The A- issuer rating on Lankdreditt Bank is based on a consolidated view 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.

Management continues to pursue a growth strategy in the agricultural sector as well as with personal customers to achieve greater scale and to diversify the business. Ongoing efforts to develop the group’s insurance, asset management and real estate brokerage businesses enables the group to meet the broad financial needs of its customers.

Building upon its origins as a digital bank, Landkreditt continues to invest in technology to support business growth and increase efficiency. Work is ongoing to incorporate ESG considerations into the credit process and to develop capabilities to meet evolving sustainability disclosure requirements. The group has material exposure to the agricultural sector, an industry which is more sensitive to environmental factors. Landkreditt aims to encourage the sustainability efforts of Norwegian farmers.

Reflecting its cooperative business model and low risk culture, Landkreditt generates relatively stable but somewhat lower returns than domestic peers. Earnings, nevertheless, are more than sufficient to absorb credit costs. Asset quality remains sound despite elevated interest rates and a more uncertain economic backdrop. Most lending is secured by residential property or agricultural property and land. Norwegian farmers also continue to receive material government support.

Landkreditt maintains robust solvency metrics underpinned by material earnings retention. Cooperative members understand the need to safeguard the group’s solidity and that retained earnings are important for future growth. Like with other Norwegian banks, Landkreditt relies to some extent on market funding, including covered bonds. Customer deposits, however, remain the primary funding source.

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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