July 17, 2018 / 6:11 AM / a month ago

UPDATE 1-Sweden's SEB profit beats forecast on strong corporate demand

* Q2 op profit SEK 10.7 bln vs SEK 10.1 bln forecast

* Profit boosted by one-off capital gains

* Interest income, commissions top forecast (Adds detail, background)

STOCKHOLM, July 17 (Reuters) - Swedish bank SEB reported a bigger-than-expected rise in its second-quarter operating earnings on Tuesday as a broad rebound in demand from corporate customers boosted income from commissions and lending.

The stocks of Sweden’s big four banks - SEB, Swedbank , Handelsbanken and Nordea - have come under pressure this year as investors fret over a recent slump in the country’s once red-hot housing market.

In addition, SEB reported earlier this year a slump in demand from its corporate clients that are its bread and butter, contributing to a more than 10 percent slide in its shares so far this year.

SEB said in a statement that business activity picked up in the second quarter from a slow start to the year, both among large corporate clients and Swedish small- and mid-size businesses, while its mortgage lending also grew.

“Advisory and event-driven financing increased and we saw higher demand for traditional bank lending,” SEB Chief Executive Johan Torgeby said, noting that housing prices had also gradually stabilised.

Operating profit at Sweden’s fourth-biggest bank by market capitalisation rose to 10.7 billion crowns ($1.22 billion) from 5.7 billion crowns a year ago and beat a mean forecast of 10.1 billion crowns in a poll of analysts.

Earnings as well as analysts’ estimates were buoyed by previously flagged one-off capital gains totalling 4.5 billion crowns from the sales of SEB’s Danish pensions arm and a stake in credit reference agency UC.

Net interest income, which includes income from mortgage lending, rose to 5.5 billion crowns from 4.9 billion crowns a year earlier. This was above the 5.1 billion crowns expected by analysts.

Income from commissions and fees, which reflects much of the revenue generated from corporate clients, increased to 4.8 billion crowns from 4.7 billion crowns, beating the mean forecast of 4.5 billion crowns. ($1 = 8.8043 Swedish crowns) (Reporting by Niklas Pollard; Editing by Subhranshu Sahu)

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