ANNUAL REPORT 2002 ANNUAL REPORT 2002 T11003-03-03 www.creato.no RETURN ADDRESS: P.O.Box 7999, N-5020 Bergen - Norway Telephone: +47 815 22 002 [email protected] - http//www.spv.no Telex:42 249 - Swift:SPAVNOBB - F.nr.: 832554332 Sparebanken Vest 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.