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Sweden’s banking sector: Facts & Figures

Updated December 2021 – For earlier editions of Facts & Figures click here

Sweden’s GDP decreased by -2.8% in 2020 compared to an increase of 2.0% in 2019, according to Eurostat. Due to the pandemic there was a sharp drop in household consumption, net exports and investments in Q2. The GDP recovered during the third quarter, but due to the second wave of Covid-19 during the fourth quarter the recovery levelled out. Unemployment increased to 8.3% from 6.8%.

Inflation slowed to 0.5% at year-end compared to 1.8% in 2019. Also, core inflation (Consumer Price Index with fixed interest rate) decreased to 0.5%. The Riksbank’s negative reporate between 2015 and 2019, ended in the beginning of 2020 when it was raised to 0%. The zero reporate continued during the whole year and in year 2021.

Government debt as a percentage of GDP grew from 35.0% to 39.9% in 2020, mainly due to government actions to support the economy from the effects of Covid-19. The rise in government debt is equivalent to €28.2 billion in 2020. In comparison the government debt fell by €14,6 billion in 2019.

The four main categories of banks on the Swedish market are Swedish commercial banks, foreign banks, savings banks and co-operative banks. In December 2020, Sweden had a total of 121 banks, comprising 42 commercial banks, 32 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 2010 to 74 in 2020. The increase has occurred above all among Swedish commercial banks when several credit market institutions have been transformed into commercial banks. The past year the numbers of foreign banks have dropped slightly to 32.

In 2020, 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 were 1,231 bank branches in Sweden in 2020 compared to 1,883 bank branches in 2010. 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 slightly more than 41,000 employees in Sweden compared to 96,000 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 normal. 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 2,508 ATMs and 252,000 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 1,773 million transactions in 2009 to 3,703 million transactions in 2019.

According to a survey by the Riksbank, the Swedish central bank, 96% of Swedish citizens have used a debit card in the past month and 86% 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 7.9 million users, which corresponds to around 75% of the Swedish population.

Increasing house prices during 2020 is an important explanation why household credit market has increased. Household lending increased to 5.7% on an annual basis compared to 5.2% last year. Lending to Swedish non-financial companies slowed down to a growth rate of 3.3% on an annual basis in 2020 compared to 3.9% last year.

Deposits account for 35% of the household financial assets in 2020 and is the most common household financial asset. Household deposits in banks grew by 11.0% in 2020 compared to 5.0% 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. The last years some institutions also started to issue green covered bonds to fund the green mortgages.

The Swedish banks are important to the Swedish economy and employ 2% of the workforce, account for 4.5% of GDP and pay 9% 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 among other things high capital and the major banks’ strong profitability. The Covid-19 pandemic has increased the risks, but Swedish banks have so far managed the crisis well.

Contributor: Christian Nilsson