Swedbank shares hit by lower interest income

A Swedbank branch located in downtown Stockholm is seen September 30, 2008. REUTERS/Bob Strong

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STOCKHOLM, Feb 2 (Reuters) – Swedish lender Swedbank (SWEDa.ST) reported quarterly results slightly below expectations on Wednesday, with lower interest income disappointing investors and sending its shares down more than 4%.

After following a robust recovery from the first waves of the COVID-19 pandemic for much of 2021, the Nordic economies faced a hurdle at the end of the year due to the Omicron variant coronavirus and related restrictions .

“It was a quarter with stable underlying business,” Swedbank CEO Jens Henriksson told reporters.

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“At the same time, this was a quarter marked by the pandemic and we are currently seeing high rates of illness among our employees.”

Pandemic brakes are already being eased in some markets, limiting damage to economies that are also battling the resurgence of inflation that has put interest rates on an upward trajectory for the first time in years.

Sweden’s oldest retail bank reported fourth-quarter operating profit down 3.4% year on year to 5.97 billion Swedish kronor ($644.93 million), slightly below 6, 10 billion crowns predicted by analysts in a Refinitiv survey.

The bank’s shares were down 4.2% at 0857 GMT, underperforming a 0.3% gain for the European banking index (.SX7P).

Commission income rose better than expected by 19% to 4.02 billion crowns, but interest income, including mortgages, fell by 0.3% to 6.55 billion crowns compared to expectations analysts of 6.62 billion crowns.

Analyst notes from Credit Suisse and JP Morgan cited lack of interest income as the reason for the stock price reaction.

Net credit impairments were positive at 67 million crowns, implying write-offs of previously forecast losses, but hard-to-predict gains on financial items fell 71% on the year, due to the decline in fixed income trading.

Total costs for the year were just below the $20.5 billion target, excluding money laundering investigations. The cost target is unchanged for 2022 but does not cover a new banking tax in Sweden.

As economic conditions normalized, Swedbank increased payouts to shareholders after they were suspended at the height of the pandemic.

Late on Tuesday, the bank announced that it was proposing a special dividend of 2 crowns per share, bringing the proposed total payout for 2021 to 11.25 crowns per share.

($1 = 9.2568 Swedish kronor)

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Reporting by Johan Ahlander Editing by Clarence Fernandez and David Goodman

Our standards: The Thomson Reuters Trust Principles.

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