The KLP Banken Group finances mortgages and other credit in the retail market and lending to municipalities, county administrations and companies carrying out public sector assignments.Additionally, the KLP Banken Group manages a lending portfolio on behalf of its parent company Kommunal Landspensjonskasse (KLP). The Group manages a lending total of NOK 124 (120) billion. The lending business is nationwide and divided into the business areas retail market and public sector loans.
In the retail market, KLP Banken shall offer products and services at competitive terms, aiming at enterprises that have chosen KLP as their pension provider are considered attractive employers.
In the public sector market KLP Kommunekreditt AS, together with KLP, shall contribute to market competition and thereby access to favorable long-term financing for the sector.
KLP Banken AS is wholly owned by KLP. KLP Banken AS has two wholly owned subsidiaries, KLP Kommunekreditt AS and KLP Boligkreditt AS. The main office is in Trondheim.
Income statement
The KLP Banken Group had a pre-tax profit at the end of first quarter of NOK 75.1 (53.1) million. The change is mainly due to increased net interest income and gains on financial instruments.
The area-allocated result gives NOK 51.1 (35.4) million in the retail market and NOK 24.0 (17.7) million in the public sector market.
Net interest income for the KLP Banken Group at the end of first quarter was NOK 126.6 (110.2) million. The increase is mainly due to the higher interest rate level providing a higher return on loans financed with equity and somewhat higher margins between loans and financing.
At the end of the quarter, the income statement includes a net gain on value changes in financial instruments of NOK 6.9 (-6.7) million. This result effect is mainly related to changes in the market value of the bank’s liquidity placements. An insignificant portion of this is realized income.
Net fees and commissions income amounted to NOK 6.7 (5.8) million per first quarter.
The Group administers housing mortgages and public sector lending financed by its parent company (KLP). The management fee for this task amounted to NOK 15.6 (15.3) million at the end of the quarter.
Operating costs and depreciations amounted to NOK -79.5 (-71.1) million. Most of the increase is due to price increases in the purchase of external services in addition to wage growth. The operating costs also include reimbursements related to fraud against our customers amounting to NOK -0.4 (-0.5) million.
Loan loss provisions and realized losses brought to book so far in 2024 is NOK -1.1 (-0.3) million. The high interest rates have so far not led to significantly increased losses on mortgage loans, but increased inflation and interest rates may in the long term lead to reduced repayment capacity among loan customers. Nor in 2024 there has been ascertained loan losses on public sector lending.
The Group’s comprehensive income as at first quarter 2024 was NOK 81.8 (91.2) million.
Lending and credits
The KLP Banken Group manages loans on its own balance sheet and loans financed by KLP, totaling NOK 124 (120) billion. As of March 31, 2024, KLP Banken group had customer loans on its own balance amounting to NOK 42.8 (42.7) billion. The distribution between the retail market and public loans was respectively NOK 24.1 (23.3) billion and NOK 18.7 (19.4) billion.
The net growth in mortgage loans in the first quarter was NOK 0.2 billion, which is a significant increase compared to the same period last year. The demand for new mortgages in the market is lower than in previous years due to high interest rates and inflation. The bank's primary target group for mortgages are members of the pension schemes in KLP.
Mortgage loans for NOK 0.7 (1.5) billion were sold from KLP Banken AS to the credit company KLP Boligkreditt AS in the quarter. The volume of managed mortgage loans for KLP is relatively stable.
The outstanding drawn credit on credit cards has increased moderately in the first quarter, and the number of customers using the bank’s credit cards shows a stable growth.
KLP Banken’s loan volume in the public market has been reduced by NOK -0.3 (0.2) billion so far this year. Loans to public borrowers managed for KLP have increased by NOK 1.5 (0.5) billion.
Liquid investments
Available liquidity is placed in other banks and in interest-bearing papers. Placements in credit institutions were at NOK 1.1 (0.8) billion. The booked value of interest-bearing papers assessed at fair value was NOK 4.8 (5.7) billion in the KLP Banken group at the end of the quarter.
Market value changes in interest-bearing securities have given an accounting effect of NOK 7.4 (-5.1) million in the first quarter.
Borrowing
The KLP Banken Group's external financing comprises deposits and bonds. At the reporting date, deposits from individuals and companies amounted to NOK 14.2 (14.1) billion and issued bonds amounted to NOK 31.3 (32.0) billion. Of the outstanding issued volume, covered bonds (OMF) issued by KLP Kommunekreditt AS and KLP Boligkreditt AS, amounted to NOK 19.2 (18.5) billion and NOK 11.3 (12.5) billion respectively. All OMF bonds issued have achieved Aaa rating. Outstanding securities debt in KLP Banken AS amounted to NOK 0.8 (1.0) billion.
Risk and capital adequacy
The KLP Banken Group is exposed to various types of risks and the bank has established a framework for risk management aimed at ensuring risks are identified, analyzed and subject to management using policies, limits, procedures and instructions.
The bank shall have a prudent risk profile and earnings are to be principally a result of borrowing and lending activities, as well as liquidity management. This means that the bank is to have low market risk, and that interest risk arising within the borrowing and lending activities is reduced using derivatives.
The KLP Banken Group and its subsidiaries are to have sound long-term financing due to regulatory demands, and limits have been established to ensure that that this objective is achieved.
The credit risk associated with the bank’s assets is low, and lending is mainly limited to local government risk and lien on housing property. Management of the bank's liquidity is conducted through investments in other banks satisfying set credit quality requirements, and in securities in accordance with board-approved credit lines.
