KLP Kommunekreditt ASQ2 2024
Interim Financial Statements 2/2024
Main features by second quarter end:
- Increased net interest income
- Reduced lending volume
- Good P&L development
Objective
The Company's objective is financing KLP Banken's loans to municipalities, county administrations and enterprises carrying out public sector assignments. Loans to companies must be guaranteed by municipalities, county administrations or the central government under the Norwegian Local Government Act. Guarantees are to be of the ordinary surety type covering both repayments and interest. The lending business is principally funded issuing covered bonds.
KLP Kommunekreditt AS is a wholly owned subsidiary of KLP Banken AS. The KLP Banken AS is owned by Kommunal Landspensjonskasse (KLP).
Income statement
The operating profit before tax for the second quarter was NOK 18.6 (17.6) million. Year-to-date, the profit before tax is NOK 45.3 (35.4) million. The change in profit is mainly due to growth in net interest income and positive effects from changes in the value of financial instruments.
Net interest income as at the second quarter was NOK 56.9 (51.8) million. The change is mainly due to higher interest rates compared to the first half of last year.
Net profit and loss effects of financial instruments as at the second quarter were NOK -2.2 (-5.7) million. This mainly includes losses on liquidity placements and costs associated with the repurchase of borrowings. Realized and unrealized changes in the value of the company’s liquidity placements have so far this year resulted in an effect of NOK 5.4 (-1.7) million. The restructuring of the borrowing portfolio is done regularly to adjust the average maturity. This may result in both losses and gains. Accounting losses due to the repurchase of own debt amount to NOK -7.4 (-4.0) million so far this year.
Operating expenses in the first half of the year were NOK -9.5 (-10.7) million. The company has not had any realized loan losses and has very low loss provisions.
Lending/total assets
The company’s loans to customers as of 30 June 2024 were NOK 18.3 (19.5) billion. Year-to-date, net lending growth has been NOK -0.7 billion. Borrowers are municipalities, county municipalities, and companies with municipal guarantees. Total assets was NOK 20.7 (21.9) billion.
Liquid investments
The security mass related to borrowing financing is subject to strict requirements. In addition to loans to the public sector, it consists of secure securities and deposits in other banks. The securities consist of certificates and bonds with very high credit quality, mainly covered bonds. As of 30 June 2024, the company’s interest-bearing securities had a market value of NOK 1.8 (1.9) billion.
Borrowing
The company’s financing consists of covered bonds (OMF) and loans from KLP Banken AS. The company had NOK 0.7 (2.3) billion in intra-group debt at the end of the quarter. Outstanding OMF debt was NOK 18.8 (18.6) billion. NOK 3.0 billion in new covered bonds were issued in the first half of the year. Net repurchase or sale of own holdings from previous issues amounted to NOK -1.5 (0.2) billion per the second quarter. All OMF issued have an Aaa rating from Moody’s.
Risk and capital adequacy
KLP Kommunekreditt AS has established a risk management framework to ensure that risks are identified, analyzed, and managed through guidelines, frameworks, routines, and instructions. The company should have a cautious risk profile, and earnings should primarily result from lending and borrowing activities as well as liquidity management. This means that the company should have low market risk. Interest rate risk arising from lending and borrowing activities is reduced using derivatives. The company shall have sufficient long-term financing within established frameworks. The credit risk in the company is very low, and loans are limited to those with municipal risk. The company’s liquidity is placed in banks with high credit quality requirements and in securities in line with board-approved credit lines.
At the end of the second quarter of 2024, core capital i.a.w. the capital adequacy rules were NOK 947.5 (878.5) million. Loans to municipalities and county administrations are risk-weighted 20 per cent in accordance with the authorities' capital adequacy regulations. KLP Kommunekreditt AS has a core capital adequacy and capital adequacy ratio of 23.0 (20.2) percent per the second quarter. The minimum statutory requirement is 17.5 percent capital adequacy ratio. Leverage ratio was 4.6 (4.0) per cent. The requirement here is 3.0 per cent.
Future prospects
The presence of KLP Kommunekreditt AS together with KLP in the public lending market contributes to competition, thereby ensuring that the public sector has access to long-term financing on favorable terms. Combined growth in recent years shows that the market position is solid.
High credit quality in the loan portfolios shall contribute to KLP Kommunekreditt AS achieving favorable borrowing terms. Government regulation of banks and financial institutions means that a number of regulatory requirements for capital and liquidity must be met. This requires ongoing earnings that make it possible to meet such requirements.
The market for loans to the municipal sector continues to grow, and about one-third of the loans are financed in the securities market rather than by the financial institutions. KLP Kommunekreditt AS is well-capitalized and has an advantage as a stable and long-term lender with a good reputation in a low-risk market. Development in the financial markets are important in terms of the extent to which KLP Kommunekreditt AS can finance its lending activities in a way that provides sufficient profitability and growth opportunities going forward.
