Quarterly Report • May 8, 2020
Quarterly Report
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| Main figures 3 | |
|---|---|
| Report of the Board of Directors 5 | |
| Income statement 20 | |
| Balance sheet 22 | |
| Cash flow statement 23 | |
| Change in equity 24 | |
| Notes 27 | |
| Results from quarterly accounts 54 | |
| Key figures from quarterly accounts 55 | |
| Equity capital certificates 56 | |
| Auditor's report 58 |
| Main figures | Jan-March | |||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | 2019 | ||||
| From the income statement | NOKm | %1) | NOKm | %1) | NOKm | %1) |
| Net interest | 710 1,61 | 649 1,59 | 2.687 1,63 | |||
| Net commission income and other income | 570 1,30 | 551 1,36 | 2.290 1,39 | |||
| Net return on financial investments | 101 0,23 | 727 1,79 | 1.201 0,73 | |||
| Total income | 1.381 3,14 | 1.926 4,74 | 6.178 3,74 | |||
| Total operating expenses | 716 1,63 | 704 1,73 | 2.797 1,69 | |||
| Results before losses | 665 1,51 | 1.223 3,01 | 3.380 2,05 | |||
| Loss on loans, guarantees etc | 308 0,70 | 67 0,17 | 299 0,18 | |||
| Results before tax | 357 0,81 | 1.155 2,84 | 3.081 1,87 | |||
| Tax charge | 67 0,15 | 109 0,27 | 518 0,31 | |||
| Result investment held for sale, after tax | 0 0,00 | 0 0,00 | 0 0,00 | |||
| Net profit | 290 0,66 | 1.046 2,57 | 2.563 1,55 | |||
| Interest Tier 1 Capital | 24 | 19 | 49 | |||
| Net profit excl. Interest Tier 1 Capital | 266 | 1.027 | 2.514 | |||
| Key figures | 31 March 2020 |
31 March 2019 |
31 Dec 2019 |
|||
| Profitability | ||||||
| Return on equity2) | 5,7 % | 23,3 % | 13,7 % | |||
| Cost-income ratio2) | 52 % | 37 % | 45 % | |||
| Balance sheet figures | ||||||
| Gross loans to customers | 127.272 | 120.100 | 126.277 | |||
| Gross loans to customers incl. SB1 Boligkreditt and SB1 Næringskreditt | 170.771 | 161.091 | 167.777 | |||
| Deposits from customers | 88.152 | 81.111 | 85.917 | |||
| Deposit-to-loan ratio excl. SB1 Boligkreditt and SB1 Næringskreditt | 69 % | 68 % | 68 % | |||
| Deposit-to-loan ratio incl. SB1 Boligkreditt and SB1 Næringskreditt 2) | 52 % | 50 % | 51 % | |||
| Growth in loans (gross) last 12 months (incl. SB1 Boligkreditt and SB1 | ||||||
| Næringskreditt) 2) | 6,0 % | 6,6 % | 4,7 % | |||
| Growth in deposits last 12 months | 8,7 % | 6,8 % | 6,6 % | |||
| Average total assets | 175.922 | 162.673 | 165.154 | |||
| Total assets | 185.182 | 164.641 | 166.662 | |||
| Losses and defaults in % of gross loans incl. SB1 Boligkreditt and SB1 Næringskreditt |
||||||
| Impairment losses ratio2) | 0,73 % | 0,17 % | 0,18 % | |||
| Non-performing commitm. as a percentage of gross loans2) | 0,38 % | 0,18 % | 0,26 % | |||
| Other doubtful commitm. as a percentage of gross loans2) | 1,23 % | 0,99 % | 1,00 % | |||
| Solidity 3) | ||||||
| Capital ratio | 20,1 % | 18,6 % | 21,6 % | |||
| Tier 1 capital ratio | 18,0 % | 16,4 % | 19,3 % | |||
| Common equity Tier 1 capital ratio | 16,3 % | 14,8 % | 17,2 % | |||
| Tier 1 capital | 17.792 | 16.775 | 17.742 | |||
| Total eligible capital | 19.879 | 19.115 | 19.854 | |||
| Liquidity Coverage Ratio (LCR) | 185 % | 180 % | 148 % | |||
| Leverage Ratio | 6,9 % | 7,4 % | 7,5 % | |||
| Branches and staff | ||||||
| Number of branches | 46 | 48 | 46 | |||
| No. Of full-time positions | 1.553 | 1.524 | 1.509 |
1) Calculated as a percentage of average total assets
2) Defined as alternative performance mesures, see attachment to the quarterly report
3) Comparables have not been restated by revised distribution of profit for 2019
| Key figures ECC | 31 March 2020 |
31 March 2019 |
31 Dec 2019 |
31 Dec 2018 |
31 Dec 2017 |
31 Dec 2016 |
|---|---|---|---|---|---|---|
| ECC ratio | 64,0 % | 64,0 % | 64,0 % | 64,0 % | 64,0 % | 64,0 % |
| Number of certificates issued, millions2) | 129,22 | 129,41 | 129,30 | 129,62 | 129,38 | 129,64 |
| ECC share price at end of period (NOK) | 67,60 | 87,40 | 100,20 | 84,20 | 82,25 | 64,75 |
| Stock value (NOKM) | 8.735 | 11.310 | 12.956 | 10.914 | 10.679 | 8.407 |
| Booked equity capital per ECC (including dividend) 2) | 86,85 | 83,86 | 90,75 | 83,87 | 78,81 | 73,35 |
| Profit per ECC, majority 2) | 1,26 | 5,02 | 12,14 | 9,97 | 8,71 | 7,93 |
| Dividend per ECC | 6,50 | 5,10 | 4,40 | 3,00 | ||
| Price-Earnings Ratio 2) | 13,46 | 4,35 | 8,26 | 8,44 | 9,44 | 8,17 |
| Price-Book Value Ratio 2) | 0,78 | 1,04 | 1,10 | 1,00 | 1,04 | 0,88 |
2) Defined as alternative performance measures, see attachement to quarterly report
(Consolidated figures. Figures in parenthesis refer to the same period of 2019 unless otherwise stated)
SpareBank 1 SMN maintains a sound liquidity position and is well capitalised. The group has a strong foundation in the shape of a broad and well-diversified earnings platform. Core business excluding loan losses delivered good results in the first quarter with a strong revenue performance and moderate cost growth. The overall result nonetheless reflects the times of crisis by increased loan losses, losses on securities and losses recorded by SpareBank 1 Gruppen.
The crisis has triggered a broad-based international economic crisis accompanied by increased unemployment and a dramatic fall in demand despite highly expansionary monetary policies in the majority of countries. After the national lockdown, imposed on 12 March, the Norwegian economy has also been hard hit, even though Norway has a more robust economy than most countries. Oil prices have fallen heavily. SpareBank 1 SMN has low exposure to sectors that are directly affected by the oil price fall. The Norwegian krone has depreciated markedly in the first quarter. Norges Bank (Norway's central bank) has lowered its key policy rate to 0.25 per cent since 12 March. A number of industries have experienced a wave of layoffs, and as at 21 April 15 per cent of the labour force were registered as jobseekers and 10 per cent were registered as totally unemployed. In response to the crisis the Norwegian government has initiated a raft of measures to assist businesses and private individuals.
SpareBank 1 SMN is the region's leading finance house and shoulders its responsibility in a highly demanding situation. A number of measures have been taken to accommodate the needs of businesses and private individuals. The group offers among other things mortgage holidays to businesses and private individuals, and advances of unemployment benefit to private individuals. The group also provides advice on
support arrangements and relevant measures to personal customers, businesses and public authorities. SpareBank 1 SMN has been allocated government-guaranteed loans worth NOK 1.5bn for mediation to corporate clients in the region.
Through the group's social dividend model, NOK 364m of the net profit has been directed to the social capital. Of this sum, NOK 200m is being distributed as the community's share of the dividend. NOK 100m is earmarked to help voluntary bodies, clubs and associations in the region through the crisis.
The group's ambitions and strategies stand firm. SMN intends to remain among the best performing banks in the Nordic region.
In light of the economic outlook, the board of directors of SpareBank 1 SMN has decided to change the distribution of profit for 2019 and is lowering the payout ratio from 53.5 per cent to 41.2 per cent. The new dividend is NOK 5.00 per equity certificate, down from NOK 6.50 in the annual accounts for 2019.
The allocation to social capital is correspondingly reduced from NOK 474m to NOK 364m, while the share going to payment of social dividend is maintained at NOK 200m.
SpareBank 1 SMN is indisputably solid. The change in the distribution of profit reflects a sound balance between the need for stability and predictability for the bank's shareholders and investors, and the corporate social responsibility the group has towards its customers and the region's local communities.
The pre-tax profit for the first quarter of 2020 was NOK 357m (1,155m). The post-tax profit was NOK 290m (1,046m) and return on equity was 5.7 per cent (23.3 per cent). The profit includes a gain of NOK 340m on the transfer of personal risk products from SpareBank 1 Forsikring to Fremtind Livsforsikring as of 1 January 2020. In the first quarter of 2019 a gain of NOK 460m was included in connection with the establishment of Fremtind Forsikring.
Overall operating revenues in the first quarter of 2020 came to NOK 1,280m (1,200m). This represents an increase of NOK 80m over the previous year. Banking operations account for the majority of the increase.
Return on financial assets was NOK 101m (727m). Of this figure, the profit share of owner interests and related companies was NOK 217m (555m), including a gain of NOK 340m on the transfer of personal risk products from SpareBank 1 Forsikring to Fremtind Livsforsikring (460m). The result excluding this gain is an overall loss of NOK 123m at related companies and a loss of NOK 124m on securities trading.
Operating expenses totalled NOK 716m (704m) in the first quarter of 2020.
Losses on loans and guarantees came to NOK 308m (67m). NOK 143m refers to write-downs on a single exposure reflecting a worsened situation due to the crisis. Write-downs in stage 1 and 2 have increased by NOK 102m, of which NOK 80m refers to changed assumptions in the loss model regarding the economy.
Lending and deposits have shown good growth. Overall lending rose by 6.0 per cent (6.6 per cent) and deposits by 8.7 per cent (6.8 per cent) in the last 12 months.
As at 31 March 2020 the CET1 ratio was 16.3 per cent (14.8 per cent). The target CET1 ratio is 15.4 per cent.
Earnings per EC were NOK 1.26 (5.02). The book value per EC was NOK 86.85 (83.86) per EC.
The price of the bank's equity certificate (MING) at quarter-end was NOK 67.60 (87.40). A cash dividend of NOK 5.0 (5.10) per EC has been paid in 2020 for the year 2019.
Net interest income rose by NOK 61m to NOK 710m (649 m) in the first quarter of 2020. The increase over the first quarter of 2019 is in all essentials due to an increased lending volume, and to higher market interest rates which have yielded improved return on the bank's equity.
Three-month NIBOR was about 35 points higher in the first quarter of 2020 than in the first quarter of 2019. The bank made interest rate hikes over the course of 2019 to compensate for rising market rates. As a result of the interest rate changes, lending margins fell and deposit margins rose in 2019.
Since 13 March 2020 Norges Bank has reduced its key rate from 1.50 to 0.25. SpareBank 1 SMN lowered its mortgage lending rate by up to 0.85 points with effect from 5 April 2020.
A reduction in the interest rate level produces lower return on the group's equity and lower net interest earnings.
Commission income and other operating income rose by NOK 19m to NOK 570m (551m) in 2020.
Net interest income on loans sold to SpareBank 1 Boligkreditt (residential mortgage company) and SpareBank 1 Næringskreditt (commercial mortgage company) is recognised as commission income. Commission income on loans sold to these two companies totalled NOK 91m (87m) in the first quarter of 2020.
An increase of NOK 15m in other commission income is mainly down to customer growth at SpareBank 1 SMN Regnskapshuset and increased incomes from payment services.
Maintaining a broad product range is an important strategy for the bank. It ensures good commission income and a high proportion of multi-product customers. A high proportion of multi-product customers signifies high customer satisfaction and provides the bank with a higher and more diversified income flow.
| Jan-March | |||||
|---|---|---|---|---|---|
| Commission income (NOKm) | 2020 | 2019 | Change | ||
| Payment transfers | 59 | 50 | 9 | ||
| Creditcard | 16 | 15 | 1 | ||
| Saving products | 22 | 24 | -2 | ||
| Insurance | 47 | 44 | 3 | ||
| Guarantee commission | 13 | 13 | 0 | ||
| Real estate agency | 83 | 84 | -1 | ||
| Accountancy services | 148 | 131 | 17 | ||
| Markets | 81 | 87 | -7 | ||
| Other commissions | 10 | 15 | -5 | ||
| Commissions ex SB1 Boligkreditt and SB1 Næringskreditt | 479 | 464 | 15 | ||
| Commissions SB1 Boligkreditt | 88 | 83 | 5 | ||
| Commissions SB1 Næringskreditt | 4 | 4 | 0 | ||
| Total commissions | 570 | 551 | 19 |
Overall return on financial investments in the first quarter was minus NOK 124m (plus 169m). This breaks down as follows:
| Jan-March | |||||
|---|---|---|---|---|---|
| Return on financial investments (NOKm) | 2020 | 2019 | Change | ||
| Gain/(loss) on sertificates and bonds | -42 | 84 | -126 | ||
| Gain/(loss) on derivatives | 50 | 32 | 18 | ||
| Gain/(loss) on financial instruments related to hedging | -148 | 23 | -171 | ||
| Capital gains shares | -6 | -4 | -2 | ||
| Gain/(loss) on other financial instruments at fair value (FVO) | -57 | 10 | -67 | ||
| Foreign exchange gain/(loss) | 65 | 9 | 55 | ||
| Gain/(loss) om shares and share derivatives at SpareBank 1 Markets | 14 | 15 | -1 | ||
| Net return on financial instruments | -124 | 169 | -293 |
The product companies give the banks access to a broader product range and hence commission income, as well as return on invested capital. The overall result of the product companies and other related companies was a loss of NOK 123m (gain of 95m) in the first quarter of 2020. In addition SpareBank 1 SMN recorded a gain of NOK 340m on the transfer of personal risk products from SpareBank 1 Forsikring to Fremtind Livsforsikring as at 1 January 2020. In the first quarter of 2019 a gain of NOK 460m was recorded on the establishment of Fremtind Forsikring.
| Jan-March | ||||
|---|---|---|---|---|
| Income from investment in associated companies | 2020 | 2019 | Change | |
| SpareBank 1 Gruppen | -115 | 38 | -153 | |
| Gain Fremtind | 340 | 460 | -120 | |
| SpareBank 1 Boligkreditt | -31 | 14 | -45 | |
| SpareBank 1 Næringskreditt | 2 | 8 | -6 | |
| SpareBank 1 Kredittkort | 0 | 3 | -3 | |
| BN Bank | 23 | 24 | -1 | |
| SpareBank 1 Betaling | -2 | 12 | -14 | |
| Other companies | 0 | -4 | 4 | |
| Income from investment in associated companies | 217 | 555 | -338 |
SpareBank 1 SMN's stake in SpareBank 1 Gruppen is 19.5 per cent. SpareBank 1 Gruppen owns 100 per cent of the shares of SpareBank 1 Forsikring, ODIN Forvaltning and SpareBank 1 Gruppen Finans. SpareBank 1 Gruppen owns 65 per cent of the non-life insurer Fremtind which was established on 1 January 2019. DNB owns the remainder of the company.
SpareBank 1 Gruppen's post-tax profit in the first quarter of 2020 was minus NOK 780m (gain of 240m). The corona crisis has strongly impacted financial results with substantial technical provisioning, high costs and negative financial return across all asset classes, along with write-downs on property portfolios.
SpareBank 1 SMN's share of the profit for the first quarter of 2019 was minus NOK 115m (gain of 38m).
SpareBank 1 Boligkreditt was established by the banks making up the SpareBank 1 Alliance to draw benefit from the market for covered bonds. The banks sell well-secured residential mortgages to the company and achieve reduced funding costs.
As at 31 March 2020 the bank had sold loans totalling NOK 42.0bn (39.2bn) to SpareBank 1 Boligkreditt, corresponding to 35.9 per cent (36.1 per cent) of the bank's overall lending to retail borrowers.
The bank's stake in SpareBank 1 Boligkreditt is 20.9 per cent, and the bank's share of that company's profit in the first quarter of 2020 was minus NOK 31m (gain of 14m). The weak performance is due to losses on the liquidity portfolio.
SpareBank 1 Næringskreditt was established along the same lines and with the same administration as SpareBank 1 Boligkreditt. As at 31 March 2020, loans worth NOK 1.5bn (1.8bn) had been sold to SpareBank 1 Næringskreditt.
SpareBank 1 SMN's stake in the company is 31.0 per cent, and the bank's share of the company's profit for the first quarter of 2020 was NOK 2m (8m). The bank's holding reflects the bank's relative share of commercial property loans sold and the bank's stake in BN Bank. Of the loans residing in SpareBank 1 Næringskreditt, 43 per cent have been transferred from BN Bank.
The profit for the first quarter of 2020 was NOK 2.4m (18m). SpareBank 1 Kredittkort is owned by the SpareBank 1 banks, and SpareBank 1 SMN has a stake of 17.3 per cent. SpareBank 1 SMN's share of the profit for the first quarter of 2020 was NOK 0.4m (3m), and the bank's share of the portfolio is NOK 882m (910m).
SpareBank 1 Kredittkort manages the LOfavør credit card programme. This has reinforced the business relationship between the Norwegian Confederation of Trade Unions (LO) and the SpareBank 1 Alliance.