At the end of the first quarter 2024, eligible Tier 1 and Tier 2 capital i.a.w. the capital adequacy rules were NOK 3 088 (2 895) million. Eligible Tier 1 and Tier 2 capital comprise core capital only. Lending is risk-weighted in accordance with the authorities' capital adequacy regulations. The KLP Banken Group had a capital adequacy ratio of 21.2 (20.5) per cent at the reporting time. The minimum statutory requirement is 14.8 per cent core capital adequacy and 18.3 per cent capital adequacy. Leverage ratio was 6.2 (5.8) per cent. Here the requirement is 3.0 per cent.
Income statementKLP Banken Group
NOTES
NOK THOUSANDS
Q1 2024
Q1 2023
01.01.2023 -31.12.2023
Interest income, effective interest method
595 252
429 816
2 038 683
Other interest income
94 243
88 399
351 367
3
Total interest income
689 495
518 215
2 390 050
Interest expense, effective interest method
-528 633
-379 989
-1 802 752
Other interest expense
-34 241
-28 076
-122 557
3
Total interest costs
-562 874
-408 064
-1 925 309
3
Net interest income
126 621
110 151
464 740
Commision income and income from banking services
7 404
6 465
30 618
Commision cost and cost from banking services
-719
-698
-2 734
Net charges and commission income
6 686
5 767
27 884
Other fee income
15 582
15 342
61 288
16
Net gain/ (loss) financial instruments
6 901
-6 731
2 466
Total other operating income
22 483
8 611
63 754
Salaries and administrative costs
-25 561
-22 130
-91 577
Depreciation
-808
-993
-3 742
Other operating expenses
-53 154
-47 945
-174 751
14
Net loan losses
-1 116
-336
-871
Total operating expenses
-80 640
-71 405
-270 941
Operating profit/loss before tax
75 150
53 124
285 437
Tax ordinary income
-949
37 006
-18 622
Profit/loss for the period
74 200
90 129
266 815
Estimate difference, pension obligation and assets
10 142
1 389
-13 013
Tax on actuarial gains and losses
-2 535
-347
3 253
Items that will not be reclassified to profit and loss
7 606
1 042
-9 760
Changes in the fair value through profit and loss
0
0
0
Tax on changes in fair value of available for sale financial assets
0
0
0
Items that may be reclassified to profit and loss
0
0
0
Other comprehensive income for the period
7 606
1 042
-9 760
Comprehensive income for the period
81 807
91 171
257 056
Balance sheetKLP Banken Group
NOTES
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
ASSETS
5
Claims on central banks
74 073
73 395
75 312
5
Loans to credit institutions
980 355
718 248
1 577 691
4,5
Loans to customers
42 836 583
42 716 903
42 856 271
5,6,13
Fixed-income securities
4 809 101
5 664 666
4 276 469
5,6
Shareholdings
1 897
1 187
1 897
5,6,8
Financial derivatives
109 398
147 104
108 370
Deferred tax assets
0
1 405
0
Intangible assets
13 603
15 099
13 943
17
Right-of-use assets
14 027
15 898
14 495
Fixed assets
436
436
436
10
Other assets
17 176
19 083
3 221
Total assets
48 856 650
49 373 425
48 928 107
LIABILITIES AND OWNERS EQUITY
LIABILITIES
5,7
Debt securities issued
31 252 801
31 998 903
31 408 338
5
Deposits and borrowings from the public
14 157 463
14 136 225
14 060 460
5,6,8
Financial derivatives
24 262
21 228
23 233
Deferred tax liabilities
3 475
0
55 706
17
Lease liabilities
14 713
16 359
15 131
11
Other liabilities
165 780
141 425
127 394
11
Provision for accrued costs and liabilities
49 618
51 240
63 913
Total liabilities
45 668 110
46 365 379
45 754 176
EQUITY
Share capital
1 140 000
1 140 000
1 140 000
Share premium
1 050 000
1 050 000
1 050 000
Other owners' eqyity
916 733
726 874
983 931
Profit for the period
81 807
91 171
0
Total equity
3 188 540
3 008 046
3 173 931
Total liabilities and equity
48 856 650
49 373 425
48 928 107
Statement of changes in equityKLP Banken Group
2024 NOK THOUSANDS
Share capital
Share premium
Other equity
Total owners’ equity
Equity 1 January 2024
1 140 000
1 050 000
983 931
3 173 931
Profit for the period
0
0
74 200
74 200
Other comprehensive income
0
0
7 606
7 606
Total comprehensive income for the period
0
0
81 807
81 807
Group contribution received during the period
0
0
214 756
214 756
Group contribution paid during the period
0
0
-281 954
-281 954
Total transactions with the owners
0
0
-67 198
-67 198
Equity 31 March 2024
1 140 000
1 050 000
998 540
3 188 540
2023 NOK THOUSANDS
Share capital
Share premium
Other equity
Total owners’ equity
Equity 1 January 2023
1 140 000
1 050 000
776 466
2 966 466
Profit for the period
0
0
90 129
90 129
Other comprehensive income
0
0
1 042
1 042
Total comprehensive income for the period
0
0
91 171
91 171
Group contribution received during the period
0
0
159 535
159 535
Group contribution paid during the period
0
0
-209 126
-209 126
Total transactions with the owners
0
0
-49 591
-49 591
Equity 31 March 2023
1 140 000
1 050 000
818 046
3 008 046
2023 NOK THOUSANDS
Share capital
Share premium
Other equity
Total owners’ equity
Equity 1 January 2023
1 140 000
1 050 000
776 466
2 966 466
Income for the year
0
0
266 815
266 815
Other comprehensive income
0
0
-9 760
-9 760
Comprehensive income for the year
0
0
257 056
257 056
Group contribution received during the period
0
0
159 535
159 535
Group contribution paid during the period
0
0
-209 126
-209 126
Total transactions with the owners
0
0
-49 591
-49 591
Equity 31 December 2023
1 140 000
1 050 000
983 931
3 173 931
Statement of cash flowKLP Banken Group
NOK THOUSANDS
Q1 2024
Q1 2023
01.01.2023 -31.12.2023
OPERATING ACTIVITIES
Payments received from customers – interest, commission and charges
572 815
390 000
1 908 976
Payments to customers – interest, commission and charges
-137 328
-89 510
-443 505
Disbursements on loans to customers and credit institutions
-1 958 440
-4 197 974
-13 278 857
Receipts on loans to customers
1 976 779
3 891 986
12 917 822
Net receipts on customer deposits banking
96 923
357 229
281 568
Disbursements on operations
-70 000
-55 629
-168 467
Payments to staff, pension schemes, employer's social security contribution etc.
