Svenska Handelsbanken : Handelsbanken (plc) Annual Report 2022

Handelsbanken plc Annual report

and financial statements

2022

Who we are

Handelsbanken is a local relationship bank, built on satisfied customers, financial strength and sustainable values. We were established in 1871 in Sweden and in the UK we now have an extensive network of branches. We support local communities across the country, helping individuals and businesses with their financial needs.

OUR VALUES

We have a fundamental belief in human nature, and that people are motivated by nature to do good things well and make the right decisions.

Trust in people and respect for the individual

Empowerment and responsibility

1. long-term,sustainable view

01

STRATEGIC REPORT

2022 Highlights	01
Chair's statement	02
Chief Executive Officer's statement	04
Our business model	06
Key performance indicators	07
Chief Financial Officer's review	08
Business development	10
Sustainability report	12
Task force on climate-related
financial disclosures	22

30

CORPORATE GOVERNANCE

Corporate governance report	30
Wates principles	34
Principle 1 - Purpose and leadership	35
Principle 2 - Board composition	36
Principle 3 - Director responsibilities	39
Principle 4	- Opportunity risk	40
Principle 5	- Remuneration	41
Principle 6	- Stakeholder relationships
and engagement	44
Committee reports	52
S172		62
Directors' report	63
Statement of directors' responsibilities	67
RISK AND CAPITAL MANAGEMENT	68

81

FINANCIAL STATEMENTS

Independent auditors' report

81

Consolidated statement of profit or loss and

comprehensive income, UK Group	87
Balance Sheet, UK Group	88
Consolidated statement of changes
in equity, UK Group	89
Cash flow statement, UK Group	90
Notes to the financial statements,
UK Group	91
Statement of profit or loss and
comprehensive income, Bank	131
Balance Sheet, Bank	132
Statement of changes in equity, Bank	133
Cash flow statement, Bank	134
Notes to the financial statements, Bank	135

Find out more about us online

handelsbanken.co.uk

STRATEGIC REPORT CORPORATE GOVERNANCE RISK AND CAPITAL MANAGEMENT FINANCIAL STATEMENTS

2022 Highlights

Operational highlights

HANDELSBANKEN PLC ONLY

Deposits

5%

Average Deposits from the public increased 5% in 2022 to £20.1 billion

HANDELSBANKEN WEALTH & ASSET

MANAGEMENT LIMITED (HWAM)

Assets Under Management and Administration (AUMA)

£4,073m

2021: £4,447 million

Financial highlights

Total income

£733.9m 38%

2021: £532.9m

Total expenses

£386.4m 5%

2021: £406.2m

Profit before net credit (losses)/gains

£347.5m 174%

2021: £126.6m

Key Performance		Financial
Indicators		performance
Page 07		Page 08

HandelsbanKEN PLC | Annual report and financial statements 2022

01

CHAIR'S STATEMENT

Record financial performance and profitability

In a year which saw the Bank achieve record financial performance and profitability, it is with pleasure that I introduce Handelsbanken plc's financial statements. Consolidated financial statements were prepared for the first time for the year ended 31 December 2022 for Handelsbanken plc and its subsidiaries (UK Group).

Income

38%

Expenses

5%

Profit before tax

154%

In 2022, another unprecedented set of events saw the emergence in the UK from lockdown restrictions, UK inflation rate reached

a 40-year high, the Russian invasion of Ukraine contributed to macroeconomic volatility and uncertainty, and the Bank of England's (BoE) Monetary Policy Committee voted to incrementally raise UK interest rates to 4% by February 2023.

Against this uncertain economic backdrop, the Bank significantly improved its financial performance and has made strong progress along its post-subsidiarisation strategic journey as we continue to build a bank for the future. Change programmes have advanced, local functions strengthened and overall governance enhanced. Progress continues to be made with our ambitious climate change programme as we aim to establish the Bank as a leader in green and sustainable finance, with the ambition of attaining net zero emissions by 2040 at the latest across our business operations, as well as our investment and financing activities.

The strength of the brand and customer offering has been evidenced by increased deposits as our customers continue to place their trust in us and believe in our financial strength. The Bank has set out a clear strategy to deliver profitable growth in a cost-effective,customer-centric and sustainable way, and in the year ahead there is particular focus on increasing our lending activity within the Bank's targeted customer segments. We will also seek to grow our Wealth Management offering by even further enhancing alignment with

the Bank.

The Board was kept regularly informed by management on strategic, regulatory and change matters and it remains fully supportive of the strategy to continuing the progress made towards long-term sustainable growth. By utilising the Bank's financial strength and commitment from the Handelsbanken Group we also are able to support an ambitious investment plan that will improve efficiencies, processes and create a better banking experience for our customers.

02 HandelsbanKEN PLC | Annual report and financial statements 2022

STRATEGIC REPORT CORPORATE GOVERNANCE RISK AND CAPITAL MANAGEMENT FINANCIAL STATEMENTS

"Against this uncertain economic backdrop, the Bank significantly improved the financial performance and has made strong progress along its post-subsidiarisation strategic journey as we continue to build a bank for the future."

As always, our colleagues have been central to the Bank's successes and I want to thank each of them for their efforts throughout this challenging and uncertain period. Whilst we continue to demonstrate restraint given the market conditions, we acknowledged the increasing cost of living in annual pay considerations and focused support on our colleagues working in lower-paid roles; we also decided to make a one-off cost of living payment to support all our staff. In response to a recent internal pulse survey carried out by employees, it showed that colleagues rated the Bank above industry benchmark and as a 'great place to work', which is testament to our strong corporate culture and decentralised business model, where common goals and core values, trust in each other and an open and collaborative environment are key features.

The outlook for 2023 remains challenging, with indications of a weakening property market, expected declines in economic activity and further reductions in consumer spending, and pressure on real incomes. However, the Bank's financial strength underpinned by its close proximity to customers means it retains a high-quality loan book that is not showing any material signs of deterioration and credit losses remain low. As a customer-centric bank we continue to monitor customer activity and behaviours closely for signs of stress, taking action where appropriate ensuring we are well placed to build on the progress to date and develop a successful business supporting customers long into the future.

We are on a very interesting journey and continue to see great opportunities in the UK market. I once again want to thank all our colleagues for making this journey possible and our customers for trusting us with their business.

MIK AEL HALLÅKER

Chair

20 March 2023

HandelsbanKEN PLC | Annual report and financial statements 2022 03