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Sweden's SEB posts 99 pct drop in Q3 profit

Swedish banking group Skandinaviska Enskilda Banken AB on Wednesday posted a 99 percent plunge in third-quarter profits due largely to credit losses in the troubled Baltic region.
/ Source: The Associated Press

Swedish banking group Skandinaviska Enskilda Banken AB on Wednesday posted a 99 percent plunge in third-quarter profits due largely to credit losses in the troubled Baltic region.

Net profit in the July-September period was 25 million kronor ($3.6 million), compared to 1.9 billion kronor in the same three months a year earlier.

SEB shares dropped 2 percent to 46.00 kronor ($6.63) in early trading in Stockholm.

Credit losses reached 3.3 billion kronor in the quarter, with the majority attributable to the Baltic region, where customers are struggling to repay debt. Nonetheless, the group said it is beginning to see signs of stabilization in the Baltic countries, where the financial crisis has been deeper than elsewhere in Europe.

Net interest income, the bank's main source of revenue, came to about 4.52 billion kronor in the quarter, down marginally from 4.55 billion kronor in the same period in 2008.

Net fee and commission income also fell slightly, around 5 percent to 3.6 billion kronor.

SEB CEO Annika Falkengren said the bank, which is the core holding of Sweden's powerful Wallenberg family, is seeing "emerging signs of economic stability and better functioning financial markets."

She said SEB will not extend its participation in the Swedish government's loan guarantee program. The bank has not used the guarantees, issued during the height of the financial crisis.

However, Falkengren said that although financial markets could be near the end of "an acute phase" in the global crisis, recovery will not be problem-free and is still much dependent on central bank liquidity measures as well as government stimulus packages.

SEB's credit losses in the quarter were lower than expected but analysts said it was too early to proclaim an end to the bank's Baltic woes.

"Credit losses are a difficult thing to evaluate," said Albert Haeggstrom, of research firm Alfred Berg in Stockholm. "The jury is still out."