Notes to accounts

Note 1 Accounting Principles

1.1 Basis for preparation
SpareBank1 Boligkreditt AS quarterly accounts have been prepared in accordance with the International Financial Standards (IFRS). The accounts have been produced in accordance with IAS 34 reporting for a partial year. The Company’s accounting principles and calculation methods have not materially changed since the annual accounts for 2020. IFRS 16- Leases have been adopted from 1 January 2019. This standard do not have any significant impacts for SPB1 Boligkreditt AS.

The presentation currency is Norwegian Kroner (NOK), which is also the Company’s functional currency. All amounts are given in NOK thousand unless otherwise stated.

The interim financial statements are not audited.

1.2 Segments
The Company has only one segment, which is mortgage lending to customers. The segment consists of lending to private individuals and all loans have been acquired from the member banks of the SpareBank 1 alliance.

1.3 Estimates and assessments regarding the use of accounting principles
The preparation of the financial information is in accordance with IFRS and involves management’s estimates which affect the implementation of accounting principles and thereby accounting values for assets, liabilities, revenue and costs. These estimates have been described in the notes to the annual accounts for 2020.


Note 2 Net Interest Income

NOK 1 000         30.06.2021  30.06.2020  2020
Interest income              
Interest income from, certificates, bonds and deposits         78,971 118,361 222,810
Interest income from residential mortgage loans         2,064,781 2,762,948 4,896,743
Total interest income         2,143,752 2,881,310 5,119,553
               
Interest expense              
Interest expense and similar expenses to credit institutions         -376 18,672 38,007
Interest expense and similar expenses on issued bonds         942,480 1,959,539 2,842,413
Interest expense and similar expenses on subordinated debt         15,314 22,743 37,900
Recovery and Resolution Fund *         24,097 25,200 51,385
Other interest expenses         4,383 4,124 10,374
Total interest expense         985,899 2,030,278 2,980,079
               
Net interest income         1,157,852 851,031 2,139,473

* From 2019, SPB1 Boligkreditt has been incorporated into the Norwegian Bank Recovery and Resolution Fund.


Note 3 Net Gains from Financial Instruments

NOK 1 000 30.06.2021 30.06.2020 2020
Commission expense      
Commission expense to SpareBank 1 banks 1,022,396 602,060 1,769,898
Total commission expense 1,022,396 602,060 1,769,898

These amounts represent Boligkreditt’s expenses in form of commissions to its owner banks, which originate the mortgage loans transferred to the Company. The amounts are calculated by subtracting all of the Company’s funding costs and estimated operational costs, including costs for additional Tier 1 bonds outstanding, from each mortgage interest rate.


Note 4 Net Gains on Financial Instruments

NOK 1 000         30.06.2021 30.06.2020 2020
Net gains (losses) from financial liabilities         -650,422 -6,682,156 -6,074,987
Net gains (losses) from financial derivatives, hedging liabilities, at fair value, hedging instrument         7,341,316 -3,611,303 3,648,701
Net gains (losses) from financial assets         -6,748,614 8,851,099 2,308,177
Net gains (losses) from financial derivatives, hedging assets, at fair value, hedging instrument         -9,901 1,330,467 -24,090
Net gains (losses)         -67,621 -111,893 -142,200

The Company utilizes hedge accounting as defined in IFRS for issued fixed rate bonds (covered bonds) with derivatives (swaps) which hedges fixed rates to floating and foreign currencies to Norwegian kroner. The hedges are individually tailored to each issued bond and exactly matches the cash flows and duration of the issued bonds. Some liabilities in foreign currency are hedged with natural hedges (corresponding assets in the same currency) and this may cause the valuation differences between assets and liabilities. There may also be valuation differences between liabilities and hedges due to the the amortization of issuance costs and bonds issued at or below par value.

SpareBank 1 Boligkreditt AS manages its liquidity risk by refinancing its outstanding bonds ahead of expected maturities and keeping proceeds as a liquidity portfolio. Fixed rate bonds and bonds in other currencies than Norwegian kroner are hedged using swaps. These positions are valued at fair value though differences may occur because the valuation of the bonds include a credit risk/spread element which the swaps do not contain. Included in assets in the table are also investments in short term, highly rated bonds from funds received from swap counterparties for collateral purposes. Such investments do not have swap hedges.

