KLP Kommunekreditt ASQ3 2023
Interim Financial Statements 3/2023
Main features by third quarter:
- Increased net interest income
- Reduced costs on financial instruments
- Moderate lending growth
Objective
The Company's objective is long-term financing of 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 (OMF).
KLP Kommunekreditt AS is a wholly owned subsidiary of KLP Banken AS. The KLP Banken Group is owned by Kommunal Landspensjonskasse (KLP).
Income statement
The pre-tax profit by quarter end was NOK 64.2 (41.8) million. The change in profit is mainly due to increased net interest income and reduced negative profit effects from value changes on financial instruments.
Net interest income by third quarter were NOK 85.1 (74.2) million. The change is primarily related to increased interest rates and a somewhat higher lending volume. Lending margins have on average been at the same level as in the same period last year.
Net income effects of financial instruments so far this year amounts to NOK -4.2 (-16.8) million. This mainly comprises reduced market values on liquid investments and costs for covered bond refinancing. Realized and unrealized increase in value of the company’s liquid investments has so far this year had a P&L effect of NOK 1.7 (-10.8) million. Restructuring of the covered bond portfolio are done regularly to adjust average duration. This may cause both loss and gain. Accounting loss brought to book caused by covered bond refinancing is NOK -5.9 (-6.0) so far this year.
Operating expenses by third quarter amounted to -16.7 (-15.6) million. The Company has not had any losses on loans, and very low loss provisions are recognized in the income statement.
Lending
The Company's customer lending as of 30 September 2023 amounted to NOK 19.4 (18.7) billion. The Company's borrowers are municipalities, county municipalities and local government enterprises with by municipal guarantees.
Liquid investments
KLP Kommunekreditt AS has strict rules on what assets may be included in the securities holdings. In addition to public sector loans, the securities holdings comprise secure bonds as well as deposits in other banks. The securities comprise certificates and bonds of high credit quality, principally investments in covered bonds. As of 30 September 2023, the Company’s securities portfolio had a market value of NOK 1.5 (2.1) billion.
Borrowing
The Company's borrowing comprise covered bonds (OMF) as well as borrowing from KLP Banken AS. So far this year new covered bond issues amounts to NOK 6.0 (3.0) billion and net repurchase of previous issues was NOK 6.4 (2.7) billion. All covered bonds have achieved Aaa rating.
Risk and capital adequacy
KLP Kommunekreditt AS has established a framework for risk management aimed at ensuring that risks are identified, analyzed and subject to management using policies, limits, procedures, and instructions. The Company is to have a prudent risk profile and earnings are to be principally a result of the borrowing and lending activity as well as liquidity management. This means that the Company is to have low market risk. Interest risk arising within the borrowing and lending activities are reduced using derivatives. The Company is to have sufficient long-term financing within set limits. The credit risk in the Company is low and lending is limited to local government risk. Management of the Company's liquidity is conducted through investments in banks satisfying high credit quality requirements.
At the end of third quarter 2023, core capital in accordance with the capital adequacy rules were NOK 879 (756) million. Loans to municipalities and county administrations are risk-weighted 20 percent in accordance with the authorities' capital adequacy regulations. KLP Kommunekreditt AS had a core capital adequacy and capital adequacy ratio 20.4 (18.2) percent at the end of third quarter. The minimum statutory requirement is 16.0 percent capital adequacy ratio. Leverage ratio was 4.1 (3.6) percent. The minimum statutory requirement is 3.0 percent.
