Upbeat signals from the Swedish banks
Although economic uncertainties remain high for Swedish banks, overall risk levels have gone down and loan losses are stabilizing.
After an awfully gloomy year at the global financial markets signals from Sweden’s four major banks -- which all have posted third-quarter earnings – now points in a considerably more upbeat direction as loan losses are stabilizing and results mainly have been surprisingly encouraging.
“The banks will be all right”, Martin Guri, equity strategist at Nordea, told The Swedish Wire. “The outcome of the reports have been better than expected and signals from the bank’s managers have been loss negative"
"Looking forward, the prognoses are optimistic”, he added.
Most notably, credit losses in the company sector have been considerably lower than estimated – although Swedbank and SEB's exposure in the Baltic State is a worrying factor as credit losses are likely to continue.
Svenska Handelsbanken, the country’s second-biggest bank by market capitalization, surpassed expectations on Wednesday. The bank’s third-quarter net profit dipped relatively modestly on lower-than-expected loan losses and stronger income.
The same day Nordea, the Nordic region's biggest bank by value, also posted better-than-expected third-quarter operating profits and loan losses landed below forecasts.
"Overall risk levels have gone down, but the uncertainty of the strength of the economic recovery is high," Nordea’s Chief Executive Christian Clausen said. “The macroeconomic trend in Nordea's home markets as well as the increase in impaired loans have stabilized”
Last week Sweden's fourth-biggest bank Swedbank said that the amount of bad loans was slowing and second-biggest bank SEB posted lower-than-expected loan losses.
"The economic situation in the Baltic countries remains challenging but we are beginning to see signs of stabilization," SEB’s Chief Executive Annika Falkengren said. "The slowing trend in new past due volumes first seen in the second quarter can now be confirmed”.
• Nordea’s third-quarter net profit dipped to €624 million from €655 million a year ago.
• Svenska Handelsbanken posted third-quarter net profit of 2.43 billion kronor ($351.2 million), down from 2.81 billion kronor a year ago.
• Swedbank posted a third-quarter loss of 3.34 billion kronor ($482 million) compared with a profit of 2.47 billion kronor a year ago.
• SEB’s third-quarter net profit fell 99 percent to 25 million kronor ($3.6 million) from 1.88 billion kronor a year earlier.
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Last Updated (Wednesday, 28 October 2009 10:57)
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