Sparebanken Vest ANNUAL ANNUAL REPORT 2002
ANNUAL REPORT 2002
T11003-03-03 www.creato.no Telephone: +47 815 22 002 Telephone: [email protected] - http//www.spv.no [email protected] Telex:42 249 - Swift:SPAVNOBB - F.nr.: 832554332 249 - - F.nr.: Swift:SPAVNOBB Telex:42 RETURN ADDRESS: P.O.Box 7999, N-5020 Bergen - Norway Sparebanken Vest Annual Report 2002
CONTENTS NOTES TO THE ACCOUNTS
General information about Sparebanken Vest / Note 1 Interest income etc...... 24 Financial Calendar 3 Note 2 Interest expenses etc...... 24 Note 3 Dividends and other income on securities Financial Highlights 4 with a variable return ...... 24 Note 4 Commissions receivable and income Main features of 2002 5 from banking services ...... 24 Note 5 Commissions payable and cost of banking services ...... 25 Knut Ravnå – On the Way to Independence 6 Note 6 Net change in value of and gain/(loss) on foreign exchange and short-term securities ...... 25 A Living Organisation in Change 8 Note 7 Other operating income ...... 25 Note 8 Salaries and general administration expenses ...... 25 Group Management 9 Note 9 Depreciation of fixed and intangible assets ...... 26 Note 10 Other operating expenses ...... 26 Board of Directors of Sparebanken Vest 10 Note 11 Losses on loans and guarantees etc...... 26 Note 12 Taxes ...... 27 Directors’ Report 11 Note 13 Specification of timing differences ...... 28 Note 14 Loans to and deposits with credit institutions ...... 28 General Accounting Policies 21 Note 15 Loans to and receivables from customers ...... 29 Note 16 Distribution of gross loans and guarantees ...... 30 Notes to the Accounts 24 Note 17 Gross loans and guarantees distributed by main industries and retail market ...... 31 Auditor’s Report / Control Committee’s Report 55 Note 18 Non-performing, doubtful and non-accruing commitments . .31 Note 19 Total non-performing and other doubtful debts ...... 31 Key Figures (Group) 1998-2002 56 Note 20 Loss provisions ...... 32 Note 21 Change in non-accrued loan interest ...... 32 Key Figures (Quarterly) 2001-2002 59 Note 22 Loans and guarantees distributed by risk group ...... 33-34 Note 23 Assets acquired ...... 34 Retail Market 62 Note 24 Commercial paper, bonds and other interest-earning securities with a fixed return ...... 35 Corporate Market 64 Note 25 Bonds to be held until maturity ...... 35 Note 26 Investments in subordinated loans ...... 35 EiendomsMegler 1 Vest 66 Note 27 Shareholdings, investments and other securities with a variable return (NOK 1 000) ...... 36-37 Gifts for the Public Benefit 68 Note 28 Other owner interests (NOK 1 000) ...... 37 Note 29 Invest posted applying the equity method (NOK 1 000) . . .38 Corporate Governance 70 Note 30 Intra-Group transactions (NOK 1 000) ...... 38 Note 31 Main figures – Subsidiaries(NOK 1 000) ...... 39 Risk Management 71 Note 32 SpareBank 1 Gruppen AS ...... 40 Note 33 Intangible assets ...... 40 PCCs – ensuring Sparebanken Vest’s Independence 72 Note 34 Fixed assets ...... 41 Note 35 Investments and depreciation of fixed assets (NOK 1 000) . .41 Organisational Structure 73 Note 36 Buildings and other real estate (NOK 1 000) ...... 42 Note 37 Prepaid expenses and accrued income ...... 42 Elected Officers 74 Note 38 Loans and deposits from credit institutions ...... 42 Note 39 Deposits from and debt to customers ...... 42 Note 40 Distribution of deposits from and debt to customers . . . . .43 Note 41 Securitised debt ...... 43 Note 42 Other liabilities ...... 43 Note 43 Provisions for expenses and commitments ...... 44 Note 44 Pension commitments ...... 44-45 Published by the Information Department, Sparebanken Vest Note 45 Subordinated loan capital ...... 45 N-5020 Bergen – Tel.: +47 55 21 74 42 (Information Dept.) – Fax: +47 55 21 72 89 Note 46 Primary capital certificates, Sec. no. 6000900 www.spv.no (as at 31 December 2002) ...... 46 Note 47 Equity (NOK 1 000) ...... 47 Project management: Jørn Lekve Note 48 Capital adequacy ...... 47-48 Design: Creato as Note 49 Guarantees and mortgages ...... 48 Photos: Bent Synnevåg and Kati Indrefjord Note 50 Main regional figures for 2002 ...... 49 Printing: Grafisk Team AS Bergen Note 51 Liquidity risk / Residual maturity ...... 49-52 Text Assistance: Kati Indrefjord Note 52 Financial instruments and derivatives ...... 53-54 We wish to thank the following businesses for their assistance: Note 53 Disputes ...... 54 Sunnhordland Mekaniske Verksted, B. Telle Trearbeid AS and Oleana AS Note 54 Transactions with closely related companies ...... 54
2 Sparebanken Vest Annual Report 2002
SPAREBANKEN VEST
Total assets Sparebanken Vest is Norway’s fourth-largest savings bank with total assets of NOK 35 billion and providing employment equivalent to 804 full-time positions. The parent bank serves the retail and corporate market and the public sector in the counties of Hordaland and Sogn & Fjordane. The head office is in Bergen.
Market area The bank’s market area comprises the regions Nordfjord, Sogn, Nordhordland, Hardanger/Midthordland, West, Sunnhordland, Bergen North and Bergen South, with a total of 59 branches.
Retail bank Sparebanken Vest is the dominant retail bank in its market area, with over 200 000 customers for whom Sparebanken Vest is their primary bank. The bank has almost 70 000 online customers, and in the corporate market there were close on 13 500 clients at the end of 2002. The bank has recorded strong growth in the commercial sector in recent years. The bank’s proximity to and knowledge of the local market are important factors in this development.
Established in 1823 Sparebanken Vest is Norway’s second-oldest bank, with roots going back to 1823 when its predecessor, Bergens Sparebank, was founded. During the 180 years it has existed, the bank has been an active contributor to growth and development in the West of Norway. The bank’s declared goal is to strengthen its involvement in the development of society and reinforce its position as the largest independent bank in the region, with strong local roots.
The Group Apart from the parent bank, the Sparebanken Group comprises EiendomsMegler 1 Vest and Filialbygg AS, as well as Sparebankbygget AS in which the bank has a 52.5% shareholding.
FINANCIAL CALENDAR 2003
Accounting results 2003 The quarterly accounts for 2003 will be announced on 24 April, 7 August and 30 October. The results will be presented through the Oslo Stock Exchange and at our Internet address: www.spv.no.
3 Sparebanken Vest Annual Report 2002
FINANCIAL HIGHLIGHTS - SPAREBANKEN VEST GROUP
(NOK MILLION) 2002 2001 2000 1999 1998
PROFIT AND LOSS ACCOUNT
Net interest income and credit commissions 876 787 751 719 647 Net operating income 173 186 238 281 36 Operating expenses 722 684 641 591 550
Profit before losses and write-downs 327 289 348 409 133 Losses on loans and guarantees etc. 166 86 43 59 8 (Write-downs)/reversal of write-downs and gain/(loss) on long-term securities (58) (3) 33 134 (5)
Profit before tax 103 200 338 484 120
BALANCE SHEET
Total assets 35 449 32 367 31 098 26 255 23 619
Net loans to and receivables from customers 31 838 28 762 26 272 22 348 20 297 Securities 2 083 1 812 2 534 2 615 1 961
Deposits from and debt to customers 22 192 19 349 17 782 15 742 14 629 Subordinated loan capital and equity 2 954 2 571 2 768 2 267 1 959
KEY RATIOS (%)
Ratio of net interest income and credit commissions to average total assets 2.52 2.50 2.70 2.91 2.86 Ratio of profit before tax to average total assets 0.30 0.63 1.22 1.96 0.54
Return on equity after tax 3.12 6.39 12.03 20.36 4.36
Loan loss ratio 0.51 0.29 0.16 0.26 0.04
Change in gross loans to and receivables from customers 10.99 9.53 17.48 10.06 11.38 Change in deposits from and debt to customers 14.69 8.81 12.96 7.61 16.12
Net capital base (NOK m) 2 705 2 192 2 370 1 948 1 774 Capital ratio 11.07 9.93 11.93 11.43 11.21 Core capital ratio 8.63 9.68 10.25 10.82 9.94
Dividend per primary capital certificate (PCC) (NOK) 3.50 9.50 12 22 5 PCC price at year-end (NOK) 104 118 130 213 134 Effective return on PCCs (3.81) 0.00 (28.64) 62.69 (35.81) RISK amount (NOK) 89.09 45.81
Further information is shown in the summary of main figures and definitions on page 58.
Total assets Net interest income Profit (NOK billion) Net interest income and credit commissions Operating profit after tax (NOK million) (NOK million)
4 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Sparebanken Vest Annual Report 2002
MAIN FEATURES OF 2002
Pre-tax profit Taken as a whole, 2002 was an unsatisfactory year for Sparebanken Vest. However, the bank’s core activities developed well, with growth in both sales and the customer base. The number of customers showed an net increase of more than 8 400, mostly in the retail sector. Sparebanken Vest recorded a pre-tax profit of NOK 103m in 2002, NOK 97m down on 2001. The lower profit was mainly due to the loss of NOK 139m on the bank’s shareholding in SpareBank 1 Gruppen and an increase of NOK 125m specified loan losses related to Finance Credit Norge AS.
Dividend of NOK 3.50 The return on equity was 3.1% and failed to meet the bank’s target figure of 11.5% for 2002. This resulted in a dividend of NOK 3.50 per primary capital certificate which was the maximum dividend permitted under current regulations. At year-end the Group had total assets of NOK 35 448bn, reflecting growth of NOK 3bn (9.5%) in 2002. At the same time the Group had a capital ratio of 11.07% and a core capital ratio of 8.63%.
Market leader Sparebanken Vest has strengthened its position as market leader in the retail market, while an increased focus on the corporate market has increased both the number of customers and total assets. Deposits from and debt to customers rose by 15% to NOK 22.2bn. The retail market segment, which accounts for 22% of the portfolio, increased by 11%, while the corporate market segment grow by 22% during the year. Gross loans to and receivable from customers rose by 11% to NOK 11% to NOK 32.3bn, with the retail and corporate markets accounting for 13% and 6%, respectively.
Strong growth in insurance results Profits before operating expenses amounted to NOK 1 049m, against NOK 973m in 2001. The contribution from banking services increased by NOK 29m. Most of the increase came from a very sharp rise in sales of insurance products and a sound improvement in income from a number of banking services, including guarantee commissions, account-related fee income and payment services.
Out of the alliance At the end of October 2002 Sparebanken Vest gave notice that it was terminating its membership of the SpareBank 1 alliance. Today, Sparebanken Vest there fore has no influence on the activities of SpareBank 1 Gruppen AS, other than that of an ordinary shareholder. However, the bank remains a member of the alliance and will continue to distribute the alliance’s products during the period of notice which runs to the end of 2003 – unless agreed otherwise. Sparebanken Vest’s decision to withdraw from the SpareBank 1 alliance is based on the view that the bank is better able to serve its market and other interested parties through independent activity. Co-operation within the alliance developed in a way that gradually became incompatible with Sparebanken Vest’s strategy. Moreover, the financial costs attributable to the jointly controlled activities of SpareBank 1 Gruppen AS no longer corresponded to the value of being a part owner of a financial services group.
5 Sparebanken Vest Annual Report 2002
6 Sparebanken Vest Annual Report 2002
MANAGING DIRECTOR KNUT RAVNÅ: ON THE WAY TO INDEPENDENCE
In many areas, 2003 will be an exciting owner banks will show whether there is a One of the bank’s strongest competitive year for Sparebanken Vest. Last year we basis for further distribution of the advantages is its large customer base decided to withdraw from the SpareBank 1 alliance’s products when the period which we are intent on maintaining and alliance. 2003 will be a year of transition of notice expires. The bank will also be developing in order to increase the when Sparebanken Vest will have to entering into distribution agreements number of satisfied and loyal customers. make the adjustments needed to enable with product suppliers, ensuring that we Customer satisfaction will therefore be us to re-assume our position as an will continue to be a full-scale provider of one of our main control parameters in independent bank with effect from financial services. the coming years, forming a natural part 1 January 2004. of our new control function based on Focus on value balanced scorecards. The decision to withdraw from the alliance creation in West of Norway was based on our disagreement with the An increasing number of financial Leaving it to strategy adopted by the SpareBank 1 institutions are merging and moving the customer to choose alliance. In our view, the alliance is their head office to Oslo or abroad, Our branch network is one of our pursuing a course of action which is leaving a vacuum which is to the obvious strengths, but only when it is incompatible with Sparebanken Vest’s particular detriment of the communities supplemented by Customer Service, strategy which is based on the continuing in the region and corporate clients. the Telephone Bank and Netbank independence of the bank. The interests Sparebanken Vest intends to fill this (our online banking facility) do we have a of our customers, our region and our vacuum. Our function is to make our full-strength and competitive distribution employees are best served by having all customers stronger and to strengthen network. We believe that the customers banking expertise and decision-making the region represented by Western themselves should be able to choose the authority located within one entity. Norway. We shall play a leading role as channel they wish to use in their contact Sparebanken Vest has regarded the a partner in the process of making with us, and we see that most of our SpareBank 1 alliance as a means to an Norway’s coastal region both viable and customers use several channels. end for the participating banks, and it influential. This is where value is created, has never been our wish to participate in and we intend to play a major role in the Competent staff a development which in our view will dilute way these values are managed. – a prerequisite both the influence and independence of Competent staff are also a prerequisite if the individual owner banks. Business as usual we are to succeed in attracting customers. Sparebanken Vest has a thorough know- The results of last year’s staff satisfaction Challenges in 2003 ledge of its market area and the people survey, which had a reply rate of 94%, Sparebanken Vest will continue as an who work there. We have set ourselves showed that our personnel have a high independent bank, serving the best ambitious targets for 2003 in terms of degree of job satisfaction, strong loyalty interests of the customers, employees, sales, efficiency, customer satisfaction to the organisation, and believe that society and the owners of the bank’s and results. This is necessary it we are to their work offers them challenges. primary capital certificates. Our primary become the bank we want to be. The Overall, this would indicate that challenge is to re-establish Sparebanken results for 2002 show that we are on the Sparebanken Vest is well placed to meet Vest as an independent bank, and to this right path, and the bank’s core activities the future. end the necessary steps will be taken to are performing very well. We have lay the foundations for independent strengthened our position in both the Changed operations with effect from 1 January retail and corporate markets, and there operating conditions 2004. This process has already been has been an increase in both the capital However, it is a fact that overall operating started in the form of a project with a base and the number of customers. conditions present a number of challenges. number of sub-projects. The accounts During the year there was also a clear We have a strong krone, high interest for 2002 include a provision of NOK improvement in the level of customer rates, an increasing unemployment 57m for restructuring. satisfaction. The focus on sales and which together mean that loan losses customer satisfaction in the last few may increase. There is also a trend in New brand to be established years is bringing positive results. several countries, including Norway, Withdrawal from the alliance means that towards tighter financial markets. In any a new brand will be established for Customer satisfaction event, we are entering a period of major Sparebanken Vest. The design and important for profitability change – and this also apples to the development of the bank’s new brand Sparebanken Vest is well placed to banking sector. We are well prepared to and profile will reflect the bank’s vision achieve its goals in 2003. The bank has a meet this challenge, thanks to our: and core values as well underlining its large customer base, a sound capital Proximity to the market, local competence involvement as an active contributor to base, a good reputation in the market, and swift decision-making procedures, the development of the West of Norway. a broad range of products, a loyal and especially in relation to the regional and Further discussions with the remaining capable workforce, and strong local roots. local commercial sector.
7 Sparebanken Vest Annual Report 2002
A DYNAMIC AND RESPONSIVE ORGANISATION
Customers in focus in relation to their own development, will also provide a guideline for further A dynamic organisation must continuously and that they enjoy working alongside development of the bank’s new strategies respond to the needs of the market. This their colleagues. We believe that basic and objectives – a process that is currently will be even more important in the future. employee satisfaction is necessary in order under way. The activities of Sparebanken Vest were to achieve good customer satisfaction. therefore reorganised in 2002 in order The employee satisfaction survey carried The future to intensify the focus on the customer out in 2002 paints a picture of an We are optimistic in our view of the future and create a dynamic and competitive organisation with strong bonds between and we look forward to meeting new organisation. This process has involved colleagues, a good relationship with challenges in 2003. The period head will the establishment of three divisions with immediate superiors, and a positive be one of preparation to ensure that we focused on maximising performance in perception of the challenges which the stand firmly "on our own legs". In the the area of banking services, customer job presents. This is reflected in a strong coming year we will continue to reinforce service and use of resources. Experience loyalty to the organisation, a high level of expertise, further steps will be taken to shows that this was a correct choice, job satisfaction and a clear perception enhance the level of customer satisfaction, and that each division has achieved its of job mastery. the process of developing and refining target figures along with an increase in the good interaction of our various customer satisfaction. Development channels of distribution will be maintained, Sparebanken Vest believes it is important and active steps will be taken in the area Scorecard that employees are given the opportunity of management development to ensure In January 2002 Sparebanken Vest to develop, and possible career paths that the interest of the workforce are started using a new control tool based may relate to professional areas or taken care of. In so doing we shall ensure on Balanced Scorecard principles. management. At any given time, 10-15% that Sparebanken Vest continues to The bank has undergone great changes of the workforce are part-time students be the leading retail bank in the West in recent years. While we were previously at a university or college. It is important of Norway! a traditional provider of financial services, that our employees have sound professional A bank where it is good to be a customer, we are now an active, sales-oriented skills. Certification of professional com- because we exist for our customers! company. This has entailed a change of petence will be introduced in 2003 and focus. Rather than concentrating mainly implemented on the basis of online on financial resutls, our attention is now training. Our employees also have sound also directed at non-economic parameters banking experience and are focused on such as employee satisfaction, customer establishing firm customer relationships. orientation, competence and development. This strengthens our position in the After only one year, we are already starting marketplace. to reap the benefits of this approach. Among other things, success is measured Corporate governance on the basis of the score at management Corporate governance has become a and ownership level, and extending to the focus of attention for all listed companies branches. At the same time, our primary and it is therefore high on Sparebanken concern has been to get the process into Vest’s agenda, with a particular emphasis action as soon as possible, rather than on corporate responsibility and risk ensure that we have achieved a 100% management which we regard as being solution. of exceptional importance. Good corporate The scorecards are used at all levels governance is necessary in order to win within the bank, among the staff and in confidence in the financial markets, the line management. and great importance is attached to confidence in the assessment of a Employee satisfaction company. It is especially important for For Sparebanken Vest is important that banks, and Sparebanken Vest will take the employees feel that their work great note of recommendations made in presents challenges, that they are active this area. Good corporate governance
8 Sparebanken Vest Annual Report 2002
GROUP MANAGEMENT
Rune Bjørhovd Arne Selle Elin Sjødin Drange Jørn Lekve Knut Ravnå Monica S. Salthella (born 1955) (born 1953) (born 1959) (born 1961) (born 1948) (born 1969) Personnel director. Director of operations Director, Retail Market Director of Information & Managing director since Deputy managing Joined the bank in since 1994. since 2002. PR since 1999. 1990. Joined the bank in director / Director, January 2002. Joined the bank in 1992. the Norwegian School of Joined the bank as head 1973. Left for 2 years to Corporate Market Previously employed Previously work in the Economics and of information services in be assistant general since 2002. at Haukeland Hospital Frank Mohn Group Business Administration 1996. Formerly editor of manager of DnC Economist from and in the Norwegian in period 1979 - 1992. (NHH) (1983). Horda Tidende and Haugesund. Kings College, London. Armed Force. Graduate civil engineer Formerly employed with commercial journalist Graduate of the Formerly managing Graduate of the from Norwegian DnB and Vital Forsikring with Bergens Tidende. Norwegian School of director of Skandia Norwegian Naval University of Science AS, lastly as divisional Graduate of the Economics and Fondsforvaltning AS. Academy and and Technology (NTH) director with Vital Norwegian School of Business Administration the Norwegian School in Trondheim in 1977. Forsikring AS. Economics and (NHH) (1972). of Economics and Business Administration MBA from University Business Administration (NHH) (1989). of Michigan (1979). (NHH). 9 Sparebanken Vest Annual Report 2002
BOARD OF DIRECTORS OF SPAREBANKEN VEST
Terje Kvamme Erik Bøckmann Pål W. Lorentsen Bjørn Ove Børnes Erling Mjelde Anne Gine Hestetun Bergen (born 1946) Bergen (born 1955) Bergen (born 1941) Klokkarvik (born 1948) Arna (born 1941) Bergen (born 1962) Assistant general manager Deputy managing director Barrister. Managing director of Board member since 2002. Member of Bergen of Sparebanken Vest. of Bergen Energi AS. Board member since 2000. HSD Buss AS. Elected by governors Municipal Executive Board. Board member since 1991. Board member since 2000. Chairman since 2000. Board member since 1992. appointed by the local Board member since 1998. Deputy chairman since 1998. authority. Chairman of Arna Urban Neighbourhood Committee, Bergen Local Jan O. Yttredal Eli Førde Aarskog Knut Ravnå Authority. Husnes (born 1943) Nordfjordeid (born 1955) Bergen (born 1948) Managing director of Managing director of Managing director Anne Sissel Sør-Norge Aluminium. Eidatunet AS. of Sparebanken Vest Raunholm Engevik Board member since 1998. Board member since 1999. since 1990. Stord(born 1962) Elected employee representative. Board member since 1992.
10 Sparebanken Vest Annual Report 2002
DIRECTORS’ REPORT 2002
The accounts for 2002 show a pre-tax Bank activities SpareBank 1 Gruppen AS is now owned profit of NOK 103m, against NOK 200m Sparebanken Vest is an independent as follows: FöreningsSparbanken 25%, in 2001. The profit after tax NOK 69m, banking and financial services group SpareBank 1 Nord-Norge, SpareBank 1 of which NOK 67m was the attributable based in Bergen and with branches in Midt-Norge, SpareBank 1 SR-Bank and to majority interests. The net profit the counties of Hordaland and Sogn & Samarbeidende Sparebanker each with corresponded to a return on equity Fjordane. The Group is also engaged approximately 14%, LO 10% and of 3.1% after tax, and thus failed to meet in estate agency activities through Sparebanken Vest with almost 8.7%. the bank’s target figure of 11.5% EiendomsMegler 1 Vest AS and property The SpareBank 1 alliance is based on for 2002. The Board proposes a cash companies. bank co-operation and it seeks to dividend of NOK 3.50 per primary capi- be a total supplier of financial services. tal certificate for 2002 and that NOK In addition to the parent bank which Services from SpareBank 1 Gruppen’s 15m be allocated to gifts for the public accounts for 64% of consolidated profits, subsidiaries are distributed mainly benefit. the Group comprises the subsidiary through the owner banks. At the holding company Sparebanken Vest end of 2002, as the parent bank of The proposed dividend corresponds to Holding AS, AS Filialbygg and Sparebank- a financial group, SpareBank 1 Gruppen AS 13% of the profit recorded by the parent bygget As in which the bank has a 52.5% had a 100% shareholding in SpareBank 1 bank, and is the maximum dividend shareholding. In 2003 the subsidiary Livsforsikring AS, SpareBank 1 Skade- which the bank is permitted to pay under holding company Sparebanken Vest forsikring AS, Odin Forvaltning AS, Bank current regulations. At the start of the Holding AS will be wound up and merged 1 Oslo AS, SpareBank 1 Fondsforvaltning year, primary capital certificates made up with tax effect with the parent company. AS, and some smaller companies engaged 11.7% of the parent bank’s equity, after in financing and asset management. adjusting for the reserve for valuation The estate agency company will be SpareBank 1 Gruppen AS also has a 65% variances. directly owned by the parent bank. holding in EnterCard AS and a 33% Sparebanken Vest sells a broad range of holding in First Securities. The pre-tax profit was NOK 97m down financial services through subsidiaries on the previous year. The decline should owned by SpareBank 1 Gruppen AS in At the end of October 2002 Sparebanken be considered in the light of the bank’s which Sparebanken Vest had an 8.67% Vest gave notice that it was terminating share of the higher losses incurred shareholding at year-end. its membership of the SpareBank 1 by SpareBank 1 Gruppen AS, the write- alliance. Today, Sparebanken Vest therefore down of the shareholding in SpareBank The SpareBank 1 Alliance has no influence on the activities of 1 Gruppen AS, and an increase in loss The SpareBank 1 alliance is the result of SpareBank 1 Gruppen AS, other than provisions. a binding co-operation agreement ente- that of an ordinary shareholder. However, red into in 1995 by four regional savings the bank remains a member of the In 2002, the Oslo Stock Exchange total banks. The licence needed to establish alliance and will continue to distribute index fell by an unprecedented 31.1% to both the licence and SpareBank 1 the alliance’s products during the period 115.2 points, the highest decline of its Gruppen AS was received in 1996, of notice which runs to the end of kind in modern stock exchange history. and in the same year Samarbeidende 2003 – unless agreed otherwise. During the same period the primary Sparebanker became part of the alliance. Sparebanken Vest’s decision to withdraw capital certificate (PCC) index fell by Samarbeidende Sparebanker currently from the SpareBank 1 alliance is based 18%, while Sparebanken Vest’s PCCs fell consists of 15 savings banks located in on the view that the bank is better able to by 5.5% (including the dividend of NOK the eastern and northern flanks of west serve its market and other interested 9.50). The highest traded price was NOK Norway. parties through independent activity. 145 (on 16 May 2002) and the lowest Co-operation within the alliance developed NOK 98 (on 20 December 2002). At 20 FöreningsSparbanken AB (publ.) became in a way that gradually became incom- February 2003 the price stood at NOK a shareholder of SpareBank 1 Gruppen patible with Sparebanken Vest’s strategy 103. AS in 1999, and the Norwegian which is based on development of the Federation of Trade Unions (LO) acquired bank as an independent entity. Moreover, The level of trading in the bank’s PCCs a shareholding in the autumn of 2000 the financial costs attributable to the has been unsatisfactory. At year-end, in connection with the takeover of jointly controlled activities of SpareBank 1 Sparebanken Vest owned 6 950 of its own Vår Bank og Forsikring. Sparebanken Gruppen AS no longer corresponded to PCCs based on the authorisation given Vest did not participate in a share the value of being a part owner of a to the bank by the Board of Governors capital increase effected by SpareBank 1 financial services group. Sparebanken in 2002 to purchase and sell its own Gruppen AS in December 2002, and as a Vest has concluded that ownership of this securities. This was done mainly in order result our shareholding was diluted kind is not necessary for the bank to be a to boost trading in the bank’s PCCs. from 13% to 8.67%. total supplier of financial services.
