Handelsbanken is the quality benchmark of Nordic banking: a decentralised, relationship-driven model (decisions pushed to the branch) that produces the sector's lowest cost/income ratio (~40%), famously near-zero credit losses through the cycle (FY2025 net reversals; eight straight quarters of releases), a fortress 17.2% CET1 and a top-tier A1 credit rating. It earns a ROE ~12.8% (ROTCE ~13.4%) — a notch below the higher-beta Swedish peers but at materially lower risk.
That ~12.8% ROE is a solid ~3.3pp spread over our ~9.5% cost of equity (residual income +SEK 6.1bn) — the bank is value-creative. But valuation leaves no margin of safety: at 1.55x book / 1.62x tangible / 11.2x earnings, the stock sits ~6% above a Gordon fair P/B of ~1.46x (fair ~SEK 127). Note too that the headline Q1 ROE was flattered by a one-off SEK 1.1bn VAT refund (underlying ~11.7%), so the run-rate is a touch lower than the reported figure. Superb franchise, full price.
Gordon fair P/B = (ROE−g)/(COE−g) with COE 9.5%, g 3% and a normalised ROE ~12.5% gives ~1.46x → fair value ~SEK 127; the FY2025 13.0% ROE implies ~SEK 134. Current 1.55x book, 1.62x tangible, 11.2x earnings.
Base SEK 132 (warranted P/B near the current run-rate ROE); bull SEK 150 if ROE re-rates toward 13.5%+ on rate normalisation; bear SEK 110 if NII compresses and the multiple de-rates to ~1.2x book.
The operating reverse-DCF (NOPAT / invested capital / WACC) does not apply to a balance-sheet business — leverage is the raw material and "net debt" is not meaningful. The equity is valued on residual income: book equity plus the present value of returns above the cost of equity, discounted at Ke; the single-stage lens is the Gordon fair price-to-book, (ROE−g)/(Ke−g). The market prices in a sustainable ROE of 13.1% vs 13.8% currently earned; at a sustained 13.8% ROE the warranted P/B is 1.66× (SEK 144/sh, +7%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 150 | 14% | +11% | 25% | ROE re-rates toward 13.5%+ on rate normalisation |
| Base | SEK 132 | 13% | -2% | 50% | Warranted P/B near current run-rate ROE |
| Bear | SEK 110 | 11% | -18% | 25% | NII compresses; multiple de-rates to ~1.2x book |
| Prob-weighted | SEK 131 | — | -3% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 8.00% | 122 | 191 | 261 | 331 | 400 | 470 | 539 |
| 8.75% | 106 | 166 | 227 | 287 | 348 | 408 | 469 |
| 9.50% (base) | 94 | 147 | 201 | 254 | 308 | 361 | 415 |
| 10.25% | 84 | 132 | 180 | 228 | 276 | 324 | 372 |
| 11.00% | 76 | 120 | 163 | 207 | 250 | 294 | 337 |
Green = fair value above the current price of SEK 134.60. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Decentralised branch model → ~40% cost/income, the sector benchmark.
Through-cycle credit discipline; net provision releases.
17.2% CET1, A1 rating — among the safest banks globally.
Reliable dividend off surplus capital.
Handelsbanken is the highest-quality, lowest-risk Nordic bank — lowest cost/income, near-zero credit losses, fortress capital — but at 1.55x book it trades ~6% above a Gordon fair P/B of ~1.46x. HOLD; base SEK 132.
Own it for quality and dividend reliability, not multiple re-rating; accumulate on a pullback toward ~1.3x book where the safety becomes cheap.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Net income to shareholders (LTM) | 23,763 | Group Overview p.4 + FY anchor 📄 p.4 | LTM = Q1 2026 profit 6,357 + FY2025 23,727 - Q1 2025 6,321, attributable to shareholders, restated continuing-operations basis. |
| Total income (LTM) | 57,131 | Group Overview p.4 📄 p.4 | LTM total income = Q1 2026 14,778 + FY2025 57,300 - Q1 2025 14,947. |
| Net interest income (LTM) | 41,552 | Group Overview p.4 📄 p.4 | Core revenue line for a bank; LTM = 10,016 + 43,041 - 11,505. Pressured by lower market rates but stable QoQ. |
| Total common equity (31 Mar 2026) | 172,228 | Balance Sheet - Group p.25 📄 p.25 | Latest-quarter equity snapshot is the bank invested-capital base. Down from 199,355 at Dec on the SEK 17.50/share dividend. |
| Non-controlling interest | 4 | Balance Sheet - Group p.25 📄 p.25 | Negligible NCI; common equity to shareholders = 172,228 - 4 = 172,224. |
| Intangible assets (goodwill + other) | 7,972 | Note 13 Intangible assets p.42 📄 p.42 | Goodwill 4,337 + other intangibles 3,635 deducted from common equity to reach tangible common equity 164,252 for ROTCE / P-TBV. |
| ROE (LTM, avg equity) | 0.128 | Key metrics - Group p.21 📄 p.21 | Bank return measure. 23,763 / avg equity 185,788. Reported RoE FY2025 13.0%, Q1 2026 13.6% (flattered by VAT one-off; underlying 11.7%). |
| Common equity tier 1 ratio (CET1) | 0.172 | Key metrics - Group p.21 📄 p.21 | Regulatory capital strength. CET1 17.2% (Q1 2026), ~2.5pp above the SFSA requirement; total capital ratio 21.6%. |
| C/I ratio | 0.395 | Key metrics - Group p.21 📄 p.21 | Handelsbanken's famed low-cost decentralised model: reported C/I 39.5% Q1 2026 (42.8% adjusted for the VAT one-off), among the lowest of any European universal bank. |
| Credit loss ratio | 0 | Highlights p.2 📄 p.2 | Near-zero cost of risk: 0.01% Q1 2026; FY2025 -0.01% (net reversals for the eighth consecutive quarter). Structural hallmark of the bank's low-risk lending culture. |
| Shares outstanding | 1,980,028,494 | The Handelsbanken share p.21 📄 p.21 | 1,980,028,494 shares outstanding (A+B), unchanged; used for BVPS, P/B and market cap. |
| Share price SHB-A end of Q1 | 123 | The Handelsbanken share p.21 📄 p.21 | Report's own 31 Mar 2026 A-share close SEK 123.05; current verified price SEK 134.60 (6 Jun 2026) used for live multiples. |
| Total dividend per share FY2025 | 17.5 | The year / Board proposal p.6 📄 p.6 | Total SEK 17.50 (ordinary 8.00 + extra 9.50). High distribution releasing surplus capital; recurring ordinary yield ~5.9%. |
| Operating profit (LTM) | 30,526 | Group Overview p.4 📄 p.4 | LTM operating profit = 8,195 + 30,463 - 8,132; pre-tax profitability proxy for a bank (before tax, after credit losses & regulatory fees). |
| Five-year ROE history | 0.13 | Key metrics per year p.26 📄 p.26 | Through-cycle ROE: 13.0 / 14.6 / 15.9 / 12.8 / 11.8% (2025-2021). Supports a normalized ~12.5% used in the Gordon fair-P/B. |
How the mttssn view has evolved — each prior dated note is preserved.