Savings banks rated by Nordic Credit Rating (NCR) benefited from strong earnings throughout 2024, the agency said in a report released today, with many also reporting net loss reversals for the full year. NCR expects Swedish savings banks to benefit from increased borrower demand in 2025 after three years of stagnant loan growth – despite continuing economic uncertainties.
In January, Sparbanken Rekarne and Sparbanken Västra Mälardalen announced plans to merge pending regulatory approval. If the merger goes ahead, it would be the third consolidation in the sector in as many years and the largest since 2014. In another key development, Swedbank AB, in which most domestic savings banks hold shares, announced an increase in dividend policy to 60-70% of net profit from 50% in recent years.
"We expect loan demand in the entire banking market to pick up in 2025," said NCR analyst Ylva Forsberg. "However, many of the savings banks could face sluggish mortgage loan growth in areas of low housing demand."
While interest rate margins are likely to continue to decline in 2025, NCR expects them to stabilise at stronger levels than before the recent cycle of interest rate rises that began in 2022. After several years of unpredictable economic conditions that have caused volatility in modelled loan-loss provisions, NCR expects greater stability, barring significant movements in large lending exposures or an increase in geopolitical volatility.
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com