Nordic Credit Rating has assigned a 'BBB+' long-term issuer rating to Norway-based Tinde Sparebank. The outlook is positive. An 'N2' short-term issuer rating has also been assigned, together with a 'BBB+' senior unsecured issue rating, a 'BBB' Tier 2 issue rating and a 'BB+' Additional Tier 1 issue rating.
Rating rationale
The long-term issuer rating reflects the bank's strong capital position, diversified funding, low risk appetite and solid earnings, despite higher costs following the recent merger. Tinde Sparebank maintains reliable access to capital market financing and limited single-name concentrations among its loan and deposit customers. The merger has strengthened the bank's risk organisation, although mergers can present risk management challenges. As a member of the Eika Alliance, Tinde Sparebank benefits from product diversity, shared development costs and the ability to finance residential retail mortgage loans through the jointly owned covered-bond company Eika Boligkreditt AS.
The rating is constrained by increased loss provisions and a higher proportion of high-risk and non-performing loans after the merger. It is also constrained by the geographic concentration of the bank's loan book in central and northern Møre og Romsdal county, and modest growth in its core municipalities. The bank maintains a strong market position in its core areas but faces significant competition from larger regional savings banks, particularly in its expanding markets.
We have lowered our standalone credit assessment on Tinde Sparebank by one notch to reflect near-term risks to our base case following its recent merger with Sunndal Sparebank.
Positive outlook
The positive outlook reflects our expectation that a stricter credit policy, enhanced risk governance resources and lower interest rates will lead to an improvement in credit quality, which has weakened over the last year. It also considers the potential for Tinde Sparebank to improve its earnings metrics as it realises merger-related cost synergies. We forecast the bank will maintain its solid capital position.
We could raise the rating to reflect improved credit quality metrics and a reduction in high-risk loan volumes, with the level of Stage 3 loans in line with peers, together with maintained strong capital ratios, with a consolidated Tier 1 ratio sustainably above 22%, and a stable pre-provision income (PPI) to risk exposure amount (REA) at approximately 2.5%, with a cost-to-income ratio nearing 50%.
We could revise the outlook to stable to reflect that asset quality metrics remain weaker than peers, with loan loss provisions consistently above 20bps, a consolidated Tier 1 ratio which remains consistently below 20%, or a PPI to REA which remains sustainably below 2.5% with a cost-to-income ratio failing to near 50%.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | BBB+ |
| Outlook: | Positive |
| Short-term issuer credit rating: | N2 |
| Senior unsecured issue rating: | BBB+ |
| Tier 2 issue rating: | BBB |
| Additional Tier 1 issue rating: | BB+ |
Contacts:
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@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.