Quarterly Report • Feb 5, 2021
Quarterly Report
Open in ViewerOpens in native device viewer
| Main figures 3 | |
|---|---|
| Report of the Board of Directors 5 | |
| Income statement 23 | |
| Balance sheet 25 | |
| Cash flow statement 26 | |
| Change in equity 27 | |
| Notes 30 | |
| Results from quarterly accounts 56 | |
| Key figures from quarterly accounts 57 | |
| Equity capital certificates 58 |
| Jan-Dec | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| From the income statement | NOKm | % 1) | NOKm | % 1) |
| Net interest | 2,759 | 1.50 | 2,687 | 1.63 |
| Net commission income and other income | 2,572 | 1.40 | 2,290 | 1.39 |
| Net return on financial investments | 951 | 0.52 | 1,201 | 0.73 |
| Total income | 6,281 | 3.42 | 6,178 | 3.74 |
| Total operating expenses | 2,952 | 1.61 | 2,797 | 1.69 |
| Results before losses | 3,329 | 1.81 | 3,380 | 2.05 |
| Loss on loans, guarantees etc | 951 | 0.52 | 299 | 0.18 |
| Results before tax | 2,378 | 1.30 | 3,081 | 1.87 |
| Tax charge | 400 | 0.22 | 518 | 0.31 |
| Result investment held for sale, after tax | 1 | 0.00 | 0 | 0.00 |
| Net profit | 1,978 | 1.08 | 2,563 | 1.55 |
| Interest Tier 1 Capital | 59 | 49 | ||
| Net profit excl. Interest Tier 1 Capital | 1,919 | 2,514 | ||
| Key figures | 31 Dec 2020 |
31 Dec 2019 |
||
| Profitability | ||||
| Return on equity 2) | 10.0 % | 13.7 % | ||
| Cost-income ratio 2) | 47 % | 45 % | ||
| Balance sheet figures | ||||
| Gross loans to customers | 134,648 | 126,277 | ||
| Gross loans to customers incl. SB1 Boligkreditt and SB1 Næringskreditt | 182,801 | 167,777 | ||
| Deposits from customers | 97,529 | 85,917 | ||
| Deposit-to-loan ratio excl. SB1 Boligkreditt and SB1 Næringskreditt | 72 % | 68 % | ||
| Deposit-to-loan ratio incl. SB1 Boligkreditt and SB1 Næringskreditt 2) | 53 % | 51 % | ||
| Growth in loans (gross) last 12 months (incl. SB1 Boligkreditt and SB1 Næringskreditt) 2) | 9.0 % | 4.7 % | ||
| Growth in deposits last 12 months | 13.5 % | 6.6 % | ||
| Average total assets | 183,428 | 165,154 | ||
| Total assets | 187,912 | 166,662 | ||
| Losses and defaults in % of gross loans incl. SB1 Boligkreditt and SB1 Næringskreditt | ||||
| Impairment losses ratio 2) | 0.54 % | 0.18 % | ||
| Non-performing commitm. as a percentage of gross loans 2) | 0.25 % | 0.26 % | ||
| Other doubtful commitm. as a percentage of gross loans 2) | 0.98 % | 1.00 % | ||
| Solidity 3) | ||||
| Capital ratio | 22.3 % | 21.6 % | ||
| Tier 1 capital ratio | 20.0 % | 19.3 % | ||
| Common equity Tier 1 capital ratio | 18.3 % | 17.2 % | ||
| Tier 1 capital | 18,636 | 17,742 | ||
| Total eligible capital | 20,759 | 19,854 | ||
| Liquidity Coverage Ratio (LCR) | 171 % | 148 % | ||
| Leverage Ratio | 7.1 % | 7.5 % | ||
| Branches and staff | ||||
| Number of branches | 45 | 46 | ||
| No. Of full-time positions | 1,560 | 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 Dec 2020 | 31 Dec 2019 | 31 Dec 2018 | 31 Dec 2017 | 31 Dec 2016 |
|---|---|---|---|---|---|
| ECC ratio | 64.0 % | 64.0 % | 64.0 % | 64.0 % | 64.0 % |
| Number of certificates issued, millions 2) | 129.39 | 129.30 | 129.62 | 129.38 | 129.64 |
| ECC share price at end of period (NOK) | 97.60 | 100.20 | 84.20 | 82.25 | 64.75 |
| Stock value (NOKM) | 12,629 | 12,956 | 10,914 | 10,679 | 8,407 |
| Booked equity capital per ECC (including dividend) 2) | 94.71 | 90.75 | 83.87 | 78.81 | 73.35 |
| Profit per ECC, majority 2) | 8.87 | 12.14 | 9.97 | 8.71 | 7.93 |
| Dividend per ECC 3) | 4.40 | 6.50 | 5.10 | 4.40 | 3.00 |
| Price-Earnings Ratio 2) | 11.01 | 8.26 | 8.44 | 9.44 | 8.17 |
| Price-Book Value Ratio 2) | 1.03 | 1.10 | 1.00 | 1.04 | 0.88 |
2) Defined as alternative performance measures, see attachment to quarterly report
3) Dividend for 2019 was reduced from 6.50 to 5.0. For 2020, a dividend of NOK 4.4 is proposed per certificate, of which only 1.3 is paid before 30 September in line with guidelines from the Ministry of Finance. See description in note 1
(Consolidated figures. Figures in parenthesis refer to the same period of 2019 unless otherwise stated)
Covid-19 has sparked a broad-based international and national economic crisis accompanied by increased unemployment and a dramatic fall in demand. The macroeconomic picture reflected immense uncertainty, and government authorities initiated a series of measures to assist businesses and private individuals.
Activity picked up through the summer and the unemployment rate receded, but a second wave of infection struck in the autumn putting a new brake on the economy. While the impact does not look to be as dramatic as in the spring, the negative effects on the economy will nonetheless be long-lasting. A rapid rollout of effective vaccines will help mitigate this and reduce the uncertainty, at the same time as low interest rates stimulate production and employment.
The housing market showed a positive development in the second half of 2020, but uncertainty remains in evidence. Individual sectors such as offshore and the hospitality industry still face challenges.
The project was finalised in December 2020. A number of measures with associated gains will be carried through in 2021. SpareBank 1 SMN is establishing 17 regional centres in which the group's business lines will be co-located. Strong specialist units under development in the regional centres will provide customers with an improved offering in accounting, estate agency and banking services. Joint support and development units in the group are being established to deliver services of high quality and efficiency.
A customer-oriented and simplified distribution system, increased digitalisation along with streamlining of support functions will enable group FTEs to be reduced by 100 in the course of 2021. Severance packages have been agreed with 75 staff members to that end. The costs thus incurred have been charged to the fourth quarter accounts for 2020 in an amount of NOK 80m. A provision of NOK 3m was also made for planned modifications to the branch network.
One SMN is central to achieving the group's strategy for the period to 2023, and provides the basis for a united and forward-looking group. Overarching objectives are an improved customer experience, a strengthened market position and improved profitability. A profit improvement of NOK 400m before tax is targeted through increased synergies, increased revenues, cost efficiencies and improved capital utilisation.
In addition to the above changes, the measures include new customer offerings, improved pricing models along with increased use of knowledge about the customer.
The group's sustainability profile will contribute to achieving the group's goals and create values for customers, owners and employees. The board of directors of SpareBank 1 SMN has therefore adopted a new strategy for sustainability. SpareBank 1 SMN will stimulate sustainable development in the region through being a
In its role as a driver for the green transition, the group will reduce its direct and indirect CO2 emissions in keeping with Norway's obligations under the Paris Agreement. The object is to reduce total emissions by at least 50 per cent by year 2030. The overarching indicator of sustainability will be the proportion of loans/turnover that qualify as sustainable economic activity.
In its partner role for the inclusive development of society, the group will profile international worker and human rights, and promote sustainable innovation and entrepreneurship. The object is to recruit a workforce that reflects the diversity of the population by year 2030.
In its role as guide to building a responsible business culture, the group will aspire to an efficient, responsible and open business culture at all levels and in all contexts. The object is to ensure zero tolerance of breaches of the group's standards of ethics, marketing and purchases.
Efforts are being made to concretise goals both in the short and long term in order to realise the group's sustainability strategy. The goals will be presented when reporting the first quarter of 2021.
Trondheim Municipality has opted for SpareBank 1 SMN as its main bank. This is a comprehensive agreement covering the areas of payment solutions, deposits, financing and securities services along with advisory services. Trondheim Municipality highlighted SpareBank 1 SMN's high ambitions as regards the environment and sustainability. Trondheim Municipality has 15,000 employees and an overall operating budget of NOK 16.6bn.
The SpareBank 1 banks are pooling their forces in a joint undertaking focused on savings and investment, and establishing SpareBank 1 Forvaltning. Customer orientation, economies of scale and better utilisation of the SpareBank 1 banks' distributive power are at centre-stage. The company will comprise the subsidiaries ODIN Forvaltning, SpareBank 1 Kapitalforvaltning and SpareBank 1 Verdipapirservice.
Andreas Eieland (40) has been appointed new managing director at SpareBank 1 Finans Midt-Norge and took up duties at the turn of 2021. He was previously head of sales and marketing at the IT company Powel. He is a chartered engineer, graduating in technical cybernetics from the Norwegian University of Science and Technology (NTNU).
SpareBank 1 SMN posted a net profit of NOK 450m (346m), and a return on equity of 8.9 per cent (7.1 per cent), in the fourth quarter. The fourth quarter figure is NOK 69m lower than in the third quarter of 2020. Earnings per equity certificate (EC) in the fourth quarter were NOK 1.99 (1.60) and book value per EC was NOK 94.71 (90.75).
Net interest income in the quarter came to NOK 688m (697m), NOK 8m down on the third quarter. The margins on residential mortgages and on loans to corporates were somewhat lower in the fourth quarter compared with the third quarter due to higher market interest rates. Increased deposit margins and growth kept net interest income at the same level as in the third quarter.
Commission income rose by NOK 119m from the previous quarter to reach a total of NOK 757m (579m). The increase from the third quarter is in all essentials down to higher income from securities services at SpareBank 1 Markets. Incomes are NOK 179m higher than in the same quarter of 2019; this is ascribable to higher income from securities services and commission income on loans sold to SpareBank 1 Boligkreditt.
Return on financial investments was NOK 53m in the fourth quarter (8 m), NOK 21m higher than in the third quarter.
At NOK 117m (8m), results recorded by related companies show a decline of NOK 53m from the third quarter.
Operating expenses increased by NOK 160m from the third to the fourth quarter, reaching NOK 845m (720m). Growth from the third quarter refers to increased costs at SpareBank 1 Markets as a result of increased variable pay due to high customer-focused activity in addition to provisions for readjustments at the bank.
Loan losses in the fourth quarter increased by NOK 11m from the third quarter, and totalled NOK 242m (103m). Losses on loans to the group's corporate clients totalled NOK 236m in the fourth quarter (81m). Losses on loans to retail borrowers in the fourth quarter totalled NOK 6m (21m).
Lending rose 1.9 per cent in the fourth quarter of 2020 (1.4 per cent). Growth in lending to retail borrowers was 1.6 per cent (2.0 per cent). Loans to corporates rose 2.5 per cent (0.3 per cent).
Deposits rose by 2.2 per cent (2.7 per cent). Deposits from retail customers rose by 0.1 per cent (0.9 per cent) and from corporate clients by 3.8 per cent (4.0 per cent).
Overall profit posted by the subsidiaries in the fourth quarter came to NOK 189m (62m), which was an increase of NOK 64m from the third quarter. The profit growth both from the previous quarter and from the same quarter of 2019 is due to an excellent profit performance at SpareBank 1 Markets.
The pre-tax profit for 2020 was NOK 2,378m (3,081m). The post-tax profit is NOK 1,978m (2,563m) and return on equity 10.0 per cent (13.7 per cent).
Overall operating income in 2020 came to NOK 5,331m (4,976m), an increase of 7.1 per cent from the previous year. Of the income growth, NOK 91m derives from banking operations and NOK 263m from the bank's subsidiaries.
The profit share from ownership interests and related companies was NOK 681m (879m), including an insurance gain of NOK 340m (460m).
Return on financial instruments totalled NOK 230m (307m).
Operating expenses came to NOK 2,952m (2,797m) in 2020. Of the increase of NOK 155m, NOK 83m refers to reorganisation expenses, NOK 30m to banking operations and NOK 42m to increased activity at the subsidiaries.
Losses on loans and guarantees totalled NOK 951m (299m).
Strong growth is noted in lending and deposits, and the bank is expanding its market share. Aggregate lending increased by 9.0 per cent (4.7 per cent) and deposits by 13.5 per cent (6.6 per cent) in 2020.
As at 31 December 2020 the CET1 ratio was 18.3 per cent (17.2 per cent). The CET1 ratio target is 16.9 per cent.
Earnings per EC were NOK 8.87 (12.14). The book value per EC was NOK 94.71 (90.75) including the proposed dividend for 2020 of NOK 4.40.
The price of the bank's equity certificate (MING) at year-end was NOK 97.60 (100.20).
It is the group's results that comprise the basis for distribution of the net profit for the year; the distribution is done at the parent bank. The parent bank's disposable profit includes dividends received from subsidiaries, related companies and joint ventures, and is adjusted for interest expenses on hybrid capital after tax.
Subsidiaries are fully consolidated in the group accounts, whereas profit shares from related companies and joint ventures are consolidated using the equity method. Dividends are accordingly not included in the group results.
The annual profit for distribution reflects changes of NOK 50m in the unrealised gains reserve.
The total amount for distribution is accordingly NOK 1,250m.
| Difference between Group - Parent Bank | 2020 | 2019 |
|---|---|---|
| Profit for the year, Group | 1,978 | 2,563 |
| Interest hybrid capital | -56 | -47 |
| Profit for the year excl interest hybrid capital, group | 1,922 | 2,516 |
| Profit, subsidiaries | -427 | -286 |
| Dividend, subsidiaries | 220 | 162 |
| Profit, associated companies | -681 | -879 |
| Dividend, associated companies | 272 | 704 |
| Group eliminations | -6 | -2 |
| Profit for the year excl interest hybrid capital, Parent bank | 1,300 | 2,216 |
| Distribution of profit | 2020 | 2019 |
| Profit for the year excl interest hybrid capital, Parent bank | 1,300 | 2,216 |
| Transferred to/from revaluation reserve | -50 | -34 |
| Profit for distribution | 1,250 | 2,182 |
| Dividends | 569 | 647 |
| Equalisation fund | 230 | 749 |
| Saving Bank's fund | 130 | 422 |
| Gifts | 321 | 364 |
| Total distributed | 1,250 | 2,182 |
The profit is distributed between the ownerless capital and the equity certificate (EC) capital in proportion to their relative shares of the bank's total equity, such that dividends and the allocation to the dividend equalisation fund constitute 64.0 per cent of the distributed profit.
The Ministry of Finance's recommendation in its press release dated 20 January 2021 implies curbs on the bank's dividend payouts. The recommendation rests on the ministry's assessment that the uncertainties afflicting the economy remain unusually large, and that banks could in time face substantial loan losses. The Ministry of Finance expects any Norwegian bank which – after a prudent assessment and based on the ESRB's recommendation – finds a basis for payouts, to limit its overall payouts to a maximum of 30 per cent of overall annual profit for the years 2019 and 2020 up to 30 September 2021.
