Foreword by the Governor

Dear reader,

Norway is a small and open economy, affected by events around us. In Norges Bank, we stand prepared to fulfil our mission, also in turbulent times.

After several years of high inflation, there has been a marked decline in a number of our trading partners. As a result, many central banks have lowered policy rates. Inflation has also eased in Norway, and although the time to ease up on the economic brakes is approaching, a restrictive monetary policy is still needed.

The global equity market has grown substantially, generating high returns for both the Government Pension Fund Global (GPFG) and Norges Bank’s foreign exchange reserves. The value of the GPFG increased by close to NOK 4 000 billion in 2024, reaching NOK 19 742 billion at the end of 2024. The value of the foreign exchange reserves increased by NOK 104 billion to NOK 789 billion in 2024.

The economic outlook is uncertain, with international political tensions and a risk of increased trade barriers. Considering the GPFG’s size with 70% allocated to equities, we must be prepared for considerable fluctuations in the GPFG’s return and value. International unrest may also affect monetary policy and the Norwegian financial system.

In a turbulent world, security and contingency preparedness will be of crucial importance, and Norges Bank is taking a systematic approach. We play a key role in ensuring an efficient and secure payment system and collaborate with other government bodies, the financial industry and other central banks to promote a stable financial sector.

In Norges Bank, we are 1 118 employees representing 44 nationalities. Most work at the Bank’s headquarters in Oslo, the rest at our offices in London, New York and Singapore. I would like to express my thanks to all my colleagues, whose expertise and strong commitment enable us to carry out Norges Bank’s mission.

Oslo, 25 February 2025

Ida Wolden Bache
Governor

Annual reports

Norges Bank’s Executive Board

The Executive Board comprises the Governor, the two Deputy Governors and six external board members, all appointed by the King in the Council of State. The Governor is Chair, and the two Deputy Governors are First Deputy Chair and Second Deputy Chair of the Executive Board. In addition, two board members are selected by and among employees to participate in the deliberation of administrative matters.

The Executive Board has four preparatory and advisory committees, whose work improves and streamlines the Executive Board’s discussions. For more information on the members of the Executive Board, see Norges Bank's website.

Work of the Executive Board in 2024

The Executive Board held 11 meetings and discussed 182 items of business. This is in line with previous years. Meetings in the form of seminars are also used for more in-depth discussions and presentations of the premises of important agenda items with Bank staff.

In addition, the Executive Board’s four subcommittees are used for the preparation of selected items for the Executive Board’s consideration.

Approximately two thirds of the Board’s time was spent on matters related to the management of the Government Pension Fund Global. This share has remained broadly unchanged since the Committee for Monetary Policy and Financial Stability was established.

Table 1 Work of the Executive Board 2020–2024

Annual Report of the Executive Board for 2024

Introduction

The geopolitical situation has changed considerably in recent years. There is substantial uncertainty about the outlook for both the global and Norwegian economy. The risk of extensive trade barriers has increased, and the threat landscape has become more complex. This affects all aspects of Norges Bank’s remit and characterised the Executive Board’s work through 2024.

At the end of 2023, the policy rate was 4.5%. The interest rate has contributed to cooling the Norwegian economy and to dampening high inflation. Inflation slowed considerably through 2024 but remained above the 2% target. The Monetary Policy and Financial Stability Committee chose to keep the policy rate unchanged at 4.5% in 2024. See the Annual Report of the Monetary Policy and Financial Stability Committee for 2024 for further information.

The international equity market rose substantially in 2024, resulting in high returns for both the Government Pension Fund Global (GPFG) and Norges Bank’s foreign exchange reserves. The value of the GPFG increased by almost NOK 4 000bn in 2024 and was NOK 19 742bn at the end of 2024. The GPFG’s value was affected by the return on investments, capital inflows from the Norwegian government and exchange rate movements.

The market value of the total equity and fixed income portfolio in the foreign exchange reserves was NOK 758.2bn at the end of 2024, NOK 103.8bn more than in 2023.

Norges Bank is on schedule to achieve the ambitions in Strategy 25. The Bank is in the process of evaluating the next generation payment system. In November, Norges Bank signed an agreement on participation in the Eurosystem’s TARGET Instant Payment Settlement (TIPS) for instant payments. At the beginning of 2025, the Executive Board made a decision to enter into formal discussions with the European Central Bank (ECB) on participation in the T2 settlement system. Norges Bank’s assessment is that collaboration with Nordic and other European central banks is the best choice for secure and stable operation of the settlement system in the long term.

Climate and the environment is another priority area in Strategy 25. Norges Bank Investment Management (NBIM) works to ensure that investee companies align their activities with the Paris Agreement. In Central Banking, there are ongoing projects to improve the Bank’s understanding of the economic impact of climate change and energy transition.

Norges Bank works systematically with security and contingency arrangements. Prioritised areas include mapping and assessing the financial sector’s importance for national security, holistic security risk management, contingency plans for national security crises and war, as well as continuing initiatives in cyber security. The Bank has an extensive training programme and participates in national and international contingency exercises. The Ministry of Justice and Public Security has initiated “Totalforsvarsåret 2026” [Total Defence Year 2026], and Norges Bank has implemented a number of activities to prepare for this, including strengthening collaboration across societal sectors and with other Nordic central banks.

Norges Bank’s employees are the Bank’s most important resource, and the Bank works systematically to promote well-being, encourage employee development and ensure that employees have the right expertise to meet the Bank’s needs. The 2024 staff survey shows that Norges Bank has high overall scores in the areas covered by the survey. The Executive Board is satisfied with the results of the 2024 staff survey and assesses the working environment at the Bank as positive. The Executive Board would like to thank Norges Bank’s employees for their significant contributions throughout the year. See Society and social conditions for more information on Norges Bank’s employees.

Government Pension Fund Global

Norges Bank manages the Government Pension Fund Global (GPFG) on behalf of the Ministry of Finance. The objective of the Bank’s investment management is to achieve the highest possible long-term return within the constraints laid down in the mandate from the Ministry of Finance.

The investments in the GPFG returned 13.1% in 2024 following strong gains in global equity markets. Nevertheless, the relative return was weak, with a return that was 0.45 percentage point below the GPFG’s benchmark index. The Executive Board emphasises the importance of assessing results over time and is satisfied that the return over time has been higher than the return on the GPFG’s benchmark index.

The value of the GPFG increased by almost NOK 4 000bn in 2024, to NOK 19 742bn. At the end of the year, the GPFG’s investments comprised 71.4% equities, 26.6% fixed income, 1.8% unlisted real estate and 0.1% unlisted renewable energy infrastructure.

Return on the Government Pension Fund Global

The value of the GPFG is affected by the return on the GPFG’s investments, capital inflows and withdrawals by the government and exchange rate movements. In 2024, the return measured in terms of the GPFG’s currency basket¹ was equivalent to NOK 2 511bn. In addition, owing to a weaker krone, the value of the GPFG measured in NOK terms increased by NOK 1 072bn, but this has no bearing on GPFG purchasing power in foreign currency. Net transfers from the Norwegian government were NOK 402bn after the payment of management fees.

Measured in terms of the GPFG’s currency basket, the return for the year was 13.1% before management costs. Equities returned 18.2%. Solid corporate earnings in the investee companies and more optimistic growth expectations, together with declining inflation expectations, led to strong equity markets. A small number of companies now account for a substantial share of the GPFG’s benchmark index, owing to developments in equity markets in recent years. Several of the largest companies are in the technology sector, and this sector had the highest return in both 2023 and 2024.

Fixed-income instruments returned 1.3% in 2024 after bond yields rose somewhat over the year. Investments in unlisted real estate returned -0.6%. While the valuations of many of the GPFG’s unlisted real estate investments fell considerably in 2023, developments were more mixed in 2024. The office segment in the US remained weak, while some other market segments performed more positively.

The GPFG’s investments in unlisted renewable energy infrastructure returned -9.8%. The return on these investments comprises net income from the assets and changes in their value. Expected future power prices, expected future production volumes and the estimated cost of capital impact valuations. The value of the assets also falls as their expected remaining life decreases. In 2024, the negative return on unlisted renewable energy infrastructure was driven in particular by a higher cost of capital.

The Executive Board considers the overall return on the fund over time to have been good. In the period between 1998 and 2024, the average annual return was 6.3%. The annual net real return, after deductions for inflation and management costs, was 4.1% in the same period.

With such a large fund and an equity share of around 70 percent, we have to be prepared for considerable fluctuations in the GPFG’s return and value. Each year, the Bank publishes analyses of risk based on hypothetical scenarios designed to illustrate extreme market events over periods of up to five years. This year’s scenarios are related to a repricing of AI companies, a debt crisis and a more fragmented world of distinct economic blocs. The estimated decrease in the value of the GPFG in these scenarios ranges from 18% to 40%.

Return relative to the benchmark index

Norges Bank manages the GPFG with a view to achieving the highest possible long-term return, within the constraints laid down in the mandate from the Ministry of Finance. Results are measured against the GPFG’s benchmark index. In 2024, the GPFG’s return before management costs was 0.45 percentage point lower than the return on the benchmark index. This is within the range of variation in relative return that can be expected from one year to the next.

Norges Bank’s investment strategies are grouped into three main strategies: market exposure, security selection and fund allocation. These strategies are complementary and aim to take advantage of the GPFG’s size and long investment horizon.

Under the strategy for market exposure, the GPFG is invested broadly in the equities and bonds included in the benchmark index. The investments are made cost-effectively and with a view to contributing to the objective of the highest possible return. Market exposure contributed positively to the GPFG’s relative return in 2024.

The strategy for security selection is based on fundamental analysis of companies, and Norges Bank uses both internal and external managers. In 2024, the overall contribution from security selection was negative. External management made a positive contribution, but the negative contribution from internal management was larger. The security selection strategy is not expected to contribute positively to the GPFG’s relative return every year, and the results for 2024 followed a period of five consecutive years of positive contributions from security selection.

Norges Bank invests part of the GPFG in listed and unlisted real estate and in unlisted renewable energy infrastructure. These investments are funded by selling equities and bonds and form part of the fund allocation strategy. In 2024, the investments in real estate returned less than the equities and bonds the Bank sold to fund them and therefore served to reduce the GPFG’s relative return.

Investments in unlisted renewable energy infrastructure returned less than the bonds sold to fund them. As these investments made up only a small part of the GPFG, this had only a minor impact on the GPFG’s overall relative return.

While unlisted renewable energy infrastructure is a relatively new investment area for Norges Bank, we have been investing in unlisted real estate since 2010. The Executive Board assesses results over time and against a wide range of return metrics, including developments in the broad real estate market.

In recent years, real estate returns have been characterised by two periods of particularly negative performance. This was after the outbreak of Covid-19 in March 2020 and the rise in interest rates that started in earnest in 2022. These events have led to a negative contribution to the GPFG’s relative return from real estate investment and the funding of such investment.

In 2024, the GPFG also had a slightly smaller allocation to equities and a smaller allocation to the largest US technology companies than the benchmark index. This served to reduce the GPFG’s relative return in 2024 as returns were strong in both the broad equity market and the technology sector. These positions are intended to adjust the GPFG’s overall risk profile and are reported as part of the fund allocation strategy.

The Executive Board emphasises the importance of assessing the performance of the GPFG as a whole and over time and is satisfied that the overall return over time has been higher than the return on the GPFG’s benchmark index, against which the return is measured. In the period between 1998 and 2024, the average annual return before management costs was 0.25 percentage point higher than the return on the benchmark index from the Ministry of Finance.

Norges Bank has reported the contributions to the relative return from the strategies for market exposure, security selection and fund allocation in the period between 2013 and 2024. The annual return before management costs was also higher than the return on the benchmark index in this period. Market exposure and security selection made positive contributions to the GPFG’s relative return, while fund allocation made a negative contribution.

Risk and costs

The objective of the highest possible return is to be achieved with acceptable risk. A variety of risk analyses and calculations are used to obtain a full picture of the GPFG’s risk exposure, and the Executive Board receives regular analyses of the underlying risk in the management of the GPFG. The management mandate requires Norges Bank to manage the GPFG with a view to ensuring that expected relative volatility (tracking error) does not exceed 1.25 percentage points. At the end of 2024, expected relative volatility was 0.44 percentage point, compared with 0.34 percentage point a year earlier. Measured over the full period between 1998 and 2024, realised relative volatility was 0.63 percentage point. The Executive Board is satisfied with the excess return achieved over time given the risk taken in the management of the GPFG as measured by relative volatility.

The management of the GPFG is to be cost-effective. Low costs are not an end in themselves, but cost-effective management helps achieve the objective of the highest possible return after costs. In the period between 2013 and 2024, annual management costs averaged 0.05% of assets under management. In 2024, management costs amounted to NOK 7.4bn or 0.04% of assets under management. The Executive Board is satisfied that management costs are low compared with other managers.

For more information on the management of the GPFG, see the Government Pension Fund Global Annual Report for 2024.

Foreign exchange reserves

Norges Bank holds foreign exchange (FX) reserves for contingency purposes. The FX reserves are to be sufficiently large and liquid to be available for use in foreign exchange market transactions as part of the conduct of monetary policy or with a view to promoting financial stability and to meet Norges Bank’s international commitments. The aim of the management of the FX reserves is the highest possible return within the applicable risk limits. The FX reserves are divided into an equity portfolio, a fixed income portfolio and a petroleum buffer portfolio.

Equity and fixed income portfolio

The composition of the equity and fixed income portfolio must be adapted to the objective of the FX reserves. The Executive Board has set principles for the management of the FX reserves and annually receives an assessment from Norges Bank Markets on the strategy and management framework. The assessment for 2024 stated that the size, liquidity, currency composition and risk profile of the FX reserves are well adapted to the objective. The management of the foreign exchange reserves is considered to be efficient and prudent.

The market value of the total equity and fixed income portfolio was NOK 758.2bn at the end of 2024, which is NOK 103.8bn more than in 2023. At the end of 2024, the value of the equity portfolio was NOK 157.1bn, while the value of the fixed income portfolio was NOK 601.1bn.

In international currency terms, the return on the total equity and fixed income portfolio was NOK 49.1bn in 2024, or 6.2%. The return on the equity portfolio was NOK 39.6bn, while the fixed income portfolio returned NOK 9.5bn, equivalent to 22.2% and 2.0%, respectively.

In NOK terms, the return on the equity and fixed income portfolio was 15.4%, reflecting higher equity prices and current interest income. The krone depreciation further increased the return in NOK terms.

The FX reserves are managed close to benchmark indexes set by the Executive Board, and the return closely tracks global equity and bond market developments. In 2024, the return on the equity and fixed income portfolios was 0.07 percentage point and 0.03 percentage point higher than the return on the portfolios’ benchmark indexes, respectively. At the end of 2024, expected relative volatility for the equity and fixed income portfolios was 0.04 and 0.02 percentage point, respectively, approximately unchanged through 2024. Norges Bank’s financial risk arises from market exposure and different currency compositions on the asset and liability sides.

Over the past ten years, the annual return on the equity and fixed income portfolio has been 11.5% and 0.6% in international currency terms, respectively. The overall annual return has been 3.4%. The Executive Board is of the opinion that returns have been solid over time.

Petroleum buffer portfolio

The purpose of the petroleum buffer portfolio is to provide for an appropriate management of the government’s need for converting foreign currency and NOK, and for any transfers to and from the GPFG.

The size of the portfolio fluctuates owing to the purchase and sale of currency in the market, the purchase of foreign exchange from the State’s Direct Financial Interest (SDFI), monthly transfers to and from the GPFG and changes in foreign exchange rates. As in recent years, high oil and gas prices have also led to large capital flows and substantial volatility in the petroleum buffer portfolio in 2024.

At the end of 2024, the market value of the petroleum buffer portfolio was NOK 30.8bn, which is NOK 4.6bn less than in 2023. The return on the portfolio was NOK 7.5bn, owing to the krone depreciation and interest income.

