Boligkreditt

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 2019. 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 2019.

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Note 2 Net Interest Income

NOK 1 000					30.09.2020	30.09.2019	2019
Interest income
Interest income from, certificates, bonds and deposits					161,073	179,913	280,846
Interest income from residential mortgage loans					3,833,192	4,027,855	5,553,510
Total interest income					3,994,265	4,207,768	5,834,356
Interest expense
Interest expense and similar expenses to credit institutions					21,106	-36,728	-45,148
Interest expense and similar expenses on issued bonds					2,401,922	2,775,328	3,903,694
Interest expense and similar expenses on subordinated debt					30,428	35,609	48,356
Recovery and Resolution Fund *					38,224	31,500	-
Other interest expenses					5,483	6,534	51,406
Total interest expense					2,497,164	2,812,243	3,958,307
Net interest income					1,497,100	1,395,525	1,876,049

 

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

 

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Note 3 Net Gains from Financial Instruments

NOK 1 000					30.09.2020	30.09.2019	2019
Net gains (losses) from financial liabilities (1)					-6,548,320	-5,750,645	-6,958,008
Net gains (losses) from financial derivatives, hedging liabilities, at fair value, hedging instrument (1,3)					-5,931,934	5,758,930	6,990,649
Net gains (losses) from financial assets (2)					10,903,519	-103,155	-272,077
Net gains (losses) from financial derivatives, hedging assets, at fair value, hedging instrument (2,3)					1,470,575	4,599	68,140
Net gains (losses)					-106,159	-90,271	-171,295

(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 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.

(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. 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 hegdes.

(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.

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Note 4 Salaries and Remuneration

NOK 1 000						30.09.2020	30.09.2019	2019
Salary						7,803	7,318	9,682
Salaries reinvoiced to SpareBank1 Næringskreditt*						-2,413	-2,092	-2,772
Pension expenses						1,041	1,673	1,727
Social insurance fees						1,767	1,952	2,536
Other personnel expenses						736	184	606
Total salary expenses						8,934	9,035	11,780
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. Pension benefit obligations are covered in SpareBank 1 Boligkreditt through participation in the pension fund of SpareBank 1 SMN. This pension scheme meets the legal demands on mandatory occupational pension.

 

Note 5 Other Operating Expenses

NOK 1 000					30.09.2020	30.09.2019	2019
IT and IT operations					9,784	8,848	11,775
Purchased services other than IT					8,645	7,065	10,159
Other Operating Expenses					1,381	1,185	2,097
Depreciation on fixed assets and other intangible assets					270	246	328
Total					20,079	17,344	24,359

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Note 6 Other Assets

NOK 1 000					30.09.2020	30.09.2019	2019
Intangible assets					154	461	379
Fixed assets					339	-	-
Accounts receivable from SpareBank 1 Næringskreditt AS					297	332	499
Accounts receivable, securities					0	-	-
Other					8	198	12
Total					798	991	890

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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 30.09.2020 were NOK 205,9 billion. All mortgages carry a variable interest rate.

NOK 1 000					30.09.2020	30.09.2019	2019
Revolving loans - retail market					41,986,145	43,301,662	42,431,353
Amortising loans - retail market					163,887,748	146,266,990	148,660,350
Accrued interest					147,600	205,186	229,402
Total loans before specified and unspecified loss provisions					206,021,494	189,773,838	191,321,105
Stage 1					199,158,131	183,237,271	183,557,607
Stage2					6,863,362	6,536,567	7,763,498
Stage 3					-	-	-
Gross loans					206,021,494	189,773,838	191,321,105
Impairments on groups of loans
Expected credit loss, stage 1					1,271	1,030	1,068
Expected credit loss, stage 2, no objective proof of loss					21,228	9,587	10,695
Expected credit loss, stage 3, objective proof of loss					-		-
Total net loans and claims with customers					205,998,995	189,763,221	191,309,342
Liability
Unused balances under customer revolving credit lines (flexible loans)					12,648,002	12,129,027	12,028,316
Total					12,648,002	12,129,027	12,028,316
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.

