Profits beat expectations at the bank that doesn’t pay bonuses

Handelsbanken, in Ilkley, pictured by James Hardisty.
Handelsbanken, in Ilkley, pictured by James Hardisty.
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SWEDISH LENDER Handelsbanken, the bank that doesn’t pay bonuses, reported third-quarter operating profit above expectations yesterday, helped by higher revenues on its loan portfolio.

The branch-based bank been growing rapidly in Britain, grabbing market share from competitors still struggling to get their houses in order after the financial crisis.

It has 21 branches in Yorkshire and is setting up a support centre in Leeds to serve its growing operations in the region.

Group operating profit in the quarter rose by 7 per cent to 4.90bn Swedish crowns ($678m) from a year ago, beating a forecast for 4.75bn Swedish crowns seen in a poll of analysts.

Operating profit for the UK, the group’s fastest-growing market, was up 51 per cent to 1.2bn Swedish crowns in the nine months to September.

UK lending to individuals increased 24 per cent to £4.1bn, while lending to businesses increased a further 7 per cent to £9.1bn. The total UK loan book now stands at £13.3bn.

Deposits from individuals increased 71 per cent to £1.3bn, while deposits from businesses increased 109 per cent to £6.5bn. UK deposits total £7.8bn.

Handelsbanken has 180 branches in the UK and will have five regional support centres once Leeds is up and running in the new year.

Handelsbanken promotes itself by word of mouth rather than national marketing campaigns and claims to follow a traditional approach to banking with local teams looking after local customers and making credit decisions in branches.

The 143-year-old lender also prides itself on its decentralised model which it says helps it to achieve a better average return on equity - a key measure of profitability - than many of its peers.

Handelsbanken also announced yesterday that it had been rated top for customer satisfaction for the sixth year running in an independent benchmark survey of British banks’ personal and business customers.

The Extended Performance Satisfaction Index rates institutions according to image, preferences and perceived quality as well as loyalty and attractiveness by customers, employees and other interested parties.

Anders Bouvin, chief executive of the UK bank, said: “Strong and lasting relationships are the cornerstone of our local banking model, and we find this traditional approach strikes a similar chord in communities all over Great Britain.

“By giving our experienced branch teams everyday decision-making power, they are able to serve each customer individually, with care and consistency.”

The bank is famous for not setting targets or paying bonuses to any branch staff or bank executives, right up to group CEO.

Yesterday’s results reaffirmed the group’s strong capital and liquidity positions, and low credit loss ratios, which have earned it among the highest credit ratings of any international bank. Handelsbanken was recently judged the strongest bank in Europe, and one of the strongest in the world, by financial information provider Bloomberg.

It is led by Simon Lodge in Yorkshire and the North East.