(Corrects date in dateline)
* Swedbank op profit rises 9.7 pct, beating analyst forecasts
* Results boosted by lower loan losses, increased activty among businesses
* Baltic operations not affected by Ukraine turmoil
STOCKHOLM, July 18 (Reuters) - Swedish banking group Swedbank said on Friday it spied signs of a long-awaited pick up in corporate credit demand as strong economies at home and in the Baltics helped it top profit expectations in the second quarter.
Swedbank, one of Sweden’s biggest mortgage lenders, said economic activity continued to grow in the April-June period and that more confident businesses were now looking to increase borrowing despite geopolitical concerns over Ukraine and Russia.
“The Swedish economy has done very well and also the Baltics, where we have not seen any impact of the Crimean crisis,” CEO Michael Wolf said.
“Particularly notable in the quarter was the increased activity among our corporate clients and volume growth in the metropolitan regions.”
The Swedish bank, which pulled out of Russia and Ukraine just last year to focus on its home markets, warned last quarter that credit demand in the Baltic’s could be hit by the turmoil in Ukraine. Swedbank is one of the biggest lenders in Latvia, Lithuania and Estonia.
Net profit for continuing operations rose 9.7 percent to 4.37 billion Swedish crowns ($639.53 million), beating a mean forecast for 4.04 billion seen in a Reuters poll of analysts.
Swedish banks faces a squeeze from tougher bank regulations as authorities, worried about excessively high levels of household debt, have sought out ways to let steam out of the country’s red-hot property market.
The Financial Supervisory Authority has already announced higher capital demands and compulsory mortgage amortisation is also being discussed.
Swedbank said it welcomed the debate, but said increasing housing supply was the most important step.
“The low supply and the lack of mobility in the housing market can only be solved through political decisions. It’s good that we get a discussion of amortisation culture, but basically it’s a problem of low supply,” Wolf said.
Net interest income rose to 5.52 billion Swedish crowns , below a mean forecast for 5.58 billion seen in a Reuters poll of analysts and compared with 5.48 billion in the year-ago period.
Loan losses amounted to 30 million Swedish crowns in the quarter, better than an average forecast of 130 million.
$1 = 6.8331 Swedish Crowns Reporting by Johan Ahlander and Mia Shanley; Editing by Simon Johnson