 

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Note 8 Share Capital and Shareholder Information

						List of shareholders as of 2020
						No of Shares	in per cent	Share of votes
SpareBank 1 Østlandet						17,377,736	22.29 %	22.29 %
SpareBank 1 SMN						16,288,758	20.89 %	20.89 %
SpareBank 1 Nord-Norge						14,538,500	18.65 %	18.65 %
BN Bank ASA						5,251,861	6.74 %	6.74 %
SpareBank 1 BV						4,893,152	6.28 %	6.28 %
Sparebanken Telemark						3,680,938	4.72 %	4.72 %
SpareBank 1 Ringerike Hadeland						3,572,202	4.58 %	4.58 %
SpareBank 1 Østfold Akershus						3,523,874	4.52 %	4.52 %
SpareBank 1 Nordvest						1,751,869	2.25 %	2.25 %
SpareBank 1 SR-Bank ASA						1,720,859	2.21 %	2.21 %
SpareBank 1 Modum						1,631,051	2.09 %	2.09 %
SpareBank 1 Søre Sunnmøre						1,049,108	1.35 %	1.35 %
SpareBank 1 Gudbrandsdal						1,037,027	1.33 %	1.33 %
SpareBank 1 Hallingdal Valdres						1,006,821	1.29 %	1.29 %
SpareBank 1 Lom og Skjåk						648,393	0.83 %	0.83 %
Total						77,972,149	100 %	100 %

 

The share capital consists of 77 972 149 shares with a nominal value of NOK 100

 

Hybrid capital

NOK 1000		ISIN	Interest rate	Issued year	Call option	30.09.2020	30.09.2019	2019
Perpetual
Hybrid (Tier 1 capital instrument)		NO0010713746	3M Nibor + 310 bp	2014	09.05.2019		-	-
Hybrid (Tier 1 capital instrument)		NO0010745920	3M Nibor + 360 bp	2015	23.09.2020	-	300,000	300,000
Hybrid (Tier 1 capital instrument)		NO0010746191	3M Nibor + 360 bp	2015	29.09.2020	-	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	350,000	350,000
Hybrid (Tier 1 capital instrument)		NO0010890825	3M Nibor + 300 bp	2020	26.08.2025	200,000
Book value						900,000	1,180,000	1,180,000

 

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

 

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Note 9 Liabilities incurred by issuing Securities

NOK 1 000						Nominal value* 30.09.2020	Nominal value* 30.09.2019	Nominal value* 2019
Senior unsecured bonds						-	-	-
Repurchased senior unsecured bonds						-	-	-
Covered bonds						218,416,475	197,703,292	201,758,203
Repurchased Covered bonds						-2,990,000	-	-
Total debt incurred by issuing securities						215,426,475	197,703,292	201,758,203

 

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

 

NOK 1 000						Book value 30.09.2020	Book value 30.09.2019	Book value 2019
Senior unsecured bonds						-	-	-
Repurchased senior unsecured bonds						-	-	-
Covered bonds						247,538,288	219,323,073	216,579,429
Repurchased covered bonds						-2,990,406	-	-
Activated costs incurred by issuing debt						-214,471	-194,464	-184,635
Accrued interest						970,239	1,092,195	1,275,284
Total debt incurred by issuing securities						245,303,651	220,220,804	217,670,078

 

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

 

Covered bonds

Due in		30.09.2020	30.09.2019	2019
2019		-	6,030,414	-
2020		-	22,462,500	20,035,500
2021		27,112,000	28,891,117	28,881,382
2022		43,759,200	38,749,200	38,749,200
2023		28,196,750	30,373,550	30,356,650
2024		24,158,575	22,862,717	23,451,428
2025		30,713,750	10,648,750	10,648,750
2026		22,710,000	21,940,000	22,210,000
2027		11,563,850	674,394	673,042
2028		2,712,800	2,562,800	2,562,800
2029		24,257,050	12,265,350	23,946,950
2038		242,500	242,500	242,500
Total		215,426,475	197,703,292	201,758,203
Total		215,426,475	197,703,292	201,758,203

 

* 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						30.09.2020	30.09.2019	2019
NOK						69,545,046	60,323,691	59,978,539
EUR						157,238,388	141,547,805	148,733,048
USD						-	9,601,507	0
GBP						9,265,435	8,499,140	8,706,679
SEK						9,254,781	248,662	251,812
Total						245,303,651	220,220,804	217,670,078

