Nordic Credit Rating (NCR) has affirmed its 'A-' long-term issuer rating on Sweden-based savings bank Sparbanken Skaraborg. The outlook is stable. The 'N2' short-term issuer rating and the 'A-' senior unsecured issue ratings 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 Sparbanken Skaraborg 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 Sparbanken Skaraborg's creditworthiness, and that there have not been significant changes in its overall risk profile. Consequently, to offset the impact of the methodology changes, we have applied a positive borderline assessment. As a result, we have affirmed our ratings and maintained the stable outlook on the ratings on Sparbanken Skaraborg.
Stable outlook
The stable outlook reflects our expectation that Sparbanken Skaraborg's strong capitalisation and improved earnings will offset potential moderate volatility in Stage 3 loans, following a sharp increase in 2024 and a subsequent decrease in the first half of 2025. We also expect that any increase in Stage 3 loans will not result in significant realised losses. In our view, growth prospects in the bank's core region remain cautiously optimistic. We expect the bank to further strengthen its already robust capital ratios, supported by modest credit growth and prudent dividend payments to its owner, and to maintain its relationship with Swedbank.
A higher rating is unlikely at this time as earnings and capitalisation are already strong.
We could lower the rating to reflect Stage 3 loans returning to higher levels (1.5-2% of total net loans over a protracted period), a deteriorating operating environment leading to reduced regional growth, asset quality and collateral values, or a decline in the common equity Tier 1 capital ratio to below 22%.
Related publications
i) NCR Comments: Ratings for Swedish savings banks unchanged after Swedbank's revised dividend policy, published 29 Jan. 2025.
ii) Sparbanken Skaraborg AB (publ) 'A-' long-term issuer rating affirmed; Outlook stable, published 17 Dec. 2024.
iii) Nordic Credit Rating publishes amended Financial Institutions Rating Methodology, published 12 May 2025.
| 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- |
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@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.