Competition in the Swedish Banking Sector 2026
Executive summary
Market shares shift over time in Sweden, and the Swedish banking market has high consumer mobility
Small banks are gaining market share from the larger banks in Sweden. From 2015 to 2025, smaller banks had a large share of net credit growth, and their market share increased over the same period. This suggests a dynamic banking market with sound competition. Similarly, in the Swedish mortgage market, banks' market shares shift from year to year.
Market concentration in the Swedish banking sector is below the average of comparable countries. If a sector is concentrated, few market participants risk having market power, which does not seem to be the case in Sweden.
An indicator of competition is that customers respond if a bank's prices are uncompetitive relative to their quality, i.e., that banking customers change banks if the prices they are paying are higher than the prices charged by competing banks.
We find that Sweden has high consumer mobility. Among the countries compared, Sweden had the highest share of customers who changed providers of financial products in the period 2017-2022. This implies that the Swedish banking market has low barriers to switching banks, which increases the competitive pressure on banks. More recent surveys suggest that Swedish banking consumers have a relatively strong understanding of how financial markets function.
Swedish banks are cost-efficient, suggesting they are working to reduce costs due to competitive pressure
Swedish banks have lower operational costs than several other comparable European countries.
Further, we find that Swedish banks pass on their low costs to customers. Banking customers in Sweden are thus offered lowpriced financial services. Historically, Swedish mortgage rates and interest rates on other loans have been among the lowest in Europe. Despite a rate hike in 2022, when the Swedish central bank increased interest rates earlier than the ECB, Swedish interest rates are again among the lowest in the benchmark countries in 2025-2026. Low costs are also reflected in low investment fund costs (UCITS) in Sweden.
Profitability for banks varies over the business cycle
Banks’ returns are cyclical. Return on equity in the Swedish banking market was relatively high during 2023 and 2024 but declined in 2025. In recent years, Swedish banks have had higher returns on equity than banks in other European countries.However, profits have increased across Europe due to rising interest rates on lending, sticky deposit rates, and, so far, no increase in losses.
Overall, we find that Swedish banks pass on a higher share of the interest rate increase into their deposit rates than countries in the euro area, i.e., there is less price stickiness in Sweden.
Sweden has an efficient lending system with low losses
In the period from 2015 to 2025, annual loss rates for Swedish banks were close to zero, the lowest among benchmark countries. Low losses indicate an effective and secure system in which banks adjust their assessments of, for example, property values through the business cycle. At the same time, Sweden has an efficient judicial system, and foreclosure auctions can be carried out quickly and easily, securing low losses for banks even in the event of defaults.
The efficient lending system is also expressed in a low yield spread between Swedish mortgage loans and treasury bonds, which has been 1.6 percentage points on average in the period 2015-2025. This shows a high liquidity in covered bonds that is comparable to the liquidity of Swedish government bonds – due to high investor confidence. However, the yield spread in Sweden is above yield spread in Denmark.1)
Differences in banks’ profitability across countries are likely driven by macroeconomic differences
Between 2020 and 2025, Swedish banks realised a return on equity of around 13 per cent, which is the highest among the countries in our comparison. However, international comparisons of profitability are heavily affected by differences in business cycle conditions across Europe. Here, Sweden is at the top, while banks in, for example, Germany, France, and the Netherlands have seen higher impairment levels in the period, lowering returns for equity holders.
We also find that the price-to-book ratio of Swedish banks is at average, when compared to banks in other countries.
Overall, we find no clear evidence of a lack of competition in the Swedish banking sector
Prices and profits for the Swedish banking sector were higher between 2023 and 2024 than in recent years, but this should be seen in the context of a changing macroeconomic environment with rising interest rates.
Based on the analysed metrics of competition, we find no clear evidence of a lack of competition in the Swedish banking sector. Instead, it suggests that the Swedish banking sector is relatively efficient compared to other countries.
The non-bank financial sector has expanded in size
From 2015 to 2026, non-bank loan assets from non-monetary financial institutions (non-MFI) increased by 110 per cent in Sweden. The share of non-MFI loan assets in total loan assets increased from 6.5 per cent in 2015 to 8.6 per cent in 2026. A similar trend is seen in other European countries, but among the comparison countries, only Finland recorded higher growth in non-MFI loan assets over the period.2)
1) The difference in yield spread might also reflect varying mortgage conditions between the countries.
2) Non-MFI are not bound by the same rules as banks, such as capital and liquidity requirements, which can be one potential reason for this development.
3) Our findings on well-functioning competition in the Swedish banking sector are in line with those of earlier reports on the topic commissioned by Finansinspektionen (2023) and Konkurrensverket (2023).