Landshypotek Bank (LHB) Q4 2023 earnings summary

Executive summary

• Record FY2023 operating profit of SEK 636m, up from SEK 548m, driven mainly by higher net interest income and deposit growth.

• Deposit growth and increased lending to large farming and forestry customers supported performance amid a subdued lending market; 2024 expected to be challenging.

Financial highlights

• FY2023 net interest income was SEK 1,230m (SEK 1,087m); operating profit was SEK 636m (SEK 548m) and net profit was SEK 501m (SEK 430m).

• FY2023 costs rose to SEK 589m from SEK 551m, mainly reflecting planned investments and staff growth; net credit losses contributed SEK 5m in recoveries.

• Q4 operating profit was SEK 126m versus SEK 176m in Q3; net interest income was SEK 302m versus SEK 299m, while costs increased to SEK 164m from SEK 124m.

• FY2023 interest income was SEK 4,649m and interest expenses SEK 3,419m, both higher YoY primarily due to higher interest rates.

• Loans to the public were SEK 104.8bn at year-end (SEK 105.6bn); deposits rose to SEK 29.1bn from SEK 23.5bn.

Outlook and guidance

• 2024 is expected to remain challenging; prior lending growth and increased savings volumes are unlikely to support earnings to the same extent.

• The economy is expected to stay weak, with recovery in H2 2024 and unemployment likely to continue rising, though not dramatically.

• Swedish market pricing anticipated the policy rate declining to 2.75% by end-2024 and 2.25% by end-2025; these were market expectations, not bank guidance.