Swedbank AB (publ)

Swedbank reported profit for the quarter of SEK 7.2 billion. Earnings per share were SEK 6.37. Excluding extraordinary restructuring costs, return on equity was 15.5% and the cost-to-income ratio was 0.39; including SEK 860 million of extraordinary costs, ROE was 14.2% and the cost-to-income ratio was 0.43. Credit impairments were SEK 313 million, or 6 basis points. CET1 capital was 17.4%, with a 260 basis point buffer. Net interest income increased 1% versus Q1, net commission income rose 7%, and other income increased 23%. Forward, management kept 2026 cost guidance at SEK 27.5 billion excluding extraordinary costs and FX, expects FTEs to be around 16,800 by the end of next year, and said the restructuring should eventually lower the cost run rate by SEK 1 billion by the end of 2028.

Jens Henriksson emphasized that Swedbank delivered a strong result in uncertain macro conditions and said the bank has clear business momentum across all markets. He highlighted higher mortgage activity, stronger corporate lending, and continued growth in the Baltics, while pointing to the completion of all U.S. investigations as a meaningful reduction in uncertainty. His tone was confident and upbeat, but he also stressed competition remains strong, especially in Swedish mortgages, where margins are historically low.

Jon Lidefelt focused on the numbers and on execution of the Swedbank 15/27 plan. He said the quarter included SEK 860 million of the SEK 1.3 billion extraordinary restructuring costs for 2026, while unchanged 2026 cost guidance remains SEK 27.5 billion excluding extraordinary costs and FX. He noted lending volumes rose 2%, deposits trended positively, NII rose 1% sequentially, and CET1 was 17.4% with a 260 bp buffer. He also explained that impairments were driven by a few corporate names and macro updates, with a reduced post-model adjustment of SEK 161 million, and reiterated that the restructuring should lead to a SEK 1 billion lower cost run rate by end-2028.

Analysts pressed management on capital returns now that the DFS settlement closes the last major legal issue, including whether the bank might move its CET1 buffer closer to the 200 bp target and whether payouts could revert toward a 75% dividend policy. Management said the formal dividend policy remains 60%-70%, the target buffer is still 200 bp, and excess capital release is a board judgment call; they also said they have no intention of holding more capital than necessary. Questions on credit provisions and stage migration were answered by saying the moves were tied to a few individual customers in C&I and Baltic Banking, with no sector-wide pattern. Analysts also asked about funding/NII timing, IRB model approvals, AI-related IT spending, Entercard, and PayEx; management said funding is front-loaded, NII timing reflects asset/liability repricing lags, IRB timelines remain uncertain, AI spend is not separately disclosed, Entercard remains in sale process, and PayEx is outside the restructuring program.