SEB (SEB) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered robust results despite a challenging macroeconomic and falling interest rate environment, supported by a diversified business model and stable net profit.

• Return on equity reached 17.0% in Q3, maintaining strong profitability.

• The acquisition of AirPlus was completed and consolidated, contributing positively to fee income but increasing operating expenses and leading to an updated 2024 cost target of SEK 31 billion.

• Organizational changes include a new COO function and the creation of a Wealth and Asset Management division, effective January 2025, to enhance strategic focus.

• Continued positive customer feedback and high rankings in satisfaction surveys, though relative performance declined versus peers.

Financial highlights

• Q3 operating income was SEK 20.9 billion, marking the sixth consecutive quarter above SEK 20 billion.

• Net interest income declined 5% sequentially and 10% year-over-year to SEK 11,055m, mainly due to deposit mix shifts, lower rates, and AirPlus consolidation.

• Net fee and commission income rose 13% year-over-year to SEK 6,034m, up 2% sequentially, driven by AirPlus and securities commissions.

• Net financial income increased 45% year-over-year to SEK 3,772m, driven by gains on strategic holdings and strong divisional performance.

• Operating expenses rose 5% sequentially and 12% year-over-year to SEK 7,718m, reflecting AirPlus costs and transaction charges.

• Net expected credit losses were SEK 393 million (5 bps), with asset quality remaining strong.

• Operating profit for Q3 was SEK 11,818m, down 9% year-over-year but flat sequentially.

Outlook and guidance

• 2024 cost target is SEK ≤31 billion, including AirPlus and related implementation charges; underlying cost target of <29 billion reiterated.

• AirPlus expected to be EPS accretive in 2025, with cost and income run rates to converge.

• Dividend payout ratio remains at 50% of EPS, with a continued aspiration for 15% return on equity.

• Basel IV day-one impact expected to be around 50-60 basis points on capital from January 2025.

• Capital buffer target remains 100–300 basis points above regulatory requirement; new SEK 2.5bn share buyback program announced.