Swedbank Highlights Strong Q3 2024 Performance and Solid Capital Ratio

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Swedbank Highlights Strong Q3 2024 Performance and Solid Capital Ratio

Swedbank AB (SWED-A.ST) reported a strong performance in the third quarter of 2024, with net income rising by 9% to 9.4 billion SEK. CEO Jens Henriksson highlighted the bank's solid quarterly results, supported by one-time and timing effects despite global economic challenges.

The bank's return on equity impressively stood at 18.4%, while the cost-to-income ratio was recorded at 0.31. Credit quality remained robust with low impairments, and the capital position remained strong with a CET1 ratio of 20.4%. Swedbank also emphasized its commitment to the financial health and sustainability of its customers, aiming to empower 1 million people by 2030, and launched a new savings platform to enhance digital experiences.

Key Points:

  • Swedbank's net income increased by 9% to 9.4 billion SEK in Q3 2024.
  • The bank's return on equity was 18.4%, with earnings per share reaching 8.30 SEK.
  • A strong capital position was maintained with a CET1 ratio of 20.4%.
  • Credit impairments were low at 270 million SEK.
  • While credit growth was observed in the Baltic countries, the Swedish market remained stable.
  • The bank launched a new savings platform and is making progress towards its 15/25 targets.

Company Outlook: Swedbank plans to allocate 1 billion SEK for strategic initiatives in 2023 and 2024. The bank is optimistic about the economic environment in Sweden and the Baltic countries due to falling inflation and potential for credit growth.

Negative Factors: The competitive landscape in Sweden and the Baltic countries is challenging due to pricing pressures from smaller players. Credit growth is slow, and the bank is monitoring the impact of monetary policy on lending.

Positive Factors: Swedbank reported a slight recovery in housing prices and transaction volumes in Sweden. The Baltic insurance sector saw a significant increase in fee income due to the cash flow revaluation of a life insurance product.

Shortcomings: Financial guidance for the next year is still pending. The bank is cautious about credit losses and continues to set aside provisions for potential portfolio risks.

Q&A Highlights: Anders Karlsson discussed the impact of collateralized bond swaps and funding costs on net interest income. The bank proactively managed regulatory debt issuance to maintain a buffer against MREL requirements. Swedbank's management capital buffer is expected to remain in the range of 100 to 300 basis points, with a capital release plan for 2025 pending regulatory approvals. Jens Henriksson announced that Jon Lidefelt will succeed Anders Karlsson as CFO starting November 1, 2023.

Swedbank's third-quarter earnings call painted a picture of resilience against global economic challenges. The bank's strong capital position and focus on customer value, efficiency, and sustainability seem poised to remain key drivers of its strategic direction in the coming years. With a new CFO stepping into the role and the next earnings call scheduled for January 2025, stakeholders will be eager to see how Swedbank navigates the evolving economic landscape.