All derivatives are valued at fair value according to changes in market interest rates and foreign exchange rates. Changes in valuations from the previous period is accounted for in profit and loss. 


 

Note 5 Salaries and Remuneration

NOK 1 000           30.06.2021 30.06.2020 2020
Salaries           4,847 4,855 10,922
Salaries reinvoiced to SpareBank1 Næringskreditt*           -1,377 -2,111 -3,275
Pension expenses           1,017 796 1,977
Social insurance fees           1,238 1,132 2,332
Other personnel expenses           89 417 510
Total salaries and renumeration           5,814 5,089 12,465
                 
Average number of full time equivalents (FTEs)           7 7 7

* The company’s employees have shared employment between SpareBank 1 Næringskreditt and SpareBank 1 Boligkreditt. All remuneration is effectuated through SpareBank 1 Boligkreditt and a portion is reinvoiced to SpareBank 1 Næringskreditt. The company also buys administrative services from SpareBank 1 SMN and SpareBank 1 Gruppen.

 

Note 6 Other Operating Expenses

NOK 1 000         30.06.2021 30.06.2020 2020
IT and IT operations         5,996 7,057 12,704
Purchased services other than IT         8,762 6,474 13,282
Other Operating Expenses         801 1,027 1,721
Depreciation on fixed assets and other intangible assets         119 182 359
Total         15,678 14,739 28,065

 

Note 7 Other Assets

NOK 1 000     30.06.2021 30.06.2020 2020
Leases     3,413 - 3,879
Fixed assets     281 358 320
Intangible assets     5 223 85
Accounts receivable from SpareBank 1 Næringskreditt AS     54 3,201 515
Accounts receivable, securities     409,135 4,475,289 212
Other     18 10 7
Total     412,906 4,479,081 5,018

 

Note 8 Residential mortgage loans

Lending to customers are residential mortgages only. The mortgages generally have a low loan-to-value. The total amount of lending to customers at the end of 31.03.2021 were NOK 211,0 billion. All mortgages carry a variable interest rate.

NOK 1 000         30.06.2021 30.06.2020 2020
Revolving loans - retail market         38,840,207 42,766,488 40,078,412
Amortising loans - retail market         172,829,202 159,469,560 168,409,290
Accrued interest         145,518 151,939 156,170
Total loans before specified and unspecified loss provisions         211,814,927 202,387,986 208,643,872
               
Stage 1         204,569,919 195,255,028 199,787,000
Stage 2         7,245,008 7,132,958 8,856,872
Stage 3         - - -
Gross loans         211,814,927 202,387,986 208,643,872
               
Impairments on groups of loans              
Expected credit loss, stage 1         1,115 10,927 1,207
Expected credit loss, stage 2, no objective proof of loss         15,870 20,779 28,968
Expected credit loss, stage 3, objective proof of loss         - - -
Total net loans and claims with customers         211,797,941 202,356,280 208,613,697
               
Liability              
Unused balances under customer revolving credit lines (flexible loans)         12,669,244 12,817,574 12,328,559
Total         12,669,244 12,817,574 12,328,559
               
Defaulted loans              
Defaults*         0.0 % 0.0 % 0.0 %
Specified loan loss provisions         0.0 % 0.0 % 0.0 %
Net defaulted loans         0.0 % 0.0 % 0.0 %
               
Loans at risk of loss              
Loans not defaulted but at risk of loss         0.0 % 0.0 % 0.0 %
- Write downs on loans at risk of loss         0.0 % 0.0 % 0.0 %
Net other loans at risk of loss         0.0 % 0.0 % 0.0 %

 

* The entire customer loan balance is considered to be in default and will be included in overviews of defaulted loans when overdue instalments and interest payments are not received within 90 days or if credit limits on revolving loans are exceeded for 90 days or more.

