ANNUAL REPORT 2006 HANDELSBANKEN HAS 615 BRANCHES ...

ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO L LE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA-PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPANKNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMNKROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ AMIRALSGATAN CITY DALA- PLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN ENEBY CENTRUM HAGEBY CENTRUM NORRTÄLJE NORSJÖ NYBRO NYKÖPING NYNÄSHAMN NÄSBY PARK NÄSSJÖ NÄSÅKER NÖDINGE OCKELBO OFFERDAL OLOFSTRÖM ORSA OSBY OSKARSHAMN PAJALA PARTILLE PITEÅ PÅLSBODA RAMSELE RIMBO ROBERTSFORS RONNEBY ROTEBRO RÅNEÅ RÄTTVIK RÖRVIK SALA SALEM SALTSJÖ-BOO SANDVIKEN SIGTUNA SIMRISHAMN SJÖBO SKANÖR SKARA SKELLEFTEÅ SKINNSKATTEBERG SKULTUNA SKURUP SKUTSKÄR SKÄRHOLMEN SKÄRPLINGE SKÖNDAL SKÖNSBERG SKÖVDE SLITE SOLLEBRUNN SOLLEFTEÅ SOLLENTUNA CENTRUM SOLNA SORSELE SPÅNGA STAFFANSTORP STENUNGSUND STOCKHOLM: BIRGER JARLSGATAN FLEMINGGATAN FRIDHEMSPLAN FRIHAMNEN GAMLA STAN GUSTAV ADOLFS TORG GÖTGATSBACKEN HORNSBERG HORNSGATAN HUMLEGÅRDEN HÖGALID KARLAPLAN KARLAVÄGEN KUNGSHOLMSTORG KUNGSTRÄDGÅRDEN MARIEBERG NORRMALMSTORG NORRTULL ODENGATAN ODENPLAN RENSTIERNAS GATA S:T ERIKSPLAN SERGEL SKANSTULL STRANDVÄGEN STUREPLAN SVEAVÄGEN TESSINPARKEN UPPLANDSGATAN VANADISPLAN VÄRTAVÄGEN VÄSTERMALM ÖSTERMALMSTORG ÖSTRA STATION STORA TUNA STORUMAN STORVIK STRÄNGNÄS STRÖMSUND STUVSTA SUNDBYBERG SUNDSVALL SUNNE SURTE SVEDALA SVEG SVENLJUNGA SVENSTAVIK SÄFFLE SÄTER SÄVSJÖ SÖDERHAMN SÖDERKÖPING SÖDERTÄLJE SÖLVESBORG SÖRBERGE SÖSDALA TIBRO TIDAHOLM TIERP TIMRÅ TINGSRYD TOMELILLA TORSBY TORSÅKER TORSÅS TRANEMO TRANÅS TREHÖRNINGSJÖ TRELLEBORG TROLLHÄTTAN TROSA TRÅNGSUND TULLINGE TYRESÖ TYRINGE TÄBY CENTRUM UDDEVALLA ULLÅNGER ULRICEHAMN ULVSUNDA UMEÅ: CITY TEG VÄSTRA UPPLANDS VÄSBY UPPSALA: CITY ERIKSBERG INDUSTRIOMRÅDE LUTHAGEN VADSTENA VAGGERYD VALLENTUNA VANSBRO VARA VARBERG VASAGATAN VAXHOLM VEBERÖD VELLINGE VETLANDA VILHELMINA VIMMERBY VINDELN VIRSERUM VISBY: ADELSGATAN ÖSTER VISLANDA VITTSJÖ VOLLSJÖ VRETEN VÅRGÅRDA VÄLLINGBY VÄNERSBORG VÄNNÄS VÄRMDÖ VÄRNAMO VÄSTANFORS VÄSTERHANINGE VÄSTERVIK VÄSTERÅS: CITY EMAUSGATAN KÖPINGSVÄGEN STORA GATAN VÄXJÖ YSTAD ÅHUS ÅKERSBERGA ÅLEM ÅMÅL ÅNGE ÅNÄSET ÅRE ÅRJÄNG ÅRSTA ÅSEDA ÅSELE ÅTVIDABERG ÄLMHULT ÄLVSBYN ÄLVSJÖ ÄLVÄNGEN ÄNGELHOLM ÖREBRO: EKERSGATAN STORTORGET VÅGHUSTORGET ÖRNSKÖLDSVIK ÖSMO ÖSTERBYBRUK ÖSTERSUND ÖSTERVÅLA ÖSTHAMMAR ÖVERKALIX ÖVERTORNEÅ ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKA AVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO L LE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: STORA TORGET VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO L LE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN ENEBY CENTRUM HAGEBY CENTRUM NORRTÄLJE NORSJÖ NYBRO NYKÖPING NYNÄSHAMN NÄSBY PARK NÄSSJÖ NÄSÅKER NÖDINGE OCKELBO OFFERDAL OLOFSTRÖM ORSA OSBY OSKARSHAMN PAJALA PARTILLE PITEÅ PÅLSBODA RAMSELE RIMBO ROBERTSFORS RONNEBY ROTEBRO RÅNEÅ RÄTTVIK RÖRVIK SALA SALEM SALTSJÖ-BOO SANDVIKEN SIGTUNA SIMRISHAMN SJÖBO SKANÖR SKARA SKELLEFTEÅ SKINNSKATTEBERG SKULTUNA SKURUP SKUTSKÄR SKÄRHOLMEN SKÄRPLINGE SKÖNDAL SKÖNSBERG SKÖVDE SLITE SOLLEBRUNN SOLLEFTEÅ SOLLENTUNA CENTRUM SOLNA SORSELE SPÅNGA STAFFANSTORP STENUNGSUND STOCKHOLM: BIRGER JARLSGATAN FLEMINGGATAN FRIDHEMSPLAN FRIHAMNEN GAMLA STAN GUSTAV ADOLFS TORG GÖTGATSBACKEN HORNSBERG HORNSGATAN HUMLEGÅRDEN HÖGALID KARLAPLAN KARLAVÄGEN KUNGSHOLMSTORG KUNGSTRÄDGÅRDEN MARIEBERG NORRMALMSTORG NORRTULL ODENGATAN ODENPLAN RENSTIERNAS GATA S:T ERIKSPLAN SERGEL SKANSTULL STRANDVÄGEN STUREPLAN SVEAVÄGEN TESSINPARKEN UPPLANDSGATAN VANADISPLAN VÄRTAVÄGEN VÄSTERMALM ÖSTERMALMSTORG ÖSTRA STATION STORA TUNA STORUMAN STORVIK STRÄNGNÄS STRÖMSUND STUVSTA SUNDBYBERG SUNDSVALL SUNNE SURTE SVEDALA SVEG SVENLJUNGA SVENSTAVIK SÄFFLE SÄTER SÄVSJÖ SÖDERHAMN SÖDERKÖPING SÖDERTÄLJE SÖLVESBORG SÖRBERGE SÖSDALA TIBRO TIDAHOLM TIERP TIMRÅ TINGSRYD TOMELILLA TORSBY TORSÅKER TORSÅS TRANEMO TRANÅS TREHÖRNINGSJÖ TRELLEBORG TROLLHÄTTAN TROSA TRÅNGSUND TULLINGE TYRESÖ TYRINGE TÄBY CENTRUM UDDEVALLA ULLÅNGER ULRICEHAMN ULVSUNDA UMEÅ: CITY TEG VÄSTRA UPPLANDS VÄSBY UPPSALA: CITY ERIKSBERG INDUSTRIOMRÅDE LUTHAGEN VADSTENA VAGGERYD VALLENTUNA VANSBRO VARA VARBERG VASAGATAN VAXHOLM VEBERÖD VELLINGE VETLANDA VILHELMINA VIMMERBY VINDELN VIRSERUM VISBY: ADELSGATAN ÖSTER VISLANDA VITTSJÖ VOLLSJÖ VRETEN VÅRGÅRDA VÄLLINGBY VÄNERSBORG VÄNNÄS VÄRMDÖ VÄRNAMO VÄSTANFORS VÄSTERHANINGE VÄSTERVIK VÄSTERÅS: CITY EMAUSGATAN KÖPINGSVÄGEN STORA GATAN VÄXJÖ YSTAD ÅHUS ÅKERSBERGA ÅLEM ÅMÅL ÅNGE ÅNÄSET ÅRE ÅRJÄNG ÅRSTA ÅSEDA ÅSELE ÅTVIDABERG ÄLMHULT ÄLVSBYN ÄLVSJÖ ÄLVÄNGEN ÄNGELHOLM ÖREBRO: EKERSGATAN STORTORGET VÅGHUSTORGET ÖRNSKÖLDSVIK ÖSMO ÖSTERBYBRUK ÖSTERSUND ÖSTERVÅLA ÖSTHAMMAR ÖVERKALIX ÖVERTORNEÅ ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKA AVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO L LE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO L LE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTACENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTADGISLAVED GLOBEN GNARPGNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY

ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDMÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN

ANNUAL REPORT 2006

HANDELSBANKEN HAS615 BRANCHES WORLDWIDE

Annual general meeting (Shareholders’ meeting)LOCATION: Grand Hôtel, Vinterträdgården, Royal entrance, Stallgatan 4, Stockholm TIME: Tuesday, 24 April 2007, 10 a.m.

NOTICE OF ATTENDANCEShareholders wishing to attend the AGM must:

• be entered in the register of shareholders kept by VPC AB (Swedish Central Securities Depository and Clearing) by Wednesday, 18 April 2007

• give notice of their attendance at the latest by 3 p.m. on Wednesday, 18 April 2007, to Handelsbanken, Kungsträdgårds-gatan 2, SE-106 70 Stockholm, tel: +46 8 701 19 84, or online at www.handelsbanken.se/bolagsstamma

To be entitled to take part in the AGM, any shareholders whose shares are nominee-registered must also request a temporary entry in the register of shareholders kept by the VPC. Shareholders must notify the nominee about this well before 18 April 2007, when this entry must have been effected.

DIVIDENDThe board of directors proposes that the record day for the dividend be Friday, 27 April 2007. If the AGM votes in accordance with this proposal, the VPC expects to send the dividend to shareholders on Thursday, 3 May 2007.

HANDELSBANKEN ■ ANNUAL REPORT 2006 1

Contents

Handelsbanken in brief 2

Highlights of 2006 3

The group chief executive’s comments 4

Goals, methods and outcome 8

Economic outlook 10

The market 11

Our customers 12

Our employees 13

Business concept, working methods and organisation 15

Administration report

Review of operations 16

Key fi gures and quarterly performance 18

The Handelsbanken share and shareholders 19

Segment information – review of business areas 21

Branch offi ce operations 22

Handelsbanken Markets 26

Handelsbanken Asset Management 29

Handelsbanken Pensions & Insurance 31

Financial reports

Accounting policies 34

The Group’s income statement and balance sheet and notes 40

Five-year review – Group 82

The parent company’s income statement and balance sheet and notes 84

Five-year review – Parent company 111

Recommendation for appropriation of profi ts 112

Other

Audit report 113

Corporate social responsibilityHandelsbanken in the community 114

Environmental issues 115

Ethical standards and corporate social responsibility 117

Corporate governance report * Corporate governance 118

The board 122

Senior management 124

Branches and branch managers 125

Defi nitions and explanations Inside back cover

Svenska Handelsbanken AB (publ)

Corporate identity no. 502007-7862

www.handelsbanken.com

* The corporate governance report is not part of the statutory annual report.

Income statement 40

Balance sheet 41

Statement of changes in equity 42

Cash fl ow statement 43

Notes

Risks and risk control 44

1 Net interest income and net gains/losses on fi nancial items at fair value 54

2 Net fee and commission income 55

3 Risk result – insurance 55

4 Other income 55

5 Staff costs 55

6 Other expenses 58

7 Loan losses/recoveries 58

8 Gains/losses on disposal of property, equipment and intangible assets 59

9 Earnings per share 59

10 Classifi cation of fi nancial assets and fi nancial liabilities 60

11 Loans to credit institutions 62

12 Lending and deposits, the public 63

13 Interest-bearing securities 64

14 Shares and participating interests 65

15 Assets where the customer bears the value change risk 66

16 Derivative instruments 66

17 Intangible assets 68

18 Property and equipment 69

19 Other assets 69

20 Prepayments and accrued income 69

21 Due to credit institutions 70

22 Liabilities where the customer bears the value change risk 70

23 Issued securities 71

24 Other trading liabilities 71

25 Insurance obligations 72

26 Taxes 72

27 Provisions 72

28 Other liabilities 72

29 Accruals and deferred income 72

30 Subordinated liabilities 73

31 Specifi cation of changes in equity 73

Other disclosures – Group 74

HANDELSBANKEN ■ ANNUAL REPORT 20062

HANDELSBANKEN IN BRIEF

Satisfi ed customers lead to higher profi tability

HANDELSBANKEN’S BRANCHES ON ITS DOMESTIC MARKETS IN THE NORDIC COUNTRIES AND GREAT BRITAIN

457 branches in Sweden

42 branches in Norway

36 branches in Finland

37 branches in Denmark

26 branches in Great Britain

HANDELSBANKEN’S GOAL

• Handelsbanken’s fi nancial goal is to have higher profi tability than the average of its competitors.

HANDELSBANKEN’S STRENGTHS

• For the past 35 years, Handelsbanken has had higher profi tability than the average for its competitors.

• Since the survey began 16 years ago, Handelsbanken has had the highest level of customer satisfaction of the four largest banks in Sweden.

• For many years, Handelsbanken has been one of the most cost-effective universal banks in Europe.

• For a long period of time, Handelsbanken has had a lower loan loss ratio than its competitors.

Three branches in Poland.Two branches in France and Germany.One branch in each of Austria, China, Estonia, Hong Kong, Luxembourg, Netherlands, Russia, Singapore, Switzerland and USA.

HANDELSBANKEN’S CORPORATE PHILOSOPHY

• A strongly decentralised organisation – the branch is the Bank.

• Focus on the customer.

• Profi tability always has higher priority than volume.

• A long-term perspective.

HANDELSBANKEN TODAY

• Total assets: SEK 1,790bn

• Operating profi t: SEK 17.2bn

• Number of employees: over 10,000

• Number of branches: 615

• Number of countries with operations: 20

Handelsbanken has seven representative offi ces:

Beijing

La Nucia

Marbella

Mumbai

Nice

St. Petersburg

Taipei


Highest profi t ever

SEK 17.2bn Operating profi t increased by 10% to SEK 17.2bn – the highest ever.

20.9% Return on equity was 20.9%.

19 new branches and two new representative offi ces

Nineteen new branches were opened: six in Great Britain, fi ve in Norway, three in Sweden, two in Denmark, two in Poland and one in Estonia. Representative offi ces were opened in India and in Spain.

Over SEK 2bn

For the fi rst time, the branch offi ce operations outside Sweden had profi ts of more than SEK 2bn.

SEK 8.00 The board proposes increasing the dividend by 14% to SEK 8.00.

The most international Nordic bank

Handelsbanken has operations in 20 countries.

Satisfi ed customers

Handelsbanken had the most satisfi ed customers in the Nordic region, when weighing together the autumn surveys in Sweden, Norway, Denmark and Finland. Source: SKI, EPSI, Dansk KundeIndex.

HIGHLIGHTS OF 2006


THE GROUP CHIEF EXECUTIVE’S COMMENTS

The branches are the Bank

Our fi nancial statements with all their fi gures really say three things: We have achieved our corporate goal, we have grown, and we earn more money than ever before.

But the annual report doesn’t really explain how we did it, and it defi nitely doesn’t answer what is probably the most important ques-tion – how can we do it again in future years?I will instead try to respond to these two questions here. We should also see the answers in light of the fact that we have increased our profi ts and our business volumes in a year when running a bank was unusually free of risks. In times like this, our skill in assessing business and credit risks would in fact tend to hamper our growth, rather than favour it – at least in Sweden.

To fi nd the answers I think you need to look further than the plain, black fi gures of the annual report. For behind all these sum-maries lie hundreds of thousands of meetings with customers, advi-sory sessions, business arrangements and fi rm handshakes. But above all, we fi nd people there – people who have met, gained confi dence in each other and therefore started doing business together.

OUR BEST ADVICE LEADS TO SATISFIED CUSTOMERS

You can gain people’s confi dence in many different ways. Our advice to customers is always based on their personal conditions, their risk propensity, their goals – it is not based on the Bank’s goals, margins or the profi t it can make. For this reason, none of our 615 branch managers receives a bonus, nor does anyone else in the branch op-erations. The same applies to the senior management of the Bank including myself. But we do have written instructions stating that our advice must always be in the customer’s best interests, even if that advice is not the most profi table for the Bank in the short term. In the long run, we all benefi t from this. This is because we are con-vinced that running a bank cannot only be a matter of wanting to earn money. It must also be combined with a desire to serve people.

I am convinced that there is a direct link between our ability to earn money and the fact that, according to the Swedish Quality In-dex (SKI) and its counterpart in the other Nordic countries, we have the most satisfi ed customers in the Nordic countries. In the Pros-pera survey we were ranked number one by Swedish mutual fund savers, and the Swedish business weekly Affärsvärlden acclaimed us Commercial Bank of the Year. The list could be made longer but I think I have made my point. Customers like us and what we do. The explanations for this are many and could be expressed at length, but they can also be summarised in two words – our branches.

THE BRANCH IS THE BANK

Handelsbanken is its branches and the branches are Handelsbanken. This is not a marketing strategy, a concept, or some other temporary idea we are testing at present. It is much, much more.

The branches are where our customers are, in their everyday lives. Thus our branches know their customers well, know their personal circumstances and limitations, their opportunities and goals. The branches know better than anyone else at the Bank what their custo-mers need and desire. It is therefore natural that the business deci-sions are also taken there, close to the customer, close to real life, at the branches. This gives better service, greater effectiveness and not least higher quality credit decisions. This is why responsibility for customers always lies with a branch offi ce.

These strengths are enough for most customers. Even a multi-national group belongs to the branch of Handelsbanken situated closest to the head offi ce of that corporate group – and these large companies are happy with this.

Our position among small and medium-sized companies is very strong. I believe this is because these enterprises have a strong, gen-uine local presence where “being local” is important. At the same time I would stress that today’s small and medium-sized companies have become much more international in the last few years. Their need of advanced fi nancial advice and business support is often on a par with that of the major industrial groups. But even these small and medium-sized companies continue to belong to “their” branch of Handelsbanken.

The way we meet customers has given us a network of contacts with Swedish business and industry which no other bank can ap-proach. Almost one-third of all corporate lending in Sweden is done by Handelsbanken. Our clients are among the best in the Swedish business world, which is one reason why the international rating agency Moody’s gives the Bank its high Aa1 rating.

WITH OUR EARS TO THE GROUND

Another advantage of the fact that business decisions are taken at the local level, close to customers, is that this creates a greater aware-ness of the market which runs right through our organisation. To put it simply, you could describe this as continuous market research, where the lead-times between identifying needs and fi nding solu-tions are extremely short. Each individual branch determines its own mix of products and services that it offers its local market. This is logical, as only the branch knows exactly what its customers want, need or are lacking.

This gives our specialists at our central units a continuous chal-lenge to develop, discontinue or change our various products and solutions, according to the needs and wishes of the market. The fact that the specifi cations are made by experienced bank staff with daily customer contact means that the feedback during the entire process is well-informed, detailed and completely ruthless.

We can point to a number of examples where the branches togeth-er with central specialists have carved out new products and refi ned

A brief summary of our fi gures for 2006:• Return on shareholders’ equity was 20.9%. • Never before has the Bank had so many branches – at the end of the

year there were 615 branches, 158 of them outside Sweden.• Operating profi t was SEK 17.2bn.

5HANDELSBANKEN ■ ANNUAL REPORT 2006


old products. Examples of the former are equity-linked bonds and other capital-protected products where the branches together with Capital Markets have designed various products. Handelsbanken introduced equity-linked bonds to Sweden, and the Bank dominates the market in Sweden and in some of its neighbouring countries. The product has steadily been refi ned, and different variations have been tested and approved by branch customers. This would not have been possible without continuous market research in the form of close collaboration between the branches and Capital Markets. The importance of this collaboration was emphasised even more when Capital Markets became a separate business segment on 1 January this year. This change denotes the Bank’s increased level of ambition in the area of investment banking.

Another example is mortgages, where the Bank has improved its product range and the branches have worked hard with existing and new customers. Mortgage business is vital to the Bank, not only through its direct contribution to Group earnings, but also via the extra business that it generates. Buying a house is often a private customer’s largest transaction, and therefore a mortgage is nearly always an excellent fi rst stage to gaining all of a customer’s banking business.

A third example is credit and charge cards, where the Bank’s op-erations weren’t quite up to the rest of the market. But in 2006, our Allkort was the credit card with the highest turnover per card in the whole of Europe. It is an excellent card, giving access to a range of good services. Handelsbanken Finans, whose responsibility includes the Bank’s card services, made more improvements. Our custom-ers with Bankomat ATM cards were given the opportunity to swap these for our new Frikort ATM/debit card, at no extra charge. In less than three months, 70,000 customers accepted the offer.

Finally, I would like to mention Handelsbanken Asset Manage-ment, where fund management performance has improved over the past few years. This has been refl ected in a sharply improved rating from the independent rating institute Morningstar, and a main-tained level for the Bank’s high market share of new savings in mu-tual funds. Morningstar ranks Handelsbanken’s range of products highest among all the major Swedish players.

WE GO OUR OWN WAY

Handelsbanken also challenges what is generally accepted. One example is our work to make Handelsbanken Liv and SPP profi t-distributing, in complete contrast to how the rest of the sec-tor functioned – and largely still does. When we demutualised Handelsbanken Liv in 2002, it was the fi rst time that a mutually run life insurance company had been reorganised on profi t-dis-tributing lines. Profi t-distributing life insurance companies are good for customers, and good for the Bank. Every year since then,

“ Handelsbanken is its branches and the branches are Handelsbanken. This is not a marketing strategy, a concept, or some other temporary idea we are testing at present. It is much, much more.”



Handelsbanken Liv has given its customers higher yields than the average for mutually run life insurance companies. On many annual ranking lists, Handelsbanken has been right at the top. SPP, which has only been a profi t-distributing company for one year, also gener-ated higher than average yields for the mutually run companies. At the same time as the policyholders received good yields on their sav-ings, SPP delivered a large contribution to the Group’s profi ts and the fi nancial risks were reduced.

However, it is not just the form of the companies that is impor-tant, but also how they work. A commercially run company aiming to make a profi t must be transparent and simple for the customer to comprehend. Here, the Bank has helped to set new standards for the market. A commercially run company must offer its customers free-dom of choice such as the option of transferring their insurance to another company. Handelsbanken Liv and SPP have been pioneers in this respect, and it should be self-evident that customers are enti-tled to transfer their insurance funds.

A further example of Handelsbanken going its own way concerns collaboration with estate agents. Handelsbanken has not acquired an estate agent or entered into a central agreement with any fi rm of estate agents. This is because our branches decide how they wish to market their products and services, and thus centrally issued direc-tives are not appropriate. But what we have done is develop e-bud, our electronic property bidding service, (www.e-bud.nu) into an ef-fi cient and effective means for local collaboration with estate agents – completely in line with the Bank’s basic philosophy. Today, 10% of properties sold via estate agents go through e-bud. The Bank collab-orates locally with almost 800 estate agents, and during 2006, over 30,000 bidders – customers or potential customers – made roughly 85,000 bids on properties. The success of e-bud is one of many rea-sons why the Bank’s mortgage operations have performed so well.

Possibly the prime example of us going our own way is our untir-ing effort to ensure that private customers can open an account, pay their bills (by Privatgiro or online) have access to their money (e.g. the Frikort cards) at no extra charge. An added benefi t of the Frikort card is that it can be used for point-of-sale purchases. Handelsbanken is almost alone in making this effort.

WORLD-CLASS EVERYDAY SERVICE

But products and solutions must be combined with world-class servi-ce. The fact that this is one of our main strengths is corroborated by all customer surveys, and in my view, this is also due to our decen-tralised way of working. The high degree of independence that the branches enjoy gives the staff the feeling that the customers of the branch really are the branch’s own. Customers appreciate being able to talk directly to the employee who makes the decision, and not merely to someone who has to ask a central department for approval.I often hear from our branches that a high service level is not always the same thing as high level banking transactions. It’s actually the

customer who decides what is regarded as advanced service. And not all customers are the same. Some customers are very familiar with the banking market, while others need considerably more advice. This actually has nothing to do with what the customer regards as advanced service on any given occasion. Sometimes, a simple, com-mon transaction, such as transferring money between two accounts can, for a customer with high demands, suddenly turn into an insur-mountable task. This is where we come into the picture. By solving the problem in a smooth, unbureaucratic manner, we are a highly qualifi ed business partner – in the customer’s eyes. And that is the most important thing.

If we can deal with these seemingly unglamourous tasks then and there, we will be the best bank in town. And we’ll be the cus-tomer’s fi rst choice when they want to do some business which is really profi table for us – business that often involves expert advisory services and asset management. With our everyday service we build up customer relationships, increase customer satisfaction, and create security for customers in their relationship with the Bank. This is very diffi cult for our competitors to copy, since it assumes familiarity with and experience of the customer, as well as the staff’s ability to make their own decisions. We create these conditions by consistently applying our decentralised way of working.

DOMESTIC MARKETS OUTSIDE SWEDENFinland, Denmark, Norway and Great Britain

The strength of our business model becomes, perhaps, even clearer abroad than in Sweden. Outside Sweden we could be regarded as an anonymous bank, with its head offi ce far away in a foreign country. But we are not. Decisions are taken close to the customer outside Sweden too. In fact, our newly opened branches outside Sweden have nothing else with which to compete, since the Handelsbanken name is unknown there. The range of products we offer is – at least initially – limited, we have few reference customers and we have little experience of the local area. In short, the only factor that can differ-entiate us from our competitors is our ability to satisfy a customer.

In Norway, our operating profi t for 2006 was up 13% to SEK 965m – our best ever result in that country. Here, too, there was a strong link to customer satisfaction. In 2006, EPSI, which conducts annual customer satisfaction surveys in Norway, named Handelsbanken as “the clear winner in the corporate market”. Just as in Sweden, customers are drawn towards an effi cient bank. In Norway, our cost/income ratio was 44.9% – an effi ciency fi gure that is the envy of many of our competitors.

The Finnish regional bank also raised its operating profi t to SEK 447m, compared with SEK 381m in 2005. Among the major banks in Finland, Handelsbanken had the most satisfi ed customers – both private and corporate. Satisfi ed customers do more business. In Finland, a great deal of effort has been put into improving our range of savings products. We have never sold so many capital-

“ We have written instructions stating that our advice must always be that which is best for the customer, even if that advice is not the most profi table for the Bank in the short term.”



protected products, and new sales of mutual funds increased in Finland.In Denmark, operating profi t climbed 8% to SEK 456m. At the beginning of the decade, Handelsbanken launched a long-term mortgage loan called a priority loan, and at year-end 2006, volumes exceeded DKK 10bn. Also in Denmark, private customer business was developed, and the Bank had success with sales of capital-pro-tected products.In 2006, our British operations maintained their rapid growth. The Bank opened six new branches in Great Britain, and at year-end we had 26 branches there. More branch managers have been recruited, and these branches will open in the fi rst half of 2007. Business volumes grew very rapidly, with lending increasing by more than 50% to GBP 2.4bn.

HANDELSBANKEN – THE MOST INTERNATIONAL NORDIC BANK

Handelsbanken has units – branch offi ces and/or representative offi ces – in 15 countries outside the Nordic region and Great Britain, making us the most international Nordic bank. These operations are run by the Handelsbanken International business area, which beca-me an independent unit when Handelsbanken Markets was split into two separate units. A vital task for Handelsbanken International will be to increase the number of markets in which the Bank can start up and grow organically by running profi table universal banking operations through its own branch network. And the Bank will con-tinue to grow internationally – and even more quickly than before. In 2006, our operations in the Nordic countries and Great Britain contributed over SEK 2bn to our operating profi ts. We are continu-ing our international drive and will open more branches in Great Britain, Finland and Norway, probably around ten in each country during 2007. There will probably be some in Denmark too, but not as many. In Germany and Poland we will double the number of branches and start universal banking operations.

In countries where Handelsbanken has not (yet) established a regional bank, we are still making advances. For example, we have now established an infrastructure for opening more offi ces in Russia through our branches in Moscow and St Petersburg.

We were the fi rst Nordic bank to start up in Russia, we were the fi rst in China, and we were also fi rst on another rapidly growing market – India, where we opened a representative offi ce in Mumbai, the country’s fi nancial capital. There was a record amount of inter-est, even before the offi ce had opened for business, above all from clients in our domestic markets which have, or will be starting up, operations in India.

Our model of running a bank on markets outside Sweden works, as confi rmed by 300,000 active customers outside Sweden. We are much better at starting branches abroad now. We see that their earn-ings grow every year and that the return on equity of the regional banks outside Sweden is approaching that of the Swedish branches. Growing organically is cost-effective. The average cost of a new

branch is SEK 5m. This includes paying for the initial investments, while taking into account the defi cit arising before the branch breaks even. This takes on average between 16 and 18 months.

WE AIM TO BE EVEN BETTER

It must become even simpler to contact the Bank, and it must be-come even simpler to do business with us. Last year, we began a major project to expand our online banking services, and now each branch’s web page is even more focused on business and customer service. We started up Handelsbanken Direct, a new service for customers whose fi rst contact with us is via the internet. We must always – 24 hours a day, seven days a week – be prepared to do bu-siness when the customer wants. We will continue to make things simpler, for ourselves and for our customers. During the year, the branches submitted 400 suggestions for changes, with the aim of creating more time to meet customers and do business; 160 of these suggestions have already been implemented. This is how Handels-banken fi ts together: we are all dependent on each other to achieve our common corporate goal – a higher return on equity than the weighted average of other banks on our domestic markets. With pride I can say that once again – for the 35th consecutive year – we have achieved this corporate goal. I am proud of the extraordinary expertise, versatility and commitment that I encounter every day in my contacts with staff. This is the base from which we have achieved our corporate goal, and I thank you all. And I am convinced that we will continue to achieve it. How? By continuing to be Handelsban-ken – only a little more so, and in even more locations around the world.

Stockholm, February 2007Pär Boman


Creating sustainable profi tability

Handelsbanken’s fi nancial goal is to have higher profi tability than other banks. The Bank will achieve this goal by having more satisfi ed customers, while having lower costs than its competitors.

High profi tability

Return on shareholders’ equity 1973–2006GOAL

Handelsbanken’s overall financial goal is to have higher return on equity than a weighted average of comparable listed Nordic and British banks.

GOAL ACHIEVEMENT

Handelsbanken’s return on equity after standard tax was 19.7% for the whole of 2006. Return on equity for a weighted average of comparable banks was just over 18%. This means that 2006 was the 35th consecutive year that Handelsbanken met its overall financial goal.

Most satisfi ed customers

Customer satisfaction index, private customers in SwedenMETHOD

The Bank aims to achieve this goal by having the most satisfied customers. The quality of the Handelsbanken Group’s services must therefore meet the expectations of demanding customers.

OUTCOME

Once again in 2006, Handelsbanken had the most satisfied customers in Sweden – both private and corporate – when compared with the four largest Swedish banks. An overall weighting of the results of surveys in Denmark, Finland and Norway showed that Handelsbanken had the most satisfied customers in the Nordic region.

GOALS, METHODS AND OUTCOME


Most effective bank

Cost-effectivenessMETHOD

Cost-effectiveness should be higher than in comparable banks.

OUTCOME

Costs as a proportion of income were 42%. Thus, as in pre-vious years, Handelsbanken was the listed Nordic bank with the highest cost-effectiveness level.

Lowest loan losses

METHOD

Profitability is always more important than volumes. This means that when granting credits, the credit quality must never be disregarded in order to achieve higher volume.

OUTCOME

Handelsbanken had no loan losses – it had net recoveries. The loan loss ratio was –0.01%. The corresponding figure for other Swedish banks was –0.05%.

Loan losses as a percentage of lending

GOALS, METHODS AND OUTCOME


ECONOMIC OUTLOOK

2006 – another strong year for the global economy

How would you sum up the trends in 2006?

“2006 was another strong year for the global economy in many respects. Company earnings reached record levels, and several stock exchange indices reached all-time highs. This was against a backdrop of continued strong growth in the global economy. In 2006, global GDP growth was at roughly the same level as the year before, i.e. among the highest of the past 20 years. However, the global pattern of growth began to change. The US economy showed clear signs of the cooling effect that recent years’ interest rate hikes have had. House prices stopped rising, and activity on the housing market was more subdued in terms of sales and new construction. During the autumn, industry also began to be affected by the weak housing construction market.”

And the trend in Europe?

“Europe, on the other hand, experienced a surprisingly sharp up-swing, driven by rising corporate earnings and investments. The long-standing decline in the German construction sector was turned around. At the same time, emerging markets in Asia and Eastern Europe were the locomotive for many European industrial compa-nies, particularly Nordic players.”

How are Sweden and the other Nordic countries being affected by increasing globalisation?“The structure of industry in the Nordic region is particularly well suited to fulfi l the increasing demand in emerging markets, with its focus on infrastructural investments, transport and raw materials. This is one reason why the Nordic region as a whole has grown much more rapidly than the OECD average. In Western Europe, only the Republic of Ireland showed

Handelsbanken’s chief economist Jan Häggström sums up the past year.

“ In Western Europe, only the Republic of Ireland showed stronger GDP growth than Finland and Sweden.”

stronger GDP growth than Finland and Sweden in 2006. The Nor-dic countries were buoyed by low interest rates and robust govern-ment fi nances. This also provided stimulus for fi scal policy.”“A normalisation of central banks’ key rates began in the euro-zone, as well as in Norway and Sweden. Despite this, lending to households and companies continued to show double-digit growth. House prices in the Nordic countries rose sharply, and price in-creases in the UK picked up again. The historically low interest rates meant that households experienced few credit problems in 2006, despite the high debt levels.”

At the beginning of 2006, you were one of the few analysts who predicted that the Riksbank’s repo rate would double during the year, from 1.50% on January 1 to 3.00% at the end of 2006. This turned out to be the case. What is your forecast for 2007?

“Many factors suggest that there is a fair way to go before key rates in Norway and Sweden reach a neutral level, and that 2007 will also see rapid credit growth and rising house prices. This also means that the level of household debt in the Nordic countries will rise from already high levels, except possibly in Denmark, where the peak may have been reached.”

And what about the trends on the corporate side?

“The combination of companies’ strong return on capital, bond yields remaining low, and small credit risk premiums created favour-able conditions for acquisition calculations. Thus, 2006 became another record year for corporate acquisitions. A large proportion of these were carried out in Europe, with the Nordic region receiv-ing its due share. These transactions were a vital driving force for growth in corporate loans, counteracting the tendency for compa-nies to use their strong cash fl ows to reduce the debt side of their balance sheets. The corporate sector enters 2007 with key ratios still looking good, which indicates that activity levels in mergers and ac-quisitions will remain high.”


Handelsbanken – a major player in the fi nancial markets

MARKETS

Handelsbanken offers a full range of fi nancial products and services in Sweden, Denmark, Finland, Norway and since 2002, in Great Britain. The Bank regards these countries as domestic markets. Sweden is the largest fi nancial market in the Nordic region, and Handelsbanken’s position here is strong. Seventy-fi ve percent of Handelsbanken’s income is generated in Sweden. The other Nordic countries and Great Britain accounted for 19% of Group income, as compared with 16% two years ago.

MARKET TRENDS

The fi nancial market can be divided into various segments. The most important of these are the credit market and the savings mar-ket. Handelsbanken has no volume goals, either in absolute fi gures or as market share; instead, it always gives priority to profi tability over volumes.

Lending

The Swedish mortgage market continued to grow. Between 2001 and 2005, the household mortgage lending market in Sweden grew

by 14% per year. In 2006, it grew by a further 13% to SEK 1,241bn (1,102). Competition remained intense. Handelsbanken had a 27% share of the market in new lending which was the same as its share of total lending volume (adjusted for securitisation). The Bank had 24% of the total market for household lending, that is mortgage loans and bank loans.

During the year, lending to non-fi nancial companies in Swe-den was 7% higher at the end of the year than the beginning. Handelsbanken was the largest player on the corporate market, with a 30% share.

THE SAVINGS MARKET

In the past fi ve years, Swedish households’ fi nancial savings (exclud-ing directly-owned shares) have increased by an average of 9% per year. As at 31 December 2006, they amounted to SEK 4,171bn. Handelsbanken had an 11% share of the total market, and has an 18% share of new savings since 1 January 2000. Thus, over the course of this decade, Handelsbanken has increased its share of the overall market, and in terms of new savings, Handelsbanken has a larger share than any of its competitors.

Handelsbanken took market share in a growing savings market.

Mutual funds (incl PPM and unit-linked insurance) SEK 1,775bn

Traditional insurance SEK 1,572bn

Bonds SEK 144bn

Bank deposits SEK 680bn

The Swedish savings market, 31 December 2006

Handelsbanken’s market shares

Mutual funds (incl PPM and unit-linked insurance) 12 %

Traditional insurance 7 %

Bonds 19 %

Bank deposits 16 %

OF WHICH:

Total lending to households, SEK 1,635bn

Total lending to non-financial companies,SEB 1,227bn

The Swedish market for loans to the public, 31 December 2006

Handelsbanken’s market shares

Household lending, 24%

Corporate lending, 30 %

OF WHICH:

Source: SEB Sparbarometern Source: Statistics Sweden, refers to total lending, i.e. mortgages and bank loans

THE MARKET


Handelsbanken has the highest customer satisfaction

Handelsbanken’s organisation and methods of work are based on customers’ needs and on the branches’ responsibility for individual customers – not on the central units’ responsibility for product areas or market segments. The local branch is responsible for the profi ta-bility of the Group’s overall exchange of business with the customer. The branch is responsible for providing the customer with expert and co-ordinated services from all units in the Handelsbanken Group.

CUSTOMER SATISFACTION

Handelsbanken aims to have the most satisfi ed customers of the Nordic banks. The Bank therefore attaches great importance to customer satisfaction surveys and acts on the results. In Sweden, independent surveys of customer satisfaction in the banking fi eld have been performed every year since 1989. They are carried out by Svenskt Kvalitetsindex (Swedish Quality Index). The survey weighs together a number of variables such as image, expectations, prod-uct and service quality and value for money. Originally, the survey only covered the large nationwide banks, and compared with these, Handelsbanken has been in top position every year for private cus-tomers and every year but one for corporate customers. This year’s survey reached the same conclusion.

Corresponding surveys in Denmark, Finland and Norway showed that Handelsbanken has the highest customer satisfaction levels in the Nordic region. Among private customers, Handelsbanken had more satisfi ed customers than the sector average in all countries, showing results which are well above those of its main competitors.

RESPONSIBILITY FOR FINANCIAL ADVICE

Many of Handelsbanken’s employees have long experience and excel-lent knowledge of the investment area. In Sweden, the Bank has 913 investment advisers who are licensed by the Swedish Security Deal-ers’ Association.

The Swedish legislation on consumer fi nancial advice stipulates that the Bank must be able to show that its employees who provide advice on fi nancial instruments have relevant knowledge appropriate to their work tasks. Handelsbanken offers a licensing course which complies with these requirements. Over 4,200 employees, more than 3,200 of them in the branch operations, have completed the course and are now licensed. Employees are regularly trained and

authorised in the investment and insurance fi eld, so that they can meet the requirements of customers and also their own and external competence demands. In addition, more than 3,300 employees of the Handelsbanken Group are authorised in accordance with the Insurance Mediation Act.

Handelsbanken’s fi nancial advisory services are based on the indi-vidual customer’s needs. The adviser obtains an overall picture of the customer’s circumstances and fi nancial situation, and the Bank can then make an investment proposal which is individually adapted to the customer’s needs, investment horizon and risk level. As in other areas, customers themselves are responsible for the actual decision.

CUSTOMER COMPLAINTS

Dealing with customer complaints is one way of focusing on rou-tines and services that do not function as they should. The Bank’s website informs customers how to draw the Bank’s attention to any problems. Customers should fi rst talk to their local branch, where the problem will normally be solved directly.

The Bank also has a designated complaints manager to whom customers can turn if they wish to have their case reconsidered. The Bank’s management is kept regularly informed about complaints cases.

All branch employees, both in Sweden and abroad, attend annual training courses on complaints management.

For several years, Handelsbanken has had the lowest propor-tion of complaints submitted to the National Board for Consumer Complaints of all the major banks. Once again in 2006, of the four major Swedish banks, Handelsbanken was the one with the lowest proportion of complaints in relation to its business volume (house-hold deposits).

Number of active customers Other Nordics and Great

Britain TotalThousands Sweden

Active private customers 1 823 253 2 076

Active corporate customers 149 46 195

Definition of an active customer: A customer who makes at least one transaction a month on their own account, has a balance of at least SEK 1,000 at the end of the month, has a loan with the Handelsbanken Group or has mutual fund savings of at least SEK 1,000. Customers who appear in several categories are only counted once.

Customer satisfaction, Private customers Customer satisfaction, Corporate customers

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SEB, Nordea and SwedbankHandelsbanken

Handelsbanken is a service company that focuses on its customers – not on individual products.

OUR CUSTOMERS


Committed employees make for satisfi ed customers

RECRUITMENT

Handelsbanken sees each recruitment as a vital investment. The Bank aims to recruit the best people, develop them and keep them within the Group. “Best” means people who have the personal qual-ities for further development at the Bank. They should also have an education which is broad and appropriate for the Bank’s operations, usually at university level. To attract potential employees when they are students, the Bank has regular local contact with students and universities. The Bank aims to meet its need for employees at various levels through internal recruitment and promotion. Some 96% of all managers in Sweden were recruited internally. The corresponding fi gure for the whole Group was 91%, including the markets where the Bank is relatively new. One of the most important tasks for managers is to stimulate employees to develop their career within the Bank. Internal mobility is highly valued both within and across national borders. External employee turnover was 5% (3).

COMPETENCE DEVELOPMENT

Every year, all employees have a planned and structured develop-ment review with their immediate superior. Based on the unit’s busi-ness/operational plan, they discuss the employee’s skills and compe-tence, how he or she should contribute to the goals of the operation and any skills development needed. The dialogue results in an action plan describing how the individual goals are to be achieved. The dialogue also includes a discussion of the next step in the employ-ee’s development. The action plan is regularly followed up by the manager and the employee. Handelsbanken defi nes competence as the ability to acquire, use, develop and pool knowledge, skills and experience. All employees are required to take responsibility for their own competence development and for sharing their competence with others. The most important means of improving professional skills is, and always has been, learning from daily work.

INDIVIDUAL SALARY DIALOGUE REVIEWS

Individual salary reviews are an expression of the Bank’s aim to fur-ther decentralise responsibility and powers. All employees in Sweden have individual salary reviews with their immediate superior with no central directives concerning defi ned salary levels. The reviews are based on the individual action plans and follow-up of these plans.

EQUALITY

Handelsbanken’s equal opportunity policy states that equal condi-tions must apply to men and women regarding career development within the Handelsbanken Group. One long-term goal is that the proportion of women and men who are managers will be the same as the overall gender distribution at the Bank. At the year-end, 36% (35) of managers at the Handelsbanken Group were women. The proportion of women among the total number of employees was 54% (52).

To make it easier for both men and women to combine a career with parenthood, the Bank offers household services to all employ-ees with children under the age of eight. In Sweden, the Bank also compensates employees on parental leave with 80% of that part of their salary which is not compensated by national insurance. Em-ployees who take parental leave have the same right to salary devel-opment as other employees.

WORKING ENVIRONMENT AND HEALTH PROMOTION

Handelsbanken has various types of programmes for health promo-tion among its employees. The Bank’s recreation programme is a vital ingredient in caring for its employees and their health. The pur-pose of this is to make the employees active, mainly through health promotion measures. It is considered very important to reach out to all employees and to increase the feeling of community at the Bank. The Bank’s overall goal in its working environment efforts is for the

Handelsbanken aims to recruit the best people, develop them and keep them within the Group. The Bank has over 10,000 employees active in 20 countries.

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Age and gender distribution 2006Average number of employees

OUR EMPLOYEES


employees to enjoy good health, to develop on a personal level and to function in an optimal way. This is a long-term goal based on sev-eral factors that will help to keep the employees healthy. Examples of this are the importance of keeping an appropriate balance between work and leisure time, having the right skills and competence to perform tasks and manage various work-related situations, clear and honest communication and showing individuals trust and respect. In line with the Bank’s decentralised way of operating, work tasks which may imply responsibility for the working environment are del-egated to managers and supervisors at workplace level. The regional banks, subsidiaries and central units have working environment committees, and at central level, there is also a working environment and safety committee.

OKTOGONEN – THE BANK’S PROFIT-SHARING SYSTEM

In order to achieve its overall goal – higher profi tability than compa-rable banks – Handelsbanken is dependent on high-quality perform-ance from its employees. It is therefore reasonable that the employees receive part of any extra profi ts. Every year but one since 1973, the Bank has allocated part of its profi t to a profi t-sharing scheme for its employees. The funds are managed by the Oktogonen Foundation. A condition for making an allocation is that the Handelsbanken Group achieves its goal of higher return on shareholders’ equity af-ter standard tax than a weighted average of other listed Nordic and British banks. One third of the extra profi ts can then be allocated to the employees. The amount is limited to 15% of the dividends to

shareholders. All employees receive an equal part of the allocated amount and the scheme includes all employees in the Nordic coun-tries and since 2004, also employees in Great Britain. Disbursement can be made when the employee reaches the age of 60.

In spring 2006, the board approved the allocation for the 2005 fi nancial year of SEK 22,000 (35,000) for each full-time employee in Sweden. Staff who have worked full-time since the profi t-sharing scheme was introduced in 1973, have received over SEK 855,000 in allocations. Through share price increases, however, mainly in the Handelsbanken share, the value of the allocations has risen to over SEK 8m. The corresponding value for a person fi rst employed in 1990, was almost SEK 2.4m at the year-end. One of the fundamen-tal concepts in managing the foundation is that a considerable part of the funds are invested in shares in Handelsbanken. Oktogonen is one of the Bank’s largest shareholders. The board of the Oktogonen Foundation is appointed by the local organisation of the Union of Finance Sector Employees.

Customer PLUSreview

Action planIndividual follow-up

Business plan

Salarydialoguereview

Business planprocess

The Wheel depicts the interplay between the Bank’s operations and the employee’s career development as a continual process in order to achieve Handelsbanken’s overall objectives.

Every year, each unit at the Bank makes a business plan. Based on this, all employees have a planned development review (PLUS) with their immediate superior. The discussion results in an indi-vidual action plan presenting the employee’s goals and possible needs for support and skills development. The action plan is then followed up and forms the basis of the individual salary dialogue review between employee and manager.

OUR EMPLOYEES


CUSTOMER11 regional head offices

Central departments

615 branches6 central business areas “Always responsible

for the customer”

BUSINESS CONCEPT

Handelsbanken is a universal bank and its business concept is to offer private and corporate customers in the Nordic countries and Great Britain a complete range of fi nancial services, based on the customer’s needs. A basic concept is that for every customer – private and corporate – there is overall responsibility at one place in the Handelsbanken Group. The overall customer responsibility is at the local branch of the Bank in the locations where the customer oper-ates.

WORKING METHODS

The business operations of the Handelsbanken Group are strongly decentralised. The Bank’s organisation and work methods are based on the branches’ responsibility for individual customers and not on the central units’ responsibility for product areas or market seg-ments. The most important means of control are a deep-seated cor-porate culture, and an effective fi nancial control system.

The Bank does not make central marketing plans, nor does it con-trol the branches’ marketing activities at the central level by giving priority to certain customer categories or product areas. For many years, Handelsbanken has consistently and successfully applied and developed this basic concept.

ORGANISATION

Handelsbanken’s organisation aims at promoting the interplay be-tween branches, support functions, specialists and central units with business responsibility. The Bank’s organisation should be viewed as a single unit focusing on the individual customer and with the local branch offi ce at the forefront.

Overall customer responsibility at one place in the Handelsbanken Group

Handelsbanken is a universal bank with strongly decentralised business operations.

BUSINESS CONCEPT, WORKING METHODS AND ORGANISATION


ADMINISTRATION REPORT ■ REVIEW OF OPERATIONS

Highest profi t ever

Operating profi t increased by 10% to SEK 17,164m (15,650). Return on shareholders’ equity increased to 20.9% (17.9). Income rose by 12% to SEK 29,559m (26,323). Expenses were SEK 12,451m (10,938). Starting on 1 January 2006, SPP is included in the Group’s consolidated accounts, and thus affects both expenses and income. The cost/income ratio was 42.1% (41.6). Earnings per share were SEK 20.41 (16.98).

INCREASING BUSINESS VOLUMES BUT SQUEEZED LENDING MARGINS

Average lending volumes in the Group rose by 13% and deposits by 14%. Branch offi ce operations outside Sweden continued their rapid growth: lending rose by 25% and deposits by 22%.

The rapid growth in lending volumes could not compensate for poorer lending margins, particularly as regards mortgage loans to households. Net interest income was positively affected by higher deposit margins but in total, net interest income in the Group fell by SEK 118m to SEK 14,972m (15,090). Net interest income in the branch offi ce operations outside Sweden increased by 17% to SEK 2,951m (2,525). Net interest income was lower in the Swed-ish branch offi ce operations at SEK 10,722m (11,511). Net interest income includes the impact of previous decisions concerning repur-chases of bonds, the funding of Stadshypotek’s mortgage loans and other aspects of the operations which cannot be directly infl uenced by the branches.

RECORD HIGH NET FEE AND COMMISSION INCOME

Net fee and commission income increased by 31% to SEK 9,232m (7,055). This high rate of increase was mainly due to higher insur-ance commissions and equity-related commissions. Insurance com-missions totalled SEK 2,338m (937). SPP accounted for SEK 1,316m of this amount. The positive yield split was SEK 1,023m, with SPP’s share being SEK 752m and Handelsbanken Liv’s SEK 271m (263). Equity-related commissions – comprising equity commissions, equi-ty-related income in mutual fund and custody operations, corporate fi nance and structured products – were SEK 4,151m (3,308). This was 25% higher, where the increase for structured products was 72% to SEK 279m (162). Total commissions from mutual fund manage-ment rose by 26% to SEK 1,548m (1,232).

