Our 'A-' issuer and issue ratings on Sparbanken Rekarne AB (publ) (Rekarne) are unchanged following the publication of its first-quarter 2022 results.
Stable core earnings in the first quarter
Rekarne's pre-provision income rose by 16% since year-end 2021 and by 3% year on year, largely driven by financial income and in part by an increase in the valuation of shareholdings in Indecap Holding AB. Core pre-provision income (excluding dividends and other income) remained virtually unchanged from the last quarter.
Capital ratio continues to improve
The core equity Tier 1 (CET1) ratio rose slightly in the quarter, to 21.9%, and the total capital ratio rose by 3.5% to 24.1% from year-end 2021. Like many other banks, Rekarne has finished reversing pandemic-related loan loss provisions and instead reported credit losses, both as a result of smaller actual losses and modelled provisions due to economic uncertainty resulting from the war in Ukraine. Loan losses were at 1bps of net loans in the quarter, slightly lower than pre-pandemic levels.
Figure 1. Sparbanken Rekarne key credit metrics, 2018–Q1 2022
| (%) | 2018 | 2019 | 2020 | 2021 | 2022 Q1 YTD |
| Net interest margin | 1.4 | 1.5 | 1.4 | 1.3 | 1.3 |
| Loan losses/net loans | 0.01 | 0.03 | 0.03 | -0.03 | 0.01 |
| Pre-provision income/REA | 3.0 | 2.0 | 2.4 | 3.4 | 3.4 |
| Return on ordinary equity | 13.4 | 11.7 | 10.3 | 15.0 | 11.6 |
| Loan growth (LTM) | 18.5 | 14.2 | -4.7 | 5.5 | 1.0* |
| CET1 ratio | 16.3 | 15.6 | 18.1 | 21.2 | 21.9 |
Based on company data. REA–risk exposure amount. All metrics adjusted in line with NCR methodology. *Last 12 months.
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