A Swedish bank’s “old fashioned” approach has seen its Midland operations thrive.
Deposits have been pouring in to Handelsbanken as corporate and individual customers viewed it as one of the safest financial institutions.
Loan losses and bad debts are up, but so are profits as the bank put in a resilient performance.
In the UK, the bank saw further growth with new branches.
The West Midlands has branches in Birmingham, Stoke, Wolverhampton, Coventry and Shrewsbury.
Patrick Hanlon, branch manager in Birmingham, said: “All of these won new customers and increased business from existing customers during a time of great difficulty for the sector.
“Clearly Handelsbanken is not totally immune from wider issues, however, our policy of working with only the best customers in any market, with our local, highly empowered approach have paid dividends as we continue to grow our business in a safe and considered way.
“All of the West Midlands branches open for 12 months or more increased lending and deposit balances and grew or maintained profitability. This clearly supports our view there is a growing market for old fashioned relationship banking for individuals and businesses – most of our customers refer friends to us such is their satisfaction.”
For the group, calendar year 2008 saw a 20 per cent increase in “household deposits” as, according to Handelsbanken, customers sought “safety”.
Lending was up 15 per cent to £123.1billion (at constant exchange rates) with operating profits ahead four per cent to £1.37billion.
Loan losses totalled £143.3million against just £2.41million in 2007, reflecting what Handelsbanken described as “deteriorating economic circumstances”.
But it pointed out that as a proportion of lending these amounted to just 0.11 per cent.
Net bad debts were £234.1million, up from £55.7million, equivalent to 0.17 per cent of lending.
Profits after tax for total operations amounted to £1.08billion, down from £1.385billion.
Operating profits jumped 39 per cent in the fourth quarter against the July to September period, reaching £465.7million. Excluding capital gains, operating profits rose by 20 per cent.
Pär Boman, president and group chief executive, said: “Last year was characterised by an increased demand for the bank’s services, particularly for products related to lending and deposits.
“The improvement in profits is chiefly attributable to higher deposit and loan volumes combined with a favourable funding situation.”
Earnings per share for continuing operations rose by 10 per cent, and capital ratios increased.
Handelsbanken’s ratings were unchanged, with Moody’s giving it Aa1 while Fitch and Standard & Poor’s was AA-.
The board has proposes an ordinary dividend of seven Swedish kronor per share against 8.5 in 2007.