For more information on the management of the FX reserves, see the report Management of Norges Bank’s foreign exchange reserves.

Tasks performed as the government’s bank

Government debt

Norges Bank manages government debt on behalf of the Ministry of Finance. The borrowing requirement is primarily met through issuing long-term fixed-rate bonds. The government also borrows short-term through Treasury bills, which are debt instruments with a maturity of one year or less. The government borrows exclusively in NOK.

At the end of 2024, government debt totalled NOK 615bn, with NOK 566bn in government bonds, and NOK 49bn in Treasury bills. Of this amount, the government’s own stock amounted to NOK 52bn in bonds and NOK 16bn in Treasury bills.

In 2024, bonds amounting to NOK 102bn were issued to the market. In February, a new 10-year bond was issued via syndication in the amount of NOK 20bn. In May, a new 15-year bond worth NOK 12bn was issued by syndication. This was the first time that a Norwegian government bond was issued with a 15-year maturity.

Existing bonds were reopened in the amount of NOK 70bn on 25 auction days. On most of these days, two bonds with different maturities were auctioned.

Treasury bills worth NOK 51bn were issued to the market at 18 auctions.

Owing to high volatility, unusually low liquidity and uncertainty in fixed income markets, Norges Bank has since summer 2022 permitted primary dealers to quote larger-than-normal yield spreads in the interdealer market for government bonds and Treasury bills. As liquidity improved somewhat through 2024, the option to quote larger yield spreads for all bills and bonds with a residual maturity of up to one year was terminated in Q3. For bonds with longer maturities, yield spreads were still larger than normal in the interdealer market at the end of 2024. The government’s borrowing requirement was met in line with the 2024 Strategy and Borrowing Programme.

NOK transactions on behalf of the government

In 2024, Norges Bank purchased foreign exchange equivalent to NOK 90.4bn. The volume of foreign exchange transactions carried out by the Bank on behalf of the government was substantially lower than in 2023, primarily reflecting a higher structural non-oil budget deficit and lower taxes paid by oil companies. The lower tax payments reflect lower petroleum prices in 2023 and 2024 compared with 2022 as oil companies pay taxes partly on income from the preceding year and partly on expected income for the current year.

Norges Bank is tasked with converting government revenues from petroleum activities on the Norwegian continental shelf so that the government receives the correct amount of NOK for spending via the central government budget and the correct amount of foreign exchange for saving in the GPFG. The transactions are carried out on behalf of the government, completely separate from monetary policy. The NOK sales must be seen in conjunction with oil companies’ NOK purchases.

Depositing to discharge debt

Throughout 2024, funds deposited at Norges Bank increased substantially. Depositing to discharge debt is an arrangement allowing debtors that cannot make repayments to discharge themselves from their debt by transferring money or securities to Norges Bank. At the end of 2024, outstanding deposits amounted to approximately NOK 769m, representing more than 19 000 cases, a doubling since the end of 2023. The increase in 2024 is primarily a consequence of the increased focus by Finanstilsynet (Financial Supervisory Authority of Norway) on financial institutions’ compliance with the Anti-Money Laundering Act.

The payment system

An efficient and secure payment system is essential for economic and financial stability. If payments cannot be made, economic activity comes to a halt. Being able to pay for goods and services is crucial for individuals to fully participate in society.

Norges Bank is tasked with promoting an efficient and secure payment system. Norges Bank is in charge of the ultimate settlement system for interbank payments in Norway and issues banknotes and coins. Norges Bank also oversees the payment system and other financial infrastructure and is the supervisory authority for interbank systems and contributes to contingency arrangements.

Norges Bank considers the financial infrastructure to be secure and efficient. Operations are stable, and payments can be made swiftly and at low cost.

Norges Bank’s settlement system

Norges Bank’s settlement system (NBO) is the core of the payment system. Payments between banks and other financial sector undertakings with an account at Norges Bank take place in NBO. Most NOK payments are therefore ultimately settled in NBO.

The operation of the settlement system was stable through 2024, with an average of NOK 350bn in payment transactions handled daily. At the end of 2024, banks’ sight deposits and reserve deposits with Norges Bank totalled NOK 38bn.

In line with Strategy 25, the process of overhauling the settlement system is underway. The Bank is evaluating the next generation payment system. In November, Norges Bank signed an agreement on participation in the Eurosystem’s TARGET Instant Payment Settlement (TIPS) solution for instant payments. The TIPS solution facilitates the sound development of Norwegian instant payments in the coming years and will provide Norges Bank with a clearer role in instant payment settlement. TIPS is scheduled for implementation in 2028. In 2024, Norges Bank explored whether the next generation of NBO should be based on the current model, with a dedicated system for Norges Bank or whether the Bank should participate in the Eurosystem’s T2 settlement system. At the beginning of 2025, the Executive Board decided to enter into formal discussions with the European Central Bank (ECB) to participate in the T2 settlement system.

Regardless of which platform is chosen, a decision has been made to implement measures to make the settlement system more component-based, in line with the IT architecture principles in Central Banking. The measures include isolating functions for the implementation of monetary policy and liquidity management and the establishment of a national contingency solution for NBO. The measures will strengthen contingency arrangements and simplify the transition to a new settlement system.

Cash

Norges Bank is tasked with meeting public demand for cash both in normal times and in contingency or crisis situations by supplying banks with cash.

The supply of cash in circulation was on average NOK 38.5bn in 2024, which was somewhat lower than in previous years and with less seasonal variation.

Although cash usage in Norway is very low in a global context, cash contributes to financial inclusion and plays an important contingency role.

In recent years, several regulations have been introduced to increase the availability of cash by clarifying banks’ obligation to offer their customers cash services. In 2024, consumers’ right to pay cash was also made clearer through the Financial Contracts Act. In total, this contributes towards giving the public real opportunities to obtain and use cash so that cash can fulfil its functions in the payment system.

Central bank digital currency

Norges Bank is assessing whether a Norwegian central bank digital currency (CBDC) is a suitable instrument for ensuring that the Norwegian krone remains an attractive and secure means of payment in the future.

Norges Bank has explored various aspects of a CBDC since 2016. The objective of introducing a CBDC would be to strengthen the payment system’s contingency arrangements and to contribute to payment system innovation through the use of new technology. A CBDC may have other benefits, for example if it is given legal tender status.

Norges Bank’s research has analysed the areas of application and characteristics of CBDCs and has experimented with CBDC payments in a test environment. Private banks and other financial sector undertakings have been invited to participate in the testing. Norges Bank is also collaborating with other central banks and international organisations in this work.

A distinction is made between retail and wholesale CBDCs in the Bank’s research. Potentially, a retail CBDC would be generally accessible to the public on a par with cash and bank deposits.

A wholesale CBDC would only be available to banks and other financial sector undertakings with an account at the central bank. This type of CBDC could be used for payment settlement in the same way as central bank reserves in the current payment settlement system, but in another technological form. Wholesale CBDCs are gaining increased international attention.

Norges Bank’s CBDC research will result in a report by the end of 2025.

Security and contingency arrangements in the payment system

Geopolitical developments in recent years have made working on payment system security and contingency arrangements both more important and more challenging than before. Compounding factors include rapid technological advances, increased globalisation and a more complex payment system.

The first line of defence will always be individual enterprises. Norges Bank supervises and oversees the payment system in order to promote a secure and efficient system. The Bank also collaborates with payment system participants and other national governing bodies on different measures for strengthening contingency arrangements. For example, the Bank is involved in testing the cyber resilience of critical functions and designing a framework for assessing IT-related risk.

For more information on the payment system, see Financial Infrastructure Report 2024.

Corporate governance

Norges Bank’s governance framework aims to be in line with best practice. The Executive Board follows up the Bank’s operations through periodic reporting on objectives, strategy implementation, resource use, financial and operational risk, as well as internal and external regulatory compliance.

Norges Bank’s use of resources is to be cost-efficient and prudent, with a cost level that is reasonable compared with that of peer organisations. Benchmarking, ie external comparisons of the Bank’s use of resources with that of other peer organisations, is used as a corporate governance tool.

On behalf of the Ministry of Finance, CEM Benchmarking has compared the management costs of the GPFG with around 270 other funds. The GPFG has the lowest costs in the peer group, measured as a share of assets under management. According to CEM, the costs are lower because management is mostly carried out internally, with a lower share of external management than in other funds. CEM also emphasises that the GPFG’s internal management is cost efficient.

A number of measures have been implemented to streamline Norges Bank’s operations, including some that aim to take advantage of synergies and economies of scale across the organisation.

The Executive Board follows up financial and operational risk and compliance through periodic status reports. Valuations, performance measurement, management and control of risk comply with internationally recognised standards and methods. See the notes to the financial statements for a detailed explanation. There were no material breaches of the limits for the management of the GPFG or the FX reserves in 2024, and operational risk exposure was within the Board’s risk tolerance limit throughout the year.

The Executive Board submits an annual risk assessment to Norges Bank’s Supervisory Council based on reporting by the administration and Internal Audit. No material deficiencies in the risk management and control regime were identified in 2024, and the Executive Board assesses the control environment and control systems at Norges Bank as satisfactory.

No directors’ and officers’ liability insurance has been provided for the members of the Executive Board or the chair of the Board, ie the Governor, in her role as general manager of Norges Bank. In practice, the Board members have limited liability risk, and the Bank self-insures any liability for damages on behalf of Board members or equivalent executive management positions. This is in line with practice in other Nordic central banks.

Balance sheet and financial statements

Balance sheet

Norges Bank’s balance sheet contains a number of items directly related to the Bank’s mission. The balance sheet total at the end of 2024 was NOK 20 722bn, compared with NOK 16 629bn at the end of 2023.

In line with the management mandate for the GPFG, the Ministry of Finance has placed a portion of the government’s assets in a separate account in Norges Bank (the GPFG krone account), presented as a liability to the Ministry of Finance. Norges Bank reinvests these funds, in its own name, and presents this as net value GPFG.

The value of the GPFG krone account will always equal the value of the investment portfolio less accrued management fees and deferred tax. Norges Bank, in its role as asset manager, bears no financial risk associated with the management of the GPFG. At year-end 2024, the GPFG’s value was NOK 19 742bn, compared with NOK 15 757bn at year-end 2023.

Detailed financial reporting for the investment portfolio of the GPFG is presented in note 20 to the financial statements. In addition, an annual report on the management of the GPFG is produced.

Excluding the GPFG, the FX reserves are Norges Bank’s largest balance sheet asset. The FX reserves are primarily invested in equities, fixed income instruments and cash. Net FX reserves amounted to NOK 789bn at year-end 2024, compared with NOK 690bn at year-end 2023. See the separate section above for more details on the management of the FX reserves.

Under the government’s consolidated account system, all government liquidity is collected daily in government accounts at Norges Bank. At year-end 2024, deposits amounted to NOK 274bn, compared with NOK 282bn at year-end 2023. Except for the GPFG krone account, this is the largest liability item on the balance sheet. However, this item fluctuates considerably through the year owing to substantial incoming and outgoing payments over the government’s accounts and transfers to and withdrawals from the GPFG.

Banknotes and coins in circulation are a liability item for Norges Bank. Norges Bank guarantees the value of this money. The amount of cash in circulation is driven by public demand. In recent years, lower demand for cash has reduced the amount in circulation. At year-end 2024, banknotes and coins in circulation amounted to NOK 38bn, compared with NOK 40bn at year-end 2023.

Deposits from banks, comprising sight deposits, reserve deposits and F-deposits, are managed by Norges Bank in accordance with its liquidity management policy. At 31 December 2024, these deposits amounted to NOK 91bn, compared with NOK 58bn at year-end 2023.

Norges Bank administers Norway’s financial obligations and rights ensuing from participation in the International Monetary Fund (IMF). Norges Bank has therefore both claims on and liabilities to the IMF. At year-end 2024, Norway’s net position with the IMF amounted to a claim of NOK 28bn, compared with NOK 27bn in 2023. See note 14 International Monetary Fund (IMF) in the notes to the financial statements for more details on the relationship between Norges Bank and the IMF.

Norges Bank’s equity at 31 December 2024 was NOK 387bn, compared with NOK 322bn at 31 December 2023. The Bank’s equity consists of the Adjustment Fund and the Transfer Fund. At year-end 2024, the Adjustment Fund stood at NOK 327bn and the Transfer Fund at NOK 60bn, compared with NOK 287bn and NOK 35bn, respectively, at year-end 2023. At 31 December 2024, Norges Bank’s equity, excluding the GPFG krone account, was 39.5% of the balance sheet total, compared with 36.9% at 31 December 2023.

The Executive Board deems that the Bank’s equity is sufficient to fulfil the Bank’s purpose (cf Section 3-11, Sub-section 1, of the Central Bank Act). This balance sheet composition is normally expected to generate a positive return over time, excluding foreign currency effects, as returns on the Bank’s investments in equities and fixed income instruments are expected to exceed the cost of the Bank’s liabilities.

Norges Bank’s assets are primarily invested in foreign currency, whereas its liabilities are primarily in NOK. Given the Bank’s balance sheet composition, income will largely be affected by developments in global fixed income, equity and foreign exchange markets. Considerable volatility in income should be expected from year to year. Future increases in the value of the GPFG will be affected by, among other things, transfers to and from the GPFG.

Income statement

Net income/expense from financial instruments

Net income from financial instruments was NOK 95.3bn in 2024, compared with NOK 71.2bn in 2023. Equity investments posted a gain of NOK 39.7bn, while fixed income investments posted a gain of NOK 9.1bn, compared with gains of NOK 30.5bn and NOK 18.6bn, respectively, in 2023. Net income from financial instruments in 2024 also includes a gain of NOK 58.9bn as a result of foreign currency effects. In 2023, the corresponding foreign currency effects resulted in a gain of NOK 30.3bn.

Government Pension Fund Global

The GPFG’s total comprehensive income showed a profit of NOK 3 575.9bn, comprising a gain on the portfolio of NOK 3 583.3bn net of management costs of NOK 7.4bn. Equity investments posted a gain of NOK 2 455bn, while fixed income investments posted a gain of NOK 71bn. The gain on the portfolio also includes a gain of NOK 1 072bn owing to foreign currency effects. Norges Bank’s total comprehensive income for 2023 showed a profit of NOK 2 616.4bn, comprising a gain on the portfolio of NOK 2 623.0bn and costs related to the management fee of NOK 6.6bn.

Total comprehensive income for 2024 was recognised against the GPFG krone account at 31 December 2024. The return on the portfolio, after management costs reimbursed to Norges Bank have been deducted, is transferred in its entirety to the krone account and thus does not affect Norges Bank’s total comprehensive income or equity.

Other operating income

In accordance with the management mandate for the GPFG, Norges Bank is reimbursed for its expenses related to the management of the GPFG up to a limit. Norges Bank was reimbursed by the Ministry of Finance in the amount of NOK 7.4bn in 2024, compared with NOK 6.6bn in 2023. Norges Bank also earns income from other services provided to banks and rent from external tenants. Income from these activities totalled NOK 183m in 2024, compared with NOK 161m in 2023.

Operating expenses

Operating expenses amounted to NOK 8.8bn in 2024, compared with NOK 8.0bn in 2023. NOK 7.4bn of the operating expenses in 2024 is related to the management of the GPFG, compared with NOK 6.6bn in 2023. See note 19 Related parties in the notes to the financial statements for more details on the management fee received by Norges Bank under the management mandate. The increase in expenses compared with 2023 is mainly related to the external management of the GPFG, foreign currency effects, personnel expenses and IT services, systems and data. Fees to external managers have increased owing to a rise in externally managed capital in 2024, foreign currency effects and higher excess return from individual external managers. Higher personnel expenses largely reflect general wage growth, foreign currency effects and a strengthening of the organisation in the form of more employees.

