Note 8 - Loans and advances to customers

Accounting Policy

Loans held in “hold to collect” business model are measured at amortised cost. Amortised cost is acquisition cost less repayments of principal, plus or minus cumulative amortisation resulting from the effective interest rate method, with deductions for loss provisions. The effective interest rate is the interest rate which precisely discounts estimated future cash in- or out-payments over the financial instrument’s expected lifetime.

The Bank sells only parts of the loans qualified for transfer to SpareBank 1 Boligkreditt. Loans included in business models (portfolios) with loans qualifying for transfer are therefore held both to collect cash flows and for sales. The Bank therefore classify all residential mortgages at fair value over other comprehensive income. Fair value on such loans at initial recognition are measured at the transaction price, without reduction for 12 month expected credit loss.

Fixed interest loans to customers are recognised at fair value. Gains and losses due to changes in fair value are recognised in the income statement as fair value changes. Accrued interest and premiums/discounts are recognised as interest. Interest rate risk on fixed interest loans is managed through interest rate swaps which are recognised at fair value. It is the group’s view that recognising fixed interest loans at fair value provides more relevant information on carrying values. 

Parent Bank   Group
31 Dec 2022 31 Dec 2023 (NOK million) 31 Dec 2023 31 Dec 2022
140,549 157,240 Gross Loans 169,862 152,629
999 776 Write-downs for expected credit losses 907 1,081
139,550 156,464 Net loans to and advances to customers 168,955 151,549
         
    Additional information    
56,876 64,719 Loans sold to SpareBank 1 Boligkreditt 64,719 56,876
718 894 - Of which loans to employees 1,609 1,349
1,739 1,749 Loans sold to SpareBank 1 Næringskreditt 1,749 1,739
         
78 102 Subordinated loan capital other financial institutions  0 0
1,394 2,000 Loans to employees 1) 3,250 2,450

1) Interest rate subsidies on loans to employees are included in net interest income. The lending rate for employees is 75 per cent of the best mortgage rate for other customers.

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Loans and commitments specified by type

 

Parent Bank   Group
31 Dec 2022 31 Dec 2023 Loans and commitments specified by type (NOK million) 31 Dec 2023 31 Dec 2022
    Gross loans and advances    
- - Financial lease 3,788 3,728
12,236 13,891 Bank overdraft and operating credit 13,891 12,236
3,825 4,211 Construction loans 4,211 3,825
124,488 139,138 Amortizing loan 147,971 132,841
140,549 157,240 Total gross loans to and receivables from customers 169,862 152,629
         
    Other commitments    
6,067 4,946 Financial guarantees, of which: 4,946 6,067
1,493 979   Payment guarantees 979 1,493
1,177 1,341   Performance guarantees 1,341 1,177
712 670   Loan guarantees 670 712
62 79   Guarantees for taxes 79 62
2,624 1,877   Other guarantee commitments 1,877 2,624
         
1,047 995 Unutilised guarantee commitments 995 1,047
12,143 12,660 Unutilised credits 12,883 12,459
4,745 7,629 Loans approvals (not discounted) 1) 7,817 4,950
5 10 Documentary credits 10 5
24,007 26,240 Total other commitments 26,652 24,527
         
164,556 183,481 Total loans and commitments 196,514 177,157
1) The increase in approved loan commitments is due to financing certificates, which previously have not been included due to error. History has not been received. 
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Loans and other commitments specified by sector and industry

