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 2018. 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 the mortage lending to reail custoomers.  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 2018.        


Note 2 Net Interest Income

NOK 1 000 30.09.2019 30.09.2018 2018
 
Interest income
Interest income from. certificates. bonds and deposits 179,913 313,135 380,228
Interest income from residential mortgage loans 4,025,673 3,479,456 4,715,801
Commission expense (payable to shareholder banks) * -1,069,935 -1,148,637 -1,518,263
Total interest income 3,135,652 2,643,954 3,577,766
 
Interest expense
Interest expense and similar expenses to credit institutions -36,728 -29,812 -25,036
Interest expense and similar expenses on issued bonds 2,775,328 2,373,346 3,211,071
Interest expense and similar expenses on subordinated debt 35,609 38,494 50,836
Guarantee Fund ** 31,500 0 0
Other interest expenses 6,534 5,704 7,757
Total interest expense 2,812,243 2,387,732 3,244,627
 
Net interest income 323,409 256,222 333,139

* 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.

** From 2019, SPB1 Boligkreditt has been incorporated into the Norwegian Guarantee Fund.


Note 3 Net Gains from Financial Instruments

NOK 1 000 30.09.2019 30.09.2018 2018
 
Net gains (losses) from financial liabilities (1) -5,750,645 -3,156,350 -4,904,674
Net gains (losses) from financial derivatives. hedging liabilities. at fair value. hedging instrument (1.3) 5,758,930 3,570,410 4,849,334
Net gains (losses) from financial assets (2) -103,155 -658,411 -234,796
Net gains (losses) from financial derivatives. hedging assets. at fair value. hedging instrument (2.3) 4,599 64,364 -3,394
Net gains (losses) -90,271 -179,988 -293,531

(1) 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 will cause the valuation change of the liabilities to be different to the valuation changes in the derivatives hedging the liabilities (there will also be valuation differences due to the the amortization of issuance costs and when the bonds are issued at prices different from par value.)

(2) SpareBank 1 Boligkreditt AS manages its liquidity risk by refinancing its outstanding bonds ahead of expected maturities and keeping proceeds as a liquidity portfolio. The majority of this portfolio is valued according to observed market values (fair value).  Fixed rate bonds and bonds in othercurrencies than Norwegian kroner are hedged using swaps. The latter are valued according to interest rate and foreign exchange rates and are alsovalued 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).  A smaller part of the portfolio is classified as hold-to-maturity and consist of bonds in Norwegian kroner at floating rates. Included in assets in the table are also investments which are hedged with natural currency hedges,  as well as investments in short term, highly rated bonds from funds received from swap counterparties for collateral purposes.   Such investments do not have a corresponding value change in the financial derivatives hedging the assets (and are also not included in the liabilities in line 1 in the table above as this contains only the Company’s issued debt securities).

(3) 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 4 Salaries and Remuneration

NOK 1 000 30.09.2019 30.09.2018 2018
 
Salary 7,318 7,974 10,201
Salaries reinvoiced to SpareBank1 Næringskreditt* -2,092 -2,183 -2,870
Pension expenses 1,673 1,735 2,055
Social insurance fees 1,952 1,639 2,146
Other personnel expenses 184 75 234
Total salary expenses 9,035 9,240 11,766
 
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 SR-Bank ASA and SpareBank 1 Gruppen. Pension benefit obligations are covered in SpareBank 1 Boligkreditt through participation in the pension fund of SpareBank 1 SR-Bank ASA. This pension scheme meets the legal demands on mandatory occupational pension.

Note 5 Other Operating Expenses

NOK 1 000 30.09.2019 30.09.2018 2018
 
IT and IT operations 8,848 7,104 9,565
Purchased services other than IT 7,065 5,581 8,310
Other Operating Expenses 1,185 1,183 1,987
Depreciation on fixed assets and other intangible assets 246 475 628
Total 17,344 14,344 20,490

Note 6 Other Assets

NOK 1 000 30.09.2019 30.09.2018 2018
 
Intangible assets 461 860 707
Account receivables from SpareBank 1 Næringskreditt AS 332 647 1,043
Other 198 0 0
Total 991 1,507 1,750

Note 7 Residential mortage loans

Lending to customers are residential mortgages only. The mortgages generally have a low loan-to-value and losses have been very low. The total amount of lending to customers at the end of 30.09.2019 were NOK 190 billion. All mortgages carry a variable interest rate.

