Banks, EU – Baltic States, Financial Services

After a gloomy year at the global financial markets signals from Sweden's four major banks now points in a considerably more upbeat direction as loan losses are stabilizing and results mainly have been surprisingly encouraging, writes LETA.

"The banks will be all right", Martin Guri, equity strategist at Nordea, told "The Swedish Wire". "The outcomes of the reports have been better than expected. Looking forward, the prognoses are optimistic", he added.

Most notably, credit losses in the company sector have been considerably lower than estimated – although Swedbank and SEB's exposure in the Baltic States is a worrying factor as credit losses are likely to continue.

Sweden's Svenska Handelsbanken posted third-quarter net profit of SEK 2.43 billion (LVL 167.1 million), down by 14% year-on-year, as the bank announced on Wednesday.

However, the bank's performance was not as bad as Dow Jones Newswire analysts expected: they had forecast a 19% drop ion net profit for Svenska Handelsbanken in the third quarter.

Third-quarter net profit of Nordea, which operates in the Nordic and Baltic countries, dipped to EUR 626 million (LVL 439.9 million) from EUR 655 million a year ago, registering a drop of less than 4%. Analysts had prognosticated that the bank's profit figure could shrink by nearly 40%.

"Overall risk levels have gone down, but the uncertainty of the strength of the economic recovery is high," Nordea's Chief Executive Christian Clausen said. "The macroeconomic trend in Nordea's home markets as well as the increase in impaired loans have stabilized".

Also Swedbank said that the amount of bad loans was slowing and second-biggest bank SEB posted lower-than-expected loan losses.

"The economic situation in the Baltic countries remains challenging but we are beginning to see signs of stabilization," SEB's Chief Executive Annika Falkengren said. "The slowing trend in new past due volumes first seen in the second quarter can now be confirmed".