SEB; Solid Results, More Capital Flexibility A Minor Credit Positive

SEB (SEBA SS) 4Q23 results are in line on revenues but a small miss on profit as loan losses start to normalise. Overall, a solid example of delivery.

• Revenues are SEK20.1bn (+7& y/y, consensus: 20.0bn), costs were slightly better than expectations, but loan losses were weaker (SEK664m, consensus: 412m) meaning net income was a small miss (SEK8.4bn, consensus 8.8bn).
• Expected credit losses (ECLs) are up to 9bp (from zero) which is still a very low level in absolute terms and NPLs are 10bp higher from Sep-23 at 37bp, again a low absolute level.
• CET1 capital was 20bp higher than Sep-23 at 19.1% (440bp higher than requirement) and total capital was up 50bp at 22.4%. There does appear to be a change in attitude to capital which is a marginal credit positive; the ordinary dividend was lower than expected (SEK8.5 vs. 9.5 consensus) but alongside a special of SEK3 and we note the share buyback plan was activated yesterday (24-Jan). This does give management a greater degree of capital flexibility, we feel.

There’s very little on outlook in either the statement or slides but there’s little upgrade for equity holders obvious here but that increased capital flexibility improves (marginally) credit investors’ position, we feel.

Conf call is 0800 London time, available at {https://edge.media-server.com/mmc/p/i8tjb2o3/}