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SpareBank 1 Sørøst-Norge
Quarterly Report • May 15, 2020
3753_rns_2020-05-15_ff43f18d-3e76-4a97-996f-afe98c1713b0.pdf
Quarterly Report
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INTERIM REPORT FOR THE 1ST QUARTER
We are together
Together we create value Learning – Engaged – Close
SPAREBANK 1 BV NO 944 521 836 TEL. +45 915 02480
Business concept, vision, values and goals
Business concept Business areas
SpareBank 1 BV's mission is to contribute to value creation in local communities by providing a wide range of financial services, as well as appropriate advice to individuals and businesses.
We aim to offer a broad range of relevant, high-quality, competitive products in all of our business areas. Each business area must provide good advice and maintain an active focus on sales. Our sales and advice must be based on expertise, quality and ethical standards in line with the best traditions of the savings bank industry.
Market area
SpareBank 1 BV's geographical market area covers Buskerud, centred around Kongsberg and Drammen, and Vestfold, where the Bank's geographical area extends from Holmestrand in the north to Larvik in the south.
The SpareBank 1 BV Group's registered head office is in Tønsberg and it has branches in Drammen, Mjøndalen, Lier, Kongsberg, Holmestrand, Horten, Tønsberg, Nøtterøy, Sandefjord and Larvik.
Resource management
Within the priority areas described in the business concept, our resources must be employed to yield the best return on capital for the benefit of our equity certificate holders, customers, employees and region.
Vision, values and goals
Vision Together we create value
Our core values
Customer first – together we are best.
Our values
Learning – engaged – close
Main strategic objective
The Group's main strategic objective is to create value for our customers and the region of which the Group is a part. We want to help local initiatives, companies and people thrive so that together we can contribute to growth and development. This will also create value for our owners and employees.
- BUSINESS AREAS
- BOARD OF DIREC TORS ' INTERIM REPORT
- INTERIM FINANCIAL STATEMENTS
- SUMMARY OF RESULTS AND KEY FIGURES
- INCOME STATEMENT IFRS
- BAL ANCE SHEE T
- RESULTS FROM QUARTERLY FINANCIAL STATEMENTS
- CHANGE IN EQUITY
- CASH FLOW STATEMENT
NOTES TO THE FINANCIAL STATEMENTS
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- ACCOUNTING POLICIES
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- LOSSES ON LOANS AND GUARANTEES
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- IMPAIRMENT PROVISIONS FOR LOANS AND GUARANTEES
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- LOANS TO CUSTOMERS BY STAGES 1, 2 AND 3
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- OTHER ASSETS
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- OTHER LIABILITIES
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- DEPOSITS FROM CUSTOMERS BY SEC TOR AND INDUSTRY
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- LOAN TO CUSTOMERS BY SEC TOR AND INDUSTRY
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- CAPITAL ADEQUACY
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- DERIVATIVES
- 1 1 . NE T RESULT FROM OTHER FINANCIAL INVESTMENTS
- 1 2 . SECURITIES ISSUED AND SUBORDINATED LOAN CAPITAL
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- SEGMENT INFORMATION
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- CRITIC AL ACCOUNTING ESTIMATES AND DISCRETIONARY VALUATIONS
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- SALE OF LOANS
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- LIQUIDITY RISK
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- ME ASURING FAIR VALUE OF FINANCIAL INSTRUMENTS
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- EVENTS AFTER THE BALANCE SHEET DATE
- DECLARATION BY THE BOARD AND CEO
- THE BANK'S EQUITY CERTIFICATES
- STATEMENTS ON FUTURE MATTERS
Business areas
SpareBank 1 BV enjoys a solid position in the retail market. Familiarity with the Bank is increasing throughout the market area. One in four retail customers in the market area has a customer relationship with the Bank, and approximately 16% use it as their main bank. Lending has grown by 6.3% in the past 12 months, while average growth in the market was 4.7%.
The Bank has almost 77,000 active customers in the retail market.
A combined offer of good digital services, a modern customer service centre and a well-developed branch network provides the customer with quick and easy access to financial services and competence in all channels.
Customers are pleased with the Group's services and customer satisfaction is high. The Group uses customer data in ways that make becoming a customer easy and that enable us to take relevant initiatives in relation to the customer. This is about both simplifying customers' everyday lives and improving the efficiency of the Bank's processes; in both cases with digitalisation as a clear driver. Building strong customer relationships is about combining the best of two worlds: artificial intelligence through smart technology and robotics, and emotional intelligence through personal contact with highly qualified employees.
As at 31 March 2020, Eiendomsmegler 1 BV and Z-eiendom AS posted total housing sales of NOK 1.4 billion from approximately 500 units.
Corporate market
The corporate market customer portfolio consists of about 8,000 active SME customers. Most of the lending portfolio is within the real estate industry. The focus on cooperation across business areas means that customers are offered an integrated product range.
SpareBank 1 BV supplies financial services packages to businesses. The Group is continuously striving to put in place more digital sales and self-service solutions for corporate customers.
One out of every four corporate customers (SMEs) in the market area has a customer relationship with the Bank.
The Bank has a solid market position in Kongsberg, Sandefjord and in Færder Municipality, and is in a challenger position in the other market areas. The corporate market wants to be seen by customers as: easy to deal with, accessible, important contributors and socially involved.
The SpareBank 1 BV Group
The SpareBank 1 BV Group is a regional business and its market area is Nedre Buskerud and Vestfold.
The Group's main activity consists of the parent bank, as well as the wholly-owned subsidiaries Eiendoms-Megler 1 BV AS and SpareBank 1 Regnskapshuset BV AS. It also owns 60% of Z-Eiendom AS. The companies are located in Kongsberg, Mjøndalen, Drammen, Lier, Holmestrand, Horten, Tønsberg, Nøtterøy, Sandefjord and Larvik.
The interim financial statements have been prepared in accordance with IAS 34 Interim reporting.
The comments and figures below refer to the Group unless explicitly stated otherwise. Figures in brackets relate to the corresponding period last year.
First quarter highlights
- Profit after tax: NOK 93.9 million (180.0 million).
- ° The result for financial assets was NOK 103.7 million lower than last year.
- ° Losses increased by NOK 21.4 million compared with last year.
- Annualised return on equity: 7.7% (15.9%).
- Net interest income: NOK 179.5 million (145.3 million).
- Net commission and other income: NOK 109.7 million (99.3 million).
- ° Including share of capital gains from the insurance merger (pension insurance products): NOK 53.0 million.
- ° Last year included the share of capital gains from the insurance merger: NOK 719 million.
- Operating expenses: NOK 153.5 million (144.7 million).
- Net impairment of loans and guarantees: NOK 27.2 million (5.8 million).
- Total growth in lending in the past 12 months, including portfolio transferred to SpareBank 1 Boligkreditt AS/SpareBank 1 Næringskreditt AS: 7.5% (6.2%).
- Deposit growth in past 12 months: 3.3% (12.8%).
- Tier 1 capital ratio, proportional consolidation: 19.5% (17.7%).
- Common Equity Tier 1 capital, proportional consolidation: 18.1% (16.3%).
- Leverage ratio, proportional consolidation: 8.3% (8.1%).
Financial performance
Cumulative figures as at 31 March unless explicitly stated otherwise.
Profit
The SpareBank 1 BV Group achieved a profit before losses of NOK 143.0 million (210.7 million). Profit after tax was NOK 93.9 million (180.0 million), which represents 0.97% (1.98%) of average total assets. The Group's annualised return on equity was 7.7% (15.9%).
The change in profit compared with the first quarter of 2019 was mainly due to a NOK 103.7 million reduction in profit from financial assets and NOK 21.4 million in higher losses.
The Group's annualised return on equity was significantly affected by gains from the insurance merger (Fremtind) of NOK 53.0 million in 2020 and NOK 71.9 million in 2019, respectively. Excluding these items, the Group's annualised return on equity was 3.4% (9.5%). Please see the 'Net income from financial assets' and 'Losses and impairment provisions' sections for further details about the non-recurring effects, as well as the negative impact the coronavirus pandemic is having on the results.
Earnings per equity certificate in the parent bank were NOK 0.55 (0.87).
Quarterly performance of profit after tax and return on equity:
Profit after tax
Return on equity
Net interest income
Net interest income amounted to NOK 179.5 million (145.3 million). Net interest income as a percentage of average total assets was 1.85% (1.59%).
At the end of the quarter, the Bank had transferred mortgages worth NOK 12,601 million (12,031 million) to SpareBank 1 Boligkreditt AS, and NOK 832 million (551 million) to SpareBank 1 Næringskreditt AS. Earnings from these loan portfolios are shown under net commission income and amounted to NOK 26.4 million (23.1 million).
Based on Norges Bank's policy rate cuts on 13 March and 20 March 2020 totalling 1.25 percentage points, a decision was made to reduce interest rates for loans and deposits by up to 0.85 percentage points. The mortgage rate was cut from 8 April and the reduction for deposits will come into effect from 27 May.
The three-month NIBOR fell sharply after the interest rate decision was made.
Quarterly change in net interest income:
Net commission and other income
Net commission and other income totalled NOK 109.7 million (99.3 million).
Net commission income
Net commission income amounted to NOK 71.2 million (64.4 million). The increase in commissions from
SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS accounted for NOK 3.3 million of this.
Other operating income
Other operating income amounted to NOK 38.5 million (34.9 million).
Net income from financial assets
Net income from financial assets amounted to NOK 7.2 million (110.9 million). The key items in 2020 are made up of dividends received totalling NOK 15.4 million (16.4 million) and net income from ownership interests of NOK 38.5 million (79.6 million). The latter item includes gains from the insurance merger for personal risk products (Fremtind) amounting to NOK 53.0million (71.9 million), as well as the Bank's NOK -17.5 million (5.4 million) share of the result in SpareBank 1 Gruppen AS for the first quarter. The deficit in Spare-Bank 1 Gruppen for this quarter was mainly due to negative value changes in financial assets, as well as weak results in insurance activities.
In addition, net income from the Bank's financial assets amounted to NOK -46.6 million (14.9 million). The quarter was heavily affected by the negative value changes in the bond and equities markets related to the ongoing pandemic and weak development of oil prices.
Quarterly change in income (NOK millions):
Net interest income
- Commission income from SB 1 Boligkreditt/Næringskreditt
- Net commission and other income
- Net income from financial assets
- Revaluation Eiendom SB1 Forsikring
- Profit in the future
Operating expenses
Total operating expenses were NOK 153.5 million (144.7 million). Operating expenses as a percentage of total operating income for the Group came to 51.8% (40.7%). The corresponding cost-income ratio for the parent bank was 52.2% (45.5%).
Personnel expenses
Personnel expenses amounted to NOK 90.4 million (85.5 million). The average number of FTEs in the Group has increased by 10 compared to the same period last year, of which 8 FTEs were in the parent bank.
Other operating expenses
Other operating expenses amounted to NOK 63.1 million (59.2 million).
Quarterly change in operating expenses:
Losses and impairment provisions
Net impairment of loans and guarantees amounted to NOK 27.2 million (5.8 million) as at 31 March. Net impairments as a percentage of average gross lending amounted to 0.09% (0.02%). The net increase in impairment provisions in Stage 3 amounted to NOK 7.7 million. In stages 1 and 2, the increases in provisions amounted to NOK 6.4 million and NOK 6.8 million, respectively. In addition to this, previous impairments of NOK 6.1 million were recognised as losses.
We are in the initial stages of an ongoing pandemic. There is considerable uncertainty about how long the crisis will last and what the impact of the pandemic will be for losses, both in the short term and in the longer term. The low interest rates and support measures established by the government will have a positive impact for corporate and retail customers who have been hit hard by the pandemic and the lockdown. In its assessment, the Bank has also assumed a gradual reopening of society and relaxing of national infection prevention requirements.
Mortgages for retail customers account for around 80% of the Bank's total lending. The Bank has no direct exposure to the oil sector and has relatively little loan exposure within industries such as hotels, restaurants, tourism, wholesale and retail trade, services and the transport sector. These industries have been especially hard hit by the coronavirus pandemic.
