INTERIM REPORT
Q3 2015
Bustadkreditt Sogn og Fjordane AS INTERIM REPORT • Q3 2015 (unaudited) 3
Key figures
FIGURES IN NOK ‘000s 30.09.15 30.09.14 31.12.14
INCOME STATEMENT
Profit/loss after taxation 75 343 85 221 112 243
Net interest margin 1,37 % 1,68 % 1,64 %
Profit/loss after tax as a % of average total assets 0,93 % 1,25 % 1,19 %
KEY BALANCE SHEET FIGURES
Gross loans to customers 11 400 450 9 177 248 9 661 293
Impairment provisions 8 458 9 054 9 887
Equity 1 076 541 761 077 788 098
Total assets 11 991 839 9 670 509 10 416 896 Average total assets 10 757 820 9 131 682 9 457 067
OTHER KEY FIGURES
Cost-to-income ratio 6,47 % 4,43 % 4,59 %
Impairment charge as a % of gross loans – 0,01 % – 0,06 % – 0,05 % Impairment provisions as a % of gross loans 0,07 % 0,10 % 0,10 % Return on equity after tax *) 12,75 % 15,43 % 15,07 % Capital adequacy ratio 21,47 % 18,17 % 16,75 %
YEAR-ON-YEAR BALANCE SHEET GROWTH
Growth in total assets 24,00 % 8,70 % 13,20 % Growth in customer lending 24,23 % 10,40 % 11,33 %
Information about the loan portfolio
Surplus value of cover pool (NOK millions) 2 498 1 906 2 068 Surplus value of cover pool (%) 26,4 % 24,7 % 24,9 %
Committed surplus (%) 11,0 % 11,0 % 11,0 %
Loan-to-value ratio, indexed 51,6 % 56,5 % 55,7 % Loan-to-value ratio, not indexed 57,2 % 58,8 % 58,0 % Face value of covered bonds issued (NOK millions) 9 462 7 700 8 302 Substitute assets other than loans (NOK millions) 591,3 493,0 755,3 Weighted average time since issue of loans (years) 3,1 3,0 3,1 Weighted average remaining term of loans (years) 16,3 16,3 16,3 Proportion of variable-rate loans 100 % 100 % 100 % Proportion of flexible mortgages 25,5 % 27,9 % 27,3 % Average loan value (NOK millions) 1 , 1 7 1 , 1 5 1 , 1 7
Number of loans 9 749 7 964 8 273
Proportion of loans secured by an overseas property 0 % 0 % 0 % *) Calculated using the opening equity balance adjusted for capital increases.
HIGHLIGHTS
Bustadkreditt Sogn og Fjordane AS is a wholly-owned subsidiary of Sparebanken Sogn og Fjordane, with its head office in Førde.
Bustadkreditt Sogn og Fjordane AS has given the Sparebanken Sogn og Fjordane group access to long-term funding on competitive terms. It finances itself by issuing covered bonds.
Services such as customer care, loan servicing, management and administrative services are supplied by Sparebanken Sogn og Fjordane. At the end of September 2015, the Company had 9,749 mortgages with a total face value of NOK 11.4 billion. The loans in the cover pool were issued by Sparebanken Sogn og Fjordane, and subsequently bought by Bustadkreditt Sogn og Fjordane. All of the Company’s loans were subject to a variable interest rate. 25.5% of the loan book was made up of flexible mortgages.
The weighted average loan-to-value ratio was 51.6 percent, the weighted average loan term was 16.3 years and the weighted average time since the loans were granted was 3.1 years. The average loan per customer was NOK 1.17 million. The Company’s total loan portfolio grew by NOK 2,223 million over the past year. The volume of covered bonds issued by the Company was NOK 9.46 billion.
