Rating action

Scope Ratings UK Limited (Scope) has resolved the Under Review status of Brage Finans AS (Brage) and upgraded the issuer rating and preferred senior unsecured debt rating to A+ from A-, both with a Stable Outlook. Consequently, the under-review status for possible upgrade on the ratings were resolved.

Brage’s issuer rating reflects Scope’s view on the strategic importance of the company for its new majority owner, Sparebanken Norge (SBN). Brage’s activities are considered to be ‘largely integrated’ to its parent, complementing SBN’s product offering – in particular leasing- to its retail and corporate customers. We believe there is a ‘high’ likelihood of support from the parent in case of need.

We have established a credit view on the parent – SBN - and applied a top-down rating approach for Brage’s issuer and debt ratings. However, Brage’s issuer rating is not fully aligned to the one of its parent at this stage, considering that the subsidiary still remains relatively independent from the parent.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Our credit view of SBN, which is the anchor for Brage’s ratings, reflects the following:

Business model assessment: Sparebanken Norge is a leading national savings bank with the majority of its business consisting of residential mortgage lending supplemented by lending to the corporate sector. Brage’s parent has a presence across the country with concentrations along the western and southern parts of the country. Despite being an independent bank, SBN spearheads a cooperation amongst independent banks through Frende Gruppen. The bank serves around 800,000 customers and has total assets of 560bn NOK.

Operating environment assessment: Sparebanken Norge operates exclusively within Norway. Norway is a relatively small open economy with one of the highest levels of per capita income in the world and low unemployment. A very strong government fiscal position provides ample capacity to support the economy when needed. The regulatory framework is well established and rigorous, and the central bank has a good track record of providing refinancing facilities to banks in times of stress. While competition is high, there is also a long history of cooperation among domestic banks.

Long-term sustainability assessment (ESG factor): Sparebanken Norge proactively manages and addresses ESG related risks and opportunities in its business and has incorporated aspects into its strategy. The bank has strong digital capabilities, in line with its ambitions to be at the forefront in this space and maintaining high cost efficiency. Furthermore, the bank has a leading national mobile banking brand. With savings bank roots dating back over 200 years, being an active participant and supporter of its local communities has been a key part of its DNA and sits at the core of the bank’s business model. The bank is aware of the importance of climate change and has integrated considerations throughout its business.

Earnings capacity and risk exposures assessment: Underpinned by its low-risk business model focused on retail mortgages, the bank has consistently delivered strong returns together with a robust risk profile. The bank operates with a comparatively low CIR compared to its peers driven by strong cost control and a focus on digital efficiency. Close to three quarters of the bank’s loan book consists of residential mortgages with the remainder consisting of lending to corporate sectors such as commercial real estate, construction and fishing. Despite some exposure to more cyclical sectors, the bank has a strong track record in performance. The bank targets a cost to income ratio of below 30% and a return on equity above 13%. The bank expects cost synergies of ca.425m NOK by 2027YE through its recently completed mergers.

Financial viability management assessment: SBN maintains solid buffers to its capital requirements with a buffer of 350bps to its regulatory requirement as of Q2 2025. SBN targets a CET1 of at least 16% including a 110bps management buffer and a 50% dividend payout ratio. Sparebanken Norge utilizes IRB models for calculating its risk weights. Following its recent mergers, the bank expects total capital synergies of ca.3.4bn NOK from 2028. The bank is primarily funded by customer deposits and covered bonds which it issues through its fully owned covered bond issuing vehicle, SBN Boligkreditt.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s view that the risks to the current rating are balanced.

The upside scenario for the ratings and Outlooks is:

1. Evidence of stronger integration into Sparebanken Norge, changing our assumption of support from the parent in the case of need.

The downside scenarios for the ratings and Outlooks are (individually or collectively):

1. A change in the level of integration between Brage and its owners, which could negatively impact the business franchise, liquidity or funding profile of Brage, which could lead to a negative change in our assumption of support.
    
2. A downward adjustment of our credit view on Sparebanken Norge which could result in a negative change in Brage’s issuer rating.

Debt ratings

Preferred senior unsecured debt: A+. The rating is aligned with the issuer rating and applies to senior unsecured debt ranking above other classes of senior unsecured debt.

Environmental, social and governance (ESG) factors

Please refer to the ‘long-term sustainability assessment’ under the ‘key rating drivers’ section above for the ESG analysis.

All rating actions and rated entities

Brage Finans AS

Issuer rating: A+/Stable, Resolution of under review status, upgrade

Preferred senior unsecured debt rating: A+/Stable, Resolution of under review status, upgrade

Stress testing & cash flow analysis
No stress testing was performed. No cash flow analysis was performed.

Methodology
The methodology used for these Credit Ratings and Outlooks, (Financial Institutions Rating Methodology, 10 January 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions - Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/uk-regulation. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity, the Rated Entities’ Related Third Parties and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings and Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings UK Limited at 52 Grosvenor Gardens, London, United Kingdom, SW1W 0AU, Tel +44 20 7824 5180. The Credit Ratings and Outlooks are EU-endorsed.
Lead analyst: Andre Hansen, Senior Analyst
Person responsible for approval of the Credit Ratings: Karlo Fuchs, Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings on 28 January 2020. The Credit Ratings/Outlooks were last updated on 28 May 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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