N YE RAMMEBETINGELSER DNB GROUP ANNUAL REPORT 2012 B Annual report 2012 DNB GROUP DNB PROFIL & DESIGN WEI QING DNB PROFIL DNB GROUP DNB GROUP DNB A nnual report 2012 nnual report Mailing address: P.O.Box 1600 Sentrum N-0021 Oslo Visiting address: Dronning Eufemias gate 30 Bjørvika, Oslo dnb.no IMPORTANT EVENTS In 2012 1 ST 2 ND QUARTER QUARTER ▪ Finanstilsynet’s new rules on a minimum 15 per cent down ▪ DNB launched the savings products SuperSave and Junior payment for home mortgages entered into force HomeSave ▪ DNB established a pilot project for Norwegian bank production ▪ DNB’s shares in Nordisk Tekstil Holding AS, which were acquired in Latvia in 2009, were sold at a profit after a successful restructuring ▪ DNB Livsforsikring signed a contract to purchase the three process buildings which constitute the Group’s new headquarters ▪ DNB and two large Swedish banks were downgraded one notch in Bjørvika in Oslo by Moody’s credit rating agency 3 RD 4 TH QUARTER QUARTER ▪ DNB presented new financial targets at its Capital Markets Day ▪ T he EU Ministers of Finance decided to establish a single super- event visory authority for the largest banks in the eurozone ▪ DNB continued to climb on Ipsos MMI’s Norwegian corporate ▪ Nordlandsbanken and DNB were formally merged reputation list and was ranked best among the banks ▪ DNB entered into an agreement to sell the branch network ▪ DNB still qualified for inclusion in the Dow JonesS ustainability in Poland Index and thus remained among the top 10 per cent companies within its industry group ▪ DNB entered into an agreement to sell its wholly-owned subsidiary SalusAnsvar AB ▪ DNB started to move into its new headquarters in Bjørvika in Oslo FINANCA I L CALENDAR 2013 CONTA CT PERSONS A nnual accounts 2012 (preliminary figures) Bjørn Erik Næss and fourth quarter 2012 7 February Chief financial officer Tel.: (+47) 4150 5201 Annual general meeting 30 April [email protected] First quarter 26 April Distribution of dividends as of 13 May Per Sagbakken Head of Investor Relations/Long-term Funding Second quarter 11 July Tel.: (+47) 2326 8400 / 9066 1159 Third quarter 24 October [email protected] DNB GROUP ANNUAL REPORT 2012 1 CONTENTS DNB IN BRIEF 2 VISION AND VALUES 2 STRATEGY 2 LONG-TERM TARGETS 3 DNB’S MARKET SHARES IN NORWAY 3 DNB’S INTERNATIONAL UNITS 4 FINANCIAL HIGHLIGHTS 5 THE DNB SHARE 6 BUSINESS AREAS 8 HISTORY 9 LEGAL STRUCTURE 9 DNB’S GEOGRAPHIC PRESENCE 10 GROUP CHIEF EXECUTIVE’S STATEMENT NEW REGULATORY FRAMEWORK 14 THE EU CONTINUES TO WORK ON BANKING REGULATION 17 REGULATORY FRAMEWORK FOR LIFE INSURANCE COMPANIES 19 IMPORTANT IFRS AMENDMENTS 20 TAXES AND FEES FOR THE FINANCIAL SERVICES INDUSTRY 21 REPORTING OF CUSTOMERS OR ENTITIES LIABLE TO US TAXATION GOVERNANCE IN DNB 24 GROUP MANAGEMENT 28 BOARD OF DIRECTORS 30 GOVERNING BODIES 32 CORPORATE GOVERNANCE DIRECTORS’ REPORT AND ANNUAL ACCOUNTS 48 DIRECTORS’ REPORT 69 ANNUAL ACCOUNTS 168 AUDITOR’S REPORT 169 CONTROL COMMITTEE’S REPORT 170 KEY FIGURES NORWAY’S LEADING FINANCIAL SERVICES GROUP DNB is Norway’s largest financial services group and one of the priority areas, especially the energy, shipping and seafood largest in the Nordic region. The Group offers a full range of finan- sectors. The bank is represented in 20 countries worldwide and cial services, including loans, savings, advisory services, insurance has 185 branch offices in Norway. and pension products for personal and corporate customers. The Group had total assets of NOK 2 473 billion as at 31 December DNB is among the world’s leading banks within its international 2012. The annual report is also available on DNB’s website (dnb.no/en/about-us) along with more detailed information about DNB’s operations. 2 DNB GROUP ANNUAL REPORT 2012 DNB IN BRIEF VIS ION AND VALUES DNB’s vision: DNB’s vision and values are about putting the customers in Creating value through the art of serving the customer focus. By having satisfied customers whose needs for financial DNB will create value for customers, owners, employees and services are well met, DNB aims to be the leading bank through- society in general. out Norway and a leading international player within selected customer segments, products and geographic areas. DNB’s values: Helpful, professional and show initiative An important target for the Group is to achieve even stronger The values reflect what should characterise DNB. Employees who are customer orientation in its operations and improve customer helpful, professional and show initiative will ensure that customers satisfaction. always have a good experience when they contact DNB. SGTRATE Y DNB’s strong position in Norway and the healthy Norwegian are in contact with the bank. It will be particularly important to economy give the Group a sound basis for continued growth. further improve customer satisfaction in the personal customer However, uncertainty regarding future economic developments market and among small corporate customers. and new requirements from the authorities call for a high level of adaptability and will