Sweden’s SEB, Handelsbanken, beat the forecasts, but Ukraine, the inflation outlook
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STOCKHOLM, April 27 (Reuters) – The Swedish banks SEB (SEBa.ST) and Handelsbanken both delivered better-than-expected quarterly gains on Wednesday to send their shares higher even as the war in Ukraine and rising inflation began to dampen the economic outlook.
During a quarter of global unrest, the two banks whose headquarters are within walking distance of each other in central Stockholm received strong income from both mortgages and corporate customers, while credit losses remained marginal.
Net profit on SEB rose to SEK 6.40 billion ($ 652 million), which easily beat an average forecast of SEK 4.93 billion in a Refinitive survey among analysts.
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At the same time, Handelsbanken’s operating profit rose to SEK 6.59 billion (USD 671 million) from SEK 5.31 billion a year earlier. Read more
The SEB share rose 5.0% after publishing what UBS called “a very strong first quarter” in a research note that highlighted higher revenues and lower costs. Handelsbanken shares rose 4.1% at 0835 GMT, surpassing the European Banking Index (.SX7P).
The business climate in Sweden has been strengthened by a strong recovery from the pandemic, which has resulted in strong income for the banks, even though Russia’s invasion of Ukraine and inflationary pressures have worried the markets and pushed up living costs.
The war, which Moscow calls a “special military operation”, has lifted already revived inflation to levels last seen in the 1990s and left central banks, including Sweden, ready to raise interest rates, increasing uncertainty for households, banks and the economy as a whole. . .
“For the first time in decades, we are now sitting here talking about inflation expectations and interest rate expectations that are clearly different,” said SEB’s CEO Johan Torgeby at a press conference.
“Central banks are expected to start moving globally and we have also seen inflation figures creep up to high figures compared to what we have seen in recent times.”
Torgeby said that rising gas prices meant that households and companies now faced rising costs while inflation had spread more over raw materials. “Both (indicate) that we will have a very turbulent period right now.”
Handelsbanken said that the conflict in Ukraine had increased uncertainty at the same time as expected interest rate increases from Sweden’s central bank would affect demand.
“It would change the picture quite dramatically,” said the bank’s CFO Carl Cederschiold.
($ 1 = 9.8095 Swedish kronor)
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Reporting by Johan Ahlander and Niklas Pollard Editing by Sherry Jacob-Phillips and Tomasz Janowski
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