Nordic Credit Rating (NCR) has revised the outlook on its 'BBB' long-term issuer rating on Sweden-based niche lender NOBA Bank Group AB (publ) to positive from stable. The long-term rating and 'N3' short-term issuer rating have been affirmed, as have the 'BBB' senior unsecured issue rating, 'BB+' Tier 2 issue rating, and 'BB-' Additional Tier 1 issue rating.
Rating rationale
The outlook revision reflects NOBA's improved operating performance, increased scale advantages, and our view that the operating environment for Nordic niche lenders has strengthened. Regulatory focus on the consumer lending sector remains high; however, we believe regulatory risk to NOBA and its larger Nordic peers has declined. Additionally, lower interest rates, reduced inflationary pressures, and more stable economies have lessened the likelihood of a significant deterioration in asset quality over the next few years. The positive outlook also considers NOBA's substantial growth in scale and customer diversification in recent years, as well as the potential for further scale benefits and continued positive asset quality trends to support additional capital generation.
We project the bank will further improve its pre-provision earnings to nearly 9% of its risk exposure amount, providing a substantial buffer against elevated credit losses in our forecast. Despite strong earnings, we expect the bank to increase dividend payouts or share buybacks to maintain its Tier 1 capital ratio just above 15%. This aligns with a common equity Tier 1 ratio at the lower end of its 13–15% financial target. Reported loss provisions have declined to 3% of net loans in 2025 and are trending below our previous expectation of 3.3%. However, loan losses and the bank's share of net Stage 2 and Stage 3 loans remain elevated in our view. We expect further improvements in asset quality, supported in part by a higher share of secured lending as the bank grows.
We have also revised our assessment of NOBA's risk governance to reflect its strong regulatory track record and enhanced transparency following the completion of its initial public offering in September. In addition, we note an improvement in NOBA's funding profile, as the company has increased its use of secured and senior unsecured funding, which better aligns with the duration of its loan book.
Positive outlook
The positive outlook reflects our expectation that NOBA's strong earnings will support excess capital generation, even with anticipated annual growth of 10–12% and credit losses of just under 3% of net loans. While we project a modest reduction in loss provisions, we believe the bank needs further improvement in its asset quality metrics to demonstrate reduced credit risk. Nevertheless, the bank's increasing economies of scale enhance resilience, and continued growth and diversification across its markets and products could support its credit profile.
We could raise the rating if NOBA achieves further improvements in asset quality metrics and economies of scale, while maintaining capital flexibility and a Tier 1 ratio consistently above 15%.
We could revise the outlook to stable if the Tier 1 ratio remains below 15% or if the common equity Tier 1 ratio margin to requirements falls below 3pp on a sustained basis. We could also return the ratings to stable if loss performance does not improve as expected, the bank's credit risk appetite increases, or regulatory changes negatively affect the operating environment.
Related publications
i) NCR Comments: NOBA Bank Group 'BBB' rating and outlook unchanged following IPO announcement, 11 Sep. 2025
ii) Nordic niche banks; building a foundation for growth, 4 Sep. 2025
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB | BBB |
| Outlook: | Positive | Stable |
| Short-term issuer credit rating: | N3 | N3 |
| Senior unsecured issue rating: | BBB | BBB |
| Tier 2 issue rating: | BB+ | BB+ |
| Additional Tier 1 issue rating: | BB- | BB- |
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
The methodology documents used for this rating are NCR's Rating Principles published on 14 Feb. 2024, NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024 and NCR's Financial Institutions Rating Methodology published on 12 May 2025. For the full regulatory disclaimer please see the rating report.