Nomura Holdings, Inc. · TSE:8604
Nomura — Handelsbanken — Nomura Conference 2013
28 slides from Nomura's conference presentation, Nov 21, 2013
Slide 1: Handelsbanken UK
Handelsbanken UK Low credit risks Low costs Local Satisfied responsibility Investor Presentation customers Nomura Conference SHB’s 21 November 2013 market Anders Bouvin, CEO UK Martin Blåvarg, Head of UK & US IR
Slide 2: Handelsbanken's strengths
Handelsbanken’s Handelsbanken s strengths For the p past 41 yyears, the bank has had higher g profitability p y than the average g of its competitors Since the first independent p survey y was made in 1989, Handelsbanken has had the highest level of customer satisfaction of the four largest bank
Slide 3: Handelsbanken has six home markets
Handelsbanken has six home markets Sweden 461 branches Norway 49 branches Finland 45 branches Denmark 55 branches Great Britain 166 branches * The Netherlands 16 branches * Per 6 November 2013, including recruited branch managers. Outside its home markets, the bank has operations in 28 locations in
Slide 4: Unchanged business model for 41 years
Unchanged business model for 41 years Financial goal – focus on profitability To have a higher return on equity than a weighted average of comparable peers This goal has been reached for the last 41 consecutive years Decentralisation Non-negotiable Non negotiable Credit policy The branch is the ba
Slide 5: Handelsbanken in the UK - recent history
H d l b k iin th Handelsbanken the UK - recentt history hi t Handelsbanken has been in the UK since 1982, designating it a home market in 2002 January 2013 J 4th UK Regional Bank created Announced branches 180 January 2011 160 3rd UK Regional Bank created 140 2008 120 2nd UK Regional Bank created 10
Slide 6: Handelsbanken UK
Handelsbanken UK Central Business Regional Central Departments Areas Banks Branches CUSTOMER Personnel Credit UK Product owners South West (RA) 166 branches* Admin Handelsbanken Central (RC) Information Direkt South (RL) Legal Handelsbanken North (RX) Compliance C it l Markets Capital M k t Risk Acc
Slide 7: Our UK branch network
Our UK branch network 166* b branches, h iincluding l di recruited it d managers 20 new branches announced year to date in 2013 Expansion costs funded by UK operations Growth in lending support throughout financial crisis. Year-on-year Year on year growth in Q3 2013: UK lending increased b
Slide 8: Why the UK is an interesting market for Handelsbanken
Why the UK is an interesting market for Handelsbanken Competitors - reputationally and financially damaged Customers - widespread dissatisfaction with UK banks Market size - twice as large as our other home markets combined 8
Slide 9: Key elements of Handelsbanken's UK growth
Key elements of Handelsbanken’s Handelsbanken s UK growth Selecting the right customers “Better cash flow than average” The Branch is the Bank Relationships – not transactions Universal banking Applying the long-term approach No internal targets (products, (products volumes etc.) etc )
Slide 10: The competition
The competition UK competition Handelsbanken Centralised Decentralised Hierarchical Flat structure Volume focused Focus on profitability Constant restructuring Stable struture Product driven Relationship driven High cost base Good cost control Poor customer service Strong
Slide 11: More satisfied customers in the UK
More satisfied customers in the UK UK… Individuals Businesses Index Index 85 85 Handelsbanken Handelsbanken 80 80 Lloyds 75 75 HSBC Barclays RBS RBS 70 70 Santander Lloyds HSBC 65 65 Santander Barclays 60 60 55 55 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Ranked top y y, for the 5th yyear ru
Slide 12: ... and more loyal
… and more loyal Individuals Businesses Index Index 95 90 88 89 Satisf action Loyalty Satisf action Loyalty 90 85 82 84 85 80 80 74 75 75 75 73 72 73 73 72 72 75 73 73 74 74 71 70 71 71 70 69 69 68 70 65 65 60 60 55 55 50 50 Handelsbanken Barclays HSBC Lloyds RBS/Nat West Santander Handelsbanken Bar
Slide 13: The Branch is the Bank
How branches operate “The The Branch is the Bank Bank” The Branch Manager makes all decisions regarding: Recruitment Costs Marketing, customer selection & management Credits Pricing Operate within a strong compliance framework/culture There are no sales or activity targets No centr