Earnings per equity certificate were NOK 8.87. In keeping with the bank's dividend policy, the board of directors recommends the bank's supervisory board to declare a cash dividend of NOK 4.40, altogether totalling NOK 569m. In light of the Ministry of Finance's advisory, the board of directors recommends the disbursement of NOK 1.30, altogether NOK 168m, which is compliant with the limit of 30 per cent of the overall annual profit for 2019 and 2020. The board of directors further recommends the bank's supervisory board to allocate NOK 321m to community dividend, of which only NOK 95m is to be disbursed prior to 30
September 2021. The board is given authorisation to decide whether to distribute all or parts of the remaining dividend and community dividend after 30 September 2021 if the capital situation and government guidelines so permits and regulatory amendments adopted.
Of this amount it is proposed that NOK 121m be transferred to the foundation Stiftelsen SpareBank 1 SMN and NOK 200m as community dividend to non-profit causes. The amount of NOK 95m to be disbursed prior to 30 September goes in its entirety to non-profit causes. NOK 230m and NOK 130m are transferred to the dividend equalisation fund and the ownerless capital respectively.
After distribution of the profit for 2020, the ratio of EC capital to total equity remains 64.0 per cent.
Net interest income rose by NOK 72m to NOK 2,759m (2,687m) in 2020. Changes in net interest income are mainly ascribable to
In the spring of 2020 Norges Bank (Norway's central bank) reduced its key policy rate from 1.50 per cent to zero. SpareBank 1 SMN lowered its mortgage lending rate by up to 125 points in the course of the second quarter. Deposit rates were lowered in the second and third quarter. NIBOR was reduced by about 145 points over the course of 2020.
NIBOR was at low levels in the second and third quarter, but rose through the fourth quarter of 2020, thus narrowing lending margins from the third to fourth quarter. Growth in lending and deposits and improved margins on deposits from retail customers compensated for this, and net interest income in the fourth quarter was at the same level as in the third quarter.
Norges Bank retains an unchanged key policy rate, and signals that it will stand at zero per cent for over one year ahead. Thereafter Norges Bank expects a gradual increase in the key policy rate as conditions in the economy normalise.
Commission income and other operating income rose by NOK 283m to NOK 2,572m in 2020 (2,290m).
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 422m (365m) as at 31 December 2020. Both the margins on, and the volumes of, loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt have increased.
Other commission income totalled NOK 2,151m (1,925m). The growth of NOK 226m is driven essentially by incomes from securities services at SpareBank 1 Markets. Increased incomes from accounting services and insurance products are also noted, but payment transfers have decreased. It has also been good underlying growth in real estate when the closure of BN Bolig is taken into account.
A high number of multi-product customers is important for the bank. It signifies high customer satisfaction and provides the bank with a diversified income flow.
| Commission and other income (NOKm) | 2020 | 2019 | Change |
|---|---|---|---|
| Payment transfers | 219 | 233 | -14 |
| Creditcard | 59 | 59 | -0 |
| Saving products | 109 | 100 | 9 |
| Insurance | 195 | 183 | 12 |
| Guarantee commission | 48 | 51 | -3 |
| Real estate agency | 392 | 390 | 2 |
| Accountancy services | 506 | 473 | 33 |
| Markets | 577 | 386 | 191 |
| Other commissions | 45 | 49 | -4 |
| Commissions ex SB1 Boligkreditt and SB1 Næringskreditt | 2,151 | 1,925 | 226 |
| Commissions SB1 Boligkreditt | 408 | 349 | 59 |
| Commissions SB1 Næringskreditt | 13 | 16 | -3 |
| Total commissions and other income | 2,572 | 2,290 | 283 |
Overall return on financial investments was NOK 230m (307m) in 2020:
| Return on financial investments (NOKm) | 2020 | 2019 | Change |
|---|---|---|---|
| Gain/(loss) on shares | -4 | 120 | -124 |
| Gain/(loss) on sertificates and bonds | 103 | -20 | 124 |
| Gain/(loss) on derivatives | 32 | 132 | -100 |
| Gain/(loss) on financial instruments related to hedging | 1 | -9 | 11 |
| Gain/(loss) on other financial instruments at fair value (FVO) | -11 | 9 | -20 |
| Gain/(loss) on foreign exchange | 82 | 22 | 59 |
| Gain/(loss) on shares and share derivatives at SpareBank 1 Markets | 28 | 54 | -26 |
| Net return on financial instruments | 230 | 307 | -77 |
The product companies give the bank's customers access to a broader product range and provide the bank with commission income, as well as return on invested capital. The overall profit of the product companies and other related companies was NOK 341m (418m) in 2020. Also noted is a gain of NOK 340m upon the transfer of personal risk products from SpareBank 1 Forsikring to Fremtind Livsforsikring as of 1 January 2020. In the first half of 2019 a gain of NOK 460m was posted related to the establishment of Fremtind.
| Income from investment in associated companies | 2020 | 2019 | Change |
|---|---|---|---|
| SpareBank 1 Gruppen | 194 | 252 | -58 |
| Gain Fremtind | 340 | 460 | -120 |
| SpareBank 1 Boligkreditt | 18 | 26 | -8 |
| SpareBank 1 Næringskreditt | 18 | 21 | -2 |
| SpareBank 1 Kreditt | 2 | 13 | -11 |
| BN Bank | 120 | 113 | 8 |
| SpareBank 1 Betaling | -2 | 3 | -4 |
| Other companies | -10 | -8 | -2 |
| Income from investment in associated companies | 681 | 879 | -197 |
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, SpareBank 1 Factoring and Modhi Finance. SpareBank 1 Gruppen owns 65 per cent of the insurer Fremtind, while DNB owns 35 per cent.
The profit share from SpareBank 1 Gruppen for 2020 was NOK 534m, down by a total of NOK 178m compared with the same period of 2019, of which NOK 120m is due to a smaller merger gain. 2019 saw a profit effect of NOK 460m from the Fremtind Forsikring merger, compared with a profit effect of NOK 340m from the merger of Fremtind Livsforsikring in 2020.
Fremtind Forsikring recorded good results in 2020 of NOK 1,168m (597m). Recognition of income from reinsurers is noted, along with run-off gains of NOK 345m. Claims ratios for the main segments – retail market house insurance and retail market car insurance – remain low. The quick clay landslide in Gjerdrum between Christmas and New Year affects the claims ratio overall by 1.6 percentage points, amounting to NOK 124m. The claims ratio on travel insurance remains relatively high due to Covid-19.
SpareBank 1 Forsikring reported a profit of NOK 234m (944m), reflecting a weak financial performance. A positive insurance risk result and return on the company portfolio partially compensate for this.
ODIN Forvaltning posted a profit of NOK 96m (71m). At the end of 2020 capital under management totalled NOK 81bn, an increase of NOK 16bn from 2019. The 35 per cent profit improvement is ascribable to net subscription in 2020 of NOK 3bn and increased capital under management due to value increases.
SpareBank 1 Factoring has some volume decline as a result of the corona crisis and delivers an annual result of NOK 53m (58m). The result for the Modhi Group was NOK 6m (48m), which is lower than last year and is mainly due to start-up costs in Finland and Sweden.
SpareBank 1 Boligkreditt was established by the banks making up SpareBank 1-alliansen 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 December 2020 the bank had sold loans totalling NOK 46.6bn (39.8bn) to SpareBank 1 Boligkreditt, corresponding to 37.5 per cent (34.6 per cent) of the bank's overall lending to retail borrowers.
The bank's stake in SpareBank 1 Boligkreditt is 22.4 per cent, and the bank's share of that company's profit in 2020 was NOK 18m (26m).
SpareBank 1 Næringskreditt was established along the same lines and with the same administration as SpareBank 1 Boligkreditt. As at 31 December 2020, loans worth NOK 1.5bn (1.7bn) 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 2020 was NOK 18m (21m). The bank's holding reflects the bank's relative share of commercial property loans sold and the bank's stake in BN Bank.
This company delivers products for all types of unsecured credit, including credit cards, consumer loans, refinancing, part payments and payment deferments to retail customers in Norway. It currently has 48 employees.
The profit for 2020 was NOK 12m (75m). SpareBank 1 Kreditt is owned by the SpareBank 1 banks, and SpareBank 1 SMN has a stake of 17.5 per cent. SpareBank 1 SMN's share of the profit for 2020 is NOK 2m (13m), and the bank's share of the portfolio is NOK 946m (946m). The decline in profit is mainly due to lower consumption – for example foreign travel – by the general public and thus lower credit card turnover.
SpareBank 1 Kreditt also manages the LOfavør credit card programme.
SpareBank 1 SMN owns 35.0 per cent of BN Bank as at 31 December 2020. BN Bank is a bank for residential mortgages and commercial property and its main market is Oslo and south-eastern Norway.
BN Bank recorded a profit of NOK 354m in 2020 (327m), providing a return on equity of 8.1 per cent (8.3 per cent). SpareBank 1 SMN's share of BN Bank's profit for 2020 was NOK 120m (113m).
SpareBank 1 Betaling is the SpareBank 1 banks' parent company for Vipps payments 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).
SpareBank 1 Betaling posted a deficit of NOK 9m in 2020, and SpareBank 1 SMN's share of the deficit is NOK 2m (profit of 3m).
Overall expenses rose by NOK 155m, or 5.5 per cent, in 2020 and totalled NOK 2,952m (2,797m). In the fourth quarter, reorganisation funds worth NOK 80m were set aside for the planned staff reduction of 100 FTEs in 2021, and NOK 3m for restructuring of the branch network. This provision aside, the growth in expenses was 2.7 per cent.
The bank's costs rose by NOK 30m (disregarding the provision for reorganisation) to NOK 1,477m in 2020. The increase corresponds to 2.2 per cent. The growth in costs refers to wage growth and increased costs related to digitalisation and modernisation of the bank.
Costs among the subsidiaries rose by NOK 42m in 2020 to NOK 1,476m (1,434m). Costs were reduced by NOK 72m as a result of the wind-up of BN Bolig in 2019. At SpareBank 1 Markets, high customer activity has brought strong income growth and cost growth of NOK 72m as a result of increased variable remuneration. Cost growth totalling NOK 42m is noted in the remaining subsidiaries.
The group's cost growth is approaching the target level of 2 per cent. The profitability project 'One SMN' prioritises taking out gains through improved efficiency and general cost reductions across the entire group. A simplified and more group-oriented organisation lays the basis for efficiency gains. Cost reductions of NOK 200m annually will be achieved over a two-year period. Staffing will be reduced by 100 FTEs in 2021. The group is in the process of simplifying the distribution structure, coordinating support functions and progressing digitalisation. In addition, IT and other operating expenses are to be reduced.
The cost-income ratio was 47 per cent (45 per cent) for the group, 37 per cent (32 per cent) for the parent bank.
Net losses on loans in 2020 totalled NOK 951m (299m). Net loan losses measure 0.54 per cent of total outstanding loans (0.18 per cent).
A loss of NOK 873m (231m) was recorded on loans to corporates in 2020. Of this figure, NOK 204m refers to a single exposure. Losses on the offshore segment total NOK 451m.
In the first quarter of 2020 the bank revised the assumptions underlying its baseline scenario in a negative direction. This position was retained for the remainder of 2020. As from the third quarter the bank's exposure to hotels and the hospitality industry was separated off into a portfolio where assessments of PD and LGD paths and special scenarios and associated weighting reflect this industry's vulnerability to the effects of Covid-19. Moreover, this entire portfolio is classified to stage 2 or 3. See Note 2 for a further description. The provision for expected loss on these loans amounts to NOK 58m. In the fourth quarter the bank also revised its weighting of the scenarios for the other portfolios, giving greater emphasis to the downside scenario. Provisions are increased due to negative migration of NOK 86m in the remaining corporate portfolio.
A loss of NOK 78m was recorded on loans to retail borrowers in 2020 (68m), of which NOK 50m is related to the changes made in assumptions employed in the bank's loss model.
Write-downs on loans and guarantees totalled NOK 1,630m as at 31 December 2020 (1,121m).
Overall problem loans (defaulted and doubtful) come to NOK 2,255m (2,110m), corresponding to 1.23 per cent (1.26 per cent) of gross outstanding loans, including loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt. All loans classified to stage 3 in the expected-credit-loss model are defined as problem loans.
Defaults in excess of 90 days totalled NOK 456m (429m). Defaults measure 0.25 per cent of gross outstanding loans (0.26 per cent). The increase refers in all essentials to the retail market portfolio.
Other doubtful exposures total NOK 1,800m (1,681m). Other doubtful exposures measure 0.98 per cent (1.00 per cent) of gross outstanding loans. The increase is mainly down to a small number of commitments in the offshore portfolio.
A very large share of the year's loan losses refers to oil-related activities – the quality of the loan portfolio is otherwise good.
The bank's assets totalled NOK 188bn as at 31 December 2020 (167bn).
As at 31 December 2020, loans worth a total of NOK 48bn (42bn) 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 into account loans sold to SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt.
Total outstanding loans rose by NOK 15.0bn (7.5bn), corresponding to 9.0 per cent (4.7 per cent), in the last 12 months to reach NOK 182.8bn (167.8bn) as at 31 December 2020.
The group shows good growth in lending to retail borrowers and is strengthening its market position, with a substantial portion of the growth in the LO (Norwegian Trade Unions Confederation) segment. The growth in lending to corporate clients is largely to small and medium-sized businesses.
Customer deposits rose in the last 12 months by NOK 11.6bn (5.3bn) to reach NOK 97.5bn (85.9bn). This represents a growth of 13.5 per cent (6.6 per cent).
Increased growth in deposits from retail customers is largely a consequence of reduced consumption resulting from the Covid-19 situation. The growth in deposits from corporate clients is fairly evenly distributed between businesses and public sector clients.
(For distribution by sector, see note 9).
The customer portfolio of off-balance sheet investment products totalled NOK 12.9bn (11.7bn) at the end of 2020. The increase of NOK 1.2bn is a result of good sales and value increases on equity funds.
| Saving products, customer portfolio (NOKm) | 2020 | 2019 | Change |
|---|---|---|---|
| Equity funds | 9,223 | 7,437 | 1,786 |
| Pension products | 724 | 740 | -16 |
| Active management | 3,005 | 3,501 | -496 |
| Total | 12,952 | 11,678 | 1,274 |
The bank's insurance portfolio grew 7.1 per cent in 2020. Satisfactory growth was noted in all product groups.
| Insurance, premium volume (NOKm) | 2020 | 2019 | Change |
|---|---|---|---|
| Non-life insurance | 962 | 888 | 74 |
| Personal insurance | 398 | 376 | 22 |
| Occupational pensions | 336 | 319 | 17 |
| Total | 1,696 | 1,583 | 113 |
Outstanding loans to retail borrowers total NOK 129bn (119bn) and deposits total NOK 47bn (42bn) as at 31 December 2020. These are loans to and deposits from wage earners, agricultural customers and sole proprietorships at the parent bank.
