Schwyzer Kantonalbank

The stable outlook on Schwyzer Kantonalbank (SZKB) mainly indicates that we expect the likelihood of support from the Canton of Schwyz to remain unchanged in the next two years. Our rating on SZKB remains sensitive to our assessment of the cantonal owners' ability and willingness to support the bank. A weakening in SZKB's role for or link with the canton, or detrimental changes in the statutory guarantee, could lead us to revise down our support assessment of the bank's status as a government-related entity (GRE). However, we do not envisage such a scenario in the next two years. Also, if this were to happen, we would expect that SZKB's existing obligations would be grandfathered. It is unlikely we would revise

...We expect Schwyzer Kantonalbank (SZKB) to weather a deteriorated economic environment thanks to its highly resilient customer base and prudent lending policies. The fallout from the Russia-Ukraine conflict on the Swiss economy and financial sector is more contained than in other Western European countries. We note that SZKB does not face any direct impact from the Russia-Ukraine war. Furthermore, the bank is not exposed to any sectors overly vulnerable to the current energy crisis. We also expect Swiss households to remain financially healthy. Resilient credit conditions in SZKB's home canton, coupled with ongoing prudent risk management and cautious lending standards safeguarding SZKB's strong asset quality, support SZKB's business stability. Around 70% of SZKB's portfolio is well collateralized residential mortgage lending. While real estate prices in the Canton of Schwyz recently experienced the highest growth nationwide, we do not expect an imminent market correction due to ongoing...

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