Notes to accounts

Note 1 Accounting Principles

1.1 Basis for preparation
SpareBank 1 Boligkreditt AS is the SpareBank 1 Alliance's separate legal vehicle established according to the specialist banking principle within the Norwegian legislation for covered bonds. The Company's purpose is to acquire residential mortgages from its ownership banks organised in the SpareBank 1 Alliance and finance these by issuing covered bonds. 

SpareBank1 Boligkreditt main office is located in Stavanger, visiting address Bjergsted Terrasse 1.

These quarterly accounts for SpareBank 1 Boligkreditt refers to the period 01.01.2014 - 30.09.2014.  The accounts have been produced in accordance with IAS 34 reporting for a partial year. The accounts are prepared in accordance with IFRS and IFRIC interpretations thereof.  The Company's accounting principles and calculation methods have not materially changed since the annual accounts for 2013.  The principles adressed below should be seen in connection with the accounting principles as they were presented in the annual accounts for 2013. 

These financial accounts have been approved by the Board of Directors of SpareBank 1 Boligkreditt on 23.10.2014

1.2 Segment
Business segments are the Company's primary reporting segment.  The Company has only one segment, which is the retail customer segment.  The segment consists of lending to private individuals and all loans have been acquired from the member banks of the SpareBank 1 alliance.  The Company's total results for the third quarter of 2013 is therefore equal to the retail segment total results. 

1.3 Presentational Currency
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. 

1.4 Risk Management
SpareBank 1 Boligkreditt AS' financial assets and liabilities fluctuates in value as a result of the variability of prices of such assets and liabilities in the financial markets.  In the annual accounts for 2013 Note 3 this risk and management thereof is more closely discussed.

1.5 Estimates 
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 2013.


Note 2 Net Interest Income

NOK 1 000 30.09.2014 30.06.2013 2013
 
Interest income
Interest income and similar income from loans to and balances with credit institutions 137,890 178,453 264,755
Interest income and similar income from loans to and balances with customers 4,973,907 4,943,221 6,661,490
Interest income treasury bills 24,856 48,693 55,606
Commission expense (payable to shareholder banks) * -1,750,330 -1,646,450 -2,299,029
Total interest income 3,386,323 3,523,917 4,682,822
 
Interest expense
Interest expense and similar expenses to credit institutions 30,303 14,295 22,910
Interest expense and similar expenses on issued bonds 3,017,230 3,234,915 4,259,716
Interest expense and similar expenses on issued certificates 40,834 82,460 104,327
Interest expense and similar expenses on Tier 2 capital 41,844 - -
Other interest expenses 76 21 682
Total interest expense 3,130,288 3,331,691 4,387,634
 
Net interest income 256,035 192,225 295,188

* Commissions to our parent banks are calculated daily for each mortgage loan transferred. whereby the commission equals the customer loan rate less a rate which incorporates the Company's average cost of funding and operational costs. The operational add-on element is expressed through an average rate which is from time to time decided by the Company's Board of Directors.


Note 3 Net Gains on Financial Instruments

NOK 1 000 30.09.2014 30.06.2013 2013
 
Net gains (losses) from financial liabilities -2,877,908 1,803,240 1,770,926
Net gains (losses) from financial assets -55,119 630,242 -176,973
Net gains (losses) from financial derivatives. hedging. at fair value 2,878,763 -2,414,954 -1,557,047
Net gains (losses) from valuation adjustment basis swap spread -8,434 - -
Netto gains (losses) -62,699 18,528 36,906

SpareBank 1 Boligkreditt uses financial derivatives as the significant part of its risk management for currency and interest rate risks. Currency risk is primarily hedged with currency swaps in order to leave Boligkreditt without exposure to any foreign currency movements. Currency swaps are entered into in an open market and based on the Company's ISDA including a collateral support annex. and the counterparties are independent of the Company. Boligkreditt's payments of interest for its debt in a foreign currency are consequently in Norwegian kroner based on a swap curve between Norwegian kroner and the currency of the incurred debt (for example Euros) with an added (or deducted) element; a basis swap spread. Additionally the Company is paying a premium (credit charge) to the counterparty in a swap which exists to cover costs which are incurred for the counterparty due to the nature of the demands placed on the counterparty in our ISDA/CSA agreement and/or regulatory demands. Both the basis swap spread and the credit charge varies over time. The volatility in these elements can not be reduced through further hedging but the effects of valuing these elements will be balanced out over the tenor of a swap agreement. SpareBank 1 Boligkreditt introduces according to current IFRS rules from the third quarter 2014 a valuation adjustment to its currency swap book which incorporates the basis swap spread and the credit charge. The effect is shown in the table above in the line "Net gains (losses) from valuation adjustment basis swap spread". The Company assessed at the introduction and will evaluate quarterly what the swap portfolio would cost to renew in terms of these elements while taking into consideration the time to maturity. The introduction could lead to increasing volatility in the Company's financial accounts.


