Baltic woes hit SEB profits
AFP · 16 Jul 2008, 13:52
Published: 16 Jul 2008 13:52 GMT+02:00
"Over the last quarters, Estonia and Latvia have experienced a sharp reduction of GDP (gross domestic product) growth. As a consequence, past due payments on loans have increased and we continue to build up reserves," chief executive Annika Falkengren said in a statement.
"Problems are most pronounced in Estonia, which largely explain the group's increased net credit losses," she said.
For the period April to June, net credit losses rose to 452 million kronor from 280 million a year earlier, of which 283 million referred to the Baltic countries compared to 94 million a year ago.
Lithuania, Latvia and Estonia accounted for 20 percent of SEB's operating profit in the first half, it said.
In the first quarter, SEB's net profit was almost halved. In the first half, the bank's net profit plunged by 31.3 percent and operating profits were down by about the same amount, from 8.71 billion a year ago to 5.9 billion.
In the second quarter alone, total operating income fell by three percent to 10.4 billion kronor. In the first half, it was down by eight percent to 19.2 billion.
Meanwhile, the group's operating expenses increased by 10 percent in the second quarter and return on equity fell to 15.2 percent from 20.7 percent a year earlier.
Falkengren insisted meanwhile that total costs during the second half of the year were expected to be lower than in the first half through further efficiency measures.
SEB said ongoing problems on the global credit market and inflationary pressures continue to have a negative impact on its activities.
But "investments made for future income generation in combination with the strong capital base and liquidity access provide the stability required for the current environment," Falkengren said.
SEB's share price was flat at 104 kronor in midday trading on the Stockholm stock exchange, as the Stockholm OMX30 index was down 0.90 percent.