-25 935
-22 299
-92 549
Interest investment accounts
34 933
10 707
65 614
Net receipts/disbursements from operating activities
16 312
28 840
20 301
Net cash flow from operating activities
506 059
313 349
1 210 903
INVESTMENT ACTIVITIES
Receipts on the sale of securities
716 997
2 301 748
5 261 280
Payments on the purchase of securities
-1 239 627
-1 407 919
-2 966 767
Receipts of interest from securities
53 958
57 876
216 770
Payments on the purchase of tangible fixed assets
0
0
-191
Net cash flow from investment activities
-468 673
951 705
2 511 092
FINANCING ACTIVITIES
Receipts on loans
1 200 000
1 000 000
7 200 000
Repayments and redemption of securities debt
-300 000
0
-7 300 000
Change in securities debt, own funds
-1 052 297
-2 497 937
-2 005 529
Net payment of interest on loans
-383 827
-291 088
-1 321 854
Payment of lease liabilities
-418
-402
-1 630
Group contributions paid
-67 198
-49 591
-49 591
Net cash flows from financing activities
-603 741
-1 839 019
-3 478 604
Net cash flow during the period
-566 355
-573 965
243 392
Cash and cash equivalents at the start of the period
1 583 769
1 340 377
1 340 377
Cash and cash equivalents at the end of the period
1 017 414
766 412
1 583 769
Net receipts/disbursements (-)
-566 355
-573 965
243 392
Notes to the financial statementKLP Banken Group
Note 1 General information
KLP Banken AS was formed 25 February 2009. KLP Banken AS owns all the shares in KLP Kommunekreditt AS and KLP Boligkreditt AS. These companies together form the KLP Banken Group. KLP Banken Group provide or acquire loans to Norwegian municipalities and county authorities, as well as to companies with public sector guarantee. The lending activities are principally financed by issuance of covered bonds. The Group also offers standard banking products to private customers. KLP Banken AS is registered and domiciled in Norway. It's head office is at Beddingen 8 in Trondheim. The company has a branch office in Dronning Eufemiasgate 10, Oslo.
The company, KLP Banken AS, is a wholly owned subsidiary of Kommunal Landspensjonskasse (KLP). KLP is a mutual insurance company.
Note 2 Accounting principles
The interim report includes the interim Financial Statements of KLP Banken Group for the period 1 January 2024 – 31 March 2024, with a specification of the results in the 1st quarter. The interim Financial Statements has not been audited.
The financial statements have been prepared in accordance with IFRS Accounting Standards®) as adopted by the EU with some additions that follow The Norwegian Accounting Act and the Regulations concerning annual accounts for banks, mortgage firms and finance companies (the Accounting Regulations). The interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting".
Other accounting principles and calculations are the same in the interim financial statement as in the annual report for 2023, please see the annual report for further information.