Total comprehensive income

Change in actuarial gains and losses showed a gain of NOK 1.0bn in 2024, compared with a loss of NOK 35m in 2023. Norges Bank’s total comprehensive income for 2024 showed a gain of NOK 95.1bn, compared with a gain of NOK 70.0bn in 2023.

Distribution of total comprehensive income

The distribution of total comprehensive income follows guidelines on the reserves and on the allocation of Norges Bank’s profit, laid down by Royal Decree of 13 December 2019 pursuant to Section 3-11, Sub-section 2, of the Central Bank Act. Total comprehensive income shall be allocated to the Adjustment Fund until this fund has reached 40% of the Bank’s net FX reserves. Any surplus is allocated to the Transfer Fund. A third of the Transfer Fund is transferred annually to the Treasury.

Of Norges Bank’s net gain of NOK 95.1bn, NOK 40.0bn was allocated to the Adjustment Fund and NOK 55.1bn to the Transfer Fund. A further NOK 30.1bn will be transferred from the Transfer Fund to the Treasury. The annual transfers and allocations for 2024 were made in accordance with the guidelines.

Funding transfers to the government

Norges Bank’s Executive Board has decided to purchase NOK by selling foreign currency from the FX reserves to fund the transfer from the Transfer Fund for the 2024 financial year. Transfer of the profit from Norges Bank’s operations and interest on the government’s deposit account are considered government revenue and are spent through the central government budget. Banks’ deposits in Norges Bank increase when the government spends transfers from Norges Bank. In the period to year-end 2024, the government has offset this increase by issuing government bonds equal to the transfers from Norges Bank. The Ministry of Finance has decided that the government will no longer issue debt for this purpose effective from the beginning of 2025. This decision was made on the basis of recommendations of a working group which examined the government’s transactions and the money market.

When Norges Bank funds transfers to the government by buying NOK in the market rather than crediting the government’s account with new NOK, banks’ deposits with Norges Bank are reduced correspondingly. This offsets the increase in banks’ deposits resulting from the government’s spending of the transfers. This means that the Executive Board’s decision continues the practice of neutralising the effect of the transfers on the banking system.

In order to minimise the effect on the foreign exchange market, Norges Bank will emphasise transparency and predictability when purchasing NOK.

1. 1 Return on the Government Pension Fund Global (GPFG) is measured primarily in terms of international currency, a weighted composite of the currencies in the benchmark index for equities and bonds. At the end of 2024, the currency basket comprised 34 currencies. Unless otherwise stated, the results of the GPFG referred to in this Report are measured in terms of the GPFG’s currency basket.

Norges Bank’s Executive Board
Oslo, 5 February 2025

Ida Wolden Bache (sign.)
Governor / Chair of the Executive Board

Pål Longva (sign.)
First Deputy Chair

Øystein Børsum (sign.)
Second Deputy Chair

Ragnhild Janbu Fresvik (sign.)

Kristine Ryssdal (sign.)

Arne Hyttnes (sign.)

Hans Aasnæs (sign.)

Nina Udnes Tronstad (sign.)

Thomas Ekeli (sign.)

Guro Heimly (sign.)
Employee representative

Mats Bay Fevolden (sign.)
Employee representative

An account of corporate social responsibility and sustainability has been prepared pursuant to the Regulations on the financial reporting of Norges Bank. The report is presented in a separate document in the Annual Report. The report on sustainability is an integral part of the Executive Board’s report.

Norges Bank’s Monetary Policy and Financial Stability Committee

The Monetary Policy and Financial Stability Committee comprises the Governor, the two Deputy Governors and two external members.

The external members are appointed by the King in the Council of State for terms of four years. The Governor chairs the Committee, and the two Deputy Governors are First and Second Deputy Chairs.

The Committee had 24 meetings and considered 93 matters in 2024.

The Committee’s work structure

The Monetary Policy and Financial Stability Committee normally holds eight scheduled meetings a year, where policy rate decisions are made. Four of the meetings coincide with the publication of the Monetary Policy Report. The Report contains an assessment of the outlook for the Norwegian and global economy, and the analyses in the Report form the basis for the Committee’s assessments and decisions on the policy rate. At the interim monetary policy meetings, when the Monetary Policy Report is not published, the Committee also sets the level of the countercyclical capital buffer.

The Committee’s schedule is primarily determined by the dates of each monetary policy decision. The Committee usually meets four times in connection with each monetary policy decision that coincides with the publication of the Monetary Policy Report. The Committee also meets twice for each interim monetary policy decision. The Committee also has some seminars on specific topics.

Bank staff prepare economic analyses and projections that provide a basis for the Committee’s discussions and staff also advise the Committee on policy decisions. To ensure that the basis for discussions is as equal as possible for all Committee members, all members are given access to identical information and analyses simultaneously.

The Committee is committed to transparent and clear external communication and seeks consensus on its assessments and decisions through in-depth discussion. The “Monetary policy assessment”, published in connection with policy rate decisions, and the “Assessment of the countercyclical capital buffer requirement”, published in connection with the buffer decisions, reflect the view of the majority. Topics of particular concern to the members in the discussions are highlighted in the assessments. Members that disagree with the assessment of the majority may dissent, and dissenting views are published together with a brief written explanation in the minutes and in the assessments published at the same time as the rate decision. All of the Committee’s decisions were unanimous in 2024. To underpin the Committee’s form as a collegial committee, the Committee Chair, the Governor, normally speaks on behalf of the Committee. Other Committee members may issue statements by agreement with the Committee Chair.

Annual Report of the Monetary Policy and Financial Stability Committee for 2024

After the surge in inflation in spring 2022, Norges Bank raised the policy rate considerably, and at the end of 2023, the policy rate was 4.5%. The interest rate has contributed to cooling down the Norwegian economy and to dampening inflation. Inflation declined markedly in 2024 but was still above the target of 2%. The Committee decided to keep the policy rate unchanged at 4.5% in 2024.

In response to lower inflation, central banks in Norway’s main trading partners started reducing their respective policy rates in 2024. Inflation in Norway declined faster than projected through the year, but the rapid rise in business costs was expected to restrain further disinflation. The Committee assessed that a restrictive monetary policy was still needed to bring inflation down to target within a reasonable time horizon.

The Norwegian financial system is robust. Norwegian banks are profitable and solid. The vast majority of households and firms have been able to service debt in the face of higher costs and interest expenses in recent years. The countercyclical capital buffer rate was kept at 2.5% throughout 2024. In May, Norges Bank advised the Ministry of Finance to keep the systemic risk buffer requirement unchanged at 4.5%, and in line with the Bank’s advice, the Ministry decided to keep the requirement unchanged.

Monetary policy

The global economy

Following the pandemic and Russia’s invasion of Ukraine, prices for transport, energy and many other globally traded goods rose sharply. In many countries, consumer price inflation rose to the highest levels seen in several decades, peaking at the end of 2022. Lower energy prices contributed to the substantial decline in consumer price inflation through 2023. Underlying inflation among trading partners also slowed. In 2024, inflation fell further, but the decline softened among several trading partners.

To reduce inflation, central banks raised policy rates considerably in 2022 and 2023. In response to lower inflation, central banks in Norway’s main trading partners started reducing their respective policy rates in 2024. Many central banks communicated increased confidence that inflation would be close to targets ahead and that the current tight monetary policy stance was no longer warranted.

Policy rate cuts and growth in real wages helped maintain economic growth among trading partners in 2024. Wage growth slowed in 2024 but remained high in a number of countries. In December, there were prospects that economic growth would pick up somewhat in 2025.

Market-based expectations of global policy rates fluctuated widely over the course of the year. At the beginning of 2024, market participants expected policy rates to be cut substantially in the coming years. Policy rates were cut less than expected in 2024, and policy rate expectations were markedly higher at the end of the year than at the beginning of the year.

Financial conditions in Norway

The krone, as measured by the import-weighted index I-44, depreciated significantly in 2022 and in the period to summer 2023. The depreciation coincided with a sharper rise in interest rates abroad than in Norway. The krone depreciated somewhat through 2024, but compared with summer 2023, the exchange rate was slightly stronger at the end of 2024.

Household interest expenses rose substantially owing to policy rate hikes and remained high in 2024. Firms’ bank financing and bond market financing also became more expensive as a result of the rate hikes. Financing costs in the bond market declined slightly in 2024, while banks’ lending rates remained elevated. At the end of 2024, the benchmark index on the Oslo Børs was higher than at the end of 2023.

Norwegian economy

Following a period of high activity, the Norwegian economy reached a cyclical peak towards the end of 2022. The rise in interest rates helped cool the economy, and in 2023 growth was low. Unemployment edged up from a low level and according to Norges Bank’s Regional Network, recruitment difficulties eased. The employment rate declined from a high level.

Economic growth picked up slightly through 2024. The increase in unemployment slowed, and in December 2024, registered unemployment was still lower than before the pandemic. Overall output in the Norwegian economy appears to have been around potential throughout the year. In Q4, Regional Network enterprises overall expected growth to increase somewhat at the beginning of 2025.

Economic activity was higher in 2024 than envisaged at the start of the year. Household consumption, petroleum investment and public demand in particular were higher than expected. On the other hand, mainland business investment and housing investment were lower than expected.

There were marked differences between industries also in 2024. High petroleum investment contributed to continued strong growth among firms supplying goods and services to the petroleum sector. Firms in the services sector also reported strong business sector and household demand. In construction, activity again fell substantially in 2024 partly owing to weak new home sales.

While very few new homes were sold, activity in the secondary housing market picked up through 2024. The number of unsold homes fell, and prices of existing homes increased more than expected. In December, existing home prices were 6.4% higher than in the same month a year earlier.

The labour market held up better in 2024 than expected at the beginning of the year. Employment continued to rise, and wage growth was high. According to preliminary figures from Statistics Norway published at the beginning of February 2025, annual wage growth was 5.7% in 2024, higher than in the forecast presented in December 2024. High wage growth over the past couple of years reflects high inflation, a tight labour market and sound profitability in some business sectors. At the end of 2024, there were prospects of high nominal wage growth also in 2025, albeit lower than in 2024.

Chart 4 Unemployment. Registered unemployed as a percentage of the labour force. 2018 Q1-2027 Q4

Sources: Norwegian Labour and Welfare administration (Nav) and Norges Bank.

Consumer price inflation slowed substantially in 2024 and was generally lower than expected. Imported goods inflation in particular declined markedly. Domestically produced goods and services inflation also declined but to a much smaller extent than imported goods inflation. Rent growth and the rise in prices for some services remained elevated through 2024. The annual rise in the consumer price index (CPI) was 3.1% in 2024, a decline from 5.5% in 2023. The CPI adjusted for tax changes and excluding energy products (CPI-ATE) rose by 3.7% in 2024, also appreciably lower than the 6.2% rise in 2023.

Norges Bank’s Expectations Survey shows that inflation expectations for the coming years have fallen since 2023, but long-term inflation expectations remained somewhat over the inflation target of 2% at the end of 2024.

Monetary policy trade-offs

The operational target of monetary policy is annual consumer price inflation of close to 2% over time. Inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment and to countering the build-up of financial imbalances.

After the policy rate was raised to 4.5% in December 2023, the Committee’s assessment was that the rate was sufficiently high to return inflation to target within a reasonable time horizon. Monetary policy had a tightening effect, and the economy cooled. At the same time, business costs had risen considerably in recent years, and continued high wage growth and the krone depreciation in 2023 were expected to restrain disinflation. The Committee was therefore of the opinion that a continued tight monetary policy stance would likely be needed for some time ahead.

In its monetary policy assessments through 2024, the Committee emphasised that inflation was still above target, despite having declined and being lower than expected. Before summer 2024, there were signs of higher-than-expected activity in the Norwegian economy, and wages appeared to rise more than projected. This could imply that inflation would be higher than previously projected, and the Committee judged it necessary to maintain a tight monetary policy stance for somewhat longer than previously signalled.

Chart 6 Estimated output gap. Percent. 2018 Q1–2027 Q4

Source: Norges Bank

Inflation declined further after summer but remained above target. The Committee was concerned with the risk that if the policy rate was lowered prematurely, inflation could remain above target for too long. On the other hand, an overly tight monetary policy stance could restrain the economy more than needed. When assessing this trade-off, the Committee concluded at its meeting in September that it was appropriate to keep the policy rate at 4.5% for a period ahead, but that the time to ease monetary policy was approaching.

Towards the end of 2024, inflation had moved closer to target, but the rapid rise in business costs was expected to restrain further disinflation. The Committee’s assessment at the monetary policy meeting in December was that restrictive monetary policy was still needed to stabilise inflation around target. The Committee also signalled that the rate most likely would be lowered in March 2025.

The forecast in the December 2024 Monetary Policy Report indicated a gradual reduction in the policy rate from 4.5% in 2025 Q1 to around 3% in 2027. Unemployment was projected to rise slightly. There were prospects that inflation would be just over 2% at the end of 2027.

The Committee was concerned with the substantial uncertainty regarding the global and domestic economic outlook.. At the monetary policy meeting in December, the Committee also discussed the risk of an increase in international trade barriers. Higher tariffs will likely dampen global growth, but the implications for the inflation outlook in Norway are uncertain. The Committee also noted that inflation in Norway was declining faster than expected through 2024. Should there be prospects of inflation continuing to decline faster than expected or a further increase in unemployment, the Committee was of the opinion that the policy rate could be lowered faster than envisaged. On the other hand, if wage and price inflation were to remain elevated for longer, a higher policy rate than envisaged in the December 2024 Monetary policy Report could then be required.

Financial stability and the basis for Norges Bank’s decision on the countercyclical capital buffer and advice on the systemic risk buffer

Norges Bank has decision-making authority for the countercyclical capital buffer (CCyB) and formalised advisory responsibility for banks’ systemic risk buffer (SyRB). The two buffer requirements account for a substantial portion of banks’ total capital requirements. The Monetary Policy and Financial Stability Committee sets the CCyB rate each quarter and advises on the SyRB rate at least every two years.

The objective of the CCyB is to strengthen banks’ resilience and mitigate the risk of banks’ credit standards amplifying an economic downturn. The CCyB requirement has remained unchanged at 2.5% since 2023 Q1.

The SyRB is intended to contribute to ensuring that banks hold sufficient capital to weather future downturns. In May 2024, the Committee decided to advise the Ministry of Finance to retain the SyRB requirement at 4.5%. In its assessment, the Committee placed particular weight on the high indebtedness of many households and banks’ high exposure to commercial real estate (CRE). The Committee also gave weight to banks’ substantial exposure to customers vulnerable to climate transition and that one bank’s funding is another’s liquidity reserve. In August, the Ministry of Finance decided to keep the SyRB requirement unchanged at 4.5%, in line with Norges Bank’s advice.

In Financial Stability Report 2024 H1 and Financial Stability Report 2024 H2, the Committee considered the financial system to be robust. In its assessments, the Committee emphasised that the vast majority of households and firms had been able to service debt in the face of high inflation and higher interest rates. At the same time, the Committee highlighted the importance of maintaining financial system resilience so that vulnerabilities do not amplify an economic downturn.

The high indebtedness of many households is a key vulnerability in the Norwegian financial system. In 2024, house prices rose by 6.4%. Credit growth accelerated somewhat through autumn 2024 but was still at a low level at the end of the year after having fallen over a long period. In recent years, household debt has risen less than income. High inflation and rising interest rates have led to tighter finances for most households. However, default rates have remained low, reflecting high employment and the sound financial basis of most households provided by financial buffers. Analyses in Financial Stability Report 2024 H2 indicate that the vast majority of households are able, by an ample margin, to service debt and cover ordinary consumption expenditure, housing expenses and electricity out of current earnings.

Banks’ high CRE exposure is another key financial system vulnerability. Higher interest rates have weakened CRE firms’ profitability. After declining sharply through 2023, estimated commercial property prices were unchanged in 2024. High employment and rental income growth enable most CRE firms to cover higher interest expenses with current earnings. Through 2024, credit premiums on CRE firms’ bank and bond financing fell, which has likely reduced refinancing risk for debt maturing in the coming years. According to the Committee’s assessment in Financial Stability Report 2024 H2, CRE prospects in 2024 improved somewhat compared with 2023.