CONSOLIDATION OF SPP AFFECTED NET FINANCIAL ITEMS AT FAIR VALUE

Net gains/losses on fi nancial items at fair value were SEK 4,261m (3,459), with most of the increase due to the effects of SPP. At the time SPP became a profi t-distributing company on 1 January 2006, certain insurance contracts were underfunded since the market value of the assets did not cover the insurance liability. This underfunding was reported in liabilities as a deferred capital contribution. When calculating the insurance liability, this is discounted by using a long-term market yield as the discount rate and fl uctuations in this rate affect the amount of the liability. The deferred capital contribution is also affected by changes in the market value of the assets which

mainly consist of equities and interest-bearing assets. The change in the deferred capital contribution was SEK 1,045m.

Trading operations performed well, and net fi nancial items at Capital Markets increased by 43% to SEK 1,378m (964). In par-ticular, currency trading and structured products generated higher income.

REDUCED RISKS IN SPP

SPP’s stated goal has been to reduce the effects on the company’s results of interest rate fl uctuations. For this reason, in the second quarter, SPP started to conduct transactions with the purpose of hedging against changes in market value with respect to the deferred capital contribution.

Value-at-Risk (VaR), which is the most common measurement of aggregated risks, was SEK 1,276m before SPP started to reduce its risks and at the end of 2006, the amount was SEK 259m.

This means that with a confi dence level of 99%, the maxi-mum possible loss in an individual month has been reduced from SEK 1.3bn to SEK 0.3bn. VaR can be complemented by simulating the effect of an interest rate shock. In the case of a parallel shift in all interest rates in all currencies of 100bp, SPP’s earnings would be affected by SEK 30m. Finally, it is also possible to view the capital requirement in relation to the Swedish Financial Supervisory Au-thority’s so-called traffi c light model. At the end of the year, only SEK 1,078m, i.e. less than 10% of the company’s capital base, was required to obtain a green light in the traffi c light model. At the end of Q1 2006, the corresponding fi gure was SEK 4,196m.

SPP AND PERFORMANCE-RELATED REMUNERATION ACCOUNTED FOR MOST OF THE INCREASE IN COSTS

Expenses were SEK 12,451m (10,938), an increase of 14%. The underlying increase in expenses was just under 2.6%, excluding SPP, performance-related remuneration and cost increases in operations outside Sweden. SPP’s expenses, which were not included in the Bank in the previous year, were SEK 734m, or almost 6.7 percent-age points of the cost increase. Performance-related remuneration rose by SEK 169m to SEK 589m, corresponding to 1.5 percentage points of the increase. Although the Bank opened more branches in 2006 than in the previous year, expenses for new branches were unchanged. The growth in operations outside Sweden meant that expenses, excluding performance-related remuneration, went up by SEK 327m, corresponding to 3.0 percentage points of the cost in-crease. Part of this is due to an increase in the number of employees outside Sweden by 145. The number of employees increased and totalled 10,320 (9,922) at the year-end.

NET RECOVERIES ON LOAN LOSSES

Recoveries exceeded loan losses and totalled SEK 55m (261). Gross losses continued to decline. The loan loss ratio was –0.01 (–0.03). Net bad debts decreased to SEK 876m (1,256), equivalent to 0.07% (0.12) of lending.

Operating profi t rose by 10% to SEK 17.2bn (15.7). The Bank’s insurance operations boosted their profi ts by 356% to SEK 2.6bn (0.6), of which SPP contributed SEK 2.1bn.


ADMINISTRATION REPORT ■ REVIEW OF OPERATIONS

CAPITAL RATIO AND RATING

The Bank’s capital ratio was 9.5% (11.6) and the Tier 1 capital ratio was 6.8%. The reason for the decrease in the capital ratio between 2005 and 2006 is that at the end of 2005, the Bank raised a loan with the purpose of contributing capital to SPP in connection with converting it into a profi t-distributing company. Thus the capital ratio was unusually high at the end of 2005.

Handelsbanken’s rating was unchanged with all three rating agencies which rate the Bank.

Rating as at 31 December 2006 Long-term Short-term

Moody´s Aa1 P-1

Standard & Poor´s AA- A-1+

Fitch AA- F1+

BUYBACK AND CANCELLATION OF SHARES

At the 2006 annual general meeting, a resolution was passed to can-cel 20.6 million shares which the Bank had previously repurchased. In connection with the cancellation, the nominal value of the share was increased from SEK 4.30 to SEK 4.45. The AGM also resolved to authorise the Board to repurchase a maximum of 40 million shares during the period until the 2007 AGM. During the second and third quarters, the Bank repurchased 14.8 million shares.

The board is requesting the 2007 AGM to cancel the repurchased shares and any shares repurchased before the 2007 AGM, and also to authorise the board to repurchase a maximum of 40 million shares during the period up to the 2008 AGM. The purpose of this is to adjust the capital structure.

BRANCH OPERATIONS OUTSIDE SWEDEN EARNED OVER SEK 2BN

Branch offi ce operations outside Sweden boosted their total profi ts by SEK 205m to SEK 2,018m, an increase of more than 11%. This increase took place at the same time as 14 (9) new branches were opened. Income rose by SEK 571m or more than 14%, while the increase in expenses was slightly less.

However, the Bank opened more branches than the 14 started in Denmark, Finland, Norway and Great Britain. Three new branches were opened in Sweden, two in Poland, and also two representa-tive offi ces, one in Spain and one in Mumbai, India. Thus the Bank started up operations in 21 new locations during the year. The rate of expansion will increase. Some 30–40 branches will be opened during 2007 with the focus on Great Britain, Finland and Norway. New markets will be opened up for universal banking operations.


Key figures for the Handelsbanken Group 2006 2005 2004 2003 2002

Profit before loan losses, SEK m 17 108 15 385 13 718 11 843 10 781

Loan losses/recoveries, SEK m 55 261 -167 -492 -392

Impairment losses/reversals on financial non-current assets, SEK m 199 -199

Operating profit, SEK m 17 164 15 650 13 553 11 550 10 190

Profit for the year, SEK m 13 128 11 354 9 860 8 116 7 282

Total assets, SEK m 1 790 008 1 582 907 1 316 789 1 260 454 1 277 514

Shareholders’ equity, SEK m 66 226 65 758 61 372 56 835 52 192

Return on equity, % 20.9 17.9 16.6 14.9 14.6

Return on equity after standard tax, % 19.7 17.8 16.4 15.3 14.6

Return on total assets, % 0.99 1.08 1.05 0.90 0.83

Cost/income ratio, % 42.1 41.6 42.8 46.9 50.2

Loan loss ratio, % -0.01 -0.03 0.02 0.06 0.05

Bad debt reserve ratio, % 69.5 65.9 53.4 51.4 60.9

Proportion of bad debts, % 0.07 0.12 0.21 0.28 0.23

Capital ratio, % 9.5 11.6 10.0 10.2 9.3

Tier 1 ratio, % 6.8 7.6 7.6 7.3 6.4

Average number of employees 10 163 9 395 9 150 9 258 9 752

No. of branches in Sweden 457 455 453 453 456

No. of branches in Nordic countries and Great Britain 141 128 120 101 96

No. of branches in other countries 17 14 11 11 11

For definitions, see inside back cover.2004 has been restated in accordance with IFRS. For 2002 and 2003, the figures are presented according to the previous format.

Quarterly performance for the Handelsbanken Group

SEK m 2006:4 2006:3 2006:2 2006:1 2005:4

Interest income 14 672 12 871 11 743 10 847 13 551

Interest expense -10 946 -9 175 -7 977 -7 063 -9 758

Net interest income 3 726 3 696 3 766 3 784 3 793

Fee and commission income 3 073 2 417 2 379 2 652 2 284

Fee and commission expense -324 -345 -310 -310 -305

Net fee and commission income 2 749 2 072 2 069 2 342 1 979

Net gains/losses on financial items at fair value 1 607 -247 1 064 1 837 1 517

Risk result – insurance 187 38 297 49 38

Other dividend income 9 2 149 33 0

Share of profit of associated companies 11 21 7 66 4

Other income 58 51 38 78 81

Total income 8 347 5 633 7 390 8 189 7 412

Administrative expenses

Staff costs -1 988 -1 543 -2 142 -2 041 -1 775

Other expenses -1 131 -929 -1 052 -1 068 -995

Depreciation, amortisation and impairments of property, equipment and intangible assets -141 -137 -136 -143 -70

Total expenses -3 260 -2 609 -3 330 -3 252 -2 840

Profit before loan losses 5 087 3 024 4 060 4 937 4 572

Loan losses/recoveries -55 -22 53 79 37

Gains/losses on disposal of property, equipment and intangible assets 0 0 1 0 0

Operating profit 5 032 3 002 4 114 5 016 4 609

Taxes -1 358 -887 -904 -887 -1 289

Profit for the period 3 674 2 115 3 210 4 129 3 320

Attributable to

Ordinary shareholders 3 674 2 115 3 210 4 129 3 320

Minority interest - - - - -

Earnings per share * 5.79 3.31 4.97 6.32 4.98

* No dilution.

Key fi gures and quarterly performance

ADMINISTRATION REPORT ■ KEY FIGURES AND QUARTERLY PERFORMANCE


The Handelsbanken share

THE HANDELSBANKEN SHARE

Handelsbanken’s share is listed on the Nordic stock exchange in Stockholm and on the Nordic Large Cap list. One trading unit is equivalent to 100 shares. The share capital amounts to SEK 2,888m, divided over 649 million shares. Each share thus represents SEK 4.45 of the share capital.

There are two classes of shares: class A and class B. Of the total number of outstanding shares, 98% are class A.

VOTING RIGHTS

Class A shares each carry one vote, while class B shares have one-tenth of a vote each. At the annual general meeting, no shareholder is allowed a greater voting power than 10% of the total number of votes in the Bank.

OWNERSHIP STRUCTURE

Handelsbanken has approximately 100,000 shareholders. As at 31 December 2006, most of these, or around 60% of the total number of shareholders, owned fewer than 500 shares. The 10% of sharehol-ders (approx.) whose holdings exceeded 2,500 shares each, together held just over 90% of the share capital. The two largest owners, Industrivärden and the Oktogonen Foundation, each owned just over 10% of the shares.

As at 31 December 2006, roughly 50% of the outstanding shares were owned by large Swedish institutions. International investors owned some 28% (25).

REPURCHASING OF SHARES

For a company, repurchasing its own shares is a way of transferring capital to shareholders. It also allows the company to adjust its capi-tal structure continuously throughout the year. The latter factor is particularly important for a bank whose fi nancial objective is higher return on shareholders’ equity.

The scope and size of the buyback depends on the Bank’s fi nan-cial position, its net earnings trend, investments and credit demand.

At the annual general meeting on 25 April 2006, it was resolved to cancel the 20.6 million shares that the Bank had repurchased since the 2005 AGM. At the same time, the Bank’s board received a mandate to repurchase 40 million shares during the period until the 2007 AGM. The buybacks were begun on 26 April 2006, and by the end of the year, 14.8 million shares had been repurchased. Since 2000, the Bank has bought back 80.5 million shares (net), which has led to capital totalling SEK 13.3bn being transferred to Handelsbanken’s shareholders.

DIVIDEND

Handelsbanken’s policy is that the dividend should be competitive in relation to other listed Nordic bank shares. For 2006, the board recommends a dividend of SEK 8.00 (7.00), an increase of 14%, corresponding to a payout ratio of 39% (41). The board proposes that the record day for dividend be 27 April 2007, implying that the share will be traded ex-dividend from 25 April 2007.

If the annual general meeting resolves in accordance with the board’s proposal, this will mean that Handelsbanken’s dividend will have increased by 78% over the past fi ve years. The corresponding rate of increase for comparable Nordic banks is 68%.

SHARE PRICE PERFORMANCE

As at 31 December 2006, Handelsbanken’s market capitalisation was SEK 131bn (129).

The Swedish stock market grew by 24% during the year. The OMX Bank Index climbed by 21%. The price of Handelsbanken’s class A share rose by 5%. The total yield, including dividends paid, was 9%.

Over the past fi ve years, Handelsbanken’s share price has climbed by 34%, while the Stockholm stock exchange as a whole has grown by 57% and the Bank Index has increased by 82%.

The largest Swedish shareholders

as at 31 December 2006% of

votes% of

capital

Industrivärden 10.7 10.5

Oktogonen Foundation 10.4 10.2

Alecta 5.3 5.2

AMF and funds 2.6 2.6

Swedbank Robur funds 2.6 2.5

Handelsbanken’s funds incl. XACT 1.9 1.8

SEB funds 1.8 1.8

Livförsäkrings AB Skandia 1.7 1.7

AFA Försäkring 1.6 1.6

Lundbergs etc. 1.6 1.6

1st National Swedish Pension Fund 1.1 1.0

4th National Swedish Pension Fund 1.0 1.0

Nordea funds 1.0 0.9

Folksam/KPA/Förenade Liv 0.9 0.9

2nd National Swedish Pension Fund 0.9 0.9

Handelsbanken’s higher profi tability has benefi ted shareholders through greater growth in dividends than the average for other listed Nordic banks. Handelsbanken’s share was fi rst listed on the Stockholm stock exchange in 1873, and is the share that has been listed longest on the Swedish stock market.

ADMINISTRATION REPORT ■ SHARE AND SHAREHOLDERS


Index

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SEK bn

Market capitalisation 1997–2006 Share price performance 1997–2006

Key figures 2006 2005 2004 2003 2002

Earnings per share, SEK 20.41 16.98 14.55 11.70 10.50

Dividend per share, SEK 8.00* 7.00 6.00 5.25 4.75

Dividend growth, % 14.3* 16.7 14.3 10.5 5.6

Adjusted shareholders’ equity per share, SEK 104.27 100.23 92.30 82.61 75.48

Price of class A share, 31 December, SEK 207.00 197.00 173.00 147.00 116.00

Average daily turnover on Stockholm stock exchange

Class A, number of shares 3 180 486 2 573 108 2 550 130 2 663 856 2 488 517

Class B, number of shares 41 024 59 610 154 003 57 964 52 986

Highest/lowest price paid, class A shares, SEK 240.0/173.0 199.5/156.5 174.5/136.5 148.5/103.5 162.5/97

Dividend yield, % 3.9* 3.6 3.5 3.6 4.1

P/E ratio 10.1 11.6 11.9 12.6 11.0

Stock exchange price/equity, % 199 197 187 178 154

* Dividend as recommended by the board.In all material respects, the figures have been adjusted to take account of current accounting policies and definitions. For definitions, see inside back cover.

Shares per shareholder31 December Shareholdings

No. in thousands

Number of sharesNumber of

shareholdersClass A shares

Class B shares

% of share

capital% of

votes

1–500 shares 59 058 8 560 1 828 1.6 1.4

501–2 500 shares 28 236 29 386 3 379 5.0 4.7

2 501–25 000 shares 9 373 50 979 4 226 8.5 8.0

25 001–250 000 shares 617 44 997 1 034 7.1 7.1

250 001– shares 221 488 537 1 283 75.5 76.5

Shares repurchased by Handelsbanken 14 517 306 2.3 2.3

Total 97 505 636 976 12 056 100.0 100.0

Shares divided into share classes31 December

No.% of

capital% of

votes

Average prices/

repurchased amount

Share capitalShare class

Class A 636 976 319 98.14 99.81 2 834 544 620

Class B 12 055 943 1.86 0.19 53 648 946

649 032 262 100.00 100.00 2 888 193 566

Repurchased during the year

Class A 14 517 300 2.23 2.28 at 190.63 64 601 985

Class B 305 500 0.05 0.00 at 206.56 1 359 475

14 822 800 2.28 2.28 2 830 475 672 65 961 460

After repurchases

Class A 622 459 019 98.15 99.81 2 769 942 635

Class B 11 750 443 1.85 0.19 52 289 471

Total after repurchases 634 209 462 100.00 100.00 2 822 232 106

As at 13 June 2006, 12,972,900 Class A shares and 7,636,300 Class B shares were cancelled. The quotient value of the shares was simultaneously increased from SEK 4.30 to 4.45 through a bonus issue. During the year, 14,517,300 Class A shares and 305,500 class B shares were repurchased.

The average number of outstanding shares in 2006 was 643,284,311.

ADMINISTRATION REPORT ■ SHARE AND SHAREHOLDERS


Segment information

Segment information Branch

operations MarketsAsset

ManagementPensions &

InsuranceOther

operations EliminationsTotal 2006

Total 2005 Change %SEK m

Net interest income 14 324 572 168 139 -216 -15 14 972 15 090 -1

Net fee and commission income 4 174 1 728 1 193 2 304 -167 9 232 7 055 31

Net gains/losses on financial items at fair value 1 206 1 422 33 907 693 4 261 3 459 23

Risk result - insurance 571 571 194 194

Other income 391 839 90 153 3 526 -4 476 523 525 0

Total income 20 095 4 561 1 484 4 074 3 836 -4 491 29 559 26 323 12

Of which internal -8 841 9 634 -240 -262 4 200 4 491 3 890 15

Administrative expenses -8 241 -3 244 -677 -1 297 -2 926 4 491 -11 894 -10 425 14

Depreciation, amortisation and impairments of property, equipment and intangible assets -153 -21 -2 -199 -182 -557 -513 9

Total expenses -8 394 -3 265 -679 -1 496 -3 108 4 491 -12 451 -10 938 14

Profit before loan losses 11 701 1 296 805 2 578 728 17 108 15 385 11

Loan losses/recoveries 53 2 - - 55 261 -79

Gains/losses on disposal of property, equipment and intangible assets 0 0 - - 1 1 4 -75

Operating profit 11 754 1 298 805 2 578 729 17 164 15 650 10

Return on equity, % 18.5 14.0 30.4 34.7 20.9 17.9

Assets 1 119 346 702 974 24 133 216 669 297 568 -570 682 1 790 008 1 582 907

Liabilities 1 074 401 696 177 22 227 209 669 291 990 -570 682 1 723 782 1 517 149

Other disclosures

Investments in non-financial assets 152 33 4 30 283 502 4 436

Average number of employees 6 155 1 244 339 681 1 744 10 163 9 395

Internal income and expenses are included in the respective item on the income statement. Internal income consists of payment for services rendered according to the cost price principle. Expenses also include the distribution of costs made internally within the Group for services from business support operations. The Other operations business area includes Treasury and the central head office departments. It also includes capital gains/losses, divdends and income and expenses that are not attributable to a specific segment.Return on equity for the segments is computed after standard tax while for the whole Group and Pensions & Insurance, it is computed after full tax. The shareholders’ equity, on which calculation of return on equity is based, corresponds to the assessment of the Group’s overall actual capital requirement.

ADMINISTRATION REPORT ■ SEGMENT INFORMATION


EARNINGS PERFORMANCE

Demand for credit remained strong, while margins on mortgage loans in particular remained under pressure. Deposit margins im-proved slightly on practically all markets. Operating profi t decreased by 5% to SEK 11,754m (12,416). Income was generally unchanged, while expenses increased at the same time as recoveries were slightly lower than the previous year. A total of 17 new branches were opened.

BRANCH OFFICE OPERATIONS IN SWEDENEarnings performance

Operating profi t was SEK 9,764m (10,583), a decrease of 8%. Net interest income fell in the Swedish branch offi ce operations. Lending

volumes rose by 10%, household lending by 11% and corporate lend-ing by 9%. The increase in lending volumes could not compensate for the pressure on margins but higher deposit margins boosted net interest income.

The margin on fl oating rate household deposits was 38bp higher during the fourth quarter than in the same quarter one year previ-ously. In terms of lending margins, the margin on mortgage loans to private individuals was under particular pressure throughout the year. The average margin was 77 bp, a decrease of 17 bp. Fee and commission income rose, particularly equity-related commission income. Expenses increased, while recoveries were SEK 134m lower and totalled SEK 55m (189).

Quarterly performance

Branch offi ce operations

SEK m 2006:4 2006:3 2006:2 2006:1 Total 2006 Total 2005 Change %

Net interest income 3 624 3 550 3 609 3 541 14 324 14 655 -2

Net fee and commission income 1 123 917 1 047 1 087 4 174 3 803 10

Net gains/losses on financial items at fair value 297 172 412 325 1 206 1 261 -4

Other income 78 89 127 97 391 369 6

Total income 5 122 4 728 5 195 5 050 20 095 20 088 0

Of which internal -2 589 -2 513 -1 946 -1 793 -8 841 -6 399 38

Administrative expenses -2 235 -1 841 -2 158 -2 007 -8 241 -7 797 6

Depreciation, amortisation and impairments of property, equipment and intangible assets -57 -32 -32 -32 -153 -138 11

Total expenses -2 292 -1 873 -2 190 -2 039 -8 394 -7 935 6

Profit before loan losses 2 830 2 855 3 005 3 011 11 701 12 153 -4

Loan losses/recoveries -55 -22 52 78 53 259 -80

Gains/losses on disposal of property, equipment and intangible assets 0 0 0 0 0 4 -100

Operating profit 2 775 2 833 3 057 3 089 11 754 12 416 -5

Return on equity, % 17.8 18.1 18.5 19.6 18.5 16.6

Average number of employees 6 193 6 364 6 055 6 007 6 155 6 018 2

Branch offi ce operations

Branch office operations comprise a total of 599 branches in eleven regional banks, and also include Handelsbanken Finans. Seven of the regional banks are in Sweden, with the remaining four in Great Britain, Denmark, Finland and Norway. At Handelsbanken, the branches are the base of all operations and co-ordinate services for all customers, includ-ing major corporations. The regional banks are responsible for their own profits and all pursue the same goals – to provide universal banking services with a higher service level and at lower cost than comparable banks. Handelsbanken Finans offers a full range of fi-nance company services in the four Nordic countries and in Great Britain. Handelsbanken Finans works through the Bank’s branches and in financing collaborations with retailers and vendors.

ADMINISTRATION REPORT ■ BRANCH OFFICE OPERATIONS


Balance sheetBranch offi ce operations 31 DecemberSEK m 2006 2005 Change %

Loans to credit institutions 39 998 35 127 14

Loans to the public 1 042 171 946 997 10

Interest-bearing securities 9 985 12 164 -18

Assets where the customer bears the value change risk 1 437 0

Other assets 25 755 33 523 -23

Total assets 1 119 346 1 027 811 9

Due to credit institutions 367 602 367 722 0

Deposits and borrowing from the public 322 321 286 185 13

Issued securities 351 381 288 231 22

Liabilities where the customer bears the value change risk 1 437 0

Other liabilities 31 660 29 175 9

Shareholders’ equity 44 945 56 498 -20

Total liabilities and equity 1 119 346 1 027 811 9

Business development in Sweden

As shown in the table, business volumes increased, to both house-holds and companies. The rate of increase was high throughout 2006, except for lending to companies where the rate of increase decreased between the last two quarters of the year. The average volume of deposits from households increased by 13%.

Credit volumes at Handelsbanken Finans, reported under branch offi ce operations, increased by 14% to SEK 42bn.

Handelsbanken was acclaimed Commercial Bank of the Year by Affärsvärlden, a Swedish business periodical. This award is based on a survey among major companies in Sweden.

During the autumn, Swedish Quality Index (SKI) presented its annual survey of how satisfi ed bank customers are. This survey has been carried out since 1989, when only the four major Swedish banks were included. Among these four, Handelsbanken has always been in top position, among both private and corporate customers. This was the case again in this year’s survey.

Three new branches were started during the year, in Frösunda and Ekerö outside Stockholm and in Viared, outside Borås. Thus the Bank had 457 branches in Sweden. More branches will be opened in 2007.

Within the organisation of Handelsbanken Finans, Handelsbanken Direct was started on 1 October with the aim of increasing availability for customers, existing and potential, who use the Bank’s online services. The intention is to develop the online banking service so that more transactions can be generated via the service, customers can be given personal service by phone 24 hours a day, 7 days a week, and the branches’ administration is also made easier. The range of offerings via the online banking service will gradually be increased. So far, customers can apply for loans and card services, or sign up for a selection of the Bank’s savings prod-ucts.

The volume of purchases made using the Bank’s Allkort credit card increased, and it had the highest purchase volume per card in Europe in its class. The total number of Allkort cards was 179,000, an increase of 20%.

The Frikort ATM and debit card, which replaced the Bankomat ATM card, has been a success. Since its launch in October, around 70,000 cards have been distributed to customers. It is particularly gratifying that these customers, who previously used cash dispensers, have started to use their cards when shopping instead of using it solely as an ATM card.

In 2006, Handelsbanken was fi rst to launch private label corpo-rate cards.

Operating profit

Branch offi ce operations in Sweden SEK m 2006 2005 Change %

Income 15 943 16 354 -3

Expenses -6 234 -5 959 5

Loan losses/recoveries 55 189 -71

Disposal of property, equipment/in-tangible assets 0 -1 100

Operating profit 9 764 10 583 -8

Business volumes Sweden

Average volumes SEK bn 2006 2005 Change %

Deposits from the public 278 246 13

of which households 105 93 13

companies 173 153 13

Loans to the public* 797 727 10

of which households 369 333 11

of which mortgage loans 319 285 12

companies 428 394 9

of which mortgage loans 142 142 0

* excl. loans to the National Debt Office

GREAT BRITAIN Earnings performance in Great Britain

Operating profi ts fell to SEK 150m (154). The decrease was mainly due to a provision for probable loan losses. The operating profi t before loan losses increased by 6%, despite the continuing rapid expansion in the form of new branches and costs for upgrading IT systems. The number of employees grew in line with the expan-sion, and at the end of 2006 there were 267 employees, an increase of 23%. The increase in income was mainly due to the continued strong growth in business volumes, in both newly-opened and exist-ing branches. The average volume of lending rose by 51% to GBP 2.4bn, while deposits rose by 25% to GBP 1.3bn.

Operating profit

Branch operations in Great Britain SEK m 2006 2005 Change %

Income 591 493 20

Expenses -421 -332 27

Loan losses/recoveries -20 -7 186

Operating profit 150 154 -3

Business volumes, Great Britain

Average volumes GBP m 2006 2005 Change %

Deposits from the public 1 254 1 004 25

Of which households 102 70 46

companies 1 152 934 23

Loans to the public 2 403 1 591 51


companies 1 971 1 290 53

Business development in Great Britain

Six new branches were opened – in Slough, Sheffi eld, Oxford, Leicester, Swindon and Wolverhampton. This brought the number of branches to 26. Managers have been recruited for several new branches and premises acquired. These branches will start up in the fi rst half of 2007, and discussions are in progress to open branches in other locations.

Handelsbanken in Great Britain was assessed for the Best Com-panies accreditation. This is based on a detailed questionnaire to all



employees with a response rate of 88% – which is considered a high fi gure. The outcome was the highest possible rating – three stars – which is only awarded to companies which are assessed as being ”extraordinary”. The results of this survey refl ect the fact that Han-delsbanken’s business model is popular with its staff. Customers also showed their appreciation in a survey arranged by the “Forum of Private Business”, where Handelsbanken was one of the banks cus-tomers least wanted to leave.

DENMARKEarnings performance in Denmark

Operating profi ts rose, despite pressure on margins. The operating profi t for the fourth quarter was the highest ever. The increase in profi ts was mainly generated through higher business volumes.

The average volume of lending was DKK 26.2bn, with lending to households representing DKK 11.6bn. The average volume of lending to households went up by 22%, while the average volume of total lending increased by 19%. One reason for the growth in household lending was the strong demand for priority loans, Han-delsbanken’s mortgage loan on the Danish market. The average volume of deposits from households increased by 8% to DKK 5.7bn, and total deposits rose by 19% to DKK 19.4bn.

The positive trend in the area of securities continued. Turnover on the Danish stock market was at a record high level with rising share prices, although the third quarter had temporarily lower activ-ity. Fee and commission income rose by 8% overall. Net gains/losses on fi nancial items increased, mainly due to a positive trend for for-eign exchange trading and the fair value measurement of interest rate derivatives.

In 2006, two structured products were launched: an equity-linked bond worth DKK 168m and a commodity-indexed bond with sales of DKK 186m. The volume of priority loans – a product which Handelsbanken was the fi rst bank to introduce in Denmark in 2000 – exceeded DKK 10bn in December.

The number of currency transactions and leasing transactions with companies increased substantially, particularly in the second half of the year. In parallel with the increased level of business activ-ity, there was a signifi cantly heightened interest in Handelsbanken in the Danish media. Handelsbanken was mentioned in the nationwide media twice as often in 2006 as in 2005.

In Dansk Kundeindex, which is an independent survey of satisfac-tion among Danish banking customers, Handelsbanken was once again very highly rated by both private and corporate customers.

Two new branches were opened in 2006, one in Hillerød, north of Copenhagen, and one in Køge, south of Copenhagen. This brought the number of branches in Denmark to 37.

Operating profit

Branch operations in DenmarkSEK m 2006 2005 Change %

Income 972 907 7

Expenses -546 -492 11

Loan losses/recoveries 30 4

Disposal of property, equipment/intangible assets 0 4 -100

Operating profit 456 423 8

Business volumes, Denmark

Average volumes DKK bn 2006 2005 Change %

Deposits from the public 19.4 16.3 19

Of which households 5.7 5.3 8

companies 13.7 11.0 25

Loans to the public 26.2 22.0 19



FINLAND Earnings performance in Finland

Operating profi t increased by 17% to SEK 447m (381). Increased business volumes – resutling in higher net interest income – and higher commissions mainly on investment operations, led to an overall increase in income of 16% to SEK 1,173m. Costs rose by 10%, due mainly to the ongoing change of bank systems, but also to higher staff costs.

Demand for credit by households remained strong in 2006, particularly for mortgage loans. The average volume of lending to households climbed by 19%. In corporate lending, Handelsbanken reinforced its position as one of the largest corporate fi nanciers in Finland. One example of this is fi nancing the local trains in the Helsinki region. A fi nancing agreement for 32 trains worth some EUR 300m was Handelsbanken’s largest ever leasing transaction in Finland.

Operating profit

Branch operations in Finland SEK m 2006 2005 Change %

Income 1 173 1 011 16

Expenses -668 -608 10

Loan losses/recoveries -58 -22 164


Business volumes, Finland

Average volumes EUR m 2006 2005 Change %

Deposits from the public 1 967 1 778 11


companies 1 025 884 16


Of which households 2 323 1 955 19

companies 4 963 4 681 6

Business development in Finland

EPSI’s survey of satisfaction among Finnish bank customers showed that Handelsbanken had Finland’s most satisfi ed customers among the large banks. The Bank had the best ratings from both private and corporate customers.

For some time Handelsbanken in Finland has been developing its product range in the area of savings and investments. The Bank started to see the result of these investments during the year. Along-side its traditional savings and investment accounts, the Bank offers several different mutual funds and structured products as investment options. A commodity index bond issued in April was subscribed for some EUR 40m. This bond issue was the largest so far issued in Finland by Handelsbanken. New sales in the Bank’s mutual funds were EUR 66m (47) and the total volume in mutual funds was



EUR 367m (269) at the end of the year. A Private Banking opera-tion was started in 2006. In addition to structured products, two new retail bond loans were issued during the year.

On 1 June, the branch in Tallinn, Estonia was opened. In or-ganisational terms, this branch is part of Regional Bank Finland, bringing the number of branches to 37. Handelsbanken in Finland decided to expand its operations with a major drive on opening new branches in 2007. It is planned to open around 10 branches in 2007.

Defi nite decisions were taken to open a branch in Mikkeli and a third branch in Espoo.

Handelsbanken in Finland ordered a local banking system from Samlink. Since its collaboration with Samlink is long-term and strategic, Handelsbanken acquired an 8% stake in Samlink. Handelsbanken Finans boosted sales in Retail Finance Consumer by 28%. An important reason for the successes was the transfer to MasterCard, which led to more active and loyal customers and thus increased turnover and higher profi ts.

NORWAY

Operating profi t for 2006 was up by 13% to SEK 965m (855), the highest ever fi gure. Income increased by 16% to SEK 1,809m. High-er business volumes for both deposits and lending created higher net interest income, despite increasing pressure on the margin for loans. Interest margins were adversely affected by Norges Bank raising key rates on fi ve occasions during the year. These rate increases did not have a direct impact on lending rates, due to the long periods of notice that banks are obliged to give private customers under Nor-wegian law. The full-year effect is estimated at SEK 35m. Fee and commission income also increased signifi cantly, as Handelsbanken Norway is doing more and more business with households.

The increase in costs was 13%, due mainly to the establish-ment of new branches, but also to the rapid rate of expansion. Handelsbanken Norway invested in a corporate profi le marketing campaign, including TV advertising, which was one factor in the increase in costs. The underlying cost trend was moderate, and the C/I ratio improved to 44.9% (45.9).

Operating profit

Branch operations in Norway SEK m 2006 2005 Change %

Income 1 809 1 563 16

Expenses -812 -718 13

Loan losses/recoveries -32 10


Business volumes, Norway

Average volumes NOK bn 2006 2005 Change %

Deposits from the public 34.7 26.5 31



Loans to the public 90.0 67.7 33



Business development in Norway

The Norwegian economy maintained its positive trend during 2006. Almost all sectors showed high activity and good profi tability, which helped to boost consumer purchasing power. This provided good conditions for the Norwegian banking sector.

The average lending volume increased by 33% to NOK 90.0bn (67.7), as compared to the overall increase among Norwegian banks which was 15%. The Bank’s lending to households rose by 22%. One contributory factor to this was the increasing proportion of “bolig-krediter” (housing credits), a product well received by the market. Lending to corporate clients rose by 41%. Average deposits were up 31%, of which household deposits grew by 21% to NOK 7.4bn (6.1). Handelsbanken Finans also showed strong growth in Norway.

The most important factor for sustainable profi table growth is satisfi ed customers. It is therefore pleasing that EPSI, in its yearly survey of customer satisfaction among Norwegian banking custom-ers, in 2006 acclaimed Handelsbanken as the “outstanding winner in the corporate market”.

In the private market too, Handelsbanken’s customer satisfaction ratings were considerably higher than for the other universal banks on the Norwegian market.

Branches were opened in Kolbotn, Asker, Moss, on Sotra, and in Molde, bringing the total number of branches in Norway to 42.

Key figures

Branch offi ce operations outside Sweden 2006 2005

Number of branches 142 128

Number of employees 1 568 1 423

Number of active customers, private, 1000s 255 244

Number of active customers, corporate, 1000s 44 42

Total assets, SEK bn 299 251

Loans to households, SEK bn 87 77

Loans to corporates, SEK bn 154 124

Deposits from the public, SEK bn 94 83



ADMINISTRATION REPORT ■ HANDELSBANKEN MARKETS

Handelsbanken Markets

Handelsbanken Markets is organised into four business areas: Capital Markets, Markets International, Financial Institutions and Cash Management and Payments. Capital Markets is the Bank’s investment bank comprising corporate finance, including debt capital markets, equities, fixed income, commodities and foreign exchange trading, structured products and research. It also includes support to the branch office operations for products in these ar-eas. Markets International comprises banking operations outside the Nordic countries and Great Britain, trade finance, export and project finance. Financial Institutions is responsible for monitoring countries, banks and other financial institutions. Cash Management and Payments is the Bank’s central function for development and sales support for payment products. There are just over 1,300 employees in 16 countries.


Profi ts increased by 34% to SEK 1,298m (969). Handelsbanken Capital Markets reported signifi cantly higher earnings, while Handelsbanken Markets International reported slightly lower earn-ings, mainly due to the fact that the new units opened in 2005 and 2006 have not yet reached break-even. Total income rose by 29% to SEK 4,561m (3,536), while expenses were up by 27%.

Changes in organisational structure at year-end 2006

As part of the Bank’s increased focus on both its investment banking operations and its international expansion, Handelsbanken Markets was split into two on 1 January 2007. Handelsbanken Capital Mar-kets continues to run the Bank’s investment banking operations, but as a separate business area. Handelsbanken International consists of three units: International, Financial Institutions and Cash Manage-ment and Payments.


Handelsbanken Markets


Net interest income 150 145 145 132 572 482 19

Net fee and commission income 515 353 440 420 1 728 1 523 13

Net gains/losses on financial items at fair value 328 235 427 432 1 422 1 010 41

Other income 231 182 281 145 839 521 61

Total income 1 224 915 1 293 1 129 4 561 3 536 29

Of which internal 2 580 2 653 2 460 1 941 9 634 6 344 52

Administrative expenses -891 -679 -938 -736 -3 244 -2 550 27

Depreciation, amortisation and impairments of property, equipment and intangible assets -6 -5 -5 -5 -21 -20 5

Total expenses -897 -684 -943 -741 -3 265 -2 570 27

Profit before loan losses 327 231 350 388 1 296 966 34

Loan losses/recoveries 0 0 1 1 2 3 -33

Gains/losses on disposal of property, equipment and intangible assets 0 0 0 0 0 0 0

Operating profit 327 231 351 389 1 298 969 34

Return on equity, % 13.9 10.0 14.8 17.6 14.0 13.8

Average number of employees 1 321 1 332 1 213 1 111 1 244 1 102 13

Balance sheetHandelsbanken Markets 31 December

SEK m 2006 2005 Change %

Loans to credit institutions 395 713 424 604 -7


Interest-bearing securities 151 993 158 839 -4

Other assets 102 811 93 386 10

Total assets 702 974 705 518 0



Issued securities 166 070 175 869 -6

Other liabilities 140 353 144 490 -3

Shareholders’ equity 6 797 5 266 29

Total liabilities and equity 702 974 705 518 0


HANDELSBANKEN CAPITAL MARKETSEarnings performance

Earnings increased by 41% to SEK 965m (686), the highest fi gure since Capital Markets was formed in 2003. Virtually all business units improved their earnings. Income rose by 24%, while expenses went up by 18%. The increase in costs was mainly a result of higher staff costs, partly due to higher performance-related remuneration and partly to the average number of staff rising from 518 to 540.

Operating profitHandelsbanken Capital Markets


Income 3 198 2 572 24

Expenses -2 233 -1 886 18

Loan losses/recoveries 0 0 0


Business development

Capital Markets’ objective is to be the leading Nordic investment bank. During the year, it advanced its positions and is one of the top three investment banks in virtually every area of operations, and market leader in several areas.

This was particularly evident in brokerage income, which in-creased by 28%. Brokerage operations in the Nordic countries and in London showed especially strong progress. Handelsbanken is one of the leading players in Nordic equities, and customers outside the Nordic region accounted for over 38% of Capital Markets’ brokerage income.

Business fl ows at corporate fi nance and debt capital markets re-mained strong. Handelsbanken was the largest player for IPOs in Sweden, and also one of the two largest bookrunners for syndicated loans.

For several years, Handelsbanken Capital Markets has been the Nordic market leader in structured products. In 2006, Handelsbanken Capital Markets arranged SEK 18.6bn worth of capitalprotected products. For equity-linked bonds, the largest prod-uct in terms of volume, the Bank’s market share in Sweden was 24%. On the warrants and certifi cates market, Handelsbanken Capital Markets’ sales rose by 209% to SEK 20bn. The Bank’s Nordic mar-ket share grew by 10 percentage points to 53%. 2006 saw the launch of the Maxcertifi kat (discount certifi cate), an alternative to outright equity investments.

Earnings from trading in fi xed income and foreign exchange in-struments climbed by 26%. Research products were improved: rapid, close-to-the-market analysis was combined with more long-term re-search. The Bank’s market position improved, and the international fi nancial magazine Global Finance acclaimed Handelsbanken as Scandinavia’s best foreign exchange bank.

Following the takeover of commodity broker, Svenska Metall-börsen’s operations in September, the Bank can now also offer fi nancial solutions in this product range. The acquisition made Handelsbanken the leading commodity broker in the Nordic region.

During the fourth quarter, the Bank began working with a lead-ing provider of direct equity trading services, which means that the Bank’s institutional clients will have access to direct trading in equi-ties on all the leading European stock exchanges. The solution is ex-pected to be ready for launch in Q1 2007. In the second stage of the launch, North American stock exchanges will also be included.

Organisation

Handelsbanken Capital Markets is Handelsbanken’s investment bank. Capital Markets was formed on 1 January 2003 and was the fi rst Nordic investment bank to integrate its operations in the fi elds of equities, foreign exchange, fi xed income instruments, corporate

fi nance, debt capital markets and structured products in the same organisation.

Corporate fi nance and debt capital markets comprise stock mar-ket introductions (IPOs), the raising of equity and loan capital on public markets, corporate mergers and acquisitions, and structured fi nancing. Operations are primarily oriented towards companies and their main owners.

Stockbroking operations comprise equities trading and research on behalf of customers with a focus on the Nordic markets, as well as the production of independent research reports. Quantitative and macroeconomic research are also produced. Operations mainly focus on major Nordic and international investors. Foreign exchange and fi xed income trading comprise all trading in fi xed income, com-modities and foreign exchange products, for both Nordic and inter-national investors.

The structured products unit provides customised fi nancial solu-tions suited to different customers’ needs and risk level, for example, equity-linked bonds, multi-asset bonds, credit-linked notes, war-rants, equity certifi cates, baskets of equities or other types of assets and share redemption programmes. These products demand broad fi nancial knowledge and a strong capital base.

The fact that Capital Markets is an integral part of Handelsbanken offers proximity to Nordic customers via the Bank’s branch offi ce network. Marketing to international customers is done through Handelsbanken Capital Markets’ units in London, New York and Singapore. Handelsbanken’s strong balance sheet offers the op-portunity to handle both complex transactions and high risk which is a necessity for its ability to compete effectively with international investment banks. HANDELSBANKEN MARKETS INTERNATIONAL AND FINANCIAL INSTITUTIONS Earnings performance

Earnings for the Handelsbanken Markets International and Financial Institutions business areas, which make up the business core of the operation which, on 1 January 2007 became Handelsbanken Interna-tional, totalled SEK 107m (116), a decrease of 8%. Income increased by 6% while expenses rose by 9%. The fall in profi ts was due to in-creased investments in newly opened units such as in Poland, Russia, China and India. Income increased in all international units. Corpo-rate business in Germany, the US and Hong Kong and clearing serv-ices for foreign banks were particularly successful. The number of employees was 369 (326), some 70% of these being outside Sweden.

Operating profitHandelsbanken Markets International and Financial Institutions


Income 631 594 6

Expenses -526 -481 9

Loan losses/recoveries 2 3 -33

Operating profit 107 116 -8

Business development

One long-term goal of the international expansion is to increase the number of markets where the Bank can conduct profi table universal banking operations via its own branch network.

Handelsbanken was the fi rst Nordic bank to open a representative offi ce in Mumbai, India. The representative offi ce in St. Petersburg, Russia is expected to be converted to a branch during the fi rst quarter of 2007.

Operations in Poland were expanded with two new branches, in Gdansk and Poznan. Since 2005, the Bank has been able to offer mortgage loans to local customers in Poland. In summer 2006, the



Bank also started to offer leasing services to corporate customers. The plan is to continue expanding in Poland in the years ahead.

Through the export and project fi nance unit, the Bank arranged the fi nancing of a road project in Finland. Handelsbanken’s position as a leading bank for trade fi nance was confi rmed when the Bank for the second year running was acclaimed “Best Trade Finance Bank and Provider in Sweden” by the international specialist periodical Global Finance.

Organisation

Handelsbanken Markets International is responsible for the branch offi ces and representative offi ces outside the Nordic region and Great Britain, clearing services for foreign banks, trade fi nance, ex-port and project fi nance. Outside Sweden, its purpose is twofold: to support the Bank’s Nordic and British corporate customers by acting as a business partner in the international markets where the Bank’s customer base is strongly established, and to develop and enhance relationships with international corporate groups. Outside the Nor-dic region and Great Britain, Markets International has banking op-erations in New York, Luxembourg, Amsterdam, Paris, St Raphaël, Vienna, Frankfurt, Hamburg, Warsaw, Poznan, Gdansk, Moscow, Singapore, Hong Kong and Shanghai and representative offi ces in Beijing, Mumbai, Taipei and St. Petersburg.




Asset Management


Net interest income 41 51 43 33 168 113 49

Net fee and commission income 296 282 320 295 1 193 985 21

Net gains/losses on financial items at fair value 7 4 15 7 33 42 -21

Other income 29 23 17 21 90 69 30

Total income 373 360 395 356 1 484 1 209 23

Of which internal -48 -25 -74 -93 -240 -408 -41

Administrative expenses -183 -155 -178 -161 -677 -608 11

Depreciation, amortisation and impairments of property, equipment and intangible assets 0 -1 0 -1 -2 -3 -33

Total expenses -183 -156 -178 -162 -679 -611 11

Profit before loan losses 190 204 217 194 805 598 35

Loan losses/recoveries - - - - - -

Gains/losses on disposal of property, equipment and intangible assets - - - - - 0

Operating profit 190 204 217 194 805 598 35

Return on equity, % 28.8 30.8 32.6 29.3 30.4 23.2

Average number of employees 357 344 328 325 339 320 6

Handelsbanken Asset Management

Handelsbanken Asset Management comprises fund management, discretionary management and Nordic custody services. Apart from services aimed at companies, institutions and pri-vate individuals, Asset Management provides support to the branch offices regarding invest-ments, portfolio systems and accounting for foundations. Operations are conducted in the four Nordic countries, and in Luxembourg, Switzerland, France, Spain and Singapore.


Operating profi t increased by 35% to SEK 805m (598). Income, which was mainly based on the volume of assets managed, increased by 23% due to higher share prices and new sales. Expenses increased by 11%. Since autumn 2004, the Bank has invested in an enhanced management organisation and an expanded range of products, which have had an impact on both expenses and income.

The volume of assets managed by Handelsbanken Asset Manage-ment grew to SEK 371bn (332). The total volume of assets under management by the Group was SEK 435bn (388).

HANDELSBANKEN MUTUAL FUNDS

2006 was another good year for savers in mutual funds, with a good performance on most of the world’s stock markets. Several equity funds increased by 25-30%. The Nordic small cap funds reported the best performance among the Bank’s mutual funds with an in-crease of 36-38%.

At the end of 2006, the Bank’s mutual fund management company managed 106 (106) mutual funds with a total value of

SEK 220bn (184). Some 49% (49) of the assets under management were invested in equity funds, 25% (24) in fi xed income funds, 24% (25) in mixed funds, and just over 2% (2) in hedge funds. The aver-age volume of assets under management in Handelsbanken’s mutual funds increased by 27% from the previous year and amounted to SEK 199bn (156). The gross margin, that is the management com-mission in relation to the assets under management, fell during the summer months with the decline in stock markets. However, it improved towards the end of the year due to rising share prices and the Bank’s launch of new mutual funds with higher management commissions.

Net new savings in the Group’s funds on the Swedish mutual fund market were SEK 15.4bn (14.9), equivalent to a market share of 22% (18). This was the eighth year running in which the Bank’s market share of new sales was higher than its share of total mutual funds savings, which at year-end amounted to 14.0% (13.7). Han-delsbanken was thus the third largest player on the market.In 2004, a major restructuring programme was launched to improve fund management performance. The programme has achieved the desired

ADMINISTRATION REPORT ■ HANDELSBANKEN ASSET MANAGEMENT


effect, not the least of which was an improved rating. Every month, the independent ratings institute Morningstar rates selected mutual funds from the fund management companies. In the December ratings from Morningstar (three-year ratings), Handelsbanken’s mu-tual funds received an average rating of 3.31, which was the highest among the major Swedish banks. In addition, Handelsbanken was best among the major Swedish banks in the equity and fi xed income funds categories for the same period.

Balance sheetAsset Management 31 DecemberSEK m 2006 2005 Change %



Interest-bearing securities - -

Other assets 6 944 5 292 31

Total assets 24 133 18 608 30



Issued securities - -

Other liabilities 1 508 2 359 -36



Sweden

Customer interest in regular savings in mutual funds increased sharply during the year, both in terms of number of customers and volume. The monthly amount saved in mutual funds during the year increased by approximately 16%. An independent customer survey reported that Handelsbanken’s mutual fund customers were again the most satisfi ed. Handelsbanken received the highest rating of the major banks for all 12 rating criteria and the highest rating of all fund management companies on 9 of the 12 criteria.

Two new mutual funds were launched on the Swedish market – the India Fund and Garantifond Plus (Guarantee Fund Plus). Garantifond Plus was launched in June as the fi rst mutual fund of its kind in Sweden. The fund guarantees 80% of the highest price ever achieved for a fund unit.

Finland and Norway

There was a continued focus on increased sales via the Norwegian and Finnish regional banks during the year. Two new mutual funds were launched, the India Fund and Klick Norge 90. Good perform-ance, especially by the equity funds and mixed funds, contributed to the sales increase.

New sales in the Bank’s mutual funds in Finland were EUR 66m (47), and at year-end, volumes of Finnish customers’ mutual funds totalled EUR 367m (269).

Net savings in the Bank’s mutual funds by customers in the Nor-wegian branch operations increased by NOK 0.8bn (0.2) and the volume of funds managed rose by 12% to NOK 2.7bn (2.4).

Exchange-traded funds

The assets managed in the XACT funds increased by 16% to SEK 17bn (14). The average volume increased by 105% to SEK 16.8bn. Three new mutual funds were launched, giving XACT a total of eight listed mutual funds. Six of these are traded on the Stockholm stock exchange, with the other two being traded on the Oslo and Helsinki stock exchanges respectively. XACT Bull increased by 33%, making it the best performance in the Swedish funds category for 2006, according to Morningstar. XACT Bull is a special fund with the objective of giving a daily return equivalent to approx. 150% of the daily change in the OMXS30TM Index.

DISCRETIONARY MANAGEMENT

The Bank managed discretionary assets totalling SEK 177bn (169), of which 34% were exposed to equity markets and the rest to fi xed income markets. SEK 40bn (34) of the managed assets were invested in the group’s mutual funds.

In 2006, portfolios under discretionary management generally achieved good returns, mainly due to strong equity markets, coupled with structured and customised management solutions. Discretion-ary management acquired several new institutional customers during the year, Q4 being the strongest quarter with net sales of approxi-mately SEK 6.6bn.

NORDIC CUSTODY SERVICES

Custody holdings in the Bank’s Nordic custody services amounted to SEK 790bn, an increase of 4%. The number of securities transac-tions rose by 68%. This refl ects increased activity among customers, as well as the strong performance of the Nordic stock exchanges.

During the year, Handelsbanken’s institutional custody services entered into a collaboration agreement with one of the largest global custodian banks in the USA. The aim of the agreement is to offer a sophisticated range of products in institutional custody services to Nordic fi nancial institutions.

Global Investor Magazine, which annually ranks institutional custody services, awarded Handelsbanken’s Nordic custody services a high rating in all the Nordic countries. Handelsbanken was ac-claimed the best custodian bank in Denmark and Norway.

