Swedish savings banks' asset quality and earnings are likely to fall during 2020 as the response to the COVID-19 pandemic reverses strong operating profits and balance sheet improvements recorded in 2019, Nordic Credit Rating (NCR) said in a report on the sector published today.
"Swedish savings banks face an uncertain future on many fronts, and we expect higher losses and earnings pressure, in particular if Swedbank cancels its dividend," said NCR analyst Sean Cotten, who wrote the report.
"We note that of the six Swedish savings banks which reported in the first quarter of 2020, two reported material increases in their non-performing loans (NPLs) levels," Mr Cotten said.
In 2019, many Swedish savings banks saw peak operating profits driven by low funding costs, strong financial gains, growing balance sheets, and a 9% increase in dividend payments from their shareholdings in Swedbank, which has strong linkages with much of the country's savings bank sector.
In today's report, NCR compares 24 Swedish savings banks and reviews their earnings, capital, asset quality and exposures as well as their interlinkages with Swedbank AB and its subsidiaries.
Analyst contact details:
Sean Cotten, +46 735 600 337, sean.cotten@nordiccreditrating.com
Geir Kristiansen, +47 90784593, geir.kristiansen@nordiccreditrating.com