Annual Report • Feb 29, 2024
Annual Report
Open in ViewerOpens in native device viewer
| Statement by the Group CEO 4 | |
|---|---|
| Important events in 2023 6 | |
| This is SpareBank 1 SMN 8 | |
| Board of Directors and Group Management 14 | |
| Community dividend 21 | |
| Corporate governance 25 |
| Introduction 41 | |
|---|---|
| Responsible lending and investments 48 | |
| Advisory services and customer offering 74 | |
| Sustainable transition of Mid-Norway 81 | |
| Sustainable transition of SpareBank 1 SMN 85 | |
| People and organisation 95 |
| Report of the Board of Directors 103 | |
|---|---|
| Income statement 118 | |
| Statement of Financial Position 120 | |
| Statement of Changes in Equity 122 | |
| Cash Flow Statement 125 | |
| Notes 126 | |
| Financial summary (Group) 227 | |
| Statement in compliance with the securities trading act, section 5-5 232 | |
| Auditor's report 233 | |
| Equity capital certificate 234 |
| Carbon Accounting Report Parent Bank 238 | |
|---|---|
| Carbon Accounting Report Group 239 | |
| GRI Index 240 | |
| Auditor's report sustainability 248 | |
| SpareBank 1 SMN's memberships 249 | |
| Taksonomiopplysninger Annex VI 250 |
Our anniversary year, no less, is now behind us, a year in which SpareBank 1 SMN marked 200 years together with customers and local communities throughout Mid-Norway. The year brought a record profit performance, and has been one of most eventful in the history of the bank. We have completed a strategically important savings bank merger, agreed mergers for key jointly-owned product companies, brought in a team from Danske Bank, strengthened our finance centres and established a presence in Oslo.
The merger with SpareBank 1 Søre Sunnmøre strengthens our position in Møre and Romsdal. It also confirms our aspiration to be a leading savings bank. At the same time it provides important experience for future mergers in a Norwegian banking market in which we expect consolidation to continue.
Consolidation is also taking place among the bank-owned product companies. The year started with an important merger in the payments sphere between Vipps and MobilePay. During the autumn agreements were presented concerning a merger between SpareBank 1 Kreditt and Eika Kreditt, and between Fremtind Forsikring and Eika Forsikring. The latter merger will make Fremtind market leader in personal insurance in Norway. Moreover, SpareBank 1 Markets has merged with the capital markets activities of SpareBank 1 SR-Bank og SpareBank 1 Nord-Norge. As a result, SpareBank 1 Markets has again become a company for the entire Alliance.
In the same year as SpareBank 1 SMN celebrated its 200 anniversary, and undertook offensive th investments, news broke of Danske Bank's withdrawal from the personal market in Norway. In that connection we have recruited a large team of staff in the private banking and wealth management field. This is also a segment with close ties with the corporate market. We already see a substantial influx of new personal and corporate customers.
The finance centres are at centre stage in SpareBank 1 SMN's business model. Here we have assembled a complete offering of financial services for personal customers and the business segment alike. They cover everything from financing and investment, via insurance and pension to estate agency and accounting services. In recent years the focus on accounting services has become extra important through several dozen acquisitions under Regnskapshuset's auspices. At the same time the range of services has widened from account keeping to advice provision in areas such as sustainability, tax, HR and transactions.
In the course of 2023 many of SpareBank 1 SMN's finance centres have been upgraded and modified to enable them to house all services offered by the group. In addition we have established a presence in Oslo. Both presence and visibility have accordingly been strengthened. In parallel with this, the group has invested in digital solutions, including use of artificial intelligence. The combination of physical presence and digital focus is known as the phygital model.
The result for 2023 is also historic, with a net profit of almost NOK 3.7 billion. Moreover, a CET1 ratio of 18.8 per cent places us among by far the most solid banks in the country. That enables us to handle uneasiness and uncertainty at the same time as providing capacity for continued profitable growth. It also gives leeway to offer owners and investors a record dividend of 12 kroner per equity certificate.
With our unique ownership model, more than NOK 1 billion of net profit goes back to the regional community, either by direct allocations or via the foundations. In the last five years the net profit from SpareBank 1 SMN has supplied the Mid-Norwegian community with more than NOK 2.6 billion in community dividend. This has provided the basis for allocations to projects small and large across all of Mid-Norway, many under voluntary sector auspices.
In connection with the presentation of the results for the year, the board of directors resolved to set aside NOK 50 million to support neuroscience research at the Kavli Institute in Trondheim. Nobel laureates Edvard and May Britt Moser have together built up a world-leading research centre to investigate the brain and neural functions. Perhaps the funds will help the research centre find the answer to the mystery behind the chronic disease of Alzheimer's.
The actual anniversary celebrations have been devoted to honouring Jakob Roll and the 43 other citizens who put 1,596 spesiedaler on the table to set up a savings bank. Initially with a focus on saving, shortly afterwards combined with a credit facility.
Little did they know that they were laying the basis for a modern financial services group. A group that has tackled both upturns and downturns alike, and stood firm in headwinds and tailwinds.
The ability to handle market downturns is what we often term our 'calm and cool' strategy. This can come in handy in a world posing major challenges and great uncertainties. These include the climate crisis, war in Ukraine, turbulence in the Middle East and uncertainties in US politics. While this situation gives grounds for unease, it is reassuring to know that the savings bank model has stood firm for 200 years. At the start of the new year we therefore have offensive plans to further develop our position as undisputed market lead in Mid-Norway and a leading Norwegian savings bank.
We at SpareBank 1 SMN are proud of what we achieve as a team, and the close collaboration we enjoy with customers, partners and local communities. All under the vision "Together we make things happen". A vision I believe those who founded the bank on a day in May in 1823 would have endorsed.
Jan-Frode Janson Group CEO at SpareBank 1 SMN
We continue to mark our 200 anniversary with a jubilee voyage, festivities and jubilee concerts in th several locations in the region. The crew for the voyage consists of intrepid young people from across the world who have participated in an eight-month-long sustainability project that we organised in collaboration with the United Nations Association of Norway and the World Federation of United Nations Associations (WFUNA).
Our history goes back 200 years, all the way to 1823. Wealthy, powerful merchants held financial sway in Trondheim at the time, and a majority of the town's populace were servants or day labourers. Norges Bank had already been established here in 1816 but, contrary to expectation, was little used by the business community.
Trondheim was by then Norway's third-largest city, and was popular among Norwegian and foreign newcomers alike. Among them was the 32-year-old Jacob Roll from the south-east of Norway who settled here in 1815. He was both wealthy and powerful, and assumed a prominent position in the city right from his arrival. He was to be a highly important man in the history of the city, not least in our history.
The first savings banks in Norway saw the light of day in the 1820s, and in Trondheim the need for a bank started to become apparent. The need was felt both by the business community and by ordinary townsfolk who up to now were unable to earn interest on their savings.
Five men, headed by Jacob Roll, took the initiative to set up a savings bank. They were joined by more of the city's better-off men – men who were keen to build their community and to support business. In 1823, 44 of them put 1,596 speciedaler of their personal resources on the table, just over 400.000 kroner in today's money, to provide enough capital to start a savings bank.
Little did they know that this was to be the start of a long and proud history, a history still in the writing. On 26 May 1823 Trondhjems sparebank was founded, thanks to these citizens and their 1,596 speciedaler. This was the third savings bank to be established in Norway, and it is this bank that is SpareBank 1 SMN today.
The bank was to be for ordinary people. It was established in the best interest of working people and domestics, and men and women alike could deposit small sums which earned interest. The annual report from 1824 shows that deposits with the bank were made by two public foundations, four wives and widows, eight government officials, one merchant, 18 craftsmen, 26 prosperous citizens' children, 40 servants and eleven day labourers.
Between the 1820s and far into the 1900s new savings banks were established across the entire region. Many of them were amalgamated with what was once Trondhjems Sparebank. Trondhjems Sparebank became Trondhjems og Strindens Sparebank, which in turn became SpareBank 1 Midt-Norge and, in 2008, SpareBank 1 SMN.
In the 2000s we started to look beyond Trøndelag. The acquisition of Romsdals Fellesbank in 2005 was a highly important step in the transition from a bank for Trøndelag to a bank for the whole of Mid-Norway. Then, in 2008, followed the acquisition of the failing Icelandic bank, Glitnir Bank, which had previously bought up BN Bank and Kredittbanken in Ålesund. That provided us with the basis for a solid presence in Sunnmøre. On 2 May 2023 we merged with SpareBank 1 Søre Sunnmøre which has further entrenched our position in Møre and Romsdal.
The men who founded Trondhjems Sparebank were concerned to build their community and to play a part in helping the less well-off to accumulate savings. They also wanted the community to own the bank, and as
early as 1847 parts of its net profit were devoted to supporting projects that would benefit the local populace. In 1870 it was formally resolved to distribute one-tenth of actual profit to charitable causes, both social and cultural.
Over the course of 200 years both we and the community have changed. The project to which it was decided that the bank should make an annual contribution from 1847 onwards was the establishment of a forced labour institution, the public utility of which may be somewhat difficult to rally round today. What has not changed is that we still distribute parts of our net profit. Today more than 40 per cent is returned to the community each year. Known as the community dividend, it is invested mainly in five areas: art and culture, sports and outdoor recreation, innovation and value creation, community building and sustainability.
Moreover, today we are much more than a bank. We are the region's leading financial services group and can offer our customers a comprehensive and cohesive range of products and services in the banking, accounting and estate agency spheres, far beyond Trondheim.
Our head office remains in the city in which we were founded. We have kept to the same location since 1882, although the 'old bank' – which back in the day was capacious enough to house both Trondheim Art Society and a family along with the bank – has expanded along Søndre gate and now covers an entire block. Today we have offices throughout the region, from Rørvik in the north to Førde in the south and Røros in the east. In 2023 we also opened an office in Oslo.
The set of values dating from 1823 has been with us throughout our history and stands strong to this day. Our main objective is, and has always been, to provide good financial advice to people and businesses in good and bad times alike. The community remains our largest stakeholder and each year receives its rightful share of our net profit.
We have a big heart for the local communities across our region, and an unwavering belief that Together we make things happen. Not least, we have an unwavering belief that 'value' means far more than money. Together with people, businesses, clubs, organisations and local communities we have created value for 200 years. This we shall continue to do.
SpareBank 1 SMN's aspires to be the leading financial services group in Mid-Norway and among the best performers in the Nordic region. We aim to create financial value, to build the regional community and to assume our share of the responsibility for a sustainable development.
With our strong customer relationships and high return over time, we have a good foundation on which to build further. We have clear-cut objectives in terms of profitability, financial position and efficiency.
Financially solid, with a CET1 ratio of 16.3 per cent. Payout ratio about 50 per cent
Efficient. Annual goal of a cost-income ratio below 40 per cent at the parent bank, and below 85 per cent at subsidiaries
We highlight five strategic priorities as particularly important in achieving the group's vision and long-term goals. These strategic priorities have been at centre stage since 2020, and will stand firm through 2024:
We are an independent regional savings bank and the region's leading financial services group. Together with our subsidiaries and affiliates, we are a complete financial centre catering to both the retail and the corporate market. With subsidiaries included, we have about 1,740 employees at the end of 2023.
SpareBank 1 SMN is one of six owners of the SpareBank 1 Alliance. Through this alliance and our own subsidiaries we offer competitive products in the fields of financing, savings and investment, insurance and payment services along with estate agency, leasing, accounting services and capital market services.
SpareBank 1 SMN is organised under the following structure:
Figure 1: Overview of business lines in SpareBank 1 SMN
Our head office is located in Trondheim and the group has altogether 63 offices.
Some offices are stand-alone and in many localities two business lines are co-located under the same roof. 15 offices are what we term finance centres in which banking, accounting and estate agency businesses are present in one and the same location.
Where to find us:
Figure 2: Overview of SpareBank 1 SMN´s offices
The group's head office is located in Trondheim along with a number of offices offering banking, accounting and estate agency services on a stand-alone or co-located basis.
EiendomsMegler 1 Midt-Norge is a subsidiary of SpareBank 1 SMN. SpareBank 1 Nordmøre is co-owner. EiendomsMegler 1 Midt-Norge owns Brauten Eiendom and is part of EiendomsMegler 1-alliansen, the country's largest provider of estate agency services. The company, including Brauten Eiendom, has approx. 260 staff distributed across some 30 offices throughout Trøndelag and Møre and Romsdal, and focuses on existing homes, commercial property, new builds, rental and agricultural brokerage services. EiendomsMegler 1 Midt-Norge celebrated its 50 anniversary in 2023. th
SpareBank 1 Regnskapshuset SMN is a subsidiary of SpareBank 1 SMN. Other owners are SpareBank 1 Gudbrandsdal and SpareBank 1 Lom og Skjåk. The company has some 550 employees across 43 locations in Trøndelag, Møre og Romsdal, Innlandet and Oslo. The company is a fully fledged finance and technology
centre and is one of the three largest operators in the accounting industry in Norway. In addition to traditional accounting services the company offers services in the fields of sustainability reporting, HR, transfer of ownership, taxes and duties, and IT.
SpareBank 1 Finans Midt-Norge is a subsidiary of SpareBank 1 SMN. Other owners are Sparebanken Sogn og Fjordane, SpareBank 1 Sørøst-Norge, SpareBank 1 Østfold-Akershus, SpareBank 1 Nordmøre, SpareBank 1 Hallingdal Valdres, SpareBank 1 Gudbrandsdal and SpareBank 1 Lom og Skjåk. The company offers leasing, commercial loans, vendor's lien and invoice sale services to about 38,000 retail customers and 6,200 corporate clients. The company markets its products through parent banks, car dealers and direct sales. SpareBank 1 Finans Midt-Norge has total assets of NOK 12.4bn and is represented in the counties of Trøndelag, Møre and Romsdal, Vestland, Vestfold and Telemark along with Innlandet and Viken.
The proportion of financed objects with electric transmissions is growing strongly in the retail and corporate market alike. The company's credit policy sets clear guidelines for various requirements on businesses, products and sectors and takes particular account of sustainability so as to set the stage for customers to opt for more sustainable options when procuring new objects.
SpareBank 1 SMN Invest AS is a wholly owned subsidiary of SpareBank 1 SMN, and holds shares and units in regional growth companies and funds. Activity in the company has been reduced, and it will not investing in new individual companies. The portfolio will accordingly be scaled back over time. The company' s securities portfolio is worth NOK 536m at the end of 2023.
The SpareBank 1 Alliance consists of 13 independent savings banks that collaborate on a shared platform and brand. The collaboration is organised through the jointly owned companies SpareBank 1 Group and SpareBank 1 Utvikling with subsidiaries, in addition to a number of companies directly owned by the SpareBank 1 banks.
SpareBank 1 SMN's has a stake of 19.5 per cent in the SpareBank 1 Group. The SpareBank 1 Group wholly owns SpareBank 1 Forsikring, SpareBank 1 Factoring and SpareBank 1 Spleis. The SpareBank 1 Group holds a 65 per cent stake in Fremtind Forsikring and 50 per cent of Kredinor. In addition, SpareBank 1 SMN, together with other SpareBank1 banks, directly owns SpareBank 1 Boligkreditt, SpareBank 1 Næringskreditt, SpareBank 1 Kreditt, SpareBank 1 Betaling, SpareBank 1 Forvaltning and BN Bank.
Advanced Management Program at Wharton Business School (1989). MBA from the Norwegian School of Economics and Business Administration NHH (1976) and law studies.
Board member since 2007 and board chair since 2013. Member of the remuneration committee since 2012 and committee chair since 2013.
Own business.
Experience as CEO of EWOS Group and head of Cermaq's fish food division. CEO of NorAqua, finance director and group CEO of the Glamox Group. Board chair of the Nordlaks aquaculture group, Axio and Norsk Landbrukskjemi.
Attended 22 of 22 board meetings in 2023.
Holds 130,000 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Master of Business Administration from NHH (2003), Certified European Financial Analyst (AFA) NHH (2003). State authorised public accountant (1994) and business economist NHH (1991). Master of Accounting NHH (1992).
Board member since 2019. Head of the internal audit committee, member of the risk committee since 2019.
Group CEO at Nord-Trøndelag Elektrisitetsverk (NTE)
Experience from accounting and advisory services, partner at EY Transaction Advisory Services, CFO at NTE.
Chair of NTE Energi AS, NTE Marked AS, NTE Elektro AS and NTE Telekom AS
Attended 21 of 22 board meetings in 2023
Holds 35,000 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Business economist from the BI Norwegian School of Management (1994).
Board member since 2018. Member of the audit and risk committee as from 2018.
Self-employed.
Fifteen years' experience from IT and payment systems through various management positions with the Norwegian banks' payment and clearing house (BBS) and Nets. CEO at Nets from 2011 to 2014.
Board chair at Maritech Systems AS, WebMed AS and group.ONE. Board member of Wordline SA. Industry adviser to Ferd AS.
Attended 19 of 22 board meetings in 2023.
Holds 5,600 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Post graduate degree in petroleum economics (1996).
Board member since 2018. Member of the remuneration committee as from 2018.
CEO at Frøy AS.
Prior experience as director of strategy at Enova 2020-2022 and as regional director at Atea Region Nord. Nineteen years' experience in the petroleum industry in various positions and companies, including with AkerBP ASA.
Attended 17 of 22 board meetings in 2023.
Holds no ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Business graduate from BI Norwegian Business School (1990) and training in municipal administration from the Norwegian Municipal and Social College (1983).
Board member as from 2023, chair of the risk committee and member of the internal audit committee from the same point in time.
Director of Thomas Angell Stiftelser. Experience as director of the Norwegian Labour Inspection Authority. Several public sector positions, most recently as chief executive of Trondheim Municipality, and as director at Sør-Trøndelag county authority.
Board chair of Trondheim Spektrum, board member of the Olavsfestdagene festival and board member of E.C. Dahls stiftelse.
Attended 12 of 17 possible board meetings in 2023.
Holds 300 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Master of Science from the Norwegian Institute of Technology NTH (1987). Mechanical engineer from Ålesund Engineering College (1982),
Board member as from 2023.
Extensive prior experience from various roles with AS Volda Mekaniske Verksted/Scana Volda, including 11 years as managing director of Scana Volda AS. Managing director of Ulstein Verft AS in the period 2013-2019, subsequently CEO of A-K maskiner. Currently senior vice president at Vard Group AS.
Deputy board chair of SpareBank 1 Søre Sunnmøre in the period 2008-2014 and alternate member in the period 2022-2023.
Extensive board experience with a number of companies in Norway and elsewhere.
Attended 14 of 17 possible board meetings in 2023.
Holds 300 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
MBA from the University of Newcastle (2003). Engineer from the Norwegian University of Science and Technology (NTNU, 1998),
Board member since 2022.
CEO at Lighthouse8.
Background as managing director of Global Media, Bigmouthmedia and LBi.
Chairman of Lighthouse8 AS, Lighthouse8 Pte Ltd, Lighthouse8 Pty Ltd and Lighthouse8 Ltd. Previously chair and board member of several companies in and outside Norway.
Attended 20 of 22 board meetings in 2023.
Holds no ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Graduate in IT Management from Sør-Trøndelag University College (HiST) and in Project Management from BI Norwegian Business School.
Board member since 2019. Board member of the Finance Sector Union, region Trøndelag, as from 2020. Regularly attending deputy representative to the national executive of the Finance Sector Union.
Chief union representative as from 2019.
Previously employee representative on the supervisory board. Previously specialist-in-charge / service desk manager in the technology, operations and security areas. Employed by SpareBank 1 SMN since 1982 in various positions and functions.
Attended 21 of 22 board meetings in 2023.
Holds 10,913 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Bankakademiet stage 1 and Insurance.
Board member since 2019.
Deputy head of the Finance Sector Union's branch at SpareBank 1 SMN from 2019. Employed at Vår Bank & Forsikring (part of SpareBank 1 SMN from 2000) from 1998 to 2001, and at TietoEvry from 2001 to 2006. Has held various functions at SpareBank 1 SMN since 2006, in recent years as brand manager (payments) and staff representative on various committees.
Four years' experience as pre-school director at Saxenborg Barnehage. Board position at Strindheim Håndball since 2015.
Attended 21 of 22 board meetings in 2023.
Holds 1,082 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Corporate adviser at SpareBank 1 SMN, previously chief union representative and board member at SpareBank 1 Søre Sunnmøre.
Attended 14 of 17 possible board meetings in 2023.
Holds 140 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
PhD in Industrial Economics and Technology Management from the Norwegian University of Science and Technology NTNU (1996). Master of Science in Business from the Graduate School of Business in Bodø (1992).
Group CEO of SpareBank 1 SMN since 1 May 2019. Previously Group CEO of SpareBank 1 Nord-Norge and deputy managing director of Fokus Bank/Danske Bank. Has also held senior positions with Orkla and ABB.
Chairman of SpareBank 1 Betaling AS, Mavi XV AS and of SpareBank 1 SMN's subsidiaries EiendomsMegler 1 Midt-Norge AS and SpareBank 1 Regnskapshuset SMN AS. Board member of SpareBank 1 Gruppen AS, SpareBank 1 Utvikling DA, Vipps AS, VIPPS Holding AS, BankID BankAxept AS, Fremtind Forsikring AS and NTNU. Chair of Sector Committee, Banking and Capital Markets (BBK).
Holds 49,166 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Authorised financial analyst (AFA) from Norwegian School of Economics and Business Administration NHH (2006) and MBA from the same institution (1994).
Joined SpareBank 1 SMN in February 2022. Previous experience from KLP Banken AS and BN Bank ASA, most recently as director, Economy and Finance, BN Bank ASA.
Chairman of SpareBank 1 SMN Invest AS and Gma Invest AS. Deputy chair of SpareBank 1 Markets AS. Board member of SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS.
Holds 10,267 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Doctorate in Communications Technology from the Norwegian University of Science and Technology (NTNU) (2009). Master of Science in Communications Technology from NTNU (2004).
Joined SpareBank 1 SMN in 2020, prior long experience with Telenor, latterly as head of the research department at Analytics & AI.
Member of the Council of Statistics Norway, member of the 'Norway towards 2025 Commission' (2020- 2021). Previous experience from several public committees.
Holds 744 ECs in SpareBank 1 SMN as at 31 December 2023 (including any Ecs held by related parties).
State authorised public accountant from NHH School of Economics and Business Administration (1994). MBA from the BI Norwegian School of Management (1990).
Joined SpareBank 1 SMN in 1997; executive director, Risk Management, since 2009. Previously with Deloitte and the Norwegian Armed Forces.
No board positions.
Holds 43,764 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Studies in political science and history at Molde University College and the Norwegian University of Science and Technology (NTNU).
Joined SpareBank 1 SMN in 2016. Previously industrial policy director at Det norske Oljeselskap, and on the management team of Danske Bank (Fokus Bank). Adviser to earlier minister of trade and industry, Børge Brende, and to the mayor of Trondheim. Has held a number of political positions.
Board chairman of Brøske & Bianchi Wine Import AS. Board member of SpareBank 1 Spleis AS, Trøndelag Høyre, Sør-Trøndelag Høyre and the Nidaros Cathedral Boys Choir.
Holds 15,713 in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Authorised financial analyst (AFA) from the Norwegian School of Economics and Business Administration NHH (2007) and MBA from the Bodø Graduate School of Business (1999).
Joined SpareBank 1 SMN in 2003, and has focused primarily on the corporate market. Executive director of Corporate Banking since 2010. Previously internal audit staff member and adviser with KPMG and analyst with Fontiera AS.
Chairman of SpareBank 1 Finans Midt-Norge. Board member of SpareBank 1 Markets AS, SpareBank 1 Factoring AS, SpareBank 1 Regnskapshuset SMN AS, Kredinor AS and Mavi XV AS.
Holds 36,202 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Master of Science from South Bank University in London (2000), bachelor's degree in business and administration from Sør-Trøndelag University College (1998).
Joined SpareBank 1 SMN in 2013. Executive director, Retail Banking, since 2018. Previously executive director, Organisation and Development (2015-2018), and assistant executive director, Retail Banking (2013-2015). Prior broad experience with the professional services firm Ernst & Young, latterly as director at Ernst & Young Advisory (2010-2013).
Chair of SpareBank 1 Gjeldsinformasjon AS. Board member of EiendomsMegler 1 Midt-Norge, SpareBank 1 Forvaltning AS and Julmas AS.
Holds 21,876 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
MBA from BI Norwegian Business School and law studies at Oslo University.
Joined SpareBank 1 SMN in May 2023. Previous experience from various management positions at DNB, Sparebanken Møre and Danske Bank. Managing director of SpareBank 1 Søre Sunnmøre from 2016 until the bank merged with SpareBank 1 SMN on 2 May 2023.
Board member of EiendomsMegler 1 Midt-Norge AS and of SpareBank 1 Regnskapshuset SMN AS.
Holds 1,407 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Master of Business Administration (MBA) from Lund University, Sweden (1997). Bachelor of Business Administration (B.Sc.) from Copenhagen Business School (1995). Officer training from the Norwegian Military Academy (1992).
CEO of SpareBank 1 Regnskapshuset SMN since June 2020. Previously CEO of SpareBank 1 Finans Midt-Norge (2013-2020), head of Customer Concept at SpareBank 1 SMN (2013), general manager at SpareBank 1 SMN (2003-2012). Previously with Innovation Strategic Consulting and Fokus Bank (Danske Bank).
Board member at SpareBank 1 Kreditt AS.
Holds 33,948 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
Graduate in real estate brokerage from BI Norwegian Business School (2008).
CEO of Eiendomsmegler 1 Midt-Norge since 1999. Previously with Storebrand Bank, Notar and Bedre Råd, and several years' experience from the construction industry.
Chairman of Brauten Eiendom AS. Board member of Eiendomsmegler 1 Norge, Agri Eiendom AS, Eiendom Norge Holding AS and Eiendom Norge.
Holds 29,141 ECs in SpareBank 1 SMN as at 31 December 2023 (including any ECs held by related parties).
The Mid-Norwegian community is our largest single owner, and local communities' share of our net profit is known as community dividend. Community dividend has long traditions at SpareBank 1 SMN; ever since 1847 parts of the net profit have gone to non-profit and charitable causes which build and develop the region.
As the region's leading financial services group we live in close proximity to the people in the region of which we are a part. We are passionately devoted to the development of the entire region, from Rørvik in the north to Førde in the south, and have a big heart for the local communities. We applaud all the wonderful things happening around us – ranging from voluntary sector activities, fostering of talented individuals and cultural events, to creating an attractive place to live and caring for the community. We attach particular importance to future generations and, for that reason, focus much attention on initiatives and activities that benefit children and young people.
The community dividend moneys go to supporting worthy projects that build and develop Mid-Norway and make the region a better place to live and work. We aim to strengthen social and business development through building knowledge, an innovation culture and capital. That enables new investments to be made and a basis for new jobs to be laid.
In 2023 the community dividend totalled NOK 474m. Of this, NOK 230m was
allocated to investments in various projects in the region. A further NOK 244m was transferred to the foundation Sparebankstiftelsen SMN, which is the community's 'savings account'.
As a step in the merger with SpareBank 1 Søre Sunnmøre, the foundation Sparebankstiftinga Søre Sunnmøre was established with a capital of NOK 1.341m. This substantially strengthens our ability to support local communities in Mid-Norway where community ownership stands at 41.7 per cent. This is distributed on the community (33.2%) and the two savings bank foundations Sparebankstiftelsen SMN (2.5%) and Sparebankstiftelsen Søre Sunnmøre (6%).
In December 2023 the strategy for community dividend was renewed with minor changes for the period 2024-2026. The strategy defines the regional community, sports and outdoor recreation, art and culture, driving the green transition along with innovation and value creation as focal areas each in their own right. Among the changes for the new strategy period is a shift in the distribution of community dividend moneys in a more sustainable direction in order to underpin the role of driver of the green transition in Mid-Norway.
Our ambition is strengthen Mid-Norway through awards which help to:
We have stepped up our endeavour to ensure that Mid-Norway also has plentiful, and good, workplaces in the future. We want to be an important actor for entrepreneurs in Mid-Norway – ranging from budding entrepreneurs at upper secondary school to more established entrepreneurial entities – and to heighten our commitment to the role of arena builder, innovator, investor and driver of green transition through collaboration with good partners and business associations.
Trondhjems Sparebank was established on 26 May 1823 – and has progressed from being a local bank to a cornerstone institution, with projects of benefit to society demonstrating that values are more than money. In 2023 the bank has accordingly celebrated its 200 anniversary in a spirit of added commitment across the th entire region and with a number of sizeable projects. Some of these are the following:
A support scheme entitled 'Equal opportunities': In the spring many clubs and associations received support amounting altogether to NOK 30m under the caption 'equal opportunities', along with larger projects creating lasting value for future generations.
In May we celebrated our birthday in all our offices and in market squares across Mid-Norway, creating a festival atmosphere together with people in the local community and clubs/associations. We had well over 10,000 visitors at events in September and 6,000 visitors to the tall ship Statsraad Lehmkuhl which was the base for the jubilee voyage along Norway's coastline stopping off in Ålesund, Molde, Nærøysund, Verdal and Trondheim. In the Trondheim Spektrum arena we extended an invitation to a substance-free anniversary concert which attracted more than 8,000 visitors. All ticket revenues went exclusively to the nonprofit organisations Miljøagentene, Mental helse ungdom and Livsglede for eldre.
Over the course of the anniversary year we wished to enable more young people to translate words into action for a better world. In conjunction with the United Nations Association of Norway and the World Federation of United Nations Associations (WFUNA) we carried through an eight month long sustainability programme for 100 young people from all over the world. About half the participants were from Mid-Norway. They learned about sustainability and project management, and carried out projects themselves in their local communities. We assembled them all as crew aboard the Statsraad Lehmkuhl and sailed along the coast of Mid-Norway on our voyage for the future.
In our ports of call we engaged more than 3,000 school students in innovation activities for the future, together with the non-profit organisations Ungt Entreprenørskap and MOT and the United Nations Association of Norway. Among other things we extended an invitation to the youth conference 'Action, Please', where young people themselves were asked to find solutions to challenges as regards plastic waste, outsiderness and recycling.
In order to preserve our, and the community's, 200 year long history for posterity, a magazine and a book have been produced, along with a podcast series entitled 'Bank, bank'. In addition, Sverresborg Trøndelag Folkemuseum has opened a splendid historical bank museum, supported by our community dividend.
As an initiative for innovation and value creation we have established a foundation – Såkorn 1 Midt. An allocation of NOK 150m has been made for the purpose of contributing capital to green start-ups in an early phase to enable more ideas and businesses to see the light of day and become established in the region. Efforts are under way to raise a matching amount from other investors in the region.
As a driver for green transition for business and industry we held a course in innovation for small and medium-sized businesses in Mid-Norway in 2022 and 2023. The course attracted a total of 60 participating firms in Trøndelag and in Sunnmøre in these two years and the initiative will continue in spring 2024.
We have granted up NOK 11.4m to "Dagsturhytta" – a project to encourage more people to exercise by taking walking trips to recreational chalets in all 38 municipalities in Mid-Norway. Our object is to promote public health in the run-up to the World Ski Championships in 2025. The project is a collaboration with Trøndelag county authority, which is contributing a matching amount. Local authorities are chipping in and will engage volunteers to assist in running the project and encourage commitment at local level.
In collaboration with the LO and the NHO we have established a programme for talented young people in the region. The object is to help to build, develop and ensure a diversity of talented young managers and employee representatives in the region, with the aim that more of them will contribute to the social debate on tomorrow's business and industry, and make their voices heard in national arenas. Based on good experience gained with 15 young participants in the pilot for 2022, we launched a new opportunity for new participants in 2023.
NOK 2m was distributed in talent scholarships to 40 talented young people in the fields of culture, sports and business and social development in Mid-Norway.
We are concerned with caring about other people, especially in demanding times. Ahead of Christmas we engaged employees in a "Christmas heartwarming" concept where we devoted NOK 2m to help organisations that do good deeds for the poorly off and/or those facing challenges related to outsiderness.
Allocations of community dividend came to NOK 230m in 2023. A total of 4,123 applications were processed in 2023, amounting in all to NOK 614m. Of these, 1,966 applications were granted. NOK 367m was allocated to socially beneficial causes in 2023 (including NOK 150m earmarked for Såkorn 1 Midt).
This statement describes how SpareBank 1 SMN complies with the 15 recommendations set out in the Norwegian Code of Practice for Corporate Governance (NUES).
The statement has been prepared in conformity with the Accounting Act section 3-3b (2) and the 1) Norwegian Code of Practice for Corporate Governance as published on 14 October 2021. The Code of Practice is available at nues.no. There are no significant divergences from the Code of Practice.
SpareBank 1 SMN abides by provisions of the Financial Institutions Act (Finansforetaksloven ) regulating 2) the governance of financial institutions with appurtenant regulations and the issuer rules of Euronext Growth Oslo Rule Book II . 3)
SpareBank 1 SMN reports its compliance for each point of the Code of Practice. Where the Code of Practice is not followed, a justification for the deviation is given and the institution's arrangements are explained. Deviations are accounted for under point 6 and 7.
The following explains how the 15 points set out in the Norwegian Code of Practice for Corporate Governance of 14 October 2021 are complied with.
The board of directors has adopted a corporate governance policy and explains the company's corporate governance through the present document. SpareBank 1 SMN adheres to the Norwegian Code of Practice for Corporate Governance. The present document also accommodates the requirements of the Accounting Act section 3-3b.
Through its corporate governance policy the bank aims to assure sound management of its assets and to give added assurance that its stated goals and strategies will be realised. Good corporate governance encompasses the values, goals and overarching principles by which the bank is governed and controlled with a view to securing the interests of EC holders, depositors and other stakeholder groups.
Through its corporate governance the bank gives special emphasis to:
Deviations from point 1 of the Code of Practice: None
SpareBank 1 SMN is a financial services group and part of the SpareBank 1 Alliance. SpareBank 1 SMN has enshrined the object of the business in article 1 of the articles of association, which is "to carry on
activity as a bank and moreover to pursue and participate in activities that the savings bank is entitled to engage in under licences held and legislation in force at any and all times."
The group is organised with subsidiaries and related companies, as shown by the illustration below.
Figure 3: Overview of business lines in SpareBank 1 SMN
SpareBank 1 SMN's vision is "together we make things happen". The vision is about creating energy, results, change and development in collaboration with employees, customers, suppliers, partners and local interests. SpareBank 1 SMN's values are: wholehearted, responsibly minded, likeable and capable.
SpareBank 1 SMN's strategy is laid out in the annual report, in which the strategic priorities are also described.
SpareBank 1 SMN aspires to be among the best performing banks in the Nordic region, and its overarching financial goal is deliver a return on equity of 13 per cent over time. The long-term CET1 target is 16.3 per cent, and for the group the objective is to keep the cost-income ratio below 40.
The board of directors sets the risk appetite to be adopted by the group each year, most recently in December 2023. More information about the company's risk profile is provided in point 10.
Corporate social responsible is a part of the group's DNA, and sustainability is a highly important aspect of the group's corporate social responsibility.
SpareBank 1 SMN works across the entire range of the UN sustainability goals and ESG. The group has endorsed the Science Based Targets initiative as a follow-up to the group's strategic objective of net zero emissions by 2050. The sustainability library at smn.no provides further information about the group's sustainability work.
Goals, strategies and risk profile are evaluated annually by the board of directors.
The group's governance structure is shown in the model below. Risk management and compliance have the opportunity to report directly to the board of directors should the need arise.
Figure 4: Goverance structure
Deviations from point 2 of the Code of Practice: None
The board of directors assesses the capital situation in light of the group's goals, strategy and desired risk profile. As at 31 December 2023 SpareBank 1 SMN's common equity tier 1 (CET1) ratio was 18.8 per cent, and its total capital ratio was 23.0 per cent.
For detailed information on capital adequacy, see the relevant note in the annual report. For a further account of the rules governing capital adequacy and the principles on which SpareBank 1 SMN bases its assessment of capital need, see the Pillar 3 report published at smn.no.
SpareBank 1 SMN aims to provide EC holders with a good return through dividend and a rising value of the bank's EC. The net profit for the year is distributed between the equity certificate capital (eierkapitalen) and
the ownerless capital (grunnfondskapital) in accordance with their respective shares of the bank's total equity capital. About one half of the net profit for the year is disbursed in dividends while the remainder goes to non-profit causes or is transferred to the foundation Sparebankstiftelsen SMN. The dividend payout is determined by the bank's supervisory board, account being taken of the expected profit trend, external framework conditions and the need for tier 1 capital.
The dividend policy is published on the bank's website.
SpareBank 1 SMN's board of directors are authorised to buy treasury ECs for up to 5 per cent of the bank's owner capital. Such purchases shall be made by trading on the securities market via the Oslo Stock Exchange. The total volume of ECs held by the bank and/or in which it has a consensual security interest may not exceed 5 per cent of the bank's owner capital. Each EC may be bought at prices between NOK 1 and NOK 300. The authorisation is valid for 18 months as from the adoption of the resolution at the supervisory board's meeting on 28 March 2023.
Authorisations to the board of directors to increase the bank's EC capital are given for specific and defined purposes. As at 31 December 2023 no such authorisation had been given.
Deviations from point 3 of the Code of Practice: None
SpareBank 1 SMN assures equal treatment of EC holders through its articles of association and management practice. All ECs confer an identical voting right, and the bank abides by provisions of the Financial Institutions Act regulating holdings and voting rights insofar as these provisions apply to savings banks with equity certificates. SpareBank 1 SMN has one equity certificate class.
In 2023 the employees were able to purchase equity certificates through a savings programme offering a bonus for continued ownership and employment. With a view to strengthening the equity certificate the bank' s articles of association require a qualified majority for amendments concerning the owner capital (eierkapitalen).
In the event of an increase of the EC capital, existing EC holders have pre-emptive rights unless special circumstances call for deviation from this rule. Any such deviation will be substantiated in a stock exchange notice.
In 2023 the employees were invited to enter savings agreements in equity certificates involving an optional annual amount of NOK 6,000, 12,000, 24,000 or 36,000 respectively. Each quarter the group purchases ECs for the amount saved, doing so through Oslo Stock Exchange at market price. SpareBank 1 SMN awards one free EC for every two ECs purchased through the arrangement. Allocation of 'bonus ECs' takes place two years after commencement of saving on condition that the employee still owns the originally saved ECs and is still employed by the group. 1,054 employees availed themselves of the offer in 2023.
In order to strengthen the equity certificate as an attractive financial instrument and to increase investors' influence over decisions affecting the EC capital, the bank's articles of association require that a qualified majority of the representatives of the equity certificate holders vote in favour of amendments concerning the owner capital in addition to a qualified majority of the supervisory board. A list of the matters to which this
applies is set out in article 10-1 of the bank's articles of association which can be found on the bank's website.
Deviations from point 4 of the Code of Practice: None
The bank's equity certificate is quoted on the Oslo Stock Exchange under the MING ticker symbol and is freely transferable. The articles of association contain no restrictions on transferability.
Deviations from point 5 of the Code of Practice: None
For financial institutions which are not public limited companies or private limited companies, the Financial Institutions Act Section 8-1(3) permits a term other than 'general meeting' to be prescribed for the company' s highest body. According to article 3-1 of the articles of association, the bank's highest body shall be the supervisory board.
The group's highest body is the supervisory board. The supervisory board shall see to it that the bank operates in line with its mission and in conformity with law, its articles of association and decisions of the supervisory board.
The composition of the supervisory board is established in article 3-3 of the articles of association and shall reflect the savings bank's owners, customer structure and stakeholder groups as well as its social function.
The supervisory board has 32 members and 30 alternates with the following representation:
The supervisory board's tasks are set out in article 3-10 of the articles of association.
Notice of meetings is sent to the supervisory board, the board of directors, the CEO and the auditor 21 days ahead of the meeting. The notice contains all case documents to be considered at the meeting, including proposed resolutions. The documents are published on the bank's website and by stock exchange notice, as well as by e-mail and the board portal.
Article 3-8 of the articles of association enables the savings bank to require that absence from the meeting shall be notified at least 5 days ahead of the meeting, which is considered to be the closest possible date to the meeting in terms of assuring the attendance of alternates.
Further, article 3-9 of the articles of association states that the meeting shall be presided over by the supervisory board chair or, in the latter's absence, by the deputy chair.
The minutes of the meetings are made available on the bank's website.
A list of supervisory board members can be found at smn.no.
Deviations from point 6 of the Code of Practice: the supervisory board votes over the election committee's recommendation for members of the board of directors as a whole, out of consideration for the collective competence of the board of directors. This practice deviates from the NUES which recommends voting over the candidates one by one.
According to article 5-1 of the articles of association the bank shall have an election committee consisting of five members and five alternates who are elected by the supervisory board for a two-year term. The election committee shall mirror the composition of members of the supervisory board and be composed as follows:
The supervisory board elects the chair of the election committee, its members, establishes instructions for the work of the election committee and determines the election committee's remuneration.
The election committee conducts annual discussions with all members of the board of directors and the group CEO in order to ascertain the competency needs of the board, and to obtain proposals for likely candidates for board positions.
The election committee shall prepare the customers' and the equity certificate holders' election of members and alternates to the supervisory board.
The election committee shall also prepare the election of:
The election committee shall give grounds for its nominations and the grounds given shall in each case contain information about the candidate's competence, capacity and independence, along with age, education and work experience. The grounds given should also contain any owner interests in the company, other assignments for the group and significant positions in other companies or organisations. In the event of re-election the nomination shall also provide information on the candidate's length of service with the company and their attendance at meetings.
The bank's website lists the members of the supervisory board's election committee, deadlines for submitting nominations, the date of the next election and a description of how nominations can be submitted.
The election committee proposes fees for all members of the respective bodies and submits the matter to the supervisory board for decision.
Deviations from point 7 of the Code of Practice: All members of the supervisory board's election committee are appointed from among the groups represented on the supervisory board, in accordance with provisions of the articles of association.
According to the Financial Institutions Act section 8-6, "The board of directors shall ensure that the requirements on the organisation of the institution and on the establishment of adequate governance and control systems are complied with".
According to article 4-1 of the articles of association, the board of directors shall consist of seven to nine members, and two members of the board of directors shall be elected by and from among the employees, if the employees so demand. The article also establishes that the board's members and alternates shall be elected for a two-year term. Members of the board of directors are appointed for two years at a time and can hold office for a maximum of 20 years, but not more than 12 years continuously in the same position; see article 7-1 of the articles of association.
As of 31 December 2023 the board of directors consists of nine regularly attending members and an observer. Of the board of directors' nine members, two are elected by and from among the employees. There are no senior employees on the board of directors. The seven members of the board of directors that are elected by the supervisory board are independent, both of the company and of the company's largest owners. The members of the board of directors are encouraged to own the bank's equity certificates.
The composition of the board of directors shall be based on the bank's articles of association and the election committee's instructions, and the company's competency needs. The election committee attaches importance to competence, capacity and diversity when considering potential candidates for board positions. The individual director's background, participation in board meetings and their holding of equity certificates is described in the annual report and at smn.no.
The board of directors acts as a collegiate body and adopts its decisions on a joint basis.
A liability insurance policy has been taken out for board members and the CEO.
Deviations from point 8 of the Code of Practice: None
The board of directors' work and procedures are regulated by the Financial Institutions Act, Chapter 8 II. The board of directors adopts all material strategies, including the bank's business strategies, risk management strategies and sustainability strategies. Moreover, the board of directors sets financial goals, market and organisational objectives and risk profile. It is the board of directors that appoints and dismisses the group CEO.
The board of directors has established instructions for the work of the board and the CEO, both adopted most recently on 20 June 2023. The instructions contain provisions on how agreements with related parties are to be handled. Details are given in the second paragraph under "independent consideration" below.
The board of directors receives regular reports on profit performance and market developments, the risk situation, compliance risk, on the status regarding anti-money laundering, the status regarding personal data protection and the status regarding information security in the group, as well as reports from the internal control function.
The board of directors conducts an annual evaluation of its work and of its own competence. It reviews its work format, procedures, meeting structure and prioritising of tasks, all of which in turn provides a basis for any changes and measures needed.
The board instructions stipulate that a director is barred from participating in the consideration of, or decision in, any matter whose significance to him/herself or to any related party is such that the director is to be regarded as having, directly or indirectly, a personal, financial or other vested interest in that matter. The same follows from the group's ethical guidelines. Each director is obliged to personally verify that he or she is not disqualified from participating in the consideration of a matter. The board opens each board meeting by clarifying whether circumstances are present calling for procedural adjustments.
Any agreement between the bank and a director or the group CEO must be approved by the board of directors, as must any agreement between the bank and a third party in which a director or the group CEO has a particular interest. Directors are required to disclose on their own initiative any interest that they personally or any related party may have. The board's assessments of legal (in)capacity issues shall be duly recorded.
Agreements of substantial financial significance between the bank and other group companies shall be presented to the board of directors for consideration.
The board of directors prepares matters through the statutory committees – the compensation committee, audit committee and risk committee. In addition the board has a technology committee to prepare technology cases. All committees have different chairs. The members are appointed for a two-year term. The board of directors establishes the committees' mandates.
Pursuant to the Financial Institutions Act, section 8-19 subsection (2), the audit committee's tasks are:
The audit committee meets at least five times yearly ahead of the board of directors' consideration of the quarterly and annual reports.
The risk committee's tasks are regulated in the Financial Institutions Act section 13-6(4) and the Financial Institutions Regulations section 13-2. The risk committee shall contribute to ensuring that risk management and capital management support the group's strategic development and goal attainment, and at the same time ensure financial stability and sound asset management. The risk committee shall contribute to ensuring that the group's management and control arrangements are appropriate to the risk level and scale of the business.
The committee shall inter alia:
The risk committee meets at least five times yearly.
The board of directors has established a remuneration committee which shall consist of at least three directors, one of whom shall be elected by the employees. The board chair is a permanent member of the committee and also chairs the committee.
The committee prepares and presents matters to the board relating to the group's remuneration arrangements, including:
The committee meets when convened by the chair, but at least once yearly and otherwise as and when required. The attendance of at least two members of the committee is required.
In 2021 the bank established a technology committee as a preparatory body for the board of directors in matters related to the group's strategic investments in technology.
The technology committee consists of at least two directors who are not employed in the SpareBank 1 SMN group. The board of directors shall also appoint the chair of the technology committee.
The committee shall inter alia:
Monitor and evaluate existing and future trends in technology/manufacturing which may impact the group's strategic plans
The committee meets when convened by the chair, but at least four times per year (once per quarter) and otherwise as and when required.
The bank will conduct an evaluation of whether the committee should be made permanent.
The committees are able to draw on resources within the administration, obtain advice and recommendations from sources outside the company, and they report from their proceedings to the assembled board of directors.
SpareBank 1 SMN has a risk management function which reports to the group CEO and is entitled to report directly to the board of directors. The group has also engaged KPMG as internal auditor.
Sound risk and capital management are central to SpareBank 1 SMN's long-term value creation. Internal control shall help to ensure efficient operations and proper management of risks of significance to the attainment of business goals.
The group's report on capital requirements and risk management, the Pillar 3 Report, contains a description of risk management, capital management and capital calculation. The report is available at smn.no.
SpareBank 1 SMN aims to maintain a moderate risk profile and to apply risk monitoring of such high quality that no single event will seriously impair the bank's financial position. The bank's risk profile is quantified through targets for rating, risk-adjusted return, expected loss, necessary economic capital and regulatory capital adequacy.
The board of directors reviews the group's development in the main risk areas on a quarterly basis and reviews the internal control system on an annual basis. The board of directors has the main responsibility for setting limits to, and monitoring, the group's risk exposure. The bank's risks are measured and reported in accordance with the principles and policy which the board of directors has adopted and which underpin the group's strategic development and goal attainment.
The board of directors receives annually, from the internal auditor and external auditor, an independent assessment of the group's risk and internal control function. The board monitors compliance with adopted frameworks, principles, and quality and risk objectives through:
SpareBank 1 SMN utilises the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) framework and the Control Objectives for Information and Related Technology (CobiT) framework as a basis for its principles for internal control and risk management.
Principles and boundaries for internal control and risk management are laid down in a separate policy. That policy sets out guidelines for the group's overall approach to risk management and aims to ensure that the group has an effective and appropriate process.
Managements at the various companies in the group are responsible for risk management and internal control with the aim of ensuring:
The compliance function is organised independently of the business units and reports to the CEO. The function assesses the undertaking's policies, procedures and systems to ensure regulatory compliance, and provides advice on measures that should be taken to ensure compliance. The function assembles its observations in a quarterly report which is presented to the group management team and the board of directors.
The function shall also establish guidelines and processes for managing compliance risk and ensure that compliance is monitored and tested by means of a structured and well-defined monitoring programme.
Business lines, support functions and subsidiaries are required to attend to compliance by operationalising the policy for compliance and identified compliance risks adopted by the board of directors.
The board of directors of SpareBank 1 SMN has adopted guidelines for the group's financial reporting. These conform to the current requirements imposed by the authorities and are designed to ensure relevant, reliable, timely and identical information to the bank's EC holders and the securities market in general.
Group Finance is headed by the CFO and is organised independently of the business lines. The unit attends to financial reporting at both parent-bank and group level, and establishes guidelines for monthly, quarterly and annual reporting from the various business lines and subsidiaries. The CFO assesses the business lines' financial results and goal achievement on an ongoing basis and sees to it that all entities perform in keeping with the group's overall financial objectives. The CFO reports directly to the group CEO.
The bank's Accounts Department and Strategy and Budget Management Department are organised under Group Finance and prepare financial reports for the group. The departments see to it that reporting is carried out in conformity with applicable legislation, accounting standards, the group's accounting policies and the board of directors' guidelines.
Group Finance has established processes to ensure that financial reporting is quality assured and that any errors and deficiencies are followed up on and rectified as and when identified. A number of control measures have been established to ensure that all financial reporting is correct, valid and complete.
Each quarter the external auditor conducts a limited audit of the group's interim financial statements. In addition a full audit is conducted of the group's annual financial statements.
For further information on risk management and internal control, see note 6 in the annual report concerning financial risk management and the group's report on capital requirements and risk management, the Pillar 3 report, which is available at smn.no.
The internal audit function is a tool enabling the board of directors and the administration to oversee that the risk management process is targeted, effective and functions as intended. Internal audit services are delivered by KPMG. These services cover the parent bank and subsidiaries that are subject to the risk management and internal control regulations.
The internal audit function's main task is to confirm that the established internal control system functions as intended, and to ensure that risk management measures are adequate to the bank's risk profile. The internal audit function reports quarterly to the board of directors, and the internal audit's reports and recommendations are reviewed and improvements implemented on an ongoing basis.
The board of directors adopts annual plans and budgets for the internal audit function.
The internal audit function carries out the operational audit of units and business lines; it does not conduct a financial audit of the group. Annual audit plans are prepared which are discussed with the group management, considered by the risk committee and approved by the board of directors. The audit function's risk assessments determine which areas are to be reviewed. Separate audit reports are prepared containing results and proposed improvement measures which are presented to the responsible manager and the group management team. A summary of the reports is sent on a quarterly basis to the risk committee and the board of directors. Any consultancy services are provided within the scope of standards and recommendations applying to internal auditors (Institute of Internal Auditors Norway).
Ethical guidelines have been drawn up for the group and its employees, and ethics is a standard topic at seminars for all new staff members. This helps to ensure that the group's values and ethical guidelines are properly communicated and made known throughout the organisation. Clear-cut guidelines have been established for reporting (whistleblowing) should any member of staff learn of circumstances that breach external or internal regulatory provisions or of other circumstances which are likely to harm the group's reputation or financial situation. How a report is to be handled is decided by the recipient of the report, in consultation with the HR manager and legal services director. The bank has an agreement with KPMG which ensures that a whistleblower can report anonymously. Whistleblowing via KPMG was utilised on three occasions in 2023.
Deviations from point 10 of the Code of Practice: None
Remuneration to the board of directors is prepared by supervisory board's election committee with a basis in market assessments, the board of directors' responsibilities, competencies, time spent and the group's complexity. The remuneration is fixed and not performance-related and no options are issued to the directors.
The board of directors' chair, the board's deputy chair and members of board committees are remunerated separately. None of the directors appointed by the supervisory board perform any task for the group beyond that of serving on the board of directors.
Further information on compensation to the board of directors and board committees is shown in the report on remuneration of senior employees which is published at smn.no.
The group's remuneration policy is formulated in accordance with the Financial Institutions Act chapter 15 with appurtenant regulations. The board of directors' remuneration committee prepares the matter before the board of directors lays down the remuneration policy each year. The policy supports the group's overarching goals, risk tolerance and long-term interests.
The policy is moreover designed to achieve the following objectives:
These rules also apply to other employees and senior personnel performing tasks of material significance for the group's risk exposure and to employees and senior personnel with control tasks.
The board of directors has a remuneration committee which prepares matters for the board. The remuneration committee deals with the remuneration arrangement, compensation to the group CEO and recommends guidelines for remuneration to senior employees (the group management). The remuneration policy was adopted by the board of directors most recently on 1 March 2023 and guidelines on remuneration to senior employees were adopted by the supervisory board on 28 March 2023.
A description of remuneration to the group CEO and senior employees is given in the report on remuneration of senior employees which is published at smn.no. Further details of the bank's remuneration arrangement are available on the bank's home page.
Deviations from point 12 of the Code of Practice: None
The bank's information policy is designed to underpin the relationship of trust between the bank's EC holders, board of directors and management team, and to ensure that the bank's stakeholders are at all times able to evaluate and relate to the bank. The bank's information policy is based on active dialogue in which openness, predictability and transparency are at centre stage.
The open information practice is in conformity with the bank's internal and external guidelines, with such limitations as follow from the duty of confidentiality and stock exchange rules in effect at any and all times.
Correct, relevant and timely information on the bank's progress and performance aims to instil investor market confidence. Information is communicated to the market via quarterly investor presentations, an investor relations area on the bank's website and stock exchange notices. The group's financial calendar is published on the bank's website.
Presentations for international partners, lenders and investors are also arranged on a regular basis. The board of directors has adopted a communication strategy indicating who can make statements on behalf of SpareBank 1 SMN and in what areas.
SpareBank 1 SMN's equity capital consists of owner (equity certificate) capital, ownerless capital and earned equity. The ownerless capital represents a 'self-owning' part of the savings bank which cannot be taken over by others through acquisition. A bank's ownership structure is moreover regulated by law such that approval is required for any acquisition entailing that a holding will represent 10 per cent or more of the bank's capital or voting rights. A list of the SpareBank 1 SMN's 20 largest EC holders is available on the bank's website at smn.no.
Deviations from point 14 of the Code of Practice: Statutory limit on equity holdings
The external auditor is appointed by the supervisory board. It is the audit committee that prepares the election of the auditor for the board of directors, and the board of directors submits its recommendation to the supervisory board. The supervisory board establishes the auditor's fee. The external auditor is one and the same for all companies in the group.
The external auditor performs the statutory confirmation of the financial information provided by the companies in their public financial statements. The external auditor presents each year to the audit committee a plan for the conduct of the audit. The external auditor provides the audit committee with a description of the main elements of the audit, including whether significant weaknesses have been identified in the bank's internal control related to the financial reporting process.
Further, the external auditor attends all meetings of the audit committee at which quarterly or annual accounts are reviewed and attends the meeting of the board of directors at which the annual accounts are reviewed. The board of directors holds at least one meeting each year with the external auditor without the group CEO or others from the day-to-day management team being present.
Guidelines have been established for the day-to day management team's right to utilise the external auditor for non-audit services. Any such services from the external auditor shall at all times be within the scope of the Auditors Act.
In addition the auditor confirms his independence and discloses whether any services other than statutory audit have been delivered to the group over the course of the accounting year.
Deviations from point 15 of the Code of Practice: None
1) Lov om årsregnskap m.v. (regnskapsloven) - Kapittel 3. Årsregnskap og årsberetning - Lovdata
2) Lov om finansforetak og finanskonsern (finansforetaksloven) - Lovdata
3) https://www.euronext.com/sites/default/files/2023-09/Euronext%20Growth%20Rule%20Book%20-% 20Part%20II%20-%20Euronext%20Growth%20Oslo%20%28norsk%20versjon%29%20-%20ikrafttredelse% 201%20oktober%202023.pdf
SpareBank 1 SMN aims to stimulate a sustainable development of our region. This is laid down as a strategic priority and is an integral aspect of the group strategy for the current period. The group's sustainability strategy is designed to render our financial goals achievable and to create value for our customers, owners and employees through being a:
The strategic objective for our climate readjustment is to reduce the group's total greenhouse gas emissions by 90-95 per cent (achieve 'net zero emissions') by 2050. A key milestone in this effort is to cut emissions by 50-55 per cent by 2030. As a natural follow-up to this ambitious objective of net zero emissions, we have in 2023 committed to the Science Based Targets initiative (SBTi). Information on what our commitment entails for SpareBank 1 SMN is explained more fully in the chapter entitled "Reducing the carbon footprint in loan portfolios".
Sustainability is integrated into all business lines and support functions in the group, including day-to-day operations, customer offering and distribution of community dividend. We view sustainability both as a financial risk and a business opportunity. Members of the group management team have responsibility for achieving strategic sustainability goals in the areas for which they are responsible. The group's sustainability efforts are regularly reviewed by the bank's board of directors and by the management boards of the group's subsidiaries. Relevant steering documents are publicly available in our Sustainability Library at smn.no/barekraft and are referred to under each significant topic in this annual report.
The operational work on sustainability is divided into three areas:
We conduct a continuous stakeholder dialogue with an ever growing network of stakeholders. This is part of our endeavour to ensure a coherent and long-term approach to our creation of value for equity certificate holders, customers, employees and the community. A summary of the most significant stakeholders is shown below. More information is available in the document Stakeholder Dialogue in the sustainability library at smn.no/barekraft.
Figure 5: Overview of SpareBank 1 SMN's stakeholders
The dialogue with stakeholders is in the form of in-depth interviews, digital questionnaire surveys and direct dialogue. We also attach importance to information gained from other interaction with stakeholders, for example general meetings, customer surveys and meetings, participation in committees and initiatives addressing a broad range of societal issues.
In addition to the continuous stakeholder dialogue we perform a double materiality analysis, updated every two years, in which we map environmental, social and financial materiality. Our framework conditions change in step with the development of society, and the materiality analysis, and its process, helps us to achieve conformance between our goals and focal areas on the one hand, and the expectations placed on us by stakeholders on the other.
The group's double materiality analysis is a foundation for achieving both the group's financial goals and its sustainability goals. In addition the analysis creates the basis for our compliance with existing and new regulatory requirements. The analysis identifies the most important themes of our impact on the environment and society, and society's financial impact on SpareBank 1 SMN. It also helps us to identify those UN sustainability goals where our impact is greatest.
Our analyses are publicly available in the Sustainability Library. Figure 4 shows the methodology underlying the preparation of our double materiality analysis.
We support the following national and international agreements in our work on integrating sustainability into the business:
We have signed and/or endorse the following principles and standards:
See the enclosed overview of SpareBank 1 SMN's memberships of industry, lobby and other Norwegian and international organisations.
The latest update of our double materiality analysis, which was carried out in autumn 2022, showed that many of the expectations from 2020 still applied at the same time as some new themes came to the fore. Based on this analysis we identified four focal areas with associated material themes:
These focal areas form the basis for our key performance indicators (KPIs) which function as drivers for our transition. Goal attainment and status as regards these KPIs are reported to the group management and the bank's board of directors on a quarterly basis.
This year we have targeted our work towards completing the KPI table. Completing the KPIs has required new tools, data points and work processes, and the work has taken somewhat longer than envisaged. The overview below summarises key figures for each focal area with appurtenant themes.
| Responsible lending and investments | Target 2023 |
Result 2023 |
Target 2024 |
|---|---|---|---|
| Losses due to fraud10) | < 10.000.000 NOK | 15.660.000 NOK | < 22.500.000 NOK |
| Share of managers and employees having completed e learning course in AML and anti-terrorist financing |
100 % | 97 % | 100 % |
| Corporate loan volumes with ESG-score | 75 % | 87 % | 90 % |
| Retail loan volumes with ESG-score1) | 20 % | 0 % | 20 % |
| Share of loans that meet the requirements for green bonds |
Under development3) |
19,1 %2) | Under development3) |
| Total greenhouse gas emissions from loan portfolios | 1.000 (1000 tCO e) 2 | 1.034 (1000 tCO e) 2 | SBTi4) |
| Share of homes in the loan portfolio with energy performance certificates |
90 % | 42 % | 70 % |
| Share of commercial properties in the loan portfolio (>1. 000 m2) with energy performance certificates |
75 % | 21 % | 90% of new grants |
| Advisory services and customer offering | |||
| Sales volume of products and services with an environmental benefit5) |
2.516.000.000 NOK | ||
| Sales volume of products and services with a social benefit6) |
2.000.000.000 NOK | 0 | 3.000.000.000 NOK |
| Category score for sustainability in WinningTemp7) | 7.4 | 7.3 | 8 |
| Share of managers and employees having completed e learning course in ethics |
100 % | 94 % | 100 % |
| No. of documented complaints of breaches of data privacy or loss of customers data |
0 | 12 | 0 |
| Sustainable transition of Mid-Norway | |||
| No. of participants in meeting places and innovation activities |
7.000 participants 250 entrepreneur- and youth enterprises |
5.790 participants 300 entrepreneur- and youth enterprises |
6.000 participants 250 entrepreneur- and youth enterprises |
| No. of participants in competence and development programmes |
50-100 | 270 | 500 |
| Share of large corporate customers with credit commitments who have carbon accounting reports8) |
25 % | 24 % | 25 % |
| Sustainable transition in SpareBank 1 SMN | |||
| Share of Group's significant procurements (> NOK 100,000) from suppliers with carbon accounting reports |
50 % | 68 % | 80 % |
| Share of managers and employees having completed e learning course in information security |
100 % | 90 % | 100 % |
| Category score for diversity, inclusion and equality in WinningTemp9) |
N/A | N/A | N/A |
| Total greenhouse gas emissions from day-to-day operations |
16,4 (1000 tCO2 e) |
18,5 (1000 tCO2 e) |
SBTi4) |
1) The model for ESG-scoring of our retail loan portfolio is at the reporting date not yet developed by the SpareBank 1 Alliance.
Based on existing framework per januar 2024. 2)
An official definition of the 15 % most energy effective buildings is not available, and access to reliable data is necessary to ensure a 3) robust approach.
Our targets related to greenhouse gas emissions is as of 2023 under development in conjunction with our commitment to SBTi. 4)
Products and services with an environmental benefit is defined as green products from our product hierarchy. This deviates from the 5) EU Taxonomy. Our disclosures related to the EU Taxonomy can be found under the focal area "Responsible lending and investments".
Our customers offering is a result of demands from the municipalities in our portfolio, and we have no specific products and services 6) serving a social benefit as per 2023.
Our employee development tool. 7)
"Large corporate customers" exceed two out of three following criterias: turnover > 400 MNOK, balance sheet total > MNOK 200 and 8) number of employees > 250.
We have updated the sustainability module in WinningTemp, and this key performance indicator is now a part of the key performance 9) indicator "Category score sustainability in WinningTemp".
10) Losses due to fraud is defined as expenses due to fraud commited to the banks customers, repaid by the bank
Financial undertakings' reporting requirements will burgeon in the years ahead, much due to the financial sector's important role in the transition to a low emissions economy in Norway as elsewhere. In 2023 SpareBank 1 SMN took several steps to prepare to accommodate the new regulatory requirements as and when they occur, including:
The Corporate Sustainability Reporting Directive (CSRD) entered into force in the EU on 1 January 2023, replacing the Non-Financial Reporting Directive (NFRD) with effect from January 2024. The Securities Trading Act Committee delivered its report on implementation of the CSRD in Norwegian law, and Norway is expected to follow the same timetable as the EU. SpareBank 1 SMN will be subject to a reporting requirement for the reporting year 2024, with its first report due in 2025.
The CSRD is operationalised through a comprehensive set of reporting standards termed European Sustainability Reporting Standards (ESRS) which cover material themes within the EU's Green Deal in the environmental, social and economic context.
As a stock-exchange-listed credit institution, we are encompassed by the first 'wave' of reporting for the reporting year 2024. We have launched a number of initiatives in-house to ensure our readiness to accommodate the requirements upon their entry into force in Norway.
We have in 2023 carried out a project to map and understand the consequences of up-coming statutory requirements and regulation. The working group has comprised experts from the sustainability department at SpareBank 1 Regnskapshuset SMN along with key personnel from risk management, the group accounting department and compliance. The mandate was to draw up a groupwide framework for the reporting and publishing of sustainability information.
As a part of the SpareBank 1 Alliance we also maintain a close dialogue with other banks in the SpareBank 1 Alliance in order to identify shared data needs, assess joint initiatives and create a common understanding of how the legislation affects us as banks. Several initiatives have already been launched related to understanding the ESRS and the data needs to which ESRS gives rise.
The comprehensive reporting requirements ensuing from the CSRD have introduced a need for further reorganisation and distribution of the responsibility for reporting on sustainability within the SpareBank 1 SMN Group. For us the operational aspect of sustainability has throughout been strongly imbedded in the respective specialist and business lines in the group, while reporting and structuring has belonged under Group Finance and Governance.
An ambition is to utilise the requirements of the CSRD to gear up our structures, our employees and our business model in a direction that promotes long-term sustainable value creation. The broad, complex, and to some extent radical requirements of the CSRD offer both an opportunity, but also a need, to further involve the group's specialist and business lines in the reporting. In the course of 2024 we will to a greater degree involve key personnel in the specialist and business lines as contributors to the preparation and updating of guidelines, action plans, key figures and objectives.
Group Finance and Governance will retain overall responsibility for understanding and implementing the legislation and any changes and updates, and key personnel in the specialist and business lines will handle specific tasks related to various material themes. We believe that this type of organisation puts the group in a better position to accommodate up-coming statutory requirements and regulatory measures.
We have since 2020, with a two-year interval for updating, prepared a materiality analysis for the group. The update helps to ensure that we always take into account changes in our stakeholders' perspective and preferences. In 2020 we prepared a simple materiality analysis with a focus on impact materiality - how SpareBank 1 SMN impacts the climate, environment and people.
When updating the materiality analysis in late autumn 2022, we opted to broaden our perspective with the inclusion of financial materiality as a dimension of our materiality analysis. This resulted in a double materiality analysis which formed the basis for the content and structure of our reporting for 2022. This structure is retained in 2023.
A double materiality analysis will now become mandatory for the first time through the implementation of the Corporate Sustainability Reporting Directive (CSRD) in Norwegian law. The double materiality analysis forms the foundation for our reporting in keeping with the ESRS, and the process, and the result, are important for maintaining our focus in the years ahead, both in our reporting and governance. We have
carried out a preliminary mapping of our present double materiality analysis in terms of topics and subtopics to identify which material themes are most likely to be relevant for us to report on when the CSRD enters into force.
Our ambition is to update the group's double materiality analysis early in 2024. With the experience and competence we gained from the process in autumn 2022, we feel well equipped to prepare a double materiality analysis in line with the new requirements of ESRS. We are bringing this work forward in 2024 to ensure that guidelines, action plans, KPIs and objectives are in line with the ESRS requirements.
The EU Taxonomy took effect in Norway on 1 January 2023 with the first reporting due in 2024 (for the reporting year 2023). As a credit institution we are a highly important actor in the allocation of capital to sustainable economic activities, and are accordingly a part of the first wave of reporting on the Taxonomy in Norway.
The Taxonomy is the EU's classification system for identifying sustainable economic activities, and sets criteria for what economic activities are to be considered, or not considered, sustainable. The Taxonomy comprises six environmental objectives, of which the first two (climate change mitigation and climate change adaptation) apply to reporting in 2023. The four remaining environmental objectives are not expected to be incorporated in the EEA Agreement before year-end, and will only become reportable for the reporting year 2024.
Other work on the EU Taxonomy, including methodology, calculations, assumptions, challenges and opportunities are described more fully in the focal area entitled 'Responsible lending and investments'.
Lending to households and businesses is the group's core activity. A consistent expectation from our stakeholders is that lending and investment activity should stimulate local, sustainable business development and value creation. Four material themes feature in this focal area:
| Material themes | Objective | Key figures | Responsibility |
|---|---|---|---|
| Prevent and combat economic crime and corruption |
Ensure compliance with laws and regulations through updated risk assessments and effective combating of economic crime |
Losses due to fraud Share of managers and employees having completed e-learning course in anti-money laundering and terrorist financing |
Director, Technology and Development |
| Secure long-term profitability and competitiveness |
Strengthen the group's growth and profitability through differentiated pricing of climate risk and active portfolio management |
Loan volume to corporate and retail customers with ESG score Share of loans that meet the requirements for green bonds |
Director, Corporate Banking Director, Retail Banking |
| Reduce carbon footprint in loan portfolios |
Reduce the group's financial risk by integrating climate and natural impact into advisory services, risk management and credit models |
Reduction of total CO2 emissions from loan portfolios in line with transition plans towards net zero by 2050 8% annual reduction of CO2 emissions in day-to-day operations |
Director, Group Finance and Governance Director, Risk Management |
| Stimulate green transition for retail customers and corporate customers |
Actively promote reduction of customers' energy consumption through advice, product development and courses offered |
Share of dwellings in the loan portfolio with an energy rating Share of commercial properties in the loan portfolio (>1,000m2) with an energy rating |
Director, Corporate Banking Director, Retail Banking CEO, EiendomsMegler 1 Midt-Norge |
Table 2: Responsible lending and investments – material themes
Economic crime committed by way of banks and financial institutions is growing in scale, and the continual professionalisation of criminals means that criminal activities are increasingly complex. For us, prevention and combating of economic crime and corruption are a pivotal task. This task is required of us by law, and supports the trust and confidence placed in Norway's welfare society and financial industry both nationally and internationally. The above theme is material to all our stakeholders, and we devote considerable resources to the work involved.
Economic crime signifies unlawful, profit-motivated acts that impact individuals, businesses and society, and may have negative consequences for confidence in Norway's welfare society. Moreover, it appears from various threat assessments that banking and finance are increasingly vulnerable to employees who commit criminal acts alone or through close links to criminals.
As an 'obliged entity' under the anti-money laundering legislation, SpareBank 1 SMN has a statutory obligation to institute measures against money laundering and terrorist financing. On 1 January 2023 a new Financial Contracts Act entered into force designed to strengthen consumer protection. The Act assigns the bank a statutory obligation to cut down processing time for complaints related to fraud.
Many measures large and small have been taken to guard against, detect and deal with economic crime in 2023.
Most important guidelines: Group policy and overarching guidelines on money laundering, terrorist financing and sanctions, policy on internal malpractices and corruption.
Responsibility for the area: The head of the anti-economic crime unit is the bank's anti-money laundering officer. The director of Technology and Development has chief responsibility for anti-fraud and internal malpractices and corruption.
Objective: To preserve the confidence of public authorities, customers, partners and competitors through prevention, detection and handling of transactions with links to money laundering, terrorist financing and other economic crime.
The bank has noted an increase in fraud and attempted fraud against our customers in 2023. Overall figures for our customer-facing activities – from customer service centre, complaints department to units combating economic crime – show a continued increase in fraud compared with previous years. This is in line with reports from public authorities and bodies as well as other financial institutions in Norway in the past year.
In 2023 a marked trend has been an increase in fraud linked to fake investments and an increase in fraud linked to digital second-hand markets. We see a continued high incidence of phone scams involving seniors (so-called 'Olga fraud'), at the same time as our security systems have prevented and halted a considerable number of attempted phone scams in 2023, compared with 2022.
In 2023 we updated our risk assessments in the fraud prevention area together with other Alliance banks as part of a long-term strategic enhancement of the anti-fraud effort in the SpareBank 1 Alliance. 2023 saw several major fraud cases in which the bank took a leading initiative at the national level with regard to the police and the prosecuting authority, and where the outcome of the cases has in large measure been beneficial to society. 2023 has also been a year in which we took a visible position in the media with a fraud prevention message. In addition we held a series of talks and customer meetings at local level whose focus was on advice and guidance on how to avoid being defrauded.
In step with a steadily growing digital integration of society and further digitalisation of payment and financial services, we expect fraud committed against the bank and our customers to remain on a high and rising level in the coming year. On a general basis, digitalisation – as a positive force in society that increases values, reduces transaction costs and realises gains – will also open the way for transnational fraud,
upscaling and intensification of attacks, effective sharing of criminal knowledge and new technology, as well as rapid changes in modus and attack vectors against banks and their customers. The growth of fraud must also be viewed in the light of a changing geopolitical picture: fraud undermines and weakens trust among citizens, and the trust citizens place in society's major participants, such as banks. This can serve the purposes of criminal actors.
