Higher interest rates had a positive effect on KBN’s core earnings
KBN’s core earnings totalled NOK 280 million for the first quarter of 2023, compared to NOK 248 million in the first quarter of 2022.
KBN’s net interest income in the first quarter of 2023 was NOK 508 million as compared to NOK 436 million in the same period in 2022. The main reason for the improvement in net interest income was rising interest rates. KBN’s result for the period in the first quarter of 2023 was a profit of NOK 389 million. In the first quarter of 2023 KBN recognised unrealised gains on financial instruments totalling NOK 114 million.
Better market conditions
KBN’s lending portfolio totalled NOK 330 billion at the end of the first quarter of 2023. KBN’s lending portfolio increased by NOK 1.6 billion in the first quarter of 2023 primarily as a result of good growth in fixed rate lending.
Persistently high credit spreads to KBN’s customers in the capital markets created better market conditions for KBN’s long-term instalment loans. The favourable market conditions for fixed rate loans, with lower pricing for long-term interest rates than for short-term rates, resulted in many customers choosing to change from floating to fixed-rate loans.
– Increasing demand for new loans is expected over the course of the rest of the year. With the capital markets continuing to be relatively unattractive for KBN’s customers, KBN expects strong demand for long-term, instalment loans to refinance maturing loans, says CEO Jannicke Trumpy Granquist.
Turmoil in the banking market
The final part of the quarter was characterised by a high level of uncertainty in the banking market, which was triggered by the insolvency of two American banks and the subsequent forced acquisition of a Swiss bank. KBN has no exposure to these banks and has therefore not been directly impacted by the bank turmoil.
NOK 1.3 billion in green lending
KBN continued to experience a good level of growth in its green lending, and its portfolio of green loans increased by NOK 1.3 billion in the first quarter of 2023, as compared to NOK 1.6 billion in the same period in 2022. Examples of projects granted green loans in the quarter include new school buildings in Trondheim municipality, Klepp municipality and Narvik municipality. At the end of the first quarter, KBN’s green lending represented 13.6% of its overall lending portfolio. KBN’s target is for 15% of its lending to be green lending by the end of 2023.
15 bond issues in five currencies
The weakness of the Norwegian krone relative to the US dollar increased KBN’s liquidity in March, and its funding activities were therefore somewhat less extensive during the month. New borrowings in the first quarter of 2023 totalled approximately NOK 24.5 billion through 15 bond issues in five currencies, compared to NOK 35.6 billion in the same period in 2022.