SEB Third-Quarter Profit Beats Estimates as Lending Income Gains

SEB AB, Scandinavia’s biggest foreign-currency trader, said profit in the third quarter jumped 46 percent after net interest and net fee income rose.

Net income in the three months through September rose to 5.47 billion kronor ($751 million) from 3.75 billion kronor a year earlier, Stockholm-based SEB said in a statement today. That beat the average 5.36 billion-krona estimate of 11 analysts surveyed by Bloomberg. Net interest income rose 8.7 percent while net fee and commission income gained 2.1 percent.

SEB is the last of Sweden’s four biggest banks to report third-quarter earnings, after Svenska Handelsbanken AB, Nordea Bank AB and Swedbank AB all showed an increase in profit thanks to higher revenue. The four managed to raise income even as record-low interest rates erode margins. SEB said the third quarter showed again ‘how vulnerable the world economy still is.’’

“The Nordic financial markets were impacted by the lower activity and we perceive hesitancy among corporate customers to raise activity levels,” Chief Executive Officer Annika Falkengren said in the statement. “We continue to live in extraordinary times with very low or no inflation, ultra-low interest rates and abundant central bank liquidity support in the euro zone and the U.S.”

Sweden’s central bank on July 3 cut its main interest rate by a bigger-than-estimated 50 basis points to 0.25 percent. The threat of a deflationary spiral gripping the largest Nordic economy has prompted a number of banks, including Nordea, SEB and Swedbank, to predict that the Riksbank will be forced to lower interest rates further before the end of this year.

Swedbank, Sweden’s biggest mortgage lender, said on Oct. 21 it will cut as much as 5.5 percent of its workforce to adjust to the low-rate environment. The plan will affect as many as 800 jobs in the coming two years as Swedbank seeks to cut costs “towards 16 billion kronor” in 2016 from 16.6 billion kronor in 2013.

Before it's here, it's on the Bloomberg Terminal.