Swedbank Credit Rating Raised to A1 at Moody’s on Reduced Risk

Swedbank AB had its credit rating raised one step at Moody’s Investors Service, which cited the Swedish lender’s lower risk and higher capital buffers.

Moody’s increased Swedbank’s long-term debt and deposit and issuer rating to A1, its fifth-highest investment-grade rating, from A2. The upgrade followed an increase in the bank’s baseline credit assessment to baa1 from baa2, Moody’s said in a statement today. The outlook on the ratings is solid, it said.

“The bank’s credit profile has strengthened as a result of sustainable reduction of its risk profile and strengthening of the bank’s corporate governance; the continued reduction of problem loans and stabilization of revenues; and enhanced capital levels and improved funding profile,” Moody’s said.

When reporting first-quarter results on April 23, Swedbank said it expected its credit rating to improve this year and be “harmonized” with that of peers.

Since Michael Wolf became chief executive officer in 2009, Swedbank has lowered risks in the Baltics, reduced the size of its Russian unit and sold its subsidiary in Ukraine. Those markets now account for some 10 percent of net lending, compared with 20 percent at the end of 2008, Moody’s said. The bank has also boosted capital buffers and is now the second-best capitalized major lender in the European Union, after Swedish rival Svenska Handelsbanken AB, according to data compiled by Bloomberg.

“Within its core markets, Swedbank has reduced portfolio risks by, among others, tightening underwriting criteria for higher-risk mortgage lending, which has helped to reduce the average loan-to-value ratio of its residential mortgage book,” Moody’s said.

Before it's here, it's on the Bloomberg Terminal.