Operating income posted by Retail Banking totalled NOK 2,078m (2,177m) in 2020. Net interest income accounted for NOK 1,213m (1,372m) and commission and other income for NOK 865m (805m). Net interest income declined due to weakened deposit margins and low return on the retail market share of the return on the bank's equity capital. On the other hand, increased lending and deposits, along with higher lending margins, have strengthened net interest income. Commission income has risen as a result of growth in incomes from investment and insurance products. Overall income fell by NOK 99m. Return on capital employed in the retail banking segment was 13.4 per cent (13.1 per cent). Capital employed is regulatory capital of 15.4 per cent, corresponding to the Group's targeted CET1 ratio through 2020.
The lending margin in 2020 was 1.80 per cent (1.50 per cent), while the deposit margin was minus 0.03 per cent (0.61 per cent) measured against three-month NIBOR. The market interest rate in terms of three-month NIBOR fell markedly in 2020.
Retail lending and retail deposits grew by 8.2 per cent (5.9 per cent) and 14.0 per cent (4.0 per cent) respectively in 2020.
Lending to retail borrowers consistently carries low risk, as reflected in continued low losses. The loan portfolio is secured by residential property.
Outstanding loans to corporates totalled NOK 45bn (40bn) and deposits totalled NOK 49bn (43bn) as at 31 December 2020. This is a diversified portfolio of loans to and deposits from corporate clients in the counties of Trøndelag and Møre and Romsdal.
Operating income in the corporate segment totalled NOK 1,381m (1,388m) in 2020. Net interest income was NOK 1,149m (1,171m), and commission income and return on financial investments came to NOK 232m (217m). Higher lending margins and growth have strengthened net interest income while reduced deposit margins and lower return on the corporate share of return on the bank's equity capital have had a negative impact.
The lending margin was 2.79 per cent (2.57 per cent) and the deposit margin was minus 0.15 per cent (minus 0.06 per cent) in 2020.
Lending growth was 11.7 per cent (reduction of 1.3 per cent) and deposits rose 15.6 per cent (9.0 per cent) in 2020.
Net overall losses in the corporate banking segment rose substantially in 2020, totalling NOK 846m (213bn) as at 31 December 2020. Of the losses, NOK 204m refer to a single exposure and NOK 455m to the offshore segment. Increased provisions as a result of lower expectations of the Norwegian economy, and a general negative migration in the portfolio, are also noted.
Return on capital employed for the corporate banking segment was 2.1 per cent in 2020 (11.7 per cent). Capital employed is regulatory capital of 15.4 per cent, corresponding to the Group's targeted CET1 ratio in 2020.
The bank's subsidiaries posted an overall pre-tax profit of NOK 540.0m in 2020 (346.8m).
| Pre-tax profit (NOKm) | 2020 | 2019 | Change |
|---|---|---|---|
| EiendomsMegler 1 Midt-Norge (87 per cent) | 52.2 | 31.5 | 20.7 |
| BN Bolig | - | -30.2 | 30.2 |
| SpareBank 1 Regnskapshuset SMN (88,7 per cent) | 110.2 | 108.3 | 1.9 |
| SpareBank 1 Finans Midt-Norge (61,2 per cent) | 214.2 | 149.9 | 64.3 |
| Sparebank 1 Markets (66,7 per cent) | 179.4 | 43.4 | 135.9 |
| SpareBank 1 SMN Invest (100 per cent) | 5.8 | 47.6 | -41.9 |
| SpareBank 1 SMN Spire Finans (100 per cent) | -29.8 | -19.8 | -10.0 |
| Other companies | 8.2 | 16.0 | -7.8 |
| Total | 540.0 | 346.8 | 193.2 |
Eiendomsmegler 1 Midt-Norge is the market leader in Trøndelag and in Møre and Romsdal. Operating income in 2020 totalled NOK 394m (349m in 2019 disregarding BN Bolig), while operating expenses were NOK 342m (317m in 2019 disregarding BN Bolig). EiendomsMegler 1 Midt-Norge recorded a pre-tax profit of NOK 52m in 2020 (32m). 7,164 dwelling units were sold in 2020 compared with 6,652 in 2019.
BN Bolig was sold in the fourth quarter of 2019. In 2019 the company posted income of NOK 41m and expenses of NOK 72m, leaving a pre-tax profit of minus NOK 30m.
SpareBank 1 Finans Midt-Norge delivered a pre-tax profit of NOK 214.2m in 2020 (149.9m). The company has shown good income growth with incomes totalling NOK 349m (287m). Moderate growth in costs was noted in 2020, and operating expenses totalled NOK 86m (85m). Losses totalled NOK 48.9m in 2020 (52.3m).
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 9.6bn (8.9bn), of which leasing agreements account for NOK 3.9bn (3.6bn) and car loans for NOK 5.5bn (5.1bn). The company also offers consumer loans, and at year-end this portfolio was worth NOK 168m (257m). An agreement has been entered into for the sale of the consumer loan portfolio to SpareBank 1 Kreditt. Growth in leasing and car loans in 2020 was 10.9 per cent and 7.4 per cent respectively.
The SamSpar banks in SpareBank 1 held a 27.9 per cent stake in SpareBank 1 Finans Midt-Norge as at 31 December 2020 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.
Andreas Eikeland is appointed new managing director of the company, and took up his duties on 2 January 2021. He replaced Arne Nypan, now managing director of SpareBank 1 SMN Regnskapshuset.
SpareBank 1 Spire Finans offers invoice purchasing to the SMB segment, and recorded a deficit of NOK 29.8m in 2020 (deficit of NOK 19.8m). The company was sold to SpareBank 1 Finans Midt-Norge in December 2020. The company will be merged with SpareBank 1 Finans Midt-Norge in the course of 2021.
SpareBank 1 Regnskapshuset SMN posted a pre-tax profit of NOK 110.2m (108.3m). Operating income increased to NOK 533m (502m), a growth of 6.2 per cent. Expenses totalled NOK 423m (394m).
SpareBank 1 SMN Regnskapshuset works continuously to achieve efficiency gains in order to increase operating income per person-year, at the same time as a strong focus on costs provides good control of the underlying cost trend. The company can point to growth and profitability in excess of the industry average. In addition, the company is working to create new income flows beyond the traditional accounting industry.
The company's market share in Trøndelag, Møre and Romsdal and Gudbrandsdal is 25 per cent.
Sparebank 1 SMN Invest invests in shares, mainly in regional businesses. In 2020 the company posted a pre-tax profit of NOK 5.8m (47.6m).
The company holds shares worth NOK 468m (438m) as at 31 December 2020. The portfolio result from the company's shareholding amounts to NOK 12.0m (56.6m) of the company's result for 2020. SpareBank 1 SMN is to wind up SpareBank 1 SMN Invest. Investing in shares is no longer a part of the group's strategy. The share portfolio will be managed together with other long-term shareholdings of the bank and will be scaled back over time.
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 141.5 FTEs.
SpareBank 1 Markets wholly owns SpareBank 1 Kapitalforvaltning. The company has total assets of NOK 187bn. The company has 19.5 FTEs.
SpareBank 1 Markets' consolidated pre-tax profit at 31 December 2020 was NOK 179.3m (43.4m). Very high activity in a number of areas yielded higher incomes than a normal fourth quarter. Incomes from Investment Banking have been strong, with a number of sizeable advisory assignments and stock issues. Incomes from primary share trading have been high. SpareBank 1 Kapitalforvaltning's income is on a par with preceding quarters. Overall group income came to NOK 816m (609m) as per the fourth quarter of 2020, a growth of NOK 207m corresponding to 33.9 per cent. Operating expenses were NOK 637m (566m), a growth of NOK 71m corresponding to 12.5 per cent.
SpareBank 1 Markets is the leading capital market unit in SpareBank 1 SMN's market area.
The bank has a conservative liquidity strategy which 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.
The bank has liquidity reserves of NOK 26bn and has the funding needed for 24 months of ordinary operation without fresh external finance.
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 171 per cent as at 31 December 2020 (148 per cent). The requirement is 100 per cent.
The group's deposit-to-loan ratio at 31 December 2020, including SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt, was 53 per cent (51 per cent).
The bank's funding sources and products are amply diversified. At end-December 2020 the proportion of the bank's overall money market funding in excess of one year's maturity was 83 per cent (83 per cent).
SpareBank 1 Boligkreditt is the bank's most important funding source, and residential mortgages totalling NOK 47bn (40bn) had been sold as at 31 December 2020.
The bank has a rating of A1 (stable outlook) with Moody's.
The CET1 ratio at 31 December 2020 was 18.3 per cent (17.2 per cent).
The CET1 requirement is 14.4 per cent, including combined buffer requirements, and a Pillar 2 requirement of 1.9 per cent. Finanstilsynet (Norway's FSA) has announced that it will not set new Pillar 2 requirements for SpareBank 1 SMN until 2021.
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 raised the systemic risk buffer for IRB banks by 1.5 per cent to 4.5 per cent with effect from 31 December 2020. In its planning the group includes a full countercyclical buffer.
The CET1 ratio rose 0.7 percentage points in the fourth quarter. Risk weighted assets were reduced by 2 percentage points in the fourth quarter, mainly as a result of reduced risk weights, reduced counterparty risk and a reduced capital need related to liquidity and bond holdings. The fourth quarter result contributed to a 2 per cent strengthening of CET1 capital. A payout ratio of 50 per cent of net profit is assumed.
A leverage ratio of 7.1 per cent (7.5 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 December 2020 was NOK 94.71 (90.75), and earnings per EC were NOK 8.87 (12.14).
The Price / Income ratio was 11.01 (8.26) and the Price / Book ratio was 1.03 (1.10). The group's quoted capital totalled NOK 12.6bn at year-end (13.0bn). Taking into account the ratio of EC capital to total equity, the group is worth NOK 19.7bn.
At year-end the EC was priced at NOK 97.60, and a dividend of NOK 5.00 per EC was paid in 2020 for the year 2019.
Growth prospects in the global economy are heavily impacted by the Covid-19 pandemic. Infection protection measures introduced in a number of countries entailed lockdown of social life and business, leading in turn to a substantial reduction in economic activity. The start-up of vaccination strengthens the likelihood that the economy will pick up again through 2021, but continued contagion outbreaks and lockdowns make for great uncertainty as to developments ahead. The bank has limited exposure to industries that are particularly exposed.
The oil price and the Norwegian krone has strengthened since the end of the third quarter. The record-high unemployment rate has been halved. Unemployment is expected to remain at a higher level than prior to the coronavirus crisis, and in some industries, such as hospitality and transport, unemployment remains very high. The key policy interest rate was lowered to zero per cent in May, and Norges Bank expects the policy rate to remain at the present level for a good while to come.
When businesses in Norges Bank's regional network were interviewed in November, they expressed continued great uncertainty. This uncertainty is reflected in low investment plans for 2021. The economic effects of the virus outbreak and the infection protection measures have been dampened by very wide-ranging support measures and an expansionary monetary policy. In its latest forecasts, Statistics Norway revised the fall in Mainland (non-oil) GDP from 3.2 per cent to 3 per cent for 2020, and GDP growth of 3.7 per cent in 2021. The bank assumes and expects Norway's very strong financial position to provide government authorities with unique opportunities to implement compensatory measures. This will contribute to mitigating the negative effects of the Covid-19 crisis.
The regional economy is also clearly impacted by the negative effects of the infection protection measures. Unemployment in Trøndelag and Møre and Romsdal was just over 9 per cent at the end of the first quarter, but has more than halved and stood at 3 per cent in Trøndelag and 3.5 per cent in Møre and Romsdal in December 2020. After a house price fall at the end of the first quarter, house prices picked up somewhat, well assisted by record-low mortgage rates.
The influx of customers requesting mortgage payment holidays diminished through the second, third and fourth quarter, on both the retail and corporate fronts. Use of policy instruments primarily comprises mortgage payment holidays and government-guaranteed loans. About NOK 3.1bn of outstanding loans to businesses are to segments heavily impacted by the infection protection measures. In the bank's assessment, a high retail market share will have a positive effect on the expected loss levels.
The bank's profits are affected directly and indirectly by fluctuations in the securities markets. The indirect effect relates very largely to the bank's ownership interest in SpareBank 1 Gruppen whose insurance business and fund management activities are both affected by such fluctuations.
The group's funding situation is good, with an LCR of 171 per cent. The bank has ample access to funding via SpareBank 1 Boligkreditt, and will consider its choice of funding source in the light of market prices.
At the end of the fourth quarter of 2020, the group's CET1 ratio is 18.3 per cent, compared with regulatory requirements of 14.4 per cent. This represents a substantial buffer.
SpareBank 1 SMN achieved a return on equity of 10 per cent in 2020, despite increased losses and reorganisation costs. Underlying operations have been sound, and all business lines have serviced customers from home offices for much of the year. Lending and deposit growth in both the retail and corporate market has been very good and the other business areas have achieved a very satisfactory income growth in an unusual year.
In 2020 a substantial effort was devoted to the profitability improvement project 'One SMN'. The project was carried through in a demanding year and will enable better distribution of the group's services, a strengthened market position and increased efficiency for all business lines.
Loan losses in 2020 primarily reflect the situation in the offshore industry, and future prospects for this industry remain uncertain. In other industries losses are limited, but loss provisions have nonetheless risen due to the uncertainty regarding the path of the pandemic.
SpareBank 1 SMN is an instigator of the development of SpareBank 1-alliansen, with a view to achieving economies of scale and to offering our customers a broad range of financial services. SpareBank 1 SMN also offers products and services to a number of savings banks within and outside SpareBank 1-alliansen. The board of directors considers the bank to be well positioned for structural changes.
Through its adopted sustainability strategy, the group has laid a basis for stimulating sustainable development in the region through its role as a driver for the green transition, as a partner for the inclusive development of society and as a guide to building a responsible business culture.
The CET1 ratio has increased to 18.3 per cent, and is in keeping with the new target of 16.9 per cent. A leverage ratio of 7.1 per cent bears witness to the bank's solidity.
The board of directors will recommend that 49.6 per cent of the group profit be allocated to cash dividend, corresponding to NOK 4.40 per equity certificate (NOK 5.0). Of this, NOK 1.30 per equity certificate is recommended for disbursement, in keeping with the Ministry of Finance's recommendation to limit payouts to 30 per cent of overall profits for 2019 and 2020. NOK 321m (364m) is recommended for allocation to community dividend, of which NOK 95m is to be disbursed. Of the community dividend, NOK 200m (200m) will go directly to non-profit causes and NOK 121m to the foundation Sparebankstiftelsen.
The board of directors is well pleased with the group's results in 2020.
4th Quarter 2020
Kjell Bjordal Bård Benum Christian Stav (chair) (deputy chair)
Mette Kamsvåg Tonje Eskeland Foss Morten Loktu
Janne T. Thomsen Christina Straub Inge Lindseth
(employee rep.) (employee rep.)
