Annual Report 2003 3 Contents
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key figures (AMONTS IN NOK MILLION) PARENT BANK GROUP 31.12.01 31.12.02 31.12.03 31.12.03 31.12.02 31.12.01 from the profit and loss account 932 1 019 1 030 Net interest- and credit commission income 1 038 1 021 932 223 122 317 Total income 367 175 262 1 155 1 141 1 347 Total net income 1 405 1 196 1 194 716 747 767 Total costs 814 793 747 439 394 580 Result before losses and write-downs 591 403 447 136 239 314 Losses on loans, guarantees etc. 318 245 138 000 Gains/ losses on sale of fixed financial assets 0 00 303 155 266 Result before tax 273 158 309 99 92 56 Tax payable on ordinary result 62 94 104 204 63 210 Result from ordinary operations after tax 211 64 205 Minority interests 1 11 204 63 210 Profit for the year 210 63 204 from the balance sheet 35 267 37 890 40 899 Balance sheet total 40 892 37 879 35 266 1 908 2 186 2 435 Certificates, bonds and other interest-bearing securities 2 435 2 186 1 908 30 850 33 344 36 573 Gross loans to customers 36 869 33 574 30 973 519 669 813 Loss provisions 825 679 526 18 499 20 249 21 727 Deposits from customers 21 666 20 182 18 429 ratios 61,99 % 65,47 % 56,94 % Costs as a percentage of total net income 57,94 % 66,30 % 62,56 % 61,99 % 66,88 % 58,95 % Costs as a percentage of total net income (excl. net gains) 59,90 % 67,66 % 62,56 % 2,09 % 2,04% 1,95 % Costs as a percentage of average assets 2,07 % 2,17 % 2,18 % 0,88 % 0,42% 0,68 % Result before tax as a percentage of average assets 0,69 % 0,43 % 0,91 % 2,09 % 3,18% 3,03 % Gross commitments in default as a percentage of gross lending 3,11 % 3,20 % 2,11 % 1,31 % 2,13 % 1,68 % Net commitments in default as a percentage of gross lending 1,75 % 2,13 % 1,32 % 1,68 % 2,01 % 2,22 % Loss provisions as a percentage of gross lending 2,24 % 2,02 % 1,70 % 0,44 % 0,72 % 0,86 % Net loan losses as a percentage of gross lending 0,86 % 0,73 % 0,45 % 59,96 % 60,73 % 59,41 % Deposits as a percentage of gross lending 58,76 % 60,11 % 59,50 % 19,13 10,29 14,01 Profit per PCC (NOK) 1) 14,78 4,35 14,01 Profit per PCC (NOK) 2) 148,70 149,01 149,01 Equity capital per PCC (NOK) 3) 15,00 10,00 14,00 Dividend paid 47,45 47,75 47,75 Dividend Equalisation Fund per PCC 10,86 % -18,57 % 52,16 % Pre-tax return per PCC 4) 11,66 % 11,29 % 12,24 % Capital adequacy 11,82 % 9,98 % 10,58 % 9,31 % 2,72 % 9,04 % Return on equity capital after tax 9,04 % 2,76 % 9,36 % 1) After-tax profit multiplied by the PCC holders' share of the equity capital as at 1.1, divided by the number of PCCs outstanding. 2) After-tax profit multiplied by the PCC holders' share of the equity capital as at 1.1, 3) PCC capital + Premium Fund + Dividend Equalisation Fund, divided by the number of PCCs outstanding. 4) It has been assumed that the investment has been made at the beginning of the year in question. 3) It has been assumed that the investment has been made at the beginning of the year in question. annual report 2003 3 contents key figures 3 annual report 2003 5 profit and loss account 14 balance sheet 15 cash flow analysis 16 notes to the annual report 2003 17 profit analysis and key financial figures 51 auditor’s report | report from the control committee 53 sparebank 1 nord-norge “for and in north norway” 54 sparebank 1 nord-norge’s history and structure 55 group management structure 60 strategy and intellectual capital 61 ownership structure 66 supervisory, executive and regional bodies 69 ORG. NR.: NO 952 706 365 P.O. BOX 6800 | N-9298 TROMSØ | NORWAY PHONE: (+47) 77 62 20 00 | FAX: (+47) 77 62 25 71 | WWW.SNN.NO DESIGN: TANK | PRINTING: FAGTRYKK ALTA AS 4 annual report 2003 The story about the bank and the annual report 2003 company which restored faith in >>> a small local community. Solidarity creates strength. In the small, local community of Fiskeboel in the munici- pality of Hadsel, the co-operation between NorLense and SpareBank 1 Nord-Norge helps to decide the future of the village. If it had not been for the partnership between NorLense and the Bank, there might not have been too many jobs available in this idyllic village. Each year, NHO, the Confederation of Norwegian Business and Industry presents an award for particularly promising innovations in business. In 2001, NorLense, received this award. NorLense is one of Norway’s leading companies within the manufacturing of bilge pump- and emergency equipment for the oil industry, and sells its products in the global market. Terje Olav