Sparbanken Sjuharad AB

Strong capitalization. Close ties with major shareholder, Swedbank, which we expect will continue. Robust earnings capacity. Concentration risk due to regional operations and narrow market focus. Small size and market share relative to main competitors. S&P Global Ratings' stable outlook on Sparbanken Sjuhärad reflects our view of the stable operating environment in Sweden, where the banking sector is likely to remain resilient despite modest house price decreases. We believe Sparbanken Sjuhärad will maintain its established business position, with close ties to Swedbank, and expect capital and earnings will remain very strong within the next two years. We could lower our ratings if Sparbanken Sjuhärad's ties with Swedbank weakened considerably, or if its capital decreased materially below our 15% threshold due

...Small size and market share relative to main competitors. Outlook: Stable S&P Global Ratings' stable outlook on Sparbanken SjuhSrad reflects our view of the stable operating environment in Sweden, where the banking sector is likely to remain resilient despite modest house price decreases. We believe Sparbanken SjuhSrad will maintain its established business position, with close ties to Swedbank, and expect capital and earnings will remain very strong within the next two years. We could lower our ratings if Sparbanken SjuhSrad's ties with Swedbank weakened considerably, or if its capital decreased materially below our 15% threshold due to higher-than-expected losses outpacing lending growth. In addition, the rating could come under pressure if the bank's overall risk position deteriorates, with a nonperforming loan (NPL) ratio considerably higher than the average for Nordic peers, and top-20 loan exposures as a share of total adjusted capital increasing materially. A positive rating action...

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