Norwegian municipalities have developed a good and comprehensive service offering to the population. Increased life expectancy, demographics, income development, and climate risk provide reasons to expect significant investment needs in the public sector also in the coming years. However, Norwegian society is currently experiencing a period of macroeconomic uncertainty that will also affect the framework conditions for the public sector. This uncertainty has also led to higher costs for the municipal sector through increased inflation and higher interest rates.
Higher costs due to increased inflation and higher interest rates may result in lower loan growth than has been normal in recent years, but this has not yet occurred, and loan growth remains high. The demand for loans to projects that contribute to climate adaptation is increasing and will most likely continue to increase in the coming years.
The board assumes that there also will be a need for significant long-term and stable financing for public borrowers in the future. KLP Banken’s expertise in municipal financing should, regardless of the size of its own balance sheet, be used for the management assignment for KLP. KLP Kommunekreditt AS and KLP together shall continue to be a central player as a provider of loans for investment purposes in the public sector.
Trondheim, 14 August 2024 | ||
AAGE E. SCHAANNING | JANICKE E. FALKENBERG | |
Chair | ||
AUD NORUNN STRAND | JONAS V. KÅRSTAD | |
CARL STEINAR LOUS Managing Director |
Statement pursuant to section § 5-6 of the securities trading act
KLP Kommunekreditt AS
We hereby confirm that the half yearly financial statement for the company for the period 1 January through 30 June 2024 to the best of our knowledge have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the company taken as a whole.
To the best of our knowledge, the half-yearly report gives a true and fair overview of important events that occurred during the accounting period and their impact on the half-yearly financial statement, and a description of the principal risks and uncertainties facing the company over the next accounting period.
Trondheim, 14 August 2024 | ||
AAGE E. SCHAANNING | JANICKE E. FALKENBERG | |
Chair | ||
AUD NORUNN STRAND | JONAS V. KÅRSTAD | |
CARL STEINAR LOUS Managing Director | ||
Income statementKLP Kommunekreditt AS
NOTE | NOK THOUSANDS | Q2 2024 | Q2 2023 | 01.01.2024 -30.06.2024 | 01.01.2023 -30.06.2023 | 01.01.2023 -31.12.2023 |
---|---|---|---|---|---|---|
Interest income, effective interest method | 247 152 | 205 781 | 496 808 | 388 102 | 891 875 | |
Other interest income | 58 356 | 49 655 | 114 328 | 102 649 | 209 113 | |
3 | Total interest income | 305 508 | 255 436 | 611 136 | 490 751 | 1 100 988 |
Interest expense, effective interest method | -246 234 | -203 837 | -491 894 | -389 716 | -879 623 | |
Other interest expenses | -31 434 | -25 139 | -62 320 | -49 228 | -107 746 | |
3 | Total interest costs | -277 668 | -228 976 | -554 214 | -438 944 | -987 369 |
3 | Net interest income | 27 840 | 26 460 | 56 922 | 51 807 | 113 619 |
17 | Net gain/(loss) on financial instruments | -4 967 | -3 157 | -2 187 | -5 686 | -2 304 |
Total net gain/(loss) on financial instruments | -4 967 | -3 157 | -2 187 | -5 686 | -2 304 | |
Other operating expenses | -4 234 | -5 718 | -9 470 | -10 692 | -22 717 | |
18 | Net loan losses | 4 | 0 | 6 | -2 | 4 |
Total operating expenses | -4 230 | -5 718 | -9 464 | -10 694 | -22 713 | |
Operating profit/loss before tax | 18 643 | 17 585 | 45 271 | 35 426 | 88 603 | |
Tax ordinary income | 880 | -3 869 | 4 | 11 934 | 235 | |
Profit for the period | 19 524 | 13 716 | 45 275 | 47 360 | 88 838 | |
Other comprehensive income for the period | 0 | 0 | 0 | 0 | 0 | |
Comprehensive income for the period | 19 524 | 13 716 | 45 275 | 47 360 | 88 838 |
BalanceKLP Kommunekreditt AS
NOTE | NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|---|
ASSETS | ||||
5 | Loans to credit institutions | 524 067 | 469 229 | 568 248 |
4,5 | Loans to customers | 18 310 780 | 19 449 096 | 19 001 225 |
5,6,15 | Fixed-income securities | 1 760 279 | 1 870 641 | 1 500 050 |
5,6 | Financial derivatives | 113 351 | 142 727 | 108 137 |
12 | Other assets | 12 529 | 16 996 | 10 618 |
Total assets | 20 721 007 | 21 948 689 | 21 188 279 | |
LIABILITIES AND OWNERS EQUITY | ||||
LIABILITIES | ||||
5,9 | Debt to credit institutions | 751 377 | 2 309 036 | 701 570 |
5,7 | Debt securities issued | 18 832 822 | 18 555 159 | 19 390 805 |
5,6 | Financial derivatives | 32 249 | 43 361 | 23 233 |
Deferred tax liabilities | 1 695 | 2 129 | 21 622 | |
