ANNUAL REPORT2000 SPAREBANK 1 VEST ANNUAL REPORT 2000

Focusing on customers and strength

CLOSE, FRIENDLY, HELPFUL AND COMPETENT

SpareBank 1 Vest exists for its customers. Our independence enables us to focus on the customers and guarantees decision-making ability, ensuring that the creation of value within the bank comes to the benefit of our region.Above all else, the ban- k’s vision - Focusing on Customers and Strength - makes the customers the undisputed focal point of our activities.

SpareBank 1 Vest carried out a major review and reassessment of its operating strategy in 2000. One thing to emerge from this was the publication of an internal brochure which was essentially a synopsis of the bank’s vision, objectives, strategy, value basis, personnel and management philosophy and ethical guidelines, as well as defining the workplace culture which we seek to achieve within the bank. The brochure was entitled "Local, friendly, helpful, capable" - words which represent the essence of the bank’s core values.

Some of the photographs in this year’s Annual Report are taken from the internal brochure, and all were taken by photographer Bent Synnevåg.The "models" are all employees of SpareBank 1 Vest, and we would like to thank them for their willing- ness to grace these pages. The names behind the faces, starting from the cover page, are as follows: Anny H. Guntveit, Inger E. Finne, Margunn Bjørnestad, Leif Hauge,Anne Line Bruvik, Marit Brochman,Arve Havnerås and Henning Haldorsen.

2 Annual Report 2000

3 SPAREBANK 1 VEST ANNUAL REPORT 2000

Contents

General information about SpareBank 1 Vest/ Financial calendar 2001 5 Financial highlights 6 Main features of 2000 7 Knut Ravnå: Our sales culture will be strengthened 9 Senior management group 11 Directors’ report 13 Profit and loss account 18 Balance sheet 19 Statement of cash flows 20 General accounting policies 21 Notes to the accounts 25 Auditor’s report/Control Committee’s report 54 Key figures 59 Value profile through old and new channels 61 A complete service, through all channels 63 Customer satisfaction up, waiting time down 64 Norway’s largest estate agency 65 Biggest in small and medium-sized companies 67 Changes in regulatory environment 69 Major advances in 2000 70 SpareBank 1 Group - facts and background 71 Elected officers, management and regions 72 Organisation chart 74

Published by the Information Department, SpareBank 1 Vest www.spv.no

N-5020 Bergen - Tel.:+47 55 21 72 42 (Information Dept./VestAvis 1) - Fax: +47 55 21 72 89 Project management: Jørn Lekve - Photos: Bent Synnevåg - Design/Assistance: oktan as Reproduction and printing: Laser Sats DTP AS / Hannevik & Sundøy Grafisk AS

4 SPAREBANK 1 VEST ANNUAL REPORT 2000

SpareBank 1 Vest

SpareBank 1 Vest is Norway’s fourth-largest savings bank, with total assets of NOK 31.1 billion and provides employment equivalent to roughly 750 man-years.The head office is in Bergen.

The bank serves the retail market, corporate market and the public sector in the counties of Hordaland and Sogn & Fjordane, with 64 branch offices. The bank’s market area comprises the regions Nordfjord, Sogn, Hardanger/Midthordland, Nordhordland, West, Bergen and Sunnhordland.

SpareBank 1 Vest is the dominant retail bank in its market area, with around 250 000 retail customers and 10 000 commercial customers. The bank has recorded strong growth in the commercial sector in recent years.

SpareBank 1 Vest is a part of the SpareBank 1 alliance, which is Norway’s fourth-largest financial services group, with aggregate total assets of roughly NOK 210 billion and 5 900 employees in a total of 425 branches.

Financial Calendar 2000

The quarterly accounting results for 2001 will be published on 26 April, 9 August and 25 October.

5 SPAREBANK 1 VEST ANNUAL REPORT 2000

Financial highlights – Sparebanken Vest Group

(NOKm) 2000 1999 1998 1997 1996

Profit and Loss Account

Net interest and credit commissions income 751 719 647 619 603 Net operating income 238 281 36 171 158 Operating expenses 641 591 550 543 526

Operating profit before losses and write-down 348 409 133 247 235 Losses on loans, guarantees and other losses 43 59 8 8 1 Write-downs/reversal of write-downs and gain/ (loss) on long-term securities 33 134 (5) 11 55 Profit before tax 338 484 120 250 289

Balance Sheet

Total assets 31 098 26 255 23 619 21 345 19 419

Loans to and accounts receivable from customers 26 272 22 348 20 297 18 182 16 410 Securities 2 293 2 615 1 961 1 968 1 807

Customer deposits and customer accounts payable 17 782 15 742 14 629 12 598 12 950 Subordinated loan capital and equity 2 768 2 267 1 959 1 891 1 695

Key rations (%)

Net interest and credit commission income as % of average total assets 2.70 2.91 2.86 2.99 3.17 Pre-tax profit as % of average total assets 1.22 1.96 0.54 1.21 1.52

Return on equity after tax 12.03 20.38 4.36 12.18 16.10

Loan loss ratio 0.16 0.26 0.04 0.04 0.01

Change in gross loans to receivable from customers 17.48 10,06 11.38 10.53 8.59 Change in deposits from and debt to customers 12.96 7.61 16.12 (2.72) 2.71

Net capital base (NOK) 2 370 1 948 1 774 1 812 1 644 Capital adequacy ratio 11.93 11.43 11,21 12.87 13.44 Core capital ratio 10.25 10.82 9.94 10.84 10.98

Dividend per primary capital certificate (NOK) 12 22 5 13 16 Primary capital certificate price at year-end (NOK) 130 213 134 229 174 Return on primary capital certificates (28.64) 62.69 (35.81) 41.21 30.21 RISK amount at 1.1.2000 (NOK) 89.09 45.81 69.12 71.27 Further information appears in the summary of main figures and definitions on page 57.

Total assets Net interest Profit after tax (NOK bn) Net interest and credit commission income (NOKm) (NOKm) 35 800 751 400 31,1 719 358 700 647 350 30 619 26,2 603 600 300 25 23,6 21,3 239 250 19,4 500 212 20 400 200 178 15 300 150 10 200 100 68 5 100 50

0 0 0 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000

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Main features of 2000

■ 2000 was a good year for the SpareBank 1 Vest Group. Norway’s second-oldest bank with operations tracing back 178 years recorded pre-tax profits of NOK 338m.

■ Pre-tax profits for the year were NOK 146m down on 1999. In considering the decline, due account must be taken of the high gains on long-term investments in 1999, the stockmarket slump in 2000 and costs related to the establishment of a common technological platform for the SpareBank 1 alliance.

■ SpareBank 1 Vest took over VÅR Bank og Forsikring’s regional banking portfolio in the counties of Hordaland and Sogn & Fjordane following the acquisition of VÅR Bank of Forsikring ASA by the SpareBank 1 alliance.The insurance activities were taken over in the first quarter of 2001.

■ The net profit of NOK 239m corresponds to a return on equity of 12%, in line with the target figure for the year.

■ The bank paid the maximum permitted dividend of NOK 12 per primary capital certificate, corresponding to 12.5% of the parent bank’s profit for the year. Primary capital certificates made up 13.6% of the bank’s equity at year-end.

■ NOK 15 million of the profit for the year was allocated to gifts for the public benefit.

■ At year-end 2000 the Group had total assets of NOK 31.1bn, up 18.4% on 1999. Deposits were 13% higher and lendings increased by 17,5%, including the portfolio taken over from VÅR Bank og Forsikring.At year-end, the funding ratio stood at 67.7%, against 70.4% at the start of the year.

7 8 SPAREBANK 1 VEST ANNUAL REPORT 2000

KNUT RAVNÅ:

– Our sales culture will be strengthened

– SpareBank 1 Vest will continue bank’s position in the market. Our aim is to be the same time it is tangible proof that we focusing on strengthening the bank’s the preferred banking alternative for really mean it when say that SpareBank 1 Vest sales culture in 2001.We have ambitious customers in every phase of life.We are not a is a bank with very strong local roots. We goals, and we believe that they can be one-channel bank.The customers are the focal know the districts, we maintain a presence in achieved through hard work and with point for SpareBank 1 Vest, – a sound bank the districts, and we know that in a way we loyal and skilled staff, good products, a with strong local roots and broad local share a community of interests with the new technological platform and a very involvement. A satisfactory level of value districts. We are the bank for retail and large customer base, says managing creation over time calls for a strong focus on corporate customers, in good times and in director Knut Ravnå. sales, and while much still remains to be done bad. We have 178 years’ experience, which to improve the bank’s sales culture I know that provides a good stock of knowledge to draw He fully admits that the conversion to a we are well on the way. Our sound financial on when advising our customers. Naturally, common technological platform and the base also provides strength, guaranteeing our our personnel are our most important launch of a new online banking service independence and dynamism. resource in this area, but it helps when ("Nettbank") in the first half of 2001 will tie up SpareBank 1 Vest rests on very sound financial considerable resources within the bank, but – Why is it so important to be independent, foundations, with a high equity ratio, a high nonetheless he believes that this should not – does it really matter to the customers? level of solvency capital, historically lower prevent the bank from achieving its overall losses than is common within the industry, and objectives. a well-established credit policy which provides Independence matters, – also to the security for both the bank and its customers. – We are very well placed to reinforce our customers position as the largest independent bank in the – But despite the credit policy and the low region with its head office in Bergen.We have – In many ways, being a savings bank gives a losses – SpareBank 1 Vest experienced a very enjoyed sound growth in the last few years competitive edge, and is the only guarantee of sharp rise in total assets last year. Does this and our products have been well received in independence, and that is why we have chosen indicate that the bank grew too quickly in the market. Even though there are many new to stay as a traditional savings bank with 2000 and that the level of losses can be players in the market and the competition is primary capital certificates. In our considered expected to rise? intense, I still believe that our strong position view, there is no question of reorganising in the financial sector can be even stronger, SpareBank 1 Vest as a limited company. says Knut Ravnå. Naturally, we are focused on running the bank Growth in total assets and credit policy as well as possible and ensuring that we Ravnå believes that the customers benefit provide a competitive return. But providing a – I understand the question, but it is important from the competition, since the banks have to competitive return is not our only objective. to point out that the increase in total assets in be on their toes to stay competitive. We wish to give added value to the customers 2000 was partly due to the takeover of Vår SpareBank 1 Vest is not a niche bank, but a full and to the society, and we wish to be an Bank og Forsikring. But having said that, it is scale bank with a complete array of financial attractive place of work. I believe that being an also gratifying that our strengthened position products for customers in every phase of life. independent bank has value in itself. Proximity is also due to organic growth.Total assets have Customers are ever more demanding, but this to the market, including the ability take almost doubled over a period of seven years, is positive since it gives SpareBank 1 Vest decisions quickly, areas of banking expertise totalling NOK 31.2bn at the end of 2000. But I an added incentive to be the customers’ and a separate identity- these are all valuable am still of the opinion that we have achieved a preferred choice. assets in themselves.This is important for the balanced growth.There is nothing in the bank’s region – and for the bank’s employees and development to indicate that we can expect elected representatives. The gift fund is an any dramatic rise in the level of defaults or Focusing on customers and strength illustration of what distinguishes an losses, but some rise is possible. If this does independent bank like SpareBank 1 Vest from happen, then we are prepared, and naturally – What will be the main priorities for some of its local competitors which are run developments are closely monitored. On the SpareBank 1 Vest in 2001? from Oslo or from abroad. In years when the other hand, the very nature of banking activity bank’s profits are at a satisfactory level, we means taking risks. By analogy, we play the role – It can be put quite simply: Focusing on seek to channel funds back to the society of midwife for small and medium-sized customers and strength.This is also the bank’s which we serve.This is done by allocating gifts companies, and we help people to realise the vision. This is a concise statement of our for the public benefit. In 2000, this involved dream of having their own home, car or primary motivation: that we exist for our allocations totalling NOK 15m, and the same whatever. Obviously, sometimes things do not customers. By providing the customers with amount will be allocated in 2001. This is of go as expected and a loss arises. When this competitive terms we also safeguard the great value for many local communities, and at happens, every effort is made to enter into a

9 positive dialogue with the customer so that surveys show that the new branch concept philosophy, our ethical guidelines and the together we can find a way through the has been a success, with an increasing level of culture we wish to typify our workplace were difficulties. customer satisfaction and reduced waiting discussed and revised.The upshot of it all was time. an internal brochure which brought together the four core values: friendliness, accessibility, Queues and branches helpfulness and proficiency. I believe that only Core values and customers by establishing a common understanding of – Some customers have complained at the these concepts can we ensure that we are all long queues in the banks.What are you doing – Are you satisfied with the level of customer moving in the same direction. A focus on the about this? satisfaction? Group’s core values is also important for the development of customer relationships and to – It is true that on occasion in the last few – You can probably never be fully satisfied with create an even greater public awareness of the years the queues have been too long in some a measurement of this kind. One the whole, brand name. This is something that has to be of our largest branches. On the one hand this the customers are very satisfied with done on a continuous basis. A number of reflects the fact that we are a popular bank: it SpareBank 1 Vest, but there is always room for additional key personnel were also recruited would be a sad business if the branches had no improvement and it is a matter that we take last year to strengthen Group expertise in customers. On the other hand, it is clearly very seriously indeed.The problem of queues banking and customer-related areas. I believe it unacceptable that the customers have to wait is one area where customer feedback tells us is important to draw on external resources to so long. We have done a lot of work to that things are not as they should be, and we supplement the skills we have within the bank. improve the situation.Among other things, we are taking steps to improve the situation. At One important determinant of our will be extending the new office concept to the same time, it should not be forgotten that competitive position is our ability to eight new and larger branches. In brief, this the customers give the employees very high continuously development and utilise the means a higher degree of automated services, marks for closeness, friendliness, helpfulness available skills, in relation both banking areas while at the same time ensuring that the and competence.This is very positive, and it is and customers. This is under constant review personal aspect of our banking service is part of the bank’s core values. Last year we in the process of reorganisation aimed at maintained.This has been achieved by splitting instituted a process whereby the bank’s vision, establishing a sales culture with the focus on the new branches into three zones and by objectives and strategies, our common value the customer, says Knut Ravnå. giving the personnel new roles. Feedback and base, our employee and management

10 SPAREBANK 1 VEST ANNUAL REPORT 2000

SENIOR MANAGEMENT TEAM

Terje Mjelde Pål Pedersen Arne Selle Knut Ravnå Jørn Lekve Frank Johannesen Frode Høyland Gro Reppen (Born 1947). Deputy (Born 1954) (Born 1953). (Born 1948). (Born 1961). (Born 1959). (Born 1966). (Born 1965). Personnel managing director Head of legal depart- Director of operations Managing director Director of infor- Director since 1994. Director, Controller director since 1999. since 1985. Joined the ment since 1994. since 1994. Joined the since 1990. Joined the mation & PR since Joined the bank in since 2000. Joined the Joined the bank as bank in 1971. Joined the bank in bank in 1992. bank in 1973. Left for 2 1999. Joined the bank 1985. Graduated in law bank in 1999. Business personnel manager in Graduate from the 1990. Previous experi- Previously worked in years to be assistant as head of information from University of economist from the 1997. Previously Norwegian School of ence as an assistant the Frank Mohn general manager of services in 1996. Bergen (1985). Institute of employed in Harstad Economics and judge and as a lawyer Group in period 1979- DnC in Haugesund. Formerly editor of Management (BI). State Local Authority and Business in private practice. 1992. Graduate civil Graduate from the Horda Tidende and authorised public subsequently in Bærum Administration (NHH) engineer from Norwegian School of commercial journalist accountant from NHH Local Authority as a in 1971 and MBA from Norwegian University Economics and with Bergens Tidende. (1995) and authorised financial consultant. NHH in 1999. of Science and Business Master of science in financial analyst from Has also worked at Technology in Administration (NHH) Business from the NHH (1998). the University of Trondheim (NTH) in in Bergen. MBA from Norwegian School of Bergen and in Unifob 1977. Michigan (1979). Economics and as senior consultant Business and office manager. Administration (NHH) Graduated in com- in Bergen (1989). parative politics at University of Bergen in 1994.

11 SPAREBANK 1 VEST ANNUAL REPORT 2000

BOARD OF DIRECTORS’ REPORT 2000

Erik Helen Knut Ravnå, Terje Kvamme, Anne Sissel Eli Førde Jan O.Yttredal, Anne Gine Bjørn Ove Pål W. Bøckmann, Nordeide Bergen Bergen Raunholm Aarskog, Husnes Hestetun, Børnes, Lorentzen, Fløisand, Engevik, Bergen (born 1948) (born 1946) Nordfjordeid (born 1943) Bergen Klokkarvik Bergen (born 1955) Bergen Managing Assistant General Stord (born 1955) Managing direc- (born 1962) (born 1948) (born 1941) Deputy managing (born 1952) director of Manager of (born 1962) Managing direc- tor of Sør-Norge Member of Managing direc- Barrister. Joined director of Deputy chairman SpareBank 1 Vest SpareBank 1 Vest. Elected employee tor of Eidatunet Aluminium. Board Bergen Municipal tor of HSD Buss the Board as Bergen Energi AS. of County since 1990. Board member representative. AS. Board mem- member since Executive Board. AS. Board mem- chairman in 2000. Joined the Board Council. Board since 1991. Board member ber since 1999. 1998. Board member ber since 1992. in 2000. member since since 1992. since 1998. Deputy chairman 1999. since 1998.

12 SPAREBANK 1 VEST ANNUAL REPORT 2000

Board of Directors’ Report 2000

2000 was a satisfactory year of opera- subsidiaries of the jointly owned financial Vår Bank og Forsikring, corresponding to 23 tions for SpareBank 1 Vest. Norway’s services group, SpareBank 1 Gruppen AS. man-years. Temporary hired employees second-oldest bank, with roots tracing accounted for 63 man-years. Until Easter back 178 years, posted pre-tax Group 2001, personnel corresponding to around 50 profits of NOK 338m. After tax the The SpareBank 1 alliance man-years will be employed full-time on the profit was NOK 239m, corresponding to The SpareBank 1 alliance is the result of - data conversion project basis. At year-end a return on equity of 12% and in line binding cooperation which was entered into at 2000, the Group provided employment with the target figure for the year. the end of 1995 between Sparebanken Nord- corresponding to 749 man-years (721). Norge, Sparebanken Midt-Norge, Sparebanken The pre-tax profit was NOK 146m down on Vest and Sparebanken Rogaland. The licence The Board considers the bank’s working the previous year. The reduction should be needed to establish both the alliance and environment to be good. Systems and considered in the light of the substantial gains SpareBank 1 Gruppen AS was received in mid- procedures are in accordance with on long-term securities in 1999, as well as the 1996. In the same year, the Samarbeidende Regulations relating to Health, Environment stockmarket downturn and costs related to Sparebanker AS also joined the SpareBank 1 and Safety. The Working Environment the establishment of a common technological alliance. Samarbeidende Sparebanker currently Committee held 4 meetings in 2000. No platform for the SpareBank 1 alliance in 2000. consists of 16 savings banks located in the resources or production methods are used The bank’s core activities in the retail and eastern and northern flanks of west Norway. which impact negatively on the environment corporate markets provided good results in In August 1998 an agreement was entered into to any appreciable extent, and the bank’s 2000. between the Norwegian SpareBank 1 banks activities do not pollute the external and FöreningsSparbanken AB (Plc), Sweden. In environment. The Board proposes a cash dividend of 1999 FöreningsSparbanken became a share- NOK 12 per primary capital certificate, holder of SpareBank 1 Gruppen AS Sick leave is actively monitored, and in this equivalent to 12.5% of the parent bank’s profit connection the company health service plays a for the year.This is also the maximum dividend Following the takeover of Vår Bank og central role. The average incidence of sick permitted under current regulations. At the Forsikring in the autumn of 2000, the leave stood at 6.1%, against 6% in 1999. start of the year, primary capital certificates Norwegian Federation of Trade Unions (LO) (PCCs) accounted for 13.6% of the parent acquired a shareholding in SpareBank 1 An organisational survey carried out internally bank’s equity, after adjusting for allocation to Gruppen AS whose shareholders are now by the Administrative Research Institute (AFF) the reserve for valuation variances. SpareBank 1 Nord-Norge, SpareBank 1 Midt- at the end of 2000 showed that most of the Norge, SpareBank 1 Vest,SpareBank 1 SR-bank employees are very satisfied with the bank’s However, the imposition of a dividend tax and and Samarbeidende Sparebanker AS with 13% working environment. The survey also changes in RISK contributed to a sharp decline each, while LO has 10% and Förenings- identified areas where there is room for in the price of the bank’s PCCs in 2000, and Sparbanken 25%. improvement, and appropriate action will be the turnover of PCCs has not been at a taken. satisfactory level.The highest traded price was As the parent bank of a financial services NOK 198 and the lowest NOK 120.They are group, SpareBank 1 Gruppen coordinates currently trading at NOK 130. common strategic projects and manages the The Norwegian economy and local SpareBank 1 brand name on behalf of the operating conditions Norwegian owner banks. Norway had a buoyant economy in 2000, with Bank activities a much higher growth rate in the first half of SpareBank 1 Vest is an independent banking At the end of 2000, the company owned 100% the year than had been envisaged, largely Group based in Bergen and with branches in of SpareBank 1 Livsforsikring AS, SpareBank 1 thanks to a higher level of domestic demand the counties of Hordaland and Sogn & Skadeforsikring AS, SpareBank 1 and mainland investment than had been Fjordane. The Group also engages in estate Fondsforsikring AS, SpareBank 1 Kredittkort expected. Unemployment was relatively low at agency activities through EiendomsMegler 1 AS, Sparebankutvikling AS, Odin Forvaltning 3.4%, and on the whole the Norwegian Vest AS, as well as real estate management AS and Enter Card AS, as well as 51% of First corporate sector had satisfactory operating activities. In addition to the parent bank, which Securities ASA and 65% of Sparebankkort AS. conditions and acceptable profitability in 2000. accounts for 90.4% of consolidated profits, the The upturn in international trade also boosted Group comprises the subsidiary holding com- exports. pany Sparebanken Vest Holding AS, AS Personnel, working environment and Filialbygg and Sparebankbygget Odda AS. safety High oil prices were an important stimulant At 31 December 1999 the parent bank’s throughout the year, strengthening both the As part of the SpareBank 1 cooperation operative workforce corresponded to 713 national economy and the Norwegian krone. alliance, SpareBank 1 Vest supplies a broad man-years, against 656 at the end of 1999.The Interest rates rose as a result of economic range of financial services from the increase includes employees taken over from pressures and a concern that Norway might

