SEB profit tops forecast as trading gains offset loan loss rise
Bank will not appeal FSA fine over money laundering controls
Loan losses increase significantly due to pandemic
CEO: 2020 forecast for SEK 6 bln credit loss increasingly likely
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STOCKHOLM, July 15 (Reuters) - Swedish bank SEB SEBa.ST reported a smaller-than-expected fall in net profit for the second quarter on Wednesday as robust income from its trading arm offset pandemic-related credit loss provisions and a fine for inadequate money laundering controls.
Net profit at Sweden's top corporate bank fell to 3.5 billion Swedish crowns ($385 million) from a year-ago 4.9 billion, but beat a mean forecast of 3.2 billion in a Refinitiv poll of analysts.
"The consequences of the Covid-19 pandemic influenced the reported financial results, while the underlying business continued to show resilience," CEO Johan Torgeby said in the report.
The bank said it will not appeal the Swedish FSA's 1 billion crown fine for failures in SEB's anti-money laundering controls in the Baltics, adding, however, that it did not agree with parts of the watchdog's decision.
Loan loss provisions, a figure closely watched in the wake of the steep economic slump due to the pandemic, rose to 2.7 billion crowns from a year-ago 386 million, worse than a forecast of 1.7 billion seen by analysts.
Torgeby said SEB's previous forecast for credit losses of 6 billion crowns this year, nearly triple the amount reported for 2019, was looking increasingly likely. "With another quarter having passed, we believe that the probability of staying at that level has increased," he said.
Fee and commission income fell to 4.4 billion crowns from 4.7 billion a year ago, as payment and card fees decreased amid the pandemic, the bank said.
Interest income, which includes income from mortgages, increased 6% to 6.05 billion crowns from 5.7 billion a year ago, despite the negative effects of a rate cut in the United States.
($1 = 9.0900 Swedish crowns)
(Reporting by Colm Fulton; editing by Niklas Pollard)
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