13 | Other liabilities | 108 239 | 111 143 | 81 817 |
13 | Provision for accrued costs and liabilities | 66 | 126 | 21 |
Total liabilities | 19 726 448 | 21 020 954 | 20 219 067 | |
EQUITY | ||||
Share capital | 391 500 | 391 500 | 391 500 | |
Share premium | 363 500 | 363 500 | 363 500 | |
Other owners' equity | 194 284 | 125 374 | 214 212 | |
Unallocated profit/loss | 45 275 | 47 360 | 0 | |
Total owners' equity | 994 559 | 927 734 | 969 212 | |
Total liabilities and equity | 20 721 007 | 21 948 689 | 21 188 279 |
Statement of changes in equityKLP Kommunekreditt AS
2024 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners' equity |
---|---|---|---|---|
Equity 1 January 2024 | 391 500 | 363 500 | 214 212 | 969 212 |
Profit for the period | 0 | 0 | 45 275 | 45 275 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Total comprehensive income for the period | 0 | 0 | 45 275 | 45 275 |
Group contribution received | 0 | 0 | 70 651 | 70 651 |
Group contribution made | 0 | 0 | -90 578 | -90 578 |
Total transactions with the owners | 0 | 0 | -19 927 | -19 927 |
Equity 30 June 2024 | 391 500 | 363 500 | 239 559 | 994 559 |
2023 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners' equity |
---|---|---|---|---|
Equity 1 January 2023 | 391 500 | 363 500 | 145 102 | 900 102 |
Profit for the period | 0 | 0 | 47 360 | 47 360 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Total comprehensive income for the period | 0 | 0 | 47 360 | 47 360 |
Group contribution received | 0 | 0 | 69 944 | 69 944 |
Group contribution made | 0 | 0 | -89 671 | -89 671 |
Total transactions with the owners | 0 | 0 | -19 728 | -19 728 |
Equity 30 June 2023 | 391 500 | 363 500 | 172 734 | 927 734 |
2023 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners' equity |
---|---|---|---|---|
Equity 1 January 2023 | 391 500 | 363 500 | 145 102 | 900 102 |
Income for the year | 0 | 0 | 88 838 | 88 838 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Total comprehensive income for the period | 0 | 0 | 88 838 | 88 838 |
Group contribution received | 0 | 0 | 69 944 | 69 944 |
Group contribution made | 0 | 0 | -89 671 | -89 671 |
Total transactions with the owners | 0 | 0 | -19 728 | -19 728 |
Equity 31 December 2023 | 391 500 | 363 500 | 214 212 | 969 212 |
Statement of cash flowKLP Kommunekreditt AS
NOK THOUSANDS | 01.01.2024 -30.06.2024 | 01.01.2023 -30.06.2023 | 01.01.2023 -31.12.2023 |
---|---|---|---|
OPERATIONAL ACTIVITIES | |||
Payments received from customers - interest, commission & charges | 505 280 | 355 260 | 794 436 |
Disbursements on loans customers & credit institutions | -256 922 | -851 278 | -1 069 415 |
Receipts on loans customers & credit institutions | 926 277 | 519 943 | 1 300 680 |
Disbursements on operations | -12 293 | -12 092 | -22 301 |
Net receipts/disbursements from operating activities | 32 618 | 1 793 | -38 809 |
Interest from credit institutions | 7 781 | 4 668 | 18 079 |
Net cash flow from operating activities | 1 202 740 | 18 294 | 982 671 |
INVESTMENT ACTIVITIES | |||
Payments on the purchase of securities | -856 909 | -200 397 | -442 481 |
Receipts on sale of securities | 603 316 | 1 051 281 | 1 666 175 |
Receipts of interest from securities | 37 267 | 39 819 | 77 787 |
Net cash flow from investment activities | -216 325 | 890 703 | 1 301 482 |
FINANCING ACTIVITIES | |||
Receipts on loans from credit institutions | 3 000 000 | 4 000 000 | 6 000 000 |
Repayments and redemption of securities debt | -5 000 000 | -5 000 000 | -5 000 000 |
Change in securities debt, own funds | 1 424 412 | -200 368 | -1 407 062 |
Net payment of interest on loans credit institions | -446 237 | -329 296 | -775 168 |
Receipts in internal funding | 350 000 | 1 205 000 | 2 205 000 |
Disbursements in internal funding | -300 000 | -605 000 | -3 210 000 |
Net payment of interest on internal funding | -16 891 | -32 053 | -67 524 |
Payment on group contribution | -19 927 | -19 728 | -19 728 |
Net cash flows from financing activities | -1 008 644 | -981 445 | -2 274 481 |
Net cash flow during the period | -22 229 | -72 448 | 9 672 |
Cash and cash equivalents at the start of the period | 535 356 | 525 685 | 525 685 |
Cash and cash equivalents at the end of the period | 513 127 | 453 237 | 535 356 |
Net receipts/disbursements | -22 229 | -72 448 | 9 672 |
Notes to the financial statementKLP Kommunekreditt AS
Note 1 General information
KLP Kommunekreditt AS was formed on 25 August 2009. The company is a credit enterprise that provides or acquires public sector loans that are guaranteed by the Norwegian municipalities. Borrowers provide surety covering both repayments and interest.
