The Company’s net lending comes to NOK 12.7 billion. Operating profit before tax increased from NOK 14.9 to 49.1 million.
KLP Boligkreditt AS is a mortgage company 100 per cent owned by KLP Banken AS. The purpose of the Company is to finance the KLP Banken Group’s home mortgage loans on favourable terms through the issuance of covered bonds (OMF).
KLP Banken AS is a commercial bank 100 per cent owned by Kommunal Landspensjonskasse gjensidig forsikringsselskap (KLP). KLP Banken AS also owns all of the shares in its subsidiary KLP Kommunekreditt AS.
Profit (NOK millions)
2024
2023
Change
Operating profit before tax
49.1
14.9
34.2
Net interest income
111.5
80.8
30.7
Operating expenses
-61.7
-62.2
0.5
Net gain/loss financial instruments
-0.7
-3.7
3.1
Loan loss provisions
-0.0
0.0
-0.0
Balance sheet (NOK billions)
2024
2023
Change
Property mortgages
12.7
12.7
-0.1
Total assets
12.8
13.7
0.1
INCOME STATEMENT
The change in profit before tax compared to last year is mainly due to higher net interest income and smaller losses on financial instruments.
Interest income from loans to customers in 2024 totalled NOK 684.6 (576.9) million. Interest income from bank deposits and securities produced a further NOK 58.5 (46.2) million.
Interest expenses are divided between NOK 566.9 (516.2) million on covered bonds issued and NOK 64.7 (26.1) million on debt to KLP Banken AS.
Net interest income thus increased from NOK 80.8 to NOK 111.5 million.
On average, lending margins were at a similar level to the previous year, but the high interest rates have resulted in increased returns on loans financed with equity. This was a significant factor behind the increased net interest income in 2024.
During the term of its borrowing agreements, the Company makes regular adjustments to reduce its liquidity risk and meet regulatory requirements with respect to liquidity and financing. Refinancing of the borrowing side then results in a need to buy back the Company’s own issues. In 2024, the effect on profits from loan buybacks was NOK -1.5 (-3.9) million.
Changed credit spreads in the securities market have also affected the Company’s liquidity portfolio. The overall profit/loss effect of changed market values on the Company’s securities investments shows realised and unrealised gains of NOK 0.9 (0.2) million.
The total accounting effect of changes in the value of financial instruments in 2024 was then NOK -0.7 (-3.7) million. See Note 6.
The Company’s lending is managed by KLP Banken AS, and a large part of the operating expenses are regulated in an agreement with the parent company. Under this agreement, KLP Boligkreditt AS is charged for its share of the parent Company’s costs for the management of mortgages, based on volume. Costs are settled monthly. Operating expenses in excess of this are mainly direct costs incurred by the Company in connection with external assistance, such as rating, auditing, etc. In 2024, the Company’s operating costs were about 1 per cent lower than last year.
LENDING
During 2024, KLP Boligkreditt AS purchased mortgage loans worth NOK 4.0 (4.5) billion from KLP Banken AS. Outstanding mortgages on the Company’s balance sheet at 31.12.2024 were at approximately the same volume as at the end of last year.
The mortgage portfolio is secured with collateral within cautious valuations whereby all borrowers are assessed with respect to solvency and willingness to pay before the loan is approved. The average loan per customer came to NOK 1.7 (1.5) million. All lending is at floating interest rates.
At the end of 2024, the Company’s mortgage portfolio had an average loan-to-value ratio (LTV - debt as a percentage of the estimated housing value) of 53 (55) per cent.
No individual losses on mortgages were recognised in the Company in 2024, and there were no loans more than 90 days past due at the end of the year. Estimated loan loss provisions had an effect on profits of NOK -26 (3) thousand in the financial year. See Note 8.
LIQUIDITY
The Company’s liquidity situation is satisfactory, as its financing more than covers the liquidity requirement from operations.
KLP Boligkreditt AS is subject to strict rules with respect to the assets it may invest in. The portfolio of liquid investments comprises safe securities and deposits in other banks. The securities are certificates and bonds with excellent security, largely covered bonds with an Aaa rating.
Holdings of cash and cash equivalents have been used to purchase loans or for redemptions and buy-backs of borrowings.
As new borrowings occur when the terms for them are considered favourable, a need sometimes arises to invest surplus liquidity. This liquidity contributes to earnings and provides the flexibility needed to meet the demand for new lending.
At the end of the financial year, NOK 0.3 (0.5) billion of the Company’s liquidity was invested in bank deposits and NOK 0.8 (0.5) billion in interest-bearing securities. Securities are recognised at market value.
BORROWING
KLP Boligkreditt AS has established a programme for issuing covered bonds.
At the end of the year, the Company had outstanding covered bond debt of NOK 10.5 (11.1) billion. During the year, new covered bonds in the amount of NOK 1.0 (1.0) billion were issued. The remaining financing comprises equity and loans from the parent company.
The bonds issued are secured in the Company’s mortgage portfolio. All issues have achieved Aaa rating.
The Company’s debt to credit institutions at the end of the year comprised internal financing from KLP Banken AS in the amount of NOK 2.2 (1.7) billion.
BALANCE SHEET AND CAPITAL ADEQUACY
Total assets stood at NOK 13.8 (13.7) billion at the end of the year.
The Company’s equity and subordinated loan capital, based on the Board of Directors’ proposal for the allocation of the year’s profit, totalled NOK 1,069 (931) million at the end of the year. Core capital is identical with equity and subordinated loan capital. This gives a capital adequacy and tier 1 capital ratio of 21.6 (18.7) per cent.
The current capital requirement, including capital buffers, is a 14.0 per cent tier 1 core capital ratio and 17.5 per cent capital adequacy. The unweighted tier 1 capital ratio was 7.7 (6.8) per cent, compared with the requirement of 3.0 per cent.
The risk-weighted balance came to NOK 4.8 (4.8) billion. Capital adequacy is considered good.
ALLOCATION OF THE PROFIT FOR THE YEAR
The financial statements for KLP Boligkreditt AS for 2024 show total comprehensive income of NOK 42.5 (11.6) million. The Board proposes that a group contribution with tax effect of NOK 48.0 million be paid to KLP. NOK 37.5 million will be received from KLP as a group contribution without any tax effect. Net profit and group contributions made will be transferred to other equity. The group contribution first has an accounting effect at the time of the decision.
ABOUT THE FINANCIAL STATEMENTS
The Board of Directors believes that the financial statements provide a true and fair view of the Company’s assets and liabilities, financial position and profit. The conditions for a going concern are present, and this is assumed in the annual financial statements.
KLP Boligkreditt AS prepares its financial statements in accordance with international accounting standards (IFRS) as approved by the EU, with associated interpretations. See Note 2 for further details.
RATING
The rating agencies’ assessments of the Company have a bearing on its borrowing terms. The Company has engaged Moody’s to provide a credit rating of the Company’s bonds. All covered bonds issued are rated Aaa.
RISK MANAGEMENT
KLP Boligkreditt AS is subject to KLP Banken’s risk management framework, the purpose of which is to ensure that risks are identified, analysed and managed by means of policies, limits, procedures and instructions.
Separate guidelines are established for the most important risk categories (liquidity, credit, market, operational and compliance risk) and an overall policy for risk management, which covers principles, organisation, limits, etc. for the Bank’s overall risk. The risk policy guidelines are adopted by the Board of Directors and are reviewed at least once a year. The policies are of an overarching nature and are complemented by procedures, rules, and instructions determined at the administrative level.