NOK 1 000 30.09.2019 30.09.2018 2018
 
Revolving loans - retail market 43,301,662 47,252,001 45,484,285
Amortising loans - retail market 146,266,990 136,400,946 138,418,290
Accrued interest 205,186 170,448 183,912
Total loans before specified and unspecified loss provisions 189,773,838 183,823,395 184,086,488
 
Impairments on groups of loans
Expected credit loss. stage 1 1,030 3,762 3,905
Expected credit loss. stage 2. no objective proof of loss 9,587 8,270 8,665
Expected credit loss. stage 3. objective proof of loss 0 0 0
Total net loans and claims with customers 189,763,221 183,811,362 184,073,918
 
Liability
Unused balances under customer revolving credit lines (flexible loans) 12,129,027 12,600,771 12,304,082
Total 12,129,027 12,600,771 12,304,082
 
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 8 Share Capital and Shareholder Information

List of shareholders as of 30.09.2019 No of Shares in per cent Share of votes
 
SpareBank 1 Østlandet 16,446,741 21.61 % 21.61 %
SpareBank 1 SMN 15,748,727 20.69 % 20.69 %
SpareBank 1 Nord-Norge 13,558,833 17.82 % 17.82 %
BN Bank ASA 4,973,224 6.53 % 6.53 %
SpareBank 1 BV 4,895,107 6.43 % 6.43 %
SpareBank 1 SR-Bank ASA 3,663,342 4.81 % 4.81 %
Sparebanken Telemark 3,498,261 4.60 % 4.60 %
SpareBank 1 Ringerike Hadeland 3.420.431 4.49 % 4.49 %
SpareBank 1 Østfold Akershus 3,318,023 4.36 % 4.36 %
SpareBank 1 Nordvest 1,659,011 2.18 % 2.18 %
SpareBank 1 Modum 1,454,195 1.91 % 1.91 %
SpareBank 1 Hallingdal Valdres 983,118 1.29 % 1.29 %
SpareBank 1 Søre Sunnmøre 944,202 1.24 % 1.24 %
SpareBank 1 Gudbrandsdal 931,914 1.22 % 1.22 %
SpareBank 1 Lom og Skjåk 610,353 0.80 % 0.80 %
Total 76,105,482 100 % 100 %

The share capital consists of 76 105 482 shares with a nominal value of NOK 100

Hybrid capital

NOK 1000 ISIN Interest rate Issued year Call option 30.09.2019 30.09.2018 2018
 
Perpetual
Hybrid (Tier 1 capital instrument) NO0010713746 3M Nibor + 310 bp 2014 09.05.2019 - 350,000 350,000
Hybrid (Tier 1 capital instrument) NO0010745920 3M Nibor + 360 bp 2015 23.09.2020 300,000 300,000 300,000
Hybrid (Tier 1 capital instrument) NO0010746191 3M Nibor + 360 bp 2015 29.09.2020 180,000 180,000 180,000
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 - -
Book value 1,180,000 1,180,000 1,180,000

Note 9 Liabilities incurred by issuing Securities

NOK 1 000 Nominal value* 30.09.2019 Nominal value* 30.09.2018 Nominal value* 2018
 
Senior unsecured bonds - 1,388,000 1,047,000
Repurchased senior unsecured bonds - - -
Covered bonds 197,703,292 201,170,506 188,169,679
Repurchased Covered bonds - - -
Total debt incurred by issuing securities 197,703,292 202,558,506 189,216,679

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

NOK 1 000 Book value 30.09.2019 Book value 30.09.2018 Book value 2018
 
Senior unsecured bonds - 1,387,958 1,046,990
Repurchased senior unsecured bonds - - -
Covered bonds 219,323,073 215,495,641 209,973,603
Repurchased covered bonds - - -
Activated costs incurred by issuing debt -194,464 -177,133 -165,808
Accrued interest 1,092,195 1,108,113 1,496,260
Total debt incurred by issuing securities 220,220,804 217,814,578 212,351,045

Liabilities categorized by debt instrument and year of maturity (nominal value*, net of repurchased bonds) NOK 1,000:

