Handelsbanken Boosts Dividend 53% as Capital Buffers Increase

Svenska Handelsbanken AB (SHBA) proposed raising its dividend by 53 percent after capital buffers at Europe’s best-capitalized major bank swelled.

The lender proposed a total dividend of 16.50 kronor per share, including an ordinary dividend of 11.50 kronor. The bank paid 10.75 kronor a year earlier. It was projected to pay shareholders 11.5 kronor, according to Bloomberg dividend forecasts, which take into account seven variables including analysts’ estimates and company guidance. Profit fell 18 percent to 3.53 billion kronor ($541 million), beating the average estimate of 3.46 billion kronor in a Bloomberg survey.

Sweden has subjected its banks to some of the strictest capital rules in Europe and warned it may raise requirements further this year after property prices and household debt levels soared to records. Swedish banks, the best capitalized lenders in Europe, already exceed the government’s 2015 capital requirement of a core Tier 1 capital ratio of 12 percent, fueling speculation they will return more money to shareholders.

Handelsbanken’s common equity Tier 1 ratio increased to 18.9 percent of risk-weighted assets under Basel III rules at the end of last year, from 18.8 percent at the end of the third quarter of last year and 16.4 percent at the end of 2012. Under Basel II regulation, the capital ratio was 19.2 percent.

The bank joins Swedish rivals Nordea Bank AB (NDA), the Nordic region’s largest lender, and Swedbank AB, the largest bank in the Baltics, in raising its dividend. Nordea proposed on Jan. 29 to increase its dividend by 26 percent to 0.43 euro per share, while Swedbank on Jan. 28 proposed raising its 2013 dividend by 2 percent to 10.1 kronor per share. Both banks’ dividends missed the average estimate in surveys by SME.

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

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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