Nordic Credit Rating (NCR) said today that it had affirmed its 'A+' long-term issuer rating on Sweden-based Danske Hypotek AB (publ). The outlook is stable. At the same time, NCR affirmed the 'N2' short-term rating and the 'AAA' issue rating on Danske Hypotek's covered bonds and the 'A+' issue rating on its senior unsecured obligations.
Rating rationale
Our 'A+' issuer rating on Danske Hypotek reflects our current 'a+' credit assessment of Danske Bank and the company's 'vital' role within the group. We also maintain our 'a' standalone credit assessment of Danske Hypotek. Ongoing pressure on lending margins from low mortgage growth in Sweden continues to weigh on our earnings outlook. We forecast a modest improvement, partly due to higher commercial mortgage volumes, but expect lending margins and cost efficiency to remain below historical levels amid high competition and subdued demand. Weaker risk-adjusted earnings contribute to our projection that Danske Hypotek's CET1 ratio will decline to 19.4% in 2028 from 20.7% at end-2025, based on projected loan growth of 2–6% per year.
Given the stable outlook on our issuer rating for Danske Hypotek, we expect the covered bond ratings to remain stable. This reflects our view that Danske Hypotek and Danske Bank will continue to be regarded as systemically important financial institutions with a very high likelihood of resolution in the event of failure.
Stable outlook
The stable outlook on Danske Hypotek reflects our credit assessment of Danske Bank. We expect our ratings on Danske Hypotek's covered bonds to remain stable given our stable outlook on our issuer rating on the company.
Ratings upside on Danske Hypotek remains constrained by our credit assessment of the parent.
We could raise or lower our rating Danske Hypotek due to changes in our credit assessment of the parent, given our view of Danske Hypotek as 'vital' to Danske Bank
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A+ | A+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Covered bond issue rating: | AAA | AAA |
| Senior unsecured issue rating: | A+ | A+ |
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@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, NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024 and NCR's Covered Bond Rating Methodology published on 12 May 2025. For the full regulatory disclaimer please see the rating report.