Second quarter (Unaudited) Sbanken Boligkreditt AS

Transcription

1 Q2 Second quarter 2018 (Unaudited) Sbanken Boligkreditt AS

2 Key figures In NOK thousand Reference Jan - Jun 18 Jan - Jun Summary of income statement Net interest income Net other income Total income Other operating expenses Operating profit before loan losses Loan losses Profit before tax Tax expense Net profit Balance sheet figures (in million NOK) Total loan volume (gross) Covered bonds issued (carried value) Total assets, end of period Losses and defaults Loss rate (%) % 0.00 % 0.00 % Solvency 4 Common equity Tier 1 ratio 16.7 % 17.7 % 16.5 % Tier 1 capital ratio 18.6 % 19.1 % 17.7 % Total capital ratio 21.3 % 21.0 % 19.4 % Leverage ratio 6.6 % 6.8 % 6.4 % Other Loan to value % 47.6 % 51.2 % Cover Pool Over-collateralisation (OC), (nominal) 12.9 % 11.5 % 10.7 % Alternative Performance Measures / References: Sbanken Boligkreditt AS (the company) discloses alternative performance measures as a supplement to the financial statements prepared in accordance with IFRS. Such performance measures are commonly used by analysts, investors and other stakeholders to evaluate the performance of the company in isolation or relative to the financial industry. The measures are provided to give an enhanced insight into the operations, financing and future prospects of the company. Some of the measures are presented in detail in notes to the financial statement and not repeated here. 1) Loss rate is calculated as the loan losses of the period divided by the average loan volume of the period. The measure is commonly used by banks and industry analysts to indicate the performance and quality of the lending book. For interim periods the loan losses for the period is annualised using the number of days in the period to the total number of days in the year. 2) LTV (Loan-to-Value) is calculated as the loan amount divided by the estimated value of the property. When calculating a weighted average of LTV for the entire loan book, the credit balance of home loans is used as weights. The LTV is provided as a measure of lending risk exposure. 3) Cover pool consist of mortgages and supplementary assets eligible according to the covered bonds legislation in Norway. Please refer to note 9 for further detail. 4) Solvency figures are presented including profit for the period. Please refer to note 3 for further detail. PAGE 2/24 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

3 Second Quarter Results Sbanken Boligkreditt AS had a net profit of NOK 40.5 (32.8) million in the second quarter of 2018, compared to NOK 48.4 million in the first quarter of At the end of the quarter, customer loans increased to NOK 33.0 (24.9) billion, up from NOK 27.7 billion at the end of the first quarter of Outstanding covered bonds amounted to NOK 29.6 (22.5) billion. The average loan to value (LTV) was 49.1 (47.6) per cent. Sbanken Boligkreditt AS ( Sbanken Boligkreditt or the company ) is a vehicle to fund the Sbanken group by issuing covered bonds based on residential mortgages. The company s offices are located in Bergen, Norway. All comparable figures refer to the corresponding period previous year unless otherwise stated. Important events during the quarter The average Norwegian short-term money market rates decreased in the second quarter of Norges Bank kept its key policy rate unchanged at 0.5 per cent at both the May and June meetings, but expects to hike the key policy rate in September Sbanken Boligkreditt maintained its lending rate levels in the quarter. Sbanken Boligkreditt successfully issued its first covered bond under the Euro Medium Term Covered Note (EMTCN) programme. The issue amounted to EUR 500 million and has a five-year tenor. The bond was well received in the market. By way of the issue, Sbanken Boligkredit AS has expanded its funding universe. Operating income Operating income amounted to NOK 53.4 (45.0) million, compared to NOK 66.2 million in the first quarter of Net interest income increased to NOK 58.4 (45.6) million. The decrease in net interest income from the first quarter of 2018 is primarily due to the increased 3 month NIBOR in the first quarter of 2018, resulting in increased cost on the company s capital market funding in the second quarter. Operating expenses Operating expenses amounted to NOK 2.0 (2.3) million in the quarter and consisted mainly of administrative expenses related to the company s hire of management and administrative resources from Sbanken ASA. Impairments and losses Loan losses was positive in the amount of NOK 0.7 (-0.2) million in the quarter. At the end of the quarter, expected credit losses (ECL) amounted to NOK 1.6 million. Taxes The calculated income tax expense was NOK 11.6 (9.7) million, which corresponds to an effective tax rate of 22.3 (22.9) per cent. Loans to customers Loans to customers amounted to NOK 33.0 (24.9) billion, representing an increase of NOK 5.3 billion from the previous quarter. The increase was due to the acquisition of NOK 8.5 billion in residential mortgages from Sbanken ASA, less repayments from customers of NOK 3.2 billion in the quarter. Capitalisation, liquidity and financial position Sbanken Boligkreditt had total booked equity of NOK 2.2 billion as of 30 June 2018, equivalent to a common equity Tier 1 capital ratio of 16.7 per cent. At quarter end the Tier 1 capital ratio was 18.6 per cent and the total capital ratio 21.3 per cent. The capital ratios include retained earnings from the first half year of As of 30 June 2018, the company had a leverage ratio of 6.6 per cent, well above the regulatory requirement of three per cent. Sbanken Boligkreditt had NOK 29.6 (22.5) billion in outstanding debt issued as covered bonds as of 30 June A total of NOK 4.8 billion (EUR 500 million) in covered bonds were issued during the quarter. Securities totalling NOK 1.5 billion were bought back and redeemed during the quarter. At quarter end, Sbanken Boligkreditt had total liquid assets of NOK 0.7 (0.4) billion. Covered bonds issued by Sbanken Boligkreditt have been assigned the highest rating from Moody s Investors Service (Aaa). Comments on results for the first half-year of 2018 Sbanken Boligkreditt made a net profit of NOK 88.9 million in the first halfyear of 2018, compared with NOK 56.3 million in the first half-year of Net interest income amounted to NOK (80.4) million. Operating expenses amounted to NOK 5.7 million, compared with NOK 4.2 million in the first half-year of Loan losses for the first half-year of 2018 was positive in the amount of NOK 0.5 (-0.3) million. Subsequent events No significant events have occurred after 30 June 2018 that affect the financial statements for Q PAGE 2/24 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