be guiding for DNB’s future strategic DNB’s customer value propositions: decisions. ▪ present and attentive ▪ competitive prices capItal-EFFICIENT growtH ▪ attractive products ▪ responsive and clear DNB’s ambition is to achieve continued growth parallel to strengthening its Tier 1 capital ratio. This requires clear priorities. Compliance with the value propositions will, along with local DNB will give priority to growth within the areas which ensure competitive power and in-depth industry knowledge, consolidate the best risk-adjusted return, with special emphasis on non- and strengthen DNB’s position among customers. capital intensive products and services. R EDUCED cost level In consequence of the sound Norwegian economy, DNB’s growth is expected to be stronger in Norway than in its international DNB will continue the process of coordinating, simplifying and operations over the next few years. streamlining operations, aiming to improve the Group’s competi- tiveness and its ability to deliver good services and products to I MPROVED CUSTOMER EXPERIENCE its customers. A number of initiatives have been implemented, including the streamlining of staff and support functions and IT O ver time, DNB has succeeded in strengthening its reputation operations, as well as adjustments to the distribution network in and improving its customer satisfaction scores. High priority will step with changes in demand and customer behaviour. be given to ensuring good experiences every time customers L ONG-TERM TARGETS DNB will give priority to long-term value creation for its share- DNB’s financial ambitions towards 2015 are: holders and aims to achieve a return on equity, growth and a ▪ Annual average growth in net interest income above 6 per cent market capitalisation which are competitive in relation to its ▪ Maximum 2 per cent average annual growth in costs including Nordic peers. restructuring costs ▪ R eturn on equity above 12 per cent in 2015 FNI ANCIAL AMBITIONS TOWARDS 2015 ▪ A common equity Tier 1 capital ratio (Basel III) at 12.0-12.5 per cent in 2015 DNB’s long-term financial ambitions are conditional on relatively ▪ An unchanged long-term dividend policy, with a payout ratio positive future developments in the macroeconomy and in the of approximately 50 per cent of annual profits. In order to general framework conditions for the financial services industry. strengthen capital adequacy, the dividend payout ratio will be 25-50 per cent in 2012-2014. DNB in BRIEF DNB GROUP ANNUAL REPORT 2012 3 RETAILDN MARKETB’s 1) MARKET SHAres in norWAY LOANS FROM FINANCIAL DEPOSITS POLICYHOLDERS’ FUNDS MUTUAL FUND INVESTMENTS 1) RETAILINSTITUTIONS MARKET AS AT DEC. AS AT DEC. AS AT DEC. AS AT DEC. LOANS FROM FINANCIAL DEPOSITS POLICYHOLDERS’ FUNDS MUTUAL FUND INVESTMENTS INSTITUTIONS AS AT DEC. AS AT DEC. AS AT DEC. AS AT DEC. % % % % % % % % CORPORATE MARKET 1) LOANS FROM FINANCIAL DEPOSITS POLICYHOLDERS’ FUNDS 2) MUTUAL FUND INVESTMENTS 1) CORPORATEINSTITUTIONS AS MARKET AT DEC. AS AT DEC. AS AT DEC. AS AT DEC. LOANS FROM FINANCIAL DEPOSITS POLICYHOLDERS’ FUNDS 2) MUTUAL FUND INVESTMENTS INSTITUTIONS AS AT DEC. AS AT DEC. AS AT DEC. AS AT DEC. % % % % % % % % DNB’s market shares 1) Source: Statistics Norway and Finance Norway. 2) Includes the public sector. DNB’s market shares 1) Source: Statistics Norway and Finance Norway. 2) Includes the public sector. DNb’s internATIONAL UNITS INCOME IN DNB’s SHARE OF INCOME IN DNB’s LOANS IN DNB’s SHARE OF LOANS IN DNB’s INTERNATIONAL UNITS INTERNATIONAL UNITS INTERNATIONAL UNITS INTERNATIONAL UNITS (NOK MILLION) IN PER CENT (NOK BILLION) AS AT DEC. PER CENT INCOME IN DNB’s SHARE OF INCOME IN DNB’s LOANS IN DNB’s SHARE OF LOANS IN DNB’s INTERNATIONAL UNITS INTERNATIONAL UNITS INTERNATIONAL UNITS INTERNATIONAL UNITS (NOK MILLION) IN PER CENT (NOK BILLION) AS AT DEC. PER CENT Dec. Dec. DNB Baltics and Poland Other international units Norwegian units Dec. Dec. DNB Baltics and Poland Other international units Norwegian units 4 DNB GROUP ANNUAL REPORT 2012 DNB in BRIEF FNI I ANC AL HIGHLIGHTS I NCOME statemeNT Amounts in NOK million 2012 2011 2010 2009 2008 Net interest income 27 216 25 252 23 436 22 633 21 910 Net commissions and fees, core business 1) 7 511 7 436 7 293 7 118 7 175 Net financial items 6 990 9 317 8 863 7 876 5 262 Net other operating income 14 501 16 754 16 156 14 994 12 438 Ordinary operating expenses 20 660 19 792 17 920 18 115 17 663 Other expenses 287 380 591 796 1 058 Pre-tax operating profit before impairment 20 769 21 833 21 081 18 717 15 627 Net gains on fixed and intangible assets (1) 19 24 26 52 Impairment of loans and guarantees 3 179 3 445 2 997 7 710 3 509 Pre-tax operating profit 17 589 18 407 18 108 11 032 12 170 Taxes 4 028 5 423 4 121 4 086 3 252 Profit from operations held for sale, after taxes 96 (5) 75 80 0 PROFIT FOR THE YEAR 13 657 12 979 14 062 7 026 8 918 Profit attributable to shareholders 13 657 12 979 14 814 8 585 9 211 Profit attributable to minority interests 0 0 (752) (1 559) (293) BalaE NC SHEET Amounts in NOK million 31 Dec.