 


Note 9 Share Capital and Shareholder Information

            List of shareholders as of 2021
            No of Shares in percent Share of votes
SpareBank 1 Østlandet           17,506,879 22.45 % 22.45 %
SpareBank 1 SMN           17,431,133 22.36 % 22.36 %
SpareBank 1 Nord-Norge           14,146,598 18.14 % 18.14 %
BN Bank ASA           5,436,118 6.97 % 6.97 %
SpareBank 1 Sør-Øst Norge           8,629,054 11.07 % 11.07 %
SpareBank 1 Ringerike Hadeland           3,698,165 4.74 % 4.74 %
SpareBank 1 Østfold Akershus           3,694,453 4.74 % 4.74 %
SpareBank 1 Nordvest           1,633,728 2.10 % 2.10 %
SpareBank 1 SR-Bank ASA           - 0.00 % 0.00 %
SpareBank 1 Modum           1,856,509 2.38 % 2.38 %
SpareBank 1 Søre Sunnmøre           1,171,457 1.50 % 1.50 %
SpareBank 1 Gudbrandsdal           1,141,753 1.46 % 1.46 %
SpareBank 1 Hallingdal Valdres           983,950 1.26 % 1.26 %
SpareBank 1 Lom og Skjåk           642,352 0.82 % 0.82 %
Total           77,972,149 100 % 100 %

The share capital consists of 77.972.149 shares with a nominal value of NOK 100.
The percent share allocation and share of vote are identical.

 

Hybrid capital

NOK 1000   ISIN Interest rate Issued year Call option 30.06.2021 30.06.2020 2020
Perpetual                
Hybrid (Tier 1 capital instrument)   NO0010745920 3M Nibor + 360 bp 2015 23.09.2020 - 300,000 -
Hybrid (Tier 1 capital instrument)   NO0010746191 3M Nibor + 360 bp 2015 29.09.2020 - 180,000 -
Hybrid (Tier 1 capital instrument)   NO0010767643 3M Nibor + 360 bp 2016 22.06.2021 250,000 250,000 250,000
Hybrid (Tier 1 capital instrument)   NO0010811318 3M Nibor + 310 bp 2017 01.12.2022 100,000 100,000 100,000
Hybrid (Tier 1 capital instrument)   NO0010850621 3M Nibor + 340 bp 2019 30.04.2024 350,000 350,000 350,000
Hybrid (Tier 1 capital instrument)   NO0010890825 3M Nibor + 300 bp 2020 26.08.2025 200,000 - 200,000
Book value           900,000 1,180,000 900,000

The issued bonds listed in the table above have status as Tier 1 capital instruments in the Company's capital coverage ratio.

 


 

Note 10 Liabilities incurred by issuing Securities

NOK 1 000           Nominal value* 30.06.2021 Nominal value* 30.06.2020 Nominal value* 2020
Senior unsecured bonds           - - -
Repurchased senior unsecured bonds           - - -
Covered bonds           221,498,405 208,329,790 220,831,875
Repurchased Covered bonds           - -2,300,000 -2,500,000
Total debt incurred by issuing securities           221,498,405 206,029,790 218,331,875

 
NOK 1 000           Book value 30.06.2021 Book value 30.06.2020 Book value 2020
Senior unsecured bonds           - - -
Repurchased senior unsecured bonds           - - -
Covered bonds           233,826,797 235,278,654 240,993,020
Repurchased covered bonds           - -2,300,000 -2,500,013
Activated costs incurred by issuing debt           -205,732 -202,237 -201,926
Accrued interest           929,187 1,123,347 1,081,090
Total debt incurred by issuing securities           234,550,251 233,899,764 239,372,170

 

 

 

Covered bonds

Due in   30.06.2021 30.06.2020 2020
2021   6,807,490 29,040,560 24,779,600
2022   39,749,200 44,249,200 41,749,200
2023   30,564,750 28,376,500 30,606,750
2024   28,111,615 24,136,030 28,158,375
2025   31,713,750 29,643,750 31,713,750
2026   24,010,000 22,710,000 22,710,000
2027   22,546,250 695,150 11,551,850
2028   2,712,800 2,712,800 2,712,800
2029   24,037,050 24,223,300 24,107,050
2031   10,003,000 - -
2032   1,000,000 - -
2038   242,500 242,500 242,500
Total   221,498,405 206,029,790 218,331,875
         

 

* Nominal value is incurred debt at exchange rates (EUR/NOK, USD/NOK, SEK/NOK and GBP/NOK) at the time of issuance

 

Debt incurred by currency (book values at the end of the period)

NOK 1 000           30.06.2021 30.06.2020 2020
NOK           75,009,829 72,245,484 72,469,545
EUR           141,690,916 144,404,833 148,882,707
GBP           8,995,261 9,130,633 8,845,102
SEK           8,854,246 8,118,814 9,174,816
Total           234,550,251 239,812,029 239,372,170

