Annual Report 2007
A Bank on the Move A number of events and developments in 2007 set SpareBank 1 Midt-Norge on a steady course for the future. We present some of them in this annual report. In figures, in words and in images. Årsrapport 2007 BENNETT AS, Photos: Pål Laukli and Studio Lasse Berre Florø Askvoll Maløy Dale Førde Nordfjordeid Ålesund Volda Skei Hellesylt 56 Where to find us find to Where 10 2 5 3 4 1 9 8 7 6 Sykkylven Molde A D S M O R G O E R Ø M Eide Averøy Aure Flatanger Agdenes Fræna Frosta Fosnes Bindal 53 Tomra Geiranger 27 Kristiansund Valldal 10 28 6 38 Åndalsnes Bøverdal 19 17 12 16 15 14 13 18 11 20 3 D N A L P P O DOVRE- FJELL Levanger Leksvik Leka Inderøy Holtålen Høylandet Hitra Grong Frøya Smøla Lom Tingvoll 48 Sunndalsøra
Titran 49 L Aure 2 Vågåmo 24 22 31 30 29 28 27 26 25 21 23 Hitra 11 Frøya Melhus Malvik Meråker Lierne Molde Namdalseid Mosvik Namsos Midtre Gaudal Rindal 13 Kongsvoll Folldal 34
Orkanger Frohavet Oppdal Brekstad 39 35 Berkåk 1 Trond 42 41 44 26 K R A M D E H heim 19 Støren 23 33 32 39 38 37 36 35 34 Leksvik
T Tynset r 55 G A L E D N Ø R T o 25
n 50 Melhus d 40 h Nærøy Namsskogan Rennebu Overhalla Rauma Orkdal Oppdal Osen e
i Åfjord m 18 22 s 14
9 f jo 36
- R Ø S r d Stjørdal Frosta e n Os 47 Osen 43 29 7 Åsen
Røros 52 16 30 20 Levanger Tydal Vikna Malm 51 31 54 24 46 8 Namsos Verdalsøra 48 47 46 45 44 43 42 41 40 Overhalla Rørvik Steinkjer 33 Røros Steinkjer Skaun Rissa Sunndal Stjørdal Snåsa Roan 17 Kolvereid 37 VEGA Brønnøysund G A L E D N Ø R T 45 12 15
4 Grong 5 - D R O N 56 55 54 53 52 51 50 49 Terråk Vestnes Surnadal Ålesund Åfjord Verran Trondheim Vikna Verdal D N A L D R O N Forvik 32 Östersund 21 Sørli 0 Where to find us Contents 0 Group Management Where there’s aWill, weCreatetheOpportunity Important Eventsin2007 City andBankontheMove SpareBank 1Fund New HeadOffice The StoryofSpareBank1Midt-Norge Contents Main FiguresGroup Key GoalsandStrategies
16 14 10 12 17 8 6
Corporate Governance No Let-Upin2008 SpareBank 1BrandaStepFurther Macroeconomy andFinancialMarkets Board ofDirectors Risk ManagementandCapitalAllocation Report oftheBoardDirectors Statement bytheCEO
36 33 18 46 40 22 20
Contents The BankandtheSociety Pro FormaIncomeStatementGroup Balance Sheet Income Statement Business Description Change inEquity–ParentBank Change inEquity–Group Pro FormaBalanceSheetGroup 48 66 65 64 54 69 68 67
Notes Supervisory Board The SupervisoryBoard Primary CapitalCertificates(PPC) Financial SummaryGroup Control Committee’s Report Auditor’s Report Cash FlowStatement 128 127 124 122 121 120 119 71
0 Contents The story of SpareBank 1 Midt-Norge 0 government support. Early in April 1925 there were rumoursdespitestraits dire in were banks many insatiable,and as (thecentral bank) described Norwegian banks’ credit needs banking crisis at the start of the 1920s. In 1921, Norges Bank Good times were replaced by adversity with the advent of the of 421,090 kroner. Venetian Renaissance style, was completed in 1882 at a cost committee was appointed and the new bank building, in the the management’s desire for a new bank building. A building promptedStreet,bySøndre of sidewest theproperties on uppermost two the purchased Bank the 1874 In 1800s. the in town the with step Trondhjemsin grewSparebank Growth andcrisi Church and land properties in Sparbu. Sakshaugincludeditemsmortgaged the and 1825, in was woman.mortgageThata loangrantedBankwentto the by first the Indeed alone. men for not was Sparebankhjems sums would be received from persons of either sex”. Trond Upon the establishment of the Bank a point was that “small from financial support from the SpareBank 1 Fund. non-profit causes. Each year about a thousand causes benefit destiny with the region is a driver behind the support given orto to the community’s paupers. To this day the Bank’s shared often went to schools, nursing homes, voluntary organisations charitablebeginningpublicmoneyandthecauses”.the In decided that part of the Bank’s profits should be allotted “to a legacy of the moral aspirations of that period. In 1840 it was The desire to be a contributor, and not just a bank, is probablySocial Contributor were also keen to promote diligence and public morality. secure institutions in which to deposit savings, savings banks a hand in improving their conditions. In addition to creating and, through saving, the lower classes would themselves have took a personal responsibility for the common people’s assets, urban areas. The earliest Norwegian savings bank managers The savings bank industry was born of poverty and need in written. been ofSpareBank 1Midt-Norge1,596 Specidaler.hadnow story ofthe chapter first The Trondhjemswas 1823,and Sparebank wasduly withaninitialcapital of established year The announcement. replied tothe men publicmorality”. and Thirty-nine thrift ofasavings promotion ofenterprise, bank,for establishment “beneficent to the the urged men fellow prominent their tocontribute known)most citizens city wasthen Addresseavisen inthe newspaper,In anannouncement fiveof (asthe Trondhjems Midt-Norge 1 SpareBank of Story The -
again recorded a cash surplus at the end of the day. one day. A week later calm had returned, and the Bank once justinBankmillion theonethan kronerof taken wereout Rock bottom was reached on Thursday 23 April when more nervous savers withdrew a total of six million kroner. withdrawto their savings. theInspace just ofoverweek, a be placed in administration, panic spread and people started When it was heard that Orkedalens Sparebank had asked to TrondhjemsSparebank.of hold taken had crisis the that care of by the local community itself. The philosophy was that the local community was best taken structurewithsubstantial decision-making branchatlevel. savings bank. The new bank featured a decentralised power Sparebank. Trøndelag had now acquired its first major regionalmergers. In 1975 Trondhjems Sparebankof number amerged forced1970s and 1960s theDevelopments within Strindens Age ofmergers a larger degree than previously. their with increasinglyidentical and offerings they became competitors banks, to savings and banks commercial between differences the of many erased also technology cash dispensers saw the light of day in the 1970s. Computer glimpse the outlines of the to self-servicebegin we and servicescustomer. banking of range the Norway’sextend to first opportunitiestechnologyConcurrentlyprovidednewnew all loanable capital away from the rural communities. structure featuring financially solid banks that did not draw number of small entities. The challenge was to create entities,a banking whereas the banking industry still comprised a large society the trend was one of centralisation: fewer, but larger developments.socialinElsewhere generalbehind lagging was systembanking the Norway; instructure bankingthe at concernwith lookedauthoritiesagain the 1960s the In andtechnoloSociety g y inchange
Fellesbank – a well run bank with considerable businessconsiderable with bank run well a – Fellesbank In 2004 SpareBank 1 Midt-Norge cast its eyes upon Romsdals R terms of good personal counselling and tailored products. resourceful, automated customer has greater requirements in whereverandday theyhappensamethetimeAtbe. theto of time thewhatever bank the to accesswant they – bank digitally. Customers make different transacted demandsbe to of business an of automatedtypes all enabling banking, Bank and Customer Centre comprise a complete approach toInternet Todaythebanking. one’s doing of ways new up banking became commonplace and new technology opened The 1990s were also marked by the digital revolution. Online Digital age professional footing. formal,collaborationthisallianceaputnew stage.The on level. The four regions had already collaborated at an localearlier the at position banks’ the strengthen to and capital meet the competition from the major financial groups in the SparebankenMidt-Norge. alliancetheobjectThetoof was Rogaland,Sparebanken Vest, Sparebanken Nord-Norge and Sparebankenbetween Alliance 1 SpareBankforthcoming bring “a taste of the future”. Mr Haugan was speaking of the 1995, Managing Director Finn Haugan wrote that 1996 would in publishedreport Midt-Norge’sSparebanken annual In SpareB bank. after the management’s initial scepticism of the new regional were absorbed in 1988. Spareskillingsbanken joined in 1989, bank. Sparebanken Inn-Trøndelag and Sparebanken Namdal clear that 23 banks would be joining to form a new regional until the merger negotiations were completed. In 1984 it was authorities the following year, but postponed the theby approvedname name new the changehadSparebank Strindens and Sparebank Trondhjems Midt-Norge. Sparebanken ofestablishment the in participate to invited were banks Merger discussions continued in the 1980s. In 1982 31 savings om s dal ank 1Alliance s
F elle s bank
placed high in order to redeem a promise that SpareBankthatpromise a redeem to order in highplaced difficult to tell. What is certain is that the bar was deliberately symbolising an important milestone in the Bank’s history, is Whether the Director’s words should be taken literally, or as of the Bank itself”. Bank’s 182-year history. That is, next after the establishment Fellesbank is probably the second say: most important could event Haugan in the Mr tug-of-warhard a after and made, was offer Anpotential. by the calculation of interest.” from persons of either sex, and will bear fruit for their owners of working people and servants, small sums will be received Under this arrangement, duly established in the best interests order and thrift. Trondhjempromotionpublicmorality,theoffor of diligence, city the in guarantees, adequate under established, A savings bank, known as Trondhjems Sparebank, is hereby An identity with 184 years’ resonance: local-level control and identity. its goal of competing with larger actors without relinquishing SpareBank 1 Alliance puts the Bank in a position to achieve the that confirmation further is Kredittilsynet’sapproval financial system. the in stabilitypromote to designed are which II), (Basel filed in response to new rules for computing capital charges financial industrycontrol. terms of application in The was the in epoch new a in ushers and certification, ISO with comparedbeapproval status. canThisapplicationIRB for Financial Supervisory (Norway’s Authority) approved Kredittilsynet SpareBank 1 Midt-Norge’s 2007 February In reality s Financial indu a major success. people in Møre og Romsdal. The acquisition has so far been for bank better even an be wouldRomsdalsFellesbank 1 “The acquisition of Romsdals Romsdals of acquisition “The try into anew
0 The story of SpareBank 1 Midt-Norge 0 City and Bank on the Move
Erecting a new block in a city centre brings a responsibility far larger than building the head office of a bank. New Head Office New Head
SpareBank 1 Midt-Norge is a substantial contributor, and we A CONtributor TO URBAN impose strict requirements on how we fulfil our role in society. DEVELOPMENT We have naturally set ambitious goals for the development The new building is significant not just for SpareBank 1 of this prime site in the centre of Trondheim. Midt-Norge’s evolution but also for Trondheim as a city. Extending over an entire block, it will play an important role in TOMORROW’S ENVIRONMENTAL revitalising the city centre, adding entirely new amenities. STANDARD Our new head office will be at the cutting edge when it In addition to embellishing the city centre with its architectural comes to putting good environmental solutions to use. We solutions, the building revitalises the centre by opening up are building not just to comply with today’s regulations, but the space between Søndre gate and Nordre gate to allow in keeping with tomorrow’s environmental standards. The business and café premises to be established in much of the new building will be among the best in the country in terms ground floor of the block. of indoor and outdoor environment. We have teamed up with the country’s foremost expertise in the field of energy use and WILL SET A NEW STANDARD indoor environments at the Norwegian University of Science Although many key decisions have been taken on the design and Technology, Trondheim, to arrive at sound, forward- of the building, we are still at the development stage. We are looking solutions. We have also set ambitious requirements now gathering the competence needed to look beyond the for the demolition and construction process. For example, familiar standard solutions in regard to the environment, as much as 90 per cent of the previous building’s materials energy, architecture, building and construction. As a bank, will be re-used or recycled. and urban development actor, we are going to great lengths to find solutions that can be lived with far into the future – for A BANK ON THE MOVE us, our customers and for the city. Society is changing, bringing new demands, needs and opportunities for us as a bank. New technology has opened up new ways to work together and to run a bank. The new building must be amenable to change, to a bank on the move. In projecting the building we are seeking flexible solutions that will enable us to work together, share competence and evolve regardless of the options we go for in the future. Project Manager, New Head Office Andersen Aarberg Irmelin 0 New Head Office Important Events in 2007 10 Important Events in 2007 in Events Important • • • • • APRIL • • J ANUARY
CEO Finn Haugan at SpareBank 1 The Bank presents its best ever best its presentsBank The Terje Skjønhals appointed new appointedTerje Skjønhals Mandatory occupationalMandatoryservice man of SpareBank 1 Gruppen. Midt-Norge remains Board chair issue. dividend participatesin capital Odd Inge Finnøy. and Bjordal Kjell appointed: Supervisory Board chairman. for the first quarter 2007. customers. Bank’starget the of cent per 70 pensions taken out by more than for 2006. pre-tax profit of NOK 1,116 million Pre-tax profit of NOK 221 million 71 per cent of the Bank’s PCC Bank’s the of cent per 71 members Board new Two -
Photographer: Ivar Mølsknes, Adresseavisen newspaper. The Arbeiderforeningen building in Trondheim FEBRUARY • • • MAY • •
Business and Industry (NHO). NorwegianConfederationofthe Union premises. Labour Trondheim over takes IRB approach to credit risk. credit rating. Cooperation agreement signed with The Bank’s Culture FoundationBank’sCulture The Kredittilsynet approves the Bank’s od’ ugae te Bank’s the upgrades Moody’s
• • • • • MARCH • • • • JUNE Source: Agraff AS.
Petter de Lange takes up duties as Agraff selected as architect for the in Molde. Bjørnsonhuset in show culture new Head Office in Trondheim. established. credit rating. 2006. for PCC per 6 NOK ofdividend office as from autumn 2010. head new theexhibited in be to IT long-term agreement. sign Partner CEO at SpareBank 1 Gruppen. the Bank’s first chief economist. SpareBank 1 and EDB Business EDB and 1 SpareBank SpareBank 1 Midt-Norge Invest AS The ‘Salamandernatten’The artwork Tl (us wt a rn - grand a with (Guts) “Tæl” declares Board Supervisory Fitch Ratings upgrades the Bank’s Eldar Mathisen takes up duties as
• • OCTOBER • • • JULY Borkeplassen in Trondheim. Photographer: Jørgen Geving. “Tæl” (Guts) award winner Ingrid Blåsmo from Orkdal
and Concert Hall in Trondheim. showtheatOlavshallen Theatre anniversary with a grand culture nine months 2007. first the formillion 853 NOK of house. long medieval Stiklestadir the Talent prize. guitarist Stian Westerhus the and Jazz grant JazzStipend Bank’s plassen in Trondheim city centre. The Bank reports a pre-tax profit The Kobert jazz trio awarded the The Bank contributes to recreating “Tæl” (Guts) celebrates fifth fifth celebrates (Guts) “Tæl” Borke- at opened branch New
- -
Photographer: Jens Petter Søraa, Adresseavisen newspaper. and CEO Finn Haugan in SpareBank 1 Midt-Norge. From the left:CFO Snorre Glørstad in Trondheim Kommune • AUGUS • • NO •
VEMBER SpareBank 1 Privatbank establis boration with Sparebanken Vest. municipality’s new main bank. hed. half 2007. first the formillion 544 NOK of The Bank reports a pre-tax profit SpareBank 1 Alliance halts colla The Bank becomes Trondheimbecomes Bank The T - - • • SEPTEMBER • • • DECEMBER
Amalgamation of the marketingthe Amalgamationof the Bank’s Gjemnes branch. of SpareBank 1 Bilplan. TheBank acquires allthe shares EiendomsMegler of 1 Midt-Norge. and Bank the of divisions main as contractors for new Head Office. selected Systems years. three further for bank chosen Trøndelagcounty municipality’s SpareBank 1 Nordvest takes over Teknobygg and YIT Building Building YIT and Teknobygg North as retained Bank The
11 Important Events in 2007 Main Figures Group 12 F Net interest and credit commission income Customer deposits SpareBank 1 Boligkreditt (gross) 1) For definition of key figures for primary capital certificates, see page 124. Booked equity capital per PCC Outstanding loans including transf. on disposals of fixed assets Loan losses and gains / write-downs and return on financial investments Operating profit before losses (mNOK) Group Figures Main (including dividend) Return on equity PCC ratio Commision and fee income Growth in lending, % Return on financial investements Share of profit SpareBank 1 Gruppen AS Cost-income ratio PCC price (NOK) Operating expenses Total assets (mNOK) F P Market value (mNOK) Growth in deposits, % Outstanding loans (gross) P/E Core capital ratio Capital adequacy ratio Profit per PCC (NOK) K Price / Booked equity capital Dividend per PCC (NOK) No. of staff No. of branches No. of person-years worked K rom the balance sheet rom the income statement re-tax operating profit ey figures and ratios ey figures
PCC
1)
32 434 71 5 5 5 12. 18.9 % -1 103 1 045 5 72.2 1 910 1 12 3 900 9 178 1 017 2007 4.2 % 1, 8.3 % 17 % 1.00 8.29 6 1.42 8.72 6 6 113 233 5 931 5 8 % 5
.00 93 71 03 % % - 5 6 5
30 13 49.0 % 11.9 % 23.7 % 1 116 4 82.00 1 008 3 178 4 140 2 819 2006 8. 3.7 % 17 % 11 % -990 6 8.2 9.94 1.71 24 190 9 841 6 -84 .3 .00
97 80 5 % 6 5 6 5 0 8
27 048 4 23.3 % 10.9 % 78.2 4 327 3 9 5 42.11 11.1 2005 8.8 % 0.7 % 32 % 31 % -90 8. 1.8 280 919 .1 % 9 170 119 898 80
-38 . 6 92 37 5 5 5 1 6 1 5 1 6 0 2
20 72 38 34 22 20.0 % 49.8 % 10.8 % 12.7 % 2 113 34.78 2004 2.7 % -729 1. 4.00 9.48
574 8 443 5 772 4 % .00 .80 6 77 81 23 0 5 37 % 4 5 5 6 8
19 87 3 32 10.2 % 13.9 % 10.1 % 31.80 38.40 12.41 6 1 47 2003 1.4 % 7. -733 3.09 1.21 2.88 87 311 8 4 332 229 55 772 713 6 4 % 6 6 81 % % - 4 6 3 5 6 6 3
19 049 3 31 089 11.1 % 23.20 30.00 2 5 2002 3.0 % 9.0 % 0.4 % 8.1 % -1 - 6 0.87 1.20 991 0.77 89 498 282 229 6 891 82 718 7 % -23 . 77 6 81 5 % 6 8 4 5
17 871 33 28 29 278 10.1 % 12.1 % 31.84 33.00 1 214 2001 4.0 % 8.8 % 9.4 % 10 % - 4.22 2.88 0.9 7. 318 827 432 272 138 66 781 3 % - 5 82 55 7 8 7 6 6 5
17 287 30 929 2 12. 10.7 % 39.4 11.47 1 132 6 29.92 2000 8.3 % 7.3 % 12 % 13 % - 2.
0.7 2.72 .2 % 344 78 394 244 130 6 6 709 811 6 89 3 11 6 % -9 5 5 5 1 6 8
1 2 23 707 18.2 % 10.9 % 3 3 5 6 1 3 1999 9. 8.1 % 0.7 % 13 % 12 % - 1.00 6 6 238 3 2.72 438 7 401 13 194 10 56 818 5 .8 .33 .48 .49 6 6 6 7 74 % 7 8 6 6 0 9 8 5
13 22 20 909 11.3 % 1 32.03 1 074 1998 8. 5 0.4 % 9.4 % 18 % - 4.08 0.89 2. 7.02 331 .4 % 707 6 3 1 5 5 79 6 3 5 1 6 38 29 23 79 56 74 % % 6 3 1 5 8 2 5
leading bank. leading Mid-Norway’s as position its reinforcing decade, past the over assets total its doubled 1 Bank Spare in NOK billion. RomsdalsFellesbank included asfrom included in NOKbillion.RomsdalsFellesbank 2005 Trend 1997–2007 intotalassets 1997 20 1998 23 1999 26 Midt-N 2000 31 2001 33 orge 2002 36 has almost almost has 2003 37 2004 39 2005 54
2006 63
2007 72 13 Annual Report 2007 SpareBank 1 Fund 14 Midt-Norge granted NOK60milliontonon-profit in2007. causes about new infrastructure. JA-YE Norway is a collaborative venture for ‘midwifery’ and companies, seedcorn establishing to contribution our NTNU, the with agreementcooperation JuniorAchievement-Young Enterprise Norway (JA-YE), Fund: the 1 SpareBank the of auspices the under ventures Asfrom 2007 wewish tohighlight four important strategic SE CAU S & Transfer’. stories of the same calibre as ‘Dynabeads’ and ‘FAST Search industrialfurthersuccesscontributeto means that by and communities,academic and industrial the between links closereven forge strategically importanttoitconsider We spawned.alreadyideas good thestimulate and ideas new develop to Fund 1 SpareBankthe use to wantWe region. contributethecreationvaluecan into we how see togaze For SpareBank 1 Midt-Norge it has been important to lift our while Møre og Romsdal take a fine fourth place. Trøndelagstatistics(Arenaexport3/2007),the no. in 16th regions,Nord-TrøndelagotherSør-withog and12th place challenges, especially the two Trøndelag counties. Compared most competitive advantage. Even so, our region faces major by a working group set up by the OECD as the region’s fore largest independent research organisation, were singled out Technology,TrondheimScandinavia’sSintef,and (NTNU) Just two years ago the Norwegian University of Science and pool of expertise by national and also internationalunique a andmaterialsstandards. raw of supplyfantastic a haveWe value. create to opportunities major offers Mid-Norway CREATION TOCONTRIBUTION V FUTURE welfare. 70 per cent went to business development in 2007. fields of business and industry, education, sports,the culturein causesdeserving andto fundsdistributes which Fund, to allocate a substantial share of our profit to the SpareBank 1 causes since 1854. Being a savings bank, we are in non-profita to positionfunds granted has Midt-Norge 1 SpareBank enjoyment. and create ofvalue,growth interms however,Of greater amountitself, thanthe interest will money iswhatthe Driven bySpareBank alargeofapplications, 1 ourowninitiativeand number Opportunity the Create we Will, a there’s Where TRATESINE GIC BU S SS DE VELOPMENT ALUE
-
Midt-NorgeTake-off, StartStøtte, Designprisenstudent and Wesupport aseries of programmes including Venture Cup, Midt-Norge significantly contributes to spawning new ideas. The cooperation agreement between the NTNU and SpareBank 1 receive early experience of value creation. youngpeople.importantis It youngerthefor generation to entrepreneurial skills, creativity and innovativeness among between private and public sector actors designed to cultivate projects through the market areas. NOK 7 million was distributed to associations and local-level In 2007 we supported 1,500 different causes across the region. makeour region aneven better place tolive inand tovisit. will that projects and eventsactivities, stimulate to wish we Fund 1 SpareBank the Through charities. and sports 2007wasalsohighlya active yeartheinsphere culture,of FIELDS AND CHARITY INTHECULTUREVITY HIGH ACTI , SPORT and Tresfjordbrua projects. Langfjord Tunnel. In 2007 we also supported the Møreaksjon to promote internet access) and to clarify issues related to the MoldeAirport Årø, to Trådløse Trondheim (an R&D project havealready granted substantial funds for the expansion of Weprojectsspeedcanupenteringearly bystage. an Weat Infrastructure is a prerequisite for development and growth. SpareBank 1 Fund. –have been promised close to NOK 50 million through the Seed,Midvest-fondene and Såkorninvest Møre og Romsdal in the future. The three seed capital companies – Proventure enable good ideas to see the light of day – and to finance toprovide tocreate is purposeTheirvalue years. two past the We have helped to establish three seedcorn companies over communities and industry in the region. competence together bring to taken are initiatives active the collaboration between the NTNU, Utspring and the Bank, Boston.ThroughinMIT summer at spendthegroups who
S
will, we create the opportunity. there’sWherecome.toyears a inbusinessesBank the and whichwill sourcebea ofenjoyment andutility forpeople, substantialmomentumacreated Mid-Norway.we 2007 In lookingand active business, culture and community life in largest private contributor to the development of a forward- ThroughSpareBankunquestionablytheareFundwe 1 the building. historicArbeiderforeningen, a ofrestorationsubstantial a start andacquire, tofoundation thefoundation),enabling culture Bank’s (the Kulturstiftelse 1 SpareBank to went the largest and best known. A major sum of NOK 20 million Stiklestadir medieval longhouse and the St. Olav Festival the cultural Festival, are Jazz International Molde of events. sports and number large a to given also was Support disadvantaged. city’ssociallythe for housewarming and pointgathering a aschurch’s rolethe isimportant asTrondheim, just but cultural and substantialin playedarole has Kirke Frue monumentVår church a As restoration. extensive after splendour former its in anniversary to 800th its able celebrate was sizeable church a the year been Last Trondheim. has for task Kirke Frue Vår restoration The In 2007 we distributed NOK 1.1 million to 46 recipients. off. it pull to will the show who and in,engaged are they with talent or determination who are passionate about what Through “Tæl” (Guts) we support individuals or associations Executive Manager N Asbjørn orberg
15 SpareBank 1 Fund Group Management 16 Executive Director K Management Group CEO Finn H jell F inance Division Finance Kjell Fordal Kjell ordal augan Markets Division Dag IvarThobroe Deputy CEO T Executive Director Tina SteinsvikSund ore H ore aarberg nternal A Internal Ernst &YoungErnst Marte VoieMarte Danielsen udit orporate Market Corporate Legai Affairs Reidar Stokke Division Executive Director Wiseth Marvin Executive Director R eidar Stokke Board ofDirectors Finn Haugan CEO R etail MarketDivision etail Tore Haarberg Deputy CEO Communications Marvin Wiseth Marvin Executive Director D Executive Director VoieMarte D ag Ivar Thobroe usiness Operations Business Tina Steinsvik Sund Tina Steinsvik anielsen Executive Director Olav Gjerland R F omsdals Olav Gjerland Division ellesbank • • • • • • • • • • • • • Strategies and Goals Key
To achieve growth in the corporate market by shouldering responsibility as the regionaltheshouldering responsibility asby marketcorporate the in Togrowthachieve A strong focus on risk management. higher than 55 per cent. Costeffectiveness lineinwiththethree best banksNorway, in cost-incomeanda rationo A tier 1 ratio of at least 8 per cent. 6 per cent. Tominimumtherisk-freeleasttheequityequalreturnto atensureon interest a plusrate at SpareBank 1 Midt-Norge. To focus on system competence development and on skilled staff who are proud of working world. To give increased focus to capital market activities. To be the region’s provider of occupational pensions. Bank’s credit strategy and should secure a moderate level of losses over time. marketleader. Growth shouldsuch bethatexposed alltimesriskatisconsistent withthe To achieve growth in the retail market, especially in well secured mortgage loans. To ensure that lending to the retail market constitutes at least 65 per cent of total lending. though cooperation. Thealliance makes for competitive products, critical size and a basis for cost effectiveness public sector in Trøndelag, Møre og Romsdal. To be a regionalToretailsavingscustomers,afor bankbe enterprises, farmingthethesectorand Membership of the SpareBank 1 Alliance as a central element of the Bank’s strategic platform. To maintain a clear profile in the savings and pensions market and in the digitalised the in and market pensions and savings the in profile clear a Tomaintain
17 Key Goals and Srategies The SpareBank 1 Brand 18 without unnecessary foreign words and wordy language wordy and words foreign unnecessary without manner personal anduncomplicated an in communicate understand.informationeasiertofar Webe therewill will benefits. Our web pages will be simpler to navigate, and the practical some with customers provides profile new Our OFFER THECUSTOMER? WHAT VALUE PROFILE THENEW DOES the local community. developmentof the contributes to andadvice sound gives initiative,takesparameters,that and trends needs, new to committed and competent. SpareBank 1 is a bank that adaptsforward-looking,are we that do, and sayeverything we in customer of ours will be even clearer. The customer will see, meet needs and grasp opportunities. The benefits of being a satisfyproductsservicesdemands,ourandtouse we how customer first. Using imagesthe puttingand and customer textthe to closer weeven offering willour show the customer phraseThe‘Banking, insurance, you’impliesandbringing ANDYOU. INSURANCE, BANKING, it is more important than ever to put this clearly across. services to back up good solutions and personal advice. And productsandofrangebroad a offer importanttoever than brings affect the breadth and quality of our offering. challengesit thelettingItwithout but trend, isthis ofmoredriver a been tougher.haveWe also is market the inCompetition made banking simpler and the customer more self-sufficient. online banking, bank ID and smarter payment solutions have they make on the Bank. In particular new technology such as respond to customers’ attitudes to and needs have andWe the demandspace. quicker ever an at and continuously, changingis marketbanking The us. of customersdemand Our new profile must tie in with what we are and what our Further Step a Brand 1 SpareBank The
profile shows that one of the country’s financial strongest the of one that shows profile oriented bank needs to be clearer and more visible. Our new across as the Bank that we indeed are. A modern, customer- We are modernising our expression and look in order to come INSTEPA BRAND WITHTHEBANK to the times, technology and the society we live in. comes across as one that is easy to identify with, and geared now imageemotionalOur value. customer,of alsothe but The new, modern expression is not just of practical value for is being offered and what benefits are involved. a direct, clear manner so that the customer understands what not just to us. Our products and services will be explained in – what is on our mind must mean something to the customer, orientation. customer and modernisation further.a step catchwords The are overall. We brand are nowtakingthe country’sare the largestbank second we and brands infinance, strongest country’s ofthe one has become SpareBank 1 spaceof11years In the brands has taken a further step forward.