The object of the Company is primarily to finance activities by issuing covered bonds with security in public sector guarantees loans. Parts of these loans are listed on Oslo Børs (Stock Exchange).
KLP Kommunekreditt AS is registered and domiciled in Norway. It'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.
Note 2 Accounting principles
The interim report includes the interim Financial Statements of KLP Kommunekreditt AS for the period 1 January 2024 – 30 June 2024, with a specification of the results in the Q2.
The financial statements for KLP Kommunekreditt AS 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".
The interim Financial Statements has not been audited.
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 | Q2 2024 | Q2 2023 | 01.01.2024 -30.06.2024 | 01.01.2023 -30.06.2023 | 01.01.2023 -31.12.2023 |
---|---|---|---|---|---|
Interest income on loans to customers | 240 736 | 202 259 | 485 832 | 381 440 | 873 796 |
Interest income on loans to credit institutions | 6 416 | 3 522 | 10 976 | 6 662 | 18 079 |
Total interest income, effective interest method | 247 152 | 205 781 | 496 808 | 388 102 | 891 875 |
Interest income on bonds and certificates | 20 669 | 18 361 | 39 946 | 40 715 | 77 406 |
Other interest income | 37 687 | 31 294 | 74 382 | 61 934 | 131 708 |
Total other interest income | 58 356 | 49 655 | 114 328 | 102 649 | 209 113 |
Total interest income | 305 508 | 255 436 | 611 136 | 490 751 | 1 100 988 |
Interest expenses on debt from KLP Banken AS | -9 760 | -20 378 | -16 697 | -33 545 | -66 549 |
Interest expenses on issued securities | -236 474 | -183 459 | -475 196 | -356 171 | -813 073 |
Total interest expenses, effective interest method | -246 234 | -203 837 | -491 894 | -389 716 | -879 623 |
Other interest expenses | -31 434 | -25 139 | -62 320 | -49 228 | -107 746 |
Total other interest expenses | -31 434 | -25 139 | -62 320 | -49 228 | -107 746 |
Total interest expenses | -277 668 | -228 976 | -554 214 | -438 944 | -987 369 |
Net interest income | 27 840 | 26 460 | 56 922 | 51 807 | 113 619 |
Note 4 Loans to customers
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
Loans to customers before write-downs | 18 230 872 | 19 442 060 | 18 895 059 |
Write-downs steps 1 and 2 | -174 | -186 | -180 |
Loans to customers after write-downs | 18 230 698 | 19 441 874 | 18 894 880 |
Accrued interest | 173 451 | 139 720 | 192 899 |
Fair value hedging | -93 369 | -132 498 | -86 554 |
Loans to customers | 18 310 780 | 19 449 096 | 19 001 225 |
All lending comprises loans to, or loans guaranteed by, Norwegian municipalities and county administrations, including loans to local government enterprises and intermunicipal (public sector lending). Guarantees are of the ordinary surety type covering both repayments and interest.
Note 5 Categories of financial instruments
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 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 | 1 760 279 | 1 760 279 | 1 870 641 | 1 870 641 | 1 500 050 | 1 500 050 |
Financial derivatives | 113 351 | 113 351 | 142 727 | 142 727 | 108 137 | 108 137 |
Total financial assets at fair value through profit and loss | 1 873 630 | 1 873 630 | 2 013 368 | 2 013 368 | 1 608 187 | 1 608 187 |
FINANCIAL ASSETS FAIR VALUE HEDGING | ||||||
Lending to Norwegian municipalities | 1 715 131 | 1 727 651 | 1 545 582 | 1 552 198 | 1 584 628 | 1 578 296 |
Total financial assets fair value hedging | 1 715 131 | 1 727 651 | 1 545 582 | 1 552 198 | 1 584 628 | 1 578 296 |
FINANCIAL ASSETS AT AMORTIZED COST | ||||||
Loans to and receivables from credit institutions | 524 067 | 524 067 | 469 229 | 469 229 | 568 248 | 568 248 |
Lending to Norwegian municipalities | 16 595 649 | 16 595 649 | 17 903 514 | 17 903 514 | 17 416 597 | 17 416 597 |
Total financial assets at amortized cost | 17 119 716 | 17 119 716 | 18 372 743 | 18 372 743 | 17 984 845 | 17 984 845 |
Total financial assets | 20 708 478 | 20 720 998 | 21 931 693 | 21 938 309 | 21 177 661 | 21 171 328 |
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS | ||||||
Financial derivatives | 32 249 | 32 249 | 43 361 | 43 361 | 23 233 | 23 233 |
Total financial liabilities at fair value through profit and loss | 32 249 | 32 249 | 43 361 | 43 361 | 23 233 | 23 233 |
FINANCIAL LIABILITIES FAIR VALUE HEDGING | ||||||
Covered bonds issued | 1 702 310 | 1 714 791 | 1 679 489 | 1 679 388 | 1 713 024 | 1 722 804 |
Total financial liabilities fair value hedging | 1 702 310 | 1 714 791 | 1 679 489 | 1 679 388 | 1 713 024 | 1 722 804 |
FINANCIAL LIABILITIES AT AMORTIZED COST | ||||||
Liabilities to credit institutions | 751 377 | 751 377 | 2 309 036 | 2 309 036 | 701 570 | 701 570 |
Covered bonds issued | 17 130 513 | 17 200 401 | 16 875 670 | 16 857 885 | 17 677 781 | 17 707 656 |
Total financial liabilities at amortized cost | 17 881 889 | 17 951 777 | 19 184 706 | 19 166 922 | 18 379 351 | 18 409 226 |
Total financial liabilities | 19 616 448 | 19 698 818 | 20 907 556 | 20 889 670 | 20 115 608 | 20 155 262 |
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.
