UPDATE 1-SEB Q4 earnings beat forecast, ups dividend

Thu Jan 31, 2013 2:06am EST

Related Topics

* Operating profit 2.84 bln SEK, vs 2.54 bln forecast

* Aims to pay dividend of 40 pct or above of EPS

* Targets 15 pct return on equity in long term (Adds background, detail)

STOCKHOLM, Jan 31 (Reuters) - Swedish banking group SEB has beaten expectations for quarterly operating profit and set more ambitious profitability and dividend targets on Thursday.

The Swedish bank sector has proved resilient to the euro zone crisis. SEB's earnings followed strong results from rivals Nordea and Swedbank on Wednesday which boosted stocks in the sector.

SEB's fourth-quarter operating profit fell 7 percent to 2.84 billion Swedish crowns ($447 million), compared with a forecast for 2.54 billion in a Reuters poll, thanks to stronger-than-expected commission income and core net interest income.

Stripping out one-off costs related to IT writedowns and buybacks of covered bonds, it would have made an operating profit of 4 billion crowns, up from 3.3 billion.

"The Nordic countries have shown remarkable resilience throughout the crisis, but as small open economies they were affected towards the end of the year," chief executive Annika Falkengren said.

While the world economy was still "muddling through", some glimmer of hope had returned, she said.

SEB said it aimed to pay a dividend that was at least 40 percent of earnings per share, compared with a previous policy of just 40 percent, and raised the payout for 2012 to 2.75 crowns from 1.70 crowns for 2011.

It said it would aim at a return on equity, a measure of how a bank can squeeze profit out of shareholder equity, of 15 percent. In 2012, return on equity was around 11 percent.

Like Swedish peers, SEB said it would stay focused on costs and boosting profitability, setting a cost cap for 2013 and for 2014 of 22.5 billion crowns per year. ($1 = 6.3492 Swedish crowns) (Reporting by Mia Shanley and Oskar von Bahr; Editing by Dan Lalor)

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