SpareBank 1 Nordmore’s A- issuer rating reflects its local savings bank business model and sound credit fundamentals. The bank is a well-established medium-sized savings bank operating in Mid- Norway with a focus on personal customers and mortgage lending. As a member of the SpareBank 1 Alliance, the bank can meet the broad financial needs of clients and benefits from important economies of scale, particularly in digital capabilities.

SpareBank 1 Nordmore generates solid profitability and has a record of sound asset quality. Management is currently developing a profitability program aimed at achieving more ambitious targets, a return on equity of 10-12% and a cost income ratio of 40%.

The bank’s operations are concentrated in More & Romsdal, a region characterised by more moderate business cycles and lower unemployment. Asset quality continues to be resilient despite a weakening macroeconomic outlook. The bank has revised its loss models to incorporate more negative economic assumptions, resulting in increased model-based provisions. Relatively low risk residential mortgages accounting for about 65% of on-balance sheet gross loans support the bank’s asset quality.

SpareBank 1 Nordmore maintains a reassuring solvency position. As of Q3 2023, the bank’s CET1 ratio was 17.5% while the leverage ratio was 9% (proportional consolidation basis), above current supervisory expectations.

The bank’s liquidity and funding profile continues to be sound, with liquidity metrics comfortably above requirements. Retail customer deposits remain the primary funding source although market funding continues to be important, including covered bonds issued by the funding vehicles of the SpareBank 1 Alliance.

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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