BackInterim 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 Q2 2024
The financial statements of Møre Boligkreditt AS show a pre-tax profit of NOK 60 million in the second quarter of 2024 (NOK 68 million). Net interest income amounted to NOK 74 million (NOK 60 million), and costs ended at NOK 14 million (NOK 16 million). Net losses from financial instruments amount to NOK 3 million, compared with net gain of NOK 22 million in the second quarter of 2023.
NOK 3 million in return on losses on loans were added to the quarterly accounts (NOK 2 million).
Profit after tax amounted to NOK 47 million (NOK 52 million).
Basis swap spreads are charged to other comprehensive income (OCI) with NOK 5 million after tax, equal to the second quarter of 2023.
Net loans to and receivables from customers increased with NOK 16 million in the second quarter of 2024. Net mortgage lending to customers amounted to NOK 31,976 million at second quarter end 2024 (NOK 33,656 million).
Møre Boligkreditt AS has 11 bond loans outstanding at 30 June 2024 with a total book value bond debt of NOK 29,213 million (NOK 29,157 million). Møre Boligkreditt AS reports Net Stable Funding Ratio (NSFR) of 106 per cent as at 30 June 2024.
Half year end results
By half year end 2024, the financial statements show a pre-tax profit of NOK 113 million (NOK 116 million). Net interest income amounts to NOK 144 million by half year end 2024 (NOK 127 million). Costs in the period ending 30 June 2024 amount to NOK 29 million (NOK 30 million). Net losses from financial instruments amount to NOK 7 million at half year end 2024, compared with net gain of NOK 17 million at half year end 2023.
NOK 5 million in return on losses on loans were added to the accounts by half year end 2024 (NOK 2 million).
Taxes amount to NOK 25 million in the first six months of 2024 (NOK 26 million), and profit after tax amounts to NOK 88 million in the first six months of 2024 (NOK 90 million).
Changes in value of basis swap spreads are charged to other comprehensive income (OCI) with NOK 9 million after tax by half year end 2024, compared with NOK 6 million being charged at half year end 2023.
Total assets at second quarter end 2024 amounted to NOK 35,054 million (NOK 36,355 million). The ECL calculation as at 30 June 2024 shows expected credit losses of NOK 6 million for Møre Boligkreditt AS (NOK 8 million).
At second quarter end 2024, the mortgages in the cover pool had an average loan-to-value ratio of 52.4 per cent, calculated as mortgage amount relative to the value of the property used as collateral (51.9 per cent).
The company's substitute assets included in the cover pool amounted to NOK 1,264 million at end-June 2024 (NOK 762 million). Over-collateralisation, calculated as the nominal value of the cover pool relative to the nominal value of outstanding covered bond loan debt was 17.4 per cent as at 30 June 2024 (21.5 per cent).
Møre Boligkreditt AS’ Liquidity Coverage Ratio (LCR) eligible assets amount to NOK 157 million as of 30 June 2024, reporting total LCR of 464 per cent by second quarter end 2024.
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 the parent bank Sparebanken Møre.
Capital strength
At the end of the second quarter, paid in equity and retained earnings amounted to NOK 1,716 million (NOK 1,650 million). Risk weighted assets amounted to NOK 7,737 million (NOK 8,827 million). Net equity and subordinated loan capital amounted to NOK 1,585 million at end-June 2024 (NOK 1,513 million). This corresponds to a Common Equity Tier 1 capital ratio of 20.5 per cent (17.1 per cent). Leverage ratio at end-June 2024 is 4.6 per cent (4.1 per cent). Møre Boligkreditt AS uses internal rating based (IRB) models to calculate capital requirements for credit risk.
Outlook
From June 2023 to June 2024 the Norwegian Consumer Price Index (CPI) increased by 2.6 per cent, while the CPI adjusted for tax changes and excluding energy products (CPI-ATE) rose by 3.4 per cent. Annual CPI growth levels are significantly down from last quarter, below Norges Bank’s projections, but still above the long-term inflation target of 2 per cent.
Unemployment levels in Norway remain low. In June 2024, the national level of registered unemployment was 1.9 per cent, compared to 1.7 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 remainder of 2024.
Twelve-months growth in household loan debt in Norway is reported at 3.3 per cent in June 2024. National housing prices increased by 0.4 per cent in June 2024, seasonally adjusted, and are up by 2.2 per cent the last twelve months.
The Board expects to see a growth in household debt around current levels going forward. The effects of increased mortgage interest rate levels and the general increase in household costs are mitigated by wage increase above estimated inflation. 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, 30 June 2024
13 August 2024
THE BOARD OF DIRECTORS OF MØRE BOLIGKREDITT AS
KJETIL HAUGE, Chair
ELISABETH BLOMVIK
KRISTIAN TAFJORD
SANDRA MYHRE HELSETH
OLE ANDRE KJERSTAD, Managing Director