4 Outlook The recent decrease in Norwegian money market rates is expected to contribute to an increase in Sbanken Boligkreditt AS s interest rate margin. In the longer term, the net interest margin could be affected by changes in market rates or changes in competition. Losses related to mortgages are expected to remain at the marginal historical levels in Supported by growth in the parent bank volume growth is expected to continue in Sbanken Boligkreditt is well capitalised to acquire significant amounts of residential mortgages from Sbanken ASA to support the group s further growth. Bergen, 12 July 2018 The Board of Directors, Sbanken Boligkreditt AS Petter Skouen (Chairman) Ragnhild Wiborg Mai-Lill Ibsen Henning Nordgulen (CEO)

5 Income statement In NOK thousand Note Q2 18 Q2 17 Jan- Jun 18 Jan- Jun Interest income Interest expense Net interest income Net gain (loss) on financial instruments Other income Other operating income Personnel expenses Administrative expenses Profit before loan losses Loan losses Profit before tax Tax expense Profit for the period Attributable to Shareholders Tier 1 capital holders Profit for the period Statement of comprehensive income In NOK thousand Q2 18 Q2 17 Jan- Jun 18 Jan- Jun Profit for the period Other comprehensive income Other comprehensive income that can be reclassified to profit or loss after tax Other items that can not be reclassified to profit or loss after tax Total components of other comprehensive income (after tax) Total comprehensive income for the period Attributable to Shareholders Tier 1 capital holders Total comprehensive income for the period PAGE 5/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

6 Balance sheet In NOK thousand Note Assets Loans to and receivables from credit institutions 5, Loans to customers 5,6,7,8, Net loans to customers and credit institutions Commercial paper and bonds at fair value through other comprehensive income (OCI) Deferred tax assets Other assets Advance payment and accrued income Total assets Liabilities Loans from credit institutions Debt securities issued 12, Derivatives Taxes payable Other liabilities Subordinated loan Total liabilities Equity Share capital Share premium Additional Tier 1 capital Other equity Total equity Total liabilities and equity PAGE 6/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

