Download Financial Stability Report June 2010

Financial
Stability
Report
June 2010
Press conference 1 June 2010
Assessment of stability
The banks are well-prepared but
uncertainty has increased
Borrowing costs fo countries with
weak public finances have increased
The difference between ten-year government bond rates and the German government bond rate with
the same maturity
Basis points
1 000
800
600
400
200
0
-200
jan-08 apr-08
jul-08
Ireland
Chart 1:3
okt-08 jan-09 apr-09
Sweden
jul-09
Portugal
okt-09 jan-10 apr-10
Spain
jul-10
Greece
Source: Reuters EcoWin
Uncertainy has increased
again
TED spread - the difference betwen the 3-month interbank rate and treasury bill rate,
basis points
500
500
Sweden
Euro area
USA
United Kingdom
450
400
450
400
350
350
300
300
250
250
200
200
150
150
100
100
50
50
0
0
jan07
apr07
jul07
okt07
jan08
apr08
jul08
okt08
jan09
apr09
jul09
okt09
jan10
apr10
Lower loan losses in period
ahead
Results before loan losses and loan losses, net in the major Swedish banks
Totalled over four quarters, SEK billion, fixed prices as at 31 March 2010
120
100
80
60
40
20
0
-20
dec-90 dec-92 dec-94 dec-96 dec-98 dec-00 dec-02 dec-04 dec-06 dec-08 dec-10 dec-12
Profit before loan losses
Loan losses, net
M ain scenario loan losses, net, FSR 2009:1
M ain scenario loan losses, net, FSR 2009:2
Chart 4:2
Sources: The banks’ reports, SME Direkt and the Riksbank
Largest losses from the Baltic
countries
Allocation of loan losses during the period 2009-2012 per region in the Riksbank’s main
scenario
SEK billion and per cent
5
8%
13
22%
10
17%
8
14%
19
31%
5
8%
Sweden
Chart 4:4
Nordic countries excl Sweden
Estonia
Latvia
Lithuania
Other countries
Source: The Riksbank
Future risks

Unease over public finances in Europe


Situation in the Baltic countries



Risk of setbacks in implementing fiscal
consolidation
Economic recession bottomed out
Domestic weaknesses may be amplified
Swedish households

An increased burden of debt may cause
problems in the long run
Strong Swedish public
finances
Budget total in selected EU countries, per cent of GDP
10
5
0
-3
-5
-10
-15
-20
2006
2007
Greece
Chart B1
Ireland
2008
Italy
2009
Portugal
2010
Spain
2011
Sweden
Source: Reuters EcoWin
Future risks

Unease over public finances in Europe


Situation in the Baltic countries



Risk of setbacks in implementing fiscal
consolidation
Economic recession bottomed out
Domestic weaknesses may be amplified
Swedish households

An increased burden of debt may cause
problems in the long run
Economic recession bottomed
out
GDP, annual percentage change
15
10
5
0
-5
-10
-15
-20
-25
98
99
00
01
02
Estonia
Chart 2:34
03
04
Latvia
05
06
07
08
09
10
Lithuania
Source: Reuters EcoWin
The internal devaluations have
continued
Nominal wages. Annual percentage change
35
30
25
20
15
10
5
0
-5
-10
-15
dec-00
dec-01
dec-02
dec-03
Estonia
Chart 2:33
dec-04
dec-05
Latvia
dec-06
dec-07
dec-08
dec-09
Lithuania
Source: Reuters EcoWin
Future risks

Unease over public finances in Europe


Situation in the Baltic countries



Risk of setbacks in implementing fiscal
consolidation
Economic recession bottomed out
Domestic weaknesses may be amplified
Swedish households

An increased burden of debt may cause
problems in the long run
In many countries real house prices rose
substantially in the years prior to the crisis
Real house prices in Sweden and abroad, index 1995=100
300
300
Sweden
Denmark
Norway
Finland
United Kingdom
USA
250
250
200
200
150
150
100
100
50
50
0
0
80
84
88
92
96
00
04
08
12
Sources: Reuters EcoWin, the BIS and the Riksbank
Increased indebtedness
Households’ debts in relation to disposable incomes (%)
180
180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
0
0
70
74
78
82
86
90
94
98
02
06
10
14
Sources: Statistics Sweden and the
The banks can manage a much worse
outcome
The banks’ Tier 1 capital ratio in the stress test
Per cent
16
Handelsbanken
Nordea
SEB
Swedbank
14
12
10
8
6
4
2
0
10 11
12
Handelsbanken
Chart 4:6
10
11 12
Nordea
10
11 12
SEB
10 11
12
Swedbank
Source: The Riksbank
Stability assessment
The banks are well-prepared but
uncertainty has increased