SpareBank 1 SMN owns 35.0 per cent of BN Bank as at 31 March 2020. BN Bank is primarily a bank for residential mortgages and commercial property, and its main market is Oslo and south-eastern Norway.
BN Bank's result for the first quarter of 2020 was NOK 69m (74m), yielding a return on equity of 6.5 per cent (7.5 per cent). SpareBank 1 SMN's share of BN Bank's profit for the first quarter of 2020 was NOK 23m (24m) adjusted for interest on hybrid capital.
SpareBank 1 Betaling is the SpareBank 1 banks' parent company for Vipps' payment solutions. Vipps aims to take its place as the Nordic region's leading financial technology company, and for SpareBank 1 SMN a stake in, and close collaboration with, Vipps will be important with a view to retaining customer relationships after the introduction of PSD2 (Revised Payment Services Directive). Vipps launched a number of services in 2019 designed to simplify bank customers' everyday life.
SpareBank 1 Betaling posted a deficit of NOK 11m in the first quarter of 2020, and SpareBank 1 SMN's share of the deficit is NOK 2,3m (gain of 12m).
Overall group operating expenses in the first quarter of 2020 amounted to NOK 716m (704m), an increase of NOK 12m compared with the same period of 2019, corresponding to 1.8 per cent.
The parent bank's costs rose by NOK 34m to NOK 367m compared with the first quarter of 2019, an increase of 10.2 per cent. The increase is attributable to staff increases in customer facing positions and to resources deployed to meet regulatory requirements.
Overall costs among the subsidiaries were reduced by NOK 21m to NOK 350m (371m) in the last 12 months. The decline in costs is down to the disposal of BN Bank in the fourth quarter of 2019, and to SpareBank 1 Markets' cost reduction due to a lower activity level. SpareBank 1 Regnskapshuset SMN shows increased costs after several business acquisitions in 2019.
The group is not satisfied with the underlying cost trend and has therefore set itself the target of restricting annual cost growth to 2 per cent. A profitability project has been established under the name "One SMN". The project will prioritise synergies between the group's business lines along with digitalisation, process efficiencies and general cost reductions across the entire group. As a consequence of lower activity since the lockdown the 2020 cost target is tightened, the target now being to restrict growth to below 2 per cent.
The group's cost-income ratio was 52 per cent (37 per cent), while the parent bank's cost-income ratio was 44 per cent (27 per cent).
Loan losses in the first quarter of 2020 totalled NOK 308m (67m). Net loan losses measure 0.73 per cent of total outstanding loans (0.17 per cent).
A loss of NOK 259m (57m) was recorded on loans to the group's corporate clients. NOK 143m of this figure relates to a single exposure. In addition, increased provisions of NOK 34m have been made in stage 1 and 2 in light of weaker prospects for the Norwegian economy and NOK 38m due to negative migration in the portfolio. Further, stage 3 write-downs are recorded in the offshore sector (NOK 25m) and in other sectors (NOK 26m).
Overall loan losses of NOK 49m are recorded on loans to retail borrowers (loss of 11m), of which NOK 43m is related to changed assumptions resulting from the bank's loss model.
Write-downs on loans and guarantees totalled NOK 1,276m (971m) as at 31 March 2020.
Overall problem loans (defaulted and doubtful) come to NOK 2,746m (1,880m), corresponding to 1.61 per cent (1.17 per cent) of gross outstanding loans, including loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt.
Defaults in excess of 90 days totalled NOK 649m (288m). Defaults measure 0.38 per cent of gross outstanding loans (0.18 per cent). The increase in defaults has been greatest with regard to residential mortgages.
Other doubtful exposures total NOK 2,097m (1,591m). Other doubtful exposures measure 1.23 per cent (0.99 per cent) of gross outstanding loans.
A low proportion of the bank's overall loan exposure is to exposed industries as a result of the corona crisis and oil price crisis, and only five per cent of the overall exposure is to industries considered to be highly exposed – oil, offshore, retail trade, hotels and service industries.
The bank's assets totalled NOK 185bn as at 31 March 2020 (165bn), having risen by NOK 20bn, i.e. by 12.1 per cent, over the last 12 months. Total assets have risen as a result of a higher lending volume and liquidity holding, as well as an increase in the market value of derivatives.
As at 31 March 2020 loans worth a total of NOK 43bn (41bn) had been sold from SpareBank 1 SMN to SpareBank 1 Boligkreditt and to SpareBank 1 Næringskreditt. These loans do not figure as loans in the bank's balance sheet. The comments covering lending growth take account of loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt.
Total outstanding loans rose by NOK 9.7bn (10.0bn) or 6.0 per cent (6.6 per cent) in the last 12 months to reach NOK 170.8bn (161.1bn) as at 31 March 2020.
The group shows good growth in the retail market and is strengthening its market position, with particularly good growth in lending to members of the LO (Norwegian Trade Union Confederation).
(For distribution by sector, see note 5).
Customer deposits rose in the last 12 months by NOK 7.0bn (5.2bn) to reach NOK 88.2bn (81.1bn). This represents a growth of 8.7 per cent (6.8 per cent).
The deposit-to-loan ratio at SpareBank 1 SMN was 69 per cent (68 per cent), excluding SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt. The deposit-to-loan ratio including SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt was 52 per cent (50 per cent).
(For distribution by sector, see note 9).
The customer portfolio of off-balance sheet investment products totalled NOK 10.0bn (9.8bn) as 31 March 2020. Sales have been good, but are counteracted by value changes.
| January - March | |||
|---|---|---|---|
| Saving products, customer portfolio (NOKm) | 2020 | 2019 | Change |
| Equity funds | 6.165 | 5.932 | 233 |
| Pension products | 766 | 755 | 11 |
| Active management | 3.083 | 3.147 | -64 |
| Total | 10.014 | 9.834 | 180 |
The bank's insurance portfolio has increased by 11 per cent over the last 12 months. Growth has been satisfactory for non-life and personal insurances alike.
| January - March | |||
|---|---|---|---|
| Insurance, premium volume (NOKm) | 2020 | 2019 | Change |
| Non-life insurance | 904 | 812 | 92 |
| Personal insurance | 379 | 351 | 28 |
| Occupational pensions | 326 | 289 | 37 |
| Total | 1.609 | 1.452 | 157 |
Outstanding loans to retail borrowers total NOK 121bn (113bn) while deposits total NOK 44bn (41bn) as at 31 March 2020. These are loans to and deposits from wage earners, agricultural customers and sole proprietorships.
Retail Banking's operating income totalled NOK 550m (518m) in the first quarter of 2020. Net interest income accounted for NOK 354m (330m) and commission income for NOK 198m (188m). The income growth is mainly due to increased lending and improved margins on deposits. Overall income rose by NOK 32m. Return on capital employed in the retail banking segment was 9.5 per cent (12.7 per cent). Capital employed is regulatory capital of 16.9 per cent, corresponding to the Group's targeted CET1 ratio.
The lending margin in the first quarter of 2020 was 1.63 per cent (1.60 per cent), while the deposit margin was 0.50 per cent (0.46 per cent) measured against three-month NIBOR. The market interest rate in terms of three-month NIBOR was 35 points higher in the first quarter of 2020 than in the same quarter of 2019, even though NIBOR fell substantially in March.
Retail lending and retail deposits grew by 7.3 per cent (7.6 per cent) and 7.9 per cent (7.6 per cent) respectively in the last 12 months.
Lending to retail borrowers consistently carries low risk, as reflected in continued low losses. The loan portfolio is secured by residential property. In the second half of March, the number of mortgage deferred payments increased significantly, and then normalized during April.
Outstanding loans to corporates total NOK 41bn (39bn) and deposits total NOK 43bn (39bn) as at 31 March 2020. This is a diversified portfolio of loans to and deposits from corporate borrowers in Trøndelag and in Møre and Romsdal.
Operating income in the corporate segment came to NOK 373m (340m) in the first quarter of 2020. Net interest income was NOK 308m (284m), and commission income and return on financial investments came to NOK 64m (57m). The lending margin was 2.67 per cent (2.69 per cent) and the deposit margin was 0.06 per cent (minus 0.02 per cent) in the first quarter of 2020. Lending rose by 1.2 per cent (1.6 per cent) and deposits rose by 8.2 per cent (6.8 per cent) in the last 12 months.
Net losses in the corporate banking segment total NOK 259m (57m) in the first quarter of 2020. NOK 143m of the losses refers to a single exposure. Also noted are increased provisioning as a result of lower expectations of the Norwegian economy along with a general negative migration in the portfolio. Mortgage payment holidays have been granted. The bank's business customers were granted installment deferrals at a much higher level than usual in March. In April, the number has fallen, but is still at a level that is far above the level in a normal situation.
Return on capital employed for the corporate banking segment was 0.2 per cent (10.9) in the first quarter of 2020. Capital employed is regulatory capital of 15.4 per cent, corresponding to the Group's targeted CET1 ratio.
The bank's subsidiaries posted an overall pre-tax profit of NOK 35.5m in the first quarter of 2020 (79.3m).
| January - March | |||
|---|---|---|---|
| Pre-tax profit (NOKm) | 2020 | 2019 | Change |
| EiendomsMegler 1 Midt-Norge | 0.0 | -0.4 | 0.4 |
| BN Bolig | - | -8.6 | 8.6 |
| SpareBank 1 Finans Midt-Norge | 27.3 | 20.7 | 6.6 |
| SpareBank 1 Regnskapshuset SMN | 46.7 | 39.6 | 7.2 |
| Sparebank 1 Markets | -15.5 | 2.2 | -17.6 |
| SpareBank 1 SMN Invest | -18.8 | 26.0 | -44.8 |
| DeBank | -7.5 | -4.9 | -2.6 |
| Other companies | 3.3 | 4.8 | -1.6 |
| Total | 35.5 | 79.3 | -43.8 |
Eiendomsmegler 1 Midt-Norge is the market leader in Trøndelag and in Møre and Romsdal and aims to continue to strengthen its market share. Operating income was NOK 83m in the first quarter of 2020 (83m), while operating expenses were NOK 83m (83m). EiendomsMegler 1 pre-tax profit in the first quarter of 2020, as in the first quarter of 2019, was approximately zero. 1,459 dwelling units were sold in the first quarter of 2020 compared with 1,447 in the same period of 2019. The company's market share as at 31 March 2020 was 36.9 per cent (37.0 per cent).
In collaboration with BN Bank, the company established in 2016 BN Bolig in which EiendomsMegler 1 Midt-Norge and BN Bank each hold a 50 per cent stake. BN Bolig's results did not measure up to expectations, and the company was sold in the fourth quarter of 2019.
SpareBank 1 Finans Midt-Norge delivered a pre-tax profit of NOK 46.7m in the first quarter of 2020 (36.9m). The company has shown good income growth with incomes totalling NOK 76.0m (68.8m). Moderate growth in costs has also been noted, and operating expenses in the first quarter of 2020 totalled NOK 24.4m (21.6m). Losses in the first quarter of 2020 came to NOK 4.9m (7.6m).
The company's business lines are mainly leasing to the SMB market and car loans to retail customers. The company manages leasing and car loan agreements worth a total of NOK 8.7bn (7.8bn), of which leasing agreements account for NOK 3.5bn (3.4bn) and car loans for NOK 5.2bn (4.4bn). The company also offers consumer loans, and at quarter-end this portfolio was worth NOK 216m (272m).
Good growth is noted, in particular for car loans where growth in the last 12 months was 19 per cent. The growth in leasing to the SMB market was 6 per cent. The corona crisis situation as from mid-March is expected to impact the company negatively through lower demand and sales. This will primarily affect the top line. It may, combined with somewhat higher defaults and losses, bring lower profitability.
The Samspar banks in SpareBank 1 held a 27.9 per cent stake in SpareBank 1 Finans Midt-Norge as at 31 December 2019, while Sparebanken Sogn og Fjordane held a stake of 7.5 per cent. SpareBank 1 SMN holds 61.2 per cent of the shares of SpareBank 1 Finans Midt-Norge.
SpareBank 1 Regnskapshuset SMN posted a pre-tax profit of NOK 27.3m (20.7m) in the first quarter of 2020, thereby achieving a profit growth of 32 per cent compared with the same period of 2019. Operating income increased to NOK 156.3m, a growth of 11.7 per cent comprising 2.5 per cent organic growth and 9.2 per cent growth resulting from acquisitions.
The strong profit growth is mainly ascribable to the following:
With 12 per cent growth from the first quarter of 2019, the company has expanded its market position to 25 per cent, an increase of more than 2 percentage points over the last 12 months. This is calculated as the company's proportion of the accounting industry's overall turnover in Trøndelag, Møre and Romsdal and Gudbrandsdal.
The company can thus point to significantly higher growth and profitability than the industry average. In addition, the company is well underway on creating new income flows beyond the traditional accounting industry.
The company is maintaining approximately the same activity level as prior to the coronavirus outbreak and no so significant long-term effects of the outbreak are expected. The company's ambitions of continued strong growth stand firm.
SpareBank 1 SMN Invest invests in shares, mainly in regional businesses. The company posted a negative pre-tax result of NOK 18.8m in the first quarter of 2020 (profit of 26.0m).
The company holds shares worth NOK 405m (447m) as at 31 March 2020.
Value changes and realisation of losses or gains on the company's overall shareholding account for a net loss of NOK 17.4m of the company's net total income.
SpareBank 1 Markets is a subsidiary of SpareBank 1 SMN which holds a 66.7 per cent stake. Other owners are SpareBank 1 Nord-Norge, SpareBank 1 SR Bank, SpareBank 1 Østlandet and the SamSpar banks. SpareBank 1 Markets is headquartered in Oslo and has offices in Trondheim, Ålesund and Stavanger. It has 151 full time equivalents.
SpareBank 1 Markets wholly owns SpareBank 1 Kapitalforvaltning. The company is at centre-stage of SpareBank 1 Markets' focus on asset management with aggregate total assets of NOK 17bn. The company has a staff of 17.
SpareBank 1 Markets' consolidated pre-tax result for the first quarter of 2020 was a loss of NOK 15.5m (profit of 2.2m). First-quarter incomes reflect effects of the coronavirus. Incomes from investment banking and own account trading have fallen, at the same time as incomes from secondary equity market trading and currency trading rose sharply. SpareBank 1 Kapitalforvaltning also shows lower commission earnings after the stock exchange fall. Overall income including SpareBank 1 Kapitalforvaltning came to NOK 105m (144m).
SpareBank 1 Markets is the leading capital market unit in SpareBank 1 SMN's market area. SpareBank 1 Markets' main focus is on clients in regard to which the group itself has a strong competitive position alone or in conjunction with the parent banks.
SpareBank 1 SMN holds 100 per cent of the shares of SpareBank 1 SMN Spire Finans. SpareBank 1 SMN Spire Finans caters specifically to small and medium-sized businesses that specialise in factoring. SpareBank 1 SMN Spire Finans is headquartered in Trondheim and has 19 employees. As at 31 March 2020 the company had loanable capital of NOK 76m, operating income of NOK 3.7m and a pre-tax result in 2019 of minus NOK 7.5m (minus 4.9m). SpareBank 1 SMN Spire Finans will operate as a subsidiary of SpareBank 1 SMN. SpareBank 1 SMN is increasing its focus on small and medium-sized businesses and will strengthen its offering in the factoring field through this acquisition.
The bank has a conservative liquidity strategy. The strategy attaches importance to maintaining liquidity reserves that ensure the bank's ability to survive 12 months of ordinary operation without need of fresh external funding.
At the turn of the quarter the bank has liquidity reserves of NOK 30bn and the funding needed for 26 months of ordinary operation without fresh external finance. In the first quarter of 2020 a loss of NOK 104m was recorded on the liquidity portfolio as a result of increased credit margins.
The government authorities require all credit institutions 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 is calculated at 182 per cent as at 31 March 2020 (180 per cent). The requirement is 100 per cent.
The Group's deposit-to-loan ratio at 31 March 2020, including SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, was 50 per cent (50 per cent).
The bank's funding sources and products are amply diversified. As at end-March 2020 the proportion of the bank's overall money market funding in excess of one year's maturity was 89 per cent (89 per cent).
SpareBank 1 Boligkreditt is the bank's most important funding source, and mortgages totalling NOK 39bn (36bn) had been sold as at 31 March 2020.
SpareBank 1 SMN has established and published a framework for green bond issuance. The framework is approved by the rating agency Sustainalytics.
The bank has a rating of A1 (stable outlook) with Moody's and a rating of A- (negative outlook) with Fitch Ratings.
As of 31 March 2020 the countercyclical buffer was lowered from 2.5 per cent to 1 per cent, bringing the CET1 requirement down to 11 per cent, including combined buffer requirements. Taking into account a Pillar 2 requirement of 1.9 per cent, the overall government requirement is 12.9 per cent. The add-on refers mainly to owner risk, market risk and credit concentration risk. The add-on is subject to review by Finanstilsynet (Norway's FSA) every second year.
SpareBank 1 SMN aims for a management buffer of about 1 per cent over and above the combined Pillar 1 and Pillar 2 requirements with a view to absorbing fluctuations in risk weighted assets and in the group's financial results. The Ministry of Finance has announced that the systemic risk buffer for IRB banks is to increase by 1.5 per cent to 4.5 per cent with effect from 31 December 2020. The CET1 ratio requirement will accordingly rise to 14.4 per cent at end-2020, and to 15.4 per cent including the management buffer. Any increase of the countercyclical buffer requires a notice period of at least 12 months. In the current situation the board of directors considers the likelihood of an increase of the countercyclical buffer to be low.
The CET1 ratio at 31 March 2020 was 16.3 per cent (14.8 per cent) – in keeping with the targeted level. The authorities' CET1 ratio requirement is 14.4 per cent.
