Scope Ratings has updated its issuer report on Banca Popolare di Sondrio, rated BBB with Stable Outlook.

Norwegian savings banks have displayed strong profitability on the back of the supportive interest-rate environment. We expect this to continue. The pace of credit expansion has abated but the banks have managed to continue growing their loan books.

May 16, 2024 15:30 (CEST)

The change in outlook reflects the deterioration in Naturtex’s sales and profitability as demand for its discretionary products declines due to the unfavorable macroeconomic environment.

Non-performing loans (NPLs) of EU banks continued to increase, hitting EUR 364.9bn according to the EBA’s latest Risk Dashboard showing data to Q4 2023. But the consolidated NPL ratio, at 1.85%, is still close to the historical low.

No action has been taken on Class A notes issued by Sirio NPL S.r.l. following the monitoring review.

The affirmation mainly reflects the still very strong financial risk profile as well as the good prospects for growth and cash generation despite macroeconomic challenges and geopolitical uncertainties.

Euro area governments unable to put in place consistent medium-term fiscal plans face credit-rating pressure even though reducing public borrowing is possible, including for highly indebted countries.

When it comes to assessing banks, high customer satisfaction, progress in digitalisation or brand value do not win arguments in investment, credit, or rating committees if financial metrics are not sufficiently reassuring.

Rating continues to reflect the Norwegian bank's focused savings bank business model, solid earnings and sound prudential metrics.