Jan-Frode Janson (Group CEO)
| Parent bank | Group | |||||||
|---|---|---|---|---|---|---|---|---|
| Jan-Dec | Jan-Dec | |||||||
| 4Q 19 | 4Q 20 | 2019 | 2020 (NOKm) | Note | 2020 | 2019 | 4Q 20 | 4Q 19 |
| 991 | 733 | 3,732 | 3,274 Interest income effective interest method | 3,722 | 4,121 | 855 | 1,091 | |
| 146 | 91 | 509 | 478 Other interest income | 475 | 505 | 90 | 145 | |
| 532 | 253 | 1,916 | 1,423 Interest expenses | 1,439 | 1,939 | 258 | 538 | |
| 605 | 571 | 2,325 | 2,329 Net interest | 10 | 2,759 | 2,687 | 688 | 697 |
| 294 | 335 | 1,127 | 1,205 Commission income | 1,510 | 1,437 | 416 | 371 | |
| 23 | 28 | 95 | 97 Commission expenses | 207 | 193 | 58 | 47 | |
| 10 | 11 | 30 | 41 Other operating income | 1,269 | 1,046 | 399 | 255 | |
| 280 | 318 | 1,061 | 1,149 Commission income and other income | 2,572 | 2,290 | 757 | 579 | |
| 70 | 39 | 884 | 528 Dividends | 39 | 15 | 27 | 1 | |
| - | - | - | - Income from investment in related companies | 3 | 681 | 879 | 117 | 8 |
| -45 | -14 | 54 | 14 Net return on financial investments | 3 | 230 | 307 | 53 | 8 |
| 25 | 25 | 937 | 542 Net return on financial investments | 951 | 1,201 | 197 | 17 | |
| 911 | 914 | 4,324 | 4,019 Total income | 6,281 | 6,178 | 1,642 | 1,292 | |
| 151 | 241 | 614 | 732 Staff costs | 1,883 | 1,699 | 570 | 411 | |
| 207 | 185 | 750 | 744 Other operating expenses | 1,069 | 1,098 | 275 | 309 | |
| 358 | 426 | 1,364 | 1,477 Total operating expenses | 11 | 2,952 | 2,797 | 845 | 720 |
| 553 | 488 | 2,960 | 2,543 Result before losses | 3,329 | 3,380 | 797 | 572 | |
| 83 | 230 | 245 | 902 Loss on loans, guarantees etc. | 6.7 | 951 | 299 | 242 | 103 |
| 470 | 258 | 2,715 | 1,641 Result before tax | 3 | 2,378 | 3,081 | 554 | 469 |
| 99 | 57 | 452 | 284 Tax charge | 400 | 518 | 104 | 123 | |
| - | - | - | - Result investment held for sale, after tax | 2,3 | 1 | 0 | 0 | 0 |
| 370 | 202 | 2,263 | 1,356 Net profit | 1,978 | 2,563 | 450 | 346 | |
| 10 | 9 | 47 | 56 Attributable to additional Tier 1 Capital holders | 59 | 49 | 10 | 10 | |
| 231 | 123 | 1,417 | 831 Attributable to Equity capital certificate holders | 1,147 | 1,572 | 257 | 207 | |
| 130 | 69 | 799 | 469 Attributable to the saving bank reserve | 646 | 886 | 145 | 117 | |
| Attributable to non-controlling interests | 126 | 56 | 38 | 12 | ||||
| 370 | 202 | 2,263 | 1,356 Net profit | 1,978 | 2,563 | 450 | 346 | |
| Profit/diluted profit per ECC | 17 | 8.87 | 12.14 | 1.99 | 1.60 |
| Parent bank | Group | |||||||
|---|---|---|---|---|---|---|---|---|
| Jan-Dec | Jan-Dec | |||||||
| 4Q 19 4Q 20 | 2019 | 2020 (NOKm) | 2020 | 2019 4Q 20 4Q 19 | ||||
| 370 | 202 2,263 1,356 Net profit | 1,978 2,563 | 450 | 346 | ||||
| Items that will not be reclassified to profit/loss | ||||||||
| -33 | 29 | -33 | -34 Actuarial gains and losses pensions | -34 | -33 | 29 | -33 | |
| 8 | -7 | 8 | 8 Tax | 8 | 8 | -7 | 8 | |
| - | - | - | - Share of other comprehensive income of associates and joint venture | 15 | 21 | 5 | 18 | |
| -25 | 22 | -25 | -25 Total | -11 | -4 | 27 | -6 | |
| Items that will be reclassified to profit/loss | ||||||||
| - | - | - | - Fair value change on financial assets through other comprehensive income | - | - | - | - | |
| 8 | 2 | 6 | 9 Value changes on loans measured at fair value | 9 | 6 | 2 | 8 | |
| - | - | - | - Share of other comprehensive income of associates and joint venture | 16 | -12 | 11 | 2 | |
| - | - | - | - Tax | - | - | - | - | |
| 8 | 2 | 6 | 9 Total | 25 | -5 | 12 | 10 | |
| -16 | 23 | -18 | -16 Net other comprehensive income | 15 | -9 | 39 | 4 | |
| 354 | 225 2,245 1,340 Total other comprehensive income | 1,993 2,554 | 490 | 350 | ||||
| 10 | 9 | 47 | 56 Attributable to additional Tier 1 Capital holders | 59 | 49 | 10 | 10 | |
| 220 | 138 1,405 | 821 Attributable to Equity capital certificate holders | 1,156 1,566 | 282 | 209 | |||
| 124 | 78 | 792 | 463 Attributable to the saving bank reserve | 652 | 883 | 159 | 118 | |
| Attributable to non-controlling interests | 126 | 56 | 38 | 12 | ||||
| 354 | 225 2,245 1,340 Total other comprehensive Income | 1,993 2,554 | 490 | 350 |
Other comprehensive income comprise items reflected directly in equity capital that are not transactions with owners, cf. IAS 1.
| Parent bank | Group | ||||
|---|---|---|---|---|---|
| 31 Dec 2019 | 31 Dec 2020 (NOKm) | Note | 31 Dec 2020 | 31 Dec 2019 | |
| 761 | 2,764 Cash and receivables from central banks | 2,764 | 761 | ||
| 9,181 | 12,901 Deposits with and loans to credit institutions | 5,091 | 2,110 | ||
| 117,033 | 124,214 Net loans to and receivables from customers | 5 | 133,131 | 125,279 | |
| 23,195 | 26,684 Fixed-income CDs and bonds | 15 | 26,606 | 23,115 | |
| 2,872 | 7,175 Derivatives | 15 | 7,226 | 2,972 | |
| 355 | 319 Shares, units and other equity interests | 15 | 2,366 | 2,953 | |
| 4,526 | 4,933 Investment in related companies | 7,324 | 6,468 | ||
| 2,309 | 2,317 Investment in group companies | - | - | ||
| 82 | 82 Investment held for sale | 2 | 41 | 40 | |
| 512 | 515 Intangible assets | 905 | 872 | ||
| 1,241 | 963 Other assets | 12 | 2,457 | 2,092 | |
| 162,066 | 182,870 Total assets | 187,912 | 166,662 | ||
| 7,585 | 12,630 Deposits from credit institutions | 13,095 | 8,853 | ||
| 86,870 | 98,166 Deposits from and debt to customers | 9 | 97,529 | 85,917 | |
| 43,014 | 43,919 Debt created by issue of securities | 14 | 43,919 | 43,014 | |
| 3,159 | 6,845 Derivatives | 15 | 7,179 | 3,528 | |
| 1,570 | 1,466 Other liabilities | 13 | 3,084 | 2,841 | |
| - | - Investment held for sale | 2 | 1 | 0 | |
| 2,047 | 1,752 Subordinated loan capital | 14 | 1,795 | 2,090 | |
| 144,245 | 164,778 Total liabilities | 166,602 | 146,243 | ||
| 2,597 | 2,597 Equity capital certificates | 2,597 | 2,597 | ||
| -0 | -0 Own holding of ECCs | -9 | -11 | ||
| 895 | 895 Premium fund | 895 | 895 | ||
| 6,144 | 6,556 Dividend equalisation fund | 6,536 | 6,123 | ||
| 840 | 569 Recommended dividends | 569 | 840 | ||
| 474 | 321 Provision for gifts | 321 | 474 | ||
| 5,432 | 5,664 Ownerless capital | 5,664 | 5,432 | ||
| 189 | 239 Unrealised gains reserve | 239 | 189 | ||
| - | - Other equity capital | 2,366 | 1,827 | ||
| 1,250 | 1,250 Additional Tier 1 Capital | 1,293 | 1,293 | ||
| Non-controlling interests | 838 | 761 | |||
| 17,822 | 18,092 Total equity capital | 21,310 | 20,420 | ||
| 162,066 | 182,870 Total liabilities and equity | 187,912 | 166,662 |
| Parent bank | Group | |||
|---|---|---|---|---|
| Jan-Dec | Jan-Dec | |||
| 2019 | 2020 (NOKm) | 2020 | 2019 | |
| 2,263 | 1,356 Net profit | 1,978 | 2,563 | |
| 109 | 102 Depreciations and write-downs on fixed assets | 166 | 172 | |
| 245 | 902 Losses on loans and guarantees | 951 | 299 | |
| 2,617 | 2,360 Net cash increase from ordinary operations | 3,096 | 3,035 | |
| 869 | -4,093 Decrease/(increase) other receivables | -4,681 | 1,235 | |
| -96 | 3,582 Increase/(decrease) short term debt | 3,896 | 716 | |
| -4,613 | -8,075 Decrease/(increase) loans to customers | -8,795 | -5,843 | |
| 1,998 | -3,721 Decrease/(increase) loans credit institutions | -2,981 | 2,964 | |
| 5,422 | 11,296 Increase/(decrease) deposits to customers | 11,611 | 5,302 | |
| -960 | 5,045 Increase/(decrease) debt to credit institutions | 4,242 | -361 | |
| -2,766 | -3,490 Increase/(decrease) in short term investments | -3,491 | -2,766 | |
| 2,471 | 2,905 A) Net cash flow from operations | 2,896 | 4,280 | |
| -66 | -38 Increase in tangible fixed assets | -136 | -120 | |
| 84 | -418 Paid-up capital, associated companies | -873 | -312 | |
| 36 | 37 Net investments in long-term shares and partnerships | 587 | -1,080 | |
| 54 | -420 B) Net cash flow from investments | -422 | -1,512 | |
| -177 | -295 Increase/(decrease) in subordinated loan capital | -295 | -177 | |
| 1 | 3 Increase/(decrease) in equity | 14 | -33 | |
| -661 | -647 Dividend cleared | -647 | -661 | |
| -373 | -364 Disbursed from gift fund | -364 | -373 | |
| 203 | -56 Increase/(decrease) in Additional Tier 1 capital | -59 | 201 | |
| -1,639 | 877 Increase/(decrease) in other long term loans | 880 | -1,846 | |
| -2,646 | -482 C) Net cash flow from financial activities | -470 | -2,890 | |
| -121 | 2,003 A) + B) + C) Net changes in cash and cash equivalents | 2,003 | -121 | |
| 883 | 761 Cash and cash equivalents at 1.1 | 761 | 883 | |
| 761 | 2,764 Cash and cash equivalents at end of quarter | 2,764 | 761 | |
| -121 | 2,003 Net changes in cash and cash equivalents | 2,003 | -121 |
| Parent Bank | Issued equity | Earned equity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (NOKm) | EC capital |
Premium fund |
Owner less capital |
Equali sation fund |
Dividend and gifts |
Un realised gains reserve |
Other equity |
Additional Tier 1 Capital |
Total equity |
| Equity at 1 January 2019 | 2,597 | 895 | 5,126 | 5,602 | 1,034 | 155 | - | 1,000 | 16,409 |
| Net profit | - | - | 313 | 555 | 1,314 | 34 | - | 47 | 2,263 |
| Other comprehensive income | |||||||||
| Financial assets through OCI | - | - | - | - | - | - | 6 | - | 6 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | -25 | - | -25 |
| Other comprehensive income | - | - | - | - | - | - | -18 | - | -18 |
| Total other comprehensive income | - | - | 313 | 555 | 1,314 | 34 | -18 | 47 | 2,245 |
| Transactions with owners | |||||||||
| Dividend declared for 2018 | - | - | - | - | -661 | - | - | - | -661 |
| To be disbursed from gift fund | - | - | - | - | -373 | - | - | - | -373 |
| Additional Tier 1 Capital | - | - | - | - | - | - | - | 250 | 250 |
| Interest payments additional Tier 1 capital | - | - | - | - | - | - | - | -47 | -47 |
| Purchase and sale of own ECCs | -0 | - | - | -0 | - | - | - | - | -0 |
| Direct recognitions in equity | - | - | -7 | -12 | - | - | 18 | - | -1 |
| Total transactions with owners | -0 | - | -7 | -12 | -1,034 | - | 18 | 203 | -832 |
| 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 |
Owner less capital |
Equali sation fund |
Dividend and gifts |
Un-realised gains reserve |
Other equity |
Additional Tier 1 Capital |
Total equity |
| Equity at 1 January 2020 | 2,597 | 895 | 5,432 | 6,144 | 1,314 | 189 | - | 1,250 | 17,822 |
| Net profit | - | - | 130 | 230 | 890 | 50 | - | 56 | 1,356 |
| Other comprehensive income | |||||||||
| Value changes on loans measured at fair value |
- | - | - | - | - | - | 9 | - | 9 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | -25 | - | -25 |
| Other comprehensive income | - | - | - | - | - | - | -16 | - | -16 |
| Total other comprehensive income | - | - | 130 | 230 | 890 | 50 | -16 | 56 | 1,340 |
| 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 | - | - | - | - | - | - | - | -56 | -56 |
| Purchase and sale of own ECCs | -0 | - | - | -0 | - | - | - | - | -0 |
| Direct recognitions in equity | - | - | -7 | -12 | - | - | 16 | - | -3 |
| Total transactions with owners | -0 | - | 103 | 182 | -1,314 | - | 16 | -56 | -1,070 |
| Equity at 31 December 2020 | 2,597 | 895 | 5,664 | 6,556 | 890 | 239 | - | 1,250 | 18,092 |
| Attributable to parent company equity holders | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Group | Issued equity | Earned equity | ||||||||
| (NOKm) | EC capital |
Premium fund |
Owner less capital |
Equali sation fund |
Dividend and gifts |
Un realised gains reserve |
Other equity |
Additional Tier 1 Capital |
Non controlling interests |
Total 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 |
Owner less capital |
Equali sation fund |
Dividend and gifts |
Un realised 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 | - | - | 130 | 230 | 890 | 50 | 493 | 59 | 126 | 1,978 |
| Other comprehensive income | ||||||||||
| Share of other comprehensive income of associates and joint ventures |
- | - | - | - | - | - | 31 | - | - | 31 |
| Value changes on loans measured at fair value |
- | - | - | - | - | - | 9 | - | - | 9 |
| Actuarial gains (losses), pensions | - | - | - | - | - | - | -25 | - | - | -25 |
| Other comprehensive income | - | - | - | - | - | - | 15 | - | - | 15 |
| Total other comprehensive income | - | - | 130 | 230 | 890 | 50 | 508 | 59 | 126 | 1,993 |
| 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 |
- | - | - | - | - | - | - | -59 | - | -59 |
| Purchase and sale of own ECCs | -0 | - | - | -0 | - | - | - | - | - | -0 |
| Own ECC held by SB1 Markets*) | 2 | - | - | 2 | - | - | 11 | - | - | 14 |
| Direct recognitions in equity | - | - | -7 | -12 | - | - | 17 | - | - | -1 |
| Share of other transactions from associates and joint ventures |
- | - | - | - | - | - | 3 | - | - | 3 |
| Change in non-controlling interests | - | - | - | - | - | - | - | - | -49 | -49 |
| Total transactions with owners | 2 | - | 103 | 183 | -1,314 | - | 31 | -59 | -49 | -1,103 |
| Equity at 31 December 2020 | 2,588 | 895 | 5,664 | 6,536 | 890 | 239 | 2,366 | 1,293 | 838 21,310 |
*) Holding of own equity certificates as part of SpareBank 1 Markets' trading activity
| Note 1 - Accounting principles 31 | |
|---|---|
| Note 2 - Critical estimates and assessment concerning the use of accounting principles 32 | |
| Note 3 - Account by business line 35 | |
| Note 4 - Capital adequacy 37 | |
| Note 5 - Distribution of loans by sector/industry 39 | |
| Note 6 - Losses on loans and guarantees 40 | |
| Note 7 - Losses 41 | |
| Note 8 - Gross loans 44 | |
| Note 9 - Distribution of customer deposits by sector/industry 45 | |
| Note 10 - Net interest income 46 | |
| Note 11 - Operating expenses 47 | |
| Note 12 - Other assets 48 | |
| Note 13 - Other liabilities 49 | |
| Note 14 - Debt created by issue of securities and subordinated debt 50 | |
| Note 15 - Measurement of fair value of financial instruments 51 | |
| Note 16 - Liquidity risk 54 | |
| Note 17 - Earnings per EC 55 |
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.