 

Note 11 Subordinated Debt

>
NOK 1000 ISIN Interest rate Issued year Call option from Maturity Nominal amount 30.06.2021 30.06.2020 2020
With maturity                  
Subordinated debt (Tier 2 capital instrument) NO0010826696 3M Nibor + 153 bp 2018 22.06.2023 22.06.2028 250,000 250,000 250,000 250,000
Subordinated debt (Tier 2 capital instrument) NO0010833908 3M Nibor + 180 bp 2018 08.10.2025 08.10.2030 400,000 400,000 400,000 400,000
Subordinated debt (Tier 2 capital instrument) NO0010835408 3M Nibor + 167 bp 2018 02.11.2023 02.11.2028 475,000 475,000 475,000 475,000
Subordinated debt (Tier 2 capital instrument) NO0010842222 3M Nibor + 192 bp 2019 24.01.2024 24.01.2029 300,000 300,000 300,000 300,000
Accrued interest             4,879 5,788 4,990
Book value             1,429,879 1,430,788 1,429,990

 

The issued bonds listed in the table above have status as Tier 2 capital instruments in the Company's capital coverage ratio.

 


Note 12 Financial Derivatives

NOK 1 000           30.06.2021 30.06.2020 2020
Interest rate derivative contracts                
Interest rate swaps                
Nominal amount           39,724,211 59,581,610 54,965,589
Asset           1,556,047 5,924,177 2,427,317
Liability           -165,141 -257,447 -192,716
Currency derivative contracts                
Currency swaps                
Nominal amount           141,283,325 111,899,375 139,210,375
Asset           12,336,975 22,127,760 18,969,131
Liability           -1,057,446 -81,037 -297,883
                 
Total financial derivative contracts                
Nominal amount           181,007,536 171,480,985 194,175,964
Asset           13,983,022 28,051,937 21,396,448
Liability*           -1,222,587 -338,484 -490,599

 

All derivative contracts exist for the purpose of hedging changes in interest rates and currency exchange rates.

 

* Change due to basis swap spread adjustment           30.06.2021 30.06.2020 2020
Total liability derivatives            -1,222,587 -338,484 -490,599
Net gain (loss) on valuation adjustment of basisswap spreads           -696,849 -395,849 -424,941
Net liability derivatives           -1,191,437 -734,333 -915,540

 

Basis swaps are currency swaps and are entered into at a certain cost (basis swap spread) between SpareBank 1 Boligkreditt and banks which offer such swaps and which have signed an ISDA agreement with the Company. Changes in the cost are valued each quarter across all of the Company's swaps in accordance with the IFRS rules. An increase in the cost would result in an increase in the value of the basisswaps while a cost decrease would reduce the value of the basis swaps. The effect may be material from quarter to quarter because the Company's portfolio of swaps is extensive. All basisswap value changes will reverse over time towards the point of termination of the swaps. Changes in basis swap valuations are not included in net income, but is included in other comprehensive income and in equity.


Note 13 Classification of Financial Instruments

NOK 1 000     Financial instruments accounted for at fair value Financial assets and debt accounted for at amortised cost Non-financial assets and liabilities 30.06.2021
             
Assets            
Lending to and deposits with credit institutions     - 3,184,594 - 3,184,594
Certificates and bonds     228,690,918 - - 28,690,918
Residential mortgage loans     - 211,797,941 - 211,797,941
Financial derivatives     13,893,022 - - 13,893,022
Deferred tax asset     - - 300,014 300,014
Other assets     - - 412,906 412,906
Total Assets     42,583,940 214,982,536 712,920 258,279,396
             
Liabilities            
Debt incurred by issuing securities*       234,550,251 - 234,550,251
Collateral received in relation to financial derivatives     - 7,570,606 - 7,570,606
Repurchase agreement     - - - -
Financial derivatives     1,919,437 - - 1,919,437
Deferred taxes     - - -19,724 -19,724
Taxes payable     - - 83,549 83,549
Subordinated dept     - 1,429,879 - 1,429,879
Other liabilities     - - 636,226 636,226
Total Liabilities     1,919,437 243,550,736 700,051 246,170,224
             
Total Equity     - 900,000 11,209,173 12,109,173
             
Total Liabilities and Equity     1,919,437 244,450,736 11,909,224 258,279,396

 

* For issued securities, 179 billion are hedged with swaps. This means that foreign currency and fixed rate exposure is effectively converted to a 3 month NIBOR exposure in Norwegian kroner.

