Nordea Eiendomskreditt AS Annual Report 2024
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Key financial figures
Summary of the income statement (NOKm)
2024
2023
2022
2021
2020
Net interest income
2,957
1,937
2,319
3,018
2,399
Net fee and commission income
57
85
77
77
0
Net result from items at fair value
-6
-77
-11
-179
-34
Other operating income
0
1
3
2
74
Total operating income
3,007
1,945
2,388
2,918
2,439
Staff costs
38
38
31
27
23
Other expenses
1,477
1,192
1,387
1,713
894
Total operating expenses
1,515
1,230
1,419
1,740
917
Loan losses (negative figures are reversals)
88
47
106
53
98
Operating profit
1,404
668
863
1,125
1,424
Income tax expense
351
168
215
281
356
Net profit for the period
1,053
500
648
844
1,068
Summary of the balance sheet (NOKm)
2024
2023
2022
2021
2020
Loans to the public, gross
450,560
334,668
323,563
305,898
266,240
Allowance for loan losses
-442
-361
-311
-218
-190
Other assets
13,104
13,239
6,555
6,813
7,143
Debt securities in issue
270,579
197,449
149,352
107,152
142,744
Other liabilities
155,190
128,192
158,401
183,216
110,690
Equity
37,452
21,905
22,054
22,125
19,759
Total assets
463,222
347,547
329,807
312,493
273,192
Average total assets
375,464
341,664
322,559
307,635
264,935
Ratios and key figures¹
2024
2023
2022
2021
2020
Basic/diluted Earnings per share (EPS), annualised basis, NOK
62.7
29.8
38.6
50.3
69.6
Equity per share
2
, NOK
2231.7
1305.3
1314.1
1318.4
1288.4
Shares outstanding
2
, million
16.8
16.8
16.8
16.8
15.3
Return on average equity
3.8%
2.3%
2.9%
3.9%
5.5%
Cost/income ratio
50.4%
63.2%
59.4%
59.6%
37.6%
Loan loss ratio, annualised, basis points
2.4
1.4
3.4
1.8
3.8
Risk Exposure Amount
2
, NOKm
129,975
81,987
80,161
74,676
62,546
Own funds, NOKm
2
37,196
22,548
22,530
22,471
21,489
Common Equity Tier 1 capital ratio
2
27.7%
26.0%
26.6%
28.5%
30.6%
Tier 1 capital ratio
2
27.7%
26.0%
26.6%
28.5%
30.6%
Total capital ratio
2
28.6%
27.5%
28.1%
30.1%
34.4%
Number of employees (Full-time equivalents)
2
24.0
24.0
21.5
20.5
17.5
1
see nordea.com/en/investors/norwegian-subsidiary-reports
2
Figures for the year 2020 include only Nordea Eiendomskreditt (NE), while figures for 2021 have been updated to include
Nordea Direct Boligkreditt (NDBK). Risk Exposure Amount has been calculated according to different methods in NE and
NDBK. Figures for NDBK have not been recalculated according to NE’s methodology.
Nordea Eiendomskreditt AS is part of the Nordea Group. We are a universal bank with a 200-year history of supporting and growing the Nordic economies – enabling dreams
and aspirations for a greater good. Every day, we work to support our customers’ financial development, delivering best-in-class omnichannel customer experiences and
driving sustainable change. The Nordea share is listed on the Nasdaq Helsinki, Nasdaq Copenhagen and Nasdaq Stockholm exchanges. Read more about us at nordea.com.
Nordea Eiendomskreditt AS Annual Report 2024
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Table of contents
Board of Directors’ Report
Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Cash flow statement
Notes to the financial statements
Note 1 Accounting policies
Note 2 Financial performance and returns
Note 2.1 Net interest income
Note 2.2 Net fee and commission income
Note 2.3 Net result from items at fair value
Note 2.4 Other expenses
Note 2.5 Loan losses
Note 2.6 Taxes
Note 3 Financial instruments
Note 3.1 Recognition and derecognition from the balance sheet
Note 3.2 Classification and measurement
Note 3.3 Fair value
Note 3.4 Offsetting
Note 3.5 Loans
Note 3.6 Interest-bearing securities
Note 3.7 Derivatives and hedge accounting
Note 3.8 Cover pool
Note 3.9 Debt securities in issue and loans from financial institutions
Note 4 Provisions
Note 5 Off-balance sheet items
Note 5.1 Assets pledged as security for own liabilities
Note 5.2 Commitments
Note 6 Employee benefits and key management personnel remuneration
Note 6.1 Staff costs
Note 6.2 Pensions
Note 7 Capital adequacy
Note 8 Other disclosures
Note 8.1 Additional disclosures on the statement of changes in equity
Note 8.2 Maturity analysis for assets and liabilities
Note 8.3 Related-party transactions
Note 8.4 Acquisitions
Note 9 Risk and liquidity management
Auditor’s report
Statement by the Chief Executive Officer and the Board of Directors
Board of Directors and Auditor
Contact information
Nordea Eiendomskreditt AS Annual Report 2024
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Board of Directors´ Report
Introduction
Nordea Eiendomskreditt AS was first incorporated in 1927 as
a credit association known as Norges Hypotekforening for
Næringslivet. During the course of autumn 2009, the
company's commercial property lending activities were sold to
the parent bank, Nordea Bank Norge ASA. With effect from
2010 the company has operated solely as a mortgage credit
institution, licenced by the Norwegian Financial Supervisory
Authority (FSA) to issue covered bonds. The business
objective is to grant and acquire residential mortgage loans
and loans to holiday homes in Norway, including secured
construction loans, and to finance its lending activities mainly
by issuing covered bonds. The mortgage loan portfolio of
NOK 450bn at the end of 2024 consists of loans acquired or
issued directly from own balance sheet, including acquisition
of mortgage loans from Danske Bank in the fourth quarter
2024. Nordea Eiendomskreditt is part of the Personal Banking
Business Area in Nordea.
Nordea Eiendomskreditt AS is domiciled in Oslo, and its
business registration number is 971 227 222.
The company’s share capital is NOK 1,896m, made up of
16,781,828 ordinary shares, each with a nominal value of
NOK 113. The entire issued share capital is owned by Nordea
Bank Abp.
Comments on the Income Statement
Income
Total operating income in 2024 was NOK 3,007m (NOK
1,945m), a increase of 55% from 2023. The increase
compared to last year is mainly related to significant increase
in net interest income, driven by higher lending volume,
increased lending margin and a generally higher interest rate
level.
Net interest income increased 53% to NOK 2,957m in 2024
(NOK 1,937m).
Net fee and commission income was NOK 57m in 2024 (NOK
85m). The reduction is mainly a result of higher liquidity facility
fee paid to the parent bank in 2024.
Net result from items at fair value ended at a loss of NOK 6m
in 2024 (loss of NOK 77m). The improvement comes from
unrealised fair value adjustments that turned from a net loss
in 2023 to a net gain in 2024, while realised net result was a
loss both years. In accordance with IFRS, net result from
items at fair value includes both realized gain/loss from
buybacks of own bonds, as well as fair value changes of
interest rate swaps and the corresponding hedged items
(fixed-rate lending and fixed-rate bonds) in the hedge
portfolio, due to changes in market rates.
Expenses
Total operating expenses were NOK 1,515m in 2024 (NOK
1,230m) whereof NOK 38m (NOK 38m) is staff related. The
number of employees at the end of 2024 was 24 (24). Other
operating expenses are mainly related to services bought
from the parent bank, such as sales and distribution of
mortgage loans, management of the loan portfolio and
customer contact, as well as funding, risk control, accounting,
reporting and IT related services. The main part is related to
sales, distribution and management of the mortgage loans,
where the fee is calculated based on net interest income, and
will therefore fluctuate between periods. Nordea
Eiendomskreditt AS does not incur any costs for research and
development (R&D) activities.
Transactions between Nordea Eiendomskreditt AS and other
legal entities or branches in the Nordea Group are settled in
conformity with OECD guidelines on transfer pricing. The
cost/income ratio for 2024 was 50.4% compared to 63.2% last
year.
Loan losses
Net loan losses and provisions recognised in the accounts for
2024 were NOK 88m (NOK 47m), covering both realised loan
losses and changes in loan loss allowances. This
corresponds to a loan loss ratio of 2.4 bps (1.4 bps). Realised
loan losses were NOK 8m (NOK 1m). Loan loss allowances
have increased from NOK 361m at the beginning of the year
to NOK 442m at the end of the year, mainly due to macro
impacts and migration of loans between stages. Also day 1
loan loss provisions for the acquired mortgage portfolio from
Danske Bank were recognised in 2024.
During the fourth quarter new enhanced collective
provisioning models were introduced, in line with the new
capital models implemented in the third quarter, resulting in
lower provisioning requirements for Nordea Eiendomskreditt.
This was mainly offset by stress test calculations reflecting
updated assumptions to assess the risks related to continued
economic uncertainty, resulting in increased management
judgement allowances. The management judgements, held to
cover expected credit losses not yet adequately captured by
the IFRS 9 modelled outcome, were increased by NOK 129m
to NOK 221m in the fourth quarter.
The underlying net loan losses in Nordea Eiendomskreditt are
low, reflecting a strong credit portfolio. Loans in Stage 3
(impaired loans) have increased, hence some deterioration in
the credit quality which is also reflected in increased loan loss
allowances. Nordea has implemented new IRB models, hence
a shift can be seen in the scoring distribution, but the
underlying risk in the portfolio remains unchanged.
See Note 2.5 “Loan losses” and Note 3.5 “Loans” for further
information about loan losses and impairment.
Taxes
Taxes for the year amounted to NOK 351m, of which NOK
178m relates to tax payable and NOK 173m due to changes
in deferred tax.
Net profit
Net profit for the year amounted to NOK 1,053m (NOK 500m).
This gives a return on average equity of 3.8% (2.3%). This is
to a large extent explained by the significant increase in net
interest income from higher lending volumes combined with
increased lending margin and a generally higher interest rate
level. The return on equity is also to a large extent a result of
the agreed pricing model for sales- and distribution fees that
are paid to the parent bank.
Comments on the Balance sheet
Assets and lending activities
Gross lending to customers at 31 December 2024 amounted
to NOK 450bn (NOK 334bn) and consists
Nordea Eiendomskreditt AS Annual Report 2024
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63,9 %
31,3 %
4,4 %
0,4 %
0,0 %
Lending by Collateral per 31 Dec 2024
Single-Family
Apartments
Vacation Home
Under construction
Commercial
26%
19%
10%
7%
6%
5%
4%
4%
4%
4%
4%
3%
2%
2%
0%
Lending by geographical distribution of property
per 31 Dec 2024
Oslo
Akershus
Vestland
Trøndelag
Østfold
Rogaland
Agder
Vestfold
Innlandet
Buskerud
NOKm
31 Dec 2024
31 Dec 2023
Covered bonds in NOK
268 358
194 827
Covered bonds in EUR
1 178
1 121
Unsecured funding from Nordea
151 055
124 930
Subordinated debt
1 100
1 100
Total
421 691 321 978
only of residential mortgage loans and loans to holiday homes
in Norway including constructions loans, used as collateral in
securing the covered bonds issued by the company.
The loan
portfolio increased by NOK 103bn as a result of the Danske
Bank acquisition in the fourth quarter. NOK 428bn of the loan
portfolio is included in the collateral pool for the purposes of
the calculation of the asset coverage requirement under the
covered bond legislation. This represents surplus collateral of
58.8% in relation to the covered bonds issued. See Note 3.8
“Cover pool” for further information.
The cover pool has a weighted average indexed loan-to-value
(LTV) ratio of 54.9% at the end of 2024 (55.9%).The average
loan size was NOK 2,374m (NOK 2,315m). The cover pool is
split between 66% amortizing loans and 34% flex loans
(including amortising loans in amortising free period),
unchanged from end of last year.
In September Nordea Eiendomskreditt entered into a financial
guarantee with Nordea Bank Abp containing credit protection
for a benchmark portfolio of mortgages in an initial nominal
amount of NOK 65bn.
Concentration risk in the loan portfolio
Nordea Eiendomskreditt’s mortgage loans and collaterals
have a good geographical spread with a major part
concentrated around the five largest Norwegian cities. See
the figures below for more detailed information on the loan
portfolio split by collateral and geography.
Liabilities and funding activities
Nordea Eiendomskreditt’s main funding source is issuance of
covered bonds. Covered bonds are debt instruments,
regulated by the Financial Undertakings Act (Act No. 17 of 10
April 2015), that gives investors a preferential claim into a
pool of high quality assets in case of the issuer’s insolvency.
Norwegian covered bonds can only be issued by mortgage
credit institutions that hold a license from the Norwegian FSA
and whose articles of association comply with certain
mandatory requirements. The cover pool in Nordea
Eiendomskreditt consists only of Norwegian residential
mortgage loans and loans to holiday homes in Norway.
During 2024 Nordea Eiendomskreditt has issued covered
bonds amounting to NOK 72.5bn in the Norwegian domestic
market under its NOK 350bn domestic covered bond
program. Issuance is done via taps of outstanding bonds and
new bonds via designated dealers. In addition, covered bonds
of NOK 39bn were transferred from Danske Bank in the fourth
quarter. During 2024 bonds amounting to NOK 38.0bn have
matured or been bought back. As of 31 December 2024,
Nordea Eiendomskreditt had outstanding covered bonds
totalling NOK 268.4bn in the Norwegian market and EUR
0.1bn in the European market. Nordea Eiendomskreditt had
also subordinated debt outstanding to the amount of NOK
1.1bn.
In addition to the covered bond funding Nordea
Eiendomskreditt also raised unsecured funding
from the parent bank. At the end of 2024 such borrowings
amounted to NOK 151.1bn.
See the table below for breakdown of the company’s funding.
Equity
Shareholder’s equity was NOK 37.5bn at 31 December 2024
(NOK 21.9bn). This includes net profit for the year of NOK
1,053m (NOK 500m).
Allocation of net profit for the year
Nordea Eiendomskreditt AS reported an operating profit for
the year of NOK 1,404m, and a net profit after tax for the year
of NOK 1,053m. The Board of Directors will propose to the
Annual General Meeting on 8 April 2025 that the company
distributes 100% of net profit as dividend to the parent
company Nordea Bank Abp.
According to IFRS, distribution of group contributions and
dividends will not be booked before formal decision is made in
the Annual General Meeting. All net profit as of 31 December
2024 is therefore distributed to retained earnings in the
balance sheet as of 31 December 2024. The Board of Nordea
Eiendomskreditt is of the view that total equity and capital
adequacy following the allocation will be sound, and well in
excess of the minimum requirements subject to CRR and
CRD IV, implemented in Norway on 31 December 2019.
Off-balance sheet commitments
The company’s business operations include different off-
balance sheet items. Interest rate and currency swaps are
used to hedge interest rate and currency risk. At the close of
Nordea Eiendomskreditt AS Annual Report 2024
5
2024, the company was party to interest rate swaps with a
nominal value of NOK 46.9bn.
Nordea Eiendomskreditt has covered bonds of EUR 0.1bn
issued in the European market. In order to eliminate the
foreign exchange risk, the company has entered into a
currency swap of the same amount. All derivative contracts
are with counterparties within the Nordea Group.
Around 25% of the loan portfolio is home flex loans where the
customer has been granted a credit line. The portion of the
credit line that has been drawn, is reported as Loans to the
public in the balance sheet while the unutilised portion is
reported as an off-balance sheet commitment.
For total exposure regarding off-balance sheet commitments,
see Note 3.7 “Derivatives and hedge accounting”, Note 4
“Provisions” and Note 5.2 “Commitments”.
Other information
The Board’s expectations for the year were, in all major
respects, achieved.
The Board of Directors confirms the assumption that Nordea
Eiendomskreditt AS is a going concern and the annual
accounts have been prepared based on this assumption.
Acquisition of Danske Bank’s Norwegian mortgage loan
portfolio
On 18 November 2024 Nordea completed the acquisition of
Danske Bank’s Norwegian personal customer and private
banking business. The acquisition was announced on 19 July
2023. After careful preparations, the business was
successfully migrated to Nordea between 15 and 17
November 2024.
The acquisition fits well into Nordea’s strategy to grow in the
Nordic region both organically and through bolt-on
acquisitions. It adds significant scale to Nordea’s Personal
Banking business in Norway and provides value creation
opportunities through offering customers a broader set of
products and services.
The transaction was structured as a transfer of assets and
liabilities. Assets were transferred at fair value, and Nordea
Eiendomskreditt only paid for the assets and liabilities that
were transferred. A lending volume of NOK 103bn was added
to Nordea Eiendomskreditt’s lending portfolio at the time of
transfer. As part of the transaction, five outstanding covered
bonds of NOK 39bn were transferred to Nordea
Eiendomskreditt. See also Note 8.4 “Acquisitions”.
Macroeconomy
Norwegian mainland GDP increased by 0.5% quarter on
quarter in the third quarter of 2024 due to increased public
sector activity. The unemployment rate was 2.1% on a
seasonally adjusted basis in December. Housing prices were
up 6.4% year on year in December. Consumer price inflation
has decreased: headline consumer price inflation stood at
2.2% in December and underlying inflation, excluding energy
and taxes, stood at 2.7%. Norges Bank’s policy rate has
remained at 4.5% since December 2023. The central bank’s
latest forecast is that the first rate cut will come in March
2025. The Norwegian krone was fairly stable against most
currencies during the fourth quarter.
Rating
The company has since April 2010 had the rating Aaa from
Moody's Investor Service for the covered bonds issued by the
company.
Risks and risk management
Risk management
Maintaining organisational risk awareness in the organization
is an integral part of Nordea Eiendomskreditt’s business
strategies. The Nordea Group has defined clear risk and
liquidity management frameworks, policies and instructions
for different risk types covering all risk exposures. This has
been implemented by Nordea Eiendomskreditt.
The Board has the overarching risk management
responsibility and decides on Nordea Eiendomskreditt’s risk
strategy and the Risk Appetite Framework. For further
information see Note 9 “Risk and liquidity management”.
Risks and uncertainties
Nordea Eiendomskreditt has an effective risk management
and oversight framework addressing the existing and
emerging risks that the company is exposed to. Nordea
Eiendomskreditt also manages a risk taxonomy that identifies
the universe of risks that it is exposed to. Nordea
Eiendomskreditt’s 2024 position on the main taxonomy risks
is outlined in the material risk picture.
The various risks and uncertainties that Nordea
Eiendomskreditt (NE) faces within the framework of its normal
business operations include but are not limited to;
• Credit risk - Loss due to failure of the borrower(s) to
meet their obligations;
• Counterparty credit risk - Loss because NE’s
counterparty in an interest or currency derivative
contract defaults prior to maturity of the contract;
• Market risk - Loss in NE’s positions in the non-
trading book as a result of changes in market rates
and parameters that affect market values or net
interest income flows;
• Operational risk - Loss resulting from inadequate or
failed internal processes, people and systems or
from external events, including legal risk and cyber
security risk;
• Compliance risk – Failure to comply with regulations
and related internal rules, potentially resulting in
criticism, reputational loss or fines;
• Financial reporting risk - Risk of misstatements or
deficiencies in financial, regulatory, tax, ,
management and ESG reporting;
• Liquidity risk - NE’s ability to service its cash flow
obligations related to lending, investment, funding,
off-balance sheet exposures, or its ability to meet its
cash flow obligations without incurring significant
additional funding costs;
• Environmental, social and governance (ESG) risks,
covering transitional and physical risks related to
climate, nature and social factors.
Including on- and off -balance sheet exposures and
exposures related to securities, the total credit risk exposure
at year end was NOK 514.5bn (NOK 382.5bn last year).
Credit risk exposure includes the risk related to derivative
contracts, which was NOK 92m at year end of 2024 (NOK
Nordea Eiendomskreditt AS Annual Report 2024
6
26m). Counterparty credit risk exposure at the end of 2024
was NOK 12m (NOK 111m).
Market risk is measured through NII - Net Interest Income
and EV - Economic Value. At the end of the year, the loss for
NII was NOK 520.6m for the 200 bps down scenario (NOK
581.5m). The most severe impact from the Basel scenarios
on EV was NOK 101.5m loss at end of year 2024 (NOK
87.5m). The most severe impact from the RAF scenarios
measuring FVSL – Fair Value Stress Loss – was NOK 67.4m
per year end 2024.
Short-term liquidity risk is limited via the Liquidity Coverage
Ratio (LCR) as well as the internal parameters Liquidity
Stress Coverage (LSC) and Liquidity Stress Horizon (LSH).
Long-term structural liquidity risk is limited via the Net Stable
Funding Ratio (NSFR). The over-collateralisation (OC)
requirement limits the amount of outstanding covered bonds
compared to the size of the cover pool. At the end of 2024 the
liquidity metrics were;
LCR: 1,130% (1,780%)
LSC: 3,699% (210%)
LSH: 904 days (172 days)
NSFR: 115.2% (115.1%)
OC: 58.8% (60.0%)
Being an issuer of covered bonds, the company is also
exposed to changes in the residential property market and the
market for holiday homes. A decline in housing prices will
reduce the value of the company’s cover pool for the purpose
of calculating the regulatory asset coverage requirement.
Quarterly stress tests are carried out to estimate the effects of
declining prices for residential properties and holiday homes.
At the end of 2024 the OC was 58.8%, meaning that the
company can withstand a significant price drop without
breaching the regulatory OC requirement of 5%. A drop in
house prices will also increase the credit risk and may lead to
increased loan losses in case of default, due to decreased
value of the collateral.
Economic uncertainty
The Nordic economies look set for a near-term soft landing.
Persistent geopolitical uncertainty, potentially increasing trade
barriers and a weakening competitive position of core
European economies represent risks to the economic outlook.
These risks include a renewed rise in energy prices, a
European economic softening and state-sponsored disruptive
behaviour, giving rise to elevated uncertainty for businesses,
investors and consumers.
Structurally, the European economies are vulnerable to
geopolitical developments leading to trade restrictions with
rising trade barriers and increasing use of state subsidies for
green sectors in China. These developments threaten the
traditional strongholds for core European economies, while
fragmented and regulated markets and a heavy regulatory
burden make it more difficult for European economies to
compete within high-growth technology sectors, such as
artificial intelligence. These vulnerabilities could also affect the
Nordic countries and feed through to Nordea
Eiendomskreditt’s credit portfolio, resulting in losses.
Potential future credit risk losses are addressed in Note 3.5
“Loans” and in the section “Credit risk management” in Note
9. Further information on the company’s risk exposure and
risk management can be found in Note 9 “Risk and liquidity
management”.
Capital management
Nordea strives to be efficient in its use of capital and therefore
actively manages its balance sheet with respect to assets,
liabilities and risk categories. Nordea Eiendomskreditt reports
risk exposure amounts according to applicable external
regulations (CRR/CRD IV), which stipulate the limits for the
minimum capital (the capital requirement).
Minimum capital requirements
Risk exposure amount (REA) is calculated in accordance with
CRR/CRD IV. After the acquisition of Danske Bank’s
Norwegian mortgage portfolio in 2024, the portion of REA for
credit risk covered by internal rating based (IRB) approach
decreased from 91.3% at the end of 2023 to 56.6% at the end
of 2024. Rating and scoring are key components in the credit
risk management. For operational risk the standardised
approach is applied. The Board decides ultimately on the
targets for capital ratios, and the capital and dividend policies
follows from the overall framework of capital management at
Nordea.
Regulatory minimum capital requirements
The CRR requires banks to comply with the following
minimum capital requirements in relation to REA:
• CET1 capital ratio of 4.5%
• Tier 1 capital ratio of 6.0%
• Total capital ratio of 8.0%
In addition, banks are required to maintain a Leverage Ratio
of 3%. The leverage ratio is a non-risk-based measure
calculated as the Tier 1 capital divided by an exposure
measure, comprising of on-balance and off-balance sheet
exposures with adjustments for certain items such as
derivatives and securities financing transactions.
Internal capital requirement
Nordea Eiendomskreditt bases its internal capital
requirements under the Internal Capital Adequacy
Assessment Process (ICAAP) on risks defined by CRR/CRD
IV, and risks internally defined under Pillar 2. The ICR
specifies the amount, type and distribution of internal capital
considered adequate to cover the nature and level of all risks
to which Nordea Eiendomskreditt is or might become exposed
to over a foreseeable future, including during periods of
stress.
The following major risk types are included in the internal
capital requirement: credit risk, market risk, operational risk,
interest rate risk in the banking book and business risk.
The ICAAP also describes Nordea Eiendomskreditt’s
management, mitigation and measurement of material risks
and assesses the adequacy of internal capital by defining
internal capital requirements reflecting the risk of the
institution. As a complement to the ordinary credit risk
quantification, comprehensive stress testing is performed at
least annually in accordance with current requirements, after
which capital requirements are measured. Regulatory buffers
were introduced with the implementation of the CRR/CRD IV
rules.
Nordea Eiendomskreditt AS Annual Report 2024
7
Own funds
Own funds is the sum of tier 1 and tier 2 capital. Tier 1 capital
consists of both common equity tier 1 (CET1) and additional
tier 1 capital. CET1 capital is considered to be capital of the
highest quality with ultimate loss-absorbance characteristics
and consists predominately of paid in capital and retained
earnings. Accumulated profit in accordance with the audited
accounts can be included in the own funds when any
foreseeable charge or dividend has been deducted from the
amount of profit.
Additional tier 1 and tier 2 capital consist mostly of undated
and dated subordinated loans, respectively. Holdings of other
financial sector entities’ subordinated loans are deducted from
the corresponding tier.
Capital position and risk exposure amount
Nordea Eiendomskreditt’s Common Equity Tier 1 capital ratio
was 27.7% at the end of 2024, an increase of 1.7 percentage
points from the end of last year. Total Capital ratio increased
1.1 percentage points to 28.6%. The increase was primarily
due to closure of the Danske Bank acquisition in November
2024 and related capital injection in August 2024.
REA was NOK 130.0bn, an increase of 59% compared to the
end of last year (NOK 82.0bn). The main driver for the
increase in REA was the closure of the Danske Bank
acquisition in November.
Own funds were NOK 37.2bn at the end of 2024, of which
NOK 1.1bn is a subordinated loan. The Tier 1 capital and the
Common Equity Tier 1 capital were NOK 36.1bn (no
additional Tier 1 capital).
The aforementioned financial guarantee with Nordea Bank
Abp containing credit protection for a subset of the loan
portfolio, has reduced the company’s risk exposure amount by
NOK 3bn.
Nordea Eiendomskreditt’s general meeting resolved a capital
injection of NOK 15bn to prepare partly for the effects of the
new IRB models, but mainly related to the acquisition of the
Danske Bank mortgage portfolio. The additional equity was
added during third quarter 2024.
