On 29 Oct. 2025, Norion Bank announced it will initiate its second SEK 500m share buyback programme this year. The bank reported a common equity Tier 1 (CET1) ratio of 16.1% as of Q3 2025, and we estimate the buybacks will reduce this ratio by approximately 90bps, all else equal. The bank has proactively offset the Tier 1 ratio impact by issuing a SEK 500m additional Tier 1 (AT1) instrument with settlement today, supporting our view of the bank's capital position.
Our latest 2025 capital ratio forecast included the anticipated impact (approximately 90bps) from the first buyback programme, following its announcement in Feb. 2025. We also considered the likelihood of the bank initiating dividend payments within the forecast period. As a result, the bank remains within our broader expectations, despite the pro forma CET1 ratio of 15.2% for Q3 2025 being about 60bps below our year-end forecast. Notably, our forecast did not include potential AT1 instruments.
We place significant emphasis on Tier 1 ratios, given the loss-absorbing capacity of AT1 instruments, provided the bank maintains sufficient distance from regulatory CET1 requirements, as is the case for Norion Bank. We also note that share buybacks offer greater flexibility than initiating dividend payments, as dividend policies often rapidly become investor expectations. Accordingly, the launch of this second buyback programme does not materially affect our assessment of the bank's creditworthiness.
This commentary does not constitute a rating action.
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com