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– Today, Swedbank offers another strong quarter in uncertain times, says Swedbank CEO Jens Henriksson in a conference call with reporters.
– The Board continues to consider the issue of dividends for 2019. Swedbank wants to pay dividends, but we follow the development and take into account the evaluations of the authorities and we are also attentive to how the pandemic develops, he adds.
Swedbank’s stock will rise about one percent after the report, meaning a price increase of nearly eight percent since the turn of the year.
Stable buffers
Jens Henriksson describes the bank’s core business as strong, with stable capital buffers and liquidity. Net interest income, which the bank derives from the difference between deposits and loans, is also stable and net fee income is supported by strong stock market performance and has now returned to normal levels after the decline in the second trimester.
The card business also recovered. And the underlying costs are developing according to plan, while the costs of measures related to investigations and legal advice in relation to money laundering issues remain low compared to the forecast.
– So we adjust our expenses for the year so that we think they end up below SEK 21 billion, says Jens Henriksson.
Previously, Swedbank’s full-year cost forecast was SEK 21.5 billion.
Research costs can increase
Swedbank has set aside SEK 1.55 billion for 2020 to cover so-called research costs, compared to SEK 1.1 billion in 2019. But after Clifford Chance’s research was completed earlier this year, research costs they have notably decreased.
– We believe that it depends in part on Covid. But it could also be that the material we’ve produced is so good that no further research is necessary, says Henriksson.
However, he adds that if there are complicated problems on the part of the US authorities, the costs can go up.
The bank’s management is based on an assessment by Swedbank economists that the bottom of the crown crisis has been overcome and that the economy is now on the rise.
– At the same time, we dare not take this into account fully because we see the increasing uncertainty that characterizes the world today, says Henriksson.
Take height for poorer development
The uncertain situation in the pandemic means Swedbank is setting aside an additional SEK 425 million to cover feared credit losses. This is in addition to the 3.3 billion SEK provisions for credit losses that the bank has made during the first half of the year.
According to Henriksson, it is a matter of taking into account whether the development would be worse than the bank anticipates.
– Had we followed the forecast we made, we could have recovered around SEK 700-800 million in reduced credit losses, he says.
– We see a concern. We are attentive. But we are very well prepared and very strong, he adds.
Joakim Goksör / TT
For the third quarter, Swedbank reports a profit before credit losses and write-offs of SEK 6,843 million. This can be compared to the profit of SEK 6.062 million during the corresponding quarter last year.
Net interest income, which the bank derives from the difference between deposit and loan rates, increased to SEK 6,714 million, compared to SEK 6,553 million a year earlier.
This can be compared to an average forecast among analysts of SEK 6.9 billion in net interest income, according to a compilation of forecasts by Reuters.
Net commissions fell marginally to SEK 3,246 million, from SEK 3,297 million. Analysts had estimated net fee income of approximately SEK 3.2 billion.
During the quarter, the bank assumes credit losses of SEK 425 million, compared to SEK 154 million a year earlier and an average forecast among analysts of just over SEK 730 million.
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