Marketing Director D jørnstad C aniel Bjørnstad ardona 19 The SpareBank 1 Brand Statement by the CEO 20 • • • • • • • 2006 for the following reasons: the 2006 figure, the Board regards 2007 as a better year than 844 million. Although net profit is NOK 52 million down on profit of NOK 1,045 million before tax and a net profit of NOK achievement than the record year 2006. The Group posted a Midt-Norgeconcludes that2007 represents evenangreater The assessment of 2007 by the Board of Directors of SpareBank 1 Bank the for Year good very A
The Bank’s equity portfolio performed well in 2007 in well performed portfolio equityBank’s The The Bank’s financial position strengthened in 2007, and The Bank’s core business showed a strong increase with Customer satisfaction and staff satisfaction are on a on are satisfaction staff and satisfaction Customer the production and distribution of savings products. put renewed focus on our ethical standard in relation to MiFid, introduction of the with combined This, firm. structured on products customers distributed some by by the Group’s incurred losses investment substantial Terra Group were affected by major problems related to ness and general well-being among the Bank’s staff. initiatives taken to strengthen both organisational robust thevarious competence and organisation development highly satisfactory trend, and there is broad support for companies have switched to SpareBank 1 Midt-Norge. evidentin Trondheim where anumber of well reputed mostinmarkets whichinarepresent.we Thismostis domesticin acquiringcreditareweand market shares growth lending general exceeds growth lending Our and corporate business expanded, particularly the latter. New customers were in good supply, and both the retail financial markets in the fourth quarter. despite weaker tendencies in national and international liquidity position. our conservative funding strategy ensures a comfortable not invested in CDOs nor subprime bonds or the like, and crisis that surfaced in the fourth quarter 2007. We have internationalfinancialthe byunaffectedvirtually are contrastIn manytoother financial industry actors, we reduced. further was portfolio loanBank’s the in present risk banking operations rising as much as NOK 84 million. by generated profit withmillion, 196 NOK of growth income up NOK 79 million. This adds up to net overallinterest incomeincome up NOK 117 million and commission At the end of 2007 savings bank colleagues in the the in colleagues bank savings 2007 of end the At -
which in turn made a highly positive contribution to the contributionto positivehighly a made turn in which in 2007 as a socially committed, out-of-the-ordinary institutionSpareBank 1 Fund, further strengthened the Bank’s position the throughactivity, administeredcharitableBank’s The coordinating the function. of makes alliance bank functioning on the challenges and demands that an ambitious and well- grip firm a has CEO, new the Mathisen, Eldar statement. financialpresentedeverGruppenSpareBankbesthasits 1 insurance office in place in Førde in Sogn og Fjordane. an have alsoWe VoldaØrsta. 1 NordVestSpareBank and rative concept was successfully established with SpareBank 1 further in 2007, and an exciting and forward-looking collabo Our recently established capital markets division expanded Åle 20.10.2010. on back moving to forward look andintentions with line inthroughcarried be toproject theexpectMay. Iin taken Directorsregardingof demolitionconstruction and be will Rosten outside the city centre. The final decision of the Board the Bank’s premises in Trondheim to temporary premises at At the time of writing we are in the process of relocating from focus on the environment and energy conservation. also strengthen the Bank’s general reputation through its officebroad premises that are right for the times. The project will wisestheads andwillafford theBankefficient and flexible willenhance thebank’s attractiveness competingin forthe many levels. In addition to focusing on cost control, theconstruction project project, it involves improvement initiatives on a just than More project. Office” Head “New bank’s the realisingtowardstaken2007 in wasforward stepmajor A office head New bank’s market and profit growth. sund andFørde -
CEO Finn H the Bank. customersand to secure a continued good development for and staff that perform at a very high level to satisfy the Bank’sand committed Board of Directors, and a management team pleased with our well functioning officer level, a responsible While expecting slightly higher turbulence, I am particularly achieved in the unusually good years behind us. Bank’sfinancial investments scarcelywill return equal the fluctuate to a greater degree than last year and return on the satisfactorythoughdevelopmentprofits evenwill2008, in webelieve that both the Bank and our customers will see a we experienced significant market volatility. For that reason profile is consistently lower than was the case the last time have established routines and standards to ensure that weour yearsrecent Inagain. uprisk pickWebelievewilldemand demand, and sales of some savings products are also slowing. of banking in 2008, as previously. We do see lower borrowing Against this backdrop we will concentrate on doing a solid job nations with which we naturally compare ourselves. makes the country’s economy significantly more robust than peak is now behind us, it also believes that Norway’sWhile oilthe Bank’swealth management team believes that the cyclical recession, and newspapers are full of reports of crises ahead.to, close or in,economy US a witnessed.seeWebeen has slump exchange stock substantial A markets. financial in forward looking.be to 2008important is opened it withup, a summed highis degreeyear good of a turbulenceWhen Satisfactory in2008 performance augan
21 Statement by the CEO Report of the Board of Directors 22 1 per cent from the third to the fourth quarter of 2007. 7.3percenthigher end-2007at thanend-at 2006, theyfell economy is the housing market. real Norway’sAlthough the house in pricesweakness wereof signs few the Among proceedings started in 2007 compared with 2006. bankruptcy statistics with a 17.1 per cent drop in bankruptcy It was accordingly Møre og Romsdal which pushed down the increaseNord-Trøndelagin 2007inover theprevious year. increaseSør-Trøndelagcentperin3.1 a centper 4.8 a and Trøndelag and Møre og Romsdal. However, this figurebankruptcySør-Trøndelag,proceedingsof startedinconceals Nord- which saw a full-year fall of 4.4 per cent in the overallthan innumber 2006. The picture is much the same in Mid-Norway year. full the yearForcent 2007per figurelowerthe 6 was previous the period same the in than fewer cent per 12.4 saw a total of 690 bankruptcy proceedings started in 2007Norway, of quarter fourth The position. financial strong very a in firms lefteconomicexpansionhas ofperiod long The high household debt accumulation. the year in response to strong pressures in the economy and overcent per 5.25 to 3.5from raisedwere rates base Bank investment activity in the mainland high (non-oil)and revenues treasury economy.good bringing barrel, per Central70 the lowest in the world. The oil price averaged around USD Norwaywherestructuralineven unemployment among is low very – 2007throughout cent per 2.5 aroundhovered to push inflation above 3 per cent this year. Unemployment by 2.8 per cent last year, high expected wage growth is likely target2.5percent.of While theconsumer priceindex rose ended1.8atpercent, appreciably below thecentral bank’s Wage growth last year was about 5.7 per cent and core inflation with 3.3 per cent for the economy as a whole. comparedcentper5.7 be likely tois 2007year full the for third quarter was 6.6 per cent. Mainland (non-oil) GDP growth 7.6percent,while 12-month GDPgrowth thethe endofat themainland (non-oil) sector inthethird quarter 2007 was of vigorous economic expansion. Annualised GDP growth for which will surely be seen as a turning point after four years Economicactivity was very high in Norway in 2007, ayear the macroeconomy in2007 settinGeneral g and Directors of Board the of Report
Pre-tax profit came to NOK 1,045 million, which is NOK is which million, 1,045 NOK to came profit Pre-tax (ATA).assetstotalaverage of cent) per (1.59cent per 1.26 equityof18.9 per cent (23.7 percent). Theprofit measured on return a producingmillion) (896 million 844 NOK of profit net a achieved Midt-Norge 1 SpareBank 2007 In Very good result – strong trend in income there are no indications to the contrary. going-concernaccountspresentedTheaare on basissince accounts and parent bank accounts under IFRS. SpareBank 1 Midt-Norge prepares and presents consolidated g principle Accountin parentheses refer to 2006) in figures stated, otherwise Unless figures. (Consolidated Account and in associated turnover and results in 2007. significant assignments number of increasethe a in received saw Markets 1 SpareBank and supply, good in were in insurance 11 per cent. Both retail and corporate customers 2007. Growth in other savings products was 13 per cent and in centper 8 depositsby andcent per 17 by Lendingrose backs of collective impairments. in 2006. In 2006 the accounts were heavily affected by write- guarantees compared with a net recovery of and NOKloans 84on millionrecorded was million 6 NOK of loss net A on other operating expenses. down to NOK 72 million on staff expenses and NOK 40Operating million expenses rose by NOK 112 million in 2007, breaking ments accounted for about 50 per cent of total income. 2007 net commission income and return on financial invest previously. The than income base diversified is therefore more more significantly robust, and are in incomes Group of the profit of SpareBank 1 Gruppen rose by NOK 43 million. was down NOK 120 million. SpareBank 1 Midt-Norge’s share income by NOK 79 million. Return on financial investments interest income was up by NOK 117 million and commission Total income growth in 2007 came to NOK 120 million. Net 71 million lower than in 2006. s 2007 s - a weighted variable after the two issues carried out in 2007. per cent of the distributed profit. The PCC fraction appears as the allocation to the dividend equalisation fund constitute shares 55.8of the Bank’s equity capital, such that dividends and relativetheir proportionto in capital PCC the andequity) bank’s(ownerlesssavingsreservethedistributed between is profit policy,the dividendBank’s the with keeping In totalling NOK 324 million. altogether PCC, per 6.00 NOK of dividend cash a set to TheBoard of Directors recommends the Supervisory Board for distribution to NOK 669 million. revaluationthe reserve2007,bringingtotalamountforthe the in transferredfrom wasmillion 49 revaluationNOKreserve. changes reflects distribution for profit Annual by the parent bank. income to taken isGruppen subsidiariesSpareBank1 and thedividend fromonly that fact the in seen isresult IFRS bank’sparentthe Group’s anddifferencethebetween The provide the basis for distribution of profit. IFRS using the cost method, and the parent bank’s accounts As from 2007 the parent bank’s accounts are presented under Proposed distribution of profit was NOK 51.00 as of end-2007. PCC pervaluebook and 8.72 NOKwere EarningsPCC per 2007 which increased equity capital by NOK 213 million. PCC was paid for 2006. A dividend issue was carried out in 82.00 at end-2006). In 2007 a cash dividend of NOK 6.00 per At year-end the price of the Bank’s PCC was NOK 72.25 (NOK
P P D rofit for the year, parent bank, rofit for the year, Group, ifference between Dividend, SpareBank 1 Gruppen Result, SpareBank 1 Gruppen Dividend, subsidiaries Result, subsidiaries IFR
S Group and
IFR S
IFR
S
P arent B ank
2007 -233 620 844 - 5 6 20 1 2
dividends. to allocation after profit net the of cent per constitutes25 sum This purposes. non-profit for aside set is million 86 NOK bank’s savingsreserve,the toaccruing share the Of half-year from 1.60 per cent in the first half-year. margin, the interest margin rose to 1.74 per cent in the second Thanks to an intact lending margin and an improved deposit Increase in net interest income the holder to a new PCC. dividend of NOK 6 per PCC will be paid for PCCs not entitlingfractionalrightscashorissued, abewillPCCs butparts of PCCsconferring theright toone new PCC. Nosubscription subscription period. The price will determine the number of The issue price will be established immediately prior to the their preference. prefer dividend PCCs to a cash dividend must actively notify responding to the allocation to dividends). PCC holders who The maximum issue amount is set at NOK 324 million (cor to opt for dividend PCCs rather than cash dividend. The directors expect the issue price to encourage PCC holders dilution and helps to safeguard PCC holders’ value growth. of new PCCs rather than cash. A dividend issue counteracts whom 71 per cent accepted the offer of dividend in the form year’s dividend issue was well received by the PCC holdersLastdividendissue). (aholders existingPCCof withplacing This year, as last, the Board of Directors recommends a privateDividend issue Profit for the year, parent bank, IFRS D T Gifts Savings bank’s reserve Equalisation fund Dividend P Transferred from revaluation reserve otal distributed rofit for distribution istribution of profit
2007 669 669 6 324 210 49 20 49 8 6
2006 669 669 303 202 92 73 -
23 Report of the Board of Directors Report of the Board of Directors 24 net write-downs of NOK 47 million in 2007. million65 realised propertyon sales2006 incoupled with assets compared with 2006 was largely due to gains of NOK million (168 million). The drop in return on other financial 161 NOK at 2006with par a ondividends wereand gains Securitiesmillion). (233 million 113 NOK totalledassets currencytrading,financial instruments other financial and on gains and securities on dividends and gains Capital Good return on financial investments of savings products was at the same high level as in 2006. and estate agency and capital market services. Income on sales12 per cent. The increase relates mainly to payment services 75 million (630 million), an increase of NOK 705 million or totalledNOKactivities capitalmarket–from income ding Net commission income and other operating income – inclu High commission income competition for sound borrowers and depositors. strongdespite margin interest the in growth forpotential adjustment of customers’ borrowing rates suggests continued relatively stable towards year-end. A continued slight lag in were ratesinterestmarketincrease, of periodlong a After margin was 1.67 per cent (1.79 per cent). increase of NOK 117 million or 12 per cent, while the interest Net interest income came to NOK 1,125 million in 2007, an margins in the second half. corporatemarkets alike along with a weak upward trend in sentials due to lending and income growth in the retail and es million.allincrease88in TheincreaseNOKwas anof half-yearcompared first millionhalf,the519NOKwith in Net interest income came to NOK 607 million in the second Asset management C Accountancy services Real estate agency and other commission Insurance Saving Payments transmission T Capital market Guarantee commission otal ommission income
(NOKm)
2007 705 1 121 19 30 5 24 73 6 42 7 6 3
2006 630 12 119 180 23 2 40 5 6 9 8
c
hange 75 32 1 1 -3 7 2 6 5 2 5
- -
costs on buildings which are to be demolished, ascapitalisedexpenses conversionBank well thebecause is asThis costs various outlays linked to the ‘New Head Office’millionin 49 project NOK oftotal debiteda were parentbank the in 2007. Bank’sThepropertycompany, Kvartalet, and Sparebank 1 2006.millionin 65 NOK of gain compareda 2007within Net losses on other financial assets came to NOK 47 million NOK 25 million. about of lossescapital contributedto bonds, on gains net Financial market disturbance in autumn 2007, which affected investments.Bank’sliquiditythe from derivesremainder SpareBank 1 Markets contributed NOK 37 million, while the trading totalled NOK 43 million (54 million) in 2007. Of this, Net gains on bonds and on foreign exchange and derivatives Invest accounted for NOK 54 million of this figure. Bank’sinvestmentMidt-Norgecompanythe transferredto shares on Gains million). (114 million 118 NOK totalled Capitalgains and dividends on the Bank’s equity portfolios and its affiliated unions. Norway), and the Norwegian Confederation of Trade Unions (20 savings banks in the eastern and northern regions AS Sparebankerof Samarbeidende SouthHedmark, Sparebanken 1 SR-Bank, SpareBank 1 Nord-Norge, SpareBank 1 Midt-Norge,SpareBank 1 Gruppen. This grouping is owned by SpareBank product companies through a jointly owneddevelop andholding alliance an operatecompany, banks 1 SpareBank The anchorage, competence and a simpler life. quality, thereby affording private individuals and firms a local economies of scale in the form of lower costs and/or higher competitive financial services and products, and to take out The SpareBank 1 Alliance’s mission is to procure and deliver Very good performance by SpareBank 1 Gruppen gain recorded in 2006 referred to property sales. incurred in buying out tenants etc. As mentioned above, the T Net gain/loss on other financial assets Net gain on bonds, currency and derivatives Capital gain on shares Dividend on securities R otal eturn on financial investments
(NOKm)
2007 113 -47 9 43 23 5
2006 233 97 17 4
financial investments). on return on above section (see shareholdingslong-term parentbank’stheovertaken portfolioInvest,haswhich of establishedinvestment company, Sparebanken Midt-Norge Bank’srecently the by posted gains the to due essentials wasNOK59.8million (39.7million). Theincrease allinis The overall pre-tax result for the Bank’s subsidiaries in 2007 Subsidiaries (49 per cent). cent). The Group recorded a cost-income ratio of 51 per cent Operatingexpenses came1.64to percent ATAof (1.75 per facing divisions. wage growth and to new focal areas in the Bank’s customer- The cost growth at the parent bank is mainly due to price and existing markets. EiendomsMegler 1 required by the strong focus on new and at increases staff to due essentially is subsidiaries the at growthcent).Costper million(22 40 subsidiaries NOK by millionroseNOK72by percent), (9 net,theBank’s andat up 11 per cent compared with 2006. Costs at the parent bank Overall costs for 2007 came to NOK 1,102 millionHigh activity(990 brought cost million),growth in keeping with plans was NOK 231 million (190 million) in 2007. profit thisnoteworthy.Midt-Norge’s of 1SpareBankshare SpareBank 1 Livsforsikring and Odin Forvaltning are (1,008especially million). Good results at SpareBank 1 Skadeforsikring, holders. The grouping’s net profit in 2007 came to NOK 1,175 factory trend, with return in excess of satis- the a on targets is performance Gruppen’sprofit set1 SpareBank by the PCC P Midt-Norge Regnskap Allegro Finans SpareBank 1 Finans Midt-Norge EiendomsMegler 1 Midt-Norge Midt-Norge Invest T Property companies otal re-tax profit
(NOKm)
2007 -34.9 59.8 5 22.0 4. 8.2 0.8 9.1 6
2006 39.7 12.2 17.4 1.9 3.1 .1
SpareBankFinansMidt-Norge1 shares the ofallovertook in 2007. trend profit positive a showed Trondheim.company The to addition in Molde and in Verdal offices has company andhasshown stable, highgrowth overlongaperiod. The portfolioworth NOK 2.3 billion, has some 4,700 customers company in the fields of leasing and car loans. It manages a SpareBank 1 Finans Midt-Norge is the region’s leading finance the result for 2007 is regarded as satisfactory. Viewed in light of market conditions over the last six months, a slower turnover rate. was an excess supply of housing, followed by price falls and interest rate hikes led to pessimism in the market. The result competition in the sector is intense. As from July 2007capacitymarkedbybuilding markethigh andactivity, repeatedand was 2007Romsdal. og MørethroughoutTrøndelag in and EiendomsMegler 1 Midt-Norge leads the estate agency market and development. growthfurther to view a competencewith andquality on authorisedaccountancy firms. The firm keepsa close focus independentcountry’slargest the among is company the With five offices, 53 staff and a turnover of NOK 30 million, 1,200 small and mid-size clients in the Bank’s to market areas. services accountancy delivers Regnskap Midt-Norge good NOK 2.2 billion spread across 2,200 customers. reflect its macro view. The company manages a portfolio of a an updated outlook on macro developments, and its portfolios market trend. It puts much effort and prestige into maintainingmarkets. The company’s aim is to cater to any market and any although return slipped slightly in 2007, as in thetime, longunderlying a formanagement underassets on return good company’s portfolios. The company has achieved a relatively fruitfulcollaboration withits distributors marketingon the substantialmanagementassetportfolio, thanksleastto not The management company Allegro Finans has worked up a nationwide. Portfolio expansion is planned for 2008. offersone-stop solutions industryfor publictheandsector SpareBank 1 Bilplan specialises in car fleet management and SpareBank 1 Finans Nord-Norge and SpareBank 1 SR-Finans. distribution agreements were signed with the previous owners,administration of 2,200 cars. In connection with the purchase,thewithalong year the ofstart theBilplanSpareBank at 1
25 Report of the Board of Directors Report of the Board of Directors 26 cent) are loss provisioned. defaults, NOK 34 million (38 million) or 15 per cent (18 per overall Of lending. gross of cent) per (0.41 cent per 0.37 end-2006,toatfellmillion), (218but levelassame the i.e. million 231 NOK to came days 90 of excess in Defaults impairment provisions exceeded actual losses. individualexposuresfactthattheprevious toand periods’ the last 12 months is mainly due to write-backs of losses on year-end (147 million). The reduction of NOK 31 millionat million over116 NOK toimpairments Individualamounted (net loss of NOK 16 million). NOKmillion5 was recorded onthe retail portfolio in2007 of recovery net A losses. confirmed previously of back exposures being reclassified as performing loans, andindividual write-provisioning, loss new of level low a to due essentiallymillion), 6 NOK of recovery(net 2007 in folio portcorporatethe onrecovered was net,million, 2 NOK impairments in 2007 (see separate section below). were recovered. No basis was found for changes in collective million). In 2006 collective impairments of NOK 94 million quartersaw net losses ofNOK million 9 (net loss ofNOK 4 2007(netindividual losses NOKmillion).of10 Thefourth Loan losses of NOK 6 million, net, were recovered as of end- Net loss recovery and low level of defaults portfolio in 2007. its on return good achieved company mid-Norway.The in mainly businesses, in invest to is mission whose arm Midt-Norge Invest is Sparebanken Midt-Norge’s investment N Corporate market T Changes in collective write-downs Retail market otal (net recovery) et losses on loans
((NOKm)
2007 6.4 4.7 1.7
2006 -1 84.4 94.0 5 .1 .7 -
Creditgrowthlargely2007wasin confined the to Collective impairments no change in the risk picture in the short term. outlookNorwegianthefor economy, suggeststherebe will over a long period. This, combined with a continued positive improved portfolio has Bank’s loan the in profile risk The over the last 12 months. grosslending,centperreductionmillion 6 27a NOK or of 463 million (490 million), or 0.78 per cent (0.83 per cent) of Totalproblem loans (defaulted anddoubtful) came toNOK 36 per cent (40 per cent) is loss provisioned. or million) (109 million 82 NOK which of lending, gross of cent) per (0.46 cent per 0.39correspondingmillion), to (272 million 232 NOK totalledexposures doubtful Other was made in collectiveinimpairments.madeBank’s wasthe Ofoverall change no 2007, in portfolio loan the in classes risk in and generate will be recorded in the accounts as commission as accounts the in recorded be will generate not figure as loans in the Bank’s balance sheet. Earnings they the figure is expected to rise steeply in 2008. The loans will Boligkreditt,andSpareBank 1 Midt-Norgeto SpareBank1 by transferred been had billion 2.7 NOK end-2007 of As increased competitive power. reducedSpareBankseebankswillfundingthe costsand1 theirhighestquality home mortgage company,theloansto of the market for mortgage backed securities. By transferring participating in the SpareBank 1 Alliance to take advantage Banks the by established was Boligkreditt 1 SpareBank SpareBank 1 Boligkreditt to SpareBank 1 Boligkreditt. Additionally, loans worth NOK 2.7 billion previously.have been Totaltransferred assets have doubled in thei.e.NOK8.3 billion space13.2orpercent higher thanmonths12 of five years. end-2007,billionatBank’s71.5 ThetotalledassetsNOK Total assets at NOK 71.6 billion 12 months previously. and classesriskthe in wascent portfolio,per loan 72
low low risk classes. Since there were only minor net changes at end-2007, just 1 percentage point higher than higher pointpercentage 1 just end-2007, at very lowvery verylow
towards active management and energy funds. productspensionand fundsequity from awayshift a was andreal estate funds 5 per cent. In the course of 2007 there management 29 per cent, saving in energy funds 21 per cent activecent, per 13products portfolio,pensionthe of cent NOK 0.8 billion or 13 per cent. Equity funds make up 32 per billionmonths6.3previously,NOK12with increaseanof compared end-2007 at billion 7.2 NOK totalled deposits bank than otherproducts savings ofportfolio overall The Good sales of savings and insurance products (20.7 per cent) to reach NOK 16.4 billion. deposits rose by NOK 0.9 billion (2.7 billion) or 7.6 per cent cent (2.9 per cent) to reach NOK 16.1 billion, while corporate Retail deposits rose by NOK 1.4 billion (0.4 billion) or 9.3 per (11.4 per cent) on the figure 12 months previously. cent per 7.6billion) orbillion(3.1 2.3 NOK increase of an year-end,at billion 32.4 NOK totalleddeposits Customer cent) of ordinary loans to customers at end-2007. Loansretailto customers accounted forper63cent (63 per commitments. by acquisitions of new customers and expansion of existing maritimeandrealestate segments, andwasgenerated both construction, manufacturing, the to loans large and size reach NOK 23.0 billion. Growth was seen mainlyto cent) perin (17.0 centmedium- per 21.8 or billion)(2.8 billion 4.1 NOK by rose corporates to Loans loans. mortgage home billion.38.9growthTheessentially relateswell-securedto 5.0 billion (4.4 billion) or 14.7 per cent (16.5 per cent) to InNOK the same period lending to retail customers rose by NOK NOK 61.9 reach billion (including to SpareBank 2007 Boligkreditt) in at year-end. cent) per (16.6 cent per 17.2 or Total outstanding loans rose by NOK 9.1 billion (7.5 billion) Strong lending and deposit growth Hedmark’s entry as a stakeholder in the fourth quarter. 18.4 per cent, down from 20.9 per cent due to Sparebanken At end-2007 the Bank’s stake in SpareBank 1 Boligkreditt was in 2007. include the amount transferred to SpareBank 1 Boligkreditt income.Thecommentaries dealing withgrowth lendingin
of 17 per cent. occupationalend-Decemberpensionsincreaseby an2007, achievedmillionwason112 NOK premium volume ofall personalforrisecentperinsurance. 20 over aAn andlife 12months the toend-December, in with per7a cent rise for non- growth cent per 11 showed portfolio insurance Bank’s the and stable, are products insurance of Sales retail market actor in mid-Norway, with a strong market strong a mid-Norway,with in actor market retail meet growing customer expectations. The Bank is the leading Guided by these key parameters, a purposeful effort is made to • • • • basis for establishing good, lasting customer relationships: financial goals are achieved. We focus on four elements as a and created is value that needs and wishescustomers’ of bulk of households’ financial needs. It is through our handlingindividuals with a basis in four business areas covering the private to advice financial provides Division Retail The Progress and sound profit in the retail market
Savings products, volume I Equity funds T Occupational pensions Personal insurance Non-life insurance Insurance Active management Property funds Energy funds management T nsurance, premium volume Excellent customer handling Unique accessibility First rate advisers A strong product range otalt otalt
(NOKm) (NOKm)
7 165 2 273 2 072 1 2007 2007 9 34 5 582 107 3 112 5 1 6 8 6 6 3
6 332 2 1 338 1 10 2006 2006 524 340 5 9 408 89 9 28 5 5 5 3
Growth Growth -2 -380 833 9 - 58 23 18 17 55 6 6 7 3 2 -
27 Report of the Board of Directors Report of the Board of Directors 28 remain favourable. Rising interest rates and plateauinghouseholds for conditionshouseeconomic 2008 of start the At the Bank’s risk profile are reflected in very low losses. economic situation in Norway and the work done to improve to reach NOK 320 million in the last 12 months. TheCommission favourable income is solid, having risen by NOK 22 million rates is a substantial challenge. interestmarket higher forcompensate to costsborrowing a higher lending volume and deposit margin.margin Raisingwas undercustomers’ strong pressure, this was compensated 36 millionfor to reachby NOK 613 million. Although the lending NOK climbed income interest net while areas, business all in trendvolume positive a of back the on million 933 in 2007. Operating income rose by NOK 58 million to NOK cent per 23.1 of equity on return a achievedDivisionThe positive market trend and have a growing customer base. a on are wecompetition intense the competitors.Despite existingincreasedofefforts by andactors new byspurred Competitionisgrowing across most ofthefinancial market satisfaction polls confirm the quality of our offering. position in all product areas and market segments. Customer Personal insurance (NOKm) Non-life insurance (NOKm) Other savings products (NOKbn) Deposits (NOKbn) Loans (NOKbn) ROE P Losses Pre-loss profit Operating expenses Total income Commission and other income Net interest income R include figures include subsidiares.from the Parent the of not does part Marketa Retail is and Division Bank, The rofit before tax etail market after tax
(NOKm)
31.12.07 23.1 % 1 37.7 382 107 299 37 55 933 320 6 6 13 -7 . .7 5 9
31.12.06 21.1 % 33.0 1 328 284 331 87 298 5 89 44 77 .0 .4 3
c hange -10 0. 1.3 4.7 54 18 1 43 1 22 3 5 6 5 8 6
