The A- issuer rating reflects BN Bank’s sound financial profile and ownership by solid member banks of the SpareBank 1 Alliance (SB1 Alliance). Management is successfully executing on a strategy to achieve sustainable returns. This entails growing mortgage lending volume, increasing margins by targeting customers willing to pay for more service, and improving efficiency. For 1H 2021, the reported return on equity was 10.6% with the cost income ratio below 33%.

Strategic decisions such as ceasing unsecured consumer lending activities and restricting the geographic focus of the commercial real estate business support the bank’s sound asset quality profile. As of 30 June 2021, non-performing and other doubtful commitments accounted for 0.46% of gross lending. Nevertheless, high household debt and elevated property prices remain risks, particularly in the bank’s primary market, the Oslo region.

Incorporating the concerns of external stakeholders, the bank has defined a sustainability strategy focused on two main goals – to actively monitor and reduce the climate footprint of the loan portfolio and to further incorporate sustainability into business operations. Work is being done to integrate ESG risks into the bank’s customer onboarding and credit granting processes.

While the bank has actively grown deposits, the use of market funding remains material. BN Banks enjoys regular access to the domestic unsecured debt market as well as to secured funding through the covered bond issuing entities of the SB1 Alliance.

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.

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