The ratings of Landkreditt Bank are based on the credit fundamentals of the group, Landkreditt SA, a leading provider of financial services to Norway’s agricultural sector. In recent years, management has pursued a growth strategy in the agricultural segment as well as with retail customers to achieve greater scale and to diversify the business. Currently, the mix is slightly more skewed to farmers, but the aim is for an equal balance between the two customer segments.

At the same time, the bank has maintained a low risk profile. Over 99% of lending is secured by residential property or agricultural property and land, and credit losses have remained minimal. The bank’s cooperative ownership structure further reinforces a fairly low risk business, with members understanding the need to ensure the solidity of the group. We expect the operating environment to remain supportive as Norway benefits from solid economic growth, low unemployment and high wealth levels. Meanwhile, the high levels of personal indebtedness and elevated property valuations remain concerns.

As an online bank, Landkreditt Bank is already comparatively efficient and continues to make investments to further digitalize and improve customer service.

Like with other Norwegian banks, the bank relies on market funding. However, the bank maintains comfortable liquidity buffers and successfully accesses the domestic unsecured and secured debt markets regularly. The bank’s reassuring solvency metrics are in line with Norwegian regulatory requirements which Scope considers to be relatively rigorous.

Download the rating report here.