The ratings of Landkreditt Bank are based on the credit fundamentals of the cooperative group, Landkreditt SA, a leading provider of financial services to Norway’s agricultural sector. The bank is the main operating company of the group. While a digital bank since its founding, ongoing investments are being made to further digitalise customer interactions and automate processes. At the same time, management is working on how it can best support farmers meet their sustainability targets.

The bank maintains a low risk profile, with over 99% of lending secured by residential property or agricultural property and land. Asset quality was little impacted by the Covid-19 pandemic although management made additional loss provisions to cover potential long-term consequences. As of year-end 2020, the reported non-performing loan ratio was 0.4%. 

The bank’s ownership structure further reinforces a fairly low risk business, with cooperative members understanding the need to ensure the solidity of the group. As of year-end 2020, the group’s CET1 capital ratio stood at 20.5%, well above the current requirement of 13.8%. Like with other Norwegian banks, the bank relies on market funding. However, Landkreditt maintains comfortable liquidity buffers and successfully accesses the domestic unsecured and secured debt markets on a regular basis.

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 www.scoperatings.com.