Nordic Credit Rating (NCR) has assigned an 'A-' long-term issuer rating to Norway-based savings bank Agder Sparebank. The outlook is stable. An 'N2' short-term issuer rating, 'A-' senior unsecured issue rating, and 'BBB+' Tier 2 instrument rating have also been assigned. The bank currently has no outstanding Additional Tier 1 instruments, but we would rate such instruments three notches below the issuer rating at ‘BBB-’.
Rating rationale
The long-term issuer rating reflects the bank's strong capital position, predominantly low-risk retail mortgage portfolio, and satisfactory earnings. The bank holds a solid position in a growing market and maintains a low to moderate risk appetite. Its diverse and stable funding profile supports deposit growth in line with loan growth. Agder Sparebank's cooperation agreement with the Eika banking alliance is viewed positively, as it supports product diversification, shared development costs, and access to residential mortgage financing through Eika Boligkreditt.
The rating is constrained by Agder Sparebank's somewhat elevated Stage 3 levels and somewhat tighter liquidity buffers than peers. It is also limited by concentrated geographic exposure and related sensitivity to local property and housing prices.
Stable outlook
The stable outlook reflects our expectation that Agder Sparebank will maintain steady growth, with a slight overweight on the retail market, while preserving its regional focus and low risk appetite. We expect the bank's earnings to stabilise after several years affected by mergers, resulting in capital generation broadly in line with asset growth and only modest declines in capital ratios. The stable outlook also reflects the ongoing economic uncertainty, both globally and domestically, including the potential for a prolonged period of elevated interest rates, which may support earnings but could pressure asset quality.
An upgrade is unlikely at this time, given that capitalisation and earnings are already strong.
We could lower the rating to reflect a material deterioration in the regional operating environment, affecting growth prospects, profitability, or asset quality metrics, or a tier 1 capital ratio below 18% over a protracted period. We could also lower the rating to reflect materially weakened earnings, with a pre-provision income/REA below 2% and cost-income ratio above 60% over a protracted period.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | A- |
| Outlook: | Stable |
| Short-term issuer credit rating: | N2 |
| Senior unsecured issue rating: | A- |
| Tier 2 issue rating: | BBB+ |
| Additional Tier 1 issue rating: | BBB- |
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
The methodology documents used for this rating are NCR's Financial Institutions Rating Methodology published on 12 May 2025, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.