Interim report Q3 KLP Banken group

KLP Banken groupQ3 2021

Main features by the third quarter end:

Good underlying operation
Lower mortgage growth
No interest rate increase on mortgages

The KLP Banken Group finances mortgages and other credit to retail customers as well as loans to municipalities, county municipalities and companies that perform public tasks. Additionally, the KLP Banken manages a lending portfolio on behalf of its parent company KLP (Kommunal Landspensjonskasse). The Group manages a lending total of NOK 114 (114) billion. The overall business of KLP Banken AS and its subsidiaries is divided into the retail market and public sector loans business areas. The business is nationwide.

In the retail market KLP Banken shall provide products and services at competitive terms to contribute to enterprises having elected KLP as their pension scheme provider are perceived as attractive employers.

In the public sector market KLP Kommunekreditt AS, together with KLP, shall contribute to market competition and thereby access to favorable long-term financing for the sector.

KLP Banken has, as part of a customer owned enterprise, taken its share of responsibility for handling the situation created by the pandemic for its customers and members. In the retail market this is done through quick interest rate reductions, close follow-up and guidance, as well as postponement of installments for members needing it. In the public sector market, the bank has contributed by increasing the loan offers based on extraordinary liquidity made available from KLP. Towards the end of the third quarter, most restrictions are being lifted, and KLP Bank's employees are increasingly looking forward to a more normal everyday life.

Interest rates are also normalizing, and many banks have announced higher mortgage rates. KLP Banken has chosen not to increase mortgage rates for the time being.

KLP Banken AS is owned 100 per cent by Kommunal Landspensjonskasse gjensidig forsikringsselskap (KLP). KLP Banken AS has two wholly owned subsidiaries, KLP Kommunekreditt AS and KLP Boligkreditt AS. The main office is in Trondheim.

INCOME STATEMENT

Net interest income in the KLP Banken Group at the end of the third quarter was NOK 232.8 (229.3) million. Increased interest income is primarily related to volume growth in mortgages. Lending margins have generally been in line with previous quarters.

Net charges and commission income was NOK 14.1 (14.2) million at the end of the quarter.

The bank group administers housing mortgages and public sector lending financed by its parent company (KLP). The management fee for this task amounted to NOK 44.6 (44.4) million at quarter end.

Operating expenses including depreciations amounted to NOK 172.8 (160.4) million.

At the end of the quarter, the income statement includes a net loss associated with securities amounting to NOK 23.5 (21.7) million. The profit and loss effects are mainly due to one-off expenses from buy-back of own bond issues in the daughter enterprises and to market value changes in the liquidity investment portfolios.

So far in 2021 loan loss provisions and realized losses amounted to NOK 1.3 (4.2) million in the retail market. This is mainly due to loss on credit card drawn credits. The pandemic has not increased loan losses on mortgages. Neither in 2021 the public sector market has incurred realized loan losses.

By the end of the quarter, the KLP Banken Group had a pre-tax profit of NOK 93.8 (101.7) million. The retail market segment generated a profit of NOK 76.9 (71.2) million while the public sector segment achieved a profit of NOK 16.9 (30.5) million. Group total income after taxes and actuarial adjustments amounted to NOK 89.9 (96.2) million by third quarter end 2021.

LENDING AND CREDITS

On 30 September 2021, the KLP Banken Group had a lending balance of NOK 38.2 (37.5) billion. The distribution between the retail market and public sector lending was NOK 21.4 (20.6) billion and NOK 16.8 (16.9) billion, respectively.

The retail market in KLP Banken see a declining growth in mortgages so far this year, amounting to NOK 0.7 (2.3) billion. Growth is thus significantly lower than last year's strong figures, which were affected by the special situation created by the pandemic. KLP Banken experience that the market growth for mortgages is flattening and that this contributes to stronger competition, at the same time as it has become increasingly easier to change loan provider. Demand for new financing in KLP Banken has nevertheless increased among the members of KLP's pension schemes, but the proportion of early redemptions has increased.

Mortgage loans amounting NOK 4.3 (6.1) billion are so far this year sold from KLP Banken to the daughter company KLP Boligkreditt AS. Managed mortgages for KLP was reduced by NOK -152 (-140) million due to ordinary repayments and redemptions.

Outstanding drawn credits on credit cards are reduced by approximately 11 per cent so far this year, but granted credit shows an increase and the number of credit card customers is growing. This is assumed to be related to a general reduction in the need for unsecured credit.

The lending volume in the public market has so far this year been reduced by NOK -0.7 (-0.2) billion. Loans to public borrowers managed for KLP increased by NOK 2.6 (6.2) billion in the same period. Managed loans to foreign debtors in foreign currency have been further reduced by NOK -1.9 (-0.6) billion since the turn of last year.

LIQUID INVESTMENT

On the reporting date, the portfolio of liquid investments comprising interest bearing securities amounted to NOK 5.3 (4.8) billion. Net profit and loss effects due to market value changes as at third quarter end was NOK 5.6 (13.4) million.

BORROWING

The KLP Banken Group's external financing comprise deposits and bonds. At the reporting date, deposits from individuals and companies was NOK 12.8 (12.0) billion and bonds issued amounted to NOK 29.5 (26.2) billion. Of the outstanding volume of bonds issued, covered bonds (OMF) issued by KLP Kommunekreditt AS and KLP Boligkreditt AS, amounted to NOK 17.0 (18.0) billion and NOK 11.6 (10.4) billion respectively. All covered bond issues have achieved AAA rating. Outstanding securities debt in KLP Banken AS amounted to NOK 0.9 (0.9) billion.

In 2020, KLP Banken AS used the extended access to F-loans in Norges Bank. The scheme has now been terminated, and at the end of the third quarter KLP Banken has no outstanding F-loans.

RISK AND CAPITAL ADEQUACY

The KLP Banken Group is exposed to various types of risks and the bank has established a framework for risk management aimed at ensuring risks are identified, analysed, and subject to management using policies, limits, routines and instructions.

The bank is to have a prudent risk profile and earnings are to be principally a result of borrowing and lending activities, as well as liquidity management. This means that the bank is to have low market risk, and interest risk arising within the borrowing and lending activities is reduced using derivatives.

The KLP Banken Group and its subsidiaries are to have sound long-term financing due to regulatory requirements, and limits have been established to ensure that that this objective is achieved.

The credit risk associated with the bank’s assets is low, and lending is mainly limited to loans with local government risk and loans with lien on housing property. Management of the bank's liquidity is conducted through investments in other banks satisfying set credit quality requirements, and in securities in accordance with Board-approved credit lines.

