The uncertain economic situation in the wake of the Trump administration's tariff shock has already had several clear effects.
After the quarter's end, uncertainty has reached new heights, says Swedbank's CEO Jens Henriksson.
So far, the consequences are "fairly small" for large and medium-sized export companies with exposure to the countries affected by US tariffs and other countries' countermeasures, according to Henriksson.
"Believe that housing prices will stagnate"
However, among private customers, many have already reacted to the geopolitical uncertainty and trade war.
We saw in connection with the turbulence – and even a little earlier – that some customers have left American equity funds and gone into more European and Swedish ones. The same applies to global funds. Then we have seen a slightly larger inflow into fixed-income funds and that people have built up a bit more on savings accounts, says Henriksson.
The housing market also appears to have been dampened.
We believe that housing prices will stagnate during the year. A month ago, we thought they might increase by 5 percent, says Henriksson.
Swedbank – one of the largest players on the Swedish mortgage market – has, however, not yet seen any clear slowdown in demand for loans for home purchases.
We are at the end of April, and often it is the case that when you sign or buy a home, it takes a while before the bank gets involved. So I don't think we have seen the effects of this yet. But a lot suggests that economic uncertainty will lead to a bit less activity on that market, says Henriksson.
Upgraded credit rating - strong capital position
In Sweden and the Baltics – that is, on Swedbank's home turf – there are, however, many factors that are important for handling the downturn, according to Henriksson:
Strong public finances, low national debt, rising real wages, innovative companies, profitable banks, and lower interest rates mean that our home markets are still well-equipped for the future.
He adds that Swedbank – which recently received an upgraded credit rating from Moody's – has a solid credit quality, which during the first quarter led to a reversal of previously made provisions of SEK 140 million.
The capital position is also strong, with a buffer of 4.5 percentage points above the capital requirements.
And our liquidity position is strong, says Henriksson.
In the report for the first quarter of the year, Swedbank reports an adjusted profit – before write-downs, taxes, and fees – of SEK 11.2 billion. This can be compared to the profit of SEK 11.9 billion for the same period last year.
The result was, however, better than expected. Analysts had, according to Bloomberg, on average expected a profit of SEK 10.7 billion.
The net interest income – what Swedbank earned on the difference between lending and deposit rates during the quarter – fell 9 percent to SEK 11.5 billion. A year earlier, the net interest income was SEK 12.6 billion, and analysts had on average expected it to be pushed down to SEK 11.4 billion.
The net commission income rose 2 percent to SEK 4.0 billion. Expected was SEK 4.2 billion.
Credit losses ended up at plus SEK 140 million during the quarter instead of minus, as Swedbank reversed previously made provisions.