Further information
Further information on capital management and capital
adequacy is presented in Note 7 “Capital adequacy” and in
the Capital and Risk Management Report at
Regulatory development
Lending regulations
The Ministry of Finance decided on 4 December 2024 to
adopt changes in the Norwegian lending regulation
(Norwegian regulation on financial institutions lending
practices) with effect from 1 January 2025. The main change
was a decrease of the requirement for maximum equity from
15% to 10%.
Regulation on capital requirement
This section highlights recent news and updates on regulatory
developments and capital requirements, mainly related to the
Bank Recovery and Resolution Directive (BRRD), the Capital
Requirements Directive (CRD), the Capital Requirements
Regulation (CRR) as being incorporated into the Norwegian
rules and regulations. In general it addresses news that is
deemed relevant from a Nordea Eiendomskreditt perspective.
Basel III is a global regulatory framework for bank capital
adequacy, stress testing and liquidity risk. In December 2017
the finalised Basel III framework, often referred to as the
Basel IV package, was published. It includes revisions to
credit risk, market risk, operational risk, credit valuation
adjustment (CVA) risk as well as the leverage ratio, and
introduces a new output floor.
The Basel IV package is implemented into EU Capital
Requirements Regulation (CRR) and effective 1 January
2025. This change is referred to as CRR3. On credit risk, the
CRR3 includes revisions to both the IRB Approach, where
restrictions on the use of IRB for certain exposures are
implemented, as well as on the standardised approach. For
operational risk, the three existing approaches will be
removed and replaced by one standardised approach to be
used by all banks.
The output floor is to be set at 72.5% of the standardised
approaches on an aggregate level. This means that the
capital requirement will be floored to 72.5% of the total Pillar 1
REA calculated with the standardised approaches for credit,
market and operational risk. The floor will be phased in,
starting with 50% from 1 January 2025 and to be fully
implemented at 72.5% from 1 January 2030 with transitional
rules for the calculation of the REA for the output floor will
extending to end-2032. The revised CRR mentioned above is
not yet incorporated into the Norwegian regulatory framework.
Nordea Eiendomskreditt continues to being identified as a
systemically important financial institution (SIFI) and is subject
to a 1.0% O-SII requirement. The requirement was confirmed
on 3 December 2024 by the Ministry of Finance.
On 9 July 2024 Nordea Eiendomskreditt received approval
from the authorities for new retail IRB models. The new IRB
retail models was implemented in the Q3 2024 reporting.
On 6 December 2024 the Ministry of Finance announced that
the Risk weight floor to residential real estate increased from
20% to 25% with effect from 1 July 2025. With the new
approved models, the Norwegian FSA decided to remove the
floor for loss given default values (LGD floor) for Nordea from
30 September 2024.
Corporate governance
Board composition
Section 2-9 of the Norwegian Accounting Act
(regnskapsloven) requires disclosures of the composition and
nomination of the Board of Directors and a description of
internal control and risk management regarding financial
reporting.
Articles of association regulating the Board of Directors
According to Nordea Eiendomskreditt’s articles of association,
last amended 19 June 2024, the Board comprises a minimum
of 5 members who are elected by the Annual General
Meeting. The chairman of the Board shall be elected by
separate ballot.
Nordea Eiendomskreditt AS Annual Report 2024
8
According to section 8-5 of the Financial Undertakings Act
(finansforetaksloven), at least one fourth of the board of
directors must be external members. According to internal
guidelines both genders shall be represented. Further
information on the composition of the Board of Directors is
disclosed in section of Board of Directors and Auditor at the
end of the Annual report.
Board and CEO insurance
Section 2-2 of the Norwegian Accounting Act
(regnskapsloven) requires disclosures of insurance coverage
for board members and the CEO of the company. Nordea
Eiendomskreditt is covered by the Nordea Group insurance
covering the personal liabilities of its management (e.g. board
members, CEO). The terms and conditions including total limit
of liability of the policy are in line with large European banks.
Financial reporting risk management
Financial reporting risk (FRR) is defined as the risk of
misstatements or deficiencies in financial reporting, regulatory
reporting, tax reporting, management reporting and reporting
of Environment, Social and Governance (“ESG”) information.
An internal control framework for managing the financial
reporting risk is in place, providing the structure and
standards for designing, operating and evaluating the internal
controls over financial reporting across the Nordea Group.
The framework is the mechanism through which management
expresses its financial statement assertions. Group Risk is the
risk control function for financial reporting risk and is
responsible for the independent monitoring and oversight of
the risks and the Group’s implementation of the framework. A
self-assessment of the effectiveness of key controls for
Nordea Eiendomskreditt is conducted quarterly with the
purpose of ensuring proper monitoring of the quality of the
financial reporting, and with reporting to the Board/Board Risk
Committee.
Further disclosures regarding corporate governance and
internal control can be found in Note 9 “Risk and liquidity
management”.
People and working environment
Working in Nordea means working in a relationship bank in
which everyone is responsible for supporting great customer
experiences. This is why attracting, developing and
maintaining highly motivated people are among our main
priorities.
Nordea Eiendomskreditt is part of the Nordea Group’s
processes for leadership and employee development,
including training programmes, performance dialogues and
employee satisfaction surveys. Gender diversity and equal
opportunities are an integrated part of the development of the
organisation and its employees.
At the end of 2024 the company had 24 (24) employees.
Staffing was equivalent to 24.0 (22.0) full time positions.
Services related to sales and distribution of mortgage loans,
management of the loan portfolio, customer contact, funding
and risk management, accounting and reporting are
purchased from other units in the Nordea Group. In line with
the Nordea Group organisation, the company was
reorganized from 1 January 2017, as the company was
assigned the product responsibility for Norwegian mortgage
loans.
Absence due to sickness during 2024 was 4.0% (7.5%). A
total of 243 (449) working days were lost to sickness in 2024.
There are no reports of work-related personnel injuries as
caused by accidents or other incidents in Nordea
Eiendomskreditt in 2024. The working environment is
considered to be good.
Information on remuneration to the company’s employees and
officers can be found in Note 6.1 “Staff costs”.
Gender equality and diversity
50% of the employees in Nordea Eiendomskreditt and 63% of
the members of the management group at the end of 2024
were female. Board composition at the end of 2024 is made
up of 4 women and 3 men. The company has adopted Nordea
Group’s diversity policy for the Group Board
. The ambition for
the board composition is of each gender to have at least 40%
representation in compliance with the policy and the
requirements in the new Limited Liability Companies Act
section 11-6a by year-end 2024. The Board and management
take a proactive approach to promoting equal opportunity in
the company. The company follows the Nordea Group’s
guidelines and regulations concerning corporate social
responsibility, including those relating to
discrimination/diversity and ethics.
Changes in Management and Board of Directors
On 1 July 2024 Anne Sofie Knoph retired from her
employment in Nordea Eiendomskreditt and left the board
from the same day. On 5 December 2024 Lars Espevik was
appointed new board member.
Legal proceedings
There have been no disputes or legal proceedings in which
material claims have been raised against the company.
Subsequent events
No events have occurred after the balance sheet date, which
may materially affect the assessment of the annual financial
statements of Nordea Eiendomskreditt.
Sustainability
In accordance with the sustainability-related ambition of the
Nordea Group, Nordea Eiendomskreditt is committed to
sustainable business development by combining financial
performance with environmental and social responsibility as
well as sound governance practices. At the core of our
operations is the development and provision of financial
services and offerings that support the transition to a
sustainable economy and with that, enable customers to
make conscious and sustainable choices
(
).
In Nordea Eiendomskreditt this resulted in the first Nordea
green covered bond issued in 2021, and a second and third
green covered bond issued in 2023 and 2024. In addition to
product offering of Green mortgage loans for energy efficient
dwellings, Nordea Eiendomskreditt also offers Energy savings
loans, which is a loan to finance measures that will improve
Nordea Eiendomskreditt AS Annual Report 2024
9
Randi Marjamaa
Gro Elisabeth Lundevik
Ola Littorin
Chair
Vice Chair
Board member
Asbjørn Rødal
Tina Sandvik
Lene Steinum
Board member
Board member
Board member
Lars Espevik
Elen M. Stiksrud
Board member
Chief Executive Officer
the energy efficiency of the customer’s home. All housing
measures recommended by Enova qualify for Energy savings
loans.
For more information on how the Nordea Group works with
sustainability, please see Nordea’s Annual Report, published
at
. This report
also cover the sustainability reporting requirements for
Nordea Eiendomskreditt as required by section 2-4 of the
Norwegian Accounting Act (regnskapsloven).
Environmental, social and corporate
governance (ESG) related risks
Nordea defines ESG risk as the risk of an adverse financial
impact in the short to longer term, deriving from the direct or
indirect impact that environmental (including climate), social
and governance issues may have on Nordea. It is important
for Nordea to integrate ESG assessments into our risk
management frameworks. Further information on ESG related
risk in Nordea can be found in Pillar 3, Nordea’s capital and
risk reporting, published at
. Nordea Eiendomskreditt’s operations
result in minimal pollution of the environment.
Due diligence assessment under the Transparency Act
Nordea Eiendomskreditt has conducted a due diligence
assessment in accordance with the OECD guidelines for
multinational enterprises. These assessments have
investigated whether there are any actual, or risks of, adverse
impacts on human rights or decent working conditions in our
operations, supply chain and other business relationships.
Information about Nordea Eiendomskreditt’s due diligence
assessment is included in Nordea Human Rights Report
2024, available on
Outlook for 2025
In the context of the uncertain macroeconomic environment
with recent years’ higher inflation and interest rates, and a
weak Norwegian krone, Nordea Eiendomskreditt AS is
continuously monitoring the economic outlook and the
behaviour of own lending portfolios in order to react timely to
adverse developments. We expect a moderate decrease in in
the Norwegian Central Bank’s key policy rate in 2025. Strong
growth in housing prices is expected.
Nordea Eiendomskreditt AS
Oslo, 7 March 2025
Nordea Eiendomskreditt AS Annual Report 2024
10
Income statement
Note
2024
2023
NOKt
Operating income
Interest income calculated using the effective interest rate method
20,322,982
15,553,396
Other interest income
523,757
358,198
Interest expense
17,889,945
13,975,092
Net interest income
2.1, 8.3
2,956,795
1,936,502
Fee and commission income
126,086
116,322
Fee and commission expense
69,402
31,381
Net fee and commission income
2.2
56,683
84,940
Net result from items at fair value
2.3, 8.3
-6,079
-77,058
Other income
36
584
Total operating income
3,007,435
1,944,968
Staff costs
6.1, 6.2
37,966
37,902
Other operating expenses
2.4, 8.3
1,476,854
1,191,832
Depr/amortisation and impairment charges
190
155
Total operating expenses
1,515,010
1,229,889
Profit before loan losses
1,492,425
715,079
Loan losses
2.5
88,209
47,139
Operating profit
1,404,216
667,940
Income tax expense
2.6
351,170
167,677
Net profit for the period
1,053,046
500,263
Attributable to:
Shareholder of Nordea Eiendomskreditt AS
1,053,046
500,263
Total
1,053,046
500,263
Statement of comprehensive income
2024
2023
NOKt
Net profit for the period
1,053,046
500,263
Items that may be reclassified subsequently to the income statement
Cash flow hedges:
Valuation gains/losses
-11,820
148
Tax on valuation gains/losses
2,955
-37
Items that may not be reclassified subsequently to the income statement
Defined benefit plans:
Remeasurement of defined benefit plans
5,047
-1,945
Tax on remeasurement of defined benefit plans
-1,261
486
Other comprehensive income, net of tax
-5,078
-1,347
Total comprehensive income
1,047,967
498,916
Attributable to:
Shareholders of Nordea Eiendomskreditt AS
1,047,967
498,916
Total
1,047,967
498,916
Nordea Eiendomskreditt AS Annual Report 2024
11
Randi Marjamaa
Gro Elisabeth Lundevik
Ola Littorin
Chair
Vice Chair
Board member
Asbjørn Rødal
Tina Sandvik
Lene Steinum
Board member
Board member
Board member
Lars Espevik
Elen M. Stiksrud
Board member
Chief Executive Officer
Balance sheet
Note
31 Dec 2024
31 Dec 2023
NOKt
Assets
Loans to credit institutions
8.3
1,879,634
2,462,506
Loans to the public
2.5, 3.5, 3.8, 5.1
450,117,763
334,307,675
Interest-bearing securities
3.6
10,553,980
10,585,566
Derivatives
3.7, 3.4, 8.3
581,395
183,957
Fair value changes of the hedged items in portfolio hedges of interest rate risk
-109,337
-42,670
Property and Equipment owned and RoU
492
681
Retirement benefit assets
5,883
0
Other assets
165,627
-186
Accrued income and prepaid expenses
26,721
49,380
Total assets
463,222,156
347,546,908
Liabilities
Deposits by credit institutions
3.9, 8.3
152,157,871
125,845,296
Debt securities in issue
3.9, 5.1, 8.3
270,579,268
197,449,415
Derivatives
3.7, 3.4, 8.3
1,116,824
665,463
Current tax liabilities
2.6
177,682
53,530
Other liabilities
14,834
15,149
Accrued expenses and prepaid income
8.3
167,098
228,641
Deferred tax liabilities
2.6
418,954
247,210
Provisions
3,359
4,818
Retirement benefit obligations
6.2
29,115
27,417
Subordinated loan capital
8.3
1,104,751
1,104,751
Total liabilities
425,769,756
325,641,690
Equity
Share capital
8.3
1,896,347
1,879,565
Share premium
8.3
24,857,300
9,874,082
Other reserves
-28,118
-23,040
Retained earnings
9,673,826
9,674,348
Net profit for the period
1,053,046
500,263
Total equity
37,452,400
21,905,218
Total liabilities and equity
463,222,156
347,546,908
Off-balance sheet items
Assets pledged as security for own liabilities
5.1
428,060,664
313,603,507
Commitments
5.2
51,830,126
35,072,002
Nordea Eiendomskreditt AS
Oslo, 7 March 2025
Nordea Eiendomskreditt AS Annual Report 2024
12
Statement of changes in equity
Other reserves
NOKt
Share capital
Share
premium
Cash flow
hedges
Defined
benefit plans
Retained
earnings
Total equity
Balance at 1 January 2024
1,879,565
9,874,082
-9,570
-13,470
10,174,620
21,905,218
Net profit for the year
1,053,046
1,053,046
Items that may be reclassified subsequently to the
income statement
Cash flow hedges:
-11,820
-11,820
2,955
2,955
Items that may not be reclassified subsequently to the
income statement
Defined benefit plans:
5,047
5,047
-1,261
-1,261
Other comprehensive income, net of tax
0
0
-8,865
3,786
0
-5,078
Total comprehensive income
0
0
-8,865
3,786
1,053,046
1,047,967
Contribution and distribution
Share Based Payments
-522
-522
Dividend paid
-500,263
-500,263
Change of share capital
16,782
14,983,218
15,000,000
Balance at 31 December 2024
1,896,347
24,857,300
-18,435
-9,684
10,726,880
37,452,400
Other reserves
NOKt
Share capital
Share
premium
Cash flow
hedges
Defined
benefit plans
Retained
earnings
Total equity
Balance at 1 January 2023
1,879,565
9,874,082
-9,681
-12,012
10,321,569
22,053,523
Net profit for the year
500,263
500,263
Items that may be reclassified subsequently to the
income statement
Cash flow hedges:
148
148
-37
-37
Items that may not be reclassified subsequently to the
income statement
Defined benefit plans:
-1,945
-1,945
486
486
Other comprehensive income, net of tax
0
0
111
-1,459
0
-1,347
Total comprehensive income
0
0
111
-1,459
500,263
498,916
Contribution and distribution
Share Based Payments
602
602
Dividend paid
-647,819
-647,819
Change of share capital
0
0
0
Balance at 31 December 2023
1,879,565
9,874,082
-9,570
-13,470
10,174,620
21,905,218
The company's share capital is NOK 1,896m. The number of shares is 16,781,828, each with a quota value of NOK 113.
All shares and voting rights are owned by Nordea Bank AB (publ).
Nordea Eiendomskreditt AS Annual Report 2024
13
NOKt
2024
2023
Interest payments received
20 563 153
15 499 255
Interest expenses paid
-17 291 877
-13 206 032
Cash flow statement
NOKt
Note
2024
2023
Operating activities
Operating profit before tax
1,404,216
667,940
Adjustments for items not included in cash flow (related to loan loss allowances)
2.5
86,752
46,496
Income taxes paid
2.6
-53,581
-209,299
Cash flow from operating activities before changes in operating assets and liabilities
1,437,387
505,137
Changes in operating assets
Change in loans to credit inst, non-liquid
-246,771
-504,116
Change in loans to the public
3.5
-13,061,065
-11,105,577
Change in interest-bearing securities
3.6
31,586
-5,149,679
Change in derivatives, net
3.7
347,396
144,201
Change in other assets
-82,180
-43,190
Changes in operating liabilities
Change in deposits by credit institutions
3.9
26,312,575
-30,068,583
Change in debt securities in issue
3.9
33,478,515
48,097,140
Change in other liabilities
-66,754
-2,130
Cash flow from operating activities
48,150,689
1,873,203
Investing activities
Acquisition/sale of business operations
-63,479,546
0
Cash flow from investing activities
-63,479,546
0
Financing activities
Change of accrued interest on subordinated loan capital
3.9
-1
932
Dividend paid
-500,263
-647,819
Share Based Payment Programme
-522
602
Increase in share capital and share premium
15,000,000
0
Cash flow from financing activities
14,499,214
-646,285
Cash flow for the period
-829,643
1,226,918
Cash and cash equivalents
NOKt
31 Dec 2024
31 Dec 2023
Cash and cash equivalents at beginning of the period
1,958,390
731,472
Cash and cash equivalents at end of the period¹
1,128,747
1,958,390
Change
-829,643
1,226,918
The following items are included in cash and cash equivalents:
Loans to credit institutions
1,128,747
1,958,390
Total cash and cash equivalents
1,128,747
1,958,390
Comments on the cash flow statement
The cash flow statement shows inflows and outflows of
cash and cash equivalents during the year. Nordea
Eiendomskreditt's cash flow has been prepared in
accordance with the indirect method, whereby operating
profit is adjusted for effects of non-cash transactions such
as loan losses. The cash flows are classified by operating,
investing and financing activities.
Operating activities
activities and cash flows are mainly derived from the
operating profit for the year with adjustment for items not
included in cash flow and income taxes paid. Items not
included in cash flow relates to changes in impairment
charges. Changes in operating assets and liabilities consist
of assets and liabilities that are part of normal business
activities, such as loans and receivables, deposits from
credit institutions and debt securities in issue. Changes in
derivatives are reported net.
Cash flow from operating activities include interest
payments received and interest expenses paid in the
following amounts:
Investing activities
financial assets. Acquisition of business operations in 2024
relates to the acquisition of Danske Bank’s mortgage loan
portfolio.
See Note 8.4 “Acquisitions” for further information.
Financing activities
equity and subordinated liabilities, such as new issues of
shares, group contribution paid or received and
issued/amortised subordinated liabilities.
Cash and cash equivalents
institutions with no fixed maturity (bank deposits).
Nordea Eiendomskreditt AS Annual Report 2024
14
Notes to the financial statements
Note 1
Accounting policies
Table of contents
1.1 Basis for presentation
1.2 Changed accounting policies and presentation
1.3 Changes in IFRSs not yet applied
1.4 Critical judgements and estimation uncertainty
1.5 Translation of assets and liabilities denominated in
foreign currencies
1.1 Basis for presentation
The financial statements of Nordea Eiendomskreditt AS are
prepared in accordance with IFRS® Accounting Standards
as adopted by the EU Commission. In addition, certain
complementary rules in the Norwegian Accounting Act with
supported regulation have been applied.
The disclosures required by the standards,
recommendations and legislation above have been
included in the notes, or in other parts of the financial
statements.
On 7 March 2025 the Board of Directors approved the
financial statements, subject to final approval of the Annual
General Meeting on 8 April 2025.
The accounting policies, method of computation and
presentations are unchanged in comparison with the
Annual Report 2023, except for the items presented in the
section “Changed accounting policies and presentation”
below.
Nordea Eiendomskreditt is part of the Nordea Group and
the Group’s Annual Report is available at
1.2 Changed accounting policies and
presentation
No new accounting policies and presentation with impact
on the financial statements of Nordea Eiendomskreditt
have been implemented during 2024.
Other amendments to IFRS
The following amended standards issued by the
International Accounting Standards Board (IASB) were
implemented by Nordea Eiendomskreditt on 1 January
2024, but have not had any significant impact on its
financial statements.
• Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current
or Non-current as well as Classification of
Liabilities as Current or Non-current – Deferral of
Effective Date; and Non-current Liabilities with
Covenants.
• Amendments to IFRS 16 Leases: Lease Liability
in a Sale and Leaseback
• Amendments to IAS 7 Statement of Cash Flows
and IFRS 7 Financial Instruments: Disclosures:
Supplier Finance Arrangements.
1.3 Changes to IFRSs not yet applied
IFRS 18 Presentation and Disclosures in Financial
Statements
In April 2024 the IASB published the new standard IFRS 18
Presentation and Disclosure in Financial Statements which
will replace IAS 1 Presentation of Financial Statements.
IFRS 18 sets out the requirements for the presentation and
disclosures in financial statements with focus on a more
structured income statement supporting the reporting
of financial performance. Items of income and expenses
will be classified into the categories operating operations,
investing operations, financing operations, income taxes
and discontinued operations. The aim is to reduce diversity
in the reporting of financial performance, helping users of
financial statements to understand the information and
make better comparisons between companies. IFRS 18 in
addition introduces requirements on the aggregation and
disaggregation of financial information in the financial
statements, which may also impact the presentation
on the balance sheet, as well as new disclosures on
management-defined performance measures.
The new standard is effective for annual reporting periods
beginning on or after 1 January 2027, with earlier
application permitted. The standard is not yet endorsed by
the EU. Nordea Eiendomskreditt does not currently intend
to adopt these amendments before the effective date.
It is not yet possible to conclude on how IFRS 18 will
impact Nordea’s financial statements and disclosures of
management-defined performance measures. There may
be moves between the different categories in the income
statement mentioned above, as well as changes in the
aggregation and disaggregation in the income statement
and balance sheet, but no significant impacts are currently
expected. This tentative conclusion remains subject to
further analysis. As IFRS 18 will not change Nordea
Eiendomskreditt’s recognition and measurement it is not
expected to have any significant impact on other financial
statements or capital adequacy in the period of initial
application.
1.4 Critical judgements and estimation
uncertainty
The preparation of financial statements in accordance with
generally accepted accounting principles requires, in some
cases, the use of judgements and estimates by
management. Actual outcome can later, to some extent,
differ from the estimates and the assumptions made. In this
section a description is made of:
• the sources of estimation uncertainty at the end of
the reporting period that have a significant risk of resulting
in a material adjustment to the carrying amount of assets
and liabilities within the next financial year, and
• the judgements made when applying accounting
policies (apart from those involving estimations) that have
the most significant impact on the amounts recognised in
the financial statements.
Critical judgements and estimates are in particular
associated with:
- the fair value measurement of certain financial
instruments (hedging portfolio)
- the impairment testing of loans to the public
Nordea Eiendomskreditt AS Annual Report 2024
15
1.5 Translation of assets and liabilities
denominated in foreign currencies
The functional currency for Nordea Eiendomskreditt is
NOK. Foreign currency is defined as any currency other
than the functional currency of the entity. Foreign currency
transactions are recorded at the exchange rate on the date
of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the
exchange rate on the balance sheet date.
Exchange differences arising on the settlement of
transactions at rates different from those at the date of the
transaction, and unrealised translation differences on
unsettled foreign currency monetary assets and liabilities,
are recognised in the income statement under “Net result
on items at fair value”.
2 Financial performance and returns
Note 2.1
Net interest income
Accounting policies
Interest consists of compensation for time value of
money plus a margin. The effective interest rate
equals the rate that discounts the estimated future
cash flows to the net carrying amount of the financial
asset or financial liability at initial recognition.
Interest income and expenses from financial instruments
are classified as “Net interest income”. Interest income is
presented on two rows in the income statement, Interest
income calculated using the effective interest rate method
and Other interest income. On the row Interest income
calculated using the effective interest method, Nordea
Eiendomskreditt present interest income from financial
assets measured at amortised cost. This line item also
includes the effect from hedge accounting relating to these
assets. All other interest income is presented as on the
income statement row “Other interest income”.
The interest component of derivatives is classified
as “Net result from items at fair value”, except for
derivatives used for hedging purposes. In accounting
hedges the interest component of derivatives is classified
as “Interest income calculated using the effective
interest rate method” if the derivative is used to
hedge an asset and as “Interest expense” if the
derivative is used to hedge a liability. In economic
hedges the interest component of derivatives is classified
as “Other interest income” if the derivative is
used to hedge an asset and as “Interest expense” if
the derivative is used to hedge a liability.
NOKt
2024
2023
Interest income calculated using the effective interest rate method
20,322,982
15,553,396
Other interest income
523,757
358,198
Interest expense
17,889,945
13,975,092
Net Interest income
2,956,795
1,936,502
Interest income calculated using the effective interest rate method
Loans to credit institutions
76,883
63,536
Loans to customers
20,141,928
15,411,921
Yield fees
53,716
50,584
Net interest paid or received on derivatives in accounting hedges of assets
50,456
27,355
Interest income
20,322,982
15,553,396
Other interest income
Interest-bearing securities measured at fair value
523,757
358,198
Other interest income
1
523,757
358,198
Interest expense
Deposits by credit institutions
6,104,243
6,404,791
Debt securities in issue
11,246,113
7,112,913
Subordinated loan capital
74,793
61,631
Other interest expenses
3,848
129,843
Net interest paid or received on derivatives in hedges of liabilities
460,948
265,913
Interest expense
17,889,945
13,975,092
Interest from categories of financial instruments
NOKt
2024
2023
Financial assets at amortised cost
20,272,527
15,526,041
Financial assets at fair value through profit or loss (including hedging instruments)¹
574,213
385,553
Financial liabilities at amortised cost
-17,428,997
-13,709,179
Financial liabilities at fair value through profit or loss (related to hedging instruments)¹
-460,948
-265,913
Net interest income
2,956,795
1,936,502
1
Nordea Eiendomskreditt AS Annual Report 2024
16
Note 2.2
Net fee and commission income
Accounting policies
The company's fee income is treated as administration fees
for maintaining customer accounts related to customers’
mortgage loans, and is recognised to income as part of the
item ”Fee and commission income” in accordance with
standard Nordea policy.
The majority share of the revenues classified as
“Commission income” constitutes revenue from contracts
with customers according to IFRS 15. Fee income is
recognised when or as an entity satisfies the performance
obligation, either over time or at a specific point of time.
