Nordic Credit Rating (NCR) has affirmed its 'A' long-term issuer rating on Sweden-based savings bank Varbergs Sparbank AB. 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 Varbergs Sparbank 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 the bank's creditworthiness, and that there have not been significant changes in its overall risk profile. Consequently, we have affirmed our ratings and maintained the stable outlook on the ratings on Varbergs Sparbank.
Stable outlook
The stable outlook reflects our view that Varbergs Sparbank will maintain a prudent risk appetite despite our expectation that it will utilise its excess capital to grow. We expect that the bank will be able to protect some of a recent increase in risk-adjusted earnings as interest rates fall. We believe that the bank's prudent provisioning will protect against significant losses despite a risk of increasing non-performing loans in the construction sector. We further believe that the regional economy will continue to perform in line with, or better than, the domestic average.
An upgrade is unlikely at this time, given the bank's regional and sectoral concentration.
We could lower the rating to reflect a decline in core earnings (core cost-to-income around 60% and risk-adjusted earnings around 2%). We could also lower the rating to reflect a material deterioration in the regional operating environment or increased risk appetite, or material changes in the bank's cooperation with Swedbank.
Related publications
i) NCR Comments: Ratings for Swedish savings banks unchanged after Swedbank's revised dividend policy, 29 Jan. 2025.
ii) Varbergs Sparbank long-term issuer rating raised to 'A'; Outlook stable, 9 Sep. 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.