Pleasing results for the third quarter
KBN’s net interest income in the third quarter of 2019 was NOK 476 million as compared to NOK 419 million in the same period in 2018. Its lending margins remained stable and generated satisfactory earnings. KBN’s green loans are the fastest growing part of its lending portfolio
Profit for the quarter totalled NOK 373 million as compared to NOK 125 million in the same period in 2018. The increase was due to unrealised gains on financial instruments in the third quarter of 2019 compared with unrealised losses in the same quarter of 2018.
“We are pleased to deliver stable results at a time of increased uncertainty in the international capital markets and tough competition in the market for local government funding”, comments Kristine Falkgård, President and CEO of KBN.
Strong growth in green lending
In the third quarter of 2019, KBN’s lending portfolio increased by NOK 3.2 billion, equivalent to an increase of 1.0%, compared to an increase of 0,9% in 2018. KBN’s portfolio of green loans grew by NOK 800 million in the third quarter. Over the first nine months of the year KBN’s portfolio of green loans grew by 11%.
“We are very pleased with the growth in our green lending. We have worked systematically to encourage Norwegian municipalities to invest in climate-friendly projects, and the demand for our green loans, which have lower interest rates, is now increasing more quickly than for our ordinary loans”, comments Falkgård.
At the end of August 2019, the rate of debt growth in the local government sector (according to Statistics Norway’s C2 credit indicator) over the first nine months of the year was 3.7%, which is about unchanged from the same period last year.
Strong liquidity
KBN’s funding activities were significantly less extensive in the third quarter of 2019 than in the third quarter of 2018 due to KBN having strong liquidity and the weakness of the Norwegian krone during the period. New borrowings totalled NOK 3.6 billion through 13 bond issues, as compared to approximately NOK 19 billion in the same period in 2018.
KBN manages its operations to ensure it complies with the regulatory requirements. At the end of the third quarter, KBN had a common equity Tier 1 capital adequacy ratio of 17.6%, a Tier 1 capital adequacy ratio of 20.4%, and a total capital adequacy ratio of 23.0%. KBN’s leverage ratio at 30 September 2019 was 3.5%.