The share of bankruptcies among Norwegian firms has risen in recent years. In 2024, the rise was particularly pronounced among real estate developers. Profitability for real estate developers has been impaired owing to higher interest rates, high construction costs, low residential construction activity and sluggish new home sales. Bankruptcy rates in most other sectors also increased somewhat but were still lower at the end of 2024 than before the pandemic. Analyses in Financial Stability Report 2024 H2 indicate that the corporate bankruptcy rate in Norway is likely to rise somewhat further, especially in the real estate sector.

Resilient banks are important for financial stability. Norwegian banks satisfy capital and liquidity requirements by a solid margin and are well-equipped to absorb higher losses. In 2024, banks were highly profitable and had ample access to both deposits and wholesale funding. Both creditworthy firms and households had ample access to credit through 2024.

In 2024, Norges Bank submitted its consultation response to the Ministry of Finance concerning amendments to the Capital Requirements Regulation (CRR). These amendments completed, among other things, measures proposed by the Basel Committee on Banking Supervision to increase banks’ resilience to crises. On the whole, Norges Bank supported the proposed national amendments.

In 2024, Norges Bank also submitted its consultation response to the Ministry of Finance concerning changes to the Lending Regulations. In the consultation response, the Monetary Policy and Financial Stability Committee highlighted the importance of retaining the Regulations and supported Finanstilsynet’s (Financial Supervisory Authority of Norway) proposal to continue all elements in the Regulations. The Committee’s assessment was that the Regulations have set limits on banks’ lending practices and dampened the build-up of vulnerabilities in the household sector. Permanent Lending Regulations would contribute to predictability and counter future deterioration of banks’ credit standards. The Regulations should, however, be reassessed at regular intervals. It is important to expand knowledge about the effects of the Lending Regulations and the consequences of the individual elements. Given that the other requirements in the Regulations are maintained, the Committee proposed some adjustments to the Regulations, such as raising the maximum LTV ratio from 85% to 90%. Moreover, the Committee proposed that banks, in their assessments of customer debt-servicing capacity, should be able to give greater weight to the risk-mitigating effect of fixed-rate loans than is currently the case. In December 2024, the Ministry of Finance decided to maintain the requirements in the Lending Regulations with some adjustments and followed Norges Bank’s advice when updating the Regulations.

Norges Bank’s Monetary Policy and Financial Stability Committee
Oslo, 17 February 2025

Ida Wolden Bache (sign.)
Governor / Committee Chair

Pål Longva (sign.)
First Deputy Chair

Øystein Børsum (sign.)
Second Deputy Chair

Ingvild Almås (sign.)

Steinar Holden (sign.)

Corporate social responsibility and sustainability

Corporate social responsibility and sustainability

This section provides an overview of Norges Bank’s sustainability work. Key topics in this section are:

• Society and social conditions
• Ethics, responsible procurement and supplier and contractor monitoring
• Climate risk, climate impact and carbon accounts

Norges Bank’s sustainability strategy guides this work.

Society and social conditions

Norges Bank’s employees

Norges Bank’s employees are the Bank’s most important resource. Safe and sound working conditions must be standard for everyone who works at the Bank. The Bank works to ensure job satisfaction, stimulating work and the expertise necessary to fulfil the Bank’s mission. Skilled and motivated employees are a prerequisite of success. It is therefore necessary to attract, develop and retain skilled and engaged managers and employees.

The 2024 staff survey showed positive results overall. Compared with other organisations in Norway, Norges Bank has a higher average score in all comparable areas. The working environment is generally regarded as supportive and appreciative, but follow-up is required in some areas. The Bank continuously strives to facilitate a positive and inclusive working environment.

Policies aimed at increasing the share of women are achieving results. The share of women in Norges Bank has increased from 35% to 38% over the past three years and is approaching the target of 40%. The positive trend is due to an increase in the share of women in NBIM from 29% to 35%. In Central Banking, there has been a small decline from 43% to 42%. Although there has been a positive development in the overall gender balance in recent years, some specialist areas and position categories still lag behind. It is positive that both the retention and recruitment rates for female employees have increased.

The number of applications for positions at Norges Bank has also increased substantially in recent years.

Recruitment

Norges Bank works systematically to attract and recruit top candidates from leading national and international institutions. To ensure that the Bank is best equipped to fulfil its mission, recruitment efforts seek to attract staff with a wide range of experience, perspectives, knowledge and expertise. To increase diversity in the organisation, the Bank recruits irrespective of nationality, gender, age and background.

There was a significant increase in the number of applicants in the period between 2022 and 2023, and the trend continued in 2024, reflecting improved recruitment initiatives and increased awareness of Norges Bank’s mission.

Employer branding

A wide range of measures and activities are used to inform students and pupils about Norges Bank:

• Visits to Norges Bank’s Knowledge Centre
• Lectures in economics, finance and technology at schools and universities through the Norges Bank Teaching Initiative and NBIM Teach
• Annual nationwide case competition for students and pupils
• Part-time student internships
• Summer trainee positions for students and graduate programmes that offer personal and professional development
• Women’s Investment Summit where NBIM invites more than 100 students from Norway and abroad in order to motivate female students to pursue a career in finance.

Non-discriminatory recruitment

In 2024, Norges Bank introduced a number of recruitment measures and activities to promote diversity and prevent discrimination. The Bank has improved its job advertisements to ensure that they do not use discriminatory language or include unnecessary requirements. A diversity statement is now included, outlining how the Bank promotes diversity and providing relevant examples. The Bank is particularly alert to the risk of discrimination based on name, ethnicity or unconscious bias favouring certain candidates.

Managers handling recruitment processes are trained to be alert to diversity issues, and the measures implemented will be monitored going forward.

Table 2 Gender distribution among job applicants, upon signing of employment contract

Learning and development opportunities

Norges Bank believes in life-long learning and seeks to provide its employees with the opportunity to build relevant skills throughout their careers. This is an important part of the Bank’s initiatives to retain motivated and engaged employees.

Management development

Managers in Norges Bank are trained in the Bank’s management principles and learn what the Bank expects from them. Managers must validate employees and build a common culture through regular follow-up combined with targeted, inclusive and supportive management. The management principles are presented at management meetings and training sessions throughout the year. The Bank is focused on developing skills to promote an efficient organisation, harnessing the power of digital tools and new technologies.

Employee development

Norges Bank’s aim is that all employees have a meaningful and targeted development plan. In 2024, the Bank has prioritised this work and the majority of the Bank’s employees now have individual development plans.

The Bank clarifies what it expects from its employees through activities and initiatives where future skill requirements are explored.

The Bank works to develop employee skills. In 2024, the Bank held courses on the climate, geopolitics, security and contingency preparedness, communication, technology and various forms of data analysis. In 2025, the Bank will further develop employee training, with particular emphasis on communication, technology and a deeper understanding of the Bank’s operations and processes.

Norges Bank has a career framework with a career ladder that describes responsibilities at each level, thus clarifying what is needed to achieve career progression.

Succession planning and internal mobility

In 2024, Norges Bank has intensified efforts to improve succession planning. This is important to avoid vulnerabilities related to critical positions and expertise, while opening the door for internal candidates.

The Bank promotes internal mobility. Employees gain experience and a better understanding of the Bank across operational and specialist areas through temporary internships both in Norway and at NBIM’s offices abroad. Employees can also apply for residency at other central banks and relevant institutions.

Retiree consultants

When an employee wishes to retire, the Bank can offer them a retiree consultant position, facilitating gradual transition to retirement. By employing retiree consultants, the Bank retains experienced employees, which enables them to continue to participate in working life also after formal retirement.

Diversity and inclusion

Norges Bank aims to be recognised as a leading institution in its fields of expertise and views increased diversity and inclusion as a means to this end. Diversity adds perspectives, stimulates creativity and improves decision-making.

In recent years, the Bank has focused on promoting a culture of inclusivity in which managers and employees contribute to develop a speak-up culture. A safe working environment contributes to a culture of acceptance and makes it easier to encourage and leverage different perspectives.

Norges Bank’s annual staff survey is an important tool in the Bank’s work to develop its staff, organisation and workplace. The survey covers both the physical and the psychosocial working environment. Survey results are reviewed by the Executive Board, management groups and various working committees, and measures are implemented based on discussions in the management groups and individual teams.

In 2024, new questions in the survey measured how diversity and inclusion are perceived. In the organisational units where employees experience positive management and psychological safety, they also perceive a higher degree of diversity and inclusivity. In the units where employees perceive a high degree of diversity and inclusion, there is a more room to put forward ideas and a greater willingness to change.

The survey results show that men and women experience equal opportunities for professional development in their roles. Initiatives to promote a sound work-life balance must also be continued, and the Bank has facilitated a flexible working arrangement. The Bank has both internal and external resources that can advise on issues related to personal and professional development, mental health and performance. Team development workshops and activities that promote awareness and inclusive behaviour will also be continued.

The Executive Board approved HR principles at Norges Bank. These govern the Bank’s initiatives within equality, anti-discrimination, diversity and inclusion. Under the Bank’s ethical rules there is zero tolerance for discrimination, harassment and bullying. Norges Bank has clear requirements and expectations that everyone at the Bank will treat others with respect and seeks to maintain a culture in which reporting of mistakes and unacceptable conditions is viewed positively. Inclusion means that employees feel that they can be themselves, that they can utilise their skills and experience a sense of community working together towards fulfilling the Bank’s mission.

Processes for salary setting, employee development and succession planning are seen as a whole to ensure that opportunities for advancement to senior and management roles are linked to performance and compliance with Norges Bank’s values, not conscious or unconscious bias.

Gender balance and gender distribution

Norges Bank has in recent years strived and managed to raise the share of female employees. The share of female employees increased from 35% in 2022 to 38% at the end of 2024. The Bank’s gender balance target is at least 40% representation of each gender, both overall in Norges Bank and among managers and specialists.

Norges Bank is one of the founding partners of Norway’s Women in Finance Charter, and in 2024, the Bank hosted the Charter’s third annual status report. The purpose is to increase women’s representation in leading positions in the Norwegian financial sector. The obligations ensuing from the Charter’s four principles are published on Norges Bank’s website.

The Bank works systematically to identify the risk of discrimination or other obstacles to gender equality by mapping and analysing HR data, conducting staff surveys and performance appraisals and through health, safety and the environment (HSE) work.

Greater detail is provided below on gender balance developments in Norges Bank overall, specified by job category and managerial and specialist position.

Table 3 Gender balance

The share of women in Norges Bank is now 38% after an increase of two percentage points in 2024. In NBIM, the increase in the number of women is 10%. The share of women in Central Banking is unchanged. Over time, the trend is positive and the Bank is approaching the target of a minimum gender balance of 40% overall.

Table 4 Share of women and men per job category at Norges Bank’s head office in Oslo. Percent

The gender balance at Norges Bank within certain job categories reflects the general gender distribution in Norway’s labour market. Fewer women than men apply for management positions and for positions in the financial and IT sectors in general. In 2024, the share of women among all of the Bank’s job categories increased or remained unchanged, with the exception of section heads. At the end of 2024, the Bank’s gender balance was in line with the Bank’s target of at least 40% in most of the job categories below management level. Developments at management level continue to be positive and in line with the Bank’s target for executive directors. For other managerial and specialist categories, the target has not been reached.

Table 5 Share of women in executive and specialist positions1. Percent

1 Specialists include chief analysts and special advisers.

In 2024, the shares of female executives and specialists in both of Norges Bank’s operational areas increased and are now 33% and 26%, respectively.

Temporary and part time employees

Most permanent employees at Norges Bank are employed on full-time contracts. Involuntary part-time work is therefore not considered an issue. The majority of temporary employment contracts at Norges Bank are related to research, student internships and some hourly paid work.

Table 6 Share of temporary and part-time employees at Norges Bank’s head office in Oslo. Percent

Parental leave

Table 7 Parental leave1 at the head office in Oslo.

1 Number of weeks taken out in the calendar year and not the number of weeks the employee has taken out in total.

Norges Bank offers fully paid gender-neutral parental leave of 16 weeks in addition to 10 weeks of maternity leave for employees at the Bank’s offices abroad.

Salary system and salary differences

Framework and principles

The Executive Board sets the framework for Norges Bank’s remuneration schemes and monitors how they are put into practice. Salary levels are to be competitive, but not market leading. Salary determination is individual and reflects the responsibilities of the position, as well as the expertise, experience and performance of the position holder.

Norges Bank employs external consultants to compare salary levels against other employers every year.

The Remuneration Committee of the Executive Board contributes to thorough and independent consideration of matters relating to Norges Bank’s remuneration schemes. In addition, Internal Audit at Norges Bank provides an independent opinion on compliance with the rules and guidelines for remuneration. An audit in 2024 confirmed that the 2023 salary system had been practised in line with regulations. No significant changes have been made to the scheme in 2024.

See note 15 Personnel expenses to the annual financial statements for further information on the payroll system and benefits to senior executives.

Salary practices

The Bank works to ensure fair salary practices and regularly analyses salary developments. Any deviations in remuneration at the individual or group level are examined further to ensure that gender-neutral criteria are applied.

Table 8 Salary differences overall. Fixed salary

Women’s fixed salary amounted on average to 78% of men’s fixed salary at the end of 2024, the same as at the end of 2023. For both operational areas, more men in senior positions, and in investment roles in NBIM, contribute to the overall gender salary gap. Table 8 shows the average fixed salary for women as a share of the average fixed salary for men in total, independent of job category. The Bank’s measures to improve the gender balance among executives and specialists will contribute to reducing salary differences.

Salary mapping

Salary mapping indicates no material differences in salary levels of men and women with comparable roles and tasks at the same location.

Tables 9–12 below show the breakdown of differences in fixed salary and remuneration paid at Norges Bank’s head office in Oslo. Job categories are based on management levels at Norges Bank and the position structure for employees in the Bank’s agreements. Total remuneration includes fixed salary, performance pay, paid overtime and compensation for travel time. Employees working on investment decisions may be eligible for performance pay. Figures for fixed salaries and remuneration paid are rounded to the nearest NOK 1 000.

Table 9 Salary mapping in Central Banking. Fixed salary by job category

Table 10 Salary mapping in Central Banking. Paid remuneration by job category

Salary differences between women and men in Central Banking are relatively small in most job categories. Women’s salary as a share of men’s salary is generally no more than a few percentage points lower, with some variation from year to year depending on recruitment and promotions. Salary differences between women and men are most pronounced in lower job categories. The differences reflect the uneven gender distribution within different fields of expertise. In some areas of expertise where men dominate, salary levels are higher owing to market conditions. The most substantial differences in remuneration paid reflect a preponderance of men in certain fields of expertise involving tasks that receive on-duty salary add-ons and/or require more overtime. Norges Bank is aware of these differences and is seeking to adjust this.

TABLE 11 Salary mapping in NBIM, Oslo. Fixed salary by job category

TABLE 12 Salary mapping in NBIM, Oslo. Paid remuneration by job category

In NBIM, differences in salary between men and women mainly reflect a preponderance of men in positions involving investment decisions. Positions with investment responsibility generally offer higher salaries in the market compared with positions at the same level in other fields of expertise.

Health, safety and the environment

In 2024, Norges Bank has given more attention to health, safety and the environment (HSE), partly through mandatory digital HSE training for all new managers. Relevant processes and internal governance documents have also been updated.

Low and stable sickness absence over time

Sickness absence in Norges Bank is stable at a low level and was 2.3% in 2024, an increase from 2.1% in 2023. The Bank works systematically to prevent sickness absence.

In 2024, 10 HSE-related incidents related directly to work in the Bank’s office premises, courses or conference centre were reported. No injuries or accidents have been sufficiently severe to require reporting to the Labour Inspection Authority.

