Swedbank Net Interest Income Disappoints as Bank Sees Costs Rise

(Bloomberg) -- Swedbank AB reported fourth-quarter net interest income that missed analyst estimates amid rising costs, dealing a blow to Chief Executive Officer Jens Henriksson as he tries to keep a lid on expenses and navigate a money-laundering probe in the U.S.

Staffing, consultation and IT outlays were “seasonally high” in the quarter meaning that costs also rose more than expected to 5.8 billion kronor ($634 million). The bank said the expenditure cap for the year is unchanged at 20.5 billion kronor, excluding a new bank tax in Sweden.

The drag on Swedbank's earnings comes at a time when the CEO has his hands tied with share buybacks because of a long running investigation by U.S. authorities involving a $155 billion dirty-money affair. That probe could take another two years to reach a conclusion, Henriksson told Bloomberg TV.

But the bank, which remains among the best capitalized in the Nordic region and Europe, plans to reward shareholders with a dividend of 11.25 kronor per share for 2021. “Our target of a 15% return remains unchanged,” the CEO said.

Swedbank fell as much as 5% in early Stockholm trading and was 4.1% lower as of 12:05 p.m.

Earnings highlights:

Fourth-quarter net income rose 7.3% to 4.84 billion kronor, better than the 4.71 billion kronor estimated in a Bloomberg survey of analysts
Net interest income totaled 6.55 billion kronor, a slight contraction on last year's figure and below analyst estimates
Commission income for the quarter climbed to a record 4.02 billion kronor, fueled by share listing business
The bank “participated in a total of seven IPOs, the largest number ever for Swedbank in a single quarter,” said Pal Bergstrom, head of large corporates and institutions
Net interest income fell short of estimates at 6.55 billion kronor
The lender will stop financing new oil tankers or making new investments in crude oil refineries for transportation fuel
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