interim report 3 quarter unaudited

Transcription

1 interim report quarter unaudited 4

2 2 rd QUARTER 24 Contents Third quarter report from the Board of Directors 6 Statement of income 7 Statement of financial position 8 Statement of changes in equity 9 Statement of cash flow Notes to the Accounts 7 Profit performance

3 rd QUARTER 24 Interim report from the Board of Directors About the company covered bond loan with nominal balance 24 with a total bond loan debt of Møre Boligkreditt AS is a wholly owned sub of 2, million in third quarter 24. 4,555 million compared to,95 sidiary of Sparebanken Møre. The company million by September 2. is licensed to operate as a mortgage com Third quarter end results pany, issuing covered bonds. Møre Bolig By end of third quarter 24 the financial Rating kreditt AS is Sparebanken Møre's most statements show a profit before tax of The rating agency Moody's has assigned important source of market funding and an 97 million, compared to 47 mil Aaa-rating to all covered bonds issued by important part of the parent bank's long- lion by third quarter end 2. Net interest Møre Boligkreditt AS. term funding strategy. income amounted to 22 million by third quarter end 24, compared to Capital strength The accounts have been prepared in 67 million by end of same period last year. Paid-in equity and other equity amounted accordance with IFRS. Costs in the period ending September to,5 million by end of third quar 24 amounted to 2 million, com ter 24, compared to 7 million Third quarter results pared with 9 million for the corre by end of third quarter 2. This corre The financial statements of Møre Boligkre sponding period 2. sponds to a capital adequacy/core capi ditt AS show a profit before tax of 67 tal ratio of 4.96 per cent. Risk-weighted million in third quarter 24, compared to The amount allocated for collective impair assets amounted to 7,2 million 57 million in third quarter 2. Net ment was 2 million by third quarter by end of third quarter 24. The Finan interest income amounted to 72 mil end 24 compared to million cial Supervisory Authority of Norway has lion, compared to 64 million for the by third quarter end 2. Profit after tax approved Sparebanken Møre Group for same period last year. Costs amounted to amounted to 44 million by third the use of internal rating based (IRB) 6 million in third quarter 24, com quarter end 24, compared to 6 models to calculate capital requirements pared with 6 million in the correspon million by third quarter end 2. Tax for credit risk in the corporate portfolios. ding quarter in 2. amounted to 5 million in the first Until further notice, the Group still has to nine months of 24, compared to use the standard approach in the Basel II 4 million the first nine months of 2. regulations for calculating capital adequacy Møre Boligkreditt AS has not established losses or impairment for individual losses in the retail portfolios. The Board regards in third quarter 24, or made changes in Total assets by third quarter end 24 the company's interest bearing capacity as the collective impairment. Tax amounted to amounted to 6,747 million compa satisfactory. 8 million in the third quarter of 24, red to,97 million by third quarter compared to 6 million in third quar end 2. Net lending amounted to Risks ter 2. Profit after tax amounted to 6,2 million third quarter end 24, Møre Boligkreditt AS is subject to a num 49 million in third quarter 24, compa compared with,472 million by ber of acts, regulations, recommendations red to 4 million in the corresponding third quarter end 2. By third quarter and regulatory provisions. These regulations quarter 2. end 24, the company's substitute assets largely stipulate restrictions concerning the included in the cover pool amounted to scope of the company's various risk expo Møre Boligkreditt AS acquired mortga 46 million, including receivables from sures. The Board and the CEO of Møre ges from Sparebanken Møre, and the credit institutions of 29 million, com Boligkreditt AS are responsible for ensur company's net lending growth amounted pared to 5 million by third quarter ing that proper risk management is estab to 995 million in third quarter 24. end 2. Møre Boligkreditt AS had fifteen lished, and that such risk management is Møre Boligkreditt AS issued one new bond loans outstanding by September adequate and complies with current laws

