Rating action

Scope Ratings GmbH has today affirmed and published the AAA long-term issuer and senior unsecured debt ratings of NRW.BANK in both local and foreign currency, with Stable Outlooks. The agency has also affirmed and published the S-1+ short-term issuer rating in both local and foreign currency. As per Rating Definitions updated in December 2025, Outlooks are not assigned to short-term ratings; hence the Outlooks for the short term issuer ratings have been withdrawn (irrelevant rating category).

Finally, Scope also assigned ratings to the following issuance programmes of the bank:

• AAA/Stable long-term and S-1+ short-term ratings to the bank’s Debt Issuance Programme
   
• AAA/Stable long-term rating to the bank’s Australian and New Zealand Medium Term Note Programme
   
• A S-1+ short-term rating to the bank’s EUR 35bn Global Commercial Paper Programme

The AAA rating of NRW.BANK is equalised with the AAA/Stable rating of the German Federal State of North Rhine-Westphalia (NRW), given the state’s explicit, unconditional, irrevocable, unlimited, first-demand statutory guarantee for NRW.BANK’s obligations with respect to loans raised, bonds issued and money borrowed as well as derivative transactions entered into by the bank.

The link to the State is further underpinned by i) a mature and very supportive legal set-up, which makes changes to NRW.BANK’s business model or guarantee structure highly unlikely; and ii) the bank’s high strategic importance to the Federal State as a key government-related entity implementing economic and social policies with a countercyclical role, supported by the bank’s own resources.

NRW.BANK also benefits from its very strong fundamentals, including its very high capitalisation, excellent asset quality and strong liquidity and funding profiles with a favourable capital markets access. Challenges are a modest but stable profitability and the bank’s concentrated lending exposure both of which are a direct consequence of the bank’s public policy mandate.

Download the Rating Report here.

Key rating drivers

Equalisation factor: NRW.BANK’s AAA rating reflects the extensive guarantee framework for its liabilities provided by the German Federal State of NRW, which is the key factor for equalising the bank’s ratings with the ratings of the federal state. The explicit, unconditional, irrevocable, unlimited, first-demand statutory guarantee can only be amended, revoked or restricted through a parliamentary act of NRW. Scope deems any such development unlikely.

NRW also undertakes the bank’s institutional liability (Anstaltslast) and guarantee obligation (Gewährträgerhaftung). This three-fold guarantee mechanism significantly enhances the likelihood of government support if ever needed. In line with other German state development banks, NRW.BANK is exempt from insolvency procedures due to its public law charter. As such, the bank became exempt from ECB supervision as a CRR credit institution in 2019 and does not need to establish a bail-in able liability structure.

High strategic importance: NRW.BANK’s AAA rating is further underpinned by its high strategic importance to the Federal State. As the federal state’s development bank, NRW.BANK plays an essential role in meeting key economic and political objectives on a regional level.

The bank’s activities have a ‘high’ strategic importance for its public sponsor. It fulfils a central role in supporting regional economic and social objectives by financing economic development, housing developments, infrastructure projects and municipalities. NRW.BANK’s strategic relevance and adaptability have been highlighted in various crises in recent years. The bank rapidly expanded its lending activity programmes to affected parts of the economy during the Covid-19 pandemic and cost-of-living shock in 2022, and administered state support following the flooding disaster in the Ahrtal in 2021. With ongoing, targeted adjustments to existing products, the bank is actively supporting the region’s green and digital transition. Risks to NRW.BANK’s position as the state’s development bank and its provision of competition-neutral activities (underpinned by a stable and supportive legal framework on national and European levels) are remote.

Very high capitalisation, excellent asset quality, and very solid funding and liquidity profiles.

NRW.BANK’s Common Equity Tier 1 ratio of 42.5% at YE 2024 is exceptionally high, including against peers and the bank’s minimum requirement of 9.5% in 2024. This is a consequence of the bank’s high equity, which is largely driven by the integration of state housing assets of the ‘Wohnungsbauförderungsanstalt’ in 2010, which were allocated to the subscribed capital of NRW.BANK amounting to around EUR 16.5bn. Additionally, profit retention, including via allocations to the general banking risk fund, steadily builds capital buffers, as net profits need to be retained after interest payments made in relation to federal loans for the promotion of housing construction and modernisation. NRW.BANK’s regulatory capital management is prudent and the bank reports significant buffers for all risk types under the German ICAAP framework.

Asset quality is excellent, underpinned by the bank’s double-recourse loan protection for its policy mandated lending business, where the bank has a direct claim against the intermediary bank to whom it provided the initial loan (the ‘house-bank principle’) as well as the ultimate borrower. The bank’s direct lending also benefits from strong credit quality and collateral availability, minimising risks and leading to generally low provisioning requirements. Only around 0.16% of the bank’s exposures were classified non-performing at YE 2024.

NRW.BANK’s benchmark issuer status among regional development bank peers and the guarantee structure grant the bank excellent and well-diversified market access. This in turn ensures refinancing at favourable rates which are passed on to the bank’s borrowers. The bank’s liquidity and funding profiles are very strong, with assured liquidity via ample buffers, stringent management and ample refinancing flexibility, including via a global commercial paper programme and access to central banking refinancing. The bank’s bonds receive preferential regulatory treatment under Solvency II and the Basel framework, including their recognition as Level 1 high-quality liquid assets for liquidity coverage ratio requirements and zero risk-weighting.