At the end of the third quarter, eligible Tier 1 and Tier 2 capital i.a.w. the capital adequacy rules were NOK 2 406 (2 283) million. Eligible Tier 1 and Tier 2 capital comprise core capital only. Lending is risk-weighted in accordance with the authorities' capital adequacy regulations. The KLP Banken Group had a capital adequacy ratio of 18.6 (18.7) per cent at the end of the quarter. The minimum statutory requirement is 12.5 per cent core capital adequacy and 16.0 per cent capital adequacy. Leverage ratio was 5.3 (5.2) per cent. Here the requirement is 3.0 per cent.

Income statementKLP Banken Group

NOTES	NOK THOUSANDS	Q3 2021	Q3 2020	01.01.2021 -30.09.2021	01.01.2020 -30.09.2020	01.01.2020 -31.12.2020
	Interest income, effective interest method	150 567	158 655	456 842	609 846	768 442
	Other interest income	15 965	26 958	47 754	110 299	132 655
3	Total interest income	166 532	185 613	504 596	720 145	901 098
	Interest expense, effective interest method	-64 023	-66 436	-201 280	-401 699	-469 541
	Other interest expense	-22 553	-25 814	-70 524	-89 104	-114 210
3	Total interest costs	-86 576	-92 250	-271 804	-490 803	-583 751
				0	0
3	Net interest income	79 956	93 363	232 792	229 341	317 346
				0	0
	Commision income and income from banking services	5 738	5 241	15 520	15 495	20 285
	Commision cost and cost from banking services	-580	-455	-1 462	-1 310	-1 766
	Net charges and commission income	5 159	4 786	14 059	14 185	18 519
	Other fee income	14 850	14 800	44 550	44 400	59 220
17	Net gain/ (loss) financial instruments	-4 893	-5 646	-23 457	-21 710	-26 145
	Total other operating income	9 957	9 154	21 093	22 690	33 074
	Salaries and administrative costs	-17 653	-15 473	-58 411	-53 623	-76 228
	Depreciation	-1 657	-1 497	-4 978	-4 449	-6 038
	Other operating expenses	-36 124	-27 200	-109 446	-102 316	-145 571
15	Net loan losses	-162	-1 316	-1 341	-4 175	-4 302
	Total operating expenses	-55 596	-45 486	-174 177	-164 563	-232 139
	Operating profit/loss before tax	39 475	61 817	93 767	101 654	136 801
	Tax ordinary income	-9 226	-14 679	4 818	3 775	-4 288
	Profit/loss for the period	30 250	47 138	98 585	105 429	132 514
	Estimate difference, pension obligation and assets	-19 284	3 844	-11 552	-12 302	-3 557
	Tax on actuarial gains and losses	4 821	-961	2 888	3 076	889
	Items that will not be reclassified to profit and loss	-14 463	2 883	-8 664	-9 227	-2 668
	Changes in the fair value through profit and loss	0	0	0	0	0
	Tax on changes in fair value of available for sale financial assets	0	0	0	0	0
	Items that may be reclassified to profit and loss	0	0	0	0	0
	Other comprehensive income for the period	-14 463	2 883	-8 664	-9 227	-2 668
	Comprehensive income for the period	15 787	50 021	89 921	96 203	129 846

Balance sheetKLP Banken Group

NOTES	NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
	ASSETS
5	Claims on central banks	67 239	70 162	68 941
5	Loans to credit institutions	1 364 616	920 743	1 175 714
4,5	Loans to customers	38 207 027	37 543 016	38 224 087
5,6,14	Fixed-income securities	5 264 862	4 788 803	3 148 228
5,6	Shareholdings	1 274	2 926	1 197
5,6,9	Financial derivatives	44 845	88 126	42 630
	Deferred tax assets	692	0	0
	Intangible assets	15 217	450	19 018
18	Right-of-use assets	779	2 337	1 948
	Fixed assets	436	19 164	444
11	Other assets	13 185	6 474	5 819
	Total assets	44 980 171	43 442 201	42 688 027
	LIABILITIES AND OWNERS EQUITY
	LIABILITIES
5,8	Debt to credit institutions	0	2 602 688	2 504 192
5,7	Debt securities issued	29 535 681	26 203 287	25 799 465
5	Deposits and borrowings from the public	12 773 731	11 992 898	11 781 187
5,6,9	Financial derivatives	37 840	135 072	80 425
	Deferred tax liabilities	0	692	21 179
18	Lease liabilities	821	2 416	2 023
12	Other liabilities	72 706	46 651	14 056
12	Provision for accrued costs and liabilities	69 737	65 340	58 700
	Total liabilities	42 490 515	41 049 043	40 261 226
	EQUITY
	Share capital	1 065 000	1 065 000	1 065 000
	Share premium	825 000	825 000	825 000
	Other owners' eqyity	509 736	406 955	536 801
	Profit for the period	89 921	96 203	0
	Total equity	2 489 657	2 393 158	2 426 801
	Total liabilities and equity	44 980 171	43 442 201	42 688 027

Statement of changes in equityKLP Banken Group

2021 NOK THOUSANDS	Share capital	Share premium	Other equity	Total owners’ equity
Equity 1 January 2021	1 065 000	825 000	536 801	2 426 801
Profit for the period	0	0	98 585	98 585
Other comprehensive income	0	0	-8 664	-8 664
Total comprehensive income for the period	0	0	89 921	89 921
Group contribution received during the period	0	0	84 919	84 919
Group contribution paid during the period	0	0	-111 985	-111 985
Total transactions with the owners	0	0	-27 065	-27 065
Equity 30 September 2021	1 065 000	825 000	599 657	2 489 657

2020 NOK THOUSANDS	Share capital	Share premium	Other equity	Total owners’ equity
Owners’ equity 31 December 2019	1 057 500	732 500	430 561	2 220 561
Merger with KLP Bankholding AS	0	0	4 536	4 536
Owners’ equity 1 January 2020	1 057 500	732 500	435 097	2 225 097
Profit for the period	0	0	105 429	105 429
Other comprehensive income	0	0	-9 227	-9 227
Total comprehensive income for the period	0	0	96 203	96 203
Group contribution received during the period	0	0	141 681	141 681
Group contribution paid during the period	0	0	-169 823	-169 823
Owners' equity received during the period	7 500	92 500	0	100 000
Total transactions with the owners	7 500	92 500	-28 142	71 858
Equity 30 September 2020	1 065 000	825 000	503 158	2 393 158