  31 Dec 2023 31 Dec 2022
Parent Bank (NOK million) Gross
loans
Other
commitments
Total loans
and
commitments
Gross
loans
Other
commitments
Total loans
and
commitments
Wage earners 87,992 9,895 97,887 77,965 7,273 85,239
Public administration 2 643 645 1 692 694
Agriculture and forestry 12,021 1,016 13,037 10,707 955 11,662
Fisheries and hunting 5,459 756 6,215 7,047 902 7,949
Sea farming industries 2,218 1,806 4,024 2,324 1,145 3,469
Manufacturing 3,170 2,245 5,415 2,563 2,201 4,765
Construction, power and water supply 6,111 2,251 8,362 4,370 2,741 7,111
Retail trade, hotels and restaurants 2,845 1,597 4,442 2,976 1,719 4,695
Maritime sector and offshore 6,030 1,574 7,604 5,382 548 5,929
Property management 19,539 1,561 21,101 16,983 2,433 19,416
Business services 4,239 910 5,149 3,561 860 4,421
Transport and other services provision 5,396 1,043 6,438 5,327 1,551 6,878
Other sectors 2,220 943 3,163 1,343 986 2,329
Total 157,240 26,240 183,481 140,549 24,007 164,556
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  31 Dec 2023 31 Dec 2022
Group (NOK million) Gross
loans
Other
commitments
Total loans
and
commitments
Gross
loans
Other
commitments
Total loans
and
commitments
Wage earners 95,058 10,123 105,181 84,957 7,572 92,529
Public administration 39 644 683 35 694 729
Agriculture and forestry 12,489 1,031 13,520 11,140 974 12,114
Fisheries and hunting 5,488 757 6,245 7,075 904 7,979
Sea farming industries 2,473 1,814 4,287 2,656 1,159 3,814
Manufacturing 3,757 2,264 6,021 3,150 2,226 5,376
Construction, power and water supply 7,353 2,291 9,644 5,526 2,790 8,317
Retail trade, hotels and restaurants 3,777 1,627 5,404 3,632 1,747 5,380
Maritime sector and offshore 6,030 1,574 7,604 5,382 548 5,929
Property management 19,651 1,565 21,216 17,101 2,438 19,538
Business services 5,148 941 6,088 4,312 893 5,206
Transport and other services provision 6,459 1,077 7,536 6,375 1,595 7,970
Other sectors 2,140 943 3,084 1,288 987 2,275
Total 169,862 26,652 196,514 152,629 24,527 177,157
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Loans and other commitments specified by geographic area

 

  31 Dec 2023 31 Dec 2022
Parent Bank (NOK million) Gross
loans
Other
commitments

Total loans
and
commitments

Gross
loans
Other
commitments
Total loans
and
commitments
Trøndelag 95,331 15,593 110,924 91,519 14,931 106,449
Møre og Romsdal 37,194 6,441 43,635 29,612 5,341 34,953
Nordland 1,109 343 1,453 1,056 44 1,101
Oslo 9,794 2,061 11,855 7,087 2,051 9,138
Rest of Norway 13,483 1,762 15,244 10,935 1,609 12,543
Abroad 329 40 369 340 31 371
Total 157,240 26,240 183,481 140,549 24,007 164,556
             
  31 Dec 2023 31 Dec 2022
Group (NOK million) Gross
loans
Other
commitments
Total loans
and
commitments
Gross
loans
Other
commitments
Total loans
and
commitments
Trøndelag 99,368 15,727 115,096 95,640 15,111 110,751
Møre og Romsdal 40,038 6,533 46,571 31,946 5,441 37,387
Nordland 1,374 352 1,726 1,317 55 1,372
Oslo 10,211 2,074 12,285 7,512 2,069 9,581
Rest of Norway 18,541 1,925 20,466 15,875 1,820 17,695
Abroad 329 40 369 340 31 371
Total 169,862 26,652 196,514 152,629 24,527 177,157
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Gross loans sold to SpareBank 1 Boligkreditt

  31 Dec 2023 31 Dec 2022
(NOK million) Gross
loans
Other
commitments
Total loans
and
commitments
Gross
loans
Other
commitments
Total loans
and
commitments
Trøndelag 55,192 2,357 57,549 36,923 1,676 38,599
Møre og Romsdal 7,392 7 7,399 8,631 384 9,015
Nordland 1,349 7 1,355 341 8 349
Oslo 457 0 457 3,248 57 3,304
Rest of Norway 274 0 274 7,693 104 7,796
Abroad 53 0 53 40 0 40
Total 64,717 2,371 67,088 56,876 2,229 59,104
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Gross loans sold to SpareBank 1 Næringskreditt