Bank is prepared to tackle any challenges arising. thehandling,customerexcellent accessibilityuniqueand market.Withstrongitsproduct offering, first-rate advisers, TheBank is well equipped to face competition in the retail tant in 2008. otherwithorganisational imporalsoGroupistheunits in skilled,motivatedExploitingstaff.collaborative potentials to heighten customer satisfaction and to retain and develop The Bank aims to increase its market shares. A further aim is than bank saving. for savings products carrying a higher risk and return profile interest rate level is expected to continue to underpin demand level. Coupled with Norway’s boom conditions, the moderate debt servicing capacity and keep losses and defaults atmaintain a to lowhelp will rates interest moderate Continued intense competition signals continued pressure on margins. whilelending, in growthslower somewhatsuggest prices also achieved in the Division’s commission income on sales NOK 88 million to NOK 513 million. Satisfactory growth was the lending margin. Net interest income rose by as much as theincome side of the accounts, despite strong pressure on cent confirm this picture. The buoyant growth strengthened perlending 22andgrowthcent ofper Deposit 5 growthof for the Bank’s corporate market business. especiallyyearanpositivegood2007 trend,made therisk customers in 2007. as This, Bank together the with the joined income trend businesses and reputable solid, Several of its business areas. The Bank also services about 10,000 firms within one or more centinthese segments inTrøndelag andMøre ogRomsdal. SpareBank1 Midt-Norge has a market share of some 41 per sectors. public and agriculture the and segmentbusiness mid-sizeand small the incorporatemainly market,the in multi-productcustomers13,000 about services Bank The the needs of business and industry. Norge on leasing finance. All products are designed to meet capital market products and with SpareBank 1 Finans Midt- on Markets 1 SpareBankthe with closelyworks Division The investment.capital and insurancepayments, foreign and domestic financing, of areas the in market corporate the to solutions financial deliversDivisionCorporate The market corporate the in profitability sound and growth Higher - thanks to skilled financial advisers. customerscorporate among satisfactionrating high a and The Bank believes that it will maintain a high market share in the second half-year. public sector customers were acquired in 2007, particularly and privatereputable ofsubstantial number A role.major a playingunitprofessional markets capital a toproximity customersthroughand acquisition customers,newof with The Bank has achieved relatively high growth both on existing solutions for the corporate market in 2007 and 2008. provided a template for a similar focus on non-life insurance targeting individuals. The success achieved schemeswith with 2007 inpension up followed was sales2006 in pensions success enjoyed by the Bank with salesgreat corporates.Theof to salesdefinedproduct of range wider contribution a of insurance and capital markets is reaping results in the form the in building competence on focus heavy Bank’s The on equity of 18.9 per cent. economic climate and low portfolio risk, produced a return growth, combined with low losses resulting from Incomemonths.a 12 lastfavourable the overmillion 35 NOK by risen Overallcommissionmillion,148havingNOK incomewas of capital market, insurance and cash management products. Personal insurance (NOKm) Non-life insurance (NOKm) Loans (NOKbn) Other savings products (NOKbn) Deposits (NOKbn) ROE P Losses Pre-loss profit Operating expenses Total income Commission and other income Net interest income C orporate market rofit before tax after tax
(NOKm)
31.12.07
18.9 % 20.8 14. 412 112 40 2 148 66 5 1.3 6 55 13 - 4 6 6 6 1
31.12.06 18.8 % 14.0 17.1 392 304 234 113 42 -88 0.9 9 38 5 5
c hange 102 123 0.4 0.7 3.7 20 17 82 21 3 88 8 5
corporate and capital market divisions. under the divisional director is operated by the Bank’s retail, is organised as a division in its own right, although activity rate market, is largely ascribable to new customers. The area evenly distributed between the retail market and the corpo reachtoaboutbillion. 10NOK growth,The whichfairlyis the loan portfolio growing by NOK 2.6 billion or 38.5 per cent achievedstrong growth andprofit in this market area, with has RomsdalsFellesbankBankover end-2005thetaking at RomsdalsFellesbank.Since 1 SpareBank name brand the SpareBank 1 Midt-Norge operates in Møre og Romsdal under SpareBank 1 RomsdalsFellesbank SpareBank 1 Markets). on section (see field corporate the in operating company SpareBank1 Markets which has bought into an established Ålesund and Sunnmøre. This was done in cooperation with January 2008 with a capability targeting larger corporates in in Ålesund in office an opened Division Corporate The itNre a te pin f asn is tk i PAB in Consulting stake to 51 per cent within its two years. raising of option the has Midt-Norge offering in the corporate field in Møre og Romsdal.Consulting. SpareBank This was done to strengthen 1 the Bank’s service collaboration with, and acquired a 34 per cent stake in, PAB As a step in the venture in Sunnmøre the Bank initiated close businesses. medium-size and small from services finance corporate for demand growing notes unit The 2007. in areas finance strengthened its staffing in the foreign exchangeand phase,andbuild-up a corporatein continues Markets 1 SpareBank and foreign exchange areas. division,theactivityparticularly inofincomefixed the in finance). The increase is attributable to a generally higherin level all service areas (fixed income, foreign exchange, corporate SpareBank 1 Markets’ income trend in 2007 showed progress Good income trend for SpareBank 1 Markets market and savings areas. where our bank’s main focus is on the corporatehas beenmarket, established capital with SpareBank 1 Nordvest in Ålesund result of the office established in Ålesund. Close cooperation expectedRomsdalstrengthenisogMøretoa Growth inas -
29 Report of the Board of Directors Report of the Board of Directors 30 to receive such permission. The new rules will render therender willrules newpermission. suchreceiveThe to respect of credit risk. It was among the first banks in Europe theIRB foundation approach tocompute capital charges in receivedemploypermissionBankto the February 2007 In IRB status approved by NOK 480 million as of end-December 2007 Fellesbank and estimated deferred tax reduce the capital base Deductions for goodwill as a result of the takeover of Romsdals- loans and NOK 4.5 billion on lending to corporates. 1.9 billion on low-weighted (the best secured) home mortgage Boligkreditt),comprisingNOK 1SpareBank transferred to 6.4 billion or 8.9 per cent in 2007 (excluding NOK 2.7 billion cent).Bank’sper(8.6The overalllendingNOKnet byrose (11.9 per cent), while tier 1 capital adequacycent per was12.5 was 8.3adequacy capitalper total end-2007cent of As Capital adequacy subordinated debt. debtsecurities, asset backed securities, high yield bonds or directly exposed to the subprime segment, nor to collateralisedforemost funding source in the years ahead. The Bank is not rising,butthe Bank regards SpareBank Boligkreditt1 asits liquiditystrategy. Credit margins onthe Bank’s funding are conservative its from profited has Bank the andconcerns, Recentfinancial market turbulence has not raised liquidity at the same point in time. based on Norges Bank’s norm, was 103 per cent (101 per cent) liquidity position is satisfactory and the liquidity indicator, year-end.Theat cent)per (78 cent per 93 was year one of amply are diversified. products The and proportion of sources money market funding funding Bank’s in excess The Good liquidity position
ikwihe vlm i rdcd o 9 to asof31.12.07.risk-weighted base measurement reduced is volume risk-weighted regulations, requirements capital the in rules transitional Under *) Figures in NOKm Tier 1 capital Risk-weighted volume *) O Subordinate debt Tier 1 capital ratio Capital adequacy wn funds
31.12.07 44 4 5 5 560 3 703 1 8 per cent of the overall overall the of cent per 12,5 8.3 5 5 7 3
31.12.06 40 473 4 809 3 498 1 311 11,9 8. 6
PCC holders totalled 9,111 at year-end, 290 fewer than at end- the issues) is applied when distributing profit for 2007. per cent (a weighted average of the fraction before and after The PCC fraction is now 56.7 per cent. A PCC fraction of 55.8 (1 July 2007) brought in fresh equity worth NOK 226 million. dividendA issue(30April 2007) employeeandan placing 6.00 per PCC was paid in 2007 for the year 2006. NOK DividendPrice/Bookof1.42. ratiothe and 8.29, was same point in time was NOK 72.25. The Price / Income ratio including a proposed dividend of NOK 6.00. The price at the The book value of the Bank’s PCC was NOK 51.00 at Theend-2007, Bank’s primary capital certificate (MING) capital until 2010. reducedeffectfullofregulatorythesee banksnot will IRB thatregulations meanTransitionalfolios.new the in rules underlyinginriskthe withbringinglineportintomore it minimum capital adequacy requirement more risk sensitive, 25 per cent of the Group management team. women. Women account for 22 per cent of mid-managers and 720 positions. The Bank’s workforce comprises 51.8 per on centdistributedemployees, 780 had Bank year-endthe At The people in the organisation entails a substantial competence boost for the Bank’s staff. industry standards was a priority in 2007, as previously, and standardsestablishedindustry.the by Complyingthewith certification programme for financial advisers that meets the wide-ranging a developed has Alliance 1 SpareBank The and competence. in combination with our values of closeness to the customer our business and our most important competitive advantage sound value creation at all levels. Our advisers are the securingcorein factor key oforganisation,accordingly a the is of The overall competence of each staff member and unit, and SpareBank 1 Midt-Norge is a competence-intensive business. F 2007 totalled 14 million. ExchangeStockin Oslo onsymbolticker MINGthe under centof the Bank’s PCCs at the same point, and PCCs traded holdersBank’scontrolledperlargestPCCThe 2006.3820 6.4 per cent.Youngerper6.4 employeeschangelikelymore areto turnover rate is on a weak negative trend, ending the year at 98 new staff were appointed in 2007 while 48 left. The staff s oncompetence ocu -
Main Figures for Subsidiaries, 31 December 2007: in career days is planned throughout our catchment area. Technology (NTNU). Next year an even greater involvement Business School and the Norwegian University of Science and callyNorwegianBIthe SchoolManagement,of Trondheim hosted by university colleges in Trondheim in 2007, specifi is demanding. The Bank participated in several career days staff best next and best the competitionincreasedfor The satisfactory numbers of well qualified applicants. manpower,andvacancyannouncements ourattracting are corporate sector. Despite the keen the competition in effort selection for and recruitment competence stronger a reflect and more actors in the recruitment and staffing marketmore emergenceof the andclearlypicture media The 2008. in so Recruitment was a key HR process in 2007 and will remain Recruitment staff in order to achieve a stable, balanced age composition. TheBank’s challenge lies in recruiting and retaining young 2007 was in the age range 20–24. in so do proportionlargestemploymenttochallenges, the 31-50 previously showed the greatest propensity to seek new jobs than they were previously. Whereas staff in the age range
Sickness absence rate absence Sickness Average age New employees Female managers Turnover No. ofstaff No. ofFTEs Main figures for the Bank at end-2007 No. of staff No. of FTEs Average age New employees Female managers Turnover Sickness absence
SpareBank 1 Finans 42.3 year 20. 4.17 % 17 % 5 20 20 % 5
EiendomsMegler 1 45.3 22.2 780 720 4.5 6.4 98 % year % % 3 6 10.3 % 2. .2 year 39 % 6 137 1 7 % 28 5 2 -
Midt-Norge Regnskap Social responsibility and staff policy eainhp aaeet oue wr cmltd by completed were modules management relationship role. In autumn 2007 the performanceprofessional management and andpersonal customer development offersprogrammedevelopmentrelated Bank’smanagement The to the managerial Management development mended bank. in the Bank’s effort to consolidate its reputation as the recom modern staff policy, will be increasingly important elements a with combined leadership, and governance First-class place is an important aspect of building the Bank’s reputation.Focusing on staff’s perceptions and experience of their work Reputation plans to increase its focus on this dimension. and individual needs. SpareBank 1 Midt-Norge has specific social considerations into account and to accommodate local of social responsibility. Employers have an obligation to take Staff policy and working conditions are an important dimension and drills. coursessecurity as well asdelegates safety andmanagers safety (HES) effort in the Bank. HES training is provided for The survey is an integral part of the health, environment and happy and proud to be working at SpareBank 1 Midt-Norge. The Bank’s annual staff survey shows that the employees are Work environment completion of the management development programme. Bank become certified SpareBank 1 managers after successful 2008. An objective is to ensure that all managerial staff at the improved version of the programme will be launchedThefocus managementon in hascontinuedspring into 2008, andan total of five modules. of the Bank’s managerial staff had completed at least one of a 33 managerial staff in the Bank. By the end of 2007 a majority 42 year 2. 8. 5 3 % 6 2 % 48 1 5 % 6 3
38. 0.83 % Allegro 6 0.0 % 2 year 5 11 12 % 2
SpareBank 1 Kvartalet 47 year 2. 5 0 % 0 % 4 4 4 - - -
31 Report of the Board of Directors Report of the Board of Directors 32 and mental health, well being and work performance. 2007. Physical activity is positively correlated with physical bonus of a mountain bike for outstanding results achieved in the Bank. Moreover, all employees are offered the additional fitness achievements are among the instruments employed by physicalfor awards prize and SykkelEner’nridecycle the A keep-fit diary, “Bedre Form” (Better Shape) ambassadors, our physical-fitness, well-being and teamworking activities. to perspectivelong a and objectiveselevated apply to us 2010,termspersonnelbothinof finance.and This enables resources are being expended on “Bedre Form” (Better Shape) on teamworking and teambuilding in the Group. Substantial that keeping fit together with colleagues has a positive effect targeted focus on physical fitness and well-being. We believe Bank’s exemplifies ambitious projectand the 2010Shape) measures that promote physical through health.alia inter “Bedre leave Form”sick (Betterreduce to wants Bank The are employed in cases of long-term absence. Individualisedleavesick involvingactivefollow-upplans andenables closer follow-up thanwas previously thecase. agenda the on absencelong-termput has weeks four than more for sick are who persons all for planningfollow-up provides the best result. The introduction of individualised problems arise in the workplace. Preventive work most often mentalphysicaland when stage early anintervening atof siveemployment agreement, importanceBankseesthethe operatingunder thegovernment andsocial partners’ inclu withlong-term absencesomewhat higher. enterpriseanAs one to 16 days) has hovered around 1 per cent in recent years, low, in 2007 averaging 4.5 per cent. Short-term absence (from for some time, and in recent years sickness absence has been The Bank has made an active effort to reduce sickness absence P er K A jell Chair xel E riksen
K och e k Deputy chair jell li A B rnstad
jordal
t a The Board of Directors of SpareBank 1 Midt-Norge
Trondheim, 2 erje nne- -
R oll B rit Skjetne 6 February 2008
D anielsen Oslo Stock Exchange. Although the Bank has relatively low the highlyvolatileshowsvaluesatstock2008 of start The contribution made by SpareBank 1 Gruppen. net interest income, higher commission income and the profit recordedBank’sthein ordinary business, including higher for 2007, and highlights in particular the sound income growthThe Board of Directors is well pleased with the Bank’s results fine support for the Bank in 2007. also like to thank the Bank’s officers for their major effortdirectorswould Thetrack.positive and a onremainsbusiness inensuring that theBank’s targets areattained andthat the whohavedisplayed splendid enterprise andresponsibility Group’semployeesthe thank to like woulddirectors The efforts to ensure a sound risk trend. operations,specialincludingbankingstrengthenordinary particular focus in the current year will be on continuing to directors’The2008. accountsin thevolatility inof degree exposure to the securities market, the directors expect a higher Outlook ahead rate’ as the Bank’s sickness absence rate. itwill beequally important todiscuss theBank’s ‘wellness that so focusthebalance toMidt-Norge aimsSpareBank1 future interventions and working environment programmes. newworking environment research and stimulate ideas for into insight an afford will It Midt-Norge. 1 SpareBank to Nordic investigation whose findings will be made available promote employee health and satisfaction, and is factorspart of in a workingwider life’. The projectIn autumnintends 2007 we toparticipated identify in the NTNUfactors project ‘Positivethat
c
Venche Johnsen hristel Employee rep. B orge
o f
dd inn T ore CEO H augan F
innøy
economic growth. important for world markets are ever more markets. Emerging the global commodity changes are in train in Substantial structural be no less challenging. and 2008 is likely to seen an exacting year, The global economy has 2008 in Let-Up No Chief Economist Petter deLange
33 Macroeconomy and Financial Markets Macroeconomy and Financial Markets 34 firms and debt-servicing expenses for households. will in due course spur growth by lowering funding costs for protracted recession in the US. Hopefully the interest rate cuts housing market. The Fed is now doing what it can to avert a firms and households and the apparent continued fall in the hefty intervention was a sharp contraction in credit supply to in the space of eight days. The justification for the unusually ratemeetingJanuary.30 on 1.25centperofcutThis awas ordinaryaninterest atcentper furtherbasis 3points 50to pointsextraordinaryanat meetingJanuary,22 on a byand The Federal Reserve (the Fed) lowered its key rate by 75 basis INTERE negative GDP growth. Technical recession is defined as two successive quarters of be difficult for the US to avoid a technical recession in 2008. may itbelieveeconomy, realwe theand creationinvalue 4.9per cent in the third quarter. The change reflects slower GDP grew 0.6 per cent in the fourth quarter 2007, down from The world definitively faces a weaker economic climate. US - - - - - 0 1 2 3 4 5 6 7 5 4 3 2 1 Q 1 S T RATE CUT 0 3 Q 3 Norway -contributionstoGDPy/y Mainland (non-oil)sector,seasonallyadjusted Q 1 S INTHEU 0 4 Q 3 Q 1 0 5 Q 3 Q 1 0 investments the contributors being private and public consumption and growth in mainland GDP in the current year at 3.5–4 per cent, ofdramatica slowdown inGDP growth inNorway. We put likelihood no see we and 2008, in highrelatively remain will price oil economy.(non-oil)thebelieve However, we andlower(oil-related) investment activity themainlandin pricesthroughoillowerfelt be would US therecession a in Norway, in high also is activity economic Although HIGH OILPRICE in 2008. recession global a anticipate not do we Hence year. per cent per 8 about at growing now is economyRussian the contributing:also arecountriesdevelopingquarter. Other year’sfourthlast in cent per 11 toppedeconomy Chinese Activitylevels in Asia remain high, and GDP growth in the 6 Q 3 Q 1 (figure 1). 0 7 S o u r c e Publicconsumption Private investment Private consumption Total Net exports : R e u t e r s E c o W i n
rates to their customers (of negative interest margin) for margin) interest negative (of customers their to rates lending raising from refrained also banks rate, base bank central the shadow normally rates lending bank Since path and to postpone raising its base rate. itsInflation Report on 31 October, to lower the interest rate the credit squeeze prompted Norges Bank, when presenting the cost of Banks’ funding on the money market. In Norway Europe and Asia, the crisis lowered to the spreading subsequentlyavailability and US the and in raisedStarting 2007. subprimemortgagemarketsautumnThecollapsedloan in 0 0 0 0 0 0 0 0 0 1 1 1 , , , , , , , , , , , , 1 2 3 4 5 6 7 8 9 0 1 2 J u n S e 0 p 4 D e s M a Costly fundingfortheBanksinautumn2007 The moneymarketinNorway 3m Nibor-baserate r J u n 0 5 S e p D e c M a r J u n 0 6 S e
p D e c first half of 2008 somewhat, and is expected to normalise in the course of the improvedliquiditypositionhasbanks’year-end Sincethe affected. less been have bonds, subprime to exposed been have period.exceptionNorwegianofway banks,whichbyonly provisionslossincurred alsoandsameheavythe losses in large made Norway outside Banks time. some for margin interest negative of result the with possible, as long as M a r J u n 0 7 S e p (figure 2). D e c 0 8 0 0 0 0 0 0 0 0 0 1 1 1 , , , , , , , , , , , , 1 2 3 4 5 6 7 8 9 0 1 2 S o u r c e : R e u t e r s E c o W i n
35 Macroeconomy and Financial Markets Corporate Governance 36 • • • • legislation at any the time in force. with accordance in services banking and business ordinaryMidt-NorgetransactbankingSpareBankallcan1 times to savings banks. all and any applyingatrules legal accordancethe with in and to manage the funds at its disposal in a secure manner accepting deposits from an unrestricted range of depositors by savingpromote to Midt-Norge’sis: object1 SpareBank Operations stakeholder groups in the Bank. securingintereststheholders, PCC of depositors otherand to governedviewcontrolledandis aBank with thewhich overarchingcompassesvalues,andgoalstheprinciples by Goodcorporate governance SpareBankat Midt-Norge1 en Principle • • • The Bank gives special emphasis to: for Corporate Governance. realised. The Bank abides by the Norwegian Code of Practice attainedandstrategies beexpressed andwillgoals its that sound management of its assets and give increased assurance Through its corporate governance policy the Bank will assure sources. keepingwithrecommendations emanating frominfluential in and lawsapplicable offramework the withinstructure governancecorporate its developfurther willpolicy, and SpareBank 1 Midt-Norge has adopted a corporate governance Governance Corporate g
o vernance full information and effective communication to underpin compliance with laws, rules and ethical standards relationship with other stakeholders board, the board of directors and management the relationship of mutual trust between the supervisory effective risk management organisation, health, environment and safety systems assuring monitoring and accountability ment and control a structure assuring targeted and independent manage non-discrimination of PCC holders and a balanced balanced a and holders PCC of non-discrimination s ofcorporate
- - proximity, local identity and competence. of terms inunrivalled as us see to customerthe wantWe tion in order to realise the Bank’s overarching goals. Capability means the ability to teamwork across the organisa initiative and recommend relevant solutions to the customer. sional quality. Capability means the ability and will to standardstake the and authorisations. Advice must be of a highethicalgood onbased profesbe mustsalesAdvisoryactivity and clear-cutattitudes.and skills competence, specialistgood customer-focused,beingmeans‘Capable’ possessingsolid the potentials which our workplace and customers offer us. Proximity stands for personal involvement and enthusiasm for and showing local insight and a broad presence in the market. manner;understanding individual needs;beingaccessible; entailsIt actingfriendly,a in forthcoming andprofessional ‘Close at hand’ stands for proximity, insight and involvement. ‘close at hand’ and ‘capable’. These values are also reflected in the Bank’s strategy of being community. Generous and high ethical standards. Responsible ability to get things done. Dynamic competitiveness and pride. Successful SpareBank 1 Midt-Norge will achieve its objectives by being: holders. customers,ourmentto partners,our staffourPCCourand weightycommita –vision ourrecommended –The bank s viionin2008 The bank’ the same customer groups. accountancy services in the same geographical areas and to and administration fleet car leasing, management, asset livestionofassets.and We alsoprovide realestate agency, medium of investment, saving, efficient payments and protec Trøndelagrealiseenabletheirgoalstothroughthem tothe sector primarily in Møre and Romsdal and South and North public theindividuals, privateenterprisesand toservices The Bank’s business mission is to provide financial advisory
– having the courage to try one’s hand, and the and one’shand, try to courage the having – – showing enthusiasm and commitment in the incommitment and enthusiasm showing – – characterised by capableness, result orientation, – being recognised for orderliness,reliabilityrecognisedfor being – - - - -
Authorisations by the Supervisory Board to the Board of Board the to BoardSupervisory the byAuthorisations intervals.irregular at placingssuch out carried has Norge Midt- 1 SpareBankGroup’semployees. the with made is increase of capital are dispensed with where a stock placing ExistingPCCholders’ pre-emptive rights theinevent an of has a duration of 18 months. annual accounts. Authorisation to buy back the Bank’s PCCs Theseauthorisations nextreviewthetheofto valid are up increase the Bank’s capital are restrictedto Directors toof Board specifiedthe to available authorisations purposes. The capital situation. lisation fund if there is a need to prioritise the Bank’s equity relativedistribution between cashdividends andtheequa the in occur Variationsmay dividend. cash competitive a paying toimportance attachesMidt-Norge 1 SpareBank in the event the gift fund, on a pro rata basis. the SpareBank 1 Fund, the dividend equalisation fund and, shares of the Bank’s equity capital. Any deficit is charged to SpareBank 1 Fund (ownerless equity) the based and holders on PCC theirthe between distributed respective are Profits good, stable return on the Bank’s total equity. The Bank’s dividend policy is to achieve results that yield a PCC capital anddividends what is desirable or undesirable conduct. have been communicated across the organisation and define bank has established a distinct set of values. These guidelines rules and ethical standards. Through its ethical guidelines the prerequisiteA soundforbanking compliance is withlaws, s ethical Compliance withlaws, rule evolution. business and strategicBank’s the on views their express to opportunity the groupsstakeholder other and holders TheBank will maintain anongoing dialogue toassure PCC other s relationand abalanced ship with Equal treatment ofPCC holders takeholders tandards s and -
The Bank’s PCC is freely transferable. sferability Free tran targets until further notice. in the credit area, but will not be adjusting its capitaltool adequacyfor measuring economic capital and risk-adjusted return goals, strategy and risk profile. The Bank has implemented a and a tier 1 capital ratio of 8 %. This is in line with theSpareBank Bank’s 1 Midt-Norge aims for a total capital ratio of 12.0 % interest in the Bank’s equity capital instrument. strengthen employees’ ownership of their own bank and their orderto increasesSuchcapitalcarriedinbeenhaveout of decision. Board’sSupervisory the of date the from as years two of durationundertakeDirectorsacapitalincreases tohave of information. specific of distribution and meeting scope the to regard for in requirements award information Stock Exchange’s Oslo the received has Midt-Norge 1 SpareBank on a regular basis. international partners, lenders and investors are also arranged website and stock exchange notifications. Presentations for investor presentations, an Investor confidence. Relations market areaquarterly via marketon the thetocommunicated investor isInformation Bank’s instilling of means a as timely information on the Bank’s progress and performance BankThealsoattaches importance correct,to relevant and centre stage. at transparencypredictabilityopenness,arewhich and in groups stakeholder respective with on dialogue proactive premium a places accordingly policy information at all times able to assess and relate to the Bank. The Bank’s management, and in ensuring that the Bank’s and stakeholdersDirectors of Board holders,are PCCBank’s the between effective and full trust to relationshipof underpinningthe communicationin importance attaches Bank The Information andcommunication
37 Corporate Governance Corporate Governance 38 • • Election Committee. the of members and Committee, Control and Directors of Board Bank’s the of alternates and members Board, the election of the chair and deputy chair of the Supervisory competence and of gender. The considerations committee’s on task is to prepare based composition a to attention due givescommittee The all. in fourtotallingemployees, thePCCholders, thedepositors, public appointees andthe Committee comprises one representative from, respectively, among the members of the Supervisory Board. The Election The Supervisory Board appoints an Election Committee from Election Committee for the Supervisory Board SpareBank 1 Midt-Norge has three election committees. committeeElection days in advance. SupervisoryBoard is received by all members at least eight the of meeting any of notice that ensure must Bank The of the CEO. of Directors, for the appointment and in the event dismissal Boardisalso responsible, atjointa meeting with the Board fixes the remuneration of the above bodies. The Supervisory mittee and Election Committee. The Supervisory Board also the members of the Bank’s Board of Directors, Control Com The Supervisory Board approves the accounts and appoints • • with the following representation: alternates32 andmembers 43 hasSupervisory BoardThe Super Go
Committee Election verning bodie Employees: 10 members and 6 alternates. Depositors: 8 members and 8 alternates. Møre og Romsdal: 8 members and 8 alternates. County councils of Sør-Trøndelag, Nord-Trøndelag and PCC holders: 17 members and 10 alternates. Supervisory Board Board of Directors visory Board
CEO Risk management s Controlbodie
Control Committee etc Audit – external Audit – internal s -
The Election Committee prepares the PCC holders’ election SupervisoryBoard.the ofmembers be alternatesmustthe andtwoalternates. leastAt onetheofmembers andoneof of PCC holders. The Election Committee has three members The PCC holders appoint an Election Committee at a meeting Board members Election Committee for PCC holders’ election of Supervisory Romsdal, Sør-Trøndelag and Nord-Trøndelag. has three members, one from each of the counties of Møre og Bank’stheSupervisoryElectionCommittee ThisBoard.to preparedepositors’the electionmembersalternates andof and undertake to CommitteeElection separate a appoint BoardSupervisory the depositor-electedof membersThe Board members Electioncommitteedepositors’ for electionSupervisoryof elected officers. recommending any changes to the fee structure for the Bank’s The Election Committee is also charged with reviewing and ments in the Group’s risk picture and risk exposure. developorganisationalandandfronts,management, staff the developments,developmentsperformance,onmarket TheBoard ofDirectors receives periodical reports onprofit control. that accounting ensure and asset to management required are subject also to satisfactory is Directors of Board The Bank’s disposal are managed in a safe and appropriate ofmanner. Directors is responsible for ensuring that the assets at the provisionslaid down bythe Supervisory Board. The Board further and association of articles laws, withcompliance in Bank’soperationsthe managesDirectors of Board The Board ofDirectors s’ function at least 11 times each year. the composition of the Board of Directors. The Board meets tion Committee has drawn up specification requirements for accordance with the Bank’s articles of association. The Elec based on criteria of competence, capacitycomposed is Directorsand of Boarddiversity The time. a and at inyears two forelectionsseparate at SupervisoryBoardthe by elected ouslysametheposition.in chairThedeputyand chair are maximumyears,20of butnotmore than years12 continu a office for holdcan and time a atyearsappointed twofor are members The Board. Supervisory the by appointed DirectorsBoardTheofmembers tenwhomnine arehas of B of Supervisory Board members and alternates. oard of D irector s - - -
