Swedbank profit tops forecast, raises dividend

By Niklas Pollard

STOCKHOLM (Reuters) -Swedish banking group Swedbank reported a slightly bigger-than-expected rise in fourth-quarter net profit on Wednesday and said credit quality had remained strong through the year as it hiked its annual dividend to shareholders.

The bank said in a statement net profit rose to 8.32 billion Swedish crowns ($793.9 million) from 6.79 billion in the previous year to come in slightly above a mean forecast of 8.26 billion in an LSEG poll of analysts.

Sweden's biggest mortgage lender proposed an annual dividend of 15.15 crowns per share, up from 9.75 crowns a year ago and just below the LSEG smart estimate of 15.24 crowns per share.

Nordic banks have seen results lifted by booming interest income as central banks cranked up rates in the past two years, but that wave now looks to have crested with monetary policy set to ease later this year, potentially curbing such revenues.

Rivals SEB, Handelsbanken and Nordea said interest income, which includes revenues from mortgages, rose to 13.33 billion crowns from 10.92 billion a year ago, topping the 12.91 billion seen by analysts.

CEO Jens Henriksson told reporters he did not expect a return to negative central bank interest rates, as was the case for years in markets such as Sweden, in the foreseeable future.

"That means our net interest income will be structurally higher going forward than it was before," he said. "That is beneficial for the bank, for stability in the wider economy and for our owners."

The bank said it would, in light of recent strong profitability, temporarily further increase investments by 1 billion crowns per year in 2024 and 2025, funds Henriksson said would be used in areas such as improving payment systems and efforts to counter fraud.

While the soaring interest rates have lifted bank income, they have also hit real estate firms hard, leaving some of them scrambling to line up funding and potentially leading to loan losses for banks if they fail.

But so far, there has been little sign of such headwinds. Swedbank booked credit impairments of 363 million crowns in the fourth quarter, down from 679 million in the year-ago quarter and below analysts' expectations of 751 million.

($1 = 10.4798 Swedish crowns)

(Reporting by Niklas Pollard and Anna Ringstrom; Editing by Terje Solsvik and Miral Fahmy)