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 Q4 2024
The financial statements of Møre Boligkreditt AS show a pre-tax profit of NOK 50 million in the fourth quarter of 2024 (NOK 28 million). Net interest income amounted to NOK 67 million (NOK 57 million) and costs ended at NOK 17 million (NOK 15 million). Net losses from financial instruments amounted to NOK 0 million in the fourth quarter of 2024 (NOK 14 million).
The quarterly accounts were charged with NOK 0 million in model-based losses on loans (ECL) (NOK 0 million) in the fourth quarter.
Profit after tax in the fourth quarter amounts to NOK 39 million (NOK 22 million).
Basis swap spreads are charged to other comprehensive income (OCI) with NOK 22 million after tax, compared with charged to OCI with NOK 11 million in the fourth quarter of 2023.
Net loans to and receivables from customers decreased by NOK 197 million in the fourth quarter of 2024.
No new bond loan volume was issued in the fourth quarter of 2024. One EUR 250 million bond loan matured in the fourth quarter, and an early redemption of NOK 1,000 million was made in a NOK denominated bond loan maturing 24th of February 2025.
Fourth quarter end results
By fourth quarter end 2024, the financial statements show a pre-tax profit of NOK 217 million (NOK 164 million). Net interest income amounts to NOK 283 million by fourth quarter end 2024 (NOK 237 million). Costs by year-end 2024, amounted to NOK 60 million (NOK 58 million). Net losses from financial instruments ended at NOK 12 million (NOK 14 million).
NOK 6 million in return on losses on loans were added to the accounts by fourth quarter end 2024 (by fourth quarter end 2023 the accounts were charged with NOK 1 million).
As at 31 December 2024, taxes amount to NOK 48 million (NOK 36 million), and profit after tax amounts to NOK 169 million (NOK 128 million).
Changes in value of basis swap spreads are charged to other comprehensive income (OCI) with NOK 30 million after tax by fourth quarter year end 2024, compared with NOK 29 million being charged at fourth quarter end 2023.
Financial position
Møre Boligkreditt AS has 11 bond loans outstanding at 31 December 2024 with a total book value bond debt of NOK 31,503 million (NOK 28,311 million). Møre Boligkreditt AS reports Net Stable Funding Ratio (NSFR) of 110 per cent as at 31 December 2024.
Net mortgage lending to customers amounted to NOK 35,746 million at fourth quarter end 2024 (NOK 32,357 million).
Total assets at year-end 2024 amounted to NOK 38,778 million (NOK 34,600 million). The ECL calculation 31 December 2024 shows expected credit losses of NOK 5 million for Møre Boligkreditt AS (NOK 11 million).
At year-end 2024, the average loan-to-value ratio is 57.3 per cent, calculated as mortgage amount relative to the value of the property used as collateral (55.1 per cent).
The company's substitute assets included in the cover pool amounted to NOK 1,147 million at the end of 2024 (NOK 854 million). Over-collateralisation, calculated as the nominal value of the cover pool relative to the nominal value of outstanding covered bond loan debt is 19.5 per cent as at 31 December 2024 (19.8 per cent).
Møre Boligkreditt AS’ Liquidity Coverage Ratio (LCR) eligible assets amount to NOK 205 million as of 31 December 2024, reporting total LCR of 820 per cent by fourth quarter end 2024 (493 per cent by fourth quarter end 2023).
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
Paid in equity and retained earnings amount to NOK 1,776 million by fourth quarter end 2024 (NOK 1,665 million). Risk weighted assets amount to NOK 8,367 million (NOK 7,640 million). Net equity and subordinated loan capital amount to NOK 1,550 million (NOK 1,489). This corresponds to a Common Equity Tier 1 capital ratio of 18.5 per cent as at 31 December 2024 (19.5 per cent). The leverage ratio as at 31 December 2024 was 4.0 per cent (4.3 per cent). Møre Boligkreditt AS uses internal rating based (IRB) models to calculate capital requirements for credit risk.
Outlook
From December 2023 to December 2024 the Norwegian Consumer Price Index (CPI) increased by 2.2 per cent, while the CPI adjusted for tax changes and excluding energy products (CPI-ATE) rose by 2.7 per cent, marginally below Norges Bank’s expectations but still above the long-term inflation target of 2 per cent.
Unemployment levels in Norway remain low. In December 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 kept the policy rate unchanged at 4.5 per cent in their December meeting, and the rate path from the central bank indicates three policy rate cuts in 2025, the first in March.
The twelve-month growth in household loan debt in Norway is picking up and reported at 3.9 per cent in November 2024. National housing prices increased by 1 per cent in December 2024, seasonally adjusted, and are up by 6.4 per cent the last twelve months. Prices in Møre og Romsdal increased by 8,3 per cent in the same period.
The Board expects housing prices to increase further due to prospects of gradually decreasing mortgage interest rates, increased household purchasing power and constrained housing supply. The Board also expects further growth in household debt going forward. Unemployment levels, both on a national level and in the county of Møre og Romsdal, are expected to stay at low levels in 2025.
Ålesund, 31 December 2024
29 January 2025
THE BOARD OF DIRECTORS OF MØRE BOLIGKREDITT AS
KJETIL HAUGE, Chair
ELISABETH BLOMVIK
KRISTIAN TAFJORD
SANDRA MYHRE HELSETH
OLE ANDRE KJERSTAD, Managing Director