Good operational performance
Profit for the second quarter 2016 was minus NOK 203 million, down from NOK 480 million in the same period last year. The negative result in the second quarter is owing to net unrealised losses on financial instruments of NOK 697 million as compared to a gain of NOK 295 million in the same period last year. The unrealised losses in the second quarter are related to funding operations and hedging derivatives, as well as fixed-rate loans to customers.
- KBN’s underlying operations are solid and lending growth still good in the second quarter. The results are influenced by unrealised losses on financial instruments, but since financial instruments normally are held to maturity, the effect of unrealised value changes on the results are reversed when the instruments mature or by a reversal in market movements, says Kristine Falkgård, President & CEO of KBN.
Improved green lending
For the first six months of 2016 new disbursements totalled NOK 25.1 billion, as against NOK 24.7 billion during the same period of 2015. KBN had an increase of 3.4% since year-end compared to 2.4% for the same period last year.
Since 2010 KBN has disbursed NOK 12 billion to climate-friendly projects in Norwegian municipalities and counties. Green lending in KBN is financed through green bonds, funding earmarked for the financing of climate friendly projects. There is increasing demand worldwide for sustainable and responsible investments and projects with a climate benefit. Investors want a gurantee that their funds are put into climate friendly investments. KBN offers favourable loan products aimed at projects with a definite climate ambition. As of June 2016 KBN has extended the types of loans with a green discount offered projects satisfying the green lending criteria.
- If Norway is to make the transition into a low-carbon society within relatively short time, the public sector investments must support Norway’s sustainable development goals. An important element in our corporate social responsibility is to contribute to municipalities making climate-smart investments, says Kristine Falkgård.
Well positioned after first half-year
In the first six months of 2016 KBN issued bonds totalling NOK 48.1 billion in ten currencies, as compared to NOK 52.7 billion in the same period last year. KBN issued its second EUR benchmark in April with a maturity of ten years. In June KBN carried out its largest floating rate bond issue so far of USD 800 million. Both transactions were significantly oversubscribed. As an active issuer of debt in domestic and international capital markets, it is vital to continuously update and expand the investor base. At all times KBN strives to adapt to possibilities in existing markets to ensure lowest possible funding costs within the framework for KBN’s funding strategy.
Common equity Tier 1 capital adequacy ratio by the end of the second quarter 2016 was 15.42 per cent.