Swedbank AB joined fellow Swedish peers SEB AB and Svenska Handelsbanken AB by delivering better-than-expected net income from lending activities in the first quarter.
(Bloomberg) — Swedbank AB joined fellow Swedish peers SEB AB and Svenska Handelsbanken AB by delivering better-than-expected net income from lending activities in the first quarter.
Sweden’s second biggest bank by market capitalization saw net interest income for the period come in at 11.94 billion kronor ($1.16 billion), beating analyst expectations of 11.51 billion kronor.
The driving factor behind the strong quarterly profit “was higher net interest income, which strengthened thanks to higher deposit margins,” Chief Executive Officer Jens Henriksson said in the report.
Swedbank’s shares were up by 0.4% at 9:50 a.m. Stockholm time on Thursday. “We expect consensus to make positive EPS revisions on the basis of the strong earnings results,” said analysts at Svenska Handelsbanken, which rate the stock a buy.
Net income jumped 69% in the three months through March from a year earlier, to 7.56 billion kronor, the Stockholm-based lender said. Analysts had expected a profit of 6.96 billion kronor.
Regional lenders have benefited from central bank-rate increases in recent months — on Wednesday the Riksbank hiked rates to 3.5% and signaled more was to come — though signs that inflation is easing could trim that growth driver and customers may soon begin to demand higher rates on deposits.
Net fee and commission income, meanwhile, edged up 3% from the same period a year ago to 3.66 billion kronor versus an average analyst estimate of 3.44 billion. The bank however saw credit impairments increase 14% from the prior quarter to reach 777 million kronor due to a weaker macro environment.
Swedbank still faces possible fines from US authorities over its alleged role in one of Europe’s largest money laundering scandals. Last month, the Swedish financial watchdog also issued the lender with a 850 million kronor fine over its sloppy control of a change in IT systems.
“The investigations are at different stages and the bank cannot at this time determine any financial consequences or when the investigations will be completed,” it said in the report.
Another potential headwind hurting the bottom line at Swedbank is a proposed windfall tax on lenders in Lithuania, with reports of a similar initiative Latvia as well.
–With assistance from Jonas Cho Walsgard.
(Adds share price, analyst reaction.)
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