On 9 Dec. 2024, Norion Bank AB (publ) announced its acquisition of DNB Sweden's credit card portfolio. Our 'BBB-' long-term issuer rating on the bank and the negative outlook on our issuer rating are unchanged following the acquisition.
The acquisition should add around SEK 700m in credit volumes, a 1.4% increase in the bank's loan book as of 30 Sep. 2024. In addition, the new portfolio will increase Norion Bank's private credit card customers to about 100,000, from 24,000, and increase the volume of credit exposure in the bank's Payments division by 25%. The bank aims to complete the acquisition in the first quarter of 2025 and expects immediate positive contributions to profitability.
Details of the acquisition and the impact on capital ratios and earnings are few. However, we believe the bank has adequate excess capital to maintain our current view of capitalisation after the transaction. The bank reported a 16.1% Tier 1 ratio as of 30 Sep. 2024, well above our 15% negative rating driver. The bank also maintains the ability to add additional Tier 1 capital, if necessary. The additional cardholders will provide a modest improvement to the bank's overall market position and competitive position within the Swedish credit card segment. The new portfolio should also support the bank's already strong earnings, offset in part by the higher expected loss profile of credit card exposures.
This commentary does not constitute a rating action.
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com