Note 3 Net interest income
NOK THOUSANDS
Q1 2024
Q1 2023
01.01.2023 -31.12.2023
Interest income on loans to customers
575 453
417 819
1 973 093
Interest income on loans to credit institutions
19 799
11 997
65 590
Total interest income, effective interest method
595 252
429 816
2 038 683
Interest income on bonds and certificates
57 461
57 698
219 358
Other interest income
36 782
30 701
132 009
Total other interest income
94 243
88 399
351 367
Total interest income
689 495
518 215
2 390 050
Interest expenses on deposits to KLP Banken
-133 495
-85 100
-426 988
Interest expenses on issued securities
-395 068
-294 813
-1 375 467
Interest expense lease liabilities
-69
-76
-297
Total interest expense, effective interest method
-528 633
-379 989
-1 802 752
Other interest expenses
-30 917
-24 123
-107 877
Interest expenses on deposits to customers
-3 324
-3 953
-14 680
Total other interest expense
-34 241
-28 076
-122 557
Total interest expense
-562 874
-408 064
-1 925 309
Net interest income
126 621
110 151
464 740
Note 4 Loans to customers
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Principal on loans to customers
42 646 811
42 587 473
42 665 975
Credit portfolio
46 022
44 760
42 393
Overdraft current account
153
84
175
Write-downs step 1 and 2
-2 049
-1 862
-1 765
Write-downs step 3
-2 468
-949
-1 413
Loans to customers after write-downs
42 688 469
42 629 506
42 705 364
Accrued interest
246 909
178 572
237 460
Fair value hedging
-98 797
-91 175
-86 554
Loans to customers
42 836 583
42 716 903
42 856 271
Note 5 Categories of financial instruments
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Capitalized value
Fair value
Capitalized value
Fair value
Capitalized value
Fair value
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Fixed-income securities
4 809 101
4 809 101
5 664 666
5 664 666
4 276 469
4 276 469
Financial derivatives
109 398
109 398
147 104
147 104
108 370
108 370
Shares and holdings
1 897
1 897
1 187
1 187
1 897
1 897
Total financial assets at fair value through profit and loss
4 920 396
4 920 396
5 812 958
5 812 958
4 386 736
4 386 736
FINANCIAL ASSETS FAIR VALUE HEDGING
Loans to and receivables from customers
1 723 865
1 734 164
1 642 496
1 649 751
1 584 628
1 578 296
Total financial assets fair value hedging
1 723 865
1 734 164
1 642 496
1 649 751
1 584 628
1 578 296
FINANCIAL ASSETS AT AMORTIZED COST
Loans to and receivables from credit institutions
74 073
74 073
73 395
73 395
75 312
75 312
Loans to and receivables from central banks
980 355
980 355
718 248
718 248
1 577 691
1 577 691
Loans to and receivables from customers
41 112 718
41 112 718
41 074 407
41 074 407
41 271 643
41 271 643
Total financial assets at amortized cost
42 167 146
42 167 146
41 866 050
41 866 050
42 924 646
42 924 646
Total financial assets
48 811 407
48 821 705
49 321 504
49 328 759
48 896 010
48 889 678
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Financial derivatives
24 262
24 262
21 228
21 228
23 233
23 233
Total financial liabilities at fair value through profit and loss
24 262
24 262
21 228
21 228
23 233
23 233
FINANCIAL LIABILITIES FAIR VALUE HEDGING
Liabilities created on issuance of securities
1 701 411
1 709 072
1 747 747
1 750 746
1 713 024
1 722 804
Total financial liabilities fair value hedging
1 701 411
1 709 072
1 747 747
1 750 746
1 713 024
1 722 804
FINANCIAL LIABILITIES AT AMORTIZED COST
Liabilities created on issuance of securities
29 551 390
29 619 019
30 251 155
30 182 476
29 695 315
29 718 083
Deposits from customers
14 157 463
14 157 463
14 136 225
14 136 225
14 060 460
14 060 460
Total financial liabilities at amortized cost
43 708 853
43 776 482
44 387 380
44 318 701
43 755 775
43 778 543
Total financial liabilities
45 434 526
45 509 816
46 156 355
46 090 675
45 492 031
45 524 579
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.
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.
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 pricing information is outdated, a derived valuation is produced from relevant stock indices or other similar securities. If this is also considered unsatisfactory, a discretionary valuation is made. This may be based on fundamental analysis, broker assessment, or adjustments for risk or liquidity considerations in relation to the price.
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 14 Loan losses provision).
Fair value of loans to Norwegian local administrations
The fair value of these loans is considered to be virtually the same as the book value, as the contract terms are constantly adjusted in line with market interest rates. The fair value of fixed rate loans is calculated by discounting contractual cash flows by market interest rates including a suitable risk margin at the end of the reporting period. This is valued at Level 2 in the valuation hierarchy, cf. Note 6.
Fair value of deposits
The fair value of floating rate deposits is taken to be approximately equal to the deposit amount including accrued interest. The fair value of fixed rate deposits is calculated by discounting contractual cash flows by market interest rates including a suitable risk margin. Discounting contractual cash flows by market interest rates including a suitable risk margin.
Fair value of loans to and receivables from credit institutions
All receivables from credit institutions (bank deposits) are at variable interest rates. The fair value of these is considered to be virtually the same as the book value, as the contract terms are continuously changed in step with change in market interest rates. This is valued at Level 2 in the valuation hierarchy, cf. Note 6.
Liabilities created on issuance of securities
Fair value in this category is determined on the basis of internal valuation models based on external observable data. This is valued in Level 2 in the valuation hierarchy, cf. Note 6.
Note 6 Fair value hierarchy
31.03.2024 NOK THOUSANDS
Level 1
Level 2
Level 3
Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities
824 064
3 985 038
0
4 809 101
Shareholdings
0
0
1 897
1 897
Financial derivatives
0
109 398
0
109 398
Total assets at fair value
824 064
4 094 436
1 897
4 920 396
LIABILITIES BOOKED AT FAIR VALUE
Financial derivatives (liabilities)
0
24 262
0
24 262
Total financial liabilities at fair value
0
24 262
0
24 262
31.03.2023 NOK THOUSANDS
Level 1
Level 2
Level 3
Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities
860 012
4 804 655
0
5 664 666
Shareholdings
0
0
1 187
1 187
Financial derivatives
0
147 104
0
147 104
Total assets at fair value
860 012
4 951 759
1 187
5 812 958
LIABILITIES BOOKED AT FAIR VALUE
Financial derivatives (liabilities)
0
21 228
0
21 228
Total financial liabilities at fair value
0
21 228
0
21 228
31.12.2023 NOK THOUSANDS
Level 1
Level 2
Level 3
Total
ASSETS BOOKED AT FAIR VALUE
Fixed-income securities
825 632
3 450 837
0
4 276 469
Shareholdings
0
0
1 897
1 897
Financial derivatives
0
108 370
0
108 370
Total assets at fair value
825 632
3 559 207
1 897
4 386 736
LIABILITIES BOOKED AT FAIR VALUE
Financial derivatives (liabilities)
0
23 233
0
23 233
Total financial liabilities at fair value
0
23 233
0
23 233
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
CHANGES IN LEVEL 3 UNLISTED SHARES
Opening balance
1 897
1 187
1 187
Additions/purchases of shares
0
0
0
Unrealized changes
0
0
710
Closing balance
1 897
1 187
1 897
Realized gains/losses
0
0
0
Fair value shall be a representative price based on what a corresponding asset or liability would have been traded for at normal market terms and conditions. Highest quality in regard to fair value is based on listed prices in an active market. A financial instrument is considered as listed in an active market if listed prices are simply and regularly available from a stock market, dealer, broker, industry group, price-setting service or regulatory authority, and these prices represent actual and regularly occurring transactions at arm's length.