7 Statement of changes in equity In NOK thousand Share capital Share premium Additional Tier 1 capital Changes in fair value through other comprehensive income Other equity Total equity Balance sheet as at Profit for the period to other equity ( ) Profit for the period to Tier 1 capital holders ( ) Payments to Tier 1 capital holders ( ) Net change of financial instruments at fair value through other comprehensive income ( to ) 5 5 Capital increase Q Capital increase not registered in the Register of Business Enterprises * Balance sheet as at Profit for the period to other equity ( ) Profit for the period to Tier 1 capital holders ( ) Payments to Tier 1 capital holders ( ) Net change of financial instruments at fair value through other comprehensive income ( to ) Capital increase registered in the Register of Business Enterprises * Balance sheet as at Effects from transition to IFRS 9** Balance sheet as at Profit for the period to other equity ( ) Profit for the period to Tier 1 capital holders ( ) Payments to Tier 1 capital holders ( ) Issued Additional Tier 1 capital ( ) Net change of financial instruments at fair value through other comprehensive income ( to ) Capital increase Balance sheet as at Sbanken Boligkreditt AS is a wholly owned subsidiary of Sbanken ASA. *In Q the share capital in Sbanken Boligkreditt AS was increased by NOK from NOK to NOK by increasing the nominal value from NOK 5 to NOK 6 per share (increase of NOK 1 per old shares) and issuing of new shares with nominal value of 6 per share. The Financial Supervisory Authority of Norway gave its consent to the share capital increase, but as at 30 June 2017 the capital increase was not yet registered with the Register of Business and Enterprises. The capital increase is therefore recognised as other equity as it was formally registered in the Register of Business Enterprises (NO: Brønnøysundsregistrene) on 10 July From 10 July 2017 it is recognised as share capital. **For further description regarding transition to IFRS 9 we refer to the annual report note 33. PAGE 7/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

8 Statement of cash flows In NOK thousand Note Jan-Jun 18 Jan-Jun Cash flows from operating activities Net payments on loans to customers 5, Interest received on loans to customers Interest received on loans to credit institutions Interest paid on loans and deposits from credit institution Net receipts/payments from buying and selling financial instruments at fair value Interest received from commercial paper and bonds Payments related to administrative expenses Payments related to personnel expenses Taxes paid Other receipts/payments Net cash flows from operating activities Cash flows from investment activities Net cash flows from investment activities Cash flows from financing activities Receipts on issued covered bonds Payments on matured and redeemed covered bonds Interest paid on covered bonds Net receipts on loans and deposits from credit institution Receipts on subordinated loan Interest paid on subordinated loan Receipts on share capital and share premium net of issuing cost EQ* Receipts on issued additional Tier1 capital Interest paid on additional Tier 1 capital Net cash flows from financing activities Total net cash flows Cash at the beginning of the period Cash at the end of the period Change in cash Cash Loans to credit institutions Total cash EQ*= see statement of changes in equity PAGE 8/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

9 Notes Note 1 Accounting Principles The quarterly financial statements for Sbanken Boligkreditt AS have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board and adopted by the EU. A description of the accounting principles applied in the preparation of the financial statements appears in the annual report for When preparing the financial statements, the management makes estimates, judgments and assumptions that affect the application of the accounting principles and the carrying amount of assets, liabilities, income and expenses. Estimates and assumptions are subject to continual evaluation and are based on historical experience and other factors, including expectations of future events that are believed to be probable on the balance sheet date. A description of the critical accounting estimates and areas where judgment is applied appear in note 2 in the annual report for As of Q the Sbanken Boligkreditt has used hedge accounting (according to IFRS 9). The principles used are described below: Hedge accounting The company uses derivative instruments to manage exposure to fixed interest rate and foreign currency relating to long-term borrowings in Euro. Upon initial recognition, derivatives and borrowings are designated as hedging instruments and accounted for as fair value hedges. Formal earmarking and documentation of the hedging relationship takes place when the hedging relationship is established. There is a clear, direct and documented connection between fluctuations in the value of the hedged item that are due to the hedged risk and fluctuations in the value of the financial derivatives. The hedging is documented with reference to the company s risk management strategy, clear identification of the hedged item and the hedging instrument, a clear description of the hedged risk and a description of why the hedging is expected to be effective. IFRS 9 simplifies the requirements for hedge accounting by linking hedge effectiveness more closely with risk management activities and leaving greater room for assessment. The requirement for a hedge effectiveness of % has been removed and replaced by more qualitative requirements, including that there must be an economic relationship between the hedging instrument and the hedged item, and that the effect of credit risk must not dominate the changes in value in the hedging relationship. Under IFRS 9, a prospective (forward-looking) effectiveness test is sufficient, while hedge effectiveness under IAS 39 must be considered both retrospectively and prospectively. Hedging documentation is still required. Hedge ineffectiveness, defined as the difference between the value adjustment of hedging instruments and the value adjustment of the hedged risks in the items, is recognised through profit or loss as it arises. The exception is the part of the value adjustment that is caused by a change in the basis swaps relating to the hedging instruments that is presented in the statement of comprehensive income. New and revised standards effective from 1 January 2018 Sbanken Boligkreditt AS has from 1 January 2018 applied the new accounting standard IFRS 9 Financial instruments. For information about effects from implementation, new accounting principles and methodology we refer to transition note (No. 33) in the annual report for New and revised standards effective from 1 January 2019 or later Standards and interpretations that will enter into force for the annual periods beginning 1 January 2019 or later have not been used in the preparation of the accounts. For Sbanken Boligkreditt AS there are no new standards that will have material effect on the financial accounts. Note 2 Segment information Sbanken Boligkreditt AS has only one reporting segment, which comprises residential mortgages to private individuals. Management monitors the company only in relation to this segment. PAGE 9/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

