awareness among employees and customers concerning the threats and risks in security, through pre- sentations, training programmes and informa- tion initiatives. Security and data protection cover administrative solutions such as rules and instructions, technical security solutions, physical protection, and protection of sensitive activities and classified information. Security and data protection activities are conducted based on an information security management system that follows international standards, such as ISO 27001. Handelsbanken’s information security work is certified according to ISO 27001. The Bank’s management system for information security is based on ISO 27001 together with the Standard of Good Practice developed by the Information Security Forum (ISF), an organisation which counts many of the largest companies in the world as mem- bers, as standard providers. The work with data protection, information and IT security is pursued systematically, and the Bank works with this from a process perspective, where risk analysis plays a central role. Risk analyses employ the various methods from ISF’s Infor- mation Risk Analysis Methodology (IRAM2) and the Privacy Impact Analysis (PIA). The Handelsbanken Group’s physical safety measures include protection against fire, pro- cesses and procedures concerning threats to employees and employee protection, travel safety, perimeter protection, the Bank’s liability and property insurance cover, as well as exter- nal environment monitoring and instructions. Instructions within the Group for managing risks related to physical safety require, among other things, that a fire evacuation review be carried out at least annually and be followed up via the annual work environment survey. G2 cont. Breakdown of loss amounts over SEK 25,000 by number, 2020–2024 % Execution, delivery and process management 55 Business disruptions and system failures 6 Clients, products and business practices 4 External crime 34 Damage to physical assets 0 Employment practices and workplace safety 1 Internal fraud 0 Breakdown of loss amounts over SEK 25,000, 2020–2024 % Execution, delivery and process management 45 Business disruptions and system failures 6 Clients, products and business practices 25 External crime 24 Damage to physical assets 0 Employment practices and workplace safety 0 Internal fraud 0 116 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Financial crime The Bank works constantly to minimise the risk of the Bank’s customers, products or services being exploited for financial crime. Financial crime includes money laundering, terrorist financing, tax evasion, corruption, fraud and breaches of international sanctions. The work is managed by a central department that reported to the Bank’s specially appointed executive with Group-wide responsibility for the work to prevent financial crime in accor- dance with the Swedish Act on Measures against Money Laundering and Terrorist Financing. Starting points for these efforts to combat financial crime are the Bank’s low tolerance of risk and the body of external regulations addressing financial crime in the countries where the Bank operates. The Bank also has a separate compliance department for financial crime, which also has Group-wide responsibility and monitors and acts in an advisory capacity in the Bank’s work to prevent financial crime. The department is headed up by the Bank’s central function owner. For fur- ther information on the Bank’s work to combat financial crime, refer to Handelsbanken’s Cor- porate Governance Report on pages 40–58. Change management The change management area covers new or materially changed products, services, markets, processes and IT systems, or when there are material changes in the Group’s operations or organisational structure. The activities and actors involved in the process are described in the Bank’s instructions and approval process for change management, which also describe how and when to involve the control functions. The process also includes requirements that risk analyses are carried out and that these consider, for example, areas such as financial crime, environment and climate, information security and data quality. Decisions related to changes must also be documented. Essential processes Essential processes refer to processes which are of material importance for providing sup- port to the Bank’s critical business operations. The Bank’s essential processes are reviewed for relevance each year and in conjunction with material changes, and are updated where necessary, as well as being subject to a risk assessment. The identification of essential processes is fundamental to the scope of the Bank’s continuity planning, i.e. which parts of the operations are to be prioritised in the event of disruptions or stoppages. Continuity planning and crisis management The purpose of the Bank’s continuity planning and crisis management is to ensure that the Bank is well prepared to continue its business operations in the event of an unpredictable situation. This means that preparatory mea- sures must be taken to mitigate the effects of a serious disruption on the business opera- tions, such that these can continue at an acceptable level for the duration of the disrup- tion. The CEO’s guidelines for continuity plan- ning and crisis management and supplemen- tary instructions state that consequence analyses are to be performed each year, in order to ascertain which operations and IT systems are of such critical importance that they require continuity plans. The continuity plans include planning the maintenance of operations during the disrup- tion and recovery to normal operations. For essential processes, the plans must include the longest permitted duration of a stoppage. There is a Central Crisis Team for the entire Group. In addition, crisis teams are to be established in some subsidiaries and units. Work in the crisis functions is to be undertaken according to special crisis manuals. Continuity plans and crisis manuals must be revised on an annual basis at a minimum. The plans must be tested each year, at a minimum, and crisis drills are carried out by the units required to have crisis functions. The work is evaluated annually and reported to the Board, which is also informed of the Bank’s strategy for continuity management. Handelsbanken also participates in the volun- tary work organised by the Swedish financial sector’s private-public partnership organisa- tion (FSPOS) to strengthen the sector’s capacity to manage disruptions and stoppages. No FSPOS exercise was carried out in 2024. Supplier arrangements The Bank has a designated process for managing supplier arrangements, including outsourcing agreements, within the Group. As the starting point, the Bank applies a risk- based working method, taking into account the Bank’s low risk tolerance, in assessments prior to decisions on supplier arrangements and their administration. The CEO has issued guidelines that set out the conditions and requirements for outsourcing agreements concerning operations of material significance. The guidelines apply throughout the Handels- banken Group and also cover the subsidiaries in the Group. Reputation risk, conduct risk and training Reputation risk is the risk of losses due to a deterioration of confidence in the Bank. This may occur for reasons such as deficiencies in ethical standards, inappropriate actions, poor information or badly planned development of new or changed products. Handelsbanken manages and minimises reputation risk in its operations through proactive business intelli- gence and accompanying, relevant corrective action when needed, and by conducting oper- ations to a high ethical standard. In 2024, three training programmes were mandatory for all employees in the Group: Financial Crime, GDPR, and Security Training – Cybersecurity. In addition, the Bank’s different units have other locally adapted mandatory training courses. Handelsbanken’s low risk tolerance is also reflected in its approach to employee benefits. The Bank regards fixed remuneration as con- tributing to sound operations, so this is applied as a fundamental rule. G2 cont. 117 Handelsbanken Annual and Sustainability Report 2024 3.1
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Compliance risk Compliance risk refers to risks associated with non-compliance. Compliance refers to the observation of and compliance with external and internal rules and regulations, accepted market practice and relevant standards that are together applicable to the Bank’s licensed operations. Compliance risk is the risk associated with the Bank’s failure to comply with this framework, and the consequences that this could have for the Bank in the form of sanctions, material finan- cial loss or loss of reputation. Handelsbanken has a low tolerance for compliance risks and must prevent these risks as far as possible and prioritise the work that needs to be carried out to quickly address any risks which have been identified. A compliance risk is beyond risk tol- erance if the Compliance function deems that the risk is major or critical, and is of the view that there is no adequate action plan, or that there are material deviations from the existing action plan. Organisational structure The responsibility for compliance in the opera- tions is an integral part of managerial responsi- bility at all levels of the Group, and is allocated at unit/department level. Function managers and product managers have a special respon- sibility for ensuring that work in each area of responsibility throughout the Group is carried out in accordance with internal and external rules and regulations, including the responsi- bility to follow up compliance with the Group- wide instructions that they issue within their areas. Handelsbanken Legal is responsible for providing legal support to the business, and for carrying out the requisite legal assess- ments, including definitive interpretations of regulations, on behalf of other units. It is also responsible for coordinating work involving legal support and legal assessments at the central and local levels. Within the Handels- banken Group, managers and employees must have a sound awareness and understanding of the requirements imposed through internal and external rules, as well as the risks associated with non-compliance, and must seek support from Handelsbanken Legal or a local legal function for the requisite legal assessments. The Compliance function is the control func- tion responsible for identifying, monitoring, controlling and reporting on compliance risks in relation to the Bank’s licensed operations. The function is headed by a Chief Compliance Officer and organisationally divided into Handelsbanken Compliance, which generally also includes local compliance units, and into local units in certain subsidiaries. Handels- banken Compliance also includes specifically defined roles such as the Appointed Officer for Controlling and Reporting Obligations accord- ing to the applicable money laundering and terrorist financing regulations, and the Data Protection Officer (DPO) according to the applicable regulations on data protection and personal data processing. Risk-based work The Compliance function applies a risk-based approach to its work. In practice, this means that the function performs an annual overall risk assessment aimed at identifying the areas on which the function is to focus its activities. The Chief Compliance Officer reports on the current risk situation in the Group to the Chief Executive Officer, the Risk committee and the Board every quarter. This includes the report from the Appointed Officer, as well as the DPO. Risk in the remuneration system Remuneration risk is the risk of loss or other damage arising due to the remuneration system. The remuneration system At Handelsbanken, remuneration is estab- lished individually when an employee takes up a new position and in local salary reviews. Remuneration takes into account the collec- tive bargaining agreements that are binding for Handelsbanken or corresponding local standardised contracts or agreements. It is based on the Bank’s model for setting salaries and the salary-setting factors it specifies: the nature and level of difficulty of the work, com- petency and skills, work performance and results achieved, leadership, the market, and being a cultural ambassador for the Bank. These principles have been applied for many years. They mean that managers at all levels participate regularly in salary processes, and take responsibility for the Bank’s salary policy and the growth in their own unit’s staff costs. To ensure that Handelsbanken has a well - designed remuneration system, risks in the remuneration system are managed as a sepa- rate risk class, with the risk management fol- lowing the same allocation of responsibilities as other types of risk. Handelsbanken has low tolerance of remuneration risks and actively strives to keep them at a low level. Perfor- mance-based variable remuneration must be applied with great caution and is not offered to employees who, in their professional roles, can have a material impact on the Bank’s risk profile. In 2024, a provision of SEK 49 million (49) was made for performance-based variable remuneration. Organisational structure and responsibility The principles for the Bank’s remuneration system are stipulated in the remuneration policy decided on by the Board. More detailed guidelines and implementation directives are decided by the Chief Executive Officer. Handels- banken Compliance reviews these steering documents to ensure observance of the regu- lations applying in this area. The responsibility for identifying and managing remuneration risks rests with every responsible manager in the operations. Handelsbanken Risk Control ensures that the remuneration system and its application are evaluated every year from a risk Performance-based variable remuneration 2024 2023 Earned performance-based variable remuneration1), SEK m 49 49 Salaries and fees, SEK m 11,375 10,168 No. of persons able to earn performance-based variable remuneration2) 137 132 Average number of employees 12,703 12,216 Earned performance-based variable remuneration, as a proportion of total salaries and fees, % 0.4 0.5 Earned performance-based variable remuneration, as a proportion of common equity tier 1 capital, % 0.03 0.03 No. of persons able to earn performance-based variable remuneration as a proportion of average number of employees, % 1.1 1.1 1) The amounts are excluding social security costs. The amounts are determined after the Annual Report is published. 2) The number of persons who are allocated performance-based variable remuneration is determined after the Annual Report is published. Of the 132 persons who were able to earn performance-based variable remuneration in 2023, 110 received an allocation. G2 cont. 118 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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perspective. This evaluation must also include an analysis of the impact of the remuneration system on the Bank’s risk, capital and liquidity situation. Risks in the remuneration system Handelsbanken’s remuneration policy and remuneration system are deemed to generate low risks, align with the Bank’s low tolerance of risks and support the Bank’s long-term interests. The remuneration system has a low impact on the Bank’s financial risk, capital and liquidity situation. The total amount reserved for performance-based variable remuneration to employees in the Handelsbanken Group must not exceed 0.4% of the Handelsbanken Group’s common equity tier 1 capital during any given year. The data for the calculation of performance-based variable remuneration is risk-adjusted based on an assessment of present and future risks. There are rules about deferring the disbursement of variable remu- neration and for completely or partly reducing the allocated deferred variable remuneration. For more detailed information and statistics about the Bank’s remuneration system, see the Corporate Governance Report and note G8 in the Annual Report. Risk in the insurance operations The risks in the insurance operations mainly comprise market risks and insurance risks. Handelsbanken conducts life insurance opera- tions in its subsidiary Handelsbanken Liv. Handelsbanken Liv’s contracts are comprised of unit-linked insurance and portfolio bond insurance, risk insurance contracts (primarily in the form of health insurance, waiver of premium insurance and death insurance), as well as traditional life insurance contracts. Handelsbanken Liv has a low risk tolerance and follows the Bank’s risk management prin- ciples. The risks in the insurance business pri- marily comprise market risks and insurance risks. For a description of the Bank’s risk man- agement, risk organisation and reporting and monitoring of risk, see the introduction to this note and the relevant risk sections of this note. Handelsbanken Liv’s risk policy sets out the risks to which the company is exposed, defines the Board’s tolerance regarding these risks and stipulates the principles and internal rules for risk management. The principles for identifying, measuring, taking action on and reporting risks are also regulated in the policy. Handelsbanken Liv’s investment policy restricts exposure to financial risks and pro- vides overall instructions on the management of assets given the obligations to its policy- holders and statutory requirements. It also provides instructions on how governance and control of the investments are to be im- plemented, and how the total risk level in the assets is to be managed. Assets are to be invested in a prudent manner so that risks can be identified, measured, analysed, and reported. The risks in the insurance operations are reported to the board and CEO of Handels- banken Liv, the Board and CEO of the Bank and Handelsbanken Risk Control. Market risk Market risk refers to the combined risk that changes in risk factors in financial markets – such as changes in interest rates, equity prices, or exchange rates – will result in changes in the value of the company’s investment assets and/ or its commitments. Market risk primarily arises in traditional life insurance and indirectly from unit-linked insurance and portfolio bond insurance contracts under which the policy- holders bear the risk of change in value but for which the Bank’s fee and commission income is impacted by the value of the assets managed. For a description of material market risks arising in traditional life insurance and risk insurance reported in accordance with IFRS 17, see note G34. Credit risk Credit risk primarily arises in traditional life insurance. For a description of credit risks arising in traditional life insurance reported in accordance with IFRS 17, see note G34. Liquidity risk Liquidity risk primarily arises in traditional life insurance. For a description of liquidity risks arising in traditional life insurance reported in accordance with IFRS 17, see note G34. Insurance risk Insurance risk refers to risk other than financial risk that is transferred from the policyholder to Handelsbanken Liv. Insurance risks primarily arise in traditional life insurance and risk insur- ance. For a description of material insurance risks arising in traditional life insurance and risk insurance reported in accordance with IFRS 17, see note G34. External capital requirements Handelsbanken Liv applies the Solvency 2 reg- ulations, which is a risk-based framework, to establish own funds and capital requirements in order to ensure that the insurance company has adequate capital for meeting its obligations to policyholders even when unforeseen nega- tive events occur. Handelsbanken Liv applies the regulatory standard formula for its entire insurance portfolio. The ratio between own funds and the capital requirement is to exceed 1 by a healthy margin at any time. The solvency capital requirement amounted to SEK 12,849 million (11,559) as at 31 December 2024, and own funds amounted to SEK 28,431 million (26,174), which resulted in a solvency ratio of 2.21 (2.26). The minimum capital requirement amounted to SEK 3,212 million (2,890) as at 31 December 2024. Handelsbanken Liv carries out an own risk and solvency assessment (ORSA) at least once a year to forecast future capital requirements based on given scenarios and stress tests. Sustainability risks The risk of financial loss or a tarnished reputation due to factors related to the environment and climate, social responsibility including human rights and labour, as well as governance issues. Sustainability risks arise from the impact of sustainability-related risk factors on the tradi- tional risk classes, such as (1) environment and climate including physical climate change, transition to a sustainable economy and bio- diversity, (2) social responsibility including human rights, labour, gender equality and information security of personal data, and (3) governance including anti-corruption and combating bribery. The Bank’s sustainability risks mainly arise indirectly through the Bank’s business, such as granting credit and invest- ments. G2 cont. 119 Handelsbanken Annual and Sustainability Report 2024 3.1
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Sustainability risk strategy The Board stipulates in Handelsbanken’s policy for sustainability that responsible actions are essential to long-term value creation at Handels banken and for maintaining confidence in the Bank. Integrating a sustainability per- spective throughout the operations ensures that the Group conducts operations that are financially sound, environmentally and socially sustainable, and that contribute to sustainable development. Sustainability risks are to be managed in line with Handelsbanken’s gener- ally low risk tolerance and comply with the risk tolerance for the risk classes in which sustainability risks are an integral part of the risk assessment. The Board’s policy forms the basis for a number of guidelines issued by the Chief Executive Officer that regulate in more detail how the Handelsbanken Group is to act in relation to environment and climate change, forestry and agriculture, human rights and labour, the weapons and defence industry, the tobacco industry, financial crime, supplier arrangements, tax management, and security and data protection. Handelsbanken’s primary operations are granting credit, and sustainability aspects are a vital part of the Bank’s credit policy. The policy clarifies that sustainability risks related to environmental, climate, social and gover- nance factors are to be an integral part of the credit risk assessment. The credit policy also states that lending must be responsible and meet high ethical standards. Handelsbanken shall enable and create the conditions for customers to make sustainable choices through the Bank’s products, services and advisory services. Organisational structure The Board and the Chief Executive Officer set out the basic principles and frameworks for the Group’s sustainability activities. The Chief Executive Officer has delegated the functional responsibility for sustainability in the Handels- banken Group to the Bank’s Chief Sustainabil- ity and Climate Officer (CSO), who is a member of the Bank’s Executive Team. The CSO heads Handelsbanken Sustainability, a Group-wide specialist function that coordinates sustain- ability activities and supports the business in integrating sustainability into its operations and in identifying significant sustainability risks. Handelsbanken’s sustainability work is decentralised and carried out wherever the Bank’s business and operational decisions are made. The responsibility for identifying and managing relevant sustainability risks is therefore an integral part of managerial responsibility at all levels in the Handelsbanken Group. Coordination between the Bank’s units takes place through such forums as Handels- banken’s Sustainability committee, which is chaired by the Bank’s CSO and includes exec- utives from the business operations and cen- tral departments. The scope of the Sustain- ability committee’s work includes proactively identifying and addressing business opportu- nities as well as sustainability risks and other potential issues. Every quarter, the Bank’s CSO monitors and reports to the Chief Executive Officer and the Board on the Bank’s overall sustainability per- formance. The Group’s sustainability risks are also reported in the Chief Executive Officer’s Risk and Compliance Committee at least every six months. Management of sustainability risks at Handelsbanken Managing sustainability risks follows the Bank’s decentralised model, and the Bank’s business operations assume the primary responsibility for identifying sustainability risks and managing them under the framework of established risk management processes. By including sustainability risks in the Bank’s change process, material sustainability risks can be prevented from entering and negatively impacting the Bank. In lending, sustainability aspects, including physical climate risks and transition risks, form an integral part of the Bank’s decision-making process. The assessment is to evaluate the customer’s sustainability activities and the sustainability risks that may be associated with the customer’s operations or the purpose of G2 cont. Various types of sustainability risks Handelsbanken takes sustainability risks into account when assessing all tradi- tional risk classes. An illustrative descrip- tion of how sustainability risks could potentially negatively impact the Bank’s operations and customers is presented below. The Bank’s overall assessment is that sustainability risks have the greatest potential impact on credit risks. Accord- ingly, sustainability risks are described in note G2 only under the credit risk section and not under the sections for other risk classes. • Credit risk Sustainability-related risks and events may, depending on the extent to which they can be preventively managed, result in a weakening of a customer’s financial position and the value of the collateral for the credit. Physical climate risks could cause damage to real property and transi- tion risk from new regulations could result in adjustment costs. Deficiencies in terms of environmental, social and legal matters among the Bank’s customers may result in higher credit risks. • Liquidity risk An increased level of sustainability-related risks to the Bank’s assets could risk impair- ing the Bank’s funding capabilities or increasing the cost of funding. Restoration following acute physical climate risk events or other types of events linked to sustain- ability factors could led to unusually strong lending growth and thus greater funding requirements for the Bank. • Market risk Major sustainability-related risks could lead to a negative change in the value of finan- cial assets, such as shares and bonds in the pension scheme. The Bank’s manage- ment of market risks could be affected by weaker market liquidity and increased vola- tility due to uncertainty about the future. At the national level, interest rates and exchange rates may be affected by how the country is expected to suffer from acute and chronic climate events and the assess- ment of the country’s willingness and capacity to transition. • Operational risks including reputation risk Operational losses may arise due to events resulting from, for example, shortcomings in information security regarding personal data or weather-related business disrup- tions. The risk of impaired reputation and decreased customer satisfaction could increase if the Bank or those customers receiving financing are deficient from a sustainability perspective. This could be the case if the Bank is perceived to be guilty of greenwashing its products and sustainability targets. • Compliance risk Non-compliance regarding sustainability could lead to sanctions or loss of reputation for the Bank. 120 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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the credit, including the risk associated with the customer’s reputation. Additional support for procuring information and assessments of sustainability risks was introduced during the year. A credit will be denied if any of the per- sons preparing or deciding on the credit is uncertain or has any doubts, see page 83–84 for a description of the credit process. A high proportion of the Bank’s lending is collateralised with real estate. Physical climate risk can cause damage to and reduce the value of properties, increase repair and insur- ance costs or reduce the income generated from properties used for rentals or in other operations. Similarly, transition risk can result in adjustment costs for energy-efficiency measures or reduce the value of the property if investments are not made. By supporting customers, for example, through providing funding and advisory services, the Bank can work together with them to address climate risks. The Bank’s financial resilience to climate risks is analysed based on scenario analyses, among other things, including stress tests for exposures collateralised with real estate. For physical climate risks, exposure to mainly flood risk from watercourses and sea-level rise was examined. The analysis indicated limited exposure to these risks. There is generally a higher risk of flooding in the UK than in the other home markets. For transition risk, the changed credit risk for the Bank’s customers was examined due to the fact that the EU Energy Performance of Buildings Directive (EPBD) sets requirements for energy efficiency improvements in buildings. The analysis of the potential impact of the regulations on the value of the collateral showed a low risk of credit losses. Furthermore, stress tests analyse the impact of a transition to a net-zero macroeco- nomy on the credit risk of the Bank’s custom- ers. This analysis also indicated low credit losses. For a more detailed description of the scenario analyses and their results, see section ESRS 2 IRO-1 E1 on page 274–276 of the Sus- tainability Report. More information about sus- tainability risks is also available in the ESG Prudential disclosures section of the Bank’s Pillar 3 report. Economic capital Handelsbanken’s model for calculating economic capital (EC) identifies in one measurement the Group’s overall risks and indicates the capital which, with very high probability, will cover unexpected losses or decreases in value. Handelsbanken Risk Control is responsible for comprehensive monitoring of the Group’s various risks. The Bank’s model for EC is an instrument in this monitoring. It is also part of the Bank’s assessment of the internal capital requirement which is reported quarterly to the Board. This assessment is intended to ensure that the Group has sufficient capital at all times in relation to all risks in the Group. The Group perspective means that economic capital also includes risks in the insurance operations and risks in the Bank’s pension obligations. Economic capital is calculated with a time horizon of one year and a confidence level that reflects an acceptable level of risk and desired rating. The Board has determined that the calculation of economic capital must be made with a 99.97% confidence level, which cap- tures an event which is extremely unfavourable for the Bank. EC is the difference between the outcome in an average year – with positive results and good growth in the value of the Bank’s assets – and the outcome at a 99.97% confidence level. Diversification effects between the different risk classes are taken into account when cal- culating EC. Since the risks are partly indepen- dent of each other, the capital requirement for all risks is lower than the sum of the economic capital for each individual risk. The capital and other financial resources which form a buffer that can absorb negative outcomes are called available financial resources (AFR). AFR is Handelsbanken’s equity with the addition of other financial values on and off the balance sheet, available to cover losses with a one-year time horizon. In risk and the capital situation, the Group applies a shareholder perspective. The eco- nomic capital model provides an overall view of the Group which makes it possible to opti- mise the risk and capital situation from the shareholder’s perspective. The outcome of the calculations plays an important role when new transactions or structural changes are considered. Credit risk is calculated using simulated out- comes of default for all the Group’s counter- parties and exposures. Market risks comprise the risk in the assets classified as the trading book, the interest rate risk in the non-trading book, market risks in the insurance operations, and the risk in share- holdings in the non-trading book. The risk in the pension obligations mainly consists of the risk of a decrease in the assets that exist for securing the Bank’s defined ben- efit pensions, and the fact that the values of these obligations are sensitive to interest rates. Most of the pension obligations are in Sweden and are secured there in a pension foundation and an occupational pension association. The other risks are operational risk, business risk, property risk and insurance risk. Business risk is related to unexpected changes in finan- cial performance in each business area. For example, these may arise due to demand or competition changing unexpectedly, thus resulting in lower volumes and squeezed margins. Property risk captures the risk of a fall in the value of the properties which the Bank owns. At year-end, EC was SEK 58.9 billion (65.5), of which credit risks accounted for the main part of the total risk. The Board stipulates that the AFR/EC ratio should be at least 120%. The ratio was 383% (366) at year-end, which illustrates that the Bank is well-capitalised in relation to its overall risks. The Swedish Finan- cial Supervisory Authority has come to the same conclusion in its overall capital assess- ment of the Bank. The risk and capital situation reported is a snapshot picture, even though the risk calcula- tions include margins of conservatism for business cycle fluctuations. To perform a final assessment of the Group’s capital adequacy requirements, consideration must also be given to the stress and scenario analysis car- ried out as part of the Bank’s capital planning. G2 cont. 0 50 100 150 200 250 ECAFR Total of AFR and EC including diversification 2024 SEK bn Risk in pension obligations Non-financial risks Market risk Credit risk 121 Handelsbanken Annual and Sustainability Report 2024 3.1
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Capital planning Handelsbanken’s capital planning aims to ensure that the Group has the right amount of financial resources available at all times. The capital requirement is a function of the Group’s risks, expected development, the reg- ulations and target ratios, Handelsbanken’s model for EC and stress tests. The Bank’s capital requirement is reported weekly to the CFO and the CEO and at least quarterly to the Board. As part of proactive capital planning, there is a contingency and action plan with specific measures that can be taken if the Bank needs to improve its capital position. The purpose of the contingency and action planning is to ensure that there is a warning system that identifies potential threats at an early stage and that the Group is prepared to take rapid action, if necessary. At least annually, a long-term capital plan is drawn up, which is designed to give a compre- hensive overview of the Group’s current capital situation, a forecast of expected capital perfor- mance, and the outcome in various scenarios. These scenarios are designed to substantially differ from expected events and thus harmon- ise with the Group’s low risk tolerance. The capital plan also contains proposals for how to maintain the capital situation at a satisfactory level in a strongly negative business environ- ment, from both a regulatory and shareholder perspective. The capital planning is divided into short- term and mid- to long-term forecasting. The part of capital planning that comprises short- term forecasts up to two years ahead princi- pally focuses on assessing existing perfor- mance and the development of the capital requirement. This forecasting is necessary to enable continual adaptation of the size and composition of own funds. Capital planning is performed through on- going analysis of changes in volume, risk and performance, and by monitoring events that may affect the capital requirements and capital level. Short-term forecasting includes all sub - components that make up the Group’s own funds and, in addition to the regulatory mini- mum requirements and buffers, the capital requirement includes a Pillar 2 requirement, the leverage ratio requirement and the minimum requirement for own funds and eligible liabili- ties (MREL). The forecasting work also includes conducting various sensitivity analyses, with a short-term perspective, of the expected change in the capital adequacy requirement and own funds. The Bank can thus be pre- pared to alter the size and composition of its own funds if required – for example, through market operations. The result of the short-term analysis forms the basis of any capital operations performed and is reported weekly to the CFO and the CEO and, if necessary, to the Board. The anal- ysis is based on a baseline scenario, with deci- sion points in the near future for how existing earnings capacity can cope with various changes in volume, as well as other effects that are expected to impact the capital situa- tion. The weekly reporting also includes sensi- tivity analyses based on various market factors that could impact the baseline forecast. The part of capital planning that comprises mid- to long-term forecasts aims to ensure compliance with statutory capital adequacy requirements and that the Group’s available financial resources (AFR) at all times cover by a good margin all risks calculated according to the EC model. The long-term forecast also includes an assessment of the trend for the Bank’s overall capital over the period: the minimum require- ments, the combined buffer requirements, the Pillar 2 requirement, the leverage ratio require- ment and the MREL requirement. The objec- tive is to forecast the expected performance and judge whether the Bank’s resilience is sat- isfactory in various scenarios. The planning horizon is at least five years and takes account of the Group’s overall business performance trend. A baseline scenario forms the foundation of the long-term capital forecast. This scenario is obtained from expected performance in the next five years regarding profit, volume growth, financial assumptions such as credit losses, and performance of the equity, property and fixed-income markets. The baseline scenario is then compared to the outcomes in a number of business cycle and crisis scenarios. The stress scenarios have been established follow- ing analysis of the historical links between the impacts of different macroeconomic variables on the financial markets and have been selected by using the scenarios expected to have the most severe impact on Handelsbanken. The prevailing macroeconomic situation, which is a combination of geopolitical risks, higher interest rates, weak consumption, a cooler business climate and a weaker Swedish labour market are factors included the Bank’s fore- casts and are analysed from the Bank’s per- spective. At the end of 2024, the common equity tier 1 ratio was 18.8% (18.8). The ratio between AFR and EC was 383% (366) at the same date. Thus, AFR exceeds the assessed internal capi- tal requirement (EC) by a very good margin. The Bank’s strong position is further empha- sised by the result of the various forward-look- ing stress scenarios which are carried out, showing that Handelsbanken’s long-term capi- tal situation is very stable from both a financial and regulatory perspective. Capital planning also monitors regulatory developments and assesses the impact and needs arising due to additional new require- ments. The Group’s regulatory capital targets The Board continuously sets the targets for the Bank’s capitalisation. A cornerstone of the internal capital requirement assessment of the regulatory capital situation is stress and sce- nario analysis of the Bank’s situation, both long-term and short-term. The scenarios used are principally based on the Bank’s internal risk tolerance and the direct requirements resulting from the regulations and other requirements from public authorities. In addition to the inter- nal assessment of the capital requirement, the Swedish Financial Supervisory Authority has communicated that the target figures of Swedish banks must not be lower than the total assessed capital requirement calculated by the Supervi- sory Authority, regardless of the banks’ internal calculations. The Bank has taken this into account when setting the target figures for the regulatory capitalisation. The Board has decided that the common equity tier 1 ratio, which is the most relevant measure for the governance of the Bank under the current regulatory framework, under nor- mal circumstances must be between 1 and 3 percentage points above the total common equity tier 1 capital requirement communi- cated to the Bank by the Swedish Financial Supervisory Authority. The other capital tiers (the tier 1 ratio and the total capital ratio) must be at least 1 percentage point above the total capital assessment communicated to the Bank by the Swedish Financial Supervisory Authority for the respective capital tiers. The leverage ratio must be at least 0.6 percentage points above the total capital requirement communi- cated to the Bank by the Swedish Financial Supervisory Authority. In addition, the Bank must fulfil all other capital requirements imposed by public authorities. Moreover, the Board has decided that “the dividend level must not lead to the capital ratios falling below a level of 1 percentage point above the requirements communicated by the Swedish Financial Supervisory Authority”. In the Bank’s assessment, the Swedish Financial Supervisory Authority’s common equity tier 1 capital requirement at the end of the fourth quarter was 14.9%. G2 cont. 122 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G3 Net interest income SEK m 2024 2023 Interest income Loans to credit institutions and central banks 34,514 29,262 Loans to the public 104,409 91,518 Interest-bearing securities eligible as collateral with central banks 8,491 8,110 Bonds and other interest-bearing securities 2,362 2,076 Derivative instruments 23,545 32,227 Other interest income 354 853 Total 173,675 164,046 Deduction of interest income reported in net gains/losses on financial transactions -2,550 -4,242 Total interest income 171,125 159,805 of which interest income according to effective interest method and interest on derivatives in hedge accounting 150,587 133,602 Interest expenses Due to credit institutions and central banks -3,362 -3,768 Deposits and borrowing from the public -42,684 -35,195 Issued securities -53,716 -45,983 Derivative instruments -25,760 -28,562 Subordinated liabilities -1,611 -1,615 Deposit guarantee fees -236 -246 Other interest expenses -505 -513 Total -127,874 -115,881 Deduction of interest expenses reported in net gains/losses on financial transactions 3,591 3,654 Total interest expenses -124,284 -112,227 of which interest expenses according to the effective interest method and interest on derivatives in hedge accounting -115,886 -100,238 Net interest income 46,841 47,578 The derivative instrument rows include net interest income related to hedged assets and liabilities. These may have both a positive and a negative impact on interest income and interest expenses. G4 Net fee and commission income SEK m 2024 2023 Brokerage and other securities commissions 449 420 Mutual funds 5,980 5,534 Custody and other asset management fees 1,171 997 Advisory services 208 236 Insurance 776 673 Payments 2,879 2,811 Loans and deposits 1,017 1,156 Guarantees 191 196 Other fee and commission income 582 536 Total fee and commission income 13,252 12,559 Securities -318 -243 Payments -1,077 -1,053 Other fee and commission expenses -131 -124 Total fee and commission expenses -1,526 -1,421 Net fee and commission income 11,726 11,139 123 Handelsbanken Annual and Sustainability Report 2024 3.1
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Fee and commission income by segment 2024 SEK m Sweden UK Norway The Netherlands Capital Markets Other Adjustments and eliminations Total Brokerage and other securities commissions 164 9 13 15 254 11 -17 449 Mutual funds 5,211 345 226 74 181 -57 5,980 Custody and other asset management fees 870 40 131 103 1 26 1,171 Advisory services 50 1 179 8 -30 208 Insurance 756 1 19 1 -1 776 Payments 2,262 332 283 1 1 2,879 Loans and deposits 636 151 120 10 3 100 -3 1,017 Guarantees 98 14 36 1 43 -1 191 Other fee and commission income 559 4 4 1 314 2 -302 582 Total fee and commission income 10,557 945 832 207 752 373 -413 13,252 Fee and commission income by segment 2023 SEK m Sweden UK Norway The Netherlands Capital Markets Other Adjustments and eliminations Total Brokerage and other securities commissions 154 5 11 11 244 15 -20 420 Mutual funds 4,747 336 231 92 193 -65 5,534 Custody and other asset management fees 725 42 110 95 26 -1 997 Advisory services 50 1 184 2 -1 236 Insurance 670 3 1 -1 673 Payments 2,209 326 270 1 5 2,811 Loans and deposits 726 143 114 9 2 165 -2 1,156 Guarantees 100 13 40 1 41 1 196 Other fee and commission income 521 4 4 1 292 1 -287 536 Total fee and commission income 9,853 919 784 209 721 450 -376 12,559 Fee and commission income refers to income from contracts with customers. Income from Brokerage and other securities commissions, Advisory services, Payments and Loans and deposits is generally recognised in conjunction with the rendering of the service, i.e. at a specific point in time. Income from Mutual funds, Custody and other asset management fees, Insurance and Guarantees is generally recognised as the services are rendered, i.e. on a straight-line basis over time. Assets under management SEK bn 2024 2023 Mutual funds, excl. PPM and unit-linked insurance 788 668 PPM 93 79 Unit-linked insurance 227 204 less external funds -1 -2 Total mutual funds 1,107 949 Structured products 3 3 Portfolio bond insurance 62 52 less Handelsbanken mutual funds and structured products -35 -27 Traditional insurance 6 6 less Handelsbanken mutual funds and structured products -6 -6 Discretionary and Institutional assets, excl. insurance 398 349 less Handelsbanken mutual funds and structured products -343 -298 Total assets under management, excl. securities in custody accounts 1,192 1,028 Securities in custody accounts, excl. mutual funds 810 712 Securities in custody accounts, excl. mutual funds, for foundations associated with Handelsbanken 36 35 G4 cont. 124 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G5 Net gains/losses on financial transactions SEK m 2024 2023 Amortised cost 605 668 of which loans 169 95 of which interest-bearing securities 0 of which issued securities 435 573 Fair value through other comprehensive income 0 -1 of which interest-bearing securities – expected credit losses 0 0 of which interest-bearing securities – reclassified from other comprehensive income 0 -1 Fair value through profit or loss, fair value option -112 670 of which interest-bearing securities -112 670 Fair value through profit or loss, mandatory incl. foreign exchange effects 2,949 1,494 of which assets held on behalf of policyholders 297 336 Hedge accounting -43 166 of which net gains/losses on fair value hedges -59 82 of which cash flow hedge ineffectiveness 15 83 Total 3,399 2,997 Less return on assets held on behalf of policyholders -297 -336 Net gains/losses on financial transactions 3,103 2,661 The accumulated value change due to changes in credit risk from initial recognition from financial assets which are classified at fair value through profit or loss, fair value option, amounted to SEK -5 million (113). G6 Net insurance result SEK m 2024 2023 Insurance revenue 1,186 1,169 Insurance service expenses1) -992 -958 Insurance service result 194 211 Result from reinsurance contracts held -1 -10 Financial income and expenses from insurance contracts -67 -44 Insurance result 126 157 Return on assets held on behalf of policyholders 297 336 Net insurance result 422 493 1) Acquisition costs are recognised directly in the income statement and amounted to SEK -13 million (-13). G7 Other income SEK m 2024 2023 Rental income 16 14 Other operating income1) 193 311 Total 209 325 1) The repayment of VAT attributable to prior years was expensed in 2024, which had an impact of SEK 52 million on other operating income. The repayment of VAT attributable to the sale of the card acquiring business was expensed in 2023, which had an impact of SEK 141 million on other operating income. The remainder of other operating income consists of various minor items for each year. 125 Handelsbanken Annual and Sustainability Report 2024 3.1
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G8 Staff costs SEK m 2024 2023 Salaries and fees -10,744 -9,532 Social security costs -2,599 -2,343 Pension costs1) -1,701 -1,112 Provision for the profit-sharing scheme -96 -83 Other staff costs -591 -572 Total -15,731 -13,642 1) The components in the reported pension costs are shown in the Pension costs table. Salaries and fees SEK m 2024 2023 Executive officers1) -141 -158 Others -10,603 -9,374 Total -10,744 -9,532 1) Executive officers and Board members in the parent company and CEOs, Executive Vice Presidents and Board members in subsidiaries (on average 51 people). Staff costs attributable to the discontinued operations in Finland are presented in note G14. Gender distribution 2024 2023 % Men Women Men Women Executive officers excluding Boards 65 35 62 38 of which in parent company 56 44 53 47 of which in subsidiaries 71 29 68 32 Boards 62 38 59 41 of which in parent company 54 46 46 54 of which in subsidiaries 64 36 62 38 Average number of employees 2024 2023 Total Men Women Total Men Women Sweden 7,462 3,639 3,823 7,285 3,530 3,755 UK 3,095 1,717 1,378 2,923 1,632 1,291 Norway 1,056 557 499 888 460 428 The Netherlands 458 292 166 415 265 150 USA 53 30 23 53 30 23 Luxembourg 53 29 24 51 27 24 Poland 14 3 11 16 4 12 Other countries 33 14 19 52 23 29 Total 12,224 6,281 5,943 11,683 5,971 5,712 The average numbers of employees attributable to the discontinued operations in Finland are presented in note G14. Remuneration1) exceeding EUR 1 million No. of persons 2024 2023 Range EUR 1.0–1.5m 5 1 Range EUR 1.5–2.0m 1 1 Total 6 2 1) Including earned pension and other salary benefits. 126 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Remuneration1) to risk-takers2), business segments 2024 2023 SEK m Remuneration No. of persons Remuneration No. of persons Handelsbanken Sweden 441 288 440 295 Handelsbanken UK 413 187 391 192 Handelsbanken Norway 120 53 111 55 Handelsbanken the Netherlands 88 45 87 46 Handelsbanken Markets 69 17 104 24 Other 386 119 306 119 Discontinued operations3) 142 38 101 37 Total 1,659 747 1,540 768 1) Earned remuneration, including pensions and other salary benefits, has been recognised as an expense in its entirety. 2) Employees whose duties can have a material impact on the Bank’s risk profile pursuant to the Commission Delegated Regulation (EU) 923/2021. There may be risk-takers or other specially regulated employees with variable remuneration in subsidiaries whose remuneration policy is subject to other EU regulations or regulations published by the Swedish Financial Supervisory Authority. 3) Discontinued operations in Finland. Remuneration1) to risk-takers2) 2024 2023 Executive Team3) Other risk-takers Executive Team3) Other risk-takers Earned fixed remuneration, SEK m 87 1,510 122 1,393 Earned performance-based variable remuneration, SEK m Earned other variable remuneration, SEK m 0 62 0 25 Total 87 1,572 122 1,418 No. of persons with fixed remuneration only 25 1 23 No. of persons who may receive both fixed and performance-based remuneration No. of persons with both fixed and variable remuneration 10 712 15 729 Total number of persons 10 737 16 752 Guaranteed variable remuneration recognised as an expense in connection with new employment, SEK m Contracted guaranteed variable remuneration recognised as an expense in connection with new employment, SEK m 1) Earned remuneration, including pensions and other salary benefits, has been recognised as an expense in its entirety. Performance-based variable remuneration is allocated at an individual level during the financial year after it is earned and is disbursed or deferred in accordance with the Bank’s policy for variable remuneration. No employees identified as risk-takers as a result of their duties earned performance-based variable remuneration in 2024. In addition to the above, one employee was identified as a risk-taker in 2024 due to their remuneration level, with remuneration amounting to SEK 4.9 million. The payment of earned performance-based variable remuneration for the earnings year 2024 will take place in spring 2025. In 2023, one employee was identified as a risk-taker due to their remuneration level, and was awarded performance-based variable remuneration totalling SEK 0.9 million, of which SEK 0.4 million was paid in 2024. All performance-based variable remuneration is paid in cash or in financial instruments. The amounts are excluding social security costs. The right of disposal of the deferred remuneration transfers to the employee at the time of disbursement. Other variable remuneration refers to disbursements from the Oktogonen profit-sharing scheme and contracted termination benefits. The disbursement of remuneration from the Oktogonen profit-sharing scheme amounted to SEK 12 million (21). The amount is excluding social security costs. Total contracted termination benefits during the year amounted to SEK 50 million (4), with the highest individual amount being SEK 7.2 million (1.4). During the year, SEK 28 million (11) in termination benefits was paid to 13 (6) risk-takers. No guaranteed variable remuneration is paid. 2) Employees whose duties can have a material impact on the Bank’s risk profile pursuant to the Commission Delegated Regulation (EU) 923/2021. There may be risk-takers or other specially regulated employees with variable remuneration in subsidiaries whose remuneration policy is subject to other EU regulations or regulations published by the Swedish Financial Supervisory Authority. 3) According to the Swedish Financial Supervisory Authority’s regulations FFFS 2011:1. Employee benefits Information about remuneration principles for all employees in the Handelsbanken Group is provided in more detail in the Corporate Governance Report on pages 49-50. Pursuant to the Swedish Financial Super- visory Authority’s regulation FFFS 2011:1 and the European Commission Delegated Regulations (EU) 575/2013 and (EU) 923/2021, banks must identify employees whose profes- sional activities have a material impact on the bank’s risk profile. Handelsbanken has identi- fied 748 (769) employees who engage in such activities and has designated them as “risk - takers”. The tables above present the Handels- banken Group’s remuneration to these risk - takers pursuant to the disclosure requirements in the aforementioned regulations. In 2024, the Handelsbanken Group had no employees whose duties have a material impact on the Bank’s risk profile, who earned performance - based variable remuneration. For the 2024 financial year, Handelsbanken has made a provision of SEK 96 million (83) for the Oktogonen profit-sharing scheme. Oktogonen profit-sharing scheme The Oktogonen profit-sharing scheme covers all employees in the Handelsbanken Group. The provision is classified as variable remuner- ation and is based on profitability metrics linked to Handelsbanken’s corporate goals being met and the Board’s overall assessment regarding the Bank’s performance. Disburse- ments are mainly made in cash to the employ- ees, or alternatively to a pension plan, savings plan or a combination of the two. Share-based payment All employees at Handelsbanken plc are covered by a Share Incentive Plan (“SIP”), in accordance with applicable UK law. Remuner- ation in the plan is settled in the form of shares in the parent company, Handelsbanken AB. A SIP requires that a UK-based trust is used to manage the share incentive plan on behalf of the company. A trust has thus been estab- lished, which is administrated by a SIP trustee. The trust acquires and allocates shares to the employees, and thereafter holds the allocated shares on behalf of the employees. The employees’ allocated shares must be vested in the SIP for a minimum of five years to prevent tax consequences for the employees. Dividends received during the vesting period accrue to the employees. The conditions for an allocation to the SIP and the earnings conditions are identical to G8 cont. 127 Handelsbanken Annual and Sustainability Report 2024 3.1
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those for the Oktogonen profit-sharing scheme. The earning period is thus the pre- ceding financial year. See the Principles for remuneration at Handelsbanken section. Handelsbanken plc’s Board of Directors decides on the final allocation to the share incentive plan. During the 2024 financial year, share-based payments of SEK 54.7 million (78.6) have been charged to expenses for the 2023 earnings year, which has been recognised as an increase in equity. The Bank’s expenses for share-based payment cannot subsequently be changed. The payment has been settled via the purchase of 531,263 shares (891,271) in Handelsbanken AB in the market by the trust, at an average market price of SEK 100.3 (91.8) per share, which have then been allocated to the employees. Within the Group, these acqui- sitions constitute hedges of share-based com- pensation, which have led to a reduction of equity. See the Statement of changes in equity. Remuneration to executive officers Executive officers in Handelsbanken are Board members, the Chief Executive Officer, Execu- tive Vice Presidents, and other members of the Executive Team, see also the Corporate Governance Report on pages 54–57. The remuneration to executive officers of the par- ent company is in accordance with the guide- lines for remuneration established by the 2024 Annual General Meeting. See also page 51. Information regarding remuneration to, pension obligations for, credits to and deposits from executive officers of Handelsbanken is provided on these pages. This also applies to the subsidiaries’ Chief Executive Officers, Executive Vice Presidents and Board members. Remuneration to executive officers of the Handelsbanken Group is paid only in the form of fixed salary and pension provisions, as well as customary benefits such as a company car. Following a special Board decision, the Bank can provide housing as part of the remunera- tion. The executive officers in question are included in the Oktogonen profit-sharing scheme on the same terms as all employees of the Bank. No performance-based variable remuneration is paid. Executive officers who are employees of the Bank are entitled to con- vert salary to pension on the same conditions as all employees. Board members who are not employees of the Bank or any of the Bank’s subsidiaries have only received a fee according to the decision of the AGM. Board members who are employees of the Bank or the Bank’s subsidiaries receive remu- neration and pension benefits by virtue of their employment. No further remuneration or pen- sion benefits are paid for serving on the Board. Information regarding fees to Board members in the parent company is shown on pages 54–57 of the Corporate Governance Report. The pension cost stated by the Bank in the remuneration information for executive officers below consists of the service cost relating to defined benefit pensions according to IAS 19, the agreed premiums for defined contribution pensions, and any pension premiums that have been converted from salary. Fees for serving on the boards of other companies on behalf of the Bank have been paid to the Bank. G8 cont. Remuneration to the Chief Executive Officer, Executive Vice Presidents and Executive Team Fixed remuneration Variable remuneration Pension costs, defined benefit and defined contribution plans Fixed and variable remuneration, in cluding pension costs Proportion fixed remuneration/total remuneration Basic salary Benefits SEK m 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Chief Executive Officer Michael Green1) 14.0 0.1 0.0 4.9 19.0 100% Carina Åkerström2) 14.5 0.6 0.0 5.1 20.2 100% Executive Vice Presidents Carl Cederschiöld3) 8.4 7.8 0.2 0.2 0.0 0.0 2.3 2.0 10.9 10.0 100% 100% Per Beckman4) 9.6 7.5 0.3 0.3 0.0 0.0 3.4 2.3 13.3 10.1 100% 100% Other member of Executive Team5) 34.5 61.4 2.2 4.9 0.1 0.3 7.8 14.1 44.6 80.7 100% 100% Average number of persons; CEO, Executive Vice Presidents, Executive Team 10 15 Number of persons as at December; CEO, Executive Vice Presidents, Executive Team 9 15 The pension cost refers to pension earned under defined benefit pension plans in accordance with IAS 19, or alternatively paid premiums for defined contribution pension plans. An accrued defined benefit pension is vested and secured in the Bank’s pension foundation or assured in the Bank’s pension fund. If service ceases before retirement age, the person receives a paid-up policy for the defined benefit and/or defined contribution pension earned. Payments of variable remuneration in the form of the Oktogonen profit-sharing scheme took place in 2024. Before local taxes and social security costs, the amount was SEK 20,499 (34,194) per employee. 1) Became Chief Executive Officer on 1 January 2024. Defined contribution pension of 35% of salary since becoming Chief Executive Officer. Previously earned defined benefit pension is placed in a paid-up policy. 2) Stepped down as Chief Executive Officer on 31 December 2023. Defined contribution pension of 35% of salary since becoming Chief Executive Officer. Previously earned defined benefit pension is placed in a paid-up policy. 3) Defined benefit pension according to the collective bargaining agreement, in combination with a defined contribution plan amounting to a maximum of 30% of salary above 30 income base amounts. The defined benefit pension is fully earned at the age of 65. 4) Defined contribution pension of 35% of salary from 18 October 2023, prior to that it was 30%. Previously earned defined benefit pension has been fully earned and is placed in a paid-up policy. 5) Other executive officers employed by the Bank receive a defined benefit or defined contribution pension according to collective bargaining agreements, in combination with a defined contribution plan amounting to a maximum of 35% of salary exceeding the income ceiling in the collective bargaining agreement. The defined benefit pension is fully earned at the age of 65. The amount for basic salary and pension is stated before any salary sacrifice. Among other members of the Executive Team, two employees have converted SEK 1.6 million from salary to pension. 128 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Pensions Net pension obligations SEK m 2024 2023 Pension obligations 31,683 31,097 Fair value of plan assets 44,785 42,796 Net pensions 13,102 11,699 In addition to the pension obligation and plan assets in the above table, provisions have been made in the years 1989-2004 to Svenska Handelsbankens Pensionsstiftelse (pension foundation) for a special supplementary pension (SKP). This includes plan assets whose market value amounts to SEK 6,666 million (7,355). SKP entails a commitment by the Bank amounting to the same amount as the plan assets. A part of this commitment, SEK 5,150 million (5,651), is conditional. Pension costs SEK m 2024 2023 Service cost1) -510 -398 Past service cost 1 Interest on pension obligations -1,099 -1,111 Interest on plan assets 1,535 1,678 Pension costs, defined benefit plans -74 170 Pension costs, defined contribution plans2) -1,236 -957 Social security costs, defined contribution plans2) -391 -325 Total pension costs -1,701 -1,112 1) In addition to the estimated service cost, this includes non-recurring items related to the Bank’s restructuring process. 2) Pension costs attributable to the discontinued operations in Finland are presented in note 14. G8 cont. Remuneration to executive officers at subsidiaries Fees paid to the 21 board members (20) of subsidiaries who are not employees of the Bank or its subsidiaries totalled SEK 15.9 million (17.9). In 2024, the Chief Executive Officers1) and Executive Vice Presidents in the subsidiaries, 13 individuals (15), received fixed salaries after conversion to pension amounting to SEK 45.6 million (48.3). Other salary benefits were SEK 7.7 million (6.2) and the Bank’s pension cost was SEK 6.4 million (6.0). Before conversion to pension, the pension cost was SEK 4.9 million (4.6), corresponding to 10.4% of the salary (9.2). Variable remuneration in the form of the Oktogonen profit-sharing scheme amounted to SEK 0.2 million (0.4). Remuneration is not paid to Chief Executive Officers and Executive Vice Presidents in sub- sidiaries who have other main work duties at Handelsbanken. 1) The Chief Executive Officer of Handelsbanken plc was also part of the Executive Team until 31 March 2024. 2) Pension obligations are amounts which, in accordance with IAS 19, the Bank reserves for payment of future defined benefit pensions. The size of the obligations depends on financial and demographic assumptions which may change from year to year. Pension obligations to executive officers As at 31 December 2024, the pension obliga- tion2) for the Chief Executive Officer Michael Green, earned before he took up the position of Chief Executive Officer and now placed in a paid-up policy, was SEK 64.5 million. The pen- sion obligation for Executive Vice President Per Beckman was SEK 109.8 million (105.7) as at 31 December 2024, the pension obligation for Executive Vice President Carl Cederschiöld was SEK 10.8 million (10.0) as at 31 December 2024, and for the other executive officers in the parent company – six individuals (12) – pension obligations were SEK 54.1 million (121.2). Pension obligations in the Handelsbanken Group for all current and former executive officers were SEK 2,667 million (2,649) as at 31 December 2024, of which pension obliga- tions for all current and former executive offi- cers in the parent company were SEK 2,466 million (2,458) as of the same date. The num- ber of people covered by these obligations in the Group is 82 (87), of whom 66 (65) are pen- sioners. The corresponding number for the parent company is 66 (71), of whom 57 (56) are pensioners. Credits to and deposits from executive officers As at 31 December 2024, credits to executive officers were SEK 1.7 million (16.3) in the par- ent company and SEK 121.4 million (123.5) in the subsidiaries. Deposits in the parent com- pany from these persons totalled SEK 537.7 million (474.2). In 2024, the Bank’s interest income from these persons for credits totalled SEK 0.0 million (0.1) in the parent company and SEK 4.0 million (3.3) in the subsidiaries. Interest paid to these persons for deposits in the parent company was SEK 24.5 million (18.9). As at 31 December 2024, credits to execu- tive officers in the subsidiaries in the Handels- banken Group were SEK 142.8 million (112.7). Credit and deposit terms for executive offi- cers employed in the Handelsbanken Group are in line with the principles applicable for all other employees of the Handelsbanken Group. All credits are subject to a credit assessment. 129 Handelsbanken Annual and Sustainability Report 2024 3.1
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Pension obligations SEK m 2024 2023 Opening balance 31,097 26,419 Service cost 476 433 Past service cost -1 Interest on pension obligations 1,099 1,111 Paid benefits -1,335 -1,248 Actuarial gains (-)/losses (+) 191 4,355 Foreign exchange effect 155 28 Closing balance1) 31,683 31,097 1) In the closing balance as at 31 December 2024, the hedging according to the inflation assumption has been included in the calculation of the Swedish pension obligation. In the closing balance as at 31 December 2023, the hedging for 2024 of 6.48% has been included in the calculation of the Swedish pension obligation. The effect of including the determined hedging increased pension liabilities by SEK 938 million as at 31 December 2023. Plan assets SEK m 2024 2023 Opening balance 42,796 39,294 Interest on plan assets 1,535 1,678 Funds contributed by the employer 1,005 924 Compensation to employer -842 -786 Funds paid directly to employees -417 -399 Actuarial gains (+)/losses (-) 535 2,129 Foreign exchange effect 173 -44 Closing balance 44,785 42,796 Return on plan assets SEK m 2024 2023 Interest on plan assets 1,535 1,678 Actuarial gains (+)/losses (-) 535 2,129 Actual return 2,070 3,807 Allocation of plan assets SEK m 2024 2023 Shares and mutual fund units on an active market1) 36,271 32,860 Shares not listed on an active market 1 2,179 Interest-bearing securities listed on an active market 7,178 6,991 Other plan assets 1,335 766 Total 44,785 42,796 1) The mutual fund units amount to SEK 27,068 million (24,568) of which fixed-income funds accounted for SEK 20,387 million (18,797). No shares or bonds issued by Svenska Handelsbanken AB (publ) are included in the plan assets as of the balance sheet date. Actuarial gains (-)/losses (+), pension obligations SEK m 2024 2023 Changes in demographic assumptions 98 6 Changes in financial assumptions -698 2,842 Experience-based adjustments 791 1,507 Total 191 4,355 G8 cont. 130 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Future cash flows SEK m Outcome 2024 Forecast 2025 Paid benefits -1,335 -1,218 Funds contributed by the employer 1,005 1,200 Defined benefit pensions are mainly paid to employees in Sweden. Of the total net pension obligation, the Swedish plan accounts for SEK 29,724 million (29,053) and the UK plan (closed for new earnings) for SEK 1,902 million (1,986). In addition, a smaller scale defined benefit plan remains in Norway. Considering their respective sizes, these are considered insignificant and are therefore not reported in further detail. Of the total plan assets, the Swedish plan assets are SEK 42,708 million (40,721), while an amount of SEK 2,077 million (2,075) is attributable to the closed plan in the UK. In Sweden, a retirement pension is paid from the age of 65 in accordance with the pension agreement between the Employers’ Association of the Swedish Banking Institutions (BAO) and Finansförbundet/Swedish Confederation of Professional Associations (Saco). The amount is 10% of the annual salary up to 7.5 income base amounts. On the part of the salary between 7.5 and 20 income base amounts, the retirement pension is 65% and in the interval between 20 and 30 income base amounts, it is 32.5% of the annual salary. No retirement pension is paid on the portion of the salary in excess of 30 income base amounts. As of 1 March 2020, all new employees and employees younger than 25 years of age at the time accrue pension in a defined contribution plan. Persons employed before 1 March 2020 are not affected and remain covered by the defined benefit pension plan. The pension plans are funded externally, meaning plan assets are held by pension funds, trusts or similar legal entities. The trusts’ (or equivalent) activities are regulated by national laws and practices, as is the relationship between the Group and the trust (or equivalent) managing the plan assets and the framework for how the plan assets may be invested. In Sweden, the Act on Safeguarding Pension Obligations and the Occupational Pension Undertakings Act are the main national laws and practices. National legislation pertaining to pensions and tax is applied in the UK. Significant assumptions Sweden UK 2024 2023 2024 2023 Discount rate, % 3.6 3.5 5.4 4.5 Expected salary increase, % 3.5 3.5 Pension indexing, % 2.0 2.0 3.0 3.0 Income base amount, % 3.0 3.0 Inflation, % 2.0 2.0 3.1 3.0 Staff turnover, % 4.5 5.0 Remaining life expectancy at retirement age, years 22.8 22.8 24.0 24.0 Average duration (Macaulay), years 14.6 14.8 13.0 14.0 The assumptions on future salary increases, inflation, etc., are based on the anticipated long-term trend and the estimates are associated with uncertainty. The assumptions are set to reflect the long-term economic prospects and to be internally consistent. The calculation of pension obligations for employees in Sweden is based on DUS23, which are assumptions on longevity that are generally accepted in the market, based on statistics produced by Insurance Sweden. Sensitivity analysis Effects on the pension obligation, SEK m Changes in assumptions Increased pension obligation Decreased pension obligation 2024 2023 2024 2023 Discount rate, % 0.5 2,480 2,480 -2,206 -2,202 Expected salary increase, % 1.0 972 954 -824 -791 Pension indexing, % 0.5 1,574 1,552 -1,466 -1,444 Remaining life expectancy at retirement age, years 1.0 1,006 985 -1,010 -988 The above sensitivity analysis is based on a change in one assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the pension obligation to significant actuarial assumptions, the same method has been applied as when calculating the pension obligation recognised within the statement of financial position. The method is described in the Bank’s accounting policies (see note G1, section 12). Compared with the 2023 Annual Report, there have been no changes in the methods used when preparing the sensitivity analysis. Through its defined benefit pension plans, the Bank is exposed to a number of risks. The most significant of these are described below: Asset volatility: The pension obligations are calculated using a discount rate set with reference to corporate bond yields. If plan assets underperform this yield, the risk of a deficit arising is low because there is a surplus value in the plan assets. The plan assets include equities and equity funds which are expected to outperform corporate bonds in the long term while being associated with volatility and risk in the short term. The Bank believes that due to the long-term nature of the pension obligations, a substantial proportion of shares is an appropriate element of the Bank’s long-term strategy to manage the plans efficiently. Changes in bond yields: A decrease in corporate bond yields will increase pension obligations. However, this will be partially offset by an increase in the value of the plans’ bond holdings. Inflation risk: The pension obligations are linked to inflation. Higher inflation will lead to increased pension obligations. Valuation of the plan assets is not directly affected by inflation in a material way. This means that an increase in inflation will probably increase the deficit in the pension plans. Life expectancy: The pension schemes are to provide benefits during the lifetime of the members. Increases in life expectancy will thus result in an increase in the pension obligation. Asset-Liability matching (ALM): The composition of the plan assets is matched to the pension liabilities composition and expected development. The overall goal is to generate a return over the medium and long term, that at least corresponds to the development of the pension obligations. A proportion of the plan assets is invested in equities, but investments are also made in fixed income instruments and cash and cash equivalents. A substantial proportion of shares is deemed appropriate in order to manage the plans effectively. Funding arrangements: Minimum funding requirements differ between plans but where such requirements are based on collective bargaining agreements or internal policies, the funding requirement is generally that the pension obligations measured according to local requirements shall be covered in full. Funding levels are monitored regularly. The Bank considers that the current contribution rate is appropriate. G8 cont. 131 Handelsbanken Annual and Sustainability Report 2024 3.1
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G9 Other expenses SEK m 2024 2023 Property and premises -708 -686 IT-related expenses -3,374 -3,379 Communication -263 -284 Travel and marketing -282 -299 Purchased services -2,052 -2,355 Supplies -146 -188 Other expenses -648 -605 Total -7,474 -7,796 Remuneration to auditors and audit companies1) PricewaterhouseCoopers AB Deloitte AB SEK m 2024 2023 2024 2023 Audit assignment -39 -40 -8 -8 Audit operations outside the audit assignment -5 -5 -2 -2 Tax advice Other services -3 -1 1) The amounts in the table are exclusive of VAT. G10 Credit losses SEK m 2024 2023 Expected credit losses on balance sheet items The year’s provision Stage 3 -377 -328 Reversed Stage 3 provision from previous years 111 209 Total expected credit losses in Stage 3 -266 -119 The year’s net provision Stage 2 485 -112 The year’s net provision Stage 1 218 39 Total expected credit losses in Stage 1 and Stage 2 703 -72 Total expected credit losses on balance sheet items 438 -192 Expected credit losses on off-balance sheet items The year’s net provision Stage 3 1 8 The year’s net provision Stage 2 111 -39 The year’s net provision Stage 1 54 8 Total expected credit losses on off-balance sheet items 166 -23 Write-offs Actual credit losses for the year1) -290 -260 Utilised share of previous provisions in Stage 3 213 185 Total write-offs -77 -75 Recoveries 74 149 Net credit losses 601 -141 of which loans to the public 435 -120 1) Of the year’s actual credit losses, SEK 114 million (99) is subject to enforcement activities. 132 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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SEK m 2024 2023 1) Expected credit losses in Stage 3 on and off the balance sheet -264 -111 Change in the model-based provision in Stage 1 and Stage 2: Updating of macroeconomic scenarios and risk factors 179 206 Transfer of exposures in exposed industries from Stage 1 to Stage 21) 9 2 Change in risk of default in included portfolio (net rating changes) -60 -483 Effect of changed exposure (existing, new and terminated exposures) 138 49 Other in Stage 1 and Stage 2 139 112 Less discontinued operations 8 -7 Model-based credit losses in Stage 1 and Stage 2 413 -121 Expert-based provision Expert-based provision -149 -617 Less discontinued operations 0 13 Expert-based provision in continuing operations -149 -604 Expert-based credit losses Stage 1 and Stage 2 (change in provision compared with the previous year) 455 17 2) Expected credit losses in Stage 1 and Stage 2 on and off the balance sheet 868 -104 3) Write-offs -77 -75 4) Recoveries 74 149 Net credit losses (1+2+3+4) 601 -141 1) Expert-based assessment of significant increase in credit risk. The provision requirement declined in 2024. Several factors contributed to the decrease in the model-calculated provision, the most important of which are the impact of the change in the values of the forward-looking macroeconomic risk factors and the decline in exposures. This was offset to a certain extent by negative rating migration in the customer base. In addition, a combination of a number of minor factors also contributed to the decline in the provision requirement during the year. During the year, the Bank applied an expert- based provision based on elevated credit risks relating to uncertainty factors which were not deemed to be fully considered in the Bank’s risk models. These uncertainty factors are mainly related to the macroeconomic climate and potential significant changes in the demand profile. Given the challenges at the end of the year in assessing how the uncer- tainty factors noted above affect the credit risk at individual company level, the Bank has analysed the need to apply an expert-based stress to the sectors at risk of a higher level of sensitivity, and reached a decision of an addi- tional provision requirement of SEK 149 million (604) in the continuing operations and SEK 149 million (617) including discontinued operations. The impairment testing process for agree- ments in Stage 3 has not been changed, and the customary procedure with individual assessment has continued. G10 cont. 133 Handelsbanken Annual and Sustainability Report 2024 3.1
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On- and off-balance sheet items that are subject to impairment testing 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 31) Stage 1 Stage 2 Stage 3 Balance sheet items Cash and balances with central banks 530,003 Other loans to central banks 12,547 Loans to other credit institutions 18,872 55 -1 -3 Loans to the public 2,288,590 76,580 8,525 -210 -328 -1,071 Bonds and other interest-bearing securities 13,259 -2 Total 2,863,270 76,635 8,525 -213 -331 -1,071 Off-balance sheet items Contingent liabilities 292,278 6,282 159 -39 -90 -26 of which contingent liabilities 54,384 1,315 55 -6 -12 -26 of which obligations 237,894 4,967 104 -33 -78 0 Total 292,278 6,282 159 -39 -90 -26 On- and off-balance sheet items that are subject to impairment testing 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 31) Stage 1 Stage 2 Stage 3 Balance sheet items Cash and balances with central banks 476,162 Other loans to central banks 32,145 Loans to other credit institutions 19,289 11 -1 -1 Loans to the public 2,292,700 136,848 7,064 -426 -819 -1,150 Bonds and other interest-bearing securities 12,709 -2 Total 2,833,004 136,859 7,064 -430 -820 -1,150 Off-balance sheet items Contingent liabilities 284,693 11,262 164 -94 -203 -42 of which contingent liabilities 56,464 1,596 60 -11 -40 -22 of which obligations 228,229 9,666 104 -83 -163 -20 Total 284,693 11,262 164 -94 -203 -42 1) Gross volume in Stage 3 for which no provision has been made, due to collateral received, amounts to SEK 6,016 million (4,781). The information in this note includes the disposal groups in Finland, which have been reclassified to Assets held for sale on the balance sheet, respectively, and which constitutes discontinued operations, see note G14. Key metrics, credit losses, % Loans to the public 2024 2023 Credit loss ratio, acc. -0.02 0.01 Total provision ratio 0.07 0.10 Provision ratio Stage 1 0.01 0.02 Provision ratio Stage 2 0.43 0.60 Provision ratio Stage 3 12.56 16.28 Proportion of loans in Stage 3 0.31 0.24 G10 cont. 134 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Change analysis Change in provision for expected credit losses, balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Provision at beginning of year -430 -820 -1,150 -2,400 -480 -723 -1,257 -2,459 Derecognised assets 63 114 125 303 37 89 211 337 Write-offs 0 1 263 264 0 1 213 214 Remeasurements due to changes in credit risk -38 297 -68 191 -219 140 -96 -175 Changes due to update in the methodology for estimation -32 -16 -48 Foreign exchange effect, etc. -7 -15 -9 -32 2 2 1 5 Purchased or originated assets -17 -8 -7 -33 -34 -33 -8 -75 Transfer to Stage 1 -27 63 1 37 -40 56 1 17 Transfer to Stage 2 49 -150 4 -96 169 -503 6 -328 Transfer to Stage 3 192 188 -229 151 167 166 -221 111 Provision at end of year -213 -331 -1,071 -1,614 -430 -820 -1,150 -2,400 Change in provision for expected credit losses, loans to the public that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Provision at beginning of year -426 -819 -1,150 -2,395 -475 -722 -1,257 -2,454 Derecognised assets 63 114 125 302 36 89 211 337 Write-offs 0 1 263 264 0 1 213 214 Remeasurements due to changes in credit risk -37 294 -68 189 -219 140 -96 -176 Changes due to update in the methodology for estimation -32 -16 -48 Foreign exchange effect, etc. -7 -15 -9 -32 2 2 1 5 Purchased or originated assets -17 -8 -7 -32 -34 -33 -8 -75 Transfer to Stage 1 -27 63 1 37 -40 56 1 17 Transfer to Stage 2 49 -145 4 -93 169 -502 6 -326 Transfer to Stage 3 192 188 -229 151 167 166 -221 111 Provision at end of year -210 -328 -1,071 -1,608 -426 -819 -1,150 -2,395 Provisions for expected credit losses in the tables above include the disposal groups in Finland, which have been reclassified to Assets held for sale on the balance sheet. Change in the provision for expected credit losses, off-balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Provision at beginning of year -94 -203 -42 -340 -103 -169 -82 -353 Derecognised assets 17 21 38 17 28 44 Write-offs Remeasurements due to changes in credit risk 43 107 17 167 8 19 39 65 Changes due to update in the methodology for estimation -6 -6 -13 Foreign exchange effect, etc. 1 -1 1 1 1 2 Purchased or originated assets -10 -3 -13 -13 -7 -20 Transfer to Stage 1 -2 7 5 -8 9 2 Transfer to Stage 2 4 -25 -21 8 -82 -74 Transfer to Stage 3 2 6 8 3 4 7 Provision at end of year -39 -90 -26 -155 -94 -203 -42 -340 The change analysis shows the net effect on the provision for the Stage in question for each explanatory item during the period. The effect of derecognitions and write-offs is calculated on the opening balance. The effect of revaluations due to changes in the methodology for estimation and foreign exchange effects, etc., is calculated before any transfer of the net amount between Stages. Purchased or originated assets and amounts transferred between Stages are recognised after the effects of other explanatory items are taken into account. The transfer rows present the effect on the provision for the stated Stage. G10 cont. 135 Handelsbanken Annual and Sustainability Report 2024 3.1
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Change in gross volume, balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Volume at beginning of year 2,833,004 136,859 7,064 2,976,927 2,902,686 91,350 5,716 2,999,751 Derecognised assets -199,493 -17,154 -1,596 -218,243 -502,323 -11,577 -1,035 -514,935 Write-offs -22 -6 -318 -346 -15 -4 -275 -294 Remeasurements due to changes in credit risk -47,420 -2,860 -321 -50,600 -6,008 -8,429 -558 -14,995 Foreign exchange effect, etc. 41,365 2,008 135 43,508 -13,018 -453 4 -13,467 Purchased or originated assets 193,925 3,187 72 197,184 513,644 7,138 84 520,866 Transfer to Stage 1 99,595 -99,432 -164 80,202 -80,136 -66 Transfer to Stage 2 -55,756 56,648 -892 -140,432 140,793 -361 Transfer to Stage 3 -1,929 -2,615 4,544 -1,731 -1,823 3,554 Volume at end of year 2,863,270 76,635 8,525 2,948,430 2,833,004 136,859 7,064 2,976,927 Change in gross volume, loans to the public that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Volume at beginning of year 2,292,700 136,848 7,064 2,436,612 2,374,713 91,349 5,716 2,471,778 Derecognised assets -194,324 -17,154 -1,596 -213,075 -149,007 -11,317 -1,035 -161,359 Write-offs -22 -6 -318 -346 -15 -4 -275 -294 Remeasurements due to changes in credit risk -37,281 -557 -321 -38,159 -12,871 -9,463 -558 -22,892 Foreign exchange effect, etc. -7,484 2,008 135 -5,341 -14,823 -394 4 -15,213 Purchased or originated assets 190,744 3,187 72 194,004 157,370 7,138 84 164,592 Transfer to Stage 1 99,590 -99,426 -164 79,336 -79,270 -66 Transfer to Stage 2 -53,404 54,297 -892 -140,272 140,632 -361 Transfer to Stage 3 -1,929 -2,615 4,544 -1,731 -1,823 3,554 Volume at end of year 2,288,590 76,580 8,525 2,373,695 2,292,700 136,848 7,064 2,436,612 Balance sheet items in the table above include the disposal groups in Finland, which have been reclassified to Assets held for sale on the balance sheet. Change in gross volume, off-balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Volume at beginning of year 284,693 11,262 164 296,119 314,586 12,533 274 327,393 Derecognised assets -43,837 -1,717 -24 -45,579 -48,128 -3,188 -138 -51,453 Write-offs -1 0 1 0 Remeasurements due to changes in credit risk 37,596 -1,931 -62 35,602 -24,479 2,095 -45 -22,428 Foreign exchange effect, etc. -45,203 52 3 -45,148 -3,010 -59 -1 -3,070 Purchased or originated assets 57,369 355 0 57,724 43,406 2,270 2 45,678 Transfer to Stage 1 5,855 -5,851 -3 10,321 -10,319 -2 Transfer to Stage 2 -4,164 4,174 -11 -7,962 7,971 -9 Transfer to Stage 3 -29 -62 90 -41 -42 83 Volume at end of year 292,278 6,282 159 298,719 284,693 11,262 164 296,119 Like the analysis for provisions, the change analysis for gross volumes shows the effect of selected explanatory items on the volumes for a stated Stage. The items showing transfers between Stages, and “Purchased or originated assets”, present the amounts in the stated Stage at the end of the period. Other items present the effect in the Stage applying at the start of the period. G10 cont. 136 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Sensitivity analysis Macroeconomic forecast in ECL calculations and sensitivity analysis The calculation of expected credit losses applies forward-looking information in the form of macroeconomic scenarios. The expected credit loss is a probability-weighted average of the estimated forecasts over three scenarios. The forecast in the base case scenario is assigned a weight of 70% (70), while an upturn in the economy is assigned 15% (15), and a downturn 15% (15). For exposures in the UK. a fourth. more severe downturn scenario has been applied as of 2022. The probability weighting for severe downturn/downturn/base case/upturn scenarios for the UK is 15%/20%/60%/5% (15/20/60/5). These have formed the basis for the calculation of expected credit losses in Stage 1 and Stage 2 as at 31 December 2024. Downturn scenario Neutral scenario Upturn scenario Macroeconomic risk factors 2025 2026 2027 2025 2026 2027 2025 2026 2027 GDP growth Sweden -2.75 0.80 2.81 2.11 2.71 2.16 3.85 3.60 1.96 UK -3.58 -0.47 2.35 1.42 1.53 1.70 3.02 2.33 1.50 UK, severe downturn scenario -6.08 -2.47 2.70 Norway -3.45 -0.34 2.25 1.55 1.66 1.60 3.15 2.46 1.40 Finland -3.50 -0.40 2.05 1.50 1.60 1.40 3.10 2.40 1.20 Eurozone -3.89 -0.58 2.15 1.11 1.42 1.50 2.71 2.22 1.30 USA -2.83 0.01 2.45 2.17 2.01 1.80 3.77 2.81 1.60 Unemployment Sweden 10.02 10.32 10.54 8.32 7.92 7.54 7.62 6.92 6.84 UK 6.45 7.03 7.50 4.75 4.63 4.50 4.05 3.63 3.80 UK, severe downturn scenario 6.75 8.63 8.50 Norway 3.90 4.60 5.30 2.20 2.20 2.30 1.50 1.20 1.60 Finland 9.70 9.90 10.00 8.00 7.50 7.00 7.30 6.50 6.30 Eurozone 8.38 8.93 9.50 6.68 6.53 6.50 5.98 5.53 5.80 USA 6.08 6.90 7.30 4.38 4.50 4.30 3.68 3.50 3.60 Policy interest rate Sweden 4.50 4.50 3.75 2.25 2.25 2.25 1.50 1.25 1.25 UK 6.00 6.00 4.75 3.75 3.75 3.25 3.00 2.75 2.25 UK, severe downturn scenario 0.50 0.50 0.50 Norway 5.75 5.25 4.00 3.50 3.00 2.50 2.75 2.00 1.50 Finland 4.25 4.25 3.50 2.00 2.00 2.00 1.25 1.00 1.00 Eurozone 4.25 4.25 3.50 2.00 2.00 2.00 1.25 1.00 1.00 USA 5.88 5.38 4.25 3.63 3.13 2.75 2.88 2.13 1.75 Property price trend, residential real estate Sweden -4.51 -4.44 4.14 3.24 3.25 3.53 7.06 7.40 4.99 UK -4.90 -4.59 -1.41 0.30 1.02 1.61 4.48 5.29 5.28 UK, severe downturn scenario -8.07 -8.41 -1.77 Norway -0.59 0.55 5.58 9.59 8.14 4.90 11.57 9.50 3.93 Finland -4.08 -1.48 1.99 1.47 2.07 2.77 5.18 3.54 3.20 Eurozone 0.70 3.92 5.05 3.20 3.42 3.40 3.91 3.52 2.60 Property price trend, commercial real estate Sweden -10.15 -3.37 4.19 1.45 3.88 4.51 8.42 10.22 6.28 UK -11.89 -8.46 0.74 -1.02 -1.44 0.76 10.80 7.96 1.82 UK, severe downturn scenario -15.91 -8.15 6.05 Norway -15.53 -8.28 1.08 -1.93 -1.03 0.65 3.73 4.09 2.00 Finland -10.56 -5.14 2.13 -1.24 0.62 2.29 3.96 5.60 3.68 Eurozone -13.40 -6.38 2.60 -0.68 0.67 2.54 4.62 5.85 4.15 Sensitivity analysis, macroeconomic scenarios The table shows the percentage increase/decrease in the provision for expected credit losses in Stage 1 and Stage 2, as at 31 December, which arises when a probability of 100% is assigned to the downturn and upturn scenarios, respectively. The effect of assigning a probability of 100% to the severe downturn scenario for the UK is not included in the total. 2024 2023 % Increase in the provision in a downturn scenario Decrease in the provision in an upturn scenario Increase in the provision in a downturn scenario Decrease in the provision in an upturn scenario Sweden 32.98 -14.39 27.45 -15.70 UK 32.43 -30.87 21.13 -29.56 UK, severe downturn scenario 37.19 29.99 Norway 37.79 -14.98 33.68 -18.20 Finland 15.66 -6.40 8.52 -5.06 The Netherlands 47.07 -18.81 36.85 -22.53 USA 77.81 -28.43 57.50 -36.86 Other countries 25.02 -10.66 23.51 -12.04 Total 31.81 -19.08 23.58 -18.51 G10 cont. 137 Handelsbanken Annual and Sustainability Report 2024 3.1
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Sensitivity analysis, significant increase in credit risk The table below shows how the provision in Stage 1 and Stage 2 as at 31 December is affected if the threshold value applied for the ratio between residual credit risk calculated on the reporting date and on initial recognition were to be set 0.5 percentage points lower and higher, respectively, than the applied threshold value of 2.5. A reduction of 0.5 to the threshold value would increase the number of loans transferred from Stage 1 to Stage 2 and would also entail an increase in the provision for expected credit losses. An increase of 0.5 to the threshold value would have the opposite effect. The Bank uses both quantitative and qualitative indicators to assess significant increases in credit risk. Further information is provided in note G2 under the heading “Credit risk”. Change in the total provision in Stage 1 and Stage 2, % Threshold value 2024 2023 2 4.35 3.50 2.5 0.00 0.00 3 -2.73 -1.93 Credit exposures that are subject to impairment testing, by PD range Balance sheet items by PD range 2024 2023 Gross volume, SEK m Gross volume, SEK m PD value1) Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 0.00 to <0.15 2,455,914 12,858 2,427,046 33,598 0.15 to <0.25 231,936 6,235 60,030 6,941 0.25 to <0.50 98,830 9,222 262,839 20,169 0.50 to <0.75 11,920 1,754 26,082 13,431 0.75 to <2.50 56,774 21,807 47,566 20,675 2.50 to <10.00 7,683 21,950 8,842 35,625 10.00 to <100 214 2,808 599 6,421 100 (default) 8,525 7,064 Total 2,863,270 76,635 8,525 2,833,004 136,859 7,064 Loans to the public by PD range 2024 2023 Gross volume, SEK m Gross volume, SEK m PD value1) Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 0.00 to <0.15 1,962,994 12,849 1,964,166 33,595 0.15 to <0.25 185,384 6,231 48,581 6,940 0.25 to <0.50 78,994 9,216 212,711 20,167 0.50 to <0.75 9,527 1,753 21,108 13,430 0.75 to <2.50 45,379 21,791 38,494 20,673 2.50 to <10.00 6,141 21,934 7,156 35,622 10.00 to <100 171 2,806 485 6,420 100 (default) 8,525 7,064 Total 2,288,590 76,580 8,525 2,292,700 136,848 7,064 Off-balance sheet items by PD range 2024 2023 Gross volume, SEK m Gross volume, SEK m PD value1) Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 0.00 to <0.15 195,904 541 209,059 1,674 0.15 to <0.25 24,404 188 15,570 166 0.25 to <0.50 39,409 676 40,923 1,157 0.50 to <0.75 21,092 433 7,365 3,623 0.75 to <2.50 10,699 1,413 10,234 2,186 2.50 to <10.00 589 2,757 1,437 1,933 10.00 to <100 181 274 105 522 100 (default) 159 164 Total 292,278 6,282 159 284,693 11,262 164 1) Refers to 12-month PD value as at the reporting date. Assets repossessed for protection of claims SEK m 2024 2023 Movable property 2 2 Carrying amount 2 2 Movable property mainly consists of repossessed lease assets. The valuation principles for assets and liabilities repossessed for protection of claims are described in note G1. G10 cont. 138 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G11 Gains/losses on disposal of property, equipment and intangible assets SEK m 2024 2023 Equipment 13 20 Total 13 20 G12 Regulatory fees SEK m 2024 2023 Risk tax -1,655 -1,644 Resolution fee -1,031 -980 Bank of England Levy -47 Total -2,733 -2,624 The risk tax amounted to 0.06% (0.06) of the tax base, which is based on the total liabilities of the credit institution at the beginning of the income year. The resolution fee amounted to 0.05% (0.05) of the fee base plus a risk adjustment factor. The fee base is based on the institution’s liabilities two years before the fee year. The Bank of England Levy was introduced in 2024 to fund the costs of the Bank of England’s monetary policy and financial stability operations. The Levy is based on the proportion of the Bank’s total eligible liabilities among UK institutions who have are subject to the levy. G13 Earnings per share 2024 2023 Profit for the year attributable to shareholders in Svenska Handelsbanken AB, SEK m 27,451 29,107 Average number of shares converted during the year, millions Average holdings of own shares in trading book, millions Average number of outstanding shares, millions 1,980.0 1,980.0 Average dilution effect, number of shares, millions Average number of outstanding shares after dilution, millions 1,980.0 1,980.0 Earnings per share, total operations, SEK 13.86 14.70 after dilution 13.86 14.70 Earnings per share, continuing operations, SEK 13.75 14.09 after dilution 13.75 14.09 Earnings per share, discontinued operations, SEK 0.12 0.61 after dilution 0.12 0.61 Earnings per share after dilution is measured by taking the effects of conversion of outstanding convertible debt instruments into account. The implication of this is that the number of potential converted ordinary shares is added to the average number of outstanding shares and that profit for the year is adjusted for the year’s interest expense on outstanding convertible debt instruments after tax. 139 Handelsbanken Annual and Sustainability Report 2024 3.1
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G14 Assets and liabilities held for sale, and discontinued operations Assets and liabilities in the Bank’s operations in Finland constitute assets and liabilities held for sale in accordance with IFRS 5, which are attributable to two different disposal groups. During the third quarter of 2024 a partial di- vestment was carried out of the first disposal group to Oma Sparbank Abp, consisting of the Finnish SME operations. During the last quar- ter of 2024, the remaining portion of the first disposal group, consisting of private custom- ers including asset management and invest- ment services as well as life insurance opera- tions, was divested to S-banken Abp and the insurance company Fennia Liv. The remaining operations in Finland comprise the second dis- posal group. The following units in Finland are included in the disposal groups and in the dis- continued operations: Handelsbanken AB (publ) international branch in Finland and Handels- banken Asuntoluottopankki, Stadshypotek AB (publ) international branch in Finland. Assets and liabilities held for sale SEK m 2024 2023 Assets Cash and balances with central banks 14 10 Other loans to central banks 25,863 Loans to other credit institutions 1 3 Loans to the public 74,209 142,409 of which households 816 39,561 of which corporates 73,393 102,847 Shares 2 Assets where the customer bears the value change risk 9,586 Intangible assets 123 Property and equipment 467 Other 282 128 Total 74,506 178,590 Liabilities Due to credit institutions 247 980 Deposits and borrowing from the public 9,742 51,556 of which households 235 17,434 of which corporates 9,507 34,122 Insurance liabilities 3 Liabilities where the customer bears the value change risk 9,586 Provisions 182 195 Other 451 1,401 Total 10,623 63,721 The translation reserve includes an amount totalling an accumulated SEK 749 million (1,022) attributable to the translation of assets and liabilities held for sale, which is included in the translation reserve presented in the Statement of changes in equity, Group. The purchase price remains in the selling entities and the disposals thus do not give rise to a reclassification of the translation reserve to the income statement. The sale process is continuing, with a focus on the remaining operations for corporate lending. Finland previously comprised a separate operating segment. 140 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Income, expenses and profit, discontinued operations SEK m 2024 2023 Net interest income 1,895 2,368 Net fee and commission income 376 406 Net gains/losses on financial transactions -8 29 Net insurance result 15 17 Other income 5 9 Total income 2,284 2,829 Staff costs -790 -841 Other expenses -580 -464 Depreciation, amortisation and impairment of property, equipment and intangible assets 0 Total expenses -1,369 -1,306 Net credit losses 53 41 Gains/losses on disposal of property, equipment and intangible assets -1 -1 Regulatory fees -131 -97 Profit for the year for Finland, before tax 835 1,467 Taxes1) -178 -200 Profit for the year for Finland, after tax 657 1,267 Other expenses attributable to discontinued operations2) -11 -73 Impairment attributable to discontinued operations3) -446 Taxes1) 92 15 Profit for the year from discontinued operations, including additional costs after tax 291 1,209 Capital gains on sale of disposal groups constituting discontinued operations Capital gain before tax -71 Taxes1) 14 Capital gain after tax -57 Profit for the year from discontinued operations, after tax 234 1,209 Material internal transactions with continuing operations, which are eliminated in the income statement above4): Income 36 100 Expenses -113 -101 1) The tax lines include current tax amounting to SEK -107 million (-649). 2) Certain expenses arise in Sweden as a result of the divestment of the discontinued operations, deriving from requirements linked to the discontinuation of the operations. These include, for example, consultancy fees and legal costs. 3) Measuring each disposal group at the lowest of fair value, less costs to sell, and carrying amount resulted in impairment, which is attributable to non-current assets. 4) Only external income and expenses are included in profit for the year both from continuing and from discontinued operations. The discontinued operations have material internal transactions with the continuing operations, which are thus eliminated in the accounting. Eliminating internal transactions attributable to the net interest income between the discontinued operations in Finland and Treasury have been adjusted and internal interest income and internal interest expenses are thus presented in continuing and discontinued operations. Fee and commission income by product, discontinued operations SEK m 2024 2023 Brokerage and other securities commissions 4 9 Mutual funds 5 7 Custody and other asset management fees 28 41 Advisory services Insurance 73 77 Payments 264 213 Loans and deposits 38 85 Guarantees 13 19 Other fee and commission income 7 11 Total fee and commission income 433 463 G14 cont. 141 Handelsbanken Annual and Sustainability Report 2024 3.1
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Staff costs, discontinued operations SEK m 2024 2023 Salaries and fees1) -631 -636 Social security costs -15 -22 Pension costs -102 -104 Other staff costs -42 -79 Total -790 -841 1) Of which SEK 2.2 million (5.5) to executive officers (President and Chief Executive Officers and boards in subsidiaries). Average number of employees discontinued operations 2024 2023 Total Men Women Total Men Women Finland 479 220 259 533 249 284 Total 479 220 259 533 249 284 Cash flows, discontinued operations SEK m 2024 2023 Cash flow from operating activities 17,592 4,611 Cash flow from investing activities 17,152 -8 Cash flow for the year from discontinued operations 34,744 4,604 G15 Other loans to central banks SEK m 2024 2023 Other loans to central banks in foreign currency 12,547 6,282 Provision for expected credit losses Total other loans to central banks 12,547 6,282 Average volumes SEK m 2024 2023 Other loans to central banks in Swedish kronor 0 Other loans to central banks in foreign currency 8,167 6,196 Total 8,167 6,196 G14 cont. 142 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G16 Loans to other credit institutions SEK m 2024 2023 Loans in Swedish kronor Banks 1,176 263 Other credit institutions 757 -1 Total 1,934 261 Loans in foreign currency Banks 14,952 16,910 Other credit institutions 2,040 2,126 Total 16,992 19,035 Provision for expected credit losses -4 -2 Total loans to other credit institutions 18,922 19,294 of which reverse repos 11,274 9,623 of which cash collateral pledged 3,427 5,470 Average volumes SEK m 2024 2023 Loans to other credit institutions in Swedish kronor 1,764 1,212 Loans to other credit institutions in foreign currency 36,577 42,394 Total 38,342 43,607 of which reverse repos 15,230 16,812 G17 Loans to the public SEK m 2024 2023 Loans in Swedish kronor Households 967,670 974,473 Corporates 599,142 599,233 National Debt Office 1,547 6,748 Total 1,568,359 1,580,454 Loans in foreign currency Households 274,056 250,008 Corporates 456,826 463,345 Total 730,882 713,353 Provision for expected credit losses -1,363 -2,000 Total loans to the public 2,297,878 2,291,808 of which finance leases 12,410 13,954 of which reverse repos 17,977 17,404 of which cash collateral pledged 1,751 13,395 Average volumes, excl. National Debt Office SEK m 2024 2023 Loans to the public in Swedish kronor 1,574,095 1,597,310 Loans to the public in foreign currency 731,157 738,482 Total 2,305,252 2,335,792 of which reverse repos 25,480 23,110 143 Handelsbanken Annual and Sustainability Report 2024 3.1
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G18 Interest-bearing securities 2024 2023 SEK m Carrying amount Fair value Nominal amount Carrying amount Fair value Nominal amount Interest-bearing securities eligible as collateral with central banks 172,606 172,606 168,407 199,128 199,128 197,474 Bonds and other interest-bearing securities1) 47,508 47,508 31,524 50,087 50,087 36,442 Total 220,114 220,114 199,931 249,215 249,215 233,916 1) Bonds and other interest-bearing securities that are subject to impairment testing amounted to SEK 13,259 million (12,709). These are measured at fair value through other comprehensive income. Provision for expected credit losses recognised in the fair value reserve in equity amounted to SEK -2 million (-2). Interest-bearing securities broken down by issuer 2024 2023 SEK m Carrying amount Fair value Nominal amount Carrying amount Fair value Nominal amount Government 172,606 172,606 168,407 199,128 199,128 197,474 Credit institution 10,428 10,428 6,662 9,733 9,733 7,856 Mortgage institutions 31,653 31,653 20,728 34,378 34,378 24,446 Other 5,427 5,427 4,134 5,975 5,975 4,141 Total 220,115 220,115 199,931 249,215 249,215 233,916 Average volumes SEK m 2024 2023 Interest-bearing securities eligible as collateral with central banks 257,685 258,785 Bonds and other interest-bearing securities 59,973 55,713 Total 317,658 314,497 G19 Shares SEK m 2024 2023 Fair value through profit or loss, mandatory 13,942 11,615 Fair value through other comprehensive income 804 601 Total shares 14,746 12,216 Holdings at fair value through other comprehensive income SEK m 2024 2023 Visa Inc 517 330 VIPPS A/S 58 60 Other holdings 229 211 Total 804 601 Handelsbanken classifies the shareholdings above as measured at fair value through other comprehensive income, as these holdings are not held for trading. The dividends on these shares amounted to SEK 16 million (3) and are recognised in the income statement under Other dividend income. During the year, the Bank divested 41 participations in SWIFT for a value of SEK 3 million (0). For information about realised and unrealised gains/losses on equity instruments measured at fair value through other comprehensive income, refer to the Statement of changes in equity for the Group. 144 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G20 Investments in associates and joint ventures There are no individually significant investments in associates or joint ventures held by Handelsbanken. There are certain entities that are considered strategic to the banking operations of the Group through their provision of, for example, payment services. All investments are unlisted. Investments in associates and joint ventures SEK m 2024 2023 Carrying amount at beginning of year 657 561 Share of profit before tax for the year 33 89 Tax -6 -37 Shareholders’ contribution 175 53 Dividend -8 Carrying amount at end of year 860 657 Income from associates and joint ventures SEK m 2024 2023 Profit for the year 27 51 Other comprehensive income Total comprehensive income for the year 27 51 Associates Corporate identity number Carrying amount, SEK m Domicile Number of shares Voting power, % 2024 2023 Bankomat AB 556817-9716 Stockholm 150 20.00 88 96 BGC Holding AB 556607-0933 Stockholm 25,542 25.54 454 428 Dyson Group plc1) 00163096 Sheffield 74,733,672 24.01 3 8 Finansiell ID-teknik BID AB 556630-4928 Stockholm 12,735 28.30 106 25 Getswish AB 556913-7382 Stockholm 10,000 20.00 115 23 USE Intressenter AB 559161-9464 Stockholm 2,448 24.48 0 0 Total 767 581 1) Ownership share 27%. Joint ventures Corporate identity number Carrying amount, SEK m Domicile Number of shares Voting power, % 2024 2023 P27 Nordic Payments Platform AB 559198-9610 Stockholm 12,500 20.84 87 71 Tibern AB 559384-3542 Stockholm 4,000 14.29 6 5 Total 93 76 G21 Assets where the customer bears the value change risk SEK m 2024 2023 Unit-linked insurance assets 273,725 230,905 Equities 13,484 13,067 Other assets 774 921 Total 287,984 244,893 145 Handelsbanken Annual and Sustainability Report 2024 3.1
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G22 Derivative instruments Nominal amount/maturity Nominal amount Positive market values Negative market values SEK m Up to 1 yr Over 1 yr up to 5 yrs Over 5 yrs 2024 2023 2024 2023 2024 2023 Derivatives held for trading Interest rate-related contracts Options 6,844 18,668 9,544 35,056 35,186 166 262 238 393 FRA/futures 752,147 19,300 771,447 397,991 347 255 310 237 Swaps 391,243 1,139,066 359,632 1,889,941 1,724,316 28,593 35,286 29,273 34,844 Currency-related contracts Options 19,498 233 16 19,747 25,693 58 158 89 237 Futures 64,075 5,523 55 69,653 62,370 1,058 1,196 619 1,146 Swaps 662,204 45,523 789 708,516 529,307 16,891 8,006 5,386 17,177 Equity-related contracts Options 4,789 606 32 5,427 4,882 229 194 113 114 Futures 281 281 215 2 5 2 2 Swaps 7,369 1,391 8,760 5,962 299 101 232 306 Commodity-related contracts Options 19 19 17 6 19 23 Futures 134 1 135 180 1 6 4 18 Credit-related contracts Swaps 275 3,836 60 4,171 3,069 164 193 147 82 Total 1,908,859 1,234,147 370,147 3,513,153 2,789,188 47,808 45,668 36,432 54,579 Derivatives for fair value hedges Interest rate-related contracts Options 41 1 Swaps 85,665 505,543 103,729 694,937 695,631 15,686 17,227 11,679 16,007 Currency-related contracts Swaps 1,046 1,046 983 83 25 Total 85,665 506,589 103,729 695,983 696,655 15,769 17,253 11,679 16,007 Derivatives for cash flow hedges Interest rate-related contracts Swaps 33,836 41,374 7,226 82,436 147,207 2,078 3,029 954 2,228 Currency-related contracts Swaps 29,395 186,800 37,283 253,478 321,590 25,558 16,381 1,222 6,649 Total 63,231 228,174 44,509 335,914 468,797 27,636 19,410 2,176 8,877 Total derivative instruments 2,057,755 1,968,910 518,385 4,545,050 3,954,640 91,213 82,331 50,287 79,463 of which exchange-traded derivatives 133,129 70,400 155 148 274 419 of which OTC derivatives settled by CCP 3,013,450 2,661,973 44,503 52,627 34,664 45,845 of which OTC derivatives not settled by CCP 1,398,471 1,222,267 46,555 29,556 15,349 33,199 Amounts offset -2,368,886 -2,310,691 -44,144 -52,221 -34,331 -45,225 Net amount 2,176,164 1,643,949 47,069 30,110 15,956 34,238 Currency breakdown of market values SEK -297,599 39,951 -3,889 371,486 USD 437,043 -25,673 103,653 -350,125 EUR 174,889 163,098 -6,713 -13,839 Others -223,120 -95,045 -42,764 71,941 Total 91,213 82,331 50,287 79,463 Derivative contracts are presented gross in the note. Amounts offset consist of the offset market value and the associated nominal amounts of contracts for which the Bank has the legal right and intention to settle contractual cash flows net (including cleared contracts). These contracts are presented on a net basis on the balance sheet per counterparty and currency. The Bank amortises positive differences between the value measured by a valuation model upon initial recognition and the transaction price (day 1 gains/losses) over the life of the derivative. Such not yet recognised day 1 gains amounted to SEK 500 million (472) at year-end. 146 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G23 Hedge accounting The Group’s overall objective for its risk man- agement and hedge accounting is to protect itself against the risk of variations in fair values and future cash flows attributable to lending and funding arising from changes in interest rates and exchange rates. In order to achieve this objective, the Group makes use of deriva- tives. Hedge accounting is applied to ensure that the Group’s risk management strategy is reflected in the financial reports. For informa- tion about the Group’s management of market risk, see note G2. The hedging strategies and various types of hedge accounting applied by the Group are described below, divided into risk categories. For a description of the accoun- ting policies for hedge accounting, see note G1. Fair value hedges Interest rate risk in fixed-rate lending and funding The purpose of this hedging strategy is to mini mise the risk of changes in the fair values of fixed-interest lending and funding arising from changes in market interest rates. The hedged risk is defined as the reference rate in the respective currency, which comprises an observable component of the interest. The hedged items are comprised of fixed-interest loans to the public and issued fixed-interest securities. The hedging instruments consist of interest rate swaps, in which a fixed interest rate is paid and a variable interest rate is received, or a fixed interest rate is received and a variable interest rate is paid. Measuring effectiveness The effectiveness of the hedges is measured through a comparison of the change in the fair value of the hedged risk in lending and funding with the change in fair value of the interest rate swaps. The effectiveness is measured from both a prospective and retrospective stand- point. Prospectively by shifting yield curves and discount curves and retrospectively through regression analysis. The effectiveness of a hedging relationship is tested at the initia- tion of the relationship and thereafter on a quarterly basis. Criteria applied in measuring effectiveness In order to qualify for hedge accounting, the ratio between the change in fair value of the hedged risk in the hedged item, and the actual derivative must be within the 80–125% interval. In the cases where this is checked through regression analysis, the following criteria must be fulfilled in order to establish an effective hedging relationship: • The gradient of the curve must be within the interval 0.8 <b <1.25. • R2 must be >0.96. Ineffectiveness Ineffectiveness is measured through a com- parison of the change in the fair value of the interest rate swap with the change in fair value of the hedged risk in lending and funding from the hedging relationship’s start date to the end of the period. The main explanation for ineffectiveness in these hedging relationships is changes in fair value arising from the variable interest in the interest rate swap, which is not matched by a change in value in the hedged risk in the lend- ing or funding. Portfolio hedging of fair value, with regard to interest rate risk Interest rate risk in fixed-rate lending portfolios This hedging strategy aims to minimise the risk of changes in the fair values of fixed-interest lending portfolios arising from changes in mar- ket interest rates. The hedged risk is defined as changes in the fair value of a portion of a lending portfolio with fixed interest, with regard to changes in a reference rate in each currency. The hedged item consists of an amount in a currency determined on the basis of a fixed- rate lending portfolio. The lending port folio is divided into interest rate fixing periods. The hedged amount is established on the basis of the interest rate risk the Bank wishes to hedge in the selected interest rate fixing periods. The hedging instruments consist of interest rate swaps, in which a variable interest rate is received and a fixed interest rate is paid. One or more hedging instruments are defined for each interest rate fixing period. A description of the measuring of effective- ness and ineffectiveness is provided in the Fair value hedges section above. Hedging instruments in fair value hedges 2024 2023 SEK m Up to 1 yr 1–5 yrs Over 5 yrs Up to 1 yr 1–5 yrs Over 5 yrs Interest rate risk Interest rate swaps, variable interest paid and fixed interest received Nominal amount 42,694 455,479 73,920 56,277 374,593 93,942 Average fixed interest, % 2.09 2.74 2.21 2.00 2.53 2.47 Cross-currency interest rate swaps, variable interest paid and fixed interest received Nominal amount 1,046 983 Average fixed interest, % 3.69 3.69 Total 42,694 456,525 73,920 56,277 375,576 93,942 147 Handelsbanken Annual and Sustainability Report 2024 3.1