Note 4 Salaries and Remuneration

NOK 1 000 30.09.2014 30.06.2013 2013
 
Salary 8,073 7,274 11,112
Salaries reinvoiced to SpareBank1 Næringskreditt* -4,288 -3,224 -4,187
Pension expenses 1,656 1,285 1,330
Social insurance fees 1,197 1,117 1,445
Other personnel expenses 1,386 262 334
Total salary expenses 8,024 6,714 10,033
 
Average number of full time equivalents (FTEs) 8 8 8

* The company


Note 5 Administration Expenses

NOK 1 000 30.09.2014 30.06.2013 2013
 
IT operation and maintenance 6,062 6,169 8,588
Travel 503 882 1,562
Telephone and postage 90 72 125
Misc other adm expenses 12 30 43
Total 6,667 7,153 10,318

Note 6 Other Operating Expenses

NOK 1 000 30.09.2014 30.06.2013 2013
 
Auditing. hired personnel from SpareBank 1 Group. other services 8,836 7,176 9,369
Operating expenses rented offices 427 427 570
Operating expenses reinvoiced to SpareBank 1 Næringskreditt -624 -708 -885
Misc other operating expenses 117 229 320
Total 8,756 7,125 9,374

Note 7 Other Assets

NOK 1 000 30.09.2014 30.06.2013 2013
 
Intangible Assets 2,650 3,393 3,002
Account Reveivables from SpareBank 1 Næringskreditt AS 1,774 1,446 1,162
Sum 4,424 4,839 4,164

Note 8 Lending to Customers

Lending to customers are residential mortgages only. The mortgages generally have a loan lon-to-value and losses have been very low. The total amout of lending to customers at the end of the period were NOK 159.8 billion. All mortgages carry a variable interest rate.

NOK 1 000 30.09.2014 30.06.2013 2013
 
Revolving loans - retail market 57,013,070 65,772,741 66,797,306
Amortising loans - retail market 102,632,280 103,607,771 107,776,344
Accrued interest 182,731 204,540 215,280
Total loans before specified and unspecified loss provisions 159,828,081 169,585,052 174,788,930
Specified loan loss provisions - - -
Unspecified loan loss provisions 7,708 7,708 7,708
Total net loans and claims with customers 159,820,373 169,577,344 174,781,222
 
Liability
Unused balances under customer revolving credit lines (flexible loans) 19,042,899 21,157,955 21,528,276
Total 19,042,899 21,157,955 21,528,276
 
Defaulted loans
Defaults* 0.00 % 0.00 % 0.00 %
Specified loan loss provisions 0.00 % 0.00 % 0.00 %
Net defaulted loans 0.00 % 0.00 % 0.00 %
 
Loans at risk of loss
Loans not defaulted but at risk of loss 0.00 % 0.00 % 0.00 %
- Write downs on loans at risk of loss 0.00 % 0.00 % 0.00 %
Net other loans at risk of loss 0.00 % 0.00 % 0.00 %
 

*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.

Changes to loan loss provisions

NOK 1 000 30.09.2014 30.06.2013 2013
 
Loan loss provisions starting balance 7,708 7,708 7,708
Change in group loan loss provisions 0 0 0
Loan loss provisions ending balance 7,708 7,708 7,708

