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Swedish bank SEB to bulk up advisory business

Swedish bank Skandinaviska Enskilda Banken AB (publ) is aiming to invest in its advisory business as it expands its corporate and investment bank, according to CEO Johan Torgeby.

SEB reported third-quarter net profit attributable to shareholders of 6.63 billion kronor, up 39% from 4.77 billion kronor a year before. Speaking on a conference call, Torgeby said the results were partly down to strong customer activity within investment banking, with advisory and issuance fees having increased more than 100% on a yearly basis during the three-month period.

The bank collected 1.3 billion kronor across net advisory fees, lending fees and other commissions as a whole in the third quarter, compared to 1.1 billion kronor a year ago. The Nordic region, and Sweden in particular, has seen a recent spate of IPOs that is set to continue into 2022. SEB garnered nearly 10% of the market share for bookrunners on Nordic IPOs between January and late September 2021, according to Dealogic data.

New business plan

SEB is working on a new three-year business plan for 2022 to 2024, as part of which it plans to make further investments. It will present the plan when it reports fourth-quarter earnings, at the latest, it said. It is focusing resources in areas such as private banking and wealth management businesses and mobile channels for retail banking.

The bank is also considering the best way to expand operations in Austria, Switzerland and the Netherlands, Torgeby said, and is hiring staff and setting up a client strategy as it looks to become a northern European bank rather than "just a Nordic bank with headquarters in Stockholm."

Net interest income

The bank booked a 5% year-over-year increase in the third-quarter net interest income to 6.64 billion kronor. For the nine months ended Sept. 30, NII increased to 19.61 billion kronor from 18.58 billion kronor.

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The increase in the year-to-date NII was mainly due to lower funding costs and volume growth related to real estate lending, mainly mortgages, according to CFO Masih Yazdi. The funding tailwind will probably not continue into 2022, and right now there is muted demand on the corporate lending side, Yazdi said.

SEB also proposed a further ordinary dividend of 4.10 kronor per share and launched a new share buyback program of up to 2.5 billion kronor.

As of Oct. 19, US$1 was equivalent to 8.62 Swedish kronor.