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Swedbank Falls as SEB Downgrades on Growth Aim: Stockholm Mover

Swedbank AB declined the most in three weeks in Stockholm trading after SEB AB said that Svenska Handelsbanken AB offers better growth prospects and cut its rating on the Swedish lender’s shares to hold from buy.

Swedbank slipped as much as 2.5 kronor, or 1.6 percent, to 157.3 kronor, their steepest decline since Feb. 26. Shares were down 1.4 percent at 157.6 kronor as of 2:15 p.m. local time, with volumes at 53 percent of the daily average in the past three months. Handelsbanken lost 0.4 percent to 284 kronor at the same time.

“The Swedish retail banking market leaders and premium valued Swedish banks have different growth ambitions -- Handelsbanken is looking for continued growth through international expansion while Swedbank distributes most of its earnings to shareholders because of its low-volume growth expectations,” Bengt Claesson, an analyst at SEB in Stockholm, wrote in a note today. Swedbank’s “share price journey is about to level off” and it’s “now close to fair value,” he said.

Handelsbanken is expanding abroad, opening a new branch every ten working days in the U.K. SEB said it expects the bank’s U.K. network growth to continue for “many years” and that the expansion is “highly profitable,” meaning that the Swedish bank’s decision to focus on growth rather than on dividends is “the correct one.” Handelsbanken’s medium-term profit growth is likely to be as much as 4 percent higher than that of its peers in the next 10 to 15 years, Claesson said.

SEB today raised its recommendation on Handelsbanken to buy from hold. Handelsbanken shares have gained 22 percent so far this year, while Swedbank’s stock has advanced 24 percent.

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