Stable net interest income under sizable market fluctuations

KBN’s aggregate customer financing¹ grew by NOK 2 billion in the second quarter of 2025. The growth in green lending amounted to NOK 1 billion in the second quarter of 2025.

Result for the 2th quarter

KBN’s core earnings² totalled NOK 305 million in the second quarter of 2025, compared to NOK 330 million in the second quarter of 2024. The decrease in core earnings was due to an increase in KBN’s operating costs in combination with lower realised gains relative to the corresponding period in 2024.

– We are putting behind us yet another quarter marked by sizable market fluctuations and uncertainty regarding the development of the global economy, says CEO Jannicke Trumpy Granquist. – KBN has good access to liquidity and will continue to provide its customers with attractive financing for local government sector projects across Norway, says Granquist.

Norges Bank cut its key policy rate by 0.25 of a percentage point at its June monetary policy committee meeting. The rate now stands at 4.25%, while the money market interest rate at the end of the quarter was 4.34%.

Sizable market fluctuations

The change of President in the USA and the associated change in economic policy caused sizeable fluctuations in the fixed income and foreign exchange markets in the first half of 2025, and there is significantly more uncertainty than usual regarding future growth both nationally and internationally. The American dollar weakened against most currencies in the quarter, including the Norwegian krone.

There is greater uncertainty than normal and worsening expectations regarding the outlook for the global economy, including due to the effect of changes to the USA’s economic policy.

KBN enjoyed good access to the international capital markets in the first six months of 2025 and completed all its funding transactions as planned. KBN’s new borrowings in the first six months of 2025 totalled approximately NOK 103 billion through 40 bond issues in 8 currencies, as compared to NOK 62 billion in the second quarter of 2024.

KBN continues to enjoy low borrowing costs and good market access thanks to its AAA/Aaa rating.

Indications of lower inflation

At its monetary policy committee meeting in June 2025, Norges Bank stated that a restrictive monetary policy was still required, but that the outlook for the coming year indicates lower inflation than previously expected. Norges Bank stated that a cautious normalisation of the policy rate would pave the way for inflation to return to the target of 2% without restricting the economy more than necessary. The future path of the policy rate thereafter will depend on economic developments.

¹ Principal amounts. Aggregate customer financing is the sum of KBN’s lending portfolio and KBN’s portfolio of municipal bonds in the liquidity portfolio, which are included as a part of KBN’s financing of customers.

² Profit after tax adjusted for net unrealised gain/(loss) on financial instruments (in accordance with note 2) adjusted for estimated tax at 25% tax rate, and adjusted for Portion allocated to owners of additional Tier 1 capital. This result measure is included to give relevant information about the company's underlying operations.