11 Sparebanken Vest Annual Report 2002
DIRECTORS’ REPORT 2002
By the end of April 2003 Sparebanken bank’s withdrawal from the SpareBank 1 Working Environment Agreement. The Vest expects to have negotiated an alliance. This includes the establishment average incidence of sick leave stood at agreement with the SpareBank 1 alliance of a new brand and a new online banking 6.2% in 2002, against 6.3% in 2001. concerning the bank’s withdrawal from facility. Sparebanken Vest carries out annual the alliance, including the possibility of internal organisational surveys based on continued distribution of parts of the Personnel, working motivation and stress theory to measure alliance’s product range. In the period environment and safety key areas affecting the level of job ahead Sparebanken Vest will continue to At 31 December 2002 the parent bank’s satisfaction. The participation rate is distribute a broad range of financial operative workforce corresponded to high, with replies from 94% of the services. 708 full-time positions, a reduction of 63 workforce in 2002, and the surveys compared with the previous year. At show that the bank has a good working Up to 31 October 2002 the bank’s share- the same time, the Group provided environment. Where there is scope for holding in SpareBank 1 Gruppen AS was employment corresponding to 804 full- improvement, this is carried out and regarded as participation in jointly time positions. monitored within the relevant depart- controlled activity and the equity method ments. of accounting was applied. For the The Board considers the bank’s period from 1 January to 31 October working environment to be good. Equal opportunity for women is an 2002 13% of the results posted by Systems and procedures are in accordance important aspect of the bank’s working SpareBank 1 Gruppen AS were recorded with Regulations relating to Health, environment, as well as being a major in the bank’s profit and loss account, Environment and Safety, and a new competitive factor. We encourage showing a loss of NOK 127m for electronic system for use in safety women to apply for managerial Sparebanken Vest. Following the notice inspections was implemented during positions with the bank and, other of withdrawal from the alliance, our the year. The Working Environment things being equal, women receive shareholding has been entered on the Committee held four meetings in 2002. priority when senior positions are to be basis of the cost method and the No resources or production methods are filled. Two out of 9 positions at regional holding classified under long-term used which directly pollute the external bank manager level are currently held by shareholdings. At year-end 2002, applying environment. The bank encourages women, and women make up one third the lowest value principle, the share- environmental awareness in relation to of the Group management. Among the holding was valued at NOK 166m, the use of paper, the management of elected Board members, one third are corresponding to 8.67% of the estimated waste and recycling. In exercising credit women, and 59% of the bank’s workforce equity of SpareBank 1 Gruppen AS at 31 policy, the bank is also guided by are women. December 2002. This entailed a write- the customers’ compliance with environ- down of NOK 50m which was charged in mental requirements. Norwegian economy the profit and loss account in the fourth and international quarter of 2002. Sick leave is actively monitored, and in economic developments this connection the company health Uncertainty was again the prevailing The accounts of Sparebanken Vest for service, the safety service and managers feature of the international economy in 2002 include a provision of NOK 57m all play a central role. In 2003 the bank 2002. The growth rate in the industrialised for restructuring in connection with the become a signatory to the Inclusive countries was only around 1.75%,
Number of full-time positions (Group) Dividend per primary capital certificate (NOK) Core capital ratio (%)
1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002
12 Sparebanken Vest Annual Report 2002
DIRECTORS’ REPORT 2002
compared with an average annual growth there is also an expectation that invest- NOK 1 049m, against NOK 973m in rate of about 3% over the last 20 years. ment in the petroleum sector will stimulate 2001. Profits from banking services The expected stimulus from the USA the economy in 2003. increased by NOK 29m, most of which failed to materialise, although the level of was attributable to an upsurge in sales activity was higher in the USA than in As a result of the uncertainty surrounding of insurance products and a sound Western Europe and Japan. It is hardly an the outcome of the imminent re- increase in income from a number of overstatement to say that the global negotiation of the Norwegian EEA other banking services, including economic picture at the start of 2003 Agreement and the consequences of the guarantee commissions, account-related gives grounds for concern. The financial admission of a further 10 countries to the charges and payment services. markets are unsettled at the prospect EU in 2004, an increasing number of of a war In Iraq, and looking ahead the Norwegian companies are considering Sparebanken Vest was only moderately most likely scenario is that the global relocating their activities abroad. exposed to the stock market in 2002, economy will continue in low gear in 2003, with aggregate losses for the year although the possibility of a general The price of oil has been rising, spurred amounting to NOK 18m. downturn cannot be excluded. on by the fear of war in Iraq and a general strike in Venezuela. As a result, the price The bank’s share of the losses recorded As 2002 started, the outlook for the of oil had risen to more than USD per by SpareBank 1 Gruppen AS for the Norwegian economy was bleak, with a barrel at the start of 2003, leading the period from January to October is strong possibility of lower interest rates. OPEC countries to increase production charges in the accounts in the sum of However, a very expansive national wage quotas from February in order to bring NOK 127m. At 31 October 2002 the settlement led to a tighter monetary the price down to around USD 25 per bank’s shareholding in SpareBank 1 policy when Norges Bank raised its refe- dollar. Gruppen AS had a book value of NOK rence rates in order to keep inflation 216m. This was written down again at down. A considerable strengthening of After adjusting for public charges and year-end, bringing the book value to the Norwegian krone and high real rates energy prices, the average inflation rate NOK 166m. of interest at home combined with a for the year as a whole was 2.4%, while stagnant global economy resulted in an the revolving 12-month rate showed a Operating expenses were 6% up at increasingly weaker domestic economy in downward trend and stood at 1.8% from NOK 722m. The increase in costs the second half of the year. The pace of December 2001 to December 2002. includes a provision of NOK 57m for growth has declined and profitability in There is an expectation that the pace of restructuring, while the corresponding large parts of the commercial sector has wage and price growth will be lower in provision in 2001 was NOK 20m. An fallen. The export sector, in particular, has 2003 than it was in 2002, which is also extensive efficiency programme has had increasing difficulties due to the why in December 2002 and January 2003 been carried out to strengthen the strengthening of the krone, and this has Norges Bank reduced its reference rates bank’s competitive position. After been reflected in an increasing number of by a total of 1 percentage point, with the allowing for the increased provision job losses. The effects were moderate prospect of further interest rate reductions for restructuring measures, operating in 2002, but if the situation continues the later this year. expenses were stable from 2001 to 2002. number of job losses could rise to Payroll and general administration costs significant levels sin 2003. At the start of Results and balance sheet fell from NOK 540m to NOK 514m, 2002 the unemployment rate stood at development – Group while other operating expenses were 3.6%, but by year-end there were more The annual report and accounts are NOK 63m higher, including the provision than 92 000 unemployed, or 3.9% of the submitted on the assumption that the for restructuring. The ratio of costs to workforce. bank will continue as a going concern. income stood at 68.8%, against 70.3% This is based on operational forecasts in 2001. The level of domestic demand was for 2003, as well as projections and At year-end, gross lendings and receivables maintained throughout the year thanks strategic assessments with a time from customers totalled NOK 32 348m, to public and private consumption. horizon extending for a further three reflecting growth of 11% in the course of Expectations of higher unemployment, years. the year. The retail segment, which lower wage growth and high energy prices accounts for 70% of the portfolio, showed may again result in stagnation in 2003 Net interest income and commissions 13% growth, while the corporate segment and a decline in the rate of inflation receivable increased by NOK 89m to grew by 6%. (adjusted for energy prices). However, the NOK 876m. The ratio of net interest abolishment of the investment tax in the income to average total assets increased Deposits and accounts payable to fourth quarter of 2002 may stimulate by 0.02 percentage points to 2.52%. customers amounted to NOK 22 192m investment in the corporate sector, and Profits before operating expenses totalled at year-end, corresponding to annual
13 Sparebanken Vest Annual Report 2002
DIRECTORS’ REPORT 2002
growth of 15%. Growth was also recorded During the year the bank recorded a net The increasing degree of self-service and in the retail and corporate market, with inflow of well over 8 400 new customers, automated functions has made it 11% and 22% respectively. The funding mostly in the retail sector. possible to reallocate resources in the ratio (ratio of deposits to net lendings) branches and improve and extend rose from 67.3% to 69.7%. and is SpareBank 1 Vest has a portfolio of advisory services and sales at the seller’s considered to be at an acceptable level. 200 000 retail customers who use the initiative. The customers made greater bank to cover all their banking require- use of Customer Service in 2002. This Losses charged in the accounts increased ments. In addition, more than 50 000 is a multi-channel service centre, and by 93% to NOK 166m, equal to 0.51% customers regard Sparebanken Vest as currently one of the bank’s best sales of gross lendings. Gross non-performing their second bank. Sparebanken Vest channels. In 2002 it dealt with around loans corresponded to 0.92% of total had 13 500 clients in the corporate one million customer calls. loans. The loss ratio in the retail market market at the end of 2002. was 0.45% and 1.98% in the corporate The installation of a new queue manage- market. Excluding the bank’s commit- Steps were taken in 2002 to strengthen ment system was completed in all the ment with Finance Credit, the loss ratio the sales culture within the bank, and branches in the Bergen region during in the corporate market was under 1%. this is clearly reflected in the sales for the they year. The system will also be installed The level of defaults in both segments year. The focus on sales management in the busiest branches in the other is within the limits which the Board has been intensified, and during the year regions. The reduction of waiting times considers acceptable. all of the bank’s sales managers took has been a priority and positive results part in a sales management programme have been achieved. In the view of the Board, the specified arranged by the bank in co-operation The branches in Øystese in Tysse and unspecified loss provisions at year- with the Administrative Research (Hardanger) and in Førde (Sunnhordland) end, amounting to NOK 296m (196) and Institute (AFF). In 2003, all of the bank’s were closed in the summer of 2002, NOK 218m (188), respectively, are sellers and advisers will take part in a bringing the total number of branches to sufficient in relation to the assessed certification programme for selected 59 at year-end. exposure which the portfolio represents. products in order to give the bank’s A loss provision of NOK 125m has been personnel added competence. Sparebanken Vest strengthened its market made for the bank’s total commitment position in the corporate sector throug- with Finance Credit. For the most part, the bank reached its hout the year, with 13 500 corporate target sales figures for 2002, excluding clients at year-end. The good progress The SpareBank 1 Vest Group posted fund and investment products. Sales of being made in the corporate market pre-tax profits of NOK 103m, while loan products were well ahead of the can be partly attributed to a strategy the profit after tax was NOK 69m. target figures for both the retain and the which is based on independence and Ordinary banking operations provided corporate markets, with housing loans the bank’s ability to take swift decisions. satisfactory results, with profits after doing exceptionally well. The bank’s Our objective is to be a strong partner losses from retail and corporate market focus on insurance products is also in the commercial sector, and to contribute activities amounting to NOK 327m, showing very good results. Sparebanken actively to development within our the same as in 2001. Before losses, Vest’s sales of non-life insurance were geographical area. profits in these segments were NOK the best of all the SpareBank 1 banks. 80m up on 2001. Sales of non-life products in the retail A separate Corporate Market Division market increased by 35.4% from 2001 to was set up with effect from April During the year the Group’s total assets 2002. The number of online customers 2002, followed by the establishment rose by 9.5% to NOK 35 448m, and at increased by 25 000 in 2002, with 70 000 of a new subsection, Marine/Shipping, year-end the capital ratio stood at customers now using this channel of to provide an enhanced service for a 11.07% while the core capital ratio was distribution, in addition to their local growing clientele. 8.63%. The bank’s target figure is a branch and Customer Service. At year- capital ratio of 12%. end, 60% of the bank’s customers aged Risk and internal control between 25 and 34 were users of the The bank’s operations are exposed to Retail and corporate markets bank’s online services. The number of a number of risks, and an overall Sparebanken Vest has strengthened its bank card purchases corresponded to 15 assessment of risk is carried out each leading position in the retail market in million transactions in 2002, 15% up on year. Through annual confirmation Hordaland and Sogn & Fjordane. A 2001. The increased use of bank cards procedures related to the Board’s strengthened focus on the corporate and online facilities has helped to reduce overall risk assessment the bank market has also brought new customers queues in the branches and has made ensures that internal controls aimed at and increased the level of total assets. the bank generally more accessible. major areas of risk in the bank’s areas
14 Sparebanken Vest Annual Report 2002
DIRECTORS’ REPORT 2002
of activity are reviewed and confirmed. within the parameters set for interest rate Defaults of more than 90 days are Major deviations are reported and exposure. These parameters are based reported, and defaults are at a level remedial action is taken. on the maximum effect on profits defined by the bank as acceptable. resulting from a parallel change of one The bank focuses risk in relation percentage point in the interest rate The bank has a sound risk classification to strategy, financial activities and curve and relate mainly to defined system for the retail and corporate operations. The financial risk is made securities portfolios. The maximum markets. In the corporate market, 20% up of the liquidity risk, the market risk effect on profits has been set at NOK of the loan portfolio was considered to and the credit risk, while the market risk 50m. The net interest rate exposure at have a medium-to-high risk at the end itself reflects the bank’s exposure to year-end 2002 was NOK 5.3m. of 2002. This represents a decrease of changes in interest rates, foreign five percentage points in there risk exchange rates and share prices. Norges Bank’s foreign exchange categories in the course of the year. regulations set the parameters for the Loss provisions have been made where The strategic risk is determined by the bank’s maximum foreign exchange considered necessary. Real estate, bank’s ability to maintain the correct exposure. In kroner terms, the bank’s shipping and the wholesale and retail operational focus and by the expertise aggregate foreign currency position trade are the largest individual branches at Board level and in the everyday (the aggregate of all currencies) cannot in the corporate market. Commitments management of the bank’s affairs. The exceed 30% of the bank’s eligible in excess of NOK 20 million account risk is revealed through the ongoing capital base. The corresponding amount for 53% of the total portfolio in the process of discussion and deliberation in NOK in any one currency cannot corporate market. within the Board and the management, exceed 15% of the bank’s eligible and through periodic assessments. capital base. SpareBank 1 Vest has set The risk attached to the corporate the limits at 20% and 10%, respectively, portfolio in 2003 is regarded as moderately The bank’s financial risk is identified and the bank has a moderate foreign rising. This applies especially to shipping, and managed through monthly reports currency position which corresponded fish farming and the fisheries, where based on limits set by the Board. The to NOK 48m at year-end. the bank’s commitments at year-end risk limits are reviewed by the Board 2002 totalled NOK 3 431m. once a year, or more often if required. Stock market investments relate largely to listed Norwegian companies. The The risk in the retail market is considered SpareBank 1 Vest has moderate liquidity bank had only moderate stock market to be moderate, with only a marginal exposure. The funding ratio (ratio of exposure in 2002. The maximum rise envisaged in 2003. Only 1.7% of the customer deposits to lendings) is exposure for stock market investment portfolio is regarded as representing an around 70%, which is regarded as has been set at NOK 250m, in terms of above-average risk. satisfactory when considered in the market value, plus a fluctuation value light of the bank’s overall funding of 10%. The actual exposure at year- The bank’s net losses in 2002 corre- structure. As regards funding sources end 2002 was NOK 20m, related sponded to 0.51% of the loan portfolio, other than customer deposits, a mainly to investments in primary and of this Finance Credit accounted for maximum of NOK 2bn is permitted to capital certificates. 75% of net losses. In a longer perspective, have a maturity of 7 days or less, while the loss ratio may rise to 0.5% of the volumes in excess of NOK 4bn are The credit risk is monitored through portfolio, while the best estimate at required to have a maturity of at least default reports, risk classification and 0.35-0.4%. In the corporate market, the three months. branch analyses. The bank has extensive losses are expected to arise in areas regulations for credit assessment and with a medium to high risk, with a The bank has been accorded a satis- the management of credit risk based on preponderance of high risk items. In the factory rating by recognised international an adopted credit policy which is retail market, only marginal losses are rating agencies, which is of considerable reviewed annually. Great importance is expected in the same categories. importance for funding purposes. One attached to credit control and monitoring of the bank’s aims is to further streng- of doubtful debts. Due account of the Operational risk is defined as the risk then the ratio of deposits to net credit risk is taken in the pricing of of errors of commission or omission, as lendings. Interest rate exposure relates loans and credit. well as the risk of losing key personnel. mainly to the Group’s portfolio of This risk is covered through internal interest-earning securities. Loans and The Board underlines the importance of control, systems testing and audits, deposits on fixed terms are of less keeping the credit risk at a moderate and by raising the level of expertise. significance for the interest rate risk. level. Gross defaulted loans corresponded The risk is considered to be at an Throughout the year the bank was to 0.92% of gross lendings at year-end. acceptable level.
15 Sparebanken Vest Annual Report 2002
DIRECTORS’ REPORT 2002
The Board is of the view that the bank’s The dividend on primary capital certificates Prospects methods and management systems for shall reflect the bank’s financial results. 2002 was a demanding year for dealing with risk are appropriate. Payment of a competitive cash dividend Sparebanken Vest, presenting many Since 1990, Norwegian banks have is a priority for Sparebanken Vest.” difficult situations strategic choices. been governed by capital adequacy Nevertheless, bank’s underlying activities regulations based on an international Elected officers performed very well, although the standard drawn up by the Basel and management positive trend in core business was Committee for the Banking Inspectorate. Following supplementary elections held unfortunately greatly affected by losses This same body has proposed changes after the spring elections in 2002, market attributable to the bank’s commitment in the international regulations and co-ordinator Erling Mjelde was elected with Finance Credit and the losses standard used for the calculation of to the Board of Directors for the period recorded by SpareBank 1 Gruppen AS. capital adequacy. The new regulations 2002/2003. Mjelde replaced Helen are intended to ensure that there is Nordeide Fløisand who left the Board. Following thorough deliberation on the better correspondence between the Sparebanken Vest established a new bank’s strategy and the appropriate capital adequacy requirement and the organisational model which took effect course forward, the bank decided to actual risk to which the banks are on 2 April 2002. As part of this process withdraw from the SpareBank 1 alliance. exposed. SpareBanken Vest is already three new divisions were set up and The reaction from both customers and in the process of preparing for the three divisional directors – Monica employees has been overwhelmingly changes to come and a separate unit – Salthella, Elin Sjødin Drange and Arne positive. It is a strategic choice that Risk Management – has been established. Selle – were appointed to head the will secure the bank local roots and Corporate Market, Retail Market and safeguard its independence. Allocation of Service, respectively. As well as being the profits – Parent Bank divisional director responsible for the It is unclear whether the other owners After estimated taxes of NOK 26m, the Corporate Market, Monica Salthella is wish to take over Sparebanken Vest’s parent bank’s profit for the year was also the deputy managing director. shareholding in SpareBank 1 Gruppen NOK 67m. The Board proposes that Following these organisational changes, AS. The remaining owner banks have the the profit for the year, including a the group management now consists right but no obligation to take over our transfer of NOK 9m from the reserve for of the managing director, the three shareholding on the expiry of the period valuation variances, in total NOK 76m, aforementioned divisional directors, the of notice. be allocated as follows: personnel director and the director of information services and PR. Withdrawal means that Sparebanken Dividend of NOK 3.50 Vest will be establishing a new brand. per PCC NOK 8.75 million Corporate governance is a set of guide- We will also be entering into distribution lines for the good management of agreements with product suppliers to Transfer to Sparebanken’s company activities. In particular, it is the ensure that we continue to be a full- capital fund NOK 52.25 million interface between owners, the board of scale provided of financial services. The directors and the management that the scope of possible further distribution Transfer to gift fund NOK 15 million recommended guideline for corporate of SpareBank 1 products will be clarified governance seek to clarify and define. In through negotiations. Total allocation NOK 76 million the future, listed companies will be required to state how they are Sparebanken Vest expects to see further The dividend for 2002 will be paid to the complying with the principles of high demand for loans, but somewhat owners of primary capital certificates on corporate governance. Good corporate less than hitherto. Deposits are also 22 March 2003, based on the number of governance is necessary in order to win expected to grow at a slightly lower pace, primary capital certificates registered in confidence in the financial markets, but our aim is to increased the proportion the Norwegian Registry of Securities on and great importance is attached to of deposits from the public. The bank is 6 March 2003. confidence in the assessment of a com- also prepared for the possibility of an pany. It is especially important for banks, increase in losses and defaulted loans, The dividend is consistent with the and Sparebanken Vest will take great but specific assessments indicate that bank’s dividend policy, which reads as note of recommendations made in this only a moderate increase in net losses follows: area. Good corporate governance will is likely. ”The financial objective of Sparebanken also provide a guideline for further Vest’s activities is to achieve results development of the bank’s new Uncertainty about macroeconomic which provide a satisfactory return on strategies and objectives – a process developments has been reflected in the total capital employed. that is currently under way. pattern of saving among the public.
16 Sparebanken Vest Annual Report 2002
DIRECTORS’ REPORT 2002
The long-term trend of recent years the public benefit, against 10% previously. The prospect of Sparebanken Vest as an characterised my a marked move away Through appropriate allocations, this independent bank with its own brand is from traditional bank saving in favour of could curb the dilution of PCC capital motivating for the employees. In the peri- investment in unit trusts has slowed and at the same time strengthen the od ahead, the focus will be profitability down. Nonetheless, there are ground bank’s local roots in the future. It is and efficiency, and the bank will be which support the view that the long- currently uncertain whether banks based focusing on closer links with its term trend towards increased saving in on PCC capital will be given greater customers and enhanced work methods. unit trusts will continue, although this scope to determine the amount of The Board is convinced that the bank’s may take time. Further intensification of dividends that can be paid. The matter is strategy will meet with success. The competition in the financial sector is currently under consideration by the bank expects to achieve a post-tax return likely. In 2002 general permission was Ministry, which will decide on the matter. on equity of 14% in 2003. given for savings banks to reorganise as limited companies. However, it is the SpareBank 1 Vest is well placed to Vote of thanks to view of the Board that the bank can best achieve its goals in 2003. The bank has a business associates, elected perform its regional functions as an large customer base, a sound capital representatives and employees independent bank by building on its pre- base, a good reputation in the market, 2002 was a challenging year for the bank, sent corporate form. In March 2002 the a broad range of products, a loyal and calling for flexibility throughout the Board of Governors authorised the capable workforce, and strong local organisation. The support and loyalty of Board of Directors to acquire and give as roots. The focus on sales will be the bank’s customers and the untiring security primary capital certificates issued increased, with the developments of efforts of the employees at all levels by the bank, but not exceeding 10% of steps already taken and the introduction within the organisation were prevailing the bank’s PCC capital. This authorisation of new initiatives. Moreover, a new features of 2001. has been approved by the Banking, organisational model has been established The Board wishes to express its thanks Insurance and Securities Commission. and new managers have been appointed. to all customers, business associates, The bank’s employees are highly motivated elected representatives and employees for In 2002 permission was also given for and keen to engage in the process of very good co-operation in 2002. For further the bank to distribute up to 25% of the building up the new (independent) information, please refer to the annual profit for the year in the form of gifts for Sparebanken Vest in 2003. accounts and notes to the accounts.
