Interim report from the Board of Directors

About the Company
Møre Boligkreditt AS is a wholly owned subsidiary of Sparebanken Møre. The company is licensed to operate as a mortgage company, issuing covered bonds. Møre Boligkreditt AS is Sparebanken Møre's most important source of market funding and an important part of the parent bank's long term funding strategy. The accounts have been prepared in accordance with IFRS. Figures in brackets refer to the corresponding period last year.

Results for Q1 2024
The financial statements of Møre Boligkreditt AS show a pre-tax profit of NOK 53 million in the first quarter of 2024 (NOK 48 million). Net interest income amounted to NOK 70 million (NOK 67 million), and costs ended at NOK 15 million (NOK 14 million).

NOK 2 million in return on losses on loans were added to the quarterly accounts (NOK 0 million). Profit after tax amounted to NOK 41 million (NOK 38 million).

Net loans to and receivables from customers decreased with NOK 397 million in the first quarter of 2024. Net mortgage lending to customers amounted to NOK 31,960 million at first quarter end 2024 (NOK 32,240 million).

Existing bond loans were increased with a total of NOK 3,000 million in the first quarter of 2024. One bond loan with outstanding debt of NOK 2,351 million at the start of the quarter matured 20 March 2024. Møre Boligkreditt AS had 11 bond loans outstanding at 31 March 2024 with a total book value bond debt of NOK 29,375 million (NOK 27,772 million). Møre Boligkreditt AS reported Net Stable Funding Ratio (NSFR) of 112 per cent as at 31 March 2024.

Total assets at first quarter end 2024 amounted to NOK 35,488 million (NOK 35,365 million). The ECL calculation as at 31 March 2024 shows expected credit losses of NOK 10 million for Møre Boligkreditt AS (NOK 10 million).

At first quarter end 2024, the mortgages in the cover pool had an average loan-to-value ratio of 53.9 per cent, calculated as mortgage amount relative to the value of the property used as collateral (53.6 per cent).

The company's substitute assets included in the cover pool amounted to NOK 1,427 million at end-March 2024 (NOK 891 million). Over-collateralisation, calculated as the nominal value of the cover pool relative to the nominal value of outstanding covered bond loan debt was 17.7 per cent as at 31 March 2024 (23.7 per cent).

Møre Boligkreditt AS’ Liquidity Coverage Ratio (LCR) eligible assets amount to NOK 158 million as of 31 March 2024, reporting total LCR of 482 per cent by first quarter end.

Rating 
The rating agency Moody's has assigned Aaa-rating to all covered bond loans issued by Møre Boligkreditt AS.

Moody’s has assigned long-term and short-term issuer ratings of A1/Prime-1, and long-term and short-term Counterparty Risk Ratings of A1/Prime-1 to Møre Boligkreditt AS, aligned with ratings of parent bank Sparebanken Møre. 

Capital strength 
In the first quarter 2024, Møre Boligkreditt AS increased its equity with NOK 100 million through a directed issue of 20,000 shares. The capital increase was fully paid in by Sparebanken Møre, the owner of all shares in Møre Boligkreditt AS. At the end of the first quarter, paid in equity and retained earnings amounted to NOK 1,674 million (NOK 1,603 million). Risk weighted assets amounted to NOK 7,785 million (NOK 8,129 million). Net equity and subordinated loan capital amounted to NOK 1,588 million at end-March 2024 (NOK 1,516 million). This corresponds to a Common Equity Tier 1 capital ratio of 20.4 per cent (18.6 per cent). Leverage ratio at end-March 2024 is 4.6 per cent (4.3 per cent). Møre Boligkreditt AS uses internal rating based (IRB) models to calculate capital requirements for credit risk.

Outlook 
From March 2023 to March 2024 the Norwegian Consumer Price Index (CPI) increased by 3.9 per cent, while the CPI adjusted for tax changes and excluding energy products (CPI-ATE) rose by 4.5 per cent. CPI levels are down from last quarter, and slightly below Norges Bank’s projections, but still above the long-term inflation target of 2 per cent. The weak Norwegian krone still adds to pressure on inflation levels through imported goods and services.

Unemployment levels in Norway remain low. In March 2024, the national level of registered unemployment was 2.0 per cent, compared to 1.8 per cent in the county of Møre og Romsdal.

Norges Bank has kept the policy rate unchanged so far this year, and the rate path from the central bank indicates that the policy rate will stay at 4.5 per cent for the larger part of 2024.

National twelve-months growth in household loan debt is declining and reported at 3.2 per cent in February 2024. This is the lowest growth level since the mid 1990’s. National housing prices increased by 0.6 per cent in March 2024, seasonally adjusted, and are up by 1.2 per cent the last twelve months.

The Board expects to see a further dampened growth in household debt going forward, due to both the effect of increased mortgage interest rate levels and the general increase in household costs. The 2024 frontline sector salary settlement agreement of 5.2 per cent increase is expected to increase household purchasing power. Unemployment levels, both on a national level and in the county of Møre og Romsdal, are expected to increase somewhat in the coming quarters, but still stay at low levels. The Board expects moderate growth in housing prices in 2024.

Ålesund, 31 March 2024
24 April 2024

THE BOARD OF DIRECTORS OF MØRE BOLIGKREDITT AS

KJETIL HAUGE, Chair
ELISABETH BLOMVIK
KRISTIAN TAFJORD
SANDRA MYHRE HELSETH

  OLE ANDRE KJERSTAD, Managing Director