Swedbank AB

Credit Highlights The outlook is stable because we anticipate that Swedbank will deliver resilient earnings and maintain a solid level of capital, with an RAC ratio of 14.25%-14.75%, over the next 18-24 months. The outlook also reflects our view that a one-notch downward revision of the stand-alone credit profile to 'a-' is unlikely to affect the ratings. This is due to Swedbank's high ALAC buffer and the additional notch of ALAC uplift that would be available in this scenario. Although unlikely at this stage, we could downgrade Swedbank if the ongoing money-laundering investigations still pending in the U.S. were to reveal material existing weaknesses in the risk management and governance framework and/or meaningfully harm the bank's financial strength, franchise, and

...S&P Global Ratings expects Swedbank will maintain its leading retail market position in Sweden. We believe Swedbank will continue to hold a strong market position in Sweden with about 20% of the retail market and 24% of lending to small and midsize enterprises (SMEs). While net interest income is set to decline over 2024-2025, we expect this will be somewhat offset by an increase in noninterest income driven by improved market conditions, which may spur a rebound in asset management and card-related fees. Therefore, we forecast pretax profit will be about Swedish krona SEK30-SEK35 billion (2.6-3.0 billion) over the next two years. Asset quality is expected to remain intact over the next 12-24 months. Nonperforming assets as a share of lending remained stable at 0.5% in the first half of 2024, after having slightly increased in the second half of 2023 due to a challenging climate for small and midsize enterprises and some larger corporates. Losses have remained manageable,...

Full Report