Value adjustments lead to higher profit for 2022

In what was a volatile year for the international financial markets in 2022, KommuneKredit delivered strong profit thanks to value adjustments. KommuneKredit provided loans and lease agreements for DKK 28 billion to support, for example, the green transition in local Danish communities.

In 2022, KommuneKredit disbursed more than 700 new loans and entered into almost 3,000 new lease agreements, thus securing municipal and regional authorities more local value for their taxpayers’ money.

For example, KommuneKredit granted a loan for DKK 10 million to Lemvig Vand for investing in their piping network. The loan was issued with a guarantee from the Municipality of Lemvig. We also granted a loan of over DKK 5 million to Halsnæs Affald with a guarantee from the Municipality of Halsnæs. The coastal protection association Sunddragets kystbeskyttelseslag af 2021 borrowed close to DKK 4 million with a guarantee issued by the Municipality of Struer for coastal protection works. Furthermore, we leased ambulances to the Capital Region for just under DKK 16 million and electric vehicles for the municipal home care service in the Municipality of Hjørring for approximately DKK 23 million.

In connection with the publication of the Annual Report 2022, CEO Jens Lundager stated:

” As CEO of KommuneKredit I am proud of the role we play in Danish society when good ideas, whether large or small, are brought to life locally, and on equal terms across the country.”

Read more in KommuneKredit’s Annual Report 2022.

Financing that supports the local sustainable transition

Many of the municipal and regional investments arise from local community ambitions for the green transition. When, for example, our customers want to establish district heating based on surplus heat, which helps to lower consumer heating bills, the project can often be financed by a green loan from KommuneKredit.

In 2022, KommuneKredits Green Bond Committee approved 290 green loans totalling DKK 8.9 billion. A major part of the green loans were approved according to KommuneKredit’s Green Bond Framework 2022 that was launched in February.

The new framework meets the new standards in the market. The loan categories have also been expanded from four to six, so that municipalities and regions can get green loans to finance investments in the areas of energy, sustainable water and wastewater management, pollution prevention and control, green buildings, clean transportation and climate change adaption.

Read more about the impact of our customers’ investments in our Green Bond Impact Report.

Increased ESG focus

In 2022, KommuneKredit implemented various ESG targets. Of these, the Board of Directors have adopted five which, for example, aim – internally – at cutting the company’s own carbon footprint and – externally –at increasing the share of green loans in our portfolio.

” I am pleased that our Board of Directors support and acknowledge the fact that at KommuneKredit, we also define our own ESG targets. We want to contribute to the green transition in society, both by reducing our own carbon footprint and by supporting our members’ climate initiatives through our financing” said Jens Lundager.

Read more about KommuneKredit’s work on sustainability and responsibility in our Sustainability Report 2022.

Expectations for 2023

In 2022, KommuneKredit took additional steps in achieving strategic initiatives that e.g. through new IT platforms aim to future-proof KommuneKredit as a well-run, accessible and sustainable financial institution. These extensive efforts will continue in the coming years.

Financially, we expect our ability to raise funding will remain unaffected by any potential turbulence in the financial markets in 2023 and we anticipate lending activities will be at normal levels.

Summary – Annual Report

• Net interest income amounted to DKK 339 million against DKK 381 million in 2021.

• Profit before value adjustments and tax totalled DKK 129 million. This was DKK 109 million less than in 2021. The decline was due to a combination of slightly reduced net interest income and an increase in administrative expenses.

• Comprehensive income for the year amounted to DKK 991 million compared with DKK 378 million in 2021. The increase was driven primarily by the higher value adjustment in 2022.

• Net lending, which is new loans including leases less instalments and redemptions, amounted to DKK 4.8 billion.

• Common Equity Tier 1 (CET1) capital, which equals equity, increased to DKK 9,766 million from DKK 8,775 million at the end of 2021.