Swedbank lands narrow profit beat as loan loss provisions fall

STOCKHOLM (Reuters) – Swedish banking group Swedbank on Thursday reported slightly better-than-expected net profit for the quarter but said a potential interruption of Russian gas deliveries to Europe would have an impact on the economic development.

Swedbank’s first-quarter net profit fell to 4.62 billion Swedish crowns ($468 mln) from 4.98 billion a year-ago, still narrowly beating the 4.58 billion analysts had expected according to Refinitiv data.

Russia’s invasion of Ukraine has had little direct impact on Sweden so far but the threat of a stop in gas deliveries has rattled European economies.

Swedbank, which has substantial operations in Estonia, Latvia and Lithuania and got about a fifth of its income in the quarter from the Baltic countries, said its direct exposure to Russia was “very small”.

“At the same time, if there will be some form of gas boycott or if Russia shuts off the gas then it will affect economic development,” Swedbank CEO Jens Henriksson told reporters without going in to detail on the impact.

“But at the end of the day, our credit quality is excellent,” he said.

Swedbank, a rival of banks such as Handelsbanken, SEB and Nordea, made loan loss provisions of 158 million crowns in the first quarter, down from 246 million a year ago when the pandemic weighed on the Swedish economy.

Interest income, which includes income from mortgages, fell marginally to 6.76 billion crowns from 6.78 billion a year ago, beating the 6.66 billion analysts expected.

Commission income rose to 3.59 billion crowns from 3.36 billion a year ago, beating the 3.66 billion analysts expected, while net income from financial items, which includes income from trading, fell to 122 million crowns in the quarter from 585 million a year ago.

($1 = 9.8776 Swedish crowns)

(Reporting by Johan Ahlander; editing by Niklas Pollard)