Bergen, 31 December 2002 20 February 2003
The Board of Directors of SPAREBANKEN VEST
Pål W. Lorentzen Bjørn Ove Børnes Chairman Deputy Chairman
Erik Bøckmann Anne Gine Hestetun Jan O. Yttredal Anne Sissel Raunholm Engevik
Eli Førde AarskogErling Mjelde Terje Kvamme
Knut Ravnå Managing Director 17 PROFIT AND LOSS ACCOUNT
Sparebanken Vest Annual Report 2002
PARENT BANK NOTES GROUP 2000 2001 2002 NOK million 2002 2001 2000
2 085 2 569 2 704 Interest income etc. 1 2 690 2 560 2 080 1 333 1 780 1 820 Interest expenses etc. 2 1 814 1 773 1 329
752 789 884 Net interest income and credit commissions 876 787 751 Dividends and other income on securities 20 (29) (96) with a variable return 3(120) (52) (4) 227 270 310 Commissions receivable and income from banking services 4 310 270 227 64 77 88 Commissions payable and cost of banking services 5 88 77 64 Net change in value of and gain/(loss) on foreign exchange 13(21) 7 and short-term securities 6 7 (21) 13 4 1 2 Other operating income 7 64 66 66 200 144 135 Net operating income 173 186 238
952 933 1 019 Profit before operating expenses 1 049 973 989 462 498 475 Salaries and general administration expenses 8 514 540 481 41 41 41 Depreciation of fixed and intangible assets 9 47 46 45 108 115 186 Other operating expenses 10 161 98 115 611 654 702 Net operating expenses 722 684 641
341 279 317 Profit before losses and write-downs 327 289 348 4386 166 Losses on loans and guarantees etc. 11 166 86 43 (Write-downs)/reversal of write-downs and gain/(loss)) 32 (3) (58) on long-term securities (58) (3) 33
330 190 93 Profit before tax 103 200 338 91 5326 Taxes 12,13 34 63 99
239 137 67 Profit for the year 1) 69 137 239 1) Of which majority's share 67 1) Of which minority's share 2
Transfers 58 9 Transferred from reserve for valuation variances Transferred from other equity, group 9 58 58 9 Total transfers 9 58
239 195 76 Profit for allocation 76 195 239
Allocation of profit (30) (24) (9) Dividend on primary capital certificates (9) (24) (30) (18) (8) Transferred to reserve for valuation variances (176) (148) (52) Transferred to Sparebanken capital fund (52) (148) (176) (15) (15) (15) Gifts for the public benefit (15) (15) (15) Transferred to other equity, group (8) (18) (239) (195) (76) Total allocations (76) (195) (239)
18 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
PARENT BANK NOTES GROUP 2000 2001 2002 NOK million 2002 2001 2000
Assets
310 332 203 Cash and deposits with central banks 203 332 310 1 359 920 695 Loans to and deposits with credit institutions 14 695 920 1 359 26 686 29 329 32 511 Total loans before specified and unspecified loss provisions 16,17 32 348 29 145 26 610 (178) (195) (292) Specified loss provisions 20 (292) (195) (178) (160) (188) (218) Unspecified loss provisions 20 (218) (188) (160) 26 348 28 946 32 001 Loans to and receivables from customers 15 31 838 28 762 26 272 4 2 2 Repossessed assets 232 2 4 Commercial paper, bonds and other interest-earning 2 021 1 312 1 843 securities with a fixed return 24 1 843 1 312 2 021 Shareholdings, investments and 171 175 240 other securities with a variable return 27 240 175 171 342 325 Shareholdings in jointly controlled companies 28 325 342 53 35 35 Shareholdings in subsidiaries 28 46 41 103 Intangible assets 33 99 36 39 193 141 119 Fixed assets 34 279 320 288 58 12 1 Other assets 9 19 61 230 182 259 Prepaid expenses and accrued income 37 241 164 231
31 135 32 423 35 501 Total assets 35 449 32 367 31 098
Liabilities and equity
3 616 2 963 2 299 Loans and deposits from credit institutions 38 2 299 2 963 3 616 17 828 19 411 22 257 Deposits from and debt to customers 39 22 192 19 349 17 782 6 045 6 856 7 382 Securities issued 41 7 382 6 856 6 045 497 322 316 Other liabilities 42 331 327 506 349 243 221 Accrued expenses and prepaid income 220 245 349 32 57 72 Provisions for expenses and commitments 43 71 56 32 693 397 746 Subordinated loan capital 45 746 397 693 29 060 30 249 33 293 Total liabilities 33 241 30 193 29 023
250 250 249 Share capital/primary capital certificates 46 249 250 250 2 2 2 Share premium reserve 4 4 4 252 252 251 Paid-up equity 253254 254
101 17 Reserve for valuation variances 1 722 1 905 1 957 Sparebanken capital fund 1 957 1 905 1 722 Other equity, group (2) 15 99 1 8231 922 1 957 Retained earnings 1 955 1 920 1 821
2 075 2 174 2 208 Total equity 47 2 208 2 174 2 075
31 135 32 423 35 501 Total liabilities and equity 35 449 32 367 31 098
1 677 2 542 2 387 Assets denominated in foreign currency 2 387 2 542 1 677 2 686 2 797 2 789 Liabilities denominated in foreign currency 2 789 2 797 2 686
OFF-BALANCE SHEET ITEMS
Contingent liabilities 593565 1 094 Guarantees 49 1 084 555 593 1 990 1 394 1 831 Mortgages 49 1 831 1 394 1 991 16 15 15 Joint and several liability 15 15 16
Commitments 2 108 3 039 5 126 Foreign currency purchase agreements 5 126 3 039 2 108 1 058 2 770 4 676 Foreign currency sales agreements 4 676 2 770 1 058
19 STATEMENT OF CASH FLOWS
Sparebanken Vest Annual Report 2002
PARENT BANK GROUP 2000 2001 2002 NOK million 2002 2001 2000 Cash flow from operations 239 137 67 Profit for the year 67 137 239 44 41 39 Ordinary depreciation 46 46 48 4386 166 Loss on loans and guarantees etc. 166 86 43 (45) (39) (23) Provision for dividends and gifts for the public benefit (23) (39) (45) Gain on sale of fixed assets (16) 281 225 249 Net cash flow from operations 240 230 285
Cash flow from investment activities (1 216) 440 225 Net change in loans to and deposits with credit institutions 225 440 (1 223) (3 907) (2 247) (3 148) Net change in instalment loans to customers (3 170) (2 139) (3 912) (49) (396) (34) Net change in credit facilities utilised (34) (396) (49) 36 45 126 Change in loss provisions 127 45 36 (3) 2 0 Change in repossessed asets 0 2 (3) (43) (86) (166) Losses on loans and guarantees etc. (166) (86) (43) 91 (4) (65) Net change in shareholdings and investments in other enterprises (65) (4) 91 132 709 (531) Net change in other interest-earning securities (531) 709 132 (130) 35 316 Net change in ownership of jointly controlled activities 316 17 (128) 1 831 Sale of fixed assets 30 5 9 (56) (72) (18) Purchase of fixed assets (19) (83) (57) (113) 99 (128) Change in other receivables (130) 112 (113) (5 257) (1 392) (3 422) Net cash flow from investments (3 417) (1 378) (5 260)
Cash flow from financing activities 2 040 1 5832 847 Net change in customer deposits 2 843 1 567 2 040 224 (653) (664) Net change in deposits from Norges Bank and other credit institutions (664) (653) 224 292 (296) 349 Net change in subordinated loan capital 349 (296) 292 1 928 811 525 Net change in bond debt 525 811 1 928 151 (256) (13) Change in other debt (5) (259) 150 4 635 1 189 3 044 Net cash flow from financing activities 3 048 1 170 4 634
(341) 22 (129) Net cash flow in period (129) 22 (341)
(341) 22 (129) Net change in cash and cash equivalents (129) 22 (341) 651 310 332 Liquid assets at 1 January 332 310 651 310 332 203 Liquid assets at 31 December 203 332 310
20 Sparebanken Vest Annual Report 2002
ACCOUNTING PRINCIPLES
GENERAL is based on the subsidiaries’ profits after activities which are included in the share The accounts have been prepared in tax and after deducting internal gains and of the profit for the year in the accounts. accordance with current accounting any amortisation of goodwill arising from In calculating gains/losses on sales of legislation, relevant regulations and the cost price of the shareholding being shares, bonds and commercial paper the generally accepted accounting practice. higher than the acquired share of book average cost method is used. All amounts are stated in NOK million, equity. unless stated otherwise. All information contained in the notes relates to the RISK MANAGEMENT Group, unless stated otherwise. JOINTLY Risk management relates to both hedging CONTROLLED ACTIVITIES and portfolio assessment. Assessment Jointly controlled activities are economic for hedging purposes is applied to FULL CONSOLIDATION activities which are regulated by agree- the bank’s holdings of fixed interest len- The consolidated accounts comprise ment between the bank and one or more dings and fixed interest deposits. This Sparebanken Vest and subsidiaries where participants such that the bank and the hedging portfolio also includes financial the parent bank directly or indirectly owns participants exercise joint control of instruments in the balance sheet 50 per cent of the shares or more, or is the activity. No single participant has a and financial derivatives. Portfolio able to control the company’s operations. deciding influence. assessment is used for parts of the A summary of consolidated companies bank’s holdings of commercial paper is shown in note 31. Uniform accounting In both the accounts of the parent bank and bonds. principles are applied to all companies and the consolidated accounts the included in the consolidated accounts. activities of the Sparebank 1 Group are In assessing the hedging portfolio All internal transactions and intercompany regarded as jointly controlled activities for accounting purposes, the bank’s accounts payable and receivable are up the time when we gave notice of assessment is based on a high degree of eliminated. our withdrawal from the alliance at the overall correlation between the hedging end of October 2002. Until then, our instrument and the identified items On the acquisition of subsidiaries the ownership was valued on the basis of hedged. There is also a presumption cost price of the shareholding in the the equity method. See note 32. that the hedged objects and the hedging parent company is eliminated against the instrument are specifically included as equity of the subsidiary at the date of part of a hedging portfolio. Gains and acquisition. The difference between the RECORDING OF losses are recorded when hedging ends. cost price and the net book value at the INCOME AND EXPENSES date of acquisition is added to the assets Interest and commissions are included In making portfolio assessments for to which the surplus value relates, within in the profit and loss account when accounting purposes, the bank’s the market value of these assets. Any earned as income or incurred as assessment is based on an overall part of the cost price that cannot be expenses. Fees that are direct payment degree of correlation in values such added to specific assets represents for services rendered are taken to that the total portfolio risk is deemed to goodwill. Goodwill is amortised on a income when paid. The entire amount have been reduced. There is also a straight line basis over the period in of loan establishment fees is taken to presumption that the investment strategy which the benefits of goodwill are income in the year of establishment in force entails management of the risk expected to accrue. when they are considered to cover the and that the ongoing management of loan establishment costs. investments of this kind is carried out in In the case of new acquisitions, the such a way that the risk is deemed to subsidiary is consolidated from the time Prepaid income and accrued expenses have been reduced. Portfolios of this when a controlling interest is held. payable at year-end are accrued and kind are valued at the lower of aggregate Subsidiaries sold are included up to the entered as a liability, while accrued fair market value and the aggregate date of disposal. income receivable is recorded in the acquisition cost of each portfolio. balance sheet under accounts receivable.
SUBSIDIARIES Dividends are stated as income in SECURITIES Subsidiaries are valued on the basis of the the year they are received, except for Shares: equity method in the company accounts. dividends from subsidiaries, associated Shares and investments in joint stock The parent company’s share of profits companies and jointly controlled companies, general partnerships and
21 Sparebanken Vest Annual Report 2002
ACCOUNTING PRINCIPLES
limited partnerships are divided as market and are broadly and easily traded. exposure and to take positions in the follows: interest rate and foreign exchange • Trading portfolio Other short-term bearer bonds and markets. These instruments relate to • Long-term investments commercial paper not included in the forward foreign exchange transactions, • Investments in general and limited trading or hedging portfolio are valued interest rate swaps, forward rate agree- partnerships collectively at the lower of the portfolio’s ments (FRAs) and quoted interest rate • Investments in subsidiaries, aggregate market value and cost. This futures. Interest rate related and foreign associated companies and portfolio also includes securities which exchange transactions are classified jointly controlled activities. are linked to a re-purchase agreement. either as hedging transactions or as trading transactions when they are made. Shareholdings and investments included Bearer bonds and commercial paper in the trading portfolio are valued at fair classified as hedging transactions are Hedging transactions are entered into in market value on the balance sheet date valued in connection with the under- order to guard against existing interest where they are traded on a stock lying item. Income and expenses from rate or foreign exchange exposure. There exchange or in a regulated market and securities of this kind are posted in must therefore be a high degree of are broadly and easily traded. Shares conformity with the underlying items negative correlation with regard to and investments included in the trading hedged. value changes between the hedging portfolio but which are not eligible for a instrument and the hedged object market valuation, are valued at the lower Bearer bonds to be held until maturity The hedging instrument is valued in of cost and actual value. are assessed at cost and adjusted to connection with the item hedged. take account of any amortisation of Long-term shareholdings are valued at premiums or discounts. The bonds are Trading transactions are transactions acquisition cost. If the real value of written down only to the extent that their entered into for own account in order a shareholding is lower than cost, and redemption is a matter of uncertainty. to make a profit by exploiting price the fall in value is not deemed to be Any premium/discount at the time of differentials and price changes. Open temporary, the shareholding is written purchase is accrued over the residual positions in this category are valued on down to its real value. If there is no maturity of the bond as a correction of the basis of the market value principle. longer a need to write down the value of the current yield at year-end. This means that we calculate the profit a shareholding, the write-down shall be or loss that would arise if we had covered reversed. our foreign exchange and interest rate FOREIGN EXCHANGE exposure on all open positions at the Investments in limited and general Receivables and accounts payable date of assessment. The calculated partnerships are incorporated on the denominated in foreign currency are profit or loss on open positions can there- basis of the cost method. translated at the middle rate on the Oslo fore be incorporated in the accounts on Stock Exchange at the balance sheet a continuous basis, even if the position The accounting treatment of investments date. Income and expenses denominated has not been finally closed. in subsidiaries, associated companies in foreign currency are translated into and jointly controlled companies is Norwegian kroner at the rates prevailing described above. on the date of the transaction. Foreign LOANS AND GUARANTEES exchange items are mainly hedged by Loans and losses are assessed at nominal Commercial paper and bonds ensuring that there are corresponding value, except for potential loan losses Commercial paper and bearer bonds are items on the other side of the balance and non-performing loans. divided as follows: sheet, or through off-balance sheet • Trading portfolio hedging items. Non-performing loans. A loan or • Other short-term investments guarantee is considered to be non- • Hedging portfolio performing if the debtor has failed • Bearer bonds to be held until maturity INTEREST RATE to service the debt as planned, or if Commercial paper and bonds invest- RELATED AND FOREIGN framework credits are not covered. ments included in the trading portfolio EXCHANGE INSTRUMENTS Commitments which have been in are valued at fair market value on the The bank uses different off-balance default for more than 90 days are, in any balance sheet date where they are traded sheet financial instruments to manage event, classified as non-performing. on a stock exchange or in a regulated its interest rate and foreign exchange When a default situation arises, interest
22 Sparebanken Vest Annual Report 2002
ACCOUNTING PRINCIPLES
and commissions are no longer taken to FIXED ASSETS tax. Deferred tax/deferred tax assets are income and accrued interest receivable In the balance sheet fixed assets are calculated at a tax rate of 28% on the is reversed. entered at cost less accumulated ordinary basis of timing differences between depreciation. Ordinary depreciation is values for accounting and taxation Actual loan losses are charged in the based on the cost price and is calculated purposes at year-end. Taxable and tax- accounts in the case of bankruptcy, using the straight line method of deductible timing differences which are confirmed debt settlement proceedings, depreciation based on the economic life reversed or can be reversed within the failure to receive a court order for attach- of the assets. same time interval are netted against ment of property, a court judgment, or if each other and entered net. the bank has terminated debt collection Ordinary depreciation for the year is procedures or has otherwise renounced posted under operating expenses. the commitment or its share thereof. PENSION COMMITMENTS If the actual market value is significantly The bank’s net pension commitments Specified loan loss provisions. The port- lower than book value and the decrease are calculated and posted as a long-term folio of loans and guarantees is assessed in value is not considered to be temporary, liability in the accounts. Net pension continuously. The assessment considers the asset is written down to the actual commitments are the difference between the debtor’s debt-servicing ability and market value. Write-downs of this kind gross pension commitments (the present the value of the loan security. If this are posted in the profit and loss account value of future pensions) and the balance shows that a loss may be expected, the under «Write-downs and gains/ losses on the insurance fund and the pension loss is entered in the accounts and the on long-term securities». If there is no premium fund. The figure for net pension amount is included in specified loan loss longer a need to write down the item, the commitments corrected for deviations provisions. write-down shall be reversed. from estimates and changes in pension assumptions appears in the balance The amount of the loan loss provision sheet. Deviations and changes of this takes account of the value of the security LIABILITIES kind are measured against the larger of and the debtor’s financial position. The Bonds issued are stated in the balance gross pension commitments and total security is assessed at market value less sheet at nominal value, adding any pension funds. If the deviations/changes selling expenses at the date of calculation. premium and deducting any discount. exceed 10% of the basis of measure- Premiums are taken to income and ment, the difference is amortised over Unspecified loan loss provisions are discounts are charged as an adjustment the average remaining period of service. assessed in relation to the private market of current interest expenses until the and branches within the corporate bond matures. Holdings of the bank’s The pension charge for the year is stated market. This assessment is made on the own bonds are posted net of bond debt. net in the profit and loss account under basis of the composition of the portfolio, Gains or losses arising on the purchase «Salaries and general administration historical experience and general lines or sale of the bank’s own bonds expenses». of development. The provisions are in the secondary market are treated intended to cover possible losses. Due as premiums/ discounts on issue. account is also taken of the low risk Subordinated loans denominated in BUSINESS AREAS premium attaching to the portfolios. foreign currency are valued at the higher Sparebanken Vest regards its banking of the drawdown rate and the rate at activities as a single area of activity. Loan loss provisions are deducted from year-end. the bank’s total lendings, while loss provisions for guarantees appear as a liability in the balance sheet. TAXATION Deferred tax and deferred tax assets are treated in accordance with the preliminary REPOSSESSED ASSETS Norwegian accounting standard for the Repossessed assets are stated separately treatment of income tax. in the balance sheet and are assessed at the lower of cost and realisable value. The tax charge in the profit and loss Any changes in value are reflected in the account includes both the tax payable for figure for losses on a continuous basis. the period and the change in deferred
23 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 1 INTEREST INCOME ETC.
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 Interest etc. on loans to and deposits 40 40 53with credit institutions 53 41 40 1 927 2 370 2 530 Interest etc. on loans to and receivables from customers 2 516 2 360 1 922 Interest etc. on commercial paper, bonds 118 154 118 and other interest-earning securities 118 154 118 – 5 3Other interest income etc. 3 5 – 2 085 2 569 2 704 Total 2 690 2 560 2 080
NOTE 2 INTEREST EXPENSES ETC.
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 116 126 44 Interest etc. on loans from credit institutions 44 126 116 821 1 111 1 164 Interest etc. on deposits and loans from customers 1 158 1 104 817 354 463 505 Interest etc. on securities issued 505 463 354 35 47 39 Interest etc. on subordinated loans 39 47 35 7 10 42 Other interest and funding expenses 42 10 7 – 2326 Fee to Savings Banks' Guarantee Fund 26 23 – 1 333 1 780 1 820 Total 1 814 1 773 1 329
Norwegian law requires all savings banks to be members of the Savings Banks' Guarantee Fund. The Fund covers losses incurred by depositors who have deposits with the member institutions for up to NOK 2 million of total deposits per depositor. By deposit is meant any credit balance with the bank on an account registered by name, as well as commitments or certificates of deposit in respect of a named person. The fee payable to the Savings banks' Guarantee Fund is set in accordance with the provisions of the Bank Guarantee Act.
NOTE 3 DIVIDENDS AND OTHER INCOME ON SECURITIES WITH A VARIABLE RETURN
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 6 4 7 Income from shareholdings and other securities with a variable return 7 4 6 (10) (56) (127) Income from shareholdings in associated companies (127) (56) (10) 24 2324 Income from shareholdings in subsidiaries 20 (29) (96) Total (120) (52) (4)
NOTE 4 COMMISSIONS RECEIVABLE AND INCOME FROM BANKING SERVICES
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 7 7 12 Guarantee commissions 12 7 7 163158 179 Payment transfer charges/interbank credit charge 179 158 163 57 105 119 Other charges and fees receivable 119 105 57 227 270 310 Total 310 270 227
24 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
COMMISSIONS PAYABLE AND COST OF BANKING SERVICES NOTE 5
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 44 58 53Payment transfer charges/BBS/EFTPOS 53 58 44 16 14 27 Payment transfer charges/interbank debit charge 27 14 16 4 5 8 Other charges and fees payable 8 5 4 64 77 88 Total 88 77 64
NET CHANGE IN VALUE OF AND GAIN/(LOSS) ON FOREIGN EXCHANGE AND SHORT-TERM SECURITIES NOTE 6
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 Net change in value and gain/(loss) on commercial paper, (1) 7 10 bonds and other interest-earning securities 10 7 (1) Net change in value and gain/(loss) on shares 8 (39) (21) and other securities with a variable return (21) (39) 8 6 11 18 Net change in value and gain/(loss) on foreign exchange 18 11 6 and financial derivatives 13 (21) 7 Total 7 (21) 13
OTHER OPERATING INCOME NOTE 7
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 3– – Real estate income 4 3 6 – – – Brokerage fees 40 4335 – – – Gains on disposal 18 19 24 1 1 2 Other operating income 2 1 1 4 1 2 Total 64 66 66
SALARIES AND GENERAL ADMINISTRATION EXPENSES NOTE 8
PARENT BANK GROUP 2000 2001 2002 Note2002 2001 2000 214 239 253 Salaries 276 258 229 21 31 19 Pensions 44 20 32 21 41 51 48 Social security contributions 5354 44 186 177 155 Administration expenses 165 196 187 462 498 475 Total 514 540 481
The average number of employees in 2002 was 792 for the parent bank and 856 for the Group. The salary to the managing director of the parent bank was NOK 1 268 560 (2001: NOK 1 253 488 2000: NOK 1 075 447), and the calculated value of fringe benefits was NOK 120 223 (2001: NOK 108 659, 2000: NOK 100 056). Remuneration to the Board of Directors of the parent bank was NOK 1 190 000 (2001: NOK 1 190 000, 2000: NOK 765 000). Remuneration to the Board of Governeors of the parent bank was NOK 184 000 (2001: NOK 179 500, 2000: NOK 84 000). Remuneration to the Control Committee of the parent bank was NOK 360 000 (2001:NOK 353 333, 2000: NOK 240 000).
The cost of interest rate subsidies on loans to the employees is not posted as an operating expense and affects the bank's net interest income.
25 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 9 DEPRECIATION OF FIXED AND INTANGIBLE ASSETS
PARENT BANK GROUP 2000 2001 2002 Noter 2002 2001 2000 38 36 39 Ordinary depreciation 35 45 41 42 1 5 2 Goodwill amortisation 33 2 5 1 2 – – Write-downs – – 2 41 41 41 Total 47 46 45
NOTE 10 OTHER OPERATING EXPENSES
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 6 2 2 Real estate operating expenses 45 25 11 42 77 76 Office rental and other running costs 325 32 10 10 6 Fixed assets charged against income 11 14 10 50 26 102 Other operating expenses 1) 102 34 62 108 115 186 Total 161 98 115
1) The increase in operating expenses in 2002 was mainly due to provisions for restructuring in connection with withdrawal from the SpareBank 1 Alliance. The external audit fee for 2002 for the Group was NOK 2 409 089 (2001:NOK 1 960 908), of which NOK 1 954 139 (2001: NOK 1 851 508) was for the parent bank.
NOK 321 550 of the audit fee for 2002 related to advisory services.
NOTE 11 LOSSES ON LOANS AND GUARANTEES ETC.
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 4385 163Loan losses 163 85 43 – 1 3Losses on guarantees etc. 3 1 – 43 86 166 Total 166 86 43
Total losses on loans and guarantees charged in the period Increase in loss provisions on commitments 14 5 5 specifically provided for previously 5 5 14 Loss provisions on commitments 44 72 191 not specifically provided for previously 191 72 44 (39) (28) (50) Reduction in previous years' loss provisions (reversal) (50) (28) (39) 27 28 30 Increase in unspecified loss provisions 30 28 27 – – – Reduction in unspecified loss provisions – – – 1322 28 Realised losses on commitments not provided for previously 28 22 13 (16) (13) (38) Recoveries on losses realised previously (38) (13) (16) 43 86 166 Total 166 86 43
Realised losses Realised losses on commitments 34 31 46 specifically provided for previously 46 31 34 1322 28 Realised losses on commitments not provided for previously 28 22 13 47 53 74 Total 74 53 47
For further information see note 20
26 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
TAXES NOTE 12
Tax charge for the year
The difference between the pre-tax accounting profit, the basis of assessment for the year and the tax charge for the year is specified below.
