Swedbank Fourth-Quarter Profit Narrowly Misses Forecast

Swedbank Fourth-Quarter Profit Narrowly Misses Forecast
Polled analysts had seen commissions at 3.81 billion crowns and interest income at 6.62 billion.

Swedish bank Swedbank reported on Wednesday a fourth-quarter operating profit that was slightly lower than expected, as weaker results from fixed income trading weighed and global supply problems tempered economic growth.

After tracking a robust recovery from the first waves of the pandemic through much of 2021, Nordic economies were again dampened by the spread of the Omicron variant of coronavirus and related curbs during the tail-end of year.

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

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

Pandemic curbs are already being eased in some markets with more set to follow, limiting the scope of further setbacks for economies also battling resurgent inflation that has upset the zero interest rate environment for banks and customers.

In a statement, Sweden’s oldest retail bank said fourth quarter operating profit dipped to 5.97 billion Swedish crowns ($644.93 million) from a year-ago 6.18 billion, narrowly lagging the 6.10 billion seen by analysts in a Refinitiv poll.

Commission income at Swedbank rose to 4.02 billion crowns from 3.38 billion a year earlier while interest income, which includes income from mortgages, dipped slightly to 6.55 billion crowns from 6.57 billion a year earlier.

Polled analysts had seen commissions at 3.81 billion crowns and interest income at 6.62 billion.

Net credit impairments were positive to the tune of 67 million crowns, implying reversals of previously projected losses, but the hard-to-predict gains on financial items fell 71% on the year, dented by the lower fixed income trading.

Total costs for the year came in at just below a target of 20.5 billion, excluding expenses on investigating money-laundering. The cost target is unchanged for 2022 but does not cover a newly imposed bank tax in Sweden.

As economic conditions have normalised, Swedbank has been lifting payouts to shareholders put on hold at the height of the pandemic. Late on Tuesday, it said it was proposing a special dividend of 2 crowns per share, taking the total proposed payout for 2021 to 11.25 crowns per share.