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Note 10 Subordinated Debt

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NOK 1000	ISIN	Interest rate	Issued year	Call option from	Maturity	Nominal amount	30.09.2020	30.09.2019	2019
With maturity
Subordinated debt (Tier 2 capital instrument)	NO0010704109	3M Nibor + 225 bp	2014	07.03.2019	07.03.2024	475,000	-		-
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							4,936	7,972	8,439
Book value							1,429,936	1,432,972	1,433,439

 

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

 

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Note 11 Financial Derivatives

NOK 1 000						30.09.2020	30.09.2019	2019
Interest rate derivative contracts
Interest rate swaps
Nominal amount						59,952,495	60,665,104	55,698,553
Asset						2,927,406	2,547,232	2,067,884
Liability						-214,028	-357,568	-332,246
Currency derivative contracts
Currency swaps
Nominal amount						121,765,375	145,503,389	145,222,180
Asset						27,146,917	19,839,441	14,186,570
Liability						-45,024	-	-542,709
Total financial derivative contracts
Nominal amount						181,717,870	206,168,494	200,920,732
Asset						30,074,324	22,386,673	16,254,454
Liability						-259,052	-357,568	-874,955

 

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

 

Change due to basis swap spread adjustment						30.09.2020	30.09.2019	2019
Net asset (+) / liability (-) as shown above, before basisswap						-259,052	-357,568	-874,955
Net gain (loss) on valuation adjustment of basisswap spreads						-467,617	-542,437	-545,419
Total asset (+) / liability (-) derivatives						-726,670	-900,005	-1,420,374

 

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. Changes in basis swap valuations are not included in net income, but is included in other comprehensive income and in equity

 

Financial assets and debt accounted for at amortised cost

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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	Non-financial assets and liabilities	30.09.2020
Assets
Lending to and deposits with credit institutions			-	17,695,451	-	17,695,451
Certificates and bonds			33,852,412	-	-	33,852,412
Residential mortgage loans			-	205,998,995	-	205,998,995
Financial derivatives			30,074,324	-	-	30,074,324
Defered tax asset			-	-	142,782	142,782
Other assets			-	-	798	798
Total Assets			63,926,736	223,694,446	143,580	287,764,762
Liabilities
Debt incurred by issuing securities			196,858,089	48,445,562	-	245,303,651
Collateral received in relation to financial derivatives			-	23,499,230	-	23,499,230
Repurchase agreement			-	250,003	-	250,003
Financial derivatives			726,670	-	-	726,670
Deferred taxes			-	-	19,450	19,450
Taxes payable			-	-	223,594	223,594
Subordinated dept			-	1,429,936	-	1,429,936
Other liabilities			-	-	3,960,268	3,960,268
Total Liabilities			197,584,759	73,624,730	4,203,312	275,412,801
Total Equity			-	900,000	11,451,961	12,351,961
Total Liabilities and Equity			197,584,759	74,524,730	15,655,273	287,764,762

 

*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	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 mortage 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	194,327,479	11,985	251,870,078
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

 

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Note 13 Financial Instruments at 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 30.09.2020

NOK 1 000				Level 1	Level 2	Level 3	Total
Certificates and bonds				23,066,419	10,785,993	-	33,852,412
Financial Derivatives				-	30,074,324	-	30,074,324
Total Assets				23,066,419	40,860,317	-	63,926,736
Debt incurred by issuing securities				-	196,858,089	-	196,858,089
Financial Derivatives				-	726,670	-	726,670
Total Liabilities				-	197,584,759	-	197,584,759

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
Certificates and bonds				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
Debt incurred by issuing securities				-	-	-	-
Financial Derivatives				-	900,005	-	900,005
Total Liabilities				-	177,844,889	-	177,844,889

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Note 14 Other Liabilities

NOK 1 000					30.09.2020	30.09.2019	2019
Employees tax deductions and other deductions					367	366	548
Employers national insurance contribution					1,239	383	645
Accrued holiday allowance					776	707	994
Commission payable to shareholder banks					189,529	126,512	126,813
Deposits*					3,101	1,407	2,471
Pension liabilities					11,833	11,211	11,383
Expected credit loss unused credit lines (flexible loans)					113	0	34
Accounts payable, secutities					3,762,575	0	0
Other accrued costs					-9,265	35,284	5,368
Total					3,960,268	175,870	148,256

 

The Company does not have an overdraft facility or a revolving credit facility as of 30.09.2020
* Deposits represents temporary balances paid in by customers in excess of the original loan amount

 

