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Investing.com -- Citi remains cautious on Swedbank (ST:SWEDa), maintaining its stance as one of the bank’s “least preferred Nordic banks on a 12-month view” and rolling over its expiring Negative Catalyst Watch into a Negative Short-Term View.
The Wall Street firm points to several near-term risks that could weigh on performance.
One of Citi’s key concerns is Swedbank’s net interest income (NII) trajectory. Analysts note that “NII sensitivity has been much lower in the rate cutting cycle than in the hiking cycle,” and expect a period of underperformance relative to consensus expectations through 2025–2027.
Second-quarter results may also reflect pressure on asset management fees, driven by market volatility and currency effects. The Swedish krona appreciated by roughly 9% against the U.S. dollar on average in the period, which Citi believes will drag on fee income.
Citi also sees potential headwinds in the mortgage market. While Swedbank has stated it sees no need to adjust pricing, Citi argues the bank “may likely need to cut pricing on mortgages to combat market share loss.”
Finally, investor hopes tied to regulatory clarity may need to be tempered. Citi cites recent reporting by FinansWatch suggesting that “any verdict in the U.S. investigation (a potential positive cited by investors) may be delayed.”
Earlier this year, Sweden’s Financial Supervisory Authority fined Swedbank 12.5 million crowns ($1.29 million) for breaching rules intended to protect sensitive information relevant to national security.
The regulator noted that the violations occurred between July 2022 and January 2024, but emphasized they were unintentional and did not lead to any actual harm.
Swedbank responded by saying it had addressed the issues over a year ago.