The bank registered a net profit of 12.32 billion kronor (1.40 billion euros, $1.84 billion) in 2011, up by 12 percent from the previous year. In the fourth quarter alone, profit was up by five percent to 3.05 billion, compared to the 3.13 billion forecast by analysts surveyed by Dow Jones Newswires.

Loan losses, an indicator of the economic and financial crisis, were almost cut in half in 2011 from 2010, down by 46 percent to 816 million kronor.

For the period from October to December, loan losses dropped by 17 percent from the previous year to 243 million kronor, while analysts had expected the figure to come in around 239 million.

Net interest income rose by 11 percent in 2011 to 23.61 billion. In the final quarter alone, it climbed 13 percent from the corresponding quarter a year earlier to 6.36 billion, beating the 6.15 billion forecast by analysts.

The Handelsbanken share was up 1.88 percent in a Stockholm market up 1.28

percent in early afternoon trading.

Handelsbanken, which exited unfazed from the 2008-2009 crisis in the Baltic countries where its Swedish rivals Nordea, SEB and Swedbank had invested heavily, has however lagged behind its competitors after the economic recovery.

Like all of the banks in the Nordic region, Handelsbanken passed the European stress tests in 2011, with a Core Tier 1 capital ratio of 8.6 percent, well above the required 5.0 percent.

At the end of 2011, the Basel 2 Tier 1 ratio was 18.4 percent, compared to

16.5 percent in 2010.