RATING OF COVERED BONDS
In the third quarter of 2011, Bustadkreditt Sogn og Fjordane’s covered bond programme was given a “long term rating” of Aaa by the ratings agency Moody’s. This rating has remained unchanged since then. After Moody’s revised its rating system earlier this year, and after Sparebanken Sogn og Fjordane was upgraded to A2, Bustadkreditt Sogn og Fjordane’s Aaa rating is considered stronger than before.
CHANGE IN CALCULATION OF LOAN-TO-VALUE RATIOS
All Norwegian credit institutions use Eiendomsverdi to provide valuations of the collateral in their cover pools. Eiendomsverdi provides two estimates: one unbiased estimate, and one adjusted estimate that downwardly adjusts the unbiased estimate for the riskiest assets. At the recommendation of the Norwegian committee on covered bonds, in the first quarter of 2015 Bustad-kreditt Sogn og Fjordane AS went from using the downwardly adjusted estimate to the unbiased estimate for collateral. This has resulted in a reduction in the reported loan-to-value ratio.
KEY FIGURES
(Figures in brackets are for the year-earlier period) • Profit after taxation of NOK 75.3 million
(85.2 million)
• Net interest income of NOK 110.5 million (115.0 million)
• Operating expenses of NOK 7.0 million (5.1 million) • Net change in the value of financial instruments of
NOK -3.0 million (0.0 million)
• Impairment charge of NOK -1.4 million (-6.0 million) • Annualised return on equity of 12.7%
(15.4%) after tax
• Core capital adequacy ratio of 21.47% (18.17%) FINANCIAL RESULTS
In the first nine months of 2015, the Company made a pre-tax profit of NOK 103.2 million. Profit after tax was NOK 75.3 million, giving an annualised return on equity of 12.7%. The equivalent figures for the previous year were NOK 116.7 million in pre-tax profit, NOK 85.2 million in profit after tax and return on equity of 15.4 %. Profit after tax was equivalent to 0.93% of average total assets, compared with 1.25% the previous year.
NET INTEREST INCOME
Net interest income totalled NOK 110.5 million. The net interest margin for the nine months to 30 September 2015 was 1.37%. The equivalent figures for the year-earlier period were NOK 115.0 million and 1.68%. The reduction in interest income was due to margins on loans to customers falling as a result of strong competition in the banking market. When interest rates on loans fall, margins will in general fall more at a credit provider than at a bank, which can recover part of the fall by paying lower interest rates on customer deposits.
OPERATING EXPENSES
Operating expenses were NOK 7.0 million, compared with NOK 5.1 million for the same period last year. The purchase of services from Sparebanken Sogn og Fjordane is the Company’s biggest expense item. Other major expense items include issuing bonds, credit rating agency fees and the purchase of services from Eiendomsverdi.
The cost/income ratio rose to 6.5% in the second quarter of 2015, up from 4.4% in the year-earlier period. This was related to a slight increase in the cost of services bought from the parent company, combined with somewhat lower interest income than last year. The weak Norwegian krone and greater volume of covered bonds also resulted in higher expenses associated with credit rating.
IMPAIRMENT PROVISIONS FOR LOANS AND GUARANTEES
The Company follows Sparebanken Sogn og Fjordane’s guidelines for assessing loan impairment. At 30 September 2015, one loan was more than 90 days in arrears, but no losses had been realised. Credit risk is low, and no individually assessed impairment provisions have been made.
Collectively assessed provisions are estimated using a model that takes the quality, size and composition of
Bustadkreditt Sogn og Fjordane AS INTERIM REPORT • Q3 2015 (unaudited) 5 the loan portfolio into account. The model used is the
same one as is used by Sparebanken Sogn og Fjordane. In the first nine months of 2015, the Company
recognised a NOK 1.4 million gain in relation to collectively assessed impairment provisions.
This gain was the result of the validation of the scoring model in autumn 2014. This pushed customers into lower risk classes, which in turn led to a reduction in collectively assessed impairment provisions.
BALANCE SHEET
The Company had total assets of NOK 11,992 million at 30 September 2015. This represented an increase of NOK 2,321 million over the past 12 months (+24.0%). The increase in total assets was primarily due to increased lending to customers.