Slide 14: Huddersfield Branch – an example
Huddersfield Branch – an example Opened p January y 2008 with 4 staff Now 8 staff with banking experience of 227 years All staff live locally SME town with population of 150,000 Broke even after 18 months 14
Slide 15: The decision to open a new branch
The decision to open a new branch No fixed plans or timescale for opening new branches – “as as long as it takes... takes ” The essential starting point is to find the right Branch Manager, who must: share our values - lengthy recruitment process, heavy focus f on cultural fit f convince us
Slide 16: Establishing a new branch
Establishing a new branch A Branch Manager and his/ her staff spend considerable time in neighbouring branches before opening their own The vast majority of new branches contain at least one ‘Handelsbanker’ Strong emphasis on only selecting customers with whom we wish to develop a long- term r
Slide 17: Share of group profits from home markets outside Sweden
Share of group profits from home markets outside Sweden Home markets outside Sweden account for 28% of group earnings* earnings 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 * 12 month rolling roperating profits 17
Slide 18: Net interest income growth in home markets
Net interest income growth in home markets Net interest income growth Q1 2009 - Q3 2013* 500% 450% 400% CAGR 42% 350% 300% 250% CAGR 13% CAGR 10% CAGR 11% 200% CAGR 4% 150% 100% 50% 0% * In local currency. Netherlands excluded since it became a home market in 2013 CAGR = Compounded Annual Growth Rat
Slide 19: Income/expense trend for UK branches
Income/expense trend for UK branches Continued expansion and increased availability 166 branches branches* including appointed branch managers Around 1,500 employees in the UK Income in Q3 in local currency increased by 37% compared to a year ago Income and expense trend in branches in the U
Slide 20: Branch operations in the UK
Branch operations in the UK Income and expense trend in the UK m GBP 90 80 70 60 Income: CAGR: 41% 50 40 30 20 Expenses: CAGR: 27% 10 0 Q109 Q309 Q110 Q310 Q111 Q311 Q112 Q312 Q113 Q313 CAGR = Compounded Annual Growth Rate 20
Slide 21: Handelsbanken UK business volumes
Handelsbanken UK business volumes Quarterly average volumes, percentage changes Outstanding Growth 1 year Growth 4 year volume (GBP) (since Q3 2012) (since Q3 2009) Total lending 11,853 19% 115% Corporate lending 8,509 16% 91% H Household h ld lending l di 3 344 3,344 28% 216% Total deposits 3,872 2
Slide 22: UK branches, total income last 16 quarters
UK branches, branches total income last 16 quarters Total income income, local currency m GBP 90 80 70 60 50 40 30 20 10 0 Q111 Q409 Q210 Q310 Q410 Q212 Q312 Q412 Q213 Q313 Q110 Q211 Q311 Q411 Q112 Q113 22
Slide 23: UK branches, profit before loan losses last 16 quarters
UK branches, branches profit before loan losses last 16 quarters Profit before loan losses, losses local currency m GBP 40 35 30 25 20 15 10 5 0 Q111 Q409 Q210 Q310 Q410 Q212 Q312 Q412 Q213 Q313 Q110 Q211 Q311 Q411 Q112 Q113 23
Slide 24: Acquisition of UK wealth and asset manager
Acquisition of UK wealth and asset manager Handelsbanken has acquired Heartwood Wealth Heartwood – growth in assets managed* Group Ltd., a wealth and asset manager offering mdr GBP private customers a total solution for their savings 1,60 1,46 1,38 Th The acquisition i iti iis partt off H Handel
Slide 25: Recommended by our customers...
Recommended by our customers... customers "Handelsbanken’s scores really stood out against the competition and d th the jjudges d commended d d th the b bankk ffor it its d decentralised t li d approachh and customer focus." 25
Slide 26: It's really a matter of basic banking...
It’ss really a matter of basic banking It banking… Low credit Low costs risks i k Local Satisfied responsibility customers SHB’s market 26
Slide 27: ... but with a modern growth strategy
… but with a modern growth strategy A mature branch covers its … which gradually cover their … which is used to open market and generates a markets and generate new new branches… surplus… surpluses Surplus Surplus Repeatable Cost-effective Scalable Low risk 27
Slide 28: Disclaimer
Disclaimer Certain statements made in this presentation are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or