By Dominic Chopping 
 

STOCKHOLM--Svenska Handelsbanken AB (SHB-B.SK), one of the Nordic region's largest lenders, said Tuesday its fourth-quarter net profit rose 35% on the year as a large gain from the sale of shares in an investment helped boost earnings and offset sluggish net interest income.

Net profit at the Stockholm-based bank rose to 4.50 billion Swedish kronor ($533.0 million) in the three months ending Dec. 31, from SEK3.34 billion in the same period a year ago. That was in line with expectations for SEK4.50 billion, according to an analyst poll by FactSet.

The board proposes an increase in the ordinary dividend to SKE6.00 a share, commprising a SEK4.50 ordinary dividend and an extra dividend of SEK1.50. The company paid a total dividend of SEK5.83 last year.

Net interest income nudged 1% higher to SEK6.97 billion, from SEK6.88 billion a year ago, while net gains on financial transactions was sharply higher at SEK1.50 billion, mainly as a result of the SEK1.21 billion gain from the sale of its shares in Svenska Cellulosa AB (SCA-B.SK). Loan losses narrowed to SEK475 million from SEK697 million.

Swedish banks face pressure from negative interest rates, imposed earlier last year by the central bank to bring inflation closer to its 2% target. The negative interest rates force banks to pay to park their customers' deposits overnight at the central bank.

The common equity Tier 1 ratio--a key measure of financial strength--was 21.2% at the end of the quarter, up from 20.4% a year ago.

-Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter: @domchopping @WSJNordics

(END) Dow Jones Newswires

February 09, 2016 01:44 ET (06:44 GMT)