Lending fees are recognised at a point of time when the
performance obligation is satisfied, i.e. when the
transaction has been performed, unless they are part of the
effective interest rate of the financial instrument.
Commission expenses that are transaction based, are
recognised in the period the services are received.
Commission expenses covering a certain period
are expensed over that period.
Net fee and commission income declined from 2023 to
2024 due to higher liquidity facility fee paid to the parent
bank in 2024, included in the item Other. Fees paid to the
parent bank related to a financial guarantee for credit
protection entered into in September 2024 is included in
the item Guarantees.
NOKt
2024
2023
Custody and issuer services
-4,712
-3,588
-4,712
-3,588
Payments
-1,969
-28
-1,969
-28
Lending
122,020
111,634
122,020
111,634
Guarantees
-6,719
0
-6,719
0
Other
-51,937
-23,078
4,066
4,687
-56,003
-27,765
Total
56,683
84,940
¹Other commission expense include NOK 45.2m related to the Liquidity Transfer and Support agreement with the parent bank and NOK 9.9m for market data services.
Note 2.3
Net result from items at fair value
Accounting policies
Realised and unrealised gains and losses on financial
instruments measured at fair value through profit or loss,
include interest-bearing securities and derivatives and are
recognised under “Net result from items at fair value”.
This item also includes realised gains and losses from
financial instruments measured at amortised cost, such as
interest compensation received or paid and realised
gains/losses on buy-backs of issued own debt.
Impairment losses from instruments within other categories
than “Financial assets at fair value through profit or loss”
are recognised under “Loan losses” (see also the sub-
section “Loan losses” below).
Critical judgements and estimation uncertainty
Estimation uncertainty exists in the valuation of
financial instruments, in particular for instruments
that lack quoted prices or where recently observed
market prices are not available (Level 3 instruments).
See Note 3.3 “Fair value”.
Net gains/losses for categories of financial instruments
2024
2023
Financial assets and liabilities mandatorily at fair value through profit or loss¹
-117,798
84,642
Financial assets at amortised cost²
-444,741
-6,274
Financial liabilities at amortised cost³
556,139
-155,529
Foreign exchange gains/losses excluding currency hedges
320
103
Total
-6,079
-77,058
¹ This row comprises of interest bearing securities and derivatives, including derivates held for economic hedging, which do not meet the requirements for hedge accounting according
to IAS 39.
² This row includes net gain/loss arising from derecognition of financial assets measured at amortised cost. The reason for derecognition is that the assets were prepaid by the
customer. This line item also includes fair value changes of hedged amortised cost assets in hedges of interest rate risk.
³ This row mainly includes fair value changes of hedged amortised cost liabilities in hedges of interest rate risk.
Nordea Eiendomskreditt AS Annual Report 2024
17
Note 2.4
Other expenses
NOKt
2024
2023
Market data services
7,685
6,294
Services bought from Group companies
1,419,458
1,130,084
Auditor's fee
2,743
1,531
Resolution fees
45,020
51,084
Other operating expenses
1,948
2,840
Total
1,476,854
1,191,832
Other expenses include expensed auditor's fee to PwC of NOK 2.743t incl.VAT. In addition NOK 51t incl. VAT has been paid to PwC for other assignments.
Note 2.5
Loan losses
Accounting policies
Impairment losses from financial assets classified into the
category “Amortised cost” (see accounting policies Note
3.2), under “Loans to the public” in the balance sheet, are
reported as “Loan losses”. Losses are reported net of any
collateral and other credit enhancements. Nordea
Eiendomskreditt’s accounting policies for the calculation of
impairment losses on loans can be found in accounting
policies to Note 3.5 “Loans”.
Counterparty losses on instruments classified into the
category “Financial assets at fair value through profit or
loss” are reported under “Net result from items at fair
value”.
More information on credit risk can be found in
Note 9 “Risk and liquidity management“.
NOKt
2024
2023
Net loan losses, Stage 1
49,199
-3,974
Net loan losses, Stage 2
31,607
3,409
Total loan losses, non-defaulted
80,805
-565
Stage 3, defaulted
Net loan losses, individually assessed, collectively calculated
-237
49,525
Realised loan losses
8,019
3,007
Recoveries on previous realised loan losses
-382
-2,549
Reimbursement right
4
0
Reversals of provisions
0
-2,280
Net loan losses, defaulted
7,404
47,703
Net loan losses
88,209
47,138
Key ratios
1
2024
2023
Loan loss ratio, basis points
2.43
1.42
- of which stage 1
1.36
-0.12
- of which stage 2
0.87
0.10
- of which stage 3
0.20
1.44
1
Nordea Eiendomskreditt AS Annual Report 2024
18
Note 2.6
Taxes
Income tax expense
NOKt
2024
2023
Current tax
1
177,731
54,264
Deferred tax
2
173,438
113,414
Total
351,169
167,678
1
51
3
2
0
730
Total
51
733
Current and deferred tax recognised in Other comprehensive income
Deferred tax on remeasurements of pension obligations DBP
-1,261
486
Deferred tax relating to cash flow hedges
2,955
-37
Total
1,694
449
Tax on the company's operating profit may differ from the theoretical amount that would arise using the tax rate in Norway, as follows:
NOKt
2024
2023
Profit before tax
1,404,216
667,940
Tax calculated at a tax rate of 25%
-351,104
-166,935
Non-deductable expenses
-14
-10
Adjustments related to prior years
-51
-733
Total tax charge
-351,169
-167,678
Average effective tax rate
-25.0 %
-25.1 %
Deferred tax
NOKt
2024
2023
Deferred tax expense (-) / income (+)
Deferred tax due to temporary differences
-173,438
-113,414
Deferred tax in the income statement, net
-173,438
-113,414
Deferred tax assets
Deferred tax liabilities
NOKt
2024
2023
2024
2023
Deferred tax assets/liabilities related to:
Financial instruments and derivatives
-424,697
-253,984
Retirement benefit obligations
5,807
6,854
Property and equipment
-65
-81
Netting between deferred tax assets and liabilities
-5,807
-6,854
5,807
6,854
Total deferred tax assets/liabilities
0
0
-418,955
-247,211
Movements in deferred tax assets/liabilities net, are as follows:
2024
2023
Balance at 1 January
-247,210
-133,515
Deferred tax relating to items recognised in Other comprehensive income
1,694
449
Adjustments relating to prior years
0
-730
Deferred tax in the income statement
-173,438
-113,414
Balance at 31 December
-418,953
-247,210
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred tax income taxes relates to the same fiscal authority.
Deferred tax totalling NOK 419m is carried in the balance sheet in full since the company expects to be able to offset this
against future earnings. Nordea Eiendomskreditt had no tax losses carried forward at 31 December 2024.
Nordea Eiendomskreditt AS Annual Report 2024
19
3 Financial instruments
Note 3.1
Recognition on and derecognition
from the balance sheet
Accounting policies
Derivative instruments, quoted securities and foreign
exchange spot transactions are recognised on and
derecognised (from the balance sheet on the trade date.
Between trade date and settlement date these assets and
liabilities are recognised as “Other assets” or ”Other
liabilities” on the balance sheet.
Other financial instruments are recognised in the balance
sheet on settlement date.
Note 3.2
Classification and measurement
Accounting policies
Each financial instrument in Nordea Eiendomskreditt has
been classified into one of the following categories:
Financial assets.
• Amortised cost
• Financial assets at fair value through profit or loss:
Mandatorily measured at fair value
through profit or loss
Financial liabilities.
• Amortised cost
• Financial liabilities at fair value through profit or
loss:
Mandatorily measured at fair value
through profit or loss
The classification of a financial assets is dependent on the
business model for the portfolio in which the instrument is
included and on whether the cash flows are solely
payments of principal and interest (SPPI).
Contractual cash flows that are SPPI are consistent
with a basic lending arrangement. In a basic lending
arrangement interest can include compensation
for the time value of money, credit risk, liquidity
risk, costs and a profit margin.
Financial assets with cash flows that are not SPPI
are measured at fair value through profit or loss. All
other assets are classified based on the business
model. Instruments included in a portfolio with a
business model where the intention is to keep the
instruments and collect contractual cash flows are
measured at amortised cost. Instruments included in
a business model where the intention is both to keep
the instruments to collect the contractual cash flows
and to sell the instruments are measured at fair value
through other comprehensive income. Financial
assets included in any other business model are
measured at fair value through profit or loss..
In order to determine the business model, Nordea
Eiendomskreditt has divided its financial assets into
portfolios and/or sub-portfolios based on how groups of
financial assets are managed together to achieve a
particular business objective.
When determining the right for the portfolios, Nordea
Eiendomskreditt has taken the current business area
structure into account. When determining the business
model for each portfolio Nordea Eiendomskreditt has
analysed the objective with the financial assets as well as
for instance past sales behaviour and management
compensation.
All financial assets and liabilities are initially measured
at fair value. The classification of financial instruments
into different categories forms the basis for how each
instrument is subsequently measured on the balance sheet
and how changes in its value are recognised. The
classification of the financial instruments on Nordea
Eiendomskreditt’s balance sheet into the different
categories under IFRS 9 is presented in the table
“Classification of financial instruments”.
Amortised cost
Financial assets and liabilities measured at amortised cost
are initially recognised on the balance sheet at fair value,
including transaction costs. Subsequent to initial
recognition, the instruments within this category are
measured at amortised cost. In an amortised cost
measurement, the difference between acquisition cost and
redemption value is amortised in the income statement
over the remaining term using the effective interest rate
method. Amortised cost is defined as the amount at which
the financial asset or financial liability is measured at initial
recognition minus the principal repayments plus or minus
the cumulative amortisation using the effective interest rate
method of any difference between that initial amount and
the maturity amount and for financial assets, adjusted for
any loss allowance. For more information about the
effective interest rate method see accounting policies in
Note 2.1 “Net interest income”. For information about
impairment under IFRS 9, accounting policies Note 3.5
“Loans”.
Interest on assets and liabilities classified at amortised cost
is recognised under “Interest income” and “Interest
expense” in the income statement.
Financial assets and financial liabilities at fair value
through profit or loss
Financial assets and financial liabilities at fair value through
profit or loss are measured at fair value, excluding
transaction costs. All changes in fair value are recognised
directly in the income statement under “Net result from
items at fair value”.
Nordea Eiendomskreditt AS Annual Report 2024
20
Classification of financial istruments
Assets
Fair value through profit or
loss (FVPL)
Amortised cost (AC)
Mandatorily
Total financial assets
31 Dec, NOKt
2024
2023
2024
2023
2024
2023
Loans to credit institutions
1,879,634
2,462,506
1,879,634
2,462,506
Loans to the public
450,117,763
334,307,675
450,117,763
334,307,675
Interest-bearing securities
10,553,980
10,585,566
10,553,980
10,585,566
Derivatives
581,395
183,957
581,395
183,957
Fair value changes of the hedged items in portfolio hedge of
interest rate risk
-109,337
-42,670
-109,337
-42,670
Accrued income and prepaid expenses
25,477
48,127
25,477
49,380
Total
451,913,537
336,775,638
11,135,375
10,769,523
463,048,911
347,546,414
Liabilities
Fair value through profit or
loss (FVPL)
Amortised cost (AC)
Mandatorily
Total financial liabilities
31 Dec, NOKt
2024
2023
2024
2023
2024
2023
Deposits by credit institutions
152,157,871
125,845,296
152,157,871
125,845,296
Debt securities in issue
270,579,268
197,449,415
270,579,268
197,449,415
Derivatives
1,116,824
665,463
1,116,824
665,463
Other liabilities
3,766
3,518
3,766
3,518
Accrued expenses and prepaid income
11,839
11,145
11,839
11,145
Subordinated loan capital
1,104,751
1,104,751
1,104,751
1,104,751
Total
423,857,495
324,414,125
1,116,824
665,463
424,974,319
325,079,588
Note 3.3
Fair value
Accounting policies
Fair value is defined as the price that at the measurement
date would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market
participants under current market conditions in the principal
market for the asset or liability or, in the absence of a
principal market, in the most advantageous market for the
asset or liability.
The existence of published price quotations in an active
market is the best evidence of fair value and when they
exist, they are used to measure the fair value of financial
assets and financial liabilities. An active market for the
asset or liability is a market in which transactions for the
asset or liability occur with sufficient frequency and volume
to provide pricing information on an on-going basis. The
absolute level of liquidity and volume required for a market
to be considered active varies depending on the class of
instruments. For some classes low price volatility is seen,
also for those instruments within the class where the trade
frequency is high. For instruments in such a class, the
liquidity requirements are lower and correspondingly, the
age limit for the prices used to establish fair value is higher.
The trade frequency and volume are monitored regularly in
order to assess if markets are active or not active.
If quoted prices for a financial instrument fail to represent
actual and regularly occurring market transactions or if
quoted prices are not available, fair value is established by
using an appropriate valuation technique. The adequacy of
the valuation technique, including an assessment of
whether to use quoted prices or theoretical prices, is
monitored on a regular basis.
Valuation techniques can range from a simple discounted
cash flow analysis to complex option pricing models.
Valuation models are designed to apply observable market
prices and rates as input whenever possible, but can also
make use of unobservable model parameters. The
adequacy of the valuation model is assessed by measuring
its capability to match market prices. This is done by
comparing calculated prices with relevant benchmark data,
e.g. quoted prices from exchange, the counterparty´s
valuations, price data from consensus services etc. Nordea
Eiendomskreditt is using valuation techniques to establish
fair value for items disclosed under the following balance
sheet items:
• Interest bearing securities (when quoted prices in
an active market are not available)
• Derivatives (OTC-derivatives)
For financial instruments, whose fair value is estimated by
a valuation technique, it is investigated whether the
variables used in the valuation model are predominantly
based on data from observable markets. By data from
observable markets, Nordea Eiendomskreditt considers
data from observable markets to be data that can be
collected from generally available external sources and
which is deemed to represent realistic market prices. If
unobservable data has a significant impact on the
valuation, the instrument cannot be recognised initially at
the fair value estimated by the valuation technique and any
upfront gains are thereby deferred and amortised through
the income statement over the contractual life of the
instrument.
Nordea Eiendomskreditt AS Annual Report 2024
21
The deferred upfront gains are subsequently released to
income if the non-observable data becomes observable.
See a breakdown below of fair values of financial
instruments measured on the basis of:
• quoted prices in active markets for the same
instrument (level 1),
• valuation techniques using observable data (level
2), and
• valuation techniques using non-observable data
(level 3).
The valuation models applied by the Nordea Group are
consistent with accepted economic methodologies for
pricing financial instruments, and incorporate the factors
that market participants consider when setting a price.
New valuation models are subject to approval by Model
Risk Committee and all models are reviewed on a regular
basis.
Critical judgements and estimation uncertainty
Critical judgements that have a significant impact on the
recognised amounts for financial instruments are exercised
when determining fair value of OTC derivatives and other
financial instruments that lack quoted prices or recently
observed market prices. Those judgements relate to the
following areas:
• The choice of valuation techniques.
• The determination of when quoted prices fail to
represent fair value (including the judgement of
whether markets are active).
• The calculation of fair value adjustments in order
to incorporate relevant risk factors such as credit
risk, model risk and liquidity risk.
• The judgement of which market parameters that
are observable.
The critical judgements required when determining fair
value of financial instruments that lack quoted prices or
recently observed market prices, also introduce a high
degree of estimation uncertainty.
In all of these instances, decisions are based upon
professional judgement in accordance with Nordea
Eiendomskreditt’s accounting and valuation policies.
Sensitivity analysis disclosures covering the fair value of
financial instruments with significant unobservable inputs
can be found in the table “Valuation techniques and inputs
used in fair value measurements of financial instruments in
Level 3” in this note.
Fair value of financial assets and liabilities
31 Dec 2024
31 Dec 2023
NOKt
Carrying amount
Fair value
Carrying amount
Fair value
Financial assets
Loans
451,888,060
447,246,993
336,727,511
337,499,000
Interest-bearing securities
10,553,980
10,553,980
10,585,566
10,585,566
Derivatives
581,395
581,395
183,957
183,957
Accrued income and prepaid expenses
25,477
25,477
48,127
48,127
Total financial assets
463,048,911
458,407,845
347,545,161
348,316,650
Financial liabilities
Deposits and debt instruments
423,841,890
426,968,715
324,399,462
324,500,812
Derivatives
1,116,824
1,116,824
665,463
665,463
Other financial liabilities
3,766
3,766
3,518
3,518
Accrued expenses and prepaid income
11,839
11,839
11,145
11,145
Total financial liabilities
424,974,319
428,101,144
325,079,588
325,180,938
Financial assets and liabilities held at fair value on the balance sheet
Categorisation in the fair value hierachy
Quoted prices in
active markets for
same instrument
Valuation technique
using observable
data
Valuation technique
using non-
observable data
NOKt
(Level 1)
(Level 2)
(Level 3)
Total
Financial assets
1
Interest-bearing securities
9,051,014
1,502,966
10,553,980
Derivatives
635,467
-54,072
581,395
Total 31 December 2024
0
9,686,481
1,448,894
11,135,375
Total 31 December 2023
0
10,361,794
407,729
10,769,523
Financial liabilities
1
Derivatives
1,116,824
0
1,116,824
Total 31 December 2024
0
1,116,824
0
1,116,824
Total 31 December 2023
0
665,463
0
665,463
1
Nordea Eiendomskreditt AS Annual Report 2024
22
NOKt
1 January 2024
Unrealised fair
value gains/losses
recorded in income
statement
Transfers into/out
of level 3
31 December 2024
Interest-bearing
securities
426 957
-5 614
1 081 624
1 502 966
Derivatives (net)
-19 228
-34 844
-54 072
Total, net
407 729
-40 458
1 081 624
1 448 894
Fair values for items measured at fair value on the
balance sheet
Determination of fair value
The pricing models applied by Nordea Eiendomskreditt are
consistent with accepted economic methodologies for
pricing financial instruments and incorporate the factors
that market participantsconsider when setting a price. New
pricing models are subject to approval by the Nordea
Group Model Risk Committee and all pricing models are
reviewed on a regular basis.
Complex valuation techniques are generally characterised
by the use of unobservable and model-specific inputs. All
valuation techniques, both simple and complex models,
make use of market prices and inputs, which comprise
interest rates, volatilities, correlations etc. Some of these
prices and inputs are observable while others are not. For
most non-exotic currencies, the interest rates are all
observable, and implied volatilities and the correlations of
the interest rates and FX rates may be observable through
option prices up to a certain maturity.
Nordea predominantly uses published price quotations to
establish the fair value of items disclosed under the
following balance sheet items:
• Interest-bearing securities
• Debt securities in issue
Nordea predominantly uses valuation techniques to
establish the fair value of items disclosed under the
following balance sheet items:
• Interest-bearing securities (when quoted prices in an
active market are not available)
• Derivatives (OTC derivatives).
For interest-bearing securities, the valuation can either be
based on direct quotes in active markets or measured
using a valuation technique.
For OTC derivatives, valuation techniques are usually
developed in-house and based on assumptions about the
behaviour of the underlying asset and on statistical
scenario analysis. Most OTC derivatives are categorised as
Level 2 in the fair value hierarchy, implying that all
significant model inputs are observable in active markets.
The fair value of financial assets and liabilities is generally
calculated as the theoretical net present value of the
individual instruments. This calculation is supplemented by
portfolio adjustments.
Nordea Eiendomskreditt incorporates credit valuation
adjustments (CVAs) and debit valuation adjustments
(DVAs) into derivative valuations. CVAs and DVAs reflect
the impact on fair value from the counterparty´s credit risk
and Nordea’s own credit quality, respectively. Calculations
are based on estimates of exposure at default, probability
of default (PD) and recovery rates on a counterparty basis.
Generally, exposure at default for CVAs and DVAs is
based on the expected exposure and estimated through
the simulation of underlying risk factors. Where possible,
Nordea obtains credit spreads from the credit default swap
(CDS) market, and PD is inferred from this data. For
counterparties that do not have a liquid CDS, the PD is
estimated using a cross-sectional regression model, which
calculates an appropriate proxy CDS spread based on
each counterparty’s rating, region and industry.
The impact of funding costs and funding benefits on the
valuation of uncollateralised and imperfectly collateralised
derivatives is partly reflected in the calculated net present
value through the applied discounting curve and partly
through the addition of a separate funding fair valuation
adjustment (FFVA). In addition, Nordea applies close-out
cost valuation adjustments, model risk adjustments for
identified model deficiencies and adjustments for
independent price verification (IPV) to its fair value
measurement.
Nordea Eiendomskreditt’s pricing models are calibrated to
the market, and if climate risk has any impact on a
particular market, it will already have been taken into
consideration by other market participants. Hence, Nordea
Eiendomskreditt has not implemented any changes to its
pricing models to take climate risk into account and no
critical valuation adjustments have been made. Going
forward, Nordea Eiendomskreditt will monitor areas in the
valuation space where climate risk could have an impact on
the models (e.g. in relation to credit valuation adjustment).
In the below table, fair value measurements of financial
assets and liabilities carried at fair value on the balance
sheet have been categorised under the three levels of the
IFRS fair value hierarchy: quoted prices in active markets
for the same instrument (Level 1), a valuation technique
using observable data (Level 2) and a valuation technique
using unobservable data (Level 3).
The Level 1 category includes financial instruments where
direct tradable price quotes exist. The Level 2 category
includes the majority of Nordea Eiendsomskreditt’s interest
bearing securities and OTC derivatives where active
markets supply the input to the valuation techniques or
pricing models. The Level 3 category includes more
complex OTC derivatives where unobservable input has a
significant impact on fair value and illiquid interest-bearing
securities.
Transfers between Level 1 and Level 2
There has not been any transfers between Level 1 and
Level 2 in 2024. When transfers between levels occur,
these are considered to have occurred at the end of the
reporting period.
Movements in Level 3
In 2024 one derivative contract is still valuated according to
level 3. One additional interest-bearing security was
transferred into level 3, leaving 2 securities at the end of
2024. Valuation according to level 3 is due to observable
market data not being available. Transfers between levels
are considered to have occurred at the end of the year.
Fair value gains and losses in the income statement during
the period are included in Net result from items at fair
value, see Note 2.3 "Net result from items at fair value".
Assets and liabilities related to derivatives are presented
net.
Nordea Eiendomskreditt AS Annual Report 2024
23
NOKt
Fair value
Valuation
techniques
Unobservable
input
Range of
fair value
Interest-bearing securities
1 502 966
Option model
Correlation,
volatilities
-150/150
Total
1 502 966
Derivatives, net
Interest rate derivatives
-54 072
Option model
Correlation,
volatilities
-5/5
Total
-54 072
States, municipalities and other
public bodies
Valuation techniques and inputs used in fair value
measurements of financial instruments in Level 3
The table above shows, for each class of assets and
liabilities categorised in level 3, the fair value, the valuation
techniques used to estimate the fair value and significant
unobservable inputs used in the valuation techniques and
the fair value sensitivity to changes in key assumptions.
The column “Range of fair value” in the table above shows
the sensitivity of the fair value of Level 3 financial
instruments to changes in key assumptions. In case the
exposure to an unobservable parameter is offset across
different instruments, only the net impact is disclosed in the
table. The range disclosed is likely to be greater than the
true uncertainty in determining the fair value of these
instruments as all unobservable parameters are in practice
unlikely to be simultaneously at the extremes of their
ranges of reasonably possible alternatives. The disclosure
is neither predictive nor indicative of future movements in
fair value.
The reported sensitivity (range) of the fair value of
derivatives follows the same methodologies as applied to
the reporting of the model risk and market price uncertainty
additional valuation adjustments (AVAs) as defined in
Commission Delegated Regulation (EU) No 2016/101 of 26
October 2015 supplementing Regulation (EU) No 575/2013
of the European Parliament and of the Council with regard
to regulatory technical standards for prudent valuation
under Article 105(14).
In order to calculate the sensitivity (range) of the fair
value of shares and interest-bearing securities, the fair
value is increased and decreased within a total range of 2–
10 percentage points depending on the valuation
uncertainty and underlying assumptions. Higher ranges are
applied to instruments with more uncertain valuations
relative to actively traded instruments and underlying
uncertainties in individual assumptions.
The valuation process at Nordea Eiendomskreditt consists
of several steps. The first step is to determine the end-of-
day mid-prices. It is the responsibility of the business areas
to determine the correct prices for the valuation process.
These prices are either internally marked prices set by a
trading unit or externally sourced prices. The valuation
prices are then controlled and tested by a valuation control
function within the first line of defence, which is
independent from the risk-taking units of the front office.
The cornerstone of the control process is the independent
price verification (IPV). The IPV test comprises verification
of the correctness of valuations by comparing end-of-day
mid-prices to independently sourced data. The result of the
IPV is analysed and any findings are escalated as
appropriate. Also, adjustments for IPV variances are
included in fair value. The verification of the correctness of
prices and inputs is as a minimum carried out on a monthly
basis and is carried out daily for many products. Third-party
information, such as broker quotes and pricing services, is
used as benchmark data in the verification. The quality of
the benchmark data is assessed on a regular basis.
The valuation adjustment at portfolio level and the deferred
Day 1 profit/loss on Level 3 transactions are calculated and
reported on a monthly basis. The actual assessment of
instruments in the fair value hierarchy is performed on a
continuous basis.
Specialised teams within the risk organisation are
responsible for second line of defence oversight of
valuations and controls performed by the business areas
and Group Finance (the first line of defence).
Financial assets and liabilities not held at fair value on the balance sheet
31 Dec 2024
31 Dec 2023
Level in fair
value
hierarchy
Carrying amount
Fair value
Carrying amount
Fair value
Assets not held at fair value on the balance sheet
Loans
451,888,060
447,246,993
336,727,511
337,499,000
3
Other financial assets
0
0
0
0
3
Prepaid expenses and accrued income
25,477
25,477
48,127
48,127
3
Total assets
451,913,537
447,272,470
336,775,638
337,547,127
Liabilities not held at fair value on the balance sheet
Deposits and debt instruments
423,841,890
426,968,715
324,399,462
324,500,812
3
Other financial liabilities
3,766
3,766
3,518
3,518
3
Accrued expenses and prepaid income
11,839
11,839
11,145
11,145
3
Total liabilities
423,857,495
426,984,320
324,414,125
324,515,475
Loans
The fair value of "Loans to credit institutions" and "Loans to
the public" have been estimated by discounting the
expected future cash flows with an assumed customer
interest rate that would have been used on the market if the
loans had been issued at the time of the measurement.
The assumed customer interest rate is calculated as the
benchmark interest rate plus the average margin on new
lending in Personal Banking. The fair value measurement
is categorised into Level 3 in the fair value hierarchy.
Other assets and prepaid expenses and accrued
income
The balance sheet items "Other assets" and "Prepaid
expenses and accrued income" consist of short
receivables, mainly accrued interest
Nordea Eiendomskreditt AS Annual Report 2024
24
receivables. The fair value is therefore considered to equal
the carrying amount and is categorised into Level 3 in the
fair value hierarchy.
