Svenska Handelsbanken AB, Sweden’s second-largest bank by market value, proposed paying shareholders 10 percent more in dividends after profit last quarter soared.
The Stockholm-based bank, which today unveiled plans to expand further in western Europe, proposed a dividend of 10.75 kronor ($1.7) a share for 2012, compared with 9.75 kronor a year earlier, according to a statement today. Profit in the three months through December jumped 49 percent to 4.54 billion kronor, beating the average 4.51 billion-krona estimate of 16 analysts survey by Bloomberg.
Handelsbanken and Swedish rivals Swedbank AB and SEB AB are the three best capitalized major lenders in the European Union, giving them scope to distribute more to shareholders at a time when other banks in Europe are trying to preserve cash to meet stricter capital rules.
Handelsbanken’s capital strength is also giving the lender scope to fund an expansion in Europe. The bank announced today the purchase of U.K. investment manager Heartwood, and named the Netherlands as one of its home markets as part of an expansion.
“We see major opportunities for continued growth here in the Netherlands,” Mikael Soerensen, head of the bank’s Dutch unit, said in a statement. “The market is similar to the U.K., with a few large, centralised banks. We’re opening branches and working close to the customer in a decentralised manner.”
Handelsbanken is expanding even as it faces some of Europe’s strictest regulatory standards. Sweden’s government is pushing through tougher capital rules than those set elsewhere. The country’s four largest banks, including Nordea Bank AB, already fulfill this year’s 10 percent core Tier 1 capital requirement of risk-weighted assets, and also top a 12 percent minimum rule that becomes effective from 2015.
Handelsbanken’s core Tier 1 ratio rose to 18.4 percent in the fourth quarter, from 17.9 percent in the third. The Swedish lender’s net interest income increased 2 percent to 6.48 billion kronor in the fourth quarter, while net fee and commission income rose 1.8 percent to 1.91 billion kronor in the period.
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