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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					30.09.2020	30.09.2019	2019
Covered Bonds					248,539,419	220,415,268	217,833,870
Total Covered Bonds					248,539,419	220,415,268	217,833,870
Residential mortgage loans					204,930,908	188,707,184	190,250,177
Public sector, SSA bond exposure					1,464,766	1,663,449	357,901
-of which allocated to LCR					835,840	-	-
Reverse repo/ depo less than 100 days					6,656,019	1,549,291	5,254,080
-of which allocated to LCR					-	-	-
Exposure to credit institutions (covered bonds)					16,462,046	19,393,961	15,521,382
-of which allocated to LCR					2,211,586	-	-
Derivatives					29,815,273	22,029,105	15,379,500
Total Cover Pool					256,281,586	233,342,990	226,763,040
Asset-coverage					103.1 %	105.9 %	104.1 %
Cover pool including amounts allocated to LCR					259,329,012
Assets-coverage including amounts allocated to LCR					104.3 %

Liquidity Coverage Ratio (LCR)					30.09.2020	30.09.2019	2019
Liquid assets					19,669,497	11,932,647	14,680,356
Cash outflow next 30 days					13,511,171	4,772,533	12,605,694
LCR ratio					145.6 %	250.0 %	116.5 %

Net Stable Funding Ratio (NSFR)					30.09.2020	30.09.2019	2019
Available amount of stable funding					235,976,047	200,358,957	206,882,321
Required amount of stable funding					217,614,132	205,559,935	198,323,077
NSFR ratio					108.4 %	102.6 %	104.3 %

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Note 16 Capital Adequacy

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 per cent 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 14.5 per cent 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: 1.0 per cent. core equity

The Issuer has an additional Pillar 2 requirement which is 0.9 per cent. core equity capital. The total requirement for the Issuer is therefore to have capital of minimum 15.4 per cent of risk weighted assets. With a management buffer added, the target for capital coverage is 15.8 per cent at at 30 September 2020.

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					30.09.2020	30.09.2019	2019
Share capital					7,797,215	7,610,548	7,610,548
Premium share fund					3,901,255	3,807,922	3,807,922
Other equity capital					-394,177	-471,879	-317,602
Common equity					11,304,293	10,946,591	11,100,868
Intangible assets					-154	-461	-379
Declared share dividend					-	-	-90,566
100% deduction of expected losses exceeding loss provisions IRB (CRD IV)					-385,380	-392,390	-420,879
Prudent valuation adjustment (AVA)					-17,900	-21,486	-16,639
Deferred taxes					-	-	-
Core equity capital					10,900,859	10,532,254	10,572,406
Hybrid bond					900,000	1,180,000	1,180,000
Tier 1 equity capital					11,800,859	11,712,254	11,752,406
Supplementary capital (Tier 2)					1,425,000	1,425,000	1,425,000
Total capital					13,225,859	13,137,254	13,177,406

Minimum requirements for capital. NOK 1 000					30.09.2020	30.09.2019	2019
Credit risk					3,850,503	3,627,350	3,711,268
Market risk					-	-	-
Operational risk					59,537	58,499	59,537
Depreciation on groups of loans					-	-	-
CVA Risk					500,326	362,097	329,561
Difference in capital requirement resulting from transitional floor					-	2,249,689	-
Minimum requirement for capital					4,410,366	6,297,636	4,100,367

Capital coverage

					30.09.2020	30.09.2019	2019
Risk-weighted assets incl. transitional floor*					55,129,576	78,720,448	51,254,583
Capital coverage (requirement w/all buffers, 15.4%)					23.99 %	16.69 %	25.71 %
Tier 1 capital coverage (requirement w/all buffers, 13.4%)					21.41 %	14.88 %	22.93 %
Core capital coverage (requirement w/all buffers, 11.9%)					19.77 %	13.38 %	20.63 %
Leverage ratio (requirement 3.0%)					4.60 %	4.87 %	5.05 %

* 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.

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Note 17 Related parties

SpareBank 1 SMN
The Company purchases a substantial amount of their support functions from SpareBank 1 SMN. 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

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Note 18 Collateral received

These institutions post collateral in the form of cash deposits to SpareBank 1 Boligkreditt. At the end of the period 30.09.2020 this collateral amounted to NOK 23.499 million. This amount is included in the balance sheet, but represents restricted cash.

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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 30.09.2020.