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Hedging instruments and ineffectiveness in fair value hedges 2024 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Ineffectiveness recognised in the income statementAssets Liabilities Interest rate risk Interest rate swaps, variable interest paid and fixed interest received 572,093 8,882 11,422 4,664 -74 Cross-currency interest rate swaps, variable interest paid and fixed interest received 1,046 83 0 6 Total 573,139 8,965 11,422 4,664 -68 Portfolio fair value hedges Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 122,844 6,803 258 -3,248 9 Total 122,844 6,803 258 -3,248 9 Hedging instruments and ineffectiveness in fair value hedges 2023 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Ineffectiveness recognised in the income statementAssets Liabilities Interest rate risk Interest rate swaps, variable interest paid and fixed interest received 524,812 7,127 15,971 17,711 155 Cross-currency interest rate swaps, variable interest paid and fixed interest received 983 25 54 7 Total 525,795 7,152 15,971 17,765 162 Portfolio fair value hedges Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 170,819 10,100 36 -7,034 -80 Interest rate options (cap) 41 1 -5 0 Total 170,860 10,101 36 -7,039 -80 The carrying amount of hedging instruments is included in the item Derivative instruments in the balance sheet. Ineffectiveness recognised in the income statement is included in the item Net gains/losses on financial transactions. Hedged items in fair value hedges 2024 Carrying amount hedged item Accumulated fair value adjustment included in the carrying amount of the hedged item Change in value used to calculate ineffectivenessSEK m Assets Liabilities Assets Liabilities Interest rate risk Issued fixed-interest securities and subordinated liabilities 567,278 -6,595 -4,733 Total 567,278 -6,595 -4,733 Portfolio fair value hedges1) Interest rate risk Fixed-interest loans to the public -6,399 -6,399 3,258 Total -6,399 -6,399 3,258 Hedged items in fair value hedges 2023 Carrying amount hedged item Accumulated fair value adjustment included in the carrying amount of the hedged item Change in value used to calculate ineffectivenessSEK m Assets Liabilities Assets Liabilities Interest rate risk Issued fixed-interest securities and subordinated liabilities 508,810 -11,412 -17,603 Total 508,810 -11,412 -17,603 Portfolio fair value hedges1) Interest rate risk Fixed-interest loans to the public -9,657 -9,657 6,954 Interest rate cap on variable rate lending -1 -1 5 Total -9,658 -9,658 6,959 1) The nominal volume of the underlying lending portfolio was SEK 122,844 million (170,867) as at 31 December 2024. No accumulated amount of adjustments to fair value hedges remained on the balance sheet for hedged items which are no longer adjusted for changes in fair value either this year or last year. G23 cont. 148 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Cash flow hedges Interest rate risk in variable-rate lending and funding The purpose of this hedging strategy is to min- imise the uncertainty associated with future incoming and outgoing payments of interest arising due to changes in variable interest rates, and instead to receive and pay amounts according to fixed interest rates which are known when entering into the hedge. The hedged item consists of highly probable future incoming and outgoing payments relating to variable-rate loans to the public and to issued floating-rate securities. The hedged risk is de- fined as a floating reference rate in the respec- tive currency, which comprises an observable component of the interest. The hedging instru- ments consist of interest rate swaps, in which a fixed interest rate is received and a variable interest rate is paid, or a fixed interest rate is paid and a variable interest rate is received. Foreign exchange risk in funding The hedging strategy aims to minimise the uncertainty associated with future payments of interest arising due to changes in exchange rates, and instead to pay interest in the func- tional currency, at a rate which is known when entering into the hedge. The hedged item con- sists of highly probable future interest payment and repayments of nominal amounts attributa- ble to issued securities in a currency other than the functional currency. The hedged risk is com- prised of the risk of changes in these future pay- ments arising due to fluctuations in the exchange rate between the funding currency and the func- tional currency. The hedging instruments consist of foreign exchange derivatives. Foreign exchange risk in internal loans to or from foreign operations The intention of this hedging strategy is to min- imise the risk of volatility linked to fluctuations in exchange rates on internal loans to or from foreign operations. The hedged item consists of the nominal amount of an internal loan between the Group’s treasury department and a foreign operation, issued in the functional currency of the foreign operation. The hedged risk consists of the risk of changes in cash flows attributable to interest payments, and repayments of nominal amounts, due to differ- ences in the exchange rate between the cur- rency of the internal loan and the parent com- pany’s functional currency, the Swedish krona. The hedging instruments consist of foreign exchange derivatives. Measuring effectiveness The effectiveness of a hedging relationship is tested at the initiation of the relationship and thereafter on a quarterly basis. The effective- ness of hedges is tested from both a prospec- tive and retrospective standpoint. Prospec- tively by shifting yield curves and discount curves. Retrospectively, in the event that the conditions for the hedged risk and the hedging instrument are not fully consistent, through regression analysis. ‘Fully consistent’ in this context implies that the cash flows and dis- counting factors are identical at all times. When effectiveness is measured, the hedged risk is represented by a perfectly effective hypothetical derivative (PEH), which matches the critical conditions of the hedged item. The fair value of the hypothetical derivative (PEH) is zero at the start date of the hedging relation- ship. Measuring effectiveness entails a com- parison of the change in fair value of the hypo- thetical derivative (PEH) with the change in fair value of the actual derivative. Criteria applied in measuring effectiveness In order to qualify for hedge accounting, the ratio between the change in fair value of the hedged risk in the hedged item, represented by the hypothetical derivative (PEH), and the actual derivative must be within the 80–125% interval. In the cases where this is checked through regression analysis, the following cri- teria must be fulfilled in order to establish an effective hedging relationship: • The gradient of the curve must be within the interval 0.8 <b <1.25. • R2 must be >0.96. Ineffectiveness Ineffectiveness is measured through a com- parison of the change in the fair value of the hedged risk in the hedged item, represented by the hypothetical derivative (PEH), with the change in fair value of the actual derivative. The hedge is deemed ineffective if the change in fair value of the derivative exceeds the change in value of the hypothetical derivative (PEH) in absolute terms. The main explanations for ineffectiveness in these hedging relationships are differences in market interest rates and exchange rates between the start date of the hedging relation- ship and the transaction date for the derivative. Ineffectiveness is also explained by changes in fair value attributable to certain interest components in the derivative which are not included in the hedged risk. G23 cont. 149 Handelsbanken Annual and Sustainability Report 2024 3.1
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Hedging instruments in cash flow hedges 2024 2023 SEK m Up to 1 yr 1–5 yrs Over 5 yrs Up to 1 yr 1–5 yrs Over 5 yrs Interest rate risk Interest rate swaps, fixed interest paid and variable interest received Nominal amount 8,338 12,627 6,078 13,568 17,253 8,645 Average fixed interest, % 0.47 0.72 0.77 0.38 0.64 0.67 Interest rate swaps, variable interest paid and fixed interest received Nominal amount 25,498 28,746 1,148 53,260 53,368 1,113 Average fixed interest, % 2.13 1.35 1.54 1.89 1.73 1.54 Foreign exchange risk Foreign exchange derivatives, EUR/SEK Nominal amount 10,865 43,747 1,089 16,075 42,777 12,048 Average exchange rate EUR/SEK 0.0975 0.0913 0.0970 0.0971 0.0926 0.0928 Foreign exchange derivatives, EUR/NOK Nominal amount 2,758 75,390 31,183 5,146 57,144 29,127 Average exchange rate EUR/NOK 0.1008 0.0953 0.0932 0.1049 0.0962 0.0834 Foreign exchange derivatives, USD/GBP Nominal amount 1,076 989 Average exchange rate USD/GBP 1.3157 1.3157 Foreign exchange derivatives, USD/NOK Nominal amount 8,923 36,864 2,066 40,077 Average exchange rate USD/NOK 0.1064 0.1027 0.0509 0.0958 Foreign exchange derivatives, USD/SEK Nominal amount 3,646 11,551 5,011 75,356 14,514 4,775 Average exchange rate USD/SEK 0.1016 0.1003 0.1105 0.0880 0.0782 0.1105 Foreign exchange derivatives, AUD/EUR Nominal amount 2,872 10,353 13,016 Average exchange rate AUD/EUR 1.5287 1.5451 1.5415 Foreign exchange derivatives, other currency pairs Nominal amount 331 7,820 384 8,096 Total 63,231 228,174 44,509 165,855 247,234 55,708 Hedging instruments and ineffectiveness in cash flow hedges 2024 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Change in the value of the hedging instru- ments recognised in other compre- hensive income Ineffectiveness recognised in the income statement Reclassified from the hedge reserve to the income statement Assets Liabilities Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 27,043 1,785 -708 -702 -6 Interest rate swaps, variable interest paid and fixed interest received 55,392 293 954 1,496 1,496 154 Foreign exchange risk1) Foreign exchange derivatives, EUR/SEK 55,701 3,061 114 -143 -144 1 1 Foreign exchange derivatives, EUR/NOK 109,331 11,893 39 -498 -521 23 10 Foreign exchange derivatives, USD/GBP 1,076 50 6 6 Foreign exchange derivatives, USD/NOK 45,787 7,249 80 79 1 Foreign exchange derivatives, USD/SEK 20,208 2,829 94 96 -2 Foreign exchange derivatives, other currency pairs 21,376 476 1,069 22 24 -2 9 Total 335,914 27,636 2,176 349 334 15 174 G23 cont. 150 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Hedging instruments and ineffectiveness in cash flow hedges 2023 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Change in the value of the hedging instru- ments recognised in other compre- hensive income Ineffectiveness recognised in the income statement Reclassified from the hedge reserve to the income statement Assets Liabilities Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 39,466 2,600 1 -1,928 -2,014 86 Interest rate swaps, variable interest paid and fixed interest received 107,741 429 2,227 3,499 3,499 226 Foreign exchange risk1) Foreign exchange derivatives, EUR/SEK 70,900 3,011 310 -158 -157 -1 Foreign exchange derivatives, EUR/NOK 91,417 8,286 608 -370 -372 2 Foreign exchange derivatives, GBP/SEK 2 2 Foreign exchange derivatives, USD/GBP 989 30 7 7 Foreign exchange derivatives, USD/NOK 42,143 3,133 1,048 -22 -19 -3 Foreign exchange derivatives, USD/SEK 94,645 1,322 3,951 -103 -103 0 Foreign exchange derivatives, AUD/USD 7 7 Foreign exchange derivatives, other currency pairs 21,496 599 732 15 16 -1 27 Total 468,797 19,410 8,877 949 866 83 252 1) When analysing for the purposes of hedge accounting, the conversion to the parent company’s functional currency, SEK, is taken into account by imputing nominal derivative legs in the hedging relationships. The imputed derivative legs are not included in the nominal volumes presented in the tables above. The carrying amount of hedging instruments is included in the item Derivative instruments in the balance sheet. Ineffectiveness recognised in the income statement is included in the item Net gains/losses on financial transactions. Reclassified to the income statement is included under Net gains/losses on financial transactions and refers to cash flow hedges terminated before their maturity date. Hedged items in cash flow hedges 2024 2023 SEK m Change in value used to calculate ineffectiveness Hedge reserve Amounts remaining in the hedge reserve from hedging relationships for which hedge accounting is no longer applied Change in value used to calculate ineffectiveness Hedge reserve Amounts remaining in the hedge reserve from hedging relationships for which hedge accounting is no longer applied Interest rate risk Issued variable-interest securities 702 1,647 2,014 2,351 Variable-interest loans to the public -1,496 -699 618 -3,499 -2,043 771 Foreign exchange risk Issued securities and subordinated liabilities in EUR and internal loans in GBP and NOK 665 -1,094 529 -432 Issued securities and subordinated liabilities in USD and internal loans in EUR, GBP and NOK -181 488 58 115 317 68 Issued securities and internal loans in other currencies -24 46 -2 -25 35 -2 Total -334 388 674 -866 228 837 G23 cont. 151 Handelsbanken Annual and Sustainability Report 2024 3.1
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G24 Offsetting of financial instruments 2024 SEK m Derivatives Repurchase agreements and securities lending Total Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 91,213 33,499 124,712 Amounts offset -44,144 -3,735 -47,879 Carrying amount on the balance sheet 47,069 29,764 76,833 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -4,787 -4,787 Financial assets received as collateral -37,378 -29,721 -67,099 Total amounts not offset on the balance sheet -42,165 -29,721 -71,886 Net amount 4,904 43 4,947 Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 50,287 3,736 54,023 Amounts offset -34,331 -3,735 -38,066 Carrying amount on the balance sheet 15,956 1 15,957 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -4,787 -4,787 Financial assets pledged as collateral -3,554 -1 -3,555 Total amounts not offset on the balance sheet -8,341 -1 -8,342 Net amount 7,615 7,615 2023 SEK m Derivatives Repurchase agreements and securities lending Total Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 82,331 32,141 114,472 Amounts offset -52,221 -4,628 -56,849 Carrying amount on the balance sheet 30,110 27,513 57,623 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -7,781 -7,781 Financial assets received as collateral -18,880 -27,513 -46,393 Total amounts not offset on the balance sheet -26,661 -27,513 -54,174 Net amount 3,449 3,449 Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 79,463 4,631 84,094 Amounts offset -45,225 -4,628 -49,853 Carrying amount on the balance sheet 34,238 3 34,241 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -7,781 -7,781 Financial assets pledged as collateral -17,305 -3 -17,308 Total amounts not offset on the balance sheet -25,086 -3 -25,089 Net amount 9,152 9,152 Derivative instruments are offset on the bal- ance sheet when this reflects the Bank’s antici- pated cash flows in the settlement of two or more agreements. Repurchase agreements and reverse repurchase agreements with cen- tral counterparty clearing houses are offset on the balance sheet when this reflects the Bank’s anticipated cash flows in the settlement of two or more agreements. This occurs when the Bank has both a contractual right and an inten- tion to settle the agreed cash flows with a net amount. The amount offset for derivative assets includes offset cash collateral of SEK 11,617 million (11,268) derived from the bal- ance sheet item Deposits and borrowing from the public. The amount offset for derivative liabilities includes offset cash collateral of SEK 1,804 million (4,272), derived from the balance sheet item Loans to the public. The remaining counterparty risk in deriva- tives is reduced through netting agreements, i.e. netting positive values against negative values in all derivative transactions with the same counterparty in a bankruptcy situation. Handels banken’s policy is to sign netting agreements with all bank counterparties. Net- ting agreements are supplemented with agree- ments for issuing collateral for the net expo- sure. The collateral used is mainly cash, but government securities are also used. Collateral for repurchase agreements and borrowing and lending of securities is normally in the form of cash or other securities. 152 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G25 Intangible assets 2024 SEK m Goodwill Trademarks and other rights Customer contracts Internally developed software Other Total Cost of acquisition at beginning of year 4,356 3 718 6,453 168 11,697 Cost of acquisition of additional intangible assets 680 680 Disposals and retirements -302 -302 Foreign exchange effect 4 36 37 77 Cost of acquisition at end of year 4,360 3 754 6,867 168 12,152 Accumulated amortisation and impairment at beginning of year -309 -2,691 -131 -3,132 Disposals and retirements 302 302 Amortisation for the year -37 -786 -33 -856 Impairment for the year -3 -3 Foreign exchange effect -17 -21 -38 Accumulated amortisation and impairment at end of year 0 0 -363 -3,199 -164 -3,727 Carrying amount 4,360 3 391 3,668 3 8,426 During the year, development expenses amounting to SEK 2,994 million (3,238) have been recognised. 2023 SEK m Goodwill Trademarks and other rights Customer contracts Internally developed software Other Total Cost of acquisition at beginning of year 4,397 3 714 6,000 164 11,278 Cost of acquisition of additional intangible assets 958 3 961 Disposals and retirements -496 -496 Foreign exchange effect -41 4 -9 -46 Cost of acquisition at end of year 4,356 3 718 6,453 168 11,697 Accumulated amortisation and impairment at beginning of year -271 -2,507 -99 -2,877 Disposals and retirements 496 496 Amortisation for the year -37 -681 -33 -751 Impairment for the year -1 -1 Foreign exchange effect -1 2 1 Accumulated amortisation and impairment at end of year 0 0 -309 -2,691 -131 -3,132 Carrying amount 4,356 3 409 3,762 37 8,567 Goodwill Intangible assets with an indefinite useful life SEK m 2024 2023 2024 2023 Handelsbanken Sweden 3,341 3,331 3 Handelsbanken UK 198 183 Handelsbanken Norway 639 655 Handelsbanken the Netherlands 183 177 Handelsbanken Capital Markets 10 3 Total 4,360 4,356 3 3 153 Handelsbanken Annual and Sustainability Report 2024 3.1
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Intangible assets with an indefinite useful life Intangible assets with an indefinite useful life are recorded at cost less any impairment losses. The Group’s intangible assets with an indefinite useful life primarily comprise goodwill. These assets are tested annually for impairment when preparing the Annual Report or when there is an indication that the asset is impaired. Impairment testing is performed by calculating the recoverable amount of the assets, i.e. the higher of the value in use and the fair value less costs to sell. As long as the recoverable amount exceeds the carrying amount, no impairment loss needs to be rec- ognised. Impairment losses are recognised directly in the income statement. Impairment testing of goodwill Recognised goodwill has arisen on business combinations and mainly derives from tradi- tional banking operations in Handelsbanken’s home markets. To test goodwill for impairment, it was allocated on the acquisition date to the cash-generating unit, or units, that are expected to benefit from the acquisition. A cash-gener- ating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of other assets. In the Bank, the cash-generating units are operating segments and goodwill is monitored at the operating segment level, see the table that specifies goodwill by operating segment. When performing impairment testing, the value in use of each cash-generating unit is calcu- lated by discounting expected future cash flows and the terminal value. The terminal value used is the forecast value of the net assets of each cash-generating unit. Previ- ously recognised impairment losses on goodwill are not reversed. The expected future cash flows for the first five years are based on forecasts of risk- weighted volumes, income, expenses and credit losses. The forecasts are mainly based on an internal assessment of assumptions about the future income and cost development, economic climate and expected interest rates. After the first five-year period, a forecast is made based on the assumption of a long-term growth rate. The estimated cash flows are based on historical real GDP growth as well as the Riksbank’s long-term inflation target. The year’s impairment test is based on an assump- tion of a long-term growth rate of 2% (2). The total forecast period is 20 years, which is justi- fied based on the Bank’s intention to conduct operations in its home market for the long term. The expected future cash flows have been discounted at a rate based on a risk-free inter- est rate and a risk adjustment corresponding to the market’s average return requirement. In the annual impairment test, the discount rate was 6.5% (8.2) after tax. The corresponding rate before tax was 9.2% (11.9). The same discount rate was used for all operating segments. The difference between the recoverable amounts and the carrying amounts in the annual impairment test of goodwill was deemed to be satisfactory. The calculated value in use of goodwill is sensitive to a num- ber of assumptions, which are significant for expected cash flows and the discount rate. The assumptions that are of greatest signifi- cance to the calculation are the assumptions for interest rates and the business cycle as well as assumptions about future income and cost development. No reasonably possible change in significant assumptions would affect the carrying amount of goodwill. Intangible assets with a finite useful life Intangible assets for which it is possible to establish an estimated useful life are amor- tised. The amortisation is on a straight-line basis over the useful life of the asset. Currently this means that customer relationships are amortised over 20 years and that internally developed software is normally amortised over five years. In certain infrastructure projects, the useful life is assessed to be more than five years. For these types of investment, the amortisation period is up to 15 years. Brand names which are subject to amortisation are amortised over five years. The amortisation period is tested on an individual basis at the time of new acquisition and also continually if there are indications that the useful life may have changed. Intangible assets with a finite useful life are reviewed for impairment when there is an indication that the asset may be impaired. The impairment test is performed according to the same principles as for intan- gible assets with an indefinite useful life, i.e. by calculating the recoverable amount of the asset. G25 cont. 154 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G26 Property and equipment Property and equipment SEK m 2024 2023 Property 3,864 3,960 Equipment 937 815 Property repossessed for protection of claims 2 2 Total 4,803 4,777 Property SEK m 2024 2023 Cost of acquisition at beginning of year 1,844 1,753 New construction and conversion 90 91 Disposals and retirements -25 Foreign exchange effect 1 0 Cost of acquisition at end of year 1,910 1,844 Accumulated deprecation and impairment at beginning of year -588 -551 Depreciation for the year according to plan -38 -37 Impairment for the year -38 Disposals and retirements 25 Foreign exchange effect 0 0 Accumulated depreciation and impairment at end of year -639 -588 Carrying amount 1,271 1,256 Carrying amount, right-of-use assets 2,593 2,704 Total carrying amount 3,864 3,960 Equipment SEK m 2024 2023 Cost of acquisition at beginning of year 2,098 1,996 Cost of additional acquisition for the year 475 425 Disposals and retirements -296 -326 Impairment for the year -37 Foreign exchange effect 65 3 Cost of acquisition at end of year 2,305 2,098 Accumulated deprecation and impairment at beginning of year -1,313 -1,300 Depreciation for the year according to plan -359 -324 Disposals and retirements 291 315 Impairment for the year 28 Foreign exchange effect -44 -4 Accumulated depreciation and impairment at end of year -1,397 -1,313 Carrying amount 908 785 Carrying amount, right-of-use assets 29 30 Total carrying amount 937 815 The Group’s tangible non-current assets consist of property (owner-occupied properties) and equipment as well as right-of-use assets. These assets are recorded at cost of acquisition less accumulated depreciation and impairment losses. Depreciation is based on the estimated useful lives of the assets and a straight-line depreciation plan is applied. The estimated useful lives are reviewed annually. No material changes were made to the useful lives in 2024. The useful life of equipment is deemed to be 2-10 years. Separate depreciation plans are applied to the different sub-components of properties. The useful life for the buildings structure is deemed to be 100 years and the remaining sub-components are deemed to have useful lives of between 10 and 35 years. The useful life of the right-of-use assets that are primarily leased premises is deemed to be the same as the term of the lease. Information about the corresponding lease liability is presented in note G45 Leases. Impairment testing of property and equipment is carried out when there is an indication that the value of the asset may have decreased. There was no indication on the balance sheet date that property and equipment required impairment. 155 Handelsbanken Annual and Sustainability Report 2024 3.1
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G27 Other assets SEK m 2024 2023 Claims on investment banking settlements 5,310 5,610 Reinsurance assets 21 27 Other 6,565 4,640 Total 11,896 10,276 G28 Prepaid expenses and accrued income SEK m 2024 2023 Accrued income 1,397 1,218 Prepaid expenses 1,071 1,114 Total 2,468 2,331 G29 Due to credit institutions SEK m 2024 2023 Due in Swedish kronor Banks 13,573 7,222 Other credit institutions 7,552 8,444 Total 21,125 15,666 Due in foreign currency Banks 62,965 73,389 Other credit institutions 190 1,088 Total 63,155 74,477 Total due to credit institutions 84,280 90,143 of which repos 0 of which cash collateral received 32,374 20,078 Average volumes SEK m 2024 2023 Due to credit institutions in Swedish kronor 18,658 22,050 Due to credit institutions in foreign currency 126,481 143,309 Total 145,140 165,359 of which repos 173 177 156 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G30 Deposits and borrowing from the public SEK m 2024 2023 Deposits in Swedish kronor Households 366,270 361,462 Corporates 281,519 275,307 National Debt Office 1 1 Total 647,789 636,769 Deposits in foreign currency Households 121,999 100,321 Corporates 291,665 279,549 Total 413,665 379,871 Total deposits from the public 1,061,454 1,016,640 Borrowing from the public Borrowing in Swedish kronor 160,748 176,875 Borrowing in foreign currency 88,537 104,966 Total borrowing from the public 249,285 281,841 Total deposits and borrowing from the public 1,310,739 1,298,480 of which repos 1 2 of which cash collateral received 3,941 5,137 of which within insurance operations 107 115 Average volumes SEK m 2024 2023 Deposits from the public Deposits from the public in Swedish kronor 615,463 676,110 Deposits from the public in foreign currency 396,857 411,677 Total 1,012,320 1,087,787 Borrowing from the public Borrowing in Swedish kronor 209,103 175,907 Borrowing in Swedish kronor, insurance operations 115 116 Borrowing in foreign currency 261,891 222,857 Total 471,109 398,880 of which repos 7,042 8,978 G31 Liabilities where the customer bears the value change risk SEK m 2024 2023 Unit-linked insurance liabilities 226,268 192,952 Portfolio bond insurance liabilities 61,977 51,989 Other fund liabilities 17 159 Total 288,263 245,100 157 Handelsbanken Annual and Sustainability Report 2024 3.1
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G32 Issued securities 2024 2023 SEK m Carrying amount Nominal amount Carrying amount Nominal amount Commercial paper Commercial paper in Swedish kronor 536 509 1,099 1,055 of which fair value through profit or loss, mandatory 536 509 1,099 1,055 Commercial paper in foreign currency 620,794 351,863 606,147 418,067 of which amortised cost 620,717 351,790 605,740 417,676 of which included in fair value hedges 0 0 15,500 15,745 of which fair value through profit or loss, mandatory 77 73 407 391 Total 621,331 352,372 607,246 419,122 Bonds Bonds in Swedish kronor 559,652 563,444 568,496 572,069 of which amortised cost 559,652 563,444 568,496 572,069 of which included in fair value hedges 270,721 267,918 216,156 218,968 Bonds in foreign currency 369,044 370,857 347,739 353,432 of which amortised cost 369,044 370,857 347,739 353,432 of which included in fair value hedges 261,351 266,598 243,902 253,894 Total 928,696 934,301 916,235 925,501 Total issued securities 1,550,027 1,286,673 1,523,481 1,344,623 SEK m 2024 2023 Issued securities at beginning of year 1,523,481 1,474,801 Issued 1,060,981 1,251,086 Repurchased -54,766 -72,561 Matured -1,035,785 -1,124,075 Foreign exchange effect, etc. 56,115 -5,771 Issued securities at end of year 1,550,027 1,523,481 Average volumes SEK m 2024 2023 Issued securities in Swedish kronor 572,209 528,045 Issued securities in foreign currency 1,030,025 1,013,598 Total 1,602,234 1,541,643 G33 Short positions SEK m 2024 2023 Short positions at fair value Equities 621 520 Interest-bearing securities 386 1,844 Total 1,007 2,364 Average volumes SEK m 2024 2023 Short positions in Swedish kronor 15,433 15,301 Short positions in foreign currency 220 209 Total 15,653 15,510 158 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G34 Insurance liabilities Insurance liabilities 2024 SEK m Liability for remaining coverage (GMM) Liability for incurred claims (GMM) Liability for remaining coverage (PAA) Liability for incurred claims – Present value of future cash flows (PAA) Liability for incurred claims Risk adjustment (PAA) Total Opening balance 8,129 0 8 260 9 8,407 Insurance revenue – GMM -610 -610 of which expected insurance service expenses -557 -557 of which write-off of contractual service margin -35 -35 of which write-off of risk adjustment -19 -19 Insurance revenue – PAA 1 -576 -575 Insurance service expenses 550 428 1 979 Insurance service result -610 550 -576 428 1 -207 Financial income and expenses through profit or loss 62 4 66 Financial income and expenses through other comprehensive income -66 -66 Cash flows – premiums paid 14 574 588 Cash flows – disbursements -550 -430 -980 Foreign exchange effect 0 0 Closing balance 7,530 0 6 262 10 7,808 Insurance liabilities 2023 SEK m Liability for remaining coverage (GMM) Liability for incurred claims (GMM) Liability for remaining coverage (PAA) Liability for incurred claims – Present value of future cash flows (PAA) Liability for incurred claims Risk adjustment (PAA) Total Opening balance 8,269 0 9 259 8 8,546 Insurance revenue – GMM -588 -588 of which expected insurance service expenses -530 -530 of which write-off of contractual service margin -39 -39 of which write-off of risk adjustment -20 -20 Insurance revenue – PAA 1 -581 -580 Insurance service expenses 528 418 1 947 Insurance service result -588 528 -581 418 1 -221 Financial income and expenses through profit or loss 37 6 0 43 Financial income and expenses through other comprehensive income 396 396 Cash flows – premiums paid 15 580 595 Cash flows – disbursements -528 -423 -951 Foreign exchange effect -1 -1 Closing balance 8,129 0 8 260 9 8,407 159 Handelsbanken Annual and Sustainability Report 2024 3.1
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Insurance liabilities GMM – by component 2024 SEK m Present value of future cash flows Risk adjustment Contractual service margin Total Opening balance 7,138 351 641 8,129 Changes related to future services 62 -5 -57 0 Changes related to services for current period -5 -20 -35 -60 Changes related to previous services Insurance service result 57 -25 -92 -60 Financial income and expenses through profit or loss and other comprehensive income -12 3 5 -4 Cash flows -536 -536 Closing balance 6,646 329 554 7,530 Insurance liabilities GMM – by component 2023 SEK m Present value of future cash flows Risk adjustment Contractual service margin Total Opening balance 7,192 385 693 8,269 Changes related to future services 43 -27 -16 0 Changes related to services for current period -1 -20 -39 -60 Changes related to previous services Insurance service result 42 -47 -55 -60 Financial income and expenses through profit or loss and other comprehensive income 417 13 3 433 Cash flows -513 -513 Closing balance 7,138 351 641 8,129 Yield curve used for discounting Locked-in yield curve, % Current yield curve, % Term 2024 2023 2024 2023 1 yr 0.89 0.75 2.25 3.02 2 yrs 0.95 0.82 2.27 2.78 5 yrs 0.92 0.88 2.41 2.25 10 yrs 1.61 1.37 2.65 2.24 20 yrs 2.57 2.43 2.94 2.76 Mortality table Remaining life expectancy in years, from age 65 Cohort Women Men 1940 23.9 22.2 1950 24.6 21.8 1960 25.3 23.3 1970 25.8 24.0 1980 26.2 24.4 Contractual service margin Proportion of contractual service margin expected to remain, % Year 2024 2023 2023 100 2024 100 94 2025 94 88 2030 67 63 2040 29 27 2050 10 9 G34 cont. 160 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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The bank’s insurance operations are con- ducted by Handels banken Liv. The balance - sheet item Insurance liabilities comprises insurance contracts that transfer significant insurance risk from the policyholders to Handels banken Liv and comprise traditional life insurance contracts and risk insurance, pri- marily in the form of health insurance, waiver of premium and death insurance taken out by small companies and private individuals in Sweden. Other than all insurance having been taken out in Sweden, no risk concentrations have been identified. The insurance operations in Denmark and Norway were divested in 2022 and 2023, respectively. The insurance opera- tions in Finland were divested in 2024. Open- ing insurance liabilities attributable to Finland are not included in the above and instead have been reclassified to Liabilities held for sale in the balance sheet, see note G14. The insur- ance liability comprises the total of the liability for remaining coverage and liability for incurred claims. For risk insurance and risk insurance components recognised in accordance with the premium allocation approach (PAA), the liability for remaining coverage is measured at received, but not yet earned premiums. For the savings insurance components in traditional life insurance contracts recognised according to the general measurement model (GMM), the liability for remaining coverage contains cash flows for commitments for future services and the portion of the contractual service margin that has not yet been recognised as income. Liability for incurred claims contain cash flows for commitments for previous services. The cash flow for commitments comprises the expected present value of future cash flows and a risk adjustment. The overall aim of the section below is to describe the components of the liability: the expected present value of future cash flows, risk adjustment and contrac- tual service margin. For more information on the classification and measurement of insur- ance contracts, see note G1 section 8. Expected present value of future cash flows The expected present value of future cash flows attributable to signed insurance con- tracts is calculated by taking into account the probability of different outcomes and discount- ing. Future cash flows include premiums, claims, claims handling and administrative expenses attributable to fulfilling the insurance contracts. The calculation is made by predicting the cash flows using relevant assumptions and informa- tion about each insurance contract. Assumptions in calculating the expected present value of future cash flows Assumptions are applied when calculating the expected present value of future cash flows which entails that the calculation is associated with uncertainty. The same assumptions are applied to the liability for remaining coverage and liability for incurred claims where relevant. The assumptions applied are based on internal historical data, industry statistics and the market situation. Handels banken Liv regularly analyses the sensitivity of the insurance liability to changes in various assumptions and any differences in the actual outcome compared with the assumed outcome. Assumptions are prepared based on an established process whereby Handels banken Liv’s actuarial depart- ment (first line of defence) is responsible for regularly, and if necessary, analysing and pre- paring proposals for changes to assumptions. The actuarial function (second line of defer- ence) reviews and comments on the proposal. A decision to change the assumption is made by the CEO of Handels banken Liv. A decision on any changes to assumptions is reported to the Bank’s Valuation committee. The two most significant assumptions are future mortality and the yield curve used to discount future cash flows. Other significant assumptions include assumptions on future administrative expenses and lapse assumptions, for example, transfers and surrender. Assumptions on mortality Assumptions on future mortality are based on industry statistics and internal historical data. The assumption is stated as a one-year death probability per age and year cohort and there- fore is too extensive to be presented in a table. Instead, the table shows the mortality assump- tion in the form of expected life expectancy from the age of 65. Assumptions on yield curve The current yield curve used to discount future cash flows is based on observable market prices for interest rate swaps up to 10 years, adjusted for credit risk. The yield curve for maturities over 10 years is determined by con- vergence using the Smith-Wilson method to a long-term forward interest rate. The current long-term forward interest rate was estimated to be 3.30% (3.45). The convergence period was estimated to be 10 years (10). The finan- cial market scenarios are market consistent, based on assumptions on absence of arbitrage and are consistent with the relevant risk-free interest rates used for discounting. The current yield curve and the locked-in yield curve (meaning the yield curve that was determined on the transition date) used for discounting the insurance liability are presented in the table. Risk adjustment Risk adjustment corresponds to the compensa- tion required by the Bank for assuming the un- certainty in future cash flows resulting from signed insurance contracts for non-financial risk. In order to ensure a high level of solvency in Handels banken Liv, this compensation has been set as the risk margin that Handels banken Liv has to maintain under the Solvency 2 regula- tions. Risk adjustment is thus calculated by applying a cost of capital method whereby the future cost of capital is predicted using a cost of capital rate of 6% (6) and then discounted to a present value. The risk adjustment for 2024 amounted to SEK 340 million (361). Based on the assumption that the expected present value of future cash flows will follow normal distribu- tion, this corresponds to a one-year confidence level corresponding to approximately 99.86% (99.90), valued using the current yield curve. The risk adjustment is recognised in the income statement divided between insurance service result and financial income and expenses. Contractual service margin Contractual service margin refers to the unearned gain that the Bank will recognise when the insurance coverage is provided in the future. A contractual service margin arose on the savings insurance component of traditional life insurance contracts in connection with the transition to IFRS 17, comprising the difference between the fair value and the total of the expected present value of future cash flows and the risk adjustment. No new traditional life insurance contracts can be taken out, and thus no further contractual service margin on new contracts will arise after the transition to IFRS 17. Handels banken has made the assessment that both the return-related services and the services associated with the provision of insur- ance coverage will be carried out proportional over time. Accordingly, the insurance coverage components have been chosen such that the dissolution of the contractual service margin will emulate a proportional dissolution over time. The table shows the expected rate of dissolution of the contractual service margin. Significant changes and events during the year The assumptions regarding transfers and surrender for traditional life insurance policies were reviewed during the year, but resulted in no changes to the assumptions. G34 cont. 161 Handelsbanken Annual and Sustainability Report 2024 3.1
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Sensitivity analysis 2024 SEK m Impact on net insurance result Impact on other comprehensive income Total impact on equity Impact on insurance liability Impact on assets held on behalf of policyholders Risk variables Scenario Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Mortality risk1) +/-10% change in expected mortality 7 -8 -2 0 5 -8 -5 8 Disability recovery risk +/-10% change in disability recovery rate 11 -13 11 -13 -11 13 Lapse risk +/-1 percentage point change in lapse rate 2 -3 -6 6 -3 3 3 -3 Administrative expenses risk +/-10% change in expenses for administration -2 2 2 -2 0 0 0 0 General interest rate risk +/-1 percentage point parallel shift in relevant interest rates -90 89 443 -606 352 -517 -452 616 -99 100 Specific interest rate risk (spread risk) +/-1% change in value of holdings with spread risk 34 -34 -4 3 31 -31 4 -3 35 -35 Equity price risk +/-10% change in value of equities 61 -61 -3 2 58 -59 4 -3 62 -62 Foreign exchange risk +/-10% change in other currencies against SEK 89 -89 -8 5 81 -84 9 -6 90 -90 Sensitivity analysis 2023 SEK m Impact on net insurance result Impact on other comprehensive income Total impact on equity Impact on insurance liability Impact on assets held on behalf of policyholders Risk variables Scenario Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Mortality risk1) +/-10% change in expected mortality 7 -8 -1 -1 6 -9 -6 9 Disability recovery risk +/-10% change in disability recovery rate 10 -12 10 -12 -10 12 Lapse risk +/-1 percentage point change in lapse rate 3 -3 -5 6 -3 2 3 -2 Administrative expenses risk +/-10% change in expenses for administration -2 2 1 -1 -1 1 1 -1 General interest rate risk +/-1 percentage point parallel shift in relevant interest rates -103 101 521 -687 419 -585 -530 697 -112 112 Specific interest rate risk (spread risk) +/-1% change in value of holdings with spread risk 35 -35 -3 3 32 -32 3 -3 35 -35 Equity price risk +/-10% change in value of equities 82 -83 -2 2 81 -81 3 -3 84 -84 Foreign exchange risk +/-10% change in other currencies against SEK 48 -48 -2 2 46 -46 3 -3 49 -49 1) The sensitivity analysis above includes the entire insurance liability except for the liability for remaining coverage for insurance contracts measured according to the PAA method since this liability is measured at received, but not yet earned premiums. As a result, a changed risk variable would not have any immediate impact on this liability other than an increase in premium in the future if it was deemed to be insufficient. The risks and the sensitivity in the portfolio of traditional life insurance and risk insurance have been quantified in the table above as the effect that reasonably likely changes in material risk variables would have on net insurance result, other comprehensive income, equity, the insurance liability and assets held on behalf of policyholders. The sensitivity analysis was based on one risk variable changing and other risk variables remaining constant. In practice, it is unlikely that only one risk variable will change since changes in some of the risk variables may be correlated. When calculating the sensitivity to material risk variables, the same method was applied as that used for the reported insurance liability. The sensitivity analysis has been prepared by applying the same method for both years. Assets in traditional life insurance held on behalf of policyholders SEK m 2024 2023 Equity funds1) 619 532 Fixed-income funds1) 4,979 5,326 Private Equity1) 16 18 Cash and cash equivalents 49 36 Total 5,663 5,912 1) Recognised as Shares, see note G19. G34 cont. 162 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Duration Fixed-income funds Traditional life insurance Present value of future cash flows SEK m 2024 2023 2024 2023 0–1 yrs 3,233 2,754 518 565 1–5 yrs 1,446 2,171 1,796 1,929 5–10 yrs 195 281 1,701 1,805 >10 yrs 105 120 2,630 2,840 Total 4,979 5,326 6,646 7,138 Risks in insurance contracts The Bank is, through its insurance contracts, primarily exposed to market risk, credit risk, liquidity risk and insurance risk. The most material risks are described below: Market risk Market risk refers to the combined risk that changes in risk factors in financial markets – such as changes in interest rates, equity prices, or exchange rates – will result in changes in the value of investment assets and/or commitments. Interest rate risk General interest rate risk arises in traditional life insurance as a result of the difference in duration between the investment assets and the insurance liability. The duration of the lia- bility is long, which is why the sensitivity to interest rates if the discount rate changes is significant. The duration of the investment assets is short, which is why the sensitivity to interest rates if the market rate changes is limited. Handels banken Liv has chosen short durations of the investment assets due to the structure of traditional life insurance. Specific interest rate risk (spread risk) arises in traditional life insurance management in holdings in fixed-income funds when credit spreads change, that is, the difference between the yield on the current holding and the yield on a government bond with the same maturity. The investment assets are recognised and measured at fair value through profit or loss, mandatory, see note G5 and note G6. To avoid volatility in the income statement for traditional life insurance, the effects of changed discount rates are recognised in Other comprehensive income, which comprises the difference be - tween the liability discounted by a locked-in yield curve and the liability discounted by the current yield curve. Equity price risk Equity price risk arises in traditional life insur- ance management due to investments in mainly equity funds. Traditional life insurance con- tracts provide the opportunity for the policy- holder to receive additional benefits in addition to the guaranteed benefits, if the actual return exceeds the guaranteed level. This means that Handels banken is primarily exposed to the downside of equity price risk. The exposure to equity price risk in the portfolio of traditional life insurance management was SEK 635 mil- lion (550) at year-end. Foreign exchange risk Foreign exchange risk mainly arises in tradi- tional life insurance management as a result of investments in mutual funds with underlying assets in primarily EUR and USD. This expo- sure is limited by using currency derivatives as needed. At year-end, the net exposure in EUR corresponded to SEK 417 million (301) the net exposure in USD was SEK 457 million (173). Credit risk Credit risk arises in traditional life insurance management on holdings in fixed-income funds. This risk is limited since the underlying holdings in mutual funds are only permitted to have a minimum credit rating of BBB- (invest- ment grade) or equivalent. Liquidity risk Liquidity risk arises primarily as a result of tra- ditional life insurance providing policyholders with the opportunity to transfer their insurance capital to another insurer. This risk is managed by daily monitoring of future disbursements and is limited by investing investment assets, as far as possible, in ucits funds with very good liquidity. Insurance risk Insurance risk refers to risk other than financial risk that is transferred from the policyholder to Handels banken Liv. The most significant insur- ance risks are described below: Mortality risk The risk of loss, or of an adverse change in the value of insurance commitments, resulting from changes in mortality. Mortality risk pri- marily arises in mortality insurance. Increased mortality leads to an increase in the value of the insurance commitments. Longevity risk The risk of loss, or of an adverse change in the value of insurance commitments, resulting from changes in mortality. Longevity risk arises in traditional life insurance contracts under which policyholders receive a guaranteed bene- fit that may be life-long. Decreased mortality leads to an increase in the value of the insur- ance commitments. Disability recovery risk The risk of loss, or of an adverse change in the value of insurance commitments, resulting from changes in the disability recovery rate. Disability recovery risk primarily arises in health insurance. Decreased disability recovery leads to an increase in the value of the insurance commitments. Lapse risk The risk of loss, or of an adverse change in the value of insurance commitments, resulting from changes in the frequency of transfers and surrender. Lapse risk primarily arises in tradi- tional life insurance contracts. Transfer rights exist for the entire portfolio. Administrative expenses risk The risk of loss, or of an adverse change in the value of insurance commitments, resulting from changes in expenses for administering insurance contracts. Administrative expenses risk primarily arises in traditional life insurance contracts. Increased administrative expenses lead to an increase in the value of the insur- ance commitments. G34 cont. 163 Handelsbanken Annual and Sustainability Report 2024 3.1
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Risk management and limitation Handels banken Liv has a low risk tolerance and follows the Bank’s risk management principles. Risks are primarily managed by Handels banken Liv maintaining a sufficient level of capital in order to be able to meet its commitments to policyholders even when unforeseen negative events occur. For more information, see the section on risks in the insurance operations in note G2. Handels banken Liv’s investment policy restricts exposure to financial risks and pro- vides overall instructions on the management of assets given the obligations to its policy- holders and statutory requirements. It also pro vides instructions on how governance and control of the investments are to be imple - mented, and how the total risk level in the assets is to be managed. Assets are to be invested in a prudent manner so that risks can be identified, measured, analysed, and reported. Handels banken limits its exposure to insur- ance risk in several ways. Medical risk assess- ments based on the health status of the insured are conducted before granting mortality and health insurance if necessary. Premiums are set based on assumptions regarding the expected cost of incurred insur- ance events, including appropriate prudence margins, and are regularly reviewed to ensure their sufficiency to cover expected costs. To avoid volatility in the income statement, the largest mortality and health insurance contracts are reinsured according to established limits for self retention, see note G27 for reinsurance assets and G37 for reinsurance liabilities. G35 Taxes Tax expenses recognised in the income statement SEK m 2024 2023 Current tax -7,814 -8,452 Deferred tax 53 118 Adjustment of tax relating to prior years -34 -83 Total tax expenses, continuing operations -7,795 -8,417 Total tax expenses, discontinued operations -72 -185 Difference between the Group’s tax expense and tax expense according to applicable Swedish tax rate SEK m 2024 2023 Profit before tax 35,016 36,322 Tax on profit before tax at Swedish tax rate -7,213 -7,482 Tax recognised in the Group -7,795 -8,417 Difference -582 -935 The difference is explained by the following items: Non-taxable income/non-deductible expenses -23 -16 Non-deductible expense on subordinated liabilities -515 -583 Different tax rate in insurance operations 316 297 Non-taxable capital gains and dividends 0 9 Different tax rates in other countries -487 -565 Tax prior years -34 -83 Other 161 6 Total -582 -935 G34 cont. 164 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Deferred tax assets 2024 SEK m Opening balance Recognised in income statement Recognised in other compre- hensive income Foreign exchange effect Offsetting Closing balance Hedging instruments 546 -191 355 Property and equipment 0 0 0 Pensions 347 92 439 Other 401 -95 306 Offsetting -936 -7 -943 Total 358 -3 -191 0 -7 157 Deferred tax liabilities 2024 SEK m Opening balance Recognised in income statement Recognised in other compre- hensive income Foreign exchange effect Offsetting Closing balance Loans to the public1) 1,878 -211 1,667 Hedging instruments 448 -69 -204 64 239 Intangible assets 65 2 67 Property and equipment 91 27 118 Pensions 2,212 215 36 15 2,478 Other 211 -86 -7 118 Offsetting -936 -7 -943 Total 3,969 -122 -168 72 -7 3,744 1) Of which lease assets SEK 1,622 million (1,845). Deferred tax assets 2023 SEK m Opening balance Recognised in income statement Recognised in other compre- hensive income Foreign exchange effect Offsetting Closing balance Hedging instruments 996 -450 546 Property and equipment 19 -19 0 Pensions 370 -23 347 Other 204 189 8 401 Offsetting -936 -936 Total 1,589 130 -450 8 -936 358 Deferred tax liabilities 2023 SEK m Opening balance Recognised in income statement Recognised in other compre- hensive income Foreign exchange effect Offsetting Closing balance Loans to the public1) 2,207 -329 1,878 Hedging instruments 764 -316 448 Intangible assets 78 -13 65 Property and equipment 95 -4 91 Pensions 2,466 231 -449 -36 2,212 Other 4 207 211 Offsetting -936 -936 Total 5,614 92 -765 -36 -936 3,969 1) Of which lease assets SEK 1,845 million (2,207). Disclosures on Pillar 2 An initial assessment has been carried out to determine how the Bank is affected by the Pillar 2 rules and will be reviewed on a continuous basis. Handels banken applies the exemption in IAS 12 entailing that the Group does not recognise or disclose deferred tax assets or liabilities related to income tax due to Pillar 2. All countries in which Handels banken operates, with the exception of the USA, have adopted the EU’s Pillar 2 Directive, and national legislation has been or will be implemented. Handels- banken does not operate in low-taxed countries, and all countries in which the Bank operates have a tax rate of more than 20%. Handels banken has estimated that effective tax rates exceed 15% in all jurisdictions in which it operates, hence no tax is recognised in the financial statements in accordance with Pillar 2 legislation. Handels banken’s assessment is that the regulations will not have any material impact on Handels banken’s financial statements. Unrecognised deferred tax assets and deficits Deferred tax assets on loss carry forwards and other future deductible temporary differences are recognised only if it is probable that they can be utilised in the foreseeable future. Unrecognised deferred tax assets are available locally in Stadshypotek AB and amount to SEK 124 million (113). G35 cont. 165 Handelsbanken Annual and Sustainability Report 2024 3.1
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G36 Provisions Provisions 2024 SEK m Provision for expected credit losses on off-balance sheet items1) Provision for restructuring2) Other provisions3) Total Provisions at beginning of year 299 43 258 601 Provisions during the year 159 159 Utilised -17 -24 -41 Reversed -177 -177 Change in expected credit losses, net -165 -165 Provisions at end of year 135 27 216 378 Provisions 2023 SEK m Provision for expected credit losses on off-balance sheet items1) Provision for restructuring2) Other provisions3) Total Provisions at beginning of year 280 87 225 591 Provisions during the year 121 121 Utilised -44 -8 -52 Reversed -80 -80 Change in expected credit losses, net 20 20 Provisions at end of year 299 43 258 601 1) For more information, see notes G10 and G44. 2) The provision for restructuring costs refers to expenses related to the Bank’s restructuring. 3) The amounts allocated for future settlement of the claims on the Bank are presented under Other provisions. G37 Other liabilities SEK m 2024 2023 Liabilities on investment banking settlements 2,865 5,192 Lease liability 2,751 2,857 Reinsurance liabilities 128 126 Other 9,632 6,708 Total 15,376 14,882 166 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G38 Accrued expenses and deferred income SEK m 2024 2023 Accrued expenses 2,055 1,902 Deferred income 880 1,087 Total 2,935 2,990 G39 Subordinated liabilities Change in subordinated liabilities SEK m 2024 2023 Subordinated liabilities at beginning of year 43,117 42,404 Issued 5,673 8,753 Matured -13,369 -8,326 Foreign exchange effect, etc. 1,633 286 Subordinated liabilities at end of year 37,054 43,117 Average volumes SEK m 2024 2023 Subordinated liabilities in foreign currency 35,603 42,200 Specification of subordinated liabilities Year of issuance Maturity Original maturity date First possible redemption date Currency Original nominal amount in each currency Convertible/ Non-convertible Interest rate, % Outstanding amount 2020 Perpetual1), 2) 1 Mar 2027 USD 500 Convertible3) 4,375 5,229 2020 Perpetual1), 2) 1 Mar 2031 USD 500 Convertible3) 4,750 4,584 2022 Fixed term4) 1 Jun 2033 1 Jun 2028 EUR 500 Non-convertible 3,250 5,748 2022 Fixed term4) 23 Aug 2032 23 Aug 2027 GBP 500 Non-convertible 4,625 6,722 2023 Fixed term4) 16 Aug 2034 16 Aug 2029 EUR 750 Non-convertible 5,000 9,053 2024 Fixed term4) 4 Nov 2036 4 Nov 2031 EUR 500 Non-convertible 3,625 5,718 Total subordinated liabilities 37,054 1) Subordinated to all instruments except for equities, the immediately senior is fixed-term subordinated liabilities. 2) Can be redeemed on each subsequent rate fixing date after the initial redemption date. 3) The liabilities are converted to ordinary shares in Svenska Handelsbanken AB if Svenska Handelsbanken AB’s common equity tier 1 ratio falls below 5.125% or if the consolidated situation’s common equity tier 1 ratio falls below 8.0%. 4) Subordinated to all senior debt. 167 Handelsbanken Annual and Sustainability Report 2024 3.1
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G40 Specification of changes in equity Change in hedge reserve SEK m 2024 2023 Hedge reserve at beginning of year 181 -307 Effective part of change in fair value Interest rate risk 794 1,486 Foreign exchange risk -460 -619 Reclassified to the income statement1) -174 -252 Tax -33 -127 Hedge reserve at end of year 308 181 Change in fair value reserve SEK m 2024 2023 Fair value reserve at beginning of year 197 126 Unrealised value change – equity instruments 167 51 Realised value change – equity instruments 3 0 Unrealised value change – debt instruments 5 19 Change in provision for expected credit losses – debt instruments 0 0 Reclassified to retained earnings – equity instruments2) -3 0 Reclassified to the income statement – debt instruments3) 0 0 Fair value reserve at end of year 369 197 Change in translation reserve, foreign operations SEK m 2024 2023 Translation reserve for foreign operations at beginning of year 3,502 4,332 Change in translation difference pertaining to branches 266 -855 Change in translation difference pertaining to subsidiaries 2,539 297 Reclassified to the income statement4) -248 9 Reclassified to retained earnings5) -811 -284 Translation reserve for foreign operations at end of year 5,249 3,502 1) Tax reclassified to the income statement pertaining to this item SEK 35 million (52). 2) Tax reclassified to retained earnings pertaining to this item SEK – million (-). 3) Tax reclassified to the income statement pertaining to this item SEK 0 million (0). 4) Tax reclassified to the income statement pertaining to this item SEK -70 million (-2). 5) Tax reclassified to retained earnings pertaining to this item SEK 8 million (19). 168 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G41 Classification of financial assets and liabilities 2024 Fair value through profit or loss SEK m Mandatory Fair value option Derivatives identified as hedging instruments Fair value through other comprehensive income Amortised cost Total carrying amount Fair value Assets Cash and balances with central banks 530,009 530,009 530,009 Other loans to central banks 12,547 12,547 12,547 Interest-bearing securities eligible as collateral with central banks 4,862 167,745 172,607 172,606 Loans to other credit institutions 18,923 18,923 18,632 Loans to the public 2,372,086 2,372,086 2,365,414 Value change of interest-hedged item in portfolio hedge -6,399 -6,399 Bonds and other interest-bearing securities 10,329 23,920 13,259 47,508 47,508 Shares 13,942 804 14,746 14,746 Assets where the customer bears the value change risk 287,984 287,984 287,984 Derivative instruments 21,340 25,729 47,069 47,069 Other assets 13 11,903 11,916 11,916 Total 338,470 191,665 25,729 14,063 2,939,069 3,508,995 3,508,431 Investments in associates and joint ventures 860 Non-financial assets 29,317 Total assets 3,539,173 Liabilities Due to credit institutions 84,527 84,527 84,592 Deposits and borrowing from the public 1,320,481 1,320,481 1,320,543 Liabilities where the customer bears the value change risk 288,263 288,263 288,263 Issued securities 614 1,549,413 1,550,027 1,545,408 Derivative instruments 14,583 1,373 15,956 15,956 Short positions 1,007 1,007 1,007 Other liabilities 12 15,687 15,700 15,700 Subordinated liabilities 37,054 37,054 38,263 Total 16,216 288,263 1,373 3,007,162 3,313,015 3,309,732 Non-financial liabilities 16,131 Total liabilities 3,329,146 169 Handelsbanken Annual and Sustainability Report 2024 3.1
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2023 Fair value through profit or loss SEK m Mandatory Fair value option Derivatives identified as hedging instruments Fair value through other comprehensive income Amortised cost Total carrying amount Fair value Assets Cash and balances with central banks 476,181 476,181 476,181 Other loans to central banks 32,145 32,145 32,145 Interest-bearing securities eligible as collateral with central banks 3,534 195,594 199,128 199,128 Loans to other credit institutions 19,298 19,298 19,272 Loans to the public 2,434,217 2,434,217 2,415,484 Value change of interest-hedged item in portfolio hedge -9,657 -9,657 Bonds and other interest-bearing securities 13,550 23,827 12,709 50,087 50,087 Shares 11,617 601 12,218 12,218 Assets where the customer bears the value change risk 254,401 78 254,479 254,479 Derivative instruments 13,618 16,492 30,110 30,110 Other assets 27 10,282 10,309 10,309 Total 296,747 219,421 16,492 13,310 2,962,544 3,508,514 3,499,412 Investments in associates and joint ventures 657 Non-financial assets 28,620 Total assets 3,537,792 Liabilities Due to credit institutions 91,124 91,124 91,287 Deposits and borrowing from the public 1,350,036 1,350,036 1,349,338 Liabilities where the customer bears the value change risk 254,609 78 254,687 254,687 Issued securities 1,506 1,521,975 1,523,481 1,497,333 Derivative instruments 27,399 6,840 34,238 34,238 Short positions 2,364 2,364 2,364 Other liabilities 27 15,712 15,739 15,739 Subordinated liabilities 43,117 43,117 43,227 Total 31,296 254,609 6,840 3,022,042 3,314,787 3,288,213 Non-financial liabilities 17,919 Total liabilities 3,332,706 Assets and liabilities in the table above include the disposal groups in Finland, which has been reclassified to Assets held for sale and Liabilities held for sale on the balance sheet, respectively (see note G14). G41 cont. 170 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G42 Fair value measurement of financial instruments Financial instruments at fair value 2024 SEK m Level 1 Level 2 Level 3 Total Assets Interest-bearing securities eligible as collateral with central banks Fair value through profit or loss, mandatory 4,778 84 4,862 Fair value through profit or loss, fair value option 167,745 167,745 Fair value through other comprehensive income Bonds and other interest-bearing securities Fair value through profit or loss, mandatory 9,610 719 10,329 Fair value through profit or loss, fair value option 23,920 23,920 Fair value through other comprehensive income 11,752 1,507 13,259 Shares Fair value through profit or loss, mandatory 13,340 586 16 13,942 Fair value through other comprehensive income 548 94 161 803 Assets where the customer bears the value change risk 285,122 2,845 17 287,984 Derivative instruments 52 47,017 47,069 Total 516,867 52,852 194 569,913 Liabilities Liabilities where the customer bears the value change risk 285,400 2,845 17 288,263 Issued securities 614 614 Derivative instruments 39 15,916 15,955 Short positions 992 15 1,007 Total 286,431 19,390 17 305,839 Financial instruments at fair value 2023 SEK m Level 1 Level 2 Level 3 Total Assets Interest-bearing securities eligible as collateral with central banks Fair value through profit or loss, mandatory 3,498 36 3,534 Fair value through profit or loss, fair value option 195,594 195,594 Fair value through other comprehensive income Bonds and other interest-bearing securities Fair value through profit or loss, mandatory 13,245 305 13,550 Fair value through profit or loss, fair value option 23,827 23,827 Fair value through other comprehensive income 11,158 1,551 12,709 Shares Fair value through profit or loss, mandatory 11,096 503 18 11,617 Fair value through other comprehensive income 310 135 156 601 Assets where the customer bears the value change risk 251,504 2,820 77 254,401 Derivative instruments 92 30,016 2 30,110 Total 510,325 35,366 253 545,944 Liabilities Liabilities where the customer bears the value change risk 251,712 2,820 77 254,609 Issued securities 1,506 1,506 Derivative instruments 47 34,189 2 34,238 Short positions 2,364 2,364 Total 254,123 38,515 79 292,717 Financial instruments in the table above include the disposal groups in Finland, which have been reclassified to Assets held for sale and Liabilities held for sale on the balance sheet, respectively (see note G14). 171 Handelsbanken Annual and Sustainability Report 2024 3.1
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Valuation hierarchy In the tables, financial instruments at fair value have been categorised in terms of how the valuations have been carried out and the degree of transparency regarding market data used in the valuation. The categorisation is shown as levels 1–3 in the tables. Financial instruments which are valued at a direct and liquid market price are categorised as level 1. These financial instruments mainly comprise government securities and other interest- bearing securities that are traded actively, listed shares and short-term positions in cor- responding assets. Level 1 also includes the majority of shares in mutual funds and other assets which are related to unit-linked insur- ance contracts and similar agreements and the corresponding liabilities. Financial instru- ments which are valued using valuation models which substantially are based on market data are categorised as level 2. Level 2 mainly includes interest-bearing securities and inter- est and foreign exchange derivatives. Finan- cial instruments whose value to a material extent is affected by input data that cannot be verified using external market information are categorised as level 3. Level 3 includes unlisted shares, certain holdings of private equity funds and certain derivatives. The categorisation is based on the valuation method used on the balance sheet date. If the category for a specific instrument has changed since the previous balance sheet date (31 December 2023), the instrument has been moved between the levels in the table. There were no significant movements between levels during the year. Changes in level 3 hold- ings during the year are shown in a separate table below. The holdings in level 3 mainly comprise unlisted shares. The Group’s holdings of unlisted shares are mainly comprised of par- ticipating interests in companies which pro- vide supporting operations to the Bank. For example, these may be participating interests in clearing organisations and infrastructure collaboration on Handelsbanken’s home mar- kets. Such holdings are generally valued at the Bank’s share of the company’s net asset value, or alternatively at the price of the last completed transaction. In all material respects, unlisted shares are classified at fair value through other comprehensive income. Value changes for these holdings are thus reported in Other comprehensive income. Certain holdings of private equity funds are categorised as belonging to level 3. These are valued using valuation models mainly based on a relative valuation of comparable listed companies in the same sector. The performance measurements used in the comparison are adjusted for factors which distort the compari- son between the investment and the company used for comparison. Subsequently, the valua- tion is based on earnings multiples, such as P/E ratios and EV/EBITA. Most of these hold- ings represent investment assets in the Group’s insurance operations. The derivatives component in some of the Bank’s issued structured bonds and the related hedging derivatives are also catego- rised as belonging to level 3. For these deriv- atives, internal assumptions have a material impact on calculation of the fair value. Hedging derivatives in level 3 are traded under CSA agreements where the market values are checked and verified with the Bank’s counter- parties on a daily basis. The year’s realised value changes on finan- cial instruments in level 3 reported in the income statement is SEK 1 million (1). Change in holdings in financial instruments in level 3 2024 SEK m Shares Derivative assets Derivative liabilities Assets where the customer bears the value change risk Liabilities where the customer bears the value change risk Carrying amount at beginning of year 174 2 -2 77 -77 Acquisitions 1 Repurchases/sales -5 Matured Unrealised value change in income statement -6 -2 2 -60 60 Unrealised value change in other comprehensive income 13 Transfer from level 1 or 2 Transfer to level 1 or 2 Carrying amount at end of year 177 17 -17 Change in holdings in financial instruments in level 3 2023 SEK m Shares Derivative assets Derivative liabilities Assets where the customer bears the value change risk Liabilities where the customer bears the value change risk Carrying amount at beginning of year 173 39 -39 525 -525 Acquisitions Repurchases/sales -1 Matured Unrealised value change in income statement 2 0 0 -448 448 Unrealised value change in other comprehensive income Transfer from level 1 or 2 -37 37 Transfer to level 1 or 2 Carrying amount at end of year 174 2 -2 77 -77 Financial instruments in the table above include the disposal groups in Finland, which have been reclassified to Assets held for sale and Liabilities held for sale on the balance sheet, respectively (see note G14). A change in unobservable inputs is not deemed to result in any significantly higher or lower measurement of the level 3 holdings, which is the reason that a sensitivity analysis is not provided. G42 cont. 172 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Differences between the transaction price and the value measured by a valuation model As stated in the accounting policies in note G1, when applying a model to value derivatives, material positive differences between the valu- ation at initial recognition and the transaction price (known as day 1 gains/losses) are amor- tised over the life of the derivative. Unrealised results due to positive differences between the transaction price and the value measured by a valuation model (known as day 1 gains/losses) are comprised of the Bank’s profit margin and compensation to cover, for example, the cost of capital and administrative expenses. As a consequence of the application of this princi- ple, SEK 164 million (113) has been recognised in Net gains/losses on financial transactions during the year. At the end of the year, non- recognised day 1 gains amounted to SEK 500 million (472). Principles for information about the fair values of financial instruments measured at amortised cost Information about the fair values of financial instruments measured at amortised cost is presented in note G41 and in the table below. These instruments essentially comprise lend- ing, deposits and borrowing. For means of payment and short-term receivables and lia- bilities, the carrying amount is considered to be an acceptable estimate of the fair value. Receivables and liabilities with a maturity date or the date for next interest rate fixing falling within 30 days are defined as short-term. The valuation of fixed-rate lending is based on the current market rate with an adjustment for assumed credit and liquidity risk premiums on market terms. The premium is assumed to be the same as the average margin for new lending at the time of the measurement. Inter- est-bearing securities have been valued at the current market price where this has been avail- able. Funding and interest-bearing securities for which market price information has not been available have been valued using a valu- ation model based on market data in the form of prices or interest for similar instruments. In the table, the valuation used for the infor- mation about the fair value of financial instru- ments measured at amortised cost is catego- rised in the valuation hierarchy described above. Means of payment and deposits are considered to be equivalent to cash and have been categorised as level 1. Level 1 also con- tains interest-bearing securities (assets and liabilities) for which there is a current market price. Lending where the assumption about credit and liquidity premiums has materially affected the information about fair value has been categorised as level 3. Other instruments are categorised as level 2. Fair value of financial instruments at amortised cost 2024 SEK m Level 1 Level 2 Level 3 Total Assets Cash and balances with central banks 530,009 530,009 Other loans to central banks 12,547 12,547 Loans to other credit institutions 4,305 13,966 362 18,633 Loans to the public 27,977 1,137 2,336,300 2,365,414 Assets where the customer bears the value change risk Total 574,838 15,103 2,336,662 2,926,603 Liabilities Due to credit institutions 39,764 44,828 84,592 Deposits and borrowing from the public 1,312,915 7,628 1,320,543 Liabilities where the customer bears the value change risk Issued securities 917,859 626,936 1,544,795 Subordinated liabilities 38,263 38,263 Total 2,270,538 717,655 2,988,193 Fair value of financial instruments at amortised cost 2023 SEK m Level 1 Level 2 Level 3 Total Assets Cash and balances with central banks 476,181 476,181 Other loans to central banks 32,145 32,145 Loans to other credit institutions 5,876 13,038 358 19,272 Loans to the public 41,120 828 2,373,537 2,415,485 Assets where the customer bears the value change risk 78 78 Total 555,400 13,866 2,373,895 2,943,161 Liabilities Due to credit institutions 31,858 59,430 91,287 Deposits and borrowing from the public 1,341,888 7,449 1,349,338 Liabilities where the customer bears the value change risk 78 78 Issued securities 857,720 638,107 1,495,827 Subordinated liabilities 43,227 43,227 Total 2,231,544 748,213 2,979,757 Financial instruments in the table above include the disposal groups in Finland, which have been reclassified to Assets held for sale and Liabilities held for sale on the balance sheet, respectively (see note G14). G42 cont. 173 Handelsbanken Annual and Sustainability Report 2024 3.1
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G43 Pledged assets, collateral received and transferred financial assets Assets pledged for own debt SEK m 2024 2023 Cash 14,590 27,456 Government securities and bonds 2,401 5,691 Loans to the public 750,510 765,513 Equities 5,806 5,869 Assets where the customer bears the value change risk 289,253 256,168 Other 1,336 1,820 Total 1,063,896 1,062,518 of which pledged assets that may be freely withdrawn by the Bank 15 18 Other pledged assets SEK m 2024 2023 Cash 256 1,370 Government securities and bonds 87,535 63,619 Equities 2,546 4,411 Total 90,336 69,399 of which pledged assets that may be freely withdrawn by the Bank 77,729 52,061 Other pledged assets refers to collateral pledged for obligations not reported on the balance sheet. Transferred financial assets reported on the balance sheet 2024 2023 SEK m Carrying amount Carrying amount associated liability Carrying amount Carrying amount associated liability Shares, securities lending 2,674 1061) 4,237 1121) Government securities and bonds, repurchase agreements 1,077 0 4,464 2 Assets where the customer bears the value change risk 17 17 159 159 Total 3,768 124 8,860 273 1) Received cash collateral. Pledged assets Pledged assets are recognised as assets on the balance sheet. Assets pledged in the form of interest-bearing securities mainly comprise securities pledged as collateral to central banks and other credit institutions, for pay- ment systems, securities trading and clearing and also securities sold under binding repur- chase agreements (repos). Assets pledged in the form of equities mainly comprise lent equities and equities in the insurance operations. Loans to the public pledged as security mainly comprise collateral registered for the benefit of holders of covered bonds issued by Stadshypotek. The collateral mainly comprises loans granted against mortgages in single- family homes, second homes, multi-family dwellings or housing co-operative apartments with a loan-to-value ratio within 75% of the market value. In the event of the company’s insolvency, pursuant to the Covered Bonds Act and the Right of Priority Act, the holders of the covered bonds have prior rights to the pledged assets. If, at the time of a bankruptcy decision, the assets in the total collateral fulfil the terms of the Act, these must be kept separate from the bankruptcy estate’s other assets and liabil- ities. The holders of the bonds will then con- tinue to receive contractual payments under the terms of the bond until maturity. Assets where the customer bears the value change risk mainly comprise units in unit- linked insurance contracts in Handelsbanken Liv where the policyholders have priority rights. Collateral received Collateral received is not recognised on the balance sheet. For reverse repurchase agree- ments and equity loans, securities are received that can be sold or repledged to a third party. The fair value of received securities under reverse repurchase agreements and agree- ments on equity loans was SEK 44,246 million (43,196) at the end of the financial year, where collateral worth SEK 7,858 million (12,528) had been sold or repledged to a third party. Infor- mation about received pledges for lending and other received collateral is shown in note G2. 174 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Transferred financial assets reported on the balance sheet Transferred financial assets are recognised as assets on the balance sheet but, for these, the rights to future cash flows are directly or indirectly transferred to an external counter- party. Most of the transferred financial assets recognised on the balance sheet comprise interest-bearing securities which have been sold under binding repurchase agreements and lent equities. Normally the terms for the binding repurchases and equity loans are stipulated in framework agreements between the Bank and the respective counterparty. Binding repurchase agreements imply selling securities with an undertaking to repurchase them at a fixed price at a pre- determined time in the future. The seller of the securities thus continues to be exposed to the risk of value changes during the life of the agreement. Securities sold under repurchase agreements remain at market value on the bal- ance sheet throughout the life of the agree- ment. The purchase price received is reported as a liability to the counterparty. According to the standard terms of a repurchase agreement, the right of ownership of the sold securities is transferred in its entirety from the seller to the buyer. This means that the buyer has the right to sell on, repledge or otherwise dispose of the purchased securities. According to the standard agreements for equity loans, the exposure to the value change in the lent equity remains with the lender. Lent equities thus remain on the balance sheet throughout the life of the loan. Collateral for lent securities is normally in the form of cash or other securities. Cash collateral received is recognised as a liability on the balance sheet. In the same way as for repurchase agree- ments, the standard agreement used for equity loans means that during the life of the loan, the borrower has the right to sell on, repledge or otherwise dispose of the borrowed securities. Government securities, bonds and equities provided as collateral for securities trading, clearing, etc. where the title to the instrument has been transferred to the counterparty are reported as other transferred financial assets. Transferred financial assets also include certain assets where the customer bears the value change risk. These assets comprise portfolios of financial instruments where the Bank has the formal right of ownership but where the risks related to the assets and also the right to future cash flows have been transferred to a third party. The valuation of these assets reflects the valuation of the corresponding liability item. G44 Contingent liabilities SEK m 2024 2023 Contingent liabilities Guarantees, credits 8,135 8,184 Guarantees, other 45,697 47,557 Irrevocable letters of credit 665 203 Other 1,256 2,177 Total 55,754 58,120 of which subject to impairment testing 55,754 58,120 Obligations Loan commitments 333,969 317,926 Unutilised part of granted overdraft facilities 100,717 96,359 Other 7,828 13,580 Total 442,514 427,865 of which subject to impairment testing 242,965 237,999 Total contingent liabilities 498,268 485,985 Provision for expected credit losses reported as provisions, see note G36. 155 340 Contingent liabilities Contingent liabilities mainly consist of various types of guarantees. Credit guarantees are provided to customers in order to guarantee commitments in other credit and pension institutions. Other guarantees are mainly commercial guarantees such as bid bonds, guarantees relating to advance payments, guarantees during a warranty period and export-related guarantees. Contingent liabilities also comprise unutilised irrevocable import letters of credit and confirmed export letters of credit. These transactions are included in the Bank’s services and are provided to support the Bank’s customers. The nominal amounts of the guarantees are shown in the table. Claims Companies within the Group are subjects of claims in a number of civil actions which are being pursued in general courts of law. The Bank’s Polish operations have a portfolio of mortgages denominated in CHF and EUR, which amounted to approximately SEK 100 million at year-end. There is uncertainty in Polish law regarding the application of various credit terms and conditions involving foreign currency. The aforementioned legal developments may mean that certain contractual terms and conditions in the Bank’s Polish operations cannot be applied and that compensation may have to be paid to certain customers. It is not currently practically feasible to estimate the potential financial impact on the Bank or the likelihood of various outcomes and no disclosure on contingent liabilities is therefore submitted. The assessment is that the other actions will essentially be settled in the Group’s favour. The assessment is that the amounts in dispute would have no material impact on the Group’s financial position or profit/loss, and no disclosure on contingent liabilities is therefore submitted. G43 cont. 175 Handelsbanken Annual and Sustainability Report 2024 3.1
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G45 Leases Handelsbanken as lessor Finance leases SEK m 2024 2023 Finance income from net investments 611 593 Variable lease payments 539 519 Distribution of undiscounted lease receivables by maturity and net investment SEK m 2024 2023 Up to 1 yr 2,876 2,725 1 yr to 2 yrs 2,542 3,480 2 yrs to 3 yrs 2,984 2,805 3 yrs to 4 yrs 2,455 1,861 4 yrs to 5 yrs 1,120 2,076 Over 5 yrs 2,508 3,303 Total undiscounted lease receivables 14,485 16,250 Unearned finance income -957 -1,292 Net investment 13,528 14,958 All leases where the Group is the lessor have been defined as finance leases. Lease agreements of this kind are accounted for as loans on the balance sheet, initially for an amount corresponding to the net investment. The change between the years was due to lower lease volumes attributable to the divestment of the lease portfolio. Lease assets mainly consist of vehicles and machines. All leases have guaranteed residual values. At year-end, the Group had one lease exposure that had a carrying amount exceeding SEK 1 billion. Handelsbanken as lessee Income statement items SEK m 2024 2023 Interest expenses for lease liabilities -74 -67 Total1) -74 -67 Depreciation and impairment of right-of-use assets Property -702 -628 Equipment -14 -14 Total2) -716 -642 Expenses for short-term leases -35 -38 Expenses for leases in which the underlying asset is of low value -52 -41 Variable lease payments that are not included in the calculation of lease liabilities -175 -167 Total3) -262 -246 Total expenses for leases -1,052 -955 Balance sheet items SEK m 2024 2023 Right-of-use assets4) Property 2,593 2,704 Equipment 29 30 Total 2,622 2,734 New right-of-use assets5) 392 350 Lease liabilities6) 2,751 2,857 Total cash outflows for leases -1,034 -980 1) Included in income statement item Interest expenses. 2) Included in income statement item Depreciation, amortisation and impairment of property, equipment and intangible assets, of which SEK -12 million (39) is an impairment loss. 3) Included in income statement item Other expenses. 4) Right-of-use assets are included in the balance sheet item Property and equipment. 5) New lease agreements during the year included in right-of-use assets. 6) Lease liabilities are included in the balance sheet item Other liabilities. 176 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Time to maturity regarding lease liabilities SEK m 2024 2023 Up to 6 mths 377 369 6 mths to 1 yr 320 353 1 yr to 2 yrs 607 610 2 yrs to 5 yrs 1,201 1,265 Over 5 yrs 474 500 Total 2,979 3,097 The Bank’s lease agreements primarily consist of contracts for the rental of premises. Excepting such contracts, other lease agreements refer mainly to multi-function printers, personal computers and various other office equipment. The majority of contracts for the rental of premises have a term of three to ten years. Some of the Bank’s contracts for the rental of premises include an option to extend the term of the agreement, entailing that the contract is extended for a specific period of time if it is not terminated by a specific point in time. There are also contracts for the rental of premises which include an option for the Bank to terminate the agreement before expiry. When determining the lease term, the options of extending the term or terminating the agreement before expiry are only included when it is highly probable that these options will be exercised. The Bank has entered into lease agreements with maturities of under 12 months, and lease agreements in which the underlying asset is of low value, which are recognised as expenses in accordance with the exemption in IFRS 16 Leases, and thus are not included in lease liabilities or right-of-use assets. G46 Segment reporting Segment reporting 2024 SEK m Sweden UK Norway The Netherlands Markets Other Adjustments and eliminations Total Net interest income 29,003 10,729 5,162 1,967 -17 -3 46,841 Net fee and commission income 9,066 869 695 188 621 288 11,726 Net gains/losses on financial transactions 959 225 80 18 1,220 602 3,103 Net insurance result 423 -1 422 Share of profit of associates and joint ventures 27 27 Other income 84 15 21 3 3 99 225 Total income 39,535 11,837 5,957 2,176 1,826 1,015 62,345 Staff costs -5,073 -3,579 -1,307 -611 -985 -4,428 252 -15,731 Other expenses -1,173 -841 -517 -145 -509 -4,290 -7,474 Internal purchased and sold services -4,899 -1,445 -809 -322 72 7,404 Depreciation, amortisation and impairment of property, equipment and intangible assets -773 -378 -106 -58 -145 -520 -24 -2,004 Total expenses -11,918 -6,242 -2,739 -1,136 -1,567 -1,834 228 -25,209 Profit before credit losses and regulatory fees 27,617 5,595 3,217 1,040 259 -819 228 37,136 Net credit losses 377 139 72 2 0 12 601 Gains/losses on disposal of property, equipment and intangible assets 8 0 5 0 0 13 Regulatory fees -2,033 -47 -411 -132 -25 -86 -2,733 Operating profit 25,969 5,686 2,883 910 234 -893 228 35,016 Profit allocation 371 49 61 0 -423 -58 Operating profit after profit allocation 26,339 5,736 2,943 910 -189 -951 228 35,016 Internal income1) 5,009 4,045 -10,458 -152 -156 1,712 C/I ratio, % 29.9 52.5 45.5 52.2 111.7 40.4 Credit loss ratio, % -0.02 -0.06 -0.02 0.00 0.00 -0.02 Loans to the public 1,589,948 246,790 320,705 104,604 15,335 20,496 2,297,878 Deposits and borrowing from the public 848,854 289,072 97,713 44,743 711 29,671 -25 1,310,739 Allocated capital 123,381 27,866 22,684 5,690 1,831 5,915 22,660 210,027 Return on allocated capital, % 17.3 17.1 10.4 13.0 -9.1 14.5 Average number of employees 4,764 2,842 993 425 470 2,729 12,224 1) Internal income which is included in total income comprises income from transactions with other operating segments and Other. Since interest income and interest expenses are reported net as income, this means that internal income includes the net amount of the internal funding cost among segments and Other. The “Other” column includes allocated capital attributable to the disposal group in Finland. G45 cont. 177 Handelsbanken Annual and Sustainability Report 2024 3.1
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The business segments are recognised in accordance with IFRS 8 Operating Segments, which means that the segment information is presented in a similar manner to that which is applied internally as part of company gover- nance. Handelsbanken’s operations are pre- sented in the following segments: Sweden, the UK, Norway, the Netherlands and Markets. The branch operations in Handelsbanken pro- vide a focused offering within financing, pay- ments, financial advisory services, savings and pensions. Excluding Markets, the country seg- ments include the branch operations together with the asset management and insurance operations. Each country is followed up as an independent profit centre and is managed by a Country General Manager. In Sweden and the UK, the branch operations under the Country General Manager are organised by county and district, respectively. The Markets segment is Handelsbanken’s investment bank, including securities trading and investment advisory ser- vices. Profit/loss for the segments is reported before and after internal profit allocation. Inter- nal profit allocation means that the unit which is responsible for the customer is allocated all the profits deriving from its customers’ trans- actions with the Bank, regardless of the seg- ment where the transaction was performed. Furthermore, income and expenses for ser- vices performed internally are reported net in the line item Internal purchased and sold ser- vices. Transactions among the segments are reported primarily according to the cost price principle. The Other and Adjustments and eliminations columns show items which do not belong to a specific segment or which are eliminated at Group level. Other overwhelm- ingly includes Treasury and central business support units. It also includes the Bank’s inter- national operations outside the home markets and transactions attributable to the provision for the Oktogonen profit-sharing scheme. The Adjustments and eliminations column includes adjustments for staff costs. Adjustments for staff costs comprise the difference between the Group’s pension costs calculated in accor- dance with IAS 19 Employee Benefits, and locally calculated pension costs. Internal income mainly consists of internal interest and commissions. The segment income statements also include internal items in the form of payment for internal services rendered. Internal debiting is primarily accord- ing to the cost price principle. In branch opera- tions, assets consist mainly of loans to the public and liabilities of deposits from the public and also internal funding. The assets in the Other column are mainly internal lending to the various segments, while the liabilities are mainly external funding. The allocated capital for the segments is the same as the capital allocation according to the internal financial control model. Segment reporting 2023 SEK m Sweden UK Norway The Netherlands Markets Other Adjustments and eliminations Total Net interest income 30,222 11,010 4,624 1,941 -50 -170 47,578 Net fee and commission income 8,460 845 659 198 592 385 11,139 Net gains/losses on financial transactions 1,185 253 79 17 1,091 37 2,661 Net insurance result 494 0 493 Share of profit of associates and joint ventures 51 51 Other income 214 13 5 1 1 94 328 Total income 40,575 12,121 5,366 2,157 1,634 397 62,249 Staff costs -4,783 -3,149 -1,103 -537 -954 -3,519 403 -13,642 Other expenses -1,353 -907 -493 -136 -461 -4,446 -7,796 Internal purchased and sold services -4,738 -1,414 -708 -277 17 7,120 Depreciation, amortisation and impairment of property, equipment and intangible assets -665 -310 -97 -59 -131 -457 -24 -1,743 Total expenses -11,538 -5,780 -2,401 -1,009 -1,530 -1,303 379 -23,182 Profit before credit losses and regulatory fees 29,037 6,340 2,965 1,148 104 -906 379 39,067 Net credit losses -142 -51 37 13 3 -141 Gains/losses on disposal of property, equipment and intangible assets 14 -1 6 0 20 Regulatory fees -1,919 -393 -113 -20 -179 -2,624 Operating profit 26,990 6,289 2,615 1,048 83 -1,082 379 36,322 Profit allocation 406 52 47 0 -421 -83 Operating profit after profit allocation 27,395 6,340 2,662 1,048 -338 -1,165 379 36,322 Internal income1) 5,767 2,999 -8,567 -98 667 -768 C/I ratio, % 28.2 47.5 44.4 46.8 126.1 37.2 Credit loss ratio, % 0.01 0.03 -0.01 -0.01 0.01 Loans to the public 1,600,862 230,692 313,267 97,110 12,467 38,553 -1,142 2,291,808 Deposits and borrowing from the public 854,313 260,595 90,206 35,945 26,243 31,204 -25 1,298,480 Allocated capital 123,899 25,856 23,339 5,177 1,686 6,904 18,224 205,085 Return on allocated capital, % 18.2 21.2 9.4 16.9 -17.6 15.3 Average number of employees 4,695 2,707 828 388 479 2,587 11,683 1) Internal income which is included in total income comprises income from transactions with other operating segments and Other. Since interest income and interest expenses are reported net as income, this means that internal income includes the net amount of the internal funding cost among segments and Other. The “Other” column includes allocated capital attributable to the disposal groups in Finland. A reorganisation was carried out in the second quarter of 2024 with the objective to create a more efficient and business-oriented organisation. Parts of the former central HR, Finance and Communication units, as well as the Financial Crime Prevention unit, which were previously included in Other, and parts of the business support unit, which were previously included in the segment Handelsbanken Markets, have been transferred to Handelsbanken Sweden. The operations in Luxembourg and New York, i.e. operations outside the home markets, have been transferred from Handelsbanken Markets to Other. In addition, parts of Handelsbanken’s IT department, which were previously reported under Other, have been transferred to Handelsbanken Markets. Comparative figures in the segment reporting have been restated due to this reorganisation. G46 cont. 178 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Income per product area SEK m 2024 2023 Household deposits and lending 20,935 21,554 Corporate deposits and lending 27,139 27,956 Payments, net 1,802 1,758 Asset management 7,151 6,531 Pension & insurance 901 830 Investment bank services 3,226 1,907 Other 1,192 1,714 Total 62,345 62,249 G47 Geographical information Geographical information 2024 SEK m Income Operating profit Tax of which current tax Profit for the year from discontinued operations after tax Assets Non-current assets of which property and equipment Sweden 40,307 23,330 -4,478 -4,648 3,148,069 5,447 2,805 UK 12,710 6,748 -1,882 -1,877 425,253 1,692 999 Norway 5,837 2,968 -844 -871 381,499 1,125 560 The Netherlands 2,296 1,072 -397 -398 310,052 260 199 USA 664 515 -87 -84 389,127 81 81 Luxembourg 300 134 -31 -31 13,319 4 4 Denmark 39 28 -10 -10 6 0 0 Poland -23 -91 0 209 0 Finland 234 100,630 -6 -43 Goodwill and other Group surpluses 4,452 4,452 24 Eliminations 216 310 -66 6 -1,233,444 174 174 Total 62,345 35,016 -7,795 -7,913 234 3,539,173 13,228 4,803 Geographical information 2023 SEK m Income Operating profit Tax of which current tax Profit for the year from dis continued operations after tax Assets Non-current assets of which property and equipment Sweden 39,928 24,034 -5,256 -5,127 3,127,776 6,226 3,111 UK 13,260 7,577 -2,085 -2,064 414,494 1,561 908 Norway 5,360 2,898 -685 -807 362,139 910 540 The Netherlands 2,368 1,321 -341 -341 230,677 256 222 USA 673 540 -80 -144 374,811 85 85 Luxembourg 320 179 -38 -38 14,930 10 10 France 2 -5 2 2 Poland -75 -172 315 1 1 Denmark 9 -4 78 78 857 Finland 1,209 181,766 409 343 Goodwill and other Group surpluses 4,477 4,477 24 Eliminations 405 -47 -12 -30 -1,174,452 -590 -467 Total 62,249 36,322 -8,417 -8,472 1,209 3,537,792 13,344 4,777 Income, operating profit and profit for the year from discontinued operations after tax, as well as assets presented in the geographical information, are composed of internal and external income, expenses and assets in the respective country. The geographical distribution of income and expenses is based on the country where the business transaction has been carried out, and is not comparable with the reported segment information. Tax includes current and deferred taxes. Additional geographical information is provided in note P17 concerning the domicile of Group companies and associates and in note G8 concerning average number of employees per country. Since Finland is recognised as Assets and liabilities held for sale, and discontinued operations, more detailed information about Finland is provided in note G14. G46 cont. 179 Handelsbanken Annual and Sustainability Report 2024 3.1
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G48 Assets and liabilities by currency 2024 SEK m SEK EUR NOK GBP USD Other currencies Total Assets Cash and balances with central banks 63,478 203,777 4,160 125,771 132,799 23 530,009 Other loans to central banks 3,352 9,195 12,547 Loans to other credit institutions 1,930 3,047 10,924 617 2,218 188 18,923 Loans to the public 1,567,637 219,855 325,257 249,285 7,583 2,469 2,372,086 of which corporates 598,763 155,273 185,593 179,980 7,423 1,565 1,128,597 of which households 967,327 64,582 139,665 69,305 160 904 1,241,943 Interest-bearing securities eligible as collateral with central banks 152,122 8,971 74 11,440 172,606 Bonds and other interest-bearing securities 34,053 555 12,900 0 47,508 Other items not broken down by currency 385,493 385,493 Total assets 2,204,712 439,557 362,511 375,673 154,039 2,681 3,539,173 Liabilities Due to credit institutions 21,125 34,762 27,340 485 337 479 84,528 Deposits and borrowing from the public 808,538 100,333 103,939 282,784 21,170 3,718 1,320,481 of which corporates 330,706 85,798 58,033 206,315 17,598 2,896 701,346 of which households 477,832 14,535 45,906 76,469 3,572 822 619,136 Issued securities 560,189 447,647 28,294 35,214 456,621 22,062 1,550,027 Subordinated liabilities 20,519 6,722 9,814 37,054 Other items not broken down by currency, incl. equity 547,083 547,083 Total liabilities and equity 1,936,934 603,261 159,573 325,205 487,942 26,258 3,539,173 Other assets and liabilities broken down by currency, net 163,620 -202,929 -50,508 333,936 23,579 Net foreign currency position -84 8 -40 34 1 -80 2023 SEK m SEK EUR NOK GBP USD Other currencies Total Assets Cash and balances with central banks 67,895 128,820 4,776 113,645 160,935 109 476,181 Other loans to central banks 29,326 1,687 1,131 32,145 Loans to other credit institutions 259 5,772 9,671 873 2,299 423 19,297 Loans to the public 1,579,316 287,783 319,815 234,892 9,330 3,081 2,434,217 of which corporates 598,485 185,869 201,140 167,456 9,171 2,016 1,164,137 of which households 974,083 101,914 118,675 67,436 159 1,065 1,263,332 Interest-bearing securities eligible as collateral with central banks 181,752 7,561 36 9,778 1 199,128 Bonds and other interest-bearing securities 36,868 486 12,223 509 50,087 Other items not broken down by currency 326,737 326,737 Total assets 2,192,827 459,749 348,209 350,541 182,852 3,614 3,537,792 Liabilities Due to credit institutions 15,666 50,097 18,093 346 6,835 87 91,124 Deposits and borrowing from the public 814,008 140,586 110,296 257,177 24,238 3,732 1,350,037 of which corporates 335,161 110,747 75,871 190,553 20,797 2,801 735,931 of which households 478,848 29,839 34,424 66,624 3,441 931 614,106 Issued securities 569,595 407,148 27,016 37,930 459,581 22,211 1,523,481 Subordinated liabilities 0 22,740 6,258 14,120 43,117 Other items not broken down by currency, incl. equity 530,033 530,033 Total liabilities and equity 1,929,302 620,570 155,404 301,711 504,774 26,030 3,537,792 Other assets and liabilities broken down by currency, net 160,527 -192,764 -48,850 321,918 22,493 Net foreign currency position -294 41 -20 -4 77 -200 Note G2 describes the Bank’s view of foreign exchange risk. Assets and liabilities in the table above include the disposal groups in Finland, which has been reclassified to Assets held for sale and Liabilities held for sale on the balance sheet, respectively (see note G14). 180 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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G49 Interests in unconsolidated structured entities Fund holdings SEK m 2024 2023 Assets1) Shares 6,365 5,928 Assets where the customer bears the value change risk 273,071 240,092 Total interests in structured unconsolidated entities 279,436 246,020 1) Of which SEK - million (9,586) is included in the disposal groups in Finland, and has been reclassified to Assets held for sale. See note G14. A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are regulated by means of contrac- tual arrangements. Handelsbanken’s interests in unconsolidated structured entities are lim- ited and consist of mutual fund holdings. Holdings in mutual fund units through unit-linked insurance contracts Funds are owned primarily through unit-linked insurance contracts at Handelsbanken Liv. The policyholder chooses how to invest the savings, under the terms of the insurance contract, and bears the risk of changes in the value of the mutual fund units. For funds man- aged by Handelsbanken in unit-linked insur- ance, the Bank holds 50% or more of the units in 11 (10) funds on behalf of its customers. The total assets in these funds amounted to SEK 211,517 million (159,625), of which Handels- banken holds SEK 132,626 million (102,152) on behalf of its customers. The assessment is that the Group’s holdings in mutual fund units under unit-linked insurance contracts with customers do not entail that the Group is exposed to variable returns. Accordingly, these holdings are excluded from the assessment of whether control over a fund exists. As a result, investments in mutual fund units through unit - linked insurance contracts are not con soli dated, and thus comprise unconsolidated structured entities. The holdings are recognised as Assets where the customer bears the value change risk and the corresponding liability to the poli- cyholders is recognised in the balance sheet item Liabilities where the customer bears the value change risk. The Group’s total holdings in mutual fund units through unit-linked insur- ance contracts are presented on the line Assets where the customer bears the value change risk in the table above. Other holdings in mutual fund units In addition, the Group owns some mutual fund units that comprise investment assets in tradi- tional life insurance at Handelsbanken Liv and in its role as market maker. Funds for which the Bank is the asset manager and in which the Bank holds more than 50% of the units are consolidated. Holdings ranging between 20% and 50% are consolidated in certain cases if the circumstances indicate that the Bank has control of them, for example, because the fund has a broad management mandate and gener- ates a high proportion of variable returns. The Bank’s interests in the fund are recognised at fair value on the line Shares in the balance sheet. The remaining portion of the fund’s fair value is consolidated and recognised in the balance sheet items Assets where the cus- tomer bears the value change risk and Liabili- ties where the customer bears the value change risk. No holdings in mutual fund units met the criteria for consolidation as at 31 December 2024 and 31 December 2023. The Group’s holdings in mutual fund units in traditional life insurance and in its role as market maker thus constituted unconsolidated structured entities and these are presented in the line Shares in the table above. The maximum exposure to loss attributable to interests in unconsolidated structured enti- ties is the current carrying amount of the inter- est. The total assets for these entities are not considered meaningful for the purpose of understanding the related risks and so have not been presented. 181 Handelsbanken Annual and Sustainability Report 2024 3.1
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G50 Related-party disclosures Claims on and liabilities to related parties Associates and joint ventures Other related parties SEK m 2024 2023 2024 2023 Loans to the public 434 334 Other assets 23 30 8 13 Total 457 364 8 13 Deposits and borrowing from the public 919 311 1,214 1,159 Total 919 311 1,214 1,159 Related parties – income and expenses Associates and joint ventures Other related parties SEK m 2024 2023 2024 2023 Interest income 19 22 Interest expenses -10 -3 -163 -149 Fee and commission income 1 1 Fee and commission expenses -202 -223 Other income 19 18 Other expenses -205 -177 -179 -182 Total -397 -380 -323 -313 The figures above refer to all operations. A list of associates and joint ventures, as well as information about shareholder contributions to associates, is presented in note G20. The operations of associates and joint ventures comprise various types of services related to the Bank’s operations. The following companies comprise the group of Other related parties: Svenska Handelsbankens Pensionsstiftelse (pension foundation), Svenska Handelsbankens Personalstiftelse (staff foundation) and Pensionskassan SHB, Tjänstepensionsförening (pension fund). These companies use Svenska Handelsbanken AB for normal banking and accounting services. The parent company’s Swedish subsidiaries have paid pension premiums relating to defined benefit pensions in an amount of SEK 73 million (81) to the pension fund. The pension fund’s commitments to the employees of subsidiaries are guaranteed by the parent company, so if the pension fund cannot pay its commitments, the parent company is liable to take over and pay the commitment. The pension fund’s obligations amounted to SEK 7,494 million (7,000). Svenska Handelsbanken AB has requested compensation from Svenska Handelsbankens Pensionsstiftelse amounting to SEK 762 million (720) regarding pension costs and from Svenska Handelsbankens Personalstiftelse amounting to SEK 28 million (44) for measures to benefit the employees. Information regarding loans to executive officers, conditions and other remuneration to executive officers is given in note G8. G51 Events after the balance sheet date No significant events have occurred after the balance sheet date. 182 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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Capital policy The Bank aims to maintain a robust capital level which meets the risk entailed in the Group’s operations and which exceeds the minimum requirements prescribed by legisla- tion. A healthy capital level is needed to man- age situations of financial strain and also for other events such as acquisitions and major growth in volumes. Capital requirements regulations According to the capital adequacy regulations, Regulation (EU) No 575/2013 EU (CRR) and Directive 2013/36/EU (CRD IV), the Bank must have common equity tier 1 capital, tier 1 capi- tal and total own funds which at least corre- spond to the individual requirements relative to the total risk-weighted exposure amount for credit risk, market risk and operational risk. In addition to holding capital in accordance with the minimum requirement, the Bank must also hold common equity tier 1 capital to comply with the combined buffer requirement which, in Sweden, comprises the sum of a capital con- servation buffer, a countercyclical buffer, a sys- temic risk buffer and a buffer for other system- ically important institutions. The Bank has a minimum capital requirement under Pillar 2. The Pillar 2 requirement is an individual require - ment determined by the Swedish Financial Supervisory Authority which is intended to cover risks that are underestimated or not cov- ered by the regulation’s minimum requirement and combined buffer requirements. There is also guidance on these requirements in Pillar 2 decided on by the Swedish Financial Super- visory Authority, representing the authority’s view of the Bank’s minimum buffer requirement in addition to the established capital require- ment. The Bank must perform an internal capital assessment. Handels banken’s capital policy states the guidelines for the internal capital as- sessment. In addition, the Bank must comply with a capital requirement at the financial con- glomerate level in accordance with the Finan- cial Conglomerates (Special Supervision) Act (2006:531), see Capital adequacy for the finan- cial conglomerate below. Furthermore, the res- olution authority, which in Sweden is the National Debt Office, must set a minimum requirement for own funds and eligible liabilities (MREL) for the Bank. In 2024, the Bank met all the statutory minimum and buffer levels by a comfortable margin. More detailed information about the Bank’s own funds and capital require- ment is available in note G2, Risk and capital management, and in Handels banken’s publica- tion titled Risk and Capital – Information ac- cording to Pillar 3 (see Handels banken.com/ir). This publication also provides a complete description of the terms and conditions apply- ing to all of Handels banken’s own funds and eligible liabilities. Note that the information in this Annual Report was prepared as at 31 December 2024 and that regulatory changes in the form of new CRR rules and the banking package took effect on 1 January 2025. Description of consolidated situation The regulatory consolidation (consolidated situation) consists of the parent company, sub- sidiaries and associates that are also included in the consolidated Group accounts, as shown in table EU LI3 Outline of the differences in the scopes of consolidation (entity by entity). The companies that are included in the consoli- dated accounts but are excluded from the consolidated situation are also shown in table EU LI3. Just as in the consolidated accounts, associates are consolidated using the equity method in the regulatory consolidated situa- tion. All subsidiaries which are subject to the regulations are included in the consolidated situation. Handels banken has no subsidiaries where the actual own funds are less than the prescribed own funds. Description of own funds for consolidated situation Own funds consist of tier 1 capital and tier 2 capital. The tier 1 capital is divided into com- mon equity tier 1 capital and additional tier 1 capital. Common equity tier 1 capital consists mainly of share capital, retained earnings and other reserves in the companies that are in- cluded in the consolidation. Additional tier 1 capital consists of additional tier 1 instruments. The tier 2 capital mainly consists of subordi- nated loans. Certain deductions are subse- quently made from own funds. The deductions are made mainly from the common equity tier 1 capital. For the Bank’s risk management, it is important that in risk terms, both the Group and the regulatory consolidation can be viewed as one unit. To enable efficient risk management in the Group, capital may need to be re-allo- cated among the various companies in the Group. In general, Handels banken is able to re-allocate capital among the Group compa- nies, to the extent that is permitted by legisla- tion, for example, capital adequacy require- ments and restrictions in corporate law. The Bank sees no other material or legal obstacles to a rapid transfer of funds from own funds, or repayment of liabilities between the parent company and its subsidiaries. Tier 1 capital Tier 1 capital consists of common equity tier 1 capital and additional tier 1 capital. Common equity tier 1 capital Common equity tier 1 capital consists mainly of share capital, retained earnings and other reserves in the companies that are included in the regulatory consolidation. Since the Group’s insurance companies are not part of the consolidation, shown in the table EU LI3, retained earnings in these companies are not included in the common equity tier 1 capital. The items to be excluded from the common equity tier 1 capital are mainly goodwill and other intangible assets, and also capital con- tributions to the insurance companies in the Group or certain deferred tax assets which exceed 10% of the common equity tier 1 capi- tal. The total of capital contributions and deferred tax assets must not exceed 15% of the common equity tier 1 capital. Since neither the capital contributions to the insurance com- panies in the Group nor the deferred tax assets exceed the threshold value, these do not reduce the common equity tier 1 capital. Neutrality adjustments are made for the effect of cash flow hedges on equity. A price adjust- ment must also be calculated and when nec- essary, be made for a prudent valuation of instruments at fair value. Institutions with per- mission to use internal ratings-based models must make a deduction for the difference between expected credit losses according to the IRB approach and the provisions made for probable credit losses if the expected credit losses exceed the provisions made. A deduc- tion must also be made for the net value of recognised surplus values in pension assets. However, the deduction may be reduced by an amount corresponding to the Bank’s right to reimbursement for pension costs from Handels banken’s pension foundation. In addi- tion, a deduction is made for permission G52 Capital adequacy 183 Handelsbanken Annual and Sustainability Report 2024 3.1
