DELÅRSRAPPORT JANUARI – SEPTEMBER 2010 201 0 · - after dilution 4.27 3.83 4.07 12.85 12.07 15.98 Tier 1 ratio according to Basel II 15.7% 13.5% 14.8% 15.7% 13.5% 14.2% * When

1 Handelsbanken

DELÅRSRAPPORT JANUARI – SEPTEMBER 2010

20 10Interim Report January –September

2 Handelsbanken

INTERIM REPORT JANUARY – SEPTEMBER 2010

Handelsbanken’s Interim ReportJanuary – September 2010

Sammanfattning january – September 2010, compared with januari – September 2009

• Operating profit for continuing operations went up by 4 percent to SEK 10,937 million (10,506)

• Profit after tax for total operations went up by 5 percent to SEK 8,133 million (7,728) and diluted

earnings per share rose to SEK 12.85 (12.07)

• Tier 1 capital increased to SEK 86.9 billion (84.0) and the Tier 1 ratio according to Basel II went

up to 15.7 percent (13.5)

• Return on equity for total operations was unchanged at 12.8 percent (12.8), while equity grew by 6 percent

• Net interest income declined by 6 percent to SEK 15,725 million (16,641)

• Net fee and commission income went up by 9 percent to SEK 5,895 million (5,398)

• Income declined to SEK 23,168 million (24,368) and expenses decreased to SEK -11,021

million (-11,162)

• The loan loss ratio decreased to 0.10 percent (0.23), with loan losses amounting to SEK -1,214

million (-2,701)

• The volume of credit commitments to the public increased by 18 percent, and the average volume

of lending rose by 1 percent, adjusted for currency effects

Summary of Q3 2010, compared with Q2 2010

• Operating profit for continuing operations went up by 2 percent to SEK 3,606 million (3,539)

• Profit after tax for total operations went up by 5 percent to SEK 2,707 million (2,573) and diluted

earnings per share rose to SEK 4.27 (4.07)

• Return on equity for total operations was 12.7 percent (12.0)

• Net interest income rose by 5 percent to SEK 5,327 million (5,082)

• Income declined by 2 percent to SEK 7,506 million (7,653), while expenses fell by 4 percent to

SEK -3,610 million (-3,745)

• Loan losses went down to SEK -294 million (-369), and the loan loss ratio dropped to 0.08 percent (0.09)

• Average lending volumes were unchanged, while credit commitments went up by 6 percent

• Via Stadshypotek, Handelsbanken became the first Nordic bank to issue covered bonds in the US

• This year, Handelsbanken again had the most satisfied bank customers in the Nordic countries

according to the SKI/EPSI survey

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2 Handelsbanken

Contents Page

Group – Overview 4

Business segments 5

Group performance 6

Branch office operations in Sweden 9Branch office operations outside Sweden 11Branch office operations in Great Britain 13Branch office operations in Denmark 14Branch office operations in Finland 15Branch office operations in Norway 16Handelsbanken International 17Handelsbanken Capital Markets 18Handelsbanken Asset Management 20Other 22

Condensed set of financial statements – The Group 23Key figures 23Income statement 24Earnings per share 24Statement of comprehensive income 25Quarterly performance 25Balance sheet 26Statement of changes in equity 27Condensed statement of cash flows 27Accounting policies 27

Note 1 Net fee and commission income 28Note 2 Net gains/losses on financial items at fair value 28Note 3 Other administrative expenses 29Note 4 Loan losses, impaired loans and pledged assets taken over 29Note 5 Loans to the public 31Note 6 Capital base and capital requirement in the banking group 33Note 7 Goodwill and other intangible assets 35Note 8 Derivatives 35Note 9 Risks and uncertainty factors 36Note 10 The Handelsbanken share 36Note 11 Turnover of own debt instruments and shares 37Note 12 Contingent liabilities 37Note 13 Related-party transactions 37Note 14 Discontinued operations 37

Parent company’s interim report 38

Information on phone conference etc 40

Share price performance and other information 41

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Handelsbanken Group – Overview

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep

2009 ChangeFull year

2009

Summary income statementNet interest income 5,327 5,610 -5% 5,082 5% 15,725 16,641 -6% 22,000

Net fee and commission income 1,924 1,803 7% 1,988 -3% 5,895 5,398 9% 7,393

Net gains/losses on financial items at fair value 177 278 -36% 424 -58% 1,101 1,960 -44% 2,457

Risk result - insurance 42 47 -11% 59 -29% 138 140 -1% 171

Other dividend income 3 2 50% 55 -95% 189 137 38% 141

Share of profits of associated companies 1 4 -75% 7 -86% 15 8 88% 26

Other income 32 18 78% 38 -16% 105 84 25% 147Total income 7,506 7,762 -3% 7,653 -2% 23,168 24,368 -5% 32,335

Staff costs -2,330 -2,451 -5% -2,352 -1% -7,038 -7,432 -5% -10,018

Other administrative expenses -1,166 -1,046 11% -1,276 -9% -3,637 -3,346 9% -4,719Depreciation, amortisation and impairments of property, equipment and intangible assets -114 -145 -21% -117 -3% -346 -384 -10% -483Total expenses -3,610 -3,642 -1% -3,745 -4% -11,021 -11,162 -1% -15,220

Profit before loan losses 3,896 4,120 -5% 3,908 0% 12,147 13,206 -8% 17,115Net loan losses -294 -866 -66% -369 -20% -1,214 -2,701 -55% -3,392Gains/losses on disposal of property, equipment and intangible assets 4 1 300% 0 4 1 300% 4

Operating profit 3,606 3,255 11% 3,539 2% 10,937 10,506 4% 13,727Taxes -945 -829 14% -1,019 -7% -2,932 -2,797 5% -3,519Profit for the period from continuing operations 2,661 2,426 10% 2,520 6% 8,005 7,709 4% 10,208Profit for the period from discontinued operations, after tax 46 8 475% 53 -13% 128 19 36Profit for the period 2,707 2,434 11% 2,573 5% 8,133 7,728 5% 10,244

Summary balance sheetLoans to the public 1,469,109 1,476,030 0% 1,484,406 -1% 1,469,109 1,476,030 0% 1,477,183 of which mortgage loans 733,757 664,326 10% 720,228 2% 733,757 664,326 10% 684,920

Deposits and borrowing from the public 572,723 605,667 -5% 580,113 -1% 572,723 605,667 -5% 549,748 of which households 240,896 232,226 4% 240,754 0% 240,896 232,226 4% 230,738

Total equity 84,698 79,779 6% 82,592 3% 84,698 79,779 6% 83,088Total assets 2,188,032 2,147,756 2% 2,325,621 -6% 2,188,032 2,147,756 2% 2,122,843

Summary of key figuresReturn on equity, total operations * 12.7% 12.0% 12.0% 12.8% 12.8% 12.6%

Return on equity, continuing operations * 12.5% 11.9% 11.8% 12.6% 12.7% 12.5%

C/I ratio, continuing operations 48.1% 46.9% 48.9% 47.6% 45.8% 47.1%

Earnings per share, total operations, SEK 4.35 3.91 4.14 13.08 12.40 16.44 - after dilution 4.27 3.83 4.07 12.85 12.07 15.98

Tier 1 ratio according to Basel II 15.7% 13.5% 14.8% 15.7% 13.5% 14.2%

* When calculating return on equity, equity is adjusted for the impact of unrealised changes in the value of financial assets classified as "Available for Sale" and for cash flow hedges.

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Business segments

THE GROUP’S INCOME STATEMENT BY BUSINESS SEGMENT, JANUARY – SEPTEMBER 2010

SEK m

Branch office operations in

Sweden

Branch office operations

outside Sweden

Capital Markets Asset Mgmt Other

Adjustments & elimi-nations

GroupJan-Sep

2010

GroupJan-Sep

2009

Net interest income 9,495 5,244 346 97 579 -36 15,725 16,641

Net fee and commission income 2,759 1,158 995 891 92 5,895 5,398

Net gains/losses on financial items at fair value 454 148 1,134 -2 -633 0 1,101 1,960

Risk result - insurance 138 138 140

Share of profits of associated companies 15 15 8

Other income 8 52 3 6 225 294 221Total income 12,716 6,602 2,478 1,130 278 -36 23,168 24,368

Staff costs -2,250 -1,954 -1,154 -381 -1,812 513 -7,038 -7,432

Other administrative expenses -716 -748 -446 -228 -1,500 1 -3,637 -3,346

Internal purchased and sold services -2,181 -622 30 -97 2,870

Depreciation and amortisation -63 -58 -27 -6 -183 -9 -346 -384Total expenses -5,210 -3,382 -1,597 -712 -625 505 -11,021 -11,162

Profit before loan losses 7,506 3,220 881 418 -347 469 12,147 13,206Net loan losses -113 -1,101 -1,214 -2,701

Gains/losses on disposal of property, equipment and intangible assets 0 0 - - 4 4 1

Operating profit 7,393 2,119 881 418 -343 469 10,937 10,506Profit allocation 548 138 -496 -190 0

Operating profit after profit allocation 7,941 2,257 385 228 -343 469 10,937 10,506Internal income * -1,433 -4,425 -534 -471 6,863 -

Cost/income ratio, % 39.3 50.2 80.6 75.7 47.6 45.8

Loan loss ratio, % 0.02 0.30 0.10 0.23

Allocated capital 41,679 25,978 4,375 5,617 84,698 79,779

Return on allocated capital, % 18.8 8.4 6.9 3.9 12.6 12.7

Average number of employees 4,402 2,906 1,080 520 1,910 10,818 10,881

* Internal income which is included in total income, comprises income from transactions with other operating segments. Since interest income and interest expense are reported net as income, this means that internal income includes the net amount of the internal funding cost among the segments.

The business segments are recognised in compliance with IFRS 8, Operating Segments. Profit/loss for the segments is reported before and after internal profit allocation. Internal profit allocation means that the unit which is responsible for the customer is allocated all the profits deriving from its customers’ transactions with the Bank, regardless of the segment where the transaction was performed. Furthermore, income and expenses for services performed internally are reported net on a separate line “Internal purchased and sold services”. 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 includes Treasury and the central head office

departments and also the cost of the Oktogonen profit-sharing foundation. The Adjustments and eliminations column includes translation differences and adjustments for staff costs calculated in accordance with IAS 19, Employee Benefits.

The segment income statements include internal items such as internal interest, commissions and payment for internal services rendered, primarily according to the cost price principle. C/I ratios for the segments are calculated after internal profit allocation. Return on allocated capital for the segments is calculated based on average equity and mainly with a tax rate of 26.3 percent. For the Group, return on equity is calculated after reported tax.

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Group performance JANUARY – SEPTEMBER 2010 COMPARED WITH JANUARY – SEPTEMBER 2009 Operating profit for the first nine months went up by 4 percent to SEK 10,937 million (10,506). A 9 percent increase in net fee and commission income and slightly lower expenses, together with lower loan losses, offset lower net interest income and lower net gains/losses on financial items at fair value.

Exchange rate movements affected operating profit by SEK -104 million, or -1 percent. Profit after tax for total operations increased by 5 percent and amounted to SEK 8,133 million (7,728).

Adjusted for foreign exchange effects, the average volume of lending to the public in the Group was up by 1 percent from the corresponding period of the previous year. However, the appreciation of the Swedish krona meant that the average volume in SEK terms decreased by SEK 35 billion, or 1 percent. At the same time, there was a marked increase in the volume of credit commitments, which grew by 18 percent during the period. The average volume of household deposits rose by 4 percent, and total deposits grew by 2 percent.

The C/I ratio for continuing operations was 47.6 percent (45.8).

Earnings per share increased to SEK 13.08 (12.40). Return on equity for total operations was unchanged at 12.8 percent (12.8), at the same time as equity increased.

Income

SEK mJan-Sep

2010Jan-Sep

2009 Change

Net interest income 15,725 16,641 -6% of which deposit margin Sweden -228 of which exchange rate changes -306

Net fee and commission income 5,895 5,398 9%

Net financial items 1,101 1,960 -44%

Other income 447 369 21%

Total income 23,168 24,368 -5%

Income declined by 5 percent, chiefly because net gains/ losses on financial items in the first quarter of the com-parison period included a high proportion of currency-related income, due to the particular market conditions that prevailed at the time and to lower net interest income.

Net interest income decreased by SEK 916 million, or 6 percent, to SEK 15,725 million. SEK 306 million of the decrease can be attributed to exchange rate movements, while a further SEK 228 million can be attributed to lower deposit margins in Swedish operations. The remainder of the decrease was chiefly due to the lower interest rate environment. Overall, the Group’s expenses relating to the Swedish Stabilisation Fund, the Danish state deposit guarantee and various other deposit guarantees charged to net interest income amounted to SEK -474 million (-448).

Net fee and commission income increased by SEK 497 million, or 9 percent, to SEK 5,895 million

(5,398). This increase was mainly attributable to the fact that fund management commissions grew by 45 percent, or SEK 355 million, and to rising lending and insurance commissions.

Net gains/losses on financial items at fair value de-creased by SEK 859 million to SEK 1,101 million (1,960), due chiefly to unusually high income during the period of comparison. The result was also affected by lower customer activity, which reduced income at Handelsbanken Capital Markets, particularly in the third quarter.

Expenses

SEK mJan-Sep

2010Jan-Sep

2009 Change

Staff costs -7,038 -7,432 -5.3%

Other administrative expenses -3,637 -3,346 8.7%

Depreciation and amortisation -346 -384 -9.9%

Total expenses -11,021 -11,162 -1.3%

Analysis of changes ChangeCosts for variable compensation -162 -1.5IAS 19 (pensions) -169 -1.5Oktogonen 72 0.6Exchange rate movements -254 -2.3

-513 -4.6Other costs 372 3.3Total change -141 -1.3

% points

Total expenses decreased by 1 percent to SEK -11,021 million. Staff costs fell by 5 percent, or SEK 394 million, mainly due to lower variable compensation, lower pension costs according to IAS 19, and exchange rate movements. The variable compensation, including social security costs and other payroll overheads, fell to SEK 173 million (335), and the allocation to the Oktogonen foundation increased by SEK 72 million to SEK -561 million (-489).

The average number of employees fell by 63 to 10,818 (10,881).

Other administrative expenses increased by 9 percent, chiefly due to a rise in IT development costs.

Loan losses

SEK mJan-Sep

2010Jan-Sep

2009 Change

Net loan losses -1,214 -2,701 1,487Loan loss ratio as a % of loans, annualised 0.10 0.23 -0.13

Impaired loans, net 2,723 3,710 -987

Level of impaired loans, % 0.17 0.24 -0.07

Loan losses more than halved to SEK -1,214 million. The loan loss ratio decreased to 0.10 percent (0.23) and net impaired loans fell to SEK 2,723 million, (3,710) corresponding to 0.17 (0.24) percent of lending.

