interim report 3 quarter unaudited

Transcription

1 interim report quarter unaudited 5

2 rd QUARTER 5 Contents Third quarter report from the Board of Directors 6 Statement of income Statement of financial position 8 Statement of changes in equity 9 Statement of cash flow Notes to the Accounts 6 Profit performance

3 rd QUARTER 5 Interim report from the Board of Directors About the company million on two existing floating rate bond tember 5 with a total bond loan debt Møre Boligkreditt AS is a wholly owned sub loans in third quarter 5. of 6 9 million compared to fifteen sidiary of Sparebanken Møre. The company bond loans with million out is licensed to operate as a mortgage com Third quarter end results pany, issuing covered bonds. Møre Bolig By third quarter end 5 the financial kreditt AS is Sparebanken Møre's most statements show a profit before tax of Rating important source of market funding and an 8 million, compared to 9 The rating agency Moody's has assigned important part of the parent bank's long- million by third quarter end 4. Net inter Aaa-rating to all covered bonds issued by term funding strategy. est income amounted to 8 million Møre Boligkreditt AS. standing at September 4. by third quarter end 5, compared to The accounts have been prepared in million by end of same period Capital strength accordance with IFRS. last year. Costs in the period ending Paid-in equity and other equity amounted September 5 amounted to to 5 million by end of third quar Third quarter results million, compared to million for ter 5, compared to 5 million The financial statements of Møre Bolig the corresponding period 4. by end of third quarter 4. This corre kreditt AS show a profit before tax of sponds to a capital adequacy/core capital 56 million in third quarter 5, compared The amount allocated for collective impair ratio of 4.5 per cent. Risk-weighted assets to 6 million in third quarter 4. ment was 4 million at third quarter amounted to million by end Net interest income amounted to 66 end 5 compared to million of third quarter 5. Møre Boligkreditt AS million, compared to million for the at third quarter end 4. Profit after tax use internal rating based (IRB) models to same period last year. Costs amounted to amounted to million by third calculate capital requirements for credit risk. million in third quarter 5, com quarter end 5, compared to 44 The Board regards the company's interest pared to 6 million in the correspond million by third quarter end 4. Tax bearing capacity as satisfactory. ing quarter in 4. amounted to 5 million in the first Møre Boligkreditt AS has not established nine months of 5, compared to Risks 5 million the first nine months of 4. Møre Boligkreditt AS is subject to a num losses or impairment for individual losses in ber of acts, regulations, recommendations third quarter 5, nor made any changes Total assets at third quarter end 5 and regulatory provisions. These regulations to the collective impairment. Tax amounted amounted to 8 94 million com largely stipulate restrictions concerning the to 5 million in third quarter of 5, pared to 6 4 million at third quar scope of the company's various risk expo compared to 8 million in third quar ter end 4. Net lending amounted to sures. The Board and the managing director ter 4. Profit after tax amounted to 6 94 million at third quarter end of Møre Boligkreditt AS are responsible for 4 million in third quarter 5, compared 5, compared to 6 4 million ensuring that proper risk management is to 49 million in the corresponding at third quarter end 4. At third quarter established, and that such risk management quarter 4. end 5, the company's substitute assets is adequate and complies with current laws included in the cover pool amounted to and regulations. Operational risk manage Møre Boligkreditt AS acquired mortgages 48 million, including receivables ment in Møre Boligkreditt AS is maintained from Sparebanken Møre, and the compa from credit institutions of 4 mil by Sparebanken Møre according to a ser ny's net lending growth amounted to lion, compared to 46 million at third vice agreement concluded between Møre 9 million in third quarter 5. Møre quarter end 4. Møre Boligkreditt AS had Boligkreditt AS and Sparebanken Møre. Boligkreditt AS drew a total of thirteen bond loans outstanding at Sep Risk management emphasizes identifying,

