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July 22 (The following statement was released by the rating agency)
Fitch Ratings says it expects the major Swedish banks in 2H14 to continue to see robust performance, while maintaining large capital and liquidity buffers - all fundamental factors that are key to supporting their high ratings.
The four large Swedish commercial banks, Nordea Bank AB (AA-/Stable), Svenska Handelsbanken AB (AA-/Stable), Swedbank AB (A+/Positive) and Skandinavinska Enskilda Banken AB (SEB; A+/Positive) are among the highest-rated banks by Fitch (see "Peer Review: Large Swedish and Finnish Banks", available on www.fitchratings.com).
The first half of 2014 was no exception to the major Swedish banks' strong track record. Capital buffers are increasing and Basel 3 common equity Tier 1 ratios ranged between 15.2% (Nordea Bank) to 20.9% (Swedbank) at end-June 2014. With currently limited credit growth expectations in most of the Swedish banks' core operating markets, the Swedish authorities' proposed higher capital requirements for these banks will likely determine the dividend pay-out ratio in 2014.
Traditional full-service banking is the backbone of the major Swedish banks and some sensitivity to lower interest rates remains; the Swedish central bank lowered rates by 50bp to 25bp in July 2014. Cost efficiency programmes are underway at most of these banks, likely to offset revenue pressures. However, these banks' cost efficiency is already strong compared with that of most European peers, which means that potential improvements may therefore be limited until revenues are boosted.