Swedish savings banks are expected to enter 2023 well equipped for a potential recession, according to a report published today by Nordic Credit Rating (NCR). Rising interest rates are impacting both households and companies, but higher interest rates are generally beneficial for banks, as they enable higher margins. Their effect on financial performance, however, is offset by expectations of increasing loan losses, driven by IFRS 9 models responding to negative macroeconomic indicators and difficulties for customers caused by high inflation, high interest rates and the economic slowdown.
"We believe high inflation, energy costs and interest rates will hit the economy even more in 2023," said NCR credit analyst Ylva Forsberg. "We expect loan losses and non-performing loans to increase and loan growth to slow. However, there is a better opportunity for banks to increase margins, with interest rates set to remain well above zero for the foreseeable future."
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com