The board of directors will recommend that 49.6 per cent of the group profit be allocated to cash dividend, corresponding to NOK 4.40 per equity certificate. Of this, NOK 1.30 per equity certificate is recommended for disbursement, in keeping with the Ministry of Finance's recommendation to limit payouts to 30 per cent of overall profits for 2019 and 2020. The board is given authorisation to decide whether to distribute all or parts of the remaining dividend after 30 September 2021 if the capital situation so permits. NOK 321m (364m) is recommended for allocation to community dividend, of which NOK 95m is to be disbursed.
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 arrangement; defined contribution plan. For a further description of the pension scheme, see note 22 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 December 2020:
| Actuarial assumptions | 31 Dec 2019 | 1 January 2019 | 31 Dec 2020 |
|---|---|---|---|
| Discount rate | 2.30 % | 2.30 % | 1.50 % |
| Expected rate of return on plan assets | 2.30 % | 2.30 % | 1.50 % |
| 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 % |
| 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 | 39 | -6 | 34 | |
| Net defined-benefit costs in profit and loss account | -3 | 1 | -3 | |
| Paid in pension premium, defined-benefit schemes | - | - | - | |
| Paid in pension premium, defined-benefit plan | - | -1 | -1 | |
| Net pension liability in the balance sheet 31 December 2020 | -112 | 10 | -102 |
| Net pension liability in the balance sheet Group (NOKm) | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| Net present value of pension liabilities in funded schemes | 640 | 608 |
| Estimated value of pension assets | -743 | -743 |
| Net pension liability in the balance sheet before employer's contribution | -104 | -135 |
| Employers contribution | 2 | 3 |
| Net pension liability in the balance sheet | -102 | -132 |
| Pension cost Group (NOKm) | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| Present value of pension accumulated in the year | 0 | 0 |
| Net interest income | -3 | -4 |
| Net pension cost related to defined plans, incl unfunded pension commitment | -3 | -4 |
| Empolyer's contribution subject to accrual accounting | 0 | 0 |
| Cost of defined contribution pension and early retirement pension scheme | 107 | 108 |
| Total pension cost for the period | 105 | 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 Q4 (NOK Million) | Assets | Liabilities | Revenue | Expenses | Profit | Ownership |
|---|---|---|---|---|---|---|
| Mavi XV AS Group | 41 | 1 | 4 | 4 | 1 | 100 % |
| Total Held for sale | 41 | 1 | 4 | 4 | 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 some changes were made in the input in the credit loss model as 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. We are in the early stages of the crisis and the consequences for the bank's customers and the industries we 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.
In the first quarter 2020 the bank changed the assumptions for the base scenario in a negative direction. This has been continued for the rest of 2020. In the third quarter the bank's exposure to hotels and tourism, including commercial real estate with the income mainly towards this industry, is separated into a separate portfolio with its own assessments of PD and LGD courses as well as special scenarios and weighting of these to reflect this portfolio's exposure to the effects of corona. In addition, this entire portfolio is included in stage 2 or 3.
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. We have 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 the downside scenario.
The applied scenario weighting was changed in the fourth quarter to reflect further increased uncertainty. For corporate market including offshore, as well as agriculture, the downside scenario was changed from a weighting with a 10 percent probability, to a weighting of a 20 percent probability. For retail market, the weighting of the downside scenario was changed from 10 to 15 per cent.
The effect of changes in input assumptions is shown as "Effect of changed assumptions in ECL model" in note 7. The effect is NOK 165 million for the Bank and 140 million for the Group.
The first part of the table below show total calculated expected credit loss as of 31 December 2020 in each of the three scenarios, distributed in the portfolios retail market (RM) corporate market (CM), and offshore, travel and agriculture which adds up to parent bank. In
addition the subsidiary SB 1 Finans Midt-norge is included. ECL for the parent bank and the subsidiary is summed up in th coloumn "Group".
The second part of the table show the ECL distributed by portfolio using the scenario weight applied, in addition to a alternative weighting where worst case have been doubled. If the downside scenario's probability were doubled at the expense of the baseline scenario at the end of December 2020, this would have entailed an increase in loss provisions of NOK 207 million for the parent bank and NOK 215 million for the group.
| CM (excl offshore |
SB 1 | |||||||
|---|---|---|---|---|---|---|---|---|
| and | Total | Finans | ||||||
| agriculture) | RM Offshore Agriculture Tourism | parent | MN | Group | ||||
| ECL base case | 434 | 94 | 781 | 48 | 39 | 1,394 | 61 | 1,455 |
| ECL worst case | 906 | 337 | 1,017 | 96 | 112 | 2,468 | 137 | 2,605 |
| ECL best case | 325 | 41 | 662 | 11 | 22 | 1,061 | 43 | 1,105 |
| ECL with scenario weights used 80/10/10 | - | - | - | - | - | - | 67 | 69 |
| ECL with scenario weights used 65/25/15 | 512 | - | 810 | 51 | - | 1,373 | - | 1,373 |
| ECL with scenario weights used 60/30/10 | - | - | - | - | 58 | 58 | - | 58 |
| ECL with scenario weights used 70/15/15 | - | 122 | - | - | - | 122 | - | 122 |
| Total ECL used | 512 | 122 | 810 | 51 | 58 | 1,554 | 67 | 1,622 |
| ECL alternative scenario weights 70/20/10 | - | - | - | - | - | - | 74 | 76 |
| ECL alternative scenario weights 45/40/15 | 606 | - | 857 | 66 | - | 1,529 | - | 1,529 |
| ECL alternative scenario weights 30/60/10 | - | - | - | - | 73 | 73 | - | 73 |
| ECL alternative scenario weights 55/30/15 | - | 159 | - | - | - | 159 | - | 159 |
| Total ECL alternative weights | 606 | 159 | 857 | 66 | 73 | 1,761 | 74 | 1,837 |
| Change in ECL if alternative weights were used | 94 | 37 | 47 | 15 | 14 | 207 | 8 | 215 |
The Tourism portfolio includes commercial real estate with more than 50% of the income from hotels and tourism companies.
In addition, an ECL provision has been included for the group for SpareBank 1 SMN Spire Finans of NOK 2 million, which is not specified in the table.
The table reflects that there are some significant differences in underlying PD and LGD estimates in the different scenarios and that there are differentiated levels and level differences between the portfolios. At group level, the ECL in the upside scenario, which largely reflects the loss and default picture in recent years, is about 80 per cent of the ECL in the expected scenario. The downside scenario gives about double the ECL than in the expected scenario. Applied scenario weighting gives about ten percent higher ECL than in the expected scenario.
For the subsidiaries the figures refer to the respective company accounts, while for associates and joint ventures incorporated by the equity method the Group's profit share is stated, after tax, as well as book value of the investment at group level.
| SB 1 | SB 1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SB1 | Finans | Regnskaps | SB1 | BN | Un | |||||
| Profit and loss account (NOKm) | RM | CM | Markets EM 1 | MN | huset SMN | Gruppen | Bank | collated | Total | |
| Net interest | 1,112 | 1,085 | -14 | 2 | 371 | 1 | - | - | 202 | 2,759 |
| Interest from allocated capital | 101 | 63 | - | - | - | - | - | - | -165 | - |
| Total interest income | 1,213 | 1,149 | -14 | 2 | 371 | 1 | - | - | 37 | 2,759 |
| Comission income and other income | 867 | 211 | 693 | 392 | -22 | 533 | - | - | -102 | 2,572 |
| Net return on financial investments **) | -2 | 21 | 137 | - | - | - | 194 | 120 | 481 | 951 |
| Total income | 2,078 | 1,381 | 816 | 394 | 349 | 533 | 194 | 120 | 416 | 6,281 |
| Total operating expenses | 929 | 422 | 637 | 342 | 86 | 423 | - | - | 114 | 2,952 |
| Ordinary operating profit | 1,149 | 959 | 179 | 52 | 263 | 110 | 194 | 120 | 301 | 3,329 |
| Loss on loans, guarantees etc. | 56 | 846 | - | - | 49 | - | - | - | 1 | 951 |
| Result before tax | 1,093 | 113 | 179 | 52 | 214 | 110 | 194 | 120 | 301 | 2,378 |
| Post-tax-return on equity *) | 13.4 % | 2.1 % | 10.0 % | |||||||
| Balance | ||||||||||
| Loans and advances to customers | 129,149 44,845 | - | - | 9,549 | - | - | - | -742 182,801 | ||
| Adv.of this sold to SB1 Boligkreditt and | ||||||||||
| SB1 Næringskreditt | -46,899 | -1,354 | - | - | - | - | - | - | 100 | -48,153 |
| Allowance for credit loss | -148 | -1,298 | - | - | -67 | - | - | - | -4 | -1,517 |
| Other assets | 156 10,471 | 3,265 | 357 | 116 | 592 | 2,151 1,514 | 36,160 | 54,781 | ||
| Total assets | 82,258 52,663 | 3,265 | 357 | 9,598 | 592 | 2,151 1,514 | 35,514 187,912 | |||
| Deposits to customers | 47,478 49,420 | - | - | - | - | - | - | 631 | 97,529 | |
| Other liabilites and equity | 34,780 | 3,244 | 3,265 | 357 | 9,598 | 592 | 2,151 1,514 | 34,883 | 90,383 | |
| Total liabilities and equity | 82,258 52,663 | 3,265 | 357 | 9,598 | 592 | 2,151 1,514 | 35,514 187,912 |
*) Calculation of capital employed in Retail Banking and Corporate Banking is based on regulatory capital. This capital is grossed up to 15.4 per cent to be in line with the capital plan during the period
| SB 1 | SB 1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SB1 | Finans | Regnskaps | SB1 | BN | Un | |||||
| Profit and loss account (NOKm) | RM | CM | Markets EM 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 |
| Comission income and other income | 805 | 205 | 509 | 390 | -26 | 502 | - | - | -97 | 2,290 |
| Net return on financial investments **) | 0 | 12 | 117 | - | - | - | 252 | 107 | 714 | 1,201 |
| Total income | 2,177 | 1,388 | 609 | 390 | 287 | 502 | 252 | 107 | 467 | 6,178 |
| Total operating expenses | 875 | 410 | 566 | 388 | 85 | 394 | - | - | 80 | 2,797 |
| Ordinary operating profit | 1,302 | 978 | 43 | 1 | 202 | 108 | 252 | 107 | 387 | 3,380 |
| Loss on loans, guarantees etc. | 32 | 213 | - | - | 52 | - | - | - | 2 | 299 |
| Result before tax | 1,270 | 765 | 43 | 1 | 150 | 108 | 252 | 107 | 384 | 390 |
| 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 SpareBank 1 Boligkreditt | -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 liabilites and equity | 37,721 | 704 | 3,669 | 309 | 8,861 | 527 | 1,609 1,425 | 25,920 | 80,745 | |
| Total liabilities 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 15.0 per cent to be in line with the capital plan during the period
| 31 Dec | 31 Dec | |
|---|---|---|
| **) Specification of net return on financial investments (NOKm) Dividends |
2020 39 |
2019 15 |
| Gain/(loss) on financial instruments related to hedging | -4 | 120 |
| Capital gains/losses shares | 103 | -20 |
| Gain/(loss) on sertificates and bonds | 32 | 132 |
| Gain/(loss) on derivatives | 1 | -9 |
| Gain/(loss) on other financial instruments at fair value (FVO) | -11 | 9 |
| Foreign exchange gain/(loss) | 82 | 22 |
| Gain/(loss) on shares and share derivatives at SpareBank 1 Markets | 28 | 54 |
| Net return on financial instruments | 230 | 307 |
| SpareBank 1 Gruppen | 194 | 252 |
| Gain Fremtind Forsikring | 340 | 460 |
| SpareBank 1 Boligkreditt | 18 | 26 |
| SpareBank 1 Næringskreditt | 18 | 21 |
| BN Bank | 120 | 113 |
| SpareBank 1 Kredittkort | 2 | 13 |
| SpareBank 1 Betaling | -2 | 3 |
| Other companies | -10 | -8 |
| Income from investment in associates and joint ventures | 681 | 879 |
| Total net return on financial investments | 951 | 1,201 |
| Fair value hedging | ||
| Changes in fair value on hedging instrument | 467 | -66 |
| Changes in fair value on hedged item | -465 | 56 |
| Net Gain or Loss from hedge accounting | 1 | -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. 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.
As of 31 December 2020 the overall minimum requirement on CET1 capital is 12.5 per cent. The capital conservation buffer requirement is 2.5 per cent, the systemic risk requirement for Norwegian IRB-banks is raised to 4.5 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. In addition the financial supervisory authority has set a Pillar 2 requirement of 1.9 per cent for SpareBank 1 SMN, however not below NOK 1,794 million in monetary terms. As at 31 December 2020, reduced risk weighted assets mean that the minimum monetary requirement of NOK 1,794 million is binding for the Pillar 2 requirement. The Pillar 2 requirement therefore rises from 1.9 per cent to 1.93 per cent. The overall minimum requirement as of 31 December 2019 has accordingly increased from 14.4 per cent to 14.43 per cent.
The systemic risk buffer stands at 4.5 per cent for the Norwegian exposures. For exposures in other countries, the particular country's systemic buffer rate shall be employed. As of 31 December 2020 the effective rate for the parent bank and for the group is accordingly 4.4 per cent.
