Demand for credit from large companies was "disappointing" in the first half, according to Skandinaviska Enskilda Banken AB CEO Johan Torgeby.
"It has been disappointing. We are speculating as to why," he said during an analyst call for the bank's second-quarter earnings. "You would actually find there is a little bit of a conundrum as there has been good GDP growth, and we've seen strong corporate client performance in our client base."
The bank's total credit portfolio, including both on and off-balance sheet items, totaled 2.159 trillion Swedish kronor at the end of the first half, up from 2.143 trillion kronor at the end of December 2016. Household loans grew by 19 billion kronor during the period, while commercial real estate and corporate loans decreased by 8 billion kronor.
His comments come as the bank reported a spike in half-year profit, which rose to 8.82 billion kronor, a nearly fourfold increase from the 2.23 billion kronor reported for the first half of 2016.
CFO Jan Erik Back said he did not believe that the Swedish housing market was going to experience the large price correction that some analysts expect. Even if there were to be a collapse in house prices, mortgage borrowers would most likely still be able to keep up with repayments, he said.
"We believe that people will continue to pay their debts but will cut down on other types of spending, like restaurants and travel and other things," he said.
Mortgages, along with house building and construction, were a major contributor to net interest income during the half, Torgeby said. Net interest income rose 4% compared with the previous year to 9.63 billion kronor.
But the bank has observed some "cooling off" of the housing market in the larger Swedish cities, especially Stockholm, and is already factoring this into its models, Back said.
"We do capture it in the stress testing. We feed it into loan-to-value models. We feed it into pricing models. It's part of everyday life to keep track of that [house prices]. And as you know, Swedish society is very transparent on that sort of thing," he said.
As of July 13, US$1 was equivalent to 8.36 Swedish kronor.