For the nine months from January to September 2005, Handelsbanken's operating profit increased by 9% to SEK11.1 billion. Income rose by SEK18.9 billion, an increase of 7%, while expenses went up by 6%. Operating profit for the third quarter alone meanwhile was just under SEK4 billion, the best so far for an individual quarter.
Larger business volumes compensated for deteriorated deposit margins and deteriorated margins for mortgage loans to households. Net commission income increased by 17% to SEK5 billion. Net commission income for the third quarter is normally relatively weak but this year it was almost as high as for the second quarter. Compared to the corresponding quarter last year, the increase was 26%. The insurance operation quadrupled its profits.
Net interest income, net commission income and income from net gains/losses on items at fair value increased by 1%, 17% and 23% respectively. In total, income rose to SEK18.9 billion, an increase of 7%. Net interest income rose since larger business volumes compensated for the decrease in margins.
The average volume of lending rose by 8%, with household lending rising by 12% and corporate lending by 4%. The rate of increase in Sweden was just over 6% and at the regional banks outside Sweden, almost 18%. The average volume of deposits totaled SEK362 billion, an increase of 19%, with deposits in Sweden at SEK243 billion.
In a comparison between the third quarter this year and the corresponding quarter in the previous year, the increase was 26%. A major contributory factor to the high net commissions income figure was the rise in securities-related commission and also continued strong performance for the Bank’s insurance operations. The increase in income from net gains/losses on items at fair value was mainly due to a considerably higher risk result in the insurance operations.
Elsewhere, the Swedish bank announced that SPP, which is a wholly-owned subsidiary currently run on mutual principles, is to be demutualized. The bank hopes that this process will be completed by January 1, 2006.
It is expected that a demutualized SPP will contribute to higher post-tax profits as early as 2006 and will boost both return on shareholders’ equity and earnings per share.