Sweden's third-biggest bank swung to a net profit in the second quarter and was upbeat about falling loan loss provisions.

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SEB, Sweden's third-biggest bank in terms of market capitalization, said on Tuesday its operating profit for the second quarter amounted to 2.58 billion kronor ($344 million), an increase of 140 percent compared to the previous quarter. Its net profit amounted to 1.99 billion kronor, after a 193 million kronor net loss a year earlier.

The bank's share rose almost 5 percent in Stockholm as the result was better than expected and the bank was upbeat about falling loan loss provisions.

"The cautiously growing optimism in the Nordic countries translates into higher income levels during the quarter”, says Annika Falkengren, SEB's CEO. “With non-performing loan formation substantially lower, SEB has turned the page in the Baltic countries.”

Credit loss provisions in the second quarter amounted to 619 million kronor, down from 1.9 billion in the previous quarter and noticeably lower than analysts forecast.

SEB is the second Nordic bank to report second-quarter earnings. Last Friday Norway’s largest lender DnB NOR said profit almost tripled to 3.3 billion Norwegian kroner ($520 million) as loan write-downs shrank.

The Swedish bank, that employs about 21,000 people worldwide, said on Monday it had signed an agreement to sell its German retail banking business to Santander, the biggest Spanish bank, for 555 million euros (698 million dollars).