Nordic Credit Rating (NCR) has affirmed its 'A-' long-term issuer rating on Norway-based Jæren Sparebank. The outlook is stable. The 'N2' short-term rating, 'A-' senior unsecured issue rating, 'BBB+' Tier 2 issue rating, and 'BBB-' 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 affirmation reflects the bank's strong capitalisation, low risk appetite, robust underwriting and favourable market position. The bank's cooperation agreement with the Eika banking alliance is viewed positively, as it provides product diversity, shared development costs and access to residential retail mortgage financing through Eika Boligkreditt. We expect the bank to maintain strong earnings and cost efficiency even as Norwegian policy interest rates decline. Loan losses are expected to remain modest despite the current economic slowdown in Norway, and we anticipate that credit metrics will continue to improve from already strong levels. However, the bank's capital ratios are likely to remain below previous expectations, primarily due to robust loan growth and high dividends. We view the bank's long-term ownership by two foundations positively, given their available liquidity and capacity to support future capital injections.
The rating is constrained by the bank’s concentrated exposure to real estate and agricultural collateral in Jæren, Rogaland county, on Norway’s west coast. Rogaland’s significant role in oil and gas production increases economic volatility relative to the national average, but also supports strong economic conditions and low unemployment.
Stable outlook
The stable outlook reflects our view that the bank’s loan book remains resilient in a weak economic environment and that credit metrics are likely to continue improving. The bank’s moderate risk appetite, strong real estate collateral and stable earnings should support resilience to a modest economic slowdown, despite the potential for higher credit losses.
We could raise the rating if the bank increases its scale and improves its competitive position, demonstrates a commitment to maintaining material regulatory capital buffers and a Tier 1 ratio above 21%, or reports pre-provision profit sustainably above 3.0% of risk exposure amount.
We could lower the rating if there is a significant downturn in the operating environment that negatively affects asset quality, a sustained decline in the Tier 1 ratio below 18%, or risk-adjusted earnings metrics fall below 2% of risk exposure amount.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A- | A- |
| Outlook: | Stable | Positive |
| 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:
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@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.