PARENT BANK 2002 2001 2000 2000 Pre.tax profit 93 190 330 +/- Permanent differences 1) (4) 32 6 +/- Change in timing differences as specified in note 13227 18 44 Tax base for the year / taxable income 316 240 380 Of which assessed tax at 28% 89 67 106 - Credit for dividends received (2) (5) (8) Capital tax at 0.3% 55 8 Tax provision in the balance sheet 92 67 106 (Excess) / insufficient tax provision (2) (9) (3) Taxes payable in the profit and loss account 90 58 103 +/- Change in deferred tax (63) (5) (12) Tax charge for the year 26 53 91
1) Including RISK on securities sold, non-deductible costs and deductions for the share of results recorded by subsidiaries and jointly controlled companies (the share of results is deducted since it has already been taxed in the hands of the individual companies).
Why the tax charge does not correspond to 28% of the pre-tax profits PARENT BANK 2002 2001 2000 28% tax on pre-tax profits 26 5393 28% tax on permanent differences (1) 9 1 (Excess) / insufficient tax provision in previous years (2) (9) (3) Capital tax 5 5 8 Credit for dividends received (2) (5) (8) Estimated tax charge 26 5391
Tax provision in the balance sheet 2002 2001 2000 Tax payable 92 67 106 Tax effect of group contribution 5 – –
Tax provision in the balance sheet 97 67 106
27 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 13 SPECIFICATION OF TIMING DIFFERENCES
The calculation of deferred tax / tax assets is based on the timing differences between the accounting and taxation values at year- end and the tax loss to be carried forward. Specification of the timing differences and the tax-loss carried forward, along with the calculation of deferred tax / tax assets, is shown below. at year-end is shown below.
PARENT BANK GROUP Change2001 2002 2002 2001 Change (2) 31 Investments in companies 1 3(2) 3(13)(10) Profit and loss account 23 18 5 (165) (18) (183) Shareholdings, primary capital certificates and owner interests (183) (18) (165) 11 (2) 9 Commercial paper, bonds and other interest-earning securities 9 (2) 11 (11) (57) (68) Pension commitments (66) (55) (11) (55) (21) (76) Accounting provisions (76) (21) (55) (6) (22) (28) Fixed assets (51) (39) (12) (226) (130) (356) Total timing differences (343) (114) (229) 28 % 28 % Rate of tax 28 % 28 % (63) (36) (100) Deferred tax assets in the accounts (96) (32) (64)
Deferred tax assets are posted in the balance sheet since income is expected in future years, or realistic tax adjustments should make it possible to utilise these assets. No provision has been made for deferred tax on the temporary difference between the proportion of equity and the RISK-regulated opening value for investments in subsidiaries and jointly controlled enterprises.
NOTE 14 LOANS TO AND DEPOSITS WITH CREDIT INSTITUTIONS
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 Loans to and deposits with credit institutions 879 252 171 with no agreed term or period of notice 171 252 879 Loans to and deposits with credit institutions 480 668 524 with an agreed term or period of notice 524 668 480 1 359 920 695 Total 695 920 1 359
Geographical risk areas 37 48 86 Hordaland 86 48 37 35 20 20 Sogn & Fjordane 20 20 35 1 028 800 557 Other parts of Norway 557 800 1 028 259 52 32 Foreign 32 52 259 1 359 920 695 Total 695 920 1 359
28 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
LOANS TO AND RECEIVABLES FROM CUSTOMERS NOTE 15
PARENT BANK GROUP 2000 2001 2002 Noter 2002 2001 2000 990 1 409 1 338 Overdraft facilities 1 338 1 409 990 439 416 520 Building loans 520 416 439 25 257 27 504 30 653 Instalment loans 30 490 27 320 25 181 26 686 29 329 32 511 Total loans before specified and unspecified loss provisions 16, 17 32 348 29 145 26 610 (178) (195) (292) Specified loss provisions 20 (292) (195) (178) (160) (188) (218) Unspecified loss provisions 20 (218) (188) (160) 26 348 28 946 32 001 Total 31 838 28 762 26 272
Loans and guarantees to senior employees (NOK 1 000), Parent Bank Loan Managing director Knut Ravnå 632 Deputy managing director Monica Salthella 0 Loans are given on general terms.
Loans and guarantees to elected officers (NOK 1 000), Parent Bank Chairman of Board of Directors Pål W. Lorentzen 4
Loans to Board members Jan O. Yttredal 1 302 Eli Førde Aarskog 668 Loans are given on ordinary customer terms
Employee representatives Terje Kvamme 222 Loans are given on general terms
Chairman of Board of Governors Kjellaug Kvåle 0
Total loans and guarantees given to employees and Board members (NOK 1 000) Parent Bank Employees 477 576 Board of Directors 1) 1 974
Group Employees 520 226
Total loans and guarantees given to other members of Board of Governors and Control Committee (NOK 1 000) Board of Governors 2) 4 634 Control Committee 148
1) Excluding managing director and employee representatives. 2) Excluding chairman of Board of Governors, Board members, Control Committee members and employee representatives.
29 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 16 DISTRIBUTION OF GROSS LOANS AND GUARANTEES
2002 2001 Loans Guarantees Loans Guarantees NOK % NOK % Distribution of loans and guarantees by sector NOK % NOK % 1 0.00 0 0.00 Central government 1 0.00 0 0.00 61 0.19 0 0.00 Local government 36 0.12 0 0.00 172 0.53535.02 Insurance and finance 199 0.68 539.70 9 543 29.50 986 93.28 Commercial activity 8 968 30.77 481 88.10 22 489 69.52 15 1.42 Wage earners 19 89368.26 12 2.20 82 0.26 30.28 Foreign 48 0.17 0 0.00 32 348 100.00 1 057 100.00 Total 29 145 100.00 546 100.00
Commercial distribution 8932.76 7 0.66 Primary industries 991 3.40 6 1.10 30.01 0 0.00 Oil and gas 30.01 0 0.00 625 1.93486 45.98 Industry and mining 6532.24 9317.03 461 1.42 118 11.16 Building and construction, power and water supply 516 1.77 85 15.56 1 267 3.92 84 7.95 Wholesale/retail trade, hotels and restaurants 1 083 3.72 82 15.02 1 442 4.46 127 12.02 International shipping and pipe transportation 1 406 4.82 26 4.76 1 482 4.58 57 5.39 Other transportation, post and telecommunications 1 212 4.16 75 13.74 2 6838.29 635.96 Real estate operations 2 5308.68 96 17.58 172 0.53535.02 Insurance and finance 199 0.68 539.71 701 2.17 44 4.16 Services 587 2.01 18 3.30 48 0.15 0 0.00 Central/local government 24 0.08 0 0.00 22 489 69.52 15 1.42 Wage earners 19 89368.26 12 2.20 82 0.26 30.28 Foreign 48 0.17 0 0.00 32 348 100.00 1 057 100,00 Total 29 145 100.00 546 100.00
Geographical areas 26 942 83.29 841 79.57 Hordaland 22 792 78.20 458 83.88 2 657 8.21 141 13.34 Sogn & Fjordane 2 466 8.46 31 5.68 2 667 8.24 72 6.81 Other parts of Norway 3 839 13.17 57 10.44 32 266 99.74 1 054 99.72 Norway - total 29 097 99.83 546 100.00 82 0.26 30.28 Foreign 48 0.17 0 0.00 32 348 100.00 1 057 100.00 Total 29 145 100.00 546 100.00
NOTE 17 GROSS LOANS AND GUARANTEES DISTRIBUTED BY MAIN INDUSTRIES AND RETAIL MARKET
2002 2001 Gross loans Guarantees Potential esposure (unapplied credit and guarantee limits) Defaults and other potential bad debts Specified loss provisions for loans and guarantees Unspecified loss provisions for loans and guarantees Gross loans Guarantees Potential exposure (unapplied credit and guarantee limits) Defaults and other potential bad debts Specified loss provisions for loans and guarantees Unspecified loss provisions for loans and guarantees
22 489 15 403 198 86 123 Retail clients 19 893 12 369 238 107 111 60 2 Foreign (retail clients) 46 2 31 22 549 15 405 198 86 123 Total retail clinets 19 939 12 371 241 108 111 8937 92 6317 Primary industries 991 6 1233610 1 089 604 397 61 25 Industry, building and construction 1 172 178 337 13 23 1 267 84 221 42 13 Commerce, hotels and restaurants 1 083 82 334 34 25 Transportation, real estate 6 308 291 790 218 147 operations and services 5 735 215 362 152 30 22 3– 10 8 Foreign (other) 2 – – – – 48 – 24 – – Municipal/public sector 24 – 31 – – 172 53– – – Insurance / finance 199 5315 – – – – – – – 95 Commercial sector – – – – – 77 9 799 1 042 1 524 394 210 95 Total commercial sector 9 206 534 1 202 235 88 77 32 348 1 057 1 929 592 296 218 Total 29 145 546 1 573 476 196 188 30 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NON-PERFORMING, DOUBTFUL AND NON-ACCRUING COMMITMENTS NOTE 18
Potential bad debts (defaults in excess of 90 days) where the balance in default on one of the commitment accounts is more than NOK 1 000.
PARENT BANK GROUP 2000 2001 2002 Non-performing commitments 2002 2001 2000 Retail market 98 144 102 Gross non-performing commitments 102 144 98 (51) (62) (41) Specified loss provisions (41) (62) (51) 47 82 61 Net non-performing commitments 61 82 47 52 % 43 % 40 % Retail market percentage provided for 40 % 43 % 52 %
Commercial market 65 76 194 Gross non-performing commitments 1) 194 76 65 (26) (26) (144) Specified loss proovisions (144) (26) (26) 39 50 50 Net non-performing commitments 50 50 39 40 % 34 % 74 % Commercial market percentage provided for 74 % 34 % 40 %
1) At 31/12 Finance Credit Norge AS was classified as a non-performing commitment where a loss provision had been made.
PARENT BANK GROUP 2000 2001 2002 Performing commitments provided for 2002 2001 2000 Retail market 90 97 96 Performing commitments provided for 96 97 90 (40) (46) (45) Specified loss provisions (45) (46) (40) 50 51 51 Net performing commitments provided for 51 51 50 44 % 47 % 47 % Retail market percentage provided for 47 % 47 % 44 %
Commercial market 146 159 193Performing commitments provided for 193 159 146 (61) (61) (62) Specified loss provisions (62) (61) (61) 85 98 131 Net performing commitments provided for 131 98 85 42 % 38 % 32 % Commercial market percentage provided for 32 % 38 % 42 %
Non-accruing commitments 183160 241 Non-performing commitments where interest is no longer posted 241 160 183 8 38 Interest accrued but not posted 8 3 8
TOTAL NON-PERFORMING AND OTHER DOUBTFUL DEBTS NOTE 19
2002 2001 2000 1999 1998 Gross non-performing loans 296 220 163139 167 Specified loss provisions (185) (88) (77) (71) (94) Net non-performing loans 111 132 86 68 73
Other doubtful debts (gross) 289 256 236 205 174 Specified loss proovisions (107) (107) (101) (106) (105) Other doubtful debts (net) 182 149 135 99 69
31 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 20 LOSS PROVISIONS
Changes in specified/unspecified loss provisions during the year
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 Specified provisions to cover losses on loans 177 178 196 and guarantees at 1 January 196 178 177 Realised losses on loans specifically provided (34) (31) (46) for previously (46) (31) (34) Increase in provisions specifically provided 14 5 5 for previously 5 5 14 Provisions for loans not specifically provided 60 72 191 for previously 191 72 60 (39) (28) (50) Reduction in previous years' provisions (reversal) (50) (28) (39) Specified provisions to cover losses on loans 178 196 296 and guarantees at 31 December 296 196 178 Unspecified provisionsto cover losses on loans 125 160 188 and guarantees at 1 January 188 160 125 Unspecified provisions to cover losses on loans 35 28 30 and guarantees in period 30 28 35 Unspecified provisions to cover losses on loans 160 188 218 and guarantees at 31 December 218 188 160
Specified loss provisions at 31 December 2002 include a provision of NOK 4m related to guarantees. Notes 11 and 43 provide further information.
NOTE 21 CHANGE IN NON-ACCRUED LOAN INTEREST
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 Interest accrued but not posted on loans 28 26 22 in the balance sheet at 1 January 22 26 28 (3) (2) (4) Interest on loans from previous periods (4) (2) (3) Interest accrued but not posted on loans (7) (5) (8) no longer recorded in the balance sheet (8) (5) (7) 8 310 Interest accrued but not posted on loans identified as doubtful 10 3 8 Interest accrued but not posted on loans 26 22 20 in the balance sheet at 31 December 20 22 26
32 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
RISK CLASSIFICATION OF LOANS AND GUARANTEES NOTE 22
All commercial commitments in excess of NOK 250 000, except for commitments in the agricultural sector, are given a risk classification on an individual basis. Other commercial commitments and all agricultural commitments are given a risk classification on a portfolio basis. All retail commitments are given a risk classification on a portfolio basis.
Structure of risk classification system
The risk classification system for the corporate and retail markets have a common structure Classification is based on a two-component system which gives a rating for the following:
Client's debt-servicing ability: Rating A to E Collateral cover: Rating 1 to 5
The rating for debt-servicing ability gives overall expression to the client's ability to service the debt on a ongoing basis, while the rating for collateral cover expresses how well the debt is secured. The combined rating for debt-servicing ability and collateral cover is shown below, with 25 classes of risk, which themselves are divided into 5 risk groups: No risk
No risk Low risk Medium risk Medium-to-high risk High risk
Debt-servicing ability
ABCDE
1 A1 B1 C1 D1 E1 Collateral 2 A2 B2 C2 D2 E2 cover 3 A3 B3 C3 D3 E3
4 A4 B4 C4 D4 E4
5 A5 B5 C5 D5 E5
Commitments involving activities which servicng ability until they have presented arising which increase the bank's expo- are a part of central government with annual accounts, while the collateral sure, the commitment is immediately 100% government responsibility, as cover is assessed in the normal way. downgraded. well as county and local authorities, are automatically accorded an A1 rating. Risk classification of corporate clients Risk classification of retail clients is Commitments which are fully secured by is carried out at least once a year when carried out each month using the a bank deposit or a government, county the client's annual accounts are received. automatic rating system. authority or local authority guarantee are A new classification is made when a new automatically accorded an A1 rating. commitment is established with the As well as providing an overview of risk same client. The doubtful part of the exposure, the risk classification system Recently established companies are auto- protfolio is continuously monitored. In is also used in connection with pricing of matically accorded a D rating for debt- the event of client-specific circumstances loans and guarantees.
Continued... 33 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
SPECIFICATION WITHIN RISK GROUPS
CORPORATE MARKET SPECIFIED LOSS COMMITMENT PROVISION 2000 2001 2002 2002 2001 2000 695 741 631 No risk – – – 2 762 3 614 3 942 Low risk 5 – – 3 565 4 033 5 347 Medium risk 12 8 9 1 247 1 605 1 394 Medium-to-high risk 23 33 29 461 613617 High risk 169 44 41 280 336 434 Non-classified 1) 138 9 010 10 942 12 365 Total 210 88 87
1) Commitments not classified at 31 December 2002, but which will be classified in the course of 2003.
RETAIL MARKET SPECIFIED LOSS COMMITMENT PROVISION 2000 2001 2002 2002 2001 2000 4 232 1 254 1 229 No risk – – – 11 240 17 051 19 540 Low risk – – – 1 450 1 582 1 821 Medium risk 4 – – 216 292 278 Medium-to-high risk 14 15 12 129 143101 High risk 68 93 79 17 267 20 322 22 969 Total 86 108 91
A commitment is defined as the total of loans and utilised credit facilities, plus unutilised credit facilities and guarantees. Unspecified loss provisions not allocated to the respective risk groups.
Average expected annual losses per risk group
The credit risk is monitored through default reports, risk classification and branch analyses. There is a strong focus on credit control and monitoring of potential bad debts.
Based on the risk classification system, 37% of the loan portfolio in the corporate market is considered to carry no risk or a low risk, while 5% is considered to carry a high risk. The corresponding figures in the retail market are 90% and 0.4%.
A moderate rise in the the risk attached to the corporate market is expected in 2003, while only a marginal increase in risk is expected in the retail market.
The bank's net losses in 2002 corresponded to 0.51% of the loan portfolio, including Finance Credit. Excluding Finance Credit the figure was 0.13%. Based on macroeconomic conditions, the level of net losses in 2003 is expected to be slightly more than 0.13%. In a longer perspective, the level of losses could correspond to 0.5% of the portfolio.
NOTE 23 ASSETS ACQUIRED
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 1 – – Other properties – – 1 32 2 Securities 2 2 3 4 2 2 Total 2 2 4
34 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
COMMERCIAL PAPER, BONDS AND OTHER INTEREST-EARNING SECURITIES WITH A FIXED RETURN NOTE 24
Risk weight 2002 2001 2000 Commercial paper and bonds issued by public authorities 0 % 607 445 903 10 % 100 25 42 20 % 104 71 23 Commercial paper and bonds issued by others 20 % 689 652 1 034 100 % 343 119 19 Total 1 843 1 312 2 021
Distribution of book values at 31 December 2002 Portfolio Balance Cost Actual Real rate Currency Listed sheet value value of return proportion Trading portfolio 110 110 110 6.67 NOK 100 Other short-term investments 1 126 1 127 1 126 6.81 NOK 100 Zero coupon bonds 604 594 604 5.93NOK 100 Bonds to be held until maturity 33 36.39NOK 100 Total 1 843 1 834 1 843
The average real rate of return is calculated by identifying the discount rate which gives a calculated value equial to the stated market value, as shown in the following equation:
where: t = the period up to maturity, calculated expressing the number of days as a fraction of 365 Ct = payment at date t MVi = market value for position i r = effective rate of return The effective rate of return is calculated as a weighted total of the individual positions, weighted by the market value.
BONDS TO BE HELD UNTIL MATURITY NOTE 25 Part of discount posted as inte- rest income Part of premium posted as inte- rest expense Book value Discount not posted as income Premium not posted as an expense Nominal value Market value Gross unrealised gain Cost
2000 112 7 2 117 6 1 122 120 3 2001 10–19––99– 2002 3– – 3– – 33–
Bonds with a value of NOK 6m were redeemed in 2002 based on drawing of lots. No bonds have been sold in contravention of guidelines governing bonds to be held until maturity.
Residual maturity 0 -1 year 1 - 5 years Total Nominal value 33
INVESTMENTS IN SUBORDINATED LOANS NOTE 26
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 Subordinated loans posted under loans 20 17 43to and deposits with credit institutions 43 17 20 Subordinated loans posted under bonds 19 19 19 and other interest-earning securities 19 19 19 39 36 62 Total 62 36 39 35 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 27 SHAREHOLDINGS, INVESTMENTS AND OTHER SECURITIES WITH A VARIABLE RETURN (NOK 1 000)
Company PCC / share capital (NOK m) No. of shares Nominal value Ownership % Cost Book value Market value
Trading portfolio (Parent Bank) Listed shares entered on the basis of the market value principle DnB Holding 7 705 50 000 500 0.01 1 647 1 630 1 630 Norsk Hydro ASA 5 331 10 000 200 0.00 2 996 3 105 3 105 Norske Skog ASA 1 331 12 000 120 0.01 1 269 1 176 1 176 Amersham PLC 53 30 000 17 0.03 1 838 1 845 1 845 Rieber & Søn ASA 795 25 000 250 0.031 216 1 187 1 187 Sensonor ASA 283200 000 410 0.14 1 590 400 400 Hardanger Sunnhordlandske ASA 17 2 433 49 0.29 104 549 549 Sparebanken Rogaland 753 15 000 1 500 0.20 3 138 2 700 2 700 Sparebanken Nord-Norge 660 15 000 1 500 0.232 563 1 9131 913 Sparebanken Midt-Norge 615 15 000 1 500 0.24 2 948 2 175 2 175 Total listed shares 19 309 16 680 16 680
Other short-term shareholdings
Unlisted shares entered at the lower of historical cost and market value Data Invest AS 1 22 860 11 1.14 1 000 914 914 Axxessit ASA 4 2 000 20 0.50 2 500 1 500 1 500 Port IT AS 9 30 000 30 0.33 1 756 11 11 Genomar AS 3100 10 0.33850 500 500 Lexmed 3 22 000 22 0.73 330 – – Brann ASA 50 110 000 1 100 2.20 2 838 22 22 Marine Farms ASA 9 10 000 10 0.11 501 70 70 Sunnhordland Sjøgard AS 1 300 30 3.00 675 450 450 Total other short-term shareholdings 10 450 3 467 3 467 Total A65short-term shareholdings (Parent Bank) 29 759 20 147 20 147
Long-term shareholdings (Parent Bank)
Listed shares FöreningsSparbanken AB 8 387 375 000 5 555 0.07 30 688
Unlisted shares SpareBank 1 Gruppen AS 1 562 135 512 135 512 8.67 166 138 Bergen Industriutvikling AS 71 633 6 330 8.92 6 330 Meland Golf AS 10 10 200 2.00 200 Nygårdstangen AS 4 185 185 4.63118 Ressurssenteret AS Manger 10 5 50 0.50 51 Nordhordland Industriutvikling AS 1 100 50 5.00 50 Hardanger Vekst AS 1 100 100 10.00 100 Fjærlandsvegen AS 1 100 100 10.00 100 Åsane Invest AS 16 15 800 1 580 9.88 1 580 BBS/Bank-Aksept Holding AS 165 239 821 5 996 3.63 3 427 Visa-Norge AS 8 280 280 3.50 140 Sambygg AS 1 672 67 6.70 63 Sogndal Eigedomsselskap AS 12 520 260 2.17 35 Øyrane Eiendomsselskap AS 21 729 729 3.47 729 Vestkanten AS 26 3 112 311 1.20 228 Klostergarasjen AS 4 188 188 4.70 188 Sarsia innovation AS 24 697 174 0.73239 Oslo Børs Holding ASA 50 12 581 125 0.25 1 671 Other unlisted companies – – – – 1 467
36 Continued... NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
Company PCC / share capital (NOK m) No. of shares Nominal value Ownership % Cost Book value Market value
Investments in unit trusts Holberg Norden 32 14 104 2.12 677 Holberg Norge 12 11 758 5.84 701
Investments in money market funds Holberg Likviditet 632 29 258 0.47 3 000 Total long-term shareholdings (Parent Bank) 217 920
Investments in general and limited partnerships etc. (Parent Bank) Kvernhuset ANS (J & S liability for NOK 3.39m) 8.30 21.44 279 Sambygg ANS (J & S liability for NOK 11.44m) 15.00 15.46 2 045 K/S Tilflukten – 14.48 174 Total investments in general and limited partnerships etc. (Parent Bank) 2 498 Total shareholdings, investments and securities with a variable return (Parent Bank) 240 565
Movements in long-term investments Opening balance at 1 January 2002 57 166 SpareBank 1 Gruppen, reclassified from 4th quarter 1) 216 430 Bought 6 391 Sold (96) Reversal of previous write-downs 2) 7 835 Write-down of SpareBank 1 Gruppen 1) (50 293) Write-downs 2) (19 513) Closing balance at 31 December 2002 217 920
1) See note 32 2) The write-downs/reversals relate mainly to changes in the value of our shareholding in FörenigsSparbanken AB, which is listed on the stock exchange in Sweden.
OTHER OWNER INTERESTS (NOK 1 000) NOTE 28
Company PCC / share capital (NOK m) No of shares Nominal value Ownership % Book value
Subsidiaries AS Filialbygg (see note 29) 4.15 41 500 4 150 100.00 Sparebankbygget AS, Odda 0.24 126 126 52.50 240 Sparebanken Vest Holding AS 30.00 30 000 30 000 100.00 34 873 Total owner interests (Parent Bank) 35 113
Subsidiaries (Group) Eliminated 35 113 Total owner interests (Group) 0
None of the companies classified as subsidiaries have a stock exchange listing. 37 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 29 INVESTMENTS POSTED APPLYING THE EQUITY METHOD (NOK 1 000)
Up to 31 October 2002 SpareBank1 Gruppen was included in the accounts of both the parent bank and Group applying the equity method.