Deposits and debt instruments
The fair value of “Deposits by credit institutions”, “Debt
securities in issue” and “Subordinated liabilities” has been
calculated as the carrying amount adjusted for fair value
changes in interest rate risk and in own credit risk. The fair
value is categorised into Level 3 in the fair value hierarchy.
The fair value changes related to interest rate risk is based
on changes in relevant interest rates compared with
corresponding nominal interest rate in the portfolios. The
fair value changes in the credit risk is calculated as the
difference between the credit spread in the nominal interest
rate compared with the current spread that is observed in
the market. This calculation is performed on an aggregated
level for all long term issuance recognised in the balance
sheet items “Debt securities in issue” and “Subordinated
liabilities”. As the contractual maturity is short for “Deposits
by credit institutions” the changes in own credit risk related
to these items is assumed not to be significant. This is also
the case for short term issuances recognised in the
balance sheet items “Debt securities in issue” and
“Subordinated liabilities”.
Other liabilities and accrued expenses and prepaid
income
The balance sheet items "Other liabilities" and "Accrued
expenses and prepaid income" consist of short-term
liabilities, mainly liabilities on securities settlement. The fair
value is therefore considered to be equal to the carrying
amount and is categorised into Level 3 in the fair value
hierarchy.
Note 3.4
Offsetting
Accounting policies
Nordea Eiendomskreditt offsets financial assets and
liabilities on the balance sheet if there is a legal right to
offset and if the intent is to settle the items net or realise
the asset and settle the liability simultaneously. The
legal right to offset should exist both in the ordinary
course of business and in case of the default, bankruptcy
and insolvency of Nordea Eiendomskreditt and its
counterparties.
Financial instruments set off on the balance sheet or subject to netting agreements
Amounts not set off but subject to master netting
agreements and similar agreements
31 Dec 2024, NOKt
Gross
recognised
financial assets
1
Gross
recognised
financial
liabilities set off
on the balance
sheet
Net carrying
amount on the
balance sheet
2
Financial
instruments
Financial
collateral
received
Cash collateral
received
Net amount
Assets
Derivatives
581,394
0
581,394
-489,141
0
0
92,254
Total
581,394
0
581,394
-489,141
0
0
92,254
Liabilities
Derivatives
1,116,824
0
1,116,824
-489,141
0
0
627,683
Total
1,116,824
0
1,116,824
-489,141
0
0
627,683
Amounts not set off but subject to master netting
agreements and similar agreements
31 Dec 2023, NOKt
Gross
recognised
financial assets
1
Gross
recognised
financial
liabilities set off
on the balance
sheet
Net carrying
amount on the
balance sheet
2
Financial
instruments
Financial
collateral
received
Cash collateral
received
Net amount
Assets
Derivatives
183,958
0
183,958
-157,719
0
0
26,239
Total
183,958
0
183,958
-157,719
0
0
26,239
Liabilities
Derivatives
665,463
0
665,463
-157,719
0
0
507,744
Total
665,463
0
665,463
-157,719
0
0
507,744
1
2
agreements and Securities lending agreements are on the balance sheet classified as Deposits by credit institution or as Deposits and borrowings from the public.
The fact that financial instruments are being accounted for
on a gross basis on the balance sheet, would not imply that
the financial instruments are not subject to master netting
agreements or similar arrangements. Generally financial
instruments (derivatives, repos and securities lending
transactions), would be subject to master netting
agreements, and as a consequence Nordea
Eiendomskreditt would be allowed to benefit from netting in
the case of default by its counterparties, in any calculations
involving counterparty credit risk.
For a description of counterparty risk see section
Counterparty credit risk in Note 9 “Risk and liquidity
management”.
Nordea Eiendomskreditt AS Annual Report 2024
25
Note 3.5
Loans
Accounting policies
Loans are financial instruments with fixed or determinable
payments that are not readily transferable without the
consent of the debtor. Loans are classified and measured
in accordance with the description in Note 3.2
“Classification and measurement”. Nordea
Eiendomskreditt’s accounting policies covering expected
credit losses follow below. Additional information on the
credit risk on loans is disclosed in Note 9 “Risk and liquidity
management”.
Loans are financial instruments classified as “Amortised
cost” are subject to impairment testing due to credit risk.
This includes assets recognized on the balance sheet as
“Loans to credit institutions”, “Loans to the public” and
“Interest-bearing securities”. These balance sheet lines
also include assets classified as Fair value through profit or
loss, which are not subject to impairment testing. See
accounting policies in Note 2.5 “Loan losses” and Note 3.2
“Classification of assets and liabilities”.
Off-balance sheet commitments are also subject to
impairment testing.
Recognition and presentation
Amortised cost assets are recognised gross with an
offsetting allowance for the expected credit losses if the
loss is not regarded as final. The allowance account is
disclosed net on the face of the balance sheet, but the
allowance account is disclosed separately in the notes.
Changes in the allowance account are recognised in the
income statement and classified as “Loan losses”.
If the impairment loss is regarded as final, it is reported as
a realised loss and the carrying amount of the loan and the
related allowance for impairment loss are derecognised. An
impairment loss is regarded as final when the obligor is
filed for bankruptcy and the administrator has declared the
economic outcome of the bankruptcy procedure, or when
Nordea Eiendomskreditt waives its claims either through a
legal based or voluntary reconstruction, or when Nordea
Eiendomskreditt, for other reasons, deem it unlikely that the
claim will be recovered. See also section “Write-offs”
below.
Provisions for off-balance sheet exposures are classified as
“Provisions” on the balance sheet, with changes in
provisions classified as “Loan losses”.
Impairment testing
Nordea Eiendomskreditt classifies all exposures into stages
on an individual basis. Stage 1 includes assets where there
has been no significant increase in credit risk, stage 2
includes assets where there has been a significant
increase in credit risk and stage 3 (impaired loans) includes
defaulted assets. Nordea Eiendomskreditt monitors
whether there are indicators of exposures being credit
impaired (stage 3) by identifying events that have a
detrimental impact on the estimated future cash flows (loss
event). Nordea Eiendomskreditt applies the same definition
of default as the Capital Requirements Regulation. More
information on the identification of loss events can be found
in Note 9 “Risk and liquidity management”. Exposures
without individually calculated allowance will be covered by
the model based impairment calculation.
For significant exposures where a credit event has been
identified, the exposure is tested for impairment on an
individual basis. If the exposure is found impaired, an
individual provision is recognised. The carrying amount of
the exposure is compared with the sum of the net present
value of expected future cash flows. If the carrying amount
is higher, the difference is recognised as an impairment
loss. The expected cash flows are discounted with the
original effective interest rate and include the fair value of
the collaterals and other credit enhancements. The
estimate is based on three different forward-looking
scenarios that are probability weighted to derive the net
present value.
For insignificant exposures that have been individually
identified as credit impaired, the measurement of the
impairment loss is measured using the model described
below, based on the fact that the exposures are already in
default.
Model based allowance calculation
For exposures not impaired on an individual basis, a
statistical model is used for calculating impairment losses.
The provisions are calculated as the exposure at default
times the probability of default (PD) times the loss given
default (LGD). The provisions for exposures for which there
has been no significant increase in credit risk since initial
recognition are based on the 12-month expected loss
(stage 1). The provisions for exposures for which there has
been a significant increase in credit risk since initial
recognition, but which are not credit impaired, are based on
the lifetime expected losses
(stage 2). This is also the case for the insignificant
credit impaired exposures in stage 3.
Nordea Eiendomskreditt uses two different models to
identify whether there has been a significant increase in
credit risk or not. For assets held at transition to IFRS 9 on
1 January 2018, the change in internal rating and scoring
data is used to determine whether there has been a
significant increase in credit risk or not.
Internal rating/scoring information is used to assess the risk
of the customers and a deterioration in rating/scoring
indicates an increase in the credit risk of the customer.
Nordea Eiendomskreditt has concluded it is not possible to
calculate the lifetime PDs at origination without the use of
hindsight for assets already recognised on the balance
sheet at transition. Changes to the lifetime Probability of
Default (PD) are used as the trigger for assets recognised
after transition.
For assets evaluated based on lifetime PDs, Nordea
Eiendomskreditt uses a mix of absolute and relative
changes in PD as the transfer criterion:
• Retail customers with an initial 12-month PD
below 1%:
Exposures with a relative increase in lifetime PD
above 100% and an absolute increase in 12-
month PD above 45bp are transferred to stage 2.
• Retail customers with an initial 12-month PD
above or equal to 1%:
Exposures with a relative increase in lifetime PD
above 100% and an absolute increase in 12-
month PD above 300bp are transferred to stage 2.
For assets for which rating and scoring models are used,
the change in rating/scoring notches is calibrated to match
Nordea Eiendomskreditt AS Annual Report 2024
26
the significant increase in credit risk based on lifetime PD.
In addition, Nordea Eiendomskreditt applies the following
backstops for transfers between stages;
• Customers with forbearance measures and
customers with payments more than thirty days
past due are also transferred to stage 2, unless
already identified as credit impaired (stage 3).
Exposures with forbearance measures will stay in
stage 2 for a probation period of 24 months from
when the measures were introduced. Once
transferred back to stage 1, after the probation
period, the exposures are treated as any other
stage 1 exposure when assessing significant
increase in credit risk.
• Exposures more than 90 days past due will
normally be classified as stage 3, but this
classification will be rebutted if there is evidence
the customer is not in default. Such exposures will
be classified as stage 2.
• Exposures with a relative change in annualised
lifetime PD exceeding 200% and with at least one
rating grade of deterioration are transferred to
stage 2.
• Exposures classified as “high risk”, i.e. with a
rating grade of 2 or below, are transferred to stage
2.
When calculating provisions, including the staging
assessment, the calculation is based on both historical data
and probability weighted forward looking information.
Nordea Eiendomskreditt applies three macro-economic
scenarios to address the non-linearity in expected credit
losses. The different scenarios are used to adjust the
relevant parameters for calculating expected losses and a
probability weighted average of the expected losses under
each scenario is recognised as provisions. The model is
based on data collected before the reporting date, requiring
Nordea Eiendomskreditt to identify events that could affect
the provisions after the data is sourced to the model
calculation. Management evaluates these events and
adjusts the provisions if deemed necessary.
Write-offs
A write-off is a de-recognition of a loan or receivable from
the balance sheet and a final realisation of a credit loss
provision. When assets are considered as uncollectable
they should be written off as soon as possible, regardless
of whether the legal claim remains or not. A write-off can
take place before legal actions against the borrower to
recover the debt have been concluded in full. Although an
uncollectable asset is removed or written-off from the
balance sheet, the customer remains legally obligated to
pay the outstanding debt. When assessing the
recoverability of non-performing loans and determining if
write-offs are required, exposures with the following
characteristics are in particular focus (list not exhaustive):
• Exposures past due more than 90 days. If,
following this assessment, an exposure or part of
an exposure is deemed as unrecoverable, it is
written-off.
• Exposures under insolvency procedure where the
collateralisation of the exposure is low.
Discount rate
The discount rate used to measure impairment is the
original effective interest rate for loans attached to an
individual customer or, if applicable, to a group of loans. If
considered appropriate, the discount rate can be based on
a method that results in an impairment that is a reasonable
approximation of using the effective interest rate method as
basis for the calculation.
Critical judgements and estimation uncertainty
Management is required to exercise critical judgements
and estimates when calculating loan impairment
allowances. When calculating allowances for individually
significant impaired loans, judgement is exercised to
estimate the amount and timing of the expected cash flows
to be received from the customers under different
scenarios, including the valuation of any collateral received.
Judgement is also applied when assigning the likelihood of
the different scenarios occurring.
Judgement is exercised to assess when an exposure has
experienced a significant increase in credit risk. If this is the
case, the provision should reflect the lifetime expected
losses, as opposed to a 12-month expected loss for
exposures not having increased significantly in credit risk.
Judgement is also exercised in the choice of modelling
approaches covering other parameters used when
calculating the expected losses, such as the expected
lifetime used in stage 2, as well as in the assessment of
whether the parameters based on historical experience are
relevant for estimating future losses.
The statistical models used to calculate provisions are
based on macro-economic scenarios, which requires
management to exercise judgement when identifying such
scenarios and when assigning the likelihood of the different
scenarios occurring. Judgement is also exercised in the
assessment of to what extent the parameters for the
different scenarios, based on historical experience, are
relevant for estimating future losses. Nordea adjusts its
collectively calculated provisions if the historical data does
not adequately reflect management’s view regarding
expected credit losses. Estimating post-model adjustments
requires management to exercise critical judgements.
Nordea Eiendomskreditt AS Annual Report 2024
27
Loans and impariment
NOKt
31 Dec 2024
31 Dec 2023
Loans measured at amortised cost, impaired (Stage 1 and 2)
449,191,939
333,635,547
Impaired loans (Stage 3)
1,368,060
1,032,728
- Servicing
249,251
381,706
- Non-servicing
1,118,809
651,022
Loans before allowances
450,559,999
334,668,275
Allowances for individually assessed impaired loans (Stage 3)
-162,220
-162,454
- Servicing
-40,809
-47,565
- Non-servicing
-121,411
-114,889
Allowances for collectively assessed impaired loans (Stage 1 and 2)
-280,016
-198,147
Allowances
-442,236
-360,601
Loans, carrying amount
450,117,763
334,307,675
Accrued interest on loans to the public is included with NOK 979m at 31 December 2024.
Nordea Eiendomskreditt does not have any financial instruments for which a loss allowance has not been recognised
because of the collateral.
Carrying amount of loans measured at amortised cost, before allowances
Credit institutions
The public
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Balance as at 1 January 2024
2,462,506
0
0
2,462,506
316,193,103
17,442,444
1,032,728
334,668,275
Changes due to origination and acquisition
0
0
0
0
104,386,569
9,626,425
233,507
114,246,502
Changes due to transfers between Stage 1 and
Stage 2, (net)
0
0
0
0
-5,494,170
5,494,170
0
0
Changes due to transfers between Stage 2 and
Stage 3, (net)
0
0
0
0
0
-206,075
206,075
0
Changes due to transfers between Stage 1 and
Stage 3, (net)
0
0
0
0
-106,541
0
106,541
0
Changes due to repayments and disposals
0
0
0
0
-90,854,113
-5,918,255
-506,905
-97,279,273
Changes due to write-offs
0
0
0
0
0
0
-8,019
-8,019
Other changes
-582,872
0
-582,872
95,579,709
3,048,672
304,132
98,932,513
Closing balance at 31 December 2024
1,879,634
0
0
1,879,634
419,704,557
29,487,381
1,368,060
450,559,999
Credit institutions
The public
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Balance as at 1 January 2023
731,472
0
0
731,472
309,546,490
13,406,750
609,274
323,562,514
Changes due to origination and acquisition
0
0
0
0
106,878,337
389,327
138,714
107,406,378
Changes due to transfers between Stage 1 and
Stage 2, (net)
0
0
0
0
-1,491,060
1,491,060
0
0
Changes due to transfers between Stage 2 and
Stage 3, (net)
0
0
0
0
0
-49,369
49,369
0
Changes due to transfers between Stage 1 and
Stage 3, (net)
0
0
0
0
-85,127
0
85,127
0
Changes due to repayments and disposals
0
0
0
0
-122,601,603
-6,174,438
-259,804
-129,035,845
Changes due to write-offs
0
0
0
0
0
0
-3,007
-3,007
Other changes
1,731,034
0
1,731,034
23,946,065
8,379,114
413,056
32,738,235
Closing balance at 31 December 2023
2,462,506
0
0
2,462,506
316,193,103
17,442,444
1,032,728
334,668,275
Movements of allowance accounts for loans measured at amortised cost
NOKt
Stage 1
Stage 2
Stage 3
Total
Balance at 1 January 2024
-46,995
-151,151
-162,454
-360,601
Changes due to origination and acquisition
-17,687
-44,469
-12,750
-74,905
Changes due to transfers from Stage 1 to Stage 2
4,574
-75,441
0
-70,868
Changes due to transfers from Stage 1 to Stage 3
220
0
-35,551
-35,331
Changes due to transfers from Stage 2 to Stage 1
-1,428
47,924
0
46,496
Changes due to transfers from Stage 2 to Stage 3
0
6,559
-50,207
-43,648
Changes due to transfers from Stage 3 to Stage 1
-84
0
17,208
17,124
Changes due to transfers from Stage 3 to Stage 2
0
-2,060
19,982
17,922
Changes due to changes in credit risk without stage transfer
-48,116
-13,952
-6,269
-68,337
Changes due to repayments and disposals
12,955
49,135
67,821
129,911
Balance at 31 Dec 2024
-96,560
-183,456
-162,220
-442,236
Nordea Eiendomskreditt AS Annual Report 2024
28
NOKt
Stage 1
Stage 2
Stage 3
Total
Balance at 1 January 2023
-50,045
-145,269
-115,213
-310,527
Changes due to origination and acquisition
-32,678
-47,828
-15,608
-96,113
Changes due to transfers from Stage 1 to Stage 2
3,525
-59,387
0
-55,862
Changes due to transfers from Stage 1 to Stage 3
116
0
-35,870
-35,754
Changes due to transfers from Stage 2 to Stage 1
-1,065
55,581
0
54,516
Changes due to transfers from Stage 2 to Stage 3
0
4,302
-26,803
-22,502
Changes due to transfers from Stage 3 to Stage 1
-30
0
9,150
9,121
Changes due to transfers from Stage 3 to Stage 2
0
-1,157
16,879
15,722
Changes due to changes in credit risk without stage transfer
20,729
-575
-36,592
-16,439
Changes due to repayments and disposals
12,454
43,182
41,602
97,238
Balance at 31 Dec 2023
-46,995
-151,151
-162,454
-360,601
Rating / scoring information for loans measured at amortised cost
Gross carrying amounts 31 Dec 2024
Gross carrying amounts 31 Dec 2023
Rating /scoring grade
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
A+
17,304,171
207,702
8,428
17,520,301
169,961,507
1,284,107
51,329
171,296,943
A
3,641,264
96,527
21,789
3,759,580
35,459,311
437,936
13,267
35,910,513
A-
2,384,424
58,114
0
2,442,539
21,895,783
572,654
13,061
22,481,498
B+
63,769,062
150,713
0
63,919,774
16,581,010
846,378
14,437
17,441,825
B
2,742,095
172,038
1,578
2,915,711
12,299,251
1,228,053
0
13,527,303
B-
81,254,961
372,508
7,577
81,635,046
7,159,737
1,261,714
17,668
8,439,120
C+
73,478,733
692,843
12,086
74,183,662
5,263,362
1,422,050
10,024
6,695,436
C
8,160,605
236,916
35,694
8,433,214
17,344,153
1,479,418
100,568
18,924,139
C-
2,818,649
102,287
5,104
2,926,039
3,085,519
823,429
26,508
3,935,456
D+
123,899,538
6,840,729
18,180
130,758,447
2,843,175
771,752
17,879
3,632,805
D
959,972
92,845
9,402
1,062,219
2,622,776
1,218,374
2,759
3,843,908
D-
6,994,220
246,219
17,574
7,258,013
16,248,673
2,385,448
43,113
18,677,234
E+
12,168,596
9,046,595
12,077
21,227,269
1,585,566
1,052,632
12,661
2,650,860
E
5,025,993
636,547
6,917
5,669,458
577,315
649,523
10,986
1,237,825
E-
2,252,516
117,477
27,130
2,397,123
2,122,930
650,781
72,774
2,846,486
F+
3,878,751
6,006,482
18,390
9,903,622
119,524
163,045
1,495
284,064
F
1,150,809
1,729,658
0
2,880,468
29,123
143,960
12,606
185,689
F-
788,185
2,043,256
2,727
2,834,168
251,932
781,317
15,204
1,048,453
0+ / 0 / 0-
738,572
420,585
1,138,404
2,297,562
324,327
252,915
576,958
1,154,200
Internal¹
2,005,419
0
0
2,005,419
2,588,291
0
0
2,588,291
Standardised/Unrated
6,167,656
217,340
25,003
6,409,999
292,346
16,959
19,431
328,736
Total
421,584,191
29,487,381
1,368,060
452,439,633
318,655,609
17,442,444
1,032,728
337,130,781
1
Note 3.6
Interest-bearing securities
Accounting policies
Instruments that are readily transferable and where
the holder of the instrument receives the nominal
amount at maturity are normally reported in the balance
sheet line item “Interest-bearing securities”. Instruments
that cannot be transferred or sold without the consent of
the holder of the instrument are normally reported as loans,
see Note 3.5 “Loans”.
For more information about accounting policies, see Note
3.1 “Recognition on and derecognition from the balance
sheet“, Note 3.2 “Classification and measurement” and
Note 3.3 “Fair value”.
Interest-bearing securities
31 Dec 2024
31 Dec 2023
NOKt
Aquired amount
Carrying amount
Aquired amount
Carrying amount
Financial assets
States, municipalities and other public bodies
5,564,537
5,469,390
4,414,614
4,384,207
Mortgage institutions
5,069,440
5,084,605
6,180,428
6,201,359
Total
10,633,977
10,553,995
10,595,042
10,585,566
Nordea Eiendomskreditt AS Annual Report 2024
29
Note 3.7
Derivates and hedge accounting
Accounting policies
A
derivative is a financial instrument or other contract with
all three of the following characteristics:
●
specified interest rate, financial instrument price,
commodity price, foreign exchange rate, index of
prices or rates, credit rating or credit index, or
other variable, provided in the case of a non-
financial variable that the variable is not specific to
a party to the contract (so-called “underlying”).
●
investment that is smaller than would be required
for other types of contracts that would be
expected to have a similar response to changes in
market factors.
●
Contracts that fulfil the above requirements of being
derivatives but are held for own use are not in scope of
IFRS 9 and are therefore not included in this note. Such
contracts are measured at cost. All derivatives are
recognised on the balance sheet and measured at fair
value. Derivatives with a positive fair value, including any
accrued interest, are recognised as assets in the line item
“Derivatives” on the asset side. Derivatives with a negative
fair value, including any accrued interest, are recognized as
liabilities in the line item “Derivatives” on the liability side.
Nordea Eiendomskreditt incorporates credit valuation
adjustments (CVAs) and debit valuation adjustments
(DVAs) into derivative valuations. CVAs and DVAs reflect
the impact on fair value from the counterparty’s credit risk
and Nordea Eiendomskreditt’s own credit quality,
respectively. For more information about the calculation
see Note 3.3 “Fair value”.
Realised and unrealised gains and losses from derivatives
are recognised in the income statement under “Net result
from items at fair value”. For more information about
accounting policies and critical judgements, see Note 3.3
“Fair value”
When a hedging relationship meets the specified hedge
accounting criteria set out in IAS 39, Nordea applies one of
three types of hedge accounting:
●
●
Nordea Eiendomskreditt has chosen, as a policy choice
permitted under IFRS 9, to continue to apply hedge
accounting in accordance with the carve-out version of IAS
39. Under the EU carve-out version of IAS 39 hedge
ineffectiveness in a hedge of assets with prepayment
options is only recognised when the revised estimate of the
amount of cash flows falls below the designated bottom
layer.
The application of hedge accounting requires the hedge to
be highly effective. A hedge is regarded as highly effective
if, at inception and throughout its life, changes in the fair
value of the hedged item, as regards the hedged risk, can
be expected to be essentially offset by changes in the fair
value of the hedging instrument. The result should be
within a range of 80–125%.
Transactions that are entered into in accordance with
Nordea Eiendomskreditt’s hedging objectives but
do not qualify for hedge accounting are economic hedge
relationships.
.
Fair value hedge accounting
Fair value hedge accounting is applied when derivatives
are hedging changes in the fair value of a recognized asset
or liability attributable to a specific risk. Fair value hedge
accounting can be performed at both micro level (single
assets/liabilities or closed portfolios of assets/liabilities
where one or more hedged items are hedged using one or
more hedging instruments) and macro level (open
portfolios where groups of items are hedged using multiple
hedging instruments).
Changes in the fair value of derivatives (hedging
instruments), as well as changes in the fair value of the
hedged item attributable to the risks being hedged, are
recognised separately in the income statement under “Net
result from items at fair value”. Given that the hedge is
effective, the change in the fair value of the hedged item
will be offset by the change in the fair value of the hedging
instrument.
The changes in the fair value of the hedged item,
attributable to the risks being hedged with the derivative
instrument, are reflected in an adjustment to the carrying
amount of the hedged item, which is also recognised in the
income statement. The fair value changes of the hedged
items held at amortised cost in hedges of interest rate risks
in macro hedges are reported separately in the balance
sheet item “Fair value changes of hedged items in portfolio
hedges of interest rate risk”.
Any ineffectiveness is recognised in the income statement
under the item “Net result from items at fair value”.
Cash flow hedge accounting
Cash flow hedge accounting is applied when hedging the
exposure to variability in future cash flows. The portion of
the gain or loss on the hedging instrument, determined to
be an effective hedge, is recognised in other
comprehensive income and accumulated in the cash flow
hedge reserve in equity. The ineffective portion of the gain
or loss on the hedging instrument is recognised in the item
“Net result from items at fair value” in the income
statement. The hedge is considered to be ineffective to the
extent that the cumulative change in fair value from the
inception of the hedge is larger for the hedging instrument
than for the hedged item.
Gains or losses on hedging instruments recognised in the
cash flow hedge reserve in equity through other
comprehensive income are recycled and recognised in the
income statement in the same period as the hedged item
affects profit or loss, normally in the period in which interest
income or interest expense is recognised.
A hedged item in a cash flow hedge can be highly probable
cash flows from recognised assets or liabilities or from
future assets or liabilities. Derivatives used as hedging
instruments are always measured at fair value. If the
hedging relationship does not meet the hedge accounting
requirements, hedge accounting is discontinued. Changes
in the unrealised value of the hedging instrument will
prospectively from the last time it was proven effective be
accounted for in the income statement. The cumulative
gain or loss on the hedging instrument
that has been recognized in the cash
Nordea Eiendomskreditt AS Annual Report 2024
30
flow hedge reserve in equity through other comprehensive
income from the period when the hedge was effective is
reclassified from equity to “Net result from items at fair
value” in the income statement if the expected transaction
is no longer expected to occur. If the expected transaction
is no longer highly probable but is still expected to occur,
the cumulative gain or loss on the hedging instrument that
has been recognised in other comprehensive income from
the period when the hedge was effective will remain in
other comprehensive income until the transaction occurs or
is no longer expected to occur.
Critical judgements and estimation uncertainty
One important judgement in connection with cash flow
hedge accounting is the choice of method used
for effectiveness testing. Where Nordea Eiendomskreditt
applies cash flow hedge accounting, the hedging
instruments used are cross-currency interest rate swaps
(for mid-term or long-term maturities) or FX swaps/(for
short-term maturities) which are always held at fair value.
