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 2025
The financial statements of Møre Boligkreditt AS show a pre-tax profit of NOK 55 million in the first quarter of 2025 (NOK 53 million). Net interest income amounted to NOK 72 million (NOK 70 million), and costs ended at NOK 17 million (NOK 15 million).

The ECL amounted to NOK 1 million in the quarter (return on losses on loans of NOK 2 million). Profit after tax amounted to NOK 43 million (NOK 41 million).

Net loans to and receivables from customers decreased with NOK 654 million in the first quarter of 2025. Net mortgage lending to customers amounted to NOK 35,092 million at first quarter end 2025 (NOK 31,960 million).

One bond loan with outstanding debt of NOK 2,000 million at the start of the quarter, matured 24 February 2025. Møre Boligkreditt AS had 10 bond loans outstanding at 31 March 2025 with a total book value bond debt of NOK 29,365 million (NOK 29,375 million). Møre Boligkreditt AS reported Net Stable Funding Ratio (NSFR) of 108 per cent as at 31 March 2025.

Total assets at first quarter end 2025 amounted to NOK 37,134 million (NOK 35,488 million). The ECL calculation as at 31 March 2025 shows expected credit losses of NOK 6 million for Møre Boligkreditt AS (NOK 10 million).

At first quarter end 2025, the mortgages in the cover pool had an average loan-to-value ratio of 55.7 per cent, calculated as mortgage amount relative to the value of the property used as collateral (53.9 per cent).

The company's substitute assets included in the cover pool amounted to NOK 534 million at end-March 2025 (NOK 1,427 million). Over-collateralisation, calculated as the nominal value of the cover pool relative to the nominal value of outstanding covered bond loan debt was 23.7 per cent as at 31 March 2025 (17.7 per cent).

Møre Boligkreditt AS’ Liquidity Coverage Ratio (LCR) eligible assets amount to NOK 242 million as of 31 March 2025, reporting total LCR of 982 per cent by first quarter end.

Capital strength 
In the first quarter of 2025, Møre Boligkreditt AS increased its equity with NOK 500 million through a directed issue of 100,000 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 2,157 million (NOK 1,674 million). Risk weighted assets amounted to NOK 8,140 million (NOK 7,785 million). Net equity and subordinated loan capital amounted to NOK 2,047 million at end-March 2025 (NOK 1,588 million). This corresponds to a Common Equity Tier 1 capital ratio of 25.1 per cent (20.4 per cent). Leverage ratio at end-March 2025 is 5.5 per cent (4.6 per cent). Møre Boligkreditt AS uses internal rating based (IRB) models to calculate capital requirements for credit risk.

Regulatory changes 
In the first quarter, the Norwegian Financial Supervisory Authority (FSA) decided on a minimum Liquidity Coverage Ratio (LCR) requirement in foreign currency for institutions that have significant currencies other than NOK. Currencies that account for minimum 5 per cent of an institution's total liabilities are considered to be significant currencies.

The Norwegian Ministry of Finance (MoF) adopted regulatory amendments that determined how CRR III is to be implemented in Norway. The Regulations will enter into force in Norway 1 April 2025. The increase of minimum average risk weight floor for mortgages secured by Norwegian residential real estate applicable to banks using the internal ratings-based approach (IRB) from 20 to 25 percent, with effect from 1 July 2025, will increase Møre Boligkreditt AS’ risk exposure amount and reduce the capital ratio with 4.6 percentage points calculated with Q1-25 input.

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. 

Outlook 
From March 2024 to March 2025, the Norwegian Consumer Price Index (CPI) rose by 2.6 percent, while the CPI adjusted for tax changes and excluding energy products (CPI-ATE) increased by 3.4 percent. Although CPI levels have declined since the previous quarter, they remain above both Norges Bank’s projections and its long-term inflation target of 2 percent. Strong wage growth and a weak krone exchange rate is contributing to more persistent inflationary pressures.

Unemployment in Norway remains low. In March 2025, the national registered unemployment rate stood at 2.1 percent, compared to 1.8 percent in the county of Møre og Romsdal. Unemployment is expected to rise slightly in the coming quarters, both nationally and regionally, but is projected to remain at relatively low levels.

The national twelve-month growth rate in household loan debt continues to trend upward, reaching 4.0 percent in February 2025. Seasonally adjusted national housing prices rose by 0.1 percent in March 2025 and have increased by 7.0 percent over the past year. The Board expects the strong housing price growth observed in the first quarter of 2025 to ease over the remainder of the year.

Norges Bank has held the policy rate steady at 4.5 percent so far this year. According to the central bank’s projected rate path, the policy rate is expected to decline to 4.0 percent by the end of 2025. Nevertheless, uncertainty surrounding future economic developments remains elevated. The recently announced trade policies by the U.S. administration have caused great volatility in financial markets, as they could significantly impact the global economy. The Board anticipates that the uncertainty and volatility will persist well into the next quarter and perhaps even longer.

Ålesund, 31 March 2025
29 April 2025

THE BOARD OF DIRECTORS OF MØRE BOLIGKREDITT AS

KJETIL HAUGE, Chair
ELISABETH BLOMVIK
KRISTIAN TAFJORD
SANDRA MYHRE HELSETH

  OLE ANDRE KJERSTAD, Managing Director