Level 1:
Instruments at this level obtain fair value from listed prices in an active market for identical assets or liabilities to which the entity has access at the reporting date. Examples of instruments in Level 1 are stock market listed securities.
Level 2:
Instruments at this level obtain fair value from observable market data. This includes prices based on identical instruments, but where the instrument does not maintain a high enough trading frequency and is therefore not considered to be traded in an active market, as well as prices based on corresponding assets and price-leading indicators that can be confirmed from market information. Example instruments at Level 2 are fixed-income securities priced on the basis of interest rate paths.
Level 3:
Instruments at Level 3 contain non-observable market data or are traded in markets considered to be inactive. The price is based generally on discrete calculations where the actual fair value may deviate if the instrument were to be traded.
Note 5 discloses the fair value of financial assets and financial liabilities that are recognized at amortized cost and according to the rules on hedge accounting. Financial assets measured at amortized cost and hedge accounting comprise lending to and due to credit institutions, Norwegian municipalities and retail customers. The stated fair value of these assets is determined on terms qualifying for level 2. Financial liabilities recognized at amortized cost and hedge accounting consist of debt securities issued and deposits. The stated fair value of these liabilities is determined by methods qualifying for level 2.
There have been no transfers between level 1 and level 2.
Interest rate on borrowings through the issuance of securities at the reporting date:
5.08%
3.66%
5.08%
The interest rate is calculated as a weighted average of the act/360 basis. It includes interest rate effects and amortization costs.
NOK THOUSANDS
Balance sheet 31.12.2023
Issued
Matured/ redeemed
Other adjustements
Balance sheet 31.03.2024
Changes in debt securities issued - stock exchange listed covered bonds and cerftificates
Bond debt, nominal amount
34 657 598
1 200 000
-300 000
-1 380
35 556 218
Adjustments
-11 981
0
0
-29 855
-41 836
Accrued interest
205 721
0
0
12 698
218 419
Own holdings, nominal amount
-3 443 000
0
-1 037 000
0
-4 480 000
Total debt securities issued
31 408 338
1 200 000
-1 337 000
-18 537
31 252 801
Note 8 Financial assets and liabilities subject to net settlement
31.03.2024 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
109 398
0
109 398
-24 262
0
85 136
Total
109 398
0
109 398
-24 262
0
85 136
LIABILITIES
Financial derivatives
24 262
0
24 262
-24 262
0
0
Total
24 262
0
24 262
-24 262
0
0
31.03.2023 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
147 104
0
147 104
-21 228
0
125 876
Total
147 104
0
147 104
-21 228
0
125 876
LIABILITIES
Financial derivatives
21 228
0
21 228
-21 228
-32
0
Total
21 228
0
21 228
-21 228
-32
0
31.12.2023 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
108 370
0
108 370
-23 233
0
85 137
Total
108 370
0
108 370
-23 233
0
85 137
LIABILITIES
Financial derivatives
23 233
0
23 233
-23 233
0
0
Total
23 233
0
23 233
-23 233
0
0
The purpose of the note is to show the potential effect of netting agreements at the KLP Banken Group. The note shows derivative positions
in the financial position statement.
Note 9 Transactions with related parties
NOK THOUSANDS
Q1 2024
Q1 2023
01.01.2023 -31.12.2023
KLP, fees lending management
15 582
15 313
61 251
KLP Skadeforsikring AS, fees
0
29
38
KLP Kapitalforvaltning AS, fees for services provided
0
0
-187
KLP, rent
-856
-850
-3 318
KLP Skipsbygget AS, rent
-565
-543
-2 171
KLP Bassengtomten AS, rent parking
-25
-24
-96
KLP Eiendomsdrift AS, cost office buildings
-234
-175
-472
KLP, pension premium
-3 776
-3 410
-13 855
KLP, staff services (at cost)
-22 428
-20 006
-77 627
KLP Group companies, subsidised interest employee loans
4 254
3 814
18 048
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
BALANCES
KLP, net internal accounts
-5 462
-4 924
-5 433
KLP, loan settlement
-13 878
-7 440
-32 167
KLP Group companies, net other internal accounts
1 408
1 207
1 421
Transactions with related parties are carried out at general market terms, with the exception of the company's share of common functions, which are allocated at cost. Allocation is based on actual use. All internal receivables are settled as they arise.
