Note 1

Accounting principles

The Group’s interim accounts have been prepared in accordance with International Financial Reporting Standards (IFRS), implemented by the EU as at 31 December 2020. The interim report has been prepared in compliance with IAS 34 Interim Reporting and in accordance with accounting principles and methods applied in the 2019 Financial statements.

The accounts are presented in Norwegian kroner (NOK), which is also the Parent Bank’s and subsidiaries’ functional currency. All amounts are stated in NOK million unless stated otherwise.

Note 1.5 in the Annual report 2019 discloses the use of estimates applied in the preparation of the annual financial statements. One of the most important areas to which critical estimates and assumptions are linked is the measurement of expected credit losses (ECL) according to IFRS 9. Covid-19 has resulted in changed assumptions for the calculation of expected losses per Q4 2020. See note 3 for further information.

 

Note 2

Loans and deposits broken down according to sectors

GROUPLoans
Broken down according to sectors31.12.202031.12.2019
Agriculture and forestry622568
Fisheries3 4523 502
Manufacturing2 7032 346
Building and construction971915
Wholesale and retail trade, hotels692621
Supply/Offshore1 4881 042
Property management7 7027 692
Professional/financial services9331 186
Transport and private/public services2 9712 569
Total corporate/public entities21 53420 441
Retail customers45 59243 847
Total loans (gross carrying amount)67 12664 288
Expected credit loss (ECL) - stage 1 - Corporate-27-30
Expected credit loss (ECL) - stage 1 - Retail-6-5
Expected credit loss (ECL) - stage 2 - Corporate-43-58
Expected credit loss (ECL) - stage 2 - Retail-34-36
Expected credit loss (ECL) - stage 3 - Corporate-146-106
Expected credit loss (ECL) - stage 3 - Retail-20-24
Loans to and receivables from customers (net carrying amount) 1)66 85064 029
-of which loans with floating interest rate (amortised cost)62 47859 832
-of which loans with fixed interest rate (fair value)4 3724 197
1) Sparebanken Møre's total EAD is published in the bank's annual report, ref note 3 in the annual report for 2019. Total EAD is also published quarterly in the bank's Pillar 3 document, ref appendix CR6.
   
   
GROUPDeposits
Broken down according to sectors31.12.202031.12.2019
Agriculture and forestry196187
Fisheries1 4461 252
Manufacturing2 3211 659
Building and construction909841
Wholesale and retail trade, hotels1 082839
Property management1 8021 648
Transport and private/public services4 7735 448
Public entities822777
Miscellaneous2 3062 467
Total corporate/public entities15 65715 118
Retail customers23 36621 685
Total deposits from customers39 02336 803
 

Note 3

Losses and impairment on loans and guarantees

Sparebanken Møre applies a three-stage approach when assessing ECL on loans to customers and financial guarantees in accordance with IFRS 9.

Stage 1: At initial recognition and if there’s no significant increase in credit risk, the commitment is classified in stage 1 with 12-months ECL.

Stage 2: If a significant increase in credit risk since initial recognition is identified, but without evidence of loss, the commitment is transferred to stage 2 with lifetime ECL measurement.

Stage 3: If the credit risk increases further, including evidence of loss, the commitment is transferred to stage 3 with lifetime ECL measurement. The commitment is considered to be credit-impaired. As opposed to stage 1 and 2, effective interest rate in stage 3 is calculated on net impaired commitment (total commitment less expected credit loss) instead of gross commitment.

Staging is performed at account level and implies that two or more accounts held by the same customer can be placed in different stages.

An increase in credit risk reflects both customer-specific circumstances and development in relevant macro factors for the particular customer segment. The assessment of what is considered to be a significant increase in credit risk is based on a combination of quantitative and qualitative indicators, as well as “backstops” (see separate section regarding “backstops”)

Quantitative criteria
A significant increase in credit risk is determined by comparing the PD at the reporting date with PD at initial recognition. If the actual PD is higher than initial PD, an assessment is made of whether the increase is significant.

