Swedbank shares hit by interest income dip

Swedish lender Swedbank (SWEDa.ST) reported slightly worse than expected quarterly earnings on Wednesday, with a drop in interest income disappointing investors and sending its shares down more than 4%.

After tracking a robust recovery from the first waves of the COVID-19 pandemic through much of 2021, Nordic economies hit a bump in the road at the back end of the year because of the Omicron coronavirus variant and related restrictions.

“It was a quarter with a stable underlying business,” Swedbank CEO Jens Henriksson told reporters.

“At the same time, it was a quarter marked by the pandemic and we are currently seeing high sickness rates among our employees.”

Pandemic curbs are already being eased in some markets, limiting the damage to economies also battling resurgent inflation that has put interest rates on an upward trajectory for the first time in years.

Sweden’s oldest retail bank reported fourth-quarter operating profit down 3.4% year on year at 5.97 billion Swedish crowns ($644.93 million), slightly lower than the 6.10 billion crowns forecast by analysts in a Refinitiv poll.

Shares in the bank were down 4.2% at 0857 GMT, underperforming a 0.3% gain for the European banking index (.SX7P).

Commission income rose by a better than expected 19% to 4.02 billion crowns, but interest income including mortgages dipped 0.3% to 6.55 billion crowns compared with analyst expectations of 6.62 billion crowns.

Analyst notes from Credit Suisse and JP Morgan cited the miss on interest income as a reason for the share price reaction.

Net credit impairments were positive to the tune of 67 million crowns, implying reversals of previously projected losses, but the hard-to-predict gains on financial items fell 71% on the year, dented by the lower fixed-income trading.

Total costs for the year came in at just below a target of 20.5 billion, excluding expenses related to money-laundering investigations. The cost target is unchanged for 2022 but does not cover a newly imposed bank tax in Sweden.

As economic conditions have normalised, Swedbank has been lifting payouts to shareholders after they were put on hold at the height of the pandemic.

Late on Tuesday the bank said it was proposing a special dividend of 2 crowns per share, taking the total proposed payout for 2021 to 11.25 crowns per share.

($1=9.2568 Swedish crowns)Reporting by Johan Ahlander Editing by Clarence Fernandez and David Goodman

This article was originally published by Reuters.