visoryBoard and orders issued by Kredittilsynet (Norway’s tions, articles of association, guidelines issued by the Super and satisfactory manner in accordance with laws and regula Bank and the Group conduct their business in an appropriate ControlCommittee’sThe includeoverseeingtasksthe that and has three members. The Control Committee is appointed by the Supervisory Board Control Committee Control bodie committee’s mandate. compensationtheestablished has Directors of Board The is disclosed in Note 1 to the parent bank. company.senioremployeesandCEO Remuneration the to isinformed oftheremuneration ofsenior employees ofthe remuneration,reviewedwhichis annually. committeeThe committee to prepare compensation the a Board’s appointed determination has of Directors the CEO’s of Board The Remuneration to senioremployee directors’ above fees. and over remuneration no receives Directors of Supervisory Thedirectors’ Boardthe fixes Board The fees. R meeting structure and prioritising of tasks. of its activity with regard to working method, case handling, self-evaluationannualDirectorsconductsanofBoard The through the forthcoming internal audit committee. so do will but present, being teammanagement the from meetings in the course of the year without the CEO or others The Board of Directors and the auditor do not at present hold Risk Management Division and internal auditor. the team,Bank’smanagement the withdiscussions holds reviewcommitteeDirectors.itstheBoardofofthepart As four-monthlyto reportits Audit’s Internalpresentationof the of ahead meets normally committee This of Directors. Board the of members three comprising committee audit internal an appointed has Directors of Board The Board of Directors with effect from March 2006. The Supervisory Board has adopted new Instructions for the An annual plan has been adopted for the Board of Directors. recommendation. governance corporate the in forth set definitions the to relation in independent are members board external All D emuneration to the irector s s B oard of
s - -
section 4–5. Act Auditors the with comply must auditor external the services fromsignificance. such non-auditservices ofAny with group the provided not has auditor external The Directors at which the annual accounts are reviewed. of Board the ofmeeting theattends and plan,audit the of briefs the Board of Directors each year on the main features the companies in their public accounts. The external auditor statutory confirmation of the financial informationthe performsauditorexternal provided subsidiaries.The all in and by parentcompanytheauditor insameutilises Bankthe The An external auditor is appointed by the Supervisory Board. External auditor annual basis. an on SupervisoryBoardthe of chair the andDirectors of meetings.TheCommittee also meets thechair ofthe Board normallytimesmeetseachyear.11 attends CEOThethese Committee Control The authority). supervisory financial areas of credit risk, operational risk and market risk. Controllerfunctionsestablished beenhavethe attend toto reporting and monitoring. Bank’sframework foroverall risk management, overall risk the customer-facing units and sees to the development of the at SpareBank 1 Midt-Norge. This function is independent of separatemanagementriskA function establishedbeenhas Risk management Internal Auditors Norway). recommendations applying to internal auditors (Institute of consultancy services are provided within the standards and The internal audit function performs no financial audit. Any continuous basis. a on implementedand reviewed are regimemanagement recommendationsand improvementsfor Bank’sthein risk internalinternaltheaudit.Thefunction’sauditfor reports BoardDirectorsof whichadopts annual plans budgetsand internal audit function reports on a four-monthly basis to the ments are adequate in relation to the Bank’s risk profile. The arrange management risk established that ensure to and intended,asfunctions systemestablishedcontrolinternal The internal audit function’s main task is to confirm that the other significant subsidiaries. internalcontrolregulationssubsidiariestheand subjectto bank,parent the coversagreement Theservices. audit nal anagreement with Ernst &Young on the provision of inter Witheffect from 2004 SpareBank Midt-Norge1 established Internal audit - -
39 Corporate Governance Risk Management and Capital Allocation 40 • of an event occurring is extremely low. defines risk management limits to ensure that the likelihood methods of calculating capital needs are available, the Bank recognisedno wheretypes risk of case the In cases.some but calculation none the less requires expert assessments in employed to compute expected loss and risk-adjusted capital,are methods Statistical losses.unexpected possible all of cent per 99.9 cover should capital risk-adjusted the that decidedhas Board TheGroup. the byincurred riskactual volumecapitalof Groupthe considers needsmeetittheto tobe lost in a12-month period. Risk-adjusted capital is the Expected loss is the amount which statistically can be expected meet unexpected losses. risk-adjustedto (economicneededcapital)capitalthe and Group’sThequantified calculatingisrisk by expected loss • • • be achieved through: financial stability and prudent asset management. This will ensure to designed also is regime management risk The attainment.target and developmentGroup’sstrategic the managementRiskintendedsupport withinGroupistheto and strategies. that the Group progresses in line with its adopted risk profile suring, managing and monitoring central risks in such a way policy.The Bank gives much emphasis to identifying, mea Bank’smanagementtheindown laid aremanagementrisk Midt-Norge’srisk1 SpareBankunderlyingprinciples The economic capital and regulatory capital adequacy. necessary loss, expected return, risk-adjusted rating, for position. The Bank’s risk profile is quantified through targetsBank’sfinancial the impairseriously will event single no profile and to apply risk monitoring of such high quality that moderateriskmaintainMidt-Norgea SpareBankto aims 1 Allocation Capital and Management Risk
Avoiding unexpected negative events which could be Avoidingcouldwhich eventsunexpectednegative the market detrimental to the Group’s operations and reputation in business strategy decision-making for basisimproved ancreatingthereby costs,risk and Asound understanding of the risks that drive earnings awareness Astrong risk culture featuring a high risk-management Striving for an optimal use of capital within the adopted -
Risk management and control are part of SpareBank 1 Midt- and control Re independent of the Group’s business areas. ManagementRiskDivisiontheis which by carried out are reporting andmonitoring risk OverallDirectors. of Board throughperiodic risk reports to the Administration and the The Group’s overall risk exposure and risk trend are monitored risk limits. measuring positions relative to risk limits and key portfolio bymonitored and gaugedalso is Riskareas. business and capitalmakes it possible to compare risk across risk groups monitoring of return on capital. Calculation of continuous risk-adjusted and concerned, business the attending risk estimatedthe on businessbasedallocating areascapitalto internalmanagement SpareBankat Midt-Norge.1 entailsIt of targetstrategic key a is risk-adjustedcapital on Return monitoring them. independence between the divisions and organisational units to andauthorisations, personal throughresponsibility to on Corporate Governance on p. 36. Much emphasis is given chapter the in described asgovernance Norge’scorporate risk management supporting units CEO, business Instructions, limits and authorisations limitsand Instructions, ement riskmanagement for sponibility Day-to-day of defence Establishes the Group’s the Establishes Group’s thatthe ensures riskprofile and irst line line First units and own funds are satisfactory based on the risk in the Group and Group and riskinthe onthe are based satisfactory own funds
requirements set byrequirements authorities set the Board ofDirectors Risk Management Risk Management reporting and and reporting Second line line Second Overall risk of defence follow-up Division
Formal reporting Independent Independent confirmation of defence hird line line Third Internal Audit
Annual re • • • cover the following areas: committeescreditlocalrespectivelythreeCommittee. The tees for the corporate market along with a central Group CreditCredit Committees and follow-up duties: decision-makinghisinmanagement CEO assistthe toarea risk the within established been have committees Two authorisations and for reporting to the Board. of risk exposure. The CEO is also responsible for delegating managementmonitoringtheGroup,forsystemstheand in responsible for seeing to the implementation of effective risk The processes. decision-makingand modelsmanagement risk of aspects risk management within the Group, as well as all significant jectives such as risk profile, authorisations and guidelines for authorities. The Group Board establishes the overarching ob based on the adopted risk profile and requirements set by the sible for overseeing that the Group’s own funds are satisfactoryThe
Board of Directors Trondheim Sør- og Nord-Trøndelag Møre og Romsdal CEO management policy Corporate market Overarching risk Retail market is responsible for risk management. Hence he is he management.Hencerisk responsible for is Markets strategy strategy strategy
iew andBoardconsiderationview . The Group has three local credit commit
of SpareBank 1 Midt-Norge is respon Alignment Alignment - - -
• • The • independent an The recommendation: deliver concerned. holder authorisation the to Committees recommendation Credit The management within their respective business areas, and areas, business respective their within management The established by the Board risk,internal pricingcapital of complianceand withlimits matters related to capital structure and liquidity risk, market beyond ordinary follow-up. becomeunable, to service their debts unless action is taken to likely highly are or unable,clearly are who customers The principles decided by the Board or the CEO. exposure comply with the limits and overarching management they must at all times see to it that risk management and risk
Balance Sheet Committee risks involved Clarifies the consequences for the Group of the various credit risk assessment individual application and to providing an independent Gives particular emphasis to covering risk related to the regulations and credit processing routines existingthecreditstrategy,with creditpolicy, lending Assesses loan and credit applications in accordance in applications credit and loan Assesses rdt upr Division Support Credit Divisions Liquidity risk Market risk Credit risk Strategy Strategy Strategy ICAAP are responsible for the day-to-day risk risk day-to-day the for responsible are is responsible for dealing with takes over dealings with with dealings over takes • •
Quarterly risk report to the Board internal audit reports Four-monthly to the Board
41 Risk Management and Capital Allocation Risk Management and Capital Allocation 42 application of capital. The profile. risk assureefficientdesigned alsoacquisitionto chosen process is and its to relation in funds own adequatehas times all at Bank the thatensure to(ICAAP) allocationmanagementcapitalprocesspolicy,risk a its of SpareBank 1 Midt-Norge has established, as an integral part quantify market risk. to approach standard the and risk, operational quantify to approachindicatorbasic the appliedBank the 2007 In that the models are in keeping with adopted guidelines. ensure that the models have sufficient predictive ability, and themodels are validated quantitatively and qualitatively to the extended management of credit risk. The IRB system and with classification and quantification of credit risk and with associatedguidelinesand routines and systems IT nisms, The IRB system includes models, processes, control mecha the full effect of the new regime until 2010. requirementsregulationsseenot bankswillIRB thatmean capital the in Transitionalrulesrisk. credit of respect in charges capital computing when models classification own its accordinglyapply will Bank The 2007.January 1 the IRB foundation approach to account for credit risk as from Midt-NorgeSpareBankreceived1haspermission apply to Basel II and the IRB system C reviewed within the Group. improvementsin Group risk management are continuously for recommendations and reports Audit’s Internal The capacity. The Internal Audit reports to the Board of Directors. thereby assuring the required independence, competence and Group’s internal audit is carried out by an external provider, process is targeted, effective and functions as intended. The the Administration which oversees that the risk management The Group. thewithin riskoverallmonitoring ofthe forreporting and responsiblealsoindependentforassessment,is risk Itrisk furtherdevelopment effectiveof riskmanagement systems. division is responsible for the Group’s risk models and for ThisCEO. thereportsbusinessthedirectly and theunits to of The apital management Internal Audit Risk Management Division is a tool at the disposal of the Board and is organised independently -
• • Credit risk the capital requirements regulations. tier 1 capital, measured according to the transitional rules in capital adequacy was 12.5 per cent, of which Group8.3end-2007 At percent. per cent12 ofwas adequacy capital total The Group aims for tier 1 capital adequacy of 8 per cent and • • • and monitoring the Group’s capital management: This is achieved through an appropriate process for planning and number of exposures above 10 per cent of own funds. within lines of business and requirements as to credit quality market, limits to maximum application of economic capital corporate and market retail the between distribution by allocated to the credit business. Concentration risk is managed default probability (PD), and maximum economic capital (UL) retail and corporate market respectively, maximum portfolio profile,risk including maximum expected the for (EL) loss from the Bank’s main strategy, and contain guidelines for the folio. The Bank’s credit strategy and credit policy are derived establishing objectives and limits for the Bank’s credit port by appetiteBank’srisk theconcretises Directors of Board Throughitsannual review ofthe Bank’s credit strategy, the the operations of the capital markets and finance divisions. leasing products to retail and corporate customers and lendingthroughand risk credit throughtoexposure incursGroup TheGroup. thefacingrisk oflargest areathe is riskCredit credit risk. managing for Committee Basel the by identified practices framework for management of credit risk is adapted to sound commitmentstothe Group. The Bank’s organisation ofand unwillingness of customers or counterparties to honour their resultinglossofriskinabilitythe the fromCreditisrisk or
the Board The process is regularly reviewed, at least annually, by methods and procedures for measuring risk appropriate and recognised on based is process The testing management process and decision-making structure Theprocess isanintegral part ofthebusiness strategy, types of risk within the Group. The process is risk-driven and includes all significantincludesallrisk-driven and isprocess The The process is forward-looking and includes stress includes and forward-looking is process The -
ordinary loan-officer system. Bank’stheprofessionalism. of documentedway isbyThis and must be characterised by completeness, high quality and lineBank’swiththeinbe creditstrategy creditandpolicy, committees. The basis on which decisions are made needs to authorisations in the corporate market are exercised by credit All authorisations in the retail market are personal. All d) lendingLending regulations – exercise of lending authorisations up and maintenance of credit policy rests with the CEO. the Retail Market Division. The responsibility for the drawing criteria for, respectively, the Corporate Market Division and credit strategy through the establishment of detailed lending These documents describe the implementation of the Bank’s c) Credit policy for the Corporate and Retail Market Divisions credits, or in the event of changes in existing exposures. lishment of principles and framework for the granting of new The composition of the portfolio is managed through the estab and credit policy. portfolio within the framework defined in the credit strategy and profitability as well as measures suited to managing the riskportfolio ofreporting measurementand the with tion connec in responsibilitiesrolesdistribution andof the to theSpareBank 1 Midt-Norge’s credit portfolio. This applies managementof frameworktoapplying thedescribe These b) Guidelines for portfolio management regulations. new capital adequacy rules (Basel II) and relevant laws and paper entitled ‘Principles for the Management of Credit Risk’, Committees’Basel theprinciples recommendedbythe on Credit risk management at SpareBank 1 Midt-Norge is based lending and credit strategy objectives. androles) ofthecredit function, overarching principles for responsibilities of (distribution organisation documents, Bank’smanagementthe compositionof theincludes This lendingmanagementtheforand pricingandcreditof risk. The credit strategy establishes the overarching principles for Directors of Board the strategy,by annuallycreditadopted The a) Credit risk is managed through: Board of Directors. the to quarterlyreported and DivisionManagement Risk Board of Directors are monitored on a continual basis by the Compliancethecreditstrategylimitsadopted withbyand - -
Probability of default (PD) The Bank’s credit models build on three central components. commitment and risk profile. authorisation.Lending authorisations gradedaresizeofby the CEO further delegates authorisations within this overall to the CEO within the adopted credit strategy and policy, and The Board of Directors delegates overall lending authorisation Bank’s credit strategy and to secure the risk-adjusted return. Bank’sloan portfolio to be managed in conformity with the The Bank’s risk classification system is designed to enable the quarterly basis. a onBoardManagement RiskthereportedDivision toand the by monitored continuously is Directors of Board the Compliancecreditstrategylimitsadoptedthebyand with scoring models that take into account financial position along tions of probability of default. The calculations are based on Bank’sThe creditmodels basedstatisticalare on computa loss provisioned exposures. based on PD, in addition to two risk classes for defaulted and Customers are assigned to one of nine “healthy” risk classes economic conditions. currentundermonths 12 next the of coursethe indefault based on point-in-time ratings, and reflect the probability of with internal and external behavioural data. The models are
A D C B F E G I J H K
Risk class
PD Lower 100 % 100 % 0. 0.1 % 7. 10 % 1 % 5 2 % 3 % 5 5 % % % -
PD Upper 99.99 % 0. 0.1 % 7. 10 % 1 % 5 2 % 3 % 5 5 % % % -
43 Risk Management and Capital Allocation Risk Management and Capital Allocation 44 the exposure is assigned to one of seven classes. Based on collateral cover (realisable value divided by EAD) are validated to test the models’ reliability. determined using standard models, and actual realised values unsecured debt, as well as direct costs of recovery. Values are realisable value of the underlying collateral, recovery rate on The Bank estimates the loss ratio for Loss Giveneach Default (LGD) loan based on expected account of expected drawings on commitments. The Bank estimates exposure at the time of default by taking Exposure at Default (EAD) meets internal criteria and international recommendations. levels. The validation results confirm that the model’srespect accuracy to their ability to rank customers and to estimate PD with both year per onceleast validatedat aremodels The
Millions 1 1 2 2 3 3 7 6 5 4 3 2 1 Collateral class 5 0 5 0 5 0 5
, , , , , , , 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 A B
C D Lower E 100 120 6 20 40 80 0 0 F
G 31.12.2006 31.12.2007 H I J Upper 100 120 20 40 6 80 0 K
Market risk of Directors. Boardcreditstrategythewithinthelimits adoptedwas by At the end of 2006 the risk profile of the Bank’s loan portfolio classification in the Bank’s portfolio system. as well as (UL) capitaleconomic necessary and (EL) loss expectedcalculationofparameters theunderliethree The (Financial Supervisory Authority of Norway) scenarios. Kredittilsynet’sThe by employed tests stress in basis a with The Group defines limits on exposure to equity instruments and currency markets. income fixed the inpositions and bondsshares, in ments invest forlimitsdetailed throughmanaged is riskMarket rates and securities prices. exchange rates,interest as such prices marketobservable in changes from resulting loss of risk the is risk Market Exchange rate risk is regarded as low. in the respective currencies. aggregatemaximumpositionthecurrencyposition on and on exchange rate risk are expressed as limits on the maximum a basis in net positions in the various currencies. The limits exchange rates. Thein Groupchanges measuresto due exchange loss rate of risk risk with the is risk rate Exchange NOK 267,000. theinterest rate risk based on a change of 1 basis point was the Group’s interest rate risk is low to moderate. At year-end lock-ins on the Group’s instruments are essentially short, and band and across all maturity bands as a whole. Interest rate limits applying to interest rate exposure within each maturity effect of this change for the variousshowing maturityanalyses utilises bands,Group withThe separatepoint. basis 1 of interest rate instruments resulting from a rate change of rate positions can be viewed in terms of the change in value interestinterestfixed funding all securities.in on risk The and loans interest fixed on mainlyarises risk rateInterest maximum limits set by the authorities. the within well are limits The Directors. of Board the to exposures relative to the adopted limits are reported monthly ManagementRiskmonitoredlimitstheis byDivision, and yearly by the Bank’s Board of Directors.adopted are and Complianceyear a withonce least the at reviewed are limits - best-secured home mortgage loans to SpareBankits of billion1 2.7 NOKtransferredBoligkreditt. had Bank the end-2007 By 2007. of course the operationalin fullybecame which Boligkreditt1SpareBank of cent per 18.4 owns Bank The related crisis scenarios. a contingency plan to deal with Bank-specific and industry- external funding under normal market conditions, and it has The Bank’s objective is to survive for 12 months without fresh a one, seven and 30 day time frame. Limits have been established for net refinancing needs within term perspective and balance in liquidity procurement. annually and establishes a framework that promotes a long- The Bank’s Board of Directors reviews the liquidity strategy portfolio. institutions to assure sufficient diversification of the funding The Bank has established limits on funding from individual cent) at end-2007. based on Norges Bank’s standards, was 103 per cent (101 per liquidity position is satisfactory and the liquidity indicator, excess of 1 year was 96 per cent (78 per amply in cent) funding market at money are year-end. of proportion The diversified. The products and sources funding Bank’s The instruments, and by employing long-term funding. and sourcesfunding markets, of variety a across funding persist. The Bank mitigates its liquidity risk by diversifying othersourcescapital.of Bankexpects The thissituation to saving behaviour have heightened the Bank’s dependence on NOK 4.6 billion in the course of 2007. Moreover, changes in to increasing lending activity, money market funding rose by was 55 per cent compared with 57 per cent at end-2006. Due loansdepositsBank’send-2007 todeposits.the ofratioAt customer is finance of sourceimportant Bank’smost The honour its payment obligations. to unable be will Group the that risk the is riskLiquidity Liquidity risk
theBank’s ongoing operations wellasexternalinas events in inherent loss of risk the as defined is riskOperational risk area. financial shortcomings resultedthis industry from have in the in events loss substantial numerous sphere national customers, authorities and other stakeholders. rapid In the inter- from demands growing ever internationalisation, and progress technological are factors years. recent Contributory in industry financial the in significance increasing acquired has risk operational of Management Operational risk rights is maintained to further reduce liquidity risk. monthly basis. A reserve in the form of committed drawing a Directorson of Board the reportedto Divisionandment Compliance with the limits is monitored by the Risk Manage- on its funding needs ahead. The Bank expects this arrangement to have a positive effect Directors. Operationallosses are reported periodically to the Board of organisation along with recommended improvements. the of appropriate levels to reported are found flaws Any and awareness of improvements needed in the particular unit. systems. Systematic risk assessment also promotes knowledge along with action plans, control routines and good follow-up this respect are professional insight and managerial expertise SpareBank 1 Midt-Norge. Executives’ most important aids in an integral aspect of executive responsibility at all levels in Identification, management and control of operational risk are as elements of a framework for handling operational risk. sibilities in supply contracts between the respective divisions good descriptions of routines and clear definition of respon authorisationstructures,Vankimportancetoattaches The embezzlement, arson and computer crime. counterfeiting,robbery,checkas such Bank the on attack of formsvarious and errorhuman systems, andprocesses internalfaulty inadequateor to due loss of riskincluding -
45 Risk Management and Capital Allocation Board of Directors 46 Board of Directors of Board international industrial companies international industrial Varied withnationaland experience management Technology (NTNU),Trondheim (1976) and ofScience University Graduate ofNorwegian AS BrekkeCEO Industrier 1998 since Board member Born: 1950 K groupmedia project managerwithSchibsted Network and atMcKinsey, asconsultant Experience director ofCell MBA, INSEAD(1993) Technology (NTNU),Trondheim (1990)and and ofScience University Graduate ofNorwegian Director,Assistant Strategy, Telenor Nordic 2004 since Board member Born: 1967 B Christel as Marketingjournalism and Director atAker Eiendom development, fromExperience property lawstudies and Defence School Forces’ OfficerCandidate Managing director 2001 since Board member Born: 1956 T Parliament Involved regularly inpolitics, of Member attending Centre NationalCulture Stiklestad and Trondheim secretariat, withCityCouncil Experience degreeCand.mag Deputy Chair 2001 since Board member Born: 1962 Eli Arnstad asGroupatAdresseavisen CEO 11 years newspaper withMckinsey consultant Ltdand Wilh. Wilhelmsen with asproject consultant Experience degree from (1987) school same the business higher (1985)and Administration Business SchoolofEconomicsand Graduate Norwegian ofthe AdresseavisenCEO, newspaper Chairman 1994 since Board member Born: 1961 Per Axel Koch erje R erje jell Eriksen oll D oll orge anielsen
Owns noPCCsasof31.12.2007Owns for Welfare(Society the ofNorway) forDet KongeligeSelskabet Norges Vel B Supervisory ofthe Member Friskgården Stjørdal Nidaros Domkirkes Restaureringsarbeider Technology and of Science (NTNU),Trondheim Centre University for EconomicResearch, Norwegian Savings BanksAssociation Norwegian Post Norway noPCCsasof31.12.2007Owns Board ofSpareBank 1Gruppen Supervisory of: Member FINN.no of: chair Deputy Papirkjøp TV-Adressa Adressa-Trykk Owns noPCCsasof31.12.2007Owns Industries Federation ofNorwegian Board ofthe Supervisory ofthe Member Persson Norge Westnofa Industrier B Univa, Estonia Baltic,Lithuania Superlon Finland Superlon, noPCCsasof31.12.2007Owns Startsiden ABC Sønnichsen 172,723Owns PCCsasof31.12.2007 TrøndelagInvestorforum for Welfare(Society the ofNorway) forDet KongeligeSelskabet Norges Vel Donasjonsfond Øiens General, Adolf Consul Nedre Elvehavn Adresseavisen newspaper Roll Severin B B B B B oard member of: member oard oard chair of: chair oard of: member oard of: member oard of: member oard of: Chairman oard oard of: oard
SpareBank 1Midt-Norge with invariouspositions experience 28 years’ college level Varied education atBankakademiet atuniversity and Senior employee SectorUnion representative, Finance 2004 since Board member Born: 1952 Venche Johnsen NorAqua director and CEO of the Glamoux Group, and CEO of Experience as director of Trøndelag Theatre, finance Advanced Management Program Business Administration NHH (197 Graduate of the Norwegian School of Economics and division CEO of EWOS Group and head of Cermaq’s fish food 2007 since Board member Born: 1953 K Glamox HÅG and atMoxyCEO Trucks, at positions several senior Gas, Supplier NetworkOiland asgeneral manageratLOGExperience – Technology (1982) of Institute Graduate Norwegian ofthe WonderlandCEO 2007 since Board member Born: 1958 Odd T SpareBank 1Midt-Norge with invariouspositions experience 37 years’ SectorUnionSB1MN Deputy headofFinance 2004 since Board member Born: 1947 Jan GunnarKvam at municipal, county and central government levels HR Manager, Aker Verdal. 20 years’ political experience Experience as dentist, health services administrator and and law studies Master of Health Administration, University of Oslo, Higher qualification in odontology University of Science and Technology (NTNU), Trondheim atHuntResearch Centre,Senior adviser Norwegian 1998 since Board member Born: 1946 Skjetne Brit Anne- jell Bjordal ore Finnøy ore 6 ), law studies and
Owns noPCCsasof31.12.2007Owns College Molde University Finnøy Gear &Propeller Nils N.FinnøyMotorfabrik Kleven Shipyard ShipyardMyklebust Kleven Maritime B Molde Kunnskapspark Owns 2,727Owns PCCsasof31.12.2007 Regularly alternatefor attending employees. 5,4Owns 54 PCCsasof31.12.2007 SpareBank 1Gruppen i: Styremedlem noPCCsasof31.12.2007Owns Landbrukskjemi Norsk Dyrøy Group Eiendom Florvaag Bruk Florvaag B B Owns 3,10Owns 6 PCCsasof31.12.2007 Helseinformatikk Norsk Tinnved Kulturhage PharmaceuticalCentral Trust Norway TrøndelagNorth Development Research and B ISI Tech B oard member of: member oard oard chair of: chair oard of: chair oard oard member of: member oard oard chair of: chair oard 47 Board of Directors 48 The Bank and the Society
The Bank has focused on social responsibility since it was WHAT IS CSR? founded in 1823. It all started when 39 men contributed The EU defines corporate social responsibility (CSR) as follows: initial capital to set up an institution “for the beneficent promotion of enterprise, thrift and public morality”. In other The Bank and the Society A concept whereby companies integrate social and environmental words they took social responsibility seriously – long before concerns in their business operations and in their interaction with their stakeholders on a voluntary basis, particularly in relation to concept came into vogue. sustainable development.
