Sweden’s Swedbank returns to profit in Q1 amid lower credit losses in the Baltics

Swedbank returns to profit in Q1, Baltics recover

STOCKHOLM — Swedbank AB, one of Sweden’s four main banks, Tuesday said it has returned to profit for the first time since 2008 as a result of significantly lower credit losses in the Baltic countries.

The bank, which has had a tough time with defaults in the Baltic countries during the financial crisis, said first-quarter net profit was 536 million kronor ($75 million), up from a loss of 3.3 billion kronor a year earlier.

The result sharply beat analysts’ expectations and shares in Swedbank rose 1.8 percent to 74.7 kronor ($10.4) in Stockholm trading.

Total credit losses for the quarter decreased by 68 percent to 2.2 billion kronor ($306 million) from 6.8 billion kronor in the first quarter 2009, and credit losses in the Baltic countries halved to 2.1 billion kronor from 4.2 billion.

“We can now clearly see the effect of the work we began a year ago,” Swedbank Chief Executive Michael Wolf said in a statement. “A lower risk level in the bank and a stronger organisation for problem loans, together with improved macroeconomic conditions, led to a significant decline in credit impairments during the first quarter.”

However, the bank’s net interest income was under pressure from lower lending volumes and fell 31 percent in the first quarter, to 4 billion kronor ($557 million) from 5.8 billion kronor a year ago.

“Net interest income will remain a challenge in the near future,” Wolf said. “Economic activity, competition and market interest rates will be the deciding factors for the turnaround.”

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Swedbank: www.swedbank.se