Nordic Credit Rating (NCR) has affirmed its 'BBB+' long-term issuer rating on Norway-based savings bank Lillesands Sparebank. The outlook is stable. The 'N2' short-term issuer rating and 'BBB+' senior unsecured issue rating have also been affirmed, in accordance with NCR's revised financial institutions rating methodology. The bank has not issued Tier 2 or Additional Tier 1 instruments, but we expect to rate such instruments at 'BBB' and 'BB+', respectively, if it chooses to do so. The ratings are no longer under criteria review.
Rating rationale
NCR has reviewed its long-term and short-term issuer ratings, issue ratings, and outlook on Lillesands Sparebank following the revision of its methodology for assigning ratings to financial institutions (see Related publications). We consider that our amendments to the methodology have not had a material impact on our view of the bank's creditworthiness. Consequently, we have affirmed our ratings and maintained the stable outlook on the ratings on Lillesands Sparebank.
We have revised our capital assessment to reflect significant improvements in capital ratios and increased distance from regulatory requirements. The adjustment also reflects our expectations that the bank will benefit from the implementation of the EU's Capital Requirements Regulation III (CRR3), given its substantial share of low loan-to-value residential mortgage loans.
Stable outlook
The stable outlook reflects our view that a weak economic climate and projected credit losses will be offset by improvements in capital and stable earnings metrics. We believe the bank's moderate risk appetite, strong real-estate collateral and stable cost position will enable resilience to a moderate slowdown in the economy. We expect Lillesands Sparebank's capital ratios will be further boosted by the implementation of CRR3.
An upgrade is unlikely at this time, given the bank's restricted competitive position with regional and sectoral concentrations.
We could lower the rating to reflect a deterioration in the local operating environment or weaker asset quality, increased reliance on bond market financing. We could also lower the rating to reflect pre-provision income to risk exposure amount below 1.5% or cost/income above 60% for a protracted period.
Related publications
i) Lillesands Sparebank assigned 'BBB+' long-term issuer rating; Outlook stable, 17 Dec. 2025.
ii) Nordic Credit Rating publishes amended Financial Institutions Rating Methodology, 12 May 2025.
| 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 | None |
| Additional Tier 1 issue rating: | BB+ | None |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@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.