SpareBank 1 SMN is under a statutory obligation to implement measures to prevent and detect money laundering and terrorist financing. In our annual report for 2022 we wrote that our chief priorities in the money laundering and terrorist financing sphere were to improve processes and procedures, ensure compliance in connection with the merger with SpareBank 1 Søre Sunnmøre, and to acquire the next generation of anti-money laundering (AML) solutions. In addition, our framework for anti-money laundering, anti-terrorist financing and sanctions has been updated. A major survey of the risk posed by various types of correspondent banking connections has been carried out, and the quality and effectiveness of 'know your customer' processes in the personal market has been improved.
Our group policy and overarching guidelines in this area set requirements for internal control and communication procedures designed to ensure compliance with the anti-money laundering legislation. A total of 27,805 transactions were identified for further checks by the bank's transaction monitoring system. 610 cases were reported as suspicious to Økokrim's financial intelligence unit (FIU).
All employees underwent training activities in 2023. 97 per cent of assigned e-learning coaching in economic crime was completed, and specific training was provided to specialist units, both on a 'classroom' basis and through tailored e-learning and certification programmes.
Internal malpractices and corruption are destructive for society as a whole and undermine lawful business activity and competition. Involvement in internal malpractices and corruption can damage the group's business and reputation, and may result in criminal punishment, loss of contract or other financial loss.
Malpractice as a concept covers both criminal and non-criminal offences and may be committed through for example embezzlement, theft, fraud, corruption, breach of confidentiality or ethical guidelines.
Zero tolerance of any form of internal malpractice or corruption is enshrined in the group's ethical guidelines.
The anti-corruption policy has been revised to cover all forms of internal malpractices. It has been reviewed by the board of directors and provides guides for the group's stance and work on preventing internal malpractices and corruption.
The most significant risks of internal malpractices and corruption that have been identified are vulnerabilities related to employees, misuse of accesses and exploitation of systems. Over the year a number of measures have been devised to map vulnerabilities and implement measures to reduce the risk of internal malpractices and corruption.
Our ethical guidelines make clear that employees must avoid entering into a relationship of dependence with the group's clients or suppliers. Employees' positions shall be registered and approved by HR.
All employees are familiarised with the guidelines regarding anti-corruption through training and attitudemoulding programmes. Should the guidelines nonetheless be breached, sanctions will be imposed on the individuals concerned.
The bank has whistleblowing procedures to ensure employees' right to report censurable circumstances. The whistleblowing procedures also apply where there is a suspicion of internal malpractices or corruption. Whistleblowing may be done anonymously. Four cases were reported in 2023.
Each year all group employees undergo a mandatory ethics update as a means of promoting ethical awareness and professional integrity. The theme for the 2023 ethics week was impartiality and conflicts of interest. To date 94 per cent of our employees have completed the programme.
The following steering documents are central to this theme:
Our long-term profitability and competitiveness are dependent on our successful achievement of a green transition in close interaction with our customers, suppliers and business partners. To that end, ESG scoring of corporate clients forms an integral part of the credit process. Corresponding tools will also be introduced for our retail customers. We have brought in a clear differentiation of loan-to-value ratios, loan instalment profiles and dividend payment potentials for companies, depending on how we view ESG risk at customer level. Through these changes in the credit process, the group's lending business will increasingly meet the requirements imposed on green bond funding.
Our credit strategy is adopted by the bank's board of directors. The scope for sustainable lending is established in this forum and is operationalised through the bank's credit policy and framework for the lending business. This framework aims to ensure that the bank for example avoids imposing debt commitments that are counter to good advisory practices or prudent lending practices. The bank is obliged to refuse loan applications where the purpose of the loan is unwarrantable, and in the case of customers with low debt-servicing ability.
In the group's updated materiality analysis, Retail Banking is considered to have greatest impact on the themes of households and agriculture. Finance granted to personal customers can have a positive impact on housing conditions, for example through the bank's role as a driver for the inclusion of low-income families in the housing market, and through offering other financial services with a positive effect on vulnerable groups in society, including our focus on a financial health team.
Retail Banking also has a driver role in the construction industry. This is through its partnerships with property developers and estate agents which can have a positive climate impact on construction projects and encourage a sustainable housing standard. Retail Banking has a focus on further developing its offering of green products, on coordinating with EiendomsMegler 1 Midt-Norge on concepts in the housing development sphere, and on encouraging housing developers to take account of house buyers' preferences as regards sustainability and by that means drive a green transition.
Lending to agricultural customers belongs under Retail Banking's portfolio, and includes the following segments: farming, forestry, animal husbandry, further processing of raw materials and provision of various services to farms. This is an important industry for us and is the bank's second largest industry portfolio. In terms of loan volume we are the second largest bank for agriculture in Norway. Our role under our agriculture policy is to assist in developing the region's agriculture. This implies a role in the evolution of the farm sector that is larger than merely being a supplier of capital.
We will by that means incentivise customers and business connections to weigh up the current sustainability of their own business and how they can adapt to the green transition. We will make it more attractive to opt for good, sustainable measures and solutions across our business lines. This will create the basis for longterm investments and environment-friendly management, and is in line with the stewardship precept: a farm property should be passed on in a better condition than when the present holder took it over.
In the course of 2023 we were given the opportunity to retrieve "estimated energy labels" from Eiendomsverdi. If these energy labels are approved for use, it will enable the energy status of many properties that lack energy data to be estimated. Hence only a small proportion of properties financed by us will be left without an energy label. This lays the basis for incorporating an advisory solution and ESG in credit assessments.
2023 was a demanding year for customers with large mortgages, large dependant burdens and low incomes. Our response was to introduce a financial health team – a measure designed to address the problem of unmanageable debt in a more coherent manner with a focus both on financial challenges and health challenges, and the reciprocal effect these issues can have on one another. This initiative is expected to help those of our customers who are struggling with unmanageable debt challenges.
Risk related to sustainability is an integral part of the credit assessment of our corporate customers, and is a routine element in credit cases and risk management. This type of risk constitutes credit risk on a par with other possible risk drivers. Under our credit strategy we work purposefully to reduce both ESG risk and greenhouse gas emissions from our loan portfolio in keeping with our goal of net zero emissions in our loan portfolio by 2050. We have prepared a document entitled "Guidelines for managing risk related to ESG" as an overarching guideline for our customer advisers.
The group will work purposefully to reduce both ESG risk and greenhouse gas emissions from the loan portfolio. We set guidelines for relevant industries that address ESG-related risk, thereby ensuring that decisions are made on a solid basis and in accordance with the group's sustainability strategy.
Our ESG model is a key tool in assessing our corporate customers' ESG risk. The model has been developed by the SpareBank 1 Alliance for the purpose of detecting credit risk related to ESG, where the
customer is scored on a scale from 1 to 10. The questions posed in the ESG model are tailored to the segment in which the customer operates, alongside assessments concerning climate risk (physical risk and transition risk), social risk factors (e.g. worker rights and human rights), as well as governance. The ESG model is a tool available to financial advisers in the customer dialogue, partly with a view to the ESG assessment, but also with a view to discussing the risk picture for the customer's industry, and to highlighting steps the customer can take to reduce their own ESG risk.
When using our ESG model we require classification of ESG risk level in the case of all exposures of NOK 10 million or more. Risk classification is updated at least annually and in the event of significant changes. Risk level is categorised as low, medium or high.
For 2023 our aim was to assess 75 per cent of all existing and new credit exposures of NOK 10 million or more using our ESG model. As at 31 December 2023 the proportion was 87.2 per cent, i.e. well above target. For 2024 we have set a target of 90 per cent.
We will continue, together with the SpareBank 1 Alliance, to further develop the ESG model in terms of functionality, questions asked, weighting and data. For new and existing customers with credit exposures below NOK 10 million the ESG model sets no requirement as to ESG classification, although a verbal ESG assessment is required in the event of observed negative discrepancies.
Investments at SpareBank 1 SMN can be divided into three categories:
In managing the group's liquidity risk, we have a portfolio consisting of liquid securities of high credit quality. The portfolio's composition and size are in conformance with steering documents for the liquidity area approved by the board of directors and with statutory requirements on liquidity management. In addition, guidelines for sustainable liquidity management have been drawn up. The group's investments in CDs and bonds total NOK 34bn at the end of 2023. In the course of 2023 we have continued to build up the share of bonds that meet ESG criteria, and have considered and participated in a number of issues denominated in NOK and EUR through the year. This amounts to NOK 2.7bn for 2023. These are in all essentials bonds issued by multinational organisations and covered bonds.
SpareBank 1 SMN Invest AS owns shares and units in regional enterprises and funds. Activity in this company is reduced, and the company will not be making investments in new individual companies. The portfolio will therefore be scaled back over time.
SpareBank 1 SMN is not a manager of mutual funds, but is a distributor of such funds. As a distributor, we are concerned to offer mutual funds with high ambitions in terms of sustainability. The mutual fund offering has been built up through ODIN, which SpareBank 1 SMN indirectly co-owns through SpareBank 1 Forvaltning, in addition to mutual funds from other fund managers.
Together with the other banks in the SpareBank 1 Alliance, we wish to make it simpler for our customers to invest in mutual funds that are appropriate to the customer in terms of return and risk, but also with a view to sustainability.
We have guidelines on sustainable distribution and recommendation of mutual funds. The guidelines are drawn up followed up together with the other banks in the SpareBank 1 Alliance. Through our guidelines we have defined what we encourage, expect, and demand of managers of the mutual funds that we distribute to our customers. If a manager breaches the requirements and, after dialogue with us, opts not to change their practices, we will halt distribution of the mutual fund concerned.
In addition to the above, we have established our own labelling scheme in which the various funds are given a sustainability rating based on compliance with our expectations. Briefly, we expect managers of the respective funds to be active owners and to exclude companies and sectors in order to ensure a more sustainable development for the company in isolation, but also for the community and the environment. We consider these factors important for the value created by the companies for their owners who are in turn our customers.
In light of a sizeable ongoing revision of the labelling scheme in the second half of 2023 we have deferred the process of obtaining new sustainability information from fund managers for 2023. We will ahead rely to a greater degree on the Sustainable Finance Disclosure Regulation (SFDR), and on more objective sustainability information provided by a supplier of sustainability data in the labelling arrangement, and less on information obtained directly from the fund managers. We expect the new labelling arrangement to be phased in during the first half of 2024.
The table below shows the distribution of ratings under the labelling arrangement for 2023. Only one change in rating is seen for funds in distribution in 2022.
| ESG score | 2023 | New funds 2023 |
|---|---|---|
| A | 12 | 1 |
| B | 179 | 3 |
| C | 17 | 0 |
| D | 4 | 0 |
| E | 0 | 0 |
| F | 1 | 0 |
| Total | 213 | 4 |
Table 3: Distribution of ESG-score funds
By far the majority of funds we distribute have a B rating, and we consider these funds to have a good approach to sustainability. Revision of the labelling arrangement is partly designed to enable funds to be differentiated from one another to a greater degree, so as to reduce the concentration of funds with a B rating. Only one fund has moved from an A rating to a B rating compared with the previous ESG scoring. In order to receive an A rating, a fund must in addition to meeting all the expectations imposed, be classified as an Article 9 fund under the SFDR.
All fund managers state that they have signed up to the UN Principles for Responsible Investment and report on compliance.
Investments of moneys from the community dividend fund and SpareBank 1 SMN Utvikling This receives further attention in the chapter 'Community dividend' and 'Stimulating innovation and sustainable economic growth'.
In keeping with the group's sustainability strategy, SpareBank 1 SMN has drawn up a framework for the issuance of green bonds (Green Bond Framework). The framework was drawn up in keeping with ICMA Green Bond Principles. The framework supports the UN Sustainable Development Goals, and all qualified loans in the portfolio can be related to one or more of the following sustainability goals:
Qualified loans are grouped in categories:
Qualified loans are grouped in categories:
SpareBank 1 SMN has appointed Multiconsult as adviser to identify the most energy-efficient residential and commercial properties, electric vehicles and renewable energy. Sustainalytics have carried out an independent assessment of the framework.
As at 31 December 2023 we had issued green bonds worth NOK 23.8bn.
Qualifying assets in the portfolio total NOK 34bn. Further details about the issuances can be found in the green bond allocation report published in our sustainability library at smn.no.
SpareBank 1 SMN's green bond framework – brought to completion in January 2024 – is an update of the existing framework for green bond issuance with an eye to the EU taxonomy. Some divergences from the taxonomy remain, mainly due to two items:
For other differences between SpareBank 1 SMN's framework and the taxonomy, we refer to the description provided in the SPO from Sustainalytics , which has evaluated the framework.
Climate risk denotes the risk of financial loss or impaired reputation which can be related either directly to climate change (physical risk) or as a consequence of adjustments towards a low emissions society (transition risk).
Loss as a result of climate risk will materialise through the traditional risk categories such as credit risk, market risk and operational risk. Climate risk is thus a driver of risk, not a risk category in its own right. The group considers climate risk to be a material financial risk, and until such time as climate risk is fully integrated into the traditional risk categories and the group's corporate governance, climate risk will receive added focus in our risk management.
We utilise the Task Force on Climate-Related Financial Disclosures (TCFD) framework to guide our work on, and reporting on, climate risk.
Climate risk responsibilities follow the group's ordinary responsibility structure, in conformance with the group's risk management policy. The board of directors of SpareBank 1 SMN has overarching responsibility for climate risk management through its approval of steering documents and follow-up of reporting from the administration. The risk and audit committee monitors the group's work on climate risk and submits its recommendations to the board of directors. Climate risk is reported on to the board of directors at least quarterly through the quarterly reporting and as a routine item in the risk report, and annually through the annual report and the ICAAP.
The board of directors has approved, and will ahead revise, steering documents designed to manage climate risk, for example the Sustainability strategy, Sustainability policy, Climate risk strategy and Credit strategy. Integrating climate risk into all steering documents, and revision, is a continuous process.
In 2022 the board of directors adopted an ambition to achieve net zero emissions by 2050, recognised climate risk as a strategic opportunity and threat, and adopted a framework for transition plans towards net zero. In 2023 the board of directors took the net-zero ambition a step further by committing the group to the Science Based Targets initiative (SBTi). The group must, by 2025, draw up plans and emission paths towards net zero in 2050 and have them validated.
The group management team has set a direction for the work on climate risk by designating sustainability as one of five priorities of the group strategy which was adopted in 2019.
Day-to-day operations follow the ordinary lines-of-defence structure and responsibilities, where the group CEO has highest responsibility. Roles and responsibilities in the climate risk effort, as part of the overall work on sustainability, are specified in the document Sustainability policy. Inasmuch as climate risk is included in all steering documents, responsibility for climate risk management is an integral part of the group' s business.
The group's ESG committee will contribute to the development and implementation of a groupwide standard for sustainability at SpareBank 1 SMN. Climate risk management is a part of this effort. All business lines in the group have a representative on the committee who is designated by the director of the business line or the head of the subsidiary concerned. The committee's mandate was revised in October 2023 and shall inter alia:
SpareBank 1 SMN is concerned to create sustainable profitability and growth. The group's climate risk strategy shall underpin these objectives as follows:
The group updates annually a detailed survey of climate risk using the TCFD template. With regard to the group's lending activity, significant industries are reviewed jointly by the industry officer, the Credit Department and Risk Management. Potential threats and uncertainties are identified and risk is assessed over the short, medium and long term. Where significant financial risks are identified, the ESG model can be adapted to identify vulnerable customers. Finally, the choice of risk management strategies is considered, including development of new policy rules.
The results of the analysis show that climate risk is primarily a risk through loans to customers. Our loan portfolio poses relatively low physical risk, with the exception of fishery and aquaculture where the risk is moderate due to the expected rise in sea temperatures. Transition risk will impact most businesses in the transition towards the low emissions society. We are exposed to agriculture and ship-related segments, which in our analyses have high estimated greenhouse gas emissions that attract public attention. These industries have a conscious awareness of the issue and are making an active effort to reduce greenhouse gas emissions, for example through the climate plan for agriculture (Landbrukets Klimaplan) and the International Maritime Organisation (IMO).
In addition to posing a transition risk, the customer's transition presents a climate-related opportunity for the group's business lines when it comes to products and advisory services. We note a rising demand for green loans among larger companies, although green loans are also in demand by smaller businesses and residential mortgage borrowers. This product offers both an opportunity for increased sales and a motivation for our customers to make green investments. Green investments can help to reduce customers' vulnerability to climate risk, but can also pose a financial risk to the customer if the investment is too high or the choice of technology is wrong.
The results from the mapping of climate risk are used to assign priorities in the work ahead, to establish new policy rules as a framework for the lending business and to progress the work on transition plans towards net zero. The results are also used as input in the work on credit strategy. The ambition is that priorities for growth and adjustment of credit boundaries should help ensure that climate risk is within the board of directors' risk appetite.
Implementation of measures places emphasis on supporting the sustainability strategy's goal of being a driver for green transition. In 2023 transition plans for agriculture, fishery and commercial property were brought to completion or were updated.
Climate risk is integrated into corporate governance through KPIs, as shown in the KPI table in the introduction to this annual report.
We issue green bonds and have established a programme to ensure that the funds are utilised as intended. The green bond framework was revised in 2023. In addition, Boligkreditt has funded its operations using green bonds. We offer green residential mortgages, construction loans and agricultural loans.
SpareBank 1 SMN utilises the Network for Greening the Financial System (NGFS) scenarios to analyse the consequences of climate changes for the group's activities. We focus on the three scenarios "orderly transition", "disorderly transition" and "hot world". Our transition plans are developed in order to contribute to an orderly transition, but they also prepare our business to handle the other two scenarios. The qualitative analysis that has been carried out focuses on the two downside scenarios.
Quantitative analyses have been carried out on the portfolio with a basis in the scenarios. In the case of transition risk in the portfolio of loans to business and industry we have examined how increased carbon prices in the NGFS scenarios impact the annual results of our corporate clients given estimated greenhouse gas emissions per client. The results confirm that if the polluter pays for its emissions, industries with high greenhouse gas emissions will face substantial costs.
In 2023 the banks in the SpareBank 1 Alliance further developed the stress test model for credit risk to include climate scenarios and climate-related variables. This work continues in 2024.
Our assessment is that a disorderly transition will present the greatest challenge within the analysis horizon to 2050. We are therefore actively working to impose requirements and expectations on our customers to ensure that a green transition reduces vulnerability to a disorderly switch to a low emissions society.
We have several processes for the identification of climate risk in our activities. The bulk of our work on climate risk focuses on the lending business since it is here that we consider the risk to be greatest.
The previously mentioned mapping of climate risk using the TCFD template provides a thorough analysis of events that can impact our customers, assessed at industry level.
Vulnerability to climate risk is likely to vary within an industry. All corporate clients with a volume above NOK 10m, along with agriculture customers, are assessed using the SpareBank 1 Alliance's shared ESG model. The model assesses customers' transition risk, physical risk, social conditions and corporate management. The model was developed with the aim of providing good, updated risk assessments and to ensure good data capture. Preliminary results from the model strengthen our assessment that transition risk poses a bigger challenge to our customers than physical risk.
Climate risk is an explicit assessment item for all loan applications submitted by corporate and agriculture customers. The adviser concerned must accordingly make a separate assessment of the customer's vulnerability to climate risk in addition to assigning an ESG score.
Our strategy on management of climate risk primarily involves driving a green transition for our customers through providing advice and finance for transition. Our transition plans for the respective industries impose clear requirements and expectations on our customers, designed to assist management of the customer's climate risk.
Good guidelines help to guard against credit risk and set clear boundaries for the lending business. Where financing of commercial property is concerned, we apply stricter loan-to-value requirements to buildings that are old or energy-inefficient. This is because we anticipate a need to upgrade to a modern energy standard in order to attract tenants and to comply with government requirements.
Integrating climate risk into corporate governance is an ongoing process, and entails the need to incorporate the effect of climate risk into all group strategies, policies and procedures. In addition to its inclusion in the Sustainability Strategy, Sustainability Policy and Climate Strategy, climate risk is integrated into the traditional risk management framework as a risk driver. The three documents mentioned above have acted as guides to how other steering documents should integrate climate risk.
EU (EBA) guidelines impose comprehensive requirements on our climate risk effort, e.g. the guidelines on loan origination and monitoring. Internal projects have been carried through to ensure compliance which in turn contributes to an increased focus and quality of the work done.
Climate risk is considered a risk driver in the bank's ICAAP.
Methods used to assess climate-related risks and opportunities, in line with strategy and risk management processes
The qualitative TCFD analyses of climate risk are conducted on significant activities in the group, with a
focus on the largest industries in our loan portfolio. We consider each event separately and events as a whole per transition/physical risk on a scale from low to high risk. The risk assessment is also performed along a short, medium and long (2030+) time dimension.
Our analyses have identified greenhouse gas emissions as a risk to customers in our loan portfolio. This has prompted the group to join the Partnership for Carbon Accounting Financials (PCAF). In 2023 we sought to improve the quality of the estimates and to adapt the methodology to Finance Norway's guide on financed greenhouse gas emissions. While the estimates are still subject to much uncertainty, they nonetheless serve as a guide in our work on strategy. A detailed description of calculations and assumptions is provided in the chapter entitled 'Financed emissions'.
Where financed properties are concerned, Eiendomsverdi has delivered an energy performance certificate for properties holding such a certificate, and has estimated energy ratings for remaining properties. Eiendomsverdi has for all properties delivered estimates of energy consumption which are used to estimate greenhouse gas emissions. The table below shows the number of financed commercial buildings with a usable area above 1,000m , and dwellings, distributed by energy rating. The figures are inclusive of loans 2 transferred to SpareBank 1 Boligkreditt/Næringskreditt.
| No. of | ||||||
|---|---|---|---|---|---|---|
| No. of | Accumulated | commercial | Accumulated | |||
| ENERGY RATING | dwellings | Share | share | buildings | Share | share |
| A | 463 | 1 % | 1 % | 3 | 0 % | 0 % |
| B | 3,453 | 4 % | 5 % | 30 | 4 % | 4 % |
| C | 3,858 | 5 % | 10 % | 30 | 4 % | 8 % |
| D | 4,759 | 6 % | 16 % | 51 | 7 % | 15 % |
| E | 5,054 | 6 % | 22 % | 26 | 3 % | 18 % |
| F | 6,730 | 8 % | 31 % | 15 | 2 % | 20 % |
| G | 8,590 | 11 % | 42 % | 8 | 1 % | 21 % |
| Energy certificate expired | 4,190 | 5 % | 47 % | |||
| No energy certificate, but built after 2010 | 8,084 | 10 % | 57 % | 122 | 16 % | 37 % |
| No energy certificate | 34,062 | 43 % | 100 % | 484 | 63 % | 100 % |
| Total no. of properties | 79,243 | 769 |
Table 4: Distribution energy rating
The table shows that many dwellings can benefit from energy efficiency upgrades. The bank offers favourably priced green construction loans or green loans for energy-efficiency measures to customers wishing to upgrade their home to a better energy rating.
Our TCFD analyses indicate that we have a degree of vulnerability to ocean warming through our customers in the fishery and aquaculture industries. Moreover, properties in unfavourable locations in terms of rising sea level, flooding or landslides will be more vulnerable in a warmer and more extreme climate.
Properties we finance through residential mortgages and commercial mortgages have been linked up to the NVE's risk maps. Data are delivered by Eiendomsverdi, and then tied in with our lending. We have chosen the following activation thresholds for flagging properties for possible physical risk.
The table below shows total outstanding loans, including loans transferred to SpareBank 1 Boligkreditt, that are secured by real property. Agriculture customers are included under corporate customers.
| NOK million | Personal customers | Corporate customers | Total loans | Share |
|---|---|---|---|---|
| Total loans | 152,971 | 38,599 | 191,570 | |
| - of which exposed to climate risk | ||||
| Flooding | 822 | 1,715 | 2,537 | 1,3 % |
| Snow slides | 2,966 | 1,041 | 4,007 | 2,1 % |
| Mountain slides | 76 | 109 | 184 | 0,1 % |
| Quick clay slides | 3,881 | 668 | 4,549 | 2,4 % |
| Sea level | 2,122 | 3,345 | 5,467 | 2,9 % |
| Total exposed to risk1) | 9,362 | 6,470 | 15,832 | 8,3 % |
1) The total exposed to risk is smaller than the sum total of risk groups. This is because some properties are included in two or more risk groups.
The NVE's risk map shows only hits where mapping has been carried out, apart from sea level, which is modelled for all properties. Moreover, flagging gives no indication of whether safety measures have been put in place.
Municipalities showing the most hits for snow slides are Ørsta, Ålesund, Rauma and Oppdal. For quick clay slides, Trondheim municipality is overrepresented. This is both because most of the group's lending is to this municipality and because many quick clay sites have been identified.
See the enclosed climate account, the chapter "Reducing the carbon footprint in day-to-day operations" and the chapter "Greenhouse gas emissions from the group's loan portfolios" for our reporting on upstream and downstream greenhouse gas emissions for 2023.
Our goal in managing climate-related risks and opportunities refers both to our opportunity to impact our surroundings and to how our surroundings impact us. More precisely this means:
We are a substantial actor in the region and we seek to use the group to contribute to the transition through the bank, our subsidiaries and our contribution to the regional community.
The following steering documents are central to this theme:
Transition plan for commercial property
Transition plan for fishery
The financial industry has negligible direct emissions, and our climate impact is in the main a consequence of the capital we manage through loans and investments. The carbon footprint in our loan portfolios constitutes a growing financial risk for us as a group. We recognise that SpareBank 1 SMN must as a major regional financial actor go to the fore as a driver for green transition in our region.
Our driver role entails reducing greenhouse gas emissions through exerting active influence on our customers, while at the same time continuing to integrate material sustainability factors into corporate governance, risk management and credit models. Our transition plans towards net zero emissions at industry level, changes in credit policy and commitment to SBTi are examples of our systematic effort to follow up and reduce our overall climate footprint.
The transition to a low emissions society is dependent on the financial industry, but preparing key performance indicators, objectives, calculations and results poses a challenge given inadequate principles and definitions to support emissions reduction and little in the way of standardised measuring and calculation methods. There is also a notable lack of definitions of what are considered to be effective emission reduction strategies. Our commitment to the Science Based Targets initiative (SBTi) will help us to resolve the problems mentioned.
The SBTi is a global, voluntary body whose mission is to assist companies, including financial institutions, in setting ambitious, science-based climate targets in line with the latest climate science. The initiative came about in response to the gap in evidence after COP21 (Paris Agreement) in 2015, when global pledges were not sufficient to prevent global warming above 1.5 degrees. The initiative is a global collaboration between the Carbon Disclosure Project (CDP), the United Nations Global Compact (UNGC), the World Resources Institute (WRI) and the World Wildlife Fund (WWF).
As a natural follow-up to the series of three board meetings entitled 'climate transition towards 2050', at which the group's strategic objective of net zero emissions by 2050 was adopted, the board of directors resolved in August 2023 that validated targets should be drawn up in line with the SBTi for all key sectors in the group's loan portfolio. A commitment to cut emissions in keeping with a 1.5 degree emissions path was submitted to the SBTi on 6 October 2023. The commitment entails that SpareBank 1 SMN, over the next two years, will draw up, and obtain approval of, short-term and long-term targets with appurtenant action plans for the period to 2050.
The project group, headed by the group's chief sustainability officer, comprises persons from corporate banking, retail banking, risk management, finance and group accounts with varying backgrounds, competencies and areas of responsibility in the group. The purpose of this organisational set-up is to ensure objectivity, expertise and breadth of viewpoints, discussions and results. In addition to setting up the internal project group we have identified a need to discuss calculation methods and other methodology with the SpareBank 1 Alliance and other banks during the preparation of our own targets. Involving external actors ensures additional collaboration with banks whose preparatory process is under way or that have already prepared science-based targets.
The latter part of 2023 was devoted to understanding how the framework will impact our objectives, including our understanding of the framework's definitions, principles, rules and measuring and calculation methods. Based on this understanding we shall in the course of 2024 improve our measurement of greenhouse gas emissions, identify key emission reduction measures, prepare a methodical approach and commence goal formulation. We are concerned that our stakeholders should have insight into the status of the overall effort, and will therefore be open about the progress made with the validation process. Information will in the course of the validation process (2024-2025) be shared in relevant communication channels.
In 2021 the group committed to the Partnership for Carbon Accounting Financials (PCAF), a global collaboration between financial institutions that seeks to harmonise and estimate greenhouse gas emissions financed by loans and investments. This commitment and partnership afford us access to a methodology approved by the GHG Protocol to estimate greenhouse gas emissions from customers in our loan portfolio. The PCAF has become the industry standard in banking and finance in terms of estimating and reporting greenhouse gas emissions produced by financed activities.
The PCAF estimates have a basis in three emission categories (scopes) consisting of direct and indirect emissions. Scope 1 represents emission sources related to business assets owned or controlled by the customer. Scope 2 represents indirect emissions stemming from the customer's consumption of energy, including electricity and district heating. Scope 3 represents indirect emissions which can be linked to the customer's activities but which are not directly owned or controlled by the customer. Scope 3 emissions are related either to the purchase of goods and services (upstream) or the sale of goods and services (downstream).
Our customers' scope 1 and scope 2 are included in the group's scope 3 downstream emissions. Financed greenhouse gas emissions are calculated by multiplying the customer's total greenhouse gas emissions by the financed portion of the customer's assets. If the bank finances 5 per cent of a customer's assets, we take in 5 per cent of that customer's greenhouse gas emissions.
The foundation wall of the PCAF methodology consists of estimated emissions based on income- or loanbased emission factors per industry. Our objective is to replace simple estimates either with emissions reported by the customer itself or with activity-based estimates.
The data quality of estimated greenhouse gas emissions, referred to by the PCAF as "data quality score", extends from 1 (based on the customer's own reported greenhouse gas emissions) to 5 (factor-based
emissions relative to loan balance). A low score denotes high data quality. Most customers are measured using the factor-based method. Estimated greenhouse gas emissions presented below generally have a low score on data quality and a high level of uncertainty.
This year the methodology for estimating greenhouse gas emissions from the loan portfolio has been updated with a number of changes to bring it more into line with Finance Norway's "Guidelines for calculating financed greenhouse gas emissions". Emission factors are also updated* and substantially changed. The changes in measuring method are so large as to require historical figures for 2022 to be estimated anew using the updated method of measurement, with the exception of Wage earners This is to ensure that reported changes as far as possible reflect changes in actual greenhouse gas emissions, and not merely technical adjustments to the method of measurement.
* Upon the recommendation in PCAF_EXIOBASE-Methodology_2023.pdf we have switched from Norwegian emission factors to EU factors. Some extreme values have been adjusted with reference to the PCAF's recommendation. This applies in particular to oil-related activity.
The table below shows estimated greenhouse gas emissions from the group's loan portfolio including loans transferred to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, both for 2023 and with new calculation of the 2022 figures. A complete climate account for both the parent company and the group is enclosed with this annual report.
| Lending balance (NOKm) |
Estimated greenhouse gas emissions (1000 tonnes CO2e) |
Emission intensity (tonnes CO2e per NOKm loaned) |
PCAF data quality score |
||||||
|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
| Agriculture and forestry | 12 | 11 | 603 | 518 | 50.4 | 48.4 | 3.3 | 3.4 | |
| Fishery | 5 | 7 | 69 | 96 | 12.7 | 13.7 | 2.8 | 2.6 | |
| Aquaculture | 2 | 2 | 14 | 18 | 6.3 | 7.6 | 2.5 | 2.9 | |
| Manufacturing and mining | 3 | 2 | 62 | 50 | 21.2 | 20.4 | 4.1 | 3.9 | |
| Construction, power and water supply |
6 | 4 | 19 | 14 | 3.2 | 3.3 | 4.2 | 4.3 | |
| Wholesale and retail trade, hotels and restaurants |
3 | 3 | 28 | 25 | 10.8 | 9.0 | 4.1 | 4.1 | |
| Shipping and offshore | 6 | 5 | 107 | 118 | 17.9 | 22.0 | 4.0 | 4.1 | |
| Property management | 21 | 19 | 4 | 3 | 0.2 | 0.2 | 3.4 | 4.2 | |
| Business services | 4 | 3 | 6 | 5 | 1.4 | 1.4 | 4.3 | 4.3 | |
| Transport and other services | 5 | 5 | 76 | 69 | 14.1 | 13.0 | 4.2 | 4.1 | |
| Public administration | 0 | 0 | 0 | 0 | 1.4 | 0.7 | 4.9 | 5.0 | |
| Other sectors | 1 | 1 | 3 | 3 | 2.0 | 2.8 | 4.2 | 4.3 | |
| Wage earners1) | 153 | 135 | 19 | 16 | 0.1 | 0.1 | 3.0 | 3.0 | |
| Total lending incl. SB1 Bolig and Næringskreditt2) |
222 | 198 | 1,012 | 935 | 4.6 | 4.7 | 3.2 | 3.3 | |
| Lending/leasing cars (SB1 Finans Midt-Norge)3) |
7.7 | 6.8 | 38.6 | 42.5 | 5.0 | 6.3 | 3.0 | 3.0 |
1) Wage earners (residential mortgages) are estimated based on financed buildings. For 2022 the previous year's figures are used, i.e. new figures using the updated measuring method have not been calculated. Scope 3 not established.
2) The loan balance is slightly lower than in the lending note. The difference is that accrued non-capitalised interest and gross positions for cashpool accounts are not included above.
3) Only NOK 7.7bn of NOK 12.6bn of the loan portfolio of SpareBank 1 Finans Midt-Norge AS is included. Refers to lending/leasing, fossil-fuel cars.
Table 6: Estimated emissions from the loan portfolio
The estimates build on location-based emission intensity levels for electricity consumption (19 grammes of CO2 e per kWh for 2023). If emission intensity is changed to the European residual mix (502 grammes of CO e per kWh), this affects estimated emissions for wage earners and property management. Total 2 greenhouse gas emissions would then have increased by 524 thousand CO e, from 1,012 thousand CO e 2 2 (using location-based emission intensity) to 1,536 thousand CO e (using market-based emission intensity). 2
Our estimates in the above table continue to indicate that greenhouse gas emissions in the loan portfolio are concentrated on a small number of sectors, and account for a limited share of our loan volume. The graph below shows that four industries account for a mere 13% of lending but as much as 85% greenhouse gas emissions. These industries are agriculture and forestry (60%), shipping and offshore (11%), transport and other services (8%) and fishery (7%).
Greenhouse gas emissions have risen by 8%, which is less than the increase in lending. The increase in lending is attributable to the merger with SpareBank 1 Søre Sunnmøre, inflation and growth in financial assets. In the case of agriculture, activity-based emissions have increased since we have financed more of the commodities produced. For fishery, emissions are reduced due to a reduction in lending volume and fewer financed vessels.
The changes in emissions from 2022 to 2023 are small relative to measurement uncertainties. We cannot use the figures to draw a conclusion as to whether greenhouse gas emissions from lending activity have changed in the period.
Revised figures for 2022 show a decline in total greenhouse gas emissions for 2022, from 1,054 thousand CO e to 935 thousand CO e, with major differences between industries. This is mainly attributable to 2 2 substantial changes in emission factors delivered by the PCAF. The group will in 2024 collaborate with other Norwegian banks to ensure greater stability in emission factors ahead.
Work on transition plans per industry is a continual process. Based on the analysis (see the graph below), the preparation of transition plans will be prioritised based on emission contributions. The transition plans will contribute to our effort to reduce financed greenhouse gas emissions and at the same time reduce our customers' vulnerability to climate change, known as transition risk. In 2023 we finalised transition plans for fishery and commercial property, whereas agriculture was finalised in 2022. A transition plan for ship-related segments and residential mortgages is in progress.
Figure 7: Distribution of the loan portfolio's greenhouse gas emissions
This is the second version of our estimated greenhouse gas emissions from the loan portfolio. The figures remain highly uncertain and must be treated accordingly. The figures indicate a direction for our work and for our future priorities, but we are cautious with regard to strategic decisions given the substantial uncertainty. When, ahead, we measure changes in greenhouse gas emissions over time, historical figures will be revised to ensure that reported changes as far as possible reflect changes in actual greenhouse gas emissions, and not merely technical adjustments to the method of measurement.
We have estimated the majority of our loan portfolio by using either an input factor or output factor. Currently a minority of our customers report their own greenhouse gas emissions and, for those that do report, the figures are not yet in the public domain, which impedes data collection. An overview of assumptions employed in estimating the greenhouse gas emissions of industries from which we have obtained primary data follows below.
For the fishery portfolio we have for a number of years collected data on ship fuel consumption of our largest customers. The figures are used to estimate greenhouse gas emissions of relatively good quality from the fishery portfolio. This portfolio has the best data quality in the analysis. However, the data source has a one-year lag, and ship fuel consumption for 2022 is used to estimate the customer's emission intensity for 2023. Where a customer's financing has risen from 2022 to 2023, estimated emissions have risen correspondingly.
In the case of the residential mortgage portfolio, estimated greenhouse gas emissions are delivered by Eiendomsverdi AS, and prepared by Simenergi AS. Greenhouse gas emissions are estimated using emission factors based on a physical production mix with an emission of 19 grammes of CO e per kWh. We 2 have above also presented estimated greenhouse gas emissions based on a European residual mix, of 502 grammes of CO e per kWh. 2
Greenhouse gas emissions from financed commercial property are estimated by retrieving information on each individual building, i.e. property type, usable floor space and energy label, where this exists. Information about the building is then combined with PCAF emission factors, either per square metre or per building.
For SpareBank 1 Finans Midt-Norge, greenhouse gas emissions are only estimated for NOK 7.7bn of NOK 12.6bn of financing used to finance vehicles with petrol or diesel engines. We have employed an average mileage of 12,000 kilometres for all cars.
In the annual report for 2022, estimated greenhouse gas emissions from agriculture were estimated based on emission factors from Asplan Viak which were in turn linked to information at individual farm level culled from the agricultural grants register. The register provides an overview of livestock numbers, production and area managed.
In the present report the emission factors are replaced with figures from Finance Norway's guidelines, the so-called PLATON factors. This has in isolation yielded a 50 per cent increase in emissions, although the increase is compensated for by the fact that farms with no activity recorded in the agricultural grants register are now estimated as dwellings, whereas their previously very high emissions were estimated using the factor-based method.
Although the data quality of estimated greenhouse gas emissions for agriculture is relatively speaking good, uncertainty still attends the figures. We are still unable to measure the difference between good as opposed to poor agronomy. We expect our customers to take Agriculture's climate calculator into use and that this will improve our estimates of greenhouse gas emissions per farm and provide input to our plan for reduction of greenhouse gas emissions ahead.
Carbon capture by woodland has risen sharply in Norway as a result of increased forestation in the period 1955-1992. Annual carbon storage in woodland has however fallen since 2009 due to low investment in silviculture, increased tree felling and a rising proportion of old woodland. (https://www.skogbruk.nbio.no /klimagassregnskapet-for-norske-skoger)
A large proportion of farms financed by the bank include forestry in their activities. A total of 1.6m decares of productive woodland are registered to our customers. Adjusted for financing rate and multiplied by a factor for area-based capture from woodland (0.2464 tCO e per decare), the financed portion of carbon capture in 2 woodland is calculated at 255 thousand tCO e. This is a highly uncertain estimate and should not be used 2 to offset financed emissions.
The EU Taxonomy Regulation - (EU) 2020/852 - establishes a Europe-wide classification system that helps companies and investors to identify environmentally sustainable economic activities.
This classification standard aims to promote sustainable investments and economic activities by providing companies and investors with clear guidelines and criteria for assessing and reporting on sustainability aspects of their businesses and projects. The EU Taxonomy Regulation sets concrete requirements as to
what activities can be considered sustainable and criteria that must be met in order for a company's activity to be regarded as sustainable.
The Act on Sustainable Finance incorporates the Taxonomy Regulation with ensuing Commission Regulations into Norwegian law. The Taxonomy Regulation entered into force in the EEA Agreement on 15 December 2022 with effect from 1 January 2023.
In order for an activity to be regarded as taxonomy-aligned, it must be considered to substantially contribute to at least one of the Taxonomy's six environmental objectives (technical screening criteria), while doing no significant harm to any of the other five objectives. The activity must moreover comply with minimum social and governance safeguards. For 2023 all six environmental objectives must be reported on.
The six overarching climate and environmental objectives are:
The requirements for companies due to report on sustainability for 2023 are laid down in EU 2013/34, the Non-Financial Reporting Directive (NFRD). Institutions subject to the NFRD are both financial and nonfinancial large public interest entities. Where SpareBank 1 SMN is concerned, it is our financial activities that are assessed under the six climate and environmental objectives. For the reporting year 2023, mandatory reporting applies only to objectives 1 and 2. For the reporting year 2024, reporting on objectives 3 to 6 (see above) will also be mandatory.
For credit institutions, reporting in line with the taxonomy is to be on a proportional consolidation basis in line with EU 575/2013. For 2023 this means that we at SpareBank 1 SMN include reported figures from our subsidiaries, related and jointly controlled companies based on the share of capital held. For an overview of the companies involved, see note 39 in the annual report – Investments in owner interests.
| Reporting category |
Description/definition | Taxonomy-aligned activities |
Data collection |
|---|---|---|---|
| 1 Financial undertakings |
Financial undertakings or holdings in financial undertakings (which are not held for trading purposes) |
Gross exposure to NFRD undertakings that have submitted taxonomy reports multiplied by GAR. Also includes special purpose bonds |
Reporting based on the company's/customer's own reporting to SpareBank 1 SMN. Few reports submitted by the reporting date for 2023. |
| 2 Non-financial undertakings subject to NFRD |
Based on screening of our loan portfolio, our customers are essentially small/medium undertakings with no reporting obligation for 2023 |
None | Reporting based on the company's/customer's own reporting to SpareBank 1 SMN. No voluntary reports submitted by the reporting date. |
| 3 Households – mortgages |
This category deals with loans secured on dwellings able to meet requirements as to climate change mitigation and climate change adaptation (objectives 1 and 2) |
Assessment based on construction year, energy consumption and doing no significant harm to climate adaptation |
All data used in the classification are delivered by Eiendomsverdi. Specifically, energy consumption is obtained for dwellings with a valid energy certificate, and all dwellings are checked against the NVE's risk map for flooding, high water levels and landslide. Selection criteria are described below the table. |
| 4 Households – car loans |
This category deals with loans to households secured on electric cars |
None | We lack information on electric car tyres. All electric car loans are therefore excluded since most car tyres lead to environmental damage. |
| 5 Local authorities | This category deals with exposure to local and regional authorities |
None | Local authorities are not subject to NFRD and no voluntary reporting submitted. |
| 6 Non-financial, not subject to NFRD |
Small and medium-sized enterprises |
None | This category not to be included in the numerator when calculating GAR for 2023 due to no reporting obligation. No voluntary reporting submitted by reporting date. |
| 7 Other assets not included in calculation of GAR |
Government securities, exposures to central banks and trading portfolio |
Not relevant | Not relevant |
| 8 Off-balance sheet assets – financial guarantees and assets under management subject to NFRD |
Guarantees or assets under management |
None | Reporting is based on the company's/customer's own reporting to SpareBank 1 SMN. No voluntary reporting for 2023 submitted by reporting date. |
Table 7: Overview of exposure categories
For the reporting category "Households – mortgages", upper threshold values for green dwellings' energy consumption are set in cooperation with Multiconsult. For dwellings built from 2021 onwards we have utilised an adjusted "Guide on calculation of primary energy needs in buildings and energy frames for almost-zero-energy buildings", including all dwellings with energy rating 'A'. For dwellings built before 2021, the NVE's recommendation for energy consumption in "Mapping of the building stock with the EU taxonomy for environment-friendly investments in mind" is taken as a basis. This requires a valid energy certificate for the dwelling, which is a stricter criterion than that employed in our green bond framework, in which all dwellings built between 2012 and 2020 are included as green dwellings.
As regards the assessment of no significant harm to the objective of climate adaptation, dwellings exposed to physical climate risk (flooding, storm surge, rockslide and landslide) are excluded. This is the same assessment as that applied in chapter 9.2.6 (Physical climate risk).
Under EU 2021/2178 (Disclosures Delegated Act) Annex V, we are obliged to report on a number of KPIs. KPIs we are obliged to report on for 2023 are:
Total value of sustainable exposures on the balance sheet over total assets (total assets correspond to points 1 to 6 in the table above).
shows the share of assets under management belonging to undertakings that finance taxonomyaligned economic activities over total assets under management (point 8 in the table)
Key performance indicators related to Fees and commissions (F&C) and Trading Book are not mandatory for 2023 reporting, and will not become mandatory until reporting year 2026.
| Calculation of Green asset Ratio (GAR), Stock | Exposure*) | Of which taxonomy aligned |
Per cent of total assets |
|---|---|---|---|
| Financial undertakings | 23,472 | 79 | |
| Households | 184,182 | 17,008 | |
| Local authorities | 1,224 | ||
| Total | 208,878 | 17,087 | 64% |
| Other assets not included in numerator | 91,263 | 28% | |
| Total Covered assets | 300,141 | 92% | |
| Assets not included in GAR scope | 24,441 | 8% | |
| Total assets1) | 324,582 | ||
| Green Asset Ratio for the group- total taxonomi aligned assets over covered assets (GAR, Stock) |
5.7 % |
1) GAR is based on exposures and balance sheet in accordance with the scope of consolidation for supervisory purposes (FINREP) pursuant to part II, chapter 2, section 2 of Regulation (EU), no. 575/2013.
Table 8: Calculation of GAR
For detailed results of the year's calculations, see the Annex VI form in enclosures.
The main reporting challenge in 2023 has been access to data and data quality. SpareBank 1 SMN's customer portfolio consists largely of small and medium-sized undertakings which are not subject to the NFRD reporting obligation. Moreover, reporting by undertakings subject to the NFRD and any voluntary reporting from undertakings not subject to the NFRD, becomes available at a later point in time, making it a challenge to include such information in reporting for 2023.
In the years ahead more undertakings will be covered by the taxonomy. As more undertakings become subject to the reporting obligation, this type of data is expected to become available in the public domain. The same applies to an industry-wide solution for the car segment as regards tyre information, information
on circular economy etc. Such solutions will simplify and improve the quality of companies' reporting in coming years.
The following steering documents are central to this theme:
The group's societal role is to stimulate a sustainable development of Mid-Norway. In order to achieve a successful transition we are reliant on the success of our customers. Stimulating a green transition for our customers is accordingly a core task today and in the period ahead. Moreover, this is a clear expectation apparent in the group's stakeholder dialogue where customers large and small, companies and private individuals alike, provide feedback and demand products and services that spur necessary change. The active influence we exert employs tools such as ESG assessment at customer level, credit policy and pricing, transition plans towards net zero emissions at industry level, advisory services and customer meetings, development of green products and services, along with competency-building measures for companies in the region.
With its large loan volume to households and the agriculture sector, Retail Banking has the potential to exert substantial influence on customers they interact with in their day-to-day business. In 2023 we worked on joint projects in the ESG sphere with the other banks in the SpareBank 1 Alliance. These involve customerfacing initiatives related to the advisory role, but also regulatory requirements and reporting. Work has for example been done to introduce estimated energy ratings as a basis for measuring greenhouse gas emissions from residential property.
With a basis in this work, new initiatives were launched at year-end which will be pursued into the coming year. The most important ongoing initiatives are the establishment of an ESG model for the retail market, an advisory tool for assessing climate risk, including physical risk, and making credit assessments, and a financial health team. Moreover, both Retail Banking and the unit responsible for agriculture are working on a collaborative dimension as a social actor with a view to product development aimed at offering relevant solutions to our customers.
Our credit strategy establishes boundaries and strategic guidelines for the lending business, including an ambition to achieve net zero CO emissions in the loan portfolios by 2050, and a halving by 2030. 2
In addition to conducting a systematic ESG assessment of all corporate customers, we are well under way to establishing transition plans at industry level with a view to achieving net zero emissions. The transition plans are a central, overarching tool in our effort to steer the loan portfolio towards net zero, and aim to meet our science-based objectives towards 2050 and 2030. The plans illustrate goals, measures and key performance indicators and will support our corporate customers in their process of adapting to an emissions path towards net zero.
Transition plans will be prepared for all key industries in the loan portfolio as a step in supporting our customers' successful transition. Our transition plans sum up what we expect of our customers, and how we as a driver can support them in their work. We have published "transition plans towards net zero" for the Commercial Property and Fishery segments in our Sustainability Library at smn.no. Transition plans for further segments will be prepared and published in 2024, in the first instance for shipping.
Our most important measures in 2024 are to further develop and analyse data culled from our ESG model, to establish transition plans for further industries, to develop green products for our customers and to enhance competencies in sustainability both internally and externally.
The following steering documents are central to this theme:
| Responsible lending and investments | Target 2023 | Results 2023 |
Target 2024 |
|---|---|---|---|
| Losses due to fraud | < 10,000,000 NOK |
15,660,000 NOK |
< 22,500,000 NOK |
| Share of managers and employees having completed e-learning course in anti-money laundering and anti-terrorist financing |
100 % | 97 % | 100 % |
| Loan volume to corporate customers with ESG score | 75 % | 87 % | 90 % |
| Loan volume to retail customers with ESG score1) | 20 % | 0 % | 20 % |
| Share of loans that meet the requirements for green bonds | Under development |
19,1 %2) | Under development3) |
| Total greenhouse gas emissions from loan portfolios | 1,000 (1000 tCO2 e) |
1,034 (1000 tCO2 e) |
SBTi4) |
| Share of dwellings in the loan portfolio with an energy rating | 90 % | 42 % | 70 % |
| Share of commercial properties in the loan portfolio (>1,000m2 ) with an energy rating |
75 % | 21 % | 90% of new loans granted |
1) The ESG scoring model for the retail market portfolio has so far not been prepared by the SpareBank 1 Alliance.
2) Based on the existing framework as per January 2024.
3) An official definition of the 15% most energy-efficient buildings is not yet available. Access to reliable data is needed to ensure a robust approach.
4) Our objectives as regards greenhouse gas emissions are under preparation as from 2023 in connection with our commitment to SBTi.
Table 9: Responsible lending and investments - key figures and results
Good advice is a key aspect of the group's core competence and customer offering. A recurrent expectation on the part of our stakeholders is that our customer offering should stimulate innovation and sustainable economic growth. Four material themes feature in this focal area:
| Material themes Objectives |
Key figures | Responsibility | |
|---|---|---|---|
| Expand the commercial offering of climate-friendly and social products and services |
Create new, sustainable revenue flows through taxonomy-aligned product and service development |
Sales volume of products and services developed to deliver an environment- and /or nature-related benefit Sales volume of products and services developed to deliver a social benefit |
Director, Corporate Banking Director, Retail Banking Managing directors of subsidiaries |
| Strengthen role-based competence-enhancing programme with a focus on ESG for own staff |
Continuously develop motivated, competent and responsible staff who contribute to sustainable value creation for the group, our customers and local communities in Mid-Norway |
Category score of at least 7.4 for sustainability in the employee-development tool Winningtemp (WT) |
Director, Technology and Development |
| Maintain ethical standards | Ensure high awareness of, and compliance with, the group's ethical guidelines in everyday business |
Proportion of managers and employees in the group having completed e learning course in ethics |
Director, Technology and Development |
| Comply with requirements and obligations on processing of personal data |
Build and preserve stakeholders' trust and confidence in the group through responsible use, and protection of, data in digital customer solutions |
No. of documented complaints related to breaches of data privacy or loss of customer data |
Director, Technology and Development |
Table 10: Advisory services and customer offering – material themes
Developing new, sustainable revenue flows is a part of the group's growth strategy. In order to ensure longterm profitability and competitive power, we are giving increasing focus to expanding our commercial offering of products and services that feature climate, natural, societal and social benefits. This is an important step in complying with the demands and expectations we meet from customers, public authorities and other stakeholders. We have strengthened our work on innovation, both within the SpareBank 1 Alliance and within our own group, in order to further develop business models and create new customer offerings.
We wish to incentivise our retail customers to opt for sustainability by offering attractive products. We offer green mortgages to customers who buy a new house with an A or B energy rating, who build a new house with an A or B energy rating, or refurbish an older house to an A, B or C energy rating. In order to qualify for a green mortgage, the customer must have an energy certificate as documentation. We also offer mortgages to young people and first-home mortgages – products offering equal opportunities to all.
We also offer green loans to energy-oriented initiatives under Enova's support arrangements. The object is to enable customers to implement energy-efficient measures secured on their own property. In conjunction with the energy supplier NTE we also offer finance on favourable terms to customers wishing to acquire a solar cell installation.
In addition we offer green deposits and sustainable mutual fund solutions. These are savings products for those who want to be certain that their savings will contribute to reducing greenhouse gas emissions. Green deposits carry somewhat lower interest rates than other products, but are on the other hand used to finance green loans. We can accept green deposits matching our volume of green loans.
In 2023 we established a financial health team. The object is to offer improved and more focused crisis preparedness to customers who are struggling with unmanageable debt problems. We do this by establishing an interdisciplinary team including expertise in financial advice (in the bank), debt advice (external) and psychology specialist competence (external). Research shows the reciprocal effect between financial problems and mental health problems. The team's object is provide customers facing major debt challenges with the best help they can get. By this means we shoulder an important responsibility for the particular customer, but also a social responsibility.
As part of the green transition for our customers we have set about establishing products for our corporate customers related to sustainability financing and transitional financing. We already employ repayment profiles and other loan terms and conditions that take account of a customer's sustainability profile, for example energy ratings for buildings. These are aspects of the advice given to our corporate customers with a view to reducing greenhouse gas emissions/intensity and ESG risk. We have introduced differentiation of LTV-ratios and repayment profiles and the option of paying dividend to companies that depends on how we view ESG risk at customer level. All else equal, buildings in a low energy category will be entitled to borrow less and be subject to a shorter repayment period.
Sustainability is an important aspect of the customer dialogue in general and of assessments using the ESG model. Sustainability assessments are an integral part of the credit evaluation of loan customers, but also important for awareness raising and enhancing the competency of adviser and corporate customer alike.
We have set up a sustainability area for our customer advisers in Corporate Banking to facilitate access to tools, presentations, transition plans and internal course programmes in the sustainability area.
The process of turning sustainability into a profitable business line at SpareBank 1 Regnskapshuset SMN was initiated in 2018, and at end-2022 the department "Sustainability reporting and advice" was established – at that time with only one staff member and an interim manager.
In the space of just a year the department has grown considerably: four new appointments, including manager and chief adviser, and further senior staff taking up duties in the new year. We believe that the mix of economists, jurists and engineers with varying length of service and experience will create a unique specialist entity from which SpareBank 1 SMN's customers, and the group, will draw great benefit in the years ahead given the growing pressure of regulation and expectations on the business sector.
Demand for the department's broad range of services has risen considerably in 2023 – from help in setting science-based targets to the drawing up of environmental product declarations. We note that preparation of climate accounts and compliance with the Transparency Act accounted for the bulk of the demand from our customers.
The factor common to these two services is that they represent a particularly important linkage with our customers – reporting is an annual recurrence, and the customer remains with SpareBank 1 Regnskapshuset SMN.
The Nybygg ('New Build') department has since 2019 focused on assisting developers who wish to erect housing projects under green auspices. It is highly important that we, as Norway's largest provider of estate agency services in respect of new builds, play our part in facilitating sustainable new homes projects. Through close cooperation with Retail Banking and Corporate Banking we can offer financing solutions to developers and retail customers alike who wish to buy into the projects concerned. In addition, we set the stage for estate agent fees on better terms for customers who make use of BREEAM or Powerhouse.
In its communication with and advice to professional real estate actors, EiendomsMegler 1 Midt-Norge highlights sustainability as a crucial criterion for all actors intending to operate in the property sector ahead. In May 2023 EiendomsMegler 1 Midt-Norge organised a property seminar with the theme The green transition will present challenges and an opportunity to develop both residential and commercial property. A market report was also prepared under the theme Sustainability for new buildings and commercial property.
Insights regarding energy efficiency and sustainability also feature in market reports and customer seminars where we will continue to focus on green financing and climate-certified property development projects.
Through competency enhancements targeting our own employees and customers, we will focus more closely on lowering the costs of printed media and printed marketing materials. These will be replaced with more profitable and sustainable digital solutions.
SpareBank 1 Finans Midt-Norge's greatest environmental impact is via its lending business. The loan portfolio chiefly comprises financed objects such as cars, other vehicles and machines. Incentivising customers to reduce their climate footprint by opting for vehicles and equipment with limited emissions rather than an outdated car fleet or machine park will have a bearing on the group's climate impact. Green car loans make for a steadily growing share of electric cars in the portfolio. Electric cars now account for 28.7 per cent of the private car portfolio. Green financing in the business and industry sector is also more in evidence with the first electric construction machines and lorries.
We at SpareBank 1 SMN aspire to being a catalyst for sustainable growth and innovation. Exploratory innovation in the group is defined by an innovation process comprising four stages. The process starts by understanding new trends likely to impact the banking and finance sector. Those trends refer both to new technology and customer behaviour, and are evaluated in light of sustainability goals with the main focus on technology, society and industry. The next step is to explore the trends in greater depth in order to assess their relevance and potential. Based on insights from innovation exploration, concepts are developed which can transformed into new products and services. Examples of trends subject to particular exploration during the course of the year are generative artificial intelligence, digital outsiderness and the circular economy.
In 2022 we held, together with Æra, a wide-ranging course in sustainable innovation for 30 group employees. The course participants continued work on their respective areas in 2023. The department concerned has focused specifically on two growth platforms. These platforms will be part of SpareBank 1 SMN's innovation process to develop, test and implement new products and services which not only promote our business mission but also contribute to sustainable development.
The following steering documents are central to this theme:
Sustainability strategy
In order to deliver the best customer experiences today and ahead we must be certain that our staff are updated on legislation and themes of importance for our customer service. It is our employees who operationalise sustainability at SpareBank 1 SMN, and it is our employees who speak with the customers. Our most important resource is without doubt our employees. Without skilled, motivated staff who want to evolve their competencies in sustainability, we will not succeed in transitioning our day-to-day operations, our customers or in creating new, sustainable revenue flows as part of the group's growth strategy.
In 2023 we focused on creating a strong learning culture, on ensuring that the group's competency needs are met through targeted and effective measures, and on making it simpler to learn in our everyday work. Our proprietary learning portals make it simpler to gain an overview of the group's learning programmes and to familiarise our employees with our increased commitment to competence. In 2023, competence building in the field of sustainability, digitalisation and ethics was at centre stage.
We aspire to be a driver for green transition, and in 2023 sustainability become more integrated into the group's business models and employees' working day. We have sought to harness the effects of
competence-building programmes in the sustainability field that were held in conjunction with Æra in 2023. We also made available a broad range of courses and learning resources linked to sustainability in general and to sustainable finance in particular.
Financial advisers, both in Retail Banking and Corporate Banking, underwent a series of training programmes and competency updates as regards professional skills, products, advisory activities and ethics in 2023. The object is to ensure high quality, and to inspire confidence and a sense of security when dealing with customers. With a view to meeting the requirement of the Insurance Mediation Act and the Financial Institutions Act as to 15 hours' continuing education, all authorised advisers at the bank underwent comprehensive programmes on the following themes: good business practice, instruments and measures for customers in financial straits, sustainability, ethics, anti-money laundering, anti-terrorist financing, as well as professional and product updating.
Moreover, all employees underwent training programmes in data and information security along with mandatory courses in personal data protection and anti-money laundering. Further, the group worked in a structured manner to raise awareness of our ethical guidelines. Through e-learning, ethical reflection and casework we put impartiality and conflicts of interest at centre stage. In addition to tuition and awarenessraising, a set of new procedures for registering offices and positions, roles and business activity was drawn up. New and improved system support for these processes was also devised, and managers and employees were given instruction in the use of these solutions.
In autumn 2023 it was decided to designate employee competence and development as one of our key focal areas in 2024. The upshot is an internal academy, to be established in 2024, that will assemble the group's competency resources and ensure increased quality of competence-building work in the years ahead.
We are keen that our employees should see the value of development and learning, and we urge all group employees to provide feedback on themes about which they wish to learn more, or less, and an evaluation of the training paths offered. This feedback is valuable in that it enables us to adapt training paths to ensure that employees experience professional and personal development.
Read more about jobs and careers with SpareBank 1 SMN on our website, smn.no.
The following steering documents are central to this theme:
Description of Competency programme in sustainability
We are dependent on the trust and confidence of our customers, investors, business partners and public authorities. Our ethical guidelines underpin this trust and confidence. The guidelines deal with attitudes and values, and are designed to promote an awareness of and compliance with the ethical standard required of employees and employee representatives in SpareBank 1 SMN in decisions they make in their day-to-day business. Breach of, or non-compliance with, these guidelines entails a high risk of reputational loss. Integrity and trust are crucial to ensuring success as the leading financial services group in our region.
All staff members and employee representatives must be recognised for their high ethical standard. All, regardless of role and position, are expected to display conduct which inspires confidence, and is honest and fair and square. The ethical guidelines are encapsulated in four overarching key principles: the duty of confidentiality, financial independence, loyalty and personal integrity. Conduct and actions must underpin the group's role as a responsible and central social actor, supported by goals and strategies for corporate social responsibility and sustainability.
All customer treatment and advice must conform to the industry's requirements as to good practices. Customers' needs and interests must be attended to through good information and advice that enables them to make conscious and well-informed choices.
A set of guidelines has been drawn up specifically to prevent bribery and corruption. The ethical guidelines also emphasise that group staff members may in no circumstance receive financial benefits in any form from the group's customers or suppliers.
Persons with managerial responsibility have an obligation to familiarise their staff members with our ethical guidelines. New staff members receive a thorough introduction to the guidelines at an early stage of the employment relationship.
The following steering documents are central to this theme:
Ethical guidelines
In an increasingly data-driven world, personal data going astray poses a considerable risk to companies and private individuals alike. Large volumes of personal data are managed, processed and owned through the group's services, which imposes strict requirements on the application and observance of key principles of personal data protection such as confidentiality, integrity and accessibility. Compliance with the personal data legislation is therefore critical to the confidence enjoyed by the group and its reputation. SpareBank 1 SMN's obligations are described in detail at smn.no and are enshrined in our data privacy policy.
A designated data protection officer assists the group CEO in meeting requirements as to the treatment of personal data. The data protection officer also prepares an annual report directly to the board of directors of SpareBank 1 SMN. The report covers the areas on which the data protection officer has focused, the observations made and risk areas to be included in the further work on personal data protection.
In 2023 the group continued work to strengthen and improve its data privacy effort by raising awareness across the organisation of the requirements on personal data processing, including strengthening the interaction with SpareBank 1 Utvikling – which is our most important data processor. The ambition for 2024
is to continue work on strengthening the interaction with SpareBank 1 Utvikling, training measures and strengthening the first line.
We have a low threshold for reporting breaches of personal data security to the Data Inspectorate. The group received three complaints from customers related to personal data security in 2023, and reported twelve deviations classified as leaks or loss of personal data to the Data Inspectorate. We received no penalty charges or injunctions from the Data Inspectorate in 2023.
The following steering documents are central to this theme:
| Advisory services and customer offering | Target 2023 | Results 2023 |
Target 2024 |
|---|---|---|---|
| Sales volume of products with an environmental benefit1) | 2,000,000,000 | 2,516,000,000 NOK |
3,000,000,000 |
| Sales volume of products with a social benefit2) | NOK | NOK | |
| Category score for sustainability in WinningTemp3) | 7.4 | 7.3 | 8 |
| Share of managers and employees in the group having completed e-learning course in ethics |
100 % | 94 % | 100 % |
| No. of documented complaints of data privacy breaches or loss of customer data | 0 | 12 | 0 |
1) Products and services with an environmental benefit is defined as green products from our product hierarchy. This deviates from the EU Taxonomy. Our disclosures related to the EU Taxonomy can be found under the focal area "Responsible lending and investments"
2) Our customer offering is a result of demands from the municipalities in our portfolio, and we have no specific products and services serving a social benefit as per 2023.
3) Our employee development tool
Table 11: Advisory services and customer offering - key figures and results
One of our social roles is to stimulate a sustainable development of Mid-Norway. The financial sector is dependent on the trust and confidence of its customers and the market. As a financial services group we play and important part in stimulating a sustainable development of our region. Our customers, partners and the community at large have a clear expectation that the company's day-to-day operations, customer offering and community dividend make an active contribution to that development. We must take the lead and set a good example. Two material themes feature in this focal area.
| Material themes |
Objectives | Key figures | Responsibility |
|---|---|---|---|
| Stimulate innovation and sustainable economic growth |
As an arena builder we shall create local meeting places and stimulate cooperation. As an innovator we shall support innovation by laying development paths for talented individuals, entrepreneurs, growth businesses, spin-offs and established R&D entities. We shall collaborate with various specialist entities on competence-raising and development programmes for green innovation in business and industry, in particular SMBs |
No. of participants at meeting places and innovation activities under group auspices No. of participants in competence-raising and development programmes under group auspices |
Director, Communications and Brand |
| Contribute to strengthen transition efforts at businesses in Mid Norway |
Help businesses in Mid-Norway to succeed in their transition to a low emissions society, through effective customer solutions and new partnerships |
Share of corporate customers with credit exposures (turnover > NOK 400m, balance sheet total > NOK 200m, no. of employees > 250) that have a climate account |
Director, Retail Banking Managing director, SpareBank 1 Regnskapshuset SMN |
Table 12: Sustainable transition of Mid-Norway - material themes
The world's climate researchers are agreed that we cannot continue on our present path. Unsustainable patterns at society level nourish unsustainable business models and behaviour that are not compatible with an emissions-free, nature-positive and circular economy. Innovation and sustainable economic growth are therefore a prerequisite for a successful transition to a low emissions society. Our role of regional financial services group is important – as community builder, investor and requirements specifier in our work with customers.
Community dividend is the community's rightful share of the annual dividend on SpareBank 1 SMN's net profit. The community's share of total equity is just over 33 per cent, and the same share of our annual dividend is accordingly earmarked for non-profit causes.
In December 2023 the strategy for community dividend was renewed with minor changes whereby our green-driver role, community building, sports and outdoor recreation, art and culture, as well as innovation
and value creation were defined as separate focal areas, each in their own right. Community dividend resources will ahead in larger measure be distributed to green projects in order to support our role as a green driver in Mid-Norway.
The funds are held in an account with SpareBank 1 SMN, and the provision for distribution in 2023 was NOK 230m. The allocation is normally distributed relatively evenly between the community, grassroots sports, culture and business development. See samfunnsutbytte.smn.no for an overview of allocations.
As a driver for green transition we have in 2023 invested in initiatives designed to assist business and industry in their green transition. We worked with the independent research institute SINTEF and organised innovation courses in conjunction with Æra Strategic Innovation. For further information see the chapter on community dividend.
The mission of the foundation SpareBank 1 SMN Utvikling is to reinvest and manage donations from SpareBank 1 SMN to non-profit business and development projects, seedcorn activities or other non-profit causes that involve an ownership role and that stimulate innovation and value creation in our market area. At year-end SpareBank 1 SMN Utvikling holds ownership positions with a book value of NOK 42.7m.
The following steering documents are central to this theme:
A failure to transition on the part of businesses in the region could diminish their earnings and increase the number of bankruptcies, whereas a successful transition could bring increased competitive power and more jobs in the region. Our financial risk will be impacted by the business segment's success, or lack of success, in this respect. Reinforcing the transition effort in the region is accordingly a prioritised task, both strategically and operationally. As referred to previously, our tools and instruments are designed to underpin this work.
In order to ensure relevancy and correct priorities, we prepare each year a sustainability barometer for businesses, local authorities and the populace. This knowledge base gives us insight into the ongoing transition effort, while at the same time affording the region insight into key hypotheses underlying the work on sustainable development in Mid-Norway.
There is no unwillingness towards green transition among companies in Mid-Norway, but there is much uncertainty as to what regulatory requirements apply, what work methodology should be followed and what priorities should be assigned. The work on green transition in Mid-Norway is reflects industry differences and businesses' size. Our knowledge base shows that industries in our region differ in terms of how well they are prepared for new regulatory requirements and for society's expectations as to sustainable transition. Transition risk is highest among the smallest companies. The smallest businesses are at risk of
failing to meet the largest companies', and the local authorities', expectations as regards systematic sustainability efforts. At the same time we note that risk comprehension is growing, and that more and more businesses view the sustainability effort as strategically important. Read more about this in our sustainability barometer for 2023 in the sustainability library at smn.no.
The Mid-Norwegian community is our largest individual stakeholder, and community's share of our net profit is termed community dividend. The profit is allocated to non-profit and charitable causes which build and develop the region. Read more about community dividend in the chapter entitled Community dividend.
The strategy for community dividend was revised in 2023, and the green driver role was highlighted as one of a number of focal areas. We have utilised resources from the community dividend fund to strengthen the transition effort of businesses in the region through:
As an initiative in favour of innovation and value creation we established a foundation – Såkorn 1 Midt. An allocation of NOK 150m was made for the purpose of contributing capital to green start-ups in an early phase to enable more ideas and businesses to see the light of day and become established in the region. Efforts are under way to raise a matching amount from other investors in the region.
As a driver for green transition for business and industry we held a course in innovation for small and medium-sized businesses in Mid-Norway in 2022 and 2023. The course attracted a total of 60 participating firms in Trøndelag and in Sunnmøre in these two years and the initiative will continue in spring 2024.
Over the course of the anniversary year we wished to enable more young people to translate words into action for a better world. In conjunction with the United Nations Association of Norway and the World Federation of United Nations Associations (WFUNA) we organised an eight-month-long sustainability programme for 100 young people from across the world. About half the participants were from Mid-Norway. The young people learned about sustainability work and project management, and ran projects themselves in their local communities. We then assembled them all as crew aboard the tall ship Statsraad Lehmkuhl and sailed along the coast of Mid-Norway on our voyage for the future.
In our ports of call we engaged more than 3,000 school students in innovation activities for the future, together with Ungt Entreprenørskap, MOT and the United Nations Association of Norway. Among other things we extended an invitation to the youth conference 'Action, Please', where young people themselves were asked to find solutions to challenges as regards plastic waste, outsiderness and recycling.
We have in the past ten years prepared industry analyses for the most important industries in the customer portfolio. In addition we publish shorter, half-yearly industry updates (industry indicators). Knowledge of industries is an important part of the credit process in terms of insight into drivers and risk factors for each industry and how these develop over time, in addition to understanding the customer and the customer's needs. Industry analyses afford a basis for determining the further development of the portfolio and the criteria to be set for loans, including factors related to sustainability.
Our transition plans describe how we practise our role as a driver for green transition within the industries we finance. Requirements and expectations are formulated with a view to reducing the customer's climate risk, which is a financial risk driver at SpareBank 1 SMN, and will play a part in ensuring a sustainable transition and development in our region.
We wish to create greater awareness of climate risk among our customers and to motivate customers to establish action plans to reduce their own emissions. Credit exposures of NOK 10m or more receive an ESG assessment and are scored on a scale from 1-10 in our ESG model, which will be an important factor in the credit assessment of our customers.
As at 31 December 2023 we have published transition plans for the commercial property and fishery industries. Further transition plans will become available in 2024 and onwards, in the first instance for shipping. The transition plans, with requirements and expectations, are a tool on this transition effort and are an integral part of the customer dialogue and assessment.
The following steering documents are central to the above theme:
| Sustainable transition of Mid-Norway | Target 2023 | Results 2023 | Target 2024 |
|---|---|---|---|
| 7,000 | 5,790 | 6,000 | |
| No. of participants in meeting places and innovation activities | participants | participants | participants |
| 250 start-up and | 300 start-up and | 250 start-up and | |
| youth | youth | youth | |
| enterprises | enterprises | enterprises | |
| No. of participants in meeting places and innovation activities | 50-100 | 270 | 500 |
| Share of large corporate customers with credit exposure that have a climate account1) |
25 % | 24 % | 25 % |
1) Large customers exceed two of the three following criteria: turnover > NOK 200m, balance sheet total > NOK 200m, no. of employees > 250
Table 13: Sustainable transition of Mid-Norway – key figures and results
We at SpareBank 1 SMN aspire to be a driver, partner and guide in the work on sustainable development in our region. Our own transition is a prerequisite for achieving credibility and trust in helping our customers to succeed in their transition.