Significant increase in credit risk since initial recognition is considered to have occurred when either

  • PD has increased by 100 per cent or more and the increase in PD is more than 0.5 percentage points, or
  • PD has increased by more than 2 percentage points

A 12-months PD is used to determine whether the credit risk has increased significantly.

Qualitative criteria
In addition to the quantitative assessment of a changes in the PD, a qualitative assessment is made to determine whether there has been a significant increase in credit risk, for example, if the commitment is subject to special monitoring.


“Backstops”
Credit risk is always considered to have increased significantly if the following events, “backstops”, have occurred:

  • the customer’s contractual payments are 30 days past due 
  • the customer has been granted forbearance measures due to financial distress, though it is not severe enough to be individually assessed in stage 3   

Significant reduction in credit risk – recovery
A customer migrates from stage 2 to stage 1 if:

  • The criteria for migration from stage 1 to stage 2 is no longer present, and
  • This is satisfied for at least one subsequent month (total 2 months)

A customer migrates from stage 3 to stage 1 or stage 2 if the customer no longer meets the conditions for migration to stage 3:

  • The customer migrates to stage 2 if more than 30 days in default.
  • Otherwise, the customer migrates to stage 1.

Customers who are not subject to the migration rules above are not expected to have significant change in credit risk and retain the stage from previous month.

Definition of default, credit-impaired and forbearance
A commitment is defined to be in default and credit-impaired (non-performing) if a claim is more than 90 days overdue and the overdue amount exceeds NOK 1 000.

A commitment is also defined to be credit-impaired (non-performing) if the commitment, as a result of a weakening of the debtor's creditworthiness, has been subject to an individual assessment, resulting in a lifetime ECL in stage 3.

A commitment is defined to be subject to forbearance (payment relief due to payment difficulties) if the bank agrees to changes in the terms and conditions as a result of the debtor having problems meeting payment obligations. Performing forbearance (not in default) is placed in stage 2 whereas non-performing (defaulted) forbearance is placed in stage 3.

Management override
Quarterly review meetings evaluate the basis for the accounting of ECL losses. If there are significant events that will affect an estimated loss which the model has not taken into account, relevant factors in the ECL model will be overridden.

Consequences of Covid-19 and measurement of expected credit loss (ECL) for loans and guarantees
Pursuant to the accounting rules (IAS 34), interim financial reports must provide an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of an entity since the last annual report. The information related to these events and transactions must take into account relevant information presented in the most recent annual report.

The interim report for Q4 2020 has been prepared in a period when the economic outlook differs from that in the annual financial statements for 2019.

The Bank’s loss provisions reflect expected credit loss (ECL) pursuant to IFRS 9. When assessing ECL, the relevant conditions at the time of reporting and expected economic developments are taken into account.

Covid-19 has resulted in an extraordinary situation for the Bank’s customers. Many corporate and retail customers have seen their income reduced in the short term, and the level of uncertainty associated with estimating the future cash flows and debt servicing capacity of these customers is high. On the other hand, other industries have had a positive economic development throughout 2020.

Changes in economic conditions have had consequences for macroeconomic scenarios and weightings in the Group’s calculations of expected credit loss (ECL) in 2020. In the first quarter of 2020, the probability of the pessimistic scenario occurring was increased from 10 to 40 per cent, while for the base case scenario it was reduced from 80 to 50 per cent.

During the fourth quarter, the outlook was more positive and clearer. Macroeconomic conditions improved. A public vaccination programme started. There was very few bankruptcies and the level of default was relatively low. The authorities announced new stimulus packages aimed at the hardest hit industries. In addition, oil prices rose markedly during the fourth quarter.

The Bank granted payment relief in the first and second quarters of 2020 due to the consequences of Covid-19. Customers who applied were granted 6-month interest-only periods until the second half of 2020. Most of the customers granted interest-only periods are now paying their installments in line with their original agreement.