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 fourth 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 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 group's hybrid equity and subordinated debt issued under the old rules has now been redeemed such that as of the first quarter of 2020 the group has no holdings covered by the transitional provisions.
| Parent Bank | Group | |||
|---|---|---|---|---|
| 31 Dec | 31 Dec | 31 Dec | 31 Dec | |
| 2019 | 2020 (NOKm) | 2020 | 2019 | |
| 17,822 | 18,092 Total book equity | 21,310 | 20,420 | |
| -1,250 | -1,250 Additional Tier 1 capital instruments included in total equity | -1,293 | -1,293 | |
| -512 | -515 Deferred taxes, goodwill and other intangible assets | -1,044 | -1,099 | |
| -1,314 | -890 Deduction for allocated dividends and gifts | -890 | -1,314 | |
| - | - Non-controlling interests recognised in other equity capital | -838 | -761 | |
| - | - Non-controlling interests eligible for inclusion in CET1 capital | 488 | 438 | |
| -33 | -43 Value adjustments due to requirements for prudent valuation | -56 | -45 | |
| -305 | -47 Positive value of adjusted expected loss under IRB Approach | -74 | -351 | |
| - | - Cash flow hedge reserve | 10 | 3 | |
| Deduction for common equity Tier 1 capital in significant investments in financial | ||||
| -185 | -186 | institutions | -572 | -168 |
| 14,222 | 15,160 Common equity Tier 1 capital | 17,041 | 15,830 | |
| 1,250 | 1,250 Additional Tier 1 capital instruments | 1,595 | 1,637 | |
| 275 | - Additional Tier 1 capital instruments covered by transitional provisions | - | 275 | |
| 15,747 | 16,410 Tier 1 capital | 18,636 | 17,742 | |
| Supplementary capital in excess of core capital | ||||
| 1,750 | 1,750 Subordinated capital | 2,262 | 2,240 | |
| 12 | - Subordinated capital covered by transitional provisions | - | 12 | |
| -140 | -139 Deduction for significant investments in financial institutions | -139 | -140 | |
| 1,623 | 1,611 Additional Tier 2 capital instruments | 2,123 | 2,113 | |
| 17,370 | 18,020 Total eligible capital | 20,759 | 19,854 |
| Minimum requirements subordinated capital | |||
|---|---|---|---|
| 911 | 1,053 Specialised enterprises | 1,240 | 1,101 |
| 1,139 | 920 Corporate | 930 | 1,149 |
| 1,628 | 1,511 Mass market exposure, property | 2,261 | 2,299 |
| 98 | 107 Other mass market | 110 | 101 |
| 984 | 1,026 Equity investments | 1 | 1 |
| 4,760 | 4,617 Total credit risk IRB | 4,541 | 4,651 |
| 2 | 1 Central government | 2 | 3 |
| 86 | 93 Covered bonds | 142 | 132 |
| 419 | 441 Institutions | 332 | 282 |
| - | - Local and regional authorities, state-owned enterprises | 27 | 5 |
| 42 | 32 Corporate | 281 | 239 |
| 22 | 20 Mass market | 476 | 463 |
| 9 | 11 Exposures secured on real property | 136 | 167 |
| 236 | 272 Equity positions | 408 | 377 |
| 104 | 99 Other assets | 159 | 151 |
| 918 | 970 Total credit risk standardised approach | 1,962 | 1,818 |
| 31 | 30 Debt risk | 31 | 34 |
| - | - Equity risk | 18 | 15 |
| - | - Currency risk and risk exposure for settlement/delivery | 3 | 3 |
| 407 | 421 Operational risk | 770 | 720 |
| 29 | 25 Credit value adjustment risk (CVA) | 123 | 115 |
| 6,145 | 6,063 Minimum requirements subordinated capital | 7,448 | 7,357 |
| 76,817 | 75,785 Risk weighted assets (RWA) | 93,096 | 91,956 |
| 3,457 | 3,410 Minimum requirement on CET1 capital, 4.5 per cent | 4,189 | 4,138 |
| Capital Buffers | |||
| 1,920 | 1,895 Capital conservation buffer, 2.5 per cent | 2,327 | 2,299 |
| 2,305 | 3,410 Systemic rick buffer, 4.5 per cent (3.0 per cent) | 4,189 | 2,759 |
| 1,920 | 758 Countercyclical buffer, 1.0 per cent (2.5 per cent) | 931 | 2,299 |
| 6,145 | 6,063 Total buffer requirements on CET1 capital | 7,448 | 7,357 |
| 4,620 | 5,687 Available CET1 capital after buffer requirements | 5,404 | 4,335 |
| Capital adequacy | |||
| 18.5 % | 20.0 % Common equity Tier 1 capital ratio | 18.3 % | 17.2 % |
| 20.5 % | 21.7 % Tier 1 capital ratio | 20.0 % | 19.3 % |
| 22.6 % | 23.8 % Capital ratio | 22.3 % | 21.6 % |
| Leverage ratio | |||
| 161,905 | 178,219 Balance sheet items | 256,978 | 230,048 |
| 6,830 | 6,190 Off-balance sheet items | 7,514 | 7,897 |
| -851 | -606 Regulatory adjustments | -1,577 | -1,503 |
| 167,885 | 183,803 Calculation basis for leverage ratio | 262,915 | 236,441 |
| 15,747 9.4 % |
16,410 Core capital 8.9 % Leverage Ratio |
18,636 7.1 % |
17,742 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 Dec 2020 (NOKm) | 31 Dec 2020 | 31 Dec 2019 | |
| 8,602 | 9,160 Agriculture and forestry | 9,591 | 8,947 | |
| 4,601 | 5,243 Fisheries and hunting | 5,259 | 4,611 | |
| 833 | 1,704 Sea farming industries | 2,100 | 1,132 | |
| 2,212 | 2,234 Manufacturing | 2,646 | 2,595 | |
| 3,157 | 3,195 Construction, power and water supply | 4,077 | 3,970 | |
| 2,181 | 2,289 Retail trade, hotels and restaurants | 2,586 | 2,517 | |
| 4,660 | 4,537 Maritime sector | 4,537 | 4,660 | |
| 14,800 | 15,427 Property management | 15,509 | 14,878 | |
| 2,445 | 3,644 Business services | 3,423 | 2,146 | |
| 4,542 | 6,032 Transport and other services provision | 6,942 | 5,409 | |
| 2 | 9 Public administration | 33 | 12 | |
| 1,890 | 1,626 Other sectors | 1,638 | 1,863 | |
| 49,926 | 55,099 Gross loans in Corporate market | 58,340 | 52,740 | |
| 109,544 | 118,714 Wage earners | 124,461 | 115,036 | |
| 159,470 | 173,814 Gross loans incl. SB1 Boligkreditt /SB1 Næringskreditt | 182,801 | 167,777 | |
| 39,833 | 46,613 of which SpareBank 1 Boligkreditt | 46,613 | 39,833 | |
| 1,667 | 1,540 of which SpareBank 1 Næringskreditt | 1,540 | 1,667 | |
| 117,970 | 125,660 Gross loans in balance sheet | 134,648 | 126,277 | |
| 850 | 1,351 - Loan loss allowance on amortised cost loans | 1,421 | 911 | |
| 87 | 96 - Loan loss allowance on loans at FVOCI | 96 | 87 | |
| 117,033 | 124,214 Net loans to and receivables from customers | 133,131 | 125,279 |
| Parent Bank | Jan-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Losses on loans and guarantees (NOKm) | RM | CM | Total | RM | CM | Total |
| Change in provision for expected credit losses for the period | 49 | 666 | 715 | 28 | 205 | 234 |
| Actual loan losses on commitments exceeding provisions made | 14 | 197 | 212 | 10 | 9 | 19 |
| Recoveries on commitments previously written-off | -7 | -18 | -25 | -5 | -1 | -7 |
| Losses for the period on loans and guarantees | 56 | 846 | 902 | 32 | 213 | 245 |
| Group | Jan-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Losses on loans and guarantees (NOKm) | RM | CM | Total | RM | CM | Total |
| Change in provision for expected credit losses for the period | 48 | 681 | 729 | 34 | 212 | 246 |
| Actual loan losses on commitments exceeding provisions made | 55 | 213 | 268 | 40 | 22 | 62 |
| Recoveries on commitments previously written-off | -25 | -21 | -46 | -6 | -2 | -8 |
| Losses for the period on loans and guarantees | 78 | 873 | 951 | 68 | 231 | 299 |
| Net | ||||
|---|---|---|---|---|
| Parent Bank (NOKm) | 1 Jan 20 | Change in provision |
write-offs/ recoveries |
31 Dec 20 |
| Loans as amortised cost- CM | 916 | 667 | -206 | 1,377 |
| Loans as amortised cost- RM | 34 | 12 | -11 | 35 |
| Loans at fair value over OCI- RM | 109 | 38 | - | 147 |
| Loans at fair value over OCI- CM | 1 | -1 | - | 0 |
| Provision for expected credit losses on loans and guarantees | 1,060 | 715 | -217 | 1,559 |
| Presented as | ||||
| Provision for loan losses | 937 | 725 | -217 | 1,446 |
| Other debt- provisons | 100 | -19 | - | 81 |
| Other comprehensive income - fair value adjustment | 23 | 9 | - | 32 |
| 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 |
| Change in | Net write-offs / |
|||
|---|---|---|---|---|
| Group (NOKm) | 1 Jan 20 | provision | recoveries | 31 Dec 20 |
| Loans as amortised cost- CM | 948 | 682 | -209 | 1,421 |
| Loans as amortised cost- RM | 63 | 10 | -11 | 62 |
| Loans at fair value over OCI- RM | 109 | 38 | - | 147 |
| Loans at fair value over OCI- CM | 1 | -1 | - | 0 |
| Provision for expected credit losses on loans and guarantees | 1,121 | 729 | -220 | 1,630 |
| Presented as | ||||
| Provision for loan losses | 998 | 739 | -220 | 1,517 |
| Other debt- provisons | 100 | -19 | - | 81 |
| Other comprehensive income - fair value adjustment | 23 | 9 | - | 32 |
| 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 |
| Jan-Dec | Jan-Dec | |||||||
|---|---|---|---|---|---|---|---|---|
| Accrual for losses on loans | 2020 | 2019 | ||||||
| Parent Bank | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Retail market | ||||||||
| Opening balance | 25 | 73 | 45 | 143 | 27 | 62 | 31 | 120 |
| Transfer to (from) stage 1 | 14 | -13 | -0 | - | 10 | -10 | - | - |
| Transfer to (from) stage 2 | -1 | 2 | -0 | - | -2 | 2 | - | - |
| Transfer to (from) stage 3 | -0 | -3 | 3 | - | - | -3 | 3 | - |
| Net remeasurement of loss allowances | -17 | 12 | 9 | 5 | -11 | 24 | 18 | 30 |
| Originations or purchases | 13 | 13 | 0 | 26 | 13 | 17 | 1 | 31 |
| Derecognitions | -8 | -23 | -2 | -33 | -11 | -20 | -1 | -33 |
| Changes due to changed input assumptions | 10 | 38 | 2 | 50 | - | - | - | - |
| Actual loan losses | 0 | 0 | -11 | -11 | - | - | -5 | -5 |
| Closing balance | 35 | 97 | 47 | 180 | 25 | 73 | 45 | 143 |
| Corporate Market | ||||||||
| Opening balance | 66 | 210 | 540 | 816 | 64 | 148 | 382 | 594 |
| Transfer to (from) stage 1 | 14 | -14 | -0 | - | 19 | -19 | - | - |
| Transfer to (from) stage 2 | -4 | 4 | -0 | - | -8 | 8 | - | - |
| Transfer to (from) stage 3 | -0 | -1 | 1 | - | - | - | 1 | - |
| Net remeasurement of loss allowances | -2 | 72 | 486 | 556 | -17 | 98 | 185 | 266 |
| Originations or purchases | 45 | 99 | 1 | 144 | 27 | 20 | 1 | 48 |
| Derecognitions | -30 | -96 | -1 | -127 | -20 | -43 | - | -63 |
| Changes due to changed input assumptions | -0 | 113 | 2 | - | - | - | - | - |
| Actual loan losses | - | - | -206 | -206 | - | - | -27 | -27 |
| Closing balance | 88 | 387 | 823 | 1,299 | 66 | 210 | 541 | 817 |
| Total accrual for loan losses | 123 | 484 | 870 | 1,478 | 91 | 283 | 586 | 960 |
| Jan-Dec | Jan-Dec | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Accrual for losses on loans | 2020 | 2019 | |||||||
| Group | Stage 1 | Stage 2 | Stage 3 | Total Stage 1 | Stage 2 | Stage 3 | Total | ||
| Retail Market | |||||||||
| Opening balance | 32 | 84 | 56 | 172 | 33 | 71 | 39 | 143 | |
| Transfer to (from) stage 1 | 14 | - 13 | - 0 | - | 12 | - 11 | - | - | |
| Transfer to (from) stage 2 | 0 | - 0 | - 0 | - | - 2 | 4 | - 1 | - | |
| Transfer to (from) stage 3 | - 1 | - 2 | 3 | - | - | - 3 | 4 | - | |
| Net remeasurement of loss allowances | - 17 | 11 | 11 | 5 | - 14 | 24 | 22 | 32 | |
| Originations or purchases | 12 | 15 | 5 | 31 | 17 | 23 | 3 | 44 | |
| Derecognitions | - 6 | - 20 | 1 | - 25 | - 13 | - 23 | - 5 | - 41 | |
| Changes due to changed input assumptions | 7 | 33 | - 6 | 35 | - | - | - | - | |
| Actual loan losses | - | - | - 11 | - 11 | - | - | - 5 | - 5 | |
| Closing balance | 42 | 107 | 58 | 207 | 32 | 84 | 56 | 172 | |
| Corporate Market | |||||||||
| Opening balance | 71 | 218 | 560 | 849 | 70 | 152 | 397 | 619 | |
| Transfer to (from) stage 1 | 14 | - 14 | - 0 | - | 20 | - 20 | - | - | |
| Transfer to (from) stage 2 | - 2 | 2 | - 0 | - | - 9 | 9 | - | - | |
| Transfer to (from) stage 3 | - 1 | 0 | 1 | - | - | - 1 | 1 | - | |
| Net remeasurement of loss allowances | - 2 | 72 | 484 | 555 | - 19 | 100 | 188 | 268 | |
| Originations or purchases | 46 | 103 | 3 | 151 | 30 | 21 | 7 | 59 | |
| Derecognitions | - 26 | - 93 | 10 | - 109 | - 20 | - 44 | - 2 | - 66 | |
| Changes due to changed input assumptions | - 2 | 111 | - 4 | 106 | - | - | - | - | |
| Actual loan losses | - | - | - 209 | - 209 | - | - | - 31 | - 31 | |
| Closing balance | 98 | 399 | 845 | 1,342 | 71 | 218 | 560 | 849 | |
| Total accrual for loan losses | 140 | 507 | 902 | 1,549 | 104 | 302 | 616 | 1,021 |
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank and Group (NOKm) | Stage1 Stage2 Stage3 | Total Stage1 Stage2 Stage3 | Total | |||||
| Opening balance | 14 | 29 | 57 | 100 | 11 | 47 | 90 | 148 |
| Transfer to (from) stage 1 | 2 | -2 | -0 | - | 3 | -3 | -0 | - |
| Transfer to (from) stage 2 | -0 | 0 | -0 | - | -1 | 1 | - | - |
| Transfer to (from) stage 3 | -0 | -0 | 0 | - | -0 | -0 | 0 | - |
| Net remeasurement of loss allowances | 2 | 16 | -54 | -36 | -2 | 3 | -33 | -33 |
| Originations or purchases | 11 | 8 | 0 | 19 | 7 | 1 | 0 | 8 |
| Derecognitions | -5 | -13 | -0 | -19 | -3 | -20 | -0 | -24 |
| Changes due to changed input assumptions | 3 | 12 | 0 | 16 | - | - | - | - |
| Actual loan losses | - | - | - | - | - | - | - | - |
| Closing balance | 27 | 50 | 4 | 81 | 14 | 29 | 57 | 100 |
| Of which | ||||||||
| Retail market | 2 | 2 | ||||||
| Corporate Market | 79 | 98 |