We have committed to integrating the UN Principles for Responsible Banking (UNEPFI) into both our business strategy and core activities, and we work on a broad front with the UN Sustainable Development Goals through our double materiality analysis. In so doing, we wish to set the standard for sustainability efforts in the financial field in our region.
Four material themes feature in this focal area:
| Material themes | Objectives | Key figures | Responsibility |
|---|---|---|---|
| Stimulate responsible resource use in our own value and supplier chains |
The group shall lead the way, setting a good example by considerably reducing resource use and waste volumes through prevention, reduction, recycling and re-use |
Share of the group's material purchases (> NOK 100,000) from suppliers with a climate account |
Director, Group Finance and Governance |
| Strengthen data protection and cybersecurity |
Ensure a systematic and risk-based approach in order to protect information values and avoid data going astray |
Share of managers and employees in the group having completed the competence raising and attitude-moulding programme for information security (Passopp) |
Director, Technology and Development |
| Promote diversity, inclusion and equality |
Lead the way as an inclusive employer with equal opportunities for all |
Category score of at least 8 for diversity, inclusion and equality in WT |
Director, Technology and Development |
| Reduce carbon footprint in day-to day operations |
Reduce carbon footprint in line with target pathways towards net zero emissions by 2050 |
8% annual reduction in CO2 emissions in day to-day operations |
Director, Group Finance and Governance |
Table 14: Sustainable transition of SpareBank 1 SMN – material themes
Our value and supplier chains are essential for our ability to comply with our strategic initiatives and to achieve our objectives. As a major financial services group, and part of the SpareBank 1 Alliance, we are a substantial purchaser of goods and services, and our procurement practice has a bearing on transition nationally and regionally. As a financial group, we are a service-providing knowledge enterprise and have a large potential to influence for example greenhouse gas emissions, worker rights and equality through the value and supplier chains of which we are a part. We are therefore reliant on our ability to stimulate responsible resource use on the part of suppliers and business partners by setting clear requirements in the context of climate and environment, social conditions and ethical governance. We must in addition be able to point to concrete, successful transition activities in our day-to-day operations in order to heighten our credibility in our dialogue with customers.
One of our goals is to induce customers and employees to make conscious, personal and professional choices that contribute to making the group and the group's products more sustainable.
SpareBank 1 SMN's procurements are undertaken both at central level and in our market areas, and it is important for us as a purchaser to maintain a conscious awareness of resource use, and to continually strive for an overview and control over our supplier chains. Our "Standard for Procurement" concretises clear guidelines with respect to procurements with a view to accommodating growing statutory requirements, as well as the aim of being a local and regional driver of the green transition. We require:
We retained the following focal areas in 2023:
By mapping our suppliers' climate accounts we have helped to put this matter on the agenda for those who have yet to establish such an account. Our tender templates now include a climate account as a qualification requirement.
The logistics system Loopfront, a database for reuse, enables us to reallocate fixtures and furniture in the office network instead of purchasing anew. Our furniture supplier has switched from being a pure furniture supplier to being an adviser on reuse and repair of used furniture. In 2023 we ran two pilot projects in which activities related to re-use, repair, redesign, transport and recycling were put on a systematic basis. Through the logistics system we have access to computations that show actual savings enabled by emission reductions which provide us with insights for further improvement efforts.
In line with the requirements as to Eco-Lighthouse certification, we have conducted a review of our own operations service providers. Work on identifying suppliers that are environmentally certified under the ISO 14001, EMAS or Eco-Lighthouse schemes started in 2019. Our objective was that 100 per cent of our own operations service providers should be environmentally certified by the end of 2022. The objective was achieved, but maintaining a 100 per cent level is a continuous ongoing process.
As a result of the group's survey and follow-up of its suppliers, 95 per cent of the group's operating suppliers were environmentally certified as at 31 December 2021. Follow-up is an ongoing activity and SpareBank 1 SMN's aim is for 100 per cent of its operating suppliers to be environmentally certified by the end of 2022.
As a result of our requirement for a climate account, a new dimension has been added under the 100 per cent definition. Our long-term objective is that 100 per cent of our suppliers should have a climate account in place. In the first instance priority is given to mapping and exerting influence on suppliers from whom we purchase goods and services worth more than NOK 100,000 per year. This work continues in 2024.
At year-end we have documentation showing that nine of our ten largest suppliers have a climate account in place.
Allianseinnkjøp is the SpareBank 1 Alliance's central procurement entity and enters supplier agreements on commission from the banks. These agreements represent our most significant agreements.
Like Procurement at SpareBank 1 SMN, Allianseinnkjøp expects suppliers and business partners to have a conscious awareness of sustainability risk in their own business and supplier chain. Suppliers are required to have in place guidelines with regard to sustainability, and that these are underpinned by action. Compliance with the Transparency Act is also required along with maintaining a climate account and a plan for transition to net zero.
In 2023 we focused on six areas in our work with the supplier chain:
"Sustainability in procurement", a phrase in use since 2019, means that thorough ESG assessments are a part of all purchasing practices. Supplier follow-up in the sustainability area has since 2019 been based on the OECD's guide on due diligence assessments, the same guidelines as are pivotal in the Transparency Act. Under the Transparency Act we are obligated to publish a statement on our due diligence assessments by 30 August 2023. The statement was published on 21 June 2023.
In Mid-Norway, SpareBank 1 SMN has mapped local and relatively minor suppliers. These have been asked to sign the Alliance's "Requirements on suppliers concerning sustainability and business-ethical matters". Work with due diligence assessments of minor local suppliers will continue in 2024. Through an earlier risk-based mapping of 249 existing Alliance suppliers, twelve suppliers were in 2022 selected for scrutiny of their compliance with the Transparency Act.
Below follows an extract from our due diligence assessments undertaken in 2022:
| Statement on due diligence assessments in 2022 | ||||
|---|---|---|---|---|
| Actual and potential negative consequences for human rights and decent working conditions are mapped and assessed in the following manner: |
These suitable measures are initiated to halt, prevent or limit negative consequences: |
By this means we monitor the implementation and results of measures: |
By this means we have communicated to affected stakeholders and rightholders how negative consequences are handled: |
By this means we ensure or collaborate on remediation and compensation where this is required |
| Follow-up of twelve selected suppliers in the sustainability area with in-depth surveys. The suppliers are in office furniture, IT equipment, IT services and consultancy firms and staffing agencies. They were chosen based on criteria such as risk of negative impact, risk mitigation potential, largest turnover volume and core business |
Selected suppliers' failure to apply due diligence assessments in accordance with OECD guidelines was responded to with deadlines for improvement. |
Deadlines for rectifying deficiencies, follow-up meetings etc., where rectification was unsatisfactory |
This is described in inputs to the banks' annual reports and in quarterly meetings with the Alliance (liaison committee, purchases) where achieved improvements are reported. |
Most suppliers had guidelines etc. in place, while 6 of the 12 that had not commenced due diligence pursuant to the Transparency Act have done so following feedback from Allianseinnkjøp. All suppliers have now documented their guidelines etc., and have given an account of their due diligence assessments. |
Table 15: Statement on due diligence assessments in 2022 in accordance with the Transparency Act
All 12 suppliers have provided a statement on their due diligence assessments: A review of the statements shows that the suppliers attach most weight to the general description of the business's organisation, area of operation, guidelines etc. There is less information on actual negative consequences and material risk of negative consequences brought to light through their due diligence assessments.
Two of the suppliers have been subject to further follow-up – a sizeable supplier of IT equipment and a sizeable supplier of IT services. Both suppliers were informed that our assessment of their statements was that insufficient weight was given to information about actual negative consequences and material risk of negative consequences; see the Transparency Act, Sections 5(b) and 5(c). A response was requested. The supplier of IT equipment was in addition asked to give an account of enquiries at one of its sub-suppliers of electronic components in China.
The supplier of IT equipment has provided more specific information about actual findings in 2022 at six subsuppliers in Asia who had 'discrepancies related to indicators of modern slavery as regards costs of recruiting, travel, medical treatment and accommodation. There was one instance of a passport and a month's pay being withheld and one case of forced overtime. The supplier also writes that they 'in collaboration with the Responsible Business Alliance (RBA) have demanded that sub-suppliers halt the unlawful practice and implement an on-site audit. Further, about USD 0.8m was reimbursed to 200 employees in 2022".
At the sub-supplier in China, whom the supplier of IT equipment was asked to make a statement on, 'discrepancies were brought to light as regards overtime work, housing allowance and national insurance contributions. This is an indication of systemic faults in control processes and is being followed up on'.
The supplier of IT services has not made the statement readily accessible on its website as required by the Transparency Act, but instead makes reference to its location in the annual report. We do not consider this sufficient. The supplier responds that "it is relevant to view the statement together with other content in our
sustainability reporting, where a number of other areas are also involved in our work with fundamental human rights and decent working conditions". Here reference is made to chapters on responsible sourcing, employee experience, diversity and inclusion" and "cybersecurity & privacy".
While it may be of interest to view the supplier's statement in conjunction with other information on sustainability work, this cannot wholly or in part replace the statement which according to the Transparency Act shall be made readily accessible on their website. In addition, it should be noted that it is not easy to see what the statement in the annual report actually comprises and what is to be regarded as relevant additional information as stated by the supplier. That said, we consider this supplier's general work on sustainability to be very good.
Alliansekjøp works for increased awareness, competence and compliance with sustainability in purchasing. We collaborate in particular with the sustainability and procurement entities in the banks and product companies to that end.
The banks and product companies expect SpareBank 1 Utvikling to report on the procurement area in accordance with the EU standards for 2024 (cf. CSRD). This is a collaboration where those in need of the report notify the desired reporting area to SpareBank 1 Utvikling based on their own stakeholder and materiality analysis. SpareBank 1 Utvikling's first independent reporting under the CSRD will be for the accounting year 2025.
Complete statements are published at
Our due diligence assessments for 2023 will be published by 30 June 2024 at smn.no/bærekraft.
The following steering documents are central to the above theme:
Data- and cyber-security are closely linked to other security challenges in today's digital society, including geopolitics, global and local value and supplier chains and crisis management. Our reputation and the trust and confidence we enjoy in the market are therefore impacted by our digital defence and robustness in the face of cyberattacks and denials of service by malicious actors. Customers regard data- and cyber-security as a basic premise for their bank, and non-compliance could lead to loss of existing and new customers alike. For us, this is a continual and particularly important effort in terms of complying with current laws and
regulations, maintaining confidence and credibility as a financial services group, and protecting customers' security in the best possible manner.
Geopolitical unrest has also been a feature of 2023, in view of ongoing wars in Ukraine and Gaza. It is a lasting concern that some warring parties in the above conflicts could endanger our services or shared financial infrastructure through targeted or arbitrary digital attacks.
We also find ourselves at a point where an economy under pressure after a number of base rate hikes, along with expensive food and electricity, bring added pressures to individuals and financial institutions. Such changes affect the threat picture in the data- and cyber-security sphere and how we seek to strengthen and maintain our digital resilience.
We have also experienced denials of service targeting the financial sector, including the SpareBank 1 Alliance. The attacks have not led to significant operational disruptions, and together with our partners we have managed to limit the effect of the attacks to a minimum. The motives for such attacks are often political, and the attacks often turn out differently from those that are financially motivated. Threat actors' objective is to sabotage or create disquiet and uncertainty around bank services' stability and availability.
Digital value chain security is an area that has come more into focus in 2023. Digital value chains are complex, can traverse national borders and include several layers of sub-suppliers. The transparency of the digital infrastructure and its components diminishes when more and more systems need to function and communicate together, at the same time as outsourcing is made use of. Criminal actors will continue to attempt to exploit supplier chains' lack of transparency ahead. Allowance must be made for this through close monitoring of suppliers' security as well as our own.
Card and bank ID information remains attractive for malicious actors intent on using the information for personal gain. We therefore give high priority to security architecture and new security solutions. Together with the rest of the Alliance we have again in 2023 reinforced competencies in the cybersecurity sphere. We exchange security-technical assessments and experience via our Alliance-wide security committee whose members are drawn from the banks making up the SpareBank 1 Alliance.
Our focus is on data- and cyber-security at the technical, human and organisational level. Alongside technical security measures, work on a good security culture is at centre stage through attitude-moulding efforts and awareness-raising and training initiatives. Our established competence-building and attitudemoulding programme for information security, Passopp, strengthens the security culture across the entire organisation. We make active use of Passopp results to plan and prioritise future competence-building and attitude-moulding courses in the security sphere.
We have high capacity to provide the requisite security, high business continuity and reliable customer services. Information security in the context of open banking, coordination and cloud services has a particular priority.
In addition, our IT and Security Department cooperates closely with SpareBank 1 Utvikling as executing partner in a number of areas, including cybersecurity and round-the-clock security monitoring and incident
reporting. TietoEvry delivers a shared client-server platform to the SpareBank 1 Alliance. This ensures that recent versions of operative systems are in use and that the systems are supported by general updates at least once a month and by security updates on an immediate basis.
The information security policy is the basic steering document for all information processing. The policy was updated in 2023 to accommodate changes in the threat picture, regulatory changes and new technological solutions including use of artificial intelligence. The group operates a policy for the outsourcing of IT services as well as a joint security strategy for the entire alliance. The outsourcing of critical or important services is a matter for the board of directors and is notified to Finanstilsynet (Norway's Financial Supervisory Authority). Given changes in the threat picture and the high complexity of value chains, we strengthened our capacity to follow up outsourced functions in 2023.
Regulations on the use of information and communication technology (ICT) guide the work on information security, and SpareBank 1 SMN is regularly audited by both the internal and external audit functions in accordance with those regulations. In 2023 the Storting adopted a new Act on Digital Security which will apply to providers of socially important services in the field of bank and financial market infrastructure. The act builds on the Network and Information Security Directive (NIS1), which is the EU's legislative measure to ensure a high common level network and information system security across the entire Union. For financial sector entities, the EU's Digital Operational Resilience Act (DORA) will strengthen financial institutions' digital resilience through ICT risk management. Such regulatory changes will affect our ongoing work on data- and cyber-security in the years ahead.
Responsibility for data- and cyber-security rests with the IT and Security Department at SpareBank 1 SMN. The department employs 20 FTEs. With formal responsibility for the data- and cyber-security area, the department also largely performs the operative tasks. Parts of these tasks are outsourced to partners and suppliers. The department's own employees control access to systems and data and are responsible for basic server security and correct access level for employees, software to protect systems and services against unauthorised access and for backup of locally stored data.
Customers find tips and advice on safe and secure use of our services at smn.no.
The following steering documents are central to this theme:
Information security policy
At SpareBank 1 SMN we work purposefully to ensure diversity, inclusion and equality in our development initiatives, recruitment processes, salary structure, and in the event of reorganisation measures and role changes. We believe that diversity and inclusiveness make for nuanced and varied views on everyday questions and issues and, by the same token, a more exciting, broadening and dynamic work environment. We strive to ensure that employees have a sense of belonging and are treated in an even-handed manner
throughout the employment relationship, and we make an active effort to assure equal status and to avoid discrimination in all aspects of the employment relationship, from vacancy announcement to termination of the employment relationship.
We have signed the Women in Finance Charter which commits us to set targets for gender balance at managerial level. The object is that women should account for a minimum of 40 per cent of managerial positions, and a clear ambition is to increase the share of women in weightier managerial positions. A good gender balance is sought at all levels of the organisation, and the proportion of women in managerial positions with personnel responsibilities in 2023 was 45 per cent, an increase of two per cent since 2022. The group management team now comprises ten persons, two of whom are women. The executive director of Technology and Development has a dedicated responsibility for monitoring the work to promote equal status and diversity, and is our representative on the Women in Finance Charter.
We have established a forum for diversity, inclusion and equal treatment. The forum follows up on action plans and initiatives scheduled for implementation. Diversity, inclusion and equal treatment are a long-term process, requiring a continuous effort at all levels of the organisation.
As a party to the Inclusive Employment Agreement, we commit to facilitating good dialogue and a relationship of trust between managers and staff with a view to reducing sickness absence. In 2023 the focus was on ensuring that procedures for inclusive follow-up of staff upon falling ill were improved, and HR is working closely with managers to ensure sound guidance and support in follow-up processes.
For this year's World Mental Health Day the theme was '#Lagplass', designed to spur a common effort against loneliness and outsiderness. We marked the day by underscoring the need to belong, generosity and inclusion, and by sharing tips on what staff and managers can do to contribute. We also provided information on opportunities for support that are available to staff through the employer should the need arise.
The following steering documents are central to this theme:
Although the financial industry has negligible direct emissions, and our climate impact is in the main an indirect consequence of the capital we manage through loans and investments, we need to readjust our dayto-day operations if we are to achieve our short-term and long-term objectives. Moreover, in order to fulfil the role of green driver for our customers we need to point to metrics, action plans and successful climate and environmental measures in our own day-to-day operations. We also believe that readjustment of our day-to-day operations instils pride and increases our employees' awareness of the theme in the customer dialogue.
Our location-based climate footprint totalled 18,553 tCO e in 2023, an increase/reduction of 4 per cent 2 compared with 2022. Consumption of electricity (151 tCO2 e), goods and services purchased (14,462 tCO2 e), business travel (2,056 tCO e) and capital goods (1,599 tCO e) are the largest drivers behind 2 2 greenhouse gas emissions in our day-to-day operations, accounting for 1.8 per cent of our overall greenhouse gas emissions.The remaining 98.2 per cent stems from our financed emissions.
A complete climate account for the parent company and the group is enclosed with this annual report. It describes KPIs, methodology, assumptions and boundaries in detail.
A more resource-efficient and circular economy is needed if we are to attain the objectives to which we have committed ourselves both at SpareBank 1 SMN but also internationally and nationally. In 2023 we set up an internal project group with resources from several business lines to develop a framework for circular transition in the group. Two stages are involved: the first focusing on the group's day-to-day operations, the second focusing on the loan portfolios.
A number of driving forces, among them regulatory requirements, obligations, public guidelines, strategic goals and results of stakeholder dialogues lead us in the direction of greater circularity within all aspects of our day-to-day operations. The switch to a more circular economy is a challenge that requires competencebuilding, a broad-based commitment, accountability in all parts of the group, and close collaboration with the regional community. We are under way on planning internal circular pilot projects with a view to instilling a broad-based commitment and learning on the path towards phasing more circularity into our day-to-day operations.
Circular economy is expected to be standardised and to play a substantial role in business and industry in years to come, and we wish, as a green driver, to take on our share of the responsibility for the transition.
We collaborate closely with Kjeldsberg Eiendomsforvaltning (KEF) in the field of property management and energy and environmental follow-up of the group's activities. As part of this collaboration, KEF collects energy and environmental data on the building stock at a number of our offices, and building operators are ready to turn our rapidly to rectify faults. Moreover, clear requirements are imposed on our collaboration with the KEF in terms of annual reduction of energy from the property portfolio and active efforts to reduce the climate footprint, which all contribute to realising the group's sustainability strategy. It has been decided that all electrical power purchased by the bank shall be 100 per cent renewable, which is assured through purchase of guarantees of origin.
We focus on sustainability when it comes to changes in office structure. One example is our finance centre in Molde which has relocated to a refurbished building in the town centre and aspires to certification under BREEAM In-Use Excellent – a project giving high priority to re-use of furniture and fixtures. Further, a preproject has started at our building in Steinkjer, also aspiring to BREEAM In-Use Excellent certification. With support from Enova we have started work on energy mapping of buildings we own in Steinkjer, Ålesund and Volda. The energy mapping will indicate potential energy and cost savings for those properties and appropriate measures to be taken.
Against the background of the group's sustainability strategy and climate strategy with appurtenant climate goals, the focus on sustainability in day-to-day operations will be strengthened in 2024. This will be done through a structured process incorporating a long-term strategy for attaining our goals in 2030 and 2050. The focus will be on energy efficiency enhancement and certification of group properties, but also on leased office areas through dialogue with landlords with a view to implementing measures in conformance with the group's strategy for sustainability and the environment.
We have for several years used Eco-Lighthouse as an environment management tool, and in 2023 we continued our work to integrate this tool into our corporate governance. Internal structures, procedures and processes underwent further improvement and monitoring tools were refined. We have for example introduced environmental groups in all locations in order to further strengthen the local footing and followup. Moreover, an arena has been established for all environmental officers in the group with a view to ensuring a shared understanding of their role, knowledge/experience sharing, and a strengthened sense of belonging and ownership. In 2024 an endeavour will be made to strengthen the role of environmental officer even further. In the course of 2023 seven locations underwent a recertification process against banking and finance criteria. All finance centres will in the course of 2024 be audited for recertification and assessed against banking and finance criteria through Eco-Lighthouse. Reporting, follow-up and evaluation of the above have been well received by our staff.
We are in the process of developing a governance system that will provide climate data at branch office level. This will help to raise internal awareness of, and motivation with regard to, the sustainability of our core business, and will have utility value for all customers and partners of the bank. Work is also under way on an internet-based, interactive training system for all employees that addresses sustainability and the environment.
The following steering documents are central to this theme:
| Sustainable transition of SpareBank 1 SMN | Target 2023 | Results 2023 | Target 2024 |
|---|---|---|---|
| Share of the group's purchases (NOK >100,000) from suppliers with a climate account |
50 % | 68 % | 80 % |
| Share of managers and employees having completed e-learning in information security |
100 % | 90 % | 100 % |
| Category score for diversity, inclusion and equality in Winningtemp1) | I/A | I/A | I/A |
| Total greenhouse gas emissions from day-to-day operations | 16,4 (1000 tCO2 e) |
18,5 (1000 tCO2 e) |
SBTi2) |
We have updated the sustainability module in WinningTemp, and this key performance indicator is now a part of the key performance 1) indicator "Category score sustainability in WinningTemp"
Our targets related to greenhouse gas emissions is as of 2023 under development in conjunction with our commitment to SBTi 2)
Table 16: Sustainable transition of SpareBank 1 SMN – KPIs and results
Our HR strategy clarifies the direction, goals and framework for our efforts in the field of 'people and organisation'. Our staff are the group's most important resource, and in order to deliver the best possible customer experiences SpareBank 1 SMN is dependent on a diversity of staff who are committed, competent, enquiring and development oriented. Our action plans our designed to ensure this, and the HR strategy defines clear goals and measures along the dimensions of organisation, people, management and culture.
The HR strategy and action plans have a basis in business goals and strategies for both the group and the business lines, along with relevant drivers and regulatory requirements. In 2023 the merger with SpareBank 1 Søre Sunnmøre was in particular focus, and we were eager to ensure a successful merger process and a good introduction to the group for our new colleagues in Sunnmøre. It was also a year of technological development in the artificial intelligence field, and large language models achieved a breakthrough. The group worked in a structured manner to make new technology and new working tools available with a view to enhancing employees' efficiency and effectiveness in their day-to-day work.
Goal: See to it that the organisational set-up, structures, systems and processes underpin the group's business needs and ensure goal attainment and development
Salary and bonus arrangements are further described in the report on remuneration of senior employees published at smn.no/barekraft.
In 2023 we continued work on reinforcing the effects of "One SMN", with a focus on cooperation models and synergies across customer-facing activities and specialist departments. In 2023 we saw benefits brought by the model, and continued work on assembling business lines under the same roof at a number of locations in the region. This provides a basis for stronger specialist teams, even clearer ownership of the workplace and increased staff satisfaction.
The merger with SpareBank 1 Søre Sunnmøre was much in focus in 2023. The merger added 72 new staff members. In that connection a new division was established including employees both from SpareBank 1 Søre Sunnmøre and from SpareBank 1 SMN's other offices in Sunnmøre and in Fjordane. A management team was established for the division, and Stig Brautaset was appointed executive director representing the division in the group management. Staff competencies were mapped, and new roles and organisational structure were drawn up. We have set much store on ensuring that our new colleagues from SpareBank 1 Søre Sunnmøre should get off to a good start with us, and a wide-ranging introduction and training programme was organised to that end.
SpareBank 1 SMN aims to be a workplace where employees experience a good balance between work and leisure. The group's life phase policy is designed to accommodate employees in all phases of life.
Arrangements involving flexible working hours and working from home are available, enabling employees to adapt their working day to their family situation. We have good procedures for the hybrid working day that ensure a good, decent work environment for our employees and that our employees' needs and expectations are attended to.
Committed and contented employees who experience a feeling of mastery, job satisfaction and personal development are crucial for our success. In 2023 we devoted much effort to the development and follow-up of Winningtemp, our tool for measuring employees' commitment, satisfaction and their experience of their working day. The insights gained from use of this tool makes it simpler for the group management team, other managers and staff members to focus on and apply measures to specific areas that we need to strengthen, develop or change. The results from these 'temperature' measurements are integrated into the group's business goals and are followed up on by the respective management groups. In 2023 we continued the work of sharing knowledge and experience of best practice between managers to ensure that the tool makes an impact on the organisation and the individual employee.
We have internal guidelines on whistleblowing. Employees are urged to report censurable circumstances of which they become aware or personally experience. Staff can report via a number of internal channels, including their immediate superior, the head of People and Organisation and the legal services director. An external reporting channel has also been established for a whistleblower to report anonymously if he or she so wishes.
Information on employees' right and obligation to report censurable circumstances is readily accessible on SpareBank 1 SMN's intranet pages. Four reports were registered in 2023.
Winningtemp also circulates questions on themes such as discrimination, equal treatment and harassment. Where an employee responds with low scores, HR are immediately alerted (anonymously) and they follow up the matter via an anonymised dialogue function built into the tool.
We respect and take account of international worker and human rights. A policy document has been drawn up and published on the group's web pages which specifies the conventions, frameworks and policies by which the group's companies abide.
The right to organise is important. A substantial proportion of our employees are members of a trade union, and the group attaches much importance to good cooperation with the unions. Joining a union is a voluntary matter, and the group does not discriminate against employees who are not organised. 77 per cent of group employees were covered by a collective bargaining agreement in 2023.
We aspire to competitive remuneration models, and a continuous effort is made to that end. Fixed remuneration is the largest single element of overall remuneration followed by pension benefits, collective benefits and insurances.
In order to ensure consistency and equal treatment in the determination and assessment of salaries, we employ Korn Ferry's method of job evaluation to define position levels.
We have for several years worked for equal pay for women and men. In 2023 women's share of men's pay was 91 per cent across the group. Women's share of men's pay for managers in the group was 84 per cent. There are variations within the various subsidiaries, position levels and management levels.
A systematic effort is made in terms of health, environment and safety, primarily in dialogue with the health and safety officer, HR and managers at department level. We wish to lay a basis for employees to keep fit.
In 2023 'Hjertebank' was launched as a new concept to facilitate better physical and mental health, and replaces our previous programme entitled Better Shape. The Hjertebank concept will achieve full effect and become a focal area for the entire group in 2024. Its mission is to build a sense of community and culture, and to stimulate individuals and departments to keep fit through enjoyable competitions and keep-fit activities.
We also encourage employees to spend their journey time to and from work keeping fit, and at the Head Office a bicycle garage with a workshop and bicycle wash station, along with fully equipped changing rooms, have been made available to that end.
It is well documented that physical activity helps to reduce sickness absence. As a party to the Inclusive Employment Agreement, we consider it very important for employees on sick leave to stay in touch with their work colleagues, thereby making it as easy as possible to make a rapid return to work. In collaboration with the Norwegian Labour and Welfare Administration (NAV), the group accepts employees in need of job training.
Sickness absence in the bank was 5.2 per cent in 2023, while for the overall group the figure was 6.3 per cent.
Goal: To ensure that our managers are secure and capable in the exercise of their management role and have relevant management support and good management tools
In 2023 our management workshops focused on shared expectations made of the group's managers, on digitalisation and change, and on managers' role as facilitators and role models. Development processes were carried through with selected manger groups where development, improvement of group processes, and interaction were focal areas, areas that are crucial in order for manager groups to create the desired results.
Moreover, all managers in the group have had access to an external portal providing digital courses with a variety of themes of relevance in a manager's working day. We have also set up a dedicated manager portal on which management processes and management tools are available to enable our managers to master the role of manager to the best possible extent.
Our managers have also been offered a digital nanograd – a concept developed by in-house experts in technology and digitalisation in the group. About 20 managers availed themselves of this offer in 2023.
Goal: To ensure that we attract, develop and retain the best and the right staff
A belief that employees perform better if they experience a sense of mastery, confidence and autonomy, and have a meaningful working day, is an important governance principle for us.
In 2023 we appointed about 300 persons to various roles in the group. This includes internal candidates and processes where employees may have transferred between departments or companies within the group.
We recognise that we are an attractive employer, and our job vacancies attract well qualified applicants. Universum's survey of students' perception of employers ranks SpareBank 1 SMN in fourth place on the list of the most attractive employers in Norway for economics students.
We aim to be an attractive employer for a broad diversity of people, and work actively to that end in our communication and recruitment processes.
Our objective is that both women and men should be among the shortlisted candidates ahead of the final decision on who is to be offered an open position. In 2023 this objective was achieved in a majority of appointment processes. The group makes a purposeful effort to ensure a wide diversity of applicants for posts in the group, of candidates invited for interview and of appointees.
We have in recent years consciously sought to ensure that our mode of communication in recruitment processes and employer branding contributes to our standing as an attractive employer for men and women alike. Our applicants' gender distribution shows that we have a gender balance and that a relatively identical share of men and women apply to our positions. The same picture is reflected in appointments which in 2023 shows a good gender balance.
In the recruitment process the emphasis is on objective and fair selection criteria, and we employ well validated testing tools to provide a picture of candidates that is as objective as possible.
We also see the need to be a visible, attractive employer for candidates from a wider range of disciplines and fields of study. An active effort is made to increase the diversity of applicants through vacancy announcements, collaboration across more fields of study and visibility across a broad selection of education institutions and disciplines.
The group's new employer branding strategy was adopted towards the end of 2023. This, together with our continued systematic effort with regard to our recruitment processes, will reinforce our attractiveness and ensure that we attract and appoint persons with diversified backgrounds.
Enhancing our employees' competency in sustainability and our ethical guidelines is further described as material themes under the focal area "Advisory services and customer offering".
Goal: To develop a shared "One SMN" culture that contributes to customer growth, continuous improvement and that makes SpareBank 1 SMN the region's best place to work
We have in recent years made an effort to implement shared cultural ambitions for the entire group. The need to create shared characteristics and ambitions for all employees has been an important extension of strengthening the group model after the organisation change in 2020/2021. Our shared ambitions as regards workplace culture across business lines are summed up in three overarching principles:
Active use was made of workplace culture aspirations in our 200 anniversary celebrations in 2023, and we th made a conscious effort to create a sense of belonging and collective identity within the group. While looking back on 200 valuable years, we also look forward to size up how we can shape the future, remain relevant and create value for our customers.
| Group | 2023 | 2022 |
|---|---|---|
| No. of FTEs, incl. subsidiaries 1) | 1 545 | 1 592 |
| No. of FTEs, parent company 2) | 798 | 664 |
| Sickness absence 3) | 6.3 % | 4.8% |
| Share of women 4) | 56 % | 56 % |
| Share of women in management positions 5) | 45 % | 43 % |
| Women's share of men's pay 6) | 90 % | 90 % |
| Average age | 41.2 | 42.4 |
| Average length of employment | 7.8 | 8.7 |
| No. of recruitments, internal 7) | 13 | 21 |
| No. of recruitments, external | 292 | 208 |
| Staff turnover 8) | 9.2 % | 10.7 % |
| Share of employees covered by collective bargaining agreement | 77 % | 77% |
1) No. of staff adjusted for FTE percentage
2) Figures taken from the FTE application and showing FTE obligation
3) Sickness absence, group. 2022 figure shows sickness absence, bank
4) Applies to permanent staff
5) Includes basic salary to permanent staff. Applies to internal recruitment at the bank
6) Applies only to parent company employees distributed by position level
7) Applies to internal recruitment at the parent company
8) Includes employees who have quit their position and left the group.
Table 17: Staffing, Group
| Age | Women | Men | Total |
|---|---|---|---|
| 18-29 | 162 | 167 | 329 |
| 30-39 | 270 | 209 | 479 |
| 40-49 | 105 | 160 | 365 |
| 50-59 | 224 | 130 | 208 |
| 60-69 | 113 | 95 | 185 |
| 70-79 | 0 | 2 | 2 |
| Total | 836 | 763 | 1 737 |
Table 18: Age and gender distribution
FTEs are calculated under same assumptions as other staffing, and convey FTEs (parent company) in the total staffing overview.
| FTEs through staffing agency | 2023 | 2022 |
|---|---|---|
| Retail Banking | 25.8 | 42.4 |
| Corporate Banking | 12.9 | 5.7 |
| Other | 5 | 1 |
| FTEs (staffing agency) | 43.7 | 49.1 |
| FTEs (parent company) | 798 | 664 |
| FTEs (staffing agency) in % of FTEs in parent | 5.48 % | 7.39 % |
Table 19: FTEs through staffing agency
In 2023 new employees totalled 229, of which 179 were women and 113 men (permanent staff).
| Age | Women | Men | Total |
|---|---|---|---|
| 18-29 | 65 | 48 | 113 |
| 30-39 | 60 | 40 | 100 |
| 40-49 | 25 | 15 | 40 |
| 50-59 | 25 | 7 | 32 |
| 60-69 | 4 | 3 | 7 |
| Total | 179 | 113 | 292 |
Table 20: Distribution of new employees
| Employee type | Women | Men | Total |
|---|---|---|---|
| Permanent | 960 | 747 | 1 707 |
| Full-time | 899 | 723 | 1 622 |
| Part-time | 61 | 24 | 85 |
| Apprentice1) | 7 | 12 | 19 |
| Full-time | 7 | 12 | 19 |
| Temporary2) | 6 | 2 | 8 |
| Full-time | 1 | 2 | 3 |
| Part-time | 5 | 0 | 5 |
| Trainee EM13) | 14 | 16 | 30 |
| Full-time | 12 | 15 | 27 |
| Part-time | 2 | 1 | 3 |
| Total | 987 | 777 | 1 764 |
1) Apprentices are employed in a training programme lasting 2 years. Upon completion of their apprenticeship they take the trade examination.
2) Temporary employees have a time-limited employment contract with SpareBank 1 SMN
3) Trainees in SpareBank 1 SMN are employed on a temporary basis for up to three years as part of a training programme while completing a bachelor's degree.
The figures refer to the SpareBank 1 SMN group and represent the number of employees in respect of whom the SpareBank 1 SMN group has an obligation.
In 2023 the international economy was marked by high, but subsiding, inflation. The larger central banks continued their monetary policy tightening through the year. The Norwegian economy was again, in 2023, marked by high activity, low unemployment and inflation far above the central bank's operating target. There are signs that industries such as building and construction and commercial property have been impacted by the high interest rate level, concurrent with a slight increase in unemployment over the year. Value creation in the mainland (non-oil) economy rose 0.7 per cent against 2022 and the wholly unemployed share of the labour force climbed from 1.6 per cent to 1.9 per cent. Wage growth ended 2023 at 5.3 per cent.
Price growth in Norway, in terms of the consumer price index (CPI), slowed through much of 2023. The annual rate of CPI growth was 5.5 per cent in 2023, a decline of 0.3 percentage point from 2022. Annual growth in the consumer price index adjusted for taxes and excluding energy (CPI-JAE) rose from 3.9 per cent in 2022 to 6.2 per cent in 2023. Growth in the CPI-JAE subsided through 2023, but not by the same margin as the CPI.
At the end of 2022, Norges Bank signalled a hike of about 3 percentage points in the base rate towards the end 2023. The vigorous rise in prices led to a more rapid and forceful tightening, with a base rate of 4.5 per cent at year-end. The bank has raised interest rates in step with Norges Bank's base rate hikes.
Twelve-month growth in credit to households (C2) declined from 4.2 per cent in 2022 to 3.1 per cent in 2023. Norges Bank anticipates a further decline in 2024.
Prospects for 2024 are uncertain. Norges Bank's monetary policy report of December 2023 indicated a base rate of about 4.25 per cent in the fourth quarter of 2024. A further reduction in inflation is anticipated internationally and in Norway.
The IMF expects global growth to remain stable at about 3 per cent in 2024, at the same time pointing out that risk present in the global economy is lower than previously.
Unemployment edged up through 2023, from record-low levels. The wholly unemployed share of the labour force was 1.7 and 1.5 per cent respectively in Trøndelag and in Møre and Romsdal at the end of 2023.
SpareBank 1 SMN's economic barometer shows that Mid-Norwegian businesses' expectations for the future are at a very low level. The risk trend in the corporate portfolio is nonetheless acceptable. Continued improvement is in evidence in the offshore segment, but increased risk is noted in the wider business sector due to high inflation and higher interest rates. Industries viewed as more exposed than others are construction and commercial property.
(Consolidated figures. Figures for the former SpareBank 1 Søre Sunnmøre are included as from the second quarter of 2023. Figures in parenthesis refer to the same period of last year unless otherwise stated. Growth figures adjusted for the merger are referred to under 'loans' and 'deposits')
SpareBank 1 SMN delivered a net profit of NOK 3,688m (2,785m), and a return on equity of 14.4 per cent (12.3 per cent). The profit for 2023 is higher than in 2022 due to increased net interest income and a gain on the disinvestment from SpareBank 1 Markets.
Net interest income came to NOK 4,632m (3,339m). The bank has implemented general interest rate increases in step with Norges Bank's base rate hikes. Lending margins in the retail market have weakened while deposit margins have concurrently strengthened compared with 2022, and return on the bank's equity capital has risen.
Lending growth in the group was 11.9 per cent (8.1 per cent) in 2023. Growth in lending to the bank's retail segment was 13.1 per cent (7.1 per cent). Lending to the bank's corporate customers rose 10.4 per cent (8.9 per cent).
Deposits rose 8.9 per cent (9.6 per cent). Personal deposits climbed 17.6 per cent (8.4 per cent). Corporate deposits rose 0.1 per cent (5.5 per cent).
Net commission income was NOK 2,084m (2,042m). Income from accounting services rose by NOK 97m measured against 2022. Income from insurance products and estate agency services also rose. Net commission income, excluding the captive mortgage companies, rose NOK 145m from 2022. Lower margins on loans sold to SpareBank 1 Boligkreditt have reduced commissions from that mortgage company by NOK 101m.
The result from related companies was NOK 297m (442m). A weaker profit share from SpareBank 1 Gruppen and a negative result at SpareBank 1 Mobilitet Holding are the main explanation for the decline.
The net result from financial instruments rose from minus NOK 94m in 2022 to NOK 476m in 2023. The increase is driven by the disinvestment from SpareBank 1 Markets, which produced a gain of NOK 414m in the fourth quarter of 2023.
The group's operating expenses came to NOK 3,017m (2,443m). Expenses are impacted by wage and price growth as well as merger costs and expensing of an operational loss of NOK 51m in the first quarter. The bank's cost-income ratio, measured as costs as a share of net interest income and commission income was 37.7 per cent (37.2).
As at 31 December, loan losses amount to NOK 14m (net recovery of 7m). Losses on loans to the group's corporate customers total NOK 6m in 2023 (net recovery of NOK 55m). The corresponding figure for personal customers is a loss of 8m (44m).
It is the group's results, exclusive of interest on hybrid capital and non-controlling ownership interests' share of the profit, that comprise the basis for distribution of the net profit for the year, and the distribution is done at the parent bank.
The net profit is distributed between the ownerless capital and the equity certificate (EC) capital in proportion to their relative shares of the bank's total equity, such that dividends and the allocation to the dividend equalisation fund constitute 74 per cent of the distributed profit. Earnings per equity certificate were NOK 16.88. Given the bank's solid capitalisation, but also its prospects for profitable operation in the period ahead, the board of directors recommends a cash dividend of NOK 12.00 per equity certificate (EC). This makes for a payout ratio of 71 per cent. The bank's long-term dividend policy is to distribute about 50 per cent of distributable profit.
The board of directors further recommends an allocation of NOK 860m to community dividend. Of this amount, NOK 250m is to be transferred to non-profit causes and NOK 610m to the foundation Sparebankstiftelsen SMN. NOK 621m and NOK 308m are to be transferred to the dividend equalisation fund and the ownerless capital respectively.
| 2023 | 2022 | |
|---|---|---|
| Profit for the year, Group | 3,688 | 2,785 |
| Interest hybrid capital (after tax) | -122 | -60 |
| Profit for the year excl interest hybrid capital, group | 3,566 | 2,725 |
| Profit, subsidiaries | -408 | -479 |
| Dividend, subsidiaries | 302 | 422 |
| Profit, associated companies | -297 | -443 |
| Dividend, associated companies | 391 | 224 |
| Group eliminations | 2 | -15 |
| Profit for the year excl interest hybrid capital, Parent bank | 3,557 | 2,434 |
| Distribution of profit | 2023 | 2022 |
| Profit for the year excl interest hybrid capital, Parent bank | 3,557 | 2,434 |
| Transferred to/from revaluation reserve | -37 | 101 |
| Profit for distribution | 3,520 | 2,535 |
| Dividends | 1,731 | 840 |
| Equalisation fund | 621 | 781 |
| Saving Bank's fund | 308 | 440 |
| Gifts | 860 | 474 |
| Total distributed | 3,520 | 2,535 |
The parent bank's disposable profit includes dividends received from subsidiaries, related companies and joint ventures, and is adjusted for interest expenses on hybrid capital after tax.
Subsidiaries are fully consolidated in the group accounts, whereas profit shares from related companies and joint ventures are consolidated using the equity method. Dividends are accordingly not included in the group results. The net annual profit for distribution reflects changes of NOK 37m in the unrealised gains reserve. The total amount for distribution is accordingly NOK 3,520m. After distribution of the net profit for 2023, the ratio of EC capital to total equity remains 66.8 per cent.
Net interest income totalled NOK 4,632m (3,339m). Norges Bank raised the base rate to 4.50 per cent in December 2023. At the end of the fourth quarter 2022, the base rate stood at 2.75 per cent. This has brought a considerable increase in banks' financing costs. NIBOR rose about 150 points over the course of 2023, and was 209 points higher on average than in 2022.
Compared with 2022, average margins on lending were approximately unchanged while margins on deposits rose. Growth in lending and deposits, driven partly by the merger with SpareBank 1 Søre Sunnmøre, has contributed to an increase in net interest income. In addition, a higher interest rate level has positively impacted return on equity. For retail customers a further interest rate hike has been announced with effect in the first quarter of 2024.
SpareBank 1 SMN's strategy of exploiting the breadth present in the group and of expanding interaction across the respective business lines stands firm. A high proportion of multi-product customers contributes to a capital-efficient, diversified income flow and high customer satisfaction.
| Commission and other income (NOKm) | 2023 | 2022 | Change |
|---|---|---|---|
| Payment transmission income | 330 | 329 | - |
| Credit cards | 61 | 61 | - |
| Commissions savings and asset mgmt | 43 | 40 | 2 |
| Commissions insurance | 253 | 236 | 16 |
| Guarantee commissions | 60 | 70 | -10 |
| Estate agency | 432 | 418 | 13 |
| Accountancy services | 661 | 564 | 97 |
| Other commissions | 76 | 51 | 26 |
| Commissions ex. Bolig/Næringskreditt | 1,915 | 1,770 | 145 |
| Commissions Boligkreditt (cov. bonds) | 155 | 256 | -101 |
| Commissions Næringskreditt (cov. bonds) | 15 | 16 | -1 |
| Total commission income | 2,084 | 2,042 | 43 |
Commission income excluding the captive mortgage companies rose 8.2 per cent, to NOK 1,915m (1,770 m). The trend in commission income is driven in particular by incomes from accounting services.
For loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt the bank receives a commission corresponding to the loan interest less the funding and operating expenses of those companies. The reduced commission income from these companies in 2023 is mainly due to higher funding costs.
Return on financial investments was NOK 476m (minus 94m). Capital gains of NOK 464m include NOK 414m related to the disinvestment from SpareBank 1 Markets. Other capital gains are related to SpareBank 1 SMN's share portfolio.
Financial instruments, including bonds and CDs, showed a capital loss of NOK 96m (capital loss of 198m) while income from foreign exchange transactions rose by NOK 17m from 2022, to NOK 108m (91m).
| Return on financial instruments (NOKm) | 2023 | 2022 | Change |
|---|---|---|---|
| Net gain/(loss) on stocks | 464 | 13 | 451 |
| Net gain/(loss) on financial instruments | -96 | -198 | 102 |
| Net gain/(loss) on forex | 108 | 91 | 17 |
| Net return on financial instruments | 476 | -94 | 570 |
SpareBank 1 SMN has a broad and well-diversified income platform. The group offers its customers a broad product range through a number of product companies which provide commission income along with return on invested capital.
The overall profit share from the product companies and other related companies was NOK 297m (443m) in 2023.
| Income from investment in associated companies (NOKm, SMN's share in parentheses) | 2023 | 2022 | Change |
|---|---|---|---|
| SpareBank 1 Gruppen (19.5 %) | -34 | 175 | -208 |
| SpareBank 1 Boligkreditt (23.9 %) | 98 | 1 | 97 |
| SpareBank 1 Næringskreditt (14.8 %) | 10 | 3 | 7 |
| BN Bank (35.0 %) | 257 | 203 | 54 |
| SpareBank1 Markets (39.9 %) | 19 | - | 19 |
| SpareBank 1 Kreditt (19.2 %) | -13 | 9 | -22 |
| SpareBank 1 Betaling (21.9 %) | -37 | 13 | -51 |
| SpareBank 1 Forvaltning (21.5 %) | 35 | 33 | 1 |
| Other companies | -36 | 6 | -42 |
| Total associated companies | 297 | 443 | -145 |
The SpareBank 1 Alliance is a collaboration between the SpareBank 1 banks. The Alliance's mission is to offer competitive financial services and products, and to exploit economies of scale. The Alliance collaboration is driven through its ownership of and participation in SpareBank 1 Utvikling DA, which develops and delivers shared products and services, and through SpareBank 1 Gruppen, as owner of the product companies.
SpareBank 1 Gruppen posted a net profit of NOK 213m (1,796m) in 2023, of which SpareBank 1 SMN's share of the controlling interest's net profit was minus NOK 34m (175m).
The most important companies in SpareBank 1 Gruppen (SpareBank 1 Gruppen's holding):
SpareBank 1 Forvaltning delivers products and services to a broad range of clients in the field of capital management and securities services. SpareBank 1 SMN's profit share in 2023 was NOK 35m (33m).
SpareBank 1 Boligkreditt is a mortgage company that issues covered bonds secured by residential mortgages with a view to stable financing with low financing costs. SpareBank 1 SMN's profit share was NOK 98m (1m) in 2023.
SpareBank 1 Næringskreditt is a mortgage company that issues covered bonds secured by commercial mortgages with a view to stable financing with low financing costs. SpareBank 1 SMN's profit share was NOK 10m (3m).
SpareBank 1 Kreditt offers unsecured finance to retail customers. SpareBank 1 SMN's profit share was minus NOK 13m (9m).
BN Bank offers residential mortgages and loans to commercial property and its main market is southeastern Norway. SpareBank 1 SMN's share of BN Bank's profit was NOK 257m (203m).
SpareBank 1 Markets is a leading Norwegian investment firm. The company offers services in the fields of equity and credit analysis, equity and bond trading and services in corporate finance. SpareBank 1 SMN's share of SpareBank 1 Markets' net profit in December 2023 was NOK 19m. Other profit share from SpareBank 1 Markets in 2023 is recognised as profit share from business held for sale.
SpareBank 1 Betaling is the SpareBank 1 banks' parent company in Vipps AS. SpareBank 1 SMN's profit share was minus NOK 37m (13m) in 2023.
The net profit of minus NOK 36m (6m) is driven by SpareBank 1 Mobilitet Holding's write-down of its equity interest in the car subscription company Flex. Like the new car market, car subscriptions have experienced weaker demand in 2023.
The group aims for a cost-income ratio below 40 per cent at the bank and below 85 per cent at EiendomsMegler 1 Midt-Norge and SpareBank 1 Regnskapshuset SMN. The cost-income ratio is defined as the ratio of operating expenses to net interest income and commission and other income.
The parent bank's cost-income ratio was 38 per cent in 2023 (37 per cent). The corresponding figures for EiendomsMegler 1 and Regnskapshuset were 91 (86) and 85 (84) per cent respectively.
| Operating expenses (NOKm) | 2023 | 2022 | Change |
|---|---|---|---|
| Personnel expenses | 1,691 | 1,406 | 286 |
| IT costs | 413 | 355 | 58 |
| Marketing | 93 | 86 | 7 |
| Ordinary depreciation | 153 | 117 | 37 |
| Operating expenses, real properties | 57 | 55 | 2 |
| Purchased services | 238 | 195 | 43 |
| Merger expenses | 64 | 22 | 42 |
| Other operating expense | 309 | 208 | 100 |
| Total operating expenses | 3,017 | 2,443 | 574 |
Overall group expenses rose by NOK 574m compared with 2022, of which NOK 106m of the increase refers to the subsidiaries. Price and wage growth along with acquisitions made by SpareBank 1 Regnskapshuset SMN are the chief driver behind the subsidiaries' expense growth.
The growth of NOK 468m in the bank's costs relates primarily to inflation, inclusion of the former SpareBank 1 Søre Sunnmøre's cost base, and expensing of the embezzlement affair in the first quarter of 2023. Costs are also impacted by the merger, celebration of the bank's 200th anniversary, and new projects and initiatives.
The group's losses on loans and guarantees came to NOK 14m in 2023 (net recovery of NOK 7m).
Losses over the course of the year break down to NOK 8m to retail customers and NOK 6m to corporate customers. At the bank, there was a net recovery of NOK 72m on losses (net recovery of NOK 37m) and at SpareBank 1 Finance, a loss of NOK 86m was recognised (30m).
Losses in 2023 break down to a recovery of NOK 28m in Stage 1 and 2 and losses of NOK 42m in Stage 3. Losses over the course of the year measured 0.01 per cent of total outstanding loans (0.00 per cent).
| Losses | 2023 | 2022 | Change |
|---|---|---|---|
| RM | 8 | 44 | -36 |
| CM | 6 | -51 | 57 |
| Total impairment losses | 14 | -7 | 21 |
Overall impairment write-downs on loans and guarantees as at 31 December 2023 amount to NOK 995m (1,188m).
The bank's loan portfolio is of good credit quality. The portfolio comprises NOK 167,777m (150.585m) in Stages 1 and 2 respectively, corresponding to 99.12 per cent. Problem loans (Stage 3) total NOK 2,085m (2,044m), corresponding to 0.88 per cent (0.97 per cent) of gross outstanding loans, including loans sold to the captive mortgage companies.
The bank's total assets at the end of 2023 were NOK 233bn (223bn), having risen by NOK 10bn, or 4.2 per cent. Total assets have grown as a result of the merger and lending growth.
As at 31 December 2023 loans totalling NOK 66bn (59bn) had been sold from SpareBank 1 SMN to the captive mortgage companies, SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt. These loans do not figure as loans in the bank's balance sheet. The comments covering lending growth take into account loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt.
In 2023 total outstanding loans rose by NOK 25.1bn (15.9bn), corresponding to 11.9 per cent (8.1 per cent), and stood at NOK 236.3bn (211.2bn) at the end of the year.
Lending to the bank's retail customers climbed 13.1 per cent (7.1 per cent), of which the merger with the former SpareBank 1 Søre Sunnmøre accounted for 8.3 percentage points. Total lending to the bank's retail customers came to NOK 166.7bn (147.4bn) at the end of 2023.
Growth in lending to the bank's corporate segment in 2023 was 10.4 per cent (8.9 per cent), of which the merger accounted for 3.5 percentage points. Overall lending to the bank's corporate clients came to NOK 57.2bn (51.8bn) as at 31 December 2023.
SpareBank 1 Finans' gross loan volume was NOK 12.6bn (12.1bn) at the end of 2023. This corresponds to growth of 4.5 per cent.
Customer deposits rose by NOK 10.9bn (10.7bn) over the course of the year to NOK 132.9bn (122.0bn). This corresponds to growth of 8.9 per cent (9.6 per cent).
Personal deposits rose by 17.6 per cent (8.4 per cent), of which the merger accounts for 10.7 percentage points. Total deposits from personal customers were NOK 64.6bn (54.9bn) at the end of the fourth quarter.
Deposits from the bank's corporate segment climbed 0.1 per cent (5.5 per cent). When adjusted for the merger with SpareBank 1 Søre Sunnmøre, growth in deposits from the bank's corporate segment would have been minus 6.8 per cent. The weak growth in deposits is related to a decline of 10 per cent in the fourth quarter, which is attributable to increasing competition for deposits from public sector customers. Total deposits from the bank's corporate segment came to NOK 63.0bn (62.9bn) as at 31 December 2023.
The Retail Banking Division achieved a pre-tax profit of NOK 1,770m (1,297m). Return on capital employed was 22.2 per cent (13.6 per cent). The retail banking portfolio consists of wage earners, agricultural customers and sole proprietorships.
Lending to the bank's retail customers rose 13.1 per cent (7.1 per cent), of which the merger with the former SpareBank 1 Søre Sunnmøre accounted for 8.3 percentage points. Total lending to the bank's retail customers came to NOK 166.7bn (147.4bn) at the end of 2023. Personal deposits rose 17.6 per cent (8.4 per cent), of which the merger accounts for 10.7 percentage points. Total personal deposits were NOK 64.6 bn (54.9bn) at the end of the fourth quarter.
The Retail Banking Division implemented general interest rate increases on loans and deposits in step with Norges Bank's base rate hikes, with a further rate increase announced for the first quarter 2024.
Lending to personal customers consistently carries low risk, as reflected in continued low losses. The loan portfolio is largely secured by residential property, and risk weights employed in the portfolio are below the regulatory floor of 20 per cent.
The Retail Banking Division prioritises balanced growth. A focus on deposits in advisory services to customers enables the bank to deliver robust earnings and heightens customers' financial security in the form of increased buffer capital.
The distribution model is enhanced by the introduction of co-location in finance centres and a transition from personal advisers to customer teams. Increased use of data and insights enables a closer interplay between the physical and digital advisory channels, providing customers with improved and more efficient advice.
Eiendomsmegler 1 Midt-Norge is the market leader in Trøndelag and in Møre and Romsdal. The pre-tax profit was NOK 40m (58m) in 2023.
| EiendomsMegler 1 Midt-Norge (92.4%) | 2023 | 2022 |
|---|---|---|
| Total revenues | 435 | 429 |
| Total operating expenses | 395 | 371 |
| Pre-tax profit (NOKm) | 40 | 58 |
| Operating margin | 9 % | 14 % |
Higher mortgage rates have dampened activity in the housing market and the sales volume was somewhat down from the previous year. EiendomsMegler 1 Midt-Norge is winning market shares, thereby compensating to some extent for the fall in sales volume. Higher incomes per sale make for increased turnover compared with 2022.
6,651 properties were sold in 2023 (6,881), and new assignments totalled 7,474 (7,450). The company's market share at year-end was 37.3 per cent, up from 36.5 per cent at end-2022.
The Corporate Banking Division achieved a pre-tax profit of NOK 1,955m (1,403m). Return on capital employed was 36.3 per cent (20.8 per cent).
Growth in lending to the bank's corporate customers in 2023 was 10.4 per cent (8.9 per cent), of which the merger accounted for 3.5 percentage points. Total lending to the bank's corporate customers came to NOK 57.2bn (51.8bn) as at 31 December 2023.
Deposits from the bank's corporate customers climbed 0.1 per cent (5.5 per cent) in 2023. When adjusted for the merger with SpareBank 1 Søre Sunnmøre, growth in deposits from the bank's corporate segment would have been minus 6.8 per cent. The weak growth in deposits is related to a decline of 10 per cent in the fourth quarter, which is attributable to increasing competition for deposits from public sector customers. Total deposits from the bank's corporate customers were NOK 63.0bn (62.9bn) as at 31 December 2023.
The division's result is positively impacted by the recognition of unrecognised interest on an exposure acquired at a discount and by a net recovery of losses.
For customers with lending and deposit products unrelated to interbank rates, two general interest rate increases were carried out in step with Norges Bank's base rate hikes.
The credit quality of the loan portfolio is good. The bankruptcy rate in the region has risen, but so far with limited impact on the loan portfolio.
A strengthened input of resources in Trondheim and greater coordination with SpareBank 1 Regnskapshuset spur Corporate Banking's acquisition of market shares in Mid-Norway. The establishment of a presence in Oslo in 2024 is expected to stimulate lending growth in selected segments where SpareBank 1 SMN offers competencies and experience.
SpareBank 1 Regnskapshuset SMN is the market leader in Trøndelag and in Møre and Romsdal. The company posted a pre-tax profit of NOK 108m (96m).
| SpareBank 1 Regnskapshuset SMN (93.3%) | 2023 | 2022 |
|---|---|---|
| Total revenues | 720 | 607 |
| Total operating expenses | 612 | 511 |
| Pre-tax profit (NOKm) | 108 | 96 |
| Operating margin | 15 % | 16 % |
Operating income climbed NOK 103m from 2022, driven by increased incomes from advisory and accounting services. The cost increase is in all essentials driven by higher personnel costs due to wage growth and acquisitions.
Substantial sums have been invested in developing the company's competitive power. This is producing results ranging from strengthened advisory competencies and capacity to a greater focus on digitalisation and new income flows. Cloud-based solutions that simplify matters for the company, along with enhanced insights and improvements in the customer process, are at centre stage. This has spurred customer growth and reinforced existing customers' loyalty.
SpareBank 1 Finans Midt-Norge's focal areas are leasing and invoice purchasing services to businesses and car loans to personal customers. SpareBank 1 Finans Midt-Norge recorded a pre-tax profit of NOK 111m (191m).
| SpareBank 1 Finans Midt-Norge (56.5%) | 2023 | 2022 |
|---|---|---|
| Total revenues | 311 | 329 |
| Total operating expenses | 115 | 108 |
| Losses on loans and guarantees | 86 | 30 |
| Pre-tax profit (NOKm) | 111 | 191 |
The company has in recent years developed new distribution channels with a special focus on the car dealer channel. More than 20 per cent of vendor's liens to personal customers now come directly from car dealers. SpareBank 1 Finans Midt-Norge has a share of about 10 per cent of the market for vendor's liens in the counties where parent banks are represented.
SpareBank 1 Finans Midt-Norge and other SpareBank 1 banks own, through SpareBank 1 Mobilitet Holding, 47.2 per cent of the car subscription company Flex, which leads the car subscription market in Norway. Like the new car market, car subscriptions have experienced weaker demand in 2023, and SpareBank 1 Mobilitet Holding wrote down its stake in Flex in the third quarter of 2023. The write-down is presented as net return on financial investments and is included in overall incomes in the segment information.
This company owns shares in regional growth companies and funds. The portfolio is managed together with other long-term shareholdings of the bank and will be scaled down over time. The company's portfolio was worth NOK 608m (584m) as at 31 December 2023.
The company's pre-tax profit in 2023 was NOK 68m (52m).
SpareBank 1 SMN has ample liquidity and access to funding. The bank follows a conservative liquidity strategy, with liquidity reserves that ensure the bank's survival for 12 months of ordinary operation without need of fresh external funding.
The bank is required to maintain sufficient liquidity buffers to withstand periods of limited access to market funding. The liquidity coverage ratio (LCR) measures the size of banks' liquid assets relative to net liquidity outflow 30 days ahead given a stressed situation. The LCR was calculated at 175 per cent as at 31 December 2023 (239 per cent). The requirement is 100 per cent.
The group's deposit-to-loan ratio at 31 December 2023, including the captive mortgage companies SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, was 56 per cent (58 per cent).
The bank's funding sources and products are amply diversified. The share of the bank's overall money market funding with a maturity above one year was 89 per cent (90 per cent) at 31 December 2023.
SpareBank 1 Boligkreditt and Næringskreditt are important funding sources for the bank, and loans totalling NOK 66bn (59bn) had been sold to these mortgage companies as at 31 December 2023.
At the end of 2023, SpareBank 1 SMN held NOK 12.4bn in senior non-preferred debt (MREL) and meets the MREL requirements.
The bank has a rating of Aa3 (stable outlook) with Moody's.
The CET1 ratio at 31 December 2023 was 18.8 per cent (18.9 per cent) compared with 19.7 per cent as at 30 September 2023.
SpareBank 1 SMN received a new Pillar 2 requirement in the fourth quarter. The requirement was reduced to 1.7 percentage points and must be met with a minimum of 56.25 per cent CET1 capital. As a result of this change the group's long-term CET1 target is revised to 16.3 per cent, including a Pillar 2 guidance. The bank is subject to a provisional add-on of 0.7 per cent to its Pillar 2 requirement until its application for adjustment of IRB models has been processed. The provisional add-on of 0.7 per cent is not included in the bank's long-term capital target.
A leverage ratio of 7.1 per cent (7.1 per cent) shows the bank to be very solid. See note 5 for details.
The group's strategies and objectives stand firm, and our effort to engage our customers and partners through our advisory capabilities, transition plans and product development will be strengthened ahead.
We have over the course of the year actively sought to further develop our understanding of the group's ESG risk and opportunities. The Retail Banking Division has launched transition plans for fishery and commercial property, and has established monitoring of ESG factors as part of its credit process. During the year, the division has strengthened the credit department by hiring a sustainability manager who is part of the group's sustainability team.
Retail Customer Division has taken a step further by estimating energy labeling of the loan portfolio, providing a basis for product development and customer dialogue. The division has also established a financial health team as part of its customer offering. The financial health team is a pilot project designed to assist customers experiencing acute stress and crisis responses to unmanageable debt or financial problems.
In our work on the climate account, we face a number of challenges related in particular to data quality and measurement uncertainty. An area to which we have devoted special attention is the availability of reliable, updated data. Moreover, calculation methodology and standards are under constant development, which may lead to inconsistency as to how emissions are calculated and reported over time. This affects the reliability of the group's climate account.
The climate account shows a decline in our emissions which is not necessarily due to a decline in economic activity or to more climate-efficient operations, but we are aware of these challenges and of the uncertainties present in our climate account. Integrating sustainability into the group's corporate governance remains an important task.
The focus on innovation of the customer offering has resulted in a new sustainability unit at SpareBank 1 Regnskapshuset SMN. A 'department of sustainability reporting and advisory services' has been launched, receiving an excellent response in the market. Corporate Banking, Retail Banking and Technology and Development are all in the process of exploring new business opportunities in the ESG sphere.
With a view to strengthening efforts to develop transition plans at industry level, SpareBank 1 SMN has, in 2023, signed and endorsed the Science Based Targets initiative (SBTi). The SBTi is a framework for corporate net-zero target setting in line with climate science, and the bank's commitment is a natural followup to the group's strategic objective of net zero emissions by 2050. The validation process is expected to take at least 2 years, and SpareBank 1 Regnskapshuset SMN will perform an advisory role in the process.
In the fourth quarter of 2023 SpareBank 1 SMN started preparations for updating its double materiality analysis. This work complies with the requirements of the new Corporate Sustainability Reporting Directive (CSRD), and will involve a broad range of our stakeholders. The work will be ongoing in the first half of 2024.
The chapter Our sustainability effort gives further details of the group's work on sustainability.
The market price of the equity certificate (EC) as at 31 December 2023 was NOK 120.48 (109.86), and earnings per EC were NOK 16.88 (12.82). A cash dividend of NOK 6.50 was paid per EC in 2023.
The Price / Income ratio was 8.40 (9.94) and the Price / Book ratio was 1.17 (1.16).
SpareBank 1 SMN's articles of association contain no restrictions on the transferability of equity certificates.
With regard to placings with employees, the latter are invited to participate under given guidelines. In employee placings where discounts are granted, a lock-in period applies before any sale can take place. The rights to ECs issued in placings with employees cannot be transferred.
SpareBank 1 SMN is not aware of any agreements between EC holders that limit the opportunity to trade ECs or to exercise voting rights attached to ECs.
See also the chapter Corporate governance.
A liability insurance policy has been taken out for board members and the CEO.
The policy covers insured persons' liability for any economic loss that is the subject of a claim brought in the insured period as the result of an alleged tortious act or omission. In addition to covering the economic loss proper, the policy covers the cost of necessary proceedings to decide the question of compensatory damages provided that the claim for damages is covered by the policy. The policy also covers necessary and reasonable expenses on advisers in the event of public investigation. Such expenses will be expenses incurred by the insured person before a claim is brought against that person. Furthermore, the policy covers any claim directed at an insured party by, or on behalf of, an employee as a result of discrimination, harassment or other illegality committed during the duration of employment, or failure to introduce or implement an adequate personnel policy or procedures.
SpareBank 1 SMN delivered a very good performance in 2023 reflecting strong profitability and financial soundness. Operating profit was satisfactory while the gain from disinvestment in SpareBank 1 Markets strengthened return on equity.
At the start of 2024 uncertainty continues to affect the economy, with reduced household purchasing power and decreasing credit growth. Inflation remains above target, although having slowed. Norges Bank raised the base rate to 4.50 per cent at its interest rate meeting in December, and the base rate may now have peaked. The further path of interest rates will in any case depend on economic developments. Unemployment remains low in Mid-Norway, but showed a weak rising trend through 2023 and Norges Bank' s regional network survey indicates a negative trend for the region.
SpareBank 1 SMN's ambition to expand its market shares stands firm. The bank's growth aspirations will be realised through initiatives taken in selected geographical locations and industries. Work on strengthening synergies across the group's business lines continues, along with a reinforced focus on deposits and saving. At the same time the board of directors sees growth opportunities through ongoing structural changes in Norway's financial industry. Investments in technology development and competence are reflected in the bank's cost growth in 2023. Effects of the efforts made are expected to strengthen earnings in 2024 and beyond, and the group's market position and efficiency in the longer term. There will be a tight focus in 2024 on the trend in costs across the group.
The risk picture in SpareBank 1 SMN's corporate loan portfolio is satisfactory, although higher interest rates and price growth have increased uncertainty above all in commercial property, building and construction and retail trade. Bankruptcies in the region are increasing in number, but remain at a lower level than prior to the pandemic. Parts of the business sector are flourishing and the bank has not observed an increase in defaults in the corporate portfolio. So far there are few indications of any deterioration of the portfolio's credit quality, as reflected in continued low losses.
In view of changes in regulatory requirements set by Finanstilsynet in November 2023, the group's longterm CET1 target is lowered from 17.2 per cent to 16.3 per cent with effect from the fourth quarter of 2023.
The group's long-term dividend policy requiring about one half of net profit to be disbursed as dividends stands firm. When setting the size of the annual dividend payout, account is taken of the group's need for capital, prospects for profitable growth and strategic plans. The board of directors has recommended the bank's supervisory board to set a cash dividend of NOK 12.00 per equity certificate (NOK 6.50) which is equivalent to 74 per cent of the net profit, and a community dividend of NOK 860m (474m). The size of the dividend for 2023 should be viewed in light of the group's solidity, which at the end of 2023 remains well above regulatory requirements and the group's long-term target.
SpareBank 1 SMN aspires to be among the best performers in the Nordic region, and the group's overriding financial goal is to deliver a return on equity of 13 per cent over time. The group's strategy stands firm, and the focus is on implementation and realisation of desired effects. The board of directors is pleased with results achieved in 2023. The group is well positioned to strengthen its market position with an efficient distribution of products and services. The board of directors expects 2024 to be another good year for the group.
Trondheim, 29 february 2024 The Board of Directors of SpareBank 1 SMN
(chair) (deputy chair)
Kjell Bjordal Christian Stav Mette Kamsvåg
Tonje Eskeland Foss Ingrid Finboe Svendsen Kristian Sætre
Freddy Aursø Christina Straub Inge Lindseth (employee rep.) (employee rep.)
Jan-Frode Janson (Group CEO)
| Parent bank | Group | ||||
|---|---|---|---|---|---|
| 2022 | 2023 (NOKm) | Note | 2023 | 2022 | |
| 4,740 | 9,219 Interest income effective interest method | 17 | 9,721 | 5,207 | |
| 724 | 1,548 Other interest income | 17 | 1,542 | 720 | |
| 2,583 | 6,622 Interest expenses | 17 | 6,631 | 2,588 | |
| 2,880 | 4,144 Net interest | 4 | 4,632 | 3,339 | |
| 1,192 | 1,117 Commission income | 18 | 1,370 | 1,446 | |
| 90 | 114 Commission expenses | 18 | 199 | 186 | |
| 55 | 73 Other operating income | 18 | 913 | 781 | |
| 1,156 | 1,076 Commission income and other income | 4 | 2,084 | 2,042 | |
| 677 | 711 Dividends | 19,44 | 26 | 33 | |
| - | - Income from investment in related companies | 19,39 | 297 | 442 | |
| -123 | 464 Net return on financial investments | 19 | 476 | -94 | |
| 554 | 1,176 Net return on financial investments | 4 | 799 | 380 | |
| 4,590 | 6,396 Total income | 7,515 | 5,760 | ||
| 661 | 849 Staff costs | 20,22 | 1,691 | 1,406 | |
| 841 | 1,121 Other operating expenses | 21,31,32, 33 |
1,326 | 1,038 | |
| 1,502 | 1,969 Total operating expenses | 4 | 3,017 | 2,443 | |
| 3,088 | 4,426 Result before losses | 4,498 | 3,317 | ||
| -37 | -72 Loss on loans, guarantees etc. | 4,1 | 14 | -7 | |
| 3,125 | 4,498 Result before tax | 4,484 | 3,324 | ||
| 631 | 820 Tax charge | 904 | 718 | ||
| - | - Result investment held for sale, after tax | 23 39 |
108 | 179 | |
| 2,494 | 3,678 Net profit | 3,688 | 2,785 | ||
| 60 | 122 Attributable to additional Tier 1 Capital holders | 125 | 63 | ||
| 1,557 | 2,376 Attributable to Equity capital certificate holders | 2,331 | 1,658 | ||
| 877 | 1,181 Attributable to the saving bank reserve | 1,159 | 934 | ||
| - | - Attributable to non-controlling interests | 74 | 130 | ||
| 2,494 | 3,678 Net profit | 3,688 | 2,785 | ||
| Profit/diluted profit per ECC | 16.88 | 12.82 |
| Parent bank | Group | ||||
|---|---|---|---|---|---|
| 2022 | 2023 (NOKm) | Note | 2023 | 2022 | |
| 2,494 | 3,678 Net profit | 3,688 | 2,785 | ||
| Items that will not be reclassified to profit/loss | |||||
| 177 | -27 Actuarial gains and losses pensions | 22 | -27 | 177 | |
| -44 | 7 Tax | 7 | -44 | ||
| - | - | Share of other comprehensive income of associates and joint venture |
6 | 4 | |
| 133 | -20 Total | -14 | 137 | ||
| 9 - |
- | Items that will be reclassified to profit/loss -5 Value changes on loans measured at fair value Share of other comprehensive income of associates and joint venture |
-5 -140 |
9 113 |
|
| 9 | -5 Total | -145 | 122 | ||
| 142 | -25 Net other comprehensive income | -158 | 259 | ||
| 2,636 | 3,653 Total comprehensive income | 3,530 | 3,044 | ||
| 60 | 122 Attributable to additional Tier 1 Capital holders | 125 | 63 | ||
| 1,647 | 2,359 Attributable to Equity capital certificate holders | 2,225 | 1,823 | ||
| 929 | 1,173 Attributable to the saving bank reserve | 1,106 | 1,028 | ||
| - | - Attributable to non-controlling interests | 74 | 130 | ||
| 2,636 | 3,653 Total comprehensive Income | 3,530 | 3,044 |
Other comprehensive income comprise items reflected directly in equity capital that are not transactions with owners, cf. IAS 1.
| Parent bank | Group | ||||
|---|---|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 (NOKm) | Noter | 31 Dec 2023 | 31 Dec 2022 | |
| ASSETS | |||||
| 1,171 | 1,172 Cash and receivables from central banks | 12,24 | 1,172 | 1,171 | |
| 21,972 | 19,241 Deposits with and loans to credit institutions | 7,12,13,24,26 | 8,746 | 11,663 | |
| 139,550 | 156,464 Net loans to and receivables from customers | 4,8,9,10,11,12,13,24,25,26 | 168,955 | 151,549 | |
| 38,072 | 34,163 Fixed-income CDs and bonds | 12,13,24,25,27 | 34,163 | 38,073 | |
| 6,804 | 6,659 Derivatives | 12,24,25,28,29 | 6,659 | 6,804 | |
| 417 | 731 Shares, units and other equity interests | 24,25,30 | 1,137 | 840 | |
| 5,063 | 6,270 Investment in related companies | 39,40,41,44 | 8,695 | 7,873 | |
| 1,924 | 2,090 Investment in group companies | 39,41 | 0 | 0 | |
| 553 | 98 Investment held for sale | 30,39 | 112 | 1,919 | |
| 467 | 812 Intangible assets | 31 | 1,228 | 663 | |
| 2,092 | 1,321 Other assets | 4,12,22,23,24,26,32,33,34 | 1,849 | 2,555 | |
| 218,085 | 229,020 Total assets | 14,15 | 232,717 | 223,110 | |
| LIABILITIES | |||||
| 14,636 | 13,160 Deposits from credit institutions | 7,24,26 | 13,160 | 14,636 | |
| 12,699 | 133,462 Deposits from and debt to customers | 4,24,26,35 | 132,888 | 122,01 | |
| 47,474 | 45,830 Debt created by issue of securities | 24,26,29,36 | 45,830 | 47,474 | |
| 8,307 | 6,989 Derivatives | 24,26,27,30 | 6,989 | 8,307 | |
| 2,067 | 2,262 Other liabilities | 22,23,24,25,26,37 | 3,005 | 2,725 | |
| - | - Investment held for sale | 39 | 1 | 1,093 | |
| 2,015 | 2,169 Subordinated loan capital | 5,24,26,38 | 2,247 | 2,058 | |
| 197,199 | 203,871 Total liabilities | 16 | 204,120 | 198,303 | |
| EQUITY | |||||
| 2,597 | 2,884 Equity capital certificates | 43 | 2,884 | 2,597 | |
| 0 | 0 Own holding of ECCs | 43 | 0 | -11 | |
| 895 | 2,422 Premium fund | 2,409 | 895 | ||
| 7,877 | 8,482 Dividend equalisation fund | 8,482 | 7,828 | ||
| 840 | 1,730 Recommended dividends | 1,730 | 840 | ||
| 474 | 860 Provision for gifts | 860 | 474 | ||
| 6,408 | 6,865 Ownerless capital | 6,865 | 6,408 | ||
| 70 | 106 Unrealised gains reserve | 106 | 70 | ||
| - | 0 Other equity capital | 2,690 | 2,940 | ||
| 1,726 | 1,800 Additional Tier 1 Capital | 5,38 | 1,903 | 1,769 | |
| - | - Non-controlling interests | 666 | 997 | ||
| 20,887 | 25,150 Total equity capital | 5 | 28,597 | 24,807 | |
| 218,085 | 229,020 Total liabilities and equity | 14,15 | 232,717 | 223,110 |
Annual report 2023
(chair) (deputy chair)
Kjell Bjordal Christian Stav Mette Kamsvåg
Tonje Eskeland Foss Ingrid Finboe Svendsen Kristian Sætre
Freddy Aursø Christina Straub Inge Lindseth (employee rep.) (employee rep.)
