Nordic Credit Rating (NCR) has affirmed its 'BBB+' long-term issuer rating on Norway-based Odal Sparebank. The outlook is stable. The 'N2' short-term issuer rating, 'BBB+' senior unsecured issue rating, 'BBB' Tier 2 issue rating, and 'BB+' Additional Tier 1 issue rating have also been affirmed.
Rating rationale
The affirmation reflects Odal Sparebank’s solid financial profile, with strong earnings and robust capital position. The bank has proven access to capital market financing, few concentrations in its mostly retail deposit base, and improved its loan-to-deposit ratio over the past year. We view the bank's membership of the Eika Alliance, co-located accounting services and local real estate agency, as positive for its cost efficiency, product offerings and customer loyalty. We have revised our assessment of the bank's capital position, expecting it to maintain a consolidated Tier 1 ratio around 23% through 2028. We have also revised our assessment of loss performance to reflect an increase in non-performing loans and loan losses, although we believe some improvements are likely in 2026.
The rating is constrained by geographical concentration in Odal Sparebank's loan book and a high share of real estate and agriculture collateral in the bank's core markets. The bank has a very strong market share in its traditional core markets in Odal but faces tougher competition in other growth markets.
Stable outlook
The outlook is stable, reflecting our view that the bank's strong earnings will compensate for a weakened domestic economy and elevated credit provisions. It also reflects the bank's strong capital position, despite our projections of being slightly downward trending through 2028. We see continuous improvement in the risk governance area in response to the supervisory review by the Norwegian FSA. Our estimates also envisage asset quality to improve somewhat in 2026.
We could raise the rating to reflect pre-provision income to risk exposure amount (REA) sustainably above 3% together with a sustained improvement in asset quality metrics or an improved market position in growth markets of Kongsvinger and Romerike.
We could lower the rating to reflect a Tier 1 capital ratio below 18% over a protracted period, a material deterioration in the local operating environment and/or weakened asset quality, or pre-provision income/REA below 1.5% over a protracted period.
| 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+ | BB+ |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Sean Cotten, lead senior analyst, +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.