CM – volume in commercial property and other industries:
Commercial property:
As a result of the coronavirus outbreak and abrupt shutdown of the Norwegian economy from 12 March, the credit risk picture has changed. The Bank's IFRS model was not designed to be able to estimate on the basis of a sharp negative shift in general conditions since the model is largely based on historical data. Given this, the Bank has conducted a comprehensive review of the individual commitments in the corporate market portfolio with an emphasis on the most vulnerable industries. Customers with weak operations and liquidity have been identified and individual impairment provisions have been made. The PD and LGD levels in the IFRS model have not been recalibrated as at the end of the first quarter, although some customers were moved from Stage 1 to Stage 2 in the IFRS model based on the review of the portfolio.
In addition to expanded individual loss assessments, the Bank changed the model's scenario weighting this quarter based on an assessment. The best-case scenario was reduced from 10% to 5%, the worst-case scenario increased from 10% to 15%, and the normalcase scenario kept unchanged at 80%. The change in probability weighting from 31 December 2019 results, in isolation, in an increase of approximately NOK 17 million in increased impairment provisions.
Quarterly change in impairment provisions:
Balance sheet performance
The Group's total assets amounted to NOK 39,317 million. This represents an increase of NOK 1,269 million over the past 12 months. The Group's business capital (total assets including loans transferred to SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS) amounted to NOK 52,750 million (50,629 million).
Lending and deposit performance
Gross lending (including volume transferred to Spare-Bank 1 Boligkreditt AS/SpareBank 1 Næringskreditt AS) amounted to NOK 45,093 million. The past 12 months have seen an increase of NOK 3,132 million, equivalent to growth of 7.5%. NOK 2,179 million, or 6.3%, of the growth came in the retail market and NOK 953 million, or 12.8%, in the corporate market. The retail market's share of lending (including SpareBank 1 Boligkreditt) at the end of the quarter was 81% (82%).
At the end of the quarter, the Group had a deposit volume of NOK 24,478 million (23,698 million) with deposit growth of 3.3% in the past 12 months. NOK 1,285 million, or 9.1%, of the growth came in the retail market and NOK -504 million, or -5.3%, in the corporate market. The Group had a deposit coverage ratio of 77.3%, compared with 80.7% at the same time last year. Including the volume transferred to SpareBank 1 Boligkreditt AS/SpareBank 1 Næringskreditt AS, the deposit coverage ratio amounts to 54.3% (56.5%). The retail market share of deposits at the end of the quarter was 63% (60%).
Quarterly change in loans and deposits:
Subordinated loan capital
Equity
Liquidity
Other
Deposits fin. inst.
The Bank's liquidity situation at the end of the quarter was very good. The Bank had a liquidity portfolio of NOK 3,831 million as at 31 March. The Bank aims to keep liquidity risk low. In a normal market, SpareBank 1 BV's goal is to be able to maintain ordinary operations for a minimum of 12 months without access to external financing. As at 31 March, the Bank is well above this target. The Bank can report an LCR of 183% (294%) as at 31 March.
At the end of the quarter, mortgages totalling NOK 12,601 million had been transferred to SpareBank 1 Boligkreditt AS, an increase of NOK 561 million from the start of year. As at 31 March, the Bank had a portfolio of loans approved for transfer to SpareBank 1 Boligkreditt AS worth NOK 11,800 million. The Bank had also transferred NOK 832 million of loans to SpareBank 1 Næringskreditt AS as at 31 March.
In 2020, the Group's target is to increase the average time to maturity of its bond debt to 2.5 years. At the end of the quarter, the average term to maturity was 3.1 years.
SpareBank 1 BV has an issuer rating from Moody's of A2 with a stable outlook; see Moody's latest credit analysis dated 9 January 2020.
Equity Capital adequacy
SpareBank 1 BV uses the standard method for calculating credit risk and the basic method for operational risk.
On 13 March, the Ministry of Finance decided to reduce the countercyclical buffer from 2.5% to 1% with immediate effect. Based on this, the regulatory requirement for Common Equity Tier 1 capital is a minimum of 11%. In September 2018, the Financial Supervisory Authority of Norway set a Pillar 2 requirement for SpareBank 1 BV of 1.9% from 31 December 2018, although the total may be no lower than NOK 457 million above the minimum requirement and buffer requirement in Pillar 1. The current total requirement for Common Equity Tier 1 capital is thus 12.9%. The Group's target for Common Liquidity portfolio
Equity Tier 1 capital ratio is a minimum of 15.5%. At the end of the quarter, the Common Equity Tier 1 capital ratio was 18.1% (16.3%). The leverage ratio was 8.3% (8.1%) at the end of the quarter. The regulatory requirement for the leverage ratio is 5.0%.
In December 2019, the Ministry of Finance adopted changes relating to capital requirements for banks. The systemic risk buffer will be increased by 1.5 percentage points at the end of 2020 for IRBA banks and at the end of 2022 for standard banks. In addition to this, an SME discount of 24% was introduced from 31 December 2019 for customers with commitments of under EUR 1.5 million and an annual turnover of under EUR 50 million.
SpareBank 1 BV is expected to receive requirements for primary capital and eligible liabilities during the second half of 2020. This capital can be written down or converted to equity (MREL). This will entail a need to issue subordinated debt (Tier 3). The Tier 3 capital will replace portions of today's unsecured senior debt when this falls due. SpareBank 1 BV does not expect the effect of new Tier 3 capital to particularly increase the Bank's financing costs.
The Financial Supervisory Authority of Norway will set a new Pillar 2 requirement, which will be effective from the end of 2020. Kvartalsvis utvikling kapitaldekning
Quarterly change in capital adequacy (proportional consolidation);
(forholdsmessig konsolidert)
| Excluding parent bank eliminations |
EiendomsMegler 1 BV AS |
Z-Eiendom AS | SpareBank 1 Regnskapshuset BV AS |
Other subsidiaries |
Total subsidiaries | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| NOK millions | 31.03.2020 | 31.03.2019 | 31.03.2020 | 31.03.2019 | 31.03.2020 | 31.03.2019 | 31.03.2020 | 31.03.2019 | 31.03.2020 | 31.03.2019 |
| Operating income |
17.2 | 16.1 | 6.0 | 7.3 | 11.2 | 10.9 | 0.1 | 0.1 | 34.4 | 34.3 |
| Operating expenses |
(16.9) | (16.3) | (6.3) | (6.5) | (9.2) | (8.8) | (0.2) | (0.3) | (32.6) | (31.9) |
| Financial items | (0.4) | (0.3) | 0.0 | (0.0) | (0.1) | (0.1) | (0.0) | (0.0) | (0.5) | (0.4) |
| Profit before tax |
(0.1) | (0.5) | (0.3) | 0.8 | 1.9 | 2.0 | (0.2) | (0.2) | 1.3 | 2.1 |
Subsidiaries
Apart from Z-Eiendom AS, the Bank owns a 100% stake in all of its subsidiaries and subsidiaries of these. The Bank owns a 60% stake in Z-Eiendom AS.
EiendomsMegler 1 BV AS includes the joint venture EiendomsMegler 1 Næringsmegling AS (the brokerage business is owned 50/50 with SpareBank 1 Telemark). EiendomsMegler 1 BV AS has a good position in the Group's market area, and is part of the national Eiendoms-Megler 1 chain, which has been the market leader in Norway for 11 years in a row. The business activities consist of commercial real estate brokerage, property settlement, purchase and sale of holiday homes, new construction and resale homes.
Z-Eiendom AS has a solid market share in the Tønsberg region. The business activities consist of brokerage of resale homes, new construction and holiday homes.
SpareBank 1 Regnskapshuset BV AS has accounting offices in Larvik, Sandefjord, Vestfold, Drammen and Kongsberg. The company offers a broad range of services, including accounting, payroll, annual reports and accounts and advisory services. The company focuses on good customer experiences from simplifying and digitalising accounting services, and offers several different systems adapted to different industry needs.
Transactions with close associates
Apart from the transaction related to the transfer of personal risk products discussed section below, the Group has not carried out any transactions with close associates that had a significant impact on the company's position or results during the reporting period.
SpareBank 1 Gruppen AS
SpareBank 1 Gruppen AS posted a result before tax of NOK -942 million (286 million) for the first quarter. The ongoing pandemic has had a significant impact on the results with substantial insurance provisions/payments on travel insurance claims and negative financial returns for all asset classes. The Group's share of the negative result from SpareBank 1 Gruppen amounted to NOK -17.5 million.
The result effect of the transfer of personal risk products from SpareBank 1 Forsikring AS to Fremtind Forsikring AS amounted to a total of around NOK 1.7 billion and was recognised as income in the current quarter. The Group's share of this gain from the merger was NOK 53.0 million.
Letter of intent Helgeland Sparebank
On 18 March, Helgeland Sparebank signed a letter of intent regarding becoming a SpareBank 1 bank through the acquisition of a 3% stake in the SamSpar companies Samarbeidende Sparebanker AS and Samarbeidende Sparebanker Utvikling DA. The transaction is valued at NOK 150 million and will involve SpareBank 1 BV selling around 0.3% of its shares in Samarbeidende Sparebanker AS and Samarbeidende Sparebanker Utvikling DA for a total of NOK 16.9 million. Following this, SpareBank 1 BV will own a 15.23% stake in Samarbeidende Sparebanker AS, which provides an indirect ownership interest of 2.97% in SpareBank 1 Gruppen AS, and a 26.49% stake in Samarbeidende Sparebanker Utvikling DA, which in turn provides an indirect ownership interest of 4.77% in SpareBank 1 Utvikling DA. The gain from the transaction has been calculated as being around NOK 9 million. The transaction is expected to be completed with accounting effect in the spring of 2021.
Future outlook
The Bank's liquidity and financial strength were very good at the end of the first quarter and it had a Common Equity Tier 1 capital ratio of 18.1%, which is well above the regulatory requirement of at least 12.9%. The Board is very pleased with the solid increases in net interest income and commission income compared with the first quarter of 2019, as well as the good lending growth in the quarter.
The outbreak of the coronavirus pandemic and the effects of the national and international measures aimed at attempting to prevent it spreading further will have a negative impact on the Group's financial performance and growth going forward. The development of the disease picture and duration of infection prevention measures will be of particular importance. On the
other hand, Norges Bank's lower policy rate and the national support measures that have been implemented for corporate and retail customers that have been directly or indirectly hit by the crisis will help to ease the situation for customers who are particularly vulnerable in this phase. In the next phase, the government is expected to announce measures that will stimulate the demand side of the economy. At the end of the first quarter, a programme was started to cut costs in line with the reduced level of activity and the Group's financial performance.
The Bank's lending and deposit rate cuts combined with the continued, relatively strong competition for mortgages is expected to put pressure on margins in the coming quarters. Further reductions in money market rates might mitigate some of this impact.
The Group kept branches closed from 12 March and for the whole of April. The Group's employees have generally served customers via home office solutions. Despite closure of the physical branches, the feedback from our customers has been good. Customers have had their needs met through self-service solutions and good conversations, both digitally and on the phone. The branch network is gradually being reopened from 4 May and national infection prevention measures have been implemented.
The Bank's liquidity portfolio mainly consists of government guaranteed bonds, bonds issued by counties/ municipalities and covered bonds. The coronavirus crisis widened spreads, which resulted in negative value changes. The Bank also has a smaller portfolio of equity certificates in Norwegian savings banks. Falls in stock market values contributed to negative value changes in this portfolio as well. Despite the relatively low risk in the Bank's securities portfolios, significant volatility is expected in the coming periods.
Both the global and the Norwegian economies will contract in 2020. In the case of the Norwegian economy, this will mainly be due to the coronavirus pandemic and the heavy fall in oil prices. Unemployment is expected to be high in the coming quarters, although it will start to fall as society and companies are reopened. Going forward, unemployment in Norway is expected to be higher than it was prior to the pandemic. Norwegian households are expected to consume less and save more, with lower credit growth the result.
Despite the Bank's corporate portfolio including a low proportion of borrowers in particularly vulnerable industries, there is considerable uncertainty associated with forecasts of how things will develop because of the potential effects and duration of the crisis. The Bank's target of a return on equity of 10% will be very difficult to achieve in 2020 because of the impact of the coronavirus pandemic.
