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Swedbank to sharpen focus on digitization, data analysis

Digitization, automation and data analytics are at the top of Swedbank AB (publ) investment agenda for 2018, CEO Birgitte Bonnesen said.

Swedbank continues to look for partners in financial technology and will be hosting an accelerator program in Riga, Latvia, in 2018, she told analysts on a postearnings conference call. Under the program, 10 startups will spend six months working on projects under the guidance of Swedbank and Wise Guys, a Baltic-based accelerator for early stage companies.

Swedbank completed the acquisition of Nordic payments firm Payex in the second half of 2017 and expects that this will strengthen its position in e-commerce, Bonnesen said. Payex was included in Swedbank's results for the first time in the fourth quarter, contributing 86 million Swedish kronor to income.

At a group level, net interest income on a yearly basis rose to 6.33 billion kronor from 6.00 billion kronor in 2016. Net commission was also up to 3.29 billion kronor from 3.06 billion kronor in the fourth quarter of 2016.

Bonnesen also said she welcomes a "normalization" in Swedish house prices, which had been growing rapidly in 2016 and the first half of 2017, raising concerns about an asset bubble. The market turned toward the end of the year, with prices falling 7.8% in the three months to December 2017, according to the Valueguard-KTH Housing Index (HOX) Sweden.

Despite the fall in prices, Bonnesen said she is still "optimistic" about the prospects for Swedbank's mortgage lending division in 2018. This is because the bank lends "all over Sweden," rather than solely in Stockholm and a handful of other cities where the most extreme peaks and troughs in house prices have been seen, she said.

Strong economic fundamentals in Sweden are also a reason to be confident, she added.

Lending to Swedish mortgages increased to 760 billion kronor in the fourth quarter, compared with 747 billion kronor at the end of the third quarter. In the Baltic counties, mortgage volumes increased 3% in local currency to the equivalent of 69 billion kronor.

Meanwhile, new accounting rules known as IFRS 9, which came into effect in January and change the way that banks must account for anticipated losses, will have only a marginal effect on the bank's common equity Tier 1 ratio, at 6 basis points.

Swedbank's CET1 ratio, a key measure of capital adequacy, stood at 24.6% at the end of 2017, up from 23.9% a quarter earlier although down from 25.0% at year-end 2016.

The bank made a profit attributable to shareholders of 4.74 billion kronor in the fourth quarter, an increase from 4.14 billion kronor in the same period in 2016. Full-year profit dipped slightly, to 19.35 billion kronor from 19.54 billion kronor.

The per-share dividend for the year dipped slightly, to 13 kronor from 13.2 kronor, but was equivalent to 75% of total profit for the sixth straight year, Swedbank said.

Shares in the lender were up 0.6% as of just before midday in Stockholm on a day of sharp market downturns. The OMX Stockholm 30 benchmark index had shed 4.1% as of the same time.

As of Feb. 5, US$1 was equivalent to 7.93 Swedish kronor.