Note 9 Equity Capital and Shareholders

Overview of shareholders as of 30.09.14

Number of shares Ownership stake Share ofvoting
 
SpareBank 1 SR-Bank ASA 11238899 20.40 % 20.40 %
SpareBank 1 SMN 9697325 17.60 % 17.60 %
SpareBank 1 Nord-Norge 8156308 14.80 % 14.80 %
Bank 1 Oslo Akershus AS 5243710 9.52 % 9.52 %
Sparebanken Hedmark 5182841 9.41 % 9.41 %
BN Bank ASA 3055807 5.55 % 5.55 %
SpareBank 1 BV 2498584 4.53 % 4.53 %
SpareBank 1 2257632 4.10 % 4.10 %
Sparebanken Telemark 1800383 3.27 % 3.27 %
SpareBank 1 Ringerike Hadeland 1717980 3.12 % 3.12 %
SpareBank 1 Nordvest 1161085 2.11 % 2.11 %
Modum Sparebank 627803 1.14 % 1.14 %
SpareBank 1 Sre Sunnmre 637625 1.16 % 1.16 %
SpareBank 1 Nttery Tnsberg 582901 1.06 % 1.06 %
SpareBank 1 Hallingdal 571346 1.04 % 1.04 %
SpareBank 1 Gudbrandsdal 391295 0.71 % 0.71 %
Lom og Skjåk Sparebank 283958 0.52 % 0.52 %
Totalt 55105482 100 % 100 %

The equity capital consists of 55 105 482 shares with a face value of NOK 100 each


Note 10 Liabilities Incurred by Issuing Securities

NOK 1 000 Nominal value* 30.09.2014 Nominal value* 30.06.2013 Nominal value* 2013
 
Short term notes. unsecured 1,825,000 4,550,000 3,400,000
Repurchased short term notes. unsecured - -591,000 -
Senior unsecured bonds 6,100,000 3,812,000 3,676,000
Repurchased senior unsecured bonds - 0 -
Covered bonds 152,477,623 169,505,999 166,495,725
Withdrawn from the Norwegian Central Bank Swap Facility - 6,569,843 6,569,843
Bonds deposited in the Norwegian Central Bank Swap Facility - -7,552,000 -7,552,000
Repurchased Covered bonds -1,911,007 -4,127,768 -1,764,681
Total debt incurred by issuing securities 158,491,616 172,167,074 170,824,887

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

NOK 1 000 30.09.2014 30.06.2013 2013
 
Short term notes. unsecured 1,824,851 4,549,180 3,399,501
Repurchased short term notes. unsecured - -590,839 -
Senior unsecured bonds 6,098,560 3,811,460 3,675,628
Repurchased senior unsecured bonds - -
Covered bonds 165,623,930 177,942,507 177,379,674
Withdrawn from the Norwegian Central Bank Swap Facility - 6,575,879 6,572,905
Bonds deposited in the Norwegian Central Bank Swap Facility - -7,552,000 -7,552,000
Repurchased covered bonds -2,072,916 -4,244,432 -1,856,072
Activated costs incurred by issuing debt -158,515 -177,532 -188,315
Accrued interest 1,725,848 1,751,094 1,715,090
Total debt incurred by issuing securities 173,041,758 182,065,316 183,146,411

Liabilities categorized by debt instrument and year of maturity (nominal value*. net of repurchased bonds) NOK 1.000

Senior Unsecured

Maturity 30.09.2014 30.06.2013 2013
 
2013 - 959,000 -
2014 800,000 4,275,000 4,651,000
2015 2,525,000 2,537,000 2,425,000
2016 4,600,000 - -
Sum 7,925,000 7,771,000 7,076,000

Covered Bonds in Central Bank Swap Facility

Maturity 30.09.2014 30.06.2013 2013
 
2013 - - -
2014 - 6,569,843 6,569,843
Sum - 6,569,843 6,569,843

Covered bonds

Maturity 30.09.2014 30.06.2013 2013
 
2013 - 7,357,301 -
2014 1,411,000 7,461,000 6,309,000
2015 10,515,698 18,376,000 17,127,000
2016 25,655,625 25,965,625 25,756,158
2017 21,013,000 21,013,000 21,013,000
2018 21,785,000 21,535,000 21,485,000
2019 25,384,732 25,204,447 25,194,564
2020 21,878,500 9,015,000 17,293,500
2021 15,631,557 15,620,641 15,670,710
2022 3,233,750 3,233,750 3,233,750
2023 - - -
2024 1,234,954 1,234,468 1,273,562
2025 1,010,000 160,000 1,010,000
2026 1,650,000 1,650,000 1,650,000
2027 - - -
2028 162,800 - 162,800
Sum 150,566,616 157,826,232 157,179,044
 
Totalt 158,491,616 172,167,074 170,824,887

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

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

NOK 1 000 30.09.2014 30.06.2013 2013
 
NOK 52,671,974 67,930,575 64,499,347
EUR 89,686,433 78,000,537 89,786,425
USD 30,445,191 35,903,469 28,624,959
SEK 238,159 230,734 235,680
Sum 173,041,757 185,028,695 183,146,411

