Nordic Credit Rating has affirmed its 'BBB+' long-term issuer rating on Norway-based Grue Sparebank. The outlook is stable. The 'N2' short-term rating, 'BBB+' senior unsecured issue rating, 'BBB' Tier 2 issue rating, and 'BB+' 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 low risk appetite and outstanding capital position. Despite total assets of only NOK 6.1bn, including transferred loans, the bank demonstrates reliable access to capital market funding and maintains a well-diversified and loyal retail deposit base. Its ownership and cooperation with the Eika Alliance banking association support product diversity, shared development costs and the ability to finance residential retail mortgage loans through the jointly owned covered-bond company Eika Boligkreditt AS.
We have revised our assessment of the bank's capital, reflecting our Tier 1 ratio projection of over 24% through 2027. The bank benefited from the implementation of the EU's Capital Requirements Regulations III (CRR3) in April 2025, which increased its Tier 1 ratio by 2.5–3pp, supported by a high proportion of low loan-to-value residential mortgages in its portfolio. The additional capital flexibility supports loan growth as the bank expands in Hamar and Elverum.
We expect Grue Sparebank to maintain solid revenues despite lower interest rates and margin pressure as it expands beyond its traditional markets. However, recent growth investments are likely to weigh on profitability, and the projected cost-to-income ratio exceeds 60% through 2027.
The rating is constrained by the geographic concentration of the loan book in the south-eastern municipalities of Innlandet county and by a high proportion of real estate and agricultural collateral in the region. The bank maintains a strong market share in its core markets but faces significant competition from regional and local peers as it seeks growth in the southern Østerdal and Hedmark regions near Hamar and invests to expand its branch in Elverum.
Stable outlook
The stable outlook reflects our view that the bank's low risk appetite will limit credit losses and offset the impact of a weaker regional economy. We expect Grue Sparebank's cost efficiency to weaken over the next few years as it invests in personnel to support growth objectives and its new branch in Hamar. The bank's improved capital ratios should support higher loan growth, enabling it to pursue its goal of doubling its share of corporate lending while maintaining a strong capital position.
We could raise the rating to reflect pre-provision income to risk exposure amount (REA) sustainably above 3% and cost-to-income below 45%, together with increased scale and improved market position in growth markets without material increase in risk appetite.
We could lower the rating to reflect a consolidated Tier 1 capital ratio below 18% over a protracted period, a material deterioration in the local operating environment or asset quality, or risk-adjusted earnings metrics below 1.5% over a protracted period.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB+ | BBB+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | BBB+ | BBB+ |
| Tier 2 issue rating: | BBB | BBB |
| Additional Tier 1 issue rating: | BB+ | BB+ |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@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.