Norwegian mid-size savings banks performed relatively strongly in the fourth quarter of 2022, concluding a successful year overall, according to a report published today by Nordic Credit Rating (NCR). Rising interest rates boosted net interest margins, supporting margin growth in each quarter of 2022. Although high inflation put further pressure on household costs, we expect that most households in Norway have sufficiently robust finances to protect against mortgage defaults.
"We expect Norway's central bank to maintain a high policy rate due to the ongoing inflationary pressure, constraining the lending growth of mid-size savings banks in the near term", said NCR credit analyst Christian Yssen. "Although the economic outlook deteriorated throughout 2022, these banks have not shown any material increase in losses and the Norwegian economy remains relatively healthy."
We expect the economy to weaken in 2023, which will have a negative impact on asset quality and loan loss provisions. However, we believe that strong pre-provision earnings are likely to offset increases in net losses in 2023, while the banks' large capital buffers provide further resilience.
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com