10 Note 3 Capital adequacy The capital adequacy regulations are intended to improve institutions risk management and achieve closer concordance between risk and capital. The applicable regulations for Norwegian banks are adapted to the EU s capital adequacy regulations for credit institutions and investment firms (CRD IV/CRR). Sbanken Boligkreditt AS uses the standard method to establish the risk weighted volume for credit risk and the basic method to establish the risk weighted volume for operational risk. At the balance sheet date, no exposure was included in the risk-weighted volume for market risk In NOK thousand Nominal exposure Risk- Weighted volume Nominal exposure Risk- Weighted volume Nominal exposure Risk- Weighted volume Central governments Regional governments Institutions Secured by mortgages on immovable property Exposures in default Covered bonds Other items Total credit risk, standardised method Credit value adjustment risk (CVA risk) Operational risk Total risk- weighted volume Capital base Share capital Share premium Other equity Additional Tier 1 capital Profit for the period Total booked equity Additional Tier 1 capital instruments included in total equity Common equity Tier 1 capital instruments Deductions Goodwill, deferred tax assets and other intangible assets Value adjustment due to the requirements for prudent valuation (AVA) Profit for the period, unaudited Common equity Tier 1 capital Additional Tier 1 capital Tier 1 capital Tier 2 capital Own funds (primary capital) Specification of capital requirements Minimum requirements CET1 capital 4.5% % % Capital conservation buffer 2.5% % % Systemic risk buffer 3.0% % % Countercyclical capital buffer 2.0% % % Additional Tier 1 capital 1.5% % % Tier 2 capital 2.0% % % Total minimum and buffer requirements own funds (primary capital) 15.5% % % Available CET1capital after buffer requirements Available Own funds (primary capital) Capital ratio % PAGE 10/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

11 Common equity Tier 1 capital 16.0% 17.7% 16.5% Additional Tier 1 capital 1.9% 1.4% 1.2% Tier 2 capital 2.7% 1.9% 1.7% Total capital ratio 20.6% 21.0% 19.4% Capital ratio % (including interim profits*) Common equity Tier 1 capital 16.7% 17.7% 16.5% Additional Tier 1 capital 1.9% 1.4% 1.2% Tier 2 capital 2.7% 1.9% 1.7% Total capital ratio 21.3% 21.0% 19.4% * Including 100 per cent of the profit. Expected dividends for the group are deducted in the parent bank s capital ratio calculation. Note 4 Leverage ratio The leverage ratio requirements is a supplement to the risk-weighted minimum capital requirements and states that the capital base in financial institutions shall also comprise a defined percentage of the value of the company s assets and off-balance-sheet liabilities, calculated without risk weighting. The capital ratio consists of Tier 1 capital and the exposure target follows the rules in the Commission Delegated Regulation (EU) The minimum leverage ratio requirement for Norwegian banks and credit institutions is three per cent and a buffer requirement of two per cent. The table below shows the calculation for the bank, on the basis of existing rule proposals and with CCFs based on the current standardised approach, subject to a CCF-floor of 10 per cent. In NOK thousand Off balance sheet commitments Potential future exposure on derivatives Loans and advances and other assets Regulatory adjustments included in Tier 1 capital Total leverage exposure Tier 1 capital Leverage ratio % 6.4 % 6.8 % 6.4 % Leverage ratio % (including interim profits*) 6.6 % 6.8 % 6.4 % Leverage Ratio requirements Minimum requirements 3.0% Buffer requirements credit institutions 0.0% Total minimum and buffer requirements (Tier 1 capital) 3.0% Available Tier 1 capital after minimum and buffer requirements Available Tier 1 capital after minimum and buffer requirements (including interim profits*) * Including 100 per cent of the profit. Expected dividends for the group are deducted in the parent bank s capital ratio calculation. PAGE 11/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

