Swedbank Profit Slips But Mortgage Demand Remains Strong
Swedbank AB (SWED-A.SK), one of the largest lenders in Sweden and the Baltic region, posted Tuesday a slight drop in third-quarter net profit, but said strong mortgage demand and the addition of a recent acquisition helped deliver "stable" results in the seasonally-weaker period.
The bank said its net profit for the three months ending Sept. 30 totaled 4.74 billion Swedish kronor ($583.2 million), compared with SEK4.82 billion for the same period last year. The result was higher than analysts' expectation of SEK4.63 billion, according to a survey by FactSet.
New residential construction in Sweden remains high, which, in combination with increased house prices, contributed to increased mortgage volumes, Swedbank said in a statement. While new construction has caught up with demand in some locations, the housing shortage still persists in many larger areas. Lending volumes and house prices are rising slower than before, however, partly due to the amortization requirement introduced last year.
"This is positive, as it contributes to more sustainable economic development, but action is still needed to increase mobility in the housing market and facilitate the construction of affordable housing," chief executive Birgitte Bonnesen said.
Swedbank said the normal negative seasonal effects in funding and securities trading, among other areas, were offset by positive currency fluctuations and stable lending volumes.
Full-year costs at the bank are now seen at around SEK16.1 billion, from an earlier estimate of SEK15.8 billion, following the completion of an acquisition.
"During the final months of the year the Group Executive Committee and I will focus on completing planning for next year and formulating our priorities," Ms. Bonnesen added. "The current high level of activity means we can aim even higher."
Net interest income at the Stockholm-based bank rose to SEK6.21 billion from SEK5.84 billion, while loan losses increased to SEK235 million from SEK201 million.
Swedbank's common equity Tier 1 ratio, a measure of financial strength, stood at 23.9%, up from 23.8% a year earlier.
-Write to Dominic Chopping at email@example.com; Twitter: @domchopping @WSJNordics
(END) Dow Jones Newswires
October 24, 2017 03:02 ET (07:02 GMT)