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Investing.com -- Swedbank AB ’s (OTC:SWDBY) stock edged down by 0.4% on Tuesday following a mixed financial report that saw the company’s net profit surpass consensus estimates but also revealed weaker areas such as commission and fees, and trading revenue.
The Swedish bank reported a net profit of SEK 8,196m, which was 7% higher than the consensus estimate of SEK 7,624m.
The bank’s pre-provision profit of SEK 11,214m exceeded expectations by 5%, primarily due to lower costs, although this figure adjusts to a 3% beat when accounting for a VAT reimbursement.
Net interest income (NII) was reported to be 2% ahead of consensus, despite a 6% quarter-on-quarter decline. This decline was attributed to lower lending rates, day-effects, and foreign exchange impacts, which were partially offset by reductions in deposit rates and funding costs.
On the downside, commissions and fees fell short of expectations by 4%. This shortfall was attributed to seasonally lower card commissions, decreased asset management fees, and commission payments.
Trading revenue also disappointed, coming in at SEK 541m against a consensus of SEK 736m, due to larger negative revaluations from funding and FX related swaps in Group Treasury.
Expenses were reported to be 6% below consensus on a reported basis, and 3% lower after adjusting for the VAT reimbursement, with the bank citing seasonally lower IT and consulting expenses as the primary driver for reduced costs.
Interestingly, the bank saw a reversal in impairments, with a credit of SEK 141m compared to the consensus expectation of a SEK 309m charge, resulting in a cost of risk (CoR) of -3 basis points.