Being socially responsible means going beyond statutory requirements The Bank was established as a savings bank in 1823 with the and doing more to invest in human resources, in environmental initiatives following purpose: and in the relationship with one’s most important stakeholders. “A savings bank, known as Trondhjem’s Sparebank, is hereby established, under adequate guarantees, in the city of Trondhjem for the promotion of public morality, diligence, order and thrift.” SpareBank 1 Midt-Norge has resolved to apply an even more systematic approach to CSR. CEO Finn Haugan considers it Under this arrangement, duly established in the best interests important for key institutions in the region to take the lead of working people and servants, small sums will be received here. He believes this is expected by the community served from persons of either sex, and will bear fruit for their owners by the Bank. by the calculation of interest.”
For SpareBank 1 Midt-Norge it means focusing in the first 1823 is far back in the past, but this backcloth has remained instance on the environment by: with the business throughout. While the rationale for founding • applying stringent environmental requirements to the the Bank is an obligation, it also creates opportunities. The demolition of the old building and the construction of obligation has been complied with through sound operation, the new head office in Trondheim through contributions to non-profit causes, through rewarding workplaces and of course through a strong and genuine • ensuring that the new head office is the most energy- commitment to the community of which we are a part. efficient commercial building in Mid-Norway with an energy consumption below 100 kWh per sq.m. While the primary concern has been the business of banking, • starting to devote more SpareBank 1 Fund resources to the commitment displayed by our staff in their local the environment in 2008. This will include changing communities is also important. The Group employs more one of the StartStøtte (business start-up support) prizes than 1,000 staff who each in their own way contribute to the under Innovator 2008 into an environmental technology life of the community both at work and in their leisure time. prize. They contribute through formal positions allotted by the Bank and through voluntary involvement in the local community In 2008 the Bank will also focus on establishing a system to – involvement in everything from business forums, local monitor prioritised measures in the CSR field. political office, school marching bands and sports clubs to day care centres and senior citizens’ get-togethers. There is a growing debate on the role of business and industry in society, which is as it should be given that 51 of the VISION 100 largest economies in the world are corporates and the The Bank’s vision – to be The Preferred Bank – underlies all remainder nations. This trend affects the financial industry the work done in the Bank. The commitment displayed by in many respects. We see traditional shareholder values being the Bank and its staff in the region and the responsibility we balanced against social-responsibility requirements, and firms shoulder in the local community are based on the values of are expected to shoulder a substantial social responsibility Closeness to the customer and Competence. Our competence and to document their doing so. enables us to contribute to the development of the society of which we are part – this is social responsibility put into SpareBank 1 Midt-Norge is a small actor in the global context, practice. but plays a dominant role in the region as a provider of financial services, as an employer and as a social actor in general. The Bank’s dominant position adds particular importance to its focus on social responsibility. to financials, the environment and social responsibility. zero tolerance of corruption. This covers all activities related take in rules for whistleblowing, and the Bank has introduced The Bank’s ethical guidelines are being expanded in 2008 to new Head Office in Trondheim. applied to its operation and, not least, the construction of the to be certified under the Eco-Lighthouse Programme criteria Bank the enablealso responsibility. willproject pilot The social on workprofessionalisefurther itscompetenceand own its enhance will Bank the project pilot the Through to be paid increased attention – we take this seriously. that ethics, corruption and the environmental challenge need naturethesocialSuchisof development globalisationand owners, our employees and the society of which we are part. run a profitable bank in the best interests of our customers,more systematically our than previously. Our prime concern is to The Bank wishes, through a pilot project, to focus on WHERE DOWES CSR even for the Bank are seen in the table above. responsibility.socialand aspectsimportantCSRmost The ce in relation to three bottom lines: financials, environment A CSR perspective means that the Bank assesses its performanTHE THREE-POINTBOTTOM LINE
The Eco-Lighthouse Foundation was formed on 13 November 2003. enterprises aspossible. public and private mid-sized and small many as of performance ment system. The programme is designed to raise the environmental manage environmental an and system action environmental an is SE PROGRAMME THE ECO-LIGHTHOU • • • • • Financials
Ethics, money laundering and and laundering Ethics, money Value creation employment and Investments Owners Profitability anticorruption TAND TODAY ?
• • • • • Environment SpareBank 1Fund onsuppliers Requirements Eco-Building –NewHead Office Energy, Waste Transport And ProgrammeEco-Lighthouse -
- Profitability (consolidated figures): FINANCIAL PCC holders: and growth in the region. responsibility though playing an active role in value creation This is necessary in order for the Bank to discharge its social profitable operation though while equity maintaining on its return financial satisfactory strength. a achieve to aims SpareBankMidt-Norge1 aspires profitable.beto The Bank
P Market value Number of PCCs issued, millions Dividend per PCC Direct return Book value per PCC Profit per PCC Number of holders K ROE Tier 1 capital ratio Equity capital, NOK 000s Retail market share Cost/income ratio rimary capital certificates ( ey figures
S
• • • • • • Social responsibility SpareBank 1Fund Work-related matters 2010 Better Shape employment Inclusive raising Competence Diversity
PCC s)
8.29 % 18.9 % 5 3 900 9 111 4 8 2007 2007 8.3 % 6 6 1.00 8.72 0. 3 % .00 3.4 5 6 1 0
7.30 % 23.7 % 4 140 9 401 4 183 2006 47.91 2006 8.7 % 9,94 0. 4 % 0. .00 55
23.3 % 3 9 7 49 42.11 3 2005 2005 8.8 % 7.0 % 8. 0. 6 4 % 0. . 5 5 5 5 71 5 1 0 1 5 3
49 The Bank and the Society The Bank and the Society 50 was transferred to the dividend equalisation fund. addition,dividend2007.InmilliontoPCCsin 49 on NOK PCCholders: 25 per cent, or NOK 324 million, was allotted sports and culture. non-profit purposes: business development, charity, research, In addition, NOK 86 million, equivalent to 7 per cent, went to indirect taxes in 2007. and direct of form the incommunity the to wentmillion, 242 NOK orcreation, value our over cent per 19 Society: went to staff in the form of salaries and social costs in 2007. Staff: 29 per cent of our value creation, or NOK 375 million, and services. goodsexternal consumptionof the andrevenues between shows in social value creation we generate, i.e. the difference alsocommunity the in Bank’sroleeconomic Themillion. communities.purchasesmadewe2007 In440worthNOK local many to effects the spin-off substantial with ment, providers’localsuppliers’andemploylocalbusiness and Through our consumption of goods and services, we support Value creation and employment (Parent Bank) SpareBank 1 Midt-Norge. guidelinesethicalfor the relation toinvestment criteriain goodreputation. committeeA hasbeen setformulateto up a interestof theinvestment decisionsinits perspective in nonethelessthisincludes investments,itrequirements on environmental or social no containstrategies investment carried out via securities fund solutions. Although the Bank’slargely areinvestments share Foreign funds. securities in in Norwegian limited companies. It also has some holdings SpareBank 1 Midt-Norge invests in shares, for the most part Investments proposition for the investor market. through a balanced distribution of dividend, as an attractive satisfactorya long-run PCC price trend and tocome across, achieve,throughprofitableto seeks robust operations, and indication of how good they a can holders expect PCC Bank’s the the Bank give to policy be run.governance The Bank The Bank’s dividend policy, investment policy and corporate
-
• SpareBank 1 Midt-Norge has been alert to the environmental ENVIRONMENTAL FACTORS support product approval. its own ethical guidelines and an internal quality system to complex savings products, the Bank complies with legislation, describedunder the section on training. As regards sales of is laundering.ThisBank’smoneynon-involvement the in ensure to and guidelinesethical in training staff ongoing The Bank has a zero tolerance policy on corruption. It Ethics,provides money laundering and anti-corruption while 48 left. 2007 in Bank the joinedemployees 98 years. 45.3 to 45.7 from fellBank the at employeeaverageageend-2006. The Atend-2007 the Bank had 720 FTEs, an increase of 59 over solvency and opportunities for future growth. strengthen to business the in retained was million, 259 Retained earnings: 20 per cent of our value creation, or NOK • • given to: be will emphasis period interim this in Even end-2010. in2008, theBank isrelocating totemporary premises until Sinceconstruction newofahead office building is starting standards and our own objectives to be met. industry enable to routines transport and sorting waste energy monitoring routines and improving waste reduction, incorporate environmental requirements in our purchasing entailsThisupdating Bank’sandthe internalcontrol system to meet the programme’s industry standard for office operation. Eco-LighthouseenterpriseundertakesBank2008,the into certified a becomesystematically. issueto seeking this By addressednot has butbanking, withassociated challenge
routines ensuring optimal waste sorting in collaboration routines to save energy and reduce transport needs company management waste a and owner premises’ the with place arrangements electronicfiling system and establishing flexible work waste-reducing measures by further developing the Bank’s -
• management skills. Modules in performancemanagement,managementinModulesskills. advisers in all product areas. A separate programme develops developed a wide-ranging certification programmehas Alliance 1 SpareBankforThe 2006. financialwithcompared rose In 2007 the proportion of employees with higher education ahead. issue thissystematically withwork will and ment The Group has a continuous focus on competence enhance- Competence raising is part in terms of age, gender and nationality alike. believes its staffing should reflect the community of whichBank The2007. it in cent per 22.2 to cent per 23.5from fell and external recruitment, the proportion of female managers Bank’smanagerialtheinternalthroughechelon in women DespiteGroup’sthe intentionincrease toproportionthe of Diversity SOCIAL FACTORS for research in the environmental field. the on focus environmentawardingbyenvironment prizes supportand closer a of importance the of awareness resources are put, the Bank will seek to promote its communitywhich to use the and Fund 1 SpareBank the Through transport-reducing measures will receive priority. under the Eco-Lighthouse programme criteria, and waste- and Certification of the operation of the Bank will also be sought • • • – the environmental aspect will be emphasised by: Whenbuilding the new head office – our new eco-building
the best in commercial buildings in Norway life cycle best possibleenvironmental the profile ensure for the building’s to entire verified be will building the in the environmental characteristics of materials included construction period the in treatment waste and transport use, energy of suppliers must have the best possible routines in terms with ‘clean building’ principles, i.e. contractors and all preferring suppliers with a good environmental profile the indoor environment must be of a quality that is among ensuring that the building is erected in accordance in erected is building the that ensuring
2010project topromote health, motivation andwell-being. Shape) (Better Form” “Bedre the up set has Group The financing three new seedcorn companies. in position leading a taking to pupils school secondary and primary among skills creative and spirit preneurial thread extending from an active focus on developing entre- a of part is NTNU the withcooperationsignedagreement wide-rangingregion.Toathe creationendvalue thisin of service the inexploited be shouldwhichposition unique a in mid-Norway puts collegesuniversity pro-active and Technology (NTNU), Sintef, and St. Science Olavs of Hospital,University the StatoilHydroof presence The Fund. 1 SpareBank the to thanks themerecurrent a is Innovation SpareBank 1 Fund notification routines effective from 2008 onwards. adopted has Bank The trend. lasting a of matter a is it if measuresconcrete with toresponded are scorebelow-par a with Factors Midt-Norge. 1 SpareBank by employed be to proud are and work at happy are staff The 2004. in than2007 invalueshigher showsurvey the aspectsof All The Bank conducts annual surveys of work-related matters. Work-related matters their physical activity. up step to staffmotivate to efforttargeted a isproject The “Bedre Form” (Better Shape) 2010 cent compared with 4.4 per cent in 2006. recent years. In 2007 the rate of sickness absence was 4.5 in perabsence sicknessaverage low in resultedhave absence Several years of active effort by the Bank to reduce sickness introduced for all staff who are sick for more than four weeks. relatedailments. Individualised follow-up plans have been concerned to make an early start to finding solutionsis toandapproachpreventive work- a favoursBank theenterprise ‘inclusiveemployment’an As December2009. 31 to ment The Bank has renewed the agreement on inclusive employ Inclusive employment to increase the Bank’s competence in this field. The Bank also aims, through its focus on social responsibility, change management were completed by 33 managers in 2007. customerrelationship management, team management and -
51 The Bank and the Society The Bank and the Society 52 environment charityfields. and health, sports, culture, the in causes to go cent per 30 while and innovation, development business to awarded are resources its of cent per 70 all aspects of the three-point bottom line. “Wherethere’s will,a wecreate theopportunity”. Itcovers positionedexpressionisFundtheSpareBankunder The 1 Bank’s market area and to contribute to the bank’s good name.arching goal is to proactively promote value creation in the over-Its 2007. establishedin was Fund 1 SpareBankThe health and ethics health and
Humanitarian, Culture Culture Breakdown ofawards madeasof31.12.2007 12% 5% Sports 12 % Communication GUTS 4 % Adm/Various 2 % Foundations development development and social social and Business Business 20 % 46 % communities, the environment and the region alike. to identify projects that will serve the interests of knowledge with the NTNU and other relevant circles the bank is seeking energy, environment and climate outcomes. In collaboration For 2008 and thereafter our ambition is to contribute to positive responsibility as examples and role models. their of aware are support ofrecipients all that ensure to Wherechildrenyoung andpeopleconcerned,are wantwe “Tæl” (Guts) and supporting development of St. Olav’s throughenthusiasts legacy. and individualstalented developing supportinggeneral,and in people young andchildren are themes Recurrentcharities. and culture sports, of sphere the substantialcontributorin a is Fund 1 SpareBankThe up: the bank operates. Two culture foundations have also been set business/commercialcauses, oneforeach county whichin Threecommercial foundations have been set upto support • W • • Arbeiderforeningen e have following companies: inthe invested In Møre og Romsdal: the Atlantic Ocean tunnel, AtlanticOcean the tunnel, In Møre ogRomsdal: and SNU. and Trøndelag kulturhage, Tindved ogUtvikling Forskning In Nord-Trøndelag: Hotel, Stiklestad Midvestfondene, Oi! Trøndersk MatogDrikke ACE and In Sør-Trøndelag: Trådløse Trondheim, Proventure Seed, Såkornfond MøreMøreaksen ogRomsdal and Angvikbygdestue, Langfjord tunnel, Molde,the Årø Airport and Oppdal Destinasjonsutvikling.
SpareBank 1 Fund supports main events. Young enterprise. 53 The Bank and the Society Business Description 54 and asset-liability management. financial andmanagement riskmaking, decision for basis theirgoals,whileFinance the Division providesoverall an and support to enable the customer-facing divisions to attain cost-effectiveBusinessSupportfocusesprocesseson work counselling. and sales activity-based and management satisfaction,customerriskon divisionsfocusMarkets and Corporate,Retail,RomsdalsFellesbankdivision.Theeach by required competencies differing the respecting while customer-orientedcost-effectivea organisationsecureand to divisions six in organised is Midt-Norge 1 SpareBank forms part of Norway’s third largest financial grouping. As one of six members of the SpareBank 1 Alliance, the Bank Group employs about 1,000 staff. Romsdals Fellesbank. in office Headis Trondheim the and of takeover the by enlarged was area market Bank’s the assets totalling NOK 71.5 billion at the end of 2007. In 2005 SpareBank 1 Midt-Norge is Mid-Norway’s largest bank with Over Description Business Retail 63 % iew view Loans by Loans sector Public/other 1 % Corporate 36 %
• Bank’sgeographical market area, and also added 11 offices, The acquisition of Romsdals Fellesbank ASA expanded the SpareBank 1 Midt-Norge has 67 offices in 51 municipalities. to the Bank can be made to just one number: 07300. gives the Bank a unique competitive edge. All telephone calls and telephone bank along with our dedicated customer centre, combined with round-the-clock access via the internet bank catchmentitsvarietyofficein aofsolutions. areavia This, maintain a presence in municipal and administrativeto is centresMidt-Norge’sstrategy 1 SpareBank of aspect key A Accessibility savings and investment, and money transfer services. financing, insurance, of fields the competitiveinproducts to accessassuredMidt-Norge subsidiaries,is SpareBank1 own its through and Alliance 1 SpareBank the Through EiendomsMegler 1 Midt-Norge in a total of 18 localities. with co-located is Midt-Norge 1 SpareBank Midt-Norge. includededicatedtoEiendomsMeglerestate agentsfrom 1 widened was offices four further a at offeringservice the addition, agency. In estate real and counselling financial Bank’sthewithline office concept focusingin year on the over converted were offices counselling seven of total A • of office solutions: offices service the various customer categories via varietya Bank’sThe east. Trøndelag theNorth inin Lierne to west inthe north, and from Vestnes in Møre and Romsdal in the Romsdalcounty in the south to Bindal in Nordland county Bank’sTheandpresence Møre Åndalsnesextendsfromin
A total of 45 offices providing retail customers with customers retail providing offices 45 of total A A total of nine In-StorenineBanksprovidingtotalof basicmanualA to the counselling offices and self-service facilities. payment services to private individuals as a supplement or in combination with OTC services. All these offices offer self-service facilities, either alone offices provide counselling servicesthese of 33 toareas. product all corporatein servicescounselling customers. offer products tailored to new needs, trends and parameters. manage his finances. The Bank aims to be among the first to and of trackkeep to saferandsimpler itmaking spot, one range enables the customer to meet all his financial needs in and payment services. The breadth and depth of the product in the fields of financing, savings and investment, insurance rangeproduct modern broad-based and a offersBank The • • • • four pillars: in establishing good, lasting customer relationships rests on investment,payments.Successinsuranceandsavingsand business is personal financial advice in the field of financing, directed at the region’s retail customers. The Division’s core activity all for responsible is Division Market Retail The The business Retail marketDivsion
FTEs Customer satisfaction rating No. of active customers No. of telephone bank customers No. of internet bank customers No. of credit cards No. of debit cards Premiums personal insurance Premiums non-life insurance Other savings products Deposits Loanable capital B asic facts Excellent customer handling Unique accessibility First class advisers A strong product range
71 383 179, 12 127,000 5 NOK 1 NOK 107m NOK 299m NOK 1 NOK 37.7bn (+14.0 % from 200 8,000 56 5 ,000 ,000 5 6 00 . 6 5 .8bn (+8.7 %) bn
6 ) Bank believes in making skilled advisers readily availablereadilyadvisersskilledmaking inbelieves Bank Common to all is their direct contact with the advisers. customer.financial 400 Thewith market the meets bank The and training of certification to this end. programme wide-ranging a operates Bank The customers. Bank’s the to assistance possible the demands of today’s financial market and to give the best focus on developing competence, skills and continuous mindsetsa has toBank The meetcrucial. is areas product our abilities. Sound competence, in tune with the times, within specialistadvisoryandskillsofterms advisers, in bothon Taking our place as the preferred bank places high demands The Bank’s financial advisers are at the heart of our business. view to offering customers optimal investment solutions. This is particularly important in the investment area with a expectations. A purposeful effort is made to accommodate rising customer satisfaction ratings confirm the quality of our service offering. position in all product areas and market segments. Customer The bank leads the retail market in Mid-Norway with a strong Customers and market position between customer and adviser are a key element thematic meetings on topical themes, and one-to-one sessions and contact with the customer. Our high activity level featuresappreciated as a reliable partner.and recognised be Thisto andis visible, predicatedbe to wants on bank activityThe attacheswho importance high-qualityto customer contact. personalservicefollow-upfinancialaleveland byadviser high a with reception customer good involves treatment customerSoundcrucial. is treated iscustomer a way The whatever mode of contact fits best at the time in question. chooseto freecustomerdedicated iscustomer centre.The advisorynetworkofoffices, internet-based our service and Bank’sThe customercontact pointscomprise extensive an financial services.extensivedistributionformostnetwork to its customers. The Retail Market Division has the region’s
55 Business Description Business Description 56 reflected in very low losses. are profile Bank’srisk the improve to done work the and 320million. Thefavourable economic situation Norwayin NOK reach to million 22 NOK by risen having solid, is income Commission challenge. substantial a posed rates interestmarket higher forcompensate to costsborrowing a higher lending volume and deposit margin. marginRaising was customers’under strong pressure, this was compensated36 million to reach NOK 613for million. Althoughby the lending NOK climbed income interest net while areas, business all in trendvolume positive a of back the on million 934 in 2007. Operating income rose by NOK 59 million to NOK cent per 23.1 of equity on return a achievedDivisionThe Financial developments positive market trend and have a growing customer base. a on are wecompetition intense the competitors.Despite existingincreasedofefforts by andactors new byspurred Competitionisgrowing across most ofthefinancial market R *) Contains both direct and distributed expenses Estimated tax Loss on loans/guarantees Result before loss and tax Operating expenses*) Total income Commission income
Net interest income Interest on allocated capital Deposit contribution RM Loan contribution eturn on allocated capital result overview Other income Capital market Payments transmission Insurance Saving Other financing income
(NOKm)
2007 382 37 55 934 320 14 110 6 319 239 5 55 13 -7 5 9 1 6 2 8 5
% of total income
23,1 %
100 % 34 % 1 12 % 66 34 % 2 0 % 6 6 1 % 1 % 6 6 % % % % %
tant in 2008. otherwithorganisational imporalsoGroupistheunits in skilled,motivatedExploitingstaff.collaborative potentials to heighten customer satisfaction and to retain and develop The Bank aims to increase its market shares. A further aim is than bank saving. for savings products carrying a higher risk and return profile interest rate level is expected to continue moderate tothe underpinconditions, boom Norway’sdemand with Coupled servicing capacity and keep losses and defaults at adebt maintainlow to help level.will ratesinterest moderate tinued intense while Con lending, margins. on pressurecontinuedsignals competition in growth slower somewhat suggest prices house plateauing and rates interest Rising remain favourable. households for conditionseconomic 2008 of start the At Prospects for 2008 Bank is prepared to tackle any challenges arising. thehandling,customerexcellent accessibilityuniqueand market.Withstrongitsproduct offering, first-rate advisers, TheBank is well equipped to face competition in the retail 2006 21,1 % 328 330 5 87 298 137 102 5 214 33 44 49 77 28 3 5 1 7 2 5
% of total income
100 % 34 % 1 12 % 66 24 % 38 % 0 % 1 % 6 6 0 % 3 % % % %
- - consistent with the Bank’s credit policy. regionalmarket leader, andthat exposed risk isatalltimes a as responsibilityBank’s the with keeping in is market competence will ensure that further growth in the corporate models, processes, tools, organisation and not least industry Scoringestimates. loss low and satisfactoryfeaturingrisk portfolio loan a of control good has Bank the that firming important is the fact that IRB status is a mark of quality con framework conditions in a tough competitive market. Equally IRB approval from Kredittilsynet in 2006 has provided better new appointees as well as experienced staff. training, ethics is a priority module at the training facility for staff working with corporate customers. Alongside technical an educational facility offering module-based training for all individual staff member. To this end the Bank has the competenceestablishedofthe continuouson focusrequiresa and are of sufficient size. The business is highly skills-intensive, competenceunitsthatensure to need the while mind inbearing customers, to proximity secure to order in area Thebusiness physicallyis located across theentire market leasing via the subsidiary SpareBank 1 Finans Midt-Norge. own capital markets division, SpareBank 1 Markets, alongside Much of the business is in close cooperation with the Bank’s from abroad. liquidity and electronic and manual money transfers to and buildings/operatingand equipment,surplusinvestmentof in investment and operations financing,The insurance corporate marketof individualsbusiness focuses on financial counsellingThe business Corporate marketDivsion Market share Customer satisfaction index No. of FTEs customers No. of multi-relationship Deposits Loanable capital B asic facts
