Sweden's fourth biggest bank sees strength in home markets.

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Swedbank, Sweden's fourth biggest bank, said Thursday that it swung to a second-quarter net profit of 1.57 billion kronor ($212 million) from a loss of 2.01 billion kronor a year earlier. The result was more than double analyst expectations as loan losses came in well below forecasts.

"Swedbank continues its positive trend", Chief Executive Officer Michael Wolf said.

Credit quality has improved more rapidly than expected in the Baltic countries and the macroeconomic developments in its home markets have been favorable, the bank said.

“In the Baltic countries, credit quality has improved more rapidly than anticipated which meant that credit losses have decreased strongly,” said Michael Wolf, who replaced Jan Liden in March 2009. “Assuming that the global macro-economy develops according to current expectations, we believe our results will continue to improve.”

In a separate statement the bank said it has received approval from the Swedish Financial Supervisory Authority to buy back subordinated Tier 2 loans amounting to 9 billion kronor as part of its work to manage its capital structure.