Income statementKLP Kommunekreditt AS
NOTE | NOK THOUSANDS | Q3 2023 | Q3 2022 | 01.01.2023 -30.09.2023 | 01.01.2022 -30.09.2022 | 01.01.2022 -31.12.2022 |
---|---|---|---|---|---|---|
Interest income, effective interest method | 244 185 | 120 766 | 632 287 | 286 244 | 463 028 | |
Other interest income | 52 167 | 20 866 | 154 815 | 50 748 | 98 981 | |
3 | Total interest income | 296 351 | 141 633 | 787 102 | 336 992 | 562 009 |
Interest expense, effective interest method | -234 813 | -102 611 | -624 529 | -234 710 | -404 952 | |
Other interest expenses | -28 237 | -9 869 | -77 465 | -28 103 | -49 451 | |
3 | Total interest costs | -263 050 | -112 480 | -701 994 | -262 813 | -454 403 |
3 | Net interest income | 33 301 | 29 153 | 85 108 | 74 178 | 107 606 |
17 | Net gain/(loss) on financial instruments | 1 486 | -3 321 | -4 201 | -16 804 | -10 751 |
Total net gain/(loss) on financial instruments | 1 486 | -3 321 | -4 201 | -16 804 | -10 751 | |
Other operating expenses | -5 971 | -5 584 | -16 663 | -15 597 | -20 725 | |
18 | Net loan losses | 3 | -1 | 0 | -5 | -8 |
Total operating expenses | -5 969 | -5 585 | -16 663 | -15 602 | -20 733 | |
Operating profit/loss before tax | 28 818 | 20 247 | 64 245 | 41 772 | 76 122 | |
Tax ordinary income | -6 340 | -4 454 | 5 594 | -6 214 | -13 771 | |
Profit for the period | 22 478 | 15 793 | 69 839 | 35 558 | 62 351 | |
Other comprehensive income for the period | 0 | 0 | 0 | 0 | 0 | |
Comprehensive income for the period | 22 478 | 15 793 | 69 839 | 35 558 | 62 351 |
BalanceKLP Kommunekreditt AS
NOTE | NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|---|
ASSETS | ||||
5 | Loans to credit institutions | 662 148 | 313 996 | 547 868 |
4,5 | Loans to customers | 19 370 631 | 18 717 589 | 19 117 097 |
5,6,15 | Fixed-income securities | 1 456 806 | 2 090 323 | 2 724 070 |
5,6 | Financial derivatives | 140 773 | 117 792 | 138 897 |
12 | Other assets | 3 296 | 6 036 | 20 092 |
Total assets | 21 633 654 | 21 245 736 | 22 548 024 | |
LIABILITIES AND OWNERS EQUITY | ||||
LIABILITIES | ||||
5,9 | Debt to credit institutions | 1 107 225 | 1 506 565 | 1 707 544 |
5,7 | Debt securities issued | 19 412 910 | 18 806 433 | 19 783 028 |
5,6 | Financial derivatives | 40 651 | 32 927 | 25 939 |
Deferred tax liabilities | 2 129 | 5 110 | 21 857 | |
13 | Other liabilities | 120 137 | 101 038 | 109 527 |
13 | Provision for accrued costs and liabilities | 389 | 354 | 28 |
Total liabilities | 20 683 441 | 20 452 427 | 21 647 922 | |
EQUITY | ||||
Share capital | 391 500 | 362 500 | 391 500 | |
Share premium | 363 500 | 312 500 | 363 500 | |
Other owners' equity | 125 374 | 82 751 | 145 102 | |
Unallocated profit/loss | 69 839 | 35 558 | 0 | |
Total owners' equity | 950 213 | 793 309 | 900 102 | |
Total liabilities and equity | 21 633 654 | 21 245 736 | 22 548 024 |
Statement of changes in equityKLP Kommunekreditt AS
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 | 69 839 | 69 839 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Total comprehensive income for the period | 0 | 0 | 69 839 | 69 839 |
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 September 2023 | 391 500 | 363 500 | 195 213 | 950 213 |
2022 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners' equity |
---|---|---|---|---|
Equity 1 January 2022 | 362 500 | 312 500 | 85 727 | 760 727 |
Profit for the period | 0 | 0 | 35 558 | 35 558 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Total comprehensive income for the period | 0 | 0 | 35 558 | 35 558 |
Group contribution received | 0 | 0 | 10 551 | 10 551 |
Group contribution made | 0 | 0 | -13 527 | -13 527 |
Total transactions with the owners | 0 | 0 | -2 976 | -2 976 |
Equity 30 September 2022 | 362 500 | 312 500 | 118 309 | 793 309 |
2022 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners' equity |
---|---|---|---|---|
Equity 1 January 2022 | 362 500 | 312 500 | 85 727 | 760 727 |
Income for the year | 0 | 0 | 62 351 | 62 351 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Total comprehensive income for the period | 0 | 0 | 62 351 | 62 351 |
