* Q1 net profit 3.98 bln SEK vs fcast 3.96 bln
* Posts net recoveries compared with expectations for
* Says Ukraine events have created uncertainty in global
(Adds quotes, details)
STOCKHOLM, April 28 Swedish banking group
Swedbank said on Monday events in Ukraine could curb
an expected increase in credit demand after posting
first-quarter earnings largely in line with forecasts.
The Swedish bank, which pulled out of Russia and Ukraine
just last year to focus on its home markets, said it had seen
good customer activity in the quarter while a favourable stock
market climate had impacted business positively.
Swedish banks have been busy shrinking their balance sheets
since the financial crisis, pulling out of higher risk areas and
slashing costs. Their capital levels have swelled and they have
benefited from cheap financing relative to peers.
But the Baltic-exposed bank, like its peer SEB
last week, sounded a warning over uncertainties related to the
conflict between Ukraine and Russia.
"We have seen an increasing tension in our world, especially
the geopolitical events in Eastern Europe," CEO Michael Wolf
said on a call with journalists. "We are very glad that we left
Russia and Ukraine and we have a very limited exposure left. The
Baltic countries are exposed to sanctions to and from Russia,
and of course we are following developments closely."
"This probably pushes credit demand further out in time.
Short-term credit demand is negatively affected by this
turmoil," he said.
Net profit for continuing operations rose to 3.98 billion
Swedish crowns ($607 million), just beating a mean forecast for
3.96 billion seen in a Reuters poll of analysts and compared
with 3.66 billion in the year-ago period.
It reported unexpected net recoveries of 100 million crowns
in the quarter compared with analyst expectations for credit
impairments of 110 million crowns.
Gains in Swedbank shares, one of Europe's best-performing
stocks after the financial crisis, have slowed in recent
quarters as focus has turned from capital and costs back to
Swedbank, one of Sweden's biggest mortgage lenders, faces a
squeeze from tougher bank regulations with Sweden's financial
watchdog aiming to raise risk weights on mortgages to 25 percent
from a current 15 percent this summer.
Swedish authorities, worried about excessively high levels
of household debt, have sought out ways to let steam out of the
country's red-hot property market.
In a sign of the bank's underperformance, Swedbank shares
are down about five percent year-to-date. Shares in its Swedish
rival, corporate-banking focused SEB, are up more than
SEB reported a bigger-than-expected rise in first quarter
operating profits, helped by strong commission income as it
raked in fees from services to help companies list and do deals.
European banks, which struggled throughout the crisis in the
face of high public debt and high unemployment, have also been
playing catch-up. The STOXX Europe 600 banks index is up
3.5 percent year-to-date on recovery hopes.
($1 = 6.5898 Swedish Crowns)
(Reporting by Mia Shanley and Johan Ahlander; Editing by