Swedbank Results: Small Earnings Beat, Credit Metrics In Line

Swedbank (SWEDA SS), the first of the Nordic banks to report, published figures with pretty solid headlines for 4Q23.

• Revenues were SEK19.0bn (+3% y/y, consensus 18.2bn), costs were up 15% (incl. SEK106m of compliance costs) and credit losses only +5% yoy meaning net income came in at SEK8.3bn (-9% y/y on a previously-flagged higher tax rate) which was ahead of consensus of SEK8.0bn. Mgmt is highlighting more investment spending from here, which may crimp any earnings estimate upgrades.
• In credit terms, CET1 is up 30bp (to 19.0%), total capital up 10bp (to 23.1%)… both strong numbers in a European context. Non-performing loans are up 8bp (to 43bp) but this is still a low level and we note lending has dropped, indicative of the bank’s risk appetite, especially in corporate lending. A new PD methodology has pushed risk exposure higher and the leverage ratio is up 50bp to 6.5% (min requirement: 3.5%).
• Overall, a solid set of figures, the consensus beat would otherwise drive small earnings estimate upgrades but that higher investment comment will temper this. Asset quality, capital levels and liquidity profiles all appear solid against expectations here, so little news for credit investors, we feel.

Analyst call is 0800 London time, available at: https://swedbank-live.creomediamanager.com/d4193cc7-fb59-4d59-b50c-9e133dccb119