Handelsbanken

Pär Boman, CEO

UBS 11 th Annual Nordic Financial Services Conference Grand Hotel, September 4 2008

2 Handelsbanken Group

Agenda

 Major issues addressed in the last 2.5 years    Group level Growth in Branch office operations outside Sweden Swedish branch office operations  Focus looking forward  Current situation in the banking sector

3 Handelsbanken Group

Issues addressed - Group level

Improved transparency in external reporting

 Reporting by segment and geography  More details to explain trends in underlying earnings  More supplementary information

More to come in the next 6 months

4 Handelsbanken Group

Issues addressed - Group level

Reduction of macro risk and earnings volatility

 Sale of SPP in September 2007 for SEK 18bn   Realised gain of SEK 4.2bn

Sale of credit card-backed bond portfolio in March 2008   Realised loss of SEK 0.8bn

In total, these transactions resulted in a realised gain of SEK 3.4bn and in a significant reduction of market risk and earnings volatility. In addition, the sale of SPP partly facilitated the extra dividend of SEK 3.1bn in 2008

The bank’s core risk competence is to assess and assume credit default risk. All other risks should be minimised

5 Handelsbanken Group

Issues addressed - Group level

Capital structure in Basel II

 Our view: Limited potential for banks to reduce capital  First Nordic bank to get Pillar II clearance from supervisory authorities  Targeted Tier1-ratio of 9-11% in Basel II

June 30, 2008

Capital ratio, Basel II Tier I ratio, Basel II

Tier I ratio target, Basel II

16.1% 10.6%

9 - 11%

Handelsbanken Group

Growth in Branch office operations outside Sweden

Jan – Jun 2008 Number of branches Of which opened during the year Branch manager appointed No. of branches which have achieved break-even Lending growth, H1-08 / H1-07 Deposits growth, H1-08 / H1-07 GB 49 3 9 20 40% 5% DK 40 1 - FIN 44 - 1 34 11% 7% 39 13% 7% N Other 46 35

Total 214

- 3 6 5

10 18

41 29% 16% 12 68% 9%

146 29% 10%

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The number of branches outside Sweden has grown by 38% since Q2 2006 to 214 6

Deposits/lending in Great Britain, Denmark, Finland and Norway refers to average volumes in local currency.

7 Branch office operations outside Sweden

Fastest growth in Great Britain

Number of branch offices in Great Britain

60 50

+123% since Q2-06

49 46 42 40 30 20 10 22 25 26 26 30 34 0 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 5.0

Lending volume in Great Britain, GBP bn +124% since Q2-06

4.0

3.0

2.0

1.0

Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08

The operations in Great Britain is showing a positive development and the current expansion is likely to continue

8 Branch office operations outside Sweden

Revenues & costs – 129 branch offices opened 1995-2007 SEK m per branch office 15 10 5 0 45 40 35 30 25 20 Yr 0 Yr 1 Yr 2

Revenues

Yr 3 Yr 4 Yr 5

Costs

Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11

9 Handelsbanken Group

Branch office operations in Sweden

Three main areas with improvement potential were identified in 2006  Growth  Productivity  The use of new technology

10 Handelsbanken Group

Branch office operations in Sweden

   

January – June 2008

Operating profit SEK RoE Net interest income increased by C/I ratio before loan losses 4,840m 18.3% 10% 38.7%

Average volumes, bn

 Loans to the public  Deposits 911 (819) +11% 276 (234) +18%

Branch office operations in Sweden

Net interest margin – Variable rate household deposits

SEK bn 130 125 120 115 110 105 100 95 90 85 80 75 70 65 60

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Average volumes

Market share, household deposits, increased from 16.0% in December 2007 to 16.6% in July 2008

Margin*

1.78% 2.03%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2003 2004 2005 2006 2007 2008 *Customer rate compared to 1 month STIBOR 4,20% 3,60% 3,00%

2.11%

2,40% +8bp 1,80% 1,20% 0,60%

Handelsbanken Group

Branch office operations in Sweden – Successful card business

January – June 2008

• The no. of Allkort up by 33%, purchase volume up 35% • The no. of Business cards up by 12%, purchase volume up 14% • The no. of Frikort cards up by 45%

No. of cards 600 000 500 000 400 000 300 000 200 000 100 000 0 Q1-05 Q3-05 Q1-06 Q3-06 Q1-07 Q3-07 Q1-08 Q2-08 12

13 Branch office operations in Sweden

Turnaround in Swedish mortgage sales % 32

Stadshypotek

30 28 26 24 22 20 18 16 2001 2002 2003 Households - share of new sales Households - market share 2004 2005 2006 2007 Jan-Jun 2008

14 Branch office operations in Sweden

Productivity is improving, with more to come

    Target 2006: 50% increase in time spent with customers by 2010 Result April 2008: +34% The impact from recent system launches not yet in the figures Profit / employee +5% in H1 2008

Branch office operations in Sweden

Profit before loan losses Average number of employees Profit / employee, SEK '000 * January - June 2008 annualised 75 50 25 0 150

Time spent with customers in Swedish branch offices 134 120

125

100

100

2006 2008*

10,434 4,625 2,256

2007 2007

9,941 4,649 2,138 + 118 (+5%)

2008 Despite C/I-ratio of 38.7% in H1, there is still scope for further improvement

Branch office operations in Sweden

Improved productivity through new technology

Internet Telephone Branch office 15 The bank is currently running 35,000 clients in a full scale test of a fully integrated internet and telephone bank

16 Handelsbanken Group

Focus going forward

 Continue the organic international expansion with focus on the UK  Increased efforts towards Swedish large caps  Additional measures to increase market share in the savings area

17 Handelsbanken Group

The current banking environment

 Not likely to ease in the near term  Significant liquidity risks in the market but poor transparency  The environment could get worse before it improves  Prudent liquidity planning will be key

18 Handelsbanken Group

Prolonged funding since early 2007

35%

Funding sources as % of total funding Jan-07 - Jul-08

30% 25% 20% 15% 10% 5% 0% jan-07 mar-07 maj-07 Credit Institutions jul-07 C/D sep-07 nov-07 jan-08 mar-08 maj-08 Bonds Subordinated loans General Public jul-08

19 Handelsbanken Group

Cash flow planning



30 days

Existing cash should last for at least 30 days without any access to the funding markets 

90 days

Existing cash + liquidity portfolio should last for 90 days without any access to the funding markets 

360 days

Existing cash + liquidity portfolio + management actions should provide enough liquidity to continue the bank’s business for >360 days without any access to the funding markets

The bank’s liquidity planning and funding activity aims at fulfilling the 30/90/360 day definitions at all times

Handelsbanken Group

Net lending in SEK in the Swedish interbank market

January – June 2008, weekly

SEK m 40 000

20

30 000 20 000 10 000 0 v 2 v 4 v 6 v 8 v 10 v 12 v 14 v 16 v 18 v 20 v 22 v 24 v 26

Handelsbanken Group

Bad debts as a percentage of lending ,net*

% 0,80 0,70 0,60 0,50 0,40 0,30 0,20 0,10 0,00

Increase related to the same commitments that explain loan losses in the period

SHB Peers**

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* Bad debts, net = Bed debts, gross – specific reserve. (Not adjusted for collective reserve). ** Average Nordea, SEB and Swedbank.

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Handelsbanken