Tønsberg, 14 May 2020 The Board of Directors of SpareBank 1 BV
Finn Haugan Chair of the Board Heine Wang Deputy Chair
Janne Sølvi Weseth Gisle Dahn
Hanne Myhre Gravdal Employee representative
Geir Arne Vestre Employee representative Elisabeth Haug
Rune Fjeldstad Managing Director
Interim financial statements
Summary of results and key figures (Group)
| (NOK thousands) | 31.03.2020 | % | 31.03.2019 | % | 31.12.2019 | % |
|---|---|---|---|---|---|---|
| Net interest income | 179,545 | 1.85 | 145,283 | 1.59 | 656,524 | 1.72 |
| Net commission and other income | 109,742 | 1.13 | 99,265 | 1.09 | 427,065 | 1.12 |
| Net income from financial assets | 7,239 | 0.07 | 110,889 | 1.22 | 171,875 | 0.45 |
| Total net income | 296,526 | 3.06 | 355,436 | 3.90 | 1,255,464 | 3.29 |
| Total operating expenses | 153,521 | 1.59 | 144,704 | 1.59 | 588,334 | 1.54 |
| Operating profit before losses/profit before losses and tax |
143,005 | 1.48 | 210,732 | 2.31 | 667,130 | 1.75 |
| Impairment of loans and guarantees | 27,235 | 0.28 | 5,808 | 0.06 | 2,318 | 0.01 |
| Profit before tax | 115,771 | 1.20 | 204,924 | 2.25 | 664,812 | 1.74 |
| Tax expense | 21,853 | 0.23 | 24,882 | 0.27 | 126,247 | 0.33 |
| Profit after tax | 93,918 | 0.97 | 180,042 | 1.98 | 538,564 | 1.41 |
| Total other comprehensive income recognised as equity |
280 | 0.00 | - | 0.00 | 4,838 | 0.01 |
| Total comprehensive income | 94,198 | 0.97 | 180,042 | 1.98 | 543,403 | 1.43 |
| 31.03.2020 | 31.03.2019 | 31.12.2019 | ||||
| Profitability | ||||||
| Return on equity, profit before other comprehensive income 1 |
7.7% | 15.9% | 11.3% | |||
| Return on equity, comprehensive income | 7.7% | 15.9% | 11.4% | |||
| Cost-income ratio 2 | 51.8% | 40.7% | 46.9% | |||
| Cost-income ratio excl. financial investments | 53.1% | 59.2% | 54.3% | |||
| Balance sheet figures | ||||||
| Gross lending to customers | 31,659,677 | 29,379,539 | 31,409,938 | |||
| Gross lending to customers incl. SpareBank 1 Boligkreditt/Næringskreditt |
45,093,329 | 41,961,238 | 44,292,346 | |||
| Deposits from customers | 24,478,042 | 23,697,672 | 24,443,290 | |||
| Deposit coverage | 77.3% | 80.7% | 77.8% | |||
| Liquidity coverage ratio (LCR), liquidity reserve | 183.0% | 294.0% | 230.0% | |||
| Lending growth incl. SpareBank 1 Boligkreditt/ Næringskreditt in the past 12 months |
7.5% | 6.2% | 5.8% | |||
| Deposit growth in the past 12 months | 3.3% | 12.8% | 10.4% | |||
| Total assets | 39,316,525 | 38,047,212 | 38,822,442 | |||
| Business capital (incl. Sparebank 1 Boligkreditt/ Næringskreditt) |
52,750,177 | 50,628,911 | 51,704,849 |
| 31.03.2020 | 31.03.2019 | 31.12.2019 | ||
|---|---|---|---|---|
| Loss | ||||
| Loss rate on lending 3 | 0.09% | 0.02% | 0.01% | |
| Loans in Stage 3 as % of gross lending | 0.86% | 0.88% | 0.82% | |
| Loss (incl. Sparebank 1 Boligkreditt/Næringskreditt) |
||||
| Loss rate on lending 3 (incl. Sparebank 1 Boligkreditt/Næringskreditt) |
0.06% | 0.01% | 0.01% | |
| Loans in Stage 3 as % of gross lending (incl. Sparebank 1 Boligkreditt/Næringskreditt) |
0.60% | 0.62% | 0.58% | |
| Financial strength in terms of proportional consolidation |
||||
| Capital adequacy ratio | 21.6% | 19.7% | 22.1% | |
| Tier 1 capital ratio | 19.5% | 17.7% | 20.0% | |
| Common Equity Tier 1 capital ratio | 18.1% | 16.3% | 18.5% | |
| Net primary capital | 5,455,171 | 5,049,597 | 5,464,361 | |
| Tier 1 capital | 4,940,626 | 4,545,889 | 4,949,961 | |
| Common Equity Tier 1 capital | 4,587,170 | 4,189,759 | 4,579,307 | |
| Basis for calculation | 25,282,797 | 25,680,439 | 24,780,727 | |
| Leverage ratio, proportional consolidation | 8.3% | 8.1% | 8.6% | |
| Offices and staffing | ||||
| Number of bank branches | 10 | 10 | 10 | |
| Number of brokerage offices | 12 | 12 | 12 | |
| Number of accounting offices | 5 | 5 | 5 | |
| Number of FTEs, parent bank (avg. YTD) | 235 | 227 | 230 | |
| Number of FTEs, group (avg. YTD) | 342 | 332 | 337 | |
| Equity certificates | 31.03.2020 | 31.03.2019 | 31.12.2019 | 31.12.2018 |
| Equity certificate fractions | 54.69% | 56.15% | 56.15% | 57.99% |
| Market price | 35.10 | 36.00 | 39.60 | 35.60 |
| Market value (NOK thousands) | 2,214,857 | 2,271,649 | 2,498,814 | 2,246,408 |
| Book equity per certificate (parent bank) | 40.32 | 38.66 | 42.19 | 40.73 |
| Book equity per certificate (Group) | 42.14 | 40.70 | 43.71 | 42.06 |
| Earnings per equity certificate (parent bank) 4 | 0.55 | 0.87 | 4.43 | 4.98 |
| Earnings per equity certificate (Group) 4 | 0.84 | 1.54 | 4.63 | 5.40 |
| Dividend per equity certificate | - | - | 2.42 | 2.95 |
| Price/earnings per equity certificate (parent bank) | 64.26 | 41.15 | 8.94 | 7.15 |
| Price/earnings per equity certificate (Group) | 41.87 | 23.34 | 8.56 | 6.59 |
| Price/book equity (parent bank) | 0.87 | 0.93 | 0.94 | 0.87 |
| Price/book equity (Group) | 0.83 | 0.88 | 0.91 | 0.85 |
-
Surplus as a percentage of average equity (OB+CB)/2, excl. hybrid capital.
-
Total operating expenses as percentage of total operating income.
-
Net loss as a percentage of average gross lending so far this year.
4.Adjusted profit/loss for the year (see section on 'The Bank's equity certificates') multiplied by equity certificate ratio and divided by the average number of outstanding equity certificates.
Income Statement IFRS
| Parent bank | Group | |||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) Note |
31.03.2020 | 31.03.2019 | 31.12.2019 |
| 151,610 | 36,044 | 33,284 | Interest income measured at fair value | 33,284 | 36,044 | 151,610 |
| 974,467 | 212,676 | 274,940 | Interest income measured at amortised cost | 275,006 | 212,852 | 975,018 |
| - | - | - | Interest income | |||
| 468,398 | 103,332 | 128,532 | Interest expenses | 128,745 | 103,614 | 470,104 |
| 657,679 | 145,388 | 179,692 | Net interest income | 179,545 | 145,283 | 656,524 |
| 296,832 | 68,569 | 75,610 | Commission income | 75,610 | 68,569 | 296,832 |
| 16,617 | 4,185 | 4,375 | Commission expenses | 4,375 | 4,185 | 16,617 |
| 5,983 | 1,699 | 4,940 | Other operating income | 38,507 | 34,880 | 146,849 |
| 286,198 | 66,083 | 76,175 | Net commission and other income | 109,742 | 99,265 | 427,065 |
| 128,793 | 16,370 | 20,608 | Dividends | 15,358 | 16,370 | 25,522 |
| 7,536 | 7,536 | 952 | Net result from ownership interests | 38,492 | 79,626 | 125,437 |
| 20,916 | 14,894 | (46,611) | Net result from other financial investments 11 |
(46,611) | 14,894 | 20,916 |
| 157,245 | 38,799 | (25,051) | Net income from financial assets | 7,239 | 110,889 | 171,875 |
| 1,101,122 | 250,270 | 230,816 | Total net income | 296,526 | 355,436 | 1,255,464 |
| 239,064 | 60,249 | 64,353 | Personnel expenses | 90,447 | 85,485 | 344,184 |
| 218,627 | 53,607 | 56,241 | Other operating expenses | 63,074 | 59,220 | 244,150 |
| 457,691 | 113,856 | 120,594 | Total operating expenses | 153,521 | 144,704 | 588,334 |
| 643,431 | 136,415 | 110,222 | Profit before losses and tax | 143,005 | 210,732 | 667,130 |
| 2,718 | 6,008 | 28,518 | Impairment of loans and guarantees 2, 14 |
27,235 | 5,808 | 2,318 |
| 640,713 | 130,406 | 81,704 | Profit before tax | 115,771 | 204,924 | 664,812 |
| 124,997 | 25,664 | 21,350 | Tax expense | 21,853 | 24,882 | 126,247 |
| 515,717 | 104,742 | 60,354 | Profit before other comprehensive income | 93,918 | 180,042 | 538,564 |
| - | - | - | Controlling interest's share of profit | 94,056 | 179,793 | 537,930 |
| - | - | - | Non-controlling interest's share of profit | (138) | 249 | 634 |
| 8,318 | - | 280 | Items reversed through profit or loss Change in value of loans classified at fair value |
280 | - | 8,318 |
| Items not reversed through profit or loss | ||||||
| (2,275) | - | - | Estimation difference, IAS 19 Pensions | - | - | (3,479) |
| Total other comprehensive income recognised | ||||||
| 6,043 | - | 280 | as equity | 280 | - | 4,838 |
| 521,759 | 104,742 | 60,633 | Total comprehensive income | 94,198 | 180,042 | 543,403 |
| - | - | - | Controlling interest's share of profit | 94,336 | 179,793 | 542,768 |
| - | - | - | Non-controlling interest's share of profit | (138) | 249 | 634 |
| Earnings per equity certificate before other | ||||||
| 4.43 | 0.87 | 0.55 | comprehensive income | 0.84 | 1.54 | 4.63 |
Balance sheet
| Parent bank | Group | ||||||
|---|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | Note | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| 94,784 | 95,598 | 795,399 | Cash and receivables from central banks |
795,399 | 95,598 | 94,784 | |
| 1,034,557 | 1,927,096 | 840,588 | Loans to and receivables from financial institutions |
882,989 | 1,964,773 | 1,070,874 | |
| 31,286,021 | 29,243,264 | 31,515,497 | Net lending to customers | 3, 4, 8 | 31,493,172 | 29,217,504 | 31,265,305 |
| 4,129,073 | 4,494,302 | 3,748,085 | Certificates, bonds and other securities at fair value |
3,748,085 | 4,494,302 | 4,129,073 | |
| 1,418,440 | 1,360,225 | 1,382,497 | Shareholdings and other equity interests |
1,382,497 | 1,360,225 | 1,418,440 | |
| 36,682 | 36,682 | 36,682 | Ownership interests in Group companies |
0 | 0 | 0 | |
| 454,943 | 407,801 | 454,943 | Interests in joint ventures and associated companies |
649,512 | 625,946 | 615,878 | |
| 97,271 | 109,492 | 94,356 | Tangible assets | 18 | 117,352 | 138,127 | 121,536 |
| - | - | - | Goodwill | 24,654 | 24,654 | 24,654 | |
| 9,872 | 11,911 | 9,779 | Deferred tax assets | 10,736 | 12,609 | 10,829 | |
| 56,593 | 100,951 | 196,776 | Other assets | 5, 10 | 212,129 | 113,474 | 71,068 |
| 38,618,237 | 37,787,323 | 39,074,601 | Total assets | 39,316,525 | 38,047,212 | 38,822,442 | |
| - | 29,000 | 400,000 | Deposits from financial institutions | 400,000 | 29,000 | - | |
| 24,463,240 | 23,718,835 | 24,496,962 | Deposits from customers | 7 | 24,478,042 | 23,697,672 | 24,443,290 |
| Liabilities from the issuance of | |||||||
| 8,279,389 | 8,490,117 | 8,207,660 | securities | 12 | 8,207,660 | 8,490,117 | 8,279,389 |
| 125,688 | 50,739 | 33,342 | Tax payable | 35,446 | 51,924 | 128,257 | |
| 288,831 | 448,372 | 613,935 | Other liabilities | 6, 3, 10 | 662,864 | 497,769 | 333,927 |
| 444,404 | 442,451 | 401,350 | Subordinated loan capital | 12 | 401,350 | 442,451 | 444,404 |
| 33,601,552 | 33,179,515 | 34,153,248 | Total liabilities | 34,185,361 | 33,208,933 | 33,629,268 | |
| 946,501 | 946,516 | 946,501 | Equity share capital | 946,501 | 946,516 | 946,501 | |
| 1,026,427 | 1,026,427 | 1,026,427 | Share premium fund | 1,026,427 | 1,026,427 | 1,026,427 | |
| 536,885 | 411,299 | 536,885 | Risk equalisation fund | 536,885 | 411,299 | 536,885 | |
| 6,540 | 6,540 | 6,540 | Endowment fund | 6,540 | 6,540 | 6,540 | |
| 2,072,392 | 1,855,062 | 2,072,392 | Sparebankens fond | 2,072,392 | 1,855,062 | 2,072,392 | |
| 25,234 | 9,879 | 25,514 | Fund for unrealised gains | 25,514 | 9,879 | 25,234 | |
| 250,000 | 250,000 | 250,000 | Additional Tier 1 capital | 250,000 | 250,000 | 250,000 | |
| 152,705 | - | - | Other equity | 175,706 | 154,630 | 328,019 | |
| - | 102,084 | 57,094 | Unallocated | 90,796 | 177,136 | - | |
| - | - | - | Non-controlling interest's share | 403 | 790 | 1,175 | |
