KLP Banken AS/KLP Banken Group
Corporate responsibility in KLP Banken
The KLP Group has an ambition to be a market leader within corporate responsibility and sustainability in its industry. Corporate responsibility is therefore a clearly defined responsibility in the Group’s strategy.
KLP and KLP Banken have for years contributed to sustainable development in the society by financing projects all over Norway, and we are working to impact people, the environment, and the society in a positive way, through our lending activities. This is achieved through actions related to the Group’s operations by financing socially beneficial investments in the public and private sectors, such as energy-saving initiatives through green mortgages and green loans in the public-sector market.
KLP’s strategic objectives within corporate responsibility are to:
- Integrate corporate responsibility into all our operations
- Increase investments that promote sustainable development and support our financial goals
- Engaging companies and industries for a more sustainable operation
- Develop products and services that contribute to positive social development
The UN Sustainable Development Goals provide the framework for KLP’s corporate responsibility, and KLP aims be a driver in efforts to achieve these goals. KLP’s corporate responsibility strategy prioritises the social effects that KLP wishes to achieve through its corporate responsibility:
- Achieving the climate target
- A sustainable business community
- Sustainable urban development and infrastructure
- Health-promoting jobs in the public sector
These social effects are associated with several of the Sustainable Development Goals, as illustrated below:
KLP Banken is a UN Principles for Responsible Banking signatory
As part of KLP, KLP Banken aims to contribute to KLP achieving its goals within corporate responsibility. Therefore, we signed the UN Principles for Responsible Banking (PRB) in 2019. Thus, we commit ourselves to implement the principles in our business within a four-year period. The purpose of the Principles is to help ensure that the financial sector develops in accordance with the UN Sustainable Development Goals and the Paris Climate Agreement. The Principles for Responsible Banking mean that the bank must be transparent about how its products and services generate value for customers and investors, as well as for society in general. To understand how the business affects and contributes to society, people and the environment, banks must analyse their current impact, set goals where they have the greatest impact, and then implement the goals. To better understand how and where we influence in a positive and a negative direction, we have used UNEP FI’s impact analysis tool. The result from the impact analysis, and a yearly report describing the progress of the implementation of the Principles, can be read here.
For further information about KLP and KLP Banken’s corporate responsibility and sustainability work, please see the KLP Group’s annual report and sustainability accounts for 2021, which are published on klp.no.
Measures and activities retail market
KLP Banken launched green mortgages (the “Grønt Boliglån” product) in September 2018. This product is offered to members of KLP who have energy-friendly housing, or who choose to take measures that make the house more energy-friendly. To get a green mortgage, with a lower interest rate on the mortgage, one of these two criteria must be satisfied:
- The house must be energy-rated A or B
- The customer must have received an Enova grant for upgrading or for energy advice on their house within the last two years.
As of December 2021, green mortgages in KLP Banken amounted to NOK 1.1 billion, corresponding to 4.4 per cent of the mortgage portfolio.
The graph below shows the development of green mortgages as a share of the total mortgage portfolio, from the launch of the product and to December 2021. As this shows, there has been a growth in green mortgages since the product was launched. We can see an increasing knowledge of the product among our customers, and green mortgages make an increasing share of the mortgage portfolio.
In 2021, KLP Banken targeted to send out minimum eight sustainability messages to influence customers into a greener direction. The messages sent out included tips on sustainable and energy-efficient refurbishment related to green mortgage, power-saving measures in connection with high electricity prices, and sustainable holiday tips ahead of the Easter, summer, and Christmas holidays. The messages were posted on our website and informed by newsletters, dynamic notifications in online and mobile banking as well as social media. KLP Banken produced a total of 14 sustainability messages in 2021, surpassing the target. In this way, we contribute to increased knowledge and focus on sustainability among our customers.
Measures and activities public-sector market
KLP Banken wants to be a driving force and sparring partner to get the municipalities to make sustaianable choices in the public administration. In 2021, we developed our own climate and environmental guide that has been well received by the municipalities. The guide contains information on various financing and support schemes, so that it becomes easier for the municipalities and the public sector enterprises to make climate- and environment-friendly investments.
In 2022, we will implement a new framework to integrate sustainability into the credit process for lending to the public sector. For municipalities and county municipalities, we will establish a model for an annual sustainability assessment, where the customers are assessed regarding to environmental, social and governance (ESG). The model will be based on publicly available sources. For public sector enterprises, sustainability will be integrated in the individual credit cases (loans must be subject to a thorough credit assessment in advance, where the purpose of the loan, finances, management and ownership are assessed.)
KLP Banken has, as a part of the management of KLP’s funds, offered green loans to municipalities, counties and enterprises related to the public sector, since 2019. Green loans are loans used to finance projects focusing on climate, the environment and sustainability. The loan can be given for investments in construction, transport, water, sewerage, refuse disposal or other public projects with a clear focus on climate. If the project to be financed with a green loan, qualifies according to KLP Banken’s criteria, the loan will carry a lower interest rate than an ordinary loan.
At the end of 2021, green loans in KLP and KLP Banken amounted to just over NOK 2.5 billion. The bulk of these are for climate-friendly new buildings, followed by loans to the water and waste sector, transport and rehabilitation of buildings. Among the projects that were financed with green loans in 2021, is a new primary and secondary school in Surnadal municipality. The school is built as a low-energy building in solid wood and will also produce its own energy. The building’s high environmental ambitions give an estimated saved CO2 emission of 6,850 kg per year. A green loan was also given to the Fire Brigade SØR IKS for the purchase of an electric van. By replacing the old fossil-powered car, the fire brigade saves 20,000 liters of fossil fuel a year.
Climate risk in the bank’s portfolios
KLP Banken has started working on mapping climate risks in its operations. The bank has looked at how climate change and the transition to a zero-emission society could affect the bank’s risk, and what opportunities this could give. KLP Banken is exposed to Norwegian mortgage customers and public-sector activities in Norway. There is a risk that some of the bank’s customers could be hit by extreme weather, which could affect the market price of their home in the short and/or long term, impairing the bank’s collateral.
In 2021 we carried out an analysis of the mortgage portfolio by mapping data from the Norwegian Water Resources and Energy Directorate (NVE), The Norwegian Mapping Authority, and Norwegian Geotechnical Institute (NGI), to map the risk of flood, sea level rise and landslides. This analysis showed that mortgages for approximately NOK 3 billion, or 12.5 percent of the bank’s mortgage portfolio, is exposed to risks such as flood, sea level rise, and landslides to a certain degree. The data do not say anything about which security measures have been implemented for the various homes or to what extent this has reduced or eliminated the risk. The bank’s loan portfolio thus has a not insignificant exposure to physical risk. The direct risk is covered through home insurance, but for the bank the risk is, for example, a fall in market value of the object due to climate-related events.
The public sector will also be affected by climate change and will need significant investments related to e.g. water and sanitation to handle extreme precipitation. Here, the bank has an opportunity to be an advisor and sparring partner within climate and sustainable business for the municipalities. Offering green financing products to meet customers’ and the government’s expectations for climate-related and sustainable investments is one way for the bank to contribute to achieve society’s overriding goals in line with the UN Sustainable Development Goals and the Paris Climate Agreement.
Equality and diversity
As part of the KLP Group, KLP Banken follows the Group’s guidelines on equality and diversity. KLP Banken shall be an attractive workplace. We believe that gender equality and diversity in the workplace strengthen value creations, increase employee satisfaction and contribute to influencing good attitudes and actions. All people should have the same rights and opportunities. That is why we are working to integrate gender equality and diversity perspectives into strategies, guidelines and measures. We also expect our employees to contribute to an inclusive working environment, where everyone is respected for who they are. This contributes to Sustainable Development Goal no. 5, Gender equality.
The table below shows selected key figures within equality in KLP Banken and KLP.
EQUAL RIGHTS AND DIVERSITY | KLP Banken | KLP |
---|---|---|
Gender balance among employees (women / men) | 52/48% | 47/53% |
Gender balance at all management levels (women / men) | 46/54% | 38/62% |
Women’s salaries as a percentage of men’s (total KLP) | 82,10 % | 83,70 % |
Women earn in relation to men other employees (e.g. all managers and highest paid positions) | 91,40 % | 91,90 % |
Women’s earnings compared to men’s in all management positions | 80,20 % | 88,30 % |
For more key figures related to equality and diversity, please see the sustainability statement in KLP’s annual report.
KLP Banken works actively, purposefully and systematically to promote gender equality and prevent discrimination. For several years, we have focused on work with gender equality and diversity, because we know that increased gender equality and diversity increases value added and increases employee satisfaction. We have goals for gender balance in management positions and higher-paid positions, because we believe balance in the composition of workers is good and because this will gradually contribute to achieving a better wage balance between men and women. Additionally, we have objectives in other areas of diversity; overall that all employees should experience being respected for who they are, and that we should increase our efforts in relation to employees with disabilities and increase the average retirement age.
Developments in the areas of gender and wage balance are too slow. We therefore decided in 2021 to participate in the joint initiative "Women in Finance", to further strengthen a targeted and concrete work to help increase the proportion of women in leading positions and specialist functions in the financial industry in Norway.
Other measures in KLP and KLP Banken are aimed at the gender and salary balance, and are related to recruitment processes, management development, salary process as well as identification and development of talents.
Eco-lighthouse
Both KLP Banken’s locations in Trondheim and Oslo are certified as an Eco-lighthouse (Miljøfyrtårn) through the Eco-lighthouse Foundation. As an Eco-lighthouse enterprise, the bank has received help to implement concrete and profitable sustainability initiatives within areas such as health and safety, waste disposal, energy use, purchasing and transport. The bank’s locations were first certified in 2012, in Oslo as a part of the KLP House in Bjørvika, and a separate certification in Trondheim. Both locations were recertified in 2021.
Annual Report for 2021
2021 was another good year for the KLP Banken Group, with continued lending growth and results reflecting desired long-term developments.
About KLP Banken
KLP Banken AS is wholly owned by Kommunal Landspensjonskasse gjensidig forsikringsselskap (KLP), and has its head office in Trondheim. KLP Banken AS has two subsidiaries, KLP Kommunekreditt AS and KLP Boligkreditt AS, which are part of the KLP Banken Group (KLP Banken).
The activities of the KLP Banken Group (KLP Banken) are divided between two nationwide business areas: the retail market and the public-sector market.
KLP Banken offers simple and competitive savings and loan products, and digital solutions to establish and manage them. The bank aims to ensure that businesses that have chosen KLP as their pension provider are perceived as attractive employers. At the end of 2021, employees in these enterprises made up around 70 per cent of KLP Banken’s retail customers.
Presence in the market for loans to public sector enterprises contributes to competition and provides the target group of municipalities, county municipalities and businesses with public guarantees with access to favourable long-term financing. The bank also provides guidance to customers within financing and municipal finance.
KLP Banken aims to be a major lender and financial partner for KLP’s owners, and the preferred bank for members of KLP’s pension schemes.
Economic development 2021 - KLP Banken
Profit (NOK millions) | 2021 | 2020 | Change |
---|---|---|---|
Profit before tax | 116.1 | 136.8 | -20.7 |
Profit for the year after tax | 121.0 | 129.8 | -8.8 |
Net interest income | 308.6 | 317.3 | -8.7 |
Balance sheet (NOK billions) | 2021 | 2020 | Change |
---|---|---|---|
Loan payments for the year including managed loans | 20.5 | 24.5 | -4.0 |
Loans on the bank group’s balance sheet | 39.9 | 38.2 | 1.7 |
Loans managed for KLP | 77.9 | 77.1 | 0.8 |
INCOME STATEMENT
The profit contribution from the two business areas is NOK 87.6 (101.6) million from the retail market and NOK 28.5 (35.2) million from the public-sector market.
KLP Banken’s return on equity was 4.8 (6.2) per cent before tax and 5.1 (5.9) per cent after tax.
The loan balance in KLP Banken increased by NOK 1.7 (3.3) billion, or 4 (9) per cent. This figure includes growth in mortgages of NOK 1.5 (2.2) billion and in public-sector loans of NOK 0.3 (1.1) billion. Public-sector loans managed for KLP increased by NOK 3.7 (7.1) billion in 2021.
Money market rates, and hence general interest rates, increased in the second half of 2021 after a long period of very low rates. KLP Banken chose to keep mortgage rates unchanged after the central bank rate increased in September. Higher borrowing costs therefore resulted in lower net interest income towards the end of the year compared to earlier in 2021. Nevertheless, strong growth in the volume of mortgages has helped to keep net interest income in the retail market at roughly the same level as last year in this segment. In the public-sector market, net interest income was in line with a normal year and thus lower than in 2020.
The bank’s total net interest income decreased by NOK 8.7 million, or 3 per cent, in 2021 compared to the previous year. 79 (77) per cent of KLP Banken’s net interest income in 2021 came from the retail market.
Changes in the value of financial instruments also turned negative in 2021. As in previous years, this mainly relates to accounting effects from the buy-back of own loan issuance. In 2021, higher interest rates also resulted in losses on the bank’s liquidity investments.
The accounting item for net profit/loss on financial instruments includes the effects of changes in the value of securities and buy-back of borrowings, in addition to the effects of changes to pension estimates and changes in the value of loans. In all, financial instruments had a total cost of NOK 32.9 (26.1) million for the financial year.
KLP Banken charges fees for some of its banking services. Changes in the bank’s earnings from fees mainly follow changes in the volume of outstanding credit in the retail market. Net fees and commission income amounted to NOK 19.5 (18.5) million in 2021.
Total operating costs and depreciation amounted to NOK 236.2 (227.8) million in 2021. This produced an increase in costs of 4 (5) per cent. The growth in costs in excess of inflation is mainly related to investments in IT technology and digitisation together with streamlining processes for customers and internally within the bank.
In addition to individual losses and loss provisions, group-level loss provisions in 2021 resulted in an effect on profits of NOK -0.4 (0.6) million. Loss provisions are calculated on loans both in the retail market and to the public sector (see Note 10).
In 2021, individual losses and loss provisions on loans and other credit amounted to NOK 2.7 (4.3) million; all of these are related to lending in the retail market. NOK -0.7 (0.4) million of the total losses and loss provisions are related to mortgages and NOK 3.0 (3.9) million to credit cards and other loans. Total losses and loss provisions decreased by approximately 47 per cent compared to the previous year. The bank’s losses are at a low level and the Board of Directors believes that the loss provisions are sufficient. Nor has the public-sector market seen any individual loan losses in 2021.
TOTAL LOAN MANAGEMENT
KLP Banken manages loans for KLP and has a total loan portfolio of NOK 117.7 (115.2) billion on its own balance sheet.
Outstanding loans (principal) per company in KLP Banken as at 31.12.21:
Company / NOK billions | Mortgages | Public/commercial | Total loans | Change 2021 |
---|---|---|---|---|
KLP Banken AS (parent) | 9.7 | - | 9.7 | 0.0 |
KLP Boligkreditt AS | 12.3 | - | 12.3 | 1.5 |
KLP (Management agreement, mortgages) | 3.0 | - | 3.0 | -0.2 |
KLP Kommunekreditt AS | - | 17.8 | 17.8 | 0.3 |
KLP (Management agreement, public-sector loans) | - | 68.5 | 68.5 | 4.4 |
KLP (Management agreement, currency loans) | - | 6.4 | 6.4 | -3.5 |
Total | 25.0 | 92.7 | 117.7 | 2.6 |
Drawn credit on credit cards comes in addition to mortgages in the retail market.
Some of the managed loans to public/commercial customers are pure management assignments for KLP, whereby the conclusion of loan agreements, documentation and follow-up are handled by the principal. KLP Banken also has a responsibility for offers, contracts and loan documentation under its mandate from KLP.
RETAIL MARKET
Clients & Customers
KLP Banken has a total of over 46,000 (45,000) active retail customers. The table below shows the breakdown by numbers of customers who actually use the bank’s products actively (one customer may use one or more products).
Product | 2021 | Membership share | 2020 | Membership share |
---|---|---|---|---|
Deposits | 44 859 | 69 % | 42 197 | 71 % |
Loans | 14 734 | 80 % | 14 477 | 80 % |
Credit card | 4 496 | 86 % | 4 814 | 87 % |
Total customers | 46 463 | 69 % | 44 266 | 71 % |
As expected, customer growth in 2021 continued from the previous year. The slightly lower membership share is due to a clean-up of inactive credit card customers.
Products
KLP Banken’s main products in the retail market are mortgages and savings. The mortgage products include ordinary mortgages, Flexilån, Boliglån Ung, bridging finance for house purchases, loans for holiday homes and Seniorlån. The bank also offers green mortgages with lower interest rates for energy-friendly homes.
Other banking products in the retail market include current accounts, savings accounts, Boligsparing for Ungdom (BSU), and debit and credit cards. Retail customers are largely self-managing through mobile and online banking.
Loans in the retail market
In 2021, the KLP Group’s mortgage portfolios increased from NOK 23.7 billion to NOK 25.0 billion. Net growth in 2021 was NOK 1.3 (2.0) billion, or 5.6 (9.3) per cent. Gross new payments totalled NOK 9.9 (9.7) billion. Mortgages are secured using cautious valuations whereby all borrowers are assessed with respect to solvency and willingness to pay before a loan is approved. Fixed-interest loans accounted for 8 (7) per cent of outstanding loans at year-end. Other loans were at floating interest rates.
KLP Banken’s outstanding mortgages in the retail market totalled NOK 22.0 (20.5) billion at the end of 2021.
At the end of 2021, the mortgage portfolios in KLP Banken had an average loan-to-value ratio (LTV - debt as a percentage of the estimated property value) of 53 (58) per cent.
At year-end, outstanding debt on credit cards issued by the bank was NOK 43.0 (49.2) million. Both the introduction of a central debt register and the coronavirus pandemic contributed to a general reduction in consumer debt.
Loans more than 90 days past due amounted to NOK 19.4 (21.1) million at the end of the year. That represents 0.09 (0.10) per cent of KLP Banken’s total lending in the retail market. Both defaults and losses therefore decreased further in 2021 and are at a stable low level compared to most other banks.
PUBLIC-SECTOR MARKET
Public market lending and the bank’s role
Loans to the public sector are provided by KLP and KLP Kommunekreditt AS and managed by KLP Banken.
KLP Kommunekreditt AS, together with KLP, has a good position in the market for long-term financing of municipalities, county municipalities and enterprises that work for the public sector. The bank also has an important role as an advisor for customers on financial matters for example. Customers appreciate this, as shown by the fact that customers are expressing increasing satisfaction satisfied with the bank.
Total loans from KLP and KLP Kommunekreditt AS to public-sector borrowers and enterprises amounted to NOK 84.1 (80.4) billion at the end of 2021, an increase of NOK 3.7 (8.2) billion, or 4.6 per cent, in the financial year. For the local government sector as a whole, the estimated net debt growth was 5.4 per cent in 2021.
Loans at fixed interest rates made up 35 (36) per cent of total loans at the end of the year.
In 2021, new loans were paid to the public sector from the companies in the KLP Group for a total of NOK 11.2 (15.3) billion. Repayments and loan redemptions during the year amounted to NOK 7.5 (7.1) billion.
During 2021, applications for loans totalling NOK 154.9 (NOK 141.8) billion were received.
The credit risk associated with loans to municipalities and county municipalities in Norway is limited to deferred payments postponement and not to a lapse in payment obligations. This is pursuant to Norwegian law, which provides the lender with security against loss if a municipality cannot meet its payment obligations. In the event of a payment deferral, the lender is also assured of compensation for accrued interest, interest on overdue payments and debt recovery costs under the Norwegian Local Government Act . Neither KLP nor the KLP Banken Group has had any credit losses on loans to municipalities or county authorities.
KLP Banken’s public market lending
The KLP Banken Group’s lending activities within KLP Kommunekreditt AS are mainly based on loans directly from the mortgage company.
Total lending in KLP Kommunekreditt AS amounted to NOK 17.8 (17.7) billion at the end of 2021. The proportion of loans at fixed interest rates was 11 (17) per cent.
KLP Kommunekreditt AS paid out new loans totalling NOK 1.3 (3.4) billion in 2021. The loan portfolio consists of direct loans to Norwegian municipalities and county authorities, or to enterprises that perform assignments for the public sector where loans are guaranteed by municipalities or county authorities. The credit risk in the loan portfolio is considered very low.
KLP Kommunekreditt AS had no non-performing loans more than 90 days past due at the end of 2021. Nor were any individual losses recognised in the accounting year. Calculated loss provisions had very little profit effect in the mortgage company in 2021.
LIQUIDITY
The KLP Banken Group’s liquidity situation is satisfactory as the Group’s financing more than covers the liquidity needs from operations.
Liquidity is invested in other banks and in interest-bearing securities. Investments in credit institutions, including financing of the subsidiaries, amounted to NOK 1.5 (1.2) billion. The book value of interest-bearing securities measured at fair value was NOK 6.0 (3.1) billion in the KLP Banken Group at the end of the year. The portfolio consists entirely of high-rated covered bonds issued by banks and bonds issued by the Norwegian government or other public institutions.
In 2020, KLP Banken AS used the extended access to F-loans in Norges Bank for the first time. This access was discontinued in 2021.
The bank reports the liquidity coverage ratio (LCR) monthly for the KLP Banken Group as a whole and quarterly for each company. At the end of 2021, the LCR was 495 (443) per cent for the Group and 177 (157) per cent for KLP Banken AS.
FINANCING OF OPERATIONS
Financing of the retail market
KLP Banken’s activities in the retail market are financed with deposits, borrowing and equity.
The bank’s deposits from retail customers increased from NOK 10.5 billion to NOK 11.6 billion in 2021. Deposit growth was higher than the previous year.
At the end of the financial year, KLP Banken AS had outstanding securities debt of NOK 0.9 (0.8) billion. This is also used in financing the subsidiaries in addition to deposits.
KLP Banken uses KLP Boligkreditt AS to finance part of the lending activities in the retail market by issuing covered bonds backed by mortgages. In 2021, new mortgage-backed bonds in the amount of NOK 3.5 (6.0) billion were issued. Outstanding bond debt in KLP Boligkreditt AS was NOK 12.4 (10.6) billion at the end of 2021. KLP Boligkreditt AS has achieved the best rating for its borrowing programme.
KLP Boligkreditt AS purchased mortgages amounting to NOK 6.0 (7.5) billion from KLP Banken AS during 2021. At the end of the year, mortgages totalling NOK 12.3 (10.8) billion were financed on KLP Boligkreditt’s balance sheet and NOK 9.7 (9.7) billion on KLP Banken AS’s balance sheet.
Financing of the public sector market
The credit company KLP Kommunekreditt AS issues covered bonds secured on loans to municipalities and county authorities and to enterprises with a municipal loan guarantee. Cost-effective financing will enable KLP Banken to offer long-term lending on good terms.
At the end of 2021, the bank had issued covered bonds backed by loans to the municipal sector amounting to NOK 18.6 (17.4) billion. New issues in 2021 amounted to NOK 5.5 (4.0) billion. No bonds have been issued outside Norway. KLP Kommunekreditt AS has achieved the best rating for its borrowing programme.
KLP Banken AS also offers deposit products for municipalities and public-sector corporate customers that are used for financing loans in the public market etc. At the end of 2021, deposits from municipalities and enterprises amounted to NOK 1.3 (1.3) billion, which corresponds to 10 (11) per cent of the bank’s total deposits.
BALANCE SHEET AND CAPITAL ADEQUACY
The total assets of KLP Banken amounted to NOK 47.5 (42.7) billion at the end of 2021. The breakdown is shown in the table below:
Total assets/NOK billions | KLP Banken Group | Change 2021 |
---|---|---|
Public sector loans/municipal guarantee | 17.8 | 0.2 |
Loans to private individuals | 22.1 | 1.5 |
Securities and liquidity | 7.5 | 3.1 |
Other assets | 0.1 | -0.0 |
Total | 47.5 | 4.8 |
The Group’s equity and subordinated loan capital, based on the Board of Directors’ proposal for allocation of profits between the Group companies for 2021, was NOK 2.5 (2.4) billion. Core capital is identical to equity and subordinated loan capital. This gives a capital ratio and tier 1 capital ratio of 18.7 (19.5) per cent. Current capital requirements including capital buffers are 12.5 per cent tier 1 capital ratio and 16.0 per cent capital ratio.
