“Our underlying operations are going well, and our core profit is in line with expectations. We are achieving good terms on our funding, and this is benefiting our customers as it is allowing us to lend to them on favourable terms”, explains Kristine Falkgård, President and CEO of Kommunalbanken.
KBN reported profit after tax of NOK 73 million for the third quarter of 2014 compared to NOK 250 million for the same period last year. Profit for the third quarter was affected by unrealised losses of NOK 260 million on financial instruments. These unrealised losses are primarily a result of an increase in the value of KBN’s debt, which is a consequence of a reduction in the credit spreads on own bonds during the course of the quarter.
The lending portfolio decreased by NOK 1.9 billion in the third quarter of 2014 as compared to an increase of NOK 1.3 billion in the same period last year. Cumulative growth in lending for the first nine months of 2014 was 2.0% as compared to growth of 7.8% in the same period in 2013. KBN is seeing increased demand for short-term loans, but chose, in accordance with its plans, to be less active in the market for particularly short-term lending in the third quarter.
GROWTH IN GREEN LENDING
KBN is seeing increased demand for lending with a green floating rate, with a 20% increase in the first nine months of 2014. The green floating rate is lower than the ordinary floating rate and is intended to provide financing for municipalities’ energy and climate action plans.
“We are proud of our ability to help municipalities with the financing they need to be able to invest in environmental projects. We are also seeing a great deal more interest internationally in environmental investment projects. As a large lender to Norwegian municipalities, KBN is able to use green bonds to channel this demand and to help Norwegian municipalities implement their energy and climate action plans”, comments Kristine Falkgård, President and CEO of Kommunalbanken.
GOOD ACCESS TO FUNDING
The agency maintained a good liquidity situation throughout the third quarter and is experiencing strong demand for its own bonds. KBN has issued new bonds totalling NOK 96.8 billion across 16 currencies in the first nine months of this year.