Nordic Credit Rating has revised the outlook on its 'BBB+' long-term issuer rating on Norway-based Tinde Sparebank to stable from positive. The long-term rating and 'N2' short-term issuer rating have been affirmed. The 'BBB+' senior unsecured issue rating, a 'BBB' Tier 2 issue rating and a 'BB+' Additional Tier 1 issue rating were also affirmed.
Rating rationale
The outlook revision to stable from positive reflects our view that the bank will need to make further progress in reducing its problem loans and demonstrate a material reduction in credit losses before we will consider an upgrade of the bank's long-term rating. The bank has made progress with some of its Stage 3 non-performing and impaired loans in recent quarters, resulting in a significant increase in loss provisions in 2025 and in the first half of 2026. We believe that credit risk is elevated and that the resolution of existing Stage 3 loans could lead to elevated credit losses remaining persistent into 2027.
We have also revised our assessment of Tinde Sparebank's capital to reflect that the combination of weaker capital generation, due to tighter interest margins and recent credit losses, and the bank's focus on loan growth will result in a reduction of the Tier 1 ratio towards 21% in 2028.
Although it continues to address asset quality issues, Tinde Sparebank's rating reflects its solid earnings and capital position, diversified funding and low risk appetite. The bank demonstrates reliable access to capital market financing and maintains limited single-name concentrations among its loan and deposit customers. The merger has resulted in a stronger risk organisation.
In addition to asset quality issues, the rating is constrained by the bank's geographic concentration in central and northern Møre og Romsdal county and modest growth in core municipalities. While the bank maintains a strong market position in its core areas, it faces significant competition from larger regional savings banks, particularly in Molde and Ålesund.
Stable outlook
The stable outlook reflects our expectation that the bank's robust earnings and capital, diversified funding, solid liquidity and post-merger cost synergies will offset elevated corporate credit losses and strong competition in the bank's largest core markets. We believe that the bank will continue to resolve problem loans with the potential for further reserves into 2027. We also expect the bank to prioritise loan growth, resulting in a reduction in the Tier 1 capital ratio towards 21% by end-2028.
We could raise the rating if the bank demonstrates improved credit quality metrics, with credit losses consistently around 20bps and net Stage 3 loans below 1.5%. Additionally, pre-provision income (PPI) to risk exposure amount (REA) should remain above 2.5%, the cost-to-income ratio below 50%, and the consolidated Tier 1 ratio sustainably above 21%.
We could lower the rating if credit quality metrics remain materially weaker than peers, or if the bank's consolidated Tier 1 ratio is sustainably below 18%, or if capital ratios fall within 200bps of regulatory requirements, or if PPI to REA is consistently below 2.0%.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB+ | BBB+ |
| Outlook: | Stable | Positive |
| 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:
Sean Cotten, lead senior analyst, +46735600337, sean.cotten@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@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.