High demand for loans in demanding market conditions
“Ensuring our customers have stable access to debt financing regardless of market conditions is an important part of the role we play in society”, comments Kristine Falkgård, President and CEO of KBN.
2018 was characterised by some periods of turbulence in the financial markets. A high level of demand for loans towards the end of the year resulted in significant lending growth for KBN. KBN’s role is to provide the local government sector with attractive and long-term debt financing regardless of market conditions. In 2018, KBN granted 661 new loans totalling NOK 55.7 billion. These loans financed investment in projects such as schools, health and care facilities, water and wastewater systems and adaptations to climate change.
Profit for the year was NOK 1,496 million in 2018 as compared to NOK 1,429 million in 2017. KBN’s profit for the year for 2018 is affected by unrealised gains from changes in the value of financial instruments. Net interest income of NOK 1,885 million helped KBN achieve strong core earnings of NOK 1,194 million in 2018 as compared to NOK 1,517 million in 2017. KBN’s return on equity after tax for 2018 was 11.9%.
“KBN is tasked with delivering on ambitious commercial targets in addition to fulfilling its sector-political function. In terms of earnings, 2018 was a very good year, with KBN enjoying favourable funding terms and attracting a high level of demand for its products”, comments Kristine Falkgård.
Strong growth in green lending
All Norway’s municipalities and county authorities had loans from KBN at the end of 2018, along with a range of municipal and inter-municipal companies. Lending for climate and environment projects represented a sizeable 36% of KBN’s overall lending growth.
“The long-term work KBN has undertaken in relation to investors, customers and political decision-makers helped make 2018 the strongest year in KBN’s history in terms of growth in its green lending. This success reflects the greater level of awareness and higher environmental ambitions of our customers. KBN is proud to be able to contribute to its customers succeeding in making the transition to a low-carbon society”, comments Kristine Falkgård.
KBN has produced a separate environmental impact report on its lending for climate friendly projects undertaken by the local government sector. The report is available here (norwegian).
KBN’s robust financial results, efficient operations and continual presence as well as the strong growth in its lending for environmentally friendly projects demonstrate that KBN is fulfilling its role in society successfully. KBN’s equity increased by NOK 754 million in 2018 to NOK 15,421 million, giving a common equity Tier 1 capital adequacy ratio of 17.4%.