DJ SBAB Bank AB (publ): Strong development for operating profit
Press release 23 October 2020
Strong development for operating profit
The third quarter was characterized by high activity, partly due to the
strength of the housing market but primarily due to SBAB's strong
competitive position. Lending to property companies and housing developers
to finance increased during the quarter and SBAB continued to grow in the
residential mortgage market. In terms of performance, with an operating
profit of SEK 636 million, the third quarter was a strong quarter for SBAB.
SBAB's Interim Report January-September 2020 is now available for download
on www.sbab.se/IR [1].
Q3 2020 (Q2 2020)
· The housing market exhibited good resilience in terms of price trend and
turnover despite continued uncertainty regarding socio-economic
development in the wake of the coronavirus pandemic.
· Continued strong growth in total lending, which increased 2.7% to SEK
412.3 billion (401.5), of which SEK 307.2 billion (302.5) comprised
lending to retail customers and SEK 105.1 billion (99.1) lending to
corporate clients and tenant-owners' associations. Total deposits
increased 2.0% to SEK 133.9 billion (131.3).
· Strong development for operating profit and net interest income.
Operating profit grew 2.4% to SEK 636 million (621). Net interest income
increased 4.2% to SEK 945 million (907). Credit losses resulted in a
recovery of SEK 4 million (loss: 11).
· The average number of unique visitors per month to www.booli.se rose
substantially and amounted to around 1,480,000 (1,300,000) during the
quarter.
· For the second year in a row, SBAB was ranked among Europe's best
workplaces according to Great Place to Work(R) (GPTW), with a 14th place
in the Large Organisations category.
Financial information
2020 2020 2020 2019
Q3 Q2 Jan-Sep Jan-Sep
Total lending, SEK bn 412.3 401.5 412.3 378.2
Total deposits, SEK bn 133.9 131.3 133.9 130.0
Net interest income, SEK million 945 907 2 737 2 596
Net result of financial -11 17 -49 32
transactions, SEK million
Expenses, SEK million -310 -312 -933 -860
Credit losses, SEK million 4 -11 -34 -16
Operating profit, SEK million 636 621 1 742 1 768
Return on equity, % 11.5 11.6 10.8 12.1
C/L ratio, % 0.30 0.32 0.31 0.31
C/I ratio, % 32.9 33.1 34.4 32.5
CET1 capital ratio, % 12.7 12.7 12.7 12.2
Statement from the CEO
The housing market has exhibited remarkable resilience during the
coronavirus pandemic. Prices climbed in the third quarter, with rising
turnover for all types of housing across the country, which helped create
favourable market conditions for financing housing. Our strong competitive
position enabled us to capture market shares in our three key customer
segments - residential mortgages to private individuals, property financing
to property companies and property financing to tenant-owners' associations.
The robust steps being implemented by central banks and governments to
counteract recession in the wake of the coronavirus pandemic entail a tidal
wave of liquidity for the market. This liquidity must find a destination and
has thus resulted in a substantial increase in demand for essentially all
forms of assets, including housing. Extremely low interest rates mean that
saving in cash or bonds is often not an option, and instead that liquidity
is attracted to other assets. We have a market where, in essence, everything
is rising in value, despite being in the midst of a pandemic with rising
unemployment and a negative economic trend.
I have worked in the financial industry for more than 30 years and lived
through numerous bizarre market conditions, but I have never experienced a
market that has so clearly received so much support from central banks and
governments for such an extended period as this one. Central bank and
government supports have been in place since the 2008/09 financial crisis
and now, during the coronavirus pandemic, these supports have been further
strengthened and extended. Is there any other solution? Perhaps not. A new
global economic system has been created which, when its foundations are
shaken, seeks to stabilise using as yet untested monetary and fiscal
policies.
The Riksbank has announced that extremely low interest rates will prevail
for several more years. We believe that this creates public expectations
that housing costs will remain very low for many years to come. We believe
that the strong economic support measures, implemented by the Riksbank and
the government, create security and give the perception that the risks are
low. In general, we believe this has resulted in many people being in fear
of being left behind and missing the chance to gain their first step on the
housing ladder. Consequences of the above include expectations of rising
house prices, increased demand for housing, rising housing prices and
increased turnover.