PRIVATE BANKING OUTSIDE THE NORDIC COUNTRIES AND GREAT BRITAIN

Private Banking outside the Nordic countries and Great Britain is conducted through Svenska Handelsbanken S.A. in Luxembourg, with a branch in Zurich, a representative in Singapore, and repre-sentative offi ces in Marbella (Costa del Sol), Nice (Côte d’Azur), and La Nucia (Costa Blanca), which was opened this year. The representative offi ces market private banking services to Nordic expatriates.

The volume outside the Nordic countries and Great Britain was SEK 14bn (12), which represents an increase of 17% for the year and 12% in the fourth quarter.

ADMINISTRATION REPORT ■ HANDELSBANKEN ASSET MANAGEMENT


Handelsbanken Pensions & Insurance

Handelsbanken Pensions & Insurance comprises Handelsbanken Liv and SPP. On 1 January 2006, SPP became a profit-distributing company, as did Handelsbanken Liv in 2002. Together, these companies are among the market leaders, with a complete range of life insurance products for occupational and private pensions, as well as asset protection schemes for companies, organisations and private individuals. The compa-nies sell their services via Handelsbanken’s branch offices, their own sales organisa-tions, independent brokers, workplaces at corporate customers, and direct marketing.


Pensions & Insurance


Net interest income 68 25 23 23 139 -2

Net fee and commission income 832 518 340 614 2 304 857 169

Net gains/losses on financial items at fair value 160 -355 -123 1 225 907 65

Risk result - insurance 187 38 297 49 571 194 194

Other income 42 44 37 30 153 109 40

Total income 1 289 270 574 1 941 4 074 1 223 233

Of which internal -91 -61 -69 -41 -262 -68 285

Administrative expenses -303 -276 -335 -383 -1 297 -631 106

Depreciation, amortisation and impairments of property, equipment and intangible assets -48 -48 -49 -54 -199 -27

Total expenses -351 -324 -384 -437 -1 496 -658 127

Profit before loan losses 938 -54 190 1 504 2 578 565 356

Loan losses/recoveries

Gains/losses on disposal of property, equipment and intangible assets - - - - - -

Operating profit 938 -54 190 1 504 2 578 565 356

Return on equity, % 54.8 -8.0 6.2 86.0 34.7 35.9

Average number of employees 680 681 674 687 681 185 268

Breakdown of results

Handelsbanken Liv SPP Pensions & Insurance

SEK m 2006 2005 2006 2005 2006 2005

Administration result 102 101 44 146 101

Risk result 218 194 353 571 194

Financial result 213 258 1 578 1 791 258

Other 100 12 130 230 12

SPP brand name -160

Operating profit 633 565 2 105 2 578 565

ADMINISTRATION REPORT ■ HANDELSBANKEN PENSIONS & INSURANCE


Consolidation of insurance operations

Income/expense Income statementReported in the insurance

companies’ sub-results

Fees Net fee and commission income

Administration result

Yield split Net fee and commission income

Financial result

Yield on equity Net gains/losses on financial items at fair value

Other

Yield – risk insurance Net gains/losses on financial items at fair value

Financial result

Capital contribution to meet guaranteed interest

Net gains/losses on financial items at fair value

Financial result

Risk result Risk result – insurance Risk result

Other income Other income Administration result

Staff costs Staff costs Administration result

Other expenses Other expenses Administration result

Amortisation of intangible assets

Depreciation, amortisa-tion and impairments of property, equipment and intangible assets

Other

PERFORMANCE FOR PENSIONS & INSURANCE

Operating profi ts were SEK 2,578m (565). Since 1 January 2006, SPP has been included in Handelsbanken’s consolidated accounts.

2006 was another good year for the policyholders at Handelsbanken. For Handelsbanken Liv, this was the fourth year running that policyholders’ insurance assets showed higher growth than the average for life insurance companies offering traditional savings. In its fi rst year as a demutualised company, SPP also offered higher return on customer’s assets than the sector average.

These high returns meant that the full yield split was received for all insurance contracts within Handelsbanken Liv and SPP. Hence the companies received 10% of the total return in the yield split and the net income was SEK 745m.

Handelsbanken Liv and SPP had a strong, positive net infl ow. For the year, premium income less insurance claims were SEK 7bn. Together with a good total return, this means that assets under management increased by 10% to SEK 171bn, including SEK 59bn in unit-linked insurance. Defi nitions of the result components

The administration result is the difference between the company’s actual costs and the fees charged on the insurance contracts to cover administration. The fees are either based on assets managed, the premiums, the number of contracts or the disbursement.

The risk result is the difference between the fees the company charges to cover the insurance risks (mortality, longevity, disability and accident) and the actual cost of these.

The financial result consists of the difference between the return on assets managed on behalf of the policyholders and that which has been allocated to the policyholders. When the total return exceeds the guaranteed rate, the com-pany receives 10% of the total return as its share. If the value of a customer’s insurance contract is less than the guaranteed value, the company provides capital. A capital contribution of this kind affects the financial result.

Other includes amortisation of intangible assets, interest expense on deben-tures loans and the change in value of assets not managed on behalf of the policyholders.

Balance sheetPensions and Insurance 31 December



Interest-bearing securities 75 317 15 420 388

Assets where the customer bears the value change risk 58 468 134 432 -57

Other assets 60 608 18 241 232

Total assets 216 669 176 484 23

Due to credit institutions 24 223 90


Liabilities where the customer bears the value change risk 58 473 135 926 -57

Insurance obligations 2 871 862 233




HANDELSBANKEN LIV

Profi ts for Handelsbanken Liv improved sharply for the fourth year running. Operating profi t increased by 12% to SEK 633m (565). SPP Liv Fondförsäkring AB was part of Handelsbanken Liv in 2005, but was sold to SPP on 1 January 2006. If the comparative period is adjusted for this, the profi t fi gure improves by 20%.

The administration result increased to SEK 102m (101). Exclud-ing SPP Liv Fondförsäkring, the administration result rose by 50%, which was mainly due to rising income as a result of higher business volumes.

Since demutualisation on 1 January 2002, the risk result has gradually improved, and totalled SEK 218m (194).

Total return on policyholders’ funds was 8.24% (11.65). Since the total return was greater than the guaranteed rate, which is between 3% and 5% depending on when the contract was entered into, the company receives 10% of the total return for all insurance contracts. Policyholders saw their capital adjusted upward by 7.42% (10.49). Handelsbanken Liv’s share of the return was thus SEK 196m (237). The fi nancial result was SEK 213m (258).

The Other component was SEK 100m (12), of which the return on assets corresponding to shareholders’ equity was SEK 146m (94). Interest expenses and depreciation of intangible assets reduced the result by SEK 46m (82).

Assets managed rose by 16% to SEK 59bn (51), of which SEK 32bn (26) was invested in unit-linked insurance. The increase was due mainly to a continued positive net infl ow, but also to a positive change in the value of the assets. At the end of the year, 34% of the assets were placed in equities, of which 12 percentage points in Swedish equities and 22 percentage points in international equities.

In connection with demutualisation in 2002, Handelsbanken Liv became one of the fi rst life insurance companies to introduce the right for customers to transfer their insurance funds. In 2006, SEK 519m was transferred to Handelsbanken Liv, while 126m was trans-ferred from the company. On 1 February 2007, the Swedish govern-ment proposed a temporary stop in transfers for pension insurance contracts entered into on or before 1 February 2007. The total net infl ow was SEK 3.7bn. Premium income, reported in accordance with IFRS 4, was SEK 774m (680). Insurance claims reported in accordance with IFRS 4 were SEK 422m (368).

The available solvency margin was SEK 3,239m. This should be related to the required solvency margin which was SEK 1,674m, implying a solvency ratio of 1.94 (2.41).



Investment assets, average exposure %

Handelsbanken Liv Full year 2006

Jan–Jun 2006

Full year 2005

Shares 37 38 34

Fixed income 55 54 58

Property 6 6 6

Other 2 2 2

Total 100 100 100

Key figures

Handelsbanken Liv Full year 2006

Jan–Jun 2006

Full year 2005

Total return, % 8.24 0.52 11.65

Assets managed, SEK bn, end of period 59 53 51

of which unit-linked 32 27 26

Solvency ratio, end of period 1.94 2.39 1.43

SPP

SPP’s profi ts were SEK 2,105m. The administration result was SEK 44m. This was a substantial improvement compared to the pre-vious year, primarily due to a 39% reduction in operating expenses to SEK 636m. Increased business volumes also contributed to an improvement in this part of the result.

The risk result was SEK 353m. The fi nancial result was SEK 1,578m. Total return was 6.76%

(6.60). Since the return was higher than the guaranteed rate on all contracts, SPP received SEK 549m as its share of the return on these contracts. The guaranteed rate is between 2.50% and 5.20%, depending on when the contract was entered into. Some 75% of the assets under management have a guaranteed rate of 3.50% or less. Policyholders saw their capital adjusted upward by 6.08%.

Prior to the demutualisation, some of SPP’s insurance portfolios were underfunded. At year-end 2005, the shortfall was estimated at SEK 3.6bn on the basis of prevailing interest rates. When calculat-ing the insurance liability, a long-term market yield is used as the discount rate. At year-end 2006, the discount rate was 54bp higher than at the start of the year. This meant that the value of the insur-ance liability for previously underfunded contracts was lower than at year-end 2005, which had a positive impact on the fi nancial result. Since Q3, the company has hedged a large part of the sensitivity in the valuation of the underfunded contracts caused by market interest rates and share price movements. The positive impact on the fi nan-cial result was SEK 1,045m.

Among other things, the Other component reports the yield on assets corresponding to the company’s equity. This fi gure was SEK 353m. In Q4, the portion of the company’s own funds previ-ously invested in equities was reinvested in fi xed-income securities. Amortisation of intangible assets and interest expenses had a nega-tive impact of SEK 224m on the Other component.

SPP had a positive net infl ow of SEK 3.3bn. Together with a good total return, this means that assets under management increased by 7% to SEK 112bn (105), of which 27bn (23) were invested in unit-linked insurance. At the end of the year, 32% of the managed assets were placed in equities, of which 11 percentage points in Swedish equities and 21 percentage points in international equities. Premium income, reported in accordance with IFRS 4, was SEK 612m. Insur-ance claims, reported in accordance with IFRS 4, were SEK 197m.

The available solvency margin was SEK 10.9bn. This should be related to the required solvency margin, which was SEK 3.5bn, implying a solvency ratio of 3.10.

Investment assets, average exposure %

SPP Full year 2006

Jan–Jun 2006

Full year 2005

Shares 36 36 18

Fixed income 60 60 79

Property 0 0 0

Other 4 4 3

Total 100 100 100

Key figures

SPP Full year 2006

Jan–Jun 2006

Full year 2005

Total return, % 6.76 -0.17 6.60

Assets managed, SEK bn, end of period 112 104 105

of which unit-linked 27 23 23

Solvency ratio, end of period 3.10 3.24 1.44

* Administration result for SPP 2005 is calculated proforma.

Demutualisation of SPP

In connection with the demutualisation of SPP, the surplus was distributed to the policyholders. Savers who held policies with gua-ranteed return shared over SEK 2.5bn. SPP introduced the right for customers to transfer their insurance in connection with the demu-tualisation. Activity in the fi rst year was extremely low: SEK 3m was transferred to SPP and SEK 40m was transferred out.

CERTIFICATION ENHANCED SALES CAPACITY AT BANK BRANCHES

Insurance plays a very important role in the Bank’s investment con-cept. As a further step in the integration of insurance in the banking business, the insurance advisers were transferred in organisational terms to the respective regional banks. During the year, some 3,000 Handelsbanken employees were trained and certifi ed in compliance with the legal requirements for insurance advisers.

CONTINUED FOCUS ON NORDIC BUSINESS

A large number of companies in the Nordic countries became new customers, following a successful collaboration with the insurance company If. Thus, Handelsbanken Liv has become one of the major insurers of mandatory occupational pensions in Norway. In Den-mark, preparations began to be able to offer occupational pension plans to existing customers of the regional bank during 2007.



Accounting policies

CHANGED ACCOUNTING POLICIES ETC.

As from 2006, SPP is a profi t-distributing company. Previously it was run on mutual principles. When SPP was demutualised, the insurance contracts were amended, and all the surplus funds in SPP as at 31 De-cember 2005 were allocated to the policyholders. The insurance capi-tal is then individual for each policyholder. This results in a change in accounting policy with the purpose of refl ecting SPP’s commitment. The change implies that the reported obligation per customer will be at least the amount of the guaranteed assets. The EU occupational pensions directive is now applied in Swedish legislation. One impli-cation of this is that a market rate of interest must be used to cal-culate the insurance obligations. For the insurance obligations that were previously measured using a maximum interest rate established by the Financial Supervisory Authority, the valuation now applies a risk-free market interest rate. Through this change of accounting policy the group’s opening shareholders’ equity has decreased by SEK 3,265m.

The defi ned-benefi t policies for the employees in the insurance business were previously treated as defi ned-contribution in the con-solidated accounts. It has now been possible to change the account-ing policy so that the pension obligations can now be reported as defi ned-benefi t. The opening shareholders’ equity has been adjusted by SEK 280m.

New policies are applied concerning consolidation of mutual funds managed by the Group where it has signifi cant holdings. Mutual funds managed by the Handelsbanken Group are consoli-dated if:• A company in the Group owns more than 50% of the total units

in an individual fund.• The Group’s return from a fund exceeds 5% of the fund’s total

return, regardless of the size of the Group’s fund unit holding. In the case of consolidation, the part of the fund’s assets cor-

responding to the ownership share is reported in the balance sheet as shares and participating interests. The part of the fund’s assets belonging to other unit holders is reported in the balance sheet as assets or liabilities where the customer bears the value change risk. Comparative fi gures for 2005 have been adjusted but this has not led to any change in shareholders’ equity.

Due to a reclassifi cation, all interest income and interest expense relating to fi nancial assets in the trading book are now reported un-der Net gains/losses on fi nancial items at fair value. This is in order to arrive at a fi gure for net interest income which is clear of fi nancial assets and liabilities in the trading book and to gain an overall view of activity in the trading book. The adjustment of the comparative fi gures has an impact only on the distribution within net interest income.

The accounts have been prepared in accordance with international financial reporting standards, IFRSs, as adopted by the EU. The accounting also follows the additions and restrictions of the regulations in the Annual Accounts Act for Credit Institutions and Securities Companies (ÅRKL), and the directives issued by the Swed-ish Financial Supervisory Authority, (FFFS 2005:33) and where applicable, the Swedish Financial Accounting Standards Council’s recommendations. Classification and valuation of items in the income statement and bal-ance sheet for the parent company follows ÅRKL, FFFS 2005:33 and where applicable, the Swedish Financial Accounting Standards Council’s recommendations if complete adjustment to IFRS is not allowed. Differences in the accounting policies between the Group and the parent company are presented under the appropriate heading below. The currency used for reporting is Swedish kronor.

ASSESSMENTS AND ESTIMATES

When preparing the annual report and consolidated accounts, the accounting regulations require that the company makes assessments and estimates. These are based on experience, assumptions and assess-ments which the management considers to be reasonable. The critical assessments made by the company management when applying the accounting policies are stated under the respective section and in the descriptions pertaining to each note. The fi nal accounting of indi-vidual transactions may deviate from the estimated values.

Areas which are particularly complex where assessments and esti-mates are of crucial importance are:• Valuation of fi nancial instruments. Holdings of instruments

where prices are lacking from well-functioning liquid markets means that standard valuation models must be used where assess-ments and assumptions are applied apart from the market param-eters that can be used in the valuation models.

• Insurance obligations. In order to calculate the technical insur-ance obligations which consist of insurance provisions and provi-sions for unsettled claims, advanced assessments of a technical nature are carried out with assumptions regarding for example mortality, future interest rates, expenses and taxes.

• Pension provisions. A number of actuarial, demographic and fi nancial assumptions are used to calculate the Group’s various pension liabilities. The various parameters used for calculation are stated in the information given in the note on staff costs.

• Loan losses/bad debts. The value of the loan receivables is tested at regular intervals. Such tests contain a great many various as-sumption and assessments that are objective in various degrees. This impairment testing includes, for example, testing the value of collateral and estimating the cash fl ows that can be expected to be received from the customer as well as the estimated times of receipt of these cash fl ows.

• Intangible assets. Impairment testing is carried out annually re-garding intangible assets with an undefi ned utilisation period by comparing the calculated recovery value with the value reported. The recovery value is calculated by estimating future cash fl ows and relevant discount interest rates.

CONSOLIDATED ACCOUNTS

The consolidated accounts comprise all companies in which Handelsbanken directly or indirectly has a controlling infl uence. Nor-mally Handelsbanken has a controlling infl uence when its holding is more than 50% of the voting rights. In exceptional cases, legal obsta-cles may prevent a controlling infl uence. In such cases, consolidation does not take place, even though the participating interest exceeds 50% of the number of votes.

Subsidiaries are consolidated in accordance with the acquisition accounting method.

FINANCIAL REPORTS ■ ACCOUNTING POLICIES


Companies in which Handelsbanken directly or indirectly has a signifi cant infl uence are reported as associated companies. A signifi -cant infl uence normally exists when the participating interest is at least 20% and at most 50% of the voting rights. Associated compa-nies are reported in the consolidated accounts in accordance with the equity method.

Since 2001, SPP Livförsäkrings AB has been 100-percent owned by Handelsbanken. The balance sheet has been consolidated since 31 December 2005. As of 1 January 2006, the company distributes prof-its, which means that the earnings risk in SPP’s operations is borne by Handelsbanken and the income statement is also consolidated.

There may be signifi cant holdings of units in mutual funds man-aged by the Handelsbanken Group. These mutual funds are consoli-dated if:• A company in the Group owns more than 50% of the total units

in an individual fund.• The Group’s return from a fund exceeds 5% of the fund’s total

return, regardless of the size of the Group’s fund unit holding. In the case of consolidation, the part of the fund’s assets correspond-ing to the ownership share is reported in the balance sheet as shares and participating interests. The part of the fund’s assets belonging to other unit holders is reported in the balance sheet as assets or liabili-ties where the customer bears the value change risk.

All foreign operations have activities that could cause their func-tional currency to deviate from the currency that the Group uses for reporting. In line with the Group’s decentralised organisation, each operation is run independently, and transactions between the parent company and the respective unit represent only part of their opera-tions. The foreign units also conduct their own funding and the parent company is only affected indirectly by each operation’s cash fl ows. Salary payments and purchases are normally made in local currency. When translating the foreign subsidiaries’ balance sheets and income statements, the current method has been used. Assets, liabilities and minority interests in equity have been converted at the closing day rate. Shareholders’ equity is translated at the rate applica-ble at the time of investment or earning. The income statement has been translated at the average annual rate. Liabilities in foreign cur-rencies raised for the purpose of hedging exchange rate differences in the net investment in independent foreign units are recorded at the closing day rate. The resulting translation differences have been classed as shareholders’ equity.

VALUATION OF RECEIVABLES AND LIABILITIES IN FOREIGN CURRENCIES

Receivables and liabilities in foreign currencies have been recorded at the end-of-day exchange rate. In the parent company, liabilities raised for the purpose of hedging exchange rate differences in subsidiaries’ shares are recorded at the rate applicable on acquisition.

CLASSIFICATION AND MEASUREMENT RULES FOR FINANCIAL ASSETS

Financial assets are classifi ed for measurement into the following categories:1. Loans and other receivables.2. Assets held to maturity.3. Assets measured at fair value.4. Assets available for sale.

Categories 1 and 2 are measured at amortised cost. In simplifi ed terms, this means that the individual instrument’s effective interest rate is used as a basis for calculating the carrying amount. Measure-ment is supplemented by impairment testing when indications of an impairment loss are present. The impairment loss is recorded in the income statement. Assets measured at fair value mainly comprise as-sets held for trading purposes. In addition, individual lending port-folios may be classifi ed as measured at fair value in cases where such

measurement is considered to provide a fairer picture of the earnings trend than measurement at amortised cost.

Assets available for sale comprise all instruments which do not come under any of the other three categories. These assets are meas-ured at fair value in the balance sheet. Unrealised changes in value are classed as shareholders’ equity. However, changes in value attrib-utable to interest as well as exchange rate fl uctuations are recognised directly in the income statement. Impairment testing is performed in those cases where indications of an impairment loss are present. The impairment loss is recorded in the income statement.

Loans to the public and credit institutions

In the balance sheet, depending on the counterparty, receivables are reported either as Loans to the public or as Loans to credit institu-tions. This classifi cation is independent of the measurement category. The items are reported in the balance sheet on the settlement date. Leasing agreements where the lessee bears the economic risks and acquires the rewards associated with ownership of the asset are also reported as receivables.

Loan receivables which represent bad debts are reported on the balance sheet at their net amount, i.e. after deduction for probable and actual loan losses.

Undrawn loans (including the risk related to fi xed advance inter-est rates) are regarded as an off-balance-sheet commitment until the settlement date. The accounting standards allow measurement at fair value or at the highest of fair value and carrying amount.

If a loan receivable is redeemed ahead of time, any early redemp-tion charge received is reported immediately under Net gains/losses on fi nancial items at fair value.

Repo transactions

Repurchase transactions, also called repo transactions, refer to agree-ments where the parties simultaneously agree on the sale of specifi c securities and the repurchase of these securities at a pre-determined price. The securities provided remain in the balance sheet while those received are not carried in the balance sheet. The securities provided are carried as Collateral pledged. Payment received is recognised un-der Due to credit institutions or as Deposits and borrowing from the public, depending on the counterparty. Payment made is recognised under Loans to credit institutions or as Loans to the public, depend-ing on the counterparty.

Securities loans

Securities lent out are recognised in the balance sheet as securities and as collateral pledged. Borrowed securities are not recognised as assets. Securities which have been lent out are measured in the same way as other securities of the same type. In cases where borrowed securities are sold, an amount corresponding to the fair value of the sold securi-ties is recognised as a liability.

Interest-bearing securities

On the balance sheet, interest-bearing securities are carried either as Instruments eligible as collateral with central banks or as Bonds and other interest-bearing securities. This classifi cation is independent of the measurement category. Interest-bearing securities acquired with the intention of being held until maturity are classifi ed as Assets held to maturity.

The acquisition value of discount and coupon instruments (held and issued) refers to the accrued acquisition value. This value is the discounted present value of future payments where the discount in-terest rate is the effective interest rate at the time of acquisition. This implies that acquired premiums and discounts on coupon instru-ments are allocated over the bond’s remaining period to maturity or, for loans with interest rate adjustments, until the next time the interest rate is adjusted.



Shares and participating interests

Shareholdings are reported in the balance sheet as Shares and partici-pating interests. This classifi cation is independent of the measurement category. In the Group, measurement is always done at fair value in the balance sheet in those cases that can be reliably measured. Impair-ment testing is also carried out for shares classifi ed as Available for sale if there are indications that an impairment loss may need to be rec-ognised. Impairment losses, if any, are recognised immediately in the income statement. In the parent company, shareholdings in associated companies and subsidiaries are measured at their acquisition value.

Assets where the customer bears the value change risk

In the balance sheet, assets where the change in value is completely linked to a liability are reported as Assets where the customer bears the value change risk.

Measurement at fair value of loan receivables and other unlisted

fi nancial items classifi ed for measurement at fair value

Assets are classifi ed for measurement at fair value if such measure-ment is judged to provide a fairer picture of the earnings trend than measurement at amortised cost.When disclosing the change in fair value of the credit risk compo-nent in a fi nancial instrument, calculations are made by separating fair value attributable to changes in interbank interest rates. This method is applied since this component can be read directly in a liquid market and therefore gives a reliable objective measurement of the change in fair value. The method avoids the subjectivity attribu-table to measuring fair value of the credit risk component separately. The fair values of the credit risk component cannot be set at a single value. Measurement of the credit risk component offers a wide va-riety of possible outcomes. This is because several different models can be used and because usually there is no liquid market for the credit risk in these assets.

REINSURANCE ASSETS

Receivables related to reinsurance agreements classifi ed as insurance contracts are reported in the balance sheet as Reinsurance assets.

INTANGIBLE ASSETS

An intangible asset is an identifi able non-monetary asset without physical form. An asset is a resource that is expected to provide future economic benefi t over which there is control as a result of past events.

When acquiring companies, an acquisition balance sheet is pre-pared in which identifi able assets and liabilities are measured at fair value at the time of acquisition. This measurement is also performed when acquiring intangible assets that do not yet fulfi l the require-ment for classifi cation as an asset. The reason for this is that this intangible right may nevertheless have a separable fair value. The part of the acquisition price that cannot be attributed to identifi -able assets and liabilities is recognised as goodwill. Acquired brands are recognised in the balance sheet at cost, after deduction for any amortisation and impairment losses. Internally accrued values in the form of goodwill, trademarks, publishing rights, customer databases and similar are not reported as assets in the balance sheet.

Investments in software developed by the Bank are carried as an expense on a current basis where the expenditure refers to mainte-nance of existing business operations or an existing intangible asset. For development of new intangible assets, or new business opera-tions for existing intangible assets, the costs accrued are capitalised from the time when it is probable that economic benefi t that can be reliably measured will arise.

An impairment test is performed when there is any indication that the asset may have decreased in value. In addition, in cases where the intangible asset has an indefi nite useful life, an annual impair-ment test is performed at the same point in time each year.

PROPERTY AND EQUIPMENT

Buildings in the banking business are carried at historical cost after deductions for depreciation and impairment losses, if any. Deprecia-tion according to plan is based on an estimated useful period for each sub-component of the buildings. The remaining useful period for each sub-component is tested annually. In addition, impairment test-ing is performed if indications of the need for impairment are present. Any impairment losses are recognised immediately in the income statement. Buildings owned as investment assets in the insurance busi-ness are reported at fair value in the balance sheet, since changes in the value of the latter are related to the size of the fi nancial undertak-ings in the insurance contracts.

CLASSIFICATION AND MEASUREMENT RULES FOR FINANCIAL LIABILITIES

Financial liabilities are normally measured at amortised cost. How-ever, fi nancial liabilities are carried at fair value in cases where they have a trading book purpose.

Due to credit institutions and deposits and

borrowing from the public

In the balance sheet, liabilities to credit institutions, as well as de-posits and borrowing from the public are reported under Due to credit institutions and Deposits and borrowing from the public, respectively. This classifi cation is independent of the measurement category.

The fi nancial component separated from insurance contracts in traditional legal life insurance agreements is also carried here. In these contracts, the fi nancial portion of the insurance contracts has an annual yield split. The yield split means that the policyholders every year receive an amount which is the highest of the adjusted li-ability based on the original guaranteed yield and the yield arising as a result of the yield split model. The calculation is accumulated for each individual insurance contract. This means that the conditional bonus is reduced in those cases where the yield in an individual year is less than the guaranteed interest rate. The portion of the yield which according to the yield split model belongs to the Bank is reported as fee and commission income. If the yield is less than the guaranteed yield per contract, it is reported under Net gains/losses on fi nancial items at fair value.

The fi nancial component in the liabilities relating to occupational pension contracts is measured at a market rate of interest.

Issued securities

Various types of securities issued by a stock exchange or other market-place are reported in the balance sheet under Issued securities. This classifi cation is independent of the measurement category.

Other trading liabilities

Trading liabilities are measured at fair value. These consist of short positions in various types of spot instruments. Other types of trad-ing book liabilities are reported divided into categories of fi nancial liability.

Subordinated liabilities

Subordinated liabilities contain various types of fi nancial liabilities for which fi nanciers are entitled to payment only after other lenders have been paid. The item may consist of securities issued on a stock exchange or of loans raised from individual counterparties. Subordi-nated liabilities are classed in this category regardless of the measure-ment category.

INSURANCE OBLIGATIONS

Insurance obligations comprise insurance contracts that have been classifi ed in their entirety as insurance, as well as the insurance com-



ponent in those insurance contracts that have been divided into a fi -nancial and an insurance component. Insurance obligations for which the insured party bears the entire value change risk are reported in the balance sheet item Liabilities where the customer bears the value change risk.

Valuation of technical provisions

Technical provisions consist of life insurance provisions and provisions for claims outstanding.

The various components in the insurance obligations are meas-ured using market-adapted valuation parameters.

Mortality assumptions

Mortality assumptions vary depending on when various insurance policies were taken out. The assumptions applied are based on joint industry statistics. For the main part of the portfolio, the mortality as-sumptions used were compiled in 1990. These assumptions take into account the expected future increase in life expectancy.

Fee assumptions

The fee assumptions vary depending on when various insurance poli-cies were taken out and are based on the fees applying at the time the contract was signed. Principally, this means one fee that is pro-portional to the premium and one fee that is proportional to the life insurance provisions.

Provision for claims outstanding

Provision for claims outstanding consists of insurance indemnity due but not paid at the close of the fi nancial year, together with the esti-mated future operating costs for settling these claims. The provision also consists of a reserve for claims incurred but not yet reported to the company at the close of the fi nancial year.

LIABILITIES WHERE THE CUSTOMER BEARS THE VALUE CHANGE RISK

The item Liabilities where the customer bears the value change risk comprise various fi nancial liabilities where the liability has a direct link to the value of a fi nancial asset reported in the balance sheet but for which the Group bears no risk whatsoever for changes in the fair value of the asset.

PROVISIONS

Provisions consist of expected negative outfl ows of resources from the Group charged against earnings. Whether or not the outfl ow occurs, however, is dependent on some type of future event that is fully or partially beyond the control of the Group. Provisions are reported, when the Group has a legal or informal obligation, as a consequence of past events when it is probable that an outfl ow of resources will be required to settle the obligation. The provision is recorded in the amount estimated to be most probable taking into account the time of settlement.

DERIVATIVE INSTRUMENTS

Derivative instruments consist of fi nancial derivative contracts. All de-rivative contracts are carried in the balance sheet at fair value. Where the fair value is positive, it is reported as an asset. When fair value is negative, it is reported as a liability.

NET ACCOUNTING

Receivables and payables with the same counterparty which can be set off, i.e. where a contractual relationship exists implying that there are legal grounds for applying set off, are reported net in the balance sheet in cases where there is an intention to settle the obligations by netting or at the same time.

EMBEDDED DERIVATIVES

If there are liabilities or assets containing fi nancial components that can clearly be separated, these are separated and then reported sepa-rately. Exceptions include items in the trading book of embedded derivatives carried at fair value, as well as instruments with similar changes in value in the different components. For example, the com-ponents may be separated in issued structured bonds – known as equity linked bonds and credit-linked notes.

TRADE DATE OR SETTLEMENT DATE ACCOUNTING

Purchases and sales of money market and capital market instruments on the spot market are subject to trade date accounting. The same ap-plies to derivative instruments. Other fi nancial assets and liabilities are normally reported on the settlement date. All instruments measured at fair value, however, are measured starting on the trade date. This also applies to the currency risk component in the fi nancial assets and liabilities that are carried at cost or amortised cost.

HEDGE ACCOUNTING

Hedge accounting is divided into two hedge categories depending on the purpose of the hedge: fair value hedges or cash fl ow hedges. In the case of fair value hedges, the item being hedged and the hedg-ing instrument are both recognised at fair value. Changes in value are recorded directly in the income statement. This accounting policy is used in cases where the purpose of the hedge is to protect the com-pany against unfavourable changes in market prices.In the case of cash fl ow hedges, the derivatives are recognised at fair value while the hedged item is carried at amortised cost. For the effec-tive portion of hedges, the change in value of the derivative is recog-nised in equity. An effective hedge means that the cash fl ows on the hedged item correspond to the cash fl ows in the hedging instrument. The ineffective portion of the derivative’s change in fair value is recog-nised directly in the income statement. The change in fair value of the derivative is then transferred from equity at the same rate as the cash fl ows of the hedged item are recognised in the income statement.

INCOME

Income is reported in the income statement when it is probable that future economic benefi ts will be gained and these benefi ts can be reli-ably measured.

INTEREST INCOME AND EXPENSE

Interest income and interest expense on fi nancial assets and liabilities, excluding interest for trading purpose are recognised in the income statement using the effective interest method.Also reported under net interest income is interest attributable to derivative instruments used as formal or economic hedges of hedged items that have interest fl ows reported in net interest income.

To arrive at a fi gure for net interest income which is clear of fi nan-cial assets and liabilities that are in the trading book and to gain an overall view of activity in the trading book, all interest income and interest expense relating to fi nancial assets in the trading book is now reported under Net gains/losses on fi nancial items at fair value.

FEE AND COMMISSION INCOME AND EXPENSE

Income and expense for various types of services are reported un-der fee and commission income and fee and commission expense, respectively. This means that brokerage income and various types of management fees are reported as commissions. Other types of income reported as commissions are payment commissions and card fees, as well as commissions from insurance operations. Positive results from the yield split in the profi t-distributing part of the insurance business are also reported as commissions.



NET GAINS/LOSSES ON FINANCIAL ITEMS AT FAIR VALUE

Net gains/losses on fi nancial items at fair value includes all items with an impact on income which arose when measured at fair value and when realising fi nancial assets and liabilities. Specifi cally, the following items are reported here:• Unrealised changes in fair value of those assets and liabilities clas-

sifi ed as Assets at fair value, excluding the component of change in value reported as interest.

• Unrealised changes in fair value of those assets and liabilities that are subject to fair value hedges, excluding the component of change in value reported as interest.

• Capital loss or gain from the sale of fi nancial assets and liabilities.• Realised and unrealised changes in value as well as interest on as-

sets and liabilities classifi ed as held for trading. • Unrealised and realised changes in fair value on derivative con-

tracts used as formal or economic hedges of other fi nancial assets and liabilities in addition to the component of changes in value reported as interest.

• Dividend income on those fi nancial assets classifi ed as the trading book.

• Negative yield split. This item contains the effects on operating profi ts of the yield on fi nancial assets in the insurance business being less than the change in guaranteed liability during the year.

• Ineffective component of derivatives used as hedging instruments in cash fl ow hedges.

RISK RESULT – INSURANCE

Risk result – insurance comprises the changes that affect the operating profi t in those liabilities classifi ed as insurance obligations.

OTHER DIVIDEND INCOME

Other dividend income consists of dividends on shares other than those classifi ed as holdings in the trading book. In the parent com-pany’s income statement this item is called Dividends received. In the parent company, dividends from subsidiaries and associated compa-nies, as well as dividend income from shares in the trading book are also reported here.

SHARE OF PROFITS OF ASSOCIATED COMPANIES

In the Group, the Bank’s share of the associated companies’ profi t before tax is reported as Share of profi ts of associated companies. The share of the associated companies’ taxes is reported with other taxes.

OTHER INCOME

Income from sold services as well as external rental income relating to leases pertaining to the Bank’s own properties are reported under Other income.

STAFF COSTS

Staff costs consist of all direct staff costs, including various forms of social security costs and other payroll overheads.

PENSION COSTS

A pension cost computed on an actuarial basis, relating to pension ob-ligations backed by the Bank’s own pension foundations, is reported as an operating expense in the parent company. The calculations comply with the Swedish Act on Safeguarding Pension Obligations. Premiums paid for pension insurance are also reported under Operat-ing expenses. The actuarial pension premium is reversed as an ap-propriation under Settlement of pensions, where settlement is made against disbursed pensions and any compensation from the pension foundations.The net amount of three different items related to defi ned-benefi t pension plans is reported as an operating expense in the Group:

+ Accrued pension rights during the year. This item refers to the year’s proportion of the calculated fi nal total pension payment. The calculation is based on an estimated fi nal salary and is subject to actuarial assumptions.

+ Interest expense. The present value of the pension liability in-creases during the year since the time to disbursement becomes shorter. This increase in liability is reported as an interest expense. The interest rate applied is the current government bond rate for maturities corresponding to the remaining period until the pen-sion liability is due to be disbursed.

- Expected rate of return. The expected rate of return is based on an assessment of the average return which will be earned on the assets which are kept separate for securing defi ned-benefi t pen-sion obligations. The time horizon for the assessment is related to the entire term of the commitment. The return is reduced by the taxes and administrative costs for managing the pension obliga-tions.

In addition, individual years may include parts of the actuarial profi ts and losses carried in the income statement.

For defi ned-benefi t pension plans, the pension payable is based on the salary and period of employment implying that the employer bears all the material risks for fulfi lling the pension obligation. For the majority of defi ned-benefi t plans, the assets are kept separate in pension foundations and a pension fund. The net amount of esti-mated pension obligations and fair value of the plan assets is report-ed in the balance sheet. The assumptions applied are shown in the note on staff costs. The difference between the actual and expected return on the assets which are kept separate for securing the pension obligations is called actuarial gains or losses. The part of the actual return on the assets which is kept separate for guaranteeing pension obligations and which is higher or lower than the expected rate of return is called actuarial profi t or loss. Actuarial profi ts and losses also exist in those cases where the actual pension liability at the end of the reporting period differs from the pension liability which has been estimated to exist at the end of the period based on actuarial assumptions. These profi ts and losses can occur when actuarial as-sumptions are changed and as an effect of the assumptions differing from the actual outcome. Only that part of fair value on the plan assets which can be expected to accrue to the Group is recognised as a net asset. The amount is tested annually.

The accounting standard allows that parts of actuarial profi ts and losses do not need to be carried in the income statement. Only that part of the actuarial profi ts and losses exceeding the higher of 10% of pension assets/liabilities at the opening of the reporting period is carried in the income statement. The amount outside this corridor is carried in the income statement on a straight-line basis during the average remaining period of employment. For Handelsbanken, this means capitalisation over a period of 20 years.

Premiums paid for defi ned-contribution pension plans are report-ed as an operating expense.

OTHER EXPENSES

Other expenses consists of administrative expenses other than staff costs and depreciation. Operating expenses pertaining to own proper-ties are also reported here.

DEPRECIATION, AMORTISATION AND IMPAIRMENT OF PROPERTY, EQUIPMENT AND INTANGIBLE ASSETSDepreciation and amortisation

All assets that have been classifi ed as Property and equipment are depreciated over an estimated useful life. A linear depreciation plan is usually applied. The property and equipment that consist of compo-nents with different set periods of useful life are divided into different categories with separate depreciation plans. Normally this only applies to properties.



Personal computers are usually written off over 3 years and invest-ments in bank vaults and similar investments in premises over 10 years. Other equipment is depreciated over fi ve years.

Intangible assets are divided into two categories. The fi rst catego-ry applies to assets for which it is possible to assess a useful period. These are amortised over this set period of useful life. The other category involves intangible assets for which it is not possible to establish a defi nite useful period. These are not amortised. Instead, they are the object of annual impairment testing. Goodwill is not subject to amortisation.

Intangible assets for which it is possible to establish an estimated useful period are amortised, usually for a maximum of fi ve years. Normally the useful period does not exceed fi ve years. Acquired brands are normally regarded as having a very long useful life, and thus the amortisation period may be much longer. The same applies to acquired customer contracts in the insurance business. The am-ortisation period is tested on an individual basis at the time of new acquisition and also on a continuous basis if there are indications that the useful life period may have changed.

Impairment losses

Impairment losses on property and equipment and intangible assets as well as shares in subsidiaries, associated companies and any participa-tion in joint ventures are reported when the recovery value is less than the carrying amount. The recovery value is calculated, at the cash-generating unit to which the asset refers, as the higher of an asset’s value in use or net realisable value. The recovery value is determined when there is an indication that the asset has fallen in value.

LOAN LOSSES

Actual loan losses for the year and impairments in respect of probable loan losses for loan receivables and other receivables are reported as Loan losses, after an individual assessment has been made. A loan loss is reported in cases where the estimated value that can be recovered is less than the book value. Any part of the receivable for which there is no realistic possibility of recovery is reported as an actual loss. This is the case, for example, when a trustee in bankruptcy has estimated bankruptcy dividends, a scheme of arrangement has been accepted or the receivable has been reduced in some other way. An amount forgiven in connection with a reorganisation is always reported as an actual loss.

For loans which have earlier been reported as actual loan losses in full, a reappraisal of the size of the loss is made in those cases where the customer is following a payment plan.

Impairment for probable loan losses is made for bad debts if the value of the collateral together with other payments from the coun-terparty do not cover the book value of the receivable. Impairment losses are recognised down to the amount which is expected to be realised, taking into account the value of the collateral and the present value of expected payments from the customer. If the col-lateral is a listed asset, the valuation of the collateral is based on the list price; otherwise the valuation is based on the yield value or the market value estimated in some other manner.

If the collateral consists of property mortgages, the underlying collateral valuation is made in the same way as for repossessed prop-erties.

In cases where the amount expected to be recovered has been cal-culated by discounting future cash fl ows, the method of calculation implies that the recovery value increases as the time for the payment from the customer approaches. The difference thus arising in the book value is recorded as interest income.

Apart from the risk assessment for individual loan receivables made quarterly by all units in the Group that are responsible for customers and loans, a central assessment of homogeneous groups of loan receivables is made at the central level. This assessment takes

into account whether there have been loan losses in these groups of loan receivables that cannot yet be allocated to an individual loan. If necessary, a group provision is made for these loan receivables. As soon as the receivable can be individually identifi ed, the provision is transferred to probable loan losses.

VALUATION OF REPOSSESSED PROPERTY

Property repossessed to protect claims is measured at the time of repossession at fair value. Repossessed property is reported and valued thereafter together with other similar properties. In the par-ent company repossessed property, other than repossessed fi nancial instruments, is valued according to rules for Valuation of inventory as stipulated in IAS 2, which means they are valued at the lower of cost and net realisable value. In the parent company, fi nancial assets repos-sessed for protection of receivables must always be valued and reported as if they had been classifi ed as available for sale.

GAINS/LOSSES ON DISPOSAL OF PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

The differences between the remaining carrying amount for property and equipment and intangible assets and the sale price is reported under Gains/losses on disposal of property, equipment and intangible assets.

TAXES

The tax expense for the period consists of Current tax and Deferred tax. Current tax refers to taxes relating to the period’s taxable result. The item also includes the Bank’s share of associated companies’ tax-es. Deferred tax is tax referring to temporary differences between the value of an asset or liability in the accounts and its taxable value.

LOAN COSTS

Loan costs are normally carried as expenses on a current basis. Where the expenditure refers to intangible assets developed by the Bank, the expenditure is capitalised from the date on which a decision is made to capitalise development costs.

LEASING

Leases are defi ned as fi nance or operating leases. A fi nance lease im-plies that the lessor transfers substantially all the risks and rewards associated with ownership to the lessee. Operating leases are all non-fi nancial leases. In accordance with the Annual Accounts Act for Credit Institutions and Securities Companies, all leases in the parent company have been classifi ed as operating leases. This means that leas-ing fees paid are reported as costs, regardless of whether the lease is of the fi nance or operating type. In the Group, the majority of leases for which the Group is lessor are fi nance leases. A fi nance lease implies that the leases are reported as loans.

SEGMENT REPORTING

Income and expenses are reported both by business area and by geo-graphical area. Classifi cation into segments is based on differences in risks and opportunities. The primary basis of classifi cation is business areas, regardless of geographical location. Income and expenses in each segment are reported gross before transactions between the vari-ous segments have been eliminated. Transactions within the segments have been eliminated.



FINANCIAL REPORTS ■ INCOME STATEMENT – GROUP

Income statement – Group

The accounting and valuation principles applied are shown in the section titled Accounting Policies.

GROUP

SEK m 2006 2005

Interest income Note 1 50 133 39 134

Interest expense Note 1 -35 161 -24 044

Net interest income 14 972 15 090

Fee and commission income Note 2 10 521 8 182

Fee and commission expense Note 2 -1 289 -1 127

Net fee and commission income 9 232 7 055

Net gains/losses on financial items at fair value Note 1 4 261 3 459

Risk result – insurance Note 3 571 194

Other dividend income 193 158

Share of profit of associated companies Note 14 105 59

Other income Note 4 225 308

Total income 29 559 26 323

Administrative expenses

Staff costs Note 5 -7 714 -6 678

Other expenses Note 6 -4 180 -3 747

Depreciation, amortisation and impairments of property, equipment and intangible assets Note 17, 18 -557 -513

Total expenses -12 451 -10 938

Profit before loan losses 17 108 15 385

Loan losses/recoveries Note 7 55 261

Gains/losses on disposal of property, equipment and intangible assets Note 8 1 4

Operating profit 17 164 15 650

Taxes Note 26 -4 036 -4 296

Profit for the year 13 128 11 354

Attributable to

Ordinary shareholders 13 128 11 354

Minority interest - -

Earnings per share * Note 9 20.41 16.98

* No dilution.


FINANCIAL REPORTS ■ BALANCE SHEET – GROUP

Balance sheet – Group


GROUP

SEK m 2006 2005

ASSETS

Cash and balances with central banks 4 800 7 014

Treasury bills and other eligible bills Note 13 86 565 44 490

Loans to credit institutions Note 11 177 175 136 546

Loans to the public Note 12 1 100 538 983 681

Bonds and other interest-bearing securities Note 13 180 178 140 220

Shares and participating interests Note 14 72 917 28 857

Assets where the customer bears the value change risk Note 15 62 827 134 432

Derivative instruments Note 16 53 703 68 169

Reinsurance assets 108 48

Intangible assets Note 17 12 524 12 789

Property and equipment Note 18 3 545 3 318

Current tax assets 747 67

Deferred tax assets Note 26 265 197

Net pension assets Note 5 3 914 3 698

Other assets Note 19 21 012 13 629

Prepayments and accrued income Note 20 9 190 5 752

Total assets Note 10 1 790 008 1 582 907

LIABILITIES AND EQUITY

Due to credit institutions Note 21 320 482 289 053

Deposits and borrowing from the public Note 12 533 885 407 617

Liabilities where the customer bears the value change risk Note 22 62 833 135 926

Issued securities Note 23 595 001 486 344

Derivative instruments Note 16 66 182 73 734

Other trading liabilities Note 24 51 829 48 137

Insurance liabilities Note 25 2 871 862

Current tax liabilities 488 767

Deferred tax liabilities Note 26 6 810 5 950

Provisions Note 27 127 36

Pension obligations Note 5 422 -

Other liabilities Note 28 15 537 10 180

Accruals and deferred income Note 29 15 643 11 748

Subordinated liabilities Note 30 51 672 46 795

Total liabilities Note 10 1 723 782 1 517 149

Minority interest 0 0

Share capital 2 888 2 879

Other reserves 3 972 3 583

Retained earnings 46 238 47 942


Total equity 66 226 65 758

Total liabilities and equity 1 790 008 1 582 907


Statement of changes in equity – Group

GROUP

SEK m Share

capitalStatutoryreserves

Hedgereserve

Fairvalue

reserveRetained earnings

Minority interest Total

Shareholders’ equity 31 December 2004 2 878 2 751 55 743 0 61 372

Impact of transition to IFRS 2005

Net effects of transition to measuring at fair value according to IAS 39 -149 680 -872 -341

Provision by group for individually assessed receivables -360 -360

Impact of changed accounting policies in the insurance operations 2006 118 118

Opening equity 2005 after adjustment 2 878 2 751 -149 680 54 629 0 60 789

Acquisition SPP -580 -580

Change in available-for-sale instruments,after tax Note 31 192 192

Change in cash flow hedges, after tax 109 109

Exchange difference Note 31 380 380

Total changes in equity not recognised in the income statement - - 109 192 -200 - 101

Profit for the year according to 2005 income statement 11 365 11 365

Impact of changed accounting policies in the insurance operations 2006 -11 -11

Profit for 2005 after adjustment 11 354 11 354

Total changes before transactions with the owners - - 109 192 11 154 - 11 455

Dividend -4 018 -4 018

Repurchase of own shares -2 468 -2 468

Reduction of share capital by means of cancellation -99 99 -

Bonus issue 100 -100 -

Shareholders’ equity 31 December 2005 2 879 2 751 -40 872 59 296 0 65 758

Impact of changed accounting policies in the insurance operations 2006 -3 652 -3 652

Opening equity 2006 after adjustment 2 879 2 751 -40 872 55 644 0 62 106

Change in available-for-sale instruments, after tax Note 31 251 251


Exchange difference Note 31 -492 -492

Total changes in equity not recognised in the income statement - - 138 251 -492 - -103


Total changes before transactions with the owners - - 138 251 12 636 - 13 025

Dividend -4 543 -4 543




Shareholders’ equity 31 December 2006 2 888 2 751 98 1 123 59 366 0 66 226

FINANCIAL REPORTS ■ STATEMENT OF CHANGES IN EQUITY – GROUP


FINANCIAL REPORTS ■ CASH FLOW STATEMENT – GROUP

Cash fl ow statement – Group

GROUP

SEK m 2006 2005

OPERATING ACTIVITIES


of which paid-in interest 47 690 46 823

of which paid-out interest -31 639 -30 137

of which paid-in dividends 2 223 252

Adjustment for non-cash items in the operating profit

Loan losses 233 238

Unrealised changes in value -2 088 1 364

Depreciation, amortisation and impairments 557 513

Paid income tax -4 248 -6 735

Changes in the assets and liabilities of operating activities

Loans to credit institutions -40 629 -27 470

Loans to the public -117 091 -121 494

Financial current assets -123 416 -21 463

Due to credit institutions 45 429 30 057

Deposits and borrowing from the public 122 648 65 374

Issued securities 108 657 43 708

Derivative instruments, net positions 6 879 -13 681

Short-term positions 3 691 21 940

Claims and liabilities on investment banking settlements -7 165 -150

Other -8 501 -2 675

Cash flow from operating activities 2 120 -14 824

INVESTING ACTIVITIES

Acquisition of subsidiaries - -

Change in shares 266 342

Change in interest-bearing securities 0 5

Change in property and equipment -323 -276

Change in intangible non-current assets -83 -23

Cash flow from investing activities -140 48

FINANCING ACTIVITIES

Repayment of subordinated loans - -

Issued subordinated loans 4 876 21 613

Dividend paid -4 543 -4 018


Cash flow from financing activities -4 029 15 127

Cash flow for the year -2 049 351

Liquid funds at beginning of year 7 014 6 396


Cash flow from investing activities -140 48


Exchange rate difference on liquid funds -165 267

Liquid funds at end of year 4 800 7 014


FINANCIAL REPORTS ■ NOTES – GROUP

Risks and risk control

HANDELSBANKEN’S UNIQUE WORK METHOD

At Handelsbanken, business transactions are always based on the customer’s requirements. The branch has responsibility for the cus-tomer and all decisions are made as close to the customer as possible. The branches aim to achieve sustainable and high profi tability by of-fering high-quality services to satisfi ed customers. Handelsbanken’s decentralised method of working is a cornerstone in how it achieves its corporate goal. At Handelsbanken, credit decisions are made at the branches, which are also responsible for following up credit risks and being proactive in its risk management. The fact that all branch-es are so active in managing credit risk means that Handelsbanken in historic terms has had low loan losses. New capital requirements affect how capital adequacy will be calculated and how risks will be managed. Handelsbanken is currently working on developing new methods and tools in the area of risk management.

