Profit at Swedbank AB stagnated last quarter as negative interest rates ate into revenue at Sweden’s biggest mortgage lender.
Net income reached 4.3 billion kronor ($529 million) in the first quarter, virtually unchanged from the same period a year earlier, the Stockholm-based bank said on Tuesday. Analysts surveyed by Bloomberg had predicted profit of 4.03 billion kronor. Net interest income sank 2% to 5.6 billion kronor while total income was down 3%.
Chief Executive Officer Birgitte Bonnesen, who took over this year after Michael Wolf was ousted amid insider trading allegations of which he has since been cleared, will need to prove to shareholders that Swedbank has put its management challenges behind it as the lender tries to generate revenue growth.
The bank said “lower market interest rates weighed on net interest income” in the quarter, while a “weak stock market produced lower commission income.” Still, Swedbank’s profit was aided by an “improved treasury result” and “good cost control,” it said. Total costs fell 4% from a year earlier, the bank said.
Swedbank has a buffer of 250 basis points on its common equity Tier 1 capital requirement, a level Chief Financial Officer Goeran Bronner characterized as “very comfortable,” at a press conference on Tuesday. Still, the lender has no excess capital at this point and the impact of new Basel rules still needs to be reviewed, he said.
Shares in Swedbank opened about 1% lower and traded 0.8% down at 167.60 kronor in Stockholm.