 

NOK 1 000     Financial instruments accounted for at fair value Financial assets and debt accounted for at amortised cost Non-financial assets and liabilities 30.06.2020
             
Assets            
Lending to and deposits with credit institutions     - 8,926,842 - 8,926,842
Certificates and bonds     28,950,758 - - 28,950,758
Residential mortgage loans     - 202,356,280 - 202,356,280
Financial derivatives     28,051,937 - - 28,051,937
Deferred tax asset     - - 164,031 164,031
Other assets     - - 4,479,081 4,479,081
Total Assets     57,002,695 211,283,122 4,643,112 272,928,929
             
Liabilities            
Debt incurred by issuing securities*       233,899,764 - 233,899,764
Collateral received in relation to financial derivatives     - 20,469,422 - 20,469,422
Repurchase agreement     - 2,507,625 - 2,507,625
Financial derivatives     734,333 - - 734,333
Deferred taxes     - - 37,393 37,393
Taxes payable     - - 226,673 226,673
Subordinated dept     - 1,430,788 - 1,430,788
Other liabilities     - - 1,271,651 1,271,651
Total Liabilities     734,333 258,307,599 1,535,717 260,577,649
             
Total Equity     - 1,180,000 11,171,280 12,351,280
             
Total Liabilities and Equity     734,333 259,487,599 12,706,997 272,928,929

 

* For issued securities, 182 billion are hedged with swaps. This means that foreign currency and fixed rate exposure is effectively converted to a 3 month NIBOR exposure in Norwegian kroner.

 


Note 14 Financial Instruments at Fair Value

Methods in order to determine fair value:

General
The interest rate curve that is used as input for fair value valuations of hedging instruments and hedging objects consists of the NIBOR-curve for maturities less than one year. The swap-curve is used for maturities exceeding one year.

Interest rate and currency swaps
Valuation of interest rate swaps at fair value is done through discounting future cash flows to their present values. Valuation of currency swaps will also include the element of foreign exchange rates.

Bonds
Valuation of bonds at fair value is done through discounting future cash flows to present value.

With effect from 2009 SpareBank 1 Boligkreditt AS has implemented the changes in IFRS 7 in relation to the valuation of financial instruments as of the date of the financial accounts. The changes require a presentation of the fair value measurement for each Level. We have the following three Levels for the fair value measurement:

Level 1: Quoted price in an active market. Fair value of financial instruments which are traded in active markets are based on the market price at the balance sheet date. A market is considered to be active if the market prices are easily and readily available from an exchange, dealer, broker, industry group, pricing service or regulating authority and that these prices represent actual and regular market transactions on an arm’s length basis.

Level 2: Valuation based on observable factors. Level 2 consist of instruments which are not valued based on listed prices, but where prices are indirectly observable for assets or liabilities, but also includes listed prices in not active markets.

Level 3: The valuation is based on factors that are not found in observable markets (non-observable assumptions). If valuations according to Level 1 or Level 2 are not available, valuations are based on not-observable information. The Company has a matter of principle neither assets nor liabilities which are valued at this level.

The following table presents the company’s assets and liabilities at fair value as of 30.06.2021

  NOK 1 000     Level 1 Level 2 Level 3 Total
Certificates and bonds       28,690,918 - - 28,690,918
Financial Derivatives       - 13,893,022    13,893,022  
Total Assets       28,690,918 13,893,022    42,583,940
               
Financial Derivatives       - 1,919,437 - 1,919,437 
Total Liabilities       - 1,919,437  - 1,919,437 

 

The following table presents the company’s assets and liabilities at fair value as of 30.06.2020

NOK 1 000       Level 1 Level 2 Level 3 Total
Certificates and bonds       28,950,759 - - 28,950,759
Financial Derivatives       - 28,051,937 - 28,051,937-
Total Assets       28,950,759 28,051,937-   57,002,696
               
Financial Derivatives       - 734,333   734,333
Total Liabilities       - 734,333 - 734,333

 