KLP Banken AS has a Pillar 2 supplement of 1.5 per cent which is included in the Group’s capital requirements at the end of 2021. In addition, a buffer of at least 0.5 per cent is maintained above the actual capital requirement for Pillar 1 and Pillar 2 risks, so the capital target is 16.5 per cent.
The risk-weighted balance sheet was NOK 12.7 (11.7) billion at the end of 2021.
The unweighted capital ratio in the Group was 5.2 (5.5) per cent. The requirement for the unweighted capital ratio is 3 per cent. Capital adequacy is considered to be good.
ABOUT THE FINANCIAL STATEMENT
In the opinion of the Board of Directors, the annual financial statements give a true and fair view of the bank's assets and liabilities, financial position and profit. The conditions for continued operations are present, and this is assumed in the annual financial statements.
ALLOCATION OF PROFIT FOR THE YEAR
The financial statements for KLP Banken AS show a total profit for 2021 of NOK 65.6 (98.5) million after tax. The Board of Directors proposes that a group contribution of NOK 89.8 (81.0) million be paid to KLP, with tax effect. NOK 67.4 (60.7) million will be returned from KLP as a group contribution without any tax effect. Profit after tax and group contribution will be transferred to other equity. The group contribution will first have an accounting effect at the time of the decision.
RATING
The rating agencies’ assessment of the companies in KLP Banken has a bearing on the borrowing terms that can be obtained. The companies use Moody’s for credit rating of bonds. KLP Banken AS has a rating of A3. All issuances of covered bonds have the best rating, Aaa.
RISK MANAGEMENT
KLP Banken AS and its subsidiaries are exposed to different types of risks. The bank has established a risk management framework aimed at ensuring that risks are identified and analysed and are subject to governance using guidelines, frameworks, procedures and instructions.
Separate guidelines have been established for the most significant individual risks (liquidity, credit, market, operational and compliance risks) and overarching guidelines for risk management that govern the principles, organisation, limits etc. for the bank group’s overall risk. The guidelines are adopted by the Board of Directors and revised at least once a year. The guidelines are of an overarching nature and are supplemented with procedures, regulations and instructions established at the administrative level.
The overall risk management policy governs roles related to the bank's risk management, including requirements and guidelines for the risk control function. The purpose of the risk control function is, among other things, to control that the guidelines are being followed.
Stress testing is used as a risk assessment method and as a tool for communication and exchange of opinion related to risk conditions. In this context, stress testing is understood to include both sensitivity- and scenario analyses.
The guidelines include risk tolerance for the individual risks and for the overall risk. Risk tolerances are defined for different stress scenarios, and different forms of stress testing are regularly carried out to ensure that the actual exposure is within the approved tolerance limits.
KLP Banken AS aims to maintain a cautious risk profile and earnings should mainly be the result of borrowing and lending activities and liquidity management. This means that KLP Banken AS should maintain a low level of market risk and that interest rate risk arising from its borrowing and lending activity should be reduced by means of derivatives. KLP Banken AS should have prudent long-term financing and frameworks have been established to ensure that this objective is achieved. The credit risk in KLP Banken is low and loans are limited to loans with municipal risk and loans with security in residential and holiday property. Management of KLP Banken’s liquidity takes the form of investments which satisfy credit quality requirements, and securities in line with credit lines approved by the Board of Directors.
The boards of directors of KLP Banken AS, KLP Kommunekreditt AS and KLP Boligkreditt AS have appointed a joint risk committee. This is not legally required, based on the amount of the total assets. The risk committee deals with matters related to the bank’s various risks, and has an advisory function vis-à-vis the Board of Directors.
CORPORATE GOVERNANCE
The Bank's articles of association and applicable legislation provide guidance for corporate governance, corporate management, and a clear division of roles between governing bodies and day-to-day management.
The Board of Directors establishes the guidelines for the company. The Board of Directors held eight board meetings in 2021.
The Managing Director is responsible for the day-to-day management of the company in accordance with instructions determined by the Board of Directors.
Board members and the general manager have taken out directors’ liability insurance. The directors’ liability insurance also covers the subsidiaries.
WORKING ENVIRONMENT AND ORGANISATION
KLP Banken AS and its subsidiaries had 76 (71) permanent employees at the end of 2021. All employment relationships are with KLP Banken AS. Two employees also have functions in the subsidiaries KLP Kommunekreditt AS and KLP Boligkreditt AS.
Because of the pandemic, most employees worked mainly from home for most of 2021. KLP Banken has nevertheless been able maintain more or less normal operations.
As KLP Banken’s most important resource, all employees have extensive experience and significant credit and market expertise within the retail and public-sector markets. The development of products and services and regulatory requirements for KLP Banken result in constant changes within the business and create a need for adaptation and new expertise. Further development of the organisation and staff training are therefore important elements of the bank’s plans and activities.
Surveys are carried out regularly among all employees to measure engagement, working environment, well-being and compliance with KLP’s values. The results of these measurements show that most employees are committed to their work and happy at KLP. The bank has a working environment and cooperation committee (AMU) which is made up of representatives from the management, KLP’s HR Department, the employees’ representatives and the security service. The Board of Directors believes that cooperation between the management of KLP Banken and its employees functions well.
The KLP Group aims to maintain absence due to illness below 4 per cent. Absence due to illness at KLP Banken was 3.4 (3.5) per cent in 2021, of which long-term absence was 2.6 (2.6) per cent and short-term absence 0.8 (0.9) per cent. Absence is followed up by managers and the HR Department in KLP and by the bank’s Board of Directors when there is an increase in absence over time. There were no work-related injuries or accidents in 2021. Short-term absence has decreased since the pandemic started.
As part of the KLP Group, KLP Banken follows the Group’s guidelines on gender equality and diversity, in which the objectives, measures and activities take into account the basis for discrimination described in the legislation. Separate objectives for gender equality and diversity have been adopted in the central working committee. The standard recruitment procedure is that all qualified applicants should be contacted regardless of age, gender, functional ability, political point of view, sexual orientation or ethnicity. KLP Banken is actively working on includeing diversity, gender equality, equal pay and reduced absence due to illness as part of the company's corporate social responsibility.
KLP Banken also adheres to the KLP Group’s Code of Conduct and the guidelines on whistleblowing.
49 (55) per cent of KLP Banken’s employees are women. The company endeavours to achieve a balance between women and men in all positions. The proportion of women in senior positions was 46 (46) per cent. In KLP Banken’s central management group (levels 1 and 2) the proportion of women was 44 (44) per cent.
At the end of 2021, the Board of Directors of KLP Banken AS comprised three women and four men, including one woman and one man elected from among the employees.
For further discussion, see the KLP Sustainability Report for 2021.
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY
KLP is a signatory to the United Nations Global Compact and is committed to working for human rights, workers’ rights, the environment and anti-corruption initiatives. KLP works on issues related to climate, corruption, human rights, workers’ rights and taxes, among others. KLP also works to ensure that its lending activities affect people, the environment and the community around us in a positive way. The KLP Banken Group has for many years contributed to the sustainable development of society through loan financing of projects throughout Norway, such as roads, schools, day-care centres, swimming pools, sports facilities, care homes, cultural centres and many other socially beneficial projects. Loans to Norwegian municipalities are used for purposes that help reduce national greenhouse gas emissions and benefit society as a whole. More than three-quarters of KLP’s owners have loans in KLP or in the KLP Banken Group. KLP Banken helps to finance energy-saving measures through green mortgages and green loans to the local government sector.
KLP Banken AS has signed up to the United Nations Principles for Sustainable Banking and committed to implementing these principles in its operations. The Principles for Sustainable Banking mean that banks are transparent about how their products and services create value for customers and investors, as well as for society as a whole. The Principles are intended to guide banks in their work on sustainability, and support society’s overall goals in line with the United Nations Sustainable Development Goals and the Paris Agreement.
Corporate social responsibility and sustainability are also included in governing documents in the form of guidelines for ethics, the environment and responsible investments, as well as in the bank’s own guidelines and job descriptions for the employees. A more detailed description of goals, measures and results is available on KLP’s website klp.no.
Prevention of financial crime is an important part of KLP Banken’s corporate social responsibility. KLP Banken works systematically to prevent our products and services from being used for criminal activities such as money laundering, corruption, terrorist financing or other crimes. Effective measures to prevent money laundering and terrorist financing are a very high priority at KLP Banken.
The bank aims to be a driver and advisor to get municipalities to make sustainable choices within public administration. In 2021, we developed our own climate and environmental guide which has been well received by the municipalities. The guide provides information on various financing and support schemes, making it easier and clearer for municipalities and municipal enterprises to make climate-friendly and green investments.
From 2021 onwards, new legal requirements have been laid down set for companies’ sustainability work. The main driver behind this paradigm shift is the EU and its “Fit for 55” climate package. This is a series of bills and regulations to ensure that the EU achieves its climate target of cutting emissions by at least 55 percent by 2030. The EU taxonomy, which defines what can be called sustainable activities, is key to this and is supported by the other regulations. KLP welcomes the coming legal requirements, and is preparing the company and the subsidiaries for the future requirements. We hope that these requirements will also lead to the bank obtaining the necessary information from its borrowers, so it can report on its lending portfolio.
KLP Banken’s premises in both Oslo and Trondheim are certified as “eco-lighthouses” through Stiftelsen Miljøfyrtårn. As an eco-lighthouse company, KLP Banken has been helped to implement concrete and profitable sustainability measures in areas such as the working environment, waste management, energy consumption, procurement and transport. The bank’s locations were first certified when it was established in 2012, then in Oslo as part of the KLP Huset development and a separate new certification in Trondheim. Both locations were recertified in 2021.
OUTLOOK
KLP Banken’s target group in the retail market are the KLP members. This comprises a significant proportion of the population, and the basis for further developing KLP Banken’s position is considered to be good. KLP Banken will continue to work on developing banking products while ensuring that its members have the best possible conditions, and that these are predictable.
KLP Banken’s organisation has functioned very well during periods of home working, but the Board expects everyone will return to the office when things open up again. The positive findings from home working will be taken into account and could provide a basis for increased flexibility.
New technology and new actors from other industries are challenging the banking industry. KLP Banken aims to exploit proven technology in order to offer relevant, customer-friendly and efficient services to its customers. This requires extensive IT investments to achieve KLP Banken’s targets for further growth and profitability.
As most bank customers in Norway have become familiar with the use of digital tools, KLP Banken as a digital bank has also gained in competitiveness, which is good for the further development of the bank. The Board believes that the bank’s further growth requires us to be able to offer timely and service-friendly customer solutions.
The debt burden on households is subject to strict official requirements for credit approval in the retail market. KLP Banken sees this as a positive sign and a good basis for further development of our personal banking products in the retail market.
The ability to service residential mortgages by KLP Banken’s main customer groups, who are mainly white-collar workers, is believed to be satisfactory going forward and will help to limit defaults and losses. KLP Banken will continue its conservative procedures for credit approval in order to maintain low risk in the bank’s lending portfolios.
The pandemic has affected large parts of the Norwegian economy and many industries have faced challenges. KLP Banken’s owners and members are largely sheltered from this through their employment in municipalities and health trusts. So KLP Banken has not felt the effects as strongly as many others, and therefore believes that it can maintain its growth ambitions and that the risk of losses will be minimal in the future as well.
Norwegian municipalities have developed a good and comprehensive range of services to the public. Increased life expectancy, demographics, income growth and climate risk give reason to expect a sustained high level of investment in the public sector over the next few years. The demand for loans for projects that contribute to climate adaptation is expected to increase in the future.
KLP Kommunekreditt AS is the only mortgage company in Norway that issues bonds secured against loans to the public sector. The presence of KLP Kommunekreditt AS together with KLP in the market for loans to the public sector contributes to competition and so provides the public sector with access long-term financing on favourable terms.
The KLP Banken Board is worried about the development following the war in Ukraine. The bank has no credit exposure in this area, but may as other Norwegian banks, be affected by the financial turmoil following the situation.
KLP Banken AS has good capital adequacy and an equity situation that satisfies all regulatory requirements. Combined with low credit risk in lending activities, this is a good starting point for access to the best possible financing in the capital markets. This is an important prerequisite if we are to offer favourable lending terms. With continued growth, and hence increasing capital requirements, it will also be natural to discuss further capital increases with the parent company as set out in the long-term capital plan.
KLP Banken is well equipped for further development and growth.
Declaration pursuant to the Norwegian securities trading act, section § 5-5
We hereby declare that, to the best of our knowledge, the annual financial statements for the period from 1 January to 31 December 2021 have been prepared in accordance with applicable accounting standards, and that the information in the financial statements gives a true and fair view of the Company’s and the Group’s assets, liabilities, financial position and overall profit or loss.
We also declare that the Directors’ report provides a true and fair overview of the development, profit or loss and the financial position of the Company and the Group, together with a description of the most significant risk and uncertainty factors the Company and the Group face.
Income statement
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | |||
---|---|---|---|---|---|
NOTES | 01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 | |
263 987 | 209 015 | Interest income, effective interest method | 621 624 | 768 442 | |
41 451 | 27 125 | Other interest income | 68 176 | 132 655 | |
5 | 305 438 | 236 140 | Total interest income | 689 801 | 901 098 |
-143 693 | -81 984 | Interest expenses, effective interest method | -290 728 | -469 541 | |
-14 936 | -19 487 | Other interest expenses | -90 463 | -114 210 | |
5 | -158 629 | -101 471 | Total interest expense | -381 191 | -583 751 |
5 | 146 808 | 134 669 | Net interest income | 308 609 | 317 346 |
20 285 | 21 520 | Commission income and income from banking services | 21 520 | 20 285 | |
-1 766 | -2 033 | Commission costs and costs of banking services | -2 033 | -1 766 | |
6 | 18 519 | 19 487 | Net charges and commission income | 19 487 | 18 519 |
59 220 | 59 400 | Other fee income | 59 400 | 59 220 | |
7 | 40 907 | -6 082 | Net gain/(loss) on financial instruments | -32 896 | -26 145 |
100 126 | 53 318 | Total other operating income | 26 504 | 33 074 | |
8 | -76 228 | -81 930 | Salary and administrative costs | -81 930 | -76 228 |
-68 226 | -63 272 | Other operating expenses | -147 846 | -145 571 | |
21,22,23 | -6 038 | -6 409 | Depreciation | -6 409 | -6 038 |
10 | -4 288 | -2 295 | Loss on loans issued, guarantees etc. | -2 299 | -4 302 |
-154 780 | -153 906 | Total operating expenses | -238 484 | -232 139 | |
110 674 | 53 568 | Operating profit/loss before tax | 116 117 | 136 801 | |
11 | -9 480 | 6 786 | Tax on ordinary income | -423 | -4 288 |
101 195 | 60 354 | Income for the year | 115 694 | 132 514 | |
12 | -3 557 | 7 136 | Estimate difference, pension obligations and assets | 7 136 | -3 557 |
11 | 889 | -1 784 | Tax on actuarial gains and losses | -1 784 | 889 |
-2 668 | 5 352 | Items that will not be reclassified to profit and loss | 5 352 | -2 668 | |
-6 | -170 | Changes in value of assets measured at fair value through other comprehensive income | - | - | |
11 | 2 | 43 | Tax on changes in fair value of available for sale financial assets | - | - |
-4 | -128 | Items that may be reclassified to profit and loss | - | - | |
-2 672 | 5 224 | Other comprehensive income for the period | 5 352 | -2 668 | |
98 522 | 65 578 | COMPREHENSIVE INCOME FOR THE YEAR | 121 046 | 129 846 | |
ALLOCATION OF INCOME | |||||
-98 522 | -65 578 | Allocated to/from retained earnings | |||
-98 522 | 65 578 | TOTAL ALLOCATION OF INCOME | |||
0.57% | 0.36% | Income for the year in per cent of total assets | 0.24% | 0.31% | |
0.56% | 0.39% | Comprehensive income for the year in per cent of total assets | 0.25% | 0.30% |
Balance sheet
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | |||
---|---|---|---|---|---|
NOTES | 31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
ASSETS | |||||
13,14,15 | 68 941 | 67 244 | Claims on central banks | 67 244 | 68 941 |
13,14,15 | 1 647 841 | 2 804 864 | Loans to and receivables on credit institutions | 1 398 501 | 1 175 714 |
14,15 | 9 746 261 | 9 758 283 | Loans to and receivables on customers | 39 934 100 | 38 224 087 |
15,16,17 | 4 842 883 | 2 630 267 | Fixed-income securities | 6 001 099 | 3 148 228 |
15,16,18,19 | - | - | Financial derivatives | 42 051 | 42 630 |
15,16 | 1 197 | 1 187 | Shares, holdings and primary capital certificates | 1 187 | 1 197 |
20 | 1 385 470 | 1 385 470 | Holdings in Group companies | - | - |
21 | 19 018 | 16 789 | Intangible assets | 16 789 | 19 018 |
22 | 1 948 | 18 236 | Right-of-use assets | 18 236 | 1 948 |
23 | 444 | 436 | Fixed assets | 436 | 444 |
24 | 12 335 | 9 620 | Other assets | 2 217 | 5 819 |
17 726 338 | 16 692 395 | TOTAL ASSETS | 47 481 860 | 42 688 027 | |
LIABILITIES AND OWNERS’ EQUITY | |||||
LIABILITIES | |||||
25 | 2 504 192 | - | Debt to credit institutions | - | 2 504 192 |
15,26 | 11 981 720 | 13 303 110 | Deposits from customers | 12 901 004 | 11 781 187 |
15,27 | 802 450 | 902 590 | Liabilities created on issuance of securities | 31 917 798 | 25 799 465 |
15,16,18,19 | 2 594 | 347 | Financial derivatives | 9 990 | 80 425 |
22 | 2 023 | 18 323 | Lease liabilities | 18 323 | 2 023 |
28 | 15 362 | 16 209 | Other liabilities | 38 369 | 14 056 |
11 | 16 980 | 11 935 | Deferred tax | 23 343 | 21 179 |
28 | 58 664 | 52 189 | Provision for accrued costs and liabilities | 52 249 | 58 700 |
15 383 985 | 14 304 704 | TOTAL LIABILITIES | 44 961 078 | 40 261 226 | |
OWNERS’ EQUITY | |||||
1 065 000 | 1 065 000 | Share capital | 1 065 000 | 1 065 000 | |
825 000 | 825 000 | Share premium | 825 000 | 825 000 | |
452 353 | 497 691 | Other owners’ equity | 630 782 | 536 801 | |
2 342 353 | 2 387 691 | TOTAL OWNERS' EQUITY | 2 520 782 | 2 426 801 | |
17 726 338 | 16 692 395 | TOTAL LIABILITIES AND OWNERS’ EQUITY | 47 481 860 | 42 688 027 |
Statement of owners’ equity KLP Banken AS
2021 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners’ equity |
---|---|---|---|---|
Owners’ equity 1 January 2021 | 1 065 000 | 825 000 | 452 353 | 2 342 353 |
Income for the year | - | - | 60 354 | 60 354 |
Other comprehensive income | - | - | 5 224 | 5 224 |
Comprehensive income for the year | - | - | 65 578 | 65 578 |
Group contribution received during the period | - | - | 60 719 | 60 719 |
Group contribution paid during the period | - | - | -80 959 | -80 959 |
Total transactions with the owners | - | - | -20 240 | -20 240 |
Owners’ equity 31 December 2021 | 1 065 000 | 825 000 | 497 691 | 2 387 691 |
2020 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners’ equity |
---|---|---|---|---|
Owners’ equity 31 December 2019 | 1 057 500 | 732 500 | 315 590 | 2 105 590 |
Merger with KLP Bankholding AS | - | - | 4 536 | 4 536 |
Owners’ equity 1 January 2020 | 1 057 500 | 732 500 | 320 126 | 2 110 126 |
Income for the year | - | - | 101 195 | 101 195 |
Other comprehensive income | - | - | -2 672 | -2 672 |
Comprehensive income for the year | - | - | 98 522 | 98 522 |
Group contribution received during the period | - | - | 105 847 | 105 847 |
Group contribution paid during the period | - | - | -72 143 | -72 143 |
Owners' equity received during the period | 7 500 | 92 500 | - | 100 000 |
Total transactions with the owners | 7 500 | 92 500 | 33 704 | 133 704 |
Owners’ equity 31 December 2020 | 1 065 000 | 825 000 | 452 353 | 2 342 353 |
NOK THOUSANDS | Number of shares | Par value | Share capital | Share premium | Other equity | Total |
---|---|---|---|---|---|---|
Equity at 1 January 2021 | 7 500 000 | 0.142 | 1 065 000 | 825 000 | 452 353 | 2 342 353 |
Changes in the period 1 January - 31 December | - | - | - | - | 45 338 | 45 338 |
Equity at 31 December 2021 | 7 500 000 | 0.142 | 1 065 000 | 825 000 | 497 691 | 2 387 691 |
There is one class of shares. All shares are owned by Kommunal Landspensjonsskasse gjensidige forsikringsselskap (KLP). |
Statement of owners’ equity KLP Banken Group
2021 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners’ equity |
---|---|---|---|---|
Owners’ equity 1 January 2021 | 1 065 000 | 825 000 | 536 801 | 2 426 801 |
Income for the year | - | - | 115 694 | 115 694 |
Other comprehensive income | - | - | 5 352 | 5 352 |
Comprehensive income for the year | - | - | 121 046 | 121 046 |
Group contribution received during the period | - | - | 84 919 | 84 919 |
Group contribution paid during the period | - | - | -111 985 | -111 985 |
Total transactions with the owners | - | - | -27 065 | -27 065 |
Owners’ equity 31 December 2021 | 1 065 000 | 825 000 | 630 782 | 2 520 782 |
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 | - | - | 4 536 | 4 536 |
Owners’ equity 1 January 2020 | 1 057 500 | 732 500 | 435 096 | 2 225 096 |
Income for the year | - | - | 132 514 | 132 514 |
Other comprehensive income | - | - | -2 668 | -2 668 |
Comprehensive income for the year | - | - | 129 846 | 129 846 |
Group contribution received during the period | - | - | 141 681 | 141 681 |
Group contribution paid during the period | - | - | -169 823 | -169 823 |
Owners' equity received during the period | 7 500 | 92 500 | - | 100 000 |
Total transactions with the owners | 7 500 | 92 500 | -28 142 | 71 858 |
Owners’ equity 31 December 2020 | 1 065 000 | 825 000 | 536 801 | 2 426 801 |
Statement of cash flows
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 | |
OPERATING ACTIVITIES | ||||
285 241 | 228 314 | Payments received from customers – interest, commission and charges | 638 105 | 812 696 |
-129 451 | -90 768 | Payments to customers – interest, commission and charges | -89 196 | -128 918 |
-9 134 031 | -9 318 168 | Disbursements on loans to customers and credit institutions | -16 640 961 | -19 998 713 |
10 350 520 | 9 304 231 | Receipts on loans to customers | 14 782 637 | 16 596 718 |
-141 468 | -1 000 963 | Net change internal loans | - | - |
495 698 | 1 320 863 | Net receipts on customer deposits banking | 1 119 290 | 295 164 |
-78 156 | -64 577 | Disbursements on operations | -148 301 | -152 043 |
-73 207 | -81 174 | Payments to staff, pension schemes, employer's social security contribution etc. | -81 174 | -73 207 |
4 663 | 1 564 | Interest investment accounts | 9 617 | 7 871 |
111 845 | 63 834 | Net receipts/disbursements from operating activities | 64 335 | 111 414 |
1 691 654 | 363 157 | Net cash flow from operating activities | -345 647 | -2 529 017 |
INVESTMENT ACTIVITIES | ||||
-10 574 628 | -5 785 095 | Payments on the purchase of securities | -9 551 367 | -11 440 399 |
7 067 621 | 7 992 953 | Receipts on the sale of securities | 9 763 759 | 11 425 797 |
40 686 | 26 839 | Receipts of interest from securities | 45 074 | 50 630 |
-2 983 | -2 578 | Payments on the purchase of tangible fixed assets | -2 578 | -2 983 |
-220 000 | - | Disbursement of capital to subsidiaries | - | - |
-3 689 304 | 2 232 120 | Net cash flow from investment activities | 254 889 | 33 045 |
FINANCING ACTIVITIES | ||||
5 470 000 | - | Receipts on loans from credit institutions | - | 5 470 000 |
-2 970 000 | -2 500 000 | Repayment and redemption from credit institutions | -2 500 000 | -2 970 000 |
-838 | -6 517 | Net payment of interest from credit institutions | -6 517 | -838 |
300 000 | 300 000 | Receipts on loans | 9 300 000 | 7 250 407 |
-896 494 | -199 839 | Repayments and redemption of securities debt | -6 569 839 | -6 756 063 |
- | - | Change in securities debt, own funds | 343 369 | -480 000 |
-19 048 | -7 782 | Net payment of interest on loans | -238 607 | -416 991 |
-1 570 | -1 654 | Payment of lease liabilities | -1 654 | -1 570 |
51 740 | - | Receipts from owners’ equity | - | - |
-18 036 | -20 240 | Group contributions made | -27 066 | -28 144 |
100 000 | - | Equity contributions received | - | 100 000 |
2 015 755 | -2 436 031 | Net cash flow from financing activities | 299 685 | 2 166 802 |
18 104 | 159 245 | Net cash flow during the period | 208 928 | -329 171 |
830 256 | 848 360 | Cash and cash equivalents at start of period | 1 212 067 | 1 541 238 |
848 360 | 1 007 606 | Cash and cash equivalents at end of period | 1 420 995 | 1 212 067 |
18 104 | 159 245 | Net receipts/disbursements (-) of cash | 208 928 | -329 171 |
Notes
Note 1 General information
KLP Banken AS was founded on 25 February 2009. KLP Banken AS and its subsidiaries provide or acquire loans to Norwegian municipalities and county authorities, as well as to companies with a public sector guarantee. The lending activities are principally financed by the issuance of covered bonds. The Group also offers standard banking products to private customers. The Company, KLP Banken AS, is registered as domiciled in Norway. The bank is an online bank without branches. Its head office is at Beddingen 8 in Trondheim. The Company has a branch office in Oslo.
