Nordic Credit Rating has affirmed its 'A-' long-term issuer rating on Norway-based SpareBank 1 Hallingdal Valdres. The outlook is stable. The 'N2' short-term rating, 'A-' senior unsecured issue rating, 'BBB+' Tier 2 issue rating, and 'BBB-' Tier 1 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
The long-term issuer rating reflects the bank's robust capitalisation and good access to funding. The bank is part of the SpareBank 1 Alliance (SB1 Alliance), which we view as supportive of business diversity, operating efficiency, and liquidity. SB1 Hallingdal Valdres' pre-provision profitability and cost efficiency are in line with those of its peers, particularly in the banking operation. The bank is predominantly a retail lender of residential mortgage loans but also has significant exposure to commercial real estate lending, agriculture and construction.
We have revised our assessment of the bank's risk performance to reflect improvements in risk reporting and adherence. In addition, we have aligned our score for other risks with the risk governance score. We have also updated our assessment of earnings to reflect our expectation that stronger cost efficiency will help sustain robust earnings for the bank.
The rating is constrained by the highly competitive environment in the bank's new growth markets in Oslo and Bergen, strong lending growth ambitions, and uncertainty about the commercial real estate sector.
Stable outlook
The stable outlook reflects our view that SB1 Hallingdal Valdres would be resilient to potential elevated, late-cyclical credit losses. This is based on the bank's low risk appetite, strong real estate collateral, and solid capitalisation. Moreover, we expect the bank to maintain strong earnings before loan losses, despite reduced net interest margins as a result of a decline in still-high market interest rates and increased competition.
We could raise the rating to reflect a consolidated Tier 1 ratio sustainably above 25%, pre-provision income to risk exposure amount (REA) sustainably above 3%, reduced uncertainty about credit risk, and improved asset quality metrics.
We could lower the rating to reflect a lasting reduction in the consolidated Tier 1 capital ratio to below 20%, risk-adjusted earnings metrics below 2% of REA, cost/income above 60% over a protracted period, a material deterioration in the operating environment, or increased risk appetite that negatively affects asset quality.
| 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
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Sean Cotten, chief rating officer, +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.