Nordic Credit Rating (NCR) said today that Norwegian savings banks are in good shape to meet the likely challenges of 2021 with strong capitalisation and access to stable sources of funding.
In a report published today the agency said the sector had outperformed its earlier expectations in the first nine months of 2020, but added that the country's savings banks have taken credit losses based on economic projections and increased their loss reserves against future actual losses.
"We see risks on the horizon and believe that 2021 could be even more challenging than 2020," said NCR credit analyst Geir Kristiansen. "However, Norwegian banks are generally well capitalised and have access to stable sources of funding."
Among the major risk factors facing the sector are increasing loan losses, which are normally late cyclical, the report says. Political measures in response to COVID-19 are keeping households afloat and companies alive, as illustrated by the low number of debt collection cases and bankruptcies in the first eight months of the year, but these measures will at some point end.
NCR also expects continuing margin pressure amid low interest rates, the report says. Mitigating factors include cost cutting and increasing lending demand as the cycle turns.
If you have any questions, please contact:
Geir Kristiansen, credit rating analyst, +4790784593, firstname.lastname@example.org
Sean Cotten, chief rating officer, +46735600337, email@example.com