| 31 Dec 2020 | 31 Dec 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank (NOK million) | Stage1 Stage2 Stage3 | Total Stage1 Stage2 Stage3 | Total | |||||
| Agriculture and forestry | 2 | 34 | 5 | 41 | 2 | 21 | 7 | 30 |
| fisheries and hunting | 6 | 2 | - | 8 | 2 | 1 | 0 | 3 |
| Sea farming industries | 2 | 0 | 3 | 5 | 1 | 0 | - | 1 |
| Manufacturing | 8 | 25 | 2 | 35 | 5 | 9 | 5 | 20 |
| Construction, power and water supply | 11 | 27 | 17 | 55 | 10 | 5 | 11 | 26 |
| Retail trade, hotels and restaurants | 10 | 30 | 17 | 58 | 10 | 8 | 11 | 28 |
| Maritime sector | 10 | 180 | 614 | 804 | 9 | 87 | 471 | 568 |
| Property management | 20 | 56 | 38 | 114 | 16 | 45 | 23 | 83 |
| Business services | 12 | 56 | 142 | 210 | 7 | 50 | 22 | 79 |
| Transport and other services | 8 | 10 | 2 | 19 | 7 | 4 | 3 | 14 |
| Public administration | 0 | - | - | 0 | - | - | - | - |
| Other sectors | 0 | 0 | - | 0 | - | - | - | - |
| Wage earners | 2 | 65 | 31 | 97 | - | 52 | 33 | 86 |
| Total provision for losses on loans | 91 | 484 | 870 | 1,446 | 68 | 283 | 586 | 937 |
| loan loss allowance on loans at FVOCI | 32 | - | - | 32 | 23 | - | - | 24 |
| Total loan loss allowance | 123 | 484 | 870 | 1,478 | 91 | 283 | 586 | 961 |
| 31 Dec 2020 | 31 Dec 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Group (NOK million) | Stage1 Stage2 Stage3 | Total Stage1 Stage2 Stage3 | Total | |||||
| Agriculture and forestry | 3 | 36 | 5 | 44 | 2 | 22 | 8 | 32 |
| fisheries and hunting | 6 | 2 | - | 8 | 2 | 1 | 0 | 3 |
| Sea farming industries | 3 | 1 | 3 | 6 | 1 | 0 | - | 1 |
| Manufacturing | 10 | 27 | 7 | 44 | 6 | 11 | 9 | 27 |
| Construction, power and water supply | 13 | 31 | 20 | 64 | 11 | 8 | 16 | 35 |
| Retail trade, hotels and restaurants | 12 | 31 | 19 | 62 | 11 | 8 | 11 | 30 |
| Maritime sector | 10 | 180 | 614 | 804 | 9 | 87 | 471 | 568 |
| Property management | 20 | 56 | 39 | 115 | 16 | 45 | 23 | 84 |
| Business services | 13 | 57 | 143 | 213 | 8 | 51 | 24 | 82 |
| Transport and other services | 10 | 12 | 10 | 32 | 8 | 5 | 8 | 21 |
| Public administration | 0 | - | - | 0 | - | - | - | - |
| Other sectors | 0 | 0 | 2 | 2 | 2 | 0 | 0 | 2 |
| Wage earners | 7 | 73 | 41 | 122 | 6 | 63 | 44 | 112 |
| Total provision for losses on loans | 108 | 507 | 902 | 1,517 | 82 | 302 | 614 | 998 |
| loan loss allowance on loans at FVOCI | 32 | - | - | 32 | 23 | - | - | 24 |
| Total loan loss allowance | 140 | 507 | 902 | 1,549 | 105 | 302 | 614 | 1,022 |
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Bank (NOK million) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Retail Market | ||||||||
| Balance at 1 January | 69,045 | 5,129 | 487 | 74,661 | 65,403 | 4,366 | 320 | 70,089 |
| Transfer to stage 1 | 1,050 | -1,019 | -31 | - | 893 | -877 | -16 | - |
| Transfer to stage 2 | -1,433 | 1,470 | -38 | - | -1,847 | 1,872 | -25 | - |
| Transfer to stage 3 | -30 | -47 | 77 | - | -60 | -135 | 195 | - |
| Net increase/decrease amount existing loans | -2,093 | -136 | -7 | -2,237 | -1,843 | -123 | -21 | -1,986 |
| New loans | 49,001 | 1,464 | 111 | 50,575 | 43,549 | 1,588 | 178 | 45,315 |
| Derecognitions | -42,243 | -2,429 | -196 | -44,867 | -37,050 | -1,562 | -145 | -38,756 |
| Financial assets with actual loan losses | -1 | -2 | -22 | -24 | - | - | - | - |
| Balance at 31 December | 73,297 | 4,430 | 381 | 78,108 | 69,045 | 5,129 | 487 | 74,661 |
| Corporate Market | ||||||||
| Balance at 1 January | 33,190 | 3,971 | 1,470 | 38,632 | 32,055 | 5,521 | 1,223 | 38,800 |
| Transfer to stage 1 | 521 | -521 | -0 | - | 1,586 | -1,561 | -26 | 0 |
| Transfer to stage 2 | -2,605 | 2,614 | -9 | - | -1,405 | 1,446 | -41 | 0 |
| Transfer to stage 3 | -70 | -685 | 754 | - | -8 | -227 | 234 | -0 |
| Net increase/decrease amount existing loans | -1,541 | -208 | 38 | -1,711 | -1,638 | -91 | -7 | -1,736 |
| New loans | 17,141 | 1,672 | 328 | 19,141 | 11,323 | 205 | 319 | 11,848 |
| Derecognitions | -11,046 | -753 | -862 | -12,662 | -8,723 | -1,324 | -232 | -10,279 |
| Financial assets with actual loan losses | -2 | -111 | -19 | -132 | 0 | 0 | - | - |
| Balance at 31 December | 35,587 | 5,979 | 1,702 | 43,268 | 33,190 | 3,971 | 1,470 | 38,632 |
| Fixed interest loans at FV | 4,285 | 4,285 | 4,677 | 4,677 | ||||
| Total gross loans at 31 December | 113,169 | 10,409 | 2,083 | 125,660 | 106,912 | 9,101 | 1,957 | 117,970 |
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Group (NOK million) | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Retail Market | ||||||||
| Balance at 1 January | 73,675 | 5,924 | 570 | 80,169 | 69,736 | 4,951 | 386 | 75,073 |
| Transfer to stage 1 | 1,260 | -1,225 | -35 | - | 1,053 | -1,034 | -19 | - |
| Transfer to stage 2 | -1,731 | 1,785 | -54 | - | -2,184 | 2,217 | -33 | - |
| Transfer to stage 3 | -44 | -89 | 133 | - | -84 | -164 | 248 | - |
| Net increase/decrease amount existing loans | -2,136 | -196 | -15 | -2,346 | -2,867 | -277 | -31 | -3,175 |
| New loans | 51,383 | 1,702 | 119 | 53,204 | 45,617 | 1,901 | 196 | 47,715 |
| Derecognitions | -43,512 | -2,624 | -239 | -46,375 | -37,596 | -1,669 | -165 | -39,430 |
| Financial assets with actual loan losses | -689 | -70 | -25 | -784 | -2 | -1 | -12 | -14 |
| Balance at 31 December | 78,206 | 5,208 | 453 | 83,867 | 73,675 | 5,924 | 570 | 80,169 |
| Corporate Market | ||||||||
| Balance at 1 January | 35,466 | 4,426 | 1,539 | 41,431 | 33,897 | 5,881 | 1,299 | 41,076 |
| Transfer to stage 1 | 693 | -690 | -4 | - | 1,659 | -1,631 | -28 | - |
| Transfer to stage 2 | -2,897 | 2,909 | -11 | - | -1,681 | 1,736 | -55 | - |
| Transfer to stage 3 | -107 | -695 | 801 | - | -42 | -237 | 279 | - |
| Net increase/decrease amount existing loans | -1,589 | -265 | 34 | -1,819 | -1,682 | -164 | -22 | -1,868 |
| New loans | 18,238 | 1,875 | 349 | 20,462 | 12,682 | 261 | 326 | 13,269 |
| Derecognitions | -11,287 | -815 | -883 | -12,985 | -9,367 | -1,414 | -230 | -11,011 |
| Financial assets with actual loan losses | -410 | -159 | -24 | -593 | 0 | -5 | -30 | -35 |
| Balance at 31 December | 38,107 | 6,587 | 1,802 | 46,496 | 35,466 | 4,426 | 1,539 | 41,431 |
| Fixed interest loans at FV | 4,285 | 4,285 | 4,677 | 4,677 | ||||
| Total gross loans at 31 December | 120,598 | 11,794 | 2,255 | 134,648 | 113,817 | 10,350 | 2,110 | 126,277 |
| Parent Bank | Group | |||
|---|---|---|---|---|
| 31 Dec 2019 |
31 Dec | 2020 (NOKm) | 31 Dec 2020 |
31 Dec 2019 |
| 2,094 | 2,269 Agriculture and forestry | 2,269 | 2,094 | |
| 970 | 1,210 Fisheries and hunting | 1,210 | 970 | |
| 645 | 1,305 Sea farming industries | 1,305 | 645 | |
| 1,582 | 1,796 Manufacturing | 1,796 | 1,582 | |
| 3,363 | 3,799 Construction, power and water supply | 3,799 | 3,363 | |
| 4,197 | 5,461 Retail trade, hotels and restaurants | 5,461 | 4,197 | |
| 1,059 | 1,182 Maritime sector | 1,182 | 1,059 | |
| 5,027 | 5,821 Property management | 5,750 | 4,718 | |
| 7,643 | 9,286 Business services | 9,286 | 7,643 | |
| 8,186 | 8,930 Transport and other services provision | 8,518 | 7,819 | |
| 13,162 | 12,711 Public administration | 12,711 | 13,162 | |
| 3,278 | 3,795 Other sectors | 3,641 | 3,001 | |
| 51,206 | 57,566 Total | 56,928 | 50,253 | |
| 35,664 | 40,600 Wage earners | 40,600 | 35,664 | |
| 86,870 | 98,166 Total deposits | 97,529 | 85,917 |
| Parent bank | Group | |||
|---|---|---|---|---|
| Jan-Dec | Jan-Dec | |||
| 2019 | 2020 (NOKm) | 2020 | 2019 | |
| Interest income | ||||
| Interest income from loans to and claims on central banks and credit institutions | ||||
| 246 | 171 | (amortised cost) | 42 | 103 |
| 1,693 | 1,584 Interest income from loans to and claims on customers (amortised cost) | 2,120 | 2,177 | |
| 1,792 | 1,519 Interest income from loans to and claims on customers (FVOCI) | 1,534 | 1,814 | |
| 134 | 129 Interest income from loans to and claims on customers (FVPL) | 129 | 134 | |
| Interest income from money market instruments, bonds and other fixed income | ||||
| 375 | 349 | securities | 346 | 371 |
| - | - Other interest income | 27 | 26 | |
| 4,241 | 3,752 Total interest income | 4,197 | 4,626 | |
| Interest expense | ||||
| 170 | 84 Interest expenses on liabilities to credit institutions | 92 | 190 | |
| 1,042 | 731 Interest expenses relating to deposits from and liabilities to customers | 719 | 1,019 | |
| 545 | 484 Interest expenses related to the issuance of securities | 484 | 545 | |
| 84 | 48 Interest expenses on subordinated debt | 50 | 86 | |
| 62 | 8 Other interest expenses | 25 | 86 | |
| 13 | 67 Guarantee fund levy | 67 | 13 | |
| 1,916 | 1,423 Total interest expense | 1,439 | 1,939 | |
| 2,325 | 2,329 Net interest income | 2,759 | 2,687 |
| Parent bank | Group | ||
|---|---|---|---|
| Jan-Dec | Jan-Dec | ||
| 2019 | 2020 (NOKm) | 2020 | 2019 |
| 234 | 246 IT costs | 340 | 321 |
| 19 | 15 Postage and transport of valuables | 19 | 23 |
| 63 | 52 Marketing | 73 | 101 |
| 109 | 102 Ordinary depreciation | 166 | 172 |
| 42 | 39 Operating expenses, real properties | 62 | 57 |
| 134 | 150 Purchased services | 221 | 193 |
| 149 | 140 Other operating expense | 187 | 231 |
| 750 | 744 Total other operating expenses | 1,069 | 1,098 |
| Parent Bank | Group | ||||
|---|---|---|---|---|---|
| 31 Dec 2019 |
31 Dec | 2020 (NOKm) | 31 Dec 2020 |
31 Dec 2019 |
|
| - | - Deferred tax asset | 129 | 158 | ||
| 88 | 67 Fixed assets | 194 | 225 | ||
| 342 | 298 Right to use assets | 470 | 499 | ||
| 107 | 135 Earned income not yet received | 185 | 132 | ||
| 13 | 11 Accounts receivable, securities | 678 | 292 | ||
| 148 | 112 Pension assets | 112 | 148 | ||
| 543 | 340 Other assets | 690 | 637 | ||
| 1,241 | 963 Total other assets | 2,457 | 2,092 |
| Parent Bank | Group | |||
|---|---|---|---|---|
| 31 Dec 2019 |
31 Dec | 2020 (NOKm) | 31 Dec 2020 |
31 Dec 2019 |
| 48 | 8 Deferred tax | 81 | 115 | |
| 475 | 322 Payable tax | 408 | 546 | |
| 10 | 11 Capital tax | 11 | 10 | |
| 10 | 101 Accrued expenses and received, non-accrued income | 671 | 389 | |
| 127 | 301 Provision for accrued expenses and commitments | 301 | 127 | |
| 100 | 81 Losses on guarantees and unutilised credits | 81 | 100 | |
| 16 | 10 Pension liabilities | 10 | 16 | |
| 347 | 303 Lease liabilities | 479 | 505 | |
| 68 | 74 Drawing debt | 74 | 68 | |
| 6 | 3 Creditors | 45 | 57 | |
| 9 | 13 Debt from securities | 568 | 197 | |
| - | - Equity Instruments | - | 244 | |
| 353 | 239 Other liabilities | 355 | 467 | |
| 1,570 | 1,466 Total other liabilites | 3,084 | 2,841 |
| Fallen | |||||
|---|---|---|---|---|---|
| 31 Dec | due/ | Other | 31 Dec | ||
| Change in securities debt (NOKm) | 2019 | Issued | Redeemed | changes | 2020 |
| Certificate, nominal value | - | 368 | - | -28 | 341 |
| Bond debt, nominal value | 42,722 | 9,518 | 11,553 | 1,132 | 41,819 |
| Senior non preferred, nominal value | - | 1,000 | - | - | 1,000 |
| Value adjustments | 73 | - | - | 495 | 568 |
| Accrued interest | 218 | - | - | -27 | 191 |
| Total | 43,014 | 10,886 | 11,553 | 1,572 | 43,919 |
| 31 Dec | Fallen due/ | Other | 31 Dec |
| Change in subordinated debt and hybrid equity (NOKm) | 2019 | Issued | Redeemed | changes | 2020 |
|---|---|---|---|---|---|
| Ordinary subordinated loan capital, nominal value | 1,793 | - | - | - | 1,793 |
| Hybrid equity, nominal value | 287 | - | 287 | - | - |
| Value adjustments | 1 | - | - | -1 | - |
| Accrued interest | 10 | - | - | -7 | 3 |
| Total | 2,090 | - | 287 | -8 | 1,795 |
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 | 1 | 7,225 | - | 7,226 |
| - Bonds and money market certificates | 4,865 | 21,741 | - | 26,606 |
| - Equity instruments | 1,928 | 6 | 432 | 2,366 |
| - Fixed interest loans | - | 43 | 4,242 | 4,285 |
| Financial assets through other comprehensive income | ||||
| - Loans at fair value through other comprehensive income | - | - | 74,761 | 74,761 |
| Total assets | 6,793 | 29,015 | 79,435 | 115,244 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
| Financial liabilities through profit/loss | ||||
| - Derivatives | 2 | 7,177 | - | 7,179 |
| - Equity instruments | - | - | - | - |
| Total liabilities | 2 | 7,177 | - | 7,179 |
| 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 | 105,054 |
| 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 |
| Equity instruments through |
Fixed interest |
Loans at fair value through |
||
|---|---|---|---|---|
| (NOKm) | profit/loss | loans | OCI | Total |
| Opening balance 1 January | 405 | 4,636 | 71,336 | 76,377 |
| Investment in the period | 48 | 731 | 47,183 | 47,962 |
| Disposals in the period | -14 | -1,206 | -43,754 | -44,973 |
| Expected credit loss | - | - | -13 | -13 |
| Gain or loss on financial instruments | -7 | 81 | 7 | 81 |
| Closing balance | 432 | 4,242 | 74,761 | 79,435 |
| (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 the period | 24 | 1,054 | 44,421 | 45,499 |
| Disposals in the period | -256 | -818 | -34,350 | -35,453 |
| 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.