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Q3 2010 COMPARED WITH Q2 2010 Operating profit increased by 2 percent to SEK 3,606 million (3,539). An increasing net interest income combined with lower expenses and lower loan losses counteracted a decrease in net gains/losses on financial items. Profit after tax for total operations went up by 5 percent to SEK 2,707 million (2,573) and earnings per share for total operations rose to SEK 4.35 (4.14). Return on equity increased to 12.7 percent (12.0).

Income

SEK mQ3

2010Q2

2010 Change

Net interest income 5,327 5,082 5%

Net fee and commission income 1,924 1,988 -3%

Net financial items 177 424 -58%

Other income 78 159 -51%

Total income 7,506 7,653 -2%

Net interest income increased by SEK 245 million or 5 percent to SEK 5,327 million. SEK 218 million of this increase is attributable to improved deposit margins in Swedish operations as a result of rising interest rates. Lending margins were generally stable during the period. Exchange rate movements decreased net interest income by SEK -43 million, and the benchmark effect in Stadshypotek amounted to SEK -36 million (2).

Adjusted for foreign exchange effects, the average volume of lending to the public increased by 1 percent compared with the previous quarter. Demand for corporate credits was weak during the period, but the improving economic climate was reflected in an increased volume of credit commitments, which continued to rise during the quarter. Household credit volumes continued to increase.

Average deposits rose by 1 percent to SEK 543 billion (537). The average volume of household deposits rose by 3 percent, but corporate volumes remained unchanged.

Net fee and commission income decreased by SEK 64 million to SEK 1,924 million (1,988), primarily due to lower commission income from portfolio bond and custody operations and lower brokerage income. Payment commissions increased by 4 percent to a new record level of SEK 630 million (607).

Net gains/losses on financial items at fair value decreased to SEK 177 million (424), chiefly due to low customer activity in fixed income and foreign exchange trading at Handelsbanken Capital Markets.

Expenses

SEK mQ3

2010Q2

2010 Change

Staff costs -2,330 -2,352 -0.9%

Other administrative expenses -1,166 -1,276 -8.6%

Depreciation and amortisation -114 -117 -2.6%

Total expenses -3,610 -3,745 -3.6%

Total expenses decreased by 4 percent to SEK -3,610 million and staff costs fell by 1 percent. Other admin-

istrative expenses decreased by 9 percent due to a seasonal decrease in the third quarter, and the decrease was general across all expense categories. Exchange rate movements reduced total expenses by SEK 42 million.

The average number of employees rose to 11,100 (10,719), chiefly due to an increased number of temporary staff during the summer.

Loan losses

SEK mQ3

2010Q2

2010 Change

Net loan losses -294 -369 75Loan loss ratio as a % of loans, annualised 0.08 0.09 -0.01

Impaired loans, net 2,723 2,755 -32

Level of impaired loans, % 0.17 0.17 0.00

Loan losses decreased to SEK -294 million. Loan losses as a proportion of lending decreased to 0.08 percent (0.09). Net impaired loans decreased marginally to SEK 2,723 million (2,755), equivalent to 0.17 (0.17) percent of lending.

PERFORMANCE IN THE BUSINESS SEGMENTS (Q3 2010 compared with Q2 2010)

In branch office operations in Sweden, operating profit increased by 2 percent to SEK 2,520 million (2,469), mainly due to improved net interest income. The loan loss ratio was 0.02 percent (-0.02). Income increased by 3 percent, while expenses fell by 2 percent.

In branch office operations outside Sweden, operating profit increased by 19 percent to SEK 785 million (661), mainly due to lower loan losses. Income decreased by 2 percent, while expenses rose by 2 percent. The loan loss ratio was 0.19 percent (0.35).

In the first nine months of the year, fifteen new branches were opened in Great Britain and eleven new branch managers were recruited in readiness for the opening of more new branches during the year. During the same period, net interest income in the UK operations increased by 57 percent in local currency terms.

Handelsbanken Capital Markets’ operating profit declined by 43 percent to SEK 175 million (309). The decrease was chiefly attributable to lower income from fixed income and foreign exchange trading, due to low customer activity in the third quarter.

Handelsbanken Asset Management’s operating profit fell to SEK 100 million (155). The decline in profits was mainly due to decreased commission income, as well as an increase in the deferred capital contribution in Handelsbanken Liv of SEK 25 million. Net savings in Handelsbanken’s funds, including SEK 0.2 billion in XACT Fonder, totalled SEK 9.1 billion.

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7 Handelsbanken

FUNDING AND LIQUIDITY During the first half of the year, the Bank refinanced all its bond maturities up to February 2011. This, coupled with the continuing shortage of demand for credit, caused the Bank to reduce its issue volumes during the third quarter. During the quarter a total of SEK 34 billion was issued, including SEK 27 billion worth of covered bonds.

The Bank continued to diversify its funding, and in September, Handelsbanken, through Stadshypotek, became the first Nordic bank to issue covered bonds in the US. This was a three-year issue, with a volume of USD 1.6 billion.

The accumulated issue volume during the year was SEK 204 billion, of which SEK 68 billion are senior bonds and SEK 136 billion are covered bonds.

The early refinancing of maturing bonds meant that during the third quarter, the Bank was able to reduce the part of its liquidity reserve that had been placed in the Riksbank, while maintaining its liquidity position. At the end of the period, the liquidity reserve exceeded SEK 500 billion. Liquid assets invested with central banks accounted for SEK 78 billion of the reserve, with SEK 14 billion of this placed with the Riksbank. Liquid bonds totalled SEK 79 billion and the remainder consisted of unutilised headroom for issues in Stadshypotek’s covered bond pool.

CAPITAL

SEK m30 Sep

201030 Sep

2009 Change

Tier 1 ratio according to Basel II 15.7% 13.5%

Capital ratio according to Basel II 20.7% 19.1%

Equity 84,698 79,779 6%

Tier 1 capital 86,890 84,040 3%

The capital base amounted to SEK 114.8 billion and the capital ratio according to Basel II was 20.7 percent, compared with 19.1 percent at the same date in 2009.

During the first quarter of 2010, a dated subordinated loan of SEK 5.2 billion was repaid at the full notional amount, and this reduced the capital ratio by 0.9 percentage points. Equity increased by SEK 4.9 billion to SEK 84.7 billion.

Tier 1 capital rose by SEK 2.9 billion to SEK 86.9 billion and during the past 12-month period, the Tier 1 ratio went up by 2.2 percentage points to 15.7 percent. During the third quarter the increase was 0.9 percentage points, with 0.2 percentage points of this being attributable to the profit for the period. The remainder was chiefly attributable to lower risk-weighted assets, where the positive migration of credit risks made a 0.3 percentage point contribution. In addition, reduced corporate loans and exchange rate effects each made a 0.1 percentage point contribution to the increase in the Tier 1 ratio.

RATING During the first nine months of the year, Handelsbanken’s short-term and long-term ratings were unchanged with the four rating agencies which monitor the Bank. All rating agencies gave the Bank a stable outlook.

Long-term Short-termFinancial strength

Standard & Poor's AA- A-1+

Fitch AA- F1+

Moody's Aa2 P-1 C+

DBRS AA (low)

DISCONTINUED OPERATIONS Discontinued operations includes businesses acquired by the Bank to protect its claims that it intends to sell. Profit after tax for the nine-month period amounted to SEK 128 million (19).

OTHER In the third quarter, the Bank decided to merge Handelsbanken Capital Markets and Handelsbanken Asset Management. The merger will be carried out during the fourth quarter.

This interim report has not been examined by Handelsbanken’s auditors.

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Branch office operations in Sweden Branch office operations in Sweden comprise six regional banks, Handelsbanken Finans’s operations in Sweden, and Stadshypotek. At Handelsbanken, the branches are the base of all operations with responsibility for all customers. The regional banks deliver universal banking services and are run with the goal of having higher profitability than comparable banks. Handelsbanken Finans has a full range of finance company services. Handelsbanken Finans works through the Bank’s branches and in financing collaborations with retailers and vendors. Stadshypotek is the Bank’s mortgage company, and is completely integrated with the branch operations.

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 3,204 3,335 -4% 3,079 4% 9,495 10,247 -7% 13,305

Net fee and commission income 920 874 5% 932 -1% 2,759 2,477 11% 3,377

Net gains/losses on financial items at fair value 170 33 415% 162 5% 454 378 20% 512

Other income 7 21 -67% -3 8 50 -84% 76Total income 4,301 4,263 1% 4,170 3% 12,716 13,152 -3% 17,270

Staff costs -748 -757 -1% -740 1% -2,250 -2,286 -2% -3,060

Other administrative expenses -238 -216 10% -243 -2% -716 -730 -2% -1,032

Internal purchased and sold services -719 -628 14% -754 -5% -2,181 -1,843 18% -2,534

Depreciation and amortisation -20 -20 0% -22 -9% -63 -60 5% -80Total expenses -1,725 -1,621 6% -1,759 -2% -5,210 -4,919 6% -6,706Profit before loan losses 2,576 2,642 -2% 2,411 7% 7,506 8,233 -9% 10,564

Net loan losses -56 -674 -92% 58 -113 -2,007 -94% -2,325Gains/losses on disposal of property, equipment and intangible assets 0 0 0% 0 0% 0 0 0% 0Operating profit 2,520 1,968 28% 2,469 2% 7,393 6,226 19% 8,239

Profit allocation 222 177 25% 207 7% 548 435 26% 757Operating profit after profit allocation 2,742 2,145 28% 2,676 2% 7,941 6,661 19% 8,996

Internal income -568 -696 18% -374 -52% -1,433 -3,149 54% -3,733Cost/income ratio, % 38.1 36.5 40.2 39.3 36.2 37.2

Loan loss ratio, % 0.02 0.27 -0.02 0.02 0.27 0.24

Allocated capital 41,679 38,635 8% 40,609 3% 41,679 38,635 8% 38,775Return on allocated capital, % 19.4 16.0 19.4 18.8 17.1 17.3

Average number of employees 4,552 4,585 -1% 4,309 6% 4,402 4,521 -3% 4,481Number of branches 461 461 0% 460 0% 461 461 0% 461

BUSINESS VOLUMES

Average volumes, SEK bnQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Loans to the public*

Household 541 494 10% 527 3% 528 484 9% 490

of which mortgage loans 484 437 11% 472 3% 472 427 11% 433

Corporate 463 478 -3% 470 -1% 466 487 -4% 483

of which mortgage loans 192 171 12% 187 3% 187 163 15% 166Total 1,004 972 3% 997 1% 994 971 2% 973

Deposits and borrowing from the public

Household 185 170 9% 178 4% 179 166 8% 168

Corporate 149 154 -3% 149 0% 151 151 0% 152Total 334 324 3% 327 2% 330 317 4% 320* excl. loans to the National Debt Office

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JANUARY – SEPTEMBER 2010 COMPARED WITH JANUARY – SEPTEMBER 2009

Earnings performance Operating profit rose by 19 percent to SEK 7,393 million (6,226) due to lower loan losses. Profit before loan losses fell by 9 percent to SEK 7,506 million (8,233) as a result of lower net interest income.

Net interest income decreased by 7 percent, or SEK 752 million, to SEK 9,495 million (10,247). Lower deposit margins negatively affected net interest income by SEK 228 million. The fee to the Stabilisation Fund reduced net interest income by SEK -157 million (-149).

Net fee and commission income increased by 11 percent, partly due to higher lending commissions.

Net gains/losses on financial items at fair value increased by 20 percent to SEK 454 million (378).

Staff costs fell by 2 percent as the average number of employees decreased by 3 percent. Overall, expenses rose by 6 percent to SEK 5,210 million (-4,919), chiefly due to an increase in IT costs. The C/I ratio was 39.3 percent.

Loan losses decreased to SEK -113 million (-2,007), which corresponds to a loan loss ratio of 0.02 percent (0.27).

Business development Among those banks offering a full range of services, Handelsbanken has for many years been the one with the most satisfied customers. At the beginning of October, SKI (Swedish Quality Index) presented the results of its annual survey, which revealed that the Bank has maintained this leading position and noted record levels among both private and corporate customers. Never before has the Bank had such satisfied private customers in Sweden as this year. Of the major Swedish banks, Handelsbanken is also the one with the most stable growth over time.

Deposits from households continued to increase, amounting to SEK 179 billion (166). Since the turn of the year, Handelsbanken’s share of the household deposit market in Sweden has risen from 18.0 percent to 18.8 percent as at 31 August. The average volume of mortgage loans to private individuals grew by 11 percent to SEK 472 billion (427).

Handelsbanken is the largest lender to companies in Sweden and its market share as at 31 August was 26.3 percent.

Since the formation of the Forestry and Farming business area in 2008, the inflow of forest-owners and farmers as customers has been very good. The number of active customers who own properties classified for tax purposes has continued to rise and now stands at

102,000 forestry and agricultural businesses. Of this figure, nearly three thousand became customers of the Bank during the first nine months of the year. A total of 1,500 employees have been trained and are continuing to receive training in products and banking services aimed at forest-owners and farmers.

Q3 2010 COMPARED WITH Q2 2010Operating profit rose by 2 percent to SEK 2,520 million (2,469), as a result of improved net interest income and lower costs. Profit before loan losses rose by 7 percent to SEK 2,576 million (2,411).

Net interest income grew by SEK 125 million, or 4 percent, between the quarters. Improved deposit margins resulting from rising interest rates caused net interest income to increase by SEK 218 million. The benchmark effect in Stadshypotek affected net interest income negatively by SEK -36 million (2). The effect over time is marginal, but it can vary between quarters. The change in the composition of lending, with an increasing share of mortgage loans and a decreasing share of corporate loans, also had a negative impact on net interest income.

Loans to households continued to grow, and the average volume of mortgage loans to private customers increased by SEK 12 billion to SEK 484 billion (472). The margin on the mortgage loan portfolio was stable at 0.67 percent (0.67). Credit demand from companies remained weak and average volumes fell by SEK 8 billion to SEK 462 billion (470). Fees for the Swedish Stabilisation Fund and the deposit guarantee totalled SEK -90 million (-94).

Net fee and commission income fell by 1 percent to SEK 920 million (932), mainly due to lower equity brokerage commissions. However, an increase in card use coupled with an increase in the number of cards generated higher payment commissions.

Net gains/losses on financial items at fair value, which consists primarily of early redemption charges and the result of currency conversions, increased by 5 percent to SEK 170 million (162).

