Swedbank Posts Loss Because of Baltic Exposure
Swedish bank Swedbank reported Thursday a first-quarter net loss, disappointing analysts' expectations for a profit, due to large provisions for loan losses in its hard-hit Baltic operations.
The Stockholm-based bank said the net loss for the quarter totaled 3.36 billion kronor ($396 million), down from a profit of 2.9 billion kronor in the same period a year ago.
Loan losses for the period widened to 6.85 billion kronor ($807 million) from 288 million a year earlier. The bank said 6.6 billion of the total were provisions, and that 4.2 billion were attributable to its business in the Baltics, a region which has been savaged by the global economic crisis.
"Swedbank today faces one of the biggest challenges in the bank's history. The global economic downturn has worsened as the financial crisis increasingly affects the real term economy," Swedbank's chief executive officer Michael Wolf said in a statement.
The company said it has decided to reevaluate the markets in Ukraine and Russia and develop its business there with "a low level of ambition" due to the economic and political uncertainties.
It will reduce the number of branches and cut staff at its operations in the Baltics in the coming quarters, with an aim to cut costs there by 15 percent.
The bank said the deteriorating economic outlook in the Ukraine also resulted in an impairment of intangible assets of 1.3 billion kronor ($153.2 million) in the quarter.
Net interest income rose to 5.8 billion kronor ($683.6 million) from 5.2 billion kronor a year earlier.