Note 10 Other assets
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Intercompany receivables
2 697
2 494
3 216
Short-term receivable securities trading
0
598
0
Miscellaneous receivables
3
0
3
Prepaid expenses
14 477
15 991
2
Total other assets
17 176
19 083
3 221
Note 11 Other liabilities and provision for accrued costs
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Creditors
3 936
4 100
2 626
Intercompany payables
20 629
13 651
39 395
Short-term balances with credit institutions
79 000
112 400
80 000
Other liabilities
62 215
11 274
5 373
Total other liabilities
165 780
141 425
127 394
Withholding tax
1 937
1 787
3 024
Social security contributions
1 995
1 875
2 782
Capital activity tax
709
674
902
Holiday pay
8 399
8 095
6 820
Pension obligations
34 377
32 550
43 999
VAT
84
0
21
Provisioned costs
2 117
6 257
6 364
Total accrued costs and liabilities
49 618
51 240
63 913
Note 12 Capital adequacy
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Share capital and share premium fund
2 190 000
2 190 000
2 190 000
Other owners' equity
916 733
726 874
983 931
Total owners' equity
3 106 733
2 916 875
3 173 931
Adjustments due to requirements for proper valuation
-4 809
-5 665
-4 276
Deduction goodwill and other intangible assets
-13 603
-15 099
-13 943
Deferred tax asset
0
-1 405
0
Core capital/Tier 1 capital
3 088 321
2 894 706
3 155 711
Supplementary capital/Tier 2 capital
0
0
0
Supplementary capital/Tier 2 capital
0
0
0
Total eligible own funds (Tier 1 and Tier 2 capital)
3 088 321
2 894 706
3 155 711
Capital requirement
1 166 463
1 129 046
1 162 608
Surplus of own funds (Tier 1 and Tier 2 capital)
1 921 859
1 765 660
1 993 104
Estimate basis credit risk:
Institutions
217 006
170 507
336 067
Retail
1 040 472
551 389
942 002
Local and regional authorities (incl. municipalities/county administations)
3 780 803
3 954 270
3 846 618
Investments with mortgage security in real estate
8 243 765
8 181 407
8 184 585
Investments fallen due
56 744
44 939
49 785
Covered bonds
381 847
438 601
325 440
Other holdings
34 676
43 271
22 517
Calculation basis credit risk
13 755 314
13 384 385
13 707 014
Credit risk
1 100 425
1 070 751
1 096 561
Operating risk
65 852
58 035
65 852
Credit valuation adjustments (CVA)
185
260
194
Total capital requirement assets
1 166 463
1 129 046
1 162 608
Core capital adequacy ratio
21.18 %
20.51 %
21.71 %
Supplementary capital ratio
0.00 %
0.00 %
0.00 %
Capital adequacy ratio
21.18 %
20.51 %
21.71 %
Leverage ratio
6.20 %
5.80 %
6.30 %
CAPITAL REQUIREMENT PER 31.03.2024
Core capital/Tier 1 capital
Supplementary capital/Tier 2 capital
Own funds
Minimum requirement excl. buffers
4.50 %
3.50 %
8.00 %
Protective buffer
2.50 %
0.00 %
2.50 %
Systemic risk buffer
4.50 %
0.00 %
4.50 %
Counter-cyclical capital buffer
2.50 %
0.00 %
2.50 %
Pilar 2-requirement
0.83 %
0.00 %
0.83 %
Current capital requirement incl. buffers
14.83 %
3.50 %
18.33 %
Capital requirement leverage ratio
3.00 %
0.00 %
3.00 %
Note 13 Fixed-income securities
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Acquisition cost
Market value
Acquisition cost
Market value
Acquisition cost
Market value
Certificates
336 416
336 926
188 259
191 816
0
0
Bonds
4 458 913
4 472 175
5 479 954
5 472 850
4 269 911
4 276 469
Total fixed-income securities
4 795 329
4 809 101
5 668 213
5 664 666
4 269 911
4 276 469
Fixed income securities are brought to account at market value, including accrued but not due interests.
Note 14 Loan loss provision
The copmpanies has updated its LGD-model in the first quarter of 2024. The update involves, among other things, an increase in transaction costs and haircut in connection with forced sales. This leads to an increase in the provision for losses.
The total loan loss provosions have increased by respectively 18 percent in KLP Banken Group.
Refer to Note 10 and Note 2 in the annual report for more details of the model.