12 Note 5 Maximum exposure to credit risk Credit risk is defined as the risk of loss resulting from a counterparty not fulfilling its obligations, and any pledged collateral not covering the outstanding claim. The company s maximum credit exposure is the book value of financial assets and any associated off-balance sheet liabilities. The following table shows the company`s maximum credit risk exposure to financial instruments, by measurement categories. In NOK thousand Gross carrying amounts Off-balance sheet amounts Maximum exposure to credit risk Loans to and receivables from credit institutions Loans to and receivables from central bank and credit institutions Loans to customers, secured Loans to and receivables from customers Other financial assets with credit risk Financial instruments at amortised cost Commercial paper and bonds Financial instruments at fair value through other comprehensive income Derivatives Financial instruments at fair value through profit and loss Gross exposure Other financial assets without credit risk Impairment Na Na Total net exposure Na Na Note 6 Loans to credit institutions and customers Gross carrying amount - Loans to credit institutions In NOK thousand Stage 1, 12-months ECL Stage 2, Lifetime ECL (not impaired) Stage 3, Lifetime ECL (impaired) Total Opening balance gross carrying amount (before transfers) Transfers between stages Opening balance gross carrying amount (after transfers) Net new financial assets originated or derecognised Changes in interest accrual Closing balance gross carrying amount Maturity: In NOK thousands Loans with agreed maturity Loans without agreed maturity Total PAGE 12/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

13 Gross carrying amount - Loans to customers In NOK thousand Stage 1, 12-months ECL Stage 2, Lifetime ECL (not impaired) Stage 3, Lifetime ECL (impaired) Total Opening balance gross carrying amount (before transfers) Transfers to Stage 1 (12-months ECL) Transfers to Stage 2 (Lifetime ECL - not impaired) Transfers to Stage 3 (Lifetime ECL - impaired) Net new financial assets originated or derecognised Changes in interest accrual Other movements Closing balance gross carrying amount Figures below are presented in accordance with IAS 39 and not restated In NOK thousand Loans to customers Loans without agreed maturity or notice period 0 0 Loans with agreed maturity or notice period Total loans to customers (gross) Write-downs for individually assessed impaired loans 0 0 Write-downs for collectively assessed impaired loans Total loans to customers (net) Residual time to maturity (gross loans) In NOK thousand Upon request 0 0 Maximum 3 months months - 1 year years More than 5 years Total In NOK thousand Loans to and receivables from credit institutions Loans to and receivables without maturity or notice period Loans to and receivables with agreed maturity or notice period 0 0 Write-downs on impaired loans 0 0 Total loans to and receivables from credit institutions Liabilities to credit institutions Loans and deposits from credit institutions without agreed maturity or notice period 0 0 Loans and deposits from credit institutions with agreed maturity or notice period Total liabilities to credit institutions PAGE 13/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

14 Note 7 Loans to customers by geographical area Lending by geographical area In NOK thousand Percentage Gross lending Percentage Gross lending Percentage Gross lending Østfold 5.9% % % Akershus 24.6% % % Oslo 22.0% % % Hedmark 1.1% % % Oppland 1.1% % % Buskerud 6.0% % % Vestfold 4.1% % % Telemark 0.7% % % Aust-Agder 0.7% % % Vest-Agder 1.0% % % Rogaland 6.7% % % Hordaland 13.3% % % Sogn og Fjordane 0.2% % % Møre og Romsdal 1.4% % % Trøndelag 4.6% % % Nordland 2.6% % % Troms 3.2% % % Finnmark 0.8% % % Total gross lending per geographical area 100.0% % % Note 8 Credit risk exposure and collateral Credit risk is defined as the risk of loss resulting from a counterparty not fulfilling its obligations, and any pledged collateral not covering the outstanding claim. The company s maximum credit exposure is the book value of financial assets and any associated off-balance sheet liabilities. The company s customer exposures comprises the bulk of the company s total credit exposure. A high percentage of the company s lending is collateralised. Collateral in the private retail market essentially comprise fixed property. The table below shows the relationship between total credit exposure and the associated collateral distributed to exposure class. Lending secured by mortgages includes the percentage distributed of exposure relating to the various loan-to-value levels. The property values on which the calculations are based are updated in the last month of each quarter and are therefore representative of the current market value. The calculation of loan-to-value does not take into account any additional collateral. In NOK thousand Loan-to-value, secured loans Number of loans Distribution as percentage Gross carrying amounts Unutilised credit lines 0 % - 40 % % % - 60 % % % - 80 % % % - 90 % % % % 7 0.1% > 100 % 4 0.0% Residential mortgages % The table below shows the percentage allocation of exposures for home loans for various loan-to-value levels. Where the entire exposure in the table above is placed in a related loan-to-value level, the relative share of the loan exposure at each level is shown in the table below. PAGE 14/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