KLP Banken AS owns all the shares in KLP Kommunekreditt AS and KLP Boligkreditt AS. These companies together form the KLP Banken Group. KLP Banken AS is a wholly owned subsidiary of Kommunal Landspensjonskasse (KLP). KLP is a mutual insurance company.
The company’s financial statement for 2021 were approved by the company’s board on 09.03.2022. The annual financial statement is available klp.no.
Note 2 Summary of the most important accounting principles
Below is a description of the most important accounting principles used in the preparation of the Company and Group financial statements for KLP Banken AS. These principles are applied in the same way in all periods presented unless indicated otherwise.
2.1 FUNDAMENTAL PRINCIPLES
The financial statements for KLP Banken AS and the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations from the IFRS Interpretations Committee (IFRIC), as adopted by the EU. The Norwegian Accounting Act and the Regulations concerning Annual Accounts for Banks, Mortgage Firms and Finance Companies (the Accounting Regulations) contain individual requirements for additional information which is not required under IFRS. These supplementary information requirements have been incorporated into the notes to the financial statements.
To prepare the accounts in accordance with IFRS, management has to make accounting estimates and approximate valuations. This will affect the value of the Company’s and the Group’s assets and liabilities, income and expenses recognised in the financial statements. Actual figures may differ from estimates used. Areas in which discretionary valuations and estimates of material significance to the Company/Group have been used are described in Note 3.
All amounts are presented in NOK thousands without decimals unless stated otherwise.
The financial statements have been prepared in accordance with the going concern assumption.
2.1.1. Changes in accounting principles and information
a) New and changed standards adopted by the Company/Group in 2021:
In the Company/Group the contributions to the Deposit Guarantee Fund have previously been classified as an operating cost in the accounts. The classification of this cost has changed and it is now reported under “Other interest costs” in the financial statement. The cost amounted to NOK 17.3 million at 31.12.2021, and NOK 11.2 million at 31.12.2020. The comparative figures have changed.
There are no other new or amended standards that have entered into force for the 2021 financial year which materially effect on the Company/Group’s accounts.
b) Standards, changes to and interpretations of existing standards that have not come into effect and where the Company/Group has not chosen early application.
A limited change was made in IAS 1 Presentation of Financial Statements, specifying that debt must be classified as short-term or long-term debt based on the rights that exist at the end of the reporting period. The classification is unaffected by expectations for the entity or events after the balance sheet date (e.g. breach of borrowing terms). The changes also specify what IAS 1 means when it refers to the ‘settlement’ of a commitment. It also specifies that breach of borrowing terms once the period has ended must be taken into account, even though no measurement is performed at this time. The changes may affect the classification of debt, particularly for entities that previously considered management’s intentions in determining the classification, as well as for certain debt items that can be converted to equity. The change must be applied retroactively in accordance with the main rule of IAS 8 Accounting Policies and will enter into force from 1 January 2023.
There are no other IFRS standards or IFRIC interpretations not yet in force that are expected to have a significant impact on the Company/Group’s financial statements.
2.2 CONSOLIDATION PRINCIPLES
2.2.1 Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. Control over an entity arises when the Group is exposed to variation in the profitability from the entity and has the ability to influence this profitability through its power over the entity. Subsidiaries are consolidated from the date on which control is acquired and are omitted from the consolidated financial statements when control ceases.
Intragroup transactions and accounts between group companies are eliminated. Where group companies present accounts in accordance with principles other than those used by the Group, these are converted to correspond to the Group’s accounting principles before they are consolidated.
2.3 TRANSLATION OF TRANSACTIONS IN FOREIGN CURRENCY
2.3.1 Functional currency and presentation currency
The accounts are presented in NOK, which is the functional currency of the parent company and the presentation currency of the Group.
2.3.2 Transactions and statement of financial position items
Transactions in foreign currency are converted to the functional currency at the transaction rate of exchange. Foreign exchange gains or losses realised on settlement and conversion of monetary items in foreign currency at the exchange-rate at the end of the reporting period are taken to profit/loss. Foreign exchange gains and losses are presented net on the line ‘Net gain/loss on financial instruments’.
Translation differences on non-monetary items (assets and liabilities) are included in the assessment of fair value. Foreign currency differences associated with non-monetary items, such as shares at fair value through profit or loss, are included as an element of value change recognised through profit or loss.
2.4 TANGIBLE FIXED ASSETS
Tangible fixed assets mainly comprise office machinery and inventory used by the Company/Group in its business.
Tangible fixed assets are recognised at acquisition including costs that can be attributed directly to the acquisition of the fixed asset, with a deduction for depreciation. Subsequent costs relating to fixed assets are capitalised as part of the fixed asset if it is likely that the expenditure will contribute to future financial benefit for the Company/Group and the cost can be measured reliably. Repair and maintenance are recognised through profit or loss during the period in which the expenses are incurred.
Depreciation is calculated by the straight-line method so the acquisition cost of tangible fixed assets, including subsequent costs, is depreciated to their residual value over the expected service life, which is:
- Office machinery: 4 years
- Inventory: 4 years
The service life of current assets is calculated annually. If there are indications of a fall in value below the residual value, the recoverable amount is calculated. If the recoverable amount is less than the residual value, the asset is written down to the recoverable amount.
The profit or loss from disposal is made up of the sale price minus the book value at the date of sale. The profit or loss from disposal is charged to the income statement.
2.5 INTANGIBLE ASSETS
The Company/Group’s intangible assets consist primarily of capitalised IT systems.
On the purchase of a new IT system, directly attributable costs for the system/software and costs of having the system installed and readied for use are capitalised.
On further development of IT systems and software, both external and internal costs are capitalised in accordance with the above. System changes regarded as maintenance are taken to expenses as they occur.
When an IT system is operational, the capitalised costs are depreciated on a linear basis over its expected life. In the event of subsequent capitalisation because of further development, this is depreciated over the original lifetime unless the expenditure increases the total expected life of the system.
If there are indications that the book value of a capitalised IT system is higher than the recoverable amount, an impairment test is carried out. If the book value is higher than the recoverable sum (present value on continued use/ownership), the asset is written down to the recoverable amount.
2.6 FINANCIAL INSTRUMENTS
The most important accounting policies relating to financial instruments are described below.
2.6.1 Recognition and derecognition
Financial assets and liabilities are recognised on the balance sheet on the date when the Company/Group becomes party to the instrument’s contractual terms and conditions. Regular purchases and sales of investments are recognised on the date of the agreement. Financial assets are removed from the balance sheet when the rights to receive cash flows from the investment expire or when these rights have been transferred and the Company/Group has essentially transferred the risk and the potential benefits from ownership. Financial liabilities are derecognised when the rights to the contractual conditions have been fulfilled or cancelled or have expired.
2.6.2 Classification and subsequent measurement
2.6.2.1 Financial assets
The classification and measurement of financial assets, other than equity instruments and derivatives, are assessed on the basis of a combination of the entity's business model criteria for asset management and the instrument's contractual cashflow characteristics.
Financial assets are classified on initial recognition in one of the following categories:
- Amortised cost
- Fair value through profit or loss
- Fair value through other comprehensive income
A financial asset is measured at amortised cost if both of the following criteria are met and the financial asset has not been reported at fair value through profit or loss (the ‘fair value option’):
- The financial asset is held in a business model whose purpose is to keep financial assets in order to receive the contractual cash flows (the ‘business model criterion’), and
- At certain times, the contractual terms of the financial asset lead to cash flows that only include repayments and interest on the outstanding principal amount (the ‘cash flow criterion’).
The business model criterion
The Company/Group assesses the target with a business model in which an asset is held at the portfolio level, because this best reflects the way the business is managed, and information is given to management. The information that is assessed includes:
- Explicit guidelines and goals for the portfolio and application of these guidelines in practice. In particular, if the management’s strategy and goal is to keep the asset in order to collect the contractual cash flows, maintain a specific interest profile, and match duration between financial assets and the corresponding financial liabilities used to finance these assets, or realise cash flows through the sale of the assets;
- How the return on the portfolio is assessed and reported to management;
- The risks that affect the performance of the business model (and the financial assets held within this business model) and how these risks are managed;
- How the managers are compensated, e.g. whether the compensation is based on the fair value of the managed assets or the total contractual cash flows; and
- Frequency, volume and date of sale in previous periods, the reasons for such sales and expectations of future sales activity. Information about the sales activities is not however assessed in isolation, but as part of an overall assessment of how the Company’s stated goals for managing the financial assets are achieved and how the cash flows are realised.
Loans provided with a view to resale to the wholly-owned mortgage companies KLP Boligkreditt AS and KLP Kommunekreditt AS will have a different business model in the consolidated financial statements and the company accounts. In the company accounts, these loans will be made with a view both to receiving the contractual cash flows and to resale, so they are measured at fair value with value changes through other comprehensive income. In the consolidated accounts, these loans will be included in a business model where the intention is to own the loan throughout its life in order to receive the contractual cash flows, and they are measured at amortised cost.
Assessment of the business model is based on reasonable future scenarios without regard to ‘worst case’ or ‘stress case’ scenarios. If cash flows after initial recognition are realised in a way that is different from the Company/Group’s original expectations, the classification of the remaining financial assets in the relevant business model does not change, but the information is incorporated into the assessment of the newly issued or acquired financial assets in the future.
Cash flow criterion
In this evaluation the principal amount is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as payment for the time value of money and for credit risk related to outstanding principal in a specific period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative expenses), as well as a profit margin.
In assessing whether the contractual cash flows are only repayments and interest on the outstanding principal amount, KLP Banken and the Group consider the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual clause that can change the date or the amount of the contractual cash flows so that it will not meet this condition. In assessing this the Company/Group considers:
- Contingent events that would change the amount and the date of the cash flows;
- Influence on functions;
- Advance payments and extended terms;
- Terms that limit the Company’s claim to cash flows from specific assets (e.g. ‘nonrecourse asset arrangements’);
- Terms that change the assessment of the time value of money - e.g. periodic resetting of interest rates.
The Company/Group has assessed all of its instruments measured at amortised cost against the rules described above and believes the instruments satisfy the criteria. The bank has senior loans on the balance sheet that to some extent expose the bank to the risk of impairment on the homes offered as collateral. The bank has determined that these loans do not pass significant insurance risks from the borrower to the bank as there are no plausible scenarios that result in curtailment of the loan amount. The loans are therefore considered to be within the scope of IFRS 9 in their entirety. These loans are considered to satisfy the cash flow criterion as the bank believes that they will never suffer more than an insignificant curtailment of the loan amounts.
All other financial assets are measured at fair value with changes in value through profit/loss, i.e.:
- Assets with contractual cash flows that do not meet the cash flow criterion; and/or
- Assets held in a different business model than ‘held to collect contractual cash flows’; or
- Assets designated at fair value through profit or loss (the ‘fair value option’).
The Company/Group may designate a debt instrument that meets the criteria to be measured at amortised cost to be reported at fair value through profit or loss if this eliminates or significantly reduces inconsistencies in measurement (‘accounting mismatches’). This option is also available under IAS 39.
Impairment model
The Financial Supervisory Authority of Norway published a circular 4/2020 criteria’s for identifying defaults, and with this the default definition was somewhat changed. The changes have not had a significant impact for the company/group. The impairment model for losses on loans and receivables is based on expected credit losses. The impairment model defines default as “a payment that is more than 90 days past due, or an account that is continuously overdrawn for a minimum of 90 days (by at least NOK 1000)”. Also, a commitment defaulted on if it has been forfeited for various reasons, such as debt negotiations. How the impairment loss is to be measured is determined for each individual stage and the model uses the effective interest rate method. A simplified approach is allowed for financial assets that do not have a significant financial component (e.g. trade receivables). Upon initial recognition, and in cases where the credit risk has not increased significantly after initial recognition, provision has to be made for credit losses that are expected to occur over the next 12 months (Stage 1). If the credit risk has increased significantly, the provisions should correspond to the expected credit losses over the expected useful life (Stage 2). If there is a loss event, impairments are raised equal to the expected loss on the commitment throughout its life (Stage 3).
In the Bank/Group, the assessment of what is considered to be a significant change in credit risk for home mortgage loans is based on a combination of quantitative and qualitative indicators and ‘backstops’.
For the products where the Bank/Group has not developed its own PD (probability of default) and LGD (loss given default) models, the loss ratio method is used. Here a change in risk rating of at least one grade from initial recognition to the reporting date is considered to be a significant increase in credit risk. This applies to the senior loan and credit card products within the retail market.
In the Group, the simplified loss rate method for public lending is also used. For the balance sheet items ‘Receivables from central banks’ and ‘Loans to and receivables from credit institutions’, the Bank/Group has made use of the exception for low credit risk. These balance sheet items have a rating that satisfies the presumption in the standard of low credit risk on the balance sheet.
For more information on loan losses, please refer to Note 10.
2.6.2.2 Financial liabilities
The Company/Group has classified all financial liabilities measured at amortised cost, except for:
- Financial liabilities at fair value through profit or loss: this classification applies to derivatives and financial liabilities designated as such upon initial recognition. The Company/Group has designated certain liabilities at fair value through the income statement, because this reduces or eliminates inconsistencies in measurement (‘accounting mismatches’)
- Financial guarantees and loan commitments
Financial guarantees and loan commitments not valued at fair value are included in the general impairment method; see information under 2.6.2.1.Other financial liabilities are recognised at amortised cost. The category includes deposits from customers and credit institutions with no interest rate hedging and other financial liabilities not designated as liabilities measured at fair value through profit or loss.
2.6.2.3 Financial derivatives and hedging
Financial derivatives are capitalised at fair value at the time the derivative contract is struck. On subsequent measurement the derivatives are recognised at fair value and are presented as an asset if the value is positive and a liability if the value is negative. Recognition of associated gains and losses depends on whether the derivative has been identified as a hedging instrument and on the type of accounting hedge the derivative is included in.
For derivatives not included in hedging relationships, gains and losses are recognised as net value changes on derivatives and foreign exchange. In the financial statements, they are included in the line ‘Net gain/loss on financial instruments’. These fall into the category of financial assets at fair value reported through profit or loss.
For derivatives included in the accounting hedges, gains and losses are recognised as net changes in value of certificates, bonds and other securities, and are presented in the financial statements under ‘Net profit/(loss) on financial instruments’.
The derivatives which are hedging instruments are used for hedging interest rate risk on fixed-interest borrowing and lending. In its hedging activity, the Group safeguards itself against movements in market interest rates. Changes in the credit spread are not taken into account in the Company/Group’s hedging strategy. The Company/Group uses the rules on fair value hedging, so the book value of the hedged item (asset or liability) is adjusted for the value change in the hedged risk. The value change is recognised in the income statement. On entry into a hedging contract, the connection between the hedging instrument and the hedging object is documented, in addition to the purpose of the risk management and the strategy behind the different hedging transactions. The hedging effectiveness is measured regularly to ensure the hedge is effective.
If the hedge no longer fulfils the criteria for hedge accounting, the recognised effect of the hedge for hedging objects recognised at amortised cost is amortised over the period up to the due date of the hedging instrument. Effective interest rate is normally calculated based on the remaining time to maturity.
2.6.2.4 Presentation, classification and measurement
Based on the descriptions above, the presentation, classification and measurement of financial instruments can be summarised in the following table:
Group Financial Instruments | Classification |
---|---|
Receivables from central banks | Amortized cost |
Loans to- and receivables from credit institutions | Amortized cost |
Loans to- and receivables from customers | Amortized cost |
Amortized cost (hedging) | |
Fixed income securities | Fair value through profit or loss |
Financial derivatives (assets) | Fair value through profit or loss |
Shares and holdings | Fair value through profit or loss |
Deposit from customers | Amortized cost |
Liabilities creates on issuance of securities | Amortized cost |
Amortized cost (hedging) | |
Financial derivatives (liabilities) | Fair value through profit or loss |
KLP Banken AS Financial Instruments | Classification |
---|---|
Receivables from central banks | Amortized cost |
Loans to- and receivables from credit institutions | Amortized cost |
Loans to- and receivables from customers | Fair value through other comprehensive income |
Fair value through profit or loss (hedging) | |
Fixed income securities | Fair value through profit or loss |
Financial derivatives (assets) | Fair value through profit or loss |
Shares and holdings | Fair value through profit or loss |
Deposit from customers | Amortized cost |
Liabilities creates on issuance of securities | Amortized cost |
Amortized cost (hedging) | |
Financial derivatives (liabilities) | Fair value through profit or loss |
2.6.3 Netting
Financial assets and liabilities are presented net in the statement of financial position when there is an unconditional offsetting entitlement that can be legally enforced and the intention is to settle net or realise the asset and liability simultaneously.
2.6.4 Modification
When the contractual cash flows from a financial instrument are renegotiated or otherwise amended, and the renegotiation or change does not lead to derecognition of the financial instrument, the gross book value of the financial instrument is recalculated and a gain or loss is recognised in the income statement. The gross book value of the financial instrument is recalculated as the present value of the renegotiated or amended contractual cash flows, discounted at the original effective interest rate for the financial instrument. Any costs or fees incurred adjust the book value of the modified financial instrument and are written down over the remaining lifetime of the changed financial instrument.
2.7 CASH AND CASH EQUIVALENTS
Cash and cash equivalents are defined as receivables from credit institutions without any termination date. The amount does not include receivables from credit institutions that are linked to the purchase and sale of securities in the management of the securities portfolios. The statement of cash flows has been prepared in accordance with the direct method.
2.8 OWNERSHIP INTERESTS IN GROUP COMPANIES
Investments in group companies are investments for permanent ownership or use and are valued at acquisition cost.
The Group financial statements cover the Bank and its wholly owned subsidiaries KLP Boligkreditt AS and KLP Kommunekreditt AS. All entities in which the Group has a decisive influence/control are considered to be subsidiaries. Control is normally achieved through ownership of more than half of the voting capital. The effect of potential voting rights that can be exercised or converted at the end of the reporting period is included in the assessment of control. Subsidiaries are consolidated from the date on which the Group takes over control and they are omitted from consolidation when that control ceases. Intercompany transactions are eliminated in the financial statements.
2.9 RIGHT-OF-USE ASSETS/LEASE LIABILITIES
On entering into a contract, the Company/Group assesses whether the contract constitutes a lease. A contract constitutes a lease if it transfers control over the use of an identified asset for a period in exchange for a consideration. At the date of implementation, the Company/Group recognises a right-of-use asset and a lease liability, and these are presented on separate lines in the accounts.
The lease liability is measured on initial recognition at the present value of lease payments not yet paid at the reporting date. The discount rate used is the Company/Group's marginal loan rate. Subsequent measurements measure the lease liability at amortised cost by the effective interest method. The lease liability is re-measured when there is a change in future lease payments arising from a change in an index or if the Company/Group changes its decision whether to exercise extension or termination options. When the lease liability is re-measured in this way, a corresponding adjustment is made to the recognised value of the right of use or is taken to profit/loss if the recognised value of the right of use is reduced to zero.
On initial recognition, the right of use is measured at acquisition cost, i.e. the lease liability (present value of the lease payments) plus advance lease payments and any direct acquisition costs. In subsequent periods, the right of use is measured using an acquisition model.
2.10 FINANCIAL LIABILITIES
The Company/Group’s financial liabilities comprise liabilities to credit institutions, covered bonds issued and deposits from customers.
2.10.1 Liabilities to credit institutions
Liabilities to credit institutions are capitalised at market value on take -up. As a rule, on subsequent measurement the liability is recognised at amortised cost in accordance with the effective interest rate method. The interest costs are included in amortisation on the line for ‘Interest expenses, effective interest rate method’ in the income statement. The KLP Bank/Group took advantage of the opportunity to take out an F-loan from the Central Bank of Norway in 2020 when these extra ordinary loans were issued. The loans have been paid up during 2021.
2.10.2 Covered bonds issued
In the first instance, covered bonds issued are recognised at fair value on take-up adjusted for purchase costs, i.e. nominal value adjusted for any premium/discount on issue. On subsequent valuation the bonds are valued at amortised cost by the effective interest method. The interest costs are shown in the line ‘Interest expenses, effective interest rate method’ in the income statement. Bonds with fixed interest are recognised in accordance with the rules on fair value hedging if they reduce or eliminate the inconsistency (“accounting mismatch”).
2.10.3 Liabilities to and deposits from customers
Deposits from customers are recognised at fair value in the balance sheet when the deposit is recorded as transferred to the customer’s account. In subsequent periods, liabilities to and deposits from customers are recognised at amortised cost in accordance with the effective interest rate method. The interest expenses are included in the line ‘Interest expenses, effective interest rate method’ in the income statement.
2.11 OWNERS’ EQUITY
The owners’ equity in the Group comprises owners’ equity contributed and retained earnings.
2.11.1 Equity contributed
Owners’ equity contributed comprises share capital, the share premium fund and other owners’ equity contributed.
2.11.2 Accrued equity
Retained earnings comprise other owners’ equity. Ordinary company law rules apply to any allocation or use of the retained earnings.
2.12 PRESENTATION OF INCOME IN THE ACCOUNTS
Income from the sale of goods and services is valued at the fair value of the consideration, net of any discounts. Intragroup sales are eliminated in the consolidated financial statements.
2.12.1 Income from services
Fees for lending management are taken to income in proportion to the management carried out for the time up to the end of the reporting period. Other services are taken to income on a linear basis over the contract period.
2.12.2 Interest income/expenses
Interest income and interest expenses associated with all interest-bearing financial instruments valued at amortised cost and fair value through other comprehensive income are taken to income using the effective interest rate method on the book value of the asset on the balance-sheet date and are reported under ‘Interest income/expenses, effective interest rate method’. Setup fees for lending are included in the amortisation and taken to income over the duration of the loan. This is true except for:
- Purchased or credit-impaired financial assets. For these assets, the Company/Group will apply the credit-adjusted effective interest rate on the amortised cost of the financial asset from initial recognition.
- Financial assets that are not purchased or credit-impaired financial assets, but which have subsequently become such. Here, the effective interest rate is applied to the amortised cost of the financial asset in subsequent reporting periods.