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to hold own shares in its capacity as market maker. The deduction must correspond to the highest market value covered by the per- mission. Finally, a deduction is made for invest- ments in securitisation, an adjustment is made for the effect of changes in own credit risk in derivative instruments and a deduction is made for insufficient coverage for non - performing exposures. Additional tier 1 capital Additional tier 1 capital consists of instruments which fulfil the requirements for additional tier 1 instruments. This capital must be perpetual and must be redeemable after five years at the earliest, but only after permission is granted by the supervisory authority. It must be possible to write down the nominal value or convert it to shares to create common equity tier 1 capital at a pre-defined level for the common equity tier 1 capital and it must be possible to uncon- ditionally suspend interest payments. The Bank’s total additional tier 1 instruments amount to SEK 11.0 billion, were issued in 2020 and fulfil the requirements of the CRR. If there are no distributable funds, coupon pay- ments must be suspended for additional tier 1 instruments. Tier 2 capital The tier 2 capital consists of subordinated loans with a maturity of at least five years. Capital requirements Credit risk The capital requirements for credit risk are calculated according to the standardised approach and the IRB approach according to CRR. There are two different IRB approaches: the IRB approach, with own estimates of PD but without own estimates of LGD and CCF (the foundation approach), and the IRB approach with own estimates of PD, LGD and CCF (the advanced approach). Handels banken uses the foundation IRB approach for exposures to institutions and sove- reign exposures, and for certain product and collateral types for corporate exposures, and for certain exposures in the subsidiaries Stads- hypotek AB and Handels banken Finans AB. The advanced IRB approach is applied to most exposures to large corporates, medi- um-sized enterprises, property companies and housing co-operative associations, and in Stadshypotek AB and Handels banken Finans AB. The same applies to retail exposures in Sweden, Norway and Finland, and in the sub- sidiaries Stadshypotek and Handels banken Finans AB. The capital requirements for equity exposures in the IRB approach are calculated according to a simple risk weight approach. The credit risk for all exposures at Handels- banken’s subsidiary Handels banken plc is cal- culated at solo and aggregated level according to the standardised approach. At year-end, the IRB approach was applied to 75% (74) of the total risk-weighted exposure amount for credit risk. For the remaining credit risk exposures, the capital requirements are calculated using the standardised approach. The average risk weight for exposures approved for the IRB approach increased during the year to 11.9% (9.7). The average risk weight, including the risk weight floor under Pillar 1 for Swedish and Norwegian mortgage loans, and for corporate exposures with collat- eral in property in Norway, is 19.1% (17.7). Credit quality is good. Of Handels banken’s corporate exposures, 96.9% (96.9) were cus- tomers with a repayment capacity assessed as normal or better than normal, i.e. with a rat- ing grade between one and five on the Bank’s ten-point risk rating scale. Market risks The capital requirement for market risk is cal- culated for the Bank’s consolidated situation. The capital requirements for interest rate risk and equity price risk are, however, only calcu- lated for positions in the trading book. When calculating the capital requirement for market risk, the standardised approach is applied. Operational risk Handels banken uses the standardised approach to calculate the capital requirement for operational risk. According to the stan- dardised approach, the capital requirement is calculated by multiplying a factor specified in the regulations by the average operating income during the last three financial years. Different factors are applied in different busi- ness segments. At the end of 2024, the total capital require- ment for operational risks for the consolidated situation was SEK 6,841 million (6,017). Capital adequacy for the financial conglomerate Institutions and insurance companies which are part of a financial conglomerate must have own funds which are adequate in relation to the capital requirement for the financial con- glomerate. Own funds and the capital require- ment for the financial conglomerate have been calculated according to the deduction and aggregation method (method 2, Annex I, Directive 2002/87/EC). The financial conglom- erate’s total own funds exceed the financial conglomerate’s capital requirement. Minimum requirement for eligible liabilities (MREL) The Bank Recovery and Resolution Directive (2014/59/EU, BRRD), was implemented in Swedish law through the Resolution Act (2015:1016). These regulations state ways to manage bank crises, and enable authorities, within a set framework, to assume control of, restructure and sell either all or parts of a bank, without liquidating the bank or entering it into bankruptcy. In addition to these crisis manage- ment measures, the regulations offer the opportunity to write down certain debt instru- ments to recapitalise a crisis-hit bank. One aspect of these regulations was the introduction of a minimum requirement for such liabilities eligible for impairment (MREL) from 1 January 2018. The minimum require- ment is set in the Bank’s resolution plan, drawn up by the Swedish National Debt Office and the Swedish Financial Supervisory Authority. The requirement is comprised of a loss absorption amount and a recapitalisation amount. MREL is to be expressed as two ratios: a risk-weighted ratio and a total exposure, non risk-weighted ratio. The combined buffer requirement must be met through common equity tier 1 capital (not including the common equity tier 1 capital used for MREL) and a man- datory subordination requirement is being introduced. To meet this subordination require- ment, a new type of debt instrument was intro- duced in Swedish legislation in December 2018. This type is subordinate to current senior debt instruments, but ranks more highly than own funds instruments as part of a resolution pro- cedure. Handels banken has issued this type of subordinated debt instrument since 2019. The new requirements were fully phased in on 1 January 2024. For 2025, Handels banken’s total MREL requirement for the risk-weighted ratio is 26.8% and for the non risk-weighted ratio is 6.0% at consolidated level. Correspondingly, the subordination requirement amounts to 19.7% and 6.0%, respectively. Handels banken meets all MREL requirements. G52 cont. 184 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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EU LI3 – Outline of the differences in the scopes of consolidation (entity by entity) The table outlines the scopes of consolidation for the companies included in the consolidated situation at year-end. 2024 Method of accounting consolidation Method of regulatory consolidation Description of the unit Corporate identity number Ownership share, % Full consolidation Proportional consolidation Equity method Neither consolidated nor deducted Deducted Svenska Handelsbanken AB (publ) 502007-7862 N/A Parent company N/A Credit institution Handelsbanken Finans AB (publ) 556053-0841 100 Full consolidation X Credit institution Stadshypotek AB (publ) 556459-6715 100 Full consolidation X Credit institution Svenska Intecknings Garanti AB Sigab (inactive) 556432-7285 100 Full consolidation X Non-financial undertakings Handelsbanken Fonder AB 556418-8851 100 Full consolidation X Other financial corporations AB Handel och Industri 556013-5336 100 Full consolidation X Non-financial undertakings Ecster AB (publ) 556993-2311 100 Full consolidation X Credit institution Handelsbanken plc 11305395 100 Full consolidation X Credit institution Handelsbanken Wealth and Asset Management Limited 04132340 100 Full consolidation X Other financial corporations Handelsbanken Nominees Limited (inactive) 2299877 100 Full consolidation X Non-financial undertakings Handelsbanken Second Nominees Limited (inactive) 3193458 100 Full consolidation X Non-financial undertakings Handelsbanken ACD Limited 4332528 100 Full consolidation X Non-financial undertakings Svenska Property Nominees Limited (inactive) 2308524 100 Full consolidation X Non-financial undertakings Optimix Vermogensbeheer N.V. 33194359 100 Full consolidation X Other financial corporations Add Value Fund Management B.V. 19196768 80 Full consolidation X Other financial corporations Optimix Beheer en Belegging B.V. (inactive) 33186584 100 Full consolidation X Non-financial undertakings Handelsbanken Markets Securities, Inc. 11-3257438 100 Full consolidation X Other financial corporations Handelsbanken Rahoitus Oy 0112308-8 100 Full consolidation X Other financial corporations Handelsbanken Fastigheter AB 556873-0021 100 Full consolidation X Non-financial undertakings Rådstuplass 4 AS 910508423 100 Full consolidation X Non-financial undertakings Handelsbanken Ventures AB 556993-9357 100 Full consolidation X Non-financial undertakings Bidtruster AB 556993-9084 100 Full consolidation X Non-financial undertakings Bankomat AB 556817-9716 20 Equity method X Non-financial undertakings BGC Holding AB 556607-0933 25.54 Equity method X Non-financial undertakings Finansiell ID-teknik BID AB 556630-4928 28.3 Equity method X Non-financial undertakings USE Intressenter AB 559161-9464 24.48 Equity method X Non-financial undertakings Getswish AB 556913-7382 20 Equity method X Non-financial undertakings P27 Nordic Payments Platform AB 559198-9610 20.84 Equity method X Non-financial undertakings Invidem AB 559210-0779 16.7 Equity method X Non-financial undertakings Tibern AB 559384-3542 14.3 Equity method X Non-financial undertakings Handelsbanken Liv Försäkrings AB (group excl. Handelsbanken Fastigheter AB) 516401-8284 100 Full consolidation X Insurance company Svenska Re S.A. RCS Lux B-32053 100 Full consolidation X Insurance company Handelsbanken Skadeförsäkrings AB 516401-6767 100 Full consolidation X Insurance company SHB Liv Försäkringsaktiebolag 2478149-7 100 Full consolidation X Insurance company Svenska RKA International Insurance Services AB (inactive) 556324-2964 100 Full consolidation X Insurance company Dyson Group plc 00163096 27 Equity method X Non-financial undertakings G52 cont. 185 Handelsbanken Annual and Sustainability Report 2024 3.1
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2024 Method of accounting consolidation Method of regulatory consolidation Description of the unit Corporate identity number Ownership share, % Full consolidation Proportional consolidation Equity method Neither consolidated nor deducted Deducted Dyson Industries Ltd 1187031 100 X Non-financial undertakings Beepart Ltd 177682 100 X Non-financial undertakings Pickford Holland & Company Ltd 128414 100 X Non-financial undertakings EFN Ekonomikanalen AB 556930-1608 100 Full consolidation X Non-financial undertakings NB: The following companies are not included in the consolidated situation: Handelsbanken Liv Försäkrings AB, SHB Liv Försäkringsaktiebolag, Svenska RKA International Insurance Services AB, Handelsbanken Skadeförsäkrings AB, EFN Ekonomikanalen AB, Svenska Re S.A. Dyson Group plc, Dyson Industries Ltd, Beepart Ltd and Pickford Holland & Company Ltd. EU LI2 – Main sources of differences between regulatory exposure amounts and carrying values in financial statements The table shows the difference between the carrying amount under the scope of regulatory consolidation and exposures considered for regulatory purposes. 2024 Items subject to SEK m Total Credit risk framework Securitisation framework CCR framework Market risk framework 1 Assets carrying amount under the scope of regulatory consolidation (as per template EU LI1) 3,279,370 3,085,357 117,764 337 75,912 2 Liabilities carrying amount under the scope of regulatory consolidation (as per template EU LI1) 16,837 16,837 3 Total net amount under the regulatory scope of consolidation 3,262,533 3,085,357 117,764 337 59,075 4 Off-balance sheet amounts 480,832 480,832 5 Differences in valuations 6 Differences due to different netting rules, other than those already included in row 2 -41,351 -4,787 -36,564 7 Differences due to consideration of provisions 1,155 1,155 8 Differences due to the use of credit risk mitigation techniques (CRMs) -24,954 42,145 -67,099 9 Differences due to credit conversion factors -296,793 -296,793 10 Differences due to Securitisation with risk transfer 11 Other differences -12,827 -12,827 12 Exposure amounts considered for regulatory purposes 3,368,595 3,312,696 33,051 337 22,511 G52 cont. 186 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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EU INS2 – Financial conglomerates information on own funds and capital adequacy ratio SEK m 2024 2023 1 Supplementary own funds requirements of the financial conglomerate (amount) 12,482 11,559 2 Capital adequacy ratio of the financial conglomerate (%) 127.0 128.7 EU KM1 – Key metrics template Key metrics 2024 2024 2023 Available own funds (amounts) 1 Common equity tier 1 capital 155,345 157,576 2 Tier 1 capital 166,296 172,603 3 Total capital 193,191 200,081 RWAs 4 Total risk-weighted exposure amount 825,457 836,790 Capital ratios (as a percentage of risk-weighted exposure amount) 5 Common Equity Tier 1 ratio (%) 18.8 18.8 6 Tier 1 ratio (%) 20.2 20.6 7 Total capital ratio (%) 23.4 23.9 Additional own funds requirements to address risks other than the risk of excessive leverage (as a percentage of risk-weighted exposure amount) EU 7a Additional own funds requirements to address risks other than the risk of excessive leverage (%) 1.8 2.0 EU 7b of which: to be made up of CET1 capital (percentage points) 1.2 1.3 EU 7c of which: to be made up of Tier 1 capital (percentage points) 1.4 1.5 EU 7d Total SREP own funds requirements (%) 9.8 10.0 Combined buffer requirement (as a percentage of risk-weighted exposure amount) 8 Capital conservation buffer (%) 2.5 2.5 EU 8a Conservation buffer due to macro-prudential or systemic risk identified at the level of a Member State (%) 9 Institution-specific countercyclical capital buffer (%) 2.0 1.9 EU 9a Systemic risk buffer (%) 3.2 3.2 10 Global systemically important institution buffer (%) EU 10a Other systemically important institution buffer (%) 1.0 1.0 11 Combined buffer requirement (%) 8.7 8.6 EU 11a Overall capital requirements (%) 18.5 18.6 12 CET1 available after meeting the total SREP own funds requirements (%) 13.1 13.1 Leverage ratio 13 Total exposure measure 3,368,806 3,390,498 14 Leverage ratio (%) 4.9 5.1 Additional own funds requirements to address the risk of excessive leverage (as a percentage of total exposure measure) EU 14a Additional own funds requirements to address the risk of excessive leverage (%) EU 14b of which: to be made up of CET1 capital (percentage points) EU 14c Total SREP leverage ratio requirements (%) 3.0 3.0 EU 14d Leverage ratio buffer requirement (%) EU 14e Overall leverage ratio requirement (%) 3.0 3.0 Liquidity Coverage Ratio 15 Total high-quality liquid assets (HQLA) (Weighted value – average) 962,211 895,982 EU 16a Cash outflows – Total weighted value 603,635 617,192 EU 16b Cash inflows – Total weighted value 75,835 88,942 16 Total net cash outflows (adjusted value) 527,801 528,250 17 Liquidity coverage ratio (%) 183.4 172 Net Stable Funding Ratio 18 Total available stable funding 2,143,849 2,101,503 19 Total required stable funding 1,734,333 1,758,065 20 NSFR (%) 123.6 120 G52 cont. 187 Handelsbanken Annual and Sustainability Report 2024 3.1
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EU OV1 – Overview of total risk exposure amounts The table shows risk-weighted exposure amounts (RWA) for credit risk, counterparty risk, market risk and operational risk the end of 2024 and the previous year. Credit risk is calculated according to the standardised approach, the foundation IRB approach and the advanced IRB approach. Market risk and operational risk are calculated according to the standardised approach. Total risk exposure amounts (TREA) Total own funds requirements SEK m 2024 2023 2024 1 Credit risk (excl. CCR) 706,444 726,276 56,516 2 of which standardised approach 196,867 183,549 15,749 3 of which the foundation IRB (F-IRB) approach 51,667 53,702 4,133 4 of which slotting approach EU 4a of which equities under the simple risk-weighted approach 2,922 2,240 234 5 of which the advanced IRB (A-IRB) approach 234,160 278,625 18,734 5a of which risk weight floors 220,828 208,160 17,666 6 CCR 10,985 11,827 879 7 of which standardised approach 8,194 8,507 656 8 of which internal model method (IMM) EU 8a of which exposures to a CCP 266 268 21 EU 8b of which credit valuation adjustment – CVA 2,127 2,463 170 9 of which other CCR 398 589 32 10 N/A 11 N/A 12 N/A 13 N/A 14 N/A 15 Disability recovery risk 16 Securitisation exposures in the non-trading book (after the cap) 17 of which SEC-IRBA approach 18 of which SEC-ERBA (including IAA) 19 of which SEC-SA approach EU 19a of which 250%/deduction 20 Position, foreign exchange and commodities risks (Market risk) 22,511 23,471 1,801 21 of which standardised approach 22,511 23,471 1,801 22 of which IMA 23 Operational risk 85,517 75,216 6,841 EU 23a of which basic indicator approach EU 23b of which standardised approach 85,517 75,216 6,841 EU 23c of which advanced measurement approach 24 Amounts below the thresholds for deduction (subject to 250% risk weight) 25 N/A 26 N/A 27 N/A 28 N/A 29 Total 825,457 836,790 66,037 G52 cont. 188 Handelsbanken Annual and Sustainability Report 2024 3.1 Introduction Administration report Financial statements Group Sustainability Other
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The table shows capital requirements for market risk according to the standardised approach at year-end 2024. Market risk under the standardised approach Capital requirements SEK m 2024 2023 Outright products Interest rate risk (general and specific) 277 243 Equity price risk (general and specific) 1 3 Foreign exchange risk 1,514 1,615 Commodity risk 0 0 Options Simplified method Delta-plus method Scenario approach 9 16 Securitisation (specific risk) Total capital requirements for market risk 1,801 1,878 Minimum requirement for eligible liabilities (MREL) The MREL requirement is expressed as a share of own funds and eligible liabilities relative to the risk weighted exposure amount and the non risk-weighted exposure amount, respectively (SFS 2015:1016). The Bank’s requirement is determined on an annual basis by the Swedish National Debt Office, and the final requirement was phased in linearly during a transitional period starting 1 January 2022 and ending 1 January 2024. Minimum requirement for eligible liabilities (MREL) % 2024 2023 Risk-weighted MREL requirement 27.1 23.8 Available own funds and eligible liabilities 40.9 39.6 Non-risk-weighted MREL requirement 6.0 5.5 Available own funds and eligible liabilities 12.1 11.9 Minimum requirement for own funds and eligible liabilities (MREL) % 2024 2023 Risk-weighted subordination requirement 20.0 16.8 Available own funds and subordinate eligible liabilities 24.0 22.0 Non-risk-weighted subordination requirement 6.0 5.5 Available own funds and subordinate eligible liabilities 8.0 7.6 G52 cont. 189 Handelsbanken Annual and Sustainability Report 2024 3.1
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3.2 Parent company Income statement Income statement, parent company SEK m Note 2024 2023 Interest income P3 125,879 121,993 Leasing income P3 1,650 1,739 Interest expenses P3 -102,112 -97,786 Dividends received P4 21,673 15,957 Fee and commission income P5 6,208 5,955 Fee and commission expenses P5 -1,437 -1,382 Net gains/losses on financial transactions P6 2,880 1,745 Other operating income P7 3,953 4,230 Total operating income 58,693 52,452 General administrative expenses Staff costs P8 -12,865 -11,456 Other administrative expenses P9 -7,745 -7,453 Depreciation, amortisation and impairment of property, equipment and intangible assets P21, P22 -2,258 -2,334 Total expenses before credit losses -22,867 -21,243 Profit before credit losses and regulatory fees 35,825 31,208 Net credit losses P10 446 58 Impairment loss on financial fixed assets -2,163 -1,524 Regulatory fees P11 -1,655 -1,633 Operating profit 32,454 28,110 Appropriations P12 336 Profit before taxes 32,790 28,110 Taxes P29 -5,131 -5,747 Profit for the year 27,659 22,363 190 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Statement of comprehensive income Statement of comprehensive income, parent company SEK m 2024 2023 Profit for the year 27,659 22,363 Other comprehensive income Items that will not be reclassified to the income statement Equity instruments measured at fair value through other comprehensive income 198 63 Tax on items that will not be reclassified to the income statement -39 -11 of which equity instruments measured at fair value through other comprehensive income -39 -11 Total items that will not be reclassified to the income statement 159 52 Items that may subsequently be reclassified to the income statement Cash flow hedges -767 -1,571 Debt instruments measured at fair value through other comprehensive income 6 25 Translation difference for the year -219 -1,289 of which hedges of net assets in foreign operations 0 5 Tax on items that may subsequently be reclassified to the income statement 88 522 of which cash flow hedges 158 324 of which debt instruments measured at fair value through other comprehensive income -1 -5 of which hedges of net assets in foreign operations 0 -1 of which tax on translation difference -69 204 Total items that may subsequently be reclassified to the income statement -892 -2,313 Total other comprehensive income -733 -2,262 Total comprehensive income for the year 26,926 20,100 The year’s reclassifications to the income statement are presented in the Statement of changes in equity. 191 Handelsbanken Annual and Sustainability Report 2024 3.2
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Balance sheet Balance sheet, parent company SEK m Note 2024 2023 Assets Cash and balances with central banks 404,238 362,536 Interest-bearing securities eligible as collateral with central banks P15 172,606 199,128 Loans to credit institutions P13 996,917 1,007,992 Loans to the public P14 524,171 600,997 Value change of interest-hedged item in portfolio hedge -6,399 -9,657 Bonds and other interest-bearing securities P15 53,569 50,791 Shares P16 8,952 6,170 Shares in subsidiaries and investments in associates and joint ventures P17 67,591 68,986 Assets where the customer bears the value change risk 2,087 1,948 Derivative instruments P18 52,686 39,019 Intangible assets P21 3,023 3,211 Property, equipment and lease assets P22 5,875 6,673 Current tax assets Deferred tax assets P29 159 374 Other assets P23 18,097 20,789 Prepaid expenses and accrued income P24 1,481 1,386 Total assets P36 2,305,053 2,360,344 Liabilities and equity Due to credit institutions P25 169,394 176,143 Deposits and borrowing from the public P26 1,050,028 1,109,471 Liabilities where the customer bears the value change risk 2,087 1,948 Issued securities, etc. P27 840,866 806,167 Derivative instruments P18 30,312 46,269 Short positions P28 1,007 2,364 Current tax liabilities 244 831 Deferred tax liabilities P29 55 336 Provisions P30 423 624 Other liabilities P31 10,792 11,374 Accrued expenses and deferred income P32 2,070 2,399 Subordinated liabilities P33 37,054 43,117 Total liabilities P36 2,144,333 2,201,046 Untaxed reserves P34 531 867 Share capital 3,069 3,069 Share premium reserve 8,758 8,758 Other funds P35 8,164 9,063 Retained earnings 112,540 115,178 Profit for the year 27,659 22,363 Total equity 160,189 158,431 Total liabilities and equity 2,305,053 2,360,344 192 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Statement of changes in equity Statement of changes in equity, parent company Restricted equity Non-restricted equity SEK m Share capital Statutory reserve Fund for internally developed software Share premium reserve Hedge reserve1) Fair value reserve1) Translation reserve1) Retained earnings incl. profit for the year Total Opening equity 2024 3,069 2,682 3,140 8,758 2,284 197 761 137,541 158,431 Profit for the year 27,659 27,659 Other comprehensive income -609 164 -288 -733 of which reclassification within equity -3 -570 -573 Total comprehensive income for the year -609 164 -288 27,659 26,926 Reclassified to retained earnings 573 573 Dividend -25,740 -25,740 Fund for internally developed software -155 155 Closing equity 2024 3,069 2,682 2,984 8,758 1,675 361 473 140,187 160,189 Restricted equity Non-restricted equity SEK m Share capital Statutory reserve Fund for internally developed software Share premium reserve Hedge reserve1) Fair value reserve1) Translation reserve1) Retained earnings incl. profit for the year Total Opening equity 2023 3,069 2,682 3,010 8,758 3,531 126 1,847 130,864 153,887 Profit for the year 22,363 22,363 Other comprehensive income -1,247 71 -1,086 -2,262 of which reclassification within equity -284 -284 Total comprehensive income for the year -1,247 71 -1,086 22,363 20,100 Reclassified to retained earnings 284 284 Dividend -15,840 -15,840 Fund for internally developed software 129 -129 Closing equity 2023 3,069 2,682 3,140 8,758 2,284 197 761 137,541 158,431 1) Included in fair value fund. 193 Handelsbanken Annual and Sustainability Report 2024 3.2
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Statement of cash flows Statement of cash flows, parent company SEK m 2024 2023 Operating activities Operating profit 32,454 28,110 of which paid-in interest 125,803 117,862 of which paid-out interest -102,528 -94,660 of which paid-in dividends 21,673 15,957 Adjustment from operating activities to investing activities 2,602 -335 of which to Liquidation of subsidiaries -335 of which to Divestment of operations and subsidiaries 2,602 Adjustment for non-cash items in operating profit Credit losses -427 -4 Unrealised value changes -128 -588 Amortisation and impairment 4,079 3,856 Group contribution to be received -8,945 -11,340 Paid income tax -5,627 -5,188 Changes in the assets and liabilities of operating activities Loans to credit institutions 11,074 17,672 Loans to the public 54,020 29,748 Interest-bearing securities and shares 20,556 -80,961 Due to credit institutions -6,749 6,526 Deposits and borrowing from the public -44,290 -27,800 Issued securities 34,699 154 Derivative instruments, net positions -29,536 22,834 Short positions -1,260 209 Claims and liabilities on investment banking settlements 216 7,077 Other -17,289 5,413 Cash flow from operating activities 45,449 -4,615 Investing activities Divestment of operations and subsidiaries 2,167 Liquidation of subsidiaries 336 Acquisitions of and contributions to associates and joint ventures -175 -53 Sales of shares 6 Acquisitions of property and equipment -4,365 -5,219 Disposals of property and equipment 3,534 3,263 Acquisitions of intangible assets -459 -682 Cash flow from investing activities 707 -2,355 Financing activities Repayment of subordinated liabilities -13,371 -8,351 Issued subordinated liabilities 5,704 8,635 Dividend paid -25,740 -15,840 Dividends from Group companies 11,338 16,249 Cash flow from financing activities -22,069 692 Cash flow for the year 24,087 -6,278 Cash and cash equivalents at beginning of year 362,536 376,010 Cash flow from operating activities 45,449 -4,615 Cash flow from investing activities 707 -2,355 Cash flow from financing activities -22,069 692 Exchange difference on cash and cash equivalents 17,615 -7,196 Cash and cash equivalents at end of year 404,238 362,536 The statement of cash flows has been prepared in accordance with the indirect method, which means that operating profit has been adjusted for transactions that did not entail paid-in or paid-out cash such as depreciation/amortisation and credit losses. Cash and cash equivalents is defined as cash and balances with central banks. 194 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Change in liabilities in financing activities SEK m 2024 2023 Opening balance 43,117 42,404 Cash flow -7,667 284 Non-cash changes, foreign exchange fluctuations 1,908 -770 Non-cash changes, foreign exchange hedges -16 1,153 Non-cash changes, accrued interest -287 46 Total liabilities in financing activities 37,054 43,117 Divestment of operations and subsidiaries SEK m 2024 Purchase price Total purchase price 4,638 Claim on purchaser -2,471 Payment 2,167 Divested assets and liabilities Loans to the public 19,957 Other assets 5 Total assets 19,963 Deposits and borrowing from the public 15,170 Other liabilities 23 Total liabilities 15,193 Cash flow from operating activities -2,602 The purchase price in its entirety is received in the form of cash and cash equivalents. Statement of cash flows, parent company, cont. 195 Handelsbanken Annual and Sustainability Report 2024 3.2
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Five-year overview Five-year overview, parent company Income statement SEK m 2024 2023 2022 2021 2020 Net interest income 25,416 25,946 18,230 13,502 13,456 Dividends received 21,673 15,957 16,953 17,611 15,937 Net fee and commission income 4,771 4,573 5,167 5,230 5,692 Net gains/losses on financial transactions 2,880 1,745 820 1,808 1,869 Other operating income 3,953 4,230 4,841 3,576 2,790 Total operating income 58,693 52,452 46,011 41,727 39,744 General administrative expenses Staff costs -12,865 -11,456 -11,990 -10,242 -11,689 Other administrative expenses -7,745 -7,453 -7,415 -6,002 -5,684 Depreciation, amortisation and impairment of property, equipment and intangible assets -2,258 -2,334 -2,459 -2,803 -2,672 Total expenses before credit losses -22,867 -21,243 -21,864 -19,047 -20,045 Profit before credit losses and regulatory fees 35,825 31,208 24,148 22,680 19,699 Net credit losses 446 58 -41 -55 -477 Impairment loss on financial fixed assets -2,163 -1,524 -2,305 -1,180 -79 Regulatory fees -1,655 -1,633 -1,331 -366 -385 Operating profit 32,454 28,110 20,471 21,079 18,758 Appropriations 336 -160 227 743 Profit before tax 32,790 28,110 20,311 21,306 19,501 Taxes -5,131 -5,747 -4,856 -4,618 -4,275 Profit for the year 27,659 22,363 15,455 16,688 15,226 Dividend for the year 29,7001) 25,740 15,840 9,900 16,666 1) As proposed by the Board. Statement of comprehensive income SEK m 2024 2023 2022 2021 2020 Profit for the year 27,659 22,363 15,455 16,688 15,226 Other comprehensive income Items that will not be reclassified to the income statement Equity instruments measured at fair value through other comprehensive income 198 63 41 62 -583 Tax on items that will not be reclassified to the income statement -39 -11 -19 -3 11 of which equity instruments measured at fair value through other comprehensive income -39 -11 -19 -3 11 Total items that will not be reclassified to the income statement 159 52 22 59 -572 Items that may subsequently be reclassified to the income statement Cash flow hedges -767 -1,571 3,411 246 -1,677 Debt instruments measured at fair value through other comprehensive income 6 25 -61 6 7 Translation difference for the year -219 -1,289 1,326 1,034 -2,184 of which hedges of net assets in foreign operations 0 5 -83 -63 -256 Tax on items that may subsequently be reclassified to the income statement 88 522 -1,251 -39 420 of which cash flow hedges 158 324 -703 -51 365 of which debt instruments measured at fair value through other comprehensive income -1 -5 6 -1 -1 of which hedges of net assets in foreign operations 0 -1 17 13 56 of which translation difference -69 204 -572 Total items that may subsequently be reclassified to the income statement -892 -2,313 3,425 1,247 -3,434 Total other comprehensive income -733 -2,262 3,447 1,306 -4,006 Total comprehensive income for the year 26,926 20,100 18,902 17,994 11,220 196 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Balance sheet SEK m 2024 2023 2022 2021 2020 Assets Loans to the public 517,772 591,340 621,110 609,948 566,158 Loans to credit institutions 996,917 1,007,992 1,025,664 986,897 953,650 Interest-bearing securities 226,175 249,919 166,117 134,861 145,648 Other assets 564,189 511,092 549,998 498,428 459,407 Total assets 2,305,053 2,360,344 2,362,889 2,230,134 2,124,863 Liabilities and equity Deposits and borrowing from the public 1,050,028 1,109,471 1,137,272 1,173,172 1,021,130 Due to credit institutions 169,394 176,143 169,617 153,490 193,054 Issued securities 840,866 806,167 806,013 679,808 657,520 Subordinated liabilities 37,054 43,117 42,404 32,257 41,082 Other liabilities 46,990 66,147 52,829 46,481 68,305 Untaxed reserves 531 867 867 706 933 Equity 160,189 158,431 153,887 144,220 142,839 Total liabilities and equity 2,305,053 2,360,344 2,362,889 2,230,134 2,124,863 Key metrics % 2024 2023 2022 2021 2020 Common equity tier 1 ratio, according to CRR 31.4 29.8 29.4 30.2 31.7 Tier 1 ratio, according to CRR 34.2 33.4 32.9 33.4 34.6 Total capital ratio, according to CRR 41.0 39.9 37.2 37.4 38.8 Return on total assets 1.13 0.90 0.63 0.72 0.65 For definitions of alternative performance measures, see page 376 and, for the calculation of these measures, see the Fact Book which is available at handelsbanken.com/ir. Five-year overview, parent company, cont. 197 Handelsbanken Annual and Sustainability Report 2024 3.2
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Notes, parent company Notes, parent company P1 Material accounting policies 199 P2 Risk and capital management 201 P3 Net interest income 206 P4 Dividends received 206 P5 Net fee and commission income 207 P6 Net gains/losses on financial transactions 207 P7 Other operating income 207 P8 Staff costs 208 P9 Other administrative expenses 209 P10 Credit losses 210 P11 Regulatory fees 215 P12 Appropriations 215 P13 Loans to credit institutions 215 P14 Loans to the public 216 P15 Interest-bearing securities 216 P16 Shares 217 P17 Shares in subsidiaries and investments in associates and joint ventures 217 P18 Derivative instruments 219 P19 Hedge accounting 220 P20 Offsetting of financial instruments 223 P21 Intangible assets 224 P22 Property, equipment and lease assets 224 P23 Other assets 226 P24 Prepaid expenses and accrued income 226 P25 Due to credit institutions 226 P26 Deposits and borrowing from the public 227 P27 Issued securities 228 P28 Short positions 228 P29 Taxes 229 P30 Provisions 230 P31 Other liabilities 230 P32 Accrued expenses and deferred income 231 P33 Subordinated liabilities 231 P34 Untaxed reserves 232 P35 Specification of changes in equity 232 P36 Classification of financial assets and liabilities 233 P37 Fair value measurement of financial instruments 235 P38 Pledged assets, collateral received and transferred financial assets 237 P39 Contingent liabilities 238 P40 Pension obligations 238 P41 Assets and liabilities by currency 240 P42 Related-party disclosures 241 P43 Proposed appropriation of profits 242 P44 Share information 242 P45 Events after the balance sheet date 242 P46 Disclosures regarding assets and liabilities held for sale 243 P47 Capital adequacy 245 198 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P1 Material accounting policies Statement of compliance The parent company’s Annual Report is pre- pared in accordance with the Swedish Annual Accounts Act for Credit Institutions and Secu- rities Companies (1995:1559) and the regula- tions and general guidelines issued by the Swedish Financial Supervisory Authority, FFFS 2008:25, on annual reports in credit institutions and securities companies. The parent com- pany also applies the Swedish Corporate Reporting Board’s recommendation RFR 2 Accounting for legal entities and statements. In accordance with the Swedish Financial Supervisory Authority’s general advice, the parent company applies statutory IFRS. This means that the international accounting stand- ards and interpretations of these standards as adopted by the EU have been applied to the extent that is possible within the framework of national laws and directives and the link between accounting and taxation. The relationship between the parent company’s and the Group’s accounting policies The parent company’s accounting policies correspond largely to those of the Group. The following reports only on the areas where the parent company’s policies differ from those of the Group. In all other respects, reference is made to the accounting policies in note G1. Presentation The parent company applies the presentation models for the income statement and balance sheet in compliance with the Annual Accounts Act for Credit Institutions and Securities Com- panies and the Swedish Financial Supervisory Authority’s regulations. This mainly implies the following differences relative to the presenta- tion models used by the Group: • Claims on central banks that are immedi- ately available upon demand are reported as Loans to credit institutions in the parent company’s balance sheet. These are reported under Other loans to central banks in the Group. • Broker and stock exchange costs are reported in the parent company as commission expenses. • Dividends received are reported on a sepa- rate line in the parent company’s income statement. • The gain/loss arising when divesting prop- erty, equipment and intangible assets in the parent company is reported as other income or expenses. • Untaxed reserves are reported as a separate balance sheet item in the parent company. These are split into an equity share and a tax liability in the Group. Assets held for sale and discontinued operations Non-current assets with a limited useful life are depreciated/amortised over their useful life in accordance with the Swedish Annual Accounts Act for the duration of their classification as held for sale. Net profit after tax from discon- tinued operations is not recognised separately in the parent company’s income statement. Also, neither assets nor liabilities held for sale are presented separately on the balance sheet. For disclosures regarding assets and liabilities held for sale and discontinued operations, see note P46. Shares in subsidiaries and investments in associates and joint ventures Shares in subsidiaries and investments in associates and joint ventures are measured at cost. All holdings are tested on each balance sheet date in order to assess whether they require impairment. If a value has decreased, impairment is recognised to adjust the value to the consolidated value. Any impairment costs are classified as Impairment loss on financial assets in the income statement. Dividends on shares in subsidiaries and associates and joint ventures are recognised as income in profit or loss under Dividends received. Hedge accounting Fair value hedges are used for the foreign exchange risk attributable to shares in foreign subsidiaries. The hedged item consists of the first part of the nominal amount for the invest- ment in shares in the respective foreign sub- sidiary. The hedging instrument consists of the funding in the parent company that finances the investment. The gain or loss on the hedg- ing instrument is recognised in the income statement together with the change in foreign exchange risk on the part of the investment in the subsidiary that constitutes a hedged item. Financial guarantees Financial guarantees, in the form of guarantee commitments on behalf of subsidiaries and associates and joint ventures, are recognised in the parent company as a provision on the balance sheet, where the parent company has an existing commitment and payment will probably be required to settle this commitment. 199 Handelsbanken Annual and Sustainability Report 2024 3.2
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Dividends The item Dividends received comprises all dividends received in the parent company including dividends from subsidiaries and associates and joint ventures, and Group con- tributions received. Anticipated dividends are recognised only if the parent company has the right to decide the amount of the dividend and the decision has been taken before the finan- cial reports were published. Accounting for pensions The parent company does not apply the provi- sions of IAS 19 concerning accounting for defined benefit plans. Instead, pension costs are calculated on an actuarial basis in the parent company in accordance with the provi- sions of the Act on Safeguarding Pension Obli- gations and the Swedish Financial Supervisory Authority’s regulations. This mainly means that there are differences regarding how the dis- count rate is established and that the calcula- tion of the future commitment does not take into account assumptions of future salary increases. The recognised net cost of pensions is calculated as the sum total of disbursed pensions, pension premiums and an allocation to the pension foundation, with a deduction for any compensation from the pension foun- dation. The net pension cost for the year is reported under Staff costs in the parent com- pany’s income statement. Excess amounts as a result of the value of the plan assets exceeding the estimated pension obligations are not recognised as an asset in the parent company’s balance sheet. Deficits are recognised as a liability. Taxes In the parent company, untaxed reserves are recognised as a separate item in the balance sheet. Untaxed reserves comprise one compo- nent consisting of deferred tax liabilities and one component consisting of equity. P1 cont. 200 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P2 Risk and capital management The Handelsbanken Group’s risk management is described in note G2. Specific information about the parent company’s risks is presented below. Credit exposures, geographical breakdown 2024 SEK m Note Sweden Norway Finland The Netherlands Other countries Total Balance sheet items Cash and balances with central banks 63,478 4,160 14 203,650 132,936 404,238 Loans to credit institutions P13 941,967 9,279 45,175 27 470 996,917 Loans to the public P14 192,541 174,513 44,267 104,604 8,246 524,171 Interest-bearing securities eligible as collateral with central banks P15 172,606 172,606 Bonds and other interest-bearing securities P15 53,569 53,569 Derivative instruments P18 52,659 27 52,686 Total 1,476,820 187,952 89,456 308,281 141,678 2,204,187 Off-balance sheet items Contingent liabilities P39 640,350 66,668 5,555 2,970 32,640 748,183 of which contingent liabilities 36,986 9,758 4,408 78 17,121 68,352 of which obligations 603,364 56,910 1,147 2,892 15,520 679,832 Total 640,350 66,668 5,555 2,970 32,640 748,183 Total on- and off-balance sheet items 2,117,170 254,620 95,011 311,250 174,319 2,952,370 Credit exposures, geographical breakdown 2023 SEK m Note Sweden Norway Finland The Netherlands Other countries Total Balance sheet items Cash and balances with central banks 67,895 4,776 10 128,696 161,159 362,536 Loans to credit institutions P13 916,839 3,889 86,818 24 422 1,007,992 Loans to the public P14 224,971 187,290 82,633 97,110 8,993 600,997 Interest-bearing securities eligible as collateral with central banks P15 199,128 199,128 Bonds and other interest-bearing securities P15 50,791 50,791 Derivative instruments P18 38,870 149 39,019 Total 1,498,494 195,956 169,460 225,830 170,724 2,260,463 Off-balance sheet items Contingent liabilities P39 600,656 65,326 25,629 3,094 28,883 723,588 of which contingent liabilities 38,592 7,412 7,406 100 15,266 68,775 of which obligations 562,065 57,915 18,223 2,995 13,616 654,813 Total 600,656 65,326 25,629 3,094 28,883 723,588 Total on- and off-balance sheet items 2,099,150 261,282 195,089 228,924 199,606 2,984,051 Geographical breakdown refers to the country in which the exposures are reported. 201 Handelsbanken Annual and Sustainability Report 2024 3.2
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Loans to the public, breakdown by sector 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Private individuals 82,332 1,722 844 -5 -9 -280 84,604 Housing co-operative associations 12,119 2,473 77 -1 -5 -1 14,662 Property management 286,035 13,418 720 -19 -29 -78 300,047 Manufacturing 25,974 1,517 33 -4 -3 -22 27,495 Retail 20,766 354 77 -6 -6 -67 21,118 Hotel and restaurant 3,593 97 25 -1 -1 -22 3,691 Passenger and goods transport by sea 222 1 0 0 0 0 223 Other transport and communication 3,344 109 17 -1 -1 -15 3,453 Construction 9,783 1,911 184 -18 -47 -110 11,703 Electricity, gas and water 6,712 4 11 0 0 -3 6,724 Agriculture, hunting and forestry 3,039 78 69 -1 -1 -9 3,175 Other services 7,238 428 30 -3 -3 -16 7,674 Holding, investment, insurance companies, mutual funds, etc. 18,399 83 5 -3 -1 -3 18,480 Sovereigns and municipalities 8,509 86 0 -1 8,594 Other corporate lending 12,348 158 63 -1 0 -40 12,528 Total 500,413 22,439 2,155 -63 -107 -666 524,171 Loans to the public, breakdown by sector 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Net Private individuals 94,920 3,819 1,129 -11 -26 -301 99,530 Housing co-operative associations 17,585 6,076 2 -3 -19 -1 23,640 Property management 292,358 26,999 727 -33 -38 -104 319,909 Manufacturing 15,773 3,568 65 -17 -83 -50 19,256 Retail 26,721 558 77 -10 -7 -62 27,277 Hotel and restaurant 1,647 340 13 -2 -3 -5 1,990 Passenger and goods transport by sea 1,264 1 0 0 0 0 1,265 Other transport and communication 5,435 132 17 -4 -2 -15 5,563 Construction 12,966 3,508 232 -47 -203 -94 16,362 Electricity, gas and water 12,191 20 3 -2 0 -3 12,209 Agriculture, hunting and forestry 3,148 278 7 -2 -3 -3 3,425 Other services 13,338 280 112 -6 -4 -84 13,636 Holding, investment, insurance companies, mutual funds, etc. 18,232 747 10 -5 -3 -3 18,978 Sovereigns and municipalities 9,219 46 0 0 9,265 Other corporate lending 28,436 236 82 -1 -1 -61 28,691 Total 553,233 46,608 2,476 -143 -392 -786 600,997 P2 cont. 202 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Credit exposures, breakdown by type of collateral 2024 SEK m Note Residential property1) Other property Sovereigns, municipalities and county councils2) Guarantees as for own debt3) Financial collateral Collateral in assets Other collateral Unsecured4) Total Balance sheet items Cash and balances with central banks 404,238 404,238 Loans to credit institutions P13 220,340 776,577 996,917 Loans to the public P14 150,723 206,065 64,421 4,685 11,802 4,450 5,967 76,058 524,171 Interest-bearing securities eligible as collateral with central banks P15 170,604 2,002 172,606 Bonds and other interest-bearing securities P15 9,845 43,724 53,569 Derivative instruments P18 1,662 19 51,005 52,686 Total 150,723 206,065 871,110 4,685 11,821 4,450 5,967 949,366 2,204,187 Off-balance sheet items Contingent liabilities P39 81,415 51,074 28,156 5,070 10,274 1,651 6,939 563,605 748,183 of which contingent liabilities 4,591 1,034 5,856 2,482 782 1,360 596 51,651 68,352 of which obligations 76,824 50,040 22,300 2,588 9,492 291 6,343 511,954 679,832 Total 81,415 51,074 28,156 5,070 10,274 1,651 6,939 563,605 748,184 Total on- and off-balance sheet items 232,138 257,139 899,266 9,755 22,095 6,101 12,906 1,512,971 2,952,370 Credit exposures, breakdown by type of collateral 2023 SEK m Note Residential property1) Other property Sovereigns, municipalities and county councils2) Guarantees as for own debt3) Financial collateral Collateral in assets Other collateral Unsecured4) Total Balance sheet items Cash and balances with central banks 362,536 362,536 Loans to credit institutions P13 146,096 861,896 1,007,992 Loans to the public P14 174,762 218,542 68,222 9,705 12,470 4,564 7,034 105,697 600,997 Interest-bearing securities eligible as collateral with central banks P15 197,348 543 1,237 199,128 Bonds and other interest-bearing securities P15 4,542 239 46,010 50,791 Derivative instruments P18 442 43 38,534 39,019 Total 174,762 218,542 779,186 10,487 12,513 4,564 7,034 1,053,374 2,260,463 Off-balance sheet items Contingent liabilities P39 68,295 47,250 30,099 5,659 12,705 1,529 7,510 550,541 723,588 of which contingent liabilities 4,345 1,187 6,298 2,563 941 1,445 802 51,194 68,775 of which obligations 63,950 46,063 23,801 3,096 11,764 84 6,708 499,347 654,813 Total 68,295 47,250 30,099 5,659 12,705 1,529 7,510 550,541 723,588 Total on- and off-balance sheet items 243,057 265,792 809,285 16,146 25,218 6,093 14,544 1,603,915 2,984,051 1) Including housing co-operative apartments. 2) Refers to direct exposures to sovereigns and municipalities and government guarantees. 3) Does not include government guarantees. 4) This column includes the parent company’s internal lending and commitments to the Group’s subsidiaries. For balance sheet items, this internal lending amounted to SEK 971,615 million (969,085), and for off-balance sheet items it amounted to SEK 295,867 million (272,990). Market risk Market risks SEK m 2024 20232) Interest rate risk 1,303 1,015 Foreign exchange risk1) 11 21 Equity price risk 66 40 Commodity price risk 1 0 1) Worst outcome in the case of +/- 5% change in SEK. 2) The result for Foreign exchange risk 2023 differs from previously reported results due to a change in method. P2 cont. 203 Handelsbanken Annual and Sustainability Report 2024 3.2
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Liquidity risk Maturity analysis for financial assets and liabilities 2024 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Unspecified maturity Total Cash and balances with central banks 416,820 416,820 Interest-bearing securities eligible as collateral with central banks1) 172,606 172,606 Bonds and other interest-bearing securities2) 53,569 53,569 Loans to credit institutions 121,107 192,692 101,814 159,244 272,893 218,597 1,066,347 of which reverse repos 12,681 12,681 Loans to the public 60,252 112,400 77,324 88,920 113,920 216,082 668,898 of which reverse repos 17,995 17,995 Other 12,011 141,541 153,552 of which shares and participating interests 8,952 8,952 of which assets from unsettled trades 3,059 3,059 Total assets 836,364 305,093 179,138 248,163 386,813 434,679 141,541 2,531,791 Due to credit institutions 57,520 60,930 14,544 9,512 2,782 284 26,955 172,527 of which repos of which deposits from central banks 12,943 247 13,190 Deposits and borrowing from the public 59,735 117,791 5,663 2,047 1,180 80 865,759 1,052,255 of which repos Issued securities3) 87,467 347,492 199,811 69,342 131,914 33,924 869,950 of which covered bonds of which certificates of deposit (CDs) with original maturity of less than one year 38,703 150,653 53,589 242,946 of which commercial paper (CPs) with original maturity of less than one year 48,020 158,976 142,232 349,227 of which certificates of deposit (CDs) and commercial paper (CPs) with original maturity of over one year 2,876 684 3,560 of which senior non-preferred bonds 918 729 20,937 31,425 32,600 86,609 of which senior bonds and other securities with original maturity of over one year 429 32,818 2,327 47,990 99,678 1,120 184,363 Subordinated liabilities 849 799 1,647 29,918 11,707 44,920 Other 3,854 203,856 207,710 of which short positions 1,007 1,007 of which liabilities from unsettled trades 2,847 2,847 Total liabilities 208,576 527,062 220,818 82,548 165,795 45,995 1,096,570 2,347,363 Off-balance sheet items Financial guarantees and unutilised loan commitments 679,832 Derivatives 2024 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Total Total derivatives inflow 235,249 494,452 123,672 182,922 317,801 95,749 1,449,845 Total derivatives outflow 232,889 482,784 123,544 177,014 310,440 90,447 1,417,118 Net 2,360 11,668 128 5,908 7,361 5,302 32,727 P2 cont. 204 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Maturity analysis for financial assets and liabilities 2023 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Unspecified maturity Total Cash and balances with central banks 393,647 393,647 Interest-bearing securities eligible as collateral with central banks1) 199,274 199,274 Bonds and other interest-bearing securities2) 51,139 51,139 Loans to credit institutions 133,126 146,061 109,699 180,809 289,090 200,645 1,059,430 of which reverse repos 12,814 12,814 Loans to the public 84,139 120,676 101,812 86,585 130,577 135,960 659,749 of which reverse repos 17,404 17,404 Other 11,687 127,213 138,900 of which shares and participating interests 6,170 6,170 of which assets from unsettled trades 5,517 5,517 Total assets 873,011 266,737 211,511 267,394 419,668 336,605 127,213 2,502,138 Due to credit institutions 61,503 61,039 15,566 18,034 1,100 845 23,169 181,256 of which repos of which deposits from central banks 11,741 20,288 0 32,030 Deposits and borrowing from the public 49,223 154,131 34,483 5,224 1,813 49 872,513 1,117,435 of which repos Issued securities3) 67,987 355,316 188,573 34,198 150,702 35,090 831,866 of which covered bonds of which certificates of deposit (CDs) with original maturity of less than one year 22,677 97,987 43,918 164,582 of which commercial paper (CPs) with original maturity of less than one year 45,106 212,756 128,562 386,423 of which certificates of deposit (CDs) and commercial paper (CPs) with original maturity of over one year 99 17,960 12,857 30,916 of which senior non-preferred bonds 557 414 970 35,826 24,236 62,003 of which senior bonds and other securities with original maturity of over one year 105 26,056 2,823 33,228 114,876 10,855 187,942 Subordinated liabilities 14,022 565 1,353 20,192 14,367 50,499 Other 7,456 217,991 225,447 of which short positions 2,366 2,366 of which liabilities from unsettled trades 5,090 5,090 Total liabilities 186,169 584,507 239,187 58,809 173,808 50,352 1,113,673 2,406,504 Off-balance sheet items Financial guarantees and unutilised loan commitments 654,813 Derivatives 2023 SEK m Up to 30 days 31 days– 6 mths 6–12 mths 1–2 yrs 2–5 yrs Over 5 yrs Total Total derivatives inflow 131,607 475,360 139,129 113,350 325,912 115,717 1,301,075 Total derivatives outflow 132,193 478,909 142,440 111,676 317,825 109,313 1,292,356 Net -586 -3,549 -3,311 1,674 8,087 6,404 8,719 1) SEK 138,235 million (169,372) of the amount (excl. interest) has a time to maturity of less than one year. 2) SEK 6,865 million (3,334) of the amount (excl. interest) has a time to maturity of less than one year. 3) SEK 621,170 million (600,589) of the amount (excl. interest) has a time to maturity of less than one year. For deposit volumes, the column “Unspecified maturity” refers to deposits payable on demand. The table contains interest flows, which means that the balance sheet items are not reconcilable with the parent company’s balance sheet. P2 cont. 205 Handelsbanken Annual and Sustainability Report 2024 3.2
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P3 Net interest income SEK m 2024 2023 Interest income Loans to credit institutions and central banks 63,520 53,689 Loans to the public 30,160 29,289 Interest-bearing securities eligible as collateral with central banks 8,491 8,110 Bonds and other interest-bearing securities 2,362 2,076 Derivative instruments 23,545 32,227 Other interest income 350 843 Total 128,428 126,235 Deduction of interest income reported in net gains/losses on financial transactions -2,550 -4,242 Total interest income 125,879 121,993 of which interest income according to effective interest method and interest on derivatives in hedge accounting 105,951 96,383 Leasing income 1,650 1,739 Interest expenses Due to credit institutions and central banks -7,030 -7,233 Deposits and borrowing from the public -39,102 -34,262 Issued securities -37,968 -34,978 Derivative instruments -19,019 -22,409 Subordinated liabilities -1,611 -1,618 Deposit guarantee fees -245 -256 Other interest expenses -728 -683 Total -105,703 -101,440 Deduction of interest expenses reported in net gains/losses on financial transactions 3,591 3,654 Total interest expenses -102,112 -97,786 of which interest expenses according to the effective interest method and interest on derivatives in hedge accounting -93,705 -85,787 Net interest income 25,416 25,946 Depreciation according to plan for finance leases1) -1,330 -1,471 Total net interest income incl. depreciation according to plan for finance leases 24,085 24,475 1) Recognised in the item Depreciation, amortisation and impairment of property, equipment and intangible assets. The derivative instrument rows include net interest income related to hedged assets and liabilities. These may have both a positive and a negative impact on interest income and interest expenses. P4 Dividends received SEK m 2024 2023 Dividends on shares 184 41 Dividends from associates 8 Dividends from Group companies1) 12,544 4,568 Group contributions received 8,945 11,340 Total 21,673 15,957 1) Of which SEK 1,261 million (1142) refers to dividends on common equity tier 1 capital loans which Stadshypotek has classified as equity instruments. 206 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P5 Net fee and commission income SEK m 2024 2023 Brokerage and other securities commissions 436 421 Mutual funds 125 109 Custody and other asset management fees 1,060 905 Advisory services 152 180 Payments 2,813 2,686 Loans and deposits 785 846 Guarantees 191 202 Other fee and commission income 646 606 Total fee and commission income 6,208 5,955 Securities -227 -227 Payments -1,074 -1,042 Other fee and commission expenses -136 -113 Total fee and commission expenses -1,437 -1,382 Net fee and commission income 4,771 4,573 Fee and commission income refers to income from contracts with customers. Income from Brokerage and other securities commissions, Advisory services, Payments and Loans and deposits is generally recognised in conjunction with the rendering of the service, i.e. at a specific point in time. Income from Mutual funds, Custody and other asset management fees, Insurance and Guarantees is generally recognised as the services are rendered, i.e. on a straight-line basis over time. P6 Net gains/losses on financial transactions SEK m 2024 2023 Amortised cost 30 -66 of which loans 30 -66 of which interest-bearing securities 0 Fair value through other comprehensive income 0 -1 of which interest-bearing securities – expected credit losses 0 0 of which interest-bearing securities – reclassified from other comprehensive income 0 -1 Fair value through profit or loss, fair value option -112 670 of which interest-bearing securities -112 670 Fair value through profit or loss, mandatory incl. foreign exchange effects 3,013 1,065 Hedge accounting -51 77 of which net gains/losses on fair value hedges -56 -7 of which cash flow hedge ineffectiveness 5 84 Total 2,880 1,745 P7 Other operating income SEK m 2024 2023 Rental income 8 7 Other operating income1) 3,945 4,223 Total 3,953 4,230 1) In 2024, Svenska Handelsbanken AB divested its SME operations in Finland to Oma Sparbank Abp, which had an impact of SEK 96 million on other operating income. The repayment of VAT attributable to prior years was also expensed in 2024, which had an impact of SEK 52 million on other operating income. In 2023, Handelsbanken fondbolagsförvaltning AB was liquidated, which had an impact of SEK 335 million on other operating income in 2023. The repayment of VAT attributable to the sale of the card acquiring business was also expensed in 2023, which had an impact of SEK 141 million on other operating income. This item includes reimbursement for services sold by the parent company to subsidiaries during the respective years. 207 Handelsbanken Annual and Sustainability Report 2024 3.2
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P8 Staff costs SEK m 2024 2023 Salaries and fees -7,940 -7,115 Social security costs -2,113 -1,914 Pension costs1) -2,267 -1,824 Provision for the profit-sharing scheme -96 -83 Other staff costs -449 -520 Total -12,865 -11,456 1) Information about pension costs is presented in note P40. Salaries and fees SEK m 2024 2023 Executive officers1), 19 persons (24) -85 -109 Others -7,855 -7,006 Total -7,940 -7,115 1) Executive officers including Board members. Gender distribution 2024 2023 % Men Women Men Women Board 54 46 46 54 Executive officers excl. Board members 56 44 53 47 Average number of employees 2024 2023 Total Men Women Total Men Women Sweden 7,132 3,468 3,664 6,899 3,330 3,569 Norway 1,056 557 499 888 460 428 Finland 472 217 255 525 246 279 The Netherlands 422 262 160 380 237 143 USA 50 29 21 50 29 21 Luxembourg 53 29 24 51 27 24 Poland 14 3 11 16 4 12 Other countries 2 0 2 4 1 3 Total 9,201 4,565 4,636 8,813 4,334 4,479 Note G8 provides information about the principles for remuneration to executive officers in the parent company. 208 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P9 Other administrative expenses SEK m 2024 2023 Property and premises -1,359 -1,311 IT-related expenses -3,435 -3,383 Communication -209 -215 Travel and marketing -222 -209 Purchased services -1,628 -1,776 Supplies -126 -157 Other expenses1) -766 -402 Total -7,745 -7,453 of which expenses for operating leases Fixed lease payments and lease payments that depend on an index -1,107 -1,048 Variable lease payments -109 -100 Total -1,216 -1,148 1) In 2024, Svenska Handelsbanken AB divested its private and life insurance operations in Finland to S-Banken Abp, which had an impact of SEK -227 million on other expenses. Operating leases are mainly related to agreements that are normal for the operations regarding office premises and office equipment. Rental costs for premises normally have a variable fee related to the inflation rate and to property taxes. Contracted irrevocable future operating lease payments distributed by maturity SEK m 2024 2023 Within 1 yr -871 -961 Between 1 and 5 yrs -2,656 -2,873 Over 5 yrs -2,868 -3,188 Total -6,395 -7,022 Remuneration to auditors and audit companies1) PricewaterhouseCoopers AB Deloitte AB SEK m 2024 2023 2024 2023 Audit assignment -10 -11 -7 -7 Audit operations outside the audit assignment -1 -1 -2 -2 Tax advice Other services -2 -1 1) The amounts in the table are exclusive of VAT. 209 Handelsbanken Annual and Sustainability Report 2024 3.2
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P10 Credit losses SEK m 2024 2023 Expected credit losses on balance sheet items The year’s provision Stage 3 -215 -278 Reversed Stage 3 provision from previous years 141 237 Total expected credit losses in Stage 3 -74 -41 The year’s net provision Stage 2 272 23 The year’s net provision Stage 1 82 63 Total expected credit losses in Stage 1 and Stage 2 354 86 Total expected credit losses on balance sheet items 280 45 Expected credit losses on off-balance sheet items The year’s net provision Stage 3 16 39 The year’s net provision Stage 2 114 -47 The year’s net provision Stage 1 34 -4 Total expected credit losses on off-balance sheet items 164 -13 Write-offs Actual credit losses for the year1) -173 -184 Utilised share of previous provisions in Stage 3 156 155 Total write-offs -17 -29 Recoveries 19 55 Net credit losses 446 58 of which loans to the public 284 71 1) Of the year’s actual credit losses, SEK 33 million (44) is subject to enforcement activities. On- and off-balance sheet items that are subject to impairment testing 2024 Gross Provisions SEK m Stage 1 Stage 2 Stage 31) Stage 1 Stage 2 Stage 3 Balance sheet items Cash and balances with central banks 404,231 Interest-bearing securities eligible as collateral with central banks Loans to credit institutions 996,521 55 -1 -3 Loans to the public 500,413 22,439 2,155 -63 -106 -666 Bonds and other interest-bearing securities 13,259 -2 Total 1,914,424 22,494 2,155 -66 -109 -666 Off-balance sheet items Contingent liabilities 573,979 5,736 115 -34 -67 -26 of which contingent liabilities 66,761 1,525 66 -6 -9 -25 of which obligations 507,218 4,211 49 -28 -58 -1 Total 573,979 5,736 115 -34 -67 -26 On- and off-balance sheet items that are subject to impairment testing 2023 Gross Provisions SEK m Stage 1 Stage 2 Stage 31) Stage 1 Stage 2 Stage 3 Balance sheet items Cash and balances with central banks 362,516 Interest-bearing securities eligible as collateral with central banks Loans to credit institutions 1,008,104 11 -1 -1 Loans to the public 553,233 46,608 2,476 -143 -392 -786 Bonds and other interest-bearing securities 12,709 -2 Total 1,936,562 46,619 2,476 -146 -393 -786 Off-balance sheet items Contingent liabilities 547,062 10,415 122 -69 -181 -42 of which contingent liabilities 66,910 1,794 71 -11 -41 -22 of which obligations 480,152 8,621 51 -58 -140 -20 Total 547,062 10,415 122 -69 -181 -42 1) Gross volume in Stage 3 for which no provision has been made, due to collateral received, amounts to SEK 1,038 million (1,142). 210 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Key metrics, credit losses, loans to the public % 2024 2023 Credit loss ratio, acc. -0.05 -0.01 Total provision ratio 0.16 0.22 Provision ratio Stage 1 0.01 0.03 Provision ratio Stage 2 0.47 0.84 Provision ratio Stage 3 30.90 31.74 Proportion of loans in Stage 3 0.28 0.28 Change analysis Change in provision for expected credit losses, balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Provision at beginning of year -146 -393 -786 -1,326 -211 -401 -934 -1,546 Derecognised assets 35 52 97 183 14 60 190 264 Write-offs 0 0 156 156 0 0 155 155 Remeasurements due to changes in credit risk -26 242 -35 181 7 92 -86 13 Changes due to update in the methodology for estimation 11 16 27 Foreign exchange effect, etc. 4 0 -5 -1 5 5 2 12 Purchased or originated assets -6 -2 -6 -15 -14 -14 0 -29 Transfer to Stage 1 -6 13 0 7 -18 14 -4 Transfer to Stage 2 13 -50 3 -34 42 -205 5 -158 Transfer to Stage 3 67 29 -90 6 18 40 -117 -59 Provision at end of year -66 -109 -666 -841 -146 -393 -786 -1,326 Change in provision for expected credit losses, loans to the public that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Provision at beginning of year -143 -392 -786 -1,321 -207 -400 -934 -1,542 Derecognised assets 35 52 97 183 14 60 190 264 Write-offs 0 0 156 156 0 0 155 155 Remeasurements due to changes in credit risk -26 239 -35 178 6 91 -86 12 Changes due to update in the methodology for estimation 11 16 27 Foreign exchange effect, etc. 4 0 -5 -1 5 5 2 12 Purchased or originated assets -6 -2 -6 -15 -14 -14 0 -29 Transfer to Stage 1 -6 13 0 7 -18 14 -4 Transfer to Stage 2 13 -46 3 -30 42 -204 5 -157 Transfer to Stage 3 67 29 -90 6 18 40 -117 -59 Provision at end of year -63 -106 -666 -836 -143 -392 -786 -1,321 Change in the provision for expected credit losses, off-balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Provision at beginning of year -69 -181 -42 -292 -66 -136 -82 -283 Derecognised assets 11 16 27 9 23 32 Write-offs 0 0 0 0 Remeasurements due to changes in credit risk 28 106 16 151 1 8 39 48 Changes due to update in the methodology for estimation -5 -7 -12 Foreign exchange effect, etc. 2 0 2 1 1 3 Purchased or originated assets -9 -1 -10 -10 -5 -16 Transfer to Stage 1 -2 6 4 -6 6 0 Transfer to Stage 2 4 -18 -14 6 -73 -67 Transfer to Stage 3 1 4 5 1 2 3 Provision at end of year -34 -67 -26 -127 -69 -181 -42 -292 The change analysis shows the net effect on the provision for the Stage in question for each explanatory item during the period. The effect of derecognitions and write-offs is calculated on the opening balance. The effect of revaluations due to changes in the methodology for estimation and foreign exchange effects, etc., is calculated before any transfer of the net amount between Stages. Purchased or originated assets and amounts transferred between Stages are recognised after the effects of other explanatory items are taken into account. The transfer rows present the effect on the provision for the stated Stage. P10 cont. 211 Handelsbanken Annual and Sustainability Report 2024 3.2
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Change in gross volume, balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Volume at beginning of year 1,936,562 46,619 2,476 1,985,658 2,017,811 30,717 2,613 2,051,142 Derecognised assets -63,903 -8,034 -487 -72,425 -408,159 -4,927 -352 -413,437 Write-offs -3 -3 -166 -172 -2 -1 -180 -183 Remeasurements due to changes in credit risk -26,449 -8,228 -170 -34,846 -25,648 -6,079 -263 -31,990 Foreign exchange effect, etc. 18,622 164 19 18,805 -11,605 -679 -6 -12,290 Purchased or originated assets 41,098 924 31 42,053 389,363 3,027 27 392,416 Transfer to Stage 1 29,940 -29,930 -9 18,644 -18,636 -8 Transfer to Stage 2 -20,888 21,331 -444 -43,588 43,693 -105 Transfer to Stage 3 -556 -349 905 -254 -497 751 Volume at end of year 1,914,424 22,494 2,155 1,939,073 1,936,562 46,619 2,476 1,985,658 Change in gross volume, loans to the public that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Volume at beginning of year 553,233 46,608 2,476 602,318 605,933 30,716 2,613 639,263 Derecognised assets -58,856 -8,034 -487 -67,378 -55,518 -4,667 -352 -60,536 Write-offs -3 -3 -166 -172 -2 -1 -180 -183 Remeasurements due to changes in credit risk -22,121 -5,925 -170 -28,216 6,937 -7,112 -263 -438 Foreign exchange effect, etc. -20,713 164 19 -20,530 -11,350 -620 -6 -11,977 Purchased or originated assets 38,031 924 31 38,986 33,136 3,027 27 36,190 Transfer to Stage 1 29,935 -29,925 -9 17,780 -17,773 -8 Transfer to Stage 2 -18,536 18,980 -444 -43,429 43,534 -105 Transfer to Stage 3 -556 -349 905 -254 -497 751 Volume at end of year 500,413 22,439 2,155 525,007 553,233 46,608 2,476 602,318 Change in gross volume, off-balance sheet items that are subject to impairment testing 2024 2023 SEK m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Volume at beginning of year 547,062 10,415 122 557,599 561,940 10,002 245 572,187 Derecognised assets -39,772 -1,467 -16 -41,255 -37,475 -2,684 -129 -40,289 Write-offs 0 0 -1 -2 0 0 -1 -1 Remeasurements due to changes in credit risk 57,586 -1,816 -49 55,721 -17,252 3,524 -31 -13,759 Foreign exchange effect, etc. -46,434 -33 1 -46,466 -3,253 -88 -1 -3,342 Purchased or originated assets 53,930 303 0 54,233 40,638 2,163 1 42,802 Transfer to Stage 1 5,373 -5,372 -1 9,892 -9,891 0 Transfer to Stage 2 -3,743 3,747 -4 -7,397 7,404 -7 Transfer to Stage 3 -22 -41 63 -30 -16 46 Volume at end of year 573,979 5,736 115 579,830 547,062 10,415 122 557,599 Like the analysis for provisions, the change analysis for gross volumes shows the effect of selected explanatory items on the volumes for a stated Stage. The items showing transfers between Stages, and “Purchased or originated assets”, present the amounts in the stated Stage at the end of the period. Other items present the effect in the Stage applying at the start of the period. P10 cont. 212 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Sensitivity analysis Macroeconomic forecast in ECL calculations and sensitivity analysis The calculation of expected credit losses applies forward-looking information in the form of macroeconomic scenarios. The expected credit loss is a probability-weighted average of the estimated forecasts over three scenarios. The forecast in the base case scenario is assigned a weight of 70% (70), while an upturn in the economy is assigned 15% (15), and a downturn 15% (15). These have formed the basis for the calculation of expected credit losses in Stage 1 and Stage 2 as at 31 December 2024. Macroeconomic risk factors Downturn scenario Neutral scenario Upturn scenario 2025 2026 2027 2025 2026 2027 2025 2026 2027 GDP growth Sweden -2.75 0.80 2.81 2.11 2.71 2.16 3.85 3.60 1.96 Norway -3.45 -0.34 2.25 1.55 1.66 1.60 3.15 2.46 1.40 Finland -3.50 -0.40 2.05 1.50 1.60 1.40 3.10 2.40 1.20 Eurozone -3.89 -0.58 2.15 1.11 1.42 1.50 2.71 2.22 1.30 USA -2.83 0.01 2.45 2.17 2.01 1.80 3.77 2.81 1.60 Unemployment Sweden 10.02 10.32 10.54 8.32 7.92 7.54 7.62 6.92 6.84 Norway 3.90 4.60 5.30 2.20 2.20 2.30 1.50 1.20 1.60 Finland 9.70 9.90 10.00 8.00 7.50 7.00 7.30 6.50 6.30 Eurozone 8.38 8.93 9.50 6.68 6.53 6.50 5.98 5.53 5.80 USA 6.08 6.90 7.30 4.38 4.50 4.30 3.68 3.50 3.60 Policy interest rate Sweden 4.50 4.50 3.75 2.25 2.25 2.25 1.50 1.25 1.25 Norway 5.75 5.25 4.00 3.50 3.00 2.50 2.75 2.00 1.50 Finland 4.25 4.25 3.50 2.00 2.00 2.00 1.25 1.00 1.00 Eurozone 4.25 4.25 3.50 2.00 2.00 2.00 1.25 1.00 1.00 USA 5.88 5.38 4.25 3.63 3.13 2.75 2.88 2.13 1.75 Property price trend, residential real estate Sweden -4.51 -4.44 4.14 3.24 3.25 3.53 7.06 7.40 4.99 Norway -0.59 0.55 5.58 9.59 8.14 4.90 11.57 9.50 3.93 Finland -4.08 -1.48 1.99 1.47 2.07 2.77 5.18 3.54 3.20 Eurozone 0.70 3.92 5.05 3.20 3.42 3.40 3.91 3.52 2.60 Property price trend, commercial real estate Sweden -10.15 -3.37 4.19 1.45 3.88 4.51 8.42 10.22 6.28 Norway -15.53 -8.28 1.08 -1.93 -1.03 0.65 3.73 4.09 2.00 Finland -10.56 -5.14 2.13 -1.24 0.62 2.29 3.96 5.60 3.68 Eurozone -13.40 -6.38 2.60 -0.68 0.67 2.54 4.62 5.85 4.15 Sensitivity analysis, macroeconomic scenarios The table below shows the percentage increase/decrease in the provision for expected credit losses in Stage 1 and Stage 2, as at 31 December, which arises when a probability of 100% is assigned to the downturn and upturn scenarios, respectively. 2024 2023 % Increase in the provision in a downturn scenario Decrease in the provision in an upturn scenario Increase in the provision in a downturn scenario Decrease in the provision in an upturn scenario Sweden 34.36 -13.92 32.00 -18.85 Norway 38.99 -15.32 34.77 -18.92 Finland 23.84 -8.85 17.11 -9.88 The Netherlands 47.07 -18.81 36.85 -22.53 USA 77.81 -28.43 57.50 -36.86 Other countries 25.02 -10.66 23.51 -12.04 Total 35.11 -13.91 30.81 -17.78 P10 cont. 213 Handelsbanken Annual and Sustainability Report 2024 3.2
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Sensitivity analysis, significant increase in credit risk The table below shows how the provision in Stage 1 and Stage 2 as at 31 December is affected if the threshold value applied for the ratio between residual credit risk calculated on the reporting date and on initial recognition were to be set 0.5 percentage points lower and higher, respectively, than the applied threshold value of 2.5. A reduction of 0.5 to the threshold value would increase the number of loans transferred from Stage 1 to Stage 2 and would also entail an increase in the provision for expected credit losses. An increase of 0.5 to the threshold value would have the opposite effect. The Bank uses both quantitative and qualitative indicators to assess significant increases in credit risk. Change in the total provision in Stage 1 and Stage 2, % Threshold value 2024 2023 2 3.70 1.85 2.5 0.00 0.00 3 -1.23 -1.66 Credit exposures that are subject to impairment testing, by PD range Balance sheet items by PD range 2024 2023 Gross volume, SEK m Gross volume, SEK m PD value1) Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 0.00 to <0.15 1,736,862 4,800 1,744,372 11,553 0.15 to <0.25 63,081 827 48,221 3,315 0.25 to <0.50 65,393 5,591 74,720 7,488 0.50 to <0.75 12,519 515 25,901 6,757 0.75 to <2.50 34,226 3,943 39,106 4,142 2.50 to <10.00 2,265 5,490 3,928 10,047 10.00 to <100 79 1,328 314 3,316 100 (default) 2,155 2,476 Total 1,914,424 22,494 2,155 1,936,562 46,619 2,476 Loans to the public by PD range 2024 2023 Gross volume, SEK m Gross volume, SEK m PD value1) Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 0.00 to <0.15 454,000 4,788 498,329 11,550 0.15 to <0.25 16,489 825 13,776 3,315 0.25 to <0.50 17,093 5,578 21,346 7,486 0.50 to <0.75 3,272 513 7,399 6,756 0.75 to <2.50 8,946 3,933 11,172 4,141 2.50 to <10.00 592 5,477 1,122 10,045 10.00 to <100 21 1,325 90 3,316 100 (default) 2,155 2,476 Total 500,413 22,439 2,155 553,233 46,608 2,476 Off-balance sheet items by PD range 2024 2023 Gross volume, SEK m Gross volume, SEK m PD value1) Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 0.00 to <0.15 390,514 511 411,184 1,666 0.15 to <0.25 47,418 173 29,689 152 0.25 to <0.50 76,469 645 77,603 1,095 0.50 to <0.75 41,147 309 10,839 3,526 0.75 to <2.50 16,918 1,041 15,960 1,625 2.50 to <10.00 1,129 2,785 1,726 1,852 10.00 to <100 385 272 60 500 100 (default) 115 122 Total 573,979 5,736 115 547,062 10,415 122 1) Refers to 12-month PD value as at the reporting date. Assets repossessed for protection of claims SEK m 2024 2023 Movable property 2 2 Carrying amount 2 2 P10 cont. 214 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P11 Regulatory fees SEK m 2024 2023 Risk tax -1,240 -1,257 Resolution fee -415 -375 Total -1,655 -1,633 The risk tax amounted to 0.06% (0.06) of the tax base, which is based on the total liabilities of the credit institution at the beginning of the income year. The resolution fee amounted to 0.05% (0.05) of the fee base plus a risk adjustment factor. The fee base is based on the institution’s liabilities two years before the fee year. P12 Appropriations SEK m 2024 2023 Change in accelerated depreciation, machinery, equipment and lease assets 336 Total 336 No changes in appropriations were made in 2023. P13 Loans to credit institutions SEK m 2024 2023 Loans in Swedish kronor Banks 1,126 238 Other credit institutions1) 766,772 740,628 Total 767,898 740,866 Loans in foreign currency Banks 26,656 46,719 Other credit institutions 202,367 220,409 Total 229,023 267,128 Provision for expected credit losses -4 -2 Total loans to credit institutions 996,917 1,007,992 of which reverse repos 12,665 12,815 of which cash collateral pledged 3,377 5,430 of which subordinated 73,749 77,146 Average volumes SEK m 2024 2023 Loans to credit institutions in Swedish kronor 464,990 497,218 Loans to credit institutions in foreign currency 546,171 549,519 Total 1,011,160 1,046,737 of which reverse repos 18,767 18,717 1) Of which SEK 18,045 million (22,079) refers to common equity tier 1 capital loans which Stadshypotek has classified as equity instruments. 215 Handelsbanken Annual and Sustainability Report 2024 3.2
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P14 Loans to the public SEK m 2024 2023 Loans in Swedish kronor Households 18,721 19,870 Corporates 127,799 143,285 National Debt Office 1,547 6,748 Total 148,067 169,903 Loans in foreign currency Households 93,460 110,270 Corporates 283,480 322,144 Total 376,940 432,414 Provision for expected credit losses -836 -1,321 Total loans to the public 524,171 600,997 of which reverse repos 17,977 17,404 of which cash collateral pledged 1,751 13,395 of which subordinated 0 1,142 Average volumes, excl. National Debt Office SEK m 2024 2023 Loans to the public in Swedish kronor 167,905 193,609 Loans to the public in foreign currency 420,454 453,155 Total 588,359 646,764 of which reverse repos 25,480 23,110 P15 Interest-bearing securities 2024 2023 SEK m Carrying amount Fair value Nominal amount Carrying amount Fair value Nominal amount Interest-bearing securities eligible as collateral with central banks 172,606 172,606 168,407 199,128 199,128 197,474 Bonds and other interest-bearing securities1) 53,569 53,569 37,550 50,791 50,791 37,151 Total 226,175 226,175 205,957 249,919 249,919 234,625 1) Bonds and other interest-bearing securities that are subject to impairment testing amounted to SEK 13,259 million (12,709). These are measured at fair value through other comprehensive income. Provision for expected credit losses recognised in the fair value reserve in equity amounted to SEK -2 million (-2). Interest-bearing securities broken down by issuer 2024 2023 SEK m Carrying amount Fair value Nominal amount Carrying amount Fair value Nominal amount Government 172,606 172,606 168,407 199,128 199,128 197,474 Credit institution 10,428 10,428 6,662 9,733 9,733 7,856 Mortgage institutions 37,713 37,713 26,754 35,083 35,083 25,155 Other 5,427 5,427 4,134 5,975 5,975 4,141 Total 226,175 226,175 205,957 249,919 249,919 234,625 Average volumes SEK m 2024 2023 Interest-bearing securities eligible as collateral with central banks 257,685 258,785 Bonds and other interest-bearing securities 59,973 55,713 Total 317,658 314,498 216 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P16 Shares SEK m 2024 2023 Fair value through profit or loss, mandatory 8,258 5,669 Fair value through other comprehensive income 694 501 Total shares 8,952 6,170 Holdings at fair value through other comprehensive income SEK m 2024 2023 Visa Inc 517 330 VIPPS A/S 58 60 Other holdings 119 111 Total 694 501 Handelsbanken classifies the shareholdings above as measured at fair value through other comprehensive income, as these holdings are not held for trading. The dividends on these shares amounted to SEK 16 million (3) and are recognised in the income statement under Other dividend income. During the year, the Bank divested 41 participations in SWIFT for a value of SEK 3 million (0). For information about realised and unrealised gains/losses on equity instruments measured at fair value through other comprehensive income, refer to the Statement of changes in equity for the parent company. P17 Shares in subsidiaries and investments in associates and joint ventures Shares in subsidiaries and investments in associates and joint ventures SEK m 2024 2023 Group companies, unlisted 67,101 68,674 Associates, unlisted 369 215 Joint ventures, unlisted 120 97 Total 67,591 68,986 217 Handelsbanken Annual and Sustainability Report 2024 3.2
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Group companies Corporate identity number Domicile Number of shares Ownership share, % Carrying amount, SEK m 2024 2023 Handelsbanken Finans AB1) 556053-0841 Stockholm 1,550,000 100 6,396 6,942 Stadshypotek AB1) 556459-6715 Stockholm 162,000 100 26,870 26,870 Handelsbanken Fonder AB 556418-8851 Stockholm 15,000 100 2 2 Handelsbanken Liv Försäkrings AB 516401-8284 Stockholm 100,000 100 6,189 6,189 SHB Liv Försäkringsaktiebolag 2478149-7 Helsinki 100 Handelsbanken Fastigheter AB 556873-0021 Stockholm 100 Ecster AB 556993-2311 Stockholm 50,000 100 1,750 1,750 Handelsbanken plc1) 11305395 London 5,050,401 100 25,029 24,520 Handelsbanken Wealth & Asset Management Limited 04132340 London 1,319,206 100 Optimix Vermogensbeheer N.V. 33194359 Amsterdam 10,209 100 734 712 Add Value Fund Management BV 19196768 Amsterdam 80 Other subsidiaries EFN Ekonomikanalen AB 556930-1608 Stockholm 100 100 0 0 AB Handel och Industri 556013-5336 Stockholm 100,000 100 12 12 Handelsbanken Markets Securities, Inc. 11-3257438 New York 1,000 100 43 39 Handelsbanken Rahoitus Oy 0112308-8 Helsinki 37,026,871 100 1,561 Handelsbanken Skadeförsäkrings AB 516401-6767 Stockholm 1,500 100 31 31 Rådstuplass 4 AS 910508423 Bergen 40,000 100 0 0 Svenska Re S.A. RCS Lux B-32053 Luxembourg 20,000 100 35 35 Handelsbanken Ventures AB 556993-9357 Stockholm 50 100 10 11 Total 67,101 68,674 1) Credit institution. The list of Group companies contains directly owned subsidiaries and large subsidiaries of these companies. Associates Corporate identity number Domicile Number of shares Ownership share, % Carrying amount, SEK m 2024 2023 Bankomat AB 556817-9716 Stockholm 150 20.00 67 67 BGC Holding AB 556607-0933 Stockholm 25,542 25.54 81 81 Dyson Group plc 00163096 Sheffield 74,733,672 27.00 24 22 Finansiell ID-teknik BID AB 556630-4928 Stockholm 12,735 28.30 86 24 Getswish AB 556913-7382 Stockholm 10,000 20.00 111 21 USE Intressenter AB 559161-9464 Stockholm 2,448 24.48 0 0 Total 369 215 Joint ventures Corporate identity number Domicile Number of shares Voting power, % Carrying amount, SEK m 2024 2023 P27 Nordic Payment Platform AB 559198-9610 Stockholm 12,500 20.84 115 92 Tibern AB 559384-3542 Stockholm 4,000 14.29 5 5 Total 120 97 P17 cont. 218 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P18 Derivative instruments Nominal amount/maturity Nominal amount Positive market values Negative market values SEK m Up to 1 yr Over 1 yr up to 5 yrs Over 5 yrs 2024 2023 2024 2023 2024 2023 Derivatives held for trading Interest rate-related contracts Options 6,844 18,668 9,544 35,056 35,267 166 263 238 394 FRA/futures 752,147 19,300 771,447 397,991 347 255 310 237 Swaps 461,098 1,752,432 429,678 2,643,208 2,421,363 40,477 49,415 41,208 48,983 Currency-related contracts Options 19,498 233 16 19,747 25,693 58 158 89 237 Futures 64,075 5,523 55 69,653 62,370 1,058 1,196 619 1,146 Swaps 683,933 177,741 26,308 887,982 716,068 24,930 14,827 13,424 23,997 Equity-related contracts Options 4,789 606 32 5,427 4,882 229 194 113 114 Futures 281 281 215 2 5 2 2 Swaps 7,369 1,391 8,760 5,962 299 101 232 306 Commodity-related contracts Options 19 19 17 5 19 22 Futures 134 1 135 180 1 6 4 18 Credit-related contracts Swaps 275 3,836 60 4,171 3,069 164 193 147 82 Total 2,000,443 1,979,731 465,712 4,445,886 3,673,076 67,732 66,618 56,404 75,538 Derivatives for fair value hedges Interest rate-related contracts Swaps 63,665 226,507 69,854 360,026 414,502 9,424 11,911 6,970 9,393 Currency-related contracts Swaps 1,046 1,046 983 83 25 Total 63,665 227,553 69,854 361,072 415,485 9,507 11,937 6,970 9,393 Derivatives for cash flow hedges Interest rate-related contracts Swaps 20,908 13,727 6,078 40,713 79,813 2,072 2,961 46 78 Currency-related contracts Swaps 18,530 120,692 24,524 163,746 228,210 17,519 9,724 1,222 6,486 Total 39,438 134,419 30,602 204,459 308,023 19,591 12,685 1,269 6,563 Total derivative instruments 2,103,546 2,341,703 566,168 5,011,417 4,396,584 96,830 91,240 64,643 91,494 of which exchange-traded derivatives 133,128 70,400 155 148 274 419 of which OTC derivatives settled by CCP 3,013,450 2,172,236 44,503 52,627 34,664 45,845 of which OTC derivatives not settled by CCP 1,864,839 2,153,948 52,172 38,465 29,705 45,230 Amounts offset -2,368,886 -2,310,691 -44,144 -52,221 -34,331 -45,225 Net amount 2,642,531 2,085,893 52,686 39,019 30,312 46,269 Currency breakdown of market values SEK -295,713 54,626 -40,467 333,073 USD 437,043 -25,673 104,150 -350,125 EUR 178,621 157,332 93,770 73,140 Others -223,121 -95,045 -92,810 35,406 Total 96,830 91,240 64,643 91,494 Derivative contracts are presented gross in the note. Amounts offset consist of the offset market value and the associated nominal amounts of contracts for which the Bank has the legal right and intention to settle contractual cash flows net (including cleared contracts). These contracts are presented on a net basis on the balance sheet per counterparty and currency. The Bank amortises positive differences between the value measured by a valuation model upon initial recognition and the transaction price (day 1 gains/losses) over the life of the derivative. Such not yet recognised day 1 gains amounted to SEK 500 million (472) at year-end. 219 Handelsbanken Annual and Sustainability Report 2024 3.2
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P19 Hedge accounting Hedging instruments in fair value hedges 2024 2023 SEK m Up to 1 yr 1–5 yrs Over 5 yrs Up to 1 yr 1–5 yrs Over 5 yrs Interest rate risk Interest rate swaps, variable interest paid and fixed interest received Nominal amount 20,694 176,443 40,045 44,464 156,862 42,357 Average fixed interest, % 2.45 3.01 2.89 2.21 2.84 2.61 Cross-currency interest rate swaps, variable interest paid and fixed interest received Nominal amount 1,046 983 Average fixed interest, % 3.69 3.69 Total 20,694 177,489 40,045 44,464 157,845 42,357 Hedging instruments and ineffectiveness in fair value hedges 2024 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Ineffectiveness recognised in the income statementAssets Liabilities Interest rate risk Interest rate swaps, variable interest paid and fixed interest received 237,182 2,621 6,712 2,993 -71 Cross-currency interest rate swaps, variable interest paid and fixed interest received 1,046 83 0 6 Total 238,228 2,704 6,712 2,993 -65 Portfolio fair value hedges Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 122,844 6,803 258 -3,248 9 Total 122,844 6,803 258 -3,248 9 Hedging instruments and ineffectiveness in fair value hedges 2023 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Ineffectiveness recognised in the income statementAssets Liabilities Interest rate risk Interest rate swaps, variable interest paid and fixed interest received 243,683 1,811 9,357 7,932 66 Cross-currency interest rate swaps, variable interest paid and fixed interest received 983 25 54 7 Total 244,666 1,836 9,357 7,986 73 Portfolio fair value hedges Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 170,819 10,100 36 -7,034 -80 Total 170,819 10,100 36 -7,034 -80 The carrying amount of hedging instruments is included in the item Derivative instruments in the balance sheet. Ineffectiveness recognised in the income statement is included in the item Net gains/losses on financial transactions. 220 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Hedged items in fair value hedges 2024 Carrying amount hedged item Accumulated fair value adjustment included in the carrying amount of the hedged item Change in value used to calculate ineffectivenessSEK m Assets Liabilities Assets Liabilities Interest rate risk1) Issued fixed-interest securities and subordinated liabilities 231,475 -5,727 -3,059 Total 231,475 -5,727 -3,059 Portfolio fair value hedges1) Interest rate risk Fixed-interest loans to the public -6,399 -6,399 3,257 Total -6,399 -6,399 3,257 Hedged items in fair value hedges 2023 Carrying amount hedged item Accumulated fair value adjustment included in the carrying amount of the hedged item Change in value used to calculate ineffectivenessSEK m Assets Liabilities Assets Liabilities Interest rate risk1) Issued fixed-interest securities and subordinated liabilities 233,072 -8,786 -7,913 Total 233,072 -8,786 -7,913 Portfolio fair value hedges1) Interest rate risk Fixed-interest loans to the public -9,657 -9,657 6,954 Total -9,657 -9,657 6,954 1) The volume of the underlying lending portfolio was SEK 122,844 million (170,819) as at 31 December 2024. No accumulated amount of adjustments to fair value hedges remained on the balance sheet for hedged items which are no longer adjusted for changes in fair value either this year or last year. Hedging instruments in cash flow hedges 2024 2023 SEK m Up to 1 yr 1–5 yrs Over 5 yrs Up to 1 yr 1–5 yrs Over 5 yrs Interest rate risk Interest rate swaps, fixed interest paid and variable interest received Nominal amount 7,588 12,627 6,078 13,568 16,503 8,645 Average fixed interest, % 0.35 0.72 0.77 0.38 0.60 0.67 Interest rate swaps, variable interest paid and fixed interest received Nominal amount 13,321 1,099 26,765 14,332 Average fixed interest, % 3.58 3.98 2.61 3.61 Foreign exchange risk Foreign exchange derivatives, EUR/NOK Nominal amount 2,758 45,538 19,512 35,857 17,514 Average exchange rate EUR/NOK 0.1008 0.0958 0.0896 0.0954 0.0728 Foreign exchange derivatives, USD/GBP Nominal amount 1,076 989 Average exchange rate USD/GBP 1.3157 1.3157 Foreign exchange derivatives, USD/NOK Nominal amount 8,923 36,864 2,066 40,077 Average exchange rate USD/NOK 0.1065 0.1027 0.0509 0.0958 Foreign exchange derivatives, USD/SEK Nominal amount 3,646 11,551 5,011 75,356 14,513 4,776 Average exchange rate USD/SEK 0.1017 0.1003 0.1105 0.0880 0.0782 0.1105 Foreign exchange derivatives, AUD/EUR Nominal amount 2,872 10,353 13,016 Average exchange rate AUD/EUR 1.5287 1.5451 1.5415 Foreign exchange derivatives, other currency pairs Nominal amount 331 15,310 8,574 15,473 Total 39,439 134,418 30,601 126,329 150,760 30,934 P19 cont. 221 Handelsbanken Annual and Sustainability Report 2024 3.2
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Hedging instruments and ineffectiveness in cash flow hedges 2024 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Change in the value of the hedging instruments recognised in other comprehensive income Ineffectiveness recognised in the income statement Reclassified from the hedge reserve to the income statement Assets Liabilities Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 26,293 1,779 -695 -689 -6 Interest rate swaps, variable interest paid and fixed interest received 14,420 293 46 97 97 70 Foreign exchange risk1) Foreign exchange derivatives, EUR/NOK 67,808 6,888 39 -280 -293 13 Foreign exchange derivatives, EUR/SEK 7,490 27 114 -8 -8 0 Foreign exchange derivatives, USD/GBP 1,076 50 6 6 Foreign exchange derivatives, USD/NOK 45,787 7,249 81 79 2 Foreign exchange derivatives, USD/SEK 20,208 2,829 95 97 -2 Foreign exchange derivatives, other currency pairs 21,376 476 1,069 22 24 -2 9 Total 204,458 19,591 1,268 -682 -687 5 79 Hedging instruments and ineffectiveness in cash flow hedges 2023 SEK m Nominal amount hedging instruments Carrying amount hedging instruments Change in fair value used to calculate ineffectiveness Change in the value of the hedging instruments recognised in other comprehensive income Ineffectiveness recognised in the income statement Reclassified from the hedge reserve to the income statement Assets Liabilities Interest rate risk Interest rate swaps, fixed interest paid and variable interest received 38,716 2,580 1 -1,831 -1,917 86 Interest rate swaps, variable interest paid and fixed interest received 41,097 381 77 751 751 80 Foreign exchange risk1) Foreign exchange derivatives, EUR/NOK 53,371 4,335 445 -194 -196 2 Foreign exchange derivatives, EUR/SEK 15,566 305 310 -12 -12 0 Foreign exchange derivatives, USD/GBP 989 30 8 8 Foreign exchange derivatives, USD/NOK 42,143 3,133 1,048 -22 -20 -2 Foreign exchange derivatives, USD/SEK 94,645 1,322 3,951 -103 -103 0 Foreign exchange derivatives, AUD/USD 7 7 -1 Foreign exchange derivatives, other currency pairs 21,496 599 732 15 17 -2 27 Total 308,023 12,685 6,563 -1,381 -1,465 84 106 1) When analysing for the purposes of hedge accounting, the conversion to the parent company’s functional currency, SEK, is taken into account by imputing nominal derivative legs in the hedging relationships. The imputed derivative legs are not included in the nominal volumes presented in the tables above. The carrying amount of hedging instruments is included in the item Derivative instruments in the balance sheet. Ineffectiveness recognised in the income statement is included in the item Net gains/losses on financial transactions. Reclassified to the income statement is included under Net gains/losses on financial transactions and refers to cash flow hedges terminated before their maturity date. Hedged items in cash flow hedges 2024 2023 SEK m Change in value used to calculate ineffectiveness Hedge reserve Amounts remaining in the hedge reserve from hedging relationships for which hedge accounting is no longer applied Change in value used to calculate ineffectiveness Hedge reserve Amounts remaining in the hedge reserve from hedging relationships for which hedge accounting is no longer applied Interest rate risk Issued variable-interest securities 689 1,641 1,917 2,333 Variable-interest loans to the public -97 329 297 -751 298 366 Foreign exchange risk Issued securities and subordinated liabilities in EUR and internal loans in GBP and NOK 301 -395 208 -107 Issued securities and subordinated liabilities in USD and internal loans in EUR, GBP and NOK -182 488 58 115 317 68 Securities issued in AUD -2 -2 -7 -2 -2 Securities issued and internal loans in other currencies -24 48 -17 37 Total 687 2,109 353 1,465 2,876 432 P19 cont. 222 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P20 Offsetting of financial instruments 2024 SEK m Derivatives Repurchase agreements and securities lending Total Financial fixed assets subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 96,830 34,890 131,720 Amounts offset -44,144 -3,735 -47,879 Carrying amount on the balance sheet 52,686 31,155 83,841 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -4,787 -4,787 Financial assets received as collateral -37,378 -31,112 -68,490 Total amounts not offset on the balance sheet -42,165 -31,112 -73,277 Net amount 10,521 43 10,564 Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 64,643 3,736 68,379 Amounts offset -34,331 -3,735 -38,066 Carrying amount on the balance sheet 30,312 1 30,313 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -4,787 -4,787 Financial assets pledged as collateral -3,554 -1 -3,555 Total amounts not offset on the balance sheet -8,341 -1 -8,342 Net amount 21,971 0 21,971 2023 SEK m Derivatives Repurchase agreements and securities lending Total Financial fixed assets subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 91,240 35,332 126,572 Amounts offset -52,221 -4,628 -56,849 Carrying amount on the balance sheet 39,019 30,704 69,723 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -7,781 -7,781 Financial assets received as collateral -18,880 -30,704 -49,584 Total amounts not offset on the balance sheet -26,661 -30,704 -57,365 Net amount 12,358 0 12,358 Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements Gross amount 91,494 4,631 96,125 Amounts offset -45,225 -4,628 -49,853 Carrying amount on the balance sheet 46,269 3 46,272 Related amounts not offset on the balance sheet Financial instruments, netting arrangements -7,781 -7,781 Financial assets pledged as collateral -17,305 -3 -17,308 Total amounts not offset on the balance sheet -25,086 -3 -25,089 Net amount 21,183 0 21,183 Derivative instruments are offset on the balance sheet when doing so reflects the Bank’s expected cash flows upon the settlement of two or more derivatives. This occurs when the Bank has both a contractual right and the intention to settle the agreed cash flows at a net amount. The remaining counterparty risk in derivatives is reduced through netting agreements, i.e. netting positive values against negative values in all derivative transactions with the same counterparty in a bankruptcy situation. Handelsbanken’s policy is to sign netting agreements with all bank counterparties. Netting agreements are supplemented with agreements for issuing collateral for the net exposure. The collateral used is mainly cash, but government securities are also used. Collateral for repurchase agreements and borrowing and lending of securities is normally in the form of cash or other securities. The amount offset for derivative assets includes offset cash collateral of SEK 11,617 million (11,268) derived from the balance sheet item Deposits and borrowing from the public. The amount offset for derivative liabilities includes offset cash collateral of SEK 1,804 million (4,272), derived from the balance sheet item Loans to the public. 223 Handelsbanken Annual and Sustainability Report 2024 3.2
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P21 Intangible assets 2024 SEK m Internally developed software Other Total Cost of acquisition at beginning of year 5,478 164 5,643 Cost of acquisition of additional intangible assets 413 45 458 Disposals and retirements -345 -345 Foreign exchange effect -7 0 -7 Cost of acquisition at end of year 5,538 210 5,749 Accumulated amortisation and impairment at beginning of year -2,300 -131 -2,433 Disposals and retirements 345 345 Amortisation for the year according to plan -597 -40 -637 Impairment for the year 0 0 Foreign exchange effect -2 0 -2 Accumulated amortisation and impairment at end of year -2,554 -171 -2,726 Carrying amount 2,984 39 3,023 During the year, development expenses amounting to SEK 2,553 million (2,883) have been recognised. 2023 SEK m Acquisition assets Internally developed software Other Total Cost of acquisition at beginning of year 531 5,361 164 6,056 Cost of acquisition of additional intangible assets 684 684 Disposals and retirements -531 -554 -554 Foreign exchange effect -12 -12 Cost of acquisition at end of year 0 5,478 164 6,174 Accumulated amortisation and impairment at beginning of year -531 -2,283 -99 -2,913 Disposals and retirements 531 554 554 Amortisation for the year according to plan -575 -33 -608 Impairment for the year 0 Foreign exchange effect 3 3 Accumulated amortisation and impairment at end of year 0 -2,300 -131 -2,964 Carrying amount 0 3,178 33 3,211 In the parent company, acquisition assets and other intangible assets with an indefinite useful life are amortised in compliance with the provisions of the above-mentioned Annual Accounts Act for Credit Institutions and Securities Companies. According to experience, the customer relations that the acquisitions have led to, and consequently the useful life of acquisition assets, are very long. The amortisation period has been set at 20 years. P22 Property, equipment and lease assets Property, equipment and lease assets SEK m 2024 2023 Property 30 26 Equipment 616 544 Lease assets 5,227 6,101 Property repossessed for protection of claims 2 2 Total 5,875 6,673 224 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Property SEK m 2024 2023 Cost of acquisition at beginning of year 57 54 New construction and conversion 6 3 Cost of acquisition at end of year 63 57 Accumulated depreciation and impairment at beginning of year -31 -29 Depreciation for the year according to plan -2 -2 Accumulated depreciation and impairment at end of year -33 -31 Carrying amount 30 26 Equipment SEK m 2024 2023 Cost of acquisition at beginning of year 1,383 1,338 Cost of additional acquisition for the year 371 332 Disposals and retirements -328 -277 Foreign exchange effect 5 -10 Cost of acquisition at end of year 1,431 1,383 Accumulated depreciation and impairment at beginning of year -839 -861 Depreciation for the year according to plan -288 -253 Disposals and retirements 315 270 Foreign exchange effect -3 5 Accumulated depreciation and impairment at end of year -815 -839 Carrying amount 616 544 Lease assets SEK m 2024 2023 Cost of acquisition at beginning of year 10,055 10,548 Cost of additional acquisition for the year 1,864 2,669 Disposals and retirements -3,206 -2,986 Foreign exchange effect, etc. -38 -176 Cost of acquisition at end of year 8,675 10,055 Accumulated depreciation and impairment at beginning of year -3,954 -4,520 Depreciation for the year according to plan -1,332 -1,471 Impairment for the year 11 24 Disposals and retirements 1,807 1,940 Foreign exchange effect 20 73 Accumulated depreciation and impairment at end of year -3,448 -3,954 Carrying amount 5,227 6,101 Distribution of future lease payments by maturity SEK m Within 1 yr Between 1 and 5 yrs Over 5 yrs Total 2024 Distribution of future lease payments 1,222 4,015 467 5,704 2023 Distribution of future lease payments 1,696 4,158 409 6,263 Lease assets mainly consist of vehicles and machines. Lease assets are depreciated during the term of the lease agreement according to the annuity method. Lease payments recognised as income during the financial year amount to SEK 317 million (268), of which the variable part of the lease income is SEK 302 million (268). The parent company’s property and equipment consist of property (owner-occupied properties), equipment and lease assets. These assets are recorded at cost of acquisition less accumulated depreciation and impairment losses. Depreciation is based on the estimated useful lives of the assets. A linear depreciation plan is applied for property and equipment. No material changes were made to the useful lives in 2024. The estimated useful lives are reviewed annually. The useful life of equipment is deemed to be 2-10 years. Separate depreciation plans are applied to the different sub-components of properties. The useful life for the buildings structure is deemed to be 100 years and the remaining sub-components are deemed to have useful lives of between 10 and 35 years. The parent company recognises finance leases as operating leases. Lease assets that primarily comprise vehicles and machinery are depreciated during the term of the lease agreement according to the annuity method. Impairment testing of property and equipment is carried out when there is an indication that the value of the asset may have decreased. There was no indication on the balance sheet date that property and equipment required impairment. P22 cont. 225 Handelsbanken Annual and Sustainability Report 2024 3.2
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P23 Other assets SEK m 2024 2023 Claims on investment banking settlements 3,059 5,517 Other 15,038 15,272 Total 18,097 20,789 P24 Prepaid expenses and accrued income SEK m 2024 2023 Accrued income 608 538 Prepaid expenses 873 849 Total 1,481 1,386 P25 Due to credit institutions SEK m 2024 2023 Due in Swedish kronor Banks 13,573 7,222 Other credit institutions 18,289 19,320 Total 31,862 26,542 Due in foreign currency Banks 62,928 73,142 Other credit institutions 74,605 76,459 Total 137,533 149,601 Total due to credit institutions 169,394 176,143 of which repos 0 of which cash collateral received 32,374 20,078 Average volumes SEK m 2024 2023 Due to credit institutions in Swedish kronor 21,411 27,383 Due to credit institutions in foreign currency 202,335 233,225 Total 223,746 260,608 of which repos 173 177 226 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P26 Deposits and borrowing from the public SEK m 2024 2023 Deposits in Swedish kronor Households 366,230 361,646 Corporates 298,938 291,500 National Debt Office 1 1 Total 665,169 653,146 Deposits in foreign currency Households 58,748 60,310 Corporates 134,534 155,898 Total 193,283 216,207 Total deposits from the public 858,451 869,353 Borrowing in Swedish kronor 160,641 176,759 Borrowing in foreign currency 30,936 63,360 Total borrowing from the public 191,577 240,119 Total deposits and borrowing from the public 1,050,028 1,109,471 of which repos 1 2 of which cash collateral received 3,708 4,924 Average volumes SEK m 2024 2023 Deposits from the public Deposits from the public in Swedish kronor 631,708 691,097 Deposits from the public in foreign currency 211,316 235,155 Total 843,024 926,252 Borrowing from the public Borrowing from the public in Swedish kronor 209,103 175,907 Borrowing from the public in foreign currency 210,737 191,818 Total 419,840 367,725 of which repos 7,042 8,978 227 Handelsbanken Annual and Sustainability Report 2024 3.2
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P27 Issued securities 2024 2023 SEK m Carrying amount Nominal amount Carrying amount Nominal amount Commercial paper Commercial paper in Swedish kronor 536 509 1,099 1,055 of which fair value through profit or loss 536 509 1,099 1,055 Commercial paper in foreign currency 591,217 351,863 578,821 391,189 of which amortised cost 591,140 351,790 578,414 390,799 of which included in fair value hedges 0 0 15,500 15,745 of which fair value through profit or loss 77 73 407 391 Total 591,753 352,372 579,920 392,244 Bonds Bonds in Swedish kronor 2,951 2,834 2,668 2,622 of which amortised cost 2,951 2,834 2,668 2,622 Bonds in foreign currency 246,162 248,676 223,578 229,835 of which amortised cost 246,162 248,676 223,578 229,835 of which included in fair value hedges 196,755 199,455 185,172 191,582 Total 249,113 251,511 226,247 232,457 Total issued securities 840,866 603,883 806,167 624,701 SEK m 2024 2023 Issued securities at beginning of year 806,167 806,013 Issued 873,882 1,004,310 Repurchased -4,101 -2,103 Matured -881,213 -985,938 Foreign exchange effect, etc. 46,131 -16,115 Issued securities at end of year 840,866 806,167 Average volumes SEK m 2024 2023 Issued securities in Swedish kronor -2,996 -8,378 Issued securities in foreign currency 872,771 860,275 Total 869,775 851,897 P28 Short positions SEK m 2024 2023 Short positions at fair value Equities 621 520 Interest-bearing securities 386 1,844 Total 1,007 2,364 Average volumes SEK m 2024 2023 Short positions in Swedish kronor 15,433 15,301 Short positions in foreign currency 220 209 Total 15,653 15,510 228 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P29 Taxes Tax expenses recognised in the income statement SEK m 2024 2023 Current tax -4,961 -6,004 Deferred tax -158 270 Adjustment of tax relating to prior years -12 -13 Total -5,131 -5,747 Tax expenses recognised in the income statement SEK m 2024 2023 Profit before tax 32,789 28,110 Tax on profit before tax at Swedish tax rate -6,755 -5,791 Recognised tax -5,131 -5,747 Difference 1,624 44 The difference is explained by the following items Non-taxable income/non-deductible expenses -36 2 Non-deductible interest on subordinated liabilities -515 -583 Non-taxable capital gains and dividends 2,584 941 Impairment of shares in subsidiaries -446 -314 Other 37 -2 Total 1,624 44 Deferred tax assets 2024 SEK m Opening balance Recognised in income statement Recognised in other comprehensive income Offsetting Closing balance Pensions 291 113 404 Other 422 -239 183 Offsetting -339 -89 -428 Total 374 -126 -89 159 Deferred tax liabilities 2024 SEK m Opening balance Recognised in income statement Recognised in other comprehensive income Offsetting Closing balance Property and equipment 9 1 0 10 Hedging instruments 593 -159 434 Other 73 -35 38 Offsetting -339 -89 -428 Total 336 -35 -159 -89 54 Deferred tax assets 2023 SEK m Opening balance Recognised in income statement Recognised in other comprehensive income Offsetting Closing balance Pensions 304 -13 291 Other 313 109 422 Offsetting -339 -339 Total 617 96 -339 374 229 Handelsbanken Annual and Sustainability Report 2024 3.2
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Deferred tax liabilities 2023 SEK m Opening balance Recognised in income statement Recognised in other comprehensive income Offsetting Closing balance Property and equipment 11 -2 9 Hedging instruments 915 -322 593 Other 267 -204 10 73 Offsetting -339 -339 Total 1,193 -206 -312 -339 336 Unrecognised deferred tax assets and deficits Deferred tax assets on loss carry forwards and other future deductible temporary differences are recognised only if it is probable that they can be utilised in the foreseeable future. Tax on loss carryforwards in international branches has a limited lifetime of five years and amounted to SEK 50 million. The loss carryfoward has no value because the loss carryfoward was also taxed in the country of the head office. P30 Provisions Provisions 2024 SEK m Provision for expected credit losses on off-balance sheet items1) Provision for restructuring²) Other provisions3) Total Provisions at beginning of year 292 22 310 624 Provisions during the year 154 154 Utilised -5 -156 -161 Reversed -29 -29 Change in expected credit losses, net -165 -165 Provisions at end of year 127 17 279 423 Provisions 2023 SEK m Provision for expected credit losses on off-balance sheet items1) Provision for restructuring²) Other provisions3) Total Provisions at beginning of year 283 158 204 646 Provisions during the year 191 191 Utilised -136 -57 -193 Reversed -28 -28 Change in expected credit losses, net 9 9 Provisions at end of year 292 22 310 624 1) For more information, see notes P10 and P39. 2) The provision for restructuring costs refers to expenses related to the Bank’s restructuring. 3) The amounts allocated for future settlement of the claims on the Bank are presented under Other provisions. P31 Other liabilities SEK m 2024 2023 Liabilities on investment banking settlements 2,847 5,090 Other 7,945 6,285 Total 10,792 11,374 P29 cont. 230 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P32 Accrued expenses and deferred income SEK m 2024 2023 Accrued expenses 1,477 1,444 Deferred income 593 955 Total 2,070 2,399 P33 Subordinated liabilities Change in subordinated liabilities SEK m 2024 2023 Subordinated liabilities at beginning of year 43,117 42,404 Issued 5,673 8,753 Matured -13,369 -8,326 Foreign exchange effect, etc. 1,633 286 Subordinated liabilities at end of year 37,054 43,117 Average volumes SEK m 2024 2023 Subordinated liabilities in foreign currency 35,603 42,200 Specification of subordinated liabilities Year of issuance Maturity Original maturity date First possible redemption date Currency Original nominal amount in each currency Convertible/ Non-convertible Interest rate, % Outstanding amount 2020 Perpetual1), 2) 1 Mar 2027 USD 500 Convertible3) 4,375 5,229 2020 Perpetual1), 2) 1 Mar 2031 USD 500 Convertible3) 4,750 4,584 2022 Fixed term4) 1 Jun 2033 1 Jun 2028 EUR 500 Non-convertible 3,250 5,748 2022 Fixed term4) 23 Aug 2032 23 Aug 2027 GBP 500 Non-convertible 4,625 6,722 2023 Fixed term4) 16 Aug 2034 16 Aug 2029 EUR 750 Non-convertible 5,000 9,053 2024 Fixed term4) 4 Nov 2036 4 Nov 2031 EUR 500 Non-convertible 3,625 5,718 Total 37,054 1) Subordinated to all instruments except for equities, the immediately senior is fixed-term subordinated liabilities. 2) Can be redeemed on each subsequent rate fixing date after the initial redemption date. 3) The liabilities are converted to ordinary shares in Svenska Handelsbanken AB if Svenska Handelsbanken AB’s common equity tier 1 ratio falls below 5.125% or if the consolidated situation’s common equity tier 1 ratio falls below 8.0%. 4) Subordinated to all senior debt. 231 Handelsbanken Annual and Sustainability Report 2024 3.2
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P34 Untaxed reserves SEK m 2024 2023 Accumulated accelerated depreciation, machinery, equipment and lease assets 531 867 Total 531 867 P35 Specification of changes in equity Change in hedge reserve SEK m 2024 2023 Hedge reserve at beginning of year 2,284 3,531 Cash flow hedges Effective part of change in fair value Interest rate risk -592 -1,165 Foreign exchange risk -96 -299 Reclassified to the income statement1) -79 -106 Tax 158 324 Hedge reserve at end of year 1,675 2,284 Change in fair value reserve SEK m 2024 2023 Fair value reserve at beginning of year 197 126 Unrealised value change – equity instruments 159 51 Realised value change – equity instruments 3 0 Unrealised value change – debt instruments 5 19 Change in provision for expected credit losses – debt instruments 0 0 Reclassified to retained earnings – equity instruments2) -3 0 Reclassified to the income statement – debt instruments3) 0 0 Fair value reserve at end of year 361 197 Change in translation reserve SEK m 2024 2023 Translation reserve at beginning of year 761 1,847 Change in translation difference 282 -811 Reclassified to the income statement4) 0 9 Reclassified to retained earnings5) -570 -284 Translation reserve at end of year 473 761 1) Tax reclassified to the income statement pertaining to this item SEK 16 million (22). 2) Tax reclassified to retained earnings pertaining to this item SEK - million (0). 3) Tax reclassified to the income statement pertaining to this item SEK 0 million (0). 4) Tax reclassified to the income statement pertaining to this item SEK 0 million (-2). 5) Tax reclassified to retained earnings pertaining to this item SEK 8 million (19). 232 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P36 Classification of financial assets and liabilities 2024 Fair value through profit or loss SEK m Mandatory Fair value option Derivatives identified as hedging instruments Fair value through other comprehensive income Amortised cost Total carrying amount Fair value Assets Cash and balances with central banks 404,237 404,237 404,237 Interest-bearing securities eligible as collateral with central banks 4,862 167,745 172,606 172,606 Loans to credit institutions 18,045 978,872 996,917 996,629 Loans to the public 524,171 524,171 520,796 Value change of interest-hedged item in portfolio hedge -6,399 -6,399 Bonds and other interest-bearing securities 16,389 23,920 13,259 53,569 53,569 Shares 8,258 694 8,952 8,952 Assets where the customer bears the value change risk 2,087 2,087 2,087 Derivative instruments 34,946 17,740 52,686 52,686 Other assets 13 18,084 18,097 18,097 Total 84,599 191,665 17,740 13,954 1,918,965 2,226,924 2,229,660 Shares in subsidiaries and investments in associates and joint ventures 67,591 Non-financial assets 10,539 Total assets 2,305,053 Liabilities Due to credit institutions 169,394 169,394 169,459 Deposits and borrowing from the public 1,050,029 1,050,028 1,049,999 Liabilities where the customer bears the value change risk 2,087 2,087 2,087 Issued securities 614 840,253 840,866 841,682 Derivative instruments 29,088 1,225 30,312 30,312 Short positions 1,007 1,007 1,007 Other liabilities 12 10,780 10,792 10,790 Subordinated liabilities 37,054 37,054 38,263 Total 30,721 2,087 1,225 2,107,510 2,141,540 2,143,599 Non-financial liabilities 2,792 Total liabilities 2,144,332 233 Handelsbanken Annual and Sustainability Report 2024 3.2
