Swedbank Earnings Beat Estimates as Baltics Post First Profit Since 2008
Swedbank AB rose to the highest price in more than two years in Stockholm trading after the largest bank in the Baltic countries reported better-than- estimated earnings, helped by a profit rebound in the region.
Swedbank gained as much as 6.15 kronor, or 6.6 percent, to 99.50 kronor, the highest intraday price since September 2008, and traded at 98.15 kronor as of 9:22 a.m. local time. The stock has rallied 38 percent this year, making it the fourth-best performer among 54 companies in the Bloomberg Europe Banks and Financial Services Index.
Net income in the third quarter was 2.59 billion kronor ($389 million), compared with a net loss of 3.34 billion kronor in the year-earlier period, the Stockholm-based bank said in a statement today. The average estimate of 12 analysts surveyed by Bloomberg was for profit of 1.52 billion kronor.
“The main driver was loan losses as Swedbank recorded reversals in Sweden, Russia and the Ukraine,” said Maths Liljedahl, an analyst at Nordea Bank AB in Stockholm. “We were aware that reversals eventually would occur, but we were not expecting them already this quarter.” Loan losses of 327 million kronor in the Baltic countries were lower than the analyst’s estimated 938 million kronor, he said.
The credit impairments in the region, which stemmed almost entirely from Latvia, narrowed from 3.33 billion kronor in the year-earlier period. Profit at the unit in Estonia, Latvia and Lithuania totaled 531 million kronor, compared with a loss of 2.32 billion kronor a year ago.
Baltic Profits
The lender’s total loan impairments dropped to 120 million kronor from 6.12 billion kronor after it recouped money set aside for bad loans in Sweden, Russia, Ukraine and Lithuania.
Swedbank was the only Swedish lender to have a full-year net loss in 2009 as the Baltic region suffered the steepest recession in the European Union, pushing up loan impairments. The bank was profitable in Estonia and Lithuania in the third quarter, while it reported a loss for Latvia.
“We are very pleased with the fact that Baltic banking reported its first profit since the fourth quarter of 2008,” Swedbank Chief Executive Officer Michael Wolf said on a conference call with journalists today. Provided the economy develops in line with expectations, the bank’s group profit “is expected to continue to improve,” he said.
To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net
To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net
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