43 % 148 13,0 NOK 14. NOK 20.9bn (+21.7 % from 200 70 5 2007 0 6 bn (+4.7 %) 6 ) -
of the Bank’s loanable capital. volume of NOK 3.2 billion, representing in total 15 per cent The Bank’s ten largest customers account for an overallcorporateoperations.Bank’smarketitsorganisationthe of lending on impact clear a has structure This employees. five than As much as 83 per cent of businesses in Trøndelagsegments. ofvariety havea mid-sizecompanies inand small fewer of numberTrøndelaglarge incorporate sectorafeatures The areas including insurance, capital markets and leasing. services a number of single-relationship customersalso Bank The cent. per in43 about businessis regionthe insegment market this of share Midt-Norge’s 1 SpareBank sectors. publicagriculture and the andsegment businessmid-size The Bank services about 13,000 customers in the small and Customers and market position Real estate 36.6 % Transport and other services other 13.0 % Loans specified by sector and industry by and sector specified Loans Public sector and others and 3.0 % Shipping 7.4 % and forestry and Agriculture Agriculture Commerce and and Commerce 16.4 % hotels/rest 8.9 % Manufacturing Building and Building and Sea farming construction 8.3 % 3.5 % 7.0 %
57 Business Description Business Description 58 to be one of good quality and moderate risk. are on a positive trend, and the bank’s portfolio is considered about 35 in all, who are monitored on a continual basis. They salmon are produced by the bank’s customers in this sector, tothe industry. Atotal of some 100,000 tonnes of trout and tofish farming with exposures totalling NOK 1,289 million SpareBank 1 Midt-Norge is the region’s largest bank catering adjusting to changing framework conditions. a long-range, solid industry featuring many actors skilled in product prices are better than for many years. Agriculture is is in very short supply for the first time in a long while, and of agricultural land to grow bioenergy crops. Norwegian meat drought problems in a number of countries and increased use price growth due to increased international demand for food, cautious and realistic optimism on the back of international by marked is Mid-Norway in Agriculture Festival. Food Trondheim2007 the and region) the in actors drink and fooduniting company (a AS DrikkeTrøndersk ogOi! Mat region), the in agriculture for tank” “think (a Landbruk TenkeloftTrønderskthrough agriculture mid-Norwegian farming In 2007 the 4,000 Bank was actively involved about in further developingbillion. 3.2 NOK has abouttotalling loans holdingcustomers Midt-Norge 1 SpareBank in this figure in the period ahead. corporates are related to real estate. Little change is expected of SpareBank 1 Midt-Norge. 21 per cent of the Bank’s loans to involved in financing real estate operations. This is also true greatThemajority financial of institutions increasinglyare Division. areas account for 65 per cent of all lending by the Corporate along with transportation and other services. All in all these management and business services, agriculture and forestry considerablea sharethe ofBank’s lending goespropertyto Given the composition of the business sector in mid-Norway, of further sensible growth. in the neighbouring county to the south, raises expectations area in Sunnmøre, based in Ålesund and extending to Førde marketseparate a natural establishmentof The bank. commercial county’s the as forward Fellesbank Romsdals management routines and capable staff are goodtaking and 2007, inSpareBank customerscorporate of accretion net 1 a was There 2006. in FellesbankRomsdals of takeover the TheRomsdals Market area has shown a positive trend after
advisers strengthened their competence in non-life non-life in competence their strengthened advisers Bank’sMoreover,corporateahead.the and areapriority a Managing these resources Midt-Norge. in the short and 1 long term will SpareBank be from pensions occupational purchased had firms 1,800 2007 of start the by and 2006, in success a proved pensions occupational Mandatory the best possible customer processes here. Close cooperation with the SpareBank 1 Alliance guarantees segment. this to capacitydelivery strengthen further will period to 2010 development areas have been identified that mid-Norway.the inIn segment SME the for bankleading the as position its retain to desire clear a has Bank The in the field of payments transmission. Bank’s focus on the public sector is based on its high profile authorities, among them Trondheim and Molde. Much of the Nord- og Sør-Trøndelag in addition to 33 of the of region’sadministrations county the localservices and Mid-Norway inmarket sectorpublicMidt-Norgethe leadsSpareBank 1 all cash management and capital market services. isascribable positivetoa trend inallbusiness areas, above 2007, an increase of NOK 123 million over 2006. The increase The Bank recorded operating income of NOK 661 million in Financial developments Trøndelag. Industry,NorwegianConfederation of the and Commerce research organisation SINTEF, the Mid-Norway Chamber of Norway,the Innovation with conjunction in Midt-Norge Export the at Conference, organised annually for 18 years running by SpareBank awarded 1 is prize The Q-Free. was a success. The Mid-Norway Export Prize for 2007 went to (the16th such trip) incooperation with SAS inTrondheim Bank’scountthethatIcelandinsight, ontostudy tour and andknowledge impart todesigned are events the of Most cultural events. while enabling the Bank to give financial support to exciting networksbusiness localstrengthens This 2007. in events and meetings thematic of series a organised Bank The their regular contact person. good,competitiveto solutions withfollow-up provided by specialists, will insurance afford with the bank’s conjunction corporate in customers and, access 2007 in insurance
Allegro Finans. Bank’ssubsidiary,the andMidt-Norge Securities First by providedpresently are servicesThesemanagement. asset active and shares of trading secondary for licences from the licences needed by a full-fledged investment firm, apart division in its own right within the Bank. The division hold a organised investmentas firm an isMarkets SpareBank1 C to afford business start-ups professional seed capital. funds to strengthen investment capital sources in Mid-Norway 2008 as previously, the Bank will devote substantial non-profitgerminationexcitingnewbusinessesof Mid-Norway. in In Scienceof andTechnology (NTNU) designedis spurtothe The Bank’s close collaboration with the Norwegian University such as financing and payments. market solutions in addition to the traditional business areas portfolio with priority given to insurance solutions andexistingcustomer the ofcapital carefor positionedwell itself has with low unemployment and acceptable inflation. The Bank favourableeconomic setting for the business sector in 2008 internationalfinancial markets, analyses suggest continued volatile more and ratesinterest higher somewhat Despite Prospects for 2008 apital market Loan contribution RM Deposit contribution Interest on allocated capital Net interest income Commission income
O R *) Contains both direct and distributed expenses E Loss on loans/guarantees R T otal income stimated tax eturn on allocated capital esult before loss and tax perating expenses*) result overview Other income Income on capital market and currency Payments transmission Insurance Saving Other financing income
(NOKm)
s Divion
18.9 % 2007 661 255 412 406 280 1 5 148 6 72 13 47 11 27 - 1 1 4 9 6
% of total income
100 % 42 % 24 % 11 % 78 % 22 % 0 % 8 % 7 % 2 % 1 % 4 % Foreign Exchange along with Corporate Finance. The division is organised in two sections: Fixed Income and SpareBank 1 Markets has 19 experienced and competent staff. exchange area, corporate finance and capital investment. potential customers and competitive existing services offer in to the fixed knowledge income market and foreign and across as a proactive actor who applies specialist competence in its market area. This ambition will be achieved by coming SpareBank 1 Markets aspires to be the leading investment firm
F ixed income & Robert Ness exchange A nalysis F oreign Spare Dag Ivar Thobroe
18.8 % B ank 1 2006 304 234 538 392 279 118 42 113 -88 28 29 41 24 2 9 9 5
M
arkets % of total income C orporate Special adviser
Torkil Leinum 100 % 5 22 % 79 % 21 % F 2 % 5 0 % 5 8 % 2 % 2 % 4 % inance % %
59 Business Description Business Description 60 and is located in Trondheim. financial advice. divisionThe comprises staff six members support,capitalissuance,equitypropertysyndication and companies,of purchasebusinesses,ofsaleand transaction Typicalservices in the corporate finance field are valuation large companies in a regional perspective. Securities Trading Act. Our business caters to mid-sizedthe under and services provide to Kredittilsynet by licensed actor region’ssole the is divisionFinance Corporate The Corporate Finance in Trondheim and Molde. Thedivision currently staffhas11members locatedandis transactions in suitable instruments. execute and cases present advice, offer Wespeculate. to The Foreign Exchange Market presents at all times an opportunity and managing foreign exchange risk. exchange exposure. We have long experience in advising on desired foreignfinancial achieve the instruments of to use correct and marketexchangeforeign the ofknowledge on rely hedging risk exchange foreign of field the inServices exchange market. foreign exchange risk hedging and investment in the foreign areas: service two comprises area Exchange Foreign The Foreign Exchange secondary trading of bonds and money market instruments. to sees and issuesstock managing lead in assistsMarkets issuance of bonds and money market instruments. SpareBankpowerutilitieslargeindustrialand companies through 1 the a potential source of funding for local authorities, counties, high yielding industrial bonds. The securities market is also investments, ranging from risk-free government bonds to risky,The securities market represents a universe of fixed income experience in advising on and managing interest rate risk. business’slong haveWeasheet. balance of sideasset and achieve the desired interest rate exposure, both on financial instrumentsthe to of usecorrect liabilityand market income Interest-rate hedging services rely on knowledge of the fixed rate hedging and the fixed income. The Fixed Income area comprises two service areas: interest Fixed Income
SpareBank 1 Gruppen one-stop provider of financial services and products. a GroupTeamworking thebase. marketingmakejoint and Bank’senhancetheearningscustomers, andits offeringto The subsidiaries’ products and services broaden the Group’s Associate and its affiliated unions. Norway), and the Norwegian Confederation of Trade Unions (20 savings banks in the eastern and northern AS regionsSparebanker Samarbeidende ofHedmark, 1 SouthSpareBank SR-Bank, SpareBank 1 Nord-Norge, Sparebank 1 Midt-Norge, SpareBank 1 Gruppen. This grouping is owned by SpareBank product1 companies through a jointly owneddevelop andholding alliance an operatecompany, banks 1 SpareBank The anchorage and competence, and makes life simpler. local a firms individualsandprivate quality.affords This economies of scale in the form of lower costs and/or higher competitive financial services and products, and to take out The SpareBank 1 Alliance’s mission is to procure and deliver T
P P P in associated companies Share of subsidiaries’ profit before tax: A Income from owner interests otal pre-tax profit, subsidiaries rofit after tax rofit before tax rofit before goodwill, amortisation and tax mounts in Net financial, SpareBank 1 Gruppen Operating expenses IFRS corrections, subsidiaries Other companies EiendomsMegler 1 ODIN Forvaltning Bank 1 Oslo SpareBank 1 Skadeforsikring Tax charge Amortisation of excess values SpareBank 1 Livsforsikring NOK
million s andub
sidiarie
1,222 1,171 1,177 1,143 2007 s 39 14 300 380 -4 - -14 -28 6 19 34 56 -4 6 1 6 5
1,025 1,017 1,001 1,038 2006 228 239 232 240 -3 -2 -37 84 1 73 5 5 3 6
Molde. The company is a wholly owned subsidiary employeescompanyTrondheim,20Thehas inof Verdalthe and Bank. NOK 2 billion and car finance for the remainder. for accountedleases which of billion, 2.3 NOK of total a agreements worthfinance car andleasing managed it end and doubled its loan portfolio compared with 2006. At year- sharesrecent in shares acquiredmarket hascompany The individuals will also an important area ahead. company’s primary market, although car finance for private the are sectorpublic andcommunity business The paths. decision-making short accessible with partner finance and sales-customer-oriented,and closeadesigned beisand to distinctlyorganisationoperation.isThesales own its and The company works up the market through the Bank’s offices Mid-Norway. competence, and works for greater value creation in SpareBankFinansMidt-Norge1 emphasistheputlocal on businesses. for partner active an and company finance ing lead Mid-Norway’s is Midt-Norge Finans 1 SpareBank SpareBank 1 Finans Midt-Norge SpareBank 1 Gruppen. SpareBank 1 Midt-Norge owns 19.5 per cent of the shares of the credit area (in Stavanger). (in Tromsø), the cash management area (in Trondheim) and development work through in engaged alsothree is Alliance The stage. centrecompetence at are ment centres for training shared processes/exploitation of best practice and procure- building,technology,competence brand-building,which collaborativeprocesses within the SpareBank 1Alliance in SpareBankGruppen1 hasadministrative responsibility for ship interests in First Securities (24.5 per cent). Utvikling(developer).DA companyTheholdsalsoowner- SpareBank 1 Medlemskort AS (card company) and lifeSpareBank insurer), Bank1 1 Oslo, ODIN Forvaltning (fund manager), Livsforsikring (life insurer), SpareBank 1 Skadeforsikring (non-SpareBank 1 Gruppen wholly own the shares of SpareBank 1 P Expenses Income K re-tax profit ey figures
(NOKm)
2007 22 30 5 2
2006 18 22 40 -
Allegro Finans nationwide. Portfolio expansion is planned for 2008. offersone-stop solutions industryfor publictheandsector SpareBank 1 Bilplan specialises in car fleet management and SR-Finans. owners- SpareBank 1 Finans Nord-Norge and SpareBank 1 tion, distribution agreements were signed with the previous administration of 2,200 cars. In connection with the acquisi thewithalong 2008, ofstart theBilplanSpareBank at of1 shares the all over took Midt-Norge Finans 1 SpareBank the Reitan Group 9.9 per cent. SpareBank 1 Midt-Norge owns 90.1 per cent of the company, track than if they own units in a fund. individualclosereachkeepcompany, to able thus are and detailedreports showing the number ofshares they own in receive will market share the by provided opportunities the ininterested investments.Those their of progress the tracking resources and time spend to needing without portfolio in which they own each individual share/security funds.Active management clients havetheir ownpersonal equity and sharesindividual in investingwith compared advantages of number a offers management asset Active manner. effective an in conditions market changing capture to it solid profit performance. Its broad range of services enables returnon managed assets compared with the market, and a deliveredsatisfactory results.companyTheachieved good Despite a turbulent securities market in 2007, Allegro Finans a good NOK 2 billion. The company currently has 11 employees and assets totalling number of external clients in addition to those of its owners. activeassetonmanagement manageslargeandassetsa for carry to licensed is It Group. Reitan the and Midt-Norge is headquartered in Trondheim. It is owned by SpareBank 1 Allegro Finans ASA, an active asset management company, P Expenses Income K re-tax profit ey figures
(NOKm)
2007 18 27 9
2006 14 14 28 -
61 Business Description Business Description 62 opened at Hitra, Fosen, Oppdal and Melhus in 2007. staffnumbernewwererecruited.of offices Fournew were sive competence building effort was undertaken and a large co-location with the owner banks was extensivecompleted, an opened, were offices Newfronts.project and a comprehen- capacity, particularly on the residential, sales recreationalsubstantial of build-up the propertyseen have years Recent entire industry. 2008 now that a stricter regulatory framework applies to the in clearly more even seen be will edge competitive This trend. among house sellers in Mid-Norway remains on an upward brand EiendomsMegler 1 the for preference that confirms andsatisfaction, customer high showing 2007 in surveys advantages on the logistics front. This is reflected in market the internal control regulations, giving it major competitive has developed quality assurance routines and implemented soundestestaterealcompaniesNorway. in Additionally, it EiendomsMegler 1 Midt-Norge is now one of the financially a trend that is expected to continue in 2008. shown in 2007 translated into higher profit than previously, further basisforgooddevelopmentgrowth.fine The a laid Nordmøre, and strong growth in Sunnmøre, the company Sør-Trøndelag,has and og Romsdal Nord- in position leader growth in turnover and market share. With its solid market- all segments. 2007 is the latest of a string of years of positive in agencyMid-Norway’sestate realas positionleading its reinforcedfurtherMidt-Norge EiendomsMegler 1 2007 In EiendomsMegler 1 Midt-Norge P Expenses Income K re-tax profit ey figures
(NOKm)
2007 1 1 10 5 6 1 1
2006 124 128 4
Nordvest (7.6 per cent) and SpareBank 1 Volda Ørsta Ørsta (5.4 Volda per cent). 1 SpareBank and cent) per (7.6 Nordvest owned by SpareBank 1 Midt-Norge (87 per cent), SpareBank 1 properties sold through EiendomsMegler 1. The company is of cent per 31 financed Midt-Norge 1 SpareBank 2007 In ness strategy. SpareBankMidt-Norge1 areessentialan aspect itsofbusi 9,000 buyers and sellers. Co-location and coordination with than more handled it so doing In area. catchment the in area. This represents about 30 per cent of all dwellings sold of which 3,599 were in SpareBank 1 Midt-Norge’s catchment In 2007 EiendomsMegler 1 Midt-Norge sold 4,452 properties, Trondheim and the surrounding district. localpresence, co-located with banking, invarious parts of specialistfunctionmaintaininga a now is businesswhich These operations complement its traditional residential agency separate units for project and commercial property broking. The company has specialised its operations and established solid basis for further growth and development. a ensuringthereby2008,January 1 onRegnskapInnherad qualitymanager.and Moreover, companymergedthewith agent estate senior a with along heads department new threeCEO,strengthenednew appointmentwas thea byof administrationqualifiedhighly The staff. 60 toclose to 40 fromexpanded it 2007 In Namsos.and LevangerStjørdal, authorised accountancy firms with offices in Trondheim,Midt-Norge Rissa, Regnskap is one of Norway’s largest independent, Midt-Norge Regnskap Income K P Expenses re-tax profit ey figures
(NOKm)
2007 29 30 1
2006 21 23 2 - services and currently caters to about 1,200 small and mid-sizedevelopment,financiallyotheraccounting,and related tax of financial services in the fields of counselling, profitability Midt-Norge Regnskap is a forward looking one-stop supplier SpareBank 1 Midt-Norge Group’s roughly 1,000 employees. largest new assignment in 2007 was payroll production for the hasmade available capacity to take on new customers. The The company has an ample supply of new assignments and and the proportion of authorised accountants was increased. even stronger focus was placed on quality and competence, an installed, was system Office/CRM new a position our further strengthen soundestto order accountancy In firms. country’sfinancially the among is Regnskap Midt-Norge With a 30 per cent rise in turnover in 2007 to NOK 30 million,
The company is a wholly-owned subsidiary of the Bank. guarantee of professional performance. a with clients its provides – Accountants Authorised of Association Norwegian the and authority) supervisory meet the quality criteria set by Kredittilsynetquality requirement (Norway’sit sets itself – whichfinancial as a minimum is to The needs. future and present both meet thattechnology foritsclients withcommitted staffserviceanda range and Midt-Norge Regnskap AS’s aim is to be a recommended partner relation to clients is no impediment. in Trøndelag, modern technology means that remoteness in co-ownership segments. While the bulk of its clients are cooperative/housingbasedcorporate,andfarmingthe in clients
63 Business Description Income Statement 64
Statement Income 1 704 1 379 2 3 200 811 771 771 973 322 977 408 141 278 392 479 207 211 893 111 -84 10 80 5 0 6 2 0
P arent bank 1 692 1 081 2 37 3 4 2007 883 620 620 168 821 443 1 291 433 5 201 809 -12 5 23 81 01 8 56 82
9 0 5 6 0 n o
e
p t
n n p
Other operating expenses Other operating income Fee and commissions expense Administration costs Staff costs Minority interests Fee and commission income Tax charge Interest expenses Net return on financial investments Loss on loans, guarantees etc. Interest income Income from associates and joint ventures Result before losses and other operating income Dividends (NOK million) P otal income quity holders of the rofit for the year rofit before income tax rofit per perating expenses et fee and commission income et interest income et return on financial investments
PCC
, in
NOK
C ompany
13,14 Notes 2 11 21 1 10 9 7 7 6 6 8 8
6
5
2 142 1 125 1 045 1 103 2 34 3 470 1 039 2007 8,72 844 845 346 671 181 338 65 5 200 233 9 8 83 90 23 - 6 5 2 9 5 6
Group 2 022 1 008 1 116 2 37 1 3 1 032 200 9,94 896 898 423 592 990 1 322 6 5 219 21 190 -84 4 56 82 28 12 6 17 6 1 6 9 6 6
1 787 1 91 200 8,51 717 720 961 283 919 544 906 142 279 5 48 199 9 148 119 881 -38 5 84 7 55 1 2 3 6 5 6 5 5
p Sheet Balance
31.12.200
P 51 001 58 929 62 866 62 866 30 183 21 911 er 3 937 3 34 1 2 2 7 1 320 1 1 219 2 383 K -143 -17 12 4 303 4 47 56 142 2 447 A jell 5 6 66 70 7 6 29 5 92 Chair xel 6 0 6 2 5 0 5 7 6 9 7 0 -
E 6 arent bank
riksen K och e 31.12.2007 k
56 808 66 600 70 982 70 982 32 5 23 9 4 382 2 39 3 402 1 349 5 5 7 097 1 77 1 371 2 -113 -17 34 0 138 6 6 42 324 6 337 73 6 720 447 66 5 1 1 5 71 93 48 8 6 6 6 1 6 5 0 6 6 5 6 1 -
n
t
t t
t Deputy chair jell li and advances to customers Group allowance for impairment on loan and advances to customers E L A Cash and balances with central banks Loans and advances to credit institutions Primary capital certificates Deposits from credit institutions (NOK million) Fixed-income CDs and bonds at fair value Prmium fund Deposits from and debt to customers Loans and advances to customers Dividend equalisation fund Debt securities in issue Financial derivatives Individual allowance for impairment on loan Purposed dividends Financial derivatives Shares, units and other equity interests Savings bank’s reserve Other liabilities Investments in associates and joint ventures Unrealised gains reserve Subordinated loan capital Investment in group companies Other reserves Revaluation reserve Goodwill Minority interests Other assets A otal liabilities otal equity otal liabilities and equity otal assets iabilities quity ssets et loans to and receivables from customers B rnstad
jordal
t a
The Board of Directors of SpareBank 1 Midt-Norge
Trondheim, 27 February 2008
erje
nne-
R
oll B
rit Skjetne
D
anielsen
11, 2 11, 12,13 20,32,34 c 20,21 20,21 19,32 17,32 Notes 19 22 23 18 18 1 1 24 14
6
5
5
,2
6
Venche Johnsen hristel Employee rep. 31.12.2007 58 878 66 643 71 503 71 503 32 434 23 9 4 860 2 39 1 349 5 1 482 5 9 178 1 830 1 1 103 2 1 042 -11 -18 34 0 B 138 6 427 324 6 665 5 342 103 6 4 5 7 5 71 9 48 12 8 6 orge 6 5 6 6 1 5 0 6 6 0 -
o f 31.12.200 Group 63 178 52 488 58 995 63 178 30 13 21 911 4 183 1 2 2 7 1 873 5 2 819 1 1 331 2 383 -147 -184 12 142 4 6 5 303 4 477 6 781 13 4 947
5 6 66 24 7 6 18 92 6 6 0 2 0 6 5 5 7 5 8 0 - dd
inn T 31.12.200 ore CEO H augan 54 327 44 767 50 656 54 327 27 048 4 18 03 F
3 671 1 1 2 1 029 3 5 1 4 2 3 1 1 8 innøy -23 -278 280 66 4 6 5 487 278 5 447 498 66 4 6 5 8 81 19 5 5 89 5 65 6 9 2 5 4 0 6 6 0 7 7 9 4 -
65 Balance Sheet Pro Forma Income Statement Group 66 (NOK million) Group Statement Income Forma Pro Interest expenses Interest income Fee and commissions expense Fee and commission income N Dividends N Other operating income Income from associates and joint ventures N Net return on financial investments Staff costs T Other operating expenses Administration costs O R Loss on loans, guarantees etc. P Tax charge Equity holders of the Company Minority interests 200 otal income rofit before income tax esult before losses perating expenses et interest income et fee and commission income and other operating income et return on financial investments 5 shows pro forma figures in connection with the merger with Romsdals Fellesbank.
1 125 2 142 1 103 1 039 1 045 3 470 2 34 2007 671 346 65 233 338 5 181 200 844 9 8 23 90 83 - 9 5 6 5 6 2
1 008 2 022 1 032 1 116 2 37 1 3 2006 580 435 990 6 228 190 322 5 1 219 89 -84 21 6 41 82 17 12 56 6 9 1 6
1 005 1 840 1 987 2005 542 293 945 894 906 5 982 1 119 297 5 149 19 707 -11 77 5 87 1 5 00 2 5 8 5 (NOK million) Group Sheet Balance Forma Pro Cash and receivables from central banks Deposits with loans to credit institutions Gross loans to customers before write-down Net loans to and receivables from costomers - Write downs by loan category - Specified write downs Fixed-income CDs and bonds at fair value Shares, units and other equity interests - Valued at cost - Valued as available for disposal - At fair valute through profit or loss Goodwill Investment in group companies Investment in related companies Other assets A Deposits from credti institutions Deposits from and debt to customers Debt created by issue of securities Other liabilities Subordinated loan capital T Primary capital certiticates PCC premium accounts Dividend equalisation fund Other equity capital Revaluation reserve Savings bank’s reserve T Minority interests 200 T otal liabilities otal equity capital otal liabilities and equity ssets 5 shows pro forma figures in connection with the merger with Romsdals Fellesbank.