15 In NOK thousand Loan-to-value, residential mortgages (relative distribution) Distribution as percentage Gross carrying amounts 0 % - 85 % 99.98% % % 0.01% > 100 % 0.00% Residential mortgages 100.0% Figures below are presented in accordance with IAS 39 and not restated In NOK thousand Loan-to-value, Residential mortgages Distribution in percent Number of loans Gross carrying amounts Off-balance sheet amounts Maximum exposure to credit risk 0 % - 40 % 25 % % - 60 % 40 % % - 80 % 34 % % - 90 % 1 % % % 0 % > 100 % 0 % Residential mortgages Exposure to customers Loans to and receivables from credit institutions Commercial paper and bonds available for sale Other assets Exposure to others Gross exposure In NOK thousand Loan-to-value, Residential mortgages (relative distribution) Distribution in percent Gross carrying amounts 0 % - 85 % % % % % > 100 % % Residential mortgages In NOK thousand Loan-to-value, Residential mortgages Distribution in percent Number of loans Gross carrying amounts Off-balance sheet amounts Maximum exposure to credit risk 0 % - 40 % 31.05% % - 60 % 44.78% % - 80 % 24.04% % - 90 % 0.12% % % 0.00% > 100 % 0.01% Residential mortgages PAGE 15/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

16 Exposure to customers Loans to and receivables from credit institutions Commercial paper and bonds available for sale Other assets Exposure to others Gross exposure In NOK thousand Loan-to-value, Residential mortgages (relative distribution) Distribution in percent Gross carrying amounts 0 % - 85 % % % % % > 100 % % 117 Residential mortgages Note 9 Loan-to-value (LTV) and cover pool In NOK thousand Debt related to securities issued, nominal value Debt related to securities issued, carried value Loans to customers (gross)* Average size of loan per customer Number of loans Weighted average since issuing of the loans (months) Weighted average remaining maturity (months) Average LTV (percent) Cover pool Loans secured with mortgages Not eligible for the over-collateralisation calculation Net loans that are in the over-collateralisation Commercial paper and bonds Supplementary assets Total cover pool for the over-collateralisation calculation Nominal value Carried value Nominal value Carried value Nominal value Carried value Over-collateralisation (percent) Amount surpassing legal minimum requirements and requirements as indicated by rating agency *excl. earned interest PAGE 16/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

17 Note 10 Loan losses Expected credit loss January- June 2018 In NOK thousand Stage 1, 12-months ECL Stage 2, Lifetime ECL (not impaired) Stage 3, Lifetime ECL (impaired) Total Opening balance ECL (Expected credit loss) Changes in PDs/LGDs/EADs on existing portfolio: Transfers to Stage Transfers to Stage Transfers to Stage Changes in PDs/LGDs/EADs on existing portfolio, with no transfers Other changes: New financial assets originated Financial assets that have been derecognised Write-offs, covered by previous write-downs 0 0 Changes to model assumption and methodologies Other movements Closing balance ECL (Expected credit loss) Specification of loan losses In NOK thousands January- June 2018 Changes in loss allowance Write-offs 0 Recoveries of previously written off loans 0 Net cost of loan losses in the period Figures below are presented in accordance with IAS 39 and not restated Loan loss provisions In NOK thousand Opening balance individual write-downs Increase in write-downs on loans previously written down Write-downs om loans not previously written down Reversal of write downs as a result of confirmations in the period Reversal of individual write-downs in the period 0 0 Closing balance 0 0 Opening balance collective write-downs /- change in collective write-downs in the period Closing balance group collective write-downs Closing balance total write-downs Individual write-downs 0 0 Individual write-downs (collectively considered) 0 0 Collective write-downs Total write downs PAGE 17/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

18 Specification of loan losses Actual losses 0 0 Reversal of previous years' depreciation 0 0 Increase in provision Reversal of provisions 0 0 Recoveries of previously written-off 0 0 Net cost of losses in the period Losses by sector and industry Retail market (individuals) Total Write-downs by product group Residential mortgages Total PAGE 18/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