High activity
Activity has been very high in our operations in the third quarter, and
during the first nine months of the year as a whole, partly due to the
strength of the housing market but primarily due to our strong competitive
position. I would like to showcase a few examples. Over the year, our
lending to property companies and housing developers to finance has
increased substantially and we have captured market shares due to our very
good customer relations and strong brand. During the coronavirus pandemic,
we have focussed strongly on availability and on working on long-term
relationships, which is particularly appreciated by our customers in times
of crisis. Another example is that our competitive terms, high level of
availability, service, satisfied customers and strong brand mean we continue
to capture market shares in the residential mortgage market. A third example
is that the number of visitors to booli.se, our housing search service, has
risen dramatically due to the fact that we have Sweden's largest range of
homes for sale - many more than Hemnet.
In terms of performance, with an operating profit of SEK 636 million, the
third quarter was a strong quarter for SBAB. The expansionary monetary
policy and supports from the Riksbank create a highly favourable funding
situation for SBAB, which in some respects, is better than it was prior to
the coronavirus pandemic. This helps to support mortgage margins and
maintain profitability at healthy level and has allowed us to lower mortgage
rates. Competition remains intense in the residential mortgage market, which
may lead to mortgage rates falling further.
Confirmed credit losses remain extremely low. To date, we have not noted any
rise in late payments from our customers despite rising unemployment - clear
evidence of the low risk inherent in our lending. Naturally, the possibility
of amortisation exemptions will provide relief for our customers, but we
still do not believe that this is decisive for many.
"Boendeekonomi är jättekul!"
SBAB is a purpose- and values-driven growth company. We place considerable
focus on being an inherently sustainable company with sustainability as a
competitive advantage. We want to create good results for all our
stakeholders. Succeeding in reaching our vision and our targets requires
high levels of motivation and commitment among staff at SBAB, which in turn
entails that SBAB must be an extremely attractive workplace. In the third
quarter, we were ranked as Europe's 14th best workplace in the Large
Organisations category by Great Place to Work. We view this as confirmation
that we have made substantial progress in becoming a very attractive
workplace.
It is highly gratifying that things continue to progress so well for SBAB.
Household finances are indeed really fun. I would like to take this
opportunity to inform you that it is soon time for the start of the third
season of "Boendeekonomi är jättekul" (Eng. "Household finances are really
fun") - our communication concept, where we, with the help of humour and
knowledge, want to make everyone understand that household finances are
really fun. We concluded the first season by filling the Globe arena with
10,000 people who watched a comic performance about household finances. The
second season concluded with a music video "Komma hem - låda låda," which
was viewed more than 6,500,000 times on YouTube and Facebook, and played
more than 350,000 times on Spotify. I am afraid I cannot reveal the
highlights or how the third season will conclude, but keep your eyes peeled
for the first episode and you'll find out more. Really exciting, don't you
agree?
The motivation and commitment at SBAB is an important reason for why I
believe it is so amazing to work here. Thank you very much, all my
colleagues, for your fantastic work.
Look after each other.
Klas Danielsson
CEO of SBAB
For further information, please contact:
Erik Wennergren, Head of Press, SBAB
Telephone: +46 724 51 79 37
E-mail: erik.wennergren@sbab.se
File: Interim report January-September 2020 [2]
File: Press release (PDF) [3]
Language: English
Company: SBAB Bank AB (publ)
Box 4209
171 04 Solna
Sweden
Phone: 08- 614 43 00
E-mail: erik.wennergren@sbab.se
Internet: www.sbab.se
ISIN: DK0030034343
EQS News ID: 1142620
SBAB Bank AB (publ) / 68 Quarterly report
Dissemination of a Swedish Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
End of Announcement EQS News Service
1142620 2020-10-23
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October 23, 2020 02:00 ET (06:00 GMT)
DJ SBAB Bank AB (publ): Strong development for -2-
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