Swedbank: Solid Start To Nordic Banking Season

Swedbank (SWEDA SS) conference call ongoing and only two real credit points:

• Asset quality; mgmt was clear it’s adopted a more negative “macro scenario” (for IFRS9 calcs) but losses were still relatively contained (8bp from 7bp in 3Q23) and write-offs were, in fact, lower than 4Q22. There is a PD (probability of default) uptick within these figures but Sweden remains a very low credit risk banking system.
• Capital movements considering the US regulatory situation; three US regulators continue to investigate Swedbank over both AML (anti-money laundering) and terrorist financing disclosures and this is part of the reason mgmt continues to run with a relatively high capital ratio (CET1 of 19.0%, 390bps above requirement, total capital of 23.1%, 360bps above).
• In credit terms, there’s little to be fearful of here, the latter capital point is idiosyncratic and the former lack of any meaningful asset quality deterioration is a reasonable start to Nordic banking season. Swedbank’s traded credits are broadly unchanged (+/- 1bp).