  31 Dec 2023 31 Dec 2022
(NOK million) Gross
loans
Other
commitments
Total loans
and
commitments
Gross
loans
Other
commitments
Total loans
and
commitments
Trøndelag 1,562 - 1,562 1,430 - 1,430
Møre og Romsdal 94 - 94 53 - 53
Nordland 93 - 93 - - -
Oslo - - - 256 - 256
Rest of Norway - - - - - -
Abroad - - - - - -
Total 1,749 - 1,749 1,739 - 1,739
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Loans to and claims on customers related to financial leases (NOK million)

Group (NOK million) 31 Dec 2023 31 Dec 2022
Gross advances related to financial leasing    
- Maturity less than 1 year 140 113
- Maturity more than 1 year and less than 5 years 2,418 2,377
- Maturity more than 5 years 1,162 1,169
Total gross claims 3,719 3,658
     
Received income related to financial leasing, not yet earned 103 105
Net investments related to financial leasing 3,788 3,728
     
Net investments in financial leasing can be broken down as follows:    
- Maturity less than 1 year 153 127
- Maturity more than 1 year and less than 5 years 2,491 2,450
- Maturity more than 5 years 1,145 1,151
Total net claims 3,788 3,728
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Loans and other commitments to customers specified by risk group

The Bank calculates default probabilities for all customers in the loan portfolio at the loan approval date. This is done on the basis of key figures on earnings, financial strength and behaviour. Default probability is used as a basis for risk classification of the customer. Further, risk classification is used to assign each customer to a risk group. See note 11 on credit risk exposure for each internal risk rating.

Customers are rescored in the Bank’s portfolio system on a monthly basis.

Other commitments include guarantees, unutilised credit lines and letters of credit.

Exposures are monitored with a basis in the exposure’s size, risk and migration. Risk pricing of business exposures is done with a basis in expected loss and economic capital required for each exposure.

The Bank uses macro-based stress tests to estimate write-downs required as a result of objective events that were not reflected in portfolio quality at the time of measurement.

Risk group default and written down consist of customers default by over 90 days and or objetive evidence of impairment leading to reduced cash flows from the customer. See note 10 Losses on loans and guarantees

 

  Neither default or credit impaired    
Parent Bank 31 Dec 23 (NOK million) Lowest risk Low risk Medium risk High risk Highest risk Default
and
credit
impaired
Total
               
Gross Loans              
Fair value through OCI 79,502 7,751 2,854 647 1,098 526 92,377
Stage 1 79,314 6,791 1,147 187 236 - 87,675
Stage 2 188 960 1,707 459 862 - 4,175
Stage 3 - - - - - 526 526
               
Amortised cost 27,706 12,092 15,553 1,498 1,069 1,363 59,281
Stage 1 27,445 9,856 11,834 886 532 - 50,553
Stage 2 261 2,236 3,719 613 536 - 7,366
Stage 3 - - - - - 1,363 1,363
               
Fair value through Profit and Loss 4,738 609 163 44 20 7 5,582
Total Gross Loans 111,946 20,452 18,570 2,189 2,186 1,897 157,240
               
Other Commitments 16,850 4,917 3,963 199 118 193 26,240
Stage 1 16,209 4,585 3,080 67 35 - 23,976
Stage 2 641 331 883 133 84 - 2,071
Stage 3 - - - - - 193 193
               
Total loans and other commitments 128,796 25,369 22,533 2,389 2,305 2,090 183,481
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  Neither default or credit impaired    
Parent Bank 31 Dec 22 (NOK million) Lowest risk Low risk Medium risk High risk Highest risk Default
and
credit
impaired
Total
               
Gross Loans              
Fair value through OCI 71,072 6,518 2,488 635 925 372 82,010
Stage 1 70,927 5,671 963 229 188 - 77,978
Stage 2 144 848 1,525 406 737 - 3,660
Stage 3 - - - - - 372 372
               
Amortised cost 26,194 11,451 12,497 1,553 633 1,502 53,830
Stage 1 24,784 10,085 10,195 913 167 - 46,144
Stage 2 1,410 1,365 2,302 640 467 - 6,184
Stage 3 - - - - - 1,502 1,502
               
Fair value through Profit and Loss 3,962 595 99 11 38 4 4,709
Total Gross Loans 101,227 18,564 15,083 2,200 1,597 1,878 140,549
               
