Company Reports

Swedbank reported an underlying return on equity of 15.5% for the second quarter of 2026. Profit before tax of SEK 10.3 billion was 2% lower sequentially, primarily due to extraordinary costs related to Swedbank's restructuring program.

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Swedbank is one of the largest retail banks in Sweden and the largest in the three Baltic states. While its foundation is based in Swedish savings banks, a position that still benefits Swedbank today, its dominant presence in the Baltics is owed to the acquisition of Hansabank in 2005.

Swedbank reported first-quarter profits before tax of SEK 9.4 billion, down 6% sequentially.

European banks have declined around 10% from their highs as rising oil and gas prices and the prospect of higher-for-longer interest rates fuel fears that loan defaults will rise.

Swedbank is one of the largest retail banks in Sweden and the largest in the three Baltic states. While its foundation is based in Swedish savings banks, a position that still benefits Swedbank today, its dominant presence in the Baltics is owed to the acquisition of Hansabank in 2005.

We're updating our model for Swedbank, raising our fair value estimate, lowering our Morningstar Uncertainty Rating, and changing our Morningstar Capital Allocation Rating.

Swedbank reported third-quarter profits before tax of SEK 10.8 billion, up 8% sequentially. Net commission income growth of 6% stood out positively, offsetting slightly lower net interest income.

Swedbank is one of the largest retail banks in Sweden and the largest in the three Baltic states. While its foundation is based in Swedish savings banks, a position that still benefits Swedbank today and is part of the rationale for our narrow moat rating for the lender, its dominant presence in the Baltics is owed to the acquisition of Hansabank in 2005. Since then, Swedbank has transformed its Swedish and Baltic lending arms into highly efficient banking operations, taking advantage of economic growth in the Baltics, a booming real estate market in Sweden, and digitalisation initiatives to improve efficiency. As a result, Swedbank has been one of the best-performing Swedish banks over the last few years.

Swedbank reported a decent second quarter, slightly ahead of consensus estimates collected by the bank itself. However, its net interest income and net fee and commission income was shy of expectations. Credit costs of just 3 basis points were good.

We maintain our SEK 249 fair value estimate for Swedbank after the bank reported its first-quarter results. Total income decreased 7% to SEK 17.3 billion, albeit still ahead of company-compiled consensus estimates of SEK 17.1 billion. Net interest income of SEK 11.5 billion beat expectations. Lending volumes were virtually flat, while the interplay between funding costs and lending income developed better than anticipated. Operating expenses of SEK 6.1 billion were good and in line with the performance a year ago. The resulting 35% cost/income ratio is strong and tracks well relative to peers. Swedbank also booked SEK 141 million in credit impairment reversals, an equivalent of 3 basis points of its loan portfolio. We maintain our narrow economic moat.

Swedbank reported fourth-quarter 2024 profits before impairments of SEK 11,894 million, down 10% on a sequential basis driven by seasonally higher operating expenses. However, a cost/income ratio of 36% in the quarter was good. Income generation was within expectations and flat versus the previous quarter excluding the volatile net gains and losses (down 21%) and other income (down 21%). Standing out positively was a credit impairment reversal of SEK 394 million driven by improving macro scenarios and postmodel adjustment releases. We increase our fair value estimate to SEK 249 from SEK 243 per share after refreshing our model with last quarter's results. Our narrow moat is unchanged.

Swedbank is one of the largest retail banks in Sweden and the largest in the three Baltic states. While its foundation is based in Swedish savings banks, a position that still benefits Swedbank today and is part of the rationale for our narrow moat rating for the lender, its dominant presence in the Baltics is owed to the acquisition of Hansabank in 2005. Since then, Swedbank has transformed both its Swedish and Baltic lending arms into highly efficient banking operations, taking advantage of economic growth in the Baltics, a booming real estate market in Sweden, and digitalisation initiatives to improve efficiency. As a result, Swedbank has been one of the best-performing Swedish banks over the last few years.

Narrow-moat Swedbank reported a good third quarter. Excluding one-offs, which benefited results, good core income generation and lower expenses stood out positively. We maintain our SEK 243 per-share fair value estimate.