For interest-bearing financial investments and derivatives measured at fair value through the income statement, interest income is classified as ‘Interest income and similar income, fair value’, while other value changes are classified as ‘Net gain or loss on financial investments’.
2.13 TAX
Tax costs in the income statement comprise tax payable and changes in deferred tax. Tax is charged to the income statement, apart from tax relating to items reported under ‘Other comprehensive income’. Deferred tax and tax assets are calculated as differences between the accounting and taxation value of assets and liabilities. Deferred tax assets are capitalised to the extent that it can be demonstrated that the Company/Group will have sufficient taxable profit in the future to exploit the tax asset.
The Company is a part of a financial services group and a tax group. Except for the limitations pursuant to the Financial Institutions Act, any tax-related surplus may be passed in its entirety to the parent company and subsidiaries as a group contribution with tax effect.
Provisions for group contributions are classified as equity until they have been approved by the general meeting, and are then settled.
The Company/Group is covered by the rules on capital activity tax. Capital activity tax is calculated on the Company’s total employer-taxable benefits in addition to salary benefits etc. that were earned in 2021 but not paid until later years.
2.14 PENSION OBLIGATIONS - OWN EMPLOYEES
The Company/Group’s pension obligations are partially insurance-covered through KLP’s public-sector occupational pensions by way of membership of the joint pension scheme for municipalities and enterprises (‘Fellesordningen’). Pension liability beyond these schemes is covered through operations. Pension costs are treated in accordance with IAS 19. The Company/Group has a defined-benefit pension scheme for its employees. The accounting liability for defined-benefit schemes is the present value of the obligation on the reporting date, with a deduction for the fair value of the pension assets. The gross obligation is calculated using the straight-line method. The gross obligation is discounted to present value using the interest rates on Norwegian high-quality bonds. Gains and losses arising on recalculation of the obligation as a result of known deviations and changes in actuarial assumptions are charged to owners’ equity via other comprehensive income during the period in which they arise. The effect of changes in the benefits from the scheme is taken to profit/loss immediately.
Presentation of the pension costs in the income statement is in accordance with IAS 1. This standard allows the option of classifying the net interest element either as an operating cost or as a financial cost. The option the Company adopts must be followed consistently for later periods. The Company has presented the pension costs under the accounting line ‘Salary and administrative costs’, while the net interest element is presented in the accounting line ‘Net gain/(loss) on financial instruments’. The estimate deviation has been classified under ‘Items that will not be reclassified to income’ in the accounting line ‘Estimate deviation pension obligations and pension assets’.
The ‘Fellesordningen’ is a multi-undertaking scheme, which means that the actuarial risk is distributed across all the municipalities and companies included in the scheme. The financial and actuarial assumptions behind the calculation of net pension obligations are therefore based on factors that are representative of the whole Group.
Note 3 Important accounting estimates and valuations
The company/group prepares estimates and assumptions about future situations. These are constantly evaluated and are based on historical data and expectations concerning probable future events considered on the basis of data available at the time of presentation of the financial statements.
The estimates may be expected to differ from the final outcome and the areas where there is significant risk of substantial change in capitalised values in future periods are discussed below.
3.1 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The company/group has invested surplus liquidity in income-bearing securities. These were initially recognised at fair value in the statement of financial position. The securities in the portfolio are classified under “Financial assets at fair value through profit or loss” as they are managed, and their earnings are measured on the basis of fair value. The principles for calculating the fair value of the various instruments are described in Note 15 and 16.
3.2 LOSSES ON FINANCIAL ASSETS
Financial assets not measured at market value are assessed for impairment at the end of the reporting period.
Financial instruments are assessed for impairment for expected losses. The method for measuring impairment for expected loss depends on whether the credit risk has increased significantly since initial recognition. Upon initial recognition, and when the credit risk has not increased significantly after initial recognition, provisions are based on 12 months’ expected loss (stage 1). If the credit risk has increased significantly since initial recognition, but there is no objective evidence of impairment, write-downs are based on expected loss over the lifetime (stage 2). If the credit risk has increased significantly and there is objective evidence of impairment, a provision should be raised for the expected loss over its lifetime (stage 3).
In the company/group, the assessment of what is considered to be a significant change in credit risk for home mortgage loans is based on a combination of quantitative and qualitative indicators and ‘backstops’. The most important driver for a significant change in credit risk for home mortgage loans in the group is a change in the probability of default (PD) from initial recognition up to the reporting date. A relative change in PD of more than 2.5 is considered to be a significant change in credit risk. The change in PD must also be at least 0.6 percentage points for the change to be considered significant.
For the products where the company/group has not developed its own PD and LGD (loss given default) models, the simplified loss ratio method is used. Here a change in risk rating of at least one grade from initial recognition to the reporting date is considered to be a significant increase in credit risk.
The lending portfolio has historically shown low losses and has generally very good collateral in public sector guarantees or mortgages. As a result, the loan loss provisions for the company/group are low. In 2021 individual losses and provisions related to lending and other credit reduced by 47 percent compared to the previous year.
Note 4 Segment information
NOK THOUSAND | Public sector Market | Retail Market | Other/eliminations | Total | ||||
---|---|---|---|---|---|---|---|---|
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
Net interest income | 65 969 | 72 411 | 242 641 | 256 158 | - | - | 308 609 | 328 569 |
Other operating income | 16 965 | 25 036 | 19 893 | 54 331 | 9 133 | -27 773 | 45 991 | 51 594 |
Operating expenses | -62 232 | -62 186 | -173 953 | -176 873 | - | - | -236 185 | -239 059 |
Loss on loans issued, guarantees etc. | -3 | -13 | -2 296 | -4 290 | - | - | -2 299 | -4 302 |
Elimination | 7 780 | - | 1 354 | -27 773 | -9 133 | 27 773 | - | - |
Operating profit/loss before tax | 28 479 | 35 248 | 87 638 | 101 553 | - | - | 116 117 | 136 801 |
Assets as at 31.12. | 20 125 706 | 19 008 076 | 31 006 061 | 29 202 028 | -3 649 908 | -5 522 078 | 47 481 860 | 42 688 026 |
Liabilities as at 31.12. | 19 364 980 | 18 263 379 | 27 846 444 | 26 113 385 | -2 250 347 | -4 115 538 | 44 961 078 | 40 261 226 |
Note 5 Net interest income
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 | |
259 320 | 207 444 | Interest income on loans to customers | 617 688 | 760 567 |
4 667 | 1 571 | Interest income on loans to credit institutions | 3 937 | 7 875 |
263 987 | 209 015 | Total interest income, effective interest method | 621 624 | 768 442 |
40 453 | 26 866 | Interest income on bonds and certificates | 36 486 | 50 241 |
998 | 260 | Other interest income | 31 690 | 82 414 |
41 451 | 27 125 | Total other interest income | 68 176 | 132 655 |
305 438 | 236 140 | Total interest income | 689 801 | 901 098 |
-122 940 | -71 789 | Interest expenses on deposits to KLP Banken | -70 216 | -122 407 |
-20 699 | -10 087 | Interest expenses on issued securities | -220 403 | -347 080 |
-54 | -109 | Interest expense lease liabilities | -109 | -54 |
-143 693 | -81 984 | Total interest expense, effective interest method | -290 728 | -469 541 |
-3 714 | -2 220 | Other interest expenses | -73 196 | -102 988 |
-11 222 | -17 268 | Interest expenses on deposits to customers | -17 268 | -11 222 |
-14 936 | -19 487 | Total other interest expense | -90 463 | -114 210 |
-158 629 | -101 471 | Total interest expense | -381 191 | -583 751 |
146 808 | 134 669 | Net interest income | 308 609 | 317 346 |
Note 6 Net commission income
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 | |
180 | 298 | Interbank commission | 298 | 180 |
4 898 | 6 000 | Short commission | 6 000 | 4 898 |
644 | 563 | Payment handling | 563 | 644 |
14 563 | 14 658 | Other commission income | 14 658 | 14 563 |
20 285 | 21 520 | Total commission income | 21 520 | 20 285 |
-155 | -111 | Interbank commission | -111 | -155 |
-1 330 | -1 557 | Payment handling | -1 557 | -1 330 |
-281 | -365 | Other commission expenses | -365 | -281 |
-1 766 | -2 033 | Total commission costs | -2 033 | -1 766 |
18 519 | 19 487 | Net commission income | 19 487 | 18 519 |
Note 7 Net gain/(loss) on financial instruments
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 | |
42 970 | -4 726 | Net gain/(loss) on fixed-income securities | -3 395 | 14 823 |
-1 303 | -750 | Net gain/(loss) financial derivatives and realized amortization linked to lending | -750 | -1 303 |
- | - | Net gain/(loss) financial derivatives and realized repurchase of own debt | -28 146 | -38 905 |
500 | 336 | Net value change lending and borrowing, hedge accounting | 336 | 500 |
-1 260 | -942 | Other financial income and expenses | -942 | -1 260 |
40 907 | -6 082 | Total net gain/(loss) on financial instruments | -32 896 | -26 145 |
Note 8 Pay and general management costs
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 | |
52 620 | 55 424 | Salaries | 55 424 | 52 620 |
7 358 | 8 203 | Social security contributions | 8 203 | 7 358 |
2 758 | 2 908 | Capital activity tax | 2 908 | 2 758 |
10 960 | 13 140 | Pensions including social security contributions | 13 140 | 10 960 |
2 533 | 2 256 | Other benefits | 2 256 | 2 533 |
76 228 | 81 930 | Total pay and general management costs | 81 930 | 76 228 |
Note 9 Auditor’s fee
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 | |
553 | 111 | Ordinary audit | 377 | 1 207 |
- | - | Certification services | 255 | 230 |
38 | - | Non-audit services | - | 38 |
591 | 111 | Total auditor’s fee | 632 | 1 475 |
The audit fee is expensed according to received invoice.
The amounts above include VAT.
Note 10 Loan loss provision
Framework for loan loss provisions
The measurement of the provision for expected credit losses on financial assets according to IFRS 9 depends on whether the credit risk has increased significantly since initial recognition. At initial recognition and if the credit risk has not increased significantly, the provision should equal 12-month expected credit losses (stage 1). If the credit risk has increased significantly from the initial recognition (stage 2) or if the asset is classified as impaired (stage 3), the provision should equal lifetime expected credit losses.
Calculation of expected credit loss
Expected credit loss (ECL) is calculated as the exposure at default (EAD) multiplied by the probability of default (PD) multiplied by the loss given default (LGD).
Probability of Default (PD) is a calculated probability based on statistical models to estimate the probability of an exposure going into default during the following 12-month period (12-month PD). In addition to calculating 12 months PD, the bank has developed PD graphs used for calculating marginal PD for the exposure’s remaining lifetime (Lifetime PD).
Loss given default (LGD) is what the bank expects to lose given that an exposure goes into default. The calculation is based on how probable it is that a defaulted exposure is cured and expected credit loss if the exposure is not cured.
Exposure at default (EAD) is expected exposure at the moment of a future default.
In KLP Banken/the Group, the assessment of what is considered to be a significant change in credit risk for retail mortgage loans are based on a combination of quantitative and qualitative indicators and ‘backstops’. The most important driver for a significant change in credit risk for retail mortgage loan is a change in the probability of default (PD) from the initial recognition up to the reporting date. A relative change in 12 month PD of more than 2.5 is considered a significant change in credit risk. In addition, the change in 12 month PD must also be at least 0.6 percentage points for the change to be considered significant. Exposures that are more than 30 days past due will automatically be placed in Stage 2, and exposures more than 90 days past due will be placed in Stage 3. The loans go back to Stage 2 and Stage 1 when the criteria for significant change in credit risk and default are no longer fulfilled.
Definition of default
Finanstilsynet published in Circular 4/2020 criteria for identification of default and this gave some minor changes in the definition of default. The changes has not have any major consequences for the company. Default is defined as "a claim that is over 90 days past due, or an account that has been continuously overdrawn for a minimum of 90 days (minimum amount NOK 1,000). Furthermore, a commitment is considered defaulted if for various reasons it has been written off, e.g. through debt negotiations, established debt settlement and/or bankruptcy.
Simplified loss ratio method
For products where the bank has not developed PD and LGD (loss given default) models, a simplified loss ratio method is used. Here a change in risk rating of at least one grade from initial recognition to the reporting date is considered to be a significant increase in credit risk. This applies to the senior loan and credit card products within the retail market. For credit cards, the bank has calculated a loss ratio based on the average estimated PD for the credit card portfolio obtained from an external credit information agency and the average LGD for credit cards for the period 2005-2014 calculated by a debt collection agency. For senior loans, a loss ratio of 0.001 percent is used based on the fact that senior loans cannot, in principle, go into default since the product is such that no interest or instalments are to be paid on the loan before the home is sold or the customer dies. In addition to that, the loan calculation is conservative, with lower loan to value (LTV) the younger the customer is (minimum age of 60 years).
For public lending in KLP Kommunekreditt AS the simplified loss rate method is used, but here with the exception for low credit risk so that all loans are in stage 1. For these loans, a loss rate of 0.001 per cent is used.
Follow-up of defaulted and doubtful commitments
Mortgages in arrears are handled by a special commitments department in the bank.KLP Banken/Group currently uses its own collection process up to and including legally enforced recovery and execution of sale/foreclosure. If a repayment agreement is not reached, any residual debt after realisation of the collateral is transferred to a collection agency for further follow-up.
For credit cards, KLP Banken/ Group has an agreement with a debt collection agency where unpaid instalments are followed up with pre-collection. The debt collection agency also handles unpaid claims with termination, legally enforced recovery and, if applicable, monitoring in cases where legally enforced recovery has so far been in vain.
Individual loss write-downs
Mortgages over 90 days past due are reviewed and followed up regularly. In addition, exposures are also reviewed when the bank receives information about debt negotiations or other conditions that would indicate increased risk. A loss assessment is carried out for all such exposures. The collateral is assessed on the basis of previously determined value, in addition to new information about the bank's collateral, for example from a broker if a sale/foreclosure has already been initiated. If the realisation value proves to be lower than the residual debt of the commitment, a loss write-down of the exposure is carried out.
Exposures with individual loss write-downs are followed up with a view to the realisation of the collateral. This can be undertaken by agreement on an ordinary sale or legally by means of a foreclosure. In some cases, a payment agreement to repay the full amount of residual debt is reached. In these cases, the loss write-down will be maintained for a minimum of 1 year after the loan has been satisfactorily served, before the exposure is considered cured.
Determination of loss
For mortgages, the determination of loss will only occur after the security has been realised and further legal proceedings have not succeeded, that is after an application for distraint has not yielded a result. The case is then monitored by a debt collection agency and followed up on a regular basis.
Credit cards are recognised as established losses when a case is closed due to insolvency or passed for monitoring by the debt collection company. A case is primarily monitored after legal action has not succeeded. Closure/waiver of a case occurs when there is nothing to be obtained in the estate after death, for bankruptcy or by debt negotiation.
Description of inputs, assumptions and estimation techniques in the model for expected losses (ECL model)
In connection with IFRS 9 and new methods for loss calculation, KLP Banken/Group has developed PD and LGD models for the bank's/group's mortgage loan portfolio. A PD model has been developed for new mortgage customers and a PD model for existing mortgage customers. The first model uses data that is available at the time of application and is valid for three months after the mortgage is granted. The second model begins after three months, and also uses data that depends on the customer's behaviour (for example the number of days in arrears). Explanatory variables are age, income, number of payment reminders sent in the last 12 months, total number of days in arrears in the last 12 months, loan-to-value ratio, co-borrower, default in the last 12 months and product type.
Logistical regression was used to create the PD model. This method is considered an industry standard for PD models, it is easy to interpret and analyse the output from the model and it can provide high coefficient of determination given that certain assumptions are met. The method also makes it possible to combine pure quantitative analyses with expert assessments, which was useful when the data was somewhat limited. A thorough manual analysis of a relatively small sample of potential variables (due to limited data) was carried out to arrive at an optimal combination of variables.
The most important measure for a PD model is the model's ability to discriminate, i.e. the ability to distinguish bad customers from good customers. The ability to discriminate is measured using ROC (Receiver Operating Characteristic), which provides some information about the proportion of predictions that are correct. The PD model for mortgage was validated autumn 2021, and the results showed that the model has a good ranging ability and stabile PD values without large fluctuations even that time period for the valuation was characterized by very low degree of default based on the corona measures such as low interest and exemption from repayment. The model is recalibrated at least yearly and the coefficient values can then be updated and the updated prediction level adjusted.
The lifetime probability of default (Lifetime PD) is used for all mortgage loans in KLP Banken excluding senior loans where a simplified model for expected loss is used. The lifetime probability of default (LTPD) of an exposuer is calculated based on aggregated figures for historically observed default rates for each year of all exposures and each exposure's probability of default 12 months after start. The results from model development show that the default rate increases slightly in year 2 before then decreasing, so that the PD in year 2 is higher than in year 1. This is in line with the expected result, since it is expected that it will take some time before a newly granted mortgage loan experiences problems. A customer will typically seek to avoid default on a mortgage loan, and will typically default on other debts before he goes into default on the mortgage loan. The reduction in PD after year 2 can be explained by a "survivalship effect", i.e. the contracts that have not defaulted in the first 2 years are typically of better credit quality, and as the loans are repaid the risk becomes lower. Experience from the industry is that contracts that have existed for a certain period of time converge towards a stable observed default rate. For KLP Banken/Group's mortgage loan portfolio, 3 years has been set as the parameter for when the default level converges towards a long-term PD level. The long-term PD level is set at 0.3 per cent, which corresponds to the average PD for the best contracts in the portfolio.
Exposure at default (EAD) is used for all mortgages in KLP Banken/Group excluding senior loans where a simplified model for expected loss is used. The EAD model has the same data sample as the LTPD model. If an exposureis in default, the exposure's balance at the time will be the bank's/group's exposure at default. EAD can be expressed for an exposure as a function of the likelihood that the contract will not be repaid within the time t. For repayment loans, EAD at time t is estimated as the exposure's balance at the time pursuant to the repayment schedule multiplied by the likelihood of the contract not being repaid within time t. The probability of a contract being terminated early within the year t is calculated as a percentage for each year in the future from 1 to 7 years.
Loss given default (LGD)
When estimating future credit loss it is important to look at the proportion of customers in default whose accounts become cured. The bank/group has examined at all historical defaults over 90 days and analysed the outcomes of these defaults. The results of the analysis show a very high level of defaults becoming cured. KLP Banken/Group has, since its inception, handled defaults and debt collection internally within the bank/group, and has one dedicated employee who handles exposures in default. The cases are followed closely, and there has been a limited number of defaults since the bank's inception. The analysis shows that the bank has had minimal losses, and most defaults have been reported as cured.
Cured default is defined as the account returning to ongoing status (no longer 90 days past due/90 days overdrawn over the bank's significant amount), or that the account is terminated without loss (typically through voluntary sale of collateral or refinancing in another bank). Non-cured default is defined as where the recovery process has resulted in the account having an established loss, or that an application for distraint has been made against the customer (foreclosure of the property or recovery of guarantee). Customers with status "nothing for distraint" also belong in this category). If the customer has entered debt negotiations, this is also defined as non-cured default. One last possibility is that the final outcome of the default is still unknown due to a short time horizon between the default date and modelling date. The figure below illustrates the various outcomes for a default.
The observed cure rate is calculated and validated at least yearly in the same way as during model development. If the observed cure rate deviates by more than 10 percentage points from the estimate used in the IFRS 9 model, an assessment shall be made of whether measures are needed, e.g. a re-estimation of the model.
Forward-looking information
A part of the assessment of future losses is the assessment of how the future will look with regard to the macroeconomic conditions that affect the bank's credit losses, e.g. interest rates, housing prices, unemployment rates etc. To calculate the expected credit loss (ECL), the bank has assumed three different scenarios, which are weighted for probability based on an assessment of the probability of each of the three outlined scenarios occurring. The scenarios used by the bank are one expected outcome, one pessimistic outcome and one optimistic outcome for expected credit loss, where the three scenarios have a factor for outcome and a probability that the scenario occurs. The sum of the weighted scenarios constitutes the expected credit loss, and the probability that each scenario will occur will thus affect the expected credit loss. In the expected outcome we assume unchanged house prices and stabile PD. In the negative scenario, a house price fall of 10 percent and an increase in average PD of 32 per cent, while the cure rate falls by 5 percentage points. This scenario is assigned 30 percent probability. In the positive scenario, the bank has assumed that house prices will increase by 5 percent and that the average PD will be halved. This scenario is assigned 10 percent probability. The expected scenario is thus weighted with a 60 percent probability.
If one only assumes a pessimistic scenario, the expected credit losses will roughly triple, and if one only assumes an optimistic scenario, the expected loss will increase with about 60 percent compared to the current losses. If only the positive scenario is assumed the expected losses will be reduced to about 40 per cent of the current losses.
KLP Banken's risk forum assesses these scenarios and their weighting on a quarterly basis, based on changes in macroeconomic factors or other factors that may affect expected credit loss in the bank.
KLP BANKEN AS
Expected credit loss (ECL) loans to customers - all segments
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 4 227 | 583 | 1 568 | 6 378 |
Transfer to Stage 1 | 261 | -119 | -142 | - |
Transfer to Stage 2 | -71 | 159 | -89 | - |
Transfer to Stage 3 | -11 | -191 | 203 | - |
Net changes | -456 | -147 | 8 | -596 |
New losses | 506 | 16 | 45 | 567 |
Write-offs | -312 | -36 | -30 | -379 |
Change risk model/parameters | 3 | 15 | 191 | 209 |
Closing balance ECL 31.12.2021 | 4 148 | 280 | 1 753 | 6 180 |
Changes (01.01.2021 - 31.12.2021) | -80 | -303 | 185 | -198 |
Expected credit loss (ECL) loans to customers - mortgage
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 302 | 354 | 1 467 | 2 123 |
Transfer to Stage 1 | 110 | -9 | -102 | - |
Transfer to Stage 2 | -24 | 108 | -84 | - |
Transfer to Stage 3 | - | -169 | 169 | - |
Net changes | -358 | -175 | 44 | -488 |
New losses | 99 | 9 | - | 109 |
Change risk model/parameters | 7 | -1 | 2 | 8 |
Closing balance ECL 31.12.2021 | 137 | 118 | 1 497 | 1 751 |
Changes (01.01.2021 - 31.12.2021) | -166 | -236 | 30 | -372 |
Expected credit loss (ECL) - credit card
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 3 907 | 229 | 101 | 4 237 |
Transfer to Stage 1 | 151 | -111 | -41 | - |
Transfer to Stage 2 | -47 | 51 | -4 | - |
Transfer to Stage 3 | -11 | -23 | 34 | - |
Net changes | -405 | -9 | -23 | -436 |
New losses | 400 | 7 | - | 407 |
Change risk model/parameters | -9 | 16 | - | 7 |
Closing balance ECL 31.12.2021 | 3 987 | 161 | 67 | 4 215 |
Changes (01.01.2021 - 31.12.2021) | 80 | -67 | -34 | -22 |
Expected credit loss (ECL) loans to customers - senior loans
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 18 | - | - | 18 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -2 | - | - | -2 |
New losses | 3 | - | - | 3 |
Closing balance ECL 31.12.2021 | 19 | - | - | 19 |
Changes (01.01.2021 - 31.12.2021) | 1 | - | - | 1 |
Expected credit loss (ECL) loans to customers - overdraft deposit accounts
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | - | - | - | - |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -4 | - | -44 | -47 |
New losses | 4 | - | 45 | 49 |
Change risk model/parameters | 5 | - | 189 | 194 |
Closing balance ECL 31.12.2021 | 5 | - | 190 | 195 |
Changes (01.01.2021 - 31.12.2021) | 5 | - | 190 | 195 |
Individual loss write-downs on mortgages are evaluated independently based on its default status and collateral of the mortgage. For example, if a defaulted loan has progressed to compulsory sale and it is founds that the loan's collateral will not cover the loan's remaining debt, the 'difference' is recognised as an individual loss write-down. When the mortgage is realised and attempts at further recovery have been unsuccessful, the residual claim is added to long-time monitoring (we currently use Intrum for long-term monitoring). The residual loan is then posted as an established loss and is removed from the balance sheet. If funds can be recovered on established losses in the future, these will be recorded as recovery on past losses.
