© Reuters. FILE PHOTO: The Swedbank logo is pictured on its branch in Riga October 21, 2014. REUTERS/Ints Kalnins/File Photo
STOCKHOLM (Reuters) -Swedish bank Swedbank reported first-quarter net profit above market expectations on Thursday and said higher deposit margins had boosted results, although credit impairments also rose.
The rival of Handelsbanken, SEB and Nordea said net profit totaled 7.56 billion Swedish crowns ($733.24 million) versus a year-ago 4.48 billion, topping a mean forecast of 6.62 billion, according to analyst estimates provided by the company.
CEO Jens Henriksson said Swedbank had a strong start to the year.
“The driving factor was higher net interest income, which strengthened thanks to higher deposit margins,” he told a news conference.
Higher interest rates have meant that Swedish banks have increased margins on their loan business. The Riksbank raised interest rates to 3.5% on Wednesday, up from zero just over a year ago, and said a further hike was likely.
Swedbank, Sweden’s biggest mortgage bank, said its net interest income, which includes revenues from mortgages, rose by 77% to 11.94 billion from a year-ago 6.76 billion, above the 11.37 billion expected by analysts.
Commission income rose to 3.66 billion crowns from a year-ago 3.55 billion, above the mean forecast 3.48 billion, while the bank made a profit on financial transactions, including hedging instruments, of 916 million compared to 139 million a year earlier.
Swedbank said its credit impairments rose to 777 million crowns from 158 million a year ago, above the 386 million seen by analysts.
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