Negative rates not so easy: swedbank ceo

Swedish bank Swedbank reported a higher-than-expected net profit in the third quarter on Tuesday as increased lending volumes in Sweden and the Baltics boosted interest income in spite of

negative interest rates, the bank's CEO told CNBC. Net profit rose to 4.82 million Swedish crowns ($541 million), above a mean forecast for 4.18 billion in a Reuters poll of analysts

and compared with 3.93 billion in the year-ago period. Peter Kollanyi | Bloomberg | Getty Images Speaking on CNBC on Tuesday, Chief Executive Birgitte Bonneson said she thought the

bank's ability to deliver net interest income of 6.06 billion crowns versus a forecast of 5.86 billion crowns and last year's 5.81 billion crown figure was "really well

done", particularly in a quarter containing summer months and with the ongoing spectre of negative interest rates hanging over Sweden's lenders. Responding to recent comments in

the _Financial Times_ from Riksbank governor, Stefan Ingves, in which he called the impact of negative rates "undramatic", Bonneson sounded a more pessimistic tone on the monetary

policy strategy. "I think negative interest rates are not such an easy instrument to use. This is exactly what you see here - I'm not sure it will help the situation to go further

into negative territory to be frank," she said. Turning to the housing market and picking up on further comments from Ingves in which he recently said Sweden's housing market was

being mismanaged, the CEO of the Nordic region's biggest mortgage lender pointed to structural issues causing distortion. "The underlying problem is there's not enough new

houses built in Sweden. There's a huge undersupply and this is the root cause of this. We need about 700,000 new houses in the next 10 years and production is around 50 thousand at best

a year," she articulated. "So this is a huge problem, it drives prices up, it's not good," Bonneson concluded. Despite these concerns, the Swedbank CEO emphasized that

given rigorous customer checks and balances, she is "quite comfortable" with the quality of the assets today. As we near the end of a hugely challenging year for the European

banking sector, Bonneson pointed out the strengths of Swedbank's business, saying this quarter's strong earnings reflected a high-quality performance without any significant

one-off items. She noted Sweden's healthy growth rates and the lender's ability, in its capacity of providing retail banking to almost half of the population and in having the

largest number of corporate clients within the four-country region, to capture that growth. This combined with maintaining strict cost discipline helped the bank to achieve its return on

equity (ROE) target of 15 percent during the quarter, she explained. Asked whether market observers need not retain such a negative outlook for European banks overall, tarring varied lenders

in different countries with the same brush, Bonneson agreed that investors would benefit from doing their homework. "I definitely think so! As an investor you have choices. You can

invest in banks with a payout 75 percent in dividends and if you look at our share price we have done really, really well in this past quarter. Or you can choose other banks, so to

speak." _Reuters contributed to this report._