Nordic Credit Rating has affirmed its 'A-' long-term issuer rating on Norway-based savings bank Askim & Spydeberg Sparebank. The outlook is stable. The 'N2' short-term issuer rating, 'A-' senior unsecured issue rating, 'BBB+' Tier 2 issue rating, and 'BBB-' Additional Tier 1 issue rating have also been affirmed, in accordance with NCR's revised financial institutions rating methodology. The ratings are no longer under criteria review.
Rating rationale
The long-term issuer rating reflects the bank's solid capital position and earnings, low risk appetite, and ready access to funding. We take a positive view of the bank's membership in the Lokalbanksamarbeidet banking cooperative, which enables product diversity, shared development costs and the opportunity to finance residential retail mortgage loans through jointly owned covered-bond company Verd Boligkreditt AS.
We expect Askim & Spydeberg Sparebank to benefit from the implementation of the EU's Capital Requirements Regulation III (CRR3), given its substantial share of low loan-to-value residential mortgage loans. With moderate loan growth expectations, we believe the Tier 1 ratio will remain above 23% through 2027, enhancing our view of capital. We have also revised our risk governance assessment to reflect significant improvements in anti-money laundering practices, risk reporting, and policy standards over the past year. Despite pressure on net interest margins from peaking interest rates and growing competition, we expect Askim & Spydeberg Sparebank to maintain strong earnings over our forecast period through 2027. We also anticipate improved loss performance over our forecast period after extraordinary losses in recent years.
The rating is constrained by Askim & Spydeberg Sparebank's concentrated exposure to residential and commercial real estate and the construction sector in northern Østfold county and the district of Follo. Although the bank has strong market share in its core operating region, the stiffer competition in the Follo district growth markets is an additional rating constraint.
Stable outlook
The stable outlook reflects our view that Askim & Spydeberg Sparebank's earnings and cost efficiency will remain strong, despite expectations of lower interest rates, offsetting moderate credit losses. We believe the bank's strong capital position and diverse funding profile will prove resilient against a modest economic slowdown. The outlook also factors in improved risk governance and our expectation of continued investment in this area.
We could raise the rating to reflect pre-provision income to risk exposure amount sustainably above 3%, a Tier 1 ratio maintained significantly above 22%, and a stronger market position in the district of Follo and the northern Østfold county.
We could lower the rating to reflect a Tier 1 capital ratio below 20% over a protracted period, a material deterioration in the local operating environment that negatively affects asset quality, or a pre-provision income below 2% of risk exposure amount for a protracted period.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A- | A- |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | A- | A- |
| Tier 2 issue rating: | BBB+ | BBB+ |
| Additional Tier 1 issue rating: | BBB- | BBB- |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Rating Principles published on 14 Feb. 2024, NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024 and NCR's Financial Institutions Rating Methodology published on 12 May 2025. For the full regulatory disclaimer please see the rating report.