Swedbank reports SEK 3.5 billion profit for the second quarter 201121-07-2011
Swedbank continues the positive trend with a SEK 3.5 billion profit for the second quarter. Net interest income strengthened for the fourth consecutive quarter, and credit quality continues to improve. “I am confident that Swedbank continues to develop in the right direction and that the great potential available in the bank is starting to provide a return,” Swedbank’s CEO Michael Wolf commented.
”We continue to show stable earnings. Despite of increased macroeconomic uncertainty, Swedbank’s balance sheet is becoming more robust,” Swedbank’s CEO Michael Wolf commented.
The SEK 3.5 billion profit for the quarter can be compared with the SEK 3.9 billion in the first quarter 2011, which was affected positively by one-off income of SEK 716 million from the settlement with the bankruptcy estate of Lehman Brothers.
A gradual improvement in profit before credit impairments, excluding one-off items, is expected.
Positive development in several areas
In the Retail business area, more customers, both private and corporate, are joining the bank’s loyalty programmes. Also in Baltic Banking customer-related work has produced dividends, and Swedbank was named the most respected company in Estonia and as having the strongest reputation in the financial sector in Latvia and Lithuania.
In the business area Large Corporates & Institutions, lending volumes are increasing again. And the Mobile Bank, launched in 2010, has also been well received by customers. In June, over 500 000 customers had registered for mobile banking, and the Mobile Bank is currently being launched in the Baltic countries.
Efficiency is steadily improving in the bank. During the second quarter, e.g., a new approach to selling life insurance helped reduce the average time for a new sale from 2.5 weeks to 2-3 days.
Increased macroeconomic uncertainty but stable bank
Despite of increased macroeconomic uncertainty, with problem economies in Europe in focus, Swedbank’s balance sheet is becoming more robust. The bank is well prepared on the funding side. Recent stress tests also indicate that Swedbank has low risks and is strongly capitalised. At the end of the quarter, the core Tier 1 capital ratio was 14.8 per cent, despite the fact that the bank during the quarter repurchased shares corresponding to 2.9 per cent of the outstanding shares. According to transition rules the core Tier 1 capital ratio was 10.1 per cent (10.1 per cent).
Repurchases will continue
During the second quarter, the bank began repurchasing shares according to the mandate from the Annual General Meeting in March. By midyear, 33.3 million shares had been repurchased, or about 2.9 per cent of the outstanding shares. The repurchases are being made to calibrate the core Tier 1 capital ratio to 13 per cent, and are planned to continue until the next AGM.
The results in more detail
Profit before impairments was SEK 4 010 million (SEK 4 068 million in the first quarter 2011). Net recoveries of SEK 324 million (SEK 972 million) were reported.
The return on equity was 14.4 per cent (16.1). Earnings per share before dilution amounted to SEK 3.02 (2.47) and earnings per share after dilution amounted to SEK 3.01 (2.47). The cost/income ratio was 0.52 (0.52).