HISTORICALLY LOW LOAN LOSSES

An excellent picture of Handelsbanken’s management of credit risks is obtained by looking at the actual outcome. For a long time – and particularly during the fi nancial crisis in the early 1990s – the Bank’s method of managing credit risk has led to signifi cantly lower loan losses than for its competitors in relation to outstanding loan vol-umes. In the past fi ve years, Handelsbanken’s average loan loss ratio has been 0.02%, compared to 0.08% for the other Swedish banks.

This picture is further enhanced when looking at bad debts as a proportion of lending at Handelsbanken. In the past fi ve years, Handelsbanken’s average bad debt reserve ratio has been 0.20%, compared to 0.47% for the other Swedish banks.

Loan losses as a percentage of lending

HANDELSBANKEN’S APPROACH TO CREDIT RISK

The Bank’s approach to credit risk can be summarised in the following points:• The Bank strives to maintain its historically low level of credit

losses in relation to other banks, thus contributing to the Bank’s profi tability target and retaining its sound fi nancial position.

• A new borrower should have a repayment ability which in the opinion of the Bank is normal or better than normal.

• The Bank’s overall profi tability target means that the credit risk must be in reasonable proportion to the profi tability of the expo-sure.

• The Bank aims for the individual employee’s responsibility for business transactions to be combined with the responsibility for risk. The person who best knows the customer and the market conditions is also in the best position to assess the risk.

RISK ORGANISATION

The board is responsible for assessing and monitoring the risks aris-ing in the Group’s operations. The board ratifi es policy documents and instructions describing how various risks should be managed and reported. For credit risks, the board draws up a decision struc-ture for limits but does not set any limit for the total exposure. The board decides on limits for other fi nancial risks in the banking operations and the CEO allocates these limits over various business areas. For the Group’s profi t-distributing insurance companies, there is a risk that the yield agreed with the customer will not be attained and that the companies must therefore contribute capital. The board does not set a limit for this risk. The CEO ensures that this risk is subject to regular follow-up and that any risk exposure exceeding a certain amount determined by the board is reported to the CEO and the board.

At the beginning of 2007, the credit risk control and fi nancial risk control units were merged into an independent risk control unit for the whole of the Handelsbanken Group, reporting to the head of Central Control and Accounting. At group level, risk exposure is checked by this unit which measures and follows up risks and re-ports to the Bank’s CEO and board. In each business area that has been allocated a limit, a local risk control unit reports the risk expo-sure to the central risk control units and to the business area.



DESCRIPTION OF RISK

MAIN RISKS

Credit risk WHERE THE RISK MAINLY ARISES

Depends whether an individual borrower can fulfil his commitments to the Bank. Branch office operations

Handelsbanken Capital Markets

Handelsbanken International

Handelsbanken Liv / SPP

FINANCIAL RISKS

Market risk

Impact on the Bank’s profits of changed market prices Handelsbanken Capital Markets

Handelsbanken Liv / SPP

Central Treasury

Liquidity risk

That the Bank cannot obtain funding at normal prices Whole Group

OTHER RISKS

Operational risk

Manual efforts, errors in procedures and systems leading to losses Whole Group

Insurance risk

A life insurance contains uncertainty depending on the insured party’s longevity or health Handelsbanken Liv / SPP

Business risk

The risk related to variations in income and expenses Whole Group

NEW CAPITAL ADEQUACY RULES

On 1 February 2007, new capital adequacy regulations were imple-mented – the Basel II rules. The new rules entail major changes in how the Bank’s capital requirement is to be calculated and how a satisfactory capital base is ensured. To avoid dramatic changes, there are transitional rules with gradual adaptation over a period of three years. The new regulations will be fully implemented from 1 January 2010. The changes apply in particular to banks which apply to use their own risk calculations – called the Internal Rating Based Ap-proach – when calculating the minimum capital cover requirement. The work on adapting the Bank to Basel II has been in progress for several years with the main focus on the regulations regarding minimum capital. During 2006, the work continued of adapting the Bank to the regulations. The branches verifi ed the credit informa-tion and new procedures. Development of system support for inter-nal risk classifi cation, risk calculation, internal and external reporting continued and is still in progress for use with capital assessment and risk management. The Bank’s work to fully implement the new regulations will continue until the end of 2009.

The regulations cover three main areas, known as pillars. Pillar 1 deals with how the requirements for minimum capital will be ful-fi lled and Pillar 2 with the supervision of the authorities and banks’ assessment and management of capital and risks. Finally, Pillar 3 deals with publication of information concerning risk management and capital adequacy.

Minimum capital requirements – Pillar 1

Credit risks – Handelsbanken applies an internal method for risk classifi cation and calculation of credit risk. The method is also called Internal Risk Classifi cation and is based on the internal rating meth-od which the Bank has successfully used for more than 25 years. The internal rating method is adjusted and developed, but the focal point of the credit process is the personal contact with the customer. An important starting point is to retain the strengths in the Bank’s credit process and credit culture.

Following a detailed review, the Swedish Financial Supervisory Authority has assessed that the Bank’s method for internal risk classifi cation is reliable. Their assessment included a condition con-cerning the organisational location of the independent risk control function. This condition has now been met by an organisational change. This means that the Bank meets the Supervisory Authority’s strict requirements for applying the internal rating method and that the method will be used to calculate the capital requirements.

Operational risks – Handelsbanken will use the standard model where the capital requirement is based on the Bank’s income in its various business areas.

Market risks – calculated in accordance with the Financial Super-visory Authority’s standardised directives and where there are rela-tively few changes.

Capital assessment and risk management – Pillar 2

Banks must have a process for assessing their total capital require-ment in relation to their risk profi le and a strategy for maintaining the capital level where the board is responsible for establishing the bank’s risk tolerance. The process is known as internal capital adequacy assessment (ICAAP). All signifi cant risks must be identi-fi ed, measured and reported in this process. The assessment must put special focus on the risks which are not managed under Pillar 1. Some risks are appropriate for capital cover while other risks such as liquidity risk, are better managed by other measures. All risks, in-cluding those which are not covered by capital, must be included in the internal capital adequacy assessment. The banks are expected to keep a larger capital base than the minimum level specifi ed in Pillar 1. In 2006, substantial resources have been devoted to developing processes and methods for ICAAP.

Handelsbanken has decided to base its ICAAP on an economic capital model (EC). The EC model provides a measure of the Group’s overall risks and corresponds to the capital which with very high probability will cover unexpected losses or decreases in value from the perspective of the shareholders. The calculation is made with a time horizon of one year and with a given confi dence level. The confi dence level is currently 99.97%. The rating agencies’ statis-tics show that for AA-banks, the probability is approximately 99.97% that they will meet their payments in time, with a time horizon of one year. The confi dence level to be applied is determined by the board which also establishes the Board’s capital policy where the Bank’s approach to risk is set out.

The capital available to meet risks is called Available Financial Resources, AFR. AFR consists of the Bank’s equity including other available fi nancial values.

The head of Central Control and Accounting has the main responsibility for Handelsbanken’s ICAAP. His task is to weigh together all the signifi cant risks and other factors for assessing and deciding the Bank’s and the Handelsbanken Group’s need of risk-bearing capital and other fi nancial resources.

Internally, the regional banks and business operations are steered towards the Bank’s overall profi tability goal. To measure and steer the business operating units towards the Bank’s overall goal, all the capital requiring return is allocated to these units.

Public disclosure – Pillar 3

Information which must be published mainly covers two areas: • Detailed mandatory information concerning models and data

according to the minimum requirements in Pillar 1. • Information about how the Bank works with Internal Capital

Adequacy Assessment and risk control according to Pillar 2.



CREDIT RISKSCredit organisation

The Bank’s focus on understanding and individually assessing each customer in depth requires a strongly decentralised organisation. The credit responsibility lies with the branch manager or the em-ployee delegated by the manager at the branch responsible for the customer.

The day-to-day business relationship with the customer gives the branch an up-to-date picture of how the customer’s operations are progressing. The branch can quickly identify potential problems which may affect the Bank’s credit risk. The fi nancial consequences of the lending affect the earnings of the branch both positively and negatively and it is the branch that handles the problems arising if a customer’s ability to pay is impaired. The Bank’s method of work-ing means that everyone who carries out transactions which entail risk, learns a well-established way of assessing what is an acceptable level of risk for the Group. This unambiguous responsibility and

Credit risk exposure

SEK m 2006 2005


Loans to credit institutions 177 175 136 546

Unutilised part of granted overdraft facilities 130 956 124 200

Credit commitments 166 576 149 664

Commercial paper programmes 22 392 9 387

Other commitments 61 70

Guarantees, credits 18 395 12 052

Guarantees, other 39 618 33 144

Documentary credits 49 150 50 542

Derivatives 42 132 42 934

Treasury bills and other eligible bills 86 565 44 490

Bonds and other interest-bearing securities 180 178 140 220

Shares and participating interests 72 372 28 461

Total 2 086 108 1 755 391

Geographical distribution

LendingOff-balance-sheet

commitments

SEK m PublicCredit

institutions Derivatives* Investments Guarantees Other Total

Sweden 834 978 86 133 32 244 246 797 30 320 219 096 1 449 568

Norway 104 494 117 174 1 505 4 386 22 727 133 403

Finland 63 549 368 23 9 045 10 745 12 564 96 294

Denmark 34 659 8 132 169 2 067 2 387 5 206 52 620

Great Britain 37 022 442 115 2 851 1 793 8 552 50 775

Other countries 25 836 81 983 9 407 76 850 8 382 100 990 303 448

Total 1 100 538 177 175 42 132 339 115 58 013 369 135 2 086 108

* Refers to positive market values after taking into account legally viable netting contracts.

Proportion of limit volumes per risk class

Decision levels for granting credits

The board

Credit committee of the board

Regional banks

Branches

Credit committee

Credit committeeforeign branches

Credit committee

7%

36%

57%

74%

21%

5%

Proportion of number of limits

Regional banks Handelsbanken MarketsHandelsbanken Asset Management

Handelsbanken Finans Handelsbanken Stadshypotek

Proportion of limit amounts

Central Credit Department

Credit committee



Loans to the public, by sector

2006 2005

SEK mLoans before

provisions

Provisionsfor probableloan losses

Loans afterprovisions

Loans afterprovisions

Private individuals 484 034 -341 483 693 432 118

Of which mortgage loans 338 087 -22 338 065 302 526

Property management 322 413 -481 321 932 298 870

Of which ownership housing co-operatives 79 179 -62 79 117 77 647

Corporate services 40 362 -71 40 291 37 160

Manufacturing 40 674 -239 40 435 38 513

Retail 37 368 -233 37 135 35 686

Transport and communication 17 333 -22 17 311 18 823

Construction 12 673 -51 12 622 11 888

Municipalities 7 880 0 7 880 8 542

Agriculture, hunting and forestry 6 371 -6 6 365 6 344

Hotel and restaurant 5 220 -21 5 199 5 173

Insurance operations 10 671 0 10 671 4 520

Other sectors 117 532 -189 117 343 86 460

Total loans to the public, before taking into consideration collective provisions 1 102 531 -1 654 1 100 877 984 097

Collective provisions -339 -416

Total 1 100 538 983 681

Loans to the public, collateral

SEK m 2006 2005

Residential property 1 607 966 547 384

Agricultural property 14 334 10 059

Other property 88 128 83 593

Governments, municipalities and county councils 95 221 106 207

Floating charges on assets 17 767 21 283

Guarantees 17 912 13 348

Unsecured 138 440 116 454

Other collateral 120 770 85 353

Total 1 100 538 983 6811 Including ownership housing co-operatives.

Bad debts and/or non-performing loans, by sector

SEK m

Bad debts Non-performingloans which

are not bad debtsGross Provisions Net2

Of whichnon-performing

Private individuals 750 -341 409 377 370

Property management/corporate services 952 -552 400 99 143

Manufacturing 451 -239 212 58 18

Retail 328 -233 95 79 17

Transport and communication 32 -22 10 9 4

Construction 59 -51 8 7 84

Hotel and restaurant 28 -21 7 5 0

Other 272 -198 74 63 34

Total 2 872 -1 657 1 215 697 6702 Book value after provisions.

Bad debts and/or non-performing loans, geographic distribution

SEK m

Bad debts Non-performingloans which

are not bad debtsGross Provisions Net3

Of whichnon-performing

Sweden 1 851 -1 071 780 483 453

Norway 136 -60 76 76 199

Finland 156 -31 125 106 0

Denmark 689 -462 227 25 18

Great Britain 33 -27 6 6 0

Rest of Europe 7 -6 1 1 0

North America 0 0 0 0 0

Asia 0 0 0 0 0

Total 2 872 -1 657 1 215 697 6703 Book value after provisions.



proximity to the customer means that problems can be identifi ed at an early stage and the Bank’s loan losses can thus be reduced. Most branch employees have a personal limit within which they have sole responsibility for their decisions. The limit determines the total amount of credit which the employee can grant to a customer. The size of the limit may vary depending on the customer category and collateral. If there is a need for larger credits, there are correspon-ding decision limits at the regional level. The largest credits are deci-ded by the board’s credit committee.

The credit process always starts at the branch, and any decision at a higher level of the Bank is based on the credit process planning pre-pared by the branch. No credit process may proceed at the Bank with-out the recommendation of the branch responsible for the customer, and thus the branch always has the credit responsibility. This does not mean, however, that the branches have no support from the regional and central functions. Regionally, there are credit departments that assist the branches with matters relating to business economics and risk assessment.

For commitments over SEK 1 million – for mortgages, over SEK 4 million – the branch draws up a credit limit. This specifi es a limit amount for the customer’s maximum credit commitment to Han-delsbanken. The credit limit also contains information concerning the collateral requirements that apply to the limit amount. A business evaluation with an analysis of the customer’s operations and an assess-ment of the customer’s repayment capacity is attached to the credit limit. The amount and arrangement of the credit limit are determined by the customer’s need of various types of credit and the Bank’s risk assessment.

Principles for managing credit risk

The Bank must have a high capacity to grant credit and must always be able to offer good customers credit on competitive terms. This implies a commitment in terms of both competence and processing times. A high level of skills and competence on the part of those working with credits contributes to retaining the Bank’s low credit risk level and thus increasing the Bank’s profi tability. This is based on business being done according to the Bank’s strict requirements. The Bank aims to be selective in choosing customers and the bor-rowers must be of high quality. The quality requirement must never be neglected in order to achieve a high loan volume.

Some 96% of the overall limit volume for credit risks was to cus-tomers with a repayment capacity assessed as normal (risk category 5 according to the Bank’s rating model) or better than normal. This approximately corresponds to an investment grade rating from exter-nal rating agencies such as Moody’s and Standard & Poor’s.

Skills and working methods are crucial in credit processing and are also important conditions for rapid organic growth. The Bank would not have been able to grow so quickly outside Sweden in the past ten years without such deeply rooted working methods and skills in the area of credits. An important stage in international expansion is to im-plement Handelsbanken’s credit culture on new markets.

The Bank regards the Nordic region and Great Britain as do-mestic markets where it can maintain close contact with customers through a local presence. In future domestic markets such as Poland and Germany, the credit risk mandate will gradually become more similar to that which applies in the Nordic countries and Great Brit-ain. Lending in other countries is mainly aimed at customers with a valuable relationship with the Bank in one of its domestic markets.

Internal rating and risk assessment

A risk assessment is made on which to base credit/limit decisions. This results in an assessment of the size of the credit risk in the Bank’s exposure to the customer. In particular, the customer’s repayment capacity is analysed. The Bank’s risk assessment for an

individual customer is a combination of the customer’s repayment capacity, the size of the credit/limit and the collateral provided by the customer. The assessment is performed at least once a year for all customers with a limit, for both corporate customers and private in-dividuals. The assessment of repayment capacity results in an internal rating of the customer. The Bank has applied the same rating system for 25 years.

Each branch makes a quarterly risk report, where it reviews its credit commitments to identify and report credits where the bor-rower’s repayment capacity is impaired and the Bank’s collateral is insuffi cient. For each such commitment, the probability of loss is specifi ed as well as the amount at risk. The risk is classifi ed as low potential, high potential or probable loss. If it is considered probable that a borrower will not meet his or her obligations to the Bank, the credit is classifi ed as a bad debt and will be written down to the value of the payments expected to be received. Low potential or high potential risk exists if the borrower’s repayment capacity is impaired, but it is still deemed probable that payments will be made. Normally, risks are identifi ed and reported and risk-limiting meas-ures are taken before a commitment becomes non-performing. The risk reports are presented each quarter to the boards of the regional banks and subsidiaries and to the board of the Bank.

Measurement of credit risks

To quantify its credit risks, the Bank calculates the probability of default (PD), the exposure at default (EAD), and the proportion of the loan that the Bank would lose in the case of default (loss given default – LGD). These factors are mainly calculated on the basis of previous losses incurred. This information is used for several impor-tant purposes, above all the pricing of risk and the calculation of capital requirements according to the Swedish Financial Supervisory Authority’s capital adequacy regulations.

Credit risk in the insurance operations

The investment policy for the insurance companies describes how the credit risk is to be managed. Investments in fi xed income secu-rities that are not issued by governments, municipalities or bank-owned mortgage institutions may comprise a maximum of 25% of the fi xed income investments. Investment in fi xed income securities with a credit rating from an external rating institution below “A” requires approval from the board of the insurance companies. The creditworthiness of issuers and counterparties is determined via both internal and external credit assessments.

OPERATIONAL RISKS

Operational risk is defi ned as the risk of loss due to defi cient or incorrect procedures and systems, human error on the part of the Bank’s employees or external events. The Bank’s defi nition of op-erational risk also includes legal risks. Identifi cation, management and control of operational risks is a clear and integrated part of managerial responsibility at all levels at Handelsbanken. The Bank’s decentralised method of work promotes cost-consciousness that re-sults in vigilance against potential loss risk in the daily procedures. Operational losses are the subject of careful examination. Major ef-forts are put into analysing how to avoid recurrences. In 2006, the Bank’s operational losses were SEK 68m. This refers to the total of individual losses in excess of SEK 25,000. SEK 31m of these losses was due to external crime.

Apart from the responsibility for operational risk borne by the managers responsible for various functions, there are managers with special responsibility for information security and physical security who report directly to the group chief executive. As an aid to identifi -cation, measurement and handling of operational risk, the Bank has a separate reporting system for operational incidents and losses. The risk



control function at Central Control and Accounting has the overall responsibility for the methods used for identifying and quantifying operational risk and for monitoring and reporting these risks to the management and the board.

To supplement the day-to-day control of operational risk, all main departments, regional banks and subsidiaries in the Group carry out annual self-evaluations of operational risk. This review is for the pur-poses of identifying operational risk and quantifying the losses that may arise. Following the review, measures are to be proposed and taken to reduce the risks. A general review of the Group’s operation-al risks is performed twice a year by the heads of the regional banks, main departments and subsidiaries. The outcome of these reviews is reported to the board.

FINANCIAL RISKSMarket risk

Market risk is the risk that price changes in the fi nancial markets – such as interest rates, currencies, equities, commodities or real estate – result in profi ts or losses for the Group. Market risks arise in Handelsbanken Capital Markets’ trading portfolios, insurance operations and the internal bank. Market risks also arise in the other banking operations. Handelsbanken Capital Markets is market maker for fi xed income products, currencies and equity instruments. Risks arise either through customer-related business or the Bank’s own positions. Central Treasury’s trading portfolio, with one or two exceptions, consists of securities that are eligible as collateral with the Riksbank and is used for securing payments in the daily clearing operations. In the insurance operations, management of the policyholders’ funds and the equity capital is exposed to market risk, mainly interest rate and equity price risks.

Risk management and analysis

The board establishes the Bank’s fi nancial risk policy, stating how the Group’s fi nancial risks should be measured and reported. Based on the fi nancial risk policy, the board determines the total market risk and liquidity risk limits for the entire Group within each type of risk. The limits are then allocated to the various business areas by the group chief executive.

The head of Central Control and Accounting has overall respon-sibility for the independent control of market risks in the Group. This responsibility entails ensuring that documentation for decisions is produced for risk measurements and limits. The head of Central Control and Accounting is also responsible for appropriate informa-tion and report systems being produced for risk measurements and limits.

The fi nancial risks and limit utilisation for the trading operation, the internal bank and the mortgage business are checked on a daily basis. Market risks are regularly assessed by the risk committee, led by the head of Central Control and Accounting. The risk commit-tee’s analyses and observations are regularly reported to the group chief executive and the board of the Bank.

Interest rate risk

The Group’s interest rate risks arise mainly at Handelsbanken Capi-tal Markets, Central Treasury, the insurance operation and in the regular lending operations at subsidaries and the regional banking operations. Interest rate risk arises in banking operations as a result of the lending partly having longer maturities than the refunding. The Bank eliminates most of this risk by entering into interest rate swap agreements. In the insurance operation, the opposite applies, i.e. the liabilities have longer maturities than the assets. Further-more, traditional life insurance products frequently offer a guaran-teed yield. As a result of this, rising interest rates have a positive effect on the insurance operation’s activities. This fundamental difference between banking operations and insurance means that combined op-erations reduce the Group’s vulnerability to changes in interest rates.

In general, interest rate risk is taken in markets which are character-ised by good liquidity. Interest rate risk is measured at the Group in several ways. Value at Risk, VaR, is used for Handelsbanken Capital Markets’ trading portfolios and for the insurance operation. For other units and for the aggregate interest rate risk in the Group, the interest rate risk is measured as the effect on fair value of a major instantane-ous parallel shift of all interest rates. As at 31 December 2006, the Bank’s interest rate risk in the case of a parallel shift in the yield curve of one percentage point was SEK –637m (–877).

Interest rate adjustment periods for the Group’s assets and liabilities

SEK m –3 mths 3–6 mths 6–12 mths 1–5 yrs 5 yrs– Total

Assets

Lending 783 063 52 601 46 787 208 929 32 943 1 124 323

Banks and other financial institutions 171 470 5 500 1 753 487 35 179 245

Bonds, etc. 105 858 23 673 28 610 61 641 51 020 270 802

Total assets 1 060 391 81 774 77 150 271 057 83 998 1 574 370

Liabilities

Deposits 442 443 5 605 4 104 15 951 92 877 560 980

Banks and other financial institutions 286 902 17 679 7 796 2 262 2 916 317 555

Issued securities 340 154 101 382 152 040 36 581 15 895 646 052

Other liabilities 824 1 183 3 029 39 587 9 576 54 199

Total liabilities 1 070 323 125 849 166 969 94 381 121 264 1 578 786

Off-balance sheet items 42 910 -110 941 8 750 28 399 33 997 3 115

Difference between assets and liabilities including off-balance-sheet items 32 978 -155 016 -81 069 205 075 -3 269 -1 301

The above table shows the interest rate adjustment periods for the Group’s interest-rate related assets and liabilities as at 31 December 2006, reported by the trade date. Non-interest bearing assets and liabilities have been excluded.



Measured as the impact on net interest income for the period January to December 2006 in the event of an immediate parallel increase/decrease in the yield curve of one percentage point, the net interest income risk in banking operations was SEK –153m (70). This risk measure is constructed so that it assumes that all interest-bearing assets and liabilities and off-balance-sheet items in the banking ope-ration as at 31 December 2006 are held to maturity and that no new positions are taken.

The non-linear interest rate risk is measured and a limit set in terms of the impact on fair value in the case of substantial changes in under-lying market interest rates and volatilities.

Equity price risk

The Group’s equity price risk mainly occurs in the Bank’s strategic share portfolio and also at Handelsbanken Capital Markets and the insurance operations. Handelsbanken is a leading market maker for structured products which give rise to equity price risks in the trad-ing operations. Apart from this, the Bank takes its own positions to a limited extent. In addition to positions in underlying shares, the equity price risk in the trading portfolio also contains positions in options which give rise to non-linear risk. The Bank has elected to set limits on and measure the risk in this portfolio using pre-defi ned stress scenarios. This means that the price risk is measured when there are signifi cant changes in underlying shares prices and volatitilies. This method captures the non-linear risk in an appropriate manner. Value at Risk is used as a complementary risk measure for equity price risk in trading operations.

The equity price risk is small in the Bank’s other operations. A limit is set for the risk and it is measured as the value change risk in the case of 10-percent fl uctuations in share prices. For the equity price risk in insurance operations, see a separate section.

The table below shows the risk in the Bank’s equity positions as at 31 December 2006 for hypothetical changes in underlying prices and volatilities. No correlation is taken into account between the equity markets in different countries.

Equity price risk31 December 2006SEK m Change in volatility

Change in equity price 25% 0% -25%

10% 590 596 605

-10% -590 -567 -550

Exchange rate risk

The Bank’s foreign exchange exposure mainly arises from Handels-banken Capital Markets’ trading in the international foreign exchange markets. Most of this trading is intra-day trading. The board has established limits for Value at Risk and stress risk relating to the ex-change rate risk arising in Handelsbanken Capital Markets’ trading operations.

Foreign exchange exposure also arises in the normal banking oper-ations as part of processing customers’ payment fl ows. The board has allocated small position limits for this part of the Bank’s exchange rate risk. The exchange rate risk was SEK 21m (5), measured as the impact on the Bank’s earnings if exchange rates change by 5%.

Market risk in the insurance operations

Asset management in the insurance operations manages traditional insurance portfolios, unit-linked insurance and the company’s own equity. Insurance obligations with guaranteed interest, known as tra-ditional insurance, are managed in a diversifi ed portfolio consisting of fi xed income securities, equities, real estate and alternative invest-ment assets. Unit-linked policies are mainly invested in mutual funds managed by Handelsbanken Asset Management. The insurance

operations’ own equity is chiefl y invested in fi xed income securities.In traditional insurance with guaranteed returns, the insurance

companies bear the risk of the policyholder not achieving a guaran-teed return on paid-in premiums. If the total yield exceeds the guar-anteed rate, the yield is split so that the policyholder receives 90% and the insurance company 10%. For savings in unit-linked insurance, the policyholder accepts the entire fi nancial risk. The insurance company bears no risk; nor does it receive any of the yield.

Asset management operations are exposed to market risks, liquidity risks, credit risks and operational risks. The insurance operations ap-ply integrated management and risk assessment of assets and liabilities called Asset and Liability Management (ALM).

In order to control exposure to different market risks, the insurance companies’ chief fi nancial offi cer establishes a benchmark portfolio. The resistance of the balance sheet is calculated continually by meas-uring the theoretical effect of dramatic fl uctuations in market prices on the company’s available solvency margin.

Changes in prices on the fi nancial markets may lead to the value of the insurance companies’ commitments to various customers exceed-ing the value of these customers’ total assets. Defi cits arise either from a decrease in the valuation rate for liabilities, which pushes up the value of the discounted commitment, or from the return on managed assets decreasing, which causes the customers’ total assets to shrink. To measure the effect of price variations on the fi nancial markets, the insurance companies follow up these risks on a regular basis.

Risk management at SPP

The defi cits at SPP – the deferred capital contribution (DCC) – are managed by the company carrying these as a liability. The main fac-tor affecting the size of the fi nancial risk, apart from allocation in the traditional insurance portfolio, is DCC’s sensitivity to changes in valuation rates for liabilities, and its sensitivity to changes in returns in the traditional insurance portfolio.

To reduce the sensitivity of the fi nancial result to these factors, fi nancial derivatives are traded on the company’s own behalf. The movements in the market that the company protects itself against are changes in interest rates and stock market performance. During the year, the company traded in interest rate swaps, interest rate swap-tions, equity futures and share options.

Risk control in insurance operations

The risk control group is responsible for producing methods and processes for risk measurement, ALM analyses, and reporting. In-surance risks and market risks are regularly reported to the chief ex-ecutive of the insurance companies and the Handelsbanken Group’s central risk control unit.

Value at Risk

Value at Risk (VaR )is used to measure the losses that may arise in risk positions due to movements in the underlying markets over a specifi ed holding period and for an assumed level of probability. The VaR method implies that the various risk categories, equity risk, interest rate risk, exchange rate risk and commodity risk, are handled in a uniform way and that the risks can be aggregated into a total market risk.

For Handelsbanken Capital Markets’ trading portfolios, VaR is calculated for the individual classes of risk and at the portfolio level with a 99% confi dence interval and a one-day holding period. The calculations are based on historical simulation and measure the im-pact on the portfolio in question, revalued using the past year’s daily changes in interest rates and prices. The model used implies that every hundredth trading day, a loss will occur which exceeds VaR.

Since VaR is based on model assumptions, it is important to con-tinually verify the effectiveness of the model. VaR is a good estimate



Value-at-Risk in relation to hypothetical outcome 2006 trading portfolio, Capital Markets

January June December-80

-60

-40

-20

0

20

40

Hypthetical outcomeVaR

SEK m

VaR for trading portfolio, Capital Markets Total Fixed income and currencies Equities

SEK m 2006 2005 2006 2005 2006 2005

Average 32 20 27 19 15 8

Maximum 61 42 46 41 49 26

Minimum 10 7 9 8 2 1

Year-end 44 22 24 23 29 7

of the risk under normal conditions, but it does not capture extreme, individual market movements. VaR is therefore regularly evaluated using back-testing. This verifi es the number of days when the actual loss exceeded VaR. Back-testing is performed both on the actual re-sult and the hypothetical result, which measures the result excluding the impact on commission income and intra-day trading.

The table entitled “VaR for trading port folio. Capital Markets” refers to the trend in 2006 and 2005. The minimum and maximum amounts show the intervals within which VaR fl uctuated during the specifi ed period.

The VaR trend relative to hypothetical results is presented in the below table. On two occasions, the hypothetical outcome was worse than the VaR. This is in line with the two to three occasions implied by a VaR model with a 99% confi dence level.

In the insurance operations, VaR is calculated using a 99% confi -dence interval and a one-month holding period. The calculations are based on historical simulation and measure the impact of the 250 most recent monthly changes in market prices.

Stress tests and scenario analyses

The VaR model does not identify risks associated with extreme market fl uctuations, and thus VaR calculations are regularly sup-plemented by stress tests. The Bank performs stress tests on the trading portfolios compared to historical scenarios and, when necessary, compared to extreme hypothetical events. The historical scenarios comprise events on the fi nancial markets during the period 1994–2006.

The most unfavourable result in these tests is always compared with the corresponding VaR estimate for that day. The relation be-tween the worst outcome and VaR can be expressed as a multiplier. This multiplier provides an indication of the possible risk of loss in the case of extreme market movements.

The table below shows the result of these stress tests during 2006.

Worst outcome relative VaR, trading portfolio, Capital Markets

SEK m

Worst outcome

scenario test VaR Multiplier

Average 104 33 3.5

Maximum 158 59 7.7

Minimum 54 16 1.9

Year-end 104 44 2.4

Value at Risk in the insurance operations 2006



Liquidity risk

Maturity analysis for contracted payment commitments – remaining contractual time to maturity

SEK m Up to 3 mths 3–12 mths 1–5 yrs Over 5 yrs Total

Sight deposits from the public 319 750 - - - 319 750

Other borrowing from the public and credit institutions 383 204 33 264 17 259 100 890 534 617

Issued securities and subordinated loans 208 605 99 177 268 708 70 183 646 673

Short-term positions 81 2 627 37 696 9 372 49 776

Unutilised credit commitments – unutilised part of overdraft facilities 297 532 - - - 297 532

Total 1 209 172 135 068 323 663 180 445 1 848 348

Short-term volatile financing by market 2006

USA 30 %Sweden 26 %

Asia 4 %Europe 40 %

Refers to the average market distribution during 2006 for issued securities with a residual maturity of less than one year and financing from credit institutions.

Liquidity risk is the risk that the Bank will not be able to meet its payment obligations when they fall due, or that the Bank will not be able to raise new loans at acceptable prices to fund its obligations.

Liquidity risk is measured and limited by carrying out a gap analysis of cash fl ows for various maturities and all currencies, and also gap analysis of groups of currencies. As a general rule, a larger exposure is permitted in currencies with high liquidity than in cur-rencies where the liquidity is low.

The liquidity defi cit consists of the amount by which estimated out-payments exceed estimated in-payments, and is restricted by limits.

With the purpose of managing disturbances on the fi nancial mar-kets that may have a temporary or long-term effect on the Bank’s liquidity, the head of Central Control and Accounting ensures that a contingency plan for the Bank’s liquidity risk management is es-tablished annually. Under this plan, the Bank’s liquidity is regularly analysed by the liquidity committee, which is led by the head of Central Treasury. The liquidity analysis includes development of gap analysis, benchmarks for volatile funding and funding costs. The Bank also develops scenario tests in which the effect on liquid-ity is simulated, given factors such as substantially reduced deposit volumes and high utilisation of committed credit lines. Central Treasury has overall responsibility for the Bank’s liquidity and fund-ing. It must ensure that the Bank has continuous control of its bal-ance sheet and that the actual funding costs are allocated out in the organisation.

The daily liquidity management is supplemented by contingency reserves to meet any disruptions in the market. The Bank therefore holds assets eligible as collateral that can be turned into liquidity at short notice through borrowing in central banks or on the capital market. The extra cost arising for funding this portfolio at a matu-rity which is suffi ciently long to handle a temporary liquidity disrup-tion, is distributed over the units at the Bank which use liquidity. Liquidity in Swedish kronor must normally be in balance at the end of each working day.

The Bank aims for well-diversifi ed funding in terms of currencies, markets and products. Liquidity is also created through the Group having good access to the international and Swedish capital markets.

Short-term funding is obtained by means of active commercial paper programmes in Sweden, the US and Europe. These programmes are supplemented by funding in the international interbank market. Long-term funding is mainly obtained through mortgage bond is-sues in Swedish kronor and utilisation of other funding programmes at the Bank. If it is assumed that the concentration in the funding portfolio or maturity structure entails too high a risk, Central Treas-ury must make sure that this concentration is reduced or that the maturity structure of the balance sheet is changed.

In autumn 2006, all outstanding bonds in Stadshypotek with a nominal value of some SEK 245bn, were converted into covered bonds. Covered bonds are bonds with priority in the issuing insti-tution’s collateral. These bonds have received an Aaa rating from Moody’s. New issues under existing bond loans and new bond loans in Stadshypotek will in future be in the form of covered bonds. This is part of the Bank’s strategy to achieve liquid, easily available, long-term funding with competitive funding costs.

The table above shows all sight deposits as maturing debt within one month. Historically, these deposits have been very stable over time and the Bank expects the majority of the sight deposits to be available to the Bank for a considerably longer period. The table shows credit promises and unutilised overdraft facilities for the con-tracted tenors. The total outstanding amount of these commitments does not necessarily represent future funding requirements.

Liquidity risk in insurance operations

Liquidity risk is the risk that the company will not be able to meet its payment obligations when they fall due, or that the company will not be able to sell securities at acceptable prices. This risk is greatly limited by most of the assets being invested in listed securities with good liquidity.

INSURANCE RISKS

The uncertainty in the outcome of an insurance policy which is de-pendent on the insured party’s life or health is called insurance risk. In Handelsbanken Liv/SPP, there are the following main groups of insurance risks:• death – payment in the event of the death of the

insured person• life – payment as long as the insured person lives• disability/accident – payment in the event of

illness/inability to workA policy often includes combinations of the three insurance risks. In mutual insurance companies, it is the policyholders collectively that take the risks, since they have the role of both owner and customer. In SPP and Handelsbanken Liv, which are demutualised (profi t-distributing) insurance companies, the policyholders no longer need to bear the risks collectively; instead, the insurance companies bear the risks.

Before risk insurance can be granted, a medical risk assessment is performed for the insured party. The purpose is to assess whether and on what terms the insured party can be granted insurance on



the basis of his or her state of health. This is essential in order to be able to offer long-term insurance at a reasonable premium in a profi table manner.

Future insurance risks

Mortality in Sweden continues to fall. This is favourable with re-gards to death benefi t insurance, but has little effect on the profi t, as risk pricing is continually adjusted.

On the other hand, falling mortality has consequences for pension insurance, since it means a rising average longevity. In savings insur-ance – products that provide fi nancial compensation as long as the insured person lives, e.g. endowment insurance and pension insur-ance – risk pricing usually applies to the entire duration of the con-tract. If actual mortality proves to be 10% lower than the assump-tions that are normally used in the sector, thus representing an addi-tional 1 to 1.5 years’ life expectancy, this will result in a total profi t reduction of about SEK 40m per annum over a fi fty-year period.

Most of SPP’s risk products, which provide fi nancial compensa-tion in the event of death and disability/accident, are priced annu-ally and the company can unilaterally change the premium from year to year. Thus, an incorrect mortality assumption can be corrected, with a rapid effect on the results.

BUSINESS RISK

Business risk is the risk that Group earnings will be lower than expected over a one-year period. For example, unexpected changes in earnings may arise if demand alters in a manner which could not have been anticipated, or if competition has increased to an unex-pected extent, resulting in declining volumes and squeezed margins. The size of the business risk depends on how much the income var-ies, the Bank’s cost structure, and the ease with which operations can be adapted to new business conditions in the short term. Only changes in earnings that cannot directly be linked to other catego-ries of risk are included in estimations of business risk. The business risk is taken into account in the Bank’s internal capital assessment.

INFORMATION GATHERING

The data/documentation for the reporting of risk is obtained mainly from IT systems. Information relating to credit risk management is obtained from a central data warehouse. Not all credit systems have yet been linked up, but a permanent linking-up of credit ledgers is being carried out, and is going according to plan. Credit risk is calculated using special calculation models. The information which forms the documentation for fi nancial risks is obtained from the business information and risk systems of the various business areas. The Group’s risks are aggregated and analysed by the central risk control function. In 2006, substantial resources were devoted to im-proving system support and calculation capacity for risk control. In 2007, these improvements will remain in sharp focus.


Notes – Group


NOTE 1 NET INTEREST INCOME AND NET GAINS/LOSSES ON FINANCIAL ITEMS AT FAIR VALUE

Specifi cation of interest 2006 2005

Credit institutions and central banks 6 650 4 838

General public 40 486 35 937

Treasury bills and other eligible bills 2 878 986


Derivative instruments recognised as hedges 557 -279

Other interest income 1 114 619

Total interest income, including trading-related 60 587 47 505

Of which trading-related interest reported in net gains/losses on financial l items at fair value 10 454 8 371

Interest income according to income statement 50 133 39 134

Credit institutions and central banks -11 681 -7 848

General public -8 495 -5 339

Issued securities -22 730 -16 955

Derivative instruments recognised as hedges 1 020 877

Subordinated liabilities -2 299 -1 520

Other interest expense -4 333 -1 989

Total interest income, including trading-related -48 518 -32 774

Of which trading-related interest reported in net finan-cial items at fair value -13 357 -8 730

Interest expense according to income statement -35 161 -24 044


Includes interest income on bad debts SEK 61m (72).Total interest income on assets recognised at amortised cost during 2006 was

SEK 46,341m (39,295).Total interest expense on liabilities recognised at amortised cost during 2006 was

SEK 39,877m (29,319).Business volumes were larger than the previous year, see Note 12 Loans and

deposits, the public.

Specifi cation net gains/losses on fi nancial items at fair value 2006 2005

Available for sale, realised 937 992

Hedge accounting

Fair value hedges 85 -17

of which hedging instruments -1 035 -125

of which hedged items 1 120 108

Ineffective portion of cash flow hedges 0 0

Instruments measured at fair value -184 -82

of which change due to changed interbank interest rate -186 -82

Loan receivables, valued at cost 359 604

Financial liabilities, valued at cost -165 -240

Gains/losses on unbundled insurance contracts 767 -

Trading, incl trading-related interest 2 462 2 202

Total 4 261 3 459

Net gains/losses on fi nancial items at fair value shows the unrealised and realised changes in value of items which are wholly or partly dependent on changes in market value.

Hedge accounting

The profi t/loss item Fair value hedges includes the net result of unrealised and realised market value changes on fi nancial assets and liabilities which are part of hedging packages. Interest income and interest expense for these instruments are recognised under net in-terest income. The impact on earnings of the ineffective portion of derivative contracts which are used to hedge cash fl ows is reported under Ineffective portion of cash fl ow hedges. Further information about hedge accounting is shown in Note 16, Derivative instru-ments.

Instruments measured at fair value

Instruments measured at fair value refers to a small number of lend-ing portfolios outside Sweden. The change in fair value for these lending portfolios largely corresponds to equally-sized opposite changes in value on other fi nancial instruments which are reported under Trading within Net gains/losses on fi nancial items at fair value. Interest income is reported under net interest income.

Loan receivables and fi nancial liabilities

Loan receivables are capital gains/losses arising when loans are redeemed ahead of time. Financial liabilities contain the capital gains/losses generated from repurchases of the Bank’s own issued securities.

Trading

Trading contains unrealised and realised changes in market value of derivative instruments which are not used as hedges, and changes in market value of other fi nancial assets and liabilities at fair value. A change has been carried out whereby interest pertaining to activ-ity in the trading book is now included in this item. Previously they were included in the net interest income. The change means that the net interest income has been positively affected by SEK 310m com-pared to the previous year.

Gains/losses on unbundled insurance contracts

The result consists both of gains/losses arising on revaluation of li-ability to policyholders due to changes in the valuation interest rate and of the results of hedging transactions carried out to counteract them. The sub-result also contains any negative yield split.



NOTE 2 NET FEE AND COMMISSION INCOME

2006 2005

Brokerage 1 718 1 383

Mutual funds and custody 2 106 1 660

Insurance 2 338 937

Payments 1 983 1 875

Lending and deposits 793 835

Guarantees 402 388

Other 1 181 1 104

Total fee and commission income 10 521 8 182

Brokerage, mutual funds and custody -260 -208

Payments -888 -839

Other -141 -80

Total fee and commission expense -1 289 -1 127


NOTE 3 RISK RESULT – INSURANCE

2006 2005

Premiums written 1 194 593

Insurance claims paid -684 -433

Change in provisions for unsettled claims 162 52

Other -101 -18

Total 571 194

NOTE 4 OTHER INCOME

2006 2005

Rental income 37 38

Other operating income 188 270

Total 225 308

Other income includes income for services sold and external rental income relating to the Bank’s own properties.

Sickness absence rate in Sweden 2006

0

1

2

3

4

5

6

7

8

9

50 years–30–49 years–29 years

Short-term sick leave menShort-term sick leave women

Long-term sick leave menLong-term sick leave women

Sickness absence in the Swedish operations was 4.0% (4.3). The figure for men was 2.2% (2.3) and for women 5.4% (5.8). Sickness absence in the form of long-term sick leave fell to 2.4% (2.5).

NOTE 5 STAFF COSTS

2006 2005

Salaries and fees -5 297 -4 611

Social security costs -1 480 -1 287

Pension costs* -260 -147

Provision to profit-sharing foundation -135 -130

Other staff costs -542 -503

Total -7 714 -6 678

*Information about defined-benefit pensions is shown in the Net pension assets table.Insurance premiums paid to group companies are SEK 5m (5).

Salaries and other remuneration 2006 2005

Board, CEO and EVPs

Sweden -72 -75

Norway -6 -5

Finland -5 -5

Denmark -3 -5

Great Britain -4 -5

Luxembourg -2 -2

USA -2 -2

Sub-total -94 -99

Others

Sweden -3 593 -3 179

Norway -416 -333

Finland -306 -270

Denmark -312 -281

Great Britain -278 -204

Luxembourg -64 -58

Germany -28 -28

USA -121 -97

Singapore -27 -23

Hong Kong -11 -12

Poland -17 -14

Other countries -30 -13

Sub-total -5 203 -4 512

Total -5 297 -4 611

2006 2005

Gender distribution % Men Women Men Women

Total number of employees 46 54 48 52

Managers 64 36 65 35

CEOs and EVPs 94 6 90 10

Board 69 31 69 31

Board incl. subsidiaries 87 13 86 14

NOTE 1 CONTINUED

Valuation techniques

The result includes unrealised results as a consequence of measur-ing balance sheet items at fair value. The assessment is mainly made on the basis of market prices. When there are no market prices the assessment uses models based on offi cial market prices. More ad-vanced calculation models contain parameters that are not listed, where assumptions and estimates must be made instead. These more advanced valuation models are seldom needed and when they are, valuation models that are generally accepted by the market are always used. Net gains/losses on fi nancial items at fair value include an item of SEK -535m, where the fair value is partly based on the Bank’s own assumptions. The instruments included in this item are mainly equity index options. The positions are essentially matched by opposite positions in listed fi nancial instruments and instruments whose fair value has been assessed on the basis of models based on offi cial market prices.



PRINCIPLES FOR REMUNERATION TO SENIOR MANAGEMENT

The remuneration for senior management is revised annually in ac-cordance with the decision process described below. The main prin-ciple in this process is that remuneration is only given in the form of fi xed salary and customary benefi ts. Variable remuneration in the form of bonuses is not paid.

Decision process for remuneration to senior management

The board of the Bank appoints a special remuneration committee composed of three board members, one of whom is appointed chair-man. The remuneration committee convenes when its chairman calls a meeting. Its assignment is to:1) establish the principles and overall policy for the salaries, benefi ts

and pensions of the executive vice presidents2) prepare proposals relating to salaries, benefi ts and pensions for

the group chief executive and the head of the auditing depart-ment, to be decided by the board

3) every year, report the results of its work to the board.

TERMS AND REMUNERATION OF SENIOR MANAGEMENTTerms

The Bank has no agreements on severance pay. The group chief executive, Pär Boman, has a retirement age of 58. His retirement pension is 65% of his salary immediately before retirement.

The chairman of the board of the Bank and former group chief executive, Lars O Grönstedt, has a retirement age of 60. His retire-ment pension between the ages of 60 and 64 is 75% of his salary im-mediately before retirement, and from the age of 65 it is 65%. From the date that Lars O Grönstedt was appointed as chairman of the board his pension benefi ts accrue entirely in the Bank’s pension fund and pension foundation (see below).

The lowest pension age for the Bank’s executive vice presidents is 60. Between the ages of 60 and 64, their retirement pension is 65% of their salary immediately before retirement. From the age of 65, their retirement pension is 10% of the annual salary up to 7.5 income base amounts. They also receive a pension under the general national insurance scheme. On the portion of the salary in excess of 7.5 income base amounts, a retirement pension of 65% is paid.

Pensions for the chairman of the board, the group chief executive and executive vice presidents are accrued successively during the years until retirement age, and are fully accrued by the time the stipulated retirement age is reached. The Bank is charged annually for the cost at the same rate as the pension is accrued. Accrued pension commit-ments are guaranteed by the Bank’s pension foundation and pension fund, and are vested. If they leave the Bank before the stipulated re-tirement age, a paid-up policy is issued for the pension accrued.

Remuneration

Lars O Grönstedt retired as group chief executive at the AGM in April 2006 and was simultaneously appointed chairman of the board of the Bank. This is a full-time position. The chairman also has over-all responsibility for ownership issues relating to shareholdings in the Bank’s pension foundation, pension fund and staff foundation. In ad-dition to the board fee from the Bank, Lars O Grönstedt is employed by the pension fund and pension foundation and receives remunera-tion accordingly.

In 2006, Lars O Grönstedt received remuneration and other ben-efi ts from the Bank amounting to SEK 3.7m (7.5), with SEK 0.2m (0.3) of this amount being other benefi ts. This remuneration refers to salary and benefi ts for the part of the year Lars O Grönstedt was group chief executive of the Bank and the fee for his services as chair-man of the board. Apart from this, remuneration and benefi ts have been paid by the Bank’s pension foundation and pension fund of SEK 4.5m, with SEK 0.2 of this amount being other benefi ts. Hence his total remuneration from the Bank, the pension fund and the pension foundation was SEK 8.2m (7.5), with other benefi ts being SEK 0.4m (0.3). External fees amounting to SEK 0.3m have been paid to the pension fund.

The Bank’s former full-time chairman of the board Arne Mårtens-son retired in 2006 with a pension in accordance with the terms of his employment contract. In 2006, Arne Mårtensson received remunera-tion and other benefi ts of SEK 10.1m (11.5), with SEK 0.1m (0,5) being other benefi ts. Board fees of SEK 0.9m (3.5) for serving on other boards have been paid to the Bank.

Board members who are not employees of the Bank have not received any compensation from the company over and above the normal fees.

Board members who are employees of the Bank receive remunera-tion and pension benefi ts by reason of their employment. No further remuneration or pension benefi ts are paid for serving on the board.

The group chief executive Pär Boman has received remuneration and other benefi ts amounting to SEK 6.0m, with SEK 0.3m of this amount being other benefi ts. No external fees have been received. No variable bonuses are paid.

The 21 (21) executive vice presidents have received remuneration and other benefi ts amounting to SEK 51.8m (61.1), with SEK 3.9m (4.5) of this amount being other benefi ts. External fees are paid to the Bank. No variable bonuses are paid.

Like all other employees of the Bank, the chairman of the board, the group chief executive and other senior managers have been allo-cated one unit in Handelsbanken’s profi t-sharing scheme, Oktogonen. A unit for an employee in Sweden amounted to SEK 21,932 (35,319).

Pension obligations

Accrued pension rights during the year have increased the pension ob-ligations for the group chief executive by SEK 3.0m (1.6) and for the chairman of the board by SEK 8.1m (7.2).

Accrued pension rights during the year have increased pension obli-gations for the 21 (21) executive vice presidents by SEK 22.2m (24.2).

Accrued pension rights during the year relating to defi ned-benefi t pension plans and premiums relating to defi ned-contribution pension plans for the present and previous boards, chief executives and execu-tive vice presidents were SEK 51.2m (45.2) for the Group and SEK 46.0m (42.0) for the parent company.

Pension obligations for the same people are SEK 1,575m (1,417) in the Group and SEK 1,410m (1,302) in the parent company. The number of people covered by these obligations is 70 (69), of whom 32 (32) are pensioners. The obligations are covered by the Bank’s pen-sion foundation.

All data concerning pension obligations and accrued pension rights during the year has been calculated in accordance with IAS 19.

