Competition in the Swedish banking sector October, 2026
Background for the study and new data inclusions
Since the publication of our first report on the level of competition in the Swedish banking sector in 2019, public discussion on this topic has continued unabated. Against this background, Finance Sweden has asked us to update and expand on our 2019 report in 2023, 2025, August 2026, and now in October 2026.
This October 2026 update builds on our previous analyses and brings in the latest evidence and market developments. It also adds three market deep dives:
Final Basel III
Decomposition of mortgage margins for Swedish mortgages
Profitability of Swedish banks and the extent to which profits exceed investors’ required returns
No sign of weak competitive pressure in Swedish banking
As in our previous studies, we find no clear evidence of a lack of competition in the Swedish banking sector. We assess competition along four key dimensions – market structure, efficiency, prices and pass-through, and profitability – and none of them indicate weak competitive pressure.
the main conclusions of our study
Market shares shift over time and small banks are gaining ground. The non-bank financial sector is growing, and high consumer mobility supports a dynamic banking market.
Swedish banks are cost-efficient and operate with relatively low operating costs compared to those in other European countries. Low costs benefit customers, such that mortgage rates are the lowest among European benchmark countries.
Final Basel III is expected to raise capital requirements for banks active in the Swedish market by about 14 per cent on average. The effect varies across banks: some may face no increase, while others may face considerably larger increases. Banks are likely to pass higher capital costs on to customers through higher loan prices.
The mortgage margin has more than halved since 2018, from 1.3 per cent to 0.6 per cent. But we expect it to rise again to around 0.9 per cent. The fall mainly occurred in 2022 and 2023 when funding costs rose faster than lending rates, and the margin did not recover when rates started to fall again.
Swedish banks earn the highest return on equity among the countries compared – around 13 per cent from 2020 to 2025. This reflects both their efficiency and more favourable business cycle conditions in Sweden than elsewhere. What matters for competition, however, is whether returns exceed what investors require for the risk they take. Adjusted for risk, banks’ returns are slightly below the average of the 30 largest listed Swedish companies.
This study was commissioned by Finance Sweden.
In brief
None of the four dimensions assessed — market structure, efficiency, pricing, and profitability — indicates weak competitive pressure in the Swedish banking sector.
- 64%
Combined market share of Sweden’s four largest banks, against 75 to 89 per cent in Denmark, Finland, France, and the Netherlands. Sweden also has the highest consumer mobility among the countries compared, measured by the share of customers switching provider between 2017 and 2022.
- 14-20%
Rise in small banks’ market share from 2015 to 2025, during which they accounted for 30 per cent of credit growth. Non-MFI loan assets grew 110 per cent over the same period, lifting their share of total loan assets from 6.5 to 8.6 per cent.
- 60% vs. 24%
Share of central bank rate increases from 2022 to 2024 passed on to depositors by Swedish banks, against the euro area. Swedish mortgage rates were the lowest among benchmark countries in 2025 and the first quarter of 2026.
- 1.3 to 0.6
Percentage fall in the mortgage margin since 2018, more than halving. Return on equity for mortgage lending is now around 3 per cent, well below what shareholders typically require.
- 14%
Average increase in capital requirements expected from the Final Basel III output floor, driven by corporate lending, though some banks will not be bound by the floor at all while others face considerably more
Commissioned by Finance Sweden. Published October 2026. Data covering 2015 to 2025, with some series to the first quarter of 2026. Sweden, benchmarked against Denmark, Finland, Norway, France, Germany, the Netherlands, and Belgium.
About this analysis
Copenhagen Economics assessed whether competition in the Swedish banking sector is sufficient to deliver good quality and low prices for customers, across four complementary dimensions: market structure, efficiency, prices and pass-through, and profitability. The study reasons that competition cannot be captured by a single number, since each indicator reflects only part of the process and is shaped by factors other than competitive pressure. This October 2026 edition updates an analysis first produced in 2019 and revised several times since, adding three deep dives on the Final Basel III output floor, the composition of mortgage margins, and bank profits relative to investors’ required returns. Bank-level data comes from Refinitiv LSEG Workspace and Statistics Sweden, with aggregated country figures from the ECB and the EBA.
Comparisons are limited to banks with more than SEK 1 billion in net loans and a loan-to-asset ratio above 20 per cent, to ensure banking is their primary business. Market share and credit growth figures cover domestic activities only, but data restrictions mean foreign activities are included for other lines such as asset management. Most figures use newly published data, though some rely on the latest available figures from earlier editions where no newer statistics exist. Benchmark countries were selected for similar market structures, effective legal systems, and stable political environments, so the comparison is to peers rather than to the EU as a whole.
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