The Company aims to maintain a low level of operational risk, and to be characterised by a high level of professional competence, good procedures and efficient operations.
The Company is included in the KLP Banken Group’s process for assessing and quantifying material risks and calculating its capital and liquidity requirements (ICAAP/ILAAP). The capital requirement assessment is forward-looking and, in addition to calculating needs based on current exposure (and, where appropriate, limits), an assessment is made of needs in light of planned growth, determined strategic changes, etc. The Company’s Board of Directors takes an active part in these assessments and, in addition to the capital requirement assessment, determines a desired level for total capital (capital target).
The boards of KLP Banken AS, KLP Kommunekreditt AS and KLP Boligkreditt AS have appointed a joint risk committee. The risk committee deals with matters specifically related to risk and has an advisory function to the Board of KLP Boligkreditt AS.
CORPORATE GOVERNANCE
The Company’s articles of association and applicable legislation provide guidelines for corporate governance and management, and define a clear division of roles between governing bodies and executive management.
The Board of Directors sets the policies for the Company’s activities. The Board held six board meetings in 2024. The Board comprised two women and two men at the end of the year.
The Managing Director is in charge of the day-to-day management of the Company in accordance with instructions issued by the Board of Directors.
Board members have taken out directors’ liability insurance. This also covers the managing director.
WORKING ENVIRONMENT AND ORGANISATION
There are no direct employees in KLP Boligkreditt AS. The Company’s governance and management are handled by people employed by KLP Banken AS.
A management agreement has been entered into with KLP Banken AS, covering administration, IT support, finance and risk management, as well as borrowing and liquidity management.
As part of the KLP Group, KLP Boligkreditt AS complies with the Group’s guidelines on equality and diversity, whose objectives, initiatives and activities take account of the basis for discrimination described in the legislation. A central working group has drawn up internal targets for equality and diversity.
SUSTAINABILITY
The Norwegian Transparency Act, which entered into force on 1 July 2022, requires companies to carry out due diligence checks and account for these in their public reporting. For 2024, a Group-wide statement will be prepared pursuant to the Transparency Act for the KLP Group. The statement will be made available by 30 June 2025 under Corporate Social Responsibility - About KLP - KLP.no
For the 2024 financial year, a Group-wide consolidated sustainability report has been prepared for KLP pursuant to Section 2-3 (4) of the Norwegian Accounting Act. KLP Banken is not currently covered by the reporting requirements as a separate entity, but is included in the Group-wide reporting for Kommunal landspensjonskasse gjensidig forsikringsselskap, whose registered address is Dronning Eufemias gate 10, 0191 Oslo, Norway. The consolidated sustainability report and auditor’s sign-off will be published at https://www.klp.no/om-klp/finans-og-ir/rapporter-og-presentasjoner.
OUTLOOK
KLP Boligkreditt AS is part of the financing structure of the KLP Banken Group. Norwegian society is experiencing turbulent times with macroeconomic uncertainty, and this also affects households. In particular, inflation and high interest rates are affecting people’s private finances. Continued low mortgage growth is expected in the near term before a gradual normalisation. The KLP Group’s members, who are mainly public-sector employees and their households, are more shielded than other groups against risks associated with their employment conditions as employees in municipalities and health enterprises. The KLP Banken Group therefore assumes that the risk of default and loss will be limited in the future too.
KLP Boligkreditt AS has a licence to operate as a mortgage company and will be further developed through the purchase of loans from KLP Banken AS or KLP. The business will be financed mainly through the issuance of covered bonds secured by the mortgage portfolio. The Company aims to help reduce the banking group’s borrowing costs and thus make a major contribution to the financing of mortgages for KLP’s members.
The new Capital Requirements Regulation (CRR3) entered into force in the EU on 1 January 2025, and the Ministry of Finance has decided that the changes will be introduced in Norway when the regulations are included in the EEA Agreement. The new rules entail lower capital requirements for mortgage loans for banks that use the standard method to calculate capital requirements, such as the KLP Banken Group. The changes will contribute to equal competitive conditions between standard method banks and IRB banks. For the KLP Banken Group, the changes will result in an easing of the capital requirement of between NOK 400 and NOK 500 million.
The Board believes that the potential for further development of the Company is in place and that a significant proportion of KLP Banken’s lending for residential purposes can be financed by KLP Boligkreditt AS, including forms of financing that benefit the environment and sustainability.
Trondheim, 12 March 2025
The Board of Directors of KLP Boligkreditt AS
AAGE SCHAANNING Chair
JANICKE E. FALKENBERG
LILL STABELL
JONAS V. KÅRSTAD
CHRISTOPHER A. N. STEEN Managing Director
Income statementKLP Boligkreditt AS
NOTES
NOK MILLIONS
2024
2023
Interest income, effective interest method
704
592
Other interest income
39
31
5
Total interest income
743
623
Interest expenses, effective interest method
-632
-542
5
Total interest expense
-632
-542
5
Net interest income
112
81
6
Net gain/(loss) on financial instruments
-1
-4
Total net gain/(loss) on financial instruments
-1
-4
Other operating expenses
-62
-62
8
Net loan losses
0
0
Total other operating expenses
-62
-62
Operating profit/loss before tax
49
15
9
Tax on ordinary income
-7
-3
Income for the year
43
12
Total other income and expenses
0
0
COMPREHENSIVE INCOME FOR THE YEAR
43
12
Total profit in% of total assets
0.31%
0.08%
BalanceKLP Boligkreditt AS
NOTES
NOK MILLIONS
31.12.2024
31.12.2023
ASSETS
10,12
Loans to and receivables on credit institutions
331
470
11,12
Loans to and receivables on customers
12 670
12 745
12,13,14
Fixed-income securities
829
516
15
Other assets
3
4
TOTAL ASSETS
13 833
13 736
LIABILITIES AND OWNERS’ EQUITY
LIABILITIES
12,16
Liabilities to credit institutions
2 194
1 686
12,17
Liabilities created on issuance of securities
10 550
11 105
18
Other liabilities
5
5
9
Deferred tax
14
8
TOTAL LIABILITIES
12 762
12 804
OWNERS’ EQUITY
Share capital
430
380
Share premium
530
480
Other accrued equity
110
71
20
TOTAL OWNERS’ EQUITY
1 070
932
TOTAL LIABILITIES AND OWNERS’ EQUITY
13 833
13 736
Trondheim, 12 March 2025
The Board of Directors of KLP Boligkreditt AS
AAGE SCHAANNING Chair
JANICKE E. FALKENBERG
LILL STABELL
JONAS V. KÅRSTAD
CHRISTOPHER A. N. STEEN Managing Director
Statement of owners’ equityKLP Boligkreditt AS
2024 NOK MILLIONS
Share capital
Share premium
Other accrued equity
Total owners’ equity
Owners’ equity 1 January 2024
380
480
71
932
Income for the year
43
43
Total comprehensive income
43
43
Group contributions without tax effect received in the period
15
15
Group contributions with tax effect made in the period
-19
-19
Owners' equity received during the period
50
50
100
Total transactions with the owners
50
50
-4
96
Owners’ equity 31 December 2024
430
530
110
1 070
2023 NOK MILLIONS
Share capital
Share premium
Other accrued equity
Total owners’ equity
Owners’ equity 1 January 2023
380
480
60
920
Income for the year
12
12
Total comprehensive income
12
12
Total transactions with the owners
0
0
0
0
Owners’ equity 31 December 2023
380
480
71
932
NOK MILLIONS
Number of shares
Par value
Share capital
Equity at 1 January 2024
1 000
380 000
380
Changes in the period 1 January - 31 December
50 000
50
Equity at 31 December 2024
1 000
430 000
430
There is one class of shares. All the shares are owned by KLP Banken AS.
