Title: Which bank do you choose? – A ratio analysis of the four major banks in Sweden
Background and problem: In 2008 the world was hit by an economic crisis. The crisis
has affected the major Swedish banks, mainly through increased credit losses. The
increase in credit losses incurred due to various factors but mainly due to banks'
exposures in the Baltic’s. The study should be considered whether any bank fared better
than the others, but even if some deterioration due to the economic crisis. This should be
investigated by using various financial ratios selected for this study.
Purpose: The aim of this study is to compare the four main banks in Sweden,
Handelsbanken, Nordea, SEB and Swedbank, based on some selected indicators. We also
want to study how they influenced by the current economic crisis by studying a five-year
period between 2004 and 2008.
Methodology: For the collection of information, we mainly rely on banks' annual
reports, literature in finance and business valuation, and external information.
By studying the ratios for the years concerned, we shall compare the banks with each
other and study the extent of the crisis.
Results and conclusions: The results of the study's indicators show deterioration in
values for all of the banks in 2008 and the first quarter of 2009. The reason for these
declines is based in the current economic crisis. The most obvious change that is visible is
the increased credit losses that affect net income, which in turn affect many of the
selected ratios. The key figure shows the most visible changes is the credit loss rate, return
on equity and earnings per share. Furthermore, the economies of the banks are expected
to decrease further in 2009.
Proposal for further study: Our proposal for a further study is to follow the banks of
the current crisis and to study further about the indicators to get a deeper understanding
of what influenced the banks. A further proposal is to study how the banks are recovering
after the crisis during 2008.