The CET1 ratio has fallen by 0.8 per cent in the first quarter. The changed distribution of the net profit for 2019 has strengthened CET1 capital by 0.3 per cent. In the CET1 calculation, the entire net profit for the first quarter is included. Risk weighted assets have increased by 7 per cent as of 31 March 2020. A significant portion of the growth, about 4 per cent, relates to higher market values of derivative positions, along with an increase in capital needed to cover CVA risk on the same positions.
A leverage ratio of 6.9 per cent (7.4 per cent) shows that the bank is financially very solid. The bank will continue to focus on capital efficiency and effectiveness with a view to strengthening its profitability and financial soundness.
The book value of the equity certificate (EC) at 31 March 2020 was NOK 86.85 (83.86), and earnings per EC were NOK 1.26 (5.02).
The Price / Income ratio was 13.46 (4.35) and the Price / Book ratio was 0.78 (1.04).
At quarter-end the EC was priced at NOK 67.60, and dividend of NOK 5.00 per EC has been paid in 2020 for the year 2019.
The demerger of personal risk products as of 1 January 2020 has brought an increase in equity capital for SpareBank 1 Gruppen at consolidated level. The majority's (the SpareBank 1 banks and the Trade Union Confederation (LO)) share of this increase is about NOK 1.7bn. SpareBank 1 SMN's share of the increase (19.5 per cent) amounts to NOK 340m and has been taken to income in the first quarter of 2020.
SpareBank 1 Gruppen (parent company) has made a tax-free gain of NOK 937m as a result of this demerger. SpareBank 1 Gruppen's basis for dividend payments increases by the same margin as this gain. SpareBank 1 Gruppen's share of any future dividend of NOK 937m (19.5 per cent) amounts to NOK 183m.
Due to the circumstances related to the coronavirus situation, DNB chose not to exercise the option expiring on 31 March 2020 to increase its stake in Fremtind Forsikring from 35 per cent to 40 per cent.
DNB states that it is pleased with the collaboration and with the progress of Fremtind Forsikring, and is of a mind to expand its ownership interest in the longer term.
Growth prospects for the global economy are considerably impaired due to the coronavirus pandemic. The infection protection measures introduced in a number of countries have led to lockdown of community life and jobs and consequent reduction of economic activity levels. The uncertainties have brought a significant fall in stock market values, which affected the group's financial performance both directly and indirectly in the first quarter of 2020.
There is much uncertainty regarding the likely depth of the crisis and its duration, and macroeconomic estimates vary widely. Most observers expect a sharp economic setback in the current year before growth gradually resumes towards the end of 2020 and in 2021. Fear of new waves of infection, increased saving rates and changes in consumer patterns could contribute to damping the upturn. The IMF expects activity levels to fall by 6 per cent in the current year, and to recover by 4.5 per cent in 2021.
In addition to the impact of the infection protection measures, the substantial fall in oil prices has strengthened the negative effects for the Norwegian economy. Norges Bank has lowered its key policy rate to 0.25 per cent, and the krone exchange rate has depreciated markedly. Unemployment in Norway has risen to just over 10 per cent. When businesses in Norges Bank's regional network were interviewed in April, more than one third of them reported impaired growth prospects as a result of the coronavirus outbreak, the measures taken to curb the spread of the disease and the oil price fall. While the damaging economic effects of the virus outbreak and the infection protection measures are counteracted by very wide-ranging support arrangements and expansionary monetary policies, they will be very large nonetheless. Statistics Norway expects Norway's very strong financial position to provide the government with unique opportunities to put in place compensatory measures. That will help to dampen the negative impacts.
The regional economy is also heavily marked by the negative effects of the infection protection measures taken. Unemployment in Trøndelag and in Møre and Romsdal stands at just over 9 per cent, and house prices fell in the month of March. SpareBank 1 SMN's corporate expectations barometer as of March 2020 shows a steep change of sentiment throughout Central Norway with 75 per cent of business leaders fearing negative consequences of the corona crisis.
The marked decline in activity levels has also led to increased uncertainty and impaired profitability among portions of SMN's clients. The bank's advisers are in close dialogue with clients, and have surveyed the
volume of exposed businesses. Instruments employed are primarily mortgage payment holidays and provision of loans backed by state guarantee. SpareBank 1 SMN has a robust loan portfolio of which 69 per cent consists of loans to retail borrowers. About NOK 8bn of the loans to corporates relate to industries that are hard hit by the infection protection measures and the low oil price.
The corona crisis and low oil price creates considerable uncertainty as regards developments ahead. The group assumes and expects that activity levels will gradually normalise over the course of the year. The impact of the infection protection measures, both in Norway and in the world at large, will nonetheless have negative consequences for the Norwegian economy in the years immediately ahead. The group expects unemployment to remain at a higher level going forward. Combined with an expectation of lower wage growth, and the risk of negative growth in real wages, the bank considers house prices ahead to be a matter of increased uncertainty. This could affect credit demand. The bank monitors the situation in the credit markets carefully and is able to adapt the business to different scenarios.
The group's write-down assessments incorporate a gradual normalisation in most sectors, but a somewhat weaker trend in the baseline scenario than under the assumptions employed at the end of the fourth quarter of 2019. Good compensation schemes from the authorities will dampen the consequenses. The situation in the offshore industry is negatively impacted by low oil prices and continues to call for a separate loss assessment for that industry.
The board of directors recommended reducing the payout ratio from 53.4 per cent to 41.2 per cent when the annual profit for 2019 is distributed, in light of the uncertain macroeconomic situation. The changed distribution reflects a good balance between the need for stability and predictability for the bank's shareholders and investors, and the corporate social responsibility that the group has towards its customers and local communities.
At the end of the first quarter of 2020 the group's CET1 ratio stands at 16.3 per cent, compared with the regulatory requirement of 12.9 per cent. This represents a substantial buffer. The Ministry of Finance reduced the countercyclical buffer from 2.5 per cent 1 per cent as from 13 March 2020.
The group's funding situation is good, with an LCR of 182 per cent and an NSFR of 123 per cent. The bank has ample access to funding via SpareBank 1 Boligkreditt, and will base its choice of funding source on funding costs.
The group's capital situation, and its good liquidity situation, mean that the bank is well prepared to help viable customers through the crisis, and SpareBank 1 SMN is well placed to strengthen its market position and create financial value for its shareholders and investors. A profitability enhancement project has been established under the name "One SMN" which is designed to expand synergies between the groups' business lines, digitalisation, process efficiencies and general cost reductions.
The board of directors considers the level of uncertainty to be higher than at the end of 2019. The board expects 2020 to be a demanding year bringing increased credit losses and low demand for credit. Further, lower earnings are expected in parts of the group along with lower operating expenses due to reduced activity levels and measures prompted by "One SMN".
The group is conscious of its central role as an important social actor in the region, and accordingly chooses to devote large parts of its social dividend to support the voluntary sector within the region.
1st Quarter 2019
Kjell Bjordal Bård Benum Christian Stav (chair) (deputy chair)
Mette Kamsvåg Morten Loktu Janne Thyø Thomsen
Tonje Eskeland Foss Inge Lindseth Christina Straub
(employee rep.) (employee rep.)
Jan-Frode Janson (Group CEO)
| Parent bank | Group | ||||||
|---|---|---|---|---|---|---|---|
| Jan-March | Jan-March | ||||||
| 2019 | 2019 | 2020 (NOKm) | Note | 2020 | 2019 | 2019 | |
| 3,732 | 867 | 1,002 Interest income effective interest method | 1,102 | 961 | 4,121 | ||
| 509 | 115 | 149 Other interest income | 148 | 114 | 505 | ||
| 1,916 | 421 | 533 Interest expenses | 540 | 426 | 1,939 | ||
| 2,325 | 562 | 618 Net interest | 10 | 710 | 649 | 2,687 | |
| 1,127 | 262 | 286 Commission income | 349 | 329 | 1,437 | ||
| 95 | 18 | 25 Commission expenses | 50 | 40 | 193 | ||
| 30 | 7 | 9 Other operating income | 271 | 262 | 1,046 | ||
| 1,061 | 250 | 270 Commission income and other income | 570 | 551 | 2,290 | ||
| 884 | 335 | 76 Dividends | 8 | 2 | 15 | ||
| - | - | - Income from investment in related companies | 3 | 217 | 555 | 879 | |
| 54 | 88 | -139 Net return on financial investments | 3 | -124 | 169 | 307 | |
| 937 | 423 | -62 Net return on financial investments | 101 | 727 | 1,201 | ||
| 4,324 | 1,235 | 826 Total income | 1,381 | 1,926 | 6,178 | ||
| 614 | 162 | 176 Staff costs | 443 | 447 | 1,699 | ||
| 750 | 171 | 191 Other operating expenses | 273 | 257 | 1,098 | ||
| 1,364 | 333 | 367 Total operating expenses | 11 | 716 | 704 | 2,797 | |
| 2,960 | 902 | 459 Result before losses | 665 | 1,223 | 3,380 | ||
| 245 | 60 | 302 Loss on loans, guarantees etc. | 6,7 | 308 | 67 | 299 | |
| 2,715 | 842 | 157 Result before tax | 3 | 357 | 1,155 | 3,081 | |
| 452 | 96 | 51 Tax charge | 67 | 109 | 518 | ||
| - | - | - Result investment held for sale, after tax | 2, 3 | 0 | 0 | 0 | |
| 2,263 | 747 | 106 Net profit | 290 | 1,046 | 2,563 | ||
| 47 | 19 | 23 Attributable to additional Tier 1 Capital holders | 24 | 19 | 49 | ||
| 1,417 | 465 | 53 Attributable to Equity capital certificate holders | 162 | 650 | 1,572 | ||
| 799 | 262 | 30 Attributable to the saving bank reserve | 91 | 367 | 886 | ||
| Attributable to non-controlling interests | 12 | 10 | 56 | ||||
| 2,263 | 747 | 106 Net profit | 290 | 1,046 | 2,563 | ||
| Profit/diluted profit per ECC | 17 | 1.26 | 5.02 | 12.14 |
| Parent bank | Group | ||||
|---|---|---|---|---|---|
| Jan-March | Jan-March | ||||
| 2019 | 2019 | 2020 (NOKm) | 2020 | 2019 | 2019 |
| 2,263 | 747 | 106 Net profit | 290 | 1,046 | 2,563 |
| Items that will not be reclassified to profit/loss | |||||
| -33 | - | -40 Actuarial gains and losses pensions | -40 | - | -33 |
| 8 | - | 10 Tax | 10 | - | 8 |
| - | - | - Share of other comprehensive income of associates and joint venture | 3 | 1 | 21 |
| -25 | - | -30 Total | -26 | 1 | -4 |
| Items that will be reclassified to profit/loss | |||||
| - | - | - Fair value change on financial assets through other comprehensive income | - | - | - |
| 6 | 0 | 3 Value changes on loans measured at fair value | 3 | 0 | 6 |
| - | - | - Share of other comprehensive income of associates and joint venture | 8 | -23 | -12 |
| - | - | - Tax | - | - | - |
| 6 | 0 | 3 Total | 11 | -23 | -5 |
| -18 | 0 | -27 Net other comprehensive income | -16 | -22 | -9 |
| 2,245 | 747 | 79 Total other comprehensive income | 274 | 1,024 | 2,554 |
| 47 | 19 | 23 Attributable to additional Tier 1 Capital holders | 24 | 19 | 49 |
| 1,405 | 466 | 36 Attributable to Equity capital certificate holders | 152 | 636 | 1,566 |
| 792 | 262 | 20 Attributable to the saving bank reserve | 86 | 359 | 883 |
| Attributable to non-controlling interests | 12 | 10 | 56 | ||
| 2,245 | 747 | 79 Total other comprehensive Income | 274 | 1,024 | 2,554 |
| Parent bank | Group | ||||||
|---|---|---|---|---|---|---|---|
| 31 Dec | 31 March | 31 March | 31 March | 31 March | 31 Dec | ||
| 2019 | 2019 | 2020 (NOKm) | Note | 2020 | 2019 | 2019 | |
| 761 | 647 | 5,848 Cash and receivables from central banks | 5,848 | 647 | 761 | ||
| 9,181 | 14,713 | 9,408 Deposits with and loans to credit institutions | 2,239 | 8,387 | 2,110 | ||
| 117,033 | 111,949 | 117,784 Net loans to and receivables from customers | 5 | 126,128 | 119,285 | 125,279 | |
| 23,195 | 20,885 | 27,473 Fixed-income CDs and bonds | 15 | 27,395 | 20,806 | 23,115 | |
| 2,872 | 3,008 | 11,379 Derivatives | 15 | 11,757 | 3,181 | 2,972 | |
| 355 | 359 | 358 Shares, units and other equity interests | 15 | 1,437 | 2,015 | 2,953 | |
| 4,526 | 4,399 | 4,525 Investment in related companies | 6,652 | 6,386 | 6,468 | ||
| 2,309 | 2,630 | 2,362 Investment in group companies | - | - | - | ||
| 82 | 82 | 82 Investment held for sale | 2 | 40 | 42 | 40 | |
| 512 | 525 | 507 Intangible assets | 876 | 846 | 872 | ||
| 1,241 | 1,647 | 1,654 Other assets | 12 | 2,810 | 3,047 | 2,092 | |
| 162,066 | 160,844 | 181,379 Total assets | 185,182 | 164,641 | 166,662 | ||
| 7,585 | 10,667 | 12,740 Deposits from credit institutions | 13,150 | 11,601 | 8,853 | ||
| 86,870 | 82,195 | 89,007 Deposits from and debt to customers | 9 | 88,152 | 81,111 | 85,917 | |
| 43,014 | 43,172 | 49,303 Debt created by issue of securities | 14 | 49,303 | 43,172 | 43,014 | |
| 3,159 | 3,069 | 7,932 Derivatives | 15 | 8,004 | 3,178 | 3,528 | |
| 1,570 | 3,408 | 3,503 Other liabilities | 13 | 4,900 | 4,632 | 2,841 | |
| - | - | - Investment held for sale | 2 | 1 | 0 | 0 | |
| 2,047 | 2,229 | 2,026 Subordinated loan capital | 14 | 2,071 | 2,273 | 2,090 | |
| 144,245 | 144,741 | 164,513 Total liabilities | 165,582 | 145,968 | 146,243 | ||
| 2,597 | 2,597 | 2,597 Equity capital certificates | 2,597 | 2,597 | 2,597 | ||
| -0 | -0 | -0 Own holding of ECCs | -12 | -9 | -11 | ||
| 895 | 895 | 895 Premium fund | 895 | 895 | 895 | ||
| 6,144 | 5,602 | 6,338 Dividend equalisation fund | 6,311 | 5,580 | 6,123 | ||
| 840 | - | - Recommended dividends | - | - | 840 | ||
| 474 | - | - Provision for gifts | - | - | 474 | ||
| 5,432 | 5,126 | 5,541 Ownerless capital | 5,541 | 5,126 | 5,432 | ||
| 189 | 155 | 189 Unrealised gains reserve | 189 | 155 | 189 | ||
| - | 0 | -27 Other equity capital | 1,760 | 1,595 | 1,827 | ||
| 1,250 | 981 | 1,227 Additional Tier 1 Capital | 1,268 | 1,023 | 1,293 | ||
| - | 747 | 106 Profit for the period | 290 | 1,046 | - | ||
| Non-controlling interests | 760 | 665 | 761 | ||||
| 17,822 | 16,103 | 16,866 Total equity capital | 19,600 | 18,673 | 20,420 | ||
| 162,066 | 160,844 | 181,379 Total liabilities and equity | 185,182 | 164,641 | 166,662 |
| Parent bank | Group | ||||
|---|---|---|---|---|---|
| Jan-March | Jan-March | ||||
| 2019 | 2019 | 2020 (NOKm) | 2020 | 2019 | 2019 |
| 2,263 | 747 | 106 Net profit | 290 | 1,046 | 2,563 |
| 109 | 29 | 109 Depreciations and write-downs on fixed assets | 172 | 46 | 172 |
| 245 | 60 | 302 Losses on loans and guarantees | 308 | 67 | 299 |
| 2,617 | 836 | 517 Net cash increase from ordinary operations | 770 | 1,160 | 3,035 |
| 869 | 348 | -8,936 Decrease/(increase) other receivables | -9,527 | 179 | 1,235 |
| -96 | 1,653 | 6,707 Increase/(decrease) short term debt | 6,537 | 2,158 | 716 |
| -4,613 | 650 | -1,051 Decrease/(increase) loans to customers | -1,155 | 376 | -5,843 |
| 1,998 | -3,534 | -227 Decrease/(increase) loans credit institutions | -129 | -3,313 | 2,964 |
| 5,422 | 747 | 2,137 Increase/(decrease) deposits to customers | 2,235 | 496 | 5,302 |
| -960 | 2,122 | 5,155 Increase/(decrease) debt to credit institutions | 4,297 | 2,387 | -361 |
| -2,766 | -457 | -4,278 Increase/(decrease) in short term investments | -4,281 | -458 | -2,766 |
| 2,471 | 2,365 | 24 A) Net cash flow from operations | -1,252 | 2,985 | 4,280 |
| -66 | -378 | 270 Increase in tangible fixed assets | 414 | -641 | -120 |
| 84 | -110 | -52 Paid-up capital, associated companies | -229 | -271 | -312 |
| 36 | 32 | -2 Net investments in long-term shares and partnerships | 1,516 | -143 | -1,080 |
| 54 | -456 | 216 B) Net cash flow from investments | 1,701 | -1,055 | -1,512 |