4 4 rd QUARTER 24 and regulations. Operational risk manage its maximum exposure to market risk. The this type of risk, Møre Boligkreditt AS inde ment in Møre Boligkreditt AS is maintained company utilizes financial derivatives to pendently bear risk associated with errors by Sparebanken Møre according to a service keep this type of risk at a low level. A specific in the deliveries and services provided by agreement concluded between Møre Bolig market strategy has been adopted for Møre Sparebanken Møre. The evaluation of the kreditt AS and Sparebanken Møre. Risk man Boligkreditt AS which establishes the limits management and control of operational risk agement emphasizes identifying, measuring for this type of risk. The company's positions is also afforded considerable space in the and managing the company's risk elements in fixed interest and foreign currencies are Group's annual ICAAP. The operational and in a manner that ensures that Møre Bol hedged with financial derivatives. The Board established yearly internal control report, igkreditt AS complies with the professional considers the overall market risk as low. both within Sparebanken Møre and by the credit regulations and keeps the various risks at a low level. CEO of Møre Boligkreditt AS, is an impor Liquidity risk tant tool for reducing operational risk. The Liquidity risk is the risk that Møre Bolig internal control reports will help identifying Credit risk kreditt AS will be unable to fulfill its obliga any operational risk, and enable action to Credit risk is defined as the risk of losses tions without substantial extra costs being be taken. The Board regards the company's associated with customers or other counter incurred in the form of decline in asset val operational risk as low. parties being unable to fulfill their obligations ues, forced sales or more expensive funding. at the agreed time and pursuant to written The company has adopted a liquidity risk Outlook agreements, and that the received collat strategy and established limits for long-term The Norwegian economy is still solid, but eral is not covering outstanding claims. The funding and short-term liquidity risk limits. the growth has been moderate so far this credit risk strategy adopted by the company A 2 months rolling revolving credit facility year. A strong household sector, due to defines which loans that can be acquired by guarantee from Sparebanken Møre ensures factors such as low interest rates and low the company. The strategy stipulates criteria timely payments to derivative counterpar unemployment, together with a solid pub for both borrowers and the collateral for the ties and owners of bonds issued by Møre lic sector will contribute to good levels of loans that can be acquired. At end of third Boligkreditt AS. Furthermore the bonds have activity in several sectors. Should the Norwe quarter 24, the mortgages in the cover a soft bullet structure in which the company gian economy be hit harder than expected, pool had an average loan-to-value ratio of has the opportunity to extend the term of its monetary and financial policy could quickly 55 per cent, calculated as mortgage amount borrowing by up to 2 months. The Board be moved in a more expansive direction. relative to the value of the property used regards the company's liquidity risk as low. The development of house prices, together as collateral. The Board regards the quality with growth in debt, is probably the most of the loan portfolio as very good and the Operational risk important risk factors to Norwegian house credit risk as low. Operational risk is the risk of losses due holds. The moderate but slow economic to inadequate or failing internal processes, upswing among Norway's trading partners Market risk human error, system failures or external is continuing. A likely slight improvement in Market risk is the risk that will arise due to events. Møre Boligkreditt AS has entered the economic situation of the euro area, and the mortgage company s holding or assum into a management agreement with Spare the relatively weak are positive for the ing positions in lending and financial instru banken Møre. The services covered by this competiveness of the local export industry. ments in which the values over time will be agreement include administration, produc Important risk factors going forward is the affected by changes in market prices. Møre tion, IT operations, and financial and risk oil price, expectations of lower oil invest Boligkreditt AS must, pursuant to the Finan management. Although the operational ments in 25, the economic develop cial Institution Act, have very low market risk risk of Møre Boligkreditt AS is dependent ment in export markets, as well as the and Board approved restrictions concerning of Sparebanken Møre's ability to manage exchange rate.

