interim report 1 quarter unaudited

Transcription

1 interim report quarter unaudited 5

2 2 st QUARTER 25 Contents First quarter report from the Board of Directors Statement of income Statement of financial position Statement of changes in equity 9 Statement of cash flow Notes to the Accounts Profit performance

3 st QUARTER 25 Interim report from the Board of Directors About the company quarter 24. Profit after tax amounted to capital increase was fully paid in by Spare- Møre Boligkreditt AS is a wholly owned 55 million in first quarter 25, com- banken Møre as the owner of all subsidiary of Sparebanken Møre. The com- pared to 4 million in the correspond- shares in Møre Boligkreditt AS. Paid-in pany is licensed to operate as a mortgage ing quarter 24. equity and other equity amounts to company, issuing covered bonds. Møre 5 million by end of first quarter 25, Bolig kreditt AS is Sparebanken Møre's most Møre Boligkreditt AS drew 5 million compared to 5 million by end of important source of market funding and an on an existing floating rate bond loan, and first quarter 24. This corresponds to a important part of the parent bank's long- issued one new 5 million fixed rate capital adequacy/core capital ratio of 5.92 term funding strategy. bond loan. One bond loan matured and per cent. Risk-weighted assets amounts to was fully repaid with million in 22 million by end of first quarter The accounts have been prepared in first quarter of 25. Møre Boligkreditt AS 25. The Financial Supervisory Authority accordance with IFRS. have fourteen bond loans outstanding by of Norway has approved Sparebanken Møre March 25, with a total bond loan debt Group for the use of internal rating based First quarter results of 4 4 million, compared to (IRB) models to calculate capital require- The financial statements of Møre Bolig- million by March 24. ments for credit risk. The Board regards kreditt AS show a profit before tax of the company's interest bearing capacity as million in first quarter 25, compared Total assets at first quarter end 25 to 5 million in first quarter 24. amounts to 94 million compared Net interest income amounted to 5 to 5 4 million at first quarter end Risks million, compared to million for 24. Møre Boligkreditt AS' net lending Møre Boligkreditt AS is subject to a num- the same period last year. Costs amounted increased with 22 million in first ber of acts, regulations, recommendations to million in first quarter 25, quarter 25. Net lending amounts to and regulatory provisions. These regulations compared with million in the cor- 5 2 million at first quarter end largely stipulate restrictions concerning the responding quarter in , compared with 4 22 mil- scope of the company's various risk expo- satisfactory. lion at first quarter end 24. At first quar- sures. The Board and the managing director Net gain in value of debt securities issued ter end 25, the company's substitute of Møre Boligkreditt AS are responsible for and related derivatives was million assets included in the cover pool amounts ensuring that proper risk management is at first quarter end 25, compared to net to million, including receivables established, and that such risk management loss of 4 million at first quarter end from credit institutions of 59 mil- is adequate and complies with current laws 24. lion, compared to 4 million at first and regulations. Operational risk manage- quarter end 24. ment in Møre Boligkreditt AS is maintained Møre Boligkreditt AS has established no by Sparebanken Møre according to a ser- individual losses or individual impairment Rating vice agreement concluded between Møre for losses in first quarter 25, and no The rating agency Moody's has assigned Boligkreditt AS and Sparebanken Møre. changes in the collective impairment has Aaa-rating to all covered bonds issued by Risk management emphasizes identifying, been made. The amount allocated for col- Møre Boligkreditt AS. measuring and managing the company's lective impairment is 2 million at first risk elements in a manner that ensures that quarter end 25 compared to mil- Capital strength Møre Boligkreditt AS complies with the pro- lion at first quarter end 24. Tax amounted In first quarter 25 Møre Boligkreditt AS fessional credit regulations and keeps the to 2 million in the first quarter of has increased its equity by million various risks at a low level. 25, compared to million in first by issuing shares á 25. The

