Competition in the Swedish banking sector October, 2026
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
Nordic productivity growth has fallen behind the global frontier: a 14 per cent lead over the US two decades ago has narrowed to near parity, and on current trends the Nordics risk falling behind within the next decade.
25 vs 43%Productivity growth in the Nordics since 2000, against the United States. Annual growth since 2005 runs at around 0.6 per cent against 1.13 per cent in the US.
24% How far Nordic productivity levels sit above the EU, broadly on a par with the US despite the slowdown in growth.
0.1-0.2% of GDPVenture capital investment in the Nordics, against roughly 0.8 per cent in the United States. Private equity shows a comparable gap.
9%Gap in GDP per capita against the US, driven mainly by lower total labour input: participation is higher, at 85 per cent for men and 81 per cent for women against 71 per cent in the EU, but average hours worked are significantly lower.
41%Fall in Nordic emissions since 1990, against 38 per cent in the EU and 30 per cent in the US.
Written by Copenhagen Economics for the Nordic Council of Ministers. Published 2026 as TemaNord 2026:538. Covers Denmark, Finland, Iceland, Norway and Sweden, with separate treatment of Greenland, the Faroe Islands and Åland.
contact us
Click below to read more about our Macro & Finance service.
Related work
Swedish Private Equity and Venture Capital Association (SVCA)
Economic footprint of Swedish venture capital
The European Commission
Study on equity investments in Europe: Mind the gap
Swedish Private Equity & Venture Capital Association
The economic footprint of Swedish Venture Capital and Private Equity
Confederation of Swedish Enterprise (Svenskt Näringsliv)
Future taxation of company profits: What to do with intangibles?
About this analysis
The report asks whether the productivity gap identified in the 2024 Draghi Report applies to the Nordic economies, which differ structurally from much of Europe. It is in two parts: an analysis of the factors behind historic Nordic competitiveness and the challenges to it, and a structured international benchmarking exercise across eight dimensions, namely innovation capacity, entrepreneurship and firm dynamics, access to capital, digitalisation, administrative and regulatory burdens, energy costs and the green transition, economic resilience, and Nordic market integration. The benchmarking combines quantitative indicators, case studies and international comparison.
Unless otherwise stated, the statistical analysis covers the five Nordic states rather than the autonomous territories. Capital stock estimates are subject to significant uncertainty. Emissions are measured territorially, so they do not account for where goods and services are ultimately consumed, and exclude international shipping and aviation. The publication was funded by the Nordic Council of Ministers, whose views it does not necessarily reflect.