That’s the share price of Sweden’s SEB — one of the Nordic region’s largest banks. About 11 per cent of SEB’s loans also happen to be to the Baltic region.
The bank reported fourth-quarter results on Wednesday which, according to Reuters, showed much weaker than expected core income from lending. The stock fell as much as five per cent on the day.
As one analyst told Reuters:
“People knew it was going to come down a lot, but it was especially weak because of the extension of (the) maturity of funding and lower returns on (the) investment portfolio, while deposit margins were a little bit weaker (than expected).
Meanwhile, on the Baltic exposure point, management told investors the bank saw net loan loss provisions for the region at 5bn kronor (£434m) in 2010, half of the 2009 figure.
In closer detail, though, the Baltic picture was still looking choppy in Q4.
The bank said individually-assessed impaired loans increased by SEK 2.96bn during the quarter, fully explained by the Baltic development where such loans were up 31 per cent to SEK 3.23bn. A significant share of these impairments — some 50 per cent according to the bank — stemmed from the revaluation of real estate collateral.
The group’s past due portfolio assessed-loans amounted to SEK 6.94bn where the Baltic region represented SEK 4.44bn. Some SEK 312m of Baltic household loans, meanwhile, had to be restructured.
Nevertheless, while the bulk of provisioning was for the Baltic region — due to that increased identification of individual impaired loans — the bank said that since June the inflow of new past due loans had slowed materially, indicating a stabilisation.
Although on that note it’s worth remembering that the bank had said a similar thing back in the third quarter:
“We see continued stability in the Nordic region and decelerating growth of non-performing loans in the Baltic countries…”
And to conclude here’s a flow chart depicting just how the bank’s 11 per cent exposure to the region actually feeds through:
Related link:
SEB back in black as Baltics stabilise - FT