Fair value of loans to Norwegian local administrations
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 6.
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 marked interest rates. This is valued in Level 2 in the valuation hierarchy, cf. Note 6.
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 6.
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 6.
Note 6 Fair value hierarchy
30.06.2024 NOK THOUSANDS | Level 1 | Level 2 | Level 3 | Total |
---|---|---|---|---|
ASSETS BOOKED AT FAIR VALUE | ||||
Fixed-income securities | 99 079 | 1 661 200 | 0 | 1 760 279 |
Financial derivatives | 0 | 113 351 | 0 | 113 351 |
Total assets at fair value | 99 079 | 1 774 551 | 0 | 1 873 630 |
LIABILITIES BOOKED AT FAIR VALUE | ||||
Financial derivatives (liabilities) | 0 | 32 249 | 0 | 32 249 |
Total financial liabilities at fair value | 0 | 32 249 | 0 | 32 249 |
30.06.2023 NOK THOUSANDS | Level 1 | Level 2 | Level 3 | Total |
---|---|---|---|---|
ASSETS BOOKED AT FAIR VALUE | ||||
Fixed-income securities | 99 218 | 1 771 423 | 0 | 1 870 641 |
Financial derivatives | 0 | 142 727 | 0 | 142 727 |
Total assets at fair value | 99 218 | 1 914 150 | 0 | 2 013 368 |
LIABILITIES BOOKED AT FAIR VALUE | ||||
Financial derivatives (liabilities) | 0 | 43 361 | 0 | 43 361 |
Total financial liabilities at fair value | 0 | 43 361 | 0 | 43 361 |
31.12.2023 NOK THOUSANDS | Level 1 | Level 2 | Level 3 | Total |
---|---|---|---|---|
ASSETS BOOKED AT FAIR VALUE | ||||
Fixed-income securities | 99 073 | 1 400 977 | 0 | 1 500 050 |
Financial derivatives | 0 | 108 137 | 0 | 108 137 |
Total assets at fair value | 99 073 | 1 509 114 | 0 | 1 608 187 |
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 |
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. The stated fair value of these liabilities is determined by methods qualifying for Level 2.
There have been no transfers between Level 1 and Level 2.
Note 7 Debt securities issued - stock exchange listed covered bonds and certificates
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
Bond debt, nominal amount | 19 700 000 | 19 700 000 | 21 700 000 |
Adjustments | -45 387 | -61 292 | -8 726 |
Accrued interest | 178 209 | 131 451 | 146 531 |
Own holdings, nominal amount | -1 000 000 | -1 215 000 | -2 447 000 |
Total debt securities issued | 18 832 822 | 18 555 159 | 19 390 805 |
Interest rate on borrowings through the issuance of securities on the reporting date: | 5.13 % | 4.16 % | 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 THOUSANDS | Balance sheet 31.12.2023 | Issued | Matured/ redeemed | Other adjustments | Balance sheet 30.06.2024 |
---|---|---|---|---|---|
Bond debt, nominal amount | 21 700 000 | 3 000 000 | -5 000 000 | 0 | 19 700 000 |
Adjustments | -8 726 | 0 | 0 | -36 661 | -45 387 |
Accrued interest | 146 531 | 0 | 0 | 31 678 | 178 209 |
Own holdings, nominal amount | -2 447 000 | 0 | 1 447 000 | 0 | -1 000 000 |
Total debt securities issued | 19 390 805 | 3 000 000 | -3 553 000 | -4 983 | 18 832 822 |
Note 8 Over-collateralisation
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
SECURITY POOL | |||
Loans to customers | 18 323 474 | 19 481 765 | 19 006 509 |
Financial derivatives (net) | 81 026 | 99 275 | 84 952 |
Additional collateral ¹ | 2 933 148 | 3 222 704 | 4 196 638 |
Total security pool | 21 337 648 | 22 803 744 | 23 288 100 |
Outstanding covered bonds incl. own funds and premium/discount | 19 921 164 | 19 758 822 | 21 894 289 |
Coverage of the security pool | 107.1 % | 115.4 % | 106.4 % |
¹ Additional collateral includes loans and receivables from credit institutions and bonds and certificates. 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 2 percent of the value of the outstanding covered bonds.