Senior Unsecured Bonds and notes

Due in 30.09.2019 30.09.2018 2018
 
2018 - 91,000 1,047,000
2019 - 1,297,000 -
Total - 1,388,000 1,047,000

Covered bonds

Due in 30.09.2019 30.09.2018 2018
 
2018 - 13,969,250 -
2019 6,030,414 27,258,444 24,954,124
2020 22,462,500 24,963,500 24,963,500
2021 28,891,117 28,825,266 28,894,098
2022 38,749,200 38,749,200 38,749,200
2023 30,373,550 30,256,700 30,378,725
2024 22,862,717 11,086,348 13,916,174
2025 10,648,750 10,648,750 10,648,750
2026 21,940,000 12,185,000 12,185,000
2027 674,394 665,248 674,808
2028 2,562,800 2,562,800 2,562,800
2029 12,265,350 - -
2038 242,500 - 242,500
Total 197,703,292 201,170,506 188,169,679
 
Total 197,703,292 202,558,506 189,216,679

* 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 30.09.2019 30.09.2018 2018
 
NOK 60,323,691 62,440,662 62,711,262
EUR 141,547,805 136,993,834 130,285,193
USD 9,601,507 10,067,640 10,707,438
GBP 8,499,140 8,063,438 8,382,733
SEK 248,662 249,004 264,420
Total 220,220,804 217,814,578 212,351,045

Note 10 Subordinated Debt

NOK 1000 ISIN Interest rate Issued year Call option from Maturity Nominal amount 30.06.2019 30.06.2018 2018
 
With maturity
Subordinated debt NO0010704109 3M Nibor + 225 bp 2014 07.03.2019 07.03.2024 475,000 - 475,000 475,000
Subordinated debt NO0010826696 3M Nibor + 153 bp 2018 22.06.2023 22.06.2028 250,000 250,000 250,000 250.000
Subordinated debt NO0010833908 3M Nibor + 180 bp 2018 08.10.2025 08.10.2030 400,000 400,000 400,000 400.000
Subordinated debt NO0010835408 3M Nibor + 167 bp 2018 02.11.2023 02.11.2028 475,000 475,000 475,000 475,000
Subordinated debt NO0010842222 3M Nibor + 192 bp 2019 24.01.2024 24.01.2029 300,000 300,000 - -
Accrued interest 7,972 3,108 6,160
Book value 1,432,972 1,603,108 1,606,160

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


Note 11 Financial Derivatives

NOK 1 000 30.09.2019 30.09.2018 2018
 
Interest rate derivative contracts
Interest rate swaps
Nominal amount 60,665,104 64,380,659 68,401,281
Asset 2,547,232 2,496,164 2,918,190
Liability -357,568 -485,838 -514,399
Currency derivative contracts
Currency swaps
Nominal amount 145,503,389 145,143,490 140,302,215
Asset 19,839,441 13,486,789 20,265,604
Liability - -667,050 -56,996
Total financial derivative contracts
Nominal amount 206,168,494 209,524,149 208,703,496
Asset 22,386,673 15,982,953 23,183,793
Liability -357,568 -1,152,888 -571,395

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

* Change due to basis swap spread adjustment 30.09.2019 30.09.2018 2018
 
Asset/Liability(-) -357,568 -1,152,888 -571,395
Net gain (loss) on valuation adjustment of basisswap spreads -542,437 -326,302 -470,713
Net asset/liability derivatives -900,005 -1,479,191 -1,042,108

Basis swaps are currency swaps and are entered into at a certain cost (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.

IFRS 9 allows the company to present the changes in basisswapspreads below other comprehensive income. As of 01.01.2018 it will no longer be presented below the income statement. It will be presented in other comprehensive income.


