STOCKHOLM: Swedbank missed fourth-quarter operating profit expectations on Tuesday and lowered its dividend hurt by worse-than-expected trading income and loan losses.
One of Sweden's biggest mortgage lenders, Swedbank reported an operating profit of 4.80 billion Swedish crowns ($562 million), below an average forecast of 5.14 billion in a Reuters poll of analysts but unchanged from a year earlier.
Banks' interest margins have come under pressure from Sweden's ultra-loose monetary policy.
The central bank cut rates to an unprecedented -0.35 percent last year and initiated a bond purchase program to stave off stubbornly low inflation.
Negative interest rates mean Swedish banks have to pay to deposit money in the central bank's accounts. That cost is hard to pass on to customers as few people are willing to pay to deposit money.
Swedbank proposed a dividend of 10.70 crowns per share, down from 11.35 crowns in 2014 and lower than the expected 11.00 crowns. The dividend was in line with the bank's policy of paying out 75 percent of profits.
Financial items at fair value, which includes trading, rose to 165 million from 69 million a year earlier but lower than the expected 366 million.
"It was a tough environment for trading throughout the autumn but somewhat better in December," CEO Michael Wolf told journalists on a conference call.
Losses from loans came in at 399 million crowns, worse than the 275 million loss expected by analysts. The bank said the increase was due to a large provision for a single commitment.
Swedbank said the low oil price had not yet resulted in any credit impairments but said it saw signs of lower credit quality among a few commitments towards the end of the quarter and that a need for provisions was likely.
"If the oil price remains at current levels around 30 dollars, it will be tough on the sector. There's no doubt about that," said Swedbank risk officer Anders Karlsson.
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