Bloomberg News

Handelsbanken Earnings Top Estimates as Loan Losses Drop

October 26, 2011

(Updates with shares in eighth paragraph.)

Oct. 26 (Bloomberg) -- Svenska Handelsbanken AB, Sweden’s second-largest lender, posted a 19 percent increase in third- quarter profit after loan losses fell by almost half.

Net income rose to 3.21 billion kronor ($490 million) from 2.71 billion kronor in the year-earlier period, the Stockholm- based bank said today in a statement. That beat the average 2.99 billion-krona estimate of 14 analysts surveyed by Bloomberg.

Handelsbanken’s shares climbed as much as 3.5 percent. Loan losses dropped to 157 million kronor from 294 million kronor, exceeding the forecast of Maths Liljedahl, an analyst at Nordea Bank AB. The Swedish lender said it doesn’t have any sovereign exposure to Greece, Portugal, Ireland, Italy or Spain, the nations whose fiscal woes have roiled markets this year and spurred banks elsewhere in Europe to raise capital.

“We have not found any weak spots in the report today, which confirms our view that Handelsbanken stands strong in the current turmoil,” Liljedahl said in an e-mailed note.

Handelsbanken said its Tier 1 capital ratio under Basel II regulations rose to 17.4 percent. Sweden, home to four of the Nordic region’s six biggest banks, wants its lenders to follow stricter capital standards than those set out by the Basel Committee on Banking Supervision and to push the changes through earlier. Finance Minister Anders Borg has said Swedish lenders face no immediate threat to raise their capital levels, though banks should be prepared to increase them in the long term.

Handelsbanken shares rose 2 percent to 192.2 kronor at 11 a.m. in Stockholm, outperforming the Bloomberg Europe Banks and Financial Services Index, which slipped 0.3 percent.

Net interest income, the difference between what the bank earns from lending and what it pays on deposits, rose 14 percent to 6.07 billion kronor in the quarter, while its net fee and commission income slipped 1.1 percent to 1.9 billion kronor.

The results come after Swedbank AB, the largest lender in the Baltic states, yesterday reported earnings that also topped estimates.

--Editors: Keith Campbell, Dylan Griffiths.

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net;

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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