Increased interest income
KBN had solid demand for new loans in the third quarter of 2023, and increase in net interest income.
KBN’s core earnings(1) totalled NOK 298 million in the third quarter of 2023, compared to NOK 249 million in the third quarter of 2022. KBN’s net interest income in the third quarter of 2023 was NOK 556 million, as compared to NOK 473 million in the same period in 2022. A good level of growth in KBN’s lending in the first nine months of the year, together with higher interest rates, contributed to the increase in KBN’s income.
In the third quarter of 2023, KBN recognised a net unrealised loss on financial instruments totalling NOK 187 million, compared to a net unrealised loss of NOK 163 million in the third quarter of 2022. KBN’s unrealised gains and losses are expected to reverse, either as market conditions normalise or as the instruments approach maturity.
Rising interest rates
The main reason for the increase in net interest income was rising interest rates. Money-market interest rates increased further in the quarter as a result of Norges Bank increasing its key policy rate by 0.25 percentage points at its meeting on 16 August and by a further 0.25 percentage points at its meeting on 20 September.
KBN increased its standard variable rate by 0.4 percentage points with effect from 5 September and by a further 0.1 percentage points with effect from 23 October.
Growth 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 2.4 billion in the third quarter of 2023.
– At the end of the quarter, 14.2% of the bank's lending portfolio consists of green loans. The goal by the end of 2023 is 15%. We are working closely together with our customers to qualify new green projects and are getting closer to our target, says CEO Jannicke Trumpy Granquist.
Completed funding transactions as planned
KBN’s funding activities in the third quarter of 2023 were at a relatively normal level. The uncertainty in the markets during the period did not impact KBN’s access to the international capital markets to any significant extent, and KBN completed its funding transactions as planned.
1: Profit after tax for the accounting period adjusted for net unrealised gains or losses on financial instruments after deducting estimated tax at the rate of 25% and the portion allocated to owners of additional Tier 1 capital. This performance measure is included to give relevant information about the company’s underlying operations.