Systematic HSE work

Norges Bank collaborates with the occupational health service to develop the Bank’s systematic HSE work. In order to reduce the risk of musculoskeletal disorders, the occupational health service has contributed with ergonomic adaptation of the workplace at both Norges Bank’s offices and home offices. The Bank has a wide range of fitness activities and has provided facilities to enable employees to cycle to work. In the ongoing work to upgrade the head office, improving the indoor climate is a priority.

The safety representative service, with safety representatives and a chief safety representative, does an important job of safeguarding employees’ interests in working environment matters. They are consulted during the planning and follow-up of measures relevant to the working environment. Management effectively cooperates with the safety representative service and the Working Environment Committee, with a strong mutual commitment to safeguarding the systematic HSE work.

Cooperation with employee representatives

To ensure strong employment relationships, active cooperation between management and employee representatives has been established and takes place through the Working Environment Committee and the Bank’s safety representatives. The Bank’s management maintains close contact with the trade unions, for example in employee and personnel committees, in the Working Environment Committee and in regular contact meetings with trade union representatives at several levels in the Bank. The employees have two representatives on the Executive Board who participate in the deliberation of administrative matters. This cooperation has been productive.

Ethics, responsible procurement and supplier and contractor monitoring

Norges Bank has been given considerable authority and trust. Employees must act in an ethical manner, comply with laws and regulations and maintain a high level of ethical awareness. The Bank does not accept any form of misconduct or financial crime such as corruption, money laundering or financing of terrorism. Norges Bank’s operational framework is designed to ensure that its activities are carried out in accordance with requirements from public authorities, international conventions, strategies and its targets. Governance documents approved by the Executive Board are published on the Bank’s website.

In Norges Bank’s operations, no actual or risk of potentially negative consequences for fundamental human rights or decent working conditions were identified in 2024, neither were there any known incidents related to corruption.

One whistleblowing report was submitted in 2024.

Rules on ethics and personal trading

Ethical principles issued by the Executive Board

The Executive Board annually revises the ethical principles that apply to all employees. In 2024, the Executive Board expanded on the principles related to financial crime and specified employer expectations related to the working environment, culture and conduct. The Governor of Norges Bank and the CEO of NBIM regularly update supplementary rules that are tailored to the tasks and the risk of conflicts of interest in the Bank’s two operational areas. The Ministry of Finance has adopted rules on impartiality for members of Norges Bank’s Executive Board and members of the Monetary Policy and Financial Stability Committee. To supplement these rules, the Executive Board has also adopted rules on, for example, conflicts of interest and restrictions on personal trading for the external members of these two bodies.

Training and framework

All new employees at Norges Bank participate in introductory courses that include ethics training. A framework and programme to combat corruption has also been established. In 2024, all employees at NBIM received training in anti-corruption measures and handling of conflicts of interest.

Considerable emphasis is placed on training and raising awareness of key risk areas. Measures include one-on-one training of new employees, e-learning, annual tests and confirmation from all employees that they have reviewed the ethical rules. Employees are obliged to report on various matters related to the ethical rules, and all reporting is continuously checked by the Bank’s oversight bodies.

Whistleblowing

The Executive Board has laid down principles for internal whistleblowing on misconduct, mistakes and unacceptable behaviour at Norges Bank. There are whistleblowing routines describing how employees and employees of suppliers and contractors can (also anonymously) report, through various channels, unethical or unlawful behaviour. Reports can be submitted through any line manager, the Bank’s whistleblowing channel, safety representatives, employee representatives and lawyers. All reports must be treated in a proper manner, in accordance with external and internal whistleblowing requirements, and without the risk of retaliation against the whistleblower.

Responsible procurement and supplier and contractor monitoring

Norges Bank procured goods and services totalling approximately NOK 5.7bn in 2024.

Climate and environmental considerations

Norges Bank aims to have a responsible and sustainable supply chain and includes environmental requirements in procurement processes where relevant.

In accordance with Norges Bank’s sustainability strategy, the Bank’s procurement policy is intended to help reduce the overall carbon footprint or environmental impact of procurement in Norges Bank. In line with the Public Procurements Act, the award criterion climate and environmental considerations is either weighted by 30% or is among the top three prioritised criteria. This includes taking into account life-cycle costs, food waste, carbon footprint and the like. If this results in a clearly more positive environmental effect, the award criterion is replaced with climate and environmental requirements in the requirement specifications.

Supplier and contractor monitoring

Before Norges Bank enters into an agreement with a supplier or contractor, the Bank conducts a background check to identify any risk of misconduct, corruption, money laundering, sanction risk or other unlawful or unethical conduct. Background checks help Norges Bank to manage these risks and make informed decisions.

All suppliers and contractors are required to comply with the Bank’s ethical principles, which also pertain to labour rights, human rights and discrimination. This is an important part of the Bank’s supplier and contractor monitoring.

All suppliers and contractors with access to the Bank’s premises or systems are responsible for ensuring that personnel who perform services or work for Norges Bank are aware of the ethical rules that apply to suppliers and contractors.

Norges Bank is subject to public procurement regulations and is required to set requirements for wage and working conditions pursuant to regulations on wage and working conditions in public contracts. Suppliers, contractors and any subcontractors must be able to document wage and working conditions upon request by Norges Bank.

The Public Procurements Regulations also include a requirement that limits the number of tiers in the supply chain in sectors with a high incidence of work-related crime, such as construction and cleaning services. Norges Bank accepts no more than two tiers of sub-contractors.

In 2024, audits of wage and working conditions were carried out at 27 of the Bank’s suppliers and contractors. Four violations of wage and/or working conditions were identified for personnel engaged by Norges Bank. At Norges Bank’s request, the suppliers and contractors in question have confirmed that the conditions have been rectified and that any outstanding wage claims will be settled.

Climate and the environment

Responsible investment management of the Government Pension Fund Global

Framework and principles for responsible investment management of the Government Pension Fund Global

The Executive Board has laid down principles for responsible management in Norges Bank. The principles are based on international principles and guidelines for sound corporate governance and responsible business conduct from the United Nations (UN) and the Organization for Economic Co-operation and Development (OECD).

The objective for the management of the Government Pension Fund Global (GPFG) is to achieve the highest possible return with acceptable risk. Responsible investment supports the objective in two ways. First, by promoting long-term value creation. Second, by reducing the financial risk associated with environmental and social factors in companies. Separate due diligence assessments are conducted, seeking to identify and manage investments with a risk of negative impact on people and the environment.

Norges Bank’s mission is to safeguard and develop financial assets for future generations. The management mandate states that work on responsible investment shall be integrated into the management of the GPFG. Long-term returns depend on sustainable growth, well-functioning and legitimate markets and sound corporate governance. Work on responsible investment can be divided into three main areas: the market, the portfolio and the companies.

The market

Common standards

The GPFG is a global fund which owns a small part of more than 8 500 listed companies in 70 countries. NBIM therefore looks to global solutions to solve common challenges such as climate change. NBIM also contributes to the development of relevant international standards and NBIM’s Chief Governance and Compliance Officer has been appointed chair of the International Sustainability Standards Board (ISSB) Investor Advisory Group (IIAG). In 2024, Norges Bank participated in 30 public consultations related to responsible investment management. All consultation responses are published on NBIM’s website. The consultations include significant issues such as corporate reporting, governance and responsible business conduct.

Selected initiatives where several companies or investors meet to discuss common standards and principles for sustainable business are supported. Such initiatives are particularly appropriate when companies in one industry or value chain face the same challenge. NBIM currently participates in a number of different collaborations with investors, companies and civil society.

NBIM participates in initiatives that are in line with the management mandate for the GPFG and supports the management objective but does not collaborate with other investors on voting or investment decisions, nor does it participate in initiatives that are primarily aimed at political authorities.

Clear expectations

Since 2008, NBIM has formulated clear expectations as to how investee companies should address relevant sustainability challenges in their operations and has emphasised that their boards should establish appropriate strategies, control functions and reporting procedures. The expectations form the basis for dialogue with investee companies and the investee companies’ work is measured against these expectations on an annual basis.

Expectations concerning investee companies’ management of challenges and opportunities related to human rights and consumer interests were updated in 2024. NBIM has also presented its positions on various corporate governance issues in order to enhance corporate governance and protect shareholder interests.

Portfolio

Identifying and managing risk

NBIM’s assessment of corporate governance and sustainability provides a better understanding of risks and opportunities associated with the GPFG’s investments. NBIM monitors how the portfolio is exposed to risks and identifies industries and companies for further follow-up. To carry out these analyses relevant, comparable and reliable data on environmental, social and governance (ESG) issues is important.

NBIM uses five main approaches to identify and manage risks associated with ESG issues in the portfolio:

1. Quarterly pre-screening of companies entering the GPFG’s equity benchmark index

2. Monitoring of companies in the portfolio and the equity benchmark index

3. Daily monitoring of incidents and controversies in the portfolio and the equity benchmark index

4. Thematic assessments of companies with high sustainability risks

5. Quarterly due diligence assessments of companies in the portfolio and the equity benchmark index against our sustainability expectations.

When companies presumed to have heightened ESG risk are identified, further analysis is conducted to assess whether dialogue should be initiated with the company, whether Norges Bank’s voting should be affected or whether Norges Bank should divest from the company due to the risk. Relevant information is also shared with the Council on Ethics, an independent body established by the Ministry of Finance.

Risk-based divestment

To limit the GPFG’s exposure to unacceptable financial risk, NBIM can, within the limits of the mandate, divest from investee companies. This applies principally to companies that impose substantial costs on other companies and society as a whole and that are therefore deemed unsustainable in the long term. Risk-based divestments may be appropriate if it is considered that the investee company poses particularly high long-term financial risk, where investments are not substantial and active ownership is not considered to be a suitable instrument. Unlike ethical exclusion, risk-based divestments are made within the limits of the management mandate and are not contingent upon advice from the Council on Ethics.

In 2024, Norges Bank divested from 49 investee companies following risk assessments related to ESG issues. The Bank has divested from a total of 575 investee companies since 2012. These divestments are investment decisions made by NBIM and are not ethical exclusions decided by Norges Bank’s Executive Board on the basis of recommendations from the Council on Ethics. Since 2012, risk-based divestments have contributed positively to the cumulative return on equity management by 0.64 percentage point, or about 0.02 percentage point annually. In 2024, 16 companies were reincluded in Norges Bank’s investment universe following the reversal of divestment decisions. In total, 25 companies have been reincluded since 2012.

Investment opportunities

Investment opportunities are identified by analysing, among other things, companies’ governance, operations and environmental and social risks and opportunities. In emerging markets, NBIM can also benefit from the knowledge of external managers with an in-depth understanding of the markets, industries and companies in which they invest. This is particularly important as it can often be difficult to obtain relevant company data in emerging markets.

Investment in renewable energy

Up to 2% of the GPFG may also be invested in unlisted renewable energy infrastructure. In 2024, Norges Bank made several joint venture investments in solar and wind power projects in Spain, Portugal and the UK. An agreement was also signed to invest in the Copenhagen Infrastructure Partners fund, CI V, which focuses on offshore and onshore wind, solar power parks, electricity grids and energy storage in North America, Europe and advanced economies in the Asia-Pacific region.

Companies

Dialogue

As a long-term investor, NBIM engages in regular dialogue with the largest investee companies. The dialogue is intended to contribute to good corporate governance and responsible business conduct. The size of the investments provides access to board members, senior executives and specialists in these companies. NBIM is interested in understanding how the companies are governed and how they address essential sustainability issues. In addition to meetings, written contact with the companies is also used. In 2024, a total of 3 313 meetings were held with 1 342 investee companies. ESG-related topics were discussed at 1 986 meetings with 950 companies, accounting for 65% of the value of the equity portfolio.

Reporting

NBIM assesses investee companies’ sustainability-related reporting on their governance structure, strategy, risk management and objectives based on the published expectations of companies and use of third-party data. Investee companies with limited reporting in high-risk sectors are contacted and encouraged to improve their reporting in accordance with the expectation documents, for example by using recognised reporting standards. In 2024, letters were sent to 107 investee companies on their reporting.

Voting

Voting is one of the most important tools Norges Bank has as a shareholder to safeguard the GPFG’s assets. At the end of 2024, the GPFG held a stake in more than 8 500 companies worldwide. NBIM voted on 110 656 matters at 11 154 general meetings in 2024, which corresponds to 97% of the portfolio. NBIM’s voting guidelines are publicly available.

Since 2021, NBIM has published its voting intentions five days before each shareholder meeting with a brief explanation each time the votes go against the board’s recommendations. In 2024, NBIM emphasised transparency further by making public an explanation also when voting in favour of the board’s recommendation, against a shareholder proposal. The GPFG’s voting intentions are available on NBIM’s website. Users can search for individual companies or download the full dataset of NBIM’s votes since 2013 and get daily updates on voting intentions five days before a company’s general meeting. In 2024, NBIM started sharing its voting intentions through the Bloomberg voting platform and communicated more detailed rationales for selected votes for the first time. In 2024, for the second year in a row, NBIM presented a summary of its voting in the first half of the year. The summary provides information about trends and results from voting at the general meetings of investee companies.

The Ministry of Finance has laid down guidelines for observation and exclusion of companies from the GPFG based on their products or conduct. The Council on Ethics and Norges Bank are responsible for following up these guidelines. Decisions concerning the observation and exclusion of companies from the GPFG are made by Norges Bank’s Executive Board, based on recommendations from the Council on Ethics. Norges Bank excludes companies which violate fundamental ethical norms through their conduct or products. Ethical exclusions are not financially motivated decisions. By not investing in such companies, the GPFG’s exposure to unacceptable risk is reduced. All advice from the Council on Ethics to Norges Bank is made public once the Executive Board has made a decision. In 2024, Norges Bank announced the exclusion of 14 companies, revoked the exclusion of seven companies, closed the observation of six companies and extended the observation period for one company. The Bank ended its active ownership under the guidelines in two cases and initiated active ownership in one case. Since 2006, the equity benchmark index has returned 0.98 percentage point less than it would have done without any ethical exclusions. On an annualised basis, the return has been 0.01 percentage point lower.

Further information on responsible investment is provided in the report Responsible investment Government Pension Fund Global 2024.

Work on climate risk in the Government Pension Fund Global

Climate risk management is an integral part of the responsible investment management of the Government Pension Fund Global (GPFG). The 2025 Climate action plan describes Norges Bank’s work on managing climate risk and the measures scheduled for implementation between 2022 and 2025. The purpose of the measures is to improve market standards, including frameworks for climate reporting, and increase the Fund’s resilience to climate risk. The measures are part of NBIMs targeted and active ownership.

Credible company goals and plans

At the heart of NBIM’s active ownership is driving investee companies to net zero emissions by 2050 through setting of credible goals and plans to reduce their direct and indirect greenhouse gas emissions (scopes 1, 2 and 3). By the end of 2024, 32% of the investee companies had set 2050 net zero targets based on recognised standards such as the Science Based Targets initiative (SBTi) or similar initiatives. If weighted according to emissions, such targets cover about 74% of the fund’s investee companies’ financed emissions (scopes 1 and 2). Weighted by their value in the portfolio, these companies amounted to 69% in 2024.

Reporting on climate risk

The 2025 Climate action plan also aims for more reporting on climate risk in the portfolio. The reporting will be developed in line with leading international standards and is included in NBIM’s overall reporting on responsible investment management. Among other things, a separate overview of climate risk is presented, which follows the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Analyses and stress tests against various climate scenarios are presented, including a scenario consistent with global warming of 1.5 degrees Celsius. The methods for such analyses are still evolving and do not provide a basis for ranking direct financial outcomes of various climate scenarios. The modelling of long-term economic effects of climate change resulting from a high increase in temperatures is particularly underdeveloped. The models are therefore likely to provide too low estimates for economic effects. The stress tests nevertheless illustrate the potential effects of climate change on future risks and returns.

