Annual Report 2012 Sparebanken Vest Shall Be a Driving Force in Social and Commercial Development in Western Norway
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EIENDOMSMEGLER VEST | FRENDE FORSIKRING | NORNE SECURITIES | BRAGE FINANS | KYTE NÆRINGSMEGLING Annual report 2012 Sparebanken Vest shall be a driving force in social and commercial development in Western Norway. The environment: Sparebanken Vest pursues an active, forward-looking environmental policy, both internally and externally. This report has therefore only been published in a PDF-version. The report is available at www.spv.no. Other contributors: Photos by Tor Yttri and Marit Hommedal, design and layout by Knowit Reaktor. The cover photo is one of several everyday portraits that are used in Sparebanken Vest’s communication with the market and society at large. Content Key figures for the Sparebanken Vest Group ...................................................................... 4 Managing director: 2012 - a profitable year in a new banking world ................................. 5 The corporate management ............................................................................................. 6 Sparebanken Vest – local identity through generations ..................................................... 7 Board of Directors’ Report ................................................................................................ 8 The board of Directors of Sparebanken Vest ................................................................... 25 Income statement.. ........................................................................................................ 27 Balance sheet.. ............................................................................................................... 28 Cash flow statement ....................................................................................................... 30 Change in equity ............................................................................................................ 31 Note 1 Accounting principles ....................................................................................... 32 Note 2 Accounting estimates and discretionary assessments ...................................... 36 Note 3 Segment information ....................................................................................... 37 Note 4 Classification of financial instruments .............................................................. 39 Note 5 Fair value of financial instruments recognised at amortised cost ...................... 41 Note 6 Valuation hierarchy for financial instruments at fair value ................................. 42 Note 7 Financial risk management ................................................................ 44 Note 8 Risk classification of the credit portfolio ................................................. 46 Note 9 Loans broken down by market, type of receivable and geographical area ....... 48 Note 10 Commitments broken down by sector and the retail market ....................... 50 Note 11 Capitalised write-downs on commitments .............................................. 52 Note 12 Development in losses and commitments in default ................................. 53 Note 13 Secured debt .................................................................................. 54 Note 14 Loans to and receivables from credit institutions ....................................... 55 Note 15 Guarantees and secured debt .............................................................. 55 Note 16 Certificates and bonds ...................................................................... 56 Note 17 Shareholdings in group companies and associated companies....................... 57 Note 18 Market risk ..................................................................................... 59 Note 19 Interest rate sensitivity ...................................................................... 60 Note 20 Currency positions ........................................................................... 61 Note 21 Financial derivatives ......................................................................... 62 Note 22 Shares.. ......................................................................................... 63 Note 23 Liquidity risk / remaining time to maturity .............................................. 66 Note 24 Net interest and credit commission income ............................................ 67 Note 25 Interest on individual balance sheet items ............................................. 67 Note 26 Net other operating revenues ............................................................. 68 Note 27 Operating expenses ......................................................................... 69 Note 28 Pensions ........................................................................................ 70 Note 29 Taxes ............................................................................................ 73 Note 30 Intangible assets ............................................................................. 74 Note 31 Tangible fixed assets ........................................................................ 76 Note 32 Debt to credit institutions .................................................................. 77 Note 33 Deposits ........................................................................................ 78 Note 34 Deposits broken down by customer groups............................................. 78 Note 35 Securitised debt .............................................................................. 79 Note 36 Subordinated loan capital and subordinated bond loans............................ 81 Note 37 Capital adequacy ............................................................................ 82 Note 38 The equity certificate ........................................................................ 84 Note 39 Transactions with related parties ......................................................... 87 Note 40 Disputes ........................................................................................................... 91 Note 41 Accounting intergration - Hardanger Sparebank .............................................. 91 Auditor’s report .............................................................................................................. 92 Control Committee’s report ............................................................................................ 94 Declaration from BoD & CEO .......................................................................................... 95 Group key figures ............................................................................................................ 96 Corporate governance .................................................................................................. 104 Subsidiaries and associated companies ........................................................................ 112 Organizational model ................................................................................................... 113 Regional map.. .............................................................................................................. 114 ANNUAL report 2012 PAGE 3 Key figures for the Sparebanken Vest Group Amounts in NOK millions 2012 2011 2010 2009 2008 Income statement Net interest and credit commission income 1 797 1 590 1 516 1 453 1 308 Net other operating income 861 603 635 489 375 Total operating expenses 1 320 1 335 1 224 1 172 1 068 Profit/loss before write-downs and tax expense 1 338 858 927 770 615 Write-downs and losses on loans and guarantees 147 126 127 270 204 Pre-tax profit/loss 1 191 732 800 500 411 Balance sheet Assets under management 127 828 115 985 105 275 97 661 94 893 Net lending 106 789 99 304 88 465 82 302 76 235 Securities 17 790 13 970 14 829 13 129 11 463 Deposits 60 032 53 142 48 719 44 881 40 521 Subordinated loan capital 1 626 1 613 1 495 2 062 1 437 Equity 7 512 6 691 5 929 4 885 4 372 Key figures Net interest and credit commission income as % of primary capital 1.45 1.46 1.49 1.58 1.60 Pre-tax profit/loss as % of primary capital 0.96 0.67 0.79 0.54 0.50 Return on equity after tax 12.3 8.7 11.3 8.0 4.9 Loss percentage, loans 0.1 0.1 0.2 0.3 0.3 Change in net lending 7.5 12.3 7.5 8.0 17.9 Change in deposits 13.0 9.1 8.6 10.8 7.7 Net subordinated capital (NOK) 7 973 7 191 6 387 6 111 4 858 Capital adequacy 12.6 11.6 11.6 11.8 9.1 Core capital adequacy 12.3 10.8 10.8 10.5 7.7 Basel II fully implemented 16.6 15.6 15.0 13.2 11.2 Dividend per equity certificate (NOK) 2.50 2.00 3.50 2.00 1.88 Listed price per equity certificate at year end (NOK) 29.4 31.7 47.0 51.0 43.3 Direct return 8.5 6.3 7.5 3.9 4.3 Effective return per equity certificate as % (1.0) (25.1) (3.9) 22.3 (44.5) Owner fraction, profit per equity certificate 21.2 21.5 18.1 9.4 6.6 See page 99 for a full overview of key figures and definitions. PAGE 4 ANNUAL report 2012 MANAGING DIRECTOR STEIN KLAKEGG 2012 – a profitable year in a new banking world Last year was marked by changes in framework conditions, new customer interfaces and good growth in the Norwegian economy. It has been an exciting, inspiring, eventful and demanding year in many ways. While the global economy was characterised by economic downturn, Norway experienced a high level of private consumption, an increase in investments and very low unemployment. There was strong optimism in the economy of and further increase the bank’s capital Western Norway in 2012. This is reflected in adequacy. These measures have proven the bank’s results. Sparebanken Vest recorded successful, and the