Statement of cash flowsKLP Boligkreditt AS
NOTES
NOK MILLIONS
2024
2023
OPERATING ACTIVITIES
Payments received from customers - interest
685
568
Receipts related to repayment and redemption of loans to customers
4 031
4 098
17
Receipts on loans from credit institutions
1 000
1 000
17
Repayments, buybacks and redemption of securities debt
-2 500
-2 000
17
Change in securities debt, own funds
944
-548
17
Net payment of interest on loans
-568
-501
16
Receipts in internal funding
6 413
6 783
16
Repayment in internal funding
-5 906
-5 624
16
Net payment of interest on internal funding
-64
-24
Payments on purchase of securities
-670
-220
Receipts on sales of securities
360
1 126
Interest received from securities
38
33
Disbursements on operations
-61
-62
Net receipts/disbursements from operating activities
3
2
Interest from credit institutions
19
15
Net cash flow from operating activities
3 724
4 646
INVESTMENT ACTIVITIES
Disbursements on loans customers
-3 956
-4 539
Net cash flow from investment activities
-3 956
-4 539
FINANCING ACTIVITIES
Change in owners' equity
100
Group contribution paid
-4
Net cash flow from financing activities
96
Net cash flow during the period
-136
107
Cash and cash equivalents at start of period
457
349
Cash and cash equivalents at end of period
320
457
Net receipts/disbursements (-) of cash
-136
107
Liquidity holdings comprise:
10
Deposits with and receivables from banks with no agreed term
320
457
Total liquidity holdings at the end of the reporting period
320
457
Total interest received
743
616
Total interest paid
-632
-524
Notes to the accountsKLP Boligkreditt AS
Note 1 General information
KLP Boligkreditt AS was founded on 30 October 2013. The company is a housing credit enterprise and finance the activity primary through issuing covered bonds (OMF). The company's functional currency is Norwegian kroner.
KLP Boligkreditt AS is registered and domiciled in Norway. KLP Boligkreditt AS’s head office is at Beddingen 8 in Trondheim and the company has a branch office in Dronning Eufemiasgate 10 in Oslo.
The company is a wholly owned subsidiary of KLP Banken AS, which is in turn wholly owned by Kommunal Landspensjonskasse (KLP). KLP is a mutual insurance company.
The company’s financial statement for 2024 were approved by the company’s board on 12.03.2025. The annual financial statement is available at www.klp.no.
Note 2 Material accounting policy information
Below is a description of the most important accounting principles used in the preparation of the financial statements for KLP Boligkreditt 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 Boligkreditt AS have been prepared in accordance with IFRS Accounting Standards® 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 Accounting Standards. These supplementary information requirements have been incorporated into the notes to the financial statements.
The annual accounts have been prepared on the principle of historic cost, with the following exceptions:
Financial assets and liabilities (including financial derivatives) are valued at fair value through profit or loss
Financial assets and liabilities are valued in accordance with the rules on fair value hedging
To prepare the accounts in accordance with IFRS Accounting Standards, management must make accounting estimates and approximate valuations. This will affect the value of the company’s assets and liabilities, income and expenses recognised in the financial statements. Actual figures may deviate from estimates used. Areas in which discretionary valuations and estimates of material significance to the company have been used are described in Note 3.
All amounts are presented in NOK millions 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
New and changed standards adopted by the company in 2024:
There are no new or amended IFRS Accounting Standards or IFRIC interpretations that have come into effect for the 2024 financial statements that significantly affect the Group's financial statements. The accounting policies applied are consistent with the policies applied in the 2023 annual report, except for a voluntary change in accounting policies for presentation in the cash flow statement.
Presentation in the cash flow statement:
Following a reassessment of the classification and presentation of the entity's cash flows based on IAS 7, the entity has, as of the 2024 financial statements, made a voluntary change in policy for the classification and presentation of cash flows.
Payments for the purchase of securities, receipts for the sale of securities and receipts of interest from securities are, as of 2024, classified as cash flows from operating activities. These were previously classified as cash flows from investing activities. The comparative figures have been restated and net cash inflows of NOK 939 million have been reclassified from investing activities to operating activities.
Payments for the purchase of loans to customers are classified as cash flows from investing activities from 2024 onwards. These were previously classified as cash flows from operating activities. The comparative figures have been restated and net payments of NOK – 3,956 million have been reclassified from operating activities to investing activities.
Cash inflows from taking up debt securities, payments from installments and redemptions of debt securities, changes in the own holdings of debt securities, payments of interest on debt securities, taking up debt to credit institutions, installments and redemptions of debt to credit institutions and payments of interest to credit institutions are classified as cash flows from operating activities from 2024 onwards. The comparative figures have been restated and net cash inflows of NOK --913 million have been reclassified from financing activities to operating activities.
The reason for the change is to provide users of the accounts with more relevant and reliable information about the resources used in operating activities during the year.
Standards, changes to and interpretations of existing standards that have not come into effect and where the company has not chosen early application.
A new accounting standard for presentation and disclosure in financial statements, IFRS 18, has been published by the IASB in April 2024. This new standard will replace IAS 1 Presentation of Financial Statements. If approved by the EU, the standard will be effective for annual reporting periods beginning on or after 1 January 2027. KLP Boligkreditt does not plan to implement the standard early.
There are certain other changes in standards and interpretations that will be effective for annual financial statements beginning on or after 1 January 2025 and that have not been adopted in these financial statements. These are not expected to have a material impact on the financial statements.
2.2 FOREIGN CURRENCY
2.2.1 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 company.
2.3 FINANCIAL INSTRUMENTS
The most important accounting policies relating to financial instruments are described below.
2.3.1 Recognition and derecognition
Financial assets and liabilities are recognized on the balance sheet on the date when the KLP Boligkreditt AS becomes party to the instrument’s contractual terms and conditions. Regular purchases and sales of investments are recognized 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 KLP Boligkreditt AS has essentially transferred the risk and the potential benefit from ownership. Financial liabilities are derecognized when the rights to the contractual conditions have been fulfilled or cancelled or have expired.
2.3.2 Classification and subsequent measurement
2.3.2.1 Financial assets
Financial assets are classified on initial recognition in one of the following categories:
Amortised cost
Fair value through profit or loss
A financial asset is measured at amortized 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 to receive the contractual cash flows (the ‘business model criterion’), and
At certain times, the contractual terms of the financial asset led to cash flows that only include repayments and interest on the outstanding principal amount (the “cash flow criterion”).
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’).
KLP Boligkreditt AS 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’).
Impairment model
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 1.000)”. Also, a commitment is considered defaulted on if it has been forfeited for various reasons, such as debt negotiationsHow the impairment loss is to be measured is determined for each individual stage and the model uses the effective interest rate method). Upon initial recognition, and in cases where the credit risk has not increased significantly after initial recognition, provision must 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).
For more information regarding loan loss provisions, please see note 8.
2.3.2.2 Financial liabilities
The company has classified all financial liabilities measured at amortised cost.
2.3.3 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.
