Swedbank AB

The outlook is stable because we believe that Swedbank will be able to deal with a softer economic outlook and maintain resilient earnings and solid capital, with a RAC ratio of 13.5%-14.5% over the next 18-24 months. Swedbank's current outstanding bail-inable liabilities lead to an ALAC (additional loss-absorbing capacity) buffer that exceeds our 3% threshold. We believe that this will continue to exceed 3% of our RWA metric over the medium term to ensure it fulfills its MREL (minimum requirements for own fund and eligible liabilities), and as a result we factor in one notch of uplift for ALAC support in our long-term rating. We could lower our rating if the worsening economic scenario meaningfully hampers Swedbank's capitalization, with the

...S&P Global Ratings expects Swedbank will strive to maintain its leading retail market position in Sweden. Over the past two years, strong mortgage demand has driven increasing competition among Swedish retail lenders. We believe that Swedbank will continue to hold about 20% of the retail market and 24% of lending to small and midsize enterprises (SMEs) in Sweden, where increasing net interest margins are likely to offset softer non-interest income over the coming quarters. To that end, we recognize that the Swedish and Baltic businesses are facing macroeconomic headwinds via inflationary pressures and a weaker growth outlook that will present challenges for the bank. For now, we forecast net profits of about Swedish krona (SEK) 18 billion-20 billion (around 1.7 billion-1.8 billion) and a cost-to-income ratio increasing to 47%-48% over the next two years....

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