Handelsbanken lands profit beat as cost crunch driven back
Handelsbanken Q3 net profit 7.21 bln SEK vs forecast 6.62 bln
Costs fall 7% sequentially in quarter
Interest income also slightly above forecast
Bank books net credit reversals in quarter
Recasts first paragraph, adds details in paragraphs 5 and 9
By Niklas Pollard
STOCKHOLM, Oct 23 (Reuters) -Swedish bank Handelsbanken SHBa.ST reported third-quarter net earnings that beat market expectations on Wednesday, driven by a sequential drop in costs, in focus after past over-runs, strong credit quality and robust interest income.
Net profit fell to 7.21 billion Swedish crowns ($683.9 million) from 7.95 billion a year ago, topping an analysts mean estimates of 6.62 billion, according to an LSEG data.
The bank said its expenses, which have been closely eyed by investors after a cost surge triggered a rout in the stock earlier this year, fell 7% quarter on quarter to 5.96 billion crowns, below the analysts' estimates of 6.09 billion crowns.
Costs at the oldest company on the Swedish stock exchange have been running high in recent quarters due to elevated expenses on items including staff, though it recorded a small sequential drop in the second quarter.
"Income went up, expenses went down and credit losses again consisted of net reversals during the quarter," the bank said in statement, adding that staffing had been cut by 2%.
Sweden's top banks are expected to face headwinds, as steadily falling central bank rates dent interest income while a still subdued Swedish economy has left lenders competing fiercely over the fairly limited demand.
Last week, the CEO of regional heavyweight Nordea NDAFI.HE described what he said was a "bloody fight" for what small lending growth existed in the market in the Nordic region.
The rival of Swedbank SWEDa.ST, SEB SEBa.ST and Nordea said net interest income, which includes revenues from mortgages, fell to 11.76 billion crowns, from 12.18 billion crowns a year ago, topping estimates of 11.50 billion crowns.
Handelsbanken's commission income rose to 2.97 billion crowns, from 2.81 billion crowns a year ago and a mean forecast of 2.96 billion billion, while it made a profit on financial transactions of 626 million compared to 1.09 billion a year earlier.
($1 = 10.5425 Swedish crowns)
Reporting by Niklas Pollard, editing by Louise Rasmussen
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