Nordic Credit Rating (NCR) has assigned an 'A-' long-term issuer rating to Norway-based Spareskillingsbanken. The outlook is stable. An 'N2' short-term issuer rating has also been assigned, together with an 'A-' senior unsecured issue rating. The bank has no issued Tier 2 or Additional Tier 1 instruments, but we would likely assign future issues an issue rating one and three notches below the issuer rating at 'BBB+' and 'BBB-', respectively, if it chooses to do so.
Rating rationale
Our 'A-' long-term issuer rating on Norway-based Spareskillingsbanken reflects the bank's exceptional capital position, low risk appetite, diverse access to funding and solid asset quality performance. We take a positive view of the bank's membership in the Lokalbanksamarbeidet banking cooperative, which enables product diversity, shared development costs and the opportunity to finance residential retail mortgage loans through jointly owned covered-bond company Verd Boligkreditt AS.
We anticipate Spareskillingsbanken will maintain its current loan portfolio composition, skewed towards low-risk residential mortgages. The low-risk profile is demonstrated by exceptional capital ratios, boosted by the effects of implementing Capital Requirements Regulation III (CRR3). We believe Spareskillingsbanken will maintain solid asset quality, resulting in modest credit losses during our forecast period through 2027. Spareskillingsbanken has exhibited strong cost efficiency in recent years. We expect interest rate cuts and strong competition will weaken earnings through 2027, although remain at solid levels.
The rating is constrained by the bank's concentrated exposure to real-estate collateral in the Kristiansand region. It is also constrained by stiffer regional competition from larger banks and neighbouring similar-sized banks, heightening margin pressure.
Stable outlook
The stable outlook reflects our expectation that the bank will be resilient to economic fluctuations due to its exceptional capital, strong real-estate collateral and solid earnings. We forecast a moderate loan growth of 7% through 2027 and anticipate the bank will maintain its low-risk appetite. We expect the bank to generate sufficient income to keep capitalisation stable, further boosted in mid-2025 from the implementation of CRR3.
A higher rating is unlikely at this time, given the bank's regional and sectoral concentrations.
We could lower the rating to reflect a sustained reduction in the Tier 1 capital ratio to below 20%. We could also downgrade the bank to reflect a material deterioration in the local operating environment or weakening asset quality, or a cost-to-income ratio above 60% for a prolonged period.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | A- |
| Outlook: | Stable |
| Short-term issuer credit rating: | N2 |
| Senior unsecured issue rating: | A- |
| Tier 2 issue rating: | BBB+ |
| Additional Tier 1 issue rating: | BBB- |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Rating Principles published on 14 Feb. 2024, NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024 and NCR's Financial Institutions Rating Methodology published on 12 May 2025. For the full regulatory disclaimer please see the rating report.