Nordic Credit Rating (NCR) has assigned a 'BBB+' long-term issuer rating to Norway-based Hegra Sparebank. The outlook is stable. An 'N2' short-term issuer rating has also been assigned, together with a 'BBB+' senior unsecured issue rating, 'BBB' Tier 2 issue rating and a 'BB+' additional Tier 1 issue rating.
Rating rationale
The long-term issuer rating reflects the bank's robust capital position and liquidity buffers, low risk appetite and strong earnings. The bank has proven access to capital market financing and few single-name concentrations. Its substantial accounting firm provides greater business and revenue diversity compared to similar sized savings banks. Hegra Sparebank has an ownership and cooperation arrangement with the Eika Alliance banking association, which enables product diversity, shared development costs, and the opportunity to finance residential retail mortgage loans through jointly owned covered-bond company Eika Boligkreditt AS.
The rating is constrained by the bank's geographic concentration east of Trondheim and a high proportion of real-estate collateral in its core markets. The rating is also constrained by the bank's size and small market share in its operating region, with strong competition from large Nordic and other savings banks in Trondheim and Stjørdal.
Stable outlook
The stable outlook reflects our expectation that Hegra Sparebank's robust capital position and strong earnings will compensate for a weakened domestic economy. We anticipate Hegra Sparebank will maintain its low-risk appetite and we expect its asset quality will improve from somewhat elevated proportions of non-performing loans over the past year. We forecast the bank will maintain strong capital ratios, following the recent improvement due to implementing the EU's Capital Requirements Regulations III (CRR3).
We could raise the rating to reflect improved scale and market position, in addition to reduced loan book concentration, mitigating downside risk to credit quality.
We could lower the rating to reflect a material deterioration in the bank's local operating environment that weakens asset quality. We could also lower the rating to reflect a Consolidated Tier 1 ratio below 18% or a pre-provision income to consolidated risk exposure amount below 2%, over a protracted period.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | BBB+ |
| Outlook: | Stable |
| Short-term issuer credit rating: | N2 |
| Senior unsecured issue rating: | BBB+ |
| Tier 2 issue rating: | BBB |
| Additional Tier 1 issue rating: | 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 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.