The currency component is designated as a cash flow
hedge of the currency risk (including cross-currency basis
margin and swap points) and the interest component as a
fair value hedge of the interest rate risk. The hypothetical
derivative method is used when measuring the
effectiveness of these cash flow hedges, meaning that the
change in a perfect hypothetical swap is used as proxy for
the present value of the cumulative change in expected
future cash flows on the hedged transaction (the currency
component).
Critical judgement has to be exercised when defining the
characteristics of the perfect hypothetical swap.
Derivatives
31 Dec 2024
31 Dec 2023
Fair Value
Nominal
amount
Fair Value
Nominal
amount
NOKt
Positive
Negative
Positive
Negative
Derivatives not used for hedge accounting
-7,905
68,828
10,000,000
-24,697
146,593
22,000,000
Derivatives used for hedge accounting
589,300
1,047,996
37,846,000
208,655
518,870
23,282,000
Total gross derivatives
581,394
1,116,824
47,846,000
183,958
665,463
45,282,000
Derivatives not used for hedge accounting
31 Dec 2024
31 Dec 2023
Fair Value
Nominal
amount
Fair Value
Nominal
amount
NOKt
Positive
Negative
Positive
Negative
Interest rate derivates
Interest rate swaps
-7,905
68,828
10,000,000
-24,697
146,593
22,000,000
Total derivatives not used for hedge accounting
-7,905
68,828
10,000,000
-24,697
146,593
22,000,000
Derivatives used for hedge accounting
31 Dec 2024
31 Dec 2023
Fair Value
Nominal
amount
Fair Value
Nominal
amount
NOKt
Positive
Negative
Positive
Negative
Fair value hedges
497,046
1,047,996
36,908,000
182,417
518,870
22,344,000
Cash flow hedges
92,254
0
938,000
26,238
0
938,000
Total derivatives used for hedge accounting
589,300
1,047,996
37,846,000
208,655
518,870
23,282,000
Nordea Eiendomskreditt enters into derivatives for risk
management purposes. Derivatives held for risk
management purposes include hedges that meet the
hedge accounting requirements and hedges that are
economic hedges but do not meet the hedge accounting
requirements.
The table above shows the fair value of derivative
financial instruments both used and not used for hedge
accounting together with their nominal amounts. The
nominal amounts indicate the volume of transactions
outstanding at year end and are neither indicative of market
risk nor credit risk.
Risk management
As part of its risk management policy, Nordea
Eiendomskreditt has identified a series of risk categories
with corresponding hedging strategies using derivative
instruments, as set out in the “Market risk” section in Note 9
“Risk and liquidity management”.
Nordea Eiendomskreditt’s exposures to market risk is non-
trading (the banking book) and includes all hedges
qualifying for hedge accounting.
The hedging instruments and risks hedged are further
described below by risk and hedge accounting type.
At inception, Nordea Eiendomskreditt formally documents
how the hedging relationship meets the hedge accounting
criteria, including the economic relationship between the
hedged item and the hedging instrument, the nature of the
risk, the risk management objective and strategy for
undertaking the hedge and the method used to assess the
effectiveness of the hedging relationship on an ongoing
basis.
Interest rate risk
Nordea Eiendomskreditt’s primary business model is to
grant mortgage loans and fund these by issuing covered
bonds. Interest rate risk is the impact that changes in
interest rates could have on Nordea Eiendomskreditt’s
margins, profit or loss and equity. Interest rate risk arises
from mismatches between interest-bearing assets and
Nordea Eiendomskreditt AS Annual Report 2024
31
interest-bearing liabilities such as the loan portfolio and the
liquidity portfolio.
As part of Nordea Eiendomskreditt’s risk management
strategy, the Board has established limits on the non-
trading interest rate gaps for interest rate sensitivities.
These limits are consistent with Nordea Eiendomskreditt’s
risk appetite and the hedge accounting objectives are
aligned to keep exposures within those limits. Nordea
Eiendomskreditt’s policy is to monitor positions on a daily
basis. For further information on measurement of risks, see
the “Market risk“ section in Note 9 “Risk and liquidity
management”.
For hedge accounting relationships related to interest rate
risk, the hedged risk is the change in the fair value of the
hedged item due to changes in benchmark interest rates.
The hedge ratio is established by matching the nominal
amount of the derivatives with the principal of the hedged
items. In order to hedge and manage the risk and limit the
impact on Nordea Eiendomskreditt’s margins, profit or loss
and equity, Nordea Eiendomskreditt uses hedging
instruments to swap interest rate exposures into either
fixed or variable rates.
The designated risk components of hedged items consist
of:
●
interest rate risk. Using the benchmark interest
rate risk can result in other risks, such as credit
risk and liquidity risk, being excluded from the
hedge accounting relationship.
●
benchmark rate is determined as a change in the
present value of the future cash flows using
benchmark discount curves. The benchmark rate
is separately identifiable and reliably measurable
and is typically the most significant component of
the overall change in fair value or cash flows.
Fair value hedges
Nordea Eiendomskreditt enters into interest rate swaps and
cross-currency interest rate swaps in order to reduce or
eliminate changes in the fair value of the hedged items due
to interest rate risk.
Hedged items are fixed-rate financial assets and liabilities
such as loans, interest bearing securities and debt
securities classified in the category “Fair value through
other comprehensive income” and debt securities in issue.
Hedging instruments are interest rate swaps and cross-
currency interest rate swaps (the portion related to interest
rate risk is designated in fair value hedge relationships).
Nordea Eiendomskreditt applies fair value hedge
accounting both at micro and macro level. The micro level
is applied for hedging fixed-rate debt securities classified in
the category “Fair value through other comprehensive
income” and fixed-rate debt securities in issue. The macro
level is applied for hedging loans where fixed-rate loans are
initially offset and the residual exposure hedged using a
portfolio of interest rate swaps up to the designated portion
of either the net asset in a given time bucket.
For hedge effectiveness testing Nordea Eiendomskredtt
uses both critical terms matching (for prospective
effectiveness testing) and regression analysis (for
retrospective effectiveness testing). When assessing hedge
effectiveness retrospectively, Nordea Eiendomskreditt
measures the fair value of a hedging instrument and
compares the change in the fair value of the hedging
instrument with the change in the fair value of the hedged
item. The effectiveness measurement is made on a
cumulative basis. Hedge ineffectiveness can arise from:
●
and hedging instruments
●
the hedged items and hedging instruments
●
or a counterparty’s credit risk on the fair value of
the hedging instruments
●
prepayments on the loan portfolio.
The table below presents the accumulated fair value
adjustments arising from continuing hedging relationships,
irrespective of whether there has been a change in hedge
designation during the year.
Nordea Eiendomskreditt AS Annual Report 2024
32
Hedged items
Interest rate risk
NOKt
31 Dec 2024
31 Dec 2023
Fair value hedges
Carrying amount of hedged assets - macro level
12,493,000
904,000
1
-109,337
-42,670
Carrying amount of hedged liabilties - micro level
24,318,183
21,937,456
1
-890,336
-297,984
1
The following table provides information about the hedging instruments.
Hedging instruments
Total nom
amount
31 Dec 2024, NOKt
Positive
Negative
Fair value hedges
Interest rate risk
497,046
1,047,996
36,908,000
Total nom
amount
31 Dec 2023, NOKt
Positive
Negative
Fair value hedges
Interest rate risk
182,417
518,870
22,344,000
The below table presents the changes in the fair value of the hedged items and changes in fair value of the hedging
instruments used as the basis for recognising ineffectiveness. These changes are recognised on the row “Net result from
items at fair value” in the income statement.
Hedge ineffectiveness
Interest rate risk
NOKt
31 Dec 2024
31 Dec 2023
Fair value hedges
Changes in fair value of hedging instruments
-129,017
83,505
Changes in fair value of hedged items used as basis for recognising hedge ineffectiveness
144,449
-130,335
Hedge ineffectiveness recognised in the income statement
15,432
-46,830
Sources of ineffectiveness include mismatches between the reset frequency of the swap and the benchmark frequency
and the fair value of the floating leg of the swap on a date other than the reset date.
Maturity profile of the nominal amount of hedging instruments - Fair value hedges
31 Dec 2024
Payable on
demand
Maximum 3
months
3-12 months
1-5 years
More than 5
years
Total
Instrument hedging interest rate risk
0
15,000
2,374,000
22,891,000
11,628,000
36,908,000
Total
0
15,000
2,374,000
22,891,000
11,628,000
36,908,000
31 Dec 2023
Instrument hedging interest rate risk
0
3,000
550,000
6,743,000
15,048,000
22,344,000
Total
0
3,000
550,000
6,743,000
15,048,000
22,344,000
Nordea Eiendomskreditt AS Annual Report 2024
33
Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
Nordea Eiendomskreditt operates with a policy of hedging all currency risk (fx risk). All assets and liabilities of any material
amount that are denominated in foreign currencies are hedged through currency swaps. A change in foreign exchange
rate will therefore not have any impact on the net result for the year or on the equity.
Cash flow hedges
For hedge accounting relationships related to currency risk, the hedged item is a foreign currency component. The hedge
ratio is established by matching the nominal amounts of the derivatives with the principals of the hedged items.
The currency component is determined as the change in the present value of the future cash flows using foreign exchange
curves. The foreign currency component is separately identifiable and reliably measurable and is typically the most
significant component of the overall change in fair value or cash flows.
Hedged items in cash flow hedges of currency risk are future payments of interest and the nominal amount from issuance
of bonds in foreign currencies.
The tables below provide information about the hedging instruments in hedges of currency risks, including the nominal
amount and the fair value of the hedging instruments as well as the cash flow hedge reserve.
Hedging instruments
Total nom
amount
31 Dec 2024, NOKt
Positive
Negative
Cash flow hedges
Currency risk
92,254
0
938,000
Total nom
amount
31 Dec 2023, NOKt
Positive
Negative
Cash flow hedges
Currency risk
26,238
0
938,000
In the below table, the fair value adjustments arising from continuing hedging relationships, irrespective of whether there
has been a change in hedge designation during the year, are specified.
Cash flow hedge reserve
Foreign exchange risk
NOKt
31 Dec 2024
31 Dec 2023
Balance at 1 January
-9,569
-9,680
Cash flow hedges:
45,080
595,316
-11,270
-148,829
-56,900
-595,168
14,225
148,792
Other comprehensive income, net of tax
-8,865
111
Balance at 31 December
-18,434
-9,569
Maturity profile of the nominal amount of hedging instruments - Cash flow hedges
31 Dec 2024
Payable on
demand
Maximum 3
months
3-12 months
1-5 years
More than 5
years
Total
Instrument hedging foreign exchange risk
0
0
0
0
938,000
938,000
Total
0
0
0
0
938,000
938,000
31 Dec 2023
Instrument hedging foreign exchange risk
0
0
0
0
938,000
938,000
Total
0
0
0
0
938,000
938,000
Nordea Eiendomskreditt AS Annual Report 2024
34
Note 3.8
Cover Pool
31 Dec 2024
31 Dec 2023
NOKt
Nominal value
Net present
value
Nominal value
Net present
value
Loans to the public
449,590,076
448,531,195
333,867,921
333,695,176
- whereof pool of eligible loans
427,675,410
426,668,142
313,352,624
313,190,494
Supplementary assets and derivatives:
240,100
82,530
183,200
-266,132
- whereof CIRS
240,100
123,688
183,200
45,739
- whereof IRS
0
-41,158
0
-311,870
Total cover pool
427,915,510
426,750,672
313,535,824
312,924,362
Debt securities in issue (net outstanding amount)
269,536,100
263,281,924
195,948,200
196,799,615
Over-collateralization calculated on net outstanding covered bonds
58.8%
62.1%
60.0%
59.0%
Debt securities in issue (issued amount)
269,536,100
263,281,924
195,948,200
196,799,615
Over-collateralization calculated on issued covered bonds (gross outstanding covered
bonds)
1
58.8%
62.1%
60.0%
59.0%
1
Without deduction for holdings of own bonds, if any.
The cover pool increase during the year is due to organic
lending growth, transfer of mortgage loans from the parent
bank and the acquisition of mortgage loans from Danske
Bank. A higher increase in outstanding covered bonds,
including covered bonds transferred from Danske Bank,
explains the decrease in over-collateralization since year
end 2023.
The guidelines for calculating the over-collateralization
requirement in the Norwegian legislation is given in the
Financial Undertakings Act (Act No. 17 of 10 April 2015)
Chapter 11 Bonds secured on a loan portfolio (covered
bonds), and appurtenant regulations. The calculation shall
be based on gross outstanding covered bonds and by use
of nominal values. Net present values are disclosed for
information and may differ from fair values disclosed in
other notes to this report due to different calculation
methods.
Nordea Eiendomskreditt AS Annual Report 2024
35
Note 3.9
Debt securities in issue and loans from
financial institutions
Accounting policies
Debt securities are instruments issued by Nordea
Eiendomskreditt that are readily transferable without the
consent of Nordea Eiendomskreditt. Debt securities are
classified into the different categories in accordance with
Note 3.2 “Classification and measurement”.
For additional accounting policies, see Note 3.1
“Recognition on and derecognition from the balance
sheet” and Note 3.3 “Fair value”.
31 Dec 2024
31 Dec 2023
NOKt
Nominal value
Other
1
Carrying
amount
Nominal value
Other
1
Carrying
amount
Covered bonds issued in Norwegian kroner
268,358,000
194,827,000
Outstanding covered bonds issued in Norwegian kroner
268,358,000
194,827,000
Covered bonds issued in EUR (in NOK)
1,178,100
1,121,200
Total outstanding covered bonds
269,536,100
1,043,168
270,579,268
195,948,200
1,501,215
197,449,415
Loans and deposits from financial institutions for a fixed term
151,055,000
1,102,871
152,157,871
124,930,000
915,296
125,845,296
Subordinated loan
1,100,000
4,751
1,104,751
1,100,000
4,751
1,104,751
Total
421,691,100
2,150,790
423,841,890
321,978,200
2,421,262
324,399,462
1
Maturity information
Maximum 1 year
91,114,000
60,987,000
More than 1 year
330,577,100
260,991,200
Total
421,691,100
321,978,200
Norwegian covered bonds (NOKt) at 31 December 2024
ISIN code
Issue date
Final payment
date
Interest
Interest rate in %
Currency
Outstanding
nominal amount
NO0013389460
07/11/2024
07/11/2029
Float
3M Nibor + 0.41%
NOK
7,000,000
NO0013334169
17/09/2024
17/09/2029
Float
3M Nibor + 0.39%
NOK
7,000,000
NO0013134684
23/01/2024
23/02/2029
Float
3M Nibor + 0.56%
NOK
26,450,000
NO0013072991
22/11/2023
22/11/2028
Float
3M Nibor + 0.54%
NOK
7,000,000
NO0012982729
10/08/2023
10/08/2032
Fixed
4.61
NOK
1,000,000
NO0012959636
14/07/2023
14/07/2025
Float
3M Nibor + 0.28%
NOK
1,000,000
NO0012838277
14/02/2023
14/02/2035
Fixed
3.39
NOK
1,420,000
NO0012829763
02/02/2023
02/02/2028
Float
3M Nibor + 0.48%
NOK
27,700,000
NO0012757675
23/11/2022
23/08/2027
Float
3M Nibor + 0.58%
NOK
8,000,000
NO0012732017
28/10/2022
28/10/2037
Fixed
4.0
NOK
1,420,000
NO0012720988
12/10/2022
12/10/2029
Fixed
4.0
NOK
8,250,000
NO0012513532
03/05/2022
17/03/2027
Float
3M Nibor + 0.33%
NOK
26,050,000
NO0012441643
15/02/2022
15/02/2030
Fixed
2.45
NOK
3,500,000
NO0011151771
17/11/2021
17/09/2026
Float
3M Nibor + 0.75%
NOK
7,000,000
NO0011017725
08/06/2021
08/06/2026
Float
3M Nibor + 0.75%
NOK
15,000,000
NO0010981301
21/04/2021
18/03/2026
Float
3M Nibor + 1.50%
NOK
27,400,000
NO0010893282
16/09/2020
16/09/2025
Float
3M Nibor + 1.50%
NOK
35,000,000
NO0010885353
18/06/2020
27/05/2025
Float
3M Nibor + 0.39%
NOK
15,000,000
NO0010873334
22/01/2020
19/03/2025
Float
3M Nibor + 0.26%
NOK
34,418,000
NO0010852650
22/05/2019
22/05/2026
Fixed
2.17
NOK
6,000,000
NO0010830003
13/08/2018
13/08/2025
Fixed
2.385
NOK
500,000
NO0010821986
04/05/2018
04/05/2048
Fixed
2.6
NOK
300,000
NO0010812084
11/12/2017
17/06/2043
Float
3M Nibor + 0.75%
NOK
300,000
NO0010766827
21/06/2016
18/06/2031
Fixed
2.2
NOK
500,000
NO0010678766
08/05/2013
08/05/2025
Fixed
3.6
NOK
100,000
NO0010593064
22/12/2010
18/06/2025
Fixed
4.8
NOK
550,000
NO0010589880
12/10/2010
10/10/2025
Fixed
4.675
NOK
500,000
Total
268,358,000
Covered bonds issued in foreign currency at 31 December 2024
ISIN code
Issue date
Final payment
date
Interest
Interest rate in %
Currency
Outstanding
nominal amount
XS1451306036
19/07/2016
15/07/2031
Fixed
0.738%
EUR
100,000
Total (in NOKt equivalent)
1,178,100
Nordea Eiendomskreditt AS Annual Report 2024
36
4 Provisions
Accounting policies
Provisions (which are presented as a liability) are
recognised when Nordea has a present obligation (legal or
constructive) as a result of a past event if it is probable (i.e.
more likely than not) that an outflow of resources
embodying economic benefits will be required to settle the
obligation, where a reliable estimate can be made of the
amount of the obligation. The amount recognised as a
provision is the best estimate of the expenditure required to
settle the present obligation at the end of the reporting
period.
Accounting policies for provisions for off-balance
sheet items can be found in Note 3.5 “Loans”.
Loan loss provisions on off-balance sheet items amounted
to NOK 3.6m (NOK 4.8m). These provisions are related to
commitments as described in Note 5.2 “Commitments”.
5 Off-balance sheet items
Note 5.1
Assets pledged as security for
own liabilities
Assets pledged as security for own liabilities contain
mortgage loans to the public that have been registered as
collateral for issued covered bonds. Counterpart is the
public. These transactions are long term with maturity 3-6
years.
The terms and conditions that apply to the collateral
pledged are regulated by the Financial Undertakings Act
(Act No. 17 of 10 April 2015) Chapter 11 Bonds secured on
a loan portfolio (covered bonds), and appurtenant
regulations.
NOKt
31 Dec 2024
31 Dec 2023
Assets pledged as security for own liabilities:
Loans to the public
428,060,664
313,603,507
Total
428,060,664
313,603,507
The above pledges pertain to the following liability and committment items:
Debt securities in issue
1
271,469,604
197,747,399
Total
271,469,604
197,747,399
1
Note 5.2
Commitments
NOKt
31 Dec 2024
31 Dec 2023
Accepted, not disbursed loans (unutilised portion of granted limit on flex loans)
51,830,126
35,072,002
Total
51,830,126
35,072,002
1
Nordea Eiendomskreditt AS Annual Report 2024
37
NOKt
2024
2023
Salaries and remunerations
1
26 169
26 121
Pension costs
5 014
4 542
Social security contributions
6 301
6 192
Other staff costs
481
1 047
Total
37 966
37 902
¹ Of which allocation to profit-sharing 2024 amounted to NOK 650t (NOK 869t),
consisting of a new allocation of NOK 750t (NOK 858t) and an adjusment to
prior years of NOK -100t (NOK 11t).
Number of employees/full time positions
2024
2023
Number of employees at 31 Dec
24
24
Number of full time equivalents at 31 Dec
24,0
24,0
Gender distribution of Board members
(percentage at year end)
- Men
38%
29%
- Women
63%
71%
6 Employee benefits and key management
personnel remuneration
All forms of consideration given by Nordea Eiendomskreditt
to its employees as compensation for services performed
are employee benefits. Short-term benefits are to be settled
within twelve months after the reporting period when the
services have been performed. Post-employment benefits
are benefits payable after termination of the employment.
Post-employment benefits in the company consist only of
pensions.
Note 6.1
Staff costs
Accounting policies
Short-term benefits
Short-term benefits consist mainly of fixed and variable
salary. Both fixed and variable salaries are expensed in the
period when the employees have performed services to
Nordea Eiendomskreditt.
Staff costs
Remuneration structure
The company’s remuneration structure compromise fixed
remuneration and variable remuneration.
Fixed base salary
and is affected by job complexity, responsibility,
performance and local market conditions.
Pension and insurance
standard of living for employees after retirement as well as
personal insurance coverage during employment. Pension
and insurance provisions are in accordance with local laws,
regulations and market practice and are either collectively
agreed schemes or company-determined or a combination.
The company aims to have defined contribution pension
schemes.
Benefits
that is either individually agreed or based on local laws,
market practice, collective bargaining agreements and
company-determined practice.
The Nordea Incentive Plan (NIP)
motivate and retain senior leaders and select roles in
primarily in business areas where the use of variable pay is
established market practice. The NIP aims to reward strong
performance and efforts. The assessment of individual
performance is based on a predetermined set of well-
defined financial as well as non-financial goals. Individual
NIP awards will not exceed the annual fixed salary. Awards
from the NIP 2024 for people who are defined as material
risk takers are allocated partly in cash and partly in
instruments with subsequent retention. Parts of the awards
for participants in the NIP who are material risk takers are
subject to a four - to five-year pro rate deferral period, in
certain exceptions three years, with forfeiture conditions
during the deferral period.
Profit Sharing Plan (PSP)
Nordea employees but not to employees that is eligible for
any of Nordea’s other formal annual variable remuneration
plans. For eligible employees, the Profit Sharing Plan is
offered irrespective of position and salary and aims to
collectively reward employees based on achievement in
relation to predetermined financial goals as well as goals
relation to customer satisfaction and ESG. The Profit
Sharing Plan is capped financially, and the outcome is not
linked to the value of Nordea’s share price. The plan
includes forfeiture conditions.
Explanations of individually specified remuneration in
the table below.
Fixed salary and fees
for the financial year paid by Nordea Eiendomskreditt AS.
Variable salary
Benefits
communication allowance.
Pensions
rights under the pension plan during the financial year. The
amount stated is the annual change in the present value of
the pension obligations (PBO) exclusive of social security
tax, which best reflects the change in pension rights for the
financial year.
No director's fee is paid to directors who are employees of
the Nordea group. The fees shown in the table are fees
paid in 2024 for services provided in 2023.
Nordea Eiendomskreditt has provided mortgage loans to its
employees on standard employee terms, close to ordinary
customer terms. Loans to the executive management are
also provided on standard employee terms. The company
has not entered into any agreements that entitle the
Managing Director or the Chairman of the Board to specific
compensation in the event of any change in their
employment or office.
Nordea Eiendomskreditt AS Annual Report 2024
38
31 Dec 2024, NOKt
Fixed salary
and fees
Variable
salary
Other
benefits
Total
remunerations
Executive management of Nordea Eiendomskreditt AS
Elen M Stiksrud, CEO
1,602
519
274
181
2,577
Total for the executive management
1,602
519
274
181
2,577
Board of Directors of Nordea Eiendomskreditt AS
Gro Elisabeth Lundevik
217
217
Asbjørn Rødal
142
142
Alex Madsen
13
13
Total for the directors of Nordea Eiendomskreditt AS
372
0
0
0
372
Total remuneration of executive management and elected officers of
Nordea Eiendomskreditt AS
1,974
519
274
181
2,949
31 Dec 2023, NOKt
Fixed salary
and fees
Variable
salary
Other
benefits
Total
remunerations
Executive management of Nordea Eiendomskreditt AS
Elen M Stiksrud, CEO (acting CEO from 6.2.2023 and CEO from 9.11.2023)
1,108
520
290
211
2,129
Børre Sten Gundersen, CEO (until 9.11.2023)¹
1,659
552
419
156
2,786
Total for the executive management
1
2,767
1,072
710
367
4,915
1
Board of Directors of Nordea Eiendomskreditt AS
Gro Elisabeth Lundevik
210
210
Alex Madsen
150
150
Total for the directors of Nordea Eiendomskreditt AS
2
360
0
0
0
360
Total remuneration of executive management and elected officers of
Nordea Eiendomskreditt AS
3,127
1,072
710
367
5,275
Note 6.2
Pensions
Accounting policies
Defined contribution plans
Pension plans that are based on defined contribution
arrangements hold no pension liability for Nordea
Eiendomskreditt. Pension costs for defined contribution
plans are recognised as an expense as the employee
renders services to the entity and the contribution payable
in exchange for that service becomes due. In general, the
payment is associated with and settled through regular
salary payments. Nordea also contributes to state pension
plans.
Defined benefit plans
IAS 19 ensures that the pension obligations net of plan
assets backing these obligations are reflected on the
balance sheet. The major defined benefit plans are funded,
covered by assets in pension funds/foundations. If the fair
value of plan assets associated with a specific pension plan
is lower than the gross present value of the defined benefit
obligation determined using the projected unit credit
method, the net amount is recognised as a liability
(“Retirement benefit liabilities”). If not, the net amount is
recognised as an asset (“Retirement benefit assets”).
Nordea Eiendomskreditt’s net obligation for defined benefit
plans is calculated separately for each plan by estimating
the amount of future benefit that employees have earned
for their service in the current period and prior periods. That
benefit is discounted to determine its present value.
Actuarial calculations, including the projected unit credit
method, are applied to assess the present value of defined
benefit obligations and related costs, based on several
actuarial and financial assumptions. Current service cost
and past service cost are recognised in the income
statement in the current year. Current service cost is
defined as the increase in the present value of the defined
benefit obligation resulting from employee service in the
current period. Past service cost is the change in the
present value of the defined benefit obligation for employee
service in prior periods triggered by plan amendments or
curtailments.
The present value of the obligation and the fair value of the
plan assets are impacted by changes in actuarial
assumptions (discount rates (interest rates and credit
spreads), inflation, salary increases, turnover and mortality)
and experience effects, including actual outcome compared
to assumptions. The remeasurement effects are
recognised immediately in equity through other
comprehensive income.
The discount rate is determined by reference to high-quality
corporate bonds where a deep enough market for such
bonds exists. Covered bonds are in this context considered
to be corporate bonds. The discount rate is determined with
reference to covered bonds. The observed bond credit
spreads over the swap curve are derived from long-dated
covered or corporate bonds and extrapolated to the same
duration as the pension obligations using the relevant swap
curves.
