Handelsbanken Capital Ratios Jump After Profit Gains 14 Percent

Svenska Handelsbanken AB (SHBA), Europe’s best-capitalized major bank, said its capital ratios increased in the third quarter after profit rose 14 percent.

Net income jumped to 3.61 billion kronor ($566 million) from 3.16 billion kronor a year earlier, the Stockholm-based bank said in a statement today. Earnings compare with the average 3.56 billion-krona estimate of 15 analysts surveyed by Bloomberg.

Sweden has subjected its banks to some of the strictest capital rules in the world and warned it may raise requirements further next year after housing prices and household debt levels soared to records. Swedish banks, the best capitalized lenders in Europe, already exceed the government’s 2015 capital requirement, sparking speculation lenders will increase dividends or make extraordinary payouts to shareholders.

Handelsbanken reported a core Tier 1 ratio under Basel II regulations of 19.3 percent at the end of September, compared with 18.2 percent at the end of June, and a ratio of 18.8 percent under Basel III, up from 17.8 percent. Swedbank AB (SWEDA) yesterday said its common equity Tier 1 ratio under Basel II rules stood at 18.8 percent at the end of September while its ratio according to Basel III was 18 percent.

Handelsbanken’s net interest income rose 3.4 percent to 6.68 billion kronor in the third quarter while net commission income increased 8.8 percent to 1.9 billion kronor. The return on equity was 14.2 percent, compared with a return of 16.2 percent at Swedbank AB, Sweden’s biggest mortgage lender.

To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net

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