Nordic Credit Rating (NCR) said today that the first quarter of 2022 proved less eventful for Nordic consumer banks than for capital markets, with recent trends continuing. Credit provision and non-performing loan metrics fell, net interest margins remained under pressure and deposit inflows remained strong. However, the seismic shifts in inflation and interest rates are expected to impact consumer banks and their customers over time.
"In our view, individuals with already weak financial profiles are more likely to be affected by food and energy price inflation," said NCR credit analyst Sean Cotten. "Homeowners also face material increases in interest costs and housing prices are coming down from record highs. We believe that these factors could affect spending patterns and demand for consumer loans."
The consolidation trend continued in the first quarter, with Danish consumer challenger bank Lunar Bank announcing a cash offer for all shares in Instabank. Despite an initial rejection by the Norwegian regulator, Lunar remains confident that the transaction will be completed by 30 Sep. 2022.