When the calculation results in a net asset, the recognised
asset is limited to the present value of any future refunds
from the plan or reductions in future contributions to the
plan. Social security contributions are calculated and
Nordea Eiendomskreditt AS Annual Report 2024
39
accounted for based on the net recognised surplus or
deficit by plan and are included on the balance sheet as
“Retirement benefit liabilities” or “Retirement benefit
assets”.
Critical judgements and estimation uncertainty
The defined benefit obligation is calculated by external
actuaries using demographic assumptions based on the
current population. As a basis for these calculations a
number of actuarial and financial parameters are used.
The estimation of the discount rate is subject to uncertainty
about whether corporate bond markets are deep enough
and of high quality. There is also uncertainty about the
extrapolation of yield curves to relevant maturities. Other
parameters, like assumptions about salary increases and
inflation, are based on the expected long-term development
of these parameters and also subject to estimation
uncertainty. The main parameters used at year end are
disclosed together with a description of the sensitivity to
changes in assumptions.
Nordea Eiendomskreditt sponsors both defined contribution
plans (DCP) and defined benefit plans (DBP).
Nordea Eiendomskreditt is obliged to have an occupational
pension scheme pursuant to the Mandatory Occupational
Pension Plan Act. Nordea Eiendomskreditt's pension
schemes meet the demands required by this act. The
company has funded its pension obligations through
Nordea Norge Pensjonskasse (pension fund), which is
managed by Gabler AS, and are final salary and service
based pension plans providing pension benefits on top of
the statutory systems. The company also has retirement
benefit obligations in connection with supplementary
pensions and early retirement pensions, which are not
covered by the pension fund. The defined benefit plan
(DBP) is closed for new employees as from 2011, and
pensions for new employees are instead based on defined
contribution plan (DCP) arrangements. From 01 January
2017 employees born later than 1957 were converted to
DCP. For employees affected by this change, all earned
benefit will retain as paid-up premiums. The DCP
arrangements are administered by Nordea Liv. Nordea
Eiendomskreditt is also member of Fellesordningen for
AFP (Avtalefestet Pensjon) established with effect from
2011. DCPs are not reflected in the balance sheet, unless
when earned pension rights have not been paid for.
Defined benefit plans may impact Nordea Eiendomskreditt
via changes in the net present value of obligations and/or
changes in the market value of plan assets. Changes in the
obligation are most importantly driven by changes in
assumptions on discount rates (interest rates and credit
spreads), salary increases, turnover and mortality as well
as relevant experience adjustments where the actual
outcome differs from the assumption. Assets are invested
in diversified portfolios as further disclosed below, with
bond exposures mitigating the interest rate risk in the
obligations and a fair amount of real assets (inflation
protected) to reduce the long term inflationary risk in
liabilities.
In 2016 the Board of Directors of Nordea Eiendomskreditt
approved of changing the pension plan for employees born
after 1957, and they were converted from DBP to DCP
from 1 January 2017.
During 2024 employees in the DCP have had the following
contribution rates:
* Pensionable salary representing 0-7.1 times G: 7%
* Pensionable salary representing 7.1-12 times G: 18%
The pension cost recognised in Nordea Eiendomskreditt's
income statement (as staff costs) for the DCP is NOK
3.048t in 2024.
NOKt
31 Dec 2024
31 Dec 2023
Net defined benefit asset or (liability) in the balance sheet
-23,232
-27,415
Total
-23,232
-27,415
IAS 19 Pension calculations and assumptions
Assumptions¹
2024
2023
Discount rate²
4.24%
3.81%
Salary increase
3.25%
3.50%
Inflation
2.25%
2.25%
Social Security increase
3.25%
3.50%
Expected adjustments of current pensions
1.70%
1.70%
¹ The assumptions disclosed for 2024 have an impact on the liability calculation by year-end 2024, while the assumptions disclosed for 2023 are used for calculating the pension
expense in 2024.
2 More information on the discount rate can be found in Accounting policies in this note. The sensitivities to changes in the discount rate can be found below.
Sensitivities - Impact on Pension Benefit Obligation (PBO)
2024
2023
Discount rate - Increase 50bps
-0.1%
-6.8%
Discount rate - Decrease 50bps
0.1%
7.5%
Salary increase - Increase 50bps
0.1%
0.1%
Salary increase - Decrease 50bps
-0.1%
-0.1%
Inflation - Increase 50bps
7.6%
7.6%
Inflation - Decrease 50bps
-6.9%
-6.9%
Net retirement benefit liabilities/assets
NOKt
2024
2023
Obligations
61,881
63,983
Plan assets
38,650
36,568
Net liability (-)/asset (+)
-23,232
-27,415
Nordea Eiendomskreditt AS Annual Report 2024
40
Movements in the obligation
NOKt
2024
2023
Opening balance
63,983
59,231
Current service cost
778
772
Interest cost
2,248
1,858
Pensions paid
-1,230
-1,154
Remeasurement from changes in financial assumptions
-5,044
2,801
Remeasurement from experience adjustments
1,009
349
Closing balance before social security contribution
61,744
63,858
Change in provision for social security contribution
1
137
126
Closing balance
61,881
63,983
1
The average duration of the PBO is 15 years based on discounted cash flows. The fact that all DBPs are closed for new
entrants leads to lower duration. The increase in average duration during the year is due to changed assumptions.
Movements in the fair value of plan assets
NOKt
2024
2023
Opening balance
36,568
35,301
Interest income (calculated using the discount rate)
1,386
1,187
Pensions paid
-459
-444
Contributions/refunds by employer
150
90
Administration cost
-12
-11
Remeasurement (actual return less interest income)
1,016
446
Closing balance
38,650
36,568
Asset composition
The combined return on assets in 2024 was 6,6% (4,6%). All asset classes generated positive return with equities as the
main driver. At the end of the year, the equity exposure in the foundation represented 14%) (12%) of total assets.
Asset composition in funded schemes
2024
2023
Equity
14%
12%
Bonds
71%
72%
Real estate
15%
15%
Other assets
6%
1%
Movements in the effect of the asset ceiling
NOKt
2024
2023
Opening balance
0
-751
Interest on the effect of the Asset Ceiling in Profit and Loss Account
0
-26
Change in the Effect of the Asset Ceiling in Other Comprehensive Income (OCI)
0
777
Defined benefit pension costs and Defined contribution plan cost
The total net pension cost recognised in Nordea Eiendomskreditt's income statement (as staff costs) for 2024 is NOK
5.014t. The amount covers both funded and unfunded pension plans, DCP as well as AFP premium.
Recognised in the income statement, NOKt
2024
2023
Current service cost
778
772
Net interest
861
671
Social Security Contribution
327
317
Pension cost on defined benefit plans
1,966
1,761
Recognised in other comprehensive income, NOKt
2024
2023
Remeasurement from changes in financial assumptions
-4,031
3,167
Remeasurement of plan assets (actual return less interest income)
-1,016
-446
Change in the Effect of the Asset Ceiling excluding Interest
0
-777
Pension cost on defined benefit plans
-5,047
1,944
The defined benefit pension plan cost for 2025 is expected to be NOKt 1.938.
Nordea Eiendomskreditt AS Annual Report 2024
41
7 Capital adequacy
Capital adequacy is a measure of the financial strength of a
bank, usually expressed as a ratio of capital to assets.
There is a worldwide capital adequacy standard (Basel III)
drawn up by the Basel Committee on Banking Supervision.
Within the EU, the capital adequacy requirements outlined
in the Capital Requirement Directive (CRD IV) and Capital
Requirement Regulation (CRR), entered into force on 1
January 2014. In Norway, CRR and CRD IV entered finally
into force on 31 December 2019.
Over the years, amendments have been made to the first
version of the capital adequacy regulation. In 2014, revised
rules for calculating capital adequacy required higher
capitalisation levels and better quality of capital, better risk
coverage, the introduction of a leverage ratio as a backstop
to the risk based requirement, measures to promote the
build-up of capital to be drawn in periods of stress and new
liquidity standards were introduced. The CRD IV and the
BRRD were implemented through national law within all EU
countries during 2014, while the CRR entered into force in
all EU countries from the first of January 2014. In June
2019, the ‘Banking package’ containing revisions to the
BRRD, the CRD and the CRR was adopted .The
implementation of the ‘banking package’ in Norway entered
into force 1 June 2022.
The finalisation of the Basel III
framework, the Basel IV package, is implemented into CRR
and will become effective on 1 January 2025 in the EU.
The Norwegian implementation is expected during H1
2025. It includes revisions to credit risk, market risk,
operational risk, credit valuation adjustment (CVA) risk as
well as the leverage ratio, and introduces a new output
floor.
The Basel III framework is implemented in the EU through
the CRR and the CRD IV and is built on three Pillars;
• Pillar I – requirements for the calculation of REA
and capital requirements
• Pillar II – rules for the Supervisory Review
Process (SREP), including the Internal Capital
Adequacy Assessment Process (ICAAP)
• Pillar III – rules for the disclosure on risk and
capital management, including capital adequacy
Nordea Eiendomskreditt performs an ICAAP with the
purpose to review the management, mitigation and
measurement of material risks within the business
environment in order to assess the adequacy of
capitalisation and to determine an internal capital
requirement reflecting the risks of the institution.
The ICAAP is a continuous process which increases
awareness of capital requirements and exposure to
material risks throughout the organisation, both in the
business area and legal entity dimensions. Stress tests are
important drivers of risk awareness, looking at capital and
risk from a firm-wide perspective on a regular basis and on
an ad-hoc basis for specific areas or segments. The
process includes a regular dialogue with supervisory
authorities, rating agencies and other external stakeholders
with respect to capital management, measurement and
mitigation techniques used.
Nordea Eiendomskreditt’s capital levels continue to be
adequate to support the risks taken, both from an internal
perspective as well as from the perspective of supervisors.
Heading into 2025, Nordea will continue to closely follow
the development of the new capital requirement regime as
well as maintain its open dialogue with the supervisory
authorities.
Common Equity Tier 1 capital and Tier 1 capital
Common Equity Tier (CET) 1 capital is defined as eligible
capital including eligible reserves, net of regulatory required
deductions made directly to CET 1 capital. The capital
recognised as CET 1 capital holds the ultimate
characteristics for loss absorbance defined from a going
concern perspective and represents the most subordinated
claim in the event of liquidation. The Tier 1 capital is
defined as the sum of CET 1 capital and Additional Tier 1
(AT1) capital where AT1 capital is the total of instruments
(hybrids) issued by the bank that meet the transitional
regulatory criteria and not included in the CET1 net after
AT1 deductions. All AT1 capital instruments are undated
subordinated capital loans.
Eligible capital and eligible reserves
Paid up capital is the share capital contributed by
shareholders, including the share premium paid. Eligible
reserves consist primarily of retained earnings, other
reserves and income from current year. Retained earnings
are earnings from previous years reported via the income
statement. Positive income from current year is included as
eligible capital after verification by the external auditors;
however negative income must be deducted. Repurchased
own shares or own shares temporary included in trading
portfolios are deducted from eligible reserves.
Additional Tier 1 instruments
The inclusion of undated subordinated loans in additional
Tier 1 capital is restricted and repurchase can normally not
take place until five years after original issuance of the
instrument. Undated subordinated loans may be repaid
only upon decision by the Board of Directors in Nordea
Eiendomskreditt and with the permission of the Norwegian
FSA. Further, there are restrictions related to step-up
conditions, order of priority, and interest payments under
constraint conditions. Additional Tier 1 instruments issued
that fulfil the regulatory requirements are fully included
whereas remaining instruments are phased out according
to transitional rules.
For the additional Tier 1 instruments, conditions specify
appropriation in order to avoid being obliged to enter into
liquidation. To the extent that may be required to avoid
liquidation, the principal amounts of additional Tier 1
instruments (together with accrued interest) would be
written down and converting such amount into a conditional
capital contribution.
Tier 2 capital
Tier 2 capital must be subordinated to depositors and
general creditors of the bank. It cannot be secured or
covered by a guarantee of the issuer or related entity or
include any other arrangement that legally or economically
enhances the seniority of the claim vis-á-vis depositors and
other bank creditors.
Tier 2 instruments
Tier 2 instruments consist mainly of subordinated debt. Tier
2 instruments include two different types of subordinated
loan capital; undated loans and dated loans. Tier 2
instruments issued that fulfil the regulatory requirements
are fully included whereas remaining instruments are
phased out according to transitional rules.
Nordea Eiendomskreditt AS Annual Report 2024
42
The basic principle for subordinated debt in own funds is
the order of priority in case of a default or bankruptcy
situation. Under such conditions, the holder of the
subordinated loan would be repaid after other creditors, but
before shareholders. The share of outstanding loan amount
possible to include in the Tier 2 capital related to dated
loans is reduced if the remaining maturity is less than five
years.
These disclosures have been prepared in accordance with
Part 8 of the CRR and applicable national regulations.
Summary of items included in own funds
NOKm
31 Dec 2024
31 Dec 2023
Equity in the consolidated situation
37,452
21,905
Proposed/actual dividend
-1,053
-500
Common Equity Tier 1 capital before regulatory adjustments
36,399
21,405
Deferred tax assets
Intangible assets
IRB provisions shortfall (-)
-347
-114
Pension assets in excess of related liabilities
Other items, net
7
-6
Total regulatory adjustments to Common Equity Tier 1 capital
-340
-120
Common Equity Tier 1 capital (net after deduction)
36,059
21,285
Additional Tier 1 capital before regulatory adjustments
Total regulatory adjustments to Additional Tier 1 capital
Additional Tier 1 capital
Tier 1 capital (net after deduction)
36,059
21,285
Tier 2 capital before regulatory adjustments
1,100
1,100
IRB provisions excess (+)
36
162
Deductions for investments in insurance companies
Other items, net
Total regulatory adjustments to Tier 2 capital
36
162
Tier 2 capital
1,136
1,262
Own funds (net after deduction)
37,196
22,548
Minimum capital requirement and REA, Risk Exposure Amount
31 Dec 2024
31 Dec 2024
31 Dec 2023
31 Dec 2023
NOKm
Minimum
Capital
requirement
REA
Minimum
Capital
requirement
REA
Credit risk
10,104
126,304
6,276
78,450
1
12
9
111
IRB
5,716
71,444
5,733
71,661
21
262
25
308
5,694
71,177
5,708
71,351
5,527
69,092
4,946
61,830
167
2,085
762
9,521
0
6
0
2
Standardised
4,389
54,860
543
6,789
- institutions
1,041
13,018
49
613
- retail
0
0
0
0
- secured by mortgages on immovable properties
3,327
41,589
493
6,168
- in default
20
253
1
8
Operational risk
294
3,670
283
3,537
Standardised
294
3,670
283
3,537
Total
10,398
129,975
6,559
81,987
Capital ratios
Percentage
31 Dec
2024
31 Dec
2023
Common Equity Tier 1 capital ratio
27.7
26.0
Tier 1 capital ratio
27.7
26.0
Total capital ratio
28.6
27.5
Leverage ratio
Tier 1 capital, transitional definition, NOKm
36,059
21,285
Leverage ratio exposure, NOKm
484,477
364,889
Leverage ratio, percentage
7.4
5.8
Nordea Eiendomskreditt AS Annual Report 2024
43
8 Other disclosures
Note 8.1
Additional disclosures on the
statement of changes in equity
Accounting policies
Share premium
The share premium consists of the difference between the
subscription price and the quota value of the shares in
Nordea Eiendomskreditt’s rights issue. Transaction costs in
connection to the rights issue have been deducted.
Other reserves
Other reserves comprise income and expenses, net after
tax effects, which are reported in equity through other
comprehensive income. These reserves include reserves
for cash flow hedges and accumulated remeasurements of
defined benefit pension plans.
Retained earnings
Apart from undistributed profits from previous years,
retained earnings may also include the equity portion of
untaxed reserves. Untaxed reserves according to national
rules are accounted for as equity net of deferred tax at
prevailing tax rates in the respective country.
Net profit
Net profit before Other comprehensive income in percent of
average total assets was 0.28% in 2024 (0.15% in 2023).
Note 8.2
Maturity analysis for assets and liabilities
Contractual undiscounted cash flows
31 Dec 2024, NOKt
< 1 month
1-3 month
3-12
month
1-2 years
2-5 years
5-10 years
>10 years
Total
Loans to the public
2,981
7,175
28,133
36,839
110,895
225,736
360,510
772,268
Loans to credit institutions
1,131
754
0
0
0
0
0
1,885
Interest-bearing securities
483
106
2,179
4,783
4,983
0
0
12,535
Total non-derivative financial assets
4,595
8,035
30,313
41,622
115,878
225,736
360,510
786,688
Deposits by credit institutions
1,072
1,461
9,378
47,254
111,920
0
0
171,084
Debt secuirities in issue
12
37,770
60,849
62,604
126,634
7,033
3,829
298,731
- of which covered bonds
12
37,770
60,849
62,604
126,634
7,033
3,829
298,731
Subordinated liabilities
0
24
59
71
1,272
0
0
1,426
Total non-derivative financial liabilities
1,084
39,254
70,285
109,929
239,826
7,033
3,829
471,240
Derivatives, cash inflows
82
318
1,213
1,261
2,663
2,215
389
8,141
Derivatives, cash outflows
271
271
1,473
1,414
3,193
2,215
577
9,413
Derivatives, net cash flows
-188
47
-259
-153
-530
0
-188
-1,272
Credit commitments
51,830
31 Dec 2023, NOKt
< 1 month
1-3 month
3-12
month
1-2 years
2-5 years
5-10 years
>10 years
Total
Loans to the public
2,758
4,496
20,608
26,572
83,081
167,182
273,023
577,721
Loans to credit institutions
1,962
505
0
0
0
0
0
2,467
Interest-bearing securities
123
101
123
2,500
9,272
0
0
12,120
Total non-derivative financial assets
4,844
5,101
20,731
29,073
92,353
167,182
273,023
592,308
Deposits by credit institutions
572
1,906
31,192
61,128
41,473
0
0
136,271
Debt secuirities in issue
11
2,534
39,365
63,729
98,430
13,735
3,947
221,751
- of which covered bonds
11
2,534
39,365
63,729
98,430
13,735
3,947
221,751
Subordinated liabilities
0
1,121
0
0
0
0
0
1,121
Total non-derivative financial liabilities
583
5,561
70,557
124,857
139,903
13,735
3,947
359,143
Derivatives, cash inflows
0
404
1,076
931
1,715
2,377
505
7,008
Derivatives, cash outflows
336
213
1,514
1,491
2,556
2,713
762
9,586
Derivatives, net cash flows
-336
191
-437
-561
-841
-336
-258
-2,579
Credit commitments
35,072
Nordea Eiendomskreditt AS Annual Report 2024
44
Note 8.3
Related-party transactions
Accounting policies
Nordea Eiendomskreditt defines related parties as:
- shareholders with significant influence
- Nordea Group companies
- Nordea Group associated undertakings
- key management personnel
All transactions with related parties are made on the same
criteria and terms as those of comparable transactions with
external parties of similar standing .
Shareholders with significant influence
At 31 December 2024 Nordea Bank Abp owned 100% of
the share capital of Nordea Eiendomskreditt AS and has
significant influence.
Nordea Group Companies
Nordea Group Companies means the group parent
company Nordea Bank Abp and its subsidiaries.
Nordea Group associated undertakings
Nordea Group associated undertakings are the entities
where Nordea Bank Abp’s share of voting rights is between
20% and 50% and/or where Nordea Bank Abp has
significant influence. Significant influence is the
power to participate in the financial and operating
policy decisions of the investee but is not control or
joint control over those policies.
Key management personnel
Key management personnel include the following positions:
- the Board of Directors
- the Chief Executive Officer (CEO)
For information about compensation, pensions and other
transactions with key management personnel, see Note 6.1
“Staff costs”.
From May 2019 mortgage loans are originated directly from
the company's own balance sheet,
however during 2024
mortgage loans of NOK 11bn were also purchased from
the parent bank.
Nordea Eiendomskreditt AS has from 1 October 2018 been
a wholly owned subsidiary of Nordea Bank Abp.
Transactions between Nordea Eiendomskreditt AS and
other legal entities or branches in the Nordea Group are
performed in conformity with OECD guidelines on transfer
pricing.
NOKt
Nordea Group companies
Nordea Group associated
undertakings
31 Dec 2024
31 Dec 2023
31 Dec 2024
31 Dec 2023
Profit and loss account
Interest income on loans with financial institutions
76,883
63,536
Other interest income
21,630
28,145
Net gains/losses on items at fair value
0
122,016
Commisson income
1,282
1,282
Other operating income
0
551
Total income
99,795
215,530
0
0
Interest expenses on liabilities to financial institutions
6,104,243
6,408,714
Interest and related expense on securities issued incl. hedging
2,803,693
1,341,981
Other interest expenses
0
122,521
Net gains/(losses) on items at fair value
166,736
13,478
Interest and related expense on subordinated loan capital
74,793
61,631
Commission and fee expense for banking services
54,142
18,921
9,917
8,149
Other operating expenses
1,418,824
1,130,517
7,626
6,257
Total expenses
10,622,433
9,097,764
17,543
14,406
Balance sheet
Loans and receivables to credit institutions
1,879,634
2,462,506
Derivatives
582,950
185,622
Other assets
161,970
0
1,462
1,200
Accrued income and prepaid expenses
24,014
46,927
Total assets
2,648,569
2,695,055
1,462
1,200
Deposits by credit institutions
152,157,870
125,845,296
Issued bonds
37,890,650
36,562,775
Derivatives
1,116,868
661,303
Accrued expenses and prepaid income
151,249
218,266
Subordinated loan capital
1,104,751
1,104,751
Share capital and share premium
26,753,647
11,753,647
Total libilities and equity
219,175,035
176,146,038
0
0
Off balance sheet items
Interest rate swaps (nominal value)
47,846,000
45,282,000
Nordea Eiendomskreditt AS Annual Report 2024
45
Note 8.4
Acquisitions
Accounting policies
In a business combination, the acquired identifiable assets
and liabilities are recognised at fair value, including any
intangible assets identified in the acquisition. The net fair
value of identifiable assets and liabilities is compared with
the consideration paid and any surplus is recognised as
goodwill.
Acquisition of Danske Bank’s Norwegian mortgage
loan Portfolio
On 18 November 2024 Nordea completed the acquisition of
Danske Bank’s Norwegian personal customer and private
banking business. Nordea Eiendomskreditt took over
mortgage loans and issued covered bond for a net
purchase price of NOK 63,480m.
The net purchase price was equal to the carrying amount of
the assets and liabilities of the seller after fair value
adjustments to loans with fixed interest rates. The
transaction did not include any transfer of equity interests.
The preliminary purchase price allocation is disclosed as
follows.
NOKt
18 November 2024
Loans to the public
102,837
Derivatives
293
Debt securities in issue
-39,651
Acquired net assets
63,480
Purchase price, settled in cash
63,647
Adjustments of the purchase price to be received
-167
Cost of combination
63,480
Nordea Eiendomskreditt AS Annual Report 2024
46
9 Risk and liquidity management
Contents
1. Risk governance
2. Credit risk
3. ESG (Environmental, Social and Governance)
related risk
4. Counterparty credit risk
5. Market risk
6. Operational risk
7. Compliance risk
8. Liquidity risk
1. Risk governance
Maintaining organisational risk awareness is an integral
part of Nordea Eiendomskreditt’s business strategy. The
Nordea Group has defined clear risk and liquidity
management frameworks, policies and instructions for
different risk types covering all risk exposures. This has
been implemented by Nordea Eiendomskreditt.
1.1 Internal Control Framework
Nordea Eiendomskreditt’s Board has adopted Nordea’s
Group Board Directive on Internal Governance which
describes the Internal Control Framework.
The Internal Control Framework ensures effective and
efficient operations, adequate identification, measurement
and mitigation of risks, prudent conduct of business, sound
administrative and accounting procedures, reliability of
financial and non-financial information (both internal and
external) and compliance with applicable laws, regulations,
standards, supervisory requirements and Nordea
Eiendomskreditt’s internal rules.
The internal control process is carried out by Nordea
Eiendomskreditt’s governing bodies that consist of Board,
CEO, senior management, the risk management function
and other staff in Nordea Eiendomskreditt and, as
regulated by intra-group agreements, by units within the
Nordea Group.
1.2 Governing bodies for risk, liquidity and capital
management
The Board of Directors of Nordea Eiendomskreditt (NE
Board), the Chief Executive Officer of Nordea
Eiendomskreditt’s (NE CEO) executive management are
the key decision-making bodies for risk and capital
management in Nordea Eiendomskreditt. In addition, NE
Board has delegated the credit decision-making to the
parent company Nordea Bank Abp through the internal risk
management framework and intra-group outsourcing
agreements. Subsidiary Board Risk Committee (BRIC) in
Nordea Eiendomskreditt assists NE Board.
1.3 Nordea Eiendomskreditt Board of Directors and
Board Risk Committee (BRIC)
NE Board has the following overarching risk management
responsibilities:
• Decide on Nordea Eiendomskreditt’s risk strategy
and the Risk Appetite Framework, including the
Risk Appetite Statements, with at least annual
reviews and additional updates when needed.
• Decides on and oversees an adequate and
effective Risk Management Framework and
regularly evaluates whether Nordea
Eiendomskreditt has effective and appropriate
controls to manage the risks.
• NE Board adopts the Group Board Directive on
Capital, which ensures adequate capital levels
within the Nordea Group, on an ongoing and
forward-looking basis, consistent with the
business model, risk appetite, and regulatory
requirements and expectations.
• NE BRIC assists NE Board in fulfilling its oversight
responsibilities concerning management and
control of risk, risk frameworks, controls and
processes associated with Nordea
Eiendomskreditt’s operations, including capital,
credit, market, liquidity, model and operational
risk, as well as conduct and compliance risk and
related frameworks and processes. During 2024
NE Board has distributed decision authority to NE
BRIC on model use approval under specific
assumptions regulated in the NE BRIC charter.
1.4 Nordea Eiendomskreditt Chief Executive Officer
NE CEO is responsible to NE Board for the overall
management of Nordea Eiendomskreditt’s operations and
risks. Responsibilities include ensuring that the risk
strategy and risk management decided by NE Board are
implemented, that necessary practical measures are taken,
and that risks are monitored and limited. In discharging
these responsibilities, NE CEO is supported by Nordea
Eiendomskreditt Executive Management (NE
management).
1.5 Nordea Eiendomskreditt Executive Management
NE management consist of CEO, Head of Credit & Risk
Management, Head of Development & Product
Management, Chief Financial Officer, Chief Operating
Officer and Chief Risk Officer (2LoD). In addition, Chief
Compliance Officer (2LoD) has the right and duty to attend
the management meetings.