Jan-Frode Janson (Group CEO)
Proposed dividends on equity certificates and gifts are recognised as equity capital in the period to the declaration of dividends by the bank's supervisory board.
| Parent Bank | Issued equity | Earned equity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (NOKm) | EC capital |
Premium fund |
Owner less capital |
Equali sation fund |
Dividend and gifts |
Un realised gains reserve |
Other equity |
Additional Tier 1 Capital |
Total equity |
| Equity at 1 January 2022 | 2,597 | 895 | 5,918 | 7,007 | 1,517 | 171 | - | 1,250 | 19,356 |
| Net profit | - | - | 440 | 781 | 1,314 | -101 | - | 60 | 2,494 |
| Other comprehensive income | |||||||||
| Value changes on loans measured at fair value |
- | - | - | - | - | - | 9 | - | 9 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | 133 | - | 133 |
| Other comprehensive income | - | - | - | - | - | - | 142 | - | 142 |
| Total comprehensive income | - | - | 440 | 781 | 1,314 | -101 | 142 | 60 | 2,636 |
| Transactions with owners | |||||||||
| Dividend declared for 2021 | - | - | - | - | -970 | - | - | - | -970 |
| To be disbursed from gift fund | - | - | - | - | -547 | - | - | - | -547 |
| Additional Tier 1 Capital | - | - | - | - | - | - | - | 476 | 476 |
| Interest payments additional Tier 1 capital | - | - | - | - | - | - | - | -60 | -60 |
| Purchase and sale of own ECCs | 0 | - | - | -0 | - | - | - | - | -0 |
| Direct recognitions in equity | - | - | 50 | 88 | - | - | -142 | - | -3 |
| Total transactions with owners | 0 | - | 50 | 88 | -1,517 | - | -142 | 416 | -1,105 |
| Equity at 31 December 2022 | 2,597 | 895 | 6,408 | 7,877 | 1,314 | 70 | 0 | 1,726 | 20,887 |
| Parent Bank | Issued equity | Earned equity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Owner | Equali | Un realised |
Additional | ||||||
| (NOKm) | EC capital |
Premium fund |
less capital |
sation fund |
Dividend and gifts |
gains reserve |
Other equity |
Tier 1 Capital |
Total equity |
| Equity at 1 January 2023 | 2,597 | 895 | 6,408 | 7,877 | 1,314 | 70 | 0 | 1,726 | 20,887 |
| Net profit | - | - | 299 | 602 | 2,591 | 37 | 27 | 122 | 3,678 |
| Other comprehensive income | |||||||||
| Value changes on loans measured at fair value |
- | - | - | - | - | - | -5 | - | -5 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | -20 | - | -20 |
| Other comprehensive income | - | - | - | - | - | - | -25 | - | -25 |
| Total comprehensive income | - | - | 299 | 602 | 2,591 | 37 | 3 | 122 | 3,653 |
| Transactions with owners | |||||||||
| Dividend declared for 2022 | - | - | - | - | -840 | - | - | - | -840 |
| To be disbursed from gift fund | - | - | - | - | -474 | - | - | - | -474 |
| Additional Tier 1 Capital | - | - | - | - | - | - | - | 416 | 416 |
| Buyback Additional Tier 1 Capital issued | - | - | - | - | - | - | - | -342 | -342 |
| Interest payments additional Tier 1 capital | - | - | - | - | - | - | - | -122 | -122 |
| Purchase and sale of own ECCs | -0 | - | - | 3 | - | - | - | - | 2 |
| Merger SpareBank 1 Søre Sunnmøre | 288 | 1,526 | 158 | - | - | - | - | - | 1,972 |
| Direct recognitions in equity | - | - | - | - | - | - | -3 | - | -3 |
| Total transactions with owners | 287 | 1,526 | 158 | 3 | -1,314 | - | -3 | -48 | 610 |
| Equity at 31 December 2023 | 2,884 | 2,422 | 6,865 | 8,482 | 2,591 | 106 | 0 | 1,800 | 25,150 |
| Attributable to parent company equity holders | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Group | Issued equity | Earned equity | ||||||||
| (NOKm) | EC capital |
Premium fund |
Owner less capital |
Equali sation fund |
Dividend and gifts |
Un realised gains reserve |
Other equity |
Additional Tier 1 Capital |
NCI | Total equity |
| Equity at 1 January 2022 | 2,588 | 895 | 5,918 | 6,974 | 1,517 | 171 | 2,896 | 1,293 | 989 23,241 | |
| Implementation effect of IFRS 17 in SpareBank 1 Gruppen 2) |
- | - | - | - | - | - | -234 | - | - | -234 |
| Equity at 1 January 2022 | 2,588 | 895 | 5,918 | 6,974 | 1,517 | 171 | 2,662 | 1,293 | 989 23,007 | |
| Net profit | - | - | 440 | 781 | 1,314 | -101 | 158 | 63 | 130 | 2,785 |
| Other comprehensive income Share of other comprehensive income of associates and joint ventures |
- | - | - | - | - | - | 117 | - | - | 117 |
| Value changes on loans measured at fair value |
- | - | - | - | - | - | 9 | - | - | 9 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | 133 | - | - | 133 |
| Other comprehensive income | - | - | - | - | - | - | 259 | - | - | 259 |
| Total comprehensive income | - | - | 440 | 781 | 1,314 | -101 | 417 | 63 | 130 | 3,044 |
| Transactions with owners | ||||||||||
| Dividend declared for 2021 | - | - | - | - | -970 | - | - | - | - | -970 |
| To be disbursed from gift fund | - | - | - | - | -547 | - | - | - | - | -547 |
| Additional Tier 1 Capital issued | - | - | - | - | - | - | - | 476 | - | 476 |
| Buyback Additional Tier 1 Capital issued |
- | - | - | - | - | - | - | - | - | - |
| Interest payments additional Tier 1 capital |
- | - | - | - | - | - | - | -63 | - | -63 |
| Purchase and sale of own ECCs | 0 | - | - | -0 | - | - | - | - | - | -0 |
| Own ECC held by SB1 Markets 1) | -2 | - | - | -16 | - | - | -2 | - | - | -21 |
| Direct recognitions in equity | - | - | 50 | 88 | - | - | -149 | - | - | -11 |
| Share of other transactions from associates and joint ventures |
- | - | - | - | - | - | 13 | - | - | 13 |
| Change in non-controlling interests | - | - | - | - | - | - | - | - | -122 | -122 |
| Total transactions with owners | -2 | - | 50 | 72 | -1,517 | - | -138 | 413 | -122 | -1,244 |
| Equity at 31 December 2022 | 2,586 | 895 | 6,408 | 7,828 | 1,314 | 70 | 2,940 | 1,769 | 997 24,807 |
| Issued equity | Earned equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (NOKm) | EC capital |
Premium fund |
Owner less capital |
Equali sation fund |
Dividend and gifts |
Un realised gains reserve |
Other equity |
Additional Tier 1 Capital |
NCI | Total equity |
| Equity at 1 January 2023 | 2,586 | 895 | 6,408 | 7,828 | 1,314 | 70 | 2,940 | 1,769 | 997 24,807 | |
| Net profit | - | - | 299 | 602 | 2,591 | 37 | -40 | 125 | 74 | 3,688 |
| Other comprehensive income | ||||||||||
| Share of other comprehensive income of associates and joint ventures |
- | - | - | - | - | - | -133 | - | - | -133 |
| Value changes on loans measured at fair value |
- | - | - | - | - | - | -5 | - | - | -5 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | -20 | - | - | -20 |
| Other comprehensive income | - | - | - | - | - | - | -158 | - | - | -158 |
| Total comprehensive income | - | - | 299 | 602 | 2,591 | 37 | -198 | 125 | 74 | 3,530 |
| Transactions with owners Dividend declared for 2022 |
- | - | - | - | -840 | - | - | - | - | -840 |
| To be disbursed from gift fund | - | - | - | - | -474 | - | - | - | - | -474 |
| Additional Tier 1 capital issued | - | - | - | - | - | - | - | 519 | - | 519 |
| Buyback additional Tier 1 Capital issued |
- | - | - | - | - | - | - | -385 | - | -385 |
| Interest payments additional Tier 1 capital |
- | - | - | - | - | - | - | -125 | - | -125 |
| Purchase and sale of own ECCs | -0 | - | - | 3 | - | - | - | - | - | 2 |
| Own ECC held by SB1 Markets 1) | 11 | - | - | 49 | - | - | 10 | - | - | 70 |
| Merging with SpareBank 1 Søre Sunnmøre |
288 | 1,513 | 158 | - | - | - | - | - | -93 | 1,866 |
| Direct recognitions in equity | - | - | - | - | - | - | 110 | - | - | 110 |
| Share of other transactions from associates and joint ventures |
- | - | - | - | - | - | -3 | - | - | -3 |
| Other transactions from associates and joint ventures |
- | - | - | - | - | - | -169 | - | - | -169 |
| Change in non-controlling interests | - | - | - | - | - | - | - | - | -312 | -312 |
| Total transactions with owners | 298 | 1,513 | 158 | 52 | -1,314 | - | -52 | 10 | -405 | 260 |
| Equity at 31 December 2023 | 2,884 | 2,409 | 6,865 | 8,482 | 2,591 | 106 | 2,690 | 1,903 | 666 28,597 |
Attributable to parent company equity holders
1) Holding of own equity certificates as part of SpareBank 1 Markets' trading activity
The change in principle as a result of the implementation of IFRS 17 is described in Note 2 Accounting Principles 2)
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 (NOK million) | 2023 | 2022 |
| 2,494 | 3,678 Net profit | 3,688 | 2,785 |
| 77 | 111 Depreciations and write-downs on fixed assets | 153 | 117 |
| - 37 | - 72 Losses on loans and guarantees | 14 | - 7 |
| - 324 | - 413 Adjustments for undistributed profits of associated companies and joint ventures |
- 297 | - 443 |
| -2,420 | 1,924 Other adjustments | 1,958 | -2,436 |
| - 210 | 5,228 Net cash increase from ordinary operations | 5,516 | 16 |
| -4,626 | 1,035 Decrease/(increase) other receivables | 1,000 | -4,193 |
| 5,155 | -1,289 Increase/(decrease) short term debt | -2,245 | 5,136 |
| -3,739 | -6,502 Decrease/(increase) loans to customers | -7,080 | -5,643 |
| -8,782 | 4,333 Decrease/(increase) loans credit institutions | 4,519 | -6,959 |
| 10,672 | 769 Increase/(decrease) deposits to customers | 885 | 10,724 |
| 294 | -1,485 Increase/(decrease) debt to credit institutions | -1,485 | - 429 |
| -7,310 | 4,115 Increase/(decrease) in short term investments | 4,115 | -7,311 |
| -8,546 | 6,204 A) Net cash flow from operations | 5,227 | -8,658 |
| - | 35 Cash and cash equivalents from aquisition | 35 | - |
| - 71 | - 60 Increase in tangible fixed assets | - 95 | - 89 |
| - 18 | - Decrease in tangible fixed assets | - | 276 |
| - 5 | - 69 Cash flows from losing control of subsidiaries or other businesses | 79 | 6 |
| 324 | 413 Dividends received from investments in related companies | 413 | 324 |
| 6 | 100 Other cash receipts from sales of interests in joint ventures | 100 | 6 |
| - 479 | - 190 Other cash payments to acquire interests in joint ventures | - 198 | - 492 |
| 813 | 1 424 Other cash receipts from sales of equity or debt instruments of other entities |
2,319 | 849 |
| - 835 | 1 487 Other cash payments to acquire equity or debt instruments of other entities |
-1,509 | - 846 |
| - 265 | 166 B) Net cash flow from investments | 1,145 | 33 |
| 1,000 | 750 Increase in subordinated loan capital | 784 | 1,000 |
| - 750 | - 750 Decrease in subordinated loan capital | - 750 | - 750 |
| 0 | - Increase in treasury shares | - | - 21 |
| - | 2 Decrease in treasury shares | 72 | - |
| - 970 | - 840 Dividend cleared | - 840 | - 970 |
| - | - Dividend to non controlling interests | - 121 | - 162 |
| - 547 | - 474 Disbursed from gift fund | - 474 | - 547 |
| 476 | 416 Additional Tier 1 Capital issued | 478 | 476 |
| 0 | - 342 Repayments Tier 1 Capital | - 385 | 0 |
| - 60 | - 122 Interest payments additional Tier 1 capital | - 125 | - 63 |
| 16,194 | 5,280 Increase in other long term loans | 5,280 | 16,194 |
| -6,613 | -10,291 Decrease in other long term loans | -10,291 | -6,613 |
| 8,729 | -6,370 C) Net cash flow from financial activities | -6,371 | 8,544 |
| - 81 | 1 A) + B) + C) Net changes in cash and cash equivalents | 1 | - 81 |
| 1,252 | 1,171 Cash and cash equivalents at 1.1 | 1,171 | 1,252 |
| 1,171 | 1,172 Cash and cash equivalents at end of the year | 1,172 | 1,171 |
| - 81 | 1 Net changes in cash and cash equivalents | 1 | - 81 |
| Additional information about cash flows | |||
| 6,263 | 10,224 Interest received | 10,710 | 6,716 |
| 3,598 | 6,177 Interest paid | 6,184 | 3,603 |
| Note | Page | |
|---|---|---|
| 1 | 128 | General information |
| 2 | 129 | Accounting principles |
| 3 | 131 | Critical estimates and assessments concerning the use of accounting principles |
| 4 | 135 | Segment information |
| 5 | 137 | Capital adequacy and capital management |
| 6 | 139 | Risk factors |
| Credit risk | ||
| 7 | 144 | Credit institutions - loans and advances |
| 8 | 145 | Loans and advances to customers |
| 9 | 153 | Derecognition of financial assets |
| 10 | 155 | Losses on loans and guarantees |
| 11 | 162 | Credit risk exposure for each internal risk rating |
| 12 | 164 | Maximum credit risk exposure |
| 13 | 167 | Credit quality per class of financial assets |
| Market risk | ||
| 14 | 169 | Market risk related to interest rate risk |
| 15 | 170 | Market risk related to currency exposure |
| Liquidity risk | ||
| 16 | 171 | Liquidity risk |
| Income statement | ||
| 17 | 172 | Net interest income |
| 18 | 173 | Net commission income and other income |
| 19 | 174 | Net return on financial investments |
| 20 | 175 | Personnel expenses |
| 21 | 178 | Other operating expenses |
| 22 | 179 | Pension |
| 23 | 183 | Income tax |
| Statement of Financial Position | ||
| 24 | 185 | Categories of financial assets and financial liabilities |
| 25 | 187 | Measurement of fair value of financial instruments |
| 26 | 190 | Fair value of financial instruments at amortised cost |
| 27 | 192 | Money market certificates and bonds |
| 28 | 193 | Financial derivatives |
| 29 | 195 | Hedge Accounting for Debt created by issue of securities |
| 30 | 197 | Shares, units and other equity interest |
| 31 | 200 | Intangible assets |
| 32 | 202 | Property, plant and equipment |
| 33 | 204 | Leases |
| 34 | 207 | Other assets |
| 35 | 208 | Deposits from and liabilities to customers |
| 36 | 209 | Debt securities in issue |
See "This is SpareBank 1 SMN" presented in the annual report.
SpareBank 1 SMN's head office is in Trondheim, no. 4 Søndre gate. The Bank's market areas are essentially Trøndelag and Nordvestlandet.
The Group accounts for 2023 were approved by the Board of Directors on 29 February 2024.
The Bank and Group accounts for 2023 for SpareBank 1 SMN have been prepared in conformity with International Financial Reporting Standards IFRS®Accounting Standards as approved by the EU (IFRS). These include interpretations from the International Financial Reporting Interpretations. Committee (IFRIC) and its predecessor, the Interpretations Committee. The measurement base for both the parent bank and group accounts is historical cost with the exception of financial assets measured at fair value as described in note 24. The accounts are presented based on IFRS standards and interpretations mandatory for accounts presented as at 31 December 2023.
SpareBank 1 SMN has described the accounting policies under each note to the annual accounts. The following accounting policies has been assessed by management as principal accounting policies:
The consolidated accounts include the Bank and all subsidiaries which are not due for divestment in the near future and are therefore to be classified as held for sale under IFRS 5. All undertakings controlled by the Bank, i.e. where the Bank has the power to control the undertaking's financial and operational principles with the intention of achieving benefits from the undertaking's activities, are regarded as subsidiaries. Subsidiaries are consolidated from the date on which the Bank has taken over control, and are deconsolidated as of the date on which the Bank relinquishes control. Mutual balance sheet items and all significant profit elements are eliminated.
Upon takeover of control of an enterprise (business combination), all identifiable assets and liabilities are recognised at fair value in accordance with IFRS 3. A positive difference between the fair value of the consideration and the fair value of identifiable assets and liabilities is recorded as goodwill, while any negative difference is taken to income upon purchase. Accounting for goodwill after first-time recognition is described under the section on intangible assets.
All intra-group transactions are eliminated in the preparation of the consolidated accounts. The non-controlling interests' share of the group result is to be presented on a separate line under profit after tax in the income statement. In the statement of changes in equity, the non-controlling interests' share is shown as a separate item.
The presentation currency is the Norwegian krone (NOK), which is also the bank's functional currency. All amounts are stated in millions of kroner unless otherwise specified.
Transactions in foreign currency are converted to Norwegian kroner at the transaction exchange rate. Gains and losses on executed transactions or on conversion of holdings of monetary items on the balance sheet date are recognised in profit/loss. Gains and losses on conversion of items other than monetary items are recognised in the same way as the appurtenant balance sheet item.
The group has assessed the impact of amended accounting standards and interpretations (IFRSs) issued by the IASB and IFRSs approved by the EU with effect from 1 January 2023 or later. The group has assessed that the application of these has not had a significant impact on the group accounts for 2023, with the following exceptions:
IFRS 17 Insurance contracts replace IFRS 4 Insurance Contracts and specify principles for recognition, measurement, presentation and disclosure of insurance contracts. The purpose of the new standard is to eliminate inconsistent practices in accounting for insurance contracts and the core of the new model are as follows:
IFRS 17 shall, as a starting point, be used retrospectively, but it has been opened for a modified retrospective application or use based on fair value at the time of transition if retrospective use is impracticable.
IFRS 17 is effective for reporting periods beginning on or after 1 January 2023, with comparative figures required. Early application is permitted.
The effect on equity as a result of the associated company SpareBank 1 Gruppen implementing this standard as of 1 January 2022 is NOK 234 million in reduced equity. The result for 2022 from SpareBank 1 Gruppen, after adapting IFRS 17/IFRS 9, has been adjusted by NOK 32 million. As such the effect on equity as of 1 January 2023 is NOK 202 million. The group's result for 2022 and other key figures have not been restated.
| IFRS 17 effects for the Group | NOK million |
|---|---|
| Implementation of IFRS 17/IFRS 9 as of 1 January 2022 | -234 |
| Restated results from SpareBank 1 Gruppen for 2022 as a result of implementing IFRS 17/IFRS 9 | 32 |
| Implementation effect on equity as of 1 January 2023 | -202 |
| Restatement of comparable figures | As at 31.12.2022 |
|---|---|
| Group's share of recognised profit from SpareBank 1 Gruppen | 175 |
| Effects of implementing IFRS 17/IFRS 9 | 24 |
| Group's restated results from SpareBank 1 Gruppen | 199 |
Furthermore, the group has assessed the impact of new or changed accounting standards and interpretations (IFRS) issued by the IASB which have not yet been effective. The group does not expect any significant impact on future periods from the adoption of these changes.
In the preparation of the Group accounts the management makes accounting estimates, discretionary assessments and assumptions that bear on the effect of the application of the accounting principles and hence the amounts booked for assets, liabilities, income and expenses. Estimates and discretionary assessments are evaluated continuously and are based on empirical experience and expectations of events which, as of the balance sheet date, are deemed likely to occur in the future.
The Bank rescores its loan portfolio monthly. Customers showing objective evidence of loss due to payment default, impaired creditworthiness or other objective criteria are subject to individual assessment and calculation of loss. Should the Bank's calculations show that the present value of the discounted cash flow based on the effective interest rate at the time of estimation is below the book value of the loan, the loan is assigned to stage 3 and a write-down is performed for the calculated loss. A high degree of discretionary judgement is required in order to assess evidence of loss, and the estimation of amounts and timing of future cash flows with a view to determining a calculated loss is affected by this judgement. Changes in these factors could affect the size of the provision for loss. In cases where collateral values are tied to specific objects or industries that are in crisis, collateral will have to be realised in illiquid markets, and in such cases assessment of collateral values may be encumbered with considerable uncertainty.
For loans in stage 1 and 2 a calculation is made of the expected credit loss using the bank's loss model based on estimates of probability of default (PD) and loss given default (LGD), as well as exposure (EAD). The bank uses the same PD model as in IRB, but with unbiased calibration, i.e. without safety margins, as a basis for assessment of increased credit risk. The PD estimate represents a 12-month probability.
Write-downs for exposures in stage 1 will be calculation of one-year's expected loss, while for exposures in stage 2, loss is calculated over lifetime.
The most important input factors in the bank's loss model that contribute to significant changes in the loss estimate and are subject to a high degree of discretionary judgement are the following:
Measurement of expected credit loss for each stage requires both information on events and current conditions as well as expected events and future economic conditions. Estimation and use of forward-looking information requires a high degree of discretionary judgement. Each macroeconomic scenario that is utilised includes a projection for a five-year period. Our estimate of expected credit loss in stage I and 2 is a probability-weighted average of three scenarios: base case, best case and worst case. The base scenario have been developed with a starting point in observed defaults and losses over the past three years, adjusted to a forward-looking estimate of the development that is slightly above the observed defaults and losses over the past 3 years.
The development in the Upside and Downside scenario is prepared with the help of adjustment factors where the development in economic situation is projected with the help of assumptions regarding how much the probability of default (PD) or loss given default (LGD) will increase or be reduced compared with the baseline scenario over a five-year period. A basis is taken in observations over the past 15 years, where Downside reflects the expected default and loss level in a crisis situation with PD and LGD levels that are applied in conservative stressed scenarios for other purposes in the bank's credit management.
In 2023, an upgraded loss model was used, which provides proposals for key assumptions when using regression analysis and simulation. Future default level (PD) is predicted based on the expected development in money market interest rates and unemployment. With SpareBank 1 SMN's assumptions in the upgraded model, write-downs are to a greater extent than previously allocated to industries with large interest-bearing debt such as property, shipping and fisheries. Norges Bank's Monetary Policy Report has been chosen as the main source for the explanatory variables interest rate and unemployment as well as the expected price development of residential property. Management's estimates and discretionary assessments of the expected development of default and loss levels (PD and LGD) were largely based on macro forecasts from Monetary Policy report (PPR) 4/23. For the worst case scenario the bank has applied the same input assumptions as Finanstilsynet stress scenario used in macro forecasts in June 2023. This implies a lower interest rate level and lower unemployment level than the bank previously applied, leading to lower impairment levels. The building and construction industry is considered to have increased credit risk and the customers in this industry have as previous quarter been classified in stage 2 or 3.
In 2022, increased macroeconomic uncertainty as a result of the war in Ukraine, strong increases in energy and raw material prices, challenges in the supply chains and the prospect of permanently higher inflation and interest rates have led to an increased probability of a low scenario for the corporate market excl. offshore. Future loss expectations have been increased by increased PD and LGD for both the personal market and the corporate market, excl. offshore in the base scenario. The bank has focused on the expected long-term effects of the crisis. For the offshore portfolio, during 2022, as a result of significant improvement in the market and market prospects, increased earnings assumptions have been used in the simulations and the weight for low scenarios has been reduced for supply and subsea.
From 2023 the model write-downs for the offshore portfolio is calculated with the same assumptions as for the corporate market in general. Expected credit loss (ECL) per 31 December 2023 was calculated as a combination of 80 per cent expected scenario, 10 per cent downside scenario and 10 percent upside scenario (80/10/10 percent). This results in lower impairment levels compared to previous periods where the weighting was 75/15/10 for corporate market and 70/15/15 for the retail market.
The effect of the change in input assumptions in 2023 is shown as "Effect of changed assumptions in the ECL model" in note 8. The writedowns are increased in parts of the corporate market and retail market due to significantly increased interest rates and price growth is expected to increase future levels of PD and LGD. Changes in scenario weights as described above reduces write-downs.In total, this amounts to NOK 4 million for the Bank and NOK 29 million for the Group in reduced write-downs.
The scenarios are weighted with a basis in our best estimate of the probability of the various outcomes represented. The estimates are updated quarterly and were as follows as per the estimates at 31 December:
| Portfolio | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Base Case | Worst Case | Best Case | Base Case | Worst Case | Best Case | |
| Retail Market | 80 % | 10 % | 10 % | 70 % | 15 % | 15 % |
| Corporate excl. Agriculture and offshore | 80 % | 10 % | 10 % | 60 % | 25 % | 15 % |
| Agriculture | 80 % | 10 % | 10 % | 60 % | 25 % | 15 % |
The first part of the table below show total calculated expected credit loss as of 31 December 2023 in each of the three scenarios, distributed in the portfolios retail market (RM) corporate market (CM), and agriculture which adds up to parent bank. In addition the subsidiary SB 1 Finans Midt-norge is included. ECL for the parent bank and the subsidiary is summed up in th coloumn "Group".
The second part of the table show the ECL distributed by portfolio using the scenario weight applied, in addition to a alternative weighting where worst case have been doubled.
If the downside scenario's probability were doubled at the expense of the baseline scenario at the end of December 2023, this would have entailed an increase in loss provisions of NOK 108 million for the parent bank and NOK 126 million for the group.
| CM | RM | Agriculture | Total parent |
SB 1 Finans MN, CM |
SB 1 Finans MN, RM |
Total group |
|
|---|---|---|---|---|---|---|---|
| ECL base case | 624 | 85 | 68 | 777 | 39 | 21 | 838 |
| ECL worst case | 1,366 | 253 | 243 | 1,862 | 158 | 82 | 2,102 |
| ECL best case | 376 | 44 | 32 | 452 | 18 | 12 | 482 |
| ECL with scenario weights used 80/10/10 | 673 | 98 | 82 | 853 | 49 | 26 | 928 |
| ECL alternative scenario weights 70/20/10 | 748 | 115 | 99 | 962 | 61 | 32 | 1,055 |
| Total ECL used | 74 | 17 | 18 | 108 | 12 | 6 | 126 |
The table reflects that there are some significant differences in underlying PD and LGD estimates in the different scenarios and that there are differentiated levels and level differences between the portfolios. At group level, the ECL in the upside scenario, which largely reflects the loss and default picture in recent years, is about 60 per cent of the ECL in the expected scenario. The downside scenario gives more than double the ECL than in the expected scenario. Applied scenario weighting gives about 10 percent higher ECL than in the expected scenario.
The assessment of what constitutes a significant increase in credit risk requires a large degree of discretionary judgement. Movements between stage 1 and stage 2 are based on whether the instrument's credit risk on the balance sheet date has increased significantly relative to the date of first-time recognition. This assessment is done with a basis in the instrument's lifetime PD, and not expected losses.
The assessment is done for each individual instrument. Our assessment is performed at least quarterly, based on three factors:
If any of the above factors indicate that a significant increase in credit risk has occurred, the instrument is moved from stage 1 to stage 2.
See also note 2 on accounting principles and note 6 on risk factors.
Assets recognised at fair value through profit and loss will mainly be securities traded in an active market. An active market is defined as a market where homogeneous products are traded, where willing buyers and sellers are normally present at all times, and where prices are accessible to the general public. Shares quoted in a regulated market place fit in with the definition of an active market. A market with a large spread between bid and ask prices and where trading is quiet may pose a challenge. Some key shares will be based on in-house valuations, transaction prices or external analyses of the company. Such shares are valued using acknowledged valuation techniques. These include the use of discounted cash flows or comparative pricing where similar, listed, companies are used (multiple pricing) to determine the value of the unlisted company. Such valuations may be encumbered with uncertainty.
Any changes in assumptions may affect recognised values. Investments in private equity funds made in the subsidiary SpareBank 1 SMN Invest are valued based on net asset value (NAV) reported from the funds. The group uses the «fair value option» for investments in private equity funds. Fair value is calculated based on valuation principles set out in IFRS 13 and guidelines for valuation in accordance with International Private Equity and Venture Capital (IPEV), see www.privateequityvaluation.com.
Management has based its assessments on the information available in the market combined with best judgment. No new information has emerged on significant matters that had occurred or already existed on the balance sheet date as of 31.12.2023 and up to the Board's consideration of the accounts on 29 February 2024. See also note 30 for specification of shares and equity interests.
Fair value of derivatives is usually determined using valuation models where the price of the underlying, for example interest rates or exchange rates, is obtained in the market. When measuring financial instruments for which observable market data are not available, the Group makes assumptions regarding what market participants would use as the basis for valuing similar financial instruments. The valuations require extensive use of discretionary judgement inter alia when calculating liquidity risk, credit risk and volatility. Changes in these factors will affect the estimated fair value of the Group's financial instruments. For further information, see note 27 Measurement of fair value of financial instruments.
For options, volatilities will either be observed implicit volatilities or estimated volatilities based on historical movements in the price of the underlying instrument. In cases where the Bank's risk position is approximately neutral, middle rates will be used. "Neutral risk position" means for example that interest rate risk within a maturity band is virtually zero. Where market prices that are obtained are based on transactions with lower credit risk, this will be taken into account by amortising the original price difference measured against such transactions over the period to maturity.
The Group conducts tests to assess possible impairment of goodwill annually or in the event of indications of impairment. Assessment is based on the Group's value in use. The recoverable amount from cash-flow-generating units is determined by calculating discounted future cash flows. The cash flows are based on historical earnings and expectations of future factors and include suppositions and estimates of uncertain factors. The outcome of the impairment tests depends on estimates of discount rates which are set discretionarily based on information available on the balance sheet date.
Regarding goodwill related to Romsdals Fellesbank, the portfolio is regarded as integrated in the Bank's other lending and deposit operations, and, the lowest level for the cash generating unit is the segments Retail Market and Corporate Market. Goodwill has been allocated to the segments based on their share of the loan portfolio. A net cash flow is estimated based on earnings in the Bank's loan and deposit portfolio. A five-year cash flow prognosis have been developed using expected growth, and a terminal value without growth thereafter. Cash flows are discounted with a discount rate (before tax rate) of 13 per cent.
Calculations show that the value of discounted cash flows exceeds recognised goodwill by an ample margin.
Other goodwill in the Group is calculated based on average earnings in the market area and is discounted at the risk-free interest rate + the risk premium for similar businesses (12-14 per cent).
Acquisition of another company is accounted for by the acquisition method. This method requires a full purchase price allocation (PPA) in which the purchase price is allocated to identified assets and liabilities in the acquired company. Excess values beyond those allocated to identified assets and liabilities are booked as goodwill. Any deficit values are, after careful assessment, recognised as income through profit/loss in the year of the acquisition (badwill). The analyses contain both concrete calculations and use of best judgement in arriving at the fairest possible value of the acquired companies at the time of acquisition. While some uncertainty invariably attends estimation items, they are supported by determinations of expected cash flows, comparable transactions in previous periods etc. See also note 40 on business acquisitions/business combinations.
SpareBank 1 SMN's strategy is that ownership resulting from defaulted exposures should at the outset be of brief duration, normally not longer than one year. Work on selling such companies is continuously ongoing, and for accounting purposes they are classified as held for sale.
SpareBank 1 SMN's strategy is that ownership duse to defaulted exposures should at the outset be of brief duration, normally not longer than one year. Investments are recorded at fair value in the Parent Bank's accounts, and is classified as investment held for sale.
From fourth quarter 2022, the subsidiary SpareBank 1 Markets is classified as held for sale. On 22 June 2022, SpareBank 1 SMN announced that SpareBank 1 Markets is strengthening its investment within the capital market and SpareBank 1 SR-Bank and SpareBank 1 Nord-Norge will be its majority owners. SpareBank 1 SR-Bank and SpareBank 1 Nord-Norge will transfer their markets business to SpareBank 1 Markets, and also buy into the company in the form of a cash consideration. After completion of the transaction, SpareBank 1 SMN will own 39.9 per cent and SpareBank 1 Markets will be treated as an associated company. The transaction is approved from the Norwegian Financial Supervisory Authority and the Norwegian Competition Authority, and was completed in December 2023.
Profit from SpareBank 1 Markets has been reclassified as shown:
| 2023 | 2022 | |
|---|---|---|
| Net interest | -8 | 8 |
| Commission income and other income | -352 | -515 |
| Net return on financial investments | -342 | -273 |
| Total income | -702 | -780 |
| Total operating expenses | -577 | -574 |
| Result before tax | -125 | -206 |
| Tax charge | 18 | 27 |
| Net profit for investment held for sale | 108 | 179 |
See also note 39 on investments in owner interests.
In the sale of loan portfolios to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, the Group considers whether the criteria for derecognition under IAS 39 are met. At the end of the accounting year all transferred portfolios were derecognised from the parent bank's balance sheet. See also note 9 on derecognition of financial assets.
SpareBank 1 SMN has Retail Banking and Corporate Banking, along with the most important subsidiaries and associates as its primary reporting segments. The group presents a sectoral and industry distribution of loans and deposits as its secondary reporting format. The group's segment reporting is in conformity with IFRS 8. For the subsidiaries the figures refer to the respective company accounts, while for associates and joint ventures incorporated by the equity method the Group's profit share is stated, after tax, as well as book value of the investment at group level.
| Group 31 December 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Profit and loss account (NOKm) |
RM | CM | Sunnmøre og Fjordane |
EM 1 | SB 1 Finans MN |
SB 1 Regnskaps huset SMN |
Other Uncollated | Total | |
| Net interest | 1,824 | 1,335 | 598 | 2 | 490 | 4 | - | 379 | 4,632 |
| Interest from allocated capital |
328 | 195 | 112 | - | - | - | - | -634 | - |
| Total interest income | 2,151 | 1,530 | 709 | 2 | 490 | 4 | - | -255 | 4,632 |
| Comission income and other income |
652 | 234 | 110 | 432 | -97 | 716 | - | 37 | 2,084 |
| Net return on financial investments **) |
1 | 6 | 7 | 1 | -82 | - | 379 | 488 | 799 |
| Total income | 2,804 | 1,770 | 826 | 435 | 311 | 720 | 379 | 270 | 7,515 |
| Total operating expenses | 1,078 | 407 | 315 | 395 | 115 | 612 | - | 97 | 3,017 |
| Ordinary operating profit | 1,726 | 1,363 | 512 | 40 | 196 | 108 | 379 | 173 | 4,498 |
| Loss on loans, guarantees etc. |
1 | 45 | -118 | - | 86 | - | - | -0 | 14 |
| Result before tax | 1,725 | 1,318 | 629 | 40 | 111 | 108 | 379 | 173 | 4,484 |
| Return on equity *) | 18.2 % | 24.3 % | 19.6 % | 14.4 % |
| SB 1 Finans |
SB 1 Regnskaps |
|||||||
|---|---|---|---|---|---|---|---|---|
| Profit and loss account (NOKm) | RM | CM | EM 1 | MN | huset SMN | Other Uncollated | Total | |
| Net interest | 1,328 | 1,380 | 3 | 459 | 2 | - | 167 | 3,339 |
| Interest from allocated capital | 163 | 125 | - | - | - | - | -288 | - |
| Total interest income | 1,491 | 1,505 | 3 | 459 | 2 | - | -121 | 3,339 |
| Comission income and other income | 796 | 290 | 418 | -106 | 605 | - | 39 | 2,042 |
| Net return on financial investments **) | -4 | 9 | 8 | -23 | - | 466 | -76 | 380 |
| Total income | 2,283 | 1,804 | 429 | 329 | 607 | 466 | -158 | 5,760 |
| Total operating expenses | 958 | 467 | 371 | 108 | 511 | - | 28 | 2,443 |
| Ordinary operating profit | 1,325 | 1,337 | 58 | 221 | 96 | 466 | -186 | 3,317 |
| Loss on loans, guarantees etc. | 29 | -66 | - | 30 | - | - | -0 | -7 |
| Result before tax | 1,296 | 1,403 | 58 | 191 | 96 | 466 | -186 | 3,324 |
| Return on equity *) | 13.6% | 20.8% | 12.3% |
*) Regulatory capital in line with the bank's capital target have been used as basis for calculating capital used in the Retail and Corporate market.
| **) Specification of other (NOKm) | 31 Dec 23 | 31 Dec 22 |
|---|---|---|
| SpareBank 1 Gruppen | -34 | 175 |
| SpareBank 1 Boligkreditt | 98 | 1 |
| SpareBank 1 Næringskreditt | 10 | 3 |
| BN Bank | 257 | 203 |
| SpareBank 1 Markets | 19 | - |
| SpareBank 1 Kreditt | -13 | 9 |
| SpareBank 1 Betaling | -37 | 13 |
| SpareBank 1 Forvaltning | 35 | 33 |
| Other companies | 46 | 29 |
| Income from investment in associates and joint ventures | 379 | 466 |
| SpareBank 1 Mobilitet Holding | -82 | -23 |
| Net income from investment in associates and joint ventures | 297 | 442 |
Capital adequacy is calculated and reported in accordance with the EU capital requirements regulations for banks and investment firms (CRR/CRD IV). SpareBank 1 SMN utilises the Internal Rating Based Approach (IRB) for credit risk. Advanced IRB Apporoach is used for the corporate portfolios. Use of IRB imposes wide-ranging requirements on the bank's organisational set-up, competence, risk models and risk management systems.
As of 31 December 2023 the overall minimum requirement on CET1 capital is 14.0 per cent. The capital conservation buffer requirement is 2.5 per cent, the systemic risk requirement for Norwegian IRB-banks is 4.5 per cent and the Norwegian countercyclical buffer is 2.5 per cent. These requirements are additional to the requirement of 4.5 per cent CET1 capital. In addition the financial supervisory authority has set a Pillar 2 requirement for SpareBank 1 SMN. From 31 December 2023 the reqirement is 1,7 per cent, and must be met with a minimum of 56.25 per cent CET1 capital. In addition the bank must have an additional 0.7 per cent in Pillar 2 requirements until the application for modeling has been processed.
Under the CRR/CRDIV regulations the average risk weighting of exposures secured on residential property in Norway cannot be lower than 20 per cent. As of 31 December 2023 an adjustment was made in the parent bank to bring the average risk weight up to 20 per cent. This is presented in the note together with 'mass market exposure, property' under 'credit risk IRB'.
The systemic risk buffer stands at 4.5 per cent for the Norwegian exposures. For exposures in other countries, the particular country's systemic buffer rate shall be employed. As of 31 December 2023 the effective rate is 4.3 per cent for the group.
The countercyclical buffer is calculated using differentiated rates. For exposures in other countries the countercyclical buffer rate set by the authorities in the country concerned is applied. If that country has not set a rate, the same rate as for exposures in Norway is applied unless the Ministry of Finance sets another rate. As of 31 December 2023 both the parent bank and the group is below the capital deduction threshold such that the Norwegian rate is applied to all relevant exposures.
| Parent Bank | Group | |||
|---|---|---|---|---|
| 31 Dec | 31 Dec | 31 Dec | 31 Dec | |
| 2022 | 2023 (NOKm) | 2023 | 2022 | |
| 20,887 | 25,150 Total book equity | 28,597 | 25,009 | |
| -1,726 | -1,800 Additional Tier 1 capital instruments included in total equity | -1,903 | -1,769 | |
| -467 | -812 Deferred taxes, goodwill and other intangible assets | -1,625 | -947 | |
| -1,314 | -2,591 Deduction for allocated dividends and gifts | -2,591 | -1,314 | |
| - | - Non-controlling interests recognised in other equity capital | -666 | -997 | |
| - | - Non-controlling interests eligible for inclusion in CET1 capital | 679 | 784 | |
| - | - Net profit | - | - | |
| - | - | Year-to-date profit included in core capital (50 per cent (50 per cent) pre tax of group profit) |
- | - |
| -72 | -53 Value adjustments due to requirements for prudent valuation | -72 | -89 | |
| -194 | -412 Positive value of adjusted expected loss under IRB Approach | -546 | -279 | |
| - | - Cash flow hedge reserve | -4 | -4 | |
| -281 | -350 Deduction for common equity Tier 1 capital in significant investments in financial institutions |
-278 | -619 | |
| 16,833 | 19,131 Common equity Tier 1 capital | 21,589 | 19,776 | |
| 1,726 | 1,800 Additional Tier 1 capital instruments | 2,252 | 2,106 | |
| -47 | -48 Deduction for significant investments in financial institutions | -48 | -47 | |
| 18,512 | 20,883 Tier 1 capital | 23,793 | 21,835 | |
| Supplementary capital in excess of core capital | ||||
| 2,000 | 2,150 Subordinated capital | 2,822 | 2,523 | |
| -210 | -216 Deduction for significant investments in financial institutions | -216 | -210 | |
| 1,790 | 1,934 Additional Tier 2 capital instruments | 2,606 | 2,312 | |
| 20,301 | 22,817 Total eligible capital | 26,399 | 24,147 |
| Minimum requirements subordinated capital | |||
|---|---|---|---|
| 1,148 | 1,256 Specialised enterprises | 1,538 | 1,351 |
| 901 | 904 Corporate | 931 | 923 |
| 1,379 | 1,569 Mass market exposure, property | 2,907 | 2,559 |
| 98 | 124 Other mass market | 126 | 100 |
| 1,249 | 1,485 Equity positions IRB | - | - |
| 4,774 | 5,338 Total credit risk IRB | 5,502 | 4,933 |
| 6 | 3 Central government | 5 | 6 |
| 82 | 95 Covered bonds | 153 | 139 |
| 403 | 373 Institutions | 280 | 276 |
| 187 | 110 Local and regional authorities, state-owned enterprises | 146 | 207 |
| 143 | 248 Corporate | 506 | 385 |
| 7 | 4 Mass market | 703 | 662 |
| 27 | 37 Exposures secured on real property | 126 | 109 |
| 90 | 63 Equity positions | 465 | 504 |
| 97 | 112 Other assets | 178 | 162 |
| 1,042 | 1,046 Total credit risk standardised approach | 2,561 | 2,450 |
| 27 | 22 Debt risk | 22 | 29 |
| - | - Equity risk | 7 | 10 |
| - | - Currency risk and risk exposure for settlement/delivery | 2 | 1 |
| 458 | 545 Operational risk | 924 | 853 |
| 30 | 38 Credit value adjustment risk (CVA) | 153 | 101 |
| 6,331 | 6,988 Minimum requirements subordinated capital | 9,171 | 8,377 |
| 79,140 | 87,354 Risk weighted assets (RWA) | 114,633 | 104,716 |
| 3,561 | 3,931 Minimum requirement on CET1 capital, 4.5 per cent | 5,159 | 4,712 |
| Capital Buffers | |||
| 1,978 | 2,184 Capital conservation buffer, 2.5 per cent | 2,866 | 2,618 |
| 3,561 | 3,896 Systemic risk buffer, 4.5 per cent | 5,081 | 4,712 |
| 1,583 | 2,184 Countercyclical buffer, 1.0 per cent | 2,866 | 2,094 |
| 7,123 | 8,264 Total buffer requirements on CET1 capital | 10,813 | 9,424 |
| 6,149 | 6,937 Available CET1 capital after buffer requirements | 5,618 | 5,639 |
| Capital adequacy | |||
| 21.3 % | 21.9 % Common equity Tier 1 capital ratio | 18.8 % | 18.9 % |
| 23.4 % | 23.9 % Tier 1 capital ratio | 20.8 % | 20.9 % |
| 25.7 % | 26.1 % Capital ratio | 23.0 % | 23.1 % |
| Leverage ratio | |||
| 210,227 | 221,334 Balance sheet items | 323,929 | 302,617 |
| 6,234 | 7,559 Off-balance sheet items | 8,984 | 7,744 |
| -1,061 | -513 Regulatory adjustments | -666 | -1,985 |
| 215,400 | 228,380 Calculation basis for leverage ratio | 332,247 | 308,376 |
| 18,512 | 20,883 Core capital | 23,793 | 21,835 |
SpareBank 1 SMN aims to maintain a moderate risk profile and to apply risk monitoring of such high quality that no single event will seriously impair the group's financial position. The group's risk profile is quantified through targets for rating, concentration, risk-adjusted return, probability of default, loss ratios, expected loss, necessary economic capital, regulatory capital adequacy, and liquidity-related regulatory requirements.
The principles underlying SpareBank 1 SMN's risk management are laid down in the risk management policy. The group gives much emphasis to identifying, measuring, managing and monitoring central risks in such a way that the group progresses in line with its adopted risk profile and strategies.
The bank's three lines of defence against financial loss or impaired reputation comprise:
Risk management within the group is intended to support the group's strategic development and target attainment. The risk management regime is also designed to ensure financial stability and prudent asset management. This will be achieved through:
The group's risk is quantified inter alia by calculating expected loss and the need for risk-adjusted capital (economic capital) to meet unexpected losses.
Expected loss is the amount which statistically can be expected to be lost in a 12-month period. Risk-adjusted capital is the volume of capital the group considers it needs to meet the actual risk incurred by the group. The board of directors has decided that the riskadjusted capital should cover 99.9 per cent of all possible unexpected losses. Statistical methods are employed to compute expected loss and risk-adjusted capital, but the calculation requires expert assessments in some cases. In the case of risk types where no recognised methods of calculating capital needs are available, the group defines risk management limits that limit loss risk in accordance with the adopted risk appetite. For further details see the group's Pillar III reporting which is available on the bank's website.
The group has incorporated ESG in steering documents, including risk management policy, credit strategy and credit policy. ESG risk, including climate risk, is considered a driver of financial risk and reputational risk.
The group's overall risk exposure and risk trend are monitored on a continual basis. Status and development are reported on by way of periodic risk reports to the administration and the board of directors. Overall risk monitoring and reporting are performed by Risk Management which is independent of the group's business lines.
Credit risk is the risk of loss resulting from the inability or unwillingness of customers or counterparties to honour their commitments to the group.
The group is exposed to credit risk through all customer and counterparty receivables. The main exposure is through ordinary lending and leasing activities, but the group's credit risk also has a bearing on the liquidity reserve portfolio through counterparty risk arising from interest rate and foreign exchange derivatives.
Credit risk associated with the group's lending activity is the risk area with the highest requirement as to capital, both under internal assessments and capital requirement calculations under the CRR.
Through its annual review of the bank's credit strategy, the board of directors concretises the group's risk appetite by establishing thresholds and limits for the bank's credit portfolio. The limits define the lending activity's boundaries. Deviations with respect to thresholds obliges the credit manager to comment on the deviation to the board of directors and in most cases to prepare action plans in
order to reduce risk. The bank's credit strategy and credit policy are derived from the bank's main strategy, and contain guidelines for the risk profile, including credit quality and concentration risk.
Concentration risk is managed by distribution between Retail Banking and Corporate Banking, limits on the size of loan and loss ratio on single exposures, limits on maximum exposure for the twenty largest grouped exposures, limits on maximum exposure within industries and a limit that ensures industry diversification among the 20 largest customers.
Compliance with credit strategy and thresholds and limits adopted by the board of directors is monitored on a continual basis by the Group Credit Committee and reported quarterly to the board of directors by way of the risk report.
The board of directors delegates lending authorisation to the group CEO. The group CEO can further delegate authorisations below divisional director level. Lending authorisations are graded in relation to exposure size and risk profile.
The board of directors delegates lending authorisation to the group CEO. The group CEO can further delegate authorisations to levels below executive director level. Lending authorisations are graded by size of commitment and risk profile.
The bank has a department dedicated to credit support which assists in or takes over dealings with customers who are clearly unable, or are highly likely to become unable, to service their debts unless action is taken beyond ordinary follow-up.
The bank's exposure to climate risk is mapped by means of qualitative assessments of physical risk and transition risk at industry level, and through the requirement of ESG scoring of all credit cases above NOK 10m for corporate customers. In addition, the bank has estimated greenhouse gas emissions from the bank's loan customers. The board of directors has adopted a strategy requiring the bank to be a driver for green transition, and transition plans are accordingly prepared towards a low emissions society for all significant industries in the bank. Transition plans for agriculture, commercial property and fishery were published in 2023. The transition plans communicate expectations and requirements we place on our customers. Strategies and policies are regularly assessed to ensure that measures against climate risk in the loan portfolio are adequate with reference to risk appetite. The bank has in 2023 not applied exclusion of industries or customer groups as a tool to curb climate risk.
The bank's risk classification system was developed to quantify credit risk, and thus to enable management of the bank's loan portfolio in keeping with the bank's credit strategy and to measure risk-adjusted return.
The bank has approval to use internal models in its risk management and capital calculation (IRB) with respect to loans and guarantees to the mass market and undertakings. Approval to use the advanced IRB approach was given by Finanstilsynet in 2015. The bank uses IRB models for risk classification, capital allocation, risk pricing and portfolio management.
In 2022 the bank package, including CRR2, was introduced in Norwegian law. The bank package contains comprehensive requirements and guidelines for the development, application and validation of the IRB models. In June 2022 an application to apply the revised models was delivered to Finanstilsynet. The process is still ongoing.
The risk classification system (IRB) builds on the following main components:
The group's credit models are based on statistical computations of probability of default. The calculations are based on scoring models that take into account financial position and internal and external behavioural data. The models are partly point-in-time oriented, and reflect the probability of default in the course of the next 12 months under current economic conditions.
Customers are assigned to one of nine risk classes based on PD, in addition to two risk classes for exposures in default and/or subject to impairment write down.
The models are validated on an ongoing basis and at least once per year both with respect to their ability to rank customers and to estimate PD levels. The validation results confirm that the models' accuracy meets internal criteria and international recommendations.
The bank has also developed a cashflow-based PD model used for exposures to commercial property lease. The bank has applied to Finanstilsynet for permission to use this model in its capital calculation (IRB).
EAD is an estimation of the size of an exposure in the event of, and at the time of, a counterparty's default. For drawing rights, a conversion factor (CF) is used to estimate how much of the present unutilised credit ceiling will have been utilised at a future default date. For guarantees, a government-determined CF is used to estimate what portion of issued guarantees will be brought to bear upon default. The CF is validated monthly for drawing rights in the retail market and corporate market. The bank's EAD model takes account of differences both between products and customer types.
The bank estimates the loss ratio for each loan based on expected recovery rate, realisable value (RE value) of the underlying collateral, recovery rate on unsecured debt, as well as direct costs of recovery. Values are determined using standard models, and actual realised values are validated to test the models' reliability.
Estimated loss ratio shall allow for a future economic contraction. Given limited data from economic contractions, the bank has incorporated substantial safety margins in its estimates to ensure conservative estimates when calculating capital requirements.
The three above-mentioned parameters (PD, EAD and LGD) underlie the group's portfolio classification and statistical calculation of expected loss (EL) and need for economic capital and regulatory capital.
Counterparty risk in derivatives trading is managed through ISDA and CSA contracts set up with financial institutions that are the bank's largest counterparties. ISDA contracts regulate settlements between financial counterparties. The CSA contracts limit maximum exposure through market evaluation of the portfolio and margin calls when the change in portfolio value exceeds the maximum agreed limit or threshold amount. The bank will continue to enter CSA contracts with financial counterparties to manage counterparty risk. See note 12 for a further description of these contracts.
Counterparty risk for customers is hedged through use of cash depots or other collateral which, at all times, have to exceed the market value of the customer's portfolio. Specific procedures have been established for calling for further collateral or to close positions if market values exceed 80 per cent of the collateral.
Market risk is a generic term for the risk of loss and reduction of future incomes as a result of changes in observable rates or prices of financial instruments. Market risk arises at SpareBank 1 SMN mainly in connection with the bank's investments in bonds, CDs and shares, including funding. SpareBank 1 has outsourced customer trading in fixed income and foreign currency instruments to SpareBank 1 Markets. This customer activity, and SpareBank 1 Markets' use of the bank's balance sheet, also affect the bank's market risk.
Market risk is managed through limits for investments in shares, bonds and positions in the fixed income and currency markets. The group's strategy for market risk lays the basis for management reporting, control and follow-up of compliance with limits and guidelines.
The group defines limits on exposure to market risk with a basis in stress tests employed in Finanstilsynet's (Financial Supervisory Authority of Norway) models. Limits are reviewed at least once a year and adopted yearly by the bank's board of directors. Compliance with the limits is monitored by Risk Management, and exposures relative to the adopted limits are reported monthly.
Interest rate risk is the risk of loss due to changes in interest rates in financial markets. The risk on all interest rate positions can be viewed in terms of the change in value of interest rate instruments resulting from a rate change of 1 percentage point across the entire interest rate curve on all balance sheet items. The group utilises analyses showing the effect of this change for various maturity bands, with separate limits applying to interest rate exposure within each maturity band and across all maturity bands as a whole, including EVE and NII for interest rate risk in the banking book. Interest rate lock-ins on the group's instruments are essentially short, and the group's interest rate risk is low to moderate.
Spread risk is the risk of loss as a result of changes in market value/fair value of bonds due to general changes in credit spreads. The bond portfolio is managed based on an evaluation of the individual issuers. In addition, the bank has a separate limit for overall spread risk and for the business lines. The bank calculates spread risk based on Finanstilsynet's module for market and credit risk. The loss potential for the individual credit exposure is calculated with a basis in rating and duration.
Exchange rate risk is the risk of loss resulting from exchange rate movements. The group measures exchange rate risk on the basis of net positions in the various currencies. Limits on exchange rate risk are expressed in limits for the maximum aggregate foreign exchange position in individual currencies.
Equity risk is the risk of loss on positions as a result of changes in share prices. Limits are set for the various portfolios as well as limits for total equity risk. Shares in subsidiaries and shares forming part of a consolidated or strategic assessment are not included.
Liquidity risk is the risk that the group will be unable to refinance its debt or unable to finance increases in its assets.
The bank's most important source of finance is customer deposits. At end-2023 the group's ratio of deposits to loans was 56 per cent, including loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, compared with 58 per cent at end-2022 (group figures).
The bank reduces its liquidity risk by diversifying funding across a variety of markets, funding sources, maturities and instruments, and by employing long-term funding. Excessive concentration of maturities heightens vulnerability with regard to refinancing. The group seeks to mitigate such risk by applying defined limits.
The bank's finance division is responsible for the group's financing and liquidity management. Compliance with limits is monitored by Risk Management which reports monthly to the board of directors, but breached limits can be reported on an ongoing basis. The group manages its liquidity on an overall basis by assigning responsibility for funding both the bank and the subsidiaries to the finance division.
Governance is based in the group's overall liquidity strategy which is reviewed and adopted by the board at least once each year. The liquidity strategy reflects the group's moderate risk profile. As a part of the strategy, emergency plans have been drawn up both for the group and the SpareBank 1 Alliance to handle the liquidity situation in periods of turbulent capital markets. These take into account periods of both bank-specific and system-related crisis scenarios as well as a combination of the two.
The bank shall have a holding of liquid assets sufficient to cover a minimum of 12 months' ordinary operation without access to external funding and to withstand a house price fall of 30 per cent. The bank shall in addition have an adequate liquidity buffer consisting of assets that meet the LCR requirements, and which in volume at all times ensures that the bank is above the minimum requirement. Access to funding has been satisfactory in 2023.
Government requirements and investor's preferences will pull in the direction of green investments ahead. The group has issued green bonds worth NOK 22.46bn and its objective is to increase the share of loans that qualify for green bonds.
The group's liquidity situation as of 31 December 2023 is considered satisfactory.
Operational risk can be defined as the risk of loss resulting from:
Operational risk is a risk category that captures the great majority of costs associated with quality lapses in the group's current activity.
Management of operational risk has acquired increased importance in the financial industry in recent years. Contributory factors are internationalisation, strong technological development and steadily growing demands from customers, public authorities and other interest groups. Many substantial loss events in the international financial industry have originated in failures in this risk area.
Identification, management and control of operational risk are an integral part of managerial responsibility at all levels of SpareBank 1 SMN. Managers' most important aids in this work are professional insight and leadership skills along with action plans, control procedures and good follow-up systems. A systematic programme of risk assessments also contributes to increased knowledge and awareness of current needs for improvement in one's own unit. Any weaknesses and improvements are reported to higher levels in the organisation.
SpareBank 1 SMN attaches importance to authorisation structures, good descriptions of procedures and clear definition of responsibilities in supply contracts between the respective divisions as elements in a framework for handling operational risk.
The management views the undertaking's IT systems as central to operations, to accounting for and to the reporting of executed transactions, as well as to providing a basis for important estimates and calculations. The IT systems are mainly standardised, and their management and operation are largely outsourced to service suppliers.
Process and risk analyses are carried out in all material areas of activity in the bank. In these analyses a risk assessment is made at process level to obtain an overview of the largest operational risks related to the bank's business and support processes.
Upon the introduction of new products, services, systems or processes a risk assessment and quality assurance are undertaken. A number of the bank's specialist areas are involved in this process. They include risk management, compliance, legal affairs, data protection officer, AML and information security. This risk assessment contributes to keeping operational risk related to new products, services, systems and processes to an acceptable level.
The bank uses a Governance, Risk and Compliance (GRC) system as a tool to improve the monitoring of risk, events and areas for improvement. An important area is event registration where these are employed for learning and improvement purposes. A structured process has been established involving follow-up of events with the responsible areas. Personnel with quality responsibilities and specialist responsibilities are involved to identify the need for measures such as process improvements, procedural changes and training needs. The system is also an important tool for registering and following up on areas for improvement that are identified by controls performed by the first and second line, as well as areas for improvement pointed out in reviews by the internal auditor.
Operational losses are reported periodically to the board of directors. The board of directors receives each year from the internal audit and the statutory auditor an independent assessment of the group's risk and of whether the internal control functions in an appropriate and adequate manner. The board of directors considers operational risk in the undertaking to be moderate, including the risk related to the accounting and reporting process.
For further information see the bank's Pillar 3 reporting which is available at https://www.sparebank1.no/nb/smn/om-oss/investor/finansiellinfo/kapitaldekning.html and the following notes:
Note 12: Maximum credit risk exposure Note 13: Credit quality per class of financial assets Note 14: Market risk related to interest rate risk Note 15: Market risk related to currency exposure
| 31 Dec 22 31 Dec 23 Loans and advances to credit institutions (NOK million) 31 Dec 23 31 Dec 22 15,280 14,191 Loans and advances without agreed maturity or notice of withdrawal 3,696 4,971 6,692 5,050 Loans and advances with agreed maturity or notice of withdrawal 5,050 6,692 21,972 19,241 Total 8,746 11,663 Specification of loans and receivables on key currencies 15 14 CAD 14 15 22 18 CHF 18 22 3,069 1,735 EUR 1,735 3,069 335 305 GBP 305 335 14 3 JPY 3 14 18,338 17,062 NOK 6,567 8,029 13 3 SEK 3 13 141 74 USD 74 141 25 26 Other 26 25 21,972 19,241 Total 8,746 11,663 2.3 % 4.5 % Average rate credit institutions 3.6 % 2.8 % 31 Dec 22 31 Dec 23 Deposits from credit institutions (NOK million) 31 Dec 23 31 Dec 22 11,225 11,028 Deposits without agreed maturity or notice of withdrawal 11,028 11,225 3,411 2,132 Deposits with agreed maturity or notice of withdrawal 2,132 3,411 14,636 13,160 Total 13,160 14,636 Specification of deposits on key currencies 1,289 621 EUR 621 1,289 - 14 GBP 14 - 15 1 JPY 1 15 13,330 12,503 NOK 12,503 13,330 0 15 SEK 15 0 1 0 USD 0 1 0 6 Other 6 0 14,636 13,160 Total 13,160 14,636 1.3 % 3.2 % Average rate credit institutions 3.2 % 1.3 % 31 Dec 22 31 Dec 23 Other commitments to credit institutions (NOK million) 31 Dec 23 31 Dec 22 0 2,304 Unutilised credits 2,304 0 55 20 Financial guarantees 20 55 55 2,324 Total 2,324 55 |
Parent Bank | Group | ||
|---|---|---|---|---|
Deposits from and loans to credit institutions with mainly floating interest.
The average interest rate is calculated based on the interest income/expense of the holding accounts' average balance for the given year. This is, however, limited to holdings in NOK denominated accounts.
Loans held in "hold to collect" business model are measured at amortised cost. Amortised cost is acquisition cost less repayments of principal, plus or minus cumulative amortisation resulting from the effective interest rate method, with deductions for loss provisions. The effective interest rate is the interest rate which precisely discounts estimated future cash in- or out-payments over the financial instrument' s expected lifetime.
The Bank sells only parts of the loans qualified for transfer to SpareBank 1 Boligkreditt. Loans included in business models (portfolios) with loans qualifying for transfer are therefore held both to collect cash flows and for sales. The Bank therefore classify all residential mortgages at fair value over other comprehensive income. Fair value on such loans at initial recognition are measured at the transaction price, without reduction for 12 month expected credit loss.
Fixed interest loans to customers are recognised at fair value. Gains and losses due to changes in fair value are recognised in the income statement as fair value changes. Accrued interest and premiums/discounts are recognised as interest. Interest rate risk on fixed interest loans is managed through interest rate swaps which are recognised at fair value. It is the group's view that recognising fixed interest loans at fair value provides more relevant information on carrying values.
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 (NOK million) | 31 Dec 2023 | 31 Dec 2022 | ||
| 140,549 | 157,240 Gross Loans | 169,862 | 152,629 | ||
| 999 | 776 Write-downs for expected credit losses | 907 | 1,081 | ||
| 139,550 | 156,464 Net loans to and advances to customers | 168,955 | 151,549 | ||
| Additional information | |||||
| 56,876 | 64,719 Loans sold to SpareBank 1 Boligkreditt | 64,719 | 56,876 | ||
| 718 | 894 - Of which loans to employees | 1,609 | 1,349 | ||
| 1,739 | 1,749 Loans sold to SpareBank 1 Næringskreditt | 1,749 | 1,739 | ||
| 78 | 102 Subordinated loan capital other financial institutions | 0 | 0 | ||
| 1,394 | 2,000 Loans to employees 1) | 3,250 | 2,450 |
1) Interest rate subsidies on loans to employees are included in net interest income. The lending rate for employees is 75 per cent of the best mortgage rate for other customers.
| Parent Bank | Group | ||
|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 Loans and commitments specified by type (NOK million) |
31 Dec 2023 | 31 Dec 2022 |
| Gross loans and advances | |||
| - | - Financial lease | 3,788 | 3,728 |
| 12,236 | 13,891 Bank overdraft and operating credit | 13,891 | 12,236 |
| 3,825 | 4,211 Construction loans | 4,211 | 3,825 |
| 124,488 | 139,138 Amortizing loan | 147,971 | 132,841 |
| 140,549 | 157,240 Total gross loans to and receivables from customers |
169,862 | 152,629 |
| Other commitments | |||
| 6,067 | 4,946 Financial guarantees, of which: | 4,946 | 6,067 |
| 1,493 | 979 Payment guarantees | 979 | 1,493 |
| 1,177 | 1,341 Performance guarantees | 1,341 | 1,177 |
| 712 | 670 Loan guarantees | 670 | 712 |
| 62 | 79 Guarantees for taxes | 79 | 62 |
| 2,624 | 1,877 Other guarantee commitments | 1,877 | 2,624 |
| 1,047 | 995 Unutilised guarantee commitments | 995 | 1,047 |
| 12,143 | 12,660 Unutilised credits | 12,883 | 12,459 |
| 4,745 | 7,629 Loans approvals (not discounted) 1) | 7,817 | 4,950 |
| 5 | 10 Documentary credits | 10 | 5 |
| 24,007 | 26,240 Total other commitments | 26,652 | 24,527 |
| 164,556 | 183,481 Total loans and commitments | 196,514 | 177,157 |
1) The increase in approved loan commitments is due to financing certificates, which previously have not been included due to error. History has not been received.
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Total loans | Total loans | |||||||
| Gross | Other | and | Gross | Other | and | |||
| Parent Bank (NOK million) | loans | commitments | commitments | loans | commitments | commitments | ||
| Wage earners | 87,992 | 9,895 | 97,887 | 77,965 | 7,273 | 85,239 | ||
| Public administration | 2 | 643 | 645 | 1 | 692 | 694 | ||
| Agriculture and forestry | 12,021 | 1,016 | 13,037 | 10,707 | 955 | 11,662 | ||
| Fisheries and hunting | 5,459 | 756 | 6,215 | 7,047 | 902 | 7,949 | ||
| Sea farming industries | 2,218 | 1,806 | 4,024 | 2,324 | 1,145 | 3,469 | ||
| Manufacturing | 3,170 | 2,245 | 5,415 | 2,563 | 2,201 | 4,765 | ||
| Construction, power and water supply | 6,111 | 2,251 | 8,362 | 4,370 | 2,741 | 7,111 | ||
| Retail trade, hotels and restaurants | 2,845 | 1,597 | 4,442 | 2,976 | 1,719 | 4,695 | ||
| Maritime sector and offshore | 6,030 | 1,574 | 7,604 | 5,382 | 548 | 5,929 | ||
| Property management | 19,539 | 1,561 | 21,101 | 16,983 | 2,433 | 19,416 | ||
| Business services | 4,239 | 910 | 5,149 | 3,561 | 860 | 4,421 | ||
| Transport and other services provision | 5,396 | 1,043 | 6,438 | 5,327 | 1,551 | 6,878 | ||
| Other sectors | 2,220 | 943 | 3,163 | 1,343 | 986 | 2,329 | ||
| Total | 157,240 | 26,240 | 183,481 | 140,549 | 24,007 | 164,556 |
| 31 Dec 2023 | 31 Dec 2022 | |||||
|---|---|---|---|---|---|---|
| Total loans | Total loans | |||||
| Gross | Other | and | Gross | Other | and | |
| Group (NOK million) | loans | commitments | commitments | loans | commitments | commitments |
| Wage earners | 95,058 | 10,123 | 105,181 | 84,957 | 7,572 | 92,529 |
| Public administration | 39 | 644 | 683 | 35 | 694 | 729 |
| Agriculture and forestry | 12,489 | 1,031 | 13,520 | 11,140 | 974 | 12,114 |
| Fisheries and hunting | 5,488 | 757 | 6,245 | 7,075 | 904 | 7,979 |
| Sea farming industries | 2,473 | 1,814 | 4,287 | 2,656 | 1,159 | 3,814 |
| Manufacturing | 3,757 | 2,264 | 6,021 | 3,150 | 2,226 | 5,376 |
| Construction, power and water supply | 7,353 | 2,291 | 9,644 | 5,526 | 2,790 | 8,317 |
| Retail trade, hotels and restaurants | 3,777 | 1,627 | 5,404 | 3,632 | 1,747 | 5,380 |
| Maritime sector and offshore | 6,030 | 1,574 | 7,604 | 5,382 | 548 | 5,929 |
| Property management | 19,651 | 1,565 | 21,216 | 17,101 | 2,438 | 19,538 |
| Business services | 5,148 | 941 | 6,088 | 4,312 | 893 | 5,206 |
| Transport and other services provision | 6,459 | 1,077 | 7,536 | 6,375 | 1,595 | 7,970 |
| Other sectors | 2,140 | 943 | 3,084 | 1,288 | 987 | 2,275 |
| Total | 169,862 | 26,652 | 196,514 | 152,629 | 24,527 | 177,157 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank (NOK million) | Gross loans |
Other commitments |
Total loans and commitments |
Gross loans |
Other commitments |
Total loans and commitments |
||
| Trøndelag | 95,331 | 15,593 | 110,924 | 91,519 | 14,931 | 106,449 | ||
| Møre og Romsdal | 37,194 | 6,441 | 43,635 | 29,612 | 5,341 | 34,953 | ||
| Nordland | 1,109 | 343 | 1,453 | 1,056 | 44 | 1,101 | ||
| Oslo | 9,794 | 2,061 | 11,855 | 7,087 | 2,051 | 9,138 | ||
| Rest of Norway | 13,483 | 1,762 | 15,244 | 10,935 | 1,609 | 12,543 | ||
| Abroad | 329 | 40 | 369 | 340 | 31 | 371 | ||
| Total | 157,240 | 26,240 | 183,481 | 140,549 | 24,007 | 164,556 |
| 31 Dec 2023 | ||||||
|---|---|---|---|---|---|---|
| Total loans | Total loans | |||||
| Gross | Other | and | Gross | Other | and | |
| Group (NOK million) | loans | commitments | commitments | loans | commitments | commitments |
| Trøndelag | 99,368 | 15,727 | 115,096 | 95,640 | 15,111 | 110,751 |
| Møre og Romsdal | 40,038 | 6,533 | 46,571 | 31,946 | 5,441 | 37,387 |
| Nordland | 1,374 | 352 | 1,726 | 1,317 | 55 | 1,372 |
| Oslo | 10,211 | 2,074 | 12,285 | 7,512 | 2,069 | 9,581 |
| Rest of Norway | 18,541 | 1,925 | 20,466 | 15,875 | 1,820 | 17,695 |
| Abroad | 329 | 40 | 369 | 340 | 31 | 371 |
| Total | 169,862 | 26,652 | 196,514 | 152,629 | 24,527 | 177,157 |
| 31 Dec 2023 | ||||||
|---|---|---|---|---|---|---|
| Total loans | Total loans | |||||
| Gross | Other | and | Gross | Other | and | |
| (NOK million) | loans | commitments | commitments | loans | commitments | commitments |
| Trøndelag | 55,192 | 2,357 | 57,549 | 36,923 | 1,676 | 38,599 |
| Møre og Romsdal | 7,392 | 7 | 7,399 | 8,631 | 384 | 9,015 |
| Nordland | 1,349 | 7 | 1,355 | 341 | 8 | 349 |
| Oslo | 457 | 0 | 457 | 3,248 | 57 | 3,304 |
| Rest of Norway | 274 | 0 | 274 | 7,693 | 104 | 7,796 |
| Abroad | 53 | 0 | 53 | 40 | 0 | 40 |
| Total | 64,717 | 2,371 | 67,088 | 56,876 | 2,229 | 59,104 |
| 31 Dec 2023 | 31 Dec 2022 | ||||||
|---|---|---|---|---|---|---|---|
| Total loans | Total loans | ||||||
| Gross | Other | and | Gross | Other | and | ||
| (NOK million) | loans | commitments | commitments | loans | commitments | commitments | |
| Trøndelag | 1,562 | - | 1,562 | 1,430 | - | 1,430 | |
| Møre og Romsdal | 94 | - | 94 | 53 | - | 53 | |
| Nordland | 93 | - | 93 | - | - | - | |
| Oslo | - | - | - | 256 | - | 256 | |
| Rest of Norway | - | - | - | - | - | - | |
| Abroad | - | - | - | - | - | - | |
| Total | 1,749 | - | 1,749 | 1,739 | - | 1,739 |
| Group (NOK million) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Gross advances related to financial leasing | ||
| - Maturity less than 1 year | 140 | 113 |
| - Maturity more than 1 year and less than 5 years | 2,418 | 2,377 |
| - Maturity more than 5 years | 1,162 | 1,169 |
| Total gross claims | 3,719 | 3,658 |
| Received income related to financial leasing, not yet earned | 103 | 105 |
| Net investments related to financial leasing | 3,788 | 3,728 |
| Net investments in financial leasing can be broken down as follows: | ||
| - Maturity less than 1 year | 153 | 127 |
| - Maturity more than 1 year and less than 5 years | 2,491 | 2,450 |
| - Maturity more than 5 years | 1,145 | 1,151 |
| Total net claims | 3,788 | 3,728 |
The Bank calculates default probabilities for all customers in the loan portfolio at the loan approval date. This is done on the basis of key figures on earnings, financial strength and behaviour. Default probability is used as a basis for risk classification of the customer. Further, risk classification is used to assign each customer to a risk group. See note 11 on credit risk exposure for each internal risk rating.