NOTE 5 CONTINUED

Average number of employees 2006 2005 Men Women

Sweden 7 829 7 228 3 523 4 306

Norway 623 569 324 299

Finland 572 542 229 343

Denmark 475 461 233 242

Great Britain 292 248 213 79

Luxembourg 79 72 46 33

Germany 41 50 21 20

USA 82 81 58 24

Singapore 40 39 17 23

Hong Kong 26 26 18 8

Poland 38 28 17 21

Other countries 66 51 32 34

Total 10 163 9 395 4 731 5 432



Net pension assets The following provisions for pension obligations have been made in the balance sheet:

2006 2005

Pension obligations 14 343 13 709

Fair value of plan assets 23 842 20 147

Pension obligations minus plan assets -9 499 -6 438

Retained income on accruals in previous periods - -

Retained actuarial gains (+) / losses (-) 6 007 2 740

Retained income in accordance with transitional rules - -

Allocated for pensions -3 492 -3 698

Of the amount allocated for pensions, SEK -3 914m (-3 698) is pension assets and SEK 422m (0) a pension liability.

Total pension costs are distributed as follows:

Pensions accrued during the year -518 -359

Interest on pension liability -557 -554

Expected return on plan assets 1 014 952

Write-off of retained income - 0

Write-off of retained actuarial gains (+) / losses (-) 45 -6

Pension costs, defined benefit plans -16 33

Redemption of pension liability - -

Costs for early retirement pensions -18 -3

Pension costs, funded plans -34 30

Pension costs, defined-contribution plans -219 -172

Special employer’s contribution and policyholder tax, other pension costs -7 -5

Total pension costs -260 -147

The actuarial calculation of pension obligations and pension costs is based on the following main assumptions:

Discount rate % 3.9 3.9

Expected salary increase % 3.6 3.6

Expected rate of return on plan assets % 7.0 7.0

Pension indexing % 2.1 2.1

Income base amount % 2.8 2.8

Staff turnover % 2.7 2.8

Expected remaining years of employment 19 19

Pension obligations, plan assets and provisions for pensions and net actuarial gains/losses for the defined-benefit plans have developed as follows. Funds paid to the employer refer to funds paid for the employer’s pension costs.

Pension obligations

Opening balance 14 097 11 957

Pensions accrued during the year 518 359

Interest expense 557 554

Paid benefits -596 -528

Costs for early retirement pensions - -

Redemption of pension obligations - -

Retained income on accruals in previous periods - -

Actuarial gains (-) / losses (+) -179 1 286

Price differences -54 81

Closing balance 14 343 13 709

2006 2005

Plan assets



Funds contributed by the employer 427 185

Funds paid to employer -534 -9

Funds paid directly to employees -303 -215

Actuarial gains (+) / losses (-) 3 126 3 142



Return on plan assets


Actuarial gains (+) / losses (-) 3 126 3 142

Real return 4 140 4 094

Provision for pension obligations

Opening balance -3 310 -3 195

Pension costs, defined benefit plans 16 -33

Paid benefits 241 -304

Funds contributed by the employer -427 -185

Costs for early retirement pensions - -

Redeemed Pension obligations - -


Closing balance -3 492 -3 698

Net actuarial gains /losses

Opening balance, actuarial gains (+) / losses (-) 2 740 884

Actuarial gains (-) / losses (+) to be recognised -45 6

Actuarial gains (-) / losses (+), redeemed pension obligations 0 0

Actuarial gains (+) / losses (-), pension obligations 179 -1 286

Actuarial gains (+) / losses (-), plan assets 3 126 3 142

Price differences 7 -6

Closing balance, actuarial gains (+) / losses (-) 6 007 2 740

The plan assets mainly comprise shares and interest-bearing securities with the fol-lowing market values on the balance sheet date:


Interest-bearing securities, etc. 3 130 3 509

Total 23 842 20 147

The plan assets include shares in Svenska Handelsbanken AB (publ) with a market value of SEK 994m (946) on the balance sheet date 31 December 2006. In Sweden, Norway, Great Britain and Germany the pension plans are defined benefit, meaning that the pension is based on a certain percentage of the final salary. There are no post-retirement health care plans.

History



Pension obligations minus plan assets -9 499 -6 438

Actuarial gains (+)/losses (-) for the period,pension obligations 179 -1 286

of which experience adjustments 209 -1 089

of which changed actuarial assumptions -30 -197

Actuarial gains (+)/losses (-) for the period, plan assets 3 126 3 142

of which experience adjustments 3 126 3 142

of which changed actuarial assumptions 0 0

Future cash fl owsOutcome

2006Forecast

2007

Expected pension payments -596 -586

Loans to senior management

Loans to the board, chief executives and executive vice presidents at the Bank or group companies are SEK 125m (122) for the Bank or other group companies and SEK 37m (57) for the parent company.

PENSION PLAN – OTHER EMPLOYEES

From the age of 65, a retirement pension is paid in accordance with the pension agreement between the Employer’s Association of the Swedish Banking Institutions (BAO) and Union of Finance Sector Employees and between BAO and SACO (the Swedish Confedera-tion of Professional Associations). The amount is 10% of the annual salary up to 7.5 income base amounts. On the part of the salary between 7.5 and 20 income base amounts the retirement pension is 65% and in the interval between 20 and 30 income base amounts, it is 32.5% of the annual salary. On the portion of the salary over 30 income base amounts no retirement pension is paid.



NOTE 6 OTHER EXPENSES

2006 2005

Property and premises -935 -894

External IT costs -1 263 -920

Communication -386 -389

Travel and marketing -430 -343

Purchased services -696 -753

Supplies -211 -186

Other expenses -259 -262

Total -4 180 -3 747

Of which lease expenses

Minimum lease fee -685 -579

Variable fee -18 -146

Total -703 -725

Rental costs for premises normally have a variable fee related to the inflation rate and to property taxes. Only one of the major lease contracts has a variable fee (related to Stibor). In 2006, the cost of the largest individual lease contract was approx. SEK 61m (58).

IT DEVELOPMENT Research and development

IT development at Handelsbanken is principally intended to meet the requirements of the business operations. This means that, since operational stability and delivery speed are the crucial factors, the Bank only changes to new technologies or environments in excep-tional circumstances. At the same time there are constant efforts to increase the effi ciency of existing processes and to enhance the Bank’s technical environment and IT architecture.

IT PROCEDURES WHEN STARTING NEW BRANCHES

In 2006, IT infrastructure was produced for several units world-wide. There are several different methods. When the Bank starts new branches in countries with existing branches, the work is based on the existing infrastructure. When starting up in a new country, the solution is based on local conditions, combined with using the Bank’s existing infrastructure as far as possible. IMPROVED INTERNAL SUPPORT

During the past two years, the number of employees at internal IT support has decreased by 35%. This decrease was due to the imple-mentation of a standard workstation for the Handelsbanken Group. There are thus fewer technologies used in the organisation.

Audit Consulting

Auditing costs 2006 2005 2006 2005

Auditors elected by the AGM

KPMG Bohlins AB -9.9 -8.5 -1.4 -1.9

Ernst & Young AB -1.2 -0.8 -0.0 -0.2

Auditor elected by the Swedish Financial Super-visory Authority

PricewaterhouseCoopers AB -2.4 -2.1 -0.7 -1.0

Internal auditing -72.2 -69.5

NOTE 7 LOAN LOSSES/RECOVERIES

Actual and probable losses minus recoveries are reported as loan losses.

Recoveries exceeded loan losses and net recoveries totalled SEK 55m as compared to net recoveries of SEK 261m in the previous year. The loan loss ratio was thus –0.01% (–0.03). Net bad debts decreased to SEK 876m (1,256), equivalent to 0.07% of lending.

2006 2005

A. SPECIFIC PROVISION FOR INDIVIDUALLY ASSESSED LOAN RECEIVABLES

This year’s write-off for actual loan losses -596 -550

Write-back of previous provisions for probable loan losses which are reported as actual loan losses in the year’s accounts 499 380

The year’s provision for probable loan losses -468 -480

Paid in from actual loan losses in previous years 265 476

Write-back of provisions for probable losses no longer necessary 302 366

Net expense for the year, individually valued loan receivables 2 192

B. PROVISION BY GROUP FOR INDIVIDUALLY ASSESSED LOAN RECEIVABLES

Allocation to/dissolution of provision by group 77 84

C. COLLECTIVELY ASSESSED HOMOGENEOUS GROUPS OF LOAN RECEIVABLES WITH LIMITED VALUE AND SIMILAR CREDIT RISK

This year’s write-off for actual loan losses -44 -43


Allocation to/dissolution of reserve for loan losses -2 2

Net expense for the year for collectively assessed homogeneous loan receivables -24 -18

D. TRANSFER RISK

Allocation to/dissolution of reserve for transfer risks - -

Net expense for the year for loan losses (A+B+C+D) 55 258

Change in value of repossessed property - 3

Total loan losses/recoveries 55 261

Both actual and probable loan losses reduce the corresponding receivable amount on the assets side of the balance sheet. The reserve for probable loan losses has decreased by SEK 29m for the Group in the form of exchange differences.



NOTE 7 CONTINUED

2006 2005

Impairment losses

Claims on credit institutions 0 0

Claims on the public -611 -693

Total impairment losses -611 -693

Write-backs


Claims on the public 378 438

Total write-backs 379 452

Bad debts etc (For definitions, see inside back cover) 2006 2005

Bad debts 2 872 3 689

Specific provision for individually assessed loan receivables -1 550 -1 910

Provision for collectively assessed homogeneous groups of loan receivables with limited value and similar credit risk -107 -107

Group provisions for individually assessed loan receivables -339 -416

Net bad debts 876 1 256

Total bad debt reserve ratio, % 69.5 65.9

Proportion of bad debts, % 0.07 0.12

Bad debt reserve ratio excl. group provisions, % 57.7 54.7

Non-performing loans which are not bad debts, SEK m 670 602

Book value of loan receivables restructured during the year, before restructure, SEK m 46 47

Book value of loan receivables restructured during the year, after restructure, SEK m 50 55

Bad debts reclassified as normal loans during the year, SEK m 171 391

NOTE 8 GAINS/LOSSES ON DISPOSAL OF PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS

2006 2005

Equipment 1 0

Property - 4

Total 1 4

The difference between the sale price and the remaining value for property, equipment and intangible assets is reported here.

NOTE 9 EARNINGS PER SHARE

2006 2005

Profit for the year, SEK m 13 128 11 354

Average number of outstanding shares (millions) 643.3 668.6

Earnings per share, SEK* 20.41 16.98

*No dilution.

Earnings per share is calculated by dividing the net profi ts attribut-able to holders of ordinary shares by the weighted average number of ordinary shares in issue during the period. The denominator excludes the Bank’s holding of repurchased own shares. There are no potentially dilutive instruments, and therefore the calculation is the same for earnings per share before and after dilution.



NOTE 10 CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 2006

Recorded at fair value in income statement

sub-divided into

Derivative instruments

designated ashedging

instruments

Investmentsheld to

to maturity

Loans and customer

receivables

Financialassets

available for sale

Othersfi nancialliabilities

Non-fi nancialassets/

liabilities Total Trading Other*

Assets


Treasury bills and other eligible bills 86 512 53 86 565

Loans to credit institutions 12 844 164 331 177 175

Loans to the public 4 632 1 095 906 1 100 538

Bonds and other interest-bearing securities 170 838 9 340 180 178

Shares and participating interests 66 410 6 507 72 917

Assets where the customer bears the value change risk 61 390 1 437 62 827

Derivative instruments 51 916 1 787 53 703


Intangible assets 12 524 12 524

Property and equipment 3 545 3 545


Deferred tax assets 265 265

Net pension assets 3 914 3 914

Other assets 21 012 21 012

Prepayments and accrued income 3 471 5 660 59 9 190

Total assets 391 991 66 022 1 787 1 293 146 15 959 21 103 1 790 008

Liabilities

Due to credit institutions 13 275 307 207 320 482

Deposits and borrowing from the public 111 756 422 129 533 885

Liabilities where the customer bears the value change risk 61 396 1 437 62 833

Issued securities 40 681 554 320 595 001


Other trading liabilities 51 829 51 829

Insurance liabilities 2 871 2 871


Deferred tax liabilities 6 810 6 810

Provisions 127 127

Pension obligations 422 422


Prepayments and accrued income 2 944 12 699 15 643

Subordinated liabilities 51 672 51 672


* Classifi ed to be measured at fair value.



NOTE 10 CONTINUED CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 2005

Recorded at fair value in income statement

sub-divided into

Derivative instrumentsdesignated as hedging

instruments

Investmentsheld to

to maturity

Loans and customer

receivables

Financialassets

available for sale

Othersfi nancialliabilities

Non-fi nancialassets/

liabilities TotalTrading Other*

Assets




Loans to the public 15 4 574 979 092 983 681

Bonds and other interest-bearing securities 125 387 502 38 14 293 140 220


Assets where the customer bears the value change risk 134 432 134 432







Net pension assets 3 698 3 698

Other assets 446 2 13 181 13 629


Total assets 258 822 139 006 4 647 515 1 140 047 19 753 20 117 1 582 907

Liabilities


Deposits and borrowing from the public 24 255 383 362 407 617

Liabilities where the customer bears the value change risk 52 462 83 464 135 926




Insurance liabilities 862 862


Deferred tax liabilities 5 950 5 950

Provisions 36 36


Prepayments and accrued income 187 11 561 11 748



*Classifi ed to be measured at fair value.



NOTE 11 LOANS TO CREDIT INSTITUTIONS

2006 2005

Loans in Swedish kronor

Banks 44 781 23 861

Other credit institutions 26 179 7 130

Sub-total 70 960 30 991

Loans in foreign currency

Banks 31 652 24 793


Sub-total 106 217 105 555

Probable loan losses -2 0

Total 177 175 136 546

Of which reverse repos 120 491 100 461

Remaining maturities

Payableon

demandWithin 3 mths

>3 mths to 1 yr

>1 yrto 5 yrs

Over 5 yrs Total

2006 95 108 69 269 7 109 3 109 2 580 177 175

2005 77 425 49 234 5 260 2 217 2 410 136 546

Average volumes 2006 2005

Loans to credit institutions in Swedish kronor 62 433 45 922

Loans to credit institutions in Swedish kronor insurance operations 7 146 620

Loans to credit institutions in foreign currency 149 741 130 460

Loans to credit institutions in foreign currency insurance operations 451 57

Total 219 771 177 059


Of which reverse repos, insurance operations 7 109 387



Remaining maturitiesPayable on

demandWithin

3 months>3 months

to 1 year>1 year

to 5 yearsOver

5 years Total

2006 98 029 308 489 153 510 339 922 200 588 1 100 538

2005 41 581 266 466 142 831 320 885 211 918 983 681

Average volumes – loans to the public 2006 2005

Loans to the public in Swedish kronor 752 671 689 540

Loans to the public in foreign currency 295 599 241 090

Total 1 048 270 930 630


NOTE 12 LOANS AND DEPOSITS, THE PUBLIC

2006 2005


Households 391 483 351 035

Companies etc 395 141 369 363

Sub-total 786 624 720 398


Households 92 551 81 539


Sub-total 315 907 265 715

Probable loan losses -1 993 -2 432

Total 1 100 538 983 681


Of which subordinated 91 101

Deposits and borrowing from the public 2006 2005


Deposits from the public 2006 2005

Deposits in Swedish kronor



Total 214 393 199 657

Deposits in foreign currency



Total 127 722 120 756

Total deposits from the public 342 115 320 413


demandWithin

3 months>3 months

to 1 year>1 year

to 5 yearsOver

5 years Total

2006 319 750 13 442 1 379 703 6 841 342 115

2005 294 331 21 032 3 379 501 1 170 320 413

Average volumes of deposits from the public 2006 2005

Deposits from the public in Swedish kronor 203 245 184 719

Deposits from the public in foreign currency 126 861 111 660

Total 330 106 296 379



NOTE 13 INTEREST-BEARING SECURITIES

2006 2005

Nominal value

Fair value

Nominal value

Fair value


Government instruments 79 415 84 145 32 663 34 514

Credit institutions 48 948 49 316 38 181 38 673

Mortgage institutions 47 507 47 817 27 497 28 249

Other 84 492 85 465 76 957 83 277

Total 260 362 266 743 175 298 184 713

Adjustment to book value for investments held to maturity - -3

Total book value 266 743 184 710


Treasury bills and other eligible bills 81 819 86 565 42 253 44 490

Total interest-bearing securities 266 743 184 710

Of which unlisted securities 1 061 7 926


Remaining maturities

Payableon

demandWithin 3 mths

>3 mths to 1 yr

>1 yrto 5 yrs

Over 5 yrs Total

2006 253 18 808 65 833 119 694 62 155 266 743

2005 2 878 14 040 43 595 97 711 26 486 184 710


Interest-bearing securities 194 516 160 508

Interest-bearing securities, insurance operations 70 905 15 190

Total 265 421 175 698

NOTE 12 CONTINUED

Borrowing from the public 2006 2005

Borrowing from the public

Swedish kronor 151 674 46 780

Foreign currency 40 096 40 424

Total 191 770 87 204

Of which repos 5 777 2 853


demandWithin

3 months>3 months

to 1 year>1 year

to 5 yearsOver

5 years Total

2006 2 460 70 709 9 401 15 965 93 235 191 770

2005 2 913 54 984 5 552 4 874 18 881 87 204

Average volume of borrowing from the public 2006 2005

Borrowing from the public in Swedish kronor 38 852 29 560

Borrowing from the public in Swedish kronor, insurance operations 107 693 22 352

Borrowing from the public in foreign currency 48 996 41 335

Total 195 541 93 247


LENDING AND DEPOSIT VOLUMES

Loans to the public increased by 12% to SEK 1,101bn (984). Stadshypotek increased by 8% to SEK 480bn (445). Stadshypotek’s lending represented 44% of the Group’s loans to the public. Loans to the public in Sweden, excluding the National Debt Offi ce rose by 10% to SEK 831bn (755), where household lending rose by 11% to SEK 391bn (352).

The average volume of loans to the public excluding loans to the National Debt Offi ce increased by 13% to SEK 1,045bn (927). Household lending rose by 13% to SEK 457bn (405), while corpo-rate lending was up 13% to SEK 588bn (522). Average lending in Sweden increased by 10% to SEK 797bn (727) while branch offi ce

operations outside Sweden increased by 24% to SEK 224bn(180). Deposits from the public, including the insurance operations went

up by 31% to SEK 534bn (408). Household deposits went up by 14% to SEK 159bn (139) and deposits from companies increased by 39% to SEK 375bn (269). The consolidation of SPP partly explains the increase in deposit volumes.

The average volume of deposits in Sweden, excluding insur-ance operations, increased by 13% to SEK 278bn (246), of which SEK 104bn (93) was from households. Outside Sweden, the aver-age volume of deposits rose by 15% to SEK 140bn (122), of which SEK 29bn (27) was from households.



NOTE 14 SHARES AND PARTICIPATING INTERESTS

2006 2005

Held for trading

Listed 65 169 22 744

Non-listed 1 241 818

Total 66 410 23 562

Holdings classified as available for sale

Listed 5 160 4 537

Non-listed 802 362

Total 5 962 4 899

Holdings in associated companies, non-listed 545 396

Total shares and participating interests 72 917 28 857

Participating interests in associated companies

Carrying amount at beginning of year 396 354

Participating interests added via consolidation of SPP 108 -

Share of profit for the year 105 59

Taxes -29 -20

Shareholders’ contribution 8 6

Dividend -32 -11

Exchange difference -11 8

Carrying amount at close of year* 545 396

* Of which goodwill 125 87

Associated companiesCorporate identity

numberRegistered

offi ceNo. of

sharesParticipating

interest %

Book value

2006 2005

Bankomatcentralen AB 556197-2265 Stockholm 1 100 21.9 0 0

BGC Holding AB 556607-0933 Stockholm 25 382 25.4 58 41

Centralen för Elektroniska Korttransaktioner CEK AB 556362-0383 Stockholm 370 37.0 16 16

BDB Bankernas Depå AB 556695-3567 Stockholm 8 000 20.0 2 -

Finansiell ID-teknik BID AB 556630-4928 Stockholm 12 735 28.3 3 2

Nordben Life and Pension Insurance Co Ltd. 14 861 Guernsey 3 000 000 50.0 127 -

Privatgirot AB 556302-4552 Stockholm 290 29.0 6 5

Upplysningscentralen UC AB 556137-5113 Stockholm 2 429 24.3 12 7

VPC AB 556112-8074 Stockholm - - - 325

VPC Holding AB 556709-1763 Stockholm 443 700 24.8 321 -

Total 545 396

Financial information on associated compa-nies referring to 100% of the companies

2006 2005

Assets Liabilities Income Profi t/loss Assets Liabilities Income Profi t/loss

Bankomatcentralen AB 0 0 0 0 0 0 0 0

BGC Holding AB 383 155 854 169 750 582 850 21

Centralen för Elektroniska Korttransaktioner CEK AB 62 18 133 2 66 23 120 6

BDB Bankernas Depå AB 9 1 57 -12 - - - -

Finansiell ID-teknik BID AB 40 29 46 -14 43 43 25 -26

Nordben Life and Pension Insurance Co Ltd. 7 801 7 547 338 16 - - - -

Privatgirot AB 48 27 113 -6 49 33 138 1

Upplysningscentralen UC AB 110 59 30 0 163 138 224 0

VPC AB - - - - 1 464 266 687 161

VPC Holding AB 1 595 302 712 50 - - - -

VALUATION METHODS FOR UNLISTED SHARES

Unlisted shares are valued on the basis of valuation models at fair value. The choice of model is applied consistently for each share. The choice of model is governed by what is considered appropriate for the individual share. Several of the unlisted shares are shares where

the Bank in its capacity as shareholder cannot control the price at which the share will be sold, since this is regulated by the company agreement. These shares are valued at the pre-determined values. For example, there are cases where the shareholders’ meeting resolves the value at which transfers will be made.



NOTE 15 ASSETS WHERE THE CUSTOMER BEARS THE VALUE CHANGE RISK

2006 2005

Insurance assets in SPP Liv - 83 664

Unit- linked insurance assets 58 468 48 594

Other fund assets 1 437 -

Share of consolidated funds not owned 2 922 2 174

Total 62 827 134 432

NOTE 16 DERIVATIVE INSTRUMENTS

Nominal amount/maturity

Total2006

Total2005

Positive market values Negative market values

Up to 1 year> 1 year to

5 yearsOver

5 years 2006 2005 2006 2005

Derivatives held for trading

Interest rate-related contracts

Options 177 251 76 343 4 820 258 414 264 052 3 118 2 931 2 803 2 632

FRA/futures 3 087 592 985 100 8 856 4 081 548 3 986 026 1 138 820 1 091 806

Swaps 910 816 1 040 615 460 553 2 411 984 2 279 990 18 422 33 211 20 439 34 415

Other instruments 10 510 208 - 10 718 14 840 4 6 0 6

Currency-related contracts

Options 33 203 2 183 - 35 386 50 775 88 439 98 365

Futures 1 129 468 13 057 405 1 142 930 1 351 482 13 313 17 255 18 159 12 590

Swaps 152 025 162 158 23 293 337 476 269 470 4 526 2 652 5 115 3 689

Equity-related contracts

Options 79 394 45 100 6 088 130 582 118 946 8 247 5 314 9 953 8 537

Futures 31 992 2 152 - 34 144 23 168 838 150 1 187 682

Swaps 718 1 405 418 2 541 3 038 320 133 1 204 1 385

Other instruments 32 - - 32 449 328 13 16 24

Other derivative contracts 365 29 346 749 30 460 15 440 1 574 598 1 612 979

Sub-total 5 613 366 2 357 667 505 182 8 476 215 8 377 676 51 916 63 522 61 677 66 110

Derivatives for fair value hedges


Options - - - - 4 290 - 13 - -

FRA/futures 3 500 6 300 - 9 800 8 100 6 4 2 5

Swaps 22 821 101 676 54 670 179 167 249 528 794 3 300 3 251 6 171

Other instruments 29 206 - - 29 206 3 953 4 2 4 2


Options 45 - - 45 - 0 - - -

Futures 71 092 15 344 - 86 436 89 197 658 1 161 1 183 1 222

Other instruments 345 48 - 393 - 0 - - -

Other derivative contracts 182 - - 182 - - - 0 -

Sub-total 127 191 123 368 54 670 305 229 355 068 1 462 4 480 4 440 7 400

Derivatives for cash flow hedges


FRA/futures - - - - 83 - 0 - -

Swaps 4 671 15 018 3 223 22 912 14 231 325 167 65 224

Sub-total 4 671 15 018 3 223 22 912 14 314 325 167 65 224

Total 5 745 228 2 496 053 563 075 8 804 356 8 747 058 53 703 68 169 66 182 73 734

Of which cleared 2 878 349 2 992 847 2 973 5 412 1 776 5 693

Currency breakdown of market values

SEK 174 936 11 032 250 432 96 620

USD -117 607 223 279 -221 426 122 327

EUR 24 954 -62 449 5 556 -89 125

Others -28 580 -103 693 31 620 -56 088



HEDGE ACCOUNTINGFair value hedges

Handelsbanken mainly uses fair value hedges to protect itself against changes in fair value for lending and deposits at fi xed interest rates and to hedge foreign exchange exposure when borrowing in foreign currencies. The main hedge instruments used are interest rate swaps and currency forwards. In a very few cases, changes in fair value of credit risk exposures are subject to hedge accounting. In these cases, credit derivatives are used as the hedge.

As at 31 December 2006, derivatives have been used as fair value hedges for a nominal amount of SEK 305bn (355). The fair value of these derivatives was SEK 1bn (4) in positive market values and SEK 4bn (7) in negative market values. The value change for the year for these derivatives is SEK –1,035m (–125) and this is reported in the income statement under Net gains/losses on fi nancial items at fair value. The change in fair value for the hedged items relating to hedged risk is SEK 1,120m (108), which is also reported under Net gains/losses on fi nancial items at fair value. Thus, the Group’s fair value hedges had a positive impact of SEK 85m (–17) on the year’s profi ts.

Cash fl ow hedges

Handelsbanken also hedges the uncertainty of future cash fl ows. Uncertainty in future cash fl ows arises when funding is at variable interest rates. These interest rates are fi xed for between one and six months. The maturity horizon of the loan is much longer, however: up to 15 years. To hedge the future interest payments for a required maturity, interest rate swaps are used. For future cash fl ows which are to be reinvested or refi nanced, interest rate swaps are used with value dates in the future so as to guarantee a known reinvestment or refi nancing interest rate. The future cash fl ows to be hedged have a high probability of occurring since they are contracted.

As at 31 December 2006, derivatives which have been used as cash fl ow hedges have a nominal amount of SEK 23bn (14). The fair value of these derivatives was SEK 325m (167) in positive market values and SEK 65m (224) in negative market values. For the effec-tive portion of hedges, the change in value of the derivative is rec-ognised in equity. The change in value is transferred to the income statement at the same pace as the hedged item’s cash fl ows affect the profi t/loss. At the end of the year, the hedge provision was SEK –136m (57). There were almost no ineffective hedges.

NOTE 16 CONTINUED



NOTE 17 INTANGIBLE ASSETS

Goodwill

Trademarksand other

rightsCustomercontracts

Internallydeveloped

softwareTotal2006

Total2005

Cost of acquisition at beginning of year 12 498 3 003 954 57 16 512 12 223

Cost of acquisition of additional intangible assets 12 - - 71 83 4 120

Foreign exchange effect -160 - - - -160 169

Cost of acquisition at close of year 12 350 3 003 954 128 16 435 16 512

Accumulated amortisation and impairments at beginning of year -2 956 -725 -35 -7 -3 723 -2 932

Accumulated amortisation of additional intangible assets - - - - - -580

Amortisation for the year according to plan -150 -39 -5 -194 -178

Impairments for the year - - - -25 -25 -

Foreign exchange effect 31 - - - 31 -33

Accumulated amortisation and impairments at end of year -2 925 -875 -74 -37 -3 911 -3 723

Closing residual value 9 425 2 128 880 91 12 524 12 789

Information on goodwill referring to associated companies can be found in Note 14 Shares and participating interests.

Amortisation is based on the expected useful life. At present, this means that principally the following amortisation rates are applied.

Goodwill Not amortised

Trademarks 20 years

Customer contractsOn a straight-line basis over the life of the relevant contract

Internally developed software 5 years

Other intangible assets Individual testing

ESTIMATES USED TO CALCULATE THE RECOVERABLE AMOUNT OF CASH-GENERATING ENTITIES WITH GOODWILL OR OF INTANGIBLE ASSETS WITH AN INDEFINITE USEFUL LIFE

Goodwill and other intangible assets with an indefi nite useful life is allocated over the following segments/cash-generating units.Branch office operations SEK 5,796m

Markets SEK 12m

Asset Management SEK 12m

Pensions & Insurance SEK 3,607m

An impairment test that the recoverable amount exceeds the book value is performed by comparing the values in the balance sheet with the estimated recoverable amount. If the recoverable amount ex-ceeds the value in the balance sheet, no impairment loss needs to be recognised. The recoverable amount for entities to which goodwill and other intangible assets have been allocated has been determined by calculating the value in use per entity. This means that future cash fl ows including an estimated closing value are estimated. The calculations are before taxes.

– The assessment is that the difference between the recoverable amount and the book value is satisfactory.

– An impairment loss has been recognised for capitalised software since it is not estimated to have any value.

Assumptions

– The cash fl ow period used to calculate the recoverable amount is normally 20 years for cash-generating entities relating to bank-ing operations and 40 years for insurance operations. The type of contract and nature of the operations dictates the choice of cash fl ow period.

– Detailed forecasts are made for the fi rst fi ve years. In the subse-quent years, gradually declining changes in the future cash fl ows are assumed. Normally, the rate of increase of future cash fl ows is assumed to be no larger than the corresponding historical rise in GDP in the country in question. These forecasts are based partly on historical trends and partly on knowledge of future events which can affect the historical trend. The outcome in individual years is compared to the forecast values. These comparisons are used to decide whether an adaptation should be made of the fore-casting method and the forecast values in the future.

– The discount rate used is the weighted return requirement for the respective type of operations. Since capital is allocated on the basis of a risk assessment, normally the same discount rate can be used for all types of goodwill items and other intangible items arising when business operations are acquired. However, the dis-count rate is always tested on a case-by-case basis. The discount rate applied is 4.2%.

Intangible assets with an indefi nite useful life

The individual assets which are not subject to annual amortisation are those where the economic life and the useful life cannot be re-garded as defi nable. Examples of such items are brand names and in certain cases customer relations in cases where these are attributable to sectors which cannot be regarded as associated operations with a limited life. In cases where the Bank only has the exclusive rights to a brand name or other intangible asset for a limited period of time, the cost of acquisition of the brand name is amortised over this pe-riod at the rate it is used.



NOTE 18 PROPERTY AND EQUIPMENT

Operating properties at

fair valueInvestment

property

Other property and equipment

Total 2006

Total 2005

1–4 yearsdepreciation

5-9 yearsdepreciation

10-19 yearsdepreciation

20+ yearsdepreciation

Nodepreciation

Opening cost of acquisition 1 380 - 742 911 124 1 212 593 4 962 4 815

Opening cost of acquisition, SPP 145 - 10 6 32 - 0 193

New acquisitions during the year - - 143 169 11 - 0 323 276

Changes as a consequence of revaluations during the year 170 - - - - - - 170 70

Capitalised new construction and rebuilding costs during the year 30 - - - - 66 - 96 40

Cost of acquisition of property and equipment sold during the year - - -194 -176 -24 -31 0 -425 -297

Foreign exchange effect - - -13 -26 -3 - 0 -42 58

Total cost of acquisition 1 725 - 688 884 140 1 247 593 5 277 4 962

Accumulated depreciation at beginning of year - - -570 -655 -58 -554 -1 837 -1 764

Accumulated depreciationat beginning of year, SPP - - -10 -4 -24 - -38

Accumulated depreciation on equipment sold during the year - - 188 168 20 32 408 281

Year’s impairment losses recognised in the income statement - - - - - -10 -10 -5

Year’s depreciation - - -135 -135 -15 -36 -321 -316

Foreign exchange effect - - 11 17 -1 - 27 -33

Total accumulated depreciation - - -516 -609 -78 -568 -1 771 -1 837

Book value of leasing assets taken over 7 7 20

Book value of other repossessed property - - - - - - 139

Book value of property repossessed for protection of claims 32 - - 32 34

Total collateral taken over 32 - - - - 7 39 193

Residual value according to plan 1 725 32 172 275 62 679 600 3 545 3 318

Of which land 762 583 1 345 1 253

Tax assessment value, Swedish properties 927 2 172 3 099 3 004

NOTE 19 OTHER ASSETS

2006 2005

Claims on investment banking settlements 17 610 8 645

Other 3 403 4 985

Probable loan losses -1 -1

Total 21 012 13 629

NOTE 20 PREPAYMENTS AND ACCRUED INCOME

2006 2005

Accrued interest income 7 727 5 065

Other accrued income 1 248 542

Prepayments 215 145

Total 9 190 5 752


Apart from owned equipment, the Bank also has at its disposal equipment under operating leases. The residual value of leased equipment in the Bank was SEK 38m (54).

Property held for use in the business at fair value was valued individually taking cash fl ows into account. The valuation was performed in December 2006 by an external valuer. The carrying

amount of the premises would have been SEK 1,555m, if they had not been carried at fair value.

The year’s depreciation for other repossessed property is SEK 7m (14).

Property repossessed to protect claims is sold as soon as reason-able market conditions exist.



NOTE 21 DUE TO CREDIT INSTITUTIONS

2006 2005

Due in Swedish kronor

Banks 52 133 48 532


Sub-total 67 768 51 559

Due in foreign currency

Banks 239 122 214 654


Sub-total 252 714 237 494

Total 320 482 289 053



demandWithin

3 months>3 months

to 1 year>1 year

to 5 yearsOver

5 years Total

2006 71 141 225 451 22 485 591 814 320 482

2005 47 046 217 876 22 064 1 047 1 020 289 053


Due to credit institutions in Swedish kronor 55 996 58 792

Due to credit institutions in foreign currency 312 130 257 471

Total 368 126 316 263


NOTE 22 LIABILITIES WHERE THE CUSTOMER BEARSTHE VALUE CHANGE RISK

2006 2005

Insurance liabilities in SPP Liv - 83 464

Unit-linked insurance liabilities 58 474 48 634

Other fund liabilities 1 437 -

Share of consolidated funds not owned 2 922 2 174

Other - 1 654

Total 62 833 135 926



NOTE 23 ISSUED SECURITIES

2006 2005

Nominalamount

Bookvalue

Bookvalue

Certificates

Certificates in Swedish kronor 26 579 28 037 26 428

Of which

at amortised cost 19 298 19 250 26 428

for trading 7 281 8 787 -

Certificates in foreign currency 219 379 218 616 207 217

Of which


for fair value hedges 12 955 12 947 18 954

for trading 31 886 31 894 -

Sub-total 245 958 246 653 233 645

Bonds

Bonds in Swedish kronor 265 631 276 769 222 301

Of which



Bonds in foreign currency 73 412 71 579 30 398

Of which



Sub-total 339 043 348 348 252 699

Total 585 001 595 001 486 344

Remaining maturities carrying amountPayable on

demandWithin

3 months>3 months

to 1 year>1 year

to 5 years >5 years Total

2006 1 657 204 474 96 236 241 846 50 788 595 001

2005 - 175 658 135 614 159 886 15 186 486 344

Average volume of issued securities 2006 2005



Turnover of own issued securities 2006 2005

Issued 1 403 1 491

Repurchased 292 275

Repaid 1 001 1 171

NOTE 24 OTHER TRADING LIABILITIES

Short positions at fair value 2006 2005

Equities 2 053 3 868


Of which

Other issuers 48 318 41 755

Own issued 1 458 2 514

Total 51 829 48 137

Remaining maturities short positions interest-bearing securitiesPayable on

demandWithin

3 months>3 months

to 1 year>1 year

to 5 years >5 years Total

2006 3 78 2 627 37 695 9 373 49 776

2005 - 2 035 5 735 29 333 7 166 44 269

Average volumes of other trading liabilities 2006 2005





NOTE 25 INSURANCE OBLIGATIONS

2006 2005

Liability for sickness annuities 2 158 437

Liability for other unsettled claims 410 318

Liability for prepaid premiums 303 107

Total 2 871 862

NOTE 26 TAXES


Loans to the public 17 -

Shares and participating interests 6 8

Derivative instruments - 57

Intangible assets 105 147

Property and equipment 49 54

Pension obligations 118 -

Other 18 46

Offsetting against deferred tax liability -48 -115

Total 265 197

Deferred tax liabilities 2006 2005

Loans to the public * 4 627 3 912


Derivative instruments 38 42

Intangible assets 611 643


Pension assets 1 118 1 055

Other 62 35

Offsetting against deferred tax assets -48 -115

Total 6 810 5 950

Net deferred tax liabilities 6 545 5 753

* Of which leasing SEK 4 603m (3 858).

Year’s change in deferred taxes

Openingbalance

Recognisedin the income

statement

Recogniseddirectly

in equityClosingbalance

Loans to the public 3 912 699 -1 4 610


Derivative instruments -15 - 53 38


Property and equipment 105 -4 0 101

Pension assets/obligations 1 055 33 -88 1 000

Other -11 -10 65 44

Total 5 753 725 67 6 545

Tax expenses recognised in the income statement 2006 2005

Current tax

Tax expense for the year -3 776 -3 636

Adjustment of tax attributable to previous years 465 55

Deferred tax

Changes in temporary differences -725 -715

Total -4 036 -4 296

Nominal tax rate in Sweden, % 28.0 28.0

Deviations

Different tax base in insurance operations -3.8 -0.7

Taxes for previous years, and other -0.7 0.0

Effective tax rate, % 23.5 27.4

NOTE 27 PROVISIONS

2006 2005

Opening balance 36 10

Additional provisions when consolidating SPP 167

Provisions during the year 5 36

Utilisation - -

Other changes -81 -10

Closing balance 127 36

NOTE 28 OTHER LIABILITIES

2006 2005

Liabilities on investment banking settlements 5 505 3 705

Other 10 032 6 475

Total 15 537 10 180

NOTE 29 PREPAYMENTS AND ACCRUED INCOME

2006 2005

Accrued interest expense 13 509 9 636

Other accrued expense 2 084 2 026

Deferred income 50 86

Total 15 643 11 748



NOTE 30 SUBORDINATED LIABILITIES

2006 2005

Subordinated loans in Swedish kronor 349 349

Subordinated loans in foreign currency 51 323 46 446

Total 51 672 46 795

Average volumes



Specifi cation, subordinated loans

Issue/conv./fi nal paymt year Currency

Original nominal amount in each

currencyInterestrate %

Outstandingamount

IN SWEDISH KRONOR

Other Swedish7 349

Total 349

IN FOREIGN CURRENCY

2005/20151 EUR 500 variable 4 517

2005/20172 EUR 700 variable 6 317

2005/perpetual3 GBP 500 5.000 6 506

2005/perpetual4 EUR 500 4.194 4 261

2006/20165 EUR 600 4.000 5 372

2006/20166 USD 800 variable 5 477

Other foreign7 18 873

Total 51 323

Total 51 672

1 Fixed-term subordinated loan with 3-month variable coupon linked to Euribor. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2010. Premature redemption requires the approval of the Swedish Financial Supervisory Authority.

2 Fixed-term subordinated loan with 3-month variable coupon linked to Euribor. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from October 2012. Premature redemption requires the approval of the Swedish Financial Supervisory Authority.

3 Perpetual subordinated loan at fixed rate. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2010. Premature redemption requires the approval of the Swedish Financial Supervisory Authority. In connection with the right of redemption, the interest rate becomes variable linked to Libor.

4 Perpetual subordinated loan at fixed rate. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2015. Premature redemption requires the approval of the Swedish Financial Supervisory Authority. In connection with the right of redemption, the interest rate becomes variable linked to Euribor.

5 Fixed-term subordinated loan at fixed rate. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2011. Premature redemption requires the approval of the Swedish Financial Supervisory Authority. In connection with the right of redemption, the interest rate becomes variable linked to Euribor.

6 Fixed-term subordinated loan with 3-month variable coupon linked to Libor. Prema-ture redemption may occur in the case of changed tax regulations or on the interest due dates from 2011. Premature redemption requires the approval of the Swedish Financial Supervisory Authority.

7 Other subordinated loans which are not specified here are issued in the form of fixed-term or perpetual subordinated loans.

NOTE 31 SPECIFICATION OF CHANGES IN EQUITY

Change in exchange differences

Exchange differences 31 December 2004 -23

Change in exchange differences in branches 176

Change in exchange differences in subsidiaries 417

Change in exchange differences in associated companies 8

Change in exchange difference on financing of net assets in subsidiaries -213

Exchange difference 31 December 2005 365

Change in exchange differences in branches -271

Change in exchange differences in subsidiaries -339

Change in exchange differences in associated companies -11

Change in exchange difference on financing of net assets in subsidiaries 129

Exchange difference 31 December 2006 -127

Specifi cation of instruments available for sale (amount after tax) 2006 2005

Unrealised market value atbeginning of year 872 680

Unrealised market value of holdings sold during the year -336 -303

Unrealised market value change during the year for remaining and new holdings 587 495

Unrealised market value at end of year 1 123 872

Revaluations in insurance operations recognised directly in equity 2006 2005

Changes in value of properties recognised directly in equity 170 70

Insurance liabilities recognised directly in equity -170 -70

Total - -


CAPITAL ADEQUACY

Capital base and capital requirement SEK m 2006 2005

CAPITAL BASE

Tier 1 capital 1) 59 272 58 424

Net tier 2 capital 23 976 30 890

Total capital base 83 248 89 314

RISK-WEIGHTED AMOUNT

Credit risks 827 649 723 658

Market risks 48 529 45 581

Total 876 178 769 239

Capital ratio, % 9.5 11.6

Tier 1 ratio, % 6.8 7.6

Capital base 2006 2005

TIER 1 CAPITAL

Equity1 61 467 59 035

Tier 1 capital contribution 5 358 5 681

Minority interest 0 0

Deducted items

Goodwill and other intangible assets -5 917 -5 992

Revaluation -152 -159

Deferred tax asset -264 -197

Unrealised accumulated profit -1 123

Adjustments in accordance with stability filter

Cash flow hedges -97 56

Total tier 1 capital 59 272 58 424

TIER 2 CAPITAL

Perpetual subordinated loans 20 838 13 421

Fixed-term subordinated loans after reduction 25 072 26 548

Adjustment unrealised accumulated profit 1 128

Revaluation adjustment 152 159


Total 106 462 98 552

Less shareholdings in insurance companies and 5–50% in companies conducting banking business -22 148 -9 238

Less adjustment, unrealised pension obligations -1 066

Total tier 1 and tier 2 capital 83 248 89 314

Enlarged capital base - -


1 Tier 1 capital has been affected by the board’s proposed appropriations.


Other disclosures – Group


CAPITAL COVER CONTINUED

Risk-weighted amount for credit risks 2006 2005

Balance sheet items Weighting InvestmentsRisk-weighted

amount InvestmentsRisk-weighted

amount

Risk weight 0% (group A) 0% 367 231 266 254

Risk weight 20% (group B) 20% 42 693 8 539 43 466 8 693

Risk weight 50% (group C) 50% 545 623 272 811 502 984 251 491

Risk weight 100% (group D) 100% 471 262 471 262 392 683 392 683

Total 1 426 809 752 612 1 205 387 652 867

2006 2005

Off-balance-sheet items 2 WeightingNominalamount

Convertedamount

Risk-weightedamount

Nominalamount

Convertedamount

Risk-weightedamount

Risk weight 0% (group A) 0% 21 925 12 264 16 614 10 075

Risk weight 20% (group B) 20% 174 099 14 269 2 854 42 061 12 670 2 534

Risk weight 50% (group C) 50% 430 084 3 362 1 681 88 346 2 487 1 244

Risk weight 100% (group D) 100% 136 290 70 502 70 502 125 777 67 013 67 013

Total 762 398 100 397 75 037 272 798 92 245 70 791

Total credit risks 1 527 206 827 649 1 297 632 723 658

2 The nominal amounts for off-balance sheets items are recalculated using a factor which varies according to the credit risk in the commitments. The recalculated amounts are subsequently allocated according to the same principles (group A-D) which apply for the balance sheet items.

Risk-weighted amount for market risks 2006 2005

Specifi crisk

Generalrisk

Risk-weightedamount

Specifi crisk

Generalrisk

Risk-weightedamount

Interest rate risks 24 620 10 466 35 086 20 584 10 844 31 428

Equity price risks 815 764 1 579 791 612 1 403

Settlement risks 15 12

Counterparty risks and other risks 10 316 11 770

Exchange rate risks 1 533 968

Total market risks 48 529 45 581

Total risk-weighted amount for credit and market risks 876 178 769 239


CAPITAL POLICY

The Bank aims to maintain a satisfactory capital level corresponding to the risk implied by the Group’s operations and which exceeds the legal minimum requirement. A satisfactory capital level is needed to manage situations of fi nancial strain and also other events such as acquisitions and strong growth in volumes. In 2006, the Board established a new capital policy, which provides guidelines for Handelsbanken’s internal capital assessment.

INTERNAL CAPITAL ASSESSMENT

Handelsbanken must have available fi nancial resources correspond-ing to all the risks which lead to unexpected losses or reductions in value. Capital planning must be undertaken to ensure that capital is available when needed. The internal capital adequacy assessment also includes the groupwide risk control so that there is an overall assessment of the Group’s risks. Handelsbanken has decided to use an economic capital model (EC). The EC model provides a measure of the Group’s overall risks and corresponds to the capital which

with very high probability will cover unexpected losses or decreases in value from the perspective of the shareholders. The assessment is carried out regularly and also monitors compliance with external statutory capital requirements.

DESCRIPTION OF THE CAPITAL BASE FOR THE FINANCIAL CORPORATE GROUP

The Bank’s capital base consists of tier 1 capital, tier 2 capital and the enlarged capital base (to cover market risks). Tier 1 capital consists of the equity belonging to the companies which are part of the fi nancial corporate group and issued tier 1 loans. Accumu-lated shareholders’ equity deriving mainly from the Group’s insur-ance companies is excluded when calculating the capital base for the fi nancial corporate group. Tier 1 capital loans (certain types of subordinated loans) can be included up to 15% of the total tier 1 capital excluding tier 1 capital loans, net after reduction items. Handelsbanken has included 9% so far. The items which must be ex-cluded from the tier 1 capital are the impact of cash fl ow hedges,


COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

SEK m 2006 2005

Guarantees, loans 18 395 12 052


Irrevocable letters of credit 46 211 46 678

Own acceptances 213 201

Other 2 790 3 716

Total 107 227 95 791

Commitments and contingent liabilities and assets total SEK 107,227m (95,791). This amount includes SEK 61m (49) relating to a number of civil actions which the Group is bringing in general courts of law. The largest individual amount in dispute is SEK 30m (24). The Bank’s assessment is that the actions will essentially be settled in its favour. None of the disputed amounts, nor any insurance compensation, has been recognised in income.

The data for contingent liabilities is reported in nominal amounts and an assessed expected value is included in the “Other” amount for the civil actions that the Group is bringing.

The Group is currently pursuing a tax dispute. The total claim is approx. SEK 20m, excluding interest, which in the case of a positive judgement would increase the Group’s income by the same amount.


COLLATERAL PLEDGED FOR OWN DEBT

SEK m 2006 2005

Book value pledged assets 407 390 78 433

Of the book value of pledged assets, interest-bearing securities represent 11% (61), repos 11% (32) and mortgage loans 69% (0).In addition there are cash funds, shares and securities loans representing 9% (7).

Collateral pledges in the form of mortgage loans comprise the assets separated in favour of holders of covered bonds issued by the compa-ny. The collateral in Stadshypotek comprises loans to the public against mortgages in real property which are single-family dwellings, second homes, multi-family dwellings and ownership housing co-operatives with a loan to value ratio within 75% of the market value and additional collateral in the form of cash funds on a blocked account. A separate specifi cation is kept of the assets and the covered bonds, and also deri-vatives relating to these.

OTHER COLLATERAL PLEDGED

SEK m 2006 2005

Market value – collateral obtained 180 126 164 932

Market value – sold or pledged collateral - -

Total 180 126 164 932

Policyholders’ registered assets represent 91% (96) of the market value of collateral obtained.In addition there are cash funds, interest-bearing securities, securities and other loans of 9% (4).


deferred tax assets and goodwill and other intangible assets. Tier 2 capital mainly consists of perpetual and fi xed-term subordinated loans. Tier 2 capital must never exceed tier 1 capital. The extended capital base also comprises subordinated loans and may only be used to cover parts of the capital requirement for market risks.

LEGAL CAPITAL REQUIREMENT

In 2006, the Bank complied with requirements of the Act on the capital adequacy and large exposures of credit institutions and securities companies (1994:2004). This Act states that at any time the Bank must have a capital base corresponding to 8% of its risk-weighted assets. Risk-weighted assets are assets on the balance sheet, but also off-balance sheet items, sorted into different groups and allocated a capital requirement in the form of risk weights on the basis of risk classes defi ned in the Act.

Handelsbanken has met the requirements of the Act (2006:531) on special supervision of fi nancial conglomerates, which came into force on 1 July 2006. Institutions and insurance companies which are part of a fi nancial conglomerate must have a capital base which is adequate in relation to the capital requirement for the fi nancial conglomerate.

On 1 February 2007, new capital adequacy regulations were in-troduced in accordance with the Act on capital adequacy and large exposures (2006:1371). The Bank is expected to reserve a larger capital base than the minimum requirements to cover the risks arising in the operations in the form of credit risks, market risks and operational risks. For further information see the note on risks and risk control.