4 4 st QUARTER 25 Credit risk Liquidity risk managing director of Møre Boligkreditt AS, Credit risk is defined as the risk of losses Liquidity risk is the risk that Møre Bolig- is an important tool for reducing operational associated with customers or other coun- kreditt AS will be unable to fulfill its obli- risk. The internal control reports will help terparties being unable to fulfill their obliga- gations without substantial extra costs identifying any operational risk, and enable tions at the agreed time and pursuant to being incurred in the form of decline in action to be taken. The Board regards the written agreements, and that the received asset values, forced sales or more expen- company's operational risk as low. collateral is not covering outstanding sive funding. The company has adopted a claims. The credit risk strategy adopted by liquidity risk strategy and established limits Outlook the company defines which loans that can for long-term funding and short-term liquid- The Norwegian economy remains strong, be acquired by the company. The strategy ity risk limits. A 2 months rolling revolving but will probably experience somewhat stipulates criteria for both borrowers and the credit facility guarantee from Sparebanken lower growth in the coming quarters. The collateral for the loans that can be acquired. Møre ensures timely payments to deriva- slowdown in growth is mainly due to the At end of first quarter 25, the mortgages tive counterparties and owners of bonds recent fall in oil price together with the in the cover pool had an average loan-to- issued by Møre Boligkreditt AS. Furthermore expected decline in petroleum investments. value ratio of 5 per cent, calculated as the bonds have a soft bullet structure in A strong household sector due to low inter- mortgage amount relative to the value of which the company has the opportunity to est rates and low unemployment, together the property used as collateral. The Board extend the term of its borrowing by up to with a solid public sector will however keep regards the quality of the loan portfolio as 2 months. The Board regards the com- the production levels high in several sec- very good and the credit risk as low. pany's liquidity risk as low. tors.the weak following the fall in oil price is positive for the competiveness of Market risk Operational risk Market risk is the risk that will arise due to Operational risk is the risk of losses due the mortgage company s holding or assum- to inadequate or failing internal processes, Should the Norwegian economy be hit ing positions in lending and financial instru- human error, system failures or external harder than expected, monetary and ments in which the values over time will be events. Møre Boligkreditt AS has entered financial policy could quickly be moved affected by changes in market prices. Møre into a management agreement with Spare- in an even more expansive direction. The Boligkreditt AS must, pursuant to the Finan- banken Møre. The services covered by this development of house prices, together cial Institution Act, have very low market risk agreement include administration, produc- with growth in debt, is probably the most and Board approved restrictions concern- tion, IT operations, and financial and risk important risk factors to Norwegian house- ing its maximum exposure to market risk. management. Although the operational holds. Important risk factors going forward The company utilizes financial derivatives risk of Møre Boligkreditt AS is dependent are also the oil price, economic growth in to keep this type of risk at a low level. A of Sparebanken Møre's ability to manage export markets and development of the specific market strategy has been adopted this type of risk, Møre Boligkreditt AS inde- exchange rate. for Møre Boligkreditt AS which establishes pendently bear risk associated with errors the limits for this type of risk. The com- in the deliveries and services provided by The economic outlook in the county of Møre pany's positions in fixed interest and for- Sparebanken Møre. The evaluation of the og Romsdal has not changed significantly so eign currencies are hedged with financial management and control of operational risk far in 25. There will probably be a slight derivatives. The Board considers the overall is also afforded considerable space in the growth in unemployment the first couple market risk as low. Group's annual ICAAP. The operational and of years, both in Norway as well as in Møre established yearly internal control report, og Romsdal. The registered unemployment both within Sparebanken Møre and by the rate in Norway was. per cent in March, the export industry and tourism.

5 st QUARTER 25 compared to 2.5 per cent in the county of The Board believes that the still relatively Sparebanken Møre. This mortgage growth Møre og Romsdal. The unemployment rate good economic outlook in Norway, and will position Møre Boligkreditt AS to acquire in the county is expected to remain below in the county of Møre og Romsdal, com- futher mortgage loan portfolios from the national levels also going forward. bined with low interest rates and increase parent bank, and further increase the vol- in disposable household income, will con- ume of outstanding bond loans from Møre tribute to further mortgage loan growth in Boligkreditt AS. Ålesund, 29 April 25 The Board of Directors of Møre Boligkreditt AS Kjetil Hauge Britt Iren Tøsse Aandal Trond Nydal chairman Geir Tore Hjelle Sandra Myhre Helseth Ole Kjerstad m anag ing dire c tor 5

6 st QUARTER 25 STATEMENT OF INCOME AS Notes Q 25 Q 24 Interest income Interest expenses 2 2 2, (M) Commission income Net change in value of debt securities issued and related derivatives -4 - Wages, salaries and general administration costs 2 2 Net interest income Other operating costs Total operating costs Profit before impairment on loans and taxes Pre tax profit 5 2 Taxes 2 Profit after tax Impairment on loans STATEMENT OF COMPREHENSIVE INCOME AS (M) Profit after tax Other comprehensive income Total comprehensive income after tax Notes Q 25 Q