As part of the process of granting payment relief, a specific, individual assessment is made of whether the application for payment relief is ‘forbearance’ and whether the loan should thus migrate to stage 2 (performing) or stage 3 (non-performing) in the Group’s ECL model.

This has been further supplemented with a more portfolio- or segment based (hotels, tourism, travel industry, personal services industry) approach to assess significantly increased credit risk and migration to stage 2. This is due to the fact that changes in future prospects are not fully captured by the ECL model.

The positive changes in economic conditions have been reflected in the macro economic scenarios and weightings as of 31.12.2020 compared to the third quarter of 2020. The probability of a pessimistic scenario occuring is reduced from 40 to 20 per cent, while the base case scenario is increased from 50 per cent to 70 per cent probability. Best case scenario is kept unchanged at 10 per cent.

Specification of credit loss in the income statement 
GROUPQ4 2020Q4 201920202019
Changes in ECL - stage 101-310
Changes in ECL - stage 2-3013-1537
Changes in ECL - stage 3-2-2-3-138
Increase in existing expected losses in stage 3 (individually assessed)-19-3252
New expected losses in stage 3 (individually assessed)483113155
Confirmed losses, previously impaired152716112
Reversal of previous expected losses in stage 3 (individually assessed)-150-7-165-30
Confirmed losses, not previously impaired3954410
Recoveries-3-2-8-8
Total impairments on loans and guarantees, etc351514950
Changes in the loss provisions/ECL recognised in the balance sheet in the period  
GROUP - 31.12.2020Stage 1Stage 2Stage 3Total
ECL 31.12.20193699240375
New commitments1320134
Disposal of commitments and transfer to stage 3 (individually assessed)-12-17-6-35
Changes in ECL in the period for commitments which have not migrated-3-22-2-27
Migration to stage 13-220-19
Migration to stage 2-427-122
Migration to stage 30-154
Changes stage 3 (individually assessed)---28-28
ECL 31.12.20203384209326
- of which expected losses on loans to retail customers6342060
- of which expected losses on loans to corporate customers2743146216
- of which expected losses on guarantees074350
     
     
GROUP - 31.12.2019Stage 1Stage 2Stage 3Total
ECL 31.12.20182661251338
New commitments1511127
Disposal of commitments and transfer to stage 3 (individually assessed)-5-12-125-142
Changes in ECL in the period for commitments which have not migrated2204
Migration to stage 11-22-1-22
Migration to stage 2-360-2136
Migration to stage 30-187
Changes stage 3 (individually assessed)--127127
ECL 31.12.20193699240375
- of which expected losses on loans to retail customers5362465
- of which expected losses on loans to corporate customers3058106194
- of which expected losses on guarantees15110116
Commitments (exposure) divided into risk groups based on probability of default
GROUP - 31.12.2020Stage 1Stage 2Stage 3Total
Low risk (0 % - < 0.5 %)52 268569-52 837
Medium risk (0.5 % - < 3 %)7 5322 239-9 771
High risk (3 % - <100 %)7561 112-1 868
Credit-impaired commitments--1 0501 050
Total commitments before ECL60 5563 9201 05065 526
- ECL-33-84-209-326
Net commitments *)60 5233 83684165 200
     
 
GROUP - 31.12.2019Stage 1Stage 2Stage 3Total
Low risk (0 % - < 0.5 %)50 157171-50 328
Medium risk (0.5 % - < 3 %)7 3692 489-9 858
High risk (3 % - <100 %)1 7261 004-2 730
Credit-impaired commitments--976976
Total commitments before ECL59 2523 66497663 892
- ECL-36-99-240-375
Net commitments *)59 2163 56573663 517
*) The tables above are based on exposure (incl. undrawn credit facilities and guarantees) and are not including fixed rate loans assessed at fair value. The figures are thus not reconcilable against balances in the statement of financial position.
 