Expected credit loss (ECL) loans to customers – all segments
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Opening balance ECL 01.01.2024
2 411
2 328
1 468
6 207
Transfer to stage 1
473
-421
-52
0
Transfer to stage 2
-16
44
-28
0
Transfer to stage 3
-1
-34
34
0
Net changes
-517
385
1 125
993
New losses
147
0
0
148
Write-offs
-12
-18
-6
-36
Closing balance ECL 31.03.2024
2 486
2 285
2 542
7 312
Changes (01.01.2024 - 31.03.2024)
75
-44
1 073
1 105
This includes provisions for losses on loans and receivables - unused credit
2 797
Expected credit loss (ECL) loans to customers – mortgage
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Opening balance ECL 01.01.2024
139
320
1 048
1 507
Transfer to stage 1
6
-6
0
0
Transfer to stage 2
-7
7
0
0
Transfer to stage 3
0
-3
3
0
Net changes
24
186
180
389
New losses
31
0
0
31
Write-offs
-2
0
0
-3
Closing balance ECL 31.03.2024
189
504
1 231
1 924
Changes (01.01.2024 - 31.03.2024)
51
183
183
417
This includes provisions for losses on loans and receivables - unused credit on mortgages
5
Expected credit loss (ECL) – public lending
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Opening balance ECL 01.01.2024
180
0
0
180
Transfer to stage 1
0
0
0
0
Transfer to stage 2
0
0
0
0
Transfer to stage 3
0
0
0
0
Net changes
-2
0
0
-2
New losses
1
0
0
1
Write-offs
-2
0
0
-2
Closing balance ECL 31.03.2024
178
0
0
178
Changes (01.01.2024 - 31.03.2024)
-2
0
0
-2
Expected credit loss (ECL) – credit card
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Opening balance ECL 01.01.2024
2 067
2 008
297
4 372
Transfer to stage 1
467
-415
-52
0
Transfer to stage 2
-9
37
-28
0
Transfer to stage 3
-1
-31
31
0
Net changes
-547
181
7
-358
New losses
115
0
0
115
Closing balance ECL 31.03.2024
2 094
1 781
255
4 129
Changes (01.01.2024 - 31.03.2024)
26
-227
-42
-243
This includes provisions for losses on loans and receivables - unused credit on credit card
2 791
Expected credit loss (ECL) loans to customers – senior loans
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Opening balance ECL 01.01.2024
24
0
0
24
Transfer to stage 1
0
0
0
0
Transfer to stage 2
0
0
0
0
Transfer to stage 3
0
0
0
0
Net changes
0
0
874
874
New losses
1
0
0
1
Closing balance ECL 31.03.2024
25
0
874
899
Changes (01.01.2024 - 31.03.2024)
1
0
874
875
Expected credit loss (ECL) loans to customers – overdrafts deposit accounts
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Opening balance ECL 01.01.2024
0
0
124
124
Transfer to stage 1
0
0
0
0
Transfer to stage 2
0
0
0
0
Transfer to stage 3
0
0
0
0
Net changes
0
0
59
59
Closing balance ECL 31.03.2024
0
0
183
183
Changes (01.01.2024 - 31.03.2024)
0
0
59
59
Book value of loans and receivables from customers – all segments
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Lending 01.01.2024
42 243 091
660 373
44 193
42 947 657
Transfer to stage 1
88 185
-88 036
-150
0
Transfer to stage 2
-156 267
164 346
-8 079
0
Transfer to stage 3
-2 978
-14 729
17 707
0
Net changes
-348 698
3 755
-160
-345 103
New losses
2 361 386
18 538
1
2 379 925
Write-offs
-1 998 712
-41 446
-489
-2 040 647
Lending 31.03.2024
42 186 009
702 802
53 022
42 941 833
Book value of loans and receivables from customers – mortgages
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Lending 01.01.2024
21 036 709
657 456
43 154
21 737 319
Transfer to stage 1
87 383
-87 383
0
0
Transfer to stage 2
-155 455
163 440
-7 985
0
Transfer to stage 3
-1 259
-14 633
15 892
0
Net change
-1 302 946
-20 538
-561
-1 324 045
New lending
2 202 444
18 538
0
2 220 982
Write-offs
-701 277
-17 074
0
-718 351
Lending 31.03.2024
21 165 598
699 807
50 500
21 915 906
Book value of loans and receivables from customers – public lending
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Lending 01.01.2024
19 087 958
0
0
19 087 958
Transfer to stage 1
0
0
0
0
Transfer to stage 2
0
0
0
0
Transfer to stage 3
0
0
0
0
Net change
-184 309
0
0
-184 309
New lending
101 773
0
0
101 773
Write-offs
-171 321
0
0
-171 321
Lending 31.03.2024
18 834 101
0
0
18 834 101
Book value of loans and receivables from customers – credit card
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Lending 01.01.2024
40 983
2 917
866
44 766
Transfer to stage 1
803
-653
-150
0
Transfer to stage 2
-812
906
-94
0
Transfer to stage 3
-101
-96
197
0
Net change
2 618
-80
-166
2 373
New lending
1 610
0
0
1 610
Lending 31.03.2024
45 101
2 995
654
48 750
Book value of loans to receivables from customers – senior loans
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Lending 01.01.2024
2 077 541
0
0
2 077 541
Transfer to stage 1
0
0
0
0
Transfer to stage 2
0
0
0
0
Transfer to stage 3
-1 603
0
1 603
0
Net change
9 965
0
11
9 977
New lending
55 528
0
0
55 528
Lending 31.03.2024
2 141 432
0
1 614
2 143 045
Book value of loans to receivables from customers – overdraft deposit accounts
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Lending 01.01.2024
-99
0
173
73
Transfer to stage 1
0
0
0
0
Transfer to stage 2
0
0
0
0
Transfer to stage 3
-15
0
15
0
Net change
-141
0
67
-74
New lending
32
0
1
32
Lending 31.03.2024
-224
0
255
31
Exposure - unused credit
NOK THOUSANDS
12 months ECL
Lifetime ECL (not credit impaired)
Lifetime ECL (credit impaired)
stage 1
stage 2
stage 3
Total stage 1-3
Lending 01.01.2024
1 766 778
57 144
198
1 824 120
Transfer to stage 1
5 914
-5 878
-36
0
Transfer to stage 2
-13 925
13 932
-7
0
Transfer to stage 3
0
-13
13
0
Net change
-74 520
-7 957
95
-82 382
New lending
473 772
3 344
0
477 117
Write-offs
-163 622
0
0
-163 622
Lending 31.03.2024
1 994 398
60 571
264
2 055 233
Losses recognised in the profit and loss account consist of:
NOK THOUSANDS
Q1 2024
Q1 2023
01.01.2023 -31.12.2023
Change in loss provisions in stage 1, 2 and 3
-1 331
-546
-1 328
Established losses
-9
0
-7
Recovery for previously established losses
223
210
464
Total losses in the income statement
-1 116
-336
-871
Note 15 Contingent liabilites
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Credit facilities for lending not utilized
1 269 548
1 155 321
1 275 687
Credit facilities issued credit card
261 844
253 367
262 897
Loan promise
1 081 907
997 905
885 271
Total contingent liabilities
2 613 300
2 406 594
2 423 855
Credit facilities for lending not utilized: The 'Fleksilån' product is included here; this is a credit facility which allows the customer to borrow up to a specified credit limit.