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

5 rd QUARTER 5 be a moderate growth in unemployment twelve months is somewhat higher than the down of the economy, both in Norway also the next quarters, both in Norway as national average growth, up from. per and in the county of Møre og Romsdal, well as in Møre og Romsdal, due to the cent since September 4. the low interest rates and high disposable slowdown of the economy. The registered household income, will contribute to fur unemployment rate in Norway was.9 per Retail lending has so far been good, with ther mortgage loan growth in Sparebanken cent in September, up from. per cent a growth rate for the Sparebanken Møre Møre. This mortgage growth will position in September 4, compared to.6 per Group of. per cent in third quarter 5, Møre Boligkreditt AS to acquire additional cent in the county of Møre og Romsdal in and 8. per cent the last twelve months. mortgage loan portfolios from the parent September 5. The growth in unemploy ment in the county of Møre og Romsdal last bank, and increase the volume of outstand The Board believes that despite the slow ing bond loans from Møre Boligkreditt AS. Ålesund, September 5 9 October 5 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 6 rd QUARTER 5 STATEMENT OF INCOME AS Notes Q 5 Q Interest income Interest expenses , (M) Net interest income Commission 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 Pre tax profit Taxes 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 5 Q

7 rd QUARTER 5 STATEMENT OF FINANCIAL POSITION AS (M) Notes , 4, 5, Assets Loans to and receivables from credit institutions,, Certificates and bonds 4, Financial derivatives 4, , , 5, , 5 4 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 44 Retained earnings Other paid-in equity Paid-in equity Other equity Total equity Total liabilities and equity

8 8 rd QUARTER 5 STATEMENT OF CHANGES IN EQUITY.9.5 Amounts in M Total equity Share capital Share premium Other equity Equity as at December Total comprehensive income for the period Issue of share capital Dividends -9 Equity as at September The share capital consists of 8 shares at 5, 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 5, and updated certificate of registration and articles of association were registered March Amounts in M Total equity Share capital Share premium Equity as at December 855 Total comprehensive income for the period 44 Issue of share capital and premium 5 Dividends -5 Equity as at September 4 9 Other equity The share capital consists of shares at 5, a total of 85 million. All shares are owned by Sparebanken Møre. 4 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 -5 Amounts in M Equity as at December The share capital consists of shares at 5, a total of 85 million. All shares are owned by Sparebanken Møre. Proposed dividend as of December amounts to 9 million. 94

9 rd QUARTER 5 CASH FLOW STATEMENT AS (M) 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 Proceeds from the sale of certificates, bonds and other securities Purchases of certificates, bonds and other securities Changes in other assets Net cash flow from investing activities Cash flow from financing activities Net change in loans from credit institutions Proceeds from bond issues Redemption of debt securities Dividend and group contribution paid Changes in other debt Issue of share capital and premium Net change in cash and cash equivalents Cash balance at Net cash flow from financing activities Cash balance at.9/. 9

10 rd QUARTER 5 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 4. The principles are outlined in the annual report for 4. There have been no changes in standards that affect the financial statements of Møre Boligkreditt AS from December 4. The interim financial statements are not audited. All amounts are stated in million unless stated otherwise. 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 Fisheries Manufacturing Public entities Activities abroad Miscellaneous Sectors Building and construction Wholesale and retail trade, hotels Property management Transport and private/public services Accrued interest income Loans, nominal amount Total corporate/public entities Retail customers Collective impairment Loans to and receivables from customers (M) NET INTEREST INCOME Interest income from: 4 5 Loans to and receivables from customers Interest income Loans to and receivables from credit institutions Interest expenses in respect of: 5 9 Debt securities issued Interest expenses 8 8 Net interest income 8 98 Loans from credit institutions

11 rd QUARTER 5 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 4 million as at September 5. 4 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. CLASSIFICATION OF FINANCIAL INSTRUMENTS 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 Financial instruments at fair value through profit and loss 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. Financial assets and liabilities carried at amortised cost Loans to and receivables from credit institutions 4 9 Loans to and receivables from customers Certificates and bonds 44 Financial derivatives Total assets Loans from credit institutions Financial derivatives 4 Total liability Debt securities issued Continues

