Johan Ahlander, Niklas pollard

STOCKHOLM (Reuters] – The Swedish banks SEB, and Handelsbanken each reported better-than expected quarterly profit increases on Wednesday. They sent their shares higher despite the uncertainty surrounding the Ukraine war and rising inflation.

Two banks located within shouting distance from each other in Stockholm made strong revenue during quarters of global turmoil. They earned large amounts of income both from corporate clients and mortgages. However, loan losses remained minimal.

SEB’s net profit rose to 6.40 Billion Swedish crowns (652 Million), beating the average forecast of 4.93 Billion crowns, according to a Refinitiv poll.

Handelsbanken saw its operating profits rise to 6.59 billion Swedish crowns ($671 Million) from 5.31 trillion crowns last year.

SEB shares rose 5.0% in the wake of posting what UBS described as “a very strong quarter” (a research note which highlighted lower revenues and higher costs). Handelsbanken shares rose 4.1% to 0835 GMT. This was higher than the European banking index.

Although the strong recovery from pandemic has boosted the business climate in Sweden, inflationary pressures and Russia’s invasion in Ukraine have strained markets and raised living expenses.

Moscow called the operation a “special military operations”. The war has already raised inflation to levels never seen before in the 1990s. It also left central banks (including Sweden) poised for raising interest rates. This uncertainty will affect households as well as banks and the economy.

Johan Torgeby (CEO SEB) stated at a press conference that “For the first-time in many decades, we’re now sitting here discussing inflation expectations as well as interest rate expectations which are clearly different.”

“Central banks will likely start to move internationally and we’ve also witnessed inflation numbers rise up to high levels compared with what we’ve experienced in recent years.”

Torgeby explained that rising gasoline prices mean households and business now face higher expenses, while inflation has spread wider across commodities. Both indicate that we are in for a turbulent time.

Handelsbanken stated that the Ukraine conflict has added uncertainty, while Sweden’s central banks expected to increase interest rates. This would impact demand.

Carl Cederschiold (CFO of Bank) stated, “It would dramatically change the situation.”

($1 = 9.8095 Swedish crowns