Solid results and growth in long-term loans
“Overall 2017 was a very good year for KBN. We have increased our earnings from our core business in a year where we have lowered our interest rates and seen growth in our long-term lending products. The result reflects on the underlying market conditions and efficient operations. Over the course of the year, half of KBN’s customers started to use our debt management portal KBN Finans and our customer survey showed that those that are using the portal are our most satisfied customers. “In 2018 we will focus on further developing KBN Finans and other digital tools for our customers”, comments Kristine Falkgård, President and CEO of KBN.
Profit for the year was NOK 1,429 million in 2017 as compared to NOK 689 million in 2016. Net interest income in 2017 totalled NOK 2,162 million, as compared to NOK 2,087 million in 2016. This increase was due to a combination of favourable funding conditions throughout large parts of 2017 and strong lending growth earlier in the year. KBN’s profit for the year was reduced somewhat by unrealised losses of NOK 163 million stemming from losses on KBN’s borrowings and exchange rate swap agreements used to convert non-NOK denominated borrowings into Norwegian krone.
More long-term loans and more green loans
KBN’s lending portfolio grew by NOK 15.2 billion in 2017, representing lending growth of 5.7%. All Norway’s municipalities and county authorities as well as Longyearbyen Local Council had loans from KBN at the end of 2017, and KBN’s total lending to the local government sector was NOK 281.7 billion.
“The municipal sector has continued to remain active in direct issuance in the debt capital market throughout 2017. KBN is the most important provider of long-term instalment-based loans, and in 2017 a number of customers chose to refinance short-maturity loans by arranging long-term instalment-based loans. We think this is a positive development, as it reduces refinancing risk and provides the borrower with greater predictability. KBN aims to continue to meet the Norwegian municipalities financing needs in the years ahead. “A well-reserved profitability means that we are well positioned to meet tomorrows welfare investments”, comments Kristine Falkgård.
KBN granted new green loans totalling NOK 1.65 billion in 2017 to 47 different projects. This represents an increase of 7%. Examples of projects financed using green loans include the new upper secondary schools in Romsdal and Horten that have been built in mass timber, an expansion to a seawater source heating system in Nordfjordeid, a biogas plant in Grødaland in Rogaland, and electrifying Båtsfjord harbour in Finnmark.
Green finance on the agenda
New long-term borrowings amounted to NOK 118.5 billion in 2017, which is NOK 35.7 billion higher than in 2016. KBN has good access to diversified sources of funding, with Asia, Europe and the USA its most important markets. KBN issued bonds in 13 different currencies in 2017.
KBN issued four benchmark bonds in 2017, three in US dollars and one in euros. These issues attracted a high level of interest from investors and were all significantly oversubscribed. KBN is committed to taking a leading role in the development of green finance in Norway by virtue of being the largest Norwegian issuer of green bonds. In November 2017 KBN issued its first NOK-denominated green bond. The bond raised NOK 1.35 billion and was issued in two tranches with maturities of 10 and 15 years.
“We have issued green bonds in the international capital markets since 2010 and wanted to make NOK-denominated green bonds available to investors as well. Our first NOK-denominated green bond was a good start and attracted a lot of attention from Norwegian investors. There is an increasing demand worldwide for sustainable and responsible investments and projects with a climate benefit. We are also seeing growing interest in Norway as well. Our interest in green finance is driven by the fact that we need and want to contribute to the sustainable development of society, including by supporting Norwegian municipalities with delivering important green welfare projects and planning new investments that take climate risk into account”, explains Kristine Falkgård.
For more information, please contact:
Tor Ole Steinsland, Chief Communications Officer
Tel. 21 50 20 16/ 982 47 016
KBN is the largest financial partner to the Norwegian local government sector and provides loans for major investments in welfare across Norway. With more than NOK 400 billion in total assets, KBN is one of Norway’s largest financial institutions. It has around 80 employees and operates from its office in central Oslo.