UPDATE 1-Handelsbanken Q2 lags consensus, hit by loan loss

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STOCKHOLM, July 22 (Reuters) - Swedish banking group Svenska Handelsbanken (SHBa.ST) posted a bigger than expected drop in second-quarter operating profits on Tuesday , hurt by higher loan losses.

Operating profit was 3.43 billion Swedish crowns ($576 million) versus an average forecast of 3.56 billion in a Reuters poll and 4.39 billion in the same period in 2007.

A slowdown in the Nordic region and the effects of the global credit crunch meant banks have seen earnings decline this year. Nordea (NDA.ST), which reported at the same time as Handelsbanken saw a 10 percent drop in second quarter operating profit.

For Handelsbanken, total income fell in the second quarter to 7.20 billion crowns from 7.55 billion. But this was above the mean forecast for 7.05 billion crowns.

Loan losses were 571 million crowns versus year-ago provisions of 65 million. The mean forecast was for a 157 million loss.

Handelsbanken said around two-thirds of the loan losses were due to one exposure in Sweden.

Other income was more or less in line with expectations in a poll of analysts.

Net interest income just beat expectations, rising to 4.49 billion crowns from 3.87 billion and compared to an expected 4.42 billion.

Net commission income fell to 1.71 billion from 2.00 billion, versus a forecast 1.75 billion.

The fair value result was 634 million crowns versus a year-earlier 1.36 million, while total costs amounted to 3.20 billion crowns, versus a year-earlier 3.23 billion and an expected 3.33 billion.

(Reporting by Anna Ringstrom; Editing by Rory Channing)