| 5,016,685 | 4,607,808 | 4,921,353 | Total equity | 5,131,163 | 4,838,279 | 5,193,174 | |
| 38,618,237 | 37,787,323 | 39,074,601 | Liabilities and equity | 39,316,525 | 38,047,212 | 38,822,442 |
Results from quarterly financial statements
Group
| (NOK thousands) | Q1/2020 | Q4/2019 | Q3/2019 | Q2/2019 | Q1/2019 | Q4/2018 | Q3/2018 | Q2/2018 | Q1/2018 |
|---|---|---|---|---|---|---|---|---|---|
| Interest income | 308,290 | 316,668 | 293,881 | 267,182 | 248,896 | 252,456 | 239,268 | 232,726 | 218,971 |
| Interest expenses | 128,745 | 129,323 | 121,725 | 115,442 | 103,614 | 96,554 | 88,758 | 86,595 | 78,599 |
| Net interest income | 179,545 | 187,345 | 172,156 | 151,740 | 145,283 | 155,903 | 150,510 | 146,131 | 140,372 |
| Commission income | 75,610 | 76,838 | 78,654 | 72,771 | 68,569 | 72,889 | 69,192 | 67,963 | 71,562 |
| Commission expenses | 4,375 | 3,924 | 4,177 | 4,331 | 4,185 | 3,988 | 3,703 | 4,249 | 3,431 |
| Other operating income | 38,507 | 31,623 | 35,353 | 44,993 | 34,880 | 34,447 | 37,427 | 64,061 | 104,537 |
| Net commission and other income | 109,742 | 104,538 | 109,829 | 113,434 | 99,265 | 103,348 | 102,916 | 127,775 | 172,668 |
| Dividends | 15,358 | 6,868 | 14 | 2,270 | 16,370 | - | 4,351 | 9,055 | 18,582 |
| Net result from ownership interests | 38,492 | 3,544 | 10,588 | 31,680 | 79,626 | 9,154 | 13,157 | 15,291 | 10,215 |
| Net result from other financial | |||||||||
| investments | (46,611) | 5,452 | (7,996) | 8,567 | 14,894 | (19,542) | 11,424 | 27,255 | 267 |
| Net income from financial assets | 7,239 | 15,864 | 2,606 | 42,516 | 110,889 | (10,388) | 28,932 | 51,600 | 29,063 |
| Total net income | 296,526 | 307,747 | 284,591 | 307,690 | 355,436 | 248,862 | 282,358 | 325,506 | 342,104 |
| Personnel expenses | 90,447 | 100,644 | 76,912 | 81,144 | 85,485 | 88,248 | 76,674 | (14,432) | 86,936 |
| Other operating expenses | 63,074 | 66,521 | 57,907 | 60,503 | 59,220 | 61,061 | 55,154 | 57,421 | 55,120 |
| Total operating expenses | 153,521 | 167,164 | 134,818 | 141,647 | 144,704 | 149,310 | 131,827 | 42,989 | 142,056 |
| Profit before losses and tax | 143,005 | 140,582 | 149,773 | 166,043 | 210,732 | 99,553 | 150,531 | 282,517 | 200,048 |
| Impairment of loans and guarantees | 27,235 | (3,520) | 2,139 | (2,108) | 5,808 | (9,374) | (8,074) | 11,294 | 6,804 |
| Profit before tax | 115,771 | 144,102 | 147,634 | 168,151 | 204,924 | 108,927 | 158,604 | 271,223 | 193,244 |
| Tax expense | 21,853 | 31,782 | 36,081 | 33,502 | 24,882 | 24,387 | 32,017 | 50,689 | 28,818 |
| Profit before other comprehensive income |
93,918 | 112,320 | 111,553 | 134,649 | 180,042 | 84,540 | 126,587 | 220,534 | 164,426 |
| Parent bank | |||||||||
| Earnings per equity certificate (quarter in isolation) |
0.55 | 0.97 | 0.82 | 1.76 | 0.87 | 0.73 | 0.99 | 2.42 | 0.83 |
| Diluted earnings per equity certificate (quarter in isolation) |
0.55 | 0.97 | 0.82 | 1.76 | 0.87 | 0.73 | 0.99 | 2.42 | 0.83 |
Change in equity as at Q1/2020
Group
| (NOK thousands) | Ownership interest 1 |
Share premium fund |
Risk equalisation fund |
Endowment fund |
Spare banken fund |
Fund for unrealised gains |
Hybrid capital |
Other | equity Unallocated | Non controlling interest's share |
Total equity |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity as at 31.12.2018 | 946,516 1,026,427 | 411,299 | 6,540 1,855,062 | 9,879 | 250,000 | 341,129 | - | 1,581 4,848,433 | |||
| Employee equity certificate savings scheme |
(15) | - | - | - | - | - | - | - | - | - | (15) |
| Interest expenses on subordinated bonds reclassified as equity |
- | - | - | - | - | - | - | (10,783) | - | - | (10,783) |
| Subordinated bond issue | - | - | - | - | - | - | 150,000 | - | - | - | 150,000 |
| Buy-back and maturity of subordinated bond |
- | - | - | - | - | - | (150,000) | - | - | - | (150,000) |
| Dividends from 2018, for payment 2019 |
- | - | - | - | - | - | - | (186,149) | - | (1,040) | (187,189) |
| Change in carrying value of subsidiaries, joint ventures and associated companies |
- | - | - | - | - | - | - | (674) | - | - | (674) |
| Profit before other comprehensive income |
- | - | 126,864 | - | 218,327 | 7,037 | - | 185,702 | - | 634 | 538,564 |
| Items reversed through profit/loss: | |||||||||||
| Change in value of loans classified at fair value |
- | - | - | - | - | 8,318 | - | - | - | - | 8,318 |
| Items not reversed through profit/ loss: |
|||||||||||
| Estimation difference, IAS 19 Pensions |
- | - | (1,277) | - | (998) | - | - | (1,205) | - | - | (3,479) |
| Equity as at 31.12.2019 | 946,501 1,026,427 | 536,885 | 6,540 2,072,392 | 25,234 | 250,000 | 328,019 | - | 1,175 5,193,174 | |||
| Equity as at 31.12.2019 | 946,501 1,026,427 | 536,885 | 6,540 2,072,392 | 25,234 | 250,000 | 328,019 | - | 1,175 5,193,174 | |||
| Interest expenses on subordinated bonds reclassified as equity |
- | - | - | - | - | - | - | - | (3,260) | - | (3,260) |
| Dividend from 2019, for payment in 2020 |
- | - | - | - | - | - | - | (152,705) | - | (634) | (153,340) |
| Change in carrying value of subsidiaries, joint ventures and associated companies |
- | - | - | - | - | - | - | 391 | - | - | 391 |
| Profit before other comprehensive income |
- | - | - | - | - | - | - | - | 94,056 | (138) | 93,918 |
| Items reversed through profit or loss: |
|||||||||||
| Change in value of loans classified at fair value |
- | - | - | - | - | 280 | - | - | - | - | 280 |
| Equity as at 31.03.2020 | 946,501 1,026,427 | 536,885 | 6,540 2,072,392 | 25,514 | 250,000 | 175,706 | 90,796 | 403 | 5,131,163 |
- The equity share capital has been deducted 20,000 in own holdings
| (NOK thousands) | Ownership interest 1 |
Share premium fund |
Risk equalisation fund |
Endowment fund |
Spare banken fund |
Fund for unrealised gains |
Hybrid capital |
Other | equity Unallocated | Total equity |
|---|---|---|---|---|---|---|---|---|---|---|
| Equity as at 31.12.2018 | 946,516 | 1,026,427 | 411,299 | 6,540 | 1,855,062 | 9,879 | 250,000 | 186,149 | - | 4,691,873 |
| Employee equity certificate savings scheme |
(15) | - | - | - | - | - | - | - | - | (15) |
| Interest expenses on subordinated bonds reclassified as equity |
- | - | - | - | - | - | - | (10,783) | - | (10,783) |
| Subordinated bond issue | - | - | - | - | - | - | 150,000 | - | - | 150,000 |
| Buy-back and maturity of subordinated bond |
- | - | - | - | - | - | (150,000) | - | - | (150,000) |
| Dividends from 2018, for payment 2019 |
- | - | - | - | - | - | - | (186,149) | - | (186,149) |
| Profit before other comprehensive income |
- | - | 126,864 | - | 218,327 | 7,037 | - | 163,488 | - | 515,717 |
| Items reversed through profit or loss: |
||||||||||
| Change in value of loans classified at fair value |
- | - | - | - | - | 8,318 | - | - | - | 8,318 |
| Items not reversed through profit or loss: |
||||||||||
| Estimation difference, IAS 19 Pension adjustment |
- | - | (1,277) | - | (998) | - | - | - | - | (2,275) |
| Equity as at 31.12.2019 | 946,501 | 1,026,427 | 536,885 | 6,540 | 2,072,392 | 25,234 | 250,000 | 152,705 | - | 5,016,685 |
| Equity as at 31.12.2019 | 946,501 | 1,026,427 | 536,885 | 6,540 | 2,072,392 | 25,234 | 250,000 | 152,705 | - | 5,016,685 |
| Interest expenses on subordinated bonds reclassified as equity |
- | - | - | - | - | - | - | - | (3,260) | (3,260) |
| Dividend from 2019, for payment in 2020 |
- | - | - | - | - | - | - | (152,705) | - | (152,705) |
| Profit before other comprehensive income |
- | - | - | - | - | - | - | - | 60,354 | 60,354 |
| Items reversed through profit or loss: |
||||||||||
| Change in value of loans classified at fair value |
- | - | - | - | - | 280 | - | - | - | 280 |
| Equity as at 31.03.2020 | 946,501 | 1,026,427 | 536,885 | 6,540 | 2,072,392 | 25,514 | 250,000 | - | 57,094 | 4,921,353 |
- The equity share capital has been deducted 20,000 in own holdings
Cash flow statement
| Parent bank | Group | |||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| 640,713 | 130,406 | 81,704 | Profit for the year before tax | 115,771 | 204,924 | 664,812 |
| (188,027) | (1,166) | (47) | Dividends/endowments paid | (681) | (2,726) | (188,547) |
| Change in value of financial assets measured at fair | ||||||
| 5,210 | (14,845) | 41,944 | value | 41,944 | (14,845) | 5,210 |
| 21,626 | 5,405 | 16,209 | Depreciation and impairments | 20,608 | 6,891 | 28,370 |
| 2,718 | 6,008 | 28,518 | Impairment of loans | 27,235 | 5,808 | 2,317 |
| (115,293) | (48,890) | (135,931) | Taxes payable | (137,278) | (50,237) | (118,418) |
| Cash flow from operating activities before change | ||||||
| 366,948 | 76,919 | 32,397 | in current assets and current liabilities | 67,598 | 149,816 | 393,743 |
| (1,887,603) | 162,537 | (261,838) | Change in lending and other assets | (256,146) | 164,680 | (1,890,504) |
| 2,298,189 | 1,590,595 | (20,705) | Change in deposits from customers | (19,675) | 1,593,188 | 2,301,997 |
| - | 29,000 | 400,000 | Change in liabilities to financial institutions | 400,000 | 29,000 | - |
| (104,566) | (451,513) | 366,676 | Change in certificates and bonds | 366,676 | (451,513) | (104,566) |
| 53,311 | 8,954 | (140,183) | Change in other receivables | (141,061) | 13,435 | 55,842 |
| 35,236 | (62,860) | 295,557 | Change in other current liabilities | 295,475 | (40,274) | 52,021 |
| 761,516 | 1,353,632 | 671,905 | A Net cash flow from operating activities | 712,867 | 1,458,332 | 808,534 |
| Cash flow from investment activities | ||||||
| (94,056) | (90,056) | (13,294) | Change in property, plant and equipment | (14,538) | (110,099) | (114,988) |
| (166,712) | (48,958) | 14,912 | Change in shareholdings and ownership interests | (18,721) | (128,246) | (188,791) |
| (260,768) | (139,013) | 1,618 | B Net cash flow from investment activities | (33,259) | (238,345) | (303,779) |
| Cash flow from financing activities | ||||||
| (450,564) | (274,473) | (123,870) | Change in borrowing, securities | (123,870) | (274,473) | (450,564) |
| (575) | (5,311) | (40,142) | Change in borrowing, subordinated loans | (40,142) | (5,311) | (575) |
| (10,783) | (2,658) | (2,866) | Change in additional Tier 1 capital classified as equity | (2,866) | (2,658) | (10,783) |
| (461,922) | (282,441) | (166,878) | C Net cash flow from financing activities | (166,878) | (282,441) | (461,922) |
| A + B + C Net change in cash and cash equivalents | ||||||
| 38,826 | 932,178 | 506,645 | for the year | 512,730 | 937,546 | 42,833 |
| 1,090,516 | 1,090,516 | 1,129,342 | Cash balance at start of period | 1,165,658 | 1,122,825 | 1,122,825 |
| 1,129,342 | 2,022,694 | 1,635,987 | Cash balance at end of period | 1,678,388 | 2,060,371 | 1,165,658 |
| 38,826 | 932,178 | 506,645 | Net change in cash and cash equivalents in the year | 512,730 | 937,546 | 42,833 |
Note 1 Accounting policies
The interim report for SpareBank 1 BV covers the period 1 January - 31 March 2020. The interim financial statements have been prepared in accordance with IFRS and IAS 34 Interim Financial Reporting, and in line with the same policies applied in the annual financial statements for 2019.