Hansen, Chairman of NorLense’s Board of Directors, says: “SpareBank 1 Nord-Norge has had a relationship with the company since 1993. Together with our bank, we have worked hard to keep our local community as strong and dynamic as possible. Amongst other things, we support the local school, informing the children of the various opportunities which exist in our village.” “The Bank has local roots and knows all about our small community. This means that the Bank is able to take on risks which centrally managed banks would never be willing to consider,” concludes Hansen. annual report 2003 sparebank 1 nord-norge Good revenue generation from the core banking Area of operations and overall corporate aim operations, but increased provisions against credit One of Sparebank 1 Nord-Norge’s main aims is to losses be a comprehensive provider of financial products and services in North Norway. In addition to loans, • The pre-tax operating result totalled deposits and payments transmission services, this NOK 273 million (2002: NOK 158 million) also comprises most other savings products, as well as life- and non-life insurance products. Services and • Higher loss provisions – NOK 318 million products are made available either by the Bank and (2002: NOK 245 million) its subsidiaries, or by Sparebank 1 Gruppen AS’s product companies. • Reduction in overall manning levels The Bank has implemented a multi-channel dis- – by 107 man-years tribution strategy, making its products and services available through 98 branches, one service centre • Substantial growth in customers’ levels of savings accessible by telephone on all weekdays, and the – Deposits increased by NOK 1,484 million Bank’s Internet pages. – Sale of other savings products was up by NOK 358 million SpareBank 1 for North Norway Ongoing customer satisfaction- and market position • Strong loan growth in retail banking market surveys show – both within the retail banking- and – 15.5 per cent corporate banking markets – that customers are sat- isfied with the Bank. A broad range of products and • Substantial improvement in services, proximity to the customers and proactive SpareBank 1 Gruppen AS’s result staff represent the Bank’s most important competi- tive edges. • 9.04 per cent after-tax cent return on equity The SNN Group will continue to work as an capital active and long-term partner as far as the further development of North Norway is concerned: • Profit/earnings per PCC (Primary Capital Certificate) ended up at NOK 14.01 • The Bank’s primary task will be to offer complete financial solutions to local people, businesses, • Proposed cash dividend per PCC for 2003: public sector entities, clubs and associations. NOK 14.00 The Bank’s services will be characterised by closeness and proximity to its customers, solu- Overall results tions which have been adapted to users’ needs, The SpareBank 1 Nord-Norge Group’s 2003 operat- local knowledge and corporate professionalism. ing result, after credit losses, but before tax, totalled NOK 273 million. This is NOK 115 million better • The Bank will also take an active part in the than in 2002. development of local communities through its The 2003 result is influenced by increased loan commitment and the sharing of knowledge. loss provisions and a poor result from securities, despite large price increases on the Oslo Stock • Through its direct and indirect involvement in Exchange. equity capital markets, the Bank will try to ensure Tax has been estimated at NOK 62 million. The that the region benefits from local ownership as result after tax and minority interests finished up at well as an environment of high skills and NOK 210 million. innovation. The main Board of Directors proposes payment of a NOK 14.00 dividend per PCC for 2003. • The Bank will further develop active networks for the sharing of knowledge, both nationally and internationally. • SNN will support local commerce and industry through partnership solutions and development contracts. 6 annual report 2003 Sale of other financial products and services Operating costs One of SpareBank 1 Nord-Norge’s strategic aims is Aggregate Group operating costs totalled NOK 814 to increase revenue generation from risk-free areas, million in 2003, up by NOK 21 million or 2.6 per cent by offering its customers a broad range of products on 2002. and services within the savings- and placement mar- In relative terms, however, there was further ket, and through the sale of non-life insurance.