Group contribution received | 0 | 0 | 10 551 | 10 551 |
Group contribution made | 0 | 0 | -13 527 | -13 527 |
Owners' equity received during the period | 29 000 | 51 000 | 0 | 80 000 |
Total transactions with the owners | 29 000 | 51 000 | -2 976 | 77 024 |
Equity 31 December 2022 | 391 500 | 363 500 | 145 102 | 900 102 |
Statement of cash flowKLP Kommunekreditt AS
NOK THOUSANDS | 01.01.2023 -30.09.2023 | 01.01.2022 -30.09.2022 | 01.01.2022 -31.12.2022 |
---|---|---|---|
OPERATIONAL ACTIVITIES | |||
Payments received from customers - interest, commission & charges | 517 652 | 223 996 | 381 107 |
Disbursements on loans customers & credit institutions | -851 278 | -1 614 362 | -2 481 139 |
Receipts on loans customers & credit institutions | 682 332 | 710 846 | 1 198 315 |
Disbursements on operations | -17 263 | -18 466 | -22 801 |
Net receipts/disbursements from operating activities | 4 713 | 57 722 | 79 152 |
Interest from credit institutions | 8 505 | 2 975 | 9 273 |
Net cash flow from operating activities | 344 660 | -637 288 | -836 092 |
INVESTMENT ACTIVITIES | |||
Payments on the purchase of securities | -301 239 | -954 253 | -2 084 060 |
Receipts on sale of securities | 1 566 175 | 522 177 | 1 030 010 |
Receipts of interest from securities | 60 820 | 20 637 | 36 175 |
Net cash flow from investment activities | 1 325 757 | -411 439 | -1 017 875 |
FINANCING ACTIVITIES | |||
Receipts on loans from credit institutions | 6 000 000 | 3 000 000 | 4 200 000 |
Repayments and redemption of securities debt | -5 000 000 | -3 008 000 | -3 008 000 |
Change in securities debt, own funds | -1 378 494 | 251 605 | -52 701 |
Net payment of interest on loans credit institions | -498 257 | -203 474 | -325 316 |
Receipts in internal funding | 1 205 000 | 1 100 000 | 3 005 000 |
Disbursements in internal funding | -1 805 000 | -350 000 | -2 055 000 |
Net payment of interest on internal funding | -54 727 | -5 641 | -14 887 |
Payment on group contribution | -19 728 | -2 976 | -2 976 |
Change in owners' equity | 0 | 0 | 80 000 |
Net cash flows from financing activities | -1 551 206 | 781 514 | 1 826 120 |
Net cash flow during the period | 119 211 | -267 213 | -27 847 |
Cash and cash equivalents at the start of the period | 525 685 | 553 531 | 553 531 |
Cash and cash equivalents at the end of the period | 644 895 | 286 318 | 525 685 |
Net receipts/disbursements | 119 211 | -267 213 | -27 847 |
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 2023 – 30 September 2023, with a specification of the results in the Q3. The interim Financial Statements has not been audited.
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 2022 please see the annual report for further information.
Note 3 Net interest income
NOK THOUSANDS | Q3 2023 | Q3 2022 | 01.01.2023 -30.09.2023 | 01.01.2022 -30.09.2022 | 01.01.2022 -31.12.2022 |
---|---|---|---|---|---|
Interest income on loans to customers | 238 809 | 118 712 | 620 249 | 281 841 | 453 754 |
Interest income on loans to credit institutions | 5 376 | 2 054 | 12 038 | 4 403 | 9 273 |
Total interest income, effective interest method | 244 185 | 120 766 | 632 287 | 286 244 | 463 028 |
Interest income on bonds and certificates | 18 118 | 10 155 | 58 833 | 23 522 | 45 009 |
Other interest income | 34 049 | 10 712 | 95 983 | 27 226 | 53 973 |
Total other interest income | 52 167 | 20 866 | 154 815 | 50 748 | 98 981 |
Total interest income | 296 351 | 141 633 | 787 102 | 336 992 | 562 009 |
Interest expenses on debt from KLP Banken AS | -20 862 | -4 532 | -54 407 | -7 038 | -17 264 |
Interest expenses on issued securities | -213 951 | -98 079 | -570 122 | -227 672 | -387 688 |
Total interest expenses, effective interest method | -234 813 | -102 611 | -624 529 | -234 710 | -404 952 |
Other interest expenses | -28 237 | -9 869 | -77 465 | -28 103 | -49 451 |
Total other interest expenses | -28 237 | -9 869 | -77 465 | -28 103 | -49 451 |
Total interest expenses | -263 050 | -112 480 | -701 994 | -262 813 | -454 403 |
Net interest income | 33 301 | 29 153 | 85 108 | 74 178 | 107 606 |
Note 4 Loans to customers
NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
Loans to customers before write-downs | 19 283 503 | 18 738 687 | 19 101 791 |
Write-downs steps 1 and 2 | -184 | -181 | -184 |
Loans to customers after write-downs | 19 283 320 | 18 738 505 | 19 101 607 |
Accrued interest | 216 136 | 98 737 | 113 540 |
Fair value hedging | -128 825 | -119 654 | -98 049 |
Loans to customers | 19 370 631 | 18 717 589 | 19 117 097 |
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 | 30.09.2023 | 30.09.2022 | 31.12.2022 | |||
---|---|---|---|---|---|---|
Capitalized value | Fair value | Capitalized value | Fair value | Capitalized value | Fair value | |
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS | ||||||
Fixed-income securities | 1 456 806 | 1 456 806 | 2 090 323 | 2 090 323 | 2 724 070 | 2 724 070 |
Financial derivatives | 140 773 | 140 773 | 117 792 | 117 792 | 138 897 | 138 897 |
Total financial assets at fair value through profit and loss | 1 597 579 | 1 597 579 | 2 208 115 | 2 208 115 | 2 862 967 | 2 862 967 |
FINANCIAL ASSETS FAIR VALUE HEDGING | ||||||
Lending to Norwegian municipalities | 1 493 349 | 1 503 950 | 1 679 957 | 1 687 999 | 1 702 745 | 1 706 638 |
Total financial assets fair value hedging | 1 493 349 | 1 503 950 | 1 679 957 | 1 687 999 | 1 702 745 | 1 706 638 |
FINANCIAL ASSETS AT AMORTIZED COST | ||||||
Loans to and receivables from credit institutions | 662 148 | 662 148 | 313 996 | 313 996 | 547 868 | 547 868 |
Lending to Norwegian municipalities | 17 877 282 | 17 877 282 | 17 037 632 | 17 037 632 | 17 414 352 | 17 414 352 |
Total financial assets at amortized cost | 18 539 430 | 18 539 430 | 17 351 628 | 17 351 628 | 17 962 220 | 17 962 220 |
Total financial assets | 21 630 358 | 21 640 959 | 21 239 700 | 21 247 742 | 22 527 932 | 22 531 825 |
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS | ||||||
Financial derivatives | 40 651 | 40 651 | 32 927 | 32 927 | 25 939 | 25 939 |
Total financial liabilities at fair value through profit and loss | 40 651 | 40 651 | 32 927 | 32 927 | 25 939 | 25 939 |
FINANCIAL LIABILITIES FAIR VALUE HEDGING | ||||||
Covered bonds issued | 1 687 674 | 1 689 332 | 471 324 | 470 232 | 1 728 703 | 1 745 090 |
Total financial liabilities fair value hedging | 1 687 674 | 1 689 332 | 471 324 | 470 232 | 1 728 703 | 1 745 090 |
FINANCIAL LIABILITIES AT AMORTIZED COST | ||||||
Liabilities to credit institutions | 1 107 225 | 1 107 225 | 1 506 565 | 1 506 565 | 1 707 544 | 1 707 544 |
Covered bonds issued | 17 725 235 | 17 738 289 | 18 335 108 | 18 273 698 | 18 054 324 | 18 048 197 |
Total financial liabilities at amortized cost | 18 832 460 | 18 845 514 | 19 841 673 | 19 780 263 | 19 761 869 | 19 755 741 |
Total financial liabilities | 20 560 785 | 20 575 496 | 20 345 925 | 20 283 422 | 21 516 511 | 21 526 770 |
Fair value shall be a representative price based on what a corresponding asset or liability would have been traded for on normal market terms and conditions. A financial instrument is considered to be listed in an active market if the listed price is simply and regularly available from a stock market, dealer, broker, industry grouping, price setting service or regulatory authority, and these prices represent actual and regularly occurring transactions at arm’s length. If the market for the security is not active, or the security is not listed on a stock market or similar, valuation techniques are used to set fair value. These are based for example on information on recently completed transactions carried out on business terms and conditions, reference to trading in similar instruments and pricing using externally collected yield curves and yield spread curves. As far as possible the estimates are based on externally observable market data and rarely on company-specific information.
The different financial instruments are thus priced in the following way:
Fixed-income securities - government
Nordic Bond Pricing is used as a source for pricing Norwegian government bonds. The prices are compared with the prices from Bloomberg to reveal any errors.