13 SPAREBANK 1 VEST ANNUAL REPORT 2000

BOARD OF DIRECTORS’ REPORT 2000 be particularly affected by escalating prices Economic developments in the counties of product areas. Relative net interest income is and costs over a prolonged period and thus Hordaland and Sogn & Fjordane were also affected by the falling funding ratio. lead to a weak and unstable currency. generally good in 2000, even though the However, the level of activity in the mainland growth rate was slightly less than the national The contribution from banking services economy levelled off in the third quarter of average. The economic situation in the bank’s increased by 22.5%, mainly due to the higher the year.This may be seen in the light of steps market area reflected a degree of stagnation, volume of payment transfer business. taken by Norges Bank to increase interest largely because the booming Norwegian Commissions from the sale of fund and rates. During 2000, Norges Bank intervened economy began to slow down, with particular insurance products showed good growth, but four times to increase reference rate by a total effect for major industries in the bank’s failed to meet the target figures. Steps have of 1.5 percentage points. Nevertheless, GNP offshore market area, especially the oil been taken to improve sales in this area in for 2000 has been estimated at around 2%, industry and the fisheries. 2001. substantially above the 0.8% recorded for In 1999 SpareBank 1 Vest made a provision of 1999.As 2001 starts, Norges Bank has made it The expected revival in the metallurgical NOK 20m for restructuring initiatives.A total clear that the target inflation rate remains at industry in 2001 will be especially beneficial in of 40 people have had the pension base around 2%, and that the present high interest Sogn & Fjordane, while further growth in the regulated under contractually agreed pensions rates will be maintained until further notice. fish farming industry would help the economy or have received severance pay and this has Because of the continuing high level of interest in both counties. However, in common with made it possible to take on new personnel, rates, lower growth is expected in 2001, but the rest of the country, a high real rate of mainly younger people with sound formal the bank believes that it should be possible to interest could contribute to lower household skills. reduce rates to some extent in the second consumption, and this in turn could lead to relatively moderate growth in the private half of the year. Operating expenses increased by 8.5% to service industries. Norway had a very favourable balance of NOK 641m, while the ratio of costs to income payments in 2000, thanks to the high price of stood at 64.8%, against 59.1% in 1999. Most of oil and the high level of oil production. The the increase relates to the cost of preparing Results and balance sheet current account surplus for 2000 is estimated for the transfer of the bank’s data processing developments – Group at almost NOK 200bn, an improvement of function to EDB-Fellesdata which is due to The annual report and accounts are submitted more than NOK 150bn on 1999. take place around Easter 2001, as well as the on the assumption that the bank will continue cost of integrating the activities of Vår Bank og The Oslo Stock Exchange was characterised as a going concern. This is based on Forsikring in the counties of Hordaland and by a high level of activity in 2000, with a high operational forecasts for 2001, as well as Sogn & Fjordane. turnover, great fluctuations in stockmarket projections and strategic assessments with a values, and very different trends in the time horizon extending for a further three At the end of 2000, gross lendings and different industries and for the various indices. years. receivable from customers amounted to NOK The Oslo Stock Exchange Total Index reached 26 610m, an increase of 17.5% on the previous a historic high on 14 September when it Profits before operating expenses totalled year. After adjusting for the portfolio taken reached 1,608.67 points, but it ended the year NOK 989m, against NOK 1 000m in 1999, and over from the Vår Group, the figures reflect at 1,336.82 reflecting a fall of 1.5% over the the reduction should be considered in the 12% growth for the year. The retail sector, year as a whole. light of stockmarket developments. Other which accounts for 68% of the portfolio, components of income reflected improve- showed 12% growth, while the corporate SpareBank 1 Vest’s PCCs - SVEG - were ment. segment grew by 13%. particularly hard hit by new dividend taxation rules and changes in other regulations which In relative terms, net interest income fell by Deposits and accounts payable to customers mean that RISK regulation will no longer apply 0.2 percentage points to 2.7 percentage totalled NOK 17 782m at year-end, reflecting to SVEG for 2000. This contributed to the points, but in kroner terms it increased by annual growth of 13%. Of this, two percentage 38.7% fall in the price of the bank’s PCCs in NOK 32m.The decline in relative net interest points related to deposits and lendings taken 2000, after having been the PCC with the best income should be seen the light of the over from the Vår Group.The retail customer return in the previous year.The dividend paid competition in the market, where SpareBank 1 segment grew by 9% and the corporate in 2000 was NOK 22 per PCC, so that the Vest attaches great importance to its customer segment by 2%.The retail customer return, including the dividend, was 28.3%. competitive position in key deposit and loan segment accounts for 66% of deposits.

Number of man-years Core capital ratio (percentage) Dividend per PCC (NOK)

800 750 731 749 12 10,98 25 717 703 10,84 10,82 22 9,94 10,25 700 10 20 600 16 8 500 15 13 12 400 6 10 300 4 200 5 5 2 100 0 0 0 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000

14 SPAREBANK 1 VEST ANNUAL REPORT 2000

BOARD OF DIRECTORS’ REPORT 2000

The funding ratio (ratio of deposits to net conversion programme, the SpareBank 1 Customer Service is not just a "Call Centre" lendings) fell from 70.4% to 67.7% at the end banks have started a major process aimed at which deals with telephone enquiries. It is a of 2000.This is considered adequate. increasing the efficiency of working processes multi-response centre which deals with a large under the name "Customer 2003". number of communications through other Losses charged in the accounts amounted to media, such as e-mail, fax, letters, standing NOK 43m, which is regarded as moderate. The SpareBank 1 Vest Group posted profits orders and wage lists. During the year, the Gross non-performing loans corresponded to for the year of NOK 338m, while the profit capacity of the Customer Service section was 1.1% of total loans in both the retail and after tax was NOK 239m, in line with the increased by he equivalent of 41 man-years, corporate customer segments. In both target figure. and in the second quarter it acquired full segments, the level of losses is within the limit service status, capable of carrying out most During the year the Group’s total assets which the Board considers acceptable. banking transactions - by telephone. increased by 18.4% to NOK 31 098m, and at In the view of the Board, the specified and year-end the capital ratio stood at 11.9% while The increasing degree of self-service and unspecified loss provisions, amounting to the core capital ratio was 10.3%. The bank’s automated functions has made it possible to NOK 178m and NOK 160m, respectively, are target figure is a capital ratio of 12%. reallocate resources in the branches and thus sufficient in relation to the exposure which improve and extend advisory services and the portfolio represents. In 2000 the bank received a rating from sales at the seller’s initiative, which will Moody’s Investor Service and Fitch IBCA. The gradually be reflected in the branch On 30 August 2000 SpareBank 1 Gruppen AS results were satisfactory, with A3/P2 and A/F2 performance. The new branch concept, received the licence needed to acquire VÅR from Moody’s and Fitch IBCA, respectively. incorporating a higher degree of self-service, Gruppen ASA.The takeover became effective The results, which were identical with ratings was implemented at the head office in from 1 January 2000.As planned, SpareBank 1 accorded to the other three large SpareBank 1 Kaigaten and in Sogndal in the fourth quarter. Vest has taken over the banking activities of banks, will strengthen the bank’s funding The new concept will be introduced at a the Vår Group in Bergen and this has resulted position in the international capital markets. further 8 branches in 2001. in the transfer of loans totalling around NOK 1 200m and deposits in the order of NOK During the fourth quarter, SpareBank 1 Vest At year-end, there were 64 branches, the same 400m, as well as 23 new employees. Under the took up a new subordinated loans of NOK as in 1999. financial settlement, SpareBank 1 Vest paid 250m on satisfactory terms. In the retail sector, SpareBank 1 Vest’s share of NOK 43.9m in excess of book values on the the market for loans and deposits stands at takeover in November. This relates to 22% and 29% respectively. This reflects a rise unrealised gains in the customer portfolios Retail and corporate markets of 1% point for lendings and a moderate and goodwill. In line with its vision, "Focusing on Customers increase for deposits, and the figures also and Strength", further steps were taken to include the portfolios taken over from the Vår As part of the takeover, under which the improve the bank’s internal organisation in Group. Norwegian Federation of Trade Unions 2000, and the bank’s renommé in the acquired a shareholding in SpareBank 1 marketplace was further enhanced through Surveys of customer satisfaction show that Gruppen AS, SpareBank 1 Vest’s shareholding positive profiling in the media. customers across the board are very satisfied was reduced to 13%. This gave a net gain of with SpareBank 1 Vest as their banking partner. NOK 26m on long-term shareholdings. In the retail and corporate markets the bank Areas of customer service have been identi- has a total of 250 000 customers, and this in fied where there is room for improvement, SpareBank 1 Vest’s share of the results posted conjunction with a high level of activity in the and appropriate measures are in preparation. by SpareBank 1 Gruppen AS are incorporated housing market, is reflected in the growth in A comparison with other SpareBank 1 banks in the accounts. The effect for 2000 was a lendings, deposits and transactions. The shows that there is still scope for SpareBank 1 negative contribution of NOK 10m. SpareBank growing savings market was earmarked for Vest to increase its sales to the existing 1 Vest’s share of the results posted by Vår special attention in 2000.At the same time, the customers. Gruppen ASA for the period 01.01. – popularity of the online banking service The increased focus on the corporate market 30.09.2000 is incorporated in the bank’s continued to grow, and at year-end there in recent years has strengthened the bank’s equity in the reserve for valuation variances roughly 27 000 customers were using this position in this segment. Our share of the which has been credited with NOK 21m. service, against 15 000 in 1999. A new online product - NetBank 1.0 - is to be launched in market for loans and deposits in this area The SpareBank 1 alliance engaged in extensive the spring of 2001, providing the bank’s stands at approximately 10% and 11%, activities in 2000. In addition to the acquisiti- customers with an extended and improved respectively, reflecting an increase for loans on of the Vår Group, involving the takeover of range of services. and a marginal reduction for deposits. regional banking activities, it is intended that The bank’s lendings relate mainly to instalment The Customer Service section provided the regional insurance business, including loans, while the vast bulk of the increase in increased accessibility and a broader range of management and sales functions, will be deposits relates to wholesale deposits. transferred to the alliance banks in the first services in 2000. The number of customers quarter of the current year. While this will using Customer Service increased greatly The retail segment showed a profit of around mean increasing the workforce of SpareBank 1 during the year, and surveys of customer NOK 615m, before costs and losses, against Vest by about 45, it also presents considerable satisfaction showed that the customers were NOK 564m in 1999, while profits in the income potential. very satisfied with the bank’s range of corporate segment totalled roughly NOK telephone-based services. Customer Service 224m, compared with about NOK 229m in In addition to the ongoing data processing received almost one million calls in 2000. 1999.

15 SPAREBANK 1 VEST ANNUAL REPORT 2000

BOARD OF DIRECTORS’ REPORT 2000

Risk and internal control the bank’s aggregate foreign currency position regarded as entailing a risk that is above The bank’s operations are exposed to a (the aggregate of all currencies) cannot average. number of risks, and an overall assessment of exceed 30% of the bank’s eligible capital base. risk is carried out each year. Through annual The corresponding amount in NOK in any The bank’s net losses in 2000 corresponded to confirmation procedures related to the one currency cannot exceed 15% of the bank’s 1.16% of the loan portfolio, and only a Board’s overall risk assessment the bank eligible capital base. SpareBank 1 Vest has set moderate rise in net losses is expected in ensures that internal controls aimed at major the limits at 20% and 10%, respectively, and the 2001. In a longer perspective, the loss ratio areas of risk in the bank’s areas of activity are bank has a moderate foreign currency position may rise to 0.5% of the portfolio. In the reviewed and confirmed. Major deviations are which corresponded to NOK 46m at year- corporate market, the losses are expected to reported and remedial action is taken. end. arise in areas with a medium to high risk, with a preponderance of high risk items. In the The bank focuses risk in relation to strategy, Stockmarket investments relate largely to retail market, only marginal losses are financial activities and operations.The financial listed Norwegian companies. The maximum expected in the same categories. risk is made up of the liquidity risk, the market exposure has been set at NOK 300m, in terms Operational risk is defined as the risk of risk and the credit risk, while the market risk of market value, and the actual exposure at errors of commission or omission, as well as itself reflects the bank’s exposure to changes year-end 2000 was NOK 108m. A stop-loss the risk of losing key personnel. This risk is in interest rates, foreign exchange rates and limit has been introduced at portfolio level, covered through internal control, systems share prices. and also for the level of exposure in individual testing and audits, and by raising the level of industries and stocks. expertise. The risk is considered to be at an The strategic risk is determined by the bank’s acceptable level. ability to maintain the correct operational The credit risk is monitored through default focus and by the expertise at Board level and reports, risk classification and branch analyses. The conversion to EDB Fellesdata in the in the everyday management of the bank’s The bank has extensive regulations for credit spring of 2001 entails a considerable affairs. The risk is revealed through the assessment and the management of credit risk operational risk, and the project risk is ongoing process of discussion and deliberation based on an adopted credit policy which is evaluated on a continuous basis. Conversion within the Board and the management, and reviewed annually. Great importance is will only be effected if the risk is at an through periodic assessments. attached to credit control and monitoring of acceptable level. doubtful debts. Due account of the credit risk The bank’s financial risk is identified and is taken in the pricing of loans and credit. The Board is of the view that the bank’s managed through monthly reports based on methods and management systems for dealing limits set by the Board. The risk limits are The Board underlines the importance of with risk are appropriate. reviewed by the Board once a year, or more keeping the credit risk at a moderate level. often if required. Gross defaulted loans corresponded to 1.1% Allocation of profits – Parent Bank of the portfolio at year-end, the same as the SpareBank 1 Vest has moderate liquidity After estimated taxes of NOK 91m, the figure for 1999. Defaults are at a level defined parent bank’s profit for the year amounted to exposure.The funding ratio (ratio of customer by the bank as acceptable. deposits to lendings) is around 68%, which is NOK 239m which the Board proposes to regarded as satisfactory. As regards funding In 1999 the bank introduced a new risk allocate as follows: sources other than customer deposits, a classification system for the retail and Dividend of maximum of NOK 1.5bn is permitted to have corporate markets. In the corporate market, NOK 12 per PCC NOK 30 million a maturity of 7 days of less, while volumes in 5% of the loan portfolio was considered to excess of NOK 3bn are required to run for at have a high risk at the end of 2000. This Transfer to reserve for least three months. represents a reduction of one percentage valuation variances NOK 18 million point in the course of the year. In the medium Interest rate exposure relates mainly to the Transfer to Sparebankens risk category there was a rise of one Group’s portfolio of interest-earning percentage point. Loss provisions have been capital fund NOK 176 million securities. Loans and deposits on fixed terms made where considered necessary. Real are of less significance for the interest rate Transfer to gift fund NOK 15 million estate, shipping and the wholesale and retail risk.Throughout the year the bank was within trade are the largest individual branches in the Total allocation NOK 239 million the parameters set for interest rate exposure. corporate market. Commitments in excess of These parameters are based on the maximum The dividend for 2000 will be paid to the NOK 20 million account for 45.6% of the total effect on profits resulting from a parallel owners of primary capital certificates on 30 portfolio in the corporate market. change of one percentage point in the interest March 2001, based on the number primary rate curve and relate mainly to defined A moderate rise in the risk attaching to the capital certificates registered in the securities portfolios. With the exception of corporate is envisaged in 2001. This applies Norwegian Registry of Securities on 15 March securities to be held until maturity, the especially to industry and building and 2001. maximum effect on profits has been set at construction where the bank’s exposure is The dividend is consistent with the bank’s NOK 50m. The net interest rate exposure at low. High risk commitments in these branches dividend policy. The dividend policy was year-end 2000 was NOK 18.5m. involve sums lower than the portfolio average. adjusted in 2000 and is as follows: Norges Bank’s foreign exchange regulations The risk in the retail market is considered to "The financial objective of Sparebanken Vest’s set the parameters for the bank’s maximum be moderate, with only a marginal rise activities is to achieve results which provide a foreign exchange exposure. In kroner terms, envisaged in 2001. Only 2% of the portfolio is satisfactory return on total capital employed.

16 SPAREBANK 1 VEST ANNUAL REPORT 2000

BOARD OF DIRECTORS’ REPORT 2000

The dividend on primary capital certificates SpareBank 1 Vest expects to see reduced application to be reorganised as public limited shall reflect the bank’s financial results. demand for loans in 2001, and growth in company and the changes in the regulatory deposits is also expected to be down on last environment for primary capital certificates Payment of a competitive cash dividend is a year. We are also prepared for a rise in the introduced in 2000, there is a need to priority for Sparebanken Vest." level of losses and loan defaults, but specific reconsider the suitability of primary capital assessments indicate a modest rise in net certificates as an equity instrument in the Governors and management losses. future.The Board wishes to have the views of In the elections in April 2000 Kjellaug Kvåle the Norwegian Association of Savings Banks Competition in the finance market will be was elected chairman of the Board of before it takes any final decision in this matter. even more intense in 2001, and the process of Governors. Pål W. Lorentzen was elected Whether or not the savings banks are restructuring within the industry is still not chairman of the Board of Directors, and Erik permitted to reorganise as limited companies, complete. Bøckmann was elected to the Board of it is the view of the Board that SpareBank 1 Directors. Bjørg Nævdal was elected chairman SpareBank 1 Vest is well placed to achieve its Vest will best be able to carry out its regional of the Control Committee. objectives in 2001. The bank has a large functions as an independent bank by continuing to build on its present corporate Changes were made to the Group manage- customer base, a sound capital base, a good form. ment in the fourth quarter. Deputy managing reputation in the market, a broad range of director Terje Mjelde assumed responsibility products, loyal and proficient personnel, and The bank expects to achieve a return on for the bank’s activities related to the strong local roots which we plan to exploit equity of 12%, after tax, in 2001. This is SpareBank 1 alliance, while controller Frode further to promote sales to both present and considered to be satisfactory, but it assumes Høyland assumed overall responsibility for the new customers.A number of initiatives will be that there are no unforeseen developments in Controller/Finance function. In addition, the continued and started to increase the focus on interest rates or operating conditions, or in head of the bank’s legal department, Pål sales based on the bank’s core values, vision, the level of resources required in the change Pedersen, was authorised to attend all objectives and strategies, including sales over to a new provider of data processing meetings of the Group management team. training, more specialist positions in the area services. of savings and investment, the broad introduction of a new branch concept and a Vote of thanks to business associates, Prospects new and improved online banking service. elected representatives and employees Centrally placed forecasters predict a gradual 2000 was a very satisfactory year for the bank. On the distribution side, SpareBank 1 Vest slow-down of Norwegian economic growth in It was also a year which called for a great reor- expects to harvest the benefits of greater 2001.The process started in the second half of ganisational willingness and ability throughout efficiency and cost savings in 2001.At the same 2000, and an average of the estimates from the organisation. The support and loyalty of time, we shall be aiming to increase product Norges Bank, the Central Bureau of Statistics, the bank’s customers, along with the sound sales to our existing customers. the Ministry of Finance and the Norwegian contribution made at all levels within the Financial Services Association indicate a Another area of special attention for organisation, were prevailing features of 2000. decline in the growth of GNP and lower SpareBank 1 Vest will be completion of the private consumption in 2001. The great The Board wishes to express its thanks and process of integrating Vår Bank og Forsikring uncertainty is how oil prices will develop, as appreciation to all customers, business in the course of the year. At the same time, well as the level of domestic and international associates, elected representatives and there will be a continuing focus on the interest rates. Interest rates are likely to employees for very good cooperation in 2000. establishment of a common technological remain at their present level in Norway for platform for the Sparebank 1 banks. For further information, please refer to the the foreseeable future, with the possibility of annual accounts and the notes to the some decline towards the end of the year. As a consequence of Gjensidige NOR’s accounts.

Bergen, 31 December 2000 15 February 2001

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

Helen Nordeide Fløisand Eli Førde Aarskog Terje Kvamme

Knut Ravnå Managing Director

17 SPAREBANK 1 VEST ANNUAL REPORT 2000

PROFIT AND LOSS ACCOUNT

P ARENT BANK NOTES GROUP 1998 1999 2000 NOK million 2000 1999 1998 1 564 1 951 2 085 Interest income etc. 1 2 080 1 946 1 559 914 1 228 1 333 Interest expenses etc. 2 1 329 1 227 912

650 723 752 Net interest and credit commission income 751 719 647 Dividends and other income from securities 21 26 20 with a variable return 3 (4) 23 12 173 200 227 Commissions and fees receivable on banking services 4 227 200 180 62 67 64 Commissions and fees payable on banking services 5 64 67 62 Net change in value of and gain (+)/loss (-) (125) 98 13 on foreign exchange and short-term securities 6 13 98 (125) 754Other operating income 7 66 27 31 14 262 200 Net operating income 238 281 36

664 985 952 Profit before operating expenses 989 1 000 683 412 457 462 Salaries and general administration expenses 8 481 476 434 36 37 41 Depreciation of fixed and intangible assets 9 45 40 40 83 84 108 Other operating expenses 10 115 75 76 531 578 611 Operating expenses 641 591 550

133 407 341 Profit before losses and write-downs 348 409 133 85943Losses on loans and guarantees etc. 11 43 59 8 (Write-downs)/reversal of write-downs and gain/(loss) (5) 134 32 on long-term securities 12 33 134 (5)

120 482 330 Pre-tax profit 338 484 120 52 124 91 Taxes 13 99 126 52

68 358 239 Profit for the year 239 358 68

Transfers and allocations

Transfers 31 Transferred from reserve for valuation variances Transferred from other equity 1 3 31 Total transfers 13

71 359 239 Profit for allocation 239 359 71

Allocation of profit (13) (55) (30) Dividend on primary capital certificates (30) (55) (13) 00(18) Transferred to reserve for valuation variances (57) (289) (176) Tansferred to Sparebanken capital fund (176) (289) (57) (1) (15) (15) Gifts for the public benefit (15) (15) (1) Transferred to other equity (18) (71) (359) (239) Total allocations (239) (359) (71)

18 SPAREBANK 1 VEST ANNUAL REPORT 2000

BALANCE SHEET

P ARENT BANK NOTES GROUP 1998 1999 2000 NOK million 2000 1999 1998 ASSETS 253 651 310 Cash and deposits with central banks 310 651 253 241 Instruments of debt refinanceable with central banks 241 602 144 1 359 Loans to and deposits with credit institutions 14 1 359 144 602 20 663 22 730 26 686 Total loans before specified and unspecified loss provisions 16,17 26 610 22 650 20 580 (199) (177) (178) Specified loss provisions 20 (178) (177) (199) (84) (125) (160) Unspecified loss provisions 20 (160) (125) (84) 20 380 22 428 26 348 Loans to and receivables from customers 15 26 272 22 348 20 297 004Assets acquired 25 4 0 0 Commercial paper, bonds and other interest-earning 1 319 2 153 1 780 securities with a fixed return 26 1 780 2 153 1 319 Shareholdings, investments and other securities 485 262 171 with a variable return 29 171 262 490 151 200 342 Shareholdings in jointly controlled companies 30 342 200 152 51 51 53 Shareholdings in subsidiaries 30 41 25 46 Intangible assets 35 39 23 39 179 182 193 Fixed assets 36 288 280 281 19 50 58 Other assets 61 47 26 169 146 230 Prepayments and accrued income 39 231 147 160 23 649 26 292 31 135 Total assets 31 098 26 255 23 619

LIABILITIES AND EQUITY 1 600 3 392 3 616 Loans and deposits from credit institutions 40 3 616 3 392 1 600 14 665 15 788 17 828 Deposits from and debt to customers 41 17 782 15 742 14 629 4 875 4 117 6 045 Securitised debt 43 6 045 4 117 4 875 345 542 621 Other liabilities 44 630 551 351 157 148 225 Accrued expenses and prepaid income 225 149 157 48 37 32 Provisions for expenses and commitments 45 32 37 48 380 401 693 Subordinated loan capital 47 693 401 380 22 070 24 425 29 060 Total liabilities 29 023 24 389 22 040