Expenses decreased by 2 percent to SEK 1,725 million (-1,759). Staff costs increased by 1 percent as the result of the employment of temporary staff during the summer, which was a main contributory factor to the average number of employees increasing by 243 people. Other administrative expenses decreased.

Loan losses remained low and amounted to SEK -56 million for the quarter (+58).

11 Handelsbanken



10 Handelsbanken

Branch office operations outside Sweden Branch office operations outside Sweden comprise the regional banks in Denmark, Finland and Norway, as well as the two regional banks in Great Britain. These countries, together with Sweden, are regarded as the Bank’s domestic markets. The branch operations in these countries are run according to the same concept as in Sweden – to provide universal banking services with a higher service level and at lower cost than peer banks. This business segment also includes Handelsbanken International and Handelsbanken Finans’s operations outside Sweden. Handelsbanken International is responsible for branch operations outside the Bank’s domestic markets.

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009


Net fee and commission income 368 409 -10% 390 -6% 1,158 1,156 0% 1,533

Net gains/losses on financial items at fair value 38 22 73% 49 -22% 148 153 -3% 250

Other income 10 -3 25 -60% 52 9 478% 6Total income 2,158 2,324 -7% 2,201 -2% 6,602 6,752 -2% 9,106

Staff costs -652 -678 -4% -644 1% -1,954 -2,090 -7% -2,778

Other administrative expenses -236 -270 -13% -264 -11% -748 -855 -13% -1,133

Internal purchased and sold services -227 -194 17% -187 21% -622 -602 3% -842

Depreciation and amortisation -20 -21 -5% -18 11% -58 -64 -9% -84Total expenses -1,135 -1,163 -2% -1,113 2% -3,382 -3,611 -6% -4,837Profit before loan losses 1,023 1,161 -12% 1,088 -6% 3,220 3,141 3% 4,269

Net loan losses -238 -192 24% -427 -44% -1,101 -694 59% -1,067Gains/losses on disposal of property, equipment and intangible assets 0 0 0% 0 0% 0 0 0% 0Operating profit 785 969 -19% 661 19% 2,119 2,447 -13% 3,202

Profit allocation 54 35 54% 58 -7% 138 140 -1% 294Operating profit after profit allocation 839 1,004 -16% 719 17% 2,257 2,587 -13% 3,496

Internal income -1,570 -1,097 -43% -1,532 -2% -4,425 -4,287 -3% -5,524Cost/income ratio, % 51.3 49.3 49.3 50.2 52.4 51.5

Loan loss ratio, % 0.19 0.14 0.35 0.30 0.17 0.19

Allocated capital 25,978 27,512 -6% 26,802 -3% 25,978 27,512 -6% 27,029Return on allocated capital, % 9.5 10.5 7.9 8.4 9.3 9.4

Average number of employees 2,940 2,956 -1% 2,893 2% 2,906 2,994 -3% 2,976Number of branches 255 245 4% 250 2% 255 245 4% 243

BUSINESS VOLUMES


2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Loans to the public

Household 142 138 3% 142 0% 142 139 2% 139

Corporate 315 351 -10% 326 -3% 322 369 -13% 361Total 457 489 -7% 468 -2% 464 508 -9% 500


Household 41 44 -7% 42 -2% 42 45 -7% 45

Corporate 99 134 -26% 100 -1% 104 128 -19% 132Total 140 178 -21% 142 -1% 146 173 -16% 177

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11 Handelsbanken


Earnings performance Operating profit fell by 13 percent due to higher loan losses and amounted to SEK 2,119 million (2,447). Profit before loan losses rose by 3 percent to SEK 3,220 million (3,141), chiefly due to higher profits in Great Britain.

Net interest income decreased by 3 percent to SEK 5,244 million (5,434). Adjusted for exchange rate movements of SEK -306 million, net interest income grew by 2 percent. Fees for state guarantees and deposit guarantees rose to SEK -183 million (-167). Net interest income was also adversely affected by lower lending volumes in Handelsbanken International.

Expenses fell by 6 percent, which was entirely attributable to exchange rate movements. The operating deficit for branches in regional banks outside Sweden which have not yet reported a profit was SEK 127 million (221).

Loan losses were SEK -1,101 million (-694), and the loan loss ratio was 0.30 percent (0.17).

The average volume of lending decreased by 9 percent to SEK 464 billion (508). The decrease was entirely attributable to exchange rate movements of SEK -27 billion and the deliberate reduction of around SEK 30 billion in lending volumes at Handelsbanken International, which began last year. Adjusted for this, lending volumes rose.

Q3 2010 COMPARED WITH Q2 2010 Operating profit improved by 19 percent to SEK 785 million (661), chiefly due to lower loan losses.

Net interest income was more or less unchanged at SEK 1,742 million (1,737). Adjusted for exchange rate movements of SEK -43 million, net interest income grew by 3 percent. In local currencies, lending volumes increased in Great Britain and Norway.

Expenses increased by 2 percent or SEK 22 million. Expansion costs for new branch offices amounted to SEK -40 million (-42).

Loan losses were SEK -238 million (-427), and the loan loss ratio was 0.19 percent (0.35).

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12 Handelsbanken

Branch office operations in Great Britain INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 344 263 31% 308 12% 931 638 46% 918

Net fee and commission income 18 22 -18% 20 -10% 56 65 -14% 85

Net gains/losses on financial items at fair value 14 7 100% 14 0% 39 25 56% 36

Other income 0 2 -100% 0 -100% 0 5 -100% 4Total income 376 294 28% 342 10% 1,026 733 40% 1,043

Staff costs -136 -120 13% -126 8% -383 -359 7% -474

Other administrative expenses -33 -32 3% -34 -3% -98 -96 2% -132

Internal purchased and sold services -27 -29 -7% -23 17% -73 -78 -6% -98

Depreciation and amortisation -3 -2 50% -3 0% -8 -9 -11% -11Total expenses -199 -183 9% -186 7% -562 -542 4% -715Profit before loan losses 177 111 59% 156 13% 464 191 143% 328

Net loan losses -168 -70 140% -15 -183 -107 71% -151Gains/losses on disposal of property, equipment and intangible assets 0 0 0% 0 0% 0 0 0% 0Operating profit 9 41 -78% 141 -94% 281 84 235% 177Profit allocation 5 2 150% 1 400% 13 21 -38% 24Operating profit after profit allocation 14 43 -67% 142 -90% 294 105 180% 201

Average number of employees 600 504 19% 563 7% 564 499 13% 502Number of branches 77 62 24% 72 7% 77 62 24% 62

BUSINESS VOLUMES

Average volumes, GBP mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Loans to the public

Household 1,366 1,057 29% 1,250 9% 1,260 997 26% 1,021

Corporate 4,863 4,461 9% 4,722 3% 4,701 4,437 6% 4,453Total 6,229 5,518 13% 5,972 4% 5,961 5,434 10% 5,474


Household 343 318 8% 335 2% 331 301 10% 304

Corporate 1,076 1,016 6% 1,015 6% 1,042 913 14% 940Total 1,419 1,334 6% 1,350 5% 1,373 1,214 13% 1,244


Earnings performance Operating profit rose to SEK 281 million (84) as the result of a strong improvement in net interest income. Net interest income rose by SEK 293 million or 46 percent to SEK 931 million (638). This can be attributed to higher lending margins and volume increases. Exchange rate effects had a negative impact on net interest income amounting to SEK 71 million.

Expenses rose by 4 percent to SEK -562 million (-542) as a result of the continued expansion of the branch network. This caused the average number of employees to rise by 13 percent to 564.

Loan losses amounted to SEK -183 million (-107), which corresponds to a loan loss ratio of 0.37 percent (0.23).

Business development During the period, the Bank decided to start another regional bank in Great Britain. This means that branch operations in Great Britain will be organised under three

regional banks as of 1 January 2011: northern, central and southern Great Britain.

In the first nine months of the year, fifteen new branches were opened and eleven new branch managers were recruited in readiness for the opening of more new branches during the year.

The average volume of loans rose by 10 percent to GBP 5,961 million (5,434), with loans to households rising by 26 percent. The volume of deposits grew by 13 percent to GBP 1,373 million (1,214).

Q3 2010 COMPARED WITH Q2 2010 Operating profit fell to SEK 9 million (141) as provisions made for probable loan losses rose to SEK -168 million (-15). Profit before loan losses rose by 13 percent to SEK 177 million (156), mainly as a result of improved net interest income. Net interest income rose by 12 percent or SEK 36 million, mainly due to increased volumes, but also to higher lending margins.

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13 Handelsbanken

Branch office operations in Denmark INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 290 321 -10% 299 -3% 897 999 -10% 1,340

Net fee and commission income 70 69 1% 82 -15% 223 215 4% 280

Net gains/losses on financial items at fair value 12 0 17 -29% 45 45 0% 68

Other income 3 -1 6 -50% 11 -1 1Total income 375 389 -4% 404 -7% 1,176 1,258 -7% 1,689

Staff costs -137 -154 -11% -136 1% -415 -460 -10% -620

Other administrative expenses -53 -64 -17% -52 2% -155 -209 -26% -251


Depreciation and amortisation -4 -6 -33% -5 -20% -14 -16 -13% -21Total expenses -242 -267 -9% -238 2% -727 -811 -10% -1,083Profit before loan losses 133 122 9% 166 -20% 449 447 0% 606

Net loan losses -23 -19 21% -23 0% -65 -145 -55% -189Gains/losses on disposal of property, equipment and intangible assets 0 0 0% 0 0% 0 0 0% 0Operating profit 110 103 7% 143 -23% 384 302 27% 417Profit allocation 3 6 -50% 0 5 16 -69% 24Operating profit after profit allocation 113 109 4% 143 -21% 389 318 22% 441

Average number of employees 624 672 -7% 627 0% 628 681 -8% 677Number of branches 53 54 -2% 53 0% 53 54 -2% 53

BUSINESS VOLUMES

Average volumes, DKK bnQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Loans to the public

Household 19.7 18.6 6% 19.2 3% 19.3 18.4 5% 18.5

Corporate 19.6 20.7 -5% 20.3 -3% 20.0 21.3 -6% 21.1Total 39.3 39.3 0% 39.5 -1% 39.3 39.7 -1% 39.6


Household 8.5 8.5 0% 8.6 -1% 8.5 8.3 2% 8.2

Corporate 12.2 12.6 -3% 12.9 -5% 12.4 12.9 -4% 12.8Total 20.7 21.1 -2% 21.5 -4% 20.9 21.2 -1% 21.0


Earnings performance Operating profit rose by 27 percent to SEK 384 million (302), chiefly due to lower loan losses. Profit before loan losses increased by SEK 2 million to SEK 449 million.

Net interest income decreased by 10 percent or SEK 102 million, of which SEK 94 million is due to exchange rate effects. Not taking into account the fees paid to the Swedish and Danish state guarantees or the effects of exchange rate movements, net interest income was unchanged. Overall, after taking into account the above-mentioned adjustments, income rose by 4 percent and expenses rose by 1 percent.

Loan losses were SEK -65 million (-145), which corresponds to a loan loss ratio of 0.14 percent (0.31).

Business development EPSI’s customer satisfaction survey showed that Handels-banken once again topped the ratings in Denmark.

The average volume of lending decreased by 1 percent to DKK 39.3 billion (39.7). Lending to households rose by 5 percent, while lending to companies fell by 6 percent, as the result of the low demand for credit.

On 30 September, the government bail-out package in Denmark, Bankpakke 1, was terminated, according to plan and as a result, the Bank no longer needs to pay regular fees towards this. During the nine-month period, the fee amounted to SEK -44 million.

Q3 2010 COMPARED WITH Q2 2010 Operating profit decreased by 23 percent to SEK 110 million (143). Net interest income fell by 3 percent. This can be attributed to higher fees to the Swedish and Danish state guarantees and to the effects of exchange rate movements. Adjusted for the aforementioned, net interest income was unchanged. Expenses were charged with SEK 15 million (2) for fees to cover losses in the case of Danish banks being closed down. Adjusted for this and the effects of exchange rate movements, expenses were on par with the previous quarter. Loan losses remained unchanged and amounted to SEK -23 million.

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14 Handelsbanken

Branch office operations in Finland

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009


Net fee and commission income 95 76 25% 100 -5% 287 219 31% 306

Net gains/losses on financial items at fair value 9 -5 7 29% 17 3 467% 20

Other income 0 -3 2 -100% 4 -1 -5Total income 343 333 3% 362 -5% 1,062 999 6% 1,386

Staff costs -84 -88 -5% -83 1% -264 -290 -9% -387

Other administrative expenses -47 -56 -16% -55 -15% -155 -168 -8% -230


Depreciation and amortisation -5 -5 0% -5 0% -16 -15 7% -21Total expenses -187 -180 4% -186 1% -571 -585 -2% -791Profit before loan losses 156 153 2% 176 -11% 491 414 19% 595

Net loan losses -25 -44 -43% -413 -94% -467 -109 328% -220Gains/losses on disposal of property, equipment and intangible assets - - - - - -Operating profit 131 109 20% -237 24 305 -92% 375

Profit allocation 11 7 57% 16 -31% 32 24 33% 58Operating profit after profit allocation 142 116 22% -221 56 329 -83% 433

Average number of employees 486 501 -3% 484 0% 489 504 -3% 502Number of branches 45 45 0% 45 0% 45 45 0% 45

BUSINESS VOLUMES

Average volumes, EUR mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Loans to the public

Household 3,170 3,060 4% 3,153 1% 3,148 3,041 4% 3,053

Corporate 6,734 7,084 -5% 6,817 -1% 6,766 7,316 -8% 7,214Total 9,904 10,144 -2% 9,970 -1% 9,914 10,357 -4% 10,267


Household 1,264 1,389 -9% 1,272 -1% 1,268 1,405 -10% 1,385

Corporate 2,498 2,387 5% 2,446 2% 2,516 1,948 29% 2,138Total 3,762 3,776 0% 3,718 1% 3,784 3,353 13% 3,523


Earnings performance Operating profit fell to SEK 24 million (305) due to an increase in loan losses to SEK -467 million (-109). Profit before loan losses rose by 19 percent to SEK 491 million (414). Profits were adversely affected by the Swedish krona strengthening by 10 percent against the euro.

Net interest income fell by 3 percent but expressed in local currency, net interest income grew by 8 percent, due to higher lending margins. Net fee and commission income rose by 31 percent or SEK 68 million, mainly due to increased commission on credit commitments. Expenses fell by 2 percent, which was entirely attributable to the strengthening of the Swedish krona.

Loan losses increased and were SEK -467 million (-109), which corresponds to a loan loss ratio of 0.58 percent (0.12).

Business development Handelsbanken has the most satisfied private and corporate customers among commercial banks in Finland, according to the EPSI customer satisfaction survey.