Fixed-income securities - other than government
Norwegian fixed-income securities except government are generally priced using prices from Nordic Bond Pricing. Those securities that are not included in Nordic Bond Pricing are priced theoretically. The theoretical price is based on the assumed present value on the sale of the position. A zero-coupon curve is used for discounting. The zero-coupon curve is adjusted upwards by means of a credit spread, which is to take account of the risk the bond entails. The credit spread is calculated on the basis of a spread curve taking account of the duration of the bond. Nordic Bond Pricing is the main source of spread curves. They provide company-specific curves for Norwegian saving banks, municipalities and energy. Saving banks have various spread curves based on total assets.
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
30.09.2023 NOK THOUSANDS | Level 1 | Level 2 | Level 3 | Total |
---|---|---|---|---|
ASSETS BOOKED AT FAIR VALUE | ||||
Fixed-income securities | 99 148 | 1 357 658 | 0 | 1 456 806 |
Financial derivatives | 0 | 140 773 | 0 | 140 773 |
Total assets at fair value | 99 148 | 1 498 430 | 0 | 1 597 579 |
LIABILITIES BOOKED AT FAIR VALUE | ||||
Financial derivatives (liabilities) | 0 | 40 651 | 0 | 40 651 |
Total financial liabilities at fair value | 0 | 40 651 | 0 | 40 651 |
30.09.2022 NOK THOUSANDS | Level 1 | Level 2 | Level 3 | Total |
---|---|---|---|---|
ASSETS BOOKED AT FAIR VALUE | ||||
Fixed-income securities | 99 496 | 1 990 828 | 0 | 2 090 323 |
Financial derivatives | 0 | 117 792 | 0 | 117 792 |
Total assets at fair value | 99 496 | 2 108 620 | 0 | 2 208 115 |
LIABILITIES BOOKED AT FAIR VALUE | ||||
Financial derivatives (liabilities) | 0 | 32 927 | 0 | 32 927 |
Total financial liabilities at fair value | 0 | 32 927 | 0 | 32 927 |
31.12.2022 NOK THOUSANDS | Level 1 | Level 2 | Level 3 | Total |
---|---|---|---|---|
ASSETS BOOKED AT FAIR VALUE | ||||
Fixed-income securities | 99 435 | 2 624 635 | 0 | 2 724 070 |
Financial derivatives | 0 | 138 897 | 0 | 138 897 |
Total assets at fair value | 99 435 | 2 763 533 | 0 | 2 862 967 |
LIABILITIES BOOKED AT FAIR VALUE | ||||
Financial derivatives (liabilities) | 0 | 25 939 | 0 | 25 939 |
Total financial liabilities at fair value | 0 | 25 939 | 0 | 25 939 |
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 | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
Bond debt, nominal amount | 21 700 000 | 19 500 000 | 20 700 000 |
Adjustments | -69 335 | -29 018 | 12 429 |
Accrued interest | 179 244 | 62 450 | 102 599 |
Own holdings, nominal amount | -2 397 000 | -727 000 | -1 032 000 |
Total debt securities issued | 19 412 910 | 18 806 433 | 19 783 028 |
Interest rate on borrowings through the issuance of securities on the reporting date: | 5.01 % | 2.58 % | 3.60% |
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 31.12.2022 | Issued | Matured/ redeemed | Other adjustments | Balance sheet 30.09.2023 |
---|---|---|---|---|---|
Bond debt, nominal amount | 20 700 000 | 6 000 000 | -5 000 000 | 0 | 21 700 000 |
Adjustments | 12 429 | 0 | 0 | -81 764 | -69 335 |
Accrued interest | 102 599 | 0 | 0 | 76 646 | 179 244 |
Own holdings, nominal amount | -1 032 000 | 0 | -1 365 000 | 0 | -2 397 000 |
Total debt securities issued | 19 783 028 | 6 000 000 | -6 365 000 | -5 118 | 19 412 910 |
Note 8 Over-collateralisation
NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
SECURITY POOL | |||
Loans to customers | 19 385 835 | 18 725 829 | 19 132 889 |