CUSTOMER LOANS AND OTHER SUBSTITUTE ASSETS In addition to the NOK 11,400 million of mortgage loans, NOK 591 million of other substitute assets have been established. The total value of the (adjusted) cover pool is NOK 11,960 million, which is 26.4% higher than the volume of covered bonds issued. In the third quarter, a new bond with a face value of NOK 2 billion was issued. The Company also repurchased and repaid NOK 544 million of loans. One NOK 302 million loan reached its maturity date.
60.5% of Bustadkreditt Sogn og Fjordane’s loan portfolio has a loan-to-value ratio of less than 60%. The Company considers its loan portfolio to be low-risk. The figure below shows the weighted loan-to-value ratio for the loans held by the Company.
The geographic distribution of our mortgage portfolio, based on where the main borrower lives, was as follows:
Region Share Western Norway 80,4 % Eastern Norway 17,9 % Central Norway 0,8 % Southern Norway 0,4 % Northern Norway 0,5 % Overseas 0,0 % Total 100,0 %
5 largest counties measured by loan volume
County Share Sogn og Fjordane 51,3 % Hordaland 25,5 % Oslo 9,0 % Akershus 5,8 % Rogaland 2,2 % Rest of Norway 6,2 % Total 100,0 %
5 largest municipalities measured by loan volume
Municipality Share Bergen 21,7 % Førde 13,3 % Flora 11,5 % Oslo 9,0 % Sogndal 3,3 % Rest of Norway 41,2 % Total 100,0 %
Other information about the loan portfolio Distribution by loan value
Loan value Volume (NOK millions)
0 – 1 mill. 2.429
1 – 2 mill. 4.498
2 – 3 mill. 2.745
over 3 mill. 1.728
Total 11.400
The combined volume of the five biggest loans was NOK 52.2 million.
SHAREHOLDERS’ EQUITY AND CAPITAL ADEQUACY At 30 September 2015, Bustadkreditt Sogn og Fjordane AS had NOK 1,077 million of equity. The capital adequacy ratio was 21.47%. The equivalent figures for the previous year were NOK 761 million of equity and a capital adequacy ratio of 18.17%. A dividend of NOK 111.9 million was paid to the parent company during the reporting period. In September 2015 the share capital was increased by NOK 325 million through the parent company buying new shares in the Company. The purpose of the capital increase was to give the Company scope to grow its loan book.
LIQUIDITY
At the close of the third quarter, Bustadkreditt Sogn og Fjordane AS had NOK 297.5 million of deposits held at Sparebanken Sogn og Fjordane, as well as a total of NOK 293.8 million of substitute assets made up of short-term government bonds and covered bonds issued by other banks.
Bustadkreditt Sogn og Fjordane AS has excellent credit facilities with Sparebanken Sogn og Fjordane. These will allow the Company to make interest and principal payments to the owners of covered bonds, enable it to make advances to customers with flexible mortgages, provide bridge financing when loans are being transferred from the parent bank to it, and fund the necessary surplus in the cover pool.
Weighted loan-to-value ratio
0% 5% 10% 15% 20% 25% 30% 35% 40% over 75% 60-75% 50-60% 40-50% Under 40% 26% 14% 20% 36% 4% 2025301520201015102014201520160102030
Førde, 26 October 2015
The Board of Directors of Bustadkreditt Sogn og Fjordane AS Frode Vasseth
Chair
Hallvard Klakegg Peter Midthun Ingeborg Aase Fransson Harald Slettvoll
CEO
RISK
Under its licence as a credit provider, Bustadkreditt Sogn og Fjordane is subject to laws, regulations and rules that limit the level of risk to which it can be exposed. The Board of Directors and CEO are responsible for establishing risk management procedures, and for ensuring that they are adequate and in compliance with laws and regulations.
