POSITIONS VACANT ANNUAL REPORT 2007 SPAREBANK 1 SR-BANK One individual can make all the difference. A person leaves tracks. If that person is given the living and social conditions needed for growth and development, that person will be a resource in his or own right, irrespective of who or where he or she is. We already have accomplished and diligent employees. But we have room for more. We have chosen the humans as our recurrent fi gure. Quite literally. Because we want more people to come to the region. More heads and more hands. Be it in Rogaland, in the Agder counties or in Hordaland. Our job is to facilitate a meaningful, forward moving society. We are a growing region. With a level of prosperity that is seldom to be found and that it is ethically correct and absolutely essential that we share with others. We are an open society. An inclusive society. A society with opportunities. A society where it is possible to make changes. A society characterised by diversity. In 2008, Stavanger is a European Capital of Culture. This is the beginning of a completely new era. Because the most important part of being a Capital of Culture in 2008 is what happens in the years to come. In 2009, 2010, 2011 and 2012. At least! In promoting culture we should be able to mix business with pleasure. We believe in sustainable culture. Culture that leaves traces that are equally important in our everyday life as in times of great festivities. That is why we are one of the main sponsors of Stavanger 2008. Culture and people hand in glove. People and culture are one. Now, there is a “Job vacancy”. Welcome to a part of Norway that gives inno- vation and creation of economic value a chance. A part of the country that is open to the world and that is ready and willing to accept all who want to contribute. Rogaland, the Agder counties and Hordaland together make up a region with power, courage and determination. This is where we reside. This is where we live. This is what we want to share. Table of contents Main fi gures and key fi gures 5 The CEO’s article 6 Group profi t before tax: The SpareBank 1 SR-Bank Group 8 NOK 1,256 million The fi nance group, organisational chart 11 Highlights in 2007 14 Annual report 16 The Board of Directors 26 Return on equity after tax: Human Capital 30 20.0 per cent (23.1 per cent) Corporate Market Division 34 Retail Market Division 37 Capital Markets Division 40 Social Audit 43 Subsidiaries 46 Corporate Governance 49 Net interest income: Risk and Capital Management 56 NOK 1,340 million Annual accounts 67 (NOK 1,128 million) Auditor´s report for 2007 126 Audit Committee´s Statement for 2007 126 Primary Capital Certifi cates 127 Key fi gures last 5 years 130 Overview of our offi ces 132 Net commission and other Contact information 133 income: NOK 895 million Governing bodies 134 (NOK 678 million) Allocation to endowment fund: NOK 95 million (NOK 88 million) Net yield on fi nancial investments: NOK 388 million (NOK 441 million) Growth in lending last 12 months: 19.8 per cent (25.7 per cent) Growth in deposits last 12 months: 18.0 per cent (13.4 per cent) SpareBank 1 SR-Bank Page 5 Main fi gures (NOK million) 2007 2006 2005 Net interest income 1 340 1 128 1 113 Net other operating income 1 283 1 119 925 Total operating expenses 1 357 1 178 1 012 Profi t before losses 1 266 1 069 1 026 Losses on loans and guarantees 10 -92 -70 Profi t from ordinary activities before tax 1 256 1 161 1 096 Key fi gures 2007 2006 2005 Total asset 31.12. (NOK million) 103 120 85 035 67 237 Net lending (NOK million) 87 861 77 059 61 480 Deposits from customers (NOK million) 50 214 42 547 37 530 Growth in loans (gross) including SpareBank 1 Boligkreditt 19,8% 25,7% 14% Growth in deposits 18% 13% 14% Capital adequacy ratio 1) 10,00 10,56 11,84 Core capital ratio 1) 7,51 7,39 8,98 Net equity and subordinated loan capital 1) 6 874 6 223 5 338 Return on equity (%) 20,0 23,1 24,7 Cost percentage 51,7 52,4 49,7 No. of man-years 1 021 944 862 No. of offi ces 54 52 50 Market price at year-end 3) 66,25 68,41 83,25 Earnings per primary capital certifi cate 3) 7,85 7,78 7,75 Dividend per primary capital certifi cate 4,75 4,34 5,07 Effective yield on the primary capital certifi cate 3,19 -11,74 66,10 RISK amount as of 1.1 preceding year 1) 2) - - 1,79 Reference is made to page 129 for a complete list of key fi gures and defi nitions 1) Figures for 2006 and 2005 are calculated according to NGAAP 2) Due to an amendment in tax regulations the RISK amount has been eliminated from 2006 3) 2005 and 2006 have been restated due to the bonus issue and split carried out in 2007 CURRICULUM VITAE NAME: Terje Vareberg TITLE: Chief Executive Offi cer RESIDENCE: Hinna FAVOURITE SPOT: Holiday cottage in Farsund LEISURE ACTIVITIES: Fishing and outdoor life Farsund, Sørlandet People who can, are willing to and dare 2007 was a very good year for SpareBank 1 SR-Bank group. Our customers’ satisfaction with our products and services was further reinforced, and the fi nancial results placed the bank among the best banks in Norway and the Nordic region. This gives us a good platform for further efforts that will benefi t the region. SpareBank 1 SR-Bank’s object is to create value for the region international unrest, especially in the fi nancial markets. In our that we are a part of. We do this by further expanding our own open economy, negative trends abroad can quickly have an operations, by improving the services we offer to our clients, impact and weaken our competitive ability. In such positive and by taking part as a committed member of the local times it is particularly important to bear in mind that the foun- communities in which we operate. We are contributing to the dation on which we are to live in 10 to 20 years is being laid building of a robust and competitive region by improving our now. Many of the future jobs have not yet seen the light of day. customers’ profi tability and creating secure and profi table jobs The rapid development in technology and markets reminds for competent people in our own organisation. A society’s us of how important it is for future jobs to deliver products diversity is inextricably linked to the presence of companies and services with a high profi ciency content and with a great that nurture competence, innovation and creativity. deal of built-in ability to change. The future labour market will increasingly call for talents. This is a reminder of the The region’s vitality is closely linked to the diversity of its importance of long-term concentration on raising the level of business community. When structural changes in trade and competence in companies and on research and education. industry unilaterally result in companies’ head offi ces being relocated to another region, labour market diversity is gradually For many years, SpareBank 1 SR-Bank has been one of the reduced. Young, talented people seek a place to live and work country’s most profi table banks. But the make-up of the added that offers diversity and opportunities, and under such circum- value has radically changed over a few years in line with the stances we face the risk of these capable people leaving our changing demands and expectations of customers. We have region. SpareBank 1 SR-Bank has a very long-term goal for its been able to deal with these persistent adjustments with good operations. The group is dependent on the communities in results, partially because we recognise that competence is which we operate developing in a positive manner and having “fresh produce” that needs to be developed and renewed. qualities that make them attractive to live and to run businesses in. Much of the annual report deals with human capital in the As a savings bank we have both a fi nancial and a public benefi t organisation. This is because people are our most important objective. This implies that a signifi cant part of the added value resource. Products can always be copied, but our corporate from the group’s operations is channelled back to the local culture, our team building and ability to interact can never be communities: up to NOK 100 million per year over the last few copied. Some people call it competitive edge, but an edge of years, in the form of support for measures that are benefi cial this nature requires constant honing to the general public. These funds are used to strengthen the foundation for the region’s growth and development in the The good results in 2007 were created by employees who longer term. In this work we place a great deal of emphasis on thrive, have a high productivity level, are able to interact and mercantile expansion, culture, research and have a very low level of sick leave, only 3 per cent. Outstanding development and the context in which children results have again been achieved by people who can, are and adolescents grow up.