Handelsbanken profit beats forecast as costs come down

By Johan Ahlander

STOCKHOLM (Reuters) -Swedish bank Handelsbanken reported first-quarter net profit above market expectations on Wednesday as its work to streamline the bank led to lower costs, sending its shares up 6.6% in early trading.

The bank, a rival of Swedbank, SEB and Nordea, said net profit fell 4% to 6.32 billion Swedish crowns ($656 million) from 6.60 billion crowns a year earlier, against a mean analyst forecast of 5.94 billion crowns, according to LSEG estimates.

Handelsbanken, which has struggled to contain costs in the last year, said that total expenses fell 7% to 6.03 billion crowns from 6.47 billion crowns last year, better than analysts' estimates of 6.36 billion crowns.

Handelsbanken CEO Michael Green said that support functions and the use of external consultants had been pared back, reducing spending at the bank whose costs have been closely eyed by investors after past unexpected increases.

"The efforts carried out over the past 12 months have not only reduced the running cost base, but also strengthened the cost culture throughout the bank," he told a news conference.

Global fears over tariff wars have harmed the recovery of the fragile, export-driven, Swedish economy.

The dimmed outlook has changed the view on monetary policy and several analysts now see the central bank cutting rates at least one more time this year from the current 2.25%.

The bank, whose main markets are Sweden, Norway and Britain, said its net interest income, which includes revenues from mortgages, fell 2% to 11.35 billion crowns from 11.59 billion crowns a year earlier, coming in above the 11.01 billion crowns expected by analysts.

Its commission income rose 5% to 2.90 billion crowns, from 2.75 billion crowns a year earlier, below the mean forecast of 2.97 billion crowns.

Handelsbanken said it had seen increased demand for advisory services at its local branches due to the uncertain macroeconomic climate.

The bank also said it had appointed Marten Bjurman as its new chief financial officer, starting in September at the latest.

($1 = 9.6363 Swedish crowns)

(Reporting by Johan Ahlander and Niklas Pollard, editing by Louise Rasmussen, Kim Coghill and Louise Heavens)