Swedbank chief executive sees reasonable profits in 2011

The chief executive officer of Swedbank said on December 10, slightly stronger lending margins due to higher interest rates and lower funding costs would help the bank produce "reasonable profits" in 2011.
Swedbank made a 9.5 billion crowns ($1.38 billion) loss in 2009, mainly due to the economic crash in the Baltics where it is the biggest lender, but has been back in the black over all three quarters reported so far this year.
"We are cost conscious," Chief Executive Michael Wolf said in an interview. "We are keeping control of our cost levels so we should also next year continue to make reasonable profits."
"We are going to continue to see an improvement on NII (net interest income), helped by improved interest rate levels generally and some margin widening and the fact we are replacing expensive state guaranteed funding next year."
Swedbank tapped the Swedish state guarantee programme to ensure liquidity as interbank lending seized up during the crisis. Wolf said the bank would replace 80 billion Swedish crowns ($11.6 billion) of that funding next year and anticipated much tighter spreads.
Moody's last month put Swedbank's A2 long-term debt and deposit rating on review for a possible upgrade based on improved financial performance, higher capital, better economic conditions and a slower pace of asset quality deterioration, particularly in the Baltic states.
Wolf said he saw Swedbank's Baltic operations posting post-provision profits for the second quarter running in the fourth quarter, driven by improved asset quality.
The region accounts for some 12 percent of its total lending versus 10 percent for rival SEB and 2 percent for Nordea. Swedbank's recovery story has sent the share price up 530 percent from all-time lows reached in March last year, though it remains well off pre-crisis levels.
During the crisis the bank was forced to go to shareholders twice to boost its capital by 27.5 billion crowns. Now, Swedbank and its Swedish rivals are among the best capitalised banks in Europe, easily meeting the benchmarkets sketched out in new banking rules - known as Basel III - which will be introduced over the next several years.
Some shareholders have called for some of the money back in the form of dividends, but Wolf echoed rival Handelsbanken saying it was too soon.