Swedbank, Other Swedish Banks Present Relatively Stable Earnings
If you look at Swedbank, the bank around which most rumors have circulated and also the bank which my Baltic readers appears to be most interested of, their profits fell by about a third from year ago levels in Q3. This decline was mainly attributable to falling commission revenue as well as portfolio losses and increased loan losses. The portfolio losses were mainly related to Lehman's collapse and the increase loan losses was mainly a result of rising loan losses in the Baltic countries. Loan losses in Sweden increased dramatically too, but from a much lower level.
In their comments, the Swedbank management concedes that things aren't going so great right now, but they argue as they have done before that it is only temporary and nowhere near as bad as the rumors suggest. However, in this interview in Svenska Dagbladet, Swedbank CEO Jan Lidén concedes that they have been to optimistic about their Baltic division and that they will probably have to revise up their forecasted loan losses.
As the Baltic hard landing has only barely begun, and as Sweden too enters a cyclical downturn, that upward revision will probably be quite large.