ENSKILDA BANKEN 
STOCKHOLM (Reuters) - Swedbank (>> Swedbank AB) is to cut around 5 percent of staff to reduce costs to combat expected revenue pressures from a weak economy after reporting stronger-than-expected third-quarter profits.
Swedbank, the first large Nordic bank to report third-quarter earnings, aims to cut costs to 16 billion Swedish crowns (2.23 billion US dollar) by 2016 from a projected 17.6 billion in 2014. That includes reducing staff by 600-800 employees in Sweden, around 5 percent of total staff.
"The door for new recruits will essentially be closed," Chief Executive Michael Wolf said on a conference call.
Cost reductions would also come from benefits relating to Swedbank's acquisition of Sparbanken Oresund.
Swedish banks have performed more strongly than many European peers due to the country's robust economy. But Swedbank warned that bank revenues could come under pressure from a low interest rate environment, fierce competition and political uncertainty in its Swedish home market.
"Sweden's economic growth is being jeopardised by a shaky global economy and uncertainty about the new government's economic policies and weak parliamentary support," the bank said in a statement.
Nick Anderson, banking analyst at Berenberg, said he was impressed by Swedbank's savings programme and that the revenue pressure was an industry-wide problem in Europe.
"What I think is so important is that they are being very honest with us and that they are managing for such an environment whereas other, non-Swedish banks are still in denial about these revenue problems," he said.
Swedbank's shares were up 3.2 percent by 0955 GMT, outperforming the Stockholm blue-chip index <.OMXS30> which rose 0.9 percent. The bank's shares are up 1 percent this year, outperforming a European banking index <.SX7P> which is down more than 3 percent.
The bank, which pulled out of Russia and Ukraine last year to focus on Sweden and the Baltics, warned that credit demand in the Baltics could be hit by turmoil in Ukraine but said it had not yet seen any direct financial impact on its business.
Swedbank, one of Sweden's biggest mortgage lenders, and Swedish rival SEB (>> Skandinaviska Enskilda Banken AB) are two of the biggest banks in Latvia, Lithuania and Estonia.
Wolf said he did not expect Swedish banks to have any problems passing the European bank stress tests when results are released on October 26, as Swedish regulators already have done thorough stress tests on the Swedish banking sector.
"That picture will not be changed by what happens now, but it is important that the European banks have the energy to take on their bad loans," Wolf said. Swedbank's Tier 1 capital ratio - a gauge of financial health - is 20.7 percent, well above the European average.
Swedish banks are not part of European Central Bank's stress tests as Sweden is not a euro zone member but they are part of the European Banking Authority's EU-wide stress tests that will be released on the same day.
Swedbank's operating profit rose to 5.73 billion Swedish crowns ($799.6 million) from 5.19 billion a year ago, boosted by lending to corporate and mortgage clients. The profits were higher than a mean forecast for 5.28 billion in a Reuters poll of analysts.
Net interest income rose to 5.83 billion, beating an analysts' forecast of 5.61 billion and compared with 5.64 billion a year earlier.
Loan losses were 235 million crowns in the quarter, bigger than an average forecast of 154 million.
(Additional reporting by Sven Nordenstam and Niklas Pollard; editing by Jason Neely and Jane Merriman)
By Johan Ahlander
