Annual Report 2003

Annual report 2003 The Group’s annual report has been approved by the Board of Directors in the original Norwegian version. This is an English translation. Shareholders registered as owners in DnB NOR ASA with the Norwegian Central Securities Depository (VPS) can now receive annual reports electronically instead of by regular mail. For more information, please contact your VPS registrar or go directly to www.vps.no/erapport.html. Contents This is DnB NOR ............................................................................... 4 Key figures ......................................................................................... 5 Establishment of the Group ..................................................... 6 From the desk of the CEO ........................................................ 7 Directors’ report ............................................................................. 8 Corporate governance in DnB NOR ................................ 20 DnB NOR stakeholders: Shareholders .......................................................................... 26 Customers ................................................................................ 30 Employees ................................................................................ 32 Society ....................................................................................... 34 Business areas .............................................................................. 37 Annual accounts .......................................................................... 57 Review of the annual accounts .................................. 58 Risk and capital management .................................... 62 Accounts and notes ........................................................... 66 Auditor’s and Control Committee’s reports ............. 122 Financial analyses .................................................................. 123 Special articles: Integration project ........................................................... 126 New brand – new corporate identity .................... 128 How things are done in DnB NOR ........................ 130 IFRS – new international accounting rules ...... 131 Basel II – new international parameters ........... 133 Governing bodies ..................................................................... 135 Contact information ............................................................... 136 DnB NOR This is DnB NOR DnB NOR ASA is Norway’s largest financial services group, with combined total assets of around NOK 1 200 billion. The Group has more than 2 million retail customers, around 150 000 corporate customers and more than 700 000 life insurance customers. DnB NOR’s operations are based on more than 180 years’ experience as a supplier of financial services in Norway. Goals product platforms in the home market enables the bank to offer customers simple DnB NOR aims to be the leading financial which can also serve as a basis for growth non-life insurance products. Cooperation services group in Norway and among the in a Nordic and international perspective. with 16 regional savings banks involves the leading financial services groups in the In addition, DnB NOR will maintain a lead- provision of technological solutions and Nordic region. ing position in all strategic product areas. distribution of the Group’s products. DnB NOR’s overriding financial targets Through an agreement with Norway Post, include creating shareholder value through the Group’s products and services are dis- an attractive and competitive return and Market leader tributed through around 300 post offices, distributing approximately 50 per cent of DnB NOR is market leader in Norway some 1 200 in-store postal outlets and profits as dividends provided that capital within lending, deposits, life and pension more than 2 000 rural postmen. In addi- adequacy remains at a satisfactory level. insurance, equity funds, asset manage- tion, DnB NOR has an international net- Moreover, the Group aims to have a return ment and securities operations. The Group work of 13 branches and representative on equity in excess of 14 per cent before has a leading position in Norway within real offices, along with subsidiaries in Sweden, goodwill amortisation, a core capital ratio of estate broking and the provision of credit Luxembourg, Great Britain, Singapore and around 7 per cent and an AA level rating cards. DnB NOR is an important partner the US. for ordinary long-term debt for banking for Norwegian businesses abroad and operations. large international companies in Norway. The Group is Norway’s leading foreign Legal structure exchange bank and one of the world’s