For a detailed description of the accounting policies that have been applied, please see note 2 in the Bank's official annual financial statements for 2019.
Note 2 Losses on loans and guarantees
| Parent bank | Group | |||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| 6,337 | 6,464 | 6,372 | Change in impairment provisions in the period, Stage 1 |
6,372 | 6,464 | 6,337 |
| 4,427 | 663 | 6,813 | Change in impairment provisions in the period, Stage 2 |
6,813 | 663 | 4,427 |
| (9,655) | (1,625) | 8,942 | Change in impairment provisions in the period, Stage 3 |
7,658 | (1,825) | (10,055) |
| 859 | - | 6,075 | Losses for the period with previous impairments | 6,075 | - | 859 |
| 1,496 | 1,297 | 619 | Losses for the period without previous impairments | 619 | 1,297 | 1,496 |
| (565) | 499 | (66) | Previously recognised impairments at start of period | (66) | 499 | (565) |
| (181) | (1,289) | (238) | Other corrections/amortisation of impairments | (238) | (1,289) | (181) |
| 2,718 | 6,008 | 28,518 | Impairment of loans and guarantees for the period | 27,235 | 5,808 | 2,318 |
Note 3 Impairment provisions for loans and guarantees
| Parent bank | |||||||
|---|---|---|---|---|---|---|---|
| Impairment provisions for loans and guarantees | Stage 1 | Stage 2 | Stage 3 | Total | |||
| 01.01.2020 | 41,600 | 41,628 | 86,855 | 170,083 | |||
| Impairment provisions transferred to Stage 1 | 3,319 | (3,319) | - | - | |||
| Impairment provisions transferred to Stage 2 | (3,877) | 5,993 | (2,116) | - | |||
| Impairment provisions transferred to Stage 3 | (303) | (1,904) | 2,208 | - | |||
| New financial assets issued or purchased | 7,689 | 1,304 | 10 | 9,003 | |||
| Increase existing loans | 10,226 | 15,633 | 21,688 | 47,547 | |||
| Reduction existing loans | (6,486) | (6,274) | (5,084) | (17,844) | |||
| Financial assets that have been deducted | (4,195) | (4,619) | (1,689) | (10,503) | |||
| Changes due to recognised impairments (recognised losses) | - | - | (6,075) | (6,075) | |||
| 31.03.2020 | 47,973 | 48,441 | 95,797 | 192,211 | |||
| - reversal of impairment provisions related to fair value through OCI*) | (11,463) | - | - | (11,463) | |||
| Capitalised impairment provisions as at 31 March 2020 | 36,510 | 48,441 | 95,797 | 180,748 | |||
| Of which, impairment provisions for capitalised loans | 30,078 | 47,763 | 94,923 | 172,763 | |||
| Of which, impairment provisions for unused credits and guarantees | 6,432 | 679 | 874 | 7,985 | |||
| Of which, impairment provisions, retail market | 4,684 | 22,298 | 22,475 | 49,458 | |||
| Of which, impairment provisions, corporate market | 31,826 | 26,143 | 73,322 | 131,290 |
| Group | |||||||
|---|---|---|---|---|---|---|---|
| Impairment provisions for loans and guarantees | Stage 1 | Stage 2 | Stage 3 | Total | |||
| 01.01.2020 | 41,600 | 41,628 | 81,880 | 165,108 | |||
| Impairment provisions transferred to Stage 1 | 3,319 | (3,319) | - | - | |||
| Impairment provisions transferred to Stage 2 | (3,877) | 5,993 | (2,116) | - | |||
| Impairment provisions transferred to Stage 3 | (303) | (1,904) | 2,208 | - | |||
| New financial assets issued or purchased | 7,689 | 1,304 | 10 | 9,003 | |||
| Increase existing loans | 10,226 | 15,633 | 20,405 | 46,263 | |||
| Reduction existing loans | (6,486) | (6,274) | (5,084) | (17,844) | |||
| Financial assets that have been deducted | (4,195) | (4,619) | (1,689) | (10,503) | |||
| Changes due to reversals of previous impairments (recognised) | - | - | (6,075) | (6,075) | |||
| 31.03.2020 | 47,973 | 48,441 | 89,538 | 185,952 | |||
| - reversal of impairment provisions related to fair value through OCI*) | (11,463) | - | - | (11,463) | |||
| Capitalised impairment provisions as at 31 March 2020 | 36,510 | 48,441 | 89,538 | 174,489 | |||
| Of which, impairment provisions for loans | 30,078 | 47,763 | 88,664 | 166,504 | |||
| Of which, impairment provisions for guarantees | 6,432 | 679 | 874 | 7,985 | |||
| Of which, impairment provisions, retail market | 4,684 | 22,298 | 22,475 | 49,458 | |||
| Of which, impairment provisions, corporate market | 31,826 | 26,143 | 67,063 | 125,032 |
Sensitivity analysis – loss model
The model calculates impairments on commitments in three different scenarios where the probability of the individual scenario occurring is weighted. The basic scenario for the IFRS 9 calculations is mainly based on the benchmark trajectory of the Monetary Policy Report from Norges Bank and contains expectations regarding macroeconomic factors such as unemployment, GDP growth, interest rates, house prices, etc.
At the same time, the loss model is based on multiple input factors from the portfolios, where the events have incurred as of the balance sheet date but where there is some natural delay before updated information is entered into the model. Because of this delay factor, the Bank has conducted an expanded review of our CM portfolio this quarter in order to identify and make provisions for individual engagements that we believe will experience specific problems making it through the crisis. PD/LGD levels cannot be recalibrated in the model as per 31 March.
In addition to expanded individual loss assessments, the Bank changed the model's scenario weighting this quarter based on an assessment. The best-case scenario was reduced from 10% to 5%, the worst-case scenario increased from 10% to 15%, and the normalcase scenario kept unchanged at 80%. The change in probability weighting from 31 December 2019 results, in isolation, in an increase of approximately NOK 17 million in increased impairment provisions.
The bottom table shows the sensitivity associated with the 10-percentage point reduction in probability of the normal case and corresponding 10 percentage point increase in probability of the worst case. Such a change would result in impairment provisions increasing by approximately NOK 30 million, which illustrates the sensitivity of a moderate deterioration in national and/or regional macroeconomic factors.