1.6 Credit decision making bodies
The governing bodies for Credit Risk and/or the Credit Risk
Management Framework are NE Board. NE Board has
delegated credit decision-making according to the powers-
to act as described in the adopted Group Board Directive
for Risk. The Nordea Group has established a number of
committees that also covers Nordea Eiendomskreditt credit
decisions. According to the Group Board Directive for Risk,
all limits within the Nordea Group are based on credit
decisions or authorizations made by an ultimate Decision-
Making Authority with the right to decide upon that limit.
Credit decisions include, inter alia, pricing, risk mitigation
and any terms and conditions related to the limit or
expected utilization. Credit decisions also serve to delegate
decision making within the approved limit to lower decision
makers, unless otherwise explicitly decided.
1.7 Governance of Risk Management and Compliance
The flow of risk-related information is passed from the
business areas and group functions to NE Board through
NE management. The flow of information starts with the
divisions that monitor and analyse information on the
respective risk types according to intra-group agreements.
The risks information is presented and
Nordea Eiendomskreditt AS Annual Report 2024
47
discussed in NE management and then brought to NE
BRIC and NE Board.
Chief Risk Officer constitutes the independent second line
of defence risk function for Nordea Eiendomskreditt
supported by an intra-group agreement with Group Risk
(GR). CRO is responsible for developing and maintaining
the Risk Management Framework with accountability for
the risk oversight and has reporting lines to CEO and
Group Risk.
Group Compliance (GC) constitutes the independent
second line of defence compliance function for Nordea
Eiendomskreditt according to intra-group agreement, and is
responsible for developing and maintaining the Compliance
Risk Management Framework (CRMF) for managing
compliance risks in cooperation with other functions in GR
and for guiding the business in their implementation of the
framework to ensure continuous adherence to the
framework. However, to strengthen and align the
governance setup of the second line of defence in legal
entities, Chief Compliance Officer (CCO) in the mortgage
companies are now employed by that entity, report to its
CEO and participates in management team meetings. The
CCO retains a primary reporting line into Group
Compliance. Reporting from GC is presented directly to NE
management, NE BRIC and NE Board.
The Risk Management Framework (RMF) ensures
consistent processes for identifying, assessing and
measuring, responding to and mitigating, controlling and
monitoring, and reporting risks to enable informed
decisions on risk-taking. The Risk Management Framework
encompasses all risks to which the Nordea Group,
including Nordea Eiendomskreditt, is or could be exposed,
including off-balance sheet risks and risks in a stressed
situation. Detailed risk information covering all risks and
Nordea Eiendomskreditt’s compliance with regulatory
requirements are regularly reported to the NE CEO in NE
management, NE BRIC and NE Board.
The Risk Identification and Materiality Assessment Process
starts with identifying potential risks to which Nordea Group
is or could be exposed. Risks are then assessed for
relevance, classified, and included in the Nordea Group’s
Common Risk Taxonomy. All risks within the Nordea
Common Risk Taxonomy are categorized as material or
not material for risk management and capital purposes for
Nordea Eiendomskreditt. Material risks are those assessed
as having a material impact on Nordea Eiendomskreditt’s
current and future financial position, its customers and
stakeholders.
1.8 Risk Appetite
The Risk Appetite Framework (RAF) supports effective risk
management and a sound risk culture by enabling informed
decisions on risk-taking, with the objective of ensuring that
risk-taking activities are conducted within Nordea
Eiendomskreditt’s risk appetite – stipulated by NE Board.
Risk Appetite is the aggregate level and types of risk
Nordea Eiendomskreditt is willing to assume , in line with
its business model, to achieve its strategic objectives.
The Risk Appetite Statements (RAS) are the articulation of
the NE Board approved risk appetite and comprises the
qualitative statements and quantitative limits and triggers
by main risk type, which are deemed appropriate to be able
to operate to ensure a prudent risk profile.
1.9 Risk Appetite processes
The RAF contains all processes and controls to establish,
monitor and communicate Nordea
Eiendomskreditt’s risk appetite:
• Risk capacity setting based on the capital position:
On an annual basis, Nordea Eiendomskreditt’s
overall risk capacity is aligned with the financial
and capital planning process, based on Nordea
Eiendomskreditt’s risk strategy. The risk capacity
is set in line with the capital and liquidity position,
including an appropriate shock absorbing
capacity.
• Risk appetite allocation by risk type: Risk appetite
includes Risk Appetite Limits for the main risk
types that Nordea Eiendomskreditt is exposed to.
Risk Appetite Triggers are also set for these main
risk types, to act as early indicators for key
decision-makers that the risk profile for a
particular risk type is approaching its Risk Appetite
Limit.
• Risk limit setting: Measurable risk limits are
established and set at an appropriate level to
manage risk-taking effectively. Risk appetite limits
are set by the NE Board. These form the basis for
setting the risk limits which are established and
approved at lower decision-making levels. The
RAF is calibrated to ensure consistency
throughout the framework. Risk appetite limits
must be set in alignment with local regulatory
requirements and be consistent with the Group
risk limits.
• Controlling and monitoring of risk exposures
against risk limits: Regular controlling and
monitoring of risk exposures compared to risk
limits are carried out to ensure that risk-taking
activity remains within the risk appetite.
• Risk appetite limit breach management process:
Nordea Eiendomskreditt’s Chief Risk Officer (NE
CRO) and Chief Compliance Officer (NE CCO)
ensure that any Risk Appetite Limit breaches are
appropriately escalated to NE management, NE
BRIC, NE Board and other parties as specified in
internal escalation routines. In case of a breach of
the risk appetite limit, NE CRO reports at least
monthly to NE management and NE Board and
other relevant governing bodies, including a
follow-up on the status of actions to be taken, until
the relevant risk exposure is back within the risk
appetite.
1.10 Embedding risk appetite in business processes
The end-to-end risk appetite process cycle is aligned with
other strategic processes, including the Internal Capital
Adequacy Assessment Process (ICAAP), Internal Liquidity
Adequacy Assessment Process (ILAAP) and the Recovery
Plan. The risk appetite is embedded in business processes
and communicated across the organisation in order to meet
Nordea Eiendomskreditt’s objectives of maintaining a
sound risk culture. This includes, but is not limited to,
ensuring a strong link between the assessed risk appetite
and the business plans and budgets, the capital and
liquidity position, the systemic risk profile/the recoverability
and resolvability assessments, as well as the incentive
structures/remuneration framework. A separate risk
description is reported to the Board of Directors in Nordea
Eiendomskreditt once a year according to requirements in
CCR/CRD IV chapter 8, adopted by the Norwegian FSA.
Nordea Eiendomskreditt AS Annual Report 2024
48
NOKm
Note
Amortised cost and
Fair value through
other comprehensive
income
Financial assets
at fair value
through profit or
loss
Loans to credit institutions
1 880
Interest-bearing securities
3.6
10 554
Loans to the public incl accrued
interest
3.5
450 118
Derivatives
92
Total loans and receivables
(on-balance exposure)
451 997
10 646
Off balance credit exposure:
5.2
51 830
Off balance credit exposure
51 830
0
Total
503 828
10 646
31 Dec 2024
1.11 Disclosure requirements of the CRR - Capital and
Risk Management report
Additional information on risk and capital management is
presented in the Capital and Risk Management Report, in
accordance with the Capital Requirements Regulation
(CRR). The report is available at
2. Credit risk
Credits granted shall conform to the common principles
established for the Nordea Group. Nordea Eiendomskreditt
strives to have a well-diversified credit portfolio that is
adapted to the structure of its home market. The key
principles for managing Nordea Eiendomskreditt’s risk
exposures are:
• the three Lines of Defence (LoD) as further
described in the Group Board Directive on internal
Governance that has been adopted by NE Board;
• independence, i.e. the risk control function should
be independent of the business controls; and,
• risk-based approach, i.e. the risk control functions
should be aligned to the nature, size and
complexity of Nordea Eiendomskreditt’s business,
ensuring that efforts undertaken are proportional
to the risks in question.
NE Head of Credit & Risk Management in 1LoD is
responsible for implementing the Nordea Group’s credit
process framework and operational credit risk guidelines
and SOPs (Standard Operating Procedures) in Nordea
Eiendomskreditt. NE CRO in 2LoD is responsible for
implementing the Nordea Group’s credit risk framework,
consisting of policies and instructions. NE CRO is also
responsible for controlling and monitoring the quality of the
credit portfolio and the credit process. NE Head of Credit &
Risk Management and NE CRO are supported by Nordea
Group resources in these responsibilities according to
intragroup agreements.
Nordea Eiendomskreditt’s credit risk management
framework includes the credit RAF which provides a
comprehensive and risk-based portfolio perspective
through relevant asset quality and concentration risk
measures. Individual credit decisions within the approved
internal credit risk limit are taken within the customer
responsible unit (CRU) in Nordea Bank Abp, filial i Norge or
in Group Credit Management. The risk categorisation
together with the exposure of the customer determine at
what level the credit decision will be made.
Responsibility for credit risk lies with the customer
responsible unit. Customers are risk categorized by a score
in accordance with the Nordea Group’s common scoring
guidelines. The scoring of customers aims to predict their
probability of default and consequently rank them
according to their respective default risk. Scoring is used as
integrated parts of the credit risk management and
decision-making process.
2.1 Credit risk definition and identification
Credit risk is defined as the potential for loss due to failure
of a borrower(s) to meet its obligations to clear a debt in
accordance with agreed terms and conditions. The
potential for loss is lowered by credit risk mitigation
techniques. Credit risk stems mainly from various forms of
lending, but also from issued guarantees and documentary
credits and includes counterparty credit risk, transfer risk
and settlement risk. Credit risk in Nordea Eiendomskreditt
is mainly related to the lending portfolio. The lending
portfolio is secured by collateral in real estate with average
loan to value of 56.7% (58.3%). The risk of material losses
in the portfolio is therefore considered to be limited.
2.2 Credit risk mitigation
Credit risk mitigation is an inherent part of the credit
decision process. In every credit decision and review, the
valuation of collateral is considered as well as the
adequacy of covenants and other risk mitigations. Pledge
of collateral is a fundamental credit risk mitigation
technique in the bank and collaterals are always sought,
when reasonable and possible, to minimize the potential for
credit losses. In every credit decision and review, the value
of collaterals must be considered.
The collateral value shall always be based on the market
value. The market value is defined as the estimated
amount for which the asset would exchange between a
willing buyer and willing seller in an arm's-length
transaction, after proper marketing and where the parties
had each acted knowledgeably, prudently and without
compulsion. From this market value, a haircut is applied.
The haircut is defined as a percentage by which the asset’s
market value is reduced ensuring a margin against loss.
The margin reflects the adjustments needed to assess the
cash proceeds when the collateral is liquidated in a forced
sale situation. A maximum collateral ratio is set for each
collateral type.
The same principles of calculation must be used for all
exposures. For High Risk customers, the foreclosure value
may differ from the maximum collateral values and should
be based on a realistic assessment for the particular asset
at that time. Risk transfer to other creditworthy parties,
through guarantees and insurance, shall be based on
legally enforceable documentation.
Maximum exposure to credit risk
Nordea Eiendomskreditt AS Annual Report 2024
49
NOKm
Note
Amortised cost and
Fair value through
other comprehensive
income
Financial assets at
fair value through
profit or loss
Loans to credit institutions
2 463
Interest-bearing securities
3.6
10 586
Loans to the public incl accrued
interest
3.5
334 308
Derivatives
26
Total loans and receivables
(on-balance exposure)
336 770
10 612
Off balance credit exposure:
5.2
35 072
Off balance credit exposure
35 072
0
Total
371 842
10 612
31 Dec 2023
Retail mortgage exposure
NOKbn
in %
NOKm
in %
<50%
266
79
239
80
50-70%
44
13
38
13
70-80%
11
3
9
3
80-90%
6
2
4
1
>90%
11
3
8
3
Total
337
100
298
100
1
allocated to the appropriate bucket.
31 Dec 2024
31 Dec 2023
2024
2023
Impaired loans (stage 3), NOKm
1 368
1 033
- of which servicing
249
382
- of which non-servicing
1 119
651
Impairment rate, (stage 3) gross, basis points
1)
30,4
30,9
Impairment rate (stage 3), net, basis points
2)
26,8
26,0
Total allowance rate (stage 1, 2 and 3), basis points
9,8
10,8
Allowances in relation to credit impaired loans (stage 3), %
4)
11,9
15,7
Allowances in relation to loans in stage 1 and 2 , basis points
5)
6,2
5,9
3
4
measured at amortised cost (stage 3) before allowances.
1
Impaired loans (Stage 3) before allowances divided by total loans measured at amortised
cost before allowances.
2
before allowances.
5
amortised cost (stage 1 and 2) before allowances.
2.2 Loan-to-value
The loan-to-value (LTV) ratio is considered a useful
measure to evaluate quality of collateral, i.e. the credit
extended divided by the market value of the collateral. In
the table, retail mortgage exposures are distributed by LTV
buckets based on the LTV ratio.
Loan-to-value
1
2.3 Collective assessment of impairment
Requirements for impairment are set forth in IFRS 9,
which are based on an expected loss model.
Assets tested for impairment are divided into three groups
depending on the stage of credit deterioration. Stage 1
includes assets where there has been no significant
increase in credit risk, stage 2 includes assets where there
has been a significant increase in credit risk and stage 3
includes defaulted assets. All assets are assessed
individually for staging. Assets are tested for impairment
collectively. Impairment testing is applying three forward
looking and weighted scenarios.
Throughout the process of identifying and mitigating credit
impairment, Nordea continuously reviews the quality of
credit exposures. Weak and credit impaired exposures are
closely monitored and reviewed at least on a quarterly
basis in terms of current performance, future debt service
capacity, and the possible need for provisions.
Default
Customers with exposures that are past due more than 90
days, being in bankruptcy or considered unlikely to pay are
regarded as defaulted and can be either servicing debt or
non-servicing. If a customer recovers from being in default,
the customer is seen as cured. Typically, this situation
occurs if the customer succeeds in creating a balance in
financials. In order to be cured the recovery should include
the customer’s total liabilities, an established satisfactory
repayment plan and an assessment that the recovery is
underway.
Collective provisioning
The collective model is executed quarterly and assessed
for each legal unit/branch. One important driver for
provisions is the trigger for the transferring of assets from
stage 1 to stage 2. For assets recognized from 1 January
2018, changes to the lifetime Probability of Default (PD) are
used as the trigger. In addition, customers with forbearance
measures and customers with payments more than thirty
days past due are also transferred to stage 2. In stage 1,
the provisions equal the 12 months expected loss. In stage
2 and 3, the provisions equal the lifetime expected loss.
The output is complemented with an expert-based analysis
process to ensure adequate provisioning. Defaulted
customers without individual provisions have collective
provisions.
Forbearance
Forbearance means eased terms or restructuring due to
the borrower experiencing or about to experience financial
difficulties. The intention of granting forbearance for a
limited time period is to help the customer return to a
sustainable financial situation ensuring full repayment of
the outstanding debt. Examples of negotiated terms are
changes in amortization profile, repayment schedule,
customer margin as well as ease of financial covenants.
Forbearance is undertaken on a selective and individual
basis, approved according to powers-to-act and followed by
impairment testing. Forborne exposures can be servicing or
non-servicing. Loan loss provisions are recognized if
necessary.
Credit-impaired loans and ratios
2.4 Sensitivities
The provisions are sensitive to rating migration even if the
triggers are not reached. The table below shows the impact
on provisions from a one-notch downgrade of Nordea
Eiendomskreditt’s household lending portfolio. It includes
both the impact of the higher risk for all exposures and the
impact of transferring exposures that reach the trigger, from
stage 1 to stage 2. It also includes the impact of exposures
with one rating grade above default going into default. For
more information on the rating scale, see table
“Rating/scoring information on loans measured at
amortised cost” above.
Nordea Eiendomskreditt AS Annual Report 2024
50
NOKm
Retail portfolios
442
620
361
521
31 Dec 2024
31 Dec 2023
Recognised
provisions
Provision if
one notch
downgrade
Recognised
provisions
Provision if
one notch
downgrade
Probability
31 Dec 2024
2025
2026
2027
weight
Favourable scenario
20%
GDP growth, %
2.2
1.4
0.8
Unemployment, %
3.8
3.8
3.6
Change in household consumption, %
2.7
2.3
1.9
Change in house prices, %
4.2
2.8
2.6
Baseline scenario
60%
GDP growth, %
1.8
0.5
0.5
Unemployment, %
4.0
4.0
4.8
Change in household consumption, %
2.7
1.9
1.5
Change in house prices, %
2.8
2.5
1.9
Adverse scenario
20%
GDP growth, %
-1.7
0.2
0.5
Unemployment, %
4.8
5.0
4.8
Change in household consumption, %
2.4
1.6
1.5
Change in house prices, %
-5.8
0.5
2.6
Probability
31 Dec 2023
2024
2025
2026
weight
Favourable scenario
10%
GDP growth, %
2.4
1.1
0.8
Unemployment, %
3.1
3.2
3.4
Change in household consumption, %
1.9
2.4
2.7
Change in house prices, %
1.2
2.9
3.4
Baseline scenario
50%
GDP growth, %
0.4
1.0
1.1
Unemployment, %
3.6
3.8
3.8
Change in household consumption, %
0.1
1.9
2.5
Change in house prices, %
0.8
2.2
2.8
Adverse scenario
40%
GDP growth, %
-1.7
0.2
0.4
Unemployment, %
4.4
4.8
4.9
Change in household consumption, %
-1.2
0.8
1.2
Change in house prices, %
-6.7
-1.5
2.0
2.5 Forward-looking information
Forward looking information is used both for assessing
significant increases in credit risk and in the calculation of
expected credit losses. Nordea Eiendomskreditt uses three
macroeconomic scenarios, a baseline scenario, a
favourable scenario and an adverse scenario. End of 2024
the scenarios were weighted into the final expected credit
losses (ECL) as follows: baseline 60%, adverse 20% and
favourable 20% (baseline 50%, adverse 40% and
favourable 10% at the end of 2023). The weight of the
adverse scenario was kept at an elevated level, reflecting
continued uncertainty regarding the macroeconomic
outlook.
The macroeconomic scenarios reflect Nordea’s view of
how the Nordic economies might develop in light of
continued geopolitical uncertainty, weak growth in major
European economies and lingering effects of the surge in
inflation and energy prices seen in recent years. When
developing the scenarios and determining the relative
weighting between the scenarios, Nordea takes into
account projections made by Nordic central banks, Nordea
Research and the European Central Bank.
The baseline scenario foresees soft landings in the Nordic
economies with unemployment largely unchanged in the
coming years. Denmark will see relatively high growth
driven by the pharmaceutical sector and reopening of North
Sea oil and gas fields. The other Nordic countries will see
higher growth in 2025, with Finland emerging from a mild
recession. The stronger growth outlook is supported by
weaker inflation and lower interest rates. The exception is
Norway, where the weak currency and relatively high
activity levels have led the central bank to keep interest
rates constant. A modest recovery in home prices is
expected to continue over the coming years supported by
rising household purchasing power. The risks around the
baseline forecast are tilted to the downside, with the upside
scenario deviating less from the baseline than the adverse.
Nordea’s two alternative macroeconomic scenarios cover a
range of plausible risk factors which may cause growth to
deviate from the baseline scenario. A further escalation of
the conflict in the Middle East may lead to a significant rise
in energy prices well into 2025. This could trigger a
European and Nordic recession as firms postpone
investments, exports slow down and households cut
spending due to weakening labour markets. Central banks
may in addition regard the inflationary impulse as
temporary and continue cutting interest rates, with rates
moving lower than in the baseline in 2026. Normalising
inflation and lower interest rates, on the other hand, may
lead to a stronger recovery than assumed in the baseline
scenario.
At the end of the fourth quarter of 2024 adjustments to
model-based allowances/provisions (management
judgements) amounted to NOK 221m (NOK 92m at the end
of the third quarter 2024 and NOK 92m at the end of 2023).
The management judgements cover expected credit losses
not yet adequately captured by the IFRS 9 modelled
outcome. The cyclical management judgement allowance
amounted to NOK 217m at the end of the fourth quarter of
2024 (NOK 88m at the end of 2023) and the reserve
covering issues identified in the IFRS 9 model to be later
covered in model updates (structural reserve) amounted to
NOK 4m (NOK 4m at the end of 2023).
Scenarios
2.6 Credit portfolio
Including on- and off -balance sheet exposures and
exposures related to securities, the total credit risk
exposure at year end was NOK 514.5bn (NOK 382.5bn last
year). More information and breakdown of exposure
according to the CRR definition is presented in the Capital
and Risk Management Report (Pillar 3 report) at
.
On-balance lending consists of fair value lending and
amortized cost lending and constitutes the major part of the
credit portfolio. Amortized cost lending is the basis for
impaired loans allowances and loan losses. Credit risk in
lending is measured and presented as the principle amount
of on-balance sheet claims, i.e. loans to credit institutions
and to the public-, and off-balance sheet
Nordea Eiendomskreditt AS Annual Report 2024
51
NOKm
31 Dec 2024
31 Dec 2023
6-30 days
3 367
2 618
31-60 days
698
499
61-90 days
197
186
>90 days
130
147
Total
4 392
3 450
1,0 %
1,0 %
Past due not impaired loans divided by
loans to the public after allowances
potential claims on customers and counterparts, net after
allowances. Credit risk exposure also includes the risk
related to derivative contracts, which was NOK 92m at year
end (NOK 26m).
Nordea Eiendomskreditt’s total lending to the public
increased to NOK 450bn at the end of 2024 (NOK 334bn).
The portfolio includes residential mortgage loans as well as
loans to holiday homes, secured by properties in Norway,
and secured construction loans for residential properties
and holiday homes. Including off-balance sheet exposures
the total credit risk exposure at year end was NOK 501.9bn
(NOK 369.4bn). Lending to credit institutions amounted to
NOK 1.9bn at the end of the year (NOK 2.5bn), placed in
the parent bank as cash accounts payable on demand or
placement with a fixed term. Nordea Eiendomskreditt also
has interest bearing securities amounting to NOK 10.6bn at
the end of 2024 (NOK 10.6bn).
2.7 Scoring distribution
One way of assessing credit quality is through analysis of
the distribution across risk grades for scored household
customers.
During 2024 Nordea introduced new retail IRB models,
improving risk parameter calculations which slightly shifted
the scoring composition downwards, while the underlying
credit quality did not deteriorate. 74,6% (93%) of the
performing retail exposures are scored C– or higher, which
indicates a probability of default of 1% or lower. One of the
main causes for the scoring composition shifting
downwards is contagion from customers exposures in the
group.
Information on scoring distribution in the lending portfolio is
shown in Note 3.5 “Loans”.
2.8 Impaired loans (Stage 3)
Impaired loans gross in Nordea Eiendomskreditt increased
during the year from NOK 1,033m in 2023 to NOK 1,368m
in 2024 and corresponded to 30bps (31bps) of total loans.
18% of impaired loans gross are servicing loans and 82%
are non-servicing loans. Impaired loans net, after
allowances for Stage 3 loans, amounted to NOK 1,206m
(NOK 871m), corresponding to 27bps (26bps) of total
loans. Allowances for Stage 3 loans amount to NOK 162m
(NOK 162m). Allowances for Stages 1 and 2 amounted to
NOK 280m (NOK 198m). The ratio of allowances for
impaired loans in relation to impaired loans is 12% (16%)
and the allowance ratio for loans in Stages 1 and 2 is
0,06% (0,06%) of total loans in Stages 1 and 2.
2.9 Past due loans
The table below shows loans past due 6 days or more that
are not considered impaired.
Past due loans excluding impaired loans
The development is closely monitored related to potential
negative impact of high interest rates and inflation. Nordea
Eiendomskreditt has not taken over any properties for
protection of claims due to default.
Loan losses amounted to NOK 88.2 in 2024 (NOK 47.1m).
This corresponds to a loan loss ratio of 2.4 basis points
(1.4 basis points).
3. ESG (Environmental, Social and Governance)
related risk
Nordea defines ESG risk as the risk of negative financial
impact over the short to longer term, stemming from the
direct or indirect impact that environmental (including
climate), social and governance issues may have on
Nordea. It is important for us to integrate ESG
assessments into our risk management frameworks.
EU Taxonomy set the standard for classification of
economic activities and regulation in this area is under
development.
The Sustainability statement available in Nordea’s Annual
Report published at
subsidiaries.
4. Counterparty credit risk
Counterparty credit risk is the risk that Nordea
Eiendomskreditt’s counterparty in an interest or currency
derivative contract defaults prior to maturity of the contract
and that Nordea Eiendomskreditt at that time has a claim
on the counterparty. Counterparty credit risk can also exist
in repurchasing agreements and other securities financing
transactions. Nordea Eiendomskreditt enters into derivative
contracts in order to hedge positions that arise through
lending and funding activities. The exposure at the end of
2024 for Nordea Eiendomskreditt was NOK 12m (NOK
111m). 100% of the exposure and 100% of the current
exposure net was towards financial institutions. Nordea
Eiendomskreditt uses only counterparties in the Nordea
group in derivative transactions. For information about
financial instruments subject to master netting agreement,
see Note 3.4 “Offsetting”.
5. Market risk
Market risk is the risk of loss on Nordea Eiendomskreditt’s
positions in the non-trading book as a result of changes in
market rates and parameters that affect the market values
or net interest income flows. Market risk exist irrespective
of the accounting treatment of the positions.
The market risk appetite for Nordea Eiendomskreditt is
expressed through risk appetite statements issued by NE
Board. The statements are defined for the banking book as
Nordea Eiendomskreditt does not have any trading book
assets.
The second line of defence ensures that the risk appetite is
appropriately translated through relevant committees into
specific risk appetite limits for Group Treasury. Group
Treasury is responsible for managing the market risk
according to intra group outsourcing agreement.
As part of the overall Risk Appetite Framework (RAF),
holistic and bespoke stress tests are used to measure the
market risk appetite and calibrate limits to monitor and
control the full set of material market risk factors to which
Nordea Eiendomskreditt is exposed.
Nordea Eiendomskreditt AS Annual Report 2024
52
5.1 Non-traded market risk
The non-traded market risks that Nordea Eiendomskreditt
is exposed to are interest rate risk, customer behavioural
risk and credit spread risk. In Nordea Eiendomskreditt it
principally arises from the core banking business, related
hedges and regulatory or other external requirements (e.g.
liquid asset buffer).
Group Treasury is responsible for the risk management of
all non-traded market risk exposures in the Nordea Group’s
balance sheet, including Nordea Eiendomskreditt.
To ensure a clear division of responsibilities within Group
Treasury, the banking book risk management is divided
across several frameworks – each with a clear risk
mandate and specific limits and controls.
Interest rate risk in the banking book (IRRBB) is the current
or prospective risk to Nordea Eiendomskreditt’s capital
and/or income arising from adverse movements in interest
rates and customer behaviour. Market risks are managed
centrally by Group Treasury and include gap risk, basis
risks, credit spread risk and behavioural risk.