Credit demand from companies was weak for most of the period and the average volume of corporate lending fell by 8 percent to EUR 6.7 billion. Loans to households rose, however, by 4 percent to EUR 3.2 billion.

Q3 2010 COMPARED WITH Q2 2010 Operating profit rose by SEK 398 million to SEK 131 million (-237), which in its entirety is due to loan losses dropping to SEK -25 million (-413). Income and expenses were impacted by the Swedish krona appreciating by 4 percent compared to the previous quarter.

Income decreased by 5 percent to SEK 343 million (362), partly attributable to exchange rate movements. Lending margins continued to improve, while the change in volumes was negative. The average volume of lending decreased by 1 percent, due to lower credit demand from companies.

16 Handelsbanken



15 Handelsbanken

Branch office operations in Norway

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 634 716 -11% 629 1% 1,950 2,040 -4% 2,775

Net fee and commission income 71 83 -14% 80 -11% 226 227 0% 289

Net gains/losses on financial items at fair value 26 18 44% 2 54 66 -18% 87

Other income 5 -4 16 -69% 33 -5 -8Total income 736 813 -9% 727 1% 2,263 2,328 -3% 3,143

Staff costs -150 -146 3% -150 0% -452 -443 2% -593



Depreciation and amortisation -5 -5 0% -2 150% -11 -13 -15% -16Total expenses -265 -253 5% -259 2% -798 -789 1% -1,052Profit before loan losses 471 560 -16% 468 1% 1,465 1,539 -5% 2,091

Net loan losses -37 -42 -12% 14 -71 -249 -71% -416Gains/losses on disposal of property, equipment and intangible assets 0 0 0% 0 0% 0 0 0Operating profit 434 518 -16% 482 -10% 1,394 1,290 8% 1,675Profit allocation 18 6 200% 24 -25% 50 48 4% 91

Operating profit after profit allocation 452 524 -14% 506 -11% 1,444 1,338 8% 1,766

Average number of employees 619 623 -1% 616 0% 619 626 -1% 625

Number of branches 48 48 0% 48 0% 48 48 0% 48

BUSINESS VOLUMES

Average volumes, NOK bnQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Loans to the public

Household 56.0 50.5 11% 54.5 3% 54.6 49.4 11% 50.1

Corporate 101.6 103.0 -1% 101.8 0% 101.6 105.1 -3% 104.2Total 157.6 153.5 3% 156.3 1% 156.2 154.5 1% 154.3


Household 9.9 8.6 15% 9.4 5% 9.4 8.6 9% 8.6

Corporate 32.3 32.3 0% 30.2 7% 32.7 33.4 -2% 34.3Total 42.2 40.9 3% 39.6 7% 42.1 42.0 0% 42.9


Earnings performance Operating profit rose by 8 percent to SEK 1,394 million (1,290), due to lower loan losses. Profit before loan losses decreased by 5 percent to SEK 1,465 million (1,539).

Net interest income fell by SEK 90 million or 4 percent, partly due to the notice period applicable to customers when Norges Bank increases its key rates and to currency effects. Net interest income was affected by expenses of SEK -37 million (-29) relating to the Swedish Stabilisation Fund and of SEK -6 million (-6) relating to the Norwegian deposit guarantee.

Expenses rose by 1 percent to SEK 798 million (789) and the C/I ratio was 35.3 percent (33.9). The average number of employees fell by 1 percent and staff costs rose by 2 percent. Loan losses went down to SEK -71 million (-249), and the loan loss ratio was 0.05 percent (0.19).

Business development Handelsbanken is at the top among both private and corporate customers in the EPSI customer satisfaction survey for Norwegian banking customers.

The average volume of lending to households increased by 11 percent and Handelsbanken gained market share. Deposits from households grew by 9 percent. Loans to companies fell by 3 percent.

Q3 2010 COMPARED WITH Q2 2010 Operating profit decreased by 10 percent due to higher loan losses. Profit before loan losses rose by 1 percent to SEK 471 million (468).

Net interest income improved by 1 percent, or SEK 5 million, to SEK 634 million (629).

Staff costs were unchanged while the average number of employees rose by three persons. The C/I ratio was 36.0 percent (35.6).

Net loan losses amounted to SEK -37 million (14), which corresponds to a loan loss ratio of 0.08 percent (-0.02).

17 Handelsbanken



16 Handelsbanken

Handelsbanken International

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009


Net fee and commission income 114 159 -28% 108 6% 366 430 -15% 573

Net gains/losses on financial items at fair value -23 2 9 -7 14 39

Other income 2 3 -33% 1 100% 4 11 -64% 14Total income 328 495 -34% 366 -10% 1,075 1,434 -25% 1,845

Staff costs -145 -170 -15% -149 -3% -440 -538 -18% -704



Depreciation and amortisation -3 -3 0% -3 0% -9 -11 -18% -15Total expenses -242 -280 -14% -244 -1% -724 -884 -18% -1,195Profit before loan losses 86 215 -60% 122 -30% 351 550 -36% 650

Net loan losses 13 -17 9 44% -321 -92 249% -99Gains/losses on disposal of property, equipment and intangible assets 0 0 0% 0 0% 0 0 0% 0Operating profit 99 198 -50% 131 -24% 30 458 -93% 551Profit distribution 17 14 21% 17 0% 38 31 23% 97Operating profit after profit allocation 116 212 -45% 148 -22% 68 489 -86% 648

Average number of employees 611 656 -7% 603 1% 606 683 -11% 670

Number of branches 32 36 -11% 32 0% 32 36 -11% 35

BUSINESS VOLUMES


2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Loans to the public

Household 3.9 3.3 18% 3.9 -1% 3.9 4.1 -5% 4.0

Corporate 55.6 74.6 -25% 59.8 -7% 58.4 82.2 -29% 77.8Total 59.5 77.9 -24% 63.7 -7% 62.3 86.3 -28% 81.8


Household 3.2 3.3 -3% 3.4 -6% 3.4 4.4 -23% 4.1

Corporate 12.8 39.9 -68% 12.9 -1% 13.2 36.6 -64% 38.1Total 16.0 43.2 -63% 16.3 -2% 16.6 41.0 -60% 42.2

JANUARY– SEPTEMBER 2010 COMPARED WITH JANUARY – SEPTEMBER 2009

Earnings performance Operating profit decreased to SEK 30 million (458), a result of the Bank making a provision of SEK 335 million during the first quarter for a previously identified risk exposure. Profit before loan losses fell by SEK 199 million to 351 million (550). Profits were adversely affected by the Swedish krona strengthening during the period.

Income decreased by 25 percent, due to the fact that some business in New York which is now part of Central Treasury was included in the period of comparison, but also to lower lending volumes. The currency effect was SEK -110 million.

Expenses fell, due partly to exchange rate movements and also because the average number of employees fell by 77.

Business development The main task of Handelsbanken International is to support the Bank’s customers in the Nordic region and

Great Britain with their international business and, in the long term, to develop prioritised countries’ operations into regional banks in line with the Bank’s business model. The Bank had 32 branches and four representative offices in 17 countries outside the Nordic countries and Great Britain. In the Netherlands, where the bank has five branches, three managers were recruited for new branches.

The average volume of corporate lending decreased by 29 percent to SEK 58.4 billion (82.2), which is partly attributable to exchange rate movements but also to a deliberate reduction of lending volumes in order to make the utilisation of the Bank’s capital more efficient.

During the first quarter, deposits were moved from Handelsbanken International to Central Treasury, mainly from insurance and mutual fund management companies. This is the main reason that deposits from companies decreased by SEK 23.4 billion.

Q3 2010 COMPARED WITH Q2 2010 Operating profit fell to SEK 99 million (131). Profit before loan losses fell by 30 percent, primarily due to lower net gains/losses on financial items. The strengthening of the Swedish krona against most other currencies also had a negative effect on earnings.

18 Handelsbanken



17 Handelsbanken

Handelsbanken Capital Markets Capital Markets is Handelsbanken’s investment bank. Its operations comprise equities, fixed income, commodities and foreign exchange trading, structured products, cash management, corporate finance, debt capital markets and exchange-traded funds as well as macroeconomic and financial research. Capital Markets employs just over 1,000 people in six countries.

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 128 113 13% 108 19% 346 361 -4% 465

Net fee and commission income 327 328 0% 346 -5% 995 1,074 -7% 1,494

Net gains/losses on financial items at fair value 219 460 -52% 404 -46% 1,134 2,574 -56% 3,055

Other income 2 -4 0 3 4 -25% 3Total income 676 897 -25% 858 -21% 2,478 4,013 -38% 5,017

Staff costs -365 -443 -18% -387 -6% -1,154 -1,389 -17% -1,855


Internal purchased and sold services 17 23 -26% 9 89% 30 40 -25% 74

Depreciation and amortisation -9 -8 13% -9 0% -27 -23 17% -31Total expenses -501 -543 -8% -549 -9% -1,597 -1,758 -9% -2,381

Profit before loan losses 175 354 -51% 309 -43% 881 2,255 -61% 2,636

Net loan losses

Gains/losses on disposal of property, equipment and intangible assets - - - - - -Operating profit 175 354 -51% 309 -43% 881 2,255 -61% 2,636Profit allocation -199 -174 14% -204 -2% -496 -450 10% -853

Operating profit after profit allocation -24 180 105 385 1,805 -79% 1,783

Internal income -170 -108 -57% -220 23% -534 1,271 1,142Cost/income ratio, % 105.0 75.1 83.9 80.6 49.3 57.2

Allocated capital 4,375 3,267 34% 4,028 9% 4,375 3,267 34% 3,843Return on allocated capital, % - 16.2 0.7 6.9 52.2 37.4

Average number of employees 1,112 1,050 6% 1,071 4% 1,080 1,045 3% 1,045

19 Handelsbanken

INTERIM REPORT JANUARY – SEPTEMBER 2010INTERIM REPORT JANUARY – SEPTEMBER 2010

18 Handelsbanken


Earnings performance Operating profit decreased by 61 percent to SEK 881 million (2,255). The decrease was due to lower profits for fixed income and foreign exchange trading compared with unusually high profits during the turbulent market in the first six months of the previous year. Market conditions subsequently gradually normalised, although they deteriorated somewhat towards the end of the period.

Net fee and commission income fell by 7 percent as a result of lower commissions for several product areas.

Income fell by a total of 38 percent to SEK 2,478 million (4,013).

Expenses fell by 9 percent to SEK -1,597 million (-1,758), mainly due to lower staff costs. The average number of employees rose to 1,080 (1,045).

Business development The stock market position continued to strengthen, both in the Nordic region and worldwide with market shares increasing as a result. According to the survey company Prospera, institutional investors rank the Bank in first place for cross-Nordic equity trading. The Bank increased its volumes on the Nordic stock exchanges by 15 percent, while total volumes on the stock exchanges increased by only 8 percent.

M&A activity on the Nordic market continued to increase; however, this increase started from a low level in the wake of the financial crisis. The interest in new share issues was still evident and interest in IPOs also began to grow from previously low levels.

Interest for various financing solutions remained keen and the Bank was the lead manager for the largest corporate bond issue ever carried out in Swedish kronor. Handelsbanken continues to be one of the largest players

for syndicated loans in the Nordic region. It carried out 72 bond issues with a total value of EUR 10 billion.

The fixed income and foreign exchange markets had lower liquidity and appetite for risk. Customer activity continued to decline during the period. Market shares were stable.

Activity levels on the commodities market continued to increase. The Bank more than doubled the number of transactions compared with the corresponding period in the previous year.

Handelsbanken is the market leader in structured products and was also the largest player in capital-protected investments, with a market share of 24 percent of new sales of listed investments in Sweden. The Bank’s trading volumes on the warrants and certificate markets in Sweden more than doubled to SEK 31 billion. Most of the turnover derived from Bull & Bear certificates, which have become one of the most heavily traded securities on the Stockholm stock exchange.

XACT Fonder maintained its strong position on the Nordic market and listed eight new exchange-traded funds (ETFs). The Bank’s share of sales on the Nordic market for exchange-traded funds was 93 percent.

Q3 2010 COMPARED WITH Q2 2010 Operating profit decreased by 43 percent to SEK 175 million (309). The decrease was partly seasonal, partly a result of a generally lower activity level arising from continued concerns about the international financial situation.

Income decreased by 21 percent to SEK 676 million (858), primarily due to a lower net result on financial items.

Expenses decreased by 9 percent to SEK -501 million (-549), as the result of lower expenses for both staff and administration.

20 Handelsbanken



19 Handelsbanken

Handelsbanken Asset Management Handelsbanken Asset Management includes Handelsbanken Fonder (mutual funds), discretionary management, Nordic custody services and Handelsbanken Liv. It also provides support to the branch offices in private banking, capital investment, portfolio systems and accounting for foundations.

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 42 27 56% 25 68% 97 108 -10% 134

Net fee and commission income 259 235 10% 316 -18% 891 717 24% 1,026

Net gains/losses on financial items at fair value -20 58 15 -2 -255 99% -267 of which deferred capital contribution -23 48 2 -22 -229 90% -253


Other income 2 1 100% 1 100% 6 7 -14% 9Total income 325 368 -12% 416 -22% 1,130 717 58% 1,073

Staff costs -128 -127 1% -130 -2% -381 -372 2% -516



Depreciation and amortisation -1 -7 -86% -4 -75% -6 -20 -70% -6Total expenses -225 -221 2% -261 -14% -712 -679 5% -909

Profit before loan losses 100 147 -32% 155 -35% 418 38 164

Net loan losses

Gains/losses on disposal of property, equipment and intangible assets - - - - - -Operating profit 100 147 -32% 155 -35% 418 38 164

Profit allocation -77 -38 103% -61 26% -190 -125 52% -198Operating profit after profit allocation 23 109 -79% 94 -76% 228 -87 -34

Internal income -145 -198 27% -168 14% -471 -492 4% -682Cost/income ratio, % 90.7 67.0 73.5 75.7 114.7 103.9

Allocated capital 5,617 5,112 10% 6,041 -7% 5,617 5,112 10% 6,261Return on allocated capital, % 1.2 6.3 4.6 3.9 - -

Average number of employees 537 527 2% 510 5% 520 531 -2% 527

ASSETS UNDER MANAGEMENT, GROUP

SEK bn, end of period30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Mutual funds, excl. PPM 112 107 108 101 89

PPM 9 7 8 7 6

Unit-linked insurance 34 33 32 31 28

XACT (Exchange-traded funds)* 19 19 19 18 17Total mutual funds 174 166 167 157 140

Portfolio bond insurance 15 14 13 11 10

Traditional insurance 22 23 25 25 25

Discretionary management, Handelsbanken Group 91 85 86 85 80

of which in Handelsbanken mutual funds 26 24 23 22 20

Structured products* 37 36 36 35 31

Directly owned shares in custody 158 144 152 142 129

Other securities in custody 24 26 29 35 25

Other asset management 37 35 37 41 35Total assets under management, Handelsbanken Group 532 505 522 509 455

* Part of Handelsbanken Capital Markets

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20 Handelsbanken

JANUARY – SEPTEMBER 2010 COMPARED WITH JANUARY – SEPTEMBER 2009Earnings performanceOperating profit improved by SEK 380 million to SEK 418 million (38), with asset management accounting for SEK 184 million (88) and Handels-banken Liv for SEK 234 million (-50). This improvement stems primarily from a reduction to SEK -22 million (-229) in the allocation to the deferred capital contribution in Handelsbanken Liv.