Note 4

Credit-impaired commitments

The table shows total commitments in default above 90 days and other credit-impaired commitments (not above 90 days).
 31.12.202031.12.2019
GROUPTotalRetailCorporateTotalRetailCorporate
       
Gross commitments in default above 90 days8372111627686
Gross other credit-impaired commitments9673992881434780
Gross credit-impaired commitments1 050111939976110866
       
ECL on commitments above 90 days1812624195
ECL on other credit-impaired commitments19181832165211
ECL on credit-impaired commitments2092018924024216
       
Net commitments in default above 90 days656051385781
Net other credit-impaired commitments7763174559829569
Net credit-impaired commitments8419175073686650
       
Gross credit-impaired commitments as a percentage of loans/guarantees1.530.244.091.480.253.96
Net credit-impaired commitments as a percentage of loans/guarantees1.220.203.271.120.202.98
 

Note 5

Classification of financial instruments

Financial assets and financial liabilities are recognised in the balance sheet at the date when the Group becomes a party to the contractual provisions of the instrument. A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire, or the company transfers the financial asset in such a way that risk and profit potential of the financial asset is substantially transferred. Financial liabilities are derecognised from the date when the rights to the contractual provisions have been extinguished, cancelled or expired.

CLASSIFICATION AND MEASUREMENT
The Group’s portfolio of financial instruments is at initial recognition classified in accordance with IFRS 9. Financial assets are classified in one of the following categories:   

• Amortised cost
• Fair value with value changes through the income statement

The classification of the financial assets depends on two factors:

• The purpose of the acquisition of the financial instrument
• The contractual cash flows from the financial assets

Financial assets assessed at amortised cost
The classification of the financial assets assumes that the following requirements are met:

• The asset is acquired to receive contractual cash flows
• The contractual cash flows consist solely of principal and interest

All lending and receivables, except fixed interest rate loans, are recorded in the group accounts at amortised cost, based on expected cash flows. The difference between the issue cost and the settlement amount at maturity, is amortised over the lifetime of the loan.

Financial liabilities assessed at amortised cost
Debt securities, including debt securities included in fair value hedging, loans and deposits from credit institutions and deposits from customers, are valued at amortised cost based on expected cash flows. The portfolio of own bonds is shown in the accounts as a reduction of the debt.

Financial instruments assessed at fair value, any changes in value recognised through the income statement
The Group's portfolio of bonds in the liquidity portfolio is classified at fair value through the income statement. The portfolio is held solely for liquidity management and is traded to optimize returns within current quality requirements for the liquidity portfolio.

The Group’s portfolio of fixed interest rate loans is assessed at fair value to avoid accounting mismatch in relation to the underlying interest rate swaps.

Financial derivatives are contracts signed to mitigate an existing interest rate or currency risk incurred by the Group. Financial derivatives are recognised at fair value through the income statement and recognised gross per contract as an asset or a liability.

The Group’s portfolio of shares is assessed at fair value with any value changes through the income statement.

Losses and gains as a result of value changes on assets and liabilities assessed at fair value, with any value changes being recognised in the income statement, are included in the accounts during the period in which they occur.

LEVELS IN THE VALUATION HIERARCHY
Financial instruments are classified into different levels based on the quality of market data for each type of instrument.

Level 1 – Valuation based on prices in an active market
Level 1 comprises financial instruments valued by using quoted prices in active markets for identical assets or liabilities. This category includes listed shares, as well as bonds and certificates in LCR-level 1, traded in active markets.

Level 2 – Valuation based on observable market data
Level 2 comprises financial instruments valued by using information which is not quoted prices, but where prices are directly or indirectly observable for assets or liabilities, including quoted prices in inactive markets for identical assets or liabilities. This category includes derivatives, as well as bonds which are not included in level 1.

Level 3 – Valuation based on other than observable market data
Level 3 comprises financial instruments which cannot be valued based on directly or indirectly observable prices. This category includes loans to customers, as well as shares.