250 250 250 Shares capital/primary capital certificates 48 250 250 250 222Share premium reserve 4 4 4 252 252 252 Paid-up equity 254 254 254

16 15 101 Reserve for valuation variances 1 311 1 600 1 722 Sparebanken capital fund 1 722 1 600 1 311 Other equity 99 12 14 1 327 1 615 1 823 Retained earnings 1 821 1 612 1 325

1 579 1 867 2 075 Total equity 49 2 075 1 866 1 579

23 649 26 292 31 135 Total liabilities and equity 31 098 26 255 23 619

1 075 1 160 1 677 Assets denominated in foreign currency 1 677 1 160 1 075 1 432 2 807 2 686 Liabilities denominated in foreign currency 2 686 2 807 1 432

OFF-BALANCE SHEET ITEMS Contingent liabilities 566 534 593 Guarantees 51 593 534 566 798 2 000 1 990 Mortgages 51 1 991 2 001 799 20 17 16 Joint and several liability 16 17 20

Commitments 2 272 2 998 2 108 Foreign currency purchase agreements 2 108 2 998 2 272 1 842 1 307 1 058 Foreign currency sale agreements 1 058 1 307 1 842

19 SPAREBANK 1 VEST ANNUAL REPORT 2000

STATEMENT OF CASH FLOWS

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 Cash flow from operations 68 358 239 Profit for the year 239 358 68 36 37 44 Ordinary depreciation 48 40 40 85943Loans on losses and guarantees etc. 43 59 8 (14) (70) (45) Provision for dividends and gifts for the public benefit (45) (70) (14) 98 384 281 Net cash flow from operations 285 387 102

Cash flow from investment activities (92) 458 (1 216) Net change in loans to and deposits with credit institutions (1 223) 458 (91) (2 081) (1 985) (3 907) Net change in instalment loans to customers (3 912) (1 988) (2 084) (17) (82) (49) Net change in credit facilities utilised (49) (81) (17) (13) 19 36 Change in loss provisions 36 19 (13) 00(3) Change in repossessed assets (3) 0 0 (8) (59) (43) Losses on loans and guarantees etc. (43) (59) (8) 5 222 91 Net change in shareholdings and investments in other enterprises 91 226 5 (1) (834) 373 Net change in other short-term securities 373 (834) (1) (1) (40) (130) Net change in securities (128) (46) (2) 411Disposal of fixed assets 9 1 5 (48) (40) (56) Purchase of fixed assets (57) (41) (49) (32) (1) (113) Change in other receivables (113) 8 (32) (2 284) (2 341) (5 016) Net cash flow from investments (5 019) (2 337) (2 287)

Cash flow from financing activities 2 031 1 123 2 040 Net change in customer deposits 2 040 1 112 2 032 457 1792 224 Net change in deposits from Norges Bank and other credit institutions 224 1 792 457 14 21 292 Net change in subordinated loan capital 292 21 14 (225) (757) 1 928 Net change in bond debt 1 928 (757) (225) (55) 176 151 Change in other debt 150 180 (57) 2 222 2 355 4 635 Net cash flow from financing activities 4 634 2 348 2 221

36 398 (100) Net cash flow in period (100) 398 36

36 398 (100) Net change in cash and cash equivalents (100) 398 36 217 253 651 Liquid assets at 1 January 651 253 217 253 651 551 Liquid assets at 31 December 551 651 253

20 SPAREBANK 1 VEST ANNUAL REPORT 2000

A CCOUNTING PRINCIPLES

GENERAL participants exercise joint control of the presumption that the hedged objects and the The accounts have been prepared in activity. No single participant has a deciding hedging instrument are specifically included as accordance with current accounting influence. part of a hedging portfolio. Gains and losses legislation, relevant regulations and are recorded when hedging ends. generally accepted accounting practice. The jointly controlled activities of the All amounts are stated in NOK million, Sparebank 1 Group are valued on the basis of In making portfolio assessments for unless stated otherwise.All information the equity method since the activities of the accounting purposes, the bank’s assessment is contained in the notes relates to the Sparebank 1 Group are substantially different based on an overall degree of correlation Group, unless stated otherwise. from the bank’s other activities, and using the in values such that the total portfolio risk is gross method would require accounting infor- deemed to have been reduced.There is also a FULL CONSOLIDATION mation that is not readily available. presumption that the investment strategy in The consolidated accounts comprise force entails management of the risk and that Sparebanken Vest and subsidiaries where the RECORDING OF the ongoing management of investments of parent bank directly or indirectly owns 50 per INCOME AND EXPENSES this kind is carried out in such a way that the cent of the shares or more, or is able to Interest and commissions are included in the risk is deemed to have been reduced. control the company’s operations. A summary profit and loss account when earned as Portfolios of this kind are valued at the lower of consolidated companies is shown in note income or incurred as expenses. Fees that are of aggregate fair market value and the 33. Uniform accounting principles are applied direct payment for services rendered are aggregate acquisition cost of each portfolio. to all companies included in the consolidated taken to income when paid.The entire amount accounts. All internal transactions and inter- of loan establishment fees is taken to income SECURITIES company accounts payable and receivable are in the year of establishment when they are Shares: eliminated. considered to cover the loan establishment Shares and investments in joint stock costs. companies, general partnerships and limited On the acquisition of subsidiaries the cost partnerships are divided as follows: price of the shareholding in the parent Prepaid income and accrued expenses payable *Trading portfolio company is eliminated against the equity of at year-end are accrued and entered as a * Long-term investments the subsidiary at the date of acquisition. The liability, while accrued income receivable is *Investments in general and difference between the cost price and the net recorded in the balance sheet under accounts limited partnerships book value at the date of acquisition is added receivable. *Investments in subsidiaries, associated to the assets to which the surplus value companies and jointly controlled activities. relates, within the market value of these Dividends are stated as income in the year assets. Any part of the cost price that cannot they are received, except for dividends from Shareholdings and investments included in the be added to specific assets represents good- subsidiaries, associated companies and jointly trading portfolio are valued at fair market will. Goodwill is amortised on a straight line controlled activities which are included in the value on the balance sheet date where basis over the period in which the benefits of share of the profit for the year in the they are traded on a stock exchange or in a goodwill are expected to accrue. accounts. regulated market and are broadly and easily traded. Shares and investments included in the In the case of new acquisitions, the subsidiary In calculating gains/losses on sales of shares, trading portfolio but which are not eligible for is consolidated from the time when a bonds and commercial paper the average cost a market valuation, are valued at the lower of controlling interest is held. Subsidiaries sold method is used. cost and actual value. are included up to the date of disposal. RISK MANAGEMENT Long-term shareholdings are valued at SUBSIDIARIES Risk management relates to both hedging and acquisition cost. If the real value of a share- Subsidiaries and associated companies are portfolio assessment. Assessment for hedging holding is lower than cost, and the fall in value valued on the basis of the equity method in purposes is applied to the bank’s holdings is not deemed to be temporary, the share- the company accounts. The parent company’s of fixed interest lendings and fixed interest holding is written down to its real value. If share of profits is based on the subsidiaries’ deposits. This hedging portfolio also includes there is no longer a need to write down the profits after tax and after deducting internal financial instruments in the balance sheet and value of a shareholding, the write-down shall gains and any amortisation of goodwill arising financial derivatives. Portfolio assessment be reversed. from the cost price of the shareholding being is used for parts of the bank’s holdings of higher than the acquired share of book equity. commercial paper and bonds. Investments in limited and general partnerships are incorporated on the basis of JOINTLY CONTROLLED ACTIVITIES In assessing the hedging portfolio for the cost method. Jointly controlled activities are economic accounting purposes, the bank’s assessment is activities which are regulated by agreement based on a high degree of overall correlation The accounting treatment of investments in between the bank and one or more between the hedging instrument and the subsidiaries, associated companies and jointly participants such that the bank and the identified items hedged. There is also a controlled companies is described above.

21 SPAREBANK 1 VEST ANNUAL REPORT 2000

A CCOUNTING PRINCIPLES

Commercial paper and bonds rate and foreign exchange exposure and to court judgment, or if the bank has terminated Commercial paper and bearer bonds are take positions in the interest rate and foreign debt collection procedures or has otherwise divided as follows: exchange markets. There instruments relate renounced the commitment or its share *Trading portfolio to forward foreign exchange transactions, thereof. * Other short-term investments interest rate swaps, forward rate agreements * Hedging portfolio (FRAs) and quoted interest rate futures. Specified loan loss provisions. The port- * Bearer bonds to be held until maturity Interest rate related and foreign exchange folio of loans and guarantees is assessed transactions are classified either as hedging continuously. The assessment considers the Commercial paper and bonds investments transactions or as trading transactions when debtor’s debt-servicing ability and the value of included in the trading portfolio are valued at they are made. the loan security. If this shows that a loss may fair market value on the balance sheet date be expected, the loss is entered in where they are traded on a stock exchange or Hedging transactions are entered into the accounts and the amount is included in in a regulated market and are broadly and in order to guard against existing interest rate specified loan loss provisions. easily traded. or foreign exchange exposure. There must therefore be a high degree of negative The amount of the loan loss provision takes Other short-term bearer bonds and correlation with regard to value changes account of the value of the security and the commercial paper not included in the trading between the hedging instrument and the debtor’s financial position. The security is or hedging portfolio are valued collectively at hedged object The hedging instrument is assessed at market value less selling expenses the lower of the portfolio’s aggregate market valued in connection with the item hedged. at the date of calculation. value and cost. This portfolio also includes securities which are linked to a re-purchase Trading transactions are transactions Unspecified loan loss provisions are agreement. entered into for own account in order assessed in relation to the private market and to make a profit by exploiting price branches within the corporate market. Bearer bonds and commercial paper differentials and price changes. Open positions This assessment is made on the basis of classified as hedging transactions are valued in in this category are valued on the basis of the composition of the portfolio, historical connection with the underlying item. Income the market value principle.This means that we experience and general lines of development. and expenses from securities of this kind are calculate the profit or loss that would arise if The provisions are intended to cover possible posted in conformity with the underlying we had if we had covered our foreign losses. Due account is also taken of the low items hedged. exchange and interest rate exposure on all risk premium attaching to the portfolios. open positions at the date of assessment.The Bearer bonds to be held until maturity are calculated profit or loss on open positions can Loan loss provisions are deducted from the assessed at cost and adjusted to take account therefore be incorporated in the accounts on bank’s total lendings, while loss provisions for of any amortisation of premiums or discounts. a continuous basis, even if the position has not guarantees appear as a liability in the balance The bonds are written down only to the been finally closed. sheet. extent that their redemption is a matter of uncertainty. Any premium at the time of LOANS AND GUARANTEES REPOSSESSED ASSETS purchase is accrued over the residual maturity Loans and losses are assessed at nominal Repossessed assets are stated separately in of the bond as a correction of the current value, except for potential loan losses and the balance sheet and are assessed at yield at year-end. non-performing loans. the lower of cost and realisable value. Any changes in value are reflected in the figure for FOREIGN EXCHANGE Non-performing loans. A loan or losses on a continuous basis. Receivables and accounts payable denomina- guarantee is considered to be non-performing ted in foreign currency are translated at the if the debtor has failed to service the debt FIXED ASSETS middle rate on the Oslo Stock Exchange at as planned, or if framework credits are not In the balance sheet fixed assets are the balance sheet date. Income and expenses covered. Commitments which have been in entered at cost less accumulated ordinary denominated in foreign currency are default for more than 90 days are, in any event, depreciation. Ordinary depreciation is based translated into Norwegian kroner at the rates classified as non-performing. If a default on the cost price and is calculated using the prevailing on the date of the transaction. situation arises, accrued interest and straight line method of depreciation based on Foreign exchange items are mainly hedged by commissions are reversed from 1 January in the economic life of the assets. ensuring that there are corresponding items the accounting year, and further recording on the other side of the balance sheet, or of interest and commissions is entered as Ordinary depreciation for the year is posted through off-balance sheet hedging items. specified loan loss provisions. under operating expenses.

INTEREST RATE RELATED AND Actual loan losses are charged in the If the actual market value is significantly lower FOREIGN EXCHANGE INSTRUMENTS accounts in the case of bankruptcy, confirmed than book value and the decrease in value is The bank uses different off-balance sheet debt settlement proceedings, failure to receive not considered to be temporary, the asset is financial instruments to manage its interest a court order for attachment of property, a written down to the actual market value.

22 SPAREBANK 1 VEST ANNUAL REPORT 2000

A CCOUNTING PRINCIPLES

Write-downs of this kind are posted in the The tax charge in the profit and loss account pensions) and the balance on the insurance profit and loss account under ”Write-downs includes both the tax payable for the period fund and the pension premium fund.The figure and gains/losses on long-term securities”. If and the change in deferred tax. Deferred for net pension commitments corrected there is no longer a need to write down the tax/deferred tax assets are calculated at a tax for deviations from estimates and changes in item, the write-down shall be reversed. rate of 28% on the basis of temporary diffe- pension assumptions appears in the balance rences which can be presumed to arise in the sheet. Deviations and changes of this kind are LIABILITIES future between profits stated in the accounts measured against the larger of gross pension Bonds issued are stated in the balance sheet and the profits computed for tax purposes, commitments and total pension funds. If the at nominal value, adding any premium and and taking account of any loss carried forward deviations/changes exceed 10% of the basis of deducting any discount. Premiums are taken with tax effect at the end of the financial year. measurement, the difference is amortised to income and discounts are charged as an Temporary timing differences which are over the average remaining period for accrual adjustment of current interest expenses reversed or can be reversed in the same of pension rights. until the bond matures. Subordinated loans period are netted against each other and denominated in foreign currency are valued at entered net. The pension charge for the year is stated net the higher of the drawdown rate and the rate in the profit and loss account under ”Salaries at year-end. PENSION COMMITMENTS and general administration expenses”. The bank’s net pension commitments are TAXATION calculated and posted as a long-term liability in Deferred tax and deferred tax assets are the accounts. Net pension commitments AREAS OF ACTIVITY treated in accordance with the preliminary are the difference between gross pension Sparebanken Vest regards its banking activities Norwegian standard for income tax. commitments (the present value of future as a single area of activity.

23 24 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 1 Interest income etc.

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 32 38 40 Interest etc. on loans to and deposits with credit institutions 40 38 32 1 450 1 825 1 927 Interest etc. on loans to and receivables from customers 1 922 1 820 1 445 Interest etc. on commercial paper, bonds and 82 88 118 other interest-earning securities 118 88 82 1 564 1 951 2 085 Total 2 080 1 946 1 559

Note 2 Interest expenses etc.

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 77 85 116 Interest etc. on loans from credit institutions 116 85 77 546 784 821 Interest etc. on deposits and loans from customers 817 782 544 261 315 354 Interest etc. on securities issued 354 315 261 24 23 35 Interest etc. on subordinated loans 35 23 24 (3) 12 7 Other interest and funding expenses 7 13 (3) 990Fee to Savings Banks’ Guarantee Fund 0 9 9 914 1 228 1 333 Total 1 329 1 227 912

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 2m 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 from securities with a variable return

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 12 13 6 Income from shares, investments and other securities with a variable return 6 15 12 88(10) Income from shareholdings in associated companies (10) 8 0 1524 Income from shareholdings in subsidiaries 21 26 20 Total (4) 23 12

Note 4 Commissions and fees receivable on banking services

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 777Guarantee commissions 7 7 7 135 158 163 Payment transfer charges / interbank credit charge 163 158 135 Fee on securities trading and asset management services 0 0 7 31 35 57 Other commissions and fees receivable 57 35 31 173 200 227 Total 227 200 180

Note 5 Commissions and fees payable on banking services

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 39 47 44 Payment transfer charges / BBS/EFTPOS 44 47 39 15 16 16 Payment transfer charges / interbank debit charge 16 16 15 844Other charges and fees payable 4 4 8 62 67 64 Total 64 67 62

25 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 6 Net gain/loss(-) on foreign exchange and short-term securities

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 Net change in value and gain (+)/loss (-) on commercial paper, (27) 1 (1) bonds and other interest-earning securities (1) 1 (27) Net change in value and gain (+)/loss(-) on shares (113) 84 8 and other securities with a variable return 8 84 (113) Net change in value and gain (+)/loss (-) on foreign exchange 15 13 6 and financial derivatives 6 13 15 (125) 98 13 Total 13 98 (125)

Note 7 Other operating income

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 333Real estate income 6 3 6 421Other operating income 60 24 25 754Total 66 27 31

Note 8 Salaries and general administration expenses

P ARENT BANK GROUP 1998 1999 2000 Note 2000 1999 1998 208 220 214 Salaries 229 230 217 20 Provision for restructuring 20 12 13 21 Pensions 46 21 14 13 41 38 41 Social security contributions 44 40 43 151 166 186 Administration expenses 187 172 161 412 457 462 Total 481 476 434

The average number of employees in 2000 was 737 for the parent bank and 774 for the Group. The salary to the managing director of the parent bank was NOK 1 075 447 (1999: NOK 977 431, 1998: NOK 970 606), and the calculated value of fringe benefits was NOK 100 056 (1999: NOK 102 416, 1998: NOK 93 358). Remuneration to the Board of Directors of the parent bank amounted to NOK 765 000 (1999: NOK 765 000, 1998: NOK 765 000). Remuneration to the Board of Governors of the parent bank amounted to NOK 84 000 (1999: NOK 79 000, 1998: NOK 84 000). Remuneration to the Control Committee of the parent bank amounted to NOK 240 000 (1999: NOK 240 000, 1998: NOK 240 000). The Group purchased advisory services from the external auditor for NOK 542 248 (1999: NOK 467 550, 1998: NOK 526 286)

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.

Note 9 Depreciation of fixed and intangible assets

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 36 37 39 Ordinary depreciation 43 40 40 2 Write-downs 2 36 37 41 Total 45 40 40

26 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 10 Other operating expenses

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 566Real estate operating expenses 11 10 8 39 41 42 Office rental and other running costs 32 28 28 11 11 10 Fixed assets charged against income 10 11 11 28 26 50 Other operating expenses 62 26 29 83 84 108 Total 115 75 76

The external audit fee for the parent bank for 2000 was NOK 480 000 (1999: NOK 480 000, 1998: NOK 490 000) and NOK 550 000 (1999: NOK 550 000, 1998 560 000) for the Group.

Note 11 Losses on loans and guarantees etc.

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 95943Loan losses 43 59 9 (1) 0 0 Losses on guarantees etc. 0 0 (1) 85943Total 43 59 8

Total losses on loans and guarantees charged in the period Increase in loss provisions on commitments 5314 specifically provided for previously 14 3 5 Loss provisions on commitments not specifically 34 42 44 provided for previously 44 42 34 (23) (20) (39) Reduction in previous years’ loss provisions (reversal) (39) (20) (23) 04127Increase in unspecified loss provisions 27 41 0 000Reduction in unspecified loss provisions 0 0 0 18 16 13 Realised losses on commitments not provided for previously 13 16 18 (26) (23) (16) Recoveries on losses realised previously (16) (23) (26) 85943Total 43 59 8

Realised losses Realised losses on commitments specifically 30 48 34 provided for previously 34 48 30 18 16 13 Realised losses on commitments not provided for previously 13 16 18 48 64 47 Total 47 64 48

Note 12 Gains on long-term securities

The following gains have been taken to income on securities classified as fixed assets: Reduced shareholding in Sparebank 1 Gruppen through a private placing in this company in favour of the Norwegian Federation of Trade Unions and affiliated associations.The bank regards this as a transaction and has calculated and posted a gain of NOK 26.9m.

27 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 13 Taxes

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:

P ARENT BANK 2000 1999 1998 Pre-tax profit 330 481 123 +/- permanent differences1) 6 (52) 2 +/- change in timing differences asspecified below 44 (59) 52 Tax base for the year / taxable income 380 371 178

Od which assessed tax at 28% 106 104 50 - Credit for dividends received (8) (4) (4) Capital tax at 0.3% 8 6 5 Tax provision in the balance sheet 106 107 50 (Excess)/insufficient tax provision (3) 1 2 Taxes payable in profit and loss account 103 108 52 +/- Change in deferred tax (12) 16 0 Tax charge for the year 91 124 52

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).The gain arising on disposal of part of the bank’s shareholding in SpareBank 1 Gruppen AS is regarded as a permanent difference since the present value of the related deferred tax has been calculated at 0. The accounting gain was NOK 26.9m.

Why the tax charge does not correspond to 28% of the pre-tax profit P ARENT BANK 2000 1999 28% tax on pre-tax profit 93 135 28% tax on permanent difference 1 (15) Excess/insufficient tax provision in previous years (3) 1 Capital tax 86 Credit for dividends received (8) (4) Estimated tax charge 91 124

Specification of timing differences The deferred tax/tax asset is calculated on the basis of the timing differences between the accounting and taxation values at the end of the accounting year, and the tax-loss to be carried forward. Specification of the timing differences and the tax-loss carry forward, along with calculation of the deferred tax/tax asset at year-end is shown below.

P ARENT BANK GROUP Change 1999 2000 2000 1999 Change Timing differences 3 3 Investments in companies 3 3 (1) 2 1 Profit and loss account 21 2 19 (26) 18 (8) Shareholdings, primary capital certificates and owner interests (8) 18 (26) 8 (21) (13) Commercial paper, bonds and other interest-earning securities (13) (21) 8 5 (37) (32) Pension commitments (30) (37) 7 (19) (26) (45) Accounting provisions (45) (26) (19) (11) (27) (38) Fixed assets (35) (21) (14) (44) (88) (132) Total negative (-)/positive timing differences (108) (82) (26) 28% 28% Rate of tax 28% 28% (12) (25) (37) Deferred tax (tax asset) (30) (23) (7) 000Deferred tax in accounts 0 0 0

The deferred tax asset is posted in the balance sheet since income is expected in future years, or realistic tax adjustments should make it possible to utilise this asset. 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.

