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Swedbank's profits drop

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14:35 CET+01:00
Swedish banking group Swedbank, formerly FSB, announced on Friday an eight-percent-drop in net profit for 2006 once exceptionally high capital gains in 2005 were taken into account.

Swedbank's net profit was down 8.4 percent on the year to 10.88 billion kronor , the bank said in a statement.

"Excluding capital gains in 2005, net profit increased by 13 percent," the bank said.

The bank's income fell 0.9 percent on the year to 29.197 billion.

In the fourth quarter, net profit rose by 13 percent on the same period in 2005 to 2.913 billion. In the final three months of the year income was up 13 percent to 7.912 billion compared to 6.997 in the same period in 2005.

"Swedbank continues to develop postively. Net interest income is up for the fourth consecutive quarter, this time by four percent compared with the previous quarter," CEO Jan Liden said in the statement.

The bank would continue to invest in Baltic countries in response to growing demand for banking services, Liden said.

"In Russia we plan to expand to the private market in the years ahead. This market is characterized by high growth and big potential," he added.

The bank also planned to expand its operations in eastern Europe.

On February 7 the bank announced plans to buy TAS-Kommerzbank of Ukraine for $735 million.

TAS, headquartered in Kiev, was Ukraine's 13th largest bank based on total loans "and one of the faster growing in the retrail segment," the bank said.

The deal is expected to be completed in the second half of 2007.

Swedbank proposed a shareholder dividend of 8.25 kronor compared to 7.5 kronor in 2005, an increase of 10 percent.

In mid-afternoon trading on the Stockholm stock exchange the Swedbank share price was down 1.95 percent to 276.50 kronor.

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