Property Loans at floating interest classified at fair value over other comprehensive income is valued based on nominal amount reduced by expected credit loss. Loans with no significant credit risk detoriation since first recognition is assessed at nominal amount. For loans with a significant increase in credit risk since first recognition or objective evidence of loss, the calculation of expected credit losses over the life of the asset is in line with loan losses for loans at amortised cost. Estimated fair value is the nominal amount reduced by expected lifetime credit loss. If the likelihood of the worst case scenario in the model is doubled, fair value is reduced by NOK 8 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 291 million in Private Equity investments, property funds, hedge funds and unquoted shares through the company SpareBank SMN 1 Invest. The valuations are in all essentials based on reporting from managers of the funds who utilise cash flow based models or multiples when determining fair value. The Group does not have full access to information on all the elements in these valuations and is therefore unable to determine alternative assumptions.
Financial derivatives at level 2 include for the most part currency futures and interest rate and exchange rate swaps. Valuation is based on observable interest rate curves. In addition the item includes derivatives related to FRAs. These are valued with a basis in observable prices in the market. Derivatives classified to level 2 also include equity derivatives related to SpareBank 1 Markets' market-making activities. The bulk of these derivatives refer to the most sold shares on Oslo Børs, and the valuation is based on the price of the actual/underlying share and observable or calculated volatility.
| Effect from change in reasonable possible alternative |
||
|---|---|---|
| (NOKm) | Book value | assumtions |
| Fixed interest loans | 4,242 | -11 |
| Equity instruments through profit/loss* | 433 | - |
| Loans at fair value through other comprehensive income | 74,761 | -8 |
* 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 reduces its liquidity risk through guidelines and limits designed to achieve a diversified balance sheet, both on the asset and liability side. Preparedness plans have been drawn up both for the group and the SpareBank 1 Alliance to handle the liquidity situation in periods of turbulent capital markets. The bank's liquidity situation is stress tested on a monthly basis using various maturities and crisis scenarios: bank-specific, for the financial market in general or a combination of internal and external factors. 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 debt created by issue of securities at the end of the fourth quarter 2020 was 3.4 years. The overall LCR at the same point was 171 per cent and the average overall LCR in the fourth quarter was 147 per cent. The LCR in Norwegian kroner and euro at quarter-end was 161 and 317 per cent respectively.
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-Dec | |||
|---|---|---|---|
| (NOKm) | 2020 | 2019 | |
| Adjusted Net Profit to allocate between ECC owners and Savings Bank Reserve 1) | 1,793 | 2,458 | |
| Allocated to ECC Owners 2) | 1,147 | 1,572 | |
| Issues Equity Captial Certificates adjusted for own certificates | 129,347,626 | 129,496,367 | |
| Earnings per Equity Captial Certificate | 8.87 | 12.14 |
| Jan-Dec | ||
|---|---|---|
| 1) Adjusted Net Profit | 2020 | 2019 |
| Net Profit for the group | 1,978 | 2,563 |
| adjusted for non-controlling interests share of net profit | -126 | -56 |
| Adjusted for Tier 1 capital holders share of net profit | -59 | -49 |
| Adjusted Net Profit | 1,793 | 2,458 |
| (NOKm) | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| ECC capital | 2,597 | 2,597 |
| Dividend equalisation reserve | 6,556 | 6,144 |
| Premium reserve | 895 | 895 |
| Unrealised gains reserve | 153 | 121 |
| Other equity capital | - | - |
| A. The equity capital certificate owners' capital | 10,201 | 9,758 |
| Ownerless capital | 5,664 | 5,432 |
| Unrealised gains reserve | 86 | 68 |
| Other equity capital | - | - |
| B. The saving bank reserve | 5,750 | 5,500 |
| To be disbursed from gift fund | 321 | 474 |
| Dividend declared | 569 | 840 |
| Equity ex. profit | 16,842 | 16,572 |
| Equity capital certificate ratio A/(A+B) | 64.0 % | 64.0 % |
| Equity capital certificate ratio for distribution | 64.0 % | 64.0 % |
| Group (NOKm) | 4Q | 3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q | 4Q |
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | 2019 | 2018 | |
| Interest income effective interest method | 945 | 971 | 1,031 | 1,250 | 1,235 | 1,190 | 1,127 | 1,075 | 1,082 |
| Interest expenses | 258 | 276 | 365 | 540 | 538 | 512 | 463 | 426 | 438 |
| Net interest | 688 | 695 | 666 | 710 | 697 | 678 | 664 | 649 | 644 |
| Commission income | 416 | 414 | 331 | 349 | 371 | 374 | 363 | 329 | 343 |
| Commission expenses | 58 | 52 | 47 | 50 | 47 | 55 | 51 | 40 | 42 |
| Other operating income | 399 | 277 | 323 | 271 | 255 | 235 | 294 | 262 | 242 |
| Commission income and other income | 757 | 638 | 607 | 570 | 579 | 554 | 606 | 551 | 543 |
| Dividends | 27 | 2 | 2 | 8 | 1 | 1 | 11 | 2 | 2 |
| Income from investment in related companies | 117 | 170 | 177 | 217 | 8 | 85 | 231 | 555 | 130 |
| Net return on financial investments | 53 | 32 | 269 | -124 | 8 | 35 | 95 | 169 | -37 |
| Net return on financial investments | 197 | 205 | 448 | 101 | 17 | 121 | 336 | 727 | 95 |
| Total income | 1,642 | 1,538 | 1,721 | 1,381 | 1,292 | 1,353 | 1,607 | 1,926 | 1,282 |
| Staff costs | 570 | 422 | 449 | 443 | 411 | 404 | 438 | 447 | 391 |
| Other operating expenses | 275 | 263 | 258 | 273 | 309 | 269 | 263 | 257 | 311 |
| Total operating expenses | 845 | 685 | 706 | 716 | 720 | 673 | 701 | 704 | 701 |
| Result before losses | 797 | 853 | 1,015 | 665 | 572 | 680 | 907 | 1,223 | 580 |
| Loss on loans, guarantees etc. | 242 | 231 | 170 | 308 | 103 | 71 | 59 | 67 | 67 |
| Result before tax | 554 | 621 | 845 | 357 | 469 | 609 | 848 | 1,155 | 513 |
| Tax charge | 104 | 102 | 126 | 67 | 123 | 121 | 165 | 109 | 104 |
| Result investment held for sale, after tax | 0 | 0 | -0 | 0 | 0 | -0 | 0 | 0 | -8 |
| Net profit | 450 | 519 | 719 | 290 | 346 | 488 | 683 | 1,046 | 401 |
| Group (NOKm) | 4Q | 3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q | 4Q |
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | 2019 | 2018 | |
| Profitability | |||||||||
| Return on equity per quarter 1) | 8.9% | 10.5% | 15.1% | 5.7% | 7.1% | 10.2% | 14.9% | 23.3% | 9.0% |
| Cost-income ratio 1) | 51 % | 45 % | 41 % | 52 % | 56 % | 50 % | 44 % | 37 % | 55 % |
| Balance sheet figures | |||||||||
| Gross loans to customers | 134,648 133,640 130,627 127,272 126,277 123,967 121,895 120,100 120,473 | ||||||||
| Gross loans incl. SB1 Boligkreditt and SB1 Næringskreditt |
182,801 179,423 175,100 170,771 167,777 165,380 163,627 161,091 160,317 | ||||||||
| Deposits from customers | 97,529 | 95,391 | 94,289 | 88,152 | 85,917 | 83,641 | 86,553 | 81,111 | 80,615 |
| Total assets | 187,912 186,900 190,484 185,182 166,662 166,475 167,289 164,641 160,704 | ||||||||
| Quarterly average total assets | 187,406 188,692 187,833 175,922 166,569 166,882 165,965 162,673 160,021 | ||||||||
| Growth in loans incl. SB1 Boligkreditt and SB1 | |||||||||
| Næringskredtt last 12 months 1) | 9.0 % | 8.5 % | 7.0 % | 6.0 % | 6.3 % | 6.8 % | 5.7 % | 6.6 % | 7.8 % |
| Growth in deposits last 12 months | 13.5 % | 14.0 % | 8.9 % | 8.7 % | 10.8 % | 4.1 % | 7.7 % | 6.8 % | 5.4 % |
| Losses and defaults in % of gross loans incl. SB1 Boligkreditt and SB1 Næringskreditt |
|||||||||
| Impairment losses ratio 1) | 0.54 % | 0.52 % | 0.39 % | 0.73 % | 0.25 % | 0.17 % | 0.14 % | 0.17 % | 0.17 % |
| Non-performing commitm. as a percentage of gross | |||||||||
| loans 1) | 0.25 % | 0.27 % | 0.39 % | 0.38 % | 0.26 % | 0.26 % | 0.22 % | 0.18 % | 0.19 % |
| Other doubtful commitm. as a percentage of gross | |||||||||
| loans 1) | 0.98 % | 1.03 % | 0.97 % | 1.23 % | 1.00 % | 1.03 % | 1.00 % | 0.99 % | 0.86 % |
| Solidity 2) | |||||||||
| Common equity Tier 1 capital ratio | 18.3 % | 17.6 % | 17.2 % | 16.3 % | 17.2 % | 15.1 % | 15.0 % | 14.8 % | 14.6 % |
| Tier 1 capital ratio | 20.0 % | 19.2 % | 18.9 % | 18.0 % | 19.3 % | 16.7 % | 16.6 % | 16.4 % | 16.3 % |
| Capital ratio | 22.3 % | 21.4 % | 21.1 % | 20.1 % | 21.6 % | 18.9 % | 18.8 % | 18.6 % | 18.5 % |
| Tier 1 capital | 18,636 | 18,290 | 18,182 | 17,792 | 17,742 | 17,417 | 17,284 | 16,775 | 16,472 |
| Total eligible capital | 20,759 | 20,373 | 20,266 | 19,879 | 19,854 | 19,765 | 19,634 | 19,115 | 18,743 |
| Liquidity Coverage Ratio (LCR) | 171 % | 140 % | 163 % | 185 % | 148 % | 181 % | 165 % | 180 % | 183 % |
| Leverage Ratio | 7.1 % | 7.1 % | 6.9 % | 6.9 % | 7.5 % | 7.4 % | 7.5 % | 7.4 % | 7.4 % |
| Key figures ECC | |||||||||
| ECC share price at end of period (NOK) | 97.60 | 84.30 | 78.30 | 67.60 | 100.20 | 98.50 | 97.70 | 87.40 | 84.20 |
| Number of certificates issued, millions 1) | 129.39 | 129.44 | 129.39 | 129.22 | 129.30 | 129.48 | 129.66 | 129.41 | 129.62 |
| Booked equity capital per ECC (including dividend) 1) |
94.71 | 92.73 | 90.37 | 86.85 | 90.75 | 89.36 | 87.04 | 83.86 | 83.87 |
| Profit per ECC, majority 1) | 1.99 | 2.35 | 3.27 | 1.26 | 1.60 | 2.30 | 3.21 | 5.02 | 1.90 |
| Price-Earnings Ratio 1) | 12.28 | 8.96 | 5.98 | 13.46 | 15.67 | 10.69 | 7.61 | 4.35 | 11.05 |
| Price-Book Value Ratio 1) | 1.03 | 0.91 | 0.87 | 0.78 | 1.10 | 1.10 | 1.12 | 1.04 | 1.00 |
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
1 Jan 2019 to 31 Dec 2020
OSEBX = Oslo Stock Exchange Benchmark Index (rebased) OSEEX = Oslo Stock Exchange ECC Index (rebased)
1 Jan 2019 to 31 Dec 2020
| 20 largest ECC holders | No. Of ECCs | Holding |
|---|---|---|
| VPF Nordea Norge | 4,292,153 | 3.31 % |
| State Street Bank and Trust Comp | 4,277,667 | 3.29 % |
| Sparebankstiftelsen SMN | 3,965,391 | 3.05 % |
| VPF Odin Norge | 3,342,919 | 2.57 % |
| Danske Invest Norske aksjer institusjon II. | 2,951,830 | 2.27 % |
| VPF Alfred Berg Gambak | 2,623,661 | 2.02 % |
| VPF Pareto aksje Norge | 2,525,369 | 1.95 % |
| J. P. Morgan Chase Bank, N.A., London | 2,041,745 | 1.57 % |
| State Street Bank and Trust Comp | 2,009,667 | 1.55 % |
| VPF Eika egenkapitalbevis | 1,948,461 | 1.50 % |
| Forsvarets personellservice | 1,906,246 | 1.47 % |
| Pareto Invest AS | 1,821,106 | 1.40 % |
| VPF Nordea Kapital | 1,390,601 | 1.07 % |
| MP Pensjon PK | 1,352,771 | 1.04 % |
| Citibank N.A | 1,340,632 | 1.03 % |
| Danske Invest Norske aksjer institusjon I | 1,295,275 | 1.00 % |
| VPF Nordea Avkastning | 1,249,111 | 0.96 % |
| VPF Alfred Berg Norge | 1,205,659 | 0.93 % |
| Morgan Stanley & Co. International | 1,031,733 | 0.79 % |
| Landkreditt utbytte | 1,000,000 | 0.77 % |
| The 20 largest ECC holders in total | 43,571,997 | 33.56 % |
| Others | 86,264,446 | 66.44 % |
| 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 up to one half of the owner capital's share of the net profit for the year should be disbursed in dividends and, similarly, that up to one half of the owner capital's share of the net profit for the year should be disbursed as gifts or transferred to a foundation. This is on the assumption that capital adequacy is at a satisfactory level. When determining dividend payout, account will be taken of the profit trend expected in a normalised market situation, external framework conditions and the need for tier 1 capital.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.