Handelsbanken's Q2 profit above forecast, boosted by higher interest rates

STOCKHOLM (Reuters) -Swedish bank Handelsbanken reported a second-quarter profit above forecasts on Wednesday as it benefited from higher interest rates.

Net profit at the 150-year-old rival to Swedbank, SEB and Nordea rose to 7.10 billion crowns ($694 million) from 4.21 billion a year earlier.

The mean forecast in a Refinitiv poll of analysts had been for a 6.67 billion crown profit.

"Handelsbanken stands steadfast in a world still in the grip of enormous uncertainty and turbulence," Chief Executive Officer Carina Akerstrom said in the report.

Sweden's central bank has raised interest rates to 3.75% from zero in the past 18 months, and with inflation still well above the 2% target, the Riksbank is widely expected to hike rates at least one more time this year.

Higher interest rates have boosted Swedish banks' income but there are also concerns steeper borrowing costs will result in more loan losses as companies and households struggle to cope.

Handelsbanken's net credit losses in the quarter only amounted to 58 million crowns, however, compared with 56 million a year ago and 337 million in the poll.

Shares in Handelsbanken fell 3.2% by 0749 GMT, underperforming the European banking index, which was down 0.3%. Prior to today's trading session Handelsbanken shares were up 4% this week.

JPMorgan said in a research note that while the net result was better than expected, net interest income was slightly below expectations and costs excluded a payment to Handelsbanken's profit sharing scheme Oktogonen.

"Despite a better-than-expected bottom line, we would expect limited changes/small downgrades to consensus estimates as costs exclude an Oktogonen provision," it said.

Net interest income, which includes income from mortgages, came in at 11.69 billion crowns, higher than the 8.39 billion crowns posted a year ago and just below the 11.87 billion crowns expected in the poll.

Swedish peers SEB and Swedbank both posted better-than-expected earnings on Tuesday.

($1 = 10.2275 Swedish crowns)

(Reporting by Johan Ahlander, editing by Anna Ringstrom and David Evans)