Net fee and commission income rose by 24 percent to SEK 891 million (717), primarily because higher volumes under management generated higher commission income and because Handelsbanken Liv received SEK 56 million (0) from a yield split. The average volume of mutual fund assets under management rose by 36 percent to SEK 164 billion (121).

The risk result in Handelsbanken Liv, which is the difference between the fees the company charges to cover insurance risks (mortality, longevity, disability and accident) and the actual cost of these, went down to SEK 138 million (140).

The average number of employees fell by 11 or 2 percent.

Business development The volume of assets managed by Handelsbanken Asset Management increased by 17 percent to SEK 237 billion (202). The total volume of assets under management by the Group was SEK 532 billion (455).

In the first nine months of the year, net new savings in Handelsbanken’s mutual funds were SEK 9.1 billion (including a net outflow of SEK 0.2 billion from XACT Fonder). SEK 2.2 billion referred to the third quarter. The Bank’s share of new savings on the Swedish market amounted to 17.0 percent during the first nine months of the year, which is significantly higher than the Bank’s share of the overall fund volume in Sweden.

Discretionary management volumes rose by 8 percent to SEK 65 billion (60). Of the assets under management, SEK 20 billion (16) was invested in Handelsbanken’s mutual funds. Total assets under discretionary manage-ment in the Group amounted to SEK 91 billion (80).

Assets under management in Handelsbanken Liv increased by 14 percent to SEK 72 billion (63), with unit-linked insurance accounting for SEK 35 billion (28) and portfolio bond insurance for SEK 15 billion (10).

Q3 2010 COMPARED WITH Q2 2010 Operating profit decreased by SEK 55 million to SEK 100 million (155). In Asset Management, profit decreased to SEK 52 million (64) and in Handelsbanken Liv, profit decreased to SEK 48 million (91).

Net fee and commission income decreased to SEK 259 million (316), with the yield split in Handelsbanken Liv accounting for SEK -6 million (30). A low level of customer activity also contributed to a decrease in portfolio bond and custody commissions.

During the quarter, a provision was made to the deferred capital contribution of SEK 23 million compared with a writeback of SEK 2 million in the previous quarter.

The risk result was SEK 42 million (59).

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21 Handelsbanken

OTHER Other includes Treasury and the central head office departments. It also includes capital gains/losses, dividends, and income and expenses that are not attributable to a specific business segment.

INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 223 249 -10% 146 53% 579 522 11% 821

Net fee and commission income 50 -34 4 92 -17 -37

Net gains/losses on financial items at fair value -233 -303 23% -200 -17% -633 -914 31% -1,151


Other income 14 5 180% 70 -80% 225 155 45% 197Total income 55 -79 27 104% 278 -246 -144

Staff costs -616 -544 13% -617 0% -1,812 -1,597 13% -2,234

Other administrative expenses -483 -403 20% -511 -5% -1,500 -1,225 22% -1,747

Internal purchased and sold services 983 833 18% 950 3% 2,870 2,519 14% 3,450

Depreciation and amortisation -61 -86 -29% -61 0% -183 -207 -12% -269Total expenses -177 -200 -12% -239 -26% -625 -510 23% -800

Profit before loan losses -122 -279 56% -212 42% -347 -756 54% -944Net loan losses

Gains/losses on disposal of property, equipment and intangible assets 4 1 300% 0 4 1 300% 4Operating profit -118 -278 58% -212 44% -343 -755 55% -940

Profit allocation 0 0 -100% 0 -100% 0 0 0Operating profit after profit allocation -118 -278 58% -212 44% -343 -755 55% -940

Internal income 2,453 2,244 9% 2,294 7% 6,863 6,657 3% 8,797

Average number of employees 1,958 1,794 9% 1,936 1% 1,910 1,790 7% 1,792

JANUARY – SEPTEMBER 2010 COMPARED WITH JANUARY – SEPTEMBER 2009 Operating profit improved to SEK -343 million (-755). In the first quarter, the Bank received a one-off dividend of SEK 130 million.

Net gains/losses on financial items at fair value improved by SEK 281 million, which was primarily due to an improved result in the Central Treasury.

The allocation made to the Oktogonen Foundation was SEK -561 million (-489).

Q3 2010 COMPARED WITH Q2 2010 Operating profit was SEK -118 million (-212), mainly due to higher net interest income.

The allocation made to Oktogonen was unchanged and amounted to SEK -187 million (-187).

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22 Handelsbanken

Condensed set of financial statements – The Group

KEY FIGURES – THE GROUP Q3

2010Q3

2009Q2

2010Jan-Sep

2010Jan-Sep

2009Full year

2009

Return on equity, total operations * 12.7% 12.0% 12.0% 12.8% 12.8% 12.6%

Return on equity, continuing operations * 12.5% 11.9% 11.8% 12.6% 12.7% 12.5%C/I ratio, continuing operations 48.1% 46.9% 48.9% 47.6% 45.8% 47.1%C/I ratio, continuing operations, incl. loan losses 52.0% 58.1% 53.8% 52.8% 56.9% 57.6%

Earnings per share, total operations, SEK 4.35 3.91 4.14 13.08 12.40 16.44 - after dilution 4.27 3.83 4.07 12.85 12.07 15.98Earnings per share, continuing operations, SEK 4.27 3.89 4.05 12.87 12.36 16.38 - after dilution 4.19 3.81 3.98 12.64 12.04 15.92Earnings per share, discontinued operations, SEK 0.08 0.02 0.09 0.21 0.03 0.06 - after dilution 0.08 0.02 0.09 0.21 0.03 0.06

Dividend, SEK 8.00Adjusted equity per share, SEK ** 136.89 128.45 133.87 136.89 128.45 133.65Average number of outstanding shares 622,382,489 623,357,100 621,866,157 621,962,797 623,469,462 623,263,916 after dilution 635,260,155 638,086,833 634,107,354 634,203,994 642,048,431 642,588,544

Capital ratio according to Basel II 20.7% 19.1% 19.9% 20.7% 19.1% 20.2%Tier 1 ratio according to Basel II 15.7% 13.5% 14.8% 15.7% 13.5% 14.2%Capital base in relation to capital requirement Basel II 259% 238% 248% 259% 238% 253%

Average number of employees, continuing operations 11,100 10,912 10,719 10,818 10,881 10,821Number of branches in Sweden 461 461 460 461 461 461Number of branches outside Sweden 255 245 250 255 245 243* When calculating return on equity, equity is adjusted for the impact of unrealised changes in the value of financial assets classified as "Available for Sale" and for cash flow hedges.** When calculating equity per share, equity is adjusted for the impact of cash flow hedges.

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23 Handelsbanken

INCOME STATEMENT – THE GROUP

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Interest income 11,006 11,351 -3% 10,265 7% 31,438 40,728 -23% 51,276

Interest expense -5,679 -5,741 -1% -5,183 10% -15,713 -24,087 -35% -29,276


Net fee and commission income Note 1 1,924 1,803 7% 1,988 -3% 5,895 5,398 9% 7,393

Net gains/losses on financial items at fair value Note 2 177 278 -36% 424 -58% 1,101 1,960 -44% 2,457


Other dividend income 3 2 50% 55 -95% 189 137 38% 141


Other income 32 18 78% 38 -16% 105 84 25% 147

Total income 7,506 7,762 -3% 7,653 -2% 23,168 24,368 -5% 32,335Staff costs -2,330 -2,451 -5% -2,352 -1% -7,038 -7,432 -5% -10,018

Other administrative expenses Note 3 -1,166 -1,046 11% -1,276 -9% -3,637 -3,346 9% -4,719Depreciation, amortisation and impairments of property, equipment and intangible assets -114 -145 -21% -117 -3% -346 -384 -10% -483

Total expenses -3,610 -3,642 -1% -3,745 -4% -11,021 -11,162 -1% -15,220Profit before loan losses 3,896 4,120 -5% 3,908 0% 12,147 13,206 -8% 17,115Net loan losses Note 4 -294 -866 -66% -369 -20% -1,214 -2,701 -55% -3,392

Gains/losses on disposal of property, equipment and intangible assets 4 1 300% 0 4 1 300% 4

Operating profit 3,606 3,255 11% 3,539 2% 10,937 10,506 4% 13,727Taxes -945 -829 14% -1,019 -7% -2,932 -2,797 5% -3,519Profit for the period from continuing operations 2,661 2,426 10% 2,520 6% 8,005 7,709 4% 10,208Profit for the period from discontinued operations, after tax Note 14 46 8 475% 53 -13% 128 19 36Profit for the period 2,707 2,434 11% 2,573 5% 8,133 7,728 5% 10,244

Attributable to

Holders of ordinary shares 2,707 2,434 11% 2,573 5% 8,133 7,728 5% 10,244 Minority interest 0 0 0% 0 0% 0 0 0% 0

EARNINGS PER SHARE – THE GROUP Q3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Earnings per share, continuing operations, SEK 4.27 3.89 10% 4.05 5% 12.87 12.36 4% 16.38 - after dilution 4.19 3.81 10% 3.98 5% 12.64 12.04 5% 15.92

Earnings per share, discontinued operations, SEK 0.08 0.02 300% 0.09 -11% 0.21 0.03 0.06 - after dilution 0.08 0.02 300% 0.09 -11% 0.21 0.03 0.06

Earnings per share, total operations, SEK 4.35 3.91 11% 4.14 5% 13.08 12.40 5% 16.44 - after dilution 4.27 3.83 11% 4.07 5% 12.85 12.07 6% 15.98

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24 Handelsbanken

STATEMENT OF COMPREHENSIVE INCOME – THE GROUP

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009Profit for the period 2,707 2,434 11% 2,573 5% 8,133 7,728 5% 10,244

Other comprehensive incomeCash flow hedges 2 31 -94% -309 -582 -68 47

Available-for-sale instruments 557 1,465 -62% 169 230% 1,281 2,702 -53% 3,274

Translation differences for the period -1,287 -776 -66% 99 -1,967 -402 -389% -109

Tax related to other comprehensive income -190 -531 64% 5 -294 -774 62% -934Total other comprehensive income -918 189 -36 -1,562 1,458 2,278Total comprehensive income for the period 1,789 2,623 -32% 2,537 -29% 6,571 9,186 -28% 12,522

Total comprehensive income for the period to

Holders of ordinary shares 1,789 2,623 -32% 2,537 -29% 6,571 9,186 -28% 12,522 Minority interest 0 0 0% 0 0% 0 0 0% 0

QUARTERLY PERFORMANCE – THE GROUP

SEK mQ3

2010Q2

2010Q1

2010Q4

2009Q3

2009

Interest income 11,006 10,265 10,167 10,548 11,351

Interest expense -5,679 -5,183 -4,851 -5,189 -5,741

Net interest income 5,327 5,082 5,316 5,359 5,610

Net fee and commission income 1,924 1,988 1,983 1,995 1,803Net gains/losses on financial items at fair value 177 424 500 497 278

Risk result - insurance 42 59 37 31 47

Other dividend income 3 55 131 4 2

Share of profits of associated companies 1 7 7 18 4

Other income 32 38 35 63 18

Total income 7,506 7,653 8,009 7,967 7,762Staff costs -2,330 -2,352 -2,356 -2,586 -2,451

Other administrative expenses -1,166 -1,276 -1,195 -1,373 -1,046Depreciation, amortisation and impairments of property, equipment and intangible assets -114 -117 -115 -99 -145

Total expenses -3,610 -3,745 -3,666 -4,058 -3,642Profit before loan losses 3,896 3,908 4,343 3,909 4,120Net loan losses -294 -369 -551 -691 -866Gains/losses on disposal of property, equipment and intangible assets 4 0 0 3 1

Operating profit 3,606 3,539 3,792 3,221 3,255Taxes -945 -1,019 -968 -722 -829Profit for the period from continuing operations 2,661 2,520 2,824 2,499 2,426Profit for the period from discontinued operations, after tax 46 53 29 17 8

Profit for the period 2,707 2,573 2,853 2,516 2,434

Earnings per share, continuing operations, SEK 4.27 4.05 4.54 4.02 3.89 - after dilution 4.19 3.98 4.46 3.94 3.81

Earnings per share, discontinued operations, SEK 0.08 0.09 0.05 0.02 0.02 - after dilution 0.08 0.09 0.05 0.02 0.02

Earnings per share, total operations, SEK 4.35 4.14 4.59 4.04 3.91 - after dilution 4.27 4.07 4.51 3.96 3.83

26 Handelsbanken



25 Handelsbanken

BALANCE SHEET – THE GROUP

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Assets Cash and balances with central banks 75,861 122,544 122,759 49,882 98,266

Treasury bills and other eligible bills 48,805 88,443 113,836 105,156 91,184

Loans to credit institutions 216,274 282,165 178,382 168,100 153,809

Loans to the public Note 5 1,469,109 1,484,406 1,467,686 1,477,183 1,476,030

Value change of interest hedged item in portfolio hedge 5,159 5,299 4,044 2,979 2,831

Bonds and other interest-bearing securities 85,044 74,308 77,649 70,846 84,148

Shares 33,672 24,637 30,534 24,883 18,284

Participating interests 99 97 98 93 79

Assets where the customer bears the value change risk 55,119 52,987 51,703 51,032 43,327

Derivative instruments Note 8 142,023 143,925 110,054 107,155 117,022

Reinsurance assets 11 17 17 12 17

Intangible assets Note 7 6,926 7,068 7,144 7,319 7,252

Property and equipment 3,216 3,279 3,243 3,281 3,358

Current tax assets 223 59 84 108 220

Deferred tax assets 406 435 293 303 388

Net pension assets 4,879 4,724 4,579 4,380 4,925

Assets held for sale 740 858 800 724 781

Other assets 33,175 21,963 41,585 42,594 39,087

Prepaid expenses and accrued income 7,291 8,407 7,295 6,813 6,748Total assets 2,188,032 2,325,621 2,221,785 2,122,843 2,147,756