| -177 | 5 | -21 Increase/(decrease) in subordinated loan capital | -19 | 5 | -177 |
| 1 | -0 | -0 Increase/(decrease) in equity | -2 | -20 | -33 |
| -661 | -661 | -647 Dividend cleared | -647 | -661 | -661 |
| -373 | -373 | -364 Disbursed from gift fund | -364 | -373 | -373 |
| 203 | -19 | -23 Increase/(decrease) in Additional Tier 1 capital | -24 | -19 | 201 |
| -1,639 | -1,097 | 5,902 Increase/(decrease) in other long term loans | 5,694 | -1,097 | -1,846 |
| -2,646 | -2,145 | 4,847 C) Net cash flow from financial activities | 4,638 | -2,166 | -2,890 |
| -121 | -236 | 5,086 A) + B) + C) Net changes in cash and cash equivalents | 5,086 | -236 | -121 |
| 883 | 883 | 761 Cash and cash equivalents at 1.1 | 761 | 883 | 883 |
| 761 | 647 | 5,848 Cash and cash equivalents at end of quarter | 5,848 | 647 | 761 |
| -121 | -236 | 5,086 Net changes in cash and cash equivalents | 5,086 | -236 | -121 |
| Parent Bank | Issued equity | Earned equity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (NOKm) | EC capital |
Premium fund |
Ownerless capital |
Equalisation fund |
Dividend and gifts |
Unrealised gains reserve |
Other equity |
Additional Tier 1 Capital |
Total equity |
| Equity at 1 January 2019 Net profit |
2,597 - |
895 - |
5,126 - |
5,602 - |
1,034 - |
155 - |
- - |
1,000 - |
16,409 - |
| Other comprehensive income | |||||||||
| Financial assets through OCI | - | - | - | - | - | - | -25 | - | -25 |
| Actuarial gains (losses), pensions |
- | - | - | - | - | - | -18 | - | -18 |
| Other comprehensive income | - | - | 313 | 555 | 1,314 | 34 | -18 | 47 | 2,245 |
| Total other comprehensive | |||||||||
| income | - | - | - | - | - | - | - | - | - |
| Transactions with owners | |||||||||
| Dividend declared for 2017 | - | - | - | - | -373 | - | - | - | -373 |
| To be disbursed from gift fund | - | - | - | - | - | - | - | 250 | 250 |
| Additional Tier 1 Capital | - | - | - | - | - | - | - | -47 | -47 |
| Buyback Additional Tier 1 Capital issued |
-0 | - | - | -0 | - | - | - | - | -0 |
| Interest payments additional Tier 1 capital |
- | - | -7 | -12 | - | - | 18 | - | -1 |
| Purchase and sale of own ECCs | -0 | - | -7 | -12 | -1,034 | - | 18 | 203 | -832 |
| Direct recognitions in equity | 2,597 | 895 | 5,432 | 6,144 | 1,314 | 189 | - | 1,250 | 17,822 |
| Total transactions with owners | - | - | - | - | - | - | - | - | - |
| Equity at 31 December 2019 | 2,597 | 895 | 5,432 | 6,144 | 1,314 | 189 | - | 1,250 | 17,822 |
| Issued equity | Earned equity | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (NOKm) | EC capital |
Premium fund |
Ownerless capital |
Equalisation fund |
Dividend and gifts |
Unrealised gains reserve |
Other equity |
Additional Tier 1 Capital |
Total equity |
| Equity at 1 January 2020 | 2,597 | 895 | 5,432 | 6,144 | 1,314 | 189 | - | 1,250 | 17,822 |
| Net profit | - | - | - | - | - | - | 106 | - | 106 |
| Other comprehensive income | |||||||||
| Value changes on loans | |||||||||
| measured at fair value | - | - | - | - | - | - | 3 | - | 3 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | -30 | - | -30 |
| Other comprehensive income | - | - | - | - | - | - | -27 | - | -27 |
| Total other comprehensive | |||||||||
| income | - | - | - | - | - | 79 | - | 79 | |
| Transactions with owners | |||||||||
| Dividend declared for 2019 | - | - | - | 194 | -840 | - | - | - | -647 |
| To be disbursed from gift fund | - | - | 109 | - | -474 | - | - | - | -364 |
| Additional Tier 1 Capital | - | - | - | - | - | - | - | - | - |
| Interest payments additional Tier | |||||||||
| 1 capital | - | - | - | - | - | - | - | -23 | -23 |
| Purchase and sale of own ECCs | -0 | - | - | -0 | - | - | - | - | -0 |
| Direct recognitions in equity | - | - | - | - | - | - | - | ||
| Total transactions with owners | -0 | - | 109 | 194 | -1,314 | - | - | -23 | -1,034 |
| Equity at 31 March 2020 | 2,597 | 895 | 5,541 | 6,338 | - | 189 | 79 | 1,227 | 16,866 |
| Attributable to parent company equity holders | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Group | Issued equity | Earned equity | ||||||||
| Unrealised | Additional | |||||||||
| EC | Premium | Ownerless | Equalisation | Dividend | gains | Other | Tier 1 | Non-controlling | Total | |
| (NOKm) | capital | fund | capital | fund | and gifts | reserve | equity | Capital | interests | equity |
| Equity at 1 | ||||||||||
| January 2019 | 2,592 | 895 | 5,126 | 5,594 | 1,034 | 155 | 1,608 | 1,043 | 637 18,686 | |
| Net profit | - | - | 313 | 555 | 1,314 | 34 | 242 | 49 | 56 | 2,563 |
| Other | ||||||||||
| comprehensive | ||||||||||
| income | ||||||||||
| Share of other | ||||||||||
| comprehensive income of |
||||||||||
| associates and | ||||||||||
| joint ventures | - | - | - | - | - | - | 9 | - | - | 9 |
| Value changes on | ||||||||||
| loans measured at | ||||||||||
| fair value | - | - | - | - | - | - | 6 | - | - | 6 |
| Actuarial gains | ||||||||||
| (losses), pensions | - | - | - | - | - | - | -25 | - | - | -25 |
| Other | ||||||||||
| comprehensive | ||||||||||
| income | - | - | - | - | - | - | -9 | - | - | -9 |
| Total other | ||||||||||
| comprehensive | ||||||||||
| income | - | - | 313 | 555 | 1,314 | 34 | 232 | 49 | 56 | 2,554 |
| Transactions | ||||||||||
| with owners | ||||||||||
| Dividend declared | ||||||||||
| for 2018 | - | - | - | - | -661 | - | - | - | - | -661 |
| To be disbursed | ||||||||||
| from gift fund | - | - | - | - | -373 | - | - | - | - | -373 |
| Additional Tier 1 | ||||||||||
| Capital issued | - | - | - | - | - | - | - | 250 | - | 250 |
| Buyback | ||||||||||
| Additional Tier 1 | ||||||||||
| Capital issued | - | - | - | - | - | - | - | - | - | - |
| Interest payments | ||||||||||
| additional Tier 1 | ||||||||||
| capital | - | - | - | - | - | - | - | -49 | - | -49 |
| Purchase and sale of own ECCs |
-0 | - | - | -0 | - | - | - | - | - | -0 |
| Own ECC held by SB1 Markets*) |
-6 | - | - | -14 | - | - | -12 | - | - | -33 |
| Direct | ||||||||||
| recognitions in | ||||||||||
| equity | - | - | -7 | -12 | - | - | 22 | - | - | 3 |
| Share of other | ||||||||||
| transactions from | ||||||||||
| associates and | ||||||||||
| joint ventures | - | - | - | - | - | - | -24 | - | - | -24 |
| Change in | ||||||||||
| non-controlling | ||||||||||
| interests | - | - | - | - | - | - | - | - | 67 | 67 |
| Total | ||||||||||
| transactions with | ||||||||||
| owners | -6 | - | -7 | -27 | -1,034 | - | -14 | 201 | 67 | -820 |
| Equity at 31 | ||||||||||
| December 2019 | 2,586 | 895 | 5,432 | 6,123 | 1,314 | 189 | 1,827 | 1,293 | 761 20,420 |
*) Holding of own equity certificates as part of SpareBank 1 Markets' trading activity
| Attributable to parent company equity holders | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Issued equity | Earned equity | |||||||||
| (NOKm) | EC capital |
Premium fund |
Ownerless capital |
Equalisation fund |
Dividend and gifts |
Unrealised gains reserve |
Other equity |
Additional Tier 1 Capital |
Non-controlling interests |
Total equity |
| Equity at 1 | ||||||||||
| January 2020 | 2,586 | 895 | 5,432 | 6,123 | 1,314 | 189 | 1,827 | 1,293 | 761 20,420 | |
| Net profit Other comprehensive income |
- | - | - | - | - | - | 278 | - | 12 | 290 |
| Share of other comprehensive income of |
||||||||||
| associates and | ||||||||||
| joint ventures | - | - | - | - | - | - | 11 | - | - | 11 |
| Value changes on loans measured at fair value |
- | - | - | - | - | - | 3 | - | - | 3 |
| Actuarial gains | ||||||||||
| (losses), pensions | - | - | - | - | - | - | -30 | - | - | -30 |
| Other | ||||||||||
| comprehensive income |
- | - | - | - | - | - | -16 | - | - | -16 |
| Total other | ||||||||||
| comprehensive income |
- | - | - | - | - | - | 262 | - | 12 | 274 |
| Transactions with owners Dividend declared |
||||||||||
| for 2019 | - | - | - | 194 | -840 | - | - | - | - | -647 |
| To be disbursed from gift fund |
- | - | 109 | - | -474 | - | - | - | - | -364 |
| Additional Tier 1 capital issued |
- | - | - | - | - | - | - | - | - | - |
| Buyback additional Tier 1 Capital issued |
- | - | - | - | - | - | - | - | - | - |
| Interest payments additional Tier 1 |
||||||||||
| capital Purchase and |
- | - | - | - | - | - | - | -24 | - | -24 |
| sale of own ECCs Own ECC held by |
-0 | - | - | -0 | - | - | - | - | - | -0 |
| SB1 Markets*) Direct |
-2 | - | - | -6 | - | - | 5 | - | - | -2 |
| recognitions in equity Share of other |
- | - | - | - | -4 | - | - | -4 | ||
| transactions from associates and joint ventures |
- | - | - | - | - | - | -40 | - | - | -40 |
| Change in non-controlling |
||||||||||
| interests | - | - | - | - | - | - | - | - | -13 | -13 |
| Total | ||||||||||
| transactions with owners |
-2 | - | 109 | 188 | -1,314 | - | -39 | -24 | -13 | -1,094 |
| Equity at 31 March 2020 |
2,584 | 895 | 5,541 | 6,311 | - | 189 | 2,050 | 1,268 | 760 19,600 |
*) Holding of own equity certificates as part of SpareBank 1 Markets' trading activity
| Note 1 - Accounting principles 28 | |
|---|---|
| Note 2 - Critical estimates and assessment concerning the use of accounting principles 29 | |
| Note 3 - Account by business line 31 | |
| Note 4 - Capital adequacy 34 | |
| Note 5 - Distribution of loans by sector/industry 36 | |
| Note 6 - Losses on loans and guarantees 37 | |
| Note 7 - Losses 38 | |
| Note 8 - Gross Loans 41 | |
| Note 9 - Distribution of customer deposits by sector/industry 43 | |
| Note 10 - Net interest income 44 | |
| Note 11 - Operating expenses 45 | |
| Note 12 - Other assets 46 | |
| Note 13 - Other liabilities 47 | |
| Note 14 - Debt created by issue of securities and subordinated debt 48 | |
| Note 15 - Measurement of fair value of financial instruments 49 | |
| Note 16 - Liquidity risk 52 | |
| Note 17 - Earnings per EC 53 |
SpareBank 1 SMN prepares and presents its quarterly accounts in compliance with the Stock Exchange Regulations, Stock Exchange Rules and International Financial Reporting Standards (IFRS) approved by EU, including IAS 34, Interim Financial Reporting. The quarterly accounts do not include all the information required in a complete set of annual financial statements and should be read in conjunction with the annual accounts for 2019. The Group has in this quarterly report used the same accounting principles and calculation methods as in the latest annual report and accounts.
The Board of Directors of SpareBank 1 SMN has decided to change its distribution of profit for 2019 based on the economic outlook, reducing the payout ratio from 53.5% to 41.2%. New dividend is NOK 5.00 per equity certificate, down from NOK 6.50 in the annual accounts for 2019. The annual accounts for 2019 were not changed to reflect this. Comparable figures for 2019 has not been restated in the quarterly report, but the effect on the solvency of the changed allocation is shown in note 4
When it prepares the consolidated accounts the management team makes estimates, discretionary assessments and assumptions which influence the application of accounting principles. This accordingly affects recognised amounts for assets, liabilities, revenues and expenses. Last year's annual accounts give a closer explanation of significant estimates and assumptions in Note 3 Critical estimates and assessments concerning the use of accounting principles.
Sparebank1 SMN Group has one pension arrangements; defined contribution plan. For a further description of the pension scheme, see note 25 in the 2019 annual report.
The group's pension liabilities are accounted for under IAS 19R. Estimate variances are therefore directly reflected in equity capital and are presented under other comprehensive income. It was decided to terminate the defined benefit scheme at a board meeting on 21 October 2016. Employees on this scheme transferred to the defined contribution scheme from 1 January 2017, and received a paid-up policy showing rights accumulated under the defined benefit scheme. Paid-up policies are managed by the pension fund, which has been 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.
A new calculation of the Group's pension liabilities has been carried out as per 31 March 2020:
| Actuarial assumptions | 31 Dec 2019 | 1 January 2019 | 31 March 2020 | |
|---|---|---|---|---|
| Discount rate | 2,30 % | 2,30 % | 1,70 % | |
| Expected rate of return on plan assets | 2,30 % | 2,30 % | 1,70 % | |
| Expected future wage and salary growth | 2,00 % | 2,00 % | 2,00 % | |
| Expected adjustment on basic amount (G) | 2,00 % | 2,00 % | 2,00 % | |
| Expected increase in current pension | 0,00 % | 0,00 % | 0,00 % | |
| Employers contribution | 19,10 % | 19,10 % | 19,10 % | |
| Demographic assumptions: | ||||
| Mortality base table | K2013 BE | |||
| Disability | IR73 | |||
| Voluntary exit | 2% to 50 years, 0% after 50 years | |||
| Movement in net pension liability in the balance sheet Group (NOKm) | Funded | Unfunded | Total | |
| Net pension liability in the balance sheet 1.1 | -148 | 16 | -132 | |
| OCI accounting 1 Jan | - | - | - | |
| OCI accounting 31 December | 40 | 0 | 40 | |
| Net defined-benefit costs in profit and loss account | -1 | 0 | -1 | |
| Paid in pension premium, defined-benefit schemes | - | - | - | |
| Paid in pension premium, defined-benefit plan | - | -1 | -1 | |
| Net pension liability in the balance sheet 31 March 2020 | -109 | 16 | -94 | |
| Net pension liability in the balance sheet Group (NOKm) | 31 March 2019 | 31 Dec 2019 |
|---|---|---|
| Net present value of pension liabilities in funded schemes | 659 | 608 |
| Estimated value of pension assets | -756 | -743 |
| Net pension liability in the balance sheet before employer's contribution | -96 | -135 |
| Employers contribution | 2 | 3 |
| Net pension liability in the balance sheet | -94 | -132 |
| Pension cost Group (NOKm) | 31 March 2019 | 31 Dec 2019 |
|---|---|---|
| Present value of pension accumulated in the year | 0 | 0 |
| Net interest income | -1 | -4 |
| Net pension cost related to defined plans, incl unfunded pension commitment | -1 | -4 |
| Empolyer's contribution subject to accrual accounting | 0 | 0 |
| Cost of defined contribution pension and early retirement pension scheme | 26 | 108 |
| Total pension cost for the period | 25 | 105 |
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.
| 2020 Q1 (NOKm) | Assets | Liabilities | Revenue | Expenses | Profit | Ownership |
|---|---|---|---|---|---|---|
| Mavi XV AS Group | 40 | 1 | 1 | 1 | - | 100 % |
| Total Held for sale | 40 | 1 | 1 | 1 | - |
For a detailed description of the Bank's model for expected credit losses, refer to note 2 and 3 in the annual accounts for 2019.
In the first quarter 2020 the input in the credit loss model have been changed a result of changed expectations due to the corona situation.The crisis and the significant increase in macroeconomic uncertainty have made the assessments extra demanding. The crisis is in early stages and the consequences for the bank's customers and the industries the bank are exposed to are difficult to estimate. The regulators have emphasized the importance of focusing on the expected long-term effects of the crisis and this has also been the bank's focus.
The bank have chosen to leave the scenario weights unchanged in the assessments this quarter, but have changed the assumptions for the base scenario in a negative direction. The reason is that the probability of the defined downside scenarios occurring is considered to be virtually unchanged, while there is little doubt that the most likely scenario is weaker compared to the previous quarter.
The development in the base scenario is prepared using adjustment factors where the development in the business cycle is projected by assumptions about how much the probability of default (PD) or loss of default (LGD) will increase or decrease compared to the base scenario in a five-year period. We expect increased losses related to debtors that have a demanding starting point before the crisis typically debtors in stage 2. The bank has therefore chosen to increase the trajectories for PD and LGD as well as reduce expected repayments in the base scenario, especially from year 2 onwards, since this will affect expected losses mainly for debtors in stage 2. To adjust for migration into stage 2, PD and LGD estimates are also increased in the first year. No first year repayments are assumed for all portfolios in all scenarios.The effect of changes in input assumptions is shown as "Effect of changed assumptions in ECL model" in note 7. The effect is NOK 80 million.