Subsidiaries: Sparebanken Vest Holding AS, AS Filialbygg, Sparebankbygget AS. Subsidiaries are enterd in the accounts on the basis of the equity method and with full consolidation in the group accounts. SpareBank 1 Gruppen AS Sparebanken Holding AS Vest AS Filialbygg Sparebank- bygget AS Total
Balance sheet value at 1 January 2002 325 236 34 882 (9 845) (84) 350 189 Adjustment 2001 (8 059) (26) 200 (7 885) +/- Addition in period (through share issue) 26 012 26 012 +/- Net unrealised gain on buildings/sites reversed in 2002 4 207 4 207 +/- Share of profits/loss (126 758) 5 006 12 564 1 851 (107 336) Reclassified long-term shareholding at 31 October 2002. See notes 27 and 32 (216 431) (216 431) - Dividends / Group contribution (4 990) (10 000) (1 527) (16 517)
Balance sheet value at 31 December 2002, based on equity method 0 34 873 (2 874) 240 32 239
Paid-in capital 322 820 30 000 6 565 126 359 511
Registered office Oslo Bergen Bergen Odda
NOTE 30 INTRA-GROUP TRANSACTIONS (NOK 1 000)
PARENT BANK 2002 2001 2000 Profit and Loss Account Interest/credit commissions received from subsidiaries 14 733 9 296 4 848 Interest paid on deposits from subsidiaries 7 818 7 132 3 954 Office rental expenses 51 54351 927 10 689 Refund of operating expenses 25 18324 468 – Office rental income – – 831
Balance Sheet Loans to subsidiaries at 31 December 162 496 184 364 76 336 Deposits from subsidiaries 65 825 61 836 46 480 Dividends receivable 1 528 16 700 22 075 Group contribution receivable 14 990 – –
38 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
MAIN FIGURES - SUBSIDIARIES (NOK 1 000) NOTE 31
Profit and Loss Account Sparebanken Vest Holding AS EiendomsMegler AS 1 Vest AS Filialbygg Sparebank- bygget AS
Total interest income/(expenses) 1 932 2 298 (12 914) (99) Total other income/(expenses) 5 695 51 59388 0345 513 Total operating expenses 691 48 089 58 477 513 Operating profit before losses and write-downs 6 936 5 802 16 643 4 901 Operating profit before losses and write-downs 6 936 5 802 16 643 4 901
Balance Sheet Current assets 35 780 16 354 26 540 4 600 Fixed assets 1 200 4 174 192 121 – Total assets 36 980 20 528 218 661 4 600 Current liabilities 6 94314 221 20 860 4 140 Long-term liabilities – 321 172 042 – Equity 30 036 5 987 25 759 460 Total liabilities and equity 36 980 20 528 218 661 4 600
Sparebanken Vest Holding AS Bergen Sparebanken Vest Holding AS owns EiendomsMegler 1 Vest. The company has no employees.
EiendomsMegler 1 Vest AS Bergen At the end of 2002 the company had 39 full-time and 4 part-time employees. The company is engaged in estate agency activities in Bergen city, Åsane, Fana and Sotra.
AS Filialbygg Bergen This company owns and manages the Group's properties in the counties of Hordaland and Sogn & Fjordane. The company is funded by the parent bank on normal customer loan terms. At the end of 2002 the company had 9 full-time and 15 part-time employees.
Sparebankbygget AS Odda This company owns the bank building in Odda. Sparebanken Vest has a 52.5% shareholding in the company. In 2002 Sparebankbygget AS sold its commercial property in Odda and at 31 December 2002 the company had no activity. Sparebankbygget AS will be wound up in 2003.
39 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 32 SPAREBANK 1 GRUPPEN AS
SpareBank 1 Gruppen AS is owned by Sparebanken Nord-Norge, Sparebanken Midt-Norge, Sparebanken Rogaland and Samarbeidende Sparebanker AS, each with a 14.08% holding, while SpareBank 1 Vest owns 8.67%, FöreningsSparbanken AB (publ) owns 25%, and 10% is owned by the Norwegian Federation of Trade Unions and affiliated associations. Until 31 October 2002, SpareBank1Vest's holding in the company was regarded as a jointly controlled activity and was posted in the accounts on the basis of the equity method. At the end of October Sparebanken Vest gave notice of termination of its membership of the alliance, and from the same date the investment was no longer deemed to be a jointly controlled activity since the conditions pertaining thereto no longer existed. At 31 December 2002 the shareholding was classified and valued as a long-term shareholding. See note 27.
Company Share capital (NOK m) Shareholding Share of voting rights
SpareBank 1 Gruppen AS 1 562 8.67 % 8.67 %
Sparebanken Vest has given subordinated loans totalling NOK 42.6m to SpareBank 1 Gruppen AS. Of this, NOK 16.6m runs to 2006 with an interest rate based on 3 month NIBOR + 110 basis points. A subordinated loan of NOK 26m is undated and has an interest rate based on NIBOR + 225 basis points.
In connection with the acquisition of VÅR Gruppen ASA in 2000, SpareBank 1 Vest has extended a total loan of NOK 1 400 m to SpareBank 1 Gruppen AS. At 31 December 2002 the outstanding amount of the loan came to NOK 480m. Of this, the proportion attributable to Sparebanken Vest was NOK 130m, and this will be reduced further in 2003.
2002 2001 Profit and Loss Account (NOK m) 100 % 8,67 % 100 % 13 % Profit/(loss) after tax (563.9) (133.4) Amortisation of goodwill and write-down of unrealised gains (755.7) (258.0) Other eliminations 30.8 Minority interestsl (1.4) (51.9) Loss for the year (1 290.2) (126.7)1) (443.3) (57.6)
1) Shares of results at 31 October 2002
NOTE 33 INTANGIBLE ASSETS
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 9 4 3Goodwill 3 4 9 37 37 100 Deferred tax assets 96 32 30 46 41 103 Intangible assets 99 36 39 1 5 2 Amortisation of goodwill 2002 2 5 1
Goodwill relates to the acquisiton of VÅR bank og forsikrings activities in the counties of Hordaland and Sogn & Fjordane. The individual elements of goodwill are amortised on a straight-line basis over 2 and 5 years, respectively.
40 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
FIXED ASSETS NOTE 34
PARENT BANK GROUP 2000 2001 2002 Note2002 2001 2000 105 139 116 Machinery, equipment and vehicles 35 120 143 108 88 2 3 Buildings and other real estate 35, 36 159 177 180 193 141 119 Fixed assets 279 320 288
INVESTMENTS AND DEPRECIATION OF FIXED ASSETS (NOK 1 000) NOTE 35
Parent Bank Machinery, equipment and vehicles Buildings and other real estate Total
Cost at 1 January 2002 342 369 3 115 345 484 Additions 17 400 780 18 180 Disposals at cost 691 – 691 Aggregate depreciation and write-downs 242 588 1 325 243 913 Book value at 31 December 2002 116 490 2 570 119 060 Ordinary depreciation 2002 39 144 113 39 257 Write-downs 2002 Gain on disposal 2002 73– 73 Ordinary depreciation rates (straight-line method) 10 - 33 % 0 - 8 % –
Group Machinery, equipment and vehicles Buildings and other real estate Total
Cost at 1 January 2002 349 093 288 178 637 271 Revaluations 1988 – 2 777 2 777 Additions 18 040 1 12319 163 Disposals at cost 968 18 994 19 962 Aggregate depreciation and write-downs 246 187 114 006 360 193 Book value at 31 December 2002 119 978 159 078 279 056 Undepreciated residual revaluation at 31 December 2002 Ordinary depreciation 2002 40 392 4 970 45 362 Of which depreciation on revaluations – 55 55 Write-downs 2002 Gain on disposal 2002 7315 792 15 865 Ordinary depreciation rates (straight-line method) 10 - 33 % 0 - 8 % –
41 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 36 BUILDINGS AND OTHER REAL ESTATE (NOK 1 000)
Location Description Book value Own use Let area Unlet area Total m_ Remarks Bergen, Nedre Korskirkealm. Bank building 33 447 5 795 – – 5 795 Incl. sites Bergen, Kaigaten 4 Bank building 57 399 7 255 – – 7 255 Incl. site Dale Bank building 6 236 802 704 – 1 506 Incl. site Lonevåg Comm. prop. 4 874 396 – – 396 Incl. site Nordfjordeid Bank building 6 845 927 – – 927 Incl. site Nordfjordeid Bank building 1 776 403– – 403Incl. site and facilities Norheimsund Bank building 15 245 1 110 – – 1 110 Incl. site Manger Bankbygg 3 175 600 461 – 1 061 Incl. site and facilities Os Bank building 1 500 939 312 79 1 330 Incl. site Sogndal Bank building 13 136 1 050 749 280 2 079 Stord Bank building 13 680 1 800 – 600 2 400 Incl. site Sundry properties worth < NOK 1 000 000 1 765 407 377 – 784 Incl. sites Group - total 159 078 21 484 2 603 959 25 046
An assessment of the properties was held in 2001 which put the value at NOK 30m more than book value.
NOTE 37 PREPAID EXPENSES AND ACCRUED INCOME
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 113148 216 Accrued income 220 149 134 – – – Overfunding of pension commitments – – 2 117 34 43 Other accruals 21 15 95 230 182 259 Total 241 164 231
NOTE 38 LOANS AND DEPOSITS FROM CREDIT INSTITUTIONS
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 Loans and deposits from credit institutions 332 54 20 with no agreed term or period of notice 20 54 332 Loans and deposits drom credit institutions 3 284 2 909 2 279 with an agreed term or period of notice 2 279 2 909 3 284 3 616 2 963 2 299 Total 2 299 2 963 3 616
NOTE 39 DEPOSITS FROM AND DEBT TO CUSTOMERS
PARENT BANK GROUP 2000 2001 2002 Note2002 2001 2000 12 719 12 799 14 049 Deposits from and debt to customers with no agreed term 13 984 12 737 12 673 5 109 6 612 8 208 Deposits from and debt to customers with an agreed term 8 208 6 612 5 109 17 828 19 411 22 257 Total 40 22 192 19 349 17 782
42 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
DISTRIBUTION OF DEPOSITS FROM AND DEBT TO CUSTOMERS NOTE 40
2002 2001 NOK % NOK % Distribution by sector Central government 235 1.06 137 0.71 Local government 1 264 5.70 948 4.90 Insurance and finance 1 0134.56 417 2.16 Private enterprise 5 702 25.69 5 217 26.96 Wage earners 13 787 62.13 12 459 64.39 Foreign 191 0.86 171 0.88 Total 22 192 100.00 19 349 100.00
Commercial sectors Primary industries 284 1.28 315 1.63 Industry and mining 576 2.60 449 2.32 Building and construction, power and water supply 541 2.44 358 1.85 Wholesale/retail trade, hotels and restaurants 955 4.30 859 4.44 International shipping and pipe transportation 299 1.35 134 0.69 Other transportation, post and telecommunications 1 030 4.64 1 444 7.46 Real estate operations 790 3.56 578 2.99 Insurance and finance 1 014 4.57 417 2.16 Services 1 385 6.24 1 274 6.58 Central/local government 1 340 6.04 891 4.60 Wage earners 13 787 62.13 12 459 64.39 Foreign 191 0.86 171 0.88 Total 22 192 100.00 19 349 100.00
Geographical distribution Hordaland 18 955 85.41 16 501 85.28 Sogn & Fjordane 2 081 9.38 1 867 9.65 Other parts of Norway 965 4.35 810 4.19 Norway - Total 22 001 99.14 19 178 99.12 Foreign 191 0.86 171 0.88 Total 22 192 100.00 19 349 100.00
SECURITISED DEBT NOTE 41
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 3 230 3 084 2 680 Commercial paper and short-term issues 2 680 3 084 3 230 2 815 3 841 4 732 Bond debt 4 732 3 841 2 815 – (69) (30) Own un-amortised bonds (30) (69) – 6 045 6 856 7 382 Total 7 382 6 856 6 045
OTHER LIABILITIES NOTE 42
PARENT BANK GROUP 2000 2001 2002 Note2002 2001 2000 107 67 97 Unassessed tax payable 12 100 72 110 260 142 144 Other current liabilities 155 142 263 – – – Other long-term liabilities – – 3 100 89 66 Own pension premium fund 66 89 100 30 24 9 Other liabilities/provision for dividend on PCCs 10 24 30 497 322 316 Total 331 327 506
43 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 43 PROVISIONS FOR EXPENSES AND COMMITMENTS
PARENT BANK GROUP 2000 2001 2002 Note2002 2001 2000 32 56 68 Pension commitments 44 67 55 32 – 1 4 Specified provisions for guarantee liabilities 4 1 – 32 57 72 Total 71 56 32
NOTE 44 PENSION COMMITMENTS
Parent Bank Sparebanken Vest's pension schemes consist of the following: 1. A group pension scheme which provides all the bank's employees with a pension equal to 70% of the final salary, but limited to 12G. At the end of 2002 the scheme covered 858 persons. A further 210 currently receive pensions under the scheme. 2. Contractual pension agreements (CPA) from 62 to 67 years of age, with an expected CPA acceptance rate of 50%. At year-end 2002 33 persons were receiving pensions under the CPA scheme. 3. A top-hat scheme covering 5 employees, with the option of a retirement pension at the age of 64 (managing director at 60). 4. Early retirement schemes. At year-end 2002, 4 persons were receiving early retirement pensions.
Group Two of the subsidiaries have group pension schemes corresponding to the parent bank's scheme. 1. The schemes established by AS Filialbygg cover 16 employees. No pensions were being paid under these schemes at the end of 2002. 2. The schemes established by EiendomsMegler 1 Vest cover 37 employees. No pensions were being paid under these scemes at the end of 2002.
PARENT BANK 2002 2001 2000 Profit and Loss Account Total Un- In- Total Un- In- Total Un- In- insured sured insured sured insured sured Present value of acc. pension rights for the year 19 4 15 19 5 14 15 312 + Interest charge on acc. pension commitments 33 6 27 32 6 26 29 6 23 - Expected return on pension fund assets 33 – 33 33 – 33 32 – 32 + Diff. between expected and actual return and changes in estimates ––––––(1)(1)– + Accounting effect of changes in accrued rights under CPA and extraord. withdrawals (severance packages) ––––––10–10 + Increased pension commitments on taking over personnel from VÅR Bank og Forsikring – – – 139 4 – – – Net pension costs for the period 19 10 9 31 20 11 21 8 13 Balance Sheet Present value of accumulated pension rights, excl. salary growth 409 83 326 401 81 320 346 70 276 + Effect of future salary growth 95 17 78 105 18 87 88 15 73 Gross pension commitments 504 100 404 506 99 407 434 85 349 - Pension fund assets 435 – 435 423 – 423 415 – 415 Net pension commitments 69 100 (31) 83 99 (16) 19 85 (66) - Unposted effect of changed estimates and diff. between expected and actual return 1 (10) 11 27 (6) 33 (13) (6) (7) Net pension commitments in the balance sheet 1) 68 110 (42) 56 105 (49) 32 91 (59)
44 Continued... NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
GROUP 2002 2001 2000 Profit and Loss Account Total Un- In- Total Un- In- Total Un- In- insured sured insured sured insured sured Present value of accumulated pension rights 21 5 16 21 6 15 15 312 + Interest charge on accrued pension commitments 33 6 27 32 6 26 29 6 23 - Expected return on pension fund assets 34 – 34 34 – 34 32 – 32 + Diff. between expected and actual return and changes in estimates –––– ––(1)(1)– + Accounting effect of changes in accrued rights under CPA and extraord. withdrawals (severance packages) ––––––10–10 + Increased pension commitments on taking over personnel from VÅR Bank og Forsikring – – – 139 4 – – – Net pension costs for the period 20 11 9 32 21 11 21 8 13 Balance Sheet Present value of accumulated pension rights, excl. salary growth 415 84 331 405 82 323 350 71 279 + Effect of future salary growth 99 18 81 107 18 89 90 15 75 Gross pension commitments 514 102 412 512 100 412 440 86 354 - Pension fund assets 445 445 431 431 421 – 421 Net pension commitments 69 102 (33) 82 100 (18) 19 86 (67) - Unposted effect of changed estimates and diff. between expected and actual return 2 (10) 12 27 (6) 33 (13) (6) (7) Net pension commitments in the balance sheet 1) 67 112 (45) 55 106 (51) 32 92 (60)
1) The bank uses the special ”corridor” equalisation method for the accounting treatment of changes in estimates and the difference between the expected and the actual return on pension fund assets.
Economic assumptions 2002 2001 2000 Discount rate 7.0 % 7.0 % 7.0 % Return on pension fund assets 8.0 % 8.0 % 8.0 % Salary growth 3.3 % 3.3 % 3.3 % Change in national insurance base rate (G) 2.5 % 2.5 % 2.5 % Pension adjustment 2.5 % 2.5 % 2.5 % Voluntary withdrawals 1.0 % 1.0 % 1.0 % CPA acceptance rate 50.0 % 50.0 % 50.0 %
The economic assumptions have a long-term perspective and are in accordance with the assumptions recommended by the Oslo Stock Exchange. Actuarial calculations have been used.
SUBORDINATED LOAN CAPITAL NOTE 45
PARENT BANK GROUP 2000 2001 2002 2002 2001 2000 443– – Subordinated loan of USD 50m raised in December 1996 – – 443 – – 349 Subordinated loan of USD 50m raised in July 2002 349 – – – 147 147 Subordinated bond loan of NOK 147m raised in December 2001 147 147 – 250 250 250 Subordinated bond loan of NOK 250m raised in November 2000 250 250 250 693 397 746 Total 746 397 693
Subordinated bond loan 2000/2010 for NOK 250m: Floating 3-month rate with borrower's right to repay the loan. Subordinated bond loan 2001/2011 for NOK 147m: Floating 3-month rate with borrower's right to repay the loan on 20/12-06. Subordinated loan 2002/2012 for USD 50m: 3-month rate based on USD LIBOR and borrower's right to repay the loan on 23/7-07
In 2002, costs related to subordinated loan capital amounted to NOK 38.3 and comprised: Issue costs of NOK 0.6 m Interest costs of NOK 37.7 m
45 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
NOTE 46 PRIMARY CAPITAL CERTIFICATES, SEC. NO. 6000900 (AS AT 31 DECEMBER 2002)
Proportion of 20 largest owners: No. of PCCs PCC capital JP Morgan Chase Bank 249 500 9.98 Gjensidige NOR 107 800 4.31 Erik Otter Steen 96 900 3.88 Sparebanken Øst 66 700 2.67 Tonsenhagen Forretningssentrum AS 38 100 1.52 Nordås Invest AS 32 000 1.28 Aske Finans AS 30 100 1.20 Kaare Holmefjord AS 30 000 1.20 Straen AS 30 000 1.20 Jan H. Freuchen 27 750 1.11 Rieber & Co AS 27 650 1.11 Einar Nistad Finans 25 000 1.00 Tine Pensjonskasse 21 900 0.88 Forsvarets personell service 20 900 0.84 Solvang ASA 20 000 0.80 Aristar AS 18 600 0.74 Agda Andrea Bonde Gjøstein 17 400 0.70 Modum Sparebank 17 000 0.68 Tore Skjensvold 16 300 0.65 Lambach Invest AS 15 850 0.63 Total 909 450 36.38
PCCs owned by the managing director, senior employees, members of the Board of Directors, Board of Governors and Control Committee, and closely related persons, as defined in section 7-26 of the Accounting Act and section 8-20 of the Supplementary Regulations pursuant to the Act :
No of PCCs Roald Korsøen 100 Ada Kjeseth 1 000 Einar Nistad 9 100 Arne Buanes 20 Stein Tore Davidsen 200 Inger Finne 100 Mary Hovden Davidsen 3 300 Karl G. Mæland 300 Nils K. Rødland 200 Erik Bøckmann 500 Terje Kvamme 100 Anne Sissel Raunholm Engevik 100 Knut Ravnå 200
Distribution by number Distribution No of PCCs Proportion (%) No. of owners Proportion (%) 1 - 100 57 679 2.31 780 35.83 101 - 1000 483 409 19.34 1 038 47.68 1001 - 5000 676 712 27.07 291 13.37 5001 - 10000 342 950 13.72 46 2.11 10001 - 250000 939 250 37.56 22 1.01 Total 2 500 000 100.00 2 177 100.00
46 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
EQUITY (NOK 1 000) NOTE 47
PARENT BANK Primary Capital Certificates PCC premium reserve Reserve for valuation variances Sparebanken capital fund Total
Balance at 1 January 2002 250 000 1 500 16 899 1 905 082 2 173 481 Purchase of own PCCs (695) (106) (801) Error correction (8 059) (8 059) Transferred from reserve for valuation variances (8 840) (8 840) Allocations 52 262 52 262 Balance at 31 December 2002 249 305 1 500 0 1 957 238 2 208 043
GROUP Primary Capital Certificates PCC premium reserve Reserve for valuation variances Sparebanken capital fund Total
Balance at 1 January 2002 250 000 3 500 14 887 1 905 082 2 173 469 Purchase of own PCCs (695) (106) (801) Error correction (8 059) (8 059) Net transfer from jointly controlled activity 1) (8 840) (8 840) Allocations 52 262 52 262 Balance at 31 December 2002 249 305 3 500 (2 012) 1 957 238 2 208 031
1) Shareholding in SpareBank 1 Gruppen posted as jointly controlled activity until 1 November 2002.
CAPITAL ADEQUACY NOTE 48
PARENT BANK 2002 2001 2000 NOK % NOK % NOK % Core capital 2 105 8.60 2 116 9.41 1 929 9.53 Net supplementary capital 746 3.05 397 1.77 693 3.42 Other deductions (151) (0.62) – – – – Net capital base 2 700 2 513 2 622 Risk-weighted volume 24 488 22 475 20 250 Capital ratio 11.03 11.18 12.95
GROUP 2002 2001 2000 NOK % NOK % NOK % Core capital 2 110 8.63 2 137 9.68 2 036 10.25 Net supplementary capital 746 3.05 397 1.80 693 3.49 Other deductions (151) (0.62) (342) (1.55) (359) (1.81) Net capital base 2 705 2 192 2 370 Risk-weighted volume 24 443 22 076 19 861 Capital ratio 11.07 9.93 11.93
Continued... 47 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
Specification of risk-weighted volume (Group) Nominal amount Risk-weighted volume Risk weight 0% 10% 20% 50% 100% 31/12-02 31/12-01 31/12-00 Banking portfolio Cash and ordinary bank deposits 203– 695 – – 139184 272 Short-term investments in securities 604 100 703 – 323 474 316 238 Lendings 192 – 99 17 480 14 578 23 338 21 029 18 637 Other receivables – – – 220 30 140 94 239 Fixed assets 101 – 169 – 333 367 705 698 Total assets 24 458 22 329 20 084 Off-balance sheet items 503348279 Total risk-weighted volume, banking portfolio 24 961 22 677 20 363
Trading portfolio Position risk related to own equity instruments 30 23 141 Position risk related to instruments of debt 24 36 22 Settlement risk 000 Counterparty risk and other risk 100 66 32 Total risk-weighted volume, trading portfolio 154 125 195 Total risk-weighted volume, banking and trading portfolio 25 115 22 802 20 558 Deductions: Subordinated loans to other financial institutions (151) (342) (359) Use of the equity method in the accounts of the parent bank (7) – – Loss provisions (514) (384) (338) Basis for calculation of capital adequacy 24 443 22 076 19 861 Currency risk 8% of basis of calculation trading portfolio 12 10 16
NOTE 49 GUARANTEES AND MORTGAGES
PARENT BANK GROUP 2000 2001 2002 Guarantees Note 2002 2001 2000 Guarantee specification: 165 205 257 Payment guarantees 257 205 165 321 195 622 Contract guarantees 622 195 321 33 3Loan guarantees 3 3 3 38 5 Guarantees for taxes 5 8 3 101 145 180 Other guarantee liabilities 170 135 101 593556 1 067 Total customer guarantees 16 1 057 546 593 – 9 27 Guarantees on behalf of Savings Banks' Guarantee Fund 27 9 – 593 565 1 094 Total guarantee liability 1 084 555 593
Mortgages Bonds and commercial paper - as security for overnight 1 990 1 394 1 831 loans from Norges Bank - valued at 1 831 1 394 1 991 1 990 1 394 1 831 Total mortgages 1 831 1 394 1 991
48 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
MAIN REGIONAL FIGURES FOR 2002 NOTE 50
Total Customer Gross assets deposits loans Region Hardanger/ Midthordland 2 744 2 194 2 728 Region Nordfjord 2 254 1 461 2 241 Region Nordhordland 3 258 2 879 3 238 Region Sogn 867 607 857 Region Sunnhordland 4 332 2 552 4 308 Region Vest 3 414 1 751 3 394 Region Bergen 13 883 8 889 13 895 Total - all regions 30 752 20 333 30 661 Central activities 1) 4 749 1 924 1 850 Sparebanken Vest - Total 35 501 22 257 32 511
1) Including centrally managed equity and Corporate Market Marine/Shipping
LIQUIDITY RISK / RESIDUAL MATURITY OF BALANCE SHEET ITEMS NOTE 51
By liquidity risk is meant the risk that the bank is unable to refinance its debt as it matures, or is unable to fund increases in assets. The liquidity risk is reduced by adjusting the balance sheet structure, including its dependence on funding from sources other than its customers, and the extra costs involved in raising long-term funding in the money market compared with the cost of shorter term funding until maturity. In 2002 Sparebanken Vest developed its strategy and parameters for liquidity management activities. The current strategy takes account of the recommendations made by the Bael Committee concerning good liquidity management for banks.
