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Swedbank published strong results if not for its NII miss. As for the rest of the Nordic banking sector, an NII peak looks in sight as lending volumes stall, policy rates stagnate and deposit volumes and margins come under pressure due to changes in mix and competitive pressure. Given the proportion of NII in Swedbank’s top-line generation, we will remain cautious when updating our forecasts.
Companies: Swedbank (SWED-A:STO)Swedbank AB Class A (SWED.A:OME)
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Swedbank realized a strong Q2 with deposit margins continuing to act as a support to top-line growth, offsetting a lending margin decline in mortgages. Fee income was supportive too, as was the trading result, insurance and subsidiaries. Cost inflation was in line with inflation expectations but loan losses, while appearing benign at a first glance, reflected negative rating and stage migrations in property management offset by some release of overlay constituted during the previous quarters. NI
Swedbank realized an excellent Q1 helped, as in Q4, by its deposit margins which led to a considerable rise in NII and in the top line. Costs rose due to administrative fines but also due to inflation but were still absorbed by top-line growth. The cost of risk was disappointing, linked to the downgraded macro outlook, expert-based provisioning and negative rating migrations. The management expects NIM to develop further.
Swedbank finished 2022 on a robust stance with a strong beat due to the very good improvement in deposit margins and relative deposit volume stability. This, along with the higher trading result, more than offset lower fees. Costs were impacted by some one-offs and cost of risk increased due to stage and rating migrations and a deteriorating macro-economic environment. The capital position was impacted by REA increases but a comfortable buffer was maintained. Guidance was also kept, although NII
Swedbank held its Investor Day on Tuesday. The bank outlined an ambitious road to a 15% RoE target by 2025 built on a 3pp annual positive jaws effect allowed through higher NIM, higher volumes and mitigated inflationary costs. This profitability target should be built on a 200bp management buffer over a 15% CET1 ratio while the dividend pay-out ratio is set to remain at 50% with any restatement of the policy dependent on the outcome of the US AML investigation.
Swedbank realized a strong Q3 with solid beats on both income and the pretax result. The top-line benefitted from strong growth in NII on higher margins and healthy volume growth. The trading result also contributed while cost inflation was higher than expected due to inflation, digitalization and AML remediation. The cost of risk increased on the back of a macro downgrade and the excess capitalization situation remained intact. The management reviewed upwards its sensitivity to higher policy ra
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