Brage Finans’ (Brage) A- issuer rating reflects a focused leasing and car financing business, solid credit fundamentals and the strategic relationship with its owner banks. Brage acts as the finance company for its owners, primarily well-established and solid savings banks operating in Western and Southern Norway. In addition to being an important distribution channel, the owners have consistently provided capital and funding to sustain growth and development.

Through the considered expansion of distribution channels as well as market share gains, Brage has steadily increased returns. For 2023, Brage reported a return on equity above 11%, excluding the commissions paid to its owners. Performance was supported by solid growth, strong cost efficiency and contained credit costs.

The nature of Brage’s business entails greater asset risk but higher margins than traditional banking focused on mortgage lending. Asset quality remains sound, underpinned by a diversified and mainly asset-backed credit portfolio as well as consistent risk management. Brage has no direct exposure to residual value risk. Reflective of a slowing Norwegian economy, the Stage 3 ratio increased to 3.2% as of YE 2023, from 2.2% as of YE 2022.

As a licensed finance company regulated and supervised by the Norwegian FSA, Brage is subject to most of the same requirements as banks, including in the areas of solvency and liquidity. Brage maintains prudential metrics above relatively stringent requirements, with support from its owners as needed.

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.

Click here to access the full report.