Årsrapport DnB NOR-konsernet 2006Årsrapport NOR-konsernet DnB Annual report 2007 NOR Group DnB Annual Annual report 2007 Useful information The Group’s annual report includes the report from The annual report also includes a review of develop- the Board of Directors of DnB NOR ASA and audited ments in the DnB NOR Group’s business areas annual accounts for 2007. The annual accounts of and support units, a description of management the DnB NOR Group have been prepared in accord- in DnB NOR and key measures to promote the ance with IFRS, International Financial Reporting health, well-being and development of the Group’s Standards, while the annual accounts of DnB NOR employees. ASA have been prepared in accordance with Nor- wegian IFRS regulations. DnB NOR Group Largest entities: DnB NOR Bank 1) Vital 1) DnB NOR Asset Management 1) DnB NOR Bank is the largest Vital is Norway’s leading DnB NOR Asset Management entity in the DnB NOR Group provider of life insurance is Norway’s largest fund man- and Norway’s largest bank, of- products and pension ager and has a leading position fering services to the corporate, savings. within discretionary asset man- retail and securities markets agement for institutional clients and the public sector. in Norway and Sweden. 1) These units prepare separate reports. Other sources of information Annual General Meeting Corporate social responsibility report 2007 The Annual General Meeting will be held on 30 April The report is available on www.dnbnor.com/csr. 2008 at 6 p.m. at DnB NOR’s premises in Kirkegt. 21, Oslo. Information on how to register attendance It can be ordered by sending an e-mail to: and items on the agenda can be found at: [email protected] www.dnbnor.com/agm. Shareholders registered as owners in DnB NOR Quarterly publications ASA with the Norwegian Central Securities Depository Quarterly reports and supplementary information for (VPS) may opt to receive annual reports and the no- investors and analysts are available on www.dnbnor. tice of the Annual General Meeting electronically. For com. They can be ordered by sending an e-mail to: more information about Investor Account Services, [email protected] please contact your VPS registrar. Shareholders with VPS accounts in DnB NOR who do not wish to receive reports or notices by regular mail, may register at: www.dnbnor.no/en/markets/securities_services Financial calendar 2008 First quarter 29 April Annual General Meeting 30 April Second quarter 10 July Distribution of dividends as of 15 May Third quarter 23 October DnB NOR in brief 5 This is DnB NOR 6 Contents DnB NOR's strategy 7 2007 in brief 8 Business areas 9 Geographic presence 10 Key figures – DnB NOR share 11 Market shares in Norway 12 DnB NOR's international units 12 Key figures 13 Group chief executive's statement 15 Business areas 17 Organisation and management of operations 18 Corporate Banking and Payment Services 21 Retail Banking 26 DnB NOR Markets 30 Life and Asset Management 34 DnB NORD 41 Staff and support units 44 Management in DnB NOR 49 Group management and Board of Directors 50 Governing bodies in DnB NOR ASA 52 Corporate governance 54 Risk management and internal control 61 Capital management and risk categories 64 The DnB NOR share 72 Corporate social responsibility 77 Employees – the Group's most valuable resource 81 Review of operations and financial performance 87 Directors’ report 88 Annual accounts 99 Auditor’s report 182 Control Committee’s report 183 Contact information 184 The Group’s annual report has been approved by the Board of Directors in the original Norwegian version. This is an English translation. DnB NOR in brief This is DnB NOR 6 DnB NOR's strategy 7 2007 in brief 8 Business areas 9 Geographic presence 10 Key figures – DnB NOR share 11 Market shares in Norway 12 DnB NOR's international units 12 Key figures 13 Group chief executive's statement 15 Learning personal finance: In Marmorhallen, DnB NOR's new arena for a variety of events and courses in Oslo, young people use interactive tools to learn more about personal finance. In addition, the bank offers many schools across Norway an introduction course in finance, insurance and house purchases. Photo: Stig B. Fiksdal DnB NOR in brief 5 This is DnB NOR DnB NOR is Norway's largest financial services group with total combined assets of NOK 1 834 billion. The Group includes strong brands such as DnB NOR, Vital, Nordlandsbanken, Cresco, Postbanken, DnB NORD and Carlson. Norway's leading financial services group... • 2.3 million retail customers • More than 198 000 corporate clients • Norway's largest Internet banks, dnbnor.no and postbanken.no, with more than 1.4 million users • Represented in more than 200 locations in Norway • Norway's largest life and pension insurance company with around 1 million customers • Norway's largest asset management company with more than 630 000 mutual fund customers in Norway and 294 institutional clients in Norway and Sweden • Norway's largest investment bank Developments in the DnB NOR Group's • Norway's leading real estate broker market capitalisation • 13 455 full-time