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2023 Fair value through profit or loss SEK m Mandatory Fair value option Derivatives identified as hedging instruments Fair value through other comprehensive income Amortised cost Total carrying amount Fair value Assets Cash and balances with central banks 362,536 362,536 362,536 Interest-bearing securities eligible as collateral with central banks 3,534 195,594 199,128 199,128 Loans to credit institutions 22,079 985,913 1,007,992 1,007,967 Loans to the public 600,997 600,997 600,369 Value change of interest-hedged item in portfolio hedge -9,657 -9,657 Bonds and other interest-bearing securities 14,255 23,827 12,709 50,791 50,791 Shares 5,669 501 6,170 6,170 Assets where the customer bears the value change risk 1,871 78 1,948 1,948 Derivative instruments 29,183 9,836 39,019 39,019 Other assets 27 20,762 20,789 20,789 Total 76,618 219,421 9,836 13,210 1,960,629 2,279,713 2,288,717 Shares in subsidiaries and investments in associates and joint ventures 68,986 Non-financial assets 11,645 Total assets 2,360,344 Liabilities Due to credit institutions 176,143 176,143 176,307 Deposits and borrowing from the public 1,109,471 1,109,471 1,109,002 Liabilities where the customer bears the value change risk 1,871 78 1,948 1,948 Issued securities 1,506 804,661 806,167 806,692 Derivative instruments 39,781 6,489 46,269 46,269 Short positions 2,364 2,364 2,364 Other liabilities 27 11,347 11,374 11,374 Subordinated liabilities 43,117 43,117 43,227 Total 43,678 1,871 6,489 2,144,817 2,196,853 2,197,183 Non-financial liabilities 4,193 Total liabilities 2,201,046 P36 cont. 234 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P37 Fair value measurement of financial instruments Financial instruments at fair value 2024 SEK m Level 1 Level 2 Level 3 Total Assets Interest-bearing securities eligible as collateral with central banks Fair value through profit or loss, mandatory 4,778 84 4,862 Fair value through profit or loss, fair value option 167,745 167,745 Fair value through other comprehensive income Loans to credit institutions 18,045 18,045 Bonds and other interest-bearing securities Fair value through profit or loss, mandatory 15,671 719 16,389 Fair value through profit or loss, fair value option 23,920 23,920 Fair value through other comprehensive income 11,752 1,507 13,259 Shares Fair value through profit or loss, mandatory 7,671 586 8,258 Fair value through other comprehensive income 439 94 161 694 Assets where the customer bears the value change risk 2,069 17 2,087 Derivative instruments 52 52,634 52,686 Total 234,097 73,669 179 307,945 Liabilities Liabilities where the customer bears the value change risk 2,069 17 2,087 Issued securities 614 614 Derivative instruments 39 30,272 30,312 Short positions 992 15 1,007 Total 3,101 30,901 17 34,020 Financial instruments at fair value 2023 SEK m Level 1 Level 2 Level 3 Total Assets Interest-bearing securities eligible as collateral with central banks Fair value through profit or loss, mandatory 3,498 36 3,534 Fair value through profit or loss, fair value option 195,594 195,594 Fair value through other comprehensive income Loans to credit institutions 22,079 22,079 Bonds and other interest-bearing securities Fair value through profit or loss, mandatory 13,950 305 14,255 Fair value through profit or loss, fair value option 23,827 23,827 Fair value through other comprehensive income 11,158 1,551 12,709 Shares Fair value through profit or loss, mandatory 5,166 503 5,669 Fair value through other comprehensive income 210 135 156 501 Assets where the customer bears the value change risk 1,794 77 1,871 Derivative instruments 92 38,925 2 39,019 Total 255,289 63,534 235 319,058 Liabilities Liabilities where the customer bears the value change risk 1,794 77 1,871 Issued securities 1,506 1,506 Derivative instruments 47 46,221 2 46,269 Short positions 2,364 2,364 Total 4,205 47,727 79 52,010 The principles applied are described in note G42. 235 Handelsbanken Annual and Sustainability Report 2024 3.2
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Change in holdings in financial instruments in level 3 2024 SEK m Shares Derivative assets Derivative liabilities Assets where the customer bears the value change risk Liabilities where the customer bears the value change risk Carrying amount at beginning of year 156 2 -2 77 -77 Acquisitions Repurchases/sales -5 Matured Unrealised value change in income statement -3 -2 2 -60 60 Unrealised value change in other comprehensive income 13 Transfer from level 1 or 2 Transfer to level 1 or 2 Carrying amount at end of year 161 0 0 17 -17 Change in holdings in financial instruments in level 3 2023 SEK m Shares Derivative assets Derivative liabilities Assets where the customer bears the value change risk Liabilities where the customer bears the value change risk Carrying amount at beginning of year 152 39 -39 525 -525 Acquisitions Repurchases/sales Matured Unrealised value change in income statement 4 0 0 -448 448 Unrealised value change in other comprehensive income Transfer from level 1 or 2 Transfer to level 1 or 2 -37 37 Carrying amount at end of year 156 2 -2 77 -77 A change in unobservable inputs is not deemed to result in any significantly higher or lower measurement of the level 3 holdings, which is the reason that a sensitivity analysis is not provided. Fair value of financial instruments at amortised cost 2024 SEK m Level 1 Level 2 Level 3 Total Assets Cash and balances with central banks 404,237 404,237 Loans to credit institutions 16,802 961,420 362 978,584 Loans to the public 27,977 1,137 491,681 520,795 Assets where the customer bears the value change risk Total 449,016 962,557 492,043 1,903,616 Liabilities Due to credit institutions 39,763 129,695 169,458 Deposits and borrowing from the public 1,042,371 7,628 1,049,999 Liabilities where the customer bears the value change risk Issued securities 243,710 597,359 841,069 Subordinated liabilities 38,263 38,263 Total 1,325,844 772,945 2,098,789 Fair value of financial instruments at amortised cost 2023 SEK m Level 1 Level 2 Level 3 Total Assets Cash and balances with central banks 362,536 362,536 Loans to credit institutions 36,854 948,676 358 985,888 Loans to the public 42,262 828 557,279 600,369 Assets where the customer bears the value change risk 78 78 Total 441,730 949,504 557,637 1,948,871 Liabilities Due to credit institutions 31,857 144,449 176,307 Deposits and borrowing from the public 1,101,553 7,449 1,109,002 Liabilities where the customer bears the value change risk 78 78 Issued securities 194,404 610,782 805,186 Subordinated liabilities 43,227 43,227 Total 1,327,892 805,907 2,133,800 P37 cont. 236 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P38 Pledged assets, collateral received and transferred financial assets Assets pledged for own debt SEK m 2024 2023 Cash 6,961 20,707 Government securities and bonds 2,401 5,691 Equities 129 143 Assets where the customer bears the value change risk 17 Other 779 737 Total 10,287 27,278 of which pledged assets that may be freely withdrawn by the Bank 15 18 Other pledged assets SEK m 2024 2023 Cash 256 239 Government securities and bonds 87,535 63,619 Equities 2,546 4,411 Other 508 399 Total 90,845 68,667 of which pledged assets that may be freely withdrawn by the Bank 77,724 52,056 Other pledged assets refers to collateral pledged for obligations not reported on the balance sheet. Collateral received As a component in reverse repurchase agreements and securities loans, the Group has received assets that can be sold or repledged to a third party. The fair value of received assets of this type was SEK 45,637 million (46,389) at the end of the financial year, where assets worth SEK 9,250 million (15,721) had been sold or repledged to a third party. Transferred financial assets reported on the balance sheet 2024 2023 SEK m Carrying amount Carrying amount associated liability Carrying amount Carrying amount associated liability Shares, securities lending 2,674 1061) 4,237 1121) Government securities and bonds, repurchase agreements 1,077 0 4,464 2 Assets where the customer bears the value change risk 17 17 159 159 Total 3,768 123 8,860 273 1) Received cash collateral. 237 Handelsbanken Annual and Sustainability Report 2024 3.2
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P39 Contingent liabilities SEK m 2024 2023 Contingent liabilities Guarantees, credits 15,898 15,688 Guarantees, other 51,333 52,885 Irrevocable letters of credit 665 203 Other 455 Total 68,351 68,775 of which subject to impairment testing 68,352 68,775 Obligations Loan commitments 291,399 284,120 Unutilised part of granted overdraft facilities 97,846 96,781 Other1) 290,587 273,912 Total 679,832 654,813 of which subject to impairment testing 511,478 488,824 Total contingent liabilities 748,183 723,588 Provision for expected credit losses reported as provisions, see note P30. 127 292 1) “Other” includes internal liquidity guarantees to subsidiaries amounting to SEK 282,918 million (260,581). Contingent liabilities Contingent liabilities mainly consist of various types of guarantees. Credit guarantees are provided to customers in order to guarantee commitments in other credit and pension institutions. Other guarantees are mainly commercial guarantees such as bid bonds, guarantees relating to advance payments, guarantees during a warranty period and export-related guarantees. Contingent liabilities also comprise unutilised irrevocable import letters of credit and confirmed export letters of credit. These transactions are included in the Bank’s services and are provided to support the Bank’s customers. The nominal amounts of the guarantees are shown in the table. Claims Companies within the Group are subjects of claims in a number of civil actions which are being pursued in general courts of law. The Bank’s Polish operations have a portfolio of mortgages denominated in CHF and EUR, which amounted to approximately SEK 100 million at year-end. There is uncertainty in Polish law regarding the application of various credit terms and conditions involving foreign currency. The aforementioned legal developments may mean that certain contractual terms and conditions in the Bank’s Polish operations cannot be applied and that compensation may have to be paid to certain customers. It is not currently practically feasible to estimate the potential financial impact on the Bank or the likelihood of various outcomes and no disclosure on contingent liabilities is therefore submitted. The assessment is that the other actions will essentially be settled in the Group’s favour. The assessment is that the amounts in dispute would have no material impact on the Group’s financial position or profit/loss, and no disclosure on contingent liabilities is therefore submitted. P40 Pension obligations SEK m 2024 2023 Fair value of plan assets 34,475 33,580 Pension obligations 30,028 29,377 Net pensions1) 4,447 4,203 1) When Net pensions is negative, the deficit is not recognised as a liability on the balance sheet, because the surplus in Pensionskassan SHB, Tjänstepensionsförening can be used to cover the parent company’s pension obligations, and because part of the commitment is conditional. The pension obligations are SEK 7,494 million (7,000) in the Bank’s pension fund (Pensionskassan SHB, Tjänstepensionsförening) and the market value of the assets is SEK 16,718 million (16,323). The surplus value in Pensionskassan SHB, Tjänstepensionsförening is thus SEK 9,224 million (9,324). Plan assets are held by Svenska Handelsbankens Pensionsstiftelse and similar legal entities regarding foreign commitments. Pension obligations are calculated in accordance with the Swedish Financial Supervisory Authority’s regulations, which for the Swedish obligations means in accordance with the Act on Safeguarding Pension Obligations and for foreign pension obligations in accordance with their corresponding local regulation. SEK 6,666 million (7,355) of the fair value of the plan assets in Svenska Handelsbankens Pensionsstiftelse consists of the provisions made in the years 1989-2004 to a special supplementary pension (SKP). The obligations include a commitment regarding SKP of the same amount as the fair value of the plan assets. A part of this commitment, SEK 5,150 million (5,650), is conditional. Pension costs SEK m 2024 2023 Pensions paid -1,813 -1,600 Pension premiums -840 -667 Social security costs -376 -276 Compensation from pension foundation 762 720 Total pension costs -2,267 -1,823 The expected pensions to be paid next year for defined benefit pension plans amount to SEK 1,200 million. The costs for pension premiums include premiums to the BTPK plan (defined contribution pension) of SEK 141 million (147). 238 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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Plan assets SEK m 2024 2023 Opening balance 33,580 31,667 Return 1,657 2,633 Compensation from pension foundation -762 -720 Closing balance 34,475 33,580 Percentage return on plan assets 5% 8% Pension obligations SEK m 2024 2023 Opening balance 29,377 31,616 Technical fee 784 792 Interest 649 367 Indexation1) 1,293 2,361 Early retirement 32 230 Pensions paid -1,778 -1,633 Changed assumptions2) -97 -4,671 Value change conditional obligation 432 622 Other change in capital value -664 -307 Closing balance 30,028 29,377 1) The effect of the hedging of pensions has declined since the indexing was reduced from 10.84% as at 1 January 2023 to 6.48% as at 1 January 2024. 2) The decline in the changed assumptions primarily relates to the higher discount rate in 2023 compared with an unchanged discount rate in 2024. Allocation of plan assets SEK m 2024 2023 Shares and mutual fund units1) 32,937 31,919 Interest-bearing securities 1,409 1,499 Other plan assets2) 129 162 Total 34,475 33,580 1) The mutual fund units are mainly invested in fixed-income funds and amount to SEK 20,898 million (20,270). 2) Other plan assets include both cash and cash equivalents and a liability for compensation that had yet to be disbursed by the pension foundation. In Sweden, as of 1 March 2020, all new employees and employees younger than 25 years of age at the time accrue pension in a defined contribution plan. Persons employed before 1 March 2020 are not affected and remain covered by the defined benefit pension plan included in the pension agreement between the Employers’ Association of the Swedish Banking Institutions (BAO) and Finansförbundet/Swedish Confederation of Professional Associations (Saco). From the age of 65, a retirement pension is paid in an amount of 10% of the annual salary up to 7.5 income base amounts. On the part of the salary in the interval between 7.5 and 20 income base amounts, the retirement pension is 65%, and in the interval between 20 and 30 income base amounts, it is 32.5% of the annual salary. No retirement pension is paid on the portion of the salary in excess of 30 income base amounts. With respect to Swedish pension obligations, the value of the pension obligations is calculated on the balance sheet date in accordance with the actuarial grounds stipulated in the Act on Safeguarding Pension Obligations. In Sweden, the most important calculation assumptions are mortality and the discount rate. The discount rate is 1.8% (1.8) after deductions for tax and overhead costs. Foreign pension obligations are calculated in accordance with local accounting requirements. P40 cont. 239 Handelsbanken Annual and Sustainability Report 2024 3.2
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P41 Assets and liabilities by currency 2024 SEK m SEK EUR NOK GBP USD Other currencies Total Assets Cash and balances with central banks 63,478 203,777 4,160 0 132,799 23 404,238 Loans to credit institutions 767,895 54,290 103,585 67,840 3,090 218 996,917 Loans to the public 147,696 184,436 178,195 4,556 6,889 2,399 524,171 of which corporates 127,518 121,090 149,366 4,555 6,730 1,498 410,757 of which households 18,631 63,346 28,829 1 160 901 111,867 Interest-bearing securities eligible as collateral with central banks 152,122 8,971 74 11,440 172,606 Bonds and other interest-bearing securities 40,114 555 12,900 0 53,569 Other items not broken down by currency 153,552 153,552 Total assets 1,324,855 452,029 298,915 72,396 154,218 2,640 2,305,053 Liabilities Due to credit institutions 31,862 54,230 36,262 41,027 5,331 682 169,394 Deposits and borrowing from the public 825,810 97,993 103,480 2,829 16,438 3,478 1,050,028 of which corporates 348,126 84,749 57,649 2,263 14,282 2,771 509,840 of which households 477,684 13,244 45,831 566 2,156 707 540,188 Issued securities 3,487 353,013 47 5,637 456,621 22,062 840,866 Subordinated liabilities 20,519 6,722 9,814 37,054 Other items not broken down by currency, incl. equity 207,710 207,710 Total liabilities and equity 1,068,869 525,754 139,789 56,215 488,204 26,222 2,305,053 Other assets and liabilities broken down by currency, net 73,752 -159,117 -16,205 334,007 23,582 Net foreign currency position 27 8 -23 21 1 33 Note G2 describes the Bank’s view of foreign exchange risk. 2023 SEK m SEK EUR NOK GBP USD Other currencies Total Assets Cash and balances with central banks 67,895 128,820 4,776 0 160,935 109 362,536 Loans to credit institutions 740,864 98,670 77,867 87,385 2,859 347 1,007,992 Loans to the public 169,249 222,221 192,392 5,383 8,753 2,999 600,997 of which corporates 142,718 139,758 166,117 5,331 8,594 1,945 464,463 of which households 19,783 82,463 26,275 52 159 1,053 129,785 Interest-bearing securities eligible as collateral with central banks 181,752 7,561 36 9,778 1 199,128 Bonds and other interest-bearing securities 37,572 486 12,223 509 50,791 Other items not broken down by currency 138,900 138,900 Total assets 1,336,232 457,758 287,294 92,768 182,835 3,456 2,360,344 Liabilities Due to credit institutions 26,542 54,242 25,438 58,238 11,103 580 176,143 Deposits and borrowing from the public 829,905 140,722 110,182 5,153 20,062 3,449 1,109,471 of which corporates 351,212 112,056 75,816 4,535 17,668 2,677 563,964 of which households 478,693 28,666 34,366 618 2,394 771 545,508 Issued securities 3,767 310,003 0 10,604 459,581 22,211 806,167 Subordinated liabilities 0 22,740 6,258 14,120 43,117 Other items not broken down by currency, incl. equity 225,445 225,445 Total liabilities and equity 1,085,659 527,707 135,619 80,253 504,865 26,240 2,360,344 Other assets and liabilities broken down by currency, net 69,794 -151,632 -12,536 322,019 22,856 Net foreign currency position -155 43 -21 -11 72 -72 240 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P42 Related-party disclosures Claims on and liabilities to related parties Subsidiaries Associates and joint ventures Other related parties SEK m 2024 2023 2024 2023 2024 2023 Loans to credit institutions 965,998 959,034 Loans to the public 1,142 434 334 Derivatives 5,617 8,909 Other assets 9,020 13,361 23 30 8 13 Total 980,635 982,446 457 364 8 13 Due to credit institutions 84,975 85,791 Deposits and borrowing from the public 18,726 20,145 919 311 1,214 1,159 Derivatives 14,356 12,060 Other liabilities 98 83 Total 118,155 118,079 919 311 1,214 1,159 Contingent liabilities 295,867 272,990 7,494 7,000 Derivatives, nominal amounts 461,984 438,479 Related parties – income and expenses Subsidiaries Associates and joint ventures Other related parties SEK m 2024 2023 2024 2023 2024 2023 Interest income 34,559 28,525 19 22 Interest expenses -4,842 -5,129 -10 -3 -163 -149 Fee and commission income 1 1 Fee and commission expenses -202 -223 Other income 3,673 3,566 19 18 Other expenses -410 -452 -205 -177 Total 32,980 26,510 -397 -380 -144 -131 Note P17 contains a specification of subsidiaries, associates and joint ventures. The operations of associates and joint ventures comprise various types of services related to the financial markets. The following companies comprise the group of other related parties: Svenska Handelsbankens Pensionsstiftelse (pension foundation), Svenska Handelsbankens Personalstiftelse (staff foundation) and Pensionskassan SHB, Tjänstepensionsförening (pension fund). These companies use Svenska Handelsbanken AB for normal banking and accounting services. Disclosures concerning shareholders’ contributions to Group and associates are provided in note P17. The pension fund’s commitments to the employees of subsidiaries are guaranteed by the parent company, so if the pension fund cannot pay its commitments, the parent company is liable to take over and pay the commitment. The pension fund’s obligations amounted to SEK 7,494 million (7,000). Svenska Handelsbanken AB has requested compensation from Svenska Handelsbankens Pensionsstiftelse amounting to SEK 762 million (720) regarding pension costs and from Svenska Handelsbankens Personalstiftelse amounting to SEK 28 million (44) for measures to benefit the employees. Information regarding loans to executive officers, conditions and other remuneration to executive officers is given in note G8. 241 Handelsbanken Annual and Sustainability Report 2024 3.2
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P44 Share information Share class 31 December 2024 Number % of capital % of votes Share capital Quota value Class A 1,944,777,165 98.22 99.82 3,014,404,606 1.55 Class B 35,251,329 1.78 0.18 54,639,560 1.55 1,980,028,494 100.00 100.00 3,069,044,166 P45 Events after the balance sheet date No significant events have occurred after the balance sheet date. P43 Proposed appropriation of profits The Board proposes a dividend of SEK 15 per share, of which SEK 7.50 in ordinary dividend (SEK 13 of which 6.50 in ordinary dividend for 2023). The Board’s proposed appropriation of profits is shown on page 58. 242 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P46 Disclosures regarding assets and liabilities held for sale Assets and liabilities in the Bank’s operations in Finland constitute assets and liabilities held for sale in accordance with IFRS 5, which are attributable to two different disposal groups. During the third quarter of 2024 a partial divest- ment was carried out of the first disposal group to Oma Sparbank Abp, consisting of the Finnish SME operations. During the last quar- ter of 2024, the remaining portion of the first disposal group, consisting of private custom- ers including asset management and invest- ment services as well as life insurance opera- tions, was divested to S-banken Abp and the insurance company Fennia Liv. The remaining operations in Finland comprise the second dis- posal group. The following units in Finland are included in the disposal groups and in the dis- continued operations: Handelsbanken AB (publ) international branch in Finland and Handels- banken Asuntoluottopankki, Stadshypotek AB (publ) international branch in Finland. Assets and liabilities held for sale SEK m 2024 2023 Assets Cash and balances with central banks 14 10 Other loans to central banks 25,863 Loans to other credit institutions 1 3 Loans to the public 44,267 82,633 of which households 792 22,325 of which corporates 43,475 60,307 Intangible assets 37 66 Property and equipment 6 18 Other 2,645 135 Total 46,969 108,727 Liabilities Due to credit institutions 247 980 Deposits and borrowing from the public 9,742 51,556 of which households 236 17,434 of which corporates 9,507 34,122 Liabilities where the customer bears the value change risk Provisions 182 187 Other 268 968 Total 10,440 53,692 The translation reserve includes an amount totalling an accumulated SEK 443 million (832) attributable to the translation of assets and liabilities held for sale, refer to Statement of changes in equity, Group. Measuring each disposal group at the lowest of fair value, less costs to sell, and carrying amount did not result in any impairment. 243 Handelsbanken Annual and Sustainability Report 2024 3.2
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Discontinued operations Income, expenses and profit, discontinued operations Finland SEK m 2024 2023 Net interest income 3,169 3,504 Net fee and commission income 306 324 Net gains/losses on financial transactions 15 29 Net insurance result Other income 4 9 Total income 3,493 3,866 Staff costs -779 -830 Other expenses -623 -510 Depreciation, amortisation and impairment of property, equipment and intangible assets -39 -35 Total expenses -1,440 -1,375 Net credit losses 54 44 Gains/losses on disposal of property, equipment and intangible assets -1 -1 Regulatory fees -102 -70 Profit for the year for Finland, before tax 2,004 2,464 Taxes -79 -81 Profit for the year for Finland, after tax 1,925 2,384 Other expenses attributable to discontinued operations1) -11 -73 Taxes 2 15 Profit for the year from discontinued operations, including additional costs after tax 1,916 2,326 Capital gains on sale of disposal groups constituting discontinued operations, before tax -131 Taxes 26 Capital gain after tax -105 Profit for the year from discontinued operations, after tax 1,811 2,326 Material internal transactions with continuing operations, which are eliminated in the income statement above2): Income -12 0 Expenses -117 -115 1) Certain expenses arise in Sweden as a result of the divestment of the discontinued operations, deriving from requirements linked to the discontinuation of the operations. These include, for example, consultancy fees and legal costs. 2) Only external income and expenses are included in profit for the year both from continuing and from discontinued operations. The discontinued operations have material internal transactions with the continuing operations, which are thus eliminated in the accounting. Eliminating internal transactions attributable to the net interest income between the discontinued operations in Finland and Treasury have been adjusted and internal interest income and internal interest expenses are thus presented in continuing and discontinued operations. Cash flows, discontinued operations SEK m 2024 2023 Cash flow from operating activities -2,168 3 Cash flow from investing activities 2,172 -8 Cash flow for the year from discontinued operations 4 -4 P46 cont. 244 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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P47 Capital adequacy EU KM1 – Key metrics template Key metrics 2024 2023 Available own funds (amounts) 1 Common equity tier 1 capital 123,977 125,618 2 Tier 1 capital 134,928 140,644 3 Total capital 161,824 168,123 RWAs 4 Total risk-weighted exposure amount 394,451 421,681 Capital ratios (as a percentage of risk-weighted exposure amount) 5 Common Equity Tier 1 ratio (%) 31.4 29.8 6 Tier 1 ratio (%) 34.2 33.4 7 Total capital ratio (%) 41.0 39.9 Additional own funds requirements to address risks other than the risk of excessive leverage (as a percentage of risk-weighted exposure amount) EU 7a Additional own funds requirements to address risks other than the risk of excessive leverage (%) 1.2 1.2 EU 7b of which: to be made up of CET1 capital (percentage points) 0.7 0.7 EU 7c of which: to be made up of Tier 1 capital (percentage points) 0.9 0.9 EU 7d Total SREP own funds requirements (%) 9.2 9.2 Combined buffer requirement (as a percentage of risk-weighted exposure amount) 8 Capital conservation buffer (%) 2.5 2.5 EU 8a Conservation buffer due to macro-prudential or systemic risk identified at the level of a Member State (%) 9 Institution-specific countercyclical capital buffer (%) 2.0 1.9 EU 9a Systemic risk buffer (%) 10 Global systemically important institution buffer (%) EU 10a Other systemically important institution buffer (%) 11 Combined buffer requirement (%) 4.5 4.4 EU 11a Overall capital requirements (%) 13.7 13.6 12 CET1 available after meeting the total SREP own funds requirements (%) 26.2 24.6 Leverage ratio 13 Total exposure measure 1,544,065 1,609,855 14 Leverage ratio (%) 8.7 8.7 Additional own funds requirements to address the risk of excessive leverage (as a percentage of total exposure measure) EU 14a Additional own funds requirements to address the risk of excessive leverage (%) EU 14b of which: to be made up of CET1 capital (percentage points) EU 14c Total SREP leverage ratio requirements (%) 3.0 3.0 EU 14d Leverage ratio buffer requirement (%) EU 14e Overall leverage ratio requirement (%) 3.0 3.0 Liquidity coverage ratio 15 Total high-quality liquid assets (HQLA) (Weighted value – average) 842,356 790,916 EU 16a Cash outflows – Total weighted value 578,624 595,524 EU 16b Cash inflows – Total weighted value 154,650 174,788 16 Total net cash outflows (adjusted value) 423,974 420,736 17 Liquidity coverage ratio (%) 201.6 192 Net Stable Funding Ratio 18 Total available stable funding 1,306,165 1,320,193 19 Total required stable funding 1,159,673 1,211,510 20 NSFR (%) 112.6 109 245 Handelsbanken Annual and Sustainability Report 2024 3.2
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EU OV1 – Overview of total risk exposure amounts The table shows risk-weighted exposure amounts (RWA) for credit risk, counterparty risk, market risk and operational risk the end of 2023 and the previous year. Credit risk is calculated according to the standardised approach, the foundation IRB approach and the advanced IRB approach. Market risk and operational risk are calculated according to the standardised approach. Total risk exposure amounts (TREA) Total own funds requirements SEK m 2024 2023 2024 1 Credit risk (excl. CCR) 327,669 359,282 26,214 2 of which standardised approach 145,115 148,672 11,609 3 of which the foundation IRB (F-IRB) approach 45,550 47,163 3,644 4 of which slotting approach EU 4a of which equities under the simple risk-weighted approach 2,905 2,182 232 5 of which the advanced IRB (A-IRB) approach 106,076 139,864 8,486 5a of which risk weight floors 28,023 21,401 2,243 6 CCR 10,980 11,827 878 7 of which standardised approach 8,189 8,507 655 8 of which internal model method (IMM) EU 8a of which exposures to a CCP 266 268 21 EU 8b of which credit valuation adjustment – CVA 2,127 2,463 170 9 of which other CCR 398 589 32 10 N/A 11 N/A 12 N/A 13 N/A 14 N/A 15 Disability recovery risk 16 Securitisation exposures in the non-trading book (after the cap) 17 of which SEC-IRBA approach 18 of which SEC-ERBA (including IAA) 19 of which SEC-SA approach EU 19a of which 1,250% / deduction 20 Position, foreign exchange and commodities risks (Market risk) 9,224 11,003 738 21 of which standardised approach 9,224 11,003 738 22 of which IMA 23 Operational risk 46,577 39,569 3,726 EU 23a of which basic indicator approach EU 23b of which standardised approach 46,577 39,569 3,726 EU 23c of which advanced measurement approach 24 Amounts below the thresholds for deduction (subject to 250% risk weight) 25 N/A 26 N/A 27 N/A 28 N/A 29 Total 394,451 421,681 31,556 Market risk under the standardised approach The table shows capital requirements for market risk according to the standardised approach at year-end 2024. Capital requirements SEK m 2024 2023 Outright products Interest rate risk (general and specific) 277 243 Equity price risk (general and specific) 1 3 Foreign exchange risk 451 618 Commodity risk 0 0 Options Simplified method Delta-plus method Scenario approach 9 16 Securitisation (specific risk) Total capital requirements for market risk 738 880 P47 cont. 246 Handelsbanken Annual and Sustainability Report 2024 3.2 Introduction Administration report Financial statements Parent company Sustainability Other
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3.3 Signatures of the Board and CEO Signatures of the Board and CEO We hereby declare that the consolidated accounts were prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, that the parent company’s annual accounts were prepared in accordance with Annual Accounts Act for Credit Institutions and Securities Companies, the regulations and general guidelines issued by the Swedish Financial Supervisory Authority (FFFS 2008:25), and RFR 2 Accounting for legal entities, that the annual accounts and consolidated accounts give a fair presentation of the Group’s and the parent company’s financial position and performance, and that the statutory administration report provides a fair view of the parent company’s and Group’s operations, financial position and performance and describes material risks and uncertainties to which the parent company and other companies in the Group are exposed. STOCKHOLM, 20 FEBRUARY 2025 Pär Boman Fredrik Lundberg Chairman of the Board Deputy Chairman Jon Fredrik Baksaas Hélène Barnekow Stina Bergfors Board member Board member Board member Hans Biörck Kerstin Hessius Anna Hjelmberg Board member Board member Board member Louise Lindh Lena Renström Ulf Riese Board member Board member Board member Michael Green Chief Executive Officer 247 Handelsbanken Annual and Sustainability Report 2024 3.3
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3.4 Auditor’s report Auditor’s report NOTE: this is an unofficial translation of the report originally issued in Swedish. In case of discrepancies between the original report and this translation the original Swedish version shall prevail. To the general meeting of the shareholders of Svenska Handels banken AB (publ), corporate identity number 502007-7862 Report on the annual accounts and consolidated accounts Opinions We have audited the annual accounts and consolidated accounts of Svenska Handels- banken AB (publ) for the year 2024 with the exception of the sustainability report on page 15 and the corporate governance statement on pages 40–57. The annual accounts and consolidated accounts of the company are included on pages 10–247 in this document. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Secu- rities Companies and present fairly, in all mate- rial respects, the financial position of parent company as of December 31, 2024 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act for Credit Institutions and Secu- rities Companies. The consolidated accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies and present fairly, in all material respects, the financial position of the group as of December 31, 2024 and their financial performance and cash flow for the year then ended in accordance with IFRS Accounting Standards, as adopted by the EU, and the Annual Accounts Act for Credit Institu- tions and Securities Companies. Our opinions do not cover the corporate governance state- ment on pages 40–57 or the sustainability report on pages 15. The statutory administration report is consis- tent with the other parts of the annual accounts and consolidated accounts.We therefore recommend that the general meeting of share- holders adopts the income statement and balance sheet for the parent company and the group. Our opinions in this report on the annual accounts and consolidated accounts are con- sistent with the content of the additional report that has been submitted to the parent com- pany’s audit committee in accordance with the Audit Regulation (537/2014) Article 11. Basis for Opinions We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those stan- dards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accor- dance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU. We believe that the audit evidence we have obtained is sufficient and appropriate to pro- vide a basis for our opinions. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most signifi- cance in the audit of the financial statements and the consolidated financial statement for the current period. These matters were addressed in the context of the audit of, and in forming our opinion on, the financial state- ments and consolidated financial statement as a whole, and we do not provide a separate opinion on these matters. The description below of how the audit was conducted in these areas is provided in this context. We have fulfilled the responsibilities de- scribed in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the perfor- mance of procedures designed to respond to our assessment of the risks of material mis- statement of the financial statements and the consolidated financial statements. The results of our audit procedures, including the proce- dures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. 248 Handelsbanken Annual and Sustainability Report 2024 3.4 Introduction Administration report Financial statements Auditor’s report Sustainability Other
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Key audit matters How our audit addressed the Key audit matter Provision for expected credit losses Detailed information and description of the area are provided in the annual accounts and consolidated accounts. Credit risk exposure and how it is managed is described in note G2. The Group’s reported expected credit losses are specified in note G10. Disclosures regarding the parent company are presented in note P2 and P10. The relevant accounting policies for the Group in this area are described in note G1, sections 6 and 13. Note P1 indicates that the parent company’s accounting policies regarding lending and provisions for expected credit losses are consistent with the Group´s accounting policies. As of 31 December, 2024 lending to the public amounts to MSEK 2 297 878 (524 171) for the group (parent) which amounts to 65% (23%) of total assets. The total credit risk exposure, including off-balance commitments, amounts to MSEK 3 699 017 (2 952 370). Provision for expected credit losses on lending to the public amounts to MSEK 1 609 (836) for which MSEK 538 (169) is based on model and expert based calculations (Stages 1 and 2) and MSEK 1 071 (666) is based on manual calculations (Stage 3). The Bank performs expert based adjustments on the model-based calculations in Stages 1 and 2 to take into considera- tion factors which are not accounted for in the model. Expected credit losses shall be measured in a way that reflects an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes and is based on past events, current conditions and forecasts of economic conditions. To determine the provision the Bank is required to make estimates and assumptions regarding for example cri- teria to identify a significant increase in credit risk and methods to calculate expected credit losses. Due to the complexity of the calculation and the fact that it requires the Bank to make estimates and assumptions with a significant impact on reported amounts, the valuation of the provision for expected credit losses is considered a key audit matter. We have evaluated whether the Bank’s assessment of probability of default, loss given default, exposure at default and expected credit loss as well as significant increase in credit risk is in accordance with IFRS 9. We have obtained an understanding of and tested the design of key controls in the credit process including credit decision, credit review, rating classification as well as identifying and determining credits deemed to be in default. We have also tested controls related to model data input and general IT controls including system access management for affected systems. Furthermore, we have on a sample basis reviewed the Bank’s initial and current credit rating. We have tested that data used from supporting systems used in the model is com- plete and accurate. We have reviewed and assessed the model including assumptions and parameters and verified the functionality of the model. We have assessed the reasonableness of the macro- economic data used. We have assessed the reasonableness of the manual adjustments, including the expert-based provision, performed by the Bank. As part of our audit, we used our internal model specialists to support us with the audit procedures performed. We have also reviewed that the disclosures in the financial reports regarding provisions for expected credit losses are appropriate. Fair value measurement of financial instruments with no market prices available Detailed disclosures and descriptions of this area are provided in the annual report and consolidated accounts. Financial instruments measured at fair value are described in Note G42 for the Group and Note P37 for the parent company. The relevant accounting policies for the Group in this area are detailed in Note G1, section 5, on page 72. Note P1 indicates that the parent company’s accounting policies regarding financial instruments measured at fair value align with the Group’s accounting policies. Key audit matter How our audit addressed the Key audit matter The Bank has financial instruments where market price is missing, thus fair value is deter- mined using valuation models based on market data. These financial instruments are catego- rized as level 2 under the IFRS fair value valuation hierarchy. Svenska Handels banken has also, to some extent, financial instruments whose valuation to fair value is determined using valuation models for which the value is affected by input data that cannot be verified by exter- nal market data. These financial instruments are categorized as level 3 under IFRS fair value valuation hierarchy. The group (parent company) has financial assets and financial liabilities in level 2 amounting to MSEK 52 852 (73 669) and MSEK 19 390 (30 901) respectively. Financial assets and liabili- ties in level 3 amounts to MSEK 194 (179) and MSEK 17 (17) respectively. The main part of the financial instruments in level 2 is made out of derivative contracts, among them interest rate swaps and various types of linear currency derivatives, fund shares, and interest bearing instruments. These instruments are valued through the use of valuation models based on market rates and other market prices. Financial instruments in level 3 pri- marily consist of unlisted shares in joint ventures,and investments in the insurance business. Due to the complexity of calculations and the fact that the Bank has to make assessments with a significant impact on reported amounts, valuation of financial instruments with no mar- ket prices is considered to be a key audit matter. We have assessed whether the Bank’s method for valuation of financial instruments where market prices are unavailable, including the classification within the valuation hierarchy, is in accordance with IFRS 13. We have tested key controls in the valuation process, including the Bank’s assessment and approval of assumptions and methods used in model-based calculations, controls over data quality as well as change management regarding internal valuation models. We have also tested general IT-controls, including system access management for affected systems. Further, we have evaluated the methods and assumptions made during the valuation of financial instruments with no market prices available. We have compared the valuation models with valuation guidelines and appropriate industry practice. We have compared assumptions used against appropriate benchmarks and price sources and examined any significant discrepancies. We have verified the reasonableness of the calculations by con- ducting our own independent valuations on a sample basis. During the audit, we have engaged our internal valuation specialist to assist us with selected audit procedures. We have also reviewed the adequacy of the disclosures in the financial statements regarding the fair value measurement of financial instruments. Other Information than the annual accounts and consolidated accounts This document contains other information besides the annual report and consolidated financial statements, which is found on pages 1–9 and 254–382. The remuneration report for the financial year 2024 also constitutes other information. The Board of Directors and the CEO are responsible for this other information. Our opinion on the annual report and con- solidated financial statement does not cover this information, and we do not express any form of assurance conclusion on this other information. In connection with our audit of the annual report and consolidated financial statements, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual report and consolidated financial state- ments. During this review, we also consider the knowledge we have gained during the audit and assess whether the information otherwise appears to contain material misstatements. If, based on the work we have performed on this information, we conclude that there is a material misstatement in this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Director’s and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual report and consolidated financial statements and that they give a fair presenta- tion in accordance with the Swedish Annual Report Act for Credit Institutions and Securi- ties Companies and, concerning the consoli- dated financial statement, in accordance with IFRS accounting standards as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and con- solidated accounts that are free from material misstatement, whether due to fraud or error. In preparing the annual report and con- solidated financial statements, The Board of Directors and the Managing Director are responsible for the assessment of the compa- ny’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the 249 Handelsbanken Annual and Sustainability Report 2024 3.4
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Managing Director intend to liquidate the com- pany, to cease operations, or has no realistic alternative but to do so. The Audit Committee shall, without preju- dice to the Board of Director’s responsibilities and tasks in general, among other things over- see the company’s financial reporting process. Auditor’s responsibility Our objectives are to obtain reasonable assur- ance about whether the annual report and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts. As part of an audit in accordance with ISAs, we exercise professional judgment and main- tain professional scepticism throughout the audit. We also: • Identify and assess the risks of material mis- statement of the annual report and consoli- dated financial statement, whether due to fraud or error, design and perform audit pro- cedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opin- ions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the over- ride of internal control. • Obtain an understanding of the company’s internal control relevant to our audit in order to design audit procedures that are appro- priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclo- sures made by the Board of Directors and the Managing Director. • Conclude on the appropriateness of the Board of Directors’ and the Managing Direc- tor’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncer- tainty exists related to events or conditions that may cast significant doubt on the com- pany’s and the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the annual report and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion about the annual report and consolidated financial statement. Our con- clusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the annual report and con- solidated financial statement, including the disclosures, and whether the annual report and consolidated financial statement repre- sent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient and appropriate audit evi- dence regarding the financial information of the entities or business activities within the group to express an opinion on the financial statement. We are responsible for the direc- tion, supervision and performance of the group audit. We remain solely responsible for our opinions. We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also inform of sig- nificant audit findings during our audit, includ- ing any significant deficiencies in internal con- trol that we identified. We must also provide the Board of Directors with a statement confirming that we have complied with relevant ethical requirements regarding independence, and to disclose any relationships and other matters that could rea- sonably be thought to bear on our indepen- dence, as well as, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual report and consolidated financial statements, including the most significant assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation preclude public disclosure about the matter. Report on other legal and regulatory requirements The auditor’s audit of the administration of the company and the proposed appropriations of the company’s profit or loss Opinions In addition to our audit of the annual report and consolidated financial statement, we have also audited the administration of the Board of Directors and the Managing Director of Svenska Handels banken AB (publ) for the year 2024 and the proposed appropriations of the com- pany’s profit or loss. We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Director’s and the Managing Director be discharged from liability for the financial year. Basis for Opinions We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those stan- dards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accor- dance with professional ethics for accountants in Sweden and have otherwise fulfilled our eth- ical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to pro- vide a basis for our opinions. Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal regarding the allocation of the com- pany’s profit or loss. In the case of a proposed dividend, this includes, among other things, an assessment of whether the dividend is justifi- able considering the requirements that the nature, scope, and risks of the company’s and the Group’s operations impose on the size of the parent company’s and the Group’s equity, the need for consolidation, liquidity, and overall financial position. The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs. This includes among 250 Handelsbanken Annual and Sustainability Report 2024 3.4 Introduction Administration report Financial statements Auditor’s report Sustainability Other
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other things continuous assessment of the company’s and the group’s financial situation and ensuring that the company´s organization is designed so that the accounting, manage- ment of assets and the company’s financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulfill the company’s account- ing in accordance with law and handle the management of assets in a reassuring manner. Auditor’s responsibility Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evi- dence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect: • has undertaken any action or been guilty of any omission which can give rise to liability to the company, or • in any other way has acted in contravention of the Companies Act, the Banking and Financing Business Act, the Swedish Annual Report Act for Credit Institutions and Securi- ties Companies or the Articles of Association. Our objective concerning the audit of the pro- posed appropriations of the company’s profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act. As part of an audit in accordance with gen- erally accepted auditing standards in Sweden, we exercise professional judgment and main- tain professional scepticism throughout the audit. The examination of the administration and the proposed appropriations of the com- pany’s profit or loss is based primarily on the audit of the accounts. Additional audit proce- dures performed are based on our professional judgment, focusing on risk and materiality. This means that we focus the examination on such actions, areas and relationships that are mate- rial for the operations and where deviations and violations would have particular signifi- cance for the company’s situation. We review and evaluate decisions made, supporting doc- umentations, actions taken, and other circum- stances relevant to our opinion on discharge from liability. As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss we examined the Board of Directors’ reasoned statement and a selection of supporting documents in order to be able to assess whether the proposal is in accordance with the Swedish Companies Act. The auditor’s examination of the ESEF report Opinion In addition to our audit of the annual accounts and consolidated accounts, we have also examined that the Board of Directors and the Managing Director have prepared the annual accounts and consolidated accounts in a for- mat that enables uniform electronic reporting (the Esef report) pursuant to Chapter 16, Sec- tion 4(a) of the Swedish Securities Market Act (2007:528) for Svenska Handels banken AB (publ) for the financial year 2024. Our examination and our opinion pertain solely to the statutory requirements. In our opinion, the Esef report has been pre- pared in a format that, in all material respects, enables uniform electronic reporting. Basis for Opinion We have performed the examination in accor- dance with FAR’s recommendation RevR 18 Examination of the ESEF report. Our responsi- bility under this recommendation is described in more detail in the Auditors’ responsibility section. We are independent of Svenska Handels banken AB (publ) in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical respon- sibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to pro- vide a basis for our opinion. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the Esef report in accordance with the Chapter 16, Section 4(a) of the Swedish Securities Mar- ket Act (2007:528), and for such internal con- trol that the Board of Directors and the Manag- ing Director determine is necessary to prepare the Esef report without material misstatements, whether due to fraud or error. Auditor’s responsibility Our responsibility is to obtain reasonable assurance whether the Esef report is in all material respects prepared in a format that meets the requirements of Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), based on the procedures performed. RevR 18 requires us to plan and execute procedures to achieve reasonable assurance that the Esef report is prepared in a format that meets these requirements. Reasonable assurance is a high level of assurance, but it is not a guarantee that an engagement carried out according to RevR 18 and generally accepted auditing standards in Sweden will always detect a material misstate- ment when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could rea- sonably be expected to influence the economic decisions of users taken on the basis of the Esef report. The audit firms apply International Standard on Quality Management 1, which requires the company to design, implement and manage a quality management system including docu- mented policies and procedures regarding compliance with professional ethical require- ments, professional standards and legal and regulatory requirements. The examination involves obtaining evi- dence, through various procedures, that the Esef report has been prepared in a format that enables uniform electronic reporting of the annual and consolidated financial statements. The procedures selected depend on the audi- tor’s judgment, including the assessment of the risks of material misstatement in the report, whether due to fraud or error. In carrying out this risk assessment, and in order to design audit procedures that are appropriate in the circumstances, the auditor considers those elements of internal control that are relevant to the preparation of the Esef report by the Board of Directors and the Managing Director, but not for the purpose of expressing an opinion on the effectiveness of those internal controls. The examination also includes an evaluation of the appropriateness and reasonableness of assumptions made by the Board of Directors and the Managing Director. The procedures mainly include a validation that the Esef report has been prepared in a 251 Handelsbanken Annual and Sustainability Report 2024 3.4
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valid XHTML format and a reconciliation of the Esef report with the audited annual report and consolidated financial statements. Furthermore, the procedures also include an assessment of whether the Group´s income statement, balance sheet, statements of changes in equity, cash flow statement and notes in the Esef report have been marked with iXBRL in accordance with the Esef regulation. The auditor’s examination of the corporate governance statement The Board of Directors is responsible for the corporate governance report on pages 40–57 and for ensuring that it has been prepared in accordance with the Swedish Annual Report Act. Our review has been conducted in accor- dance with FAR’s recommendation RevR 16, The Auditor’s Examination of the Corporate Governance Report. This means that our examination of the corporate governance report has a different focus and significantly lesser scope than the focus and scope of an audit conducted in accordance with Interna- tional Standards on Auditing and generally accepted auditing standards in Sweden. We believe that this review provides us with a suffi- cient basis for our opinion. A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2–6 of the Swedish Annual Report Act and chapter 7 section 31, second paragraph of the same act, are consistent with the other parts of the annual report and consolidated financial statements and are in accordance with the Annual Accounts Act for Credit Institu- tions and Securities Companies. Auditor’s report on the statutory sustainability report It is the board of directors who is responsible for the statutory sustainability report on page 15 and that it has been prepared in accor- dance with the previous wording that applied prior to 1 July 2024 of the Swedish Annual Report Act. Our examination has been conducted in accordance with FAR’s auditing standard RevR 12 The auditor’s opinion on the statutory sustainability report. This means that our review of the sustainability report has a differ- ent focus and significantly lesser scope than the focus and scope of an audit conducted in accordance with International Standards on Auditing and generally accepted auditing stan- dards in Sweden. We believe that this review provides us with a sufficient basis for our opinion. A statutory sustainability report has been prepared. PricewaterhouseCoopers AB, Torsgatan 21, 113 97 Stockholm, was appointed auditor of Svenska Handels banken AB (publ) by the general meeting of the shareholders on 20 March 2024 and has been the company’s auditor since 29 March 2017. Deloitte AB, Rehnsgatan 11, 113 57 Stockholm, was appointed auditor of Svenska Handels banken AB (publ) by the general meet- ing of the shareholders on 20 March 2024 and has been the company’s auditor since 22 March 2023. Stockholm February 26, 2025 PricewaterhouseCoopers AB Deloitte AB Magnus Svensson Henryson Malin Lüning Authorized Public Accountant Authorized Public Accountant 252 Handelsbanken Annual and Sustainability Report 2024 3.4 Introduction Administration report Financial statements Auditor’s report Sustainability Other
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4.0 Sustainability at Handelsbanken Sustainability at Handelsbanken 254 Handelsbanken Annual and Sustainability Report 2024 4.0
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4.0 Sustainability at Handelsbanken 254 4.1 Introduction 256 Sustainability Report 259 4.2 General information 260 ESRS 2 General disclosures 261 Datapoints related to other EU legislation 280 4.3 Environmental information 284 ESRS E1 Climate change 285 EU Taxonomy 293 ESRS E4 Biodiversity and ecosystems 296 4.4 Social information 298 ESRS S1 Own workforce 299 ESRS S2 Workers in the value chain 308 ESRS S4 Consumers and end-users 313 Entity specific – Contribute to Society 316 4.5 Governance information 318 ESRS G1 Business conduct 319 Entity specific – Counteract financial crime 322 Entity specific – Financial stability 324 4.3 cont. EU Taxonomy – continued 326 4.6 Auditor's report on the review of Svenska Handelsbanken AB's (publ) sustainability report 372 255 Handelsbanken Annual and Sustainability Report 2024
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4.1 Introduction New sustainability regulations New sustainability legislation has been gradu- ally implemented in a number of different areas, mainly, but not solely, related to the EU’s aim of making Europe the first climate-neutral continent. Handels banken offers its customers financial products, services and advisory ser- vices that enable them to make sustainable choices, comply with applicable regulations and prepare for future legislation. Handels- banken’s 2024 Sustainability Report is pre- sented on pages 259–370 and has been pre- pared in accordance with the requirements of the European Sustainability Reporting Stand- ards (ESRS), with the exception that the Sus- tainability Report is presented outside the administration report. Parts of this Report also constitute the Bank’s statutory sustainability report. Handels banken has integrated sustainability as a natural part of its operations for a long time, focusing on long-term responsibility and close customer relationships. The five Group-wide sustainability targets, which were developed based on the UN global initiative Principles for Responsible Banking (PRB), have played an important role in driving the progress of the Bank’s sustainability work. We are proud of how these targets have helped us strengthen our efforts, develop business products and services, build processes and working methods, and position ourselves as a responsible actor. Given the new laws and regulations in the field of sustainability, the Bank now sees a need to align its objectives even more with its core values and unique working methods. The Bank aims to achieve higher profitability than the average of peer competitors in our home markets. We use two means to achieve this: lower costs and more satisfied customers than our competitors. By further integrating sustainability into these pillars, the Bank can contribute to long-term stable and responsible development that benefits customers, society and the environment. The Bank’s ambition is to ensure that its operations can fully support our customers in their transition in line with current science and the climate targets of our home markets and the EU. Our aim is to provide capital and liquid- ity to meet customers’ funding needs and to offer products, services and advisory services that enable a sustainable transition. Handels- banken will thus enhance its ability to integrate sustainability into all customer meetings, regardless of where and how our customers choose to meet us. The Science Based Targets initiative (SBTi) is an independent initiative that helps compa- nies set science-based climate targets in line with the Paris Agreement. According to the SBTi’s general methodology, the current assessment is that our customers’ properties in which the Bank holds collateral should achieve a standardised indicated emission reduction of 56 per cent for residential proper- ties and 53 per cent for commercial properties by 2030 (base year 2021), based on the market and property distribution of the portfolio. The Bank continuously monitors the development of its collateral portfolio to ensure an efficient funding structure for the Bank and to evaluate its pace towards a climate-neutral portfolio. Handels banken has a high ambition to make funding available to creditworthy property owners and thereby support their transition. With appropriate products, services and advi- sory services, and by ensuring sufficient capi- tal and liquidity, the Bank ensures its ability to promote the necessary energy efficiencies and emission reductions. Moving forward, the Bank is focusing on improving both its analysis and its offering to continuously provide even more help to customers in their transition. However, the real estate sector faces signifi- cant challenges to achieve the desired transi- tion. Handels banken is well-positioned to be a leader in supporting development in the sector. The Bank’s previous sustainability targets will no longer be separate priorities, and instead are integrated into the Bank’s core business. As previously, the focus of these efforts is on supporting customers in their tran- sition journey through three key areas: lending, asset management and payment services. This means that our sustainability offering, which includes responsible lending and gender-equal advisory services, is fully integrated into the Bank’s operations – in customer meetings, in our product development, in various local initi- atives and in our knowledge exchanges. By providing advisory services and information, we improve the financial literacy of our cus- tomers and in doing so empower them to make well-informed financial decisions. The integration of sustainability thus increases the Bank’s ability to better meet the individual needs of our customers. Handels banken strengthens its sustainability efforts by remain- ing close to the market and customers while maintaining its unique characteristics – long- term relationships, strong cost awareness and low risk-taking. Handels banken sees this as a natural step forward in further strengthening its role as a long-term and stable partner in a changing world. In addition to adhering to the regulations that apply to the financial sector, Handels- banken wants to raise its own ambitions in the area of sustainability, not least in terms of the direct climate impact of its own operations. Introduction 256 Handelsbanken Annual and Sustainability Report 2024 4.1 Introduction Administration report Financial statements Sustainability Introduction Other
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Sustainable working methods A cornerstone of Handels banken’s business model is the processing of credit applications through a customer-oriented, highly decen- tralised approach. The local branch decides whether or not the credit is to be granted fol- lowing a careful assessment and analysis, which includes the important factors of local connection and in-depth market knowledge. The Bank is financed by funding and equity. In addition, the Bank offers customers the oppor- tunity to purchase and acquire various kinds of securities and savings products. Finally, the Bank processes payments, mainly in Sweden. Handels banken’s value chain is described in more detail on page 267. A variety of risks arise in the banking opera- tions. A bank that fails to manages these risks adequately will quickly become a problem for its customers and owners. In the past, this has often had such far-reaching consequences that costs for restoring a functioning banking system had to be shouldered by society, cen- tral banks and, ultimately, taxpayers. Handels- banken has never needed financial support from either central banks or taxpayers. We want to be a long-term, stable and accessible player – never part of the problem, always part of the solution. Handels banken’s robust resil- ience to crises has been achieved over a long period of time, based on low risk tolerance and stable finances, combined with high know - how and expertise in credit management, and a strong corporate culture. Extensive experience in lending Handels banken has over 150 years of experi- ence in managing changes in the nature of credit risk, such as changes in technology. This takes place at the local level, but within the framework of a Bank-wide credit policy. When granting credit, the Bank assumes that the relevant licensing authorities have made decisions in accordance with the appli- cable regulatory framework and that they issue permits and licences to meet publicly stated sustainability objectives. Besides assessing credit risk, the Bank ensures that the necessary permits are in place and con- siders their validity. The Bank’s role is not to scrutinise legislation or government decisions since this would risk conflicting with demo- cratically enacted laws and regulations. The Bank currently integrates climate risks into its credit assessments and overall risk manage- ment in accordance with the requirements of the Swedish Financial Supervisory Authority, read more in note G2 on pages 119–121. In addition, Handels banken lends to public sector actors such as municipalities, counties and regions, sovereigns and central banks, and thereby also helps build strong and stable societies. In accordance with the Taxonomy Regulation (EU 2020/852), Handels banken also reports how its activities and financing contribute to the Taxonomy’s six environmental objectives, such as climate change mitigation and climate change adaptation. The Bank’s Taxonomy reporting can be found on pages 293–295 and 326–370. A comprehensive savings offering Handels banken offers its customers the opportunity to invest in a wide range of bonds, shares and funds. The Bank’s own products, mainly funds, have been developed based on what the Bank regards as the most sought-after investment opportunities, which means that the range is primarily governed by customer needs and wishes. The same princi- ples as for lending – complying with applica- ble laws and regulations – also apply to deposits and other investment services. As always at Handels banken, the range of prod- ucts and services is curated based on cus- tomer needs. All securities offered are traded on regulated marketplaces, such as Nasdaq. The Bank is in regular contact with various exchanges to ensure that the listing agree- ments are produced so that customers can be confident that their investments correspond to an actual asset, and that relevant informa- tion on issuers is available so that informed investment decisions can be made. Fast and secure payments Nowadays, payments are mostly made elec- tronically, which is both fast and resource- efficient. One of the Bank’s key priorities is to ensure that the payments systems are pro- tected from being used for criminal activities. This includes working proactively to prevent payment flows from being used for money laundering, terrorist financing or other illegal activities. Looking ahead Handels banken is well equipped to support its customers in their efforts to adapt themselves and their businesses to both current and future legislation. Following the requirements of the ESRS, the Bank has performed a double mate- riality assessment (DMA) which can be read on pages 273–277. In summary, Handels banken considers its social responsibility to ensure good availability of credit, offering customers relevant investment opportunities and prevent- ing criminals from accessing payment services. Yet it is also natural for the Bank to support its customers in their transition process through close dialogue and advice on matters relating to the EU’s net-zero emissions target. It is a Företag 257 Handelsbanken Annual and Sustainability Report 2024 4.1
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natural extension of the Bank’s business model, which focuses on a long-term approach and customer benefit. Our community engagement Our many years of engaging with the commu- nity, in the form of supporting independent knowledge sharing, research into finances and supporting the local initiatives and activities of clubs and associations, is part of our different approach to running a bank, based on long- term personal customer relationships and a strong local connection. We want to contribute to the strength and stability of the communities in which we operate. This is where we can find the most favourable conditions. Knowledge at the centre of Handelsbanken’s community engagement Handels banken’s operations are based on an in-depth and broad knowledge of finances. The Bank sees that customers who have good financial knowledge often make more informed and better decisions, and thus pose a lower credit risk. It is therefore entirely natural that Handels banken wants to enhance knowledge about finances through education and research. It is also important for the Bank that this knowledge, together with other insights and analysis of finances and society, is widely and impartially shared, without any influence from the Bank or motivated by other interests. Handels banken supports research and the dis- semination of knowledge in both its foundation form and in its daily work. More than 1,200 post-doc researchers receive financing in vari- ous ways under these initiatives. An independent media house has also been established to share new knowledge, insights and analysis through books, magazines, TV and podcasts. Collaborations take place with relevant knowledge centres to create more platforms for generating and disseminating knowledge. Scientific education is an area in which the Bank is dedicating extra resources over the next few years, and several ongoing projects will result in various forms of teaching materials. Research grants from the Handels- banken-supported foundations in 2024 amounted to SEK 265 million, focusing mainly on research into business economic and eco- nomic science. Handels banken has a major opportunity to make a difference in society within the areas of research and the dissemination of new knowl- edge. For this reason, Handels banken intends 1) Annual Report, Note G47. to focus its community engagement on re - search, with the aim of sharing new insights that be given to and benefit many people. This is how the Bank creates the highest value for its customers while providing significant public benefit. At the same time, Handels banken is a highly decentralised organisation, with deep connections in its local markets. The branches know local needs the best, and therefore they know how to best support developments in their areas and choose how best to channel their community engagement locally. Handels banken as a taxpayer Handels banken is a responsible taxpayer that contributes to the communities in the countries where the Bank operates. This takes place by withholding, paying and accounting for the Bank’s own tax, on behalf of its co-workers and on behalf of its customers, in accordance with national and international laws and regu- lations. It is then the task of elected deci- sion-makers to distribute this income to the public for the common good. One of Sweden’s largest taxpayers Handels banken’s profit before taxes and regu- latory fees amounted to SEK 38.2 billion in 2024. This generated the following value: • SEK 7.9 billion in total tax, making Handels- banken one of the largest payers of corpo- rate tax in Sweden • SEK 2.9 billion in resolution fees and other regulatory fees • SEK 29.7 billion in proposed dividends to shareholders. Transparent and responsible taxpayer Handels banken complies with the OECD Transfer Pricing Guidelines, meaning that the Group’s earnings are taxed where value is cre- ated. As part of this, the Bank produces a country-by-country report that includes infor- mation on earnings and tax paid by country. This report is submitted to the tax authority in Sweden, which then shares the report with the tax authorities in the other countries where the Bank operates. As a financial institution under the supervision of the Swedish Financial Supervisory Authority, Handels banken is required to publish geographical information by country in accordance with FFFS 2008:25. This public report provides essentially the same information as the country-by-country report that is shared with tax authorities as described above.1) In all countries in which Handels banken is established, the Bank conducts real operations with profits from local business operations for which the Bank is taxed locally in accordance with the normal local tax regulations. This also applies to the Bank’s operations in Luxem- bourg, which consequently are not subject to local Luxembourg tax regimes that allow for lower tax rates. Handels banken’s tax management framework Handels banken’s tax management framework consists of Handels banken’s policy for sus- tainability, Handels banken’s policy for ethical standards and Handels banken's CEO guide- line on managing taxes. These serve as an important starting point for the Bank’s work on tax-related matters and are published on the Bank’s external website. Under the framework, Handels banken dis- associates itself from tax evasion and the Bank must manage tax in accordance with local and international tax laws and regulations and their intent. A fundamental principle is that the transactions carried out by the Bank as part of its own operations as well as the transactions carried out or participated in by the Bank in relation to its customers must always have a commercial purpose. The Bank is not to carry out or participate in artificial transactions, as part of its own operations or in relation to its customers, that have a primary objective of obtaining tax advantages in conflict with the intent of the tax regulations. If there is doubt, the Bank must refrain from participating. Taxes withheld for customers and employees 2024, SEK 11,492 m % Taxes withheld for customers 63 Taxes withheld for employees 37 Corporate tax and charges 2024, SEK 14,829 m % Corporate tax 53 Social security costs 18 Fees for resolution fund, deposit insurance and risk tax 20 Non-deductible input VAT 10 258 Handelsbanken Annual and Sustainability Report 2024 4.1 Introduction Administration report Financial statements Sustainability Introduction Other
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Sustainability Report Sustainability Report 259 Handelsbanken Annual and Sustainability Report 2024
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4.2 General information General information Disclosure Requirements ESRS 2 General disclosures Basis for preparation 261 BP-1: General basis for preparation of sustainability reports 261 BP-2: Disclosures in relation to specific circumstances 261 Governance 262 GOV-1: The role of the administrative, management and supervisory bodies 262 GOV-2: Information provided to and sustainability matters addressed by Handels banken’s administrative, management and supervisory bodies 264 GOV-3: Integration of sustainability-related performance in incentive schemes 265 GOV-4: Statement on due diligence 265 GOV-5: Risk management and internal controls over sustainability reporting 265 Strategy 266 SBM-1: Strategy, business model and value chain 266 SBM-2: Interests and views of stakeholders 268 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model 268 Impact, risk and opportunity management 273 IRO-1: Description of the processes to identify and assess material impacts, risks and opportunities 273 ESRS 2 IRO-1 E1: Description of the processes to identify and assess material climate-related impacts, risks and opportunities 274 ESRS 2 IRO-1 E4: Description of the processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities 277 IRO-2: Disclosure requirements in ESRS covered by Handels banken’s Sustainability Report 277 Metrics and targets 278 Datapoints related to other EU legislation Datapoints related to other EU legislation 280 260 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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ESRS 2 General disclosures This section presents the basis on which sus- tainability work is structured and the govern- ance processes and strategies that support the Bank’s role in the financial market. Sustain- ability at the Bank is integrated into all parts of the operations, including lending, asset man- agement and advisory services, and is gov- erned by Handelsbanken’s overarching princi- ples and strategy of a long-term approach, trust in the individual, local connection and low risk tolerance. ESRS 2 General disclosures General information Handelsbanken’s Sustainability Report 2024 is based on the European Sustainability Reporting Standards (ESRS) and aims to provide an insight into the Bank’s environmental, social and governance impacts, and how these aspects may affect the Bank’s development. Basis for preparation BP-1: General basis for preparation of sustainability reports Handelsbanken’s 2024 Sustainability Report is presented on pages 259–370 and has been prepared in accordance with the requirements of the European Sustainability Reporting Standards (ESRS), with the exception that the Sustainability Report is presented outside the administration report and it is the Executive Team of the Bank that is responsible for pre- paring the Report. Parts of this Report also constitute the Bank’s statutory sustainability report, which also includes the Taxonomy reporting, and is defined in the table on page 11. The Sustainability Report aims to strengthen the Bank’s sustainability work, enhance report- ing and ensure greater transparency for exter- nal stakeholders. The Sustainability Report was prepared at Group level in line with the financial state- ments. The subsidiaries included in the Group and that reference the Group’s Sustainability Report are: Handelsbanken Finans AB, Stads- hypotek AB, Handelsbanken Fonder AB, Ecster AB and Handelsbanken Liv Försäkring AB. The Report covers both Handelsbanken’s own operations and upstream and down- stream activities in the value chain. More infor- mation about the value chain is provided in SBM-1 Strategy, business model and value chain on page 266. No information on intellectual property rights, know-how or innovation results has been omitted. This also includes information on any future developments or ongoing negotiations. BP-2: Disclosures in relation to specific circumstances One of the changes from previous years is that the Sustainability Report was prepared in accordance with the ESRS, with the exception that the Sustainability Report is presented out- side the administration report. This entailed new processes for the preparation of the Sus- tainability Report and also the development of the Bank’s material sustainability matters and targets. See more information on page 278. The Group-wide sustainability targets, based on the UN Principles for Responsible Banking (PRB) have been important to sustain- ability at the Bank. Given the new regulations, the Bank now sees a more urgent need to align its objectives with its core values and working methods. This does not mean changing the Bank’s fundamental way of working, but rather further integrating sustainability into the Bank’s business strategy. Previous Group-wide sus- tainability targets are no longer addressed separately and are now incorporated with the Bank’s overall corporate goal: to have better profitability than the average of peer competi- tors in its home markets, achieved though lower costs and more satisfied customers. Read more about the previous sustainability targets on page 278. The time perspectives used is in line with ESRS definitions, short term is one year, medium term is between one and five years, and long term is more than five years. Any value chain estimates and/or uncertainties used in metrics are indicated in the information presented. This also applies to any changes in comparative information. The following information is incorporated by reference to other parts of the administration report: • Contribute to society (ESRS 2 MDR-M) • Financial stability (ESRS 2 MDR-M). For 2024, the Bank’s reporting under the Task Force on Climate-related Financial Disclosures (TCFD) is part of the Sustainability Report, meaning that some information in section E1 Climate Change is derived from the TCFD. Some of the information in the E4 Bio diversity section is from the Bank’s Nature and Biodiver- sity Progress report published for the first time in 2024, partly guided by the Taskforce on Nature-related Financial Disclosures (TNFD). Handelsbanken has previously reported on sustainability in accordance with the GRI and some ESRS metrics correspond to previously used GRI indicators. Taxonomy reporting is part of the statutory Sustainability Report. Information related to other EU legislation is presented in the table Relationship to other EU legislation on pages 280–283. 261 Handelsbanken Annual and Sustainability Report 2024 4.2
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Governance GOV-1: The role of the administrative, management and supervisory bodies The Board is Handels banken’s highest admin- istrative body and is responsible for establish- ing the overall goals and strategy of the Bank. The Board was composed of nine elected mem- bers in 2024. In addition, there are two work- ers’ representatives and two deputy members representing the employees, in accordance with Swedish law. All Board members are non - executive. Several members have worked on the Bank’s Board for a long time and are very familiar with the Bank’s operations. The corpo- rate governance structure of Handels banken, including the Board’s roles and experience, is described in more detail in the Corporate Gov- ernance Report on pages 40–57. During the 2024 financial year, the percentage of women on the Board of the Bank was 44 per cent of the elected members, and the percentage of the elected members with a different geograph- ical origin than Sweden was 11 per cent. The proportion of elected members who were inde- pendent of the Bank, its management and major shareholders was 78 per cent. The Board members have broad and extensive experi- ence from the business community. Several are, or have been, chief executive officers or CFOs of major companies, and most of them are also board members of major companies. The Board has access to relevant sustainability expertise through the specialists employed in the organisation, including a dedicated sus- tainability and climate unit. This enables the Board to understand the strategic and opera- tional challenges of the business operations and to make informed decisions on sustaina- bility matters. The skills and expertise available to address sustainability matters are directly related to the Bank’s operations and material sustainability risks and opportunities. The Bank’s Chief Sustainability and Climate Officer (CSO) is a member of the Executive Team and reports every quarter to the Board and the CEO on the progress and development of sus- tainability, including issues of particular con- cern to the Bank. The Board issues overarching policies that govern the entire Group’s operations, serving Selection of steering documents Steering documents Established by Public Climate change Bio- diversity Own workforce Workers in the value chain Consumers and end-users Contribute to society Business conduct Counteract financial crime Financial stability Credit policy for the Handelsbanken Group The Board No • • • Policy for remuneration at the Handelsbanken Group The Board No • Policy for ethical standards at the Handelsbanken Group The Board Yes • • • • Policy for the Handelsbanken Group on actions against financial crime The Board Yes • Policy for management of conflicts of interest at the Handelsbanken Group The Board Yes • Policy for sustainability at the Handelsbanken Group The Board Yes • • • • • • Policy for complaints management at the Handelsbanken Group The Board No • Policy for operational risk at the Handelsbanken Group The Board No • • Policy against corruption The Board Yes • • Handelsbanken’s guidelines – Environment and climate change CEO Yes • • Human rights and working conditions – Handelsbanken’s guidelines CEO Yes • • • Guidelines for work environment at the Handelsbanken Group CEO Yes • Guidelines for Handelsbanken’s offering in forestry and farming CEO Yes • Guidelines for supplier arrangements at the Handelsbanken Group CEO No • Guidelines for security and data protection at the Handelsbanken Group CEO No • Guidelines for actions against financial crime at the Handelsbanken Group CEO No • Policy on governance and steering documents The Board No • • Financial policy for the Handelsbanken Group The Board No • Capital policy for the Handelsbanken Group The Board No • 262 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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as a framework for the work processes of both management and employees. These policies are reviewed annually, but may be up- dated more frequently to ensure that the Bank can react quickly to changing conditions or new risks. For example, Handels banken’s credit policy describes the Bank’s risk tolerance and strate- gies for managing credit risks. This policy ensures that the Bank’s low risk tolerance for credit losses is maintained over time. The pol- icy clarifies that sustainability risks and related environmental, climate, social and governance factors are to be an integral part of the credit risk assessment. The credit policy states that Handels banken’s lending must be responsible and meet high ethical standards, and that the Bank puts customers first, not the Bank’s prod- ucts and services. The Bank’s job is to satisfy customer needs, not to sell specific services. Risk management is further strengthened by the policy for risk control, which sets out the basic principles for the independent monitor- ing and control of the Group’s risk manage- ment. This policy emphasises that all material risks to which the Bank is exposed, or can be expected to be exposed to, must be identified and managed systematically and transparently. This is reflected in the way business units are responsible for monitoring their respective risks and how this is followed up through the Bank’s internal control functions. The policy for ethical standards states that all Handels banken employees must act in a way that upholds confidence in the Bank. All operations within the Group are to observe high ethical standards. Discrimination, victimi- sation, sexual harassment or other forms of harassment based on gender, transgender identity or expression, ethnicity, religion or other beliefs, disability, sexual orientation, age or on any other grounds must not occur within the Bank, either internally towards and between employees or towards customers, suppliers and other external parties. The policy also describes how employees and other stake- holders should act in case of suspected fraud or other irregularities. Handels banken has an established whistleblower system that can be used to report something anonymously. Iden- tity and personal data must be protected at all times, and there must be no form of unfair treatment of the whistleblower. Handels banken’s policy against corruption emphasises the importance of preventing and never accepting corruption in any form. The policy covers all types of corrupt behaviour, including bribery, breach of trust and improper use of one’s position to gain advantages for oneself or others. All employees of the Group, as well as others representing the Bank, are expected in all their activities to act in a man- ner that maintains confidence in Handels- banken and must avoid participating in actions that may involve improper influence or corruption. The Bank follows the recommendations of the Swedish Anti-Corruption Institute’s Code on Business Conduct, and rules regarding The Board Chief Executive Officer Handelsbanken SustainabilitySustainability committee Green Finance committee Sustainability Home MarketsSustainability taskforce Selects/appoints/initiates Informs/reports Sustainability governance at Handelsbanken Q1 Q2 Q3 Q4 Business environment analysis of regulations and world events. Sustainability from the perspec- tive of supervisory authorities. Review of new regulations against greenwashing. Sustainability in a new organisa- tional structure. Status of CSRD implementation. Integrating sustainability risks into portfolio management and investment and insurance advice. The Sustainability committee’s work in 2024 263 Handelsbanken Annual and Sustainability Report 2024 4.2
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bribery and other improper influence are applied in all contexts, including gifts, corpo- rate hospitality and events. The joint approval process for new and amended products is governed by the Bank’s policy for products and services and adheres to an established checklist specifying the product’s characteristics, risks and other rele- vant information. This process is designed to ensure that the Bank’s sustainability matters are taken into account in product development. The policy for sustainability sets the direc- tion for the Bank’s work and clearly sets out the Bank’s view of sustainability. The policy encompasses all activities in relation to co-workers, customers, suppliers and other business partners. It states that sustainability matters should be integrated throughout the Bank’s operations and that the Bank should strive to minimise negative impacts on the environment and society. This policy reflects the Bank’s commitment to operate in a way that supports a transition to an economy with net-zero GHG emissions. The policy also states that Handels banken is to protect human rights and workers’ rights and not contribute to viola- tions of these. Gender equality, diversity and inclusive culture are to be part of Handels- banken’s core values. Handels banken does not accept corruption, money laundering or terrorist financing and conflicts of interest are to be managed. The aim of the policy on governance and steering documents is to define the overall organisation and to describe the goals, steer- ing documents and division of responsibilities that form the basis of the governance of the Group. The policy highlights Handels banken’s targets, concept and corporate culture, which include the central pillars of trust in the indi- vidual, a strong local commitment and a decentralised way of working. The Bank endeavours to create value through personal meetings and long-term customer relation- ships. This is supplemented with a working method and remuneration system that sup- port responsible and risk-conscious opera- tions. By running the banking operations in a responsible and sustainable manner and with stable finances, Handels banken earns the confidence of customers, shareholders and other stakeholders. Satisfied customers are required to ensure sustainable profitability and the ability to develop the Bank’s business and customer offerings, regardless of changes in the world. The policy thus serves as a frame- work for good governance and a platform for creating value and contributing to the society in which the Bank operates. The Bank’s CEO also issues guidelines and instructions that complement the Board’s poli- cies. These steering documents cover many areas, from actions against financial crime to guidelines on human rights, the environment and climate change. In summary, these policies and guidelines show how the Board’s and management’s responsibilities for managing impacts, risks and opportunities are integrated into Handels- banken’s governance structure. A comprehen- sive framework of policies, guidelines and instructions ensures that all parts of the organ- isation have clear and effective processes to monitor, manage and report risks and opportu- nities. A summary of the Bank’s steering docu- ments can be found on Handels banken.com. Certain policies and guidelines are also availa- ble in their entirety on the website. Handels banken’s sustainability work is decentralised and carried out wherever the Bank’s business and operational decisions are made. Handels banken’s Chief Sustainability and Climate Officer (CSO) leads sustainability work and reports directly to the CEO. The CSO is responsible for ensuring that sustainability work is conducted in accordance with internal and external rules and that identified sustaina- bility risks are managed. The function also reports on sustainability matters to the Board’s Audit Committee and coordinates the Bank’s sustainability work through the Sustainability committee. The CSO is Chair of the Bank’s Sustainabil- ity committee, which was established in 2010. The committee’s role is to analyse and, when necessary, coordinate the Group’s sustaina- bility efforts. The scope of the Sustainability committee’s work includes proactively identify- ing and addressing potential issues and busi- ness opportunities. The committee comprises decision-makers from both business and central departments, many of whom are also members of the Bank’s Executive Team. The Sustainability committee convenes at least three times per year, or more often if necessary. In 2024, in conjunction with the implementa- tion of CSRD, a steering group was established to complement the Sustainability committee. The steering group comprises the Bank’s CSO, CFO and the Bank’s former Chief Strategy Officer who is now Head of Financial Crime Prevention. The steering group assumes the overall responsibility for making decisions on establishing boundaries, priorities and the focus of implementing the CSRD. The CSO has reported to the Board’s Audit Committee on several occasions, on identified material sustainability matters and on the sustainability targets developed in line with the reporting requirements. The management of sustainability matters and risks is integrated into the Bank’s risk management, which follows a three-line-of - defence structure. This is described in more detail in the Corporate Governance Report on pages 48–49 and covers responsibility of the business operations (first line), risk control (second line), and independent review (third line). For more information on the management of sustainability risks, see note G2 on pages 119–121, and the Bank’s report Risk and Capital Information according to Pillar 3. The CSO reports regularly to the Board or relevant committees on the progress of the Bank’s sustainability work, the achievement of the sustainability targets established in line with the ESRS and the strategic issues raised by them. The Audit Committee has a key role in overseeing the implementation of the CSRD and adjusting and developing sustainability targets on behalf of the Board. These targets and progress are regularly monitored to ensure that they are in line with the Bank’s overall business goals and risk management. GOV-2: Information provided to and sustainability matters addressed by Handels banken’s administrative, management and supervisory bodies Reporting on the Bank’s overall sustainability work, including key issues related to regulatory frameworks, policies and actions, is provided on a quarterly basis to the Board, or the com- mittee designated by the Board, and to the CEO by the CSO. Any significant deviations are also reported, which includes progress in the sustainability work. No significant devia- tions were reported in 2024. Handels banken’s Board of Directors consid- ers impacts, risks and opportunities in a num- ber of key sustainability areas primarily through the steering documents issued by the Board, including on overall strategy, transactions and risk management. These steering documents set out the fundamental principles of the Bank’s operations and provide a framework for its sustainability work, including how the Bank manages sustainability-related risks and opportunities. These steering documents are complemented by detailed internal rules that provide instructions and guidance on how sus- tainability work is to be conducted in practice. The following items have been addressed by Handels banken’s Board or relevant commit- tees in 2024: • Governance: The Bank’s policies, guide- lines and organisation have been assessed, and the Board was informed of the Bank’s climate transition plan. • CSRD and double materiality assess- ment: Handels banken has conducted a double materiality assessment to identify which sustainability matters are of greatest importance to the Bank. • Sustainability targets in accordance with CSRD: Definition of targets and internal preparation, including timetable, in relation to new requirements under the CSRD. 264 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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• Sustainability targets in accordance with PRB: Reporting and fulfilment of the sus- tainability targets adopted by the Bank’s CEO in 2021 in connection with Handels- banken joining the Principles for Responsi- ble Banking (PRB). • Gender-equal finances: Updated goals for gender-equal advisory services, particularly in financial literacy and perceived expertise. • External initiatives and commitments: Significant external initiatives and commit- ments affecting the Bank’s sustainability work. • Fossil fuel commitments: The Bank’s com- mitments related to reducing exposure to fossil fuels. • Greenwashing: Risks related to the Bank describing its activities and products as more sustainable than they actually are. GOV-3: Integration of sustainability- related performance in incentive schemes Handels banken’s remuneration system is designed to promote sound and sustainable operations and is linked to the Bank’s business goals and culture. It includes fixed remunera- tion, pension, and some salary benefits. Varia- ble remuneration is generally applied with great caution in Handels banken and is not applied to members of its administrative, man- agement and supervisory bodies. There is therefore no significant proportion of variable remuneration directly linked to sustainability targets. The Oktogonen profit-sharing scheme applies to the Bank’s Executive Team on the same terms as all other employees and aims to reward long-term, stable and sustainable operations. The Bank’s remuneration policy emphasises the importance of sustainability by aligning remuneration to the Bank’s business strategy and the policy is designed to ensure that sus- tainability aspects are an integral part of the company’s business model. There are no spe- cific sustainability targets linked to variable remuneration, as the focus is on promoting long-term interests and a sustainable business model by applying fixed remuneration as a general rule. As remuneration is fixed, and vari- able remuneration is applied very cautiously, sustainability-related performance is mainly assessed through the Bank’s general princi- ples for sound and sustainable operations rather than specific performance metrics or benchmarks. The decision-making process for the remu- neration system takes place through the Bank’s Remuneration committee, which is re- sponsible for preparing proposals for guide- lines for remuneration to executive officers. The Board of Directors decides on any changes to the guidelines and draws up new guidelines at least every four years if there is a need for significant changes. The committee also eval- uates compliance with the guidelines and re- views remuneration structures and levels. If necessary, the Board of Directors may deviate from the guidelines in order to safeguard the long-term interests of Handels banken. Read more about Handels banken’s approach to variable remuneration and the Bank’s remu- neration policy in the Corporate Governance Report on page 49 and in Handels banken’s Remuneration Report on Handels banken.com. GOV-4: Statement on due diligence The Due diligence table presents an overview of how the elements of due diligence for people and the environment are handled in Handels- banken and where in the Sustainability Report these disclosures can be found. Due diligence Core elements of due diligence Disclosure Requirements Page a) Embedding due diligence in governance, strategy and business model ESRS 2 GOV-2 264 ESRS 2 GOV-3 265 ESRS 2 SBM-3 268 b) Engaging with affected stakeholders ESRS 2 SBM-2 268 ESRS 2 IRO-1 273 ESRS 2 MDR-P 301, 309, 313 c) Identifying and assessing adverse impacts for the environment and people ESRS 2 IRO-1 273 ESRS 2 SBM-3 268 d) Taking action to address negative impacts on people and the environment Environmental: 287, 297 Social: 302, 314, 316 Governance: 320, 322, 324 e) Tracking the effectiveness of these efforts Environmental: 289, 297 Social: 304, 311, 315, 316 Governance: 321, 323, 325 GOV-5: Risk management and internal controls over sustainability reporting Handels banken Sustainability has overall responsibility for sustainability reporting, including responsibility for ensuring that effective processes are in place for the risks that have been identified. To minimise risks and increase the quality and traceability of the Bank’s sustainability reporting, Handels- banken has improved its processes in con- nection with the transition to ESRS reporting. Responsibilities have been clarified for the internal stakeholders that provide information, and stricter traceability requirements have been introduced for data sources and sup- porting documentation, including expanded requirements for internal controls on reported information wherever deemed appropriate. For example, a duality requirement was intro- duced for information related to Taxonomy reporting for the reconciliation of information, which in turn is derived from systems with previously established control functions. Handels banken’s internal control process for sustainability reporting is based on a clearly defined division of responsibilities and steer- ing documents, whereby decision-making paths, authority and responsibility in sustaina- bility are specifically defined and communi- cated. Handels banken Sustainability and Handels banken Finance are responsible for identifying and evaluating operational control activities linked to sustainability and taxon- omy reporting, where controls in business processes and systems are deemed essential to reduce the risk of significant errors in sus- tainability reporting. The greatest risk of significant errors is that operational errors are made in the preparation of information for reporting. 265 Handelsbanken Annual and Sustainability Report 2024 4.2
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Strategy SBM-1: Strategy, business model and value chain Handels banken’s operations are based on a fundamental respect and trust in individuals. The customer relationship is at the very core of the business, with the Bank following custom- ers through different stages of life and design- ing its business models according to their needs. The Bank’s strategy integrates sustain- ability into a decentralised working method with a focus on risk mitigation and a long-term approach on customer relationships. This includes providing lending, investment and advisory service products and services that are tailored to customers’ sustainability requirements. The Bank aims to achieve better profitability than the average for banks in our home mar- kets. We use two means to achieve this: lower costs and more satisfied customers than our competitors. By further integrating sustainabil- ity into these pillars, the Bank can contribute to long-term stable and responsible development that benefits customers and society. Customer surveys carried out by EPSI/SQI have con- firmed that sustainability efforts lead to satis- fied customers, with sustainability and social responsibility highlighted as an important fac- tor. At the same time, effectively managing sustainability risks contributes to lower costs, for example, by mitigating credit losses. A sustainable society requires a robust finan- cial system that is protected from being abused. For this reason, the fight against money laundering and terrorist financing are central elements of the 2030 Agenda and the SDGs. Handels banken regards the prevention of financial crime as a fundamental condition for ensuring safe and stable banking opera- tions. Handels banken’s home markets are Sweden, the UK, Norway and the Netherlands. The Bank also does business in Luxembourg and the USA. At the end of 2024, Handels banken had 424 branches and meeting places. Characteristics of Handels banken’s employ- ees, including the number of employees in home markets, are presented in section S1-6 Characteristics of Handels banken’s employ- ees, see page 305. In 2021, the decision was made to initiate a process to divest the operations in Finland. In 2023, an agreement was signed to sell the Finnish private, SME and life insurance opera- tions. These transactions were completed in 2024. Handels banken’s remaining operations in Finland are being handled in a separate sales process. Handels banken’s customers are private individuals and companies, with a particular focus on property companies and owner- managed companies. Handels banken primar- ily offers lending, asset management and pay- ment solutions of various kinds and is always developing its sustainable products and ser- vices to ensure a competitive offering, and thus to improve profitability while maintaining a low level of risk. Handels banken’s funding offering includes: • Green loans for corporate customers: aimed mainly at property companies and companies financing projects with defined environmental benefits, such as energy- efficient buildings, renewable energy or actions to improve the environment. • Loans with ESG-linked features: these loans are tailored for companies and the loan terms are linked to the customer achieving specific sustainability targets. These loans are particularly relevant for larger companies that actively work to inte- grate sustainability into their business model. • Climate and energy loans: Tailored for investments aimed at reducing energy con- sumption or implementing solutions that reduce climate impact. These loans are aimed at both businesses and private indi- viduals. • Green mortgages: For private individuals who own a home that meets high environ- mental standards. Handels banken has a wide range of funds for customers to choose from. For customers wanting to invest in funds with a sustainability focus, Handels banken’s offering includes: • Article 9 funds: funds that have sustainable investments or reductions of carbon emis- sions as their objective, targeting private and corporate customers who are looking for a distinct sustainability profile in their investments. • Article 8 funds: funds that promote environ- mental or social characteristics and target both private and corporate customers. Handels banken’s greatest impact on sustaina- ble development, whether in a positive or neg- ative direction, lies in its business operations: through financing customers’ projects and businesses, and in managing customers’ assets. On issues such as the climate, environment, biodiversity, human rights and inclusivity, the Bank has the greatest chance to make a posi- tive difference by supporting customers through their sustainable transition. By assist- ing our customers – whether large companies, SMEs or private customers – to be more sus- tainable, Handels banken itself becomes more sustainable. The decentralised working model and local connection enable Handels banken to adapt to sustainability-related requirements and changes in the market. The Bank is facing a continued transition to a low-carbon economy. This includes addressing risks related to both climate change and the global transition towards sustainable energy consumption. The Bank must ensure that the financing of the prop- erty sector, which accounts for a large share of its lending, is in line with future energy Loans to the public – by sector 31 December 2024 SEK bn Proportion of total lending, % Private individuals 1,172 49.4 Housing co-operative associations 283 11.9 Property management 730 30.8 Manufacturing 32 1.3 Retail 25 1.1 Hotel and restaurant 8 0.3 Passenger and goods transport by sea 0 0.0 Other transport and communication 6 0.3 Construction 16 0.7 Electricity, gas and water 10 0.4 Agriculture, hunting and forestry 22 0.9 Other services 15 0.6 Holding, investment, insurance companies, mutual funds, etc. 28 1.2 Sovereigns and municipalities 2 0.1 Other corporate lending 25 1.1 Total 2,372 100 Loans to the public 2024 – Geographical breakdown % Sweden 68.1 UK 10.4 Norway 13.5 Finland 3.2 The Netherlands 4.4 Other countries 0.3 Total 100 Loans to the public 2024 – Sector breakdown % Private individuals 49.4 Corporates 38.6 Housing co-operative associations 11.9 Sovereigns and municipalities 0.1 Total 100 266 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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Mapping and understanding the company’s value chain is crucial in the context of sustainability, particu- larly for double materiality under the CSRD. This assessment identifies impacts, risks and opportunities both upstream, downstream and own operations, and the effects this has on the company’s stakeholders. Handelsbanken’s value chain can be divided into three main value chains: lending, asset management and payments, which together constitute the Bank’s overall business operations. Upstream lending refers to the sources of funding that enable the Bank to grant credit, with the input mainly consisting of bonds issued and deposits from the public. Downstream, lending comprises the products offered to customers, such as mortgages, personal loans, property lending and other corporate lending. Furthermore, lending comprises lending to customers in the public sector, such as municipalities, counties and regions as well as sover- eigns and central banks. Asset management includes upstream activities that are based on customer sav- ings and deposits in savings products, such as mutual funds. These monetary funds are then invested down- stream through the funds’ purchase of shares, bonds and other assets in companies around the world. Upstream payments include deposits into payment accounts, as well as the technical infrastructure and the service providers that enable the transaction flows and the Bank’s connection to payment service providers and card networks. Downstream, payments involve the processing of transactions for customers’ purchases and invoices when the Bank acts as mediator. The Bank’s own operations comprise internal processes, procedures and IT systems that support business flows and related activities. These are handled by the Bank’s co-workers with a focus on stability, efficiency, low risk and long-term customer relationships. The business activities carried out within this value chain create value that is shared between the Bank’s share- holders and society through taxes and regulatory fees, while some of the value benefits co-workers in the form of remuneration, and some is reinvested in the operations to support its long-term development. Profitable business with long-term customer relationships and low risk-taking Branches Co-workers IT Licensing and supervision Capital Deposits/savings Financing Procurements Loans Upstream lending comprises the sources of funding that enable the Bank to grant credit. This includes bonds issued and deposits from the public. Downstream lending encompasses the impacts and effects arising from the Bank’s lending on customers and society, as well as sovereigns, municipalities and central banks. Products such as mortgages, property lending and other corporate and public sector lending are examples of lending downstream in the value chain. Co-workers Impacts co-workers through salaries, security and development. Asset management Upstream asset management includes customers’ savings and deposits in various savings products, such as mutual funds. The capital is further invested down- stream through the fund's investments in shares, bonds and other assets in various companies. The Bank’s role here is to offer advisory services and products to customers that enables them, based on their choice of products, to consider sustainability aspects and the impact on society. Society Contributes to society through financial stability, local presence, knowledge, via taxes, lending to sovereigns, municipalities and central banks, and indirectly through products and services. Payments Upstream payments consist of deposits of customers’ funds into payment accounts, as well as the technical infrastructure and service providers that enable the transaction flows and the Bank’s connection to payment service providers and card networks. Downstream, it consists of processing payments for customers’ purchases and invoices, whereby the Bank mediates transactions with a focus on security and efficiency. The planet Climate and environment Impact on climate and the environment directly via own emissions, indirectly via business relationships. Lending Asset management Payments Work- force Dividend Reinvested in the operationsTax Profit Salaries Regula- tory fees Handelsbanken’s value chain Private customers Corporate customers Public sector Company Public Authorities Shareholders Public Bond investors Suppliers efficiency and climate change adaptation requirements. Handels banken wants to meet customers’ growing expectations about the sustainability performance of the financial industry. Handels- banken can see continuing strong demand for green and ESG-linked financing products, as well as sustainable investment alternatives. To achieve this, Handels banken has intensi- fied its efforts to offer green solutions and investment opportunities by developing and expanding its green offering. This includes products such as green loans, which finance projects that benefit the environment, and loans with ESG-linked features, whose loan terms are linked to the borrower achieving specific sustainability targets. In asset man- agement, Handels banken offers a wide range of funds, including funds reported as Article 9, funds with sustainable investment or a reduc- tion in carbon emissions as their objective, or Article 8, funds that promote environmental or social characteristics. Handels banken has also developed digital tools, such as Energikollen, which helps cus- tomers make their properties more energy effi- cient, and Hållbarhetskollen, which allows the Bank’s corporate customers to automatically calculate their carbon emissions based on their accounting records. The Bank has long since reduced its exposure to fossil fuels has and this now represents a very limited share of 267 Handelsbanken Annual and Sustainability Report 2024 4.2
