Saxo Bank Group crowned best-performing Nordic bank

The Nordic region has weathered the impact of the Covid-19 pandemic reasonably well. In 2020, economic activity contracted at a much lower rate than many markets across Europe. Norway, for instance, saw its economy shrink by just 0.8% over the year. Sweden, by contrast, saw its gross domestic product fall by 2.8%, marginally outperforming Finland and Denmark, which registered contractions of 2.9% and 3.3%, respectively, according to data from the International Monetary Fund.

This resilient macroeconomic performance owes much to the foundations of the region’s economy, which is built on strong social welfare systems across most markets. In addition, the Nordic countries are highly digitised relative to other economies in Europe. Finance and commerce, as well as the provision of government services, have mostly moved well beyond analogue technology. As a result, the private sector was able to adjust to the ‘new normal’ of a global pandemic with ease. Nordic banks, in particular, are at the vanguard of the region’s digitised economy — a fact that partly contributed to their robust performance in 2020.

The Banker’s Top 30 Nordic Banks ranking makes clear that most lenders across the region were able to bolster their Tier 1 capital positions and total assets when faced with an unprecedented challenge, even if pre-tax profitability appeared to be more of a mixed affair. Underscoring this point is the fact that this year’s top 10 best-performing Nordic banks table is a more geographically mixed affair than in the 2020 ranking. Denmark’s Saxo Bank Group tops the table with an overall score of 7.10, followed by Iceland’s Arion Bank with a score of 6.44. Denmark’s Ringkjøbing Landbobank secured third position with 6.17, while Sparebank 1 Nord-Norge from Norway and Sparbanken Skane from Sweden came in at fourth and fifth respectively, with scores of 5.71 and 5.57. 

Meanwhile, in terms of the top 10 banks by growth, the dominant presence of Swedish and Danish lenders marks a notable difference in the current ranking relative to the 2020 edition. The explosive growth of neobank Klarna ensured the top spot on the table, while four other Swedish lenders, including Sparbanken Skane, Länsförsäkringar Bank, Swedbank and Skandinaviska Enskilda Banken (SEB) Group, rounded out the top five positions. The remaining banks in the table include three from Denmark and two from Finland. 

The top 10 banks by profitability is a truly diverse affair. Denmark’s Saxo Bank Group tops the table with a score of 7.89, while Iceland’s Arion Bank secured second place with 7.52. The remaining banks in the top five include Sweden’s Sparbanken Skane with a score of 6.25, Norway’s S Banken with 6.17 and Sweden’s Länsförsäkringar Bank with a score of 6.08. Rounding out the top 10 lenders by profitability are three Norwegian banks, and one each from Denmark and Finland.

Some notable changes have occurred with respect to the top 10 banks by asset quality. Sweden’s Svenska Handelsbanken emerged on top with a score of 8.69, while Denmark’s Saxo Bank Group came in a close second position with a score of 8.49. In last year’s edition, these two banks were positioned ninth and fourth, respectively. Similarly, Sweden’s Länsförsäkringar Bank has jumped to third place in the 2021 edition, with a score of 8.06 — a marked improvement from the 10th position and score of 6.11 it achieved in the 2020 ranking. Beyond these movements, Swedbank is a new addition to the top 10 banks by asset quality table, taking eighth place with a score of 7.59. 

In the context of a post-pandemic economic recovery, the all-important top 10 banks by soundness table is dominated by lenders from Iceland, Denmark and Norway. Iceland’s Arion Bank secured first position with a score of 8.97, a great improvement from its fourth place in the 2020 ranking. Ringkjøbing Landbobank, from Denmark, came in second with a score of 8.81, up from fifth place in 2020. Santander Consumer Bank Nordic from Norway, Landsbankinn from Iceland and Sparebank 1 Nord-Norge from Norway, round out the top five, coming in third, fourth and fifth, respectively. 

Meanwhile, little change has occurred in terms of the top 10 banks in the main regional ranking by Tier 1 capital. In first place, once again, is Finland’s Nordea Group with a Tier 1 capital position of $35.98tn. Denmark’s Danske Bank and Norway’s DNB Group have also maintained second and third place, respectively. Sweden’s SEB Group and Svenska Handelsbanken secured fourth and fifth position, with Tier 1 capital of $20.10tn and $19.36tn. Indeed, the only change occurred between Finland’s OP Pohjola Group, which was bumped into eighth place from seventh in 2020, by Denmark’s Nykredit, following a 20% increase in Tier 1 capital by the latter. 

Notably, all 30 banks featured in the main ranking recorded gains to their Tier 1 capital positions, with the exception of Norway’s DNB Group which saw a marginal contraction of just 0.26% over the review period. It was a similar story with respect to total asset growth: not a single Nordic lender saw this metric contract in the 2021 ranking. Yet, when it comes to profitability, the picture is more mixed. Only 10 of the 30 lenders in the main ranking secured an increase to their pre-tax profitability over the 2020 review period. Even so, that one in three lenders were able to enjoy an expansion of their pre-tax profits during a global pandemic arguably points to the resilience and adaptability of the region’s banking sector. 

The Banker’s Top 30 Nordic Banks ranking illuminates the underlying strength of the region’s lenders at a time of unprecedented economic turmoil. Given that the Nordic economies are expected to enjoy robust growth during 2021 and 2022, there is every chance that the coming years will see a complete shift in the banks’ fortunes, with growing Tier 1 capital, total assets and pre-tax profits likely to occur in conjunction with one another. As the world prepares for a post-Covid future, few other regional banking sectors are as well positioned to meet the uncertainties — and the opportunities — presented by this transformed economic landscape.