GROUP - 31.12.2020Financial instruments at fair value through profit and lossFinancial instruments assessed at amortised costTotal book value
Cash and claims on Norges Bank 542542
Loans to and receivables from credit institutions 1 1661 166
Loans to and receivables from customers4 37262 47866 850
Certificates and bonds8 563 8 563
Shares and other securities178 178
Financial derivatives1 793 1 793
Total financial assets14 90664 18679 092
Loans and deposits from credit institutions 2 2092 209
Deposits from and liabilities to customers 39 02339 023
Financial derivatives537 537
Debt securities 28 77428 774
Subordinated loan capital 702702
Total financial liabilities53770 70871 245
    
    
GROUP - 31.12.2019Financial instruments at fair value through profit and lossFinancial instruments assessed at amortised costTotal book value
Cash and claims on Norges Bank 1 0721 072
Loans to and receivables from credit institutions 1 0881 088
Loans to and receivables from customers4 19759 83264 029
Certificates and bonds6 938 6 938
Shares and other securities194 194
Financial derivatives1 176 1 176
Total financial assets12 50561 99274 497
Loans and deposits from credit institutions 817817
Deposits from customers 36 80336 803
Financial derivatives288 288
Debt securities issued 28 27128 271
Subordinated loan capital 704704
Total financial liabilities28866 59566 883
Net gains/losses on financial instruments    
 Q4 2020Q4 201931.12.202031.12.2019
Certificates and bonds2-8-4-9
Securities-94-316
Foreign exchange trading (for customers)8115241
Fixed income trading (for customers)251616
Financial derivatives-1-3-9-2
Net change in value and gains/losses from financial instruments295262
 

Note 6

Financial instruments at amortised cost

GROUP31.12.202031.12.2019
 Fair valueBook valueFair valueBook value
Cash and claims on Norges Bank5425421 0721 072
Loans to and receivables from credit institutions1 1661 1661 0881 088
Loans to and receivables from customers62 47862 47859 83259 832
Total financial assets64 18664 18661 99261 992
Loans and deposits from credit institutions2 2092 209817817
Deposits from and liabilities to customers39 02339 02336 80336 803
Debt securities issued28 90728 77428 36228 271
Subordinated loan capital and AT1 capital714702714704
Total financial liabilities70 85370 70866 69666 595
 

Note 7

Financial instruments at fair value

A change in the discount rate of 10 basis points will have an impact of about NOK 15 million on loans with fixed interest rate.

GROUP - 31.12.2020Based on prices in an active marketObservable market informationOther than observable market information 
 Level 1Level 2Level 3Total
Cash and claims on Norges Bank   -
Loans to and receivables from credit institutions   -
Loans to and receivables from customers  4 3724 372
Certificates and bonds6 1212 442 8 563
Shares and other securities14 164178
Financial derivatives 1 793 1 793
Total financial assets6 1354 2354 53614 906
Loans and deposits from credit institutions   -
Deposits from and liabilities to customers   -
Debt securities   -
Subordinated loan capital and AT1 capital   -
Financial derivatives 537 537
Total financial liabilities-537-537
     
     
GROUP - 31.12.2019Based on prices in an active marketObservable market informationOther than observable market information 
 Level 1Level 2Level 3Total
Cash and claims on Norges Bank   -
Loans to and receivables from credit institutions   -
Loans to and receivables from customers  4 1974 197
Certificates and bonds4 7412 197 6 938
Shares6 188194
Financial derivatives 1 176 1 176
Total financial assets4 7473 3734 38512 505
Loans and deposits from credit institutions   -
Deposits from customers   -
Debt securities issued   -
Subordinated loan capital and AT1 capital   -
Financial derivatives 288 288
Total financial liabilities-288-288
Reconciliation of movements in level 3 during the period
GROUPLoans to and receivables from customersShares
Book value as at 31.12.20194 197188
Purchases/additions1 2044
Sales/reduction-1 058-17
Transferred to Level 300
Transferred from Level 300
Net gains/losses in the period29-11
Book value as at 31.12.20204 372164
   
