Nordic Credit Rating (NCR) has raised its long-term issuer rating on Norway-based savings bank Haugesund Sparebank to 'A-' from 'BBB+'. The outlook is stable. The 'N2' short-term issuer rating has been affirmed. The senior unsecured issue rating has been raised to 'A-', the Tier 2 instrument rating has been raised to 'BBB+' and the additional Tier 1 instrument rating has been raised to 'BBB-'.
Rating rationale
The rating action reflects significantly strengthened capitalisation and reduced uncertainty following the completion of the delayed merger with Tysnes Sparebank last year. The bank's Tier 1 ratio increased sharply after the implementation of the EU's Capital Requirements Regulation III (CRR3), reaching 24.2% at year-end on a consolidated basis. We expect above-market loan growth and dividends at the upper end of the policy range to reduce capitalisation, but anticipate the Tier 1 ratio will remain strong, above 22% throughout our forecast period. However, we expect the bank will need to increase market funding to support loan growth, with the loan/deposit ratio approaching 140% by the end of our forecast period. While the bank's bond maturity profile is balanced, we consider this funding source to be higher risk than customer deposits.
On 1 Sep. 2025, the merger with Tysnes Sparebank was completed after several delays. During the process, high-risk Stage 3 loans in the bank's portfolio were a significant concern, and we view their divestment positively. With the merger finalised, we have reassessed the organisational structure, including the bank's risk management framework and resources, which we consider to have improved. We continue to view the bank's credit risk appetite as somewhat elevated for a Norwegian savings bank, as reflected in our loss performance assessment. We note that Haugesund Sparebank has made progress, with the share of net Stage 3 loans declining to 1.6% at year-end 2025 from a peak above 2% in 2023. We expect further gradual improvement.
The rating continues to reflect strong earnings, a moderate risk appetite, and benefits from membership in the Eika alliance. However, it remains constrained by regional concentrations, a relatively higher-risk loan book compared with domestic peers, and intense competition in its markets.
Stable outlook
The stable outlook reflects our expectation that Haugesund Sparebank's strong capitalisation and earnings will continue to serve as a buffer towards potential losses, even as it targets above-market loan growth in the coming years. We expect the bank to leverage its larger scale to further improve cost efficiency and strengthen its market position, although competition remains intense in several attractive markets.
An upgrade is unlikely at this time, given regional concentrations as well as already strong capital and earnings.
We could lower the rating to reflect a material deterioration in the local operating environment that negatively affects the bank's growth or profitability. We could also lower the rating to reflect a Tier 1 ratio significantly below 22% over a protracted period, or a significant increase in loan losses or non-performing loans.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A- | BBB+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | A- | BBB+ |
| Tier 2 issue rating: | BBB+ | BBB |
| Additional Tier 1 issue rating: | BBB- | BB+ |
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.