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Stakeholder dialogue Stakeholders How stakeholder engagement and dialogue takes place Purpose of dialogue Co-workers • Annual activity plan linked to a co-worker’s goals through the Planning and Development Interview (PLUS). Group-wide work environment survey. • Employee representatives on the Board. • Joint health and safety forum comprising employer and workers’ representatives. • That each employees has an individual action plan that is followed up during the year and which forms the basis for salary negotiations. • Ensure that employee perspectives and interests are taken into account in strategic decisions at the highest level. • Promote a safe and healthy work environment through continuous dialogue and follow-up between employers and co-workers. Customers • Daily meetings, both advisory services and customer support. Meetings take place physically at branches, by phone, digitally and on social media. • Regular customer surveys. • Have more satisfied customers than peer competitors. • Maintain a close relationship with customers and adapt services to their needs. • Ensure that customer needs and queries are handled quickly and efficiently across all channels. • Collect feedback to better understand customer expectations and improve the Bank’s products and services. Owners and investors • Annual General Meeting. • Quarterly and annual reports are presented followed by investor calls. • Individual investor meetings. • Present financial results and allow shareholders to vote on important issues. • Provide information about the company’s profits and strategy, followed by talks with investors to answer questions. • Opportunity to discuss specific issues, such as sustainability. Authorities and legislators • Ongoing dialogue with stakeholders including supervisory authorities, central banks and regulatory bodies. • Ensure compliance with laws and regulations and contribute to the development of new regulations for a stable and sustainable financial sector. Trade unions • Ongoing dialogue with trade unions at national level and via the European Works Council on common cross-border issues. • Regular meetings to discuss health and safety issues and conduct risk assessments. • Ensure cooperation on labour practices, health and safety and strategic issues, both at national and international level. • Promote a safe work environment. Society • Cooperation on local community projects. • Partnerships with NGOs. • Grants for research via foundations. • Offer independent journalism through the subsidiary EFN. • Support and contribute to community development through local initiatives. • Collaborate with non-profit organisations to drive social and environmental issues. • Promote economic and social research and higher education through grants from the Bank’s foundations. • Raise awareness about finances to empower people to make informed financial decisions and thereby improve their economic and social situation. Suppliers • Continuous dialogue. • Implementation of the Code of Conduct. • Monitoring key performance indicators. • Enhance sustainability work at the Bank and its suppliers. • Ensures compliance with the Bank’s high ethical and social standards. the Bank’s total lending. The Bank works con- tinuously to continue reducing its exposure and has reduced its lending to the fossil fuel sector 87 per cent since 2021. For more infor- mation on the Bank's lending, see table Lend- ing (Gross) to TCFD sectors under section ESRS 2 IRO-1 E1 on page 276. By combining a long-term business strategy with responsible solutions, Handels banken is helping to accelerate the sustainable transition in the sectors and markets that are most critical to achieving the Bank’s climate and sustainability ambition. SBM-2: Interests and views of stakeholders Handels banken’s principal stakeholders are customers, co-workers, owners and inves- tors, trade unions, and the rest of society, including special interest organisations, public authorities and legislators. These stakeholder groups have been identified on the basis of their significant impact on, or impact from, the Bank’s activities. The Bank also maintains continual dialogue with other stakeholders, such as equity research analysts, trade asso- ciations, sustainability analysts, non-profit organisations, international organisations, municipalities and regions, suppliers, press and media, students and educational estab- lishments, including schools and universities. Further details on how Handels banken incor- porates perspectives from workers in the value chain can be found in the section S2-2, see page 309. For Handels banken, business conduct means that the Bank meets the expectations of these stakeholders and acts in a way that maintains their continued trust. Based on the dialogues conducted with key stakeholders, Handels banken gains a deeper understanding of their views and expectations of the Bank’s sustainability work. These insights are embedded into the Bank’s strat- egy and business model, with sustainability integrated into the decentralised way of work- ing and governed by long-term customer care and a focus on low risk. By actively listening to customers, investors and other social actors, the Bank can tailor its offerings, guide- lines and processes to meet both business and sustainability-related challenges. By inte- grating stakeholder perspectives into ongoing strategy development, the Bank can ensure that its business model is adjusted to chang- ing conditions, customer preferences and regulatory requirements. When affected stake- holders have views or where other external factors emerge that have a bearing on the Group’s sustainability activities and business operations, the standard reporting process is that the CSO informs the Bank’s Board. SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model 13 sustainability matters, presented in table IRO definitions and descriptions, have been identified as material to Handels banken based on the double materiality assessment, read more about the process behind the result in the section IRO-1 on page 273. These matters will be addressed in the sections E1 Climate 268 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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change, E4 Biodiversity, S1 Own workforce, S2 Workers in the value chain, S4 Consumers and end-users, G1 Business conduct and the entity specific matters of Contribute to society, Counteract financial crime and Financial stability. In summary, the Bank has both a direct and indirect impact on the environment, people and society in these areas. A well-run and responsible bank can have a significant posi- tive impact on the economy, not only through direct economic impacts such as corporate tax payments, but also through indirect impacts. For example, the conditions under which the Bank lends money can make a difference, to both the individual and society. On issues such as the climate, environment, biodiversity, human rights and inclusivity, the Bank has the greatest chance to make a positive difference by supporting customers through their sustain- able transition. Handels banken thus works actively to support and accelerate its custom- ers’ sustainable development. This takes the form of dialogue and advice, within the frame- work of financing, in discussions regarding savings and by building close relationships with customers. Although banking operations have a relatively small direct impact on the environment and cli- mate, the Bank works continuously to stream- line energy consumption, reduce unnecessary paper consumption and reduce travel by car and air, and is instead investing in digital solu- tions and remote meetings to reduce its climate footprint. These digital solutions also help cus- tomers to reduce their climate impact. Handels banken currently sees no significant changes in the business model, value chain, strategy or decision-making as a result of iden- tified positive and negative impacts, risks and opportunities. These aspects are continuously addressed within the scope of day-to-day work, with ongoing assessments and adjust- ments where necessary. The Bank is taking action to address the identified positive and negative impacts, risks and opportunities in different areas, but currently sees no need for major strategic changes. The actions identified for each ESRS area and the entity specific matters are presented in more detail in later sections of the Sustainability Report. The Bank has a robust strategy and busi- ness model that is well-positioned to manage material impacts and risks and capitalise on identified opportunities. By working on long- term business relationships, low risk-taking and cost-consciousness, the Bank is able to address the challenges posed by sustainability matters, such as climate change and social risks. Handels banken considers the prevention of direct and indirect risks as part of its sus- tainability work. The Bank is aware that social and environmental matters can significantly increase credit risk, investment risk and repu- tation risk. Sustainability risks are thus inte- grated into normal processes and procedures. For more information on quantitative resil- ience in the context of climate change work, see ESRS 2 SBM-3 E1 Climate change section on page 286. The IRO definitions and descriptions table presents the results of the double materiality assessment and shows where in Handels- banken’s business model the identified issues can be found. It clarifies whether the impacts, risks and opportunities related to sustainability matters are in the Bank’s own operations or whether they are upstream or downstream in the Bank’s value chain. Summary of material impacts, risks and opportunities ESRS Material sustainability matter Material impacts, risks and opportunities Value chain Upstream (U) Downstream (D)1) Time horizon E1 Climate change adaptation Potential positive impact Potential negative impact Risk Opportunity Asset management & lending Asset management & lending Lending Lending U & D U & D D D Short/medium/long Short/medium/long Long Short/medium/long E1 Climate change mitigation Actual positive impact Actual negative impact Risk Opportunity Asset management & lending Asset management & lending Lending Lending U & D U & D D D Short/medium/long Short/medium/long Long Long E1 Energy Potential positive impact Actual negative impact Payment, own operations & downstream Payment, own operations & downstream U & D U & D Short/medium/long Short/medium/long E4 Direct impact drivers of biodiversity loss Actual negative impact Asset management D Long S1 Working conditions (Own workforce) Actual positive impact Actual negative impact Own operations Own operations Short/medium/long Short/medium/long S1 Equal treatment and opportunities for all (Own workforce) Actual positive impact Potential negative impact Own operations Own operations Short/medium/long Short/medium/long S2 Working conditions for workers in the value chain Potential positive impact Potential negative impact Asset management, suppliers & lending Asset management, suppliers & lending U & D U & D Medium/long Short/medium/long S4 Information-related impacts for consumers and end-users Potential positive impact Potential negative impact Risk Payment & lending Payment & asset management Payment, asset management & lending D U & D U & D Short/medium/long Short/medium/long Short/medium/long - Entity specific Contribute to society Actual positive impact Opportunity Own operations, asset management & lending Own operations, asset management & lending U & D U & D Short/medium/long Short/medium/long G1 Corporate culture Actual positive impact Opportunity Own operations Own operations Short/medium/long Short/medium/long G1 Corruption and bribery Actual positive impact Actual negative impact Own operations Own operations Short/medium/long Short/medium/long - Entity specific Counteract financial crime Actual positive impact Potential negative impact Risk Payment, own operations & downstream Payment & own operations Payment & lending D D D Short/medium/long Short/medium/long Short/medium/long - Entity specific Financial stability Actual positive impact Opportunity Own operations & lending Own operations & lending U & D U & D Short/medium/long Short/medium/long 1) U = upstream and D = downstream. 269 Handelsbanken Annual and Sustainability Report 2024 4.2
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Environmental information E1 Climate change Climate change adaptation Definition Impact, risk, opportunity Description Provide information and support customers on physical climate risk Potential positive impact The Bank can make a positive contribution to customers’ adaptation to climate change through products, services and advisory services as well as in funding and investing. Finance/invest in projects with high climate-related risk Potential negative impact The Bank can potentially have a negative impact by financing operations or investing in companies that operate in locations that prove unsuitable due to climate change. Unmanaged climate-related risk can pose a financial risk Financial risk Particularly in the long term, climate change may pose new and higher risks to geographies, industries and sectors that are relevant to the Bank, not least flood risk linked to the Bank’s collateral in property. Reducing physical climate risk requires investment Financial opportunity To retain or reduce risks linked to a changing climate may require investments that could be financed by Handelsbanken, which normally generates a business opportunity. Climate change mitigation Definition Impact, risk, opportunity Description Enabling transition Actual positive impact Through its products and services, the Bank can accelerate and streamline the transition of customers by supporting them in making long-term sustainable investment decisions and financing climate-smart solutions. Financing/investing in companies with excessive climate impact Actual negative impact The Bank can have a negative impact by financing operations or investing in companies that do not reduce their climate impact at the required rate. Unmanaged transition risk can pose a financial risk Financial risk The transition to net-zero GHG emissions will require investments and emission reductions. If the Bank’s customers are unable to make the transition, or are unable to bear the costs of necessary investments, the transition may pose financial risks to the Bank, especially in the long term. Financing climate-smart investments Financial opportunity The transition to net-zero GHG emissions will in many cases require increased investment, not least in the property sector where the Bank has many customers, which may bring new business opportunities for the Bank. Energy Definition Impact, risk, opportunity Description Energy transition Potential positive impact Energy transition encompasses both energy efficiency and the use of renewable energy. Upstream and in own operations this could include the purchase of renewable energy. Downstream, this could include offering financing solutions that enable or encourage customers to make the energy transition, or investing in companies that provide energy transition solutions. Energy consumption Actual negative impact Energy consumption throughout the Bank’s value chain risks having a negative impact. Fossil energy consumption in particular contributes to climate change, geopolitical tensions and loss of nature and biodiversity. E4 Biodiversity and ecosystems Direct impact drivers of biodiversity loss Definition Impact, risk, opportunity Description Invest in companies with activities that negatively affect biodiversity Actual negative impact Handelsbanken’s negative impact is mainly indirectly in the value chain. This could be through investing in activities that contribute negatively to climate change, land-use change, direct exploitation, invasive alien species, environmental pollution, and other impacts. 270 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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Social information S1 Own workforce Working conditions for own employees Definition Impact, risk, opportunity Description Safe labour practices and positive work environment Actual positive impact The Bank strives to be a secure employer by offering competitive terms and benefits to promote long-term employment. Terms and conditions are based on collective bargaining agreements, laws, regulations or other local agreements. The Bank creates the conditions for a positive work environment where employees feel good, develop and perform their work optimally and have a balanced life. Risk of work-related incidents Actual negative impact There is a risk of work-related incidents occurring in the Bank’s operations. Equal treatment and opportunities for all Definition Impact, risk, opportunity Description Skills development Actual positive impact The Bank creates the conditions for each co-worker to develop their skills in line with the needs and wishes of the business. Promoting diversity Actual positive impact Handelsbanken endeavours to reflect the diversity of the communities where the Bank operates, and to achieve and maintain a balanced gender representation in different roles and parts of the Bank. Through an inclusive culture, the Bank can best harness the advantages inherent to gender equality and diversity. Unfair pay gaps Potential negative impact An unfair pay gap between women and men is an injustice and may affect the economic position of employees now and in the future. This could also negatively affect the work environment and employee engagement. In addition, unfair pay gaps may damage the Bank’s reputation, reduce its attractiveness as an employer, and lead to difficulties in retaining and recruiting competent co-workers, which in turn could affect the Bank’s long-term success. S2 Workers in the value chain Working conditions for workers in the value chain Definition Impact, risk, opportunity Description Promote good labour practices for workers in the value chain Potential positive impact The Bank can work to promote good labour practices in the value chain. Influence can be achieved through a structured approach in relation to the Bank’s suppliers and the companies it finances and invests in. Business relationships with companies where poor management of working conditions may occur Potential negative impact The Bank may also potentially have a negative impact by financing operations, investing in companies or entering into contracts with suppliers that fail to manage working conditions for their workers. S4 Consumers and end-users Information-related impacts for consumers and end-users Definition Impact, risk, opportunity Description Active and dynamic security work Potential positive impact Proactive and dynamic management of IT security that meets identified potential threats, and to ensure that procedures are in place for managing changes in the IT environment so that no breaches occur and various transactions can be carried out. Disruption in service deliveries Potential negative impact Disruptions in service deliveries to customers could be caused either directly or indirectly as a result of a cyber-attack or inadequate procedures when introducing changes to the IT environment. Leakage of customer data Potential negative impact Leakage of customer data, such as personal data, may result from a cyber-attack or inadequate procedures. Fines or sanctions Financial risk Failure to handle customer data properly, or significant disruptions in service delivery, may result in fines or sanctions. Entity specific Contribute to society Contribute to society Definition Impact, risk, opportunity Description Responsible and local banking operations create value and growth through access to good advisory services and capital Actual positive impact The Bank makes a positive contribution through responsible risk management, advisory services and lending that promote economic growth. Its local presence provides a deeper understanding of customers, meaning that support can be offered for the different stages of business and life. In addition, the Bank strengthens the national economy through taxes and fees. Responsible banking operations close to customers creates customer satisfaction, distribution and business opportunities and thus income Financial opportunity By providing responsible banking services and a local presence, the Bank can attract and retain customers, strengthen its brand, create long-term business opportunities and establish a strong foundation for distributing our products and services. 271 Handelsbanken Annual and Sustainability Report 2024 4.2
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Governance information G1 Business conduct Corporate culture Definition Impact, risk, opportunity Description Strong corporate culture Actual positive impact Our decentralised ways of working, with trust and respect for individuals, permeates our corporate culture. Our co-workers have great responsibility and authority to make decisions in all kinds of matters that concern our customers. The strong corporate culture creates commit- ment, a clear structure for development and gives every co-worker an opportunity to influence the Bank’s operations. Attracting talent Financial opportunity The Bank’s strong corporate culture may be a strong contributing factor to attracting more talent to Handelsbanken as an employer and to low staff turnover. Internal recruitment spreads our way of working and strengthens the culture in all parts of the organisation. When employees develop, the Bank develops. It can lead to financial opportunities. Corruption and bribery Definition Impact, risk, opportunity Description Counteracting corruption and bribery Actual positive impact Handelsbanken is committed to high ethical standards, which include active efforts to prevent bribery and corruption. Risk of incidents linked to corruption and bribery Actual negative impact In Handelsbanken’s operations, there is a risk of incidents linked to corruption and bribery and certain specific roles are more exposed to risk. Entity specific Counteract financial crime Counteract financial crime Definition Impact, risk, opportunity Description Contribution to counteract financial crime in society Actual positive impact Financial crime continues to be an enormous problem for society, and more collaboration and exchange of information is needed to prevent it. As part of the financial sector, the Bank has the opportunity, together with other stakeholders, to counteract the negative impact of financial crime. Risk of incidents link to financial crime Potential negative impact The risk of incidents where the Bank’s customers, products or services are exploited for financial crime. Risk of loss of revenue and/or fines Financial risk Reduced confidence in the Bank with fewer customers and possible fines if there are shortcomings in the Bank’s work. Entity specific Financial stability Financial stability Definition Impact, risk, opportunity Description Contribute to financial stability Actual positive impact Handelsbanken contributes to financial stability by maintaining stable finances and conducting banking operations with low risk tolerance and a long-term approach. Financial stability enables business with existing and new customers Financial opportunity With stable finances, low credit losses and solid management of its operations, the Bank creates the conditions for doing business with our customers and supporting them in the long term regardless of the external environment. This also presents an opportunity to attract customers and investors who value a bank with a business model featuring low risk tolerance and stability. 272 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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Impact, risk and opportunity management IRO-1: Description of the processes to identify and assess material impacts, risks and opportunities Handels banken initiated its double materiality assessment in autumn 2023 and the final results of the assessment were adopted in 2024. The method and implementation were based on the requirements of ESRS and the implementation guide provided by EFRAG, which at the time of conducting the materiality assessment was still a draft1). The purpose of the assessment was to identify and under- stand which sustainability matters are material to the Bank, based on impacts, risks and opportunities. The double materiality assessment was based on two dimensions: impact materiality and financial materiality. Impact materiality entails an assessment of how the company’s operations and management of sustainability matters impact the macro environment, includ- ing society, people and the climate. This assessment covers both actual and potential, positive and negative impacts. Financial mate- riality aims to analyse how various sustainabil- ity matters affect the company’s financial posi- tion and financial performance, focusing on risks and opportunities over the short, medium and long term. The method for the assessment was mainly based on a qualitative approach. This was partly motivated by the lack of complete and reliable data and the absence of accepted models to assess the nature of different sus- tainability matters, as opposed to more estab- lished models for assessing and monitoring financial risks, for example. The method for the double materiality assessment will evolve over time as the quality of models and data improves. The double materiality assessment was based on the sustainability matters previously reported under the principles of the Global Reporting Initiative (GRI), as well as the mate- rial matters defined in ESRS at the sub-topic level. In addition, sector-specific sustainability matters identified by the Sustainability Accounting Standards Board (SASB) and other sustainability matters relevant to the banking sector were included. The materiality assessment covered all value chains within Handels banken, taking into account aspects such as the Bank’s lending in 1) Draft ESRG 1 Double materiality conceptual guidelines for standard-setting Working paper, January 2022 various sectors, investments of customer savings, payment processing, suppliers and the impact that arises in the Bank’s own oper- ations in all home markets. These aspects were also taken into account when assessing business conduct matters. The assessment of upstream and downstream impacts, risks and opportunities was limited to the first stage since the Bank’s main opportunity to have an impact essentially takes place in relation to the first stage, meaning in direct dialogue with customers and suppliers, but also because access to relevant data is deemed to be insuf- ficient for analysis in multiple stages. The same applies from a risk and opportunity perspec- tive. The materiality assessment did not result in the Bank identifying any elevated risk linked to geographical aspects or business relation- ships. However, financial crime is an area that is generally associated with elevated risk in the banking sector. The Bank has long-established procedures and processes in place to counter- act this. Part of the assessment was to consider sustainability matters in terms of the elements of the Bank’s business model, which reflect a long-term approach, low risk tolerance and satisfied customers. The Bank has also taken into account its own operations and where they are conducted. The Bank’s operations have little direct impact compared to the indi- rect impact the Bank has through, for example, lending to customers. Therefore, Handels- banken’s sites were not considered in terms of direct impact on the environment for the dis- closure requirements of ESRS E2, E3, and E5. Nor were the sites of the Bank’s customers taken into account for these disclosure requirements since relevant and complete information was not available to perform such an analysis. In order to provide a quantitative basis for the assessment of any material sustainability matters, data on the Bank’s loans to the public was used, with sectoral and industry breakdowns by geographical area. For the Bank’s primary asset management volumes, portfolio data was used to map investment sectors and geographical spread. For the payments value chain, no corresponding quantitative basis was used, and instead the assessment was based on the Bank’s business model and general geographical presence. The materiality assessment process was led by Handels banken Sustainability, and takes into account the Bank’s entire operations and its various value chains, and forms the basis for Handels banken’s sustainability reporting in 2024. Several central staff functions, support functions and product owners were involved to ensure that multiple perspectives on sustaina- bility matters were taken into account, from a risk and impact perspective as well as busi- ness opportunities. The steering group respon- sible for the implementation of the CSRD was also involved in the analysis process. The Bank’s internal control functions have reviewed the methodology, assumptions and process for the materiality assessment. The final outcome of the assessment was established in 2024. The involvement of the Bank’s CSO in the materiality assessment ensured that the opportunities identified as material were for- warded to the relevant business development units and to the Bank’s Executive Team for further preparation and actions, if necessary. In conjunction with the double materiality assessment, several stakeholder dialogues were held with various stakeholder groups affected by the Bank’s operations. These dia- logues involved stakeholders, such as custom- ers, employees, owners and non-governmen- tal organisations (NGOs). The purpose of the dialogues was to validate the results of the assessment, but also to gather views and opinions on the sustainability matters identified as material. The stakeholder dialogues were conducted sequentially after the groundwork of identifying the Bank’s material sustainability matters, which is why the starting point for the dialogues was primarily a validation of the results. The outcome of the dialogues did not lead to any changes in the sustainability mat- ters considered material for the Bank to report on. Comments received during the dialogues will be used as a basis for updating the materi- ality assessment for future sustainability reporting. Impact materiality The assessment of material impacts on people and the environment in Handels banken’s dou- ble materiality assessment was carried out to identify both actual and potential impacts of the Bank’s operations in different parts of the value chain. This assessment used the existing due diligence processes in each value chain. Scale and scope were assessed for actual positive impacts. The assessment of negative impacts also considered severity, which was based on scale, scope and irremediable char- acter. Potential impacts were assessed based on the likelihood of their occurrence, with posi- tive impacts graded according to scale, mag- nitude and likelihood, while negative impacts were assessed based on the likelihood com- bined with severity. All factors were used to calculate an overall assessment value for each sustainability mat- ter, which was then compared against thresh- olds to determine materiality. The factors rated 273 Handelsbanken Annual and Sustainability Report 2024 4.2
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according to five-point qualitative and quanti- tative scales were: • Scale: Assessment of the extent of the Bank’s impact, graded from minimal to absolute impact. • Scope: Assessment of the extent to which the Bank’s stakeholders are affected, including the spread and frequency of the event, graded from minimal to global impact. • Likelihood: Assessment of the likelihood of an impact occurring, graded from very unlikely to very likely. • Irremediable character: For negative impacts, the ease of remedying or restoring the damage was assessed, graded from very easy to remedy to irremediable character. Financial materiality The double materiality assessment took into account the interdependence between impact materiality and financial materiality by first assessing impact materiality and then per- forming a risks and opportunities analysis. This ensured that the impact materiality became a central part of the assessment of potential financial risks and opportunities. The assessment of financial materiality focused on sustainability risks and business opportunities could impact the Bank’s financial position and financial performance, and the likelihood of their occurrence. The assessment used both qualitative and quantitative scales. To strengthen the link to financial reporting, monetary thresholds were applied as a basis for quantifying the financial impact. This meant that each sustainability matter assessed was assigned a score based on a multiplication of the assessed financial impact and the likeli- hood of its occurrence, which was then set against a threshold to determine materiality. The factors used were graded as follows: • Likelihood: The likelihood of an impact occurring, graded on a five-point scale from very unlikely to very likely. • Financial impact: Financial impact was assessed on a five-point scale, with minimal to critical impact graded on the basis of monetary thresholds linked to the Bank’s balance sheet, income statement and risk management processes. To determine the appropriate thresholds for Handels banken in the assessment of financial materiality, they were linked to the conceptual framework for materiality levels described in EFRAG’s guide1). The Bank used already established monetary thresholds, such as those used to determine what constitutes a material impact on the balance sheet and income statement. In addition, monetary limits 1) Draft ESRG 1 Double materiality conceptual guidelines for standard-setting Working paper, January 2022. applied in the Group Risk Control function were used to measure risks in different risk classes. These monetary limits were then linked to the Bank’s profit and loss account to deter- mine what is material for the financial position at Group level. The information was compiled to determine the final monetary levels that were graded on a scale, which was then used in the assessment of financial risks and oppor- tunities. The Bank’s Group Risk Control function participated in the materiality assessment to analyse impacts, risks and opportunities. The function’s participation ensured that the assessment of risks related to financial materi- ality was linked to the Bank’s existing risk management processes and the Bank’s low risk tolerance was taken into account in the assessment. Sustainability risks were evalu- ated in a broader perspective in this assess- ment since these risks are considered to be integrated into other risk classes, such as credit risk, financial risk and compliance risk. The Bank’s work of managing sustainability risks takes place within the framework of the Bank’s decentralised model, where the busi- ness operations are responsible for identifying and managing sustainability risks through established risk management processes and associated tools. For more information about the Bank’s risk management, see note G2 Risk and capital management on page 80. To ensure that the materiality assessment remains relevant, the annual update of the double materiality assessment is planned ahead of reporting in 2025. The double materiality assessment identified the 13 material sustainability matters presented in the section SBM-3, see page 269. The other sustainability matters covered by the remain- ing ESRSs have not been assessed as material since Handels banken has no significant direct impact on them through its own operations or in the value chain. ESRS 2 IRO-1 E1: Description of the processes to identify and assess material climate-related impacts, risks and opportunities The determination of material climate-rated impacts, risks and opportunities followed the same process and methodology as the overall process for determining other sustainability matters. See section IRO-1 on page 273. Lending For a bank, the main climate-related risk lies at business level, rather than in the supply chain or internal operations. Handels banken’s core business is lending, and a high proportion of the Bank’s total lending is collateralised with real estate. Handels banken therefore choses to primarily focus its assessment of physical climate risks and transition risks on risks related to real estate in the credit risk area. Physical climate risk can cause damage to property, which could reduce the value of the property or reduce the income generated from the property if it is used for rentals or any other activity. Similarly, transition risk due to, for example, new regulations requiring energy effi- ciency improvements in buildings, can result in adjustment costs or reduce the value of collat- eral if investments are not made. In both cases of climate risk, the credit risk could potentially increase by the effect on repayment capacity or the value of the collateral. The assessment of potentially adverse financial impact on the Bank associated with climate risks in the double materiality assess- ment was based on an internal analysis of flood risks in Sweden. Further climate scenario analyses were performed in 2024, the results of which confirmed the outcome of the double materiality assessment and thus did not lead to any change in material sustainability mat- ters. For definitions of the short, medium and long term perspectives used, see BP-1 – General basis for preparation of sustainability reports on page 261. Physical climate risk can stem from a variety of factors, such as floods, storms, drought, fires, landslides and subsidence. To assess these risks, stress tests can be conducted assuming climate scenarios. Due to the lack of relevant scenario data and some property - specific data, it is not possible to make quanti- tative assessments of all identified risks at present. For non-financial undertakings, the total exposure to factors analysed is available in the Bank’s Risk and Capital Information according to Pillar 3 Report, Table ESG 5. The Bank focused its analysis of physical climate risks on flood risk. An estimate of the flood risk both from watercourses and from sea level rise, and in some cases surface water, was carried out in the Bank’s four home markets for loans to the public, a large share of which is collateralised with real estate. It is based on climate scenario data with the aim of getting as close to RCP 8.5 as possible and with long time horizons up to 2050–2100. The physical climate risk scenarios used in the analysis for each home market are described in the table Applied scenarios – Lending on page 275. For example, the flood risk from 274 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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seas in Sweden is calculated by determining the highest sea level that has historically occurred at an interval of 100 years. This level is then adjusted based on the RCP 8.5 sce- nario for 2100, while taking land elevation into account. Data from the Swedish Meteorologi- cal and Hydrological Institute (SMHI) is used to estimate future sea level rise, while data from the Swedish Civil Contingencies Agency (MSB) is used to identify the geographical areas that would be affected by the new sea level. The Physical risk - Lending table on page 275 shows Handels banken’s total loans to the public in the four home markets, followed by the share of the exposure collateralised with real estate that is exposed to flood risk from watercourses and sea level rise. Due to differ- ences in scenario data, the two risks are assessed separately in Sweden and Norway, while they are assessed collectively in the UK and the Netherlands. The uncertainty in this analysis is generally considered high, primarily due to uncertainties in inputs such as climate scenarios and flood data for different geographical areas. The sce- nario data used by Handels banken also origi- nates from several different providers and var- ies somewhat in its assumptions and models. Consequently, the quantitative assessments are not fully uniform between the countries and should therefore be considered indicative rather than directly comparable. Nor does the analysis distinguish between different levels of flooding. The analysis indicates that the Bank’s real estate collateral in Sweden has limited expo- sure to flood risk both from watercourses and seas, partly because the land elevation com- pensates for the sea level rise. For Norway, the exposure to flood risk from the sea is slightly higher but still limited. The Netherlands has extensive flood protection facilities and the analysis shows a limited exposure despite the fact that large parts of the country are below sea level. The risk of flooding is generally higher in the UK than in the other home mar- kets, which is also reflected in Handels- banken’s exposures. The risk of flooding is already higher today and is expected to increase further as a result of climate change. It is the climate-related increase that is shown in the table for the UK. However, this risk may be overestimated since the analysis for the UK is based on postcode areas for the location of properties, unlike the other home markets where individual property coordinates are used. The analysis shows the size of the exposure to flood risk, but does not estimate the risk of credit losses since these depend on the borrower’s financial position, the vulnerability of the property and insurance coverage. Handels banken assesses the credit risk of individual counterparties via an internal rating. An analysis of the distribution of flood risk exposures across the rating grades shows that the volumes are minor for the weaker rating grades. The risk of credit losses due to flood risk is therefore considered limited. In the context of society’s transition to a sustainable economy, regulations regarding, for example, energy performance and GHG emissions, as well as new technologies and public preferences, may entail financial risks, known as transition risks. Handels banken assesses that the Bank has no significant exposure to activities that are directly incompatible with the transition to a climate-neutral economy. The Bank has rela- tively limited exposure to sectors often con- sidered difficult to transition, such as steel, cement and petrochemicals. For more infor- mation about the Bank’s sectoral lending exposure, refer to the table on page 266. How- ever, the Bank is exposed to sectors where considerable investment will be required to achieve climate neutrality, such as the real estate sector. The Bank’s lending to private individuals mainly comprises mortgages collat- eralised by real estate. Transition risks from real estate financing are therefore considered central to the evaluation of Handels banken’s exposure to transition risks. In order to evaluate these transition risks, Handels banken performed scenario analyses for both mandatory energy efficiency improve- ments to real estate collateral and for how the impact of the climate transition on the real economy could affect the Bank’s customers. The revised EU Energy Performance of Buildings Directive (EPBD) sets out the requirements for energy efficiency improve- ments for commercial buildings and the imple- mentation of country-specific plans for resi- dential buildings. The investments required to improve a building’s energy performance can be financed by Handels banken, which pre- sents a business opportunity. In exceptional cases, when the customer is in financial diffi- culty, credit risk may increase from the deterio- ration in the value of the property used as col- lateral for the loan, if the investment is not made. Physical risk – Lending SEK m Sweden Norway UK The Netherlands Lending 1,614,796 320,219 260,363 104,739 of which collaterised by real estate 1,480,946 300,751 241,200 104,049 Flooding, watercourses 10,582 525 0.7% 0.2% 7,040 477 Flooding, sea level rise 7,832 5,322 2.7% 0.5% 0.5% 1.7% Applied scenarios – Lending Risk type Home market Climate scenario Time horizon Data source Geographical position Frequency Flooding from watercourses Sweden Expected climate at end of time horizon 2100 Swedish Civil Contingencies Agency (MSB) Geographic coordinates 1/200 Sea level rise Sweden RCP 8.5 2100 Swedish Civil Contingencies Agency (MSB) Swedish Meteorological and Hydrological Institute (SMHI) Geographic coordinates 1/100 Flooding from watercourses Norway Expected climate at end of time horizon 2100 NVE (Norwegian Water Resources and Energy Directorate) Geographic coordinates 1/200 Sea level rise Norway RCP 8.5 2080–2100 Norwegian Mapping Authority Geographic coordinates 1/200 Flooding from watercourses, sea level rise and surface water UK RCP 8.5 2100 JBA Risk Management Postcode Several Flooding from watercourses, sea level rise The Netherlands Warm High (WH) 2050 Climate Impact Atlas Geographic coordinates 1/300 275 Handelsbanken Annual and Sustainability Report 2024 4.2
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Lending (gross) to TCFD sectors 31 December 2024 SEK m Energy 7,649 Oil and gas 367 Coal 0 Electric utilities 7,283 Transportation 3,188 Air freight 12 Passenger air transportation 0 Maritime transportation 324 Rail transportation 638 Trucking services 1,946 Automobiles and components 268 Materials and buildings 747,018 Metals and mining 1,652 Chemicals 1,859 Construction materials (excluding wood products) 397 Capital goods 64 Real estate management and development 743,046 Agriculture, food, and forest products 29,728 Beverages 678 Agriculture 12,881 Packaged foods and meats 3,786 Paper and forest products 12,383 Total 787,584 Scenario analyses to estimate the effects of regulatory changes related to energy efficien- cies in properties were carried out for loans to Swedish and Norwegian real estate companies and to Swedish households. The analyses indicated low credit losses due to transition risks. The analyses are based on scenarios with a five-year time horizon, in which each counterparty is analysed on the basis of their individual income statement and balance sheet, to determine whether the new economic situation would cause a default and what the potential credit loss would be. The analyses are based on an expected or stressed mac- ro-scenario created by Handels banken. The expected macro-scenario is based on the Bank’s published economic forecasts, while the stressed macro-scenario corresponds to a severe recession scenario. To evaluate the transition risk, it is assumed that investments are required in the counterparty’s properties to achieve energy classes in line with the regula- tory requirements for energy performance. The analyses study the effect of reducing the value of the real estate collateral by an amount equal to the investment cost. The analyses indicated low credit losses in both the expected and stressed scenarios. Data on energy classes for individual build- ings was obtained from completed energy declarations. Energy classification vary depending on the time and the country in which they are carried out. Properties with no energy class are assigned modelled energy classes based on the Bank’s other real estate collateral. The investment costs per square meter assumed for different property types are based on expert authorities’ assessments. The scenario analysis to assess the impact of the climate change transition on the econ- omy and, by extension, the Bank’s customers, is based on a macroeconomic scenario devel- oped by the Network for Greening the Financial System (NGFS). The scenario is called Net Zero 2050 and is based on the introduction of a climate policy where the world commits to reaching net-zero GHG emissions by around 2050 and to limiting global warming to 1.5°C. In this scenario, the introduction of costs for GHG emissions is central and the analysis assumes that counterparties pay for the GHG emissions generated by their properties. The emissions data was obtained from energy dec- larations, and estimates from the Partnership for Carbon Accounting Financials (PCAF). Based on the same scope and methodology with an impact on the counterparty’s income statement and balance sheet and with a five-year time horizon as described above, low credit losses are expected to arise in this scenario. In its lending, the Bank conducts an individ- ual credit assessment of each customer based on the customer’s circumstances. This method- ology, called Business Assessment, includes a credit risk assessment that evaluates repay- ment capacity and collateral. Relevant sustain- ability risks are also integrated into the credit risk assessment, and these risks are then ana- lysed and assessed as they may affect both the repayment capacity and value of the collat- eral. Climate scenarios or scenario analysis are not used in the credit process. Climate-related physical risks and climate-related transition risks that may affect customers in the Bank’s credit portfolio over different time horizons are described in the Bank’s credit risk assessment instructions. The risks relevant to the credit risk of an individual customer depend on the industry in which the customer operates and other circumstances of the customer’s busi- ness. The branch responsible for the customer is responsible for identifying and analysing the risks relevant to the credit risk assessment. A customer may be more or less exposed to a risk and also more or less sensitive to its impact. A reconciliation is made against the guidelines set by the CEO regarding business relationships with certain industries. Climate-related physical risks and transition risks are important sustainability aspects that are taken into account in the credit risk assessment of different customers, such as property companies. The assessment includes an analysis of the risk of climate-related dam- age to properties and requirements for energy efficiency improvements to buildings in the property portfolio. The magnitude of these risks to the customer and the customer’s abil- ity to manage them are key factors in the Bank’s credit risk assessment in each individ- ual case. The Bank used evidence from expert authorities and external monitoring to identify opportunities for the Bank in relation to the cli- mate transition. In assessing the business opportunities pre- sented by the transition, the Bank examined changes in climate regulations and policies, concentrating on those affecting fossil fuel use, renewable energy and the real estate sec- tor. The Bank also analysed potential techno- logical advances in renewable energy, energy efficiency and carbon capture, which create opportunities to finance innovative projects. Furthermore, the Bank took market changes into account, such as shifting consumer and investor preferences towards sustainable practices, which may create financial opportu- nities for companies transitioning to a low-car- bon economy. One example is the EU Renovation Wave and Energy Performance of Buildings Directive (EPBD), which creates business opportunities for banks in the real estate sector. The EPBD aims to improve the energy performance of buildings and reduce GHG emissions by set- ting minimum standards and targets for both new and existing buildings. The European Commission estimates that annual invest- ments of more than EUR 300 billion will be required to meet the energy efficiency targets for 2030, including building renovation targets. Increased investment in energy efficiency in buildings can lead to increased business vol- umes for the Bank, thanks to its strong market position, with a significant share of loans to the sector, combined with good and long-term customer relationships. The real estate sector is generally exposed to climate-related physical risks. The sector is also exposed to transition risks, driven by the EPBD, for example, which affects legislation on the Minimum Energy Performance Stand- ards (MEPS). However, there are very few cus- tomers in the Bank’s portfolio where the credit risk is considered high due to these types of sustainability risks. Handels banken integrates scenario analysis to evaluate the potential effects of transition events on its business. The Bank uses scenar- ios developed by the International Energy Agency (IEA), for example, and frameworks such as the Net-Zero Banking Alliance (NZBA) to assess how well its portfolio aligns with the 1.5°C goal, and to identify risks and opportuni- ties related to the climate transition. 276 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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Asset management The double materiality assessment primarily considered analyses from ISS ESG for Handels banken Fonder’s investment portfolio regarding both physical risk and transition risk. For physical climate risks, an analysis is car- ried out of the current and future risk exposure to six of the most costly physical climate threats: coastal floods, droughts, heat stress, river floods, tropical cyclones and wild fires. Future risk exposure extends up to 2050 and is assessed for both a likely scenario, Represent- ative Concentration Pathway (RCP) 4.5, corre- sponding to a temperature increase of 1.7– 3.2°C by 2100, and a worst-case scenario, RCP 8.5, corresponding to a temperature increase of 3.2–5.4°C by 2100, based on two scenarios from the IPCC Fifth Assessment Report (AR5). The potential impacts of climate threats in each scenario were simulated using advanced scientific climate models. The risks were then assessed in terms of company spe- cific geographical exposure of both revenue streams and assets. This was quantified in terms of operational risks, such as business interruption and repair costs, and market risks. The financial risk arising from these operational risks and market risks was used in a forward - looking valuation to derive the company’s Physical Value at Risk (PVaR), meaning the estimated change in the share price due to the impact of physical climate risks. In a likely sce- nario, an increase in PVaR from 0.08 per cent to 0.50 per cent is predicted for Handels- banken Fonder’s total portfolio, compared with 0.55 per cent for a global broad benchmark. In a worst-case scenario, the PVaR of Handels- banken Fonder’s portfolio could rise to 0.76 per cent, which is still below the global bench- mark of 0.84 per cent. This estimate does not capture all important climate-related physical risks, and a real worst-case scenario would probably have a greater impact on the port- folios than estimated. The analysis shows varying levels of risk across the portfolio’s exposure to different sectors, with manufacturing sectors showing the highest potential risk exposure, with a cur- rent PVaR of 0.04 per cent that could increase to 0.40 per cent in the worst-case scenario. The sector-specific results enable Handels- banken Fonder to identify areas with higher cli- mate-risk exposure and take this into account in its risk management strategies. Transition risks and opportunities are also identified through a model from ISS ESG based on the Net Zero by 2050 scenario (NZE2050) from International Energy Agency’s World Energy, which corresponds to a temper- ature increase of 1.5°C. Risks and opportuni- ties are assessed on the basis of a long-term (2050) scenario, although impacts are expected to be realised gradually in both the short and medium term. Through changes in demand and costs, the model estimates the financial impact and derives the company’s Transition Value at Risk (TVaR) resulting from transition-related events. The model covers three types of transition risks: • Policy transition risks: Changes in costs and revenue due to changing policy environ- ments. • Market risks: Impact of carbon prices on relevant sectors. • Technological risks: Changes in relative prices and demand for fossil fuel technolo- gies and low-carbon technologies. The analysis shows that Handels banken Fonder’s Transitional Value at Risk (TVaR) for the investment portfolio was 2.41 per cent. This is lower than the corresponding value of 4.57 per cent for the unscreened global bench- mark, which indicates that Handels banken Fonder’s portfolio is potentially less exposed to transition risks compared with the broader market in the transition to a low-carbon econ- omy. As with physical risks, manufacturing companies represent the largest share of the risk exposure, with a total of 1.73 per cent. The electricity, gas, steam and air conditioning supply sector showed a negative TVaR (-0.21 per cent), indicating opportunities in the transi- tion and that the companies that represent sector exposure would be positively impacted by an increase in value. Read more in the fund company’s Climate and Nature Report pub- lished annually on Handels bankenfonder.se. ESRS 2 IRO-1 E4: Description of the processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities The identification of impacts, risks and oppor- tunities for biodiversity and ecosystems is based on the qualitative analysis carried out as part of the Bank’s double materiality assess- ment. More information on the process for identifying and assessing Handels banken’s impacts, risks and opportunities is provided in the IRO-1 section on page 273. Handels banken has identified the direct impact drivers of biodiversity loss as a material topic from an impact perspective in the double materiality assessment. This is based on the indirect impact of the Bank’s investing activi- ties in its downstream value chain, as well as the recognition of the urgency of the biodiver- sity crisis and the need for businesses, includ- ing financial institutions such as Handels- banken, to take a proactive role in protecting and restoring the natural environment that is fundamental to economies, societies and stability. The physical locations of Handels- banken’s own operations are mainly situated in long-standing, developed urban areas which can be assumed to be locations that are not situated in or in close proximity to biodiversity - sensitive areas, and therefore the own opera- tions have not been deemed to be material. The direct impact drivers of biodiversity loss are land use, climate change, resource use, pollution and invasive species. It should be noted that methods for assess- ing and evaluating nature and biodiversity in financial terms are still under development. This makes it challenging to quantify risks and opportunities when assessing the potential financial materiality of biodiversity. The same applies to the assessment of dependencies, transition and systemic risks in the value chain that cannot be fully assessed until better meth- ods are available, for example, for assessing the dependencies of the value chain on natural resources and ecosystem services. Based on Handels banken’s low risk focus, and that the impact and dependency on biodiversity is mainly indirect through the Bank’s lending and investments, it was concluded that financial impacts in this area are unlikely for Handels- banken in the time horizon assessed, whereby this was not deemed material from a financial perspective. Affected communities were not consulted in this assessment. IRO-2: Disclosure requirements in ESRS covered by Handels- banken’s Sustainability Report A list of the disclosure requirements that the Sustainability Report contains, based on the results of Handels banken’s double materiality assessment and the materiality assessment at datapoint level, can be found in the introduc- tion to each topic area. See page 260 for ESRS 2, page 284 for E1 and E4, page 298 for S1, S2 and S4 and the entity specific matter Contrib- ute to society, as well as page 318 for G1 and the entity specific matters Counteract financial crime and Financial stability. A description of the Bank's identification of material informa- tion to be disclosed in relation to IROs is pre- sented in the section IRO-1, see page 273. The materiality assessment at datapoint level was based on the regulations and involves an assessment of the materiality of each data- point for the user. A list of datapoints provided from other EU legislation can be found on pages 280–283. 277 Handelsbanken Annual and Sustainability Report 2024 4.2
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Metrics and targets In connection with the work to report in accordance with ESRS, Handels banken will stop reporting on the sustainability targets that were adopted in 2021 and previously governed the Bank’s sustainability activities. These targets played an important role in the Bank’s sustainability strategy to govern and measure the Bank’s impact in its business areas: investment, funding and advisory services. To ensure transparency and follow the prin- ciple of materiality, Handels banken reports the final outcome of the previous targets here. This information provides an indication of progress made in 2024, and serves as a bridge to the new targets. Handels banken believes that this final report is important for the Bank’s stake- holders since it provides an overview of priori- ties and performance in 2024, and it forms the basis for the Bank’s development going for- ward. The information supplements the report- ing of the new targets and reinforces Handels- banken’s ambition to maintain transparency and responsibility in its sustainability work. Handels banken’s previous sustainability target was “to be, and to be recognised as the most sustainable bank among peer competi- tors.” Furthermore, Handels banken has had sustainability targets in three areas: invest- ment, financing and advisory services and a target for net-zero GHG emissions from Handels banken’s operations, including rele- vant parts of the lending and investment port- folio. The Bank has developed several new products and services to meet customer needs. See section SBM-1: Strategy, business model and value chain on page 266 for exam- 1) Criteria for green loans according to the Bank’s Green Bond Framework handelsbanken.com/handelsbankens-green-bonds, aligned with the 2021 ICMA Green Bond Principles and adapted to, but not fully aligned with, the EU Taxonomy. ples of products and services. Compared with last year, the volume of green loans1) increased 42 per cent to SEK 123.4 billion (87.2), of which green mortgages increased 16 per cent to SEK 40.6 billion (35.0). In addi- tion, lending facilities with ESG-linked features amounted to SEK 144.0 billion (105.4), of which drawn loans accounted for SEK 66.2 billion. Regarding the net-zero target and interim targets for 2030 that the Bank has worked towards, see page 291 for Handels- banken’s total GHG emissions disaggregated by Scope 1, Scope 2 and Scope 3 and for financed emissions. Handels banken Fonder will continue to fol- low the alignment of the investment portfolios with regards to the targets and transition path- way of the Paris Agreement (net zero GHG emissions by 2040), and the investments' con- tribution to the 2030 Agenda. In addition to the reporting on page 289, Handels banken Fonder also reports its progress in a Sustainability and Engagement Report available at Handels- bankenfonder.se The Bank’s targets for advisory services can be found in a final report The savings gap – where we are now can be found on the Bank’s website, Handels banken.com. Handels banken is making progress in the area of advisory ser- vices, and will focus on increasing the know- how of the Bank’s customers in financial liter- acy. Webinars and customer events were arranged on this subject in 2024. In 2025, the Bank intends to continue to increase advisors’ knowledge on the subject and publish addi- tional information for customers. In 2024, Handels banken reviewed and adjusted the current sustainability targets to applicable regulations and reporting require- ments, and to the Bank’s business model and way of working. Handels banken has worked systematically to develop and set sustainability targets as part of efforts to integrate sustaina- bility into all aspects of its operations and report in line with the ESRS requirements. More detailed information about the new tar- gets can be found under each material sus- tainability topic. The process has only involved internal stakeholders and was carried out in close cooperation with various business spe- cialists, ensuring that the targets are both rele- vant to the Bank and feasible, taking into account the relevant ESRS. The work was based on the outcome of the Bank’s double materiality assessment, and the process started with a review of the existing sustainability targets. Based on this, draft sus- tainability targets were developed, which were then iterated in the business to allow for a broader discussion and collection of views from different departments. 0 20 40 60 80 Bank 10Bank 9Bank 8Bank 7Bank 6Bank 5Bank 4Bank 3Bank 2Handels- banken Bank 1 Weighted average of sustainability surveys1 Sector average 65.3 1) Based on a weighted average of sustainability ratings for peer competitors in our home markets from four global sustainability surveys converted to a scale of 0–100 for all four surveys. 278 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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Datapoints related to other EU legislation Datapoints related to other EU legislation Datapoints related to other EU legislation The table Relationship to other EU legislation shows the datapoints in the Sustainability Report that derive from other EU legislation. References are made to the SFDR, Pillar III, the Benchmark Regulation, and the European Climate Law. Relationship to other EU legislation Disclosure Requirement and related datapoint SFDR reference1) Pillar 3 reference2) Benchmark Regulation reference3) EU Climate Law reference4) Material / Not material Page ESRS 2 GOV-1 Board’s gender diversity paragraph 21 (d) Indicator number 13 of Table #1 of Annex 1 Commission Delegated Regula- tion (EU) 2020/18165), Annex II Material 262 ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e) Delegated Regulation (EU) 2020/1816, Annex II Material 262 ESRS 2 GOV-4 Statement on due diligence paragraph 30 Indicator number 10 Table #3 of Annex 1 Material 265 ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i Indicators number 4 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/24536), Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii Indicator number 9 Table #2 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii Indicator number 14 Table #1 of Annex 1 Delegated Regulation (EU) 2020/18187), Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14 Regulation (EU) 2021/1119, Article 2(1) Material 285 ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g) Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity Delegated Regulation (EU) 2020/1818, Article12.1 (d) to (g), and Article 12.2 Material 285 ESRS E1-4 GHG emission reduction targets paragraph 34 Indicator number 4 Table #2 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate Change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 6 Material 289 ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38 Indicator number 5 Table #1 and Indicator n. 5 Table #2 of Annex 1 Not material ESRS E1-5 Energy consumption and mix paragraph 37 Indicator number 5 Table #1 of Annex 1 Material 290 ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43 Indicator number 6 Table #1 of Annex 1 Not material 280 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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Disclosure Requirement and related datapoint SFDR reference1) Pillar 3 reference2) Benchmark Regulation reference3) EU Climate Law reference4) Material / Not material Page ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44 Indicators number 1 and 2 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity Delegated Regulation (EU) 2020/1818, Article 5(1), 6 and 8(1) Material 291 ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55 Indicators number 3 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate Change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 8(1) Material 292 ESRS E1-7 GHG removals and carbon credits paragraph 56 Regulation (EU) 2021/1119, Article 2(1) a. Not material b. Material 292 ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66 Delegated Regulation (EU) 2020/1818, Annex II Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c). Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book – Climate change physical risk: Exposures subject to physical risk Not material ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c). Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34; Template 2: Banking book – Climate change transi- tion risk: Loans collateralised by immov- able property – Energy efficiency of the collateral Not material ESRS E1-9 Degree of exposure of the portfolio to climate-related opportunities paragraph 69 Delegated Regulation (EU) 2020/1818, Annex II Not material ESRS E2-4 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 Indicator number 8 Table #1 of Annex 1 Indicator number 2 Table #2 of Annex 1 Indicator number 1 Table #2 of Annex 1 Indicator number 3 Table #2 of Annex 1 Not material ESRS E3-1 Water and marine resources paragraph 9 Indicator number 7 Table #2 of Annex 1 Not material ESRS E3-1 Dedicated policy paragraph 13 Indicator number 8 Table 2 of Annex 1 Not material ESRS E3-1 Sustainable oceans and seas paragraph 14 Indicator number 12 Table #2 of Annex 1 Not material ESRS E3-4 Total water recycled and reused paragraph 28 (c) Indicator number 6.2 Table #2 of Annex 1 Not material ESRS E3-4 Total water consumption in m3 per net revenue on own operations paragraph 29 Indicator number 6.1 Table #2 of Annex 1 Not material ESRS 2 – IRO 1 – E4 Paragraph 16 (a) i Indicator number 7 Table #1 of Annex 1 Not material ESRS 2 – IRO 1 – E4 Paragraph 16 (b) Indicator number 10 Table #2 of Annex 1 Not material ESRS 2 – IRO 1 – E4 Paragraph 16 (c) Indicator number 14 Table #2 of Annex 1 Not material 281 Handelsbanken Annual and Sustainability Report 2024 4.2
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Disclosure Requirement and related datapoint SFDR reference1) Pillar 3 reference2) Benchmark Regulation reference3) EU Climate Law reference4) Material / Not material Page ESRS E4-2 Sustainable land / agriculture practices or policies paragraph 24 (b) Indicator number 11 Table #2 of Annex 1 Material 296 ESRS E4-2 Sustainable oceans / seas practices or policies paragraph 24 (c) Indicator number 12 Table #2 of Annex 1 Material 297 ESRS E4-2 Policies to address deforestation paragraph 24 (d) Indicator number 15 Table #2 of Annex 1 Material 296 ESRS E5-5 Non-recycled waste paragraph 37 (d) Indicator number 13 Table #2 of Annex 1 Not material ESRS E5-5 Hazardous waste and radioactive waste paragraph 39 Indicator number 9 Table #1 of Annex 1 Not material ESRS 2 – SBM3 – S1 Risk of incidents of forced labour paragraph 14 (f) Indicator number 13 Table #3 of Annex 1 Not material ESRS 2 – SBM3 – S1 Risk of incidents of child labour paragraph 14 (g) Indicator number 12 Table #3 of Annex 1 Not material ESRS S1-1 Human rights policy commitments paragraph 20 Indicator number 9 Table #3 and Indi- cator number 11 Table #1 of Annex I Material 300 ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 Delegated Regulation (EU) 2020/1816, Annex II Material 301 ESRS S1-1 Processes and measures for preventing trafficking in human beings paragraph 22 Indicator number 11 Table #3 of Annex I Material 301 ESRS S1-1 Workplace accident prevention policy or management system paragraph 23 Indicator number 1 Table #3 of Annex 1 Not material ESRS S1-3 Grievance/complaints handling mechanisms paragraph 32 (c) Indicator number 5 Table #3 of Annex 1 Material 302 ESRS S1-14 Number of fatalities and number and rate of work-related accidents paragraph 88 (b) and (c) Indicator number 2 Table #3 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e) Indicator number 3 Table #3 of Annex 1 Not material ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a) Indicator number 12 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Material 307 ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b) Indicator number 8 Table #3 of Annex 1 Material 307 ESRS S1-17 Incidents of discrimination paragraph 103 (a) Indicator number 7 Table #3 of Annex 1 Material 307 ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 104 (a) Indicator number 10 Table #1 and Indicator number 14 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Not material ESRS 2 – SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b) Indicators number 12 and 13 Table #3 of Annex 1 Not material 282 Handelsbanken Annual and Sustainability Report 2024 4.2 Introduction Administration report Financial statements Sustainability General information Other
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Disclosure Requirement and related datapoint SFDR reference1) Pillar 3 reference2) Benchmark Regulation reference3) EU Climate Law reference4) Material / Not material Page ESRS S2-1 Human rights policy commitments paragraph 17 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex I Material 308 ESRS S2-1 Policies related to value chain workers paragraph 18 Indicators number 11 and 4 Table #3 of Annex 1 Material 308 ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 Indicator number 10 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Material 308 ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 Delegated Regulation (EU) 2020/1816, Annex II Material 308 ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 Indicator number 14 Table #3 of Annex I Material 310 ESRS S3-1 Human rights policy commitments paragraph 16 Indicator number 9 Table #3 of Annex 1 and Indicator num- ber 11 Table #1 of Annex 1 Not material ESRS S3-1 Non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17 Indicator number 10 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Not material ESRS S3-4 Human rights issues and incidents paragraph 36 Indicator number 14 Table #3 of Annex I Not material ESRS S4-1 Policies related to consumers and end-users paragraph 16 Indicator number 9 Table #3 and Indi- cator number 11 Table #1 of Annex I Material 313 ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17 Indicator number 10 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Material 313 ESRS S4-4 Human rights issues and incidents paragraph 35 Indicator number 14 Table #3 of Annex I Not material ESRS G1-1 United Nations Convention against Corruption paragraph 10 (b) Indicator number 15 Table #3 of Annex I Not material ESRS G1-1 Protection of whistle-blowers paragraph 10 (d) Indicator number 6 Table #3 of Annex 1 Not material ESRS G1-4 Fines for violation of anti-corruption and anti-bribery laws paragraph 24 (a) Indicator number 17 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Material 321 ESRS G1-4 Standards of anti-corruption and anti-bribery paragraph 24 (b) Indicator number 16 Table #3 of Annex I Material 321 1) Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (Sustainable Finance Disclosures Regulation) (OJ L 317, 9.12.2019, p. 1). 2) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (Capital Requirements Regulation “CRR”) (OJ L 176, 27.6.2013, p. 1). 3) Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1). 4) Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1). 5) Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in each benchmark provided and published (OJ L 406, 3.12.2020, p. 1). 6) Commission Implementing Regulation (EU) 2022/2453 of 30 November 2022 amending the implementing technical standards laid down in Implementing Regulation (EU) 2021/637 as regards the disclosure of environmental, social and governance risks (OJ L 324,19.12.2022, p.1.). 7) Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17). 283 Handelsbanken Annual and Sustainability Report 2024 4.2
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4.3 Environmental information Environmental information Disclosure Requirements ESRS E1 Climate change Strategy 285 E1-1: Transition plan for climate change mitigation 285 ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model 286 Impact, risk and opportunity management 287 E1-2: Policies related to climate change mitigation and adaptation 287 E1-3: Actions and resources in relation to climate change policies 287 Metrics and targets 289 E1-4: Targets related to climate change mitigation and adaptation 289 E1-5: Energy consumption and mix 290 E1-6: Gross Scopes 1, 2, 3 and Total GHG emissions 290 E1-7: GHG removals and GHG mitigation projects financed through carbon credits 292 E1-8: Internal carbon pricing 292 EU Taxonomy Taxonomy reporting 293 Methodology for the credit institution 293 Methodology for asset management 294 Methodology for insurance operations 295 ESRS E4 Biodiversity and ecosystems Strategy 296 E4-1: Transition plan and consideration of biodiversity and ecosystems in strategy and business model 296 ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model 296 Impact, risk and opportunity management 296 E4-2: Policies related to biodiversity and ecosystems 296 E4-3: Actions and resources related to biodiversity and ecosystems 297 Metrics and targets 297 E4-4: Targets related to biodiversity and ecosystems 297 284 Handelsbanken Annual and Sustainability Report 2024 4.3 Introduction Administration report Financial statements Sustainability Environmental information Other
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ESRS E1 Climate change Environmental information Handelsbanken works systematically to reduce its climate impact and contribute to the global transition to a low-carbon economy, at the same time as the Bank develops its work to reduce the negative impact on biodiversity. This section describes how Handelsbanken impacts, and is impacted by, climate and nature-related changes. In addition, it presents the Bank’s management and progress in envi- ronmental and climate issues, including the reduction of emissions from its own opera- tions, the Bank’s indirect impact through financed emissions, the impact of the invest- ment portfolios, and actions to prevent, miti- gate, and avoid the negative impact on biodi- versity. By integrating the climate and environment into business decisions and risk management, Handelsbanken is strengthening its role as a long-term and sustainable player in the financial market. Strategy E1-1: Transition plan for climate change mitigation In 2023, Handelsbanken published its Transi- tion Plan, which will be updated in 2025. The Transition Plan builds on the Bank’s unique corporate culture and ambition to contribute to the achievement of the EU’s climate targets, national climate targets in each home market, and the Paris Agreement’s goal of limiting global warming to 1.5°C. The transition plan describes how Handelsbanken intends to address the climate issue. It focuses primarily on the Bank working with and supporting its customers and portfolio companies in their transition towards net zero, which will be vital to Handelsbanken’s contribution to the transi- tion of society. The Bank has developed sev- eral products and can offer its customers incentives in the form of loan terms and prac- tices as well as contacts to technical and local experts for the provision of technical advice and support services. Handelsbanken uses these tools to drive positive change and will continue to focus on improving their efficiency moving forward. The implementation of the Bank’s transition plan is decentralised and may require additional resources, based on the any needs that may be identified. This is part of the ongoing business development process that will continue in the years ahead. Based on the Bank’s decentralised approach, all home markets and relevant business areas will operate in line with the Group’s sustainabil- ity agenda and the transition plan will be inte- grated into their annual business planning. The aim is to prioritise activities with the greatest positive impact on the real economy, such as reducing GHG emissions. Each home market has a Steering Commit- tee that brings relevant decision-makers and local sustainability experts together. These committees develop the national roadmaps and guide and coordinate the implementation of the activities. As at Group level, the national roadmaps should have an impact approach. The national roadmaps define the activities, business developments, training courses and customer groups that will be prioritised during the transition process. A successful transition for Handelsbanken is based on local imple- mentation, business integration and decen- tralised development and ownership. The activities identified in the national roadmaps will be integrated into the business plans of the relevant units. The roadmaps will be updated regularly. The implementation of the national road- maps is coordinated by Handelsbanken Sus- tainability through the Group-wide Task force on Climate, which brings together representa- tives from each home market. The working group is led by the Chief Sustainability and Climate Officer (CSO), who is part of the Executive Team and regularly reports on progress to Handelsbanken’s Board, CEO and Executive Team. Handelsbanken’s shares are included in the EU Paris-Aligned Benchmarks. ESRS E1 Climate change Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Climate change adaptation Potential positive impact Potential negative impact Risk Opportunity Asset management & lending Asset management & lending Lending Lending Short/medium/long Short/medium/long Long Short/medium/long Climate change mitigation Actual positive impact Actual negative impact Risk Opportunity Asset management & lending Asset management & lending Lending Lending Short/medium/long Short/medium/long Long Long Energy Potential positive impact Actual negative impact Payment, own operations & downstream Payment, own operations & downstream Short/medium/long Short/medium/long 285 Handelsbanken Annual and Sustainability Report 2024 4.3
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ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model Handelsbanken’s strategy, business model and way of banking are based on a combina- tion of a local connection, long-term customer relationships, low risk-taking, a decentralised approach, a focus on stable finances and sus- tainability. Climate change and the transition to a low-carbon economy present new risks and opportunities for the Bank. This means that the Bank must continue to develop its operations by, for example, raising competencies, new products and services, deeper customer dia- logues and improved processes for identifying, measuring and managing climate-related risks and opportunities. This is nothing new for Handelsbanken. The process has been ongo- ing and evolving for many years, and will con- tinue to do so. The Bank’s assessment is that the foundations of its way of doing banking are well-suited to managing the new risks and opportunities presented by climate change and the green transition, and that the business development that is required can be performed within the framework of the Bank’s established working methods. Lending Handelsbanken’s core business is lending, and a large part of the Bank’s total lending is collateralised with real estate. The Bank there- fore choses to mainly focus its assessment of physical climate risks and transition risks on risks related to real estate in the credit risk area. Among other things, the Bank’s resilience to climate risks is analysed based on stress tests, which were performed on 31 December 2024. For physical climate risks, exposure to mainly flood risk from watercourses and sea- level rise was examined. This was performed for all four home markets – Sweden, the UK, Norway and the Netherlands – under climate scenarios and with long time horizons until 2050-2100. For transition risk, the change in the risk of credit losses per counterparty was examined following the EU’s revised Energy Performance of Buildings Directive (EPBD), which sets requirements for energy efficiency improvements in buildings. This was carried out for real estate companies in Sweden and Norway, and for households in Sweden, under a recession scenario developed by Handels- banken, and with a medium-term time horizon of five years. A stress test was also carried out to determine how the climate transition’s impact on the real economy could affect the Bank’s customers. The stress test is based on the Network for Greening the Financial Sys- tem’s (NGFS) Net Zero 2050 scenario and also includes the costs of the GHG emissions generated by the customer’s property. For a more detailed description of the stress tests and their results, refer to ESRS 2 IRO-1 E1 on page 274 for a description of the processes to identify and assess material climate risks. Asset management As a part of the financial system and as a man- ager of customers’ savings, Handelsbanken plays a role in enabling society’s transition and sustainable development. Handelsbanken’s asset management consists of the fund com- panies Handelsbanken Fonder, Handels- banken Wealth & Asset Management (HWAM) and Optimix, the life insurance company Handelsbanken Liv and discretionary manage- ment. HWAM has been a wholly owned sub- sidiary of Handelsbanken in the UK since 2013. It has been owned by Handelsbanken plc since 2018 and is responsible for asset management operations on behalf of the sub- sidiary’s customers. Optimix Vermogensbe- heer NV is a Dutch asset management firm and a wholly owned subsidiary of Handelsbanken. Optimix operates under its own, separate brand, and is responsible for all asset manage- ment undertaken on behalf of Handelsbanken in the Netherlands. Handelsbanken Fonder, HWAM and Optimix manage a total of approximately SEK 1,107 billion, which represents about 93 per cent of total assets under management at Handels- banken. Handelsbanken’s subsidiary Handels- banken Liv has largely chosen Handelsbanken Fonder’s products for its insurance policies. This also applies to parts of Handelsbanken’s discretionary management, which means that much of the reporting carried out by Handels- banken Fonder also becomes part of the value chain of these operations. Here, a description is provided of the vari- ous subsidiaries’ risks and opportunities linked to climate change in relation to strategy and business model, focusing on the subsidiary with the greatest impact, Handelsbanken Fonder. Handelsbanken Fonder manages just over SEK 1,058 billion, which represents approximately 89 per cent of total assets under management at Handelsbanken. As a tool to identify and assess climate-re- lated risks and opportunities, Handelsbanken Fonder uses a scenario analysis to stress test the investment portfolios with respect to vari- ous future climate scenarios. These analyses were carried out on 31 December 2024. The analysis for physical climate risks calculates current and future risk exposure for six of the most costly physical climate risks on the basis of an intermediate scenario (Representative Concentration Pathway (RCP) 4.5) and a worst-case scenario (RCP 8.5), with long-term time horizons up to 2050. The risks are then assessed in terms of company specific geo- graphical exposure for both revenue streams and assets. This is quantified in terms of oper- ational risks and market risks. Handelsbanken Fonder’s total investment portfolio shows strong resilience, and compares favourably with an unscreened global benchmark. The analysis showed varying levels of risk across the portfolio’s exposure to different sectors. These sector-specific insights allow Handels- banken Fonder to identify areas of higher climate-risk exposure and adapt its risk management strategies accordingly. However, a stress test does not capture all material climate-related physical risks, and an actual worst-case scenario would probably have a greater impact on Handelsbanken Fonder’s portfolios than estimated. For a more detailed description of the physical climate risk stress tests, see section E1 IRO-1 on page 274. Transition risks and opportunities are assessed in relation to a long-term scenario up to 2050, although the impacts are expected to be realised gradually in both the short and medium term. The analysis was based on the Net Zero 2050 scenario (NZE2050) from the International Energy Agency’s World Energy Outlook series, which corresponds to a tem- perature increase of 1.5°C. The analysis for transition risks identifies three types of transi- tion risks: policy risks, market risks and tech- nological risks. The financial impact is esti- mated based on changes in demand and costs, which results in an assessment of the company’s transition risk. In the stress tests, Handelsbanken Fonder’s investment portfolio shows strong resilience, or low exposure, to transition risks – both in terms of the assessed risk as a whole and in comparison with a global unscreened benchmark. For a more detailed description of the transition risk stress tests, see section E1 IRO-1 on page 274. A key factor in Handelsbanken Fonder’s resilience to transition risks is the fossil fuels exclusion strategy. Handelsbanken Fonder excludes companies involved in the explora- tion, production and refining of fossil fuels, with an upper limit of five per cent of revenue for such activities. Handelsbanken Fonder also excludes companies where more than 50 per cent of revenue is derived from fossil-fuel related services. For power generation based on fossil fuels, the fund company has a restric- tive approach and applies specific transition criteria for companies operating in this sector. 286 Handelsbanken Annual and Sustainability Report 2024 4.3 Introduction Administration report Financial statements Sustainability Environmental information Other
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This is the reason that other sectors, such as manufacturing, represent the largest exposure to transition risk in Handelsbanken Fonder’s portfolio. Handelsbanken Fonder integrates the sce- nario analysis into its investment processes to build resilience in portfolios, support the transi- tion to a low-carbon economy and deliver long-term value to customers. The results obtained from the scenario analysis for physi- cal and transition risks can be integrated into investment decision-making processes in sev- eral ways, for example, in risk management where the results of the scenario analysis are used to identify and quantify the potential cli- mate-related risks in the investment portfolios. This information is used to develop risk mitiga- tion strategies and adjust portfolio allocations where necessary. Sector exclusion is the first line of defence in the risk management pro- cess. Handelsbanken Fonder applies exclu- sion primarily when a sector has high sustain- ability risks, is not compatible with long-term sustainable asset management, and when the ability to influence a company to adapt to sustainable development is deemed limited. Handelsbanken Fonder engages with compa- nies to understand their climate-risk manage- ment strategies, encourage the adoption of best practices, and support their transition process. Integration takes place in various ways depending on the management approach. In active management, the analysis of sustain- ability risks, as well as their assessment and management, is integrated into the investment processes. In passive management, climate risks are managed in product development and through asset stewardship. Given the rules-based nature of passive investments, it is the choice of benchmark in product devel- opment that includes sustainability factors. Choosing the Paris-Aligned Benchmarks is a tool for identifying and managing high-emitting portfolio companies which, in turn, is a strat- egy for managing climate risks. In active allo- cation management, climate-related risks are handled in the portfolio manager’s selection process by integrating climate-related risks and opportunities and broader sustainability metrics into the portfolio manager evaluation process. Handelsbanken Fonder pursues active stewardship with regard to actively and pas- sively managed funds, for example, by voting at general meetings where sustainability - related matters are often addressed. In the Nordic region, but mainly in Sweden, Handels- banken Fonder also participates in a large number of nomination committees. The fund company’s view is that each board should be well-informed and able to establish strategies for the company that entail long-term sustain- able operations. Handelsbanken Wealth & Asset Management and Optimix have not yet carried out climate - based resilience analyses. Impact, risk and opportunity management E1-2: Policies related to climate change mitigation and adaptation The steering documents that primarily address the Bank’s material sustainability matters related to climate change and energy are: • Policy for sustainability, for more informa- tion, see page 264 • Credit policy, for more information, see page 263 • Guidelines regarding the environment and climate change. The Bank’s policy for sustainability, as adopted by the Bank’s Board, is complemented by the CEO’s guidelines regarding the environment and climate change. The guidelines apply to the entire Handelsbanken Group and are intended to provide guidance for decision - making. The guidelines and the policy for sustainability have been published on the Bank’s website. According to Handelsbanken’s guideline regarding the environment and cli- mate change, the Bank’s GHG emissions should be reduced over time in line with the 1.5°C goal. Handelsbanken has developed specific criteria for business relationships with fossil energy companies, in line with the Inter- national Energy Agency’s (IEA) Net Zero by 2050 scenario. Among other things, these criteria require the Bank not to enter into new business relationships with, or finance or invest customers’ funds in, companies involved in coal mining, or to finance new oil and gas exploration. For more information about the Bank’s criteria and definition of tran- sition companies, refer to Sector Framework – Fossil Energy on handelsbanken.com. Handelsbanken shall take into account risks related to the transition and physical climate change in its business activities, where such risks are deemed relevant. Handelsbanken expects companies with which it has business relationships to operate in line with the long- term goals of the Paris Agreement by, for example, switching to renewable energy production and improving energy efficiency. The guidelines regarding the environment and climate change refer to several international initiatives such as the UN Global Compact, the Equator Principles, the Principles for Respon- sible Banking that the Bank takes into account when working with climate change adaptation and energy. In addition to the Group-wide steering docu- ments, Handelsbanken’s subsidiary Handels- banken Fonder has a policy for shareholder engagement and responsible investment. The policy aims to establish guidelines for the fund company’s active stewardship and its work on responsible investment. For more information on the policy, see section S2-1 on page 308. E1-3: Actions and resources in relation to climate change policies Handelsbanken endeavours to support its customers and portfolio companies on their journey towards net-zero GHG emissions. An important part of this work is to develop and adapt products that facilitate and support their transition. This, combined with Handels- banken’s own efforts to reduce its climate impact, is central to the Bank’s contribution to the climate transition. This section describes the activities that Handelsbanken carried out during the year and planned initiatives aimed at supporting cus- tomers in their climate transition. These activi- ties are considered to be some of the most central to the Bank’s climate work and their impact is evaluated at an aggregate level. Activities are regularly reviewed and developed to ensure continued relevance. Own operations Energy efficiency is a crucial factor in reducing the Bank’s own emissions. During the year, the Bank completed a number of measures to reduce energy consumption, such as starting to replace fluorescent tubes and low-energy light bulbs with LEDs, and recycling around 1,600 fittings by converting them to LEDs. During the year, the Bank established a sus- tainability group for systems management and development with the task of creating mea- sures to make IT systems more efficient, which will reduce the need for hardware and lower energy consumption. The Bank has held train- ing sessions for IT department co-workers to raise awareness of digital and electronic waste and how managing this waste can help reduce the climate footprint. As part of its transition plan, the Bank will work over the next year to identify and imple- ment activities within its own operations. Some 287 Handelsbanken Annual and Sustainability Report 2024 4.3
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elements of this work have already started with a review of existing activities and processes. In Norway, the process to certify bank branches with the Norwegian Eco-Lighthouse label continued and a total of 23 branches were certified during the year. This means that environmental and climate work must be moni- tored and integrated into their corporate gov- ernance. The aim is that all 39 bank branches in Norway will be certified by 2027. During the year, the Bank set a target to reduce energy consumption per square meter by an average of at least 2.5 per cent per year at its headquarters and internal departments. The outcome for 2024, and the average per year to date, was an increase of 1.9 per cent. Since 2018, the Bank has purchased 100 per cent renewable electricity for its operations. The aim is to continue to maintain that level. Lending As a financial institution, Handelsbanken can influence its customers’ business decisions, including how they approach the transition to net-zero emissions. The Bank has access to several tools, such as advisory services, train- ing and incentives linked to loan terms. As part of this process, new products were launched in 2024 to support customers’ transition. Green transition loans were introduced in Norway and the UK to improve energy efficiency in proper- ties. A green loan was also launched in Norway for the construction of buildings that meet the criteria for green financing under the Bank’s Green Bond Framework. To enable a more structured assessment of customers’ sustainability performance, the Bank launched a digital tool in the UK during the year to collect information about custom- ers’ sustainability plans, progress and risks related to sustainability. The tool is used in customer meetings with both existing and new customers and is initially aimed at real estate customers, with plans to extend its use to other corporate customers in the future. In Sweden, Hållbarhetskollen (the Sustain- ability Check) service was launched during the year to help companies calculate their carbon emissions based on their accounts. The ser- vice supports companies in meeting the in- creased requirements to report their carbon footprint and also provides a clear overview of where emissions arise. In addition, the service offers specific proposals on action to reduce emissions. To further strengthen support for customers in their transition, the Bank has focused intently on raising know-how among branch employees. The aim of such action is to improve advisory services and increase the ability of employees to address sustainability 1) Total assets under management in May amounted to SEK 120 billion and at year-end to approximately SEK 145 billion. This volume refers to the total fund assets under management, not adjusted for the volume of own holdings as stated in the text above. in customer meetings. In the UK, this included the introduction of sustainability advisers to support branch advisers in dealing with more complex sustainability matters in client dia- logues. In Sweden, monthly meetings were introduced for sustainability managers at the branches. These meetings aim to share infor- mation to improve skills, provide inspiration and establish knowledge of regulations and current external issues. As a bank with significant lending to the real estate sector, Handelsbanken attaches great importance to offering tools that support real estate customers in their efforts to enhance energy efficiency. One example is Energikollen (Energy Check), a digital service that Handels- banken Sweden offers its mortgage custom- ers, as well as owners of apartment buildings as of 2024. The service helps customers iden- tify the right energy efficiency measures tai- lored to their home’s specific conditions. In collaboration with a Swedish engineering consultancy, the Bank conducted training on physical climate risks, which increased internal skills and enabled more informed discussions with major real estate customers on climate challenges and potential solutions. This part- nership also offers in-depth expertise to cus- tomers who require further guidance. With these initiatives, Handelsbanken seeks to reduce emissions linked to real estate financing while supporting customers in com- plying with regulations such as the Energy Performance of Buildings Directive (EPBD). During the year, the Bank also further clari- fied instructions on the assessment of climate risks, physical and transition risks in the credit process for companies. The purpose is to pro- vide guidance to the organisation to consis- tently identify, analyse and assess the sustain- ability risks relevant to the credit risk assess- ment. In the Netherlands, the Bank also updated the local credit instructions to ensure that new real estate funding contributes to the Bank’s transition plan. Over the next year, the Bank plans to con- tinue to develop products and services that support customer transitions and to further develop standard processes to follow up and engage customers on sustainability. A key focus area going forward is to encourage and support customers in preparing credible and ambitious transition plans. Such plans will be increasingly required, especially from custom- ers and portfolio companies in sectors where the Bank can make the greatest impact. The Bank also intends to further integrate climate issues into its standard real estate financing process, with a particular focus on the energy classes of buildings. These initia- tives are part of the Bank’s work on identifying opportunities, evaluating the direction of prog- ress and contributing to the climate transition. Asset management Handelsbanken Fonder integrates established climate targets and their outcome in the investment process and develops and offers products that are in line with its emissions targets, for example, index funds that follow Paris Aligned Benchmarks. Handelsbanken Global Index Criteria, which belongs to this category of funds, was recognised by Bloom- berg in May 2024 as the world’s largest Article 9 fund1). The fund’s assets under management at year-end amounted to just over SEK 108 billion. Handelsbanken Fonder engages with portfolio companies on their climate targets and transition plans. The Bank’s asset management activities also apply the Group’s guidelines regarding the environment and climate change for coal, for example, which means that no new business relationships or investments are made in com- panies engaged in coal mining or building new coal-fired power plants. In addition to what the fund company excludes according to the policy for share- holder engagement and responsible invest- ment, the fund company offers funds in two different levels of exclusion: basic and enhanced level (criteria). Read more under “Follow our work” at handelsbankenfonder.se. Handelsbanken Fonder applies enhanced exclusion criteria to 99.4 per cent of the fund company’s assets under management, which limits investments in companies involved in the extraction, production or distribution of fossil fuels, including coal, oil and natural gas.The fund company’s risk control function monitors compliance with exclusion criteria in the fund company’s investments on a daily basis. Companies that derive more than five per cent of revenue from the production or distri- bution of fossil fuels and more than 50 per cent from related services are excluded, except for the companies classified as transition companies, read more under companies in transition under “Follow our work” at handelsbankenfonder.se. The level of sustainable investment is stated in the fund rules of each fund and is reported every year in accordance with the SFDR regu- lations, which provides transparency to cus- tomers and discloses the fund’s investments and any sustainability focus it has. During the year, Handelsbanken Fonder identified the companies that account for 70 per cent of the fund company’s financed emis- sions and that have not yet shown that they are in line with net-zero emissions. Handels- 288 Handelsbanken Annual and Sustainability Report 2024 4.3 Introduction Administration report Financial statements Sustainability Environmental information Other
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GHG emission reduction targets Base year Target year Metric Target Scope included Change since preceding year Change since base year Scopes 1 + 2 – Own operations 2021 2030 tCO2e -50% Scopes 1 + 2 -4% -23% Scope 3.15 – Asset management Investments 2020 2030 tCO2e/EVIC -50%1) Scopes 1 + 2 + 3 -18% -31% 1) The target covers assets under management within Handelsbanken Fonder, corresponding to 89% of total assets under management. banken Fonder conducted climate dialogues with 13 of these companies in 2024. Handelsbanken Fonder was involved in various international climate dialogue initia- tives during 2024. Handelsbanken Fonder pursues active stewardship with regard to both actively and passively managed funds. The most direct means of exercising stewardship is by voting at general meetings. During the 2024 general meeting season, the fund company voted at around 1,275 meetings. Ahead of annual gen- eral meetings in 2024, fund company partici- pated in 66 nomination committees. Through its participation in nomination committees, the fund company has an influence on the boards elected by the general meetings. Work is taking place in Handelsbanken Wealth & Asset Management to further develop the company’s sustainability strategy, which includes the exclusion criteria in the company’s policy for responsible investment. This process is expected to be completed in 2025. During the year, Handelsbanken Wealth & Asset Management raised the minimum level in its responsible funds so that these must invest at least 70 per cent (65 per cent for one of the funds) of their portfolio in assets that display positive envi- ronmental and/or social themes. Work is taking place in Optimix to further develop the company’s sustainability strategy. Metrics and targets E1-4: Targets related to climate change mitigation and adaptation Contributing to the EU’s climate targets, the Bank’s home markets national climate targets, and the Paris Agreement’s goal of limiting warming to 1.5°C requires that the Bank’s cus- tomers reduce their emissions in line with the targets set for their respective sectors in the EU and in these countries. Handelsbanken’s ambition is to use products, services and advi- sory services to support its customers on their transition journey. Handelsbanken's target is to reduce its abso- lute Scope 1 and 2 emissions by 50 per cent by 2030 from 2021 levels. The base year was decided based on recommendations from the Science Based Targets initiative (SBTi) for set- ting base years. In addition to the absolute reduction target, the Bank has also set targets for electricity procurement, which means that 100 per cent renewable electricity will continue to be purchased until 2030. Working to enhance energy efficiency is cru- cial for Handelsbanken to reduce its climate impact in its own operations, which means using less energy to achieve the same result. The aim is to reduce energy consumption per square meter in the headquarters and internal departments by an average of at least 2.5 per cent per year between 2023 and 2030. By reducing energy consumption in buildings and facilities, Scope 1 and 2 emissions can be reduced. The target is aligned with national and international targets and it exceeds the EU energy saving requirements for public build- ings and the level set in Sweden’s national contribution. The target is not science-based, although energy efficiency is a recognised method for reducing carbon emissions. Stake- holders were not involved in setting the target, which was adopted in 2024 and will be followed up annually. Handelsbanken has also set an aspirational goal for climate adaptation, where the Bank actively contributes to spreading knowledge about climate-adaptation measures. Informa- tion can be disseminated through mailings and by engaging with customers about climate adaptation. Lending In 2025, Handelsbanken will conduct a more in-depth analysis of the lending operating area based on the specific conditions applicable to each home market. The analysis will result in a description of how the Bank’s business model supports the climate transition and how the Bank’s assets are expected to develop over time. The Bank aims to further integrate cli- mate risk factors into current risk management methods and processes. For more information, refer to section IRO-1 on page 273 and G2 on page 119. In the 2025 Sustainability Report, Handelsbanken intends to report on how the Bank’s transition plan is aligned with the EU Climate Law in conjunction with the inclusion of the Sustainability Report in the administra- tion report following the requirements of the ESRS. A follow-up of the climate targets for lending that applied in 2024 is reported in the General information section on page 278. The Bank’s main tool for reducing financed emissions is to support customers and portfo- lio companies in their transition journey. This includes products, services and support to customers and portfolio companies to encour- age ambitious transition strategies and plans tailored to achieve net-zero emissions. Handelsbanken has strict criteria for lending to high-emitting sectors such as oil, gas and coal. The Bank does not finance new coal mines, oil or gas extraction projects or compa- nies heavily involved in fossil fuel infrastruc- ture, as such activities are not considered in line with a global reduction of carbon emis- sions according to the 1.5°C goal. Exceptions can be made for companies classified as tran- sition companies, which requires clear and credible decarbonisation plans. Asset management To serve our customers with relevant products that support a transition and to consider mate- rial sustainability risks in investment decisions, Handelsbanken Fonder has set an interim tar- get of reducing its carbon footprint for the investment portfolio, measured in tCO2e per enterprise value including cash (EVIC) for the portfolio companies, by 50 per cent by 2030, based on the 2020 level. The target covers all emissions in the companies’ value chain, i.e. Scopes 1, 2 and 3. The base year has been chosen based on the availability of data, with 2020 being the earliest possible year that has updated Scope 3 data available from the fund company’s data provider. Handelsbanken Fonder reports financed GHG emissions, carbon footprint and GHG intensity for investments in equities and corporate bonds, including direct and indirect investments via fund-of-funds structures. Handelsbanken Fonder conducts a review of its emissions targets every five years, which commenced in 2024. The fund company is continuing to develop, on an ongoing basis, and ensure a relevant product offering based 289 Handelsbanken Annual and Sustainability Report 2024 4.3