2020 NOK THOUSANDS	Share capital	Share premium	Other equity	Total owners’ equity
Owners’ equity 31 December 2019	1 057 500	732 500	430 561	2 220 561
Merger with KLP Bankholding AS	0	0	4 536	4 536
Owners’ equity 1 January 2020	1 057 500	732 500	435 097	2 225 097
Income for the year	0	0	132 514	132 514
Other comprehensive income	0	0	-2 668	-2 668
Comprehensive income for the year	0	0	129 846	129 846
Group contribution received during the period	0	0	141 681	141 681
Group contribution paid during the period	0	0	-169 823	-169 823
Owners' equity received during the period	7 500	92 500	0	100 000
Total transactions with the owners	7 500	92 500	-28 142	71 858
Equity 31 December 2020	1 065 000	825 000	536 801	2 426 801

Statement of cash flowKLP Banken Group

NOK THOUSANDS	01.01.2021 -30.09.2021	01.01.2020 -30.09.2020	01.01.2020 -31.12.2020
OPERATING ACTIVITIES
Payments received from customers – interest, commission and charges	456 867	627 758	812 696
Payments to customers – interest, commission and charges	-66 789	-110 395	-128 918
Disbursements on loans to customers and credit institutions	-11 721 281	-15 211 980	-19 998 713
Receipts on loans to customers	11 647 662	12 659 974	16 596 718
Net receipts on customer deposits banking	993 314	506 761	295 164
Disbursements on operations	-113 534	-115 806	-152 043
Payments to staff, pension schemes, employer's social security contribution etc.	-64 090	-55 248	-73 207
Interest investment accounts	1 500	5 754	7 871
Net receipts/disbursements from operating activities	76 930	55 684	111 414
Net cash flow from operating activities	1 210 578	-1 637 496	-2 529 017
INVESTMENT ACTIVITIES
Receipts on the sale of securities	8 028 394	7 963 824	11 425 797
Payments on the purchase of securities	-7 077 325	-9 621 605	-11 440 399
Receipts of interest from securities	34 633	61 314	50 630
Payments on the purchase of tangible fixed assets	0	-1 936	-2 983
Net cash flow from investment activities	985 702	-1 598 403	33 045
FINANCING ACTIVITIES
Receipts on loans from credit institutions	0	4 960 000	5 470 000
Repayment and redemption from credit institutions	-2 500 000	-2 360 000	-2 970 000
Net payment of interest from credit institutions	-6 517	0	-838
Receipts on loans	5 300 000	6 701 872	7 250 407
Repayments and redemption of securities debt	-5 176 000	-5 665 000	-6 756 063
Change in buyback of securities debt	562 229	-696 000	-480 000
Net payment of interest on loans	-174 373	-364 464	-416 991
Payment of lease liabilities	-1 197	-1 200	-1 570
Group contributions made	-27 065	-28 142	-28 144
Equity contributions received	0	100 000	100 000
Net cash flows from financing activities	-2 022 922	2 647 066	2 166 802
Net cash flow during the period	173 358	-588 834	-329 171
Cash and cash equivalents at the start of the period	1 212 067	1 541 238	1 541 238
Cash and cash equivalents at the end of the period	1 385 425	952 404	1 212 067
Net receipts/disbursements (-) of cash	173 358	-588 834	-329 171

Notes to the financial statementsKLP Banken Group

Note 1 General information

KLP Banken AS was formed on 25 February 2009. KLP Banken AS owns all the shares in KLP Kommunekreditt AS and KLP Boligkreditt AS. These companies together form the KLP Banken AS Group. KLP Banken AS Group provide or acquire loans to Norwegian municipalities and county authorities, as well as to companies with public sector guarantee. The lending activities are principally financed by issuance of covered bonds. The Group also offers standard banking products to private customers. KLP Banken AS is registered and domiciled in Norway. It's head office is at Beddingen 8 in Trondheim. The company has a branch office in Dronning Eufemiasgate 10, Oslo.

The company, KLP Banken AS, is a wholly owned subsidiary of Kommunal Landspensjonskasse (KLP). KLP is a mutual insurance company.

Note 2 Accounting principles

The interim report includes the interim Financial Statements of KLP Banken Group for the period 1 January 2021 – 30 September 2021, with a specification of the results in the second quarter. The interim Financial Statements has not been audited.

The interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting".

In September, the Norwegian Accounting Standards Board published updated guiding assumptions for pension liabilities. In relation to the assumptions used as at 31.12.2020, the discount rate for corporate bonds was changed from 1.7 % to 1.9 %. At the same time, wage growth was changed from 2.25 % to 2.50 %, the National Insurance Scheme's basic amount (G) was changed from 2.0 % to 2.25 % and pension adjustment was changed from 1.24 % to 1.50 %. In total, these changes result in a NOK 11,6 million increase in recognised pension liabilities for the Group as at 30.09.2021.

Other accounting principles and calculations are the same in the interim financial statement as in the annual report for 2020.

Note 3 Net interest income

NOK THOUSANDS	Q3 2021	Q3 2020	01.01.2021 -30.09.2021	01.01.2020 -30.09.2020	01.01.2020 -31.12.2020
Interest income on loans to customers	150 138	158 270	455 171	602 636	760 567
Interest income on loans to credit institutions	430	385	1 670	7 209	7 875
Total interest income, effective interest method	150 568	158 655	456 842	609 846	768 442
Interest income on bonds and certificates	8 888	10 503	23 465	42 573	50 241
Other interest income	7 077	16 455	24 289	67 727	82 414
Total other interest income	15 965	26 958	47 754	110 299	132 655
Total interest income	166 533	185 613	504 596	720 145	901 098
Interest expenses on deposits to customers	-18 034	-17 666	-51 734	-105 927	-122 407
Interest expenses on issued securities	-45 984	-48 757	-149 524	-295 729	-347 080
Interest expense lease liabilities	-6	-13	-22	-43	-54
Total interest expenses, effective interest method	-64 024	-66 436	-201 280	-401 699	-469 541
Other interest expenses	-18 245	-23 009	-57 565	-80 688	-102 988
Interest expenses on deposits to customers	-4 309	-2 806	-12 960	-8 417	-11 222
Total other interest expenses	-22 553	-25 814	-70 524	-89 104	-114 210
Total interest expenses	-86 577	-92 250	-271 804	-490 803	-583 751
Net interest income	79 956	93 363	232 792	229 341	317 346

