By Joshua Kirby


Swedbank's earnings fell on quarter in the first three months of 2024 amid lower interest income, but the bank said an improving economy should boost performance over the year as it looks to move on from tangles with regulators over money laundering.

Pretax profit fell 4% to 10.65 billion kronor ($978.8 million) compared with the last quarter of 2023, the Swedish bank said Thursday.

Net interest income declined 5% to SEK12.6 billion, falling short of analysts' expectations as set out in a poll compiled by FactSet. Net profit, however, increased 1% to SEK8.43 billion, a little ahead of expectations.

The decrease in net interest income was mainly related to lower deposit margins amid higher interest rates, as well as lower average lending volumes and higher funding costs, Swedbank said.

Subdued mortgage margins and moving of deposits into term accounts acted as a limit on Swedish banks' volumes and margins in the first months of the year, Berenberg analyst Hugh Moorhead wrote in a recent note.

Interest rates are now heading lower, Swedbank chief executive Jens Henriksson said, citing the Swedish central bank. "In Sweden, the recovery is in sight," Henriksson said. "I still feel optimistic about the economic outlook."

Swedbank meanwhile said it would move its anti-financial-crime unit into its group products & advice division, effective immediately, amid continued probes into alleged shortfalls in its money-laundering oversight.

The move comes as the bank remains under investigation by U.S. financial authorities into historical money-laundering and counter-terrorism work. The bank, which has a major presence in the wider Baltic region as well as in Sweden, last year paid $3.4 million to settle U.S. allegations that its Latvian subsidiary handled transactions in violation of sanctions on Crimea, following the peninsula's annexation by Russia.

Swedbank was meanwhile cleared of money launder by Estonian prosecutors earlier this year, ending a yearslong probe into the bank's activities in the country.

The bank said it didn't know when the investigations by U.S. authorities would conclude, and that it can't determine the potential financial penalties. Integrating the anti-financial-crime unit will boost efficiency and quality, Swedbank said.

"We are taking the next step to be at the forefront in the fight against financial crime," CEO Henriksson said.


Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby


(END) Dow Jones Newswires

04-25-24 0208ET