Nordic Credit Rating (NCR) said today that Swedish savings banks are set to enter 2022 with stable performance, after the past year’s uncertainty has left lending portfolios relatively unscathed. As conditions in 2021 turned out to be less severe than anticipated, we revised our assessment of the national operating environment for Swedish banks to the pre-pandemic level in September 2021. NCR retains some caution with regard to new virus variants and renewed restrictions, but does not expect them to have a significant impact on savings banks’ performance or credit portfolios in 2022.
In 2022, the Swedish financial supervisory authority is expected to increase its monitoring of savings banks, especially on risk governance and anti-money laundering monitoring. In addition, European regulators are increasingly cautioning banks about exposure to climate-related risks in their credit portfolios, which several Swedish savings banks have already begun working on.
"Despite the uncertainty of the past two years, Swedish savings banks are entering 2022 with high capitalisation rates and strong asset quality metrics," said NCR credit analyst Ylva Forsberg. "We do not expect increases in capitalisation requirements to affect these banks. However, collaborative efforts on governance could become more important in 2022."
NCR expects interest margins to improve somewhat in 2022, due to the Swedish central bank’s indication of interest rate increases over the coming years. Net profits have been strong for many banks in 2021, due to various factors relating to the pandemic, but these are not expected to be repeated in 2022.