Handelsbanken boosted by higher loan volumes and lending margins

SWEDISH lender Handelsbanken said its financing position was strong when posting second-quarter profit that met forecasts yesterday, helped by rising loan volumes at home and improved lending margins.

At a time of worries about bank exposure to the Eurozone debt crisis and rising funding costs, Handelsbanken said its funding position was sound -- a liquidity reserve of 600bn crowns (£57bn) will cover requirements for over two years.

“From our own perspective, the bank’s low tolerance for risk, focus on credit quality combined with our organic growth levels are the key factors behind the stable performance,” finance director Ulf Riese said.

Handelsbanken’s operating profit rose five per cent from the previous quarter to 4.14bn crowns compared with 4.04bn forecast in a poll or analysts. Loan losses shrank to 172m versus an expected 232m.

Its report came after similarly solid earnings from top Nordic bank Nordea on Tuesday.

“On the whole, I think this looks good,” Cheuvreux analyst Mats Anderson said, pointing to higher net interest income in line with forecasts.

Jan Erik Gjerland, an analyst at DnB NOR, said in a note: “Lower loan losses in Sweden should be positive together with higher writebacks seen in the Baltics for SEB.” Handelsbanken is Sweden’s second biggest bank.