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SpareBank 1 Nord-Norge Third quarter interim report 2010 – the Group
Very satisfactory result per Q3 2010. The Bank's financial position is strong.
Main features (figures in brackets refer to the same interim period in 2009):
• Operating profit before tax for the first nine months of 2010 totalled NOK 760 million (NOK 671 million).
• Return on equity after tax was 15.5 per cent (15.8 per cent).
• Profit per equity certificate (Group) for the first nine months: NOK 11.78 (NOK 10.57).
• Good underlying banking operations; profit from core operations before losses of NOK 548 million (NOK 517
million).).
• Combined profit contribution from the Group’s subsidiaries of NOK 43 million (NOK 19 million).
• Net gain on financial investments totalled NOK 256 million (NOK 295 million).
• The profit contribution from SpareBank 1 Gruppen AS amounted to NOK 103 million (NOK 139
million).
• The contribution to the overall profit from other joint ventures in the SpareBank 1 alliance (Bank 1
Oslo, BN Bank, SpareBank 1 Boligkreditt and SpareBank 1 Næringskreditt) amounted to NOK 61
million.
• Net gain on the Bank’s share portfolio recognised in the accounts totalled NOK 75 million. Of this,
NOK 63.4 million was attributable to the recognition of dividend income and changes in the value of
the share portfolio in the first quarter as a result of the merger between Nordito and PBS.
• A net loss of NOK 2 million was recognised on the interest-bearing portfolio (including related
financial derivatives transactions).
• A net gain of NOK 19 million was recognised on currency and other financial derivatives.
• Costs kept under control - cost-to-income ratio of 46 per cent (46 per cent). A non-recurring gain due to
recognising income from a NOK 60 million reduction in pension commitments as a result of the transition to a
new early retirement pension scheme (AFP) in the private sector.
• Low loan losses: Net losses totalled NOK 44 million (NOK 141 million). Net losses in the third quarter of
NOK 1 million.
• Total lending growth over the last 12 months (including loans transferred to SpareBank 1 Boligkreditt): 7.3 %
(5.6 %).
• Retail banking 8.4 per cent (including SpareBank 1 Boligkreditt).
• Corporate market 4.4 per cent.
• The accounts show a loan growth over the past 12 months of 2.2 per cent (-2.0 per cent).
• Growth in deposits over the last 12 months: 8.9 % (6.6 %).
• Retail market 6.2 per cent.
• Corporate market 3.7 per cent.
• Public sector market 26.3 per cent.
• Deposit-to-loan ratio: 73.9 % (69.3 %).
• The Bank is financially strong, with a core capital adequacy (Group) of 9.8 per cent (9.3 per cent) and total
capital adequacy of 11.0 per cent (11.1 per cent).
• Liquidity remains satisfactory.
Introductory comments
The interim accounts have been prepared in accordance
with the International Financial Reporting Standards
(IFRS), including IAS 34 relating to interim reporting.
IFRS involves the use of different principles for the
incorporation of subsidiaries and joint-venture companies
between the parent bank and consolidated accounts. In the
consolidated accounts, the equity method is applied, in
accordance with which the profit/loss of joint-venture
companies is incorporated in the Group’s profit and loss
account based on ownership interest, and is taken into
consideration in the book value of the ownership interests
on the balance sheet. The proportionate share of the
subsidiaries’ profit/loss is consolidated into the accounts.
In accordance with IFRS, only the cost method of
accounting shall be used in company accounts. This means
that the book value of subsidiaries and joint-venture
businesses in the parent bank’s accounts is the historic
cost. In the parent bank’s profit and loss account, only the
annual dividends received from these businesses are
shown.
In accordance with the rules and regulations from the
Ministry of Finance dated 16 October 2008, permission
was given to reclassify securities in the trading portfolio
from the category “At fair value through profit and loss” to
categories which are assessed at amortised cost. The
Group decided to make such a reclassification of large
parts of the interest-bearing portfolio held for sale as at 1
July 2008.
Future assessments in these categories shall be calculated
at amortised cost using the effective interest method of
accounting, which means that earlier write-downs and
interest are amortised and incorporated as interest income
over the remaining life of the securities in question. The
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Bank’s remaining portfolio of commercial paper and
bonds is classified as “At fair value through profit and
loss”. To the extent that there is an active market for the
securities involved, observable market prices are applied in
order to assess fair value.
Since year-end, the Group has amended its classification
of net interest income/costs relating to interest rate hedging
for fixed interest loans. Previously, these items were
recognised in the profit and loss account under “Net value
changes for financial assets”, but they are now reported
under “Interest income”. The figures for previous periods
(2010 and 2009) have also been reclassified to allow
comparison.
Earnings performance
Operating profit before tax for the first nine months of
2010 amounted to NOK 760 million. Profit for the
equivalent period of 2009 was NOK 671 million. The
Group’s core operations (operations excluding net income
from financial investments) remain strong, posting a profit
before losses of NOK 548 million, up by NOK 31 million
on the same time last year.
The Group’s return on equity after tax as of 30 September
2010 is 15.5 per cent (15.8 per cent). For the parent bank,
the return on equity is 15.6 per cent (18.9 per cent) and the
profit per equity certificate for the parent bank is NOK
9.70 (NOK 10.39).
The tax cost has been estimated at NOK 149 million.
Compared to the third quarter of 2009, the NOK 89
million improvement in pre-tax profit is specified as
follows:
• Reduction in net interest income NOK -31 mill.
• Increase in net commission income NOK 63 mill.
• Reduction in income from financial
investments
NOK -39 mill.
• Reduction in other operating income NOK -16 mill.
• Reduction in costs NOK 15 mill.
• Reduction in net losses NOK 97 mill.
Excluding the non-recurring gain from a NOK 60 million
reduction in pension commitments in the first quarter of
2010 as a result of the transition to a new early retirement
scheme (AFP) for the private sector, the main reason for
the increase in profits is lower loan losses.
For the third quarter, operating profit totalled NOK 260
million, compared to NOK 240 million and NOK 260
million in the second and first quarters of 2010
respectively.
Return on equity for the third quarter was 15.6 per cent.
Share of SpareBank 1 Gruppen’s result
SpareBank 1 Gruppen’s preliminary profit after tax for the
first nine months of 2010 totalled NOK 508 million. The
SpareBank 1 Nord-Norge Group’s share of the result,
amounting to NOK 99 million, has been incorporated in
the accounts. Furthermore, a NOK 4 million correction to
the final profit for the year for 2009 was recognised as
income.
With effect from 1 January 2010, the banks that own
SpareBank 1 Gruppen AS took over ownership of Bank 1
Oslo AS. In the first nine months of 2010, Bank 1 Oslo
contributed NOK 32 million to SpareBank 1 Nord-Norge’s
profit.
Subsidiaries
The Group’s subsidiaries produced an aggregate
contribution of NOK 43 million towards profit for the first
nine months of 2010. Of this, SpareBank 1 Finans Nord-
Norge AS accounted for NOK 36 million.
The financial results of North West 1 Alliance Bank in
Russia have been incorporated into the consolidated
accounts for the period 13–30 September 2010 with NOK
- 0.6 million.
Further reference is made to the relevant notes to the
quarterly accounts and a separate paragraph below.
Interest margin
The Group’s net interest income for the first nine months
of 2010 amounted to NOK 844 million. This is NOK 31
million lower than for the same period of 2009. In relation
to average total assets, net interest income for the period
was 1.72 per cent, 0.06 percentage points lower than for
the equivalent period last year.
For the third quarter alone, net interest income was NOK
10 million higher than in the second quarter.
Net interest income was affected by the transfer of loans to
SpareBank 1 Boligkreditt. Income from the transferred
portfolio is recognised as commission income. For the first
three quarters of the year, this amounted to NOK 27, 24
and 24 million respectively. The equivalent figures for
2009 were NOK 12, 11 and 17 million.
To ensure liquidity, the Bank raised substantial long-term
funding from the capital markets during the financial crisis
in 2007 and 2008. These loans have large credit spreads
compared to current levels and have increased the Bank’s
average funding cost. The redemption and replacement of
older capital market funding raised before the financial
crisis (with low credit spreads) has had, and will continue
to have, a negative impact on the Bank’s interest margin.
The Bank has maintained its focus on its lending margin.
Strong competition and low interest rates is expected to
represent a continued pressure on the Bank's interest
margin.
Net income from banking services and other income
Net commission income for the first nine months of 2010
was NOK 380 million, an increase of NOK 63 million
compared to the same period last year. The improvement
was largely due to an increase in commission income from
SpareBank 1 Boligkreditt and EnterCard, and higher agent
fees from EiendomsMegler1 Nord-Norge.
Other income for the first nine months of 2010 was down
NOK 16 million on the same period last year. This is due
to the fact that a gain on the sale of the Group’s factoring
business was recognised in 2009.
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Net commissions and other income for the third quarter
alone totalled NOK 131 million, compared to NOK 133
million in the previous quarter and NOK 121 million in the
third quarter of 2009.