Bustadkreditt Sogn og Fjordane is exposed to credit risk, operational risk, liquidity risk and interest rate risk. The Board considers it a priority for the Company to maintain a low risk exposure. Limits have been set on exposure to the various classes of risk, and a system has been established for measuring, managing and monitoring each of them.
Credit risk
Credit risk is the danger of losing money as a result of customers or counterparties being unable or unwilling to meet their obligations to Bustadkreditt Sogn og Fjordane.
The Company has its own rules on which loans it can buy from its parent company. The rules are strict, which means that in principle the credit risk is low. The rules specify requirements relating to the type of loan, loan-to-value ratio, risk class and type of collateral. At the end of the third quarter of 2015, the Company’s average loan-to-value ratio was 51.6%, measured using the approved valuation of the collateral by Eiendomsverdi AS. The Board of Directors considers the loan portfolio to be of high quality, and to be associated with a low credit risk.
Market risk
Market risk is the risk arising from the Company’s open positions relating to loans and financial instruments whose values fluctuate over time in response to changes in market prices. Bustadkreditt Sogn og Fjordane AS does not have any investments in shares or foreign currencies, so all of its market risk is related to interest rate risk. The Company’s risk management framework sets limits on the Company’s exposure to market risk. The Board of Directors considers it important for Bustadkreditt Sogn og Fjordane AS to maintain a low exposure to market risk.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to fulfil its obligations and/or finance an increase in assets without significant additional cost, either because it has to realise losses on the sale of assets or because it has to make use of unusually expensive financing.
The Board has decided that the Company’s exposure to liquidity risk should be kept low. This is, amongst other things, reflected in the size of the required liquidity buffer.
The Company’s credit agreements with its parent also play an important role in reducing its liquidity risk. Operational risk
Operational risk is defined as the risk of losses due to human error, external actions or failures and defects in the Company’s systems, procedures and processes. Bustadkreditt Sogn og Fjordane AS has signed an agreement with Sparebanken Sogn og Fjordane on the provision of services in areas such as customer service, administration, IT, finance and risk management. In these areas, the parent company is responsible for resolving any mistakes and for handling the operational risk. The Board believes that it handles this area well.
OUTLOOK
Falling margins resulted in a slightly lower profit than in the equivalent period last year. Interest rates are expected to remain low, which will probably result in lower average margins than we have experienced over the past two years. Nevertheless, with costs and loan losses at current levels, the Board believes that the Company can continue to make a healthy profit. In September 2015, Norges Bank lowered its key rate to 0.75%. The interest rate path for the coming three years was also adjusted down. Viewed in isolation, lower interest rates should mean that house prices will continue to rise. On the other hand, a key rate approaching 0% and a falling interest rate path suggest that the economy will perform worse over the coming years. Unemployment has risen in recent months, which may reduce overall demand and put downward pressure on house prices. Statistics Norway expects house prices to fall in the fourth quarter of 2015, and then to rise slightly in 2016. Unemployment is expected to peak in 2016. Bustadkreditt Sogn og Fjordane AS’s risk exposure will increase if customers with loans from the Company become unemployed. However, interest rates are extremely low, and collateral is strong. Overall, the Board therefore considers the risks to be low, even if the macroeconomic situation becomes somewhat more challenging in the immediate future.
Funding obtained in the market for covered bonds will continue to play a vital role in helping the Sparebanken Sogn og Fjordane banking group to remain
competitive. We are therefore working to ensure that Bustadkreditt Sogn og Fjordane can buy a larger proportion of Sparebanken Sogn og Fjordane’s mortgage portfolio in the coming years.