28 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 14 Loans to and deposits with credit institutions

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 Loans to and deposits with credit institutions 241 70 879 with no agreed term or period of notice 879 70 241 Loans to and deposits with credit institutions 361 74 480 with an agreed term or period of notice 480 74 361 602 144 1 359 Total 1 359 144 602

Geographical risk areas 120 1 37 Hordaland 37 1 120 40 0 35 Sogn & Fjordane 35 0 40 374 74 1 028 Other parts of Norway 1 028 74 374 68 69 259 Foreign 259 69 68 602 144 1 359 Total 1 359 144 602

Note 15 Loans to and receivables from customers

P ARENT BANK GROUP 1998 1999 2000 Notes 2000 1999 1998 922 975 990 Overdraft facilities 990 975 922 377 405 439 Building loans 439 405 377 19 364 21 350 25 257 Instalment loans 25 181 21 270 19 281 20 663 22 730 26 686 Total loans before specified and unspecified loss provisions 16, 17 26 610 22 650 20 580 (199) (177) (178) Specified loss provisions 20 (178) (177) (199) (84) (125) (160) Unspecified loss provisions 20 (160) (125) (84) 20 380 22 428 26 348 Net loans and receivables from customers 26 272 22 348 20 297

Loans and guarantees to senior employees (NOK 1 000), Parent Bank Loan Man. dir. Knut Ravnå 742 Dep. man. dir.Terje Mjelde 950 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 0 Board members Bjørn Ove Børnes 0 Jan O.Yttredal 866 Anne Gine Hestetun 0 Helen Nordeide Fløisand 1 146 Eli Førde Aarskog 764 Erik Bøckmann 0 Loans are given on ordinary customer terms. Employee representatives Terje Kvamme 268 Anne Sissel Raunholm Engevik 0 Loans are given on general terms. Chairman of Board of Governors Kjellaug Kvåle 0 Loans are given on ordinary customer terms. Total loans and guarantees given to employees and Board members (NOK 1 000) Parent Bank Employees 334 495 Board of Directors 1) 2 776 Group Employees 347 943 Total loans and guarantees given to other members of Board of Governors and Control Committee (NOK 1 000) Board of Governors 2) 3 383 Control Committee 361

1) Excluding managing director and employee representatives. 2) Excluding chairman of Board of Governors, Board members and employee representatives. 29 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 16 Distribution of gross loans and guarantees

2000 1999 Loans Guarantees Loans Guarantees Kroner % NOK % Distribution of loans and guarantees by sector Kroner % Kroner % 0 0.00 0 0.00 Central government 0 0.00 0 0.00 36 0.13 1 0.17 Local government 57 0.25 0 0.00 337 1.27 204 34.40 Insurance and finance 21 0.09 204 38.20 8 070 30.33 377 63.58 Commercial activity 7 205 31.81 319 59.74 18 116 68.08 11 1.85 Wage earners 15 243 67.30 11 2.06 51 0.19 0 0.00 Foreign 124 0.55 0 0.00 26 610 100.00 593 100.00 Total 22 650 100.00 534 100.00

Commercial distribution 969 3.64 3 0.51 Primary industries 951 4.20 3 0.56 2 0.01 0 0.00 Oil and gas 28 0.12 0 0.00 616 2.31 34 5.73 Industry and mining 452 2.00 81 15.17 443 1.66 80 13.49 Building and construction, power and water supply 398 1.76 71 13.30 1 061 3.99 70 11.80 Wholesale/retail trade, hotels and restaurants 910 4.02 58 10.86 952 3.58 65 10.96 International shipping and pipe transportation 795 3.51 5 0.94 748 2.80 33 5.57 Other transportation, post and telecommunications 785 3.46 33 6.18 2 770 10.41 77 12.99 Real estate operations 2 440 10.77 17 3.18 337 1.28 204 34.40 Insurance and finance 21 0.10 204 38.20 535 2.01 15 2.53 Services 477 2.10 51 9.55 10 0.04 1 0.17 Central/local government 26 0.11 0 0.00 18 116 68.08 11 1.85 Wage earners 15 243 67.30 11 2.06 51 0.19 0 0.00 Foreign 124 0.55 0 0.00 26 610 100.00 593 100.00 Total 22 650 100.00 534 100.00

Geographical risk areas 22 081 82.98 504 85.00 Hordaland 18 982 83.81 451 84.46 2 416 9.08 31 5.22 Sogn & Fjordane 2 303 10.17 27 5.05 2 062 7.75 58 9.78 Other parts of Norway 1 241 5.47 56 10.49 26 559 99.81 593 100.00 Norway - total 22 526 99.45 534 100.00 51 0.19 0 0.00 Foreign 124 0.55 0 0.00 26 610 100.00 593 100.00 Total 22 650 100.00 534 100.00

30 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 17 Gross loans and guarantees distributed by main industries and retail market

2000 1999 Gross Guaran- Poten- Default Speci- Uspeci- Gross Guaran- Poten- Default Speci- Uspeci- loans tees tial and fied fied loans tees tial and fied fied expo- other loss loss expo- other loss loss sure poten- provi- provi- sure poten- provi- provi- (unapp- tial sions sions (unapp- tial sions sions lied debts for for lied debts for for credit loans loans credit loans loans and and and and and and guarantee guaran- guaran- guarantee guaran- guaran- limits) tees tees limits) tees tees 18 116 11 461 263 90 99 Retail clients 15 243 11 668 230 88 79 49 02210Foreign (retail clients) 96 0 4 2 1 0 18 165 11 463 265 91 99 Total retail clients 15 339 11 672 232 89 79 969 3 148 41 12 0 Primary industries 951 3 104 37 9 0 1 061 114 245 44 16 0 Industry, building and construction 879 152 337 41 29 0 1 061 70 371 65 27 0 Commerce, hotels and restaurants 910 58 233 33 18 0 Transportation, real estate 5 005 190 352 80 32 0 operations and services 4 496 106 473 68 32 0 20 0000Foreign (other) 28 0 0 0 0 0 10 165000Municipal/public sector 26 0 57 0 0 0 337 204 138000Insurance / finance 21 204 278 0 0 0 00 00061 Commercial sector 0 0 0 0 0 46 8 445 582 1 319 230 87 61 Total commercial sector 7 311 523 1 482 179 88 46 26 610 593 1 782 495 178 160 Total 22 650 534 2 154 411 177 125

Note 18 Non-performing, doubtful and non-accruing commitments Non-performing commitments provided for (over 1 month) Non-performing commitments over NOK 1 000 per account

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 Retail market 187 170 205 Gross non-performing commitments 205 170 187 (60) (57) (64) Specified loss provisions (64) (57) (60) 127 113 141 Net non-performing commitments 141 113 127 32% 34% 31% Retail market percentage provided for 31% 34% 32%

Commercial market 112 84 88 Gross non-performing commitments 88 84 112 (46) (27) (32) Specified loss provisions (32) (27) (46) 66 57 56 Net non-performing commitments 56 57 66 41% 32% 36% Commercial market percentage provided for 36% 32% 41%

Performing commitments provided for Retail market 44 62 60 Performing commitments provided for 60 62 44 (34) (32) (27) Specified loss provisions (27) (32) (34) 10 30 33 Net performing commitments provided for 33 30 10 77% 52% 45% Retail market percentage provided for 45% 52% 77%

Commercial market 97 95 141 Performing commitments provided for 141 95 97 (59) (61) (55) Specified loss provisions (55) (61) (59) 38 34 86 Net performing commitments provided for 86 34 38 61% 64% 39% Commercial market percentage provided for 39% 64% 61%

Non-accruing commitments 157 134 183 Non-performing commitments where interest is no longer posted 183 134 157 978Interest accrued but not posted 8 7 9

31 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 19 Total non-performing and other doubtful debts

2000 1999 1998 1997 1996 Gross non-performing loans 293 254 299 254 292 Specified loss provisions (96) (84) (106) (109) (119) Net non-performing loans 197 170 193 145 173

Other doubtful debts (gross) 201 157 141 226 311 Specified loss provisions (82) (93) (93) (103) (119) Other doubtful debts (net) 119 64 48 123 192

Note 20 Loss provisions Changes in specified/unspecified loss provisions during the year

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 214 200 177 Specified provisions to cover losses on loans and guarantees at 1 January 177 200 214 (30) (48) (34) Realised losses on loans specifically provided for previously (34) (48) (30) 5314 Increase in provisions for loans specifically provided for previously 14 3 5 34 42 60 Provisions for loans not specifically provided for previously 1) 60 42 34 (23) (20) (39) Reduction in previous years’ provisions (reversal) (39) (20) (23) Specified provisions to cover losses on loans 200 177 178 and guarantees at 31 December 178 177 200 84 84 125 Unspecified provisions to cover losses on loans and guarantees at 1 January 125 84 84 04135Unspecified provisions to cover losses on loans and guarantees in period 2) 35 41 0 Unspecified provisions to cover losses on loans 84 125 160 and guarantees at 31 December 160 125 84

Specified loss provisions at 31 December 2000 include a provision of NOK 0.3m related to guarantees. 1) Including NOK 16m related to the purchase of Vår Bank’s banking portfolio, with related provisions. 2) Including NOK 8m related to the purchase of Vår Bank’s banking portfolio, with related provisions.

Note 21 Change in non-accued loan interest

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 44 36 28 Interest accrued but not posted on loans in the balance sheet at 1 January 28 36 44 (6) (6) (3) Interest on loans from previous periods (3) (6) (6) Interest accrued but not posted on loans (11) (9) (7) no longer recorded in the balance sheet (7) (9) (11) 978Interest accrued but not posted on loans identified as doubtful 8 7 9 Interest accrued but not posted on loans 36 28 26 in the balance sheet at 31 December 26 28 36

32 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 22 Loans and guarantees distributed by risk group

All commercial commitments in excess of NOK 250 000, except for commitments in the agricultural sector, shall be classified by risk.All retail commitments shall be classified by risk.

Structure of risk classification system: SpareBank 1 Vest established a new risk classification system for the corporate area effective from 1 January 1999. Risk classification in the retail market took effect from 31 March 1999.

The risk classification systems for the corporate and retail amrkets 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 the client’s ability to service the debt on an ongoing basis, while the rating for collateral cover expresses how well the debt is secured. The combined rating for debt-servising ability and collateral cover is shown below, with 25 classes of risk, which themselves are divided into 5 risk groups:

Debt-servicing ability ABCDE 1A1B1C1D1E1 Collateral cover 2 A2 B2 C2 D2 E2 3A3B3C3D3E3 4A4B4C4D4E4 5A5B5C5D5E5

Risk groups

No risk Low risk Medium risk Medium-to-high risk High risk

Commitments involving activities which are a part of central government with 100% government responsibility, as well as county and local authorities, are automatically accorded an A1 rating. Commitments which are fully secured by a bank deposit or a government, county authority or local authority guarantee are automatically accorded an A1 rating.

Recently established companies are automatically accorded a D rating for their debt-servicing ability until they have presented annual accounts, while the collateral cover is assessed in the normal way.

Risk classification of corporate clients is carried out at least once a year when the client’s annual accounts are received. A new classification is amde when a new commitment is established with the same client. The doubtful part of the portfolio is continuously monitored. In the event of client-specific circumstances arising which increase the bank’s exposure, the commitment is immediately downgraded.

Risk classification of retail customers is carried out each month using the automatic rating system.

As well as providing an overview of risk exposure, the risk classification system is also used in connection with pricing of loans and guarantees.

33 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 23 Specification within risk groups

Corporate market Commitment Specified loss provisions 1999 2000 2000 1999 839 695 No risk 0 15 637 2 762 Low risk 0 0 2 953 3 765 Medium risk 7 0 3 153 1 447 Medium-t-high risk 13 7 1 216 461 High risk 41 21 518 280 Non-classified 1) 845 9 316 9 410 Total 69 88 1) Commitments not classified at 31 December 2000, but which will be classified in the course of 2001.

Retail market Commitment Specified loss provisions 1999 2000 2000 1999 3 786 4 275 No risk 0 0 10 467 11 555 Low risk 0 30 1 491 1 491 Medium risk 2 19 255 217 Medium-to-high risk 70 24 23 139 High risk 0 16 16 022 17 677 Total 72 89

At year-end, the portfolio from VÅR Bank og Forsikring had not been integrated with the risk classification system. The corporate market portfolio as defined in note 22. A commitment is defined as the total of loans and utilised credit facilities, plus unutilised credit facilities and guarantees. Unspecified loss provisions have not been allocated to individual risk groups.

Note 24 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 or a low risk, while 5% is considered to carry a high risk.The corresponding figures in the retail market are 90% and 0.8%.

A moderate rise in the risk attached to the corporate market is expected in 2001, while only a marginal increase in risk is expected in the retail market.

The bank’s net losses in 2000 corresponded to 0.16% of the loan portfolio.A slight increase in losses is expected in 2001. In a longer perspective, the level of losses could correspond to 0.5% of the portfolio.

Note 25 Assets acquired

P ARENT BANK GROUP 1999 2000 2000 1999 01Other properties 1) 10 03Securities 3 0 04Total 40

1) Including the purchase of bank portfolios with related repossessed properties totalling NOK 549 012.

34 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 26 Commercial paper, bonds and other interest-earning securities with a fixed return

Risk weight 2000 1999 1998 Commercial paper and bonds issued by public authorities 0 % 903 953 813 10 % 42 9318 20 % 23 149 302 Commercial paper and bonds issued by others 20 % 1 034 958 186 100 % 19 Total 2 021 2 153 1 319 Of which government securities presented as instruments of debt which can be refinanced in central banks (241) Total 1 780

Distribution of book values at 31 Dec. 2000 Portfolio Balance Cost Actual Real rateCurrency Listed sheet value value of return proportion Trading portfolio 522 521 522 7.49 NOK 100 Other short-term investments 1 382 1 393 1 382 7.58 NOK 100 Bonds to be held to maturity 117 112 120 6.35 NOK 100 Total 2 021 2 026 2 024

The average real rate of return is calculated by identifying the discount rate which gives a calculated value equal 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 = real rate of return

In summations, the real rate of return is calculated as a weighted total of the individual positions, weighted by the market value.

Note 27 Bonds to be held until maturity

Cost Part of Part of Book Discount Premium Nominal Market Gross discount premium value not posted not posted value value unrealised posted as posted as as income as an gain interest interest expense income expense 1998 200 1 2 199 8 4 204 210 10 1999 139 7 4 142 7 2 147 148 6 2000 112 7 2 117 6 1 122 120 3

The residual discount/premium is taken to income/charged in the accounts in equal amounts each year until maturity. The income/expense is posted as an adjustment of bond interest income. Bonds with a value of NOK 25m were redeemed in 2000 based on drawing of lots.This resulted in a loss of NOK 0.5m. 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 13 109 122

Note 28 Investments in subordinated loans

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 23 20 20 Subordinated loans posted under loans to and deposits with credit institutions 20 20 23 419Subordinated loans posted under bonds and other interest-earning securities 19 4 23 24 39 Total 39 24 23

35 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 29 Shareholdings, investments and other securities with a variable return (NOK 1 000)

Company PCC / No. of Nominal Owner- Cost Book Market share capital shares value ship % value value (NOK m) Trading portfolio (Parent Bank)

Listed: Storebrand ASA 1 387 100 000 500 0.04 5 944 6 450 Narvesen ASA 200 6 650 133 0.07 1 968 1 855 Nycomed Amersham PLC 87 60 000 36 0.04 4 289 4 350 Pan Fish ASA 64 40 000 20 0.03 2 385 2 400 Orkla Borregaard ASA 1 370 36 000 225 0.02 6 305 6 318 Norske Skog ASA 679 20 000 400 0.06 7 424 7 470 Rieber & Søn ASA 398 7 600 76 0.02 381 407 Norsk Hydro ASA 5 331 30 000 600 0.01 10 955 11 160 Tomra Systems ASA 176 25 000 25 0.01 4 405 4 375 EDB Business Partner ASA 156 30 000 53 0.03 3 042 3 060 Nera ASA 246 75 000 150 0.06 2 833 2 850 Schibsted ASA 69 25 000 25 0.04 2 734 2 800 Prosafe ASA 262 25 000 250 0.10 3 228 3 450 TGS Nopec Geophysical ASA 24 30 000 30 0.13 3 028 3 240 Smedvig ASA 83 20 000 30 0.04 1 463 1 740 Bergesen D.Y. ASA 122 30 000 75 0.06 4 161 4 230 Frontline ASA 890 15 000 296 0.03 1 670 1 778 Royal Caribbean Cruise LTD ASA 9 35 000 2 0.02 7 656 8 050 SAS Norge ASA 235 30 000 300 0.13 2 766 2 820 Sensonor ASA 378 280 000 1 400 0.37 3 045 2 800 Nortrans Offshore LTD ASA 68 27 000 95 0.14 2 030 2 025 Bergen Nordhordland Rutelag ASA 16 400 4 0.03 34 28 Hardanger Sunnhordlandske ASA 17 2 300 46 0.27 70 449 Nokia 2 302 10 000 180 0.01 3 918 3 911 Sparebanken Rogaland 749 10 000 1 000 0.13 1 906 2 470 Indre Sogn Sparebank 38 1 750 175 0.46 268 221 Sparebanken Nord-Norge 660 10 000 1 000 0.15 1 643 1 750 Sparebanken Midt-Norge 605 20 100 2 010 0.33 3 575 3 759 Book value on market value basis 96 216 Listed shares - Total 9 136 93 126 96 216 96 216

Other short-term shareholdings

Unlisted: Data Invest AS 1 142 22 860 11 0.00 1 000 1 000 1 000 Energos ASA 6 100 000 10 0.17 1 200 1 200 1 200 Axxessit ASA 3 2 000 2 0.07 2 500 2 500 2 500 Port IT AS 10 30 000 60 0.60 1 756 900 900 Genomar AS 3 100 10 0.33 850 850 850 Lexmed 3 22 000 22 0.73 330 2 2 Brann ASA 50 110 000 1 100 2.20 2 838 990 990 Sospita AS 2 47 154 5 0.25 1 081 165 165 Active ISP AS 3 50 000 5 0.17 1 970 650 650 Marine Farms ASA 8 1 000 10 0.13 501 410 410 Glenwood Venture II 1 000 783 339 0.00 1 136 1 136 Glenwood Capital Partners 10 1 095 863 0.00 517 517 Venca International Partners I 100 150 000 0.00 78 78 Book value at lower of cost and market value Total short-term shareholdings 1 235 14 026 10 398 10 398 Total short-term shareholdings (Parent Bank) 10 371 107 152 106 614 106 614

36 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 29 continue

Company PCC / No. of Nominal Owner- Cost Book share capital shares value ship % value (NOK m) Long-term shareholdings (Parent Bank)

Listed: FöreningsSparbanken AB 9 817 375 000 6 992 0.07 48 462

Unlisted: Bergen Industriutvikling AS 71 633 6 330 8.92 6 330 Meland Golf Klubb 10 10 200 2.00 200 Høyteknologisenteret i Bergen AS 33 312 312 0.95 56 Nygårdstangen AS 4 185 185 4.63 118 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 21 729 729 3.47 729 Vestkanten AS 26 3 112 311 1.20 228 Other unlisted companies 356 303 Total long-term holdings (Parent Bank) 23 898 61 972

Investments in general and limited partnerships etc. (Parent Bank) Kvernhuset ANS (Joint and several liability for NOK 8.3m) 8.30 21.44 279 Sambygg ANS (Joint and several liability for NOK 20.33m) 20.33 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) 171 084

Movements in long-term investments Opening balance at 1 January 2000 57 052 Bought 251 Sold (256) Reversal of previous write-downs 5 138 Write-downs (213) Closing balance at 31 December 2000 61 972

37 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 30 Other owner interests (NOK 1 000)

Company PCC / share capital No. of Nominal Owner- Book (NOK 1 000) shares value ship% value Jointly controlled activities (Parent Bank) SpareBank 1 Gruppen AS 930.00 120 952 120 952 13.0 342 427 Total jointly controlled activities 342 427

Subsidiaries Filialbygg AS 4.15 41 500 4 150 100.0 16 713 Sparebankbygget AS,Odda 0.24 126 126 52.5 22 Sparebanken Vest Holding AS 30.00 30 000 30 000 100.0 36 296 Total subsidiaries 53 031 Total owner interests (Parent Bank) 395 458

Subsidiaries (Group) Eliminated 53 031 Total subsidiaries (Group) 0 Total owner interests (Group) 342 427

None of the companies classified as jointly controlled activities have a stock exchange listing.

Note 31 Investments posted applying the equity method (NOK 1 000)

Jointly controlled activitiest: SpareBank 1 Gruppen AS. Jointly controlled activities are posted in the accounts of both the parent bank and the Group applying the equity method.

Subsidiaries: Sparebanken Vest Holding AS, Filialbygg AS, Sparebankbygget AS. The subsidiaries are posted in the accounts of both the parent bank and the Group applying the equity method.

SpareBank 1 Sparebanken Filialbygg AS Sparebank- Total Gruppen AS Vest bygget AS Holding AS Balance sheet value at 1 January 2000 199 616 38 955 12 461 22 251 054 +/- Additions in period (through share issue) 111 890000111 890 +/- Share of profits (10 219) 5 341 18 327 0 13 449 + Gain on reduction of shareholding 1) 26 900 0 0 26 900 + Share of profits from VÅR-Gruppen 01.01-30.09 14 240 14 240 - Dividends (8 000) (14 075) 0 (22 075) Balance sheet value at 31 Dec. 2000 342 427 36 296 16 713 22 395 458

Paid-in capital 257 790 30 000 6 565 126 294 481 Registered office Oslo Bergen Bergen Odda

1) In September 2000, under a private placing, the Norwegian Federation of Trade Unions and affiliated associations acquired a 10% shareholding in SpareBank 1 Gruppen AS. In the second quarter, FöreningsSparbanken AB (publ) increased its shareholding from 24% to 25%.The overall effect of this has been to reduce SpareBank 1 Vest’s shareholding from 15.2% to 13%. SpareBank 1 Vest now owns 13% of the book equity of SpareBank 1 Gruppen AS. This resulted in a gain of NOK 26.9m.The gain is non-taxable since the owner bank’s investments in the SpareBank 1 Group are of a long-term and strategic nature, and there is therefore no question of this investment being sold - and a gain thus realised in the foreseeable future.

38 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 32 Intra-Group transactions (NOK 1 000)

P ARENT BANK 2000 1999 1998 Profit and Loss Account Interest/credit commissions received from subsidiaries 4 848 5 103 4 905 Interest paid on deposits from subsidiaries 3 954 2 025 2 029 Office rental expenses 10 689 13 609 10 623 Office rental income 831 801 700 Group contribution paid 8 650

Balance Sheet Loans to subsidiaries at 31 December 76 336 80 444 83 150 Deposits from subsidiaries 46 480 44 026 33 594 Provision for dividends 22 075 4 264

Note 33 Main figures - Subsidiaries (NOK 1 000)

Profit and Loss Account Sparebanken Vest EiendomsMegler 1 Filialbygg AS Sparebank- Holding AS Vest AS bygget AS Total interest income/(expenses) 1 955 993 (4 136) (195) Total other income/(wxpenses) 4 011 36 193 41 653 866 Total operating expenses 524 33 244 11 913 510 Operating profit before losses and write-downs 5 442 3 942 25 604 161 Operating profit 5 442 3 846 25 604 161

Balance Sheet Current assets 37 493 10 014 28 244 40 Fixed assets 1 200 4 558 89 685 1 893 Total assets 38 693 14 571 117 930 1 932 Current liabilities 8 448 8 224 18 524 64 Long-term liabilities 417 83 262 2 100 Equity 30 246 5 930 16 144 (232) Total liabilities and equity 38 693 14 571 117 930 1 932

Sparebanken Vest Holding AS Bergen Sparebanken Vest Holding comprises the following companies: Eiendomsmegler1 Vest AS Bergen At the end of 2000 the company had 24 whole-time and 3 part-time employees.The company is engaged in estate agency activities in Bergen, Åsane, Fana, Laksevåg and Stord in Sunnhordland.

AS Filialbygg Bergen This company owns 6 of 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.had 9 whole-time and 2 part-time employees.

Sparebankbygget AS Odda This company owns the bank building in Odda. Sparebank1 Vest has a 52.5% shareholding in the company. At the end of 2000 the company had 2 part-time employees.