Swedbank's second quarter was decent. The bank posted a return on equity of 17.5%. As expected, the first cuts of interest rates in Sweden and the Euro Area as well as further deposits shifts toward higher interest-bearing deposits weighed on net interest income, which declined 3% on a sequential basis. Operating expenses increased 5% driven by salary adjustments and IT investments, displaying a similar performance as we have seen at peers recently. Net commission income carried by a strong asset management fee performance on improving equity markets was positive, although not enough to offset the decline in net interest income. Nevertheless, total income increased 1% as net gains and losses on financial items posted a good quarter. Given the volatile nature of this last line item, however, and with further rate cuts on the cards for the second half of the year, income generation has likely peaked already. Lastly, loan loss reversals of SEK 289 million drove a strong bottom-line performance for the quarter, although this again is not a tailwind investors should expect to last. An improving economic outlook has allowed Swedbank to release provisions for bad debts it had taken earlier. The bank also lowered its management overlay by SEK 43 million. We maintain our fair value estimate of SEK 243 per share and narrow economic moat rating.

Danske published an improved guidance for its 2024 net profit, lifting the target from between DKK 20 billion to DKK 22 billion to between DKK 21 billion to DKK 23 billion. The bank flagged a continually strong credit quality and now expects small reversals of impairment charges for the second quarter of 2024. Previously, the bank guided for about 8 basis points of loan losses, or roughly DKK 1.4 billion, which would have been in line with its targeted through-the-cycle assumptions. Now, Danske believes that credit losses for the full year may not exceed DKK 0.6 billion. The better-than-expected credit quality outlook for this year is a positive development and may signal that although potentially strained, households and corporations will manage to service existing debts after a rapid rise in interest rates for the most part. We would also not be surprised if Danske's Nordic peers would show similar improved outlooks during their second-quarter earnings releases. We maintain our DKK 233 per share fair value estimate and narrow economic moat rating.

Swedbank reported fourth-quarter 2023 profit before tax of SEK 11.080 billion, down 3% sequentially. Overall, the quarter was good, rounding out a strong 2023 for Swedbank, supported by higher interest rates driving materially stronger net interest income through the year. We maintain our SEK 243 per-share fair value estimate and narrow economic moat rating.

We are raising our fair value estimate for Swedbank to SEK 243 per share from SEK 207 previously after refreshing our model. Apart from the time value of money since our last model update, we believe that Swedbank's midcycle profitability has structurally improved. While we previously believed that the bank could achieve about 12% in returns on equity through the cycle, we now believe 13% is more likely. Although interest rates are set to fall this year, we believe they will settle above previous levels, allowing for greater net interest margins than Swedbank achieved over the past decade. Our narrow moat rating is unchanged.

Swedbank is one of the largest retail banks in Sweden and the largest in the three Baltic states. While its foundation is based in Swedish savings banks, a position that still benefits Swedbank today and is part of the rationale for our narrow moat rating for the lender, its dominant presence in the Baltics is owed to the acquisition of Hansabank in 2005. Since then, Swedbank has transformed both its Swedish and Baltic lending arms into highly efficient banking operations, taking advantage of economic growth in the Baltics, a booming real estate market in Sweden, and digitalisation initiatives to improve efficiency. As a result, Swedbank has been one of the best-performing Swedish banks over the last few years.

We maintain our SEK 207 per share fair value estimate for Swedbank after the bank reported first-quarter operating profits before tax of SEK 9,681 million, up 13% on a sequential basis. Owed to its low cost/income ratio (37%), the bank was able to offset 14% higher expenses with 9% higher income. The culprit for the increased expense line was found in the SEK 850 million fine Swedbank received for an IT incident in April this year. Underlying expenses excluding fines, which we don't view as recurring, decreased 2% to SEK 5,520 million. Income generation in the quarter of SEK 17,387 million was good overall, with higher net interest income of SEK 11,936 million versus SEK 10,918 million a quarter ago standing out. Higher deposit margins more than making up for weaker product margins, both driven by rising interest rates, drove the bulk of this quarter's NII performance. Credit impairments of SEK 777 million, or 16 basis points, still speak to an overall benign credit risk environment. Of the total SEK 777 million, Swedbank added SEK 198 million to its reserves beyond what its models predicted. We maintain our narrow-moat rating.