Customers are rescored in the Bank's portfolio system on a monthly basis.
Other commitments include guarantees, unutilised credit lines and letters of credit.
Exposures are monitored with a basis in the exposure's size, risk and migration. Risk pricing of business exposures is done with a basis in expected loss and economic capital required for each exposure.
The Bank uses macro-based stress tests to estimate write-downs required as a result of objective events that were not reflected in portfolio quality at the time of measurement.
Risk group default and written down consist of customers default by over 90 days and or objetive evidence of impairment leading to reduced cash flows from the customer. See note 10 Losses on loans and guarantees
| Parent Bank 31 Dec 23 (NOK million) | Lowest risk | Low risk | Medium risk | High risk | Highest risk | Default and credit impaired |
Total |
|---|---|---|---|---|---|---|---|
| Gross Loans | |||||||
| Fair value through OCI | 79,502 | 7,751 | 2,854 | 647 | 1,098 | 526 | 92,377 |
| Stage 1 | 79,314 | 6,791 | 1,147 | 187 | 236 | - | 87,675 |
| Stage 2 | 188 | 960 | 1,707 | 459 | 862 | - | 4,175 |
| Stage 3 | - | - | - | - | - | 526 | 526 |
| Amortised cost | 27,706 | 12,092 | 15,553 | 1,498 | 1,069 | 1,363 | 59,281 |
| Stage 1 | 27,445 | 9,856 | 11,834 | 886 | 532 | - | 50,553 |
| Stage 2 | 261 | 2,236 | 3,719 | 613 | 536 | - | 7,366 |
| Stage 3 | - | - | - | - | - | 1,363 | 1,363 |
| Fair value through Profit and Loss | 4,738 | 609 | 163 | 44 | 20 | 7 | 5,582 |
| Total Gross Loans | 111,946 | 20,452 | 18,570 | 2,189 | 2,186 | 1,897 | 157,240 |
| Other Commitments | 16,850 | 4,917 | 3,963 | 199 | 118 | 193 | 26,240 |
| Stage 1 | 16,209 | 4,585 | 3,080 | 67 | 35 | - | 23,976 |
| Stage 2 | 641 | 331 | 883 | 133 | 84 | - | 2,071 |
| Stage 3 | - | - | - | - | - | 193 | 193 |
| Total loans and other commitments | 128,796 | 25,369 | 22,533 | 2,389 | 2,305 | 2,090 | 183,481 |
| Parent Bank 31 Dec 22 (NOK million) | Lowest risk | Low risk | Medium risk | High risk | Highest risk | Default and credit impaired |
Total |
|---|---|---|---|---|---|---|---|
| Gross Loans | |||||||
| Fair value through OCI | 71,072 | 6,518 | 2,488 | 635 | 925 | 372 | 82,010 |
| Stage 1 | 70,927 | 5,671 | 963 | 229 | 188 | - | 77,978 |
| Stage 2 | 144 | 848 | 1,525 | 406 | 737 | - | 3,660 |
| Stage 3 | - | - | - | - | - | 372 | 372 |
| Amortised cost | 26,194 | 11,451 | 12,497 | 1,553 | 633 | 1,502 | 53,830 |
| Stage 1 | 24,784 | 10,085 | 10,195 | 913 | 167 | - | 46,144 |
| Stage 2 | 1,410 | 1,365 | 2,302 | 640 | 467 | - | 6,184 |
| Stage 3 | - | - | - | - | - | 1,502 | 1,502 |
| Fair value through Profit and Loss | 3,962 | 595 | 99 | 11 | 38 | 4 | 4,709 |
| Total Gross Loans | 101,227 | 18,564 | 15,083 | 2,200 | 1,597 | 1,878 | 140,549 |
| Other Commitments | 14,300 | 5,910 | 3,009 | 520 | 96 | 173 | 24,007 |
| Stage 1 | 14,238 | 5,771 | 2,555 | 75 | 24 | - | 22,663 |
| Stage 2 | 62 | 139 | 454 | 445 | 71 | - | 1,171 |
| Stage 3 | - | - | - | - | - | 173 | 173 |
| Total loans and other commitments | 115,527 | 24,473 | 18,093 | 2,719 | 1,693 | 2,051 | 164,556 |
| Neither default or credit impaired | |||||||
|---|---|---|---|---|---|---|---|
| Group 31 Dec 23 (NOK million) | Lowest risk | Low risk | Medium risk | High risk | Highest risk | Default and credit impaired |
Total |
| Gross Loans | |||||||
| Fair value through OCI | 79,502 | 7,751 | 2,854 | 647 | 1,098 | 526 | 92,377 |
| Stage 1 | 79,314 | 6,791 | 1,147 | 187 | 236 | - | 87,675 |
| Stage 2 | 188 | 960 | 1,707 | 459 | 862 | - | 4,175 |
| Stage 3 | - | - | - | - | - | 526 | 526 |
| Amortised cost | 28,043 | 14,748 | 22,971 | 2,853 | 1,833 | 1,557 | 72,004 |
| Stage 1 | 27,782 | 12,177 | 18,328 | 1,797 | 532 | - | 60,616 |
| Stage 2 | 261 | 2,571 | 4,642 | 1,056 | 1,301 | - | 9,832 |
| Stage 3 | - | - | - | - | - | 1,557 | 1,557 |
| Fair value through Profit and Loss | 4,636 | 609 | 163 | 44 | 20 | 7 | 5,480 |
| Total Gross Loans | 112,181 | 23,108 | 25,988 | 3,544 | 2,951 | 2,091 | 169,862 |
| Other Commitments | 16,850 | 4,917 | 4,374 | 199 | 118 | 193 | 26,652 |
| Stage 1 | 16,209 | 4,585 | 3,293 | 67 | 35 | - | 24,189 |
| Stage 2 | 641 | 331 | 1,081 | 133 | 84 | - | 2,270 |
| Stage 3 | - | - | - | - | - | 193 | 193 |
| Total loans and other commitments | 129,031 | 28,025 | 30,362 | 3,743 | 3,069 | 2,284 | 196,514 |
| Neither default or credit impaired | |||||||
|---|---|---|---|---|---|---|---|
| Group 31 Dec 22 (NOK million) | Lowest risk | Low risk | Medium risk | High risk | Highest risk | Default and credit impaired |
Total |
| Gross Loans | |||||||
| Fair value through OCI | 71,072 | 6,518 | 2,488 | 635 | 925 | 372 | 82,010 |
| Stage 1 | 70,927 | 5,671 | 963 | 229 | 188 | - | 77,978 |
| Stage 2 | 144 | 848 | 1,525 | 406 | 737 | - | 3,660 |
| Stage 3 | - | - | - | - | - | 372 | 372 |
| Amortised cost | 27,250 | 13,973 | 19,084 | 2,605 | 1,403 | 1,673 | 65,989 |
| Stage 1 | 25,840 | 12,598 | 16,471 | 1,535 | 167 | - | 56,611 |
| Stage 2 | 1,410 | 1,375 | 2,612 | 1,071 | 1,236 | - | 7,705 |
| Stage 3 | - | - | - | - | - | 1,673 | 1,673 |
| Fair value through Profit and Loss | 3,884 | 595 | 99 | 11 | 38 | 4 | 4,631 |
| Total Gross Loans | 102,206 | 21,086 | 21,670 | 3,252 | 2,366 | 2,049 | 152,629 |
| Other Commitments | 14,300 | 5,910 | 3,530 | 520 | 96 | 173 | 24,527 |
| Stage 1 | 14,238 | 5,771 | 2,827 | 75 | 24 | - | 22,934 |
| Stage 2 | 62 | 139 | 703 | 445 | 71 | - | 1,420 |
| Stage 3 | - | - | - | - | - | 173 | 173 |
| Total loans and other commitments | 116,505 | 26,996 | 25,200 | 3,772 | 2,462 | 2,222 | 177,157 |
| 31 Dec 2023 | 31 Dec 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (NOK million) | Gross loans |
Other commitments |
Total loans and commitments |
Gross loans |
Other commitments |
Total loans and commitments |
|||
| Lowest risk | 37,570 | 1,518 | 39,088 | 48,752 | 2,217 | 50,969 | |||
| Low risk | 13,153 | 597 | 13,750 | 6,261 | 7 | 6,268 | |||
| Medium risk | - | - | - | 1,259 | 4 | 1,263 | |||
| High risk | 3,960 | 81 | 4,042 | 327 | 0 | 327 | |||
| Highest risk | 7,619 | 143 | 7,762 | 220 | - | 220 | |||
| Default and written down | 2,414 | 32 | 2,446 | 58 | 0 | 58 | |||
| Total | 64,717 | 2,371 | 67,088 | 56,876 | 2,229 | 59,104 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| (NOK million) | Gross loans |
Other commitments |
Total loans and commitments |
Gross loans |
Other commitments |
Total loans and commitments |
||
| Lowest risk | 1,311 | - | 1,311 | 1,496 | - | 1,496 | ||
| Low risk | 188 | - | 188 | 147 | - | 147 | ||
| Medium risk | - | - | - | 96 | - | 96 | ||
| High risk | 250 | - | 250 | - | - | - | ||
| Highest risk | - | - | - | - | - | - | ||
| Default and written down | - | - | - | - | - | - | ||
| Total | 1,749 | - | 1,749 | 1,739 | - | 1,739 |
In its ordinary business the Bank undertakes transactions that result in the sale of financial assets. The Bank transfers such financial assets mainly through sales of customers' home mortgage loans to SpareBank 1 Boligkreditt or commercial property loans to SpareBank 1 Næringskreditt.
Payment received for loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt corresponds to book value and is deemed to equal the loans' fair value at the time of sale.
In accordance with the management agreement with the above mortgage companies, the Bank is responsible for management of the loans and maintains customer contact. The Bank receives payment in the form of commission for the obligations ensuing from management of the loans.
The above mortgage companies can sell the loans bought from the Bank, while the Bank's right to service the customers and receive commission continues to apply. Should the Bank be unable to service customers, its right to service and commission may lapse. The Bank may have the option to repurchase the loans under given conditions.
If the mortgage companies incur losses on purchased loans, they have a certain right to settle such loss against commissions from all banks that have sold the loans. Hence a limited residual involvement exists related to sold loans in the event of a possible limited settlement of loss against commission. However, this opportunity of settlement is not considered to be of such a nature as to alter the conclusion that the great majority of risk and advantages is transferred. The Bank's maximum exposure to loss is represented by the highest amount reimbursable under the agreements.
The Bank has considered the accounting implications such that great majority of risk and advantages related to the sold loans is transferred to the mortgage companies. This entails full derecognition of sold loans. The Bank recognises all right and obligations that are created or retained in connection with the sale separately as assets or liabilities.
SpareBank 1 Boligkreditt AS is owned by savings banks participating in the SpareBank 1 Alliance. The Bank has a stake of 23.85 per cent as of 31 December 2023 (22.62 per cent as of 31 December 2022). SpareBank 1 Boligkreditt AS acquires loans secured on dwellings and issues covered bonds within the applicable rules that were established in 2007. Loans sold to SpareBank 1 Boligkreditt are secured on dwellings at up to 75 per cent of property valuation. Sold loans are legally owned by SpareBank 1 Boligkreditt and the Bank has, over and above the right to be responsible for management and receipt of commission, and the right to take over written-down loans in whole or in part, no right to make use of the loans. The Bank is responsible for management of the sold loans and receives commission based on the net of the return on the loans that the Bank has sold and the mortgage company costs.
In 2023 mortgage loans were bought and sold to a net value of NOK 7.8bn (10.2bn in 2022) to SpareBank 1 Boligkreditt. In total, mortgage loans to SpareBank 1 Boligkreditt were derecognised in an amount of NOK 64.7bn at the end of the financial year (NOK 56.9bn in 2022).
SpareBank 1 SMN has, together with the other owners of SpareBank 1 Boligkreditt, entered an agreement for the establishment of a liquidity facility for SpareBank 1 Boligkreditt. Under this agreement the Banks undertake to purchase covered bonds issued by the mortgage company limited to the overall value of amounts falling due over the next 12 months at SpareBank 1 Boligkreditt.
The liability is limited to the mortgage company's obligation to redeem issued covered bonds after the company's own holding of liquidity at the due date is subtracted. Each owner is liable principally for its share of the need, subsidiarily for twice the primary liability under the same agreement. The bonds may be deposited in Norges Bank and therefore entail no significant increase in risk for the Bank. Under its liquidity strategy, SpareBank 1 Boligkreditt holds liquidity in compliance with the Net Stable Funding Ratio requirements. This liquidity reserve is taken into account in assessing the Banks' liability. Hence it is only in cases where the company no longer has sufficient liquidity to meet amounts falling due over the next 12 months that the Bank will report any exposure in this regard.
Together with the other owners of SpareBank 1 Boligkreditt, SpareBank 1 SMN has also entered an agreement to ensure that SpareBank 1 Boligkreditt has at all times a common equity Tier 1 capital ratio of at least 9 per cent. The shareholders are required to supply sufficient core capital within 3 months of receiving a written request to do so, unless other initiatives are taken to reduce the capital need.
The shareholders' undertaking to supply such core capital is on a pro rata rather than a solitary basis, and is based on each shareholder's pro rata portion of the shares of SpareBank 1 Boligkreditt. Each owner is liable principally for its share of the need, subsidiarily for twice the primary liability under the same agreement. At year-end the company has about 22.2per cent own funds, of which about 19.9 per cent is core capital. Viewed in light of the mortgage company's very low risk profile, the Bank considers it unlikely that capital will be called up under this agreement and has opted not to maintain reserves to that end.
SpareBank 1 Næringskreditt AS is owned by savings banks in the SpareBank 1 Alliance. The Bank has a stake of 14.80 per cent as at 31.12.2023 (16.30 per cent as at 31.12.2022). SpareBank 1 Næringskreditt AS acquires loans secured on dwellings and issues covered bonds within the applicable rules that were established in 2007. Loans sold to SpareBank 1 Næringskreditt are secured on commercial property at up to 60 per cent of property valuation. Sold loans are legally owned by SpareBank 1 Næringskreditt and the Bank has, over and above the right to be responsible for management and receipt of commission, and the right to take over written-down loans in whole or in part, no right to make use of the loans. The Bank is responsible for management of the sold loans and receives commission based on the net of the return on the loans that the Bank has sold and the mortgage company costs.
Commercial property loans sold to SpareBank 1 Næringskreditt were reduced by NOK 90m in 2023 (increased by NOK 337m in 2022). In total, mortgage loans to SpareBank 1 Næringskreditt were derecognised in an amount of NOK 1.6bn by the end of the financial year (NOK 1,7bn in 2022).
As described above with regard to SpareBank 1 Boligkreditt, a similar agreement has been entered with SpareBank 1 Næringskreditt.
An agreement to secure a core capital ratio of at least 9 per cent at SpareBank 1 Næringskreditt has been similarly entered into. See the above account concerning SpareBank 1 Boligkreditt.
Loan loss provisions are recognised based on expected credit loss (ECL). The general model for provisions for loss of financial assets in IFRS 9 applies to both financial assets measured at amortised cost and to financial assets at fair value with changes in value through profit or loss, which are not impaired when purchased or issued. In addition, unused credit, loan commitments and financial guarantee contracts that are not measured at fair value through profit or loss are also included.
Measurement of the provision for expected loss depends on whether credit risk has increased significantly since first- time recognition. Upon first-time recognition, and when credit risk has not increased significantly since first-time recognition, provision shall be made for expected loss occuring due to defaults that occur within 12 months.
If credit risk has risen significantly, provision shall be made for expected loss across the entire life. Loss estimates are prepared quarterly, and build on data in the data warehouse which has historical accounting and customer data for the entire credit portfolio. The bank uses three macroeconomic scenarios to take into account non-linear aspects of expected losses. The various scenarios are used to adjust relevant parameters for calculating expected losses, and a probability-weighted average of expected losses under the respective scenarios is recognised as a loss
Loss estimates are computed based on 12-month and lifelong probability of default (PD), loss given default (LGD) and exposure at default (EAD). The data warehouse contains historical data for observed PD and observed LGD. This forms the basis for estimating future values for PD and LGD. In keeping with IFRS 9 the bank groups its loans in three stages.
This is the starting point for all financial assets covered by the general loss model. All assets that do not have significantly higher credit risk than at first-time recognition receive a loss provision corresponding to 12 months' expected loss. All assets that are not transferred to stage 2 or 3 reside in this category.
Stage 2 of the loss model encompasses assets that show a significant increase in credit risk since first-time recognition, but where objective evidence of loss is not present. For these assets a provision for expected loss over the entire lifetime is to be made. In this group we find accounts with a significant degree of credit deterioration, but which at the balance sheet date belong to customers classified as performing. As regards delineation against stage 1, the bank defines 'significant degree of credit deterioration' by taking a basis in whether the exposure's calculated probability of default shows a significant increase. SpareBank 1 SMN has decided to utilise both absolute and relative changes in PD as criteria for transfer to stage 2. The most important factor for a significant change in credit risk is the quantitative change in PD on the period end compared to the PD at first time recognition. A change in PD by more than 150 per cent is considered to be a significant change in credit risk. The change will have to be over 0.6 percentage points. In addition, customers with payments 30 days past due will be transferred to stage 2. A qualitative assessment is also done when engagements have been put on watch list or given forbearance.
The thresholds for movement between Stage 1 and Stage 2 are symmetrical. After a financial asset has transferred to Stage 2, if its credit risk is no longer considered to have significantly increased relative to its initial recognition, the financial asset will move back to Stage 1.
Stage 3 of the loss model encompasses assets that show a significant increase in credit risk since loan approval and where there is objective evidence of loss at the balance sheet date. For these assets a provision shall be made for expected loss over the entire lifetime. These are assets which under previous rules were defined as defaulted and written down.
Impairment must be a result of one or more events occurring after first-time recognition (a loss event), and it must be possible to measure the result of the loss event(s) reliably. Objective evidence of impairment of a financial asset includes observable data which come to the group's knowledge on the following loss events:
The group assesses first whether individual objective evidence exists that individually significant financial assets have suffered impairment. Where there is objective evidence of impairment, the size of the impairment is measured as the difference between the asset' s carrying value and the present value of estimated future cash flows (excluding future credit losses that have not been incurred),
discounted at the financial asset's original effective interest rate. The carrying value of the asset is reduced through a provision account and the loss is recognised in the income statement.
Default is defined in two categories: 1) payment default or 2) default based on manual default marking.
1) Payment default is defined as material payment arrears or overdrafts of more than 90 days' duration. Threshold values for material arrears or overdrafts are set out in the Norwegian CRR/CRD IV regulations.
2) Default resulting from manual default marking is based to a larger degree on individual credit assessments, and to a lesser degree on automatic mechanisms. Events included in this category are provision for loss on a customer loan, bankruptcy/debt restructuring, forbearance assessments, deferment of interest and instalment payments for more than 180 days, or other indications suggesting considerable doubt as to whether the borrower will perform his obligations.
The new default definition entails the introduction of a 'waiting period' during which borrowers are categorised as still in default after the default has been rectified. The waiting period is three months or 12 months depending on the underlying cause of the default.
Furthermore, rules on default marking at group level are introduced whereby corporate customers in default to a group company (e.g. SpareBank 1 SMN Finans Midt-Norge) will also be considered to be in default to the bank. For personal customers, threshold values are specified for default contagion in the group. Where a defaulted exposure exceeds 20 per cent of total exposure, the exposure will be considered to be in default at group level.
Write-down for actual losses (derecognition of book value) are made when the bank has no reasonable expectations to recover the asset in its whole or partially. Criteria for write-down are as follows:
The commitment will normally be placed on long-term monitoring in case the debtor should again become solvent and suable.
Financial guarantees are contracts that require the bank to reimburse the holder for a loss due to a specific debtor failure to pay in accordance with the terms is classified as issued financial guarantees. On initial recognition of issued financial guarantees, the guarantees are recognised in the balance sheet at the received consideration for the guarantee. Subsequent measurement assesses issued financials
guarantees to the highest amount of the loss provision and the amount that was recognised at initial recognition less any cumulative income recognised in the income statement. When issuing financial guarantees, the consideration for the guarantee is recognised under "Other liabilities" in the balance sheet. Revenue from issued financial guarantees and costs related to purchased financial guarantees is amortised over the duration of the instrument and presented as "Commission income" or "Commission expenses". Changes in expected credit losses are included in the line «Losses on loans and guarantees» in the income statement.
Expected credit losses are calculated for loan commitments and presented as "Other liabilities" in the balance sheet. Changes in the provision for expected losses are presented in the line «Losses on loans and guarantees» in the income statement. For instruments that have both a drawn portion and an unutilised limit, expected credit losses are distributed pro-rata between provisions for loan losses and provisions in the balance sheet based on the relative proportion of exposure.
| 2023 | 2022 | |||||
|---|---|---|---|---|---|---|
| Parent Bank (NOKm) | RM | CM | Total | RM | CM | Total |
| Change in provision for expected credit losses | 4 | -59 | -55 | 29 | -97 | -68 |
| Actual loan losses on commitments exceeding provisions made | 11 | 146 | 157 | 7 | 38 | 45 |
| Recoveries on commitments previously written-off | -21 | -153 | -174 | -7 | -7 | -14 |
| Losses for the period on loans and guarantees | -6 | -66 | -72 | 29 | -66 | -37 |
| 2023 | 2022 | |||||
| Group (NOKm) | RM | CM | Total | RM | CM | Total |
| Change in provision for expected credit losses | 1 | -7 | -6 | 38 | -86 | -48 |
| Actual loan losses on commitments exceeding provisions made | 47 | 168 | 215 | 13 | 45 | 58 |
| Recoveries on commitments previously written-off | -40 | -155 | -195 | -7 | -10 | -17 |
| Losses for the period on loans and guarantees | 8 | 6 | 14 | 44 | -51 | -7 |
In 2023, the Group has written off NOK 296 million, which are still subject to enforcement activities, the corresponding figure for 2022 was NOK 193 million.
| Merge Søre |
Change in | Net write offs |
|||
|---|---|---|---|---|---|
| Parent Bank (NOKm) | 1 Jan 23 | Sunnmøre | provision | /recoveries | 31 Dec 23 |
| Loans as amortised cost- CM | 921 | 32 | -101 | -181 | 671 |
| Loans as amortised cost- RM | 35 | 11 | 2 | -5 | 43 |
| Loans at fair value over OCI- RM | 147 | - | -10 | - | 137 |
| Loans at fair value over OCI- CM | 2 | - | 11 | - | 13 |
| Provision for expected credit losses on loans and guarantees | 1,106 | 43 | -99 | -186 | 864 |
| Presented as | |||||
| Provision for loan losses | 999 | 41 | -77 | -186 | 776 |
| Other debt- provisons | 67 | 2 | -16 | - | 53 |
| Other comprehensive income - fair value adjustment | 40 | - | -5 | - | 36 |
| Change in | Net write offs |
|||
|---|---|---|---|---|
| Parent Bank (NOKm) | 1 Jan 22 | provision | /recoveries | 31 Dec 22 |
| Loans as amortised cost- CM | 1,298 | -98 | -278 | 921 |
| Loans as amortised cost- RM | 31 | 10 | -5 | 35 |
| Loans at fair value over OCI- RM | 128 | 19 | - | 147 |
| Loans at fair value over OCI- CM | 1 | 1 | - | 2 |
| Provision for expected credit losses on loans and guarantees | 1,458 | -68 | -284 | 1,106 |
| Presented as | ||||
| Provision for loan losses | 1,348 | -65 | -284 | 999 |
| Other debt- provisons | 79 | -12 | - | 67 |
| Other comprehensive income - fair value adjustment | 31 | 9 | - | 40 |
| Merge | Net write | ||||
|---|---|---|---|---|---|
| Søre | Change in | offs | 31 Dec | ||
| Group (NOKm) | 1 Jan 2023 | Sunnmøre | provision | /recoveries | 2023 |
| Loans as amortised cost- CM | 976 | 32 | -44 | -181 | 777 |
| Loans as amortised cost- RM | 63 | 11 | -1 | -5 | 68 |
| Loans at fair value over OCI- RM | 147 | - | -10 | - | 137 |
| Loans at fair value over OCI- CM | 2 | - | 11 | - | 13 |
| Provision for expected credit losses on loans and guarantees | 1,188 | 43 | -44 | -186 | 995 |
| Presented as | |||||
| Provision for loan losses | 1,081 | 41 | -23 | -186 | 907 |
| Other debt- provisons | 67 | 2 | -16 | - | 53 |
| Other comprehensive income - fair value adjustment | 40 | - | -5 | - | 36 |
| Change in | Net write offs |
|||
|---|---|---|---|---|
| Group (NOKm) | 1 Jan 2022 | provision | /recoveries | 31 Dec 2022 |
| Loans as amortised cost- CM | 1,343 | -88 | -280 | 976 |
| Loans as amortised cost- RM | 49 | 19 | -5 | 63 |
| Loans at fair value over OCI- RM | 128 | 19 | - | 147 |
| Loans at fair value over OCI- CM | 1 | 1 | - | 2 |
| Provision for expected credit losses on loans and guarantees | 1,520 | -48 | -285 | 1,188 |
| Presented as | ||||
| Provision for loan losses | 1,410 | -45 | -285 | 1,081 |
| Other debt- provisons | 79 | -12 | - | 67 |
| Other comprehensive income - fair value adjustment | 31 | 9 | - | 40 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank (NOKm) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Retail market | ||||||||
| Opening balance | 46 | 93 | 42 | 181 | 39 | 82 | 36 | 156 |
| Transfer to (from) stage 1 | 18 | -18 | -0 | - | 18 | -18 | -0 | - |
| Transfer to (from) stage 2 | -3 | 3 | -0 | - | -2 | 2 | -0 | - |
| Transfer to (from) stage 3 | -0 | -8 | 9 | - | -0 | -6 | 6 | - |
| Net remeasurement of loss allowances | -26 | 19 | -5 | -12 | -24 | 20 | 7 | 4 |
| Originations or purchases | 15 | 20 | 3 | 37 | 17 | 24 | 4 | 45 |
| Derecognitions | -14 | -31 | -4 | -49 | -12 | -24 | -3 | -39 |
| Changes due to changed input assumptions | 3 | 16 | 8 | 27 | 9 | 13 | -2 | 20 |
| Actual loan losses | 0 | 0 | -5 | -5 | - | - | -5 | -5 |
| Closing balance | 38 | 95 | 45 | 179 | 46 | 93 | 42 | 181 |
| Corporate Market | ||||||||
| Opening balance | 138 | 298 | 421 | 858 | 84 | 268 | 871 | 1,223 |
| Transfer to (from) stage 1 | 59 | -59 | -0 | - | 75 | -74 | -1 | - |
| Transfer to (from) stage 2 | -14 | 24 | -10 | - | -5 | 97 | -92 | - |
| Transfer to (from) stage 3 | -1 | -5 | 6 | - | -1 | -3 | 4 | - |
| Net remeasurement of loss allowances | -58 | 11 | 9 | -38 | -67 | -35 | -66 | -168 |
| Originations or purchases | 90 | 35 | 37 | 163 | 49 | 34 | 4 | 87 |
| Derecognitions | -52 | -68 | -15 | -136 | -33 | -31 | -24 | -88 |
| Changes due to changed input assumptions | -2 | 31 | -62 | -33 | 37 | 41 | 4 | 83 |
| Actual loan losses | - | - | -181 | -181 | - | - | -278 | -278 |
| Closing balance | 160 | 267 | 205 | 633 | 138 | 298 | 421 | 858 |
| Total accrual for loan losses | 198 | 363 | 251 | 812 | 184 | 391 | 463 | 1,039 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Group (NOKm) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Retail market | ||||||||
| Opening balance | 55 | 107 | 47 | 209 | 45 | 89 | 40 | 174 |
| Transfer to (from) stage 1 | 21 | -20 | -1 | - | 20 | -20 | -0 | - |
| Transfer to (from) stage 2 | -4 | 5 | -1 | - | -3 | 3 | -1 | - |
| Transfer to (from) stage 3 | -1 | -10 | 11 | - | -0 | -7 | 7 | - |
| Net remeasurement of loss allowances | -28 | 25 | -6 | -9 | -24 | 25 | 8 | 9 |
| Originations or purchases | 19 | 25 | 3 | 47 | 22 | 30 | 4 | 56 |
| Derecognitions | -17 | -34 | -7 | -58 | -13 | -26 | -4 | -43 |
| Changes due to changed input assumptions | -0 | 14 | 7 | 21 | 8 | 13 | -3 | 18 |
| Actual loan losses | - | - | -5 | -5 | - | - | -5 | -5 |
| Closing balance | 46 | 111 | 46 | 204 | 55 | 107 | 47 | 209 |
| Corporate Market | ||||||||
| Opening balance | 151 | 311 | 450 | 912 | 94 | 278 | 896 | 1,268 |
| Transfer to (from) stage 1 | 63 | -63 | -0 | - | 77 | -76 | -1 | - |
| Transfer to (from) stage 2 | -18 | 28 | -10 | - | -7 | 99 | -92 | - |
| Transfer to (from) stage 3 | -1 | -6 | 7 | - | -2 | -3 | 4 | - |
| Net remeasurement of loss allowances | -59 | 22 | 60 | 23 | -68 | -30 | -47 | -145 |
| Originations or purchases | 96 | 46 | 38 | 181 | 55 | 35 | 5 | 95 |
| Derecognitions | -54 | -70 | -16 | -140 | -34 | -33 | -26 | -93 |
| Changes due to changed input assumptions | -5 | 29 | -75 | -51 | 35 | 40 | -8 | 67 |
| Actual loan losses | - | - | -186 | -186 | - | - | -280 | -280 |
| Closing balance | 172 | 299 | 268 | 739 | 151 | 311 | 450 | 912 |
| Total accrual for loan losses | 218 | 410 | 314 | 943 | 206 | 418 | 497 | 1,121 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank and Group (NOKm) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Opening balance | 24 | 34 | 9 | 67 | 19 | 55 | 5 | 79 |
| Transfer to (from) stage 1 | 6 | -6 | -0 | - | 16 | -16 | -0 | - |
| Transfer to (from) stage 2 | -2 | 2 | -0 | - | -1 | 1 | -0 | - |
| Transfer to (from) stage 3 | -0 | -1 | 1 | - | -0 | -0 | 1 | - |
| Net remeasurement of loss allowances | -13 | -4 | 2 | -15 | -16 | -3 | 3 | -15 |
| Originations or purchases | 9 | 4 | 0 | 13 | 12 | 6 | 0 | 18 |
| Derecognitions | -6 | -8 | -1 | -15 | -4 | -12 | -0 | -16 |
| Changes due to changed input assumptions | 0 | 5 | -3 | 2 | -3 | 3 | 0 | 1 |
| Actual loan losses | - | - | - | - | - | - | - | - |
| Closing balance | 18 | 27 | 8 | 53 | 24 | 34 | 9 | 67 |
| Of which | ||||||||
| Retail market | 1 | 1 | ||||||
| Corporate Market | 51 | 66 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank (NOKm) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Agriculture and forestry | 3 | 44 | 10 | 57 | 4 | 38 | 18 | 60 |
| Fisheries and hunting | 6 | 33 | - | 39 | 11 | 12 | 0 | 23 |
| Sea farming industries | 5 | 0 | 0 | 5 | 3 | 1 | 1 | 5 |
| Manufacturing | 15 | 31 | 13 | 59 | 9 | 47 | 2 | 58 |
| Construction, power and water supply | 46 | 25 | 28 | 99 | 26 | 22 | 11 | 59 |
| Retail trade, hotels and restaurants | 8 | 13 | 1 | 23 | 16 | 14 | 1 | 32 |
| Maritime sector | 7 | 54 | 103 | 164 | 19 | 117 | 184 | 320 |
| Property management | 44 | 92 | 22 | 159 | 34 | 55 | 28 | 117 |
| Business services | 17 | 16 | 24 | 57 | 13 | 24 | 177 | 214 |
| Transport and other services | 10 | 6 | 13 | 29 | 9 | 11 | 16 | 36 |
| Public administration | 0 | - | - | 0 | 0 | - | - | 0 |
| Other sectors | 1 | 0 | - | 1 | 0 | 0 | - | 0 |
| Wage earners | 1 | 47 | 35 | 83 | 1 | 50 | 25 | 75 |
| Total provision for losses on loans | 163 | 363 | 251 | 776 | 144 | 391 | 463 | 999 |
| loan loss allowance on loans at FVOCI | 36 | 36 | 40 | 40 | ||||
| Total loan loss allowance | 198 | 363 | 251 | 812 | 184 | 391 | 463 | 1,039 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Group (NOKm) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Agriculture and forestry | 4 | 46 | 10 | 60 | 5 | 40 | 19 | 64 |
| Fisheries and hunting | 6 | 33 | 0 | 39 | 11 | 12 | 0 | 23 |
| Sea farming industries | 6 | 0 | 0 | 6 | 4 | 1 | 4 | 9 |
| Manufacturing | 18 | 36 | 13 | 68 | 11 | 50 | 8 | 70 |
| Construction, power and water supply | 46 | 42 | 33 | 121 | 30 | 25 | 16 | 71 |
| Retail trade, hotels and restaurants | 11 | 15 | 2 | 28 | 17 | 15 | 2 | 34 |
| Maritime sector | 7 | 54 | 103 | 164 | 19 | 117 | 184 | 320 |
| Property management | 45 | 93 | 22 | 160 | 35 | 55 | 29 | 118 |
| Business services | 19 | 18 | 78 | 114 | 15 | 25 | 184 | 224 |
| Transport and other services | 12 | 11 | 16 | 39 | 12 | 16 | 21 | 49 |
| Public administration | 0 | - | - | 0 | 0 | - | - | 0 |
| Other sectors | 1 | 0 | - | 1 | 0 | 0 | 0 | 0 |
| Wage earners | 8 | 62 | 36 | 106 | 8 | 61 | 29 | 99 |
| Total provision for losses on loans | 183 | 410 | 314 | 907 | 166 | 418 | 497 | 1,081 |
| loan loss allowance on loans at FVOCI | 36 | 36 | 40 | 40 | ||||
| Total loan loss allowance | 218 | 410 | 314 | 943 | 206 | 418 | 497 | 1,121 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank (NOKm) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Retail Market | ||||||||
| Opening balance | 80,994 | 3,962 | 527 | 85,484 | 82,299 | 3,892 | 444 | 86,636 |
| Transfer to stage 1 | 895 | -868 | -27 | - | 1,075 | -1,060 | -15 | - |
| Transfer to stage 2 | -1,538 | 1,557 | -18 | - | -1,403 | 1,411 | -8 | - |
| Transfer to stage 3 | -38 | -156 | 194 | - | -32 | -119 | 150 | - |
| Net increase/decrease amount existing loans |
-2,305 | -95 | -6 | -2,406 | -2,501 | -106 | -15 | -2,623 |
| New loans | 42,690 | 1,549 | 222 | 44,460 | 38,691 | 1,418 | 120 | 40,229 |
| Derecognitions | -29,797 | -1,395 | -149 | -31,342 | -37,136 | -1,473 | -137 | -38,746 |
| Financial assets with actual loan losses | 0 | 0 | -18 | -18 | -0 | -1 | -11 | -12 |
| Closing balance | 90,901 | 4,553 | 725 | 96,178 | 80,994 | 3,962 | 527 | 85,484 |
| Corporate Market | ||||||||
| Opening balance | 43,127 | 5,883 | 1,346 | 50,356 | 38,359 | 5,186 | 2,656 | 46,201 |
| Transfer to stage 1 | 1,026 | -1,021 | -5 | - | 1,839 | -1,820 | -19 | - |
| Transfer to stage 2 | -2,669 | 2,670 | -1 | - | -1,699 | 2,606 | -908 | - |
| Transfer to stage 3 | -72 | -44 | 116 | - | -67 | -72 | 139 | - |
| Net increase/decrease amount existing loans |
-1,099 | -485 | -10 | -1,594 | -731 | -257 | -3 | -990 |
| New loans | 17,922 | 816 | 351 | 19,089 | 17,124 | 1,661 | 86 | 18,872 |
| Derecognitions | -10,901 | -828 | -335 | -12,064 | -11,697 | -1,415 | -514 | -13,625 |
| Financial assets with actual loan losses | -7 | -2 | -298 | -307 | -3 | -8 | -91 | -102 |
| Closing balance | 47,327 | 6,988 | 1,165 | 55,480 | 43,127 | 5,883 | 1,346 | 50,356 |
| Fixed interest loans at FV | 5,582 | - | - | 5,582 | 4,709 | - | - | 4,709 |
| Total gross loans at the end of the period | 143,809 | 11,541 | 1,890 157,240 | 128,830 | 9,845 | 1,874 | 140,549 |
| 31 Dec 2023 | 31 Dec 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Group (NOKm) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Retail Market | ||||||||
| Opening balance | 86,972 | 4,901 | 635 | 92,508 | 87,577 | 4,612 | 531 | 92,721 |
| Transfer to stage 1 | 1,138 | -1,108 | -30 | - | 1,278 | -1,261 | -17 | - |
| Transfer to stage 2 | -1,955 | 1,978 | -23 | - | -1,771 | 1,784 | -13 | - |
| Transfer to stage 3 | -59 | -219 | 277 | - | -40 | -151 | 190 | - |
| Net increase/decrease amount existing loans | -2,272 | -165 | -20 | -2,457 | -2,177 | -170 | -25 | -2,372 |
| New loans | 45,658 | 1,781 | 231 | 47,670 | 41,570 | 1,801 | 129 | 43,500 |
| Derecognitions | -32,519 | -1,694 | -227 | -34,440 | -39,465 | -1,714 | -150 | -41,329 |
| Financial assets with actual loan losses | -0 | -0 | -18 | -18 | -0 | -1 | -11 | -12 |
| Closing balance | 96,963 | 5,474 | 825 | 103,263 | 86,972 | 4,901 | 635 | 92,508 |
| Corporate Market | ||||||||
| Opening balance | 47,621 | 6,460 | 1,410 | 55,491 | 41,855 | 5,768 | 2,759 | 50,382 |
| Transfer to stage 1 | 1,207 | -1,199 | -8 | - | 2,090 | -2,045 | -45 | - |
| Transfer to stage 2 | -3,639 | 3,655 | -17 | - | -2,042 | 2,959 | -917 | - |
| Transfer to stage 3 | -101 | -80 | 180 | - | -97 | -88 | 185 | - |
| Net increase/decrease amount existing loans | -1,103 | -692 | -23 | -1,818 | -761 | -329 | -13 | -1,104 |
| New loans | 19,159 | 1,339 | 368 | 20,866 | 19,085 | 1,751 | 109 | 20,945 |
| Derecognitions | -11,811 | -949 | -354 | -13,114 | -12,507 | -1,546 | -577 | -14,629 |
| Financial assets with actual loan losses | -7 | -2 | -297 | -306 | -3 | -8 | -91 | -102 |
| Balance at 31 December | 51,327 | 8,533 | 1,259 | 61,119 | 47,621 | 6,460 | 1,410 | 55,491 |
| Closing balance | ||||||||
| Fixed interest loans at FV | 5,480 | - | - | 5,480 | 4,631 | - | - | 4,631 |
| Total gross loans at the end of the period | 153,770 | 14,007 | 2,085 | 169,862 | 139,224 | 11,361 | 2,044 | 152,629 |
The Bank uses a special classification system for monitoring credit risk in the portfolio. Risk classification is based on each individual exposure's probability of default. In the table below this classification is collated with corresponding rating classes at Moody's.
Historical default data are Parent Bank figures showing the default ratio (DR) per credit quality step. The figures are an unweighted average of customers with normal scores in the period 2014-2023.
Collateral cover represents the expected realisation value (RE value) of underlying collaterals. The value are determined using fixed models, and actual realisation value are validated to test their reliability of the model. In accordance with the capital requirements regulations the estimates are downturn estimates. Based on the collateral cover (RE value / EAD) the exposure is classified to one of seven classes, the best of which has a collateral cover above 120 per cent, and the lowest has a collateral cover below 20 per cent.
| Probability of default | Collateral cover | |||||||
|---|---|---|---|---|---|---|---|---|
| Credit quality step From | To | Moody's | Historical default Default 2022 | Collateral class Lower limit Upper limit | ||||
| A | 0.00 % | 0.10 % | Aaa-A3 | 0.02 % | 0.04 % | 1 | 120 | |
| B | 0.10 % | 0.25 % | Baa1-Baa2 | 0.04 % | 0.05 % | 2 | 100 | 120 |
| C | 0.25 % | 0.50 % | Baa3 | 0.09 % | 0.12 % | 3 | 80 | 100 |
| D | 0.50 % | 0.75 % | Ba1 | 0.30 % | 0.20 % | 4 | 60 | 80 |
| E | 0.75 % | 1.25 % | Ba2 | 0.63 % | 1.10 % | 5 | 40 | 60 |
| F | 1.25 % | 2.50 % | 1.30 % | 1.99 % | 6 | 20 | 40 | |
| G | 2.50 % | 5.00 % | Ba2-B1 | 2.11 % | 2.74 % | 7 | 0 | 20 |
| H | 5.00 % | 10.00 % | B1-B2 | 4.75 % | 5.17 % | |||
| I | 10.00 % | 99.99 % | B3-Caa3 | 14.59 % | 19.97 % | |||
| J | Default | |||||||
| K | Problem loans |
The Bank's exposures are classified into risk groups based on credit quality step.
| Credit quality step | Risk groups |
|---|---|
| A - C | Lowest risk |
| D - E | Low risk |
| F - G | Medium risk |
| H | High risk |
| I | Highest risk |
| J - K | Default and credit impaired |
| Averaged | Averaged | |||
|---|---|---|---|---|
| unhedged | Total | unhedged | Total | |
| Parent Bank | exposure | exposure | exposure | exposure |
| (NOK million) | 31 Dec 2023 | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2022 |
| Lowest risk | 1.1 % | 128,796 | 0.9 % | 115,527 |
| Low risk | 2.4 % | 25,369 | 1.3 % | 24,473 |
| Medium risk | 3.5 % | 22,533 | 1.7 % | 18,093 |
| High risk | 2.1 % | 2,389 | 3.0 % | 2,719 |
| Highest risk | 3.5 % | 2,305 | 2.2 % | 1,693 |
| Default and/or problem loans | 5.7 % | 2,090 | 10.0 % | 2,051 |
| Total | 183,481 | 164,556 |
| Averaged | Averaged | |||
|---|---|---|---|---|
| unhedged | Total | unhedged | Total | |
| Group (NOK million) | exposure | exposure | exposure | exposure |
| (NOK million) | 31 Dec 2023 | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2022 |
| Lowest risk | 1.2 % | 129,031 | 0.6 % | 116,505 |
| Low risk | 2.2 % | 28,025 | 1.2 % | 26,996 |
| Medium risk | 2.6 % | 30,362 | 2.2 % | 25,200 |
| High risk | 1.4 % | 3,743 | 3.6 % | 3,772 |
| Highest risk | 2.6 % | 3,069 | 2.9 % | 2,462 |
| Default and/or problem loans | 5.3 % | 2,284 | 10.9 % | 2,222 |
| Total | 196,514 | 177,157 |
The realisation value of furnished collateral is determined such that they, on a conservative assessment, reflect the presumed realisation value in an economic downturn.
The table below shows maximum exposure to credit risk for balance sheet components, including derivatives. Exposures are shown on a gross basis before collateral and permitted set-offs.
For disclosure of classes of financial instruments where this is not spesified in the table below, see note 24 Categories of financial assets and financial liabilities.
| Maximum | Provision | Other collateral |
||||
|---|---|---|---|---|---|---|
| exposure | for | and | Maximum | |||
| to credit | expected | Collateral | Collateral | netting | exposure | |
| 31 Dec 23 (NOK million) | risk, gross |
credit losses |
in property |
in securities |
agreements *) |
to credit risk, net |
| Assets | ||||||
| Balances with central banks | 1,147 | - | - | - | - | 1,147 |
| Loans and advances to credit institutions | 19,241 | - | - | - | - | 19,241 |
| Loans and advances to customers at fair value through profit or loss |
5,582 | - | 5,387 | 26 | 30 | 139 |
| Loans and advances to customers at amortised cost | 59,281 | 659 | 32,438 | 2,912 | 20,313 | 2,959 |
| Loans and advances to customers at fair value through OCI | 92,377 | 117 | 91,080 | 71 | 471 | 638 |
| Securities and bonds | 34,163 | - | - | - | 11,884 | 22,278 |
| Derivatives | 6,659 | - | - | - | 3,849 | 2,810 |
| Earned income, not yet recieved | 136 | - | - | - | - | 136 |
| Accounts receivable, securities | 66 | - | - | - | - | 66 |
| Total assets | 218,651 | 776 | 128,904 | 3,010 | 36,548 | 49,413 |
| Liabilities | ||||||
| Guarantee commitments and documentary credits | 5,972 | 19 | - | - | - | 5,953 |
| Unutilised credits and Loan approvals | 22,592 | 34 | 3,030 | 448 | 424 | 18,656 |
| Other exposures | 5,354 | - | - | - | - | 5,354 |
| Total liabilities | 33,919 | 53 | 3,030 | 448 | 424 | 29,964 |
| Total credit risk exposure | 252,570 | 79,377 |
| Other | ||||||
|---|---|---|---|---|---|---|
| Maximum | Provision | collateral | ||||
| exposure | for | and | Maximum | |||
| to credit | expected | Collateral | Collateral | netting | exposure | |
| 31 Dec 22 (NOK million) | risk, gross |
credit losses |
in property |
in securities |
agreements *) |
to credit risk, net |
| Assets | ||||||
| Balances with central banks | 1,159 | - | - | - | - | 1,159 |
| Loans and advances to credit institutions | 21,972 | - | - | - | - | 21,972 |
| Loans and advances to customers at fair value through profit or loss |
4,709 | - | 4,541 | 26 | 32 | 110 |
| Loans and advances to customers at amortised cost | 53,830 | 890 | 27,568 | 2,785 | 20,996 | 1,591 |
| Loans and advances to customers at fair value through OCI | 82,010 | 109 | 80,954 | 38 | 444 | 464 |
| Securities and bonds | 38,072 | - | - | - | 10,482 | 27,590 |
| Derivatives | 6,804 | - | - | - | 3,909 | 2,894 |
| Earned income, not yet recieved | 87 | - | - | - | - | 87 |
| Accounts receivable, securities | 262 | - | - | - | - | 262 |
| Total assets | 208,904 | 999 | 113,064 | 2,850 | 35,862 | 56,130 |
| Liabilities | ||||||
| Guarantee commitments and documentary credits | 7,174 | 29 | - | - | - | 7,145 |
| Unutilised credits and loan approvals | 16,888 | 37 | 3,095 | 50 | 255 | 13,451 |
| Other exposures | 4,461 | - | - | - | - | 4,461 |
| Total liabilities | 28,524 | 67 | 3,095 | 50 | 255 | 25,057 |
| Total credit risk exposure | 237,428 | 81,187 |
| Provision | |||||
|---|---|---|---|---|---|
| exposure | for | collateral | Maximum | ||
| exposure | |||||
| to credit | |||||
| risk, net | |||||
| 1,147 | - | - | - | - | 1,147 |
| 8,746 | - | - | - | - | 8,746 |
| 5,480 | - | 5,387 | 26 | 30 | 37 |
| 72,004 | 531 | 32,438 | 2,912 | 33,065 | 3,059 |
| 92,377 | 117 | 91,080 | 71 | 471 | 638 |
| 34,163 | - | - | - | 11,884 | 22,279 |
| 6,659 | - | - | - | 3,849 | 2,810 |
| 153 | - | - | - | - | 153 |
| 66 | - | - | - | - | 66 |
| 220,796 | 648 | 128,904 | 3,010 | 49,300 | 38,934 |
| 5,972 | 19 | - | - | - | 5,953 |
| 23,003 | 34 | 3,030 | 448 | 424 | 19,067 |
| 5,404 | - | - | - | - | 5,404 |
| 34,380 | 53 | 3,030 | 448 | 424 | 30,425 |
| 255,176 | 69,359 | ||||
| Maximum to credit risk, gross |
expected credit losses |
Collateral in property |
Collateral in securities |
Other and netting agreements *) |
| Maximum | Provision | Other | ||||
|---|---|---|---|---|---|---|
| exposure | for | collateral | Maximum | |||
| to credit | expected | Collateral | Collateral | and netting | exposure | |
| risk, | credit | in | in | agreements | to credit | |
| 31 Dec 22 (NOK million) | gross | losses | property | securities | *) | risk, net |
| Assets | ||||||
| Balances with central banks | 1,159 | - | - | - | - | 1,159 |
| Loans and advances to credit institutions | 11,663 | - | - | - | - | 11,663 |
| Loans and advances to customers at fair value through profit or loss |
4,631 | - | 4,541 | 26 | 32 | 32 |
| Loans and advances to customers at amortised cost | 65,989 | 950 | 27,568 | 2,785 | 31,255 | 3,431 |
| Loans and advances to customers at fair value through OCI | 82,010 | 109 | 80,954 | 38 | 444 | 464 |
| Securities and bonds | 38,073 | - | - | - | 10,482 | 27,591 |
| Derivatives | 6,804 | - | - | - | 3,909 | 2,894 |
| Earned income, not yet recieved | 104 | - | - | - | - | 104 |
| Accounts receivable, securities | 262 | - | - | - | - | 262 |
| Total assets | 210,693 | 1,059 | 113,064 | 2,850 | 46,121 | 47,600 |
| Liabilities | ||||||
| Guarantee commitments and documentary credits | 7,174 | 29 | - | - | - | 7,145 |
| Unutilised credits and loan approvals | 17,408 | 37 | 3,095 | 50 | 255 | 13,971 |
| Other exposures | 4,505 | - | - | - | - | 4,505 |
| Total liabilities | 29,088 | 67 | 3,095 | 50 | 255 | 25,621 |
| Total credit risk exposure | 239,781 | 73,221 |
*) Other collateral includes cash, movables, ship and guarantees received. For covered bonds the cover pool comprises loans to customers in the company that has issued the bond.
For derivatives, cash has been provided as collateral, in addition to bilateral ISDA agreements on netting of derivatives.
The Bank's maximum credit exposure is shown in the above table. SpareBank 1 SMN provides wholesale banking services to BN Bank and the Samspar banks. In this connection a guarantee agreement has been established which assures full settlement for exposures connected to these agreements.
For retail and corporate customers, use is made of framework agreements requiring provision of collateral. Customers furnish cash deposits and/or assets as collateral for their trade in power and salmon derivatives at NASDAQ OMX Oslo ASA and Fish Pool ASA.
SpareBank 1 SMN enters into standardised and mainly bilateral ISDA agreements on netting of derivatives with financial institutions as counterparties. Additionally the Bank has entered into supplementary agreements on provision of collateral (CSA) with the most central counterparties. As of 31 December 2023 the Bank has about 40 (38) active ISDA agreements. As from 1 March 2017 the Bank was required under EMIR to have in place a CSA with daily exchange of margin collateral etc. with all financial counterparties with which the bank deals domiciled (inter alia) in an EU meber state. The Bank only enters into agreements with cash as collateral. The Bank has delegated responsibility for handling these agreements to SEB Prime Collateral Services which handles margin requirements on behalf of the Bank. More about collateral and encumbrances in note 37 Other debt and liabilities.
The collateral is measured at fair value, limited to maximum credit exposure for the individual counterparty.
The Group has NOK 230 million exposures in stage 3 where no impairment charge has been made due to value of collateral, for 2022 the same amount was NOK 213 million.
The Bank handles the credit quality of financial assets by means of its internal guidlines for credit ratings. See section entitled credit risk under Note 6 Risk factors. The table below shows credit quality per class of assets for loan-related assets in the balance sheet, based on the Bank's own credit rating system.The entire loan exposure is included when parts of the exposure are defaulted. Non-performance is defined in the note as default of payment of NOK 1,000 or more for more than 90 days.
| Neither defaulted nor written down | Defaulted | |||||||
|---|---|---|---|---|---|---|---|---|
| 31 Dec 2023 (NOK million) | Notes | Lowest risk |
Low risk |
Medium risk |
High risk |
Highest risk |
or credit impared |
Total |
| Loans to and claims on credit institutions |
7 | 19,241 | - | - | - | - | - | 19,241 |
| Loans to and claims on customers 8 | ||||||||
| Retail market | 86,719 | 8,702 | 3,488 | 818 | 1,197 | 731 | 101,655 | |
| Corporate market | 25,227 | 11,750 | 15,083 | 1,371 | 989 | 1,165 | 55,585 | |
| Total | 111,946 | 20,452 | 18,570 | 2,189 | 2,186 | 1,897 | 157,240 | |
| Financial investments | 27 | |||||||
| Quoted government and government guaranteed bonds |
8,546 | - | - | - | - | - | 8,546 | |
| Quoted other bonds | 16,566 | 440 | 5 | - | - | - | 17,011 | |
| Unquoted government and government guaranteed bonds |
5,323 | - | - | - | - | - | 5,323 | |
| Unquoted other bonds | 3,282 | - | - | - | - | - | 3,282 | |
| Total | 33,717 | 440 | 5 | - | - | - | 34,163 | |
| Total | 164,904 | 20,893 | 18,575 | 2,189 | 2,186 | 1,897 | 210,644 |
| Neither defaulted nor written down | Defaulted | |||||||
|---|---|---|---|---|---|---|---|---|
| Lowest | Low | Medium | High | Highest | or credit | |||
| 31 Dec 2022 (NOK million) | Notes | risk | risk | risk | risk | risk | impared | Total |
| Loans to and claims on credit institutions |
7 | 21,972 | - | - | - | - | - | 21,972 |
| Loans to and claims on customers 8 | ||||||||
| Retail market | 77,371 | 7,432 | 3,025 | 711 | 1,046 | 531 | 90,116 | |
| Corporate market | 23,857 | 11,132 | 12,058 | 1,488 | 551 | 1,346 | 50,433 | |
| Total | 101,227 | 18,564 | 15,083 | 2,200 | 1,597 | 1,878 | 140,549 | |
| Financial investments | 27 | |||||||
| Quoted government and government guaranteed bonds |
9,167 | - | - | - | - | - | 9,167 | |
| Quoted other bonds | 14,496 | 429 | 197 | - | - | - | 15,121 | |
| Unquoted government and government guaranteed bonds |
4,378 | - | - | - | - | - | 4,378 | |
| Unquoted other bonds | 9,404 | 2 | - | - | - | - | 9,406 | |
| Total | 37,445 | 430 | 197 | - | - | - | 38,072 | |
| Total | 160,644 | 18,994 | 15,280 | 2,200 | 1,597 | 1,878 | 200,593 |
| Neither defaulted nor written down | Defaulted | |||||||
|---|---|---|---|---|---|---|---|---|
| 31 Dec 2023 (NOK million) | Notes | Lowest risk |
Low risk |
Medium risk |
High risk |
Highest risk |
or credit impared |
Total |
| Loans to and claims on credit institutions |
7 | 8,746 | - | - | - | - | - | 8,746 |
| Loans to and claims on customers 8 | ||||||||
| Retail market | 86,721 | 10,255 | 8,029 | 1,308 | 1,596 | 831 | 108,740 | |
| Corporate market | 25,460 | 12,853 | 17,959 | 2,236 | 1,355 | 1,259 | 61,122 | |
| Total | 112,181 | 23,108 | 25,988 | 3,544 | 2,951 | 2,091 | 169,862 | |
| Financial investments | 27 | |||||||
| Quoted government and government guaranteed bonds |
8,546 | - | - | - | - | - | 8,546 | |
| Quoted other bonds | 16,566 | 440 | 5 | - | - | - | 17,011 | |
| Unquoted government and government guaranteed bonds |
5,323 | - | - | - | - | - | 5,323 | |
| Unquoted other bonds | 3,283 | - | - | - | - | - | 3,283 | |
| Total | 33,718 | 440 | 5 | - | - | - | 34,163 | |
| Total | 154,644 | 23,548 | 25,993 | 3,544 | 2,951 | 2,091 | 212,771 |
| Neither defaulted nor written down | Defaulted | |||||||
|---|---|---|---|---|---|---|---|---|
| 31 Dec 2022 (NOK million) | Notes | Lowest risk |
Low risk |
Medium risk |
High risk |
Highest risk |
or credit impared |
Total |
| Loans to and claims on credit institutions |
7 | 11,663 | - | - | - | - | - | 11,663 |
| Loans to and claims on customers 8 | ||||||||
| Retail market | 77,932 | 9,096 | 7,035 | 1,090 | 1,391 | 595 | 97,140 | |
| Corporate market | 24,716 | 11,990 | 14,635 | 2,162 | 976 | 1,454 | 55,932 | |
| Total | 102,648 | 21,086 | 21,670 | 3,252 | 2,366 | 2,049 | 153,072 | |
| Financial investments | 27 | |||||||
| Quoted government and government guaranteed bonds |
9,167 | - | - | - | - | - | 9,167 | |
| Quoted other bonds | 14,496 | 429 | 197 | - | - | - | 15,121 | |
| Unquoted government and government guaranteed bonds |
4,378 | - | - | - | - | - | 4,378 | |
| Unquoted other bonds | 9,405 | 2 | - | - | - | - | 9,407 | |
| Total | 37,446 | 430 | 197 | - | - | - | 38,073 | |
| Total | 151,757 | 21,517 | 21,867 | 3,252 | 2,366 | 2,049 | 202,808 |
This note is a sensitivity analysis based on relevant balance sheet items as of 31 December and thereafter for the year concerned. The Bank's interest rate risk is calculated by simulating a parallel interest rate shift for the entire interest rate curve of one percentage point on all balance sheet items.
For further details regarding interest rate risk, see Note 6 Risk Factors.
| Interest rate risk, change 1 percentage point | |||||
|---|---|---|---|---|---|
| Basis risk Group (NOK million) | 2023 | 2022 | |||
| Currency | |||||
| NOK | - 32 | - 48 | |||
| EUR | 7 | 6 | |||
| USD | - 1 | - 3 | |||
| CHF | 0 | - 1 | |||
| GBP | 0 | 1 | |||
| Other | 0 | 0 | |||
| Total interest rate risk, effect on result before tax | - 27 | - 45 |
Total interest rate risk suggest that the Bank will have losses from an increase in the interest rate in 2023. This is the same effect as in 2022.
The table below shows the effect of an interest rate curve shift on various time intervals and the associated gains or losses within the respective maturities.
| Interest rate risk, change 1 percentage point | ||
|---|---|---|
| Interest rate curve risk, Group (NOK million) | 2023 | 2022 |
| Maturity | ||
| 0 - 2 month | 8 | - 11 |
| 2 - 3 months | - 30 | - 4 |
| 3 - 6 months | - 13 | - 10 |
| 6 - 12 months | 6 | - 5 |
| 1 - 2 years | - 4 | - 9 |
| 2 - 3 years | 5 | 2 |
| 3 - 4 years | - 4 | - 3 |
| 4 - 5 years | - 3 | 3 |
| 5 - 8 years | 2 | - 6 |
| 8 - 15 years | 7 | - 3 |
| Total interest rate risk, effect on result before tax | - 27 | - 45 |
Foreign exchange risk arises when there are differences between the Group's assets and liabilities in a given currency. Currency trading must at all times be conducted within adopted limits and authorisations. The Group's limits define quantitative measures for maximum net foreign currency exposure, measured in Norwegian kroner.
The Group has established limits for net exposure (expressed as the highest of the sum of long and short positions). Overnight exchange rate risk for spot trading in foreign currency must not, exceed NOK 150 million on an aggregate basis.
Foreign exchange risk has been low throughout the year. For further details see note 6 on risk factors.
| Parent Bank | Net foreign exchange exposure NOK | Group | |
|---|---|---|---|
| 2022 | 2023 (NOK million) | 2023 | 2022 |
| -5 | 20 EUR | 20 | -5 |
| 4 | 2 USD | 2 | 4 |
| 4 | 5 SEK | 5 | 4 |
| -0 | -1 GBP | -1 | 0 |
| -3 | -0 Other | 0 | -3 |
| 1 | 26 Total | 26 | 1 |
| 0,5 | 0,9 Result effect of 3% change | 0,9 | 0,5 |
Liquidity risk is the risk that the group will be unable to refinance its debt or unable to finance increases in its assets. See note 6 on risk factors for a detailed description.
| Group | ||||||
|---|---|---|---|---|---|---|
| At 31 Dec 2023 (NOKm) | On demand | Below 3 months | 3-12 months | 1 - 5 yrs | Above 5 yrs | Total |
| Cash flows related to liabilities 2) | ||||||
| Deposits from credit institutions | 10,399 | 90 | 344 | 1,938 | 20 | 12,792 |
| Deposits from and debt to customers | 89,914 | 23,961 | 10,120 | 8,894 | - | 132,888 |
| Debt created by issue of securities | - | 3,164 | 2,513 | 44,528 | 1,295 | 51,499 |
| Derivatives - contractual cash flow out | - | 1,130 | 4,101 | 26,309 | 1,397 | 32,937 |
| Other liabilities | - | 1,004 | 1,207 | 551 | 269 | 3,031 |
| Subordinated loan capital 1) | - | 38 | 505 | 2,180 | - | 2,723 |
| Total cash flow, liabilities | 100,313 | 29,386 | 18,790 | 84,401 | 2,981 | 235,871 |
| Derivatives net cash flows | ||||||
| Contractual cash flows out | - | 1,130 | 4,101 | 26,309 | 1,397 | 32,937 |
| Contractual cash flows in | - | -805 | -3,331 | -24,630 | -1,360 | -30,126 |
| Net contractual cash flows | - | 325 | 770 | 1,679 | 37 | 2,811 |
| Group | ||||||
|---|---|---|---|---|---|---|
| At 31 Dec 2022 (NOKm) | On demand | Below 3 months | 3-12 months | 1 - 5 yrs | Above 5 yrs | Total |
| Cash flows related to liabilities 2) | ||||||
| Debt to credit institutions | 11,180 | 1,194 | 161 | 2,125 | 26 | 14,685 |
| Deposits from and debt to customers | 89,936 | 19,376 | 7,480 | 5,217 | - | 122,010 |
| Debt created by issuance of securities | - | 951 | 8,442 | 41,837 | 1,746 | 52,977 |
| Derivatives - contractual cash flow out | - | 798 | 8,532 | 26,947 | 1,655 | 37,932 |
| Other liabilities | - | 1,361 | 787 | 386 | 258 | 2,792 |
| Subordinated loan capital 1) | - | 16 | 824 | 1,459 | - | 2,299 |
| Total cash flow, liabilities | 101,116 | 23,696 | 26,226 | 77,972 | 3,684 | 232,694 |
| Derivatives net cash flows | ||||||
| Contractual cash flows out | - | 798 | 8,532 | 26,947 | 1,655 | 37,932 |
| Contractual cash flows in | - | -622 | -8,176 | -25,412 | -1,633 | -35,843 |
| Net contractual cash flows | - | 176 | 356 | 1,535 | 21 | 2,089 |
Does not include value adjustments for financial instruments at fair value
1) For subordinated debt the call date is used for cash settlement
2) Contractual cash-flows include calculated interest and the total amount therefore deviate from recognised liabilities
Interest income and expenses related to assets and liabilities which are measured at amortised cost or fair value over OCI are recognised in profit/loss on an ongoing basis using the effective interest rate method. Charges connected to interest-bearing funding and lending are included in the computation of effective interest rate and are amortised over expected lifetime. For debt instruments assets at amortised cost which have been written down as a result of objective evidence of loss, interest is recognised as income based on the net capitalised amount. In the case of interest-bearing instruments measured at fair value in profit or loss, the market value will be classified as income from other financial investments.
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 (NOKm) | 2023 | 2022 |
| 435 | 887 Interest income from loans to and claims on central banks and credit institutions (amortised cost) |
380 | 212 |
| 2,814 | 4,716 Interest income from loans to and claims on customers (amortised cost) | 5,701 | 3,483 |
| 1,879 | 3,616 Interest income from loans to and claims on customers (Fair value over OCI) | 3,616 | 1,879 |
| 125 | 165 Interest income from loans to and claims on customers (Fair value over Profit and loss) |
165 | 125 |
| 599 | 1,382 Interest income from money market instruments, bonds and other fixed income securities (Fair value over Profit and loss) |
1,377 | 595 |
| - | - Other interest income | 24 | 22 |
| 5,852 | 10,767 Total interest income | 11,262 | 6,315 |
| 260 | 559 Interest expenses on liabilities to credit institutions | 559 | 260 |
| 1,524 | 3,780 Interest expenses relating to deposits from and liabilities to customers | 3,748 | 1,508 |
| 1,035 | 2,056 Interest expenses related to the issuance of securities | 2,057 | 1,035 |
| 66 | 129 Interest expenses on subordinated debt | 132 | 68 |
| 7 | 9 Other interest expenses | 45 | 26 |
| 79 | 90 Guarantee fund levy | 90 | 79 |
| 2,972 | 6,622 Total interest expense | 6,631 | 2,977 |
| 2,880 | 4,144 Net interest income | 4,632 | 3,339 |
Commission income and expenses are generally accrued in step with the provision of the service. Charges related to interest-bearing instruments are not entered as commission, but are included in the calculation of effective interest and recognised in profit/loss accordingly. Consultancy fees accrue in accordance with a consultancy agreement, usually in step with the provision of the service. The same applies to ongoing management services. Fees and charges in connection with the sale or mediation of financial instruments, property or other investment objects which do not generate balance sheet items in the Bank's accounts are recognised in profit/loss when the transaction is completed. The Bank receives commission from SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt corresponding to the difference between the interest on the loan and the funding cost achieved by SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt. This shows as commission income in the Bank's accounts.
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 (NOK million) | 2023 | 2022 |
| Commission income | |||
| 77 | 68 Guarantee commission | 68 | 77 |
| - | - Broker commission | 265 | 267 |
| 44 | 47 Portfolio commission, savings products | 47 | 44 |
| 256 | 155 Commission from SpareBank 1 Boligkreditt | 155 | 256 |
| 16 | 15 Commission from SpareBank 1 Næringskreditt | 15 | 16 |
| 475 | 496 Payment transmission services | 493 | 471 |
| 236 | 253 Commission from insurance services | 253 | 236 |
| 88 | 83 Other commission income | 74 | 80 |
| 1,192 | 1,117 Total commission income | 1,370 | 1,446 |
| Commission expenses | |||
| 80 | 102 Payment transmission services | 102 | 80 |
| 11 | 12 Other commission expenses | 96 | 105 |
| 90 | 114 Total commission expenses | 199 | 186 |
| Other operating income | |||
| 30 | 38 Operating income real property | 41 | 32 |
| - | - Property administration and sale of property | 166 | 151 |
| - | - Securities trading | - | - |
| - | - Accountant's fees | 661 | 564 |
| 25 | 34 Other operating income | 45 | 34 |
| 55 | 73 Total other operating income | 913 | 781 |
| 1,156 | 1,076 Total net commision income and other operating income | 2,084 | 2,042 |
| Parent Bank | Group | |||
|---|---|---|---|---|
| 2022 | 2023 (NOKm) | 2022 | 2021 | |
| Valued at fair value through profit/loss | ||||
| -428 | 17 Value change in interest rate instruments | 17 | -427 | |
| Value change in derivatives/hedging | ||||
| -10 | 2 Net value change in hedged bonds and derivatives* | 2 | -10 | |
| -38 | 5 Net value change in hedged fixed rate loans and derivatives | 5 | -38 | |
| 275 | -118 Other derivatives | -118 | 275 | |
| Income from equity instruments | ||||
| - | - Income from owner interests | 297 | 442 | |
| 646 | 693 Dividend from owner instruments | - | - | |
| 4 | 32 Value change and gain/loss on owner instruments | -5 | 4 | |
| 30 | 18 Dividend from equity instruments | 26 | 33 | |
| -19 | 421 Value change and gain/loss on equity instruments | 469 | 9 | |
| 461 | 1,069 Total net income from financial assets and liabilities at fair | 692 | 287 | |
| value through profit/(loss) | ||||
| Valued at amortised cost | ||||
| -0 | -2 Value change in interest rate instruments held to maturity | -2 | -0 | |
| -0 | -2 Total net income from financial assets and liabilities at | -2 | -0 | |
| amortised cost | ||||
| 93 | 108 Total net gain from currency trading | 108 | 93 | |
| 554 | 1,175 Total net return on financial investments | 799 | 380 | |
| * Fair value hedging | ||||
| -2,155 | 896 Changes in fair value on hedging instrument | 896 | -2,155 | |
| 2,145 | -894 Changes in fair value on hedging item | -894 | 2,145 | |
| -10 | 2 Net Gain or Loss from hedge accounting | 2 | -10 | |
For detailed information on emoluments to top management 2023, please see The executive pay report published on smn.no
| Parent Bank | Group | |||
|---|---|---|---|---|
| 2022 | 2023 (NOK million) | 2023 | 2022 | |
| 568 | 722 Wages | 1,455 | 1,227 | |
| 54 | 67 Pension costs (Note 25) | 117 | 99 | |
| 39 | 60 Social costs | 119 | 81 | |
| 661 | 849 Total personnel expenses | 1,406 | ||
| 1,691 | ||||
| 675 | 776 Average number of employees | 1,618 | 1,549 | |
| 664 | 798 Number of man-labour years as at 31 December | 1,545 | 1,432 |
(thousands of NOK)
| Fixed remuneration | No. Of equity |
|||||||
|---|---|---|---|---|---|---|---|---|
| Name of director, position | Year | Base salary1) |
Fringe benefits2) |
Extra ordinary items3) |
Pension expense4) |
Total re muneration |
Loan 5) |
capital certificates 6) |
| Jan-Frode Janson, Group CEO | 2023 | 5,300 | 317 | 1,241 | 6,859 | - | 49,166 | |
| 2022 | 5,078 | 295 | 1,229 | 6,601 | 1 | 45,805 | ||
| Trond Søraas, Executive director - Finance | 2023 | 2,387 | 193 | 100 | 314 | 2,994 | 3,323 | 10,267 |
| and Strategy | 2022 | 1,891 | 292 | 150 | 278 | 2,611 | 3,942 | 10,000 |
| Nelly Maske, Executive director - Retail | 2023 | 2,797 | 204 | 382 | 3,383 | 5,898 | 21,876 | |
| Banking | 2022 | 2,680 | 204 | 100 | 374 | 3,358 | 3,927 | 21,783 |
| Vegard Helland, Executive director - | 2023 | 2,927 | 193 | 355 | 3,475 | 100 | 36,202 | |
| Corporate Banking | 2022 | 2,786 | 190 | 150 | 348 | 3,473 | 551 | 35,842 |
| Stig Brautaset, Executive director - | 2023 | 1,771 | 144 | 435 | 2,351 | - | 1,407 | |
| Sunnmøre og Fjordane regions7) | 2022 | - | ||||||
| Astrid Undheim, Executive director - | 2023 | 2,385 | 220 | 362 | 2,968 | 5,787 | 744 | |
| Technology and Development | 2022 | 2,285 | 177 | 100 | 216 | 2,778 | 6,666 | 384 |
| Ola Neråsen, Executive director - Risk | 2023 | 2,439 | 171 | 274 | 2,884 | - | 43,764 | |
| Management | 2022 | 2,280 | 181 | 272 | 2,733 | 120 | 43,404 | |
| Rolf Jarle Brøske, Executive director - | 2023 | 2,281 | 208 | 150 | 274 | 2,912 | 9,771 | 15,713 |
| Communications and Brand | 2022 | 2,175 | 195 | 276 | 2,646 | 9,629 | 10,853 | |
| Arne Nypan, CEO SpareBank 1 | 2023 | 2,594 | 235 | 254 | 3,083 | 4,903 | 33,948 | |
| Regnskapshuset SMN8) | 2022 | 2,434 | 299 | 252 | 2,984 10,559 | 29,958 | ||
| Kjetil Reinsberg, CEO EiendomsMegler 1 | 2023 | 3,076 | 468 | 391 | 3,934 10,995 | 29,141 | ||
| Midt-Norge9) | 2022 | 3,114 | 429 | 378 | 3,921 | 5,138 | 16,358 | |
| Kjell Fordal, Executive director - Finance | 2023 | - | - | |||||
| and Strategy10) | 2022 | 2,086 | 119 | 117 | 2,322 12,525 | 221,753 | ||
1) None of the directors receive variable remuneration, only fixed remuneration. Fixed remuneration equals base salary, salary for vacation, deduction from salary for vacation, pension compenasation,
additional pension, tax compenasation for 12G-pension and other fixed additions.