39 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 34 Jointly controlled activities

In cooperation with Sparebanken Nord-Norge, Sparebanken Midt-Norge, Sparebanken Rogaland and Samarbeidende Sparebanker AS the bank is a part-owner of SpareBank 1 Gruppen AS. Each of the parties has a 13% shareholding in the company.The Swedish FöreningsSparbanken AB (publ) also has a 25% shareholding, while the Norwegian Federation of Trade Unions and affiliated companies own 10%.The structure of control of company is regulated under an agreement between the owners.This asset is regarded as participation in a jointly controlled activity.

In the autumn of 2000 SpareBank 1 Gruppen AS received the licence needed to acquire VÅR Gruppen ASA, although the acrual transaction took place in September. Following a private placing, the Norwegian Federation of Trade Unions and affiliated associations have a 10% shareholding in SpareBank 1 Gruppen AS. In the second quarter FöreningsSparbanken AB (publ) increased its holding from 24% to 25%.As a result of these transactions SpareBank 1 Vest’s shareholding has been reduced from 15.2% to 13%. SpareBank 1 Vest now owns 13% of the book equity of SpareBank 1 Gruppen AS.

The investment in SpareBank 1 Gruppen AS is posted applying the equidy method.Together, the dilution of the shareholding and the gain arising from the increase in equity of SpareBank 1 Gruppen AS through the acquisition of VÅR Gruppen ASA, give SpareBank 1 Vest an accounting gain of NOK 26.9m in 2000.

”The gain appears appears in the profit and loss account of the parent bank under ”Gain on sale of long-term financial investments”, with a corresponding entry in the balance sheet under ”Shareholdings in other associated companies”.The entry in the profit and loss account reflects the fact that this was an equity transaction involving the reduction of a shareholding (a capital issue) which was unrelated to the ordinary income arising from ownership of associated companies.The share of profits from VÅR Gruppen ASA in the period 01.01. - 30.09 has been posted directly against equity.

Share capital Share of Company (NOK m) Shareholding voting rights SpareBank 1 Gruppen AS 930.4 mill 13 % 13 %

Sparebank1 Vest has given a subordinated loan of NOK 16.6m to SpareBank 1 Gruppen AS.The loan matures in 2006 and the rate of interest is based on 3 mth. NIBOR + 110 basis points. In connection with the acquisition of VÅR Gruppen ASA, SpareBank 1 Gruppen AS has taken up a new subordinated loan of NOK 400m, the entire amount provided by the Norwegian Federation of Trade Unions and affiliated associations.

In connection with the acquisition of VÅR Gruppen ASA, SpareBank 1 Vest has extended a loan of NOK 182m to SpareBank 1 Gruppen AS.The entire amount of the loan matures on 15 June 2005 and the interest rate is set at 6 mth. NIBOR + 0.5 percentage units p.a.

The jointly controlled activities consist of the parent company SpareBank 1 Gruppen AS, SpareBank 1 Livsforsikring AS, SpareBank 1 Skadeforsikring AS, SpareBank 1 Fondsforsikring AS, Bank 1 Oslo AS, Sparebankutvikling AS , ODIN Forvaltning AS SpareBank 1 Aktiv Forvaltning ASA, SpareBank 1 Finans AS, Enter Card AS (65%) and First Securities ASA (51%).The activities of the subsidiaries relate to banking, insurance, broking and fund management.All transactions between the bank and the subsidiaries of SpareBank 1 Gruppen are on commercial terms. Internal payments between the bank and SpareBank 1 Gruppen AS which do not relate to sales and portfolio advisory services are based on the full cost principle. The following table summarises the results of the SpareBank 1 Group.The figures are based on a preliminary forecast.

2000 Profit and Loss Account (NOK m) 100 % 13 % ODIN Forvaltning AS - profit 21.2 2.8 SpareBank 1 Livsforsikring AS - profit 83.0 10.8 SpareBank 1 Gruppen AS - loss (117.0) (15.2) SpareBank 1 Skadeforsikring AS - loss (60.0) (7.8) SpareBank 1 Fondsforsikring AS - profit (8.5) (1.1) Bank 1 Oslo AS incl. SpareBank 1 Finans AS - profit 243.0 31.6 Enter Card AS - loss (28.4) (3.7) First Securities ASA - profit 94.0 12.2 SpareBank 1 Aktiv Forvaltning ASA 00 Elimination of share of subsidiaries’ results 81.2 10.6 Minority share (40.7) (5.3) Amortisation of goodwill (64.6) (8.4) Write-down of surplus values on acquisition of VÅR (21.4) (2.8) VÅR profits credited to equity (01.01 - 30.09) (187.8) (24.4) Corrected reversal of accumulated interest at 30 Sept. 2000 32.2 4.2 Write-down of gain on sale of loan portfolio (143.1) (18.6) Group loss (117.0) (15.2)

40 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 35 Intangible assets

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 9 Goodwill 9 41 25 37 Deferred tax assets 30 23 39 41 25 46 Intangible assets 39 23 39 1 Amortisation of goodwill 2000 1 Goodwill relateto the acquisition of Vår Bank og Forsikring’s 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.

Note 36 Fixed assets

P ARENT BANK GROUP 1998 1999 2000 Notes 2000 1999 1998 83 86 105 Machinery, equipment and vehicles 37 108 89 87 96 96 88 Buildings and other real estate 37, 38 180 191 194 179 182 193 Fixed assets 288 280 281

Note 37 Investments and depreciation of fixed assets (NOK 1 000)

Parent Bank Machinery, Buildings Total equipment and other and vehicles real estate Cost at 1 Jan. 2000 275 236 154 443 429 679 Additions 50 319 1 551 51 870 Disposals at cost 1 386 940 2 326 Aggregate depreciation and write-downs 219 770 66 811 286 581 Book value at 31 Dec. 2000 104 399 88 243 192 642 Ordinary depreciation 2000 31 239 5 924 37 163 Write-downs 2000 2 428 2 428 Gain/(loss) on disposal 2000 56 (142) (86) Ordinary depreciation rates (straight-line method) 10 - 33% 0 - 8%

Group Machinery, Buildings Total equipment and other and vehicles real estate Cost at 1 Jan. 2000 281 935 285 501 567 436 Revaluation 1988 02 777 2 777 Additions 52 762 1 551 54 313 Disposals at cost 2 379 1 722 4 101 Aggregate depreciation and write-downs 223 774 108 459 332 233 Book value at 31 Dec. 2000 108 544 179 648 288 192 Undepreciated residual revaluation at 31 Dec. 2000 0 2 112 2 112 Ordinary depreciation 2000 32 954 8 537 41 491 Of which depreciation on revaluations 56 56 Write-downs 2000 2 428 2 428 Gain on disposal 2000 56 24 528 24 584 Ordinary depreciation rates (straight-line method) 10 - 33% 0 - 8%

41 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 38 Buildings and other real property (NOK 1 000)

Parent Bank Location Description Book Own Let Unlet M2 Remarks value use area area total Bergen, Nedre Korskirkealmenning Bank building 37 220 5 085 265 0 5 350 Incl. sites Bremnes Bank building 593 927 167 0 1 094 Incl. sites and facilities Dale Bank building 6 548 802 704 0 1 506 Incl. site Eid Sokn Bank building 1 232 573 0 0 573 Incl. site Fitjar Bank building 4 815 1 211 295 0 1 506 Incl. site and quay Lindås Bank building 1 351 591 574 0 1 165 Incl. sites and facilities Lonevåg Comm. prop. 5 271 396 0 0 396 Incl. site Nordfjordeid Bank building 9 040 690 0 640 1 330 Incl. site and facilities Norheimsund Bank building 16 155 1 110 0 0 1 110 Incl. site Manger Bank building 3 547 600 461 0 1 061 Incl. site and facilities Skånevik Bank building 1 158 337 0 170 507 Incl. site and facilities Strandebarm Bank building 1 074 716 0 0 716 Incl. site

Sundry properties worth < NOK 1 000 000 239 951 450 0 1 401 Incl. sites Parent Bank - Total 88 243 13 989 2 916 810 17 715

Subsidiaries Location Description Book Own Let Unlet M2 Remarks value use area area total Bergen, Kaigaten 4 Bank building 60 378 7 255 0 0 7 255 Incl. site Odda Bank building 1 694 500 730 0 1 230 Os Bank building 1 641 1 040 290 0 1 330 Incl. site Sogndal Bank building 12 675 1 728 140 150 2 018 Stord Bank building 14 330 1 800 600 0 2 400 Incl. site

Sundry properties worth < NOK 1 000 000 687 125 3 065 0 3 190 Incl. sites Subsidiaries - Total 91 405 12 448 4 825 150 17 423 Group - Total 179 648 26 437 7 741 960 35 138

Note 39 Prepayments and accrued income

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 90 80 113 Accrued income 134 80 90 Overfunding of pension commitments 2 1 79 66 117 Other accruals 95 66 70 169 146 230 Total 231 147 160

Note 40 Debt to credit institutions

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 Loans and deposits from credit institutions with 148 54 332 no agreed term or period of notice 332 54 148 Loans and deposits from credit institutions with 1 452 3 338 3 284 an agreed term or period of notice 3 284 3 338 1 452 1 600 3 392 3 616 Total 3 616 3 392 1 600

Note 41 Deposits from and debt to customers

P ARENT BANK GROUP 1998 1999 2000 Note 2000 1999 1998 10 462 11 512 12 719 Deposits from and debt to customers with no agreed term 12 673 11 468 10 428 4 203 4 276 5 109 Deposits from and debt to customers with an agreed term 5 109 4 274 4 201 14 665 15 788 17 828 Total 42 17 782 15 742 14 629

42 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 42 Distribution of deposits from and debt to customers

2000 1999 NOK % Distribution by sector NOK % 82 0.46 Central government 253 1.61 687 3.86 Local government 736 4.67 747 4.20 Insurance and finance 534 3.39 4 172 23.47 Private enterprise 3 865 24.55 11 946 67.18 Wage earners 10 224 64.95 148 0.83 Foreign 130 0.83 17 782 100.00 Total 15 742 100.00

Commercial sectors 421 2.37 Primary industries 385 2.45 310 1.74 Industry and minimg 345 2.19 415 2.33 Building and construction, power and water supply 418 2.66 796 4.48 Wholesale/retail trade, hotels and restaurants 758 4.82 74 0.42 International shipping and pipe transportation 70 0.44 293 1.65 Other transportation, post and telecommunications 281 1.78 903 5.08 Real estate operations 850 5.40 747 4.20 Insurance and finance 534 3.39 1 058 5.95 Service industries 864 5.49 671 3.77 Central/local government 883 5.60 11 946 67.18 Wage earners 10 224 64.95 148 0.83 Foreign 130 0.83 17 782 100.00 Total 15 742 100.00

Geographical distribution 15 001 84.36 Hordaland 13 290 84.42 1 781 10.02 Sogn & Fjordane 1 604 10.19 852 4.79 Other parts of Norway 718 4.56 17 634 99.17 Norway - Total 15 612 99.17 148 0.83 Foreign 130 0.83 17 782 100.00 Total 15 742 100.00

Note 43 Securitised debt

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 1 975 1 507 3 230 Commercial paper and short-term issues 3 230 1507 1975 2 900 2 610 2 815 Bond debt 2 815 2610 2900 4 875 4 117 6 045 Total 6 045 4 117 4 875

Note 44 Other debt

P ARENT BANK GROUP 1998 1999 2000 Note 2000 1999 1998 50 107 107 Unassessed tax payable 13 110 109 50 181 285 384 Other current liabilities 387 289 184 Other long-term liabilities 3 3 3 101 95 100 Own pension premium fund 100 95 101 13 55 30 Other liabilities/provision for dividend on PCCs 30 55 13 345 542 621 Total 630 551 351

Note 45 Provisions for expenses and commitments

P ARENT BANK GROUP 1998 1999 2000 Note 2000 1999 1998 47 37 32 Pension commitments 46 32 37 47 1 Specified provisions for guarantee liabilities 1 48 37 32 Total 32 37 48

43 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 46 Pension commitments

Parent Bank Sparebanken Vest’s pension schemes consist of the following: 1A group pension scheme which provides all the bank employees with a pension equal to 70% of the final salary, but limited to 12G. At the end of 2000, the scheme covered 796 persons.A further 194 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 2000, 28 persons were receiving pensions under the CPA scheme. 3. A top-hat scheme covering 3 employees, with the option of a retirement pension at the age of 64 (managing director at 60). The pension corresponds to 70% of the final salary until the age of 67at which pointthose involved are covered by the group scheme. 4. Early retirement schemes.At year-end 2000, 13 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 Filialbygg AS cover 9 employees. No pensions were being paid under these schemes at the end of 2000. 2. The schemes established by Eiendomsmegler 1 Vest cover 27 employees. No pensions were being paid under these schemes at the end of 2000.

Profit and Loss Account P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 Insu- Unin- Unin- Insu red sured Total Total sured red 13 13 12 3 15 Present value of accumulated pension rights for the year 15 3 12 13 14 25 27 23 6 29 + Interest charge on accrued pension commitments 29 6 23 27 25 25 27 32 0 32 - Anticipated return on pension funds 32 0 32 27 25 + Diff. between expected and actual return, (1) 0 0 (1) (1) accrued employer’s Nat. Ins. contr. and changes in estimates (1) (1) 0 1 (1) + Accounting effect of changes in accrued rights under CPA 0010 0 10 and extraord. withdrawals (severance packages) 10 0 10 0 0 12 13 13 8 21 Net pension costs for the period 21 8 13 14 13

Balance Sheet Present value of accumulated pension rights, 306 324 276 70 346 excl. wage growth, group scheme 350 71 279 326 308 74 75 73 15 88 + Effect of future wage growth, group scheme 90 15 75 76 75 380 399 349 85 434 Gross pension commitments 440 86 354 402 383 327 364 415 0 415 - Pension funds 421 0 421 368 330 53 35 (66) 85 19 Net pension commitments 19 86 (67) 34 53 - Effect of changed estimates and diff. between expected and 6 (2) (7) (6) (13) actual return, not posted in the accounts, group scheme (13) (6) (7) (2) 6 47 37 (59) 91 32 Net pension commitments in the balance sheet 1) 32 92 (60) 36 47

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 funds.

Assumptions 2000 1999 1998 Discount rate 7.0 % 7.0 % 7.0 % Return on pension funds 8.0 % 8.0 % 8.0 % Wage growth 3.3 % 3.3 % 3.3 % G-regulation 2.5 % 2.5 % 2.5 % Pension regulation 2.5 % 2.5 % 2.5 % Voluntary withdrawals 1.0 % 1.0 % 1.0 % Anticipated CPA acceptance rate 50.0 % 50.0 % 50.0 %

The economic assumptions have a long-term perspective and are in accordance with assumptions recommended by the Oslo Stock Exchange. Actuarial calculations have been used.

44 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 47 Subordinated loan capital

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 380 401 443 Subordinated loan of USD 50m raised in December 1996 443 401 380 250 Subordinated bond loan of NOK 250m raised in November 2000 250 380 401 693 Total 693 401 380

Subordinated foreign currency loan: The agreed interest rate for the period 1996 – 2001 is revolving USD 3-month LIBOR + 0.7%. For the period 2001- 2006 the agreed rate is USD 3-month LIBOR + 1.45%. Repayment of the loan in 2001 has been approved by the Banking, Insurance and Securities Commission. The subordinated loan is posted at the rate in force on 31 December 2000. The subordinated loan is applied in USD or swapped to NOK, and there is therefore no gain or loss on this item. For capital adequacy purposes, the Banking, Insurance and Securities Commission has agreed that the bank can write up the subordinated loan of USD 50m from NOK 325m to NOK 443m.

Subordinated bond loan 2000/2010 for NOK 250m: Floating 3-month rate with borrower’s right to repay the loan.

In 2000, costs related to subordinated loan capital amounted to NOK 35.9m and comprised: Issue costs of NOK 1.1m Interest costs of NOK 34.8m

Note 48 Primary capital certificates, Sec. no. 6000900 (as at 31 December 2000)

20 largest owners No. of PCCs Proportion (%) Chase Manhattan Bank 249 500 9.98 Erik Otter Steen 104 900 4.20 Clipper Shipping AS 39 000 1.56 Tonsenhagen Forretningssentrum AS 38 100 1.52 Nordås Invest AS 32 000 1.28 Tine pensjonskasse 29 100 1.16 Jan H. Freuchen 29 000 1.16 Rieber & Co AS 27 650 1.11 To re Skjensvold 25 000 1.00 Einar Nistad Finans 25 000 1.00 Forsvarets personellservice 20 900 0.84 Solvang ASA 20 000 0.80 Sparebanken Rogaland 17 100 0.68 Agda Andrea Bonde Gjøstein 16 600 0.66 Bjørn E. Skarslien 15 550 0.62 AHM Skips AS 13 000 0.52 Allmgården 11 050 0.44 Holla Sparebank 10 800 0.43 Sparebanken Midt-Norge 10 050 0.40 Anders Rignes 10 000 0.40 Total 744 300 29.76

Primary capital certificates ownerd by the managing director, senior employees, membes 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 9-20 of the Supplementary Regulations pursuant to the Act.

No. of PCCs Knut Ravnå 200 Erik Bøckmann 1 500 Teje Kvamme 100 Anne Sissel Raunholm Engevik 100 Nils K. Rødland 200 Roald Korsøen 100 Erik Otter Steen 104 900 Jan S. Johannessen 130 Einar Nistad 76 300 Kjell Sævdal 100 Inger Finne 100 Alvhild Halleraker 50 Eva Braut 600 Arnvald Risøy 238 Karl G. Mæland 300 Håkon Østgulen 100

45 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 48 continue

Distribution by number Distribution No. of PCCs Proportion (%) No. of owners Proportion (%) 1- 100 61 371 2.45 826 34.23 101- 1000 552 407 22.10 1 177 48.78 1001- 5000 809 172 32.37 343 14.21 5001- 10000 347 250 13.89 48 1.99 10001- 2500000 729 800 29.19 19 0.79 Sum 2 500 000 100.00 2 413 100.00

Note 49 Equity (NOK 1 000)

Parent Bank Primary PCC premium Reserve for Sparebanken Total capital reserve valuation capital certificates variances fund Balance at 1 Jan. 2000 250 000 1 500 14 873 1 600 243 1 866 616 Error correction 1) 14 240 14 240 Correction of classification error 2) 53 716 (53 716) Allocations 18 251 176 097 194 348 Balance at 31/12 250 000 1 500 101 080 1 722 624 2 075 204

Group Primary PCC premium Reserve for Sparebanken Total capital reserve valuation capital certificates variances fund Balance at 1 Jan. 2000 250 000 3 500 12 550 1 600 243 1 866 293 Error correction 1) 14 240 14 240 Correction of classification error 2) 53 716 (53 716) Allocations 18 643 176 097 194 740 Balance at 31/12 250 000 3 500 99 149 1 722 624 2 075 273

1) The increase of NOK 14.2m in the reserve for valuation variances relates to SpareBank 1 Vest’s relative share of the VÅR Group’s profits in the period 01.01 - 30.09-2000 which has been credited directly to the Sparebank1 Group’s equity.

2) The increase of NOK 53.7m in the reserve for valuation variances, and the corresponding decline in the Sparebanken capital fund, relates to correction of an insufficient allocation of the share of profits from 1999 to the reserve for valuation variances.As a concequence of this error, the basis for calculation of the dividend in 1999 was NOK 53.7m too high.

Note 50 Capital adequacy

P ARENT BANK GROUP 1998 1999 2000 2000 1999 1998 Nok % Nok % Nok % Nok % Nok % NOK % 1 569 9.95 1 827 10.57 1 929 9.53 Core capital 2 036 10.25 1 843 10.82 1 574 9.94

325 325 693 Subordinated loan capital 693 325 325 Net supplementary 325 2.06 325 1.88 693 3.42 capital 693 3.49 325 1.90 325 2.06

(95) (0.60) (3) (0.02) 0 0.00 Other deductions (359) (1.81) (220) (1.29) (125) (0.79) 1 799 2 149 2 622 Net capital base 2 370 1 948 1 774

15 773 17 289 20 250 Risk-weighted volume 19 861 17 039 15 828

11.41 12.43 12.95 Capital ratio 11.93 11.43 11.21

46 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 50 continue

Specification of risk-weighted volume (Group) Nominal amount Risk-weighted volume NOK m Risk weight 0% 10% 20% 50% 100% 31.12.00 31.12.99 31.12.98 Banking portfolio Cash and ordinary bank deposits 310 0 1 359 0 0 272 29 123 Short-term investments in securities 311 43 1 009 0 32 238 229 268 Lendings 36 0 534 15 021 11 020 18 637 16 033 14 251 Other receivables 24 1 14 32 220 239 154 143 Fixed assets 156 0 0 0 698 698 539 583 Total assets 20 084 16 984 15 368 Off-balance sheet items 279 233 301 Total risk-weighted volume, banking portfolio 20 363 17 217 15 669

Trading portfolio Position risk related to own equity instruments 141 313 521 Position risk related to instruments of debt 22 9 20 Settlement risk 000 Counterparty risk and other risk 32 22 27 Foreign exchange risk 000 Total risk-weighted volume, trading portfolio, incl. foreign exchange risk 195 344 568 Total risk-weighted volume, banking and trading portfolio, incl. foreign exchange risk 20 558 17 561 16 237 Deductions: Subordinated loans to other financial institutions (359) (220) (125) Loss provisions (338) (302) (284) Basis for calculation of capital adequacy, incl. foreign exchange risk 19 861 17 039 15 828

Note 51 Guarantees and mortgages

Guarantees P ARENT BANK GROUP 1998 1999 2000 Note 2000 1999 1998 Guarantee specification 236 249 165 Payment guarantees 165 249 236 227 181 321 Contract guarantees 321 181 227 333Loan guarantees 3 3 3 223Guarantees for taxes 3 2 2 98 99 101 Other guarantee liabilities 101 99 98 566 534 593 Total customer guarantees 16 593 534 566 Guarantees on behalf of Savings Banks’ Guarantee Fund 566 534 593 Total guarantee liability 593 534 566

Mortgages Buildings - as loan security - valued at 1 1 Bonds and commercial paper - as security for overnight loans 798 2 000 1 990 from Norges Bank - valued at 1 990 2 000 798 798 2 000 1 990 Total mortgages 1 990 2 001 799

47 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 52 Main regional figures for 2000

Total assets Assets 2) Liabilities Deposits Gross and equity 2) loans Region Hardanger/ Midthordland 2 294 1 785 1 776 2 296 Region Nordfjord 1 749 1 288 1 284 1 747 Region Nordhordland 2 547 2 093 2 081 2 538 Region Sogn 683 505 504 678 Region Sunnhordland 3 406 2 153 2 108 3 393 Region Vest 2 493 1 326 1 321 2 483 Region Bergen 10 938 7 144 7 055 10 806 Total - all regions 24 110 16 294 16 130 23 941 Central activities 1) 7 025 14 841 1 698 2 745 Sparebanken Vest - Total 31 135 31 135 17 828 26 686

1) Including centrally managed equity 2) Excluding internal capital transfers

Note 53 Residual maturity and date of interest rate adjustment of balance sheet items

Residual maturity of balance sheet items at 31 December 2000

0 - 1 1 - 3 3 - 12 1 - 5 Over No Total month months months years 5 years residual maturity ASSETS Cash and deposits with central banks NOK 72 216 288 Foreign currency 22 22 Loans to and deposits with credit institutions NOK 821 277 203 1 301 Foreign currency 58 58 Loans to and receivables from customers NOK 1 587 326 1 500 10 078 11 582 25 073 Foreign currency 18 154 1 365 1 537 Specified loss provisions NOK (178) (178) Unspecified loss provisions NOK (160) (160) Commercial paper, bonds and other interest-earning securities with a fixed return NOK 388 474 587 331 1 780 Other assets NOK 230 241 358 488 1 317 Foreign currency 48 12 60 Total assets 3 156 129 2 549 10 969 12 947 578 31 098 NOK 3 098 129 2 531 10 767 11 582 544 29 421 Foreign currency 58 0 18 202 1 365 34 1 677

48 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 53 continue

0 - 1 1 - 3 3 - 12 1 - 5 Over No Total month months months years 5 years residual maturity LIABILITIES AND EQUITY Loans and deposits from credit institutions NOK 565 300 571 1 436 Foreign currency 318 1 321 541 2 180 Deposits from and debt to customers NOK 17 622 93 12 17 727 Foreign currency 52 3 55 Securitised debt NOK 3 910 56 639 1 440 6 045 Foreign currency Other liabilities NOK 6 874 880 Foreign currency 77 Subordinated loan capital NOK 250 250 Foreign currency 443 443 Equity NOK 2 075 2 075 Total liabilities and equity 4 851 17 678 2 356 1 993 693 3 527 31 098 NOK 4 481 17 678 1 032 1 452 250 3 520 28 413 Foreign currency 370 0 1 324 541 443 7 2 685 Net liquidity exposure gap on balance sheet items (1 695) (16 601) 193 8 976 12 254 (3 127) 0 NOK (1 383) (16 601) 1 499 9 315 11 332 (3 154) 1 008 Foreign currency (312) 0 (1 306) (339) 922 27 (1 008) Net liquidity exposure gap on forward foreign currency transactions (5) 14 (4) 0 0 0 5 Forward purchases of foreign currency NOK 17 28 42 87 Foreign currency 709 1 285 114 2 108 Forward sales of foreign currency NOK (714) (300) (188) (1 202) Foreign currency (17) (999) (42) (1 058) Net total - all items (1 700) (16 587) 189 8 976 12 254 (3 127) 5 NOK (2 080) (16 873) 1 423 9 315 11 332 (3 154) (37) Foreign currency 380 286 (1 234) (339) 922 27 42

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.