If the downside scenario's probability were doubled at the expense of the baseline scenario at the end of march 2020, this would have entailed an increase in loss provisions of NOK 80 million for the parent bank and NOK 103 million for the group. A corresponding doubling of the upside scenario's probability at the expense of the baseline scenario would have entailed a reduction in loss provisions of NOK 28 million for the parent bank and NOK 30 million for the group.
| (mill. kr) | ||||
|---|---|---|---|---|
| Portfolio | Increase in accrual for losses when probability for worst case is double |
Increase in accrual for losses when probability for worst case is 100 percent |
Reduction in accrual for losses when probability for best case is double |
Reduction in accrual for losses when probability for best case is 100 percent |
| Retail Market | 24 | 224 | -7 | -87 |
| Corporate excl. Agriculture |
||||
| and offshore | 28 | 260 | -9 | -107 |
| Agriculture | 5 | 33 | -2 | -20 |
| Offshore | 22 | 138 | -11 | -84 |
| Total Parent Bank SpareBank 1 |
80 | 655 | -28 | -297 |
| Finans Midt-Norge |
23 | 88 | -1 | -9 |
| Total Group | 103 | 743 | -30 | -306 |
For the subsidiaries the figures refer to the respective company accounts, while for 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.
| SB1 | SB1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SB1 | EM | Finans | Regnskapshuset | SB1 | BN | |||||
| Profit and loss account (NOKm) | RM | CM | Markets | 1 | MN | SMN | Gruppen | Bank Uncollated | Total | |
| Net interest | 301 | 271 | -2 | -0 | 82 | 0 | - | - | 59 | 710 |
| Interest from allocated capital | 53 | 38 | - | - | - | - | - | - | -91 | - |
| Total interest income | 354 | 308 | -2 | -0 | 82 | 0 | - | - | -32 | 710 |
| Commission income and other | ||||||||||
| income | 198 | 54 | 60 | 83 | 19 | 156 | - | - | -1 | 570 |
| Net return on financial | ||||||||||
| investments **) | -2 | 10 | 45 | - | - | - | -115 | 23 | 140 | 101 |
| Total income | 550 | 373 | 103 | 83 | 101 | 156 | -115 | 23 | 107 | 1,381 |
| Total operating expenses | 246 | 113 | 118 | 83 | 49 | 129 | - | - | -22 | 716 |
| Ordinary operating profit | 304 | 261 | -15 | -0 | 52 | 27 | -115 | 23 | 130 | 665 |
| Loss on loans, guarantees etc. | 44 | 258 | - | - | 5 | - | - | - | 1 | 308 |
| Result before tax including held | ||||||||||
| for sale | 260 | 3 | -15 | -0 | 47 | 27 | -115 | 23 | 128 | 357 |
| Post-tax return on equity*) | 9.5 % | 0.2 % | 5.7 % | |||||||
| Balance | ||||||||||
| Loans and advances to customers 121,269 41,174 | - | - | 8,957 | - | - | - | -629 170,771 | |||
| Adv. of this sold to SB1 | ||||||||||
| Boligkreditt and SB1 | ||||||||||
| Næringskreditt | -42,254 | -1,245 | - | - | - | - | - | - | -0 | -43,498 |
| Allowance for credit losses | -157 | -930 | - | - | -52 | - | - | - | -6 | -1,144 |
| Other assets | 197 | 7,932 | 2,636 301 | 23 | 551 | 1,834 1,449 | 44,132 | 59,054 | ||
| Total assets | 79,055 46,931 | 2,636 301 | 8,928 | 551 | 1,834 1,449 | 43,497 185,182 | ||||
| Deposits to customers | 43,961 42,710 | - | - | - | - | - | - | 1,482 | 88,152 | |
| Other liabilities and equity | 35,095 | 4,222 | 2,636 301 | 8,928 | 551 | 1,834 1,449 | 42,015 | 97,030 | ||
| Total liabilites and equity | 79,055 46,931 | 2,636 301 | 8,928 | 551 | 1,834 1,449 | 43,497 185,182 |
| SB1 | SB1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SB1 | EM | Finans | Regnskaps | SB1 | BN | |||||
| Profit and loss account (NOKm) | RM | CM | Markets | 1 | MN | huset SMN | Gruppen | Bank Uncollated | Total | |
| Net interest | 278 | 247 | -4 | -0 | 75 | -0 | - | - | 52 | 649 |
| Interest from allocated capital | 52 | 36 | - | - | - | - | - | - | -88 | - |
| Total interest income | 330 | 284 | -4 | -0 | 75 | -0 | - | - | -36 | 649 |
| Commission income and other | ||||||||||
| income | 188 | 55 | 124 115 | 16 | 140 | - | - | -85 | 551 | |
| Net return on financial investments | ||||||||||
| **) | 0 | 2 | 21 | - | - | - | 38 | 23 | 643 | 727 |
| Total income | 518 | 340 | 140 114 | 92 | 140 | 38 | 23 | 522 | 1,926 | |
| Total operating expenses | 217 | 104 | 138 123 | 44 | 119 | - | - | -41 | 704 | |
| Ordinary operating profit | 301 | 236 | 2 | -9 | 47 | 21 | 38 | 23 | 564 | 1,223 |
| Loss on loans, guarantees etc. | 6 | 53 | - | - | 8 | - | - | - | - | 67 |
| Result before tax including held | ||||||||||
| for sale | 295 | 183 | 2 | -9 | 40 | 21 | 38 | 23 | 564 | 1,155 |
| Post-tax return on equity*) | 12.7 % 10.9% | 12.2 % | ||||||||
| Balance | ||||||||||
| Loans and advances to customers | 113,040 | 38,881 | - | - | 7,980 | - | - | - | 1,190 161,091 | |
| Adv. of this sold to SB1 Boligkreditt | ||||||||||
| and SB1 Næringskreditt | -39,349 | -1,642 | - | - | - | - | - | - | -0 | -40,991 |
| Allowance for credit losses | -109 | -654 | - | - | -48 | - | - | - | -5 | -815 |
| Other assets | 203 | 2,886 | 2,715 993 | 25 | 458 | 1,723 1,263 | 35,092 | 45,356 | ||
| Total assets | 73,785 | 39,471 | 2,715 993 | 7,957 | 458 | 1,723 1,263 | 36,277 164,641 | |||
| Deposits to customers | 40,734 | 39,471 | - | - | - | - | - | - | 906 | 81,111 |
| Other liabilities and equity | 33,051 | -0 | 2,715 993 | 7,957 | 458 | 1,723 1,263 | 35,372 | 83,530 | ||
| Total liabilites and equity | 73,785 | 39,471 | 2,715 993 | 7,957 | 458 | 1,723 1,263 | 36,277 164,641 |
| SB 1 | SB 1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SB 1 | EM | Finans | Regnskaps | SB 1 | BN | Un | ||||
| Profit and loss account (NOKm) | RM | CM | Markets | 1 | MN | huset SMN | Gruppen | Bank | collated | Total |
| Net interest | 1,160 | 1,024 | -17 | -1 | 313 | -0 | - | - | 207 | 2,687 |
| Interest from allocated capital | 211 | 147 | - | - | - | - | - | - | -358 | - |
| Total interest income | 1,372 | 1,171 | -17 | -1 | 313 | -0 | - | - | -151 | 2,687 |
| Commission income and other | ||||||||||
| income | 805 | 205 | 509 540 | 73 | 502 | - | - | -345 | 2,290 | |
| Net return on financial investments **) | 0 | 12 | 117 | - | - | - | 252 | 107 | 714 | 1,201 |
| Total income | 2,177 | 1,388 | 609 540 | 386 | 502 | 252 | 107 | 218 | 6,178 | |
| Total operating expenses | 875 | 410 | 566 538 | 184 | 394 | - | - | -169 | 2,797 | |
| Ordinary operating profit | 1,302 | 978 | 43 | 1 | 202 | 108 | 252 | 107 | 386 | 3,380 |
| Loss on loans, guarantees etc. | 32 | 213 | - | - | 52 | - | - | - | 2 | 299 |
| Result before tax including held for | ||||||||||
| sale | 1,279 | 838 | 43 | 1 | 150 | 108 | 252 | 107 | 384 | 3,081 |
| Post-tax return on equity*) | 13.1 % | 11.7% | 13.7 % | |||||||
| Balance | ||||||||||
| Loans and advances to customers | 119,381 40,162 | - | - | 8,897 | - | - | - | -663 167,777 | ||
| Adv. of this sold to SB1 Boligkreditt | ||||||||||
| and SB1 Næringskreditt | -40,122 | -1,378 | - | - | - | - | - | - | -0 | -41,500 |
| Allowance for credit losses | -119 | -819 | - | - | -56 | - | - | - | -4 | -998 |
| Other assets | 220 | 5,495 | 3,669 309 | 21 | 527 | 1,609 1,425 | 28,109 | 41,384 | ||
| Total assets | 79,360 43,460 | 3,669 309 | 8,861 | 527 | 1,609 1,425 | 27,442 166,662 | ||||
| Deposits to customers | 41,639 42,756 | - | - | - | - | - | - | 1,522 | 85,917 | |
| Other liabilities and equity | 37,721 | 704 | 3,669 309 | 8,861 | 527 | 1,609 1,425 | 25,920 | 80,745 | ||
| Total liabilites and equity | 79,360 43,460 | 3,669 309 | 8,861 | 527 | 1,609 1,425 | 27,442 166,662 |
*) Calculation of capital employed in Retail Banking and Corporate Banking is based on regulatory capital. This capital is grossed up to 15.4 percent to be in line with the capital plan during the year
| **) Specification of net return on financial investments (NOKm) | 31 March 2020 |
31 March 2019 |
31 Dec 2019 |
|---|---|---|---|
| Dividends | 8 | 2 | 15 |
| Capital gains shares | -42 | 84 | 120 |
| Gain/(loss) on sertificates and bonds | 50 | 32 | -20 |
| Gain/(loss) on derivatives | -148 | 23 | 132 |
| Gain/(loss) on financial instruments related to hedging | -6 | -4 | -9 |
| Gain/(loss) on other financial instruments at fair value (FVO) | -57 | 10 | 9 |
| Foreign exchange gain/(loss) | 65 | 9 | 22 |
| Gain/(loss) om shares and share derivatives at SpareBank 1 Markets | 14 | 15 | 54 |
| Net return on financial instruments | -124 | 169 | 307 |
| SpareBank 1 Gruppen | -115 | 38 | 252 |
| Gain Fremtind Forsikring | 340 | 460 | 460 |
| SpareBank 1 Boligkreditt | -31 | 14 | 26 |
| SpareBank 1 Næringskreditt | 2 | 8 | 21 |
| BN Bank | 23 | 24 | 113 |
| SpareBank 1 Kredittkort | 0 | 3 | 13 |
| SpareBank 1 Betaling | -2 | 12 | 3 |
| Other companies | -0 | -4 | -8 |
| Income from investment in associates and joint ventures | 217 | 555 | 879 |
| Total net return on financial investments | 101 | 727 | 1.201 |
| Fair value hedging | |||
| Changes in fair value on hedging instrument | 359 | 82 | -66 |
| Changes in fair value on hedging item | -365 | -85 | 56 |
| Net Gain or Loss from hedge accounting | -6 | -4 | -9 |
SpareBank 1 SMN utilises the Internal Rating Based Approach (IRB) for credit risk. Use of IRB imposes wide-ranging requirements on the bank's organisational set-up, competence, risk models and risk management systems. As from 31 March 2015 the bank has received permission to apply the Advanced IRB Approach to those corporate portfolios that were previously reported under the Basic Indicator Approach.
As of 31 Marc 2020 the capital conservation buffer requirement is 2.5 per cent, the systemic risk requirement is 3.0 per cent and the Norwegian countercyclical buffer is 1.0 per cent. These requirements are additional to the requirement of 4.5 per cent CET1 capital, so that the overall minimum requirement on CET1 capital is 11.0 per cent. In addition the financial supervisory authority has set a Pillar 2 requirement of 1.9 per cent for SpareBank 1 SMN. The total minimum requirement on CET1 capital is accordingly 12.9 per cent.
The Supervisory Board adopted at its meeting on 26 March 2020 a revised proposal for application of the net profit for 2019 entailing an overall reduction of 303 NOK million compared with the original proposal of NOK 1,314 million for distribution as dividends and donations. Historical figures as at 31 December 2019 are not restated, but the effect of the above decision as at 31 December 2019 is shown in the table below.
The EU capital adequacy framework (CRR/CRDIV) was incorporated into Norwegian law with effect from 31 December 2019. The Basel I floor was accordingly removed and an SME rebate introduced. The countercyclical capital buffer was reduced with immediate effect in March 2020 from 2.5 per cent to 1.0 per cent. The systemic risk buffer will rise to 4.5 per cent with effect from 31 December 2020.
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. For the first quarter of 2020 both the parent bank and the group is below the capital deduction threshold such that the Norwegian rate is applied to all relevant exposures.
The group's hybrid equity and subordinated debt issued under the old rules has now either been redeemed or notice of redemption has been given such that as of the first quarter of 2020 the group has no holdings covered by the transitional provisions.