Liabilities and equityDue to credit institutions 229,257 275,008 218,144 239,790 199,211

Deposits and borrowing from the public 572,723 580,113 580,612 549,748 605,667

Liabilities where the customer bears the value change risk 55,171 53,024 51,770 51,103 43,374

Issued securities 951,956 1,066,049 1,025,991 966,075 963,199

Derivative instruments Note 8 146,657 122,021 100,966 93,101 119,368

Other trading liabilities 38,200 37,584 41,308 29,647 30,076

Insurance liabilities 791 864 1,529 952 906

Current tax liabilities 1,274 833 534 834 99

Deferred tax liabilities 8,777 8,658 8,568 8,448 8,171

Provisions 149 181 178 199 339

Liabilities held for sale 289 320 301 222 352

Other liabilities 28,998 26,213 34,963 23,175 20,383

Accrued expenses and deferred income 19,190 19,035 19,536 17,456 18,312

Subordinated liabilities 49,902 53,126 52,069 59,005 58,520Total liabilities 2,103,334 2,243,029 2,136,469 2,039,755 2,067,977

Minority interest 0 0 1 1 1

Share capital 2,899 2,899 2,899 2,899 2,899

Reserves -1,630 -712 -676 -68 -888

Retained earnings 75,296 74,979 80,239 70,012 70,039

Profit for the period 8,133 5,426 2,853 10,244 7,728Total equity 84,698 82,592 85,316 83,088 79,779Total liabilities and equity 2,188,032 2,325,621 2,221,785 2,122,843 2,147,756

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26 Handelsbanken

STATEMENT OF CHANGES IN EQUITY – THE GROUP

Jan - Sep 2009SEK m

Share capital

Hedge reserve

Fairvalue

reserveTranslation

reserveRetained earnings Minority Total

Opening equity 2,899 -252 -3,152 1,058 74,409 1 74,963

Total comprehensive income for the period -50 1,914 -406 7,728 0 9,186

Dividend -4,364 -4,364

Change of own shares in trading book -6 -6Closing shareholders' equity 2,899 -302 -1,238 652 77,767 1 79,779

Jan - Sep 2010SEK m

Share capital

Hedge reserve

Fairvalue

reserveTranslation

reserveRetained earnings Minority Total

Opening equity 2,899 -217 -802 951 80,256 1 83,088

Total comprehensive income for the period -429 923 -2,056 8,133 0 6,571

Dividend -4,988 -4,988

Change of own shares in trading book 28 28

Disposal of minority interests -1 -1Closing shareholders' equity 2,899 -646 121 -1,105 83,429 0 84,698

CONDENSED STATEMENT OF CASH FLOWS – THE GROUP

SEK mJan-Sep

2010Jan-Sep

2009Full year

2009

Cash flow from operating activities 42,020 47,183 -2,906Cash flow from investing activities 342 -740 -6,544Cash flow from financing activities -10,149 -4,720 -4,722Cash flow for the period 32,213 41,723 -14,172

Liquid funds at beginning of the period 49,882 66,894 66,894Cash flow in the period 32,213 41,723 -14,172Exchange rate differences on liquid funds -6,234 -10,351 -2,840Liquid funds at end of period 75,861 98,266 49,882

ACCOUNTING POLICIESThe information concerning the Group has been prepared in accordance with IAS 34. The contents of the interim report also comply with the applicable provisions of the Swedish Act on Annual Reports in Credit Institutions and Securities Companies, the Swedish Financial Supervisory Authority’s regulations and general guidelines FFFS 2008:25 on annual reports in credit institutions and securities companies and recommendations from the Swedish Financial Reporting Board.

As of the 2010 financial year, the following three changes in regulations lead to changed accounting policies. The changes have not had any material impact on the Group’s or the parent company’s reported figures or financial position.

The new IFRS 3 Business Combinations entails changed principles for recognition of business combinations achieved in stages and contingent considerations. Another change due to the new standard is that the acquirer has the opportunity to opt to recognise goodwill at its total fair value in the consolidated balance sheet and thus also include any goodwill shares related to non-controlling interests. The new IFRS 3 also implies that transaction costs arising in connection with business combinations in the future will be expensed directly in the consolidated accounts. However, this changed principle does not include the parent company where transaction costs are included in the acquisition value of shares in subsidiaries as stipulated in the provisions of the Act on Annual Reports in Credit Institutions and

Securities Companies. The new IFRS 3 only applies to new acquisitions and has thus not led to any retroactive adjustment of the amounts reported.

The amended IAS 27 Consolidated and Separate Financial Statements means that the principles for reporting ownership changes in subsidiaries have changed.

The application of RFR 2:3 Accounting for Legal Entities means that as of the 2010 financial year, the parent company presents changes in equity not deriving from transactions with the owners in a separate statement of other comprehensive income in the same way as already applies for the Group.

In all other respects, the Group’s and the parent company’s interim report has been prepared in accordance with the same accounting policies and calculation methods that were applied in the annual report for 2009. None of the other changes in standards or new interpretative communications which have come into force during the period are assessed to have a material impact on the parent company’s or the Group’s financial reports.

Unless otherwise stated, all the amounts reported refer to continuing operations.

This interim report has not been examined by Handelsbanken’s auditors.

28 Handelsbanken



27 Handelsbanken

Notes

Note 1 Net fee and commission income

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Brokerage and other securities commissions 426 422 1% 452 -6% 1,345 1,371 -2% 1,862

Mutual funds 393 296 33% 391 1% 1,150 795 45% 1,156

Custody 53 102 -48% 108 -51% 278 310 -10% 411

Advisory services 51 13 292% 60 -15% 150 122 23% 196

Insurance 157 131 20% 169 -7% 499 394 27% 532

Payments 630 608 4% 607 4% 1,807 1,777 2% 2,377

Lending and deposits 299 296 1% 289 3% 918 816 13% 1,109

Guarantees 134 137 -2% 132 2% 395 405 -2% 529

Other 104 140 -26% 113 -8% 302 365 -17% 494

Commission income 2,247 2,145 5% 2,321 -3% 6,844 6,355 8% 8,666Securities commissions -50 -51 -2% -58 -14% -165 -161 2% -223

Payment commissions -255 -249 2% -246 4% -725 -710 2% -957

Other commission expenses -18 -42 -57% -29 -38% -59 -86 -31% -93

Commission expense -323 -342 -6% -333 -3% -949 -957 -1% -1,273Net fee and commission income 1,924 1,803 7% 1,988 -3% 5,895 5,398 9% 7,393

Note 2 Net gains/losses on financial items at fair value

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Available for sale, realised 2 12 -83% -23 11 53 -79% 58

Hedge accounting Fair value hedges 92 -83 82 12% 255 -97 -80 Hedge ineffectivness 25 4 -22 -3 -25 88% -6

Instruments at fair value 196 212 -8% 552 -64% 975 146 158

Loan receivables at amortised cost 96 140 -31% 113 -15% 301 375 -20% 514

Financial liabilities at amortised cost -58 -121 52% -123 53% -295 -528 44% -648Gains/losses on unbundled insurance contracts -23 48 2 -22 -229 90% -253

Trading / Other -153 66 -157 3% -121 2,265 2,714Total 177 278 -36% 424 -58% 1,101 1,960 -44% 2,457

..

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28 Handelsbanken

Note 3 Other administrative expenses

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Property and premises -247 -255 -3% -273 -10% -782 -791 -1% -1,091

External IT costs -368 -287 28% -394 -7% -1,146 -954 20% -1,338

Communication -97 -96 1% -104 -7% -311 -303 3% -420

Travel and marketing -83 -68 22% -100 -17% -265 -251 6% -381

Purchased services -215 -178 21% -239 -10% -653 -593 10% -841

Supplies -70 -80 -13% -80 -13% -230 -207 11% -303

Other expenses -86 -82 5% -86 0% -250 -247 1% -345Other administrative expenses -1,166 -1,046 11% -1,276 -9% -3,637 -3,346 9% -4,719

Note 4 Loan losses, impaired loans and pledged assets taken over

Loan losses

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Specific provision for individually valued loan receivablesProvision for the period -368 -768 -52% -490 -25% -1,476 -2,573 -43% -3,290

Write-back of previous provisions 64 36 78% 37 73% 199 118 69% 234

Total -304 -732 -58% -453 -33% -1,277 -2,455 -48% -3,056

Collective provisionsNet provision for the period for individually valued receivables 27 1 17 59% 40 39 3% 13

Net provision for the period for homogenous loan receivables -2 -16 -88% 5 -2 -43 -95% -55

Net provision for the period for off-balance sheet items 3 2 50% 2 50% 5 -28 -30

Total 28 -13 24 17% 43 -32 -72

Other provisionsAllocations for off-balance sheet items - -15 0 0 -15 -17

Write-back of previous provisions - - - - - 78

Guarantees honoured - - - - - -

Total - -15 0 0 -15 61

Write-offsActual loan losses for the period -224 -277 -19% -280 -20% -791 -600 32% -958

Utilised share of previous provisions 169 154 10% 202 -16% 593 273 117% 460

Recoveries 36 17 112% 138 -74% 218 128 70% 174Total -19 -106 -82% 60 20 -199 -324

Change in value of repossessed property

Value change for the period 1 - 0 0 - -1Net loan losses -294 -866 -66% -369 -20% -1,214 -2,701 -55% -3,392

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Impaired loans Impaired loans includes all loans for which not all the contracted cash flows will probably be fulfilled. The full amount of all loans which give rise to a specific provision is included in impaired loans, including amounts which are covered by collateral. This means that the impaired loans reserve ratio is stated without taking into account collateral received. Thus this key figure may vary substantially between the quarters even though the provisioning policies are unchanged.

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009Impaired loans 8,509 8,594 7,886 8,615 8,546

Specific provision for individually assessed loan receivables -5,200 -5,218 -5,096 -4,731 -4,229

Provision for collectively assessed homogenous groups of loan receivables with limited value -166 -168 -175 -175 -162

Collective provisions for individually assessed loan receivables -420 -453 -472 -474 -445

Impaired loans, net 2,723 2,755 2,143 3,235 3,710

Total impaired loans reserve ratio 68.0% 67.9% 72.8% 62.4% 56.6%

Level of impaired loans, % 0.17% 0.17% 0.14% 0.21% 0.24%

Impaired loans reserve ratio excl. collective provisions 63.1% 62.7% 66.8% 56.9% 51.4%

Loan loss ratio as a % of loans, accumulated 0.10% 0.12% 0.14% 0.21% 0.23%

Non-performing loans which are not impaired loans 1,812 1,828 1,568 1,519 2,256

Impaired loans and/or non-performing loans, by sector

30 September 2010

SEK m Gross Provisions Net*Of which non-

performing

Private individuals 1,174 -659 515 466 1,053Housing co-operative associations 27 -15 12 8 92Property management 1,055 -437 618 327 285Manufacturing 3,093 -2,428 665 31 36Retail 527 -347 180 158 60Hotel and restaurant 189 -68 121 17 7Passenger & goods transport by sea 2 -1 1 1 -Other transport and communication 215 -128 87 55 8Construction 376 -166 210 197 135Electricity, gas and water 36 -8 28 0 2Agriculture, hunting and forestry 49 -25 24 20 -Other services 340 -196 144 135 54Holding, investment and insurance companies etc. 1,158 -709 449 7 2Other corporate lending 268 -179 89 80 78Credit institutions - - - - -Total 8,509 -5,366 3,143 1,502 1,812* Book value after deduction of specific provisions

Impaired loans Non-performing loans which are not

impaired loans

31 December 2009

SEK m Gross Provisions Net*Of which non-

performing

Private individuals 1,222 -664 558 541 966Housing co-operative associations 90 -15 75 71 85Property management 1,304 -538 766 318 92Manufacturing 2,852 -2,190 662 599 130Retail 607 -444 163 20 44Hotel and restaurant 29 -24 5 2 11Passenger & goods transport by sea - - - - -Other transport and communication 142 -111 31 20 5Construction 335 -155 180 122 101Electricity, gas and water 10 -8 2 - 2Agriculture, hunting and forestry 33 -23 10 7 0Other services 63 -46 17 16 11Holding, investment and insurance companies etc. 1,239 -370 869 5 5Other corporate lending 614 -309 305 239 67Credit institutions 75 -9 66 66 -Total 8,615 -4,906 3,709 2,026 1,519* Book value after deduction of specific provisions

Impaired loans Non-performing loans which are not

impaired loans

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Pledged assets taken over

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Buildings and land 85 78 33 33 40

Shares and other participating interests 1 1 1 1 1

Other 29 30 34 38 49Total pledged assets taken over 115 109 68 72 90

Note 5 Loans to the public

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

SEK loans

- to households 547,198 533,897 520,841 511,315 498,719

- to companies etc 450,410 448,445 444,334 444,269 453,170Total 997,608 982,342 965,175 955,584 951,889

Foreign currency loans

- to households 140,253 142,899 141,288 144,332 138,266

- to companies etc 337,034 365,001 366,950 382,638 390,708Total 477,287 507,900 508,238 526,970 528,974

Provision for probable loan losses -5,786 -5,836 -5,727 -5,371 -4,833Loans to the public 1,469,109 1,484,406 1,467,686 1,477,183 1,476,030 of which National Debt Office 2,966 3,414 3,023 11,279 2,433 of which reverse repos 8,910 5,242 9,957 11,544 12,722

Loans to the public, by sector

31 Dec 2009

SEK m

Loans before deduction of

provisions

Provisions forprobable

loan losses

Loans afterdeduction of

provisions


provisionsPrivate individuals 656,559 -659 655,900 626,799 of which mortgage loans in Stadshypotek 509,746 -12 509,734 476,094 of which other mortgage loans 83,862 -48 83,814 82,779 of which other loans to private individuals 62,951 -599 62,352 67,926Housing co-operative associations 109,181 -15 109,166 103,416 of which mortgage loans in Stadshypotek 96,626 -4 96,622 92,789Property management 339,646 -437 339,209 345,986Manufacturing 56,263 -2,428 53,835 65,550Retail 33,371 -347 33,024 38,250Hotels and restaurants 6,884 -68 6,816 7,643Passenger & goods transport by sea 14,995 -1 14,994 16,730Other transport and communication 36,973 -128 36,845 39,310Construction 14,019 -166 13,853 13,803Electricity, gas, water 21,362 -8 21,354 22,022Agriculture, hunting and forestry 6,721 -25 6,696 4,629Other services 18,170 -196 17,974 18,143Holding, investment, insurance companies, mutual funds etc. 101,016 -709 100,307 109,655Government and municipalities 18,204 - 18,204 21,248Other corporate lending 41,531 -179 41,352 44,473Total loans to the public, before taking into account collective provisions 1,474,895 -5,366 1,469,529 1,477,657Collective provisions -420 -474Total loans to the public 1,469,109 1,477,183