2.3.4 Modification
When the contractual cash flows from a financial asset are renegotiated or otherwise amended, and the renegotiation or change does not lead to derecognition of the financial asset, the gross book value of the financial asset is recalculated and a gain or loss is recognized in the income statement. The gross book value of the financial asset is recalculated as the present value of the renegotiated or amended contractual cash flows, discounted at the original effective interest rate for the financial asset. Any costs or fees incurred adjust the book value of the modified financial asset and are amortised over the remaining lifetime of the changed financial asset.
2.4 CASH AND CASH EQUIVALENTS
Cash and cash equivalents are defined as receivables from credit institutions without termination date. The amount does not include receivables from credit institutions that are linked to 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.
2.5 FINANCIAL LIABILITIES
The company’s financial liabilities comprise liabilities to credit institutions and covered bonds issued.
2.5.1 Liabilities to credit institutions
Liabilities to credit institutions are capitalized at market value on take-up. As a rule, on subsequent measurement the liability is recognized at amortized cost. The interest costs are included in the amortization and are shown in the line “Interest expenses effective interest rate method” in the income statement.
2.5.2 Covered bonds issued
In the first instance covered bonds issued are recognized at fair value on take-up adjusted for purchase costs, i.e. nominal adjusted for any premium/discount on issue. On subsequent valuation the bonds are valued at amortized cost. The interest costs are shown in the line “Interest expenses effective interest rate method” in the income statement. Upon repurchase of covered bond issued, any gain or loss is recognized in the line “net gain/loss on financial instruments”.
2.6 PRESENTATION OF INCOME
2.6.1 Interest income/expenses
Interest income and interest expenses associated with all interest-bearing financial instruments valued at amortized cost are taken to income using the effective interest rate method (internal rate of return). This is presented in the financial statement under the line “Interest income/expenses effective interest rate method”.
2.7 TAX
Tax costs in the income statement comprise tax payable and changes in deferred tax. Tax is recognized in the profit and loss account in the period in which it is incurred. Deferred tax and tax assets are calculated as differences between the accounting and taxation value of assets and liabilities. Deferred tax assets are capitalized to the extent it can be shown probable that the company will have sufficient taxable profit 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.
Group contributions that are proposed but not approved by the general meeting are classified as equity. When the group contribution is approved, it is reclassified as a liability. The tax effect of the group contribution is included in the calculation of deferred tax until the date of approval.
The company pays no benefits to employees and is not covered by the rules on financial activity tax. The company’s nominal income tax rate in 2024 is 22 per cent.
Note 3 Important accounting estimates and valuations
The company 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.
The company's financial position comprises primarily lending secured by housing mortgage, housing title deeds or housing association shares (hypothesised residential loans) or other real estate (hypothesised property loans) and borrowing taken up through issuance of covered bonds. For accounting purposes these items are valued at amortized cost.
The portfolio of loans measured at amortized cost is written down for expected credit losses. The method for measuring impairment for expected loss depends on whether the credit risk has increased significantly since initial recognition. 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 credit deterioration, write-downs are based on expected loss over the lifetime (stage 2). If the credit risk has increased significantly and there is credit deterioration, a provision should be raised for the expected loss over its lifetime (stage 3).
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 company 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 1.5 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 more information about the company's calculation of losses, please refer to Note 8.
Note 4 Segment information
KLP Boligkreditt AS has no division of its income by products or services. The Company has only the retail market segment and offers its customers only loans that are secured by property mortgage. The Company has only Norwegian customers. The Company has no external customers representing more than 10 per cent of the Company’s total operating income.
Note 5 Net interest income
NOK MILLIONS
2024
2023
Interest income on loans to customers
685
577
Interest income on loans to credit institutions
19
15
Total interest income, effective interest method
704
592
Interest income on fixed-income securities
39
31
Total other interest income
39
31
Total interest income
743
623
Interest expenses on debt from KLP Banken AS
-65
-26
Interest expenses on issued securities
-567
-516
Total interest expense, effective interest method
-632
-542
Total interest expense
-632
-542
Net interest income
112
81
Note 6 Net gain/(loss) on financial instruments
NOK MILLIONS
2024
2023
Net gain/(loss) on fixed-income securities
1
0
Net gain/loss on realized repurchase of own debt
-2
-4
Total net gain/(loss) on financial instruments
-1
-4
Note 7 Auditor’s fee
NOK THOUSANDS
EY
PwC
2024
2023
Ordinary audit
150
114
264
293
Certification services
183
Total auditor’s fee
150
114
264
476
The company has changed external auditors in 2024. The audit costs for 2024 include costs to both EY and PWC. The amounts above are inclusive of VAT. Audit fees are included in the line "Other operating expenses" in the income statement.
Note 8 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 Boligkreditt AS, the assessment of what is considered to be a significant change in credit risk for retail 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 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 1.5 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. A loan in stage 3 will be three months in quarantine before it will be moved back to stage 2 or 1. Based on this a loan will remain in stage three for three months after the loan is reported “healthy”.
Definition of default
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 as default if for various reasons it has been written off, e.g. through debt negotiations, established debt settlement and/or bankruptcy.
Follow-up of defaulted and doubtful commitments
Mortgages in arrears are handled by a special commitments department in the bank, 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.
Individual loss provisions
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 in the case, 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 provisions of the exposure is carried out.
Exposures with individual loss provisions 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 foreclosure. In some cases, a payment agreement to repay the full amount of residual debt is reached. In these cases, the loss provisions will be maintained for a minimum of 1 year after the loan has been satisfactorily served, before the commitment 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.
Description of inputs, assumptions and estimation techniques in the model for expected losses (ECL model)
KLP Banken 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 include data that depends on the customer's behaviour (for example the number of days in arrears). Explanatory variables are age, income, number of reminders sent in the last 12 months, total number of days in arrears in the last 12 months, loan-to-value ratio, co-borrower, defaults in the last 12 months and product type.
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 lifetime probability of default (Lifetime PD) is used for all retail mortgage loans in KLP Banken Groups excluding senior loans where a simplified model for expected loss is used. The lifetime probability of default (LTPD) of an exposure 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 the 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 exposure is in default, the exposure's balance at the time will be the bank's/group's exposure 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 in arrears 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 into debt negotiations, this is also defined as non-cured default. One last possibility is that we do not know the final outcome of the default 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 it 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 regarding 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 15 per cent and a doubling of the average PD are assumed, while the number of cured defaults decrease with 5 per cent. This scenario is given a 20 per cent weight. In the positive scenario it is assumed that house prices increase with 5 per cent and that the PD is halved. The positive scenario is given a 20 per cent weight. The expected scenario is thereby given a 60 per cent weight. It is assumed that a loan will have the same staging in all the scenarios.
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.