Note 9 Liabilities to credit institutions
30.06.2024 NOK THOUSANDS | ||||
---|---|---|---|---|
Due date | Nominal | Accrued interest | Book value | |
Debt to KLP Banken AS | 15.12.2025 | 400 000 | 734 | 400 734 |
Debt to KLP Banken AS | 15.12.2025 | 350 000 | 642 | 350 642 |
Total liabilities to credit institutions | 750 000 | 1 377 | 751 377 | |
Interest rate on debt to credit institutions at the reporting date: | 4.72 % | |||
The interest rate is calculated as a weighted average of the act/360 basis. |
30.06.2023 NOK THOUSANDS | ||||
---|---|---|---|---|
Due date | Nominal | Accrued interest | Book value | |
Debt to KLP Banken AS | 16.12.2024 | 100 000 | 175 | 100 175 |
Debt to KLP Banken AS | 16.12.2024 | 1 505 000 | 2 635 | 1 507 635 |
Debt to KLP Banken AS | 16.12.2024 | 400 000 | 700 | 400 700 |
Debt to KLP Banken AS | 16.12.2024 | 300 000 | 525 | 300 525 |
Total liabilities to credit institutions | 2 305 000 | 4 036 | 2 309 036 | |
Interest rate on debt to credit institutions at the reporting date: | 3.94 % | |||
The interest rate is calculated as a weighted average of the act/360 basis. |
31.12.2023 NOK THOUSANDS | ||||
---|---|---|---|---|
Due date | Nominal | Accrued interest | Book value | |
Debt to KLP Banken AS | 15.12.2025 | 700 000 | 1 570 | 701 570 |
Total liabilities to credit institutions | 700 000 | 1 570 | 701 570 | |
Interest rate on debt to credit institutions at the reporting date: | 4.75 % | |||
The interest rate is calculated as a weighted average of the act/360 basis. |
Note 10 Financial assets and liabilities subject to net settlement
30.06.2024 NOK THOUSANDS | Related sums that are not presented net | |||||
---|---|---|---|---|---|---|
Gross financial assets/ liabilites | Gross assets/ liabilites presented net | Book value | Financial instruments | Security in cash | Net recognised value | |
ASSETS | ||||||
Financial derivatives | 113 351 | 0 | 113 351 | -32 249 | -87 471 | 11 990 |
Total | 113 351 | 0 | 113 351 | -32 249 | -87 471 | 11 990 |
LIABILITIES | ||||||
Financial derivatives | 32 249 | 0 | 32 249 | -32 249 | 0 | 0 |
Total | 32 249 | 0 | 32 249 | -32 249 | 0 | 0 |
30.06.2023 NOK THOUSANDS | Related sums that are not presented net | |||||
---|---|---|---|---|---|---|
Gross financial assets/ liabilites | Gross assets/ liabilites presented net | Book value | Financial instruments | Security in cash | Net recognised value | |
ASSETS | ||||||
Financial derivatives | 142 727 | 0 | 142 727 | -43 361 | 0 | 99 366 |
Total | 142 727 | 0 | 142 727 | -43 361 | 0 | 99 366 |
LIABILITIES | ||||||
Financial derivatives | 43 361 | 0 | 43 361 | -43 361 | 0 | 0 |
Total | 43 361 | 0 | 43 361 | -43 361 | 0 | 0 |
31.12.2023 NOK THOUSANDS | Related sums that are not presented net | |||||
---|---|---|---|---|---|---|
Gross financial assets/ liabilites | Gross assets/ liabilites presented net | Book value | Financial instruments | Security in cash | Net recognised value | |
ASSETS | ||||||
Financial derivatives | 108 137 | 0 | 108 137 | -23 233 | 0 | 84 905 |
Total | 108 137 | 0 | 108 137 | -23 233 | 0 | 84 905 |
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 Kommunekreditt AS. The note shows derivative positions in the financial statement.