2) Fringe benefits includes compensation for electronic communications, fixed car allowance, company car, mileage allowance, accident- / treatment-/ occupational-/other injury-/
travel and group life insurance, as well as the benefit of low-interest loans. Additionally, this includes reported benefits for issued equity certificates at a discount in a voluntary saving plan which senior employees participate
on the same conditions as all the employees.
3) Extraordinary items is paid out in special cases to senior employees who have had an extraordinary workload
4) Pension expense inkludes occupational pension and pension account for salaries over 12G
5) Loan includes loan to directors and loan to their related persons. All directors has the same loan conditions as all the employees. 6) Number of equity capital sertificates also inkludes certificates owned by related persons and companies in wich one has significant influence
7) Stig Brautaset was the CEO of SpareBank 1 Sunnmøre, which merged with SpareBank 1 SMN May 2nd 2023. After the merge he took up his position as
Executive director Sunnmøre and Fjordane regions. Pension expense is related to the comany-owned pension account for salaries over 12G and regular occupational pension.
8) Arne Nypan is CEO SpareBank 1 Regnskapshuset SMN (SB1 RH) - total remuneration and pension expense is related to SB1 RH
9) Kjetil Reinsberg is CEO EiendomsMegler 1 Midt-Norge (EM1) - total remunertaion and pension expense is retaled to EM1
10) Kjell Fordal resigned from his position 31.8.2022
| (thousands of NOK) | ||
|---|---|---|
| -------------------- | -- | -- |
| Fees to | |||||||
|---|---|---|---|---|---|---|---|
| nomination-/ | |||||||
| audit-/ risk | No. Of | ||||||
| and remuneration |
Other | Loans as of 31 |
equity capital |
||||
| Name | Title | Year Fee | committee | benefits | December | certificates | |
| 2023 595 | 40 | 19 | - | 130,000 | |||
| Kjell Bjordal | Board chairman | 2022 573 | 40 | 3 | - | 130,000 | |
| 2023 313 | 129 | 4 | - | 35,000 | |||
| Christian Stav | Deputy chair | 2022 301 | 120 | - | - | 30,000 | |
| Board member | 2023 273 | 134 | 15 | 3,951 | 5,600 | ||
| Mette Kamsvåg | 2022 261 | 128 | 1 | - | 5,600 | ||
| 2023 273 | 47 | 11 | 12,606 | - | |||
| Tonje Eskeland Foss | Board member | 2022 261 | 49 | - | - | - | |
| Kristian Sætre1) | Board member | 2023 206 | 20 | 1 | 1,421 | - | |
| Ingrid Finnboe Svendsen1) | Board member | 2023 206 | 106 | - | - | 1,150 | |
| 2023 | 66 | 7 | 15 | - | 15,000 | ||
| Morten Loktu | Board member | 2022 261 | 27 | - | - | 15,000 | |
| 2023 273 | 20 | 64 | - | - | |||
| Freddy Aursø | Board member | 2022 261 | 23 | - | - | - | |
| 2023 273 | - | 925 | 5,620 | 1,083 | |||
| Christina Straub | Board member, employee representative2) | 2022 261 | - | 818 | - | 971 | |
| 2023 273 | 27 | 965 | 3,956 | 10,913 | |||
| Inge Lindseth | Board member, employee representative2) | 2022 261 | 27 | 916 | - | 7,353 |
1) Was selected in 2023
2) Other emoluments include salary in employment relationships
| (thousands of NOK) | ||
|---|---|---|
| Name Knut Solberg, Supervisory Board Chair |
Year | Fee |
| 2023 | 95 | |
| 2022 | 100 | |
| 2023 | 270 | |
| Other members | 2022 | 405 |
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 (NOK million) | 2023 | 2022 |
| 304 | 404 IT costs | 461 | 355 |
| 11 | 12 Postage and transport of valuables | 15 | 14 |
| 59 | 71 Marketing | 93 | 86 |
| 77 | 111 Ordinary depreciation (note 31, 32 and 33) | 153 | 117 |
| 46 | 50 Operating expenses, real properties | 57 | 55 |
| 188 | 222 Purchased services | 254 | 217 |
| 156 | 251 Other operating expense | 294 | 195 |
| 841 | 1,121 Total other operating expenses | 1,326 | 1,038 |
| Audit fees (NOK 1000) | |||
| 975 | 3,362 Financial audit | 4,905 | 3,142 |
| 879 | 1,191 Other attestations | 1,339 | 984 |
| 0 | - Tax advice | 29 | 27 |
| 244 | 1,075 Other non-audit services | 1,075 | 311 |
| 2,098 | 5,628 Total incl. value added tax | 7,348 | 4,464 |
The SpareBank 1 SMN Group has a pension scheme for its staff that meet the requirements set for mandatory occupational pensions. SpareBank 1 SMN had a defined benefit scheme previously. This pension scheme is administered by a pension fund conferring entitlement to specific future pension benefits from age 67. The schemes include children's pension and disability pension under further rules. The Group's defined benefit pension scheme assures the majority of employees a pension of 68 percent of final salary up to 12G. This arrangement was terminated from 1 January 2017. Employees on this scheme was transferred to the defined contribution scheme and received a paid-up policy showing rights accumulated under the defined benefit scheme. The termination resulted in reduced pension obligations, which has been treated as a settlement gain and reduced the pension expense for 2016.
Paid-up policies are managed by the pension fund, which becomes a paid-up pension fund as from 1 January 2017. A framework agreement has been established between SpareBank 1 SMN and the pension fund which covers funding, asset management etc. In view of the responsibility still held by SpareBank 1 SMN, future liabilities will need to be incorporated in the accounts.
The board of the pension fund is required to be composed of representatives from the Group and participants in the pension schemes in accordance with the articles of association of the pension fund. In addition to the pension obligations coveredd by the pension fund, the group has unfunded pension liabilities which can not be funded by the assets in the collective arrangements. The obligations entails employees not registered as member of the pension fund, additional pensions above 12 G, early retirement pension schemes and contractual early retirement schemes in new arrangement (AFP Subsidies Act).
Under a defined contribution pension scheme the group does not provide a future pension of a given size; instead the group pays an annual contribution to the employees' collective pension savings. The future pension will depend on the size of the contribution and the annual return on the pension savings. The group has no further obligations related to employees' labour contribution after the annual contribution has been paid. There is no allocation for accrued pension obligations under such schemes. Defined contribution schemes are directly expensed. Any pre-paid contributions are recognised as an asset (pension assets) to the extent the contribution can be refunded or reduce future inpayments. The contributions are made to the pension fund for full-time employees, and the contribution is from 7 per cent from 0-7,1 G and 15 per cent from 7.1 – 12 G. The premium is expensed as incurred.
The banking and financial industry has established an agreement on an early retirement pension scheme ("AFP"). The scheme covers early retirement pension from age 62 to 67. The Bank pays 100 per cent of the pension paid from age 62 to 64 and 60 per cent of the pension paid from age 65 to age 67. Admission of new retirees ceased with effect from 31 December 2010. The Act on state subsidies in respect of employees who take out contractual pension in the private sector (AFP Subsidies Act) entered into force on 19 February 2010. Employees who take out AFP with effect in 2011 or later will receive benefits under the new scheme. The new AFP scheme represents a lifelong add-on to National Insurance and can be taken out from age 62. Employees accumulate AFP entitlement at an annual rate of 0.314 per cent of pensionable income capped at 7.1G up to age 62. Accumulation under the new scheme is calculated with reference to the employee's lifetime income, such that all previous working years are included in the qualifying basis.
For accounting purposes the new AFP scheme is regarded as a defined benefit multi-employer scheme. This entails that each employer accounts for its pro rata share of the scheme's pension obligation, pension assets and pension cost. If no calculations of the individual components of the scheme and a consistent and reliable basis for allocation are available, the new AFP scheme will be accounted for as a defined-contribution scheme. At the present time no such basis exists, and the new AFP scheme is accordingly accounted for as a defined-contribution scheme. The new AFP scheme will only be accounted for as a defined-benefit scheme once reliable measurement and allocation can be undertaken. Under the new scheme, one-third of the pension expenses will be funded by the State, two-thirds by the employers. The employers' premium will be fixed as a percentage of salary payments between 1G and 7.1G.
In keeping with the recommendation of the Norwegian Accounting Standards Board, no provision was made for the group's de facto AFP obligation in the accounting year. This is because the office that coordinates the schemes run by the main employer and trade union organisations has yet to perform the necessary calculations.
| 2023 | 2022 | |||
|---|---|---|---|---|
| Actuarial assumptions | Costs | Commitment | Costs | Commitment |
| Discount rate | 3,0 % | 3,2 % | 1,6 % | 3,0 % |
| Expected rate of return on plan assets | 3,0 % | 3,2 % | 1,6 % | 3,0 % |
| Expected future wage and salary growth | 3,25 % | 3,25 % | 2,25 % | 3,25 % |
| Expected adjustment of basic amount (G) | 3,25 % | 3,25 % | 2,25 % | 3,25 % |
| Expected increase in current pension | 0%/2,0% | 0%/2,0% | 0%/2,0% | 0%/2,0% |
| Employers contribution | 19,1 % | 19,1 % | 19,1 % | 19,1 % |
| Expected voluntary exit before/after 50 yrs | 2/0 % | 2/0 % | 2/0 % | 2/0 % |
| Estimated early retirement outtake at age 62/64 | 25/50 % | 25/50 % | 25/50 % | 25/50 % |
| Mortality base table | K2013BE | |||
| Disability | IR73 |
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 Net pension liability in the balance sheet (NOK million). Financial position 1 Jan. |
2023 | 2022 |
| 645 | 577 Net present value of pension liabilities in funded schemes | 577 | 645 |
| -701 | -812 Estimated value of pension assets | -812 | -701 |
| -56 | -235 Net pension liability in funded schemes | -235 | -56 |
| 1 | 1 Employer's contribution | 1 | 1 |
| -54 | -234 Net pension liability in the balance sheet | -234 | -54 |
| Group | 2023 | 2022 | |||||
|---|---|---|---|---|---|---|---|
| Funded Unfunded | Total | Funded Unfunded | Total | ||||
| Present value of pension liability in funded schemes | 572 | 5 | 577 | 639 | 7 | 645 | |
| Fair value of pension assets | -812 | - | -812 | -701 | 0 | -701 | |
| Net pension liability in the balance sheet before employer's contribution |
-240 | 5 | -235 | -62 | 7 | -56 | |
| Employer's contribution | 0 | 1 | 1 | 0 | 1 | 1 | |
| Net pension liability in the balance sheet after employer's contribution |
-240 | 6 | -234 | -62 | 8 | -54 |
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 Pension cost for the year | 2023 | 2022 |
| 0 | 0 Present value of pension accumulated in the year | - | 0 |
| -1 | -7 Interest cost of pension liabilities | -7 | -1 |
| -1 | -7 Net defined-benefit pension cost without employer's contribution | -7 | -1 |
| 0 | 0 Employer's contribution - subject to accrual accounting | 0 | 0 |
| -1 | -7 Net pension cost related to defined benefit plans * | -7 | -1 |
| 9 | 10 Early retirement pension scheme, new arrangement | 17 | 16 |
| 46 | 64 Cost of defined contribution pension | 107 | 84 |
| 54 | 67 Total pension cost | 117 | 99 |
| Other comprehensive income for the period | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Unfunded | Funded | Total | Unfunded | Funded | Total | |
| Change in discount rate | - | -13 | -13 | 0 | -111 | -111 |
| Changing other factors, DBO | 0 | 11 | 11 | 0 | 65 | 64 |
| Change in other factors, pension assets | - | 29 | 29 | - | -130 | -130 |
| Other comprehensive income for the period | 0 | 26 | 27 | -1 | -177 | -177 |
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 Movement in net pension liability in the balance sheet | 2023 | 2022 |
| -54 | -234 Net pension liability in the balance sheet 1.1 | -234 | -54 |
| -177 | 27 Actuarial gains and losses for the year | 27 | -177 |
| -1 | -7 Net defined-benefit costs in profit and loss account incl. Curtailment /settlement |
-7 | -1 |
| -1 | -3 Paid-in pension premium, defined-benefit schemes | -3 | -1 |
| -234 | -217 Net pension liability in the balance sheet 31.12 | -217 | -234 |
| 2022 | 2023 Financial status 31.12 | 2023 | 2022 |
| 577 | 558 Pension liability | 558 | 577 |
| -812 | -776 Value of pension assets | -776 | -812 |
| -235 | -217 Net pension liability before employer's contribution | 217 | -235 |
| 1 | 1 Employer's contribution | 1 | 1 |
| -234 | -217 Net pension liability after employer's contribution*) | -217 | -234 |
* Presented gross in the Group accounts
| Group | 31.12.2023 | 31.12.2022 | |||||
|---|---|---|---|---|---|---|---|
| Funded Unfunded | Total | Funded Unfunded | Total | ||||
| Pension liability | 555 | 3 | 558 | 572 | 5 | 577 | |
| Value of pension assets | -776 | - | -776 | -812 | 0 | -812 | |
| Net pension liability before employer's contribution | -221 | 3 | -217 | -240 | 5 | -235 | |
| Employer's contribution | 0 | 1 | 1 | 0 | 1 | 1 | |
| Net pension liability after employer's contribution | -221 | 4 | -217 | -240 | 6 | -234 |
| Fair value of pension liability, Group | 31.12.2023 | 31.12.2022 |
|---|---|---|
| OB pension liability (PBO) | 577 | 645 |
| Present value of pension accumulated in the year | - | - |
| Payout/release from scheme | -33 | -32 |
| Interes costs of pension liability | 17 | 10 |
| Curtailment/ Settlement | - | - |
| Actuarial gain or loss | -2 | -47 |
| CB pension liability (PBO) | 558 | 577 |
| Fair value of pension assets, Group | 31.12.2023 | 31.12.2022 |
|---|---|---|
| OB pension assets | 812 | 701 |
| Paid in | 2 | 1 |
| Payout/release from fund | -33 | -32 |
| Expected retur | 24 | 11 |
| Curtailment/ Settlement | - | - |
| Actuarial changes | -29 | 130 |
| CB market value of pension assets | 776 | 812 |
| Discount rate | Salary adjustment | Pension adjustment | ||||
|---|---|---|---|---|---|---|
| Sensitivity, Group | + 1 pp | - 1 pp | +1 pp | - 1 pp | + 1 pp | |
| 2023 | ||||||
| Change in accumulated pension rights in course of year | - | - | - | - | - | |
| Change in pension liability | -58 | 70 | - | - | 72 | |
| 2022 | ||||||
| Change in accumulated pension rights in course of year | - | - | - | - | - | |
| Change in pension liability | -62 | 76 | - | - | 77 |
| Parent Bank | Group | |||
|---|---|---|---|---|
| 2022 | 2023 Members | 2023 | 2022 | |
| 726 | 741 Numbers of persons included in pension scheme | 741 | 726 | |
| 218 | 230 of which active | 230 | 218 | |
| 508 | 511 of which retirees and disabled | 511 | 508 | |
| Investment and pension assets in the pension fund | 2023 | 2022 | ||
| Current | 55 % | 43 % | ||
| Money market | 14 % | 21 % | ||
| Equities | 25 % | 29 % | ||
| Real estate | 6 % | 7 % | ||
| Total | 100 % | 100 % |
The pension scheme arrangement is located in its own pension fund, which has a long-term horizon on the management of its capital. The pension fund seeks to achieve as high a rate of return as possible by composing an investment portfolio that provides the maximum risk-adjusted return. The pension fund seeks to spread its investments on various issuers and asset classes in order to reduce companyspecific and market-specific risk. The portfolio thus comprises equity investments in Norwegian and foreign shares. The bond portfolio is essentially invested in Norwegian bonds. Bank deposits are placed in Norwegian Banks.
Tax recorded in the income statement comprises tax in the period (payable tax) and deferred tax. Period tax is tax calculated on the taxable profit for the year. Deferred tax is accounted for by the liability method under IAS 12. Calculation of deferred tax is done using the tax rate in effect at any time. Liabilities or assets are calculated on temporary differences i.e. the difference between balance-sheet value and tax-related value of assets and liabilities. However, liabilities or assets are not calculated in the case of deferred tax on goodwill for which there is no deduction for tax purposes, nor on first-time-recognised items which affect neither the accounting nor the taxable profit.
A deferred tax asset is calculated on a tax loss carryforward. Deferred tax assets are recognised only to the extent that there is expectation of future taxable profits that enable use of the tax asset. Withholding tax is presented as period tax. Wealth tax is presented as an operating expense in the group accounts under IAS 12.
| Parent Bank | Group | ||
|---|---|---|---|
| 2022 | 2023 (NOK million) | 2023 | 2022 |
| 3,125 | 4,498 Result before tax | 3,688 | 3,353 |
| -456 | -1,099 +/- permanent differences | -632 | -722 |
| -315 | -216 +/- change in temporary differences as per specification | -227 | -313 |
| - | - + deficit carried forward | -0 | -4 |
| 2,354 | 3,183 Year's tax base/taxable income | 2,829 | 2,313 |
| 612 | 803 Tax payable on profit for the year | 885 | 699 |
| -15 | -30 Taxes on interest hybrid capital | -31 | -15 |
| 15 | 8 Excess/too little tax accrued previous year | 14 | 21 |
| 612 | 781 Total taxes payable in statement of financial position | 868 | 705 |
| 612 | 803 Tax payable on profit for the year | 885 | 699 |
| 34 | 47 +/- change in deferred tax | 50 | 35 |
| -15 | -30 Taxes on interest hybrid capital | -31 | -15 |
| 631 | 820 Tax charge for the year | 904 | 718 |
| Change in net deferred tax liability | |||
| -34 | 47 Deferred tax shown through profit/loss | 50 | -35 |
| -44 | 7 Deferred tax shown through equity | 7 | -44 |
| - | 41 Change in deferred tax arising from business combination | 41 | -81 |
| 3 | 11 Too little taxes accrued previous year | -9 | 3 |
| 76 | 106 Total change in net deferred tax liability | 89 | -156 |
* Due to changes in temporary differences between annual accounts and final tax papers.
| 2022 | 2023 Composition of deferred tax carried in the balance sheet (NOK Million) |
2023 | 2022 |
|---|---|---|---|
| Temporary differences: | |||
| - | 13 - Business assets | 44 | 27 |
| - | - - Leasing items | 310 | 273 |
| 234 | 212 - Pension liability | 216 | 236 |
| 202 | 544 - Securities | 544 | 202 |
| 2,154 | 1,337 - Hedge derivatives | 1,337 | 2,154 |
| - | 128 - Other temporary differences | 128 | 4 |
| 2,590 | 2,233 Total tax-increasing temporary differences | 2,578 | 2,896 |
| 648 | 558 Deferred tax | 644 | 723 |
| Temporary differences: | |||
| -27 | - - Business assets | -12 | -38 |
| - | - - Pension liability | - | - |
| -75 | -48 - Securities | -48 | -75 |
| -2,185 | -1,471 - Hedge derivatives | -1,471 | -2,185 |
| -13 | -2 - Other temporary differences | -117 | -107 |
| - | - - Deficit carried forward | - | -1 |
| -2,301 | -1,521 Total tax-decreasing temporary differences | -1,648 | -2,407 |
| -575 | -380 Deferred tax asset | -411 | -602 |
| 72 | 178 Net deferred tax (-asset ) | 231 | 122 |
The above table comprises temporary differences from all consolidated companies shown gross. At the company level tax-increasing and tax-reducing temporary differences are shown net. At the group level recognition is on a gross basis in conformity with IAS 12 with each company being presented separately in the calculation of the Group's tax benefit and deferred tax:
| 2023 | 2022 | |
|---|---|---|
| Tax benefit recorded 31 Dec | 6 | 5 |
| Deferred tax recorded 31 Dec | -236 | -127 |
| 2022 | 2023 Reconciliation of tax charge for the period recognised against profit and loss to profit before tax |
2023 | 2022 |
|---|---|---|---|
| 781 | 1,125 25 % of profit before tax | 1,190 | 882 |
| -114 | -275 Non-taxable profit and loss items (permanent differences) | -257 | -129 |
| -44 | -30 Tax effect of costs reflected in equity | -31 | -44 |
| 8 | - Too little taxes accrued previous year | 2 | 8 |
| 631 | 820 Tax for the period recognised in the income statement | 904 | 718 |
| 20 % | 18 % Effective tax rate | 25 % | 21 % |
Shares, sertificates, bonds and derivatives are classified at fair value through profit/loss.
All financial instruments classified at fair value through profit/loss are measured at fair value, and any change in value from the opening balance is recognised as gain or losses from other financial investments. Financial assets held for trading purposes are characterised by the fact that instruments in the portfolio are traded frequently and that positions are established with the aim of short-term gain. Other such financial assets at fair value through profit or loss are investments which, on initial recognition, are designated at fair value through profit or loss.
Financial derivatives are presented as assets when fair value is positive, and as liabilities when fair value is negative.
| Group | Financial instruments at fair value through profit or loss |
Financial | ||||
|---|---|---|---|---|---|---|
| Designated | instruments at fair value |
Financial instruments |
||||
| as such | through other | measured at | ||||
| upon initial | Held for | comprehensive | amortised | |||
| 31 Dec 2023 (NOKm) | recognition | Mandatorily | trading | income | cost | Total |
| Assets | ||||||
| Cash and receivables from central banks | - | - | - | - | 1,172 | 1,172 |
| Deposits with and loans to credit institutions |
- | - | - | - | 8,746 | 8,746 |
| Loans to and receivables from customers | 5,582 | - | - | 92,263 | 71,110 | 168,955 |
| Shares, units and other equity interests | - | 774 | 363 | - | - | 1,137 |
| Fixed-income CDs and bonds | - | 34,163 | - | - | 34,163 | |
| Derivatives | 744 | - | 5,915 | - | - | 6,659 |
| Earned income not yet received | - | - | - | - | 153 | 153 |
| Accounts receivable, securities | - | - | - | - | 66 | 66 |
| Total financial assets | 6,326 | 774 | 40,441 | 92,263 | 81,247 | 221,051 |
| Liabilities | ||||||
| Deposits from credit institutions | - | - | - | - | 13,160 | 13,160 |
| Deposits from and debt to customers | - | - | - | - | 132,888 | 132,888 |
| Debt created by issue of securities | - | - | - | - | 45,830 | 45,830 |
| Derivatives | 1,630 | - | 5,359 | - | - | 6,989 |
| Subordinated loan capital | - | - | - | - | 2,247 | 2,247 |
| Lease liabilities | - | - | - | - | 403 | 403 |
| Debt from securities | - | - | - | - | -15 | -15 |
| Total financial liabilities | 1,630 | - | 5,359 | - | 194,512 | 201,501 |
| Group | Financial instruments at fair value through profit or loss |
Financial | ||||
|---|---|---|---|---|---|---|
| instruments at | Financial | |||||
| Designated as such |
fair value through other |
instruments measured at |
||||
| upon initial | Held for | comprehensive | amortised | |||
| 31 Dec 2022 (NOKm) | recognition | Mandatorily | trading | income | cost | Total |
| Assets | ||||||
| Cash and receivables from central banks | - | - | - | - | 1,171 | 1,171 |
| Deposits with and loans to credit | ||||||
| institutions | - | - | - | - | 11,663 | 11,663 |
| Loans to and receivables from customers | 4,708 | - | - | 81,901 | 64,940 | 151,549 |
| Shares, units and other equity interests | - | 700 | 140 | - | - | 840 |
| Fixed-income CDs and bonds | - | 38,073 | - | - | - | 38,073 |
| Derivatives | 294 | - | 6,510 | - | - | 6,804 |
| Earned income not yet received | - | - | - | - | 104 | 104 |
| Accounts receivable, securities | - | - | - | - | 262 | 262 |
| Total financial assets | 5,002 | 38,773 | 6,649 | 81,901 | 78,140 | 210,465 |
| Liabilities | ||||||
| Deposits from credit institutions | - | - | - | - | 14,636 | 14,636 |
| Deposits from and debt to customers | - | - | - | - | 122,010 | 122,010 |
| Debt created by issue of securities | - | - | - | - | 47,474 | 47,474 |
| Derivatives | 2,368 | - | 5,939 | - | - | 8,307 |
| Subordinated loan capital | - | - | - | - | 2,058 | 2,058 |
| Lease liabilities | - | - | - | - | 339 | 339 |
| Debt from securities | - | - | - | - | 176 | 176 |
| Total financial liabilities | 2,368 | - | 5,939 | - | 186,693 | 195,000 |
Fair value of financial instruments that are traded in the active markets is based on market price on the balance sheet date. A market is considered active if market prices are easily and regularly available from a stock exchange, dealer, broker, industry group, price-setting service or regulatory authority, and these prices represent actual and regularly occurring market transactions at an arm's length. This category also includes quoted shares and Treasury bills.
Level 2 consists of instruments that are valued by the use of information that does not consist in quoted prices, but where the prices are directly or indirectly observable for the assets or liabilities concerned, and which also include quoted prices in non-active markets.
If valuation data are not available for level 1 and 2, valuation methods are applied that are based on non-observable information.
| Assets (NOKm) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value through profit/loss | ||||
| - Derivatives | - | 6,659 | - | 6,659 |
| - Bonds and money market certificates | 2,879 | 31,284 | - | 34,163 |
| - Equity instruments | 363 | 152 | 622 | 1,137 |
| - Fixed interest loans | - | 102 | 5,480 | 5,582 |
| Financial assets through other comprehensive income | ||||
| - Loans at fair value through other comprehensive income | - | - | 92,263 | 92,263 |
| Total assets | 3,242 | 38,197 | 98,365 | 139,804 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
| Financial liabilities through profit/loss | ||||
| - Derivatives | - | 6,989 | - | 6,989 |
| Total liabilities | - | 6,989 | - | 6,989 |
| Assets (NOKm) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value through profit/loss | ||||
| - Derivatives | - | 6,804 | - | 6,804 |
| - Bonds and money market certificates | 3,721 | 34,352 | - | 38,073 |
| - Equity instruments | 140 | 130 | 570 | 840 |
| - Fixed interest loans | - | 78 | 4,630 | 4,708 |
| Financial assets through other comprehensive income | ||||
| - Loans at fair value through other comprehensive income | - | - | 81,901 | 81,901 |
| Total assets | 3,861 | 41,363 | 87,101 | 132,325 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
| Financial liabilities through profit/loss | ||||
| - Derivatives | - | 8,307 | - | 8,307 |
| Total liabilities | - | 8,307 | - | 8,307 |
| Equity | ||||
|---|---|---|---|---|
| instruments through profit |
Fixed interest | Loans at fair value |
||
| (NOKm) | /loss | loans | through OCI | Total |
| Opening balance 1 January | 570 | 4,630 | 81,901 | 87,101 |
| Investment in the period | 38 | 1,814 | 40,578 | 42,430 |
| Disposals in the period | -25 | -977 | -30,210 | -31,212 |
| Expected credit loss | - | - | 2 | 2 |
| Gain or loss on financial instruments | 38 | 14 | -7 | 45 |
| Closing balance 31 December 23 | 622 | 5,480 | 92,263 | 98,365 |
| Equity | ||||
|---|---|---|---|---|
| instruments | Loans at fair | |||
| through profit | Fixed interest | value | ||
| (NOKm) | /loss | loans | through OCI | Total |
| Opening balance 1 January | 564 | 4,198 | 83,055 | 87,817 |
| Investment in the period | 17 | 1,355 | 36,461 | 37,834 |
| Disposals in the period | -2 | -752 | -37,604 | -38,358 |
| Expected credit loss | - | - | -20 | -20 |
| Gain or loss on financial instruments | -8 | -171 | 9 | -171 |
| Closing balance 31 December 22 | 570 | 4,630 | 81,901 | 87,101 |
The valuation method applied is adapted to each financial instrument, and is intended to utilise as much of the information that is available in the market as possible.
The method for valuation of financial instruments in level 2 and 3 is described in the following:
The loans consist for the most part of fixed interest loans denominated in Norwegian kroner. The value of the fixed interest loans is determined such that agreed interest flows are discounted over the term of the loan by a discount factor that is adjusted for margin requirements. The discount factor is raised by 10 points when calculating sensitivity.
Property Loans at floating interest classified at fair value over other comprehensive income is valued based on nominal amount reduced by expected credit loss. Loans with no significant credit risk detoriation since first recognition is assessed at nominal amount. For loans with a significant increase in credit risk since first recognition or objective evidence of loss, the calculation of expected credit losses over the life of the asset is in line with loan losses for loans at amortised cost. Estimated fair value is the nominal amount reduced by expected lifetime credit loss. If the likelihood of the worst case scenario in the model is doubled, fair value is reduced by NOK 2 million.
Valuation on level 2 is based for the most part on observable market information in the form of interest rate curves, exchange rates and credit margins for the individual credit and the bond's or certificate's characteristics. For paper valued under level 3 the valuation is based on indicative prices from a third party or comparable paper.
Shares that are classified to level 3 include essentially investments in unquoted shares. Among other a total of NOK 531 million in Private Equity investments, property funds, hedge funds and unquoted shares through the company SpareBank SMN 1 Invest. The valuations are in all essentials based on reporting from managers of the funds who utilise cash flow based models or multiples when determining fair value. The Group does not have full access to information on all the elements in these valuations and is therefore unable to determine alternative assumptions.
Financial derivatives at level 2 include for the most part currency futures and interest rate and exchange rate swaps. Valuation is based on observable interest rate curves. In addition the item includes derivatives related to FRAs. These are valued with a basis in observable prices in the market. Derivatives classified to level 2 also include equity derivatives related to SpareBank 1 Markets' market-making activities. The bulk of these derivatives refer to the most sold shares on Oslo Børs, and the valuation is based on the price of the actual /underlying share and observable or calculated volatility.
| Effect from change in reasonable possible alternative |
||
|---|---|---|
| (NOKm) | Book value | assumtions |
| Fixed interest loans | 5,480 | -15 |
| Equity instruments through profit/loss* | 622 | - |
| Loans at fair value through other comprehensive income | 92,263 | -2 |
* As described above, the information to perform alternative calculations are not available
Financial instruments that are not measured at fair value are recognised at amortised cost or are in a hedging relationship. Amortised cost entails valuing balance sheet items after initially agreed cash flows, adjusted for impairment. Amortised cost will not always be equal to the values that are in line with the market assessment of the same financial instruments. This is due to different perceptions of market conditions, risk and discount rates.
Methods underlying the determination of fair value of financial instruments that are measured at amortised cost are described below:
Current-rate loans are exposed to competition in the market, indicating that possible excess value in the portfolio will not be maintained over a long period. Fair value of current-rate loans is therefore set to amortised cost. The effect of changes in credit quality in the portfolio is accounted for through collectively assessed impairment write-downs, therefore giving a good expression of fair value in that part of the portfolio where individual write-down assessments have not been made.
Individual write-downs are determined through an assessment of future cash flow, discounted by effective interest rate. Hence the discounted value gives a good expression of the fair value of these loans.
Loans to and claims on credit institutions, Earned income not received, Debt to credit institutions and deposits from customers and debt from securities
For loans to and claims on credit institutions, as well as debt to credit institutions and deposits from customers, fair value is estimated equal to amortised cost.
The calculation of fair value in level 2 is based on observable market values such as on interest rate and spread curves where available.
| 31 Dec 2022 | |||
|---|---|---|---|
| 31 Dec 2023 Level 1) (NOKm) Book value Fair Value Book value 2 19,241 19,241 21,972 2 58,522 58,685 52,941 2 136 136 87 2 66 66 262 77,965 78,128 75,262 2 13,160 13,160 14,636 2 133,462 133,462 122,699 2 13,260 13,182 11,679 2 32,637 32,639 35,868 2 2,169 2,168 2,015 2 - - - 2 260 260 233 2 -15 -15 176 194,933 194,857 187,306 |
Fair Value | ||
| Assets | |||
| Loans to and claims on credit institutions | 21,972 | ||
| Loans to and claims on customers at amortised cost | 53,085 | ||
| Earned income not yet received | 87 | ||
| Accounts receivable, securities | 262 | ||
| Total financial assets at amortised cost | 75,406 | ||
| Liabilities | |||
| Debt to credit institutions | 14,636 | ||
| Deposits from and debt to customers | 122,699 | ||
| Securities debt at amortised cost | 11,605 | ||
| Securities debt, hedging | 35,867 | ||
| Subordinated debt at amortised cost | 2,014 | ||
| Subordinated debt, hedging | - | ||
| Lease liabilities | 233 | ||
| Debt from securities | 176 | ||
| Total financial liabilities at amortised cost | 187,231 |
| 31 Dec 2023 | 31 Dec 2022 | ||||
|---|---|---|---|---|---|
| (NOKm) | Book value | Fair Value | Book value | Fair Value | |
| Assets | |||||
| Loans to and claims on credit institutions | 2 | 8,746 | 8,746 | 11,663 | 11,663 |
| Loans to and claims on customers at amortised cost | 2 | 71,115 | 71,298 | 65,018 | 65,184 |
| Earned income not yet received | 2 | 153 | 153 | 104 | 104 |
| Accounts receivable, securities | 2 | 66 | 66 | 262 | 262 |
| Total financial assets at amortised cost | 80,080 | 80,263 | 77,046 | 77,212 | |
| Liabilities | |||||
| Debt to credit institutions | 2 | 13,160 | 13,160 | 14,636 | 14,636 |
| Deposits from and debt to customers | 2 | 132,888 | 132,888 | 122,010 | 122,010 |
| Securities debt at amortised cost | 2 | 13,260 | 13,182 | 11,679 | 11,605 |
| Securities debt, hedging | 32,637 | 32,639 | 35,868 | 35,867 | |
| Subordinated debt at amortised cost | 2 | 2,247 | 2,246 | 2,058 | 2,058 |
| Subordinated debt, hedging | 2 | - | - | - | - |
| Lease liabilities | 2 | 403 | 403 | 339 | 339 |
| Debt from securities | 2 | -15 | -15 | 176 | 176 |
| Total financial liabilities at amortised cost | 194,580 | 194,504 | 186,765 | 186,690 |
1) Fair value is determined by using different methods in three levels. See note 25 for a definition of the levels
| Parent Bank | Group | ||
|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 Money market certificates and bonds by issuer sector (NOKm) | 31 Dec 2023 | 31 Dec 2022 |
| State | |||
| 8,079 | 7,972 Nominal value | 7,972 | 8,079 |
| 7,940 | 7,823 Book value | 7,823 | 7,940 |
| Other public sector | |||
| 17,424 | 12,614 Nominal value | 12,614 | 17,424 |
| 17,419 | 12,630 Book value | 12,630 | 17,419 |
| Financial enterprises | |||
| 12,336 | 13,026 Nominal value | 13,026 | 12,336 |
| 12,525 | 13,483 Book value | 13,483 | 12,525 |
| Non-financial enterprises | |||
| 10 | 7 Nominal value | 7 | 10 |
| 9 | 7 Book value | 8 | 10 |
| 37,849 | 33,620 Total fixed income securities, nominal value | 33,620 | 37,849 |
| 178 | 218 Accrued interest | 218 | 178 |
| 38,072 | 34,163 Total fixed income securities, booked value | 34,163 | 38,073 |
Bonds and money market instruments are classified at fair value through profit/loss at 31 December 2023.
All derivatives are booked at fair value through profit and loss. Gains are carried as assets and losses as liabilities in the case of all interest rate derivatives. This applies both to derivatives used for hedging purposes and held for trading purposes. The Bank does not employ cash flow hedging.
The contract amount shows absolute values for all contracts.
For a description of counterparty risk and market risk, see note 6 on risk factors. For further details concerning market risk linked to interest rate risk, see note 14 on market risk related to interest rate risk, and for market risk related to currency exposure, see note 15 on market risk related to currency exposure.
| Fair value through profit and loss (NOKm) | 31 Dec 2023 31 Dec 2022 |
|||||
|---|---|---|---|---|---|---|
| Contract | Fair value | Contract | Fair value | |||
| Currency instruments | amount | Assets | Liabilities | amount | Assets | Liabilities |
| Foreign exchange derivatives (forwards) | 14,863 | 72 | -241 | 11,510 | 71 | -96 |
| Currency swaps | 36,719 | 556 | -116 | 27,459 | 242 | -118 |
| FX-options | 326 | -3 | 3 | 41 | -1 | 0 |
| Total currency instruments | 51,907 | 625 | -354 | 39,010 | 312 | -214 |
| Interest rate instruments | ||||||
| Interest rate swaps (including cross currency) | 245,023 | 4,919 | -4,478 | 256,905 | 5,160 | -4,566 |
| Short-term interest rate swaps (FRA) | - | 4 | -2 | - | - | -1 |
| Total interest rate instruments | 245,023 | 4,923 | -4,480 | 256,905 | 5,160 | -4,566 |
| Commodity-related contracts Stock-exchange-traded standardised forwards and futures contracts |
2,091 | 158 | -158 | 1,055 | 1,164 | -1,164 |
| Total commodity-related contracts | 2,091 | 158 | -158 | 1,055 | 1,164 | -1,164 |
| Hedging Interest rate instruments |
||||||
| Interest rate swaps (including cross currency) | 34,643 | 744 | -1,630 | 38,401 | 294 | -2,368 |
| Total interest rate instruments | 34,643 | 744 | -1,630 | 38,401 | 294 | -2,368 |
| Total | ||||||
| Total interest rate instruments | 279,666 | 5,666 | -6,110 | 295,306 | 5,454 | -6,934 |
| Total currency instruments | 51,907 | 625 | -354 | 39,010 | 312 | -214 |
| Total commodity-related contracts | 2,091 | 158 | -158 | 1,055 | 1,164 | -1,164 |
| Accrued interest | - | 211 | -367 | - | -127 | 5 |
| Total financial derivatives | 333,664 | 6,659 | -6,989 | 335,371 | 6,803 | -8,307 |
| Fair value through profit and loss (NOKm) | 31 Dec 2023 31 Dec 2022 |
|||||
|---|---|---|---|---|---|---|
| Contract | Fair value | Contract | Fair value | |||
| Currency instruments | amount | Assets | Liabilities | amount | Assets | Liabilities |
| Foreign exchange derivatives (forwards) | 14,863 | 72 | -241 | 11,510 | 71 | -96 |
| Currency swaps | 36,719 | 556 | -116 | 27,459 | 242 | -118 |
| FX-options | 27 | -3 | 3 | 41 | -1 | 0 |
| Total currency instruments | 51,907 | 625 | -354 | 39,010 | 312 | -214 |
| Interest rate instruments | ||||||
| Interest rate swaps (including cross currency) | 245,023 | 4,919 | -4,478 | 256,905 | 5,160 | -4,566 |
| Short-term interest rate swaps (FRA) | - | 4 | -2 | - | - | -1 |
| Total interest rate instruments | 245,023 | 4,923 | -4,480 | 256,905 | 5,160 | -4,566 |
| Commodity-related contracts | ||||||
| Stock-exchange-traded standardised forwards and futures contracts | 2,091 | 158 | -158 | 1,055 | 1,164 | -1,164 |
| Total commodity-related contracts | 2,091 | 158 | -158 | 1,055 | 1,164 | -1,164 |
| Hedging | ||||||
| Interest rate instruments | ||||||
| Interest rate swaps (including cross currency) | 34,643 | 744 | -1,630 | 38,401 | 294 | -2,368 |
| Total interest rate instruments | 34,643 | 744 | -1,630 | 38,401 | 294 | -2,368 |
| Total | ||||||
| Total interest rate instruments | 279,666 | 5,666 | -6,110 | 295,306 | 5,454 | -6,934 |
| Total currency instruments | 51,907 | 625 | -354 | 39,010 | 312 | -214 |
| Total commodity-related contracts | 2,091 | 158 | -158 | 1,055 | 1,164 | -1,164 |
| Accrued interest | - | 211 | -367 | - | -127 | 5 |
| Total financial derivatives | 333,664 | 6,659 | -6,989 | 335,371 | 6,803 | -8,307 |
The Bank evaluates and documents the effectiveness of a hedge in accordance with IAS 39. The Bank employs fair value hedging to manage its interest rate risk. In its hedging operations the Bank protects against movements in the market interest rate. Changes in credit spread are not taken to account when measuring hedge effectiveness. In the case of fair value hedging, both the hedging instrument and the hedged object are recorded at fair value, and changes in these values from the opening balance are recognised in profit/loss.
The bank has established hedge accounting in order to achieve accounting treatment that reflects how interest rate risk and foreign exchange risk are managed in the case of large long-term borrowings. See note 6 Risk factors for more information. The hedged objects consist exclusively of debt created by the issuance of financial instruments and are implemented in conformity with IFRS 9 by fair value hedging. For those debt instruments that are included in the hedging portfolio, separate interest rate and exchange rate swaps are entered into with corresponding principle and maturity structure. Inefficiency may nonetheless arise as a result of random market variations in the evaluation of object and instrument.
The hedging instruments (interest rate and exchange rate swaps) are recognised at fair value, whereas the hedged objects are recognised at fair value in respect of the risks that are hedged (interest rate risk and exchange rate risk). Hedge inefficiency, defined as the difference between the value adjustment of the hedging instruments and the value adjustment of the hedged risks in the objects is recognised through profit/loss on an ongoing basis.
| Nominal amount 31 Dec 2023 | Nominal amount 31 Dec 2022 | |||||
|---|---|---|---|---|---|---|
| Group (NOK million) | Hedging instrument |
Hedging | object Ineffectivity | Hedging instrument |
Hedging | object Ineffectivity |
| Accounting line in Balance Sheet |
Derivatives | Debt createdby issuanceof securities |
Derivatives | Debt createdby issuanceof securities |
||
| Debt at fixed interest | Interest swap |
Interest swap |
||||
| Nominal NOK | 13,079 | 12,164 | - 915 | 11,200 | 11,200 | - |
| Interest and currency swap | Interest and currency swap | |||||
| Debt in currency at fixed interest |
||||||
| Nominal EUR | 19,011 | 19,011 | - | 23,120 | 23,120 | - |
| Nominal JPY | 719 | 719 | - | - | - | - |
| Nominal CHF | 2,118 | 2,118 | - | 3,737 | 3,737 | - |
| Book value 31 Dec 2023 | Book value 31 Dec 2022 | |||||
| Hedging instrument |
Hedging object |
Ineffectivity in PL |
Hedging instrument |
Hedging object |
Ineffectivity in PL |
|
| Recorded amount Assets | 744 | 294 | ||||
| Recorded amount Liabilities | 1,630 | 29,624 | 2,368 | 35,868 | ||
| Accumulated value changes ending balance |
-1,259 | -1,251 | -2,185 | -2,233 | ||
| Accumulated value changes opening balance |
-2,155 | -2,145 | -30 | -88 | ||
| Change in fair value | 896 | 894 | 2 | -2,155 | -2,145 | -10 |
| Accounting line in profit and loss |
Net return on financial investments |
Net return on financial investments |
In recent years, reform of and alternatives to IBOR rates have become a priority area for governments across the world. However, there is uncertainty as to the timing and method for any changes. All SpareBank 1 SMN's interest rate derivatives have IBOR rates as their benchmark, and thus could be affected by changes. The most significant positions are held in EURIBOR and NIBOR. The bank follows market developments closely, and participates in several projects in order to monitor and facilitate any changes. The table below shows exposure and nominal amount for derivatives in hedge relationships that may be affected by the IBOR reform, split on the IBOR rate in question.
| Nominal amount | ||||||
|---|---|---|---|---|---|---|
| Interest- and currency instrument (NOK million) | Hedging object | Hedging instrument | Net Exposure | |||
| EURIBOR 3M | - | 14,985 | - 14,985 | |||
| EURIBOR 6M | - | 293 | - 293 | |||
| OIBOR 3M | - | 19,254 | - 19,254 | |||
| Total | - | 34,532 | - 34,532 |
| Parent bank | Group | ||
|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 Shares and units (NOK million) | 31 Dec 2023 | 31 Dec 2022 |
| 210 | 454 At fair value through profit or loss | 985 | 710 |
| 140 | 363 Listed | 363 | 140 |
| 70 | 92 Unlisted | 623 | 571 |
| 210 | 454 Total shares and units | 985 | 710 |
| Subordinated bond | |||
| 123 | 220 Listed | 96 | 123 |
| 85 | 56 Unlisted | 56 | 7 |
| 207 | 276 Total subordinated bond | 152 | 130 |
| Business held for sale - of which shares | |||
| 98 | 98 Unlisted | 112 | 1,919 |
| 98 | 98 Total shares held for sale (see note 39) | 112 | 1,919 |
| 263 | 583 Total listed companies | 459 | 263 |
| 252 | 246 Total unlisted companies | 791 | 2,496 |
| Listed companies | Org.no | Stake over 10 % |
Our holding (no.) |
Acquisition cost (NOK 1000) |
Market value/book value (NOK 1000) |
|---|---|---|---|---|---|
| Visa Inc. C-aksjer | 63,536 | 6,750 | 167,566 | ||
| Total quoted shares | 6,750 | 167,566 | |||
| SpareBank 1 Nordmøre | 937899408 | 69,423 | 7,455 | 8,678 | |
| Total quoted credit institutions | 7,455 | 8,678 | |||
| DNB Global Treasury | 880109162 | 118,592 | 112,276 | 107,729 | |
| Holberg OMF | 997454790 | 649,728 | 64,491 | 68,143 | |
| DNB European Covered Bonds | 880109162 | 15,180 | 12,585 | 10,613 | |
| Total quoted securities | 189,352 | 186,486 | |||
| Unlisted companies | |||||
| Eksportfinans | 816521432 | 2,153 | 16,651 | 39,975 | |
| VN Norge AS - billion shares | 821083052 | 28,688,772 | 37,338 | 20,125 | |
| Visa C preference shares | 1,298 | 2,607 | 10,932 | ||
| Eiendomskreditt AS | 979391285 | 44,000 | 4,502 | 9,329 | |
| Sparebank 1 Bank og Regnskap AS | 917143501 | 308 | 2,487 | 3,388 | |
| Runde Miljøbygg AS | 989736027 | 40,000 | 2,500 | 2,500 | |
| Misc companies | 2,955 | 5,302 | |||
| Total unquoted shares and units | 69,040 | 91,550 | |||
| SpareBank 1 Finans Midt-Norge | 938521549 | 124,300 | 124,310 | ||
| Sparebanken Sogn og Fjordane | 946670081 | 14,624 | 14,695 | ||
| Flekkefjord Sparebank | 937894627 | 12,153 | 12,239 | ||
| Sparebanken Øst | 937888937 | 9,632 | 9,656 | ||
| SpareBank 1 Sørøst-Norge | 944521836 | 8,572 | 8,585 | ||
| SpareBank 1 Nord-Norge | 952706365 | 7,400 | 7,433 | ||
| Hegra Sparebank | 937903235 | 5,683 | 5,690 | ||
| Aurskog Sparebank | 937885644 | 5,003 | 5,025 | ||
| DNB Bank | 984851006 | 4,168 | 4,205 | ||
| Sparebanken Sør | 937894538 | 4,010 | 4,018 | ||
| SpareBank 1 SR-Bank | 937895321 | 4,012 | 4,017 | ||
| Other | 20,173 | 20,227 | |||
| Total quoted subordinated bonds | 219,730 | 220,098 | |||
| SpareBank 1 Gruppen | 975966372 | 48,750 | 48,088 | ||
| DNB Bank | 984851006 | 8,033 | 8,117 | ||
| Total unquoted subordinated bonds | 56,783 | 56,205 | |||
| Total shares, units and equity capital certificates, parent bank | 549,110 | 730,584 |
| Our | Acquisition | Market value/book |
|||
|---|---|---|---|---|---|
| Unlisted companies | Org.no | Stake over 10 % |
holding (no.) |
cost (NOK 1000) |
value (NOK 1000) |
| SIGNORD AS (Tidligere Viking Venture III) | 992229667 | 16.8 % | 955,039 | 34,745 | 240,736 |
| Salvesen & Thams AS | 999104428 | 27,564 | 45,733 | 141,514 | |
| Crayo Nano AS | 998682525 | 1,689,279 | 20,266 | 19,427 | |
| Sintef Venture V | 920749984 | 9,000 | 16,636 | 19,111 | |
| Proventure Seed III AS | 924111895 | 18,600,001 | 15,810 | 17,298 | |
| Sonoclear AS (prev BrainImage AS) | 917956146 | 12.4 % | 1,517,982 | 7,988 | 15,180 |
| Sintef Venture IV | 912844889 | 18,101 | 11,653 | 13,840 | |
| Novelda AS | 987361719 | 19,980 | 7,163 | 11,548 | |
| Signord Klasse E | 992229667 | 46,476 | 4,704 | 9,292 | |
| Proventure Seed II AS | 913391136 | 16,076,187 | 11,688 | 8,681 | |
| Vectron Biosolutions AS | 992779837 | 220,000 | 6,000 | 6,140 | |
| Novela Kapital AS | 922061017 | 624,000 | 6,240 | 4,430 | |
| Sintef Venture IV B | 927177021 | 15,000 | 3,705 | 3,603 | |
| Other companies | 36,882 | 20,190 | |||
| Total unquoted shares and units | 229,215 | 530,990 | |||
| Elimination of subordinated bond SpareBank 1 Finans Midt Norge |
-124,300 | -124,310 | |||
| Total shares, units and equity capital certificates, Group | 654,025 | 1,137,264 |
Intangible assets mainly comprise goodwill in the SpareBank 1 SMN Group. Other intangible assets will be recognised once the conditions for entry in the balance sheet are present. Goodwill arises as the difference between the fair value of the consideration upon purchase of a business and the fair value of identifiable assets and liabilities; see description under Consolidation. Goodwill is not amortised, but is subject to an annual depreciation test with a view to revealing any impairment, in keeping with IAS 36. Testing for value impairment is done at the lowest level at which cash flows can be identified.
Intangible assets acquired separately are carried at cost. Useful economic life is either finite or infinite. Intangible assets with a finite economic life are depreciated over their economic life and tested for impairment upon any indication of impairment. The depreciation method and period are assessed at least once each year.
Amounts recorded on the Bank's assets are reviewed on the balance sheet date for any indications of value impairment. Should such indications be present, an estimate is made of the asset's recoverable amount. Each year on the balance sheet date recoverable amounts on goodwill, assets with unlimited useful lifetime, and intangible assets not yet available for use, are computed. Write-downs are undertaken when the recorded value of an asset or cash-flow-generating entity exceeds the recoverable amount. Write-downs are recognised in profit/loss. Write-down of goodwill is not reversed. In the case of other assets, write-downs are reversed where there is a change in the estimates used to compute the recoverable amount.
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| Other intangible assets |
Goodwill | Total (NOK million) | Total | Goodwill | Other intangible assets |
| 38 | 447 | 485 Cost of acquisition at 1 January | 796 | 680 | 116 |
| 12 | - | 12 Additions | 176 | 31 | 145 |
| 133 | 219 | 352 Additions as a result of business combinations* | 219 | 219 | 0 |
| -1 | - | -1 Disposals | -1 | - | -1 |
| - | - | - Disposal subsidiary** | 183 | 183 | - |
| 182 | 665 | 847 Cost of acquisition at 31 December | 1,373 | 1,113 | 260 |
| 18 | - | 18 Accumulated depreciation and write-downs as at 1 January | 125 | 34 | 91 |
| 18 | - | 18 Current period's depreciation | 20 | - | 20 |
| -1 | - | -1 Disposals | -1 | - | -1 |
| 35 | - | 35 Accumulated depreciation and write-down as at 31 December | 144 | 34 | 110 |
| 147 | 665 | 812 Book value as at 31 December | 1,229 | 1,079 | 150 |
* Additions as a result of business combinations shows the effect of the merger with SpareBank 1 Søre Sunnmøre
** As from fourth quarter 2022 the subsidiary SpareBank 1 Markets have been reclassified to investment held for sale. The effect has been presented as disposals.
-
2022 Parent Bank Group Other intangible assets Goodwill Total (NOK million) Total Goodwill Other intangible assets 24 447 470 Cost of acquisition at 1 January 1,017 842 175 14 - 14 Addition 36 21 16 - - - Disposal subsidiary* -258 -183 -74 38 447 485 Cost of acquisition at 31 December 795 680 116 13 - 13 Accumulated depreciation and write-downs as at 1 January 164 34 130 5 - 5 Current period's depreciation 7 - 7 - - - Disposal subsidiary* -46 - -46 18 - 18 Accumulated depreciation and write-down as at 31 December 125 34 91 20 447 467 Book value as at 31 December 670 646 25
*As from fourth quarter 2002 the subsidiary SpareBank 1 Markets have been reclassified to investment held for sale. The effect has been presented as disposals.
Property, plant and equipment along with property used by the owner are accounted for under IAS 16. The investment is initially recognised at its acquisition cost and is thereafter depreciated on a linear basis over its expected useful life. When establishing a depreciation plan, the individual assets are to the necessary extent split up into components with differing useful life, with account being taken of estimated residual value. Property, plant and equipment items which individually are of little significance, for example computers and other office equipment, are not individually assessed for residual value, useful lifetime or value loss, but are assessed on a group basis. Property used by the owner, according to the definition in IAS 40, is property that is mainly used by the Bank or its subsidiary for its own use.
Property, plant and equipment which are depreciated are subject to a depreciation test in accordance with IAS 36 when circumstances so indicate. Property held in order to earn rentals or for capital appreciation is classified as investment property and is measured at fair value in accordance with IAS 40. The group has no investment properties.
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| Buildings and other real property |
Machinery, inventory and vehicles |
Total (NOK million) | Total | Machinery, inventory and vehicles |
Buildings and other real property |
| 122 | 160 | 282 Cost of acquisition at 1 January | 563 | 243 | 320 |
| 23 | 23 | 46 Additions | 50 | 25 | 25 |
| 65 | 21 | 86 Additions as a result of business combinations* |
87 | 21 | 65 |
| -10 | -18 | -28 Disposals | -28 | -18 | -10 |
| 200 | 186 | 386 Cost of acquisition at 31 December | 672 | 272 | 400 |
| 73 | 92 | 165 Accumulated depreciation and write-downs as at 1 January |
331 | 162 | 170 |
| 31 | 19 | 50 Accumulated depreciations as a result of business combinations* |
50 | 19 | 31 |
| 12 | 19 | 31 Current period's depreciation | 41 | 22 | 19 |
| -1 | - | -1 Current period's write-down | -1 | - | -1 |
| -9 | -17 | -26 Disposals | -26 | -17 | -9 |
| 107 | 113 | 219 Accumulated depreciation and write-down as at 31 December |
396 | 186 | 210 |
| 93 | 74 | 167 Book value as at 31 December | 276 | 86 | 190 |
* Additions as a result of business combinations shows the effect of the fusion with Sparebank1 Søre Sunnmøre
| 2022 | |||||
|---|---|---|---|---|---|
| Parent Bank | Group | ||||
| Buildings and other real property |
Machinery, inventory and vehicles |
Total (NOK million) | Total | Machinery, inventory and vehicles |
Buildings and other real property |
| 104 | 133 | 237 Cost of acquisition at 1 January | 546 | 236 | 310 |
| 26 | 30 | 56 Additions | 60 | 34 | 26 |
| -8 | -3 | -11 Disposals | -12 | -3 | -9 |
| - | - | - Disposals Subsidiaries* | -31 | -24 | -7 |
| 122 | 160 | 282 Cost of acquisition at 31 December | 563 | 243 | 320 |
| 73 | 79 | 152 Accumulated depreciation and write-downs as at 1 January |
334 | 163 | 170 |
| 8 | 15 | 23 Current period's depreciation | 34 | 19 | 15 |
| -8 | -2 | -10 Disposals | -10 | -2 | -9 |
| - | - | - Disposals Subsidiaries* | -26 | -20 | -7 |
| 73 | 92 | 165 Accumulated depreciation and write-down as at 31 December |
332 | 162 | 170 |
| 49 | 68 | 117 Book value as at 31 December | 232 | 81 | 150 |
* As from fourth quarter 2002 the subsidiary SpareBank 1 Markets have been reclassified to investment held for sale. The effect has been presented as disposals.
With a basis in acquisition cost less any residual value, assets are depreciated on a straight-line basis over expected lifetime as follows:
The Group has not provided security or accepted any other infringements on its right of disposal of its fixed tangible assets.
The acquisition cost of fully depreciated assets still in use in the Bank in 2023 is NOK 138 million (NOK 107 million). 29 milion is due to the effect of the fusion with SpareBank 1 Søre Sunnmøre.
The Group has no significant non-current assets out of operation as at 31 December 2023.
Identifying a lease
At the inception of a contract, The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
For contracts that constitute, or contain a lease, the Group separates lease components if it benefits from the use of each underlying asset either on its own or together with other resources that are readily available, and the underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the contract. The Group then accounts for each lease component within the contract as a lease separately from non-lease components of the contract.
At the lease commencement date, the Group recognises a lease liability and corresponding right-of-use asset for all lease agreements in which it is the lessee, except for the following exemptions applied:
For these leases, the Group recognises the lease payments as other operating expenses in the statement of profit or loss when they incur.
The lease liability is recognised at the commencement date of the lease. The Group measures the lease liability at the present value of the lease payments for the right to use the underlying asset during the lease term that are not paid at the commencement date. The lease term represents the non-cancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the Group is reasonably certain to exercise this option.
The lease payments included in the measurement comprise of:
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect adjustments in lease payments due to an adjustment in an index or rate.
The Group does not include variable lease payments in the lease liability. Instead, the Group recognises these variable lease expenses in profit or loss.
The Group presents its lease liabilities as separate line items in the statement of financial position.
The Group measures the right-of use asset at cost, less any accumulated depreciation and impairment losses, adjusted for any remeasurement of lease liabilities. The cost of the right-of-use asset comprise:
The Group applies the depreciation requirements in IAS 16 Property, Plant and Equipment in depreciating the right-of-use asset, except that the right-of-use asset is depreciated from the commencement date to the earlier of the lease term and the remaining useful life of the right-of-use asset.
The Group applies IAS 36 Impairment of Assets to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.
For a contract that contains a lease component and one or more additional lease or non-lease components, The Group allocates the consideration in the contract applying the principles in IFRS 15 Revenue from Contracts with Customers.
For contracts where the Group acts as a lessor, it classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. The group as a lessor does not have any finance leases.
For operating leases, the Group recognises lease payments as other income, mainly on a straight-line basis, unless another systematic basis is more representative of the pattern in which benefit from the use of the underlying asset is diminished. The Group recognises costs incurred in earning the lease income in other operating expenses. The Group adds initial direct costs incurred in obtaining an operating lease to the carrying amount of the underlying asset and recognises those costs as an expense over the lease term on the same basis as the rental income.
IFRS 16 refers to two different methods of determining the discount rate for lease payments:
Lease contracts covered by IFRS 16 vary as regards term and option structure. Moreover, assumptions must be made as to the opening value of the underlying assets. Both of these items make an implicit interest calculation more complicated than an incremental borrowing rate calculation.
SpareBank 1 SMN has a framework for transfer pricing that is designed to provide as correct a picture as possible of how various balance sheet items, business lines, segments or regions in the bank contribute to the bank's profitability. The starting point for the transfer pricing rates is the bank's historical cost of funding. The Group's cost of funding can be split up into a cost related to senior unsecured debt and a cost related to capital (hybrid capital and subordinated loan capital). The latter cost of funding shall, like other equity, be distributed on assets based on risk weights. The cost related to own funds (hybrid capital and subordinated loan capital) then appears as a further transfer price addition to the loan accounts.
The bank also has indirect liquidity costs related to liquidity reserves. These are reserves that the bank is required to hold by the authorities along with reserves of surplus liquidity held by the bank for shorter periods. The liquidity reserves have a substantial negative return measured against the bank's cost of funding. This cost is distributed on balance sheet items that create a need for liquidity reserves, and appear as a reduction from the transfer price interest for deposits and an addition as regards loans.
In the transfer pricing the bank's liquidity cost or cost of funding is distributed on assets and liabilities, and is actively utilised in the internal account. The transfer price is accordingly a well-established tool in the governance of the bank, and is regularly updated. The transfer price interest rate for an asset with the corresponding underlying, in this case commercial property, will therefore be a good representation of the incremental borrowing rate. This discount rate will include the material additions to the cost of funding, giving a more correct picture of the opportunity cost for the bank. This interest rate have been used as the discount rate for the Group's leases coming under IFRS 16. A discount rate of 2.05 per cent has been used in 2023.
Right-of-use assets are classified as non-current assets in the balance sheet whereas the lease liability is classified as other debt. The Group's lease liability relates in all essentials to lease agreements for offices
| Parent Bank | Group | |||
|---|---|---|---|---|
| 2022 | 2023 Right-of-use assets | 2023 | 2022 | |
| 398 | 417 Acquisition cost 1 January | 627 | 568 | |
| 14 | 57 Addition of right-of-use assets | 136 | 54 | |
| 0 | 0 Disposals | -17 | 2 | |
| 4 | 33 Transfers and reclassifications | 40 | 5 | |
| 417 | 507 Acquisition cost 31 December | 786 | 629 | |
| 146 | 194 Accumulated depreciation and impairment 1 January | 307 | 214 | |
| 49 | 61 Depreciation | 92 | 90 | |
| 0 | 0 Disposals | -3 | 0 | |
| 194 | 256 Accumulated depreciation and impairment 31 December | 396 | 304 | |
| 223 | 251 Carrying amount of right-of-use assets 31 December | 390 | 325 |
| Lease liabilities | |||
|---|---|---|---|
| Parent Bank | Group | ||
| 2022 | 2023 Undiscounted lease liabilities and maturity of cash outflows | 2023 | 2022 |
| 58 | 41 Less than 1 year | 77 | 88 |
| 49 | 39 1-2 years | 70 | 75 |
| 47 | 38 2-3 years | 60 | 69 |
| 44 | 35 3-4 years | 53 | 59 |
| 40 | 31 4-5 years | 51 | 56 |
| 182 | 124 More than 5 years | 289 | 290 |
| 421 | 308 Total undiscounted lease liabilities at 31 December | 531 | 604 |
| 2022 | 2023 Summary of the lease liabilities | 2023 | 2022 |
|---|---|---|---|
| 262 | 233 At initial application 01 January | 336 | 368 |
| 18 | 84 New lease liabilities recognised in the year | 123 | 58 |
| -48 | -56 Cash payments for the principal portion of the lease liability | -83 | -87 |
| -7 | -9 Cash payments for the interest portion of the lease liability | -12 | -9 |
| 7 | 9 Interest expense on lease liabilities | 12 | 9 |
| 0 | 0 Other changes | 28 | 1 |
| 233 | 260 Total lease liabilities at 31 December | 403 | 339 |
| 50 | 54 Current lease liabilities (note 37) | 59 | 56 |
| 183 | 207 Non-current lease liabilities (note 37) | 344 | 282 |
| -48 | -56 Total cash outflows for leases | -97 | -96 |
| 2022 | 2023 Summary of other lease expenses recognised in profit or loss | 2023 | 2022 | |
|---|---|---|---|---|
| 17 | 14 Variable lease payments expensed in the period | 17 | 20 | |
| 2 | 1 | Operating expenses in the period related to short-term leases (including short term low value assets) |
5 | 5 |
| 0 | 0 | Operating expenses in the period related to low value assets (excluding short term leases included above) |
0 | 0 |
| 19 | 15 Total lease expenses included in other operating expenses | 23 | 25 |
| Parent Bank | Group | ||||||
|---|---|---|---|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 (NOK million) | 31 Dec 2023 | 31 Dec 2022 | ||||
| - | - Deferred tax asset | 6 | 5 | ||||
| 117 | 167 Fixed assets | 276 | 232 | ||||
| 223 | 251 Right to use assets | 390 | 325 | ||||
| 87 | 136 Earned income not yet received | 153 | 104 | ||||
| 262 | 66 Accounts receivable, securities | 66 | 262 | ||||
| 240 | 221 Pensions | 221 | 240 | ||||
| 1,164 | 479 Other assets | 737 | 1,387 | ||||
| 2,092 | 1,321 Total other assets | 1,849 | 2,555 |
Customer deposits are recognised at amortised cost
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| 31 Dec 2022 31 Dec 2023 Deposits from and liabilities to customers (NOKm) | 31 Dec 2023 31 Dec 2022 | ||||
| 88,068 | 87,652 Deposits from and liabilities to customers without agreed maturity | 87,081 | 87,380 | ||
| 34,632 | 45,810 Deposits from and liabilities to customers with agreed maturity | 45,808 | 34,630 | ||
| 122,699 | 133,462 Total deposits from and liabilities to customers | 132,888 | 122,010 | ||
| 1.3 % | 2.9 % Average interest rate | 2.9 % | 1.3 % | ||
Fixed interest deposits account for 7.1 per cent (4.0 per cent) of total deposits.
| 31 Dec 2022 31 Dec 2023 Deposits specified by sector and industry | 31 Dec 2023 31 Dec 2022 | ||
|---|---|---|---|
| 48,316 | 57,874 Wage earners | 57,874 | 48,316 |
| 21,690 | 19,437 Public administration | 19,437 | 21,690 |
| 2,159 | 2,460 Agriculture and forestry | 2,460 | 2,159 |
| 1,366 | 1,588 Fisheries and hunting | 1,588 | 1,366 |
| 644 | 1,157 Sea farming industries | 1,157 | 644 |
| 2,881 | 2,671 Manufacturing | 2,671 | 2,881 |
| 5,534 | 5,251 Construction, power and water supply | 5,251 | 5,534 |
| 6,065 | 5,996 Retail trade, hotels and restaurants | 5,996 | 6,065 |
| 1,198 | 1,132 Maritime sector | 1,132 | 1,198 |
| 5,645 | 5,867 Property management | 5,787 | 5,577 |
| 13,036 | 13,413 Business services | 13,413 | 13,036 |
| 9,364 | 11,164 Transport and other services provision | 10,698 | 8,856 |
| 4,800 | 5,452 Other sectors | 5,425 | 4,687 |
| 122,699 | 133,462 Total deposits from customers broken down by sector and industry | 132,888 | 122,010 |
| 31 Dec 2022 31 Dec 2023 Deposits specified by geographic area | 31 Dec 2023 31 Dec 2022 | |||
|---|---|---|---|---|
| 77,655 | 79,421 Trøndelag | 78,847 | 77,047 | |
| 19,425 | 26,081 Møre og Romsdal | 26,081 | 19,425 | |
| 1,894 | 1,336 Nordland | 1,336 | 1,894 | |
| 9,431 | 11,431 Oslo | 11,431 | 9,349 | |
| 11,621 | 12,561 Other counties | 12,561 | 11,621 | |
| 2,673 | 2,633 Abroad | 2,633 | 2,673 | |
| 122,699 | 133,462 Total deposits broken down by geographic area | 132,888 | 122,010 |
Issued securities debt (senior loans) are measured at amortised cost or as financial liabilities specifically accounted for at fair value with changes in value recognised in profit or loss. As a general rule, hedge accounting (fair value hedging) is used when issuing bond debt with a fixed interest rate. In hedging, there is a clear, direct and documented connection between changes in the value of the hedged item (loan) and the hedging instrument (interest rate derivative). For the hedged item, changes in fair value related to the hedged risk are accounted for as a addition or deduction in capitalised securities debt and are recognised in the income statement under «Net return on financial investments». The hedging instruments are measured at fair value and the changes in fair value are recognised in the income statement on the same profit line as the hedging objects. Debt when issuing securities is presented including accrued interest. See note 29 for a more detailed description of hedge accounting.
| Parent Bank | Group | |||
|---|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 (NOK million) | 31 Dec 2023 | 31 Dec 2022 | |
| 40,392 | 33,417 Bond debt | 33,417 | 40,392 | |
| 7,082 | 12,412 Senior non preferred | 12,412 | 7,082 | |
| 47,474 | 45,830 Total debt securities in issue | 45,830 | 47,474 | |
| 1.3 % | 2.1 % Average interest, bond debt | 2.1 % | 1.3 % | |
| 2.7 % | 4.5 % Average interest, senior non preferred | 4.5 % | 2.7 % | |
| 31 Dec 2022 | 31 Dec 2023 Securities debt specified by maturity 1) | 31 Dec 2023 | 31 Dec 2022 | |
| 8,807 | - 2023 | - | 8,807 | |
| 4,497 | 3,438 2024 | 3,438 | 4,497 | |
| 9,080 | 9,648 2025 | 9,648 | 9,080 | |
| 9,512 | 11,520 2026 | 11,520 | 9,512 | |
| 6,424 | 8,068 2027 | 8,068 | 6,424 | |
| 9,649 | 10,722 2028 | 10,722 | 9,649 | |
| 505 | 2,513 2029 | 2,513 | 505 | |
| 105 | 113 2030 | 113 | 105 | |
| 316 | 338 2031 | 338 | 316 | |
| 263 | 281 2032 | 281 | 263 | |
| 316 | 338 2033 | 338 | 316 | |
| 158 | 169 2034 | 169 | 158 | |
| -93 | -134 Currency agio | -134 | -93 | |
| -2,344 | -1,490 Premium and discount, market value of structured bonds | -1,490 | -2,344 | |
| 280 | 306 Accrued interest | 306 | 280 | |
| 47,474 | 45,830 Total securities debt | 45,830 | 47,474 |
1) Maturity is final maturity, not call date
| 31 Dec 2022 | 31 Dec 2023 Securities debt distributed on significant currencies | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|
| 21,554 | 24,231 NOK | 24,231 | 21,554 | |
| 22,255 | 18,784 EUR | 18,784 | 22,255 | |
| 3,665 | 2,814 Other | 2,814 | 3,665 | |
| 47,474 | 45,830 Total securities debt | 45,830 | 47,474 |
| Fallen | |||||
|---|---|---|---|---|---|
| due/ | Other | ||||
| Change in securities debt | 31 Dec 2023 | Issued | redeemed | changes | 31 Dec 2022 |
| Bond debt | 34,767 | - | 10,291 | 2,526 | 42,532 |
| Senior non preferred | 12,344 | 5,280 | - | -36 | 7,100 |
| Adjustments | -1,588 | - | - | 850 | -2,438 |
| Accrued interest | 306 | - | - | 26 | 280 |
| Total | 45,830 | 5,280 | 10,291 | 3,366 | 47,474 |
| Change in securities debt | 31 Dec 2022 | Issued | Fallen due/ redeemed |
Other changes |
31 Dec 2021 |
|---|---|---|---|---|---|
| Bond debt | 42,532 | 12,594 | 6,613 | -254 | 36,805 |
| Senior non preferred | 7,100 | 3,600 | - | - | 3,500 |
| Adjustments | -2,438 | - | - | -2,286 | -152 |
| Accrued interest | 280 | - | - | 102 | 178 |
| Total | 47,474 | 16,194 | 6,613 | -2,438 | 40,332 |
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| 31 Dec 22 | 31 Dec 23 Other debt and recognised liabilities (NOK million) | 31 Dec 23 | 31 Dec 22 | ||
| 72 | 178 Deferred tax | 236 | 127 | ||
| 611 | 793 Payable tax | 880 | 705 | ||
| 13 | 22 Capital tax | 22 | 13 | ||
| 97 | 140 Accruals | 442 | 388 | ||
| 427 | 533 Provisions | 533 | 427 | ||
| 66 | 52 Loss provision guarantees | 52 | 66 | ||
| 6 | 9 Pension liabilities | 9 | 6 | ||
| 233 | 260 Lease liabilities | 403 | 339 | ||
| 97 | 9 Drawing debt | 9 | 97 | ||
| 73 | 132 Creditors | 191 | 116 | ||
| 176 | -15 Debt from securities | -15 | 176 | ||
| 196 | 148 Other | 243 | 265 | ||
| 2,067 | 2,262 Total other debt and recognised liabilities | 3,005 | 2,725 | ||
| Other liabilities, not recognised | |||||
| 4,461 | 5,354 Credit limits, trading | 5,354 | 4,461 | ||
| - | - Other commitments | 50 | 44 | ||
| 4,461 | 5,354 Total other commitments | 5,404 | 4,505 | ||
| 6,529 | 7,616 Total commitments | 8,410 | 7,230 |
As from 1 March 2017 the bank is required under the European market infrastructure regulation (EMIR) to have in place a CSA with daily exchange of margin collateral etc. with all financial counterparties with which the bank deals domiciled (inter alia) in an EU member state. The Emir regulation regulates OTC derivatives and entails inter alia that SpareBank 1 SMN will be entitled to clear certain derivatives transactions through a central counterparty. This mainly applies to interest rate derivatives in euro and Norwegian kroner. Derivatives are cleared through London Clearing House as central counterparty where cash is the only collateral at present. SpareBank 1 SMN is not a direct member of London Clearing House, but has entered an agreement with Commerzbank and SEB as clearing broker. The liabilities are presented gross in the table below.
