Swedbank beats Q3 profit estimates, says economy "remains resilient"

Reuters

Published Oct 26, 2023 06:19

Updated Oct 26, 2023 07:01

STOCKHOLM (Reuters) -Swedish banking group Swedbank reported a bigger-than-expected third-quarter net profit on Thursday, and said the economy remained resilient despite turbulence and higher interest rates.

Sweden's biggest mortgage lender posted a net profit of 9.13 billion crowns ($817 million), well above a forecast of 8.57 billion crowns in a LSEG poll of analysts.

It had posted a profit of 5.59 billion crowns in the year-ago period.

"Our business is stable and profitable at a time of war, uncertainty and transition," CEO Jens Henriksson told reporters. "In these uncertain times we once again deliver a stable result."

Several rapid rate hikes by the Swedish central bank since the start of last year have boosted interest income at Swedbank, but also put pressure on real estate markets, property owners and developers.

While headline inflation has eased from a peak of over 10%, it remains well above the Riksbank's target of 2%.

The central bank has indicated a further rate hike could come in November, fuelling concerns over a wider economic slump and possible future headwinds for banks.

Swedbank, a rival to lenders such as Handelsbanken, Nordea and SEB, said interest income, which includes revenues from mortgages, rose to 12.9 billion crowns from 8.36 billion crowns a year ago, slightly beating expectations.

Higher funding costs have primarily hit Swedish real estate firms hard, with many scrambling to refinance vast piles of debt accumulated during years of zero or even negative interest rates, potentially leading to future loan losses for banks.