Note 4 Loans to customers

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
Principal on loans to customers	38 111 660	37 310 951	38 057 684
Credit portfolio	44 887	53 008	49 595
Overdraft current account	661	508	531
Write-downs step 1 and 2	-984	-1 816	-1 558
Write-downs step 3	-978	-1 233	-872
Loans to customers after write-downs	38 155 246	37 361 418	38 105 380
Accrued interest	67 032	76 155	53 806
Premium/discount	0	3 980	74
Fair value hedging	-15 252	101 464	64 827
Loans to customers	38 207 027	37 543 016	38 224 087

Note 5 Categories of financial instruments

NOK THOUSANDS	30.09.2021		30.09.2020		31.12.2020
	Capitalized value	Fair value	Capitalized value	Fair value	Capitalized value	Fair value
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Fixed-income securities	5 264 862	5 264 862	4 788 803	4 788 803	3 148 228	3 148 228
Financial derivatives	44 845	44 845	88 126	88 126	42 630	42 630
Shares and holdings	1 274	1 274	2 926	2 926	1 197	1 197
Total financial assets at fair value through profit and loss	5 310 981	5 310 981	4 879 855	4 879 855	3 192 054	3 192 054
FINANCIAL ASSETS FAIR VALUE HEDGING
Loans to and receivables from customers	2 840 420	2 890 695	3 584 828	3 634 339	3 734 955	3 790 329
Total financial assets fair value hedging	2 840 420	2 890 695	3 584 828	3 634 339	3 734 955	3 790 329
FINANCIAL ASSETS AT AMORTIZED COST
Loans to and receivables from credit institutions	67 239	67 239	70 162	70 162	68 941	68 941
Loans to and receivables from central banks	1 364 616	1 364 616	920 743	920 743	1 175 714	1 175 714
Loans to and receivables from customers	35 366 607	35 316 202	33 958 189	33 905 181	34 489 133	34 489 133
Total financial assets at amortized cost	36 798 462	36 748 056	34 949 093	34 896 086	35 733 788	35 733 788
Total financial assets	44 949 863	44 949 732	43 413 776	43 410 280	42 660 798	42 716 172
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Financial derivatives	37 840	37 840	135 072	135 072	80 425	80 425
Total financial liabilities at fair value through profit and loss	37 840	37 840	135 072	135 072	80 425	80 425
FINANCIAL LIABILITIES FAIR VALUE HEDGING
Liabilities created on issuance of securities	1 005 304	1 015 876	1 869 145	1 878 218	1 139 041	1 148 872
Total financial liabilities fair value hedging	1 005 304	1 015 876	1 869 145	1 878 218	1 139 041	1 148 872
FINANCIAL LIABILITIES AT AMORTIZED COST
Liabilities to credit institutions	0	0	2 602 688	2 602 688	2 504 192	2 504 192
Liabilities created on issuance of securities	28 530 376	29 926 255	24 334 142	24 417 385	24 660 423	25 283 898
Deposits from customers	12 773 731	12 773 731	11 992 898	11 992 898	11 781 187	11 781 187
Total financial liabilities at amortized cost	41 304 107	42 699 986	38 929 728	39 012 970	38 945 802	39 569 276
Total financial liabilities	42 347 251	43 753 702	40 933 944	41 026 260	40 165 268	40 798 573

Fair value shall be a representative price based on what a corresponding asset or liability would have been traded for on normal market terms and conditions. A financial instrument is considered to be listed in an active market if the listed price is simply and regularly available from a stock market, dealer, broker, industry grouping, price setting service or regulatory authority, and these prices represent actual and regularly occurring transactions at arm’s length. If the market for the security is not active, or the security is not listed on a stock market or similar, valuation techniques are used to set fair value. These are based for example on information on recently completed transactions carried out on business terms and conditions, reference to trading in similar instruments and pricing using externally collected yield curves and yield spread curves. As far as possible the estimates are based on externally observable market data and rarely on company-specific information.

The different financial instruments are thus priced in the following way:

Fixed-income securities - government

Bloomberg is used as a source for pricing Norwegian government bonds. The prices are compared with the prices from Nordic Bond Pricing to reveal any errors.

Fixed-income securities - other than government

Norwegian fixed-income securities, except government are priced directly on prices from Nordic Bond Pricing. Those securities that are not included in Nordic Bond Pricing are priced theoretically. The theoretical price is based on the assumed present value on the sale of the position. A zero-coupon curve is used for discounting. The zero-coupon curve is adjusted upwards by means of a credit spread, which is to take account of the risk the bond entails. The credit spread is calculated on the basis of a spread curve taking account of the duration of the bond. Nordic Bond Pricing is the main source of spread curves. They provide company-specific curves for Norwegian savings banks, municipalities and energy. Savings banks have various spread curves based on total assets. For companies where Nordic Bond Pricing do not deliver spread curves, the Group use spread curves from three Norwegian banks. When spread curves are available from more than one of these banks, an equal-weighted average is used. If a bond lacks an appropriate spread curve, spread from a comparable bond from the same issuer is used.

Financial derivatives

These transactions are valued based on the applicable swap curve at the time of valuation. Derivative contracts are to be used only to hedge balance amounts and to enable payments obligations to be met. Derivative contracts may be struck only with counterparties with high credit quality.

Shares (unlisted)

For liquid shares and units, the closing price on the balance sheet date is used as the basis for measurement at fair value. If the prices are not quoted, the last price traded is used. Illiquid shares are priced on the basis of the Oslo Stock Exchange’s index algorithm based on the last traded prices. If the price picture is out of date, a derived valuation is produced from relevant equity indices or other similar securities. If this is also considered unsatisfactory, a discretionary valuation is made in which the Company’s financial key figures, broker assessment etc. are used.

Fair value of loans to retail customers

The fair value through profit/loss is calculated by discounting contractual cash flows to present values. The discount rate is determined as the market rate, including a suitable risk margin. For loans measured at fair value through other comprehensive income, the fair value is calculated as the recognised principal minus estimated loss provisions on loans classified in Stage 2 and 3 (see note 15 Loan losses provision).

Fair value of loans to Norwegian local administrations

The fair value of these loans is considered to be virtually the same as the book value, as the contract terms are constantly adjusted in line with market interest rates. The fair value of fixed rate loans is calculated by discounting contractual cash flows by market interest rates including a suitable risk margin at the end of the reporting period. This is valued at Level 2 in the valuation hierarchy, cf. Note 6.

Fair value of deposits

The fair value of floating rate deposits is taken to be approximately equal to the deposit amount including accrued interest. The fair value of fixed rate deposits is calculated by discounting contractual cash flows by market interest rates including a suitable risk margin. Discounting contractual cash flows by market interest rates including a suitable risk margin. This is valued at Level 2 in the valuation hierarchy, cf. Note 6.