Most of the bank's long-term funding which matures in more than one year is linked to agreements where interest rate is tied up to fixed short-term interest rates. This is done in order to reduce the interest rate risk involved in raising long-term funding.
Restløpetid på balanseposter pr. 31/12-02 0 - 1 1 - 3 3 - 12 1 - 5 Over No residual Total month months months years 5 years maturity Assets Cash and deposits with central banks NOK 23– – – – 171 194 Foreign currency – – – – – 9 9 Loans to and deposits with credit institutions NOK – 238 405 – – – 643 Foreign currency 52 – – – – – 52 Loans to and receivables from customers NOK 1 542 370 2 073 7 037 19 030 – 30 052 Foreign currency 23– 154 3201 799 – 2 296 Specified loss provisions NOK – – – – – (291) (291) Foreign currency – – – – – (1) (1) Unspecified loss provisions NOK – – – – – (218) (218) Commercial paper, bonds and other interest- earning securities with a fixed return NOK 102 516 363 766 96 – 1 843 Foreign currency – – – – – – 0 Other assets NOK – 250 – 378 – 211 839 Foreign currency – – – – – 31 31 Total assets 1 742 1 374 2 995 8 501 20 925 (88) 35 449 NOK 1 667 1 374 2 841 8 181 19 126 (127) 33 062 Foreign currency 75 – 154 320 1 799 39 2 387
Continued... 49 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
0 - 1 1 - 3 3 - 12 1 - 5 Over No residual Total month months months years 5 years maturity Liabilities and equity Loans and deposits from credit institutions NOK 34 – – – – – 34 Foreign currency 83 452 1 375 355 – – 2 265 Deposits from and debt to customers NOK 21 745 – 5 267 – – 22 017 Foreign currency 175 – – – – – 175 Securitised debt NOK 50 925 1 705 4 702 – – 7 382 Foreign currency – – – – – – 0 Other liabilities NOK 220 – – – – 402 622 Foreign currency – – – – – – 0 Subordinated loan capital NOK – – – – 397 – 397 Foreign currency – – – – 349 – 349 Equity NOK – – – – – 2 208 2 208 Total liabilities and equity 22 307 1 377 3 085 5 324 746 2 610 35 449 NOK 22 049 925 1 710 4 969 397 2 610 32 660 Foreign currency 258 452 1 375 355 349 – 2 789 Net liquidity exposure gap on balance sheet items (20 565) (3) (90) 3 177 20 179 (2 698) 0 NOK (20 382) 449 1 131 3 212 18 729 (2 737) 402 Foreign currency (183) (452) (1 221) (35) 1 450 39 (402) Net liquidity exposure gap on forward foreign currency transactions (3) (31) 55 0 0 0 21 Forward purchases of foreign currency NOK 468 49 2 835 – – – 3 352 Foreign currency 1 303 2 033 1 789 – – – 5 125 Forward sales of foreign currency NOK (991) (401) (2 388) – – – (3 780) Foreign currency (783) (1 712) (2 181) – – – (4 676) Net total - all items (20 568) (34) (35) 3 177 20 179 (2 698) 21 NOK (20 905) 97 1 578 3 212 18 729 (2 737) (26) Foreign currency 337 (131) (1 613) (35) 1 450 39 47
Overdraft facilities are grouped under loans with a residual maturity of up to 1 month. Instalment loan repayments are apportioned in accordance with the loan structure.
50 Continued... NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
Agreed/probable time for adjustment of interest on balance sheet items and financial derivatives at 31 December 2002
0 - 1 1 - 3 3 - 12 1 - 5 Over No residual Total month months months years 5 years maturity Assets Cash and deposits with central banks NOK 23– – – – 171 194 Foreign currency – – – – – 9 9 Loans to and deposits with credit institutions NOK 238 405 – – – – 643 Foreign currency 52 – – – – – 52 Loans to and receivables from customers NOK 1 419 27 59351 496 493 – 30 052 Foreign currency 852 1 144 300 – – – 2 296 Specified loss provisions NOK – – – – – (291) (291) Foreign currency – – – – – (1) (1) Unspecified loss provisions NOK – – – – – (218) (218) Commercial paper, bonds and other interest- earning securities with a fixed return NOK 290 1 206 251 96 – – 1 843 Other assets NOK – – – – – 839 839 Foreign currency – – – – – 31 31 Total assets 2 874 30 348 602 592 493 540 35 449 NOK 1 970 29 204 302 592 493 501 33 062 Foreign currency 904 1 144 300 – – 39 2 387
Liabilities and equity Loans and deposits from credit institutions NOK – 24 – – – 9 33 Foreign currency 138 452 1 668 – – 8 2 266 Deposits from and debt to customers NOK – 21 775 – 242 – – 22 017 Foreign currency 175 – – – – – 175 Securitised debt NOK 1 755 2 022 1 855 1 750 – – 7 382 Foreign currency – – – – – – 0 Other liabilities NOK – – – – – 622 622 Foreign currency – – – – – – 0 Subordinated loan capital NOK – 397 – – – – 397 Foreign currency – 349 – – – – 349 Equity NOK – – – – – 2 208 2 208 Total liabilities and equity 2 068 25 019 3 523 1 992 0 2 847 35 449 NOK 1 755 24 218 1 855 1 992 – 2 839 32 659 Foreign currency 313 801 1 668 – – 8 2 790 Net interest rate exposure on balance sheet items 806 5 329 (2 921) (1 400) 493 (2 307) 0 NOK 215 4 986 (1 553) (1 400) 493 (2 338) 403 Foreign currency 591 343 (1 368) – – 31 (403)
Continued... 51 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
0 - 1 1 - 3 3 - 12 1 - 5 Over No residual Total month months months years 5 years maturity Off-balance sheet financial derivatives which affect interest rate exposure (981) 86 79 1 284 (451) 0 17 Purchase positions NOK 1 589 3 382 13 055 2 150 139 – 20 315 Foreign currency 1 304 2 082 1 789 – – – 5 175 Sale positions NOK (3 091) (3 617) (12 584) (866) (590) – (20 748) Foreign currency (783) (1 761) (2 181) – – – (4 725) Net interest rate exposure incl. off-balance sheet financial derivatives (175) 5 415 (2 842) (116) 42 (2 307) 17 NOK (1 287) 4 751 (1 082) (116) 42 (2 338) (30) Foreign currency 1 112 664 (1 760) – – 31 47 Net interest rate exposure of average total assetsl (2.12) 2.24 (3.71) 3.69 0.12 0.08 0.30 NOK (4.32) (0.67) 1.35 3.69 0.12 – 0.17 Foreign currency 2.20 2.91 (5.06) – – 0.08 0.13
Interest rate sensitivity Throughout 2002 Sparebanken Vest had substantial holdings of bonds and commercial paper, mainly for the purpose of meeting statutory requirements relating to liquidity reserves and deposits required as security for loans from Norges Bank.
At year-end, the bank's holdings of bonds and commercial paper amounted to NOK 1 843m, with an average duration of 0.31 years. Taken separately, the interest rate risk on these investments would result in a loss of value of NOK 4.8m in the event of a parallel rise in the interest rate of 1 percentage point. The bank uses interest rate swaps, futures and future rate agreements (FRA) to manage the interest rate risk related to these securities.
Exposed interest rate positions at year-end 202, with accounting effect, would have resulted in a loss of NOK 5.2m in the event of a parallel rise in the interest rate of 1 percentage point. The bank also has bonds for NOK 3.2m with an average duration of 0.1 years which are to be held until maturity. A rise in interest rates would have no immediate negative accounting effect for this part of the portfolio.
In managing its interest rate exposure, the bank realises that different maturities can develop differently. The basic risk has been accounted for by ensuring that the bulk of the bank's investments are in gilts.
Foreign exchange risk Assets and liabilities in foreign currency at 31 December 2002, re-stated in NOK
Posted in Balance Sheet Not posted in Balance Sheet Currency Assets Liabilities Forward Forward Net purchases sales positions USD 7232 071 4 609 3 229 31 JPY 738 382 381 738 (1) GBP 91 134 51 5 3 CHF 399 – 10 408 1 SEK 37 42 20 25 (10) DKK 22 22 4 2 2 EUR 375 137 51 269 20 Other 2 – – – 2 Total 2 387 2 788 5 126 4 676 48
Foreign currency items are secured through corresponding items in the balance sheet or through off-balance sheet hedging positions. The foreign exchange risk is therefore always limited.
52 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
FINANCIAL INSTRUMENTS AND DERIVATIVES NOTE 52
Financial instruments 1) Nominal amount 31/12-02 Book value 31/12-02 Average book value 2002 Market value 31/12-02 exposed Credit value 2002
Trading portfolio Balance sheet instruments - Commercial paper, bonds etc.. 110 110 – 110 - Shareholdings 7 17 70 17 - Money market investment funds – – 10 – Off-balance sheet instruments 2) - Forward purchases/sales of foreign currency 8 065 8 031 4 988 44 - Interest rate contracts 11 52311 52377 602 1
Ordinary banking activity Balance Sheet - Assets - Commercial paper, bonds etc. 1 721 1 730 1 419 1 730 - Bonds to be held until maturity 335 3 - Long-term shareholdings 158 218 218 Balance Sheet - Liabilities - Commercial paper and bond debt 7 383 7 377 7 191 Off-balance sheet instruments 2) - Forward purchases/sales of foreign currency 1 785 1 771 967 18 Interest rate contracts 5 792 5 792 6 084 24 Options 1 522 1 522 1 368 47
1) The nominal amount is the underlying principal which is the basis of calculation of interest income, interest expenses and net gains in the profit and loss account.
2) Off-balance sheet instruments in the columns for "Book value" and "Average book value" are stated at the total of purchases and sales at year-end and at the average for the year. These amounts are included in order to show the bank's activity in this area.
Financial derivatives are agreements entered into with financial institutions and customers in order to set interest rates, foreign exchange rates and the value of equity instruments for specific periods.
Sparebanken Vest has used the following financial derivatives in the course of the year:
Forward foreign exchange transactions These are agreements to purchase or sell a specific amount of foreign currency at a future date at an agreed exchange rate.
Interest rate contracts comprise: - Forward rate agreements (FRA) which stipulate a certain rate of interest on a nominal amount of foreign currency for a future period of time. - Interest rate swaps which are agreements to exchange interest rates (fixed for floating) for a specific amount over a given period of time. - Interest rate options which give the buyer the right to receive from the seller the difference between the market rate and an agreed rate of interest for a specific amount over a given period.
Continued... 53 NOTES TO THE ACCOUNTS
Sparebanken Vest Annual Report 2002
Options The bank's holdings of options relates to bank deposits with a stock exchange return and the issue of share index linked bonds to customers. All share options sold to customers are secured against corresponding holdings in the market, and the bank's open position related to these options is very limited.
Market risk The market risk attached to commercial activity is limited under the risk limits which are set by and regularly reported to the Board of Directors. The limits for foreign currency positions are largely in line with the limitations set by Norges Bank. The limits for interest rate risk are set at a level which limits the risk to a level which ensures that the bank's core activities do not suffer.
Credit risk The credit risk is expressed by the risk-weighted volume calculated in accordance with capital adequacy regulations laid down by the Banking, Insurance and Securities Commission. The credit risk is the risk that contractual obligations are not met by the bank's counterparty. Internal regulations regukate the maximum counterparty exposure. The above table shows that no major risk is attached to the above financial derivatives.
NOTE 53 DISPUTES
At year-end 2002 the Sparebanken Vest was not involved in any litigation or legal disputes of material economic significance for the Group's activities. The bank is otherwise subject to various claims related to its normal activities. Loss provisions have been made where considered appropriate.
NOTE 54 TRANSACTIONS WITH ASSOCIATED COMPANIES
Sparebanken Vest has defined the following listed companies as being associated companies. The information is provided in accordance with Preliminary Norwegian Accounting Standard for “Information about associated companies” in so far as this information does not contravene current legislation related to the bank's duty of confidentiality:
Subsidiaries The bank's subsidiaries are listed in note 31. Intercompany balances are shown in note 30. All intra-Group transactions are conducted on the basis of normal commercial terms and principles.
SpareBank1 Gruppen AS SpareBank 1 Gruppen AS (8.67% shareholding) with related companies. The company is the holding company of a financial group and these remarks embrace all the related companies of this financial group. (See note 32).
The bank's commercial relationship with these companies is based on the standard commercial terms and conditions currently in force for each company.
54 Sparebanken Vest Annual Report 2002
AUDITOR’S REPORT FOR 2002
We have audited the annual accounts of generally accepted Norwegian auditing relevant laws and regulations and Sparebanken Vest for 2002 which show a standards. This requires that we plan present fairly the financial position of profit for the year of NOK 67 million for and perform the audit procedures which the bank at 31 December 2002 and the parent company and a profit for the we consider necessary to determine that the result of its operations and its year of NOK 69 million for the Group. the annual report and accounts are free cash flows for the year in accordance We have also audited the information in of material misstatements. We have with generally accepted Norwegian the annual report related to the annual examined, on a test basis, the accounting accounting principles accounts, the submission of the material supporting the accounts and • the management have complied with accounts on a going concern basis and assessed the accounting principles their obligation to keep systematic the proposed allocation of the profit for applied, the accounting estimates made and clear records and documentation the year. The annual accounts, which by management, and the content and of accounting information as comprise the annual report, profit and presentation of the annual report and required by law and in accordance loss account, balance sheet, statement accounts. To the extent required by with generally accepted Norwegian of cash flows and notes to the accounts generally accepted Norwegian auditing accounting practice and consolidated accounts, are presented standards, we have reviewed the bank’s • the information in the annual report by the company’s Board of Directors and asset management and accounting and related to the annual accounts, the its Managing Director. Our responsibility internal control systems. We consider submission of the accounts on a is to submit an audit report related to that our audit provides an appropriate going concern basis and the the annual report and accounts and basis for our audit report. proposed application of the profit other matters in accordance with the for the year are in conformity with the requirements of the Auditors Act. We believe that annual accounts and in accordance We have conducted our audit in • the annual report and accounts have with relevant laws and regulations. accordance with the Auditors Act and been prepared in accordance with the
Bergen, 20 February 2003 PricewaterhouseCoopers DA Geir Inge Lunde Per Kåre Furnes State Authorised Public Accountant (Norway) State Authorised Public Accountant (Norway)
REPORT OF THE CONTROL COMMITTEE FOR 2002
The Committee has held regular meetings under the Savings Banks Act and in The annual report and accounts for 2002 in Bergen in 2002 and visited the Sogn accordance with the instructions issued have been reviewed and discussed region. In the performance of its work to the Control Committee. with the external and internal auditors, the Committee has conferred with the and with representatives of the bank's chairman of the Board of Directors, the The Control Committee has not found management. managing director and with those the Bank's activities to be in conflict with responsible for different areas of activity. the provisions of the Savings Banks Act, In the view of the Committee, the annual the Financing Activity Act, the bank’s report and accounts, including the The Committee has worked closely with Articles of Association, resolutions of the consolidated accounts, have been the internal auditor, while maintaining Board of Governors or other provisions prepared in accordance with the Savings contact with the external auditor. governing the Bank's activities. Bank Act and regulations laid down by the Banking, Insurance and Securities A chairman of the Committee and the In co-operation with the internal auditor, Commission. external and internal auditor held a the Committee has continuously monito- meeting with the chairman of the Board red and considered the development of The Control Committee has no criticism of Governors in order to summarise the the bank's loss position and risk exposure, of the annual report and accounts and activities of the previous year and plan as well as measures taken by the bank to recommends that the profit and loss for the current year. meet this development. account and the balance sheet for 2002, including the consolidated accounts, as The Committee has carried out the The Committee is of the view that the submitted by the Board of Directors, be checks considered necessary to comply Board of Directors' assessment of the adopted by the Board of Governors as with the guidelines and directives which bank's financial position, as presented in the accounts of Sparebanken Vest for the Committee is required to observe the annual report, is adequate. 2002.
Bergen, 20 February 2003
Lillian Torsvik Kjell Steinsbø Nils Rødland
Liv Henjum Anne Kverneland Bogsnes 55 GROUP KEY FIGURES 1998 - 2002
Sparebanken Vest Annual Report 2002
PROFIT AND LOSS ACCOUNT SUMMARY 2002 2001 2000 1999 1998 Interest income etc. 2 690 2 560 2 080 1 946 1 559 Interest expenses etc 1 814 1 7731 3291 227 912
Net interest income and credit commissions 876 787 751 719 647
Dividends and other income on securities with a variable return (120) (52) (4) 2312 Commissions receivable and income from banking services 310 270 227 200 180 Commissions payable and cost of banking services 88 77 64 67 62 Net change in value of and gain/(loss) on foreign exchange and short-term securities 7 (21) 1398 (125) Other operating income 64 66 66 27 31 Net operating income 173186 238281 36
Profit before operating expenses 1 049 973 989 1 000 683
Salaries and general administration expenses 514 540 481 476 434 Depreciation of fixed and intangible assets 47 46 45 40 40 Other operating expenses 161 98 115 75 76 Total operating expenses 722 684 641 591 550
Profit before losses and write-downs 327 289 348 409 133
Losses on loans and guarantees etc. 166 86 4359 8 (Write-downs)/reversal of write-downs and gain/(loss) on long-term securities (58) (3) 33 134 (5)
Profit before tax 103 200 338 484 120
Taxes 34 63 99 126 52
Profit for the year 69 137 239 358 68
BALANCE SHEET SUMMARY
Assets
Cash and deposits with central banks 203 332 310 651 253 Loans to and deposits with credit institutions 695 920 1 359 144 602 Gross loans before specified and unspecified loss provisions 32 348 29 145 26 610 22 650 20 580 Specified loss provisions (292) (195) (178) (177) (199) Unspecified loss provisions (218) (188) (160) (125) (84) Net loans to and receivables from customers 31 838 28 762 26 272 22 348 20 297 Assets acquired 2 2 4 Commercial paper, bonds and other interest- earning securities with a fixed return 1 843 1 312 2 021 2 153 1 319 Shareholdings, investments and other securities with a variable return 240 175 171 262 490 Shareholdings in jointly controlled companies 325 342 200 152 Intangible assets 99 36 39 23 39 Fixed assets 279 320 288 280 281 Other assets 9 19 61 47 26 Prepaid expenses and accrued income 241 164 231 147 160
Total assets 35 449 32 367 31 098 26 255 23 619
Liabilities and equity
Loans and deposits from credit institutions 2 299 2 963 3 616 3 392 1 600 Deposits from and debt to customers 22 192 19 349 17 782 15 742 14 629 Securitised debt 7 382 6 856 6 045 4 117 4 875 Other liabilities 331 327 506 476 314 Accrued expenses and prepaid income 220 245 349 224 194 Provisions for commitments and expenses 71 56 32 37 48 Subordinated loan capital 746 397 693 401 380 Total liabilities 33 241 30 193 29 023 24 389 22 040
Primary capital certificatesl 249 250 250 250 250 PPC premium reserve 44444 Paid-up equity 253254 254 254 254
Reserve for valuation variances Sparebanken capital fund 1 957 1 905 1 722 1 600 1 311 Other equity, Group (2) 15 99 12 14 Retained earnings 1 955 1 920 1 821 1 612 1 325
Total equity 2 208 2 174 2 075 1 866 1 579
Total liabilities and equity 35 449 32 367 31 098 26 255 23 619
AVERAGE TOTAL ASSETS 34 739 31 518 27 785 24 700 22 623 56 GROUP KEY FIGURES 1998 - 2002
Sparebanken Vest Annual Report 2002
RESULTS AS A PERCENTAGE OF AVERAGE TOTAL ASSETS 2002 2001 2000 1999 1998 Interest income etc. 7.74 8.12 7.48 7.88 6.89 Interest expenses etc 5.22 5.634.78 4.97 4.03
Net interest income and credit commissions 2.52 2.50 2.70 2.91 2.86
Dividends and other income on securities with a variable return (0.35) (0.16) (0.01) 0.09 0.05 Commissions receivable and income from banking services 0.89 0.86 0.81 0.81 0.79 Commissions payable and cost of banking services 0.25 0.24 0.230.27 0.27 Net change in value of and gain/(loss) on foreign exchange and short-term securities 0.02 (0.07) 0.05 0.40 (0.55) Other operating income 0.18 0.21 0.24 0.11 0.14 Net operating income 0.50 0.59 0.86 1.14 0.16
Profit before operating expenses 3.02 3.09 3.56 4.05 3.02
Salaries and general administration expenses 1.48 1.71 1.74 1.931.91 Depreciation of fixed and intangible assets 0.14 0.15 0.16 0.16 0.18 Other operating expenses 0.46 0.31 0.41 0.30 0.34 Total operating expenses 2.08 2.17 2.31 2.39 2.43
Profit before losses and write-downs 0.94 0.92 1.25 1.66 0.59
Losses on loans and guarantees etc. 0.48 0.27 0.15 0.24 0.03 (Write-downs)/reversal of write-downs and gain/(loss) on long-term securities (0.17) (0.01) 0.12 0.54 (0.02)
Profit before tax 0.30 0.63 1.22 1.96 0.54
Taxes 0.10 0.20 0.36 0.51 0.22
Profit for the year 0.20 0.43 0.86 1.45 0.32
Return on investment, earnings and capital structure (%)
1. Return on equity after tax 3.12 6.39 12.03 20.38 4.36 2. Return on total assets before losses and tax 0.94 0.92 1.25 1.66 0.59 3. Net return on total assets 0.20 0.43 0.86 1.45 0.32 4. Operating expenses as a percentage of profit before operating expenses 68.8370.3064.81 59.10 80.53 5. Funding ratio 69.70 67.27 67.68 70.44 72.07
Balance Sheet development (%)
6. Change in gross loans to and receivables from customers 10.99 9.5317.48 10.06 11.38 7. Change in commercial paper, bonds and other interest-earning securities 40.47 (35.08) (6.13) 63.23 0.08 8. Change in deposits from and debt to customers 14.69 8.81 12.96 7.61 16.12 9. Change in total assets 9.52 4.08 18.45 11.16 10.65
Defaults, provisions and loan losses
10. Loan loss ratio 0.51 0.29 0.16 0.26 0.04 11. Gross default ratio 0.92 0.75 0.61 0.61 0.81 12. Net default ratio 0.35 0.45 0.32 0.30 0.35 13. Percentage of defaulted loans provided for 62.50 40.00 47.23 51.07 56.28 14. Unspecified provisions as a percentage of gross loans (0.67) (0.65) (0.60) (0.55) (0.41)
Capital adequacy
15. Net capital base 2 705 2 192 2 370 1 948 1 774 16. Basis of calculation 24 44322 076 19 861 17 03915 828 17. Capital ratio 11.07 9.9311.9311.4311.21 18. Core capital ratio 8.639.68 10.25 10.82 9.94
57 GROUP KEY FIGURES 1998 - 2002
Sparebanken Vest Annual Report 2002
PRIMARY CAPITAL CERTIFICATES (PCC) (PARENT BANK) 2002 2001 2000 1999 1998
19. Primary capital certificates (NOK m) 250 250 250 250 250 20. Dividend per PCC (NOK) 3.50 9.50 12.00 22.00 5.00 21. Traded price at 31 December (NOK) 104.00 118.00 130.00 213.00 134.00 22. PCCs as a percentage of capital base 11.66 11.66 12.74 13.58 16.09 23. Book equity per PCC (NOK) 100.00 100.00 100.00 100.00 100.00 24. Profit (gross) per PCC (NOK) 27.60 54.80 95.60 143.20 27.20 25. Earnings per PCC (NOK) 3.22 6.98 12.98 23.04 4.54 26. RISK amount (NOK) 89.09 45.81 27. Effective rate of return per PCC (3.81) 0.00 (28.64) 62.69 (35.81) 28. Direct rate of return 3.37 8.05 9.23 10.33 3.73 29. Payout ratio 12.68 17.34 12.55 15.36 18.38 30. Provision for dividends as % of PCC's share of profits 108.74 136.08 92.42 95.47 110.07
Personnel
Number of employees 850 857 794 760 775 Number of full-time positions 796 813749 703717
Distribution network
Sales outlets 59 6364 64 67 Mobile banks 122
DEFINITIONS:
1. Profit for the year as a percentage of opening equity + 50% of the profit for the year. 2. Operating profit before losses and write-downs as a percentage of average total assets. 3. Operating profit after tax as a percentage of average total assets. 5. Deposits from and debt to customers as a percentage of loans to and receivables from customers. 6. Change in gross lendings at 31 December compared with the previous year-end volume. 7. Change in securities at 31 December compared with the previous year-end volume. 8. Change in customer deposits at 31 December compared with the previous year-end volume. 10. Losses on loans and guarantees as a percentage of loans to and receivables from customers at 31 December. 11. Gross defaults as a percentage of gross lendings. 12. Defaulted loans less specified loss provisions for such loans as a percentage of net lendings. 13. Specified loss provisions for defaulted loans as a percentage of the gross amount of such loans. 22. PCCs as a percentage of the parent bank's equity at year-end, corrected for allocations to the reserve for valuation variances. 24. Profit for the year divided by the number of PCCs. 25. Proportion of the profit for the year attributable to PCCs, divided by the number of PCCs. 27. Dividend plus change in market price from 1 Jan. to 31 Dec. as a percentage of stock exchange price at 1 Jan. 28. Provision for dividends as a percentage of the stock exchange price at year-end. 29. Dividend as a percentage of the gross operating profit per PCC.