The GPFG’s climate and nature reporting also covers exposure to nature and changes in nature and the resulting economic consequences. The reporting follows up on the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), showing the measures we implement and the tools we have to handle related risks and opportunities.

Measuring carbon footprint

Norges Bank has measured and published the carbon footprint of investee companies in the equity portfolio and benchmark index since 2014, based on reported and modelled data for scope 1, 2 and 3 emissions. In 2024, the Bank has improved the measuring of financed scope 3 emissions to include companies’ upstream activities. There are still many companies that do not report their emission data or whose reporting still varies in frequency and quality. This is in particular the case for scope 3 emissions. This is why Norges Bank exclusively uses modelled figures from our data provider in the calculation of scope 3 emissions. Such carbon footprint analyses provide insight into the extent of greenhouse gas emissions of investee companies and into risks and opportunities across sectors.

Norges Bank’s reporting of the GPFG’s financed emissions is in line with guidance from the Partnership for Carbon Accounting Financials (PCAF). The GPFG’s financed emissions for scopes 1 and 2 were 47 million tonnes of CO₂ equivalent in 2024, which is 2% lower than the corresponding figure for the benchmark index. The financed emissions for scope 3 are estimated at 403 million tonnes of CO₂ equivalent, which is 2% lower than the benchmark index. Due to significant changes from 2023 to 2024 to the method for estimating financed scope 3 emissions, the figures are not directly comparable. This is based on an estimation model that the Bank has reason to believe underestimates actual scope 3 emissions. The Bank has used a single source for reported and estimated emission data, as recommended by the PCAF.

Investee companies in the GPFG’s equity portfolio emitted 83 tonnes of CO₂ equivalent per million USD in revenue, based on data reported or estimated in 2024. This is referred to as the equity portfolio’s emissions intensity in 2024, 6% lower than that of the benchmark index, and 20% lower than in 2023. For corporate bonds, the portfolio’s emissions intensity was 89 tonnes of CO₂ equivalent per million USD in revenue, which is 23% higher than the emissions intensity of the benchmark index and 28% lower than in 2023.

Government measures will impact climate risk

The Bank’s understanding of the effects of climate change on the global economy and financial markets will develop. At the same time, governments will introduce new regulations, new technological advances will be seen and consumer preferences will change, and companies will adapt their strategies accordingly. These developments will affect the GPFG’s climate risk. Given the GPFG’s mandate and investment strategy, the GPFG’s climate risk will primarily depend on government measures that ensure an orderly and predictable climate transition and on companies achieving their net zero targets.

Work on climate risk in real estate management in the Government Pension Fund Global

NBIM considers climate change in its real estate investments. The real estate portfolio is exposed to both physical climate risk, such as extreme weather and gradually rising sea levels and flooding, and transition risk, such as a statutory reduction of energy consumption or lower demand for buildings with high emissions. A growing number of tenants are setting targets for net zero emissions for their own businesses, and therefore prefer energy efficient buildings powered by renewable energy sources. The 2025 Climate action plan sets a target for net zero emissions by 2050 for the real estate portfolio and a target of reduced operational carbon emissions intensity (scopes 1 and 2) by 40% by 2030. In order to achieve these targets, the Bank will work to reduce emissions linked to the real estate portfolio and integrate climate risk assessments into investment processes. From 2019 to 2023¹, the emissions intensity of the real estate portfolio fell by 16%.

The Bank measures progress towards the net zero target in the real estate portfolio using emission pathways consistent with global warming of 1.5 degrees Celsius for various real estate markets, developed by the Carbon Risk Real Estate Monitor (CRREM). By the end of 2023, 43% of the real estate portfolio by value was aligned with these CRREM pathways.

Read more about the work on climate risk in the GPFG in the report Responsible investment 2024 and the publication on climate risk on the GPFG’s website.

Work on climate and climate risk issues in Central Banking

Climate change and measures to mitigate climate change have an impact on the Norwegian and global economy and hence also on Norges Bank’s performance of its core tasks. The Executive Board has primary responsibility for the Bank’s strategy work related to climate change and climate risk. Topics related to climate change and the energy transition’s impact on the Norwegian economy are discussed in the Monetary Policy and Financial Stability Committee.

In 2024, the Bank worked actively to strengthen expertise and integrate climate and energy transition into the Bank’s analyses. Norges Bank has ambitions to share new knowledge through its publications and conferences. In autumn 2024, a conference on the economic consequences of climate change and energy transition was held, with attendees from a wide range of specialist areas.

Since 2018, Norges Bank has been a member of the Network for Greening the Financial System (NGFS), a network for central banks and supervisory authorities. The network provides a forum for sharing experiences and best practices, performs analyses and designs methods for managing environmental and climate risk relevant to financial authorities and the financial sector. Norges Bank cooperates with the NGFS, the International Banking Research Network (IBRN) and other international institutions to enhance expertise on the effects of climate-related changes.

Climate and monetary policy

In order to better understand how climate-related changes affect the business sector, Norges Bank conducts annual surveys of enterprises in the Bank’s Regional Network. The surveys show that climate-related factors, especially factors related to the transition to a low-carbon economy, such as changes in customer preference and climate policies, affect most enterprises. The Bank has also initiated several research projects within this area, one of which examines how extreme weather events in Norway impact Norwegian households’ consumption, income and wealth, while another project examines how energy transition may impact the krone exchange rate over time.

To a large extent, climate transition is energy transition. Norges Bank closely monitors developments in energy markets and works to better integrate these markets into its analytical framework.

Through the NGFS, Norges Bank contributes to analyses of how climate-related factors affect the macroeconomy in general and potential monetary policy implications.

Climate risk and financial stability

In 2024, banks’ substantial exposures to customers vulnerable to climate transition were emphasised as a key vulnerability in Norges Bank’s summary of financial stability assessments. Climate risk was also one of reasons why Norges Bank recommended to maintain the systemic risk buffer requirement.

Climate transition affects banks’ risk assessments through various channels. Financial institutions must ensure that they are well equipped to assess and manage climate-related transition risks.

Adequate information about climate risk may reduce banks’ exposure to losses and help secure the financing of necessary transition measures. In 2024, Norges Bank published a number of analyses that attempted to quantify the consequences of climate transition for Norwegian borrowers. The Staff Memo Firms’ transition to lower greenhouse gas emissions and the risk in Norwegian banks shows that banks may experience a moderate and manageable increase in losses should carbon taxes increase markedly. There are, however, major differences between industries, which make sound banking practices even more important. The Staff Memo Home energy conversion can be a net cost for the average household discusses the potential consequences for Norwegian homeowners of stricter energy efficiency requirements for existing homes.

Climate stress tests and climate scenarios are important tools that central banks use to understand the effect of climate change on the financial system. In 2025, the NGFS will publish short-term scenarios to complement their long-term scenarios, which will provide a new tool for understanding the impact of climate transition. Norges Bank plans to further study how physical climate risk and nature disaster risk may impact financial stability.

Responsible investment and climate risk in the foreign exchange reserves

The equity portfolio of the foreign exchange reserves is managed according to the same principles and strategies for responsible investment as the equity investments in GPFG (expectations of investee companies, voting and company dialogue). This means that the GPFG’s climate action plan, including the target that investee companies adjust their operations to ensure compliance with global net zero emissions by 2050, also applies to the equity portfolio of the foreign exchange reserves.

Decisions on risk-based divestment from individual companies implemented for the GPFG’s equity portfolio are also followed up in the equity portfolio of the foreign exchange reserves. In 2024, Norges Bank divested from five new companies in the foreign exchange reserves’ equity portfolio. In addition, a total of 42 companies were excluded from the foreign exchange reserves’ benchmark index and no new companies were put under observation based on ethical guidelines. The observation of one company was ended in 2024.

Norges Bank measures greenhouse gas emissions in connection with the entire equity portfolio of the foreign exchange reserves using two different metrics, financed emissions and emissions intensity. The financed emissions of the equity portfolio for scopes 1 and 2 were 365 501 tonnes of CO₂ equivalent in 2024. Financed emissions for scope 3 was 3 420 848 tonnes. Emissions intensity for scopes 1 and 2 was 69 tonnes of CO₂ equivalent in 2024, 22% lower than in 2023. The reduction is mostly attributable to risk-based divestment from industrial companies and power producers.

A project has been initiated to stress test the value of the foreign exchange reserves against different climate scenarios. So far, the project has primarily consisted of assessing methods and data. The analysis will help improve the understanding of the potential impact of climate change on the Bank’s balance sheet.

Climate impact of Norges Bank’s operations

One of the ambitions in Norges Bank’s sustainability strategy is to reduce emissions from the Bank’s own operations, in line with the Paris Agreement. The Bank annually reports the climate impact of the Bank’s own operations in the published carbon accounts and as part of the Eco-Lighthouse environmental management certification scheme. The carbon accounts are prepared in accordance with the Greenhouse Gas Protocol standard and include the offices where Norges Bank has operational control in Oslo, London, New York and Singapore. Norges Bank has selected 2019 as the reference year. This is the most recent year with normal activity and reliable underlying data.

Carbon accounts

Table 13 Annual carbon accounts for Norges Bank’ operations

1 Includes the gases CO₂ CH₄, N₂0, HFCs, PFCs, SF₆ and NF₃. Norges Bank mainly uses emissions factors from the Department for Environment, Food & Rural Affairs (DEFRA) and the Department for Energy Security & Net Zero (DESNZ).

2 Emissions from data centres and cloud solutions were not included in the 2023 carbon accounts due to unavailable data from one provider. The figure for 2023 is therefore not directly comparable to the figure for 2024. Total scope 3 GHG emissions and the total have also been updated from 2023.

3 From 2024, hotel stays include stays in flats.

4 Production of notes includes transport in connection with production and delivery to Norges Bank.

Greenhouse gas emissions totalled 11 068 tonnes of CO₂ equivalent at the end of 2024, an increase of 14% compared with the reference year 2019. From 2024, Norges Bank’s share of emissions from providers of external data centres and cloud solutions, banknote production and stays in flats are included in the carbon accounts. In total, this amounts to 1 073 tonnes of the emissions for 2024. The increase in emissions from 2019 to 2024, exclusive of new emission sources, amounts to 3%.

Air travel was the largest source of emissions, accounting for 82% of total emissions. Total emissions from air travel were 8% higher than in the reference year 2019. The number of kilometres travelled was reduced by 14% in the same period. However, the emission factors relating to air travel have increased substantially since 2019, and each individual flight therefore yields higher emissions. If the change in emission factors for air travel is excluded, emissions were reduced by 17% in 2024.

Emissions from hotel stays now include both hotel rooms and stays in flats. Stays in flats are mostly used by employees at the offices abroad and amount to 73% of the emissions from overnight stays.

Banknotes are produced by an external provider in Malta that also produces banknotes for several other European central banks. Transport to and from Malta is the largest source of emissions from banknote production and amounted to 81% in 2024.

Greenhouse gas emission targets and reduction measures

In 2024, the Executive Board set a target to reduce emissions from own operations by 35% per permanent employee by the end of 2028 compared with 2019. The target is equivalent to a reduction from 10.3 tonnes of CO₂ equivalent per employee in 2019 to 6.7 tonnes per employee by 2028.

Table 14 Target attainment and emissions intensity per employee

2 The number of permanent employees is the average of the number of permanent employees at the start and end of the year.

Total emissions have increased by 14% from the reference year 2019. The effect of the increase on emissions per employee was dampened by a greater increase in the number of permanent employees. Emissions per employee were 10.1 tonnes of CO₂ equivalent in 2024, a reduction of 2% measured against 2019. However, the carbon accounts have been expanded with new emission sources since 2019 and the emission factors for air travel have increased substantially. If these changes are excluded, the result is 7.2 tonnes of CO₂ equivalent per permanent employee in 2024.

Air travel

Air travel accounted for 82% of Norges Bank’s emissions in 2024, an increase of 8% compared with 2019. However, emissions per employee decreased by around 8% during the same period. NBIM is a global organisation with a global mandate, and its staff accounts for most of the travel activity in Norges Bank. Travel between NBIM’s offices to share knowledge and achieve effective collaboration across the offices is crucial to achieving the GPFG’s objective of the highest possible return. In addition, there is extensive travel activity related to the monitoring of external equity managers worldwide and meetings with investee companies. For Central Banking, maintaining a wide contact network and acquiring and sharing knowledge is an important part of fulfilling the Bank’s mission in an optimal manner.

In order to achieve the target of a 35% reduction in emissions per permanent employee by the end of 2028, air travel emissions must be reduced. In line with the plan for 2024, the Bank’s most important measure to reduce emissions from air travel is to raise awareness through internal information efforts and better management information. To achieve the latter, the Bank works to make travel and emission data more easily available via digital platforms developed in-house, which will provide new insight and a better basis for making decisions.

Energy consumption

In 2024, energy consumption accounted for 6% of Norges Bank’s total emissions, and the Bank is working to reduce emissions from energy consumption at its offices. At the head office, the Bank has in recent years set an annual target of 5% reduction in electricity consumption compared with the previous year. So far, the target has been achieved every year and the same is planned for 2025. The Bank also buys guarantees of origin for the head office’s electricity consumption, ensuring that energy is from renewable sources. Further measures have been implemented to reduce energy consumption for lighting, heating, ventilation and air conditioning. Climate concerns are key in the ongoing upgrade programme at the Bank’s head office, and equipment is being replaced with less energy-intensive alternatives.

Environmentally friendly and energy-efficient operations – certifications

Norges Bank’s head office at Bankplassen 2, the course and conference venue Vindåsen and Venastul are Eco-Lighthouse certified. The Eco-Lighthouse certification scheme is a national scheme managed by the Eco-Lighthouse Foundation and provides access to tools that assist the Bank in measuring and improving environmental performance.

Being Eco-Lighthouse certified, Norges Bank uses an environmental management system for its own operations and premises. An annual environmental report documents the status of implemented environmental measures and action plans for the following year. Offices are recertified every third year, and the head office was recertified in 2022. Annual reports and regular recertification ensure that the Bank’s office premises comply with high standards for environmentally responsible operations.

The London office is a BREEAM-certified building. BREEAM is a recognised environmental certification system, which promotes sustainable design and construction throughout the building process. The certification is reviewed every third year.

Limited assurance of sustainability indicators

Norges Bank has engaged EY to perform a limited assurance engagement on sustainability information in Norges Bank’s Annual Report for 2024. See EY’s report, Independent accountant’s assurance report.

Norges Bank does not refer to sustainability indicators throughout Norges Bank’s Annual Report for 2024. The table below refers to the reporting standards and indicators on which the information is based. Reported information is for the period between 1 January 2024 and 31 December 2024. Information provided is attested by EY.

1. 1 Data are available one year in arrears.

1. 1 The climate-related indicator is based on IFRS S2 paragraph 29 (a) (vi) (2) Financed emissions B61 Asset management (a)

2. 2 The indicator climate-related disclosures is based on IFRS S2 paragraph 29 (a) (vi) (2) Financed emissions B61 (a) Asset management

Financial statements

Main points

Income statement

Balance sheet

Oslo, 5 February 2025

Ida Wolden Bache (sign.)
(Governor / Chair of the Executive Board)

Pål Longva (sign.)
(First Deputy Chair)

Øystein Børsum (sign.)
(Second Deputy Chair)

Kristine Ryssdal (sign.)

Arne Hyttnes (sign.)

Nina Udnes Tronstad (sign.)

Hans Aasnæs (sign.)

Thomas Ekeli (sign.)

Ragnhild Janbu Fresvik (sign.)

Mats Bay Fevolden (sign.)
(Employee representative)

Guro Heimly (sign.)
(Employee representative)

Statement of cash flows

Statement of changes in equity

Notes

Note 1 General information

Introduction

Norges Bank is Norway’s central bank. The Bank is a separate legal entity and is owned by the State. The Bank’s main office is at Bankplassen 2, Oslo, Norway.