Note 12 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 30.09.2019
 
Assets
Lending to and deposits with credit institutions - 4,564,258 - - 4,564,258
Certificates and bonds 35,143,942 - - - 35,143,942
Residential mortgage loans - 189,763,221 - - 189,763,221
Financial derivatives 22,386,673 - - - 22,386,673
Defered tax asset - - - 10,994 10,994
Other assets - - - 991 991
Total Assets 57,530,615 194,327,480 - 11,986 251,870,081
 
Liabilities
Debt incurred by issuing securities 176,944,884 43,275,920 - - 220,220,804
Collateral received in relation to financial derivatives - 16,783,630 - - 16,783,630
Repurchase agreement - - - - -
Financial derivatives 900,005 - - - 900,005
Deferred taxes - - - 21,446 21,446
Taxes payable - - - 52,191 52,191
Subordinated dept - 1,432,972 - - 1,432,972
Other liabilities - - - 175,870 175,870
Total Liabilities 177,844,889 61,492,522 - 249,507 239,586,918
 
Total Equity - 1,180,000 - 11,103,163 12,283,163
 
Total Liabilities and Equity 177,844,889 62,672,522 - 11,352,670 251,870,081

*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 30.09.2018
 
Assets
Lending to and deposits with credit institutions - 11,411,753 - - 11,411,753
Residential mortage loans - 183,811,362 - - 183,811,362
Certificates and bonds 35,032,317 - - - 35,032,317
Financial derivatives 15,982,953 - - - 15,982,953
Defered tax asset - - - 10,055 10,055
Other assets - - - 1,507 1,507
Total Assets 51,015,270 195,223,115 - 11,562 246,249,947
 
Liabilities
Debt incurred by issuing securities 171,644,706 46,169,872 - - 217,814,578
Collateral received in relation to financial derivatives - 13,370,235 - - 13,370,235
Financial derivatives 1,479,191 - - - 1,479,191
Deferred taxes - - - 102,675 102,675
Taxes payable - - - - -
Subordinated dept - 1,603,108 - - 1,603,108
Other liabilities - - - 148,423 148,423
Total Liabilities 173,123,896 61,143,215 - 251,099 234,518,210
 
Total Equity - 1,180,000 - 10,551,737 11,731,737
 
Total Liabilities and Equity 173,123,896 62,323,215 - 10,802,836 246,249,947

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


Note 13 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, butwhere 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 30.09.2019

NOK 1 000 Level 1 Level 2 Level 3 Total
 
Bonds and bills 22,551,609 12,592,333 - 35,143,942
Financial Derivatives - 22,386,673 - 22,386,673
Total Assets 22,551,609 34,979,006 - 57,530,615
 
Bonds - 176,944,884 - 176,944,884
Financial Derivatives - 900,005 - 900,005
Total Liabilities - 177,844,889 - 177,844,889

The following table presents the company’s assets and liabilities at fair value as of 30.09.2018

NOK 1 000 Level 1 Level 2 Level 3 Total
 
Bonds and bills 21,280,143 13,752,174 - 35,032,317
Financial Derivatives - 15,982,953 - 15,982,953
Total Assets 21,280,143 29,735,127 - 51,015,270
 
Bonds - 171,644,706 - 171,644,706
Financial Derivatives - 1,479,191 - 1,479,191
Total Liabilities - 173,123,896 - 173,123,896

Note 14 Other Liabilities

NOK 1 000 30.09.2019 30.09.2018 2018
 
Employees tax deductions and other deductions 366 499 623
Employers national insurance contribution 383 297 708
Accrued holiday allowance 707 663 946
Commission payable to shareholder banks 126,512 111,668 132,512
Deposits* 1,407 188 525
Pension liabilities 11,211 15,961 10,461
Other accrued costs 35,284 6,067 4,988
Total 175,870 135,343 150,763

The Company does not have an overdraft facility or a revolving credit facility as of 30.06.2019
* Deposits represents temporary balances paid in by customers in excess of the original loan amount


Note 15 Asset Coverage Test

The asset coverage is calculated according to the Financial Services Act § 2-31 (Covered Bond Legislation). There is a difference between this asset coverage test and the amounts in the balance sheet; for the purposes of the test mortgage loans which may have migrated above the 75% loan to value level are adjusted. Only that part of the mortgage loan corresponding to a loan to value up to 75% of the collateral is considered. Market values are used for all substitute collateral in the test. In addition any defaulted loans, i.e. loans in arrears at or beyond 90 days, are excluded from the test..