5 rd QUARTER 24 The possibility of a somewhat weaker ployment will increase slightly in Møre og in Norway, and in the county of Møre og growth in private consumption is also a Romsdal but still below national levels. The Romsdal, combined with low interest rates risk factor to consider. The activity in Møre registered unemployment rate in Norway and increase in household income, will con og Romsdal county will remain high despite was 2.7 per cent in September compared tribute to further mortgage loan growth in the expected lower growth of about per with an unemployment rate of 2. per cent Sparebanken Møre. This mortgage growth cent in 25 in the petroleum investments. in the county of Møre og Romsdal. will position Møre Boligkreditt AS to acquire As a result of lower oil investments, and the futher mortgage loan portfolios from the continued poor performance in some of the The Board believes that the still relatively parent bank, and also to further increase main export markets it is likely that unem good climate for businesses and industry volume of outstanding bond loans. Ålesund, 22 October 24 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 ceo 5

6 6 rd QUARTER 24 STATEMENT OF INCOME AS Notes Q 24 Q Interest income Interest expenses , 6 72 Net interest income Net change in value of debt securities issued and related derivatives Wages, salaries and general administration costs Other operating costs 6 Total operating costs Profit before impairment on loans and taxes Impairment on loans Pre tax profit Taxes Profit after tax STATEMENT OF COMPREHENSIVE INCOME AS Profit after tax Other comprehensive income Total comprehensive income after tax Notes Q 24 Q

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

8 8 rd QUARTER 24 STATEMENT OF CHANGES IN EQUITY.9.24 Total equity Share capital Share premium Other paid-in equity Other equity Equity as at December Total comprehensive income for the period 44 Issue of share capital and premium 5 Amounts in M Dividends Equity as at September The share capital is distributed over 7 shares at 25, a total of 875 million. All shares are owned by Sparebanken Møre..9.2 Total equity Share capital Share premium Other paid-in equity Other equity Equity as at December Capital increase 2 2 Total comprehensive income for the period 6 6 Dividends Amounts in M Equity as at September Total equity Share capital Share premium Other paid-in equity Other equity Equity as at December Total comprehensive income for the period 52 Issue of share capital 2 2 Amounts in M Dividends Equity as at December Proposed dividend amounts to 52 million as per December

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

10 rd QUARTER 24 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 2. The principles are outlined in the annual report for 2. There have been no changes in standards that affect the financial statements of Møre Boligkreditt AS from December 2. 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 Agriculture and forestry 2 Fisheries Manufactoring 7 Sectors Building and construction Wholesale and retail trade, hotels Property management Transport and private/public services Public entities 8 Activities abroad Miscellaneous Retail customers Loans, nominal amount Total corporate/public entities Collective impairment Loans to and receivables from customers NET INTEREST INCOME Interest income from: 5 Loans to and receivables from customers Interest income Loans to and receivables from credit institutions Interest expenses in respect of: 2 24 Debt securities issued Interest expenses Net interest income Loans from credit institutions

11 rd QUARTER 24 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 September FINANCIAL ASSETS AND LIABILITIES 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. FINANCIAL ASSETS 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.9.24 Fair value 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 Book value Fair value Book value Fair value Book value Financial assets at fair value through profit or loss: Bonds Financial derivatives Certificates Loans and receivables (at amortised cost): Loans to and receivables from credit institutions Loans to and receivables from customers

12 2 rd QUARTER 24 FINANCIAL LIABILITIES Fair value Book value Fair value Book value Fair value Book value Financial liabilities at fair value through profit or loss: Financial derivatives Debt securities issued (at amortised cost subject to hedge accounting): Debt securities issued Other financial liabilities (at amortised cost): Loans from credit institutions Debt securities issued Financial instruments not traded in an active market are valued in-house by the use of appropriate valuation techniques and current market conditions, or valued based on quotes or input from other market players. Based on prices in an active market Level Observable market information Level 2 Other than observable market information Level Total Certificates Bonds Financial derivatives Loans to and receivables from credit institutions Loans to and receivables from customers Total financial assets Financial assets at fair value through profit or loss: Loans and receivables (at amortised cost): Financial liabilities at fair value through profit or loss: Financial derivatives Debt securities issued (at amortised cost subject to hedge accounting): Debt securities issued Other financial liabilities (at amortised cost): Loans from credit institutions Debt securities issued 8 8 Total financial liabilities

