March 23, 2023

By Niklas Pollard

STOCKHOLM (Reuters) -Swedish banking group SEB beat fourth-quarter internet revenue forecasts on Thursday on greater curiosity revenue after central financial institution fee hikes and buying and selling beneficial properties, prompting it to spice up its proposed dividend.

Surging inflation, partially as a result of power disaster stemming from the warfare in Ukraine, has seen central banks crank up charges whereas the monetary strain on households and companies has but to translate into painful mortgage losses.

Web revenue at Sweden’s prime company financial institution rose to 7.43 billion Swedish crowns ($728.8 million) from 6.20 billion a yr earlier, beating a imply forecast of seven.15 billion in a Refinitiv ballot of analysts.

“In the course of the fourth quarter, the unprecedented macroeconomic setting continued to impression buyer sentiment, exercise and our outcomes,” CEO Johan Torgeby mentioned in an announcement.

“Nonetheless, financial savings buffers constructed up through the pandemic contributed to surprisingly resilient demand and consumption, whereas labour markets remained sturdy.”

The primary of Sweden’s prime banks to report for the fourth quarter, SEB posted curiosity revenue, together with income from mortgages, of 9.72 billion crowns, up from 6.72 billion a yr earlier and above the 9.49 billion anticipated by analysts.

Nevertheless, buying and selling revenue, sometimes a much less sure income than curiosity revenue, accounted for a major a part of the earnings beat because it greater than doubled from a yr earlier to three.50 billion crowns.

Analysts at Citi mentioned in a analysis word that SEB had delivered a “low high quality beat” with core income broadly in step with expectations.

SEB shares had been down 3.0% by 0901 GMT whereas different Swedish banking shares additionally dipped.

Price and fee revenue on the financial institution fell to five.42 billion crowns from 5.89 billion a yr earlier, simply topping the imply forecast of 5.34 billion.

Web anticipated credit score losses rose to 506 million crowns from 299 million a yr earlier.

SEB proposed elevating its dividend to six.75 crowns per share from 6.00 crowns, greater than analysts’ estimate of 6.23 crowns.

Hovering inflation has additionally raised value pressures for SEB, which set a price goal of 26.5 billion crowns to 27 billion crowns for 2023, primarily based on foreign money charges final yr, in comparison with spending of 25 billion crowns in 2022.

($1 = 10.1946 Swedish crowns)