Swedbank Profit Jumped 71% in Second Quarter, Beating Estimates

Sweden’s biggest mortgage bank said profit in the second quarter soared 71 percent from a year earlier after income was supported by fair value adjustments.

Swedbank AB reported net income of 6.27 billion kronor ($730 million), beating the 5.53 billion-krona average estimate in a Bloomberg survey of analysts. Net interest income was broadly unchanged while total income grew 27 percent. Net income in the quarter was boosted by the sale of Visa Europe, which resulted in tax-exempt income of 2.12 billion kronor, Swedbank said.

“Volatility in the financial markets increased during the second quarter” after Britain voted to leave the European Union, Chief Executive Officer Birgitte Bonnesen said in the statement. “Central banks again have to find tools to stimulate the economy. This probably means that the current low interest rates will remain for even longer.”

Swedish central bank rates have been negative for almost 1 1/2 years, putting pressure on lending income and threatening to distort housing prices.

“The Swedish and Baltic economies stand strong, but will still be affected if global business activity is dampened due to uncertainty,” Bonnesen said.

Common equity Tier 1 capital was 23 percent of risk-weighted assets at the end of June, compared with 23.7 percent in the previous quarter.

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