STOCKHOLM, Jan 29 (Reuters) - Swedish bank SEB narrowly missed fourth-quarter net profit expectations on Wednesday and proposed a lower-than-expected total dividend for the year, causing its shares to decline by 4%.
The bank's net profit, which caters more to corporate clients than some of its domestic counterparts, dropped by nearly 11% to 7.49 billion crowns ($683 million) from 8.37 billion a year earlier, falling short of the 7.65 billion expected by analysts in an LSEG poll.
SEB suggested an ordinary and special dividend totaling 11.50 crowns per share for the year, unchanged from the previous year but below the 12.73 crowns anticipated by analysts, according to data from LSEG.
CEO Johan Torgeby stated that the bank's return on equity had been affected by decreasing interest rates, a less robust net financial income level, and expenses related to integrating payment service provider AirPlus.
Jefferies analysts referred to the dividend as the key negative of the results, while analysts at JP Morgan predicted a muted share price reaction due to the stock's valuation and the absence of upgrades in the pipeline.
In a separate announcement, the bank revealed a new share buyback program after finishing its previous repurchase plan.
SEB, a part of the investment domain linked to Sweden's Wallenberg family, is the second of Sweden's major banks to release fourth-quarter results after Swedbank surpassed profit forecasts.
Following a favorable trend from rising central bank rates in recent years, reductions in rates by institutions like Sweden's Riksbank have started to impact interest income for the country's banks, though the effect has been relatively subdued to date.
SEB reported interest income, encompassing revenue from mortgages, at 10.82 billion crowns, a decrease from 12.10 billion a year earlier but surpassing analysts' mean estimate of 10.59 billion.
The bank set a cost target of 33 billion crowns for this year, which includes costs for AirPlus, after spending 30.9 billion in 2024, in accordance with company guidance.
($1 = 10.9729 Swedish crowns)