7 st QUARTER 25 STATEMENT OF FINANCIAL POSITION AS (M) Notes , 4, 5, Assets Loans to and receivables from credit institutions 2,, Certificates and bonds 4, Financial derivatives 4, , , 5, , 5 24 Loans to and receivables from customers Deferred tax asset Total assets Liabilities and equity Loans from credit institutions Debt securities issued Financial derivatives Share capital Share premium Tax payable Total liabilities Profit for the period 55 4 Retained earnings Other paid-in equity Paid-in equity Other equity Total equity Total liabilities and equity

8 st QUARTER 25 STATEMENT OF CHANGES IN EQUITY..25 Amounts in M Total equity Share capital Share premium Other equity Equity as at December Total comprehensive income for the period 55 Issue of share capital Dividends -9 Equity as at March The share capital consists of shares at 25, a total of 95 million. All shares are owned by Sparebanken Møre. The issue of share capital of million was approved by the Financial Supervisory Authority of Norway 9 March 25, and updated certificate of registration and articles of association were registered March Amounts in M Equity as at December 2 Total comprehensive income for the period Total equity Share capital Share premium Other equity Issue of share capital and premium 5 Dividends -52 Equity as at March The share capital consists of shares at 25, a total of 5 million. All shares are owned by Sparebanken Møre. 24 Total equity Share capital Share premium Other equity Equity as at December Total comprehensive income for the period 9 Issue of share capital and premium 5 Dividends -52 Amounts in M Equity as at December The share capital consists of shares at 25, a total of 5 million. All shares are owned by Sparebanken Møre. Proposed dividend as of December amounts to 9 million. 94

9 st QUARTER 25 CASH FLOW STATEMENT AS Interest, commission and fees received 4 52 Interest, commission and fees paid (M) 24 Cash flow from operating activities Payment for acquiring loans from the Parent Bank Payment related to instalment loans and credit lines to customers Operating expenses paid Income taxes paid Net cash flow from operating activities Cash flow from investing activities Proceeds from the sale of certificates, bonds and other securities 245 Purchases of certificates, bonds and other securities Changes in other assets -4 - Net cash flow from investing activities -2-9 Cash flow from financing activities Net change in loans from credit institutions Proceeds from bond issues Dividend and group contribution paid Redemption of debt securities Changes in other debt Issue of share capital and premium 5 5 Net cash flow from financing activities Net change in cash and cash equivalents Cash balance at Cash balance at.2/

10 st QUARTER 25 Notes Amounts in million ACCOUNTING PRINCIPLES Møre Boligkreditt AS` interim report is prepared in accordance with IAS 4 Interim Financial Reporting (compressed). The accounts are prepared using the same principles, and with the same methodology as the annual accounts for 24. The principles are outlined in the annual report for 24. There have been no changes in standards that affect the financial statements of Møre Boligkreditt AS from December 24. The interim financial statements are not audited. All amounts are stated in million unless stated otherwise. 2 OPERATING SEGMENTS Møre Boligkreditt AS has only one segment in its business and here the customers derive mainly from the retail banking market. The following tables contain details of loans to customers by sector, business activity and geographical area. LOANS (M) Agriculture and forestry 2 Fisheries Manufacturing Sectors Building and construction Wholesale and retail trade, hotels Property management 2 55 Public entities Activities abroad Miscellaneous 45 5 Retail customers Accrued interest income Loans, nominal amount Transport and private/public services Total corporate/public entities Collective impairment Loans to and receivables from customers (M) NET INTEREST INCOME Interest income from: 5 Loans to and receivables from customers 4 54 Interest income 4 5 Loans to and receivables from credit institutions Interest expenses in respect of: 5 29 Interest expenses 2 29 Net interest income 5 29 Loans from credit institutions Debt securities issued

