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 Q3 2024
The financial statements of Møre Boligkreditt AS show a pre-tax profit of NOK 54 million in the third quarter of 2024 (NOK 20 million). Net interest income amounted to NOK 72 million (NOK 53 million), and costs ended at NOK 14 million (NOK 13 million). Net losses from financial instruments amount to NOK 5 million, compared with net losses of NOK 17 million in the third quarter of 2023.

NOK 1 million in return on losses on loans were added to the quarterly accounts (in third quarter 2023 the accounts were charged NOK 3 million). Profit after tax amounted to NOK 42 million (NOK 16 million).

Basis swap spreads are added to other comprehensive income (OCI) with NOK 1 million after tax, compared with charged to OCI with NOK 12 million in the third quarter of 2023.

Net loans to and receivables from customers increased with NOK 3,968 million in the third quarter of 2024. Net mortgage lending to customers amounted to NOK 35,943 million at third quarter end 2024 (NOK 33,717 million).

Møre Boligkreditt AS issued one EUR 500 million benchmark Covered Bond Premium transaction in the third quarter of 2024, no bond loan matured in the quarter. Møre Boligkreditt AS has 12 bond loans outstanding at 30 September 2024 with a total book value bond debt of NOK 35,673 million (NOK 28,832 million). Møre Boligkreditt AS reports Net Stable Funding Ratio (NSFR) of 105 per cent as at 30 September 2024.

Third quarter end results
By third quarter end 2024, the financial statements show a pre-tax profit of NOK 167 million (NOK 136 million). Net interest income amounts to NOK 216 million by third quarter end 2024 (NOK 180 million). Costs in the period ending 30 September 2024 amount to NOK 43 million (NOK 43 million). Net losses from financial instruments amount to NOK 12 million by third quarter end 2024, compared with no gain/losses from financial instruments by third quarter end 2023.

NOK 6 million in return on losses on loans were added to the accounts by third quarter end 2024 (by third quarter end 2023 the accounts were charged NOK 1 million).

Taxes amount to NOK 37 million in the first nine months of 2024 (NOK 30 million), and profit after tax amounts to NOK 130 million in the first nine months of 2024 (NOK 106 million).

Changes in value of basis swap spreads are charged to other comprehensive income (OCI) with NOK 8 million after tax by third quarter end 2024, compared with NOK 18 million being charged at third quarter end 2023.

Total assets at third quarter end 2024 amounted to NOK 42,418 million (NOK 35,857 million). The ECL calculation as at 30 September 2024 shows expected credit losses of NOK 5 million for Møre Boligkreditt AS (NOK 11 million).

At third quarter end 2024, the mortgages in the cover pool had an average loan-to-value ratio of 55.0 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 3,469 million at end-September 2024 (NOK 757 million). Over-collateralisation, calculated as the nominal value of the cover pool relative to the nominal value of outstanding covered bond loan debt was 14.5 per cent as at 30 September 2024 (21.8 per cent).

Møre Boligkreditt AS’ Liquidity Coverage Ratio (LCR) eligible assets amount to NOK 2,571 million as of 30 September 2024, reporting total LCR of 106 per cent by third 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 third quarter, paid in equity and retained earnings amounted to NOK 1,759 million (NOK 1,654 million). Risk weighted assets amounted to NOK 8,667 million (NOK 8,624 million). Net equity and subordinated loan capital amounted to NOK 1,577 million at end-September 2024 (NOK 1,515 million). This corresponds to a Common Equity Tier 1 capital ratio of 18.2 per cent (17.6 per cent). The leverage ratio at end-September 2024 is 3.8 per cent (4.2 per cent). Møre Boligkreditt AS uses internal rating based (IRB) models to calculate capital requirements for credit risk.

Outlook 
From September 2023 to September 2024 the Norwegian Consumer Price Index (CPI) increased by 3.0 per cent, while the CPI adjusted for tax changes and excluding energy products (CPI-ATE) rose by 3.1 per cent, which is below Norges Bank’s projections but still above the long-term inflation target of 2 per cent.

Unemployment levels in Norway remain low. In September 2024, the national level of registered unemployment was 2.0 per cent, compared to 1.6 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.

The twelve-month growth in household loan debt in Norway is reported at 3.5 per cent in August 2024. National housing prices increased by 0.4 per cent in September 2024, seasonally adjusted, and are up by 4.1 per cent over 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 further increase in the twelve-month housing price growth in 2024.

Ålesund, 30 September 2024
23 October 2024

THE BOARD OF DIRECTORS OF MØRE BOLIGKREDITT AS

KJETIL HAUGE, Chair
ELISABETH BLOMVIK
KRISTIAN TAFJORD
SANDRA MYHRE HELSETH

  OLE ANDRE KJERSTAD, Managing Director