Note 15 Other Liabilities

NOK 1 000         30.06.2021 30.06.2020 2020
Employees tax deductions and other deductions         392 465 627
Employers national insurance contribution         875 926 702
Accrued holiday allowance         460 386 1,082
Commission payable to shareholder banks         184,165 130,627 184,028
Deposits*         658 1836 4,361
Pension liabilities         10,748 11,683 10,448
Expected credit loss unused credit lines (flexible loans)         32 232 51
Accounts payable, securities         408,800 1,093,000 -
Other accrued costs         30,095 32,495 7,779
Total         636,226 1,2071,651 209,078

 

The Company does not have an overdraft facility or a revolving credit facility as of 30.06.2021.
* Deposits represents temporary balances paid in by customers in excess of the original loan amount.
Accounts payable, securities, are such amounts that have been transacted, but not yet settled.

 


Note 16 Asset Coverage Test

The asset coverage is calculated according to the Financial Services Act § 2-31 (Covered Bond Legislation). The asset coverage test excludes as a cover pool asset any shares of mortgages representing loan to value above the legal maximum of 75 percent. 

In addition any defaulted loans, i.e. loans in arrears at or beyond 90 days, are excluded from asset coverage. Substitute (liquid) assets are included at market values. 

NOK 1 000         30.06.2021 30.06.2020 2020
Covered Bonds         234,755,983 228,562,836 242,074,324
Total Covered Bonds         234,755,983 228,562,836 242,074,324
Residential mortgage loans         211,248,702 201,046,743 207,697,380
Public sector, SSA bond exposure         3,134,039 1,060,763 3,858,900
-of which allocated to LCR         379,995 0 1,245,478
Reverse repo/ depo less than 100 days         894,159 3,214,757 4,402,964
-of which allocated to LCR         0 0 -
Exposure to credit institutions (covered bonds)         20,266,960 13,295,569 15,852,466
-of which allocated to LCR         5,790,500 1,357,901 1,948,134
Derivatives         12,670,434 27,785,411 20,905,849
Total Cover Pool         242,043,799 245,045,342 249,523,946
Asset-coverage         103.1 % 107.2 % 103.1 %
Cover pool including amounts allocated to LCR         248,214,295 246,403,243 252,717,558
Assets-coverage including amounts allocated to LCR         105.7 % 107.8 % 104.4 %

 
Liquidity Coverage Ratio (LCR)         30.06.2021 30.06.2020 2020
Liquid assets         10,985,773 15,010,955 17,332,393
Cash outflow next 30 days         4,827,460 14,494,866 12,783,956
LCR ratio         227.6 % 103.6 % 135.6 %
Net Stable Funding Ratio (NSFR)         30.06.2021 30.06.2020 2020
Available amount of stable funding         227,233,171 234,549,793 227,169,644
Required amount of stable funding         221,424,640 214,463,664 217,574,186
NSFR ratio         102,6% 109.4 % 104.4 %

 

Note 17 Capital Adequacy

The primary goal for the Company’s management of capital reserves is to ensure compliance with laws and regulatory requirements. The Company’s owner banks pay in additional core capital on an as-needed basis, according to the covered bond funding function that Boligkreditt delivers to its banks. 

As of December 31, 2020 the Norwegian national implementation of the EU’s CRR/CRD IV was amended, which means that the average risk weight on lending secured by residential property in Norway cannot be lower than 20 percent.

The European Union has approved new regulatory requirements, CRD IV, which is implemented in Norway. The requirement of 16.0 percent total capital for SpareBank 1 Boligkreditt includes:
  • Minimum core equity Pillar 1: 4.5 percent.
  • Additional Tier 1 equity capital 1.5 percent and additional Tier 2 capital 2.0 percent (can be held as Tier 1 and Tier 2, alternatively as core equity capital).
  • Conservation buffer: 2.5 percent core capital.
  • Systemic risk buffer: 4.5 percent. core equity for exposures in Norway. For exposures in other countries, the rate in each country shall be used.
  • Countercyclical buffer: 1.0 percent core equity.

The Issuer has an additional Pillar 2 requirement which is 0.9 percent core equity capital. The total requirement for the Issuer is therefore to have capital of minimum 16.9 percent of risk weighted assets. With a management buffer added, the target for capital coverage is 17.3 percent as of June 30, 2021.

