Record-high green growth in a year marked by global unrest and increased interest rates
KBN's core earnings increased from NOK 908 million in 2021 to NOK 1,081 million in 2022.
Photo: Eilif Stene
Net interest income increased by NOK 280 million from 2021 to 2022. However, unrealised losses weighed on the annual result.
About the result
Net interest income totalled NOK 1,866 million in 2022 as compared to NOK 1,585 million in 2021. The result for the year was a loss of NOK 60 million in 2022 as compared to a profit of NOK 1,208 million in 2021. The fall in profit was largely due to unrealised losses from changes in the value of financial instruments in 2022, very largely relating to changes in the value of fixed rate loans, but also in part from hedging contracts and the liquidity portfolio.
Unrealised losses for 2022 amounted to NOK 1,622 million as compared to unrealised gains of NOK 322 million in 2021 and are the result of market turbulence in 2022.
KBN’s financial instruments are normally held to maturity and the effects of unrealised gains and losses on KBN’s profits reverse either when fluctuations in the market reverse or as instruments approach maturity.
- Unrest in the global financial markets has affected us both negatively and positively in 2022. On the negative side, the unrest has affected unrealised gains and losses. On the positive side, we have had record high demand for our core products, long-term instalment loans. KBN has never paid out such a large volume of these loans before, says CEO Jannicke Trumpy Granquist.
Over NOK 8 billion disbursed in green loans
KBN granted new loans totalling NOK 39 billion. The portfolio of green lending for investment in climate and environment friendly projects increased by 24%, equivalent to NOK 8.4 billion, in 2022. KBN disbursed over NOK 8 billion in green loans to 68 projects in 2022. At the end of 2022, 134 municipalities, five county authorities and a total of 70 other customers had green loans from KBN, and outstanding green lending totalled NOK 43.5 billion. The environmental impact of these loans is reported annually in KBN’s separate Impact Report. KBN‘s Criteria Document for green lending is updated annually in pace with developments in the market.
Green lending accounted for 13.3% of KBN's total lending portfolio at year-end of 2022.
NOK 87 billion in new long-term borrowings
New long-term borrowings amounted to NOK 87 billion in 2022, as compared to NOK 97 billion in 2021. The reduction in the amount raised in NOK terms was primarily due to less debt maturing in 2022 than in 2021. KBN issued bonds in 10 currencies in 2022, an increase from 2021 when KBN issued bonds in 9 different currencies.
KBN’s funding program was not materially affected by the market turbulence seen in 2022, and KBN enjoyed good access to the capital markets throughout the year. KBN’s total outstanding bonds and other borrowings increased in 2022 from NOK 395.4 billion to NOK 429.2 billion. The increase in total borrowing measured in Norwegian kroner, is largely due to the weakening of the krone through 2022.
KBN issued three green bonds in 2022 with a total nominal value equivalent to NOK 7.5 billion and denominated in Australian dollars, Canadian dollars and Swedish krona respectively.
KBN’s total primary capital at 31 December 2022 was NOK 19,691 million. Of this amount, NOK 15,299 million is common equity Tier 1 capital. The solvency ratio is sufficient, and above the bank's internal targets at the end of 2022.