Swedish lender Swedbank announced a smaller-than-expected net profit for the second quarter on Tuesday due to higher costs and lower trading gains.
Nordic banks face rising inflation and interest rates, fueled in part by the Ukraine crisis and the pandemic, which boost mortgage income but squeeze business and family clients.
Swedbank, Sweden’s largest mortgage lender, reported a net profit of $452 million for April-June, up from $462 million in the previous quarter and $5.56 billion a year ago.
Refinitiv predicted 5.01 billion crowns, so Swedbank shares declined 2.3% by 0701 GMT. They’ve fallen 30% this year due to a selloff in banking equities and the bank’s exposure to Baltic countries and the housing market.
Swedbank CEO Jens Henriksson said the bank’s second-quarter results were strong. “Credit quality and impairments are high.”
At the same time, Swedbank, a rival of Handelsbanken, SEB, and Nordea, reported that interest income, including mortgage revenue, jumped to 7.11 billion crowns from 6.74 billion a year ago.
Commission income fell to 3.55 billion crowns from 3.67 billion a year earlier, below analysts’ estimate of 3.64 billion. Income from financial items, including trading income, decreased to 57 million from 645 million amid volatile financial markets.
Swedbank recorded loan loss provisions of 40 million crowns in the quarter, compared to reversals of 27 million a year earlier.
“When inflation rears its ugly head as it has, it will mean a worse economy, but Sweden has a strong starting place,” Henriksson added.
“We’ve long stress-tested our customers to ensure they can handle rising interest rates.”
The bank’s 2022 cost cap is 20.5 billion crowns.
Swedish crowns worth $110.4020
