Nordic Credit Rating (NCR) said most of the nine Nordic niche banks in its analysis are experiencing substantial transformation in a report published today. These include strategic shifts, changes in ownership, acquisition of new portfolios, and three banks relocating their domicile from Norway.
"One-off transactions complicate comparisons with previous quarters. However, we believe credit losses have stabilised at about 3.2% annually for the sample, excluding one-off impacts," said NCR credit analyst Sean Cotten. "These losses generally remain well within each bank's earnings buffers, with over half of the sample reporting a return on ordinary equity of 9.5% or higher."
Aside from TF Bank's sale of a large portion of its non-performing loans, Stage 3 loans are still increasing as a share of total lending for most banks. Avida also noted a significant rise in provisions and a decrease in gross non-performing loans, which materially lowered their net Stage 3 exposure.
Affected banks quickly adapted to the Swedish regulator's updated guidance on funding and liquidity metrics by increasing their liquidity buffers and holding a larger proportion of liquid assets.
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com