LONDON - Swedbank on Tuesday reported its third straight quarterly loss but said it's seeing signs that credit quality in the Baltic region is beginning to stabilize.
Swedbank /quotes/comstock/22u!e4:se0000242455- (SE:SWEDA 65.50, 0.00, 0.00%) , a Stockholm-based lender with a heavy exposure to the Baltic region, swung to a third-quarter loss of 3.34 billion krona ($482 million), after earning 2.47 billion krona in the year-earlier period.
Consensus estimates were for a 2.14 billion loss.
The loss came after the group took impairments of 6.1 billion krona, virtually all of which was in the Baltic countries of Estonia, Latvia and Lithuania as well as Ukraine.
The loan-loss level in Ukraine was a staggering 76.4%, and 6.9% in the Baltics, and yet only 1.95% for the group.
The lender now carries 35.77 billion krona of impaired loans. It also has $1.42 billion of U.S. real-estate exposure coming from Lehman Brothers collateral, though it's not had to take any fresh provisions there.
The group recently conducted a 14.6 billion rights issue -- the discounted sale of stock to existing investors -- and said its Tier 1 capital ratio stands at 11.4% under new rules, though a less impressive 8.8% under transition rules in force.
Despite the bleak quarter, Swedbank said it sees signs of stability in the Baltic countries.
"We see signs in Baltic Banking that credit quality is no longer weakening at the same rate as before. The level of new impaired loans was somewhat lower during the third quarter than in the second quarter," the lender said in sticking to its view that second-half impairments will be lower than first-half impairments.
Swedbank shares rose 3.8% in early trade.
Steve Goldstein is MarketWatch's London bureau chief.