Norges Bank shall promote economic stability and manage substantial assets on behalf of the nation. The Bank conducts monetary policy, monitors financial stability, promotes robust and efficient payment systems and financial markets and manages Norway’s foreign exchange reserves.

Norges Bank manages the Government Pension Fund Global (GPFG) on behalf of the Ministry of Finance in accordance with section 3, second paragraph, of the Government Pension Fund Act and the management mandate for the GPFG issued by the Ministry of Finance.

The GPFG shall support government saving to finance future expenditure and underpin long-term considerations relating to the use of Norway’s petroleum revenues. The Norwegian Parliament has established the legal framework in the Government Pension Fund Act, and the Ministry of Finance has formal responsibility for the fund’s management. The Executive Board of Norges Bank has delegated day-to-day management of the GPFG to Norges Bank Investment Management (NBIM).

The Ministry of Finance has placed funds for investment in the GPFG in the form of a Norwegian krone deposit with Norges Bank (the krone account). Norges Bank manages the krone account in its own name by investing the funds in an investment portfolio consisting of equities, bonds, real estate and infrastructure for renewable energy. The GPFG is invested in its entirety outside of Norway.

Transfers are made to and from the krone account in accordance with the management mandate. When the Norwegian State’s petroleum revenue exceeds the use of petroleum revenue in the fiscal budget, deposits will be made into the krone account. In the opposite situation, withdrawals will be made. Transfers to and from the krone account lead to a corresponding change in Owner’s capital in the GPFG.

Norges Bank is not exposed to financial risk from its management of the GPFG. The return on the portfolio, less the management fee to Norges Bank, is transferred in its entirety to the krone account and does not affect total comprehensive income or equity in Norges Bank. The investment portfolio under management is equal to the amount on deposit in the krone account at the time in question, less the accrued management fee and deferred tax. This is presented on a separate line as an asset in Norges Bank’s balance sheet, and the krone account is presented as a liability in the same amount to the Ministry of Finance. For further information about the management mandate for the GPFG, Norges Bank’s governance structure and risk management see note 20.9 Investment risk. For further information about transactions between Norges Bank and the GPFG, see note 19 Related parties.

Approval of the financial statements

The annual financial statements of Norges Bank for 2024 were approved by the Executive Board on 5 February 2025 and approved by the Supervisory Council on 20 February 2025. The annual financial reporting for the GPFG is an excerpt of Norges Bank’s financial reporting and is included in Norges Bank’s annual financial statements as note 20.

Norges Bank’s net gain of NOK 95.1 billion will be covered by a provision to the Adjustment Fund of NOK 40.0 billion and a transfer to the Transfer Fund of NOK 55.1 billion. A further NOK 30.1 billion will be transferred from the Transfer Fund to the Treasury. The annual transfers and allocations for 2024 were made in accordance with the guidelines.

Note 2 Accounting policies

This note describes accounting policies, significant estimates and accounting judgements that are relevant to the financial statements as a whole and the accounting policies that are relevant for investments in subsidiaries as part of the management of the GPFG. Additional accounting policies, significant estimates and accounting judgements are included in the respective statements and notes.

Basis of preparation

Pursuant to section 4-3 of the Central Bank Act, the annual financial statements of Norges Bank have been prepared in accordance with the Accounting Act and Regulation on the financial reporting for Norges Bank (the Regulation), laid down by the Ministry of Finance.

The Regulation entails that the financial reporting of the GPFG is prepared in accordance with IFRS Accounting Standards as adopted by the EU, subject to the additions and exemptions specified in the Accounting Act and the Regulation. It sets forth that the return on the investment portfolio and the return assigned to the krone account of the GPFG shall be presented on separate lines in the income statement, the net value of the GPFG and the deposits in the krone account of the GPFG shall be presented on separate lines in the balance sheet, inflows to and withdrawals from the krone account of the GPFG shall be presented on separate lines in the statement of cash flows and the annual financial reporting of the GPFG shall be presented in a separate note in Norges Bank’s annual financial statements, see note 20 Government Pension Fund Global (GPFG). In addition, subsidiaries that are included in the consolidation for the preparation of consolidated financial reporting for the investment portfolio are excluded from the consolidation in Norges Bank’s annual financial statements. See also section Accounting policies for investments in subsidiaries as part of the management of the GPFG below for the consolidation of certain subsidiaries in the GPFG.

The financial statements are presented in a manner that is most relevant to an understanding of the Bank’s financial performance.

The annual financial statements are prepared with a closing date of 31 December, and are presented in Norwegian kroner (NOK), and unless otherwise stated, rounded to the nearest million. Rounding differences may occur.

Norges Bank’s annual financial statements are prepared under a going concern basis.

Changes in accounting policies, including new and amended standards and interpretations in the period

Accounting policies applied are consistent with the policies applied in the previous accounting year. There are no new or amended IFRS standards and interpretations that have become effective for the accounting year beginning on 1 January 2024 that have had any material effect on the Bank’s financial statements.

New and amended standards and interpretations effective from 2025 or later

In 2024, the International Accounting Standards Board (IASB) issued a new IFRS accounting standard for presentation and disclosure in financial statements: IFRS 18 Presentation and Disclosure in Financial Statements. IFRS 18 will replace IAS 1 Presentation of Financial Statements. The new standard will take effect for financial years beginning on or after 1 January, 2027. Early application is permitted after the EU has approved the standard. Norges Bank has started to assess the new requirements of IFRS 18.

Other issued IFRS standards, changes in existing standards and interpretations issued with effective dates from 2025 or later are expected to be immaterial or not applicable for the Bank’s financial reporting at the time of implementation.

Accounting policies for the financial statements as a whole

Financial assets and liabilities

Recognition and derecognition

Financial assets and liabilities are recognised in the balance sheet upon becoming a party to the instrument’s contractual provisions.

Financial assets are derecognised when the contractual rights to the cash flows expire, or when the financial assets and substantially all the risks and rewards of ownership are transferred. See note 9 Secured lending and borrowing and note 20.13 Secured lending and borrowing for details on transferred assets that are not derecognised.

Financial liabilities are derecognised when the obligation is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires.

Purchase or sale of a financial asset where the contractual terms require settlement in accordance with normal market conditions, is recognised on the trade date.

Classification and measurement

Financial assets are classified based on the business model used for managing the assets and their contractual cash flow characteristics.

The investment portfolio of the GPFG is managed in accordance with the management mandate issued by the Ministry of Finance, the investment mandate issued by the Executive Board of Norges Bank and investment strategies issued by the management of NBIM. These mandates and strategies, including the risk management strategies, entail that financial assets are managed and evaluated on a fair value basis. The financial assets in the GPFG are therefore measured at fair value through profit or loss, except for Management fee receivable, which is not part of the investment portfolio. Management fee receivable is measured at amortised cost.

The foreign exchange reserves are managed in accordance with the principles issued by the Executive Board and are managed and their performance evaluated on a fair value basis. Other financial assets are measured at amortised cost.

Financial liabilities are measured at amortised cost, except for financial liabilities designated as at fair value through profit or loss. This applies to financial liabilities in the foreign exchange reserves that are managed and their performance evaluated on a fair value basis. For the GPFG, financial liabilities, except for Management fee payable and Deferred tax, are integrated into the investment portfolio that is managed and evaluated on a fair value basis, and are therefore designated at fair value through profit or loss. Management fee payable is measured at amortised cost. See note 20.10 Tax for information about the recognition and measurement of Deferred Tax.

Financial derivatives are measured at fair value through profit or loss.

For further specification of the classification of financial instruments, see note 6 Measurement and table 6.2 Classification of financial instruments.

Impairment

For financial assets classified as measured at amortised cost, an allowance for expected credit losses is recognised. Expected credit losses are estimated per loan and are based on the loan’s exposure at default, probability of default and loss given default. The recognised amount comprises expected credit losses within the 12 months after the reporting date. In the event of a substantial increase in credit risk since initial recognition, an expected loss allowance is recognised over the expected life of the asset.

Accounting policies for investments in subsidiaries as part of the management of the GPFG

The GPFG is an investment entity in accordance with IFRS 10 Consolidated financial statements. IFRS 10 defines an investment entity and introduces a mandatory exemption from consolidation for investment entities.

Investments in real estate and infrastructure for renewable energy are made through subsidiaries of Norges Bank, which are exclusively established as part of the management of the fund. Subsidiaries are controlled by the GPFG and are included in the financial reporting for the GPFG in accordance with section 3-4 of the Regulation. For further information, see note 20.16 Interests in other entities.

Subsidiaries measured at fair value through profit or loss

Subsidiaries that invest in real estate or infrastructure for renewable energy through ownership interests in other entities, are investment entities. These subsidiaries are measured at fair value through profit and loss in accordance with the principles for financial assets. Subsidiaries that invest in real estate and infrastructure for renewable energy are presented in the balance sheet of the GPFG as Unlisted real estate and Unlisted infrastructure, respectively. See note 20.6 Unlisted real estate and note 20.7 Unlisted renewable energy infrastructure for supplementing policies.

Consolidated subsidiaries

Subsidiaries that perform investment-related services, and which are not investment entities themselves, are consolidated. Consolidated subsidiaries do not own, neither directly nor indirectly, investments in real estate or infrastructure for renewable energy.

Note 3 Income/expense from equities and bonds

Table 3.1 Income/expense from equities

Table 3.2 Income/expense from bonds

Tax expense

Norges Bank is exempt from income tax on its operations in Norway but is liable to taxes in some other jurisdictions. Tax expense comprises income tax that will not be refunded under local tax rules or tax treaties to Norges Bank. This pertains primarily to withholding tax on dividends related to the foreign exchange reserves’ equity investments.

Tax expense was NOK 31 million in 2024, compared with NOK 39 million in 2023.

Germany and Japan are the markets with the highest tax expense, amounting to NOK 16.4 million and NOK 12.3 million in 2024, respectively, compared with NOK 10.8 million and NOK 10.5 million in 2023, respectively. Norway’s tax treaties with these countries entail a tax rate of 15 percent. Tax expense in other respects refers to smaller amounts divided among several other jurisdictions.

Accounting policies for taxation are further detailed in note 20.10 Tax.

Note 4 Holdings of equities and bonds

Table 4.1 Equities

1 Equities lent is exclusively related to equity investments in the foreign exchange reserves.

Table 4.2 Bonds

1 Nominal values have been converted into NOK at the closing rate at the balance sheet date. The nominal value comprises the face value of the instrument or principal.

Bonds in Norges Bank’s balance sheet are in their entirety associated with management of the foreign exchange reserves. Norges Bank issues government debt and enters into financial contracts in the area of government debt management in the name of the Ministry of Finance. Transactions related to government debt management are recognised in the government accounts and not in Norges Bank’s income statement or balance sheet.

Bank for International Settlements (BIS)

The Bank for International Settlements (BIS) acts as a bank for central banks, and its mission is to serve central banks in their pursuit of monetary policy and financial stability by fostering international cooperation in those areas.

The BIS is a limited liability company owned by central banks. Norges Bank has 8 000 voting shares (with a face value of SDR 5 000) in the BIS, in addition to 564 non-voting shares (with a face value of SDR 5 000), for a total of 8 564 shares. Norges Bank’s share of the total shares in the BIS was equal to 1.5 percent at year-end 2024, the same as at year-end 2023.

When the shares were issued, the BIS required payment of only 25 percent of the share capital, with the remaining 75 percent committed capital not recognised in the balance sheet. The committed capital was NOK 475 million at year-end 2024, compared with NOK 438 million at year-end 2023.

Dividends from the BIS are distributed annually. Dividends received from the BIS was NOK 44 million in 2024, compared with NOK 35 million in 2023.

Note 5 Foreign exchange reserves

The foreign exchange reserves are to be available for use in foreign exchange market transactions or as part of the conduct of monetary policy, with a view to promoting financial stability and to meet Norges Bank’s international commitments. The foreign exchange reserves are divided into a fixed income portfolio, an equity portfolio and a petroleum buffer portfolio. See further discussion in note 7 Investment risk.

The petroleum buffer portfolio is intended to receive the government’s cash flow from petroleum activities in foreign currency and any transfers to and from the GPFG. The purpose of the portfolio is to provide for an appropriate management of the government’s need for converting foreign currency and NOK.

See note 8 Currency for a specification of the foreign exchange reserves’ currency breakdown.

Tables 5.1 and 5.2 show income statement and balance sheet, respectively, for the foreign exchange reserves by portfolio, and are presented as they are operationally managed by Norges Bank.

Table 5.1 Foreign exchange reserves by portfolio, income statement

Table 5.2 Foreign exchange reserves by portfolio, balance sheet

Note 6 Measurement

Introduction

Fair value for the vast majority of assets and liabilities is based on quoted market prices or observable market data. If the market is not active, fair value is established by using standard valuation techniques. Estimating fair value may be complex and require the use of judgement, in particular when observable inputs are not available. The valuation risk is addressed by the control environment at Norges Bank, which is responsible for fair value measurement.

The fair value hierarchy

All securities in the foreign exchange reserves are measured at fair value. The securities have been classified in the fair value hierarchy presented in table 6.1 Foreign exchange reserves’ investments by level of valuation uncertainty. The classification is determined by the observability of the market inputs used in the fairvalue measurement:

• Level 1 comprises assets that are valued based on unadjusted quoted prices in active markets. An active market is a market in which transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
• Assets and liabilities classified as Level 2 are valued using models with inputs that are either directly or indirectly observable. Inputs are considered observable when they are based on market data reflecting actual events or transactions.
• Assets classified as Level 3 are valued using models with significant use of unobservable inputs. Inputs are considered unobservable when market data are not available and the input is developed using the best information available about the assumptions that market participants would use when pricing the asset.

An overview of models and valuation techniques with their respective observable and unobservable inputs, categorised by type of instrument, is described in this note.

Table 6.1 Foreign exchange reserves’ investments by level of valuation uncertainty

1 Other comprises other assets and liabilities limited to money market instruments, including reverse repurchase agreements, deposits in banks, short-term borrowing, unsettled trades and other assets and liabilities.

At year-end 2024, the valuation uncertainty for the foreign exchange reserves was generally unchanged compared with year-end 2023. The majority of foreign exchange reserves are associated with low valuation risk and are classified as Level 1. At year-end 2024, 99.7 percent of equity holdings and 98.9 percent of bond holdings are classified as Level 1, and valuation is thus based on quoted market prices.

Movements between levels in the hierarchy

There have been no substantial movements between levels in the fair value hierarchy.

Valuation techniques

Norges Bank has defined hierarchies for which price sources are to be used for valuation. Holdings that are included in the benchmark indices are normally valued in accordance with the index providers’ prices, while the remaining holdings of equities and bonds are valued almost exclusively using prices from other reputable external price providers. For equities and derivatives traded in active markets (Level 1), the close price is used. For bonds traded in active markets, the bid price is generally used.

Below are the valuation techniques used for equities and bonds classified as Level 2 in the fair value hierarchy.

Equities (Level 2)

Equities that are valued based on models with observable inputs provided by vendors are classified as Level 2 in the fair value hierarchy. These holdings are not traded in active markets and include listed shares in companies where trading has been suspended. The valuation models take into account various observable market inputs, such as the price of comparable equity quotes, last traded price and volume.

Bonds (Level 2)

Bonds classified as Level 2 are valued based on observable market inputs from comparable issues, in addition to direct indicative or binding quotes. These holdings usually consist of less liquid bonds than those classified as Level 1, ie where there is not an activity volume for binding trades and a low activity volume for indicative price quotes at the measurement date.

Control environment

The control environment for fair value measurement is organised around a formalised and documented valuation policy and guidelines, which are supported by work and control procedures. The portfolios managed by Norges Bank Markets contain only liquid government securities, where valuation risk is very low. Any questions are discussed by a separate management committee.

The valuation environment has been adapted in accordance with market standards and established practices for valuation. This is implemented in practice in the form of daily valuation of all holdings. These processes are scalable to market changes and are based on internal and external data solutions.

