Handelsbanken and SEB lead forecasts as Nordic banks face pandemic
STOCKHOLM (Reuters) – Quarterly profits for Handelsbanken and SEB fell less than expected as Swedish banks weathered the economic blow from the COVID-19 pandemic, although SEB saw an increase in bad debt provisions.
Nordic banks are the first in Europe to release second quarter results and have so far defied gloomy forecasts, with the Norwegian DNB also beating expectations.
“The bank’s credit quality remains good,” Handelsbanken said on Wednesday, adding that the quarter’s loan losses were the lowest in years. “Household loans, household deposits and business deposits continued to show stable growth. “
Its second-quarter net profit fell to 3.96 billion crowns ($ 436 million) from 4.22 billion a year earlier, beating analysts’ average forecast of 3.34 billion.
SEB’s net profit also fell less than expected, with revenues from its business arm offsetting provisions for credit losses and a fine for inadequate money laundering controls.
The net profit of SEB, Sweden’s largest investment bank, fell to 3.5 billion kroner from 4.9 billion a year earlier, but exceeded analysts’ average forecast of 3.2 billion.
SEB has said it will not appeal a fine of Kroner 1 billion imposed by the Swedish financial regulator for failing to comply with anti-money laundering controls in the Baltic states, although it added that it disagreed with parts of the watchdog’s decision.
SEB CEO Johan Torgeby said on a conference call that the bank was not, to his knowledge, under investigation in the United States in connection with the Baltic “dirty money” scandal. which rocked rivals Swedbank and Danish lender Danske Bank. Swedbank and Danske Bank are under close scrutiny by US authorities.
SEB’s interest income, which includes mortgage income, rose 6% to KKr 6.05 billion.
CREDIT AND CORONAVIRUS
Analysts generally expect banks to see a surge in bad loans as the pandemic plunges economies into recession.
Loan losses for Handelsbanken were 97 million crowns, better than 435 million a year earlier and well below the loss of 1.02 billion projected by analysts.
“This positive credit result is a clear indication that Handelsbanken will continue to demonstrate the strength of its asset quality during this recession,” said Louise Lundberg, chief risk officer at rating agency Moody’s.
The losses were “considerably lower than those of most Nordic and European peers and reflect the bank’s track record,” she added.
SEB, however, saw its loan losses climb to 2.7 billion crowns from 386 million a year ago, worse than analysts’ average forecast of 1.7 billion.
CEO Johan Torgeby said SEB was sticking to its forecast for credit losses of SEK 6 billion this year, nearly triple the 2019 level.
Kepler Cheuvreux analyst Robin Rane said he did not expect investors to buy SEB because its performance was due to its business arm, “which was obvious given the market conditions favorable “.
Rane added that although Handelsbanken’s low credit losses stood out, performance in other parts of the core business was relatively weak.
Handelsbanken shares were down 1.6% and SEB shares were down 2% as of 11:07 GMT.
Handelsbanken’s net interest income, which includes mortgage income, fell 5% to 7.6 billion kroner, missing analysts’ forecast of 8.2 billion.
Reporting by Colm Fulton; edited by Anna Ringstrom, Mark Potter and Emelia Sithole-Matarise