   
GROUPLoans to and receivables from customersShares
Book value as at 31.12.20183 811175
Purchases/additions1 09710
Sales/reduction-687-14
Transferred to Level 300
Transferred from Level 300
Net gains/losses in the period-2417
Book value as at 31.12.20194 197188
 

Note 8

Issued covered bonds

The debt securities of the Group consist of covered bonds quoted in Norwegian kroner (NOK) and Euro (EUR) issued by Møre Boligkreditt AS, in addition to certificates and bonds quoted in NOK issued by Sparebanken Møre. The table below provides an overview of the Group’s issued covered bonds.

Issued covered bonds in the Group (NOK million)    
ISIN codeCurrencyNominal value 31.12.2020InterestIssuedMaturityBook value 31.12.2020Book value 31.12.2019
NO0010588072NOK1 050fixed NOK 4.75 %201020251 2211 187
XS0968459361EUR25fixed EUR 2.81 %20132028330308
XS0984191873EUR-6M Euribor + 0.20 %20132020-296
NO0010696990NOK-3M Nibor + 0.45 %20132020-231
NO0010720204NOK-3M Nibor + 0.24 %20142020-3 001
NO0010730187NOK1 000fixed NOK 1.50 %201520221 022999
NO0010777584NOK3 0003M Nibor + 0.58 %201620213 0063 013
XS1626109968EUR250fixed EUR 0.125 %201720222 6472 490
NO0010819543NOK3 0003M Nibor + 0.42 %201820243 0023 004
XS1839386577EUR250fixed EUR 0.375 %201820232 6842 522
NO0010836489NOK1 000fixed NOK 2.75 %201820281 0861 024
NO0010853096NOK3 0003M Nibor + 0.37 %201920252 9982 503
XS2063496546EUR250fixed EUR 0.01 %201920242 6702 484
NO0010884950NOK3 0003M Nibor + 0.42 %202020252 998-
XS2233150890EUR303 mnd Euribor + 0.75 %20202027327-
Total covered bonds issued by Møre Boligkreditt AS (incl. accrued interests)23 99123 062

As at 31.12.2020, Sparebanken Møre held NOK 503 million in covered bonds issued by Møre Boligkreditt AS (NOK 0 million). Møre Boligkreditt AS held no own covered bonds as at 31.12.2020 (NOK 0 million). 

 

Note 9

Operating segments

Result - Q4 2020GroupEliminationsOther 2)CorporateRetail 1)Real estate brokerage
Net interest income3141-161321970
Other operating income72-153425226
Total income386-14181572196
Operating costs157-1527321049
Profit before impairment2291-9125115-3
Impairment on loans, guarantees etc.350044-90
Pre-tax profit1941-981124-3
Taxes47     
Profit after tax147     
       
       
Result - 31.12.2020GroupEliminationsOther 2)CorporateRetail 1)Real estate brokerage
Net interest income1 2282154857260
Other operating income285-5611510110223
Total income1 513-5413058682823
Operating costs630-5513912839622
Profit before impairment8831-94584321
Impairment on loans, guarantees etc.1490014900
Pre-tax profit7341-93094321
Taxes167     
Profit after tax567     
       
       
Key figures - 31.12.2020GroupEliminationsOther 2)CorporateRetail 1)Real estate brokerage
Loans to customers 1)66 850-1161 31220 69044 9640
Deposits from customers 1)39 023-2665113 66524 7330
Guarantee liabilities1 530001 52550
The deposit-to-loan ratio58.10.049.666.055.00.0
Man-years34601564913011
       
       
Result - Q4 2019GroupEliminationsOther 2)CorporateRetail 1)Real estate brokerage
Net interest income3390-131362160
Other operating income75131625165
Total income4141331612325
Operating costs168132833886
Profit before impairment2460-25128144-1
Impairment on loans, guarantees etc.15001320
Pre-tax profit2310-25115142-1
Taxes41     
Profit after tax190     
       