49 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 53 continued

Agreed/probable time for adjustment of balance sheet items and financial derivatives at 31 December 2000

0 - 1 1 - 3 3 - 12 1 - 5 Over No Total month months months years 5 years residual maturity ASSETS Cash and deposits with central banks NOK 72 216 288 Foreign currency 22 22 Loans to and deposits with credit institutions NOK 821 277 203 1 301 Foreign currency 58 58 Loans to and receivables from customers NOK 23 868 82 681 442 25 073 Foreign currency 233 1 013 291 1 537 Specified loss provisions NOK (178) (178) Unspecified loss provisions NOK (160) (160) Commercial paper, bonds and other interest- earning securities with a fixed return NOK 309 671 586 214 1 780 Other assets NOK 1 317 1 317 Foreign currency 60 60 Total assets 1 493 25 829 1 162 895 442 1 277 31 098 NOK 1 202 24 816 871 895 442 1 195 29 421 Foreign currency 291 1 013 291 0 0 82 1 677

LIABILITIES AND EQUITY Loans and deposits from credit institutions NOK 1 136 300 1 436 Foreign currency 318 1 321 541 2 180 Deposits from and debt to customers NOK 17 622 93 12 17 727 Foreign currency 52 3 55 Securitised debt NOK 3 910 56 639 1 440 6 045 Foreign currency Other liabilities NOK 880 880 Foreign currency 77 Subordinated loan capital NOK 250 250 Foreign currency 443 443 Equity NOK 2 075 2 075 Total liabilities and equity 5 416 19 992 1 276 1 452 0 2 962 31 098 NOK 5 046 18 228 732 1 452 0 2 955 28 413 Foreign currency 370 1 764 544 0 0 7 2 685 Net interest rate exposure on balance sheet items (3 923) 5 837 (114) (557) 442 (1 685) 0 NOK (3 844) 6 588 139 (557) 442 (1 760) 1 008 Foreign currency (79) (751) (253) 0 0 75 (1 008) Off-balance sheet financial derivatives which affect interest rate exposure (158) (1 550) 3 619 (1 427) (479) 0 5 Purchase positions NOK 1 235 25 415 82 765 18 412 127 827 Foreign currency 709 1 551 434 2 694 Sale positions NOK (2 085) (27 029) (79 441) (19 838) (479) (128 872) Foreign currency (17) (1 487) (139) (1) (1 644) Net interest rate exposure incl. off-balance sheet financial derivatives (4 081) 4 287 3 505 (1 984) (37) (1 685) 5 NOK (4 694) 4 974 3 463 (1 983) (37) (1 760) (37) Foreign currency 613 (687) 42 (1) 0 75 42 Net interest rate exposure of average total assets (14.69) 15.43 12.61 (7.14) (0.13) (6.06) 0.02 NOK (16.89) 17.90 12.46 (7.14) (0.13) (6.33) (0.13) Foreign currency 2.20 2.47 0.15 0.00 0.00 0.27 0.15

50 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 53 continued

INTEREST RATE SENSITIVITY Throughout 2000 Sparebanken Vest had substantial holdings of bonds and commercial paper, mainly for the purpose of meeting statutory requirements relating to liquidity reserves and deposits as required as security for loans from Norges Bank.

At year-end, the bank’s holdings of bonds and commercial paper amounted to NOK 2 012m, with an average duration of 0.65 years.

Taken separately, the interest rate risk on these investments would result in a loss of value of NOK 12.3m mill. kroner 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 2000, with accounting effect, would have resulted in a loss of NOK 8.9m kroner in the event of a parallel rise in the interest rate of 1 percentage point.The bank also has bonds for NOK 117m with an average duration of 3.17 years which are to be held until maturity.A rise in interest rates would have no immediate 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 2000

Currency Posted in Balance Sheet Not posted in balance sheet Forward Forward Net Assets Liabilities purchases sales positions of which of which of which of which loans share- deposits sub.loan holdings capital USD 561 542 2 470 2 020 443 1 947 16 18 JPY 781 781 10 9 120 883 8 GBP 10 8 5 5 25 29 1 CHF 105 104 111 111 7 0 1 SEK 56 48 54 53 0 0 2 DKK 20 2 2 0 0 0 EUR 159 145 28 22 9 130 10 Other 3 1 0 0 2 Total 1 695 2 681 2 108 1 058 42

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.

51 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 54 Financial instruments and derivatives

Financial instruments Nominal Book Average Market Credit amount 1) value book value exposed value value 31/12-00 31/12-00 2000 31/12-00 2000

Trading portfolio Balance sheet instruments - Commercial paper, bonds etc. 531 522 394 522 - Shareholdings 10 107 177 107 Off-balance sheet instruments 2) - Forward purchases/sales of foreign currency 2 217 2 235 875 22 - Interest rate contracts 119 078 119 078 90 264 5 Trading portfolio - Total 121 836 121 942 91 710 27

Ordinary banking activity Balance Sheet - Assets - Commercial paper, bonds etc. 1 386 1 382 1 346 1 382 - Bonds to be held until maturity 122 117 131 120 - Long-term shareholdings 24 62 62 Balance Sheet - Liabilities - Commercial paper and bond debt 6 051 6 045 5 348 Off-balance sheet instruments 2) - Forward purchases/sales of foreign currency 969 931 1 203 9 - Interest rate contracts 5 248 5 248 4 800 16 Options 505 505 25

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 or 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 derivatives in the course of the year:

Forward foreign exchange transactions These are agreements to purchase of 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 futures which are agreements relating to the future purchase or sale of an underlying bond at a predetermined rate.

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. The bank has no open positions in options.

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 regulate the maximum counterparty exposure.The above table shows that no major risk is attached to the above financial derivatives.

52 SPAREBANK 1 VEST ANNUAL REPORT 2000

NOTES TO THE ACCOUNTS

Note 55 Disputes

At year-end 2000 the bank was not involved in any litigation or legal disputes.The bank is otherwise subject to various claims related to its normal activities. The size and extent of these claims are cush that they are of no material importance for the bank’s financial position. Loss provisions have been made where considered appropriate.At year-end 2000 the bank’s subsidiaries were not involved in any legal disputes of any special economic significance.

Note 56 Transactions with closely related companies

”Sparebanken Vest has defined the following quoted companies as being closely related to the bank.The information is provided in accordance with the Preliminary Norwegian Accounting Standard for ”Information about closely related companies” in so far as this information does not cintravene current legislation related to the bank’s duty of confidentiality:

Subsidiaries The bank’s subsidiaries are listed in note 33. Intercompany balances are shown in note 32.All transaction between Group companies are conducted on the basis of normal commercial terms and principles.

Jointly controlled activities SpareBank 1 Gruppen AS (13% 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 34).

The bank’s commercial relationship with these companies is based on the standard commercial terms and conditions currently in force for each company.

53 SPAREBANK 1 VEST ANNUAL REPORT 2000

A UDITOR’S REPORT FOR 2000

We have audited the annual accounts of Sparebanken Vest for 2000 and presentation of the annual report and accounts. To the extent which show a profit for the year of NOK 239 million for the parent required by generally accepted Norwegian auditing standards, we have company and a profit for the year of NOK 239 million for the Group. reviewed the bank’s asset management and accounting and internal We have also audited the information in the annual report related to the control systems. We consider that our audit provides an appropriate annual accounts, the submission of the accounts on a going concern basis for our audit report. basis and the proposed allocation of the profit for the year.The annual accounts, which comprise the annual report, profit and loss account, We believe that balance sheet, statement of cash flows and notes to the accounts and • the annual report and accounts have been prepared in accordance consolidated accounts, are presented by the company’s Board of with the relevant laws and regulations and present fairly the financial Directors and its Managing Director. Our responsibility is to submit an position of the bank at 31 December 2000 and the result of its audit report related to the annual report and accounts and other operations and its cash flows for the year in accordance with generally matters in accordance with the requirements of Auditors Act. accepted Norwegian accounting principles • the management have complied with their obligation to keep We have conducted our audit in accordance with the Auditors Act and systematic and clear records and documentation of accounting generally accepted Norwegian auditing standards.This requires that we information as required by law and in accordance with generally plan and perform the audit procedures which we consider necessary to accepted Norwegian accounting practice determine that the annual report and accounts are free of material • the information in the annual report related to the annual accounts, misstatements. We have examined, on a test basis, the accounting the submission of the accounts on a going concern basis and the pro- material supporting the accounts and assessed the accounting principles posed application of the profit for the year are in conformity with the applied, the accounting estimates made by management, and the content annual accounts and in accordance with relevant laws and regulations. Bergen, 15 February 2001 PricewaterhouseCoopers DA

Geir Inge Lunde Per Kåre Furnes State Authorised Public Accountant (Norway) State Authorised Public Accountant (Norway)

REPORT OF THE CONTROL COMMITTEE FOR 2000

The Committee convened regularly throughout 2000, with meetings in loss position and risk exposure, as well as measures taken by the bank to Bergen and in the regional and branch offices. In the performance of its meet this development. work the Committee has conferred with the chairman of the Board of The Committee is of the view that the Board of Directors' assessment Directors, the managing director and with those responsible for different of the bank's financial position, as presented in the annual report, is areas of activity. adequate. The Committee has worked closely with the internal auditor, while The annual report and accounts for 2000 have been reviewed and maintaining contact with the external auditor. discussed with the external and internal auditors, and with The Committee has carried out the checks considered necessary to representatives of the bank's management. comply with the guidelines and directives which the Committee is In the view of the Committee, the annual report and accounts, including required to observe under the Savings Banks Act and in accordance with the consolidated accounts, have been prepared in accordance with the the instructions issued to the Control Committee. Savings Bank Act and regulations laid down by the Banking, Insurance and The Control Committee has not found the Bank's activities to be in con- Securities Commission. flict with the provisions of the Savings Banks Act, the Financing Activity The Control Committee has no criticism of the annual report and Act, the bank’s Articles of Association, resolutions of the Board of accounts and recommends that the profit and loss account and the Governors or other provisions governing the Bank's activities. balance sheet for 2000, including the consolidated accounts, as submitted In cooperation with the internal auditor, the Committee has by the Board of Directors, be adopted by the Board of Governors as the continuously monitored and considered the development of the bank's accounts of Sparebanken Vest for 2000.

Bergen, 15 February 2001

Bjørg Nævdal Lillian Torsvik Nils Rødland

Kjell Steinsbø Anne Lise Noss

54 SPAREBANK 1 VEST ANNUAL REPORT 2000

GROUP KEY FIGURES

Group Key Figures 1996 - 2000

PROFIT AND LOSS ACCOUNT SUMMARY 2000 1999 1998 1997 1996 Interest income etc. 2 080 1 946 1 559 1 189 1 295 Interest expenses etc. 1 329 1 227 912 570 692

Net interest and credit commission income 751 719 647 619 603 Dividends and other income with a variable return (4) 23 12 17 15 Commissions and fees receivable on banking services 227 200 180 166 142 Commissions and fees payable on banking services 64 67 62 68 64 Net change in value of and gain/(loss) on foreign exchange and short-term securities 13 98 (125) 28 37 Other operating income 66 27 31 28 28 Net operating income 238 281 36 171 158

Profit before operating expenses 989 1 000 683 790 761 Salaries and general administration expenses 481 476 434 430 431 Depreciation of fixed and intangible assets 45 40 40 37 33 Other operating expenses 115 75 76 76 62 Total operating expenses 641 591 550 543 526

Profit before losses and write-downs 348 409 133 247 235 Losses on loans and guarantees etc. 43 59881 Write-downs/reversal of write-downs and gain/loss on long-term securities 33 134 (5) 11 55

Pre-tax profit 338 484 120 250 289 Taxes 99 126 52 72 77

Profit for the year 239 358 68 178 212

BALANCE SHEET SUMMARY

Assets Cash and deposits with central banks 310 651 253 217 188 Instruments of debt refinanceable with central banks 241 Loans to and deposits with credit institutions 1 359 144 602 511 580 Gross loans before specified and unspecified loss provisions 26 610 22 650 20 580 18 478 16 718 Specified loss provisions (178) (177) (199) (212) (238) Unspecified loss provisions (160) (125) (84) (84) (70) Net loans to and receivables from customers 26 272 22 348 20 297 18 182 16 410 Repossessed assets 4 0001 Commercial paper, bonds and other interest-earning securities with a variable return 1 780 2 153 1 319 1 318 1 298 Shareholdings, investments and other securities with a variable return 171 262 490 500 457 Shareholdings in jointly controlled companies 342 200 152 150 52 Intangible assets 39 23 39 25 4 Fixed assets 288 280 281 276 268 Other assets 61 47 26 52 82 Prepayments and accrued income 231 147 160 114 79 Total assets 31 098 26 255 23 619 21 345 19 419

Liabilities and equity Loans and deposits from credit institutions 3 616 3 392 1 600 1 142 1 075 Deposits from and debt to customers 17 782 15 742 14 629 12 598 12 950 Securitised debt 6 045 4 117 4 875 5 101 3 061 Other liabilities 630 551 351 430 478 Accrued expenses and prepaid income 225 149 157 124 98 Provisions for commitments and expenses 32 37 48 59 62 Subordinated loan capital 693 401 380 366 322 Total liabilities 29 023 24 389 22 040 19 820 18 046 Primary capital certificates 250 250 250 250 250 PCC premium reserve 4 4444 Total paid-up equity 254 254 254 254 254

Reserve for valuation variances Sparebankens capital fund 1 722 1 600 1 311 1 254 1 067 Gift fund 0 0 0 0 13 Other equity 99 12 14 17 39 Total retained earnings 1 821 1 612 1 325 1 271 1 119 Total equity 2 075 1 866 1 579 1 525 1 373 Total liabilities and equity 31 098 26 255 23 619 21 345 19 419

AVERAGE TOTAL ASSETS 27 785 24 700 22 623 20 718 19 011

55 SPAREBANK 1 VEST ANNUAL REPORT 2000

GROUP KEY FIGURES

Group Key Figures 1996 - 2000 continued

RESULTS AS A PERCENTAGE OF AVERAGE TOTAL ASSETS 2000 1999 1998 1997 1996 Interest income etc. 7.48 7.88 6.89 5.74 6.81 Interest expenses etc. 4.78 4.97 4.03 2.75 3.64

Net interest and credit commission income 2.70 2.91 2.86 2.99 3.17 Dividends and other income on securities with a variable return (0.01) 0.09 0.05 0.08 0.08 Commissions and fees receivable on banking services 0.81 0.81 0.79 0.80 0.74 Commissions and fees payable on banking services 0.23 0.27 0.27 0.33 0.34 Net change in value of and gain/(loss) on foreign exchange and short-term securities 0.05 0.40 (0.55) 0.14 0.19 Other operating income 0.24 0.11 0.14 0.14 0.15 Net operating income 0.86 1.14 0.16 0.84 0.83

Profit before operating expenses 3.56 4.05 3.02 3.82 4.00 Salaries and general administration expenses 1.74 1.93 1.91 2.08 2.27 Depreciation of fixed and intangible assets 0.16 0.16 0.18 0.18 0.17 Other operating expenses 0.41 0.30 0.34 0.37 0.33 Total operating expenses 2.31 2.39 2.43 2.62 2.77

Profit before losses and write-downs 1.25 1.66 0.59 1.20 1.24 Losses on loans and guarantees etc. 0.15 0.24 0.03 0.04 0.01 Write-downs/reversal of write-downs and gain/loss on long-term securities 0.12 0.54 (0.02) 0.05 0.29

Pre-tax profit 1.22 1.96 0.54 1.21 1.52 Taxes 0.36 0.51 0.22 0.35 0.40 Profit for the year 0.86 1.45 0.32 0.86 1.12

Return on investment, earnings and capital structure (%) 1. Return on equity after tax 12.03 20.38 4.36 12.18 16.10 2. Return on total assets before losses and tax 1.25 1.66 0.59 1.20 1.24 3. Net return on total assets 0.86 1.45 0.32 0.86 1.12 4. Operating expenses as a percentage of profit before operating expenses 64.81 59.10 80.53 68.73 69.12 5. Funding ratio 67.68 70.44 72.07 69.29 78.92

Balance sheet development (%) 6. Change in gross loans to and receivables from customers 17.48 10.06 11.38 10.53 8.59 7. Change in commercial paper, bonds and other interest-earning securities (17.32) 63.23 0.08 1.54 6.66 8. Change in deposits from and debt to customers 12.96 7.61 16.12 (2.72) 2.71 9. Change in total assets 18.45 11.16 10.65 9.92 11.99

Defaults, provisions and loan losses 10. Loan loss ratio 0.16 0.26 0.04 0.04 0.01 11. Gross default ratio 1.10 1.11 1.45 1.36 1.73 12. Net default ratio 0.74 0.75 0.81 0.79 1.05 13. Percentage of defaulted loans provided for 32.08 33.07 35.45 42.91 40.75 14. Unspecified provisions as percentage of gross loans (0.60) (0.55) (0.41) (0.45) (0.42)

Capital adequacy 15. Net capital base 2 370 1 948 1 774 1 812 1 644 16. Basis of calculation 19 861 17 039 15 828 14 074 12 234 17. Capital ratio 11.93 11.43 11.21 12.87 13.44 18. Core capital ratio 10.25 10.82 9.94 10.84 10.98

56 SPAREBANK 1 VEST ANNUAL REPORT 2000

GROUP KEY FIGURES

Group Key Figures 1996 - 2000 continued

Primary capital certificates (PCC) (Parent Bank) 2000 1999 1998 1997 1996 19. Primary capital certficates (NOK m) 250 250 250 250 250 20. Dividend per PCC (NOK) 12.00 22.00 5.00 13.00 16.00 21.Traded price at 31 December (NOK) 130.00 213.00 134.00 229.00 173.50 22. PCCs as a percentage of capital base 12.74 13.58 16.09 16.70 18.49 23. Book equity per PCC (NOK) 100.00 100.00 100.00 100.00 100.00 24. Profit (gross) per PCC (NOK) 95.60 143.20 27.20 71.20 84.80 25. Earnings per PCC (NOK) 12.98 23.04 4.54 13.17 17.94 26. RISK amount (NOK) 89.09 45.81 69.12 71.27 27. Real rate of return per PCC (28.64) 62.69 (35.81) 41.21 30.21 28. Direct rate of return 9.23 10.33 3.73 5.68 9.22 29. Payout ratio 12.55 15.36 18.38 18.26 18.87 30. Provision for dividends as % of PCC’s share of profits 92.42 95.47 110.07 98.73 86.14

Personnel Number of employees 794 760 775 794 813 Number of man-years 749 703 717 731 750

Distribution network Sales outlets 64 64 67 70 70 Mobile banks 1 2233

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/(loss) 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 paid 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 1 January. 29. Dividend as a percentage of the operating profit per PCC.