Note 11 Subordinated Debt

NOK 1000 Issued year Call option Nominal amount Accrued interest 30.09.2014 30.06.2013 2013
 
Tier 2 subordinated notes 2,014 2,019 1,600,000 4,058 1,604,058 - -
Additional Tier 1 capital notes 2,014 2,019 350,000 279 350,279 - -
Book value 1,950,000 4,337 1,954,337 - -

Note 12 Financial Derivatives

NOK 1 000 30.09.2014 30.06.2013 2013
 
Interest rate derivative contracts
Interest rate swaps
Nominal amount 71,521,563 86,263,759 77,804,369
Asset 5,337,817 4,280,197 4,111,612
Liability -726,329 -747,405 -745,077
Currency derivative contracts
Currency swaps
Nominal amount 111,858,355 107,245,701 112,350,126
Asset 9,465,546 5,900,957 8,648,739
Liability -34,614 -79,562 -52,340
Total financial derivative contracts
Nominal amount 183,379,918 193,509,460 190,154,495
Asset 14,803,363 10,181,153 12,760,351
Liability * -760,943 -826,967 -797,417

All derivative contracts exist for the purpose of hedging changes in interest rates and currency exchange rates. * Including the valuation adjustment of the basis swap spread discussed in Note 3


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 Financial assets held to maturity Non-financial assets and liabilities 30.09.14
 
Assets
Deposits at and receivables from financial institutions - 9,637,332 - - 9,637,332
Norwegian government short term debt certificates 297,525 - - - 297,525
Bonds 12,843,525 - 890,509 - 13,734,034
Lending to customers - 159,820,373 - - 159,820,373
Financial derivatives 14,803,363 - - - 14,803,363
Other assets - - - 4,424 4,424
Total Assets 27,944,413 169,457,705 890,509 4,424 198,297,051
 
Liabilities
Debt incurred by issuing securities 134,225,131 38,816,626 - - 173,041,757
Collateral received in relation to financial derivatives - 11,921,491 - - 11,921,491
Financial derivatives 769,378 - - - 769,378
Deferred taxes - - - 157,770 157,770
Taxes payable - - - - -
Tier 2 capital - 1,954,337 - - 1,954,337
Other liabilities - - - 2,055,098 2,055,098
Total Liabilities 134,994,509 52,692,454 - 2,212,868 189,899,831
 
Total Equity - - - 8,397,220 8,397,220
 
Total Liabilities and Equity 134,994,509 52,692,454 - 10,610,088 198,297,051
 

*Fair value calculation according to changes in market interest rates and currencies exchange rates

NOK 1 000 Financial instruments accounted for at fair value * Financial assets and debt accounted for at amortised cost Financial assets held to maturity Non-financial assets and liabilities 30.09.13
 
Assets
Deposits at and receivables from financial institutions - 8,141,726 - - 8,141,726
Norwegian government short term debt certificates 5,289,918 - - - 5,289,918
Bonds 5,552,915 - 1,216,076 - 6,768,991
Lending to customers - 169,577,344 - - 169,577,344
Financial derivatives - - - - -
Other assets 10,181,153 - - 4,839 10,185,992
Total Assets 21,023,987 177,719,070 1,216,076 4,839 199,963,972
 
Liabilities
Debt incurred by issuing securities 132,900,130 49,165,186 - - 182,065,316
Collateral received in relation to financial derivatives - 5,970,786 - - 5,970,786
Financial derivatives 826,967 - - - 826,967
Deferred taxes - - - 100,712 100,712
Taxes payable - - - - -
Tier 2 capital - - - - -
Other liabilities - - - 2,797,990 2,797,990
Total Liabilities 133,727,097 55,135,972 - 2,898,702 191,761,771
 
Total Equity - - - 8,202,201 8,202,201
 
Total Liabilities and Equity 133,727,097 55,135,972 - 11,100,903 199,963,972

*Fair value calculation according to changes in market interest rates and currencies exchange rates


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:

  • Quoted price in an active market for an identical asset or liability (level 1)
  • Valuation based on observable factors either direct (prices) or indirected (deduced from prices used in level 1) other than quoted price for the asset or liability (Level 2)
  • The valuation is based on factors that are not found in observable markets (non-observable assumptions) (level 3)

The following numbers present the company

NOK 1 000 Level 1 Level 2 Level 3 Total
 
Bonds and bills 5,559,521 7,581,529 - 13,141,050
Financial Derivatives - 14,803,363 - 14,803,363
Total Assets 5,559,521 22,384,892 - 27,944,413
 