58 GROUP KEY FIGURES 2001 - 2002
Sparebanken Vest Annual Report 2002
QUARTERLY RESULTS (cumulative) PROFIT AND LOSS ACCOUNT SUMMARY 31/12-02 30/9-02 30/6-02 31/3-02 31/12-01 30/9-01 30/6-01 31/3-01 Interest income etc. 2 690 1 959 1 266 621 2 560 1 932 1 259 617 Interest expenses etc. 1 814 1 319 852 420 1 773 1 354 882 433
Net interest income and credit commissions 876 640 414 201 787 578 377 184
Dividends and other income on securities with a variable return (120) (118) (16) (4) (52) (36) (15) (12) Commissions receivable and income from banking services 310 230 146 69 270 190 122 60 Commissions payable and cost of banking services 88 66 4321 77 533318 Net change in value of and gain/(loss) on foreign exchange and short-term securities 7 1 6 11 (21) (24) (23) (21) Other operating income 64 44 34 18 66 55 44 15 Net operating income 17391 127 73186 13295 24
Profit before operating expenses 1 049 731 541 274 973 710 472 208
Salaries and general administration expenses 514 391 262 132 540 389 260 122 Depreciation of fixed and intangible assets 47 35 23 11 46 34 24 12 Other operating expenses 161 85 62 32 98 69 43 26 Total operating expenses 722 511 347 175 684 492 327 160
Profit before losses and write-downs 327 220 194 99 289 218 145 48
Losses on laons and guarantees etc. 166 41 16 (3) 86 35 20 (3) (Write-downs)/reversal of write-downs and gain/(loss) on long-term securities (58) (12) (4) (2) (3) (8) (4) (7)
Profit before tax 103 167 174 100 200 175 121 44
Taxes 34 84 56 30 63 57 40 18
Profit after tax 67 83 118 70 137 118 81 26
AVERAGE TOTAL ASSETS 34 739 34 266 33 673 33 228 31 518 31 222 31 053 30 675
RESULTS AS A PERCENTAGE OF AVERAGE TOTAL ASSETS Interest income etc. 7.74 7.64 7.58 7.58 8.12 8.27 8.18 8.16 Interest expenses etc. 5.22 5.15 5.10 5.135.635.80 5.735.72
Net interest income and credit commissions 2.52 2.50 2.48 2.45 2.50 2.48 2.45 2.43
Dividends and other income on securities with a variable return (0.35) (0.46) (0.10) (0.05) (0.16) (0.15) (0.10) (0.16) Commissions receivable and income from banking services 0.89 0.90 0.87 0.84 0.86 0.81 0.79 0.79 Commissions payable and cost of banking services 0.25 0.26 0.26 0.26 0.24 0.230.21 0.24 Net change in value of and gain/(loss) on foreign exchange and short-term securities 0.02 0.00 0.04 0.13(0.07) (0.10) (0.15) (0.28) Other operating income 0.18 0.17 0.20 0.22 0.21 0.24 0.29 0.20 Net operating income 0.50 0.36 0.76 0.89 0.59 0.57 0.62 0.32
Profit before operating expenses 3.02 2.85 3.24 3.34 3.09 3.04 3.07 2.75
Salaries and general administration expenses 1.48 1.531.57 1.61 1.71 1.67 1.69 1.61 Depreciation of fixed and intangible assets 0.14 0.14 0.14 0.130.15 0.15 0.16 0.16 Other operating expenses 0.46 0.33 0.37 0.39 0.31 0.30 0.28 0.34 Total operating expenses 2.08 1.99 2.08 2.14 2.17 2.11 2.12 2.12
Profit before losses and write-downs 0.94 0.86 1.16 1.21 0.92 0.93 0.94 0.63
Losses on loans and guarantees etc. 0.48 0.16 0.10 (0.04) 0.27 0.15 0.13(0.04) (Write-downs)/reversal of write-downs and gain/(loss) on long-term securities (0.17) (0.05) (0.02) (0.02) (0.01) (0.03) (0.03) (0.09)
Profit before tax 0.30 0.65 1.04 1.22 0.63 0.75 0.79 0.58
Taxes 0.10 0.33 0.34 0.37 0.20 0.24 0.26 0.24
Profit after tax 0.19 0.32 0.71 0.85 0.43 0.51 0.53 0.34 59 GROUP KEY FIGURES 2001 - 2002
Sparebanken Vest Annual Report 2002
QUARTERLY RESULTS (non-cumulative) 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 2002 2002 2002 2002 2001 2001 2001 2001 Interet income etc. 731 693 645 621 628 673 642 617 Interest expenses etc. 495 467 432 420 419 472 449 433
Net interest income and credit commissions 236 226 213 201 209 201 193 184
Dividends and other income on securities with a variable return (2) (102) (12) (4) (16) (21) (3) (12) Commissions receivable and income from banking services 80 84 77 69 80 68 62 60 Commissions payable and cost of banking services 22 2322 21 24 20 15 18 Net change in value of and gain/(loss) on foreign exchange and short-term securities 6 (5) (5) 11 3(1) (2) (21) Other operating income 20 10 16 18 11 11 29 15 Net operating income 82 (36) 54 73 54 37 71 24
Profit before operating expense 318 190 267 274 263 238 264 208
Salaries and general administration expenses 123 129 130 132 151 129 138 122 Depreciation of fixed and intangible assets 12 12 12 11 12 10 12 12 Other operating expenses 76 23 30 32 29 26 17 26 Total operating expenses 211 164 172 175 192 165 167 160
Profit before losses and write-downs 107 26 95 99 71 73 97 48
Losses on loans and guarantees etc. 125 25 19 (3) 51 15 23 (3) (Write-downs)/reversal of write-downs and gain/ (loss) on long-term securities (46) (8) (2) (2) 5 (4) 3(7)
Profit before tax (64) (7) 74 100 25 54 77 44
Taxes (50) 28 26 30 6 17 22 18
Profit after tax (16) (35) 48 70 19 37 55 26
60 GROUP KEY FIGURES 2001 - 2002
Sparebanken Vest Annual Report 2002
BALANCE SHEET DEVELOPMENT 31/12-02 30/9-02 30/6-02 31/3-02 31/12-01 30/9-01 30/6-01 31/3-01 Cash and deposits with central banks 203 351 564 276 332 269 251 222 Loans to and deposits with credit institutions 695 707 888 494 920 867 719 890 Gross loans before specified and unspecified loss provisions 32 348 31 687 31 043 29 897 29 145 28 338 27 650 27 098 Specified loss provisions (292) (180) (175) (175) (195) (183) (188) (169) Unspecified loss provisions (218) (204) (199) (191) (188) (166) (162) (160) Net loans to and receivables from customers 31 838 31 303 30 669 29 531 28 762 27 989 27 300 26 769 Assets acquired 2 1 32 2 4 4 4 Commercial paper, bonds and other interest- earning securities with a fixed return 1 843 1 646 1 380 1 584 1 312 1 828 2 213 1 970 Shareholdings, investments and other securities with a variable return 240 69 127 161 175 169 140 73 Shareholdings in jointly controlled companies 219 294 320 325 341 325 328 Intangible assets 99 35 36 36 36 36 37 38 Fixed assets 279 296 307 313 320 300 297 295 Other assets 9 56 28 50 19 159 212 174 Prepaid expenses and accrued income 241 106 107 215 164 239 289 215
Total assets 35 449 34 789 34 403 32 982 32 367 32 201 31 787 30 978
Loans and deposits from credit institutions 2 299 2 317 2 808 3 324 2 963 2 071 2 768 2 181 Deposits from and debt to customers 22 192 20 840 20 405 19 462 19 349 19 126 18 759 18 568 Securitised debt 7 382 7 302 7 442 6 797 6 856 6 671 6 280 6 125 Other liabilities 331 249 285 255 327 476 401 784 Accrued expenses and prepaid income 220 1 003725 446 245 938674 480 Provisions for expenses and commitments 71 57 57 57 56 32 32 32 Subordinated loan capital 746 772 397 397 397 694 717 707 Total liabilities 33 241 32 540 32 119 30 738 30 193 30 008 29 631 28 877
Paid-up equity 253254 254 254 254 254 254 254 Retained earnings 1 955 1 912 1 912 1 920 1 920 1 821 1 821 1 821 Total equity 2 208 2 166 2 166 2 174 2 174 2 075 2 075 2 075
Interim profit + allocations 83118 70 118 81 26
Total liabilities and equity 35 449 34 789 34 403 32 982 32 367 32 201 31 787 30 978
Return on investment, earnings and capital structure (%) Return on equity after tax 3.04 5.03 10.66 12.85 6.39 7.39 7.72 5.05 Return on total assets before losses and taxes 0.94 0.86 1.16 1.21 0.92 0.930.94 0.63 Net return on total assets 0.19 0.32 0.71 0.85 0.430.51 0.530.34
Solvency (%) Loan loss ratio 0.51 0.17 0.10 (0.04) 0.30 0.16 0.15 (0.04) Capital ratio 11.07 11.08 9.26 9.62 9.9311.16 11.81 11.93
Primary Capital Certificates (Parent Bank) Profit per PCC (NOK) 3.22 3.87 5.50 3.26 6.98 6.01 4.13 1.32
Personnel Number of full-time positions 796 801 799 807 813808 801 795
For definitions, see page 58.
61 RETAIL MARKET
Sparebanken Vest Annual Report 2002
- Now we know where to find the kids. They are usually in the ball park!
They’re small, but their boots pack a punch! And they are not all so small, either. It’s not difficult to get the dads involved – and some of the mums too – in a game of "football". Especially when there are high walls all around, and the green plastic grass makes you feel like a … footballer.
After the ball park came into place at Storebø in the autumn, many parents are really pleased. Instead of playing in the parking lots and in other dangerous places, the kids have safe place for ball games. It is also a hang-out for teenagers in the evening.
The local community has got a new attraction. You find all age groups in the ball centre at the school – all the time. During school hours the classes take turn playing there, and after school anybody can play there. And lots of people do.
- It is one of the best things that has happened here, says one father. The park here is the largest of its kind to have been installed – so far.
- There are so many people who play football that it’s difficult to recruit children to the school music corps, says Bjørn Kristian Bjånesøy, father of two of the keen players. Creative parents have found an alternative use for How NOK 2 million the football pitch: when it is cold enough, turns into 40 football parks... the plastic grass can be showered with water and it freezes to make a good ice rink. This was the Take a sizeable joint effort- value around NOK 100 000, an active local authority and a benevolent local commercial result of joint efforts – in addition to support sector – value around NOK 50 000. Combine this with from Sparebanken Vest, the Norwegian Football a bank with funds for the public benefit – and with a wish to Association and the Local Authority. do something for children growing up – value around NOK 50 000. This gives you enough capital to start on a football park. The rest you get from the State. Guaranteed. With a population of 4500, Austevoll now has 250 In 2002 the gift of NOK 2 million was given to Hordaland Football Association. active footballers. Maybe there is already a new Claus Lundekvam in action on the plastic grass... 62 RETAIL MARKET
Sparebanken Vest Annual Report 2002
RETAIL MARKET – THE BANK’S CORNERSTONE
Sparebanken Vest is a retail bank above Operations were also more stable than had the highest sales volume per all else. It is in this sector that 70% of our in the previous year, although instability employee (measured as sales points per employees work, and it provides 65% of was a problem from time to time. product). As well as dealing with customer the bank’s profits. In order to succeed in Accessibility is becoming an increasingly telephone calls, an increasing proportion the future we must maintain a level of important parameter of competition, of the contact with the bank is in the satisfaction among both customers and and ensuring that the Netbank provides form of e-mails and through the online employees. a reliable and functional service will banking facility. Apart from sales on be a priority in the period ahead. The incoming calls, there was a special focus With approximately 42% of the market in combination with Customer Service and on waiting times in 2002. The reply time our geographical area, we are also undis- the Branch Network is also important. from the switchboard was 7 seconds for putedly the largest retail bank in the West The Branch Network now makes much the year as a whole, while the average of Norway. In 2002 there was a gross more active use of Netbank, for example waiting for contact with Customer Service inflow of roughly 1 5000 new customers to convene meetings, to send out was 40 seconds. In the last months of who cover all their banking requirements invitations to attend customer seminars the year this was down to 30 seconds, through us. In total, the bank has more and to provide information about new which was satisfying for both the bank than 250 000 retail customers. facilities and products. and the customers. Since June 2002, Customer Service has been providing Youthful customer base Broad product range a call-back service to avoid queuing. As a savings bank, our profile depicts us In terms of the product range, Around 10 000 customers have availed as "the bank for life" with the customer Sparebanken Vest can match any of its themselves of this service. A new facility relationship starting at birth and continuing competitors. The sales figures for 2002 in 2003 is the use of SMS. Here, we are for life. Compared with the market trend also show that good progress is now a pilot customer in co-operation with as regards children and young people we being made in sales of savings products Norwegian Telecom. are decidedly different since roughly 20% other than ordinary bank saving. Even in of our customer base are under 16 years of a very difficult financial market, the number Listening to the customers age, while at the same time a verage of fund-based savings agreements was The results of the Customer satisfaction savings are increasing in this segment. 8% up on 2001. Other focuses of attention survey in 2002 were eagerly awaited, In 2002 the number of customers under in 2002 were the maintenance and especially as we had not been satisfied the age of 16 increased by 16% to around strengthening of expertise, as well as with the results in 2001. They showed an 37 000. The are possibly our most underlining the importance of our ability improvement, but only by one point important asset! to offer a broad range of products. (from 65 to 66). There is still much to be On the training side, all personnel done by working systematically on the More than 500 of the bank’s 708 operative engaged in retail activities received basic customer feedback. Special areas of personnel are employed in the recently instruction in the use of electronic attention are the waiting time in the established Retail Division. facilities related to our four main product branches, direct contact with the Our branch network is one of our obvious groups: Payment services, Investment, customers, and further strengthening strengths, but only when it is supplemented Financing and Insurance. of professional skills. Specific action by Customer Service, the Telephone Bank plans within each organisational unit are and Netbank (our online banking facility) A survey held in December showed a clear designed to bring further improvements do we have a full-strength and competitive improvement in the level of employee in 2003. distribution network. We believe that the satisfaction compared with the previous customers themselves should be able year – up from 72 to 77 points. Progress Figures from to choose the channel they wish to was made in all areas considered by the Customer Service (including use in their contact with us, and we see survey. It was particularly encouraging to Switchboard) and Telephone that most of our customers use several see an improvement in the level of job Bank in 2002 channels. Three outlets were closed in satisfaction and a significant decline in 2002, but with 59 branches we are still the signs of burn-out. This bodes well for 1 million calls, of which 620 000 bank with the best geographical coverage 2003 when we shall be laying the to Customer Service in our market area. foundations for the further development 15 000 calls on Saturdays of the bank as an independent entity – 16% of the traffic after 4 pm Increased accessibility – outside the SpareBank 1 alliance. Our focus on online banking facilities 4.3 million calls to Telephone Bank (Netbank) produced impressive results Shorter waiting time in 2002. We now have almost 70 000 Customer Service is in constant change, 25 000 calls via "Between Us" customers, an increase of 35% on 2001. and in 2002 the personnel in this unit and 10 000 e-mails
63 CORPORATE MARKET
Sparebanken Vest Annual Report 2002
Business revival in Skånevik
Lars Hovda, managing director of SMV, and CM adviser Svein Ottesen
2002 was a record year for Sunnhordland that can take swift decisions and provide pany, focused on product development Mekaniske Verksted. There was many answers at any time of the day, says Hovda. in a demanding international market. reasons. Sparebanken Vest was one of Only 5 - 6 other companies operate in them. – Good chemistry and a good - Production quality is our best guarantee the same market as SMV: relationship with our adviser from the for the future. We must see what the Few companies have had the same bank, says Lars Hovda, managing director customer needs, discuss the matter and success with special-purpose vehicles of SMV. find a solution. That is also the basis of for the smelting industry. SMV also our relationship with Sparebanken Vest, has long-standing relationships with Just as the company provides individually says Lars Hovda. major Norwegian clients in the offshore tailored solutions for its customers, sector, and carries out the machining Sparebanken Vest provides an offer to "Sunnhordland Mekaniske Verksted" and development of special-purpose meet the company’s specific needs. – the name conjures up visions of an old- equipment. – Our engineers have scope – The bank knows us, and this is especially fashioned rural business. But nothing to experiment, says Hovda. This allows important when we are negotiating could be further from the truth. Behind their creativity to blossom, and results foreign contracts. We need a bank the name is an up-to-date innovative com- are innovative new products.
64 CORPORATE MARKET
Sparebanken Vest Annual Report 2002
CORPORATE MARKET – POISED FOR GROWTH
Sparebanken Vest has made good pro- Structural changes create products, services and IT solutions, as gress in the corporate client market in scope for increased business well as on management and personnel the last few years, and at year-end we had There have been significant changes in the coaching programmes. 13 500 corporate clients, corresponding structure of the banking sector in Bergen Our main goal remains unchanged: to 37% of the market. There was an and the west of Norway. As a result, an Sparebanken Vest shall be a strong and encouraging rise in deposits which were increasing number of financial institutions attractive partner for the local commercial 22% up on the previous year, while loans have transferred decision-making authority sector in the counties of Hordaland and grew by a moderate 6%. to Oslo or out of Norway. This, in turn, is Sogn & Fjordane. This shall be achieved causing more and more companies to by having the required capacity, compe- The good progress being made in the look for a local banking partner in the tence and a broad international network. corporate market can be partly attributed to west of Norway. Consequently, we have 13 500 corporate clients a strategy which is based on independence experienced an inflow of new customers. and the bank’s ability to take swift The customers regard Sparebanken Vest Swift decision-making capability decisions. Our objective is to be a strong as a natural choice and a preferred partner partner in the commercial sector, and in the current market situation. Independent and strong local roots to contribute actively to development Play an active role in the development within our geographical area. Active involvement in of local trade and commerce business development Focusing on customer areas Sparebanken Vest intends to plays and Capacity, competence and a In 2002 the bank’s customer division was active role in developing the local broad international network divided into two divisions: Retail Market commercial sector, and rising market and Corporate Market. The divisions are shares in recent years indicate that the BM PM focused on maximising performance in bank is achieving its goals. The relationship the area of banking services, customer between the bank/bank adviser and service and use of resources. individual customers is an important Gross loans (NOK billion) Sparebaken Vest provides the corporate element in determining the bank’s market with a full range of financial and success rate in the corporate market. The banking service. This is achieved by level of competence among our clients incorporating the following units within and in the commercial sector is constantly the corporate market division: Marine & rising, and this presents a challenge for Shipping, Corporate Market Bergen, Sparebanken Vest. Within the Corporate Payment Services, Insurance and Strategy Division there is a strong focus on & Business Development. the development of competence, good
Gross loans distributed by main industries (%)
Building and construction, power and water supply(4,72) Gross lending growth (%) Manufacturing and mining (6,39) Primary industries (9,13) Local government/public sector (0,49) Services (7,17) Insurance and finance (1,76)
Real estate operations (27,44)
Oil and gas (0,03)
Transportation and communication (15,16)
International shipping and pipe transportation (14,75) Retail/wholesale trade, hotels and restaurants (12,96) 65 EIENDOMSMEGLER 1 VEST
Sparebanken Vest Annual Report 2002
Who said it was easy? Sparebanken Vest in Sogn & Fjordane did.
Sparebanken Vest in the county of Sogn & Fjordane is a full-range wholesaler of financial products and services located in the county’s busiest area: The Centre of Trade and Commerce in Førde.
On three narrow floors we give provide a broad range of offers. We have the complete range of financial options - loans, investments, insurance, and now the purchase and sale of property. No other bank in the county can match this.
It is a long time since the property market in Sogn & Fjordane was mostly about pastures and barns. Today, house prices are just as high as in Bergen, and in Førde new blocks of flats are constantly popping up.
Eiendomsmegler 1 has been in Førde since January, headed by the lofty figure of Tore Berqvam. – It is not enough just to be her. You have to have an active presence, says the 26-year-old. Many properties are still sold privately, and one of Berqvam’s aims is to get part of this market.
- I have signed contracts with people who have tried to sell their house themselves but with no success. We hope that people will realise that the agent’s fee is not just an expense, but that it can be recovered by the customer in form of a higher price fir their property! We are entering the market From left: at full speed – today we sold 34 plots of land, Tore Bergqvam - EiendomsMegler 1 Vest he adds with a smile. Wenche Lammetun, Laila V. Helgheim, Geir Flatjord, Silje Rylandsholm and Terje Lyngstad - Sparebanken Vest 66 EIENDOMSMEGLER 1 VEST
Sparebanken Vest Annual Report 2002
GOOD INCREASE IN PROPERTY SALES IN 2002
EiendomsMegler 1 Vest AS, which is the considerable synergy effects that exist The EiendomsMegler 1 chain bank’s wholly owned estate agency between banking and real estate activities. - reinforcing its position as company, recorded a creditable 22% rise Norway’s largest estate in property sales in 2002. The company’s Organic growth agency chain. 5 offices in Hordaland handles property Growth has been achieved through a EiendomsMegler 1 Norge AS is a chain sales worth almost NOK 2 billion during gradual increase in manpower in the of collaborating real estate agencies the year. last few years. which are wholly or partly owned by The company has organised its real banks involved in the SpareBank 1 The company now has around 22% estate broking activities in segments alliance. The chain was established in of the market for estate agency sales of and established separate broker units 1999. residential property in Hordaland. related to real estate, housing co-opera- tives and projects/commercial property. Co-operation within the chain relates to EiendomsMegler 1 can look back on yet The broker units are staffed by recruiting brand building, IT, purchasing and another hectic year in the real estate external personnel, where possible with development. market, with a high level of activity in the professional qualifications. At the same At the start of 2003 the chain provided first half of the year. The trend changes time, there is an ongoing process aimed the equivalent of 350 full-time positions in the second half of the year, with at increasing expertise in the branches divided among 66 branches. some decline in prices, but not more which have been set up in densely than is seasonally normal. However, the populated areas where there is the basis In 2002 the chain sold 12 700 properties, turnover time increased, especially for for a market. The company now has reflecting growth of almost 15%. properties in the highest price bracket branches in Fana, Bergen Centre, Åsane, EiendomsMegler 1 thereby strengthened and those outside central locations. Sotra and Stord. The Stord branch its position as Norway’s largest estate is owned jointly (50/50) by Eiendoms- agency chain, measured by the number New strategy megler 1 Vest AS and EiendomsMegler 1 of properties sold. The company’s strategy was reviewed Rogaland. Among the company’s 19 by the Board of Directors and senior real estate brokers are 13 who are state management in 2002 and a new strategy authorised. It is expected that a further 22% growth in 2002 document was drawn up. two brokers will receive authorisation on completion of the two-year period of 1500 properties sold Based on the company’s strong brand practice. name and the preference which it enjoys 22% of the market in the market, active steps will be taken At year-end 2002 the company had 37 to market and sell its services to active permanent employees. Co-operation with banks real estate customers. At the same time, and estate agencies there will be a focus on the overall market New branch in Førde with a view to creating a preference A new estate agency branch was opened among those who are not currently active in Førde at the end of 2002. This is a in the real estate market. It is important completely new market since the company that EiendomsMegler 1 Vest has "top of has never been engaged in real estate mind" status and a preference among activities in Sogn & Fjordane before. those who belong to this latter group. The branch is located in Sparebanken Vest’s offices in Førde. An important way of accessing the relevant A steady rise in turnover is expected in target groups is through an extension of the coming years, and 50 properties are the established, good relationship which expected to change hands in the first these potential customers have with our year of operations. owner, Sparebanken Vest. There is an The new branch is headed by Lawyer active policy aimed at extracting the Øistein Ørjasæter.
67 GIFTS FOR THE PUBLIC BENEFIT
Sparebanken Vest Annual Report 2002
The main battles fought by Ulriken Eagles are not against basketball teams. They are against drugs, criminality and truancy.
David Martinez had lived in six different countries before he was 13. That teaches you something about rootlessness. But when he met the Ulriken player Marco Elsafadi and discovered basketball everything fell into place.
Now David and Marco are trying to help other rootless young people – in co-operation with the Child Welfare Centre and the police. The project "New Pages" is a preventive initiative taken by Ulriken Eagles to help young people. David is the project leader.
The Ulriken players are seen as role models, and it is not difficult to understand that young people who have come off the rails have more respect for than for dreary grown-ups. Respect and confidence are necessary in this work, and the sports heroes inspire both.
- We try to give the kids what everybody needs: Attention and praise, says David. – Many of them don’t think they are good at anything. We bring out the positive side, and we become role models. It’s great to know that you’ve given something, and we learn a lot ourselves, he says.