Other Commitments 14,300 5,910 3,009 520 96 173 24,007
Stage 1 14,238 5,771 2,555 75 24 - 22,663
Stage 2 62 139 454 445 71 - 1,171
Stage 3 - - - - - 173 173
               
Total loans and other commitments 115,527 24,473 18,093 2,719 1,693 2,051 164,556
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  Neither default or credit impaired    
Group 31 Dec 23 (NOK million) Lowest risk Low risk Medium risk High risk Highest risk Default
and
credit
impaired
Total
               
Gross Loans              
Fair value through OCI 79,502 7,751 2,854 647 1,098 526 92,377
Stage 1 79,314 6,791 1,147 187 236 - 87,675
Stage 2 188 960 1,707 459 862 - 4,175
Stage 3 - - - - - 526 526
               
Amortised cost 28,043 14,748 22,971 2,853 1,833 1,557 72,004
Stage 1 27,782 12,177 18,328 1,797 532 - 60,616
Stage 2 261 2,571 4,642 1,056 1,301 - 9,832
Stage 3 - - - - - 1,557 1,557
               
Fair value through Profit and Loss 4,636 609 163 44 20 7 5,480
Total Gross Loans 112,181 23,108 25,988 3,544 2,951 2,091 169,862
               
Other Commitments 16,850 4,917 4,374 199 118 193 26,652
Stage 1 16,209 4,585 3,293 67 35 - 24,189
Stage 2 641 331 1,081 133 84 - 2,270
Stage 3 - - - - - 193 193
               
Total loans and other commitments 129,031 28,025 30,362 3,743 3,069 2,284 196,514
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  Neither default or credit impaired    
Group 31 Dec 22 (NOK million) Lowest risk Low risk Medium risk High risk Highest risk Default
and
credit
impaired
Total
               
Gross Loans              
Fair value through OCI 71,072 6,518 2,488 635 925 372 82,010
Stage 1 70,927 5,671 963 229 188 - 77,978
Stage 2 144 848 1,525 406 737 - 3,660
Stage 3 - - - - - 372 372
               
Amortised cost 27,250 13,973 19,084 2,605 1,403 1,673 65,989
Stage 1 25,840 12,598 16,471 1,535 167 - 56,611
Stage 2 1,410 1,375 2,612 1,071 1,236 - 7,705
Stage 3 - - - - - 1,673 1,673
               
Fair value through Profit and Loss 3,884 595 99 11 38 4 4,631
Total Gross Loans 102,206 21,086 21,670 3,252 2,366 2,049 152,629
               
Other Commitments 14,300 5,910 3,530 520 96 173 24,527
Stage 1 14,238 5,771 2,827 75 24 - 22,934
Stage 2 62 139 703 445 71 - 1,420
Stage 3 - - - - - 173 173
               
Total loans and other commitments 116,505 26,996 25,200 3,772 2,462 2,222 177,157
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Gross loans and commitments sold to SpareBank 1 Boligkreditt

  31 Dec 2023 31 Dec 2022
(NOK million) Gross
loans
Other
commitments
Total loans
and
commitments
Gross
loans
Other
commitments
Total loans
and
commitments
Lowest risk 37,570 1,518 39,088 48,752 2,217 50,969
Low risk 13,153 597 13,750 6,261 7 6,268
Medium risk - - - 1,259 4 1,263
High risk 3,960 81 4,042 327 0 327
Highest risk 7,619 143 7,762 220 - 220
Default and written down 2,414 32 2,446 58 0 58
Total 64,717 2,371 67,088 56,876 2,229 59,104
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Gross loans and commitments sold to SpareBank 1 Næringskreditt

  31 Dec 2023 31 Dec 2022
(NOK million) Gross
loans
Other
commitments
Total loans
and
commitments
Gross
loans
Other
commitments
Total loans
and
commitments
Lowest risk 1,311 - 1,311 1,496 - 1,496
Low risk 188 - 188 147 - 147
Medium risk - - - 96 - 96
High risk 250 - 250 - - -
Highest risk - - - - - -
Default and written down - - - - - -
Total 1,749 - 1,749 1,739 - 1,739
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Annual report and notes

© SpareBank 1 SMN