OTHER COMMITMENTS

SEK m 2006 2005



Total commitments regarding future payments 22 453 9 457

Credit promises 166 576 149 664


Total other commitments 297 532 273 864

Total 319 985 283 321

Contracted irrevocable future operating lease charges distributed by the year they fall due for payment 2006 2005

2007 645 364

2008 487 264

2009 424 184

2010 249 125

2011 187 84

2012 106 67

2013 70 33

2014 46 26

2015 38 21

2016 28 13

2017 20 12

2018 and later 41 24

Total 2 341 1 217


SEGMENT REPORTING 2006

SEK mBranchoffi ces Markets

AssetManagement

Pensions & Insurance Other

Total2006

Net interest income 14 324 572 168 139 -231 14 972

Net fee and commission income 4 174 1 728 1 193 2 304 -167 9 232

Net gains/losses on financial items at fair value 1 206 1 422 33 907 693 4 261

Risk result - insurance 571 571

Other income 391 839 90 153 -950 523

Total income 20 095 4 561 1 484 4 074 -655 29 559

Of which internal -8 841 9 634 -240 -262 4 200 4 491

Administrative expenses -8 241 -3 244 -677 -1 297 1 565 -11 894


Total expenses -8 394 -3 265 -679 -1 496 1 383 -12 451


Loan losses/recoveries 53 2 - - 55

Gains/losses on disposal of property, equipment and intangible assets 0 0 - - 1 1


Return on equity, % 18.5 14.0 30.4 34.7 20.9

Assets 1 119 346 702 974 24 133 216 669 -273 114 1 790 008

Liabilities 1 074 401 696 177 22 227 209 669 -278 692 1 723 782

Other disclosures

Investments in non-financial assets 152 33 4 30 283 502



GEOGRAPHICAL SEGMENT INFORMATION

Sweden Other Nordic countries Rest of world Eliminations Group

SEK m 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Income 22 031 20 579 4 747 3 779 2 912 2 042 -131 -77 29 559 26 323

Assets 1 466 953 1 223 920 246 230 221 206 461 163 421 439 -384 338 -283 658 1 790 008 1 582 907

Other disclosures

Investments in non-financial assets 399 4 388 60 29 43 19 502 4 436


SEGMENT INFORMATION 2005

SEK mBranchoffi ces Markets

AssetManagement

Pensions & Insurance Other

Total2005

Net interest income 14 655 482 113 -2 -158 15 090

Net fee and commission income 3 803 1 523 985 857 -113 7 055

Net gains/losses on financial items at fair value 1 261 1 010 42 65 1 081 3 459

Risk result – insurance 194 194

Other income 369 521 69 109 -543 525

Total income 20 088 3 536 1 209 1 223 267 26 323

Of which internal -6 399 6 344 -408 -68 4 421 3 890

Administrative expenses -7 797 -2 550 -608 -631 1 161 -10 425


Total expenses -7 935 -2 570 -611 -658 836 -10 938

Profit before loan losses 12 153 966 598 565 1 103 15 385

Loan losses/recoveries 259 3 - -1 261

Gains/losses on disposal of property, equipment and intangible assets 4 0 0 - 0 4

Operating profit 12 416 969 598 565 1 102 15 650

Return on equity, % 16.6 13.8 23.2 35.9 17.9

Assets 1 027 811 705 518 18 608 176 484 -345 514 1 582 907

Liabilities 971 313 700 252 16 853 175 134 -346 403 1 517 149

Other disclosures

Investments in non-financial assets 96 14 6 4 103 217 4 436


Internal income and expenses are included in the respective item on the income statement. Internal income consists of payment for services rendered according to the cost price principle. Expenses also include the distribution of costs made internally within the Group for services from business support operations.

The Other operations business area includes Treasury and the central head offi ce departments. It also includes capital gains/losses, dividends, and income and expenses that are not attributable to a specifi c segment.

Return on equity for the segments is computed after standard tax while for the whole Group and for Pensions & Insurance, it is com-puted after full tax.

The shareholders’ equity, on which calculation of return on equity is based, corresponds to the assessment of the Group’s overall actual capital requirement.


ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

SEK m USD EUR DKK NOK GBP JPY HKD SGDOther

currencies

Assets

Loans to credit institutions 83 531 9 387 6 068 1 497 610 438 134 36 4 488

Loans to the public 22 506 106 208 33 717 102 718 34 779 920 2 052 288 7 324

Bonds and other interest-bearing securities 70 231 30 772 2 203 4 945 631 0 77 23 5 784

Liabilities

Due to credit institutions 124 528 80 655 7 883 7 877 11 437 1 013 9 535 37 9 335

Deposits and borrowing from the public 37 548 49 202 19 075 43 936 14 664 126 173 244 3 773

Issued securities 177 677 91 593 483 3 347 15 183 1 114 0 0 1 094

Subordinated liabilities 9 676 22 727 0 0 18 041 892 0 0 0

Other assets and liabilities including positions in derivatives 172 899 97 199 -14 419 -53 799 23 164 1 514 7 437 23 -2 934

Net foreign currency positions -262 -611 128 201 -141 -273 -8 89 460

FAIR VALUE DISCLOSURES

SEK m

Bookvalue2006

Adjustment to fair

value 2006

Bookvalue2005

Adjustment to fair

value 2005

Assets

Loans to credit institutions 177 175 -34 136 546 -57

Loans to the public 1 100 538 -14 983 681 5 775

Interest-bearing securities 266 743 - 184 710 3

Other assets 245 552 2 500 277 970 2 185

Total assets 1 790 008 2 452 1 582 907 7 906

Liabilities

Due to credit institutions 320 482 76 289 053 331

Deposits and borrowing from the public 533 885 -14 407 617 -6

Issued securities 595 001 -2 169 486 344 2 626

Other liabilities 222 742 - 287 340 -

Subordinated liabilities 51 672 111 46 795 556

Total liabilities 1 723 782 -1 996 1 517 149 3 507

Total surplus/deficit 4 448 4 399


In accordance with IFRS, a comparison is to be made between fair value and book value for both assets and liabilities in the balance sheet and also fi nancial items which are not reported in the balance sheet. Values which are based on customer relations are not to be taken into account, although they may be of importance in valuing, for example, deposit accounts and mortgage and consumer credits. The directives allow scope for choice of method and various as-sumptions. Thus, the methods applied and the assumptions made may vary among the credit institutions. Information concerning fair value is not a corporate valuation and therefore cannot constitute the basis of a comparison between credit institutions.

For means of payment, current receivables and liabilities and also for receivables and liabilities with a variable interest rate, the fair value is considered to be the same as the book value. Receivables and liabilities with fi nal maturity or date for next interest rate fi xing within 30 days are considered to be short-term.

Assets and liabilities which are traded on liquid markets have been valued at the average price on the balance sheet day. Market-listed

off-balance-sheet items are valued in the same way. Items which are not traded on liquid markets, irrespective of

whether these are current assets, non-current assets, issued liabilities or off-balance-sheet fi nancial items are valued at the current market rate for the corresponding maturity adjusted to take into account the credit and liquidity risk. The credit and liquidity risk premium by which the market rate has been adjusted when making the valuation is assumed to be the same as the average margin for new lending at the time of the measurement.

Properties are valued on the basis of an external valuation.With the method applied, the interest risk in the balance sheet

gives rise to surplus values if short-term rates are falling and defi cits if interest rates are rising. A surplus value also occurs when margins decrease, and a defi cit when margins increase.

In cases where the fair value of assets is less than the book value and for liabilities, the book value is less than the fair value, this is because these items are subject to hedge accounting.



RELATED PARTY DISCLOSURES

SEK m Opening balance Increase/Decrease Closing balance

Lending Associated companies 23 -11 12

Others - - -

Total 23 -11 12

Other assets Associated companies - - -

Others 6 514 520

Total 6 514 520

Total assets Associated companies 23 -11 12

Others 6 514 520

Total 29 503 532

Deposits and borrowing Associated companies 155 85 240

Others 85 105 190

Total 240 190 430

Other financial liabilities Associated companies - 7 7

Others 674 102 776

Total 674 109 783

Other liabilities Associated companies 1 -1 -

Others - - -

Total 1 -1 -

Total liabilities Associated companies 156 91 247

Others 759 207 966

Total 915 298 1 213

SEK m 2006 2005

Interest income Associated companies 1 1

Others - 65

Total 1 66

Interest expense Associated companies -6 -3

Others -11 -144

Total -17 -147

Fee and commission income Associated companies 185 201

Others 6 167

Total 191 368

Fee and commission expense Associated companies -209 -237

Others - -

Total -209 -237

Net result on financial items at fair value

Associated companies - -

Others -53 -14

Total -53 -14

Other income Associated companies - -

Others 2 154

Total 2 154

Other expenses Associated companies - -53

Others -198 -69

Total -198 -122

Total Associated companies -29 -91

Others -254 159

Total -283 68


RELATED PARTY DISCLOSURES CONTINUED

The associated companies are listed in Note 14. These companies perform various types of services linked to the fi nancial markets. “Other” includes the various pension organisations: Svenska Handelsbankens Pensionsstiftelse, Svenska Handelsbankens Personalstiftelse and Pensionskassan SHB, försäkringsförening which use the Bank for customary banking and accounting services.

Shareholders’ contribution to associated companies, see Note 14.For 2005, ”Other” in the income statement includes SPP Livförsäkring AB (SPP). Svenska Handelsbanken AB mainly performs IT-related

services and asset management. Handelsbanken Liv Försäkrings AB and SPP also have close cooperation.

Related-party transactions with CEO, EVPs and board of directors

SEK m 2006 2005

Lending 85 98

Interest income 2 2

2006 2005

Deposits 16 10


For other transactions, see Note 5, Terms and remuneration for senior management.

Credit is granted after customary credit review. The interest rate is determined on normal commercial terms. However for employees of the Bank (not members of the board), the interest rate on credit up to SEK 1.5m is two percentage points lower than the equivalent interest rate for external customers. This benefi t is taxable for the employee and constitutes a basis for social security charges payable by the Bank. Credit to close family members is granted on normal commercial terms and is not included in this report. In exceptional cases, if credit to a close family member is granted at the subsidised interest rate described above, this is reported as a taxable benefi t for the employee. For deposits, the interest rate for employees is the same as for external customers.

LEASES

Disclosures on gross investment and present value of future minimum leasing payments

SEK m 2006 2005

Gross investment 36 066 32 831

Present value of future minimum lease payments at balance sheet date 32 641 30 883

Distribution of gross investment and minimum lease payments by maturityWithin1 year

Between 1and 5 years

Later than 5 years Total

Distribution of gross investment 5 066 10 852 20 148 36 066

Distribution of present value minimum leasing payments 5 014 10 287 17 340 32 641

Unearned fi nance income

SEK m 2006 2005

Unearned finance income 3 424 2 615

NON-GUARANTEED RESIDUAL VALUES ACCRUING TO THE LESSOR

All leases have guaranteed residual values.

PROVISION FOR BAD DEBTS REFERRING TO MINIMUM LEASE PAYMENTS

The book value of the provision for bad debts with respect to minimum lease payments is SEK 5.5m (4.7).

VARIABLE PART OF LEASE PAYMENTS INCLUDED IN EARNINGS FOR THE PERIOD

Amounted to SEK 142m (38) for 2006 due to higher interest rates in 2006 than 2005.

MAJOR LEASE CONTRACTS

The largest individual lease exposure is worth SEK 8.3bn (7.4).



Five-year review for the Group

As a consequence of the transition to IFRS the formats for the income statements and balance sheets for 2004–2006 have changed.The accounting policies are described on page 34. The income statements and balance sheets for 2002–2003 are reported in the format and according to the principlesin force at the close of the respective years, as no retroactive restatements can be made for these years without considerable difficulty.

FINANCIAL REPORTS ■ FIVE-YEAR REVIEW – GROUP

Income statement

SEK m 2006 2005 2004 2003 2002

Net interest income 14 972 15 090 14 808 Net interest income 18 345 17 006

Dividends received 491 392

Net fee and commission income 9 232 7 055 6 000 Net fee and commission income 4 707 4 587

Net gains/losses on financial itemsat fair value 4 261 3 459 2 390 Net gains/losses on financial items -1 827 -938

Risk result - insurance 571 194 44

Other dividend income 193 158 218

Share of profit of associated companies 105 59 104

Other income 225 308 399 Other operating income 243 320

Total income 29 559 26 323 23 963 Total operating income 21 959 21 367

Administrative expenses General administrative expenses

Staff costs -7 714 -6 678 -6 380 Staff costs -6 216 -6 203

Other expenses -4 180 -3 747 -3 364 Other expenses -2 855 -3 267

Depreciation and impairments of property, equipment and intangible assets -557 -513 -501

Depreciation and impairments of property, equipment and intangible assets -807 -866

Total expenses -12 451 -10 938 -10 245 Total expenses before loan losses -9 878 -10 336

Profit before loan losses 17 108 15 385 13 718 Profit before loan losses 12 081 11 031

Loan losses/recoveries 55 261 -167Loan losses incl. change in value of repossessed property -492 -392

Gains/losses on disposal of property, equipment and intangible assets 1 4 2

Impairment loss/reversals of financialfixed assets 199 -199

Share of profit of associated companies 29 20

Result of banking operations 11 817 10 460

Result of insurance operations -267 -270

Operating profit 17 164 15 650 13 553 Operating profit 11 550 10 190

Appropriations -89 -80

Profit before taxes 11 461 10 110

Taxes -4 036 -4 296 -3 693 Taxes -3 345 -2 817

Minority interest - -11

Profit for the year 13 128 11 354 9 860 Profit for the year 8 116 7 282

Attributable to

Ordinary shareholders 13 128 11 354 9 860

Minority interest - - -

Earnings per share, SEK * 20.41 16.98 14.55 11.70 10.50

* No dilution.


FINANCIAL REPORTS ■ FIVE YEAR REVIEW – GROUP

Balance sheet

SEK m 2006 2005 2004 2003 2002

Assets

Loans to the public 1 100 538 983 681 861 252 823 142 839 340

Loans to credit institutions 177 175 136 546 109 076 115 273 79 517

Interest-bearing securities 266 743 184 710 169 854 127 309 137 327

Other assets 245 552 277 970 176 607 194 730 221 330

Total assets 1 790 008 1 582 907 1 316 789 1 260 454 1 277 514

Liabilities and equity

Deposits and borrowing from the public 533 885 407 617 342 243 303 326 292 838

Due to credit institutions 320 482 289 053 258 995 202 689 235 113

Issued securities 595 001 486 344 441 614 458 701 464 402

Subordinated liabilities 51 672 46 795 25 182 26 732 26 801

Other liabilities 222 742 287 340 187 383 212 171 206 168

Shareholders’ equity 66 226 65 758 61 372 56 835 52 192

Total liabilities and equity 1 790 008 1 582 907 1 316 789 1 260 454 1 277 514

Memorandum items

Collateral pledged 111 535 125 570

Contingent liabilities 71 311 78 958

Pension obligations - -

Other commitments 5 954 068 6 594 156


FINANCIAL REPORTS ■ INCOME STATEMENT – PARENT COMPANY

Income statement – Parent company


SEK m 2006 2005

Interest income Note P1 34 644 24 156

Interest expense Note P1 -25 510 -15 557


Dividends received Note P2 3 362 815

Fee and commission income Note P3 7 107 6 430

Fee and commission expense Note P3 -1 276 -1 184


Net gains/losses on financial items Note P4 2 220 2 582

Other operating income Note P5 812 608

Total operating income 21 359 17 850

General administrative expenses

Staff costs Note P6 -7 186 -6 629

Other administrative expenses Note P7 -3 695 -3 192

Depreciation, amortisation and impairments of property, equipment and intangible assets Note P16, P17 -634 -310

Total expenses before loan losses -11 515 -10 131

Profit before loan losses 9 844 7 719

Loan losses, net Note P8 -200 -160


Appropriations Note P9 4 365 4 712

Profit before taxes 14 009 12 271

Taxes Note P24 -3 302 -3 404



FINANCIAL REPORTS ■ BALANCE SHEET – PARENT COMPANY

Balance sheet – Parent company


SEK m 2006 2005

ASSETS


Treasury bills and other eligible bills Note P13 37 484 37 031

Loans to credit institutions Note P11 338 037 312 391

Loans to the public Note P12 571 960 495 442

Bonds and other interest-bearing securities Note P13 153 935 149 057

Shares and participating interests Note P14 72 466 55 145

Assets where the customer bears the value change risk 1 437 -

Derivative instruments Note P15 57 271 72 863

Intangible assets Note P16 1 597 1 918

Property and equipment Note P17 1 741 1 716

Current tax assets 689 -

Deferred tax assets Note P24 - -

Other assets Note P18 20 842 12 683

Prepayments and accrued income Note P19 6 057 3 891

Total assets Note P10 1 268 192 1 149 056

LIABILITIES AND EQUITY

Due to credit institutions Note P20 353 112 311 876

Deposits and borrowing from the public Note P21 412 664 376 947

Liabilities where the customer bears the value change risk 1 437 -

Issued securities Note P22 254 484 217 774

Derivative instruments Note P15 67 719 76 724

Other trading liabilities Note P23 51 829 50 716

Current tax liabilities - 491

Deferred tax liabilities Note P24 382 248

Provisions Note P25 - -

Other liabilities Note P26 13 282 9 122

Accruals and deferred income Note P27 9 419 7 286

Subordinated liabilities Note P28 51 672 46 795

Total liabilities Note P10 1 216 000 1 097 979

Untaxed reserves Note P29 1 183 1 397

Share capital 2 888 2 879

Statutory reserve 2 682 2 682

Retained earnings 34 732 35 252


Total equity 51 009 49 680

Total liabilities and equity 1 268 192 1 149 056

MEMORANDUM ITEMS

Collateral pledged for own debt Note P31 121 978 79 319

Other collateral pledged Note P32 5 397 5 986

Contingent liabilities and commitments Note P33 136 268 126 703

Pension obligations Note P34 - -

Other commitments Note P35 309 852 271 389


Statement of changes in equity – Parent company

Restricted equity

SEK m Share capitalStatutory

reserveHedge

reserveFair value

reserveRetained earnings Total

Shareholders’ equity 31 December 2004 2 878 2 682 42 589 48 149

Impact of transition to IFRS 2005

Net effect of changeover to measuring at fair value according to IAS 39 -221 680 -347 112

Opening equity 2005 after adjustment 2 878 2 682 -221 680 42 242 48 261

Change in available-for-sale instruments, after tax Note P30 163 163


Exchange difference Note P30 176 176

Total changes in equity not recognised in the income statement - - 75 163 176 414


Total changes before transactions with the owners - - 75 163 9 043 9 281

Dividend -4 018 -4 018

Group contributions provided -1 376 -1 376




Shareholders’ equity 31 December 2005 2 879 2 682 -146 843 43 422 49 680

Change in available-for-sale instruments, after tax Note P30 259 259


Exchange difference Note P30 -261 -261

Total changes in equity not reported in the income statement - - 222 259 -261 220


Total changes before transactions with the owners - - 222 259 10 446 10 927

Dividend -4 543 -4 543

Group contributions provided -693 -693




Shareholders’ equity 31 December 2006 2 888 2 682 76 1 102 44 261 51 009

FINANCIAL REPORTS ■ STATEMENT OF CHANGES IN EQUITY – PARENT COMPANY


Cash fl ow statement – Parent company

SEK m 2006 2005

OPERATING ACTIVITIES


of which paid-in interest 33 404 34 668

of which paid-out interest -23 729 -23 500

of which paid-in dividends 2 223 252

Adjustment for non-cash items in the operating profit

Loan losses 578 306

Unrealised changes in value -2 271 1 360

Depreciation, amortisation and impairments 634 310

Paid income tax -4 465 -6 783

Changes in the assets and liabilities of operating activities

Loans to credit institutions -25 646 -32 107

Loans to the public -77 096 -85 711

Financial current assets -7 469 -36 758

Due to credit institutions 41 236 41 507


Issued securities 36 710 18 757

Derivative instruments, net positions 6 551 -12 882

Short-term positions 1 113 24 519

Claims and liabilities on investment banking settlements -9 270 1 610

Other 5 511 -2 949


INVESTING ACTIVITIES

Change in shares -12 180 -136

Change in interest-bearing securities 0 54

Change in property and equipment -293 -258

Change in intangible non-current assets -84 -23

Cash flow from investing activities -12 557 -363

FINANCING ACTIVITIES

Repayment of subordinated loans - -

Issued subordinated loans 4 876 21 612

Dividends paid -4 543 -4 018

Group contribution paid 3 027 4 867



Cash flow for the year -2 082 312

Liquid funds at beginning of year 6 919 6 302


Cash flow from investing activities -12 557 -363


Exchange rate difference on liquid funds -161 305

Liquid funds at end of year 4 676 6 919

FINANCIAL REPORTS ■ CASH FLOW STATEMENT – PARENT COMPANY


FINANCIAL REPORTS ■ NOTES – PARENT COMPANY

Notes – Parent company

NOTE P1 NET INTEREST INCOME

2006 2005

Interest income

Credit institutions and central banks 11 033 8 414

General public 21 275 17 535

Treasury bills and other eligible bills 2 610 986


Derivative instruments recognised as hedges 409 -280

Other interest income 869 454

Total interest income 45 098 32 515

Of which interest income reported in net gains/losses on financial items at fair value 10 454 8 359

Interest income according to income statement 34 644 24 156

Interest expense

Credit institutions and central banks -14 172 -8 902

General public -8 417 -5 184

Issued securities -10 646 -7 496

Derivative instruments recognised as hedges 989 804

Subordinated liabilities -2 299 -1 520

Other interest expense -4 322 -1 989

Total interest expense -38 867 -24 287

Of which interest expense reported in net gains/losses on financial items at fair value -13 357 -8 730

Interest expense according to income statement -25 510 -15 557


Includes interest income on bad debts SEK 50m (55). Total interest income on assets recognised at amortised cost during 2006 was SEK 31,908m (23,849). Total interest expense on liabilities recognised at amortised cost during 2006 was SEK 33,509m (20,382).

NOTE P2 DIVIDENDS RECEIVED

2006 2005

Dividend on shares and participating interests 1 332 720

Dividend from associated companies 32 11

Dividend from group companies 1 998 84

Total 3 362 815

NOTE P3 NET FEE AND COMMISSION INCOME

2006 2005

Brokerage 1 575 1 269

Mutual funds and custody 936 935

Insurance - 8

Payments 1 948 1 843

Lending and deposits 586 667

Guarantees 397 386

Other 1 665 1 322

Total fee and commission income 7 107 6 430

Brokerage, mutual funds and custody -343 -302

Payments -862 -814

Other -71 -68

Total fee and commission expense -1 276 -1 184


NOTE P5 OTHER INCOME

2006 2005

Rental income 37 38

Other operating income 775 570

Total 812 608

NOTE P4 NET GAINS/LOSSES ON FINANCIAL ITEMS

2006 2005

Available for sale, realised 922 1 019

Hedge accounting

Fair value hedges 93 65

of which hedging instruments 115 62

of which hedged items -22 3

Ineffective portion of cash flow hedges 0 0

Written back from equity on cash flow hedges 0 -

Ineffective portion of net investment hedges - -

Instruments measured at fair value -184 -82

of which change due to changed interbank interest rate -186 -82

Loan receivables, valued at cost 78 -

Financial liabilities, valued at cost 98 -

Trading 1 213 1 580

Total 2 220 2 582

Valuation techniques The result includes unrealised results as a consequence of measuring balance sheet items at fair value. The assessment is mainly made on the basis of market prices. When there are no market prices the assessment uses models based on official market pric-es. More advanced calculation models contain parameters that are not listed, where assumptions and estimates must be made instead. These more advanced valuation models are seldom needed and when they are, valuation models that are generally ac-cepted by the market are always used. Net gains/losses on financial items at fair value include an item of SEK -535m, where the fair value is partly based on the Bank’s own assumptions. The instruments included in this item are mainly equity index options. The positions are essentially matched by opposite positions in listed financial instruments and instruments whose fair value has been assessed on the basis of models based on official market prices.



Sickness absence rate in the Swedish operations %

2006 2005

Age Men Women Total Men Women Total

–29 1.6 2.8 2.3 2.3 2.5 2.4

30–49 1.9 4.6 3.3 1.8 5.1 3.6

50– 3.0 7.3 5.4 3.4 7.6 5.8

Total 2.2 5.3 3.9 2.3 5.8 4.2

Of which on long-term sick leave, percentage points of total sickness absence

–29 0.6 0.7 0.6 1.0 0.4 0.6

30–49 0.8 2.8 1.9 0.5 3.2 2.0

50– 1.7 5.2 3.7 2.0 5.4 4.0

Total 1.0 3.4 2.3 1.0 3.8 2.5

See Group Note 5.Principles for remuneration to senior management.Decision process for remuneration to senior management.Terms and remuneration for senior management.Pension obligations.Loans to senior management.

NOTE P6 STAFF COSTS

2006 2005

Salaries and fees -4 586 -4 205

Social security costs -1 262 -1 172

Pension costs * -718 -649

Provision to profit-sharing foundation -117 -115

Other staff costs -503 -488

Total -7 186 -6 629

* SEK 468m (442) of the pension costs are costs calculated on an actuarial basis and SEK 302m (207) are pension premiums.

The calculated pension cost which is charged to the operating profit is based on the number of employees in active service.

See the specification of the Group’s pension expenses in Note P34.Insurance premiums paid to group companies are SEK 5m (5).

Salaries and other remuneration 2006 2005

Board, CEO and EVPs

Sweden -58 -67

Norway -3 -3

Finland -3 -4

Denmark -3 -3

Great Britain -4 -5

Sub-total -71 -82

Others

Sweden -3 099 -2 935

Norway -377 -300

Finland -265 -234

Denmark -299 -270

Great Britain -278 -204

Luxembourg -13 -14

Germany -28 -28

USA -88 -80

Singapore -27 -23

Hong Kong -11 -12

Poland -17 -14

Other countries -13 -9

Sub-total -4 515 -4 123

Total -4 586 -4 205

Gender distribution % 2006 2005

Men Women Men Women

Board of directors 69 31 69 31

CEO/EVPs 90 10 90 10

Audit costs Audit Consulting

2006 2005 2006 2005

Auditors elected by the AGM

KPMG Bohlins AB -7.0 -5.6 -0.2 -1.7

Ernst & Young AB -1.1 -0.8 0.0 -0.2

Auditors elected by the Swedish Finan-cial Supervisory Authority

PricewaterhouseCoopers AB -1.3 -1.4 -0.7 -0.9

Internal audit -64.9 -66.0

NOTE P7 OTHER ADMINISTRATIVE EXPENSES

2006 2005

Property and premises -827 -810

External IT costs -1 228 -873

Communication -331 -345

Travel and marketing -309 -272

Purchased services -671 -524

Supplies -188 -173

Other expenses -141 -195

Total -3 695 -3 192

Of which lease expenses

Minimum lease fee -697 -575

Variable fee -18 -146

Total -715 -721

Rental costs for premises normally have a variable fee related to the inflation rate and to property taxes. Only one of the major lease contracts has a variable fee (related to Stibor).

In 2006, the cost of the largest individual lease contract was approx. SEK 61m (58).



NOTE P8 LOAN LOSSES

2006 2005

A. SPECIFIC PROVISION FOR INDIVIDUALLY ASSESSED LOAN RECEIVABLES

The year’s write-off for actual loan losses -554 -574

Write-back of previous provisions for possible loan losses which are reported as actual loan losses in the year’s accounts 490 406

The year’s provision for probable loan losses -448 -466


Write-back of provisions for probable loan losses which are no longer necessary 273 324

Net expense for the year for individually assessed loan receivables 138 -166

B. PROVISION BY GROUP FOR INDIVIDUALLY ASSESSED LOAN RECEIVABLES

Allocation to/dissolution of provision by group -339 -

C. COLLECTIVELY ASSESSED HOMOGENEOUS GROUPS OF LOAN RECEIVABLES WITH LIMITED VALUE AND SIMILAR CREDIT RISK

The year’s write-off for actual loan losses 0 0


Allocation to/dissolution of reserve for loan losses 0 0

Net expense for the year for collectively assessed homogenous groups of loan receivables 1 2

D. TRANSFER RISK

Allocation to/dissolution of reserve for transfer risks - -

Net expense for the year for loan losses (A+B+C+D) -200 -164

Change in value of repossessed property - 4

Total loan losses -200 -160

Both actual and probable loan losses reduce the corresponding receivable amount on the assets side of the balance sheet. The reserve for prob-able loan losses has decreased by SEK 27m for the parent company in the form of exchange differences.

Recovered from actual loan losses in previous years includes calculations relating to recoveries in the portfolio of overdue loans which is subject to monitoring. Previously these were only booked in the consolidated accounts but they can now be reported for a legal entity. For 2006, this has resulted in an income item of SEK 217m.

Allocation to/dissolution of group provisions were previously only booked in the consolidated accounts but can now be reported for a legal entity.

2006 2005

Impairment losses


Claims on the public -851 -634

Total impairment losses -851 -634

Write-backs


Claims on the public 272 310

Total write-backs 273 324

NOTE P9 APPROPRIATIONS

2006 2005

Settlement of pensions

Calculated pension premiums in the Bank 468 442

Pensions paid by the Bank -534 -438

Compensation from pension foundation 520 -

Total 454 4

Change in amortisation of goodwill in excess of plan 152 -208

Change in other untaxed reserves - 23

Group contribution 3 759 4 893

Total 4 365 4 712



NOTE P10 CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES 2006

At fair value in the income statement divided into:

Derivatives designated

as hedge instruments

Investments held to

maturity

Loans and customer

receivables

Financial assets

available for sale

Other fi nancial liabilities

Non-fi nancial assets/

liabilities TotalTrading Other *

Assets





Bonds and other interest-bearing securities 144 595 9 340 153 935


Assets where the customer bears the value change risk 1 437 1 437





Deferred tax assets

Other assets 20 842 20 842


Total assets 258 780 4 632 1 361 936 228 63 164 4 027 1 268 192

Liabilities



Liabilities where the customer bears the value change risk 1 437 1 437




Current tax liabilities


Provisions


Accruals and deferred income 3 196 6 223 9 419


Total liabilities 162 072 2 492 1 049 617 1 819 1 216 000

* Classified to be measured at fair value.



NOTE P10 CONTINUED CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES 2005

At fair value in the income statement divided into

Derivatives identifi ed as hedge

instruments

Investments held to

maturity

Loans and customer

receivables

Financial assets

available for sale

Other fi nancial liabilities

Non fi nancial assets/

liabilities Total Trading Other *

Assets




Loans to the public 15 4 574 490 853 495 442

Bonds and other interest-bearing securities 134 224 502 38 14 293 149 057





Current tax assets

Deferred tax assets

Other assets 446 2 12 235 12 683


Total assets 258 532 4 574 1 490 515 825 203 55 108 3 634 1 149 056

Liabilities








Provisions


Accruals and deferred income 187 7 099 7 286


Total liabilities 272 855 2 729 821 656 739 1 097 979

* Classified to be measured at fair value.




Loans to credit institutions in Swedish kronor 214 911 195 967

Loans to credit institutions in foreign currency 164 299 146 631

Total 379 210 342 598


NOTE P11 LOANS TO CREDIT INSTITUTIONS

2006 2005


Banks 32 291 23 690


Sub-total 210 676 194 548


Banks 31 157 24 941


Sub-total 127 363 117 843

Probable loan losses -2 0

Total 338 037 312 391


Remaining maturities Payable on demand

Within 3 months

>3 months to 1 year

>1 year to 5 years

Over 5 years Total

2006 101 729 146 740 42 957 36 738 9 873 338 037

2005 78 510 135 232 61 657 27 636 9 356 312 391




Loans to the public in Swedish kronor 258 960 234 094

Loans to the public in foreign currency 281 253 228 096

Total 540 213 462 190


Bad debts etc. For defi nitions see inside back cover 2006 2005

Bad debts 2 483 3 158

Specific provisions for individually assessed loan receivables -1 505 -1 848

Provision for collectively assessed homogeneous groups of loan receivables with limited value and similar credit risk 0 0

Provisions by group for individually assessed loan receivables -339 0

Net bad debts 639 1 310

Total bad debt reserve ratio, % 74.3 58.5

Proportion of bad debts, % 0.08 0.17

Non-performing loans which are not bad debts, SEK m 440 277

Book value of loan receivables restructured during the year, before restructure, SEK m 17 34

Book value of loan receivables restructured during the year, after restructure, SEK m 18 39

Bad debts reclassified as normal loans during the year, SEK m 40 83

Group provisions were previously only booked in the consolidated accounts, but are now booked on the legal entities.

NOTE P12 LOANS TO THE PUBLIC

2006 2005




Sub-total 273 289 245 114




Sub-total 300 513 252 176

Probable loan losses -1 842 -1 848

Total 571 960 495 442



Within 3 months

>3 months to 1 year

>1 year to 5 years

Over 5 years Total

2006 84 317 87 438 96 087 146 245 157 873 571 960

2005 30 603 71 665 86 888 128 673 177 613 495 442



NOTE P13 INTEREST-BEARING SECURITIES

2006 2005

Nominal value Fair value Nominal value Fair value


Government instruments 34 611 35 265 25 797 27 080

Credit institutions 48 787 49 136 38 061 38 547

Mortgage institutions 29 583 29 838 39 260 41 082

Other 76 891 77 180 73 395 79 382

Total 189 872 191 419 176 513 186 091

Adjustment to book value for investments held to maturity - -3

Total book value 191 419 186 088


Government instruments eligible as collateral with central banks 34 611 35 265 25 797 27 080

Other instruments eligible as collateral with central banks 2 221 2 219 9 570 9 951

Total interest-bearing securities 36 832 191 419 35 367 186 088

Of which unlisted securities 569 7 926


IFRS 7 is applied from 1 January 2005 onwards.


Within 3 months

>3 months to 1 year

>1 year to 5 years

Over 5 years Total

2006 253 16 779 58 007 93 410 22 970 191 419

2005 2 878 14 445 37 014 106 729 25 022 186 088



NOTE P14 SHARES AND PARTICIPATING INTERESTS

2006 2005

Held for trading

Listed 18 253 14 485

Non-listed 28 10

Sub-total 18 281 14 495

Holdings classified as Available for sale

Listed 5 161 4 537

Non-listed 801 354

Sub-total 5 962 4 891

Holdings in associated companies, non-listed 245 237

Holdings in group companies, non-listed 47 978 35 522

Total 72 466 55 145



NOTE P14 CONTINUED

Associated companies Corporate identity number

Registered offi ce

Number of shares

Participating interest %

Book value

2006 2005

Bankomatcentralen AB 556197-2265 Stockholm 1 100 21.9 0 0

BGC Holding AB 556607-0933 Stockholm 25 382 25.4 4 4

Centralen för Elektroniska Korttransaktioner CEK AB 556362-0383 Stockholm 370 37.0 0 0

BDB Bankernas Depå AB 556695-3567 Stockholm 8 000 20.0 4 -

Finansiell ID-teknik BID AB 556630-4928 Stockholm 12 735 28.3 19 15

Privatgirot AB 556302-4552 Stockholm 290 29.0 1 1

Upplysningscentralen UC AB 556137-5113 Stockholm 2 429 24.3 0 0

VPC AB 556112-8074 Stockholm - - - 217

VPC Holding AB 556709-1763 Stockholm 443 700 24.8 217 -

Sub-total 245 237

Group companies Corporate identity number

Registered offi ce

Number of shares


Book value

2006 2005

Swedish credit institutions

Handelsbanken Finans AB 556053-0841 Stockholm 1 550 000 100 145 145

Stadshypotek AB 556459-6715 Stockholm 162 000 100 26 870 26 870

Stadshypotek Bank AB 516401-9803 Stockholm 3 000 000 100 361 361

Sub-total 27 376 27 376

Foreign credit institutions

SH 2005 S.A 017277754 Warsaw 125 100 1 494

Handelsbanken Markets Securities, Inc 11-3257438 New York 1 000 100 23 23

Svenska Handelsbanken Delaware Inc., USA 13-3153272 Delaware 1 000 100 0 0

Svenska Handelsbanken S.A. RCS Lux B-15992 Luxembourg 1 000 000 100 147 147

ZAO Svenska Handelsbanken 1057711005384 Moscow 1 500 000 100 453 415

Sub-total 624 1 079

Other Swedish companies

AB Handel och Industri 556013-5336 Stockholm 100 000 100 5 5

Fritidsvärden AB* 556192-4803 Göteborg 1 000 100 0 0

FV Fastighetsvärden AB 556043-2766 Stockholm 1 000 100 134 134

Förvaltnings AB Lejontrappan* 556481-1551 Göteborg 1 000 100 0 0

Handelsbanken Fondbolagsförvaltning AB 556070-0683 Stockholm 10 000 100 1 1

Handelsbanken Försäkring AB 516401-8326 Stockholm 1 500 100 300 300

Handelsbanken Liv Försäkrings AB 516401-8284 Stockholm 100 000 100 3 238 1 538

Handelsbanken Mezzanine Management AB 556679-2668 Stockholm 5 000 100 1 1

Handelsbanken Mezzanine Fond 1 KB 969710-3126 Stockholm Participation 100 95 100

Handelsbanken Skadeförsäkrings AB 516401-6767 Stockholm 1 500 100 30 15

Siboelf Shipping AB* 556482-2525 Göteborg 1 000 100 0 0

SPP Fonder AB 556397-8922 Stockholm 1 000 100 51 51

SPP Livförsäkring AB 516401-8524 Stockholm 2 000 100 15 464 4 264

Sub-total 19 319 6 409

* Shares taken over to protect claim.

Other foreign companies Corporate identity number

Registered offi ce

Number of shares


Book value

2006 2005

Ejendomsselskabet af 1. januar 2002 A/S 38300512 Herning 2 460 000 100 393 392

Forva AS 945812141 Oslo 4 000 000 100 1 1

Rådstuplass 4 ASA 910508423 Bergen 40 000 100 146 146

SHB Verwaltungs- und Beteiligungsgesellschaft mbH HRB 29714 Frankfurt Participation 100 - -

SIL (Nominees) Limited 1932320 London 100 100 - -

Svenska Finans International BV 0055 97 705 Rotterdam 10 200 100 84 84

Svenska Property Nominees Limited 2308524 London 100 100 - -

Svenska Re S.A. RCS Lux B-32053 Luxembourg 19 999 99.99 35 35

Sub-total 659 658

Total 47 978 35 522



NOTE P15 DERIVATIVE INSTRUMENTS

Nominal amount/maturity Positive market values Negative market values

Up to 1 year

> 1 year to 5 years

Over5 years

Total 2006

Total 2005 2006 2005 2006 2005

Derivatives held for trading


Options 179 614 82 034 8 545 270 193 272 728 3 118 2 944 2 874 2 644

FRA/futures 3 086 800 985 100 8 856 4 080 756 3 986 109 1 138 820 1 085 806

Swaps 934 920 1 224 515 563 425 2 722 860 2 668 322 22 425 41 034 23 882 42 239

Other instruments 10 510 208 - 10 718 14 841 4 6 0 6


Options 33 204 2 183 - 35 387 50 775 89 439 98 365

Futures 1 109 219 12 238 405 1 121 862 1 354 674 13 196 17 270 17 834 12 639

Swaps 170 209 162 158 23 293 355 660 269 470 4 594 2 651 5 115 3 689

Equity-related contracts

Options 79 285 47 452 6 089 132 826 118 947 7 892 5 314 10 310 8 537

Futures 30 683 2 152 - 32 835 23 168 1 232 150 1 197 682

Swaps 718 1 404 418 2 540 3 038 320 134 1 204 1 385

Other instruments 32 - - 32 449 328 13 16 24

Other derivative contracts 365 29 346 749 30 460 15 440 1 574 598 1 612 979

Sub-total 5 635 559 2 548 790 611 780 8 796 129 8 777 961 55 910 71 373 65 227 73 995

Derivatives for fair value hedges


FRA/futures 3 500 6 300 - 9 800 8 100 6 4 3 5

Swaps 22 821 46 709 18 872 88 402 58 806 545 326 1 260 1 472

Other instruments 29 206 - - 29 206 3 953 4 2 4 2


Options 45 - - 45 - 0 - - -

Futures 71 092 15 344 - 86 436 76 032 658 1 141 1 183 1 028

Other instruments 345 48 - 393 - 1 - - -

Other derivative contracts 182 - - 182 - - - 0 -

Sub-total 127 191 68 401 18 872 214 464 146 891 1 214 1 473 2 450 2 507

Derivatives for cash flow hedges


Swaps 1 677 6 611 3 223 11 511 10 942 147 17 42 222

Sub-total 1 677 6 611 3 223 11 511 10 942 147 17 42 222

Total 5 764 427 2 623 802 633 875 9 022 104 8 935 794 57 271 72 863 67 719 76 724

Of which cleared 2 878 349 2 992 847 2 973 5 412 1 776 5 693

Currency breakdown of market values

SEK 166 787 15 754 268 692 105 342

USD -120 028 223 253 -234 722 120 697

EUR 33 307 -62 451 5 649 -91 711

Others -22 795 -103 693 28 100 -57 604

See Group Note 16 for a description of Hedge accounting.



NOTE P16 INTANGIBLE ASSETS

Goodwill on the purchase of net assets

Internally developed

software Total 2006 Total 2005

Cost of acquisition at beginning of year 2 170 29 2 199 2 066

Cost of acquisition of additional intangible assets 12 72 84 23

Foreign exchange effect -104 - -104 110

Cost of acquisition at close of year 2 078 101 2 179 2 199

Accumulated amortisation and impairments at beginning of year -280 -1 -281 -265

Amortisation for the year according to plan -297 -2 -299 -1

Impairments for the year - -25 -25 -

Foreign exchange effect 23 - 23 -15

Accumulated amortisation and impairments at end of year -554 -28 -582 -281

Closing residual value 1 524 73 1 597 1 918

AmortisationAmortisation is based on the expected useful life. At present, this means that principally the following amortisation rates are applied:

Goodwill 20 years

Internally developed software 5 years

Other intangible assets Individual testing

The useful life of goodwill on acquisition assets in the parent company is assessed to have a life which is virtually without limit. The depreciation period has been set at 20 years.

NOTE P17 PROPERTY AND EQUIPMENT

Other property and equipment

Investment property

1–4 years depreciation



20+ years depreciation

No depreciation Total 2006 Total 2005

Opening cost of acquisition - 671 831 117 1 212 593 3 424 3 345

New acquisitions during the year - 132 151 9 - 0 292 258

Capitalised new construction and rebuilding costs during the year - - - - 66 - 66 40

Acquisition value of property and equipment sold during the year - -192 -171 -4 -31 0 -398 -275

Foreign exchange effect - -12 -25 -2 - 0 -39 56

Total cost of acquisition - 599 786 120 1 247 593 3 345 3 424

Accumulated depreciation at beginning of year - -510 -588 -56 -554 -1 708 -1 630

Accumulated depreciation on sold property and equipment - 187 166 4 32 389 271

Year’s impairment losses recognised in the income statement - - - - -10 -10 -5

Year’s depreciation - -128 -125 -11 -36 -300 -304

Foreign exchange effect - 10 15 0 - 25 -40

Total accumulated depreciation - -441 -532 -63 -568 -1 604 -1 708

Book value of repossessed property for protection of claims - - - - 0

Total collateral taken over - - - - 0

Residual value according to plan - 158 254 57 679 593 1 741 1 716

Of which land - 583 583 583

Tax assessment value for Swedish properties - 2 172 2 172 2 172

Apart from owned equipment, the Bank also has at its disposal equipment under operating leases.The residual value of leased equipment in the Bank was SEK 99m (117).



NOTE P18 OTHER ASSETS

2006 2005

Claims on investment banking settlements 14 866 3 481

Other 5 976 9 202

Total 20 842 12 683

NOTE P19 PREPAYMENTS AND ACCRUED INCOME

2006 2005

Accrued interest income 4 854 3 394

Other accrued income 1 171 464

Prepayments 32 33

Total 6 057 3 891

NOTE P20 DUE TO CREDIT INSTITUTIONS

2006 2005

Due in Swedish kronor

Banks 44 146 30 753


Sub-total 67 939 40 913

Due in foreign currency

Banks 240 951 217 401


Sub-total 285 173 270 963

Total 353 112 311 876



Within 3 months

>3 months to 1 year

>1 year to 5 years Over 5 years Total

2006 77 722 248 852 24 409 2 079 50 353 112

2005 49 079 234 285 25 766 2 645 101 311 876


Due to credit institutions in Swedish kronor 53 452 40 688

Due to credit institutions in foreign currency 350 047 286 595

Total 403 499 327 283




NOTE P21 DEPOSITS AND BORROWING FROM THE PUBLIC

Deposits and borrowing from the public 2006 2005


Deposits from the public 2006 2005

Deposits in Swedish kronor


Companies etc. 108 701 108 810

Sub-total 210 337 196 294

Deposits in foreign currency


Companies etc. 104 870 97 955

Sub-total 127 846 121 204

Total 338 183 317 498

Average volume of borrowing from the public 2006 2005

Borrowing from the public in Swedish kronor 35 916 26 775

Borrowing from the public in foreign currency 46 844 39 343

Total 82 760 66 118



Within 3 months

>3 months to 1 year


2006 2 473 64 040 6 814 793 361 74 481

2005 2 948 50 461 4 947 1 081 12 59 449

Borrowing from the public 2006 2005

Borrowing from the public



Total 74 481 59 449


Average volumes of deposits from the public 2006 2005

Deposits from the public in Swedish kronor 208 299 187 277

Deposits from the public in foreign currency 127 596 112 798

Total 335 895 300 075


Within 3 months

>3 months to 1 year


2006 315 551 13 321 1 401 701 7 209 338 183

2005 290 549 21 631 3 376 500 1 442 317 498



NOTE P22 ISSUED SECURITIES

2006 2005

Nominal amount Book value Book value

Certificates

Certificates in Swedish kronor 7 281 8 787 5 353

Of which

at amortised cost - - 5 353

for trading 7 281 8 787 -

Certificates in foreign currency 166 389 166 137 163 872

Of which



for trading 31 886 31 894 -

Sub-total 173 670 174 924 169 225

Bond loans

Bond loans in Swedish kronor 29 081 25 647 18 151

Of which


for fair value hedges 10 905 10 816 -

Bond loans in foreign currency 55 334 53 913 30 398

Of which



Sub-total 84 415 79 560 48 549

Total 258 085 254 484 217 774

Remaining maturities carrying amount Payable on demand

Within 3 months

>3 months to 1 year

>1 year to 5 years >5 years Total

2006 1 657 132 064 70 008 48 644 2 111 254 484

2005 - 94 779 101 592 20 606 797 217 774

Average volume of issued securities 2006 2005



Turnover of own issued securities

2006 2005SEK bn

Issued 872 1 019

Repurchased 153 109

Repaid 668 922

NOTE P23 OTHER TRADING LIABILITIES

2006 2005

Short positions at fair value

Shares 2 053 3 868


Of which

Other issuers 49 626 46 848

Own issued 150 -

Total 51 829 50 716

Remaining maturities short positions interest-bearing securities Payable on demand

Within 3 months

>3 months to 1 year

>1 year to 5 years >5 years Total

2006 3 78 2 627 37 695 9 373 49 776

2005 - 2 037 5 735 31 910 7 166 46 848

Average volumes of other trading liabilities 2006 2005





NOTE P24 TAXES


Derivative instruments - 57


Other 2 10

Offsetting against deferred tax liability -48 -115

Total - -




Derivative instruments 30 -

Offsetting against deferred tax assets -48 -115

Total 382 248

Net deferred tax liabilities 382 248

Year’s change in deferred taxesOpening balance

Recognised in the income

statement

Recognised directly in

equityClosing balance

Shares and participating interests 219 33 252

Derivative instruments -57 87 30

Property and equipment 96 7 103

Other -10 10 -3 -3

Total 248 17 117 382

Tax expenses recognised in the income statement 2006 2005

Current tax

Tax expense for the year -3 449 -3 677

Adjustment of tax attributable to previous years 164 45

Deferred tax

Changes in temporary differences -17 228

Total -3 302 -3 404

Nominal tax rate in Sweden, % 28.0 28.0

Deviations

Non-taxable dividend -4.1 -0.2

Non-taxable income/non-deductible expenses -0.0 -0.1

Tax relating to previous years -0.3 -

Effective tax rate, % 23.6 27.7

NOTE P25 PROVISIONS

2006 2005

Opening balance - 10

Provisions during the year - -

Utilisation - -

Other changes - -10

Closing balance - -

NOTE P26 OTHER LIABILITIES

2006 2005

Liabilities on investment banking settlements 4 764 2 650

Other 8 518 6 472

Total 13 282 9 122



NOTE P28 SUBORDINATED LIABILITIES

2006 2005



Total 51 672 46 795

Average volumes



Specifi cation, subordinated loans

Issue/conv./fi nal paymt yr Currency

Original nominal

amount in each

currencyInterest rate %

Outstanding amount

IN SWEDISH KRONOR

Other Swedish 7 349

Sub-total 349

IN FOREIGN CURRENCY

2005/2015 1 EUR 500 variable 4 517

2005/2017 2 EUR 700 variable 6 317

2005/perpetual 3 GBP 500 5.000 6 506

2005/perpetual 4 EUR 500 4.194 4 261

2006/2016 5 EUR 600 4.000 5 372

2006/2016 6 USD 800 variable 5 477

Other foreign 7 18 873

Sub-total 51 323

Total 51 672

1 Fixed-term subordinated loan with 3-month variable coupon linked to Euribor. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2010. Premature redemption requires the approval of the Swedish Financial Supervisory Authority.

2 Fixed-term subordinated loan with 3-month variable coupon linked to Euribor. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from October 2012. Premature redemption requires the approval of the Swedish Financial Supervisory Authority.

3 Perpetual subordinated loan at fixed rate. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2010. Premature redemption requires the approval of the Swedish Financial Supervisory Authority. In connection with the right of redemption, the interest rate becomes variable linked to Libor.

4 Perpetual subordinated loan at fixed rate. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2015. Premature redemption requires the approval of the Swedish Financial Supervisory Authority. In connection with the right of redemption, the interest rate becomes variable linked to Euribor.

5 Fixed-term subordinated loan at fixed rate. Premature redemption may occur in the case of changed tax regulations or on the interest due dates from 2011. Premature redemption requires the approval of the Swedish Financial Supervisory Authority. In connection with the right of redemption, the interest rate becomes variable linked to Euribor.

6 Fixed-term subordinated loan with 3-month variable coupon linked to Libor. Prema-ture redemption may occur in the case of changed tax regulations or on the interest due dates from 2011. Premature redemption requires the approval of the Swedish Financial Supervisory Authority.

7 Other subordinated loans which are not specified here are issued in the form of fixed-term or perpetual subordinated loans.

