Nordea today reported a profit of SEK 11 billion for the third quarter. Thus, the bank follows other major Swedish banks that report this week.
– Low credit losses and good profits, says Ekot financial commentator Kristian Åström
Is there a corona effect in the banks’ results for the third quarter? Yes, of course, if not for the pandemic, the banks would have done even better.
Or is it that simple?
Swedbank did its thing second highest profit ever on its lending at the same time as unemployment rose and companies went bankrupt. The bank’s credit losses were admittedly higher than the corresponding period last year, but much lower than expected.
This is during an ongoing pandemic.
This year, the bank has set aside SEK 3.7 billion for loans that the bank may not get back from borrowers with problems. But the realized credit loss so far this year is one billion, not 3.7.
What to expect In the future, with increased spread of infection, it is difficult to predict, but all four major banks report increased economic activity and credit losses, which may be considered low and also, which are far below analysts’ expectations.
How is this possible, at the same time as unemployment has risen and economists are talking about a crisis?
Well, one answer may be that it takes time to go bankrupt. In that case, the corporate bankruptcies are ahead of us.
Another answer is that the incipient recession that we saw signs of at the end of last year, and which was shocked by the pandemic, and became a deep decline, has been alleviated by stimuli.
A recovery continued during the third quarter.
The Riksbank continues buy mortgage bonds and keep interest rates down. The government’s government credit guarantees and support for companies and households are holding back bankruptcy and unemployment. And prices in the housing market are rising and lending continues to grow.
Banks, for their part, have reviewed their costs, so when revenues increase and credit losses are low, profits rise – even in the midst of an ongoing pandemic.