Note 11 Transactions with related parties
NOK THOUSANDS | 01.01.2024 -30.06.2024 | 01.01.2023 -30.06.2023 | 01.01.2023 -31.12.2023 |
---|---|---|---|
KLP Banken AS, interest on borrowing | -16 697 | -33 545 | -66 549 |
KLP Banken AS, interest on deposits | 5 157 | 3 690 | 8 646 |
KLP Banken AS, administrative services (at cost) | -6 426 | -7 073 | -13 966 |
KLP Kapitalforvaltning AS, fees for services provided | 0 | 0 | -77 |
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
BALANCES | |||
KLP Banken AS, debt to credit institutions | -751 377 | -2 309 036 | -701 570 |
KLP Banken AS, deposit | 219 034 | 208 922 | 213 878 |
KLP Banken AS, loan settlement | 10 950 | 15 264 | 10 618 |
Net outstanding accounts to: | |||
KLP Banken AS | -294 | -1 524 | -1 627 |
KLP Kapitalforvaltning AS | 0 | 0 | -77 |
There are no direct salary cost in KLP Kommunekreditt 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 12 Other assets
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
Intercompany receivables | 10 950 | 15 264 | 10 618 |
Prepaid expenses | 1 580 | 1 732 | 0 |
Total other assets | 12 529 | 16 996 | 10 618 |
Note 13 Other liabilities and provision for accrued costs
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
Creditors | 221 | 116 | 113 |
Intercompany payables | 294 | 1 524 | 1 704 |
Short-term balances with credit institutions | 87 800 | 101 400 | 80 000 |
Other liabilities | 19 923 | 8 102 | 0 |
Total other liabilities | 108 239 | 111 143 | 81 817 |
VAT | 66 | 126 | 21 |
Total accrued costs and liabilities | 66 | 126 | 21 |
Note 14 Capital adequacy
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
Share capital and share premium fund | 755 000 | 755 000 | 755 000 |
Other owners' equity | 194 284 | 125 374 | 214 212 |
Total owners' equity | 949 284 | 880 374 | 969 212 |
Adjustments due to requirements for proper valuation | -1 760 | -1 871 | -1 500 |
Core capital/Tier 1 capital | 947 524 | 878 503 | 967 712 |
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) | 947 524 | 878 503 | 967 712 |
Capital requirement | 330 090 | 347 882 | 340 885 |
Surplus of own funds (Tier 1 and Tier 2 capital) | 617 434 | 530 622 | 626 827 |
ESTIMATE BASIS CREDIT RISK: | |||
Institutions | 114 866 | 125 444 | 137 401 |
Local and regional authorities | 3 708 250 | 3 954 738 | 3 846 618 |
Covered bonds | 145 223 | 145 816 | 120 454 |
Other items | 1 580 | 1 732 | 0 |
Calculation basis credit risk | 3 969 919 | 4 227 729 | 4 104 472 |
Credit risk | 317 593 | 338 218 | 328 358 |
Operating risk | 12 335 | 9 432 | 12 335 |
Credit valuation adjustment (CVA) | 162 | 232 | 192 |
Total capital requirement assets | 330 090 | 347 882 | 340 885 |
Core capital adequacy ratio | 23.0 % | 20.2 % | 22.7 % |
Supplementary capital ratio | 0.0 % | 0.0 % | 0.0 % |
Capital adequacy ratio | 23.0 % | 20.2 % | 22.7 % |
Leverage ratio | 4.6 % | 4.0 % | 4.6 % |
CAPITAL REQUIREMENT PER 30.06.2024 | Core capital/ Tier 1 capital | Supplementary capital/Tier 2 capital | Own funds |
---|---|---|---|
Minimum requirement excl. buffers | 4.5 % | 3.5 % | 8.0 % |
Protective buffer | 2.5 % | 0.0 % | 2.5 % |
Systemic risk buffer | 4.5 % | 0.0 % | 4.5 % |
Counter-cyclical capital buffer | 2.5 % | 0.0 % | 2.5 % |
Current capital requirement incl. buffers | 14.0 % | 3.5 % | 17.5 % |
Capital requirement leverage ratio | 3.0 % | 0.0 % | 3.0 % |
Note 15 Fixed-income securities
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 | |||
---|---|---|---|---|---|---|
Acquisition cost | Market value | Acquisition cost | Market value | Acquisition cost | Market value | |
Certificates | 98 941 | 99 079 | 213 414 | 216 767 | 0 | 0 |
Bonds | 1 655 504 | 1 661 200 | 1 656 044 | 1 653 874 | 1 498 025 | 1 500 050 |
Total fixed-income securities | 1 754 445 | 1 760 279 | 1 869 458 | 1 870 641 | 1 498 025 | 1 500 050 |
Fixed income securities are brought to account at market value, including accrued but not due interests.
Note 16 Contingent liabilites
NOK THOUSANDS | 30.06.2024 | 30.06.2023 | 31.12.2023 |
---|---|---|---|
Loan commitment | 43 000 | 22 650 | 70 850 |
Total contingent liabilities | 43 000 | 22 650 | 70 850 |
Note 17 Net gain/(loss) on financial instruments
NOK THOUSANDS | Q2 2024 | Q2 2023 | 01.01.2024 -30.06.2024 | 01.01.2023 -30.06.2023 | 01.01.2023 -31.12.2023 |
---|---|---|---|---|---|
Net gain/(loss) on fixed-income securities | 2 491 | -8 | 5 406 | -1 696 | 3 763 |
Net gain/(loss) financial derivatives and realized amortization linked to lending | -189 | 0 | -189 | 0 | -46 |
Net gain/(loss) financial derivatives and realized repurchase of own debt | -7 269 | -3 149 | -7 404 | -3 990 | -6 020 |
Total net gain/(loss) on financial instruments | -4 967 | -3 157 | -2 187 | -5 686 | -2 304 |
Note 18 Loan loss provision
Changes in provisions for expected losses in second quarter 2024 are related to changes in lending volume. No other changes have been made to the assumptions or input to the model for calculating loss provisions in the second quarter of 2024.
Refer to Note 8 and Note 2 in the annual report for more details of the model.