Book value of loans to and receivables from customers - all segments
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 9 626 541 | 65 073 | 54 315 | 9 745 929 |
Transfer to Stage 1 | 19 809 | -11 224 | -8 584 | - |
Transfer to Stage 2 | -189 505 | 202 137 | -12 631 | - |
Transfer to Stage 3 | -4 189 | -7 915 | 12 104 | - |
Net change | -47 832 | -98 | 1 288 | -46 643 |
New lending | 4 814 719 | 24 137 | 3 146 | 4 842 002 |
Write-offs | -4 746 875 | -20 243 | -13 683 | -4 780 801 |
Lending 31.12.2021 | 9 472 667 | 251 866 | 35 954 | 9 760 487 |
Book value of loans to and receivables from customers - mortgages
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 7 950 011 | 60 479 | 51 005 | 8 061 495 |
Transfer to Stage 1 | 16 689 | -9 376 | -7 313 | - |
Transfer to Stage 2 | -187 670 | 200 145 | -12 475 | - |
Transfer to Stage 3 | -3 284 | -7 213 | 10 497 | - |
Net change | -4 588 990 | -19 546 | -10 461 | -4 618 997 |
New lending | 4 549 762 | 23 994 | 3 101 | 4 576 857 |
Write-offs | -9 731 | - | -789 | -10 520 |
Lending 31.12.2021 | 7 726 786 | 248 483 | 33 565 | 8 008 834 |
Book value of loans to and receivables from customers - credit card
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 42 146 | 4 594 | 3 310 | 50 049 |
Transfer to Stage 1 | 3 120 | -1 849 | -1 271 | - |
Transfer to Stage 2 | -1 835 | 1 992 | -157 | - |
Transfer to Stage 3 | -780 | -702 | 1 482 | - |
Net change | -7 890 | -796 | -1 163 | -9 848 |
New lending | 3 524 | 144 | - | 3 667 |
Lending 31.12.2021 | 38 284 | 3 383 | 2 202 | 43 869 |
Book value of loans to and receivables from customers - senior loans
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 1 633 715 | - | - | 1 633 715 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net change | -187 612 | - | - | -187 612 |
New lending | 261 429 | - | - | 261 429 |
Lending 31.12.2021 | 1 707 532 | - | - | 1 707 532 |
Book value of loans to and receivables from customers - overdraft deposit accounts
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 670 | - | - | 670 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | -125 | - | 125 | - |
Net change | -485 | - | 18 | -467 |
New lending | 4 | - | 44 | 49 |
Lending 31.12.2021 | 65 | - | 188 | 252 |
Exposure - unused credit
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 993 121 | 3 434 | 290 | 996 845 |
Transfer to Stage 1 | 2 147 | -1 983 | -164 | - |
Transfer to Stage 2 | -56 903 | 56 903 | - | - |
Transfer to Stage 3 | -69 | -90 | 159 | - |
Net change | 49 605 | 3 116 | -103 | 52 618 |
New lending | 243 297 | 1 451 | - | 244 748 |
Write-offs | -72 891 | -230 | -29 | -73 150 |
Lending 31.12.2021 | 1 158 308 | 62 601 | 153 | 1 221 062 |
LOSSES RECOGNISED IN THE PROFIT AND LOSS ACCOUNT CONSIST OF:
KLP Banken AS NOK THOUSANDS | 01.01.2021 -31.12.2021 |
---|---|
Change in loss provisions in Stage 1, 2 and 3 | -2 506 |
Established losses | -356 |
Recovery for previously established losses | 566 |
Total losses in the income statement | -2 295 |
KLP Banken Group
Expected credit loss (ECL) loans to customers - all segments
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 4 422 | 586 | 1 567 | 6 577 |
Transfer to Stage 1 | 261 | -119 | -142 | - |
Transfer to Stage 2 | -71 | 160 | -89 | - |
Transfer to Stage 3 | -11 | -191 | 203 | - |
Net changes | -473 | -148 | 8 | -613 |
New losses | 552 | 18 | 45 | 614 |
Write-offs | -337 | -38 | -30 | -405 |
Change risk model/parameters | 3 | 15 | 191 | 209 |
Closing balance ECL 31.12.2021 | 4 346 | 282 | 1 753 | 6 382 |
Changes (01.01.2021 - 31.12.2021) | -76 | -304 | 185 | -195 |
Expected credit loss (ECL) loans to customers - mortgage
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 324 | 357 | 1 468 | 2 148 |
Transfer to Stage 1 | 110 | -9 | -102 | - |
Transfer to Stage 2 | -24 | 109 | -84 | - |
Transfer to Stage 3 | - | -169 | 169 | - |
Net changes | -366 | -175 | 44 | -497 |
New losses | 119 | 11 | - | 130 |
Change risk model/parameters | 7 | -1 | 2 | 8 |
Closing balance ECL 31.12.2021 | 159 | 121 | 1 498 | 1 777 |
Changes (01.01.2021 - 31.12.2021) | -165 | -237 | 30 | -371 |
Expected credit loss (ECL) - public lending
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 173 | - | - | 173 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -9 | - | - | -9 |
New losses | 26 | - | - | 26 |
Write-offs | -15 | - | - | -15 |
Closing balance ECL 31.12.2021 | 176 | - | - | 176 |
Changes (01.01.2021 - 31.12.2021) | 3 | - | - | 3 |
Expected credit loss (ECL) - credit card
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 3 907 | 229 | 101 | 4 237 |
Transfer to Stage 1 | 151 | -111 | -41 | - |
Transfer to Stage 2 | -47 | 51 | -4 | - |
Transfer to Stage 3 | -11 | -23 | 34 | - |
Net changes | -405 | -9 | -23 | -436 |
New losses | 400 | 7 | - | 407 |
Change risk model/parameters | -9 | 16 | - | 7 |
Closing balance ECL 31.12.2021 | 3 987 | 161 | 67 | 4 215 |
Changes (01.01.2021 - 31.12.2021) | 80 | -67 | -34 | -22 |
Expected credit loss (ECL) loans to customers - senior loans
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | 18 | - | - | 18 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -2 | - | - | -2 |
New losses | 3 | - | - | 3 |
Closing balance ECL 31.12.2021 | 19 | - | - | 19 |
Changes (01.01.2021 - 31.12.2021) | 1 | - | - | 1 |
Expected credit loss (ECL) loans to customers - overdraft deposit accounts
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2021 | - | - | - | - |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -4 | - | -44 | -47 |
New losses | 4 | - | 45 | 49 |
Change risk model/parameters | 5 | - | 189 | 194 |
Closing balance ECL 31.12.2021 | 5 | - | 190 | 195 |
Changes (01.01.2021 - 31.12.2021) | 5 | - | 190 | 195 |
Book value of loans to and receivables from customers - all segments
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 37 940 905 | 166 651 | 54 315 | 38 161 871 |
Transfer to Stage 1 | 26 144 | -17 560 | -8 584 | - |
Transfer to Stage 2 | -401 112 | 413 743 | -12 631 | - |
Transfer to Stage 3 | -4 189 | -7 915 | 12 104 | - |
Net changes | -1 338 481 | -10 335 | 1 288 | -1 347 528 |
New losses | 12 320 968 | 46 816 | 3 146 | 12 370 930 |
Write-offs | -9 139 803 | -63 815 | -13 683 | -9 217 300 |
Lending 31.12.2021 | 39 404 432 | 527 587 | 35 954 | 39 967 973 |
Book value of loans to and receivables from customers – mortgages
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 18 672 122 | 162 057 | 51 005 | 18 885 185 |
Transfer to Stage 1 | 23 024 | -15 711 | -7 313 | - |
Transfer to Stage 2 | -399 277 | 411 751 | -12 475 | - |
Transfer to Stage 3 | -3 284 | -7 213 | 10 497 | - |
Net changes | -5 025 645 | -29 782 | -10 461 | -5 065 888 |
New losses | 9 431 086 | 46 673 | 3 101 | 9 480 860 |
Write-offs | -2 915 409 | -43 572 | -789 | -2 959 770 |
Lending 31.12.2021 | 19 782 618 | 524 203 | 33 565 | 20 340 386 |
Book value of loans to and receivables from customers - public lending
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 17 592 253 | - | - | 17 592 253 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -853 994 | - | - | -853 994 |
New losses | 2 624 925 | - | - | 2 624 925 |
Write-offs | -1 487 251 | - | - | -1 487 251 |
Lending 31.12.2021 | 17 875 934 | - | - | 17 875 934 |
Book value of loans to and receivables from customers – credit card
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 42 146 | 4 594 | 3 310 | 50 049 |
Transfer to Stage 1 | 3 120 | -1 849 | -1 271 | - |
Transfer to Stage 2 | -1 835 | 1 992 | -157 | - |
Transfer to Stage 3 | -780 | -702 | 1 482 | - |
Net changes | -7 890 | -796 | -1 163 | -9 848 |
New losses | 3 524 | 144 | - | 3 667 |
Lending 31.12.2021 | 38 284 | 3 383 | 2 202 | 43 869 |
Book value of loans to and receivables from customers – senior loans
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 1 633 715 | - | - | 1 633 715 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -187 612 | - | - | -187 612 |
New losses | 261 429 | - | - | 261 429 |
Lending 31.12.2021 | 1 707 532 | - | - | 1 707 532 |
Book value of loans to and receivables from customers – overdraft deposit accounts
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 670 | - | - | 670 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | -125 | - | 125 | - |
Net changes | -485 | - | 18 | -467 |
New losses | 4 | - | 44 | 49 |
Lending 31.12.2021 | 65 | - | 188 | 252 |
Exposure – unused credit
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2021 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2021 | 993 121 | 3 434 | 290 | 996 845 |
Transfer to Stage 1 | 2 147 | -1 983 | -164 | - |
Transfer to Stage 2 | -56 903 | 56 903 | - | - |
Transfer to Stage 3 | -69 | -90 | 159 | - |
Net changes | 49 605 | 3 116 | -103 | 52 618 |
New losses | 243 297 | 1 451 | - | 244 748 |
Write-offs | -72 891 | -230 | -29 | -73 150 |
Lending 31.12.2021 | 1 158 308 | 62 601 | 153 | 1 221 062 |
LOSSES RECOGNISED IN THE PROFIT AND LOSS ACCOUNT CONSIST OF:
KLP Banken Group NOK THOUSANDS | 01.01.2021 -31.12.2021 |
---|---|
Change in loss provisions in Stage 1, 2 and 3 | -2 509 |
Established losses | -356 |
Recovery for previously established losses | 566 |
Total losses in the income statement | -2 299 |
KLP BANKEN AS 2020
Expected credit loss (ECL) loans to customers - all segments
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 3 771 | 205 | 2 549 | 6 525 |
Transfer to Stage 1 | 124 | -79 | -45 | - |
Transfer to Stage 2 | -71 | 334 | -263 | - |
Transfer to Stage 3 | -30 | -31 | 61 | - |
Net changes | -292 | 152 | -471 | -610 |
New losses | 548 | 34 | 1 | 583 |
Write-offs | -229 | -12 | -194 | -435 |
Change risk model/parameters | 406 | -21 | -71 | 314 |
Closing balance ECL 31.12.2020 | 4 227 | 583 | 1 568 | 6 378 |
Changes (01.01.2020 - 31.12.2020) | 456 | 378 | -981 | -147 |
Expected credit loss (ECL) loans to customers - mortgage
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 310 | 64 | 2 479 | 2 853 |
Transfer to Stage 1 | 32 | -22 | -10 | - |
Transfer to Stage 2 | -6 | 267 | -261 | - |
Transfer to Stage 3 | - | -19 | 19 | - |
Net changes | -115 | 112 | -679 | -681 |
New losses | 144 | 17 | - | 161 |
Change risk model/parameters | -63 | -64 | -83 | -210 |
Closing balance ECL 31.12.2020 | 302 | 354 | 1 466 | 2 123 |
Changes (01.01.2020 - 31.12.2020) | -63 | -64 | -83 | -210 |
Expected credit loss (ECL) - credit card
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 3 444 | 141 | 70 | 3 656 |
Transfer to Stage 1 | 92 | -57 | -35 | - |
Transfer to Stage 2 | -65 | 68 | -3 | - |
Transfer to Stage 3 | -30 | -12 | 41 | - |
Net changes | -405 | 29 | 14 | -362 |
New losses | 401 | 17 | 1 | 419 |
Change risk model/parameters | 469 | 43 | 12 | 524 |
Closing balance ECL 31.12.2020 | 3 907 | 229 | 101 | 4 237 |
Changes (01.01.2020 - 31.12.2020) | 463 | 88 | 31 | 581 |
Expected credit loss (ECL) loans to customers - senior loans
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 17 | - | - | 17 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -2 | - | - | -2 |
New losses | 3 | - | - | 3 |
Closing balance ECL 31.12.2020 | 18 | - | - | 18 |
Changes (01.01.2020 - 31.12.2020) | 1 | - | - | 1 |
Individual loss write-downs on mortgages are evaluated independently based on its default status and collateral of the mortgage. For example, if a defaulted loan has progressed to compulsory sale and it is founds that the loan's collateral will not cover the loan's remaining debt, the 'difference' is recognised as an individual loss write-down. When the mortgage is realised and attempts at further recovery have been unsuccessful, the residual claim is added to long-time monitoring (we currently use Lindorff for long-term monitoring). The residual loan is then posted as an established loss and is removed from the balance sheet. If funds can be recovered on established losses in the future, these will be recorded as recovery on past losses.
Book value of loans to and receivables from customers - all segments
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 10 920 673 | 41 830 | 86 038 | 11 048 542 |
Transfer to Stage 1 | 13 654 | -10 235 | -3 418 | - |
Transfer to Stage 2 | -27 907 | 36 161 | -8 254 | - |
Transfer to Stage 3 | -14 965 | -14 728 | 29 693 | - |
Net change | -81 584 | 917 | -4 269 | -84 936 |
New lending | 4 529 944 | 37 727 | 8 590 | 4 576 261 |
Write-offs | -5 713 275 | -26 598 | -54 065 | -5 793 938 |
Lending 31.12.2020 | 9 626 541 | 65 073 | 54 315 | 9 745 929 |
Book value of loans and receivables from customers – mortgages
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 9 318 263 | 38 468 | 83 261 | 9 439 992 |
Transfer to Stage 1 | 11 159 | -9 084 | -2 074 | - |
Transfer to Stage 2 | -24 475 | 32 623 | -8 149 | - |
Transfer to Stage 3 | -12 752 | -14 268 | 27 020 | - |
Net change | -5 610 941 | -24 754 | -56 372 | -5 692 067 |
New lending | 4 272 026 | 37 495 | 8 564 | 4 318 084 |
Write-offs | -3 269 | - | -1 245 | -4 514 |
Lending 31.12.2020 | 7 950 011 | 60 479 | 51 005 | 8 061 495 |
Book value of loans and receivables from customers - credit card
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 57 954 | 3 362 | 2 777 | 64 093 |
Transfer to Stage 1 | 2 495 | -1 151 | -1 344 | - |
Transfer to Stage 2 | -3 433 | 3 538 | -105 | - |
Transfer to Stage 3 | -2 213 | -460 | 2 672 | - |
Net change | -16 055 | -927 | -716 | -17 698 |
New lending | 3 397 | 232 | 26 | 3 655 |
Lending 31.12.2020 | 42 146 | 4 594 | 3 310 | 50 049 |
Book value of loans and receivables from customers - senior loans
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 1 543 847 | - | - | 1 543 847 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net change | -164 654 | - | - | -164 654 |
New lending | 254 522 | - | - | 254 522 |
Lending 31.12.2020 | 1 633 715 | - | - | 1 633 715 |
Book value of loans and receivables from customers - overdraft deposit accounts
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | - | - | - | - |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net change | 670 | - | - | 670 |
Lending 31.12.2020 | 670 | - | - | 670 |
Exposure - unused credit
KLP Banken AS NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 892 264 | 2 258 | 71 | 894 592 |
Transfer to Stage 1 | 1 147 | -1 112 | -34 | - |
Transfer to Stage 2 | -2 589 | 2 589 | - | - |
Transfer to Stage 3 | -385 | -1 | 386 | - |
Net change | 18 418 | -380 | -104 | 17 933 |
New lending | 169 666 | 370 | - | 170 036 |
Write-offs | -85 399 | -289 | -28 | -85 716 |
Lending 31.12.2020 | 993 121 | 3 434 | 290 | 996 845 |
LOSSES RECOGNISED IN THE PROFIT AND LOSS ACCOUNT CONSIST OF:
KLP Banken AS NOK THOUSANDS | 01.01.2020 -31.12.2020 |
---|---|
Change in loss provisions in Stage 1, 2 and 3 | -4 824 |
Established losses | -55 |
Recovery for previously established losses | 591 |
Total losses in the income statement | -4 288 |
KLP Banken Group 2020
Expected credit loss (ECL) loans to customers - all segments
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 3 955 | 205 | 2 549 | 6 710 |
Transfer to Stage 1 | 124 | -79 | -45 | - |
Transfer to Stage 2 | -71 | 334 | -263 | - |
Transfer to Stage 3 | -30 | -31 | 61 | - |
Net changes | -190 | 173 | -471 | -488 |
New losses | 603 | 37 | 1 | 642 |
Write-offs | -230 | -12 | -194 | -435 |
Change risk model/parameters | 261 | -42 | -71 | 149 |
Closing balance ECL 31.12.2020 | 4 422 | 586 | 1 567 | 6 577 |
Changes (01.01.2020 - 31.12.2020) | 468 | 381 | -981 | -133 |
Expected credit loss (ECL) loans to customers - mortgage
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 332 | 64 | 2 479 | 2 875 |
Transfer to Stage 1 | 32 | -22 | -10 | - |
Transfer to Stage 2 | -6 | 267 | -261 | - |
Transfer to Stage 3 | - | -19 | 19 | - |
Net changes | 14 | 133 | -678 | -531 |
New losses | 160 | 20 | - | 179 |
Change risk model/parameters | -208 | -85 | -83 | -375 |
Closing balance ECL 31.12.2020 | 324 | 357 | 1 467 | 2 148 |
Changes (01.01.2020 - 31.12.2020) | -8 | 293 | -1 011 | -727 |
Expected credit loss (ECL) - public lending
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 161 | - | - | 161 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -27 | - | - | -27 |
New losses | 40 | - | - | 40 |
Closing balance ECL 31.12.2020 | 173 | - | - | 173 |
Changes (01.01.2020 - 31.12.2020) | 13 | - | - | 13 |
Expected credit loss (ECL) - credit card
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 3 444 | 141 | 70 | 3 656 |
Transfer to Stage 1 | 92 | -57 | -35 | - |
Transfer to Stage 2 | -65 | 68 | -3 | - |
Transfer to Stage 3 | -30 | -12 | 41 | - |
Net changes | -405 | 29 | 14 | -362 |
New losses | 401 | 17 | 1 | 419 |
Change risk model/parameters | 469 | 43 | 12 | 524 |
Closing balance ECL 31.12.2020 | 3 907 | 229 | 101 | 4 237 |
Changes (01.01.2020 - 31.12.2020) | 463 | 88 | 31 | 581 |
Expected credit loss (ECL) loans to customers - senior loans
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Opening balance ECL 01.01.2020 | 17 | - | - | 17 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -2 | - | - | -2 |
New losses | 3 | - | - | 3 |
Closing balance ECL 31.12.2020 | 18 | - | - | 18 |
Changes (01.01.2020 - 31.12.2020) | 1 | - | - | 1 |
Book value of loans to and receivables from customers - all segments
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 34 780 207 | 53 202 | 86 038 | 34 919 447 |
Transfer to Stage 1 | 23 602 | -20 183 | -3 418 | - |
Transfer to Stage 2 | -33 706 | 41 960 | -8 254 | - |
Transfer to Stage 3 | -14 965 | -14 728 | 29 693 | - |
Net changes | -5 151 595 | 2 244 | -4 269 | -5 153 619 |
New losses | 14 094 796 | 130 755 | 8 590 | 14 234 140 |
Write-offs | -5 757 434 | -26 598 | -54 065 | -5 838 097 |
Lending 31.12.2020 | 37 940 905 | 166 651 | 54 315 | 38 161 871 |
Book value of loans and receivables from customers - mortgages
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 16 643 938 | 49 840 | 83 261 | 16 777 039 |
Transfer to Stage 1 | 21 106 | -19 032 | -2 074 | - |
Transfer to Stage 2 | -30 273 | 38 422 | -8 149 | - |
Transfer to Stage 3 | -12 752 | -14 268 | 27 020 | - |
Net changes | -7 739 137 | -23 427 | -56 372 | -7 818 936 |
New losses | 9 801 653 | 130 523 | 8 564 | 9 940 740 |
Write-offs | -12 413 | - | -1 245 | -13 658 |
Lending 31.12.2020 | 18 672 122 | 162 057 | 51 005 | 18 885 185 |
Losses on lending and receivables from customers - public lending
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 16 533 859 | - | - | 16 533 859 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -910 740 | - | - | -910 740 |
New losses | 4 035 223 | - | - | 4 035 223 |
Write-offs | -2 066 089 | - | - | -2 066 089 |
Lending 31.12.2020 | 17 592 253 | - | - | 17 592 253 |
Losses on lending and receivables from customers - credit card
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 57 954 | 3 362 | 2 777 | 64 093 |
Transfer to Stage 1 | 2 495 | -1 151 | -1 344 | - |
Transfer to Stage 2 | -3 433 | 3 538 | -105 | - |
Transfer to Stage 3 | -2 213 | -460 | 2 672 | - |
Net changes | -16 055 | -927 | -716 | -17 698 |
New losses | 3 397 | 232 | 26 | 3 655 |
Lending 31.12.2020 | 42 146 | 4 594 | 3 310 | 50 049 |
Losses on lending and receivables from customers - senior loans
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 1 543 847 | - | - | 1 543 847 |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | -164 654 | - | - | -164 654 |
New losses | 254 522 | - | - | 254 522 |
Lending 31.12.2020 | 1 633 715 | - | - | 1 633 715 |
Book value of loans and receivables from customers - overdraft deposit accounts
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | - | - | - | - |
Transfer to Stage 1 | - | - | - | - |
Transfer to Stage 2 | - | - | - | - |
Transfer to Stage 3 | - | - | - | - |
Net changes | 670 | - | - | 670 |
Lending 31.12.2020 | 670 | - | - | 670 |
Exposure - unused credit
KLP Banken Group NOK THOUSANDS | 12 months ECL | Lifetime ECL (not credit impaired) | Lifetime ECL (credit impaired) | |
---|---|---|---|---|
2020 | Stage 1 | Stage 2 | Stage 3 | Total |
Lending 01.01.2020 | 892 264 | 2 258 | 71 | 894 592 |
Transfer to Stage 1 | 1 147 | -1 112 | -34 | - |
Transfer to Stage 2 | -2 589 | 2 589 | - | - |
Transfer to Stage 3 | -385 | -1 | 386 | - |
Net changes | 18 418 | -380 | -104 | 17 933 |
New losses | 169 666 | 370 | - | 170 036 |
Write-offs | -85 399 | -289 | -28 | -85 716 |
Lending 31.12.2020 | 993 121 | 3 434 | 290 | 996 845 |
LOSSES RECOGNISED IN THE PROFIT AND LOSS ACCOUNT CONSIST OF:
KLP Banken Group NOK THOUSANDS | 01.01.2020 -31.12.2020 |
---|---|
Change in loss provisions in Stage 1, 2 and 3 | -4 838 |
Established losses | -55 |
Recovery for previously established losses | 591 |
Total losses in the income statement | -4 302 |
Note 11 Tax
KLP Banken AS | NOK THOUSAND | KLP Banken Group | ||
---|---|---|---|---|
01.01.2020 - 31.12.2020 | 01.01.2021 - 31.12.2021 | 01.01.2021 - 31.12.2021 | 01.01.2020 - 31.12.2020 | |
110 674 | 53 568 | Accounting income before taxes | 116 117 | 136 801 |
Other income components: | ||||
-3 557 | 7 136 | Estimate difference, pension obligations and assets | 7 136 | -3 557 |
-6 | -170 | Value adjustment for instruments other than shares through OCI | - | -6 |
Differences between accounting and tax income: | ||||
-806 | - | Other deductions | - | - |
-29 946 | 31 008 | Reversal of value increase financial assets | -25 805 | -21 854 |
-466 | 247 | Other permanent differences | 247 | -466 |
5 065 | -1 964 | Change in differences between book and taxable income | 29 540 | -25 901 |
80 959 | 89 825 | Taxable income | 127 236 | 85 017 |
- | - | Group contribution received with tax effect | - | - |
80 959 | 89 825 | Base for tax payable in tax expenses | 127 236 | 85 017 |
- | - | Total allowable carry-forward deficit as at 31 December | - | - |
80 959 | 89 825 | Tax surplus | 127 236 | 85 017 |
RECONCILIATION OF BASIS FOR DEFERRED TAX/TAX ASSETS | ||||
DEFERRED TAX ASSETS LINKED TO: | ||||
-17 | 37 | Fixed assets | 37 | -17 |
-636 | -1 400 | Financial instruments | -7 144 | -13 872 |
- | - | Hedging of borrowing | -85 | -6461 |
- | - | Lending to customers and credit enterprises | -6 898 | - |
-10 388 | -9 173 | Pension obligation | -9 173 | -10 388 |
-19 | -22 | Leases | -22 | -19 |
-11 059 | -10 558 | Total deferred tax assets | -23 285 | -30 757 |
DEFERRED TAX LINKED TO: | ||||
646 | 37 | Lending to customers and credit enterprises | 37 | 14 320 |
7 153 | - | Financial instruments | 12 676 | 8 032 |
- | - | Hedging loans | 5 276 | 2519 |
20 240 | 22 456 | Tax effect of group contribution | 28 640 | 27 065 |
28 039 | 22 494 | Total deferred tax | 46 629 | 51 936 |
16 980 | 11 935 | Net deferred tax/tax assets | 23 343 | 21 179 |
20 240 | 21 643 | Tax on Group contribution payment made | 28 640 | 27 065 |
20 240 | 21 643 | Tax payable | 28 640 | 27 065 |
SUMMARY OF TAX EXPENSES FOR THE YEAR | ||||
6 385 | -7 261 | Changes in deffered tax excl.group contribution | 633 | 4 476 |
-18 036 | -20 240 | Reversed tax on paid out group contribution | -27 065 | -28 143 |
20 240 | 22 456 | Tax on Group contribution payment made | 28 640 | 27065 |
8 589 | -5 045 | Capitalized tax | 2 207 | 3 399 |
7 698 | -6 786 | Tax on ordinary result | 423 | 4 290 |
891 | 1 741 | Tax on postings in other comprehensive income | 1 784 | -891 |
8 589 | -5 045 | Total tax expenses | 2 207 | 3 399 |
8.0% | -8.3% | Effective tax percentage | 1.8% | 2.6% |
RECONCILIATION OF TAX PERCENTAGE | ||||
110 674 | 53 568 | Accounting income before taxes | 116 117 | 136 801 |
-3 563 | 6 966 | Items in other comprehensive income | 7 136 | -3 563 |
107 111 | 60 534 | Total profit before tax | 123 253 | 133 238 |
26 778 | 15 133 | Income taxs expense, nominal tax rate | 30 813 | 33 310 |
8 589 | -5 045 | Income tax expense, effective tax rate | 2 207 | -3 399 |
18 189 | 20 178 | Difference between effective and nominal tax rate | 28 606 | 29 911 |
18 036 | 20 240 | Tax effect on paid out group contribution | 27 065 | 28 143 |
153 | -62 | Tax effects of permanent differences | -62 | 153 |
- | - | Effect of change in tax rate on deferred tax | 1 602 | 1 617 |
- | - | Other differences | - | -2 |
18 189 | 20 178 | Total | 28 606 | 29 911 |
Note 12 Pension obligations, own employees
The majority of the pension obligation is covered through KLP’s joint pension scheme for local authorities and enterprises (“Fellesordningen”). The Company also offers a pension scheme in addition to Fellesordningen. This obligation is covered through operation. Fellesordningen is a defined-benefit pension scheme that satisfies the requirements for mandatory occupational pensions (“obligatorisk tjenestepension”, or OTP). The Company has a contract pension (AFP) scheme.
