Our long-term issuer ratings on Swedish savings banks Sparbanken Alingsås AB, Sparbanken Lidköping AB, Sparbanken Skaraborg AB (publ), Sparbanken Västra Mälardalen, Sörmlands Sparbank AB (publ), and Varbergs Sparbank AB (publ) remain unchanged following Swedbank AB's announcement of a larger-than-anticipated dividend and revised dividend policy. Swedbank raised its payout to 70% of 2024 profits, and increased its dividend policy to 60-70% of net profits, from 50% previously.
As of 31 Dec. 2023, these banks held between 3.1 and 9.2 million shares in Swedbank, receiving dividend income ranging from 10-30% of 2023 operating income. In our 2024 forecasts, we included dividends per share around SEK 12, reflecting a 50% dividend payout ratio and our conservative forecast. The new announced payout ratio implies an increase to dividend income of 20-40%.
While we exclude Swedbank dividends from our earnings assessments for these banks, the income supports the banks' already strong capitalisation. We believe there is a strong chance that Swedbank will cancel or significantly reduce its dividend when it receives a verdict and potential fine from U.S. authorities, although the timing remains uncertain. Additionally, the EU Capital Requirements Regulation (CRR3) took effect on 1 Jan. 2025, which we expect will enhance capital ratios further for these banks.
This commentary does not constitute a rating action.
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com