SpareBank 1 SMN is registered as a GCM member of NASDAQ OMX Clearing AB. The bank offers customers clearing representation related to their trade in electricity and salmon derivatives on NASDAQ OMX Oslo ASA and Fish Pool ASA. Clearing representation entails that the bank substitutes itself in the place of the client as counterparty to NASDAQ OMX Clearing AB and takes on the obligation towards NASDAQ to furnish margin collateral and to execute settlement of contracts and pay charges. For the bank's exposure as a GCM, clients will furnish collateral in the form of a deposit of cash and/or encumbrance of other assets.
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| Cash deposit |
Securities | Total Securities pledged | Total | Securities | Cash deposit |
| 1,268 | - | 1,268 Securities pledged 31 December 2023 | 1,268 | - | 1,268 |
| 1,685 | - | 1,685 Relevant liabilities 31 December 2023 | 1,685 | - | 1,685 |
| 3,089 | - | 3,089 Securities pledged 31 December 2022 | 3,089 | - | 3,089 |
| 3,811 | - | 3,811 Relevant liabilities 31 December 2022 | 3,811 | - | 3,811 |
The Group is not involved in legal disputes that are considered to be of substantial significance for the Group's financial position. It can nevertheless be mentioned that SpareBank 1 SMN has a case concerning embezzlement for the period December 2022 to January 2023, and we will follow up claims with a basis on this case. Furthermore, a case where SpareBank 1 SMN is indirectly in dispute with Tieto Evry regarding remuneration for deliveries is currently unclear, as the appeal period follow the district court's decision in Tieto Evry's disfavor has not expired. No loss provision has been made as at 31 December 2023.
The group has made provisions for pension liabilities, see note 22, specified losses on guarantees, see note 10, restructuring and gifts. The provision for restructuring is made based on the downsizing plan. Provision on gifts is the part of previous year's profit to be allocated to non-profit causes. More on this topic in the section corporate social responsibility.
| Pension | Restructuring | ||
|---|---|---|---|
| Parent Bank/Group (NOK million) | liabilities | provision | Gifts |
| Provisions at 1 January 2023 | 6 | 1 | 425 |
| Additional provisions in the period | - | - | 230 |
| Amounts used in the period | -3 | 0 | -198 |
| Amounts unused reversed in the period | - | - | - |
| The increase during the period in the discounted amount that occurs over time, and the effect of any changes in the discount rate |
- | - | - |
| Other | 0 | - | - |
| Provisions at 31 December 2023 | 4 | 2 | 456 |
| Pension | Restructuring | ||
|---|---|---|---|
| Parent Bank/Group (NOK million) | liabilities | provision | Gifts |
| Provisions at 1 January 2022 | 8 | 33 | 314 |
| Additional provisions in the period | - | - | 250 |
| Amounts used in the period | -1 | -31 | -139 |
| Amounts unused reversed in the period | - | - | - |
| The increase during the period in the discounted amount that occurs over time, and the effect of any changes in the discount rate |
- | - | - |
| Other | -1 | - | - |
| Provisions at 31 December 2022 | 6 | 1 | 425 |
Subordinated debt are measured at amortised cost like other long-term loans. Subordinated debt ranks behind all other debt. Hybrid capital denotes bonds with a nominal interest rate, but the Bank is not obliged to pay interest in a period in which no dividend is paid, nor does the investor subsequently have a right to interest that has not been paid, i.e. the interest does not accumulate. Hybrid Capital have been classified as equity since these do not satisfy the definition of a financial liabiltiy in IAS 32. The bond is perpetual and SpareBank 1 SMN has the right to not pay interest to the investors. The interest will not be presented as an interest expense in the income statement, but as a reduction to equity. See also Note 3 for a closer description. The treatment of subordinated debt and hybrid capital in the calculation of the group's capital adequacy is described in Note 5 Capital adequacy and capital management.
| Parent bank | Group | ||||||
|---|---|---|---|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2023 (NOKm) | 31 Dec 2023 | 31 Dec 2022 | ||||
| Dated subordinated debt | |||||||
| - | - 2026 SpareBank 1 Finans Midt-Norge 23/34 | 76 | 43 | ||||
| 250 | - 2028 floating rate NOK (Call 2023) | - | 250 | ||||
| 500 | - 2028 floating rate NOK (Call 2023) | - | 500 | ||||
| 250 | 250 2029 floating rate NOK (Call 2024) | 250 | 250 | ||||
| - | 150 2029 floating rate NOK (Call 2024) | 150 | - | ||||
| 1,000 | 1,000 2032 floating rate NOK (Call 2024) | 1,000 | 1,000 | ||||
| - | 750 2033 floating rate NOK (Call 2024) | 750 | - | ||||
| 15 | 19 Accrued interest | 21 | 16 | ||||
| 2,015 | 2,169 Total dated subordniated debt | 2,247 | 2,058 | ||||
| 3.2 % | 5.8 % Average rate NOK | 5.8 % | 3.2 % | ||||
| Additional Tier 1 Capital | |||||||
| - | - 5/99 SpareBank 1 Finans Midt-Norge floating rate NOK (Call 2023) | 103 | 43 | ||||
| 76 | - 5/99 floating rate NOK (Call 2023) | - | 76 | ||||
| 300 | - 5/99 floating rate NOK (Call 2023) | - | 300 | ||||
| 200 | - 5/99 floating rate NOK (Call 2023) | - | 200 | ||||
| 250 | 250 5/99 floating rate NOK (Call 2024) | 250 | 250 | ||||
| 500 | 500 5/99 floating rate NOK (Call 2024) | 500 | 500 | ||||
| - | 50 5/99 floating rate NOK (Call 2024) | 50 | - | ||||
| - | 300 5/99 floating rate NOK (Call 2024) | 300 | - | ||||
| - | 150 5/99 floating rate NOK (Call 2024) | 150 | - | ||||
| 200 | 200 7/99 fixed rate 5.0% NOK (Call 2025)* | 200 | 200 | ||||
| 200 | 200 7/99 fixed rate 7.12% NOK (Call 2027)* | 200 | 200 | ||||
| - | 150 7/99 fixed rate 7.04% NOK (Call 2029)* | 150 | - | ||||
| 1,726 | 1,800 Total additional Tier 1 Capital | 1,903 | 1,769 | ||||
| 4.6 % | 7.4 % Average rate NOK | 7.4 % | 4.6 % |
*) Fixed rate funding changed to floating rate by means of interest rate swaps
| Fallen due/ | Other | ||||
|---|---|---|---|---|---|
| Changes in subordinated debt and hybrid equity issue | 31 Dec 2023 | Issued | redeemed | changes | 31 Dec 2022 |
| Ordinary subordinated debt, NOK | 2,226 | 934 | 750 | - | 2,043 |
| Accrued interest | 21 | - | - | 5 | 16 |
| Total subordinated debt and hybrid equity issue | 2,247 | 934 | 750 | 5 | 2,058 |
| Fallen due/ | Other | ||||
| Changes in additional Tier 1 Capital | 31 Dec 2023 | Issued | redeemed | changes | 31 Dec 2022 |
| Additional Tier 1 Capital, NOK | 1,903 | 711 | 576 | - | 1,769 |
| Total subordinated debt and hybrid equity issue | 1,903 | 711 | 576 | - | 1,769 |
| Fallen due/ | Other | ||||
| Changes in subordinated debt and hybrid equity issue | 31 Dec 2022 | Issued | redeemed | changes | 31 Dec 2021 |
| Ordinary subordinated debt, NOK | 2,043 | 1,000 | 750 | - | 1,793 |
| Accrued interest | 16 | - | - | - | 16 |
| Total subordinated debt and hybrid equity issue | 2,058 | 1,000 | 750 | - | 1,808 |
| Fallen due/ | Other | ||||
| Changes in additional Tier 1 Capital | 31 Dec 2022 | Issued | redeemed | changes | 31 Dec 2021 |
| Additional Tier 1 Capital, NOK | 1,769 | 700 | 224 | - | 1,293 |
| Total subordinated debt and hybrid equity issue | 1,769 | 700 | 224 | - | 1,293 |
Associates are companies in which the Bank has substantial influence. As a rule, influence is substantial where the Bank has an ownership interest of 20 per cent or more. Associates are accounted for by the equity method in the consolidated accounts. The investment is initially recognised at acquisition cost and subsequently adjusted for the change in the Bank's share of the associated undertaking's net assets. The Bank recognises its share of the profit of the associated undertaking in its income statement. Associates are accounted for in the parent bank accounts by the cost method.
Under IFRS 11 investments in Joint arrangements shall be classified as Joint operations or joint ventures depending on the right and obligations in the contractual arrangement for each investor. SpareBank 1 SMN has assessed its joint arrangements and concluded that they are joint ventures. Jointly controlled ventures are accounted for using the equity method in the group and the cost method in the parent bank.
When the equity method is used joint ventures are recognised at their original acquisition cost. The carrying amount is thereafter adjusted to recognise the share of the results after the acquisition and the share of comprehensive income. When the group's share of a loss in a joint venture exceeds the capitalized amount (including other long-term investments that are in reality part of the group's net investment in the venture), no further loss is recognized unless liabilities have been assumed or payments have been made on behalf of the joint venture. Unrealized gains on transactions between the group and its joint ventures are eliminated according to the ownership interest in the business. Unrealized losses are also eliminated unless the transaction gives evidence of a fall in value on the transferred asset. Amounts reported from joint ventures are, if necessary, restated to ensure they correspond with the accounting policies of the group.
Assets which the board of directors of the bank has decided to sell are dealt with under IFRS 5 if it is highly likely that the asset will be sold within 12 months. This type of asset comprises for the most part assets taken over in connection with bad loans, and investments in subsidiaries held for sale. In the case of depreciable assets, depreciation ceases when a decision is taken to sell, and the asset is measured at fair value in accordance with IFRS 5. The result of such activity and appurtenant assets and liabilities are presented on a separate line as held for sale.
| Company | Company number | Registered office | Stake in per cent |
|---|---|---|---|
| Investment in significant subsidiaries | |||
| EiendomsMegler 1 Midt-Norge | 936159419 | Trondheim | 92.4 |
| SpareBank 1 Regnskapshuset SMN | 936285066 | Trondheim | 93.3 |
| SpareBank 1 Invest | 990961867 | Trondheim | 100.0 |
| SpareBank 1 Finans Midt-Norge | 938521549 | Trondheim | 56.5 |
| SpareBank 1 SMN Kvartalet | 990283443 | Trondheim | 100.0 |
| SpareBank 1 Bygget Steinkjer | 934352718 | Trondheim | 100.0 |
| St. Olavs Plass | 999263380 | Trondheim | 100.0 |
| SpareBank 1 Bilplan | 979945108 | Trondheim | 100.0 |
| Shares owned by subsidiaries and sub-subsidiaries | |||
| GMA Invest | 994469096 | Trondheim | 100.0 |
| Sentrumsgården | 975856828 | Leksvik | 35.3 |
| Aqua Venture | 891165102 | Trondheim | 37.6 |
| Omega-3 Invest | 996814262 | Namsos | 33.6 |
| Tjeldbergodden Utvikling | 979615361 | Aure | 23.0 |
| Grilstad Marina | 991340475 | Trondheim | 35.0 |
| GMN 6 | 994254707 | Trondheim | 35.0 |
| GMN 51 | 996534316 | Trondheim | 30.0 |
| GMN 52 | 996534413 | Trondheim | 30.0 |
| GMN 53 | 996534502 | Trondheim | 30.0 |
| Grilstad N8 AS | 926281070 | Trondheim | 35.0 |
| Brauten Eiendom | 917066221 | Trondheim | 100.0 |
| Kvidal Regnskap AS | 993787663 | Børsa | 100.0 |
| Brattberg Regnskap AS | 977203058 | Overhalla | 100.0 |
| Askus AS | 965056238 | Lillehammer | 100.0 |
| Askus Nord AS | 931931008 | Hammerfest | 100.0 |
| Askus Nord 2 AS | 932681266 | Lillehammer | 100.0 |
| Regnskapsforum | 964276390 | Trondheim | 50.0 |
| SpareBank 1 Mobilitet Holding | 927249960 | Hamar | 30.7 |
| Investment in joint ventures | |||
| SpareBank 1 Gruppen | 975966372 | Tromsø | 19.5 |
| SpareBank 1 Utvikling | 986401598 | Oslo | 18.0 |
| Investment in associates | |||
| SpareBank 1 Boligkreditt | 988738387 | Stavanger | 23.9 |
| BN Bank | 914864445 | Trondheim | 35.0 |
| SpareBank 1 Næringskreditt | 894111232 | Stavanger | 14.8 |
| SpareBank 1 Kreditt | 975966453 | Trondheim | 19.2 |
| SpareBank 1 Betaling | 919116749 | Oslo | 21.9 |
| SpareBank 1 Gjeldsinformasjon | 924911719 | Oslo | 18.9 |
| SpareBank 1 Forvaltning | 925239690 | Oslo | 21.5 |
| SpareBank 1 Markets | 992999101 | Oslo | 39.9 |
| Investment in companies held for sale | |||
| Mavi XV | 890899552 | Trondheim | 100.0 |
| Mavi XXIX | 827074462 | Trondheim | 100.0 |
| Byscenen Kongensgt 19 | 992237899 | Trondheim | 94.0 |
| Bjerkeløkkja | 998534976 | Oppdal | 95.0 |
Recorded at acquisition cost in the Parent Bank. Full consolidation in the Group accounts. Total costs include tax charge. The booked value of subsidiaries in the tables below is the Parent Bank's booked value.
| 2023 (NOK million) | Company's share capital (NOK 000's) |
No. Of shares |
Nominal value (NOK |
000's) Assets Liabilities | Equity | NCI of equity *) |
Total income |
Total expenses |
Profit or loss |
NCI of profit or loss *) |
Book value 31.12 |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SpareBank 1 Finans Midt-Norge AS | 1,200,000 | 57,015 | 21.0 | 12,636 | 10,987 | 1,648 | 618 | 404 | 380 | 24 | 28 | 792 |
| Total investments in credit institutions | 792 | |||||||||||
| EiendomsMegler 1 Midt-Norge | 105,960 | 4,788 | 22 | 409 | 166 | 32 | 18 | 435 | 403 | 32 | 3 | 201 |
| SpareBank 1 SMN Kvartalet | 30,200 | 30,200 | 1 | 110 | 18 | 10 | - | 25 | 15 | 10 | - | 126 |
| SpareBank 1 Regnskapshuset SMN | 20,349 | 211 | 96 | 708 | 260 | 84 | 30 | 633 | 549 | 84 | 7 | 331 |
| SpareBank 1 Invest | 457,280 914,560 | 1 | 811 | 24 | 66 | - | 69 | 3 | 66 | - | 540 | |
| SpareBank 1 Bygget Steinkjer | 1,000 | 100 | 10 | 37 | 1 | 1 | - | 0 | - 1 | 1 | - | 40 |
| St. Olavs Plass | 1,000 100,000 | 0 | 53 | 2 | 0 | - | 4 | 4 | 0 | - | 50 | |
| SpareBank 1 Bilplan | 5,769 | 41,206 | 0 | 8 | 0 | - 0 | - | 0 | 0 | - 0 | - | 9 |
| Total investments in other subsidiaries | 1.298 | |||||||||||
| Total investments in Group companies, Parent Bank | 2.090 |
*) Non-controlling interests
| Company's share capital |
Nominal value |
NCI of | Profit | NCI of profit |
Book | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (NOK | No. Of | (NOK | equity *) |
Total | Total | or | or loss*) |
value | ||||
| 2022 (NOK million) SpareBank 1 Finans Midt-Norge AS |
000's) 1,050,000 |
shares 57,015 |
18.4 | 12,198 | 000's) Assets Liabilities 10,728 |
Equity 1,470 |
617 | income 353 |
expenses 212 |
loss 140 |
62 | 31.12 671 |
| Total investments in credit institutions | 671 | |||||||||||
| EiendomsMegler 1 Midt-Norge | 105,960 | 4,788 | 22 | 420 | 162 | 258 | 34 | 429 | 382 | 47 | 6 | 189 |
| SpareBank 1 SMN Kvartalet | 30,200 | 30,200 | 1 | 104 | 18 | 86 | - | 18 | 14 | 4 | - | 126 |
| SpareBank 1 Regnskapshuset SMN | 20,349 | 211 | 96 | 635 | 196 | 438 | 50 | 547 | 472 | 75 | 9 | 298 |
| SpareBank 1 Invest | 457,280 914,560 | 1 | 750 | 29 | 721 | - | 53 | 2 | 51 | - | 540 | |
| SpareBank 1 Bygget Steinkjer | 1,000 | 100 | 10 | 36 | 0 | 36 | - | 0 | - 1 | 1 | - | 40 |
| St. Olavs Plass | 1,000 100,000 | 0 | 53 | 1 | 52 | - | 3 | 2 | 1 | - | 50 | |
| SpareBank 1 Bilplan | 5,769 | 41,206 | 0 | 8 | 0 | 8 | - | 0 | 0 | - 0 | - | 9 |
| Total investments in other subsidiaries | 1,252 | |||||||||||
| Total investments in Group companies, Parent Bank | 1,924 |
*) Non-controlling interests
| (NOK million) | 2023 | 2022 |
|---|---|---|
| SpareBank 1 Finans Midt-Norge | 78 | 102 |
| EiendomsMegler 1 Midt-Norge | 40 | 49 |
| SpareBank 1 Markets | 108 | 139 |
| SpareBank 1 Regnskapshuset SMN | 70 | 57 |
| SpareBank 1 SMN Invest | - | - |
| SpareBank 1 SMN Kvartalet | 4 | 3 |
| St. Olavs Plass 1 SMN | 1 | - |
| Sparebank 1 Bygget Steinkjer | 1 | 1 |
| Total dividends | 302 | 350 |
Associates and joint ventures are recorded at acquisition cost in the Parent Bank. Group figures are presented by the equity method.
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| 2022 | 2023 (NOK million) | 2023 | 2022 | ||
| 4,590 | 5,063 As at 1 January | 8,075 | 7,384 | ||
| 473 | 916 Acquisition/sale | 760 | 487 | ||
| 0 | -20 Write-down | -23 | 0 | ||
| - | 312 Equity capital changes | -22 | 59 | ||
| - | - Profit share | 297 | 442 | ||
| - | - Dividend paid | -391 | -297 | ||
| 5,063 | 6,270 Book value as at 31 December | 8,695 | 8,075 |
| Specification of year's change, Group | Additions/ disposal | Equtiy change | |
|---|---|---|---|
| SpareBank 1 Gruppen | - | -150 | |
| SpareBank 1 Boligkreditt | -28 | 44 | |
| SpareBank 1 Næringskreditt | -61 | 30 | |
| SpareBank 1 Kreditt | 64 | 19 | |
| Sparebank 1 Betaling | - | 53 | |
| BN Bank | - | -1 | |
| SpareBank 1 Forvaltning | 70 | 11 | |
| Sparebank 1 Markets | 707 | - | |
| Other companies | 8 | -27 | |
| Sum | 760 | -22 |
| (NOK million) | 2023 | 2022 |
|---|---|---|
| SpareBank 1 Gruppen | 287 | 137 |
| SpareBank 1 Boligkreditt | - | 16 |
| BN Bank | 70 | 70 |
| SpareBank 1 Næringskreditt | 3 | 1 |
| SpareBank 1 Forvaltning | 31 | 72 |
| Total dividend from associates and joint ventures | 391 | 297 |
The tables below contain company or Group accounting figures on a 100 per cent share basis, except for profit share which is stated as the SMN Group's share. Badwill and amortisation effects related to acquisitions are included in the profit share. Booked value is the consolidated value in the SMN Group.
| Book value |
|||||||
|---|---|---|---|---|---|---|---|
| 2023 (NOK million) | Assets Liabilities | Total income | Total costs | Profit share | 31.12 | No. of shares | |
| SpareBank 1 Gruppen | 132,113 | 119,812 | 17,648 | 17,402 | -34 | 1,737 | 420,498 |
| SpareBank 1 Boligkreditt | 320,465 | 307,788 | 680 | 201 | 98 | 2,809 | 18,595,136 |
| SpareBank 1 Næringskreditt |
10,634 | 8,547 | 111 | 54 | 10 | 309 | 2,402,572 |
| SpareBank 1 Kreditt | 9,746 | 7,903 | 493 | 562 | -13 | 354 | 975,378 |
| Sparebank 1 Betaling | 1,256 | 0 | - | 2 | -37 | 275 | 6,849,205 |
| BN Bank | 47,961 | 41,933 | 1,347 | 583 | 257 | 1,997 | 4,943,072 |
| SpareBank 1 Forvaltning | 1,718 | 570 | 890 | 722 | 35 | 247 | 985,722 |
| Other companies | -18 | 242 | |||||
| Total | 297 | 7,970 |
| Total | Total | Profit | Book value | No. of shares |
||
|---|---|---|---|---|---|---|
| 420,498 | ||||||
| 17,635,629 | ||||||
| 11,615 | 9,565 | 47 | 27 | 3 | 333 | 2,640,198 |
| 7,159 | 5,890 | 351 | 304 | 9 | 283 | 751,377 |
| 1,251 | 0 | - | 3 | 13 | 260 | 5,711,159 |
| 44,998 | 39,499 | 1,128 | 533 | 203 | 1,812 | 4,943,072 |
| 1,523 | 696 | 709 | 538 | 33 | 162 | 722,575 |
| 4 | 322 | |||||
| 442 | 8,075 | |||||
| Assets 121,397 287,957 |
Liabilities 106,592 275,138 |
income 19,319 107 |
costs 18,123 62 |
share 175 1 |
31.12 2,208 2,696 |
SpareBank 1 SMN's strategy is that ownership duse to defaulted exposures should at the outset be of brief duration, normally not longer than one year. Investments are recorded at fair value in the Parent Bank's accounts, and is classified as investment held for sale.
| 2023 (NOK Million) | Assets Liabilities | Revenue | Expenses | Profit | Ownership | |
|---|---|---|---|---|---|---|
| Mavi XV Group | 80 | 26 | 15 | 15 | 1 | 100 % |
| Total Held for sale | 80 | 26 | 15 | 15 | 1 | |
| 2022 (NOK Million) | Assets Liabilities | Revenue | Exspenses | Profit | Ownership | |
| Mavi XV Group | 75 | 30 | 12 | 11 | 0 | 100 % |
| SpareBank 1 Markets | 1,844 | 1,063 | 780 | 601 | 179 | 67 % |
| Total Held for sale | 1,919 | 1,093 | 791 | 612 | 179 |
Upon acquisition of businesses a purchase price analysis is prepared in accordance with IFRS 3 where identifiable assets and liabilities are recognised at fair value on the acquisition date.
SpareBank 1 Regnskapshuset SMN AS has in 2023 acquired Askus AS, Kvidal Regnskap AS and Brattberg Regnskap AS. The companies will be merged and fully integrated into SpareBank 1 Regnskapshuset SMN AS in 2024. Lom Regnskap AS, Regnskapsforum AS and Info-Regnskap AS has been integrated into SpareBank 1 Regnskapshuset SMN AS in 2023.
Purchase price allocations have been prepared in accordance with IFRS 3 in which identifiable assets and liabilities are recognised at fair value on the acquisition date. The difference between the group's acquisition cost and book value of net assets is allocated to goodwill.
The merger of SpareBank 1 Søre Sunnmøre and SpareBank 1 SMN was carried out on 2 May 2023 with accounting effect from the same date. SpareBank 1 SMN is the acquiring entity and the merger is accounted for using the acquisition method of accounting in accordance with IFRS 3.
On 20 June 2022 the boards of directors of the two banks entered into an agreement of intent on a merger between SpareBank 1 SMN and SpareBank 1 Søre Sunnmøre. The rationale for the merger was the banks' joint desire to create a larger and more dynamic bank, increasingly attractive to customers, investors and shareholders, employees and local communities in the region.
The overarching goal of the merged bank is to take its place as the leading banking player in Sunnmøre and in Fjordane. A merged bank makes for greater competitive power, an enhanced presence and increased attractiveness to customers, employees, investors and shareholders alike.
The merger plan was approved by the boards of both banks on 3 October 2022, and was finally approved by the respective general meetings of the banks on 9 November 2022. The requisite authorisations were received from Finanstilsynet on 17 March 2023 and the merger completion date was set at 2 May 2023.
In the final merger plan the conversion ratio was set at 93.4 per cent for SpareBank 1 SMN and 6.6 per cent for SpareBank 1 Søre Sunnmøre.
Payment for acquisition of the business activity of SpareBank 1 Søre Sunnmøre will be in the form of new equity certificates (ECs) in SpareBank 1 SMN.
In connection with the merger, the equity certificate capital is raised by NOK 288 million through the issuance of 14,379,147 new equity certificates of which 1,407,923 ECs go to previous EC holders in SpareBank 1 Søre Sunnmøre and 12,971,224 ECs go to the foundation Sparebankstiftinga Søre Sunnmøre. This entails the conversion of one SpareBank 1 Søre Sunnmøre EC for every 1.4079 SpareBank 1 SMN ECs.
These equity certificates are issued at a nominal value of NOK 20 per EC and a subscription price of NOK 103.36 per EC, corresponding to the latest calculated book value per EC on 30 April 2023. After the issuance of new equity certificates the total issued EC capital will amount to 2,884,311,800 distributed on 144,215,590 ECs with a nominal value of NOK 20 per EC.
The fair value of the 14,379,147 ECs issued as payment to EC holders in SpareBank 1 Søre Sunnmøre and the foundation Sparebankstiftinga Søre Sunnmøre is NOK 137.10 per EC, corresponding to the latest market price quoted on 2 May 2023 for SpareBank 1 SMN's EC. The difference between the fair value of the payment made to SpareBank 1 Søre Sunnmøre's EC holders prior to the merger and their share of net equity capital for the purposes of the acquisition analysis constitutes goodwill, and is recognised in the balance sheet on the completion date in accordance with IFRS 3.
The table below shows the merger payment, the fair value of assets and liabilities from SpareBank 1 Søre Sunnmøre and the calculation of goodwill as at 2 May 2023 (merger completion date).
| Merger payment | Number | Price (NOK) | Payment (NOKm) |
|---|---|---|---|
| Issued EC capital - SpareBank 1 Søre Sunnmøre | 1,407,923 | 103 | 146 |
| Issued EC capital - Sparebankstiftinga Søre Sunnmøre | 12,971,224 | 103 | 1,341 |
| Total payment | 14,379,147 | 1,486 |
| Book value 30 | Fair value 2 | ||
|---|---|---|---|
| Fair value of identifiable assets and liabilities | April 2023 | Excess Values | May 2023 |
| (NOKm) | |||
| Cash and receivables from central banks | 35 | - | 35 |
| Deposits with and loans to credit institutions | 1,602 | - | 1,602 |
| Net loans to and receivables from customers | 10,345 | 20 | 10,365 |
| Fixed-income CDs and bonds | 206 | - | 206 |
| Shares, units and other equity interests | 566 | 23 | 589 |
| Investment in related companies | 163 | 107 | 270 |
| Deferred tax asset | 2 | - | 2 |
| Fixed assets | 48 | 15 | 63 |
| Other assets | 43 | - | 43 |
| Intangible assets (customer relationship) | - | 133 | 133 |
| Total assets | 13,009 | 299 | 13,307 |
| Deposits from credit institutions | 9 | - | 9 |
| Deposits from and debt to customers | 9,994 | - | 9,994 |
| Debt created by issue of securities | 1,240 | - | 1,240 |
| Deferred tax | - | 42 | 42 |
| Other liabilities | 52 | - | 52 |
| Provision for accrued expenses and commitments | 19 | - | 19 |
| Subordinated loan capital | 150 | - | 150 |
| Total liabilities | 11,463 | 42 | 11,505 |
| Additional Tier 1 Capital | 50 | 50 | |
| Net assets | 1,496 | 1,753 | |
| Goodwill | 219 | ||
| Calculated equity capital based on the latest market price quoted on 2 May 2023 NOK 137.10, and a conversion ratio set at 93.4 per cent for SpareBank 1 SMN and 6.6 per cent for SpareBank 1 Søre sunnmøre |
1,971 |
In this context 'related parties' means subsidiaries, associated companies, joint ventures and companies held for sale over which the Bank exercises substantial influence, as well as SpareBank 1 SMN Pensjonskasse (pension fund) and companies owned by the Bank's personal related parties. The opening balance may differ from the previous year's closing balance as the opening balance includes companies that during the fiscal year have been classified as related partied of the Bank.
| Subsidiaries | Other related companies | |||
|---|---|---|---|---|
| Loans (NOK million) | 2023 | 2022 | 2023 | 2022 |
| Outstanding loans as at 1.1 | 10,350 | 8,670 | 4,526 | 4,622 |
| Loans issued in the period | 207 | 1,703 | -4,577 | 332 |
| Repayments | -2 | 23 | -776 | 332 |
| Outstanding loans as at 31.12 | 10,559 | 10,350 | 725 | 4,622 |
| Interest rate income | 518 | 235 | 23 | 48 |
| Bonds and subordinated loans as at 31.12 | 226 | 155 | 1,018 | 945 |
| Deposits (NOK million) | ||||
| Deposits as at 1.1 | 1,263 | 1,426 | 1,831 | 2,037 |
| Contribution received during the period | 27,411 | 52,956 | 344,438 | 78,579 |
| Withdrawals | 27,634 | 52,340 | 344,966 | 78,694 |
| Deposits as at 31.12 | 1,040 | 2,042 | 1,303 | 1,923 |
| Interest rate expenses | 45 | 22 | 60 | 21 |
| Securities trading | 203 | 134 | - | - |
| Commission income SpareBank 1 Boligkreditt | - | - | 154 | 255 |
| Commission income SpareBank 1 Næringskreditt | - | - | 16 | 16 |
| Issued guarantees and amount guaranteed | - | 6 | 26 | 20 |
All loans and deposits for related parties are booked in the Parent Bank
SpareBank 1 SMN's treasury department and Sparebank 1 Markets, through outsourced business, carry out a large number of transactions with the Bank's related companies. Transactions are executed on a ongoing basis in the fixed income and forex area, payments transmission, bond trading etc. These transactions are part of ordinary bank operations and all agreements are contracted on market terms. Numbers above includes net investmens in derivatives, bond transactions and deposits.
SpareBank 1 SMN has signed supply agreements with several related companies in order to safeguard ordinary banking operations and further development of the SpareBank 1 Alliance. This includes development of data-technical solutions for alliance collaboration, commission from insurance and savings and investment products, administrative services, leasing of premises etc. The agreements are considered to be on market terms. In addition the Bank participates in increases of capital in related companies; see note 39 on investment in owner interests.
The Bank's ECC capital totals NOK 2,884,311,800 distributed on 144,215,590 equity capital certificates (ECCs), each with a face value of NOK 20. As of 31 December 2023 there was 17,348 ECC holders (17,007 as of 31 December 2022).
ECC capital has been raised by the following means:
| Change in ECC | Total ECC | |||
|---|---|---|---|---|
| Year | Change | capital (NOK) | capital (NOK) | No. of ECCs |
| 1991 | Placing | 525,000,000 | 525,000,000 | 5,250,000 |
| 1992 | Placing | 75,000,000 | 600,000,000 | 6,000,000 |
| 2000 | Employee placing | 5,309,900 | 605,309,900 | 6,053,099 |
| 2001 | Employee placing | 4,633,300 | 609,943,200 | 6,099,432 |
| 2002 | Employee placing | 4,862,800 | 614,806,000 | 6,148,060 |
| 2004 | Bonus Issue | 153,701,500 | 768,507,500 | 7,685,075 |
| 2005 | Placing | 217,424,200 | 985,931,700 | 9,859,317 |
| 2005 | Employee placing | 23,850,000 | 1,009,781,700 | 10,097,817 |
| 2005 | Split | - | 1,009,781,700 | 40,391,268 |
| 2005 | Rights issue | 252,445,425 | 1,262,227,125 | 50,489,085 |
| 2007 | Dividend issue | 81,752,950 | 1,343,980,075 | 53,752,203 |
| 2007 | Employee placing | 5,420,000 | 1,349,400,075 | 53,976,003 |
| 2008 | Dividend issue | 90,693,625 | 1,440,093,700 | 57,603,748 |
| 2008 | Employee placing | 6,451,450 | 1,446,545,150 | 57,861,806 |
| 2009 | Bonus issue | 289,309,025 | 1,735,854,175 | 69,434,167 |
| 2010 | Employee placing | 12,695,300 | 1,748,549,475 | 69,941,979 |
| 2010 | Rights issue | 624,082,675 | 2,372,632,150 | 94,905,286 |
| 2011 | Rights issue | 625,000 | 2,373,257,150 | 94,930,286 |
| 2012 | Reduction in nominal value | -474,651,430 | 1,898,605,720 | 94,930,286 |
| 2012 | Rights issue | 569,543,400 | 2,468,149,120 | 123,407,456 |
| 2012 | Employee placing | 16,220,200 | 2,484,369,320 | 124,218,466 |
| 2012 | Placing | 112,359,540 | 2,596,728,860 | 129,836,443 |
| 2023 | Fusion | 287,582,940 | 2,884,311,800 | 144,215,590 |
| 20 largest ECC holders at 31 December 2023 | No. Of ECCs | Holding |
|---|---|---|
| Sparebankstiftinga Søre Sunnmøre | 12,971,224 | 8.99 % |
| Sparebankstiftelsen SMN | 5,463,847 | 3.79 % |
| Kommunal Landspensjonskasse Gjensidige | 4,222,118 | 2.93 % |
| Pareto Aksje Norge VPF | 3,870,618 | 2.68 % |
| State Street Bank and Trust Company | 3,421,466 | 2.37 % |
| Pareto Invest Norge AS | 2,938,362 | 2.04 % |
| VPF Eika Egenkapitalbevis | 2,743,094 | 1.90 % |
| JP Morgan Chase Bank, N.A., London | 2,651,780 | 1.84 % |
| Danske Invest Norske Institutt II. | 2,375,940 | 1.65 % |
| The Northern Trust Company, London Br | 2,232,500 | 1.55 % |
| VPF Alfred Berg Gambak | 2,201,532 | 1.53 % |
| VPF Holberg Norge | 2,150,000 | 1.49 % |
| State Street Bank and Trust Company | 2,143,675 | 1.49 % |
| VPF Odin Norge | 2,016,474 | 1.40 % |
| Forsvarets Personellservice | 2,014,446 | 1.40 % |
| J.P. Morgan SE | 1,870,630 | 1.30 % |
| VPF Nordea Norge Verdi | 1,847,635 | 1.28 % |
| RBC Investor Services Trust | 1,786,001 | 1.24 % |
| Spesialfondet Borea Utbytte | 1,550,642 | 1.08 % |
| MP Pensjon PK | 1,352,771 | 0.94 % |
| Sum 20 største eiere | 61,824,755 | 42.87 % |
| Øvrige eiere | 82,390,835 | 57.13 % |
| Utstedte egenkapitalbevis | 144,215,590 | 100 % |
SpareBank 1 SMN aims to manage the Group's resources in such a way as to provide equity certificate holders with a good, stable and competitive return in the form of dividend and a rising value of the bank's equity certificate.
The net profit for the year will be distributed between the owner capital (the equity certificate holders) and the ownerless capital in accordance with their respective shares of the bank's total equity capital.
SpareBank 1 SMN's intention is that around one half of the owner capital's share of the net profit for the year should be disbursed in dividends and, similarly, that around one half of the owner capital's share of the net profit for the year should be disbursed as gifts or transferred to a foundation. This is on the assumption that capital adequacy is at a satisfactory level. When determining dividend payout, account will be taken of the profit trend expected in a normalised market situation, external framework conditions and the need for tier 1 capital.
ECC owners share of profit have been calculated based on net profit allocated in accordance to the average number of certificates outstanding in the period. There is no option agreements in relation to the Equity Capital certificates, diluted net profit is therefore equivalent to Net profit per ECC.
| (NOKm) | 2023 | 2022 |
|---|---|---|
| Adjusted Net Profit to allocate between ECC owners and Savings Bank Reserve 1) | 3,489 | 2,592 |
| Allocated to ECC Owners 2) | 2,331 | 1,658 |
| Issues Equity Captial Certificates adjusted for own certificates | 138,106,331 | 129,316,131 |
| Earnings per Equity Captial Certificate | 16.88 | 12.82 |
| 1) Adjusted Net Profit | 2023 | 2022 |
| 3,688 | 2,785 |
|---|---|
| -74 | -130 |
| -125 | -63 |
| 3,489 | 2,592 |
| 2) Equity capital certificate ratio (parent bank) (NOKm) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| ECC capital | 2,884 | 2,597 |
| Dividend equalisation reserve | 8,482 | 7,877 |
| Premium reserve | 2,422 | 895 |
| Unrealised gains reserve | 71 | 45 |
| Other equity capital | - | - |
| A. The equity capital certificate owners' capital | 13,859 | 11,413 |
| Ownerless capital | 6,865 | 6,408 |
| Unrealised gains reserve | 35 | 25 |
| Other equity capital | - | - |
| B. The saving bank reserve | 6,900 | 6,433 |
| To be disbursed from gift fund | 860 | 474 |
| Dividend declared | 1.730 | 840 |
| Equity ex. profit | 23,350 | 19,161 |
| Equity capital certificate ratio A/(A+B) | 66.8 % | 64.0 % |
| Equity capital certificate ratio for distribution | 66.8 % | 64.0 % |
The annual accounts are regarded as approved for publication once they have been considered by the board of directors. The supervisory board and regulatory authorities can thereafter refuse to approve the accounts, but not to change them. Events up to the time at which the accounts are approved for publication, and which relate to circumstances already known on the balance sheet date, will be included in the information base for accounting estimates and thus be fully reflected in the accounts. Events concerning circumstances that were not known on the closing date will be illuminated if significant.
The accounts are presented on the going-concern assumption. In the view of the board of directors this assumption was met at the time the accounts were approved for presentation.
| Income statement NOKm 1) | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|---|---|---|
| Interest income | 11,262 | 5,927 | 6,315 | 4,197 | 4,626 | 4,057 | 3,825 | 3 597 | 4 031 | 4 265 |
| Interest expenses | 6,631 | 2,588 | 2,977 | 1,439 | 1,939 | 1,655 | 1,600 | 1 714 | 2 159 | 2 475 |
| Net interest and credit comissionincome |
4,632 | 3,339 | 3,339 | 2,759 | 2,687 | 2,403 | 2,225 | 1 883 | 1 872 | 1 790 |
| Commision and fee income | 2,084 | 2,042 | 2,042 | 2,572 | 2,290 | 2,177 | 2,005 | 1 674 | 1 545 | 1 512 |
| Income from investment in relatedcompanies |
297 | 442 | 442 | 681 | 879 | 423 | 443 | 423 | 448 | 527 |
| Return on financial investements | 502 | -61 | -61 | 269 | 322 | 334 | 317 | 521 | 11 | 193 |
| Total income | 7,515 | 5,760 | 5,760 | 6,281 | 6,178 | 5,337 | 4,989 | 4 502 | 3 876 | 4 021 |
| Salaries, fees and otherpersonnel costs | 1,691 | 1,406 | 1,406 | 1,883 | 1,699 | 1,584 | 1,426 | 1 159 | 1 093 | 1 002 |
| Other operating expenses | 1,326 | 1,038 | 1,038 | 1,069 | 1,098 | 1,040 | 943 | 844 | 838 | 787 |
| Total costs | 3,017 | 2,443 | 2,443 | 2,952 | 2,797 | 2,624 | 2,369 | 2 003 | 1 931 | 1 789 |
| Operating profit before losses | 4,498 | 3,317 | 3,317 | 3,329 | 3,380 | 2,713 | 2,621 | 2 499 | 1 945 | 2 232 |
| Losses on loans and guarantees | 14 | -7 | -7 | 951 | 299 | 263 | 341 | 516 | 169 | 89 |
| Operating profit | 4,484 | 3,324 | 3,324 | 2,378 | 3,081 | 2,450 | 2,279 | 1 983 | 1 776 | 2 143 |
| Taxes | 904 | 718 | 718 | 400 | 518 | 509 | 450 | 341 | 370 | 362 |
| Result investment Held for sale | 108 | 179 | 179 | 1 | 0 | 149 | -1 | 4 | - 1 | 0 |
| Profit of the year | 3,688 | 2,785 | 2,785 | 1,978 | 2,563 | 2,090 | 1,828 | 1 647 | 1 406 | 1 782 |
| Dividend | 1,730 | 840 | 840 | 569 | 840 | 661 | 571 | 389 | 292 | 292 |
| Balance sheet NOKm | ||||||||||
| Cash and loans to and claims on credit institutions |
9,917 | 12,834 | 5,956 | 7,856 | 2,871 | 5,957 | 7,527 | 4,207 | 5,677 | 5,965 |
| CDs, bonds and other interest-bearing securities |
50,655 | 53,792 | 44,024 | 43,522 | 35,508 | 32,438 | 31,672 | 29,489 | 30,282 | 27,891 |
| Loans before loss provisions | 169,862 152,629 147,301 134,648 126,277 120,473 112,071 102,325 | 93,974 | 90,578 | |||||||
| - Loan loss provisions | 907 | 1,081 | 1,410 | 1,517 | 998 | 744 | 1,113 | 971 | 559 | 467 |
| Other assets | 3,189 | 5,137 | 2,974 | 3,403 | 3,004 | 2,581 | 3,096 | 3,030 | 2,540 | 2,080 |
| Total assets | 232,717 223,312 198,845 187,912 166,662 160,705 153,254 138,080 131,914 126,047 | |||||||||
| Debt to credit institutions | 13,160 | 14,636 | 15,063 | 13,095 | 8,853 | 9,214 | 9,607 | 10,509 | 8,155 | 9,123 |
| Deposits from and debt to customers | 132,888 122,010 111,286 | 97,529 | 85,917 | 80,615 | 76,476 | 67,168 | 64,090 | 60,680 | ||
| Debt created by issuance of securities | 52,818 | 55,781 | 44,241 | 51,098 | 46,541 | 47,251 | 45,537 | 40,390 | 40,569 | 39,254 |
| Other debt and accrued expences etc. | 3,007 | 3,818 | 3,217 | 3,085 | 2,841 | 2,671 | 1,924 | 1,532 | 1,734 | 1,095 |
| Subordinated debt | 2,247 | 2,058 | 1,796 | 1,795 | 2,090 | 2,268 | 2,201 | 3,182 | 3,463 | 3,371 |
| Total equity | 28,597 | 25,009 | 23,241 | 21,310 | 20,420 | 18,686 | 17,510 | 15,299 | 13,904 | 12,524 |
| Total liabilities and equity | 232,717 223,312 198,845 187,912 166,662 160,705 153,254 138,080 131,914 126,047 | |||||||||
| Key figures | ||||||||||
| Total assets | 232,717 223,312 198,845 187,912 166,662 160,704 153,254 138,080 131,914 126,047 | |||||||||
| Average total assets | 235,303 213,112 196,229 183,428 165,154 156,992 145,948 137,060 128,355 117,794 | |||||||||
| Profit as a percentage of total assets | 1.6 % | 1.2 % | 1.4 % | 1.1 % | 1.5 % | 1.3 % | 1.2 % | 1.2 % | 1.1 % | 1.4 % |
| Gross loans to customers | 169,862 152,629 147,301 134,648 126,277 120,473 112,071 102,325 | 93,974 | 90,578 | |||||||
| Gross loans to customers incl. SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt |
236,329 211,244 195,353 182,801 167,777 160,317 148,784 137,535 127,378 120,435 | |||||||||
| Gross loans in retail market | 159,777 141,833 132,894 124,461 115,036 108,131 | 98,697 | 89,402 | 80,725 | 74,087 | |||||
| Gross loans in corporate market | 76,553 | 69,411 | 62,458 | 58,340 | 52,740 | 52,186 | 50,087 | 48,133 | 46,653 | 46,348 |
| Deposits from and debt to customers | 132,888 122,010 111,286 | 97,529 | 85,917 | 80,615 | 76,476 | 67,168 | 64,090 | 60,680 | ||
| Deposits from retail market | 57,874 | 48,316 | 44,589 | 40,600 | 35,664 | 33,055 | 31,797 | 29,769 | 28,336 | 26,496 |
| Deposits from corporate market | 75,015 | 73,693 | 66,697 | 56,928 | 50,253 | 47,561 | 44,678 | 37,398 | 35,754 | 34,184 |
| Ordinary lending financed by ordinary | ||||||||||
| deposits | 78 % | 80 % | 76 % | 72 % | 68 % | 67 % | 68 % | 66 % | 68 % | 67 % |
| Ordinary lending incl. SpareBank 1 Boligkreditt and SpareBank 1 |
50 % | |||||||||
| Næringskreditt financed by ordinary deposits |
56 % | 58 % | 57 % | 53 % | 51 % | 50 % | 51 % | 49 % | 50 % |
| Capital adequacy | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| CET 1 Capital | 21,589 | 19,776 | 17,790 | 17,041 | 15,830 | 14,727 | 13,820 | 13,229 | 12,192 | 10,679 |
| Core capital | 23,793 | 21,835 | 19,322 | 18,636 | 17,742 | 16,472 | 15,707 | 15,069 | 13,988 | 12,382 |
| Primary capital | 26,399 | 24,147 | 21,333 | 20,759 | 19,854 | 18,743 | 17,629 | 17,185 | 16,378 | 14,937 |
| Risk weighted volume | 114,633 104,716 | 98,664 | 93,096 | 91,956 101,168 | 94,807 | 88,788 | 89,465 | 95,317 | ||
| CET 1 Ratio | 18.8 % | 18.9 % | 18.0 % | 18.3 % | 17.2 % | 14.6 % | 14.6 % | 14.9 % | 13.6 % | 11.2 % |
| Core capital ratio | 20.8 % | 20.9 % | 19.6 % | 20.0 % | 19.3 % | 16.3 % | 16.6 % | 17.0 % | 15.6 % | 13.0 % |
| Capital ratio | 23.0 % | 23.1 % | 21.6 % | 22.3 % | 21.6 % | 18.5 % | 18.6 % | 19.4 % | 18.3 % | 15.7 % |
| Leverage ratio | 7.2 % | 7.1 % | 6.9 % | 7.1 % | 7.5 % | 7.4 % | 7.2 % | 7.4 % | 6.7 % | 6.0 % |
| Cost/income ratio | 45 % | 42 % | 45 % | 47 % | 45 % | 49 % | 47 % | 44 % | 50 % | 44 % |
| Losses on loans | 0.01 % | 0.00 % | 0.09 % | 0.54 % | 0.18 % | 0.17 % | 0.23 % | 0.39 % | 0.14 % | 0,08 % |
| ROE | 14.4 % | 12.3 % | 13.5 % | 10.0 % | 13.7 % | 12.2 % | 11.5 % | 11.3 % | 10.7 % | 15.1 % |
| Growth in lending (gross) | 11.9 % | 8.1 % | 6.9 % | 9.0 % | 4.7 % | 7,8 % | 8.2 % | 8.0 % | 5.8 % | 7.3 % |
| Growth in deposits | 8.9 % | 9.6 % | 14.1 % | 13.5 % | 6.6 % | 5.4 % | 13.9 % | 4.8 % | 5.6 % | 8.5 % |
| Number of staff 1) | 1,737 | 1,498 | 1,449 | 1,653 | 1,634 | 1,588 | 1,482 | 1,328 | 1,298 | 1,273 |
| Number of FTEs 1) | 1,545 | 1,432 | 1,432 | 1,560 | 1,509 | 1,493 | 1,403 | 1,254 | 1,208 | 1,192 |
| Number of branches | 46 | 40 | 40 | 45 | 46 | 48 | 48 | 48 | 49 | 49 |
1)Comparable figures for 2021 have been restated due to the reclassification of the subsidiary SpareBank 1 Markets to held for sale from Q4 2022. See further information in note 3. Prior year figures have not been restated. The number of staff and FTE's have been restated for years 2022 and 2021.
FTEs
We hereby declare that to the best of our knowledge
Trondheim, 29 February 2024 The Board of Directors of SpareBank 1 SMN
(chair) (deputy chair)
Kjell Bjordal Christian Stav Mette Kamsvåg
Tonje Eskeland Foss Ingrid Finboe Svendsen Kristian Sætre
Freddy Aursø Christina Straub Inge Lindseth (employee rep.) (employee rep.)
Jan-Frode Janson (Group CEO)
To the Supervisory Board of SpareBank 1 SMN
We have audited the financial statements of SpareBank 1 SMN, which comprise:
In our opinion
Our opinion is consistent with our additional report to the Audit Committee.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 5 years from the election by the Supervisory Board on 22 November 2018 for the accounting year 2019.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Loans to customers represent a considerable part of total assets. The assessment of loan loss provisions is a model-based framework which includes assessments with elements of management judgment. The framework, is complex, includes considerable volumes of data and judgmental parameters.
We focused on this area due to the significance of the impairment considerations for the value of loans, and the fact that the use of judgement has a potential to affect the profit for the period. Furthermore, there is an inherent risk of errors because of the complexity and quantity of data involved in the modelling.
The use of models to determine expected credit losses entails judgement, specifically with respect to:
In the case of loans where there is objective evidence of impairment, an individual allowance for credit loss is recognized. The assessments require management to use judgement.
Please refer to note 3, 6, 8 and 10 in the annual report for a description of the company's impairment model and how the company estimates their expected credit losses using IFRS 9.
In our audit of expected loss allowance, we evaluated and tested the design and effectiveness of controls for quality assurance relating to the applied assumptions and models used in the calculations. Furthermore, we tested the input used in the model-based calculation of allowances as well as the individually calculated allowances.
For loans considered on a collective basis the calculation is based on a framework model. We tested the model and considered the relevance and the reasonableness of important assumptions used in the calculation.
We obtained a detailed understanding of the process and tested relevant controls directed at ensuring:
Our controls testing gave no indication of material misstatements in the model, or deviations from IFRS 9.
Our work included tests of the company's financial reporting systems relevant to financial reporting. The company uses external service providers to operate some of the important IT systems. The auditor at the relevant service organization are used to evaluate the design and efficiency of the established control systems, and tests the controls designed to ensure the integrity of the IT system that are relevant to financial reporting. The auditor have issued a report that included testing of whether central calculations performed by core systems were performed according to expectations, hereunder interest calculations and mortifications. The testing included the integrity of data, changes of and access to the systems.
To assess whether we could rely on the work performed by other auditors, we satisfied ourselves regarding the auditors' competence and objectivity and examined the reports received and assessed potential weaknesses and remediation initiatives. Our assessments showed that we could rely on the
data handled and calculations performed within the IT systems that are relevant to financial reporting.
For loans with objective evidence of impairment and where the impairment amounts were individually calculated, we tested a sample by assessing the estimated future cash flows used by management to substantiate the impairment calculation. We challenged management's assumptions by interviewing key credit personnel and management both to assess the information received from customers and to assess how the reliability of the information were evaluated. We compared the assumptions made by management to external documentation when available. The result of the testing showed that management's assumptions in the calculation of impairment amounts were reasonable.
We have read the notes and found that the information provided was sufficient.
The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors' report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors' report nor the other information accompanying the financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of Directors' report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors' report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors' report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors' report or the other information accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors' report
Our opinion on the Board of Director's report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility.
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's and the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
As part of the audit of the financial statements of SpareBank 1 SMN, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name SB1SMN-2023-12-31-nb, have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation.
Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary.
For a description of the auditor's responsibilities when performing an assurance engagement of the ESEF reporting, see:https://revisorforeningen.no/revisjonsberetninger
Trondheim, 29 February 2024 PricewaterhouseCoopers AS
Rune Kenneth S. Lædre State Authorised Public Accountant Note: This translation from Norwegian has been prepared for information purposes only.
At end-2023 the market price of SpareBank 1 SMN's EC (MING) was NOK 141.80. At end-2022 it was NOK 127.40
At the end of 2023 SpareBank 1 SMN's equity certificate (EC) capital totalled NOK 2,884m distributed on 144,215.590 ECs with a nominal value of NOK 20 each. At the turn of the year the group had a treasury holding of ECs totalling 11,745 ECs.
| Equity Certificates (EC) | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|---|---|---|
| Quoted price | 141.80 | 127.40 | 149.00 | 97.60 | 100.20 | 84.20 | 82.25 | 64.75 | 50.50 | 58.50 |
| No. of ECs issued, million | 144.20 | 129.29 | 129.39 | 129.39 | 129.30 | 129.62 | 129.38 | 129.83 | 129.83 | 129.83 |
| Market value (NOKm) | 20,448 | 16,471 | 19,279 | 12,629 | 12,956 | 10,914 | 10,679 | 8,407 | 6,556 | 7,595 |
| Dividend per EC | 12.00 | 6.50 | 7.50 | 4.40 | 6.50 | 5.10 | 4.40 | 3.00 | 2.25 | 2.25 |
| Book value per EC | 120.48 | 109.86 | 103.48 | 94.71 | 90.75 | 83.87 | 78.81 | 73.26 | 67.65 | 62.04 |
| Profit per EC | 16.88 | 12.82 | 13.31 | 8.87 | 12.14 | 9.97 | 8.71 | 7.91 | 7.02 | 8.82 |
| Price-Earnings Ratio | 8.40 | 9.94 | 11.19 | 11.01 | 8.26 | 8.44 | 9.44 | 8.19 | 7.19 | 6.63 |
| Price-Book Value Ratio | 1.18 | 1.16 | 1.44 | 1.03 | 1.10 | 1.00 | 1.04 | 0.88 | 0.75 | 0.94 |
| Payout ratio | 71.0 % | 50.5 % | 56.3 % | 50 % | 54 % | 51 % | 50 % | 38 % | 25 % | 25 % |
| EC fraction | 66.8 % | 64.0 % | 64.0 % | 64.0 % | 64.0 % | 64.0 % | 64 % | 64.0 % | 64.0 % | 64.6 % |
1 Jan 2022 to 31 Dec 2023
OSEBX = Oslo Stock Exchange Benchmark Index (rebased) OSEEX = Oslo Stock Exchange ECC Index (rebased)
1 Dec 2022 to 31 Dec 2023
Total number of ECs traded (1000)
| 20 largest ECC holders | No. Of ECCs | Holding |
|---|---|---|
| Sparebankstiftinga Søre Sunnmøre | 12,971,224 | 8.99 % |
| Sparebankstiftelsen SMN | 5,463,847 | 3.79 % |
| KLP | 4,222,118 | 2.93 % |
| Pareto Aksje Norge VPF | 3,870,618 | 2.68 % |
| State Street Bank and Trust Comp | 3,421,466 | 2.37 % |
| Pareto Invest Norge AS | 2,938,362 | 2.04 % |
| VPF Eika Egenkapitalbevis | 2,743,094 | 1.90 % |
| J. P. Morgan Chase Bank, N.A., London | 2,651,780 | 1.84 % |
| Danske Invest Norske Aksjer Institusjon II. | 2,375,940 | 1.65 % |
| The Northern Trust Comp | 2,232,500 | 1.55 % |
| VPF Alfred Berg Gamba | 2,201,532 | 1.53 % |
| VPF Holberg Norge | 2,150,000 | 1.49 % |
| State Street Bank and Trust Comp | 2,143,675 | 1.49 % |
| VPF Odin Norge | 2,016,474 | 1.40 % |
| Forsvarets personellservice | 2,014,446 | 1.40 % |
| J. P. Morgan SE | 1,870,630 | 1.30 % |
| VPF Nordea Norge | 1,847,635 | 1.28 % |
| RBC Investor Services Trust | 1,786,001 | 1.24 % |
| Spesialfondet Borea Utbytte | 1,550,642 | 1.08 % |
| MP Pensjon PK | 1,352,771 | 0.94 % |
| The 20 largest ECC holders in total | 61,824,755 | 42.87 % |
| Others | 82,390,835 | 57.13 % |
| Total issued ECCs | 144,215,590 | 100.00 % |
SpareBank 1 SMN aims to manage the Group's resources in such a way as to provide equity certificate holders with a good, stable and competitive return in the form of dividend and a rising value of the bank's equity certificate.
The net profit for the year will be distributed between the owner capital (the equity certificate holders) and the ownerless capital in accordance with their respective shares of the bank's total equity capital.
SpareBank 1 SMN's intention is that up to one half of the owner capital's share of the net profit for the year should be disbursed in dividends and, similarly, that up to one half of the owner capital's share of the net profit for the year should be disbursed as gifts or transferred to a foundation. This is on the assumption that capital adequacy is at a satisfactory level. When determining dividend payout, account will be taken of the profit trend expected in a normalised market situation, external framework conditions and the need for tier 1 capital.
Mid-Norway is an attractive place for both businesses and people, and it should remain so for a long time to come. Therefore, sustainable development of our region is crucial when describing our social responsibility. This means being an active and visible driver for the green transition of Mid-Norway and promoting responsible business practices.
For us, this entails more than just minimizing our own environmental impact. The financial industry has limited direct emissions, and our influence on climate through day-to-day operations mostly originates from emissions related to office operations, energy consumption, and business travel. While it is important for us to reduce our emissions from day-to-day operations, we recognise that our most significant contribution lies in how we influence our suppliers and customers in a more sustainable direction.
In 2022, the board adopted an ambition to achieve net-zero emissions by 2050. To help us reach net-zero, we have established transition plans for various sectors in our loan portfolios. Alongside the net-zero ambition, these transition plans will significantly impact how we finance these sectors going forward.
In 2023, we further strengthened this effort. We launched net-zero transition plans for fishery and the commercial property sector, and in August, the board decided that SpareBank 1 SMN shall develop emission reduction targets according to the Science Based Targets initiative (SBTi). SBTi is a global initiative that assists companies in setting science-based targets to reduce greenhouse gas (GHG) emissions in line with the Paris Agreement. This means that over the next two years, SpareBank 1 SMN will develop both short-term and long-term targets, along with corresponding action plans to achieve our net-zero ambition. Furthermore, we commit to publicly disclose our emission targets, reduction plans, and overall progress in line with the Paris Agreement.
A robust and transparent climate account is a crucial tool in achieving our climate ambitions. To reach our goals, it is essential to map, measure, and manage our GHG emissions. This involves calculating the impact of all our economic activities at a detailed level so that we and our stakeholders can understand our influence and what contributes to it.
It is important to emphasize that we are making progress in our GHG emission reductions, but we still have a way to go to reach our final targets. We have taken significant steps in reporting GHG emissions since we compiled our first climate accounts in 2019. In 2022, we were among the banks that included emissions from the loan portfolio – known as financed emissions. We consider these emissions crucial in our efforts towards the green transition of Mid-Norway, and in 2023, a project group was established to ensure that our ambitions and transition plans align with the Paris Agreement.
When working with climate accounting, we face several challenges, especially related to data quality and uncertainty in the data. One area in which we have paid special attention to is the availability of reliable and up-to-date data. Most of our upstream and downstream emissions consists of secondary data. Calculation methodologies and standards are constantly evolving, which can lead to inconsistency in how emissions are calculated and reported over time. Changes in the data quality of emission factors can result in changes in reported emissions, despite no changes in economic activity. This affects the reliability of the climate accounting as a measuring tool, and it is something we prioritize highly. For the climate accounting to be an effective management tool, we must ensure that reported changes in emissions mainly reflect real climate actions and actual improvements rather than changes in methodology or external factors.
In 2023, we were required to revise our reported GHG inventory for the previous year (2022) and our base year (2019). Changes in methodological assumptions and underlying data in emission factors related to our upstream indirect emissions were so material that we had to recalculate previous years with updated assumptions to ensure better comparability. We are aware of these challenges and uncertainties in our climate accounting, and it is a prioritized area that we are working to improve for 2024.
In 2023, we continued our collaboration with SpareBank 1 Regnskapshuset SMN AS and Asplan Viak AS in compiling the climate accounts. We believe that the combination of local expertise and familiarity with SpareBank 1 SMN, coupled with international knowledge, has positively contributed to the development of the climate accounts.
The climate accounts adhere to the standards, recommendations, and guidelines provided by the GHG Protocol. This includes the GHG Protocol Corporate Accounting and Reporting Standard, GHG Protocol Scope 2 Guidance, and The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
In line with the GHG Protocol, we categorize our GHG emissions into three overarching categories, commonly referred to as scopes. We define these as:
Additionally, the terms upstream and downstream are used to describe indirect emissions caused respectively before us in the value chain (procurement) and after us in the value chain (financed emissions).
The climate accounts are prepared based on collected energy and accounting data from SpareBank 1 SMN.1
Within the boundary of the GHG Protocol, the organisation's responsibility areas for GHG emissions are defined through organisational boundaries.
These specify which emissions an organisation is accountable for and include direct emissions from sources owned or controlled by the organisation, as well as indirect emissions from sources outside the organisation's control.
The choice of organisational boundaries affects which emissions are included in the reporting and how they are reported. Companies can choose between "equity share" or differing "control methods". The equity share method includes emissions from operations that the organisation owns, regardless of whether it has operational control over them, while the control approach includes emissions from operations that the organisation either has operational or financial control over, regardless of ownership.
When compiling our climate accounts, we use operational control. This method defines which of the companies' assets and their respective emissions should be included in the climate accounting, and subsequently where they fall within the various scopes. By using this method, we include emissions from activities that SpareBank 1 has operational control over.
For the climate accounts to serve as a valuable management tool and to provide stakeholders with the best possible information about our climate efforts, we rely on a complete climate account. We use multiple data sources and various calculation methods to ensure an accurate picture of our emissions.
In line with the GHG Protocol, we rely on two main types of data: primary and secondary data. Primary data includes activity and/or emissions data collected directly from the parent, subsidiaries or the supply chain. In our climate accounts, we consider primary data as quantified data from our activities, such as fuel or energy consumption, combined with emissions factors as specific as possible.
Secondary data consists of all other estimated or calculated data. This could include estimated electricity consumption at locations where we do not have exact readings, or emission calculations based on costs.
1 From May 1st, 2023, SpareBank 1 SMN and SpareBank 1 Søre Sunnmøre were merged. From this date onwards, SpareBank 1 Søre Sunnmøre was also included in the data collection for SpareBank 1 SMN. GHG-emissions that occurred from January 1st, 2023, to April 30th, 2023, as well as for the entire fiscal year 2022, have been calculated on a pro forma basis. This is in line with our financial reporting and corresponding financial notes.
Calculation using specific emission factors
Calculation of secondary data sources using financial data
For this reason, this method is best suited for identifying the main sources (hotspots) of our emissions, allowing us to focus on the most significant emission drivers using primary data.
Calculation of financed emissions using secondary and primary data sources
There are four significant changes affecting the climate accounting for 2023. These changes require a retroactive adjustment of previous years' climate accounting to ensure comparability between the base year, the previous year, and this year's reporting.
On 1st of May 2023, SpareBank 1 SMN and SpareBank 1 Søre Sunnmøre were merged. The GHG calculations from both banks are reported collectively from the 1st of May 2023.
Upstream GHG emissions from January 1st, 2023, to April 30th, 2023, and for the entire fiscal year 2022 were calculated on a pro forma basis to establish a comparison basis for emissions related to day-today operations. The GHG emissions presented with pro forma information can be found on the last page of the climate accounts.
The presentation of pro forma information is in line with how the financial reporting and corresponding financial notes are prepared. Downstream emissions or KPI's for SpareBank 1 Søre Sunnmøre are not included in our pro forma calculation.
In compiling this year's climate accounting, we observed a reduction in emissions compared to the climate accounts in 2022. The reduction could not be explained by reduced economic activity or more climate-efficient upstream or downstream operations. Additionally, we merged with SpareBank 1 Søre Sunnmøre, which, in isolation, could have potentially led to an increase in emissions.
We realized that the changes were due to updated emission factors for 20231 . These updates, which included several minor methodological adjustments and uncertainties in the statistical basis, resulted in a material overall change. The change of previous year's climate accounts resulted in an increase in emissions in 2023, rather than a reduction in emissions.
The change in emission factors was significant to the degree that it rendered the 2023 climate accounts incomparable to previous years without an adjustment using the new set of emissions factors.
The methodology for estimating GHG emissions from the loan portfolio has been updated this year to align with Finance Norway's updated 'Guidelines for Calculating Financed Emissions.' The emission factors were updated in the fall of 2023 to a new version of EXIOBASE, without manual adjustments or corrections of outliers. This has resulted in material changes to the emission factors.
We've consulted the updated guidance for the PCAF database and sought advice from Asplan Viak AS to evaluate the emission factors. Based on their feedback and in consultation with other banks in the SpareBank 1 Alliance, we have chosen to switch from Norwegian emission factors to EU factors and corrected some outlier values. Due to these material changes in the measurement method, we've re-estimated the figures for 2022 using the updated measurement method. This ensures the reported changes largely reflect changes in actual GHG emissions, rather than just technical adjustments in the measurement method.
Previous climate accounting utilised two different sources of electricity-related emissions. In Scope 2, a Nordic electricity mix (136g CO2e/kWh) was used to calculate location-based emissions2 . Meanwhile, market-based Scope 2 emissions were calculated using a residual mix from the Norwegian Water Resources and Energy Directorate (NVE) (405g CO2e/kWh)3 . Simultaneously, we employed a Norwegian consumption mix from NVE for location-based emission factors in our calculation of financed emissions, along with the same residual mix for market-based emissions as for upstream emissions.
For the climate accounting for year 2023, we have chosen to use the same factor set from NVE in Scope 2 for both upstream and downstream. This applies to both location-based and market-based electricity-related emissions, specifically the Norwegian consumption mix (19g CO2e/kWh) and the European residual mix (502g CO2e/kWh)3,4. We retroactively applied the NVE factors to the Scope 2 calculations for 2019 and 2022 to ensure comparability across reporting years.
1 The updates included adjustments to the emission factors, such as revised global warming potentials (GWPs) for greenhouse gases, redistribution of emissions in some Norwegian sectors, and changes in intensities based on new economic data. Intensities for 2022 and 2023 are adjusted with the consumer price index, which entails uncertainties. There is a delay in the availability of statistics, which does not align with financial reporting years. This means that the 2023 emission factors are influenced by macroeconomic conditions from 2021, where the global pandemic likely explains deviations in reported emissions from several industry sectors. 2 NS3720 - estimated average for EU mix
3 Norges vassdrags- og energidirektorat (NVE): Varedeklarasjon for strømleverandører 4 Norges vassdrags- og energidirektorat (NVE): Klimadeklarasjon for fysisk levert strøm
Our total estimated upstream GHG emissions1 amounted to 14 744 tCO2e in 2023. compared to 13 967 tCO2e in 2022. This represents an increase of 6%.
During the same period, the increase in the Group's turnover exceeded the estimated increase in emissions from day-to-day operations. Additionally, SpareBank 1 Søre Sunnmøre was merged in as of May 1st, 2023.
It is likely that the absolute increase in emissions is due to increased activity following the change of previous year's figures.
We do not report any emissions in Scope 1. Direct emissions from sources that we own, or control are limited for us to emissions from owned vehicles. Any emissions from owned vehicles are estimated based on cost and are categorized under business travel in Scope 3.
Indirect GHG emissions associated with the consumption of purchased energy, including electricity, district heating, and cooling in our office premises in Mid-Norway, Sunnmøre, and Oslo.
Our total estimated energy consumption in 2023 was 3,542 MWh. Compared to 2022, this represents an increase of 16%. This consists of a share of district heating (14%) and a share of electricity (86%).
The majority (99%) of our upstream emissions are associated with indirect emissions from day-to-day operations. The largest contributors come from IT-related services, travel expenses, depreciation of capital goods, premises, marketing and media, as well as other operational agreements.
1 The results shows total estimated , location-based GHG emissions. Total market-based upstream GHG emissions amounted to 15 878 tCO2e in 2023, compared to 14 865 tCO2e in 2022. 2GHG emissions in SpareBank 1 Søre Sunnmøre between 01.01.23 – 30.04.23, and for the financial year 2022, is calculated on a pro forma basis.
Our estimates still indicate that GHG emissions in the loan portfolio are concentrated on a small number of sectors, and account for a limited share of our loan volume.
The graph below shows that four industries contribute as much as 85% of the greenhouse gas emission, yet only account for a mere 13% of the banks loans. These industries are agriculture and forestry (60%), shipping and offshore (11%), transport and other services (8%) and fishery (7%).
GHG emissions have risen by 8%, which is less than the increase in lending. The increase in lending is attributable to the merger with SpareBank 1 Søre Sunnmøre, inflation and growth in financial assets. In the case of agriculture, activity-based emissions have increased since we have financed more of the commodities produced. For fishery, emissions are reduced due to a reduction in lending volume and fewer financed vessels.
For the fishery portfolio we have for several years collected data on ship fuel consumption of our largest customers. The figures are used to estimate GHG emissions of relatively good quality from the fishery portfolio. This portfolio has the best data quality in the analysis. However, the data source has a one-year time-lag, and ship fuel consumption for 2022 is used to estimate the customer's emission intensity for 2023. Where a customer's financing has risen from 2022 to 2023, estimated emissions have risen correspondingly.
In the case of the residential mortgage portfolio, estimated GHG emissions are delivered by Eiendomsverdi AS, and prepared by Simenergi AS. GHG emissions are estimated using emission factors based on a physical production mix with an emission of 19 grammes of CO2e per kWh. We have also presented estimated greenhouse gas emissions based on a European residual mix, of 502 grammes of CO2e per kWh.
Greenhouse gas emissions from financed commercial property are estimated by retrieving information on each individual building, i.e. property type, usable floor space and energy label, where this exists. Information about the building is then combined with PCAF emission factors, either per square metre or per building.
In the climate accounts for 2022, estimated GHG emissions from agriculture were estimated based on emission factors from Asplan Viak which were in turn linked to information at individual farm level from the agricultural production register. The register provides an overview of livestock numbers, production and area managed.
In the present report the emission factors are replaced with numbers provided by Finance Norway's guidelines, the so-called PLATON factors. This yielded a 50 per cent increase in emissions, but the increase is compensated for by the fact that farms with no activity recorded in the agricultural production register are now estimated as "dwellings". These "dwellings" now have a lot lower emissions than they previously had based on using the factor-based method.