30 September 2010

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Specification of Loans to the public – Property management

31 Dec 2009

SEK m

Loans before deduction of

provisions

Provisions forprobable

loan losses


provisions


provisionsLoans in SwedenState-owned property companies 6,562 - 6,562 6,855Municipal-owned property companies 18,789 - 18,789 18,152Residential property companies 65,135 -23 65,112 58,547 of which mortgage loans in Stadshypotek 45,946 -1 45,945 37,177Other property companies 113,083 -198 112,885 119,257 of which mortgage loans in Stadshypotek 48,971 -13 48,958 49,566Total loans in Sweden 203,569 -221 203,348 202,811Loans outside SwedenDenmark 5,412 -33 5,379 5,766Finland 17,834 - 17,834 21,516Norway 61,753 -75 61,678 65,061Great Britain 42,008 -108 41,900 41,294Other countries 9,070 - 9,070 9,538Total loans outside Sweden 136,077 -216 135,861 143,175

Total loans - Property management 339,646 -437 339,209 345,986

30 September 2010

Credit risk exposure

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Loans to the public 1,469,109 1,484,406 1,467,686 1,477,183 1,476,030

of which reverse repos 8,910 5,242 9,957 11,544 12,722

Loans to credit institutions 216,274 282,165 178,382 168,100 153,809

of which reverse repos 99,449 103,730 71,437 64,701 64,864

Unutilised part of granted overdraft facilities 182,939 166,028 162,474 163,259 163,208

Credit commitments 229,420 225,146 213,728 218,826 203,114

Other commitments 3,163 2,702 2,571 1,971 1,264

Guarantees, credits 17,895 22,095 20,781 20,178 30,538

Guarantees, other 41,751 46,283 46,232 48,038 46,105

Documentary credits 47,330 46,961 42,150 42,474 46,650

Derivatives * 142,023 143,925 110,054 107,155 117,022

Treasury bills and other eligible bills 48,805 88,443 113,836 105,156 91,184

Bonds and other interest-bearing securities 85,044 74,308 77,649 70,846 84,148Total 2,483,753 2,582,462 2,435,543 2,423,186 2,413,072

* Refers to the total of positive market values

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Note 6 Capital base and capital requirement in the banking group The quantitative information provided in this section follows the directives and general guidelines of the Swedish Financial Supervisory Authority concerning publication of information relating to capital adequacy and risk management. Figures reported in this section refer to the minimum capital requirements under Pillar 1 of Basel II.

Capital base

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009TIER 1 CAPITALEquity, group 84,698 82,592 85,316 83,088 79,779

Accrued dividend, current year -3,741 -2,494 -1,247 -4,988 -3,273

Dividend for previous year (unpaid) -4,988

Deduction of equity outside the banking group -249 -268 -68 -41 -38

Deduction of earnings outside the banking group -354 -271 -135 -55 64

Minority interests 0 0 -1 -1 -1

Equity * 80,354 79,559 78,877 78,003 76,531

Tier 1 capital contribution * 14,219 14,612 14,501 14,845 14,770

Minority interests 295 290 296 282 240

Deducted items

Goodwill and other intangible assets -6,859 -7,001 -7,077 -7,252 -7,184

Revaluation reserve -124 -126 -128 -130 -132

Deferred tax assets -406 -435 -293 -303 -388

Special deduction for IRB institutions -605 -691 -334 -443 -827

Capital contribution in companies outside the banking group -234 -234 -233 -233 -233

Positions in securitisation -216 -249 -333 -165 -126

Adjustments in accordance with stability filter

Cash flow hedges 646 648 420 217 302 Unrealised accumulated gains, shares -648 -388 -304 -56 0 Unrealised accumulated gains/losses, fixed income instruments 468 602 651 810 1,087

Total Tier 1 capital * 86,890 86,587 86,043 85,575 84,040

TIER 2 CAPITALPerpetual subordinated loans * 17,021 18,399 17,753 18,650 18,334

Dated subordinated loans 17,344 18,658 18,522 24,424 24,089

Additional items

Unrealised accumulated gains, shares 648 388 304 56 0

Revaluation reserve 124 126 128 130 132

Deducted items

Special deduction for IRB institutions -605 -691 -334 -443 -827

Capital contribution in companies outside the banking group -234 -234 -233 -233 -233

Positions in securitisation -216 -249 -333 -165 -126

Total Tier 2 capital * 34,082 36,397 35,807 42,419 41,369Total Tier 1 and Tier 2 capital * 120,972 122,984 121,850 127,994 125,409Deductable items from total capital base

Capital contribution in insurance companies -4,717 -4,717 -4,717 -4,717 -4,717

Surplus value pension assets * -1,489 -1,682 -1,872 -1,524 -1,647

Total capital base for capital adequacy purposes * 114,766 116,585 115,261 121,753 119,045

TIER 1 CAPITAL **Excluding the profit generated during the period -1,381 -1,471 -1,187

Adjustment in accorance with Tier 1 capital contribution limits - - -

Total Tier 1 capital ** 85,509 84,572 82,853

Adjustment subordinated loans - - -

Total Tier 2 capital ** 34,082 35,807 41,369

Total Tier 1 and Tier 2 capital ** 119,591 120,379 124,222

Deductable items from total capital base

Capital contribution in insurance companies -4,717 -4,717 -4,717

Surplus value pension assets ** -1,796 -2,183 -1,930

Total capital base for capital adequacy purposes ** 113,078 113,479 117,575

* Including the profit generated in the period and the accrued right to recover pension costs.

TIER 2 CAPITAL

** As the interim report has not been examined by the Bank's auditors, the profit generated during the period and the accrued right to recover pension costs are excluded.

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Capital requirement

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Credit risk according to standardised approach 4,210 4,489 4,558 4,290 5,713

Credit risk according to IRB approach 34,648 37,017 37,430 39,033 39,205

Interest rate risk 1,570 1,517 1,234 1,308 1,520

Equity price risk 27 31 22 30 35

Exchange rate risk - - - - -

Commodities risk 43 49 36 41 22

Settlement risk - - - - -

Operational risk 3,849 3,849 3,849 3,484 3,484Total capital requirement according to Basel II 44,347 46,952 47,129 48,186 49,979

Adjustment according to transitional rules 31,119 29,428 28,403 27,102 24,304Capital requirement according to Basel II, transitional rules 75,466 76,380 75,532 75,288 74,283

Risk-weighted assets, Basel I 1,198,051 1,215,037 1,190,626 1,190,218 1,186,492

Risk-weighted assets, Basel II 554,342 586,893 589,125 602,330 624,726

Capital requirement according to Basel I (8% of risk-weighted assets) 95,844 97,203 95,250 95,217 94,919

Capital adequacy analysis 30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Capital requirement in Basel II compared to Basel I 46% 48% 49% 51% 53%

Capital requirement in Basel II compared to transitional rules 59% 61% 62% 64% 67%

Capital ratio according to Basel II * 20.4% 19.3% 18.8%

Capital ratio according to Basel I * 9.6% 9.6% 10.1%

Capital ratio according to transitional rules * 12.0% 12.0% 12.7%

Capital ratio according to Basel II ** 20.7% 19.9% 19.6% 20.2% 19.1%

Capital ratio according to Basel I ** 9.7% 9.8% 9.8% 10.3% 10.2%

Capital ratio according to transitional rules ** 12.2% 12.2% 12.2% 12.9% 12.8%

Tier 1 ratio according to Basel II * 15.4% 14.4% 13.3%

Tier 1 ratio according to Basel I * 7.2% 7.2% 7.1%

Tier 1 ratio according to transitional rules * 9.1% 9.0% 8.9%

Tier 1 ratio according to Basel II ** 15.7% 14.8% 14.6% 14.2% 13.5%

Tier 1 ratio according to Basel I ** 7.3% 7.2% 7.3% 7.3% 7.2%

Tier 1 ratio according to transitional rules ** 9.2% 9.1% 9.1% 9.1% 9.1%

Capital base in relation to capital requirement Basel II 259% 248% 245% 253% 238%

Capital base in relation to capital requirement Basel I 121% 122% 122% 129% 127%

Capital base in relation to capital requirement according to transitional rules 152% 153% 153% 162% 160%

* Excluding profit generated during the period since this report has not been examined by auditors.

** Including profit generated during the period.

Figures reported in this section refer to the minimum capital requirements under Pillar 1 of the capital adequacy rules, Basel II. In the table, “according to Basel II” means that the figures are based on the minimum capital requirements after the transitional rules have ceased to apply.

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Credit risks IRB

SEK m30 Sep

201030 Jun

201030 Sep

201030 Jun

201030 Sep

201030 Jun

2010

Corporates 875,717 914,305 39.2 40.5 27,442 29,619 of which repos and securities loans 19,513 19,503 0.5 0.8 8 13 of which other loans 856,204 894,802 40.1 41.4 27,434 29,606

Households 680,633 675,449 7.7 7.8 4,180 4,205

of which property loans 599,963 591,916 5.8 5.9 2,783 2,777

of which other loans 80,670 83,533 21.7 21.4 1,397 1,428

Small companies 30,044 30,552 42.2 42.6 1,014 1,041

Institutions 210,801 216,229 8.6 9.3 1,448 1,606

of which repos and securities loans 140,643 134,865 0.5 0.4 53 46

of which other loans 70,158 81,364 24.9 24.0 1,395 1,560

Other 12,183 12,633 57.9 54.0 564 546

Total IRB 1,809,378 1,849,168 23.9 25.0 34,648 37,017 of which repos and securities loans 160,156 154,368 0.5 0.5 61 59 of which other loans 1,649,222 1,694,800 26.2 27.3 34,587 36,958

Exposure after credit risk protection (EAD) Average risk weight, % Capital requirement

Handelsbanken is implementing the IRB model for its credit exposures in stages. For corporate and institutional exposures, the exposures at all regional banks, Stadshypotek and Handelsbanken Finans have been approved for calculation of the capital requirement according to the IRB model, as have exposures to institutions and large companies at Handelsbanken’s foreign branches that are not part of the regional banking operations. Swedish, Danish, Finnish and Norwegian exposures to households and small companies, and corresponding exposures in the Handelsbanken Finans and Stadshypotek Groups have also been approved for IRB reporting. Repos and securities loans are reported separately in the table since they give rise to very low capital requirements, while the volume varies considerably over time. The low capital requirement is due to

the fact that the exposure in repos and securities loans is reported gross and the exposure is secured.

The total average risk weight for IRB exposures went down by 1.1 percentage points during the quarter. For corporate exposures, the average risk weight went down by 1.4 percentage points (excluding repos and securities loans), which is mainly because the Bank has increased its lending to creditworthy customers and has reduced lending to customers with a poorer credit rating. This may also be explained by a slightly positive credit migration to better risk categories. In other respects, there are small changes in risk weight.

Note 7 Goodwill and other intangible assets

SEK mJan-Sep

2010Jan-Sep

2009Full year

2009

Opening residual value 7,319 7,057 7,057

Additional during the period 60 377 413

The period's amortisation -69 -59 -80

The period's impairments -1 -25 -25

Foreign exchange effect -383 -98 -46

Closing residual value 6,926 7,252 7,319

Note 8 Derivatives

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Positive market valuesTrading 116,654 115,348 86,181 90,096 100,873

Fair value hedges 24,697 27,914 23,278 16,369 15,537

Cash flow hedges 673 663 595 690 612Total 142,024 143,925 110,054 107,155 117,022

Negative market valuesTrading 136,780 113,555 95,099 88,292 114,987

Fair value hedges 8,510 7,047 4,778 4,022 3,499

Cash flow hedges 1,367 1,419 1,089 787 882Total 146,657 122,021 100,966 93,101 119,368

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Note 9 Risks and uncertainty factors There is still considerable uncertainty regarding the global economic recovery. In several of the Bank’s home markets, there have been positive signs recently, although domestic demand continues to be weak in many OECD countries. If the trend in major economies with high debt levels makes a clear change for the worse, this could directly or indirectly affect the Bank's customers and thus the Bank. However, Handelsbanken’s historically low tolerance of risks, sound capitalisation and strong liquidity means that the Bank is well equipped to cope with these conditions.

Despite the recession, Handelsbanken’s loan losses continued to fall during the third quarter. The credit risk, measured as the average risk weight in approved IRB exposures, went down during the quarter. According to this measure, both corporate and household lending showed reduced credit risks.

Handelsbanken’s liquidity situation is healthy. As part of its strategy to reduce its liquidity risks, for a long time the Bank has worked on

extending its bond funding and ensuring that liquidity risks are including in internal pricing. During the third quarter, Handelsbanken became the first Nordic bank to issue covered bonds in the US. This allows for a further diversification of the Bank’s long-term funding. The total liquidity reserves ensure that the Bank can maintain its present operations even if the situation on the financial markets were to deteriorate considerably and the supply of new funding in the markets were to disappear.

Handelsbanken has continued its work of preparing for the new liquidity regulations which are being drafted. One step in these preparations is to centralise all liquidity management. The new organisation strengthens control of liquidity risks and optimises the Bank’s funding.

.

Handelsbanken’s position with the Swedish central bank (the Riksbank), weekly average

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

W1 W4 W8 W12 W16 W20 W24 W28 W32 W36 W40 W44 W48 W52 W4 W8 W12 W16 W20 W24 W28 W32 W36 W39

2009 2010

SEK m

Handelsbanken has low tolerance of market risks. For the third quarter of 2010, the total exposure for Handelsbanken Capital Markets’ trading portfolio, measured as Value-at Risk (VaR), was on average SEK 30 million (Q3 2009: 45 million). During the period, the risk varied between SEK 17 million (24) and 44 million (72).

Other aspects of the Bank’s risk and capital management are described in Handelsbanken’s 2009 annual report and in

Handelsbanken’s Risk and Capital Management - Information according to Pillar 3. Both these are available on the Bank’s website at www.handelsbanken.se/ireng. No material changes have occurred since the publication of these documents that are not presented in this interim report.