31.12.2007 71 503 66 643 71 503 5 5 23 9 32 434 4 860 2 39 1 482 9 178 8 878 5 1 103 1 4 5 2 2 2 1 349 1 830 -18 -11 0 34 665 66 4 6 138 6 342 5 5 6 6 5 48 66 7 12 13 6 5 6 1 3 0 0 2 0 9 6 0 5
31.12.2006
63 178 58 995 63 178 5 5 21 911 30 13 4 183 1 873 2 819 2 488 5 1 2 7 2 383 1 798 1 2 1 -184 -147 12 4 440 477 781 4 5 13 700 6 394 5 38 6 23 66 6 84 0 5 0 0 0 6 2 0 5 8
31.12.2005 54 327 50 656 54 327 4 44 7 27 048 18 03 3 671 1 5 3 2 3 1 029 1 2 87 1 2 1 4 -278 -23 280 66 4 6 411 447 499 4 66 5 3 5 6 8 3 5 5 6 81 5 6
9 4 6 7 6 0 0 6 4 1 6 7 6 2 0 0 9 8 67 Pro Forma Balance Sheet Group Change in Equity – Group 68 To be disbursed from gift fund Equity 31 Dec 200 - increase in PCC capital/equity premium fund - value to employees Subscription rights and options to employees: Dividend declared for 200 Purchase/sale of own PCCs Change in associated companies, 200 E E Minority interest Profit for the year Change in minority share Bonus issue Stock issue Gain on sale of shares to M-N Invest Dividend finally decided in 200 Total income 200 Curtailment/Settlement Profit for the year - fringe benefit tax, employee placing Employee placing Dividend issue A Change in accounting principles E E To be disbursed from gift fund Profit for the year Dividend declared for 200 Change in minority share, EiendomsMegler 1 Change in minority share upon Change in associated companies, 200 Equtiy 1 Jan 2007 reserve under new regulations Transferred to unrealised gains E Group Group – Equity in Change (NOK million) dividend payment in Allegro
qutiy 1 Jan 2006 qutiy 31 quity 1 Jan 2005 qutiy 31 quity at 31 djusted equity 1 Jan 2005
D D
ec 2007 ec 2006 D
ec 2006
5
5
5 6
5
5 6
1 262 1 262 1 349 1 262 1 262 Primary 1 2 capital 2 241 761 761 82 Issued equity
6 5 ------8 ------
2 - 2 - 5 - - - -
Premium -223 fund 212 131
138
10 10 ------7 0 0 0 0 0
- - - -
Saving bank reserve 1 618 1 450 1 830 1 227 1 155 1 684 1 684 1 4 214 211 211 243
- 12 -9 -4 5 72 66 ------0 - - - - - 1 - 0
- - -
equity Other -278 -221 -303 410 3 3 39 395 368 410 221 221 395 395 -89 3 -92
-0 -2 6 6 6 - -
------8 - 8 8 - 0 5 ------
Majority Share Earned equity Equalisation fund 137 137 12 624
581 675 443 372 700 700 -29 -7 17 12
- - 81 55 71
1 ------6 - - - 5 - - 5 6 - - -
Unrealised reserve gains 142 103 -49 142 10
0 0 0 ------0 ------0
- - - - -
Revaluation reserve
213 13 135 344 135 135 -4
0 0 0 ------0 ------0 5 ------
Minority interest 10 -3 ------
- - 2 - - 4 4 2 8 9 0 0 8 9 5 0
------
equity 4 183 Total 3 671 4 860 2 662 2 519 4 183 4 183 3 -278 -221 -303 844 4 720 720 213 89 -89 -17 6 -92 143 29 20 10 13 -9 71 5 -3 -4
2 2 2 - - - 5 4 6 0 reserve under new regulations Transferred to unrealised gains E Bank Parent – Equity in Change (NOK million) P Equtiy 1 Jan 2007 To be disbursed from gift fund Dividend declared for 200 Change in associated companies, 200 Dividend issue Employee placing E Profit for the year Curtailment/Settlement - fringe benefit tax, employee placing E Switch to IFRS at parent bank 01.01.200 E To be disbursed from gift fund Dividend declared for 200 E Profit for the year arent bank quity at 31 quity at 31 qutiy 31 quity 1 Jan 2006 quity 31 D D
ec 2007 ec 2006 D D
ec 2005, ec 2006
N 6 5 orwegian G
6 AAP 6
Primary 1 262 1 262 1 349 1 262 1 262 1 262 capital Issued equity 82 - - -
- - 5 ------
Premium 131 fund 138
- - - - - 7 0 0 0 0 0 ------
Saving bank 1 569 1 635 1 776 1 369 1 373 1 635 reserve 210 2 - 66 -4 6
- - - - - 1 3 2
-303 -278 410 3 39 equity 395 395 410 Other 368 395 -92 -89 6 Majority Share Earned equity -
0 8 5 - -
Equalisation
1 fund 570 646 615 491 483 646 -7 49 - -8 6
1 - - - 6 - 5 2 -
Unrealised reserve 142 142 -49 gains 92 0 0 ------
-278 -303
3 937 3 937 4 382 3 123 3 486 3 937 -89 3 819 equity Total -92 213 6 13 -9 20 6 - 2 0 3
69 Change in Equity – Parent Bank Contents Notes 70
Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note content 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 4 3 2 1 ofaccounting principles use the income operating Other from investments Income financial other Net commissionincome concerning assessments and Critical estimates riskmanagement Financial accounting principles IFRS General information for advances Allowance onloanand losses tocustomers advances and Loans advances and –Loans Credit institutions derivates Financial securities Fixed income Trading securities joint ventures and Associates Intangible assets Property, equipment plantand assets Other tax Income expenses Operating income Net interest informationSegment s note s
78 83 82 82 76 71 71 95 92 91 90 90 88 87 86 86 86 84 83 81 79
Note Note 3 Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note
31 29 28 27 26 25 24 23 22 41 40 39 38 37 36 35 34 33 32 0 Impacts of IFRS ParentImpacts ofIFRS Bank Maximum credit risk exposure, Maximum credit riskexposure, analysisMaturity liabilities and ofassets Fair instruments valueoffinancial Related parties related capitalEquity and –capital adequacyratio Pension liabilities Other loancapital Subordinated inissue securities Debt Due tocustomers Inco Acquisition ofbusiness events Subsequent structure ownership PCC capital and Market riskrelated toforeign exchangerisk Market rate riskrelated tointerest risk termofcommitments Residual contractual Age breakdown of loans fallen due but not written down forCredit riskexposure each internalriskrating assets classoffinancial Credit qualityper disregarding collateral me statem me ent and Balance sheet – sheet Balance ent and
117 107 106 104 103 101 100 117 117 116 115 115 114 112 110 113 109 99 98 97 not permit value impairments with respect to goodwill, equity capital capital equity goodwill, to respect with impairments value permit not does standard impairment”. This and reporting financial “Interim 10 IFRIC accounts for 2007. whetherThistheycomestandardunder2.IFRSaffect not does annualthe to respect with valued be must instrumentequity issued the of value fair the below is compensation the where instruments equity of issuance the transactionsconnection8,IFRICwithin Under 2”. IFRS of“Scope 8 IFRIC and other obligations. the Group’s financial instruments, or additional information related to taxation management. This standard does not affect the capitalclassification and Group’scapital the information onand expandedrequires valuation 1 IAS inof requirementsthebeyondinstrumentsexisting changegothatrules. The of qualitative and quantitative disclosures of risk exposure associatedexpandsnotedisclosurethe requirements standardThe32.IASof requireswith financial and 30 IAS replaces 7 IFRS instruments. financial disclosuresonimprove to requirementsinformation additional brings 7 IFRS of introduction The changes in IAS 1 – Presentation of Financial Statements – Capital (NewIFRS7Standard) Disclosures.Financial– Instruments: Disclosures andassociated 2007: of as T presented accounts annual for 2007.31 December mandatory interpretations and standards IFRS on based prepared been have accounts annual The inNote4. Group accounts are described the to crucial are estimates and assumptions the where areas or complexity,of degree high a estimates, and judgments of element large a containing Areas judgments. make to management the requires principles accounting company’s the of application Moreover, estimates. of use the requires IFRS with conformity in statements financial of preparation The reflected inprofit/loss. derivatives, financial modifications: financial assets and following financial debt recognised the at fair value with with value changes cost historical is accounts Group and bank parent the both for base measurement The Interpretations include Standing These the Committee (SIC). predecessor, Norway. its and in (IFRIC) effect Committee given Interpretations Reporting Financial International been the from interpretations have which (IFRS) Standards Reporting Financial International with conformity in prepared been have Midt-Norge 1 SpareBank for 2007 for accounts Group The B Noteg principle 2–IFRSaccountin gate.Søndre in bank’s temporarily Rosten the be at 2010 located will in October office erected is to head building 2008 head office new a February while From Trondheim Romsdal. Møre and Trøndelag and South and North essentially are areas market bank’s The Bank). (Parent 4 gt. Trondheim, Søndre in headquarted is Midt-Norge 1 SpareBank Bank 1Midt-N Spare Bank’sSee the annualreport. inthe descreption business descreption Business Note information 1–General Notes he following standard is implemented in the annual accounts for for accounts annual the in implemented is standard following he asis for P reparing the orge Group C onsolidated A nnual A ccounts s
relevant to the annual accounts for 2007: annual accounts commencing on for 1 mandatory Januaryare changes 2007 and orinterpretations standards,later, following The but are not considered The standard does not affect the annual accounts for 2007. recognised in interim accounts to be reversed at instrumentsfinancialand instruments a accountedacquisition at and for cost subsequent balance sheet date. otherwise specified. otherwise Bank’s functional currency. All amounts are stated in millions of NOK unless krone (NOK), which is also presentation the The currency is Norwegian the P requirements and their interaction” (into force on 1 January 2008). defined benefit aasset, limitonminimumThe funding – 19“IAS IFRIC 14 IAS 23 (Amendment) “Borrowing costs” (into force on 1 January 2009). 1 March 2007). on forcetransactions”share(intotreachery and Group – 2 “IFRS 11 IFRIC to the company and the Group. 2008 or later, but the management team has not considered them relevant will be mandatory for company and group accounts commencing on 1 January Thefollowing interpretations ofexisting standards have been published and This standard is not expected to affect the company or group accounts. in its internal reporting. The Bank will apply IFRS 8 as from 1 January 2009. must be based on the management team’s approach to segment information related information”. Under the new standard, presented segment informationstandardSFAS“Disclosuresenterprise 131,USan segmentsand about of 8 IFRS 2009). replaces January IAS 14 and 1 coordinates on segment forcereporting with (into the requirements segments” of “Operating 8 IFRS implementation. early for opted having teammanagement the without later,but or 2008 will be mandatory for company and group accounts commencing on 1 January Thefollowing interpretations ofexisting standards have been published and IFRIC 9 “Re-assessment of embedded derivatives”. in a hyper-inflationary economies” and IFRIC 7 “Applying the restatement approach under IAS 29, financial reporting IFRS 4 “Insurance contracts”. resentation C urrency
71 Notes Notes 72 (12 per cent) and Federationthe Norwegian of Trade Unions (10 per cent). SparebankenHedmark are owners Other stake. cent per 19.5 a with each Midt-Norge, Sparebank 1 Nord-Norge and Samarbeidende Sparebanker AS, SpareBank 1 Gruppen AS is owned by SpareBank 1 SR-Bank, SpareBank 1 for by equitycapital method. the sheet items in the Bank’s accounts. Jointly controlled entities are accounted by recognising the Bank’s proportional share of assets, liabilities and balance foraccounts Bank jointly jointly and controlled operations controlledassets The participants. other with together control exercises agreement by Bank the that entails control Joint entities. controlled jointly or assets controlled jointly operations, controlled jointly of form the take may ventures Joint Joint Ventures company.as anassociated defined too it AS, Boligkreditt 1 SpareBank of cent per 20.89 owns also Gruppen AS. This investment is shown as an associated company. The Bank ownership remaining being the divided betweenDA, the Utvikling SpareBank 1 SpareBank Alliance of and SpareBankcent 1 per 20 owns Bank The statement. loss initsprofit and undertaking associated result ofthe the associated undertaking’s net assets. The Bank recognises its share of the acquisition cost and subsequently adjusted for change in the Bank’s at share recognisedof initially is investment The method. capital equity the by for accounted are companies Associated more. or cent per 20 of interest ship influence. As arule, influence iswhere substantial the Bank has an owner- substantial has Bank the which in companies are companies Associated A minority’sequity capital, the share isshownasaseparate item. a on presented the In statement. is loss and profit the in result tax after profit under line Group separate the of share minority’s The accounts. Group the of preparation the in eliminated are transactions intra-Group All 2004. carried outpriorto1January combinations business retrospectivelyto 3 IFRS applied not has Bank The intangible assets. on section the under described is recognition first-time after goodwill for Accounting purchase. upon income to taken differenceis negative a while and the fair value of identifiable assets and liabilities is recorded asconsideration goodwill, the of value fair differencebetween positive A 3. IFRS with all combination), accordance in value (business fair at recognised are liabilities and assets identifiable enterprise an of control of takeover Upon eliminated. are elements profit significant all and items sheet balance Mutual control. control, and are at deconsolidated the date on which the Bank relinquishes Subsidiaries are consolidated from the date on which the Bank has taken over are regarded assubsidiaries. activities, undertaking’s the from benefits achieving of intention the with principles operational and financial undertaking’s an control to power the IFRS under sale for held as classified be therefore shall and future, near the in The Group accounts include the Bank and all subsidiaries not due for disposal C onsolidation ssociated . All undertakings controlled by the Bank, i.e. where the Bank has Bank the where i.e. Bank, the by controlled undertakings All 5. C ompanies
rules ofIAS39. rules 10/200 no. cf.circular 2004,Kredittilsynet’s December 21 of regulations lending the Hence valuation of loans in the Group and company accounts complies with instrument’s lifetime. over financial out-payments the expected rate is the interest rate which precisely discounts estimated future interest effectivecash The in- likelihood. or loss or fall value any for deductions with minus or plus method, rate principle, effective interest the from resulting of amortisation cumulative repayments minus cost acquisition is cost Amortised 39. IAS with keeping in cost amortised at measured are Loans in equitycapital. reflected are recognitions these All monitoring. term long to subject loans loss provisions, and in the recovery of previously recognised loan charges and resulted rules new in the sizeableunder losses reductions in balance-sheet over the expected life of the loan. Calculations of specified and non-specified were routines new established connection for recognition that of loan In losses, and losses. loan charges and are loans now amortised of recognition 200 January 1 On L equitycapital method. which itvaluesusingthe entity controlled jointly a in investment an as AS Gruppen 1 SpareBank in participation its classifies Group The owners. the among agreement by regulated is collaboration 1 SpareBank the of structure governance The • • • • • • Group’s tothe which come following knowledgeonthe lossevents: data observable includes asset financial a of impairment value of evidence must be possible to measure the result of the loss event(s) reliably. Objective one or more events occurring after first-time recognition (a of loss result event), a andbe it must impairment Value exposure. the service to flows cash objective evidence of if, value only impairment exists and which if, is likely impaired been to reduce has future assets financial individual of value The impairment. that exists a financial asset or group of financial assets havesuffered value At each balance sheet date the Group considers whether objective evidence Value information values. sheet onbalance relevant more provides value fair at loans interest fixed recognising that interest rate swaps which through are recognised at managed fair value. It is is the Group’s loans view interest fixed on risk rate Interest interest. as as value changes. Accrued interest and premiums/discounts are recognised due to changes in fair value are recognised in profitthe statement loss and Fixed interest loans to customers are recognised at fair value. Gains and losses
oans and active markets for the financial asset are closed due to financial problems the the Group grants the borrower special terms in light of financial or legal breach ofcontract, interest and suchasfailure topayinstalments borrower theissueror part of the difficulties on significant financial restructuring borrower’s ofthe aspects situation the debtor is likely to start debt negotiation or other financial financial other or negotiation debt start to likely is debtor the I mpairment on 5 L . The lending regulations are considered to conform to the the to conform to considered are regulations lending The . oan 5 L SpareBank 1 Midt-Norge switched to IAS 39 for for 39 IAS to switched Midt-Norge 1 SpareBank osses F inancial A ssets
sheet and accounted for by the same principle of amortised cost. All fixed All cost. amortised of principle same the by for accounted and sheet balance the in “loans” item main the under entered are leases Financial L statement. provisions, are loss profit recognised and inthe by loss provisions, as well as surpluses and deficits in relation to earlier loss covered not losses Actual provisions. loss such in reflected are provisions are classified as actual losses. Actual losses covered by earlier specified loss Where the balance of evidence that suggests losses are losses permanent, A arise. inwhichthey period inthe statement loss profit and in the nised susceptible to value impairment. Losses due to value impairment are recog is value at fair recognised assets financial of group or asset financial a that exists evidence whether Group date At of eachthe assesses sheet balance Value potential problem loans. as loss,are Group classified willincur that the but where the customer’snon-performing makesfinancial situation it likely overdrawn by 90 days or more. Loans and other commitments which are not ment and interest payments are 90 days or more past due or credit lines are is included in the Group’s lists of non-performing commitments once instal and non-performing as regarded is customer a to commitment overall The N to write-backofcollectivelossprovisions. of negative migration after loans were granted. Positive migration will lead migration between rating classes and the increase in expected loss as a result Collective loss impairment provisions are calculated on the basis of negative loss statement. and profit the recognisedin is reducedloss through provisionthe a and account is asset the of value carrying The rate. interest effective original asset’s (excluding flows future credit cash losses that have not been future incurred), discounted at the financial estimated of value present the and value carrying asset’s the between difference the as measured is the impairment of size the impairment, value of evidence objective is there Where overall ofvalueimpairment. assessment an in included not are identified, being still is or identified, is impairment value where and impairment, value for tested individually are that Assets systems. Customers are anonymised, as required by the Personal Data Act. assessment credit bank’s the in customer single every of creditworthiness the of assessment continuous involves migration customer Determining loss. change inexpected and migration negative measuring by done is This groups. such for rating in trend the measured by is assets financial of groupsValue of impairment credit riskcharacteristics. or not, that asset is included in a group of financial assets sharing the same significant asset, financial assessed individually an of impairment value of exists evidence objective no that decide Group or the Should basis. collective individual an on assessed is impairment value of evidence objective the significant, individually not are which assets financial of case the In impairment. value suffered have assets financial significant individually that exists evidence objective individual whether first assesses Group The eases ctual on- P I erforming and mpairment of L osses L P oans otential R ecognised at P roblem L oans F air Value - -
measured at amortised cost using the effective interest rate method; see method; rate effectiveinterest the using cost amortised at measured are maturity to held as classified bonds and instruments market Money carried out at differing intervals in relation to the size of the investment. valuation of all share investments have been established. 39.4 IASThese under price valuationscost at valued areare measured the opening balance is recognised in equity. Shares which cannot be reliably available for sale are also measured at fair value, but the change in revenuefinancialfrom otherinvestments.as classifiedunits as Shares and value from recognised is balance opening the from value in change and value, fair at All financial instruments classified at fair value through profit/loss are measured hedging instruments. as earmarked are they unless profit/loss through value fair at reckoned fair value through profit/loss or as held to maturity. at classified are Derivatives bonds are andinvariably instruments market Money sale. for available as or profit/loss through value fair at either classified are units and Shares market money units, and instruments shares and bonds, and derivative comprise currency and derivatives interest-rate instruments. and Securities Securities and equipment. and The Bank has no contracts of the type “sale and lease back” of plant, property effectivethe interest. revenues within the lease’s expected lifetime are included when computing depreciation plan a is set When up, the lifetime. individual assets expected are, over to the basis extent necessary, linear a on depreciated thereafter and cost acquisition at recognised initially are – properties owner-occupied and properties investment from apart – equipment and plant Property, P income’. operating ‘other under included is Profit/loss notes. in specified are are and liabilities and assets liabilities’ ‘other companies, and assets’ ‘other under sheet balance the in incorporated limited acquired of case the In is taken tosell. decision a when ceases depreciation initiallydepreciated, are which assets of case the Bank’sIn the and properties. loans bad with connection overin are dealt with sell under IFRS to decided has Bank the of Directors of Board the which Assets N be identified. level atwhichcash flows can lowest at the done is Testing impairment 36. value forIAS with keeping in impairment, any revealing to view a with test depreciation annual an to subject is but amortised, not is Goodwill Consolidation. under description see liabilities; and assets identifiable of value fair the and business a of purchase upon Goodwill arises as the difference between the fair value of the consideration are present. sheet balance inthe entry for conditions the once recognised be will assets intangible Other Group. Midt-Norge 1 SpareBank the in goodwill comprise only assets Intangible I the account of this method under the section on loans. O ntangible roperty, perations on- C urrent P A lant and ssets A ssets D erivatives 5. This type of asset is for the most part assets taken E H quipment eld for Sale and D iscontinued 6 . Routines for ongoing for Routines .
73 Notes Notes 74 interest rate and are amortised over expected lifetime. over expected rate areinterest amortised and effective of computation the in included are lending and funding bearing effectiveusing the Allcharges tointerest- rate connected interest method. measured at amortised cost are recognised in profit/loss onare anwhich ongoing liabilities basis and assets to related expenses and revenues Interest I recoverable tocomputethe used estimates amount. in change a is there where reversed are write-downs assets, other of case the In reversed. not is goodwill of Write-downs profit/loss. in recognised are Write-downs amount. recoverable the exceeds entity flow-generating cash- or asset an of value recorded the when undertaken is Write-downs yet available for are computed. use, not assets intangible and lifetime, useful unlimited with assets goodwill, Each year on the balance sheet date recoverable amounts are computed on asset’s recoverable amount. impairment. Should such indications be value present, an of estimate is indications made any of the ascertain to date sheet balance the on reviewed exceptions, some with are, bank’s sheet the balance on recorded Amounts W inloanlosses. ordeductions are shownasadditions of suchassets respectively, IAS 2 or IFRS as holdings or non-current assets held for sale and are accounted for under, realisable value. assets Repossessed which are to be realised are classified such commitments. When repossessed, the assets are valued at presumed in a number of cases takes over assets that have been put up as security for of and guarantees,its loans As treatmentpart the Bank of non-performing R income. operating other in recognised is balance opening the from change value the concerned, are properties investment Where 13. Note in separately presented are properties investment to related changes effectvalue the of and expenses operating and Rentals property. individual the to specific is that risk and account the interest rate level, general risk present in the real estate market and is based on discounted cash flows. The required rate of return takes into accounts the eachof at closing faircalculationof The updated 40. is value IAS with keeping in value fair at measured is and property investment as Property held in order to earn rentals or for capital appreciation is classified a to subject soindicate. inkeeping circumstances depreciation test withIAS36when are depreciated are which equipment and plant Property, • • • ofproperty,IAS 16.Lifetimesofvariousclasses are: equipment plantand Owner-occupied property is accounted for by the cost method, in keeping with which is mainly utilised by the Bank or its subsidiaries for their property own is property purposes. owner-occupied 40, IAS in definition the to According valued onacollectivebasis. are but impairment, value individuallyor valued lifetime forvalue, residual not are equipment, office other significance, minor and of PCs example for estimated residual value. Property,of taken plant is and account equipment and whichlifetimes, differingare with individually components into up split nterest epossessed rite-downs years IT equipment Machinery Buildings R evenues and A ssets 3 years 50years 25 and 5. Any losses/gains upon disposal or revaluation E xpenses
balance sheet item. sheet balance appurtenant the as way same the in recognised are items monetary than based on hedging principles. Gains and losses on conversion of items other equity in directly recognised are they unless profit/loss, in recognised are date sheet balance the on items monetary of holdings of conversion on or transactions executed on losses and Gains rate. exchange transaction the at kroner Norwegian to converted are currency foreign Transactionsin T transaction iscompleted. balance sheet items generate innot do the which Bank’sobjects investment accounts other or are financial property recognised of instruments, mediation in or profit/loss sale whenthe with the connection in charges and Fees provision of the service. The same applies to ongoing management services. accrue in accordance with a consultancy agreement, usually in step of with the calculation the in effective included interest and recognised are in profit/loss accordingly. but Consultancy fees commission, as entered not are instruments interest-bearing to related Charges service. the of provision the with step in accrued generally are expenses and income Commission C contract. over termofthe the income interest and not utilised in hedging the contexts, premium/discount as is amortised (HTM) maturity to held as classified instruments interest-bearing of case the In investments. financial other from income as classified be will value In the case of interest-bearing instruments measured at fair value, the market accounting nor the taxableprofit. accounting northe the neither affect which items first-time-recognised on nor purposes, tax for deduction no is there which for goodwill on tax deferred of case the in value of assets and liabilities. However, liabilities or assets are not calculated differences i.e. the difference between balance-sheet value and tax-related of case deferredIn the aretax, liabilities or assets calculated on temporary Deferred tax is accounted for by the liability method in keeping with IAS 12. profit year.for the taxable the on calculated tax is tax Period tax. deferred period and tax) (payable the in tax comprises account loss and profit the in recorded Tax I hedged cash flowis the realised. when periods profit inthe through back written are equity in recognised changes value Accumulated value, and the value change from the openingfair at balance shown is is recognised instrument hedging in the equity.hedging, flow cash of case the In are recognised balance inprofit/loss. opening the the fromvalues and these in changes arerecordedfair object at and value, hedged instrument hedging the both hedging, value fair of case the In instrument. hedging the object and hedged the of valuation market the in account into taken is spread credit option in IAS 39. Hedging of these loans is dealt with at portfolio level and value fair the on based valued market are loans fixed-interest Bank’s The effectiveness.not taken ofhedge toaccountinrespect against movements in the market protects interest rate. Bank Changes the in credit operations spread hedging are its In risk. rate interest its manage to hedging value employs fair Bank The sheet. balance the in entered first when hedge a of effectiveness the documents and evaluates Bank The H ncome ransactions and ommission edge A T ccounting axes I ncome and H oldings in E xpenses F oreign C urrency
Loss assessments are made as part of the assessment of loan losses, losses, loan of assessment the of part as business. made ordinary are its assessments Loss of part as guarantees financial issues Bank The U contributions. employer’sbe shown without the will formsOther ofover-financing contribution. employer’s accrued an represent also will premiums Prepaid scheme, and employer’s contributions are due on uncovered commitments. pension the into payments on accrue contributions employer’s Norway In commitments. pension termofthe expected tothe a pathcorresponding determined on the basis of is the rate market discount interest The rate levels. forrate government interest actual bonds for and adjusted classes asset Expected return on pension assets is based on historical returns on the various measured atfair transaction costs. valuelessexpected the pension assets and accrued employer’s contributions. Pension assets are interest on expenses previously accumulated rights less expected return on and period the in accumulated rights comprises cost pension period’s The ageof50. atthe rights starts pension of accumulation and scheme multi-company a as treated is AFP pensions. and some specific agreements on early retirementpensions and supplementary There are in addition commitments under the Early Retirement Scheme (AFP) accumulation period. been accumulated, have while the to non-accumulated deemed portion is portion accrued over the the residualof respect in profit/loss in recognised are changes) (plan accumulation rights pension periods’ previous of Costs this obligation. 2007. Paid-up havepolicies issued been in connection with the removal of January 1 from as amount basic the times 12 above salaries of respect in accumulation and expected final salary. The Bank phased out the arrangement plan for salaries up to 12 times the benefit basic amount. A basis is taken defined in linear a as treated is which fund pension own its has Bank The reaching ageof62. the upon pension retirement early take can Employees amount. basic the times 12 of majority the assures of pension which retirement a employees scheme pension a operates Bank The P effective usingthe period rate loan. interest on the cost and settlement amount at maturity is accordingly accrued over the loan borrowing difference between Any cost. amortised at measured thereafter are Loans expenses. transaction of deduction after received compensation Loans are initially recognised at borrowing cost, which is the fair value of the L charge IAS12. under tax a as defined not is it though even charge, tax total the of part as tax Capital tax is presented as tax in the bank’s accounts. The Bank views capital the of taxasset. use appurtenant enable that profits taxable future of expectation no is there that extent the to only recognised are tax deferred of case the in Assets In the case of deferred tax an asset is calculated on a tax loss carryforward. ong- ensions ncertain T erm C L ommitments oans 6 8 per cent of final salary limited to limited salary final of cent per 8
must be written up before dividends can be paid to shareholders or before or shareholders to paid be can dividends before up written be must below falls adequacy should the bank’s tier 1 capital adequacy fall below can require hybrid capital to be written down in proportion with equity capital 1 capital up to limit of 15 per cent of aggregate tier 1 capital. Kredittilsynet interest does not accumulate. Hybrid capital is approved as an element of tier is investor the subsequently entitled to that interest has paid, not i.e. been obliged to pay interest in a period where dividends are not paid, and neither Hybrid capital denotes bonds with a nominal interest rate, but the Bank is not long-term loans. balance sheet and are measured at amortised cost in the same way as other the in liability a as classified are loans Subordinated capital. 1 tier of cent per 100 to up at eligible are loans subordinated perpetual while purposes, at eligible are loans subordinated Dated liabilities. other all behind ranks debt Subordinated Subordinated a orlegalcontractual obligation. has Bank the where cases in provisioned are expenses Restructuring are substantial. suchcommitments equity where on commitments uncertain which do not meet the criteria for recognition in the financial consequences canbe reliably calculated. Information is disclosed there is a preponderant likelihood that the commitment will materialise and see Note 19. Provisions are made for commitments where other uncertain are based on the same principles and are reported together with loan losses, as equity capital until the proposal isfinally proposal as equitycapital untilthe adopted. classified is dividend Proposed statement. capital equity the in and report Directors’ the in out set is dividends for proposal Directors’ of Board The were approved for presentation. of the Board of Directors this assumption was met at the time the accounts view the In assumption. going-concern the on presented are accounts The significant. illuminatedif datewillbe sheet balance not knownonthe were that circumstances concerning Events accounts. the in reflected fully will be included in the information base for accounting estimates and thus be and which relate to circumstances already known on the balance sheet date, publication, for approved are accounts the which at time the to up Events can toapprove thereafterrefuse accounts,but not tochangethem. the Directors has reviewed them. The Supervisory Board and regulatory authorities approved tobe accounts are for deemed The Board of the publication once E Board. by todeclaration Bank’s dividend the ofthe period Supervisory Dividend on primary capital certificates is recognised as equity capital in the D format. reporting secondary its as deposits and loans of distribution industry and sectoral a presents Bank format. The reporting primary its keyas subsidiaries, the as The Bank has the corporate market, retail market and capital market, as well Segment cost. at amortised equity capital is written up. Hybrid capital is shown as other long-term debt