Income from financial investments
Net income from financial investments for the first nine
months of 2010 totalled NOK 256 million. The result
breaks down as follows:
Result from SpareBank 1 Gruppen NOK 103 mill.
Result from SpareBank 1 Boligkreditt
Result from Bank 1 Oslo
Result from BN Bank
Amortised net lesser value booked as
income, BN Bank
Result from SpareBank 1 Næringskreditt
Share dividends
Net gains on shares
NOK 7 mill.
NOK 32 mill.
NOK 18 mill.
NOK 3 mill.
NOK 1 mill.
NOK 43 mill.
NOK 32 mill.
Net loss on bonds NOK -2 mill.
Net gain on currency and financial
derivatives
NOK 19 mill.
When compared with the same period of 2009, net income
from financial investments was NOK 39 million lower.
For the third quarter alone, net income from financial
investments totalled NOK 76 million.
As of 30 June 2010, a gain of NOK 63.4 million was
recognised in conjunction with the merger of Nordito AS
and PBS Holding AS. The merger was completed in April,
effective from 1 January 2010. PBS was the acquirer, and
the new company was give the name Nets. At 30
September 2010, there had been no change in the valuation
of the Bank's ownership interest in Nets.
On 1 July 2008, the Bank completed a reclassification of
large parts of the interest-bearing securities in its trading
portfolio, from the category “At fair value through profit
and loss” to categories which are assessed at amortised
cost. This involved NOK 3,807 million of the NOK 4,981
million portfolio in the accounts as at 30 June 2008. If
such a re-classification had not been made, further
unrealised losses of NOK 212 million on this portfolio
would have been charged to the profit and loss account
from 1 July 2008 to 31 December 2008 as a result of
increased credit spreads. Without the reclassification, this
unrealised loss would have become an unrealised gain of
NOK 4 million at 30 September 2010. As a result of
scheduled amortisation, the value of the reclassified
portfolio fell from NOK 3,807 to NOK 2,583 million over
the period 30 June 2008 to 30 September 2010. At 30 June
2008, write-downs of NOK 112 million had been made on
this part of the portfolio, which is now being recognised as
income (amortised) over the remaining term to maturity of
each individual security. In 2008, 2009 and to date in
2010, NOK 18 million, NOK 26 million and NOK 15
million was recognised as income respectively. At 30
September 2010, the average term to maturity for the
reclassified part of the portfolio was 1.56 years.
The reclassified portfolio has been assessed with regard to
the need for permanent write-downs in value. As at 31
December 2008, a NOK 46 million write-down had been
made on two of the Bank’s investments as a result. A
further NOK 17 million of write-downs have been made
on one security in 2009. No further write-downs were
made in 2010. See also the notes to the interim accounts
for the first quarter.
Operating costs
Ordinary operating costs for the first nine months of 2010
totalled NOK 681 million, down by NOK 15 million or 2.2
per cent on the equivalent period last year.
As mentioned above, pension costs in the first quarter of
2010 fell due to a non-recurring gain of NOK 60 million as
a result of the transition to the new early retirement
pension scheme in the private sector. Current pension costs
related to the early retirement pension scheme will
increase in the future as a result.
Excluding the above non-recurring gain, operating costs
for the first nine months of 2010 totalled NOK 741
million, 45 million more than for the year-earlier period.
The increase was due to:
Wages and salaries NOK 14 million
Pensions NOK 11 million
Social insurance contributions NOK 3 million
Administrative expenses NOK 4 million
Depreciation NOK -4 million
Property expenses NOK 3 million
Other expenses NOK 14 million
Total NOK 45 million
Expenses represented 1.38 per cent of average total assets,
a reduction of 0.04 percentage points compared to the
same period last year. Excluding the above-mentioned
adjustments relating to the early retirement scheme,
expenses were 1.51 per cent of average total assets.
The Group has a cost-to-income ratio of 45.9 per cent for
the first nine months of 2010, compared to 46.2 per cent
for the year-earlier period. The cost-to-income ratio
excluding the reduction in pension costs was 49.9 per cent.
For the third quarter alone, ordinary operating costs
totalled NOK 237 million, compared to NOK 256 million
in the previous quarter.
The breakdown of the cost reductions from the second to
third quarters of 2010 is as follows:
Increase in wages and salaries NOK 4 mill.
Reduction in pension/social insurance NOK -6 mill.
Reduction in administrative costs NOK -11 mill.
Reduction in other costs NOK -6 mill.
Total reduction NOK -19 mill.
At the end of the third quarter of 2010, the Bank had 758
full-time equivalent employees, of which 677 were in the
parent bank. The corresponding figures for 2009 were 784
and 695 respectively.
The bank is continuing to implement cost-reduction
measures. This includes possible rationalisation measures
within the areas of distribution and overall staffing levels.
Net losses and commitments in default
The Group’s net losses on lending at the end of the third
quarter totalled NOK 44 million. Net losses are made up of
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NOK 31 million in the corporate market and NOK 13
million in the retail market.
For the third quarter alone, there was a loss of NOK 1
million.
At 30 September 2010, net commitments in default and
doubtful commitments amounted to NOK 554 million,
equivalent to 0.88 per cent of gross lending including
intermediary loans (mainly SpareBank 1 Boligkreditt),
down by NOK 42 million on the same period in 2009.
The Group’s total individual loss write-downs at the end of
the third quarter 2010 were NOK 248 million, an increase
of NOK 22 million on the previous quarter.
Group write-downs fell by NOK 36 million in the third
quarter to NOK 202 million. At 30 September 2010, group
write-downs represented 0.32 per cent of the Group's total
gross lending including intermediary loans.
In the opinion of the Main Board of Directors, the quality
of the Bank’s loan portfolio is good, and the Bank is still
doing good quality work on defaulted and doubtful loans
and advances in the Group. As a result of the economic
downturn, the bank witnessed a relatively high level of
losses in 2008 and 2009. Despite the continued
uncertainties regarding growth and the prospects of the
international and national economies, the Main Board of
Directors is of the opinion that the level of losses in the
near future will be lower than in 2008/2009.
Tax
The Group’s tax cost for the third quarter of 2010 was
estimated at NOK 149 million. In the parent bank’s
accounts, profit for tax purposes has been reduced by
permanent differences coupled with the effects of the
exemption model. According to IFRS, wealth tax is not a
tax cost, and NOK 9 million has therefore been charged to
the profit and loss account as part of other operating costs.
Total assets
At 30 September 10, Group assets stood at NOK 68,261
million, after a NOK 3,687 million, or 5.7 per cent,
increase over the last 12 months.
Loans
At 30 September 2010, Group gross lending to customers
totalled NOK 50,489 million. In comparison with 30
September 2009, this represents an increase of 2.2 per
cent. At 30 September 2010, intermediary mortgage
lending amounting to NOK 12,218 million had been
transferred to SpareBank 1 Boligkreditt AS. Lending
growth including these loans amounted to 7.3 per cent.
Retail lending was up by 8.6 per cent, whereas corporate
and public sector loans were up by 4.4 per cent in all.
Including intermediary loans, 69 per cent of the Bank's
total lending was to the retail market at 30 September
2010, a slightly higher proportion than at the end of the
third quarter of 2009.
The financial crisis, and the resulting slowdown in
economic growth, has restricted lending growth,
particularly to the corporate market. However, businesses
in the region now appear to be more optimistic, which is
resulting in increased loan demand. The Main Board of
Directors sustains its ambitions for lending growth and
increased market shares. In the case of new loans,
particular emphasis is placed on customers’ ability to
service and repay their outstanding loans, and on a
satisfactory level of collateral and other security to ensure
that credit risk is maintained at an acceptable level.
Saving and investments
At 30 September 2010, Group deposits from customers
totalled NOK 37,303 million. Over the last 12 months,
deposits increased by NOK 3,047 million or 8.9 per cent.
By segment, the increases were 6.2 per cent in the retail
market, 26.3 per cent in the public sector market and
3.7 per cent in the corporate market.
Portfolio of certificates and bonds
The Group’s portfolio of certificates and bonds totalled
NOK 12,175 million as at 30 September 2010.
Comparative figures at 31 December 2009 and 30
September 2009 were NOK 8,893 million and NOK
10,378 million respectively. The portfolio volume interest-
bearing securities remains higher than previous years as a
result of the following:
• Increased liquidity reserves in the form of
certificates and Treasury bills.
• Transfer of loans to SpareBank 1 Boligkreditt
involves an increased portfolio of covered bonds
(and reduced loans).
• Using the authorities’ swap scheme for covered
bonds involves accounting-related incorporation
on a gross basis, which in turn means a parallel
increase in assets (including sertificates) and
liabilities.
The larger portfolio of certificates and bonds entails only a
small degree of increased risk.
Liquidity
Deposits from customers represent the Bank’s main source
of funding. At the end of the third quarter 2010, the
deposit-to-loan ratio was 73.9 per cent, up by 4.6
percentage points on the previous year. The Bank’s
remaining funding, apart from equity capital and deposits
from customers, is mainly from long-term funding from
the capital markets. The Bank's access to liquidity has
been, and remains, satisfactory. The Bank’s strategic aim
is to maintain the overall liquidity risk at a low level.