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36 Handelsbanken

Note 10 The Handelsbanken share Q3

2010Q3

2009Q2

2010Jan-Sep

2010Jan-Sep

2009Full year

2009

Number of repurchased shares, end of period - - - - - -Holding of own shares in trading book, end of period 23,847 35,224 1,672,424 23,847 35,224 160,591Number of outstanding shares after repurchases and deduction for trading book, end of period 623,445,615 623,434,238 621,797,038 623,445,615 623,434,238 623,308,871

Number of outstanding shares after dilution, end of period 635,686,812 637,208,064 634,674,704 635,686,812 637,208,064 635,550,068Average holdings of own shares (repurchased and holdings in trading book) 1,086,973 112,362 1,603,305 1,506,665 - 205,546Average number of outstanding shares 622,382,489 623,357,100 621,866,157 621,962,797 623,469,462 623,263,916 after dilution 635,260,155 638,086,833 634,107,354 634,203,994 642,048,431 642,588,544

Share price ordinary class A, SEK 220.90 178.00 192.20 220.90 178.00 204.20Market capitalisation, SEK bn 138 111 120 138 111 127

Note 11 Turnover of own debt instruments and shares The Handelsbanken Group issues and repurchases debt instruments which it has issued on its own account and its own shares. This turnover is mainly intended as part of the Bank’s securities operations and also as a component in funding its operations. During the period January to September 2010, the turnover was:

Interest-bearing securities, bonds and certificates (SEK billion): ….Group Parent company Issued (sold): 1,080 703 Repurchased (bought): 162 46 Repaid: 877 643 Equity-related securities (SEK billion):

Issued (sold): 2.7 Repurchased (bought): 2.7

Note 12 Contingent liabilities Total contingent liabilities were SEK 107,071 million (110,799 as at 31 December), most of which are credit guarantees. This amount includes SEK 92 million (106) relating to a number of civil actions which the Group is bringing in general courts of law. Contingent liabilities relating to civil actions are reported as an

assessed expected value. Other contingent liabilities are reported in nominal amounts.

Note 13 Related-party transactions During the period, only normal business transactions have been carried out between the parent company and subsidiaries. In the second quarter, Handelsbanken AB sold shares to Svenska Handelsbankens Pensionsstiftelse (pension foundation) and Pensionskassan SHB försäkringsförening (pension fund) for a value of SEK 417 million. The transaction was completed on business terms. There are no other transactions of material significance with associated companies. In this context, Svenska Handelsbankens Pensionsstiftelse (pension foundation), Svenska Handelsbankens Personalstiftelse (staff foundation) and Pensionskassan SHB försäkringsförening (pension fund) are associated companies. These companies use Handelsbanken AB for customary banking and accounting services.

Note 14 Discontinued operations Discontinued operations mainly comprise the results from the acquired parts of the Plastal Group. The Bank intends to divest its holdings in the Plastal Group as soon as market conditions permit this.

.

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37 Handelsbanken

Parent company

PARENT COMPANY’S INCOME STATEMENT

SEK m Q32010 Q32009 Change Q22010 Change Jan-Sep 2010 Jan-Sep 2009 Change Full year2009Net interest income 3,693 3,728 -1% 3,505 5% 10,770 10,941 -2% 14,584Dividends received 30 2,346 -99% 859 -97% 1,124 3,014 -63% 3,096Net fee and commission income 1,556 1,430 9% 1,562 0% 4,687 4,368 7% 5,995Net gains/losses on financial items 150 237 -37% -47 491 1,859 -74% 2,453Other income 142 126 13% 149 -5% 436 423 3% 597Total income 5,571 7,867 -29% 6,028 -8% 17,508 20,605 -15% 26,725Staff costs -2,318 -2,346 -1% -2,252 3% -6,895 -7,094 -3% -8,938Other administrative expenses -1,103 -1,002 10% -1,182 -7% -3,407 -3,203 6% -4,450Depreciation, amortisation and impairments of property, equipment and intangible assets -134 -162 -17% -136 -1% -407 -437 -7% -574Total expenses before loan losses -3,555 -3,510 1% -3,570 0% -10,709 -10,734 0% -13,962Profit before loan losses 2,016 4,357 -54% 2,458 -18% 6,799 9,871 -31% 12,763Net loan losses -288 -872 -67% -356 -19% -1,186 -2,953 -60% -3,781Impairments of financial assets - - -270 -270 - -30Operating profit 1,728 3,485 -50% 1,832 -6% 5,343 6,918 -23% 8,952Appropriations 27 27 0% 27 0% 82 83 -1% 4,691Profit before tax 1,755 3,512 -50% 1,859 -6% 5,425 7,001 -23% 13,643Taxes -452 -486 -7% -572 -21% -1,497 -1,313 14% -2,784Profit for the period 1,303 3,026 -57% 1,287 1% 3,928 5,688 -31% 10,859

PARENT COMPANY’S STATEMENT OF COMPREHENSIVE INCOME

SEK m Q32010 Q32009 Change Q22010 Change Jan-Sep 2010 Jan-Sep 2009 Change Full year2009Profit for the period 1,303 3,026 -57% 1,287 1% 1,303 5,688 -77% 10,859Other comprehensive incomeCash flow hedges 51 47 9% -317 -592 -69 13Available-for-sale instruments 557 1,468 -62% 170 228% 1,283 2,706 -53% 3,277Translation differences for the period -1,098 -581 -89% 197 -1,440 -178 51Group contribution provided - - - - - -2,622Tax related to other comprehensive income -160 -484 67% 20 -202 -770 74% -238Total other comprehensive income -650 450 70 -951 1,689 481

Total comprehensive income for the period 653 3,476 -81% 1,357 -52% 2,977 7,377 -60% 11,340


37 Handelsbanken

Parent company’s interim report

PARENT COMPANY’S INCOME STATEMENT

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009

Net interest income 3,693 3,728 -1% 3,505 5% 10,770 10,941 -2% 14,584Dividends received 30 2,346 -99% 859 -97% 1,124 3,014 -63% 3,096Net fee and commission income 1,556 1,430 9% 1,562 0% 4,687 4,368 7% 5,995Net gains/losses on financial items 150 237 -37% -47 491 1,859 -74% 2,453

Other income 142 126 13% 149 -5% 436 423 3% 597Total income 5,571 7,867 -29% 6,028 -8% 17,508 20,605 -15% 26,725Staff costs -2,318 -2,346 -1% -2,252 3% -6,895 -7,094 -3% -8,938Other administrative expenses -1,103 -1,002 10% -1,182 -7% -3,407 -3,203 6% -4,450Depreciation, amortisation and impairments of property, equipment and intangible assets -134 -162 -17% -136 -1% -407 -437 -7% -574Total expenses before loan losses -3,555 -3,510 1% -3,570 0% -10,709 -10,734 0% -13,962Profit before loan losses 2,016 4,357 -54% 2,458 -18% 6,799 9,871 -31% 12,763Net loan losses -288 -872 -67% -356 -19% -1,186 -2,953 -60% -3,781Impairments of financial assets - - -270 -270 - -30Operating profit 1,728 3,485 -50% 1,832 -6% 5,343 6,918 -23% 8,952Appropriations 27 27 0% 27 0% 82 83 -1% 4,691Profit before tax 1,755 3,512 -50% 1,859 -6% 5,425 7,001 -23% 13,643Taxes -452 -486 -7% -572 -21% -1,497 -1,313 14% -2,784

Profit for the period 1,303 3,026 -57% 1,287 1% 3,928 5,688 -31% 10,859

PARENT COMPANY’S STATEMENT OF COMPREHENSIVE INCOME

SEK mQ3

2010Q3

2009 ChangeQ2

2010 ChangeJan-Sep

2010Jan-Sep


2009Profit for the period 1,303 3,026 -57% 1,287 1% 1,303 5,688 -77% 10,859

Other comprehensive incomeCash flow hedges 51 47 9% -317 -592 -69 13Available-for-sale instruments 557 1,468 -62% 170 228% 1,283 2,706 -53% 3,277Translation differences for the period -1,098 -581 -89% 197 -1,440 -178 51Group contribution provided - - - - - -2,622Tax related to other comprehensive income -160 -484 67% 20 -202 -770 74% -238Total other comprehensive income -650 450 70 -951 1,689 481

Total comprehensive income for the period 653 3,476 -81% 1,357 -52% 2,977 7,377 -60% 11,340

39 Handelsbanken



38 Handelsbanken

PARENT COMPANY’S BALANCE SHEET

SEK m30 Sep

201030 Jun

201031 Mar

201031 Dec

200930 Sep

2009

Assets Cash and balances with central banks 75,626 122,263 122,551 49,681 97,997Treasury bills and other eligible bills 40,384 78,131 105,234 96,701 82,859Loans to credit institutions 520,257 520,072 422,140 414,441 384,707Loans to the public 671,124 698,803 702,526 723,056 742,352Bonds and other interest-bearing securities 75,423 65,269 65,339 58,089 70,725Shares 30,890 21,943 26,511 21,167 14,652Shares in subsidiaries and participating interests 33,195 33,195 33,458 33,458 33,476Assets where the customer bears the value change risk 2,041 2,963 3,046 3,376 1,200Derivative instruments 149,662 140,533 115,068 110,177 118,160Intangible assets 1,540 1,625 1,681 1,782 1,773Property and equipment 1,740 1,787 1,736 1,750 1,754Current tax assets - - - - 1,136Deferred tax assets 391 403 241 231 247Other assets 25,424 20,158 39,676 41,670 20,529Prepaid expenses and accrued income 5,310 4,579 5,345 4,691 4,572Total assets 1,633,007 1,711,724 1,644,552 1,560,270 1,576,139

Liabilities and equityDue to credit institutions 269,482 305,311 246,743 272,712 225,663Deposits and borrowing from the public 551,360 556,527 554,658 522,503 576,021Liabilities where the customer bears the value change risk 2,063 2,998 3,075 3,419 1,234Issued securities 464,089 531,499 519,796 474,205 467,022Derivative instruments 167,332 136,173 120,887 110,788 131,872Other trading liabilities 38,200 37,584 41,308 29,647 30,076Current tax liabilities 302 248 119 369 -Deferred tax liabilities 86 88 89 90 89Provisions 138 167 170 188 323Other liabilities 24,327 22,965 36,660 20,106 19,599Accrued expenses and deferred income 9,030 9,235 9,219 8,333 9,757Subordinated liabilities 49,913 53,139 52,082 59,021 58,536Total liabilities 1,576,322 1,655,934 1,584,806 1,501,381 1,520,192

Untaxed reserves 1,147 1,221 1,275 1,368 2,363

Share capital 2,899 2,899 2,899 2,899 2,899Statutory reserve 2,682 2,682 2,682 2,682 2,682Retained earnings 46,029 46,363 51,552 41,081 42,315Profit for the period 3,928 2,625 1,338 10,859 5,688Total equity 55,538 54,569 58,471 57,521 53,584Total liabilities and equity 1,633,007 1,711,724 1,644,552 1,560,270 1,576,139

Memorandum itemsAssets pledged for own debt 101,377 129,833 126,697 171,051 161,075Other assets pledged 14,598 16,113 13,784 8,124 12,035Contingent liablilities and commitments 145,890 156,232 151,255 154,336 152,550Other commitments 410,664 387,560 371,673 376,563 356,998

The interim information for the parent company with comments concerning financial performance, significant events and risk is covered by the report provided for the whole of the Handelsbanken Group.

40 Handelsbanken



SUBMISSION OF REPORT

I hereby submit this interim report.

Stockholm, 20 October 2010

Pär Boman President and Group Chief Executive

PHONE CONFERENCE A phone conference with the Bank’s CFO, Mr Ulf Riese, will be held on 20 October at 3 p.m. CET.

The press release, presentation material, the Fact Book and a recording of the phone conference are available at www.handelsbanken.se/ireng

The highlights for January–December 2010 will be published on 9 February 2011.

For further information, please contact: Pär Boman, President and Group Chief Executive Tel: +46 (8) 22 92 20

Ulf Riese, CFO Tel: +46 (8) 22 92 20

Mikael Hallåker, Head of Investor Relations Tel: +46 (8) 701 29 95, [email protected]

41 Handelsbanken



Svenska Handelsbanken AB (publ), Corporate identity no. 502007-7862 SE-106 70 Stockholm, Sweden, Telephone +46 (0)8-701 10 00, www.handelsbanken.com

2010

Han

dels

bank

en

Share price performance and other information The Swedish stock market grew by 14 percent during the first nine months of the year. The Stockholm stock exchange’s bank index rose by 6 percent. Handelsbanken’s class A shares closed at SEK 220.90 on 30 September 2010, an increase of 8 percent. Since 1 January 2000, Handelsbanken's share price has increased by 105 percent, while the Stockholm stock exchange has fallen by 10 percent.

SHARE PRICE PERFORMANCE, 31 DECEMBER 1999 – 30 SEPTEMBER 2010

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Index

SHB A OMX Stockholm Banks_PI OMX Stockholm 30 Index

ANALYSTS WHO MONITOR THE BANK

Company Analyst Email addressABG SUNDAL COLLIER Magnus Andersson [email protected]

ABG SUNDAL COLLIER Rickard Henze [email protected]

ARCTIC SECURITIES Fridtjof Berents [email protected]

CARNEGIE Thomas Johansson [email protected]

CARNEGIE Rickard Strand [email protected]

CITIGROUP Henrik Christiansson [email protected]

CREDIT SUISSE Andreas Håkansson [email protected]

DANSKE BANK Per Grönborg [email protected]

DANSKE BANK Frida Lewné [email protected]

DEUTSCHE BANK Jan Wolter [email protected]

DNB NOR Odd Weidel [email protected]

ERIK PENSER FONDKOMMISSION Tomas Ullman [email protected]

EVLI BANK PLC Kimmo Rämä [email protected]

EXECUTION Ltd Fiona Swaffield [email protected]

FOX-PITT, KELTON Geoff Dawes [email protected]

GOLDMAN SACHS Aaron Ibbotson [email protected]

J P MORGAN Nana Francois [email protected]

KEEFE, BRUYETTE & WOODS LTD. Aldo Comi [email protected]

MERRILL LYNCH Johan Ekblom [email protected]

MORGAN STANLEY Henrik Schmidt [email protected]

NOMURA INTERNATIONAL PLC Jon Peace [email protected]

NOMURA INTERNATIONAL PLC Chintan Joshi [email protected]

RBS Kristin Dahlberg [email protected]

SEB ENSKILDA EQUITIES Hampus Brodén [email protected]

STANDARD & POOR'S Phuong Pham [email protected]

SWEDBANK MARKETS Christian Hall [email protected]

UBS Nick Davey [email protected]

ÖHMAN Francis Dallaire [email protected]

© 2010

Svenska Handelsbanken AB (publ), Corporate identity no. 502007-762SE-106 70 Stockholm, Sweden, Telephone +46 (0)8-701 10 00, www handelsbanken.se

Documents

DELÅRSRAPPORT JANUARI – SEPTEMBER 2010 201 0 · - after dilution 4.27 3.83 4.07 12.85 12.07 15.98 Tier 1 ratio according to Basel II 15.7% 13.5% 14.8% 15.7% 13.5% 14.2% * When