| Used scenario weighting as of 31 March 2020 | Weighting | RM | CM | Total |
|---|---|---|---|---|
| Scenario 1 (normal case) | 80% | 35,639 | 83,557 | 119,196 |
| Scenario 2 (worst case) | 15% | 27,749 | 39,641 | 67,390 |
| Scenario 3 (best case) | 5% | 1,454 | 4,002 | 5,456 |
| Total | 64,842 | 127,200 | 192,042 | |
| Change in impairment provisions in the event of a change in weighting |
Weighting | RM | CM | Total |
| Scenario 1 (normal case) | 70% | (4,455) | (10,445) | (14,900) |
| Scenario 2 (worst case) | 25% | 18,499 | 26,428 | 44,927 |
| Scenario 3 (best case) | 5% | - | - | - |
Note 4 Loans to customers by Stages 1, 2 and 3*
| Parent bank | |||||
|---|---|---|---|---|---|
| Loans to customers by Stages 1, 2 and 3 | Stage 1 | Stage 2 | Stage 3 | Total | |
| 01.01.2020 | 27,440,928 | 1,947,235 | 273,126 | 29,661,289 | |
| Loans transferred to Stage 1 | 320,151 | (320,145) | (5) | - | |
| Loans transferred to Stage 2 | (461,748) | 466,447 | (4,699) | - | |
| Loans transferred to Stage 3 | (4,697) | (33,592) | 38,288 | - | |
| New financial assets issued or purchased | 3,976,285 | 56,315 | 1,306 | 4,033,905 | |
| Increase existing loans | 375,495 | 21,671 | 5,933 | 403,099 | |
| Reduction existing loans | (838,955) | (88,173) | (2,184) | (929,312) | |
| Financial assets that have been deducted | (2,991,702) | (199,199) | (18,239) | (3,209,140) | |
| Changes due to recognised impairments (recognised losses) | (106) | - | (6,098) | (6,204) | |
| 31.03.2020 | 27,815,649 | 1,850,560 | 287,427 | 29,953,637 | |
| Impairment provisions as % of gross lending | 0.17% | 2.62% | 33.33% | 0.64% |
| Group | |||||
|---|---|---|---|---|---|
| Loans to customers by Stages 1, 2 and 3 | Stage 1 | Stage 2 | Stage 3 | Total | |
| 01.01.2020 | 27,430,833 | 1,947,235 | 257,529 | 29,635,597 | |
| Loans transferred to Stage 1 | 320,151 | (320,145) | (5) | - | |
| Loans transferred to Stage 2 | (461,748) | 466,447 | (4,699) | - | |
| Loans transferred to Stage 3 | (4,697) | (33,592) | 38,288 | - | |
| New financial assets issued or purchased | 3,976,285 | 56,315 | 1,306 | 4,033,905 | |
| Increase existing loans | 372,637 | 21,671 | 5,898 | 400,207 | |
| Reduction existing loans | (838,955) | (88,173) | (2,184) | (929,312) | |
| Financial assets that have been deducted | (2,991,702) | (199,199) | (18,239) | (3,209,140) | |
| Changes due to recognised impairments (recognised losses) | (106) | - | (6,098) | (6,204) | |
| 31.03.2020 | 27,802,698 | 1,850,560 | 271,796 | 29,925,054 | |
| Impairment provisions as % of gross lending | 0.17% | 2.62% | 32.94% | 0.62% |
Note 5 Other assets
| Parent bank | Group | |||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| 21,058 | 32,203 | 56,752 | Prepaid, unaccrued costs, and accrued income not yet received |
69,295 | 43,957 | 32,420 |
| 16,117 | 3,895 | 26,190 | Other assets | 29,001 | 4,665 | 19,230 |
| 19,418 | 64,852 | 113,833 | Derivatives and other financial instruments at fair value |
113,833 | 64,852 | 19,418 |
| 56,593 | 100,951 | 196,776 | Total other assets | 212,129 | 113,474 | 71,068 |
Note 6 Other liabilities
| Parent bank | Group | |||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| 46,181 | 54,173 | 49,287 | Accrued expenses and unaccrued income received | 64,681 | 68,633 | 62,100 |
| 71,151 | 57,923 | 68,767 | Provision for accrued expenses and liabilities | 69,243 | 57,181 | 71,627 |
| 134,052 | 274,356 | 373,195 | Other liabilities | 406,254 | 310,034 | 162,752 |
| 37,447 | 61,920 | 122,686 | Derivatives and other financial instruments at fair value |
122,686 | 61,920 | 37,447 |
| 288,831 | 448,372 | 613,935 | Total other liabilities | 662,864 | 497,769 | 333,927 |
Note 7 Deposits from customers by sector and industry
| Parent bank | Group | |||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| 15,285,830 | 14,143,168 | 15,427,696 | Salaried staff, etc. | 15,427,696 | 14,143,168 | 15,285,830 |
| 3,197,454 | 2,874,881 | 3,076,931 | Property management/business services, etc. | 3,058,011 | 2,853,717 | 3,177,504 |
| 754,043 | 703,499 | 781,008 | Merchandising/hotels and restaurants | 781,008 | 703,499 | 754,043 |
| 188,906 | 237,312 | 197,724 | Agriculture/forestry | 197,724 | 237,312 | 188,906 |
| 633,708 | 575,109 | 614,865 | Building and construction | 614,865 | 575,109 | 633,708 |
| 1,412,784 | 1,645,273 | 1,379,350 | Transport and service Industries | 1,379,350 | 1,645,273 | 1,412,784 |
| 307,646 | 178,840 | 292,820 | Production (manufacturing) | 292,820 | 178,840 | 307,646 |
| 1,969,637 | 2,233,716 | 1,939,573 | Public administration | 1,939,573 | 2,233,716 | 1,969,637 |
| 713,232 | 1,127,037 | 786,995 | Abroad and others | 786,995 | 1,127,037 | 713,232 |
| 24,463,240 | 23,718,835 | 24,496,962 | Total deposits | 24,478,042 | 23,697,672 | 24,443,290 |
Note 8 Loan to customers by sector and industry
| Parent bank | Group | |||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| 24,140,703 | 22,502,533 | 24,111,822 | Salaried staff, etc. | 24,111,822 | 22,502,533 | 24,140,703 |
| 5,513,943 | 5,195,378 | 5,739,125 | Property management/business services, etc. | 5,710,542 | 5,164,842 | 5,488,251 |
| 348,044 | 363,247 | 345,747 | Merchandising/hotels and restaurants | 345,747 | 363,247 | 348,044 |
| 236,036 | 271,825 | 224,291 | Agriculture/forestry | 224,291 | 271,825 | 236,036 |
| 324,524 | 308,902 | 334,729 | Building and construction | 334,729 | 308,902 | 324,524 |
| 346,830 | 325,975 | 357,217 | Transport and service Industries | 357,217 | 325,975 | 346,830 |
| 277,769 | 251,236 | 284,405 | Production (manufacturing) | 284,405 | 251,236 | 277,769 |
| 1.843 | - | 1,714 | Public administration | 1,714 | - | 1.843 |
| 245,938 | 190,979 | 289,210 | Abroad and others | 289,210 | 190,979 | 245,938 |
| 31,435,630 | 29,410,075 | 31,688,260 | Gross lending | 31,659,677 | 29,379,539 | 31,409,938 |
| 8,353,979 | 26,896,546 | 8,378,724 | - Of which, measured at amortised cost | 8,350,140 | 26,866,010 | 8,328,288 |
| 21,307,310 | - | 21,574,914 | - Of which, measured at fair value through OCI | 21,574,914 | - | 21,307,310 |
| 1,774,341 | 2,513,529 | 1,734,623 | - Of which, measured at fair value | 1,734,623 | 2,513,529 | 1,774,341 |
| (149,609) | (166,810) | (172,763) | - Impairment provisions for loans | (166,504) | (162,035) | (144,634) |
| 31,286,021 | 29,243,264 | 31,515,497 | Net lending | 31,493,172 | 29,217,504 | 31,265,305 |
| 31,435,630 | 29,410,075 | 31,688,260 | Gross lending | 31,659,677 | 29,379,539 | 31,409,938 |
|---|---|---|---|---|---|---|
| 12,039,621 | 12,031,029 | 12,601,234 | Gross loans transferred to SB1 Boligkreditt | 12,601,234 | 12,031,029 | 12,039,621 |
| 842,787 | 550,670 | 832,418 | Gross loans transferred to SB1 Næringskreditt | 832,418 | 550,670 | 842,787 |
| 44,318,037 | 41,991,774 | 45,121,913 | Gross lending including SB1 Boligkreditt and Næringskreditt |
45,093,329 | 41,961,238 | 44,292,346 |
Note 9 Capital adequacy
SpareBank 1 BV uses the standard method for credit risk and the basic method for operational risk. As at 31 December 2019, the requirement for the capital conservation buffer was 2.5%, for the systemic risk buffer 3.0%, and for the countercyclical capital buffer 2.5%. On 12 March 2020, the countercyclical capital buffer was reduced to 1.0% with immediate effect. This was done in connection with the coronavirus pandemic. These requirements are additional to the Common Equity Tier 1 capital requirement of 4.5%, meaning that the overall minimum requirement for Common Equity Tier 1 capital is 11.0%. The Financial Supervisory Authority of Norway has also set a Pillar 2 requirement for SpareBank 1 BV of 1.9%. The total minimum requirement for Common Equity Tier 1 capital, including the Pillar 2 requirement, is thus 12.9%.
The Group's target for Common Equity Tier 1 capital ratio is a minimum of 15.5% at the end of 2020.
Extended consolidation for owner companies in the Samarbeidende Sparebanker grouping
Under the CRD IV rules, SpareBank 1 BV is currently below the materiality threshold for reporting fully consolidated capital adequacy. Consequently, capital adequacy is not worked out at a consolidated level.
The Bank has carried out proportional consolidation of interests in the cooperative group since 2018. The provision applies to interests in other financial institutions engaged in the activities to which the cooperation relates; see Financial Institutions Act, section 17-13.
Proportional consolidation
| 31.03.2020 | 31.03.2019 | 31.12.2019 | |
|---|---|---|---|
| Primary capital | |||
| Common Equity Tier 1 capital | 4,587,170 | 4,189,759 | 4,579,307 |
| Tier 1 capital | 4,940,626 | 4,545,889 | 4,949,961 |
| Primary capital | 5,455,171 | 5,049,597 | 5,464,361 |
| Basis for calculation | 25,282,797 | 25,680,439 | 24,780,727 |
| Capital adequacy | |||
| Common Equity Tier 1 capital | 18.14% | 16.31% | 18.48% |
| Tier 1 capital ratio | 19.54% | 17.70% | 19.98% |
| Capital adequacy | 21.58% | 19.66% | 22.05% |
| Leverage ratio | 8.32% | 8.11% | 8.58% |
The following companies are included in proportional consolidation:
- SpareBank 1 Boligkreditt
- SpareBank 1 Næringskreditt
- SpareBank 1 Kredittkort AS
- SpareBank 1 SMN Finans AS
- BN Bank
Parent bank
| Primary capital | 31.03.2020 | 31.03.2019 | 31.12.2019 |
|---|---|---|---|
| Equity capital | 946,501 | 946,516 | 946,501 |
| Share premium fund | 1,026,427 | 1,026,427 | 1,026,427 |
| Risk equalisation fund | 536,885 | 411,299 | 411,299 |
| Sparebankens fond | 2,072,392 | 1,855,062 | 1,855,062 |
| Fund for unrealised gains/losses | 25,514 | 9,879 | 9,879 |
| Endowment fund | 6,540 | 6,540 | 6,540 |
| Allocated dividend classified as equity | - | - | - |
| Other equity (IAS pensions and interest paid on hybrid capital) | (3,260) | (2,658) | (4,740) |
| Profit for the period | 60,354 | 104,742 | 515,717 |
| Total capitalised equity (excluding additional Tier 1 capital) | 4,671,353 | 4.357,808 | 4,766,685 |
| Value adjustments on shares and bonds measured at fair value (AVA) | (27,702) | (7,331) | (7,425) |
|---|---|---|---|
| Deduction for non-material interests in the financial sector | (955,950) | (1,093,403) | (953,926) |
| Dividends allocated for distribution, classified as equity | - | - | - |
| Profit for the period | (60,354) | (104,742) | (515,717) |
| Interim profit included in Tier 1 capital | - | - | 363,012 |
| Total Common Equity Tier 1 capital | 3,627,347 | 3,152,332 | 3,652,628 |
| Additional Tier 1 capital | 250,000 | 250,000 | 250,000 |
| Additional Tier 1 capital | - | 24,000 | 24,000 |
| Deduction for non-material interests in the financial sector | - | (38,829) | - |
| Total Tier 1 capital | 3,877,347 | 3,387,503 | 3,926,628 |
| Supplementary capital in excess of Tier 1 capital | |||
| Time-limited primary capital | 400,000 | 400,000 | 400,000 |
| Deduction for non-material interests in the financial sector | (4,928) | (31,005) | (4,925) |
| Net primary capital | 4,272,419 | 3,756,498 | 4,321,703 |
| Risk-weighted basis for calculation | |||
| Assets not included in the trading portfolio | 17,677,392 | 16,534,211 | 17,445,730 |
| Operational risk | 1,919,857 | 1,931,036 | 2,048,828 |
| Position risk in the trading portfolio | - | - | - |
| CVA surcharge (counterparty risk on derivatives) | 85,896 | 30,452 | 27,781 |
| Total basis for calculation | 19,683,146 | 18,495,699 | 19,522,339 |
| Common Equity Tier 1 capital | 18.43% | 17.04% | 18.71% |
| Tier 1 capital ratio | 19.70% | 18.32% | 20.11% |
| Capital adequacy | 21.71% | 20.31% | 22.14% |
| Leverage ratio | 9.77% | 8.77% | 10.05% |
| Buffer requirements | |||
| Capital conservation buffer (2.50%) | 492,079 | 462,392 | 488,058 |
| Countercyclical buffer (1.0%/2.0%/2.5%) | 196,831 | 369,914 | 488,058 |
| Systemic risk buffer (3.00%) | 590,494 | 554,871 | 585,670 |
| Total buffer requirement for Common Equity Tier 1 capital | 1,279,404 | 1,387,177 | 1,561,787 |
| Minimum requirement for Common Equity Tier 1 capital (4.50%) | 885,742 | 832,306 | 878,505 |
| Available Common Equity Tier 1 capital in excess of minimum requirement | 1,462,201 | 932,848 | 1,212,336 |
| Total credit risk | 17,677,392 | 16,534,211 | 17,445,730 |
|---|---|---|---|
| Other commitments | 179,896 | 188,370 | 120,258 |
| Equity items | 1,154,627 | 591,943 | 1,196,285 |
| Shares in mutual funds | 33,125 | 51,979 | 25,858 |
| Receivables from institutions and companies with short-term ratings | 107,116 | 324,418 | 145,911 |
| Covered bonds | 250,113 | 310,024 | 203,526 |
| High-risk commitments | - | - | - |
| Commitments past due | 125,268 | 97,364 | 150,127 |
| Mortgaged against commercial property | 2,227,285 | 2,039,857 | 2,040,958 |
| Mortgaged against residential and holiday property | 8,095,740 | 8,129,843 | 8,504,153 |
| Mass market | 2,601,712 | 2,459,892 | 2,197,800 |
| Companies | 2,669,489 | 2,119,245 | 2,655,744 |
| Institutions | 159,596 | 106,534 | 111,259 |
| Publicly owned companies | 9,745 | 18,237 | 10,134 |
| Local and regional authorities | 63,681 | 96,505 | 83,717 |
| 31.03.2020 | 31.03.2019 | 31.12.2019 | |
Note 10 Derivatives
| 2020 | 2019 | |||||
|---|---|---|---|---|---|---|
| Contract sum Fair value | 31.12.2020 | Contract sum Fair value | 31.12.2019 | |||
| 31.12.2020 | Assets | Liabilities | (NOK thousands) | 31.12.2019 | Assets | Liabilities |
| Derivatives – hedging | ||||||
| 4,915,000 | 113,833 | 122,686 | Derivatives at fair value | 4,895,000 | 64,852 | 61,920 |
| 4,915,000 | 113,833 | 122,686 | Total derivatives for fair value hedging | 4,895,000 | 64,852 | 61,920 |
Note 11 Net result from other financial investments
| 20,916 | 14,894 | (46,611) | Net result from other financial investments | (46,611) | 14,894 | 20,916 |
|---|---|---|---|---|---|---|
| 6,089 | 1,110 | 2,152 | Exchange rate gains/losses on currency | 2,152 | 1,110 | 6,089 |
| 2,158 | 469 | (5,717) | Net change in value of financial derivatives measured at fair value |
(5,717) | 469 | 2,158 |
| (6,430) | 4,561 | (20,182) | Net change in value of bonds/certificates measured at fair value |
(20,182) | 4,561 | (6,430) |
| 19,099 | 8,754 | (22,864) | Net change in value of stocks, shares, etc. measured at fair value |
(22,864) | 8,754 | 19,099 |
| 31.12.2019 | 31.03.2019 | 31.03.2020 | (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 |
| Parent bank |
Note 12 Securities issued and subordinated loan capital
SpareBank 1 BV issues and redeems securities issued as part of its liquidity management. The refinancing requirement has also been partly funded by the transfer of the loan portfolio to SpareBank 1 Boligkreditt AS. The breakdown is the same for the parent bank and the Group.