Bonds - 134,225,131 - 134,225,131
Financial Derivatives - 769,378 - 769,378
Total Liabilities - 134,994,509 - 134,994,509

The following numbers present the company

NOK 1 000 Level 1 Level 2 Level 3 Total
 
Bonds and bills 10,194,849 647,985 - 10,842,833
Financial Derivatives - 10,181,153 - 8,778,292
Total Assets - 10,829,138 - 19,621,125
 
Bonds - 132,900,130 - 132,900,130
Financial Derivatives - 826,967 - 826,967
Total Liabilities - 133,727,097 - 133,727,097

Note 15 Bonds classified as Hold to Maturity

As of 31.03.14

Bonds classified as Book value 01.01.14 Investments Matured Amortising Exchange rate effects Amortised cost 30.09.14
 
Hold to maturity 1,213,050 - -250,000 -74,728 - 888,322
Total certificates and bonds 1,213,050 - -250,000 -74,728 - 888,322

Market value of bonds in hold to maturity portfolio

Bonds classified as Book value Market value incl. currency effect Effect on net inc if at fair vaue
 
Hold to maturity 888,322 893,096 4,774
Total certificates and bonds 888,322 893,096 4,774

Note 16 Other Liabilities

NOK 1 000 30.09.2014 30.06.2013 2013
 
Employees tax deductions and other deductions 331 299 600
Employers national insurance contribution 215 185 369
Accrued holiday allowance 767 624 901
Commission payable to shareholder banks 1,977,789 2,717,278 3,115,000
Deposits* 11,195 9,320 8,541
Pension liabilities 13,131 11,594 12,111
Other accrued costs 55,510 58,690 5,834
Total 2,058,937 2,797,990 3,143,356

The Company does not have an overdraft facility or a revolving credit facility * Deposits represents temporary balances paid in by customers in excess of the original loan amount


Note 17 Asset Coverage Requirement

The asset coverage is calculated according to the Financial Services Act § 2-31 (Covered Bond Legislation). There is a discrepancy between the asset coverage test and the amounts in the balance sheet because for the purposes of the test mortgage loans which may have migrated above the 75% loan to value level are reduced to reflect the decrease in the value of the underlying collateral so that only a maximum loan corresponding to a value of 75% of the collateral is considered.  Furthermore, the fact that market values are recorded for all bonds and certificates in the cover pool could have an impact.  In addition any defaulted loans, i.e. loans in arrears at or beyond 90 days, are excluded from the test (there have been no occurances of any defaults since commencement of operations).  The company separates Cover Pool 1 and Cover Pool 2.  Cover Pool 1 is utilised for market issuances of covered bonds whilst Cover Pool 2 is a separate mortgage portfolio established solely for use in the swap facility with Norway's Central Bank in 2009.

Pool 1

NOK 1 000 30.09.2014 30.09.2013 2013
 
Covered Bonds 167,325,802 172,048,642 171,499,524
Repurchased Bonds -2,078,797 -4,262,855 -1,859,098
Derivatives -14,194,052 -9,521,139 -12,005,425
Total Covered Bonds 151,052,954 158,264,648 157,635,002
Lending to customers 159,553,933 162,926,838 167,354,070
Treasury Bills 297,525 4,641,933 498,480
Substitute collateral 11,268,071 8,062,253 6,901,444
Total Cover Pool 171,119,528 175,631,024 174,753,993
Asset-coverage 113.3 % 111.0 % 110.9 %

Pool 2

NOK 1 000 30.09.2014 30.09.2013 2013
 
Covered Bonds - 8,596,048 8,556,515
Repurchased Bonds - -998,877 -998,894
Derivatives - -44,598 -3,043
Total Covered Bonds - 7,552,574 7,554,578
Lending to customers - 6,538,382 7,273,742
Treasury Bills - 647,985 246,487
Substitute collateral - 666,064 320,762
Total Cover Pool - 7,852,431 7,840,991
Asset-coverage 0.0 % 104.0 % 103.8 %

Note 18 Capital Adequacy

The primary goal for the Company's management of capital reserves is to ensure compliance with laws and regulatory requirements and maintain solid financial ratios and a high quality credit assessment in order to best support its business.