13 rd QUARTER Based on prices in an active market Level Observable market information Level 2 Other than observable market information Level Total Financial assets at fair value through profit or loss: Bonds Financial derivatives Loans to and receivables from credit institutions 5 5 Loans to and receivables from customers Total financial assets Loans and receivables (at amortised cost): Financial liabilities at fair value through profit or loss: Financial derivatives Debt securities issued (at amortised cost subject to hedge accounting): Debt securities issued Other financial liabilities (at amortised cost): Loans from credit institutions Debt securities issued Total financial liabilities Based on prices in an active market Level Observable market information Level 2 Other than observable market information Level Total Bonds Financial derivatives Loans to and receivables from credit institutions 5 5 Loans to and receivables from customers Total financial assets Financial assets at fair value through profit or loss: Loans and receivables (at amortised cost): Financial liabilities at fair value through profit or loss: Financial derivatives Debt securities issued (at amortised cost subject to hedge accounting): Debt securities issued Other financial liabilities (at amortised cost): Loans from credit institutions Debt securities issued Total financial liabilities

14 4 rd QUARTER 24 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 ISIN code NO4998 Currency Nominal value.9.24 Interest Issue Maturity M Nibor +.45 % NO M Nibor +.5 % NO M Nibor +.4 % NO M Nibor +.55 % NO fixed 4.75 % NO M Nibor +.4 % XS SEK 45 M Stibor +.75 % NO M Nibor +.49 % NO M Nibor +.65 % XS SEK 7 M Stibor +.7 % NO M Nibor +.47 % XS EUR 25 fixed EUR 2.8 % XS EUR 6M Euribor +.2 % NO M Nibor +.45 % NO M Nibor +.7 % NO M Nibor +.24 % Total securities issued Financial derivatives to hedge securities (liabilities) COVER POOL Pool of eligible loans ) Total collateralised assets Collateralisation 2.8 % 4.7 %. % Financial derivatives to hedge securities (assets) Total borrowings raised through the issue of securities Supplementary assets ) 4 million of total gross loans are not eligible for the cover pool as at.9.4.

15 rd QUARTER 24 6 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: Income statement Interest and credit commision income from Sparebanken Møre related to deposits Interest and credit commision income paid to Sparebanken Møre related to loan/credit facility Interest paid to Sparebanken Møre related to bonded debt Management fee paid to Sparebanken Møre Statement of financial position Deposits in Sparebanken Møre Covered bonds Loan/credit facility in Sparebanken Møre Accumulated transferred loan portfolio from Sparebanken Møre

16 6 rd QUARTER 24 7 EQUITY AND RELATED CAPITAL AS Net equity and subordinated loan capital Risk-weighted assets (calculation basis for capital adequacy ratio) 7 2 Capital adequacy ratio 4.96 Core capital ratio 4.96 IRB approach (Basel II) Core capital Supplementary capital The Financial Supervisory Authority of Norway has approved Sparebanken Møre Group for the use of internal rating based (IRB) models to calculate capital requirements for credit risk in the corporate portfolios. Until further notice, the Group still has to use the standard approach in the Basel II regulations for calculating capital adequacy in the retail portfolios. Due to transitional rules, the minimum capital requirement for the third quarter of 24 cannot be reduced below 8 per cent in relation to the requirements according to Basel I rules. Capital adequacy for the third quarter is reported according to the transitional rules. The schedule below shows capital adequacy according to Basel II without regard to the rules of transition: AS Risk-weighted assets (calculation basis for capital adequacy ratio) Capital adequacy ratio Core capital ratio IRB approach (Basel II)

17 rd QUARTER 24 Profit performance QUARTERLY PROFIT Q 24 Q2 24 Q 24 Q4 2 Q Total other operating income Total operating costs Net interest income Profit before impairment on loans and taxes Taxes Profit after tax Q 24 Q2 24 Q 24 Q4 2 Q 2 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 Impairment on loans Pre tax profit AS A PERCENTAGE OF AVERAGE ASSETS Average total assets ACCUMULATED PROFIT FOR THE YEAR Total other operating income Total operating costs Net interest income Profit before impairment on loans and taxes Impairment on loans Pre tax profit Profit before impairment on loans and taxes Impairment on loans... Pre tax profit Taxes Profit after tax Taxes Profit after tax AS A PERCENTAGE OF AVERAGE ASSETS Net interest income Total other operating income Total operating costs Average total assets 7

18 8 rd QUARTER 24

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