Credit challenges: modest but stable profitability, and some concentration of the loan portfolio, both driven by the public policy mandate.

NRW.BANK’s profitability is modest but broadly stable, reflecting its non-profit maximising character and public policy mandate, in line with other development banking peers. Scope expects the bank to continue to post solid earnings as net interest income should stabilise at relatively robust levels. At the same time, some cost inflation is likely to persist on administrative expenses, and Scope expects the bank to prudently manage its cost base in coming years.

The bank’s exposure is mostly towards financial institutions (40% of total exposure) and public sector entities (37%) and the portfolio exhibits some geographical concentration to its home-state NRW (47.5% of total exposure) and Germany (27.9% excluding NRW). This is a direct consequence of the bank’s regional mandate, and NRW.BANK manages concentration risks via prudent underwriting, single obligor and concentration limits.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the coming 12 to 18 months.

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

1. A downgrade our Outlook change of the Federal State of NRW;
    
2. Changes in the legal framework or guarantee structure that notably weaken government support for NRW.BANK.

Qualitative Scorecard QS1 and Equalisation Factor

Scope applies a top-down approach (QS1) in assessing the creditworthiness of NRW.BANK, which takes the public sponsor’s rating (Federal State of North Rhine-Westphalia: AAA/Stable) as the starting point. Scope sees ‘strong’ integration between NRW.BANK and the Federal State, reflecting the bank’s: i) sole public ownership by the Federal State; ii) public legal status as an ‘Anstalt des öffentlichen Rechts’ (public law institution); iii) fulfilment of operating activities exclusively on behalf of the government, with the purpose of implementing economic and social policies; and iv) its high financial interdependence with the Federal State due to significant direct funding provided to municipalities.

For further details, please see Appendix I of the associated rating report.

Scope then applies a rating equalisation factor given the explicit, unconditional, irrevocable, unlimited, first-demand statutory guarantee of the Federal State of NRW for NRW.BANK’s obligations with respect to loans raised, bonds issued and money borrowed as well as derivative transactions entered into by the bank.

The assessments under QS1 and the rating equalisation factor result in an indicative rating of AAA.

The approach also includes a supplementary analysis of the entity’s business and financial risk profiles, which does not result in further adjustments, resulting in a final rating of AAA.

The results were discussed and confirmed by a rating committee.

Environmental, Social and Governance (ESG) factors

ESG factors material to NRW.BANK’s credit quality are captured by Scope’s rating approach through several analytical areas.

Governance and social considerations are material and were included in Scope’s assessment of: i) the bank’s level of integration with the public sponsor, highlighting the supportive legal framework that requires the bank to comply with the Act on NRW.BANK and its statutes and fulfil its role as a competition-neutral public-law institution, including the provision of key services to support regional economic and social objectives, including the financing of social housing; and ii) NRW.BANK’s standalone fundamentals in the supplementary analysis, highlighting its conservative risk profile and management, in line with other German regional and national development banks.

Environmental considerations include the bank’s role in fostering and enabling the public sponsor’s climate protection and sustainability agenda. The Federal State of NRW’s Sustainability Strategy is a clear commitment to the Paris Agreement and foresees net neutrality in greenhouse gas emissions by 2045, in line with goals at the federal level. Accordingly, NRW.BANK has committed to net climate neutrality by 2045 across its activities, namely promotional activities, capital market activities and its own banking operations.

As regards its promotional activities, the bank has introduced ESG criteria, including a comprehensive exclusion list and sectoral transition pathways for seven heavily emitting sectors such as oil and gas, electricity production, automotive and real estate. Additionally, the bank maps its activities according to the UN Sustainable Development Goals (SDGs). The bank has introduced several products to foster the state’s sustainability agenda, including to improve energy efficiency, renewable energy production and greater biodiversity, among others.

NRW.BANK is also progressing in transitioning its capital market investments towards climate neutrality. In its ESG Investment Framework, the bank has implemented several measures in line with UN Principles for Responsible Investment (UN PRI), including thematic investments, normative exclusions of certain investments, portfolio screening and a collaborative engagement approach. On the refinancing side, NRW.BANK has been a pioneer among regional development banks in issuing ESG-labelled bonds, with the first green bond issued in 2013 and a target of at least one issuance per year to establish a green refinancing curve, and social bonds issued since 2020, with similarly at least one issuance per year.

Finally, the bank produces non-financial reports, including on its efforts towards climate neutrality, considering the impact of its lending, investing and refinancing operations. In 2025, the bank published the first report voluntarily guided by the European Sustainability Reporting Standards (ESRS) as introduced in the CSRD, covering the year 2024. Finally, the bank has established a reporting framework for financed emissions for the year 2024 according to PCAF standards and will set reduction targets in its transition plan.

Rating Committee
The main points discussed during the rating committee were: i) the level of integration with the public sponsor; ii) the liability support mechanism; and iii) a supplementary analysis of NRW.BANK’s fundamentals.

Methodology
The methodology used for these Credit Ratings and Outlooks, (Government Related Entity Rating Methodology, 3 September 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/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication/. 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 and the Rated Entity.
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 GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Julian Zimmermann, Director
Person responsible for approval of the Credit Ratings: Alvise Lennkh-Yunus, Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings on 31 July 2020.

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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