The accounting treatment of pension obligations is described in more detail in Notes 2.
NOK THOUSANDS | Joint scheme | Via operation | 2021 | Joint scheme | Via operation | 2020 |
---|---|---|---|---|---|---|
Pension costs | ||||||
Present value of accumulation for the year | 10 282 | 410 | 10 692 | 8 532 | 360 | 8 892 |
Administration cost | 209 | 0 | 209 | 214 | 0 | 214 |
Planchange | 0 | 0 | 0 | 0 | 0 | 0 |
Social security contributions - Pension costs | 1 479 | 58 | 1 537 | 1 190 | 47 | 1 236 |
Capital activity tax - Pension costs | 525 | 20 | 545 | 437 | 18 | 455 |
Pension costs incl. social security and administration costs taken to income | 12 495 | 488 | 12 983 | 10 373 | 425 | 10 798 |
Net financial costs | ||||||
Interest costs | 1 813 | 207 | 2 019 | 1 948 | 274 | 2 222 |
Expected return | -1 325 | 0 | -1 325 | -1 418 | 0 | -1 418 |
Management costs | 96 | 0 | 96 | 112 | 0 | 112 |
Net interest costs | 584 | 207 | 791 | 642 | 274 | 916 |
Social security contributions - Net interest cost | 82 | 29 | 112 | 87 | 36 | 123 |
Capital activity tax - Net interest cost | 29 | 10 | 40 | 32 | 14 | 46 |
Net interest cost including social security contributions | 696 | 246 | 942 | 761 | 323 | 1 084 |
Estimate difference, pensions | ||||||
Actuarial gains (losses) | -6 895 | 904 | -5 992 | 2 334 | 653 | 2 987 |
Social security contributions | -972 | 127 | -845 | 329 | 92 | 421 |
Capital activity tax | -345 | 45 | -300 | 117 | 33 | 149 |
Actuarial gains (losses) incl. social security contributions | -8 212 | 1 076 | -7 136 | 2 780 | 777 | 3 557 |
Total pension costs including interest costs and estimate difference | 4 978 | 1 811 | 6 789 | 13 914 | 1 525 | 15 439 |
NOK THOUSANDS | Joint scheme | Via operation | 2021 | Joint scheme | Via operation | 2020 |
---|---|---|---|---|---|---|
Pension obligations | ||||||
Gross accrued pension obligation | 111 299 | 12 689 | 123 989 | 97 377 | 12 305 | 109 683 |
Pension assets | 93 180 | 0 | 93 180 | 74 796 | 0 | 74 796 |
Net liability before SSC | 18 119 | 12 689 | 30 808 | 22 582 | 12 305 | 34 887 |
Social security contributions | 2 555 | 1 789 | 4 344 | 3 184 | 1 735 | 4 919 |
Capital activity tax | 906 | 634 | 1 540 | 1 129 | 615 | 1 744 |
Gross accrued obligations incl. social security costs | 114 760 | 15 113 | 129 873 | 101 691 | 14 656 | 116 346 |
Net liability incl. social security costs | 21 580 | 15 113 | 36 693 | 26 895 | 14 656 | 41 550 |
Reconciliation of pension obligations | ||||||
Capitalized net liability/(asset) 01.01 | 26 895 | 14 656 | 41 550 | 21 230 | 14 419 | 35 649 |
Pension costs taken to profit/loss | 12 495 | 488 | 12 983 | 10 373 | 425 | 10 798 |
Finance costs taken to profit/loss | 696 | 246 | 942 | 761 | 323 | 1 084 |
Actuarial gains and losses incl. social security contributions | -8 212 | 1 076 | -7 136 | 2 780 | 777 | 3 557 |
Social security contributions paid in premiums/supplement | -8 642 | -1 136 | -9 778 | -6 966 | -1 089 | -8 054 |
Capital activity tax paid-in premium/supplement | -432 | -57 | -489 | -348 | -54 | -403 |
Premium/supplement paid-in including admin | -1 219 | -160 | -1 379 | -935 | -146 | -1 082 |
Capitalized net liability/(asset) 31.12 | 21 580 | 15 113 | 36 693 | 26 895 | 14 656 | 41 550 |
Change in pension obligations | ||||||
Gross pension assets 01.01. before planchange | 101 691 | 14 656 | 116 346 | 80 247 | 14 419 | 94 667 |
Planchange | 0 | 0 | 0 | 0 | 0 | 0 |
Gross pension assets 01.01. after planchange | 101 691 | 14 656 | 116 346 | 80 247 | 14 419 | 94 667 |
Present value of accumulation for the year | 10 282 | 410 | 10 692 | 8 532 | 360 | 8 892 |
Interest costs | 1 813 | 207 | 2 019 | 1 948 | 274 | 2 222 |
Actuarial losses (gains) gross pension obligation | 2 548 | 1 076 | 3 625 | 11 843 | 777 | 12 620 |
Social security contributions - pension costs | 1 479 | 58 | 1 537 | 1 190 | 47 | 1 236 |
Social security contributions - net interest costs | 82 | 29 | 112 | 87 | 36 | 123 |
Social security contributions paid in premiums/supplement | -1 219 | -160 | -1 379 | -935 | -146 | -1 082 |
Capital activity tax - pension costs | 525 | 20 | 545 | 437 | 18 | 455 |
Capital activity tax - net interest costs | 29 | 10 | 40 | 32 | 14 | 46 |
Capital activity tax - paid-in premiums/supplement | -432 | -57 | -489 | -348 | -54 | -403 |
Payments | -2 039 | -1 136 | -3 175 | -1 343 | -1 089 | -2 431 |
Gross pension obligation 31.12 | 114 760 | 15 113 | 129 873 | 101 691 | 14 656 | 116 346 |
Change in pension assets | ||||||
Pension assets 01.01 | 74 796 | 0 | 74 796 | 59 017 | 0 | 59 017 |
Expected return | 1 325 | 0 | 1 325 | 1 418 | 0 | 1 418 |
Actuarial loss (gain) on pension assets | 10 761 | 0 | 10 761 | 9 063 | 0 | 9 063 |
Administration cost | -209 | 0 | -209 | -214 | 0 | -214 |
Financing cost | -96 | 0 | -96 | -112 | 0 | -112 |
Premium/supplement paid-in including admin | 8 642 | 1 136 | 9 778 | 6 966 | 1 089 | 8 054 |
Payments | -2 039 | -1 136 | -3 175 | -1 343 | -1 089 | -2 431 |
Pension assets 31.12 | 93 180 | 0 | 93 180 | 74 796 | 0 | 74 796 |
NOK THOUSANDS | Joint scheme | Via operation | 2021 | Joint scheme | Via operation | 2020 |
---|---|---|---|---|---|---|
Over/under-financing of the pension scheme | ||||||
Present value of the defined-benefit pension obligation | 114 760 | 15 113 | 129 873 | 101 691 | 14 656 | 116 346 |
Fair value of the pension assets | 93 180 | 0 | 93 180 | 74 796 | 0 | 74 796 |
Net pension obligation | 21 580 | 15 113 | 36 693 | 26 895 | 14 656 | 41 550 |
31.12.2021 | 31.12.2020 | |
---|---|---|
Financial assumptions (common to all pension schemes) | ||
Discount rate | 1.90% | 1.70% |
Salary growth | 2.75% | 2.25% |
National Insurance basic amount (G) | 2.50% | 2.00% |
Pension increases | 1.73% | 1.24% |
Social security contributions | 14.10% | 14.10% |
Capital activity tax | 5.00% | 5.00% |
For the measurement of pension expense for 2021 used assumptions as of 31.12.2020, while for calculating pensjon liabilities 31.12.2021 used assumptions and population per 31.12.2021. The assumptions are based on market conditions per 31.12.2021 and in accordance with the recommendation from the Norwegian Accounting Standards Board.
KLP’s joint pension scheme for local authorities and enterprises (“Fellesordningen”)
An important part of the basis of pension costs and pension obligations is how mortality and disability develop amongst the members of the pension scheme.
KLP has used the K2013BE mortality table based on Finance Norway’s analyses of mortality in life insurance populations in Norway and Statistics Norway’s extrapolations.
Take-up of contractual early retirement (AFP), (per cent in relation to remaining employees):
The costs of AFP depend on how many in each year-group take AFP. On reaching 62 years there are 42.5 per cent who retire with an AFP pension.
It is only those who are employed and working right up until they retire who are entitled to AFP. This is taken into account in the calculation of the AFP obligation.
Voluntary termination for “Fellesordning” (in %) | ||||||
---|---|---|---|---|---|---|
Age (in years) | <24 | 24-29 | 30-39 | 40-50 | 51-55 | >55 |
Turnover | 25 % | 15 % | 7.5% | 5 % | 3 % | 0 % |
Pensions via operations:
Take-up of AFP/premature retirement is not relevant to this scheme. In regard to mortality the same variant of K2013BE has been used as for Fellesordningen.
Number | Joint scheme | Via operation | 2021 | Joint scheme | Via operation | 2020 |
---|---|---|---|---|---|---|
Membership status | ||||||
Number active | 77 | 2 | 79 | 77 | 2 | 79 |
Number deferred (previous employees with deferred entitlements) | 51 | 5 | 56 | 46 | 5 | 51 |
Number of pensioners | 19 | 3 | 22 | 17 | 3 | 20 |
2021 | 2020 | |
---|---|---|
Composition of the pension assets: | ||
Property | 13.8% | 13.3% |
Lending | 11.9% | 12.9% |
Shares | 30.9% | 24.2% |
Long-term/HTM bonds | 27.7% | 28.9% |
Short-term bonds | 13.8% | 16.9% |
Liquidity/money market | 1.9% | 3.9% |
Total | 100.0% | 100.0% |
The pension funds are based on KLP’s financial funds in the common portfolio. The table shows percentage placing of the pension funds administered by KLP at the end of the year. Value-adjusted return on the assets was 8.36 per cent in 2021 and 4.23 per cent in 2020.
Expected payment into benefit plans after cessation of employment for the period 1 January 2022 – 31 December 2022 is NOK 12.5 million.
Sensitivity analysis as at 31 December 2021 | |
---|---|
Discount rate reduced by 0.5% | Increase |
Gross pension obligation | 10.8% |
Accumulation for the year | 17.8% |
Salary growth increases by 0.25% | Increase |
Gross pension obligation | 0.6% |
Accumulation for the year | 1.4% |
Mortality increases by 10% | Increase |
Gross pension obligation | 2.8% |
Accumulation for the year | 2.1% |
The sensitivity analysis above is based on all other assumptions being unchanged. In practice that is an unlikely scenario and changes in some assumptions are correlated. The calculation of gross pension obligation and accumulation for the year in the sensitivity analysis has been done using the same method as in calculating gross pension obligation in the financial statement position.
The duration in the joint scheme is estimated at 18.3 years.
Note 13 Cash and cash equivalents and other loans and receivables from credit institutions
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
68 941 | 67 244 | Claims on central banks | 67 244 | 68 941 |
779 419 | 940 362 | Bank deposits operations | 1 353 751 | 1 143 126 |
- | - | Cash | - | - |
848 360 | 1 007 606 | Total cash and cash equivalents (liquidity) | 1 420 995 | 1 212 067 |
19 947 | 14 755 | Bank accounts to be used for the purchase and sale of securities | 44 750 | 32 588 |
848 475 | 1 849 747 | Receivable on group coppanies | - | - |
1 716 782 | 2 872 108 | Loans and receivables from credit institutions | 1 465 745 | 1 244 656 |
Note 14 Lending and receivables
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
LOANS TO AND RECEIVABLES FROM CREDIT INSTITUTIONS | ||||
868 307 | 1 022 361 | Bank deposits (of which are restricted witholdings 2 878) | 1 465 745 | 1 244 656 |
848 345 | 1 849 308 | Principal on loans to Group companies | - | - |
130 | 439 | Accrued interest on loans to Group companies | - | - |
1 716 782 | 2 872 108 | Loans to and receivables from credit institutions | 1 465 745 | 1 244 656 |
LOANS TO AND RECEIVABLES FROM CUSTOMERS | ||||
9 689 836 | 9 711 426 | Principal on loans to customers | 39 870 185 | 38 057 684 |
49 595 | 43 355 | Credit portfolio | 43 355 | 49 595 |
531 | 179 | Overdraft current account | 179 | 531 |
-1 360 | -874 | Write-downs step 1 and 2 | -1 075 | -1 558 |
-872 | -1 040 | Write-downs step 3 | -1 040 | -872 |
5 952 | 5 237 | Accrued interest | 53 852 | 53 806 |
- | - | Premium/discount | - | 74 |
2 579 | - | Fair value hedging | -31 356 | 64 827 |
9 746 261 | 9 758 283 | Loans to and receivables from customers | 39 934 100 | 38 224 087 |
Note 15 Categories of financial instruments
KLP Banken AS 31.12.2021 | NOK THOUSANDS | KLP Banken Group 31.12.2021 | ||
---|---|---|---|---|
Book value | Fair value | Book value | Fair value | |
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS | ||||
2 630 267 | 2 630 267 | Fixed-income securities | 6 001 099 | 6 001 099 |
- | - | Financial derivatives | 42 051 | 42 051 |
1 187 | 1 187 | Shares and holdings | 1 187 | 1 187 |
2 631 454 | 2 631 454 | Total financial assets at fair value through profit and loss | 6 044 337 | 6 044 337 |
FINANCIAL ASSETS FAIR VALUE HEDGING | ||||
31 631 | 32 108 | Loans to and receivables from customers | 2 012 822 | 2 056 718 |
31 631 | 32 108 | Total financial assets fair value hedging | 2 012 822 | 2 056 718 |
FINANCIAL ASSETS AT AMORTIZED COST | ||||
67 244 | 67 244 | Loans to and receivables from credit institutions | 67 244 | 67 244 |
955 117 | 955 117 | Loans to and receivables from central banks | 1 398 501 | 1 398 501 |
1 849 747 | 1 849 747 | Loans to Group companies | - | - |
43 355 | 43 355 | Loans to and receivables from customers | 37 921 278 | 37 877 269 |
2 915 463 | 2 915 463 | Total financial assets at amortized cost | 39 387 023 | 39 343 014 |
FINANCIAL ASSETS AT FAIR VALUE WITH VALUE CHANGE OVER OTHER COMPREHENSIVE INCOME | ||||
9 683 297 | 9 683 297 | Loans to and receivables from customers | - | - |
9 683 297 | 9 683 297 | Total financial assets at fair value with value change over other comprehensive income | - | - |
15 261 844 | 15 262 322 | Total financial assets | 47 444 181 | 47 444 069 |
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS | ||||
347 | 347 | Financial derivatives | 9 990 | 9 990 |
347 | 347 | Total financial liabilities at fair value through profit and loss | 9 990 | 9 990 |
FINANCIAL LIABILITIES FAIR VALUE HEDGING | ||||
- | - | Liabilities created on issuance of securities | 508 146 | 515 581 |
- | - | Total financial liabilities fair value hedging | 508 146 | 515 581 |
FINANCIAL LIABILITIES AT AMORTIZED COST | ||||
902 590 | 906 024 | Liabilities created on issuance of securities | 31 409 652 | 30 977 884 |
13 303 110 | 13 303 110 | Deposits from customers | 12 901 004 | 12 901 004 |
14 205 700 | 14 209 133 | Total financial liabilities at amortized cost | 44 310 656 | 43 878 888 |
14 206 047 | 14 209 480 | Total financial liabilities | 44 828 792 | 44 404 459 |
KLP Banken AS 31.12.2020 | NOK THOUSANDS | KLP Banken Group 31.12.2020 | ||
---|---|---|---|---|
Book value | Fair value | Book value | Fair value | |
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS | ||||
4 842 883 | 4 842 883 | Fixed-income securities | 3 148 228 | 3 148 228 |
- | - | Financial derivatives | 42 630 | 42 630 |
1 197 | 1 197 | Shares and holdings | 1 197 | 1 197 |
4 844 080 | 4 844 080 | Total financial assets at fair value through profit and loss | 3 192 054 | 3 192 054 |
FINANCIAL ASSETS FAIR VALUE HEDGING | ||||
75 360 | 74 519 | Loans to and receivables from customers | 3 734 955 | 3 790 329 |
75 360 | 74 519 | Total financial assets fair value hedging | 3 734 955 | 3 790 329 |
FINANCIAL ASSETS AT AMORTIZED COST | ||||
68 941 | 68 941 | Loans to and receivables from credit institutions | 68 941 | 68 941 |
799 366 | 799 366 | Loans to and receivables from central banks | 1 175 714 | 1 175 714 |
848 475 | 848 475 | Loans to Group companies | - | - |
49 595 | 49 595 | Loans to and receivables from customers | 34 489 133 | 34 489 133 |
1 766 377 | 1 766 377 | Total financial assets at amortized cost | 35 733 788 | 35 733 788 |
FINANCIAL ASSETS AT FAIR VALUE WITH VALUE CHANGE OVER OTHER COMPREHENSIVE INCOME | ||||
9 621 306 | 9 621 306 | Loans to and receivables from customers | - | - |
9 621 306 | 9 621 306 | Total financial assets at fair value with value change over other comprehensive income | - | - |
16 307 123 | 16 306 281 | Total financial assets | 42 660 798 | 42 716 172 |
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS | ||||
2 594 | 2 594 | Financial derivatives | 80 425 | 80 425 |
2 594 | 2 594 | Total financial liabilities at fair value through profit and loss | 80 425 | 80 425 |
FINANCIAL LIABILITIES FAIR VALUE HEDGING | ||||
- | - | Liabilities created on issuance of securities | 1 139 041 | 1 148 872 |
- | - | Total financial liabilities fair value hedging | 1 139 041 | 1 148 872 |
FINANCIAL LIABILITIES AT AMORTIZED COST | ||||
2 504 192 | 2 504 192 | Liabilities to credit institutions | 2 504 192 | 2 504 192 |
802 450 | 804 975 | Liabilities created on issuance of securities | 24 660 423 | 25 283 898 |
11 981 720 | 11 981 720 | Deposits from customers | 11 781 187 | 11 781 187 |
15 288 362 | 15 290 887 | Total financial liabilities at amortized cost | 38 945 802 | 39 569 276 |
15 290 956 | 15 293 481 | Total financial liabilities | 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
Nordic Bond Pricing is used as a source for pricing Norwegian government bonds. The prices are compared with the prices from Bloomberg 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 10 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 16.
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 16.
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 16.
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 16.
Note 16 Fair value hierarchy
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
Financial assets recognized at fair value: | ||||
Fixed-income securities and shares | ||||
442 921 | 491 693 | Level 1: Value based on prices in an active market | 595 610 | 581 905 |
4 399 963 | 2 138 574 | Level 2: Value based on observable market data | 5 405 489 | 2 566 322 |
1 197 | 1 187 | Level 3: Value based on other than observable market data | 1 187 | 1 197 |
4 844 080 | 2 631 454 | Total fixed-income securities, shares, holdings and primary capital certificates | 6 002 286 | 3 149 424 |
Financial derivatives - fair value hedging | ||||
- | - | Level 1: Value based on prices in an active market | - | - |
- | - | Level 2: Value based on observable market data | 42 051 | 42 630 |
- | - | Level 3: Value based on other than observable market data | - | - |
- | - | Total financial derivatives | 42 051 | 42 630 |
Assets recognised at fair value with value change over other comprehensive income | ||||
- | - | Level 1: Value based on prices in an active market | - | - |
- | - | Level 2: Value based on observable market data | - | - |
9 621 306 | 9 683 297 | Level 3: Value based on other than observable market data | - | - |
9 621 306 | 9 683 297 | Total mortgage assessed at fair value over other comprehensive income | - | - |
14 465 386 | 12 314 751 | Total financial assets recognized at fair value. | 6 044 337 | 3 192 054 |
Financial liabilities recognized at fair value: | ||||
Financial derivatives (liabilities) - fair value hedging | ||||
- | - | Level 1: Value based on prices in an active market | - | - |
2 594 | 347 | Level 2: Value based on observable market data | 9 990 | 80 425 |
- | - | Level 3: Value based on other than observable market data | - | - |
2 594 | 347 | Total financial derivatives (liabilities) | 9 990 | 80 425 |
2 594 | 347 | Total financial assets recognized at fair value. | 9 990 | 80 425 |
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
Changes in level 3 unlisted securities | ||||
2 053 | 1 197 | Opening balance 1 January | 1 197 | 2 053 |
125 | 0 | Additions/purchases of shares | 77 | 125 |
-981 | -87 | Unrealized changes | -87 | -981 |
1 197 | 1 187 | Closing balance | 1 187 | 1 197 |
- | - | Realized gains/losses | - | - |
Changes in level 3 loans to and receivables from customers | ||||
10 883 569 | 9 621 306 | Opening balance 1 January | ||
1 674 842 | 3 273 959 | Loans to and receivables from customers | ||
-2 920 243 | -3 209 676 | Overdue/redeemed loans to and receivables from customers | ||
-16 862 | -2 292 | Net other changes | ||
9 621 306 | 9 683 297 | Closing balance |
Fair value should 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 in this level obtain fair value from listed prices in an active market for identical assets or liabilities that the entity has access to at the reporting date. Example instruments at Level 1 are stock market listed securities.