Income
Note 30.09.15 30.09.14 31.12.14
Interest income 254 435 260 387 354 122
Interest expenses 143 942 145 360 198 573
Net interest income 110 493 115 027 155 549
Commission income 1 296 953 1 359
Net commission income 1 296 953 1 359
Net gains/losses on financial instruments – 2 964 – 66 – 1 133
Total other operating income – 2 964 – 66 – 1 133
Net other operating income – 1 668 887 226
Total operating income 108 825 115 913 155 775
Wages, salaries, etc. 0 0 29
Administration expenses 1 069 837 1 441
Other operating expenses 5 975 4 294 5 674
Total operating expenses 7 044 5 131 7 144
Operating profit/loss before loan impairment charge 101 780 110 782 148 631
Loan impairment charge 3, 4, 5 – 1 429 – 5 959 – 5 126
Operating profit/loss 103 210 116 741 153 757
Tax expense 27 867 31 520 41 514
Profit/loss for the reporting period 75 343 85 221 112 243
COMPREHENSIVE INCOME
Profit/loss for the reporting period 75 343 85 221 112 243
Other comprehensive income 0 0 0
Bustadkreditt Sogn og Fjordane AS INTERIM REPORT • Q3 2015 (unaudited) 9
Balance
ASSETS Note 30.09.15 30.09.14 31.12.14
Loans and advances to credit institutions 297 507 164 997 402 799 Loans to customers 3, 4, 5 11 391 992 9 168 194 9 651 406 Commercial paper and bonds 293 827 327 799 352 365
Deferred tax assets 828 777 828
Other receivables/Accrued income 7 684 8 742 9 499
Total assets 11 991 839 9 670 509 10 416 896
SHAREHOLDERS’ EQUITY AND LIABILITIES
Paid-up equity
Share capital 1 000 000 675 000 675 000
Total paid-up equity 1 000 000 675 000 675 000
Retained earnings
Other equity 7 76 541 86 077 1 198
Allocated for dividends 0 0 111 900
Total retained earnings 76 541 86 077 113 098
Total equity 1 076 541 761 077 788 098
Liabilities
Debt to credit institutions 1 409 057 1 136 252 1 256 635 Debt securities in issue 6 9 461 919 7 704 257 8 312 310
Tax payable 28 762 50 695 41 566
Accrued costs 15 559 18 228 18 287
Total liabilities 10 915 298 8 909 432 9 628 798
Total liabilities and equity 11 991 839 9 670 509 10 416 896
Førde, 26 October 2015
The Board of Directors of Bustadkreditt Sogn og Fjordane AS
Frode Vasseth Chair
Hallvard Klakegg Peter Midthun Ingeborg Aase Fransson
Harald Slettvoll CEO
Cash flow statement
30.09.15 30.09.14 31.12.14
Profit/loss before taxation 103 210 116 741 153 757 Loan impairment charge – 1 429 – 5 959 – 5 126
Tax paid – 41 602 – 17 611 – 41 578
Reduction/increase in loans and advances to customers – 1 739 157 – 499 525 – 983 570
Other non-cash transactions 17 211 4 306
A) Net cash flow from operating activities – 1 678 961 – 406 143 – 872 210
Reduction/increase in investments in
commercial paper and bonds 58 538 – 17 708 – 42 274
B) Net cash flow from investment activities 58 538 – 17 708 – 42 274
Increase/reduction in loans from credit institutions 152 422 – 407 399 – 287 016 Increase/reduction in debt securities 1 149 609 570 218 1 178 271 Increase/reduction in paid-up share capital 325 000 300 000 300 000
Dividends – 111 900 – 93 900 – 93 900
C) Net cash flow from financing activities 1 515 131 368 920 1 097 356
D) Net cash flow during the year (A+B+C) – 105 292 – 54 931 182 872
Opening balance of cash and cash equivalents 402 799 219 927 219 927
Closing balance of cash and cash equivalents 297 507 164 997 402 799
Breakdown of cash and cash equivalents
Deposits at other financial institutions 297 507 164 997 402 799
Bustadkreditt Sogn og Fjordane AS INTERIM REPORT • Q3 2015 (unaudited) 11
Equity statement
PAID-UP UT EQUITY RETAINED EARNINGS
Other Allocated for Total Share capital equity dividends equity
Opening balance 01.01.14 375 000 94 755 0 469 755
Dividends paid 0 – 93 900 0 – 93 900
Profit/loss for the reporting period 0 343 111 900 112 243 Equity transactions
New paid-up equity 300 000 0 0 300 000
Closing balance 31.12.2014 675 000 1 198 111 900 788 098
Opening balance 01.01.15 675 000 1 198 111 900 788 098
Dividends paid 0 0 – 111 900 – 111 900
Profit/loss for the reporting period 0 75 343 0 75 343 Equity transactions
New paid-up equity 325 000 0 0 325 000
NOTE 1 – WAGES, SALARIES, ETC.