Equity and capital adequacy
SpareBank 1 Nord-Norge received permission from the
Financial Supervisory Authority of Norway (FSAN) to
apply internal measuring methods (Internal Rating Based
Approach) for credit risk from 1 January 2007. The
statutory minimum requirement for capital adequacy for
credit risk was therefore, with effect from 2007, based on
the Bank’s internal risk assessment. The rules and
regulations render the statutory minimum requirement for
capital adequacy more risk-sensitive, so that the capital
requirement to a larger extent corresponds to the risk in the
underlying portfolios. The use of internal measurement
measures places great demands on the Bank’s
organisation, competence, risk models and risk
management systems.
As a result of the transition rules in the new regulation,
IRB banks were to see the full effects of reduced
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regulatory capital requirements starting from 2010. A
resolution has now been reached to postpone this, and the
transition rules for 2009 will continue to apply in 2010.
The Group has been granted permission by FSAN to use
proportional consolidation in its reporting of the capital
adequacy of the assets in SpareBank 1 Boligkreditt,
SpareBank 1 Næringskreditt.
The biggest banks in the SpareBank 1 alliance have
reviewed and coordinated the way in which they
implement the rules on the calculation of capital adequacy.
This applies primarily to the methodology for
consolidating their joint ventures. For SpareBank 1 Nord-
Norge this has changed the calculation of SpareBank 1
Nord-Norge's, resulting in an increase in the parent bank's
capital adequacy, but a reduction in the Group's capital
adequacy. In the figures for the third quarter 2010,
previous figures have been adjusted to reflect the changes.
It is worth noting that some of the reduction in the Group's
capital adequacy ratio is due to the transitional rules (the
"floor") on capital adequacy requirements coming into
force (the Group's risk-weighted assets have also fallen as
a result of the changes).
At 30 September 2010, Group core capital adequacy
amounted to 9.78 per cent (9.31 per cent) of risk-weighted
assets. The total capital adequacy ratio was 11.00 per cent
(11.13 per cent). If the full impact of the IRB approach is
included (without "floor"), the core capital adequacy ratio
was 9.93 per cent.
At the end of the third quarter 2010, the capital adequacy
ratio of the parent bank was 12.15 per cent (12.39 per
cent), of which core capital constituted 10.65 per cent
(10.21 per cent).
The Bank’s goal for core capital adequacy is 10 per cent or
higher. The Bank’s financial position is deemed to be
good.
If 50 per cent of profit were to be calculated into the
capital adequacy, the core capital adequacy ratio for the
parent bank would be 11.35 per cent (111.02 per cent) and
for the Group 10.43 per cent (9.93 per cent).
The Bank’s equity certificate holders
The Bank’s equity certificate capital amounts to NOK 896
million, represented by 17,912,073 equity certificates. The
equity certificate ratio at 1 January 2010 was estimated to
be 34.54 per cent. The number of equity certificate holders
at 30 September 2010 was 8,398, a reduction of 149 over
the past 12 months. The number of equity certificate
holders from northern Norway was 2 450. An overview of
the Bank’s 20 largest equity certificate holders is provided
in the notes to the accounts.
North-west Russia
In September 2010, SpareBank 1 Nord-Norge established
banking operations in Russia through North West 1
Alliance Bank. SpareBank 1 Nord-Norge holds a 75 per
cent ownership interest in the bank, whilst the remaining
25 per cent of the shares are owned by SpareBank 1 Nord-
Norge's Russian partner Bank Tavrichesky in St.
Petersburg. The new bank is headquartered in St.
Petersburg and has a branch in Murmansk.
When it started operating, North West 1 Alliance Bank had
37 employees, including 3 managers recruited from
SpareBank 1 Nord-Norge.
In May 2008 SpareBank 1 Nord-Norge bought a 10 per
cent ownership interest in Bank Tavrichesky, St.
Petersburg. The financial performance of Bank
Tavrichesky remained satisfactory even during the credit
crisis.
Concluding remarks and outlook
The Bank's financial results for the third quarter and for
the year-to-date is considered to be very good. The Bank’s
core operations remain strong.
There are signs that businesses in the region are becoming
increasingly optimistic, which has resulted in growing loan
demand. Low interest rates and increasing competition is
expected to continue to keep the Bank's interest margin
under pressure.
The Bank attaches importance to balance sheet growth in
terms of both deposits and loans. Importance is also
attached to increasing other income through sales of other
products and services. All lending growth shall include
good quality.
The Bank will continue to focus heavily on cost-reducing
measures. This includes possible rationalisation measures
within the areas of distribution and staffing level.
Tromsø, 27 October 2010
The Main Board of Directors of SpareBank 1
Nord-Norge
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Key figures group
Amounts in NOK million and in % of average assets 30.09.10 % 30.09.09 % 31.12.09 %
From the profit and loss account
Net interest income 844 1.72 % 875 1.78 % 1 173 1.80 %
Net fee-, commision and other operating income 385 0.78 % 338 0.69 % 462 0.71 %
Net income from financial investments 256 0.52 % 295 0.60 % 524 0.80 %
Total income 1 485 3.02 % 1 508 3.07 % 2 159 3.31 %
Total costs 681 1.38 % 696 1.42 % 972 1.49 %
Result before losses 804 1.63 % 812 1.66 % 1 187 1.82 %
Losses 44 0.09 % 141 0.29 % 185 0.28 %
Result before tax 760 1.54 % 671 1.37 % 1 002 1.54 %
Tax 149 0.30 % 123 0.25 % 143 0.22 %
Minority interests 0 0.00 % 0 0.00 % 1 0.00 %
Result for the period 611 1.24 % 548 1.12 % 858 1.32 %
Profitability
Return on equity capital 1 15.5 % 15.8 % 18.2 %
Interest margin 2 1.72 % 1.78 % 1.80 %
Cost/income 3 45.9 % 46.2 % 45.0 %
Balance sheet figures
Loans and advances to customers 50 489 49 413 48 180
Loans and advances to customers including agency loans 62 707 58 462 59 061
Growth in loans and advances to customers past 12 months 2.2 % -2.0 % -6.0 %
Growth in loans and advances to cust. incl. agency loans past 12 months 7.3 % 5.6 % 4.0 %
Deposits from customers 37 303 34 256 34 877
Growth in deposits from customers past 12 months 8.9 % 6.6 % 0.9 %
Deposits as a percentage of gross lending 4 73.9 % 69.3 % 72.4 %
Deposits as a percentage of gross lending including agency loans 59.5 % 58.6 % 59.1 %
Average assets 5 65 611 65 402 65 169
Total assets 68 261 64 574 64 239
Losses on loans and commitments in default
Losses on loans to customers as a percentage of gross loans incl.agency loans 0.09 % 0.32 % 0.31 %
Commitments in default as a percentage of gross loans incl.agency loans 0.34 % 0.67 % 0.65 %
Commitments at risk of loss as a percentage of gross loans incl.agency loans 0.93 % 0.70 % 0.71 %
Net comm. in default and at risk of loss as a per. of gross loans incl. agency loans 0.88 % 1.02 % 0.97 %
Solidity
Capital adequacy ratio 6 11.00 % 11.13 % 12.76 %
Core capital adequacy ratio 7 9.78 % 9.31 % 10.71 %
Core capital 4 595 4 133 4 846
Equity and related capital resources 5 167 4 941 5 775
Adjusted risk-weighted assets base 46 963 44 400 45 250
Branches and full-time employees
Branches 75 81 76
Manyear 758 784 778
Equity Certificates 30.09.10 31.12.09 31.12.08 31.12.07 31.12.06 31.12.05
Equity Certificate ratio overall 8 34.54 % 34.54 % 34.22 % 32.88 % 34.19 % 35.60 %
Quoted/market price NONG as at 103.50 110.00 44.00 127.00 149.50 157.00
Quotation value 9 1 854 1 970 788 2 135 2 367 2 486
Equity capital per Equity Certificate - Group (NOK) 10 106.16 100.73 87.56 89.46 79.84 73.36
Result per Equity Certificate (Group) 11 11.78 16.39 6.65 14.30 17.13 12.46
Cash dividend per Equity Certificate to be paid 12 6.75 3.00 9.50 10.00 10.00
P/E (Price/Earnings) - Group 13 6.6 6.7 6.6 8.9 8.7 12.6
P/V (Price/Book Value) - Group 14 1.0 1.1 0.5 1.4 1.9 2.1
Agency loans includes loans transferred to SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS
13 Market price on Oslo Stock Exchange at end of period, divided by result for the period per EC
14 Market price on Oslo Stock Exchange at end of period, divided by book value of equity capital per EC
1 Profit for the period as a percentage of average total equity, calculated as average amount of quarterly equity and per 01.01. and 31.12.
