Handelsbanken's shares tumble after Q1 expenses soar

Swedish bank Handelsbanken SHB_A reported first-quarter net profit below market expectations on Wednesday due to soaring expenses, sending the shares tumbling almost 10%.

Handelsbanken, known for its decentralised business model that gives branch managers huge say over decisions, saw expenses jump 12% to 6.47 billion crowns, from 5.78 billion in the corresponding quarter last year. The bank said staff costs had been rising during the quarter.

"In a quarter marked by expenses rising more quickly than income, we are naturally far from satisfied," the bank said.

Handelsbanken shares slumped 9.3% by 0756 GMT, the biggest one-day drop since March 2023, to hit their lowest level since December 2023.

Costs, net interest income and net fee and commission income all disappointed, J.P. Morgan wrote in a note.

"Overall we would expect up to mid single digit downgrades given the topline and costs weakness," it added.

The bank, a rival of Swedbank SWED_A, SEB SEB_A and Nordea NDA_FI, said net profit fell 3% to 6.60 billion crowns ($611 million) from 6.81 billion a year earlier, against a mean analyst forecast of 6.69 billion crowns, according to LSEG estimates.

Sweden's SEB reported lower than expected net interest income on Wednesday, sending its shares down 2.7%.

In a bid to improve results going forward, Handelsbanken said had appointed Marion Ulander as acting country general manager for Norway, replacing Arild Andersen.

"As a consequence of the ongoing weak development of our Norwegian operations, we have after a review decided on a strategic refocus," the bank said in a statement.

The bank, whose main markets are Sweden, Norway and Britain, said its net interest income, which includes revenues from mortgages, rose 1% to 11.59 billion crowns from 11.49 billion crowns a year earlier, coming in below the 12.01 billion crowns expected by analysts.

Its commission income, which has been under pressure due to the slowing economy, slipped slightly to 2.75 billion crowns, from 2.77 billion crowns a year earlier, below the mean forecast of 2.86 billion.