STOCKHOLM, April 28 (Reuters) – Swedish bank SEB reported a better-than-expected net profit for the first quarter on Wednesday after it slashed provisions for bad debts amid an improving economic outlook and tapped into a boom in trading on markets.
Over the last year Sweden’s banks, some of the best capitalised in the world, have defied expectations of rising loan losses as the spread of COVID-19 shut businesses and reduced employment around the world.
“The overall concern observed last year in the global economy has been replaced by an increased optimism,” CEO Johan Torgeby said in the report.
Net profit at Sweden’s top corporate bank rose to 6.02 billion Swedish crowns ($717.6 million)from a year-ago 2.36 billion, beating a mean forecast of 4.87 billion in a Refinitiv poll of analysts.
Loan loss provisions, a figure closely watched in the wake of the economic slump due to the pandemic, were 156 million crowns compared to a year-ago 1.5 billion, much better than the 803 million seen by analysts.
Fee and commission income at Sweden’s top corporate bank rose slightly to 4.78 billion crowns from 4.62 billion a year ago, as increased assets under management offset the sluggish effect the pandemic had on payments.
Interest income, which includes income from mortgages, increased to 6.4 billion crowns from 6.20 billion a year ago, amid strong demand for mortgages in Sweden.
The bank said it increased its digital offering in the quarter, with customers able to apply for household mortgages and buy investments like stocks over smartphone app.
Trading income increased to 2.18 billion from a year-ago 804 million loss amid high trading activity on markets.
“By far the best report out of the Swedish banks so far,” Andreas Hakansson, a senior analyst at Danske Bank, said.
“They are the first Swedish bank to beat on interest income, which they aren’t usually reliant on…their other income is very strong,” he added referring to assets under management and market trading.
($1 = 8.3891 Swedish crowns)
(Reporting by Colm Fulton; editing by Niklas Pollard and Carmel Crimmins)