57 SPAREBANK 1 VEST ANNUAL REPORT 2000

GROUP KEY FIGURES

Group Key Figures 1999 - 2000 (quarterly, cumulative)

PROFIT AND LOSS ACCOUNT SUMMARY 31/12-00 30/9-00 30/6-00 31/3-00 31/12-99 30/9-99 30/6-99 31/3-99 Interest income etc. 2 080 1 474 950 467 1 946 1 479 1 018 528 Interest expenses etc. 1 329 924 587 288 1 227 954 671 359

Net interest and credit commission income 751 550 363 179 719 525 347 169 Dividends and other income on securities with a variable return (4) 5 10 3 23 24 23 12 Commissions and fees receivable on banking services 227 161 106 52 200 147 95 48 Commissions and fees payable on banking services 64 46 31 15 67 48 33 17 Net change in value of and gains(+)/(losses) on foreign exchange and short-term securities 13 24 9 22 98 71 58 34 Other operating income 66 38 28 14 27 22 14 5 Net operating income 238 182 122 76 281 216 157 82

Profit before operating expenses 989 732 485 255 1 000 741 504 251 Salaries and general administration expenses 481 354 223 109 476 333 219 110 Depreciation of fixed and intangible assets 45 30 20 10 40 31 21 10 Other operating expenses 115 86 65 31 75 60 38 18 Total operating expenses 641 470 308 150 591 424 278 138

Profit before losses and write-downs 348 262 177 105 409 317 226 113 Losses on loans and guarantees etc. 43 41 19 4 59 43 38 18

Net change in value of and gains(+)/(losses) on long-term securities 33 32 3 (1) 134 55 55 51

Pre-tax profit 338 253 161 100 484 329 243 146 Taxes 99 65 46 29 126 75 52 25

Profit for the period 239 188 115 71 358 254 191 121

AVERAGE TOTAL ASSETS 27 785 27 214 26 898 26 726 24 700 24 331 24 245 23 945

RESULTS AS A PERCENTAGE OF AVERAGE TOTAL ASSETS Interest income etc. 7.48 7.23 7.06 6.99 7.88 8.11 8.40 8.82 Interest expenses etc. 4.78 4.53 4.36 4.31 4.97 5.23 5.54 6.00

Net interest and credit commission income 2.70 2.70 2.70 2.68 2.91 2.88 2.86 2.82

Dividends and other income on securities with a variable return (0.01) 0.02 0.07 0.04 0.09 0.13 0.19 0.20 Commissions and fees receivable on banking services 0.81 0.79 0.79 0.78 0.81 0.80 0.78 0.80 Commissions and fees payable on banking services 0.23 0.23 0.23 0.22 0.27 0.26 0.27 0.28

Net change in value of and gains(+)/(losses) on short term securities 0.05 0.12 0.07 0.33 0.40 0.39 0.48 0.57 Other operating income 0.24 0.19 0.21 0.21 0.11 0.12 0.12 0.08 Net operating income 0.86 0.89 0.91 1.14 1.14 1.18 1.30 1.37

Profit before operating expenses 3.56 3.59 3.61 3.82 4.05 4.06 4.16 4.19 Salaries and general administration expenses 1.74 1.74 1.66 1.63 1.93 1.82 1.82 1.83 Depreciation of fixed and intangible assets 0.16 0.15 0.15 0.15 0.16 0.17 0.17 0.17 Other operating expenses 0.41 0.42 0.48 0.46 0.30 0.33 0.31 0.30 Total operating expenses 2.31 2.31 2.29 2.24 2.39 2.32 2.30 2.30

Profit before losses and write-downs 1.25 1.28 1.32 1.57 1.66 1.74 1.86 1.89 Losses on loans and guarantees etc. 0.15 0.20 0.14 0.07 0.24 0.24 0.31 0.30 Net change in value of and gains(+)/(losses) on long-term securities 0.12 0.16 0.02 (0.01) 0.54 0.30 0.45 0.85

Pre-tax profit 1.22 1.24 1.20 1.50 1.96 1.80 2.00 2.44 Taxes 0.36 0.32 0.34 0.43 0.51 0.41 0.42 0.42

Profit for the period 0.86 0.92 0.86 1.06 1.45 1.39 1.58 2.02

58 SPAREBANK 1 VEST ANNUAL REPORT 2000

GROUP KEY FIGURES

QUARTERLY RESULTS (non- cumulative) 4thQtr 3rdQtr 2ndQtr 1stQtr 4thQtr 3rdqtr 2ndQtr 1stQtr 2000 2000 2000 2000 1999 1999 1999 1999 Interest income etc. 606 524 483 467 467 461 490 528 Interest expenses etc. 405 337 299 288 273 283 312 359 Net interest and credit commission income 201 187 184 179 194 178 178 169 Dividends and other income on securities with a variable return (9) (5) 7 3 (1) 1 11 12 Commissions and fees receivable on banking services 66 55 54 52 53 52 47 48 Commissions and fees payable on banking services 18 15 16 15 19 15 16 17 Net change in value of and gains(+)/(losses) on short-term securities (11) 15 (13) 22 27 13 24 34 Other operating income 28 10 14 14 5 8 9 5 Net operating income 56 60 46 76 65 59 75 82 Profit before operating expenses 257 247 230 255 259 237 253 251 Salaries and general administration expenses 127 131 114 109 143 114 109 110 Depreciation of fixed and intangible assets 15 10 10 10 9 10 11 10 Other operating expenses 29 21 34 31 15 22 20 18 Total operating expenses 171 162 158 150 167 146 140 138 Profit before losses and write-downs 86 85 72 105 92 91 113 113 Losses on loans and guarantees etc. 2 22 15 4 16 5 20 18 Net change in value of and gains(+)/(losses) on long-term securities 1 29 4 (1) 79 0 4 51 Pre-tax profit 85 92 61 100 155 86 97 146 Taxes 34 19 17 29 51 23 27 25 Profit for period 51 73 44 71 104 63 70 121 BALANCE SHEET DEVELOPMENT 31/12-00 30/9-00 30/6-00 31/3-00 31/12-99 30/9-99 30/6-99 31/3-99 Cash and deposits with central banks 310 617 324 166 651 196 186 197 Instruments of debt refinanceable with central banks 241 Loans to and deposits with credit institutions 1 359 1 040 1 266 1 393 144 624 1 052 828 Gross loans before specified and unspecified loss provisions 26 610 24 924 23 937 23 273 22 650 22 059 21 527 21 029 Commercial paper, bonds and other interest-earning securities with a fixed return (178) (174) (158) (162) (177) (192) (202) (205) Unspecified loss provisions (160) (148) (141) (137) (125) (106) (102) (97) Net loans to and receivables from customers 26 272 24 602 23 638 22 974 22 348 21 761 21 223 20 727 Repossessed assets 4 3 3 0 0 0 0 0 Commercial paper, bonds and other interest-earning securities with a fixed return 1 780 1 271 1 759 2 360 2 153 1 390 943 1 463 Shareholdings, investments and other securities with a variable return 171 254 250 255 262 354 409 486 Shareholdings in associated companies 342 358 204 201 200 208 207 210 Intangible assets 39 23 23 23 23 39 39 39 Fixed assets 288 268 272 276 280 273 277 273 Other assets 61 100 29 79 47 64 21 27 Prepayments and accrued income 231 243 256 295 147 107 110 216 Total assets 31 098 28 779 28 024 28 022 26 255 25 016 24 467 24 466 Loans and deposits from credit institutions 3 616 2 678 2 623 2 969 3 392 1 785 1 446 1 783 Deposits from and debt to customers 17 782 16 606 17 056 16 315 15 742 15 374 15 250 14 785 Securitised debt 6 045 5 823 5 042 5 492 4 117 4 511 4 742 5 084 Other liabilities 630 405 376 478 551 403 296 283 Accrued expenses and prepaid income 225 699 480 371 149 674 523 394 Provisions for expenses and commitments 32 37 37 37 37 49 48 48 Subordinated loan capital 693 456 429 423 401 388 393 389 Total liabilities 29 023 26 704 26 043 26 085 24 389 23 184 22 698 22 766 Paid-up equity 254 254 254 254 254 254 254 254 Retained earnings 1 821 1 633 1 612 1 612 1 612 1 324 1 324 1 325 Total equity 2 075 1 887 1 866 1 866 1 866 1 578 1 578 1 579 Profit for the period 188 115 71 254 191 121 Total liabilities and equity 31 098 28 779 28 024 28 022 26 255 25 016 24 467 24 466 Return on investment, earnings and capital structure (%) Return on equity after tax 12.03 12.79 11.96 14.94 20.38 19.86 22.81 29.52 Return on total assets before losses and taxes 1.25 1.28 1.32 1.57 1.66 1.74 1.86 1.89 Net return on total assets 0.86 0.92 0.86 1.06 1.45 1.39 1.58 2.02 Solvency (%) Loan loss ratio 0.16 0.22 0.16 0.07 0.26 0.26 0.35 0.34 Capital ratio 11.93 9.52 10.72 10.82 11.43 9.66 9.87 9.94 PCCs (Parent Bank) Profit per PCC (NOK) 12.98 10.21 6.25 3.86 23.04 16.35 12.29 7.79 Personnel Number of man-years 749 725 729 714 703 710 711 709 For definitions, see page 57 59 60 SPAREBANK 1 VEST ANNUAL REPORT 2000

Value profile through old and new channels

SpareBank 1 Vest’s vision is "Focusing on A competitive bank to the customers. SpareBank 1 Vest seeks to Customers and Strength", indicating at The very core of SpareBank 1 Vest’s service reinforce this process partly through once that the customers are the focal concept is, naturally, its ability to provide com- extensive training and development initiatives point, and that strategic choices are petitive financial products and services. But it and through an active recruitment policy. determined by customer choices and will be difficult for SpareBank 1 Vest to lead requirements.As clear as this may be, it the field on price. For this to happen, the bank The customer chooses the channel must nonetheless be emphasised in would have to change radically.Through good SpareBank 1 Vest takes the view that it is the order to highlight both the market and service, proactive customer work, a customer’s choice of channel that determines the customer perspective. decentralised branch structure, a complete the channels of distribution on offer, – branches, telephonics, online banking services By providing competitive terms and ensuring distribution network, a good understanding of etc. The branch network will continue to be that we have freedom of action and the customers and sound expertise we shall the bank’s largest and most important channel. independence we are able to maintain our create additional value for the customers. The extent and content will be determined by strength, in relation to both the market and Geographical and cultural proximity customer preferences, but the bank envisages our customers. In addition to the geographical closeness a situation where branch activities are based The bank’s vision is a reflection of its which will continue to be a fundamental on sales, advisory services and the forging of aspirations,and indicates that there is still much element of competition, the concept of relationships with the individual customers. to be achieved. Our value profile tells how this proximity must be given a new content and a Where possible, the bank will be aiming to will be done or – in other words – why the further dimension.The concept of proximity is have daily banking transactions effected using customers should opt for SpareBank 1 Vest. no longer measured only in terms of the automated solutions. SpareBank 1 Vest is physical distance to the nearest branch: there Accessible and independent currently carrying out a major reorganisation must also be an emphasis on the "cultural The Norwegian savings banks and SpareBank 1 and reconstruction programme within the proximity" by which we mean that the Vest have established much of their business larger branches based on this philosophy. customer can call at a financial institution on the basis of geographical proximity, local which is familiar with him/her, and with the roots and thorough familiarity with local con- Extended offers client’s circumstances and framework of ditions. Other players and several of the new- Through telephonics and SpareBank 1 Vest’s operations. comers whose services are only distributed online banking services the customers have so Cultural and personal proximity is created using telephonics and the Internet base their far only been able to carry out simple banking mainly through the people in the organisation. communication with the customers solely on transactions. The range of options is being Traditionally, this has been taken care of by the interest rates and bank charges.The growth of gradually extended, and in time it will be customers’ personal advisers in the branch new channels has made it apposite to question possible to carry out a complete range of network.We believe that this relationship will whether the "old" values are still relevant and transactions using telephonics and the online continue to be the most important of significance for the customer’s choice of banking facility. In SpareBank 1 Vest customer competitive element within the concept of bank, and also whether these values are at all interaction through these channels is the proximity. important for customers who mainly wish to responsibility of a special department for this use telephonics and the Internet as their Friendly and helpful purpose – Customer Service. In cases where channel of communication with the bank. Surveys show that the lack of good service is the customer has a personal adviser the SpareBank 1 Vest is convinced that the values often the reason why customers change customer relationship is dealt with by this nurtured by the savings banks - with a new and banks.A friendly and helpful attitude promotes adviser, although the customer may also be broader content - will continue to be key customer satisfaction and customer loyalty attended to by Customer Service, if the parameters of competition in the future. which is also reflected in the bank’s accounting customer so wishes. performance. SpareBank 1 Vest wishes to place Customer relationships Core values an even greater emphasis on this core value regardless of the channel Following a strategic reassessment carried out and will monitor progress in this area through The personal customer relationship, based on in 2000, SpareBank 1 Vest concluded that the further customer surveys. bank’s market and communications strategy the perception of the bank as a close, friendly, will continue to be based on differentiation as Competent helpful and competent entity, will thus be a competitive strategy. SpareBank 1 Vest is also in the process of equally important in the new channels as it has Through time, key elements of the bank’s value entering a phase where the customers are been, by tradition, in the bank’s branch base will therefore play an important role in contacting the bank when they need products network. It is the aim of SpareBank 1 Vest to stimulating competition in new channels. which also include advisory services to a ensure that good customer relationships are However,the dynamism of the market calls for greater extent than payment services. The also developed in new channels, and the bank’s further specification and clarification in this customers will be more inclined to carry out core values must also be visible in these areas. area. Our value profile will thus be based on a general payment functions themselves, while In total, this will continue to reflect the perception of the bank as an entity the bank will supply the tools needed. This activities of a bank with a value profile where characterised by the following attributes: means that our proficiency (capability) will be the human aspect is given meaning and Local, friendly, helpful and competent. a steadily more important part of our delivery content.

61 62 SPAREBANK 1 VEST ANNUAL REPORT 2000

RETAIL MARKET:

A complete service, through all channels

SpareBank 1 Vest maintained its comparison. Information has also become channel to move in only one direction in the position as the leading retail bank in the more accessible, through both the media and future - upwards. counties of Hordaland and Sogn & the Internet, and has thus increased market Fjordane in 2000. Profits from this awareness of the various banks and financial Brand product and service quality segment, before costs and losses, institutions. In all, the pace of change in Just as new technology is changing customers’ amounted to NOK 615m, against customer perceptions and expectations of requirements of their banking partner, their NOK 564m in 1999. prices and service has increased, and will expectations as regards the quality of service continue to increase. are also changing. Moreover, general trends in Market surveys also show that even though demography and lifestyle will bring about Sparebank 1 Vest is the largest retail bank in its New technology gives increased major changes in consumer behaviour in the market area, with a total of 250 000 accessibility slightly longer term. The educational customers, its position as market leader is SpareBank 1 Vest had 64 branches at the end revolution that has been taking place since the exposed. Competition is intensifying, with an of 2000, the same as in 1999. However, the 1960s means a different generation of older increasing number of players offering branch in the Student Centre in Bergen was people who will be much more demanding as specialised services, while at the same time close following the acquisition of Vår Bank og consumers. The customers are looking for structural changes within the finance industry Forsikring, and at the same time a new branch simplicity and less complexity, combined with are still taking place.The combination of new was opened at Tårnplass in the centre of flexibility and solutions tailored to individual operating conditions and strong national Bergen.We continue to define our branches as requirements, products and services. Products economic growth has whetted the appetites the main channel of distribution, but the and services are being chosen to a greater of foreign financial services groups to expand structure, technology and service content at extent on the basis of what they say they are in Norway, or to look for merger partners. branch level are under constant review.A new and what they represent, in full conformity SpareBank 1 Vest has responded to the branch concept with a higher degree of with the customers’ own requirements, value challenges in the marketplace by continuing to selfservice was introduced at the head office and lifestyle. provide a complete range of products to its in Kaigaten and in Sogndal, and is due to be Increasing membership of benefits customers in all phases of life. SpareBank 1 implemented in a further 8 branches in 2001. programmes Vest does not operate solely in niche areas. So far,the new concept has resulted in positive SpareBank 1 Vest has experienced a sharp rise Instead, it is a full-scale bank, providing its feedback from both customers and the bank in the number of customers who are covered customers with a complete banking service staff. by the benefits programmes which are through all available channels, whether specially tailored for different age groups and through its branches, using online facilities or Increased use of Customer Service are well founded in current trends.The various by telephone. Here, customer contact, Customers made much greater use of the benefits programmes are an offer to the bank’s advisory services and good interpersonal bank’s online service, Nettbank, and Customer customers in all age groups and in every phase relationships give the bank important com- Service in 2000. The accessibility and options of life, from "Labb and Line" for the youngest, petitive advantages. available under Customer Service were increased during the year and almost 1 million "Eleven to Fifteen", "Standing on your own two calls were registered, and surveys of customer feet", to "retail Extra". Change in customer behaviour satisfaction showed a high level of satisfaction "Standing on your own two feet" has had the In a short space of time, customers have had with the bank’s telephone-based services. greatest increase in customers, with a rise of less need to actually come to the bank, and no less than 95%.This a programme for young this trend was further strengthened in 2000. New Nettbank people which is specially adapted to their While only 22% of giro payments were carried The bank launched new home pages on the requirements and the need for individual out electronically in 1998, this figure had risen Internet in 2000, with a heightened focus on follow-up. More than 18 000 of SpareBank 1 to 52% in December 2000. The number of interactivity and information as the first step Vest’s customers have joined the programme, customers who use "Nettbank" - SpareBank 1 towards a new and improved online service. and the bank has recorded the highest level of Vest’s online banking service - has increased The new "Nettbank" was launched on 5 March sales success of all the SpareBank 1 banks in from 12 000 at the end of 1999 to around 30 2001.The new online service provides a much 2000. Within the targeted age group, 57% of 000 at the time of writing, at the start in March broader array of products and services and the customers are now members of the 2001. allows the customers to buy and sell stocks programme. "Retail Extra" recorded a 36% A strong focus on this area and a major and investment units, while at the same time rise in membership. allocation of resources by the largest financial providing a complete overview of banking Continuous product development, strength- services groups have helped to give the transactions. However, the greatest innovation ening of the SpareBank 1 Vest brand name, and online/direct service banks a strong foothold is the launch of a new page where the a focus on further improvements in the quality in the market, and they are now part of the customer and the bank can meet. We expect of the service provided will therefore be main total banking picture for purposes of the demand for banking service through this priorities in the coming years.

63 SPAREBANK 1 VEST ANNUAL REPORT 2000

RETAIL MARKET:

Customer satisfaction up, waiting time down

SpareBank 1 Vest’s aim is to ensure that its New queue measurement system branch network. Internal objectives have now customers are very satisfied with their bank. New initiatives have been launched as part of been set for what is an acceptable waiting/ Great efforts are therefore made to measure this process, including the installation of a new response time when using our new telephone- customer feedback so that the bank is always queuing system in all branches in the Bergen based and online channels. In the course of competitive and able to meet the region, and in all branches being build on the 2001 internal objectives of this kind will also requirements of the market. basis of the new branch concept. The system be set for the bank’s branch network, which will be implemented in the first half of 2001. currently consists of 64 offices. Important considerations in this respect are Queue measurement will be a key tool in this the work done to keep customer waiting time During 2001, 11 of these offices will be con- respect since it will give the bank a considera- at a satisfactory level, in both the branches and verted and adapted in line with the bank’s new bly better overview of the situation in the when using the bank’s telephone-based and branch concept. Briefly, this means simpler and various branches, in terms of both queuing and online services. as well as ensuring that the faster procedures for "cash turnover", a higher transaction time. customers’ overall confidence in the bank, in degree of self-service, increased accessibility relation to prices, products, service and Surveys of customer satisfaction show that through extended opening hours, changes in opening times etc. is at a high level. SpareBank 1 Vest’s customers are generally working practices and a re-deployment of well satisfied with the bank, but at the same personnel resources to boost the level of In the period ahead we will be focusing on time there is room for improvement. additional sales to our customers. extending and refining our operating base through a broader range of products, Short response time The feedback from both the customers and competitive terms and increased accessibility. Surveys of customer satisfaction indicate that the employees with regard to the bank’s new the response time is important for the bank’s branch concept has been very positive, with customers – not only with regard to telepho- reduced waiting time and increased customer ne-based and online services, but also in the satisfaction.

64 SPAREBANK 1 VEST ANNUAL REPORT 2000

EIENDOMSMEGLER 1:

Norway’s largest estate agency

EiendomsMegler 1 Vest AS reached a been reorganised as a separate limited EiendomsMegler 1 largest in Norway historic milestone in 2000. More than company, EiendomsMegler 1 Sunnhordland AS, Cooperation was established with the other 1 000 properties were sold through the and is jointly owned by EiendomsMegler 1 estate agency companies of the SpareBank 1 company’s five sales offices, up 16% on Rogaland AS. alliance in 1999, and in a short period of time 1999. Never has SpareBank 1 Vest EiendomsMegler 1 has become a very strong handled so many properties! For the In 2000, in response to increasing competition, brand name. first time, the company’s turnover EiendomsMegler 1 Vest separated the different exceeded NOK 1 billion, measured by segments and they now exists as individual Through this alliance, EiendomsMegler 1 has the price of the properties sold. profit centres. become Norway’s largest estate agency, turning over 9 620 properties in 2000, against At the head office in Nedre Korskirke- 6 200 in 1999.There is a clear trend indicating almenning departments have been set up to that consumers are turning towards the large, In 2000, EiendomsMegler 1 Vest and focus specially on sales of new projects, nationwide estate agencies, and this has SpareBank 1 Vest placed a greater focus on commercial properties and housing co- contributed to the growth. A high level of cross-sales of services. Collaboration between operative dwellings, in addition to the ordinary proficiency among our personnel has the bank’s estate agency activities and its sale of property in the secondary market. reinforced this trend in the local markets, advisory services offers great potential. To where competition remains intense. date, the figures show that SpareBank 1 Vest A customer service department has also been finances around 40% of house purchases. set up, which also serves the regional Roughly 50% of the turnover is channelled branches. Opening hours have been extended, into the bank in the form of different to 8 am to 8 pm on weekdays, and from Eiendomsmegler 1 first to profile investments for a shorter or longer period. 10 am to 4 pm on Saturdays. openness of bids 2000 saw a degree of media focus on ethics At the end of the year, EiendomsMegler 1 Vest and work practices in the estate agency AS had a workforce of 30 (incl. Stord), and this business, including the issue of false bids. Restructuring and reorganisation will be increased by 4-5 in the first half of EiendomsMegler 1 is the first estate agency EiendomsMegler 1 Vest has a considerable 2001. undertaking in Norway to give the buyer the knowledge of local market conditions, based right to see all the bids that form the basis of on its five sales offices.The offices are located the price that has been realised. in the centre of Bergen, in the Åsane shopping centre, at Sandsli in Fana, and in the Sartor EiendomsMegler 1 seeks to be the shopping centre and in Stord. The regional recommended and leading estate agency in its branch at Nygård was re-located in the Sartor local markets, and this will continue to be the shopping centre in 2000.The Stord office has company’s goal in 2001.

65 66 SPAREBANK 1 VEST ANNUAL REPORT 2000

CORPORATE MARKET:

Biggest in small and medium-sized companies

A greater focus on the corporate New technology is also leading to product customers on the basis of two criteria; the market reinforced the bank’s position in development in the area of online solutions customer’s debt-servicing ability and the this segment in 2001. Much of the for the commercial sector. In the second half degree of collateral cover for the creation value in Norway takes place in of 2000 SpareBank 1 Vest launched "Bedrifts- commitment. Five per cent of the loan the districts, and in Hordaland, outside Nett", a new generation of online banking portfolio was regarded as carrying a high risk Bergen, SpareBank 1 Vest is the services, on the Internet. at the end of 2000.This is 1 percentage point trendsetting bank for the commercial down on the previous year-end figure. In the sector. In Bergen itself, the market Strategic cooperation strengthened intermediate risk range, the figure rose by 1 houses many players, and the main Collaboration with the SpareBank 1 alliance percentage point. Higher loss provisions have competitors are the large commercial and FöreningsSparbanken again provided good been assessed and appropriate allocations banks. results in 2000, as reflected by participation made. In the corporate market, the risk is and financing commitments in a number of considered to be rising at a moderate rate, national and international projects. Through especially with regard to commitments in the In terms of the number of customers, this collaboration, SpareBank 1 Vest has industrial sector, as well as building and SpareBank 1 Vest is the largest bank, with 32% acquired the strength and capacity needed to construction, where the bank’s exposure is of the market, reflecting the fact that the become involved in larger undertakings. low.The bank’s high risk commitments in these bank’s customers consists to a great extent of One of the largest and most important areas are lower than the portfolio average. small and medium- sized companies. The projects in 2000 related to the establishment Real estate, shipping and the retail and corresponding figures for market shares, of a common technological platform for the wholesale trade are the largest individual measured by gross lendings, shows that SpareBank 1 banks. This will give the branches in the bank’s corporate portfolio, SpareBank 1 Vest has a 10% share, an increase customers increased scope to use the best- and commitments in excess of NOK 20m of around 2%-points in the last two years. In developed branch and distribution network in make up 45.6% of the total volume of 2000, the bank’s lendings increased by 14%, the finance industry. It will also provide commitments in the corporate market. from NOK 7.1bn to NOK 8.1bn.Taken sepa- SpareBank 1 with an enhanced capability to rately, the corporate market provided profits develop new and better products tailored to Prospects of around NOK 224m, against NOK 229m in individual customer requirements. The process of structural change within the 1999. In 2000, participation in the alliance also led to banking industry is still in progress, and further the setting up of a major client section in intensification of competition is likely in 2001. Commercial insurance SpareBank 1 Vest in Bergen in order to SpareBank 1 Vest expected to see lower The acquisition of Vår Bank og Forsikring has strengthen the organisation and to make the demand for loans in 2001, and deposits are strengthened our competitive position by bank better equipped to deal with larger also likely to grow at a lower pace. Norwegian broadening the existing product range. customer groups. Through the SpareBank 1 domestic interest rates are likely to remain at SpareBank 1 Vest is now a full-scale financial alliance, and by continuously monitoring the their present level, with some prospect of a institution which is also able to offer insurance market and analysing branches of industry, we decline as the year progresses. products for the commercial sector, an area are able to provide our own solutions, SpareBank 1 Vest is well placed to achieve its where sales of this kind are expected to developed in pace with the requirements of goals in 2001. The bank has a large customer increase substantially. Our expectations in the commercial sector. base, a healthy financial position, a good 2001 relate particularly to sales of the defined reputation, a broad product range, loyal and benefit pension scheme "Free Choice", which Classification lowers risk proficient personnel and strong local roots is offered to companies with no traditional The bank introduced a new risk classification which will be utilised to an even greater pension schemes, as well as ordinary insurance system for the corporate market in 1999.The extent to focus on higher sales, to both products. system classifies the risk attached to individual present and new customers.