EXPECTED CREDIT LOSS (ECL) - LOANS TO CUSTOMERS - MORTGAGE
NOK THOUSANDS
12-month ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
2024
stage 1
stage 2
stage 3
Total
Opening balance ECL 01.01.2024
41
21
62
Transfer to Stage 1
9
-9
0
Transfer to Stage 2
-1
1
0
Transfer to Stage 3
Net changes
1
35
36
New losses
13
2
15
Write-offs
-8
-2
-10
Change in risk model
-8
-8
-16
Closing balance ECL 31.12.2024
46
41
88
Changes (01.01.2024- 31.12.2024)
5
20
26
BOOK VALUE OF LOANS TO AND RECEIVABLES FROM CUSTOMERS - MORTGAGE
NOK THOUSANDS
12-month ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
2024
stage 1
stage 2
stage 3
Total
Lending 01.01.2024
12 434 701
310 809
12 745 511
Transfer to Stage 1
121 871
-121 871
0
Transfer to Stage 2
-210 380
210 380
0
Transfer to Stage 3
Net change
-430 227
-5 605
-435 831
New lending
3 317 419
11 472
3 328 891
Write-offs
-2 915 253
-53 684
-2 968 937
Lending 31.12.2024
12 318 131
351 502
12 669 633
Recognised loan loss provisions
-46
-41
-88
Book value of loans to mortgages 31.12.2024
12 318 085
351 460
12 669 545
EXPECTED CREDIT LOSS (ECL) - LOANS TO CUSTOMERS - MORTGAGE
NOK THOUSANDS
12-month ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
2023
stage 1
stage 2
stage 3
Total
Opening balance ECL 01.01.2023
25
41
66
Transfer to Stage 1
1
-1
0
Transfer to Stage 2
-1
1
0
Transfer to Stage 3
Net changes
9
14
23
New losses
12
2
14
Write-offs
-4
-36
-41
Closing balance ECL 31.12.2023
41
21
62
Changes (01.01.2023 - 31.12.2023)
17
-20
-3
BOOK VALUE OF LOANS TO AND RECEIVABLES FROM CUSTOMERS - MORTGAGE
NOK THOUSANDS
12-month ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
2023
stage 1
stage 2
stage 3
Total
Lending 01.01.2023
12 033 405
249 164
12 282 569
Transfer to Stage 1
53 977
-53 977
0
Transfer to Stage 2
-178 111
178 111
0
Transfer to Stage 3
Net change
-423 514
-7 713
-431 227
New lending
3 764 783
30 388
3 795 171
Write-offs
-2 815 838
-85 164
-2 901 002
Lending 31.12.2023
12 434 701
310 809
12 745 511
Recognised loan loss provisions
-41
-22
-63
Book value of loans to mortgages 31.12.2023
12 434 660
310 788
12 745 448
Note 9 Tax
NOK MILLIONS
2024
2023
Accounting income before taxes
49
15
Permanent differences
Reversal of value increase financial assets
1
-2
Change in differences between book and taxable income
-2
7
Taxable income
48
19
Group contribution made with tax effect
48
19
DEFFERED TAX ASSETS LINKED TO
Financial instruments
0
0
Total tax-reducing temporary differences
0
0
DEFERRED TAX LINKED TO
Amortization of premium fund, borrowing
4
3
Tax effect of group distribution
11
4
Total tax-increasing temporary differences
14
8
Net deferred tax(+)/tax assets(-)
14
8
SUMMARY OF TAX EXPENSES OF THE YEAR
Change in deferred tax taken to income excl. effect of group distribution
0
-1
Capitalized tax from Group contribution
11
4
Reallocated tax from paid out Group contribution
-4
0
Total tax costs
7
3
Effective tax rate
13 %
22 %
RECONCILIATION OF TAX RATE
Accounting income before taxes
49
15
Income tax expense, nominal tax rate
11
3
Income tax expense, effective tax rate
7
3
Difference between effective and nominal tax
4
0
Effect of reallocated tax from paid out Group contribution
4
0
Total
4
0
Note 10 Cash, cash equivalents and other loans and receivables from credit institutions
NOK MILLIONS
31.12.2024
31.12.2023
Bank deposits operations
320
457
Total cash and cash equivalents (liquidity)
320
457
Bank accounts to be used for the purchase and sale of securities
11
13
Loans and receivables from credit institutions
331
470
Note 11 Lending and receivables
NOK MILLIONS
31.12.2024
31.12.2023
LOANS TO AND RECEIVABLES FROM CUSTOMERS
Principal on loans to customers
12 642
12 717
Write-downs
0
0
Accrued interest
27
28
Loans to and receivables from customers
12 670
12 745
Note 12 Categories of financial assets
NOK MILLIONS
31.12.2024
31.12.2023
Book value
Fair value
Book value
Fair value
FINANCIAL ASSETS AT FAIR VALUE
Fixed-income securities
829
829
516
516
Total financial assets at fair value
829
829
516
516
FINANCIAL ASSETS AT AMORTIZED COST
Loans to and receivables from credit institutions
331
331
470
470
Lending to the retail market
12 670
12 670
12 745
12 745
Total financial assets at amortized cost
13 001
13 001
13 215
13 215
Total financial assets
13 829
13 829
13 732
13 732
FINANCIAL LIABILITIES AT AMORTIZED COST
Liabilities to credit institutions
2 194
2 194
1 686
1 686
Covered bonds issued
10 550
10 569
11 105
11 103
Total financial liabilities at amortized cost
12 744
12 763
12 791
12 789
Total financial liabilities
12 744
12 763
12 791
12 789
Fair value shall be a representative price based on what a corresponding asset or liability would have been traded for on the balance sheet date.
A financial instrument is considered as listed in an active market if listed prices are easily 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. If the market for the security is not active, or the security is not listed on a stock market or similar, the Group uses valuation techniques 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 to the least extent possible 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.
Fixed-income securities - other than government
Norwegian fixed-income securities are generally priced based on rates from Nordic Bond Pricing. Securities not covered by Nordic Bond Pricing are priced theoretically. The theoretical price should be based on the discounted value of the security's future cash flows. Discounting is done using a swap curve adjusted for credit spread and liquidity spread. The credit spread should, to the extent possible, be based on a comparable bond from the same issuer. Liquidity spread is determined at the discretion of the evaluator.
Fair value of loans to retail customers
Fair value of lending without fixed interest rates is considered virtually the same as book value since the contract terms are continuously changed in step with market interest rates. Fair value of fixed rate loans is calculated by discounting contractual cash flows by the marked rate including a relevant risk margin on the reporting date. This is valued in Level 2 in the valuation hierarchy, cf. note 14.
Fair value of loans to and receivables from credit institutions
All receivables from credit institutions (bank deposits) are at variable interest rates. Fair value of these is considered virtually the same as book value since the contract terms are continuously changed in step with change in market interest rates. This is valued in Level 2 in the valuation hierarchy, cf. note 14.
Fair value of liabilities to credit institutions
These transactions are valued using a valuation model, including relevant credit spread adjustments obtained from the market. This is valued in Level 2 in the valuation hierarchy, cf. note 14.
Liabilities created on issuance of covered bonds
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 14.
Note 13 Fixed-income securities
NOK MILLIONS
31.12.2024
Debtor categories
Acquisition cost
Unreal. gain/loss
Accr. int. not due
Market value
Government/social security administration
30
0
30
Credit enterprises
795
-1
5
799
Total fixed-insome securities
825
-1
5
829
Effective interest rate: 5.20%
NOK MILLIONS
31.12.2023
Debtor categories
Acquisition cost
Unreal. gain/loss
Accr. int. not due
Market value
Government/social security administration
20
0
20
Credit enterprises
493
0
4
497
Total fixed-insome securities
513
0
4
516
Effective interest rate: 5.16%
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 14 Fair value hierarchy
31.12.2024 NOK MILLIONS
Level 1
Level 2
Level 3
Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities
30
799
829
Total assets at fair value
30
799
829
31.12.2023 NOK MILLIONS
Level 1
Level 2
Level 3
Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities
20
497
516
Total assets at fair value
20
497
516
LEVEL 1:
Instruments at this level obtain fair value from listed prices in an active market for identical assets or liabilities to which the entity has access at the reporting date. Examples of instruments in Level 1 are stock market listed securities.
