Solid operations and good profit for the first quarter
Profit for the first quarter of 2018 was NOK 474 million as compared to NOK 360 million in the same period in 2017. The increase was affected by unrealised gains on financial instruments, which contrasts with unrealised losses in the first quarter of 2017. The gains stem from changes in the value of KBN’s debt and a change in the market conditions for KBN’s currency swap agreements.
“We delivered good earnings in the first quarter, reflecting our solid underlying operations. Net interest income was slightly lower than in the first quarter of 2017, and this was among other ting due to Norwegian money market rates increasing considerably in the first three months of the year”, comments Kristine Falkgård, President and CEO of KBN.
Slower debt growth
In the first quarter, new disbursements totalled NOK 9.1 billion as compared to NOK 17.1 billion in the first quarter of 2017. The rate of growth in local government sector debt has fallen in recent years. At the end of February, local government sector debt growth over the previous twelve months stood at 4.5%, down from 5.3% at the end of 2017. At the same time, KBN’s review of the 2018 investment budgets of local authorities reveals an expected level of investment in 2018 in line with 2017.
“In the first quarter we experienced increasing demand for green loans, which are loans used to finance climate-friendly projects. This is a pleasing development and indicates higher demand for KBN’s green lending product with lower interest rate, comments President and CEO Kristine Falkgård.
Good access to funding
In the first quarter of 2018 new borrowings totalled approximately NOK 54 billion as compared to NOK 47 billion in the same period in 2017. The largest single bond issued by KBN in the first quarter was a five-year USD 1.5 billion benchmark bond. This bond was well received and was significantly over subscribed. KBN has experienced favourable market conditions in the first quarter of 2018. Good market access and favourable funding cost ensures that Norway’s municipalities are able to access suitable funding on favourable terms when financing important welfare services.
At the end of the first quarter, KBN had a common equity Tier 1 capital adequacy ratio of 17.91%.