[STOCKHOLM] Banking group Swedbank, one of Sweden's biggest mortgage lenders, posted fourth-quarter earnings below market expectations on Tuesday, saying "increased credit spreads" hit trading income, but still raised its dividend 12 per cent.
Net profit in the quarter rose to 3.80 billion Swedish crowns (US$459 million), lagging an average forecast of 4.18 billion given in a Reuters poll of analysts but up from 3.61 billion in the same period of 2013.
Swedbank's operating profit in the quarter fell to 4.80 billion crowns from 4.88 billion a year ago, well below an average of analysts' forecasts of 5.24 billion.
The net fair value result, which includes trading amounted to 69 million crowns, down from 461 million in the year-ago period and well below the expected 505 million. "Credit spreads in the capital markets diverged and that affected valuation and periodisation negatively," Swedbank's chief financial officer Goran Bronner said in a conference call.
Swedbank said it has a common equity tier 1 capital solvency ratio of 21.2 per cent of assets, 1.9 percentage points over the minimum capital requirement imposed on the bank by the Swedish financial regulator. "That buffer is needed due to uncertainty about outstanding capital rules. Because of that, we don't think that we have any excess capital," Chief Executive Michael Wolf said.
Nevertheless the bank proposed a dividend of 11.35 crowns per share, up by 12.4 per cent from 10.10 crowns in 2013 but lower than the expected 11.50 crowns. The dividend corresponds to a 75 per cent payout ratio, which is in line with the bank's policy.