LEVEL 2:
Instruments at this level obtain fair value from observable market data. This includes prices based on identical instruments, but where the instrument does not maintain a high enough trading frequency and is 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 is based generally on discrete calculations where the actual fair value may deviate if the instrument were to be traded.
See note 12 discloses the fair value of financial assets and financial liabilities that are recognized at amortized cost.
There have been no transfers between Level 1 and Level 2.
Note 15 Other assets
NOK MILLIONS
31.12.2024
31.12.2023
Receivables between Group companies
3
4
Total other assets
3
4
Note 16 Liabilities to credit institutions
31.12.2024 NOK MILLIONS
Currency
Interest
Due date
Nominal
Accrued interest
Book value
Debt from KLP Banken AS
NOK
Fixed
15.12.2026
2 050
4
2 054
Debt from KLP Banken AS
NOK
Fixed
15.12.2026
140
0
140
Total liabilities to credit institutions
2 190
4
2 194
Interest rate on debt to credit institutions at the reporting date
4.05%
The interest rate is calculated as a weighted average of the act/360 basis.
NOK MILLIONS
Book value 31.12.2023
Receipts internal funding
Disbursements internal funding
Changes accrued interest
Book value 31.12.2024
Interest paid in 2024
Debt from KLP Banken AS
1 686
6 413
-5 906
1
2 194
-64
Debt from KLP Banken AS
1 686
6 413
-5 906
1
2 194
-64
31.12.2023 NOK MILLIONS
Currency
Interest
Due date
Nominal
Accrued interest
Book value
Debt from KLP Banken AS
NOK
Fixed
15.12.2025
1 537
3
1 540
Debt to KLP Banken AS
NOK
Fixed
15.12.2025
146
0
146
Total liabilities to credit institutions
1 683
3
1 686
Interest rate on debt to credit institutions at the reporting date
3.88%
The interest rate is calculated as a weighted average of the act/360 basis.
Total liabilities created on issuance of securities
10 550
11 105
Interest rate on borrowings through the issuance of securities at the reporting date.
5.05%
5.07%
The interest rate is calculated as a weighted average of the act/360 basis. It includes interest rate effects and amortization costs.
NOK MILLIONS
Balance sheet 31.12.2023
Issued
Matured/ redeemed
Other adjustments
Balance sheet 31.12.2024
Interest paid in 2024
Change in liabilities created on issuance of securities
Bonds, nominal value
11 054
1 000
-1 554
10 500
Revaluations
-3
-2
-5
Accrued interest
54
0
55
-568
Total liabilities created on issuance of securities
11 105
1 000
-1 554
-1
10 550
-568
NOK MILLIONS
Balance sheet 31.12.2022
Issued
Matured/ redeemed
Other adjustments
Balance sheet 31.12.2023
Interest paid in 2023
Change in liabilities created on issuance of securities
Bonds, nominal value
12 600
1 000
-2 546
11 054
Revaluations
-3
0
-3
Accrued interest
37
17
54
-501
Total liabilities created on issuance of securities
12 634
1 000
-2 546
17
11 105
-501
Note 18 Other liabilities and provision for accrued costs and liabilities
NOK MILLIONS
31.12.2024
31.12.2023
Receivables between companies in the same Group
5
5
Creditors
0
0
Total other liabilities
5
5
Note 19 Transactions with related parties
NOK MILLIONS
2024
KLP Banken AS
Other group companies
Interest incomes
11
6
Interest expenses
-65
Purchase of services
-56
0
Other receivables
2
1
Bank deposits
224
Borrowing
-2 194
Other debt
-5
Purchase of loans from KLP Banken AS
3 956
NOK MILLIONS
2023
KLP Banken AS
Other group companies
Interest incomes
9
-9
Interest expenses
-26
Purchase of services
-56
0
Other receivables
2
0
Bank deposits
214
Borrowing
-1 686
Other debt
-5
-2
Purchase of loans from KLP Banken AS
4 539
There are no direct salary costs in KLP Boligkreditt AS. Personnel costs (administrative services) are allocated from KLP Banken AS.
Transactions with related parties are carried out on general market terms, with the exception of the Company’s share of common functions, which is allocated at cost. Allocation is based on actual use. All internal receivables are settled as they arise.
Note 20 Capital adequacy
NOK MILLIONS
31.12.2024
31.12.2023
Share capital and share premium
960
860
Other owners’ equity
110
71
Total owners’ equity
1 070
932
Adjustments due to requirements for proper valuation
-1
-1
Core capital/Tier 1 capital
1 069
931
Supplementary capital/Tier 2 capital
0
0
Total own funds (eligible Tier 1 and Tier 2 capital)
1 069
931
Capital requirement
395
398
Surplus of own funds (eligible Tier 1 and Tier 2 capital)
674
534
Calculation basis credit risk
Institutions
67
95
Retail
380
402
Mortgage security in real estate
4 257
4 273
Covered bonds
80
50
Other holdings
0
1
Calculation basis credit risk
4 784
4 820
Credit risk
383
386
Operational risk
13
12
Total capital requirement assets
395
398
Core capital adequacy ratio
21.6%
18.7%
Supplementary capital ratio
0.0%
0,0 %
Capital adequacy ratio
21.6%
18.7%
Leverage ratio
7.7%
6.8%
Capital requirement per 31.12.2024
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
4.5%
0.0%
4.5%
Counter-cyclical buffers
2.5%
0.0%
2.5%
Applicable capital requirement incl. buffers
14.0%
3.5%
17.5%
Capital requirement leverage ratio
3.0%
0.0%
3.0%
Note 21 Financial risk management
Organisation of risk management
KLP Boligkreditt AS is a wholly owned subsidiary of KLP Banken AS. The Board of Directors of the Bank has established a risk management framework aimed at ensuring that risks are identified, analyzed 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, organization, 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 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 Analysis and Control 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 and interest rate risk lies with the Finance Department.
Note 22 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.
KLP Boligkreditt AS provides property mortgage loans to retail customers. The principal customer group is made up of members of KLP, who represent about 77 per cent of the lending volume.
22.1 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 KLP Boligkreditt AS 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 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.
KLP Boligkreditt only provides loans mortgaged in residential property. 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.
The market value of the mortage assets is updated quarterly against the market value of housing in Norway provided by Eiendomsverdi AS.
22.2 LOANS ACCORDING TO TYPE OF SECURITY/EXPOSURE (PRINCIPAL)
NOK MILLIONS
31.12.2024
31.12.2023
LOANS ACCORDING TO TYPE OF SECURITY/EXPOSURE (PRINCIPAL)
Retail mortgage loans
12 642
12 717
Total
12 642
12 717
Sums falling due more than 12 months after the end of the reporting period
12 279
12 356
NOK MILLIONS
31.12.2024
31.12.2023
ALLOCATION OF LOAN TO VALUE (PRINCIPAL) FOR RETAIL MORTGAGE LOANS
Loan to value ratio up to 50 per cent
4 527
3 550
Loan to value ratio from 51 to 60 per cent
2 960
3 014
Loan to value ratio from 61 to 75 per cent
4 492
5 005
Loan to value ratio above 75 per cent
664
1 148
Total
12 642
12 717
Average loan-to-value ratio (volume weighted)
54.68%
57.08%
KLP Boligkreditt 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 ascertained 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 expected 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.