Financial derivatives (net) | 100 044 | 84 821 | 112 913 |
Additional collateral ¹ | 4 188 048 | 2 791 650 | 3 974 463 |
Total security pool | 23 673 927 | 21 602 301 | 23 220 266 |
Outstanding covered bonds incl. own funds and premium/discount | 21 841 922 | 19 474 543 | 20 832 669 |
Coverage of the security pool | 108.4 % | 110.9 % | 111.5 % |
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
30.09.2023 NOK THOUSANDS | ||||
---|---|---|---|---|
Due date | Nominal | Accrued interest | Book value | |
Debt to KLP Banken AS | 16.12.2024 | 1 105 000 | 2 225 | 1 107 225 |
Total liabilities to credit institutions | 1 105 000 | 2 225 | 1 107 225 | |
Interest rate on debt to credit institutions at the reporting date: | 4.53 % | |||
The interest rate is calculated as a weighted average of the act/360 basis. |
30.09.2022 NOK THOUSANDS | ||||
---|---|---|---|---|
Due date | Nominal | Accrued interest | Book value | |
Debt to KLP Banken AS | 15.12.2023 | 150 000 | 156 | 150 156 |
Debt to KLP Banken AS | 15.12.2023 | 400 000 | 416 | 400 416 |
Debt to KLP Banken AS | 15.12.2023 | 200 000 | 208 | 200 208 |
Debt to KLP Banken AS | 15.12.2023 | 505 000 | 525 | 505 525 |
Debt to KLP Banken AS | 15.12.2023 | 50 000 | 52 | 50 052 |
Debt to KLP Banken AS | 15.12.2023 | 200 000 | 208 | 200 208 |
Total liabilities to credit institutions | 1 505 000 | 1 565 | 1 506 565 | |
Interest rate on debt to credit institutions at the reporting date: | 2.34 % | |||
The interest rate is calculated as a weighted average of the act/360 basis. |
31.12.2022 NOK THOUSANDS | ||||
---|---|---|---|---|
Due date | Nominal | Accrued interest | Book value | |
Debt to KLP Banken AS | 15.12.2023 | 1 705 000 | 2 544 | 1 707 544 |
Total liabilities to credit institutions | 1 705 000 | 2 544 | 1 707 544 | |
Interest rate on debt to credit institutions at the reporting date: | 3.16 % | |||
The interest rate is calculated as a weighted average of the act/360 basis. |
Note 10 Financial assets and liabilities subject to net settlement
30.09.2023 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 | 140 773 | 0 | 140 773 | -40 651 | -104 349 | 17 441 |
Total | 140 773 | 0 | 140 773 | -40 651 | -104 349 | 17 441 |
LIABILITIES | ||||||
Financial derivatives | 40 651 | 0 | 40 651 | -40 651 | 0 | 0 |
Total | 40 651 | 0 | 40 651 | -40 651 | 0 | 0 |
30.09.2022 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 | 117 792 | 0 | 117 792 | -32 927 | 0 | 84 865 |
Total | 117 792 | 0 | 117 792 | -32 927 | 0 | 84 865 |
LIABILITIES | ||||||
Financial derivatives | 32 927 | 0 | 32 927 | -32 927 | 0 | 0 |
Total | 32 927 | 0 | 32 927 | -32 927 | 0 | 0 |
31.12.2022 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 | 138 897 | 0 | 138 897 | -25 939 | 0 | 112 959 |
Total | 138 897 | 0 | 138 897 | -25 939 | 0 | 112 959 |
LIABILITIES | ||||||
Financial derivatives | 25 939 | 0 | 25 939 | -25 939 | 0 | 0 |
Total | 25 939 | 0 | 25 939 | -25 939 | 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 | 01.01.2023 -30.09.2023 | 01.01.2022 -30.09.2022 | 01.01.2022 -31.12.2022 |
---|---|---|---|
KLP Banken AS, interest on borrowing | -54 407 | -7 038 | -17 264 |
KLP Banken AS, interest on deposits | 6 089 | 2 490 | 4 177 |
KLP Banken AS, administrative services (at cost) | -10 008 | -9 518 | -13 116 |
KLP Kapitalforvaltning AS, fees for services provided | 0 | 0 | -74 |
NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
BALANCES | |||
KLP Banken AS, debt to credit institutions | -1 107 225 | -1 506 565 | -1 707 544 |
