Annual Report 2023

It should provide added value to be a customer of KBN. Our goal of being the customer's first choice will be achieved through the further development of our key competitive advantages:

1. Attractive and predictable access to long-term financing with products tailored to each customer's needs.
2. Our customers and employees will prefer using KBN’s digital solutions because they provide insight, are efficient and provide a good basis for decisions.
3. Utilizing our unique knowledge of both the loan market and the municipal sector to closely follow up with our customers, with the aim of contributing to both competence development and good decision-making among our customers.

As the largest lender to the municipal sector, we have a responsibility to ensure financing capacity for new borrowing. At the same time, we have a responsibility to contribute to limiting significant new borrowings that would impair a customer's financial situation substantially. Based on responsible credit practices and our credit model, it will become increasingly important to support customers in making sound and forward-looking decisions that uphold economic sustainability and healthy local communities.

We will:

• Further develop our differentiated customer support to provide customers with a perceived added value in choosing KBN as the central lender. At the same time, all our customers should perceive KBN as relevant.
• Continue to develop our digital tools, simplify and fully digitize the loan process and ensure the realization of benefits from investments in new systems.
• Develop new profitable products and services that address customer needs.
• Establish customer centers and streamline the customer journey.
• Expand the use of measures to safeguard and contribute to economic sustainability for our customers.

KBN aims to be recognized for having effective governance and control, as well as a strong risk management culture. Quality and transparency in reporting, a deep understanding of the market, and relationships with investors and market participants are intended to ensure that the bank maintains a strong position.

We will:

• Maintain a strong credit rating.
• Further develop a diversified, innovative and profitable funding program based on open, developed and transparent markets.
• Hold liquidity reserves that are invested in highly creditworthy liquid securities.
• Strive to be precise, open and transparent in our dialogue with the market through high quality financial and non-financial reporting.
• Further develop our risk management framework.
• Work to improve the framework conditions in areas that are central to our operations, and which strengthen our competitiveness.
• Integrate robust ESG analyses into decisions regarding investments and suppliers.
• Intensify efforts in systematically organizing, managing and maintenance of external and internal data to streamline and enhance the quality of risk measurements and reports, ensuring reliable governance data.
• Continue the digitalization of transaction and reporting processes.

To maintain our leadership in green finance, we will focus on further developing our efforts in the following three main areas:

1. Green loans. Through green loans, we are driving more and increasingly ambitious green investments. Our goal is to continue the strong growth of green loans, with a larger proportion of our customers opting for green loans, thereby facilitating their transition to a low-emission society and adapting to a changing climate. This initiative is also intended to contribute to increased focus on biodiversity.
2. Measuring environmental impact and reducing emissions. Disseminating information and knowledge about the environmental impact of green loans to both our customers and debt investors. Additionally, we will strengthen our efforts to assess total financed emissions. This entails, as a lender, a heightened awareness of precisely what we are financing. In collaboration with our customers, we aim to formulate plans for reducing overall financed emissions.
3. Insight solutions for our clients, especially related to climate risk, that facilitate knowledge development and understanding.

We will:

• Further develop our green loan program to accelerate the growth of green investments.
• Enhance the criteria for defining what constitutes "green" and incorporate criteria for the use of natural resources.
• Continue the work on financing projects aligned with the EU Taxonomy and develop a framework for issuing bonds under the EU Green Bond Standard.
• Map our financed emissions and create a plan on how, together with our clients, we will reduce them.
• Building on our ESG risk model, shift customer dialogue to include their efforts more extensively in climate and nature conservation.

KBN aims to have strong professional communities that evolve and share knowledge. The combined expertise of our employees is our most valuable resource. By facilitating meaningful exchanges and diverse perspectives, we collaboratively arrive at the best solutions. Through leveraging technological opportunities and high-quality data, we aim to enhance efficiency and create added value for both customers and our organization. We aspire to be an attractive employer that engages and fosters job satisfaction among our employees.

We will:

• Maintain a culture of continuous learning- and knowledge-sharing, expanding expertise both in breadth and depth.
• Further develop the organization and renew how we work by digitizing and streamlining processes.
• Work systematically and purposefully in advancing our business.
• Be a data-driven organization – one truth, in one place, right the first time – providing insights and a solid foundation for decision-making.
• Foster digital competence across various methods and tools throughout the organization.
• Increase diversity and systematically invite different perspectives and experiences in problem-solving and development work.
• Make forward-looking technology and solution choices that provide excellent user experiences.

To achieve the government’s goal of the highest possible returns over time within sustainable frameworks, the board has adopted strategic objectives for the strategy period.