19 Note 11 Credit-impaired assets and overdue loans Credit-impaired assets In NOK thousand Loans to customers: Mortgages Principal type of collateral held Residential property Gross exposure Impairment allowance Carrying amount Fair value of collateral held Net exposure Provisioning ratio after collateral % Total credit-impaired assets % Overdue loans - age distribution The table below shows the carrying value of overdue loans and overdrawn amounts on credits allocated by number of days after maturity. The table provides an analysis of exposure where there is inadequate ability or propensity to pay, rather than overdue amounts attributable to a delay in transferring funds. Based on this and the company s internal routines for monitoring overdue exposure, the default must exceed NOK 800 for more than 6 days to be included in the second table below. Overdue loans In NOK thousand 7-30 days days days More than 90 days Total Mortgages Total Figures below are presented in accordance with IAS 39 and not restated Non-performing and doubtful loans Sbanken Boligkreditt monitors exposures for which repayments and interest have not been paid on time or for which authorised overdraft limits are exceeded, where the reason is deemed to be the customer s inability or lack of propensity to pay. Payment defaults of more than 60 days and more than NOK 200 are always reported as non-performing. If other matters indicate that the customer s financial position will result in loss, the exposure is classified as doubtful. The need to recognise individual impairments is assessed against the value of available collateral for the exposure. The table below shows the relationship between the gross book value of non-performing and doubtful loans and the associated individual impairments. In NOK thousand Non-performing loans with write-downs 0 0 Non-performing loans without write-downs Total non-performing loans (more than 60 days) Doubtful loans 0 0 Gross non-performing and doubtful loans Individual write-downs 0 0 Net non-performing and doubtful loans Provisioning ratio 0 % 0 % Overdue loans without write-downs - age distribution The table below shows the book value of overdue loans and overdrawn amounts on credits allocated by number of days after maturity, where no impairments have been recognised. The table provides an analysis of exposures where there is inadequate ability or propensity to pay, rather than overdue amounts attributable to a delay in transferring funds. Based on this and the company s internal routines for monitoring overdue exposures, the default must exceed NOK 200 for more than 6 days to be included in the table below. PAGE 19/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

20 In NOK thousand 7-30 days days days More than 90 days Total Mortgages Loans to customers In NOK thousand 7-30 days days days More than 90 days Total Mortgages Loans to customers Note 12 Issued debt Carried at amortised cost: In NOK thousand Currency Bonds issued NOK Subordinated loan NOK Total debt securities issued Specification of covered bonds as at : ISIN Issuing company Nominal value Currency Interest Maturity Carrying value Covered bonds NO Sbanken Boligkreditt AS NOK Floating NO Sbanken Boligkreditt AS NOK Floating NO Sbanken Boligkreditt AS NOK Floating NO Sbanken Boligkreditt AS NOK Floating NO Sbanken Boligkreditt AS NOK Floating NO Sbanken Boligkreditt AS NOK Floating XS Sbanken Boligkreditt AS EURO Fixed Total covered bonds All covered bond loans have soft bullet with the possibility to extend the maturity with one year. Subordinated loan NO Sbanken Boligkreditt AS NOK Floating * NO Sbanken Boligkreditt AS NOK Floating ** Total subordinated loan * First possible call date for the issuer is 22 June The loan agreement has covenants to qualify as Tier 2 capital. ** First possible call date for the issuer is 26 April The loan agreement has covenants to qualify as Tier 2 capital. Changes of debt securities: January - June Issued Matured Redeemed Other adjustments Covered bonds (nominal) Subordinated loan Total PAGE 20/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

21 Note 13 Additional Tier 1 Capital (hybrid capital) In NOK thousand Currency Additional Tier 1 capital NOK Total Additional Tier 1 capital Specification of additional Tier 1 capital as at : ISIN Additional Tier 1 capital Issuing company Nominal value Currency Interest Maturity* Carrying amounts NO Sbanken Boligkreditt AS NOK NO Sbanken Boligkreditt AS NOK 3M Nibor % 3M Nibor % Perpetual* Perpetual** Total additional Tier 1 capital * The Tier1 capital is perpetual with an option for the issuer to redeem the capital at specific dates, the first time being 22 June ** The Tier1 capital is perpetual with an option for the issuer to redeem the capital at specific dates, the first time being 26 April Change of Additional Tier 1 capital January - June Issued Matured Redeemed Other adjustments Additional Tier 1 capital Total As at 30 June 2018, there is NOK 0.95 million in accrued interest related to additional Tier 1 capital. This has been recognised against the additional Tier 1 capital and the carried value including accrued interest is million NOK Note 14 Net interest income Net interest income In NOK thousand Q2 18 Q2 17 Jan- Jun 18 Jan- Jun Loans to and receivables from credit institutions Loans to customers Commercial paper and bonds Total interest income Loans and deposits from credit institutions Debt securities issued Subordinated loan Other interest expense Total interest expense Net interest income All interest income from customers is related to residential mortgages PAGE 21/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

