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StocksMedium•29 October 2026•
2 min read

Pareto Bank loan losses forecast at 3.7% of net loans by end-2026

Key Facts

1Nordic Credit Rating forecast loan losses at around 3.7% of net loans by the end of 2026.
2Pareto Bank reported a post-tax profit of 36.9 million Norwegian kroner in the second quarter of 2026, compared with 200.7 million a year earlier.
3The common equity Tier 1 capital ratio was 19.7% on June 30, 2026, against a 15.8% target.
4The bank set January 28, 2027, as the scheduled date for its fourth-quarter 2026 report.

Pareto Bank said Norway’s new-home market remains weak and risks are elevated in parts of its residential development portfolio, according to its third-quarter interim report. The bank said credit quality results could vary significantly over the coming quarters. The statement did not specify, in the remarks cited here, the quarter’s credit losses or their effect on period earnings. In an earlier assessment, Nordic Credit Rating expected loan losses to remain high in the near term, at around 3.7% of net loans by the end of 2026. That figure reflects a credit rating forecast, not an actual result reported by the bank for the third quarter.

Nordic Credit Rating attributed pressure on borrowers involved in residential property development to higher interest rates and new construction costs, as well as a surplus of apartments offered for sale for rental purposes. The agency said these factors delayed presales and weakened demand for new residential projects. In the second quarter of 2026, the bank reported a post-tax profit of 36.9 million Norwegian kroner, compared with 200.7 million kroner in the same period of 2025. The secondary earnings summary attributed the decline mainly to record loan-loss provisions and losses, particularly in residential property development. These figures provide background on earlier pressure but do not determine third-quarter earnings or their causes.

On capital, bank data cited by Nordic Credit Rating showed a common equity Tier 1 capital ratio of 19.7% on June 30, 2026, above the 15.8% target. The bank said completing projects and limiting losses remain its top priorities, but noted that the work takes time because project conditions vary and the sales market is weak. It added that Norway’s new-home market remains very weak and that risk levels are high in some parts of its residential development portfolio. The bank kept its long-term return-on-equity ambition at 15% and maintained an annual distribution policy of at least 50%.

The bank’s financial calendar sets January 28, 2027, as the scheduled publication date for its fourth-quarter 2026 report. Until then, the bank said resolving existing projects and limiting losses would remain among its priorities. It linked the slow pace of this process to project-specific factors and weak sales. It also said credit quality results could vary considerably in the coming quarters. The forecast of loan losses at around 3.7% of net loans by the end of 2026 remains an earlier estimate by Nordic Credit Rating.