2 Total interest margin as a percentage of average total assets
3 Total costs as a percentage of total net income
4 Deposits from customers as a percentage of gross lending
5 Average assets are calculated as average assets each quarter and at 01.01. and 31.12.
6 Net subordinated capital as a percentage of calculated risk-weighted balance
7 Core capital as a percentage of calculated risk-weighted balance
8 EC holders share of equity capital as at 01.01.
9 Quoted price on Oslo Stock Exchange multiplied by numbers of EC's outstanding
10 EC-capital + Premium Fund + Dividend Equalisation Fund + Equity Certificates holders' share of the equity capital as at 01.01. * (other equity capital + Result for the
period, divided by number of EC's outstanding
11 Profit for the period (group) multiplied by Equity Certificates holders' share of the equity capital as at 01.01., in relation to
total number of EC's 12 Cash dividend per EC for the accounting year. Resolution made by Main Board of Directors
*)
*)
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31.12.09 3Q09 3Q10 30.09.09 30.09.10 30.09.10 30.09.09 3Q10 3Q09 31.12.09
2 686 593 650 2 117 1 807 Interest income 1 866 2 179 669 618 2 763
1 591 317 379 1 298 1 024 Interest costs 1 022 1 304 378 324 1 590
1 095 276 271 819 783 Net interest income 844 875 291 294 1 173
449 120 127 325 374 Fee- and commission income 443 381 149 143 526
87 20 21 63 63 Fee- and commission costs 63 64 21 21 88
5 1 2 3 3 Other operating income 5 21 3 - 1 24
367 101 108 265 314 Net fee-, commision and other operating income 385 338 131 121 462
22 0 1 5 33 Dividend 43 6 1 1 23
144 0 0 182 100 Income from investments 164 172 64 97 281
278 89 14 155 57 Net gain from investments in securities 49 117 11 65 220
444 89 15 342 190 Net income from financial investments 256 295 76 163 524
1 906 466 394 1 426 1 287 Total income 1 485 1 508 498 578 2 159
441 106 113 310 273 Personnel costs 325 357 131 124 508
264 57 59 185 188 Administration costs 204 200 62 59 284
34 8 6 25 20 Ordinary depreciation 33 37 11 12 49
153 36 38 118 130 Other operating costs 119 102 33 32 131
892 207 216 638 611 Total costs 681 696 237 227 972
1 014 259 178 788 676 Result before losses 804 812 261 351 1 187
170 38 - 2 133 37 Losses 44 141 1 39 185
844 221 180 655 639 Result before tax 760 671 260 312 1 002
126 44 50 110 136 Tax 149 123 55 50 143
718 177 130 545 503 Result for the period 611 548 205 262 859
Majority interest 611 548 205 262 858
Minority interests 0 0 0 0 1
Result per Equity Certificate
13.85 3.41 2.51 10.51 9.70 Result per Equity Certificate 11.78 10.57 3.95 5.05 16.39
13.85 3.41 2.51 10.51 9.70 Diluted result per Equity Certificate 11.78 10.57 3.95 5.05 16.39
718 177 130 545 503 Result for the period 611 548 205 262 859
0 0 0 0 0 Recalculation differences -2 0 -2 0 00 0 0 0 0 Net change in fair market value of investment in joint ventures 18 -14 18 -7 -17
-6 0 0 -6 0 Net change in fair market value of financial assets available for sale 0 -6 0 0 -60 0 0 0 0 Tax on other comprehensive income 0 0 0 0 0
-6 0 0 -6 0 Other comprehensive income for the period 16 -20 16 -7 -23712 177 130 539 503 Total comprehensive income for the period 627 528 221 255 836
Majority interest 627 529 221 255 840Minority interests 0 -1 0 -3 1
Totalresult per Equity Certificate
13.73 3.41 2.51 10.39 9.70 Total result per Equity Certificate 12.09 10.18 4.26 4.92 15.97
13.73 3.41 2.51 10.39 9.70 Diluted total result per Equity Certificate 12.09 10.18 4.26 4.92 15.97
Tax on other comprehensive income:0 0 0 0 0 Effective part of change in fair market value in cash flow hedging 0 0 0 0 00 0 0 0 0 Net change in fair market value of financial assets available for sale 0 0 0 0 00 0 0 0 0 Tax on other comprehensive income 0 0 0 0 0
Statement of comprehensive income
Comprehensive income
Group
(Amounts in NOK million)
Parent Bank
7/21
31.12.09 30.09.09 30.09.10 30.09.10 30.09.09 31.12.09
Assets2 159 437 381 Cash and balances with central banks 411 437 2 1592 671 2 105 2 348 Loans and advances to credit institutions 437 363 908
46 431 47 713 48 496 Loans and advances to customers 50 489 49 413 48 180 216 195 233 - Individual write-downs for impaired value 248 207 228 227 224 192 - Collective write-downs for impaired value 202 233 238
45 988 47 294 48 071 Net loans and advances to customers 50 039 48 973 47 714 410 460 356 Shares 550 603 560
8 891 10 374 12 174 Certificates and bonds 12 175 10 378 8 893 561 691 785 Financial derivatives 785 691 561 248 286 386 Investments in Group Companies 0 0 0
1 586 1 449 1 741 Investments in assosiated companies and joint ventures 2 695 2 149 2 396 110 111 102 Property, plant and equipment 459 466 469 11 0 10 Intangible assets 24 1 1
554 459 613 Other assets 686 513 578
63 189 63 666 66 967 Total assets 68 261 64 574 64 239
Liabilities6 869 6 816 5 310 Deposits from credit institutions 5 334 6 815 6 868
34 892 34 275 37 264 Deposits from customers 37 303 34 256 34 87714 162 15 106 16 436 Debt securities in issue 16 436 15 106 14 162
319 393 538 Financial derivatives 538 393 3191 092 1 356 1 602 Other liabilities 1 793 1 493 1 242
0 112 0 Deferred tax liabilities 0 115 31 608 1 532 1 348 Subordinated loan capital 1 348 1 532 1 608
58 942 59 590 62 498 Total liabilities 62 752 59 710 59 079
Equity
896 896 896 Equity Certificate capital 896 896 896
123 123 123 Equity Certificate premium reserve 123 123 123
471 223 351 Dividend Equalisation Fund 351 223 471
2 624 2 221 2 463 The Savings Bank's Fund 2 603 2 314 2 724
133 68 133 Donations 133 68 133
0 0 0 Other equity capital 790 690 810
0 0 0 Fund for unrealised gains - 2 0 0
0 545 503 Result for the period 611 548 0
Minority interests 4 2 34 247 4 076 4 469 Total equity 5 509 4 864 5 160
63 189 63 666 66 967 Total liabilities and equity 68 261 64 574 64 239
Statement of financial positionParent Bank
(Amounts in NOK million)
Group
8/21
(Amounts in NOK million) 3Q10 2Q10 1Q10 4Q09 3Q09 2Q09 1Q09 4Q08 3Q08
Interest income 669 616 581 584 618 694 867 1 171 1 126
Interest costs 378 335 309 286 324 415 565 822 777
Net interest income 291 281 272 298 294 279 302 349 349
Fee- and commission income 149 152 142 145 143 126 112 122 119
Fee- and commission costs 21 20 22 24 21 23 20 22 26
Other operating income 3 1 1 3 - 1 0 22 3 1
Net fee-, commision and other operating income 131 133 121 124 121 103 114 103 94
Dividend 1 33 9 17 1 5 0 2 1
Income from investments 64 59 41 109 97 68 7 220 8
Net gain from investments in securities 11 12 26 103 65 - 10 62 - 195 - 65
Net income from financial investments 76 104 76 229 163 63 69 27 - 56
Total income 498 518 469 651 578 445 485 479 387
Personnel costs 131 133 61 151 124 117 116 107 124
Administration costs 62 73 69 84 59 66 75 79 71
Ordinary depreciation 11 10 12 12 12 12 13 22 13
Other operating costs 33 40 46 29 32 31 39 39 25
Total costs 237 256 188 276 227 226 243 247 233
Result before losses 261 262 281 375 351 219 242 232 154
Losses 1 22 21 44 39 49 53 114 41
Result before tax 260 240 260 331 312 170 189 118 113
Tax 55 38 56 20 50 36 37 18 49
Minority interests 0 0 0 1 0 0 0 1 0
Result for the period 205 202 204 310 262 134 152 99 64
Profitability
Return on equity capital 15.56 % 15.57 % 15.90 % 26.25 % 22.71 % 11.83 % 13.52 % 9.18 % 5.98 %
Interest margin 1.74 % 1.73 % 1.70 % 1.85 % 1.77 % 1.70 % 1.87 % 2.21 % 2.31 %
Cost/income 47.59 % 49.42 % 40.09 % 42.40 % 39.27 % 50.79 % 50.10 % 51.57 % 60.21 %
Balance sheet figures
Loans and advances to customers 50 489 48 329 48 429 48 180 49 413 50 473 50 900 51 268 50 414
Growth in loans and advances to cust. incl. agency loans past 12 months 7.3 % 6.2 % 5.2 % 4.0 % 5.6 % 5.1 % 7.4 % 8.0 % 9.0 %
Deposits from customers 37 303 37 851 35 497 34 877 34 256 36 129 34 078 34 572 32 148
