* 9.75 SEK/share dividend tops expectations
* 4.1 bln SEK Q4 operating profit matches forecasts
* Market uncertainty hits trading in Q4
By Oskar von Bahr and Mia Shanley
STOCKHOLM, Feb 15 Swedish bank
Handelsbanken sees room for further growth in the
British market where regulators have been seeking more
competition in the retail market, it said on Wednesday, in
reporting a 12 percent rise in full-year profits and 8 percent
rise in its dividend.
Handelsbanken raised its dividend to 9.75 crowns ($1.5) per
share for last year, beating analysts' foreceasts after higher
core income and lower loan losses lifted fourth quarter earnings
in line with forecasts.
Swedish banks have outperformed regional peers during the
European debt crisis, backed by two years of healthy economic
growth in Sweden and Norway and capital solvency ratios which
are amongst the highest in the region.
The government expects growth in Sweden to slow sharply,
with one influential think tank forecasting zero growth this
year. There are growing concerns about an overheating housing
market in Norway and Denmark's economy is already in bad shape.
Worries that tough new bank regulations will make it
increasingly difficult for the Swedish banks especially to meet
profitability targets have also made investors more wary.
But Handelsbanken, Sweden's second-biggest bank by market
capitalisation, is seen by investors as one of Europe's most
conservative lenders, and with a core Tier 1 capital ratio of
15.6 percent of assets it has benefited from far lower funding
costs than peers. It avoided the worst of the 2008-2009 crisis,
which hammered regional rivals.
Shares in the bank were up 2.2 percent at 217.4 crowns by
1548 GMT on Wednesday, when the Stoxx Europe 600 banking sector
index was up 1.7 percent.
Handelsbanken's profits in Britain surged 72 percent to 224
million crowns in the fourth quarter and made up 5.5 percent of
its total earnings. Profit in Sweden was 3.3 billion crowns.
Last year it opened another 21 branches in Britain to take
the total there to 104, almost a quarter the size of its Swedish
The bank said it has been opening a new British branch
nearly every other week, focusing on clients with good cash flow
and offering a more traditional face-to-face service approach.
"Long term, Britain represents an opportunity to open many
new branches," Chief Executive Par Boman told Reuters.
"There are very many places where we do not exist in
Britain, far more than in Sweden."
"We've been very optimistic about Britain for a couple of
quarters because we think it's working well. It is a perfect
environment for them to grow really unhindered," said Francis
Dallaire, an analyst at Pareto Ohman, of the Swedish bank.
"It is very encouraging to see how they are developing it,
and probably we are only seeing the beginning of an area that
could develop even more," he added.
NO COST CUTS
Handelsbanken is the last of the big Nordic banks to report
earnings for the fourth quarter.
Turbulent markets in the fourth quarter bit into trading
income, but strong core income helped boost operating profit
from continuing operations by 7 percent to 4.1 billion crowns,
matching a Reuters forecast.
For the full year net profit rose by 12 percent to 12.3
billion crowns, with earnings per share up 12 percent at 19.78
crowns. Operating profit from continuing operations was also up
12 percent at 16.5 billion crowns while return on equity rose
0.6 percentage points to 13.5 percent.
While both Handelsbanken and rival Swedbank's
dividends topped forecasts, Norway's DnB halved its
dividend and SEB said it would pay below its payout target.
Handelsbanken's rivals are implementing tough cost cuts and
sacking staff to keep up profitability levels, but Boman said
his bank would take on new staff this year.