Swedish banking group Swedbank reported first-quarter operating profit above market expectations on Tuesday as lower loan losses and increased mortgage volumes helped offset a challenging interest rate environment. Swedbank, one of Sweden's biggest mortgage lenders, said operating profit fell slightly to 5.28 billion crowns ($648 million) from 5.38 billion a year ago, above a mean forecast of 5.14 billion in a Reuters poll of analysts.
"The result is marked by the volatility that we have seen in the first quarter with increased macro economic uncertainty and a continued negative interest rate environment," said newly appointed Chief Executive Birgitte Bonnesen. Net interest income, which includes revenue from mortgages and loans to companies, dipped to 5.62 billion crowns from 5.72 billion a year earlier to come in just below a forecast 5.70 billion. But losses from loans came in at only 35 million crowns, far better than the 309 million loss seen by analysts.
Swedish banks have faced sub-zero rates for over a year, putting pressure on interest income. The Riksbank cut rates in the first quarter to an unprecedented -0.50 percent to force stubbornly low inflation closer to its 2 percent target. It was the first report for CEO Bonnesen, who replaced Michael Wolf in February. Late last year it emerged some members of the bank's top management had been involved property deals as a sideline, sometimes with the bank's own customers. Wolf fired one senior executive but was himself later ousted while Chief Financial Officer Goran Bronner decided to leave the bank. Swedbank also reported Wolf to Sweden's Financial Supervisory Authority (FSA) for alleged market abuse, although he has subsequently been cleared of wrong-doing.