Level 2:
Instruments in 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 not therefore 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 i based generally on discrete calculations where the actual fair value may deviate if the instrument were to be traded.
Note 15 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 17 Fixed-income securities
KLP Banken AS 31.12.2021 | NOK THOUSANDS | KLP Banken Group 31.12.2021 | ||||||
---|---|---|---|---|---|---|---|---|
Acquisition cost | Unrel. gain/loss | Accr. int. not due | Market value | Debtor categories | Acquisition cost | Unrel. gain/loss | Accr. int. not due | Market value |
419 685 | -22 | - | 419 663 | Government/social security administration | 523 607 | -28 | - | 523 579 |
1 985 535 | -1 194 | 1 806 | 1 986 147 | Credit enterprises | 4 990 179 | -5 991 | 4 867 | 4 989 055 |
- | - | - | - | Local government administration | 263 623 | -123 | 507 | 264 007 |
73 666 | -1 976 | 340 | 72 030 | Foreign credit institutions (not banks) | 73 666 | -1 976 | 340 | 72 030 |
153 565 | -1 389 | 251 | 152 427 | Multilateral development banks (not banks) | 153 565 | -1 389 | 251 | 152 427 |
2 632 451 | -4 581 | 2 397 | 2 630 267 | Total fixed-income securities | 6 004 640 | -9 507 | 5 965 | 6 001 099 |
Effective interest rate: | 0.93% | Effective interest rate: | 0.94% |
KLP Banken AS 31.12.2020 | NOK THOUSANDS | KLP Banken Group 31.12.2020 | ||||||
---|---|---|---|---|---|---|---|---|
Acquisition cost | Unrel. gain/loss | Accr. int. not due | Market value | Debtor categories | Acquisition cost | Unrel. gain/loss | Accr. int. not due | Market value |
369 989 | -29 | - | 369 960 | Government/social security administration | 508 985 | -40 | - | 508 945 |
4 214 711 | 30 208 | 1 914 | 4 246 833 | Credit enterprises | 2 265 613 | 3 563 | 1 509 | 2 270 685 |
- | - | - | - | Local government administration | 141 568 | -1 369 | 2 310 | 142 508 |
73 666 | -985 | 280 | 72 961 | Foreign credit institutions (not banks) | 73 666 | -985 | 280 | 72 961 |
153 565 | -611 | 175 | 153 129 | Multilateral development banks (not banks) | 153 565 | -611 | 175 | 153 129 |
4 811 932 | 28 582 | 2 370 | 4 842 883 | Total fixed-income securities | 3 143 397 | 557 | 4 274 | 3 148 228 |
Effective interest rate: | 0.61% | Effective interest rate: | 0.60% |
Effective interest is calculated as a yield-to-maturity, i.e. it is the constant interest rate level at which one may discount all the future cash flows from the securities to obtain the securities’ total market value.
Note 18 Financial derivatives
KLP Banken AS
NOK THOUSANDS 31.12.2021 | |||||||
---|---|---|---|---|---|---|---|
Nominal amount | Fair value | < 1 year | 1-5 years | 5-10 years | > 10 years | Total | |
Derivatives related to borrowing | - | - | - | - | - | - | - |
Derivatives related to lending | - | - | - | - | - | - | - |
Total assets | - | - | - | - | - | - | - |
Derivatives related to borrowing | - | - | - | - | - | - | - |
Derivatives related to lending | 18 000 | -347 | 10 000 | 8 000 | - | - | 18 000 |
Total liabilities | 18 000 | -347 | 10 000 | 8 000 | - | - | 18 000 |
KLP Banken Group
NOK THOUSANDS 31.12.2021 | |||||||
---|---|---|---|---|---|---|---|
Nominal amount | Fair value | < 1 year | 1-5 years | 5-10 years | > 10 years | Total | |
Borrowing in currency | 500 000 | 7 097 | - | - | 500 000 | - | 500 000 |
Derivatives related to lending | 1 445 093 | 34 954 | - | 930 735 | 514 358 | - | 1 445 093 |
Total assets | 1 945 093 | 42 051 | - | 930 735 | 1 014 358 | - | 1 945 093 |
Derivatives related to borrowing | - | - | - | - | - | - | - |
Derivatives related to lending | 573 427 | -9 990 | 302 414 | 245 007 | 11 475 | 14 531 | 573 427 |
Total liabilities | 573 427 | -9 990 | 302 414 | 245 007 | 11 475 | 14 531 | 573 427 |
KLP Banken AS
NOK THOUSANDS 31.12.2020 | |||||||
---|---|---|---|---|---|---|---|
Nominal amount | Fair value | < 1 year | 1-5 years | 5-10 years | > 10 years | Total | |
Derivatives related to borrowing | - | - | - | - | - | - | - |
Derivatives related to lending | - | - | - | - | - | - | - |
Total assets | - | - | - | - | - | - | - |
Derivatives related to borrowing | - | - | - | - | - | - | - |
Derivatives related to lending | 68 400 | -2 594 | 50 000 | 18 400 | - | - | 68 400 |
Total liabilities | 68 400 | -2 594 | 50 000 | 18 400 | - | - | 68 400 |
KLP Banken Group
NOK THOUSANDS 31.12.2020 | |||||||
---|---|---|---|---|---|---|---|
Nominal amount | Fair value | < 1 year | 1-5 years | 5-10 years | > 10 years | Total | |
Borrowing in currency | 1 100 000 | 37 088 | 600 000 | - | 500 000 | - | 1 100 000 |
Derivatives related to lending | 327 920 | 5 542 | - | 155 422 | 172 498 | - | 327 920 |
Total assets | 1 427 920 | 42 630 | 600 000 | 155 422 | 672 498 | - | 1 427 920 |
Derivatives related to borrowing | - | - | - | - | - | - | - |
Derivatives related to lending | 2 825 224 | -80 425 | 1 253 602 | 718 002 | 838 620 | 15 000 | 2 825 224 |
Total liabilities | 2 825 224 | -80 425 | 1 253 602 | 718 002 | 838 620 | 15 000 | 2 825 224 |
The company uses interest-rate swaps to adjust for differences in interest rate exposure between lending and borrowing. All derivative agreements entered into are for hedging purposes. The hedging strategy involves swapping interest terms in future periods, not swapping principal amounts. Interest-rate swaps are generally agreed with the same principal as the underlying loan or borrowing (back-to-back). Changes in the value of the effective part of the hedging instruments are regularly compared with changes in the value of the hedged risk, and any differences in hedging effectiveness are corrected. See note 2.6.2.3 for a description of the accounting policies for classifying and measuring derivatives.
Note 19 Financial assets and liabilities subject to net settlement
KLP BANKEN AS
31.12.2021 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 | - | - | - | - | - | - |
Total | - | - | - | - | - | - |
LIABILITIES | ||||||
Financial derivatives | 347 | - | 347 | - | -3 628 | - |
Total | 347 | - | 347 | - | -3 628 | - |
KLP BANKEN GROUP
31.12.2021 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 | 42 051 | - | 42 051 | -9 200 | - | 32 851 |
Total | 42 051 | - | 42 051 | -9 200 | - | 32 851 |
LIABILITIES | ||||||
Financial derivatives | 9 990 | - | 9 990 | -9 200 | -3 628 | - |
Total | 9 990 | - | 9 990 | -9 200 | -3 628 | - |
KLP BANKEN AS
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 | - | - | - | - | - | - |
Total | - | - | - | - | - | - |
LIABILITIES | ||||||
Financial derivatives | 2 594 | - | 2 594 | - | -6 390 | - |
Total | 2 594 | - | 2 594 | - | -6 390 | - |
KLP BANKEN GROUP
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 | - | 42 630 | -42 630 | - | - |
Total | 42 630 | - | 42 630 | -42 630 | - | - |
LIABILITIES | ||||||
Financial derivatives | 80 425 | - | 80 425 | -42 630 | -6 390 | 31 405 |
Total | 80 425 | - | 80 425 | -42 630 | -6 390 | 31 405 |
The purpose of this note is to show the potential effect of netting agreements on the KLP Banken Group. The note shows the derivative positions in the financial position statement.
Note 20 Ownership in Group companies
KLP BANKEN AS
NOK THOUSANDS | Organization number | Ownership % | Acquisition- cost | Book value 31.12.2021 | Book value 31.12.2020 |
---|---|---|---|---|---|
KLP Boligkreditt AS | 912 719 634 | 100 | 710 470 | 710 470 | 710 470 |
KLP Kommunekreditt AS | 994 526 944 | 100 | 675 000 | 675 000 | 675 000 |
Total | 1 385 470 | 1 385 470 | 1 385 470 |
Note 21 Intangible assets
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
60 673 | 63 656 | Acquisition cost 01.01 | 63 656 | 60 673 |
2 983 | 2 578 | Additions | 2 578 | 2 983 |
- | - | Disposals | - | - |
63 656 | 66 233 | Acquisition cost 31.12 | 66 233 | 63 656 |
-40 226 | -44 638 | Accumulated depreciation previous years | -44 638 | -40 226 |
-4 413 | -4 806 | Ordinary depreciation for the year | -4 806 | -4 413 |
19 018 | 16 789 | Book value | 16 789 | 19 018 |
Depreciation period 3-7 years |
Note 22 Leases
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
RIGHT-OF-USE ASSETS - PROPERTY | ||||
3 506 | 1 948 | Opening balance 01.01. | 1 948 | 3 506 |
-1 558 | -1 636 | Depreciation | -1 636 | -1 558 |
- | -779 | Deduction | -779 | - |
- | 18 703 | Addition | 18 703 | - |
1 948 | 18 236 | Closing balance 31.12. | 18 236 | 1 948 |
LEASE LIABILITIES - PROPERTY | ||||
3 573 | 2 023 | Opening balance 01.01. | 2 023 | 3 573 |
-1 550 | -1 582 | Repayments | -1 582 | -1 550 |
- | -821 | Deduction | -821 | - |
- | 18 703 | Addition | 18 703 | - |
2 023 | 18 323 | Closing balance 31.12. | 18 323 | 2 023 |
01.01.2020 -31.12.2020 | 01.01.2021 -31.12.2021 | NOK THOUSANDS | 01.01.2021 -31.12.2021 | 01.01.2020 -31.12.2020 |
---|---|---|---|---|
PROPERTY | ||||
54 | 109 | Interest expense lease liabilities | 109 | 54 |
54 | 109 | Interest expense lease liabilities | 109 | 54 |
In the fourth quarter of 2021, a new 10-year lease has been capitalized. It is an intercompany lease for the rental of office premises with KLP Eiendom.
Note 23 Fixed assets
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
1244 | 1244 | Acquisition cost 01.01 | 1 244 | 1 244 |
0 | 0 | Acquired during the period | 0 | 0 |
0 | 0 | Disposals during the period | 0 | 0 |
1244 | 1 244 | Acquisition cost 31.12 | 1 244 | 1 244 |
-733 | -800 | Acc. depreciation previous years | -800 | -733 |
-67 | -8 | Annual depreciation | -8 | -67 |
-800 | -808 | Accumulated depreciation | -808 | -800 |
444 | 436 | Book value | 436 | 444 |
Note 24 Other assets
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
11 989 | 9 599 | Receivables between companies in the same Group | 2 196 | 5 472 |
117 | - | Miscellaneous receivables | - | 117 |
229 | 21 | Prepaid expenses | 21 | 229 |
12 335 | 9 620 | Total other assets | 2 217 | 5 819 |
Note 25 Liabilities to credit institutions
KLP Banken AS/KLP Banken Group
NOK THOUSANDS | Due date | Nominal value | Accrued interest | Book value 31.12.2021 |
---|---|---|---|---|
Norges Bank | - | - | - | |
Total liabilities to credit institutions | - | - | - | |
All loans in Norges Bank have been redeemed as of 31.12.2021. |
KLP Banken AS/KLP Banken Group
NOK THOUSANDS | Balance sheet 31.12.2020 | Issued | Matured/ redeemed | Other adjustements | Balance sheet 31.12.2021 | Interest paid in 2021 |
---|---|---|---|---|---|---|
F-loans Norges Bank | 2 504 192 | - | -2 500 000 | -4 192 | - | 6 517 |
Total liabilities to credit institutions | 2 504 192 | - | -2 500 000 | -4 192 | - | 6 517 |
KLP Banken AS/KLP Banken Group
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 |
KLP Banken AS/KLP Banken Group
NOK THOUSANDS | Balance sheet 31.12.2019 | Issued | Matured/ redeemed | Other adjustements | Balance sheet 31.12.2020 | Interest paid in 2020 |
---|---|---|---|---|---|---|
F-loans Norges Bank | - | 5 470 000 | -2 970 000 | 4 192 | 2 504 192 | 838 |
Total liabilities to credit institutions | - | 5 470 000 | -2 970 000 | 4 192 | 2 504 192 | 838 |
Interest is only paid upon redemption, not during the term of the loan.
Note 26 Deposits from customers
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
11 981 720 | 13 303 110 | Deposits from customers without agreed duration | 12 901 004 | 11 981 720 |
11 981 720 | 13 303 110 | Total deposits from customers without agreed duration | 12 901 004 | 11 981 720 |
CUSTOMER DEPOSITS DIVIDED BY CUSTOMER GROUPS | ||||
10 516 533 | 11 601 485 | Deposits from customers, retail market | 11 601 485 | 10 516 533 |
1 264 654 | 1 299 519 | Deposits from customers, public sector market | 1 299 519 | 1 264 654 |
200 533 | 402 106 | Deposits from subsidiaries | - | - |
11 981 720 | 13 303 110 | Total deposits from customers | 12 901 004 | 11 781 187 |
0.55% | 0.56% | Interest rate on customer deposits, at the reporting date | 0.57% | 0.57% |
The interest rate is calculated as a weighted average of the act/360 basis. |
Note 27 Debt securities issued - stock exchange listed covered bonds and certificates
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
800 000 | 900 000 | Bonds, nominal value | 31 818 640 | 25 698 407 |
1 761 | 1 320 | Revaluations | 60 603 | 74 535 |
689 | 1 270 | Accrued interest | 38 554 | 26 522 |
802 450 | 902 590 | Total liabilities created on issuance of securities | 31 917 798 | 25 799 465 |
0.72% | 1.28% | Interest rate on borrowings through the issuance of securities at the reporting date | 1.10% | 0.64% |
The interest rate is calculated as a weighted average of the act/360 basis. It includes interest rate hedges and amortization costs. |
KLP Banken AS
NOK THOUSANDS | Balance sheet 31.12.2020 | Issued | Matured/ redemed | Other adjustments | Balance sheet 31.12.2021 | Interest paid in 2021 |
---|---|---|---|---|---|---|
CHANGE IN LIABILITIES CREATED ON ISSUANCE OF SECURITIES | ||||||
Bonds, nominal value | 800 000 | 300 000 | -200 000 | - | 900 000 | - |
Revaluations | 1 761 | - | - | -441 | 1 320 | - |
Accrued interest | 689 | - | - | 581 | 1 270 | -7 782 |
Total liabilities created on issuance of securities | 802 450 | 300 000 | -200 000 | 140 | 902 590 | -7 782 |
KLP Banken Group
NOK THOUSANDS | Balance sheet 31.12.2020 | Issued | Matured/ redemed | Other adjustments | Balance sheet 31.12.2021 | Interest paid in 2021 |
---|---|---|---|---|---|---|
CHANGE IN LIABILITIES CREATED ON ISSUANCE OF SECURITIES | ||||||
Bonds, nominal value | 25 698 407 | 9 300 000 | -6 248 000 | 3 068 233 | 31 818 640 | - |
Revaluations | 74 537 | - | - | -13 934 | 60 603 | - |
Accrued interest | 26 521 | - | - | 12 033 | 38 554 | -238 607 |
Total liabilities created on issuance of securities | 25 799 465 | 9 300 000 | -6 248 000 | 3 066 332 | 31 917 798 | -238 607 |
KLP Banken AS
NOK THOUSANDS | Balance sheet 31.12.2019 | Issued | Matured/ redemed | Other adjustments | Balance sheet 31.12.2020 | Interest paid in 2020 |
---|---|---|---|---|---|---|
CHANGE IN LIABILITIES CREATED ON ISSUANCE OF SECURITIES | ||||||
Bonds, nominal value | 1 400 000 | 300 000 | -900 000 | - | 800 000 | - |
Revaluations | 2 416 | - | - | -655 | 1 761 | - |
Accrued interest | 4 936 | - | - | -4 247 | 689 | 19 048 |
Total liabilities created on issuance of securities | 1 407 352 | 300 000 | -900 000 | -4 902 | 802 450 | 19 048 |
KLP Banken Group
NOK THOUSANDS | Balance sheet 31.12.2019 | Issued | Matured/ redemed | Other adjustments | Balance sheet 31.12.2020 | Interest paid in 2020 |
---|---|---|---|---|---|---|
CHANGE IN LIABILITIES CREATED ON ISSUANCE OF SECURITIES | ||||||
Bonds, nominal value | 25 718 000 | 10 300 000 | -7 270 000 | -3 049 593 | 25 698 407 | - |
Revaluations | 21 526 | - | - | 53 009 | 74 535 | - |
Accrued interest | 82 665 | - | - | -56 142 | 26 522 | -416 991 |
Total liabilities created on issuance of securities | 25 822 190 | 10 300 000 | -7 270 000 | -3 052 726 | 25 799 465 | -416 991 |
Note 28 Other liabilities and provision for accrued costs
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
2 688 | 7 483 | Receivables between companies in the same Group | 4 150 | 1 213 |
4 918 | 2 779 | Creditors | 2 867 | 5 086 |
7 756 | 5 946 | Miscellaneous liabilities | 31 352 | 7 757 |
15 362 | 16 209 | Total other liabilities | 38 369 | 14 056 |
2 949 | 2 816 | Withholding tax | 2 816 | 2 949 |
2 570 | 2 262 | Social security contributions | 2 262 | 2 570 |
1 227 | 820 | Capital activity tax | 820 | 1 227 |
5 856 | 6 273 | Holiday pay | 6 273 | 5 856 |
41 550 | 36 693 | Pension obligations | 36 693 | 41 550 |
- | 150 | VAT | 211 | 36 |
4 512 | 3 176 | Provisioned costs | 3 176 | 4 512 |
58 664 | 52 189 | Total accrued costs and liabilities | 52 249 | 58 700 |
Note 29 Capital adequacy
KLP Banken AS | NOK THOUSANDS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2020 | 31.12.2021 | 31.12.2021 | 31.12.2020 | |
1 890 000 | 1 890 000 | Share capital and share premium fund | 1 890 000 | 1 890 000 |
452 353 | 497 691 | Other owners’ equity | 630 782 | 536 801 |
2 342 353 | 2 387 691 | Total owners’ equity | 2 520 782 | 2 426 801 |
-4 843 | -2 630 | Adjustments due to requirements for proper valuation | -6 001 | -6 226 |
-19 018 | -16 789 | Deduction goodwill and other intangible assets | -16 789 | -19 018 |
2 318 494 | 2 368 274 | Core capital/Tier 1 capital | 2 497 992 | 2 401 558 |
- | - | Supplementary capital/Tier 2 capital | - | - |
- | - | Supplementary capital/Tier 2 capital | - | - |
2 318 494 | 2 368 274 | Total own funds (eligible Tier 1 and Tier 2 capital) | 2 497 992 | 2 401 558 |
959 695 | 1 019 611 | Capital requirement | 1 070 801 | 983 091 |
1 358 799 | 1 348 662 | Surplus of own funds (eligible Tier 1 and Tier 2 capital) | 1 427 191 | 1 418 468 |
Calculation basis credit risk: | ||||
5 921 046 | 6 740 972 | Institutions | 286 512 | 242 831 |
- | - | Local and regional authorities | 3 628 147 | 3 559 832 |
3 598 104 | 3 508 610 | Investments with mortgage security in real estate | 7 824 605 | 7 386 329 |
163 069 | 302 739 | Retail | 302 739 | 163 069 |
72 770 | 36 584 | Investments fallen due | 36 584 | 72 770 |
424 683 | 198 615 | Covered bonds | 498 905 | 227 068 |
1 439 528 | 1 516 418 | Other holdings | 131 535 | 54 755 |
11 619 201 | 12 303 938 | Calculation basis credit risk | 12 709 027 | 11 706 654 |
929 536 | 984 315 | Credit risk | 1 016 722 | 936 532 |
30 159 | 35 296 | Operational risk | 53 416 | 46 448 |
- | - | Credit valuation adjustments (CVA) | 663 | 110 |
959 695 | 1 019 611 | Total capital requirement assets | 1 070 801 | 983 091 |
19.3% | 18.6% | Core capital adequacy ratio | 18.7% | 19.5% |
0.0% | 0.0% | Supplementary capital ratio | 0.0% | 0.0% |
19.3% | 18.6% | Capital adequacy ratio | 18.7% | 19.5% |
5.0% | 4.9% | Unweighted capital adequacy | 5.2% | 5.5% |
Capital requirement as at 31.12.2021 | Core capital/ Tier 1 capital | Supplementary capital/Tier 2 capital | Own funds |
---|---|---|---|
Minimum requirement without buffers | 4.5% | 3.5% | 8.0% |
Protective buffers | 2.5% | 0.0% | 2.5% |
System risk buffers | 3.0% | 0.0% | 3.0% |
Counter-cyclical buffers | 1.0% | 0.0% | 2.5% |
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% |
KLP Banken has been granted exemption from the buffer requirement for the unweighted tier 1 capital ratio in accordance with Section 5 of the CRR/CRD IV regulations.
Note 30 Financial risk management
Organisation of risk management
The Board of Directors of the Bank has established a risk management framework aimed at ensuring that risks are identified, analysed and managed based on policies, limits, procedures and instructions. The Board has adopted risk policies covering the key individual risks as well as an overarching risk policy that covers principles, organisation, limits etc. for the Bank’s total risk. The risk policies are of an overarching nature and are complemented by procedures, guidelines and instructions laid down at the senior management level. The policies state which departments are responsible for handling the various risks and also cover the establishment of a separate risk control function. One purpose of the risk control function is to check that the risk policies and other guidelines for risk management are being followed. This function is carried out by the head of the Risk Management and Compliance Department, which is responsible for preparing periodic risk reports to senior management and the Board as well as reporting on any breaches of policies or guidelines. The Department, which has an independent role in relation to other departments, also has other tasks associated with the Bank’s risk management. The responsibility for the operational direction of the Bank’s liquidity risk, exchange rate risk and interest rate risk lies with the Finance Department. KLP Banken has established a risk committee, which is a sub-committee of the Board. The risk committee deals with matters specifically related to risk and has an advisory function to the Board.