Bustadkreditt Sogn og Fjordane AS’s financial statements have been prepared using the simplified application of IFRS. These interim financial statements have been presented in accordance with IAS 34 “Interim Financial Reporting”. The Company has used the same accounting policies and calculation methods as at 31 December 2014.
The Ministry of Finance issued new regulations on the simplified application of IFRS on 3 March 2014. The new regulations came into force as of the 2014 financial year, but a transition arrangement allows the old regulations to be used for the 2014 and 2015 financial years. The Company has chosen to make use of the transition arrangement, and has therefore prepared the financial statements for Q3 2015 using the old regulations.
For more detailed information about our accounting principles and critical accounting estimates, please see Bustadkreditt Sogn og Fjordane’s annual report for 2014. See: www.ssf.no
All figures are stated in thousands of NOK, unless otherwise specified.
NOTE 2 – SEGMENTS
The Company has one segment. This segment consists of loans to retail customers and a small volume of loans to private businesses. All of the loans have been bought from Sparebanken Sogn og Fjordane. The Company does not have any operations outside Norway. Customers with overseas addresses are classified as part of the Norwegian operations.
Notes to the financial statements
NOTE 3 – LOAN IMPAIRMENT CHARGE
30.09.15 30.09.14 31.12.14
Increase/reduction in individually assessed impairment provisions 0 – 283 – 283 Increase/reduction in collectively assessed impairment provisions – 1 429 – 5 676 – 4 843 Losses realised during the period for which impairment provisions
had previously been made 0 0 0
Losses realised during the period for which impairment provisions
had not previously been made 0 0 0
Recoveries against previous years’ realised losses 0 0 0
Loan impairment charge for the period – 1 429 – 5 959 – 5 126
NOTE 4 – IMPAIRMENT PROVISIONS
30.09.15 30.09.14 31.12.14
Individually assessed impairment provisions at the start of the period 0 283 283 + New ind. ass. provisions against previously impaired loans 0 0 0 - Release of individually assessed provisions from past periods 0 283 283 + Loan loss provisions against previously unimpaired loans 0 0 0 - Losses realised for which individually assessed provisions
had been made 0 0 0
Individually assessed impairment provisions at the end
of the period 0 0 0
Collectively assessed impairment provisions at start of period 9 887 14 730 14 730 + Change in collectively assessed provisions for the period – 1 429 – 5 676 – 4 843
Collectively assessed impairment provisions at end of period 8 458 9 054 9 887
Bustadkreditt Sogn og Fjordane AS INTERIM REPORT • Q3 2015 (unaudited) 13
NOTE 5 – OANS IN DEFAULT AND AT RISK OF DEFAULT
30.09.15 30.09.14 31.12.14
Loans in default
Loans more than 90 days in arrears 918 4 449 2 505 -individually assessed impairment provisions 0 0 0
Net loans in default 918 4 449 2 505
Coverage ratio 0 % 0 % 0 %
Other loans at risk of default
Loans at risk of default (not in default) 0 0 0 - Individually assessed impairment provisions 0 0 0
Net other loans at risk of default 0 0 0
Coverage ratio 0 % 0 % 0 %
NOTE 6 – DEBT SECURITIES IN ISSUE
