Sandnes Sparebank’s (Sandnes) A- issuer rating reflects a well-established local savings bank franchise in south-west Norway, solid and resilient earnings capabilities as well as sound prudential metrics.

Following de-risking efforts and a focus on rebuilding the business franchise in recent years, Sandnes in 2021 generated solid results despite the low interest rate environment and increased IT spending. Asset quality remains sound, with earnings continuing to be more than sufficient to cover credit costs. While operating in a region more exposed to the country’s oil and gas industry, the group’s direct exposure is immaterial.

Management is executing on its 2021-2024 strategic plan, with sustainability being a key component of the business strategy. Further, the bank is upgrading its IT infrastructure to meet evolving client needs and improve overall efficiency.

Scope expects the bank to maintain prudent buffers above regulatory requirements. Minimum solvency requirements for Norwegian banks are comparatively high and are set to rise following announced increases in the countercyclical buffer rate and the systemic risk buffer for banks like Sandnes using standardized models. At year-end 2021, the bank’s CET1 capital and leverage ratios were 16.6% (proportional consolidation basis) and 9.2%, respectively.

The A- issuer rating of SSB Boligkreditt AS, a wholly owned subsidiary, is aligned with that of Sandnes Sparebank. Through the issuance of covered bonds, SSB Boligkreditt provides secured funding for its parent. The covered bonds of SSB Boligkreditt are rated AAA.

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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