NOK 1 000 30.09.2019 30.09.2018 2018
 
Total Covered Bonds 220,415,268 216,599,631 211,466,729
Residential mortgage loans 188,707,184 182,857,384 182,916,170
Lending to the public sector (gov. bonds/certificates or gov. guaranteed debt) 1,663,449 1,876,221 2,443,614
Reverse repo/ depo less than 100 days 1,549,291 9,386,748 9,337,374
Exposure to credit institutions (covered bonds) 19,393,961 21,758,180 7,829,441
Derivatives 22,029,105 14,830,064 22,612,398
Total Cover Pool 233,342,990 230,708,598 225,138,997
Asset-coverage 105.9 % 106.5 % 106.5 %
Liquidity Coverage Ratio (LCR) 30.09.2019 30.09.2018 2018
 
Liquid assets 11,932,647 9,916,420 10,054,367
Cash outflow next 30 days 4,772,533 1,254,658 1,061,996
LCR ratio 250.0 % 790.4 % 946.7 %
Net Stable Funding Ratio (NSFR) 30.09.2019 30.09.2018 2018
 
Available amount of stable funding 200,358,957 198,196,910 202,019,676
Required amount of stable funding 205,559,935 190,959,935 191,375,955
NSFR ratio 102.6 % 103.8 % 105.6 %

Note 16 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.

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. 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.                              

The European Union has approved new regulatory requirements, CRD IV, which is implemented in Norway. The requirement of 16.3% total capital for SpareBank 1 Boligkreditt includes:                            

  • Minimum core equity Pillar 1: 4.5 per cent.
  • Additional Tier 1 equity capital 1.5 per cent. and additiponal Tier 2 capital 2.0 per cent (can be held as Tier 1 and Tier 2, alternatively as core equity capital)
  • Conservation buffer: 2.5 per cent core capital
  • Systemic risk buffer: 3 per cent. core equity
  • Countercyclical buffer: 2 per cent. core equity (will increase to 2.5 per cent. on 31.12.2019)                            

The Issuer has an additional Pillar 2 requirement which is 0.8 per cent. core equity capital. The total requirement for the Issuer is therefore to have capital of minimum 16.3 per cent. of risk weighted assets. With a management buffer added, the target for capital coverage is 16.7 per cent. as of year-end 2018.

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 and several 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 30.09.2019 30.09.2018 2018
 
Share capital 7,610,548 7,090,548 7,190,548
Premium share fund 3,807,922 3,547,922 3,597,922
Other equity capital -471,879 -125,974 -385,104
Common equity 10,946,591 10,512,496 10,403,366
Intangible assets -461 -860 -707
Declared share dividend - - -
100% deduction of expected losses exceeding loss provisions IRB (CRD IV) -392,390 -346,871 -363,428
Prudent valuation adjustment (AVA) -21,486 -33,119 -15,182
Core equity capital 10,532,254 10,131,646 10,024,049
Hybrid bond 1,180,000 1,180,000 1,180,000
Tier 1 equity capital 11,712,254 11,311,646 11,204,049
Supplementary capital (Tier 2) 1,425,000 1,600,000 1,600,000
Total capital 13,137,254 12,911,646 12,804,049
Minimum requirements for capital. NOK 1 000 30.09.2019 30.09.2018 2018
 
Credit risk 3,627,350 3,316,120 3,362,169
Market risk - - -
Operational risk 58,499 62,185 62,185
Depreciation on groups of loans - - -
CVA Risk 362,097 173,229 308,572
Difference in capital requirement resulting from transitional floor 2,249,689 2,559,659 2,378,276
Minimum requirement for capital (8 per cent of RWA) 6,297,636 6,111,193 6,111,202

Capital coverage

30.09.2019 30.09.2018 2018
 
Risk-weighted assets incl. transitional floor 78,720,448 76,389,911 76,390,017
Capital coverage (requirement w/all buffers. 16.3%) 16.69 % 16.90 % 16.76 %
Tier 1 capital coverage (requirement w/all buffers. 14.3%) 14.88 % 14.81 % 14.67 %
Core capital coverage (requirement w/all buffers. 12.8%) 13.38 % 13.26 % 13.12 %
Leverage ratio (requirement 3%) 4.87 % 4.83 % 4.91 %

Note 17 Related parties

The Company has 189 763 MNOK loans to customers. These are loans acquired from shareholder banks at market values (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 is 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. 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 18 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 30.09.2019 this collateral amounted to NOK 16 784 million. This amount is included in the balance sheet, but represents restricted cash.  According to signed ISDA and CSA agreement, it is not permitted for the parties in derivatives transactions to net amounts amongst various transactions.


Note 19 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 30.09.2019.