| Securities issued | Parent bank/Group | |||
|---|---|---|---|---|
| (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 | |
| Certificate debt, nominal value | - | - | - | |
| Bond debt, nominal value | 8,087,000 | 8,486,000 | 8,290,000 | |
| Value adjustments and accrued interest | 120,660 | 4,117 | (10,611) | |
| Total securities issued | 8,207,660 | 8,490,117 | 8,279,389 |
| Change in securities issued | Parent bank/Group | ||||
|---|---|---|---|---|---|
| Redeemed in | |||||
| (NOK thousands) | 31.03.2020 | Issued in 2020 | 2020 | 31.12.2019 | |
| Certificate debt, nominal value | - | - | - | - | |
| Bond debt, nominal value | 8,087,000 | 325,000 | (528,000) | 8,290,000 | |
| Value adjustments and accrued interest | 120,660 | - | - | (10,611) | |
| Total securities issued | 8,207,660 | 325,000 | (528,000) | 8,279,389 |
| Subordinated loan capital | Parent bank/Group | |||
|---|---|---|---|---|
| (NOK thousands) | 31.03.2020 | 31.03.2019 | 31.12.2019 | |
| Subordinated loan capital | 400,000 | 440,000 | 440,000 | |
| Value adjustments and accrued interest | 1,350 | 2,451 | 4,404 | |
| Total subordinated loan capital | 401,350 | 442,451 | 444,404 |
| Change in subordinated loan capital | Parent bank/Group | |||
|---|---|---|---|---|
| Redeemed in | ||||
| 31.03.2020 | Issued in 2020 | 2020 | 31.12.2019 | |
| Subordinated loan capital | 400,000 | - | (40,000) | 440,000 |
| Value adjustments and accrued interest | 1,350 | - | - | 4,404 |
| Total subordinated loan capital | 401,350 | - | (40,000) | 444,404 |
Note 13 Segment information
The segment information is related to the way in which the Group is managed and followed up internally by the business through performance and capital reporting, proxies and procedures. The reporting of segments is divided into the following areas: Retail market (RM) and corporate market (CM) customers,
which include the parent bank and subsidiaries related to real estate and accounting services. Other subsidiaries include subsidiary companies that manage property. Group eliminations are shown together with undivided operations in a separate column (nonreportable segments).
Group 31.03.2020
| Other | Non-reportable | ||||
|---|---|---|---|---|---|
| (NOK thousands) | RM | CM | subsidiaries | segments | Total |
| Profit | |||||
| Net interest income | 98,701 | 64,982 | (21) | 15,883 | 179,545 |
| Net commission and other income | 80,275 | 30,152 | 50 | 6,504 | 116,981 |
| Operating expenses | 93,927 | 40,844 | 201 | 18,549 | 153,521 |
| Profit before losses | 85,049 | 54,290 | (172) | 3,838 | 143,005 |
| Impairment of loans and guarantees | 8,699 | 18,485 | - | 51 | 27,235 |
| Profit before tax | 76,350 | 35,805 | (172) | 3,788 | 115,771 |
| Other | Non-reportable | ||||
|---|---|---|---|---|---|
| RM | CM | subsidiaries | segments | Total | |
| Balance sheet | |||||
| Net lending to customers | 23,252,513 | 7,205,345 | - | 1,035,314 | 31,493,172 |
| Other assets | 81,642 | 33,149 | 12,079 | 7,696,482 | 7,823,352 |
| Total assets per segment | 23,334,155 | 7,238,494 | 12,079 | 8,731,797 | 39,316,525 |
| Deposits from and liabilities to customers | 15,636,651 | 8,489,559 | - | 351,832 | 24,478,042 |
| Other equity and liabilities | 7,697,504 | (1,251,065) | 12,079 | 8,379,965 | 14,838,483 |
| Total equity and liabilities per segment | 23,334,155 | 7,238,494 | 12,079 | 8,731,797 | 39,316,525 |
Group 31.03.2019
| Other | Non-reportable | ||||
|---|---|---|---|---|---|
| (NOK thousands) | RM | CM | subsidiaries | segments | Total |
| Profit | |||||
| Net interest income | 80,491 | 54,674 | (18) | 10,136 | 145,283 |
| Net commission and other income | 76,243 | 26,051 | 60 | 107,800 | 210,154 |
| Operating expenses | 95,929 | 40,189 | 258 | 8,328 | 144,704 |
| Profit before losses | 60,805 | 40,536 | (216) | 109,607 | 210,732 |
| Losses on loans and guarantees | 8,099 | -2,370 | - | 79 | 5,808 |
| Profit before tax | 52,706 | 42,906 | (216) | 109,528 | 204,924 |
| RM | CM | Other subsidiaries |
Non-reportable segments |
Total | |
|---|---|---|---|---|---|
| Balance sheet | |||||
| Lending to customers | 21,846,202 | 6,664,774 | - | 868,564 | 29,379,539 |
| Impairment provisions for loans | (51,365) | (109,955) | - | (716) | (162,035) |
| Other assets | 26,106 | 14,452 | 13,356 | 8,775,794 | 8,829,709 |
| Total assets per segment | 21,820,943 | 6,569,271 | 13,356 | 9,643,642 | 38,047,212 |
| Deposits from and liabilities to customers | 14,704,078 | 8,097,952 | - | 895,642 | 23,697,672 |
| Other equity and liabilities | 7,116,865 | (1,528,681) | 13,356 | 8,748,000 | 14,349,540 |
| Total equity and debt per segment | 21,820,943 | 6,569,271 | 13,356 | 9,643,642 | 38,047,212 |
Group 31.12.2019
| Profit before tax | 303,856 | 198,000 | (2,221) | 165,177 | 664,812 |
|---|---|---|---|---|---|
| Impairment of loans and guarantees | 8,365 | (5,614) | - | (433) | 2,318 |
| Profit before losses | 312,221 | 192,386 | (2,221) | 164,744 | 667,130 |
| Operating expenses | 394,895 | 159,367 | 1,719 | 32,353 | 588,334 |
| Net commission and other income | 339,218 | 103,005 | 240 | 156,477 | 598,940 |
| Net interest income | 367,898 | 248,748 | (742) | 40,620 | 656,524 |
| Profit | |||||
| (NOK thousands) | RM | CM | subsidiaries | segments | Total |
| Other | Non-reportable |
| Other | Non-reportable | ||||
|---|---|---|---|---|---|
| RM | CM | subsidiaries | segments | Total | |
| Balance sheet | |||||
| Net lending to customers | 23,358,345 | 6,967,092 | - | 939,868 | 31,265,305 |
| Other assets | 91,591 | 25,163 | 12,219 | 7,428,164 | 7,557,137 |
| Total assets per segment | 23,449,936 | 6,992,255 | 12,219 | 8,368,032 | 38,822,442 |
| Deposits from and liabilities to customers | 15,451,151 | 8,577,994 | - | 414,145 | 24,443,290 |
| Other equity and liabilities | 7,998,785 | (1,585,739) | 12,219 | 7,953,887 | 14,379,152 |
| Total equity and liabilities per segment | 23,449,936 | 6,992,255 | 12,219 | 8,368,032 | 38,822,442 |
Note 14 Critical accounting estimates and discretionary valuations
In preparing the consolidated accounts, the management makes estimates and discretionary assessments, as well as assumptions that affect the impact of applying the accounting policies. This will therefore affect the reported amounts for assets, liabilities, income and expenses.
The IFRS 9 loss model is based on multiple input factors from the portfolios, where the events have incurred as of the balance sheet date but where there is some natural delay before updated information is entered into the model. Because of this delay factor, the Bank has
conducted an expanded review of our CM portfolio this quarter in order to identify and make provisions for individual commitments that we believe will experience specific problems making it through the crisis. PD/LGD levels cannot be recalibrated in the model as per 31 March.
In addition to expanded individual loss assessments, the Bank changed the model's scenario weighting this quarter based on an assessment. Please see the more detailed comments in note 3 and the Board of Directors' Interim Report.
Note 15 Sale of loans
SpareBank 1 BV and other owners have agreed to establish a liquidity facility for SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS. This means that the banks commit to buy bonds issued by the company up to a total value of 12 months' term to maturity. Each owner is principally liable for its share of the requirement, and secondarily for twice the primary liability under the same agreement. The bonds can be deposited with Norges Bank, so carry no significant added risk for SpareBank 1 BV.
The Bank has signed an agreement for the legal sale of loans with high security and collateral in real estate to SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS. For more information on the accounting treatment of the agreements, see note 2 and note 9 to the annual financial statements for 2019.
Note 16 Liquidity risk
Liquidity risk is the risk that the Bank may be unable to meet its payment obligations, and/or the risk of not being able to finance the desired growth in assets. SpareBank 1 BV draws up an annual liquidity strategy which addresses the Bank's liquidity risk, among other things.
The Group's liquidity risk is covered by the Bank's liquidity reserve/buffer. The main objective of Spare-Bank 1 BV is to maintain the viability of the Bank in a normal situation, without external funding, for 12
months. The Bank should also be able to survive a minimum of 150 days in a 'highly stressed' situation where there is no access to funding from the capital markets. The Bank exercises daily governance according to the above goals. A contingency plan has also been established to handle liquidity crises. The average remaining term to maturity in the portfolio of senior bond loans was 3.1 years as at 31 March 2020. Overall LCR was 183% at the end of the first quarter and average total LCR was 174% in the quarter.
Note 17 Measuring fair value of financial instruments
Financial instruments at fair value are classified at different levels.
Level 1: Valuation based on quoted prices on an active market. The fair value of financial instruments traded on active markets is based on the market price at the balance sheet date. A market is considered to be active if the market prices are easily and regularly available from a stock exchange, dealer, broker, economic grouping, pricing service or regulatory authority, and these prices represent actual and regularly occurring market transactions at arm's length. The category includes listed shares and units in mutual funds, treasury bills, government bonds and certificates that are traded in active markets.
Level 2 Valuation based on observable market data. Level 2 consists of instruments which are valued using information other than quoted prices, but where prices are directly or indirectly observable for the assets or liabilities, and also include
quoted prices on inactive markets.