Credit facitities issued credit card: Customers' credit card limits are a contingent liabilitiy for the Bank, where the customer can choose to utilise the credit up to the allocated credit limit.
Loan commitment: The Bank issues funding certiticates that customers can use in bidding procedures for home purchases. This also inculudes other loans that have been granted but not disbursed.
Note 16 Net gain/(loss) on financial instruments
NOK THOUSANDS
Q1 2024
Q1 2023
01.01.2023 -31.12.2023
Net gain/(loss) on fixed-income securities
7 438
-5 117
7 882
Net gain/(loss) financial derivatives and realized amortization linked to lending
-1
-8
284
Net gain/(loss) financial derivatives and realized repurchase of own debt
-1 496
-2 671
-9 933
Net accrual of over/under rates borrowings and securities
1 380
1 380
5 521
Other financial income and expenses
-420
-315
-1 288
Total net gain/(loss) on financial instruments
6 901
-6 731
2 466
Note 17 Leases
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Property
RIGHT-OF-USE ASSETS
Opening balance 01.01.
14 495
16 365
16 365
Depreciation
-468
-468
-1 870
Closing balance
14 027
15 898
14 495
LEASE LIABILITIES
Opening balance 01.01.
15 131
16 761
16 761
Repayments
-418
-402
-1 630
Closing balance
14 713
16 359
15 131
NOK THOUSANDS
Q1 2024
Q1 2023
01.01.2023 -31.12.2023
Property
Interest expense lease liabilities
69
76
297
Interest expense lease liabilities
69
76
297
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 AS.
Note 18 Pension obligations - own employees
NOK THOUSANDS
31.03.2024
31.03.2023
31.12.2023
Capitalized net liability
43 999
32 092
32 092
Pension costs taken to profit/loss
3 776
3 410
13 635
Finance costs taken to profit/loss
420
315
1 287
Actuarial gains and losses incl. social security contributions
-10 142
-1 389
13 013
Premiums/supplement paid-in including admin
-3 677
-1 879
-16 029
Capitalized net liability
34 377
32 550
43 999
ASSUMPTIONS
31.03.2024
31.03.2023
31.12.2023
Discount rate
3.45%
3.00%
3.10%
Salary growth
3.50%
3.50%
3.50%
The National Insurance basic amount (G)
3.25%
3.25%
3.25%
Pension increases
2.80%
2.60%
2.80%
Social security contribution
14.10%
14.10%
14.10%
Capital activity tax
5.00%
5.00 %
5.00%
The effect of changes in the assumptions is a reduction of the obligation by NOK 10.1 million as of 31.03.2024. The change is recognized in comprehensive income.
Quarterly earnings trend
NOK MILLIONS
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Interest income
689.5
686.5
634.0
551.4
518.2
Interest expense
-562.9
-561.5
-515.1
-440.7
-408.1
Net interest income
126.6
125.0
118.9
110.6
110.1
Commision income and income from banking services
7.4
7.8
8.4
8.0
6.5
Commision cost and cost from banking services
-0.7
-0.8
-0.7
-0.6
-0.7
Net charges and commission income
6.7
7.0
7.7
7.4
5.8
Other fee income
15.6
15.3
15.3
15.3
15.3
Net gain/(loss) financial instruments
6.9
5.4
6.4
-2.6
-6.7
Total other operating income
22.5
20.7
21.7
12.7
8.6
Salaries and administrative costs
-25.6
-27.7
-20.6
-21.1
-22.1
Depreciation
-0.8
-0.9
-0.9
-1.0
-1.0
Other operating expenses
-53.2
-41.9
-44.6
-40.3
-47.9
Net loan losses
-1.1
0.2
-0.6
-0.1
-0.3
Total operating expenses
-80.6
-70.4
-66.7
-62.5
-71.4
Operating profit/loss before tax
75.1
82.3
81.6
68.3
53.1
Tax ordinary income
-0.9
-19.6
-19.6
-16.4
37.0
Profit/loss for the period
74.2
62.7
62.0
51.9
90.1
Other comprehensive income
10.1
-28.3
-2.0
15.9
1.4
Tax on other comprehensive income
-2.5
7.1
0.5
-4.0
-0.3
Other comprehensive income for the period
7.6
-21.2
-1.5
12.0
1.0
Comprehensive income for the period
81.8
41.5
60.5
63.9
91.2
Key figures – accumulated
NOK MILLIONS
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Pre-tax income
75.1
285.4
203.1
121.5
53.1
Net interest income
126.6
464.7
339.7
220.8
110.2
Other operating income
22.3
89.2
66.9
43.9
21.1
Other operating cost and depreciation
-80.6
-270.9
-200.6
-133.9
-71.4
Net gain/(loss) financial instruments
6.9
2.5
-2.9
-9.3
-6.7
Deposits
14 157.5
14 060.5
14 350.6
14 524.0
14 136.2
Lending customers
24 101.5
23 855.0
23 753.6
23 481.3
23 332.8
Lending with public sector guarantee
18 735.1
19 001.2
19 370.6
19 449.1
19 384.1
Non-performing loans
53.0
44.2
52.1
42.6
45.6
Total liabilities created on issuance of securities