30.09.15 30.09.14 31.12.14
Commercial paper and other short-term borrowings 0 0 0 Bonds in issue 9 455 500 7 700 000 8 302 000 Own commercial paper/bonds, not amortised 0 0 0
Total debt securities in issue 9 455 500 7 700 000 8 302 000
Term to maturity
Remaining term to maturity (face value)
2015 356 500 1 200 000 802 000 2016 1 299 000 1 700 000 1 700 000 2017 1 000 000 1 000 000 1 000 000 2018 1 800 000 1 800 000 1 800 000 2019 1 000 000 1 000 000 1 000 000 2020 2 000 000 1 000 000 2 000 000 2021 2 000 000 0 0 Total 9 455 500 7 700 000 8 302 000 New borrowings in 2015 2 000 000 Repaid during the reporting period 846 500
MATURITY BOOK VALUE ISIN NUMBER FACE VALUE INTEREST RATE SPREAD DATE *) 30.09.15
NO0010630973 356 500 3 MND. NIBOR 0,70 07.12.15 356 001 NO0010593155 484 000 3 MND. NIBOR 0,58 10.03.16 481 788 NO0010625619 815 000 3 MND. NIBOR 0,55 28.06.16 812 290 NO0010637101 1 000 000 3 MND. NIBOR 0,72 17.02.17 1 001 300 NO0010660020 800 000 3 MND. NIBOR 0,55 18.04.18 800 080 NO0010673395 1 000 000 3 MND. NIBOR 0,48 20.09.18 1 000 480 NO0010665177 1 000 000 3 MND. NIBOR 0,58 13.08.19 1 003 836 NO0010710676 2 000 000 3 MND. NIBOR 0,36 15.06.20 2 008 390 NO0010743586 2 000 000 3 MND. NIBOR 0,43 16.06.21 1 996 640 Amortisation 1 114
Total debt securities in issue 9 461 919
The table shows the agreed maturity date.
*) The terms of the loan allow for the maturity date to be extended by one year. All loans are denominated in NOK.
NOTE 7 – CAPITAL ADEQUACY
30.09.15 30.09.14 31.12.14
Equity and subordinated debt
Share capital and share premium account 1 000 000 675 000 675 000
Other equity 1 198 855 1 198
Share of interim profit/loss 0 0 0
Equity 1 001 198 675 855 676 198
Other core capital 0 0 0
Deductions:
Deferred tax assets – 828 – 777 – 828
Net core capital 1 000 370 675 078 675 370
Core Tier 1 capital 1 000 370 675 078 675 370
Net supplementary capital 0 0 0
Net equity and subordinated loan capital 1 000 370 675 078 675 370
BASIS FOR CALCULATION Credit risk
Institutions 59 502 32 999 78 686
Retail loans 276 303 220 851 235 363
Residential mortgage loans 4 066 360 3 278 378 3 452 788
Overdue advances 917 2 748 2 791
Covered bonds 26 391 32 779 32 748
Other advances 511 417 412
Total calculation basis for credit risk 4 429 984 3 568 172 3 802 788
Operational risk 229 697 146 843 229 697
Total calculation basis 4 659 681 3 715 015 4 032 485
Excess equity and subordinated debt 627 596 377 877 352 771
CAPITAL ADEQUACY
Capital adequacy ratio 21,47 % 18,17 % 16,75 % Core capital adequacy ratio 21,47 % 18,17 % 16,75 % Core Tier 1 capital adequacy ratio 21,47 % 18,17 % 16,75 % Unweighted core capital ratio 7,95 % 6,65 % 7,74 % The capital adequacy ratio has been calculated using the new capital adequacy regulations (Basel II). The standardised approach has been used for credit risk and market risk, whilst the basic indicator approach has been used for operational risk.
There are three pillars to the Basel II regulations. Pillar 1 relates to minimum capital adequacy requirements, and builds on the previous regulations in Basel I. Pillar 2 relates to the institution’s internal assessment of total capital requirements (ICAAP), whilst Pillar 3 covers disclosure requirements for financial information.