22 Note 15 Net gain (loss) on financial instruments In NOK thousand Q2 18 Q2 17 Jan- Jun 18 Jan- Jun ) Financial instruments at fair value through profit and loss: Gain/(loss) on derivatives (used in hedge accounting) Total gain/(loss) on financial instruments at fair value through profit and loss ) Financial instruments at amortised cost: Gain (loss) by repurchase of own bonds at amortised cost Total gain (loss) on financial instruments at amortised cost ) Currency items: Gain (loss) on currency items Total gain (loss) on currency items Total gain (loss) on financial instruments recognised through profit and loss Related to hedge accounting Sbanken Boligkreditt AS has recognised 6.6 MNOK due to changes in the basis swaps against other comprehensive income in the Q2 18. Note 16 Administrative expenses Other administrative expenses In NOK thousand Q2 18 Q2 17 Jan- Jun 18 Jan- Jun Consultants and other external services Other operating expenses Total other administrative expenses Personnel expenses In NOK thousand Q2 18 Q2 17 Jan- Jun 18 Jan- Jun Board remuneration Payroll tax Total personnel expenses PAGE 22/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

23 Note 17 Tax expense In NOK thousand Q2 18 Q2 17 Jan- Jun 18 Jan- Jun Taxes payable Change in deferred tax Correction of taxes payable previous year Total tax expense Reconciliation of the tax expense: Profit before tax Expected tax expense at nominal rate of 23 % (in 2018) and 24 % (in 2017) Tax effect from interest to Tier 1 capital holders Tax effect from unrealised financial instruments Correction of taxes payable previous year Total tax expense Effective tax rate 22.3% 22.9% 22.3% 22.7% 23.0% Note 18 Fair value of financial instruments Fair value of financial instruments (in NOK thousands) In NOK thousand Carrying value Fair value Carrying value Fair value Carrying value Fair value Assets Loans to and receivables from credit institutions (ac) Loans to customers (ac) Commercial paper and bonds at fair value through OCI Other assets (ac) Total assets financial instruments Liabilities Loans and deposits from credit institutions (ac) Debt securities issued (ac) Derivatives (used in hedge accounting) Other liabilities (ac) Subordinated loan (ac) Total liabilities financial instruments (ac) = assets and liabilities booked at amortised cost PAGE 23/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED

24 Level 1 Level 2 Level 3 Total Commercial paper and bonds available for sale Total Derivatives (used in hedge accounting) Total Financial instruments measured at fair value level 3 In NOK thousand Total Opening balance 1 January Net gain/(loss) on financial instruments (unrealised)* 0 0 Acquisitions / exits 0 0 Sale 0 0 Settlement 0 0 Transferred from Level 1 or Level Transferred to Level 1 or Level Other 0 0 Closing balance at 30 June There have been no transfers of financial instruments between Level 1 and Level 2 in the period January to June Level 1 Level 2 Level 3 Total Commercial paper and bonds available for sale Total Financial instruments measured at fair value level 3 In NOK thousand Total Opening balance 1 January Net gain/(loss) on financial instruments (unrealised)* 0 0 Acquisitions / exits 0 0 Sale 0 0 Settlement 0 0 Transferred from Level 1 or Level Transferred to Level 1 or Level Other 0 0 Closing balance at 31 December Level 1 Level 2 Level 3 Total Commercial paper and bonds available for sale Total Financial instruments measured at fair value level 3 In NOK thousand Total Opening balance 1 January Net gain/(loss) on financial instruments (unrealised)* 0 0 Acquisitions / exits 0 0 Sale 0 0 Settlement 0 0 Transferred from Level 1 or Level Transferred to Level 1 or Level Other 0 0 Closing balance at 30 June PAGE 24/28 SECOND QUARTER 2018 SBANKEN BOLIGKREDITT AS UNAUDITED