Swedbank’s interim report for the first quarter: A good start to 201128-04-2011
Swedbank has had a good start to the year, with a first quarter profit amounting to SEK 3.9 bn bolstered by one-off revenue from the settlement with Lehman Brothers’ bankruptcy estate and recoveries from the Baltic countries, Russia and Ukraine. The trend of improved credit quality continued.
“We have had a good start to 2011. The trends from recent quarters are continuing. Higher market interest rates are supporting net interest income, credit quality continues to improve and the risk-weighted assets are declining,” Swedbank’s CEO Michael Wolf commented.
The first quarter profit of SEK 3.9 bn (SEK 2.8 bn profit in the fourth quarter of 2010), is bolstered by one-off revenue of SEK 716 million from the settlement with Lehman Brothers’ bankruptcy estate, and net recoveries equivalent of SEK 972 million as a result of further improved credit quality in the credit portfolio in the Baltic countries and eastern Europe. A gradual improvement in profit before credit impairments, excluding one-off items, is expected, and credit impairments are expected to remain low with good potential for recoveries.
Focus going forward: Improving the customer experience and developing the business
Going forward, focus will be on developing the business and improving customer experience. The goal is to make Swedbank the bank with the most satisfied customers and the best customer offerings.
” It is a realistic goal that I am convinced we will achieve. The challenge is significant and will take several years of dedicated effort where we focus long-term on our business and on building a strong unified culture within the bank,” Michael Wolf commented, adding that the work to increase quality and efficiency in the organisation continues.
Strengthened capital base – supports exercising the share repurchase mandate
The bank’s capital base strengthened significantly during the quarter, and at the end of the quarter, the core Tier 1 capital ratio was 14.9 per cent, which gives support to begin exercising the share repurchase mandate that the Board of Directors received from the Annual General Meeting.
Positive development in several business areas
Many business areas showed positive development during the quarter. In Retail, over 90 000 customers signed up for various private customer concepts. The level of activity within Large Corporates & Institutions was high and there is a raised interest in Swedbank as an alternative. Within Baltic Banking, credit demand is gradually rising, although at a slightly slower than expected pace.
The results in detail
Profit before impairments increased by 21 per cent to SEK 4 068 million (SEK3 368 million in the fourth quarter 2010). The return on equity was 16.1 per cent during the first quarter (11.7). Earnings per share were SEK 2.47 (2.37). The cost/income ratio was 0.52 (0.58). The core Tier 1 capital ratio increased to 14.9 per cent (13.9 per cent on 31 December 2010) according to Basel 2.