Swedbank sees Q1 loss as money laundering costs and COVID-19 weigh

Swedbank will report a first-quarter loss due to rising costs, credit impairments related to the COVID-19 outbreak, as well as a previously announced fine after a money laundering-related investigation, it said on Wednesday.

"The Swedish Financial Supervision Authority imposed an administrative penalty of SEK 4 billion ($397 million), credit impairments equivalent to around SEK 2.2 billion together with rising expenses are expected to lead to a negative result during the first quarter of 2020," Swedbank said. The bank said it will report around 2.2 billion crowns worth of credit impairments in the period, mostly due to coronavirus-related increase in credit provisions.

"The financial strains caused by the COVID-19 pandemic will be extensive in our home markets," the bank said, adding that, "Deteriorating macroeconomic forecasts...lead to an increase in our credit impairments." Swedbank is one of the first major European banks to provide an estimate for impaired loans during the first quarter, with many lenders expected in the coming weeks to disclose a major jump in soured debt.

Swedbank was hit with a record 4 billion crown fine on March 19 when the country's financial watchdog found serious deficiencies in Swedbank's anti-money laundering work after an investigation into the bank's business in the Baltic region. The bank's own internal investigation into its money-laundering controls is expected to cost 1.55 billion crowns in 2020, an increase of 750 million from previous estimates, the bank said on Wednesday.

Swedbank said its action program, designed to improve controls against economic crime, will cost 1.1 billion crowns in 2020, an increase of 250 million on its previous forecast. ($1 = 10.0683 Swedish crowns)

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