Growth in deposits from customers past 12 months 8.9 % 4.8 % 4.2 % 0.9 % 6.6 % 6.9 % 9.6 % 7.9 % 6.1 %
Deposits as a percentage of gross lending 73.9 % 78.3 % 73.3 % 72.4 % 69.3 % 71.6 % 67.0 % 67.4 % 63.8 %
Deposits as a percentage of gross lending including agency loans 59.5 % 62.0 % 59.3 % 59.1 % 58.6 % 62.9 % 59.9 % 60.9 % 58.0 %
Average assets 65 611 64 728 64 163 65 169 65 402 65 678 64 537 61 267 60 207
Total assets 68 261 65 859 64 086 64 239 64 574 67 961 63 566 65 507 60 879
Losses on loans and commitments in default
Losses on loans to customers as a percentage of gross loans incl.agency loans 0.01 % 0.15 % 0.14 % 0.30 % 0.27 % 0.34 % 0.37 % 0.81 % 0.00 %
Commitments in default as a percentage of gross loans incl.agency loans 0.34 % 0.51 % 0.56 % 0.65 % 0.67 % 0.82 % 0.79 % 0.54 % 0.50 %
Commitments at risk of loss as a percentage of gross loans incl.agency loans 0.93 % 0.85 % 0.71 % 0.71 % 0.70 % 0.67 % 0.66 % 0.79 % 0.85 %
Net comm. in default and at risk of loss as a per. of gross loans incl. agency loans 0.88 % 0.99 % 0.91 % 0.97 % 1.02 % 1.18 % 1.13 % 0.97 % 1.01 %
Solidity
Capital adequacy ratio 11.00 % 11.21 % 11.79 % 12.76 % 11.13 % 11.26 % 12.42 % 10.75 % 11.82 %
Core capital adequacy ratio 9.78 % 9.86 % 10.38 % 10.71 % 9.31 % 10.01 % 10.50 % 9.49 % 10.52 %
Core capital 4 595 4 682 4 687 4 846 4 133 4 035 4 136 4 229 3 798
Equity and related capital resources 5 167 5 322 5 323 5 775 4 941 4 540 4 890 4 789 4 267
Adjusted risk-weighted assets base 46 963 47 463 45 163 45 250 44 409 40 310 39 383 44 565 36 109
Result from the Group's quarterly accounts
9/21
Parent Bank
31.12.08 31.12.09
Equity Certificate capital 896 896
Equity Certificate premium reserve 123 123
Dividend Equalisation Fund 277 471
Set aside dividend - 54 - 121
Share Fund Fair Value Options - 5 - 30
A. Equity attributable to Equity Certificate holders of the Bank 1 237 1 339
The Savings Bank's Fund 2 221 2 623
Allocated dividends to ownerless capital 0 - 161
Donations 133 133
Share Fund Fair Value Options - 10 - 57
B. Total ownerless capital 2 344 2 538
Equity Certificate Ratio overall (A/(A+B)) 34.54 % 34.54 %
ECC ratio overall
(Amounts in NOK million)
(Amounts in NOK million) PCC capitalPremium
Fund
Dividend Equalisation
FundSaving Bank's
FundDonations
FundFair value reserve
Other equity
Period result
Total Majority interests
Minority interests Total equity
Group
Equity at 01.01.09 896 123 277 2 314 133 6 703 4 452 6 4 458
Total comprehensive income for the Period result 548 548 548Other comprehensive income:Net change in fair market value of investment in joint ventures - 13 - 13 - 1 - 14Tax on other comprehensive income Total other comprehensive income - 6 - 13 - 19 - 1 - 20Total comprehensive income for the period - 6 - 13 548 529 - 1 528
Transactions with ownersDividend issue Set aside for dividend payments Reversal of dividend payments Dividend paid - 54 - 54 - 2 - 56Payments from Donations Fund - 65 - 65 - 1 - 66Total transactions with owners - 54 - 65 - 119 - 3 - 122
Equity at 30.09.09 896 123 223 2 314 68 690 548 4 862 2 4 864
Equity at 01.01.10 896 123 471 2 724 133 810 5 157 3 5 160
Total comprehensive income for the Period result 611 611 611Other comprehensive income:Recalculation differences - 2 - 2 - 2Net change in fair market value of investment in joint ventures 40 - 20 20 - 2 18Net change in fair market value of financial assets available for sale Tax on other comprehensive income Total other comprehensive income 40 - 2 - 20 18 - 2 16Total comprehensive income for the period 40 - 2 - 20 611 629 - 2 627
Transactions with ownersDividend issue Set aside for dividend payments 121 Reversal of dividend payments Changes in minority interests 4 4Dividend paid - 120 - 161 - 281 - 1 - 282Payments from Donations Fund Total transactions with owners - 120 - 161 - 281 3 - 278
Equity at 30.09.10 896 123 351 2 603 133 - 2 790 611 5 505 4 5 509
Quarterly Report - Changes in equity
10/21
31.12.09 30.09.09 30.09.10 30.09.10 30.09.09 31.12.09
844 655 639 Result before tax 760 671 1 002 34 25 20 + Ordinary depreciation 33 37 49 0 0 0 + Write-downs, gains/losses fixed assets 0 0 0
170 133 37 + Losses on loans and guarantees 44 141 185 126 110 136 - Tax 149 123 142
0 0 0 - Group contributions 0 0 0 54 54 281 - Dividends/donations 281 54 54
868 649 279 Provided from the year's operations 407 672 1 040
- 22 433 729 Change in sundry liabilities: + increase/ - decrease 786 350 - 89 485 434 - 282 Change in various claims: - increase/ + decrease - 355 494 545
2 946 1 677 -2 120 Change in gross lending to and claims on customers: - increase/ + decrease -2 369 1 749 2 964-2 232 -3 739 -3 229 Change in short term-securities: - increase/ + decrease -3 272 -3 753 -2 225
293 - 324 2 372 Change in deposits from and debt owed to customers: + increase/ - decrease 2 426 - 316 3053 149 3 096 -1 559 Change in debt owed to credit institutions: + increase/ - decrease -1 534 3 107 3 160
5 487 2 226 -3 810 A. Net liquidity change from operations -3 911 2 303 5 700
- 17 - 10 - 12 - Investment in fixed assets - 23 - 14 - 33 1 0 0 + Sale of fixed assets 0 0 4
- 458 - 359 - 293 Change in holdings of long-term securities: - increase/ + decrease - 299 - 353 - 600
- 474 - 369 - 305 B. Liquidity change from investments - 322 - 367 - 629
-5 584 -4 640 2 274 Change in borrowings through the issuance of securities: + increase/ - decrease 2 274 -4 640 -5 584 147 71 - 260 Change in Equity Certificate/subordinated loan capital: + increase/ - decrease - 260 71 147
-5 437 -4 569 2 014 C. Liquidity change from financing 2 014 -4 569 -5 437
- 424 -2 712 -2 101 A + B + C. Total change in liquidity -2 219 -2 633 - 3665 254 5 254 4 830 + Liquid funds at the start of the period 3 067 3 433 3 433
4 830 2 542 2 729 = Liquid funds at the end of the period 848 800 3 067
Liquid funds are defined as cash-in-hand, claims on central banks,plus loans to and claims on credit institutions.
Statement of cash flowsParent Bank
(Amounts in NOK million)
Group
11/21
Notes
Note 1 - Accounting Principles
The Group’s quarterly accounts have been prepared in accordance with stock exchange rules and regulations and International Financial Reporting Standards (IFRS), including IAS 34 relating to interim reporting. The quarterly accounts do not comprise all information which is required in complete annual accounts and should be read in conjunction with the 2008 Annual Accounts. IAS 1 – presentation of the financial accounts – has been amended in 2009, involving several changes in the presentation of the profit and loss account – now “Statement of comprehensive income” as well as the statement of changes in equity capital. Items which are recognised directly in equity capital shall now also be presented in the Statement of comprehensive income as extended profit and loss account items. In the equity capital statement transactions between the owners and other transactions are kept separate.
In accordance with the rules and regulations dated 16 October 2008 issued by the Ministry of Finance, it is now permitted to reclassify securities in a trading portfolio from the category ‘Market value with any value changes shown through the profit and loss account’ to the category ‘Hold until maturity’ and ‘Loans and claims’. The SNN Group decided to apply such reclassification to large parts of its interest-bearing portfolio with effect from01.07.08. Future assessments within these categories shall be calculated at amortized cost, which means that earlier write-downs of values and interest are to be amortized and included in the profit and loss account as interest income over the remaining life of the items in question. Reference is made to Note 12.The remaining portfolio of certificates and bonds is assessed at market value through the profit and loss account.
