• Profit for Full Year 2024: Increased by 2% compared to the previous year.
• Q4 2024 Profit: SEK8.5 billion.
• Net Interest Income: Declined during 2024; stable during Q4 due to timing effects.
• Cost-to-Income Ratio: 0.34 for the full year; 0.36 for Q4.
• Return on Equity: 17.1% for the full year; 15.8% for Q4.
• Dividend Proposal for 2024: SEK21.70 per share, corresponding to 70% of the profit.
• Mortgage Volumes in Sweden: Decreased by SEK2 billion in Q4.
• Corporate Lending in Sweden: Decreased by SEK8 billion in Q4.
• Private Lending in Baltics: Increased by SEK2 billion in Q4.
• Corporate Lending in Baltics: Increased by SEK6 billion in Q4.
• Customer Deposits: Increased by SEK4 billion in Q4, excluding FX impact.
• Net Commission Income: Stable in Q4.
• Net Gains and Losses: SEK923 million in Q4.
• Total Expenses for 2024: SEK25.4 billion.
• Credit Impairment Recoveries: SEK394 million in Q4.
• CET1 Capital Ratio: 19.8% with a buffer of 460 basis points above requirements.

• Warning! GuruFocus has detected 5 Warning Sign with SWDBF.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Swedbank AB (SWDBF) delivered a strong financial performance in 2024, with a 2% increase in profit compared to the previous year.
• The company maintained a solid return on equity of 17.1% for the full year and 15.8% for the fourth quarter.
• Swedbank AB (SWDBF) has a strong capital position, with a CET1 capital ratio of 19.8%, providing a buffer of around 460 basis points above requirements.
• The Board of Directors has proposed a dividend of SEK21.70 per share, corresponding to 70% of the profit, reflecting a new dividend policy of 60% to 70% payout.
• The company has shown strong growth in its Baltic operations, with increased lending and deposits, and a focus on sustainable finance, as evidenced by the growth of its Sustainable Asset Register.

Negative Points

• Net interest income declined during 2024, with challenges in maintaining stable income due to timing effects and lower customer interest rates.
• Swedbank AB (SWDBF) faced increased competition in the Swedish mortgage market, leading to a slight decline in mortgage volumes in the third and fourth quarters.
• The introduction of new bank taxes in Latvia and Lithuania is expected to impact the company's business strategy and profitability in these regions.
• The company is dealing with uncertainties related to ongoing US investigations, which could potentially result in fines, affecting capital reserves.
• Swedbank AB (SWDBF) is experiencing muted corporate loan demand in Sweden, impacting overall lending growth.

Q & A Highlights

Q: Can you explain the impact of timing effects on Net Interest Income (NII) and how it might change with interest rate movements? A: Jens Henriksson, CEO, explained that the positive timing effects on NII are expected to continue as long as short-term rates decline. These effects will normalize once rates flatten out, which could happen in the second half of 2025. Jon Lidefelt, CFO, added that while it's challenging to forecast quarter-over-quarter due to various factors, the long-term sensitivity remains the focus.

Q: What is Swedbank's stance on the windfall tax in Latvia and its potential impact on business strategy? A: Jens Henriksson, CEO, expressed concerns about sector-specific taxes and their impact on profitability. He noted that the windfall tax in Latvia, unlike Lithuania, does not exclude income from new lending, which could negatively affect the Latvian economy and Swedbank's business strategy there.

Q: How does Swedbank plan to manage its excess capital, especially after the AML investigation is concluded? A: Jens Henriksson, CEO, stated that Swedbank's new dividend policy aims to return 60% to 70% of profits to shareholders. The bank intends to maintain a strong capital buffer and will consider capital release once uncertainties, particularly the US investigations, are resolved.

Q: Could you elaborate on the derivatives effect on NII and the impact of trading-related NII? A: Jon Lidefelt, CFO, explained that trading-related NII is moved to net gains and losses (NGL) and is not primarily related to funding. The derivatives line, in combination with debt security issues, reflects the lowering funding costs. However, exact timing effects are difficult to quantify due to various assumptions.

Q: What are Swedbank's plans regarding M&A opportunities given its strong capital position? A: Jens Henriksson, CEO, mentioned that Swedbank continuously evaluates M&A opportunities but currently has no significant plans. The bank remains focused on organic growth and maintaining a strong capital position.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.