Fair value of loans to and receivables from credit institutions

All receivables from credit institutions (bank deposits) are at variable interest rates. The fair value of these is considered to be virtually the same as the book value, as the contract terms are continuously changed in step with change in market interest rates. This is valued at Level 2 in the valuation hierarchy, cf. Note 6.

As the contract terms are continuously changed in step with change in market interest rates. This is valued at Level 2 in the valuation hierarchy, cf. Note 6.

Liabilities created on issuance of securities

Fair value in this category is determined on the basis of internal valuation models based on external observable data. This is valued in Level 2 in the valuation hierarchy, cf. Note 6.

Note 6 Fair value hierarchy

30.09.2021 NOK THOUSANDS	Level 1	Level 2	Level 3	Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities	596 150	4 668 712	0	5 264 862
Shareholdings	0	0	1 274	1 274
Financial derivatives	0	44 845	0	44 845
Total assets at fair value	596 150	4 713 557	1 274	5 310 981
LIABILITIES BOOKED AT FAIR VALUE
Financial derivatives (liabilities)	0	37 840	0	37 840
Total financial liabilities at fair value	0	37 840	0	37 840

30.09.2020 NOK THOUSANDS	Level 1	Level 2	Level 3	Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities	912 246	3 876 557	0	4 788 803
Shareholdings	0	0	2 926	2 926
Financial derivatives	0	88 126	0	88 126
Total assets at fair value	912 246	3 964 682	2 926	4 879 855
LIABILITIES BOOKED AT FAIR VALUE
Financial derivatives (liabilities)	0	135 072	0	135 072
Total financial liabilities at fair value	0	135 072	0	135 072

31.12.2020 NOK THOUSANDS	Level 1	Level 2	Level 3	Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities	581 905	2 566 322	0	3 148 228
Shareholdings	0	0	1 197	1 197
Financial derivatives	0	42 630	0	42 630
Total assets at fair value	581 905	2 608 952	1 197	3 192 054
LIABILITIES BOOKED AT FAIR VALUE
Financial derivatives (liabilities)	0	80 425	0	80 425
Total financial liabilities at fair value	0	80 425	0	80 425

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
CHANGES IN LEVEL 3 UNLISTED SHARES
Opening balance	1 197	2 053	2 053
Additions/purchases of shares	77	125	125
Unrealized changes	0	748	-981
Closing balance	1 274	2 926	1 197
Realized gains/losses	0	0	0

Fair value shall be a representative price based on what a corresponding asset or liability would have been traded for at normal market terms and conditions. Highest quality in regard to fair value is based on listed prices in an active market. A financial instrument is considered as listed in an active market if listed prices are simply and regularly available from a stock market, dealer, broker, industry group, price-setting service or regulatory authority, and these prices represent actual and regularly occurring transactions at arm's length.

LEVEL 1:

Instruments at this level obtain fair value from listed prices in an active market for identical assets or liabilities to which the entity has access at the reporting date. Examples of instruments in Level 1 are stock market listed securities.

LEVEL 2:

Instruments at this level obtain fair value from observable market data. This includes prices based on identical instruments, but where the instrument does not maintain a high enough trading frequency and is therefore not considered to be traded in an active market, as well as prices based on corresponding assets and price-leading indicators that can be confirmed from market information. Example instruments at Level 2 are fixed-income securities priced on the basis of interest rate paths.

LEVEL 3:

Instruments at Level 3 contain non-observable market data or are traded in markets considered to be inactive. The price is based generally on discrete calculations where the actual fair value may deviate if the instrument were to be traded.

Note 5 discloses the fair value of financial assets and financial liabilities that are recognized at amortized cost and according to the rules on hedge accounting. Financial assets measured at amortized cost and hedge accounting comprise lending to and due to credit institutions, Norwegian municipalities and retail customers. The stated fair value of these assets is determined on terms qualifying for level 2. Financial liabilities recognized at amortized cost and hedge accounting consist of debt securities issued and deposits. The stated fair value of these liabilities is determined by methods qualifying for level 2. There have been no transfers between level 1 and level 2.

Note 7 Debt securities issued - stock exchange listed covered bonds and certificates

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
Bond debt, nominal amount	30 822 035	28 204 872	27 628 407
Adjustments	61 053	90 444	74 537
Accrued interest	29 592	53 972	26 521
Own holdings, nominal amount	-1 377 000	-2 146 000	-1 930 000
Total debt securities issued	29 535 681	26 203 287	25 799 465
Interest rate on borrowings through the issuance of securities at the reporting date:	0.76 %	0.64 %	0.64 %
The interest rate is calculated as a weighted average of the act/360 basis. It includes interest rate effects and amortization costs.

NOK THOUSANDS	Balance sheet 31.12.2020	Issued	Matured/ redeemed	Other adjustements	Balance sheet 30.09.2021
Changes in debt securities issued - stock exchange listed covered bonds and cerftificates
Bond debt, nominal amount	27 628 407	5 300 000	-5 176 000	3 069 628	30 822 035
Adjustments	74 537	0	0	-13 483	61 053
Accrued interest	26 521	0	0	3 071	29 592
Own holdings, nominal amount	-1 930 000	0	553 000	0	-1 377 000
Total debt securities issued	25 799 465	5 300 000	-4 623 000	3 059 216	29 535 681

Note 8 Liabilities to credit institutions

NOK THOUSANDS	Due date	Nominal value	Accrued interest	Book value 30.09.2021
Norges Bank	-	0	0	0
Total liabilities to credit institutions	-	0	0	0
In the third quarter of 2021, KLP Banken AS redeemed F-loans from Norges Bank with nominal value of NOK 700 million.

NOK THOUSANDS	Due date	Nominal value	Accrued interest	Book value 30.09.2020
Norges Bank	05.10.2020	100 000	95	100 095
Norges Bank	11.11.2020	400 000	0	400 000
Norges Bank	23.11.2020	100 000	53	100 053
Norges Bank	26.03.2021	700 000	1 294	701 294
Norges Bank	06.04.2021	300 000	523	300 523
Norges Bank	16.04.2021	100 000	153	100 153
Norges Bank	20.04.2021	200 000	294	200 294
Norges Bank	01.07.2021	150 000	113	150 113
Norges Bank	26.08.2021	550 000	163	550 163
Total liabilities to credit institutions		2 600 000	2 688	2 602 688
In the thired quarter of 2020, KLP Banken AS applied F-loans from Norges Bank and was granted loan with nominal value of NOK 1,550 million.

