Swedbank (SWED) Q4 2022 earnings summary

Executive summary

• FY22 profit rose 5% to SEK 21.9bn; ROE was 13.3%. Q4 profit increased 19% QoQ to SEK 6.8bn, with ROE of 15.8%, driven mainly by net interest income.

• Credit quality remained good and liquidity strong, while provisions rose amid a weaker macro outlook. A 15% sustainable ROE target for 2025 was announced.

Financial highlights

• FY22 total income increased 12% to SEK 53.2bn; net interest income rose 23% to SEK 33.2bn, while net commission income fell 4% to SEK 14.2bn.

• FY22 expenses increased 3% to SEK 21.4bn; profit before impairments, Swedish bank tax and resolution fees rose 19% to SEK 31.8bn.

• FY22 profit before tax rose 6% to SEK 27.4bn and net profit increased 5% to SEK 21.9bn; credit impairments were SEK 1.5bn versus SEK 170m in 2021.

• Q4 income rose 15% QoQ to SEK 16.1bn and net interest income increased 31% to SEK 10.9bn; net profit rose 19% to SEK 6.8bn.

• Q4 included SEK 681m of intangible-asset impairments, primarily PayEx, and SEK 81m of one-off costs for closing Danish banking operations.

Outlook and guidance

• Target sustainable ROE of 15% in 2025, supported by a 0.40 cost/income ratio and CET1 management buffer of 1–3% of the Swedish FSA requirement; buffer ambition is 2% in 2025.

• Financial plan assumes average annual income growth in 2021–2025 will exceed cost growth by 3 percentage points; the 2025 credit impairment ratio assumption is 0.07%, based on a 10-year historical average and not future guidance.

• The 50% payout policy remains in effect; an additional ~3% of capital is expected to be generated above the targeted 2% management buffer through 2025, with excess returned via distributions, repurchases or both.

• FY23 issuance need expected to be in line with 2022, focused on senior unsecured and senior non-preferred bonds; SEK 127bn of maturities fall due in 2023.