Note 2 - Capital Adequacy
New capital adequacy rules and regulations (Basel II – EU’s new directives for capital adequacy) were implemented in Norway with effect from 1 January 2007. SpareBank 1 Nord-Norge has received permission from The Financial Supervisory Authorityof Norway (FSAN) to apply internal calculation methods (Internal Rating-Based Approach) for credit risk from 1 January 2007. With effect from 2007, therefore, the statutory minimum capital adequacy requirement for credit risk will be based on the Bank’s internal assessment of risk. This will make the statutory minimum capital adequacy requirement more risk-sensitive, which means that the capital requirement will to a larger extent correspond to the risk contained in the underlying portfolios in question. The use of internal calculation methods will involve comprehensive demands on the Bank’s organisation, competence, risk models and risk management systems. As a result of transitional rules relating to the new directive mentioned above, IRB-banks would not experience the full impact of the reduced regulatory capital requirements until 2010. Until 2010, banks had to report on a parallel basis, both according to the old capital adequacy calculations and Basel II. During the period 2007-2010, an annual adjustment of the risk-adjusted
12/21
31.12.09 30.09.09 30.09.10 30.09.10 30.09.09 31.12.09
896 896 896 Equity certificates 896 896 896
0 0 0 - -Own equity certificates 0 0 0
123 123 123 Premium reserve 123 123 123
471 223 351 Equalisation reserve 351 223 471
2 624 2 221 2 463 Savings bank's reserve 2 603 2 314 2 724
0 0 0 Allocated to dividend 0 0 0
133 68 133 Endowment fund 133 68 133
0 0 0 Other equity 790 690 810
0 0 0 Reserve for unrealised gains - 2 0 0
0 0 0 Minority interests 4 2 3
0 545 503 Period result 611 548 0
4 247 4 076 4 469 Total equity 5 509 4 864 5 160
0 0 0 Minority interests - 4 - 2 - 3
0 - 545 - 503 Period result - 611 - 548 0
Core capital
0 0 0 Adjusted subordinated capital from consolidated financial institutions 13 45 12
- 11 0 - 10 Intangible assets - 55 - 33 - 26
0 0 0 Fund for unrealised gains 37 26 37
- 121 0 0 Deduction for allocated dividends 0 0 - 121
- 351 - 363 - 353 % deduction for subordinated capital in other financial institutions 0 - 23 0
- 80 - 83 - 97 % deduction for expected losses on IRB, net of writedowns - 94 - 81 - 86 0 0 0 % capital adequacy reserve - 612 - 510 - 529
346 350 353 Fund bonds 412 395 402
4 030 3 435 3 859 Total core capital 4 595 4 133 4 846
Supplementary capital
1 262 1 182 995 Nonperpetual subordinated capital 1 278 1 422 1 544
- 351 - 363 - 353 50% deduction for subordinated capital in other financial institutions 0 - 23 0
- 80 - 83 - 97 50% deduction for expected losses on IRB, net of writedowns - 94 - 81 - 86
0 0 0 50% capital adequacy reserve - 612 - 510 - 529
831 736 545 Total supplementary capital 572 808 929
4 861 4 171 4 404 Equity and related capital resources 5 167 4 941 5 775
Minimum requirements subordinated capital, Basel I I
342 336 846 Specialised lending exposure 848 336 342
994 998 543 Other corporations exposure 543 1 000 1 086
17 17 16 SME exposure 17 18 17
275 279 293 Property retail mortage exposure 391 359 275
39 41 33 Other retail exposure 34 44 42
151 136 181 Equity investments 0 0 0
1 818 1 807 1 912 Total credit risk IRB 1 833 1 757 1 762
550 514 611 Credit risk standardised approach 1 485 1 287 1 362
55 114 176 Debt risk 157 115 55
41 115 17 Equity risk 41 132 54
0 0 12 Currency risk 12 0 0
214 214 242 Operational risk 284 227 227
0 0 0 Transitional arrangements 58 132 258
- 68 - 71 -72 Deductions - 113 - 98 - 98
2 610 2 693 2 898 Minimum requirements subordinated capital 3 757 3 552 3 620
14.90 % 12.39 % 12.15 % Capital adequacy ratio 11.00 % 11.13 % 12.76 %
12.35 % 10.21 % 10.65 % Core capital ratio 9.78 % 9.31 % 10.71 %
2.55 % 2.18 % 1.50 % Supplementary capital ratio 1.22 % 1.82 % 2.05 %
Parent Bank Group
(Amounts in NOK million)
Note 2 - Capital Adequacy
13/21
31.12.09 30.09.09 30.09.10 30.09.10 30.09.09 31.12.09
352 346 197 Non-performing commitments 216 392 386 383 366 566 + Non-performing commitments, impaired 586 411 417 220 195 233 - Individual write-down for impaired value 248 207 228 515 517 530 = Net bad and doubtful commitments 554 596 575
30 % 27 % 31 % Loan loss provision ratio 31 % 26 % 28 %
27 7 15 + Period's change in individual write-down for impaired value 15 9 29
30 27 - 39 + Period's change in collective write-down for impaired value - 39 29 36
+ Period's confirmed losses against which individual write-downs 121 107 65 were previously made 69 109 124
+ Period's confirmed losses against which individual write-downs 5 3 1 were previously not made 4 5 10
13 11 5 - Recoveries in respect of previously confirmed losses 5 11 14 170 133 37 = Total losses on loans 44 141 185
Individual write-downs for impaired value:Individual write-downs for impaired value
193 193 220 on loans and guarantees as at 01.01. 232 203 203- Confirmed losses during the period on loans and guarantees,
121 106 65 against which individual write-downs for impaired value has prev. been made 68 108 127 48 47 46 - Reversal of previous years' individual write-downs for impaired value 46 48 49
+ Increase in write-downs for impaired value for commitments against which 25 24 8 individual write-downs for impaired value were previously made 14 26 28
+ Write-downs for impaired value for commitments against which no 171 136 118 individual write-downs for impaired value was previously raised 118 139 177
= Individual write-downs for impaired value 220 200 235 on loans and guarantees * 250 212 232
Collective write-downs for impaired value:Collective write-downs for impaired value against losses on loans
196 197 227 and guarantees as at 01.01. 238 204 204+ Period's collective write-downs for impaired value against losses
31 27 - 35 on loans and guarantees - 36 29 34= Collective write-downs for impaired value against losses on loans,
227 224 192 and guarantees 202 233 238*Individual write-downs for impaired value on guarantees, NOK 2 million, are included in the Balance Sheet as liabilities under 'Provisions against liabilities'.
Note 5 - Individual- and collective write-downs for impaired value
Parent Bank(Amounts in NOK million)
Group
Note 3 -Net bad and doubtful commitments
Note 4 - Losses incorporated in the accounts
14/21
31.12.09 30.09.09 30.09.10 30.09.10 30.09.09 31.12.09
0 0 0 Central government administration and social security administration 0 0 1 140 240 150 Counties and municipalities 173 297 170
2 420 2 227 2 415 Agriculture, forestry, fisheries, hunting and fish farming 2 582 2 346 2 545 125 229 155 Production of crude oil and natural gas 155 229 125
1 116 1 172 1 195 Industry and mining 1 326 1 303 1 2402 109 1 976 2 270 Building and construction, power and water supply 2 582 2 275 2 4081 195 1 239 1 692 Wholesale and retail trade; hotel and restaurant industry 1 878 1 393 1 355 419 426 607 International shipping and pipeline transport 607 426 419
7 443 7 719 7 486 Financing, property management and business services 7 373 7 577 7 2961 463 1 371 1 302 Transport and communication 1 640 1 700 1 795 694 777 735 Other service industries 821 820 789 286 239 211 Insurance, fund management and financial services 119 85 157
28 970 30 055 30 229 Retail banking market 31 130 30 919 29 827 51 43 49 Foreign retail banking market 103 43 53
46 431 47 713 48 496 Gross lending 50 489 49 413 48 180
0 0 0 Central government administration and social security administration 0 0 0 0 0 0 Counties and municipalities 0 0 0
50 39 3 Agriculture, forestry, fisheries, hunting and fish farming 3 39 50 0 0 0 Production of crude oil and natural gas 0 0 0
24 23 12 Industry and mining 13 23 25 9 6 1 Building and construction, power and water supply 2 7 9 6 2 2 Wholesale and retail trade; hotel and restaurant industry 3 3 6 1 1 0 International shipping and pipeline transport 0 1 1
33 28 31 Financing, property management and business services 31 28 34 2 3 0 Transport and communication 3 3 7 2 0 11 Other service industries 10 1 3 0 0 3 Insurance, fund management and financial services 3 0 0
25 16 14 Retail banking market 16 19 30 0 0 0 Foreign retail banking market 0 0 0 0 0 0 Non individual specific write-downs public market 0 0 0
31 29 - 35 Collective write-downs public market - 35 30 31 0 - 2 0 Collective write-downs retail market 0 - 2 3 0 0 0 Unallocated market 0 0 0
183 145 42 Gross losses 49 152 199 13 12 5 Recoveries from previously written off losses 5 11 14
170 133 37 Net losses 44 141 185
622 975 1 313 Central government administration and social security administration 1 313 975 6225 532 4 826 6 013 Counties and municipalities 6 013 4 826 5 532 763 776 860 Agriculture, forestry, fisheries, hunting and fish farming 860 776 763
1 20 2 Production of crude oil and natural gas 2 20 1 412 363 455 Industry and mining 455 363 412