11 st QUARTER 25 IMPAIRMENT, LOSSES AND NON-PERFORMANCE Møre Boligkreditt AS reviews its loan portfolio every quarter. Commitments are tested to see whether or not objective evidence exists that a loss event has occurred and that the loss event reduces the loan's future cash flows. Examples of such objective evidence are material financial problems at the debtor, payment defaults, material breaches of contract, agreed changes to the interest rate or other agreement terms due to financial problems at the debtor, bankruptcy, etc. If objective evidence of impairment exists, the impairment is estimated as the difference between the carrying amount (balance + accrued interest on the date of assessment) and the present value of future cash flows. Estimates of future cash flows also take into account takeovers and sales of associated collateral, included expenses associated with such takeovers and sales. When all collateral has been liquidated and there is no doubt that the mortgage company will not receive further payments relating to the commitment, the impairment will be reversed and the actual loss will be booked. Nonetheless, the claim against the customer will remain and be followed up, unless a debt cancellation agreement is reached with the customer. Collective impairments are calculated for subgroups of loans when objective events indicate that future cash flows that would be used to service the commitments have weakened, where it is not possible to examine all commitments on an individual basis, or where information is not identifiable at a commitment level. Commitments for which individual impairments have been registered are not included in the basis for collective impairment. The Sparebanken Møre Group has developed its own collective impairment model and calculations are conducted each month based on input from the risk classification system, data warehouse, and assessments of macroeconomic factors. Changes to risk classification, negative developments in collateral values, and registered macroeconomic events that affect future estimated cash flows are taken into account in the model. The Group's model for collective impairment is tailored to Møre Boligkreditt AS' assumptions and operations. No exposures in the company's lending portfolio were identified on the date of the financial position needing individual impairments. Nor do the lending statistics on this date show any registered nonperformance in the mortgage company's portfolio. Totalt impairment amounts to 2 million as at March FINANCIAL INSTRUMENTS All lending and receivables are recorded at amortised cost. Amortised cost is also used for floating rate securities issued. The company's debt securities issued with fixed interest rates are accounted for using fair value hedging. Losses and gains, resulting from changes in value due to changes in market interest of debt securities with fixed interest are recognised in the income statement in the period they arise. Market prices are used to price lending to and receivables from financial institutions and lending to customers. The prices set include a mark-up for the relevant credit risk. Fair value is estimated as the carrying amount of the lending and receivables stated at amortised cost after deducting impairment. There are no major differences between the book value and the fair value of loans to credit institutions and customers, and liabilities to credit institutions agreed at variable rates and recognised at amortised cost. Fair value of debt securities is calculated allowing for change in the market interest rates and change in the credit margin. Financial derivatives related to the company`s debt securities issued are carried at fair value through profit or loss, and recognised gross per contract, as either asset or debt.

12 2 st QUARTER 25 Financial instruments at fair value through profit or loss CLASSIFICATION OF FINANCIAL INSTRUMENTS Financial assets and liabilities carried at amortised cost Loans to and receivables from credit institutions 59 4 Loans to and receivables from customers Certificates and bonds 2 4 Financial derivatives 9 Total assets Loans from credit institutions 4 Debt securities issued 4 4 Financial derivatives 24 Total liabilities FAIR VALUE OF FINANCIAL INSTRUMENTS AT AMORTISED COST Loans to and receivables from credit institutions Fair value Book value Fair value Book value Loans to and receivables from customers Total assets Debt securities issued Total liabilities Loans from credit institutions FINANCIAL INSTRUMENTS AT AMORTISED COST Observable market information Based on prices in an active market Level Other than observable market information Level 2 Level Total Loans to and receivables from credit institutions Loans to and receivables from customers Total assets Loans from credit institutions 4 4 Debt securities issued Total liabilities FINANCIAL INSTRUMENTS AT FAIR VALUE Based on prices in an active market Observable market information Level Other than observable market information Level 2 Level Total Certificates and bonds Financial derivatives 9 9 Total assets Financial derivatives Total liabilities 24 24

13 st QUARTER 25 5 ISSUED COVERED BONDS Securities issued at variable rate terms are stated at amortised cost. Fair value hedging with value changes through profit and loss is used for the company's securities issued at fixed rate terms. COVERED BONDS (M) Currency Nominal value..25 Interest Issue Maturity NO499 M Nibor +.45 % NO M Nibor +.5 % NO5492 M Nibor +.4 % NO559 5 M Nibor +.55 % NO52 5 fixed 4.5 % NO25 M Nibor +.4 % XS5955 SEK 45 M Stibor +.5 % NO5 95 M Nibor +.49 % NO522 2 M Nibor +.5 % ISIN code XS245 SEK M Stibor +. % NO 2 M Nibor +.4 % XS9459 EUR 25 fixed EUR 2. % XS949 EUR M Euribor +.2 % NO999 M Nibor +.45 % NO992 5 M Nibor +. % NO224 2 M Nibor +.24 % NO 5 fixed.5 % Accrued interest Financial derivatives to hedge securities (liabilities) 24 Total securities issued Financial derivatives to hedge securities (assets) Total borrowings raised through the issue of securities COVER POOL (M) Pool of eligible loans ) Supplementary assets Total collateralised assets Collateralisation ) 5 million of total gross loans are not eligible for the cover pool as at % 5. %.2 %

