Handelsbanken dividend miss, higher costs dent shares

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Shareholder payout below analysts' expectations

CEO says income hits record in all home markets

Net profit rises to 5.92 bln SEK, matching forecast

Shares fall 6%

Adds shares, analyst comment, CEO news conference

By Niklas Pollard

STOCKHOLM, Feb 8 (Reuters) -Sweden's Handelsbanken SHBa.ST proposed a lower than expected payout for shareholders and said investments that drove up costs in the fourth quarter were set to continue, sending its shares down 6% on Wednesday.

Against a backdrop of record annual and quarterly income in its main markets, Handelsbanken proposed an ordinary dividend of 5.50 crowns per share for 2022, up from 5.00 a year earlier, as well as a special dividend of 2.50 crowns per share.

That still fell short of Refinitiv estimates for a total payout of 8.56 crowns per share and analysts at Citi said markets were likely to question an extra dividend that was "modest" in light of income from the sale of the bank's Danish business and ample capital buffers.

Central bank rate hikes to cool red-hot inflation have dramatically shifted banks out of zero-rate territory over the past year, lifting interest income sharply, but also putting pressure on the households and businesses they serve.

The rival of Swedbank SWEDa.ST, SEB SEBa.ST and Nordea NDAFI.HE said fourth-quarter net profit reached 5.92 billion crowns ($560 million) from 5.24 billion a year earlier, in line with analysts' mean forecast.

The bank, whose spending rose 13% year-on-year in the quarter, said it expected higher investment in areas such as IT and digital services would continue through 2023.

"Costs are under control," CEO Carina Akerstrom told a news conference. "We allocate our resources where we see they safeguard the bank for the future, fully according to plan."

Handelsbanken, whose main markets are Sweden, Norway and Britain, said its interest income, which includes revenue from mortgages, rose to 10.63 billion crowns from 7.74 billion a year earlier, above the 10.16 billion expected by analysts.

However, that performance was eclipsed by Swedbank last week, and JP Morgan analysts said in a note that lower commission income took some of the shine off the results.

Commission income fell to 2.72 billion crowns from 3.16 billion a year earlier, below the 2.79 billion seen by analysts. Credit losses widened to 54 million crowns from 9 million, significantly less than the 330 million expected by analysts.

($1 = 10.5621 Swedish crowns)

Reporting by Niklas Pollard Editing by Christopher Cushing and Mark Potter


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