NOK THOUSANDS | 12-month ECL stage 1 | Lifetime ECL not credit impaired stage 2 | Lifetime ECL credit impaired stage 3 | Total |
---|---|---|---|---|
EXPECTED CREDIT LOSS (ECL) - LOANS TO CUSTOMERS - PUBLIC LENDING | ||||
Opening balance ECL 01.01.2024 | 180 | 0 | 0 | 180 |
Transfers to stage 1 | 0 | 0 | 0 | 0 |
Transfers to stage 2 | 0 | 0 | 0 | 0 |
Transfers to stage 3 | 0 | 0 | 0 | 0 |
Net changes | -4 | 0 | 0 | -4 |
New losses | 3 | 0 | 0 | 3 |
Write-offs | -4 | 0 | 0 | -4 |
Closing balance ECL 30.06.2024 | 174 | 0 | 0 | 174 |
Changes (01.01.2024-30.06.2024) | -6 | 0 | 0 | -6 |
NOK THOUSANDS | 12-month ECL stage 1 | Lifetime ECL not credit impaired stage 2 | Lifetime ECL credit impaired stage 3 | Total |
---|---|---|---|---|
VALUE OF LENDING AND RECEIVABLES FOR CUSTOMERS RECOGNISED IN THE BALANCE SHEET - PUBLIC LENDING | ||||
Lending 01.01.2024 | 19 087 959 | 0 | 0 | 19 087 959 |
Transfers to stage 1 | 0 | 0 | 0 | 0 |
Transfers to stage 2 | 0 | 0 | 0 | 0 |
Transfers to stage 3 | 0 | 0 | 0 | 0 |
Net changes | -475 057 | 0 | 0 | -475 057 |
New lending | 268 101 | 0 | 0 | 268 101 |
Write-offs | -476 680 | 0 | 0 | -476 680 |
Lending 30.06.2024 | 18 404 323 | 0 | 0 | 18 404 323 |
Quarterly earnings trend
NOK MILLIONS | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
---|---|---|---|---|---|
Interest income | 305.5 | 305.6 | 313.9 | 296.4 | 255.4 |
Interest expense | -277.7 | -276.5 | -285.4 | -263.1 | -229.0 |
Net interest income | 27.8 | 29.1 | 28.5 | 33.3 | 26.5 |
Net gain/(loss) financial instruments | -5.0 | 2.8 | 1.9 | 1.5 | -3.2 |
Total net gain/(loss) on financial instruments | -5.0 | 2.8 | 1.9 | 1.5 | -3.2 |
Other operating expenses | -4.2 | -5.2 | -6.1 | -6.0 | -5.7 |
Total operating expenses | -4.2 | -5.2 | -6.1 | -6.0 | -5.7 |
Operating profit/loss before tax | 18.6 | 26.6 | 24.4 | 28.8 | 17.6 |
Tax ordinary income | 0.9 | -0.9 | -5.4 | -6.3 | -3.9 |
Profit for the period | 19.5 | 25.7 | 19.0 | 22.5 | 13.7 |
Key figures - accumulated
NOK MILLIONS | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
---|---|---|---|---|---|
Pre-tax income | 45.3 | 26.6 | 88.6 | 64.2 | 35.4 |
Net interest income | 56.9 | 29.1 | 113.6 | 85.1 | 51.8 |
Other operating income | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Other operating cost | -9.5 | -5.2 | -22.7 | -16.7 | -10.7 |
Net gain/(loss) financial instruments | -2.2 | 2.8 | -2.3 | -4.2 | -5.7 |
Lending with public sector guarantee | 18 310.8 | 18 735.1 | 19 001.2 | 19 370.6 | 19 449.1 |
Non-performing loans | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Total liabilities created on issuance of securities | 18 832.8 | 19 162.8 | 19 390.8 | 19 412.9 | 18 555.2 |
Other borrowing | 751.4 | 551.2 | 701.6 | 1 107.2 | 2 309.0 |
Total assets | 20 721.0 | 20 816.3 | 21 188.3 | 21 633.7 | 21 948.7 |
Average total assets | 20 954.6 | 21 002.3 | 21 868.2 | 22 090.8 | 22 248.4 |
Equity | 994.6 | 975.0 | 969.2 | 950.2 | 927.7 |
Interest net | 0.27 % | 0.14 % | 0.52 % | 0.39 % | 0.23 % |
Profit/loss from ordinary operation before taxes | 0.22 % | 0.13 % | 0.41 % | 0.29 % | 0.16 % |
Return on equity | 9.34 % | 10.99 % | 9.84 % | 9.52 % | 7.87 % |
Capital adequacy ratio | 23.0 % | 22.8 % | 22.7 % | 20.4 % | 20.2 % |
Liquidity coverage ratio (LCR) | 851 % | 975 % | 925 % | 1 034 % | 2 158 % |
Contact information
KLP KOMMUNEKREDITT AS
Beddingen 8, 7042 Trondheim
Organization no.: 912 719 634
VISITOR ADDRESS
Trondheim: Beddingen 8
Oslo: Dronning Eufemias gate 10
Phone number: +47 55 54 85 00