fore- DnB NOR ASA was established on Strategy most shipping banks. Among the strong 4 December 2003 through the merger of DnB NOR will create value for share- brands included in the Group are DnB DnB Holding ASA and Gjensidige NOR holders, customers, employees and other NOR, Vital, Nordlandsbanken, Cresco, ASA. Den norske Bank ASA and Union stakeholders by realising identified syner- Postbanken, Avanse and Carlson. Bank of Norway ASA merged on 19 Janu- gies, creating new solutions in the merged ary 2004, and Vital Forsikring ASA and group and exploiting the opportunity for Gjensidige NOR Spareforsikring ASA strategic repositioning provided by the Represented throughout Norway merged on 9 March 2004. A number of merger. – and abroad other group subsidiaries will merge during DnB NOR will be the best financial part- After the completion of the merger in the the course of 2004. Some companies will ner for Norwegian retail and corporate cus- course of 2004, DnB NOR will have 215 be sold. tomers and the preferred partner in Norway bank branches. The Group has a long-term The chart below illustrates the legal for international customers. The Group will cooperation agreement with Gjensidige structure of the Group at end-March 2004. develop its customer base and attractive NOR Forsikring, which among other things �� 1) To be sold 4 DnB NOR annual report 2003 Key figures Key figures1) Profit and loss accounts Amounts in NOK million 2003 2002 2001 2000 1999 Net interest income 13 789 13 887 13 310 12 395 11 948 Net other ordinary operating income 8 279 5 619 7 341 7 800 6 704 Gains on the sale of fixed assets 23 39 30 15 43 Ordinary operating expenses 13 191 12 537 12 450 11 887 11 856 Other expenses 219 394 123 81 787 Pre-tax operating profit before losses 8 681 6 613 8 107 8 242 6 053 Net losses/(reversals) on loans, guarantees etc. 1 891 1 023 604 (26) 219 Net gain/(loss) on long-term securities 224 (316) (100) 741 400 Pre-tax operating profit 7 014 5 274 7 404 9 009 6 233 Taxes 1 636 1 642 1 378 2 219 1 191 Profit for the year 5 378 3 632 6 026 6 790 5 042 Earnings per share (NOK) 4.11 2.77 4.59 5.15 3.83 Balance sheets 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. Amounts in NOK million 2003 2002 2001 2000 1999 Total assets 705 677 638 357 594 242 556 123 514 053 Net lending to customers 557 503 488 217 469 640 430 096 391 376 Deposits from customers 335 576 317 598 300 980 275 447 264 247 Average total assets for the year 697 223 622 732 575 183 535 088 497 027 Key figures 2003 2002 2001 2000 1999 Return on equity (%) 12.7 8.9 15.5 18.5 16.1 Dividends per share (NOK) 2.20 2.14 2.53 2.43 1.94 Core capital ratio (%) 6.8 7.1 7.1 6.3 6.3 Capital adequacy ratio (%) 9.8 9.9 10.0 9.6 9.4 Loan-loss ratio (%) 0.34 0.21 0.13 (0.01) 0.06 Combined interest rate spread (%) 2.62 2.77 2.75 2.91 3.19 Share price at year-end (NOK) 44.40 32.60 40.40 47.50 32.90 Recorded equity per share (in NOK, excl. allocated dividends) 32.18 30.32 29.74 27.34 27.98 Price/book value (excl. allocated dividends) 1.38 1.08 1.36 1.74 1.18 1) All figures have been prepared in accordance with the DnB NOR Group’s accounting principles as at 31 December 2003. All figures represent the combined business of DnB and Gjensidige NOR (pro forma accounts). All figures prior to 2000 include operations in Postbanken (pro forma accounts). Asset management operations acquired from Skandia are included in the figures as from 1 June 2002 and Nordlandsbanken as from 1 January 2003. Additional key figures and definitions can be found under “Financial analyses” on page 123. “Shareholders” on page 26 provides more key figures for the DnB NOR share. Financial calendar 2004 First quarter: Second quarter: Third quarter: 6 May 12 August 28 October JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Annual General Meeting: 27 April Distribution of dividends: From mid-May The Annual General Meeting of DnB NOR ASA will be held Tuesday, 27 April 2004 at 6 p.m. at the Hotel Bristol, Kristian IV’s gt 7, Oslo, Norway. Ex-dividend date: 28 April DnB NOR annual report 2003 5 Establishment of the Group Establishment of the Group On 4 December 2003, DnB Holding ASA and Gjensidige NOR ASA merged to establish Norway’s largest financial services group, DnB NOR. 18 March 2003 17 September Boards of Directors sign merger agreement Gjensidige NOR and DnB responded to the Competition Following preliminary discussions and negotiations, the Boards of Authority’s notification of 19 August Directors in Gjensidige NOR ASA and DnB Holding ASA entered Gjensidige NOR and DnB presented a comprehensive response, into a merger agreement. indicating disagreement with a number

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