KLP Banken AS, deposit | 211 320 | 203 544 | 205 231 |
KLP Banken AS, loan settlement | 2 430 | 5 242 | 20 092 |
Net outstanding accounts to: | |||
KLP Banken AS | -1 302 | -1 110 | -1 402 |
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 | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
Intercompany receivables | 2 430 | 5 242 | 20 092 |
Prepaid expenses | 866 | 794 | 0 |
Total other assets | 3 296 | 6 036 | 20 092 |
Note 13 Other liabilities and provision for accrued costs
NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
Creditors | 1 | 0 | 25 |
Intercompany payables | 1 302 | 1 110 | 1 402 |
Short-term balances with credit institutions | 104 700 | 90 600 | 108 100 |
Other liabilities | 14 134 | 9 328 | 0 |
Total other liabilities | 120 137 | 101 038 | 109 527 |
VAT | 389 | 354 | 28 |
Total accrued costs and liabilities | 389 | 354 | 28 |
Note 14 Capital adequacy
NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
Share capital and share premium fund | 755 000 | 675 000 | 755 000 |
Other owners' equity | 125 374 | 82 751 | 145 102 |
Total owners' equity | 880 374 | 757 751 | 900 102 |
Adjustments due to requirements for proper valuation | -1 457 | -2 090 | -2 724 |
Core capital/Tier 1 capital | 878 917 | 755 660 | 897 378 |
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) | 878 917 | 755 660 | 897 378 |
Capital requirement | 345 157 | 332 841 | 353 621 |
Surplus of own funds (Tier 1 and Tier 2 capital) | 533 760 | 422 819 | 543 756 |
ESTIMATE BASIS CREDIT RISK: | |||
Institutions | 161 140 | 87 406 | 141 371 |
Local and regional authorities | 3 916 156 | 3 825 005 | 3 963 118 |
Covered bonds | 116 139 | 160 190 | 194 389 |
Other items | 515 | 794 | 0 |
Calculation basis credit risk | 4 193 950 | 4 073 394 | 4 298 878 |
Credit risk | 335 516 | 325 872 | 343 910 |
Operating risk | 9 432 | 6 826 | 9 432 |
Credit valuation adjustment (CVA) | 209 | 144 | 280 |
Total capital requirement assets | 345 157 | 332 841 | 353 621 |
Core capital adequacy ratio | 20.4 % | 18.2 % | 20.3 % |
Supplementary capital ratio | 0.0 % | 0.0 % | 0.0 % |
Capital adequacy ratio | 20.4 % | 18.2 % | 20.3 % |
Leverage ratio | 4.1 % | 3.6 % | 4.0 % |
CAPITAL REQUIREMENT PER 30.09.2023 | Core capital/ Tier 1 capital | Supplementary capital/Tier 2 capital | Own funds |
---|---|---|---|
Minimum requirement excl. buffers | 4.5 % | 3.5 % | 8.0 % |
Protective buffer | 2.5 % | 0.0 % | 2.5 % |
Systemic risk buffer | 3.0 % | 0.0 % | 3.0 % |
Counter-cyclical capital buffer | 2.5 % | 0.0 % | 2.5 % |
Current capital requirement incl. buffers | 12.5 % | 3.5 % | 16.0 % |
Capital requirement leverage ratio | 3.0 % | 0.0 % | 3.0 % |
Note 15 Fixed-income securities
NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 | |||
---|---|---|---|---|---|---|
Acquisition cost | Market value | Acquisition cost | Market value | Acquisition cost | Market value | |
Certificates | 99 013 | 99 148 | 80 037 | 80 185 | 392 669 | 395 773 |
Bonds | 1 357 140 | 1 357 658 | 2 019 917 | 2 010 139 | 2 328 552 | 2 328 297 |
Total fixed-income securities | 1 456 153 | 1 456 806 | 2 099 954 | 2 090 323 | 2 721 221 | 2 724 070 |
Fixed income securities are brought to account at market value, including accrued but not due interests. |
Note 16 Contingent liabilites
NOK THOUSANDS | 30.09.2023 | 30.09.2022 | 31.12.2022 |
---|---|---|---|
Loan commitment | 27 750 | 37 012 | 35 491 |
Total contingent liabilities | 27 750 | 37 012 | 35 491 |
Note 17 Net gain/(loss) on financial instruments
