Our 'BBB+' issuer and issue ratings on Sparbanken Västra Mälardalen (Sparbanken VM) are unchanged following the publication of its year-end results.
Improved core earnings performance
Despite a reduction in overall revenues and profits, core pre-provision earnings (net interest income and net fee and commission income net of expenses) rose by 19% and core cost efficiency improved to 53% from 57% a year earlier. Pre-provision earnings were somewhat ahead of our expectations, and we expect the bank to continue to improve risk-adjusted earnings and cost efficiency metrics through 2022.
Despite the impact of the ongoing COVID-19 pandemic, business volumes and lending grew by 7.8% and 5.9% respectively, improving net interest income by 8.3% and fee revenues by 5.9% in 2020. The bank's bottom line was negatively impacted by regulatory guidance to withhold dividends, which negatively affected dividend revenues from
Sparbanken VM's 2021 revenues stand to benefit from renewed
Loss performance exceeds expectations given pandemic
Sparbanken VM reported
Capital remains strong
Sparbanken VM's common equity Tier 1 ratio fell somewhat in the course of 2020 as a result of growth in the risk exposure amount outpacing profits, including a
This commentary does not constitute a rating action.
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