Nordic Credit Rating (NCR) has affirmed its 'BBB+' long-term issuer rating on Norway-based savings bank Odal Sparebank. The outlook is stable. The 'N2' short-term issuer rating, 'BBB+' senior unsecured issue ratings and 'BBB' Tier 2 issue rating have also been affirmed, in accordance with NCR's revised financial institutions rating methodology. The ratings are no longer under criteria review.
Rating rationale
NCR has reviewed its long-term and short-term issuer ratings, issue ratings, and outlook on Odal Sparebank following the revision of its methodology for assigning ratings to financial institutions (see Related publications). We consider that our amendments to the methodology have not had a material impact on our view of Odal Sparebank's creditworthiness. Consequently, we have affirmed our ratings and maintained the stable outlook on the ratings on Odal Sparebank.
Odal Sparebank has achieved strong loan growth, including transferred loans, with growth above 15% for both corporate and retail customers, over the 12 months ending 31 Mar. 2025. We have revised our risk governance assessment to reflect the recent high growth, as well as its double-digit growth expectations through 2027. In our view, the recent strengthening of personnel serves as a mitigating factor, although we consider that the high growth intensifies pressure on the bank's risk management capacity and risk resources. We expect Odal Sparebank to benefit from the implementation of the EU's Capital Requirements Regulation III (CRR3), given its substantial share of low loan-to-value residential mortgage loans. While CRR3 will boost capital ratios in 2025, we anticipate these ratios will decline due to strong loan growth.
Stable outlook
The stable outlook reflects our view that the bank's strong earnings and capital position will prove resilient against a modest economic slowdown. We believe Odal Sparebank's cost efficiency will remain robust but weaken from current strong levels due to pressure on margins and significant investments in personnel and growth regions. We anticipate capital ratios to decline from strong levels following the positive regulatory impact of CRR3, driven by strong growth prospects, although compensated by an improving market position in growth areas in Romerike.
We could raise the rating to reflect pre-provision income to risk exposure amount (REA) sustainably above 3% and cost to income below 45%, a material reduction in Stage 3 non-performing loans, or an improved market position in the growth markets in Romerike.
We could lower the rating to reflect a consolidated Tier 1 capital ratio below 18% over a protracted period, a material deterioration in the local operating environment that negatively affects asset quality, or risk-adjusted earnings metrics below 1.5% for REA over a protracted period.
Related publications
i) Odal Sparebank assigned 'BBB+' long-term issuer rating; Outlook stable, 27 Jun. 2024
ii) Nordic Credit Rating publishes amended Financial Institutions Rating Methodology, published 12 May 2025.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB+ | BBB+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | BBB+ | BBB+ |
| Tier 2 issue rating: | BBB | BBB |
| Additional Tier 1 issue rating: | BB+ | None |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
The methodology documents used for this rating are NCR's Financial Institutions Rating Methodology published on 12 May 2025, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.