Scope has updated its rating report on SpareBank 1 Nordvest, rated A- with Stable Outlook.

The A- issuer rating reflects SpareBank 1 Nordvest’s well-established market position in its local area in north-west Norway and a sound financial profile. In a year where the economy suffered from the pandemic and the policy rate was lowered to 0% from 1.5%, the bank’s performance was resilient. In 2020, the bank reported a return on equity of 6.5% while Stage 3 loans remained low at 1.3% of the loan book.

Key to the bank’s competitive position is its membership in the SpareBank 1 Alliance. In addition to enabling SpareBank1 Nordvest to meet the broader financial needs of clients, the alliance is a source of expertise and provides important economies of scale, particularly in digital capabilities. As well, the covered bond issuing vehicles of the alliance are a critical source of funding. The bank’s solvency metrics remain at solid levels. As of YE 2020, the CET1 capital ratio was 16.7% while the leverage ratio was 8.9% on a proportional consolidation basis.

The Stable Outlook reflects the ongoing resilience of the bank’s business and operating performance in a challenging operating environment. The upcoming merger with Surnadal Sparebank is expected to be supportive of the bank’s credit profile.

This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on this LINK.