1 587 1 580 1 685 Building and construction, power and water supply 1 685 1 580 1 5871 322 1 105 1 422 Wholesale and retail trade; hotel and restaurant industry 1 422 1 105 1 322
23 23 33 International shipping and pipeline transport 33 23 232 773 2 974 2 841 Financing, property management and business services 2 840 2 962 2 764 844 851 736 Transport and communication 736 851 844 346 382 340 Insurance, fund management and financial services 339 375 340
1 758 1 769 1 812 Other service industries 1 812 1 769 1 75818 663 18 385 19 500 Retail banking market 19 500 18 385 18 663
246 246 252 Foreign retail banking market 293 246 24634 892 34 275 37 264 Deposits from customers 37 303 34 256 34 877
Note 8 - Deposits broken down by sector and industry
Group(Amounts in NOK million)
Note 6 - Loans broken down by sector and industry
Note 7 - Losses broken down by sector and industry
Parent Bank
15/21
Parent Bank Group
31.12.09 30.09.09 30.09.10 30.09.10 30.09.09 31.12.09
1 1 4 Repossessed assets 0 0 1
285 236 278 Accrued income 289 245 292
33 32 48 Prepayments 55 41 44
235 190 283 Other assets 342 227 241
554 459 613 Total other assets 686 513 578
471 978 820 Costs incurred 938 1 087 586
82 64 2 Provisioning against incurred liabilities and costs 53 69 107
539 314 780 Other liabilities 802 337 549
1 092 1 356 1 602 Total other liabilities 1 793 1 493 1 242
Note 10 - Other assets
Note 11 - Other liabilities
(Amounts in NOK million)
Note 9 - Subsidiaries
(Amounts in NOK 1 000) EquityShare of Eq.% 30.09.10 30.09.09 31.12.09 30.09.10 30.09.09 31.12.09
SpareBank 1 Finans Nord-Norge AS 100 36 340 54 894 64 912 258 227 276 779 286 798
SpareBank 1 Nord-Norge Invest AS 100 -2 485 -42 933 -64 779 96 094 12 598 -9 274
Eiendomsdrift AS 100 2 407 497 2 075 47 197 55 639 44 756
EiendomsMegler 1 Nord-Norge AS 100 4 884 5 068 3 783 22 219 18 445 17 334
SpareBank 1 Nord-Norge Forvaltning ASA 100 2 702 949 2 087 12 899 9 031 10 168
North-West 1 Alliance Bank 75 - 613 0 0 11 164 0 0
Profit from ordinary operations after tax
Note 12 - Investment in bonds
(Amounts in NOK million) 01.07.08 31.12.08 30.09.09 31.12.09 30.06.10 30.09.10Hold until maturityBook value 3 109 3 498 2 923 2 650 2 079 1 994Nominal value (nominal amount) 3 182 3 588 2 969 2 689 2 108 2 020Theoretical market value 3 109 3 358 2 885 2 623 2 058 1 983
Loans and claimsBook value 698 739 639 629 601 589Nominal value (nominal amount) 737 809 663 656 626 612Theoretical market value 698 675 621 599 582 572
Total book value 3 807 4 237 3 562 3 279 2 680 2 583
As a result of extraordinary market conditions, parts of the Bank’s ordinary securities portfolio became illiquid in 2008. Following the changes in international accounting standards in October 2008 (see note 1), the SNN Group decided to reclassify parts of the Bank’s bond portfolio as at 01.07.09 from the category ‘Market value with inclusion of value changes over the profit and loss account’ to the categories ‘Hold until maturity’ and ‘Loans and claims’ as the securities in question no longer was expected to be sold before maturity. In the category ‘Hold until maturity’ the Bank includes quoted securities, whereas unquoted securities has been put into the category of ‘Loans and claims.'In the categories ‘Hold until maturity’ and ‘Loans and claims’ the securities are assessed at amortized cost. After the reclassification, the writedowns made earlier will be reversed over the portfolio’s remaining life, which on average is 1,74 year as at 30.06.10, and included in the profit and loss account as interest income. For the last half year of 2008 and the year 2009, such inclusion of income amounts to NOK 44 million. As at 30.06.10 the amount booked as income is NOK 10 million. If the reclassification had not been made, the Group would have charged NOK 212 million to the profit and loss account in the third and fourth quarter of 2008 due to increased credit spreads. This unrealised loss would have been reduced to NOK 9 as at 30.06.10. It was necessary to apply a NOK 46 million write-down due to the permanent impairment of value in this portfolio as at 31.12.08. A further NOK 17 million write-down has been made on this part of the portfolio as at 31.12.09. No further write-down has been made in 2010. The portfolio had an NOK 478 million unrealised loss on foreign exchange as at 31.12.08. As at 31.12.09 the loss was NOK 3 million and as at 30.06.10 the unrealised loss is NOK 50 million.
16/21
Parent Bank and Group(Amounts in NOK million)
Securities issued31.12.09 30.09.09 30.09.10
Certificates and other short-term borrowings Bond debt 14 162 15 106 16 436Total debt securities in issue 14 162 15 106 16 436
Changes in securities issued:
Statement of financial position Issued
Matured/redeemed
Exchange rate
movementsOther
adjustments
Statement of financial
position31.12.09 30.09.10 30.09.10 30.09.10 30.09.10 30.09.10
Certificates and other short-term borrowings Bond debt 14 162 6 940 -4 539 - 205 78 16 436Total debt securities issued 14 162 6 940 -4 539 - 205 78 16 436
Subordinated loan capital and perpetual subordinated loan capital securities
31.12.09 30.09.09 30.09.10Perpetual subordinated loan capital securities2033 6 months Libor + margin (US$ 60 mill.)(call opt. 2013) 370 370 370Perpetual subordinated loan capital securities - currency - 24 - 20 - 17Total perpetual subordinated loan capital securities 346 350 353
Subordinated loan capitalSubordinated loan capital with definite maturities 1 262 1 182 995Total subordinated loan capital 1 262 1 182 995
Total subordinated loan capital and perpetual 1 608 1 532 1 348
Changes in subordinated loan capital and perpetual subordinated loan capital securities:
Statement of financial position Issued
Matured/redeemed
Exchange rate
movementsOther
adjustments
Statement of financial
position31.12.09 30.09.10 30.09.10 30.09.10 30.09.10 30.09.10
Subordinated loan capital with definite maturities 1 262 - 264 - 3 995Perpetual subordinated loan capital securities 346 7 353subordinated loan capital securities 1 608 - 264 4 1 348
Note 13 - Securities issued and subordinated loan capital
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Note 14 - Financial derivatives
Parent Bank and Group
(Amounts in NOK million)
Fair value hedging transactions 30.09.10 30.09.09 31.12.09Net loss charged to the statement of comprehensive income in
respect of hedging instruments in connection with actual value - 68 74 102
Total gain from hedging objects relating to the hedged risk 65 - 41 - 74
Total fair value hedging transactions
(Amounts in NOK million)
Fair value through statement of comprehensive income 30.09.10 30.09.09 31.12.09
Fair value Fair value Fair value
Foreign currency instruments Contract Assets Liabilites Contract Assets Liabilites Contract Assets Liabilites
Foreign exchange financial derivatives (forwards) 3 079 55 42 3 224 48 35 3 367 28 38
Currency swaps 6 086 159 88 6 313 177 100 5 934 103 34
Currency options
Total non-standardised contracts 9 165 214 130 9 537 225 135 9 301 131 72
Standardised foreign currency contracts (futures)
Total foreign currency instruments 9 165 214 130 9 537 225 135 9 301 131 72
Interest rate instruments
Interest rate swaps (including cross currency) 15 342 216 367 14 754 144 214 15 743 134 196
Short,-term interest rate swaps (FRA)
Other interest rate contracts 428 3 4 296 5 10 173 5 9
Total non-standardised contracts 15 770 219 371 15 050 149 224 15 916 139 205
Standardised interest rate contracts (futures)
Total interest rate instruments 15 770 219 371 15 050 149 224 15 916 139 205
Hedging of funding loans
Foreign currency instruments
Foreign exchange financial derivatives (forwards)
Currency swaps
Total, non-standardised contracts
Standardised foreign currency contracts (futures)
Total foreign currency instruments
Interest rate instruments
Interest rate swaps (including cross currency) 8 509 352 37 7 786 317 34 6 808 291 42
Short-term interest rate swaps (FRA)
Other interest rate contracts
Total, non-standardised contracts 8 509 352 37 7 786 317 34 6 808 291 42
Standardised interest rate contracts (futures)
Total interest rate instruments 8 509 352 37 7 786 317 34 6 808 291 42
Total interest rate instruments 24 279 571 408 22 836 466 258 22 724 430 247
Total foreign currency instruments 9 165 214 130 9 537 225 135 9 301 131 72
Total 33 444 785 538 32 373 691 393 32 025 561 319
The Bank's main Board of Directors has determined limits for maximum risk for the Bank's interest rate positions. Routines have
been established to ensure that positions are maintained within these limits.
Interest rate swaps:
Commitments to exchange one set of cash flow for another over an agreed period.
Foreign exchange derivatives:
Agreements to buy or sell a fixed amount of currency at an agreed future date at a rate of exchange which has been agreed in advance
Currency swaps:
Agreements relating to the swapping of currency- and interest rate terms and conditions, periods and amounts having been agreed in advance.
