Swedbank Earnings: Good Q1 Performance

We maintain our SEK 249 fair value estimate for Swedbank after the bank reported its first-quarter results. Total income decreased 7% to SEK 17.3 billion, albeit still ahead of company-compiled consensus estimates of SEK 17.1 billion. Net interest income of SEK 11.5 billion beat expectations. Lending volumes were virtually flat, while the interplay between funding costs and lending income developed better than anticipated. Operating expenses of SEK 6.1 billion were good and in line with the performance a year ago. The resulting 35% cost/income ratio is strong and tracks well relative to peers. Swedbank also booked SEK 141 million in credit impairment reversals, an equivalent of 3 basis points of its loan portfolio. We maintain our narrow economic moat.