NOK THOUSANDS | Q3 2023 | Q3 2022 | 01.01.2023 -30.09.2023 | 01.01.2022 -30.09.2022 | 01.01.2022 -31.12.2022 |
---|---|---|---|---|---|
Net gain/(loss) on fixed-income securities | 3 443 | -2 753 | 1 747 | -10 833 | -4 379 |
Net gain/(loss) financial derivatives and realized amortization linked to lending | 0 | 5 | 0 | 5 | 5 |
Net gain/(loss) financial derivatives and realized repurchase of own debt | -1 957 | -572 | -5 947 | -5 976 | -6 377 |
Total net gain/(loss) on financial instruments | 1 485 | -3 321 | -4 201 | -16 804 | -10 751 |
Note 18 Loan loss provision
Changes in provisions for expected losses in third quarter 2023 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 third quarter of 2023. 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 01.01.2023 | 184 | 0 | 0 | 184 |
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 | -8 | 0 | 0 | -8 |
New losses | 23 | 0 | 0 | 23 |
Write-offs | -15 | 0 | 0 | -15 |
Closing balance ECL 30.09.2023 | 184 | 0 | 0 | 184 |
Changes (01.01.2023-30.09.2023) | 0 | 0 | 0 | 0 |
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 01.01.2023 | 19 215 331 | 0 | 0 | 19 215 331 |
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 | -625 884 | 0 | 0 | -625 884 |
New lending | 2 436 384 | 0 | 0 | 2 436 384 |
Write-offs | -1 526 191 | 0 | 0 | -1 526 191 |
Lending 30.09.2023 | 19 499 640 | 0 | 0 | 19 499 640 |
Quarterly earnings trend
NOK MILLIONS | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 |
---|---|---|---|---|---|
Interest income | 296.4 | 255.4 | 235.3 | 225.0 | 141.6 |
Interest expense | -263.1 | -229.0 | -210.0 | -191.6 | -112.5 |
Net interest income | 33.3 | 26.5 | 25.3 | 33.4 | 29.2 |
Net gain/(loss) financial instruments | 1.5 | -3.2 | -2.5 | 6.1 | -3.3 |
Total net gain/(loss) on financial instruments | 1.5 | -3.2 | -2.5 | 6.1 | -3.3 |
Other operating expenses | -6.0 | -5.7 | -5.0 | -5.1 | -5.6 |
Total operating expenses | -6.0 | -5.7 | -5.0 | -5.1 | -5.6 |
Operating profit/loss before tax | 28.8 | 17.6 | 17.8 | 34.4 | 20.2 |
Tax ordinary income | -6.3 | -3.9 | 15.8 | -7.6 | -4.5 |
Profit for the period | 22.5 | 13.7 | 33.6 | 26.8 | 15.8 |
Key figures - accumulated
NOK MILLIONS | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 |
---|---|---|---|---|---|
Pre-tax income | 64.2 | 35.4 | 17.8 | 76.1 | 41.8 |
Net interest income | 85.1 | 51.8 | 25.3 | 107.6 | 74.2 |
Other operating income | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Other operating cost | -16.7 | -10.7 | -5.0 | -20.7 | -15.6 |
Net gain/(loss) financial instruments | -4.2 | -5.7 | -2.5 | -10.8 | -16.8 |
Lending with public sector guarantee | 19 370.6 | 19 449.1 | 19 384.1 | 19 117.1 | 18 717.6 |
Non-performing loans | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Total liabilities created on issuance of securities | 19 412.9 | 18 555.2 | 18 474.4 | 19 783.0 | 18 806.4 |
Other borrowing | 1 107.2 | 2 309.0 | 2 313.1 | 1 707.5 | 1 506.6 |
Total assets | 21 633.7 | 21 948.7 | 21 843.2 | 22 548.0 | 21 245.7 |
Average total assets | 22 090.8 | 22 248.4 | 22 195.6 | 21 336.9 | 20 685.7 |
Equity | 950.2 | 927.7 | 914.0 | 900.1 | 793.3 |
Interest net | 0.39 % | 0.23 % | 0.11 % | 0.50 % | 0.36 % |
Profit/loss from ordinary operation before taxes | 0.29 % | 0.16 % | 0.08 % | 0.36 % | 0.20 % |
Return on equity | 9.52 % | 7.87 % | 7.93 % | 8.46 % | 7.32 % |
Capital adequacy ratio | 20.4 % | 20.2 % | 20.4 % | 20.3 % | 18.2 % |
Liquidity coverage ratio (LCR) | 1 034 % | 2 158 % | 2 827 % | 2 174 % | 4 278 % |
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