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Skandinaviska Enskilda Banken AB Class A SEB A

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Morningstar’s Analysis

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Good Q3 at SEB, With Additional Dividend and Buyback Program Making Up for Lost Dividend Income

Niklas Kammer, CFA Equity Analyst

Analyst Note

| Niklas Kammer, CFA |

No-moat Skandinaviska Enskilda Banken reported a good third quarter with an underlying operating profit of SEK 8 billion, up 35% versus the year-ago quarter. This strong performance was naturally driven by a weak comparable base in 2020, primarily owing to higher expected credit losses last year. Nevertheless, we believe performance was good. Net interest income came in 5% higher at SEK 6.3 billion, as weaker customer-driven interest income was offset by volume growth and lower funding costs at a group level contributing positively. Net fee and commission income also showed strong growth of 21%, as activity remained elevated across primary and secondary markets, advisory, and payments. At the same time, operating expenses increased only 2%. Credit losses came in at SEK 49 million, bringing the year-to-date loan-loss ratio to just a single basis point. Overall, this performance resulted in a respectable return on equity of 14.1%. We are increasing our fair value estimate to SEK 123 per share from SEK 110 after incorporating better-than-expected income generation and lower loan losses.

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Company Profile

Business Description

Skandinaviska Enskilda Banken is a Swedish universal bank with a strong focus on the corporate lending sector. The bank operates in the Nordics, the Baltics, Germany, and the United Kingdom but derives the majority of its operating profits from Sweden. SEB specializes in corporate lending, particularly to large corporations. Additionally, it serves about 2,300 large midcorporate and multinational companies, 700 financial institutions, and about 400,000 small and medium-size enterprises. It also serves about 4 million private customers in Sweden and the Baltics. The bank offers asset management, life insurance, and to a lesser extent private banking services to its clients.

Kungstradgardsgatan 8
Stockholm, SE-106 40, Sweden
T +46 771621000
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 15,543