14 4 st QUARTER 25 TRANSACTIONS WITH RELATED PARTIES In order to conduct normal business, Møre Boligkreditt AS purchases services from Sparebanken Møre. There will also be transactions between the parties related to the acquisition of loan portfolio, and the fact that Sparebanken Møre provides loans and credits to the mortgage company. Loans from Sparebanken Møre are transferred at market value. If the purchased mortgage loans have fixed interest rates the price is adjusted for the value above / below par. Sparebanken Møre is responsible for ensuring that the loans to be transferred to Møre Boligkreditt AS are properly established and in accordance with the requirements specified in the agreement between the mortgage company and the Parent Bank. In case of a violation of these requirements, the Parent Bank will be liable for any losses that the mortgage company would experience as a result of the error. Sparebanken Møre and Møre Boligkreditt AS have formalised the settlement of interest for transaction days from date of transfer of loan portfolio to date of settlement of the consideration. If Møre Boligkreditt AS should have difficulty in obtaining financing, there is established a revolving guarantee from Sparebanken Møre where the purpose is to ensure timely payments to owners of bonds and derivative counterparties. of the extent of the activity and the loan portfolio acquired by Møre Boligkreditt AS, charges related to accounting, financial reporting, risk management, cash management, financing, governance and general legal services will incur. The pricing of the services provided to Møre Boligkreditt AS by Sparebanken Møre distinguishes between fixed and variable costs for the mortgage company. Fixed costs are defined as costs the mortgage company must bear regardless of the activity related to the issuance of covered bonds, the acquisition of portfolio, etc. Variable costs are defined as costs related to the size of the portfolio acquired from Sparebanken Møre and the work that must be exercised by the Bank's employees to deliver satisfactory services given the number of customers in the portfolio. Sparebanken Møre bills the mortgage company based on actual salary costs, including social security contribution, pension costs and other social costs. Parts of the mortgage company's expenses related to services provided by Sparebanken Møre relates to the size of the portfolio acquired from Sparebanken Møre. Management fee is calculated and billed monthly, in which the month's average portfolio size form the basis of billing. The interest rate of the mortgage company's deposit and credit limit in Sparebanken Møre is based on months NIBOR + a premium. Møre Boligkreditt AS is billed for costs related to the lease of premises at Sparebanken Møre. It is assumed that regardless of operations, a certain area of the bank attributable to the mortgage company is utilised during the year. Regardless The most important transactions are as follows: Interest and credit commision income from Sparebanken Møre related to deposits 5 Interest and credit commision income paid to Sparebanken Møre related to loan/credit facility 5 2 Interest paid to Sparebanken Møre related to bonded debt Management fee paid to Sparebanken Møre 5 22 Deposits in Sparebanken Møre Covered bonds (M) Income statement Statement of financial position Loan/credit facility in Sparebanken Møre Accumulated transferred loan portfolio from Sparebanken Møre

15 st QUARTER 25 EQUITY AND RELATED CAPITAL (M) AS Net equity and subordinated loan capital Risk-weighted assets (calculation basis for capital adequacy ratio) Capital adequacy ratio Core capital ratio IRB approach (Basel II) Core capital Supplementary capital Internal rating based (IRB) models have been used to calculate capital adequacy in the retail portfolio as of..25, and in the corporate portfolio from

16 st QUARTER 25 Profit performance QUARTERLY PROFIT (M) Net interest income Q 25 Q4 24 Q 24 Q2 24 Q Total other operating income 4 5 Total operating costs Profit before impairment on loans and taxes Pre tax profit Taxes 2 Profit after tax Q 25 Q4 24 Q 24 Q2 24 Q 24 Impairment on loans AS A PERCENTAGE OF AVERAGE ASSETS Net interest income Total other operating income Total operating costs Profit before impairment on loans and taxes Impairment on loans Pre tax profit Taxes Profit after tax Average total assets (M) ACCUMULATED PROFIT FOR THE YEAR (M) Net interest income Total other operating income Total operating costs Profit before impairment on loans and taxes Pre tax profit 5 2 Taxes 2 Profit after tax Impairment on loans AS A PERCENTAGE OF AVERAGE ASSETS Net interest income Total other operating income Total operating costs Profit before impairment on loans and taxes...9 Impairment on loans... Pre tax profit...9 Taxes Profit after tax Average total assets (M)

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