Swedbank stays pessimistic about Europe

Swedbank’s (OMX: SWED A) second quarter of 2012 was weaker than the first according to most metrics. President and CEO Michael Wolf summarized this as follows: First there was a short-lived confidence boost from ECB liquidity injection until markets refocused on sovereign economic challenges and their effect on the banking systems. This deteriorated growth outlook and led to lower interest rates. Since then there are some political initiatives to stimulate recovery but their effect is very uncertain. The bank is preparing for a European wide recession and is thus staying very cost-focused, aiming to cut variable costs by a billion this year. The uncertainty is too great to give accurate earnings guidance.

Since Swedbank is one of those seen among the strongest, more customers are contacting it according to the bank. Total income of 8.9 billion is 5% above Q2 2011 but 3% below Q1 2012. Net interest income stayed above 5.2 billion while staff costs and other expenses continued downward trend. Operating profit of about 4.2 4 billion is lower than in both comparison periods. Reported profit was 3.162 billion. Core Tier 1 capital ratio with currently recommended calculation methods climbed to 16.6 per cent according to Basel 2 and Basel 3 ratio stands at 15.5% as of June 30th.