The Company’s parent banks have committed themselves to keep the Company’s Equity Tier 1 capital at the minimum regulatory level (in the Shareholders Agreement). Primarily this commitment is pro rata according to the ownership stakes in the Company, but it is a joint undertaking if one or more ownership banks are unable to comply up to the maximum of twice the initial pro rata amount. 

Capital. NOK 1 000         30.06.2021 30.06.2020 2020
Share capital         7,797,215 7,610,548 7,797,215
Premium share fund         3,901,255 3,807,922 3,901,255
Other equity capital         -520,356 -328,033 -282,363
Common equity         11,178,114 11,090,438 11,416,107
Intangible assets         -5 -223 -85
Declared share dividend         - - -85,769
100% deduction of expected losses exceeding loss provisions IRB (CRD IV)         -399,531 -367,362 -409,225
Prudent valuation adjustment (AVA)         -23,401 -16,864 -19,711
Deferred taxes         - - -
Core equity capital         10,755,177 10,705,989 10,901,316
Hybrid bond         900,000 1,180,000 900,000
Tier 1 equity capital         11,655,177 11,885,989 11,801,316
Supplementary capital (Tier 2)         1,425,000 1,425,000 1,425,000
Total capital         13,080,177 13,310,989 13,226,316
 
Minimum requirements for capital. NOK 1 000         30.06.2021 30.06.2020 2020
Credit risk         4,214,135 3,871,006 4,040,496
Market risk         - - -
Operational risk         56,724 59,537 56,724
Depreciation on groups of loans         - - -
CVA Risk         439,438 538,319 334,910
Difference in capital requirement resulting from transitional floor         - - -
Minimum requirement for capital         4,696,927 4,561,616 4,432,130
 

Capital coverage

          30.06.2021 30.06.2020 2020
Risk-weighted assets incl. transitional floor*         58 711 584 55,770,199 55,401,623
               
Capital coverage (requirement w/all buffers, 16.9%)         22.28 % 23.87 % 23.87 %
Tier 1 capital coverage (requirement w/all buffers, 14.9%)         19.85 % 21.31 % 21.30 %
Core capital coverage (requirement w/all buffers, 13.4%)         18.32 % 19.20 % 19.68 %
Leverage ratio (requirement 3.0%)         4.53 % 4.62 % 4.53 %
 

* The EU capital adequacy framework (CRR/CRDIV) was incorporated into Norwegian law with effect from 31 December 2019 and the transitional floor for risk weighted assets was accordingly removed at the same time.


Note 18 Related parties

The Company has 211,798 MNOK mortgage loans to customers. These are loans acquired from shareholder banks at market values (i.e. nominal value).

SpareBank 1 SMN
The Company acquires significant support services, including accounting services, back-office and other banking services from SpareBank 1 SMN. These services were previously purchased from SpareBank SR Bank. A complete SLA is established between the Company and SpareBank 1 SMN.

SpareBank 1 - Alliance
In addition the Company has a Transfer and Servicing agreement in place with each individual shareholder bank regulating amongst other things the servicing of mortgage loans.

SpareBank 1 Næringskreditt AS
All employees within SpareBank 1 Boligkreditt AS are also to various degrees working for SpareBank 1 Næringskreditt AS. Twenty percent of the administrative expenses in SpareBank 1 Boligkreditt AS to be charged to SpareBank 1 Næringskreditt AS. This division of administrative expenses between the two companies reflect the actual resources utilisation in SpareBank 1 Boligkreditt AS.


Note 19 Collateral received

NOK 1000 30.06.2021 30.06.2020 2020
Collateral 7,570,606 20,469,422 16,838,423
Total  7,570,606 20,469,422 16,838,423

 

SpareBank 1 Boligkreditt has signed ISDA-agreements including CSAs (Credit Support Annexes) with a number of financial institutions that are counterparties in interest rate and currency swaps. These institutions post collateral in the form of cash deposits to SpareBank 1 Boligkreditt. The amount is included in the balance sheet, but represents restricted cash. 


Note 20 Contingencies and Events after Balance Sheet Date

SpareBank 1 Boligkreditt AS is not a party to any ongoing legal proceedings.

No events have taken place after the balance sheet date which are expected to have any material impact on the financial statements as of the end of the period 30.06.2021.