- These valuation methods maximise the use of observable data where it is available and rely as little as possible on the Bank's own estimates.
- The fair value of interest rate swaps is calculated as the present value of estimated future cash flows based on the observable rate curve.
- The fair value of bonds and certificates (assets and liabilities) is calculated as the present value of the estimated cash flow based on the observable yield curve, including an indicated credit spread on the issuer from a reputable brokerage firm or Reuters/ Bloomberg pricing services.
- This category includes bonds, certificates, equity instruments, own securities issued measured at fair value, and derivatives.
Level 3: Valuation based on other than observable data. If no valuation is available in relation to level 1 and 2, valuation methods based on non-observable information are used.
- Fair value of fixed rate deposits and loans: The Bank uses the base rate/reference rate on the loans, and discounts using its own swap curve to calculate the funding margin. The Bank has no 'day 1 profit'. For valuations at later dates, the Bank reads in reads customer interest and adjusts for funding and customer margins. Swap interest will be charged on the discount date. This is then compared with the swap rate on the calculation date taking account of the remaining term to maturity. Changes to the customer margin (administrative markup, markup for anticipated losses and return on equity) in the term of the loan are not assessed/taken into account.
- Equity investments are valued at fair value under the following conditions:
-
- Price at the time of the last capital increase or last sale between independent parties, adjusted for changes in market conditions since the capital increase/sale.
-
- Fair value based on expected future cash flows for the investment.
-
- On the remaining financial instruments, fair value is determined on the basis of value estimates obtained from external parties. For those unlisted shares where fair value cannot be measured reliably, acquisition cost or impaired book value is used.
- This category includes other equity instruments, loans at fair value through OCI and the Bank's own fixed-rate loans.
- The fair value of mortgages is understood to be: Loans in loss category 1 - the nominal value of the loan (not equal to amortised cost). Loan in loss category 2, and 3 - the loan's nominal value decreases by the expected losses (= amortised cost). Loans in loss category 3K - the loan's nominal value decreases by individual impairment provisions (= amortised cost)
The Group's assets and liabilities measured at fair value as at 31 March 2020
| - Derivatives | - | 114 | - | 114 |
|---|---|---|---|---|
| - Equity Instruments | 208 | - | 1,175 | 1,383 |
| - Bonds and certificates | 209 | 3,526 | - | 3,735 |
| - Loans approved for Boligkreditt | - | - | - | - |
| - Loans at fair value through OCI *) | - | - | 21,575 | 21,575 |
| - Fixed-rate loans | - | - | 1,735 | 1,735 |
| Financial assets at fair value | ||||
| Assets | Level 1 | Level 2 | Level 3 | Total |
| Total liabilities | - | 3,204 | - | 3,204 |
|---|---|---|---|---|
| - Derivatives | - | 123 | - | 123 |
| - Securities issued at fair value | - | 3,081 | - | 3,081 |
| - Fixed rate deposits | - | - | - | - |
| Financial liabilities at fair value | ||||
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
*) Please see note 1 for comments regarding revaluation/changes in measurement method as at 31 March 2020.
The Group's assets and liabilities measured at fair value as at 31 March 2019
| Assets | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value | ||||
| - Fixed-rate loans | - | - | 1,685 | 1,685 |
| - Loans approved for Boligkreditt | - | - | 822 | 822 |
| - Loans at fair value through OCI | - | - | - | - |
| - Bonds and certificates | 205 | 4,272 | - | 4,477 |
| - Equity Instruments | 279 | - | 1,082 | 1,361 |
| - Derivatives | - | 65 | - | 65 |
| Total assets | 484 | 4,337 | 3,589 | 8,410 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial liabilities at fair value | ||||
| - Securities issued at fair value | - | 2,648 | - | 2,648 |
| - Derivatives | - | 62 | - | 62 |
| Total liabilities | - | 2,710 | - | 2,710 |
The Group's assets and liabilities measured at fair value as at 31 December 2019
| Assets | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value | ||||
| - Fixed-rate loans | - | - | 1,775 | 1,775 |
| - Loans at fair value through OCI *) | - | - | 21,307 | 21,307 |
| - Loans approved for Boligkreditt | - | - | - | - |
| - Bonds and certificates | 703 | 3,412 | - | 4,115 |
| - Equity Instruments | 241 | - | 1,178 | 1,419 |
| - Derivatives | - | 19 | - | 19 |
| Total assets | 944 | 3,431 | 24,260 | 28,635 |
| Liabilities | Level 1 | Level 2 | Level 3 | Total |
| Financial liabilities at fair value | ||||
| - Fixed rate deposits | - | - | - | - |
| - Securities issued at fair value | - | 2,785 | - | 2,785 |
| - Derivatives | - | 37 | - | 37 |
| Total liabilities | - | 2,822 | - | 2,822 |
Changes in instruments classified as Level 3 as at 31 March 2020
| Fixed-rate loans | Shares at fair value through profit or loss |
Loans approved for Boligkreditt |
Lending at fair value through OCI |
|
|---|---|---|---|---|
| Opening balance 01.01.2020 | 1,775 | 1,178 | - | 21,307 |
| Additions | 30 | - | - | 268 |
| Disposals | (70) | (1) | - | - |
| Net gain/loss on financial instruments | - | (2) | - | - |
| Closing balance 31.12.2019 | 1,735 | 1,175 | - | 21,575 |
Changes in instruments classified as Level 3 as at 31 March 2019
| Fixed-rate loans | Shares available for sale |
Loans approved for Boligkreditt |
|
|---|---|---|---|
| Opening balance 01.01.2019 | 1,687 | 1,052 | 821 |
| Additions | 35 | 28 | 276 |
| Disposals | (37) | - | (275) |
| Net gain/loss on financial instruments | - | 2 | - |
| Closing balance 31.03.2019 | 1,685 | 1,082 | 822 |
Changes in instruments classified as Level 3 as at 31 December 2019
| Fixed-rate loans | Shares at fair value through profit or loss |
Loans approved for Boligkreditt |
Lending at fair value through OCI |
|
|---|---|---|---|---|
| Opening balance 01.01.2019 | 1,687 | 1,052 | 821 | - |
| Change as a result of the reassessment retail market | - | - | - | 21,307 |
| Additions | 332 | 154 | 276 | - |
| Disposals | (244) | (20) | (1,097) | - |
| Net gain/loss on financial instruments | - | (8) | - | - |
| Closing balance 31.12.2019 | 1,775 | 1,178 | - | 21,307 |
Note 18 Events after the balance sheet date
No events with a material bearing on the financial statements have occurred since the balance sheet day. However, the ongoing pandemic means there is considerable uncertainty associated with critical accounting estimates and discretionary assessments as at 31 March 2020. In connection with this, please see in particular the discussions in the Board of Directors' Interim Report, note 3 and note 14.
Declaration by the Board and CEO
We declare that, to the best of our knowledge and belief, the interim financial statements for the period 1 January to 31 March 2020 have been prepared in accordance with IAS 34 Interim Reporting, and that the information in the financial statements provides a true picture of the Bank's and the Group's assets, liabilities, financial position and results as a whole.
We also declare that, to the best of our knowledge and belief, the interim report provides an accurate summary of key events in the accounting period and their influence on preliminary annual accounts, the major risk and uncertainty factors facing the business In the coming accounting period, and significant transactions with close associates.
Tønsberg, 14 May 2020 The Board of Directors of SpareBank 1 BV
Finn Haugan Chair of the Board
Heine Wang Deputy Chair Elisabeth Haug
Janne Sølvi Weseth Gisle Dahn
Hanne Myhre Gravdal Employee representative Geir Arne Vestre Employee representative Rune Fjeldstad Managing Director
Earnings per equity certificate
Earnings per equity certificate are calculated by dividing the portion of the profit for the year that is assigned to the company's equity certificate holders (minus own equity certificates) by a weighted average of the number of equity certificates over the year.
Diluted earnings per equity certificate
In the calculation of diluted earnings per equity certificate, the weighted average number of issued ordinary equity certificates in circulation is adjusted for the effect of converting potential equity certificates which could lead to dilution. The Bank has no potential equity certificates that could cause dilution at 31 March 2020. Diluted earnings per equity certificate is therefore equal to earnings per equity certificate.
| Parent bank | ||
|---|---|---|
| (NOK thousands) | 31.03.2020 | |
| Based on profit for the year divided between equity certificate holders and primary capital | 63,021 | |
| Number of equity certificates issued | 63,101 | |
| Earnings per equity certificate | 0.55 | |
| Par value | 15.00 |
Calculation of equity certificate fraction (based on OB 2020)
| Adjusted primary capital | 01.01.2020 |
|---|---|
| Total equity | 5,016,685 |
| - fund for unrealised gains (FUG) | (25,234) |
| - additional Tier 1 capital | (250,000) |
| - allocated dividends classified as equity | (152,705) |
| Total adjusted primary capital | 4,588,745 |
| Equity certificate fraction | |
| Equity certificate capital | 946,501 |
| Share premium fund | 1,026,427 |
| Risk equalisation fund | 536,885 |
| Total equity certificate holders | 2,509,813 |
| Equity certificate fraction | 54.69% |
| Adjusted profit for the year | 31.03.2020 |
| Profit for the year | 60,354 |
| - corrected for interest on additional Tier 1 capital recognised directly against equity | (3,260) |
| - corrected for FUG | 5,927 |
| Adjusted profit for the year | 63,021 |
Price development March 2019 – March 2020
20 largest shareholders
Price Turnover/volume
| Quantity | Share | |
|---|---|---|
| SpareBank 1 Stiftelsen BV | 13,642,787 | 21.62% |
| Sparbankstiftelsen Nøtterøy-Tønsberg | 10,925,503 | 17.31% |
| Verdipapirfondet Eika | 1,892,698 | 3.00% |
| Pareto AS | 1,532,868 | 2.43% |
| Landkreditt Utbytte | 1,000,000 | 1.58% |
| Wenaasgruppen AS | 907,432 | 1.44% |
| Melesio Capital NYE AS | 853,368 | 1.35% |
| Bergen Kommunale Pensjonskasse | 780,000 | 1.24% |
| Catilina Invest AS | 731,950 | 1.16% |
| Foretakskonsulenter AS | 621,230 | 0.98% |
| Sanden AS | 588,000 | 0.93% |
| DNB Bank ASA | 540,850 | 0.86% |
| Øyhovden Invest AS | 453,545 | 0.72% |
| JAG Holding AS | 400,000 | 0.63% |
| Norgesinvestor Proto AS | 400,000 | 0.63% |
| Johansen Kjell Petter | 372,000 | 0.59% |
| Salt Value AS | 370,750 | 0.59% |
| Verdipapirfondet Nordea Norge | 336,849 | 0.53% |
| Hausta Investor AS | 330,000 | 0.52% |
| Espedal & Co AS | 299,198 | 0,47% |
| Total for 20 largest shareholders | 36,979,028 | 58.60% |
| Other owners | 26,122,325 | 41.40% |
| Equity certificates issued | 63,101,353 | 100.00% |
Dividend policy
SpareBank 1 BV aims to achieve results that deliver a good return on the Bank's equity. This will ensure its owners a competitive, stable, long-term return in terms of dividends and higher prices for its equity certificates.
Each year's profit will be distributed proportionately between equity share capital and the primary capital fund based on their relative share of the Bank's equity.
The Bank's policy is that a minimum 50% of the equity certificate holders' share of each year's profit should be paid out as a cash dividend.
The following factors will be considered in determining the level of the total annual dividend from the Bank:
- The Bank's financial strength
- Financial performance
- External conditions
- Long-term goal of stable ownership fractions
Statements on future matters
The report contains statements about future circumstances that reflect the executive management team's current view of certain future events and potential financial performance.
Although SpareBank 1 BV believes that the expectations expressed in such statements about the future are reasonable, there can be no guarantee that the expectation will prove to have been correct. Results could therefore vary greatly from those assumed in the statements regarding future circumstances.
Important factors that can cause such differences for SpareBank 1 BV include, but are not limited to: (i) macroeconomic developments, (ii) changes in the market, and (iii) changes in interest rates.
This report does not mean that SpareBank 1 BV undertakes to revise these statements on future matters beyond that which is required by applicable law or applicable stock exchange rules if and when circumstances arise that will cause changes compared with the situation on the date when the statements were made.
