Swedbank Sjuharad AB

Strong capitalization. Expected continued close ties with major shareholder, Swedbank AB. Robust earnings capacity. Strong regional brand. Concentration risk due to regional operations and narrow market focus. Small size relative to main competitors. The stable outlook on Swedish savings bank Swedbank Sjuhärad AB reflects Standard&Poor's Ratings Services' expectation that the bank will maintain close cooperation with major shareholder Swedbank AB and incur credit losses of between 15 basis points (bps) per year in 2015 and 2016, supporting robust earnings capacity and continued capital accumulation. We expect the bank to retain a higher share of mortgage lending on its own balance sheet, representing about Swedish krona (SEK) 1.5 billion (€160 million) in domestic mortgages over the next two years.

...Small size relative to main competitors. Outlook: Stable The stable outlook on Swedish savings bank Swedbank SjuhSrad AB reflects Standard & Poor's Ratings Services' expectation that the bank will maintain close cooperation with major shareholder Swedbank AB and incur credit losses of between 15 basis points (bps) per year in 2015 and 2016, supporting robust earnings capacity and continued capital accumulation. We expect the bank to retain a higher share of mortgage lending on its own balance sheet, representing about Swedish krona (SEK) 1.5 billion (160 million) in domestic mortgages over the next two years. We could lower the rating if we considered macroeconomic risks in Sweden to be higher than we currently expect, primarily due to increased household debt and residential real estate price appreciation. In addition, we could also take a negative rating action if we saw that Swedbank SjuhSrad's ties to Swedbank were weakening, or if Swedbank SjuhSrad is unable to maintain capital in...

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