A new capital requirements directive was introduced in Norway as of January 1, 2007 (Basel II). SpareBank1 Boligkreditt AS obtained permission from the Financial Services Authority in Norway (Finanstilsynet) for the implementation of its own Internal Ratings Based (IRB) model for credit risks from the seond quarter of 2009.  The Company's parent banks have committed themselves to pay in additional capital (Shareholders Agreement) if the Company's capital declines below 9% (Core Tier 1), primarily pro-rata according to individual ownership shares, then collectively (joint and several) up to twice the original pro-rata amount for each parent bank.

Transitional rules have been implemented by the FSA whereby regulated financial institutions with approved IRB models will not be able to fully benefit from the results of such models until the year 2018. Regulated entities are allowed to reduce by 20% the total sum of risk weighted assets which would otherwise have been in place under the previous Basel I framework.  In the following years until the end of 2017, the transitional rules will lead to significantly higher capital requirements than what would otherwise have been applicable under Basel II.

The European Union has approved new regulatory requirements, CRD IV.  The new regulations places more robust requirements on capital adequacy, capital structure, liquidity buffers and funding.  CRD IV is gradually introduced in Norway up until the end of 2016. The requirement of 13.5% total capital from July 1, 2014 includes a 10% Core Tier 1 capital and 3.5% other capital.  A new calculation for capital adequacy (CRD IV) is introduced for SpareBank 1 Boligkreditt from the 3rd quarter 2014. 

The parent banks have committed themselves to pay in additional capital if the Company's Core Tier 1 capital should decline below 9%.  Individual bank additional amounts are determined by the pro rata ownership shares, and if not sufficient, the banks are required to pay in an amount up to twice the pro-rata based individual amounts.

Capital. NOK 1 000 Ny CRD IV beregning 30.09.2014 30.09.2014 30.09.2013 2013
 
Share capital 5,510,548 5,510,548 5,310,548 5,310,548
Premium share fund 2,757,922 2,757,922 2,657,922 2,657,922
Other equity capital 5,626 5,626 98,050 320,555
Total equity capital entered into the balance sheet 8,274,096 8,274,096 8,066,520 8,289,025
Intangible assets -2,650 -2,650 -3,393 -3,002
Declared share dividend - - -302,105
Additional Tier 1 capital 350,000 350,000 - -
50% deduction of expected losses exceeding loss provisions IRB (previous method) -138,412 -81,806 -182,832
100% deduction of expected losses exceeding loss provisions IRB (CRD IV) -268,776
Additional prudent valuation adjustment (AVA) -28,705
Core capital (Tier 1) 8,323,965 8,483,034 7,981,321 7,801,086
Tier 2 capital 1,600,000 1,600,000 - -
50% deduction of expected losses exceeding loss provisions IRB (previous method) -138,412 -81,806 -
Total capital 9,923,965 9,944,621 7,899,515 7,801,086
 
Minimum requirements for capital according to Basel II i NOK 1 000 30.09.2014 30.09.2014 30.09.2013 2013
Credit risk 34,675,303 2,774,024 2,766,957 1,713,813 1,846,418
Market risk - - - -
Operational risk 446,409 35,713 35,713 27,797 27,797
Depreciation on groups of loans - - - -
CVA Risk 4,587,877 367,030
Difference in capital requirement due to the Basel I transitional floor 27,558,409 2,204,673 2,793,791 4,242,703 4,299,650
Minimum requirement for capital 5381439.84 5596461.02 5984313 6173865
 
Capital adequacy
30.09.2014 30.09.2014 30.09.2013 2013
Total capital coverage (%) 15 14 11 10
Tier 1 capital coverage (%) 12 12 11 10
Core Tier 1 capital coverage (%) 12 12 11 10

Note 19 Related Parties

Transactions with related parties
The Company has 159 444 MNOK loans to customers. These are acquired from shareholder banks at market value (i.e. nominal value).

SpareBank 1 SR-Bank ASA
The Company purchases a substantial amount of their support functions from SpareBank 1 SR-Bank ASA.
A complete SLA are established between the Company and SpareBank 1 SR-Bank ASA.

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.  In accordance with a Board decision in SpareBank 1 Næringskreditt dated 17.09.09 one third of the administrative expenses in SpareBank 1 Boligkreditt AS are 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 Boligkredit AS.


Note 20 Contingencies

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


Note 21 Collateral Received

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. At the end of the period 30.09.2014 this collateral amounted to NOK 11 921 million.


Note 22 Tax

NOK 20 536 860 has been reclassified as a tax payable from deferred tax during the first quarter of 2014.


Note 23 Events after Balance Sheet Date

None