Handelsbanken said in its report that results had been impacted by a provision for a restructuring reserve of 1.47 billion crowns referring to the branch closure and IT investment programme the bank unveiled in September.
The cost savings plan is part of a major strategy shift for a bank that has long prized its branch network and in 2016 even ousted a previous CEO for entertaining plans to slim down the bank.
Third-quarter net profit fell to 3.32 billion Swedish crowns ($380.88 million) from 3.57 billion in the previous year, falling short of the mean forecast of 3.72 billion seen by analysts according to Refinitiv data.
Loan losses, a figure closely watched due to a slump in the pandemic-hit wider economy, were 49 million crowns, better than a year-ago 192 million and much lower than the 492 million loss expected by analysts.
Throughout 2020, the bank has shown resilience during a pandemic expected to result in a jump in soured debt for banks as the spread of the coronavirus has shut businesses around the world.
"Again, they have beat consensus quite significantly on loan loss provisions, as they report basically zero losses whereas closer to 10 basis points was expected," said Andreas Hakansson, senior analyst at Danske Bank.
Net interest income, which includes income from mortgages, fell 2% to 7.89 billion crowns from 8.05 billion a year ago.
Increased unemployment due to the pandemic is still likely to mean some heavily indebted households may have trouble paying their mortgages.
Total expenses, a line which worried investor's in recent years, rose 7% to 6.74 billion from a year ago 6.3 billion, as the bank continued to restructure its business to control costs in the long run.
The bank said it expects annual costs to be 20 billion crowns by the end of 2022, a saving of 1.7 billion compared with 2019.
Handelsbanken also said it planned to sell off its buy-now pay-later card business, Ecster.
Gains on financial transactions were 358 million crowns, up 32% from a year-ago, amid high demand for trading during the pandemic, while fee and commission income fell to 2.67 billion crowns from 2.70 billion a year ago.
($1 = 8.7166 Swedish crowns)
(Reporting by Colm Fulton; Editing by Niklas Pollard and Louise Heavens)
By Colm Fulton