(Bloomberg) -- Svenska Handelsbanken AB Chief Executive Officer Michael Green failed to put a lid on costs during the first quarter in his role, despite promises to make the lender more efficient.

The Stockholm-based bank’s expenses jumped 12% between January and March, it said in a statement on Wednesday. The bank vowed to take corrective actions “at a higher pace” going forward. 

“The results were weak,” Citigroup Inc. analyst Shrey Srivastava said in a note. One particular issue was the strong rise in expenses “even though the new CEO had made cost control a cornerstone of his plan,” Srivastava said.

Handelsbanken shares plunged as much as 11.7%, the steepest intra-day drop in over four years.

The disappointing performance is a setback for Green, who took office in January and immediately vowed to boost efficiency, which typically involves rising revenue and falling costs. He has since started to trim management and group functions. 

“In a quarter marked by expenses rising more quickly than income, we are naturally far from satisfied,” the bank said in the statement on Wednesday.

As a result, Handelsbanken saw a key efficiency metric known as cost-to-income ratio deteriorate in the quarter, setting it apart from peers Nordea Bank Abp and DNB Bank ASA.

Net interest income — the difference between money made on lending and the cost of funding — came in at 11.59 billion Swedish kronor ($1.1 billion) in the period, down 5% from the prior quarter. Analysts tracked by Bloomberg on average expected 11.98 billion kronor. The income line was hit by narrowing margins, the bank said.

What Bloomberg Intelligence Says:

“Costs increased quickly (a 6% consensus miss), getting the cost focus of new CEO Michael Green off to a shaky start; consensus currently expects a 2% rise in costs this year and that will likely tick higher.”

— Mar’Yana Vartsaba, banks analyst

Staff costs are rising, the bank said, adding that part of the increase is due to additional recruitments in the branches as a result of increasing customer and business activity.

Handelsbanken has the biggest property exposure among the nation’s banks and there has been a concern around risks for rising credit losses due to the financial difficulties in the sector. Those fears have yet to materialize. The bank reported net credit recoveries of 95 million kronor, compared with an estimate of 231 million kronor in loss provisions.

The Stockholm-based lender’s net income fell to 6.6 billion kronor. Analysts had penciled in 6.75 billion kronor.

Read More: Handelsbanken Drops on Earnings Miss as Costs Rise: Street Wrap

The bank also announced a strategic refocus for its Norwegian operations, citing an “ongoing weak development,” and named Marion Ulander as acting head of operations in the country while it seeks a permanent country general manager.

--With assistance from Christopher Jungstedt, Christian Wienberg and Macarena Muñoz.

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