Nordic Credit Rating (NCR) has affirmed its 'BBB+' long-term issuer rating on Norway-based Voss Veksel- og Landmandsbank ASA (Vekselbanken). The outlook is stable. The 'N2' short-term issuer rating, the 'BBB+' senior unsecured issue rating, the 'BBB' issue rating on the bank's Tier 2 instrument and the 'BB+' issue rating on the bank's additional Tier 1 instrument were also affirmed.
Rating rationale
The affirmation reflects the bank's strong earnings and capital position and low risk appetite. The bank has proven access to capital market financing and few single-name concentrations. Vekselbanken has an ownership and cooperation arrangement with the Eika Alliance banking association which enables product diversity, shared development costs and the opportunity to finance residential retail mortgage loans through jointly owned covered-bond company Eika Boligkreditt AS.
We expect Vekselbanken to maintain strong earnings over our forecast period through 2027. We also expect credit losses to remain at similar levels, given the continued effects of recent cost inflation and high interest rates.
The rating is constrained by geographic concentration in the relatively rural local economy of the Voss region and a high proportion of real-estate collateral in the bank's core market. The rating is also constrained by strong competition from the bank's main owner, Voss Sparebank, and the two banks' largely shared customer base.
Stable outlook
The stable outlook reflects our view that Vekselbanken's strong earnings will compensate for a weakened domestic economy. We forecast that the bank's cost efficiency will remain stronger than that of its peers and it will maintain strong asset quality. Vekselbanken has achieved strong capital ratios following implementation of the EU's Capital Requirements Regulations III (CRR3). We expect the bank to utilise this positive effect to support loan growth in the coming years.
We could raise the rating to reflect the bank's commitment to a consolidated Tier 1 ratio above 22% or improved scale and competitive position. We could also raise the rating to reflect stronger regional economic growth due to reduced commuting time between Voss and Bergen.
We could lower the rating to reflect a material deterioration in the local operating environment that weakens asset quality, a consolidated Tier 1 ratio below 18% over a protracted period, or pre-provision income to consolidated risk exposure amount below 2% for a protracted period.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB+ | BBB+ |
| Outlook: | Stable | Stable |
| 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:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@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.