SEB Net Profit Beats Estimates But Warns on Regulatory Fees

By Dominic Chopping Features Dow Jones Newswires

Skandinaviska Enskilda Banken AB (SHB-B.SK) Thursday posted a forecast-beating first-quarter net profit as healthy growth in mortgage lending helped offset lower deposit margins related to the negative interest rate environment, but the bank warned that customers face increasing costs as regulatory fees in Sweden rise.

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The Swedish government has proposed increasing the fee banks pay to help cover the cost of supporting financial institutions that get into trouble, arguing that bumper profits within the country's growing financial-services industry justify them paying a higher "resolution fee".

SEB's new Chief Executive, Johan Torgeby, who took the helm less than a month ago, said the cost of delivering banking services is increasing. "This year, SEB expects to pay more than SEK2 billion in regulatory fees including resolution fund and deposit guarantee fees. Ultimately these costs will also impact customers."

The Stockholm-based bank posted a net profit of 4.29 billion Swedish kronor ($485.9 million) for the three months ended Mar. 31, compared with a loss of SEK2.29 billion a year earlier, beating expectations of SEK3.93 billion according to a FactSet poll. Profit last year was weighed by a goodwill impairment charge of SEK5.33 billion in connection with a company reorganisation.

Net interest income rose to SEK4.72 billion from SEK4.64 billion, while loan losses narrowed to SEK204 million from SEK291 million.

The bank's common equity Tier 1 ratio--a key measure of financial strength--stood at 18.9% at the end of the quarter, down from 19.1% a year earlier.

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-Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter: @domchopping @WSJNordics

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April 27, 2017 05:20 ET (09:20 GMT)