Note 31 Credit risk
Credit risk is defined as the risk of loss associated with loan customers, derivative counterparties, issuers of securities and other counterparties being unable or unwilling to settle at the agreed time and in accordance with written contracts, where the collateral established does not cover the outstanding claim. The Group provides loans to retail customers, Norwegian municipalities and county administrations, local government enterprises, intermunicipal companies and loans to companies where the loan is guaranteed by a Norwegian municipality or county administration.
31.1 CONTROL AND LIMITATION OF CREDIT RISK
The Board has adopted a policy for credit risk which contains overarching guidelines, requirements and limits associated with credit risk. The policy states that the Bank should have a low credit risk profile and includes limits on types of lending and principles for the organisation and operation of the Bank’s lending activity. The Bank is allowed to take on some higher risk within some products, but loan products to retail customers other than mortgage loans may not amount to more than 10 per cent of the Bank's total lending in the retail market. The policy also includes an overarching mandate structure for lending and other counterparty exposure.
Credit risk associated with issuers of securities, derivative counterparties and other counterparties in the financial area is also limited by Board-determined limits on individual counterparties. These limits are based on the counterparty’s solvency and other assessments of counterparties’ creditworthiness.
In processing all new loan applications in the public sector, checks are made on whether the customer’s credit limits are greater than the sum of the loan amounts applied for and current lending. In the credit risk policy described above, requirements are set for reporting to the Board on the use of the limits. Any breach of the limits must be reported to the Company’s Board in any event. All loans in the public sector market in KLP Banken are provided to municipalities or county administrations, or with a municipal/county administration guarantee. In the retail market, loans are provided with a mortgage on housing or leisure real estate, generally within 75 per cent of the market value of the mortgaged object. In processing loan applications the borrower’s servicing ability and the value of the mortgage object is assessed and loans are provided only within set limits and authorisations. KLP Banken also provides unsecured credit to private individuals through credit cards according to credit rating of the customer's ability to pay and debt ratio.
The market value of the mortgage assets is updated quarterly using market values for housingin Norway provided by Eiendomsverdi AS.
31.2 LOANS ACCORDING TO TYPE OF SECURITY/EXPOSURE (PRINCIPAL)
NOK THOUSANDS | KLP Banken AS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |
Retail mortgage loans | 9 715 742 | 9 693 535 | 22 039 572 | 20 509 735 |
Unsecured retail loans (credit cards) | 43 055 | 49 200 | 43 055 | 49 200 |
Lending to municipalities and county administrations | - | - | 16 900 919 | 16 576 790 |
Lending with municipal/county administration guarantee | - | - | 934 123 | 975 098 |
Total | 9 758 796 | 9 742 735 | 39 917 668 | 38 110 823 |
Sums falling due more than 12 months after the end of the reporting period | 9 527 560 | 9 520 736 | 38 220 027 | 36 027 301 |
Allocation of loan to value (principal) for retail mortgage loans | ||||
Loan to value ratio up to 50 per cent | 3 195 117 | 2 448 957 | 8 030 521 | 6 795 202 |
Loan to value ratio from 51 to 60 per cent | 1 109 613 | 861 148 | 4 077 378 | 3 374 876 |
Loan to value ratio from 61 to 75 per cent | 2 125 718 | 2 195 156 | 6 279 807 | 5 901 663 |
Loan to value ratio above 75 per cent | 3 285 294 | 4 188 274 | 3 651 867 | 4 437 994 |
Total | 9 715 742 | 9 693 535 | 22 039 572 | 20 509 735 |
KLP Banken uses a risk classification system to classify retail customers with loans or credits. Customers are classified from A to K, where A indicates very low risk while K is for customers on which the bank has incurred losses. Below is a distribution table with the volume of loans divided into low, medium and high risk, where low risk is defined as lending to customers in class A or B, medium risk is defined as lending to customers in class C or D, and high risk is defined as lending to customers in classes E to K.
The table below shows the total book value of the various risk classes and per stage in the impairment model. Stage 1 is all healthy loans, which must be written down by the estimated losses for 12 months. Stage 2 indicates that the exposure has a substantially increased credit risk since its initial recognition on the balance sheet, and means that the loan must be written down by the estimated losses throughout the entire term. Stage 3 is all loans in default (over 90 days past due) or with individual loss write-downs, which must be written down by the estimated losses throughout the entire term.
2021 Lending in KLP Banken AS | Stage 1 | Stage 2 | Stage 3 | Total CB book value |
---|---|---|---|---|
Low risk - risk class A | 3 096 622 | 34 049 | - | 3 130 670 |
Low risk - risk class B | 5 418 994 | 111 374 | 2 254 | 5 532 623 |
Medium risk - risk class C | 868 467 | 41 612 | 986 | 911 065 |
Medium risk - risk class D | 62 377 | 68 664 | 10 863 | 141 904 |
High risk - risk class E | 2 561 | 14 358 | 15 351 | 32 270 |
High risk - risk class F | - | 5 338 | - | 5 338 |
High risk - risk class K | - | - | 6 500 | 6 500 |
Engagements without risk class (new customers) | 118 | - | - | 118 |
Total CB book value | 9 449 139 | 275 394 | 35 954 | 9 760 487 |
2021 Lending in KLP Banken Group | Stage 1 | Stage 2 | Stage 3 | Total CB book value |
---|---|---|---|---|
Low risk - risk class A | 7 877 760 | 94 075 | - | 7 971 835 |
Low risk - risk class B | 12 202 656 | 215 832 | 2 254 | 12 420 742 |
Medium risk - risk class C | 1 307 637 | 116 893 | 986 | 1 425 516 |
Medium risk - risk class D | 113 959 | 102 565 | 10 863 | 227 387 |
High risk - risk class E | 2 840 | 16 412 | 15 351 | 34 603 |
High risk - risk class F | - | 5 338 | - | 5 338 |
High risk - risk class K | - | - | 6 500 | 6 500 |
Engagements without risk class (new customers) | 17 875 876 | - | - | 17 875 876 |
Total CB book value | 39 380 728 | 551 115 | 35 954 | 39 967 797 |
2021 Unused credit in KLP Banken AS | Stage 1 | Stage 2 | Stage 3 | Total unused credit |
---|---|---|---|---|
Low risk - risk class A | 730 148 | 30 749 | - | 760 898 |
Low risk - risk class B | 387 676 | 26 993 | 79 | 414 748 |
Medium risk - risk class C | 32 285 | 3 972 | 47 | 36 304 |
Medium risk - risk class D | 652 | 886 | 9 | 1 548 |
High risk - risk class E | - | - | 18 | 18 |
High risk - risk class F | - | - | - | - |
High risk - risk class K | - | - | - | - |
Engagements without risk class (new customers) | 7 546 | - | - | 7 546 |
Total unused credit | 1 158 308 | 62 601 | 153 | 1 221 062 |
2021 Unused credit in KLP Banken Group | Stage 1 | Stage 2 | Stage 3 | Total unused credit |
---|---|---|---|---|
Low risk - risk class A | 730 148 | 30 749 | - | 760 898 |
Low risk - risk class B | 387 676 | 26 993 | 79 | 414 748 |
Medium risk - risk class C | 32 285 | 3 972 | 47 | 36 304 |
Medium risk - risk class D | 652 | 886 | 9 | 1 548 |
High risk - risk class E | - | - | 18 | 18 |
High risk - risk class F | - | - | - | - |
High risk - risk class K | - | - | - | - |
Engagements without risk class (new customers) | 7 546 | - | - | 7 546 |
Total unused credit | 1 158 308 | 62 601 | 153 | 1 221 062 |
2020 Lending in KLP Banken AS | Stage 1 | Stage 2 | Stage 3 | Total CB book value |
---|---|---|---|---|
Low risk - risk class A | 2 671 200 | - | - | 2 671 200 |
Low risk - risk class B | 6 128 321 | 36 902 | 1 867 | 6 167 090 |
Medium risk - risk class C | 606 000 | 8 273 | 899 | 615 173 |
Medium risk - risk class D | 186 944 | 20 860 | 13 856 | 221 660 |
High risk - risk class E | 9 092 | 10 755 | 26 634 | 46 482 |
High risk - risk class F | - | 11 811 | 6 768 | 18 579 |
High risk - risk class K | 2 652 | - | 2 283 | 4 935 |
Engagements without risk class (new customers) | 809 | - | - | 809 |
Total CB book value | 9 605 019 | 88 602 | 52 308 | 9 745 929 |
2020 Lending in KLP Banken Group | Stage 1 | Stage 2 | Stage 3 | Total CB book value |
---|---|---|---|---|
Low risk - risk class A | 7 194 192 | 8 742 | - | 7 202 935 |
Low risk - risk class B | 11 644 652 | 95 198 | 1 867 | 11 741 718 |
Medium risk - risk class C | 1 145 056 | 30 712 | 899 | 1 176 667 |
Medium risk - risk class D | 327 477 | 26 163 | 13 856 | 367 497 |
High risk - risk class E | 12 292 | 17 552 | 26 634 | 56 478 |
High risk - risk class F | - | 11 811 | 6 768 | 18 579 |
High risk - risk class K | 2 652 | - | 2 283 | 4 935 |
Engagements without risk class (new customers) | 17 592 889 | - | - | 17 592 889 |
Total CB book value | 37 919 210 | 190 180 | 52 308 | 38 161 698 |
2020 Unused credit in KLP Banken AS | Stage 1 | Stage 2 | Stage 3 | Total unused credit |
---|---|---|---|---|
Low risk - risk class A | 640 912 | - | - | 640 912 |
Low risk - risk class B | 323 184 | 308 | 142 | 323 634 |
Medium risk - risk class C | 21 563 | 2 025 | 106 | 23 694 |
Medium risk - risk class D | 728 | 1 075 | 42 | 1 845 |
High risk - risk class E | - | 27 | - | 27 |
High risk - risk class F | - | - | - | - |
High risk - risk class K | - | - | - | - |
Engagements without risk class (new customers) | 6 733 | - | - | 6 733 |
Total unused credit | 993 121 | 3 434 | 290 | 996 845 |
2020 Unused credit in KLP Banken Group | Stage 1 | Stage 2 | Stage 3 | Total unused credit |
---|---|---|---|---|
Low risk - risk class A | 640 912 | - | - | 640 912 |
Low risk - risk class B | 323 184 | 308 | 142 | 323 634 |
Medium risk - risk class C | 21 563 | 2 025 | 106 | 23 694 |
Medium risk - risk class D | 728 | 1 075 | 42 | 1 845 |
High risk - risk class E | - | 27 | - | 27 |
High risk - risk class F | - | - | - | - |
High risk - risk class K | - | - | - | - |
Engagements without risk class (new customers) | 6 733 | - | - | 6 733 |
Total unused credit | 993 121 | 3 434 | 290 | 996 845 |
The KLP Banken Group also invests in securities issued by the government, municipalities and county administrations and deposits in banks satisfying minimum rating requirements, as well as covered bonds issued by Norwegian credit institutions.
Credit quality of securities, bank deposits and derivatives
Securities with external credit rating (Moody’s)
NOK THOUSANDS | KLP Banken AS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |
AAA | 2 558 105 | 4 769 908 | 5 652 240 | 3 075 253 |
Aa1-Aa3 | 72 043 | 72 975 | 72 043 | 72 975 |
Total | 2 630 148 | 4 842 883 | 5 724 283 | 3 148 228 |
Deposits in banks grouped by external credit assessment (Moody’s)
NOK THOUSANDS | KLP Banken AS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |
Aa1-Aa3 | 670 615 | 442 398 | 964 311 | 687 553 |
A1-A3 | 284 502 | 356 967 | 434 190 | 488 162 |
Total | 955 117 | 799 366 | 1 398 501 | 1 175 714 |
The Bank Group may also be exposed to credit risk from interest rate derivatives. The purpose of such contracts is to reduce risks arising from the Group’s borrowing and lending activities. The Group's internal policy sets out the requirements for the creditworthiness of derivative counterparties. All derivative contracts are entered into with counterparties with a minimum A1 rating (Moody’s).
31.3 MAXIMUM EXPOSURE TO CREDIT RISK
KLP Banken measures maximum exposure as the sum of principal and accrued interest. Security in cash or securities is not exchanged, nor are other credit improvements carried out. The table below shows the maximum exposure for the parent bank and the Group.
Maximum exposure to credit risk
NOK THOUSANDS | KLP Banken AS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |
Receivables from central banks | 67 244 | 68 941 | 67 244 | 68 941 |
Loans to and receivables from credit institutions | 1 357 223 | 1 647 841 | 1 800 607 | 1 376 248 |
Loans to and receivables from customers | 9 760 487 | 9 745 929 | 39 927 080 | 38 161 698 |
- of which retail mortgage loans | 9 716 330 | 9 695 505 | 22 047 881 | 20 519 195 |
- of which retail credit cards | 44 158 | 50 423 | 44 158 | 50 423 |
- of which lending to the public sector | - | - | 17 835 041 | 17 592 079 |
Fixed-income securities | 2 630 148 | 4 842 883 | - | 3 148 322 |
Financial derivatives | - | - | 42 051 | 42 630 |
Off-balance sheet items (new in 2018 - IFRS 9) | 1 221 062 | 996 845 | 1 221 062 | 996 845 |
Loan loss provisions rated at amortized cost | 871 | 780 | 1 072 | 978 |
Loan loss provisons rated at a real value over other comprehensive income (FVOCI) | 324 | 1 109 | 324 | 1 109 |
Loan loss provisions on off-balance items | 3 556 | 3 457 | 3 556 | 3 457 |
TOTAL | 15 040 915 | 17 307 785 | 43 062 996 | 43 800 425 |
31.4 LOAN LOSS PROVISIONS
The Bank has very low losses, cf. Note 10, and considers all receivables to be satisfactorily secured. All mortgage loans to the retail market in KLP Banken are secured with mortgages generally within 85 per cent of the market value, and any losses will only arise when the value of the mortgaged object falls below the residual amount of the loan. The Bank has also issued credit cards to customers in the retail market. These are unsecured receivables with a higher risk of loss than for mortgage-secured loans. Loans in the public-sector market are provided to municipalities or county administrations, or to undertakings with a municipal/county administration guarantee. KLP Banken has had no write-downs or losses in the public-sector market.
Loans fallen due or written down
NOK THOUSANDS | KLP Banken AS | KLP Banken Group | ||
---|---|---|---|---|
31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |
Principal on loans with payments overdue by 7-30 days | 30 358 | 78 731 | 128 333 | 140 169 |
Principal on loans with payments overdue by 31-90 days | 30 180 | 20 463 | 36 117 | 57 158 |
Principal on non-performing loans | 35 719 | 53 906 | 35 719 | 53 906 |
Total loans fallen due | 96 257 | 153 100 | 200 169 | 251 233 |
Relevant collateral or guarantees | 91 010 | 148 427 | 128 673 | 210 168 |
Principal on lending that has been written down | 3 434 | 1 964 | 3 434 | 1 964 |
- of which written down | 1 438 | 1 031 | 1 438 | 1 031 |
31.5 CONCENTRATION OF CREDIT RISK
A large proportion of the Group’s lending at the end of the year was linked to public-sector financing, so the portfolio has a high concentration towards a single sector. The underlying credit risk from this sector is however so low that it is hardly possible to reduce this concentration without increasing the total risk in the portfolio. The concentration towards the Norwegian public sector is thus considered not to be a risk issue. The concentration towards individual borrowers is limited by individual Board-set limits.
Lending to the Group’s largest borrower as at 31 December 2021 was approximately 1.0 per cent of the Group’s total lending.
Note 32 Market risk
Market risk is here understood to mean the risk of a reduction in the fair value of the Bank’s owners’ equity as a result of fluctuations in market prices for the Bank’s assets and liabilities. Changes in credit margins are excluded as they fall under credit risk.
The Group is exposed to market risk as a result of the Group’s borrowing and lending activity and management of its liquidity. The exposure is however limited to interest rate risk and exchange rate risk. Interest rate risk arises from differences in timing of interest rate adjustments for the Company’s assets and liabilities. The risk associated with such imbalances is reduced by using derivative contracts. All of the Company’s borrowing is in NOK, and the whole of the lending portfolio comprises loans in NOK.
32.1 MEASUREMENT OF MARKET RISK
Interest rate risk is measured as the change in value on a one percentage point change in all interest rates.
32.2 INTEREST RATE RISK
The market risk policy comprises the Group’s overarching guidelines, requirements and limits associated with market risk. The policy dictates that the market risk should be minimised so the total market risk is low. It further states that the Group should not actively take positions that expose it to market risk. The policy also sets limits for interest rate risk, both for the total interest rate risk for the indefinite future and for rolling 12-month periods. The risk limits are set to ensure that low market risk profile that has been adopted is adhered to. The operational responsibility for managing the Company’s market risk lies with the Finance Department. The Risk Management and Compliance Department reports the Company’s actual exposure in relation to limits in accordance with guidelines set by the Board.
Interest rate risk arises because the fixed interest periods for the Bank’s assets and liabilities are not the same. The gap in the table below shows the difference between assets and liabilities that can be interest-adjusted within the given time intervals. The repricing date shows the time to the next agreed interest adjustment date. Floating-rate loans and deposits, and cash and receivables from credit institutions, fall into the time interval up to one month, while fixed-interest loans, securities and liabilities created on issuance of securities fall into the time interval for which interest adjustment has been agreed.
INTEREST RISK KLP BANKEN AS
Repricing dates for interest-bearing assets and liabilities as at 31 December 2021
NOK THOUSANDS | Total Principal | Up to 1 mth | From 1 mth to 3 mths | From 3 mths to 12 mths | From 1 year to 5 years | Over 5 years |
---|---|---|---|---|---|---|
Lending | 9 715 742 | 3 334 836 | 6 353 343 | 5 106 | 22 457 | - |
Fixed-income securities | 2 609 000 | 335 000 | 2 274 000 | - | - | - |
Cash and receivables from central banks and credit institutions | 2 869 252 | 2 869 252 | - | - | - | - |
Total | 15 193 994 | 6 539 088 | 8 627 343 | 5 106 | 22 457 | - |
Liabilities to depositors | 13 302 504 | - | 13 302 504 | - | - | - |
Liabilities to financial institutions | - | - | - | - | - | - |
Liabilities created on issuance of securities | 900 000 | - | 900 000 | - | - | - |
Total | 14 202 504 | - | 14 202 504 | - | - | - |
Gap | 991 490 | 6 539 088 | -5 575 161 | 5 106 | 22 457 | - |
Financial derivatives | - | - | 8 000 | - | -8 000 | - |
Net gap | 991 490 | 6 539 088 | -5 567 161 | 5 106 | 14 457 | - |
INTEREST RISK KLP BANKEN GROUP
Repricing dates for interest-bearing assets and liabilities as at 31 December 2021
NOK THOUSANDS | Total Principal | Up to 1 mth | From 1 mth to 3 mths | From 3 mths to 12 mths | From 1 year to 5 years | Over 5 years |
---|---|---|---|---|---|---|
Lending | 39 874 613 | 17 205 576 | 20 728 778 | 292 662 | 1 245 595 | 402 002 |
Fixed-income securities | 5 953 184 | 676 000 | 5 277 184 | - | - | - |
Cash and receivables from central banks and credit institutions | 1 462 877 | 1 462 877 | - | - | - | - |
Total | 47 290 674 | 19 344 453 | 26 005 962 | 292 662 | 1 245 595 | 402 002 |
Liabilities to depositors | 13 302 504 | - | 13 302 504 | - | - | - |
Liabilities to financial institutions | - | - | 0 | - | - | - |
Liabilities created on issuance of securities | 33 649 308 | 5 349 308 | 27 800 000 | - | - | 500 000 |
Total | 46 951 812 | 5 349 308 | 41 102 504 | - | - | 500 000 |
Gap | 338 862 | 13 995 145 | -15 096 542 | 292 662 | 1 245 595 | -97 998 |
Financial derivatives | - | 286 774 | 912 023 | 17 309 | -1 175 742 | -40 364 |
Net gap | 338 862 | 14 281 919 | -14 184 519 | 309 971 | 69 853 | -138 362 |
INTEREST RISK KLP BANKEN AS
Repricing dates for interest-bearing assets and liabilities as at 31 December 2020
NOK THOUSANDS | Total Principal | Up to 1 mth | From 1 mth to 3 mths | From 3 mths to 12 mths | From 1 year to 5 years | Over 5 years |
---|---|---|---|---|---|---|
Lending | 9 693 534 | 2 999 533 | 6 622 570 | 27 667 | 34 174 | 9 590 |
Fixed-income securities | 4 802 000 | 140 000 | 4 662 000 | - | - | - |
Cash and receivables from central banks and credit institutions | 2 565 127 | 2 565 127 | - | - | - | - |
Total | 17 060 661 | 5 704 660 | 11 284 570 | 27 667 | 34 174 | 9 590 |
Liabilities to depositors | 11 981 720 | 11 981 720 | - | - | - | - |
Liabilities to financial institutions | - | - | - | - | - | - |
Liabilities created on issuance of securities | 3 300 000 | 2 500 000 | 800 000 | - | - | - |
Total | 15 281 720 | 14 481 720 | 800 000 | - | - | - |
Gap | 1 778 941 | -8 777 060 | 10 484 570 | 27 667 | 34 174 | 9 590 |
Financial derivatives | - | - | 58 400 | -40 000 | -18 400 | - |
Net gap | 1 778 941 | -8 777 060 | 10 542 970 | -12 333 | 15 774 | 9 590 |
INTEREST RISK KLP BANKEN GROUP
Repricing dates for interest-bearing assets and liabilities as at 31 December 2020
NOK THOUSANDS | Total Principal | Up to 1 mth | From 1 mth to 3 mths | From 3 mths to 12 mths | From 1 year to 5 years | Over 5 years |
---|---|---|---|---|---|---|
Lending | 38 061 621 | 14 908 544 | 20 018 699 | 1 299 489 | 1 075 541 | 759 348 |
Fixed-income securities | 6 168 000 | 225 000 | 5 943 000 | - | - | - |
Cash and receivables from central banks and credit institutions | 2 293 664 | 2 293 664 | - | - | - | - |
Total | 46 523 285 | 17 427 208 | 25 961 699 | 1 299 489 | 1 075 541 | 759 348 |
Liabilities to depositors | 11 981 720 | 11 981 720 | - | - | - | - |
Liabilities to financial institutions | - | - | - | - | - | - |
Liabilities created on issuance of securities | 31 248 000 | 2 778 000 | 27 370 000 | 600 000 | - | 500 000 |
Total | 43 229 720 | 14 759 720 | 27 370 000 | 600 000 | - | 500 000 |
Gap | 3 293 565 | 2 667 488 | -1 408 301 | 699 489 | 1 075 541 | 259 348 |
Financial derivatives | - | -389 692 | 2 003 246 | -214 012 | -873 424 | -526 118 |
Net gap | 3 293 565 | 2 277 796 | 594 945 | 485 477 | 202 117 | -266 770 |
The Company’s interest rate sensitivity as at 31 December 2021 (2020), measured as value change in the event of one percentage point change in all interest rates, was NOK 14.0 million (9.3).
Note 33 Liquidity risk
Liquidity risk is the risk that the Bank may not be able to meet its obligations and/or finance increases in its assets without substantial additional costs arising in the form of price falls on assets which must be realised, or in the form of more costly financing.
33.1 MANAGEMENT OF LIQUIDITY RISK
A liquidity policy has been established for the Group containing principles, guidelines, requirements and limits that apply to the management of the liquidity risk. The policy contains various requirements and limits to adhere to the desired liquidity risk profile, including targets for deposit cover, limits for refinancing needs for various timeframes and liquidity buffer requirements. The Board has also adopted an emergency plan for financial crises (including liquidity crises) as part of the Bank's recovery plan. In addition to the requirements at Group level, separate specific requirements have been established for subsidiaries, including requirements for continuously positive cash flows, limits for refinancing requirements and requirements for liquidity reserves and drawing rights. The operational responsibility for managing the Company’s liquidity risk lies with the Finance Department. The Risk Management and Compliance Department reports the Company’s actual exposure in relation to limits in accordance with guidelines set by the Board.
33.2 MATURITY ANALYSIS
The tables below show the maturity analysis of the Group’s assets and liabilities including stipulated interest rates.