NOK THOUSANDS	Due date	Nominal value	Accrued interest	Book value 31.12.2020
Norges Bank	26.03.2021	700 000	1 823	701 823
Norges Bank	06.04.2021	300 000	750	300 750
Norges Bank	16.04.2021	100 000	229	100 229
Norges Bank	20.04.2021	200 000	445	200 445
Norges Bank	01.07.2021	150 000	227	150 227
Norges Bank	26.08.2021	550 000	579	550 579
Norges Bank	13.01.2021	300 000	97	300 097
Norges Bank	10.02.2021	200 000	42	200 042
Total liabilities to credit institutions		2 500 000	4 192	2 504 192
In the fourth quarter of 2020, KLP Banken AS applied F-loans from Norges Bank and was granted loan with nominal value of NOK 510 million.

	Nominal value 31.12.2020	Issued	Matured/ redeemed	Other adjustements	Nominal value 30.09.2021
F-loans Norges Bank	2 500 000	0	-2 500 000	0	0
Total liabilities to credit institutions	2 500 000	0	-2 500 000	0	0

Note 9 Financial assets and liabilities subject to net settlement

30.09.2021 NOK THOUSANDS				Related sums that are not presented net
	Gross financial assets/liabilites	Gross assets/ liabilities presented net	Book value	Financial instruments	Security in cash	Net recognised value
ASSETS
Financial derivatives	9 397	0	9 397	-9 397	0	0
Total	9 397	0	9 397	-9 397	0	0
LIABILITIES
Financial derivatives	11 954	0	11 954	-9 397	-1 924	634
Total	11 954	0	11 954	-9 397	-1 924	634

30.09.2020 NOK THOUSANDS				Related sums that are not presented net
	Gross financial assets/liabilites	Gross assets/ liabilities presented net	Book value	Financial instruments	Security in cash	Net recognised value
ASSETS
Financial derivatives	88 126	0	88 126	-88 126	0	0
Total	88 126	0	88 126	-88 126	0	0
LIABILITIES
Financial derivatives	135 072	0	135 072	-88 126	-6 391	40 555
Total	135 072	0	135 072	-88 126	-6 391	40 555

The purpose of the note is to show the potential effect of netting agreements at the KLP Banken Group . The note shows derivative positions in the financial position statement.
31.12.2020 NOK THOUSANDS				Related sums that are not presented net
	Gross financial assets/liabilites	Gross assets/ liabilities presented net	Book value	Financial instruments	Security in cash	Net recognised value
ASSETS
Financial derivatives	42 630	0	42 630	-42 630	0	0
Total	42 630	0	42 630	-42 630	0	0
LIABILITIES
Financial derivatives	80 425	0	80 425	-42 630	-6 390	31 405
Total	80 425	0	80 425	-42 630	-6 390	31 405

Note 10 Transactions with related parties

NOK THOUSANDS	01.01.2021 -30.09.2021	01.01.2020 -30.09.2020	01.01.2020 -31.12.2020
KLP, fees lending management	44 550	44 412	59 200
KLP Kapitalforvaltning AS, fees for services provided	-98	-242	-315
KLP, rent	-2 060	-3 243	-2 725
KLP Skipsbygget AS, rent	-1 641	-1 443	-1 854
KLP Bassengtomten AS, rent parking	-87	-85	-85
KLP Eiendomsdrift AS, cost office buildings	-366	-195	-195
KLP, pension premium	-9 895	-8 301	-10 960
KLP, staff services (at cost)	-49 309	-50 129	-66 596
KLP Group companies, subsidised interest employee loans	8 777	10 639	14 187

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
BALANCES
KLP, net internal accounts	-22	-111	92
KLP, loan settlement	-22 165	-30 918	3 004
KLP Group companies, net other internal accounts	1 073	1 154	1 163
Transactions with related parties are carried out at general market terms, with the exception of the company's share of common functions, which are allocated at cost. Allocation is based on actual use. All internal receivables are settled as they arise.

Note 11 Other assets

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
Intercompany receivables	2 112	2 366	5 472
Miscellaneous receivables	114	114	117
Prepaid expenses	10 958	3 994	229
Total other assets	13 185	6 474	5 819

Note 12 Other liabilities and provision for accrued costs

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
Creditors	1 418	420	5 086
Intercompany payables	23 226	32 241	1 213
Other liabilities	48 062	13 991	7 757
Total other liabilities	72 706	46 651	14 056
Withholding tax	1 723	1 578	2 949
Social security contributions	1 346	2 673	2 570
Capital activity tax	497	762	1 227
Holiday pay	4 456	4 225	5 856
Pension obligations	54 113	50 184	41 550
VAT	735	18	36
Provisioned costs	6 867	5 900	4 512
Total accrued costs and liabilities	69 737	65 340	58 700

Note 13 Capital adequacy

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
Share capital and share premium fund	1 890 000	1 890 000	1 890 000
Other owners' equity	536 801	430 561	536 801
Total owners' equity	2 426 801	2 320 561	2 426 801
Adjustments due to requirements for proper valuation	-5 265	-7 910	-6 226
Deduction goodwill and other intangible assets	-15 217	-19 164	-19 018
Deferred tax asset	0	-10 196	0
Core capital/Tier 1 capital	2 406 320	2 283 291	2 401 558
Supplementary capital/Tier 2 capital	0	0	0
Supplementary capital/Tier 2 capital	0	0	0
Total eligible own funds (Tier 1 and Tier 2 capital)	2 406 320	2 283 291	2 401 558
Capital requirement	1 035 315	979 416	983 091
Surplus of own funds (Tier 1 and Tier 2 capital)	1 371 005	1 303 876	1 418 468
Estimate basis credit risk:
Institutions	281 151	200 157	242 831
Retail	310 658	176 952	163 069
Local and regional authorities (incl. municipalities/county administations)	3 527 441	3 444 351	3 559 832
Investments with mortgage security in real estate	7 566 523	7 407 615	7 386 329
Investments fallen due	37 868	55 940	72 770
Covered bonds	435 748	356 291	227 068
Other holdings	140 253	19 282	54 755
Calculation basis credit risk	12 299 642	11 660 589	11 706 654
Credit risk	983 971	932 847	936 532
Operating risk	51 225	46 448	46 448
Credit valuation adjustments (CVA)	119	120	110
Total capital requirement assets	1 035 315	979 416	983 091
Core capital adequacy ratio	18.6 %	18.7 %	19.5 %
Supplementary capital ratio	0.0 %	0.0 %	0.0 %
Capital adequacy ratio	18.6 %	18.7 %	19.5 %
Leverage ratio	5.3 %	5.2 %	5.5 %

