HSBC moves Handelsbanken, Swedbank to 'hold' on weak Q1

Svenska Handelsbanken AB

04/04/2025 09:00

** HSBC downgrades Swedish lenders Svenska Handelsbanken SHBa.ST and Swedbank SWEDa.ST to "hold" from "buy," citing rate cuts and lower NII expectations in Q1

** Stocks are down around 4% amid a wider selloff in European lenders sparked by US tariffs, with European banking index .SX7P falling 5%

** The broker expects lower NII due to pressure from foreign exchange rates, higher Stockholm Interbank Offered Rates (STIBOR)

** Deposit flows which previously supported NII are also "a point of caution," as household inflows are flat quarter-to-date, adds HSBC

** However, despite cautious short-term outlook, weak results could be an opportunity to cash in on better long-term outlook, the broker says

** It expects strong Swedish GDP growth, as lower interest rates drive up private consumption

** Together with strengthening credit demand and a recent shift in interest rate forwards, this could imply a better NII outlook in H2, says HSBC

** HSBC keeps its "hold" rating on SEB SEBa.ST and Nordea

 (Reporting by Vera Dvorakova)

 ((vera.dvorakova@thomsonreuters.com))