Reporting year 2023
| Total GHG emissions CO2 -equivalents (tonnes) |
2019 | 2022 | 2023 | Change | Change |
|---|---|---|---|---|---|
| Scope 1 GHG emissions (tCO2e) | Base year | Previous year | Reporting year | Previous year | Base year |
| Total net Scope 1 GHG emissions | - | - | - | 0 % | 0 % |
| Scope 2 GHG emissions (tCO2e) | |||||
| Total net location based1 | 40 | 59 | 80 | 36 % | 98 % |
| Total net market-based2 | 939 | 957 | 1 214 | 27 % | 29 % |
| Scope 3 GHG emissions (tCO2e) | |||||
| Total net upstream Scope 3 | 15 443 | 13 908 | 14 664 | 5 % | -5 % |
| Purchased goods and services | 11 279 | 11 056 | 11 567 | 5 % | 3 % |
| Capital goods | 1 416 | 1 217 | 1 327 | 9 % | -6 % |
| Transport and distribution | 624 | 248 | 221 | -11 % | -65 % |
| Waste generated in operations | 37 | 20 | 30 | 52 % | -18 % |
| Business travels | 2 087 | 1 367 | 1 520 | 11 % | -27 % |
| Total net downstream Scope 3 | - | 934 982 | 1 011 689 | 8 % | - |
| Financed emissions | - | 934 982 | 1 011 689 | 8 % | - |
| Agriculture and forestry | - | 517 847 | 603 450 | 17 % | - |
| Fishery | - | 96 122 | 69 027 | -28 % | - |
| Aquaculture | - | 17 584 | 13 785 | -22 % | - |
| Manufacturing and mining | - | 50 424 | 61 931 | 23 % | - |
| Consutrction, power and water supply | - | 14 453 | 19 463 | 35 % | - |
| Wholesale and retail trade, hotels and restaurants | - | 24 880 | 28 499 | 15 % | - |
| Shipping and offshore | - | 118 228 | 107 439 | -9 % | - |
| Property management | - | 3 347 | 4 453 | 33 % | - |
| Business services | - | 4 713 | 5 903 | 25 % | - |
| Transport and other services | - | 68 844 | 75 896 | 10 % | - |
| Public administration | - | 1 | 3 | 285 % | - |
| Other sectors | - | 2 973 | 2 728 | -8 % | - |
| Wage earners (retail loans) | - | 15 566 | 19 113 | 23 % | - |
| Total GHG emissions (tCO2e) | |||||
| Total GHG emissions (location-based) | - | 948 949 | 1 026 434 | 8 % | - |
| Total GHG emissions (market-based) | - | 949 847 | 1 027 567 | 8 % | - |
| Energy consumption (MWh) | |||||
| Net consumption electricity | 2 371 | 2 385 | 3 058 | 28 % | 29 % |
| Net consumption heating3 | - | 301 | 484 | 61 % | - |
1Location-based GHG emissions stemming from consumption of electricity is calculated using NVE's emissions factor for physically delivered energy (19 g CO2e/kWh). 2Market-based GHG emissions from consumption of eletricity is calculated using two different emissions factors. For guarantees of origin (GoO's) we've calculated 0 g CO2e/kWh. For market-based GHG emissions where GoO's isn't used we've used NVE's factor for european residual mix (502 g CO2e/kWh). 3Emissions from consumption of heating is calculated with an emissions factor of 45,1 g CO2e/kWh. This applies to both location-based and market-based Scope 2 emissions.
| Key Performance Indicators |
2019 | 2022 | 2023 | Change | Change |
|---|---|---|---|---|---|
| CO2 -equivalents (tonnes) |
Base year | Previous year | Reporting year | Previous year | Base year |
| Total turnover (NOK 1000) | |||||
| Turnover | 6 339 000,0 | 7 650 000,0 | 13 131 000,0 | 72 % | 107 % |
| Emission intensity per turnover (NOK 1000) | |||||
| kg CO2e/NOK 1000 turnover (location-based) | - | 140,0 | 78,2 | -44 % | - |
| kg CO2e/NOK 1000 turnover (market-based) | - | 133,0 | 78,3 | -41 % | - |
Reporting year 2023 – including pro forma calculations of SpareBank 1 Søre Sunnmøre
| Total GHG emissions CO2 -equivalents (tonnes) |
2019 | 2022 | 2023 | Change | Change |
|---|---|---|---|---|---|
| Scope 1 GHG emissions (tCO2e) | Base year | Previous year | Reporting year | Previous year | Base year |
| Total net Scope 1 GHG emissions | - | - | - | 0 % | 0 % |
| Scope 2 GHG emissions (tCO2e) | |||||
| Total net location based1 | 40 | 61 | 81 | 33 % | 100 % |
| Total net market-based2 | 939 | 1 009 | 1 235 | 22 % | 32 % |
| Scope 3 GHG emissions (tCO2e) | |||||
| Total net upstream Scope 3 | 15 443 | 15 227 | 15 110 | -1 % | -2 % |
| Purchased goods and services | 11 279 | 12 032 | 11 892 | -1 % | 5 % |
| Capital goods | 1 416 | 1 365 | 1 365 | 0 % | -4 % |
| Transport and distribution | 624 | 277 | 228 | -18 % | -63 % |
| Waste generated in operations | 37 | 20 | 30 | 52 % | -18 % |
| Business travels | 2 087 | 1 532 | 1 594 | 4 % | -24 % |
| Total net downstream Scope 3 | - | 934 982 | 1 011 689 | 8 % | - |
| Financed emissions | - | 934 982 | 1 011 689 | 8 % | - |
| Agriculture and forestry | - | 517 847 | 603 450 | 17 % | - |
| Fishery | - | 96 122 | 69 027 | -28 % | - |
| Aquaculture | - | 17 584 | 13 785 | -22 % | - |
| Manufacturing and mining | - | 50 424 | 61 931 | 23 % | - |
| Consutrction, power and water supply | - | 14 453 | 19 463 | 35 % | - |
| Wholesale and retail trade, hotels and restaurants | - | 24 880 | 28 499 | 15 % | - |
| Shipping and offshore | - | 118 228 | 107 439 | -9 % | - |
| Property management | - | 3 347 | 4 453 | 33 % | - |
| Business services | - | 4 713 | 5 903 | 25 % | - |
| Transport and other services | - | 68 844 | 75 896 | 10 % | - |
| Public administration | - | 1 | 3 | 285 % | - |
| Other sectors | - | 2 973 | 2 728 | -8 % | - |
| Wage earners (retail loans) | - | 15 566 | 19 113 | 23 % | - |
| Total GHG emissions (tCO2e) | |||||
| Total GHG emissions (location-based) | - | 950 269 | 1 026 880 | 8 % | - |
| Total GHG emissions (market-based) | - | 951 218 | 1 028 034 | 8 % | - |
| Energy consumption (MWh) | |||||
| Net consumption electricity | 2 371 | 2 489 | 3 100 | 25 % | 31 % |
| Net consumption heating3 | - | 301 | 484 | 61 % | - |
1Location-based GHG emissions stemming from consumption of electricity is calculated using NVE's emissions factor for physically delivered energy (19 g CO2e/kWh). 2Market-based GHG emissions from consumption of eletricity is calculated using two different emissions factors. For guarantees of origin (GoO's) we've calculated 0 g CO2e/kWh. For market-based GHG emissions where GoO's isn't used we've used NVE's factor for european residual mix (502 g CO2e/kWh). 3Emissions from consumption of heating is calculated with an emissions factor of 45,1 g CO2e/kWh. This applies to both location-based and market-based Scope 2 emissions.
Mid-Norway is an attractive place for both businesses and people, and it should remain so for a long time to come. Therefore, sustainable development of our region is crucial when describing our social responsibility. This means being an active and visible driver for the green transition of Mid-Norway and promoting responsible business practices.
For us, this entails more than just minimizing our own environmental impact. The financial industry has limited direct emissions, and our influence on climate through day-to-day operations mostly originates from emissions related to office operations, energy consumption, and business travel. While it is important for us to reduce our emissions from day-to-day operations, we recognize that our most significant contribution lies in how we influence our suppliers and customers in a more sustainable direction.
In 2022, the board adopted an ambition to achieve net-zero emissions by 2050. To help us reach net-zero, we have established transition plans for various sectors in our loan portfolios. Alongside the net-zero ambition, these transition plans will significantly impact how we finance these sectors going forward.
In 2023, we further strengthened this effort. We launched net-zero transition plans for fishery and the commercial property sector, and in August, the board decided that SpareBank 1 SMN shall develop emission reduction targets according to the Science Based Targets initiative (SBTi). SBTi is a global initiative that assists companies in setting science-based targets to reduce greenhouse gas (GHG) emissions in line with the Paris Agreement. This means that over the next two years, SpareBank 1 SMN will develop both short-term and long-term targets, along with corresponding action plans to achieve our net-zero ambition. Furthermore, we commit to publicly disclose our emission targets, reduction plans, and overall progress in line with the Paris Agreement.
A robust and transparent climate account is a crucial tool in achieving our climate ambitions. To reach our goals, it is essential to map, measure, and manage our GHG emissions. This involves calculating the impact of all our economic activities at a detailed level so that we and our stakeholders can understand our influence and what contributes to it.
It is important to emphasize that we are making progress in our GHG emission reductions, but we still have a way to go to reach our final targets. We have taken significant steps in reporting GHG emissions since we compiled our first climate accounts in 2019. In 2022, we were among the banks that included emissions from the loan portfolio – known as financed emissions. We consider these emissions crucial in our efforts towards the green transition of Mid-Norway, and in 2023, a project group was established to ensure that our ambitions and transition plans align with the Paris Agreement.
When working with climate accounting, we face several challenges, especially related to data quality and uncertainty in the data. One area in which we have paid special attention to is the availability of reliable and up-to-date data. Most of our upstream and downstream emissions consists of secondary data. Calculation methodologies and standards are constantly evolving, which can lead to inconsistency in how emissions are calculated and reported over time. Changes in the data quality of emission factors can result in changes in reported emissions, despite no changes in economic activity. This affects the reliability of the climate accounting as a measuring tool, and it is something we prioritize highly. For the climate accounting to be an effective management tool, we must ensure that reported changes in emissions mainly reflect real climate actions and actual improvements rather than changes in methodology or external factors.
In 2023, we were required to revise our reported GHG inventory for the previous year (2022) and our base year (2019). Changes in methodological assumptions and underlying data in emission factors related to our upstream indirect emissions were so material that we had to recalculate previous years with updated assumptions to ensure better comparability. We are aware of these challenges and uncertainties in our climate accounting, and it is a prioritized area that we are working to improve for 2024.
In 2023, we continued our collaboration with SpareBank 1 Regnskapshuset SMN AS and Asplan Viak AS in compiling the climate accounts. We believe that the combination of local expertise and familiarity with SpareBank 1 SMN, coupled with international knowledge, has positively contributed to the development of the climate accounts.
The climate accounts adhere to the standards, recommendations, and guidelines provided by the GHG Protocol. This includes the GHG Protocol Corporate Accounting and Reporting Standard, GHG Protocol Scope 2 Guidance, and The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
In line with the GHG Protocol, we categorize our GHG emissions into three overarching categories, commonly referred to as scopes. We define these as:
Additionally, the terms upstream and downstream are used to describe indirect emissions caused respectively before us in the value chain (procurement) and after us in the value chain (financed emissions).
The climate accounts are prepared based on collected energy and accounting data from SpareBank 1 SMN1 , SpareBank 1 Finans Midt-Norge AS, SpareBank 1 Regnskapshuset SMN AS, EiendomsMegler 1 Midt-Norge AS, SpareBank 1 SMN Kvartalet AS, SpareBank 1 Bygget Steinkjer AS, and St. Olavs Plass 1 SMN AS, in addition to SpareBank 1 Markets AS2 . The climate accounts from all companies form the basis for the consolidated accounts.
Within the boundary of the GHG Protocol, the organisation's responsibility areas for GHG emissions are defined through organisational boundaries. These specify which emissions an organisation is accountable for and include direct emissions from sources owned or controlled by the organisation, as well as indirect emissions from sources outside the organisation's control.
The choice of organisational boundaries affects which emissions are included in the reporting and how they are reported. Companies can choose between "equity share" or differing "control methods". The equity share method includes emissions from operations that the organisation owns, regardless of whether it has operational control over them, while the control approach includes emissions from operations that the organisation either has operational or financial control over, regardless of ownership.
When compiling our consolidated climate accounts, we use both methods:
The' Group GHG-emissions are consolidated based on the ownership fraction in the subsidiaries (equity share). The ownership fraction is specified for each subsidiary in the figure below.
The individual climate accounts of the companies are compiled according to operational control, where all company activities are included regardless of ownership.
1 From May 1st, 2023, SpareBank 1 SMN and SpareBank 1 Søre Sunnmøre were merged. From this date onwards, SpareBank 1 Søre Sunnmøre was also included in the data collection for SpareBank 1 SMN. GHG-emissions that occurred from January 1st, 2023, to April 30th, 2023, as well as for the entire fiscal year 2022, have been calculated on a pro forma basis. This is in line with our financial reporting and corresponding financial notes.
2 In June 2022, SpareBank 1 Nord-Norge and SpareBank 1 SR-Bank transferred their capital market businesses to SpareBank 1 Markets AS, in addition to acquiring ownership stakes in the company. This significantly reduced SpareBank 1 SMN's ownership fraction, and SpareBank 1 Markets AS is no longer considered a subsidiary in the Group. The transaction was expected to be completed in March 2023, but was only approved by the FSA in December 2023. Therefore, SpareBank 1 Markets AS is included in the climate accounts as a subsidiary for the entire reporting year 2023.
For the climate accounts to serve as a valuable management tool and to provide stakeholders with the best possible information about our climate efforts, we rely on a complete climate account. We use multiple data sources and various calculation methods to ensure an accurate picture of our emissions.
In line with the GHG Protocol, we rely on two main types of data: primary and secondary data. Primary data includes activity and/or emissions data collected directly from the parent, subsidiaries or the supply chain. In our climate account, we consider primary data as quantified data from our activities, such as fuel or energy consumption, combined with emissions factors as specific as possible.
Secondary data consists of all other estimated or calculated data. This could include estimated electricity consumption at locations where we do not have exact readings, or emission calculations based on costs.
We integrate the data sources using multiple calculation methods:
We calculate the climate impact of direct and indirect emissions by converting primary data into emissions using emission factors. For example, we collect meter readings and multiply the kilowatt-hours by an emission factor to estimate our GHG emissions associated with energy consumption.
Primarily, this method applies to the calculation of indirect energyrelated emissions in Scope 2 and the calculation of certain financed emissions in Scope 3. This is the most specific and reliable method for calculating GHG emissions.
When we do not have access to primary data, we rely on secondary data sources. For our indirect upstream emissions, we use Klimakost, a scientifically grounded emission model developed by Asplan Viak AS. The model estimates the carbon footprint associated with operating costs and is particularly useful for estimating our Scope 3 emissions related to day-to-day operations.
Klimakost, an Environmentally Extended Input-Output Analysis (EEIOA) model, uses emission statistics from various countries, industries, and sectors, as well as trade between them, to estimate the carbon footprint per unit of currency spent on different goods and services. Although this method provides an overview of which types of purchases and activities have the greatest climate impact, it is not able to disaggregate emissions to individual products or suppliers.
For this reason, this method is best suited for identifying the main sources (hotspots) of our emissions, allowing us to focus on the most significant emission drivers using primary data.
The majority of our GHG emissions is in our downstream value chain. At the end of 2021, we became a member of the Partnership for Carbon Accounting Financials (PCAF), a global collaboration among financial institutions to harmonize estimation, measurement, and disclosure of GHG emissions associated with their loan portfolios.
We base our estimation of GHG emissions in our loan portfolios on the PCAF methodology, as well as Finance Norway's updated guidance on PCAF and financed emissions.
There are four significant changes affecting the climate accounting for 2023. These changes require a retroactive adjustment of previous years' climate accounting to ensure comparability between the base year, the previous year, and this year's reporting.
On 1st of May 2023, SpareBank 1 SMN and SpareBank 1 Søre Sunnmøre were merged. The GHG calculations from both banks are reported collectively from the 1st of May 2023.
Upstream GHG emissions from January 1, 2023, to April 30, 2023, and for the entire fiscal year 2022 were calculated on a pro forma basis to establish a comparison basis for emissions related to day-to-day operations. The GHG emissions presented with pro forma information can be found on the last page of the climate accounts.
The presentation of pro forma information is in line with how the financial reporting and corresponding financial notes are prepared. Downstream emissions or KPI's for SpareBank 1 Søre Sunnmøre are not included in our pro forma calculation.
In compiling this year's climate accounting, we observed a significant reduction in emissions. This reduction could not be explained by reduced economic activity or more climate-efficient upstream or downstream operations. Additionally, we merged with SpareBank 1 Søre Sunnmøre, which, in isolation, could have potentially led to an increase in emissions.
We realized that the changes were due to updated emission factors for 20231 . These updates, which included several minor methodological adjustments and uncertainties in the statistical basis, resulted in a material overall change. The change of previous year's climate accounts resulted in a decreased emission reduction in 2023.
The change in emission factors was significant to the degree that it rendered the 2023 climate account incomparable to previous years without an adjustment using the new set of emissions factors.
The methodology for estimating GHG emissions from the loan portfolio has been updated this year to align with Finance Norway's updated 'Guidelines for Calculating Financed Emissions.' The emission factors were updated in the fall of 2023 to a new version of EXIOBASE, without manual adjustments or corrections of outliers. This has resulted in material changes to the emission factors.
We've consulted the updated guidance for the PCAF database and sought advice from Asplan Viak AS to evaluate the emission factors. Based on their feedback and in consultation with other banks in the SpareBank 1 Alliance, we have chosen to switch from Norwegian emission factors to EU factors and corrected some outlier values. Due to these material changes in the measurement method, we've re-estimated the figures for 2022 using the updated measurement method. This ensures the reported changes largely reflect changes in actual GHG emissions, rather than just technical adjustments in the measurement method.
Previous climate accounting utilised two different sources of electricity-related emissions. In Scope 2, a Nordic electricity mix (136g CO2e/kWh) was used to calculate location-based emissions2 . Meanwhile, market-based Scope 2 emissions were calculated using a residual mix from the Norwegian Water Resources and Energy Directorate (NVE) (405g CO2e/kWh)3 . Simultaneously, we employed a Norwegian consumption mix from NVE for location-based emission factors in our calculation of financed emissions, along with the same residual mix for market-based emissions as for upstream emissions.
For the climate accounting for year 2023, we have chosen to use the same factor set from NVE in Scope 2 for both upstream and downstream. This applies to both location-based and market-based electricity-related emissions, specifically the Norwegian consumption mix (19g CO2e/kWh) and the European residual mix (502g CO2e/kWh)3,4. We retroactively applied the NVE factors to the Scope 2 calculations for 2019 and 2022 to ensure comparability across reporting years.
1 The updates included adjustments to the emission factors, such as revised global warming potentials (GWPs) for greenhouse gases, redistribution of emissions in some Norwegian sectors, and changes in intensities based on new economic data. Intensities for 2022 and 2023 are adjusted with the consumer price index, which entails uncertainties. There is a delay in the availability of statistics, which does not align with financial reporting years. This means that the 2023 emission factors are influenced by macroeconomic conditions from 2021, where the global pandemic likely explains deviations in reported emissions from several industry sectors. 2 NS3720 - estimated average for EU mix
3 Norges vassdrags- og energidirektorat (NVE): Varedeklarasjon for strømleverandører 4 Norges vassdrags- og energidirektorat (NVE): Klimadeklarasjon for fysisk levert strøm
Our total estimated upstream GHG emissions1 amounted to 18 553 tCO2e in 2023, compared to 19 389 tCO2e in 2022. This represents a reduction of 4%.
In the same period, the increase in the Group's turnover was greater than the calculated reduction in emissions from day-to-day operations. Additionally, SpareBank 1 Søre Sunnmøre was merged with the Group on the 1st of May 2023.
It is likely that the reduction in emissions is due to a reduction in emission factors rather than a real decrease in our emissions, which likely remained constant during the period.
• Scope 1
We do not report any emissions in Scope 1. Direct emissions from sources that we own, or control are limited for us to emissions from owned vehicles. Any emissions from owned vehicles are estimated based on cost and are categorized under business travel in Scope 3.
Indirect GHG emissions associated with the consumption of purchased energy, including electricity, district heating, and cooling in our office premises in Mid-Norway, Sunnmøre, and Oslo.
Our total estimated energy consumption in 2023 was 6,600 MWh. Compared to 2022, this represents an increase of 16%. This consists of a share of district heating (14%) and a share of electricity (86%).
The majority (99%) of our upstream emissions are associated with indirect emissions from day-to-day operations. The largest contributors come from IT-related services, travel expenses, marketing and media, as well as other operational agreements.
1 The results shows total estimated , location-based GHG emissions. Total market-based upstream GHG emissions amounted to 20 668 tCO2e in 2023, compared to 21 299 tCO2e in 2022. 2GHG emissions in SpareBank 1 Søre Sunnmøre between 01.01.23 – 30.04.23, and for the financial year 2022, is calculated on a pro forma basis.
Our estimates still indicate that GHG emissions in the loan portfolio are concentrated on a small number of sectors, and account for a limited share of our loan volume.
The graph below shows that four industries contribute as much as 82% of the GHG emissions, yet only account for a mere 13% of our loans. These industries are agriculture and forestry (58%), shipping and offshore (10%), transport and other services (7%) and fishery (7%).
GHG emissions have risen by 8%, which is less than the increase in lending. The increase in lending is attributable to the merger with SpareBank 1 Søre Sunnmøre, inflation and growth in financial assets. In the case of agriculture, activity-based emissions have increased since we have financed more of the commodities produced. For fishery, emissions are reduced due to a reduction in lending volume and fewer financed vessels.
For the fishery portfolio we have for several years collected data on ship fuel consumption of our largest customers. The figures are used to estimate GHG emissions of relatively good quality from the fishery portfolio. This portfolio has the best data quality in the analysis. However, the data source has a one-year lag, and ship fuel consumption for 2022 is used to estimate the customer's emission intensity for 2023. Where a customer's financing has risen from 2022 to 2023, estimated emissions have risen correspondingly.
In the case of the residential mortgage portfolio, estimated GHG emissions are delivered by Eiendomsverdi AS, and prepared by Simenergi AS. GHG emissions are estimated using emission factors based on a physical production mix with an emission of 19 grammes of CO2e per kWh. We have also presented estimated GHG emissions based on a European residual mix, of 502 grammes of CO2e per kWh.
GHG emissions from financed commercial property are estimated by retrieving information on each individual building, i.e. property type, usable floor space and energy label, where this exists. Information about the building is then combined with PCAF emission factors, either per square metre or per building.
For SpareBank 1 Finans Midt-Norge, GHG emissions are only estimated for NOK 7.7bn of NOK 12.6bn of financing used to finance vehicles with petrol or diesel engines. We have used an average mileage of 12,000 kilometres for all car usage.
In the climate accounts for 2022, estimated GHG emissions from agriculture were estimated based on emission factors from Asplan Viak which were in turn linked to information at individual farm level from the agricultural production register. The register provides an overview of livestock numbers, production and area managed.
In the present report the emission factors are replaced with numbers provided by Finance Norway's guidelines, the so-called PLATON factors. This yielded a 50 per cent increase in emissions, but the increase is compensated for by the fact that farms with no activity recorded in the agricultural production register are now estimated as "dwellings". These "dwellings" now have a lot lower emissions than they previously had based on using the factor-based method.
1 The results deviate from the results presented in the paragraph «Greenhouse gas emissions from the Group's loan portfolios» in the annual report. The deviation is due to differing consolidation methods, and amounts to 16 778 tCO2e (1 – ownership fraction SpareBank 1 Finans Midt-Norge AS).
Reporting year 2023
| Total consolidated GHG emissions -equivalents (tonnes) |
2019 | 2022 | 2023 | Change | Change |
|---|---|---|---|---|---|
| CO2 Scope 1 GHG emissions (tCO2e) |
Base year | Previous year | Reporting year | Previous year | Base year |
| 0 % | 0 % | ||||
| Total net Scope 1 GHG emissions | - | - | - | ||
| Scope 2 GHG emissions (tCO2e) Total net location based1 |
129 | 151 | 17 % | 56 % | |
| 97 | |||||
| Total net market-based2 | 2 260 | 2 040 | 2 266 | 11 % | 0 % |
| Scope 3 GHG emissions (tCO2e) | |||||
| Total net upstream Scope 3 | 22 209 | 19 260 | 18 403 | -4 % | -17 % |
| Purchased goods and services | 15 814 | 15 143 | 14 462 | -4 % | -9 % |
| Capital goods | 1 990 | 1 637 | 1 599 | -2 % | -20 % |
| Transport and distribution | 713 | 285 | 255 | -11 % | -64 % |
| Waste generated in operations | 23 | 24 | 30 | 24 % | 31 % |
| Business travels | 3 669 | 2 170 | 2 056 | -5 % | -44 % |
| Total net downstream Scope 3 | - | 958 990 1 033 482 | 8 % | - | |
| Financed emissions | - | 958 990 1 033 482 | 8 % | - | |
| Agriculture and forestry | - | 517 847 | 603 450 | 17 % | - |
| Fishery | - | 96 122 | 69 027 | -28 % | - |
| Aquaculture | - | 17 584 | 13 785 | -22 % | - |
| Manufacturing and mining | - | 50 424 | 61 931 | 23 % | - |
| Consutrction, power and water supply | - | 14 453 | 19 463 | 35 % | - |
| Wholesale and retail trade, hotels and restaurants | - | 24 880 | 28 499 | 15 % | - |
| Shipping and offshore | - | 118 228 | 107 439 | -9 % | - |
| Property management | - | 3 347 | 4 453 | 33 % | - |
| Business services | - | 4 713 | 5 903 | 25 % | - |
| Transport and other services | - | 68 844 | 75 896 | 10 % | - |
| Public administration | - | 3 1 |
285 % | - | |
| Other sectors | - | 2 973 | 2 728 | -8 % | - |
| Wage earners (retail loans) | - | 15 566 | 19 113 | 23 % | - |
| Loan/leasing - fossil cars | - | 24 009 | 21 792 | -9 % | - |
| Total GHG emissions (tCO2e) | |||||
| Total GHG emissions (location-based) | 978 379 | 1 052 035 | 8 % | - | |
| Total GHG emissions (market-based) | - | 980 290 | 1 054 150 | 8 % | |
| - | - | ||||
| Energy consumption (MWh) | 5 707 | 5 028 | 5 657 | 13 % | -1 % |
| Net consumption electricity | 943 | 39 % | |||
| Net consumption heating3 | - | 678 | - |
1Location-based GHG emissions stemming from consumption of electricity is calculated using NVE's emissions factor for physically delivered energy (19 g CO2e/kWh). 2Market-based GHG emissions from consumption of eletricity is calculated using two different emissions factors. For guarantees of origin (GoO's) we've calculated 0 g CO2e/kWh. For market-based GHG emissions where GoO's isn't used we've used NVE's factor for european residual mix (502 g CO2e/kWh). 3Emissions from consumption of heating is calculated with an emissions factor of 45,1 g CO2e/kWh. This applies to both location-based and market-based Scope 2 emissions.
| Key performance indicators CO2 -equivalents (tonnes) |
2019 Base year |
2022 Previous year |
2023 Reporting year |
Change Previous year |
Change Base year |
|---|---|---|---|---|---|
| Total turnover (NOK 1000) | |||||
| Turnover | 4 599 365,3 | 5 635 675,4 | 15 448 102,5 | 174 % | 236 % |
| Emission intensity per turnover (NOK 1000) | |||||
| kg CO2e/NOK 1000 turnover (location-based) | - | 188,2 | 68,1 | -64 % | - |
| kg CO2e/NOK 1000 turnover (market-based) | - | 188,5 | 68,2 | -64 % | - |
1Turnover is a result of the parent company and subsidiary revenues multiplied by the ownership fraction. Internal transactions are not eliminated in this figure, and the number is not directly transferable to the consolidated financial statements.
Reporting year 2023 – including pro forma calculations of SpareBank 1 Søre Sunnmøre
| Total consolidated GHG emissions CO2 -equivalents (tonnes) |
2019 | 2022 | 2023 | Change | Change |
|---|---|---|---|---|---|
| Scope 1 GHG emissions (tCO2e) | Base year | Previous year | Reporting year | Previous year | Base year |
| Total net Scope 1 GHG emissions | - | - | - | 0 % | 0 % |
| Scope 2 GHG emissions (tCO2e) | |||||
| Total net location based1 | 97 | 131 | 152 | 16 % | 56 % |
| Total net market-based2 | 2 260 | 2 092 | 2 287 | 9 % | 1 % |
| Scope 3 GHG emissions (tCO2e) | |||||
| Total net upstream Scope 3 | 22 209 | 20 578 | 18 848 | -8 % | -15 % |
| Purchased goods and services | 15 814 | 16 119 | 14 787 | -8 % | -6 % |
| Capital goods | 1 990 | 1 785 | 1 637 | -8 % | -18 % |
| Transport and distribution | 713 | 314 | 262 | -16 % | -63 % |
| Waste generated in operations | 23 | 24 | 30 | 24 % | 31 % |
| Business travels | 3 669 | 2 336 | 2 131 | -9 % | -42 % |
| Total net downstream Scope 3 | - | 958 990 1 033 482 | 8 % | - | |
| Financed emissions | - | 958 990 1 033 482 | 8 % | - | |
| Agriculture and forestry | - | 517 847 | 603 450 | 17 % | - |
| Fishery | - | 96 122 | 69 027 | -28 % | - |
| Aquaculture | - | 17 584 | 13 785 | -22 % | - |
| Manufacturing and mining | - | 50 424 | 61 931 | 23 % | - |
| Consutrction, power and water supply | - | 14 453 | 19 463 | 35 % | - |
| Wholesale and retail trade, hotels and restaurants | - | 24 880 | 28 499 | 15 % | - |
| Shipping and offshore | - | 118 228 | 107 439 | -9 % | - |
| Property management | - | 3 347 | 4 453 | 33 % | - |
| Business services | - | 4 713 | 5 903 | 25 % | - |
| Transport and other services | - | 68 844 | 75 896 | 10 % | - |
| Public administration | - | 1 | 3 | 285 % | - |
| Other sectors | - | 2 973 | 2 728 | -8 % | - |
| Wage earners (retail loans) | - | 15 566 | 19 113 | 23 % | - |
| Loan/leasing - fossil cars | - | 24 009 | 21 792 | -9 % | - |
| Total GHG emissions (tCO2e) | |||||
| Total GHG emissions (location-based) | - | 979 699 | 1 052 482 | 7 % | - |
| Total GHG emissions (market-based) | - | 981 660 | 1 055 520 | 8 % | - |
| Energy consumption (MWh) | |||||
| Net consumption electricity | 5 707 | 5 132 | 5 699 | 11 % | 0 % |
| Net consumption heating3 | - | 678 | 943 | 39 % | - |
1Location-based GHG emissions stemming from consumption of electricity is calculated using NVE's emissions factor for physically delivered energy (19 g CO2e/kWh). 2Market-based GHG emissions from consumption of eletricity is calculated using two different emissions factors. For guarantees of origin (GoO's) we've calculated 0 g CO2e/kWh. For market-based GHG emissions where GoO's isn't used we've used NVE's factor for european residual mix (502 g CO2e/kWh). 3Emissions from consumption of heating is calculated with an emissions factor of 45,1 g CO2e/kWh. This applies to both location-based and market-based Scope 2 emissions.
Strategy, policies and practices
The table shows SpareBank 1 SMN's reporting for 2023 with reference to the GRI Universal Standards 2021.
| indicator | Indicator - name |
Indicator - description | Response in annual report | Source |
|---|---|---|---|---|
| GENERAL INFORMATION | ||||
| Organizational profile | ||||
| 2-1 | Organizational details |
Name of the organization | SpareBank 1 SMN | |
| 2-1 | Organizational details |
Location of the organization's headquarters | Søndre Gate 4, 7011 TRONDHEIM |
|
| 2-1 | Organizational details |
The organization's countries of operations | Norway | |
| 2-1 | Detaljer om organisasjonen |
Ownership and legal form | SpareBank 1 SMN's organizatonal set-up |
|
| 2-6 | Activities and workers |
Activities, product and services provided by the organization |
This is SpareBank 1 SMN Subsidiaries |
|
| 2-6 | Activities and workers |
Beskrivelse av de bransje og marked organisasjonen opererer i |
This is SpareBank 1 SMN Subsidiaries |
|
| 2-6 | Activities and workers |
Sector(s) in which the organization is active | This is SpareBank 1 SMN SpareBank 1 SMN's organizational set-up |
|
| People and organisation | ||||
| 2-6 | Activities and workers |
Description of the organization's supply chain |
Stimulating responsible resource use in our own value and supplier chains |
Website: Guidelines for sustainability in procurement |
| 2-6 | Activities and workers |
Significant changes in sector(s) which the organization is active and other relevant business relationships compared to the previous reporting period |
Important events in 2023 | |
| 2-7 | Employees | Total number of employees (permanent and temporary) and a breakdown by gender and region |
People and organization Staffing |
|
| 2-8 | Workers who are not employees |
Total number of workers who are not employees and whose work is controlled by the organization |
People and organization Organization Staffing |
|
| 2-23 | Policy Commitments |
Policy commitments for responsible business conduct and respect of human rights |
Corporate governance | |
| 2-28 | Membership associations |
Industry associations, other memberships associations, and national or international advocacy organization in which it participates in a significant role |
Sustainability and corporate social responsibility Our obligations |
See attachment: SpareBank 1 SMN's memberships |
| 2-22 | Statement on sustainable development strategy |
Statement from the highest governance body or most senior executive of the organization about the relevance of sustainable development and its strategy for contributing to this |
Sustainability and corporate social responsibility |
Sustainability is an integral part of our group strategy and is incorporated into all business lines and support functions including day-to-day operations, customer offering and distribution of community dividend. |
|---|---|---|---|---|
| 2-23 | Policy Commitments |
Describe the organization's values, principals, standards and norms of behavior |
People and organisation | Website: Sustainability policy |
| 2-24 | Embedding policy |
Describe how policies for responsible business conduct are embedded in the organzation's activities and business |
Stimulating responsible resource use in our own value |
Website: Sustainability policy |
| commitments | relationships | and supplier chains | ||
|---|---|---|---|---|
| 2-25 | Processes to remediate negative impacts |
Describe the organization's commitments and approach has for remedation of negative impacts it has directly or indirectly caused or contributed to |
Stimulating responsible resource use in our own value and supplier chains |
Webpage: Group Impact Analysis 2022 |
| 2-26 | Mechanisms for seeking advice and raising concerns |
Mechanisms for individuals to seek advice on implementing the organization's policies and practices for responsible business conduct, and raise concerns about the organization's business conduct |
People and organisation Organization |
Webiste: Whistleblowing procedure |
| 2-27 | Compliance with laws and regulation |
Total number of significant instances of non compliance with laws and regulations during the reporting period, and instance where fines or non-monetary fines were incurred |
Corporate governance - point 1 | Zero violations, zero fines. |
| Governance | ||||
| 2-9 | Governance structure and composition |
Governance structure, including commitees of the highest governance body that are responsible for decision-making on and overseeing the management of the organization's impacts on the economy, environment, and people. |
Corporate governance | |
| 2-10 | Nomination and selection of the highest governance body |
Criteria used for nominating and selecting highest governances body members, including whether and how views of stakeholders, diversity, independence and competencies relevant to the impacts of the organization are considered. |
Corporate governance - point 7 | |
| 2-11 | Chair of the highest governance body |
Describe whether the chair of the highest governance body is also a senior executive of the organization, and if so, explain their function, the reasons of such an arrangement and how conflicts of interested are prevented and mitigated. |
Corporate governance - point 8 | |
| 2-12 | Role of the highest gonvernance body in overseeing the management of impacts |
Describe the role of the highest governance body and its senior executives in developing, approving and updating the organization's purpose, values, mission statement, strategies, policies and goals related to sustainable development. |
Ensuring long-term profitability and competitiveness Climate risk- and opportunities |
|
| 2-12 | Role of the highest gonvernance body in overseeing the management of impacts |
Describe the role of the highest governance body in overseeing the organizations's due diligence and other processes to identify and manage the organization's impact of the economy, environment, and people |
Webpage: Stakeholder dialogue | |
| 2-13 | Delegation of responsibility for managing impacts |
Describe how the highest governance body delegates responsibilities for managing the organization's impacts on economy, environment and people. |
Ensuring long-term profitability and competitiveness Climate risk- and opportunities |
|
| 2-14 | Role of the highest governance body in sustainability reporting |
If the highest governance body is responsible reviewing and approving the reported information, describe the process. |
Corporate governance | Nettside: Representantskapets oppgaver |
| 2-15 | Conflict of interest |
Processes meant to prevent and mitigate conflicts of interest in the highest governance body. |
Corporate governance - point 9 | |
| 2-16 | Communcation of critical concerns |
Whether and how critical concerns are communicated to the highest governance body, and the nature and number of critical concerns reported during the reporting period. |
Corporate governance - point 10 |
|
| Collective knowledge of |
Measures taken to advance the collective knowledge, skills, and experience of the |
Ensuring long-term profitability |
| 2-17 | the highest governance body |
highest governance body on sustainable development. |
and competitiveness Climate risk- and opportunities |
Website: Sustainability policy |
|---|---|---|---|---|
| 2-18 | Evaluation of the performance of the highest governance body |
Independent and internal processes to evaluate the performance of the highest governance body in overseeing the management of the organization's impact on the economy, environment and people. Describe actions taken in response to the evaluations. |
Corporate governance - point 9 | |
| 2-19 | Remuneration policies |
Remuneration policies for members of the highest governance body and senior executives, and how the remuneration policies for relate to their objectives and performance in relation to the management of the organization's impacts on the economy, environmen |
Corporate governance | Webpage: Remuneration and emoluments to senior personell |
| 2-20 | Process to determine remuneration |
Process for designing its remuneration policies and for determining remuneration |
Corporate governance | Webpage: Remuneration and emoluments to senior personell |
| 2-21 | Annual total compensation ratio |
Ratio of the annual total compensation for the organization's highest-paid individual to the median annual total compensation for all employees (excluding the highest-paid individual), represented as amount and percentage |
Corporate governance | Webpage: Remuneration and emoluments to senior personell |
| 2-30 | Collective bargaining agreements |
Percentage of total employees covered by collective bargaining agreements |
People and organisation Staffing |
|
| Stakeholder engagement | ||||
| 2-21 | Approach to stakeholder engagement |
The categories of stakeholders the organization engages with |
Webpage: Stakeholder dialogue |
|
| 2-29 | Approach to stakeholder engagement |
Description of how the organization identifies stakeholders |
Webpage: Stakeholder dialogue | |
| 2-29 | Approach to stakeholder engagement |
Approach to engaging with stakeholders, and how often the organization includes different stakeholders |
Webpage: Stakeholder dialogue |
|
| Reporting practices | ||||
| 2-2a | Entities included in the organization's sustainability reporting |
Entities included in its sustainability reporting |
SpareBank 1 SMN, SpareBank 1 Regnskapshuset SMN AS, EiendomsMegler 1 Midt-Norge AS, SpareBank 1 Finans Midt Norge AS, SpareBank 1 Markets AS, SpareBank 1 SMN Invest AS. |
|
| 2-2b | Entities included in the organization's sustainability reporting |
Specify the differences between the list of entities included in its financial reporting and the list included in its sustainability reporting |
No differences | |
| 2-2c | Entities included in the organization's sustainability reporting |
Explain the approach used for consolidating information |
Material subsidaries are included in the annual report See "Important events in 2022". |
|
| 2-3 | Reporting period, frequency and contact point |
Reporting period for, and the frequency of, the organization's sustainability reporting, publication date and contact point for questions about the report |
Date of publishing: 29.02.2024 Reporting period: 2023 Reporting frequency: Yearly Contact point: Jan-Eilert Nilsen |
E-mail: jan-eilert.nilsen@smn. no |
| 2-4 | Restatements of information |
Report restatements of information from previous reporting periods |
Webpage: Climate accounting report 2023 |
|
| 2-5 | External assurance |
External assurance of the organization's sustainability report |
Auditor's report | Website: Auditor's report |
| 3-1a | Process to determine |
Describe the process the organization has | Global Reporting Initiative 2021. | Webpage: Group Materiality |
| material topics | followed to determine its material topics | Analysis 2022 | ||
|---|---|---|---|---|
| 3-1b | Stakeholders whose views have informed the process of determining material topics |
Specify the stakeholders and experts whose views have informed the process of determining its material topics |
Webpage: Stakeholder dialogue | |
| 3-2 | List of | materials topics List the organzation's material topics | Our sustainability work Our focal areas |
Webpage: Group Materiality Analysis 2022 |
| 3-2 | List of materials topics |
Report changes to the list of material topics compared to the previous reporting period |
Our sustainability work Our focal areas |
Webpage: Group Materiality Analysis 2022 |
| 1.1 Preventing and combating economic crime and corruption | |||||||
|---|---|---|---|---|---|---|---|
| 3-3 | Management of material topics |
Description and definition of material topics | Preventing and combating economic crime and corruption |
Webpage: Group Materiality Analysis 2022 |
|||
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Preventing and combating economic crime and corruption |
Webpage: Group Materiality Analysis 2022 |
|||
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Preventing and combating economic crime and corruption |
Webpage: Group Materiality Analysis 2022 |
|||
| 404-2a | Program for upgrading employee skills |
Share of managers and employees who have completed e-learning courses in AML and anti-terrorist financing |
Target 2023: 100 % Result 2023: 97 % Target 2024: 100 % |
||||
| SMN-1 | N/A | Losses due to fraud | Target 2023: < 10.000.000 NOK Result 2023: 15.660.000 NOK Target 2024: < 22.500.000 NOK |
| 3-3 | Management of material topics |
Description and definition of material topics | Ensuring long-term profitability and competitiveness |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Ensuring long-term profitability and competitiveness |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Ensuring long-term profitability and competitiveness |
Webpage: Group Materiality Analysis 2022 |
| FS8 | N/A | Corporate loan volumes with ESG-score | Target 2023: 75 % Result 2023: 87 % Target 2024: 90 % |
|
| FS8 | N/A | Retail loan volumes with ESG-score | Target 2023: 20 % Result 2023: 0 % Target 2024: 20 % |
|
| FS8 | N/A | Share of loans that meets the requirements of green bonds |
Target 2023: Under development Result 2023: 19.1 % Target 2024: Under development |
| 3-3 | Management of material topics |
Description and definition of material topics | Reducing the carbon footprint in loan portfolios |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Reducing the carbon footprint in loan portfolios |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Reducing the carbon footprint in loan portfolios |
Webpage: Group Materiality Analysis 2022 |
| 305-1 | Direct (Scope 1) GHG |
Direct (Scope 1) GHG emissions | Reducing the carbon footprint | Webpage: Climate accounting |
| emissions | in loan portfolios | report 2023 | ||
|---|---|---|---|---|
| 305-2 | Energy indirect (Scope 2) GHG emissions |
Energy indirect (Scope 2) GHG emissions | Reducing the carbon footprint in loan portfolios |
Webpage: Climate accounting report 2023 |
| 305-3 | Other indirect (Scope 3) GHG emissions |
Other indirect (Scope 3) GHG emissions | Reducing the carbon footprint in loan portfolios |
Webpage: Climate accounting report 2023 |
| 305-5 | Reduction of | GHG emissions Total CO2 emissions from loan portfolios | Target 2023: 1.000 (1000 tCO2e) Result 2023: 1.034 (1000 tCO2e) Target 2024: SBTi |
Webpage: Climate accounting report 2023 |
| 1.4 Stimulating green transition for customers | |||||||
|---|---|---|---|---|---|---|---|
| 3-3 | Management of material topics |
Description and definition of material topics | Stimulating green transition for retail customers and corporate customers |
Webpage: Group Materiality Analysis 2022 |
|||
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Stimulating green transition for retail customers and corporate customers |
Webpage: Group Materiality Analysis 2022 |
|||
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Stimulating green transition for retail customers and corporate customers |
Webpage: Group Materiality Analysis 2022 |
|||
| SMN-3 | N/A | Share of homes in loan portfolios with energy rating |
Target 2023: 90 % Result 2023: 42 % Target 2024: 70 % |
||||
| SMN-3 | N/A | Share of commercial properties in corporate loan portfolio (>1.000m2) with energy rating |
Target 2023: 75 % Result 2023: 21 % Target 2024: 90 % of new exposures |
| 3-3 | Management of material topics |
Description and definition of material topics | Expanding the commercial offering of climate-friendly and social products and services |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Expanding the commercial offering of climate-friendly and social products and services |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Expanding the commercial offering of climate-friendly and social products and services |
Webpage: Group Materiality Analysis 2022 |
| FS8 | N/A | Sales volume of products and services with an environmental benefit |
Overall target 2023: 2.000.000.000 NOK Overall result 2023: 2.516.000.000 NOK Overall target 2024: 3.000.000.000 NOK |
|
| FS7 | N/A | Sales volume of products and services with a social benefit |
| 3-3 | Management of material topics |
Description and definition of material topics | Strengthening role-based competence-enhancing programmes with a focus on ESG for our own staff |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Strengthening role-based competence-enhancing programmes with a focus on ESG for our own staff |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Strengthening role-based competence-enhancing programmes with a focus on ESG for our own staff |
Webpage: Group Materiality Analysis 2022 |
| SMN-2 | N/A | Category-score for sustainability in | Target 2023: 7,4 Result 2023: 7,3 |
| Winningtemp | Target 2024: 8 | |||
|---|---|---|---|---|
| 2.3 Maintaining ethical standards | ||||
| 3-3 | Management of material topics |
Description and definition of material topics | Maintaining ethical standards | Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Maintaining ethical standards | Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Maintaining ethical standards | Webpage: Group Materiality Analysis 2022 |
| 404-2a | Program for upgrading employee skills |
Share of managers and employees who have completed e-learning course in ethics |
Target 2023: 100 % Result 2023: 94 % Target 2024: 100 % |
|
| 404-2b | Program for upgrading employee skills |
Assistance for employees who intendes to retire, resigning or change work tasks |
Frequency of employees resigning, retiring or changing work tasks doesn't occur beyond what is pervieced as normal, and assistance to such transiations are not described in further detail |
|
| 2.4 Complying with requirements and obligations on the processing of personal data | ||||
| 3-3 | Management of material topics |
Description and definition of material topics | Complying with requirements and obligations on the processing of personal data |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Complying with requirements and obligations on the processing of personal data |
Webpage: Group Materiality Analysis 2022 |
Complying with requirements and obligations on the processing of personal data
Target 2023: 0 Result 2023: 12 Target 2024: 0
| privacy and | |
|---|---|
| losses of | |
| customer data |
Evaluation of policies and commitments
No. of documented complaints of breaches of data privacy or loss of customer data
regarding material topics
3-3
418-1
Management of material topics
Substantiated complaints concerning breaches of customer
with local
| Management | ||||
|---|---|---|---|---|
| 3-3 | of material topics |
Description and definition of material topics | Stimulating innovation and sustainable economic growth |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Stimulating innovation and sustainable economic growth |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Stimulating innovation and sustainable economic growth |
Webpage: Group Materiality Analysis 2022 |
| 413-1 | Operations with local community engagement, impact assessments, and development programs |
No. of participants in meeting places and innovation activities led by SpareBank 1 SMN |
Target 2023: 7.000 participants and 250 entrepreneur- and youth enterprises Result 2023: 5.790 participants and 300 entrepreneur- and youth enterprises Target 2024: 6.000 participants and 250 entrepreneur- and youth enterprises |
|
| Operations |
| 413-1 | community engagement, impact assessments, and development |
|
|---|---|---|
| ------- | -------------------------------------------------------------------------- | -- |
No. of participants in competence- and development programmes led by SpareBank 1 SMN
Target 2023: 50-100 Result 2023: 270 Target 2024: 500
| 3-3 | Management of material topics |
Description and definition of material topics | Helping to strengthen transition efforts in small and medium size businesses |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Helping to strengthen transition efforts in small and medium size businesses |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Helping to strengthen transition efforts in small and medium size businesses |
Webpage: Group Materiality Analysis 2022 |
| SMN-3 | N/A | Share of large corporate customers with credit engagements who has carbon accounting reports |
Target 2023: 25 % Result 2023: 24 % Target 2024: 25 % |
| 3-3 | Management of material topics |
Description and definition of material topics | Stimulating responsible resource use in our own value and supplier chains |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Stimulating responsible resource use in our own value and supplier chains |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Stimulating responsible resource use in our own value and supplier chains |
Webpage: Group Materiality Analysis 2022 |
| SMN-4 | N/A | Share of the Group's material procurement (> NOK 100 000) from suppliers with carbon accounting reports |
Target 2023: 50 % Result 2023: 68 % Target 2024: 80 % |
| 3-3 | Management of material topics |
Description and definition of material topics | Strengthening data and cybersecurity |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Strengthening data and cybersecurity |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Strengthening data and cybersecurity |
Webpage: Group Materiality Analysis 2022 |
| 404-2a | Program for upgrading employee skills |
Share of managers and employees who have completed digital learning courses in cyber security |
Target 2023: 100 % Result 2023: 90 % Target 2024: 100 % |
| 3-3 | Management of material topics |
Description and definition of material topics | Promoting diversity, inclusion and equality |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Promoting diversity, inclusion and equality |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Promoting diversity, inclusion and equality |
Webpage: Group Materiality Analysis 2022 |
| SMN-5 | N/A | Minimum category-score Winningtemp on diversity, inclusion and equality: 8 |
Target 2023: I/A Result 2023: I/A Target 2024: I/A |
| 3-3 | Management of material topics |
Description and definition of material topics | Reducing the carbon footprint in day-to-day operations |
Webpage: Group Materiality Analysis 2022 |
|---|---|---|---|---|
| 3-3 | Management of material topics |
Description of policies regarding the material topics |
Reducing the carbon footprint in day-to-day operations |
Webpage: Group Materiality Analysis 2022 |
| 3-3 | Management of material topics |
Evaluation of policies and commitments regarding material topics |
Reducing the carbon footprint in day-to-day operations |
Webpage: Group Materiality Analysis 2022 |
| 305-1 | Direct (Scope 1) GHG emissions |
Direct (Scope 1) GHG emissions | Reducing the carbon footprint in day-to-day operations |
Webpage: Climate accounting report 2023 |
| 305-2 | Energy indirect (Scope 2) GHG emissions |
Energy indirect (Scope 2) GHG emissions | Reducing the carbon footprint in day-to-day operations |
Webpage: Climate accounting report 2023 |
| 305-3 | Other indirect (Scope 3) GHG emissions |
Other indirect (Scope 3) GHG emissions | Reducing the carbon footprint in day-to-day operations |
Webpage: Climate accounting report 2023 |
| 305-5 | Reduction of GHG emissions |
Total CO2 emissions from day-to-day operations |
Target 2023: 16,4 (1000 tCO2e) Result 2023: 18,5 (1000 tCO2e) Target 2024: SBTi |
Webpage: Climate accounting report 2023 |
To the Board of Directors of SpareBank 1 SMN
We have undertaken a limited assurance engagement in respect of SpareBank 1 SMN's GRI Index for 2023 and of selected key performance indicators for sustainability for the period 1 January 2023 - 31 December 2023 (the Subject Matter), included in SpareBank 1 SMN's annual report for the year 2023.
The identified Subject Matter Information consists of:
SpareBank 1 SMN's GRI index for 2023 is an overview of which sustainability topics SpareBank 1 SMN considers material to its business and which key performance indicators SpareBank 1 SMN uses to measure and report its sustainability performance, together with a reference to where material sustainability information is reported. SpareBank 1 SMN's GRI Index for 2023 is available and included in appendix to SpareBank 1 SMN's annual report for the year 2023. We have examined whether SpareBank 1 SMN has provided a GRI Index for 2023 and whether mandatory disclosures are presented according to the Standards published by the Global Reporting Initiative (www.globalreporting.org/standards) (criteria).
SpareBank 1 SMN has defined key performance indicators for sustainability in the annual report for the year 2023. The quantification of the key performance indicators is determined by topic-specific disclosure requirements from GRI or own definitions specified by the bank and explained in the chapters under "Vårt bærekraftsarbeid" and in the appendix "SpareBank 1 SMN Klimaregnskap" and "SpareBank 1 SMN Konsolidert klimaregnskap" (criteria). For the following key performance indicators for sustainability, we have examined the basis for 2023 and whether the key figures have been calculated, estimated and reported in accordance with the applicable criteria:
Management is responsible for the preparation of the Subject Matter Information in accordance with the applicable Criteria. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of a Subject Matter Information that is free from material misstatement, whether due to fraud or error.
Quantification of greenhouse gases has an inherent uncertainty due to the fact that the determination of emission factors and values necessary to combine emissions of different gases is based on incomplete scientific knowledge.
We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which are based on the basic ethical principles: integrity, objectivity , professional competence and due care, confidentiality and professional behaviour.
We apply the International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, and accordingly, maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Our responsibility is to express an opinion on the Subject Matter Information based on the evidence we have obtained. We conducted our limited assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 revised – «Assurance Engagements other than Audits or Reviews of Historical Information» and on greenhouse gas emissions, International Standard on Assurance Engagements (ISAE 3410) - "Assurance Engagements on Greenhouse Gas Statements", issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain limited assurance about whether the Subject Matter Information is free from material misstatement.
A limited assurance engagement in accordance with ISAE 3000 and ISAE 3410 involves assessing the suitability in the circumstances of management's use of the Criteria as the basis for the preparation of the Subject Matter Information, assessing the risks of material misstatement of the Subject Matter Information whether due to fraud or error, responding to the assessed risks as necessary in the circumstances, and evaluating the overall presentation of the Subject Matter Information. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks.
The procedures we performed were based on our professional judgment and, among others, included:
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether the Subject Matter Information has been prepared, in all material respects, in accordance with the Criteria
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that:
bærekraftsarbeid" and in appendix "Sparebank 1 SMN Klimaregnskap" and "Sparebank 1 SMN Konsolidert klimaregnskap" .
Trondheim, 29 February 2024 PricewaterhouseCoopers AS
Rune Kenneth S. Lædre State Authorised Public Accountant
Note: This translation from Norwegian has been prepared for information purposes only
ACI Norge Nordic Future Innovation AS Agritech Cluster Norges Eiendomsmeglerforbund Arti7 bedriftsnettverk Trondheim Norsk institutt for styremedlemmer Aukra næringsforum Norsk kommunikasjonsforening Den norske advokatforening Norsk nettverk for næringseiendom Den norske dataforening Norsk Petroleumsforening Econa Norske Finansanalytikeres Forening Eiendom Norge NorwAI Finansieringsselskapenes Forening Næringsforeningen i Trondheimsregionen Fosnavåg shippingklubb Næringsforeningen i Værnesregionen Framtiden i Våre Hender Næringsforeningen i Ålesundsregionen Framtidslaben Ålesund Næringslivets sikkerhetsråd Frøya Handelsstand Oppdal Næringsforening Frøya nye næringsforening Orkland næringsforening Førde industri- og næringssamskipnad ProtoMore Molde Haram næring- og innovasjonsforum Rauma næringslag Hitra Næringsforening Regnskap Norge HR Norge Renergy Hustadvika næringsforum Rennebu næringsforening Håndverkerforeningen i Trondheim Romsdal reiseliv ICC Norge Samarbeidsgruppen Midtbyen Trondheim iKuben Molde Shippingklubben Ålesund Industrinavet Verdal Skift - næringslivets klimaledere Innherred Næringsforening Skogmo Industripark Overhalla InnoCamp Steinkjer Sparebankforeningen KID Næringslivs nettverket Startuplab Fintech Industriprogram Knytte bedriftsnettverk Trondheim Steinkjer næringsforum Kommunikasjonsforeningen Sunndal næringsforening Kristiansund og Nordmøre næringsforum Surnadal næringsforening Kvinner i Finans charteret Sykkylven industri- og næringslag Lean forum Midt-Norge Thams Klyngen Orkanger Lean forum Nordvest todalen.no Maritimt forum Nordvest Trollheimsporten AS Midsund næringsforum Trondheim markedsforening Miljøfyrtårn Trondheim Tech Port (Tidligere Technoport) Molde Næringsforum Trøndelag HR-forum Molde sentrum Trøndersk matfestival Namdal Næringsforening UN Global Compact Norge Namdalskysten Næringsforening UNEPFIs Principles for Responsible Banking Namsos næringsforening Ungt Entreprenørskap NCE Finance Innovation United Nations (USCH5) NCE Finance Innovation Verdipapirforetakenes forbund NCE ikuben Molde Verdipapirforetakenes forening Newton-rom (via selskapet First Scandinavia) Vestnes næringsforum NiTr Fosen Vestnes sentrumsforening NiTr Malvik Visit Nordmøre og Romsdal NiTr Melhus Ørland næringsforum NiTr Midtre Gauldal Ålesund Kunnskapspark Nordic arena nettverk Møre AS
Finans Norge NTNU Partnerskap Innovasjon og verdiskapning Frøya Næringsforum Partnership for Carbon Accounting Financials (PCAF)
| % of assets excluded from the | % of assets excluded from the | ||||||
|---|---|---|---|---|---|---|---|
| numerator of the GAR (Article | denominator of the GAR | ||||||
| 7(2) and (3) and Section 1.1.2. | (Article 7(1) and Section 1.2.4 | ||||||
| Total environmentally sustainable assets | KPI 1) | KPI 1) | % coverage (over total assets) 2) | of Annex V) | of Annex V) | ||
| Main KPI | Green asset ratio (GAR) stock | 17.087 | 5,7 % | 5,7 % | 92,5 % | 28,12 % | 7,53 % |
| % of assets excluded from the | % of assets excluded from the | ||||||
|---|---|---|---|---|---|---|---|
| numerator of the GAR (Article | denominator of the GAR | ||||||
| 7(2) and (3) and Section 1.1.2. | (Article 7(1) and Section 1.2.4 | ||||||
| Total environmentally sustainable activities | KPI 3) | KPI 3) | % coverage (over total assets) | of Annex V) | of Annex V) | ||
| Additional KPIs | GAR (flow) | 5.488 | 1,8 % | 1,8 % | 12,0 % N/A | N/A | |
| Trading book 4) | N/A | N/A | N/A | ||||
| Financial guarantees | 0 | 0 | 0 | ||||
| Assets under management | 0 | 0 | 0 | ||||
| Fees and commissions income 4) | N/A | N/A | N/A |
1) The KPI is based on the total taxonomy-aligned assets in table 1
2) % of assets covered by the KPI over banks'total assets
3) The KPI is based on the total taxonomy-aligned assets in table 4
4) Fees and Commissions and Trading Book KPIs shall only apply starting 2026
Note: cells shaded in black should not be reported for the reporting year 2023
The table provides information on the covered assets for GAR-calculation.
| a | b | c | d | e | f | g | h | i | j ab |
ac | ad ae |
af | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 December 2023 | |||||||||||||||
| TOTAL (CCM + CCA) 1), 2) Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) |
|||||||||||||||
| Of which towards taxonomy relevant sectors (Taxonomy-eligible) | Of which towards taxonomy relevant sectors (Taxonomy-eligible) |
||||||||||||||
| Total [gross] carrying | |||||||||||||||
| amount | Of which environmentally sustainable (Taxonomy-aligned) | Of which environmentally sustainable (Taxonomy-aligned) |
Of which environmentally sustainable (Taxonomy-aligned) | ||||||||||||
| Of which Use of | Of which | Of which Use | Of which | Of which Use of | |||||||||||
| Proceeds | Of which enabling transitional |
of Proceeds | enabling | Of which transitional Of which Proceeds |
enabling | ||||||||||
| GAR - Covered assets in both numerator and denominator | |||||||||||||||
| 1 | Loans and advances, debt securities and equity instruments not HfT | 209.028 | 180.870 | 17.087 | 17.008 | 180.870 | 17.087 | 17.008 | |||||||
| eligible for GAR calculation | |||||||||||||||
| 2 | Financial undertakings | 23.472 | 5.675 | 79 | - | 5.675 | 79 | ||||||||
| 3 | Credit institutions | 23.286 | 5.675 | 79 | - | 5.675 | 79 | ||||||||
| 4 5 |
Loans and advances Debt securities, including UoP |
5.643 17.606 |
2.702 2.973 |
24 55 |
- # |
2.702 2.973 |
24 55 |
||||||||
| 6 | Equity instruments | 36 | - | - | # | ||||||||||
| 7 | Other financial corporations | 186 | - | - | - | # | |||||||||
| 8 | of which investment firms | - | - | - | - | - | |||||||||
| 9 | Loans and advances | - | - | - | - | - | |||||||||
| 10 | Debt securities, including UoP | - | - | - | - | - | |||||||||
| 11 12 |
Equity instruments of which management companies |
- 186 |
- - |
- - |
- | - - |
|||||||||
| 13 | Loans and advances | - | - | - | - | - | |||||||||
| 14 | Debt securities, including UoP | - | - | - | - | - | |||||||||
| 15 | Equity instruments | 186 | - | - | - | ||||||||||
| 16 | of which insurance undertakings | - | - | - | - | - | |||||||||
| 17 | Loans and advances | - | - | - | - | - | |||||||||
| 18 | Debt securities, including UoP | - | - | - | - | - | |||||||||
| 19 20 |
Equity instruments Non-financial undertakings |
- - |
- - |
- - |
- | - - |
|||||||||
| 21 | Loans and advances | - | - | - | - | - | |||||||||
| 22 | Debt securities, including UoP | - | - | - | - | - | |||||||||
| 23 | Equity instruments | - | - | - | - | ||||||||||
| 24 | Households | 184.182 | 173.971 | 17.008 | - | 17.008 | 173.971 | 17.008 | 17.008 | ||||||
| 25 | of which loans collateralised by residential | 173.808 | 173.536 | 17.008 | - | 17.008 | 173.536 | 17.008 | 17.008 | ||||||
| 26 | immovable property of which building renovation loans |
- | - | - | - | - | |||||||||
| 27 | of which motor vehicle loans | 6.726 | 435 | - | - | - | 435 | ||||||||
| 28 | Local governments financing | 1.224 | 1.224 | 1.224 | |||||||||||
| 29 | Housing financing | ||||||||||||||
| 30 | Other local government financing | 1.224 | 1.224 | 1.224 | |||||||||||
| 31 | Collateral obtained by taking possession: residential and | ||||||||||||||
| commercial immovable properties | |||||||||||||||
| 32 | Assets excluded from the numerator for GAR calculation (covered in the denominator) |
91.263 | |||||||||||||
| 33 | Financial and Non-financial undertakings | 80.668 | |||||||||||||
| SMEs and NFCs (other than SMEs) not subject to NFRD | |||||||||||||||
| 34 | disclosure obligations | 77.856 | |||||||||||||
| 35 | Loans and advances | 69.085 | |||||||||||||
| 36 | of which loans collateralised by commercial | 42.187 | |||||||||||||
| 37 | immovable property of which building renovation loans |
||||||||||||||
| 38 | Debt securities | 5.177 | |||||||||||||
| 39 | Equity instruments | 3.593 | |||||||||||||
| 40 | Non-EU country counterparties not subject to NFRD | 2.813 | |||||||||||||
| disclosure obligations | |||||||||||||||
| 41 | Loans and advances | , | |||||||||||||
| 42 43 |
Debt securities Equity instruments |
2.488 168 |
|||||||||||||
| 44 | Derivatives | 3.976 | |||||||||||||
| 45 | On demand interbank loans | 3.746 | |||||||||||||
| 46 | Cash and cash-related assets | 25 | |||||||||||||
| 47 | Other categories of assets (e.g. Goodwill, commodities | 2.848 | |||||||||||||
| 48 | Total GAR assets | 300.141 | 180.870 | 20.497 | 16.491 | 180.870 | 17.087 | 17.008 | |||||||
| 49 50 |
Assets not covered for GAR calculation Central governments and Supranational issuers |
24.441 15.800 |
|||||||||||||
| 51 | Central banks exposure | 1.451 | |||||||||||||
| 52 | Trading book | 7.189 | |||||||||||||
| 53 | Total assets | 324.582 | 180.870 | 20.497 | - | 16.491 | 180.870 | 17.087 | 17.008 | ||||||
| Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations | |||||||||||||||
| 54 | Financial guarantees | ||||||||||||||
| 55 56 |
Assets under management Of which debt securities |
||||||||||||||
| 57 | Of which equity instruments | ||||||||||||||
1) Reporting on CCM og CCA for the reporting year 2023
2) Cells shaded in black across the template are not subject for disclosure for the reporting year 2023
The table provides information about the proportion of EU-taxonomy eligible and taxonomy-aligned exposures, broken down by sector towards non-financial corporates (subject to NFRD). For the reporting year 2023 SpareBank 1 SMN do not have exposures towards non-financial corporates subject to NFRD.
The table provides information about proportion of taxonomy-eligible and taxonomy-aligned assets compared to total covered assets.
| a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae | af | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 December 2023 | ||||||||||||||||
| TOTAL (CCM + CCA) 1), 2) Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) |
||||||||||||||||
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy | Proportion of total covered assets funding taxonomy | Proportion of total covered assets funding taxonomy relevant sectors | ||||||||||||||
| eligible) | relevant sectors (Taxonomy-eligible) | (Taxonomy-eligible) | ||||||||||||||
| % (compared to total covered assets in the denominator) | Proportion of total covered assets funding taxonomy relevant | Proportion of total covered assets funding | Proportion of total covered assets funding taxonomy | Proportion of | ||||||||||||
| sectors (Taxonomy-aligned) | taxonomy relevant sectors (Taxonomy | relevant sectors (Taxonomy-aligned) | total assets | |||||||||||||
| aligned) | covered 3) | |||||||||||||||
| Of which Use of | Of which | Of which | Of which | Of which | Of which | Of which | ||||||||||
| Proceeds | transitional | enabling | Use of Proceeds |
Of which enabling | Use of Proceeds |
transitional | enabling | |||||||||
| GAR - Covered assets in both numerator and denominator | ||||||||||||||||
| 1 | Loans and advances, debt securities and equity instruments not HfT | 59 % | 6 % | 6 % | 59 % | 6 % | 6 % | 9 % | ||||||||
| eligible for GAR calculation | ||||||||||||||||
| 2 | Financial undertakings | 2 % | 0 % | 2 % | 0 % | 0 % | ||||||||||
| 3 | Credit institutions | 2 % | 0 % | 2 % | 0 % | 0 % | ||||||||||
| 4 | Loans and advances | 1 % | 0 % | 1 % | 0 % | 0 % | ||||||||||
| 5 | Debt securities, including UoP | 1 % | 0 % | 1 % | 0 % | 0 % | ||||||||||
| 6 | Equity instruments | |||||||||||||||
| 7 | Other financial corporations | |||||||||||||||
| 8 | of which investment firms | |||||||||||||||
| 9 | Loans and advances | |||||||||||||||
| 10 | Debt securities, including UoP | |||||||||||||||
| 11 | Equity instruments | |||||||||||||||
| 12 | of which management companies | |||||||||||||||
| 13 | Loans and advances | |||||||||||||||
| 14 | Debt securities, including UoP | |||||||||||||||
| 15 | Equity instruments | |||||||||||||||
| 16 | of which insurance undertakings | |||||||||||||||
| 17 | Loans and advances | |||||||||||||||
| 18 | Debt securities, including UoP | |||||||||||||||
| 19 | Equity instruments | |||||||||||||||
| 20 | Non-financial undertakings | |||||||||||||||
| 21 | Loans and advances | |||||||||||||||
| 22 | Debt securities, including UoP | |||||||||||||||
| 23 | Equity instruments | |||||||||||||||
| 24 | Households | 58 % | 6 % | 6 % | 58 % | 6 % | 6 % | 9 % | ||||||||
| 25 | of which loans collateralised by residential | 58 % | 6 % | 6 % | 58 % | 6 % | 6 % | 9 % | ||||||||
| immovable property | ||||||||||||||||
| 26 | of which building renovation loans | |||||||||||||||
| 27 | of which motor vehicle loans | 0 % | ||||||||||||||
| 28 | Local governments financing | 0 % | 0 % | 0 % | ||||||||||||
| 29 | Housing financing | |||||||||||||||
| 30 | Other local government financing | 0 % | 0 % | 0 % | ||||||||||||
| 31 | Collateral obtained by taking possession: residential and | |||||||||||||||
| commercial immovable properties | ||||||||||||||||
| 32 Total GAR assets | 59 % | 6 % | 6 % | 59 % | 6 % | 6 % | 9 % |
1) Only reporting on CCM og CCA for the reporting year 2023
2) Cells shaded in black across the template are not subject for disclosure for the reporting year 2023
3) Proportion of aligned assets in table 1 over total eligible assets in table 1
The table provides information on the flow of new loans (on a net basis) compared to flow of total eligible assets.
| a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae | af | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 December 2023 | ||||||||||||||||
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | |||||||||||||||
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy | Proportion of total covered assets funding | |||||||||||||||
| taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant | |||||||||||||||
| eligible) | sectors (Taxonomy-eligible) | |||||||||||||||
| % (compared to flow of total eligible assets) | Proportion of total covered assets | Proportion of | ||||||||||||||
| Proportion of total covered assets funding taxonomy relevant | funding taxonomy relevant sectors | Proportion of total covered assets funding taxonomy | total new | |||||||||||||
| sectors (Taxonomy-aligned) | (Taxonomy-aligned) | relevant sectors (Taxonomy-aligned) | assets covered 3) |
|||||||||||||
| Of which | Of which | Of which | ||||||||||||||
| Use of | Of which | Of which | Use of | Of which | Use of | Of which | Of which | |||||||||
| Proceeds | transitional | enabling | Proceeds | enabling | Proceeds | transitional | enabling | |||||||||
| GAR - Covered assets in both numerator and denominator | ||||||||||||||||
| 1 | Loans and advances, debt securities and equity instruments not HfT | 21 % | 22 % | 21 % | 21 % | 22 % | 21 % | 10 % | ||||||||
| eligible for GAR calculation | ||||||||||||||||
| 2 | Financial undertakings | 30 % | 0 % | 30 % | 0 % | 0 % | ||||||||||
| 3 | Credit institutions | 30 % | 0 % | 30 % | 0 % | 0 % | ||||||||||
| 4 | Loans and advances | |||||||||||||||
| 5 | Debt securities, including UoP | 58 % | 0 % | 58 % | 0 % | 0 % | ||||||||||
| 6 | Equity instruments | |||||||||||||||
| 7 | Other financial corporations | |||||||||||||||
| 8 | of which investment firms | |||||||||||||||
| 9 | Loans and advances | |||||||||||||||
| 10 | Debt securities, including UoP | |||||||||||||||
| 11 | Equity instruments | |||||||||||||||
| 12 | of which management companies | |||||||||||||||
| 13 | Loans and advances | |||||||||||||||
| 14 | Debt securities, including UoP | |||||||||||||||
| 15 | Equity instruments | |||||||||||||||
| 16 | of which insurance undertakings | |||||||||||||||
| 17 | Loans and advances | |||||||||||||||
| 18 | Debt securities, including UoP | |||||||||||||||
| 19 | Equity instruments | |||||||||||||||
| 20 | Non-financial undertakings | |||||||||||||||
| 21 22 |
Loans and advances Debt securities, including UoP |
|||||||||||||||
| 23 | Equity instruments | |||||||||||||||
| 24 | Households | 21 % | 22 % | 21 % | 21 % | 22 % | 21 % | 10 % | ||||||||
| of which loans collateralised by residential immovable | ||||||||||||||||
| 25 | property | 21 % | 22 % | 21 % | 21 % | 22 % | 21 % | 10 % | ||||||||
| 26 | of which building renovation loans | |||||||||||||||
| 27 | of which motor vehicle loans | 18 % | 18 % | |||||||||||||
| 28 | Local governments financing | |||||||||||||||
| 29 | Housing financing | |||||||||||||||
| 30 | Other local government financing | |||||||||||||||
| Collateral obtained by taking possession: residential and | ||||||||||||||||
| 31 | commercial immovable properties | |||||||||||||||
| 32 | Total GAR assets | 21 % | 18 % #DIV/0! | 22 % | 21 % | 22 % | 0 % | 21 % | 10 % |
1) Only reporting on CCM og CCA for the reporting year 2023
2) Cells shaded in black across the template are not subject for disclosure for the reporting year 2023 3) Proportion of new aligned assets over total new eligible assets
The table provides information about off-balance sheet exposures towards undertakings subject to NFRD.
For the reporting year 2023 SpareBank 1 SMN do not have off-balance sheet exposures towards undertakings subject to NFRD disclosure obligations.
The table provides information about the exposure to nuclear and fossil gas related activities.
| Row | Nuclear energy related activities | ||||||
|---|---|---|---|---|---|---|---|
| 1. | The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. |
NO | |||||
| 2. | The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. |
NO | |||||
| 3. | The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or NO industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. |
||||||
| Fossil gas related activities | |||||||
| 4. | The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. | NO | |||||
| 5. | The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. | NO | |||||
| 6. | The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. | NO |
Based on the disclosure template 2-5 is omitted due to no reporting information for the reporting year 2023.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.