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Sweden’s banking sector: Facts & Figures

Updated December 2020 – For earlier editions of Facts & Figures click here

The Sweden’s GDP increased by 1.7% in 2019 compared to 2.0% in 2018, according to Eurostat. Household consumption contributed with 0.5% to total growth and public consumption, 0.1%. Exports increased more than imports and therefore net exports added 1.1%. Production of goods rose by 1.4% and services by 1.9%.

Employment increased by 0.6% in 2019. However, unemployment increased to 6.8% in 2019 compared to 6.4% in 2018.

Inflation was relatively stable during 2019 and amounted to 1.8% at year end. The Riksbank’s negative reporate between 2015 and 2019, ended at the beginning of 2020 when it was raised to 0%.

Government debt as a percentage of GDP was 35.1% in 2019, down from 38.8% in 2018.

The four main categories of banks on the Swedish market are Swedish commercial banks, foreign banks, savings banks and co-operative banks. In December 2019, Sweden had a total of 125 banks, comprising 41 commercial banks, 37 foreign banks, 45 savings banks and two co-operative banks.

The number of commercial banks and foreign bank branches in Sweden has increased from 62 in 2009 to 78 in 2019. The increase has occurred above all among Swedish commercial banks, when several credit market institutions have been transformed into commercial banks. The past two years the number of foreign banks has increased from 30 to 37.

In 2019 there were 45 independent savings banks in Sweden. Many of the savings banks are relatively small and several of them have merged during the years.

The major Swedish banks all have a large share of their business abroad. The banking market in the other Nordic countries is important for the major Swedish banks as well as the Baltic States and other countries in northern Europe.

The Swedish state owns one bank, which mainly offers mortgage loans, and has no other ownership in the banking sector.

There are 1,265 bank branches in Sweden in 2019 compared to 1,934 bank branches in 2009. The number of branch offices has diminished slowly in the last ten years due mainly to changing customer behaviour. Most of the bank branches are now cashless. The banking sector has around 41,000 employees in Sweden compared to 90,000 in the whole financial sector.

Normal bank services are almost exclusively performed through mobile phones, tablets and computers. Bank services like mobile payment services, Bank e-ID, e-invoices, etc. have become the new norm. According to the ECB, Swedes uses non-cash payments to a larger extent than most other Europeans. For that reason, the use of cash is declining rapidly.

The most common means of payment in Sweden are the various charge cards and electronic giro systems. Most payments are linked to bank transaction accounts, which facilitate salary deposits, ATM withdrawals, credit and charge card purchases and automatic transfers. In Sweden there are 2,672 ATMs and 276,000 card payment terminals.

Paper-based payments such as giro forms, cheques and cash payments have been replaced by electronic payments of various types. As an example, the use of different kinds of cards has increased from 1,650 million transactions in 2008 to 3,550 million transactions in 2018.

According to a survey by the Riksbank, the Swedish central bank, 93% of Swedish citizens have used a debit card in the past month and 62% have used the Swish mobile payment service. Swish, which was introduced by banks seven years ago and offers real-time account-to-account transfer, has 7.5 million users, which corresponds to around 70% of the Swedish population.

Falling house prices during 2019 cooled the household credit market somewhat. Household lending decreased slightly to 5.0% on an annual basis compared to 5.3% last year. Lending to Swedish non-financial companies also slowed down a bit to a growth rate of 3.9% in 2019 on an annual basis.

Deposits account for 34% of household financial assets in 2019 and is the most common household financial asset. Household deposits in banks grew by 5.0% in 2019 compared to 6.7% the previous year.

Sustainable finance is a high priority in Sweden. Initiatives in the area have started or are planned by both banks and government. Most Swedish banks offer, for example, green mortgages. Over the last years some institutions have started to issue green covered bonds to fund green mortgages.

The Swedish banks are important to the Swedish economy and employ 2% of the workforce, account for 3.8% of GDP and pay 10.5% of the corporate taxes.

The Riksbank has kept negative repo rates from 2015 to 2019 and zero interest rate from the beginning of 2020. The Swedish banks have managed to maintain satisfactory earnings despite the low interest rate environment. In addition, the Swedish banks’ non-performing loan ratio is the lowest in Europe.

According to the financial stability report from Finansinspektionen, the resilience among the major banks in Sweden is satisfactory because of high capital and liquidity ratios, but also because of the major banks’ strong profitability.

Contributor: Christian Nilsson