Swedbank AB

The positive outlook reflects our view that Swedbank is reaching a mature state in its governance, risk management, and compliance overhaul. It can shoulder a potential fine from the remaining money-laundering investigations, given its strong earnings generation and robust capital levels. We anticipate Swedbank's earnings will remain stable and support a RAC ratio of 14%-15% over the next 12-24 months. Although unlikely at this stage, we could take a negative rating action on the bank if the ongoing U.S. money-laundering investigations reveal material and unrectified weaknesses in its risk management and governance framework or meaningfully harm the bank's financial strength, franchise, and reputation. Similarly, we could revise the outlook to stable if Swedbank's asset quality markedly deteriorates beyond our base-case

...S&P Global Ratings expects Swedbank to maintain its leading retail market position in Sweden. We believe that Swedbank's strong market position in Sweden and the Baltics, with a 20% market share in customer loans in Sweden and 36%-40% in the Baltics, supports its resilient revenue generation even as interest rate decline. We estimate that headwinds for the net interest income, which accounted for about 66% of total income in 2024, will be partly offset by growth in asset management, card and payments, and other fee income. In our opinion, the bank's outstanding operating efficiency, with a cost-to-income ratio of 34% in 2024 and a continued low level of credit losses, should result in a sound net profit of Swedish krona (SEK) 26 billion-SEK 28 billion over 2025-2026, compared with SEK 34.9 billion (3.1 billion) in 2024....

Full Report