Due to the lending structure in Nordea Eiendomskreditt’s
home market Norway, most of the contractual interest rate
exposures are floating rate while fixed rate lending only
constitutes a small part of the loan book. Consequently,
wholesale funding is also issued in or swapped to floating
rate format. The resulting residual repricing gap risk and
fixing risk are managed by Group Treasury for Nordea
Eiendomskreditt. The net outright interest rate risk
stemming from the repricing gaps, together with the limited
fixed interest rate risk, are hedged with interest rate swaps
(IRS).
Liquid assets held to satisfy liquidity buffer requirements
are managed with minimal market risk exposure in
accordance with the Liquidity Buffer frameworks.
5.2 Measurement of market risk
IRRBB Economic value (EV) of equity stress tests
considers the change in EV of interest-bearing banking
book assets, liabilities and derivative exposures resulting
from interest rate movements, independently of the
accounting classification and ignoring credit spreads and
commercial margins. The model assumes a run-off
balance sheet and includes behavioural modelling for pre-
payments. Changes in the EV of the equity of the banking
book are measured and limited against the 6 standardised
scenarios defined by the Basel Committee on Banking
Supervision (BCBS). The exposure limit under this metric is
measured against the worst outcome out of the 6 scenarios
measured.
The net interest income (NII) risk metric measures the
change in net interest income relative to a baseline
scenario, resulting in a NII risk value over a one-year
horizon. The model uses a constant balance sheet
assumption, implied forward rates and behavioural
modelling for pre-payments. IRRBB earnings risk is
measured and limited against a +/-200bp shock in line with
regulatory guidance for NII measurement.
The fair value stress loss (FVSL) risk measure considers
the potential revaluation risk relating to positions held under
fair value accounting classifications.
EV and NII sensitivities are measured using the Basel
interest rate shocks while FVSL sensitivities are measured
using internally defined Risk Appetite Framework (RAF)
scenarios. The exposure limit is measured against the
worst outcome from the relevant scenarios. The RAF
scenarios are calibrated to reflect severe but plausible
events and are designed to test specific exposures that
are, or may be held, under the approved mandate.
The FVSL RAF scenarios are applied to both the banking
book and the trading book portfolios (where relevant), and
the Board risk appetite limit considers the combined impact
across both. The FVSL metric is monitored daily. A range
of EV risk scenarios are estimated daily for management
information purposes, but fully calculated and monitored
monthly against risk appetite limits. The NII and earnings
risk metrics are monitored monthly.
The measurement of IRRBB is dependent on key
assumptions applied in the models. The most material
assumptions relate to the modelling of embedded
behavioural options in both assets and liabilities. The
behavioural option held by Nordea Eiendomskreditt’s
lending customers to execute early loan prepayments is
estimated using prepayment models. On the other hand
Nordea has floor options towards customers stemming
from the fact that customer rates are modelled to not go
negative. Furthermore, issued bonds also contain floors
because Nordea currently does not charge negative rates
to investors in bonds issued by Nordea Eiendomskreditt.
5.3 Market risk analysis
At the end of the year, the loss for NII was NOK 520.6m for
the 200 bps down scenario (NOK 581.5m). The most
severe impact from the Basel scenarios on EV was NOK
101.5m loss at end of year 2024 (NOK 87.5m). The most
severe impact from the RAF scenarios measuring FVSL
was NOK 67.4m per year end 2024.
6. Operational risk
Operational risk is defined as the risk of loss resulting from
inadequate or failed internal processes, people and
systems or from external events, and includes legal risk.
Operational risk is inherent in all of Nordea
Eiendomskreditt’s businesses and operations.
Consequently, all managers are accountable for the
operational risks related to their area of responsibility, and
responsible for managing these risks within risk limits and
risk appetite limits in accordance with the operational risk
management framework. NE CRO constitutes the 2LoD
risk control function for operational risk and is responsible
for developing and maintaining the overall operational risk
management framework as well as for monitoring and
controlling the operational risk management of the 1LoD.
The 2LoD control function monitors and controls that
operational risks are appropriately identified, assessed and
mitigated. The 2LoD control function also follows-up on risk
exposures towards risk appetite limits and assesses the
adequacy and effectiveness of the operational risk
management framework and framework implementation.
Staff within the 2LoD control function are responsible for
preparing and submitting regular risk reports on all material
risk exposures including risk appetite limit utilization and
operational risk incidents to NE CRO, who thereafter
reports to NE CEO in NE management and NE Board.
Nordea has closely monitored geopolitical developments,
such as in Ukraine and the Middle East,
Nordea Eiendomskreditt AS Annual Report 2024
53
during 2024 and continues to do so. Throughout the year
Nordea has witnessed elevated threat levels for cyber
security and also for physical security across the Nordics.
Nordea has taken actions to address the increased risk.
Nordea supports a hybrid working model and preventive
measures focusing on e.g. awareness communications and
training activities, as well as preventive and compensating
controls have been put in place to mitigate operational risk
related to remote working.
The RAS for operational risk is expressed in terms of:
1) residual risk level
2) total loss amount from incidents and management
of Incidents.
6.1 Management of operational risk
The Nordea Group’s Group Board Directives on Risk, Risk
Appetite and Internal Governance, which have been
adopted by NE Board, set the principles for the
management of risks in Nordea Eiendomskreditt. Based on
these principles, the Nordea Group has established
supporting internal rules for operational and compliance
risk that form the overall operational risk and compliance
risk management frameworks. These also apply to Nordea
Eiendomskreditt. Management of operational and
compliance risk includes all activities aimed at identifying,
assessing and measuring, responding and mitigating,
controlling and monitoring and reporting on risks. Risks are
identified through various processes as detailed in the
following section.
6.2 Risk and control self-assessment (RCSA)
The Risk and Control Self-Assessment process ensures an
overview and assessment of operational and compliance
risks for Nordea Eiendomskreditt. The process improves
risk awareness and enables the effective assessment,
control and mitigation of identified risks. Furthermore, the
Risk and Control Self-Assessment process and its results
provide the basis and input for risk reporting at Nordea
Eiendomskreditt.
6.3 Change Risk Management and Approval (CRMA)
framework
The purpose of the Change Risk Management and
Approval process is to ensure that risks arising from a
change are identified, assessed and managed before a
change is approved and implemented. This is to ensure
that no unexpected incidents occur when going live with the
change.
The Change Risk Management and Approval process must
be applied to all relevant types of change and development
initiatives, including but not limited to, involving changes to
new or changed processes, organisational changes,
information and communication technology changes, new
outsourcing arrangements and exceptional transactions.
6.4 Issue Management
Issues are defined as deficiencies in the control
environment, i.e. defects and/or quality matters within the
internal control environment for managing risk. When such
deficiencies are discovered, they must be reported as
issues. The Issue Management Framework consists of
multiple processes across all three lines of defence
identified in different risk management processes, and they
together fall under the purpose of issues and action
management.
6.5 Incident Reporting Management
The objectives of Incident Reporting Management are to
ensure appropriate handling and reporting of detected
incidents to minimize the impact on Nordea
Eiendomskreditt and its customers, prevent reoccurrence,
and reduce the probability and impact of future incidents. In
addition, the Incident Management shall secure timely
notification to defined external bodies and parties, including
relevant supervisory authorities.
6.6 Raising Your Concern (RYC)
The objectives of the RYC (“whistleblowing”) process are to
ensure that Nordea Group employees and customers have
the right to and feel safe when speaking up if they witness
or suspect misconduct or unethical behaviour. The RYC
process encompasses ways to report a suspected breach
of ethical standards, or breach of internal or external rules.
Concerns can be raised openly, confidentially or
anonymously by individuals. The RYC process also
outlines rules and procedures for how RYC investigations
are conducted.
6.7 Complaints Handling
The objective of complaints handling is to ensure customer
satisfaction and to identify pain points for IT-development
or process changes. Complaints handling is managed by
the customer responsible units together with the “Customer
Ombudsman” as regulated by an intra-group agreement.
Reporting on the number and types of complaints is
produced monthly and presented to members of NE
management together with ongoing or proposed mitigating
actions per complaint area.
6.8 Third Party Risk Management (TPRM)
The objective of Third Party Risk Management is to ensure
that risks related to third parties and third party activities,
including but not limited to outsourcing, are appropriately
identified, assessed and managed before entering into,
during as well as when exiting a third party arrangement.
Third Party Risk Management ensures that risks
associated with third parties and third party activities are
kept within risk appetite and risk limits.
While Nordea Eiendomskreditt may delegate day-to-day
operational activities to Third Parties (TPs), Nordea
Eiendomskreditt always remains fully accountable and
responsible and must demonstrate effective over-sight and
governance of the procured or outsourced services and
functions.
6.9 Business Continuity and Crisis Management (BC &
CM)
The Business Continuity and Crisis Management
framework ensures the capability to handle extraordinary
events and crises and assures the continued delivery and
recovery of prioritised products, services and processes to
predefined acceptable levels. Extraordinary events and
crisis situations are timely and appropriately escalated and
responded to through pre-established structures. The
capabilities are validated by testing and exercising the
organisation and established plans to ensure to protect its
resources (e.g. people, premises, technology and
information), supply chain, interested parties and
reputation, before a discuptive incident occurs. This
includes ensuring that roles and responsibilities are clear,
known and communicated to all involved.
Nordea Eiendomskreditt AS Annual Report 2024
54
6.10 Information Security Management
The objective of Information and Communication
Technology Risk Management is to ensure that information
and communication technology and data management
risks are appropriately identified, assessed and managed.
The Nordea Group maintains an Information Security
Management System for implementation of the principles
and requirements for information security, with the overall
objective to preserve the confidentiality, integrity and
availability of Nordea’s information and information
entrusted to Nordea and Nordea Eiendomskreditt, by
applying a risk-based methodology.
6.11 Cyber security
Introducing new technologies, exploring new ways of doing
business and connecting with customers widen bank’s
attack surface. At the same time, entities that pose cyber
threats are becoming more organised, resourceful and
experienced. Nordea focuses not only on maintaining
effective basic information security controls but also on
enhancing its cyber defence with new tools and functions
for security, detection and response. Nordea develops
innovative security practices to meet new business
demands, such as robust mobile applications and proactive
customer support for fraud detection and prevention.
6.12 Significant/Key Operating Processes (SiOPs)
The objective of the SiOPs framework is to identify and
document SiOPs to ensure risks and controls in the most
important processes are assessed and managed, for these
processes to operate as intended, which includes ensuring
Nordea Eiendomskreditt’s customers are offered products
and services in a compliant, safe and timely way.
6.13 Reputational Risk
The objective of Reputational Risk Management is to
protect the Nordea Group’s and Nordea Eiendomskreditt’s
reputation. Reputational risk is defined as the risk of
damage to the trust in the Nordea brand from our
customers, employees, authorities, investors, partners and
the general public with the potential for adverse financial
impact. Reputational risk is often an impact from, or a
cause of, other types of risks, e.g. credit, liquidity, market,
operational, compliance and legal risks inherent in the
business. A reputational risk framework with guiding
principles for managing reputational risk has been
developed. The framework is strongly linked with the risk
management framework and related processes for
identifying, assessing and mitigating risk. It includes
considering stakeholders’ perceptions in the decision-
making processes.
6.14 Minimum own funds requirement for operational
risk
Nordea Eiendomskreditt’s own funds requirements for
operational risk are calculated according to the
standardised approach. In this approach, the institution’s
activities are divided into eight standardised business lines
and the gross income-based indicator for each business
line is multiplied by a predefined beta coefficient. The
consolidated own funds requirement for operational risk is
calculated as the average of the last three years’ own funds
requirement.
7. Compliance risk
Nordea defines compliance risk as the risk of failure to
comply with applicable regulations and related internal
rules. Management of compliance risk is governed by
Nordea’s Compliance Risk Appetite Statement which also
sets out the requirements for the mitigation of compliance
risk. Employees throughout Nordea are accountable for the
compliance risks related to their mandate and for managing
these risks in accordance with the Compliance Risk
Management Framework. The key governance principle for
management of risks at Nordea is the three Lines of
Defence (“LoD”) model.
1LoD is represented by the staff in Nordea Eiendomskreditt
performing business activities as well as staff in the Nordea
Group operating under intra-group agreement on account
of Nordea Eiendomskreditt. All employees in the 1LoD
have a role of understanding and adhering to prudent risk
management and are accountable for managing
compliance risks as part of performing their tasks. All
managers are fully responsible for the risks they assume
and are accountable for ensuring compliance with
applicable regulations within their respective area of
responsibility. Hence, they are responsible for ensuring that
the appropriate organisation, governance, controls,
procedures and support systems are implemented to
ensure a sufficient system of internal controls.
Group Risk (GR) and Group Compliance (GC) represent
Nordea’s independent second line of defence (2LoD)
control function. GR & GC oversee the implementation of
the financial and the non-financial risk policies and
according to a risk-based approach, monitor and control
the Risk Management Framework including the
Compliance Risk Management Framework and oversee
that all risks that Nordea is or could be exposed to, are
identified, assessed, monitored, managed and reported on.
GR is organized in divisions with individual risk type
responsibility. The following divisions are part of GR; Group
Credit Risk Control, Model Risk & Validation, Group
Financial Risk Management & Control, Group Operational
Risk, Risk Models, Chief Security Office, Enterprise-wide
Risk Management and Recovery & Resolution Planning,
CRO Office and Country CROs.
Group Compliance (GC) constitutes the compliance
function for Nordea Eiendomskreditt according to intra-
group agreement and is responsible for developing and
maintaining the risk management framework for managing
compliance risks in cooperation with other functions in GR
and for guiding the business in their implementation of the
framework to ensure continuous adherence to the
framework. GC is responsible for regular reporting on
annual compliance plan to NE Board and NE CEO at least
quarterly. GC reports on the status and development of
Nordea Eiendomskreditt’s compliance risks including
information on major deficiencies along with consequence
analyses and emerging risks and trends; status and key
observations from monitoring activities and investigations;
general updates on Financial Supervisory Authority
interactions and impact; and preparations on regulatory
changes. The reports shall also contain recommendations
on actions to be undertaken to mitigate compliance risk.
Group Internal Audit (GIA) represents the 3LoD according
to intra-group agreement. GIA conducts risk based and
general audits and shall assess whether the internal control
framework is both effective and efficient, including
assessing whether existing policies and procedures and
Group internal Rules remain adequate and comply with
legal and regulatory requirements, and with the risk
appetite and strategy of Nordea. GIA is also in charge of
the independent review of 1LoD and 2LoD including
ensuring that the segregation of duties is
Nordea Eiendomskreditt AS Annual Report 2024
55
defined and established between risk management (1LoD)
and risk control (2LoD).
7.1 Customer Protection
The aim of Customer Protection is to ensure fair treatment
of customers and fair customer outcomes. Treating
customers fairly include open and transparent
communication, meeting the customer needs (outcome
focused), employee awareness, honest and open approach
in customer complaints and communication as well as
timely, accurate and relevant management information.
The key areas covered in Customer Protection are financial
advice (including mortgage credit offering), product
governance arrangements, employee knowledge and
competence, and customer complaints handling. Customer
Protection related to advisory activities seeks to ensure that
advice given to the customers meets customers' needs and
circumstances; the advice given on suitable products; and
that lending is responsible. Customer Protection related to
products and services consists of delivering high quality,
good, and valuable products and services which meet
customer needs. This means defining and meeting target
market, delivering value for money and provision of fair
product materials and customer communications. It is also
important to manage conflicts of interest in relation to
products and services. Customer complaints are an
important tool for monitoring customer protection. The
complaints handling framework has in the recent years
been developed and the process is renewed with clear and
regular reporting, a strong feedback culture, root cause
analysis and mitigating activities.
7.2 Conduct Risk Management
Conduct risk is defined as the risk of inappropriate culture
and behaviour of employees, or the risk that intentional or
unintentional actions across the end to end customer
lifecycle can lead to unfair outcomes and harm for
customers or disrupt market integrity. Conduct risk
management approaches are continuously developed to
ensure that culture and employee behaviours are
consistent with the values, and that employees deliver fair
outcomes for customers across all stages of the customer
lifecycle. This includes driving a strong focus on putting the
customer first in the business strategy, the design and
development of products, the sales, and the ongoing
service provided to Nordea Eiendomskreditt’s customers.
All employees, including part-time employees and
consultants, are required to undertake annual Code of
Conduct training as part of their Licence to Work to ensure
proper awareness and knowledge of the ethical principles.
7.3 Financial Crime Prevention
Financial crime is a serious threat to the security and
integrity of the global financial system, and cooperation
between banks and authorities is what is required to fight it.
It is a joint responsibility to improve safety in the global
financial system. The Nordea Group is committed to
comply with applicable laws and regulations concerning
anti-money laundering, counter terrorist financing,
sanctions, tax evasion, bribery and corruption in the
jurisdictions in which Nordea operates. Nordea and Nordea
Eiendomskreditt will not accept being exploited for money
laundering or any other types of financial crime. Therefore,
a number of Group Internal Rules has been established by
the Nordea Group in order to achieve robust and consistent
standards of compliance. These have been adopted by the
NE Board and support the broader customer strategy,
values and vision, and provide a uniform set of risk
management principles and mandatory standards for
Nordea Eiendomskreditt and the Nordea Group as a whole.
It is important for Nordea Eiendomskreditt that robust risk-
based due diligence measures are conducted when
onboarding new customers, and on a continuous basis. By
knowing customers and counterparties well, screening and
monitoring activities can be performed to detect suspicious
or illegal activity and reported to the authorities for further
investigation. Nordea Eiendomskreditt has outsourced to
the customer responsible units in the Nordea Group to
perform all due diligence measures and regulated this
service in an intra group outsourcing agreement.
To detect suspicious transactions, monitoring systems and
controls are in place to detect transaction activities that are
outside normal activity patterns. Every year, these
processes generate hundreds of thousands of alerts in the
Nordea Group, although only a fraction is for Nordea
Eiendomskreditt’s customers. All alerts are managed and,
where necessary, investigated for potential suspicious
activity which may result in a Suspicious Activities Report
being filed with the relevant authorities in the relevant
jurisdictions.
Nordea Eiendomskreditt also has an obligation to comply
with all international and local sanctions programmes.
Nordea Eiendomskreditt’s customers and their transactions
are therefore screened against applicable sanctions lists to
ensure adherence to sanctions requirements. In recent
years, considerable improvements have been implemented
to reduce financial crime risks through significant
investment in technology, capabilities and more
sophisticated assessment techniques.
8. Liquidity risk
8.1 Liquidity management
During 2024, Nordea Eiendomskreditt continued to benefit
from its prudent liquidity risk management, in terms of
maintaining a diversified and strong funding base and a
diversified liquidity buffer. Nordea Eiendomskreditt
maintained a strong liquidity position throughout the year
despite the continued volatility in global markets driven by
geopolitical and macroeconomic uncertainty. Nordea
Eiendomskreditt issued NOK 72.5bn in long-term funding in
2024. Throughout 2024, Nordea Eiendomskreditt remained
compliant with the requirement for Liquidity Coverage Ratio
(LCR) and the Net Stable Funding Ratio (NSFR).
8.2 Liquidity risk definition and identification
Liquidity risk is the risk that Nordea Eiendomskreditt can
only meet its liquidity commitments at an unsustainably
high price or, ultimately, is unable to meet its obligations as
they come due.
Nordea Eiendomskreditt is exposed to liquidity risk in its
lending, investment, funding, off-balance sheet exposures
and other activities which could result in negative cash flow
mismatch. Nordea Eiendomskreditt’s liquidity management
is an integral part of the Nordea Group’s liquidity risk
management.
8.3 Management principles and control
Liquidity risk in the Nordea Group is managed across three
lines of defence:
• The first line of defence consists of Group
Treasury and the business areas (Nordea
Eiendomskreditt included). Group Treasury is
responsible for the day- to- day
Nordea Eiendomskreditt AS Annual Report 2024
56
management of the liquidity positions, liquidity
buffers, external and internal funding including the
mobilisation of cash around the Nordea Group,
and funds transfer pricing. Nordea
Eiendomskreditt and Group Treasury have
entered into an intra-group agreement for the
purpose of liquidity risk management.
• The second line of defence, which includes
Nordea Eiendomskreditt CRO and units within the
Nordea’s Group Risk (GR) acting in accordance
with intra-group agreement, are responsible for
providing independent oversight of, and challenge
to the first line of defence.
• The third line of defence includes Group Internal
Audit, which is responsible for providing
independent oversight of the first and second lines
of defence.
Nordea Eiendomskreditt’s Board of Directors defines the
liquidity risk appetite by setting limits for applied liquidity
risk metrics. The risk appetite is anchored to liquidity stress
testing results over specified time horizons as well as
regulatory requirements and has implications for the nature
and scope of activities undertaken by Nordea.
The risk appetite framework and supporting liquidity risk
limits and thresholds will ensure prudent hedging activities
and mitigate the overall liquidity risk of Nordea
Eiendomskreditt.
8.4 Liquidity risk management strategy
Nordea Eiendomskreditt’s liquidity management strategy is
based on policy statements resulting in various liquidity risk
measures, limits and organisational procedures.
The objective of liquidity risk management is to ensure that
Nordea Eiendomskreditt can always meet its cash flow
obligations, including on an intraday basis, across market
cycles and during periods of stress. Nordea
Eiendomskreditt strives to diversify its sources of funding to
a larger pool of investors and seeks to establish and
maintain relationships with investors in order to ensure
market access.
Nordea Eiendomskreditt’s funding programme is limited to
long-term covered bonds. Short- and medium-term funding
are arranged as intra-group loans priced at market rate.
Trust is fundamental in the funding market. Therefore,
Nordea Eiendomskreditt periodically publishes information
on the liquidity situation and the cover pool. Furthermore,
Nordea Eiendomskreditt regularly performs stress testing of
the liquidity risk position and the cover pool to capture
relevant risk drivers. Nordea Eiendomskreditt is covered by
the Nordea Group’s business contingency plans for liquidity
crisis management.
8.5 Liquidity risk measurement
To ensure funding in situations where Nordea
Eiendomskreditt is in urgent need of cash and the normal
funding sources do not suffice, Nordea Eiendomskreditt
holds a liquidity buffer. The liquidity buffer consists of
central bank eligible, high credit quality and liquid securities
that can be readily sold or used as collateral in funding
operations.
Liquidity risk management focuses on both short-term
liquidity risk and long-term structural liquidity risk. Liquidity
risk is limited by the Board of Directors via the liquidity
stress coverage ratio metric stipulating that the liquidity
buffer needs to be sufficient to cover peak cumulative
stressed outflows experienced over the first 90 days of a
combined stress event, whereby Nordea Eiendomskreditt is
subject to a market-wide stress similar to what many banks
experienced in 2007-08, as well as idiosyncratic stress
corresponding to a three-notch credit rating downgrade.
This metric and the regulatory liquidity coverage ratio
(LCR) and the net stable funding ratio (NFSR) form the
basis for Nordea’s liquidity risk appetite, which is reviewed
and approved by the Board at least annually.
8.6 Liquidity risk analysis
The Liquidity Coverage Ratio (LCR) according to the LCR
Delegated Act was 1130% (1780%) at the end of the year.
Nordea Eiendomskreditt does not have other significant
currencies than Norwegian krone.
The Liquidity Stress Coverage (LSC) and Liquidity Stress
Horizon (LSH) were at the end of the year 3,699% (210%)
and 904 days (172 days) respectively. Net Stable Funding
Ratio (NSFR) was at the end of the year 115.2% (115.1%).
Nordea Eiendomskreditt AS Annual Report 2024
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Auditor’s report
Nordea Eiendomskreditt AS Annual Report 2024
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Nordea Eiendomskreditt AS Annual Report 2024
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Nordea Eiendomskreditt AS Annual Report 2024
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Nordea Eiendomskreditt AS Annual Report 2024
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Randi Marjamaa
Gro Elisabeth Lundevik
Ola Littorin
Chair
Vice Chair
Board member
Asbjørn Rødal
Tina Sandvik
Lene Steinum
Board member
Board member
Board member
Lars Espevik
Elen M. Stiksrud
Board member
Chief Executive Officer
Statement by the Chief Executive Officer
and the Board of Directors
Pursuant to Section 5-5 of the Securities Trading Act
The Chief Executive Officer and the Board of Directors have today considered and approved the Board of Director’s Report and
the annual accounts of Nordea Eiendomskreditt AS for 2024, including comparative figures for 2023 (the “2024 Annual Report”).
The Annual Report has been prepared in accordance with IFRS as adopted by the EU, and additional Norwegian disclosure
requirements pursuant to the Accounting Act, the Regulations for Annual Accounts and the Securities Trading Act. According to
our best knowledge, the 2024 Annual Report has been prepared in accordance with the applicable accounting standards and
gives a true and fair view of the company’s assets, liabilities and net profit as of 31 December 2024 and as of 31 December
2023.
According to our best knowledge, the Board of Directors’ report gives a true and fair view of the company’s activities, results and
financial position including disclosure of related party transactions and the description of the most relevant risk factors the
company faces the coming year.
Nordea Eiendomskreditt AS
Oslo, 7 March 2025
Nordea Eiendomskreditt AS Annual Report 2024
62
Board of Directors and Auditor
Board of Directors
Chair
Randi Marjamaa
Nordea Bank Abp, filial i Norge
Head of Personal Banking Norway, Nordea
Country Senior Executive, Nordea Norway
Board member since 2023
Members
Gro Elisabeth Lundevik
University of Agder, Senior Advisor,
Economic and property division
Investor and professional board member
Vice Chair, Board member since 2019
Ola Littorin
Nordea Bank Abp, filial i Sverige
Head of Long Term Funding & Structuring, Group
Treasury, Nordea
Board member since 2013
Tina Sandvik
Nordea Bank Abp, filial i Sverige
Head of Products and Development, Personal Banking,
Nordea
Board member since 2023
Lene Steinum
Nordea Bank Abp, filial i Norge
Programme Manager, Group Technology , Nordea
Board member since 2022
Asbjørn Rødal
Independent consultant and non-executive board member
with 25 years’ experience as partner in global audit firm
Board member since 2023
Lars Espevik
Nordea Bank Abp, filial i Norge
General Counsel Business Banking, Nordea
Branch Manager Norway, Nordea
Head of Legal Norway, Nordea
Board member since 2024
Auditor
PricewaterhouseCoopers AS
Hallvard Aarø
Authorised Public Accountant
Nordea Eiendomskreditt AS Annual Report 2024
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Contact information
Nordea Eiendomskreditt AS
Visiting address: Essendropsgate 7
Postal address: P.O. Box 1166 Sentrum, 0107 Oslo
Telephone: +47 22 48 50 00
Internet: www.nordea.no