Swedbank reports huge first quarter losses

Major Swedish bank Swedbank has reported an operating loss of 3.36 billion kronor ($400 million) for the first quarter. The huge losses caused the Stockholm bourse to drop in early trading.

By comparison the bank reported an operating profit of 3.72 billion kronor for the corresponding period of last year and the figures disappointed analysts who had forecast an operating profit of 813 million kronor.

The bank’s result was hit by write offs on intangible assets amounting to 1.305 billion kronor and a one-off cost for Swedbank Robur’s erroneous mutual fund charges of 346 million kronor.

But even excluding these items Swedbank reported an operating loss of 1.572 billion for the first quarter.

Swedbank’s CEO Michael Wolf, commenting on the report on Thursday, said that the bank stands in front of one of its greatest ever challenges.

“The global recession has deepened in line with the strengthened impact of the financial crisis on the real economy. In several markets in which Swedbank operates the downturn is deep,” he wrote in a company press release.

A write off of 1.3 billion kronor concerns Swedbank’s operations in Ukraine whose value had already previously been dramatically depreciated.

“Due to the economic and political insecurity Swedbank has chosen to revalue Ukraine and will in the future develop operations at a less ambitious level,” the bank writes.

Swedbank’s Baltic operations remain “a vital part of our domestic market strategy,” the bank wrote while not ruling out future goodwill write offs in the sector.

Credit losses increased dramatically and amounted to a net 6.845 billion, in comparison with 288 million kronor in the corresponding period of last year.

Credit loss reserves amounted during the quarter to 6.552 billion kronor, of which 3.68 billion kronor were due to the macro-economic situation.

Total revenues amounted to 9.424 billion, in comparison with 8.45 billion in the corresponding period of last year.

Costs increased from 4.44 billion kronor to 4.63 billion kronor.

The effects of Swedbank’s report were felt across the Swedish financial sector as the Stockholm stock market opened on Wednesday.

Swedbank’s stock fell 15 percent on opening but had stabilized to -7 percent by 10am with the Stockholm OMX index down 0.9 percent.

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Swedish bank’s IT fault puts customer accounts in the red

A technical problem at Sweden's Swedbank on Thursday night gave customers a nasty surprise, with their account balances inexplicably going negative, payments impossible, and Swish payments no longer working.

Swedish bank's IT fault puts customer accounts in the red

By 11.30pm, more than 2,000 Swedbank customers had reported the fault to the site Downdetector, and the problem was still not solved by 17.00pm on Friday. 

“We have an ongoing IT disruption where certain customers see an incorrect balance on their accounts,” a message on the bank’s app read. “The reason is a planned update to our internal systems which went wrong. We apologise, of course, for that and are working as quickly as possible to fix the problem.” 

The Swish payment service has also been affected, with the service, which is owned collectively by Swedish banks, reporting on its site that there was a “technical disruption at Swedbank and Sparbank which might affect Swish payments from these banks”. 

Some Swedbank customers posted their negative account balances on Twitter, expressing shock at the incorrect figures. 

The disruption comes at the worst possible time for many Swedes. Many people are paid on the 25th of the month, meaning this Friday marks the start of the payday weekend. Many will have also scheduled their bill payments for this Friday. 

Marko Saric from Malmö saw his account balance drop by 1.2 million kronor, going half a million kronor into the red. 

“It’s just totally crazy,” he told SVT. “We were going to go out and shop for the weekend. It’s lovely weather and the kids want to go out, but we can’t use our card. We’ve got no cash. Everything is in the bank.” 

“You’re just completely blocked. Colleagues need to make emergency food parcels for you. It’s just crazy that something like this should happen.” 

In its statement, the bank assured customers that their money was “secure”, and that the bank still had the correct information on what their account balance should be. 

“Customers who feel that they have suffered economic damage as a result of the disruption should contact the bank,” the message said.