Credit losses cut into Swedbank's earnings for first half of 2020

Swedbank logo.
Swedbank logo. Source: Priit Mürk/ERR

Swedbank's earnings for January-June of 2020 were €88 million. Compared to the first half of 2019, earnings dropped by €9 million, which can mostly be attributed to increased credit losses.

The bank announced on Friday that due to restrictions set to alleviate the spread of COVID-19, a drop in consumption and a decrease in pension fund management fee ratios, fee incomes decreased by 14 percent to €34.4 million in the first six months of 2020.

Net income from financial instruments dropped by 56 percent which can be attributed to asset revaluation. Interest income increased by 7 percent to €115.7 million, with loan and deposit portfolios increasing.

Loan portfolios for households and businesses have grown, having increased 3 percent from 2019, up to €8.272 billion. Deposits increased by 14 percent to €9.856 billion.

Swedbank's expenses increased by 3 percent with staff costs, anti-money laundering protection and customer knowledge taking up most of the increased expenses.

Rate of loan losses stands at 0.2 percent

Reserves for loan losses increased by €10 million over the first six months of 2020. The reserve, along with impaired loans, stands at €56.3 million.

For comparison, reserves increased by €1 million in the same period in 2019. The increases are mostly a consequence of the emergency situation and outlooks for macroeconomics.

Loan loss rates last year were zero percent, compared to 0.2 percent this year.

Swedbank Estonia's return on equity in the period of January-June was 18.1 percent.

The number of loans issued to private customers in the second quarter of 2020 decreased in comparison to the second quarter of 2019. Issued loans were in a downward trend in April and May, with June seeing an increase in the number of issued loans.

Factoring volumes continually increased among business clients, but decreases were noticed in the volumes of long-term loans and leases. In the second half of the quarter, business lease demand recovered to pre-pandemic levels and investments are continued that were suspended in spring.


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Editor: Kristjan Kallaste

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