The Swedish group's net profit grew by six percent to 15.8 billion kronor ($1.92 billion, 1.6 billion euros), the biggest in the bank's history, helped by higher revenues from Britain and The Netherlands.
The bank – which makes most of its profits in Sweden but has been bulking up its business abroad – reported strong growth in private banking customers as well as increased lending in Sweden and overseas.
"Operating profit in Britain rose by 41 percent to 1.6 billion kronor, chiefly due to higher net interest income and improved net fee and commission
income," the group reported.
Income from loans grew by one-third in Britain and by almost a quarter (23 percent) in The Netherlands but fell 0.3 percent in Sweden.
Overall household lending grew by eight percent to 860 billion kronor compared with corporate loans, which increased by one percent to 886 billion kronor.
Handelsbanken is one of the best capitalised banks in Europe with a steadily rising funding level and "Tier 1" capital – a measure of a bank's financial strength – which grew to 20.4 percent from 18.9 percent a year ago.
But its higher lending has also exposed it to higher risks, and fourth-quarter profits were hit by extremely low interest rates and greater losses from bad loans which saw a five percent drop in net profits to 3.34 billion kronor compared with the same period in 2013.
The bank said that falling interest rates resulted in an eight percent fall in net profits overall in the course of the year. Sweden's central bank cut its key interest rate to zero at the end of October.
The news follows a rough week few weeks for Swedish banking giants, who have made global headlines following a number of scandals about company perks.
Last month, one of Sweden's top businessmen Sverker Martin-Löf quit as chairman of Industrivärden, one of Sweden's leading investment companies, which has stakes in Handelsbanken, after claims of "excessive" use of private jets and taking family members on company trips to hunting lodges owned by a forestry and paper firm (SCA), which the investment company owns a huge chunk of.
Industrivärden subsequently announced that that Anders Nyrén, who is currently chairman of the Swedish banking group Handelsbanken, would take over as its new chairman.
Meanwhile, Pär Boman, Handelsbanken's current CEO, is in the pipeline to take over as chairman of Handelsbanken, with an announcement expected before the firm's annual spring meeting.
Earlier this week it emerged that Christian Clausen, the CEO of Swedish banking giant Nordea was also under investigation for taking free hunting trips.