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on customer demand and to work towards its emissions targets in line with Handelsbanken’s overall transition plan. As part of this, the fund company is continuing to review the exclusion criteria in its product offering to ensure that these criteria are aligned with customer needs and preferences and enable effective manage- ment of sustainability risks. E1-5: Energy consumption and mix Energy consumption and mix 2023 2024 Total fossil energy consumption (MWh) 42,791 39,539 Share of fossil sources in total energy consumption (%) 60 59 Fuel consumption for renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.) (MWh) 436 317 Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources (MWh) 27,533 26,594 The consumption of self-generated non-fuel renewable energy (MWh)1) 55 61 Total renewable energy consumption (MWh) 28,024 26,973 Share of renewable sources in total energy consumption (%) 40 41 Total energy consumption (MWh) 70,815 66,512 1) Refers to self-generated solar energy. Handelsbanken has not signed any agree- ments to purchase nuclear energy in any of its markets. However, nuclear energy can be part of the local energy mix consumed by Handels- banken, but its share has not been calculated separately and is included in the total energy volume. Similarly, renewable energy, mainly in the form of renewable district heating, can be included in the energy purchased on the local market. As long as the energy is not originally labelled as renewable, it has been classified as fossil in the accounts. E1-6: Gross Scopes 1, 2, 3 and Total GHG emissions Handelsbanken calculates and reports emis- sions from its four home markets, broken down by own operations and lending and investments in asset management. The vast majority of emissions are in the value chain through the Bank’s financed emissions. Own operations Emissions from activities within the consoli- dated Group are categorised under three different Scopes, depending on the Bank’s operational control over the specific activities. Scope 1 includes direct emissions from refrig- erant leaks, stationary combustion of fuels used for heat production and backup genera- tors, and mobile emissions from company vehicles. Scope 2 are indirect emissions from purchased electricity, heating and cooling in both company-owned and leased facilities. Scope 3 emissions are all indirect emissions that occur in parts of the Group’s supply chain. Read more in the table Scope 3 content on page 290. The climate calculations are based on the GHG Protocol, an internationally recognised standard. In the first instance, primary data is used directly from the supplier. In the absence of primary data, the result is calculated using the emissions of neighbouring units or, in the absence of data, using average data or esti- mates. Underlying data, such as energy con- sumption in kWh, is multiplied by an emission factor to produce an emission figure. Emission factors can be obtained from national authori- ties, industry bodies or licensed data sources. Handelsbanken uses renewable energy for its electricity consumption by purchasing 92 per cent guarantees of origin from hydropower, 4 per cent from solar energy and 4 per cent from wind power. The Bank’s biogenic emissions come mainly from two sources: Scope 1 emissions from the use of renewable gas, through the purchase of biogas, and Scope 2 emissions from the pur- chase of district heating fired with organic materials. Only biogenic emissions from bio- gas are reported, as the emission factor used for district heating in the Scope 2 calculations does not separate biogenic and fossil emis- Scope 3 content Scope 3 category Included? Share of primary data Justification and method 3.1 Purchased goods and services Partly1) 90% Encompasses the most material suppliers in the areas of IT equipment, paper consumption and water consumption. Emissions from cloud services are omitted due to data shortages. 3.2 Capital goods No n/a Handelsbanken does not operate or control any capital goods to any significant extent from a GHG accounting perspective. 3.3 Fuel and energy-related activities Partly1) 66% Includes transmission and distribution losses from electricity consumption. Estimated using emissions factors. Other sources in this category have so far been omitted, such as Well-to-Tank (WTT) emissions. 3.4 Upstream transportation and distribution Partly1) 88% Includes postal and transportation services internally and to customers. 3.5 Waste generated in operations No n/a As a financial services provider, the Bank does not generate significant waste. For the waste generated in day-to-day operations, there are few practical ways to measure this, and the results for the Bank would probably not be material. 3.6 Business travel Yes 98% Includes business travel by air, rail and road, as well as hotel stays. Taxi journeys and other business travel are not included. 3.7 Employee commuting No1) n/a This category is material but the Bank has not yet adopted a calculation method. 3.8 Upstream leased assets No n/a Handelsbanken does not lease upstream assets to any significant extent from a GHG accounting perspective. 3.9 Downstream transportation No n/a All distribution services for communicating with customers are reported under transportation and upstream distribution. Emissions from customers’ transport to the office are not included, as this is difficult to measure and most customer activities take place digitally. 3.10 Processing of sold products No n/a Handelsbanken does not sell physical products that require any significant processing from a GHG perspective. 3.11 Use of sold products No n/a Handelsbanken does not sell physical products to any significant extent from a GHG perspective. 3.12 End-of-life treatment of sold products No n/a Handelsbanken does not sell physical products that require end-of-life treatment to any significant extent from a GHG perspective. 3.13 Downstream leased assets No1) n/a This category may be included in the future as emission calculations for investment and financing are developed. 3.14 Franchises No n/a Handelsbanken does not have any franchises. 3.15 Investments Partly1) 59% Emissions from lending are calculated for the Bank's real estate-related lending, which represents 88% of the Bank's total lending. For investments, emissions are calculated at 94% of on the share of total assets under management where it is possible to calculate emissions using established calculation methods. In turn, this accounts for 95% of total assets under management within asset management. The bank intends to expand its calculations to cover a larger part of the loan portfolio, with a focus on high-emitting sectors. 1) Handelsbanken intends to continue to develop its Scope 3 reporting. 290 Handelsbanken Annual and Sustainability Report 2024 4.3 Introduction Administration report Financial statements Sustainability Environmental information Other
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Total GHG emissions disaggregated by Scopes 1, 2 and 3 Retrospective Milestones and target years 2021 2023 2024 % 2024/2023 2025 2030 2040 Annual target in %/Base year Scope 1 GHG emissions Gross Scope 1 GHG emissions (tCO2e) 339 154 143 -7 -50% for Scope 1+2. Percentage of Scope 1 GHG emissions from regulated emission trading schemes (%) 0 0 0 0 Scope 2 GHG emissions Gross location-based Scope 2 GHG emissions (tCO2e) 5,567 4,644 4,468 -4 Gross market-based Scope 2 GHG emissions (tCO2e) 2,718 2,295 2,205 -4 -50% for Scope 1+2. Significant Scope 3 GHG emissions Total Gross indirect (Scope 3) GHG emissions (tCO2e) 41,775,535 43,351,634 46,059,746 6 1 Purchased goods and services 3,764 3,149 2,714 -14 2 Capital goods 3 Fuel and energy-related activities (not included in Scopes 1 or 2) 650 665 669 1 4 Upstream transportation and distribution 119 83 119 42 5 Waste generated in operations 6 Business travel 417 3,024 2,489 -18 7 Employee commuting 8 Upstream leased assets 9 Downstream transportation 10 Processing of sold products 11 Use of sold products 12 End-of-life treatment of sold products 13 Downstream leased assets 14 Franchises 15 Investments 41,770,5851) 43,344,7132) 46,053,7563) 6 For targets in Scope 3.15, see the table GHG emis- sion reduction targets in section E1-4. Total GHG emissions Total GHG emissions (location-based) (tCO2e) 41,781,441 43,356,431 46,064,357 6 Total GHG emissions (market-based) (tCO2e) 41,778,592 43,354,082 46,062,094 6 1) Emission calculations within investments per 2021 include lending and Handelsbanken Fonder. 2) Emission calculations within investments per 2023 include lending and Handelsbanken Fonder, Optimix and HWAM. 3) Emission calculations in asset management as of 2024 include all asset management. Financed emissions Emissions intensity Exposure (SEK m)1) Coverage2) Share of primary data Total financed emissions (tCO2e) 2021 2023 2024 % 2024 /2023 Scope 3.15 Investments Lending (Scope 1, 2) Mortgages 1,150,961 100% 57% 302,972 9.6 kgCO2e/m2 8.5 kgCO2e/m2 8.2 kgCO2e/m2 -4% Commercial properties 932,492 100% 81% 486,815 14.1 kgCO2e/m2 12.0 kgCO2e/m2 12.0 kgCO2e/m2 0% Investments (Scope 1, 2, 3) 1,192,000 94% 44% 45,263,969 45.1 tCO2e/ SEK m3) 44.8 tCO2e/ SEK m4) 38.0 tCO2e/ SEK m5) -15% Calculated by data provider6) 39,509,895 Estimated6) 5,754,074 Total GHG emissions in Scope 3.15 Investments 46,053,756 1) Exposure refers to on-balance for lending and assets under management (AUM) in asset management. 2) The coverage in asset management is calculated based on the share of total assets under management where it is possible to calculate emissions using established calculation methods. In turn, this accounts for 95% of total assets under management within asset management. 3) Emission calculations within investments per 2021 include lending and Handelsbanken Fonder. 4) Emission calculations within investments per 2023 include lending and Handelsbanken Fonder, Optimix and HWAM. 5) The emission intensity as of 2024 includes all asset management. 6) The majority of the reported emissions have been calculated using data from Asset Management's data providers. For a smaller part of the portfolio where data has been missing, emissions have been estimated based on the most granular data that Handelsbanken has available for the calculated part of the portfolio. For targets related to the Bank’s Scope 3.15, see the table for GHG emission reduction targets in Section E1-4. 291 Handelsbanken Annual and Sustainability Report 2024 4.3
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sions. Possible biogenic emissions in Scope 3 are not calculated. In 2024, Scope 1 biogenic emissions amounted to 63 tCO2e. The reporting of self-generated solar energy is new for 2024, which has also led to a change in the comparative data for 2023 regarding location-based Scope 2 emissions (+3 tonnes). Lending Emissions from lending are calculated for the Bank’s real estate financing, which represents 88 per cent of the Bank’s total lending. The Bank intends to expand the calculations to cover a larger part of the loan portfolio, with a focus on high-emitting sectors. The calcula- tion of financed emissions for the lending portfolio covers the real estate portfolio, i.e. loans collateralised with real estate. The base year emissions calculation and subsequent calculations were performed using the standard issued by Partnership for Carbon Accounting Financials (PCAF), which provides a stan- dardised methodology and contributes to the transparency and comparability of financed emissions reported. The calculations are based on energy performance certificates (EPCs), where available. In the absence of energy declarations, estimates from the PCAF are used based on country and building type level. Emission factors are obtained from public and reliable sources, and in cases where data on a building’s energy label or specific heating sources are missing, estimates from the PCAF are used. For the full methodology, see the Methodology financed emissions – lending on handelsbanken.com. Asset management For investments, emissions are calculated at 94 per cent of the part of total assets under management where it is possible to calculate emissions using established calculation meth- ods. This part in turn accounts for 95 per cent of total assets under management. The major- ity of the reported emissions have been calcu- lated using data from the fund companies' various data providers. For Handelsbanken Fonder, these calcula- tions are made using data and methods from ISS ESG and include the investment objects' Scope 1, 2 and 3 emissions. The emissions calculations are based on the ownership share in each investment, calculated by comparing the size of the investment with the company's enterprise value including cash (EVIC). These methodologies are in line with the definitions of Principal Adverse Impact Indicators 1, 2 and 3 in Table 1 of the EU’s Sustainable Finance Disclosure Regulation (SFDR). The greenhouse gases used by Handelsbanken Fonder in its calculations are those defined in the Kyoto Protocol. The emissions for HWAM and Opti- mix are calculated using data and methods from Morningstar and Clarity AI respectively and include the investees' Scope 1, 2 and 3 emissions. For a small part of the portfolio where it is possible to calculate emissions through estab- lished calculation methods, but where data from the data providers has been missing, the emissions have been estimated based on the most granular data that Handelsbanken has available for the calculated part of the portfolio. Handelsbanken's subsidiary Handelsbanken Liv has largely chosen Handelsbanken Fond- er's products for its insurance policies. This also applies to parts of Handelsbanken's dis- cretionary management, which means that much of the reporting carried out by Handels- banken Fonder also becomes part of the value chain of these operations. For the remainder of the assets under management within Handels- banken Liv and Handelsbanken's discretionary management, emissions have been estimated based on the calculated emission intensity of Handelsbanken Fonder. The total reported emissions within asset management, including emissions calculated through data providers and subsequently esti- mated emissions, amount to 45,263,969 tCO2e. E1-7: GHG removals and GHG mitigation projects financed through carbon credits To achieve the goals of the Paris Agreement, it is not enough to significantly reduce global emissions. CO2 must also be captured from the atmosphere and stored (Carbon Capture and Storage, CCS). This is also referred to as carbon removal credits, negative emissions or sequestration projects. To support the devel- opment of CCS, Handelsbanken has invested in carbon removal credits from Puro.earth according to the Puro standard. The certifi- cates are called CORCs. In 2024, the Bank purchased and cancelled 172 tonnes of CO2 from various biochar sup- pliers in Europe. Carbon removal credits have not been offset against the Bank’s total emis- sions or carbon targets. Biochar is a biogenic carbon sink that sequesters CO2 from the atmosphere through a pyrolysis process, where biomass is converted into biochar at high temperatures without oxygen. According to the Puro standard, this results in a very long-lasting carbon bond with a duration of over 100 years, minimising the risk of non-per- manence. In general, biochar is considered a nature-based solution, especially if it is made from organic matter and used to improve soil fertility and water-holding capacity. The Bank did not make any other purchases of carbon removal credits, meaning that 100 per cent were purchased from EU offset projects and from a recognised standard. The project does not count as a corresponding adjustment under Article 6 of the Paris Agreement. To a lesser extent, Handelsbanken contrib- uted indirectly to the financing of carbon removal credits through a local energy agree- ment in Sweden whereby the supplier carbon offsets for district heating it delivers. The car- bon offset volume for 2024 was not available when this Annual Report was finalised, but based on the volume for 2023 this is estimated to be less than 80 tonnes. Carbon offsetting takes place on the basis of recognised stan- dards. Handelsbanken does not yet have a devel- oped strategy for neutralising unavoidable emissions. The Bank also does not have any existing plans, holdings or agreements regard- ing carbon credits to be cancelled. E1-8: Internal carbon pricing Handelsbanken does not apply internal carbon pricing in any of its operating areas. GHG intensity based on net revenue1) GHG intensity per net revenue 2023 2024 Change since preceding year Total GHG emissions (location-based) per net revenue (tCO2e/SEK m) 247.44 245.45 -1% Total GHG emissions (market-based) per net revenue (tCO2e/SEK m) 247.42 245.44 -1% 1) Information regarding total net revenue is provided for the consolidated situation with the definition based on Section 4a of the Swedish Annual Reports in Credit Institutions and Securities Companies (1995:1559). 292 Handelsbanken Annual and Sustainability Report 2024 4.3 Introduction Administration report Financial statements Sustainability Environmental information Other
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EU Taxonomy EU Taxonomy Taxonomy reporting The EU Taxonomy is a classification system that determines which economic activities are environmentally sustainable. The Taxonomy provides a common framework and sets out information requirements at both company and product level to help investors identify environ- mentally sustainable investments. Handels- banken falls under the EU Taxonomy and uses the regulation as one of several tools to evaluate the environmental sustainability of its operations. In line with the Paris Agreement and the goal of limiting global warming to 1.5°C, Handels- banken is working towards a transition to an economy with net-zero GHG emissions. This work takes place via the Bank’s customers by supporting them in their transition with the products and advisory services that the Bank offers. By continuing to develop products and services that contribute to this transition, the Bank is working to meet the requirements and objectives of the Taxonomy. This also creates good conditions for increasing the share of taxonomy-aligned assets from a strategic perspective going forward. Handelsbanken has already adapted its financing framework for green bonds, enabling the financing of more projects that promote energy efficiency and climate adaptation. The framework is based on the EU Taxonomy and is closely aligned with the regulation’s techni- cal screening criteria in order to make a sub- stantial contribution to its environmental objectives. During the year, Handelsbanken launched products and incentive structures aimed at increasing the proportion of assets that meet the requirements of the financing framework which, in turn, increases the volume of Taxonomy-aligned assets. To further support customers’ climate action, the Bank has developed tools that pro- vide real estate owners with information about energy improvement measures in order to reduce their emissions. The Bank also offers small and medium-sized enterprises the opportunity to measure their emissions and receive recommendations on how to reduce them. Under the Non-Financial Reporting Direc- tive (NFRD), public-interest entities with more than 500 employees are required to report in accordance with Regulation (EU) 2020/852 (the Taxonomy Regulation). In their statutory sustainability report, financial institutions are required to provide information about the extent to which their assets are funding Tax- onomy-aligned activities. Handelsbanken is a financial conglomerate with operations in several business segments. The regulatory framework and answers from the European Commission require the Bank to report the Green Asset Ratio (GAR) for the various parts of the Group’s operations. To increase read- ability, transparency and provide a good over- view of the GAR, Handelsbanken has opted to report the Taxonomy-aligned activities of its banking operations in the consolidated situa- tion, separate from the insurance business segment, and in total for the Group. A sum- mary table has been included in this section. For detailed information about the degree of alignment with the Taxonomy’s requirements per environmental objective and business segment and reporting in the templates required by the Regulation, refer to section 4.3 cont. EU Taxonomy – continued on page 326. Reporting based on the consolidated situation provides a true and fair view of the Group’s assets while avoiding double count- ing. Other assets, from non-financial activi- ties, are minimal and have no impact on the Bank’s total green assets. Handelsbanken’s GAR is calculated based on the energy performance of household exposures with real estate collateral within the Bank and based on the GAR of our corporate counterparties in the credit portfolio and asset management within the Bank and in the life insurance operations. The calculations are based on reliable data, such as energy decla- rations and physical risk assessments for financed properties, and published key perfor- mance indicators from our corporate counter- parts. The Bank works continuously to improve the availability and quality of data, with the aim of increasing the GAR. This includes increasing access to information in the form of energy declarations for properties in all of the Bank’s markets so that alignment with the taxonomy criteria can be fully assessed. The Bank’s reported KPIs for the year resulted in an increase in GAR compared with the 2023 financial year. For agreements in the balance sheet in the banking operations, the increase was mainly due to the fact that the year of construction is now more widely available for properties in the Netherlands, making it possible to calculate Taxonomy alignment for these agreements, and that the proportion of properties assessed as subject to physical risk has decreased since more granular data has been provided from a new supplier. Published KPIs for Taxonomy alignment for financial counterparties are also available this year and can be used in the cal- culation. In addition, the Taxonomy alignment of non-financial counterparties has generally increased during the year. The holdings in the portfolios with the largest contribution to the environmental objectives of asset management have been assessed by applying a holding and flow analysis, compar- ing this year’s levels with the previous year. The changes in the contribution of the total portfolio between the years were partly impacted by inflows in larger index funds investing in large listed Nordic and European companies in the real estate sector as well as the industrial and power sectors. Also, the volumes of the insurance operations are rec- ognised separately in separate tables, which resulted in a lower total portfolio and lower sustainability levels. The overall levels of sub- stantial contributions to the environmental objectives are in line with total portfolio values, which also correspond to a diversified portfolio with broad exposure. The company holdings with the highest contribution are in our largest funds and portfolios and are found both in active and in passive management. Two weighted KPIs for the Group – one turnover-based, and one capital expenditure - based – are calculated by weighting each busi- ness segment’s KPI by its share of the Group’s total income. The definition of assets in the Taxonomy reporting is based on Delegated Regulation C (2021) 4987, and Commission Implementing Regulation (EU) 2021/451 with regard to supervisory reporting of institutions. Methodology for the credit institution The KPIs stipulated for the banking operations in the credit institution are reported for agree- ments in the balance sheet, financial guaran- tees and asset management. The proportion of assets at the end of the period and the inflow of new assets during the year, which are eligible and aligned with the EU Taxonomy’s technical screening criteria for all six environ- mental objectives, are reported in the set templates for credit institutions. The reporting of trading book assets and fees and commis- sions for investing activities that meet the Taxonomy criteria will, in line with regulatory requirements, will be reported from the 2025 financial year. 293 Handelsbanken Annual and Sustainability Report 2024 4.3
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Handelsbanken’s main KPI is the Green Asset Ratio (GAR), which shows the proportion of covered assets at the end of the period that meet the Taxonomy criteria. For credit expo- sures in the balance sheet, this means that GAR reporting includes the proportion of covered assets (the denominator) that finance economic activities that meet the criteria set out in the EU Taxonomy (the numerator). The calculation of the green asset ratio for Handelsbanken’s corporate portfolio is based on figures reported by both financial and non - financial counterparties from the previous financial year (2023). Non-financial undertak- ings required to report according to NFRD published the proportion of their operations that is taxonomy eligible and aligned both as a proportion of turnover and as a proportion capital expenditure (CapEx). Both of these key KPIs are used in the reporting of financial insti- tutions. Hence the green asset ratio of is cal- culated and reported twice. 2023 was the first time non-financial under- takings also reported the share of their activi- ties covered by the last four environmental objectives of the taxonomy, which include water and marine resources, transition to a circular economy, pollution, and biodiversity and ecosystems. Alignment with the taxonomy criteria for these environmental objectives will be reported for the first time by non-financial undertakings for the 2024 financial year, which financial institutions then use in their reporting the following year. In this year’s reporting, the Bank also includes companies required to report under the NFRD in EEA countries, which had a very minor effort. The exposure amount for general purpose lending, equities and debt securities are multi- plied by KPIs reported by counterparties. Spe- cific KPIs for the underlying financed assets are to be used and obtained directly from the counterparty for bonds and financing where use of proceeds is known. The disclosure of alignment to the EU Taxonomy technical spec- ification criteria for green bonds is still under development. Covered bonds are therefore weighted with the counterparty’s KPIs, which is a conservative approach. Use of proceeds known are assets where the financed economic activities are known and specific criteria are contractually defined. The assets include specialised lending and debt capital market assets in the Green regis- try of the Bank, in line with the Green Bond Framework. If no data is available from the counterparty, this exposure is included only in the denominator in the green asset ratio. Local governments financing, except for housing financing and specialised lending, is not included in the numerator in the calculation of the green asset ratio. Household exposures with real estate collateral and motor vehicle exposures are assessed using applicable crite- ria in the taxonomy. Other types of household financing are not considered to be Taxonomy - eligible nor aligned. Household exposures with real estate collat- eral are deemed to be Taxonomy-aligned based on the building’s energy performance, given that they are not deemed to be exposed to physical risk due to climate change. The assessment of physical risk uses the same thresholds and external climate data as used for the Pillar 3 physical risk disclosure. Collat- eral exposed to physical risk is not deemed to be aligned with the taxonomy, which is a con- servative assessment. This assessment does not take into account any adaptation plans or other mitigation measures, as the availability of qualitative information regarding these factors is limited. In Sweden, buildings are Taxonomy-aligned if they were built before 2021 with energy class A and those with energy declarations accord- ing to construction regulation BBR29 whose energy performance is below national thresh- olds corresponding to the top 15 per cent. Required data for assessing buildings con- structed prior to 2021 that do not have an energy declaration under construction regula- tion BBR 29 is available from the Swedish National Board of Housing, Building and Plan- ning, though this data is currently not available to credit institutions. For household exposures with properties built before 2021 in other coun- tries no data or studies meeting the regulatory criteria for calculating best energy performance are available. Only buildings with energy class A can therefore be used in these cases. This means that a significant part of the credit port- folio cannot be fully assessed in accordance with the Taxonomy’s top 15 per cent threshold. Household exposures to properties built after 2021, where the energy performance should be at least 10 per cent lower than the national thresholds for nearly zero-energy buildings, can only be assessed in Sweden. In other countries information to assess taxonomy alignment is lacking. Taken together, these data gaps lead to very conservative reporting by the Bank, which means that the green asset ratio is reported lower than the actual conditions would justify. The Bank is working actively to gain access to necessary data in order to ensure the calculation of a more accurate green asset ratio. No estimates are allowed in the mandatory reporting, which means exposures to under- takings not required to report cannot be assessed using the taxonomy. Exposures to non-reporting undertakings, within and outside the EU, are therefore only included in the denominator of the green asset ratio. Further- more, assets held for sale are included under other assets category and are thus also only included in the denominator. The green asset ratio is calculated for the stock and flow in the balance sheet. Flow of financial guarantees and assets in the balance sheet is defined as new loans, i.e. the agree- ments originated during the year. This approach enables an assessment of the proportion of sustainable assets in new financing can be assessed excluding effects of amortisation or currency fluctuations. Disclosure of exposure to non-financial undertakings per sector is a summed by the primary NACE code of the counterparty and includes all non-financial undertakings subject to NFRD, reporting eligi- bility for any economic activity included in the EU Taxonomy. Reporting by the Bank as a credit institution is based on prudential consolidation deter- mined in accordance with CRR, which is described in more detail in note G52 on page 183. The life insurance undertaking of the Bank is not included in consolidation but is dis- closed here in accordance with the equity method, see note G1 on page 69. To avoid double counting, assets representing the life insurance undertaking in the balance sheet are only included in the denominator. The green asset ratio in the life insurance undertaking is reported separately in the next section on page 366. Taxonomy reporting for financial guarantees and assets in the balance sheet are based on data from internal systems of the Bank also used for capital adequacy reporting and for several tables in the annual reports. This infor- mation used is of good quality, without known flaws and is also used in other reporting. Infor- mation on undertakings required to report according NFRD and their reported KPIs is collected from an external provider, and infor- mation on the NFRD requirement is compared to information in internal systems of the Bank. The process for the collection of taxonomy criteria for financing where use of proceeds known will be implemented next year. There- fore, these exposures are not included in the numerator of this year’s green asset ratio. Methodology for asset management Reporting and calculating the green invest- ment ratio of assets under management encompass the asset management’s mutual funds and discretionary volumes excluding the volumes of the insurance operations that are recognised separately this year. The calcula- tion is made by analysing the holdings to the securities level, which means that fund hold- ings are classified based on their underlying assets. The green investment ratio is based on companies’ reported KPIs, proportion of turnover and CapEx, and then aggregated at 294 Handelsbanken Annual and Sustainability Report 2024 4.3 Introduction Administration report Financial statements Sustainability Environmental information Other
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List of Taxonomy tables Consolidated Taxonomy disclosure Group in accordance with article 8 in the taxonomy regulation Page Handelsbanken key performance indicators in accordance with EU Taxonomy, Group Turnover and capital expenditure 326 Taxonomy disclosures for credit instution in accordance with article 8 in the taxonomy regulation Summary of key performance indicators 328 Assets for the calculation of GAR Turnover and capital expenditure 330 GAR sector information Turnover and capital expenditure 338 GAR KPI Stock Turnover and capital expenditure 346 GAR KPI Flow Turnover and capital expenditure 354 KPI off-balance-sheet exposures Turnover and capital expenditure, stock and flow 358 KPI on fees and commissions income from services other than lending and asset management Disclosed for financial year 2025 KPI Trading book portfolio Disclosed for financial year 2025 Nuclear and fossil gas related activities for credit institution in accordance with (EU) 2022/1214 Nuclear and fossil gas related activities Turnover and capital expenditure, on and off balance sheet 360 Taxonomy-aligned economic activities (denominator) Turnover and capital expenditure, on and off balance sheet 360 Taxonomy-aligned economic activities (numerator) Turnover and capital expenditure, on and off balance sheet 362 Taxonomy-eligible but not taxonomy-aligned economic activities Turnover and capital expenditure, on and off balance sheet 364 Taxonomy disclosures for life insurance in accordance with article 8 in the taxonomy regulation The proportion of the insurance or reinsurance undertaking’s investments that are directed at funding, or are associated with, Taxonomy-aligned in relation to total investments 366 Nuclear and fossil gas related activities for life insurance in accordance with (EU) 2022/1214 Nuclear and fossil gas related activities Turnover and capital expenditure 368 Taxonomy-aligned economic activities (denominator) Turnover and capital expenditure 368 Taxonomy-aligned economic activities (numerator) Turnover and capital expenditure 369 Taxonomy-eligible but not taxonomy-aligned economic activities Turnover and capital expenditure 370 Handelsbanken Group EU Taxonomy KPIs Business segment Income Taxonomy KPIs of Handelsbanken Group, 2024-12-31 MSEK Proportion % KPI Turnover based KPI Turnover based KPI weighted Capex based KPI Capex based KPI weighted Banking Credit portfolio 179,336 95.5 Green asset ratio (GAR) 3.4 3.2 3.5 3.3 Financial guarantees 94 0.1 Green asset ratio (GAR) 0.6 0.0 0.5 0.0 Assets under management 5,381 2.9 Green investment ratio (GIR) 1.5 0.0 2.0 0.1 Insurance (life) 2,921 1.6 Green investment ratio (GIR) 3.2 0.1 0.2 0.0 Consolidated, Group 187,732 100.0 Consolidated KPI, Group 3.3 3.4 portfolio level. Reporting is based on data from the Bank’s internal portfolio systems, which is used for other financial reporting and consid- ered to be of high quality. Information on the reported KPIs of the mutual fund and portfolio holdings is collected from external data pro- viders and the corporate data available to the market on the portfolio date is used to calcu- late the aggregate amounts. Methodology for insurance operations Handelsbanken Liv’s KPIs are based on the company’s balance sheet at year-end. Hold- ings in ucits funds were analysed to the extent practicable. Handelsbanken Liv’s starting point was to classify the fund holdings based on the funds’ underlying assets. Disclosures in the tables were based on fig- ures from the preceding financial year (2023) published by the companies subject to the disclosure requirements under Article 8 of the Taxonomy. As the Taxonomy will enter into force gradually, it will take a number of years before all KPIs are fully implemented. In its regular implementation efforts, Handelsbanken Liv takes into account guidance published by the European Commission. External data pro- viders were primarily used to prepare disclo- sures for the tables. When external data was not available, Handelsbanken Liv used its own research analysis based on other external data sources. In parts of the table where data avail- ability has not been satisfactory, work is underway for next year's reporting to supple- ment with additional information about the portfolio's green investments. 295 Handelsbanken Annual and Sustainability Report 2024 4.3
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ESRS E4 Biodiversity and ecosystems ESRS E4 Biodiversity and ecosystems Strategy E4-1: Transition plan and consideration of biodiversity and ecosystems in strategy and business model The resilience of the Bank’s own operations for managing its negative impacts on biodiversity is considered high since the Bank’s main own operations are not dependent on natural resources. The strategy for the Bank’s value chain, where negative impacts on biodiversity have been identified downstream in asset management, is to actively support and accel- erate sustainable development. This, com- bined with the Bank’s low and integrated risk tolerance, provides a solid basis for resilience to biodiversity loss. Resilience was assessed as part of Handels- banken’s Nature and Biodiversity Progress Report 2023, published in 2024. More accurate models to assess physical, transition and sys- temic risks in the value chain over different time horizons are under development. Handels- banken collaborates with other stakeholders through, for example, the Mistra BIOPATH research programme, which is developing methods for integrating nature and biodiversity into financial planning. Handelsbanken has not yet defined a detailed transition plan for biodiversity, but because climate change is a key driver of bio- diversity loss the Bank’s climate transition plan is a key element of its work in this area. Read more about the Bank’s transition plan for cli- mate change in section E1-1 – Transition plan for climate change mitigation on page 285. ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model The main impact on biodiversity and ecosys- tems stems from the Bank’s asset manage- ment, which primarily take place via the Bank’s fund company. One challenge is the loca- tion-based assessment of the actual impact. For example, a company’s headquarters may be located in one country, but its production could be spread all across the world. Supply chains are often global and difficult to map without more specific information from each individual company, but the assessment is that there is a negative impact on biodiversity investing in activities that contribute negatively to climate change, land-use change, direct exploitation, invasive alien species, environ- mental pollution and other impact drivers. For more general information on the link between the Bank’s identified sustainability matters, refer to section SBM-3 on page 269. Impact, risk and opportunity management E4-2: Policies related to biodiversity and ecosystems The steering documents that address the Bank’s material sustainability matters for the direct impact drivers of biodiversity loss are: • Policy for sustainability, for more informa- tion, see page 264 • Guidelines regarding the environment and climate change • Guidelines for Handelsbanken’s offering in forestry and farming. The content of these steering documents emphasises how biodiversity is an important matter for Handelsbanken to integrate into its operations including asset management. They describe the close link between biodiversity and environmental and climate change, as well as sustainable social development. In the guidelines regarding the environment and cli- mate change, the Bank states its commitment to minimising the negative impacts on the environment and climate. Contributions to direct impact drivers are not stated in the guidelines, but climate and resource use are two areas that are specifically addressed. These guidelines also state that through its business relationships, the Bank wants to pro- mote sustainable business models that take biodiversity into account and that strive to minimise damage and contributions to nega- tive development. The guidelines regarding the environment and climate change also address the social impacts of the deterioration of biodi- versity. As biodiversity declines, partly due to increased use of the earth’s limited natural resources, the risks to the environment and climate as well as to people, businesses and societies, increase. When ecosystem services are threatened by these negative impacts, social impacts can arise due to, for example impacts on food security. In support of its work with biodiversity, the Bank’s guidelines regard- ing the environment and climate change refer to several international initiatives, such as the UN Global Compact, the Equator Principles, the Principles for Responsible Banking (PRB), the Principles for Responsible Investment (PRI), the Principles for Sustainable Insurance (PSI) and the Convention on Biological Diver- sity (CBD). The latter aims to ensure that natu- ral resources are used sustainably. The guidelines for Handelsbanken’s offering in forestry and farming describe specifically how these sectors are one of the main causes of global biodiversity loss. Land-use change, one of the main drivers of biodiversity loss, is also one of the largest sources of global GHG emissions. Sustainable forestry and farming is therefore an enabler for the promotion of biodi- versity and a stable climate. The forestry and farming guidelines include expectations regarding sustainable land and agricultural methods in this business area, although the guidelines do not specifically refer to deforestation. Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Direct impact drivers of biodiversity loss Actual negative impact Asset management Long 296 Handelsbanken Annual and Sustainability Report 2024 4.3 Introduction Administration report Financial statements Sustainability Environmental information Other
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While sustainable methods for ocean-related sustainability are not explicitly mentioned, the Bank’s general guidelines regarding the envi- ronment and climate change also include expectations that are applicable to marine related activities. E4-3: Actions and resources related to biodiversity and ecosystems In 2024, Handelsbanken implemented several key actions to prevent, mitigate and remediate the negative impact the Bank can be assumed to have on biodiversity. Offsetting biodiversity loss has not been implemented in Handels- banken’s actions but may occur indirectly in the Bank’s value chain. The actions taken so far have not included indigenous and local knowledge or nature-based solutions. The following is an extract of the most rele- vant actions and activities conducted in 2024. In order to measure and contribute to posi- tive change, Handelsbanken collaborates with different parts of society and the value chain in its work with biodiversity. The Mistra BIOPATH research project, in which Handelsbanken is a lead partner, brings influential players from the business world together with researchers in economics and ecology, with the aim of work- ing side by side to stop and reverse the loss of biodiversity. New and existing approaches are identified, evaluated and developed in order to integrate biodiversity considerations into fi- nancial decision-making. The Bank is also a member of Business@Biodiversity Sweden, a knowledge platform for training and ex - changing ideas on biodiversity. Handelsbanken Fonder has been a member of Nature Action 100 since 2023. The initiative aims to engage the 100 global companies deemed systemically important in reversing nature and biodiversity loss by 2030. These companies have an impact on habitat loss, overexploitation of land and pollution of soil and water. Some of the sectors initially in focus include biotechnology and pharmaceuticals, chemicals and the food industry. Handels- banken’s strategy to engage in initiatives and research, such as Mistra BIOPATH and Nature Action 100, is a continuous action. In 2024, Handelsbanken focused on devel- oping its reporting capabilities for nature-re- lated disclosures. In August 2024, the Bank published its first stand-alone report on nature and biodiversity, based on the recommenda- tions of the Taskforce on Nature-related Finan- cial Disclosures (TNFD). The ambition is for the report to be used to further develop and deepen the analysis of negative and positive impacts on biodiversity and ecosystems, including in business areas and sectors that are not currently material in the context of the Bank’s materiality assessment but which could eventually become important to the Bank and its customers. As a major investor and owner, Handels- banken Fonder has both a responsibility and an opportunity to engage with companies to influence them to act responsibly and conduct their business in a sustainable manner. In 2024, Handelsbanken Fonder addressed bio- diversity in several dialogues. The aim has been to encourage companies to increase their knowledge, reporting and transparency on issues related to activities with a potentially negative impact on biodiversity, both within their direct operations and in their value chains. In its latest Climate and Nature Report, Handelsbanken Fonder reported for the first time, guided by the recommendations of the TNFD, with the aim of integrating nature-re- lated risks and opportunities into its invest- ment decisions. Metrics and targets E4-4: Targets related to biodiversity and ecosystems Biodiversity and nature metrics are not equally established as carbon footprint metrics in climate reporting, making it difficult at present to quantify and target an exact contribution to biodiversity loss, particularly at the portfolio level. For this reason, the Bank has defined an interim target based on engagement dialogue, which is one of the most important sustainabil- ity tools that financial players can use to work on their indirect impact in the value chain. The target is between 2025 and 2030, through the Bank’s asset management, to conduct 20 bio- diversity engagement dialogues per year with selected portfolio companies in prioritised sec- tors. With this target, Handelsbanken aims to reduce its indirect impact on biodiversity and ecosystems, which is in line with the Bank’s expectations in its guidelines regarding the environment and climate change. The interim target is absolute and covers all of the Bank’s investor activities in all markets. The base year for the interim target is 2025, which is why there is currently no baseline value. The target will be followed up annually to ensure that the targeted number of dia- logues is met. The Bank’s approach to ensur- ing compliance with the target from when it enters into force in 2025 is to record every engagement dialogue in order to measure whether the Bank’s progress is in line with the planned target at the end of each reporting period during the life of the target. The dialogues can cover all levels of the mit- igation hierarchy (avoidance, minimisation, restoration/rehabilitation, and compensation or offsets). Biodiversity offsetting is not relevant for achieving this target. Engagement dialogue is an established tool, although the target does not have a direct science-based link to biodi- versity. The Bank’s new target for biodiversity and ecosystems has been designed to develop the Bank’s work, share knowledge and create the conditions for meeting the tar- gets presented in the Kunming-Montreal Global Biodiversity Framework, adopted by the UN, which aims to halt and reverse biodi- versity loss. Ecological thresholds were not used in the development of the target, but the Bank’s ambition is that the engagement dia- logues with selected counterparties will sup- port the process of reducing the Bank’s contri- bution to impact drivers of biodiversity loss, and creating a basis for how the Bank can continue to focus its work on the topic together with its counterparties. 297 Handelsbanken Annual and Sustainability Report 2024 4.3
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4.4 Social information Social information Disclosure Requirements ESRS S1 Own workforce Strategy 299 ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model 299 Impact, risk and opportunity management 300 S1-1: Policies related to own workforce 300 S1-2: Processes for engaging with own workers and workers’ representatives about impacts 301 S1-3: Processes to remediate negative impacts and channels for own workers to raise concerns 302 S1-4: Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions 302 Metrics and targets 305 S1-5: Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 305 S1-6: Characteristics of Handelsbanken’s employees 305 S1-7: Characteristics of non-employee workers in Handelsbanken’s own workforce 305 S1-8: Collective bargaining coverage and social dialogue 306 S1-9: Diversity metrics 306 S1-10: Adequate wages 306 S1-11: Social protection 306 S1-13: Training and skills development metrics 306 S1-14: Health and safety metrics 307 S1-15: Work-life balance metrics 307 S1-16: Remuneration metrics (pay gap and total remuneration) 307 S1-17: Incidents, complaints and severe human rights impacts 307 ESRS S2 Workers in the Value Chain Strategy 308 ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model 308 Impact, risk and opportunity management 308 S2-1: Policies related to value chain workers 308 S2-2: Processes for engaging with value chain workers about impacts 309 S2-3: Processes to remediate negative impacts and channels for value chain workers to raise concerns 309 S2-4: Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those action 309 Metrics and targets 311 S2-5: Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 311 ESRS S4 Consumers and end-users Strategy 313 ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model 313 Impact, risk and opportunity management 313 S4-1: Policies related to consumers and end-users 313 S4-2: Processes for engaging with consumers and end-users about impacts 313 S4-3: Processes to remediate negative impacts and channels for consumers and end-users to raise concerns 314 S4-4: Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions 314 Metrics and targets 315 S4-5: Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 315 Entity specific – Contribute to Society Strategy 316 Impact, risk and opportunity management 316 Metrics and targets 316 298 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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ESRS S1 Own workforce Strategy ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model Handelsbanken’s values and strong corpo- rate culture are vitally important to the Bank’s success and are a fundamental requirement for the Bank to remain an attractive employer. The Bank’s business concept is based on trust and respect for individuals, both cus- tomers and co-workers. The decentralised way of working creates commitment and gives every co-worker both responsibility and opportunities to make an impact on the Bank’s operations. Collaborating, developing, 1) “Employees” refers to all Bank employees excluding external consultants. For more information about the Bank’s employees, refer to S1-6 on page 305. 2) “Co-workers” refers to all Bank employees as well as external consultants. For more information about the external consultants, refer to S1-7 on page 305. and creating solutions together improves the Bank’s ability to achieve its overall objective. An essential part of this collaboration is Handelsbanken’s traditionally positive rela- tionships with trade unions, which are part of its corporate culture. The Bank promotes the right of all employees1) to join a trade union or employee organisation. Handelsbanken’s strength is derived from the combined expertise of its co-workers2). Employee development is a prerequisite for the Bank’s continued success and is crucial to the Bank’s ability to ensure customer satisfaction. All co-workers are offered continuous skills development as the needs of the business, its customers and the world change, in accor- dance with current policies and regulations. Considering that the Bank is a large employer and operates in several markets, the Bank’s operations could entail that co-workers risk being exposed to or influenced by events that may create a sense of uncertainty or lack of respect in the workplace. Handelsbanken works actively to ensure that all co-workers feel secure and respected. A good and inclu- sive work environment is crucial to co-workers’ health and well-being and is a prerequisite for the Bank’s long-term profitability. By attracting, recruiting, developing and retaining co-work- ers with different backgrounds, perspectives and experiences, the Bank strengthens its capacity to understand its customers’ needs and to adapt to a society in a constant state of change. Handelsbanken adopts a long-term approach to employment and aims to be an attractive employer by offering competitive terms of employment for all employees. Unfair pay gaps are part of a wider societal problem, with structural challenges related to the gender pay gap requiring a long-term com- mitment from companies and society alike. The Bank engages in active and systematic efforts throughout the organisation to identify and address unfair pay gaps, and this process is part of the work on achieving equal pay. Overall, the Bank’s assessment is that the identified positive and negative impacts linked to working conditions, and equal treatment and opportunities for all are not the result of Handelsbanken’s strategy or business model, but are due to the fact that the Bank is a large employer and operates in several markets. Social information Handelsbanken aims to create an inclusive and sustainable work environment with equal opportunities for all co-workers. At the same time, the Bank assumes responsibility for workers in the value chain by integrating these issues into its business decisions and through its human rights guidelines and Supplier Code of Conduct. This section describes the impacts, risks and opportunities affecting the Bank with regard to social sustainability through its own workforce, workers in the value chain and the Bank’s cus- tomers, including the targets that have been set and how the Bank governs and manages this to amplify positive impacts and minimise negative impacts and risks. For consumers and end-users, the Bank ensures the protec- tion of personal data and data security through strict guidelines and technical solutions. Handels banken works continuously to protect its customers’ data, transactions and IT envi- ronments in accordance with international standards and legislation. ESRS S1 Own workforce Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Working conditions (Own workforce) Actual positive impact Actual negative impact Own operations Own operations Short/medium/long Short/medium/long Equal treatment and opportunities for all (Own workforce) Actual positive impact Potential negative impact Own operations Own operations Short/medium/long Short/medium/long 299 Handelsbanken Annual and Sustainability Report 2024 4.4
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Impact, risk and opportunity management S1-1: Policies related to own workforce Handelsbanken has the following steering documents in place to address positive and negative impacts with respect to labour prac- tices and equal treatment and opportunities for all co-workers: • Policy for remuneration • Guidelines for work environment • Policy for ethical standards, for more information, see page 263 • Policy for sustainability, for more information, see page 264 • Guidelines regarding human rights and working conditions. Together with the overall framework for gender equality, diversity and inclusion at Handels- banken, these policies and guidelines form the basis of the Bank’s steering documents to support co-workers’ work processes and the Bank’s efforts to minimise negative impacts and amplify positive impacts. All steering doc- uments apply to all co-workers of the Handels- banken Group. For more information on the steering documents, see the table “Selection of steering documents” on page 262. The content of the steering documents that address the impacts on Handelsbanken’s co-workers demonstrates that the Bank aims to create a healthy, good and safe workplace characterised by trust and respect and where all co-workers have the opportunity to feel good and develop. Handelsbanken works actively to promote good working conditions for its co-workers. The policy for remuneration stipulates that Handelsbanken’s remuneration system must be fit-for-purpose and consistent with the Bank’s business goal and business culture, which are based on sound, sustainable oper- ations whereby co-worker conduct is charac- terised by high ethical standards, good administrative order and regulatory compli- ance. Remuneration must also be structured to promote a healthy and efficient manage- ment of sustainability risks. Handelsbanken adopts a long-term approach to employment, and remuneration must be market-based, equal and gender-neutral, and enable the Bank to attract, recruit, retain and develop tal- ented co-workers. The remuneration system must also ensure good management succes- sion, thus contributing to the achievement of the Handelsbanken Group’s corporate goal. Handelsbanken generally has a low risk toler- ance, which is reflected in its approach to remuneration. Fixed remuneration is consid- ered to contribute to sound operations and should therefore be applied as a general rule. Fixed remuneration mainly comprises basic salary, customary salary benefits and pension. Performance-based variable remuneration must be applied with great caution and is not offered to co-workers who, in their profes- sional roles, can have a material impact on the Bank’s risk profile. For more information on remuneration to executive officers, refer to the section GOV-3 on page 265. In certain countries, Handelsbanken is party to collective bargaining agreements on general terms and conditions of employment and con- ditions for pensions. The policy does not affect rights and obligations under collective bargain- ing agreements or other contractual or labour law provisions. Group HR ensures that remuneration within Handelsbanken is applied in accordance with external and internal regulations. The indepen- dent control functions monitor and analyse the remuneration system and report material risks and flaws to the Board’s Remuneration and Risk committees. The guideline for the work environment describe the overall goal, responsibilities and process for the work environment at Handels- banken. The overall goal of Handelsbanken’s work environment management is to ensure that the Bank’s co-workers feel good, develop and function optimally. A good and inclusive work environment promotes co-workers’ health and well-being, which in turn is a nec- essary prerequisite for the Bank’s long-term profitability. All co-workers at Handelsbanken should feel respected and secure at their workplace. The guidelines state that work environment management is to be conducted systemati- cally and based on a number of health factors, based on Handelsbanken’s culture and values: respect, trust, pride, competence, balance, communication, security, and physical work environment. This work is carried out through regular surveys, risk assessments, action plans, checks on actions taken, monitoring and reporting. The activities identified for maintaining and developing a good and inclusive work environ- ment and counteracting risks of illness are to be regularly followed up and integrated into the work environment plan, which forms part of the annual business plan. The CEO, on behalf of the Board of Direc- tors, has overall responsibility for the Bank’s work environment and delegates specific tasks related to the work environment to responsible managers who ensure that the work environ- ment is managed in the daily operations. The Chief Human Resources Officer is responsible for issuing the instructions to be followed by the managers assigned with tasks related to the work environment. All co-workers have a responsibility to participate in the Bank’s work environment activities and assume responsi- bility for their own health. An ongoing dialogue between manager and co-worker is also cru- cial when it comes to detecting early signs of poor health and ensuring that co-workers’ work situation is sustainable in the long run. Handelsbanken aims to create a healthy and safe work environment, which is a central part of the Bank’s commitment to human rights and labour practices. The Bank emphasizes the importance of long-term business relation- ships and low risk-taking, which indirectly con- tributes to secure employment by creating sta- ble and sustainable working conditions. Handelsbanken recognises the right of its co-workers to decide for themselves whether they want to be represented by a trade union and respects their right to negotiate collective bargaining agreements. To address positive and negative impacts within the framework of equal treatment and opportunities for all co-workers, the Bank’s steering documents state that Handelsbanken strives to create an inclusive culture with trust and respect for every individual. The policy for ethical standards states that all Handelsbanken employees must act in a way that upholds confidence in the Bank. All operations within the Group are to observe high ethical standards, and all financial advice should always be based on the needs of the customer. If there is any uncertainty about what is ethically acceptable, the issue should be raised with the employee’s immediate supervisor. Discrimination, victimisation, sex- ual harassment or other forms of harassment based on gender, transgender identity or expression, ethnicity, religion or other beliefs, disability, sexual orientation, age or on any other grounds must not occur within the Bank, either internally towards and between employees or towards customers, suppliers and other external parties. The policy also describes how employees and other stakeholders should act in case of suspected fraud or other irregularities. Handels- banken has an established whistleblower system that can be used to report something anonymously. Identity and personal data must be protected at all times, and there must be no form of unfair treatment of the whistleblower. All managers are responsible for ensuring that the policy is followed in the daily opera- tions and that it is taken into consideration in internal instructions in each operating area. Employees are to be given the opportunity to regularly discuss ethical issues, and ethical aspects should be integrated as a natural component of the Bank’s internal training. All managers are also responsible for ensuring 300 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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that external contractors are informed of and commit to following this policy. The guidelines regarding human rights and working conditions supplement and clarify the approach to human rights and fundamental labour practices, and emphasize the impor- tance of responsible conduct as a basis for long-term value creation both for the own workforce and for workers in the value chain as well as in other business relationships including consumers and end-users. The Bank is committed to following the UN Guiding Principles on Business and Human Rights and national action plans, and works in a struc- tured manner to uphold human rights and good working conditions as a natural part of its own operations and Handelsbanken’s busi- ness relationships. The Bank aims to make continuous improvements in this area and to avoid and address negative human rights impacts. This takes place based on the Bank’s procedures that follow guidelines and policies, as described i S1-3, see page 302. The guide- line outlines the Bank’s position on such issues as discrimination, victimisation, gender equal- ity and diversity for all co-workers. Handels- banken does not accept any form of child labour, slave labour or human trafficking within the Group or via business relationships, and works actively to prevent them from occurring in the Group and in the companies with which the Bank has business relationships. Handels- banken supports a number of international ini- tiatives, including the UN Global Compact, the OECD Guidelines for Multinational Enterprises and the ILO core conventions to promote sus- tainable development. Information on reviews and dialogues with the Bank’s co-workers can be found in S1-2 and S1-4 on pages 301 and 302. The framework for gender equality, diversity and inclusion is central to Handelsbanken’s efforts to be an equal opportunity workplace, to utilise the benefits of diversity and to create an inclusive culture. The framework is estab- lished by the Chief Human Resources Officer. It applies to the entire Group and supplements the other steering documents. A focus on gender equality, diversity and inclusive culture is part of Handelsbanken’s core values and corporate culture, which are to be natural and integral parts of the Bank’s daily operations. All business plans include objectives and activities to promote gender equality, diversity and an inclusive culture and are regularly monitored. While these activities are based on the Bank’s role as an employer, they also take a customer and societal per- spective into consideration. By promoting diversity, the Bank can better meet the various expectations and needs of its customers. For Handelsbanken, gender equality means that all of the Bank’s co-workers, regardless of gender, must have the same rights, opportuni- ties and conditions to develop and contribute to the Bank’s progress. The goal is to utilise and respect each co-worker’s competency, experience and value in the best possible way, so that they can develop as individuals and in their professional roles. Handelsbanken endeavours to achieve and maintain a bal- anced gender representation in different roles and parts of the Bank. Handelsbanken’s view of diversity encom- passes individuals’ different skills and work experience, ways of thinking and solving prob- lems, socio-economic backgrounds, appear- ance and personal circumstances. It also includes encompasses in gender, transgender identity or expression, age, ethnic background, sexual orientation, disability, religion or belief, and other grounds of discrimination. The Bank is to reflect the diversity of the communities where it operates. Handels- banken aims to attract, recruit, develop and retain co-workers with different backgrounds and perspectives. Diversity is a crucial element of the Bank’s success and is closely linked to its profitability. By promoting an inclusive cul- ture, Handelsbanken can best harness the advantages inherent to gender equality and diversity. To achieve the Bank’s goals in terms of gen- der equality, diversity and inclusion, the Bank places a particular emphasis on management succession planning and recruitment, compe- tency development, health and work environ- ment, work-life balance, and gender-equal pay. S1-2: Processes for engaging with own workers and workers’ representatives about impacts Handelsbanken’s decentralised way of work- ing creates commitment and gives every co-worker both considerable responsibility and opportunities to make an impact on the Bank’s operations. All managers are responsi- ble for maintaining a close and regular dia- logue with their co-workers and with trade union or workers’ representatives as part of the daily operations. This continuous dialogue pro- vides an opportunity to identify early signals, for example, regarding the work environment, and ensure that the Bank’s co-workers feel good and develop in their roles. In addition to this close day-to-day dia- logue, Handelsbanken has an established structure for developing its operations and its co-workers, with the customer and their busi- ness as the starting point. This process, which is called the Wheel, is designed to ensure that all employees actively participate in their unit’s business planning process, which includes setting goals and scheduling activities for the coming year. As part of the Wheel, each The Wheel illustrates the relationship between the operations and the development of the Bank’s employees. Managers and their employees work together to create their own unit’s business plan each year. After the plan is set, planning dialogues and performance reviews (PLUS reviews) are carried out, linking the business plan with each employee’s goals. As a result, every employee has an individual action plan that is followed up regularly during the year and forms the basis of the annual salary review between manager and employee. Salary dialogue review B usine ss p lan PLUS Cus tome r BUSINESS PLAN PRO CESS Individual follow -ups Action plan The Wheel – the relationship between the operations and the Bank’s employees 301 Handelsbanken Annual and Sustainability Report 2024 4.4
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employee has an individual planning dialogue and performance review (PLUS review) with their manager on a regular basis – at least once a year – which results in an individual action plan. PLUS reviews include a review of the current situation, the work environment, the business plan, the employee’s performance and devel- opment in their current position, and future career opportunities. By discussing the current situation and work environment, the employee and manager gain a mutual understanding of the current work situation, including the unit’s work environment as it compares with the Bank’s culture and values. The aim is to ensure that all co-workers feel good, develop and work optimally and maintain a good work-life balance. As part of this ongoing dialogue with the Bank’s co-workers and employee representa- tives, each manager is responsible for per- forming regular work environment surveys, based on the Bank’s health factors, in cooper- ation with their co-workers and trade union representative or workers’ representative. For one of these health factors – communication, which includes questions about the close, continuous dialogue between the Bank’s man- agers and co-workers, the results show that 92 per cent (92) of co-workers gave positive responses. More information about the Bank’s systematic work environment management and Group-wide work environment survey is provided in section S1-4 on page 302. Handelsbanken’s traditionally good relation- ships and cooperation with trade unions are a valuable component of the Bank’s culture and an integral part of its way of working. In addi- tion to matters dealt with in the dialogue with union organisations at the national level in each country, Handelsbanken also has a Euro- pean Works Council (EWC). More information about EWC is provided in section S1-8 on page 305. The Bank’s contacts with co-workers take place both directly and through workers’ repre- sentatives as part of the daily operations. A continuous, close dialogue also takes place between managers and trade union or work- ers’ representatives. This dialogue, which is often informal and as standard practice takes place at an early stage, is based on national legislation and the processes regulated by local agreements with respect to the forms of cooperation, and covers organisational changes, employee and rehabilitation issues, new products and procedures, and the appointment of new managers. Sweden, the UK, Norway and the Netherlands also have country-specific cooperation forums that meet at least once every quarter. The purpose of these cooperation dialogues is to ensure co-determination at all levels within the Bank and compliance with national legislation as well as central and local collective bargaining agreements. Workers’ representatives on the Board also ensure that dialogue and knowl- edge-sharing take place at all stages of the decision-making process and that the per - spectives of their own workforce are taken into consideration at the Board level. S1-3: Processes to remediate negative impacts and channels for own workers to raise concerns A good and inclusive work environment is crucial to co-workers’ health and well-being, which in turn is a prerequisite for Handels- banken’s long-term profitability. The Group-wide work environment survey, which is part of the Bank’s systematic work environment management and covers all co - workers, measures co-workers’ perception of the work environment. The survey includes questions about co-workers’ knowledge of how to act when instances of victimisation, discrimination, harassment or sexual harass- ment occur as well as in threatening or violent situations. In this year’s survey, 96 per cent (96) of co-workers say they have a good un- derstanding of how to respond to such occur- rences. For more information about how the Bank’s systematic work environment manage- ment is followed up in each country, refer to section S1-4 on page 302. The Bank has clear procedures and guide- lines for managing poor health, illness and other work environment incidents. All employ- ees are covered by local company healthcare programmes or the equivalent, and partnership agreements have been signed with external providers to offer work environment expertise. All work environment incidents are to be reported in the Bank’s internal system, WEIN. This includes work-related injuries, accidents, work-related illnesses, near-misses, victimisa- tion or harassment, and intimidation. Incidents are preferably reported in consultation with the workers’ representatives and the responsible manager or supervisor, who investigates the causes and takes action to prevent the inci- dent from recurring. Where possible, the affected party should be involved in the inves- tigation and their views taken into account. WEIN is available to all co-workers via the Bank’s intranet. All co-workers undergo mandatory security training annually, covering physical security and information about WEIN. Handelsbanken is committed to having a respectful culture, high ethical standards and a climate where everyone can discuss, react and act if something conflicts with the Bank’s values. All co-workers at Handelsbanken should feel respected and secure at their work- place. Taking action when something is not right is an important part of the Bank’s culture. To uphold confidence in the Bank, co-work- ers and other stakeholders are encouraged to report suspected irregularities or misconduct, such as financial crime, money laundering or serious abuses in the work environment. Co-workers should primarily report such irregularities or misconduct to their immediate supervisor or to a senior manager within their own or another unit. If this is not an appropri- ate course of action, they may use Handels- banken’s whistleblower system, which is man- aged by an external party with guaranteed identity protection as far as legally possible. The whistleblower system complies with exter- nal legislation and protects the whistleblower from retaliation in accordance with the Bank’s policy for ethical standards. Handelsbanken’s whistleblower system and related procedures are described in the Bank’s policy for ethical standards, and the system is available via the intranet and the Bank’s public website both for internal and for external stakeholders. This refers to co-workers in Handelsbanken and in the value chain, suppliers, customers and other stakeholders. The Bank plans to include a follow-up of co-workers’ awareness of, and trust in, the whistleblower system in the Group-wide work environment survey. The continuous dialogue in the day-to-day operations and in the PLUS reviews between managers and co-workers create the condi- tions for collecting the views of co-workers on managing any negative impacts. S1-4: Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions Handelsbanken aims to be an attractive employer and offers competitive terms of employment for all forms of employments – temporary as well as permanent. During the year, the proportion of permanent employees was 94 per cent. In addition to statutory requirements and collective bargaining agreements, the Bank provides benefits that aim to promote long-term employment, gender equality and involvement in the Bank’s performance. Handelsbanken aims to meet its co-workers’ needs during various phases of their life in a flexible way. Collective bargaining agreements are the foundation of the workplace benefits 302 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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that the Bank offers to both temporary and permanent employees. More information on remuneration to Bank’s employees is provided in section S1-10 on page 306. Handelsbanken offers various types of competitive benefits for both permanent and temporary employees of the Group; these differ between countries, depending on local conditions. Handelsbanken aims to make it easier for all employees to combine employment with par- enthood. In addition to the rules for parental leave under national social insurance systems, Handelsbanken provides supplementary remu- neration in most of its markets. This means that employees on parental leave also receive remuneration in accordance with local regula- tions (in addition to the general parental insur- ance) for a certain period of time. Employees on parental leave are also entitled to a salary review in the same way as other employees. Handelsbanken also offers its employees credit on special terms, mainly for housing financing. The terms and conditions for such credit differ between countries depending on local conditions, and in many countries are a taxable benefit. Pensions are a central part of the total remu- neration to employees of Handelsbanken. The Bank offers pension terms that are competitive and comply with the legislation and regulations in force in the countries where the Bank oper- ates. Occupational pension plans can include retirement pension, disability pension and sur- viving family member protection. Employees are offered pension solutions including defined benefit pensions, defined contribution pensions or a combination of the two. Oktogonen is Handelsbanken’s scheme for collective profit-sharing, based on a common corporate goal where all employees contribute to the success of the Bank. Handelsbanken’s corporate goal is to have higher profitability than the average of peer competitors in our home markets. A prerequisite for allocations to the profit-sharing scheme is that Handels- banken meets its corporate goal. An allocation is made following the Board’s overall assess- ment of the Bank’s performance. Disburse- ments are made directly to the individual employee either in cash, to a pension savings programme, to a savings plan or a combina- tion of these. Handelsbanken promotes the right of all employees to join a trade union or employee organisation. Information about the proportion of employees covered by collective bargaining agreements is provided in section S1-8 on page 305. In addition to collective bargaining agree- ments, there are other forms of agreements and cooperation with local employee organisa- tions. In the UK, Norway and the Netherlands, for example, work councils have been estab- lished. The issues discussed at the national level in cooperation with these parties include monitoring the operations, work environment, skills development and remuneration. Handelsbanken engages in systematic work environment management encompass- ing the physical, organisational and social work environment. This work is built around an annual process based on a number of health factors with the Bank’s culture and values as their starting point. Work environ- ment management is a natural part of the daily operations and includes regular work environment surveys, risk assessments, actions to address identified shortcomings and follow-up to ensure that the actions implemented have had the desired effect. Work environment activities are conducted in accordance with local legislation and regula- tions in each country where the Bank oper- ates and covers all co-workers. In coopera- tion with their co-workers and trade union representative or workers’ representative, each manager is responsible for performing regular work environment surveys, based on the Bank’s health factors. These health fac- tors are respect, trust, pride, competence, balance, communication, security, and physi- cal work environment, along with the related categorises of inclusion and engagement. Based on the results of the work environment survey and a joint risk assessment, a work environment plan is prepared with activities that become part of the unit’s business plan for the relevant year. These activities are monitored on an ongoing basis for the rele- vant year to maintain and develop a good and inclusive work environment and counter- act risks of illness. Identified risks are man- aged through tailored improvements. Every country monitors its systematic work environment efforts in a joint health and safety forum that includes both employer and work- ers’ representatives. The forum evaluates the results of work environment surveys at an aggregated level, sickness absence, and reported work environment incidents. Identi- fied risks are managed during the relevant year through tailored actions that are followed up on a regular basis. The Group-wide work environment survey for 2024 showed a score of 5.1 (5.1) on a scale of 1–6, with 1 being the lowest and 6 the highest. Handelsbanken offers an allowance for well-being and leisure activities, and also regularly organises healthy living initiatives. Handelsbanken works actively and system- atically to ensure equal pay and to rectify unfair pay gaps between women and men through- out the operations. This work takes place on a continuous basis and in connection with specific occasions, such as recruitment, salary reviews and employees’ return from parental leave. In the Swedish, Norwegian and Dutch operations, salaries are mapped out every year to address any differences. In connection with annual salary reviews, information initiatives are also carried out for salary-setting man- agers in Sweden, the UK, Norway and the Netherlands, where equal pay is a key area discussed. During the annual salary reviews, the salary-setting manager can not only make salary adjustments based on performance but also ensure that salary levels are equal and fair from a gender perspective. In Sweden and Norway, work on equal pay has been conducted in close cooperation with the trade unions for many years. More information about pay gaps between men and women is provided in section S1-16 on page 307. Handelsbanken’s strength is derived from the combined expertise of its co-workers. When co-workers develop, the Bank also de- velops. A well-established structure ensures that all employees, in dialogue with their man- ager, are provided with the conditions to de- velop their skills in line with the needs and wishes of the business and its customers. Skills development activities are based on cur- rent policies and regulations, taking changes in the external environment into consideration. This helps the co-workers to continuously grow and actively contribute to Handelsbank- en’s long-term success. A central part of the co -workers’ development is on-the-job learn- ing, with all co-workers taking responsibility for their own development and the advancement of the business. Handelsbanken offers a wide range of train- ing courses and programmes at different levels to strengthen co-workers’ skills. The Bank’s digital learning platform is used to monitor and track participation in formal courses and pro- grammes. In addition, co-workers have the opportunity to participate in courses through external training platforms, tailored to individ- ual goals and action plans. Handelsbanken provides a number of Group-wide training courses. To ensure com- pliance with regulations and industry stan- dards, several training courses were manda- tory for all co-workers in 2024, for example: • Training in financial crime, with a focus on measures to counteract money laundering, terrorist financing and related crime such as tax evasion and fraud. • Security training covering physical security and cybersecurity. • Training in the General Data Protection Regulation (GDPR). 303 Handelsbanken Annual and Sustainability Report 2024 4.4
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Results for training in financial crime, see cor- porate governance information in G1 on page 321. Leaders who have served as a manager for one to two years have the opportunity to participate in the Handelsbanken Leadership programme, which aims to create a shared foundation for leadership and leadership development. During the year, 183 leaders completed the programme. All new managers in Sweden, the UK and Norway are provided with a skills development training plan during their first year as a man- ager or leader, focusing on among other things salary reviews, labour rights and competency based recruitment. In the Netherlands, all new managers undergo a special training pro- gramme and are offered individual leadership training. The “Sustainability in the financial industry” training course works as a platform for training different professionals in the banking, financial and insurance industries about sustainability. The overall goal of the course is to build up knowledge and awareness of the activities required to achieve a transition to a sustain- able future. The course includes sections on international and European initiatives and reg- ulations, climate-related risks, the EU Taxon- omy Regulation and the SFDR, and on rules relating to advisory services and product over- sight governance. At Handelsbanken, the course is mandatory for all co-workers and consultants with an assignment of longer than six months. This course was launched in 2021 and 96.2 per cent of all employees have com- pleted it to date. In Sweden, 3,990 advisors have taken a sustainability refresher course during the year. The topics included sustainability reporting, diversity and inclusion, and greenwashing. Handelsbanken aims to have a good and inclusive work environment. Regular surveys of the physical, organisational and social work environment are conducted as part of the Bank’s systematic work environment manage- ment. All potential risks in the operations are assessed, and the results of the work environ- ment surveys provide a basis for these risk assessments. Risks identified in the course of the daily operations are also assessed, along with risks identified in connection with work environment incidents. All identified risks and planned actions are documented in the annual work environment plan. Handelsbanken does not accept any form of victimisation, discrimination or harassment, including sexual harassment. Such behaviour is contrary to the Bank’s culture and core val- ues. Every individual has the right to be met and treated with trust and respect, and all co-workers have a responsibility to prevent and take action against any unacceptable behaviour they observe or become aware of. Each unit and country regularly follows up on reported incidents documented and investi- gated through the Bank’s internal system for work environment incidents, WEIN, to improve the Bank’s procedures and prevent further incidents from occurring. Gender equality, diversity and inclusion are central aspects of Handelsbanken’s core values. Diversity is important to the Bank’s success and key for innovation, which in turn is closely linked to the Bank’s profitability. By attracting, recruiting, developing and retaining co-workers with different backgrounds, per- spectives and experiences, Handelsbanken strengthens its capacity to understand its customers’ needs and to adapt to a society in a constant state of change. The Bank endeavours to reflect the diversity of the communities where it operates, and to achieve or maintain a balanced gender repre- sentation in different roles and parts of the operations. An inclusive culture is crucial when it comes to harnessing the advantages inher- ent to gender equality and diversity. To achieve its goals in terms of gender equality, diversity and inclusion, the Bank focuses particularly on areas such as management succession plan- ning and recruitment, competency develop- ment, health and work environment, work-life balance and gender-equal salaries. In autumn 2024, an international initiative was carried out to provide the Bank’s talent acquisition partners in all home markets with training in competency based recruitment, which is an important tool for promoting diver- sity. This approach aims to create a structured recruitment process in which each candidate’s skills are assessed objectively against estab- lished requirements, thereby helping to chal- lenge stereotypes and make the recruitment process more transparent and fair. To coordinate and drive the issues of gender equality, diversity and inclusion within the Group, a Diversity Council has been estab- lished, with representatives from different parts of the organisation. Local diversity committees and forums have also been created in Sweden, the UK, Norway and the Netherlands that work to promote these issues in their respective markets. Handelsbanken in Sweden is also a member of the Diversity Charter Sweden net- work, promoting a further focus on diversity in the workplace. Women accounted for 49 per cent of all employees at Handelsbanken, and the propor- tion of women in all management positions was 44 per cent. Handelsbanken in Norway and the UK are signatories to the Women in Finance Charter, a pledge to promote gender balance across the financial sector. The target in the UK is for the proportion of female managers to be 40 per cent by 2026. As part of these efforts, the Bank has developed a programme to increase the representation of women in senior man- agement roles, with a particular focus on women who have taken extended career breaks. In Norway, the Bank focused on diver- sity and inclusion during the year within the framework of its leadership and employee training. In 2024, the proportion of female managers was 30 per cent in the UK and 42 per cent in Norway. More information on gender balance in the Bank is provided in sections S1-5 and S1-9 on pages 305 and 306. 304 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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Metrics and targets S1-5: Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities Handelsbanken aims to be a workplace where all co-workers have equal rights, opportunities and conditions to develop and actively contrib- ute to the Bank’s progress and success. A good and inclusive work environment is a fundamental prerequisite for ensuring that co-workers feel good, develop and perform at optimal capacity. All metrics and targets have been set by Handelsbanken, and the process has only involved internal stakeholders and was carried out in close cooperation with various business specialists. The Bank’s own workforce and workers’ representatives were not involved in formulating the targets. The metrics in the table were reported in previous Sustainability Reports but were not formulated as targets. The following targets have now been set to manage the Bank’s impacts, risks and oppor- tunities. Progress is therefore measured from 2024 as the base period, and the Bank will subsequently perform analyses, evaluate trends and any lessons learnt or see if any improvements need to be made. The target for a good and inclusive work environment is measured annually and the gender balance target is set for 2026. The target related to equal pay aims to follow up on the ambition as reflected in the Bank’s policy for remuneration. This has not been set as a measurable target, since work on achieving equal pay requires long-term commitments from both companies and society as a whole. Accordingly, the overall assessment is that it is more appropriate for the work to be carried out with continuous monitoring and evaluation, but at the same time it can be tailored to collective bargaining agreements and current and future legislation. More information on how the Bank works to achieve equal pay can be found in S1-4, see page 302. S1-6: Characteristics of Handelsbanken’s employees Employee head count by gender Gender Number of employees (head count) Male 6,713 Female 6,578 Other - Not reported - Total employees 13,291 Number of employees refers to the head count used to calculate full-time equivalents (FTEs). Calculation is an average for the year. Gender is based on legal gender. Number of employees in home markets Country Number of employees (head count) Sweden 7,851 UK 3,184 Norway1) 1,098 The Netherlands1) 508 1) These markets represent less than 10% of the Bank’s total number of employees. Number of employees refers to the head count used to calculate full-time equivalents (FTEs). Calculation is an average for the year. In 2024, staff turnover in the Group amounted to 7.5 per cent, and 993 employees ended their employment at Handelsbanken. The number of employees who terminated their employment does not include the 272 employ- ees of the operations divested in Finland in 2024. For more information, see note G8 of the Annual Report on page 126. S1-7: Characteristics of non- employee workers in Handelsbanken’s own workforce Non-employees in Handelsbanken’s own workforce 2024 2023 Number of external consultants1) 960 1,161 1) A majority of external consultants work with IT-related activities. Characteristics of non-employees in Handels- banken’s own workforce are compiled by the respective country every month and pertain to consultants who were contracted on the last day of the preceding month. Consultants are calculated as full-time equivalents, which is defined as FTE based on the scope of the con- tract and the information is compiled from the Bank’s consultant procurement in Sweden. Once all the figures for the preceding year have been reported, an average is calculated for the number of non-employees in the Group’s own workforce. Employees by contract type, broken down by gender Female Male Other1) Not disclosed Total Number of employees2) 6,320 6,480 - - 12,800 Number of permanent employees2) 5,980 6,175 - - 12,155 Number of temporary employees2) 88 68 - - 156 Number of non-guaran- teed hours employees2) 252 237 - - 489 1) Gender as specified by the employees themselves. 2) Number of employees refers to the head count used to calculate FTEs. Number of temporary employees refers to the number of temporary employees with a monthly salary. Number of non-guaranteed hours employees refers to the number of temporary employees with an hourly contract. The information applies as per 31 December 2024. Targets – own workforce Targets Targets and metrics 20241) Equal pay – The Bank aims to achieve equal pay across all areas of the Bank. Average salary, men in relation to women, all employees, %2) Sweden 17 UK 25 Norway 13 The Netherlands 19 Total 20 Good and inclusive work environment – The work environ- ment at the Bank is to be perceived as good and inclusive by at least 90% of co-workers, measured in the annual work environment survey. All co-workers, % 933) Gender balance – the Bank aims to have a gender-balanced workforce, with women or men accounting for at least 40% of all employees and managers. The target is to achieve and/ or maintain gender balance in these roles by 2026. Gender breakdown, women/men, % All employees Managers 49/51 44/56 1) Data was produced using the new calculation basis according to the European Sustainability Reporting Standards (ESRS). Accordingly there are no comparative figures since earlier data does not provide comparability with the current year. 2) Objective factors that explain pay gaps (such as complexity of work duties and experience) were not taken into account. 3) The outcome for 2023 was 93%. For more information about the target process, see page 278. 305 Handelsbanken Annual and Sustainability Report 2024 4.4
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S1-8: Collective bargaining coverage and social dialogue The percentage of employees at the Bank covered by collective bargaining agreements amounted to 70 per cent, which pertains to employees in Sweden, Norway, Finland and Luxembourg. Employees who are not mem- bers of a union are also covered by the terms of the collective bargaining agreement, but are not represented by the employee organisation in individual matters. Collective bargaining agreements are the foundation of the work- place benefits that the Bank offers to both temporary and permanent employees. In addition to matters dealt with in the dia- logue with union organisations or work coun- cils at the national level in each country, based on either collaboration agreements or national legislation, Handelsbanken also has a European Works Council (EWC). The EWC has served as a forum for information and dialogue concern- ing the Bank’s joint, cross-border matters, such as the work environment and future per- formance, since the 1990s. The work is for- malised on the basis of a cooperation agree- ment for EWC and consists of representatives from the Executive Team and workers’ repre- sentatives from Sweden, Norway, the UK, the Netherlands, Finland and Luxembourg. The Forum generally holds four scheduled meet- ings per year, and the Bank and workers’ rep- resentatives remain in dialogue between these scheduled meetings, following an established interaction process that ensures the flow of information between the operations and the EWC. S1-9: Diversity metrics Diversity metrics 2024 Gender breakdown, number of women/men Executive Team1) 4/5 Gender breakdown, percentage women/men Executive Team1) 44/56 Age breakdown, number All employees <30 yrs 2,005 30–50 yrs 5,903 >50 yrs 4,892 Managers <30 yrs 31 30–50 yrs 961 >50 yrs 846 Executive Team1) <30 yrs 0 30–50 yrs 2 >50 yrs 7 Age breakdown, % All employees <30 yrs 15.7 30–50 yrs 46.1 >50 yrs 38.2 Managers <30 yrs 1.7 30–50 yrs 52.3 >50 yrs 46 Executive Team1) <30 yrs 0 30–50 yrs 22.2 >50 yrs 77.8 1) The Bank’s highest management body is the Executive Team, that replaced the previous Executive Management, which coordinates the strategic governance of the Group, and addresses operational Group-wide issues and other critical matters from a Group perspective. Before deci- sions are made on such matters by the Chief Executive Officer or other officers, these are, as a general rule, discussed by the Executive Team. For more information on the members of the Executive Team and former exec- utive management, see page 57 of the Corporate Gover- nance Report. S1-10: Adequate wages Total employee remuneration at Handels- banken is to be on market terms, gender-neu- tral and help to strengthen the Bank’s competi- tiveness and profitability. By offering attractive remuneration, the Bank aims to attract, recruit, retain and develop skilled co-workers, and to ensure good management succession plan- ning. This is stated in the Bank’s remuneration policy, which is set by the Board. Once a year, the Bank’s Remuneration committee must make an assessment of the policy and the remuneration system and report the results of the assessment to the Board. Handelsbanken applies individual salaries, which are determined through annual salary reviews between the manager and employee. Terms and benefits may vary within the Group depending on local market conditions or the collective bargaining agreements in effect in each country. All Handelsbanken employees receive an adequate salary in line with current reference salaries, which are regulated by collective bargaining agreements and/or local legislation. S1-11: Social protection All Handelsbanken employees are covered by social protection against loss of income in the event of illness, unemployment, work-related injury, parental leave and pension. This is regu- lated either by collective bargaining agree- ments or in accordance with local legislation. S1-13: Training and skills development metrics At Handelsbanken, continuous learning is not just about formal training, but also about con- stantly learning and developing in the course of the employee’s day-to-day work. Through problem-solving, feedback and collaboration with colleagues, a culture where learning is a natural part of the daily operations is built. Handelsbanken’s leaders play a crucial role in creating an environment that promotes devel- opment, where co-workers are expected to assume responsibility for their own develop- ment and that of the organisation. A focus on skills development is essential to upholding a high standard, ensuring regulatory compliance and building a sustainable work- force equipped to respond to the demands and opportunities of the future. More informa- Collective bargaining coverage and social dialogue in home markets Collective bargaining coverage Social dialogue Coverage rate Employees – EEA (for countries with >50 empl. representing >10% total empl.) Employees – Non-EEA (estimate for regions with >50 empl. representing >10% total empl.) Workplace representation (EEA only) (for countries with >50 empl. representing >10% total empl.) 0–19% The Netherlands1) UK 20–39% 40–59% 60–79% 80–100% Sweden, Norway1) Sweden, Norway1), the Netherlands1) 1) These markets represent less than 10% of the Bank’s total number of employees. 306 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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tion about training and skills development is provided in section S1-4 on page 302. All of the Bank’s employees are covered by a recurring performance evaluation. In this year’s work environment survey, 97 per cent (96) of the Bank’s employees stated they have had performance reviews with their immediate manager at least once a year. More information about performance reviews, also referred to as PLUS, is provided in section S1-2 on page 301. Average number of registered training hours per employee, by gender, hours1) 2024 Female 22.8 Male 21.7 1) Pertains to training completed via Handelsbanken’s training platforms. Proportion of co-workers who participated in a perfor- mance evaluation and performance review, by gender, %2) 2024 Female 97 Male 96 Prefer not to state 94 Other 100 2) Refers to the proportion of the Bank’s co-workers who responded positively to the statement, “My immediate manager has a PLUS review with me once a year” in the Bank’s Group-wide work environment survey. The denominator for the calculation is the number of work environment survey respondents. S1-14: Health and safety metrics Work environment management is carried out based on local legislation and regulations for each country where the Bank has its opera- tions. All co-workers are covered by Handels- banken’s work environment survey, which the Bank has defined as its health and safety man- agement system for preventing work-related injuries. More information about the Bank’s systematic work environment management and the annual Group-wide work environment survey is provided in section S1-4 on page 302. For additional health and safety metrics, refer to section S1-5 on page 305. S1-15: Work-life balance metrics Handelsbanken aims to meet its employees’ needs during various phases of their life in a flexible way. 100 per cent of the Bank’s employees are entitled to family-related leave, which is regulated by local legislation and/or collective bargaining agreements. In 2024, 19 per cent of the Bank’s employees took family leave. Of these employees, 56 per cent were women and 44 per cent were men. The Netherlands is included in the total leave figure but national legislation does not permit reporting broken down by gender. S1-16: Remuneration metrics (pay gap and total remuneration) Average salary, men in relation to women, all employees, %1) 20242) Sweden 17 UK 25 Norway 13 The Netherlands 19 Total 20 Annual total remuneration ratio 20242) Total remuneration ratio (highest paid individual to the median annual total remuneration for all employees excluding the highest-paid individual 22 1) Objective factors that explain pay gaps (such as com- plexity of work duties and experience) were not taken into account. 2) Data was produced using the new calculation basis according to the European Sustainability Reporting Standards (ESRS). Accordingly there are no comparative figures since earlier data does not provide comparability with the current year. S1-17: Incidents, complaints and severe human rights impacts In 2024, 73 cases related to discrimination including harassment were reported through the Bank’s main Group-wide and local chan- nels. The number of reported complaints related to working conditions, and equal treat- ment and opportunities for all amounted to 233. The majority of reported cases related to discrimination, including harassment and working conditions, as well as equal treatment and opportunities for all, refer to incidents that involve persons outside the Bank and have exposed the Bank’s co-workers to situations that create a sense of insecurity or lack of respect in the workplace. All reported cases are handled according to the Bank’s proce- dures and guidelines. All reported cases are reviewed and actions are taken to prevent events from being repeated. For more informa- tion on the Bank’s procedures and the changes that co-workers can use to raise concerns, see section S1-3 on page 302. During the reporting period, Handelsbanken paid SEK 81,043 in compensation, fines or penalties related to the incidents and com- plaints described above. For more information about Handelsbanken’s staff costs, see note G8 of the Annual Report on page 126. 307 Handelsbanken Annual and Sustainability Report 2024 4.4
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ESRS S2 Workers in the value chain ESRS S2 Workers in the Value Chain Strategy ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model The identified positive and negative impacts of Handelsbanken on workers in the value chain could affect all workers in the value chains for the Bank’s lending, investments and supplier relationships, including any workers in joint ventures in the supply chain. This impact is not due to the Bank’s strategy or business model, but to the fact that the Bank operates in the financial sector. Impact, risk and opportunity management S2-1: Policies related to value chain workers The steering documents that address the Bank’s material impact on workers in the value chain are: • Policy for sustainability, for more informa- tion, see page 264 • Credit policy, for more information, see page 263 • Guidelines regarding human rights and working conditions, for more information, see page 300 • Guidelines for supplier arrangements. The Bank’s guidelines regarding human rights and working conditions are a complement to the policy for sustainability and aim to clarify Handelsbanken’s approach to human rights and fundamental labour practices. Handels- banken does not accept any form of child labour, slave labour or human trafficking, and is to work actively to prevent them from occurring in the Group’s supply chain and in other companies with which Handelsbanken has business relationships, for example, in the form of lending, other financing, asset management, advisory services, product development and purchasing. For more infor- mation on the content and the Bank’s com- mitments in the guideline, refer to section S1-1 on page 300. Guidelines for supplier arrangements in the Group detail how the Bank is to manage sup- plier arrangements. All procurement follows a process, which is described in detail in the Bank’s instructions. The main principle is that the Bank applies a risk-based working method, taking into account the Bank’s low risk tolerance. Sustainability risks, such as environmental and climate-related, social (including workers in the value chain) and governance factors, are an integral part of risk management to identify suppliers with a negative impact on sustainability. The guidelines apply to supplier relation- ships in which a supplier regularly delivers ser- vices or products, or performs functions for the Bank. These guidelines apply across Handels- banken Group and, where applicable, to sub- sidiaries, unless deviations are required due to binding rules outside Sweden or for subsidiar- ies. As part of its sustainability work with sup- pliers, the Bank has a Code of Conduct that has been formulated based on the Bank’s sus- tainability strategy as well as internationally accepted standards. The Code of Conduct and associated work are described in more detail in section S2-4. The Bank engages in regular dialogue with its suppliers in which sustainability is one of the focus areas. These dialogues examine, for example, whether the supplier has a collective bargaining agreement, a health and safety policy, anti-corruption guidelines and a system for environmental impact management. As support in these efforts, the Bank refers in its guideline regarding human rights and working conditions to several international initiatives and guidelines relevant to the procurement process, including the UN Global Compact, the OECD Guidelines for Multinational Enter- prises, the UN Guiding Principles on Business and Human Rights, and the ILO Core Conven- tions. In addition to these international guidelines, Handelsbanken’s subsidiaries comply with local legislation, such as the Modern Slavery Act in the UK and the Transparency Act in Norway. More information can be found on the relevant country website of Handelsbanken. All asset management at Handelsbanken is based on the same core values, which are embedded in the Bank’s corporate culture and supported by a framework based on interna- tional norms and conventions. Sections S2-4 and S2-5 describe how the various subsidiar- ies with investment operations work on human rights and labour practices, focusing on the subsidiary with the greatest impact, Handels- banken Fonder. The definition of workers in asset management applies primarily to work- ers in portfolio companies but may, where information is available, also include workers in the subcontractors of portfolio companies. Handelsbanken Fonder, Handelsbanken Wealth and Asset management (HWAM) and Optimix manage a total of approximately SEK 1,107 billion, which represents about 93 per cent of total assets under management at Handelsbanken. For a brief description of HWAM and Optimix, see sections ESRS 2 SBM-3 E1 on page 286. Handelsbanken’s subsidiary Handelsbanken Liv has largely chosen Handelsbanken Fonder’s products for its insurance policies. This also applies to parts of Handelsbanken’s discre- tionary management, which means that a large part of the reporting carried out by Handels- banken Fonder becomes part of the value chain of these operations. For a description of the value chain for asset management, see ESRS 2 SBM-3 E1 on page 286. Handelsbanken Fonder’s policy for share- holder engagement and responsible invest- ments encompasses both the fund company’s active stewardship and responsible invest- ments. Sustainability is an integral part of the investment analysis and rests on three pillars: exclusion, inclusion and engagement. The pol- icy for responsible investments is based on international norms in areas such as the envi- ronment, human rights, labour practices, cor- ruption and controversial weapons. Through Handelsbanken, the fund company is a signa- tory to the UN Principles for Responsible Investment (UN PRI) and also supports the UN Global Compact. These initiatives and guide- lines, together with the values reflected in the Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Working conditions for workers in the value chain Potential positive impact Potential negative impact Asset management, suppliers & lending Asset management, suppliers & lending Medium/long Short/medium/long 308 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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Bank’s corporate culture, constitute a common and clear foundation for Handelsbanken Fonder’s asset management. The policy applies to the fund company’s asset management and the funds’ direct investments in Swedish and foreign shares and corporate bonds. For indirect investments, for example, to manage liquidity or regional allocation, the policy is applied to the greatest extent possible. For external funds, in the fund company’s funds-of-funds, this policy applies in its entirety, but the external funds are not compelled to use the same analysis tools as Handelsbanken Fonder. The policy also covers the investment advice provided by the fund company. The results of the fund company’s work on active stewardship and responsible invest- ments are reported at least annually to the fund company’s Board and on a regular basis to the fund company’s CEO. The policy is updated and adopted by the Board at least once a year. It also serves as guidance for the companies in which the fund company invests and as a communication tool for existing and potential mutual fund unit holders. The policy is published on the fund company’s website, handelsbankenfonder.se. The fund company believes that taking sus- tainability risks into account and integrating sustainability performance over time has a positive impact on returns, while promoting more sustainable development in society. The policy also emphasises the interests of the fund unit holders, and that the management of the funds is always conducted in their com- mon interest. All decisions and actions are aimed at achieving the best possible return for fund unit holders, considering the funds’ objectives and investment restrictions. The policy also takes into account the portfolio companies and describes how the fund com- pany exercises active stewardship and influ- ences the companies to promote sustainable and responsible business practices. Society as a whole is also a stakeholder, and by integrat- ing sustainability risks and factors into the investment process, the fund company ensures that the interests of society are con- sidered. Employees and Board members are also stakeholders, and the policy describes how remuneration systems and incentive pro- grammes should be designed to support the objectives of the fund company. By taking these stakeholders into account, the fund company ensures that the policy integrates both economic and sustainability aspects into its management. Handelsbanken Wealth & Asset Manage- ment (HWAM) manages a range of eleven multi asset funds, four of which – the Responsible Funds - are subject to HWAM's Responsible Investment Policy. The policy is based on four underlying components to assess and monitor investments. These are ESG integration, nega- tive screening, investments that demonstrate positive environmental and/or social themes and engagement. A Responsible Investment Committee, including external members, is responsible for independently reviewing the Responsible Investment Policy. Optimix has signed the UN Principles for Responsible Investment (PRI). Optimix Responsible Investment Policy excludes com- panies that do not respect the criteria regard- ing the environment, human rights, working conditions and anti-corruption. This includes violations of workers' rights, forced labour, child labour and restrictions on the right to col- lective bargaining in accordance with the UN Global Compact. This responsible investment policy relates to both discretionary asset man- agement and collective management via the Optimix investment funds and is supervised by the Head of Investments. S2-2: Processes for engaging with value chain workers about impacts Structured efforts to protect human rights and good working conditions must be part of Handelsbanken’s business relationships. Handelsbanken does not engage in direct dialogue with workers in its value chains, and instead works through established processes to take their perspectives in consideration. There are currently no plans to introduce direct contact with these co-workers, as the Bank has developed other actions to manage the impacts on workers in the value chain. Exam- ples of these actions include periodic screen- ing of the companies the Bank invests in to identify negative impacts on workers in the value chain through its asset management, checklists used in credit assessment pro- cesses, and a code of conduct for the Bank’s suppliers. For more information on the Bank’s procedures and actions in this area, refer to the section S2-4 on page 309. S2-3: Processes to remediate negative impacts and channels for value chain workers to raise concerns Handelsbanken’s whistleblowing process and system is described in more detail in section S1-3 on page 302. It is also available for use by workers in the Bank’s value chain and can be accessed via the Bank’s website. S2-4: Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those action Handelsbanken has identified opportunities to impact workers in the value chains indirectly through its activities in lending, investments and relationships with suppliers. Actions to address these impact opportunities are inte- grated into each value chain. Handelsbanken’s guidelines for supplier arrangements state that the Bank applies a risk-based working method, given its low risk tolerance. Before entering into a contract, the Bank conducts due diligence to ensure that the supplier meets the Bank’s ethical and sus- tainability requirements, in line with the Bank’s Supplier Code of Conduct. The supplier is to answer questions about whether it has policies in place governing human rights, child and forced labour, and occupational health and safety. In addition, external sustainability data is collected to support the supplier assessment. In its sustainability work with suppliers, the Bank has identified opportunities to engage with workers in the supply chain by placing requirements on suppliers in line with the Bank’s Code of Conduct. The Code of Conduct is mainly applied to larger suppliers in Sweden, and recently it has also been implemented in other home markets. The Code has been developed based on the Bank’s sustainability agenda as well as inter- nationally accepted standards, such as the UN Global Compact, focusing on human rights, labour, environmental and anti-corruption. In some cases, the Bank may choose to review and accept a supplier’s own code of conduct if this is justified. The use of the Code of Conduct clarifies suppliers’ responsibilities, for example, by requiring them to eliminate and combat human trafficking, modern slavery and forced labour, and ensuring that they are not involved in child labour or human rights viola- tions. Efforts related to the Code of Conduct are carried out continuously and systematically through dialogues with suppliers and periodic follow-ups. Handelsbanken has entered into an agree- ment with an international sustainability data provider to further strengthen its capacity to evaluate and monitor both new and existing suppliers. The data provider also supplies a risk classification tool, allowing the Bank to evaluate suppliers on the basis of risks linked to specific operating areas or geographical regions. The new procedures will be integrated 309 Handelsbanken Annual and Sustainability Report 2024 4.4
