Swedbank AB, the largest lender in the Baltic states, plans to cut costs by 1 billion kronor ($150 million) this year after reporting a 65 percent drop in fourth- quarter profit.
Net income fell to 965 million kronor from 2.75 billion kronor a year earlier, the Stockholm-based bank said today in a statement. That beat the 891 million-kronor average estimate of analysts surveyed by SME Direkt.
Swedbank wrote down 1.91 billion kronor of goodwill at its Latvian business and took a staff restructuring charge of 330 million kronor. Chief Executive Officer Michael Wolf plans to cut costs further this year as the lender guards against the risk of a recession in Europe.
“The current macroeconomic outlook is very uncertain and there is a clear risk of recession in Europe,” Wolf said in the statement. “We are planning a weak scenario and are focusing on cost development.”
Swedbank fell 1.4 percent to 104.10 kronor as of 9:10 a.m. in Stockholm trading, paring this year’s gain to 17 percent. The company proposed a dividend of 5.3 kronor a share, more than the 5 kronor estimated by analysts in a Bloomberg survey.
Sweden, home to four of the Nordic region’s six biggest banks, wants its lenders to follow stricter capital standards than those set out by the Basel Committee on Banking Supervision.
Swedbank’s core Tier 1 capital ratio was 15.7 percent for the period under Basel 2, compared with 13.9 percent a year earlier. The lender said it needs a core Tier 1 capital ratio of 13.5 percent to 14.5 percent because of tougher regulations and withdrew its current target of at least 13 percent until 2013.
Net interest income, the difference between what the bank earns from lending and what it pays on deposits, jumped 10 percent to 4.99 billion kronor in the quarter, while its net commission income slipped 16 percent to 2.13 billion kronor. An economic recovery in the Baltic region allowed Swedbank to recoup 174 million kronor in bad-loan provisions in the quarter, it said.