       
Result - 31.12.2019GroupEliminationsOther 2)CorporateRetail 1)Real estate brokerage
Net interest income1 314255097980
Other operating income293-511109911520
Total income1 607-4911560891320
Operating costs646-5015312739719
Profit before impairment9611-384815161
Impairment on loans, guarantees etc.500040100
Pre-tax profit9111-384415061
Taxes200     
Profit after tax711     
       
       
Key figures - 31.12.2019GroupEliminationsOther 2)CorporateRetail 1)Real estate brokerage
Loans to customers 1)64 029-1201 20419 79443 1510
Deposits from customers 1)36 803-2169613 13422 9940
Guarantee liabilities1 360001 35550
Deposit-to-loan ratio57.20.057.866.453.30.0
Man-years35701565113713
       
1) The subsidiary, Møre Boligkreditt AS, is part of the Bank’s Retail segment. The mortgage company's main objective is to issue covered bonds for both national and international investors, and the company is part of Sparebanken Møre's long-term financing strategy. Key figures for Møre Boligkreditt AS are displayed in a separate table.
       
2) Consists of head office activities not allocated to reporting segments, customer commitments towards employees as well as the subsidiary Sparebankeiendom AS, which manages the buildings owned by the Group.
 MØRE BOLIGKREDITT AS
Statement of income31.12.202031.12.2019
Net interest income345308
Other operating income-1-3
Total income344305
Operating costs4945
Profit before impairment on loans295260
Impairment on loans, guarantees etc.1-11
Pre-tax profit294271
Taxes6449
Profit after tax230222
   
   
Statement of financial position31.12.202031.12.2019
Loans to and receivables from customers29 04125 655
Total equity2 2822 274
 

Note 10

Transactions with related parties

These are transactions between the Parent Bank and wholly-owned subsidiaries based on arm's length principles.
The most important transactions eliminated in the Group accounts:
PARENT BANK31.12.202031.12.2019
Statement of income  
Net interest and credit commission income from subsidiaries2410
Received dividend from subsidiaries227172
Administration fee received from Møre Boligkreditt AS4136
Rent paid to Sparebankeiendom AS1413
   
Statement of financial position  
Claims on subsidiaries4 8762 290
Covered bonds5030
Liabilities to subsidiaries1 475848
Intragroup right-of-use of properties in Sparebankeiendom AS96107
Intragroup hedging600
Accumulated loan portfolio transferred to Møre Boligkreditt AS29 04525 658
 

Note 11

EC capital

The 20 largest EC holders in Sparebanken Møre as at 31.12.2020Number of ECsPercentage share of EC capital
Sparebankstiftelsen Tingvoll994 80010.06
Cape Invest AS863 8138.74
Verdipapirfond Nordea Norge Verdi390 3433.95
Wenaasgruppen AS380 0003.84
MP Pensjon339 7813.44
Pareto AS305 1893.09
Verdipapirfond Pareto Aksje Norge279 2492.82
Wenaas Kapital AS250 0002.53
Verdipapirfondet Eika egenkapital245 4352.48
FLPS - Princ All Sec204 7282.07
Beka Holding AS150 1001.52
Lapas AS (Leif-Arne Langøy)123 5001.25
Forsvarets personell pensjonskasse80 7600.82
Stiftelsen Kjell Holm79 7000.81
PIBCO AS75 0000.76
BKK Pensjonskasse58 8280.60
Malme AS55 0000.56
U Aandals Eftf AS50 0000.51
Spesialfondet Borea utbytte44 0290.45
Storebrand Norge I Verdipapirfond41 9050.42
Total 20 largest EC holders5 012 16050.69
Total number of ECs9 886 954100.00
 

Note 12

Capital adequacy

Capital adequacy for Sparebanken Møre is calculated in accordance with IRB Foundation for credit risk. Market risk calculations are based on the standard method and operational risk calculations on the basic method.

