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Investing.com -- Shares of Handelsbanken (ST:SHBa) fell more than 7% on Wednesday after the Swedish lender reported a 12% drop in second-quarter operating profit to SEK 7.16 billion, down from SEK 8.14 billion in the prior quarter, as net interest income declined and trading losses mounted.
Net interest income fell 6% to SEK 10.69 billion, impacted by SEK 550 million in negative effects from margin and funding changes, as well as the strengthening of the Swedish krona.
Adjusted for foreign exchange effects of SEK 164 million, the decrease was 4%. Business volume changes contributed SEK 57 million, while calendar day effects added SEK 33 million.
Financial transactions posted a loss of SEK 64 million, down from a gain of SEK 506 million.
Losses included SEK 404 million from market valuation changes in derivatives and SEK 121 million from the sale of the Finnish credit card portfolios.
Additional valuation effects, including CVA/DVA and hedge ineffectiveness, amounted to SEK 253 million in negative impact.
Total (EPA:TTEF) income declined 8% to SEK 13,624 million. Net fee and commission income fell 1% to SEK 2,866 million.
Fund management and asset-related commissions dropped 3% to SEK 1.71 billion, while card commissions rose 12% to SEK 261 million.
Payment commissions increased 7% to SEK 451 million. Other components, including lending, deposit, and insurance commissions, were lower.
Other income rose to SEK 133 million from SEK 37 million, mainly due to a stronger net insurance result.
Total expenses were stable at SEK 6.02 billion. Staff costs slightly decreased to SEK 3,784 million, including a SEK 90 million provision for the Oktogonen scheme and SEK 58 million in restructuring charges.
The average number of employees declined 2% to 11,654. Other expenses were unchanged at SEK 1,723 million. Depreciation was SEK 510 million. The cost/income ratio rose to 44.2% from 40.7%.
Credit losses showed net reversals of SEK 219 million, up from SEK 54 million.
This included a SEK 121 million reversal of an expert-based provision and SEK 48 million in recoveries from the Ecster divestment.
The credit loss ratio improved to 0.03% from 0.01%, reflecting a net recovery.
Regulatory fees totaled SEK 664 million, including SEK 400 million in risk tax, SEK 251 million in resolution fees, and SEK 13 million for the Bank of England Levy.
Profit for the period declined to SEK 5.49 billion from SEK 6.32 billion. Earnings per share were SEK 2.77, compared with SEK 3.19. Return on equity eased to 12.7% from 12.9%.
The common equity tier 1 ratio remained at 18.4%, 3.5 percentage points above regulatory requirements and 0.5 points above the bank’s target range. The total capital ratio was unchanged at 22.7%.
For the first half of 2025, operating profit was SEK 15.30 billion, down 9% from SEK 16.78 billion.
Income fell 8% to SEK 28.41 billion, while expenses declined 7% to SEK 12.04 billion. Net credit loss reversals totaled SEK 273 million.
Earnings per share were SEK 5.96, and return on equity was 12.8%. The anticipated dividend for the half-year was SEK 7.15 per share.