All holdings and investments are generally valued by external, independent price providers. They have been chosen on the basis of analyses performed by the Norges Bank units responsible for valuation.

Price providers are monitored on an ongoing basis through regular discussions, controls and price challenges for individual securities. For a large portion of holdings, prices from independent price providers are based on quoted market prices. For holdings that are not sufficiently liquid for valuation to be based on quoted prices, widely accepted models are used. Observable inputs are used where possible, but in some cases, owing to illiquid markets, unobservable inputs are used.

The valuation process is subject on a daily basis to numerous controls by the valuation departments. Controls are based on defined thresholds and sensitivities, which are monitored and adjusted in accordance with prevailing market conditions. At each month-end, more extensive controls are performed to ensure valuation in accordance with fair value.

In NBIM, valuation memos and reports are prepared at each quarter-end, documenting the results of the controls performed and the most important sources of uncertainties in the valuations.

The NBIM investment meeting, which includes NBIM’s leader group, is held every quarter prior to the publication of the financial reporting. The committee reviews the documentation, discusses major pricing issues and approves the valuation.

Other investments

Norges Bank holds equity investments in the BIS and Swift, which are not part of the foreign exchange reserves. These are investments undertaken by Norges Bank in its role as Norway’s central bank and to preserve Norway’s international obligations in this area. The obligations involve long-term commitments that do not have economic gain as an objective and are not, by their nature, financial investments. This is primarily related to shares in the Bank for International Settlements (BIS) which are valued at NOK 249 million and would have been allocated to Level 3 in the fair value hierarchy. Valuation is uncertain owing to a lack of activity in the market. These shares are valued using models that use a substantial degree of non-observable inputs. See note 4 Holdings of equities and bonds for further information on equities in the BIS.

Classification of financial instruments

Norges Bank’s financial assets are either classified as fair value through profit or loss (designated or mandatory) or as amortised cost. The measurement category is determined at initial recognition of the asset.

Financial liabilities shall generally be measured at amortised cost, except for financial liabilities in the foreign exchange reserves and financial derivatives, which are measured at fair value through profit or loss.

The carrying amount of financial assets and liabilities measured at amortised cost is considered a reasonable estimate of fair value, thus comparable fair value amounts have not been calculated.

Table 6.2 Classification of financial instruments

Note 7 Investment risk

The aim of the management of the foreign exchange reserves is to attain the highest possible return within established guidelines and risk limits. Investment risk is mitigated by managing and controlling the investment management risks to which Norges Bank is exposed. In addition, a well-defined division of roles and responsibilities has been established for the risk management process.

Organisation

The Executive Board has the overarching responsibility for risk management at Norges Bank and has established principles for risk management in Central Banking, including financial risk. The Executive Board also lays down the overarching principles for the management of Norges Bank’s foreign exchange reserves, including strategic asset allocation, benchmark indexes, investment universe and overarching risk measures. The management of the foreign exchange reserves and financial risk is reported quarterly to the Executive Board.

The Risk and Investment Committee is a preparatory and advisory body to strengthen and improve the Executive Board’s work related to investment strategy and risk limits for the foreign exchange reserves.

The Governor is responsible for the management of the foreign exchange reserves. The Governor has operationalised the Executive Board’s principles in guidelines issued for the management of the equity portfolio, fixed income portfolio and petroleum buffer portfolio. Operational responsibility for management has been delegated to NBIM and Norges Bank Markets. Under the framework of the Governor’s guidelines, the equity portfolio is managed in accordance with risk management and associated processes for the GPFG, the fixed income portfolio and the petroleum buffer portfolio according to supplementary guidelines set by the head of Markets.

The division of roles and responsibilities in the risk management system is organised along three lines of defence. The first line of defence comprises the operational risk management and control activities that are performed by the operating units. The second line of defence comprises the central risk management and compliance functions, which are tasked with advising and supporting the operating units. Their task is to challenge the assessments of the first line of defence and ensure that the first line of defence performs adequate controls. The third line of defence is the internal audit function. Internal audit is placed under the Executive Board, independently of the administration, and shall assess whether risk management and compliance function as required.

Framework

The composition of the foreign exchange reserves and associated risk depends primarily on the strategic equity allocation and the portfolios’ benchmark indexes, which are both defined by the Executive Board. The strategic equity allocation of the total equity and fixed income portfolio is 20 percent.

The benchmark index for the equity portfolio is a tax-adjusted version of the FTSE ALL World Developed Market Index, limited to euro area countries, the US, the UK, Japan, Canada, Australia, Switzerland, Sweden and Denmark. The equity portfolio may be invested in cash deposits and equities listed on a regulated and recognised exchange.

The benchmark index for the fixed income portfolio is a market-weighted index of all nominal government bonds with a residual maturity of between one month and 10 years issued by France, Germany, Japan, China, the UK and the US. The fixed income portfolio may be invested in cash deposits, Treasury bills and government bonds issued by the countries in the benchmark index.

No benchmark index has been set for the petroleum buffer portfolio. The purpose of the portfolio is to provide for an appropriate management of the government’s need for converting foreign currency and NOK and for any transfers to and from the GPFG. The petroleum buffer portfolio is invested in short-term fixed income instruments.

Through management of the foreign exchange reserves, Norges Bank is exposed to various types of financial risk, including market risk, credit risk and counterparty risk. For the management of the foreign exchange reserves, risk management is defined as the management of these risks. The units with operational responsibility for management have the responsibility for managing risk in accordance with current principles and guidelines.

Risk management process

Norges Bank employs several measurement methodologies, processes and systems to control investment risk. Robust and widely accepted risk management systems and processes are complemented by internally developed measurement methods and processes.

Market risk

Market risk is defined as the risk of loss or a change in the market value of the portfolio, or parts of the portfolio, as a result of changes in the equity, fixed income or foreign exchange market, including changes in credit premiums.

Continuous monitoring, measurement and assessment of market risk are performed along multiple dimensions.By combining different and complementary risk measures, a better insight into the portfolios’ risk profile is gained. Norges Bank measures both absolute and relative risk for the investments in the portfolios.

Allocation by geography and industry

The foreign exchange reserves primarily contain investments in sovereign bonds and listed companies. In accordance with the investment management framework, the investments are allocated to several countries and currencies. The following tables show investments broken down by geography and industry.

Table 7.1 Foreign exchange reserves’ allocation by asset class and region/sovereign issuer

Table 7.2 Equity portfolio by industry

1 Includes other asset and liability items in the equity portfolio

Table 7.3 Foreign exchange reserves’ 10 largest holdings of equities

1 Percentage of the total equity portfolio.

Foreign exchange rate risk

Foreign exchange rate risk is the risk that the value of financial instruments will change owing to movements in foreign exchange rates. Norges Bank has, primarily through the foreign exchange reserves, invested in securities issued and traded in currencies other than NOK. Consequently, the value of these investments is exposed to foreign exchange rate risk. Note 8 Currency contains more information on the exchange rates used and the currency distribution in the foreign exchange reserves.

Interest rate risk

A substantial portion of the foreign exchange reserves is invested in sovereign bonds issued by the US, Germany, France, the UK, Japan and China. The value of fixed income instruments is affected by changes in interest rates in these countries. The investments’ interest rate sensitivity is measured by modified duration. At year-end 2024, modified duration was 3.47 percent for the fixed income portfolio. In isolation, this means that a 1 percent fall in yields corresponds to a 3.47 percent rise in bond prices. By comparison, modified duration at year-end 2023 was 3.54.

Volatility and correlation risk

Norges Bank uses models to quantify the risk of value changes associated with the foreign exchange reserves. Volatility is a standard risk measure based on the statistical concept of standard deviation, which takes into account the correlation between different investments in the portfolio. Absolute volatility provides an estimate of how much the portfolio value can be expected to change in the course of a year, given the current portfolio composition. Relative volatility (tracking error) provides an indication of how much the portfolio is expected to fluctuate compared with its benchmark index. In accordance with the Executive Board’s principles for management of the foreign exchange reserves, the maximum expected relative volatility is set at 50 basis points for the equity and fixed income portfolios, respectively. This implies that that the relative return on the portfolios is expected to lie within the range of ±50 basis points in two out of three years.

The risk models make it possible to estimate the risk in a portfolio across asset classes, markets, currencies, securities and instruments. Risk is then expressed as a single numerical value, which takes into account the correlation between risk factors. The models use historical relationships, which is expected to provide reliable forecasts in markets that are not experiencing substantial changes in volatility and correlation. Estimates will be less reliable in periods marked by significant market movements. Calculated volatility provides a point estimate of risk and says little about the overall risk profile. To compensate for these weaknesses, complementary models and methods, including stress tests, are used.

The risk models are regularly tested and evaluated for their ability to estimate risk. The risk measures provided here are annualised, which means that it is assumed that volatility and portfolio composition are constant over time.

Table 7.4 Portfolio risk, expected volatility

Table 7.5 Portfolio risk, expected relative volatility

At year-end 2024, expected absolute volatility was measured at 15.8 percent for the equity portfolio and 9.4 percent for the fixed income portfolio. This means that value fluctuations on the order of NOK 25 billion and NOK 56 billion, respectively, can be expected in two out of three years. In these cases, expected value fluctuations are calculated excluding expected returns. At year-end 2023, the corresponding expected value fluctuations were NOK 20 billion and NOK 55 billion, respectively. At year-end 2024, expected relative volatility for the equity and fixed income portfolios was 4 and 2 basis points, respectively, compared with 5 and 2 basis points, respectively, at year-end 2023.

Credit risk

Credit risk is the risk of loss due to an issuer being unable to meet its payment obligations.

The fixed income portfolio comprises only sovereign bonds issued by countries with high credit ratings from external credit rating agencies. The credit risk of bond investments in the foreign exchange reserves is therefore regarded as low.

Table 7.6 Bonds specified by sovereign issuer and credit rating

Counterparty risk

Counterparties are necessary for trading in markets and for ensuring effective management of liquidity, market and credit risk. Counterparty risk is defined as the risk of loss due to a counterparty default on its obligations. Counterparty risk includes the risk associated with counterparty insolvency, settlement risk and custodial risk. Counterparty risk is primarily related to securities lending, reverse repurchase agreement, unsecured bank deposits, foreign exchange contracts and futures.

In the management of the foreign exchange reserves a large number of counterparties are used to limit concentration. To reduce counterparty risk, requirements have been set for the credit quality of counterparties. Norges Bank’s counterparties usually have credit ratings from several independent credit rating agencies. Credit ratings of Norges Bank’s counterparties are monitored and complemented by alternative credit risk indicators.

Counterparty risk is also limited by setting exposure limits for individual counterparties. In most instances, the exposure limit is determined by the credit rating of the counterparty. Exposure per counterparty is measured daily.

Netting agreements are in place for trades in securities lending, currency contracts and reverse repurchase agreements, and there are collateral requirements for counterparty net positions with a positive market value. Minimum requirements have also been set relating to the credit quality, time to maturity and concentration of the collateral. Netting and collateral agreements are entered into for all counterparties approved for these types of trades. For securities lending transactions, a premium is added to the market value to reflect the position’s volatility, and these positions are also adjusted for netting and actual collateral received and posted when determining net exposure. See note 10 Collateral and offsetting for further information.

At year-end 2024, counterparty risk is regarded as low. Collateral has been posted in excess of the exposure in the open reverse repurchase agreements, and unsecured bank deposits almost exclusively comprise deposits with the Federal Reserve (US dollar) or with other central banks.

Table 7.7 Counterparties1 by credit rating2

1 Counterparties in the category Brokers are defined as equity and bond brokers and futures brokers. Counterparties in other transactions are classified as Non brokers. In cases where a counterparty is used for trading securities and for other transactions, the same counterparty will be included in both categories. As counterparties are counted per legal entity, several counterparties may be included per corporate group. Counterparties that are central banks are not included in the table.

2 Median rating

Leverage

Leverage may be used to ensure effective management of the investments in the equity portfolio, but not with the aim of increasing the economic exposure to risky assets. Leverage is the difference between total net exposure and the market value of the portfolio. Leverage in the portfolio was 0.10 percent at year-end 2024, compared with 0.09 percent at year-end 2023.

Sale of securities that Norges Bank does not own (“short sale”)

The sale of securities that Norges Bank does not own is not permitted in the management of the foreign exchange reserves.

Liquidity risk

Liquidity risk is the risk of being unable to meet financial obligations at the agreed time. As a central bank, Norges Bank is not exposed to this type of liquidity risk in local currency. There is little or no liquidity risk associated with the Bank’s liabilities, which are primarily in NOK. The majority of assets are held in foreign currency and are highly liquid financial instruments. They may be realised at short notice without a substantial change in value, and the liquidity risk associated with them is therefore regarded as low. Assets in foreign currency are regarded as sufficient for meeting foreign currency obligations.

Climate risk

Climate risk is defined as the risk related to future physical climate changes and changes related to the transition to a low-carbon society.

The Executive Board has decided that the equity portfolio in the foreign exchange reserves shall be managed according to the same principles and strategies for responsible management as the equity investments in the GPFG. Among other things, it means that the Bank’s work with responsible management is based on a long-term goal that the companies in the investment portfolio align their operations with the goals of the Paris Agreement. The fixed income portfolio in the foreign exchange reserves consists exclusively of government bonds, and climate related issues will have little effect on the composition of the bond portfolio.

Other risk

Credit risk associated with lending to banks

Credit and counterparty risk associated with F-loans and intraday/overnight loans (D-loans) is managed by requiring collateral for such loans, in the form of securities pledged to Norges Bank. The total lending facility for banks is determined by collateral pledged to Norges Bank, F-deposits and deposits with the Scandinavian Cash Pool.

Norges Bank stipulates more detailed terms for pledging securities and fund units as collateral for loans in Norges Bank pursuant to section 6 of the Regulation on the Access of Banks to Borrowing and Deposit Facilities in Norges Bank etc. The current guidelines have been issued in Norges Bank’s Circular 4/2024 from October 2024. See note 12 Loans and deposits for more information.

The rules for pledging collateral are intended to limit Norges Bank’s risk associated with lending to banks and facilitate appropriate levels of bank borrowing. Risk is limited, since only high-quality securities are eligible and since the loan value is lower than the market value of the collateral (haircut).

Loans to the IMF

The Kingdom of Norway is a member of the IMF. Norges Bank shall, in accordance with the Central Bank Act, manage the country´s rights and obligations as a result of membership in the IMF. This includes making currency available for IMF lending. Norges Bank considers the risk related to IMF loans to be low. See note 14 International Monetary Fund (IMF) for further information.

Expected credit losses

Financial assets measured at amortised cost are allocated on the reporting date to stages 1, 2 or 3.

On initial recognition, assets are allocated to stage 1. Stage 1 requires an estimation of a 12-month expected credit loss. The expected loss in stage 1 reflects the entire loss on an asset weighted by the probability that the loss will occur in the next 12 months. On each reporting date, an assessment shall be made of whether the credit risk of an asset has increased significantly since initial recognition. If this is the case, the exposure must be moved to stages 2 or 3. Stages 2 and 3 require estimation of an expected credit loss over the entire life of the exposure.

Table 7.8 Expected credit loss for financial assets measured at amortised cost

At year-end 2024 and 2023, the financial assets measured at amortised cost are allocated to stage 1, and no loss provisions have been made for expected credit losses.

Note 8 Currency

Table 8.1 Foreign exchange reserves by currency

Total comprehensive income is affected by exchange rate movements. A 1 percent depreciation of NOK against all currency crosses will result in a positive impact on the income statement of around NOK 8 billion, and a corresponding negative impact on the income statement from a 1 percent appreciation of NOK.

Table 8.2 Exchange rates

1 Percentage change in the exchange rate.

2 Special Drawing Rights is an international type of monetary reserve currency created by the International Monetary Fund (IMF). The value of the SDR is calculated from a weighted basket of US dollar, the euro, the Chinese renminbi, the Japanese yen and the British pound.