| Parent Bank | Group | |||||
|---|---|---|---|---|---|---|
| 31 Dec 2019 |
31 Mar 2019 |
31 Mar | 2020 (NOKm) | 31 Mar 2020 |
31 Mar 2019 |
31 Dec 2019 |
| 17,822 | 16,103 | 16,866 Total book equity | 19,600 | 18,673 | 20,420 | |
| Additional Tier 1 capital instruments included in total | ||||||
| -1,250 | -981 | -1,227 | equity | -1,268 | -1,023 | -1,293 |
| -512 | -525 | -507 Deferred taxes, goodwill and other intangible assets | -1,059 | -1,073 | -1,099 | |
| -1,314 | - | - Deduction for allocated dividends and gifts | - | - | -1,314 | |
| - | - | - | Non-controlling interests recognised in other equity capital |
-760 | -665 | -761 |
| - | - | - | Non-controlling interests eligible for inclusion in CET1 capital |
398 | 392 | 438 |
| - | -747 | -106 Net profit | -290 | -1,046 | - | |
| - | 237 | 83 | Year-to-date profit included in core capital (0 per cent (50 per cent) pre tax of group profit) |
266 | 537 | - |
| -33 | -31 | -50 | Value adjustments due to requirements for prudent valuation |
-62 | -43 | -45 |
| -305 | -284 | -293 | Positive value of adjusted expected loss under IRB Approach |
-329 | -303 | -351 |
| - | - | - Cash flow hedge reserve | 13 | 5 | 3 | |
| Deduction for common equity Tier 1 capital in significant | ||||||
| -185 | -163 | -185 | investments in financial institutions | -353 | -333 | -168 |
| 14,222 | 13,609 | 14,582 Common equity Tier 1 capital | 16,155 | 15,122 | 15,830 | |
| 1,250 | 1,000 | 1,250 Additional Tier 1 capital instruments | 1,637 | 1,377 | 1,637 | |
| Additional Tier 1 capital instruments covered by | ||||||
| 275 | 275 | - | transitional provisions | - | 275 | 275 |
| 15,747 | 14,884 | 15,832 Tier 1 capital | 17,792 | 16,775 | 17,742 | |
| Supplementary capital in excess of core capital | ||||||
| 1,750 | 1,750 | 1,750 Subordinated capital | 2,240 | 2,298 | 2,240 | |
| 12 | 184 | -0 Subordinated capital covered by transitional provisions | -0 | 184 | 12 | |
| -140 | -142 | -153 | Deduction for significant investments in financial institutions |
-153 | -142 | -140 |
| 1,623 | 1,792 | 1,597 Additional Tier 2 capital instruments | 2,087 | 2,340 | 2,113 | |
| 17,370 | 16,676 | 17,429 Total eligible capital | 19,879 | 19,115 | 19,854 |
| Minimum requirements subordinated capital | |||||
|---|---|---|---|---|---|
| 911 | 962 | 964 Specialised enterprises | 1,153 | 1,106 | 1,101 |
| 1,139 | 1,155 | 1,269 Corporate | 1,279 | 1,161 | 1,149 |
| 1,628 | 1,515 | 1,625 Mass market exposure, property | 2,310 | 2,126 | 2,299 |
| 98 | 95 | 97 Other mass market | 100 | 97 | 101 |
| 984 | 1,076 | 987 Equity investments | 1 | 1 | 1 |
| 4,760 | 4,802 | 4,942 Total credit risk IRB | 4,842 | 4,491 | 4,651 |
| 2 | 2 | 2 Central government | 4 | 3 | 3 |
| 86 | 87 | 101 Covered bonds | 152 | 135 | 132 |
| 419 | 387 | 567 Institutions | 466 | 269 | 282 |
| - | - | - Local and regional authorities, state-owned enterprises | 15 | 10 | 5 |
| 42 | 41 | 30 Corporate | 227 | 251 | 239 |
| 22 | 73 | 17 Mass market | 474 | 536 | 463 |
| 9 | 13 | 16 Exposures secured on real property | 174 | 211 | 167 |
| 236 | 231 | 240 Equity positions | 383 | 365 | 377 |
| 104 | 91 | 115 Other assets | 150 | 169 | 151 |
| 918 | 925 | 1,088 Total credit risk standardised approach | 2,045 | 1,949 | 1,818 |
| 31 | 43 | 47 Debt risk | 48 | 45 | 34 |
| - | - | - Equity risk | 7 | 12 | 15 |
| - | - | - Currency risk and risk exposure for settlement/delivery | 3 | 3 | 3 |
| 407 | 387 | 407 Operational risk | 720 | 654 | 720 |
| 29 | 28 | 98 Credit value adjustment risk (CVA) | 240 | 118 | 115 |
| - | - | - Transitional arrangements | - | 929 | - |
| 6,145 | 6,186 | 6,583 Minimum requirements subordinated capital | 7,907 | 8,200 | 7,357 |
| 76,817 | 77,327 | 82,282 Risk weighted assets (RWA) | 98,832 | 102,495 | 91,956 |
| 3,457 | 3,480 | 3,703 Minimum requirement on CET1 capital, 4.5 per cent | 4,447 | 4,612 | 4,138 |
| Capital Buffers | |||||
| 1,920 | 1,933 | 2,057 Capital conservation buffer, 2.5 per cent | 2,471 | 2,562 | 2,299 |
| 2,305 | 2,320 | 2,468 Systemic rick buffer, 3.0 per cent | 2,965 | 3,075 | 2,759 |
| 1,920 | 1,547 | 823 Countercyclical buffer, 1.0 per cent (2.5 and 2.0 per cent) | 988 | 2,050 | 2,299 |
| 6,145 | 5,800 | 5,348 Total buffer requirements on CET1 capital | 6,424 | 7,687 | 7,357 |
| 4,620 | 4,330 | 5,531 Available CET1 capital after buffer requirements | 5,284 | 2,823 | 4,335 |
| Capital adequacy | |||||
| 18.5 % | 17.6 % | 17.7 % Common equity Tier 1 capital ratio | 16.3 % | 14.8 % | 17.2 % |
| 20.5 % | 19.2 % | 19.2 % Tier 1 capital ratio | 18.0 % | 16.4 % | 19.3 % |
| 22.6 % | 21.6 % | 21.2 % Capital ratio | 20.1 % | 18.6 % | 21.6 % |
| Leverage ratio | |||||
| 161,905 | 156,292 | 177,198 Balance sheet items | 249,366 | 221,200 | 230,048 |
| 6,830 | 6,834 | 7,719 Off-balance sheet items | 8,702 | 8,262 | 7,897 |
| -851 | -840 | -1,033 Regulatory adjustments | -1,820 | -1,600 | -1,503 |
| 167,885 | 162,287 | 183,884 Calculation basis for leverage ratio | 256,248 | 227,862 | 236,441 |
| 15,747 | 14,884 | 15,832 Core capital | 17,792 | 16,775 | 17,742 |
| 9.4 % | 9.2 % | 8.6 % Leverage Ratio | 6.9 % | 7.4 % | 7.5 % |
| Effect as at 31 December 2019 on the adopted application of net profit, as revised: | 31 Dec 2019 | |
|---|---|---|
| Parent Bank | Group | |
| Common equity Tier 1 capital | 14,525 | 16,133 |
| Tier 1 capital | 16,051 | 18,045 |
| Total eligible capital | 17,673 | 20,158 |
| Common equity Tier 1 capital ratio | 18.9 % | 17.5 % |
| Tier 1 capital ratio | 20.9 % | 19.6 % |
| Capital ratio | 23.0 % | 21.9 % |
| Leverage Ratio | 9.6 % | 7.6 % |
| Parent Bank | Group | |||||
|---|---|---|---|---|---|---|
| 31 Dec 2019 |
31 March 2019 |
31 March | 2020 (NOKm) | 31 March 2020 |
31 March 2019 |
31 Dec 2019 |
| 13,203 | 12,327 | 13,477 Agriculture, forestry, fisheries, hunting | 13,853 | 12,658 | 13,558 | |
| 833 | 866 | 756 Sea farming industries | 1,053 | 1,176 | 1,132 | |
| 2,212 | 3,148 | 1,870 Manufacturing | 2,255 | 3,507 | 2,595 | |
| 3,157 | 2,938 | 3,025 Construction, power and water supply | 3,837 | 3,703 | 3,970 | |
| 2,181 | 2,683 | 2,266 Retail trade, hotels and restaurants | 2,607 | 3,014 | 2,517 | |
| 4,660 | 4,609 | 5,177 Maritime sector | 5,177 | 4,609 | 4,660 | |
| 14,800 | 14,840 | 14,614 Property management | 14,689 | 14,915 | 14,878 | |
| 2,445 | 2,410 | 2,454 Business services | 2,158 | 2,060 | 2,146 | |
| 4,542 | 4,158 | 5,546 Transport and other services provision | 6,379 | 4,977 | 5,409 | |
| 2 | 3 | 6 Public administration | 17 | 15 | 12 | |
| 1,890 | 1,771 | 1,718 Other sectors | 1,742 | 1,720 | 1,863 | |
| 49,926 | 49,754 | 50,909 Gross loans in retail market | 53,767 | 52,354 | 52,740 | |
| 109,544 | 103,949 | 111,460 Wage earners | 117,004 | 108,738 | 115,036 | |
| 159,470 | 153,703 | 162,369 | Gross loans incl. SB1 Boligkreditt /SB1 Næringskreditt |
170,771 | 161,091 | 167,777 |
| 39,833 | 39,220 | 41,972 of which SpareBank 1 Boligkreditt | 41,972 | 39,220 | 39,833 | |
| 1,667 | 1,771 | 1,526 of which SpareBank 1 Næringskreditt | 1,526 | 1,771 | 1,667 | |
| 117,970 | 112,712 | 118,871 Gross loans in balance sheet | 127,272 | 120,100 | 126,277 | |
| 850 | 717 | 964 - Loan loss allowance on amortised cost loans | 1,019 | 769 | 911 | |
| 87 | 46 | 123 - Loan loss allowance on loans at FVOCI | 125 | 46 | 87 | |
| 117,033 | 111,949 | 117,784 Net loans to and receivables from customers | 126,128 | 119,285 | 125,279 |
| Parent Bank | Jan-March | Jan-March | Jan - Dec | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2019 | ||||||||
| Losses on loans and guarantees (NOKm) | RM | CM | Total | RM | CM | Total | RM | CM | Total | |
| Change in provision for expected credit losses for the period | 44 | 146 | 190 | 6 | 52 | 58 | 28 | 205 | 234 | |
| Actual loan losses on commitments exceeding provisions made | 1 | 112 | 112 | 1 | 2 | 3 | 10 | 9 | 19 | |
| Recoveries on commitments previously written-off | -1 | -0 | -1 | -1 | -1 | -2 | -5 | -1 | -7 | |
| Losses for the period on loans and guarantees 44 |
302 | 6 | 53 | 60 | 32 | 213 | 245 |
| Group | Jan-March | Jan-March | Jan - Dec | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2019 | |||||||
| Losses on loans and guarantees (NOKm) | RM | CM | Total | RM | CM | Total | RM | CM | Total |
| Change in provision for expected credit losses for the period | 40 | 148 | 188 | 6 | 55 | 61 | 34 | 212 | 246 |
| Actual loan losses on commitments exceeding provisions made | 28 | 115 | 143 | 6 | 3 | 8 | 40 | 22 | 62 |
| Recoveries on commitments previously written-off | -19 | -4 | -22 | -1 | -1 | -2 | -6 | -2 | -8 |
| Losses for the period on loans and guarantees | 49 | 259 | 308 | 11 | 57 | 67 | 68 | 231 | 299 |
| Net | ||||
|---|---|---|---|---|
| Change in | write-offs | |||
| Parent Bank (NOKm) | 1 Jan 20 | provision | /recoveries | 31 Mar 20 |
| Loans as amortised cost- CM | 916 | 146 | -30 | 1,031 |
| Loans as amortised cost- RM | 34 | 7 | -3 | 39 |
| Loans at fair value over OCI- RM | 109 | 37 | - | 146 |
| Loans at fair value over OCI- CM | 1 | -0 | - | 1 |
| Provision for expected credit losses on loans and guarantees | 1,060 | 190 | -33 | 1,219 |
| Presented as | ||||
| Provision for loan losses | 937 | 182 | -33 | 1,086 |
| Other debt- provisons | 100 | 6 | - | 106 |
| Other comprehensive income - fair value adjustment | 23 | 3 | - | 26 |
| Change in | Net write-offs/ | |||
|---|---|---|---|---|
| Parent Bank (NOKm) | 1 Jan 19 | provision | recoveries | 31 Mar 19 |
| Loans as amortised cost- CM | 742 | 50 | 1 | 792 |
| Loans as amortised cost- RM | 45 | 17 | 1 | 63 |
| Loans at fair value over OCI- RM | 75 | -12 | - | 63 |
| Provision for expected credit losses on loans and guarantees | 862 | 55 | 2 | 918 |
| Presented as | ||||
| Provision for loan losses | 697 | 64 | 2 | 763 |
| Other debt- provisons | 148 | -10 | - | 139 |
| Other comprehensive income - fair value adjustment | 17 | 0 | - | 17 |
| Net | ||||
|---|---|---|---|---|
| Parent Bank (NOKm) | 1 Jan 19 | Change in provision |
write-offs/ recoveries |
31 Dec 19 |
| Loans as amortised cost- CM | 742 | 201 | -27 | 916 |
| Loans as amortised cost- RM | 45 | -6 | -5 | 34 |
| Loans at fair value over OCI- RM | 75 | 34 | - | 109 |
| Loans at fair value over OCI- CM | - | 1 | - | 1 |
| Provision for expected credit losses on loans and guarantees | 862 | 230 | -32 | 1,060 |
| Presented as | ||||
| Provision for loan losses | 697 | 272 | -32 | 937 |
| Other debt- provisons | 148 | -48 | - | 100 |
| Other comprehensive income - fair value adjustment | 17 | 6 | - | 23 |
| Group (NOKm) | 1 Jan 20 | Change in provision |
Net write-offs/ recoveries |
31 Mar 20 |
|---|---|---|---|---|
| Loans as amortised cost- CM | 948 | 149 | -32 | 1,065 |
| Loans as amortised cost- RM | 63 | 3 | -3 | 63 |
| Loans at fair value over OCI- RM | 109 | 37 | - | 146 |
| Loans at fair value over OCI- CM | 1 | -0 | - | 1 |
| Provision for expected credit losses on loans and guarantees | 1,121 | 190 | -34 | 1,276 |
| Presented as | ||||
| Provision for loan losses | 998 | 180 | -34 | 1,144 |
| Other debt- provisons | 100 | 6 | - | 106 |
| Other comprehensive income - fair value adjustment | 23 | 3 | - | 26 |
| Group (NOKm) | 1 Jan 19 | Change in provision |
Net write-offs/ recoveries |
31 Mar 19 |
|---|---|---|---|---|
| Loans as amortised cost- CM | 766 | 57 | 0 | 822 |
| Loans as amortised cost- RM | 68 | 17 | 1 | 86 |
| Loans at fair value over OCI- RM | 75 | -12 | - | 63 |
| Provision for expected credit losses on loans and guarantees | 909 | 62 | 1 | 971 |
| Presented as | ||||
| Provision for loan losses | 744 | 70 | 1 | 815 |
| Other debt- provisons | 148 | -10 | - | 139 |
| Other comprehensive income - fair value adjustment | 17 | 0 | - | 17 |
| Group (NOKm) | 1 Jan 19 | Change in provision |
Net write offs/ recoveries |
31 Dec 19 |
|---|---|---|---|---|
| Loans as amortised cost- CM | 766 | 212 | -31 | 948 |
| Loans as amortised cost- RM | 68 | 0 | -5 | 63 |
| Loans at fair value over OCI- RM | 75 | 34 | - | 109 |
| Loans at fair value over OCI- CM | - | 1 | - | 1 |
| Provision for expected credit losses on loans and guarantees | 909 | 248 | -36 | 1,121 |
| Presented as | ||||
| Provision for loan losses | 744 | 290 | -36 | 998 |
| Other debt- provisons | 148 | -48 | - | 100 |
| Other comprehensive income - fair value adjustment | 17 | 6 | - | 23 |
| Accrual for losses on loans | 31 Mar 20 | 31 Mar 19 | 31 Dec 19 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Parent Bank (NOKm) | Stage1 Stage2 Stage3 Total | Stage1 Stage2 Stage3 Total | Stage1 Stage2 Stage3 Total | |||||||||
| Retail market | ||||||||||||
| Opening balance | 25 | 73 | 45 | 143 | 28 | 63 | 29 | 120 | 27 | 62 | 31 | 120 |
| Transfer to (from) Stage 1 | 13 | -13 | -0 | - | 10 | -10 | -0 | - | 10 | - 10 | 0 | - |
| Transfer to (from) Stage 2 | -2 | 2 | -0 | - | -1 | 1 | -0 | - | - 2 | 2 | 0 | - |
| Transfer to (from) Stage 3 | -0 | -3 | 3 | - | -0 | -2 | 2 | - | 0 | - 3 | 3 | - |
| Net remeasurement of loss | ||||||||||||
| allowances | -15 | 12 | 9 | 6 | -6 | 17 | 3 | 14 | - 11 | 24 | 18 | 30 |
| Originations or purchases | 4 | 2 | 0 | 6 | - | - | - | - | 13 | 17 | 1 | 31 |
| Derecognitions | -2 | -6 | -1 | -10 | -3 | -6 | -0 | -10 | - 11 | - 20 | - 1 | - 33 |
| Changes due to changed input | ||||||||||||
| assumptions | 5 | 38 | - | 43 | - | - | - | - | ||||
| Actual loan losses | -3 | -3 | 1 | 1 | - | - | - 5 | - 5 | ||||
| Closing balance | 28 | 104 | 53 | 185 | 28 | 63 | 36 | 126 | 25 | 73 | 45 | 143 |
| Corporate market | ||||||||||||
| Opening balance | 66 | 210 | 540 | 816 | 64 | 148 | 383 | 594 | 64 | 148 | 382 | 594 |
| Transfer to (from) Stage1 | 9 | -9 | -0 | - | 9 | -9 | -0 | - | 19 | - 19 | 0 | - |
| Transfer to (from) Stage2 | -4 | 4 | -0 | - | -1 | 1 | - | - | - 8 | 8 | - | - |
| Transfer to (from) Stage3 | -0 | -1 | 1 | - | -0 | -0 | 1 | - | 0 | 0 | 1 | - |
| Net remeasurement of loss | ||||||||||||
| allowances | -8 | 33 | 148 | 173 | -0 | 28 | 58 | 86 | - 17 | 98 | 185 | 266 |
| Originations or purchases | 14 | 2 | 1 | 17 | - | - | - | - | 27 | 20 | 1 | 48 |
| Derecognitions | -11 | -72 | -0 | -83 | -6 | -21 | -0 | -27 | - 20 | - 43 | 0 | - 63 |
| Changes due to changed input | ||||||||||||
| assumptions | 4 | 30 | - | 34 | - | - | - | - | ||||
| Actual loan losses | - | - | -30 | -30 | 1 | 1 | - | - | - 27 | - 27 | ||
| Closing balance | 70 | 197 | 660 | 927 | 64 | 147 | 441 | 654 | 66 | 210 | 541 | 817 |
| Total accual for loan losses | 98 | 301 | 713 1,112 | 92 | 210 | 477 | 780 | 91 | 283 | 586 | 961 |
| 31 Mar 20 | 31 Mar 19 | 31 Dec 19 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group (NOKm) | Stage1 Stage2 Stage3 Total | Stage1 Stage 2 Stage 3 Total | Stage1 Stage 2 Stage3 Total | |||||||||
| Retail market | ||||||||||||
| Opening balance | 32 | 84 | 56 | 172 | 34 | 72 | 37 | 143 | 33 | 71 | 39 | 143 |
| Transfer to (from) Stage | ||||||||||||
| 1 | 14 | -14 | -0 | -0 | 11 | -11 | -0 | - | 12 | -11 | - | - |
| Transfer to (from) Stage 2 | -2 | 3 | -1 | 0 | -1 | 3 | -1 | - | -2 | 4 | -1 | - |
| Transfer to (from) Stage | ||||||||||||
| 3 | -0 | -4 | 4 | -0 | -0 | -3 | 3 | - | - | -3 | 4 | - |
| Net remeasurement of loss | ||||||||||||
| allowances | -16 | 12 | 11 | 8 | -7 | 18 | 4 | 15 | -14 | 24 | 22 | 32 |
| Originations or purchases | 5 | 2 | 0 | 7 | 5 | 3 | 0 | 8 | 17 | 23 | 3 | 44 |
| Derecognitions | -3 | -7 | -7 | -17 | -3 | -7 | -2 | -12 | -13 | -23 | -5 | -41 |
| Changes due to changed input | ||||||||||||
| assumptions | 5 | 38 | - | 43 | - | - | - | - | - | - | - | - |
| Actual loan losses | - | - | -3 | -3 | - | - | 1 | 1 | - | - | -5 | -5 |
| Closing balance | 35 | 114 | 61 | 210 | 38 | 74 | 42 | 155 | 32 | 84 | 56 | 172 |
| Corporate market | ||||||||||||
| Opening balance | 71 | 218 | 557 | 846 | 68 | 152 | 397 | 618 | 70 | 152 | 397 | 619 |
| Transfer to (from) Stage | ||||||||||||
| 1 | 9 | -9 | -0 | - | 10 | -9 | -1 | - | 20 | -20 | - | - |
| Transfer to (from) Stage 2 | -4 | 4 | -0 | - | -2 | 2 | -0 | - | -9 | 9 | - | - |
| Transfer to (from) Stage | ||||||||||||
| 3 | -0 | -1 | 1 | - | -0 | -1 | 1 | 0 | - | -1 | 1 | - |
