By Johan Ahlander
STOCKHOLM (Reuters) – Sweden’s Handelsbanken said on Tuesday it would exit Denmark and Finland, as it saw little chance to grow without making major investments in those markets.
Handelsbanken, one of Sweden’s oldest banks and a major mortgage lender, said new regulatory frameworks meant the bank needed central staff functions and infrastructure in each market and that the synergies had decreased for small markets.
“Despite a lasting presence in these markets, the bank’s market position remains small and the bank sees little opportunity to scale up its offering without significant investment,” Handelsbanken said in a statement, adding that the process to divest the operations had been initiated.
Together, Denmark and Finland account for 10% of the income, 13% of the costs, and 8% of Handelsbanken’s operating profit.
Handelsbanken’s main markets are Sweden, Norway and the United Kingdom, and these markets account for 91% of its profits. Handelsbanken also has small operations in the Netherlands and in Luxemburg.
Handelsbanken reported better-than-expected third-quarter net profit which rose to 5.19 billion Swedish crowns ($602 million) from 3.32 billion in the previous year, beating the mean forecast of 4.65 billion by analysts, according to Refinitiv data.
Handelsbanken, with a low-risk, decentralised business model, has proven resilient in the face of COVID-19 and its shares, up 30% this year, are very close to pre-pandemic levels.
“Handelsbanken’s transformation is bearing fruit,” Chief Executive Carina Akerstrom said in an e-mailed statement. “The cost reducing measures are going ahead with undiminished vigour.”
However, the bank said underlying total expenses, which worried investors in recent years, was up 3% in the first nine months of this year compared with the same period last year.
($1 = 8.6135 Swedish crowns)
(Reporting by Johan Ahlander; Editing by Edmund Blair, Bernadette Baum and Emelia Sithole-Matarise)
