Nordic Credit Rating (NCR) has affirmed its 'BBB+' long-term issuer rating on Norway-based Søgne og Greipstad Sparebank. The outlook is stable. The 'N2' short-term issuer rating, the 'BBB+' senior unsecured issue rating, the 'BBB' issue rating on the bank's Tier 2 instrument and the 'BB+' issue rating on the bank's Additional Tier 1 instrument were also affirmed.
Rating rationale
The affirmation reflects our view that the bank has, and will continue to, perform largely in line with our earlier expectations. Stronger capital generation compared with our forecast a year ago led to a consolidated Tier 1 ratio to 23.7% as of end-2025, compared with our expectation of 23.1%. While extraordinary costs in the first half of 2026 and stronger expected growth in the second half lead to a Tier 1 ratio of 23.5% in our 2026 forecast, we expect it to climb above 24% by end-2028. Reflecting this, we have raised our assessment of Søgne og Greipstad Sparebank's capital.
Our 'BBB+' long-term issuer rating on Norway-based Søgne og Greipstad Sparebank continues to reflect the bank's moderate risk appetite, diverse access to funding and solid market position in its historical core markets, supported by its membership in Lokalbanksamarbeidet. Asset quality performance worsened in the first half of 2026, in line with the trend seen in the Norwegian savings bank sector, and remains broadly in line with most peers.
The rating remains constrained by the bank's geographic concentration in western Kristiansand, a high proportion of real-estate collateral in its core markets, and some limitations in the risk governance framework. The rating is also constrained by the bank's small size as well as high, and increasing, competition in and around Kristiansand.
Stable outlook
The outlook is stable, reflecting our view that Søgne og Greipstad Sparebank's solid capitalisation and adequate earnings are sufficient to compensate for a continued weakened domestic economy and relatively high risk in the real-estate development sector. We expect the bank to maintain its moderate risk profile. Net Stage 3 loans are forecast to remain elevated at approximately 1.5% of net lending in 2027 and 2028, while credit losses are expected to gradually decline towards historical levels. We also expect that the bank will maintain its market position in both its traditional and newer markets, despite high competition.
We could raise our rating on Søgne og Greipstad to reflect improved scale and market position; strengthened core earnings, with a cost-to-income ratio around 50% and risk-adjusted earnings around 2.5% over a protracted period, and improvements to the risk governance framework.
We could lower our rating to reflect a material deterioration in the local operating environment that negatively affects asset quality, a consolidated Tier 1 capital ratio sustainably below 20% or significantly weakened market position due to competitive pressure in the region.
| 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:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Sean Cotten, lead senior analyst, +46735600337, sean.cotten@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.