| Net remeasurement of loss | ||||||||||||
| allowances | -9 | 33 | 151 | 175 | -9 | 25 | 57 | 73 | -19 | 100 | 188 | 268 |
| Originations or purchases | 14 | 2 | 3 | 20 | 9 | 7 | 0 | 16 | 30 | 21 | 7 | 59 |
| Derecognitions | -11 | -73 | -1 | -85 | -6 | -21 | -0 | -28 | -20 | -44 | -2 | -66 |
| Changes due to changed input | ||||||||||||
| assumptions | 4 | 30 | - | 34 | - | - | - | - | - | - | - | - |
| Actual loan losses | - | - | -31 | -31 | - | - | -1 | -1 | - | - | -31 | -31 |
| Closing balance | 75 | 204 | 680 | 960 | 70 | 156 | 452 | 678 | 71 | 218 | 560 | 849 |
| Total accrual for loan losses | 110 | 318 | 741 1,170 | 108 | 230 | 494 | 832 | 104 | 302 | 616 1,021 |
| guarantees and unused credit lines |
31 Mar 20 | 31 Mar 19 | 31 Dec 19 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Parent bank and Group (NOKm) |
Stage1 Stage2 Stage3 Total | Stage1 Stage2 Stage3 Total | Stage1 Stage2 Stage3 Total | ||||||||||
| Opening balance | 14 | 29 | 57 | 100 | 11 | 47 | 90 | 148 | 11 | 47 | 90 | 148 | |
| Provision for credit losses | |||||||||||||
| Transfer to (from) Stage 1 | 1 | -1 | -0 | - | 1 | -1 | -0 | -0 | 3 | -3 | -0 | 0 | |
| Transfer to (from) Stage 2 | -0 | 0 | - | - | -0 | 0 | - | - | -1 | 1 | - | - | |
| Transfer to (from) Stage 3 | -0 | -0 | 0 | - | -0 | -0 | 0 | 0 | -0 | -0 | 0 | 0 | |
| Net remeassurement of loss | |||||||||||||
| allowances | -3 | 8 | -0 | 5 | -0 | 2 | -10 | -8 | -2 | 3 | -33 | -33 | |
| Origination or purchases | 2 | 0 | 0 | 3 | - | - | - | - | 7 | 1 | 0 | 8 | |
| Derecognitions | -1 | -3 | -0 | -4 | -1 | -0 | -0 | -1 | -3 | -20 | -0 | -24 | |
| Changes due to changed input | |||||||||||||
| assumptions | 1 | 2 | - | 3 | - | - | - | - | - | - | - | ||
| Actual loan losses | - | - | - | - | - | - | |||||||
| Closing Balance | 14 | 36 | 57 | 106 | 10 | 48 | 81 | 139 | 14 | 29 | 57 | 100 |
| Parent Bank (NOKm) | 31 March 2020 | ||||||
|---|---|---|---|---|---|---|---|
| Loans subject to impairment | |||||||
| Fixed interest |
|||||||
| Gross loan - Total | Stage 1 | Stage 2 | Stage 3 | loans at FV | Total | ||
| Balance at 1 January 2020 | 102,235 | 9,101 | 1,957 | 4,677 | 117,970 | ||
| Transfer to stage 1 | 1,482 | -1,471 | -11 | - | - | ||
| Transfer to stage 2 | -1,799 | 1,872 | -73 | - | - | ||
| Transfer to stage 3 | -79 | -600 | 679 | - | - | ||
| Net increase/decrease amount excisting loans | -1,661 | 100 | 61 | 33 | -1,467 | ||
| New loans | 20,231 | 382 | 85 | 89 | 20,787 | ||
| Derecognitions | -16,994 | -852 | -98 | -362 | -18,305 | ||
| Financial assets with actual loan losses | 0 | -110 | -4 | 0 | -114 | ||
| Balance at 31 March 2020 | 103,416 | 8,421 | 2,596 | 4,438 | 118,871 |
| Parent Bank | 31 March 2019 | |||||
|---|---|---|---|---|---|---|
| Loans subject to impairment | ||||||
| Gross loan | Stage 1 | Stage 2 | Stage 3 | Total | ||
| Balance at 1 January | 97,458 | 9,888 | 1,543 | loans at FV 4,467 |
113,356 | |
| Transfer to stage 1 | 1,571 | -1,567 | -4 | - | -0 | |
| Transfer to stage 2 | -1,148 | 1,165 | -17 | - | 0 | |
| Transfer to stage 3 | -10 | -238 | 248 | - | - | |
| Net increase/decrease amount excisting loans | -2,630 | 5 | -1 | -28 | -2,654 | |
| New loans | 13,347 | 292 | 11 | 337 | 13,987 | |
| Derecognitions | -10,947 | -865 | -39 | -126 | -11,977 | |
| Balance at 31 March | 97,640 | 8,680 | 1,741 | 4,650 | 112,712 |
| Parent Bank | 31 December 2019 | ||||||
|---|---|---|---|---|---|---|---|
| Loans subject to impairment | |||||||
| Gross loan - Total | Stage 1 | Stage 2 | Fixed interest Stage 3 loans at FV |
Total | |||
| Balance at 1 January 2019 | 97,458 | 9,888 | 1,543 | 4,467 | 113,356 | ||
| Transfer to stage 1 | 2,479 | -2,438 | -41 | 0 | - | ||
| Transfer to stage 2 | -3,252 | 3,318 | -66 | 0 | - | ||
| Transfer to stage 3 | -67 | -361 | 429 | 0 | - | ||
| Net increase/decrease amount excisting loans | -3,481 | -213 | -28 | -133 | -3,856 | ||
| New loans | 54,871 | 1,793 | 497 | 1,022 | 58,184 | ||
| Derecognitions | -45,771 | -2,879 | -335 | -678 | -49,665 | ||
| Financial assets with actual loan losses | -2 | -6 | -41 | 0 | -49 | ||
| Balance at 31 December 2019 | 102,235 | 9,101 | 1,957 | 4,677 | 117,970 |
| Group (NOKm) | 31 March 2020 | ||||||
|---|---|---|---|---|---|---|---|
| Loans subject to impairment | |||||||
| Fixed interest |
|||||||
| Gross loan - Total | Stage 1 | Stage 2 | Stage 3 loans at FV |
Total | |||
| Balance at 1 January 2020 | 109,140 | 10,350 | 2,110 | 4,677 | 126,277 | ||
| Transfer to stage 1 | 1,596 | -1,582 | -14 | - | - | ||
| Transfer to stage 2 | -1,988 | 2,075 | -87 | - | - | ||
| Transfer to stage 3 | -98 | -649 | 748 | - | - | ||
| Net increase/decrease amount excisting loans | -1,620 | 87 | 60 | 33 | -1,440 | ||
| New loans | 21,173 | 408 | 85 | 89 | 21,756 | ||
| Derecognitions | -17,329 | -913 | -130 | -362 | -18,734 | ||
| Financial assets with actual loan losses | -393 | -167 | -25 | - | -585 | ||
| Balance at 31 March 2020 | 110,480 | 9,608 | 2,747 | 4,438 | 127,273 |
| Group | 31 March 2019 | ||||||
|---|---|---|---|---|---|---|---|
| Loans subject to impairment | |||||||
| Gross loan | Stage 1 |
Stage 2 | Stage 3 | Total | |||
| Balance at 1 January | 103,494 | 10,829 | 1,682 | 4,467 | 120,473 | ||
| Transfer to stage 1 | 1,571 | -1,567 | -4 | - | - | ||
| Transfer to stage 2 | -1,148 | 1,165 | -17 | - | - | ||
| Transfer to stage 3 | -10 | -238 | 248 | - | - | ||
| Net increase/decrease amount excisting loans | -2,359 | 5 | -1 | -28 | -2,382 | ||
| New loans | 13,348 | 292 | 11 | 337 | 13,988 | ||
| Derecognitions | -10,947 | -865 | -40 | -126 | -11,978 | ||
| Balance at 31 March | 103,949 | 9,622 | 1,880 | 4,650 | 120,100 |
| Group | 31 December 2019 | ||||
|---|---|---|---|---|---|
| Loans subject to impairment | |||||
| Gross loan - Total | Stage 1 Stage 2 Stage 3 |
Fixed interest loans at FV |
Total | ||
| Balance at 1 January 2019 | 103,494 | 10,829 | 1,683 | 4,467 | 120,473 |
| Transfer to stage 1 | 2,712 | -2,665 | -47 | 0 | - |
| Transfer to stage 2 | -3,865 | 3,953 | -88 | 0 | - |
| Transfer to stage 3 | -126 | -402 | 527 | 0 | - |
| Net increase/decrease amount excisting loans | -4,553 | -441 | -53 | -133 | -5,180 |
| New loans | 58,443 | 2,164 | 524 | 1,022 | 62,153 |
| Derecognitions | -46,963 | -3,082 | -396 | -678 | -51,119 |
| Financial assets with actual loan losses | -2 | -6 | -41 | - | -49 |
| Balance at 31 December 2019 | 109,140 | 10,350 | 2,110 | 4,677 | 126,277 |
| Parent Bank | Group | |||||
|---|---|---|---|---|---|---|
| 31 Dec 2019 |
31 March 2019 |
31 March | 2020 (NOKm) | 31 March 2020 |
31 March 2019 |
31 Dec 2019 |
| 3,064 | 3,382 | 3,578 Agriculture, forestry, fisheries, hunting | 3,578 | 3,382 | 3,064 | |
| 645 | 985 | 923 Sea farming industries | 923 | 985 | 645 | |
| 1,582 | 1,544 | 1,525 Manufacturing | 1,525 | 1,544 | 1,582 | |
| 3,363 | 3,200 | 3,026 Construction, power and water supply | 3,026 | 3,200 | 3,363 | |
| 4,197 | 3,857 | 3,810 Retail trade, hotels and restaurants | 3,810 | 3,857 | 4,197 | |
| 1,059 | 1,127 | 295 Maritime sector | 295 | 1,127 | 1,059 | |
| 5,027 | 4,911 | 5,631 Property management | 5,318 | 4,606 | 4,718 | |
| 7,643 | 6,912 | 7,633 Business services | 7,633 | 6,912 | 7,643 | |
| 8,186 | 7,487 | 9,847 Transport and other services provision | 9,479 | 6,979 | 7,819 | |
| 13,162 | 11,680 | 12,004 Public administration | 12,004 | 11,680 | 13,162 | |
| 3,278 | 3,058 | 3,545 Other sectors | 3,370 | 2,787 | 3,001 | |
| 51,206 | 48,143 | 51,817 Total | 50,962 | 47,059 | 50,253 | |
| 35,664 | 34,052 | 37,190 Wage earners | 37,190 | 34,052 | 35,664 | |
| 86,870 | 82,195 | 89,007 Total deposits | 88,152 | 81,111 | 85,917 |
| Parent Bank | Group | |||||
|---|---|---|---|---|---|---|
| January - March | January - March | |||||
| 2019 | 2019 | 2020 (NOKm) | 2020 | 2019 | 2019 | |
| Interest Income | ||||||
| 246 | 49 | 67 | Interest income from loans to and claims on central banks and credit institutions (amortised cost) |
22 | 19 | 103 |
| 1,693 | 406 | 430 | Interest income from loans to and claims on customers (amortised cost) |
565 | 517 | 2,177 |
| 1.792 | 413 | 505 | Interest income from loans to and claims on customers (Fair value over OCI) |
509 | 418 | 1.814 |
| 134 | 32 | 33 | Interest income from loans to and claims on customers (Fair value over Profit and loss) |
33 | 32 | 134 |
| 375 | 83 | 116 | Interest income from money market instruments, bonds and other fixed income securities (Fair value over Profit and loss) |
115 | 82 | 371 |
| - | - | - Other interest income | 7 | 7 | 26 | |
| 4,241 | 982 | 1,151 Total interest income | 1,250 | 1,075 | 4,626 | |
| Interest expense | ||||||
| 170 | 35 | 45 Interest expenses on liabilities to credit institutions | 52 | 39 | 190 | |
| 1,042 | 209 | 301 Interest expenses relating to deposits from and liabilities to customers | 295 | 206 | 1,019 | |
| 545 | 140 | 148 Interest expenses related to the issuance of securities | 148 | 140 | 545 | |
| 84 | 20 | 20 Interest expenses on subordinated debt | 21 | 21 | 86 | |
| 10 | 2 | 2 Other interest expenses | 9 | 8 | 33 | |
| 65 | 13 | 16 Guarantee fund levy | 16 | 13 | 65 | |
| 1,916 | 421 | 533 Total interest expense | 540 | 426 | 1,939 | |
| 2,325 | 562 | 618 Net interest income | 710 | 648 | 2,687 |
| Parent Bank | Group | |||||
|---|---|---|---|---|---|---|
| January - March | January - March | |||||
| 2019 | 2019 | 2020 (NOKm) | 2020 | 2019 | 2019 | |
| 234 | 57 | 63 IT costs | 86 | 81 | 321 | |
| 19 | 4 | 4 Postage and transport of valuables | 5 | 5 | 23 | |
| 63 | 12 | 15 Marketing | 24 | 26 | 101 | |
| 109 | 29 | 27 Ordinary depreciation | 42 | 46 | 172 | |
| 42 | 10 | 7 Operating expenses, real properties | 9 | 13 | 57 | |
| 134 | 24 | 38 Purchased services | 53 | 36 | 193 | |
| 149 | 35 | 37 Other operating expense | 53 | 50 | 231 | |
| 750 | 171 | 191 Total other operating expenses | 273 | 257 | 1,098 |
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| 31.12.19 | 31.03.2019 | 31.3.20 (NOKm) | 31.3.20 | 31.3.19 | 31.12.19 |
| - | - | - Deferred tax asset | 156 | 177 | 158 |
| 85 | 91 | 79 Fixed assets | 215 | 235 | 222 |
| 342 | 362 | 338 Right to use assets | 488 | 599 | 499 |
| 107 | 110 | 134 Earned income not yet received | 186 | 178 | 132 |
| 13 | 565 | 422 Accounts receivable, securities | 1,102 | 998 | 292 |
| 148 | 179 | 109 Pensions | 109 | 179 | 148 |
| 546 | 340 | 571 Other assets | 554 | 681 | 640 |
| 1,241 | 1,647 | 1,654 Total other assets | 2,810 | 3,047 | 2,092 |
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| 31.12.19 | 31.3.19 | 31.3.20 (NOKm) | 31.3.20 | 31.3.19 | 31.12.19 |
| 48 | 84 | 38 Deferred tax | 103 | 147 | 115 |
| 475 | 311 | 120 Payable tax | 179 | 361 | 546 |
| 10 | 10 | 10 Capital tax | 10 | 10 | 10 |
| 76 | 303 | 246 Accrued expenses and received, non-accrued income | 602 | 625 | 455 |
| 127 | 173 | 291 Provision for accrued expenses and commitments | 291 | 173 | 127 |
| 100 | 139 | 106 Losses on guarantees and unutilised credits | 106 | 139 | 100 |
| 16 | 21 | 16 Pension liabilities | 16 | 21 | 16 |
| 347 | 363 | 344 Lease liabilities | 494 | 601 | 505 |
| 68 | 63 | 42 Drawing debt | 42 | 63 | 68 |
| 6 | 53 | 5 Creditors | 58 | 104 | 57 |
| 9 | 812 | 1,097 Debt from securities | 1,677 | 1,129 | 197 |
| - | - | - Equity Instruments | 34 | 30 | 244 |
| 287 | 1,076 | 1,188 Other liabilities | 1,286 | 1,230 | 401 |
| 1,570 | 3,408 | 3,503 Total other liabilites | 4,900 | 4,632 | 2,841 |
| Fallen | |||||
|---|---|---|---|---|---|
| 31 Dec | due/ | Other | 31 March | ||
| Change in securities debt (NOKm) | 2019 | Issued | Redeemed | changes | 2020 |
| Bond debt, nominal value | 42,722 | 2,500 | 1,614 | 5,040 | 48,649 |
| Value adjustments | 73 | - | - | 387 | 460 |
| Accrued interest | 218 | - | - | -24 | 195 |
| Total | 43,014 | 2,500 | 1,614 | 5,403 | 49,303 |
| Change in subordinated debt and hybrid equity (NOKm) | 31 Dec 2019 |
Issued | Fallen due/ Redeemed |
Other changes |
31 March 2020 |
|---|---|---|---|---|---|
| Ordinary subordinated loan capital, nominal value | 1,793 | - | - | - | 1,793 |
| Hybrid equity, nominal value | 287 | - | 24 | - | 263 |
| Value adjustments | 1 | - | - | -1 | 0 |
| Accrued interest | 10 | - | - | 6 | 16 |
| Total | 2,090 | - | 24 | 5 | 2,071 |
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 | 2 | 11,755 | - | 11,757 |
| - Bonds and money market certificates | 3,537 | 23,859 | - | 27,395 |
| - Equity instruments | 989 | 42 | 406 | 1,437 |
| - Fixed interest loans | - | 43 | 4.396 | 4,439 |
| Financial assets through other comprehensive income | ||||
| - Loans at fair value through other comprehensive income | - | - | 71,461 | 71,461 |
| Total assets | 4,527 | 35,699 | 76,263 | 116,489 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
| Financial liabilities through profit/loss | ||||
| - Derivatives | 18 | 7,986 | - | 8,004 |
| - Equity instruments | 34 | - | - | 34 |
| Total liabilities | 52 | 7,986 | - | 8,038 |
| Assets (NOKm) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value through profit/loss | ||||
| - Derivatives | 8 | 3,173 | - | 3,181 |
| - Bonds and money market certificates | 2,578 | 18,228 | - | 20,806 |
| - Equity instruments | 1,520 | 72 | 423 | 2,015 |
| - Fixed interest loans | - | 43 | 4,607 | 4,650 |
| Financial assets through other comprehensive income | ||||
| - Loans at fair value through other comprehensive income | - | - | 60,332 | 60,332 |
| Total assets | 4,106 | 21,515 | 65,362 | 90,984 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
| Financial liabilities through profit/loss | ||||
| - Derivatives | 7 | 3,171 | - | 3,178 |
| - Equity instruments | 30 | - | - | 30 |
| Total liabilities | 37 | 3,171 | - | 3,208 |
| Assets (NOKm) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value through profit/loss | ||||
| - Derivatives | 3 | 2,969 | - | 2,972 |
| - Bonds and money market certificates | 2,913 | 20,202 | - | 23,115 |
| - Equity instruments | 2,506 | 43 | 405 | 2,953 |
| - Fixed interest loans | - | 43 | 4,636 | 4,678 |
| Financial assets through other comprehensive income | ||||
| - Loans at fair value through other comprehensive income | - | - | 71,336 | 71,336 |
| Total assets | 5,421 | 23,256 | 76,377 | 105,053 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
| Financial liabilities through profit/loss | ||||
| - Derivatives | 2 | 3,525 | - | 3,528 |
| - Equity instruments | 244 | - | - | 244 |
| Total liabilities | 247 | 3,525 | - | 3,772 |
The following table presents the changes in the instruments classified in level 3 as at 31 March 2020:
| Equity | ||||
|---|---|---|---|---|
| instruments through |
Fixed interest |
Loans at fair value |
||
| (NOKm) | profit/loss | loans | through OCI | Total |
| Opening balance 1 January | 405 | 4,636 | 71,336 | 76,377 |
| Investment in the period | 6 | 91 | 14,177 | 14,274 |
| Disposals in the period | -11 | -395 | -14,016 | -14,421 |
| Expected credit loss | - | - | -38 | -38 |
| Gain or loss on financial instruments | 5 | 64 | 3 | 72 |
| Closing balance | 406 | 4,396 | 71,461 | 76,263 |
| (NOKm) | Equity instruments through profit/loss |
Fixed interest loans |
Loans at fair value through OCI |
Total |
|---|---|---|---|---|
| Opening balance 1 January | 550 | 4,425 | 61,294 | 66,269 |
| Investment in period | 5 | 337 | 4,817 | 5,159 |
| Disposals in the period | -166 | -161 | -5,780 | -6,107 |
| Expected credit loss | - | - | -0 | -0 |
| Gain or loss on financial instruments | 35 | 7 | 0 | 42 |
| Closing balance | 423 | 4,607 | 60,332 | 65,362 |
| (NOKm) | Equity instruments through profit/loss |
Fixed interest loans |
Loans at fair value through OCI |
Total |
|---|---|---|---|---|
| Opening balance 1 January | 550 | 4,425 | 61,294 | 66,269 |
| Investment in period | 24 | 1,054 | 44,421 | 45,499 |
| Disposals in the period | -256 | -818 | -34,350 | -35,424 |
| Expected credit loss | - | - | -36 | -36 |
| Gain or loss on financial instruments | 87 | -25 | 6 | 68 |
| Closing balance | 405 | 4,636 | 71,336 | 76,377 |
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.
