Skandinaviska Enskilda Banken AB (publ)

Large Nordic corporate and financial institutions business franchise. Strong risk-adjusted capitalization underpinned by stable earnings. Sound asset quality and low loan losses in the corporate and retail loan portfolio. Concentration of comparably large single-name exposures. Somewhat lower cost efficiency than domestic peers, but improving. Domination of funding profile by wholesale funding and corporate deposits. The stable outlook on Skandinaviska Enskilda Banken AB (publ) (SEB) reflects our view that the bank will maintain resilient earnings and risk-adjusted capital (RAC) above 10% over the next two years as Sweden benefits from a benign economic environment and the domestic housing market adjusts to higher housing stock volumes and stricter amortization requirements for new residential mortgages. We also anticipate that SEB will build a

...Outlook: Stable The stable outlook on Skandinaviska Enskilda Banken AB (publ) (SEB) reflects our view that the bank will maintain resilient earnings and risk-adjusted capital (RAC) above 10% over the next two years as Sweden benefits from a benign economic environment and the domestic housing market adjusts to higher housing stock volumes and stricter amortization requirements for new residential mortgages. We also anticipate that SEB will build a considerable additional loss-absorbing capacity (ALAC) buffer in the coming years as it fulfills its minimum requirements for own funds and eligible liabilities (MREL), likely by replacing a large share of senior unsecured debt with senior subordinated debt instruments through 2022. As such, we believe that SEB's ALAC buffer will eventually exceed 5% of S&P Global Ratings' risk-weighted assets (RWAs) and therefore we already incorporate one notch of ALAC support into our ratings on SEB. We could lower our ratings on SEB if excessive payouts or...

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