Swedbank Q1 2019: decline in structured products volumes

Swedbank’s income from structured products decreased in the period January-March 2019. As of March 31 2019, outstanding volume for structured retail bonds stood at SEK10.65 billion (€1.01 billion), a 1% fall from the end of December (SEK10.74 billion) and down 22% compared to March last year (SEK13.59 billion).

Swedbank had a 13% share of the Swedish market in the first quarter of 2019, according to SRP data. The bank sold 22 structured products worth SEK273.3m to retail investors during the period, down from 34 products with combined sales of SEK490m in the previous quarter and also down from 26 products worth SEK386m in the first quarter of 2018.

Twelve of the bank’s products in Q1 2019 were linked to a single index, including nine products tied to the Solactive Sustainable Development Goals World Index. A further nine products were linked to a basket of shares while one product was linked to the FX rates.

Swedbank’s best-selling product in the quarter was Bevis Nu Tillväxtvalutor which sold SEK29.3m during its subscription period. The five-year securities pay a fixed annual coupon of 13% while the return at maturity is linked to the appreciation of an equally weighted currency basket comprising the Brazilian real, Russian rouble, Mexican peso and South African rand, relative to the euro.

The bank’s best performing product in the quarter came in the shape of Kreditderivatbevis Industribolag 3, a five-year credit-linked note which matured on January 21 2019 paying investors a capital return of 160.4% (9.49% pa).

During the first quarter, Swedbank issued SEK47 billion in long-term debt, which consisted entirely of covered bonds. Funding for 2019 is generally expected to be unchanged on 2018, according to the bank. Maturities for the full-year 2019 nominally amount to SEK68 billion calculated from the beginning of the year. As of March 31 outstanding short-term funding, commercial paper, included in debt securities in issue amounted to SEK221 billion (December 31 2018: SEK131 billion).

The bank also signed an agreement with Sustainalytics, a global supplier of environmental, social and governance analysis.

Assets under management by Swedbank Robur, the banks fund management company, rose 12% in the first quarter to SEK959 billion of which SEK908 billion related to the Swedish fund business and SEK52 billion to the Baltic business. The increases in both Sweden and the Baltic countries are due to net inflows and higher valuations, according to the bank.

In contrast to the end of last year, market movements have been favourable during the first quarter of 2019, according to Anders Karlsson (pictured), the bank’s acting president and chief executive officer.

‘Global stock exchanges have developed positively, and credit spreads have tightened...growth prospects have, however, been revised down, partly as a result of the uncertainty surrounding ongoing trade conflicts and the Brexit negotiations,’ said Karlsson, commenting on the banks results.

Click the link to view the full Swedbank Q1 2019 interim report.