Floating rate mortgages classified at fair value through other comprehensive income (OCI) are valued based on carrying amounts and expected credit losses. Mortgages without significant increase in credit risk since initial recognition, are valued at nominal amount. For loans with a significant increase in credit risk since initial recognition, expected credit loss will be calculated as for assets at amortised cost. Estimated fair value on these mortgages are the carrying amount less lifetime expected credit losses. With a doble likelihood of the worst case scenario in the expected credit loss model, the calculated fair value is reduced by NOK 7 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 279 million in Private Equity investments, property funds, hedge funds and unquoted shares through the company SpareBank 1 SMN Invest AS. 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 | 4,396 | -1 |
| Equity instruments through profit/loss* | 406 | - |
| Loans at fair value through other comprehensive income | 71,584 | -7 |
* As described above, the information to perform alternative calculations are not available
Liquidity risk is the risk that the group will be unable to refinance its debt or to finance asset increases. Liquidity risk management starts out from the group's overall liquidity strategy which is reviewed and adopted by the board of directors at least once each year. The liquidity strategy reflects the group's moderate risk profile.
The group mitigates liquidity risk by diversifying its funding across different markets, funding sources, maturities and instruments and through the use of long-term funding. Contingency plans exist both for the group and the SpareBank 1 alliance for managing the liquidity situation in periods of capital market turbulence. These plans address both bank-specific and systemic crises and a combination of the two. The group's objective is to survive twelve months of ordinary operations without access to fresh external funding while housing prices fall 30 per cent. In the same period minimum requirements to LCR shall be fulfilled.
The average residual maturity on the portfolio of senior bonds and covered bonds at the end of the first quarter 2020 was 3.4 years. The overall LCR at the same point was 185 per cent and the average overall LCR in the first quarter was 175 per cent. The LCR in Norwegian kroner at quarter-end was 137 per cent. In euro there was a net cash inflow.
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.
| Jan-March | ||||
|---|---|---|---|---|
| (NOKm) | 2020 | 2019 | 2019 | |
| Adjusted Net Profit to allocate between ECC owners and Savings Bank | ||||
| Reserve 1) | 254 | 1,017 | 2,458 | |
| Allocated to ECC Owners 2) | 162 | 650 | 1,572 | |
| Issues Equity Captial Certificates adjusted for own certificates | 129,261,369 | 129,516,409 | 129,496,367 | |
| Earnings per Equity Captial Certificate | 1.26 | 5.02 | 12.14 |
| Jan-March | |||
|---|---|---|---|
| 1) Adjusted Net Profit | 2020 | 2019 | 2019 |
| Net Profit for the group | 290 | 1,046 | 2,563 |
| Adjusted for non-controlling interests share of net profit | -12 | -10 | -56 |
| Adjusted for Tier 1 capital holders share of net profit | -24 | -19 | -49 |
| Adjusted Net Profit | 254 | 1,017 | 2,458 |
| 2) Equity capital certificate ratio (parent bank) (NOKm) | 31 March 2020 | 31 March 2019 | 31 Dec 2019 |
|---|---|---|---|
| ECC capital | 2,597 | 2,597 | 2,597 |
| Dividend equalisation reserve | 6,338 | 5,602 | 6,144 |
| Premium reserve | 895 | 895 | 895 |
| Unrealised gains reserve | 121 | 99 | 121 |
| Other equity capital | -17 | 0 | - |
| A. The equity capital certificate owners' capital | 9,934 | 9,193 | 9,758 |
| Ownerless capital | 5,541 | 5,126 | 5,432 |
| Unrealised gains reserve | 68 | 56 | 68 |
| Other equity capital | -10 | 0 | - |
| B. The saving bank reserve | 5,599 | 5,182 | 5,500 |
| To be disbursed from gift fund | - | - | 474 |
| Dividend declared | - | - | 840 |
| Equity ex. profit | 15,533 | 14,375 | 16,572 |
| Equity capital certificate ratio A/(A+B) | 64.0 % | 64.0 % | 64.0 % |
| Equity capital certificate ratio for distribution | 64.0 % | 64.0 % | 64.0 % |
| Group (NOKm) | 1Q | 4Q | 3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q |
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2019 | 2019 | 2019 | 2018 | 2018 | 2018 | 2018 | |
| Interest income effective interest method | 1.250 | 1.235 | 1.190 | 1.127 | 1.075 | 1.082 | 1.025 | 989 | 962 |
| Interest expenses | 540 | 538 | 512 | 463 | 426 | 438 | 414 | 408 | 394 |
| Net interest | 710 | 697 | 678 | 664 | 649 | 644 | 610 | 581 | 568 |
| Commission income | 349 | 371 | 374 | 363 | 329 | 343 | 344 | 361 | 339 |
| Commission expenses | 50 | 47 | 55 | 51 | 40 | 42 | 45 | 45 | 36 |
| Other operating income | 271 | 255 | 235 | 294 | 262 | 242 | 186 | 291 | 239 |
| Commission income and other income | 570 | 579 | 554 | 606 | 551 | 543 | 486 | 607 | 542 |
| Dividends | 8 | 1 | 1 | 11 | 2 | 2 | 0 | 4 | 2 |
| Income from investment in related companies | 217 | 8 | 85 | 231 | 555 | 130 | 105 | 102 | 79 |
| Net return on financial investments | -124 | 8 | 35 | 95 | 169 | -37 | 77 | 195 | 99 |
| Net return on financial investments | 101 | 17 | 121 | 336 | 727 | 95 | 182 | 300 | 180 |
| Total income | 1.381 | 1.292 | 1.353 | 1.607 | 1.926 | 1.282 | 1.277 | 1.488 | 1.290 |
| Staff costs | 443 | 411 | 404 | 438 | 447 | 391 | 376 | 413 | 403 |
| Other operating expenses | 273 | 309 | 269 | 263 | 257 | 311 | 240 | 248 | 241 |
| Total operating expenses | 716 | 720 | 673 | 701 | 704 | 701 | 616 | 661 | 645 |
| Result before losses | 665 | 572 | 680 | 907 | 1.223 | 580 | 661 | 827 | 645 |
| Loss on loans, guarantees etc. | 308 | 103 | 71 | 59 | 67 | 67 | 69 | 78 | 48 |
| Result before tax | 357 | 469 | 609 | 848 | 1.155 | 513 | 592 | 748 | 596 |
| Tax charge | 67 | 123 | 121 | 165 | 109 | 104 | 119 | 156 | 131 |
| Result investment held for sale, after tax | 0 | 0 | -0 | 0 | 0 | -8 | 6 | 150 | 1 |
| Net profit | 290 | 346 | 488 | 683 | 1.046 | 401 | 480 | 743 | 466 |
| Group (NOKm) | 1Q 2020 |
4Q 2019 |
3Q 2019 |
2Q 2019 |
1Q 2019 |
4Q 2018 |
3Q 2018 |
2Q 2018 |
1Q 2018 |
|---|---|---|---|---|---|---|---|---|---|
| Profitability | |||||||||
| Return on equity per quarter 1) | 5,7% | 7,1% | 10,2% | 14,9% | 23,3% | 9,0% | 11,1% | 17,9% | 11,2% |
| Cost-income ratio 1) | 52 % | 56 % | 50 % | 44 % | 37 % | 55 % | 48 % | 44 % | 50 % |
| Balance sheet figures | |||||||||
| Gross loans to customers | 127.272 126.277 123.967 121.895 120.100 120.473 118.044 115.787 113.174 | ||||||||
| Gross loans incl. SB1 Boligkreditt and SB1 Næringskreditt |
170.771 167.777 165.380 163.627 161.091 160.317 157.825 154.790 151.065 | ||||||||
| Deposits from customers | 88.152 | 85.917 | 83.641 | 86.553 | 81.111 | 80.615 | 77.529 | 80.343 | 75.937 |
| Total assets | 185.182 166.662 166.475 167.289 164.641 160.704 159.337 159.584 152.083 | ||||||||
| Quarterly average total assets | 175.922 166.569 166.882 165.965 162.673 160.021 159.460 155.833 152.668 | ||||||||
| Growth in loans incl. SB1 Boligkreditt and SB1 | |||||||||
| Næringskredtt last 12 months 1) | 6,0 % | 6,3 % | 6,8 % | 5,7 % | 6,6 % | 7,8 % | 7,3 % | 7,6 % | 7,9 % |
| Growth in deposits last 12 months | 8,7 % | 10,8 % | 4,1 % | 7,7 % | 6,8 % | 5,4 % | 6,1 % | 6,3 % | 8,2 % |
| Losses and defaults in % of gross loans incl. SB1 Boligkreditt and SB1 Næringskreditt |
|||||||||
| Impairment losses ratio 1) | 0,73 % | 0,25 % | 0,17 % | 0,14 % | 0,17 % | 0,17 % | 0,18 % | 0,20 % | 0,13 % |
| Non-performing commitm. as a percentage of gross | |||||||||
| loans 1) | 0,38 % | 0,26 % | 0,26 % | 0,22 % | 0,18 % | 0,19 % | 0,18 % | 0,18 % | 0,19 % |
| Other doubtful commitm. as a percentage of gross | |||||||||
| loans 1) | 1,23 % | 1,00 % | 1,03 % | 1,00 % | 0,99 % | 0,86 % | 0,86 % | 0,95 % | 0,90 % |
| Solidity 2) | |||||||||
| Common equity Tier 1 capital ratio | 16,3 % | 17,2 % | 15,1 % | 15,0 % | 14,8 % | 14,6 % | 14,9 % | 15,0 % | 14,6 % |
| Tier 1 capital ratio | 18,0 % | 19,3 % | 16,7 % | 16,6 % | 16,4 % | 16,3 % | 16,7 % | 17,0 % | 16,3 % |
| Capital ratio | 20,1 % | 21,6 % | 18,9 % | 18,8 % | 18,6 % | 18,5 % | 19,2 % | 19,0 % | 18,2 % |
| Tier 1 capital | 17.792 | 17.742 | 17.417 | 17.284 | 16.775 | 16.472 | 16.542 | 16.488 | 15.697 |
| Total eligible capital | 19.879 | 19.854 | 19.765 | 19.634 | 19.115 | 18.743 | 18.969 | 18.418 | 17.518 |
| Liquidity Coverage Ratio (LCR) | 185 % | 148 % | 181 % | 165 % | 180 % | 183 % | 150 % | 150 % | 162 % |
| Leverage Ratio | 6,9 % | 7,5 % | 7,4 % | 7,5 % | 7,4 % | 7,4 % | 7,5 % | 7,4 % | 7,3 % |
| Key figures ECC | |||||||||
| ECC share price at end of period (NOK) | 67,60 | 100,20 | 98,50 | 97,70 | 87,40 | 84,20 | 90,90 | 84,50 | 80,90 |
| Number of certificates issued, millions 1) | 129,22 | 129,30 | 129,48 | 129,66 | 129,41 | 129,62 | 129,44 | 129,31 | 129,38 |
| Booked equity capital per ECC (including dividend) | |||||||||
| 1) | 86,85 | 90,75 | 89,36 | 87,04 | 83,86 | 83,87 | 82,57 | 80,21 | 76,53 |
| Profit per ECC, majority 1) | 1,26 | 1,60 | 2,30 | 3,21 | 5,02 | 1,90 | 2,32 | 3,54 | 2,21 |
| Price-Earnings Ratio 1) | 13,46 | 15,67 | 10,69 | 7,61 | 4,35 | 11,05 | 9,77 | 5,97 | 9,16 |
| Price-Book Value Ratio 1) | 0,78 | 1,10 | 1,10 | 1,12 | 1,04 | 1,00 | 1,10 | 1,05 | 1,06 |
1) Defined as alternative performance measures, see attachment to the quarterly report
2) Comparables have not been restated since revised distribution of profit for 2019.
OSEBX = Oslo Stock Exchange Benchmark Index (rebased) OSEEX = Oslo Stock Exchange ECC Index (rebased)
1 April 2018 to 31 March 2020
Total number of ECs traded (1000)
| 20 largest ECC holders | Number | Share |
|---|---|---|
| VPF Nordea Norge | 4,864,385 | 3.75 % |
| Sparebankstiftelsen SMN | 3,965,391 | 3.05 % |
| Euroclear Bank S.A./N.V. | 3,537,174 | 2.72 % |
| VPF Odin Norge | 3,342,919 | 2.57 % |
| Danske Invest Norske aksjer institusjon II. | 3,162,149 | 2.44 % |
| Vertex Markets SA | 3,000,000 | 2.31 % |
| J.P. Morgan Securities plc | 2,761,083 | 2.13 % |
| VPF Pareto aksje Norge | 2,397,025 | 1.85 % |
| State Street Bank and Trust Comp (nominee) | 2,262,954 | 1.74 % |
| VPF Alfred Berg Gambak | 2,163,100 | 1.67 % |
| State Street Bank and Trust Comp (nominee) | 2,157,539 | 1.66 % |
| Morgan Stanley & Co. International | 2,100,862 | 1.62 % |
| Pareto Invest AS | 1,782,600 | 1.37 % |
| Forsvarets personellservice | 1,779,246 | 1.37 % |
| VPF Eika egenkapitalbevis | 1,719,305 | 1.32 % |
| KBC bank NV | 1,413,000 | 1.09 % |
| VPF Nordea kapital | 1,408,636 | 1.08 % |
| MP pensjon PK | 1,352,771 | 1.04 % |
| J. P. Morgan Bank Luxembourg S.A. (nominee) | 1,352,299 | 1.04 % |
| Danske invest norske aksjer institusjon I | 1,341,275 | 1.03 % |
| The 20 largest ECC holders in total | 47,863,713 | 36.86 % |
| Others | 81,972,730 | 63.14 % |
| Total issued ECCs | 129,836,443 | 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 about one half of the owner capital's share of the net profit for the year should be disbursed in dividends and, similarly, that about 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.
To the Board of Directors of SpareBank 1 SMN
We have reviewed the accompanying consolidated interim balance sheet of SpareBank 1 SMN as of 31 March 2020, the income statement, the statement of comprehensive income, the statement of changes in equity and the cash flow statement for the three-month period then ended, and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with IAS 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review.
We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISAs), and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information does not present fairly, in all material respects, the financial position of the entity as at 31 March 2020, and its financial performance and its cash flows for the three-month period then ended in accordance with IAS 34 Interim Financial Reporting.
Trondheim, 7 May 2020 PricewaterhouseCoopers AS
Rune Kenneth S. Lædre State Authorised Public Accountant
Note: This translation from Norwegian has been prepared for information purposes only.
PricewaterhouseCoopers AS, Brattørkaia 17B, Postboks 6365 Torgard, NO-7492 Trondheim T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
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