Bulletin: Swedish Banks Can Weather A Housing Market Correction; BICRA Group Remains '2'

STOCKHOLM (S&P Global Ratings) Nov. 10, 2022--S&P Global Ratings believes Swedish banks face a correction phase via the housing market, but asset quality deterioration will remain manageable. Following a review of our Banking Industry Country Risk Assessment we have maintained Sweden in group '2'. The economic and industry risk scores remain '2' and '3' and we still view both trends as stable. The reversal of the long-standing trend of ultra-low interest expenses has started to hit household confidence and consumption. We believe this will lead to a softer growth outlook and now expect a 0.3% real GDP contraction in 2023. Sweden 'AAA/A-1+' Ratings Affirmed; Outlook Stable, Oct. 28, 2022 Banking Industry Country Risk Assessment Update: October 2022, Oct. 27, 2022

...November 10, 2022 STOCKHOLM (S&P Global Ratings) Nov. 10, 2022--S&P Global Ratings believes Swedish banks face a correction phase via the housing market, but asset quality deterioration will remain manageable. Following a review of our Banking Industry Country Risk Assessment we have maintained Sweden in group '2'. The economic and industry risk scores remain '2' and '3' and we still view both trends as stable. Dynamics in Sweden's housing market are shifting after unprecedented COVID-19-related support measures. Government support, all-time-low interest rates, and work-from-home trends contributed to an about 24% rise in housing prices between April 2020 and April 2021, and similarly an increase in household debt. This has been followed by an about 13% fall in prices from an April 2022 peak after Sweden's central bank aggressively increased rates this year in response to surging inflation (see chart 1)....

Bulletin