CAPITAL REQUIREMENT PER 30.09.2021	Core capital/Tier 1 capital	Supplementary capital/Tier 2 capital	Own funds
Minimum requirement excl. buffers	4.5 %	3.5 %	8.0 %
Protective buffer	2.5 %	0.0 %	2.5 %
Systemic risk buffer	3.0 %	0.0 %	3.0 %
Counter-cyclical capital buffer	1.0 %	0.0 %	1.0 %
Pilar 2-requirement	1.5 %	0.0 %	1.5 %
Current capital requirement incl. buffers	12.5 %	3.5 %	16.0 %
Capital requirement leverage ratio	3.0 %	0.0 %	3.0 %

Note 14 Fixed-income securities

NOK THOUSANDS	30.09.2021		30.09.2020		31.12.2020
	Acquisition cost	Market value	Acquisition cost	Market value	Acquisition cost	Market value
Certificates	567 611	567 687	1 030 802	1 031 809	650 553	651 453
Bonds	4 695 024	4 697 175	3 727 342	3 756 994	2 492 844	2 496 775
Total fixed-income securities	5 262 635	5 264 862	4 758 144	4 788 803	3 143 397	3 148 228
Fixed income securities are brought to account at market value, including accrued but not due interests.

Note 15 Loan loss provision

In the third quarter of 2021 the bank has not made any adjustments in the expected loss model. The total loan loss provisions in KLP Banken AS were reduced by 8 percent and by 8 percent on the group level.

Refer to Note 18 and Note 2 in the annual report for more details of the model.

Expected credit loss (ECL) - loans to customers, all segments

NOK THOUSANDS	12 months ECL	Lifetime ECL (not credit impaired)	Lifetime ECL (credit impaired)
	stage 1	stage 2	stage 3	Total stage 1-3
Opening balance ECL 01.01.2021	4 422	586	1 567	6 577
Transfer to stage 1	398	-258	-139	0
Transfer to stage 2	-34	124	-90	0
Transfer to stage 3	-8	-193	201	0
Net changes	-589	-83	168	-505
New losses	395	1	0	395
Write-offs	-286	-28	-24	-339
Change in risk model	-2	11	2	11
Closing balance ECL 30.09.2021	4 295	160	1 684	6 139
Changes (01.01.2021 - 30.09.2021)	-128	-426	117	-438

Expected credit loss (ECL) - loans to customers, amortized cost

NOK THOUSANDS	12 months ECL	Lifetime ECL (not credit impaired)	Lifetime ECL (credit impaired)
	stage 1	stage 2	stage 3	Total stage 1-3
Opening balance ECL 01.01.2021	1 075	486	1 559	3 120
Transfer to stage 1	340	-205	-134	0
Transfer to stage 2	-16	106	-90	0
Transfer to stage 3	-7	-190	198	0
Net changes	-408	-91	171	-328
New losses	137	0	0	137
Write-offs	-215	-23	-24	-262
Change in risk model	-6	5	2	2
Closing balance ECL 30.09.2021	899	88	1 682	2 670
Changes (01.01.2021 - 30.09.2021)	-175	-398	123	-450

Losses on unused credit

NOK THOUSANDS	12 months ECL	Lifetime ECL (not credit impaired)	Lifetime ECL (credit impaired)
	stage 1	stage 2	stage 3	Total stage 1-3
Opening balance ECL 01.01.2021	3 350	99	8	3 457
Transfer to stage 1	58	-53	-5	0
Transfer to stage 2	-18	18	0	0
Transfer to stage 3	0	-3	3	0
Net changes	-181	8	-4	-177
New losses	257	1	0	258
Write-offs	-71	-5	-1	-77
Change in risk model	4	4	0	8
Closing balance ECL 30.09.2021	3 398	69	3	3 470
Changes (01.01.2021 - 30.09.2021)	47	-29	-6	12

Value of lending and receivables for customers recognised in the balance sheet - all segments

NOK THOUSANDS	12 months ECL	Lifetime ECL (not credit impaired)	Lifetime ECL (credit impaired)
	stage 1	stage 2	stage 3	Total stage 1-3
Gross lending 01.01.2021	37 940 905	166 651	54 315	38 161 871
Transfer to stage 1	42 735	-22 123	-20 612	0
Transfer to stage 2	-4 888	10 336	-5 448	0
Transfer to stage 3	-3 844	-7 956	11 800	0
Net changes	-961 169	1 252	884	-959 033
New losses	9 040 599	7 436	2 610	9 050 645
Write-offs	-7 970 609	-46 263	-12 008	-8 028 881
Gross lending 30.09.2021	38 083 729	109 333	31 540	38 224 602

Losses on lending and receivables from customers rated at amortized cost

NOK THOUSANDS	12 months ECL	Lifetime ECL (not credit impaired)	Lifetime ECL (credit impaired)
	stage 1	stage 2	stage 3	Total stage 1-3
Gross lending 01.01.2021	37 940 905	166 651	54 315	38 161 871
Transfer to stage 1	42 735	-22 123	-20 612	0
Transfer to stage 2	-4 888	10 336	-5 448	0
Transfer to stage 3	-3 844	-7 956	11 800	0
Net change	-961 169	1 252	884	-959 033
New lending	9 040 599	7 436	2 610	9 050 645
Write-offs	-7 970 609	-46 263	-12 008	-8 028 881
Gross lending 30.09.2021	38 083 729	109 333	31 540	38 224 602

Exposure - unused credit

NOK THOUSANDS	12 months ECL	Lifetime ECL (not credit impaired)	Lifetime ECL (credit impaired)
	stage 1	stage 2	stage 3	Total stage 1-3
Gross lending 01.01.2021	993 121	3 434	290	996 845
Transfer to stage 1	993 121	3 434	290	996 845
Transfer to stage 2	1 985	-1 823	-162	0
Transfer to stage 3	-1 369	1 369	0	0
Net change	-37	-88	125	0
New lending	38 461	-320	-141	38 001
Write-offs	172 421	25	0	172 446
Gross lending 30.09.2021	-53 972	-174	-24	2 204 137

Losses recognised in the profit and loss account consist of:

NOK THOUSANDS	01.01.2021 -30.09.2021	01.01.2020 -30.09.2020	01.01.2020 -31.12.2020
Change in loss provisions in stage 1, 2 and 3	-1 837	-4 430	-4 838
Established losses	-4	-55	-55
Recovery for previously established losses	500	310	591
Total losses in the income statement	-1 341	-4 175	-4 302

Note 16 Contingent liabilites

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
Credit facilities for lending not utilized	895 453	689 250	743 495
Credit facilities issued credit card	264 269	250 716	253 580
Loan promise	1 548 156	1 201 486	651 063
Total contingent liabilities	2 707 878	2 141 452	1 648 138

Credit facilities for lending not utilized: The ‘Fleksilån’ product is included here; this is a credit facility which allows the customer to borrow up to a specified credit limit.