2024
LOANS BY RISK CLASS AND STAGE IN IFRS9
Stage 1
Stage 2
Stage 3
Total CB book value
Low risk - risk class A
6 410
60
6 470
Low risk - risk class B
5 497
52
5 548
Medium risk - risk class C
346
87
433
Medium risk - risk class D
64
145
209
High risk - risk class E
2
9
10
High risk - risk class F
High risk - risk class K
Engagements without risk class (new customers)
Total CB book value
12 318
352
12 670
2023
LOANS BY RISK CLASS AND STAGE IN IFRS9
Stage 1
Stage 2
Stage 3
Total CB book value
Low risk - risk class A
5 473
44
5 517
Low risk - risk class B
6 358
70
6 428
Medium risk - risk class C
513
78
591
Medium risk - risk class D
84
113
198
High risk - risk class E
7
5
12
High risk - risk class F
High risk - risk class K
Engagements without risk class (new customers)
Total CB book value
12 435
311
12 746
The Company also invests in securities issued by municipalities and county administrations and will in addition have credit risk exposure in the form of “additional collateral”. The additional collateral can amount up to 20 per cent of the cover. In accordance with the Company’s internal guidelines the additional collateral may be in the form of deposits in banks satisfying minimum rating requirements as well as covered bonds issued by Norwegian credit enterprises.
CREDIT QUALITY SECURITIES, BANK DEPOSITS AND DERIVATIVES
NOK MILLIONS
31.12.2024
31.12.2023
SECURITIES WITH EXTERNAL CREDIT RATING (MOODY’S)
CREDIT QUALITY OF SECURITIES, BANK DEPOSITS AND DERIVATIVES
Aaa
829
516
Total
829
516
NOK MILLIONS
31.12.2024
31.12.2023
DEPOSITS IN BANKS GROUPED BY EXTERNAL CREDIT ASSESSMENT (MOODY’S)
Aa1-Aa3
105
156
A1-A3
226
314
Total
331
470
The Company may also be exposed to credit risk as a result of derivative agreements struck. The purpose of such agreements is to reduce risks arising as a result of the Company’s borrowing and lending activities. The Company’s internal guidelines specify creditworthiness requirements for derivative counterparties. As of 31 December 2024, KLP Boligkreditt AS had no derivative agreements with any counterparties.
22.3 MAXIMUM EXPOSURE TO CREDIT RISK
KLP Boligkreditt AS measures maximum exposure as principal and accrued interest. No collateral in cash or securities is exchanged, nor are other credit improvements carried out. The table below shows the maximum exposure for KLP Boligkreditt AS.
NOK MILLIONS
31.12.2024
31.12.2023
MAXIMUM EXPOSURE TO CREDIT RISK
Loans to and receivables from credit institutions
331
470
Loans to and receivables from customers
12 670
12 746
Fixed-income securities
829
516
Loss write-downs stage 1 and 2
0
0
Total
13 830
13 732
22.4 LOANS FALLEN DUE
The Company has not incurred losses on lending. The company considers all receivables to be satisfactorily secured. The loans are secured with mortgages, and losses will only arise when the value of the mortgaged object falls below the residual amount of the loan.
NOK MILLIONS
31.12.2024
31.12.2023
LOANS FALLEN DUE
Principal on loans with payments overdue by 7-30 days
83
104
Principal on loans with payments overdue by 31-90 days
14
6
Principal on non-performing loans
Total loans fallen due
98
109
Relevant security or guarantees
98
109
22.5 CONCENTRATION OF CREDIT RISK
The Company's lending is in its entirety linked to financing of real estate where the loans are mainly secured with mortgages within 75 per cent of the market value. All borrowers are Norwegian and the collateral is in Norwegian real estate. The company has a risk consentration where it is exposed to a general impairment in the Norwegian housing market.
The concentration against individual borrowers is limited by individual Board-set limits. KLP Boligkreditt AS’s largest exposure as at 31 December 2024 was about 0.1 per cent of the Company's total lending.
Note 23 Market risk
Market risk is understood here as the risk of reduced fair value of the Company’s owners’ equity as a result of fluctuations in market prices for the Company’s assets and liabilities. Changes in credit margins are however excluded since this comes under the term credit risk.
KLP Boligkreditt AS is exposed to market risk as a result of the Company’s borrowing and lending activity and management of the Company’s liquidity. The exposure is however limited to interest rate risk and exchange rate risk. Interest rate risk arises as a result of differences in timing of interest rate adjustment for the Company’s assets and liabilities. The risk associated with such imbalances is reduced by using derivative contracts. All borrowing is in Norwegian kroner. The whole of the lending portfolio comprises loans in NOK.
23.1 MEASUREMENT OF MARKET RISK
Interest rate risk is measured as change in value on a one percentage point change in all interest rates.
23.2 INTEREST RATE RISK
The market risk policy is the Company’s overarching guidelines, requirements and limits associated with market risk. The policy dictates that the market risk should be minimized so that the total market risk is low. It further states that the Company should not actively take positions that expose the Company to market risk. The policy also sets limits for interest rate risk both for the total interest rate risk for the infinite future and for rolling 12-month periods. The risk limits are set to ensure that the low market risk profile policy is complied with. The operational responsibility for managing the Company’s market risk lies with the Finance Department in KLP Banken. The Risk Analysis and Control 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 table below shows repricing dates for the Company’s interest-bearing assets and liabilities, and the gap shows the difference between assets and liabilities that can be interest-adjusted within the given time intervals. Lending at variable rates, and cash and receivables with credit institutions, are assumed to be able to be repriced within a 0-3 month horizon. The debt falls into the time interval for which interest adjustment has been agreed.
The Company’s interest rate sensitivity as at 31 December 2024 (2023), measured as value change in the event of one percentage point change in all interest rates, was NOK -5.7 million (-4.5 million).
INTEREST-RATE RISK KLP BOLIGKREDITT AS
Repricing dates for interest-bearing assets and liabilities as at 31 December 2024
NOK MILLIONS
Total Principal
Up to 1 mth
From 1 mths to 3 mths
From 3 mths to 12 mths
From 1 year to 5 years
Over 5 years
Loans to and receivables from credit institutions
331
331
Loans to and receivables from customers
12 642
12 642
Fixed-income securities
820
250
570
Total
13 793
581
13 212
Liabilities to credit institutions
2 194
2 194
Liabilities created on issuance of securities
10 496
2 496
8 000
Total
12 690
4 690
8 000
Net gap
1 103
-4 109
5 212
Repricing dates for interest-bearing assets and liabilities as at 31 December 2023
NOK MILLIONS
Total Principal
Up to 1 mth
From 1 mths to 3 mths
From 3 mths to 12 mths
From 1 year to 5 years
Over 5 years
Loans to and receivables from credit institutions
470
470
Loans to and receivables from customers
12 717
12 717
Fixed-income securities
516
250
266
Total
13 704
720
12 984
Liabilities to credit institutions
1 683
1 683
Liabilities created on issuance of securities
11 054
2 500
8 554
Total
12 737
4 183
8 554
Net gap
966
-3 463
4 430
Note 24 Liquidity risk
Liquidity risk means the risk that the Company does not manage to meet its obligations and/or finance increases in its assets without substantial additional costs arising in the form of price falls in assets that must be realized, or in the form of more costly financing.
