Good results in a challenging year

“2020 was one of the most demanding years in recent times, primarily due to the major human and social consequences of the coronavirus pandemic. The year also saw a big setback for the world economy and turmoil in the financial markets. In terms of KBN’s earnings, 2020 was somewhat weaker than the previous year. However, our good access to capital, the significant demand for our products and our highest ever level of customer satisfaction indicate that KBN is fulfilling its role in society successfully”, comments Jannicke Trumpy Granquist, President and CEO of KBN. 

KBN’s revenue is primarily generated from its lending activities. Net interest income totalled NOK 1,672 million in 2020, which is somewhat less than in 2019. The decrease was due to the fact KBN quickly cut its lending rate in line with the interest rate cuts made by Norges Bank during the coronavirus pandemic. KBN took this action to ensure that the cuts to Norway’s key policy rate benefitted the local government sector. 

Municipalities on the front line  

KBN’s lending grew by 2.7% in 2020 as compared to growth of 2.5% in 2019. Much of the growth in 2020 was seen in the final two months of the year. KBN’s green lending for projects with a clear climate ambition grew by NOK 2.9 billion, equivalent to growth of 11.2% relative to 2019. The rate of growth in local government sector borrowing reached 8.1% in 2020, which represents a historically high rate of growth. 

“The lockdown had major consequences for municipal services, and from March 2020 Norway’s municipalities were more or less continually in crisis management mode. The fact that the level of investment was approximately in line with expectations for 2020 illustrates, however, that Norway’s municipalities and county authorities were largely able to carry out the investment projects for which they had budgeted as planned in parallel with their extraordinary tasks and the demanding circumstances”, comments Jannicke Trumpy Granquist. 

Stable access despite the market turmoil 

In a year shaped primarily by the coronavirus pandemic, but also by political unrest and the UK’s departure from the EU, KBN enjoyed stable access to funding on favourable terms. Good market access is absolutely central to KBN’s ability to provide the local government sector with stable and low-cost financing. KBN’s role is to offer attractive and long-term debt financing irrespective of market conditions. In 2020 KBN granted 547 new loans totalling NOK 58 billion. These loans financed investment in projects such as schools, health and care facilities, water and wastewater systems, and adaptations to climate change. 

“We are finding that investors from across the world want to lend us money because they regard lending to Norwegian municipalities as a safe investment. The level of interest in our green bonds, which finance green investments across Norway, is also high, and we are seeing demand from ever more investors for the information that we publish at the project level in our environmental impact report”, comments Jannicke Trumpy Granquist. 

Significant environmental impact 

KBN is publishing a separate environmental impact report alongside its annual report for 2020.  The impact report presents the projects financed by KBN’s green bonds, as well as their calculated environmental impact. At the end of 2020 KBN’s outstanding green loans totalled just over NOK 26 billion across 267 local government sector projects. Their combined environmental impact in terms of the amount of CO2 saved or avoided was approximately 50,000 tonnes in 2020. 

KBN’s return on equity after tax for 2020 was 7.4%, and its equity increased by NOK 2,137 million. 

Annual report 2020
Impact report 2020