Handelsbanken’s net interest income fell 5 percent during the first quarter, compared to the immediately preceding quarter’s SEK 12,222 million, and amounted to SEK 11,587 million. Expected according to Infront’s forecast compilation was SEK 11,964 million.
Adjusted for currency, daily effect (1 day less) and deposit guarantee fees, net interest fell by 4 percent compared to the previous quarter.
“The decrease was largely explained by lower interest margins as a result of increased price competition, especially on customers’ deposit accounts, and that an increased proportion of the deposit volume was placed in accounts with lower margins,” writes Handelsbanken.
Overall, the net effect of margins and financing costs was SEK -392 million. Changed business volumes had an effect of SEK -87 million.
Net commissions decreased by 2 percent to SEK 2,754 million. Here, the analyst forecast average was SEK 2,852 million.
Fund, custody and other asset management commissions increased by 1 percent, but net payment commissions decreased by 12 percent, where net card commissions decreased by 17 percent as a result of seasonally higher activity during the comparison quarter, writes Handelsbanken.
The credit losses were net recoveries of SEK 95 million. On average, the analysts had expected credit losses of SEK 303 million.
The return on equity was 13.7 percent, compared to the expected average of 13.8 percent.
The Tier 1 capital ratio, which is a risk-weighted measure of the size of the bank’s capital base, amounted to 18.8 percent at the end of the period, compared to the expected 18.9 percent.
Costs are rising faster than revenues
Handelsbanken states in its interim report that the development during the first quarter was not satisfactory.
“In a quarter where costs are rising faster than revenues, we are of course not satisfied,” writes the bank.
Handelsbanken further writes that the outcome means that the bank will work even more focused in the future, “with resolute change work at a higher pace”. Business support costs must be moved closer to business decisions and the decentralized responsibility for implementing efficiency improvements must be strengthened.
The bank points to good growth in the savings business and Private Banking, which is considered to confirm the branches’ ability to operate effectively in highly competitive segments.
“Personnel costs are increasing. But part of the increase is due to new hires in the office operations, which is a good sign of increasing customer and business activity,” Handelsbanken writes further.
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