The major Swedish banks have released their quarterly reports this week. Profits are very stable, but bank executives are grumbling a bit about squeezed mortgage profit margins.
The mortgage margin is probably the lowest in history, CEO Jens Henriksson told TT, echoing a similar statement from Nordea colleague Frank Vang-Jensen.
Obviously
Generally low interest rates and fierce competition are their explanation for lower mortgage profits.
"Maybe we have reached some kind of bottom for net interest income," Maria Landeborn says.
But the banks are making up for it with increased household savings and rising stock prices.
It's obvious that they're doing it because the banks are still doing well, she says.
The so-called commission income rose in several cases by double digits. This primarily includes fund and card fees from customers.
When the stock markets rise by double digits, the assets under management become much larger, and if you have a percentage income on that, it becomes a lot of money, of course.
Good for the economy
What if the banks increase other small fees?
I haven't seen any general trend of trying to raise other fees as well, Landeborn says.
The banks' earnings reports also point to a generally positive trend for the economy. Corporate lending is increasing noticeably. After several years of weak economic activity, activity among companies seems to be increasing.
It could be a sign that Sweden has reached the economic bottom.
Conservative
And despite concerns around the world, credit losses are generally low.
That's a good rating for Swedish banks.
Or are they too cautious?
"Yes, you can ask yourself that question. This is probably a sign that major Swedish banks are perhaps a bit conservative, but at the same time it is important that we have stable banks," says Maria Landeborn.
Major banks' 2nd quarter results (2nd quarter last year in brackets)
Nordea made a profit before loan losses of EUR 1.7 billion, equivalent to SEK 18.7 billion (EUR 1.6 billion). Net interest income, the bank's profit from the difference between deposit and lending rates, fell 1 percent to EUR 1.8 billion. Net commission income, including fund and card fees, rose 11 percent to EUR 880 million.
SEB's profit (before items affecting comparability) reached SEK 10.8 billion (10.4). Net interest income rose to SEK 10.7 billion (10.6). Net commission income rose to SEK 7.2 billion (6.7).
Handelsbanken reported an operating profit of SEK 6.7 billion (7.1). Net interest income fell 7 percent to SEK 10.0 billion, while net commission income rose 9 percent to SEK 3.1 billion.
Swedbank's operating profit was SEK 10.25 billion (10.8). Net interest income rose 3 percent to SEK 11.3 billion. In Sweden, net interest income fell 8 percent. Net commission income rose 14 percent to SEK 4.5 billion.
Source: Banks' interim reports
