Swedbank: Beat On Loan Losses

Swedbank (Aa3 pos, A+) 1Q24 results are a marginal beat on a positive loan loss performance but the Swedish mortgage NPL figure is higher so, from a credit standpoint, a very mixed bag. We see little reason for spreads to move tighter here.

• Key credit metrics: CET1 ratio is inline with expectations (at 19.3%, 30bp up from Dec-23). Loan losses are just 3bp of loans, 80% lower y/y and nearly SEK400m (72%) better than consensus was expecting. Non-performers are up 9bp (to 0.52%), consensus was looking for flat and this is driven by Swedish mortgages.
• Wider view: net interest income missed marginally but 9% growth in fees meant revenue expectations were met. Costs were very slightly better than expected and that low loan loss figure has driven the 3% net income beat. SEB and SHBA were both punished by the equity market for revenue disappointment so this will be a key factor to watch today.
• Outlook: the economic commentary describes Sweden, in the short term, as “bleak” but mgmt indications are more positive further out. We doubt there’s any upgrade to expectations with these figures.

Conf call is 0800 (London time), available at: {https://swedbank-live.creomediamanager.com/e2f8aa82-a933-4d99-9d6b-cdaead3be541}