Nordic banks' revenue falls behind European peers amid rate pressure

Nordic lenders lagged other major European banks in first-quarter 2026 revenue performance as lower interest rates continue to drag on their lending income.

Sweden-based Svenska Handelsbanken AB (publ) and Skandinaviska Enskilda Banken AB (publ) reported year-over-year revenue declines of more than 7%, while peer Swedbank AB (publ) recorded a 1.5% drop, according to Visible Alpha data.

The results reflect the impact of the Swedish central bank's rate cuts, which have been the most aggressive in Europe. Since 2024, the Riksbank has slashed its benchmark rate by 225 basis points, compared with rate reductions of 200 bps by the European Central Bank and 150 bps by the Bank of England.

Handelsbanken's first-quarter net interest income (NII) — the difference between what lenders pay for deposits and what they earn from loans and other assets — fell 12.3%. It also recorded "fairly flat" lending volumes on the back of the Swedish economy's soft growth, CEO Michael Green said. The bank's noninterest income grew 12.1%, somewhat offsetting the weak NII result.

SEB's quarterly revenue, meanwhile, was due to lower NII and noninterest income. For Swedbank, the quarter marked the first time that the 2025 rate cuts were fully reflected in its NII, CFO Jon Lidefelt said.

Finland-headquartered Nordea Bank Abp — the Nordic region's largest bank by assets — logged a 2.2% decrease in revenue, Visible Alpha data shows.

Spain's Banco de Sabadell SA booked an 8.4% drop in first-quarter revenue, the sharpest decline among Europe's 25 largest banks in the sample.

The results reflect the sale of UK unit TSB Banking Group PLC, though the bank also cited customer margin compression as a cause for a 2.8% drop in NII. Sabadell maintained its full-year 2026 guidance for NII growth of more than 1%, on expectations of higher interest rates and healthy loan volumes, CFO Sergio Palavecino said on the bank's earnings call.

But compared to its Spanish peers, Sabadell is not poised to benefit as much from higher interest rates and should be more sensitive to a deterioration in asset quality, owing to its higher exposure to small-business lending, analysts at Keefe, Bruyette & Woods said in a note cited by Dow Jones Newswires.

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The war in the Middle East has led to significant volatility in energy markets and brought renewed uncertainty to the global economic outlook. Higher energy prices are set to slow down growth and push up inflation, building the case for keeping interest rates higher for longer, which in turn should support banks' lending income.

Major central banks, including the ECB, the BoE and the Riksbank, kept their policy rates unchanged in recent weeks to buy more time to gauge the extent of the inflationary impact of the Middle East war.

Norway's central bank, meanwhile, surprised markets on May 6 when it delivered its first interest rate hike since 2023, citing prospects that stubbornly high inflation will "remain elevated ahead" given the "substantial uncertainty still surrounding the global economic outlook" amid the Gulf conflict.

The first-quarter average net interest margin (NIM) of the 25 large European banks in the sample stood at 1.47%, versus 1.48% a year ago and 1.50% in the previous quarter. NIM is the difference between the interest received on loans and the rate paid for deposits.

On the other end of the spectrum, Austria's Erste Group Bank AG recorded the highest revenue growth of 40.5%, boosted by its acquisition of Banco Santander SA's Polish unit. However, its NII and net fee and commission income were both below expectations.

Other banks that reported significant revenue growth include Spain's Banco Bilbao Vizcaya Argentaria SA, Swiss giant UBS Group AG, and Belgium-based KBC Group NV, which all reported increases in both NII and noninterest income.

UK-headquartered Standard Chartered PLC posted a record first-quarter revenue, as strong wealth and retail banking activities led to a surge in noninterest income that helped offset weaker NII.

In aggregate, operating revenue grew in the first quarter from the same period in 2025 and 2024.

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