Konkurrensen i den svenska banksektorn 2025
The Swedish banking market has high consumer mobility and market shares shift over time
An indicator of competition is that customers respond if a bank's prices are uncompetitive relative to their quality, i.e., that banking customers change banks if the prices they are paying are higher than the prices charged by competing banks. As analysed in the previous report, Sweden has high consumer mobility.
The European Commission found that from 2017-2022, Sweden had the highest share of customers who have changed providers of financial products - across all types of products. This implies that the Swedish banking market has low barriers to switching banks, which increases the competitive pressure on banks.
Small banks are gaining market shares from the larger banks in Sweden. From 2014 to 2024 smaller banks had a large share of net credit growth, and their market share increased over the same period. This suggests a dynamic banking market with sound competition. The same picture is evident in the Swedish mortgage market, as market shares change between banks from year to year.
At the same time, market concentration in the Swedish banking sector is below the average of comparable countries. If a sector is concentrated, few market participants risk having market power – which does not seem to be the case in Sweden.
Swedish banks are cost-efficient, suggesting they are working to reduce costs due to competitive pressure
Swedish banks have lower operational costs than comparable EU countries.
Further, we find that Swedish banks pass on their low costs to customers. Banking customers in Sweden are thus offered lowpriced financial services. Historically, Swedish mortgage rates and interest rates on other loans have been among the lowest in Europe. Despite a rate hike in 2022, when the Swedish central
bank increased interest rates, Swedish interest rates are once again among the lowest among the benchmark countries in 2023 and 2024.
Profitability for banks varies over the business cycle
Banks’ returns are cyclical. Recent increases in profits should be seen in this context. Prices and profits in the Swedish banking market rose during 2023 and 2024 – and in general Swedish banks currently have higher returns on equity than banks in other European countries. However, increased profits are seen across Europe due to increasing interest rates on lending, stickiness in deposit rates, and no increase in losses yet, impacting the banks’ performance positively.
Overall, we find that Swedish banks pass on a higher share of the interest rate increase into their deposit rates than countries in the Euro area, i.e., there is less price stickiness in Sweden.
Sweden has an efficient lending system with low losses
In the period from 2017-2024, annual loss rates for Swedish banks were close to zero – the lowest among benchmark countries. Low losses are an indication of an effective and secure system where banks adjust their assessments of e.g., property values through a business cycle. At the same time, Sweden has an efficient judicial system, and foreclosure auctions can be carried out quickly and easily, securing low losses for banks even in the case of defaults.
The efficient lending system is also expressed in a low yield spread between Swedish mortgage loans and treasury bonds, which has been 1.9 percentage points on average in the period 2009-2024. This shows a high liquidity in covered bonds that is comparable to the liquidity of Swedish government bonds – due to high investor confidence. However, the yield spread in Sweden is above yield spread in Denmark.1
Differences in banks’ profitability across countries are driven by macroeconomic differences
Between 2019 to 2024, Swedish banks realised a return on equity of around 12.9 per cent, which is the highest among countries in our comparison. However, international comparisons of profitability are much affected by differences in business cycle situations across Europe: Here Sweden is at the top, while banks in e.g., Germany, France, and the Netherlands have seen higher impairment levels in the period, lowering returns for equity holders.
We also find that the profitability of Swedish banks is at average compared to other large listed companies within Sweden.
Overall, we find no clear evidence of a lack of competition in the Swedish banking sector
Prices and profits for the Swedish banking sector were higher in 2023 and 2024 than in recent years, but this should be seen in the context of a changing macroeconomic environment with increasing interest rates on lending.
Based on the analysed metrics of competition, we find no clear evidence of a lack of competition in the Swedish banking sector. Instead, it suggests that the Swedish banking sector is relatively efficient compared to other countries.