24.1 MANAGEMENT OF LIQUIDITY RISK
The management of KLP Boligkreditt’s liquidity risk must be viewed in the context of the management of the liquidity risk in the KLP Banken Group. A liquidity policy is established for the Group containing principles, guidelines, requirements and limits that apply to the management of the liquidity risk. The policy states that the Group is to have a moderate liquidity risk profile and various requirements and limits have been set to achieve this, including targets for deposit cover, limits for refinancing requirements for various time periods and requirements for liquidity buffers. The Board has further adopted an emergency plan for liquidity crises as part of the liquidity policy. In addition to the requirements at Group level, separate specific requirements have been established for KLP Boligkreditt, including requirements for continually 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.
The bank holds deposits and a well-diversified securities portfolio to manage liquidity risk. The securities portfolio consists of securities issued by the government, municipalities, and other LCR-approved 0 per cent risk-weighted assets, as well as covered bonds issued by Norwegian credit institutions. The securities are spread across several counterparties, and the bank also has established credit lines that set limits on large exposures. The bank's securities portfolio is intended to have low credit risk and will consist exclusively of securities rated AA or AAA.
24.2 MATURITY ANALYSIS
The tables below show the maturity analysis of the Company’s assets and liabilities including stipulated interest rates.
LIQUIDITY RISK KLP BOLIGKREDITT AS
Maturity analysis for assets and liabilities as at 31 December 2024
NOK MILLIONS
Total
Undefined
Up to 1 mth
From 1 mths to 3 mths
From 3 mths to 12 mths
From 1 year to 5 years
Over 5 years
Loans to and receivables from customers
22 026
86
173
785
4 180
16 802
Fixed-income securities
922
3
57
109
752
Loans to and receivables from credit institutions
331
107
224
Total
23 279
197
454
894
4 933
16 802
Liabilities created on issuance of securities
13 308
31
104
2 677
10 496
Liabilities to credit institutions
2 306
7
5
36
2 258
Total
15 614
38
109
2 713
12 754
NET CASH FLOW
7 664
158
345
-1 819
-7 821
16 802
Maturity analysis for assets and liabilities as at 31 December 2023
NOK MILLIONS
Total
Undefined
Up to 1 mth
From 1 mths to 3 mths
From 3 mths to 12 mths
From 1 year to 5 years
Over 5 years
Loans to and receivables from customers
15 920
70
139
626
4 087
10 999
Fixed-income securities
573
3
23
20
526
Loans to and receivables from credit institutions
470
256
214
Total
16 963
329
376
645
4 613
10 999
Liabilities created on issuance of securities
11 900
32
111
1 748
10 008
Liabilities to credit institutions
1 773
6
4
28
1 736
Total
13 672
38
115
1 776
11 744
NET CASH FLOW
3 291
291
261
-1 130
-7 131
10 999
A 24-month internal loan of NOK 2 190 millions has been provided from KLP Banken AS to KLP Boligkreditt AS, which is defined as Liabilities to credit institutions. This loan is rolled over currently every third month and the interest rate is set each month.
Note 25 Over-collateralisation
NOK MILLIONS
Fair value
31.12.2024
31.12.2023
SECURITY POOL
Loans to customers 1)
12 671
12 689
Additional collateral 2)
903
1 834
Total security pool
13 574
14 523
Outstanding covered bonds incl. own funds and premium/discount
10 569
12 051
Coverage of the security pool
128.4%
120.5%
1) Excluding mortgage loans that do not qualify for security pool.
2) Additional collateral includes loans to and receivables from credit institutions, bonds and certificates. Liquid assets used in the
LCR liquidity reserve are not included in additional collateral.
Section 11-7 of the Regulations on Financial Institutions lays down a requirement for over-collateralisation by at least 5 per cent of the value of the outstanding covered bonds.
Note 26 Salary and obligations to senior management
2024 NOK THOUSANDS
Paid from KLP Boligkreditt AS
Paid from another company in the same group
Salaries, fees etc.
Other benefits
Annual pension accumulation
Loans
Interest rate as at 31.12.2024
Repayment plan 1)
Salaries, fees etc.
Other benefits
Annual pension accumulation
Loans
Interest rate as at 31.12.2024
Repayment plan 1)
SENIOR EMPLOYEES
Christopher A. Steen, Managing Director
1 657
31
310
8 701
4,85/5,50
A54
BOARD OF DIRECTORS
Aage Schaanning, Chair
4 306
160
1 322
7 326
4,95/5,50
Fleksilån
Lill Stabell
92
Janicke Elisabeth S. Falkenberg
Jonas Vincent Kårstad, Chosen by and among the employees in the KLP Bank
126
EMPLOYEES
Total salary for employees of KLP Boligkreditt AS
8 701
2023 NOK THOUSANDS
Paid from KLP Boligkreditt AS
Paid from another company in the same group
Salaries, fees etc.
Other benefits
Annual pension accumulation
Loans
Interest rate as at 31.12.2023
Repayment plan 1)
Salaries, fees etc.
Other benefits
Annual pension accumulation
Loans
Interest rate as at 31.12.2023
Repayment plan 1)
SENIOR EMPLOYEES
Christopher A. Steen, Managing Director
957
4.70
A29
1 556
58
313
555
4.70
A30
BOARD OF DIRECTORS
Aage Schaanning, Chair
4 099
152
1 281
6 182
4.70
HC
Lill Stabell
88
Janicke Elisabeth S. Falkenberg (From March 2023)
Aina Iren Slettedal Eide (left the Board in March 2023)
Jonas Vincent Kårstad, Chosen by and among the employees in the KLP Bank
126
EMPLOYEES
Total salary for employees of KLP Boligkreditt AS
957
555
1) A= Annuity loan, last payment, HC = Housing Credit.
The KLP Board of Directors has laid down principles and guidelines for remuneration that apply for the entire Group and set up a remuneration committee as a subcommittee of the Board. The committee reports on and carries out checks that the remuneration schemes in the Group are in line with the Board's principles and guidelines.
The Managing Director receives no remuneration or pension accumulation from KLP Boligkreditt AS. The incumbent receives all benefits from the parent company, KLP Banken AS, where he holds the position of Head of Finance KLP Boligkreditt refunds the portion of the benefits that can be linked to the role as Managing Director. There is no agreement on performance pay or special consideration on termination or change in employment contract. The pensionable age is 70 years.
There are no obligations to provide the Chair of the Board of Directors special consideration or other benefits on termination or change in employment contract or appointment.
Directors’ fees are set by the General Assembly. Board members employed in the KLP Group, not having been elected by and from the employees, do not receive a fee for the Board appointment. Benefits in addition to Directors’ fees for Board members employed in the KLP Group are stated only if they are included in the senior management group employed in the KLP Group. This also applies to any loans they may have with the Group. Of the board members, Aage E. Schaanning, Janicke Elisabeth S. Falkenberg and Jonas Vincent Kårstad are employed in the KLP Group. All benefits are shown without the addition of social security costs.
The KLP Group offers loans for various pruposes. There are separate loan terms for employees, and no senior employees have loan terms that deviate from these. Loans to external directors are only granted under ordinary loan terms. The interest rebate that accrues to employees is refunded to the lending company.
Attention is drawn otherwise to the description of the main principles on determination of remuneration in the KLP Group that may be found at klp.no.
Note 27 Number of FTEs and employees
KLP Boligkreditt AS has two employees, who receive no salary or other form of remuneration from the Company. KLP Boligkreditt AS buys personnel services from other companies in the KLP Group.