Nordic niche banks are expected to enter 2026 with stronger credit profiles, according to a report published by Nordic Credit Rating (NCR). Improved capital buffers, normalising asset quality, and progress in cost efficiency are supporting growth, particularly in scalable credit card and payment products. However, differentiation within the sector is becoming more pronounced and some banks continue to undergo transformations or face weak asset quality.
"We generally expect Nordic niche banks to enter 2026 on a stronger footing," said NCR analyst Sean Cotten. "While regulatory scrutiny of the consumer lending sector remains elevated, we believe that regulatory risk for larger Nordic niche banks has diminished. In addition, we see capital optimisation, asset quality normalisation, and further progress in strategic transformations as key themes supporting Nordic niche bank credit quality in 2026."
Capital optimisation is a key theme, with banks reshaping balance sheets through redomiciliations, risk-transfer solutions, and subordinated capital issuance. This increased flexibility has supported growth, technology investment, and portfolio acquisitions. Weaker banks continue to face strategic decisions, including raising equity or consolidating.
Asset quality is normalising as credit losses decline, supported by lower interest rates and easing inflationary pressures. We also expect non-performing loan metrics to decrease due to improving alternatives for offloading NPLs and mitigating their capital impact.
In addition, multi-year transformation programmes are resulting in lower cost bases and more resilient earnings. Banks further along in their transformation are reporting stronger returns on equity and lower cost-to-income ratios. Despite execution risks, scalable operations are supporting structurally lower cost bases and improved credit resilience, contributing to a positive outlook for the sector in 2026.
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com