Bustadkreditt Sogn og Fjordane AS INTERIM REPORT • Q3 2015 (unaudited) 15
NOTE 8 – TRANSACTIONS WITH RELATED PARTIES
Intra-group transactions
30.09.15 30.09.14 31.12.14
Interest received from Sparebanken Sogn og Fjordane 3 185 3 237 4 515 Interest paid to Sparebanken Sogn og Fjordane 23 479 20 521 27 793 Interest paid to Sparebanken Sogn og Fjordane on covered bonds 5 173 4 012 6 332 Services bought from Sparebanken Sogn og Fjordane 3 145 2 728 3 808 Deposits at Sparebanken Sogn og Fjordane 297 507 164 997 402 799 Liabilities to Sparebanken Sogn og Fjordane 1 409 057 1 136 252 1 256 635 Covered bonds held by Sparebanken Sogn og Fjordane 998 320 336 332 402 458 Bustadkreditt Sogn og Fjordane AS has no employees. An agreement has been signed with Sparebanken Sogn og Fjordane on the supply of loan servicing and administrative services. All of the Company’s loans have been acquired from Sparebanken Sogn og Fjordane, and an agreement has been signed with the bank on the servicing of the portfolio. Bustadkreditt Sogn og Fjordane AS takes on all of the risk associated with the loans that it acquires from its parent. Bustadkreditt Sogn og Fjordane AS has been given access to excellent credit facilities with Sparebanken Sogn og Fjordane. These will allow the Company to make interest and principal payments to the owners of covered bonds, enable it to make advances to customers with flexible mortgages, provide bridge financing when loans are being transferred, and fund the necessary surplus in the cover pool.
Further details of the credit facilities:
Bustadkreditt Sogn og Fjordane AS has four credit facilities with Sparebanken Sogn og Fjordane (SSF): a) A 3-year credit that matures in June 2017. The credit facility is to be used for buying mortgage loans
from SSF. It has a limit of NOK 750 million.
b) A credit agreement to ensure that owners of covered bonds will be paid even if the mortgage credit subsidiary is unable to meet its obligations. The limit on the facility at 30 September 2015 was NOK 154 million. Under the agreement, the obligations of the Bank relate to all payments due to the owners of the covered bonds over the coming year.
c) A credit facility that can be used to finance advances to customers with available credit within their flexible mortgages. At 30 September 2015 the limit on the facility was NOK 1,189 million
d) A credit facility related to overcollateralisation. The facility shall only be used to buy loans for inclusion in the cover pool, and to buy instruments that qualify as part of a liquidity buffer. At 30 September 2015, the limit on the facility was NOK 1,419 million, but this limit depends on the volume of covered bonds issued at any given time.
All agreements and transactions adhere to arm’s length principles.
NOTE 9 – OFF BALANCE SHEET ITEMS
30.09.15 30.09.14 31.12.14
Unused credit facilities 1 189 376 977 006 1 022 206
Total contingent liabilities 1 189 376 977 006 1 022 206
The unused credit facilities are available financing in flexible mortgages. Company has no other off-balance-sheet obligations.
NOTE 10 – SUBSTITUTE ASSETS
30.09.15 30.09.14 31.12.14
Deposits at the parent company 297 507 164 997 402 799 Government-guaranteed commercial paper 29 922 0 24 885 Other commercial paper and bonds 263 906 327 799 327 480
INFORMATION ABOUT THE COMPANY
Address:
Bustadkreditt Sogn og Fjordane AS Langebruvegen 12
N-6800 Førde
Tel. no: +47 57 82 97 00
Organisation number: 946 917 990
Management:
Harald Slettvoll CEO
Board of Directors:
Frode Vasseth Chair
Hallvard Klakegg Board member Peter Midthun Board member Ingeborg Aase Fransson Board member
Contact person:
Harald Slettvoll, CEO, +47 57 82 97 52
GRAPHIC DESIGN:
Sparebanken Sogn og Fjordane / E. Natvik Prenteverk AS English translation: Språkverkstaden
