February 6, 2019 / 6:24 AM / 5 months ago

Handelsbanken dividend misses forecast as capital requirements bite

FILE PHOTO: A branch of Handelsbanken is seen in Wilmslow, Britain January 12, 2015. REUTERS/Phil Noble

STOCKHOLM (Reuters) - Sweden’s Handelsbanken proposed a lower-than-expected dividend for 2018 on Wednesday as stricter requirements from the country’s regulator hit capital levels.

While fourth-quarter operating earnings came in above market expectations, the bank proposed a dividend of 5.50 crowns, well below the payout of 6.49 per share seen by analysts and lower than the total 7.50 crowns per share paid out for 2017.

The 2017 payout included an ordinary dividend of 5.5 crowns per share and one-off payment of 2.0 crowns per share.

The Swedish Financial Supervisory Authority last year altered the way it weighs risks in Handelsbanken’s mortgage portfolio. As a result, the bank’s total risk exposure increased by 163 billion crowns, meaning its capital ratios declined.

“The bank’s policy for dividend is linked to the capital target,” Handelsbanken said in a statement.

Operating profit in the quarter rose to 5.29 billion Swedish crowns (£447.8 million) from a year-ago 5.00 billion, beating a mean forecast for 5.21 billion seen in a Reuters poll of analysts.

Net interest income, which includes income from mortgages, rose to 7.87 billion crowns from 7.78 billion a year ago but was below the estimated 7.92 billion in a Reuters poll of analysts.

However, commission income rose to 2.61 billion crowns from 2.50 billion a year ago, narrowly topping the 2.59 billion seen by analysts, while loan and credit losses were just over 100 million crowns lower than forecast at 276 million.

Reporting by Johan Ahlander; editing by Niklas Pollard

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