The countercyclical capital buffer was reduced from 2.5 per cent to 1.0 per cent with effect from 13 March 2020. The level is set by the Ministry of Finance based on advice from Norges Bank. The countercyclical capital buffer can be increased with 12 months notice. No changes have been announced in 2020.

The requirement for Common Equity Tier 1 capital (CET1) for Pillar 1 is 11.0 per cent. The requirement consists of a minimum requirement of 4.5 per cent, a conservation buffer of 2.5 per cent, a systemic risk buffer of 3.0 per cent and a countercyclical capital buffer of 1.0 per cent. In addition, Finanstilsynet has set an individual Pillar 2 requirement of 1.7 per cent for Sparebanken Møre, however a minimum of NOK 590 million.

The capital adequacy reported in the Q4 report is based on a proposed cash dividend of NOK 4.50 per equity certificate, a total of NOK 44 million, and an allocation to dividend funds for the local community totalling NOK 45 million.

 31.12.202031.12.2019
EC capital989989
- ECs owned by the Bank-2-3
Share premium357357
Additional Tier 1 capital (AT1)599599
Primary capital fund3 0292 819
Gift fund125125
Dividend equalisation fund1 7681 559
Proposed dividend for EC holders44138
Proposed dividend for the local community45140
Other equity254246
Total equity7 2086 970
   
Tier 1 capital (T1)  
Goodwill, intangible assets and other deductions-56-53
Value adjustments of financial instruments at fair value-16-14
Additional Tier 1 capital (AT1)-599-599
Expected IRB-losses exceeding ECL-480-352
Deduction for proposed dividend for EC holders-44-138
Deduction for proposed dividend for the local community-45-140
Total Common Equity Tier 1 capital (CET1)5 9685 673
Additional Tier 1 capital - classified as equity599599
Additional Tier 1 capital - classified as debt00
Total Tier 1 capital (T1)6 5676 272
   
Tier 2 capital (T2)31.12.202031.12.2019
Subordinated loan capital of limited duration702704
Total Tier 2 capital (T2)702704
   
Net equity and subordinated loan capital7 2696 976
   
Risk weighted assets (RWA) by exposure classes  
Credit risk - standardised approach31.12.202031.12.2019
Central governments or central banks00
Regional governments or local authorities248188
Public sector companies9973
Institutions (banks etc)538342
Covered bonds454373
Equity173148
Other items640666
Total credit risk - standardised approach2 1521 790
   
Credit risk - IRB Foundation  
Retail - Secured by real estate9 9328 684
Retail - Other411431
Corporate lending18 41917 969
Total credit risk - IRB-F28 76227 084
   
Credit value adjustment risk (CVA) - market risk396535
Operational risk (basic method)2 8402 735
Risk weighted assets (RWA)34 15032 144
   
Minimum requirement Common Equity Tier 1 capital (4.5 %)1 5371 446
   
Buffer requirements31.12.202031.12.2019
Capital conservation buffer , 2.5 %854804
Systemic risk buffer, 3.0 %1 025964
Countercyclical buffer, 1.0 % (2.5 % per 31.12.2019)342804
Total buffer requirements2 2202 572
Available Common Equity Tier 1 capital after buffer requirements2 2121 655
   
Capital adequacy as a percentage of risk weighted assets (RWA)31.12.202031.12.2019
Capital adequacy ratio21.321.7
Tier 1 capital ratio19.219.5
Common Equity Tier 1 capital ratio17.517.7
   
Leverage Ratio (LR)31.12.202031.12.2019
Basis for calculation of leverage ratio82 64377 552
Leverage Ratio (LR)8.08.1
 

Note 13

Events after the reporting period

No events have occurred after the reporting period that will materially affect the figures presented as of 31 December 2020.

There is still great uncertainty associated with Covid-19. This uncertainty is reflected in the calculations of expected losses. Please see the interim report from the Board of Directors as well as note 3 for further information.