SEB profit climbs on strong interest income, raises dividend

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Rising inflation, partly due to the energy crisis stemming from the war in Ukraine, has seen central banks raise rates, boosting banks’ interest income while the financial pressure on households and businesses has yet to translate into painful loan losses.

Net profit at Sweden’s top corporate bank rose to 7.43 billion Swedish crowns ($728.8 million) from 6.20 billion a year earlier, beating an average forecast of 7.15 billion in a survey of analysts by Refinitiv.

“During the fourth quarter, the unprecedented macroeconomic environment continued to impact customer sentiment, activity and our results,” said CEO Johan Torgeby.

“However, the savings buffers built up during the pandemic have contributed to surprisingly resilient demand and consumption, while labor markets have remained strong.”

SEB, which is the first of Sweden’s top banks to present results for the last quarter of 2022, reported interest income, which includes mortgage income, of 9.72 billion kroner, up from 6.72 billion kroner a year earlier and higher than analysts’ expectations of 9.49 billion crowns.

Meanwhile, fee and commission income at the bank fell to 5.42 billion kroner from 5.89 billion kroner a year earlier, just exceeding the average forecast of 5.34 billion kroner, while expected net credit losses rose to 506 million crowns from 299 million crowns a year earlier.

SEB proposed to raise the annual dividend to 6.75 crowns per share from 6.00 crowns, higher than the analysts’ estimate of 6.23 crowns.

Rising inflation has also raised cost pressures for SEB, which has set a cost target of 26.5 billion kroner to 27 billion kroner for 2023, based on currency rates last year, compared to ‘ spending 25 billion crowns in 2022.

($1 = 10.1946 Swedish crowns)

(Reporting by Niklas Pollard; Editing by Terje Solsvik and Krishna Chandra Eluri)

By Niklas Pollard

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