NOTE P29 UNTAXED RESERVES

2006 2005

Accumulated amortisation on goodwill in excess of plan 1 183 1 397

Total 1 183 1 397

NOTE P30 SPECIFICATION OF CHANGES IN EQUITY

Change in exchange differences


Change in exchange differences in foreign branches 176

Exchange difference 31 December 2005 154

Change in exchange differences in foreign branches -261


Specifi cation of instruments available for sale (amount after tax) 2006 2005

Unrealised market value at beginning of year 843 680

Unrealised market value of associated holdings sold during the year -327 -303

Unrealised market value change value during the year for remaining and new holdings 586 466

Unrealised market value at end of year 1 102 843

NOTE P32 OTHER COLLATERAL PLEDGED

2006 2005

Cash funds 783 233

Government instruments and bonds 2 778 3 994

Securities loans 1 836 1 759

Total 5 397 5 986

NOTE P31 COLLATERAL PLEDGED FOR OWN DEBT

2006 2005

Government instruments and bonds 44 356 47 982

Repos 42 999 25 803

Shares - 366

Cash 20 330 4 442

Securities loans 14 293 726

Total 121 978 79 319

Turnover of own shares

SEK bn 2006 2005

Issued 16.1 11.5

Repurchased 20.4 14.0

NOTE P27 ACCRUALS AND DEFERRED INCOME

2006 2005

Accrued interest expense 7 556 5 404

Other accrued expense 1 829 1 851

Deferred income 34 31

Total 9 419 7 286


NOTE P33 COMMITMENTS, CONTINGENT LIABILITIES AND ASSETS

2006 2005



Irrevocable letters of credit 46 211 46 678

Own acceptances 201 201

Other 136 178

Total 136 268 126 703

Commitments and contingent liabilities and assets total SEK 136,268m (126,703). This amount includes SEK 61m (49) relating to a number of civil actions which the parent company is bringing in general courts of law. The largest individual amount in dispute is SEK 30m (24). The Bank’s assessment is that the actions will essentially be settled in its favour. None of the disputed amounts, nor any insurance compensation, has been recognised in income.

The data for contingent liabilities is reported in nominal amounts and an assessed expected value is included in the amount under ”Other” for the civil actions that the parent company is bringing.

The parent company is currently pursuing a tax dispute. The total claim is approx. SEK 20m, excluding interest, which in the case of a positive judgement would increase the parent company’s income by the same amount.

NOTE P34 PENSION OBLIGATIONSPension obligations, plan assets and pension commitments are calculated in accord-ance with the Act on Safeguarding Pension Obligations and the Swedish Financial Supervisory Authority’s regulations, and have developed as follows. The pension obligations are entirely covered by assets in the pension foundations and are not reported on the balance sheet.

2006 2005



Surplus value (not reported) -5 953 -4 026

Pension costs -527 -911

Interest expense -281 -268

Yield 4 547 4 675

Cost of own retirement plans 3 739 3 496

Insurance premiums -302 -207

Costs covered by surpluses in specially designated assets/increase of surplus in specially designated assets

-3 753 -3 934

Pension costs -316 -645

Of which reported under appropriations -14 -438

PENSION OBLIGATIONS


Pension costs 527 911


Pensions paid by the Bank -534 -438

Other increase in capital value 1 826 2 005


PLAN ASSETS


Return 4 547 4 675

Funds paid from pension foundation -520 -


Percentage return on specially separated assets 20 24

NOTE P35 OTHER COMMITMENTS

2006 2005



Total commitments regarding future payments 22 453 9 373



Total other commitments 287 399 262 016

Total 309 852 271 389

Contracted irrevocable future operating lease charges distributed by the years they fall due for payment. 2006 2005

2007 633 372

2008 471 266

2009 403 184

2010 225 125

2011 174 84

2012 100 67

2013 63 33

2014 39 26

2015 31 21

2016 20 13

2017 13 12

2018 and later 24 24

Total 2 196 1 227

NOTE P34 CONTINUED

The plan assets mainly comprise shares and interest-bearing securities with the following market values on the balance sheet date.

2006 2005


Interest-bearing securities, etc. 819 987

Total 23 311 19 284

The plan assets include shares in Svenska Handelsbanken AB (publ) with a market value of SEK 994m (946) on the balance sheet date 31 December 2006.

From the age of 65, a retirement pension is paid in accordance with the pension agreement between the Employer’s Association of the Swedish Banking Institutions (BAO) and Union of Finance Sector Employees and between BAO and SACO (the Swedish Confederation of Professional Associations). The amount is 10% of the an-nual salary up to 7.5 price base amounts. A retirement pension of 65% is paid in the interval between 7.5– 20 price base amounts.

In addition a commitment has been made which is part of the Bank’s profit-sharing system Oktogonen (regarded in the Group as a non-defined benefit plan). Changes in this commitment are included in Other increase in capital value.

The pension commitments are SEK 2,495m (2,787) in the Bank’s pension fund (Pensionskassan SHB, försäkringsförening) and the market value of the assets is SEK 9,786m (8,308). The surplus value in this pension fund is thus SEK 7,291m (5,521).




Capital base 2006 2005

TIER 1 CAPITAL

Equity 1 45 935 45 085

Tier 1 capital contribution 5 358 5 681

Minority interest -

Deducted items

Goodwill and other intangible assets -1 597 -1 918

Revaluation -152 -159

Deferred tax asset - -

Unrealised accumulated profit -1 101

Adjustments in accordance with stability filter

Cash flow hedges -77 204


TIER 2 CAPITAL

Perpetual subordinated loans 20 838 13 421

Fixed-term subordinated loans after reduction 24 183 24 446

Adjustment unrealised accumulated profit 1 108

Revaluation adjustment 152 159


Total 94 647 86 919

Less shareholdings in insurance companies and 5–50% in companies conducting banking business -217 -9 098

Total tier 1 and tier 2 capital 94 430 77 821

Enlarged capital base - -


1 Tier 1 capital has been affected by the board’s proposed appropriations.

CAPITAL COVER

PARENT COMPANY

Capital base and capital requirement

SEK m 2006 2005

CAPITAL BASE

Tier 1 capital 48 366 48 893

Tier 2 capital, net 46 064 28 928


RISK-WEIGHTED AMOUNT

Credit risk 529 842 451 877

Market risks 48 526 45 581

Total 578 368 497 458

Capital ratio, % 16.3 15.6

Tier 1 ratio, % 8.4 9.8

Other disclosures – Parent company





Balance sheet items Weighting InvestmentsRisk-weighted

amount InvestmentsRisk-weighted

amount

Risk weight 0% (group A) 0% 563 039 421 734

Risk weight 20% (group B) 20% 42 079 8 416 43 306 8 661

Risk weight 50% (group C) 50% 157 242 78 621 140 566 70 283

Risk weight 100% (group D) 100% 352 927 352 927 291 032 291 032

Total 1 115 287 439 964 896 638 369 976


Off-balance-sheet items 2 WeightingNominal amount

Recalculated amount

Risk-weighted amount

Nominal amount

Recalculated amount


Risk weight 0% (group A) 0% 150 561 47 668 174 315 45 190

Risk weight 20% (group B) 20% 141 923 13 702 2 740 28 896 12 518 2 504

Risk weight 50% (group C) 50% 428 478 3 343 1 672 91 573 5 959 2 979

Risk weight 100% (group D) 100% 151 203 85 466 85 466 134 903 76 417 76 417

Total 872 165 150 179 89 878 429 687 140 084 81 900

Total credit risks 1 265 466 529 842 1 036 722 451 876

2 The nominal amounts for off-balance sheets item are recalculated using a factor which varies according to the credit risk in the commitments. The recalculated amounts are subsequently allocated according to the same principles (group A–D) which apply for the balance sheet items.

Risk-weighted amount for market risks 2006 2005

Specifi c risk

General risk


Specifi c risk

General risk


Interest rate risks 24 620 10 466 35 086 20 584 10 844 31 428

Equity price risks 815 764 1 579 791 612 1 403

Settlement risks 15 12

Counterparty risks and other risks 10 316 11 770

Exchange rate risks 1 530 968

Total market risks 48 526 45 581

Total risk-weighted amount for credit and market risks 578 368 497 457

See the Group for a description of the capital base, capital requirement and capital management.


FINANCIAL REPORTS ■ NOTES PARENT COMPANY

CREDIT RISK EXPOSURE

PARENT COMPANY

SEK m 2006 2005

Loans to the public 571 960 495 442








Documentary credits 46 483 47 004

Derivative instruments 47 503 44 089

Treasury bills and other eligible bills 37 484 37 031



Total 1 619 217 1 455 435

LOANS TO THE PUBLIC, COLLATERAL

PARENT COMPANY

SEK m 2006 2005

Residential property 157 242 134 631

Agricultural property 4 865 1 816

Other property 72 939 66 572

Governments, municipalities and county councils 61 871 69 794

Floating charges on assets 17 767 21 283

Guarantees 17 890 13 318

Unsecured 133 210 112 060

Other collateral 106 176 75 968

Loans to the public 571 960 495 442

LOANS TO THE PUBLIC, BY SECTOR

PARENT COMPANY

2006 2005

SEK mLending before

provisions

Provisions for probable loan losses

Lending after provisions

Lending after provisions

Private individuals 134 425 -220 134 205 119 707

Property management 188 859 -447 188 412 161 455

of which ownership housing co-operatives 4 398 -7 4 391 4 371

Corporate services 40 362 -71 40 291 37 160

Manufacturing 37 204 -242 36 962 35 222

Retail 34 097 -238 33 859 32 536

Transport and communication 13 604 -22 13 582 15 390

Construction 8 152 -51 8 101 7 207

Municipalities 6 374 - 6 374 6 990

Agriculture, hunting and forestry 5 526 -6 5 520 5 513

Hotel and restaurant 4 449 -21 4 428 4 390

Insurance operations 10 539 0 10 539 4 413

Other sectors 89 872 -185 89 687 65 459

Total loans to the public 573 463 -1 503 571 960 495 442



BAD DEBTS AND/OR NON-PERFORMING LOANS, BY SECTOR

PARENT COMPANY Bad debts Non-performing

loans which are not

bad debtsSEK m Gross Provisions Net*

Of which non-

performing

Private individuals 518 -220 298 288 171

Property management/corporate services 799 -518 281 89 113

Manufacturing 455 -242 213 58 17

Retail 335 -238 97 80 17

Transport and communication 31 -22 9 9 4

Construction 60 -51 9 6 84

Hotel and restaurant 28 -21 7 5 0

Other 257 -193 64 53 34

Total 2 483 -1 505 978 588 440

FAIR VALUE DISCLOSURES

PARENT COMPANY 2006 2005

SEK mBook value

Adjustment to fair value

Book value

Adjustment to fair value

ASSETS

Loans to credit institutions 338 037 -275 312 391 21


Interest-bearing securities 191 419 - 186 088 3

Other assets 166 776 2 500 155 135 2 185

Total assets 1 268 192 2 228 1 149 056 3 104

LIABILITIES

Due to credit institutions 353 112 22 311 876 -73

Deposits and borrowing from the public 412 664 -19 376 947 2

Issued securities 254 484 -262 217 774 517

Other liabilities 144 068 - 144 587 -

Subordinated liabilities 51 672 111 46 795 555

Total liabilities 1 216 000 -148 1 097 979 1 001

Total surplus/deficit 2 376 2 103

In accordance with the Swedish Financial Supervisory Authority’s directives (2006:16) a comparison is to be made between fair value and book value for both assets and liabilities in the balance sheet and also financial items which are not reported in the balance sheet. Values which are based on customer relations are not to be taken into account, although they may be of importance in valuing, for example, deposit accounts and mortgage and consumer credits. The directives allow scope for choice of method and various assumptions. Thus, the methods applied and the assumptions made may vary among the credit institutions. Information concerning fair value is not a corporate valuation and therefore cannot constitute the basis of a comparison between credit institutions.

For means of payment, current receivables and liabilities and also for receivables and liabilities with a variable interest rate, the fair value is considered to be the same as the book value. Receivables and liabilities with final maturity or date for next interest rate fixing within 30 days are considered to be short-term.

Assets and liabilities which are traded on liquid markets have been valued at the average price on the balance sheet day. Market-listed off-balance-sheet items are valued in the same way.

Items which are not traded on liquid markets, irrespective of whether they are assets, issued liabilities or off-balance-sheet financial items are valued at the current market rate for the corresponding maturity adjusted to take into account the credit and liquidity risk. The credit and liquidity risk premium by which the market rate has been adjusted when making the valuation is assumed to be the same as the average margin for new lending at the time of the measurement.

Properties are valued on the basis of an external valuation.With the method applied, a surplus value occurs in the assets when margins de-

crease and a deficit when margins increase.In those cases where fair value on assets is less than the book value and for liabili-

ties, the book value is less than the fair value, this is due to these items being a) subject to hedge accounting and b) that they are to be regarded as fixed assets where the fall in value has been considered temporary.

Adjustment to fair value for 2005 has been made in accordance with the Financial Supervisory Authority’s directives (2005:33).

BAD DEBTS AND/OR NON-PERFORMING LOANS, GEOGRAPHIC DISTRIBUTION

PARENT COMPANY Bad debts Non-performing

loans which are not bad

debtsSEK m Gross Provisions Net*

Of which non-

performing

Sweden 1 462 -919 543 374 224

Norway 136 -60 76 76 199

Finland 156 -31 125 106 0

Denmark 689 -462 227 25 17

Great Britain 33 -27 6 6 0

Rest of Europe 7 -6 1 1 0

North America 0 0 0 0 0

Asia 0 0 0 0 0

Total 2 483 -1 505 978 588 440



RELATED PARTY DISCLOSURES

PARENT COMPANY

SEK m Opening balance Increase/Decrease Closing balance

Lending Subsidiaries 178 223 -1 063 177 160

Associated companies 23 -11 12

Others - - -

Total 178 246 -1 074 177 172

Derivatives with positive market value Subsidiaries 4 700 -630 4 070

Associated companies - - -

Others - - -

Total 4 700 -630 4 070

Other assets Subsidiaries 5 231 -1 093 4 138


Others 6 514 520

Total 5 237 -579 4 658

Total assets Subsidiaries 188 154 -2 786 185 368

Associated companies 23 -11 12

Others 6 514 520

Total 188 183 -2 283 185 900

Deposits and borrowing Subsidiaries 49 670 3 117 52 787

Associated companies 155 85 240

Others 85 105 190

Total 49 910 3 307 53 217

Other financial liabilities Subsidiaries - - -

Associated companies - 7 7

Others 674 102 776

Total 674 109 783

Derivatives with negative market value Subsidiaries 3 195 -661 2 534


Others - - -

Total 3 195 -661 2 534

Other liabilities Subsidiaries 2 216 -873 1 343

Associated companies 1 -1 -

Others - - -

Total 2 217 -874 1 343

Total liabilities Subsidiaries 55 081 1 583 56 664

Associated companies 156 91 247

Others 759 207 966

Total 55 996 1 881 57 877

Off-balance sheet

Derivatives nominal value Subsidiaries -4 438 -422 -4 860


Others - - -

Total -4 438 -422 -4 860

Guarantees Subsidiaries 34 731 870 35 601


Others - - -

Total 34 731 870 35 601


RELATED-PARTY DISCLOSURES CONTINUED

SEK m 2006 2005

Interest income Subsidiaries 4 467 3 700

Associated companies 1 1

Others - 65

Total 4 468 3 766

Interest expense Subsidiaries 2 387 -1 391

Associated companies -6 -3

Others -11 -144

Total 2 370 -1 538

Fee and commission income Subsidiaries 569 316

Associated companies 185 201

Others 6 167

Total 760 684

Fee and commission expense Subsidiaries -27 -11


Others - -

Total -236 -246

Net gain/losses on Subsidiaries - -

financial items Associated companies - -

Others -53 -14

Total -53 -14

Other income Subsidiaries 710 439

Associated companies - -

Others 2 60

Total 712 499

Other expenses Subsidiaries -166 -141

Associated companies - -52

Others -198 229

Total -364 36

Total Subsidiaries 7 940 2 912


Others -254 363

Total 7 657 3 187

The subsidiaries and associated companies are listed in Note P14. These companies perform various types of services linked to the financial markets. “Other” includes the pension organisations: Svenska Handelsbankens Pensionsstiftelse, Svenska Handelsbankens Personalstiftelse and Pensionskassan SHB, försäkringsförening which use the Bank for customary banking and accounting services. Shareholders’ contribution to associated companies and Group companies, see Note P14. Group contributions received, see Note P14. Group contributions made, see Change in equity, Parent company page 86.For 2005, “Other” in the income statement includes SPP Livförsäkring AB (SPP). Svenska Handelsbanken AB mainly performs IT-related services and asset management. Handelsbanken Liv Försäkrings AB and SPP also have close cooperation.

RELATED-PARTY TRANSACTIONS WITH CEO, EVPS AND BOARD OF DIRECTORS

PARENT COMPANY

SEK m 2006 2005

Lending 85 98

Interest income 2 2

2006 2005

Deposits 16 10


For other transactions, see Note 5, Group, Terms and remuneration for senior management.

Credit is granted to closely-related persons after customary credit review. The interest rate is determined on normal commercial terms. However for employees of the Bank (not members of the board ), the interest rate on credit up to SEK 1.5m is two percentage points lower than the equivalent interest rate for external customers. This benefit is taxable for the employee and constitutes a basis for social security charges payable by the Bank. Credit to close family members is granted on normal commercial terms and is not included in the accounts. In exceptional cases, if credit to a close family member is granted at the subsidised interest rate described above, this is reported as a taxable benefit for the employee. For deposits, the interest rate for employees is the same as for external customers.

FINANCIAL REPORTS ■ FIVE-YEAR REVIEW PARENT COMPANY



Five-year review – Parent company

Income statement

SEK m 2006 2005 2004 2003 2002

Net interest income 9 134 8 599 8 469 12 213 10 925

Dividends received 3 362 815 716 600 500

Net fee and commission income 5 831 5 246 4 518 4 015 4 011

Net gains/losses on financial items 2 220 2 582 2 053 -1 840 -964

Other operating income 812 608 728 223 240

Total operating income 21 359 17 850 16 484 15 211 14 712

General administrative expenses

Staff costs -7 186 -6 629 -6 284 -5 751 -5 742

Other administrative expenses -3 695 -3 192 -2 891 -2 374 -2 726

Depreciation, amortisation and impairments of property, equipment and intangible assets -634 -310 -307 -441 -482

Total expenses before loan losses -11 515 -10 131 -9 482 -8 566 -8 950


Loan losses, net -200 -160 -325 -791 -715

Impairment losses/reversals on financial non-current assets - - - 199 -759


Appropriations 4 365 4 712 18 077 4 040 4 371

Profit before taxes 14 009 12 271 24 754 10 093 8 659

Taxes -3 302 -3 404 -6 746 -2 779 -2 207

Profit for the year 10 707 8 867 18 008 7 314 6 452

Dividend for the year 5 074 * 4 585 4 018 3 640 3 294

* As proposed by the board

Balance sheet

SEK m 2006 2005 2004 2003 2002

Assets

Loans to the public 571 960 495 442 408 842 398 859 438 372

Loans to credit institutions 338 037 312 391 280 285 256 462 246 014

Interest-bearing securities 191 419 186 088 155 189 127 500 139 666

Other assets 166 776 155 135 162 223 183 696 208 387

Total assets 1 268 192 1 149 056 1 006 539 966 517 1 032 439

Liabilities and equity

Deposits and borrowing from the public 412 664 376 947 315 004 296 470 286 226

Due to credit institutions 353 112 311 876 270 369 234 900 280 219

Issued securities 254 484 217 774 198 864 195 883 233 107

Subordinated liabilities 51 672 46 795 25 182 26 734 26 560

Other liabilities 144 068 144 587 147 822 161 183 159 180

Untaxed reserves 1 183 1 397 1 149 13 121 11 473

Shareholders’ equity 51 009 49 680 48 149 38 226 35 674

Total liabilities and equity 1 268 192 1 149 056 1 006 539 966 517 1 032 439

Memorandum items

Collateral pledged for own debt 121 978 79 319 79 720 69 395 73 077

Other collateral pledged 5 397 5 986 3 791 5 984 19 932

Contingent liabilities 136 268 126 703 109 182 102 782 122 022

Pension obligations - - - - -

Other commitments 309 852 271 389 252 595 6 061 784 6 754 119


FINANCIAL REPORTS ■ RECOMMENDATION FOR APPROPRIATION OF PROFITS

Recommendation for appropriation of profi ts and statement from the board

In accordance with the balance sheet for Handelsbanken, profi ts totalling SEK 45,439m are at the disposal of the annual general meeting.

The board recommends that the profi ts be distributed as follows:Dividend per share paid to the shareholders SEK 8.00 (SEK 7.00 for 2005) 5,074Balance carried forward 40,365Total allocated 45,439

When assessing the amount of the company’s proposed dividend, account has been taken of the nature of operations, their scope, consolidation requirement and risk-taking. Our assessment is that the above appropriation of profi ts is prudent and well-adapted to the operations as a going concern.

Unrealised changes in value of assets and liabilities at fair value have had a net impact of SEK –4,542m on the shareholders’ equity.

The capital base of the fi nancial corporate group exceeded the statutory capital requirement by SEK 13,154m at the year-end. The surplus capital in the parent company was SEK 48,161m.

We hereby declare that to the best of our knowledge, this annual report has been prepared in accordance with sound accounting practices for limited companies, that the information provided corresponds to the actual circumstances and that nothing of material importance has been omitted which could affect the view of the company presented in the annual report.

STOCKHOLM 20 FEBRUARY 2007

Lars O Grönstedt Chairman

Hans Larsson Anders Nyrén

Pirkko Alitalo Jon Fredrik Baksaas Ulrika Boëthius

Tommy Bylund Göran Ennerfelt Sigrun Hjelmquist

Fredrik Lundberg Sverker Martin-Löf Bente Rathe

Pär BomanPresident and

Group Chief Executive


Audit report

To the annual general meeting of the shareholders of Svenska Handelsbanken AB (publ)Corporate identity number: 502007-7862

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the chief executive of Svenska Handelsbanken AB (publ) for the year 2006. The company’s annual accounts and consolidated accounts are included in the printed version of this document on pages 16–112. We have not audited the corporate governance report on pages 118–123. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international fi nancial report-ing standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the conso-lidated accounts are free of material misstatement. During the year, the auditing department of Handelsbanken has continuously examined the internal controls and accounts. We have received the reports that have been prepared. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the chief executive and signifi cant estimates made by the board of directors and the chief executive when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined signifi cant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the chief executive. We also examined whether any board member or the chief executive has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act for Credit Institutions and Securities Companies or the Articles of Association. We believe that our audit provides a reasonable basis for our opinions set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies, and give a true and fair view of the company’s fi nancial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international fi nancial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act for Credit Institutions and Securities Companies and give a true and fair view of the group’s fi nancial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual general meeting of shareholders that the income statements and balance sheets of the parent company and the Group be adopted, that the profi t of the parent company be dealt with in accordance with the recommendation in the administration report, and that the members of the board and the chief executive be discharged from liability for the fi nancial year.

STOCKHOLM 8 MARCH 2007

KPMG Bohlins AB Ernst & Young AB

Thomas Thiel Torsten LythAuthorised public accountant Authorised public accountant

Ulla Nordin BuismanAuthorised public accountant

Appointed by the Swedish Financial Supervisory Authority


CORPORATE SOCIAL RESPONSIBILITY

Handelsbanken in the community

HANDELSBANKEN’S PURPOSE

By delivering fi nancial services, Handelsbanken, together with other players in the fi nancial sector, fulfi ls an important function in soci-ety. The Bank’s purpose is to be a link between the different players in society so that capital can be transferred from those who have a surplus of liquid funds to those who need to borrow money. The banking system also maintains a functioning and effi cient payment system. An effi cient banking system is a condition for a modern, functioning society.

The word economy means careful management of scarce resourc-es. The company with the highest level of cost-effectiveness that can also deliver the best products or services, so that it has the most satisfi ed customers, has the highest productivity and thus makes the best contribution to society.

In the banking sector, cost-effectiveness is usually measured as the proportion of costs to income, the C/I ratio. Handelsbanken has the lowest C/I ratio of the Nordic banks and also compares very fa-vourably with other European banks. Handelsbanken had the most satisfi ed customers in the Nordic region.

HANDELSBANKEN IN THE LOCAL COMMUNITY

Handelsbanken has a nationwide branch network in Sweden and a large branch network in the other Nordic countries. High cost-effectiveness allows Handelsbanken to retain a local presence and thus continue to fulfi l an important function in local communities including places where other banks have closed their local branches. Handelsbanken is convinced that a local presence is necessary.The basic concept of the Bank’s way of operating is that decisions are made as close to the customer as possible, including granting loans. In concrete terms, this means that loan applications are proc-essed and – with few exceptions – decided by Handelsbanken’s local branch. It is the local branch which has the best knowledge of the customer’s circumstances. This work method gives Handelsbanken close ties with the local community.

Handelsbanken makes a better contribution to society than other banks by having higher productivity, that is, more satisfi ed customers combined with higher cost-effectiveness.

HANDELSBANKEN’S CONTRIBUTION TO THE COMMUNITY

Handelsbanken is one of the largest tax payers in Sweden and for the past few years has paid over SEK 4bn in tax every year.

As in all other issues at Handelsbanken, the local branch decides whether the Bank should sponsor various cultural and community projects. A guiding principle here is whether the project is perceived as having a link to the Bank’s business operations. Since all customer responsibility is decentralised to the local branches, there is usually no reason for Handelsbanken to make central decisions on these issues.

Over the years, Handelsbanken’s board has decided to allocate funds to independent research foundations. These foundations are named after Jan Wallander, Tom Hedelius and Tore Browaldh, all previous group chief executives and chairmen of the board of Handelsbanken. In 2006, these foundations made 113 grants (92) totalling SEK 113m (88), representing resources greater than 250 full-time working years for research posts.


A responsible business approach – delivering better service than other banks, at the same time as the Bank has lower costs – is nec-essary if Handelsbanken is to continue to have higher profi tability and thus make a larger fi nancial contribution to society than other Nordic banks.


Environmental issues

Environmental issues are a vital element in the Handelsbanken Group’s operations, both in terms of the direct environmental im-pact of the Bank’s operations and any indirect impact. The latter in-cludes environmental aspects of granting credits, offering savings in mutual funds with an environmental or ethical profi le and offering customers online and other electronic banking services.

The Folksam Index for corporate social responsibility reviews all listed companies on the Stockholm stock exchange regarding their preparedness to handle risks related to environmental impact. Among the 35 companies reviewed in the fi nancial sector, Handels-banken was awarded “Best in sector”.

Environmental policy

As far as technically and fi nancially possible, and to the extent that it is compatible with the Bank’s undertakings, Handelsbanken aims to promote long-term sustainable development. The Bank also aims to take measures to minimise any negative impact on the environment. Consistent and long-term improvements will generate benefi ts to the environment as well as cost savings.

Handelsbanken has signed and complies with voluntary agre-ements, such as the ICC Business Charter for Sustainable Deve-lopment and the United Nations Environmental Program Finance (UNEP FI), “Banks and the environment”. UNEP FI is a statement that economic development must be compatible with social welfare and a sound environment. Objectives and policy

The aim of Handelsbanken’s environmental work is to promote long-term sustainable development. Action is taken to cause as little negative impact on the environment as possible, by minimising en-ergy use, choosing environment-friendly materials and products and minimising residual products. The Bank has produced material with the purpose of inspiring and motivating its employees to act in an environmentally conscious way, so that environmental issues become a natural part of their daily work.

Environmental responsibility and organisation

As in other areas at Handelsbanken, the responsibility for practi-cal environmental issues is decentralised. All managers in the Handelsbanken Group have the primary responsibility for environ-mental issues at their units and all employees have a responsibility for the environment as part of their duties. For the Group as a whole, internal environmental issues are co-ordinated by the central administration department. The head of the central credit depart-ment is responsible for environmental issues related to granting credits. Environmental issues are an integral part of the introduction programme for new employees, and also of credit training courses.

DIRECT ENVIRONMENTAL IMPACT

Carbon dioxide (CO2) emissions is an area where the Bank’s opera-tions have a direct impact on the environment. For several years, the Bank has measured the carbon dioxide emissions generated by its own operations. The Bank’s direct impact mainly derives from busi-ness travel and the use of heating and electricity.

Sweden is one of the few countries in the world where an increa-sing GDP is accompanied by diminished emissions of greenhouse gases. Handelsbanken is part of that trend. Over the past few years, the Bank’s earnings and business volumes have increased while its carbon dioxide emissions have decreased.

In 2005, Handelsbanken’s carbon dioxide emissions fell by 20%. The proportion of purchased electricity with the Good Environ-mental Choice mark was 42% and the average use of electricity at the Swedish branches in 2005 was 133 kWh/m2 as compared to an average value of 150 kWh/m2 for premises in Sweden (Energy indi-cators – 2005, Swedish Energy Agency).

Emissions CO2

tonnes 2005 2004

Electricity 3 886 5 762

Heating 1 719 2 474

Travel 2 693 2 577

Transport of goods 2 246 2 246

Other 5 85

Total 10 549 13 144

Information concerning emissions in 2006 is not yet available. Electricity and heating refer to Handelsbanken’s Nordic operations. Other refers to operations in Sweden.

In environmental terms, Handelsbanken’s policy is to promote long-term sustainable develop-ment by taking action to minimise the negative environmental impact by the Bank.




Actions to reduce negative environmental impact

Handelsbanken makes continuous efforts to reduce environmental impact. Here are some examples from 2006:• The Bank launched an e-mailbox function as part of its online

services, where customers can receive information in electronic form. Customers can cancel paper information online and instead receive this electronically.

• Information to the same customer is put in the same envelope to a greater extent, leading to fewer mail items.

• Movement detectors have been installed in the public areas at the Tegeluddsvägen property so that the lights are extinguished when there is nobody on the premises.

• Several cooling plants in the Bank’s premises were shut down and these buildings were linked to district cooling facilities.

• Heat recycling was installed in one of the Bank’s properties in Stockholm.

• Waste separation at source is being gradually introduced in the Bank’s units.

• When renovating the facades of the Bank’s premises in central Stockholm (Arsenalsgatan and Blasieholmstorg), environmentally-friendly methods and material were used.

• At the branches, the power installed in the machine rooms was lowered from 3kW to 2kW which affected the need for cooling.

INDIRECT ENVIRONMENTAL IMPACTEnvironmental issues associated with granting loans

The Bank can infl uence the environment in a broader perspective in the application of its credit policy. In accordance with Handelsbanken’s credit policy, environmental factors are taken into consideration when assessing the customer’s repayment capacity. For lending com-mitments over SEK 1m and in the case of mortgages over SEK 4m, a limit document is drawn up. For all customers with a credit limit, an annual review and analysis is made in the form of a business eval-uation. This includes an assessment of possible environmental risks for each customer. This is particularly important when assessing the repayment capacity of a customer engaged in environmentally haz-ardous activities or selling products that involve environmental or health risks. The assessment may concern the required governmental authorisations, adherence to the prescribed limits for emissions, and

that the products in question remain competitive after environmen-tal and health risks have been taken into account. A large part of Handelsbanken’s lending portfolio consists of mortgage loans. For property-related credits, it is essential to take into account environ-mental factors pertaining to buildings or environmentally harmful activities conducted in the building now or in the past. Environ-mental factors in the vicinity of the property are also considered.

It is always the customer who is responsible for how its own operations are conducted, but repayment capacity and thus the Bank’s credit risk is affected by the customer’s willingness or ability to manage these risks.

Ethical and environmental mutual funds

The Handelsbanken Group offers the opportunity to save in mutual funds with an ethical or environmental profi le. For several years, the Bank’s range of funds has included the SPP Global Sustain-ability Share Index Fund. This fund invests in companies which, in addition to fi nancial targets, also have social objectives and aim to use natural resources in a long-term sustainable manner. In 2005, the Bank started another fund with this focus. The Handelsbanken Sweden Index Ethical Fund invests in companies which have been examined on the basis of ethical criteria relating to the environment, human rights and business ethics. The assets managed in the two funds totalled SEK 3.3bn (2.3).

The Bank also offers a global environmental fund via an external fund manager. This fund only invests in companies that are expected to offer good returns and that also comply with special environ-mental criteria.

Environmental impact of purchases and projects

Environmental requirements are always made on suppliers when the Bank procures goods and services. Environmental considera-tions are included in decisions on all investments and purchases. Handelsbanken maintains an ongoing dialogue with its suppliers to promote and develop environmental issues. When planning the Bank’s buildings, premises and furnishings, environmental guide-lines are applied and declarations of environmental and material content are required. Materials and components must be long-life, recyclable and low-energy.


Ethical standards and corporate social responsibility

ETHICAL GUIDELINES

Handelsbanken’s ethical guidelines state that operations must be char-acterised by high ethical standards. Employees must conduct them-selves in a manner that upholds confi dence in the Bank. The ethical guidelines are ratifi ed every year by the board of Handelsbanken. A fundamental, self-evident rule is that the Bank and its employees must comply with the laws and regulations that govern its operations in various ways. General recommendations and statements from the Swedish Financial Supervisory Authority and other authorities must be observed when designing procedures and instructions.

Money laundering and economic crime

The Bank must not participate in transactions involving funds which may be suspected of originating from criminal activities, or in trans-actions the implication of which the responsible employees do not understand. Nor should the Bank participate in transactions which can be perceived as assisting tax evasion. The appropriate managers at Handelsbanken are responsible for keeping employees regularly in-formed of the content of legislation on combatting economic crime.

Handelsbanken applies laws and regulations in its work against money laundering and particularly serious crime. The Bank has in-ternal instructions for this purpose and all employees are regularly trained in issues relating to money laundering and the fi nancing of particularly serious crime.

Customer relations

Financial advice must always be based on the customer’s needs, fi -nancial position and risk propensity. It is important that employees ensure that customers understand the implications of the decisions they make. The advice given aims to provide the customer with the most suitable product from the Bank’s range, regardless of what is best for the Bank in the short term. The Bank must not take advan-tage of its superior expertise and fi nancial position in relation to cus-tomers. Sound business practices, acting in a consistent manner and fair treatment of customers are key concepts at the Bank. No type of discrimination is allowed.

In some cases, for example securities trading, where the Bank is acting on behalf of both customers and itself, a confl ict of interests may arise. Operations must be oriented in such a way to avoid this type of confl ict as far as possible.

The Bank as customer

Handelsbanken is a major purchaser of goods and services from both Swedish and international suppliers. Ethical considerations are just as important for the Bank in its role as customer as when it supplies services and products. To avoid incurring obligations to customers and suppliers, the Bank has rules regarding receiving and giving per-sonal gifts and entertainment.

Conduct of employees

It is important that the Bank’s employees are not suspected of taking improper advantage of knowledge about the fi nancial markets which they obtain in the course of their work. All employees must be

familiar with the local insider trading laws and observe the Bank’s own rules governing employees’ and closely-related persons’ private securities and currency transactions.

In their work at the Bank and in their private affairs, employees must refrain from business transactions that violate the Bank’s rules or current legislation. Employees must not handle matters in which they or a relative have a personal interest nor matters for companies in which they or a relative have a material interest. Handelsbanken’s employees must also refrain from transactions or other commitments that may seriously jeopardise their own fi nancial position.

Employees must notify the Bank of assignments outside the Bank and obtain approval. These rules also apply to secondary occupations and posts in clubs, societies and the like. Remuneration for being a member of a board on behalf of the Bank must be paid to the Bank. Employees who are in doubt regarding the Bank’s ethical guidelines and dealing with related issues must contact their immediate supe-rior to discuss the correct action.


The success of Handelsbanken in the market derives from the trust it enjoys from the public and authorities. The Bank’s work meth-ods stem from a fundamental human outlook based on trust and respect. All employees are clearly responsible for their actions profes-sionally and in social and ethical issues. Therefore, it is important that business decisions at the Bank can be justifi ed also from a social and ethical perspective.

Human rights

Handelsbanken endorses the principles set out in the UN Universal Declaration of Human Rights. This means that the Bank strives to support and respect the protection of international human rights within the area which the Bank can infl uence. It also means that the Bank endeavours to ensure that it is not involved in any breach of human rights. When granting credits, the Bank takes account of its customers’ attitudes to human rights.

Working conditions and union rights

Handelsbanken complies with the laws and agreements on working hours in all countries where it has operations. In the Nordic coun-tries, where 93% of the Bank’s employees work, Handelsbanken ad-heres to the collective bargaining agreements which regulate work-ing hours, overtime, rest periods, breaks and holidays. All employees in the Handelsbanken Group have the right to organise and join a union. The Oktogonen profi t-sharing foundation has a representa-tive on the central board. The local boards of the regional banks include employee representatives. At Handelsbanken, all individuals with the same competence have the same right to employment, pro-motion, salary and professional development, regardless of gender, age, ethnic background or sexual orientation. Handelsbanken’s equal opportunity policy states that equal conditions shall apply to men and women regarding personal development within the Handelsbanken Group.

All operations at Handelsbanken must be characterised by high ethical standards.



Corporate governance

GOVERNANCE AND CONTROL

Corporate governance is the term used to describe a set of regula-tions for management and control of companies. Handelsbanken strictly applies the Swedish Code of Corporate Governance. This corporate governance report, which comprises pages 118–123, has not been examined by the Bank’s auditors.

INFORMATION ABOUT CORPORATE GOVERNANCE

The aim of the board’s information policy is to ensure that stock market operators have access to fast, simultaneous, correct, relevant and reliable information. The Bank’s website (www.handelsbanken.se/ireng) includes all published information provided to the stock market during the past three years.

The website also contains a section on corporate governance issues, where the information in the corporate governance report is continually updated.

ANNUAL GENERAL MEETINGS (SHAREHOLDERS’ MEETINGS)

Shareholders exercise their right to decide on matters relating to the company at general meetings of shareholders. The annual general meeting (AGM) appoints the board, the chairman of the board and the auditors, and also decides on their fees. The annual general meeting also decides on policies for salary and other remuneration for the group chief executive and other members of the Bank’s senior management.

Information in preparation for meetings as well as minutes of annual general meetings can be viewed on the Bank’s website. Notice of general meetings and all proposals for the meeting are available on the website.

APPOINTMENT OF THE BOARD AND AUDITORS

The nomination committee is the AGM’s body for preparing the meeting’s decisions relating to appointment issues. By decision of the 2006 AGM, the four largest shareholders in voting terms each appointed a representative who, together with the chairman, would constitute the nomination committee until the next AGM appoints a new nomination committee. The nomination committee consists of Carl-Olof By (Industrivärden), Henrik Forssén (the Oktogonen Foundation), Tomas Nicolin (Alecta), Lars Öhrstedt (AFA Försäkring) and Lars O Grönstedt (chairman of the board of Handelsbanken). Together, the members of the nomination committee represent approximately 29% of the number of votes for all shares in the Bank.

BOARD OF DIRECTORS

In advance of the AGM on 25 April 2006, the chairman of the board, Arne Mårtensson had declined re-election. At the annual general meeting, Pär Boman was elected to the board and the other

members were re-elected. The AGM elected Lars O Grönstedt as chairman of the board. At the subsequent fi rst board meeting, Hans Larsson and Anders Nyrén were appointed vice chairmen. At the same time, the board appointed Pär Boman as president and group chief executive after Lars O Grönstedt.

Size and independence

Handelsbanken’s board comprises 13 members who are elected by the Annual General Meeting. No employee representatives are elected. The employees are instead represented by two board mem-bers, elected by the AGM, who represent the Bank’s profi t-sharing foundation, Oktogonen.

The rule concerning confl icts of interest in credit matters means that the board members cannot participate in credit decisions con-cerning companies where they have ownership interests or where they are employed or are board members. The Bank’s board is there-fore somewhat larger than is the case in other listed companies.

The Stockholm stock exchange’s listing requirements make certain stipulations concerning the composition of the board. For example, the majority of the members elected by the AGM must be independent of the company and the management. At least two of the board members must also be independent of the company’s ma-jor shareholders. Handelsbanken’s board fulfi ls these requirements. Regarding the requirement that no more than one board member is allowed to work in the senior management of the Bank, it may be mentioned that the group chief executive is a member of the board. The composition of the board also fulfi ls the requirements concer-ning independence as expressed in the Swedish corporate governance code.

The fundamental work of the board

According to the Swedish Companies Act, the Board’s overall task is to manage the company’s business on behalf of the owners. The board of a universal bank such as Handelsbanken must also comply with a large number of industrial regulations. Central among these is the Swedish Banking and Financing Business Act (2004:297). In addition, there is specifi c legislation for operations such as securities and insurance. The industrial legislation is supplemented by regula-tions from Swedish Financial Supervisory Authority. Many of these regulations include instructions directed at the board of the Bank.

Banking legislation requires the board to ensure that certain general operating regulations on fi nancial strength, liquidity, risk management, transparency and soundness are fulfi lled.

Financial strength and liquidity

A bank’s operations must be pursued in such a way that its ability to fulfi l its obligations is not jeopardised. Risks are inherent in all operations, but these risks must be adapted to the size of the buffer capital. Similarly, suffi cient liquidity is vital for the Bank to also fulfi l its obligations in the short term, and not risk incurring temporary

Corporate governance is the term used to describe a set of regulations for management and control of companies. Handelsbanken strictly applies the Swedish Code of Corporate Governance.



payment problems. Good liquidity requires advanced liquidity plan-ning and tight control of payment fl ows.

The specifi c implications of the regulations on fi nancial strength and liquidity are set out in the more detailed provisions of other legisla-tion. This include the regulations on capital adequacy. As of 1 February 2007, certain new capital adequacy regulations apply (Basel II), which place a greater focus on the responsibility of the board for total capital requirements and requirements for transparency.

Risk management – internal control

A bank must have systems adapted to its operations which enable it to identify, measure, govern, internally report and have control over the risks associated with its operations. In particular, the board must ensure that the combination of different forms of risk such as credit risks, market risks and operating risks does not jeopardise the Bank’s ability to fulfi l its obligations. This requirement can only be met if good internal control exists. Thus, good internal control is part of the risk management and capital evaluation functions.

Risk control in terms of credit risks and operating risks is carried out by the credit risk control unit at the Central Credit department. Risk control in terms of other risks, such as market risks, liquidity risks, insurance risks and business risks, is carried out by the fi -nancial risk control unit at Central Control and Accounting. The responsibility for capital planning rests with the head of the capital unit at Central Control and Accounting department. Reporting to the head of Central Control and Accounting, the head of Treasury has responsibility for group liquidity and funding.

The Bank applies strict methods for risk assessment and risk ma-nagement to ensure that the risks to which it is exposed are managed within the established framework. The outcome of the company’s process for risk assessment and risk management is discussed an-nually by the board. Credit risks, operational risks, market risks and liquidity risks are regularly presented to the board.

Financial reporting

Internal control for fi nancial reporting is based on the Bank’s own control environment (organisation, decision paths, authority and re-sponsibility) which is documented and communicated in governing documents such as internal policies, guidelines, manuals and codes. Examples of these are the division of work between on the one hand the board, and on the other hand the group chief executive and the other bodies which the board establishes, instructions for the right to approve costs, and accounting and reporting instructions. The risks which have been identifi ed for fi nancial reporting are managed via the Bank’s control structures which are documented in descrip-tions of processes and internal control.

The Bank has information and communication channels with the aim of achieving completeness and correctness in its fi nancial re-ports, for example by means of making the governing documents for fi nancial reporting available and known to the employees concerned. The Bank follows up how the control structures are managed and their effi ciency. One of the tools for this is self-assessment tests. The company’s information and communication channels are also fol-lowed up to ensure that they are appropriate for their purpose with reference to the fi nancial reporting.

Internal auditing

The head of the Central Auditing department is appointed by the board. The Central Auditing department has some seventy employ-ees, a large number of whom have competence corresponding to public authorised accountants. The Bank’s external auditors evalu-ate and perform quality control on the work of the internal audit department. The internal auditing department’s assignment is based on a policy for internal auditing operations established by the board.

Following a co-ordinated risk assessment, the audit work should be planned so that it focuses on examining operations and procedures which are of material importance and/or involve risks. The planned auditing commitments are documented annually in an audit plan which is established by the board’s audit committee on behalf of the board. The result of internal audits, the actions to be taken and the status of these, are continually reported to the audit committee.

Transparency

A bank’s operations must be organised and pursued in such a way that the Bank’s structure, links with other companies and position are visible. The overall responsibility for the transparency of the institution’s fi nancial position and organisational structure rests with the board. The more detailed implications of the requirement for transparency are, for example, set out in the Swedish legislation for annual accounts. The Bank’s accounts have been prepared in accordance with international fi nancial reporting standards, IFRS, as adopted by the EU. The amendments and restrictions pursuant to the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (ÅRKL) and the implementation directives issued by the Swedish Financial Supervisory Authority are also ap-plied. The requirement for transparency also entails compliance with stock exchange regulations such as the listing agreement and listing requirements.

Soundness

In other respects, too, the operations of a credit institution must be pursued in a sound manner. This means that the Bank must maintain a level of quality in its operations, such that the confi dence of the market can be upheld. The areas affected by this include the Bank’s conduct with respect to its customers.

Guidelines and instructions

The fundamental issues on the allocation of expertise among the board, the committees of the board, the chairman, the group chief executive and the internal auditing function are manifested in the board’s work regulations and its instructions to the group chief ex-ecutive. The set of instructions that is established every year at the statutory meeting includes credit instructions for the Group, as well as various policies relating to the management of the fi nancial risks associated with the Group’s operations. Every year, the board sets funding limits and assumes responsibility for the Bank’s base pro-spectus (i.e. prospectus responsibility). In addition, every year, the board establishes a risk mandate relating to interest rate risks, liquid-ity risks and other risks.

The board’s working instructions state that the chairman should assist the group chief executive in contacts with the Bank’s most important relationships, particularly the main owners. The chairman also has overall responsibility for ownership issues relating to share-holdings in the Bank’s pension foundation, pension fund and staff foundation.

In the absence of the chairman, in order of seniority on the board, the vice chairmen of the board must fulfi l the chairman’s tasks and assist the chairman as decided by him. In other respects there is no other division of work for the board than that which in-volves the committees.

The group chief executive also establishes a series of instructions and policy documents, either in response to assignments from the board, or to fulfi l regulatory requirements relating to the Bank’s senior management specifi ed by the Swedish Financial Supervisory Authority.

The work of the board in 2006

During the year, the board held 12 ordinary general meetings



(including one telephone meeting) and one strategy meeting. It discussed the economic situation and the Bank’s strategy at regu-lar intervals. One of the regular items discussed is a report on the Bank’s position compared to other Swedish and international banks. Also, risk limits for interest rate risks and other categories of risk were reviewed and followed up. In addition, the board was regularly informed about operating risks. It also took decisions on matters of borrowing, major credit-related matters, large investments and stra-tegic issues.

During the year, the board held an internal training day which included the Bank’s payment services.

In December, as a result of the new capital adequacy regulations, the board established a new capital policy and fi nancial risk policy, etc. for the Group. This capital policy sets out responsibilities and guidelines for internal capital evaluation and capital planning. The board also established a confi dence level for the calculation of eco-nomic capital and a target for the Tier 1 ratio and other relevant capital ratios, to apply from 1 February 2007. Responsibility for the Bank’s liquidity and fi nancing is set out in a fi nancial policy, while the fi nancial risk policy includes responsibilities and guidelines for the independent risk control function. As of 2007, the Bank will report more detailed information on capital adequacy and risk ma-nagement.

The board’s work is evaluated in individual discussions between the board members and the chairman of the board, supported by a questionnaire which is answered individually by the members. The results were compiled and discussed at the board meeting in November. The chairman reported the results of the evaluation and the board’s discussion to the nomination committee. The board also met on one occasion to evaluate the work of the group chief execu-tive without him being present.

Credit committee

The credit committee consists of the chairman of the board, the two vice chairmen, the group chief executive and four other members. The head of the central credit department is also a member of the credit committee. The board’s credit committee met 11 times dur-ing the year.

The credit committee makes decisions on behalf of the board regarding the majority of credit cases referred to the board for its decision. It also prepares credit cases which, due to their special importance, must be presented to the whole board. The rules regar-ding confl icts of interest in the Swedish Companies Act are carefully observed and are the subject of special attention.

Remuneration committee

The board’s remuneration committee consists of the chairman of the board and two other members, both of whom are independent in relation to the company and its management. The committee met three times during the year.

The task of the remuneration committee is to prepare proposals to the board regarding adjustments to the salary and benefi ts of the group chief executive. The committee also prepares proposals to the board regarding adjustments to the salary and benefi ts of the head of the Bank’s internal auditing department. This committee also establishes the principles and overall policy for the salaries, benefi ts and pensions of the executive vice presidents. The committee reports annually on the results of its work to the board. It has also been assigned to prepare the board’s proposal to the AGM regarding remuneration principles and other employment terms for the Bank’s senior management.

The audit committee/Work with accounting and audit issues

The audit committee consists of the chairman of the board, plus two members who are independent of the company and its manage-ment. One of these members is also independent of the Bank’s major shareholders. One of the independent members is the committee’s chairman. The audit committee met three times during the year.

The board’s audit committee prepares the work of the board to ensure compliance with the principles established for fi nancial reporting and internal control. The committee normally performs this by processing crucial accounting matters and material events after the balance sheet date, and any other circumstances which may affect the qualitative content of the fi nancial reports. The audit com-mittee maintains regular contacts with the Bank’s external and inter-nal auditors. In conjunction with the six-monthly fi nancial accounts, the internal and external auditors are to inform about the risk ana-lyses which have been performed, including co-ordination between the internal and external auditors and observations made at their summary audit of the six-monthly fi nancial report. In conjunction with the full-year fi nancial accounts, the internal and external audi-tors are to inform about material uncertainties in reported values, observations relating to internal control, compliance, irregularities and observations made when auditing the full-year fi gures.

A written annual report of observations from the regular audits and an examination of six-monthly and annual accounts is submitted every year by the external auditors to the chairman of the board and the group chief executive. In addition, the chairman of the external auditors commented on these reports at separate meetings of the au-ditors and the chairman of the board and the group chief executive,

Handelsbanken’s boardInformation about remuneration refers to the 12-month period between the 2006 and 2007 AGMsInformation about attendance refers to 2006

Nationality Remuneration (SEK) Attendance board meetings Attendance committee work

Lars O Grönstedt, chairman Swedish 1 415 000 13/13 100%

Hans Larsson, vice chairman Swedish 745 000 12/13 100%

Anders Nyrén, vice chairman Swedish 745 000 13/13 100%

Pirkko Alitalo Finnish 440 000 12/13 100%

Jon Fredrik Baksaas Norwegian 365 000 8/13 -

Ulrika Boëthius Swedish - 13/13 -

Pär Boman, CEO Swedish - 13/13 100%

Tommy Bylund Swedish - 13/13 100%

Göran Ennerfelt Swedish 555 000 10/13 82%

Sigrun Hjelmquist Swedish 440 000 12/13 100%

Fredrik Lundberg Swedish 365 000 13/13 -

Sverker Martin-Löf Swedish 655 000 13/13 100%

Bente Rathe Norwegian 655 000 11/13 100%



respectively, and at an audit committee meeting. When the audit has been completed, the head of internal auditing and the chairman of the external group of auditors provide a verbal report of their obser-vations to the board. The chairman of the external group of auditors also meets the board once a year without the group chief executive or other members of the Bank’s management being present. The chairman of the external auditors also presents a report of the Bank’s auditing to the annual general meeting of shareholders.