positions NOK billion ... and the most international 118 • Partner for Norwegian companies abroad and for large international companies 111 in Norway 96 • International network of 12 branches and representative offices 79 • One of the world's leading shipping banks • A major international player in the energy sector 58 • Norway's leading foreign exchange bank • Operations in Sweden within banking, asset management, insurance, car financing, real estate broking through Svensk Fastighetsförmedling and distribution of financial products through SalusAnsvar • Operations in Poland and the Baltic region through DnB NORD 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 2003 2004 2005 2006 2007 • Operations in north-west Russia through DnB NOR Monchebank • Private banking in Luxembourg 6 DnB NOR in brief DnB NOR ANNUAL REPORT 2007 DnB NOR's strategy Business idea DnB NOR will be customers' best financial partner and will meet their needs for financial solutions DnB NOR's strengths are a local presence and a full range of services. DnB NOR has a unique platform in the Norwegian market: • a high market share in all segments • the largest customer base • the most extensive distribution network Common value base and culture Team spirit, simplicity, value creation DnB NOR's shared values describe what should distinguish the organisation and work processes both internally and in relation to customers Strategy Utilise growth potential and improve cost efficiency in Norway Exploit international growth opportunities Growth in home market: Introduce new products and services, strengthen distribution and market positions, utilise the full range of products Cost efficiency in Norway: Optimise customer processes and distribution, streamline IT, reorganise operational processes International growth: Global growth in selected industries built on core competencies: shipping, energy and seafood. Strengthen position in the Nordic and Baltic regions Financial targets The financial targets reflect the aim to create shareholder value. The Group seeks to achieve a return on equity and share price increases that are competitive in a Nordic context. The long-term targets are: NOK 20 billion in pre-tax operating profits before write-downs in 2010: • Return on equity above 16 per cent from 2008 • 10 per cent average annual growth in pre-tax operating profits before write-downs Other ambitions: • A cost/income ratio below 46 per cent by the end of 2010 Capital strategy and dividend policy: • A core capital ratio of approximately 6.5 per cent • Dividend payments representing approximately 50 per cent of annual profits Dividends will be determined on the basis of expected profit levels in a normal situation, external parameters and the need to maintain capital adequacy at a satisfactory level. • AA level ratings for long-term debt for DnB NOR Bank ASA DnB NOR ANNUAL REPORT 2007 DnB NOR in brief 7 2007 in brief First quarter • Rune Bjerke became group chief executive on 1 January • Moody's upgraded its long-term rating of DnB NOR Bank ASA from Aa3 to Aa1 • DnB NOR Finans entered into an agreement to buy SEB's leasing portfolio within vendor-based car financing in Sweden • DnB NOR expanded its operations in Asia by establishing Corporate Finance Asia, a Singapore-based unit offering investment banking services • From 1 January, capital adequacy calculations for some portfolios were based on the Basel II regulations Second quarter • The Group was granted a concession to purchase the Polish bank BISE Bank through its partially-owned subsidiary DnB NORD • DnB NOR reorganised parts of its operations and changed the composition of its group management team to meet new challenges in the financial industry • DnB NOR Boligkreditt arranged its first bond issues in the international capital market, and the bonds received a top AAA rating from the rating agencies • DnB NOR purchased the Swedish real estate brokerage chain Svensk Fastighets- förmedling Third quarter • The financial turmoil had a limited impact on DnB NOR • Vital reappraised its property portfolio, leading to a revaluation of NOK 7 billion • Vital increased its technical insurance provisions to reflect higher average life expectancy • The Group sold its ownership interests in Aker Brygge Fourth quarter • DnB NOR presented its new strategy and new financial target figures at the Capital Markets Day on 9 October • The Group sold its remaining bank buildings • The Group purchased SalusAnsvar, which distributes financial products to members of professional organisations in Sweden • The Group entered into an agreement to purchase SkandiaBanken Bilfinans • DnB NOR started sales of housing loans in Sweden Financial highlights 2007 2006 Pre-tax operating profits before write-downs (NOK million) 15 148 14 066 Profits for the year (NOK million) 15 022 11 808 Earnings per share (NOK) 11.08 8.74 Proposed dividend (NOK) 4.50 4.00 Total combined assets at year-end (NOK billion) 1 834 1 688 Return on equity (per cent) 22.0 19.5 8 DnB NOR in brief DnB NOR ANNUAL REPORT 2007 Business areas Corporate Banking and NOK 353 million from 2006.