Interest rate- and currency swap agreements:
Agreements involving the swapping of currency- and interest rate terms and conditions, periods and amounts having been agreed in advance.
Options:
Agreements where the seller gives the buyer a right, but not an obligation to either sell or buy a financial instrument or currency at an agreed date or before, and
at an agreed amount.
SpareBank 1 Nord-Norge enters into hedging contracts with respected Norwegian and foreign banks in order to reduce its own risk. Financial derivatives
transactions are related to ordinary banking operations and are done in order to reduce the risk relating to the Bank’s funding loans from the financial markets,
and in order to cover and reduce risk relating to customer-related activities. Only hedging transactions relating to the Bank’s funding loan operations are defined
as ‘fair value hedging’ in accordance with IFRS standard IAS 39. Other hedging transactions are defined as ordinary accounts-related hedging. The Bank does not
use cash flow hedging.
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Group
30.09.10
(Amounts in NOK million)
Retail
Banking
Corporate
BankingLeasing
Unallocate
dTotal
Net interest income 426 362 76 - 20 844
Net fee- and commission income 168 143 - 1 75 385
Other operating income 0 0 0 256 256
Operating costs 331 280 19 51 681
Result before losses 263 225 56 260 804
Losses 11 26 6 1 44
Result before tax 252 199 50 259 760
Loans and advances to customers 30 277 18 218 2 321 - 327 50 489
Individual write-downs for impaired value on loans and advances to customers - 34 - 199 - 13 - 2 - 248
Collective write-downs for impaired value on loans and advances to customers - 59 - 133 - 10 0 - 202
Other assets 0 0 23 18 199 18 222
Total assets per business area 30 184 17 886 2 321 17 870 68 261
Deposits from customers 19 752 17 512 0 39 37 303
Other liabilities and equity capital 0 0 2 321 28 637 30 958
Total equity and liabilities per business area 19 752 17 512 2 321 28 676 68 261
30.09.09
Net interest income 472 373 71 - 15 901
Net fee- and commission income 146 116 - 3 58 317
Other operating income 0 0 25 265 290
Operating costs 357 281 19 39 696
Result before losses 261 208 74 269 812
Losses 9 123 8 1 141
Result before tax 252 85 66 268 671
Loans and advances to customers 30 098 17 615 2 159 - 459 49 413
Individual write-downs for impaired value on loans and advances to customers - 30 - 165 - 12 0 - 207
Collective write-downs for impaired value on loans and advances to customers - 56 - 168 - 9 0 - 233
Other assets 0 0 20 15 581 15 601
Total assets per business area 30 012 17 282 2 158 15 122 64 574
Deposits from customers 18 626 15 644 0 - 14 34 256
Other liabilities and equity capital 0 0 2 158 28 160 30 318
Total equity and liabilities per business area 18 626 15 644 2 158 28 146 64 574
Note 15 - Business Areas
Management has made an assessment of which business areas are deemed reportable with
respect to form of distribution, products and customers. The primary format of reporting
takes as a starting point risk and yield profiles of various assets and reporting is divided into
private customers (Retail Banking Market), Corporate / Public Market and leasing. Apart
from what is included in this list, the Group does not have any companies or segments which
are of significant importance. The Bank operates in a limited geograpfical area and reporting
along the lines of geograpfic segments provides little additional information.
19/21
Trading statistics
Price trend NONG
Note 16 - Primary Capital Certificates (PCCs)
The 20 largest PCC holders as at 30.09.10
Number Share of PCC Holders of PCCs PCC CapitalPareto Aksjer Norge 1 029 091 5.75%Pareto Aktiv 494 660 2.76%MP Pensjon 418 279 2.34%Frank Mohn AS 381 362 2.13%Tonsenhagen Forretningssentrum AS 319 126 1.78%Citibank N.A. 276 206 1.54%Framo Development AS 238 798 1.33%Nordea Bank Norge ASA 207 000 1.16%Sparebanken Rogalands Pensjonskasse 204 057 1.14%Pareto VPF 179 285 1.00%Forsvarets Personellservice 174 334 0.97%Karl Ditlefsen, Tromsø 154 359 0.86%Sparebankstiftelsen 153 478 0.86%Trond Mohn 143 279 0.80%Terra Utbytte Verdipapirfond 125 229 0.70%Fred Olsen & Co’s pensjonskasse 121 787 0.68%Euroclear Bank S.A 118 073 0.66%Troms Kraft Invest AS, Tromsø 115 113 0.64%Ringerike Sparebank 113 741 0.63%Taj Holding AS, Finnsnes 100 000 0.56%TOTAL 5 067 257 28.29%
NOK
421
873
396
161 56
8 41
7
781
553
181
045
281
907
275
475
1 02
6 88
7
652
316
504
949
493
782
1 05
1 53
1
528
328
850
700
164
976
401
553
366
282
1 28
6 75
7
1 29
7 29
1
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
mar
.09
apr.
09
may
.09
jun.0
9
jul .09
aug.0
9
sep.0
9
oct
.09
nov.
09
dec
.09
jan.
10
feb.
10
mar
. 10
apr.
10
may
.10
jun.
10
jul . 1
0
aug.
10
sep.
10
30
40
50
60
70
80
90
100
110
120
mar
.09
apr.
09
may
09
jun.0
9
jul.09
aug.0
9
sep.0
9
oct.
09
nov.
09
dec.
09
jan. 10
feb.
10
mar
. 10
apr.
10
may
.10
jun. 10
jul. 1
0
aug. 10
sep.
10
Dividend policyThrough its policy regarding owners of its capital and its dividend policy, the bank intends to ensure that its equity certificates are regarded as attractive and liquid financial instruments. The bank's objective is to manage the group's resources in such a way that, compared to comparable investments and taking into account the bank's risk profile, a good, long-term and competitive return on the bank's equity is achieved. For the owners of the bank's equity certificates, the return will be in the form of cash dividends and changes in the market price of the certificates. SpareBank 1 Nord-Norge's equity comprises two principal groups: the equity capital owned by the owners of the bank's equity certificates, and the equity capital that is socially owned. The bank's aim is to ensure that, over time, it will be a savings bank with a considerable element of socially-owned capital. Furthermore, the bank's goal is to treat the owner groups equitably, in accordance with the intentions in the current legislation. This implies that the bank will seek to avoid undesirable equity dilution effects that result from inequitable treatment of the two groups of owners. The profitfor the individual year is to be split proportionately between the owner groups in relation to their relative share of the bank's equity. Dividends will, as far as possible, be set so that each of the groups has at its disposal equally large relative shares of the profit as a dividend. Dividends will comprise cash payments to equity certificate holders and funds allocated to reserves for donations and endowments etc. The bank's aim is to distribute a total of up to 50 per cent of the profit for the year in the form of dividends.
Note 17 - SpareBank 1 BoligkredittIn the third quarter, SpareBank 1 Nord-Norge agreed, together with the other shareholders of SpareBank 1 Boligkreditt, to provide a liquidity facility to SpareBank 1 Boligkreditt. This involves the banks committing themselves to buying residential mortgage bonds with a maximum total value of SpareBank 1 Boligkreditt's debt maturing over the next twelve months. The agreement means that each shareholder has principal responsibility for his share of the requirement, and secondary responsibility for double the value of his principal responsibility. The bonds can be deposited with Norges Bank, which means that they do not significantly increase the Bank's risk exposure.
20/21
SpareBank 1 Nord-NorgeP.O. Box 6800N-9298 Tromsø
Telephone: (+47 915) 02244Web: www.snn.no
E-mail: [email protected]
Org.number: 952 706 365Headoffice: Storgata 65, Tromsø
SpareBank 1 Nord-Norge Main Board of Directors:Kjell Olav Pettersen, Tromsø (Chairman)Erik Sture Larre jr., Oslo (Deputy Chairman)Roar Dons, TromsøElisabeth Johansen, StamsundAnn-Christine Nybacka, BrønnøysundPål Andreas Pedersen, BodøAnita Persen, AltaVivi Ann Pedersen, Tromsø (elected from the employees)Gunnar Kristiansen, Sortland (elected from the employees, deputy)
Members of the Group Management Committee:Hans Olav Karde (Chief Executive Officer)Oddmund Åsen (Deputy Chief Executive Officer)
Rolf Eigil Bygdnes (Senior Group General Manager CFO)Elisabeth Utheim (Senior Group General Manager Support Functions)Geir Andreassen (Senior Group General Manager Risk Management)Stig Arne Engen (Director, Communication)
Investor RelationsRolf Eigil Bygdnes (Senior Group General Manager CFO)Telephone +47 776 22211e-mail: [email protected] Korsberg Dalsbø (Head of communication)e-mail: [email protected] +47 99380389
Interim reports and accounts 2010:4th quarter At the beginning of February 20111st quarter 6 Mai 20112nd quarter 10 August 20113rd quarter 26 October 2011
Liv Bortne Ulriksen (Senior Group General Manager Retail and Corporate Banking Market)
Information
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