AUDITORS

The AGM appoints external auditors. Two auditing companies are appointed, which in turn nominate authorised public accountants who bear the main responsibility. The Swedish Financial Supervisory Authority also appoints an auditor for the Bank. As stipulated by law, the mandate period for the auditors appointed by the sharehold-ers’ meeting is four years. At the 2004 annual general meeting, KPMG Bohlins and Ernst & Young were appointed for the next four years, that is until the AGM in 2008.

Bank auditors are not permitted to own shares in the Bank or to be granted loans by the Bank. Handelsbanken aims to avoid purchasing other consulting services from the companies which are responsible for auditing the Bank. When procuring consulting services from the companies which are responsible for auditing the Bank, the auditing policy states that a special review must be made in accordance with the Swedish Institute of Authorised Public Accountants’(FAR) analysis model and the American Sarbanes-Oxley Act.

KPMG Bohlins AB

This company was elected by the 2004 AGM for the period up to and including the 2008 AGM. They have been chief auditors since the 2000 AGM and since then the auditor in charge has been Tho-mas Thiel, authorised public accountant.

Ernst & Young AB

This company was elected by the 2004 AGM for the period up to and including the 2008 AGM. They have been auditors since 1998 and since 2005, the chief auditor has been Torsten Lyth, authorised public accountant.

Authorised public accountant

Ulla-Britt Nordin Buisman (Öhrlings Pricewaterhouse Coopers AB). Appointed by the Swedish Financial Supervisory Authority at the 2004 AGM.

SENIOR MANAGEMENT

See page 124 for information about the senior management and the shares they own in the company.

REMUNERATION

Neither the board members nor the Group management receive variable remuneration such as bonuses. There are no existing equity-related or equity price-related incentive programmes for the board and the company management. Like all employees of the Bank, the management and board members who are employees of the Bank receive allocations made to the Bank’s profi t-sharing system Oktogo-nen, when these are made.

Remuneration to the board

At the 2006 AGM, the board’s fees were set at SEK 6,380,000, of which SEK 1,050,000 to the chairman. The board has allocated the fees such that the vice chairmen receive SEK 555,000 each and the other members, SEK 365,000 each. Members of the credit committee receive another SEK 190,000 each, members of the re-muneration committee SEK 75,000 each and members of the audit committee SEK 100,000 each. Members who work in the Bank’s operations receive no fee.

Remuneration principles for senior management

The 2006 AGM approved the following principles for remuneration and other conditions of employment for the group chief executive and senior managers who report directly to the group chief executive and are members of the senior group management: • The total remuneration shall be on market terms.• Remuneration is paid only in the form of a fi xed salary and

customary benefi ts.• Variable remuneration in the form of bonuses is not paid.• The minimum retirement age is 60. However, the retirement age

for the group chief executive may be lower than this. Pension benefi ts are defi ned-benefi t.

• The period of notice on the part of the employee is six (6) months and on the part of Handelsbanken, twelve (12) months. If the Bank terminates the employment contract later than fi ve years after the person’s appointment as a member of the Bank’s management, the period of notice is 24 months. In exceptional cases, periods of notice may be shorter.

• No severance pay is paid.• The senior managers in question are included in the Oktogonen

profi t-sharing system on the same terms as all employees of the Bank.

The senior management positions to which these principles apply are the group chief executive and the senior managers who report directly to the group chief executive and are members of the senior group management.

Terms for senior management

The Bank has no agreements on severance pay. The group chief executive, Pär Boman, has a retirement age of 58. His retirement pension is 65% of his salary immediately before retirement. The chairman of the board of the Bank and former group chief execu-tive, Lars O Grönstedt, has a retirement age of 60. His retirement pension between the ages of 60 and 64 is 75% of his salary immedi-ately before retirement, and from the age of 65 it is 65%. From the date that Lars O Grönstedt was appointed as chairman of the board his pension benefi ts accrue entirely in the Bank’s pension fund and pension foundation. Further information about conditions and re-muneration for senior management can be found in Note 5 on pages 55–57.

Loans to senior management

Loans to the board, chief executives, and executive vice presidents total SEK 125m (122) for the Group and SEK 37m (57) for the parent company.



The board

LARS O GRÖNSTEDT chairmanB.A. and Graduate in Business

Administration Stockholm, year of birth

1954. Member since 2001.

Chairman of the board’s remuneration

committee and credit committee.

Member of the board’s audit committee.

Other assignments: Director of

AB Industrivärden, Vice chairman of

Stockholm Chamber of Commerce.

Own shareholdings and those of

immediate family: 9,025, of which

8,425 indirectly via the Oktogonen profi t-

sharing foundation.

HANS LARSSON vice chairmanB.A. Stockholm, year of birth 1942.

Member since 1990. Member of the

board’s credit committee.

Other assignments: Chairman of Nobia

AB, Biolight International AB, Attendo

Holding AB, CreVal Partners Fund 1 AB,

director of Holmen AB, Dynea Oy.

Own shareholdings and those

of immediate family: 18,600

ANDERS NYRÉN vice chairmanGraduate in Business Administration

and MBA. President and group chief

executive of AB Industrivärden, Bromma,

year of birth 1954. Member since 2001.

Member of the board’s credit committee.


Telefonaktiebolaget L M Ericsson,

Ernströmgruppen AB, AB Industrivärden,

Sandvik AB, Skanska AB, Svenska

Cellulosa AB SCA, SSAB Svenskt

Stål AB and chairman of the Swedish

Association of Listed Companies and the

Association for Sound Practices in the

Securities Market.



PÄR BOMANEngineering and Business/Economics

degree, Stockholm, year of birth 1961.



Other assignments: Director of the

Swedish Bankers’ Assocation.



2,927 indirectly via the Oktogonen

profi t-sharing foundation.

PIRKKO ALITALO Graduate in business administration,

Helsinki, year of birth 1949.


board’s remuneration committee.


Lagercrantz Group AB.



JON FREDRIK BAKSAASGraduate in business administration

and MBA, President and group chief

executive of Telenor ASA, Sandvika, year

of birth 1954. Member since 2003.

Other assignments: Director of Aker

ASA, Det Norske Veritas (council).


immediate family: 0

ULRIKA BOËTHIUSSciences programme Upper Secondary

School, Bank employee, Stockholm,


Other assignments: Vice chairperson

of Swedish Union of Financial Sector

Employees.


of immediate family: 2,897, of which

2,897 indirectly via the Oktogonen profi t-

sharing foundation.

TOMMY BYLUNDUpper Secondary School, Bank Vice

President, Ljusdal, year of birth 1959.



Other assignments: Chairman of

Oktogonen Foundation.



10,868 indirectly via the Oktogonen

profi t-sharing foundation.



GÖRAN ENNERFELTB.A. and Graduate in business

administration, President and group chief

executive of Axel Johnson Gruppen

AB, Upplands Väsby, year of birth 1940.



Other assignments: Chairman of Axfood

AB, director of Spirent plc.



SIGRUN HJELMQUISTGraduate engineer and Licentiate of

Technology. Chairperson and Partner

of Sight Executive Group AB, Djursholm,


Member of the board’s remuneration

committee.


Sandvik AB, IBS AB, E.ON Sverige AB

(previously Sydkraft AB),

RAE Systems Inc.



FREDRIK LUNDBERGGraduate Engineer and Graduate in

business administration, Honorary

Doctor of Economics and Honorary

Doctor of Engineering. President

and group chief executive of L E

Lundbergföretagen AB, Djursholm,

year of birth 1951.

Member since 2002.


Holmen AB, Cardo AB, Hufvudstaden

AB, Director of L E Lundbergföretagen

AB, NCC AB, AB Industrivärden,

Sandvik AB.


of immediate family: 1,849,500

SVERKER MARTIN-LÖFDoctor of Engineering in Technology

in Paper and Chemical Pulping,

Stockholm, year of birth 1943.

Member since 2002. Chairman of the

board’s audit committee, Member of the



Svenska Cellulosa AB SCA,

Skanska AB, SSAB Svenskt Stål AB,

Vice chairman of Telefonaktiebolaget

LM Ericsson, AB Industrivärden.



BENTE RATHEGraduate in business administration

and MBA, Trondheim, year of birth

1954. Member since 2004. Member of

the board’s credit committee and audit

committee.

Other assignments: Chairman of Petoro

AS and Enviro Energi ASA, Director of

Kongsberg Automotive ASA, Powel ASA.




Handelsbanken’s board of directorsRefers to the 12-month period between the 2006 and 2007 AGMs

Nationality Independent * RemunerationCredit committee

Remunerationcommittee

Auditcommittee

Lars O Grönstedt, chairman Swedish 1 415 000 chairman chairman member

Hans Larsson, vice chairman Swedish 745 000 member

Anders Nyrén, vice chairman Swedish • 745 000 member

Pär Boman, CEO Swedish - member

Pirkko Alitalo Finnish • 440 000 member

Jon Fredrik Baksaas Norwegian • 365 000

Ulrika Boëthius Swedish -

Tommy Bylund Swedish - member

Göran Ennerfelt Swedish 555 000 member

Sigrun Hjelmquist Swedish • 440 000 member

Fredrik Lundberg Swedish • 365 000

Sverker Martin-Löf Swedish • 655 000 member chairman

Bente Rathe Norwegian • 655 000 member member

• This member is to be regarded as independent in relation to the company and its management.• This member is to be regarded as independent in relation to the company and its management

and also to major shareholders in the company.

* As defined in the Swedish Corporate Governance Code.


Senior management

* Indirect holding of shares in Handelsbanken via the Oktogonen profit-sharing foundation.

President and group chief executive

PÄR BOMAN year of birth 1961Employed: 1991Shareholding: 3,627, of which 2,927 indirectly*

Executive vice presidents at central head offi ce

BJÖRN BÖRJESSON year of birth 1951Head of Handelsbanken InternationalEmployed: 1981Shareholding: 9,901, of which 9,901 indirectly*

MIKAEL ERICSON year of birth 1960Head of Handelsbanken Capital MarketsEmployed: 1993Shareholding: 2,248, of which 2,248 indirectly*

ANDERS H JOHANSSON year of birth 1955Head of ITEmployed: 1999Shareholding: 764, of which 764 indirectly*

PATRIK HERTSBERG year of birth 1963Head of Handelsbanken Asset ManagementEmployed: 1994Shareholding: 1,269, of which 1,269 indirectly*

OLLE LINDSTRAND year of birth 1949Head of Credit DepartmentEmployed: 1985Shareholding: 6,586, of which 6,586 indirectly*

ANNA RAMBERG year of birth 1952Head of Human ResourcesEmployed: 1971Shareholding: 25,013, of which 24,104 indirectly*

ULF RIESE year of birth 1959Head of Control and AccountingEmployed: 1983Shareholding: 27,016, of which 8,359 indirectly*

HÅKAN SANDBERG year of birth 1948Employed: 1969Shareholding: 25,715 of which 25,206 indirectly*

Executive vice presidents at the regional banks

PER BECKMAN year of birth 1962Head of Northern NorrlandEmployed: 1993Shareholding: 1,073, of which 1,073 indirectly*

RAINER LAWNICZAK year of birth 1958Head of Southern NorrlandEmployed: 1982Shareholding: 9,246, of which 9,246 indirectly*

LARS KAHNLUND year of birth 1954Head of Stockholm CityEmployed: 1975Shareholding: 18,574, of which 18,574 indirectly*

THOMMY MOSSINGER year of birth 1951Head of Central SwedenEmployed: 1982Shareholding: 9,161, of which 9,161 indirectly*

ANDERS OHLNER year of birth 1955Head of Eastern SwedenEmployed: 1985Shareholding: 5,365, of which 5,365 indirectly*

M JOHAN WIDERBERG year of birth 1949Head of Western SwedenEmployed: 1972Shareholding: 26,147, of which 22,647 indirectly*

CLAES NORLÉN year of birth 1955Head of Southern SwedenEmployed: 1978Shareholding: 13,667, of which 13,667 indirectly*

MAGNUS UGGLA year of birth 1952Head of Great BritainEmployed: 1983Shareholding: 38,333, of which 8,333 indirectly*

ANDERS BOUVIN year of birth 1958Head of DenmarkEmployed: 1985Shareholding: 7,069, of which 6,569 indirectly*

PETRI HATAKKA year of birth 1962Head of FinlandEmployed: 1990Shareholding: 1,143, of which 1,143 indirectly*

INGA-LILL NICOLIN year of birth 1950Head of NorwayEmployed: 1986Shareholding: 5,060, of which 5,060 indirectly*

Chief executives at the subsidiaries

MICHAEL ZELL year of birth 1950Head of Handelsbanken Liv and SPPEmployed: 1978Shareholding: 14,667, of which 13,667 indirectly*Call options equivalent to 10,000 shares

YONNIE BERGQVIST year of birth 1961Head of Handelsbanken FinansEmployed: 1979Shareholding: 10,314, of which 10,177 indirectly*

FRANK VANG-JENSEN year of birth 1967Head of StadshypotekEmployed: 1998Shareholding: 1,232, of which 932 indirectly*

Others at central head offi ce

KATARINA BERNER FRÖSDAL year of birth 1956Head of InfrastructureEmployed: 1979Shareholding: 11,685, of which 11,685 indirectly*

JAN HÄGGSTRÖM year of birth 1949Head of Handelsbanken Markets ResearchEmployed: 1988Shareholding: 3,842, of which 3,842 indirectly*

ELISA SAARINEN year of birth 1963Head of Corporate CommunicationsEmployed: 1995Shareholding: 1,190, of which 1,190 indirectly*

Changes during the year

Pär Boman, previously head of Handelsbanken Markets, was appointed president and group chief executive.

Ulf Riese, previously head of Handelsbanken Asset Management, was appointed head of Central Control and Accounting.

Mikael Ericson, previously head of Handelsbanken Capital Markets, was appointed executive vice president and head of Handelsbanken Capital Markets.

Rainer Lawniczak was appointed executive vice president and head of Regional Bank Southern Norrland.

Björn Börjesson, executive vice president, previously head of Handelsbanken Markets, was appointed head of Handelsbanken International.

Katarina Berner Frösdal was appointed head of Infrastructure.

In February 2007, Patrik Hertsberg was appointed executive vice president and head of Handelsbanken Asset Management.


Branches and branch managers

NORTHERN NORRLAND

Branch Branch manager

Arvidsjaur Hans Albert Lindgren

Backe Berit Bölander

Bjurholm Vacant

Bjästa Mats Hållberg

Björna Margareta Persson

Boden Eva Rångevall

Bredbyn Mats Ågren

Bureå Helen Bergwall

Burträsk Catharina Johansson Björk

Byske Sören Markström

Domsjö Roland Wennerberg

Dorotea Anna-Karin Öhnerud

Gammelstad Eva-Britt Lindström

Gällivare Lars Beyron

Haparanda Roger Keisu

Holmsund Stenebo, Marina

Hoting Marianne Rullander

Husum Thomas Kassman

Härnösand Johan Grahn

Jokkmokk Kent Aidanpää

Junsele Annica Olofsson

Kalix Gunnar Sandqvist

Kiruna Vacant

Kramfors Lars Norlinder

Lugnvik Tommy Sjölund

Luleå Storgatan Jan Persson

Luleå Örnäset Lisbeth Aidanpää

Lycksele Henrik Johansson

Lövånger Kjell-Ove Löfgren

Malå Ann-Charlotte Renström

Nordingrå Tommy Sjölund

Nordmaling Ivan Forsgren

Norsjö Greger Holmström

Näsåker Jan-Åke Sjömäling

Pajala Per-Anders Juntti

Piteå Stefan Uddström

Ramsele Vacant

Robertsfors Jenny Berglund

Råneå Ellinor Eriksson

Skellefteå Göran Olsson

Sollefteå Thomas Rönnberg

Sorsele Hans Albert Lindgren

Storuman Peter Persson

Trehörningsjö Gunilla Näslund

Ullånger Tommy Sjölund

Umeå

City Peter Hansi

Umeå Teg Catrine Danielsson

Umeå Västra Vacant

Vilhelmina Roland Wennerberg

Vindeln Alexander Bagrov

Vännäs Ann-Christine Söderberg Rånman

Ånäset Eva Nordenstam

Åsele Anna-Karin Öhnerud

Älvsbyn Britt-Marie Stenvall

Örnsköldsvik Helena Johansson

Överkalix Maria Fältmark

Övertorneå Håkan Funck

SOUTHERN NORRLAND


Alfta Dan Silvroth

Arbrå Pär Lindh

Avesta Pia Källarbo

Bergby Ylva Wallén Svensson

Bergsjö Ulrika Sjöström

Bispgården Lars-Göran Fahlén

Bjursås Anders Rapp

Björbo Gerd Kosjanow

Bollnäs Irene Hörberg

Borlänge Katarina Rülcker

Bräcke Tomas Wallström

Delsbo Joakim Frithiof

Edsbyn Anders Lundin

Fagersta Lars Annerman

Falun Anders Forsgren

Fränsta Lars Gustafsson

Furudal Bengteric Andersson

Föllinge Anette Nilsson

Gagnef Kerstin Berg Lindgren

Gnarp Niclas Södergren

Grangärde Maria Jonasson

Grängesberg Eva Ludvigsson

Gällö Tomas Wallström

Gävle City Svante Larsson

Hammarstrand Lars-Göran Fahlén

Hammerdal Örjan Olsson

Heby Åsa Olsson

Hede Thomas Ohlsson

Hedemora Håkan Arvidsson

Hedesunda Susanne Persson

Hudiksvall Thony Nylund

Insjön Clas Bond

Järpen Henrik Lindqvist

Järvsö Ove Larsson

Kilafors Sten Morin

Kopparberg Lena Ragnarsson Vöks

Krokom Ulf Hellström

Kvissleby Per Pettersson

Leksand Anders Ekström

Liden Inger Nordström

Lima Lena Eggens

Lit Mikael Hansson

Ljusdal Tommy Bylund

Ljusne Catarina Bengtsson

Ludvika Mats Johansson

Malung Åsa Björlin

Matfors Johan Billström

Mockfjärd Håkan Eriksson

Mora Henrik Ragnarsson

Mörsil Astrid Larsson Lindh

Norberg Leif Magnusson

Ockelbo Karin Eriksson

Offerdal Jörgen Nordqvist

Orsa Bengteric Andersson

Rättvik Martin Sellberg

Sala Peter Gustavsson

Sandviken Sven-Erik Larsson

Skinnskatteberg Andreas Byrén

Skutskär Tom Wallin

Skärplinge Stefan Holmquist

Skönsberg Urban Strömbom

Stora Tuna Catrine Stenback

Storvik Helene Hedin

Strömsund Lars-Erik Olsén

Sundsvall Owe Sundin

Sveg Gunilla Bäckius

Svenstavik Bengt Adolfsson

Säter Ingela Hedberg

Söderhamn Kerstin Nordstrand

Sörberge Bertil Sjöstrand

Tierp Mats Hansson

Timrå Johanna Lundberg

Torsåker Kerstin Persson

Vansbro Fredrik Hallqvist

Västanfors Mikael Johansson

Ånge Stefan Mattsson

Åre Hans Pernelind

Östersund Petter Dahlin

Östervåla Ove Johannesson

STOCKHOLM CITY


Danderyd

Djursholm Leif Jadvi

Mörby centrum Fredrik Christofferson

Lidingö

Centrum Mia Hiljebäck

Larsberg Vacant

Näset Evalena Holmqvist

Sigtuna

Arlanda Lars Åsgårdh

Märsta Ann Lilja

Stora gatan Katarina Fridén

Sollentuna

Centrum Fredrik Andersson

Rotebro Yvonne Orre

Solna

Centrum Per Eldestrand

Frösunda Ulf Eliasson

Vreten Klas Bornälv

Stockholm

Birger Jarlsgatan Jörgen Nielsen

Frihamnen Richard Nordgård

Gamla Stan Linda Kyrkander

Gustav Adolfs Torg Bo Kaijser

Humlegården Jörgen Larson

Karlaplan Magnus Ericson

Karlavägen Per Andersson

Kista Thomas von Schéele

Kungsträdgården Åsa Öhlund

Norrmalmstorg Jan Ringblom

Norrtull Helena Ericsson

Odengatan Carl-Magnus Gustafsson

Odenplan Joakim Becker

S:t Eriksplan Mats Byrstedt

Stockholm Sergel Göran Lönnstad

Strandvägen Bengt Bohman

Stureplan Mikael Westerback


Sveavägen Malin Bergström

Tessinparken Peder Wiberg

Upplandsgatan Lisbeth Andersson

Vanadisplan Richard Johnson

Vasagatan Maria Hellberg

Värtavägen Björn Åhlander

Östermalmstorg Anders Danielsson

Östra Station Thomas Anttila

Sundbyberg Carina Idberg

Täby

Täby Centrum Johan Lurén

Näsby Park Mats Kivilä

Upplands Väsby Urban Wolters

Vallentuna Fredrik Enander

Vaxholm Anneli Sönmez

Åkersberga Sune Werkell

CENTRAL SWEDEN


Alviks Torg Johan Lindblom

Arboga Ulla-Karin Aufrecht

Blackeberg Susanne Signell

Brommaplan Peter Lindh

Bålsta Joakim Kihlgren

Dalarö Maud Lyckenius

Ekerö Jesper Hellström

Enköping Ulla Reuterskiöld

Farsta Rickard Svallfors

Fellingsbro Ingrid Persson

Finnerödja Olle Jonsson

Fjugesta Anders Hedvall

Fleminggatan Jan Larsson

Fridhemsplan Niklas Hedblom

Frövi Mikael Jansson

Globen Hans Widmark

Gnesta Mårten Larsson

Götgatsbacken Anders Lindegren

Hallsberg Yvonne Bülow

Hallstavik Roland Ericson

Hallunda Per Molin

Hammarby Marion Ulander

Haninge Mikael Wenngren

Hornsberg Anki Lenksjö

Hornsgatan Mats Eriksson

Huddinge Kjell Andersson

Hägersten Susanne Norman-Taube

Hässelby Marie Lindström

Högalid Pernilla Eldestrand

Högdalen Jörgen Nilsson

Jakobsberg Marie Cedergren

Järna Laila Jansson

Knivsta Agneta Nygården

Kolbäck Eva Klang

Kumla Thomas Ljungberg

Kungsholmstorg Göran Almberg

Kungsängen Maria Wedholm

Kungsör Niklas Johansson

Kärrtorp Anders Hagman

Köping Peter Fällman

Lindesberg Larry Andersson

Marieberg Karin Lundqvist

Marievik Tomas Ejnar

Nacka Susanne Danielsson

Norrtälje Bo Schotte

Nynäshamn Stefan Zettergren

Pålsboda Helene Wiberg

Renstiernas G Katarina Alf

Rimbo Tina Nylén

Salem Catharina Persson

Saltsjö Boo Hans Ek

Skanstull Per Anders Tranberg

Skultuna Lars-Åke Pettersson

Skärholmen Kenneth Wadling

Sköndal Vacant

Spånga Anders Nygren

Stuvsta Mats Nordling

Södertälje Peter Almström

Trosa Maria Westerfalk

Trångsund Malin Berglund

Tullinge Vacant

Tyresö Lars Holm

Ulvsunda Karin Enestad

Uppsala

City Jörgen Ericsson

Eriksberg Lars Olsson

Industriomr Baruch Grauman

Luthagen Lars Sandberg

Vällingby Thomas Wedholm

Värmdö Per Anwret

Västerhaninge Jenny Lööw

Västermalm Lena Wennerberg

Västerås

City Kent Johansson

Emausgatan Cecilia Hallqvist

Köpingsvägen Lena Nilsson

Stora Gatan Håkan Jansson

Årsta Vacant

Älvsjö Birgitta Billström

Örebro

Stortorget Kenneth Wallin

Ekersgatan Christer Larsson

Våghustorget Bengt Gunnarson

Ösmo Renée Andersson

Österbybruk Christer Lindgren

Östhammar Christer Lindgren

EASTERN SWEDEN


Alvesta Thorwald Burman

Anderstorp Pernilla Åkestrand

Bankeryd Thomas Landén

Borensberg Birgitta Östergren

Borgholm Conny Johansson

Eksjö Karin Jönsson

Emmaboda Sven-Erik Karlsson

Eskilstuna

Fristadstorget Jonas Elfridsson

Östermalm Bo Vallin

Finspång Dag Kinnerud

Flen Lotta Peppas

Fårösund Leif Närström

Färjestaden Jan Pilemyr

Gislaved Jörgen Asp

Hemse Magnus Gardell

Hultsfred Monica Carlenskog

Huskvarna Hans Färemo

Högsby Anne-Helene Markström

Jönköping Claes Ericson

Kalmar

Kvarnholmen Mikael Fredriksson

Kalmar Berga Markus Hagström

Katrineholm Göran Bjerke

Klintehamn Lars Cramér

Lammhult/Rörvik Per-Olof Lenegård

Landsbro Kent Lind

Linköping

City Gert Lundmark

Tornby Anders Hallros

Mjölby Patrik Rosengren

Motala Michael Minnered

Mönsterås Karin Mattsson

Mörbylånga Marianne Wigforss

Mörlunda Börje Samuelsson

Norrköping

Drottninggatan Åke Stenberg

Eneby Mats Borgsjö

Hageby Lars Blomqvist

Nybro Manfred Sass

Nyköping Eva Wahlberg

Nässjö Mats Andersson

Oskarshamn Ingvar Persson

Slite Catarina Bylund

Strängnäs Wilhelm Trahn

Sävsjö Jonas Flink

Söderköping Michael Rimstedt

Tingsryd Ingela Nilsson

Torsås Stefan Pålsson

Tranås Jens Fransson

Vaggeryd Jörgen Bruhn

Vetlanda Olle Hagström

Vimmerby Hans Will

Virserum Maria Bjarnehäll

Visby

Adelsgatan Madeleine Gottfridsson-Endrell

Öster Stefan Lövkvist

Vislanda Johan Isaksson

Värnamo Lars-Eric Ericsson

Västervik Michael Skännestig

Växjö Mikael Jismark

Ålem Susann Svenzén

Åseda Peter Holmberg

Åtvidaberg Erik Torbrand

WESTERN SWEDEN


Alingsås Peter Romedahl

Arvika Göran Eriksson

Bollebygd Eva-Lotta Duneskog

Borås

Hulta Thomas Strömberg

Norrby Thomas Bogsjö

Viared Thomas Bogsjö

Stora Torget Janne Pehrsson

Falkenberg Michael Sterne

Falköping Magnus Kvarnmarker

Filipstad Peter Bergkvist

Fristad Gunilla Lööf

Färjelanda Gunilla Andersson

Gällstad Kenneth Thörnqvist

Göteborg

Almedal Anders Gross

Avenyn Olle Eksell

Backa-Ringön Christina Hjälte

City Jan Wergeland

Eriksberg Anders Hjälte

Frölunda Tommy Häggström

Första Långgatan Knut Pokorny

Gårda Mats Berntsson

Hisings Kärra Anna Ekstrand

Hjällbo Christian Pennert

Högsbo Annette Bertilsson

Kortedala Jan Gottberg

Landala Michael Åhman

BRANCHES AND BRANCH MANAGERS


Lilla Bommen Katarina Helgen

Majorna Marie Jakobsson

Marieholm Britt-Marie Linse

Odinsgatan Christian Sjöberg

Sisjön Assar Larsson

Torslanda Veronica Wallin

Volvo Eva Hasselström

Örgryte Ingemar Rask

Övre Husargatan Jan Sahlin

Hagfors Pär Skogfeldt

Herrljunga Acting – Gunnar Jönsson

Hjo Lena Karlsson

Karlskoga Charlotte Schreck-Pettersson

Karlstad

Stora Torget Peter Andersson

Våxnäs Fredrik Ekenberg

Kristinehamn Mats-Ove Mattsson

Kungsbacka Mats Rollof

Kungälv Anette Pettersson

Landvetter Claes Ahlström

Lerum Camilla Sjöberg

Lidköping Anders Stigson

Lilla Edet Jan-Olof Strand

Mariestad Kerstin Waller

Mellerud Cecilia Blom

Mölndal Martin Henriksson

Mölnlycke Ann Sundvisson

Nödinge Lena Gillholm

Partille Liselott Mattson

Skara Martin Drebin

Skövde Niklas Standar

Sollebrunn Hans-Göran Nilsson

Stenungsund Mats Ingemarsson

Sunne Pär Olsson

Surte Christian Nielsen

Svenljunga Bengt Larsson

Säffle Elisabeth Korp

Tibro Marianne Bergman

Tidaholm Lena Lundh

Torsby Morgan Smegärd

Tranemo Lars Nydén

Trollhättan Thomas Eriksson

Uddevalla Stefan Widlund

Ulricehamn Kenneth Olofsson

Vara Joakim Carlsson

Varberg Jan Bogsjö

Vårgårda Anna-Karin Heljegård

Vänersborg Mats Johansson

Åmål Bo Larson

Årjäng Peter Johansson

Älvängen Peter Kornesjö

SOUTHERN SWEDEN


Arlöv Jonas Sjöberg

Broby Peter Andersson

Båstad Joakim Holm

Eslöv Dag Olsson

Halmstad Tony Bringevall

Helsingborg

Norr Per Franklin

Stortorget Göran Pelvén

Söderport Sven Rosenkvist

Hässleholm Ola Tyrberg

Höganäs Magnus Landbring

Höllviken Göran Fredriksson

Höör Annika Johansson

Karlshamn Per Bjerstedt

Karlskrona Jan Erik Dahl

Kivik Andreas Jeppsson

Klippan Lena Johansson

Knislinge Ingela Ström

Kristianstad Mikael Rubin

Kävlinge Göran Camitz

Laholm Lars Andersson

Landskrona Annila Hansson

Ljungby Thomas Eldh

Ljungbyhed Eva Aurell

Lomma Mona Persson

Lund

City Nils-Erik Persson

Ideon John Persson

Markaryd Staffan Werner

Malmö

Amiralsgatan Per-Ove Kamlund

City Göran Johnsson

Dalaplan Jens Isaksson

Fosie Dag Sundewall

Fridhem Gunnar Holmqvist

Köpenh.vägen Maria Zanichelli

Limhamn Bengt Rosendahl

Lundavägen Bengt Nyquist

Triangeln Ulf Dahlqvist

Värnhem Roger Håkansson

Olofström Katarina Ring

Osby Jonas Skyman

Ronneby Carl-Gustaf Larsson

Simrishamn Lennart Jirback

Sjöbo Thomas Johansson

Skanör Christer Nilsson

Skurup Håkan Lennartsson

Staffanstorp Olle Svensson

Svedala Gert Nilsson

Sölvesborg Helen Olofsson

Sösdala Karin Eriksson

Tomelilla Bengt-Göran Grenander

Trelleborg Marie Brunstam

Tyringe Yvonne Liljeqvist

Veberöd Hans-Åke Mårtensson

Vellinge Tomas Wall

Vittsjö Catharina Munkberg

Vollsjö Bonnie Cederquist

Ystad Jan-Olof Petersson

Åhus Thomas Hansson

Älmhult Fredrik Roghner

Ängelholm Kenneth Persson

DENMARK


Amager Claes Peulecke

Aulum Helle Bjerre

Ballerup Fin Mortensen

Brande Benny Larsen

Esbjerg Morten Andersen

Fredericia Jens Christian Jørgensen

Give Niels Peder Nielsen

Hammerum Børge Thomsen

Herning

City Niels Viggo Malle

Fredhøj Bruno Hansen

Holstebro Claus Gade

Horsens Jann Due

Ikast Morten Smith

Karup Gitte Nielsen

Kgs. Lyngby Knud Jacobsen

Kibæk Preben Staal

Kolding Jesper Andersen

Copenhagen:

City Lars Moesgaard

Frederiksberg Henrik Bengtsson

Østerbro Carsten Heger

Køge Brian Arnvig

Lemvig Lars Balle Olsen

Odense Tom Skjellerup

Park Allé Henrik Eg

Roskilde Boje Nielsen

Sdr. Felding Kristian Hansen

Sdr. Omme Bent Egdal

Silkeborg Carsten Hjortflod

Struer Poul Bakkegaard

Sunds Anders Frederiksen

Vejle Peter Sørensen

Viborg Arnth Stougaard

Videbæk John Nyby

Vildbjerg Henrik Kristiansen

Aalborg Ole Dahl Nielsen

Århus Jan Arup

FINLAND


Espoo

Leppävaara Tuija Nuutinen

Tapiola Pekka Ursin

Helsinki

Pasila Sirpa Pensas

Dianapuisto Mirjam Sarkki

Esplanadi Tiina Roschier

Hakaniemi Leif Grönlund

Kamppi Nina Arkilahti

Munkkivuori Reima Jokela

Itäkeskus Hannu Oksanen

Hämeenlinna Jutta Ruuskanen-Tähtinen

Hyvinkää Mervi Karsikas

Imatra Pekka Lankinen

Joensuu Juha Saastamoinen

Jyväskylä Tauno Virkki

Kerava Kimmo Heiskanen

Kokkola Sören Björkgård

Kouvola Jorma Qvick

Kuopio Seppo Tujunen

Lahti Tarmo Kallio

Lappeenranta Acting - Martti Mäkelä

Mikkeli Jouko Kervinen

Oulu Jari Murtoperä

Pietersaari Anders Norrena

Pori Esa Yli-Sipilä

Raisio Juha Vasanen

Rauma Erkki Nissilä

Rovaniemi Pekka Pistokoski

Salo Juho Huovinen

Seinäjoki Esa Alkio

Tallinn, Estonia Harri Tuohimaa

Tampere

Kauppakatu Tarja Suvisalmi

Kyttälä Ilkka Pehkonen

Tornio Pirkko Lääkkölä

Turku Markku Ropponen

Tammisaari Marika Lindholm

Vaasa Yngve Svens

Vantaa

Tikkurila Jaakko Hara

Myyrmäki Stephan Björkell



NORWAY


Arendal Per Olav Nærestad

Asker Turid Williksen

Bergen

Fana Arvid Føleide

Flesland Gunnar Røsland

Fyllingsdalen Mette Skauge

Minde Erik Ramsdal

Sentrum Arild Andersen

Strandgaten Åse Fluge Nordgreen

Vest Christian Ravnå

Åsane Tore Svein Nese

Drammen Kirsti Jensås

Fredrikstad Tove Anita R Torp

Halden Roar Elsness

Hamar Hans Skjelbreid

Haugesund Knut Børge Lunde

Kolbotn Geir Anders Sundnes

Kristiansand Arild Andresen

Larvik Hans Jørgen Ormar

Lillestrøm Line Thams Blikstad

Lysaker Jørgen Misvær

Molde Kolbjørn Heggdal

Moss Jan Fredrik Fogth

Oslo

Fyrstikktorget Glenn Steinbø

Kirkegaten Harald Søreide

Majorstuen Ronny Myreng

Nydalen Torstein Haugland

Olav Vs Gate Knut Berge

Skøyen Sven Ove Oksvik

Sandefjord Ingelise Schliekelmann

Sandnes Anette Wathne

Sandvika Cecilie Tvedt

Sarpsborg Espen Lerkerød

Ski Hanne Fjellheim

Skien Jan Egil Hafredal

Sotra Lisbeth Turøy

Stavanger

Sentrum Hroar Gudbrandsen

Straen Terje Lind

Tromsø Bjørn Andreassen

Trondheim

Heimdal Bente E Dahl

Søndregt Ola Grøtte

Tønsberg Jan Erik Skjolden

Ålesund Jan Petter Larsen

GREAT BRITAIN


Birmingham Patrick Hanlon

Bournemouth Tracey Davidson

Bristol Tim Wilkinson

Cambridge Richard Waters

Cardiff Rick Spencer

Chelmsford Justin Grainger

Guildford Neil Truman

Hull Pete Sumners

Leeds Andy Copsey

Leicester Sean Martin

Liverpool Sean Mcgurren

London Simon Silvester

Maidstone Jonathan Watson

Manchester Simon Raine

Newcastle Kevin Pattison

Norwich John Harper

Nottingham Colin Kirk

Oxford David Woodhead

Plymouth Paul Wilmot

Reading Roy Arbon

Sheffield Mike Harrison

Slough John Parker

Southampton Jeremy Tollworthy

Stoke-on-trent Michael Smith

Swindon Trevor Harrison

Wolverhampton Mike Priddy

UNITS OUTSIDE THE NORDIC COUNTRIESAND GREAT BRITAIN

Unit Head of unit

Amsterdam Brian Herring

Luxembourg Göran Högvall

Hong Kong Göran Stille

Singapore Jan Djerf

Shanghai Johan Andrén

Germany Holger Namér

Frankfurt Mattias Metzger

Hamburg Vacant

New York Mikael Green

Poland Mikael Sörensen

Gdansk Beata Suchocka

Poznan Jaroslaw Ladziak

Warsaw Marzena Malek

Paris Peter Einarsson

Russia Raimo Valo

Moscow Svante Anderback

St. Petersburg Markku Vasari

Vienna Carl-Christian Prinz Zu Solms-Lich

Mumbai John Ödmann



Defi nitions and explanations

General defi nitions

ADJUSTED SHAREHOLDERS’ EQUITY PER SHARE. Shareholders’ equity at the end of the period is adjusted by surplus/defi cit values on fi nancial assets classifi ed to be held to maturity and reduced by the equity effect of cash fl ow hedges and the minority share of shareholders’ equity. Adjusted equity is then divided by the number of outstanding ordinary shares at the end of the period.

BAD DEBTS. Loans where payments will probably not be met according to the conditions of the contract. A loan is not a bad debt if there is collateral which covers the principal amount, interest and penalties for late payments by a satisfactory margin.

BAD DEBT RESERVE RATIO. Provision for probable loan losses as a percentage of gross bad debts.

CAPITAL BASE. The capital base is the sum of tier 1 (primary) and tier 2 (supplementary) capital. Tier 1 capital comprises shareholders’ equity less goodwill plus 72% of untaxed reserves in the parent company. Tier 2 capital includes fi xed-term subordinated loans with some reduction when the residual maturity is less than fi ve years. These loans must not exceed 50% of tier 1 capital. With permission from the government or, following authorisation by the government, from the Swedish Financial Supervisory Authority, other instruments may also be included in tier 1 or tier 2 capital. However, tier 2 capital must never exceed tier 1 capital. The total of tier 1 and tier 2 capital is reduced by the book value of holdings in insurance operations and certain fi nancial operations. To cover the capital requirement on the market risks, subordinated loans with an original maturity of at least two years can be included in the capital base.

C/I RATIO. Total expenses in relation to total income.

CAPITAL RATIO. Capital ratio or capital adequacy is the capital base in relation to risk-weighted volume. The capital ratio must be at least 8%.

DIVIDEND YIELD. Dividend per share divided by the share price at year-end.

EARNINGS PER SHARE. The profi t/loss for the year divided by the average number of outstanding shares. Where applicable, the dilution effect is taken into account.

LOAN LOSS RATIO. Loan losses and changes in value of repossessed property as a percentage of the opening balance for loans to the public, loans to credit institutions (excluding banks), repossessed property and credit guarantees.

NON-PERFORMING LOANS. Loans where interest, repayments or overdrafts have been due for payment for more than 60 days.

P/E RATIO. The share price at year-end divided by earnings per share.

PROPORTION OF BAD DEBTS. Bad debts (net) in relation to total loans to the public and credit institutions (excluding banks).

RETURN ON EQUITY. Profi t for the year in relation to average shareholders’ equity excluding the equity impact of fi nancial assets classifi ed as available for sale, and cash fl ow hedges. An adjustment is also made for a weighted average of rights issues, dividends and repurchase of own shares.

RETURN ON TOTAL ASSETS. Operating profi t in relation to average total assets.

RISK-WEIGHTED VOLUME. The risk-weighted volume is determined by the assets and off-balance-sheet items being placed in varying risk classes, in accordance with the Act on Capital Adequacy and Large Exposures of Credit Institutions and Securities Companies. The volumes are weighted taking into account the assessed risk such that they are included in the risk-weighted volume by 0%, 20%, 50% or 100%.

Explanation of insurance terms

AVAILABLE SOLVENCY MARGIN. Mainly comprising equity and any subordinated loans.

BONUS RATE. The interest rate, before fees and taxes, at which the insurance capital (the insured party’s savings) earn interest. This is the most important component when calculating the allocated bonus. This normally only applies at companies run on mutual principles. See Yield rate.

COLLECTIVE CONSOLIDATION RATIO. The market value of the insurance company’s assets in relation to the insurance commitments.

EXPENSE RATIO. Operating expenses in relation to premiums written.

GUARANTEED RATE. The interest rate, before fees and taxes, which is used to calculate the guaranteed funds.

PREMIUMS WRITTEN. Mainly the total of premiums paid in during the year.

REQUIRED SOLVENCY MARGIN. Consists mainly of the sum of 4% of the life insurance provisions, 1% of the unit-linked commitments, 1% of conditional bonuses and 0.1–0.3% of mortality risks.

SOLVENCY RATIO. Available solvency margin in relation to required solvency margin. The ratio, which should be at least 1, shows the company’s ability to meet its commitments.

TOTAL RETURN. Mainly the sum of changes in value and return on the investment assets.

YIELD RATE. The interest rate, before fees and taxes, at which the insurance capital (the insured party’s savings) earn interest. This is the most important component when calculating the conditional bonus. This normally only applies in profi t-distributing life insurance companies. See Bonus rate.

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HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPANKNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMNKROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: 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DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN ENEBY CENTRUM HAGEBY CENTRUM NORRTÄLJE NORSJÖ NYBRO NYKÖPING NYNÄSHAMN NÄSBY PARK NÄSSJÖ NÄSÅKER NÖDINGE OCKELBO OFFERDAL OLOFSTRÖM ORSA OSBY OSKARSHAMN PAJALA PARTILLE PITEÅ PÅLSBODA RAMSELE RIMBO ROBERTSFORS RONNEBY ROTEBRO RÅNEÅ RÄTTVIK RÖRVIK SALA SALEM SALTSJÖ-BOO SANDVIKEN SIGTUNA SIMRISHAMN SJÖBO SKANÖR SKARA SKELLEFTEÅ SKINNSKATTEBERG SKULTUNA SKURUP SKUTSKÄR SKÄRHOLMEN SKÄRPLINGE SKÖNDAL SKÖNSBERG SKÖVDE SLITE SOLLEBRUNN SOLLEFTEÅ SOLLENTUNA CENTRUM SOLNA SORSELE SPÅNGA STAFFANSTORP STENUNGSUND STOCKHOLM: BIRGER JARLSGATAN FLEMINGGATAN FRIDHEMSPLAN FRIHAMNEN GAMLA STAN GUSTAV ADOLFS TORG GÖTGATSBACKEN HORNSBERG HORNSGATAN HUMLEGÅRDEN HÖGALID KARLAPLAN KARLAVÄGEN KUNGSHOLMSTORG KUNGSTRÄDGÅRDEN MARIEBERG NORRMALMSTORG NORRTULL ODENGATAN ODENPLAN RENSTIERNAS GATA S:T ERIKSPLAN SERGEL SKANSTULL STRANDVÄGEN STUREPLAN SVEAVÄGEN TESSINPARKEN UPPLANDSGATAN VANADISPLAN VÄRTAVÄGEN VÄSTERMALM ÖSTERMALMSTORG ÖSTRA STATION STORA TUNA STORUMAN STORVIK STRÄNGNÄS STRÖMSUND STUVSTA SUNDBYBERG SUNDSVALL SUNNE SURTE SVEDALA SVEG SVENLJUNGA SVENSTAVIK SÄFFLE SÄTER SÄVSJÖ SÖDERHAMN SÖDERKÖPING SÖDERTÄLJE SÖLVESBORG SÖRBERGE SÖSDALA TIBRO TIDAHOLM TIERP TIMRÅ TINGSRYD TOMELILLA TORSBY TORSÅKER TORSÅS TRANEMO TRANÅS TREHÖRNINGSJÖ TRELLEBORG TROLLHÄTTAN TROSA TRÅNGSUND TULLINGE TYRESÖ TYRINGE TÄBY CENTRUM UDDEVALLA ULLÅNGER ULRICEHAMN ULVSUNDA UMEÅ: CITY TEG VÄSTRA UPPLANDS VÄSBY UPPSALA: CITY ERIKSBERG INDUSTRIOMRÅDE LUTHAGEN VADSTENA VAGGERYD VALLENTUNA VANSBRO VARA VARBERG VASAGATAN VAXHOLM VEBERÖD VELLINGE VETLANDA VILHELMINA VIMMERBY VINDELN VIRSERUM VISBY: ADELSGATAN ÖSTER VISLANDA VITTSJÖ VOLLSJÖ VRETEN VÅRGÅRDA VÄLLINGBY VÄNERSBORG VÄNNÄS VÄRMDÖ VÄRNAMO VÄSTANFORS VÄSTERHANINGE VÄSTERVIK VÄSTERÅS: CITY EMAUSGATAN KÖPINGSVÄGEN STORA GATAN VÄXJÖ YSTAD ÅHUS ÅKERSBERGA ÅLEM ÅMÅL ÅNGE ÅNÄSET ÅRE ÅRJÄNG ÅRSTA ÅSEDA ÅSELE ÅTVIDABERG ÄLMHULT ÄLVSBYN ÄLVSJÖ ÄLVÄNGEN ÄNGELHOLM ÖREBRO: EKERSGATAN STORTORGET VÅGHUSTORGET ÖRNSKÖLDSVIK ÖSMO ÖSTERBYBRUK ÖSTERSUND ÖSTERVÅLA ÖSTHAMMAR ÖVERKALIX ÖVERTORNEÅ ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKA AVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO L LE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTA CENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTAD GISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDAL MÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA ALFTA ALINGSÅS ALVESTA ALVIKS TORG ANDERSTORP ARBOGA ARBRÅ ARLANDA SKY CITY ARLÖV ARVIDSJAUR ARVIKAAVESTA BACKE BANKERYD BERGBY BERGSJÖ BJURHOLM BJURSÅS BJÄSTA BJÖRBO BJÖRNA BLACKEBERG BODEN BO L LE BYGD BOLLNÄS BORENSBERG BORGHOLM BORLÄNGE BORÅS: HULTA NORRBY STORA TORGET VIARED BREDBYN BROBY BROMMA-PLAN BRÄCKE BUREÅ BURTRÄSK BYSKE BÅLSTA BÅSTA DALARÖ DELSBO DJURSHOLM DOMSJÖ DOROTEA ED SBYN EKERÖ EKSJÖ EMMABODA ENKÖPING ESKILSTUNA: FRISTADSTORGET ÖSTERMALM ESLÖV FAGERSTA FALKENBERG FALKÖPING FALUN FARSTACENTRUM FELLINGSBRO FILIPSTAD FINNERÖDJA FINSPÅNG FJUGESTA FLEN FRISTAD FRÄNSTA FRÖSUNDA FRÖVI FURUDAL FÅRÖSUND FÄRGELANDA FÄRJESTADEN FÖLLINGE GAGNEF GAMMELSTADGISLAVED GLOBEN GNARP GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GNESTA GRANGÄRDE GRÄNGESBERG GÄLLIVARE GÄLLSTAD GÄLLÖ GÄVLE CITY GÖTEBORG: ALMEDAL AVENYN BACKA RINGÖN CITY ERIKSBERG FRÖLUNDA FÖRSTA LÅNGGATAN GÅRDA HISINGS

KÄRRA HJÄLLBO HÖGSBO KORTEDALA LANDALA LILLA BOMMEN MAJORNA MARIEHOLM ODINSGATAN SISJÖN TORSLANDA VOLVO PVB ÖRGRYTE ÖVRE HUSARGATAN HAGFORS HALLSBERG HALLSTAVIK HALLUNDA TORG HALMSTAD HAMMARBY HAMMARSTRAND HAMMERDAL HANINGE CENTRUM HAPARANDA HEBY HEDE HEDEMORA HEDESUNDA HELSINGBORG: NORR STORTORGET SÖDERPORT HEMSE HERRLJUNGA HJO HOLMSUND HOTING HUDDINGE CENTRUM HUDIKSVALL HULTSFRED HUSKVARNA HUSUM HÄGERSTEN HÄRNÖSAND HÄSSELBY GÅRD HÄSSLEHOLM HÖGANÄS HÖGDALEN HÖGSBY HÖLLVIKEN HÖÖR INSJÖN JAKOBSBERG JOKKMOKK JUNSELE JÄRNA JÄRPEN JÄRVSÖ JÖNKÖP ING KALIX KALMAR: BERGA KVARNHOLMEN KARLSHAMN KARLSKOGA KARLSKRONA KARLSTAD: VÅXNÄS KATRINEHOLM KILAFORS KIRUNA KISTA KIVIK KLINTEHAMN KLIPPAN KNISLINGE KNIVSTA KOLBÄCK KOPPARBERG KRAMFORS KRISTIANSTAD KRISTINEHAMN KROKOM KUMLA KUNGSBACKA KUNGSÄNGEN KUNGSÖR KUNGÄLV KVISSLEBY KÄRRTORP KÄVLINGE KÖPING LAHOLM LAMMHULT LANDSBRO LANDSKRONA LANDVETTER LEKSAND LERUM LIDEN LIDINGÖ: CENTRUM LARSBERG NÄSET LIDKÖPING LILLA EDET LIMA LINDESBERG LINKÖPING: CITY TORNBY LIT LJUNGBY LJUNGBYHED LJUSDAL LJUSNE LOMMA LUDVIKA LUGNVIK LULEÅ: STORGATAN ÖRNÄSETLUND: CITY IDEON LYCKSELE LÖVÅNGER MALMÖ: AMIRALSGATAN CITY DALAPLAN FOSIE FRIDHEM KÖPENHAMNSVÄGEN LIMHAMN LUNDAVÄGEN TRIANGELN VÄRNHEM MALUNG MALÅ MARIESTAD MARIEVIK MARKARYD MATFORS MELLERUD MJÖLBY MOCKFJÄRD MORA MOTALA MÄRSTA MÖLNDMÖLNLYCKE MÖNSTERÅS MÖRBY CENTRUM MÖRBYLÅNGA MÖRLUNDA MÖRSIL NACKA: FORUM NACKA NORBERG NORDINGRÅ NORDMALING NORRKÖPING: DROTTNINGGATAN

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ANNUAL REPORT 2006 HANDELSBANKEN HAS 615 BRANCHES ...

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