- Sparebanken Vest had faith in us three years ago. Now the "New Pages" concept How NOK 750 000 has led to has spread to other towns, because they savings of NOK 220m for society... have seen the positive results, says In the last few years the bank has supported the work done Arild Buen, responsible for the everyday by Ulriken Eagles against drugs and criminality to the tune of running of Ulriken Eagles. NOK 750 000. The calculation makes for mind-boggling reading. Arne Klyve, head of instruction at the Bergen Clinics, estimates that the 11 youths who were helped by the Ulriken players in 2002 could have cost society NOK 220 million through a life of drugs and criminality.
68 GIFTS FOR THE PUBLIC BENEFIT
Sparebanken Vest Annual Report 2002
GIFTS AS A WAY OF DEVELOPING THE WEST OF NORWAY
Every day Sparebanken Vest’s banking year the bank has focused on individual targets, combined with changes in the activity is helping to develop the West areas, such as initiative and activities regulations which were adopted in the of Norway. We finance peoples’ dreams that can greatly improve the surroundings autumn of 2002, may make it possible and the growth and future of companies. and conditions in which children and for us to make annual gift allocations in We are also more than an ordinary young people grow up – whether in relation the order of NOK 60-70m. bank. We are selective in distributing to sport, culture or education – or initia- gifts for the public benefit as a way of tives designed to give children and The following are some of promoting growth and development in young people from a disadvantaged those who have received the West of Norway. background a better chance of succeeding gifts from the bank: as they grow up. During the last few In recent years Sparebanken Vest has years considerable sums have been 40 ball courts in Hordaland, several been guided by a selective and generous allocated to the construction of 40 football gift allocation policy, trying to give as pitches, 18 netball courts, several athletics football pitches and a number of much as we can under existing regulations facilities, many new clubhouses etc. clubhouses for sports associations and taking account of our accounting In addition, considerable allocations to the results. This has brought continuity Paediatric Clinic at Haukeland Hospital 18 netball courts in Bergen to the allocation of gifts. During the last have led to the start of a well-being and five years the bank has allocated gifts culture project for sick children, while Well-being and culture project for for the public benefits for a total in millions given to the Bergen International sick children at the Paediatric Clinic, excess of NOK 60m. Festival ensure the start of initiatives In 2002 NOK 15m was allocated. targeted at children and young people. Haukeland Hospital The focus on supporting initiatives for Funds have also been earmarked by the the public benefit is one of a number of bank to make Bergen’s large cultural Children’s International Festival specific projects which reinforce the institutions more accessible to the whole position of Sparebanken Vest as an of the West of Norway. A case in point is Professorship grant to the Norwegian important social institution in the West the major new tour planned by Bergen School of Economics and Business of Norway. Philharmonic Orchestra in the counties Administration Earmarked for women. of Sogn & Fjordane and Sunnhordland. A strong and viable region This practice is based on the view that Long-term and credible Church of Norway SOS Sparebanken Vest shall take active steps The bank’s long-term gift policy enhances to give something back to the local Sparebanken Vest’s credibility and ability Church of Norway Town Mission community that it seeks to serve. It is in to get things done – when, for example, the bank’s own interest that we have a are in dialogue with recipients of gifts, The Rafto Foundation strong and viable West of Norway. And if or in meetings with representatives the region is to be an attractive place to of the media, authorities, politicians or Opera Nordfjord live and work in, we need to offer more institutions. They know that this is not a than a job. This is why it is so important one-off situation, but the result of the that we have a local community with, bank’s well-considered and long-term Night Jazz amongst other things, a well functioning strategy which says that part of the bank’s cultural and communal life. It is therefore surplus shall be for the benefit of the Tour support for Bergen Philharmonic also important that those who are chosen local community. The gift policy is closely Orchestra in counties of Sogn & to receive the bank’s gifts also share the linked to the bank’s value base and is Fjordane and Sunnhordland bank’s core values. This is why the accorded considerable respect. recipients of the gifts are enthusiasts, Coastal culture initiatives teams and organisation involved in the Independence in practice development of the community to make The gift policy may thus be seen as it strong and viable. practical expression of our independence Norwegian Glacier Museum and local roots. It reinforces our brand Promoting a healthy name, reputation and profile in a way Norsk Vasskraft og Industristad, Tyssedal environment and culture that is both long-term and positive in Sparebanken Vest seeks to ensure that nature. Sparebanken Vest also believes Plastic grass surface over a longer perspective there is an that its gifts should function as a way of – Solid Sports Association appropriate distribution of gifts between promoting a regional focus in the West areas represented by culture, medicine, of Norway. In this connection, the scope health and the environment, competence, of gifts may be considerable extended Establishment of Tjorehagen education and research, sport and from and including 2004 since a humanitarian activities. However, each performance by the bank in excess of its Kleppevik Prize, Sund Local Authority
69 Sparebanken Vest Annual Report 2002
CORPORATE GOVERNANCE
Corporate governance has become a owners of primary capital certificates. Anne Gine Hestetun (born 1962), Board focus of attention for all listed companies Primary capital certificates make up 11% member since 1998. Member of Bergen and it is therefore high on Sparebanken of the bank’s overall core capital. Municipal Executive Board. Vest’s agenda, with a particular emphasis Anne Sissel Raunholm Engevik (born on corporate responsibility and risk The Board of Governors exercises the 1962), employee-elected Board member management which we regard as being highest authority in the bank and consists since 1992. Senior employee representa- of exceptional importance. of 48 members. tive in Sparebanken Vest. • 25% are elected by the depositors Terje Kvamme (born 1946), employee- Corporate governance is primarily the through direct and indirect elections elected Board member since 1991, triangular interface between owners, the • 25% are elected by the local authority deputy general manager and head of board of directors and the management, in the bank’s area of activity through payments services in Sparebanken Vest. but it affects the way the business is direct and indirect elections Knut Ravnå (born 1948), managing perceived by others – including customers, • 25% are elected by the owners of director and Board member since 1990. suppliers, employees and society at primary capital certificates large. It is here, more than anywhere • 25% are elected by the bank’s Senior management: else, that confidence is built. employees Knut Ravnå (born 1948), managing The acting chairman of the Board of director since 1990 – graduate of NHH The ability to build confidence is especially Governors is Kari Mæland (local authority (1972) and MBA (University of Michigan important for banks – a healthy business appointee). The Board of Governors 1979). Employed by the bank in period culture with high ethical standards is convenes at least twice a year, or more 1973 – 1981 and then from 1983. important for access to the capital often, as required. The Board of Governors’ Monica Salthella (born 1969), deputy markets, for example. inspection body is the Control Committee managing director, director responsible which has 6 members. The chairperson is for Corporate Market since 2002 – BA Our value base therefore underlines the Lillian Torsvik. The Control Committee from Kings College, London. Joined the importance of the following: convenes regularly - normally once a bank in 2002. • One of the bank’s objectives is to month. Elin Sjødin Drange, (born 1959), director conduct its activities in order to The Board of Directors has 10 members, responsible for Private Market since achieve a good margin compared including the managing director. Two of 2002. Joined the bank in 2002 – graduate with the statutory requirement the Board members are elected by the of NHH (1983). • The bank realises the economic employees, 1 member is elected by the Arne Selle, (born 1953), director respon- importance of having and communi- Governors appointed by the local autho- sible for Service Division – civil engineer cating good corporate governance rity, and 1 member shall be resident (NTH 1977). Joined the bank in 1992. since enhanced confidence gives in the county of Sogn & Fjordane. The Rune Bjørhovd (born 1955), personnel access to capital at an acceptable Board of Directors shall convene at least director since 2002. Graduate of price once a month, or more often as required. Norwegian Naval Academy and NHH. • Good corporate governance Joined the bank in 2002. increases the likelihood that well- Pål W. Lorentzen (born 1941), chairman. Jørn Lekve (born 1961), director of infor- founded decisions are taken Barrister with the firm of solicitors mation services and PR since 1999. within acceptable risk parameters Thommesen Krefting Greve Lund AS. Graduate of NHH (1989). Joined the • Good corporate governance creates Board member since 2000. bank in 1996. harmony between owners, the board Bjørn Ove Børnes (born 1948), deputy of directors, the management and chairman. Managing director of HSD Auditor employees, and benefits customers, Buss AS. Board member since 1992. The bank’s external auditors are society and suppliers, and makes Jan O. Yttredal (born 1943), Board member PricewaterhouseCoopers DA, represented the company an attractive place since 1998. Managing director of Sør- by State Authorised Public Accountants of work. Norge Aluminium AS. Geir Inge Lunde and Per Kåre Furnes. The Eli Førde Aarskog (born 1955), Board internal audit department is headed by In allocating profits, Sparebanken Vest member since 1999. Hotel owner from State Authorised Public Accountant Bernt treats primary capital certificates and the Nordfjordeid in the county of Sogn & R. Petersen. For administrative purposes Sparebanken capital fund equally. The Fjordane. he reports to the managing director and proportion of profits allocated to primary Erling Mjelde (born 1941), Board member directly to the Board of Directors. capital certificates is distributed entirely since 2002. Elected by the local authority as dividends. Similarly, the bank seeks to appointed Governors. Chairman of Arna For information concerning remuneration, have an open information policy which Urban Neighbourhood Committee in the fees, loans and ownership of primary provides the market with relevant municipality of Bergen. capital certificates in relation to the Board information at the right time. Among the Erik Bøckmann (born 1955), Board of Directors and senior management, members of the General Meeting/ Board member since 2000. Deputy managing please refer to notes 8, 15 and 46 to the of Governors, 25% are elected by the director of Bergen Energi AS. accounts.
70 Sparebanken Vest Annual Report 2002
RISK MANAGEMENT
Sparebanken Vest has decided to develop responsibility for the bank’s overall credit scorecard parameters) will also be and implement an overall risk management control, including credit strategies, important criteria of success. concept. Basel II (The New Basel Capital measurement/analysis and reporting. Accord) sets new requirements concerning Other areas will be phased in pace with New concept risk management and Sparebanken Vest developments and their establishment. effective from 1 January 2004 has set up a special unit in this connection. As part of the process of establishing Over time, new procedures will improve Implementation a new risk management concept, the the bank’s profitability. of new credit procedures bank’s internal control procedures will The aim of Sparebanken Vest’s overall be assessed in relation to the internal The main objectives of setting up a new risk management concept is to implement control regulations. Under the internal unit are as follows: the principles set out by the Basel control regulations the bank shall carry Committee for the management of out an overall risk assessment at least • Help to improve the comparison, different risks. In relation to credit, once a year. Major risk shall be identified, management, analysis and reporting various approaches are being considered assessed and covered through appropriate of various risks for the bank as a basis for the implementation of steps. The overall risk assessment shall • Help to establish a better basis for new credit procedures. There are several be considered by the Board of Directors making strategic choices and choice objectives, As well as establishing a good at the start of each year. Confirmation of of direction. credit control system, deliveries shall help internal control for the year shall be • Through a better understand and to reduce the consumption of resources given subsequently and shall review the awareness of risk, the Board and by credit procedures in the line, as well as work done by the bank to uncover risk senior management will have a better improving quality, maintaining consistency identified in the risk assessment at the basis upon which to balance objectives, of strategy/policy, and providing a better start of the year. The bank’s guidelines strategy, results and risk. basis for the pricing of risk. and solutions related to internal control procedures in accordance with the internal The New Basel Capital Accord sets Structure and relationships control regulations will be assessed out new procedures and requirements The bank’s aim is to establish systems in conjunction with the development concerning the management of risk. The and procedures as a continuous cycle of new risk management procedures. aim of the Accord is to ensure that banks which equates strategy and goals, The bank’s aim is to have the new risk with international activities and their with follow up based on measurement management concept in place by regulatory authorities are able to make and reporting. Based on the actual 1 January 2004. 2003 will be used at more detailed risk assessments when performance, an appropriate response develop and establish procedures, calculating reserve requirements in relation will be made, as required. It is also including stipulation of specifications for to the capital base. There are also our intention that the concept will models, IT solutions and a pilot project. requirements relating to the measurement provide a basis for the bank’s overall risk and management of risk. The regulations management, and thus make a strong strongly encourage more sophisticated contribution to the overall creation of models through lower risk capital. value. The concept and the solutions Historically, new EU legislation is drawn shall be in proportion to the bank’s up on the basis of recommendations requirements, taking account of size, from the Basel Committee. The same exposure and complexity. applies to Norwegian legislation in this area. The EU is expected to adopt final Capital allocation resolutions in this connection in the course of 2003. enhances profitability Over time, the new procedures will contribute to greater profitability in Risk Management Sparebanken Vest’s various areas of established as separate area activity. The bank’s profitability will be Sparebanken Vest has laid several of the improved by allocating capital to those foundation stones needed to establish areas which given the best return in effective risk management on a par with relation to the risk involved. Our aim the best international small and medium- is also to ensure that capital allocation is sized banks. based on a dynamic process which takes We have already established a separate area account of changes in external operating – Risk management – which reports directly conditions as they arise, the bank’s level to the managing director and which, in of ambition and development of the risk terms responsibility and organisationally, profile and profitability. A good correlation is independent in relation to the bank’s and interface with the bank’s strategy Kolbjørn Valestrand and Signe Aarhus, Oleana AS business areas. The new area already has and measurement processes (budgets, and CM consultant Marit N. Trengereid
71 Sparebanken Vest Annual Report 2002
PRIMARY CAPITAL CERTIFICATES – SAFEGUARDING SPAREBANKEN VEST’S INDEPENDENCE
The primary capital certificate (PCC) is for gifts. The savings banks would like 2002. This moderate dividend is the the equity instrument used by savings to have greater flexibility in the allocation maximum amount permitted under banks. The trend over time shows that of profits, including the possibility of current regulations, and it should be investments in PCCs provide a better paying a dividend higher than the considered in the light of the special return than the stock exchange share relative proportion of equity attributable circumstances which affected the bank’s indices, but the market for PCCs is to PCCs. In its recommendation to results in 2002. As no allocation was limited and on occasion the low level of the Ministry of Finance the Banking, made to the dividend adjustment reserve, trading makes it less attractive. Insurance and Securities Commission there is no RISK amount for the has been sceptical to this proposal, accounting year. Those involved in the PCC market have and the matter is currently under long been arguing the case for better consideration by the Ministry, which will In order to improve the liquidity of its framework conditions for PCCs, in order decide on the matter. PCCs, Sparebanken Vest has resolved to to ensure that there is a well-functioning buy back its own PCCs subject to an equity market for Norwegian savings The primary capital upper limit equal to 10% of the aggregate banks. A good source of equity is required certificate - an appropriate PCC capital, corresponding to 250 000 in order to maintain the distinctive quality equity instrument PCCs. At year-end, the bank owned 6 950 and independence of the savings banks in Sparebanken Vest believes that the PCC of its own PCCs. the future. is an appropriate equity instrument for the bank. The PCC safeguards the bank’s The traded price of Sparebanken Vest’s Greater flexibility needed independence, a feature which gives a PCC fell by 5.5% in 2002, varying between Sparebanken Gjensidige Nor’s application clear competitive advantage in today’s og NOK 145 (highest, on May 2) and to reorganise as a limited company was market. This ensures that decisions are NOK 98 (lowest, on December 02). The a catalyst in this process. The necessary taken locally, with the proximity to the traded price at year-end was NOK 102. changes in the law were adopted, and at customers that is necessary in order the same time new and better framework to understand their potential and The PCC index fell by 18% in 2002, while conditions were approved for PCCs. The challenges. The bank therefore wishes to the benchmark index on the Oslo Stock following are important elements in this retain its present organisational form. Exchange fell by 31%. respect: the representation of owners of PCCs on the bank’s Board of Governors 2002 can be increased to 40%, capital tax on The Board proposes a cash dividend of PCCs is to be reduced, and savings banks NOK 3.50 per primary capital certificate now have greater scope to allocate fund for the financial year ended 31 December
SVEG COMPARED WITH OSLO STOCK EXCHANGE BENCHMARK INDEX IN 2002: Sparebanken Vest This illustration shows the development of Sparebanken Vest’s PCC – SVEG – re-based and relative to The Oslo Stock Exchange Benchmark Index – (OSEBX) – which is an expression of the way the stock market has developed. Here, the benchmark index has been re-based and set equal to the SVEG value of NOK 118 at the start of the year Benchmark index Index (01.01.2002 = 118)
72 ORGANISATIONAL STRUCTURE
Sparebanken Vest Annual Report 2002 Procedures Purchases Service Division Centre Legal Market Information/PR Risk Management Controller/Finance Insurance IT Service Personnel/Development Services Payment Division CM Corporate Corporate Market Board of Directors Managing Director Bergen Internal Audit Shipping ORGANISATIONAL STRUCTURE ORGANISATIONAL West Sogn Regions Marine/ Nordfjord Sunnhordland Nordhordland Hardanger/Midthordland RM Bergen South Division Retail Market RM Bergen North Service Customer
73 Sparebanken Vest Annual Report 2002
BOARD OF GOVERNORS
Members elected by depositors: Erik Bøckmann EDP/Systems, Inge Ådland Bjørn Kvamme Erling Mjelde (starting 01.06.03) Ingri Geitrheim Waage Terje Kvamme Service Centre, Deputy General Manager Roald Korsøen Anne Sissel R. Engevik Rolf Titlestad Håkon Østgulen Knut Ravnå Procedures, Deputy General Manager Ola T. Sekse Svein Havre Margunn Y. Samnøy CONTROL COMMITTEE Purchasing, Purchasing Manager Magne Reksnes Lillian Torsvik (chairman) Ulf Eide Einar Vatne jr. Kjell Steinsbø (deputy chairman) Jan Tore Eresberg Nils K. Rødland Corporate Market Terje Vidar Vestvik Liv Henjum Divisional Director Monica S. Salthella Jostein Valen Anne Kverneland Bogsnes Business Development, Lillian Torsvik General Manager Erik Throndsen External auditor Office address: Kaigaten 4, N-5016 Bergen Members elected by local authorities: Geir Inge Lunde, State Authorised Public Post address: P.O. Box 7999, N-5020 Bergen Karl Mæland (deputy chairman) Accountant, PriceWaterhouseCoopers DA Tel.: +47 815 22 002 - Fax: +47 55 21 73 50 Erling Mjelde Inger Sjong MANAGEMENT Corporate Market Bergen, Bjørg Hoff Managing Director: Knut Ravnå General Manager Mona Biering Kristian Helland Deputy Managing Director: Marine/Shipping, Geir Lid Monica S. Salthella General Manager Henning Nordgulen Norvall Bolstad Office address: Kaigaten 4, N-5016 Bergen Payment Services, Margun Ervik Post address: P.O. Box 7999, N-5020 Bergen Deputy General Manager Terje Kvamme Bernt J. Flæsland Tel.: +47 815 22 002 - Fax: +47 55 21 73 05 Insurance, General Manager Arne Bakke Gerd Kvile Åshild Bjelland Eriksen Risk Management Retail Market Division Sigurd Toft Director Frank Johannesen Divisional Director Elin Sjødin Drange Business Development, Employees: Controller/Finance General Manager Jan Tore Thunestvedt Stein Tore Davidsen Director: Frode Høyland Office address: Kaigaten 4, N-5016 Bergen Bodil Digranes Head of Management Accounting Post address: P.O. Box 7999, N-5020 Bergen Inger Finne Terje Mjelde Tel.: +47 815 22 002 - Fax: +47 55 21 73 50 Oddvar Dahl Accounting, Head of Accounting Mary H. Davidsen Kari L. Sandal Bergen North Linda K. Nordeide Finance, General Manager Egil Mokleiv General Manager Frank H.Bjørndal Margot Dyrdal Equity, General Manager Eirik Eldøy Branches: Arna, Åsane, Askøy, Ingvei Wolfe Loddefjord, Laksevåg, Oasen, Steinar Danielsen Information & PR Tårnplass, Øyjorden and Almenningen Kari Vedøy Director Jørn Lekve Eva Braut Head of Information Services Bergen South Godtskalk Skåtun Christine Wigand General Manager Kate Henriksen Investor relations, General Manager Branches: Os, Lagunen, Sandsli, Members elected by owners of Karstein Lien Nesttun, Minde, Sletten, primary capital certificates: Gifts for the public benefit, Danmarksplass and Kaigaten Kjellaug Kvåle (chairman) General Manager Gro Reppen Tor Johannesen Customer Service Finn Haugan Legal Dept. General Manager Trond Larsen Johan Fredrik Kroepelien Lawyer Pål Pedersen Erik Sture Larre Special Commitments, Region Hardanger/Midthordland Svein Garberg Deputy General Manager Eyvind Bagge Grova 14, N-5600 Norheimsund Gunnar Dolven Security, Head of Security Steinar Søraas Tel.: +47 815 22 002 - Fax: +47 56 55 07 01 Ada Kjeseth Regional General Manager Oddvar Ystanes Jan S. Johannessen Markets Branches: Norheimsund, Strandebarm, Einar Nistad Marker Manager Jan Erik Kjerpeseth Bjørkheim, Vaksdal, Dale, Eikelandsosen, Arne Buanes Fusa, Odda and Røldal Karen Blaauw Helle Personnel/Development Director Rune Bjørhovd Region Nordfjord BOARD OF DIRECTORS Development Manager Torunn Garlid P.O. Box 243, N-6771 Nordfjordeid Pål W. Lorentzen (chairman) Personnel adm., Deputy General Tel.: +47 815 22 002 - Fax: +47 57 88 56 01 Bjørn Ove Børnes (deputy chairman) Manager Annelise Drange Regional General Manager Jan O. Yttredal Solveig Midtbø Anne Gine Hestetun Service Division Branches: Nordfjordeid, Måløy, Selje, Eli Førde Aarskog Director Arne Selle Bryggja, Davik and Stadtlandet 74 Sparebanken Vest Annual Report 2002
Region Sogn P.O. Box 22, N-6851 Sogndal Tel.: +47 815 22 002 - Fax: +47 57 67 67 57 Acting Regional General Manager Stadlandet Solveig Midtbø Branches: Region Nordfjord Sogndal and Førde in Sunnfjord Selje Måløy Bryggja Region Nordhordland P.O. Box 140, N-5903 Isdalstø Davik Nordfjordeid Tel.: +47 815 22 002 - Fax: +47 56 34 28 41 Regional General Manager Audun Rebnor Branches: Knarvik Senter, Frekhaug, Lindås, Masfjorden, Mastrevik, Radøy, Fedje, Lonevåg, Haus and Valestrandsfossen
Region Sunnhordland P.O. Box 404, N-5403 Stord Tel.: +47 815 22 002 - Fax: +47 53 45 68 90 Førde Regional General Manager Arnt Sortland Branches: Leirvik, Bremnes, Mosterhamn, Region Sogn Sæbøvik, Husnes, Fitjar, Sveio, Skånevik and Sagvåg Region Nordhordland Region Vest Sogndal P.O. Box 152/153, N-5342 Straume Tel.: +47 815 22 002 - Fax: +47 56 32 34 01 Regional General Manager Trygve Wåge Bergen Branches: Straume, Rong, Skogsvåg, Storebø, Bekkjarvik and Ågotnes Nedre Korskirkeallmenningen Kaigaten EIENDOMSMEGLER 1 VEST AS Danmarksplass Head Office: MastrevikMasfjorden Minde Nedre Korskirkeallm. 1 Fedje Sletten P.O. Box 7999, N-5020 Bergen Lindås Tårnplass Tel.: +47 55 21 77 00 - Fax: +47 55 21 77 14 Øyjorden Managing Director Rune Hansen Radøy Dale
Åsane: Knarvik Frekhaug Lonevåg Åsane Senter, N-5116 Ulset Rong Valestrandsfossen Tel.: +47 55 19 74 50 - Fax: +47 55 19 74 51 Åsane senter Askøy Haus Vaksdal Ågotnes Fana: Laksevåg Arna Bjørkheim Straume Fyllingsdalen Sandslihaugen 1, N-5254 Sandsli Vestkanten Nesttun Norheimsund Tel.: +47 55 11 47 20 - Fax: +47 55 11 47 21 Sandsli Lagunen Skogsvåg Strandebarm Sotra: Eikelandsosen Os Fusa Sartor Senter, N-5352 Straume Region Vest Tel.: +47 56 32 34 80 - Fax: +47 56 32 34 81 Storebø Stord: Odda Borggt. 8, Leirvik Bekkjarvik P.O. Box 404, N-5403 Stord Fitjar Region Hardanger/Midthordland Tel.: +47 53 45 68 80 - Fax: +47 53 45 68 85 Leirvik Husnes AS FILIALBYGG Røldal Office address: Bremnes Sagvåg Sæbøvik Nedre Korskirkeallm. 1 A Mosterhamn Skånevik P.O. Box 7999, N-5020 Bergen Tel.: +47 55 21 75 11 - Fax: +47 55 21 76 80 Managing Director Magne Hellevang Region Sunnhordland Sveio
75 T11003-03-03 www.creato.noT11003-03-03
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