Loan distribution – Bergen and Regions Loan distribution (at Group level) Development of income – Corporate Market Corporate Market

NOK mill. 250 Retail customers 68,08%______Bergen 53,22%______Real estate operations 10,41% ______Primary industries 3,64% 200 Sunnhordland 12,00%______Wholesale/retail,trade,hotels and restaurants 3,99% International shipping and pipe transportation 3,58% Nordhordland 6,87%______Other transportation,post and telecommunications2,80% 150 Industry and mining 2,31% Hard./Midthord. 9,21%______Service industries 2,01% 100 Building and construction,power and water supply 1,66% Vest 7,40%______Insurance and finance 1,28% Foreign 0,19%______50 Nordfjord 8,67%______Central/local government 0,04% ______Oil and gas 0,01% ______Sogn 2,65% ______0 1996 1997 1998 1999 2000

67 68 SPAREBANK 1 VEST ANNUAL REPORT 2000

PRIMARY CAPITAL CERTIFICATES (PCCS):

Changes in regulatory environment

SpareBank 1 Vest’s performance in 2000 market as a whole is due to the fact that the Foreign investors find PCCs complicated.They provided an acceptable 12% return on proportion of PCC capital is lower for differ from the familiar instruments, and are equity, in line with the bank’s target.The SpareBank 1 Vest than it is for others. therefore of little interest. dividend for the year is NOK 12 per Low risk attached to SpareBank 1 Vest’s PCCs The level of trading in PCCs in the Norwegian primary capital certificate, the A price of NOK 130 per PCC is nonetheless stockmarket has therefore fallen significantly, maximum amount permitted under high, when measured against the bank’s book and this, in turn, has made PCCs even less current regulations. values, and this may be a reflection of the interesting. bank’s risk profile. SpareBank 1 Vest’s has a The largest of the savings banks, Gjensidige In 2000, SpareBank 1 Vest changed its dividend broadly diversified portfolio, with a low NOR Savings Bank, needs to raise equity and policy, giving priority to the payment of a cash proportion of commercial commitments. has therefore applied for permission to be dividend rather than the accumulation of a Over time, this has resulted in low losses, and reorganised as a limited company under dividend regulation reserve. only moderate losses are expected in the legislation to be specially passed for this period ahead. purpose. In report no. 4 from the Bank Law SpareBank 1 Vest’s PCCs have generally better Commission, the way is opened for a general Change in RISK secured than the bank’s own reserves, and reorganisation right, but consideration of the Despite satisfactory value creation from core therefore have low risk exposure. matter in the Storting has yet to draw up the activities, the value of the bank’s PCCs fell by The bank’s PCCs total NOK 250m, while the final conclusions in this matter. 38.7%, from NOK 212 to NOK 130 in the bank’s own reserves exceed NOK 1 800m, The other savings banks do not like the idea of course of the year.This is related to changes in after allocation of the profit for 2000. PCCs special legislation being passed for Gjensidige RISK regulation, which has great significance account for approximately 13.6% of the bank’s NOR Savings Bank, fearing that that legislation for SpareBank 1 Vest. total core capital. of this kind would lead to a further loss of Under the new regulations, only amounts that interest in PCCs, and that in the future its are allocated to the dividend regulation Reorganisation of savings banks appeal would be restricted to those with a reserve may be included on the RISK A current topic of discussion is the reorgani- special interest in this kind of instrument. In calculation. No such allocation was made by sation of savings banks. Reorganisation as a such a situation, PCCs would not be a source SpareBank 1 in 2000 and the RISK amount is limited company which would give greater equity for the remaining savings banks. therefore NOK 0. access to equity. The savings bank sector is the most important The lapse of RISK on this part of the The market for new issues of PCCs has dried consultation body before a final decision is company’s earnings must be regarded as up, and it would be difficult to carry out a made. The Association of Norwegian Savings reasonable. PCCs do not share in ownership major issue within the framework of Banks will make its recommendation in of the bank’s reserves. The fact that these acceptable terms for capital of this kind.This is April this year, and SpareBank 1 Vest’s position items have been mixed from the point of view because of the special characteristics of PCCs on the general question at issue will be of taxation has been to the advantage of the which make them less than fully acceptable as decided when the Association’s views are owners of PCCs. The value of this advantage an equity instrument. known. has been included in the price of SVEG, and The Oslo Stock Exchange is opposed to However,the Board of Directors of SpareBank the termination of this advantage inevitably including PCCs in the Total Index.There are 1 Vest has already taken the view that, for its causes the price to fall.That the fall has been therefore no indexed, or virtually indexed, part, SpareBank 1 Vest will continue in its greater for SpareBank 1 Vest than for the portfolios for PCCs. present organisational form.

SpareBank 1 Vest compared with Oslo Stock Exchange Total Index 02.01.2000 - 31.12.2000 2000 2001 220 SpareBank 1 Vest 210 Total Index 200

190

180

170

160

150 Index (02.01.1999 = 100) 140

130

120 jan feb mar apr mai jun jul aug sep okt nov des jan

69 SPAREBANK 1 VEST ANNUAL REPORT 2000

THE SPAREBANK 1 ALLIANCE:

Major Advances in 2000

SpareBank 1 Gruppen AS is the parent bank of long-term strategic and business alliance has banks and give the customers better access to the financial services group, the SpareBank 1 been established between SpareBank 1 the best-developed branch and distribution Group. The company coordinates the group’s Gruppen AS on the one hand and the network in the Norwegian financial sector. A strategic projects and manages the SpareBank Norwegian Federation of Trade Unions and common platform will also provide SpareBank 1 brand name, and is also responsible for NKL on the other. 1 a broader basis for the development of new strategic IT development, payment transfer products tailored to customer wishes. services and online banking services on behalf Brandbuilding The SpareBank 1 banks are also collaborating of the Norwegian owner banks, specifically During the last four years, the SpareBank 1 on the development of the next generation of SpareBank 1 NordNorge, SpareBank 1 Group has succeeded in making the SpareBank online banks. Working closely with the MidtNorge, SpareBank 1 SR- Bank, SpareBank 1 brand name one of the most well-known in alliance’s Swedish partner, Förenings- 1 Vest and the Samspar banks. the Norwegian financial sector. In Norway, Sparbanken, a total concept has been At the end of 2000, the company was the sole outside Oslo, SpareBank 1 is the most well- developed which will give the customers even owner of Bank 1 Oslo AS, SpareBank 1 known brand name among the larger financial more reasons to choose online banks in Livsforsikring AS, Odin Forvaltning A, institutions. If we include Oslo, where general, and SpareBank 1 in particular. The SpareBank 1 Skadeforsikring AS, SpareBank 1 SpareBank 1 had not profiled distribution implementation process started in 2000. Livsforsikring AS, SpareBank 1 Aktiv before the integration of VÅR towards the end Nevertheless, the most important project – Forvaltning ASA and Sparebankutvikling AS. of 2000, the SpareBank 1 name is in second and the largest – for the SpareBank 1 alliance The company also has a 51% shareholding in position. next year will be what is called the "Customer First Securities ASA and Sparebankutvikling A broad focus on brandbuilding, along with a 2003" project. The aim is to establish a AS, as well as a 65% shareholding in EnterCard continuing local present and advertising on common platform in order to meet individual AS. national TV, has brought good results in a customer requirements systematically and relatively short space of time. In the coming professionally. Acquisition and integration of years SpareBank 1 will be aiming to develop VÅR Gruppen ASA the brand name further by creating a greater The future On 13 June 2000, SpareBank 1 Gruppen AS awareness of the bank’s core values – SpareBank 1 stands for cooperation between received a licence from the Ministry of Finance "proximity to the market, local roots and independent banks which believe in having to acquire VÅR Gruppen ASA. cooperation". local roots and local management of financial During the year, the SpareBank 1 Group and services. An understanding of the individual the SpareBank 1 banks allocated considerable Joint projects customers and the local environment, along resources to prepare for the extensive Each year, the Norwegian SpareBank 1 banks with local management, will be an increasingly integration process. The banks have gradually carry out in extensive development work, important advantage in the years to come. taken over the regional banking activities of involving around 200 employees in the various One of the aims of the SpareBank 1 Group is VÅR Bank AS, as well as part of the insurance projects.The aim is to develop new tools and to progress from primarily offering traditional business. For its part, SpareBank 1 Gruppen AS systems geared to the requirements of the savings and loan products to become a total has taken over and integrated VÅR Gruppen future, and thus promoting the best possible supplier of financial services. By developing in ASA in Oslo. Here, the acquired company was relationship with the customers. this way, SpareBank 1 will reinforce its position far bigger than the acquiring company, in both One of the largest projects in 2000 was and thus make a reality of the alliance’s vision: financial terms and in relation to the number directed at establishing a joint technological "SpareBank 1 shall meet each customer’s of employees. platform for the SpareBank 1 banks in order expectations through proximity to the market, In connection with the purchase, an extensive to create closer links between the owner local roots and cooperation".

70 SPAREBANK 1 VEST ANNUAL REPORT 2000

THE SPAREBANK 1 GROUP - FACTS AND BACKGROUND

The SpareBank 1 alliance was established in Nøtterø Sparebank 1996 by Sparebanken Nord-Norge, Spare- Rygge-Vaaler Sparebank banken Midt-Norge, Sparebanken Vest and Sparebanken Grenland Sparebanken Rogaland. Vestfold SpareBank The licence permitting the binding coopera- tion alliance and the establishment of the SpareBank 1 Group was received in November 1996. In the same year, Samarbeidende Sparebanker AS joined the Tromsø SpareBank 1 alliance. Today, Samarbeidende Sparebanker consists of 15 savings banks located in the eastern and SpareBank 1 northern flanks of western Norway. Total assets: NOK 210 billion In August 1998 an agreement was entered No. of customers: 2 300 000 into between the Norwegian SpareBank 1 No. of employees (man-years): 5 900 banks and the Swedish commercial bank No. of branches: 425 FöreningsSparbanken AB (plc.) concerning the ownership of SpareBank 1 Gruppen AS. Bank 1 Oslo In 2000, SpareBank 1 Gruppen AS received a Life insurance licence to acquire VÅR Gruppen ASA.At the Non-life insurance same time, the Norwegian Federation of Odin Forvaltning Trade Unions (LO) became a co-owner of Fondsforsikring SpareBank 1 Gruppen AS. EnterCard (54%) At 31 December the shareholders of SpareBank 1 Kredittkort SpareBank 1 Gruppen AS were as follows: First Securities (51%) Sparebanken Nord-Norge (13%), Spare- EiendomsMegler 1 banken Midt-Norge (13%), Sparebanken Vest Financing companies (13%), Sparebanken Rogaland (13%), FSPA - branch Samarbeidende Sparebanker AS (13%), FöreningsSparbanken AB (25%) and the Norwegian Federation of Trade Unions (10%). Following the integration of VÅR Bank og Forsikring ASA, the SpareBank alliance in Trondheim Norway has total assets of NOK 210 billion, 425 branches, 5 900 employees, 2.2 million retail customers and 110 000 corporate cus- tomers. FöreningsSparbanken Total assets: SEK 929 billion Banks No. of customers: 4 700 000 At the end of 2000 the SpareBank 1 alliance No. of employees (man-years): 11 000 consisted of the following banks: No. of branches: 740 SpareBank 1 Nord-Norge SpareBank 1 Midt-Norge Bergen Oslo Spintab (credit company) SpareBank 1 Vest Robur (funds) SpareBank 1 SR-Bank FöreningsSparbanken Finans Bank 1 Oslo FöreningsSparbanken Kort Samarbeidende Sparebanker: Swedbank Markets (stockbrokers) SpareBank 1 Ringerike Stavanger Swedbank (Luxembourg) S.A. SpareBank 1 Kongsberg SparLiv/SparFond SpareBank 1 Gran FöreningsSparbanken Fastig.b. SpareBank 1 Jevnaker Lunner FSPA - branch, Oslo SpareBank 1 Hallingdal SpareBank 1 Gudbrandsdal In cooperation with: SpareBank 1 Nordvest 85 independent savings banks SpareBank 1, Bank 1 Oslo 4 partly owned savings banks GS Banken 450 local branches Halden SpareBank Total assets: SEK 80 billion Lom og Skjåk Sparebank Modum Sparebank

71 SPAREBANK 1 VEST ANNUAL REPORT 2000

ELECTED OFFICERS, MANAGEMENT AND REGIONS (MEDIO MARCH 2001)

SUPERVISORY BOARD BOARD OF DIRECTORS REGION BERGEN Members elected by depositors Pål W.Lorentzen (chairman) Office address: Kaigaten 4, N-5016 Bergen Bjørn Kvamme Bjørn Ove Børnes (deputy chairman) Post address: P.O. Box 7999, N-5020 Bergen Anne-Lise Noss Helen Nordeide Fløisand Telephone: 815 22 002 - Fax: +47 55 21 73 50 Roald Korsøen Eli Førde Aarskog Regional General Manager: Erik M.Throndsen Håkon Østgulen Erik Bøckmann Head of Major Accounts: Deputy General Ola T.Sekse Jan O.Yttredal Manager Knut N.Wie Margunn Y.Samnøy Anne Gine Hestetun Head of Corporate Market: General Manager Vidar Berge Terje Kvamme Sigurd Tufte Jan Tore Eresberg Anne Sissel R. Engevik Head of Small Companies: Deputy General Jostein Valen Knut Ravnå Manager Kjell Ivar Bruvik Arnvald Risøy Terje Vidar Vestvik CONTROL COMMITTEE Market area – Bergen Lillian Torsvik Bjørg Nævdal (chairman) Head of Market Area: General Manager Lillian Torsvik (deputy chairman) Jan-Tore Thunestvedt Members elected by local authorities Nils K. Rødland Branches: Kaigaten, Nedre Korskirkealmennin- Karl G. Mæland (deputy chairman) Kjell Steinsbø gen, Danmarksplass, Minde, Sletten, Nordnes, Inger Sjong Anne-Lise Noss Tårnplass Bjørg Hoff External auditor Ingmar Ljones Geir Inge Lunde, State Authorised Public Market area – Bergen North Erling Mjelde Accountant, PricewaterhouseCoopers DA Head of Market Area: Deputy General Manager Geir Lid Magne Lien Norvall Bolstad MANAGEMENT Branches: Åsane, Indre Arna, Øyjorden Margun Ervik Managing Director: Knut Ravnå Bernt J. Flæsland Deputy managing Director:Terje Mjelde Market area – Bergen West Åshild Bjelland Eriksen Office address: Kaigaten 4, N-5016 Bergen Head of Market Area: Deputy General Manager Gerd Kvile Post address: P.O. Box 7999, N-5020 Bergen Bjørn T.Johannessen Sigurd Toft Telephone: 815 22 002 - Fax: +47 55 21 73 50 Branches:Askøy,Vestkanten, Fyllingsdalen, Internal Audit Department Laksevåg Employees Internal auditor Bernt R. Petersen Stein Tore Davidsen Market area – Bergen South Kjell Sævdal Controller/Finance Head of Market Area: Deputy General Manager Inger Finne Controller, Director Frode Høyland Inger Johanne Aam Oddvar Dahl Accounting, Head of Accounting Jan Eystein Lien Branches: Lagunen, Nesttun, Sandsli, Os Mary H. Davidsen Finance, General Manager Egil Mokleiv Bente Moore Equity, General Manager Karstein Lien REGION Bodil Langeland HARDANGER/MIDTHORDLAND Ingvei Wolfe Operations N-5600 Norheimsund Erling Vik Director Arne Selle Telephone: 815 22 002 - Fax: +47 56 55 07 01 Alvhild Halleraker EDP/Systems, Stig Gunnar Røthe Regional General Manager: Oddvar Ystanes Eva Braut Service Centre,Ass. General Manager Branches: Norheimsund, Strandebarm, Øystese, Godskalk Skåtun Rolf Titlestad Bjørkheim,Tysse,Vaksdal, Dale, Modalen, Procedures, Deputy General Manager Eikelandsosen, Fusa, Odda, Røldal Members elected by owners of primary Svein T.Havre primary capital certificates Security, Head of Security Steinar Søraas REGION NORDFJORD Kjellaug Kvåle (chairman) Information / PR P. O. B o x 243 Tor Johannessen Director Jørn Lekve N-6771 Nordfjordeid Finn Haugan Information & PR, editor Christine Wigand Telephone: 815 22 002 - Fax: +47 57 88 56 01 Johan Fredrik Kroepelien Deputy General Manager Lisbet Nærø Regional General Manager: Roald Ness Erik Sture Larre Company Secretary Greta Tepstad Branches: Nordfjordeid, Måløy, Selje, Bryggja, Svein Garberg Davik, Stadlandet Gunnar Dolven Legal Dept. Erik Otter Steen Lawyer Pål Pedersen REGION NORDHORDLAND Jan S. Johannessen Personnel/Development P. O. Box 140, N-5903 Isdalstø Einar Nistad Director Gro Reppen Telephone: 815 22 002 - Fax: +47 56 34 28 41 Audun Fanebust Development & Organisation, Regional General Manager:Audun Rebnor Karen Blaauw Helle Deputy General Manager Torunn Garlid Branches: Knarvik Senter, Frekhaug, Lindås, Personnel adm., Deputy General Manager Masfjorden, Mastrevik, Radøy, Fedje, Lonevåg, Annelise Drange Haus,Valestrandsfossen Customers/Market Director Frank Johannesen Market, Market Manager Jan Erik Kjerpeseth Customer Service, Deputy General Manager Trond Larsen Credit Support, Deputy General Manager Torstein Vindheim Insurance, General Manager Arne Bakke

72 REGION SOGN P. O. B o x 22 N-6851 Sogndal Stadlandlandendet Telephone: 815 22 002 - Fax: +47 57 67 67 95 Regional General Manager: Frank H. Bjørndal Selje Mål y Region Nordfjorrd REGION SUNNHORDLAND BrygBryggjay gja P. O. B o x 404 DDavik Nordfjordeidfj d N-5403 Stord Telephone: 815 22 002 - Fax: +47 53 45 68 90 Regional General Manager:Arnt Sortland Branches: Leirvik, Bremnes, Mosterhamn, Sæbøvik, Husnes, Fitjar, Skånevik, Førde, Sveio, Sagvåg

REGION WEST P. O. Box 152/153 N-5352 Straume Telephone: 815 22 002 - Fax: +47 56 32 34 01 Regional General Manager:Trygve Wåge Branches: Straume, Rong, Skogsvåg, Storebø, Bekkjarvik, Ågotnes

EIENDOMSMEGLER 1 VEST AS Head Office: Bergen ReRRegion Sogn EiendomsMegler 1 Vest AS Nedre Korskirkealmenningenorskirkealmenniskirkealmenni Sogndal Nedre Korskirkealmenningen 1 Kaigatenaigatenigaten SpareBank 1 Vest DanmarksplaDaanmarksplassmarksplas P. O. Box 7999 MMinde N-5020 Bergen NNordnes Telephone: +47 55 21 77 00 Sletten Fax: +47 55 21 77 14 Tårnplass Åsane: Øyyjyjorden Åsane Senter MastrevikM reve ikk Masfjordenasfjorden N-5116 Ulset Fedjee Telephone: +47 55 19 74 50 LindLi ås Fax: +47 55 19 74 51 RadRaadøy Dale Fana: Sandslihaugen 1 KnarvikKKnarvivik Loneeevåg N-5254 Sandsli Rong Region Nordhordlandnd Telephone: +47 55 11 47 20 Valesttrrrandsfodsfossen Å Fax: +47 55 11 47 21 ø HausHaausuus Vaksdal Ågotness å AArnana Bjørkheim Sotra: Øystesey Sartor Senter Norheimsund N-5353 Straume SandsSandan slsli Laguunennen Telephone: +47 56 32 34 80 g StrandeStrandebarmnde Fax: +47 56 32 34 81 Eikelandsosenandsosedsose Region Veststt OOs Fusausa Stord: Borggt. 8 Leirvik Storebø P. O. B o x 404 Odda N-5403 Stord Bekkjarvikrvik Telephone: +47 53 45 68 80 danger/Midthorrdland Fax: +47 53 45 68 85 Fitjararr

AS FILIALBYGG LeiLeirirvik Husnese Managing Director: Magne Hellevang Røldal Nedre Korskirkealmenningen 1 A Bremnenes SagvSag åg Sæbøvikik SpareBank 1 Vest N-5020 Bergen Mosterhamnrharham Skånevik Telephone: +47 55 21 75 11 Fax: +47 55 21 76 80 Førdrrde Sveioo Region Sunnhordland

73 Information Secretary Company Secretariat Information/PR st, Files, Equipment Systems IT-Operations Collateral Security Systems Payment User Support Bank systems Po Project Coordination Project Purchases IT Service Centre Procedures Security Buildings Operations 1 Vest Market Customer Service Insurance SupportCredit Eiendoms- Megler RM CM Nordhordl. RM CM Sogn SpareBank 1 Alliance 1 SpareBank Deputy Managing Director RM CM Customer/Market Nordfjord RM CM Managing Director Board of Directors Board Sunnhordl. RM CM Midthordl. Hardanger/ Internal Audit RM CM est V Head Cashier Small Companies Companies Major Accounts Investments Overdrafts/Collection RM CM Bergen Legal Controller Accounting Finance Equity Controller/Finance ersonnel Development P Administration Reorganisation rsonnel/Development Pe Organisational structure

74 75 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