Investing.com -- Bank of America downgraded Swedbank (ST:SWEDa) to 'Underperform' and Banco Bpm (BIT:BAMI) to 'Neutral' given a lack of catalysts for further upside in both stocks.

Swedbank's stock has outperformed Nordic peers in recent months, driven by temporary net interest income gains, higher dividend payouts, and reduced expectations for policy rate cuts. However, BofA believes these positives are already reflected in the share price.

The brokerage expects a sharp drop in interest income in 2025, with weak loan growth and pressure from the competitive Swedish mortgage market. It also anticipates negative operating jaws, where costs grow faster than revenue, due to rising salaries, IT expenses, and lower trading gains.

BofA also sees limited upside from a potential U.S. fine settlement, noting that Swedbank has already increased its dividend policy in anticipation. The firm cut its price target to 217 SEK from 239 SEK.

Banco BPM's bid to take full control of asset manager Anima remains uncertain, with the deal's financial impact hinging on regulatory approval under the Danish Compromise. This rule would reduce capital requirements for the acquisition, limiting Banco BPM’s CET1 capital hit to 39 basis points. Without approval, the impact would be a steeper 268 basis points.

BofA noted that while the Anima deal could boost earnings per share by about 10%, the return on investment could vary significantly depending on regulatory treatment. The firm raised its price target to €9.40 from €8.00 but sees limited upside, leading to the downgrade from 'Buy' to 'Neutral.'

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