KBN’s lending portfolio increased by NOK 5.9 billion in the third quarter of 2022 primarily as a result of good growth in standard variable rate and fixed rate lending. KBN’s green lending grew by NOK 3.1 billion in the quarter. KBN’s result for the period in the third quarter of 2022 was a profit of NOK 145 million as compared to a profit of NOK 450 million in the third quarter of 2021. Unrealised losses on financial instruments as a result of the market turmoil were the reason for the decrease in profit for the period.
- Unrest in the global financial markets keep impacting unrealised profit and loss, but to a lesser extent than in previous quarters. We are pleased with our core earnings. In third quarter there is an increase in KBN’s green lending. We are on track to reach KBN’s strategic target, for 12% of its lending to be green lending by the end of 2022. In addition, we see a positive growth in our core products, long-term instalment loans, says CEO Jannicke Trumpy Granquist.
KBN’s core earnings (1) totaled NOK 249 million in the third quarter of 2022, compared to NOK 236 million in the third quarter of 2021. The main explanation for the increase in KBN’s core earnings was higher net interest income. In the third quarter of 2022, KBN recognised unrealised losses on financial instruments totalling NOK 163 million, while in the third quarter of 2021 it recognised unrealised gains totalling NOK 271 million. KBN’s unrealised gains and losses are expected to reverse, either as market conditions normalise or as the instruments approach maturity.
KBN’s lending portfolio totaled NOK 323 billion at the end of the third quarter of 2022. The lending portfolio increased by NOK 5.9 billion within the quarter, while it decreased by NOK 3.8 billion in the same period last year. The third quarter of 2022 was characterised by increasing demand for new loans. The relatively unattractive terms available to KBN’s customers in the capital markets resulted in a large influx of loans with short and medium-term maturities being refinanced using long-term, instalment-based loans.
KBN continued to experience a good level of growth in its green lending, and its portfolio of green loans increased by NOK 3.1 billion in the third quarter of 2022, as compared to NOK 2.1 billion in the same period in 2021. Examples of green loans granted by KBN in the quarter include green loans for the City of Oslo to finance the purchase of new trams, the new Tøyenbadet swimming facility in Oslo and Voldsløkka school. Also, City of Bergen has received green loan to replace 550 windows in Grieghallen. At the end of September 2022, KBN’s green lending represented 12.1% of its overall lending portfolio. KBN’s target is for 12% of its lending to be green lending by the end of 2022.
New borrowings in the third quarter of 2022 totaled NOK 6 billion through five bond issues in three currencies, compared to approximately NOK 8 billion in the same period in 2021. KBN did not issue any particularly large individual bonds in the period but rather focused on smaller transactions in GBP, AUD and USD. The market uncertainty in the period did not impact KBN’s ability to access the international capital markets to any significant extent, and it completed its funding transactions as planned.
(1): Profit after tax for the period adjusted for unrealised gains or losses on financial instruments after tax and the portion allocated to owners of additional Tier 1 capital. This result measure is included to give relevant information about the company’s underlying operations.
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