Price drop despite unexpectedly high profit for SEB

Higher net interest, lower credit losses and a greater inflow from financial transactions lifted the big bank SEB’s profit more than expected in the first quarter.

But the SEB share is being pushed down in the shadow of the price collapse for the reporting competitor Handelsbanken.

Wallenbergsfären’s large bank SEB’s share drops around 3 percent in morning trading after a report for the first quarter of the year and is thus up 5 percent since the turn of the year.

The price drop is smaller than the price falls for Swedbank and Handelsbanken – which fall 4.6 and 9.5 percent respectively.

Costs are rising

There are some weak points in the quarterly report, despite the unexpectedly high profit. SEB’s net interest income is worse than most analysts had expected. At the same time, costs are rising more than expected, not least personnel costs, which are up 9 percent compared to the previous quarter, notes the big bank Citi’s analyst Shrey Srivastava in a comment.

At the same time, CEO Johan Torgeby gives in the report a picture of a tough banking market right now.

“The high interest rate situation continued to dampen credit demand, both among our corporate and private customers. Deposit flows to accounts with higher returns continued in the Baltics, while the trend in Sweden leveled off. Margins on Swedish mortgages remained at historically low levels in a competitive market,” he says in a comment in the report.

SEB reports a profit before credit losses and imposed fees of SEK 13.5 billion for the first quarter of the year. This can be compared with 12.6 billion in the corresponding quarter last year.

Lower net interest than expected

After tax, there were 9.5 billion left, up from 9.4 billion a year earlier. There, the expectations among analysts were 8.9 billion.

Net interest, what the bank earns from the difference between deposit and lending rates, rose to 11.8 billion. A year earlier, net interest was SEK 11.3 billion.

But analysts had hoped for a somewhat larger lift. The average forecast was 12.0 billion in net interest, according to a compilation of forecasts made by Bloomberg.