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into the Bank’s existing guidelines and instruc- tions. The service started to be used in 2024 and the Bank will continue to procure more suppliers in 2025. Supplier arrangements are regularly moni- tored as part of the Bank’s risk-based working method. The scope and frequency of monitor- ing are adapted to the scope and risk level of the contract. High-risk contracts are monitored at least once a year. Any shortcomings identi- fied in connection with the monitoring are to be documented in an action plan, addressed immediately and followed up, taking into account the Bank’s right of termination and discontinuation plan. If the risk, nature or scope of the contract changes materially, the contract is reassessed and reclassified. The supplier arrangement process is also followed when renegotiating contracts. Handelsbanken’s credit policy forms the basis of the Bank’s credit process, which is applied throughout the Group and in all mar- kets where the Bank operates. The credit pro- cess is stable and does not change depending on the business cycle. The Bank has a low risk tolerance and its business model is based on taking and managing credit risks through its branch operations. The branch responsible for customers bears the main responsibility for preparing and assessing credit risks of its cus- tomers according to internal instructions and procedures, with the support of the Bank’s credit organisation. The assessment of sus- tainability risks is an integral part of the credit risk assessment. All credits are reviewed annually. The credit risk assessment includes an anal- ysis of the borrower’s repayment capacity, and an important part of the risk analysis is to assess sustainability risks. These include envi- ronmental and climate-related risks, social risks and corporate governance risks. For example, in connection with the credit assess- ment and annual renewal of credit limits for major companies, the Bank asks questions about their policies and procedures for moni- toring issues such as labour practices and human rights. This information is included as part of the overall assessment of how sustain- ability risks may impact credit risk. Handelsbanken’s credit policy states that the Bank shall be prudent about granting credit to businesses where the negative impact of sustainability risks, including social factors, on credit risk is considered to be excessive. If the sustainability risks are considered to have an excessive impact on credit risk, the transaction is beyond the Bank’s risk tolerance. In such instances, both the credit and business strat- egy with the customer are reevaluated. One specific measure that aims to prevent negative impacts while creating positive effects for workers in the value chain is the sustainable construction initiative Hållbar byggbransch. This is an industry initiative launched as part of cooperation between the major Swedish banks to combat financial crime and promote workers’ rights and work- ing conditions in the construction sector. As part of financing to the construction sector, a specific contractual term is applied to credits above a certain limit, with the aim of standardising sector-specific requirements. The terms of the contract are based on four main requirements for control systems and project reports: compulsory prior notifications of construction sites (with a pre-entry check and approval process for companies and indi- vidual co-workers), Swedish F-tax and checks on tax debts and employers’ contributions, as well as physical workplace inspections. In applying these specific contractual terms, the borrower undertakes to provide the Bank with, at a minimum, annual reports from the control systems used, giving the Bank insight into and an overview of the entire value chain at the construction site. In addition, the bor- rower must ensure that at least one unan- nounced physical work inspection is carried out annually by an independent third party. If shortcomings are detected, the Bank and the borrower engage in dialogue to establish an action plan. Through this reporting and monitoring, the Bank has the opportunity to influence the entire value chain – from the borrower itself to subcontractors and suppliers – in a more posi- tive direction, in dialogue with the borrower. The increased transparency through report- ing derived from control systems and physical workplace inspections provides Handels- banken with a tool for proactively identifying potential risks and creating early dialogue with the borrower. The purpose of this dialogue is to drive positive change and to counteract any negative development. In addition to applying the specific contractual conditions, these tools provide the Bank with a basis for dialogue with all borrowers in the construction sector, with the aim of influencing the entire value chain and moving it in a more sustainable direction. This initiative is part of the Bank’s sustain- ability work in the area of finance and has helped to clarify these efforts, which ultimately can accelerate the desired changes. Increased transparency is a first step towards setting measurable targets in the future, based on the requirements set out in the specific contractual terms. Handelsbanken Fonder has ongoing dia- logues, both directly and jointly, with compa- nies in sectors and value chains with elevated human and labour rights risks, such as the mining industry, the clothing industry, the con- struction sector and the food industry. A large part of the collaborative dialogues conducted on behalf of Handelsbanken Fonder are managed by an external party and focus on suspected norm violations. For each such dialogue, a target is set and it is moni- tored with regard to the companies’ transpar- ency, implementation of relevant policies and processes, and actions taken to address any breaches. These dialogues allow the fund company to identify and address potential and actual impacts affecting workers in the portfo- lio companies. Handelsbanken Fonder also actively participates in investor networks and collaborations with a focus on human rights and labour rights. As part of this work, the fund company has participated for a number of years in thematic engagement dialogues to counteract modern forms of slavery through Sustainalytics. This work has focused on 20 companies in the con- struction and clothing industry, with the aim of encouraging these companies to adopt strate- gies for the payment of living wages, strengthen the right to union membership, and ensure fair procurement processes to identify risks across the supply chain. The dialogue project ended in January 2024 and have led to several com- panies strengthening their processes in rela- tion to suppliers, and one company improving its human rights policy. Read more about initiatives and partner- ships in Handelsbanken Fonder’s Investor Initiatives and Partnerships publication avail- able at handelsbankenfonder.se. Dialogues related to human rights and labour rights In 2024, Handelsbanken Fonder engaged in 62 direct dialogues and 144 collaborative dialogues on human rights and labour rights. A central measure in Handelsbanken Fond- er’s work is to systematically monitor the com- panies in which the fund company invests for violations of norms, including labour rights vio- lations. This monitoring takes place on a daily basis and if any signals are detected, they are addressed according to the fund company’s established processes. Additional actions that Handelsbanken Fonder can take involve active stewardship. As a shareholder, the fund company can exert an influence over companies through active stewardship – for both actively and passively managed funds. Two of the most direct ways to exercise this influence over companies are through representation in nomination commit- tees and voting at shareholders’ meetings. One example is the fund company’s long-term efforts to promote gender balance in the nomination committee group, which have resulted in posi- tive progress over time. Handelsbanken Fonder invests in a signifi- cant number of companies spread over 310 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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numerous geographical markets. By voting at shareholders’ meetings, the fund company has the opportunity to influence the direction of companies on relevant issues. In line with the fund company’s sustainability initiatives, Handelsbanken Fonder supports in principle shareholder resolutions that promote corpo- rate sustainability and greater transparency in the reporting of companies on human rights and labour rights. In 2024, Handelsbanken Fonder voted at a total of 1,275 shareholders’ meetings and at 150 shareholders’ meetings where human rights and labour rights were on the agenda. In 2024, Handelsbanken Fonder continued to focus on human rights, including workers’ rights, through dialogues with portfolio compa- nies. As part of this work, the fund company has initiated a review to clarify and prioritise dialogues with the companies where the risk of inadequate management of human rights, including workers’ rights, has been identified. Handelsbanken Fonder also publishes the Statement on principal adverse impacts of investment decisions on sustainability factors, also referred to as the PAI Statement. This statement covers the entire investment portfo- lio of the fund company and includes specific indicators related to workers’ rights. For the most recent version of the PAI state- ment, refer to handelsbankenfonder.se. Handelsbanken Fonder participates in several networks and collaborations with other investors, where workers’ rights are in focus. One example is the fund company’s involve- ment in the Investor Integrity Forum, an initia- tive in which Swedish investors work together with Transparency International Sweden to accumulate knowledge and engage in dia- logue with selected companies in the con- struction sector. The aim is to monitor and safeguard workers’ rights and safety, with a particular focus on the risks found in long subcontracting chains. This cooperation has raised the level of awareness, leading to im- proved discussions and dialogues between investors and companies concerning these challenges. Handelsbanken Fonder’s risk control func- tion conducts daily reviews of the funds’ hold- ings to ensure that the companies have not been confirmed to be in breach of international norms relating to workers’ rights. Dialogue is initiated with the priority companies if there are indications that a company is at risk of violat- ing workers’ rights. Companies confirmed to be in breach of international norms are ex- cluded from the fund company’s available investment universe. At the end of 2024, 71 companies had been confirmed to be in breach of international norms, with 8 specifically violating workers’ rights. There were no new cases in 2024. A public list of these companies is available on the fund company’s website, handelsbankenfonder.se. In addition to financial criteria, the responsi- ble fund manager integrates environmental, social and governance (ESG) issues into analy- sis and investment decisions. This includes workers’ rights as a critical part of the sustain- ability analysis, which aims to identify risks and opportunities in the business models of com- panies. Sustainability activities are based on three main methods: inclusion of investments, exclusion of investments and pursuing active stewardship. HWAM's Responsible Investment Policy provides a framework that, amongst other objectives, seeks to limit the effects that HWAM’s Responsible Funds’ portfolios have or may have on employees of the companies in which the funds invest. HWAM’s Responsi- ble Funds usually invest in other funds man- aged by third-party managers. HWAM assesses investments for its Responsible Funds according to four areas to ensure that their investments comply with HWAM's Responsible Investment Policy, these are: ESG integration processes of third-party managers, negative screening, investments that demon- strate positive environmental and/or social themes and engagement processes of third- party managers. Part of HWAM’s negative screening process includes screening against international norms and conventions. HWAM screens its Responsible Funds’ investment portfolios against the UN Global Compact Principles regarding human rights, labor, the environment and anti-corruption (‘principles’). The Responsible Funds’ investment portfolios are reviewed monthly to ensure that no hold- ings violate these principles. If a breach of the screening against these principles occurs, HWAM may engage in dialogue with the third- party manager to bring about change, and if this does not happen, the holding may be divested. HWAM also conducts annual evalua- tions of the Responsible Funds’ investment portfolio to ensure that all holdings remain in accordance with HWAM's Responsible Invest- ment Policy. In 2024, no holdings in the Responsible Funds were excluded due to violating the principles. Optimix engages in dialogue with external managers on the integration of ESG factors, sustainability reporting and, where applicable, the progress achieved. Optimix reviews its investment portfolios on a quarterly basis with the help of Sustainalytics to ensure that the companies comply with the UN Global Com- pact. Companies that do not meet the UN Global Compact's standards are excluded. Optimix reports its exclusion strategy and measures in the annual reports of the funds. In 2024, no serious incidents have been reported and no discussions have taken place with external managers regarding workers in the value chain. No exclusions have taken place as a result of norm violations during the year. Metrics and targets S2-5: Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities The process for setting targets for workers in the value chain is described in general terms in the General information section, see page 278. Neither workers in the value chain nor appointed representatives were involved in formulating or checking the targets. Progress or lessons learnt have not been analysed since the targets were prepared in 2024. Nomination committees and shareholders’ meetings Active stewardship 2024 2023 2022 2021 2020 Nomination committees 66 68 70 47 41 Number of nomination committee places where we have appointed women, % 74 75 73 79 71 Shareholders’ meetings1) 1,275 977 1,163 1,019 647 Of which Swedish companies 364 311 302 338 238 Of which non-Swedish companies 911 666 861 681 409 1) On 1 April 2020, the mutual funds previously managed by Xact Kapitalförvaltning were transferred to Handelsbanken Fonder AB. Voting at shareholders’ meetings Sweden 364 USA 260 Norway 72 Brazil 64 Finland 50 China 50 Denmark 41 India 37 Japan 34 Taiwan 30 Others 273 311 Handelsbanken Annual and Sustainability Report 2024 4.4
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Handelsbanken does not engage in direct dialogue with workers in its value chains, and instead works through established processes to take their perspectives in consideration. Targets have been set in accordance with these established processes and the target level is based on the Bank’s low risk tolerance. Handelsbanken imposes clear requirements for suppliers’ sustainability commitments through its Code of Conduct, which reflects the Bank’s sustainability activities and policies as well as internationally accepted standards in the field. Starting a number of years ago, the Bank has measured the percentage of suppliers in Sweden with an annual purchase volume exceeding SEK 5 million that have signed the Bank’s Code of Conduct or presented their own code that the Bank has reviewed and approved. The Bank tracks this metric by keeping a register of contracts and suppliers that have signed the Code of Conduct, as well as a separate register of those suppliers that have presented their own code that the Bank has assured and approved. The Bank reported an outcome of 85 per cent for 2023. The pro- cedure is managed internally and no external controls are used. This measurement is tangi- ble and provides the Bank with a clear and effective metric of compliance with sustaina- bility requirements. As of 2024, Handelsbanken has set a new target stipulating that 90 per cent of suppliers with an annual purchase volume of more than SEK 5 million must have signed the Bank’s Code of Conduct or have their own code approved by the Bank. This extended target covers all the Bank’s home markets, making it non-comparable with the preceding year’s out- come. The measurement will be carried out annually and refers to the percentage of sup- pliers (purchased volume as a percentage). The outcome for 2024 was 83.3 per cent. Lending The credit policy provides guidance for Handels banken’s credit operations and estab- lishes the framework of the Bank’s risk toler- ance. One aspect described in the credit policy is that the Bank should be prudent in its lend- ing to businesses where sustainability risks and related social factors have a significant negative impact on credit risk. The assessment of a corporate customer’s repayment capacity includes a forward-looking assessment of sustainability risks, including environmental, climate, social and governance risks. As of 2024, the Bank will conduct an annual screening of exposure to companies where sustainability risks driven by social factors are deemed to be higher than normal in the credit risk assessment. This screening is compared to the Bank’s total exposure. The process was performed by Handelsbanken Credit. Handelsbanken has set a target that the proportion of lending for which the impact of social sustainability risks on credit risk is deemed to be higher than normal should be zero per cent. This target was achieved in 2024. Asset management Handelsbanken strives to prevent or limit neg- ative impacts on human rights and the rights of workers in the companies in which the Bank’s asset management invests. This is conducted through regular screening of portfolio compa- nies to identify companies that do not comply with international norms and conventions. Handelsbanken Fonder expects portfolio companies to respect human rights and to work in compliance with the UN Guiding Prin- ciples on Business and Human Rights. Port- folio companies are also expected to report transparently on identified risks and actions to address them. All company holdings in Handelsbanken Fonder are regularly screened to identify com- panies that do not comply with international norms and conventions relating to the environ- ment, human rights, labour and anti-corrup- tion. This means that each company holding is analysed to detect possible breaches or viola- tions of international norms based on the four main areas of the UN Global Compact. Handelsbanken Fonder excludes invest- ments in companies that, according to the fund company’s assessment, have been con- firmed to violate international norms and con- ventions. This includes companies that violate workers’ rights. For more information on which companies were excluded on these grounds, refer to handelsbankenfonder.se The fund company’s risk control function monitors compliance with exclusion criteria in the fund company’s investments on a daily basis. Any deviations are regularly reported to the fund company’s board and CEO as part of the ongoing work of the risk control function. For 2024, the share of assets under manage- ment in funds with negative screening, regard- ing companies that violate international norms and conventions, was 99.8 per cent. Handelsbanken Fonder engages an inde- pendent sustainability data company, ISS ESG, to conduct norm-based screening of its holdings. ISS ESG examines companies’ involvement in verified or suspected violations of international norms and conventions, as well as how companies respond to these allega- tions. As part of its process, ISS ESG collects data from media and expert sources globally. In cases of allegations of violations of interna- tional norms, an in-depth analysis is carried out to assess the seriousness of the situation, categorising this from “potential” to “very seri- ous.” The company’s response and actions are rated on a four-level scale, from non-existent to credible actions. ISS ESG uses a traffic light system to evalu- ate allegations of norm violations and rates these on a scale of one to ten, with one indi- cating no allegation and ten representing a serious, verified violation without sufficient action being taken. This assessment is based on information from reliable sources, including intergovernmental bodies, authorities and the company itself. Reliance on published allega- tions could be a limitation since it could mean that some norm violations may not be detected if they are not reported. Several of the factors included in the negative screening are reported annually in Handelsbanken Fonder’s Statement on princi- pal adverse impacts of investment decisions on sustainability factors (PAI Statement). For outcomes and more information, refer to the most recent report on handelsbankenfonder.se. The four Responsible Funds covered by HWAM's Responsible Investment Policy are subject to monthly screening, whereby HWAM uses data provided by an external data pro- vider, Morningstar Sustainalytics, to ensure that no holdings violate the UN Global Com- pact Principles. The outcome is presented monthly to the HWAM Responsible Investment Committee. The other seven funds managed by HWAM are not subject to the same screen- ing. At the end of 2024, screened assets repre- sented 9.0 per cent of HWAM’s total assets under management. Optimix reviews its investment portfolios on a quarterly basis with the help of Sustainalytics to ensure that the companies comply with the UN Global Compact. Optimix does not invest in shares and bonds from companies that do not comply with the UN Global Compact. Optimix reports its exclusion strategy and measures in the annual reports of the funds. The norm-based exclusions apply to both direct investments in equity and corporate bond securities within funds and discretionary portfolios. All investments in equities and cor- porate bonds are screened. For 2024, the pro- portion of assets under management in funds with negative screening, regarding companies that violate international norms and conven- tions, was 51.6 per cent. 312 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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ESRS S4 Consumers and end-users ESRS S4 Consumers and end-users Strategy ESRS 2 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model Efforts related to Handelsbanken’s information security and data protection aims to protect customers’ data, privacy, transactions and the Bank’s IT environment, as well as to monitor outsourced IT operations. The CEO estab- lishes guidelines encompassing the overall goals and strategy of IT operations in the Handels banken Group. For further information, see notes in the Annual Report, G2 Operational Risk/IT operations in the Handelsbanken Group; Security and data protection on page 116. Impact, risk and opportunity management S4-1: Policies related to consumers and end-users The steering documents that address the Bank’s material impact and the financial risk, which are identified for the consumers and end-users area, are: • Policy for complaints management • Policy for operational risk • Guidelines for security and data protection • Guidelines regarding human rights and working conditions. Handelsbanken’s policy for operational risk, which is adopted by the Board and includes IT and information security risks (ICT risks), clearly states that the Bank has a low risk tolerance for operational risks. The Bank should, to the greatest extent possible, work proactively to prevent these risks in order to reduce potential losses. The policy is supple- mented with specific guidelines endorsed by the CEO, which focus on security and data protection in the Handelsbanken Group. The guidelines for security and data protec- tion include requirements for both administra- tive solutions, such as rules and instructions, and technical security solutions, physical pro- tection, and protection of sensitive activities and classified information. These security solutions should be proportionate to the nega- tive consequences of inadequate security or incorrect processing, taking into account the Bank’s low risk tolerance and its need to pro- tect customer privacy. The guidelines for security and data protec- tion state that all co-workers of the Bank are responsible for compliance with the rules for protection of information and customers’ pri- vacy, and each manager is responsible for ensuring compliance with the rules in their own area of responsibility. Annual security and data protection training sessions aim to remind employees of their responsibilities in this area. According to Handelsbanken’s policy, cus- tomer complaints should be handled promptly and in accordance with the rules applicable to the specific complaint. Every complaint is taken very seriously and is seen as an oppor- tunity to correct errors or address misunder- standings. The Bank’s aim for its complaints management is that the person who has made the complaint should be very satisfied with the manner in which the complaint was handled. The CEO establishes guidelines for complaints management. Handelsbanken’s guidelines regarding human rights and working conditions state that the Bank shall endeavour to prevent or limit negative impacts on human rights that are related to the Group’s operations, products or services through business relationships. For more information on the content and the Bank’s commitments in the guideline, refer to section S1-1 on page 300. S4-2: Processes for engaging with consumers and end-users about impacts Handelsbanken attaches great importance to being available to customers – being there when the customer needs the Bank. A local presence combined with digital solutions enable the Bank to always offer personal cus- tomer meetings including advisory services, regardless of whether the customer wants to visit a local branch or use of digital channels. Customers in Sweden can also contact the bank all hours of the day by phone by access- ing Personal service, where the customer confirms their identity by using a personal code or a Mobile BankID verified by Handels- banken. Handelsbanken’s communication with cus- tomers and end-users must inspire trust, be accurate, factual and easy to understand, and be characterised by openness, accessibility and speed. These principles are described in Handelsbanken’s communication policy and apply not only in normal circumstances but also in crisis situations, and also cover unplanned events such as disruptions due to IT errors that affect customers. To maintain high quality, create a shared structure and facilitate for all users, there are instructions and templates for continuity planning in place at the Bank that also include the communica- tion of IT outages. These are to be updated on an ongoing basis, but not less that once a year. If a personal data breach occurs that is considered to have had a major impact on one or more private individuals, they must be informed of the incident. A case-by-case assessment is made, but in general, the branch responsible for the customer contacts the customer if the matter relates to individual customers. The Privacy Officer informs the branch when such a measure is to be taken. In the event of a complaint, the customer should first contact the person who handled the matter or the local branch. For further processing, there are designated complaints officers in each home market whose contact details are available on the Bank’s website. Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Information-related impacts for consumers and end-users Potential positive impact Potential negative impact Risk Payment & lending Payment & asset management Payment, asset management & lending Short/medium/long Short/medium/long Short/medium/long 313 Handelsbanken Annual and Sustainability Report 2024 4.4
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S4-3: Processes to remediate negative impacts and channels for consumers and end-users to raise concerns Handelsbanken endeavours to ensure that customers who lodge complaints are to be very satisfied with how the Bank addresses the issue. Complaints can be submitted by e-mail, telephone or letter. Customer complaints are dealt with in accordance with regulations and guidelines, thoroughly and as efficiently as possible, with a formal assessment of the fac- tual issue. If requested by the customer, a writ- ten reply may be issued. The customer is given an explanation if the complaint cannot be resolved. If the customer is dissatisfied with the Bank’s decision and wishes to appeal, they may contact the National Board for Consumer Disputes (ARN) in Sweden or the correspond- ing body in other home markets, and Handels- banken undertakes to participate in their processing of the dispute. Information on com- plaints management is available on the Bank’s website. In order to ensure an efficient complaints process, staff are regularly trained in handling complaints and the number of complaints per channel is measured quarterly for continued good accessibility. In cases where complaints about the process are received, these are followed up and adjustments are made if necessary. S4-4: Taking action on material impacts on consumers and end- users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions The security environment is constantly evolv- ing, and it is therefore crucial that Handels- banken maintains security work that responds swiftly to identified threats. It is important that procedures are in place for managing changes in the IT environment so that no breaches occur. However, if breaches should occur or information is released incorrectly, the conse- quences could be serious, such as negative consequences for the customer, a loss of con- fidence in the Bank or financial losses. To mitigate the risk of such negative conse- quences, Handelsbanken continuously evalu- ates and makes decisions on new threats in this area. This includes monitoring threats and risks related to the introduction of new tech- nologies such as AI functionality, updating internal instructions and working methods, and raising awareness among co-workers and key individuals in specific risk areas. Continuous monitoring of events, both internally and exter- nally, increases the Bank’s ability to take the right action at the right time. Handelsbanken participates and cooperates in international cybersecurity forums, including membership of Trusted Introducer, a European network for IT security, and the Forum of Inci- dent Response and Security Teams (FIRST). The Bank also participates in the security com- mittee of the Swedish Bankers’ Association and is a member of the Swedish National Cyber Security Centre’s (NCSC) financial forum. Through these collaborations, the Bank aims to strengthen cybersecurity in the finance sector and increase Sweden’s resilience to cyber threats. In addition, Handelsbanken has an enhanced cybersecurity partnership with two other major banks in Sweden, which was initiated in 2022, and in 2024 a joint working group was launched focused on AI security. Today’s volatile geopolitical situation affects every bank’s day-to-day operations, and in response to this, Handelsbanken established a concept for its operational resilience in 2023. This concept refers to the Bank’s ability to maintain critical operations in the event of dis- ruptions, interruptions or attacks. The central areas that interact to strengthen operational resilience include effective management of operational risks, continuity management, inci- dent management, and IT and security activi- ties that prevent and manage both internal and external disruptions, attacks and interruptions. In addition, suppliers are required to meet the same standards for information security as those that apply to the operations conducted by the Bank itself. In 2024, the Bank focused further on developing its capabilities to main- tain operational resilience, particularly digital resilience in accordance with the EU’s new Digital Operational Resilience Act (DORA). The Bank’s security work and its manage- ment of sensitive information are also gov- erned by both international and national legis- lation. Information security work is undertaken in accordance with the ISO/IEC 27001 interna- tional standard, for which several of the Bank’s areas are certified and undergo annual audits. The areas certified under ISO/IEC 27001:2022 also include, in addition to the Bank’s Informa- tion Security Management System (ISMS) and its organisation for information security, Group IT Risk Management, Information Security Risk Analysis Process, Data Protection (GDPR), Continuity & Crisis Management. It also includes three IT production processes: IT Change Management, IT Incident Manage- ment and IT Event Management. In 2023, the Bank reported that four processes were included. The difference is that the IT Continu- ity Management process is now included in Continuity & Crisis Management and therefore is still included in the certification. The annual audit for 2024 showed that the Bank achieved the highest possible quality standards in these areas. The Bank’s ISMS is based on the Standard of Good Practice developed by Information Security Forum (ISF), an organisation which counts many of the largest companies in the world as members. Security activities are con- ducted systematically and are process-driven, with risk analyses employing methodology from the ISF’s Information Risk Analysis Meth- odology (IRAM2), as well as others. Data protection work must comply with the General Data Protection Regulation (GDPR) and other applicable laws and regulations in this area. This work is pursued continuously, systematically and with a risk-based approach, while maintaining traceability. Evaluations, analyses and assessments of potential risks and impacts are to be carried out and carefully documented. In 2024, Handelsbanken initiated a project to introduce improved system sup- port for governance, risk and compliance (GRC). The main aim of a GRC system is to create a standardised, common structure for documenting business processes and instruc- tions. Regarding privacy issues, this means specifically means that the system supports the registration of personal data processing, the implementation of impact assessments and the management of privacy-related risk analyses. The Group’s complaints officers report regularly to the Board, the Executive Team and product owners on complaints received. 314 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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These reports include information on both individual and recurring complaints, and pro- vide indications of areas where improvements may be necessary. Refer to section S4-3 on page 314 for management of cases where customers believe that they have suffered sig- nificant negative consequences in conjunction with lodging a complaint. Metrics and targets S4-5: Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities Handelsbanken’s overall target in the area of consumers and end-users is to safeguard the safety, security and privacy of both co-workers and customers and to protect the Bank’s assets. In parallel, the Bank must deliver reli- able and secure services with high availability, which is crucial for maintaining confidence and stability in the financial system. The percentage of co-workers who have completed cybersecurity training was 96.6 per cent for 2024. The aim is for 95 per cent of all co-workers to complete the training annually. This is an element of Handelsbanken’s efforts to ensure that its employees have the neces- sary awareness of cybersecurity and can thus contribute to maintaining secure and resilient operations. The metric, expressed as a per- centage and included in this report for the first time, is a calculation of the percentage of co-workers, of the total, who had the annual cybersecurity training assigned to them before 1 December and who completed the course before the end of the year. The target of 95 per cent has been set internally without being con- firmed with external stakeholders. A high per- centage is deemed to indicate good aware- ness of the Bank’s security requirements, which will ensure fewer security incidents. The procedure is managed internally and no external controls are used. The availability of the Bank’s self-service payment system was 99.41 per cent in 2024. The target is to have availability of at least 99.30 per cent. This is a key target for ensuring that customers always have access to the Bank’s services and for maintaining customer satisfaction through high availability and reli- ability. The metric, expressed as a percentage and included in this report for the first time, is a calculation of the percentage of uptime in relation to total time (uptime + downtime), measured and evaluated monthly, but is reported here as a weighted result for the full year. The statistics are based on data manually entered into the Bank’s incident reporting sys- tem. The target of 99.30 per cent has been set internally without being confirmed with exter- nal stakeholders. The purpose of this target is to raise awareness of and to make the Bank’s operational stability and deviations visible to the operations or other stakeholders. A high score indicates good availability of the Bank’s various online services, which will ensure higher customer satisfaction. The procedure is managed internally and no external controls are used. During 2024, 28 incidents (31) relating to customer privacy or poor management of customer data were reported. None (0) of the reports were received via government authorities. A total of 21 (13) were complaints received from customers which were found to be substantiated by the Head of Security and involved the exposure of a handful of custom- ers’ data. None (0) were identified internally. All cases have been managed with the parties concerned. This data does not include cases under the GDPR, which is presented sepa- rately below. Comparative figures for last year have been adjusted from 13 to 31, since the reported outcome in the 2023 Sustainability Report referred to a net figure. For better comparability, the 2024 outcome and the 2023 comparative figures are reported using the same method (gross). The metric is stated in numbers and is the total number of cus- tomer complaints related to customer privacy or poor management of customer data in terms of confidentiality and privacy. The metric has not been set as a target, but is reported for transparency. There is no plan to set a target for the number of incidents since the Bank is continuously making improve- ments. Each incident is reviewed separately and actions are taken to prevent similar events in the future. The procedure is man- aged internally and no external controls are used. In 2024, a total of 640 (612) personal data breaches were reported internally. Of these, 17 (17) breaches were deemed to require noti- fication under the GDPR and thus were reported to the Swedish Authority for Privacy Protection (IMY). All breaches were handled in accordance with the Bank’s processes and procedures. The metric is stated in numbers and is the total number of personal data breaches reported internally and a total of the number reported to IMY , measured over the full year. The metric has not been set as a target, but is reported for transparency. There is no plan to set a target for the number of incidents since the Bank is continuously making improve- ments. Each incident is reviewed separately and actions are taken to prevent similar events in the future. The procedure is managed inter- nally and no external controls are used. Handelsbanken endeavours to actively pre- vent and mitigate incidents by applying robust security measures and continuous monitoring of processes to ensure that customer informa- tion is handled securely and correctly. Each incident is reviewed and actions are taken to prevent similar events in the future. 315 Handelsbanken Annual and Sustainability Report 2024 4.4
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Entity specific – Contribute to Society Entity specific – Contribute to Society Strategy Long-term business relationships and low risk-taking are cornerstones of Handels- banken’s corporate and business culture. As a result, sustainability has long been a natural part of Handelsbanken’s operations, including its role as a responsible taxpayer. The Bank endeavours to contribute to the communities in which it operates, which is achieved by pursuing a decentralised business model with local branches serving as hubs for customer relationships. Selling loans that lead to unhealthy debt always has a negative impact on the customer. Handelsbanken has a low risk tolerance, which means that the Bank deliberately refrains from high-risk transactions, even if the customer is willing to pay a higher interest rate. Working closely with customers and understanding their needs means that long-term relationships can be built up, which not only provides customers with a sense of security but also contributes to a more stable and prosperous society. Customer relationships are established through personal meetings combined with innovative digital services and solutions. This enables the Bank, by leveraging its business model, to help increase prosperity over time in the societies where Handelsbanken operates. Through its stable and responsible business approach, Handelsbanken contributes to sustainable economic development, while promoting an efficient and secure payment system and developing new digital solutions for the future. Advisory services not only offer an opportunity to provide customers with financial guidance, but also to educate them on important areas related to their personal finances, such as housing financing, pension savings and investments. Handelsbanken foundation and publishing, which coordinates the Bank’s community engagement, was established in 2024. This includes support for independent research and knowledge sharing on economic and social issues, as well as EFN Ekonomikanalen, which is an independent, wholly owned subsidiary. EFN’s mission is to produce independent financial journalism to share knowledge about the economy and society to a wider audience, thereby strengthening people’s ability to make their own informed financial decisions. Impact, risk and opportunity management The steering documents that address sustain- ability matter of contribute to society are: • Policy for ethical standards, for more infor- mation, see page 263 • Policy on governance and steering docu- ments, for more information, see page 264. These policies govern how Handelsbanken manages the entity specific sustainability mat- ter of contributing to society, where the Bank has an actual positive impact that in turn can create financial opportunities. The Bank’s concept and working method form the basis for managing these impacts and realising opportunities, through action that is continu- ously implemented throughout the Group’s operations. The Bank contributes to society by provid- ing responsible and sustainable financial ser- vices that support economic stability and development. The decentralised working method enables local needs to be met and business opportunities to be quickly identified, all while building up long-term customer rela- tionships. The Bank also contributes directly to society through lending to the public sector, including sovereigns, central banks, municipal- ities and counties. For a presentation of loans to the public, refer to the table Loans to the public by sector and industry 2024 on page 266. Through its local presence and proximity to the customer, the Bank also gains a better understanding of customer needs, enabling it to support them in different stages of life and business. The Bank also contributes to society by paying taxes and fees, which strengthens the national economy. A financially sustainable and profitable bank is vital, not only generating returns for share- holders and tax revenue, but also so that any surplus can be reinvested in the business. By creating economic value, Handelsbanken can grow and meet the future needs of its customers, for example, by enabling long-term lending. The measures that manage the posi- tive impact and opportunities are ongoing measures and are part of daily operations with the aim of maintaining high customer satisfaction. Metrics and targets Handelsbanken’s target is to endeavour to conduct responsible banking operations that contribute to society. Handelsbanken has more than 420 branches in its four home markets. The local branch always assumes responsibility for the cus- tomer, no matter how, where or when the cus- tomer contacts the Bank. The independence of the branches leads to a very strong local connection. Short decision-making channels also enable us to more quickly adapt to various changes in local markets, and to quickly take advantage of new business opportunities. Using the branch’s in-depth customer due dili- gence, the Bank can identify and prioritise the areas of greatest value to our customers, and thus to society and the Bank. Satisfied customers are fundamental for a relationship bank such as Handelsbanken in order for it to continue to conduct banking operations that can contribute to society, which is why customer satisfaction surveys are very important at Handelsbanken, and cus- tomer satisfaction is followed up by the Bank’s own and public surveys. Every year, EPSI Rat- ing Group, which includes the Swedish Quality Index, carries out and validates independent surveys of customer satisfaction in all of the Bank’s home markets. The Bank is to achieve the corporate goal of having higher profitability than the average of peer competitors in home markets by, among other factors, having more satisfied customers than its competitors. Handelsbanken will not set new targets or metrics other than those that have already been established and are regularly monitored regarding customer satisfaction since these have been selected to support the Bank’s cor- porate goals. There are no specific base years Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Entity specific Contribute to society Actual positive impact Opportunity Own operations, asset management & lending Own operations, asset management & lending Short/medium/long Short/medium/long 316 Handelsbanken Annual and Sustainability Report 2024 4.4 Introduction Administration report Financial statements Sustainability Social information Other
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or targets for how Handelsbanken contributes to society other than surveying customer satis- faction through EPSI/SKI, which has been con- ducted continuously since 1989, and provides a stable and long-term basis for monitoring and improving this work. The Bank maintained its stable and strong position in terms of cus- tomer satisfaction in 2024, for more informa- tion about the survey, see page 16. Satisfied customers are proof that the Bank’s way of working on contributing to society is effective. Selling loans that build up unhealthy levels of household and corporate debt always hits customers hardest. Handelsbanken has a low risk tolerance. The Bank’s strict approach to risk means that the Bank deliberately refrains from participating in high-risk transactions, even if the customer is willing to pay a higher interest rate. The credit loss ratio provides an indication of how responsibly a bank manages its business. For more information about the credit loss ratio, see section Financial stability on page 324. Handelsbanken contributes to society in the countries where the Bank operates both by paying taxes and fees, and by paying taxes to local tax authorities on behalf of co-workers and customers. For more information on how Handelsbanken has contributed to society through taxes and fees, see the section The Bank as a taxpayer on page 258. 317 Handelsbanken Annual and Sustainability Report 2024 4.4
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4.5 Governance information Governance information Disclosure Requirements ESRS G1 Business conduct Impact, risk and opportunity management 319 G1-1: Corporate culture and business conduct policies 319 G1-3: Prevention and detection of corruption and bribery 320 Metrics and targets 321 G1-4: Incidents of corruption or bribery 321 Entity specific – Counteract financial crime Governance 322 Impact, risk and opportunity management 322 Metrics and targets 323 Entity specific – Financial stability Governance 324 Impact, risk and opportunity management 324 Metrics and targets 325 318 Handelsbanken Annual and Sustainability Report 2024 4.5 Introduction Administration report Financial statements Sustainability Governance information Other
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ESRS G1 Business conduct ESRS G1 Business conduct Impact, risk and opportunity management G1-1: Corporate culture and business conduct policies The steering documents that address the Bank’s material sustainability matters, corporate culture, and corruption and bribery, within business conduct are: • Policy for ethical standards, for more information, see page 263 • Policy for management of conflicts of interest • Policy for sustainability, for more information, see page 264 • Policy against corruption, for more information, see page 263. The Policy against corruption and the Policy for management of conflicts of interest set out Handels banken’s approach to corruption and conflicts of interest. The steering documents detail the zero-tolerance approach that Handels- banken takes in relation to corruption, money laundering or terrorist financing, and that con- flicts of interest are to be managed. For more information on the Bank's work with suspected irregularities see section G1-3 on page 320. The Bank’s policy for management of conflicts of interest provides guidance on identifying and managing conflicts of interest. The policy also emphasises that reporting should be con- ducted annually on those units where the likeli- hood of conflicts of interest is considered to be higher, and how these conflicts have been managed. It is the responsibility of all heads of units to continuously identify potential conflicts of interest. The bank's policies and risk toler- ance form the basis for the internal work instructions that exist in all departments. The instructions are the internal guidelines that all employees have to follow and are used in their daily work. Handels banken’s corporate culture is based on a decentralised approach, with trust and respect for individuals. The Bank’s corporate culture target are in line with the targets for its own workforce, and are based on the results of the annual workplace survey, which also serves as a tool for evaluating the corporate culture. This is a long-term goal that includes such fac- tors as clear and transparent communication, having the right skills and conditions in place to solve tasks and tackle different work situa- tions, feeling pride and trust, and feeling and being respected. Read more about how this is integrated into the Bank’s approach to its own Governance information Handels banken maintains high ethical standards and complies with applicable regulations to ensure responsible business conduct. Using clear steering documents and efficient work processes, the Bank mitigates risks and creates long-term value for customers and shareholders. In parallel, the Bank is actively engaged in counteracting financial crime, such as money laundering and financing of terrorism. The Bank also works to maintain financial stability through low risk, long-term customer relationships and a robust capital buffer and liquidity reserve. This section describes corporate governance at Handels banken, the impact that the Bank has and the risks and opportunities that are clearly linked to this area. The section also provides an account of how the Bank controls and targets identified issues. Through close customer relationships and regular training, the Bank ensures that its products are not used for criminal purposes. Handels banken also invests in new technologies and cooper- ates with other community stakeholders to strengthen protection against financial crime. Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Corporate culture Actual positive impact Opportunity Own operations Own operations Short/medium/long Short/medium/long Corruption and bribery Actual positive impact Actual negative impact Own operations Own operations Short/medium/long Short/medium/long 319 Handelsbanken Annual and Sustainability Report 2024 4.5
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workforce, the formulation of targets, the actions taken and the results of the work envi- ronment survey in section S1 Own workforce, starting on page 299. Employee conduct The following are extracts from codes of conduct included in the Bank’s policies and guidelines which refer to employees. Handels banken’s co-workers • must not be in a position where they may be suspected of taking improper advantage of knowledge about the financial markets which they obtain in the course of their work • must be familiar with legislation con- cerning trading in financial instru- ments and observe the Bank’s rules for employees’ private securities and currency transactions • must, in their work at the Bank and in their private affairs, refrain from busi- ness transactions that violate the Bank’s rules • must refrain from transactions or other commitments that could seri- ously jeopardise their personal finan- cial position • are not permitted to process transac- tions in which they, or persons closely associated with them, have a per- sonal interest – this also applies to companies in which co-workers, or persons closely associated with them, are involved • must report to a manager or can notify Group Compliance or Group Audit if they suspect irregularities at the Bank. Handels banken’s separate whistleblowing system provided by an external supplier may be used as well as these reporting channels • must notify the Bank of assignments outside the Bank and obtain approval – this also applies to secondary occupations and certain posts in clubs, societies and the like. G1-3: Prevention and detection of corruption and bribery Handels banken’s work methods are character- ised by respect and high ethical standards. It is important that we combat risks in all ways possible and uphold confidence in the Bank’s operations and the financial sector as a whole. The Bank aims to work proactively to counter- act all types of criminal activity, including cor- ruption and other financial crime. Handels- banken has also established procedures for managing conflicts of interest and preventing negative impact on customers’ interests. The Bank’s policy against corruption emphasises that co-workers must never engage in acts that may involve bribery or improper influence. Regular risk analyses are undertaken to pre- vent and detect corruption. The annual evalua- tion encompasses the entire Bank, including international branches and subsidiaries, and assesses the risk of bribery and corruption among employees and units, corresponding to 100 per cent. In addition, the general risk assessment regarding money laundering and terrorist financing also examines the risk of corruption-related crime by the Bank’s cus- tomers as a predicate offence to money laun- dering. Risk areas with an elevated risk of corruption are specifically identified, such as customers operating in countries or sectors with a higher incidence of corruption. Employees who have direct contact with customers, those who can influence purchas- ing or procurement, as well as those handling sensitive information or who have decision - making mandates relating to customers are considered to be particularly exposed to risks related to bribery and corruption. Handels- banken has a training course on anti-corrup- tion and other financial crime, which highlights the Bank’s policy against corruption, policy for ethical standards and the Banks guidelines on bribery and improper influence, that is manda- tory for the Banks co-workers and consultants with assignments of six months or longer. The training includes specific examples of appro- priate and inappropriate behaviour. Handels- banken’s Board and the Boards of subsidiaries receive bribery and corruption training annu- ally. On completion of the training, the Boards have familiarised themselves with the definition of corruption in relation to Swedish legislation, Swedish self-regulation (Code to prevent Cor- ruption in Business), Swedish legal statistics on bribery and the link between corruption and money laundering and/or terrorism. Further- more, the training includes a section on how corruption impacts Handels banken’s opera- tions and which corruption risks could exist in the Bank. Handels banken’s anti-corruption work is a continuous process, and since 2017, the Bank is a member of Transparency International Sweden, where the Bank and other large Swedish companies exchange experiences and knowledge in the area. The Bank encourages all its co-workers to report confirmed or suspected fraud or other irregularities. The Bank believes it is essential to act and take action when something is not right. Handels banken has an external whistle- blower system that can be accessed by all co-workers, consultants and external parties to anonymously report fraud. All reports of suspected fraud are investigated promptly by a function that is independent of operations. For more information about the whistleblower system, see section S1-3 on page 302. 320 Handelsbanken Annual and Sustainability Report 2024 4.5 Introduction Administration report Financial statements Sustainability Governance information Other
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Metrics and targets G1-4: Incidents of corruption or bribery Handels banken is to actively work to prevent and limit corruption-related incidents. The Bank takes action to prevent its products and services from being used for financial crime. This work follows a risk-based approach, starting from policies and guidelines that allo- cate resources to the areas identified in risk assessments as having the highest risk. The risk-based approach is flexible and allows for efficient use of resources by allocating resources to the areas where risks are higher. The Bank’s ambition is to develop relevant measurable targets in addition to those already set and to evaluate alternative metrics in terms of effectiveness and data quality. In 2024, there were no (0) confirmed inci- dents of corruption or bribery, legal proceed- ings regarding corruption or bribery launched against the Bank or its co-workers, disciplinary measures or dismissals of co-workers, or ter- mination of contracts with partners or suppli- ers as a result of corruption or bribery during the year. The reported figure includes con- firmed cases of giving and receiving bribes, breach of trust and use of one’s position to gain improper advantage for oneself or others. Anti-money laundering incidents are reported and presented separately in the section “Coun- teract financial crime” on page 323. In each calendar year, 90 per cent of the Bank’s employees must have completed anti- corruption training. For the Board, the figure is 100 per cent for the same training. The training target for employees is set at 90 per cent since a certain percentage of employees may be on parental or official leave during the year and are not expected to undertake training during this time. Mandatory anti-corruption training courses are assigned to all employees and consultants via a training portal. The percentage of em - ployees who have completed training is re- ported in the training portal, which is where all figures are collated for the report. The system marks the training course as concluded only after the course has been successfully completed. A limitation in the system is that employees on official leave, parental leave or not working for any other reason are included in the figures. The training portal is not used for Board training, which is held in a different format. The table Board member training shows the number and percentage of Board members in the Handels banken Group and in the Bank’s subsidiaries who have completed the training in anti-corruption, anti-money laundering, and combating the financing of terrorism. The Employee training table shows the per- centage of employees who have received anti-corruption, anti-money laundering and anti-terrorist financing training. The percentage also includes employees on parental or official leave. Board member training 2024 2023 2022 2021 2020 Number of Board members who have completed the training in anti-corruption, anti-money laundering and combating the financing of terrorism1) 9 10 10 9 8 Percentage of Board members who have completed the training in anti-corruption, anti-money laundering and combating the financing of terrorism1) 100 100 100 100 100 Total number of subsidiary Board members who have completed the training in anti-corruption, anti-money laundering and combating the financing of terrorism1) 43 41 45 43 36 Percentage of subsidiary Board members who have completed the training in anti-corruption, anti-money laundering and combating the financing of terrorism1) 100 89 100 100 100 1) The majority of Board members reside in Sweden Employee training 2024 2023 2022 2021 2020 Percentage of employees who have completed the training in anti-corruption, anti-money laundering and combating the financing of terrorism 92 91 92 90 - 321 Handelsbanken Annual and Sustainability Report 2024 4.5
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Entity specific – Counteract financial crime Entity specific – Counteract financial crime Governance Handels banken works constantly and pro- actively to minimise the risk of the Bank’s cus- tomers, products or services being exploited for financial crime. Financial crime includes money laundering, terrorist financing, tax eva- sion, corruption, fraud and breaches of inter- national sanctions. The work is governed by a central department headed by the Bank’s spe- cially appointed executive with Group-wide responsibility for the work to prevent financial crime. Starting points for these efforts are the Bank’s low risk tolerance and the body of external regulations addressing financial crime in the countries where the Bank operates. The Bank also has a separate compliance depart- ment for financial crime with Group-wide responsibility, which monitors and acts in an advisory capacity in the Bank’s work to com- bat financial crime. Read more about Handels- banken’s work to combat financial crime in the G2 note on page 116. Impact, risk and opportunity management Handelsbanken regards preventative work as a fundamental principle for secure, sound bank- ing operations, and efforts to combat financial crime are a high priority. The steering documents that address the entity specific sustainability matter to counter- act financial crime are: • Policy for ethical standards, for more infor- mation see page 264 • Policy on measures against financial crime • Policy for sustainability, for more informa- tion, see page 264 • Policy against corruption, for more informa- tion, see page 264 • Guidelines for actions against financial crime. Both the policy and the guidelines on actions against financial crime represent Handels- banken’s position against financial crime. The Bank must not participate in transactions that its employees do not understand or in transac- tions with suspected links to criminal activities. Handels banken’s established policies and actions against financial crime and corruption constitute a central framework for conducting this work. The designated executive at the Bank is responsible for implementing the nec- essary actions to ensure compliance with laws, regulations and Group policies. In addition, all employees and consultants with assignments of six months or longer are required to complete mandatory courses each year on matters relating to money laun- dering, terrorist financing, international sanc- tions, corruption and predicate offences to money laundering such as fraud and tax evasion. The Bank has undertaken to comply with the applicable laws and regulations regarding money laundering, terrorist financ- ing, international sanctions and corruption in all of the countries where the Bank operates, in order to prevent the Bank’s infrastructure being used for illegal activities. The Bank has an open, active dialogue with the authorities that supervise its work on preventing and counteracting financial crime. The work of preventing and counteracting financial crime in Handels banken is risk based. It starts with a general risk assessment to identify, analyse and manage the various risks that the Bank faces. The Bank’s decentralised organisation, combined with its strong local roots, provides opportunities for creating close and long-term customer relationships and developing in-depth customer due diligence. Customer relationships are mainly initiated at one of Handels banken’s branches, which gives the Bank’s co-workers a better ability to get to know the customers and to better understand their business and the banking services they require. This customer due diligence is valua- ble for being able to identify deviations and to work effectively on measures to counteract financial crime. Deviations identified by the Banks’ branches are used as a supplement to Handels banken’s continuous follow-up, which includes auto- mated monitoring to identify suspicious trans- actions and behaviour. If suspected cases of financial crime are identified in this monitoring, they are reported to the relevant authority. Suspicious transactions related to money laundering or terrorist financing must be reported to the local Financial Intelligence Unit of the Swedish Police without delay. If there is strong suspicion of money laun- dering, terrorist financing or fraud, Handels- banken terminates the customer relationship, or implements product restrictions in order to prevent continued use of the Bank’s channels, services and products for such activities. Recent years have seen a growth in social engineering, increasingly aimed at elderly people, who are being tricked into using their BankID or providing personal codes. To pro- tect its customers from this and other com- mon types of fraud, such as investment or romance fraud, Handels banken continuously works to keep its customers abreast of the prevailing risks and how they can protect themselves. Handels banken participated in the cross-bank information campaign “ Scamaware!” during the year. Customers who have been the victim of fraud can contact Handels banken around the clock for help with emergency measures, for example, to block banking services, and, as far as possible, to get help to recover lost money. The Bank also provides advice and support on the steps customers should take, including reporting the fraudulent transaction to the police and filing a complaint, which are ele- ments of the Bank’s evaluation of potential compensation. Profits from fraud are a source of income for organised crime, which has become increas- ingly violent in recent years. Handels banken’s goal is to reduce these criminal profits and the subsequent money laundering, regardless of how the fraud occurs. The Bank has noted that many cases of fraud are completed by the customers themselves, after having been tricked by the fraudsters. These fraud events also play a part in financing crime and are there- fore a priority area for Handels banken. In addi- tion to investments in the control environment to identify both unauthorised and authorised fraudulent transactions, Handels banken also Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Entity specific – Counteract financial crime Actual positive impact Potential negative impact Risk Payment, own operations & downstream Payment & own operations Payment & lending Short/medium/long Short/medium/long Short/medium/long 322 Handelsbanken Annual and Sustainability Report 2024 4.5 Introduction Administration report Financial statements Sustainability Governance information Other
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participates in the Ministry of Finance’s forum against fraud and, during 2024, took part in a collaboration project with the Swedish Police’s national fraud centre (NBC) and other Swedish banks. In addition, Handels banken works actively with the NBC, the Swedish Bankers’ Association and other Swedish banks and social actors to make it more difficult to perpe- trate fraud. Money laundering remains a serious prob- lem for society, and more collaboration and exchange of information is needed to tackle the issue. As part of the financial sector, Handels banken – together with other stake- holders – has the opportunity to counteract the negative impact of financial crime. In 2020, a collaboration was initiated between the Finan- cial Intelligence Unit of the Swedish Police, Handels banken and other major banks in the Swedish market (called Swedish Anti-Money Laundering Intelligence Taskforce (SAMLIT). In 2023, the cooperation was extended to include fraud and was renamed Samlit Financial Crime Prevention. Through this collaboration, the Bank gains valuable information about various fraud methods and how criminal networks launder money in practice, and can identify customers suspected of links to these net - works. In addition, as of 1 January 2023, banks in the Swedish market are legally entitled to col- laborate with law enforcement authorities, the Swedish Financial Supervisory Authority and other credit institutions to prevent, deter or detect money laundering and terrorist finan- cing. Handels banken welcomes this develop- ment. Collaboration is permitted for money laundering and terrorist financing that is con- sidered serious, and may take place following a decision by the participating authority or authorities. Metrics and targets Handels banken is to actively work to prevent and limit incidents related to money launder- ing. The Bank takes action to prevent its prod- ucts and services from being used for financial crime. This work follows a risk-based approach, starting from policies and guidelines that allo- cate resources to the areas identified in risk assessments as having the highest risk. The risk-based approach is flexible and allows for efficient use of resources by allocating re- sources to the areas where risks are higher. The Bank’s ambition is to develop relevant measurable targets in addition to those already set and to evaluate alternative metrics in terms of effectiveness and data quality. In the case of low suspicion, a Suspicious Activity Report (SAR) must be prepared and thus no evidence of money laundering or terrorist financing is required. The notification requirement also applies to cases where the Bank has refused to execute transactions due to suspected money laundering or terrorist financing. A report may relate to one or more private indi- viduals and companies, and several transac- tions. Handels banken has a low risk tolerance for the risk of the Bank being exploited as part of financial crime. Preventive efforts to counteract financial crime must be taken into account in all processes, instructions and internal con- trols. The effectiveness of this work is moni- tored by measuring the frequency of fraud, maintaining a high level of customer due dili- gence, and promptly investigating and report- ing suspicious transactions. A critical part of this process is ensuring that all staff undergo financial crime prevention training, which is measured and monitored continuously. Mandatory training courses on combating financial crime are assigned to all employees and consultants via a training portal. The per- centage of employees who have completed training is reported in the training portal, which is where all figures are collated for the report. The system marks the training course as con- cluded only after the course has been suc- cessfully completed. A limitation in the system is that employees on official leave, parental leave or not working for any other reason are included in the figures. The training portal is not used for Board training, which is held in a different format. For each calendar year, the Bank’s target is that 90 per cent of the Bank’s employees must have completed financial crime prevention training. For the Board, the figure is 100 per cent for the same training. The training target for employees is set at 90 per cent since a certain percentage of employees may be on parental or official leave during the year and are not expected to undertake training during this time. All monitoring is reported and evaluated in relation to the Bank’s risk tolerance. Metrics for the training of employees, the Board and sub- sidiary boards are presented in section G1-4, see page 321. Suspicious transactions reported 2024 2023 2022 2021 2020 Number of suspicious transactions involving money laundering/terrorist financing (SAR)1) 5,529 5,245 6,194 5,039 4,730 1) According to the Swedish Anti-Money Laundering Act, Handels banken is also obligated, without delay, to report suspicions of money laundering or terrorist financing (suspicious activity reporting, SAR) to the Financial Intelligence Unit of the Swedish Police or equivalent authority. 323 Handelsbanken Annual and Sustainability Report 2024 4.5
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Entity specific – Financial stability Entity specific – Financial stability Governance The financial system plays an important role in the economy. A stable and well-functioning system is a prerequisite for the economy to function and foster growth. In the event of a severe financial crisis, which has occurred to varying degrees in the past, there is a risk that basic functions of the financial system, such as the supply of credit, will be disrupted or even cease to function. It can lead to signifi- cant costs to society. Handels banken is part of the financial system and serves a role in con- tributing to financial stability. Low risk toler- ance and a long-term approach are the corner- stones of the Bank’s corporate and business culture. The Bank’s Board decides on the level of risk tolerance. The combination of a robust capital buffer and liquidity reserve and strong operational resilience creates the foundation for financial stability, making the Bank a relia- ble counterparty. In the past, Handels banken has therefore managed its way through finan- cial crises and sharp macroeconomic down- turns very well, and has not needed assistance from governments, nor from shareholders in the form of new share issues. Handels banken is also ranked by leading rating agencies as one of the most stable banks in the world and is the bank with the highest credit rating of all comparable privately owned banks, in addition to having the highest combined global rating from the Fitch, Moody’s and S&P rating agencies. Financial stability is a key factor affecting all three perspectives of the value chain – upstream, own operations and downstream. It affects both the availability of funding, which is the Bank’s raw material, and the Bank’s ability to support customers in all economic situations, for example, by ensuring credit supply and a functional payment system. Deposits and lending are central to the Bank’s business model and rely on this stability, as do the Bank’s own operations. Impact, risk and opportunity management The Bank contributes to the stability of the financial system and society by conducting banking operations with a low risk tolerance, stable finances through a robust capital buffer and liquidity reserve, and well-organised oper- ations. This also enables the Bank to do busi- ness with customers and to support them with a long-term approach to business relation- ships, regardless of the external situation or economic climate. It also presents opportuni- ties for the Bank to attract new customers who value a bank with a business model featuring stability and low risk tolerance. Combined, this maintains the confidence of customers and investors in Handels banken, and the Bank can thus have an actual positive impact and also create financial opportunities. The main steering documents that address the entity specific sustainability matter of Financial stability and form the basis of the management and governance of this matter are the following policies issued by Handels- banken’s Board of Directors: • Policy on governance and steering docu- ments at the Handels banken Group • Credit policy for the Handels banken Group, for more information, see page 263 • Capital policy for the Handels banken Group • Financial policy for the Handels banken Group • Policy on operational risk at the Handels- banken Group. These policies, which apply to the entire Group, establish the framework for managing the credit risks and financial risks to which the Bank’s business may give rise and express its tolerances for these risks. The Bank maintains its financial stability through solid risk and cap- ital management, which thereby provides opportunities for business and making a posi- tive contribution to the stability of the financial system in society. The policy on governance and steering docu- ments serves as the basis of the Bank’s corpo- rate governance. For more information on the policy, see the general section GOV-1 on page 264. The credit policy states that the Bank has a low tolerance for credit risk and endeavours to establish long-term relationships with custom- ers who have good repayment capacity. This means that the Group must be selective when choosing its customers, and credit customers must be of high quality. The quality require- ment must never be neglected in favour of higher credit volumes, higher prices or market share. The Bank’s tolerance of credit risk is reflected in the expectation that the Bank will be able to have good capacity for granting credit without government support, even in a serious recession. The Bank’s ambition is to maintains its historically low level of credit losses compared to other banks. For more information, see GOV-1 on page 263. The capital policy aims to ensure that the Group’s capital situation is satisfactory and regulates how the Bank is to pursue its capital planning in order to ensure this. The Group shall at all times be well-capitalised in relation to its risks and meet the targets set by the Board and the capital requirements set by supervisory authorities, even in situations of financial stress. Handels banken’s capital situa- tion must also continue to support a high credit rating from the most important rating agencies. The financial policy establishes the frame- works under which the funding operations are to be conducted. Financial risks, that is market risks and liquidity risks, are only to occur as a natural part of customer business, in connec- tion with Handels banken’s funding and liquid- ity management, and in its role as a market maker. The Group’s funding and liquidity man- agement shall ensure that Handels banken can meet its payment obligations in both the short and long term. The Group’s funding is to be well diversified in terms of market, currency and maturity terms. Handels banken is to have a sufficient liquidity reserve in order to be able to continue its operations without new borrow- ing on the financial markets for set periods of time. This must also apply under stressful con- ditions. The policy on operational risk stipulates that Handels banken must, as far as possible, endeavour to prevent operational risks. An operational risk which could have serious adverse consequences for the Bank, the Bank’s customers or the financial system in the event of an incident must be reduced to an acceptable level by taking risk mitigation Summary of material impacts, risks and opportunities Material sustainability matter Material impacts, risks and opportunities Value chain Time horizon Entity specific – Financial stability Actual positive impact Opportunity Own operations & lending Own operations & lending Short/medium/long Short/medium/long 324 Handelsbanken Annual and Sustainability Report 2024 4.5 Introduction Administration report Financial statements Sustainability Governance information Other
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measures. The policy also describes the Bank’s overall risk management strategies for main- taining high operational resilience. Operational resilience is the Bank’s ability to prevent, antici- pate, withstand and recover from disruptions, attacks or interruptions affecting the Bank’s critical operations. The Bank’s credit process is centralised and shared by the whole Group. It is based on a conviction that a decentralised organisation with a local connection ensures high quality in credit decisions. Each branch responsible for the customer assumes the full credit responsi- bility. and the basis for credit decisions is always prepared by the branch responsible for the credit, regardless of whether the final decision is to be made at the branch or at a higher deci- sion-making level. The branch’s local connec- tion and close relationships with its customers enable the branch to quickly identify any prob- lems and take action. Handels banken’s restric- tive approach to risk means that the Bank deliberately avoids high-risk transactions, even if the expected financial reward may be high at the time. The risks arising in the operations are systematically identified, measured, managed and reported in all parts of the Group. For more information about the Bank’s risk man- agement, risk tolerance and risk strategy, see note G2 Risk and capital management on page 80. The aim of the Bank’s capital planning is to ensure that the Group has the right amount of financial resources available at all times given the Group’s risks, the development of the operations, regulatory requirements and the capital targets set by the Bank. At least annu- ally, a long-term capital plan is drawn up, which is designed to give a comprehensive overview of the Group’s current capital situa- tion, a forecast of expected capital perfor- mance, and the outcome in various scenarios. The capital planning is divided into short-term and mid- to long-term forecasting. The part of capital planning that comprises short-term forecasts up to two years ahead principally focuses on assessing existing performance and the development of the capital require- ment. This forecasting is necessary to enable continual adaptation of the size and composi- tion of own funds. For more information about the Bank’s capital management, see note G2 Risk and capital management on page 80. All procedures, processes and ongoing actions are part of the day-to-day operations so as to maintain financial stability. Metrics and targets The Bank has a long-standing and systematic approach to measuring risk and capital man- agement and has many established metrics and targets in this area. Among these, the fol- lowing metrics and targets are specifically applied to effectively monitor financial stability outcomes and actions: The common equity tier 1 ratio must, under normal circumstances, be between 1 and 3 percentage points above the total common equity tier 1 capital requirement communi- cated to the Bank by the Swedish Financial Supervisory Authority. The minimum requirement for the structural liquidity measure, the net stable funding ratio (NSFR) – the ratio between available stable funding and required stable funding – requires the Bank to have sufficient stable funding to cover its funding needs under both normal and stressed circumstances from the perspective of a one-year horizon. The minimum require- ment applies at aggregate level and the ratio must be at least 100 per cent. The Bank strives to always have low credit losses. For more information, see pages 17, 80. The Bank measures the outcome using the following metrics: • Common equity tier 1 ratio • Tier 1 ratio • Liquidity coverage ratio (LCR) • Net Stable Funding Ratio (NSFR) • Average credit loss ratio. The metrics are not validated by an external party but are monitored by the Swedish Finan- cial Supervisory Authority. Information on each metric and the associated measurement meth- odologies and significant assumptions can be found mainly in note G2 Risk and capital man- agement beginning on page 80 and in the sec- tion Definitions and explanations on page 376. Page references for each metric: • Common equity tier 1 ratio pages 122, 377 • Tier 1 ratio pages 122, 377 • Liquidity coverage ratio (LCR) pages 111, 377 • Net Stable Funding Ratio (NSFR) pages 111, 377 • Average credit loss ratio pages 17, 80. 325 Handelsbanken Annual and Sustainability Report 2024 4.5
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4.3 cont. EU Taxonomy – continued 2024-12-31 2024-12-31 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) Business segment and group consolidated KPIs, turnover based Revenue MSEK Proportion % Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Banking Credit portfolio 179,336 95.5 51.2 3.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 51.3 3.4 0.0 0.1 Financial guarantees 94 0.1 2.2 0.6 0.0 0.6 0.0 0.0 0.0 0.0 0.7 0.1 0.2 3.1 0.6 0.0 0.6 Assets under management 5,381 2.9 4.7 1.4 0.1 0.6 0.4 0.0 0.0 0.0 0.7 0.1 0.0 6.0 1.5 0.1 0.6 Insurance 2,921 1.6 10.6 4.5 0.1 0.7 0.4 0.0 0.0 0.0 0.9 0.1 0.0 12.0 4.6 0.1 0.7 Consolidated KPI, turnover based (weighted) 187,732 100.0 49.2 3.3 0.0 0.1 0.0 0.0 0.0 0.0 0.1 0.0 0.1 49.4 3.3 0.0 0.1 2024-12-31 2024-12-31 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) Business segment and group consolidated KPIs, capital expenditure based Revenue MSEK Proportion % Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Banking Credit portfolio 179,336 95.5 51.5 3.5 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 51.5 3.5 0.0 0.1 Financial guarantees 94 0.1 3.2 0.5 0.0 0.5 0.0 0.0 0.0 0.0 0.1 0.1 0.0 3.5 0.5 0.0 0.5 Assets under management 5,381 2.9 5.3 2.0 0.2 0.8 0.6 0.0 0.0 0.0 0.4 0.1 0.0 6.5 2.0 0.2 0.8 Insurance 2,921 1.6 0.8 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.3 0.0 0.0 1.6 0.1 0.0 0.0 Consolidated KPI, capital expenditure based (weighted) 187,732 100.0 49.3 3.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 49.4 3.4 0.0 0.1 Handelsbanken Group EU Taxonomy KPIs EU Taxonomy – continued In accordance with the Non-Financial Report- ing Directive (NFRD), credit institutions are required to disclose the extent to which assets finance economic activities are eligible and aligned with the EU Taxonomy Regula- tion, (EU) 2020/852. For many economic activities, the EU Taxonomy defines criteria that must be met in order for them to be clas- sified as sustainable. This section provides extended information regarding the Taxonomy and associated mandatory tables, which together with the Taxonomy information in section 4.3 Environmental information consti- tute Handelsbanken’s complete Taxonomy reporting. The Bank’s reporting for banking operations is based on the consolidated situ- ation and is presented in the set templates for credit institutions. Assets in the insurance operations are presented separately on pages 366–370. The Group’s total green assets ratio is calcu- lated by aggregating key performance indica- tors (KPIs) for credit agreements in the balance sheet, for financial guarantees, in asset man- agement and in the insurance operations. Two weighted KPIs, one based on turnover and one on capital expenditure, are calculated by weighting each business segment’s KPI by its share of the Group’s total income. 326 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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2024-12-31 2024-12-31 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) Business segment and group consolidated KPIs, turnover based Revenue MSEK Proportion % Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Banking Credit portfolio 179,336 95.5 51.2 3.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 51.3 3.4 0.0 0.1 Financial guarantees 94 0.1 2.2 0.6 0.0 0.6 0.0 0.0 0.0 0.0 0.7 0.1 0.2 3.1 0.6 0.0 0.6 Assets under management 5,381 2.9 4.7 1.4 0.1 0.6 0.4 0.0 0.0 0.0 0.7 0.1 0.0 6.0 1.5 0.1 0.6 Insurance 2,921 1.6 10.6 4.5 0.1 0.7 0.4 0.0 0.0 0.0 0.9 0.1 0.0 12.0 4.6 0.1 0.7 Consolidated KPI, turnover based (weighted) 187,732 100.0 49.2 3.3 0.0 0.1 0.0 0.0 0.0 0.0 0.1 0.0 0.1 49.4 3.3 0.0 0.1 2024-12-31 2024-12-31 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) Business segment and group consolidated KPIs, capital expenditure based Revenue MSEK Proportion % Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which enabling Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which transitional Of which enabling Banking Credit portfolio 179,336 95.5 51.5 3.5 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 51.5 3.5 0.0 0.1 Financial guarantees 94 0.1 3.2 0.5 0.0 0.5 0.0 0.0 0.0 0.0 0.1 0.1 0.0 3.5 0.5 0.0 0.5 Assets under management 5,381 2.9 5.3 2.0 0.2 0.8 0.6 0.0 0.0 0.0 0.4 0.1 0.0 6.5 2.0 0.2 0.8 Insurance 2,921 1.6 0.8 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.3 0.0 0.0 1.6 0.1 0.0 0.0 Consolidated KPI, capital expenditure based (weighted) 187,732 100.0 49.3 3.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 49.4 3.4 0.0 0.1 Handelsbanken Group EU Taxonomy KPIs 327 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Summary of KPIs to be disclosed by credit institutions under Article 8 of the Taxonomy Regulation Total environmentally sustainable assets, SEK m* KPI4) KPI5) % coverage (over total assets)3) % of assets excluded from the numerator of the GAR (Article 7(2) and (3) and Section 1.1.2. of Annex V) % of assets excluded from the denominator of the GAR (Article 7(1) and Section 1.2.4 of Annex V) Main KPI Green asset ratio (GAR) stock 83,940 3.4 3.5 76.6 35.6 23.4 Total environmentally sustainable activities, SEK m KPI KPI % coverage (over total assets) % of assets excluded from the numerator of the GAR (Article 7(2) and (3) and Section 1.1.2. of Annex V) % of assets excluded from the denominator of the GAR (Article 7(1) and Section 1.2.4 of Annex V) Additional KPIs GAR (flow) 17,035 3.0 3.2 100.0 58.3 0.0 Trading book1) Financial guarantees 48 0.6 0.5 Assets under management 12,652 1.5 2.0 Fees and commissions income2) 1) For credit institutions that do not meet the conditions of Article 94(1) of the CRR or the conditions set out in Article 325a(1) of the CRR. 2) Fees and commissions income from services other than lending and AuM. Institutions shall disclose forward-looking information for these KPIs, including information in terms of targets, together with relevant explanations on the methodology applied. 3) % of assets covered by the KPI over banks’ total assets. 4) Based on the Turnover KPI of the counterparty. 5) Based on the CapEx KPI of the counterparty, except for lending activities where for general lending Turnover KPI is used. * Environmentally sustainable assets calculated using the KPI for turnover. Handelsbanken’s taxonomy disclosures for banking operations in the credit institution 328 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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SEK m 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,333,834 1,275,979 83,933 77,753 666 1,305 264 7 7 31 454 537 2,107 1,279,371 83,940 77,753 666 1,312 2 Financial undertakings 45,959 25,068 1,917 17 5 12 0 66 0 25,147 1,917 17 5 3 Credit institutions 44,105 24,245 1,916 17 5 12 0 24,257 1,916 17 5 4 Loans and advances 11,817 7,924 1,077 1 1 9 0 7,933 1,077 1 1 5 Debt securities, including UoP 32,288 16,321 839 15 4 3 16,324 839 15 4 6 Equity instruments 7 Other financial corporations 1,854 824 2 0 1 66 0 890 2 0 1 8 Of which investment firms 1,651 705 0 64 0 769 0 9 Loans and advances 1,651 705 0 64 0 769 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 0 0 0 0 0 13 Loans and advances 0 0 0 0 0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 31 15 1 0 15 1 0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 31 15 1 15 1 20 Non-financial undertakings 57,381 20,416 4,263 649 1,300 252 7 7 31 388 537 2,107 23,730 4,270 649 1,307 21 Loans and advances 57,381 20,416 4,263 649 1,300 252 7 7 31 388 537 2,107 23,730 4,270 649 1,307 22 Debt securities, including UoP 23 Equity instruments 0 0 0 0 0 24 Households 1,230,494 1,230,494 77,753 77,753 1,230,494 77,753 77,753 25 Of which loans collateralised by residential immovable property 1,230,264 1,230,264 77,753 77,753 1,230,264 77,753 77,753 26 Of which building renovation loans 27 Of which motor vehicle loans 230 230 230 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,158,810 33 Financial and non-financial undertakings 1,007,823 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 620,079 35 Loans and advances 619,973 36 Of which loans collateralised by commercial immovable property 142,066 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 106 40 Non-EU country counterparties not subject to NFRD disclosure obligations 358,514 41 Loans and advances 358,252 42 Debt securities 262 43 Equity instruments 44 Derivatives 25,729 45 On demand interbank loans 653 46 Cash and cash-related assets 6 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 101,288 48 Total GAR assets 2,492,644 1,275,979 83,933 77,753 666 1,305 264 7 7 31 454 537 2,107 1,279,371 83,940 77,753 666 1,312 49 Assets not covered for GAR calculation 762,737 50 Central governments and Supranational issuers 35,932 51 Central banks exposure 679,578 52 Trading book 47,227 53 Total assets 3,255,381 1,275,979 83,933 77,753 666 1,305 264 7 7 31 454 537 2,107 1,279,371 83,940 77,753 666 1,312 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 8,228 180 48 0 46 0 0 54 5 13 253 48 0 46 55 Assets under management 848,420 40,121 12,207 1,160 4,980 3,352 161 55 32 0 0 6,118 281 48 1,221 2 276 51,121 12,652 1,160 5,083 56 Of which debt securities 215,787 378 111 65 15 77 0 0 0 0 0 2 2 459 111 65 15 57 Of which equity instruments 627,307 39,743 12,097 1,095 4,964 3,275 161 55 32 0 0 6,116 281 48 1,220 2 276 50,662 12,541 1,095 5,067 Assets for the calculation of GAR – Turnover 330 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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SEK m 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,333,834 1,275,979 83,933 77,753 666 1,305 264 7 7 31 454 537 2,107 1,279,371 83,940 77,753 666 1,312 2 Financial undertakings 45,959 25,068 1,917 17 5 12 0 66 0 25,147 1,917 17 5 3 Credit institutions 44,105 24,245 1,916 17 5 12 0 24,257 1,916 17 5 4 Loans and advances 11,817 7,924 1,077 1 1 9 0 7,933 1,077 1 1 5 Debt securities, including UoP 32,288 16,321 839 15 4 3 16,324 839 15 4 6 Equity instruments 7 Other financial corporations 1,854 824 2 0 1 66 0 890 2 0 1 8 Of which investment firms 1,651 705 0 64 0 769 0 9 Loans and advances 1,651 705 0 64 0 769 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 0 0 0 0 0 13 Loans and advances 0 0 0 0 0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 31 15 1 0 15 1 0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 31 15 1 15 1 20 Non-financial undertakings 57,381 20,416 4,263 649 1,300 252 7 7 31 388 537 2,107 23,730 4,270 649 1,307 21 Loans and advances 57,381 20,416 4,263 649 1,300 252 7 7 31 388 537 2,107 23,730 4,270 649 1,307 22 Debt securities, including UoP 23 Equity instruments 0 0 0 0 0 24 Households 1,230,494 1,230,494 77,753 77,753 1,230,494 77,753 77,753 25 Of which loans collateralised by residential immovable property 1,230,264 1,230,264 77,753 77,753 1,230,264 77,753 77,753 26 Of which building renovation loans 27 Of which motor vehicle loans 230 230 230 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,158,810 33 Financial and non-financial undertakings 1,007,823 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 620,079 35 Loans and advances 619,973 36 Of which loans collateralised by commercial immovable property 142,066 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 106 40 Non-EU country counterparties not subject to NFRD disclosure obligations 358,514 41 Loans and advances 358,252 42 Debt securities 262 43 Equity instruments 44 Derivatives 25,729 45 On demand interbank loans 653 46 Cash and cash-related assets 6 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 101,288 48 Total GAR assets 2,492,644 1,275,979 83,933 77,753 666 1,305 264 7 7 31 454 537 2,107 1,279,371 83,940 77,753 666 1,312 49 Assets not covered for GAR calculation 762,737 50 Central governments and Supranational issuers 35,932 51 Central banks exposure 679,578 52 Trading book 47,227 53 Total assets 3,255,381 1,275,979 83,933 77,753 666 1,305 264 7 7 31 454 537 2,107 1,279,371 83,940 77,753 666 1,312 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 8,228 180 48 0 46 0 0 54 5 13 253 48 0 46 55 Assets under management 848,420 40,121 12,207 1,160 4,980 3,352 161 55 32 0 0 6,118 281 48 1,221 2 276 51,121 12,652 1,160 5,083 56 Of which debt securities 215,787 378 111 65 15 77 0 0 0 0 0 2 2 459 111 65 15 57 Of which equity instruments 627,307 39,743 12,097 1,095 4,964 3,275 161 55 32 0 0 6,116 281 48 1,220 2 276 50,662 12,541 1,095 5,067 Assets for the calculation of GAR – Turnover 331 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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SEK m 2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,302,491 1,226,616 55,471 52,380 2 871 233 12 12 1,243,218 55,703 52,380 2 883 2 Financial undertakings 32,802 642 1 0 1 2 15,370 1 0 1 3 Credit institutions 31,165 2 14,649 0 0 4 Loans and advances 4,192 2 1,194 0 0 5 Debt securities, including UoP 26,943 13,440 6 Equity instruments 31 16 7 Other financial corporations 1,637 642 1 0 1 720 1 0 1 8 Of which investment firms 834 372 0 0 0 372 0 0 0 9 Loans and advances 834 372 0 0 0 372 0 0 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 240 79 17 Loans and advances 240 79 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 59,864 16,149 3,089 2 869 230 12 12 18,023 3,322 2 882 21 Loans and advances 59,864 16,149 3,089 2 869 230 12 12 18,023 3,322 2 882 22 Debt securities, including UoP 23 Equity instruments 0 24 Households 1,209,825 1,209,825 52,380 52,380 1,209,825 52,380 52,380 25 Of which loans collateralised by residential immovable property 1,209,620 1,209,620 52,380 52,380 1,209,620 52,380 52,380 26 Of which building renovation loans 27 Of which motor vehicle loans 205 205 205 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,225,857 33 Financial and non-financial undertakings 1,022,376 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 611,303 35 Loans and advances 611,254 36 Of which loans collateralised by commercial immovable property 138,351 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 48 40 Non-EU country counterparties not subject to NFRD disclosure obligations 375,146 41 Loans and advances 370,531 42 Debt securities 4,532 43 Equity instruments 83 44 Derivatives 16,492 45 On demand interbank loans 1,228 46 Cash and cash-related assets 10 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 185,752 48 Total GAR assets 2,528,348 1,226,616 55,471 52,380 2 871 233 12 12 1,243,218 55,703 52,380 2 883 49 Assets not covered for GAR calculation 760,635 50 Central governments and Supranational issuers 45,613 51 Central banks exposure 677,325 52 Trading book 37,697 53 Total assets 3,288,983 1,226,616 55,471 52,380 2 871 233 12 12 1,243,218 55,703 52,380 2 883 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 7,928 142 49 0 49 0 0 0 143 49 0 49 55 Assets under management 914,797 84,408 18,402 1,070 9,047 83,889 153 87 168,298 18,556 0 1,070 9,134 56 Of which debt securities 207,908 19,876 3,445 182 1,054 19,892 2 1 39,768 3,447 0 182 1,054 57 Of which equity instruments 695,965 63,485 14,466 888 7,971 62,939 150 85 126,424 14,616 0 888 8,056 Assets for the calculation of GAR – Turnover 332 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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SEK m 2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,302,491 1,226,616 55,471 52,380 2 871 233 12 12 1,243,218 55,703 52,380 2 883 2 Financial undertakings 32,802 642 1 0 1 2 15,370 1 0 1 3 Credit institutions 31,165 2 14,649 0 0 4 Loans and advances 4,192 2 1,194 0 0 5 Debt securities, including UoP 26,943 13,440 6 Equity instruments 31 16 7 Other financial corporations 1,637 642 1 0 1 720 1 0 1 8 Of which investment firms 834 372 0 0 0 372 0 0 0 9 Loans and advances 834 372 0 0 0 372 0 0 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 240 79 17 Loans and advances 240 79 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 59,864 16,149 3,089 2 869 230 12 12 18,023 3,322 2 882 21 Loans and advances 59,864 16,149 3,089 2 869 230 12 12 18,023 3,322 2 882 22 Debt securities, including UoP 23 Equity instruments 0 24 Households 1,209,825 1,209,825 52,380 52,380 1,209,825 52,380 52,380 25 Of which loans collateralised by residential immovable property 1,209,620 1,209,620 52,380 52,380 1,209,620 52,380 52,380 26 Of which building renovation loans 27 Of which motor vehicle loans 205 205 205 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,225,857 33 Financial and non-financial undertakings 1,022,376 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 611,303 35 Loans and advances 611,254 36 Of which loans collateralised by commercial immovable property 138,351 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 48 40 Non-EU country counterparties not subject to NFRD disclosure obligations 375,146 41 Loans and advances 370,531 42 Debt securities 4,532 43 Equity instruments 83 44 Derivatives 16,492 45 On demand interbank loans 1,228 46 Cash and cash-related assets 10 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 185,752 48 Total GAR assets 2,528,348 1,226,616 55,471 52,380 2 871 233 12 12 1,243,218 55,703 52,380 2 883 49 Assets not covered for GAR calculation 760,635 50 Central governments and Supranational issuers 45,613 51 Central banks exposure 677,325 52 Trading book 37,697 53 Total assets 3,288,983 1,226,616 55,471 52,380 2 871 233 12 12 1,243,218 55,703 52,380 2 883 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 7,928 142 49 0 49 0 0 0 143 49 0 49 55 Assets under management 914,797 84,408 18,402 1,070 9,047 83,889 153 87 168,298 18,556 0 1,070 9,134 56 Of which debt securities 207,908 19,876 3,445 182 1,054 19,892 2 1 39,768 3,447 0 182 1,054 57 Of which equity instruments 695,965 63,485 14,466 888 7,971 62,939 150 85 126,424 14,616 0 888 8,056 Assets for the calculation of GAR – Turnover 333 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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SEK m 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,333,834 1,282,594 86,910 77,753 809 1,581 194 10 0 12 341 1,046 0 1,284,187 86,920 77,753 809 1,581 2 Financial undertakings 45,959 24,621 1,928 10 11 28 0 0 0 24,649 1,928 10 11 3 Credit institutions 44,105 24,263 1,925 10 9 28 0 24,291 1,925 10 9 4 Loans and advances 11,817 7,927 1,079 2 1 9 0 7,936 1,079 2 1 5 Debt securities, including UoP 32,288 16,336 845 8 8 18 16,355 845 8 8 6 Equity instruments 7 Other financial corporations 1,854 358 3 0 2 0 0 358 3 0 2 8 Of which investment firms 1,651 225 0 0 0 0 0 225 0 0 0 9 Loans and advances 1,651 225 0 0 0 0 0 225 0 0 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 0 0 0 0 0 13 Loans and advances 0 0 0 0 0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 31 15 1 0 0 15 1 0 0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 31 15 1 15 1 20 Non-financial undertakings 57,381 27,478 7,230 799 1,570 166 10 0 12 341 1,046 0 29,044 7,240 799 1,570 21 Loans and advances 57,381 27,478 7,230 799 1,570 166 10 0 12 341 1,046 0 29,044 7,240 799 1,570 22 Debt securities, including UoP 23 Equity instruments 0 0 0 0 0 24 Households 1,230,494 1,230,494 77,753 77,753 1,230,494 77,753 77,753 25 Of which loans collateralised by residential immovable property 1,230,264 1,230,264 77,753 77,753 1,230,264 77,753 77,753 26 Of which building renovation loans 27 Of which motor vehicle loans 230 230 230 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,158,810 33 Financial and non-financial undertakings 1,007,823 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 620,079 35 Loans and advances 619,973 36 Of which loans collateralised by commercial immovable property 142,066 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 106 40 Non-EU country counterparties not subject to NFRD disclosure obligations 358,514 41 Loans and advances 358,252 42 Debt securities 262 43 Equity instruments 44 Derivatives 25,729 45 On demand interbank loans 653 46 Cash and cash-related assets 6 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 101,288 48 Total GAR assets 2,492,644 1,282,594 86,910 77,753 809 1,581 194 10 0 12 341 1,046 0 1,284,187 86,920 77,753 809 1,581 49 Assets not covered for GAR calculation 762,737 50 Central governments and Supranational issuers 35,932 51 Central banks exposure 679,578 52 Trading book 47,227 53 Total assets 3,255,381 1,282,594 86,910 77,753 809 1,581 194 10 0 12 341 1,046 0 1,284,187 86,920 77,753 809 1,581 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 8,228 263 41 0 40 10 12 285 41 0 40 55 Assets under management 848,420 44,883 16,957 1,279 6,442 5,054 116 8 3 1 0 3,751 187 16 1,093 2 372 0 55,156 17,263 1,279 6,467 56 Of which debt securities 215,787 438 165 67 30 108 0 0 0 0 0 1 18 565 165 67 30 57 Of which equity instruments 627,307 44,444 16,793 1,212 6,413 4,946 116 8 3 1 0 3,750 187 16 1,075 2 372 0 54,591 17,099 1,212 6,437 Assets for the calculation of GAR – Capital Expenditure (CapEx) 334 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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SEK m 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,333,834 1,282,594 86,910 77,753 809 1,581 194 10 0 12 341 1,046 0 1,284,187 86,920 77,753 809 1,581 2 Financial undertakings 45,959 24,621 1,928 10 11 28 0 0 0 24,649 1,928 10 11 3 Credit institutions 44,105 24,263 1,925 10 9 28 0 24,291 1,925 10 9 4 Loans and advances 11,817 7,927 1,079 2 1 9 0 7,936 1,079 2 1 5 Debt securities, including UoP 32,288 16,336 845 8 8 18 16,355 845 8 8 6 Equity instruments 7 Other financial corporations 1,854 358 3 0 2 0 0 358 3 0 2 8 Of which investment firms 1,651 225 0 0 0 0 0 225 0 0 0 9 Loans and advances 1,651 225 0 0 0 0 0 225 0 0 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 0 0 0 0 0 13 Loans and advances 0 0 0 0 0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 31 15 1 0 0 15 1 0 0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 31 15 1 15 1 20 Non-financial undertakings 57,381 27,478 7,230 799 1,570 166 10 0 12 341 1,046 0 29,044 7,240 799 1,570 21 Loans and advances 57,381 27,478 7,230 799 1,570 166 10 0 12 341 1,046 0 29,044 7,240 799 1,570 22 Debt securities, including UoP 23 Equity instruments 0 0 0 0 0 24 Households 1,230,494 1,230,494 77,753 77,753 1,230,494 77,753 77,753 25 Of which loans collateralised by residential immovable property 1,230,264 1,230,264 77,753 77,753 1,230,264 77,753 77,753 26 Of which building renovation loans 27 Of which motor vehicle loans 230 230 230 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,158,810 33 Financial and non-financial undertakings 1,007,823 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 620,079 35 Loans and advances 619,973 36 Of which loans collateralised by commercial immovable property 142,066 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 106 40 Non-EU country counterparties not subject to NFRD disclosure obligations 358,514 41 Loans and advances 358,252 42 Debt securities 262 43 Equity instruments 44 Derivatives 25,729 45 On demand interbank loans 653 46 Cash and cash-related assets 6 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 101,288 48 Total GAR assets 2,492,644 1,282,594 86,910 77,753 809 1,581 194 10 0 12 341 1,046 0 1,284,187 86,920 77,753 809 1,581 49 Assets not covered for GAR calculation 762,737 50 Central governments and Supranational issuers 35,932 51 Central banks exposure 679,578 52 Trading book 47,227 53 Total assets 3,255,381 1,282,594 86,910 77,753 809 1,581 194 10 0 12 341 1,046 0 1,284,187 86,920 77,753 809 1,581 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 8,228 263 41 0 40 10 12 285 41 0 40 55 Assets under management 848,420 44,883 16,957 1,279 6,442 5,054 116 8 3 1 0 3,751 187 16 1,093 2 372 0 55,156 17,263 1,279 6,467 56 Of which debt securities 215,787 438 165 67 30 108 0 0 0 0 0 1 18 565 165 67 30 57 Of which equity instruments 627,307 44,444 16,793 1,212 6,413 4,946 116 8 3 1 0 3,750 187 16 1,075 2 372 0 54,591 17,099 1,212 6,437 Assets for the calculation of GAR – Capital Expenditure (CapEx) 335 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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SEK m 2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,302,491 1,231,356 55,218 52,380 698 841 16 0 0 1,248,860 55,447 52,380 698 841 2 Financial undertakings 32,802 277 20 0 20 15,007 20 0 20 3 Credit institutions 31,165 14,649 0 0 4 Loans and advances 4,192 1,194 0 0 5 Debt securities, including UoP 26,943 13,440 6 Equity instruments 31 16 7 Other financial corporations 1,637 277 20 0 20 358 20 0 20 8 Of which investment firms 834 45 0 0 0 46 0 0 0 9 Loans and advances 834 45 0 0 0 46 0 0 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 240 79 17 Loans and advances 240 79 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 59,864 21,253 2,818 698 821 16 0 0 24,028 3,046 698 821 21 Loans and advances 59,864 21,253 2,818 698 821 16 0 0 24,208 3,046 698 821 22 Debt securities, including UoP 23 Equity instruments 0 24 Households 1,209,825 1,209,825 52,380 52,380 1,209,825 52,380 52,380 25 Of which loans collateralised by residential immovable property 1,209,620 1,209,620 52,380 52,380 1,209,620 52,380 52,380 26 Of which building renovation loans 27 Of which motor vehicle loans 205 205 205 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,225,857 33 Financial and non-financial undertakings 1,022,376 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 611,303 35 Loans and advances 611,254 36 Of which loans collateralised by commercial immovable property 138,351 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 48 40 Non-EU country counterparties not subject to NFRD disclosure obligations 375,146 41 Loans and advances 370,531 42 Debt securities 4,532 43 Equity instruments 83 44 Derivatives 16,492 45 On demand interbank loans 1,228 46 Cash and cash-related assets 10 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 185,752 48 Total GAR assets 2,528,348 1,231,356 55,218 52,380 698 841 16 0 0 1,248,860 55,447 52,380 698 841 49 Assets not covered for GAR calculation 760,635 50 Central governments and Supranational issuers 45,613 51 Central banks exposure 677,325 52 Trading book 37,697 53 Total assets 3,288,983 1,231,356 55,218 52,380 698 841 16 0 0 1,248,860 55,447 52,380 698 841 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 7,928 179 30 1 28 0 0 0 180 30 1 28 55 Assets under management 914,797 100,373 23,288 1,476 13,229 99,604 33 12 199,977 23,321 0 1,476 13,241 56 Of which debt securities 207,908 21,589 3,919 173 2,533 21,593 2 0 43,182 3,921 0 173 2,533 57 Of which equity instruments 695,965 77,692 19,141 1,303 10,678 76,912 31 12 154,605 19,172 0 1,303 10,690 Assets for the calculation of GAR – Capital Expenditure (CapEx) 336 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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SEK m 2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible) Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which enabling Of which environ- mentally sustainable (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Total gross carrying amount GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 1,302,491 1,231,356 55,218 52,380 698 841 16 0 0 1,248,860 55,447 52,380 698 841 2 Financial undertakings 32,802 277 20 0 20 15,007 20 0 20 3 Credit institutions 31,165 14,649 0 0 4 Loans and advances 4,192 1,194 0 0 5 Debt securities, including UoP 26,943 13,440 6 Equity instruments 31 16 7 Other financial corporations 1,637 277 20 0 20 358 20 0 20 8 Of which investment firms 834 45 0 0 0 46 0 0 0 9 Loans and advances 834 45 0 0 0 46 0 0 0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 240 79 17 Loans and advances 240 79 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 59,864 21,253 2,818 698 821 16 0 0 24,028 3,046 698 821 21 Loans and advances 59,864 21,253 2,818 698 821 16 0 0 24,208 3,046 698 821 22 Debt securities, including UoP 23 Equity instruments 0 24 Households 1,209,825 1,209,825 52,380 52,380 1,209,825 52,380 52,380 25 Of which loans collateralised by residential immovable property 1,209,620 1,209,620 52,380 52,380 1,209,620 52,380 52,380 26 Of which building renovation loans 27 Of which motor vehicle loans 205 205 205 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Assets excluded from the numerator for GAR calculation (covered in the denominator) 1,225,857 33 Financial and non-financial undertakings 1,022,376 34 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 611,303 35 Loans and advances 611,254 36 Of which loans collateralised by commercial immovable property 138,351 37 Of which building renovation loans 38 Debt securities 39 Equity instruments 48 40 Non-EU country counterparties not subject to NFRD disclosure obligations 375,146 41 Loans and advances 370,531 42 Debt securities 4,532 43 Equity instruments 83 44 Derivatives 16,492 45 On demand interbank loans 1,228 46 Cash and cash-related assets 10 47 Other categories of assets (e.g. Goodwill, commodities, etc.) 185,752 48 Total GAR assets 2,528,348 1,231,356 55,218 52,380 698 841 16 0 0 1,248,860 55,447 52,380 698 841 49 Assets not covered for GAR calculation 760,635 50 Central governments and Supranational issuers 45,613 51 Central banks exposure 677,325 52 Trading book 37,697 53 Total assets 3,288,983 1,231,356 55,218 52,380 698 841 16 0 0 1,248,860 55,447 52,380 698 841 Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations 54 Financial guarantees 7,928 179 30 1 28 0 0 0 180 30 1 28 55 Assets under management 914,797 100,373 23,288 1,476 13,229 99,604 33 12 199,977 23,321 0 1,476 13,241 56 Of which debt securities 207,908 21,589 3,919 173 2,533 21,593 2 0 43,182 3,921 0 173 2,533 57 Of which equity instruments 695,965 77,692 19,141 1,303 10,678 76,912 31 12 154,605 19,172 0 1,303 10,690 Assets for the calculation of GAR – Capital Expenditure (CapEx) 337 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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GAR sector information – Turnover Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 1 B0910 - Support activities for petroleum and natural gas extraction 0 0 0 0 2 C1061 - Manufacture of grain mill products 18 0 0 0 0 0 19 0 37 0 3 C1085 - Manufacture of prepared meals and dishes 6 0 0 0 0 0 7 0 13 0 4 C1623 - Manufacture of other