Sweden Retail Banking: Opportunities and Risks to 2023

Sweden Retail Banking: Opportunities and Risks to 2023

Summary

Sweden’s total loan balances outstanding (including credit card, personal loan, and residential mortgage balances outstanding) recorded a healthy compound annual growth rate (CAGR) of 6.9% during 2014-18 to reach SEK4.0tn ($452.4bn). The country’s household debt is rapidly rising and ranks among the top 10 countries with high household debt globally.

The majority of the Swedish loan balances outstanding are from home loans, as residential mortgage balances outstanding accounted for 82% of total balances outstanding in 2018, followed by personal loans (16.9%) and credit card loans (1.1%). However, regulatory improvements such as the introduction of stringent amortization rules and declining house prices in the country have negatively impacted the growth of consumer loan balances outstanding. Additionally, a fall in the value of the country’s exports as well as geopolitical tensions such as Brexit and the trade war between the US and China are leading to an increase in economic uncertainty. As a result, we estimate total loan balances outstanding to grow at a comparatively lower CAGR of 4.9% over 2019-23.

Sweden's gross household savings rate stood at 17.7% in 2018 - the highest in comparison to peer countries such as Germany, France, the US, Italy, Canada, Spain, and the UK. Swedish consumers invest much of their wealth via deposits due to a tendency to save and a preference for low-risk investments. Consequently, retail deposit balances in Sweden grew at a CAGR of 8.0% during the review period despite negative deposit interest rates.

Based on our proprietary datasets, this report analyzes the Swedishlending market, with a focus on the consumer lending segment. The report discusses in detail the credit card, personal, and mortgage loan markets, covering market size, competitors’ market shares, and survey insights. The report also provides a market overview and insights on the retail deposit segment. In addition, it covers the key digital disruptors in Swedenretail lending segment.

Scope

- Residential mortgage loans in Sweden registered a high review-period CAGR of 7.2%. The high growth was mainly due to rising house prices, falling mortgage rates, and increasing net household disposable income.
- The personal loans market recorded a review-period CAGR of 5.9%. Rising wages, high employment, and low rates on consumer loans were the main contributors towards this growth.
- Credit card balances outstanding recorded a CAGR of -0.1% during 2014-18. Although the penetration of credit cards is healthy in Sweden (74.2 per 100 individuals), their usage remains stubbornly low due to the consumer preference for debt-free payments and prudent spending.

Reasons to Buy

- Make strategic decisions using top-level historic and forecast data onthe Swedishretail lending industry.
- Identify the most promising lending segment.
- Receive detailed insights into lending in Sweden, including consumerlending.
- Understand the changing market and competitive dynamics by learning about new competitors and recent deals in the retail lending space.
- Receive comprehensive coverage of the retail deposit market in Sweden.