Morningstar | Swedbank Reports Decent 1Q 2019 Results, Carried by Equity Holdings
Swedbank reported first-quarter 2019 results of SEK 5.3 billion up 5% compared with the same period last year as higher net gains and losses on financial items more than offset higher expenses. Loan volumes showed continued growth albeit at a slower pace, especially in Sweden. Volumes increased SEK 63 billion to SEK 1,591 billion in total year-over-year, mostly owed to mortgage and corporate lending. Lower resolution fund fees in the quarter also helped net interest income generation, which came in 2% higher vis-à -vis last year. Net commission income was flat at SEK 3.1 billion as higher card income was offset by lower corporate finance contributions. In sum, total income increased 6% compared with the same period last year, although most of the improvement was a positive contribution from Swedbank’s equity holdings in Visa and Asiakastieto, rather than operating performance. Expenses increased 8% year over year on higher wages and depreciation charges resulting in 5% higher profits before impairments thanks to the group’s operating leverage. Credit costs of 5 basis points continue to be a tailwind to the bottom line supported by stable economic growth in Swedbank’s end markets. We maintain our fair value estimate of SEK 232 and narrow-moat rating.Swedbank provides financial services and products in its home markets of Sweden, Estonia, Latvia and Lithuania. Co. has four segments: Swedish Banking, which is responsible for all its Swedish customers except corporates and financial institutions; Large Corporates and Institutions, which is responsible for large corporates, financial institutions and banks as well as for trading and capital market products; Baltic Banking, which operates in Estonia, Latvia and Lithuania; and Group Functions and Other. At Dec 31 2013, Co. had 731 branches and 1,396 automated teller machines. Also as of such date, Co. had total assets of SEK1.82 trillion and deposits of SEK620.85 billion.
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