builders' carpentry and joinery 0 0 0 0 0 0 5 C1712 - Manufacture of paper and paperboard 0 0 0 0 0 6 C1724 - Manufacture of wallpaper 0 0 0 0 7 C1729 - Manufacture of other articles of paper and paperboard 0 0 0 0 8 C2013 - Manufacture of other inorganic basic chemicals 241 0 241 0 9 C2014 - Manufacture of other organic basic chemicals 9 8 0 0 9 8 10 C2059 - Manufacture of other chemical products n.e.c. 0 0 0 0 0 11 C2120 - Manufacture of pharmaceutical preparations 0 0 0 0 0 12 C2219 - Manufacture of other rubber products 0 0 0 0 0 0 13 C2221 - Manufacture of plastic plates, sheets, tubes and profiles 1 0 0 0 1 0 14 C2229 - Manufacture of other plastic products 0 0 73 73 0 15 C2351 - Manufacture of cement 10 2 10 2 16 C2361 - Manufacture of concrete products for construction purposes 53 0 53 0 17 C2410 - Manufacture of basic iron and steel and of ferro-alloys 0 0 0 0 18 C2420 - Manufacture of tubes, pipes, hollow profiles and related fittings, of steel 18 18 18 18 19 C2433 - Cold forming or folding 0 0 0 0 0 0 20 C2445 - Other non-ferrous metal production 0 0 0 0 0 0 21 C2511 - Manufacture of metal structures and parts of structures 0 0 0 0 0 0 22 C2521 - Manufacture of central heating radiators and boilers 493 8 18 511 8 23 C2593 - Manufacture of wire products, chain and springs 0 0 0 0 0 0 24 C2599 - Manufacture of other fabricated metal products n.e.c. 0 0 0 0 0 0 25 C2611 - Manufacture of electronic components 494 97 0 494 97 26 C2620 - Manufacture of computers and peripheral equipment 0 0 0 0 0 0 27 C2630 - Manufacture of communication equipment 0 0 0 0 0 0 0 28 C2651 - Manufacture of instruments and appliances for measuring, testing and navigation 0 0 0 0 0 0 29 C2712 - Manufacture of electricity distribution and control apparatus 0 0 0 0 0 0 30 C2720 - Manufacture of batteries and accumulators 0 0 0 0 31 C2740 - Manufacture of electric lighting equipment 1,678 141 0 0 1,678 141 32 C2751 - Manufacture of electric domestic appliances 0 0 0 0 0 0 0 33 C2790 - Manufacture of other electrical equipment 0 0 0 0 34 C2811 - Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 0 0 0 0 0 0 0 35 C2812 - Manufacture of fluid power equipment 5 1 2 7 1 36 C2813 - Manufacture of other pumps and compressors 0 0 0 0 37 C2814 - Manufacture of other taps and valves 0 0 0 0 0 0 38 C2815 - Manufacture of bearings, gears, gearing and driving elements 0 0 0 0 0 39 C2822 - Manufacture of lifting and handling equipment 0 0 0 0 40 C2824 - Manufacture of power-driven hand tools 0 0 0 0 41 C2825 - Manufacture of non-domestic cooling and ventilation equipment 63 40 0 0 0 63 40 42 C2829 - Manufacture of other general-purpose machinery n.e.c. 1 0 1 9 11 0 43 C2849 - Manufacture of other machine tools 0 0 0 0 0 0 44 C2892 - Manufacture of machinery for mining, quarrying and construction 0 0 0 0 0 0 45 C2899 - Manufacture of other special-purpose machinery n.e.c. 0 0 0 1 2 0 46 C2931 - Manufacture of electrical and electronic equipment for motor vehicles 0 0 0 0 47 C2932 - Manufacture of other parts and accessories for motor vehicles 0 0 0 0 48 C3099 - Manufacture of other transport equipment n.e.c. 0 0 0 0 0 0 49 C3250 - Manufacture of medical and dental equipment 0 0 0 0 0 0 50 C3299 - Other manufacturing n.e.c. 5 5 51 C3312 - Repair of machinery 0 0 0 0 0 0 52 C3314 - Repair of electrical equipment 0 0 0 0 0 0 53 C3320 - Installation of industrial machinery and equipment 0 0 0 0 0 54 D3511 - Production of electricity 1,065 905 24 0 10 50 0 0 1,149 905 55 D3514 - Trade of electricity 0 0 0 0 0 0 0 0 0 0 56 E3700 - Sewerage 0 0 0 0 0 57 F4110 - Development of building projects 197 16 2 0 200 16 58 F4120 - Construction 12 0 12 0 59 F4120 - Construction of residential and non-residential buildings 1,172 8 0 0 0 0 0 1,172 8 60 F4212 - Construction of railways and underground railways 0 0 0 0 61 F4222 - Construction of utility projects for electricity and telecommunications 13 13 0 13 13 62 F4311 - Demolition 0 0 0 0 0 0 63 F4312 - Site preparation 41 4 7 0 0 3 51 4 64 F4321 - Electrical installation 1 0 0 0 0 0 0 0 1 0 65 F4322 - Plumbing, heat and air-conditioning installation 0 0 0 0 66 F4329 - Other construction installation 0 0 0 0 0 0 338 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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GAR sector information – Turnover Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 1 B0910 - Support activities for petroleum and natural gas extraction 0 0 0 0 2 C1061 - Manufacture of grain mill products 18 0 0 0 0 0 19 0 37 0 3 C1085 - Manufacture of prepared meals and dishes 6 0 0 0 0 0 7 0 13 0 4 C1623 - Manufacture of other builders' carpentry and joinery 0 0 0 0 0 0 5 C1712 - Manufacture of paper and paperboard 0 0 0 0 0 6 C1724 - Manufacture of wallpaper 0 0 0 0 7 C1729 - Manufacture of other articles of paper and paperboard 0 0 0 0 8 C2013 - Manufacture of other inorganic basic chemicals 241 0 241 0 9 C2014 - Manufacture of other organic basic chemicals 9 8 0 0 9 8 10 C2059 - Manufacture of other chemical products n.e.c. 0 0 0 0 0 11 C2120 - Manufacture of pharmaceutical preparations 0 0 0 0 0 12 C2219 - Manufacture of other rubber products 0 0 0 0 0 0 13 C2221 - Manufacture of plastic plates, sheets, tubes and profiles 1 0 0 0 1 0 14 C2229 - Manufacture of other plastic products 0 0 73 73 0 15 C2351 - Manufacture of cement 10 2 10 2 16 C2361 - Manufacture of concrete products for construction purposes 53 0 53 0 17 C2410 - Manufacture of basic iron and steel and of ferro-alloys 0 0 0 0 18 C2420 - Manufacture of tubes, pipes, hollow profiles and related fittings, of steel 18 18 18 18 19 C2433 - Cold forming or folding 0 0 0 0 0 0 20 C2445 - Other non-ferrous metal production 0 0 0 0 0 0 21 C2511 - Manufacture of metal structures and parts of structures 0 0 0 0 0 0 22 C2521 - Manufacture of central heating radiators and boilers 493 8 18 511 8 23 C2593 - Manufacture of wire products, chain and springs 0 0 0 0 0 0 24 C2599 - Manufacture of other fabricated metal products n.e.c. 0 0 0 0 0 0 25 C2611 - Manufacture of electronic components 494 97 0 494 97 26 C2620 - Manufacture of computers and peripheral equipment 0 0 0 0 0 0 27 C2630 - Manufacture of communication equipment 0 0 0 0 0 0 0 28 C2651 - Manufacture of instruments and appliances for measuring, testing and navigation 0 0 0 0 0 0 29 C2712 - Manufacture of electricity distribution and control apparatus 0 0 0 0 0 0 30 C2720 - Manufacture of batteries and accumulators 0 0 0 0 31 C2740 - Manufacture of electric lighting equipment 1,678 141 0 0 1,678 141 32 C2751 - Manufacture of electric domestic appliances 0 0 0 0 0 0 0 33 C2790 - Manufacture of other electrical equipment 0 0 0 0 34 C2811 - Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 0 0 0 0 0 0 0 35 C2812 - Manufacture of fluid power equipment 5 1 2 7 1 36 C2813 - Manufacture of other pumps and compressors 0 0 0 0 37 C2814 - Manufacture of other taps and valves 0 0 0 0 0 0 38 C2815 - Manufacture of bearings, gears, gearing and driving elements 0 0 0 0 0 39 C2822 - Manufacture of lifting and handling equipment 0 0 0 0 40 C2824 - Manufacture of power-driven hand tools 0 0 0 0 41 C2825 - Manufacture of non-domestic cooling and ventilation equipment 63 40 0 0 0 63 40 42 C2829 - Manufacture of other general-purpose machinery n.e.c. 1 0 1 9 11 0 43 C2849 - Manufacture of other machine tools 0 0 0 0 0 0 44 C2892 - Manufacture of machinery for mining, quarrying and construction 0 0 0 0 0 0 45 C2899 - Manufacture of other special-purpose machinery n.e.c. 0 0 0 1 2 0 46 C2931 - Manufacture of electrical and electronic equipment for motor vehicles 0 0 0 0 47 C2932 - Manufacture of other parts and accessories for motor vehicles 0 0 0 0 48 C3099 - Manufacture of other transport equipment n.e.c. 0 0 0 0 0 0 49 C3250 - Manufacture of medical and dental equipment 0 0 0 0 0 0 50 C3299 - Other manufacturing n.e.c. 5 5 51 C3312 - Repair of machinery 0 0 0 0 0 0 52 C3314 - Repair of electrical equipment 0 0 0 0 0 0 53 C3320 - Installation of industrial machinery and equipment 0 0 0 0 0 54 D3511 - Production of electricity 1,065 905 24 0 10 50 0 0 1,149 905 55 D3514 - Trade of electricity 0 0 0 0 0 0 0 0 0 0 56 E3700 - Sewerage 0 0 0 0 0 57 F4110 - Development of building projects 197 16 2 0 200 16 58 F4120 - Construction 12 0 12 0 59 F4120 - Construction of residential and non-residential buildings 1,172 8 0 0 0 0 0 1,172 8 60 F4212 - Construction of railways and underground railways 0 0 0 0 61 F4222 - Construction of utility projects for electricity and telecommunications 13 13 0 13 13 62 F4311 - Demolition 0 0 0 0 0 0 63 F4312 - Site preparation 41 4 7 0 0 3 51 4 64 F4321 - Electrical installation 1 0 0 0 0 0 0 0 1 0 65 F4322 - Plumbing, heat and air-conditioning installation 0 0 0 0 66 F4329 - Other construction installation 0 0 0 0 0 0 339 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 67 F4331 - Plastering 0 0 0 0 0 0 68 F4334 - Painting and glazing 0 0 0 0 19 0 0 0 69 F4391 - Roofing activities 0 0 0 0 7 0 0 0 70 F4399 - Other specialised construction activities n.e.c. 0 0 0 0 0 0 71 G4531 - Wholesale trade of motor vehicle parts and accessories 0 0 0 0 0 72 G4614 - Agents involved in the sale of machinery, industrial equipment, ships and aircraft 0 0 4 0 73 G4615 - Agents involved in the sale of furniture, household goods, hardware and ironmongery 0 0 0 0 74 G4642 - Wholesale of clothing and footwear 0 0 0 0 75 G4643 - Wholesale of electrical household appliances and equipment 0 0 0 0 76 G4645 - Wholesale of perfume and cosmetics 0 0 0 0 0 77 G4646 - Wholesale of pharmaceutical goods 0 0 0 0 0 78 G4649 - Wholesale of other household goods 0 0 0 0 485 0 79 G4651 - Wholesale of computers, computer peripheral equipment and software 0 0 0 0 0 0 80 G4652 - Wholesale of electronic and telecommunications equipment and parts 0 0 73 0 0 81 G4662 - Wholesale of machine tools 0 0 0 0 82 G4663 - Wholesale of mining, construction and civil engineering machinery 0 0 33 0 83 G4666 - Wholesale of other office machinery and equipment 0 0 0 0 84 G4669 - Wholesale of other machinery and equipment 2 0 0 0 2 0 85 G4672 - Wholesale of metals and metal ores 0 0 0 0 0 0 0 0 86 G4673 - Wholesale of wood, construction materials and sanitary equipment 0 0 0 0 87 G4674 - Wholesale of hardware, plumbing and heating equipment and supplies 0 0 0 0 0 0 88 G4675 - Wholesale of chemical products 0 0 18 0 0 89 G4676 - Wholesale of other intermediate products 0 0 0 0 0 0 90 G4690 - Non-specialised wholesale trade 0 0 0 0 0 0 91 G4711 - Retail sale in non-specialised stores with food, beverages or tobacco predominating 0 0 0 0 0 92 G4752 - Retail sale of hardware, paints and glass in specialised stores 0 0 0 0 0 0 93 G4771 - Retail sale of clothing in specialised stores 0 0 0 0 0 94 G4791 - Retail sale via mail order houses or via Internet 0 0 0 0 0 0 95 H5010 - Sea and coastal passenger water transport 0 0 0 0 0 0 96 H5223 - Service activities incidental to air transportation 0 0 0 0 97 I5510 - Hotels and similar accommodation 1,733 179 0 0 3,104 179 98 J5813 - Publishing of newspapers 26 0 0 26 0 99 J5821 - Publishing of computer games 0 0 0 0 0 0 100 J5829 - Other software publishing 0 0 0 0 0 0 0 101 J5911 - Motion picture, video and television programme production activities 0 0 0 0 2 0 0 102 J6110 - Wired telecommunications activities 0 0 0 0 103 J6120 - Wireless telecommunications activities 0 0 0 0 0 0 0 0 104 J6201 - Computer programming activities 0 0 0 0 0 0 105 J6202 - Computer consultancy activities 0 0 0 0 106 K6420 - Activities of holding companies 110 14 110 14 107 K6420 - Financial and insurance activities 365 4 64 13 442 4 108 K6492 - Other credit granting 103 16 27 0 4 11 0 0 144 16 109 K6499 - Other financial service activities, except insurance and pension funding n.e.c. 1 0 1 1 0 110 K6619 - Other activities auxiliary to financial services, except insurance and pension funding 38 38 43 81 38 111 L6810 - Buying and selling of own real estate 120 0 120 0 112 L6820 - Renting and operating of own or leased real estate 7,395 992 87 0 12 34 0 0 7,527 992 113 L6832 - Management of real estate on a fee or contract basis 0 0 0 0 114 M7010 - Activities of head offices 3,675 1,639 0 0 3,675 1,639 115 M7022 - Business and other management consultancy activities 0 0 0 0 0 116 M7112 - Engineering activities and related technical consultancy 326 34 80 7 5 11 7 1 431 41 117 M7211 - Research and experimental development on biotechnology 124 1 22 5 150 1 118 M7219 - Other research and experimental development on natural sciences and engineering 0 0 0 0 0 119 M7220 - Research and experimental development on social sciences and humanities 0 0 0 0 120 M7311 - Advertising agencies 0 0 0 0 0 0 0 121 M7490 - Other professional, scientific and technical activities n.e.c. 0 0 0 0 122 N8110 - Combined facilities support activities 0 0 0 0 0 123 N8299 - Other business support service activities n.e.c. 831 83 735 1,565 83 124 R9329 - Other amusement and recreation activities 0 0 0 0 0 GAR sector information – Turnover cont. 340 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 67 F4331 - Plastering 0 0 0 0 0 0 68 F4334 - Painting and glazing 0 0 0 0 19 0 0 0 69 F4391 - Roofing activities 0 0 0 0 7 0 0 0 70 F4399 - Other specialised construction activities n.e.c. 0 0 0 0 0 0 71 G4531 - Wholesale trade of motor vehicle parts and accessories 0 0 0 0 0 72 G4614 - Agents involved in the sale of machinery, industrial equipment, ships and aircraft 0 0 4 0 73 G4615 - Agents involved in the sale of furniture, household goods, hardware and ironmongery 0 0 0 0 74 G4642 - Wholesale of clothing and footwear 0 0 0 0 75 G4643 - Wholesale of electrical household appliances and equipment 0 0 0 0 76 G4645 - Wholesale of perfume and cosmetics 0 0 0 0 0 77 G4646 - Wholesale of pharmaceutical goods 0 0 0 0 0 78 G4649 - Wholesale of other household goods 0 0 0 0 485 0 79 G4651 - Wholesale of computers, computer peripheral equipment and software 0 0 0 0 0 0 80 G4652 - Wholesale of electronic and telecommunications equipment and parts 0 0 73 0 0 81 G4662 - Wholesale of machine tools 0 0 0 0 82 G4663 - Wholesale of mining, construction and civil engineering machinery 0 0 33 0 83 G4666 - Wholesale of other office machinery and equipment 0 0 0 0 84 G4669 - Wholesale of other machinery and equipment 2 0 0 0 2 0 85 G4672 - Wholesale of metals and metal ores 0 0 0 0 0 0 0 0 86 G4673 - Wholesale of wood, construction materials and sanitary equipment 0 0 0 0 87 G4674 - Wholesale of hardware, plumbing and heating equipment and supplies 0 0 0 0 0 0 88 G4675 - Wholesale of chemical products 0 0 18 0 0 89 G4676 - Wholesale of other intermediate products 0 0 0 0 0 0 90 G4690 - Non-specialised wholesale trade 0 0 0 0 0 0 91 G4711 - Retail sale in non-specialised stores with food, beverages or tobacco predominating 0 0 0 0 0 92 G4752 - Retail sale of hardware, paints and glass in specialised stores 0 0 0 0 0 0 93 G4771 - Retail sale of clothing in specialised stores 0 0 0 0 0 94 G4791 - Retail sale via mail order houses or via Internet 0 0 0 0 0 0 95 H5010 - Sea and coastal passenger water transport 0 0 0 0 0 0 96 H5223 - Service activities incidental to air transportation 0 0 0 0 97 I5510 - Hotels and similar accommodation 1,733 179 0 0 3,104 179 98 J5813 - Publishing of newspapers 26 0 0 26 0 99 J5821 - Publishing of computer games 0 0 0 0 0 0 100 J5829 - Other software publishing 0 0 0 0 0 0 0 101 J5911 - Motion picture, video and television programme production activities 0 0 0 0 2 0 0 102 J6110 - Wired telecommunications activities 0 0 0 0 103 J6120 - Wireless telecommunications activities 0 0 0 0 0 0 0 0 104 J6201 - Computer programming activities 0 0 0 0 0 0 105 J6202 - Computer consultancy activities 0 0 0 0 106 K6420 - Activities of holding companies 110 14 110 14 107 K6420 - Financial and insurance activities 365 4 64 13 442 4 108 K6492 - Other credit granting 103 16 27 0 4 11 0 0 144 16 109 K6499 - Other financial service activities, except insurance and pension funding n.e.c. 1 0 1 1 0 110 K6619 - Other activities auxiliary to financial services, except insurance and pension funding 38 38 43 81 38 111 L6810 - Buying and selling of own real estate 120 0 120 0 112 L6820 - Renting and operating of own or leased real estate 7,395 992 87 0 12 34 0 0 7,527 992 113 L6832 - Management of real estate on a fee or contract basis 0 0 0 0 114 M7010 - Activities of head offices 3,675 1,639 0 0 3,675 1,639 115 M7022 - Business and other management consultancy activities 0 0 0 0 0 116 M7112 - Engineering activities and related technical consultancy 326 34 80 7 5 11 7 1 431 41 117 M7211 - Research and experimental development on biotechnology 124 1 22 5 150 1 118 M7219 - Other research and experimental development on natural sciences and engineering 0 0 0 0 0 119 M7220 - Research and experimental development on social sciences and humanities 0 0 0 0 120 M7311 - Advertising agencies 0 0 0 0 0 0 0 121 M7490 - Other professional, scientific and technical activities n.e.c. 0 0 0 0 122 N8110 - Combined facilities support activities 0 0 0 0 0 123 N8299 - Other business support service activities n.e.c. 831 83 735 1,565 83 124 R9329 - Other amusement and recreation activities 0 0 0 0 0 341 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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GAR sector information – CapEx Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 1 B0910 - Support activities for petroleum and natural gas extraction 0 0 0 0 2 C1061 - Manufacture of grain mill products 300 53 0 0 0 1 0 0 301 53 3 C1072 - Manufacture of rusks and biscuits; manufacture of preserved pastry goods and cakes 0 0 0 0 4 C1082 - Manufacture of cocoa, chocolate and sugar confectionery 152 0 152 0 5 C1085 - Manufacture of prepared meals and dishes 109 19 0 0 0 0 0 0 110 19 6 C1623 - Manufacture of other builders' carpentry and joinery 0 0 0 0 0 0 7 C1712 - Manufacture of paper and paperboard 0 0 0 0 0 8 C1724 - Manufacture of wallpaper 0 0 0 0 9 C1729 - Manufacture of other articles of paper and paperboard 0 0 0 0 10 C2013 - Manufacture of other inorganic basic chemicals 391 0 0 0 391 0 11 C2014 - Manufacture of other organic basic chemicals 15 15 0 0 15 15 12 C2059 - Manufacture of other chemical products n.e.c. 0 0 0 0 0 13 C2120 - Manufacture of pharmaceutical preparations 0 0 0 0 0 14 C2219 - Manufacture of other rubber products 0 0 0 0 0 0 15 C2221 - Manufacture of plastic plates, sheets, tubes and profiles 0 0 0 0 0 0 16 C2223 - Manufacture of builders’ ware of plastic 0 0 0 0 17 C2229 - Manufacture of other plastic products 0 0 0 0 84 84 0 18 C2351 - Manufacture of cement 17 2 17 2 19 C2361 - Manufacture of concrete products for construction purposes 119 0 119 0 20 C2410 - Manufacture of basic iron and steel and of ferro-alloys 0 0 0 0 21 C2420 - Manufacture of tubes, pipes, hollow profiles and related fittings, of steel 9 9 9 9 22 C2433 - Cold forming or folding 0 0 0 0 0 0 23 C2511 - Manufacture of metal structures and parts of structures 306 9 12 9 0 0 317 18 24 C2512 - Manufacture of doors and windows of metal 0 0 0 0 25 C2521 - Manufacture of central heating radiators and boilers 543 20 0 543 20 26 C2562 - Machining 0 0 0 0 27 C2593 - Manufacture of wire products, chain and springs 0 0 0 0 0 0 28 C2594 - Manufacture of fasteners and screw machine products 0 0 0 0 0 0 29 C2599 - Manufacture of other fabricated metal products n.e.c. 0 0 0 0 0 0 0 0 30 C2611 - Manufacture of electronic components 806 22 0 0 0 806 22 31 C2620 - Manufacture of computers and peripheral equipment 0 0 0 0 0 0 32 C2630 - Manufacture of communication equipment 0 0 0 0 0 0 0 33 C2651 - Manufacture of instruments and appliances for measuring, testing and navigation 0 0 0 0 0 0 0 0 34 C2712 - Manufacture of electricity distribution and control apparatus 0 0 0 0 0 0 35 C2720 - Manufacture of batteries and accumulators 1 1 1 1 36 C2733 - Manufacture of wiring devices 0 0 0 0 37 C2740 - Manufacture of electric lighting equipment 1,020 94 0 0 1,020 94 38 C2751 - Manufacture of electric domestic appliances 0 0 0 0 0 0 0 39 C2790 - Manufacture of other electrical equipment 0 0 0 0 40 C2811 - Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 0 0 0 0 0 0 0 41 C2812 - Manufacture of fluid power equipment 2 0 2 4 0 42 C2813 - Manufacture of other pumps and compressors 0 0 0 0 43 C2814 - Manufacture of other taps and valves 0 0 0 0 0 0 44 C2815 - Manufacture of bearings, gears, gearing and driving elements 0 0 0 0 0 45 C2822 - Manufacture of lifting and handling equipment 0 0 0 0 46 C2824 - Manufacture of power-driven hand tools 0 0 0 0 47 C2825 - Manufacture of non-domestic cooling and ventilation equipment 58 46 0 0 0 58 46 48 C2829 - Manufacture of other general-purpose machinery n.e.c. 21 0 0 2 22 0 49 C2849 - Manufacture of other machine tools 0 0 0 0 0 0 50 C2892 - Manufacture of machinery for mining, quarrying and construction 0 0 0 0 0 0 51 C2899 - Manufacture of other special-purpose machinery n.e.c. 3 0 0 0 0 3 0 52 C2931 - Manufacture of electrical and electronic equipment for motor vehicles 0 0 0 0 53 C2932 - Manufacture of other parts and accessories for motor vehicles 0 0 0 0 54 C3099 - Manufacture of other transport equipment n.e.c. 0 0 0 0 0 0 55 C3101 - Manufacture of office and shop furniture and fittings 1,083 717 1,083 717 56 C3250 - Manufacture of medical and dental equipment 2 0 0 0 0 0 2 0 57 C3291 - Manufacture of brooms and brushes 0 0 0 0 58 C3299 - Other manufacturing n.e.c. 5 5 59 C3312 - Repair of machinery 0 0 0 0 0 0 60 C3314 - Repair of electrical equipment 0 0 0 0 0 0 61 C3320 - Installation of industrial machinery and equipment 0 0 0 0 0 62 D3511 - Production of electricity 1,080 914 15 1 12 0 0 0 1,108 916 63 D3514 - Trade of electricity 0 0 0 0 0 0 0 0 0 0 64 E3700 - Sewerage 0 0 0 0 0 65 F4110 - Development of building projects 210 87 4 0 215 87 66 F4120 - Construction 4 3 4 3 342 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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GAR sector information – CapEx Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 1 B0910 - Support activities for petroleum and natural gas extraction 0 0 0 0 2 C1061 - Manufacture of grain mill products 300 53 0 0 0 1 0 0 301 53 3 C1072 - Manufacture of rusks and biscuits; manufacture of preserved pastry goods and cakes 0 0 0 0 4 C1082 - Manufacture of cocoa, chocolate and sugar confectionery 152 0 152 0 5 C1085 - Manufacture of prepared meals and dishes 109 19 0 0 0 0 0 0 110 19 6 C1623 - Manufacture of other builders' carpentry and joinery 0 0 0 0 0 0 7 C1712 - Manufacture of paper and paperboard 0 0 0 0 0 8 C1724 - Manufacture of wallpaper 0 0 0 0 9 C1729 - Manufacture of other articles of paper and paperboard 0 0 0 0 10 C2013 - Manufacture of other inorganic basic chemicals 391 0 0 0 391 0 11 C2014 - Manufacture of other organic basic chemicals 15 15 0 0 15 15 12 C2059 - Manufacture of other chemical products n.e.c. 0 0 0 0 0 13 C2120 - Manufacture of pharmaceutical preparations 0 0 0 0 0 14 C2219 - Manufacture of other rubber products 0 0 0 0 0 0 15 C2221 - Manufacture of plastic plates, sheets, tubes and profiles 0 0 0 0 0 0 16 C2223 - Manufacture of builders’ ware of plastic 0 0 0 0 17 C2229 - Manufacture of other plastic products 0 0 0 0 84 84 0 18 C2351 - Manufacture of cement 17 2 17 2 19 C2361 - Manufacture of concrete products for construction purposes 119 0 119 0 20 C2410 - Manufacture of basic iron and steel and of ferro-alloys 0 0 0 0 21 C2420 - Manufacture of tubes, pipes, hollow profiles and related fittings, of steel 9 9 9 9 22 C2433 - Cold forming or folding 0 0 0 0 0 0 23 C2511 - Manufacture of metal structures and parts of structures 306 9 12 9 0 0 317 18 24 C2512 - Manufacture of doors and windows of metal 0 0 0 0 25 C2521 - Manufacture of central heating radiators and boilers 543 20 0 543 20 26 C2562 - Machining 0 0 0 0 27 C2593 - Manufacture of wire products, chain and springs 0 0 0 0 0 0 28 C2594 - Manufacture of fasteners and screw machine products 0 0 0 0 0 0 29 C2599 - Manufacture of other fabricated metal products n.e.c. 0 0 0 0 0 0 0 0 30 C2611 - Manufacture of electronic components 806 22 0 0 0 806 22 31 C2620 - Manufacture of computers and peripheral equipment 0 0 0 0 0 0 32 C2630 - Manufacture of communication equipment 0 0 0 0 0 0 0 33 C2651 - Manufacture of instruments and appliances for measuring, testing and navigation 0 0 0 0 0 0 0 0 34 C2712 - Manufacture of electricity distribution and control apparatus 0 0 0 0 0 0 35 C2720 - Manufacture of batteries and accumulators 1 1 1 1 36 C2733 - Manufacture of wiring devices 0 0 0 0 37 C2740 - Manufacture of electric lighting equipment 1,020 94 0 0 1,020 94 38 C2751 - Manufacture of electric domestic appliances 0 0 0 0 0 0 0 39 C2790 - Manufacture of other electrical equipment 0 0 0 0 40 C2811 - Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 0 0 0 0 0 0 0 41 C2812 - Manufacture of fluid power equipment 2 0 2 4 0 42 C2813 - Manufacture of other pumps and compressors 0 0 0 0 43 C2814 - Manufacture of other taps and valves 0 0 0 0 0 0 44 C2815 - Manufacture of bearings, gears, gearing and driving elements 0 0 0 0 0 45 C2822 - Manufacture of lifting and handling equipment 0 0 0 0 46 C2824 - Manufacture of power-driven hand tools 0 0 0 0 47 C2825 - Manufacture of non-domestic cooling and ventilation equipment 58 46 0 0 0 58 46 48 C2829 - Manufacture of other general-purpose machinery n.e.c. 21 0 0 2 22 0 49 C2849 - Manufacture of other machine tools 0 0 0 0 0 0 50 C2892 - Manufacture of machinery for mining, quarrying and construction 0 0 0 0 0 0 51 C2899 - Manufacture of other special-purpose machinery n.e.c. 3 0 0 0 0 3 0 52 C2931 - Manufacture of electrical and electronic equipment for motor vehicles 0 0 0 0 53 C2932 - Manufacture of other parts and accessories for motor vehicles 0 0 0 0 54 C3099 - Manufacture of other transport equipment n.e.c. 0 0 0 0 0 0 55 C3101 - Manufacture of office and shop furniture and fittings 1,083 717 1,083 717 56 C3250 - Manufacture of medical and dental equipment 2 0 0 0 0 0 2 0 57 C3291 - Manufacture of brooms and brushes 0 0 0 0 58 C3299 - Other manufacturing n.e.c. 5 5 59 C3312 - Repair of machinery 0 0 0 0 0 0 60 C3314 - Repair of electrical equipment 0 0 0 0 0 0 61 C3320 - Installation of industrial machinery and equipment 0 0 0 0 0 62 D3511 - Production of electricity 1,080 914 15 1 12 0 0 0 1,108 916 63 D3514 - Trade of electricity 0 0 0 0 0 0 0 0 0 0 64 E3700 - Sewerage 0 0 0 0 0 65 F4110 - Development of building projects 210 87 4 0 215 87 66 F4120 - Construction 4 3 4 3 343 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 67 F4120 - Construction of residential and non-residential buildings 628 222 0 0 0 0 0 628 222 68 F4212 - Construction of railways and underground railways 1 0 1 0 69 F4222 - Construction of utility projects for electricity and telecommunications 12 11 0 12 11 70 F4311 - Demolition 0 0 0 0 0 0 71 F4312 - Site preparation 34 0 7 0 0 3 44 0 72 F4321 - Electrical installation 0 0 0 0 0 0 0 0 0 0 73 F4322 - Plumbing, heat and air-conditioning installation 0 0 0 0 0 0 74 F4329 - Other construction installation 0 0 0 0 0 0 75 F4331 - Plastering 0 0 0 0 0 0 76 F4334 - Painting and glazing 0 0 0 0 0 77 F4399 - Other specialised construction activities n.e.c. 0 0 0 0 0 78 G4531 - Wholesale trade of motor vehicle parts and accessories 0 0 0 0 0 0 0 0 79 G4614 - Agents involved in the sale of machinery, industrial equipment, ships and aircraft 3 0 0 0 3 0 80 G4615 - Agents involved in the sale of furniture, household goods, hardware and ironmongery 0 0 0 0 0 0 81 G4642 - Wholesale of clothing and footwear 0 0 0 0 0 82 G4643 - Wholesale of electrical household appliances and equipment 0 0 0 0 0 0 0 0 83 G4645 - Wholesale of perfume and cosmetics 0 0 0 0 0 84 G4646 - Wholesale of pharmaceutical goods 2,065 0 0 0 0 0 2,065 0 85 G4649 - Wholesale of other household goods 0 0 0 1,044 1,044 0 86 G4651 - Wholesale of computers, computer peripheral equipment and software 0 0 0 0 87 G4652 - Wholesale of electronic and telecommunications equipment and parts 0 0 0 0 0 0 0 0 88 G4662 - Wholesale of machine tools 0 0 0 0 0 0 89 G4663 - Wholesale of mining, construction and civil engineering machinery 21 0 0 0 21 0 90 G4666 - Wholesale of other office machinery and equipment 0 0 0 0 0 91 G4669 - Wholesale of other machinery and equipment 2 0 0 0 0 0 2 0 92 G4672 - Wholesale of metals and metal ores 0 0 0 0 0 0 0 0 93 G4673 - Wholesale of wood, construction materials and sanitary equipment 0 0 0 0 0 0 94 G4674 - Wholesale of hardware, plumbing and heating equipment and supplies 0 0 0 0 0 0 1 0 95 G4675 - Wholesale of chemical products 0 0 0 0 0 0 0 0 96 G4676 - Wholesale of other intermediate products 0 0 0 0 0 0 0 0 97 G4690 - Non-specialised wholesale trade 0 0 0 0 0 0 98 G4711 - Retail sale in non-specialised stores with food, beverages or tobacco predominating 2 0 2 0 99 G4752 - Retail sale of hardware, paints and glass in specialised stores 0 0 0 0 0 100 G4771 - Retail sale of clothing in specialised stores 0 0 0 0 0 101 G4799 - Other retail sale not in stores, stalls or markets 0 0 0 0 0 0 102 H5010 - Sea and coastal passenger water transport 0 0 0 0 103 H5223 - Service activities incidental to air transportation 0 0 0 0 0 104 I5510 - Hotels and similar accommodation 3,157 182 0 3,157 182 105 J5813 - Publishing of newspapers 75 0 75 0 106 J5821 - Publishing of computer games 0 0 0 0 0 0 107 J5829 - Other software publishing 0 0 0 0 0 0 0 0 108 J5911 - Motion picture, video and television programme production activities 0 0 0 0 0 0 0 0 0 0 109 J6110 - Wired telecommunications activities 0 0 0 0 0 110 J6120 - Wireless telecommunications activities 0 0 0 0 0 0 0 111 J6190 - Other telecommunications activities 172 0 172 0 112 J6201 - Computer programming activities 0 0 0 0 0 0 0 0 113 J6202 - Computer consultancy activities 0 0 0 0 114 K6420 - Activities of holding companies 110 55 110 55 115 K6420 - Financial and insurance activities 495 266 7 1 503 266 116 K6492 - Other credit granting 57 48 14 0 0 28 0 0 99 48 117 K6499 - Other financial service activities, except insurance and pension funding n.e.c. 2 0 0 2 0 118 K6619 - Other activities auxiliary to financial services, except insurance and pension funding 31 32 99 130 32 119 L6810 - Buying and selling of own real estate 137 18 137 18 120 L6820 - Renting and operating of own or leased real estate 8,072 2,986 44 0 0 93 0 0 8,209 2,986 121 L6832 - Management of real estate on a fee or contract basis 0 0 0 0 122 M7010 - Activities of head offices 3,664 1,251 0 0 0 0 3,664 1,251 123 M7022 - Business and other management consultancy activities 27 0 0 27 0 124 M7112 - Engineering activities and related technical consultancy 766 6 0 0 0 9 0 0 775 6 125 M7120 - Technical testing and analysis 0 0 0 0 126 M7211 - Research and experimental development on biotechnology 169 90 3 1 172 90 127 M7219 - Other research and experimental development on natural sciences and engineering 0 0 0 0 0 128 M7220 - Research and experimental development on social sciences and humanities 0 0 0 0 129 M7311 - Advertising agencies 0 0 0 0 0 0 0 130 M7410 - Specialised design activities 0 0 0 0 131 M7490 - Other professional, scientific and technical activities n.e.c. 0 0 0 0 132 N8110 - Combined facilities support activities 0 0 0 0 0 133 N8299 - Other business support service activities n.e.c. 1,594 49 0 1,594 49 134 Q8810 - Social work activities without accommodation for the elderly and disabled 0 0 0 0 0 0 135 R9329 - Other amusement and recreation activities 0 0 0 0 0 GAR sector information – CapEx cont. 344 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD Breakdown by sector – NACE 4 digits level (code and label) Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount SEK m of which environ mentally sustainable (CCM) SEK m of which environmentally sustainable (CCM) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (CCA) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (WTR) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (CE) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (PPC) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (BIO) SEK m of which environmentally sustainable (TOTAL) SEK m of which environmentally sustainable (TOTAL) 67 F4120 - Construction of residential and non-residential buildings 628 222 0 0 0 0 0 628 222 68 F4212 - Construction of railways and underground railways 1 0 1 0 69 F4222 - Construction of utility projects for electricity and telecommunications 12 11 0 12 11 70 F4311 - Demolition 0 0 0 0 0 0 71 F4312 - Site preparation 34 0 7 0 0 3 44 0 72 F4321 - Electrical installation 0 0 0 0 0 0 0 0 0 0 73 F4322 - Plumbing, heat and air-conditioning installation 0 0 0 0 0 0 74 F4329 - Other construction installation 0 0 0 0 0 0 75 F4331 - Plastering 0 0 0 0 0 0 76 F4334 - Painting and glazing 0 0 0 0 0 77 F4399 - Other specialised construction activities n.e.c. 0 0 0 0 0 78 G4531 - Wholesale trade of motor vehicle parts and accessories 0 0 0 0 0 0 0 0 79 G4614 - Agents involved in the sale of machinery, industrial equipment, ships and aircraft 3 0 0 0 3 0 80 G4615 - Agents involved in the sale of furniture, household goods, hardware and ironmongery 0 0 0 0 0 0 81 G4642 - Wholesale of clothing and footwear 0 0 0 0 0 82 G4643 - Wholesale of electrical household appliances and equipment 0 0 0 0 0 0 0 0 83 G4645 - Wholesale of perfume and cosmetics 0 0 0 0 0 84 G4646 - Wholesale of pharmaceutical goods 2,065 0 0 0 0 0 2,065 0 85 G4649 - Wholesale of other household goods 0 0 0 1,044 1,044 0 86 G4651 - Wholesale of computers, computer peripheral equipment and software 0 0 0 0 87 G4652 - Wholesale of electronic and telecommunications equipment and parts 0 0 0 0 0 0 0 0 88 G4662 - Wholesale of machine tools 0 0 0 0 0 0 89 G4663 - Wholesale of mining, construction and civil engineering machinery 21 0 0 0 21 0 90 G4666 - Wholesale of other office machinery and equipment 0 0 0 0 0 91 G4669 - Wholesale of other machinery and equipment 2 0 0 0 0 0 2 0 92 G4672 - Wholesale of metals and metal ores 0 0 0 0 0 0 0 0 93 G4673 - Wholesale of wood, construction materials and sanitary equipment 0 0 0 0 0 0 94 G4674 - Wholesale of hardware, plumbing and heating equipment and supplies 0 0 0 0 0 0 1 0 95 G4675 - Wholesale of chemical products 0 0 0 0 0 0 0 0 96 G4676 - Wholesale of other intermediate products 0 0 0 0 0 0 0 0 97 G4690 - Non-specialised wholesale trade 0 0 0 0 0 0 98 G4711 - Retail sale in non-specialised stores with food, beverages or tobacco predominating 2 0 2 0 99 G4752 - Retail sale of hardware, paints and glass in specialised stores 0 0 0 0 0 100 G4771 - Retail sale of clothing in specialised stores 0 0 0 0 0 101 G4799 - Other retail sale not in stores, stalls or markets 0 0 0 0 0 0 102 H5010 - Sea and coastal passenger water transport 0 0 0 0 103 H5223 - Service activities incidental to air transportation 0 0 0 0 0 104 I5510 - Hotels and similar accommodation 3,157 182 0 3,157 182 105 J5813 - Publishing of newspapers 75 0 75 0 106 J5821 - Publishing of computer games 0 0 0 0 0 0 107 J5829 - Other software publishing 0 0 0 0 0 0 0 0 108 J5911 - Motion picture, video and television programme production activities 0 0 0 0 0 0 0 0 0 0 109 J6110 - Wired telecommunications activities 0 0 0 0 0 110 J6120 - Wireless telecommunications activities 0 0 0 0 0 0 0 111 J6190 - Other telecommunications activities 172 0 172 0 112 J6201 - Computer programming activities 0 0 0 0 0 0 0 0 113 J6202 - Computer consultancy activities 0 0 0 0 114 K6420 - Activities of holding companies 110 55 110 55 115 K6420 - Financial and insurance activities 495 266 7 1 503 266 116 K6492 - Other credit granting 57 48 14 0 0 28 0 0 99 48 117 K6499 - Other financial service activities, except insurance and pension funding n.e.c. 2 0 0 2 0 118 K6619 - Other activities auxiliary to financial services, except insurance and pension funding 31 32 99 130 32 119 L6810 - Buying and selling of own real estate 137 18 137 18 120 L6820 - Renting and operating of own or leased real estate 8,072 2,986 44 0 0 93 0 0 8,209 2,986 121 L6832 - Management of real estate on a fee or contract basis 0 0 0 0 122 M7010 - Activities of head offices 3,664 1,251 0 0 0 0 3,664 1,251 123 M7022 - Business and other management consultancy activities 27 0 0 27 0 124 M7112 - Engineering activities and related technical consultancy 766 6 0 0 0 9 0 0 775 6 125 M7120 - Technical testing and analysis 0 0 0 0 126 M7211 - Research and experimental development on biotechnology 169 90 3 1 172 90 127 M7219 - Other research and experimental development on natural sciences and engineering 0 0 0 0 0 128 M7220 - Research and experimental development on social sciences and humanities 0 0 0 0 129 M7311 - Advertising agencies 0 0 0 0 0 0 0 130 M7410 - Specialised design activities 0 0 0 0 131 M7490 - Other professional, scientific and technical activities n.e.c. 0 0 0 0 132 N8110 - Combined facilities support activities 0 0 0 0 0 133 N8299 - Other business support service activities n.e.c. 1,594 49 0 1,594 49 134 Q8810 - Social work activities without accommodation for the elderly and disabled 0 0 0 0 0 0 135 R9329 - Other amusement and recreation activities 0 0 0 0 0 345 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 95.7 6.3 5.8 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.2 95.9 6.3 5.8 0.0 0.1 41.0 2 Financial undertakings 54.5 4.2 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 54.7 4.2 0.0 0.0 1.4 3 Credit institutions 55.0 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 55.0 4.3 0.0 0.0 1.4 4 Loans and advances 67.1 9.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 67.1 9.1 0.0 0.0 0.4 5 Debt securities, including UoP 50.5 2.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 50.6 2.6 0.0 0.0 1.0 6 Equity instruments 7 Other financial corporations 44.4 0.1 0.0 0.0 0.0 0.0 0.0 0.0 3.6 0.0 0.0 48.0 0.1 0.0 0.0 0.1 8 Of which investment firms 42.7 0.0 0.0 0.0 3.9 0.0 46.6 0.0 0.0 0.0 0.1 9 Loans and advances 42.7 0.0 0.0 0.0 3.9 0.0 46.6 0.0 0.0 0.0 0.1 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 13 Loans and advances 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 48.5 2.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.3 0.1 0.0 0.0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 20 Non-financial undertakings 35.6 7.4 1.1 2.3 0.4 0.0 0.0 0.1 0.7 0.9 3.7 41.4 7.4 1.1 2.3 1.8 21 Loans and advances 35.6 7.4 1.1 2.3 0.4 0.0 0.0 0.1 0.7 0.9 3.7 41.4 7.4 1.1 2.3 1.8 22 Debt securities, including UoP 23 Equity instruments 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 24 Households 100.0 6.3 6.3 100.0 6.3 6.3 37.8 25 Of which loans collateralised by residential immovable property 100.0 6.3 6.3 100.0 6.3 6.3 37.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 51.2 3.4 3.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 51.3 3.4 3.1 0.0 0.1 76.6 GAR KPI stock – Turnover 346 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 95.7 6.3 5.8 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.2 95.9 6.3 5.8 0.0 0.1 41.0 2 Financial undertakings 54.5 4.2 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 54.7 4.2 0.0 0.0 1.4 3 Credit institutions 55.0 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 55.0 4.3 0.0 0.0 1.4 4 Loans and advances 67.1 9.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 67.1 9.1 0.0 0.0 0.4 5 Debt securities, including UoP 50.5 2.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 50.6 2.6 0.0 0.0 1.0 6 Equity instruments 7 Other financial corporations 44.4 0.1 0.0 0.0 0.0 0.0 0.0 0.0 3.6 0.0 0.0 48.0 0.1 0.0 0.0 0.1 8 Of which investment firms 42.7 0.0 0.0 0.0 3.9 0.0 46.6 0.0 0.0 0.0 0.1 9 Loans and advances 42.7 0.0 0.0 0.0 3.9 0.0 46.6 0.0 0.0 0.0 0.1 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 13 Loans and advances 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 48.5 2.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.3 0.1 0.0 0.0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 20 Non-financial undertakings 35.6 7.4 1.1 2.3 0.4 0.0 0.0 0.1 0.7 0.9 3.7 41.4 7.4 1.1 2.3 1.8 21 Loans and advances 35.6 7.4 1.1 2.3 0.4 0.0 0.0 0.1 0.7 0.9 3.7 41.4 7.4 1.1 2.3 1.8 22 Debt securities, including UoP 23 Equity instruments 48.5 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.5 2.2 0.0 0.0 0.0 24 Households 100.0 6.3 6.3 100.0 6.3 6.3 37.8 25 Of which loans collateralised by residential immovable property 100.0 6.3 6.3 100.0 6.3 6.3 37.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 51.2 3.4 3.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 51.3 3.4 3.1 0.0 0.1 76.6 GAR KPI stock – Turnover 347 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 94.2 4.3 4.0 0.0 0.1 0.0 0.0 0.0 95.4 4.3 4.0 0.0 0.0 39.6 2 Financial undertakings 2.0 0.0 0.0 0.0 0.0 0.0 46.9 0.0 0.0 0.0 1.0 3 Credit institutions 0.0 47.0 0.0 0.0 0.0 0.9 4 Loans and advances 0.1 28.5 0.0 0.0 0.0 0.1 5 Debt securities, including UoP 49.9 0.8 6 Equity instruments 50.3 0.0 7 Other financial corporations 39.2 0.1 0.0 0.1 44.0 0.1 0.0 0.1 0.0 8 Of which investment firms 44.6 0.0 0.0 0.0 44.6 0.0 0.0 0.0 0.0 9 Loans and advances 44.6 0.0 0.0 0.0 44.6 0.0 0.0 0.0 0.0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 33.0 17 Loans and advances 33.0 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 27.0 5.2 0.0 1.5 0.4 0.0 0.0 30.1 5.5 0.0 1.5 1.8 21 Loans and advances 27.0 5.2 0.1 1.5 0.4 0.0 0.0 30.1 5.5 0.0 1.5 1.8 22 Debt securities, including UoP 23 Equity instruments 24 Households 100.0 4.3 4.3 100.0 4.3 4.3 36.8 25 Of which loans collateralised by residential immovable property 100.0 4.3 4.3 100.0 4.3 4.3 36.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 48.5 2.2 2.1 0.0 0.0 0.0 0.0 0.0 49.2 2.2 2.1 0.0 0.0 76.9 GAR KPI stock – Turnover 348 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 94.2 4.3 4.0 0.0 0.1 0.0 0.0 0.0 95.4 4.3 4.0 0.0 0.0 39.6 2 Financial undertakings 2.0 0.0 0.0 0.0 0.0 0.0 46.9 0.0 0.0 0.0 1.0 3 Credit institutions 0.0 47.0 0.0 0.0 0.0 0.9 4 Loans and advances 0.1 28.5 0.0 0.0 0.0 0.1 5 Debt securities, including UoP 49.9 0.8 6 Equity instruments 50.3 0.0 7 Other financial corporations 39.2 0.1 0.0 0.1 44.0 0.1 0.0 0.1 0.0 8 Of which investment firms 44.6 0.0 0.0 0.0 44.6 0.0 0.0 0.0 0.0 9 Loans and advances 44.6 0.0 0.0 0.0 44.6 0.0 0.0 0.0 0.0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 33.0 17 Loans and advances 33.0 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 27.0 5.2 0.0 1.5 0.4 0.0 0.0 30.1 5.5 0.0 1.5 1.8 21 Loans and advances 27.0 5.2 0.1 1.5 0.4 0.0 0.0 30.1 5.5 0.0 1.5 1.8 22 Debt securities, including UoP 23 Equity instruments 24 Households 100.0 4.3 4.3 100.0 4.3 4.3 36.8 25 Of which loans collateralised by residential immovable property 100.0 4.3 4.3 100.0 4.3 4.3 36.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 48.5 2.2 2.1 0.0 0.0 0.0 0.0 0.0 49.2 2.2 2.1 0.0 0.0 76.9 GAR KPI stock – Turnover 349 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 96.2 6.5 5.8 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.0 96.3 6.5 5.8 0.1 0.1 41.0 2 Financial undertakings 53.6 4.2 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 53.6 4.2 0.0 0.0 1.4 3 Credit institutions 55.0 4.4 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 55.1 4.4 0.0 0.0 1.4 4 Loans and advances 67.1 9.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 67.2 9.1 0.0 0.0 0.4 5 Debt securities, including UoP 50.6 2.6 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 50.7 2.6 0.0 0.0 1.0 6 Equity instruments 7 Other financial corporations 19.3 0.2 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.3 0.2 0.0 0.1 0.1 8 Of which investment firms 13.6 0.0 0.0 0.0 0.0 0.0 13.6 0.0 0.0 0.0 0.1 9 Loans and advances 13.6 0.0 0.0 0.0 0.0 0.0 13.6 0.0 0.0 0.0 0.1 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 13 Loans and advances 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 48.7 2.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.3 0.1 0.0 0.0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 20 Non-financial undertakings 47.9 12.6 1.4 2.7 0.3 0.0 0.0 0.0 0.6 1.8 0.0 50.6 12.6 1.4 2.7 1.8 21 Loans and advances 47.9 12.6 1.4 2.7 0.3 0.0 0.0 0.0 0.6 1.8 0.0 50.6 12.6 1.4 2.7 1.8 22 Debt securities, including UoP 23 Equity instruments 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 24 Households 100.0 6.3 6.3 100.0 6.3 6.3 37.8 25 Of which loans collateralised by residential immovable property 100.0 6.3 6.3 100.0 6.3 6.3 37.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 51.5 3.5 3.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 51.5 3.5 3.1 0.0 0.1 76.6 GAR KPI stock – CapEx 350 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 96.2 6.5 5.8 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.0 96.3 6.5 5.8 0.1 0.1 41.0 2 Financial undertakings 53.6 4.2 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 53.6 4.2 0.0 0.0 1.4 3 Credit institutions 55.0 4.4 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 55.1 4.4 0.0 0.0 1.4 4 Loans and advances 67.1 9.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 67.2 9.1 0.0 0.0 0.4 5 Debt securities, including UoP 50.6 2.6 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 50.7 2.6 0.0 0.0 1.0 6 Equity instruments 7 Other financial corporations 19.3 0.2 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.3 0.2 0.0 0.1 0.1 8 Of which investment firms 13.6 0.0 0.0 0.0 0.0 0.0 13.6 0.0 0.0 0.0 0.1 9 Loans and advances 13.6 0.0 0.0 0.0 0.0 0.0 13.6 0.0 0.0 0.0 0.1 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 13 Loans and advances 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 48.7 2.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.3 0.1 0.0 0.0 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 20 Non-financial undertakings 47.9 12.6 1.4 2.7 0.3 0.0 0.0 0.0 0.6 1.8 0.0 50.6 12.6 1.4 2.7 1.8 21 Loans and advances 47.9 12.6 1.4 2.7 0.3 0.0 0.0 0.0 0.6 1.8 0.0 50.6 12.6 1.4 2.7 1.8 22 Debt securities, including UoP 23 Equity instruments 48.7 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48.7 2.2 0.0 0.0 0.0 24 Households 100.0 6.3 6.3 100.0 6.3 6.3 37.8 25 Of which loans collateralised by residential immovable property 100.0 6.3 6.3 100.0 6.3 6.3 37.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 51.5 3.5 3.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 51.5 3.5 3.1 0.0 0.1 76.6 GAR KPI stock – CapEx 351 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 94.5 4.2 4.0 0.1 0.1 0.0 0.0 0.0 95.9 4.3 4.0 0.1 0.1 39.6 2 Financial undertakings 0.8 0.1 0.0 0.1 45.7 0.1 0.0 0.1 1.0 3 Credit institutions 47.0 0.0 0.0 0.9 4 Loans and advances 28.5 0.0 0.0 0.1 5 Debt securities, including UoP 49.9 0.8 6 Equity instruments 50.3 0.0 7 Other financial corporations 16.9 1.2 0.0 1.2 21.9 1.2 0.0 1.2 0.0 8 Of which investment firms 5.4 0.0 0.0 0.0 5.5 0.0 0.0 0.0 0.0 9 Loans and advances 5.4 0.0 0.0 0.0 5.5 0.0 0.0 0.0 0.0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 33.0 17 Loans and advances 33.0 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 35.5 4.7 1.2 1.4 0.0 0.0 0.0 40.1 5.1 1.2 1.4 1.8 21 Loans and advances 35.5 4.7 1.2 1.4 0.0 0.0 0.0 40.1 5.1 1.2 1.4 1.8 22 Debt securities, including UoP 23 Equity instruments 0.0 24 Households 100.0 4.3 4.3 100.0 4.3 4.3 36.8 25 Of which loans collateralised by residential immovable property 100.0 4.3 4.3 100.0 4.3 4.3 36.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 48.7 2.2 2.1 0.0 0.0 0.0 0.0 0.0 49.4 2.2 2.1 0.0 0.0 76.9 GAR KPI stock – CapEx 352 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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2023-12-31 2023-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total covered assets in the denominator) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 94.5 4.2 4.0 0.1 0.1 0.0 0.0 0.0 95.9 4.3 4.0 0.1 0.1 39.6 2 Financial undertakings 0.8 0.1 0.0 0.1 45.7 0.1 0.0 0.1 1.0 3 Credit institutions 47.0 0.0 0.0 0.9 4 Loans and advances 28.5 0.0 0.0 0.1 5 Debt securities, including UoP 49.9 0.8 6 Equity instruments 50.3 0.0 7 Other financial corporations 16.9 1.2 0.0 1.2 21.9 1.2 0.0 1.2 0.0 8 Of which investment firms 5.4 0.0 0.0 0.0 5.5 0.0 0.0 0.0 0.0 9 Loans and advances 5.4 0.0 0.0 0.0 5.5 0.0 0.0 0.0 0.0 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 33.0 17 Loans and advances 33.0 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 35.5 4.7 1.2 1.4 0.0 0.0 0.0 40.1 5.1 1.2 1.4 1.8 21 Loans and advances 35.5 4.7 1.2 1.4 0.0 0.0 0.0 40.1 5.1 1.2 1.4 1.8 22 Debt securities, including UoP 23 Equity instruments 0.0 24 Households 100.0 4.3 4.3 100.0 4.3 4.3 36.8 25 Of which loans collateralised by residential immovable property 100.0 4.3 4.3 100.0 4.3 4.3 36.8 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 48.7 2.2 2.1 0.0 0.0 0.0 0.0 0.0 49.4 2.2 2.1 0.0 0.0 76.9 GAR KPI stock – CapEx 353 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to flow of total eligible assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 93.2 7.2 5.8 0.0 0.2 0.0 0.0 0.0 0.0 0.1 0.1 0.3 93.8 7.2 5.8 0.0 0.2 41.7 2 Financial undertakings 63.7 7.8 0.0 0.0 0.1 0.0 0.0 0.0 0.4 0.0 0.0 64.1 7.8 0.0 0.0 3.2 3 Credit institutions 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 1.9 4 Loans and advances 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 1.9 5 Debt securities, including UoP 6 Equity instruments 7 Other financial corporations 56.1 5.2 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 57.0 5.2 0.0 0.0 1.3 8 Of which investment firms 42.7 0.0 3.9 46.6 0.3 9 Loans and advances 42.7 0.0 3.9 46.6 0.3 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 45.7 10.6 0.6 2.7 0.5 0.0 0.0 0.1 0.7 1.9 4.3 53.1 10.6 0.6 2.8 3.0 21 Loans and advances 45.9 10.7 0.6 2.7 0.6 0.0 0.0 0.1 0.7 1.9 4.3 53.4 10.7 0.6 2.8 3.0 22 Debt securities, including UoP 23 Equity instruments 24 Households 100.0 6.9 6.9 100.0 6.9 6.9 35.4 25 Of which loans collateralised by residential immovable property 100.0 6.9 6.9 100.0 6.9 6.9 35.4 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 38.9 3.0 2.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1 39.1 3.0 2.4 0.0 0.1 100.0 GAR KPI flow – Turnover 354 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to flow of total eligible assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 93.2 7.2 5.8 0.0 0.2 0.0 0.0 0.0 0.0 0.1 0.1 0.3 93.8 7.2 5.8 0.0 0.2 41.7 2 Financial undertakings 63.7 7.8 0.0 0.0 0.1 0.0 0.0 0.0 0.4 0.0 0.0 64.1 7.8 0.0 0.0 3.2 3 Credit institutions 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 1.9 4 Loans and advances 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 1.9 5 Debt securities, including UoP 6 Equity instruments 7 Other financial corporations 56.1 5.2 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 57.0 5.2 0.0 0.0 1.3 8 Of which investment firms 42.7 0.0 3.9 46.6 0.3 9 Loans and advances 42.7 0.0 3.9 46.6 0.3 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 45.7 10.6 0.6 2.7 0.5 0.0 0.0 0.1 0.7 1.9 4.3 53.1 10.6 0.6 2.8 3.0 21 Loans and advances 45.9 10.7 0.6 2.7 0.6 0.0 0.0 0.1 0.7 1.9 4.3 53.4 10.7 0.6 2.8 3.0 22 Debt securities, including UoP 23 Equity instruments 24 Households 100.0 6.9 6.9 100.0 6.9 6.9 35.4 25 Of which loans collateralised by residential immovable property 100.0 6.9 6.9 100.0 6.9 6.9 35.4 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 38.9 3.0 2.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1 39.1 3.0 2.4 0.0 0.1 100.0 GAR KPI flow – Turnover 355 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to flow of total eligible assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 94.0 7.7 5.8 0.1 0.3 0.1 0.0 0.0 0.0 0.0 0.3 0.0 94.3 7.7 5.8 0.1 0.3 41.7 2 Financial undertakings 61.1 7.8 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 61.1 7.8 0.0 0.0 3.2 3 Credit institutions 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 0.0 0.0 1.9 4 Loans and advances 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 0.0 0.0 1.9 5 Debt securities, including UoP 6 Equity instruments 7 Other financial corporations 49.7 5.2 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 49.7 5.2 0.0 0.0 1.3 8 Of which investment firms 13.6 0.0 0.0 13.6 0.0 0.3 9 Loans and advances 13.6 0.0 0.0 13.6 0.0 0.3 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 59.2 17.7 1.0 3.9 0.6 0.0 0.0 0.0 0.4 3.7 0.0 63.9 17.7 1.0 3.9 3.0 21 Loans and advances 59.4 17.8 1.0 3.9 0.6 0.0 0.0 0.0 0.4 3.7 0.0 64.1 17.8 1.0 3.9 3.0 22 Debt securities, including UoP 23 Equity instruments 24 Households 100.0 6.9 6.9 100.0 6.9 6.9 35.4 25 Of which loans collateralised by residential immovable property 100.0 6.9 6.9 100.0 6.9 6.9 35.4 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 39.2 3.2 2.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.0 39.3 3.2 2.4 0.0 0.1 100.0 GAR KPI flow – CapEx 356 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to flow of total eligible assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total assets covered Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling GAR – Covered assets in both numerator and denominator 1 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 94.0 7.7 5.8 0.1 0.3 0.1 0.0 0.0 0.0 0.0 0.3 0.0 94.3 7.7 5.8 0.1 0.3 41.7 2 Financial undertakings 61.1 7.8 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 61.1 7.8 0.0 0.0 3.2 3 Credit institutions 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 0.0 0.0 1.9 4 Loans and advances 68.8 9.6 0.0 0.0 0.1 0.0 0.0 68.9 9.6 0.0 0.0 1.9 5 Debt securities, including UoP 6 Equity instruments 7 Other financial corporations 49.7 5.2 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 49.7 5.2 0.0 0.0 1.3 8 Of which investment firms 13.6 0.0 0.0 13.6 0.0 0.3 9 Loans and advances 13.6 0.0 0.0 13.6 0.0 0.3 10 Debt securities, including UoP 11 Equity instruments 12 Of which management companies 13 Loans and advances 14 Debt securities, including UoP 15 Equity instruments 16 Of which insurance undertakings 17 Loans and advances 18 Debt securities, including UoP 19 Equity instruments 20 Non-financial undertakings 59.2 17.7 1.0 3.9 0.6 0.0 0.0 0.0 0.4 3.7 0.0 63.9 17.7 1.0 3.9 3.0 21 Loans and advances 59.4 17.8 1.0 3.9 0.6 0.0 0.0 0.0 0.4 3.7 0.0 64.1 17.8 1.0 3.9 3.0 22 Debt securities, including UoP 23 Equity instruments 24 Households 100.0 6.9 6.9 100.0 6.9 6.9 35.4 25 Of which loans collateralised by residential immovable property 100.0 6.9 6.9 100.0 6.9 6.9 35.4 26 Of which building renovation loans 27 Of which motor vehicle loans 100.0 100.0 0.0 28 Local government financing 29 Housing financing 30 Other local government financing 31 Collateral obtained by taking possession: residential and commercial immovable properties 32 Total GAR assets 39.2 3.2 2.4 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.0 39.3 3.2 2.4 0.0 0.1 100.0 GAR KPI flow – CapEx 357 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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KPI off-balance-sheet exposures – Stock, Turnover 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 2.2 0.6 0.0 0.6 0.0 0.0 0.0 0.0 0.7 0.1 0.2 3.1 0.6 0.0 0.6 2 Assets under management (AuM KPI) 4.7 1.4 0.1 0.6 0.4 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.1 0.0 0.0 6.0 1.5 0.1 0.6 KPI off-balance-sheet exposures – Stock, CapEx 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 3.2 0.5 0.0 0.5 0.0 0.0 0.0 0.1 0.1 3.5 0.5 0.0 0.5 2 Assets under management (AuM KPI) 5.3 2.0 0.2 0.8 0.6 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.1 0.0 0.0 0.0 6.5 2.0 0.2 0.8 KPI off-balance-sheet exposures – Flow, Turnover 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 1.0 0.3 0.0 0.2 0.0 0.0 0.1 0.0 0.6 1.7 0.3 0.0 0.2 2 Assets under management (AuM KPI) 4.4 1.1 0.1 0.5 0.3 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.2 0.0 0.0 5.4 1.2 0.1 0.5 KPI off-balance-sheet exposures – Flow, CapEx 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 1.8 0.2 0.0 0.2 0.0 0.0 0.0 0.0 0.0 1.9 0.2 0.0 0.2 2 Assets under management (AuM KPI) 4.7 1.6 0.1 0.6 0.4 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.1 0.0 0.0 0.0 5.7 1.6 0.1 0.6 358 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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KPI off-balance-sheet exposures – Stock, Turnover 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 2.2 0.6 0.0 0.6 0.0 0.0 0.0 0.0 0.7 0.1 0.2 3.1 0.6 0.0 0.6 2 Assets under management (AuM KPI) 4.7 1.4 0.1 0.6 0.4 0.0 0.0 0.0 0.0 0.0 0.7 0.0 0.1 0.0 0.0 6.0 1.5 0.1 0.6 KPI off-balance-sheet exposures – Stock, CapEx 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 3.2 0.5 0.0 0.5 0.0 0.0 0.0 0.1 0.1 3.5 0.5 0.0 0.5 2 Assets under management (AuM KPI) 5.3 2.0 0.2 0.8 0.6 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.1 0.0 0.0 0.0 6.5 2.0 0.2 0.8 KPI off-balance-sheet exposures – Flow, Turnover 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 1.0 0.3 0.0 0.2 0.0 0.0 0.1 0.0 0.6 1.7 0.3 0.0 0.2 2 Assets under management (AuM KPI) 4.4 1.1 0.1 0.5 0.3 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.2 0.0 0.0 5.4 1.2 0.1 0.5 KPI off-balance-sheet exposures – Flow, CapEx 2024-12-31 2024-12-31 Climate change mitigation (CCM) Climate change adaptation (CCA) Water and marine resources (WTR) Circular economy (CE) Pollution (PPC) Biodiversity and Ecosystems (BIO) Total (CCM + CCA + WTR + CE + PPC + BIO) % (compared to total eligible offbalance sheet assets) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which enabling Of which Use of Proceeds Of which transitional Of which enabling 1 Financial guarantees (FinGuar KPI) 1.8 0.2 0.0 0.2 0.0 0.0 0.0 0.0 0.0 1.9 0.2 0.0 0.2 2 Assets under management (AuM KPI) 4.7 1.6 0.1 0.6 0.4 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.1 0.0 0.0 0.0 5.7 1.6 0.1 0.6 359 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Nuclear and fossil gas related activities in accordance with (EU) 2022/1214 In 2022 the European Commission determined that certain activities for power generation from fossil gas and nuclear energy shall be included in the taxonomy. The regulation consists of detailed technical criteria as well as requirements for separate reporting for non-financial and financial undertakings. The Bank has low exposures in the balance sheet to a limited number of non-financial counterparties whose economic activities are subject to these regulations, and these exposures are disclosed in the set templates. On-balance sheet – credit portfolio Nuclear energy related activities 1. The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. YES 2. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. YES 3. The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. YES Fossil gas related activities 4. The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. YES 5. The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. YES 6. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. NO Off-balance sheet – financial guarantees, capital in mutual funds and discretionary portfolios Nuclear energy related activities 1. The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. YES 2. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. YES 3. The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. YES Fossil gas related activities 4. The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. YES 5. The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. YES 6. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. YES Taxonomy-aligned economic activities (denominator) On-balance sheet – credit portfolio, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 374 0.0 374 0.0 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 254 0.0 254 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 83,312 3.3 83,305 3.3 7 0.0 8. Total applicable KPI 83,940 3.4 83,933 3.4 7 0.0 360 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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On-balance sheet – credit portfolio, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 454 0.0 454 0.0 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 80 0.0 80 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 86,386 3.5 86,376 3.5 10 0.0 8. Total applicable KPI 86,920 3.5 86,910 3.5 10 0.0 Off-balance sheet – financial guarantees, capital in mutual funds and discretionary portfolios, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 196 0.0 196 0.0 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 183 0.0 183 0.0 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 11,989 1.3 11,827 1.3 161 0.0 8. Total applicable KPI 12,369 1.4 12,207 1.4 161 0.0 Off-balance sheet – financial guarantees, capital in mutual funds and discretionary portfolios, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 267 0.0 267 0.0 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 67 0.0 67 0.0 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 16,739 1.9 16,623 1.9 116 0.0 8. Total applicable KPI 17,073 1.9 16,957 1.9 116 0.0 Taxonomy-aligned economic activities (denominator) cont. 361 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Taxonomy-aligned economic activities (numerator) On-balance sheet – credit portfolio, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 374 0.4 374 0.4 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 254 0.3 254 0.3 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI 83,312 99.3 83,305 99.3 7 100.0 8. Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI 83,940 100 83,933 100 7 100 On-balance sheet – credit portfolio, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 454 0.5 454 0.5 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 80 0.1 80 0.1 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI 86,386 99.4 86,376 99.4 10 100.0 8. Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI 86,920 100 86,910 100 10 100 362 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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Off-balance sheet – financial guarantees, capital in mutual funds and discretionary portfolios, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 196 1.6 196 1.6 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 183 1.5 183 1.5 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI 11,989 96.9 11,827 96.9 161 100.0 8. Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI 12,369 100.0 12,207 100.0 161 100.0 Off-balance sheet – financial guarantees, capital in mutual funds and discretionary portfolios, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 267 1.6 267 1.6 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 67 0.4 67 0.4 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI 16,739 98.0 16,623 98.0 116 100.0 8. Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI 17,073 100.0 16,957 100.0 116 100.0 Taxonomy-aligned economic activities (numerator) cont. 363 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Taxonomy-eligible but not taxonomy-aligned economic activities On-balance sheet – credit portfolio, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.0 1 0.0 2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 2 0.0 2 0.0 3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 2 0.0 2 0.0 5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.0 1 0.0 6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 7. Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 1,192,299 47.8 1,192,042 47.8 257 0.0 8. Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI 1,192,303 47.8 1,192,046 47.8 257 0.0 On-balance sheet – credit portfolio, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 7. Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 1,195,868 48.0 1,195,684 48.0 184 0.0 8. Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI 1,195,868 48.0 1,195,684 48.0 184 0.0 364 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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Off-balance sheet – financial guarantees, capital in mutual funds and discretionary portfolios, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.0 1 0.0 1 0.0 2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 3 0.0 1 0.0 1 0.0 3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4 0.0 2 0.0 2 0.0 4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 132 0.0 66 0.0 66 0.0 5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 48 0.0 24 0.0 24 0.0 6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4 0.0 2 0.0 2 0.0 7. Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 30,913 3.5 15,457 1.7 15,457 1.7 8. Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI 31,105 3.5 15,552 1.7 15,552 1.7 Off-balance sheet – financial guarantees, capital in mutual funds and discretionary portfolios, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0.0 0.0 0.0 0.0 0.0 0.0 3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0.7 0.0 0.4 0.0 0.4 0.0 4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 28.0 0.0 14.0 0.0 14.0 0.0 5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 6.0 0.0 3.0 0.0 3.0 0.0 6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1.3 0.0 0.7 0.0 0.7 0.0 7. Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 32,827 3.7 16,413 1.8 16,413 1.8 8. Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI 32,863 3.7 16,431 1.8 16,431 1.8 Taxonomy-eligible but not taxonomy-aligned economic activities cont. 365 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Handelsbanken’s taxonomy disclosure for life insurance operations Taxonomy disclosures for life insurance in accordance with article 8 in the taxonomy regulation The proportion of the insurance or reinsurance undertaking’s investments that are directed at funding, or are associated with, Taxonomy-aligned in relation to total investments The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities relative to the value of total assets covered by the KPI, with following weights for investments in undertakings per below: Turnover-based: (%) 2.3 Capital expenditures-based: (%) 0.1 The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities, with following weights Turnover-based: (SEK m) 6,770 Capital expenditures-based: (SEK m) 234 The percentage of assets covered by the KPI relative to total investments of insurance or reinsurance undertakings (total AuM). Excluding investments in sovereign entities. Coverage ratio: (%) 93.3 The monetary value of assets covered by the KPI. Excluding investments in sovereign entities. Coverage: (SEK m) 293,563 Additional, complementary disclosures: breakdown of denominator of the KPI The percentage of derivatives relative to total assets covered by the KPI. (%) 0.0 The value in monetary amounts of derivatives. (SEK m) 1 The proportion of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/ EU over total assets covered by the KPI: For non-financial undertakings: (%) 23.1 For financial undertakings: (%) 0.0 Value of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings: (SEK m) 67,859 For financial undertakings: (SEK m) 0 The proportion of exposures to financial and non-financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: For non-financial undertakings: (%) 21.6 For financial undertakings: (%) 0.0 Value of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings: (SEK m) 63,530 For financial undertakings: (SEK m) 0 The proportion of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: For non-financial undertakings: (%) 29.6 For financial undertakings: (%) 0.0 Value of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings: (SEK m) 86,772 For financial undertakings: (SEK m) 0 The proportion of exposures to other counterparties and assets over total assets covered by the KPI: (%) – Value of exposures to other counterparties and assets: SEK m – The proportion of the insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy- aligned economic activities: (%) 1.9 Value of insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned economic activities: SEK m 5,458 The value of all the investments that are funding economic activities that are not Taxonomy- eligible relative to the value of total assets covered by the KPI: (%) 23.1 Value of all the investments that are funding economic activities that are not Taxonomy- eligible: SEK m 67,859 The value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned relative to the value of total assets covered by the KPI: (%) 21.9 Value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned: SEK m 64,386 366 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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(1) Climate change mitigation Turnover-based: (%) 4.5 Capital expenditures-based: (%) 0.1 Transitional activities: A % Turnover) 0.1 Enabling activities: B % (Turnover) 0.7 Transitional activities: A % (CapEx) 0.0 Enabling activities: B % (CapEx) 0.0 (2) Climate change adaptation Turnover-based: (%) 0.7 Capital expenditures-based: (%) 0.0 Enabling activities: B % (Turnover) 0.0 Enabling activities: B % (CapEx) 0.0 (3) The sustainable use and protection of water and marine resources Turnover-based: (%) 0.0 Capital expenditures-based: (%) 0.0 Enabling activities: B % (Turnover) 0.0 Enabling activities: B % (CapEx) 0.0 4) The transition to a circular economy Turnover-based: (%) 0.0 Capital expenditures-based: (%) 0.0 Enabling activities: B % (Turnover) 0.0 Enabling activities: B % (CapEx) 0.0 (5) Pollution prevention and control Turnover-based: (%) 0.0 Capital expenditures-based: (%) 0.0 Enabling activities: B % (Turnover) 0.0 Enabling activities: B % (CapEx) 0.0 (6) The protection and restoration of biodiversity and ecosystems Turnover-based: (%) 0.0 Capital expenditures-based: (%) 0.0 Enabling activities: B % (Turnover) 0.0 Enabling activities: B % (CapEx) 0.0 Taxonomy disclosures for life insurance in accordance with article 8 in the taxonomy regulation Additional, complementary disclosures: breakdown of numerator of the KPI The proportion of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: For non-financial undertakings - Turnover-based: (%) 2.3 For non-financial undertakings -Capital expenditures-based: (%) 0.1 For financial undertakings - Turnover-based: (%) 0.0 For financial undertakings- Capital expenditures-based: (%) 0.0 Value of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings – Turnover-based: (SEK m) 6,770 For non-financial undertakings – Capital expenditures-based: (SEK m) 234 For financial undertakings – Turnover-based: (SEK m) 0 For financial undertakings – Capital expenditures-based: (SEK m) 0 The proportion of the insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy- aligned: Turnover-based: (%) – Capital expenditures-based: (%) – Value of insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned: Turnover-based: (SEK m) – Capital expenditures-based: (SEK m) – The proportion of Taxonomy-aligned exposures to other counterparties and assets over total assets covered by the KPI: Turnover-based: (%) – Capital expenditures-based: (%) – Value of Taxonomy-aligned exposures to other counterparties and assets over total assets covered by the KPI: Turnover-based: (SEK m) – Capital expenditures-based: (SEK m) – Breakdown of the numerator of the KPI per environmental objective Taxonomy-aligned activities – provided ‘do-not-significant-harm’(DNSH) and social safeguards positive assessment: Handelsbanken’s taxonomy disclosure for life insurance operations cont. 367 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Nuclear and fossil gas related activities in accordance with (EU) 2022/1214 Insurance operations in the life insurance company Insurance operations in the life insurance company Nuclear energy related activities 1. The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. YES 2. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. YES 3. The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. YES Fossil gas related activities 4. The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. YES 5. The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. YES 6. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. YES Taxonomy-aligned economic activities (denominator) Insurance operations in the life insurance company, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4 0.0 4 0.0 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 13,412 4.6 13,340 4.5 72 0.0 8. Total applicable KPI 13,417 4.6 13,345 4.5 72 0.0 Insurance operations in the life insurance company, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.0 1 0.0 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 14 0.0 14 0.0 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4 0.0 4 0.0 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.0 1 0.0 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 143 0.0 96 0.0 47 0.0 8. Total applicable KPI 163 0.1 117 0.0 47 0.0 368 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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Taxonomy-aligned economic activities (numerator) Insurance operations in the life insurance company, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4 0.0 4 0.0 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 13,412 100.0 13,340 100.0 72 100.0 8. Total applicable KPI 13,417 100.0 13,345 100.0 72 100.0 Insurance operations in the life insurance company, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.4 1 0.6 2. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 14 8.7 14 12.2 3. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4 2.7 4 3.8 4. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 5. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.8 1 1.1 6. Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 143 87.4 96 82.4 47 100.0 8. Total applicable KPI 163 100.0 117 100.0 47 100.0 369 Handelsbanken Annual and Sustainability Report 2024 4.3 cont.
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Taxonomy-eligible but not taxonomy-aligned economic activities Insurance operations in the life insurance company, turnover Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 0 0.0 2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 7. Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 18,736 6.4 9,368 3.2 9,368 3.2 8. Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI 18,736 6.4 9,368 3.2 9,368 3.2 Insurance operations in the life insurance company, CapEx Amount (SEK m) and proportion CCM + CCA Climate change mitigation (CCM) Climate change adaptation (CCA) Economic activities Amount % Amount % Amount % 1. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 2. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 0 0.0 3. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 0 0.0 4. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 7 0.0 3 0.0 3 0.0 5. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 1 0.0 0 0.0 0 0.0 6. Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI 0 0.0 0 0.0 0 0.0 7. Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI 3,628 1.2 1,814 0.6 1,814 0.6 8. Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI 3,636 1.2 1,818 0.6 1,818 0.6 370 Handelsbanken Annual and Sustainability Report 2024 4.3 cont. Introduction Administration report Financial statements Sustainability EU Taxonomy Other
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4.6 Auditor's report on the review of Svenska Handelsbanken AB's (publ) sustainability report Auditor's report on the review of Svenska Handelsbanken AB's (publ) sustainability report NOTE: this is an unofficial translation of the report originally issued in Swedish. In case of discrepancies between the original report and this translation the original Swedish version shall prevail. To the management of Svenska Handelsbanken AB (publ), corporate identity number 502007-7862 Conclusion We have been commissioned by the manage- ment of Svenska Handelsbanken AB (publ) to review Svenska Handelsbanken AB's sustain- ability report for 2024. Svenska Handels- banken AB's Sustainability Report consists of pages 259-371 of this document. Based on our review described in the section Auditor's Responsibilities, no circumstances have come to light that give us reason to believe that the Sustainability Report has not, in all material respects, been prepared in accordance with the criteria, which include: • that the Sustainability Report meets the requirements of the ESRS, with the excep- tion that it is presented outside the Board of Directors' Report and that it is the manage- ment that is responsible for the preparation of the Sustainability Report; • that the process that the company has implemented to identify reported sustaina- bility information has been carried out as described in the sustainability report • compliance with the reporting requirements of the EU Green Taxonomy Regulation Article 8 Basis for conclusion We have conducted the review in accordance with ISAE 3000 (revised) Assurance engage- ments other than audits and review reviews of historical financial information. Our responsi- bilities under this standard are described in more detail in the section Auditor's Responsi- bilities. We believe that the documentation we obtained during our review is sufficient and appropriate in order to provide us with a basis for our conclusion. Information of particular importance We would like to draw attention to the descrip- tion of the principles and criteria for the Sus- tainability Report on page 261, where it is stated that the Sustainability Report has been prepared in accordance with the ESRS, with the exception of the requirement for placement in the Board of Directors' Report, and that the management is responsible for the preparation of the Sustainability Report. Management's responsibilities Management is responsible for preparing the Sustainability Report in accordance with appli- cable criteria as set out on page 261 of the Sustainability Report. Management is responsible for designing and implementing a process to identify the information reported in the Sustainability Report in accordance with the ESRS and for describing this process in the ESRS 2 IRO-1 section of the Sustainability Report. These responsibilities include: • to understand the context in which the Group's activities and business relationships take place and to develop an understanding of its relevant stakeholders; • to identify the actual and potential impacts (both negative and positive) related to sus- tainability issues, as well as risks and oppor- tunities that affect, or can reasonably be expected to affect, the Group's financial position, financial results, cash flows, access to financing or cost of capital in the short, medium or long term; • assessing the materiality of the identified impacts, risks and opportunities related to sustainability issues by selecting and apply- ing appropriate thresholds; and • make assumptions that are reasonable under the circumstances. The management is also responsible for the preparation of the Sustainability Report, which includes: • compliance with disclosure requirements under the ESRS; • compliance with the reporting requirements of the EU Green Taxonomy Regulation Article 8 and • the selection and application of appropriate sustainability reporting methodologies and to make assumptions and estimates that are reasonable in the circumstances. This responsibility also includes the internal control deemed necessary to prepare a sus- tainability report that does not contain material misstatements, whether due to irregularities or mistakes. Limitations in the preparation of the Sustainability Report When reporting forward-looking statements in accordance with the ESRS, the management of Svenska Handelsbanken AB (publ) must prepare forward-looking statements based on the assumptions made about events that may occur in the future and possible future activi- ties of Svenska Handelsbanken AB (publ). Actual outcomes are likely to be different because expected events often do not occur as expected. Auditor's responsibilities Our task is to give a limited opinion on the sus- tainability report based on our review. We have carried out the review in accord- ance with ISAE 3000 (revised). This standard requires us to plan and implement our review procedures to achieve limited assurance that the Sustainability Report has been prepared in accordance with the European Sustainability Reporting Standards (ESRS), except that it is presented outside the Board of Directors' Report and that it is the management that is responsible for the preparation of the Sustain- ability Report. Audit firms apply the International Standard on Quality Management 1, which requires firms to design, implement and manage a quality management system including guidelines or procedures regarding compliance with ethical requirements, standards for professional prac- tice and applicable legal and regulatory requirements. We are independent in relation to Svenska Handelsbanken AB in accordance with gener- ally accepted auditing practice in Sweden and have otherwise fulfilled our professional ethical responsibilities in accordance with these requirements. The review includes obtaining evidence about the sustainability report through various measures. The auditor chooses which actions are to be performed, including by assessing the risks of material misstatement in the basis for the sustainability report, whether these are due to irregularities or mistakes. In this risk assessment, the auditor takes into account those parts of the internal control that are rele- vant to how Svenska Handelsbanken AB pre- pares the documentation in order to design review procedures that are appropriate in the 372 Handelsbanken Annual and Sustainability Report 2024 4.6 Sustainability Auditor's report Introduction Administration report Financial statements Other
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circumstances, but not for the purpose of making an opinion on the effectiveness of the internal control. The review has been limited to a general analysis of the sustainability report and the basis for it, as well as inquiries from the company's staff. Our assurance is there- fore based on limited assurance compared to an audit. The review procedures mainly include: Our review measures regarding the process the company has undertaken to identify sus- tainability information to report included, but were not limited to, the following: • gain an understanding of the process by: – conducting inquiries to understand the sources of information used by manage- ment (e.g., stakeholder dialogues, busi- ness plans, and strategy documents); and – review the company's internal documen- tation of its process; and • evaluate whether the information obtained from our actions on the process imple- mented by the company is consistent with the description of the process in the sustain- ability report. Our review actions regarding the Sustainability Report included, but were not limited to, the following: • obtain through inquiries a general under- standing of the internal control environment, reporting processes and information sys- tems relevant to the preparation of the infor- mation in the sustainability report. • evaluated whether information identified as material through the process that the com- pany has carried out to identify the content of the sustainability report is also included. • evaluated whether the structure and presen- tation of the sustainability report is in line with the requirements of the ESRS; • carry out inquiries to relevant personnel and analytical review procedures regarding selected disclosures in the Sustainability Report; • perform random substantive review on a selection of disclosures in the sustainability report • obtain, through inquiries and analytical review procedures, evidence on the meth- odologies for producing material estimates and forward-looking information and on how those methodologies were applied; • gain an understanding of the process of identifying economic activities that are cov- ered by and consistent with the EU Green Taxonomy and the corresponding disclo- sures in the sustainability report. Other information Our assignment does not include information relating to previous periods. Stockholm, February 26, 2025 PricewaterhouseCoopers AB Deloitte AB Magnus Svensson Henryson Malin Lüning Authorized Public Accountant Authorized Public Accountant 373 Handelsbanken Annual and Sustainability Report 2024 4.6
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5.0 Other Other 374 Handelsbanken Annual and Sustainability Report 2024 5.0
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5.0 Other 374 5.1 Definitions and explanations 376 5.2 Branches and branch managers 380 375 Handelsbanken Annual and Sustainability Report 2024
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5.1 Definitions and explanations Definitions and explanations Alternative performance measures The Bank’s financial reports contain alternative performance measures which Handels banken believes provide valuable information to the reader since they are used by the Executive Team for internal financial control and follow- up of performance, and also for comparison between reporting periods. Alternative Performance Measures (APMs) are financial measures of performance, finan- cial position or cash flow that are neither de- fined in IFRS nor the Capital Requirements Regulation. These need not be comparable with similar key metrics (performance meas- ures) presented by other companies. Calcula- tions of certain key metrics are reported in the Fact Book which is available at Handels- banken.com/ir. Adjusted equity per share Equity at the end of the year reduced by the equity effect of cash flow hedges and the minority share of equity. Adjusted equity is then divided by the number of ordinary shares at the year-end reduced by buybacks. Where applicable, the dilution effect is taken into account. C/I ratio Total expenses in relation to total income. In segment reporting, profit allocation is included in total income. Credit loss ratio Losses on loans to the public in relation to gross loans to the public at the beginning of the year. Earnings per share The profit for the year attributable to share- holders divided by the average number of out- standing shares. Where applicable, the dilution effect is taken into account. Economic capital (EC) Economic capital is a model for calculating economic capital which, in one measurement, identifies the Group’s overall risks and indicates the capital which, with very high probability, will cover unexpected losses or decreases in value. Interest margin Net interest income for the period calculated for the full year, in relation to average total assets. P/E ratio Share price at year-end divided by earnings per share for the year. Proportion of loans in Stage 3 Net loans to the public in Stage 3 in relation to total loans to the public. Provision ratio stage 1 Provisions in Stage 1 for loans to the public in relation to total loans to the public in Stage 1. Provision ratio stage 2 Provisions in Stage 2 for loans to the public in relation to total loans to the public in Stage 2. Provision ratio stage 3 Provisions in Stage 3 for loans to the public in relation to total loans to the public in Stage 3. Return on allocated capital The segment’s operating profit after profit allocation and tax, calculated using a tax rate of 20.6%, in relation to the average capital allocated quarterly during the year. Return on equity The year’s profit in relation to average equity. Average equity for the last four quarters is adjusted for value changes on financial assets classified as fair value through other compre- hensive income, derivatives in cash flow hedges, revaluation effects from defined benefit pen- sion plans and a weighted average of new share issues, dividends, and repurchases of own shares. Return on total assets The year’s profit in relation to the average of total assets for the past five quarters. Total provision ratio Total provisions for loans to the public in relation to total loans to the public. Total return The total of the year’s change in share price and the total dividend per share paid during the year, divided by the share price at the end of the previous year. 376 Handelsbanken Annual and Sustainability Report 2024 5.1 Introduction Administration report Financial statements Sustainability Other Definitions and explanations
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Key metrics and definitions defined in the Capital Requirements Regulation Additional own funds requirement The requirement consists of an additional mini- mum requirement based on a formal decision from the regulatory authorities within the Pillar 2 framework and concerns risks that a bank is or could be exposed to that are not covered by the general minimum requirements. Additional tier 1 instruments Additional tier 1 instruments comprise perpet- ual subordinated loans which meet the require- ments stated in Regulation (EU) No 575/2013 and can therefore be included in the tier 1 capital. Capital requirements The statutory capital requirement means that an institution which is subject to CRR must have a common equity tier 1 ratio of at least 4.5%, a tier 1 ratio of at least 6% and a total capital ratio of at least 8%. This means that own funds for the respective ratio must be at least the stated percentage of the risk expo- sure amount. For definitions of the respective own funds amounts, see Common equity tier 1 capital, Tier 1 capital and Total capital. In addi- tion to the general requirements, the supervi- sory authority may add institution-specific requirements in accordance with Pillar 2 of the regulations. Credit conversion factor (CCF) Credit Conversion Factor (CCF) is a percent- age value by which off-balance sheet expo- sures are multiplied to calculate the exposure amount. The credit conversion factor corre- sponds to the expected utilisation level of the exposure in the event of default. Credit valuation adjustment (CVA) risk Credit valuation adjustment (CVA) risk means the risk that the market value of a derivative will decrease, owing to deterioration of the creditworthiness of the counterparty. The CVA is a component in the regulations for the valua- tion of derivatives. An exposure to a counter- party with weaker creditworthiness must have a lower carrying amount than the equivalent exposure to a counterparty with better credit- worthiness. In this context, credit valuation adjustment risk means that if a given counter- party’s creditworthiness weakens, the bal - ance sheet values of all derivative transactions with this counterparty with a positive market value decrease – and thus the Bank’s equity decreases. Common equity tier 1 capital Common equity tier 1 capital is one of the components of own funds and mainly com- prises equity. Deductions are made for divi- dends generated, goodwill and other intangible assets, etc. and the difference between an expected loss and provisions made for proba- ble credit losses. Common equity tier 1 ratio Common equity tier 1 capital in relation to total risk exposure amount. Common equity tier 1 ratio available for use as a buffer The common equity tier 1 ratio after a deduc- tion for the part of common equity tier 1 capital required to comply with alll formal capital requirements. Exposure amount Exposure amount (exposure at default) is the amount which is subject to capital adequacy requirements. For off-balance sheet items, the amounts are recalculated using the credit conversion factor (CCF). For derivatives, the exposure value is calculated according to the standardised approach for counterparty risk (SA-CCR). Exposure value Exposure value is the same as exposure amount. The exposure value concept is used in the standardised approach for credit risk. Guidance in Pillar 2 Guidance in accordance with Pillar 2 of the regulations allows the supervisory authority to inform the bank of the capital level which it deems the bank must maintain, excluding the minimum and buffer requirements maintained to cover risks and manage future financial strain. Leverage ratio Tier 1 capital in relation to total assets, includ- ing certain off-balance sheet items recalcu- lated with conversion factors defined in the standardised approach and regulatory adjust- ments from own funds. Liquidity coverage ratio (LCR) High-quality liquid assets in relation to an esti- mated net outflow of liquidity over a period of 30 days. Own funds Own funds are the sum of tier 1 and tier 2 capital. Risk exposure amount The capital requirement in accordance with CRR is multiplied by 12.5. Risk exposure amount is used in conjunction with market risk and operational risk. Risk weight A measure to describe the level of risk an exposure is expected to have according to the Capital Requirements Regulation. Risk-weighted exposure amount Exposure amount multiplied by risk weight. Risk-weighted exposure amount is used in conjunction with credit risk and counterparty risk. Tier 1 capital Common equity tier 1 capital including addi- tional tier 1 instruments. Tier 1 ratio Tier 1 capital in relation to total risk exposure amount. Tier 2 capital Tier 2 capital mainly comprises subordinated loans which meet the requirements stated in Regulation (EU) No 575/2013 and can there- fore be included in tier 2 capital. Total capital ratio Total capital in relation to total risk exposure amount. Total risk-weighted exposure amount Total risk exposure amount is the sum of risk exposure amount and risk-weighted exposure amount. 377 Handelsbanken Annual and Sustainability Report 2024 5.1
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Explanations CRR Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institu - tions and investment firms and amending Regulation (EU) No 648/2012. Defaults A default shall be considered to have occurred with regard to a particular obligor when either or both of the following have taken place: a) the institution considers that the obligor is unlikely to pay its credit obligations to the insti- tution, the parent undertaking or any of its sub- sidiaries in full, without recourse by the institu- tion to actions such as realising security; b) the obligor is past due more than 90 days on any material credit obligation to the institution, the parent undertaking or any of its subsidiaries. Expected loss (EL) Expected loss or EL means the ratio of the amount expected to be lost on an exposure from a potential default of a counterparty or dilution over a one year period to the amount outstanding at default. Forbearance measure A forbearance measure is a concession by an institution towards an obligor that is experienc- ing or is likely to experience difficulties in meeting its financial commitments. Internal ratings-based approach (IRB approach) The internal ratings-based approach is the approach provided for in Chapter 3 of Regula- tion (EU) No 575/2013 for the calculation of risk-weighted exposure amounts for the pur- poses of points (a) and (f) of Article 92(3). Loss given default (LGD) Loss given default or LGD means the ratio of the loss on an exposure due to the default of a counterparty to the amount outstanding at default. MREL requirement Minimum requirement for own funds and eligi- ble liabilities (MREL). The MREL requirement is expressed as a share of own funds and eligible liabilities relative to the risk-weighted exposure amount and the non risk-weighted exposure amount, respectively. The requirement is deter- mined annually by the Swedish resolution authority, in accordance with the Swedish Resolution Act (SFS 2015:1016). Net Stable Funding Ratio (NSFR) The structural liquidity measure that is a ratio between available stable funding and the sta- ble funding required. Non-recurring items Non-recurring items are items which Handels- banken deems to be of a one-off nature. These are specified in Handels banken’s Fact Book, which is available at Handels banken.com/ir. OTC derivatives Over-the-counter derivatives are uncleared tailor-made derivatives. Own funds and eligible liabilities The sum total of own funds and eligible liabili- ties according to the Swedish Resolution Act (SFS 2015:1016), intended to meet the MREL requirement. Probability of default (PD) Probability of default or PD means the proba- bility of default of a counterparty over a one- year period. Securitisation Securitisation means a transaction or scheme, whereby the credit risk associated with an exposure or pool of exposures is tranched, having both of the following characteristics: a) payments in the transaction or scheme are dependent upon the performance of the expo- sure or pool of exposures; b) the subordination of tranches determines the distribution of losses during the ongoing life of the transac- tion or scheme; c) the transaction or scheme does not create exposures with all the charac- teristics listed in Article 147(8) of Regulation (EU) No 575/2013. Social security costs Fees for financing social security systems. This comprises employers’ contributions and special payroll tax in Sweden and equivalent taxes and charges for operations elsewhere. Special items Special items are items which tend to vary between financial reporting periods, such as provisions to the Oktogonen profit-sharing scheme, and which Handels banken has speci- fied in detail to facilitate comparison of finan- cial performance. Standardised approach The standardised approach is the approach provided for in Chapter 2 of Regulation (EU) No 575/2013 for the calculation of risk-weighted exposure amounts for the purposes of points (a) and (f) of Article 92(3). The standardised approach means that the risk weights used when calculating the capital requirement for credit risk are specified in the regulations. Sustainability 2030 Agenda The action plan containing the 17 Sustainable Development Goals (SDGs) that is to be achieved by 2030 and which was adopted by global leaders at the UN Sustainable Develop- ment Summit in September 2015. Article 8 fund Funds that, in accordance with the disclosure requirements stipulated in the SFDR, promote environmental or social characteristics and contribute to sustainability without having sus- tainability as the objective of management. Article 9 fund Funds that, in accordance with the disclosure requirements stipulated in the SFDR, have sustainable investment as their objective and invest in companies or projects that meet spe- cific environmental or social objectives. Carbon footprint A calculation of the total greenhouse gas (GHG) emissions caused directly and indirectly by an individual, organisation, event or product. 378 Handelsbanken Annual and Sustainability Report 2024 5.1 Introduction Administration report Financial statements Sustainability Other Definitions and explanations
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Corporate Sustainability Reporting Directive (CSRD) The EU Corporate Sustainability Reporting Directive that will regulate how certain compa- nies will be required to report on sustainability in their annual reports. It applies to financial years beginning after 1 July 2024. ESG Environmental, social and governance criteria. EU Taxonomy An EU-wide classification system for sustaina- ble activities. The introduction of the Taxonomy is part of the EU action plan for financing sus- tainable growth. Equator Principles A financial industry benchmark for determin- ing, assessing and managing environmental and social risk in projects. European Sustainability Reporting Standards (ESRS) The EU standards that describe the sustaina- bility reporting requirements under the CSRD. Global Reporting Initiative (GRI) GRI is an international standard for sustainabil- ity reporting. Greenhouse Gas Protocol (GHG Protocol) The most commonly used standard for calcu- lating and reporting a company’s GHG emis- sions. Network for Greening the Financial System (NGFS) A global network of more than 100 central banks and supervisors, which was founded in 2017 to promote a sustainable and climate- friendly financial systems by integrating cli- mate-related risks in financial decisions and regulations. Paris Agreement At the UN Climate Change Conference in Paris in December 2015, world leaders reached a new global and legally binding climate agree- ment. The agreement entered into force in 2016 and commits countries to limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C. Paris Aligned Benchmark (PAB) An index that approximates a pathway for investments to achieve alignment with the goals of the Paris Agreement. This index is part of the EU’s sustainability agenda to promote trans- parent and reliable climate-friendly investments. Partnership for Carbon Accounting Financials (PCAF) A global partnership of financial insti tutions that work together to develop and implement a harmonised approach to assess and disclose the GHG emissions associated with their loans and investments. The PCAF is the GHG Proto- col’s approved standard for the financial sector. Physical climate risks Physical climate risks arise as a consequence of global warming brought about by increased GHG emissions. This results in increased occurrences of extreme weather events, as well as rising sea levels, coastal erosion and similar consequences. Principles For Responsible Banking (PRB) The UN Principles for Responsible Banking. The aim of the Principles is to increase and visualise the banking sector’s contribution to sustainability and strengthen the need for the finance sector to act in line with the Paris Agreement and the 17 SDGs. Scope (1, 2 and 3) These are different categories of emissions set by the GHG Protocol. Scope 1 includes direct GHG emissions that occur in the company’s own operations. Scope 2 is indirect GHG emis- sions, for example, electricity that is purchased and used by the reporting company. Scope 3 comprises all other indirect GHG emissions that occur from a company’s value chain that are not owned or controlled by the company. Sustainable Development Goals The Sustainable Development Goals (SDGs) are part of the 2030 Agenda. There are a total of 17 SDGs, which in turn have 169 associated targets. With these SDGs, global leaders have pledged to eradicate extreme poverty, combat inequalities and injustice and solve the climate crisis by 2030. Sustainable Finance Disclosure Regulation (SFDR) An EU regulation that aims to make it easier to compare the sustainability performance of different funds by requiring fund companies to disclose how sustainability risks are integrated into investment decisions, how the principal adverse impacts of sustainability factors are considered, and whether a fund has sustaina- ble investment as its objective or promotes environmental or social characteristics. Task Force on Climate-related Financial Disclosure (TCFD) A global initiative that developed a framework to help businesses identify and prevent their climate-related risks and opportunities. The framework also provides guidance on report- ing and transparency. Taskforce on Nature-related Financial Disclosures (TNFD) A global initiative to develop a set of disclosure recommendations and guidance for organisa- tions to report and act on evolving nature- related dependencies, impacts, risks and opportunities. Transition company A company that is transitioning its operations to be more sustainable. An example is a com- pany that is shifting away from fossil energy production to renewable energy. Transition risks Transition risks are risks that arise through changes to legislation, changes in the demand for products and services, changed customer behaviour or other structural shifts which take place as part of society’s attempts to transition to a climate-neutral economy. 379 Handelsbanken Annual and Sustainability Report 2024 5.1
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5.2 Branches and branch managers Branches and branch managers Handelsbanken’s strength lies in close relationships and local presence. With a nationwide network of branches in Sweden, the UK, Norway and the Netherlands, local experts are always avail- able to provide qualified advice based on customer needs. This closeness to customers is not only the foundation that enables Handels banken to offer high-quality advisory services, but also one of the reasons why Handels banken is one of the most stable banks in the world. Local business decisions are made by employees who know both the customer and the local market, which results in more satisfied customers and better decisions. The information applies as per 31 December 2024. Sweden Alingsås Malin Bern Alviks Torg Linda Unger Arboga Larry Andersson Arenastaden Christer Örtegren Blasieholmstorg Large Corporates Kenneth Holmström Boden Eva Berggren Bollebygd Anders Roos Bollnäs Anna Ekström Borlänge Henrik Bergenström Borås City Joakim Antonsson Brommaplan Charlotta Hallqvist Lindström Bålsta Anna Karlsson Båstad Adam Bergqvist Djursholm Fredrik Enander Edsbyn Anna Ekström Ekerö Patrik Lönnstad Enköping Lars Olsson Eskilstuna Johan Gustavsson Eslöv Angelica Lund Fagersta Ida Eriksson Falkenberg Kristian Gårdenfelt Falköping Rebecca Ingwall Falun Henrik Ragnarsson Farsta Centrum Mårten Larsson Gislaved Per Risberg Globen Katarina Alf Gotland CarlOscar Sjöström Gällivare Marcus Lagerqvist Gävle City Peter Brodin Gothenburg Almedal Helena Johansson Gothenburg Avenyn Veronica Wallin Johansson Gothenburg City Johan Martinsson Gothenburg Frölunda Patrik Niklasson Gothenburg Masthuggskajen Peter Romedahl Gothenburg Sisjön Christian Sjöberg Gothenburg Torslanda Eva Bergholtz Gothenburg Volvo PVB Hampus Bogsjö Gothenburg Örgryte Linda Hellsten Hallstavik Diana Israelsson Halmstad Magnus Landbring Hammarby Sjöstad Erik Lundmark Haninge Maria Sjöstedt Hedemora Jonas Lund Helsingborg Stortorget Erik De La Motte Huddinge Centrum Heléne Ferlin Hudiksvall Thony Nylund Hägersten Philip Vikman Härnösand Andreas Linder Hässleholm Matz Nilsson Höganäs Erik De La Motte Höllviken Maria Hägerström Järfälla Karin Morin Jönköping Jens Claesson Kalix Maria Mörk Kalmar Johan Lorentzon Karlastaden Christian Pennert Karlshamn Kristina Helander Krona Karlskoga Jonna Hagelbrand Karlskrona Peter Andersson Karlstad Magdalena Gunnarsson Katrineholm Terese Klöver Kiruna Alexander Steen Kista Johannes Thornell Knivsta Agneta Sturesson Kramfors Kim Brändström Kristianstad Åhus Rebecca Törnkvist Krokom Henrik Lindqvist Kumla Nina Bertebo Kungsbacka Anna-Lena Ranhög Kungsängen Anna Karlsson Kungälv Gustav Olsson Kävlinge Roger Håkansson Köping Annette Holmsten Landskrona Elin Persson Leksand Anders Ekström Lerum Annika Eriksson Lidingö Mikael Gustafson Lidköping Andreas Hauge Lima Camilla Enqvist Lindesberg Maria Ekdahl Linköping Petri Rask Ljungby Maria Larsson Ljusdal Tove-Li Häll Lomma Philip Cederholm Ludvika Edvin Rogefors Luleå Storgatan Jonathan Kylmänen Lund City Roger Håkansson Lund Ideon Erik Hultgren Lycksele Fredrik Karlsson Malmö City Erik Bredberg Malmö Fosie Anders Persson Malmö Fridhem Göran Camitz Malmö Limhamn Cecilia Leijgård Malmö Stortorget Pernilla Hanserup Malmö Öster Cecilia Wahlberg Mariestad Pernilla Ljungkvist Marievik Thomas Hernbäck Mjölby Fredrik Lundgren Mora Anette Skoglund Motala Fredrik Lundgren Mölndal Helena Johansson Mölnlycke Fredrik Gårlin Mörby Centrum Sofie Ehrström Nacka Forum Nesrin Atci Nordmaling Camilla Björk Norrköping Christina Törnell Norrtälje Diana Israelsson Norsjö – Malå Henrik Widman Nyköping Terese Klöver Nynäshamn Erik Johansson Nässjö Peter Fråhn Oskarshamn Marie-Louise Mobelius Pajala Maria Grym Partille Rickard Åhrén Piteå Stefan Uddström Sala Heby Helen Emnerud Vilhelmsson Saltsjö-Boo Jennie Widlund Sandviken Johan Björk Sigtuna Johanna Estman Larsson Simrishamn Mohammad Mokhtari Sjöbo Thomas Hansson Skanör Maria Hägerström Skellefteå Henrik Widman Skövde Niklas Standar Sollefteå Kim Brändström Sollentuna Centrum Fredrik Andersson Solna Maria Lidström Andersson Staffanstorp Roger Håkansson Stenungsund Per Marcher Stockholm Arbetargatan Beril Kadayifci Stockholm Gärdet Petra Wahlberg Stockholm Hornsberg Nahir Oussi Stockholm Humlegården Anne-Marie Dahlstedt Stockholm Högalid Malin Cederlund 380 Handelsbanken Annual and Sustainability Report 2024 5.2 Introduction Administration report Financial statements Sustainability Other Branches and branch managers
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Stockholm Karlaplan David Forner Stockholm Kungsholmstorg Franck Eklund-Morén Stockholm Kungsträdgården Lena Stenmark Stockholm Norrmalmstorg Maria Wedholm Stockholm Norrtullsgatan Linda Norman Monteil Stockholm S:t Eriksplan Emelie Franck Stockholm Skanstull Camilla Esgård Stockholm Slussen Anna Andersson Stockholm Strandvägen Carl-Magnus Gustafsson Stockholm Stureplan Hans Lundin Stockholm Vanadisplan Stina Marklund Stockholm Vasagatan Anders Lindegren Stockholm Östermalmsgatan David Forner Stockholm Östermalmstorg Jan Larsson Strängnäs Katharina Hellmark Strömsund Marlene Wahlström Sundbyberg Martin Nordfeldt Sundsvall Åsa Willén Sunne Catherine Bergman Sveg Emil Olsson Grind Söderhamn Thomas Frykberg Södertälje Ellinor Lindblom Tierp Hampus Udell Tranås Anna Gyllenhammar Trelleborg Cecilia Pilo Trollhättan Ingela Karlsson Tullinge Anna Zickert Söderström Tyresö Maria Grahn Täby Johan Grahn Uddevalla Fredrik Sköld Ulricehamn Agneta Gustafsson Umeå City Anders Sundström Umeå Teg Henrik Lundström Upplands Väsby Carl-Fredrik Boija Uppsala Boländerna Kristina Carlsson Uppsala City Micael Lindström Uppsala Luthagen Ann-Sofie Sivander Uppsala Rosendal Sofie De Jounge Vallentuna Susanne Ädel Vansbro Fredrik Hallkvist Vara Hanna Carlsson Varberg Alexander Turesson Vetlanda Malin Zeilon Vilhelmina Sabitha Rolandsson Vimmerby Marie-Louise Mobelius Vällingby Eric Nolerstedt Vänersborg Maj Rudell Vännäs Alexander Bagrov Värmdö Johanna Lagerbäck Värnamo Eva Fälth Västervik Marie-Louise Mobelius Västerås City Marie Strandberg Västerås Köpingsvägen Mats Söderlund Västerås Öster Mälarstrand Emilie Lövgren Växjö Maj-Lis Pettersson Ystad Katerina Bosevska Åkersberga Carin Björnestam Söderlind Åmål Dennis Göransson Ånge Ulrika Magnusson Åre Per J Lindberg Älmhult Fredrik Roghner Älvsborg Allison Åsblom Älvsbyn David Åkerlund Älvsjö Daniel Andersson Ängelholm Irene Andersson Öland Johan Lorentzon Örebro Drottningparken Michael Johnsson Örebro Ekersgatan Kristina Dahl Örebro Stortorget Kenneth Vallin Örnsköldsvik Kari Pessa Östersund Hans Albert Lindgren Östhammar Anna Lydell Bjälmén UK Aberdeen & Dundee Steve Rae Altrincham Rachel Farnan Ascot Cara Taylor Banbury Martin Randall Barnsley & Rotherham Steven Stocker Bath Frank Green Bedford Chris Spurgeon Birmingham – Temple Row Stephen Breen Bolton Mark Hutchinson Bournemouth Alex Newey Bradford David Brady Bristol Aztec West Matt Bevan Bristol Queens Square Illtyd Francis Bromley Chris Pye Bromsgrove Gavin Oliver Cambridge Cambourne Thomas Smith Cambridge North Paul Smith Canterbury & Ashford Gavin Coleman Cardiff Christoper Price Central Scotland Karl Lejman Chelmsford Arun Jeyarajah Chelsea Ceri Baker Chester Nicola Arrowsmith Chesterfield Karen Claydon Chichester Brett Charles Chiswick Raakesh Teeluck Clapham Michelle Groome Clifton Neil Humphreys Colchester Russell Felstead Cotswold Roger Bell Coventry Brett Salisbury Crawley David Barden Croydon Stephen Gutteridge Darlington Sarah Martinson Dartford Jon Gurney Derby Michael Alldread Doncaster Andrew Kerley Dorchester Martin Dyer Durham Jonathan Leonard Ealing Chris Ttouli East Lancashire Richard Lancaster East Sussex Simon Nicholson Edgbaston Oliver Longmore Edinburgh East Craig Ramsay Edinburgh West End Iain Henderson Enfield Kirti Mistry Exeter Jim Durrant Finchley Will Lamb Fylde Coast Adam Short Gateshead Neil Black Glasgow City David Waddell Gloucester Emma Gray Grimsby Julie Williamson Guildford Jason May Halifax Neil Whittaker Hampstead Jake Ellson Harrogate James Cornell Harrow Nerpal Singh Henley on Thames Brian Palmer Hertford Debbie Chilton High Wycombe Nick Oliver Huddersfield Ian Noke Hull Hesslewood Timothy Kitching Hull Marina Court James Gray Inverness John Imray Ipswich Martin Fish Finchley Will Lamb Kensington Navid Shah Kingston upon Thames Mark Lobo Leamington Spa Danielle Coe Leeds Lawnswood Andy Lowther Leeds The Embankment Mike Harvey Leeds Wellington Street Andrew Shakeshaft Leicester Jane Morris Lincoln Di Jones Liverpool Duke Street Alexia Hayes Liverpool Exchange Station Catherine Joynt London – Large Corporates South Paul Highmore London Bridge Mark Lilliott London Holborn David Boaden London Liverpool Street Mark Earlam London Marylebone Andrew Rowlands London Moorgate Ross Simmons London West End Roy Budgett Luton Phil Bidwell Maidstone Jack Thomas Manchester – Large Corporates North Paul Highmore Manchester Spinningfields Mark Cundiff Manchester Trafford Philip Basten Manchester Trinity Way Anthony Flynn Middlesbrough Thomas Ramshaw Milton Keynes Lisa Robey Morpeth Neil Black Newbury Kevin Heppell Newcastle upon Tyne Brian Foreman Newport David Cleaves North Cumbria Michelle Raffles North Wales Louise Harper Northampton Timothy Richardson Norwich Jim Braithwaite Nottingham Ropewalk Darryn Evans Nottingham West Bridgford Nick Pulley Oxford & Abingdon Graham Beith Oxford Parkway David Cook Peterborough Helen Hickingbotham Plymouth Paul Warnham Portsmouth Jonathan Hughes Preston John Williams Reading Nick Oliver Redhill & Epsom Hichem Turki Dit Gara Youssef Richmond Paul Cooledge Romford Andy Walker Salisbury Graham Renshaw Scarborough Owen Mahoney Sevenoaks Dan Batchelor Sheffield Pete Gray Shrewsbury Lindsay Pearson Solihull Sean Leckenby South Lakes & Lancaster Michael Fell Southampton Philip Dedman Southend on Sea Phil Clarke St Albans Steve Smith Stafford Helen Brown Stockton on Tees John Martinson Stoke on Trent Lee Vickers Swansea Martin Griffiths Swindon Shaun Bradshaw Tamworth Paul Thacker Taunton Peter Kirby Truro Elizabeth Stansfield Tunbridge Wells Dan Batchelor Wakefield David Haslehurst Warrington Ian Foster Watford Andrew Samarasinghe Weybridge Geoff Harrison Wigan Mark Hutchinson Wilmslow Haydn Aird Wimbledon Dermot Jordan Winchester John Gornall Windsor Faisal Khan Wolverhampton Ian Gough Worcester & Hereford Stephen Ellis York Joy Newton 381 Handelsbanken Annual and Sustainability Report 2024 5.2
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Norway Arendal Vidar Akselsen Asker Anita Kongsgård Bergen Nord Bjørn Tore Riise Bergen Sentrum Geir Flaa Bergen Syd Jarle Hundven Bodø Tore Halvorsen Drammen Cathrine Bjørge Follo Hanne Bjørnå Berntsen Fredrikstad Tove Anita Rønning Torp Halden Tormod Sørum Hamar Lars Erik Jevanord Haugesund Ole Henry Slette Jessheim Inger Elisabeth Østereng Kyhen Kongsberg Cathrine Bjørge Kristiansand Vidar Akselsen Larvik Bodil Hansen Lillehammer Hans Alf Skjelbreid Lillestrøm Helene Warhuus Molund Lysaker Glenn Steinbø Mo i Rana Tore Halvorsen Molde Kristin Farstad Vang Moss Ole Petter Garberg Oslo Bjørvika Liv Hårstadhaugen Oslo Bryn Ole Almedal Hellevik Oslo Majorstuen Henrik Gunnestad Bjerkreim Oslo Nord Jon Are Skarholt Oslo Skøyen Linda Rognes Stensrud Oslo Vika Eirik Arnesen Sandefjord Hans Jørgen Ormar Sandnes Sindre Bergsagel Sandvika Aslak Olimb Nanseth Sarpsborg Tormod Sørum Skien Mårten Jacobsson Stavanger Rolf Inge Knutsen Tønsberg Sveinung Dahl Tromsø Vegar Haugstvedt Henriksen Trondheim Ola Grøtte Ålesund Johan Gerhard Myklebust The Netherlands Alkmaar Ronald Smit Amersfoort Jeroen Ammerdorffer Amstelveen Caroline Mesters Amsterdam Amstel Erik van den Brom Amsterdam Centrum Tim Neu Amsterdam Zuid Lars Vissers Apeldoorn Jeroen Altena Arnhem Kees van Yren Bergen op Zoom Jeroen Wiertz Breda Edwin Boonk Den Bosch Nicole van Rijmenam Den Hague Marc de Brey Drenthe Shiëstha de Jonge Eindhoven Pieter van de Koolwijk Friesland Tammo Oosterhof Groningen Martijn Popken Haarlem Daniël van Til Het Gooi Laurens de Jong Leiden Gelte Olijve Maastricht Gaston van den Biggelaar Rijnmond Zuid Hidde van der Wind Roermond Luc Geisen Rotterdam Riewing van Eerden Tilburg Erik de Beer Twente Martijn Peters Utrecht Siger Seinen Zwolle Peter Hulsbergen Other countries Luxembourg Peggy Paul New York Martin Blåvarg 382 Handelsbanken Annual and Sustainability Report 2024 5.2 Introduction Administration report Financial statements Sustainability Other Branches and branch managers
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Production: Handelsbanken in cooperation with Hallvarsson&Halvarsson. Photo: Magnus Fond (Fond & Fond Photographers), Pär Olsson (Studio Pär Olsson), Rickard Kilström (Fotograf Rickard Kilström), Handelsbanken. Print: Larsson Offsettryck, Linköping 2025.
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