Nordic Credit Rating (NCR) has affirmed its 'A-' long-term issuer rating on Norway-based savings bank Orkla Sparebank. The outlook is stable. The bank’s 'N2' short-term issuer rating, 'A-' senior unsecured, 'BBB+' Tier 2, and 'BBB-' Additional Tier 1 instrument ratings are also affirmed.
Rating rationale
The affirmation reflects Orkla Sparebank's strong capital and liquidity positions, as well as its moderate risk appetite. The merger with Rindal Sparebank, together with organic loan growth outpacing the market, has led us to upgrade our assessment of Orkla Sparebank's competitive position. Increased resources for risk management, low loan losses, and improved credit quality have also resulted in higher assessments of risk governance and loan loss performance. As a member of the Eika Alliance, the bank benefits from product diversity, shared development costs, and access to residential mortgage financing through Eika Boligkreditt.
The rating is constrained by the bank's concentrated exposure to real estate and agriculture in the region southwest of Trondheim in central Norway. It is also limited by strong competition and a low market share in Trondheim, the bank's fastest-growing market
Stable outlook
The outlook remains stable, reflecting our view that a weak economic climate and projected credit losses will be offset by strong and stable pre-loss earnings metrics. The merger with Rindal Sparebank appears to have been well executed, and we expect cost synergies to materialise in 2027. The merger has also strengthened the bank's capital ratios, and our expectations of stable capital ratios are a stabilising factor in our credit risk assessment.
We could raise our rating on Orkla Sparebank if economic conditions and asset quality metrics improve relative to peers, if pre-provision income/risk exposure amount (REA) remains sustainably above 3%, or if there is a general improvement in funding and liquidity.
We could lower our rating if there is a material deterioration in the local operating environment that weakens asset quality, a sustained reduction in the Tier 1 capital ratio to below 20%, or risk-adjusted earnings metrics remain below 2% of REA on a sustained basis.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A- | A- |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | A- | A- |
| Tier 2 issue rating: | BBB+ | BBB+ |
| Additional Tier 1 issue rating: | BBB- | BBB- |
Contacts:
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Sean Cotten, lead senior analyst, +46735600337, sean.cotten@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@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.