Handelsbanken Capital Ratio Climbs as Net Income Tops Estimates

Svenska Handelsbanken AB, the best-capitalized of the European Union’s biggest banks, said its core capital ratio jumped to 17.8 percent of risk-weighted assets under Basel III rules after second-quarter profit grew.

That compares with a ratio of 17.5 percent at the end of March, the Stockholm-based bank said in a statement today. Under Basel II, the ratio was 18.2 percent in June compared with 18 percent in March. Profit rose to 3.7 billion kronor ($560 million) from 3.33 billion kronor, beating the average 3.45 billion krona-estimate of 12 analysts surveyed by Bloomberg.

Sweden’s biggest banks have built up more reserves than competitors elsewhere in the EU, helping drive down funding costs and freeing them to raise dividends while others focus on preserving cash. Swedbank AB yesterday reported a common equity Tier 1 ratio under Basel III of 17.2 percent -- above Sweden’s 12 percent requirement, due to take effect in 2015.

At Handelsbanken, net interest income increased 1.5 percent to 6.67 billion kronor in the second quarter, compared with an average analyst estimate of 6.63 billion kronor. Net fee and commission income advanced 5.4 percent to 1.92 billion kronor, the Swedish bank said.

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