Credit facilities issued credit card: Customers’ credit card limits are a contingent liability for the Bank, where the customer can choose to utilise the credit up to the allocated credit limit.

Loan commitment: The Bank issues funding certificates that customers can use in bidding procedures for home purchases. This also includes other loans that have been granted but not disbursed.

Note 17 Net gain/(loss) on financial instruments

NOK THOUSANDS	Q3 2021	Q3 2020	01.01.2021 -30.09.2021	01.01.2020 -30.09.2020	01.01.2020 -31.12.2020
Net gain/(loss) on fixed-income securities	-1 855	7 541	5 575	13 355	14 823
Net gain/(loss) financial derivatives and realized amortization linked to lending	0	41	0	41	-1 303
Net gain/(loss) financial derivatives and realized repurchase of own debt	-3 309	-13 517	-28 639	-34 622	-38 905
Net value change lending and borrowing, hedge accounting	514	-188	336	-435	500
Other financial income and expenses	-243	477	-729	-49	-1 260
Total net gain/(loss) on financial instruments	-4 893	-5 646	-23 457	-21 710	-26 145

Note 18 Leases

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
	Property
RIGHT-OF-USE ASSETS
Opening balance 01.01.	1 948	3 506	3 506
Depreciation	-1 169	-1 169	-1 558
Closing balance	779	2 337	1 948
LEASE LIABILITIES
Opening balance 01.01.	2 023	3 573	3 573
Repayments	-1 202	-1 157	-1 550
Closing balance	821	2 416	2 023

NOK THOUSANDS	Q3 2021	Q3 2020	01.01.2021 -30.09.2021	01.01.2020 -30.09.2020	01.01.2020 -31.12.2020
	Property
Interest expense lease liabilities	6	13	22	43	54
Interest expense lease liabilities	6	13	22	43	54
The lease expires on 31.01.2022. It is an intercompany lease for the rental of office premises with KLP Eiendom.

Note 19 Pension obligations - own employees

NOK THOUSANDS	30.09.2021	30.09.2020	31.12.2020
Capitalized net liability	41 550	35 649	35 649
Pension costs taken to profit/loss	9 738	8 139	10 798
Finance costs taken to profit/loss	729	796	1 084
Actuarial gains and losses incl. social security contributions	11 552	12 302	3 557
Premiums/supplement paid-in including admin	-9 456	-6 703	-9 539
Capitalized net liability	54 113	50 184	41 550

ASSUMPTIONS	30.09.2021	30.09.2020	31.12.2020
Discount rate	1.90%	1.40 %	1.70 %
Salary growth	2.50%	2.00 %	2.25 %
The National Insurance basic amount (G)	2.25%	1.75 %	2.00 %
Pension increases	1.50%	0.99 %	1.24 %
Social security contribution	14.10 %	14.10 %	14.10 %
Capital activity tax	5.00 %	5.00 %	5.00 %

Quarterly earnings trend

NOK MILLIONS	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020
Interest income	166.5	170.2	167.9	180.0	191.8
Interest expense	-86.6	-93.1	-92.1	-92.0	-98.5
Net interest income	80.0	77.1	75.7	88.0	93.4
Commision income and income from banking services	5.7	5.2	4.6	4.8	5.2
Commision cost and cost from banking services	-0.6	-0.5	-0.4	-0.5	-0.5
Net charges and commission income	5.2	4.7	4.2	4.3	4.8
Other fee income	14.9	14.9	14.9	14.8	14.8
Net gain/(loss) financial instruments	-4.9	-33.0	14.5	-4.4	-5.6
Total other operating income	10.0	-18.2	29.3	10.4	9.2
Salaries and administrative costs	-17.7	-20.5	-20.3	-22.6	-15.5
Depreciation	-1.7	-1.7	-1.7	-1.6	-1.5
Other operating expenses	-36.1	-35.2	-38.1	-43.3	-27.2
Net loan losses	-0.2	-0.6	-0.5	-0.1	-1.3
Total operating expenses	-55.6	-58.0	-60.6	-67.6	-45.5
Operating profit/loss before tax	39.5	5.7	48.6	35.1	61.8
Tax ordinary income	-9.2	-1.3	15.4	-8.1	-14.7
Profit/loss for the period	30.2	4.4	64.0	27.0	47.1
Other comprehensive income	-19.3	0.0	7.7	8.7	3.8
Tax on other comprehensive income	4.8	0.0	-1.9	-2.2	-1.0
Other comprehensive income for the period	-14.5	0.0	5.8	6.6	2.9
Comprehensive income for the period	15.8	4.4	69.8	33.6	50.0

Key figures – accumulated

NOK MILLIONS	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020
Pre-tax income	93.8	54.3	48.6	136.8	101.7
Net interest income	232.8	152.8	75.7	317.3	229.3
Other operating income	58.6	38.6	19.0	77.7	58.6
Other operating cost and depreciation	-174.2	-118.6	-60.6	-232.1	-164.5
Net gain/(loss) financial instruments	-23.5	-18.6	14.5	-26.1	-21.7
Deposits	12 773.7	12 642.6	12 103.2	11 781.2	11 992.9
Lending customers	21 364.8	21 409.3	20 893.9	20 569.8	20 610.3
Lending with public sector guarantee	16 842.2	16 752.1	16 734.4	17 654.3	16 932.7
Non-performing loans	31.5	34.1	57.0	54.3	48.2
Total liabilities created on issuance of securities	29 535.7	29 194.6	27 147.4	25 799.5	26 203.3
Other borrowing	0.0	701.8	1 303.2	2 504.2	2 602.7
Total assets	44 980.2	45 215.6	43 200.4	42 688.0	43 437.9
Average total assets	43 834.1	43 951.8	42 944.2	41 188.3	41 568.3
Equity	2 489.7	2 473.9	2 469.5	2 426.8	2 388.7
Interest net	0.53 %	0.35 %	0.18 %	0.80 %	0.57 %
Profit/loss from ordinary operation before taxes	0.21 %	0.12 %	0.11 %	0.33 %	0.24 %
Return on equity	5.15 %	4.47 %	8.02 %	6.16 %	6.11 %
Capital adequacy ratio	18.6 %	18.4 %	19.3 %	19.5 %	18.7 %
Liquidity coverage ratio (LCR)	353 %	438 %	371 %	443 %	270 %