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Continued signs of recovery at SEB and DnB Nor, but hiring still muted

Business volumes at SEB continued to improve in the second quarter of this year, with the bank increasing its credit exposure, private banking and asset management activities, as well as spending more on IT specialists and consultants.

Overall, Q2 and half-year figures published today showed the financial woes of the Baltic economies continuing to act as a drag on its figures, but that the picture otherwise was improving.

Half-year operating profit before taking into account credit losses was down 26% to SEK6.2bn from SEK8.35bn.

But, stripping this out, operating profit for the six months from January to June was up 51% to SEK3.66bn from SEK2.42bn.

For the quarter, operating profit was SEK2.58bn, against SEK618bn at the same point in 2009. Against the first quarter of this year, it was ahead 140%, from SEK1.08bn.

Staff costs for the half-year period were down 9%, largely because of bank having shed nearly 1,500 employees in the period, added president Annika Falkengren, though for Q2 versus Q1 costs were up 4%.

Other expenses rose 14% during the half-year, with the bank investing heavily both in IT and “consultants for business and structural development”, said Falkengren.

The bank’s retail banking operations had attracted 3,000 new SMEs while its private banking division had attracted an extra 600 customers and the bank now had SEK405bn assets under management, she added.

SEB’s figures followed Q2 and interim results from DnB Nor published on Friday.

It reported pre-tax operating profit of NOK4.36bn for the quarter, against NOK1.15bn at the same point last year, and NOK8.36bn for the half-year, compared with NOK5.67bn.

Its large corporates and international division saw Q2 pre-tax operating profit rise to NOK1.52m, an increase of NOK58m on the same period in 2009, though its DnB Nor Markets business recorded a NOK293m drop in pre-tax operating profit in Q2, to NOK984m.

Nevertheless, the bank had been appointing more equity analysts to extend its Nordic equity research capability, it said.

Corporate financial activity was also increasing, with high levels of activity in Asia, and there had been rise in income from debt capital markets activity in the US and Sweden, it added.

The bank was also receiving more revenue from custodial and other securities services as well as from proprietary trading and other market making activity, primarily within fixed income and currencies.

“Developments in the equity, credit, commodity, currency and interest rate markets will still be decisive for the business area’s future performance,” it added.

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