12 rd QUARTER 5 4 FINANCIAL INSTRUMENTS, CONT. FAIR VALUE OF FINANCIAL INSTRUMENTS AT AMORTISED COST Fair value Book value Fair value Book value Loans to and receivables from customers Total assets Loans to and receivables from credit institutions Debt securities issued Total liability Loans from credit institutions FINANCIAL INSTRUMENTS AT AMORTISED COST Based on prices in an active market Observable market information Other than observable market information Level Level Level Total Loans to and receivables from credit institutions Loans to and receivables from customers Total assets Loans from credit institutions Debt securities issued Total liability FINANCIAL INSTRUMENTS AT FAIR VALUE Based on prices in an active market Observable market information Other than observable market information Level Level Level Total Certificates and bonds Financial derivatives Total assets Financial derivatives 4 4 Total liability 4 4

13 rd QUARTER 5 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.9.5 Interest Issue Maturity NO M Nibor +.5 % NO56498 M Nibor +.4 % NO559 5 M Nibor +.55 % NO588 5 fixed 4.5 % 5 66 NO658 M Nibor +.4 % 4 85 XS SEK 45 M Stibor +.5 % NO658 M Nibor +.49 % ISIN code NO65 5 M Nibor +.65 % XS SEK M Stibor +. % NO668 M Nibor +.4 % XS EUR 5 fixed EUR.8 % XS98498 EUR 6M Euribor +. % 85 4 NO69699 M Nibor +.45 % NO M Nibor +. % NO4 5 M Nibor +.4 % NO8 fixed.5 % Total securities issued Accrued interest Financial derivatives to hedge securities (liabilities) 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 ) 6 million of total gross loans are not eligible for the cover pool as at %.8 %. %

14 4 rd QUARTER 5 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. 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. 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 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. 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. The most important transactions are as follows: (M) 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

15 rd QUARTER 5 EQUITY AND RELATED CAPITAL AS (M) IRB approach (Basel II) Core capital Expected losses exceeding actual losses, IRB portfolios corporate Supplementary capital Net equity and subordinated loan capital Capital requirement by exposure classes Exposure classes SA - credit risk Secured by mortgages on immovable property Covered bonds Other items Institutions (banks etc) Total capital requirements - credit risk, The Standardised Approach Exposure classes IRB - credit risk Retail - Secured by real estate Retail - Other 6 6 Specialised lending Other corporate lending SME IRB-F capital requirements 84 6 Total capital requirements - credit risk Exposure classes SA - market risk Credit value adjustment risk (CVA) Total capital requirement less transitional rules Additional capital requirements from transitional rules ) 4 6 Total capital requirements Operational Risk (Basic Indicator Approach) Risk-weighted assets (calculation basis for capital adequacy ratio) Risk-weighted assets less transitional rules Additional RWA from transitional rules ) Total risk-weighted assets Capital adequacy ratio 4,5 5, 5,4 Core capital ratio 4,5 5, 5,4 Core Tier capital ratio 4,5 5, 5,4 Minimum requirement common equity Tier capital (4.5 %) ) Transitional rules require that RWA can not be less than 8 per cent of the corresponding Basel I requirement. Capital adequacy as a percentage of the weighted asset calculation basis incl. transitional rules Møre Boligkreditt's capital requirements at th September 5 are based on IRB-Foundation for corporate commitments and IRB-Retail for retail commitments. 5

16 6 rd QUARTER 5 Profit performance QUARTERLY PROFIT (M) Q 5 Q 5 Q 5 Q4 4 Q 4 Net interest income Total other operating income Total operating costs Profit before impairment on loans and taxes Pre tax profit Taxes Profit after tax Q 5 Q 5 Q 5 Q4 4 Q 4 Impairment on loans AS A PERCENTAGE OF AVERAGE ASSETS Total operating costs Profit before impairment on loans and taxes Impairment on loans Pre tax profit Taxes Profit after tax Net interest income Total other operating income 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 Impairment on loans Pre tax profit Taxes Profit after tax 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)

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