On Monday, Nordea presented a record profit for the first quarter of the year. During Tuesday, Swedbank’s and SEB’s reports followed, which also showed strong increases in profits.
Above all, it is the difference between the lending and deposit interest, the so-called net interest rate, that is behind the banks’ profit increases.
– The reason for that is that the savings rates have not been raised to the same extent as the policy rate has been raised and then you have been able to make money on the difference between them, says Frida Bratt, savings economist.
Nordea’s net interest income rose 40 percent to SEK 21 billion. This can be compared with a net interest of SEK 15 billion a year earlier. Swedbanks lifted to SEK 12.8 billion, which can be compared with a net interest income of SEK 7 billion a year ago.
SEB also showed a substantial increase in profits. Operating profit landed at SEK 12,093 million for the second quarter of the year. This can be compared with the profit of SEK 7,234 million in the corresponding quarter a year earlier.
– The banks are living very well right now and we’ll see how long the rise in interest rates continues, says Frida Bratt.
The villa owners: “Horrible”
These are figures that make representatives of the interest organization Villaägarnas see red.
– Mortgage interest rates are skyrocketing at the same time as Swedish households are burdened by increased costs. And then the banks take the opportunity to increase their profit margins. It’s hideously provocative, Håkan Larsson, Chief Economist Villaägarna.
He continues:
– While mortgage interest rates were quickly raised to around 4.5 percent, savings rates are lagging behind. The average for savings interest is around 1.7 percent. It is on this margin that the banks make serious money. It is enough to state that competition is bad in the Swedish banking market and both the Financial Supervisory Authority and the Minister of Finance must now act.
What do you think they should do?
– In Great Britain, the British Financial Supervisory Authority has summoned the banks to discuss why savings rates are not raised at the same rate as the policy rate. We believe that the Swedish Financial Supervisory Authority must do the same and not tacitly accept the high profit margins. It is especially important in this market with a lack of competition. The finance minister must also act. Here, the state has a tool through the state bank SBAB. It’s time they act to push down mortgage rates and improve savings rates.
Svantesson: “A priority issue”
Finance Minister Elisabeth Svantesson says that she does not rule out that more political initiatives may be needed to increase competition in the Swedish banking market.
“I have recently had conversations with each of the major banks in Sweden. My message has been that in difficult times with high inflation, it is important that various actors take their responsibility,” she writes in an email to TV4 Nyheterna.
Furthermore, she writes that an investigation into a possible change to the calculation template for interest difference compensation is to be presented after the summer.
“It will be a priority issue for the government to take forward, which aims to make it less costly for the customer to cancel a fixed loan early and thus easier to change banks”.
Swedbank: Will cover risks
Swedbank’s CEO Jens Henriksson is satisfied with the quarter’s figures.
– Today we deliver a strong result, a return on equity of 20.4 percent, he says to TV4 Nyheterna.
The fact that the banks are currently making more money, he says, is due to the high interest rates and customer deposits. On the other hand, he believes that the margin on mortgages has gone down “pretty much” and that they earn less on that front.
But is it ethically right to earn so much more on deposits?
– We have raised deposit rates, most recently a week or so ago when we raised both mortgage rates and deposit rates by 0.25 percent. So I would say we have raised rates here.
Jens Henriksson believes that it is fundamentally good to have profitable banks because they have a buffer to deal with possible economic crises.
– The difference between what we get in on one side and what we lend out on the other side, that’s the business we do, it has to cover the risk that some customers don’t pay back. It should cover costs because we have a fantastic app and more than 1,000 people who work to check for money laundering, he says.