vents ividend A fter the R eporting D ebt and B per cent. Written-down amounts on hybrid capital hybrid on amounts Written-down cent. per 6 5 alance Sheet 0 per cent of tier 1 capital for capital adequacy adequacy capital for capital 1 tier of cent per 0 H ybrid C D apital ate 5 per cent or total capital
75 Notes Notes 76 which is independent of the Group’s ofthe which isindependent areas. business Division Management Risk the by out carried are reporting and monitoring risk Overall Directors. of Board the and Administration the to reports risk The Group’s overall risk exposure and risk trend are monitored through periodic risklimits. keyand portfolio limits risk to relative positions measuring by monitored and gauged also is makes it possible to compare risk across risk groups and business areas. Risk continuous monitoring of return on capital. Calculation and concerned, of business risk-adjusted the capital attending risk estimated the on based areas business to capital allocating entails It Midt-Norge. 1 SpareBank at ment Return on risk-adjusted capital is a key strategic target of internal manage isextremelyevent occurring low. theBank defines risk management limits to ensure that the likelihood of an available, are needs capital calculating of methods recognised no where types risk of case the In cases. some in assessments expert requires less the none calculation but capital, risk-adjusted and loss expected compute cent of all possible unexpected losses. Statistical methods are employed to Group. The Board has decided that the the risk-adjusted capital should cover 99.9 per by incurred risk actual the meet to needs it considers Group the capital of volume the is capital Risk-adjusted period. 12-month a in lost be to expected be can statistically which amount the is loss Expected losses. unexpected capital tomeet (economiccapital) needed adjusted The Group’s risk is quantified by calculating expected loss and the need for risk- • • • achieved through: This willbe management. asset prudent stability and financial toensure also designed Group’s strategic the development and support target to attainment. intended The riskis management Group regime the is within management Risk strategies. and in such Groupa way that the progressesrisk profile with its adopted in line emphasis to measuring, identifying, managing and monitoring much central risks gives Bank The policy. management risk Bank’s the in down laid are Midt-Norge’s management 1 risk underlyingSpareBank principles The capital adequacy. regulatory economic capital and necessary loss, expected return, risk-adjusted rating, for targets through quantified is profile risk Bank’s The position. financial Bank’s the impair apply risk monitoring of such high quality that no single event will seriously to and profile risk moderate a maintain to aims Midt-Norge 1 SpareBank F Note 3–Financialriskmanagement •
inancial A sound understanding of the risks that drive earnings and risk costs, costs, risk and earnings drive that risks the of understanding sound A featuring riskculture awareness ahigh riskmanagement A strong Group’s market reputation inthe and operations Avoiding unexpected negative events which could be detrimental to the strategy thereby creating animproved basisfor decision-making Striving for an optimal use of capital within the adopted business business adopted the within capital of use optimal an for Striving R isk M anagement -
and the CEO further delegates authorisations within this overall authorisation. lending authorisation to the CEO within the adopted credit strategy and policy, to secure The return. Boardthe risk-adjusted of delegatesDirectors overall and strategy credit bank’s the with conformity in managed be to portfolio Bank’s the loan enable to designed is system Bank’sclassification The risk quarterly Board ofDirectors. tothe reported and Division Management Risk the by basis continual a on monitored is Compliance with credit strategy and limits adopted by the Board of Directors centofownfunds. 10per above exposures of number and quality credit to as requirements and business of lines within capital economic of application maximum to limits market, tion risk is managed by distribution between the retail market and corporate maximum economic capital (UL) allocated to the credit business. Concentra maximum expected loss (EL), maximum portfolio default probability including profile, (PD) risk and the for guidelines contain strategy,and main bank’s the from derived are policy credit and strategy creditBank’s The portfolio. bank’s risk appetite by establishing objectives and limits for the bank’s credit the Bank’s strategy,concretises the credit of Directors review of Board the annual its Through Group. the facing risk of area largest the is risk Credit Group. tothe commitments tohonourtheir orcounterparties customers of unwillingness or inability the fromresulting loss of risk the is risk Credit C expected drawings oncommitments. expected of account taking by default of time the at exposure estimates Bank The E recommendations. international and criteria internal meets accuracy models’ the that confirm results validation The levels. PD estimate to and customers rank to ability their to respect with both year per once least at validated are models The writedown. impairment in addition to two risk classes for exposures in default or subject to individual PD, on based classes risk “healthy” nine of one to assigned are Customers current economicconditions. under 12months next ofthe course are based on point-in-time ratings, and reflect the probability of default in the financialposition along with internal and externalbehavioural data. The models of default. The calculations are based on scoring models that take into account The Bank’s credit models are based on statistical computations of probability P Bank’sThe build onthree central credit models components. follow-up. ordinary unlessactionistaken debts beyond their to service with customers who are clearly unable, or are highly likely to become unable, The Bank has a division dedicated to credit support which takes over dealings are graded authorisations Lending riskprofile. by and sizeofcommitment xposure at redit robability of R isk D efault ( D efault ( EAD PD ) ) - and establishes a framework that promotes a long-term perspective perspective long-term a promotes inliquidityprocurement. balance and that framework annually a strategy establishes liquidity the and reviews Directors of Board Bank’s The by and employing long-termfunding. instruments, sources and across funding a variety its of liquidity markets,risk by funding diversifying mitigates Bank The persist. to situation this expects Bank The capital. of bank’ssaving havethe sourcesbehaviour other heightened on dependence funding rose by NOK 4. 57 per cent at 6. end-200 Due to increasing lending activity, money market bank’s the 2007 was loans to ratio deposits of The Bank’s source of important financemost At is deposits. end- customer obligations. Liquidity risk is the risk that the Group will be unable to honour its payment L Group’s the and short, rate interest riskislowtomoderate. as a whole. Interest rate lock-ins on the Group’s instruments are essentially interest rate exposure within each maturity band and across all to applyingmaturity limits separate bandswith bands, maturity various for change this of rate change of 1 basis point. The Group utilises analyses showing the effect a from resulting instruments rate interest of value in change the of terms in viewed be can positions rate interest all on risk The securities. interest fixed in funding and loans interest fixed on mainly arises risk rate Interest by authorities. maximumlimitsset are the wellwithinthe the adopted limits are reported monthly to the Board of Directors. The limits to relative exposures and Division, Management Risk the by monitored is adopted yearly by the Bank’s Board of Directors. Compliance with the limits are and year a once least at reviewed are limits The scenarios. Norway) of Authority Supervisory (Financial Kredittilsynet’s by employed tests stress in basis a with instruments equity to exposure on limits defines Group The markets. currency and fixedincome inthe positions and bonds shares, in investments for limits detailed through managed is risk Market rates,prices suchasinterest prices. exchangerates securities and market observable in changes from resulting loss of risk the is risk Market M folio system. economic capital necessary (UL) as well as classification in the bank’sport and (EL) loss expected of calculation the underlie parameters three The reliability. models’ the realised valuesare validatedtotest actual direct costs of recovery. Values are determined using standard models, and value of the underlying collateral, recovery rate on unsecured debt, as well as The Bank estimates the loss ratio for each loan based on expected realisable L iquidity oss Given arket R R isk isk D efault ( 6 billion in the course of 2007. Moreover, changes in L G D ) per cent comparedcent with per 55 -
two factors: Parts activity are of the currency market related in the to exposure through its through risk foreign exchangeexposures. customers’ exchange foreign indirect to exposed also is Bank The times. all at hedged fully not is risk which on items sheet balance certain on margin interest net the with connection in arise also will risk exchange currency since such positions tend to be difficult tohedge to the full. Foreign defaulted loans in foreign currency and with equity capital investments connection in foreign in arise may risk exchange foreign some However, risk. such incurring not to view a with risk foreignexchange manages Bank The F annualreport. inthe in aseparate chapter details Further of risk management and exposure are included in notes and reduce liquidityrisk. of committeddrawing tofurther rights ismaintained reported to the Board of Directors on a monthly basis. A reserve in the form Compliance with the limits is monitored by the Risk Management Division and scenarios. crisis industry-related and deal withbank-specific to plan contingency a has it and conditions, market normal under funding external fresh without months 12 for survive to is objective Bank’s The degree of balance in the 0 to 3 month maturity band. See Note 3 analysissensitivity bank’s ofthe Note rate interest risk. See band. maturity month 3 to 0 the in balance of degree reasonable a be however will There month. 1 of space the within repriced be can that assets exceeds far which portfolio deposit floating-rate a have typically will Bank The hedged. fully be cannot which risk rate interest an Loans and deposits where the Bank is able to change the interest rate entail markets. fixedincome of changesinspread between for maximum exposure per maturity band. The Bank also manages the risk the yield The curve. risk of non-parallel shifts is addressed by setting limits The Bank measures interest rate risk as the profit effect of a parallel shift in I See Note37for analysis sensitivity bank’s ofthe foreign exchangerisk. fully atalltimes. hedged not is risk which on items sheet balance certain on margin interest net the with connection in arise also will risk exchange Foreign full. the to hedge to difficult be to tend positions such since currency foreign in investments arise in connection with defaulted loans in foreign currency and equity capital a view to not incurring such risk. However, some foreign exchange risk may with risk exchange foreignbank’s other the manages Division Finance The risklimits. division (SpareBank 1Markets) withinestablished for the Bank, and the taking of currency positions by the bank’s capital markets Customers’ exposure in the currency market resulting in an indirect exposure nterest oreign E R xchange ate R isk R isk 6 for
77 Notes Notes 78 g principle accountin the net position. position. net the assess to used is offerprice or bid relevant the case opposite the In zero. means for example that interest rate risk within a maturity band is virtually position” risk “Neutral applied. be will rates middle approximatelyneutral, is bank’s position the risk where cases In forunderlying items. movements price historical on based volatilities estimated or volatilities implicit ved obser be will volatilities options, of case the In market. the in obtained is the price of underlying items, for example interest rates and exchange rates, Fair value of derivatives is usually determined using valuation models where F share. reliably Shares whichcannot be price. carried atcost valuedwillbe values will generally be based on valuations or the latest known trade of the available for sale will also as be recognised classified at fair Assets value uncertainty.through equity. with Market encumbered be could assets Such analyses transaction pricesorexternal company.internal valuations, ofthe on based be will be shares key mainly Some market. will active an loss in traded and securities profit through value fair at recognised Assets F which have migrated negatively dateofapproval. the since will cause loss. Calculation is based on increase in expected loss on portfolios commitment which identify to possible not is it where but risk credit rising Collective write-downs are calculated for groups of commitments subject to relevant objectiveinformation. larger than NOK 250,000 that are in default, or where the Bank has other exposures of case the in considered Write-downis principles. same the on based calculated is commitments market retail of write-down Individual were initiallylosses determined. discounted cash flow basedof onvalue thecurrent effective the interest and ratevalue at book theloan’s time the specified between difference the as calculated is write-down Individual write-down. individual for assessed are in payment default, negative migration or contravening other objective criteria The Bank rescores its loan portfolio monthly. Customers in a poor risk class, L Note e 4–Critical air Value of air Value of osses on L oans and Guarantees D E quity erivatives C apital I s nterests timate s s andasse ssment -
resulting from changes in the parameters mentioned will in large measure large in will mentioned parameters the in changes from resulting changes Estimate sheet. balance the in shown commitment net the to not major significance. Uncertainty largely relates to the gross commitment and the general trend all in of of the number which disability arepensioners, of inflation rates, wage and trend,turnover, interest assets, the basic pension state pension on entitlement return and including: estimates, of number a on based are year the for cost pension the and commitments pension Net P are todifferent assigned amatterofuncertainty. willalsobe assets substantial uncertainty, and in some cases the methods whereby cash flows expected future cash flows. Cash flowestimates will invariablyof be discounting subject to on based largely are assets intangible of tests Write-down I derivative. the of term the over risk credit lower with transactions such against measured risk, this will be taken into account by amortising the original price differencecredit lower a with transactions in basis a with obtained that are prices market extent the To risk. credit underlying an reflect will price the Bank, the than rating credit poorer a has counterparty the where derivatives For market Group’s atthe area isdiscounted and equitycapital hurdle rate. the averagein on earnings based calculated is Group the in goodwill Other cent). for (11per similarbusinesses over 20 years and is discounted at the risk-free interest rate + risk premium on the loan portfolio is also calculated (0.2 per cent). Cash flow is calculated bank’s expense ratio in relation to total assets (1.33 per cent). Expected loss of five years. Allocated expenses are computed with reference to the parent total a to extended be currentlyto averageis used, four-year A concerned. area market the from income other average on and margin, and average portfolio on based estimated are Earnings area. market the in earnings on based estimated is flow cash A area. portfolio/market purchased the in trend the on based calculated is Fellesbank Romsdals to related Goodwill Goodwill changes. estimate charged wayasother same toprofit inthe immediately be not and period earning remainingaverage over accrued be
ntangible ensions s concerningtheueof A ssets
B Individual allowance for Loans and advances to customers 2007 types of assets (loan) allocated geographically in a separate note under loans. The Bank operates in a limited geographical area and reporting along the lines of geographic secondary segments provides little additional information. Significant are not a separately segment and appear under the item “unallocated” together with activities which cannot be allocated to either private or formatbusiness segments.of reporting takes as a starting point risk and yield profilesManagement of have variousmade an assessment assets of whichand business reporting areas isare deemed divided reportable intowith respect private to form customers.of distribution, The products Bank’s and customers. ownThe primary investing activities Note 5–Seg impairment on loan adv. of this to Boligkreditt Other assets Group allowance for impairment on loan Allocated Net interest income I Other liabilities and equity Deposits to customers T P Net losses om loans and guarantees Net profit on financial investments *) Operating expense Net fee and comiccion income Total interest income T P ncome statement otal assets otal liabilites rofit before income tax ost-tax return on equity alance (NOK million)
ment information
34 953 34 953 37 1 18 219 23.1 % -2 732 6 734 382 6 55 320 6 -31 -4 7 8 13 55 m cm rm -7 6 6 8 6 9 -
20 662 20 662 20 7 14 18.9 % -130 039 412 441 6 11 148 2 -81 5 23 55 13 72 m - 8 5 6 - -
Spare 46 10 30 44 37 10 arkets 0 0 B ------
ank 1 m e 1 1 iendoms- 98 10 98 egler 1 98 5 5 98 4 0 1 8 4 ------
f a llegro 13 13 13 18 2 13 9 2 5 2 ------
6
Spare 2 323 2 323 2 293 2 323 inans 22 44 43 44 24 B -9 -3 0
8 k 1 - - -
r m idt- egnskap 30 29 8 1 8 0 8 0 8 N ------
orge u
13 445 13 446 12 2 12 3 1 184 1 077 ncollated -127 163 31 - - 66 6 6 6 30 6 0 0 0 2 6 1 1 2 9
t 71 503 71 503 32 434 12 39 0 -2 732 1 045 1 910 1 12 1 12 1 103 -18 -11 6 34 otal 2 71 6 - 5 6 5 5 6 5 6 0 9
79 Notes Notes 80 Individual allowance for 2005 Individual allowance for 2006 impairment on loan impairment on loan B
B Loans and advances to customers Loans and advances to customers Net interest income Net interest income I I Deposits to customers Group allowance for impairment on loan Group allowance for impairment on loan Allocated Allocated Other liabilities and equity Other assets Other assets T Total interest income Total interest income T Deposits to customers T Net fee and comiccion income Net fee and comiccion income Other liabilities and equity Operating expense Operating expense T Net profit on financial investments *) Net profit on financial investments *) Net losses om loans and guarantees Net losses om loans and guarantees P P P P ncome statement ncome statement otal assets otal liabilites otal assets otal liabilites rofit before income tax rofit before income tax ost-tax return on equity ost-tax return on equity alance alance (NOK million) (NOK million)
28 738 33 230 33 230 28 738 1 32 990 28 423 17 821 14 14 179 21.2 % 21.1 % 5 408 328 306 56 5 41 317 5 5 55 298 2 -37 -31 - -4 49 6 12 28 7 77 65 44 37 m cm rm cm rm -2 4 4 6 6 6 9 0 0 3
14 737 17 083 17 083 14 737 13 9 17 070 14 8 11 8 18.8 % 18.0 % 3 11 2 877 -19 -111 -201 -130 392 317 399 397 270 2 411 42 113 234 223 -88 -3 6 65 12 28 5 6 93 m m 6 7 6 4 5 0 0 0 6
Spare Spare arkets arkets -11 B B 34 14 27 31 27 27 ank 1 ank 1 0 0 0 0 1 3 1 3 3 ------
m m e e iendoms- iendoms- 12 102 124 egler 1 egler 1 65 91 91 65 91 91 9 4 8 1 3 1 3 0 5 0 0 6 0 ------
f f a a llegro llegro 86 46 46 86 14 48 8 4 4 2 8 14 19 1 1 6 6 6 1 1 0 6 6 0 0 ------
Spare Spare 1 130 1 617 1 617 1 130 1 473 1 1 101 inans inans 5 14 979 1 -12 B B 18 16 2 31 88 44 41 2 31 5 22 17 -2 -4 -8 -1 -1 k 1 k 1 5 5 5 9 9 1 0 - - -
r r m m idt- idt- egnskap egnskap 23 18 21 17 N N 3 6 6 3 2 1 0 0 3 6 6 0 0 3 ------orge orge
u u
11 105 11 105 11 81 9 569 9 569 1 170 8 9 93 9 919 ncollated ncollated -711 -3 325 209 892 6 392 2 -30 -24 - - -33 -28 23 78 56 5 5 56 - 0 0 0 0 6 5 4 0 2 4 5 1 0
t t 54 327 63 178 63 178 54 327 30 13 4 33 042 10 27 048 27 279 1 116 1 008 2 819 5 9 1 008 -23 -147 -278 -184 280 919 9 56 6 9 otal otal 423 283 990 90 -84 -38 6 90 6 92 44 6 1 6 1 0 0 1 6
Dividend on securities
Capital gains on shares Share of profit, SpareBank 1 Gruppen (NOK million) *) Specification of net return on financial investments Net return on financial investments Net gains on other financial assets Net gains on securities, currency and derivatives
adv. of this from Midt-Norge Invest
N
2 352 1 379 2 190 ote 6 – 2006 973 10 71 87 5 7 0 0
P N arent bank et intere
1 081 3 456 2 375 3 073 1 02 1 0 2007 199 1 12 18
6 56 0 1 5 5 8 5
n
t
t
s I I interest-bearing securities Interest and similar income from certificates, bonds and other Interest and similar income from loans to and claims on customers Interest and similar income from loans to and claims on credit institutions Other interest income Interest and similar expenses relating to deposits from Interest and similar expenses related to the issuance of securities Interest and similar expenses on liabilities to credit institutions and liabilities to customers Interest and similar expenses on subordinated loan capital Other interest expenses and similar expenses (NOK million) nterest expense nterest income otal interest income otal interest expense t income et interest income
2007 233 34 -47 23 43 54 9 6 5
3 470 2 345 1 125 3 1 1 033 1 02 2007 117 18 1 12 6 5 5 3 4 7 5 5 5
Group 2006 190 423 17 65 5 98 4 2 376 1 369 - 1 008 2 247
2006 10 55 665 21 65 87 5 0 2 2
1 916 1 822 2005 2005 955 961 334 4 119 283 27 6 6 66 83 1 42 23 82 4 3 0 2 - 6
81 Notes Notes 82 Note 8–Incomefromother financialin ve
N
55 6
ote 7 – 2006 2006 247 322 399 479 20 2 80 63 20 24 80 12 10 20 92 6 11 14 94 26 71 -2 7 5 9 3 0 0 2 0 8 9 0
P P N arent bank arent bank et commi 2007 2007 140 168 420 501 120 288
-17 -10 2 81 3 80 22 13 18 97 19 60 35 - 1 6 - 6 7 6 6 3 1 3 1 7 6 1 6
t
t
t
t t
t
ss C N N C C - Bonds and money market certificates - at fair value - Bonds and money market certificates -held for trading - Dividend from equity instruments - Dividend from Group companies Value change in other derivatives Value change in fixed income instruments Net value change in hedged fixed rate loans and derivatives Net value change in hedged bonds and derivatives Value change in equity instruments Guarantee commission Payment transmission services Dividend from equity instruments Net gain from currency trading - Equity instruments - held for trading Broker commission Other commission expenses Realised available-for-sale instruments Write-down of available-for-sale instruments - Equity instruments - at fair value Securities trading Portfolio commission, savings products Sales commission, savings products Commission from SpareBank 1 Boligkreditt Payment transmission services Insurance services Other commission income (NOK million) (NOK million) otal net incomes from financial assets at fair value otal commission expenses otal net income from other financial investments otal net commission income otal net income from securities available for sale otal commission income urrency trading ommission expenses ommission income et income from financial assets available for sale et income from assets at fair value ion income
s
tment
s 2007 2007 113 574 659 120 129 288 -17 -10 96 85 3 7 2 80 22 6 22 21 50 -5 - 6 6 7 6 6 5 3 2 1 9 3 1 0 1 6 6
Group Group 2006 2006 156 233 546 628 111 112 131 2 82 64 20 11 24 80 6 12 10 55 22 6 14 26 71 -2 5 9 2 3 3 7 0 8 0 0 9
2005 2005 134 164 491 576 13 2 84 23 3 9 21 83 23 87 6 13 5 15 31 50 -2 -3 5 8 6 2 0 8 0 2 5 3 0 0 3 0 0 8
**) 15 employees were transferred from the Bank’s property company to the parent bank in 2007. *) Refers to change in pension scheme for former Romsdals Fellesbank Note 10–OPERATING E Note 9–O
1 1 3 2006 2006 2006 392 811 31 278 565 392 340 300 274 704 3 71 10 23 55 43 5 97 5 0 1 4 9 1 4 0 1 5 0 - -
P P arent bank arent bank ther operating income 1 9 1 41 2007 2007 2007 433 883 3 291 433 283 300 321 7 720 3 780 103
23 5 21 5 4 6 23 5 5 10 2 2 0 1 4 5 6 0 1 8 0 5 - -
t
t
t
( A Personnel expense Wages Administrative expenses Personnel expenses Operating income real property Property administration and sale of property Pension costs (defined benefit plan) Financial audit Other personal expenses *) Emoluments Controll Committe Of which remuneration to Board chairman Emoluments Board of Directors Ordinary depreciation (note 13 and 14) Tax advice Other attestations Other operating income Social costs Average number of employees Number of man-labour years as at 31 December Emoluments Controll Committe Write-down fixed assets (note 13 and 14) Tap ved salg av anleggsmidler Other non-audit services Number of employees as at 31 December Of which remuneration to Supervisory Board chariman Other operating expense (NOK million) (NOK million) NOK otal other operating income otal personnel expenses otal operating expenses udit fees XPENSE 1000)
(in NOK 000s)
S
1 103 1 41 2 29 1 017 2007 2007 2007 583 5 474 300 338 449 974 283 931 3 11 96 83 39 31 49 79 10 56 6 2 5 8 5 5 3 5 8 0 5 -
Group Group 1 3 1 823 2006 2006 2006 512 990 5 407 300 322 4 910 340 841 9 3 10 46 12 55 14 33 31 5 78 49 5 5 5 5 -7 1 9 1 3 0 0 4 0 6 -
1 4 2005 2005 2005 485 906 48 384 300 279 729 407 817 330 222 173 80 898 70 101 52 6 1 2 27 7 40 5 9 5 9 6 6 5 1 6 0 5 0 -
83 Notes Notes 84
D difference followingofthe The isaspesification before accountingprofit between the the tax,year’s the and year’s taxbase taxcharge. Note 11–Incometax
5 5
eferred tax in balance sheet 2006 2006 -292 -1 -103 -12 -130 610 207 439 123 882 1 17 171 177 137 133 -82 -29 41 6 6 30 -8 - - - - 8 - 9 - - 0 6 1 - 0 0 5 0 0 0
P arent bank 2007 2007 -303 -107 -174 821 805 201 325 124 111 22 230 229 130
-85 -32 -37 -20 -98 -11 91 8 -1 6 - - - - - 0 5 - 5 9 0 0 0 0 0
y
t
t d
t d n
Temporary differences: C deferred tax recognised in the income statement (NOK million) – Business assets Result before tax +/- permanent differences – Leasing items +/- change in temporary differences in acc. with specification +/- group contributions – Loans – Pension liability Capital (property) tax 0.3 % Of which payable tax at 28 % Payable tax in balance sheet Too (much)/little tax provision in 200 Year’ change in payable tax – Securities – remuneration on received dividend +/- change in deferred tax +/- tax on group contributions – Hedge derivates – Equtiy captial instruments – Other temporary differences – Deficit carried forward Temporary differences: – Business assets – Leasing items – Loans – Pension liability – Securities – Hedge derivates – Equtiy captial instruments – Other temporary differences – Deficit carried forward (NOK million) ax charge for the year al temporary differences al temporary differences ear’s tax base/taxable income omposition of deferred tax carried in the balance sheet and effered tax eferred tax asset et
6 , due 2007
1 04 D 2007 2007 -484 -136 -319 -174 -141 eferred tax in balance sheet 861 201 479 134 1 134 111 24 241 24 130 -4 -20 -97 -11 -42 5 8 -2 5 - 1 0 2 - 5 6 0 - 0 6 5 0 5 1 0 0 0
Group 2006 2006 -331 -1 -121 -1 -130 632 219 442 124 918 1 182 177 183 137 133 -93 -93 -29 - 65 6 3 56 5 6 -9 -4 - - 3 0 9 - 5 1 - - 0 0 6 0 0 0 4
2005 2005 -568 -159 -10 -19 -172 -12 672 199 551 154 79 104 218 193 188 192 171 -35 -17 -3 -22 -13 47 10 -1 - - 5 - - 6 0 - 5 - 0 7 6 - 5 0 5 6
D
5 5
effered tax recognised in the income statement 2006 2006 21 % 207 105 247 -47 -49 -39 -29 29 30 90 30 13 4 42 0 0 0 3 1 - - - - 0 0 1 0 0 6 1 - -
2007 2007 25 % -113 201 230 -32 -34 - -37 - -11 -43 5 5 27 19 -8 -2 -4 -1 -3 0 0 - - 0 0 9 8 0 2 0 0 0 - - -
r
t
e
t d
t d n
Temporary differences: C recognised against profit and loss to profit before tax deferred tax recognised in the income statement (NOK million) 28 % of profit before tax – Business assets Non-taxable profit and loss items (permanent differences) – Leasing items Group contributions – Loans Capital (property) tax Too much/little tax provision previous years Recognised deferred tax Use of unrecognised deficit carried forward Tax on gain/loss on discontinued operations – Pension liability – Securities – Hedge derivates – Equtiy captial instruments – Other temporary differences – Deficit carried forward Temporary differences: – Business assets – Leasing items – Loans – Pension liability – Securities – Hedge derivates – Equtiy captial instruments – Other temporary differences – Deficit carried forward ax charge for the period al temporary differences al temporary differences ffective tax rate omposition of deferred tax carried in the balance sheet and econciliation of tax charge for the period effered tax eferred tax asset et
D effered tax recognised in the income statement 2007 2007 19 % -154 200 293 1 -43 -33 - -4 - - -12 - -44 -7 -38 37 10 5 5 5 5 56 5 19 -2 -1 -3 0 0 - - - 2 2 5 5 8 0 3 1 0 3 6 -
2006 2006 20 % -109 -101 219 237 313 -10 120 -30 -99 -49 -39 -29 - 66 66 90 27 78 13 4 42 5 0 0 - - - 0 5 1 0 0 5 9 -
2005 2005 22 % -527 -148 -178 -22 -177 199 551 154 2 104 218 171 -41 - -22 - 5 6 47 10 5 -1 -1 -7 - 0 - - - - 7 2 0 5 0 0 5 0 6 0 85 Notes Notes 86 The gross value of fully depreciated assets still in use is regarded as insignificant.
No need for impairment write down in the parent bank was identified in 2007. A write down related to acquisition in a subsidiary was carried out in 2007. acquisition of 100 per cent of Romsdals Fellesbank in 200 See note 4 for a description of the valuation model for goodwill. The balance sheet value in the parent bank comprises excess value in connection with the Note 14– INTANGIBLE ASSET T The Bank has not provided security or accepted any other infringements on its right of disposal of its fixed tangible assets. P b Note 13–Property, plantandequipment Note 12–O
and other real
he gross value of fully depreciated assets still in use rovision of securities property uildings 2006 2006 447 560 447 1 2 447 327 47 49 96 48 97 81 5 14 6 -8 0 1 0 1 0 0 0 2 0 8 1 2 - - -
m
P P P arent bank arent bank arent bank inventor and vehicles ther asset achinery,
436 531 380 483 2007 2007 95 10 4 49 447 661 447 142 3 447 5 1 6 0
14 6 72 6 19
0 - 0 0 8 1 4 - - - t
a
a
o
Godwill Acquisition cost at 1 January Takeover of subsidiaries (note 28) Deferred tax asset Property, plant and equipment Disposal Assets held for sale Capital contribution to the pension fund Write downs for the year Accumulated write downs 1 January Earned income not yet received Tenants’ rentals Other debtors Accounts receivable securities Goodwill shown in balance sheet 31 December Other assets (NOK million) (NOK million) 142 485 627 428 otal cquisition cost at 31 ccumulated write downs 31 ther assets 10 49 47 80 3 0
b a
o c
s
Current period’s impairment Disposals Acquisitions Current period’s depreciation Accumulated depreciation and write-down as at 1 January Cost of acquisition at 1 January (NOK million) Revaluation ost of acquisitionat 31 ccumulated depreciation and impairment as at 31 ook value as at 31 f which buildings available for sale
S
5
. The remainder relates to the merger and acquisition of an estate agency by EiendomsMegler 1.
D
ecember
D D
ecember 2006 ecember
D
ecember
D ecember
and other real B property
uildings 1 042 2007 2007 460 4 440 24 277 4 6 115 444 329 111 422
6 14 6 6 00 23
0 - 0 1 0 0 5 1 4 0 0 0 1 4 - -
Group Group Group inventor and M vehicles 2006 2006 achinery, 470 582 111 460 947 408 5 4 42 273 4 428 5 10 5 2 5 94 14 5 87 6 0 - 8 3 3 6 4 6 6 0 1 2 1 - -
t 1 865 1 428 2005 2005 1026 otal 585 440 454 48 911 1 4 192 28 9 173 4 81 10 5 5 5 8 14 5 5 0 4 7 6 0 0 9 4 0 5 6 2 4 4 - -
T SpareBank 1 Bilplan 2007 T SpareBank 1 Bilplan 2006 2006 SpareBank 1 Boligkreditt Specification of year’s change Parent bank figures are based on cost price. Consolidated figures are presented under the equity method. Note 15–Associate SpareBank 1 Boligkreditt SpareBank 1 Utvikling DA SpareBank 1 Gruppen A SpareBank 1 Utvikling DA SpareBank 1 Bilplan SpareBank 1 Boligkreditt SpareBank 1 Gruppen SpareBank 1 Gruppen Molde kunnskapspark SpareBank 1 Boligkreditt SpareBank 1 Utvikling DA SpareBank 1 Gruppen Molde kunnskapspark SpareBank 1 Bilplan SpareBank 1 Boligkreditt SpareBank 1 Utvikling DA SpareBank 1 Gruppen
otal he Group’s ownership shares in associated companies and joint ventures: ccounts receivables and liabilities related to associated companies 2006 629 128
01 0 0 0
P arent bank
2007
735 6 10
29 6 0 0 0 A
b
As at 1 January Acquisition/sale IFRS items recognised directly in equity IFRS items recognised directly in equity Share of the associates/joint ventures profit (NOK million) s andj ook value as at 31 C C C Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway ountry ountry ountry
oint venture
D ecember
71 532
55 1 A A A 7 781 9 672 5 7 9 s ssets ssets ssets 424
3 6 6 6
5 5 9 22 6 5 9 04 a 4 9 6 2 2 2 8 0 8 6 dditions/ disposal l l l
iabilities iabilities iabilities
65 696 5 14 112 7 307 9 079 10 0 783 8 909 7 2 221 66 1 6 6 0 30 44 6 6
e L 1 2 3 0 1 0 7 0 oan i i i
- - - -
42 316 10 404 31 4 qutiy change ncome ncome ncome 1 611 1 979 1 1 88 398 55 1 103 5 32 2007 0 4 0 2 0 8 4 0 0 5 781 112 233 -20 p p p
-4 -4 -4
- - D
d
eposits
rofit/ loss rofit/ loss rofit/ loss
Group - - - 7 120 190 233 231 120 189
ividend paid -0 -0
2006 0 0 2 0 2 0 0 0
o
o o
781 498 128 190 -1 -18 Subordinated loan 6
20 20 wnership share wnership share wnership share - -
t
2005 20 % 18 % 27 % 18 % 20 % 20 % 20 % 20 % 18 % 20 % 27 % 21 % 20 % 128 10 498 292 119 otal 1 43 77 10
- - 6 6 5 6 0
87 Notes Notes 88 Yara International TGS/Franklin European Fund, Aksjefond TGS Nopec Geophysical Telenor Sparebank 1 SR-Bank GFB Skagen Global Aksjefond Seadrill Ltd Salmar Tandberg Statoil PA Resources Aktiebo Orkla Odin Templeton Global Smb Odin Templeton Global Odin Europa Smb Odim Seismic Nøtterø Sparebank GFB Norwegian Air Shuttle Norske Skog Norsk Hydro Klepp Sparebank GFB Hexagon Composites Funcom N.V. Frontline Ltd Fred Olsen Energy Fast Search & Transfer Specification of DnB Nor Det Norske Oljeselskap Deep Sea Supply Electromagnetic EMCI value, are recognised at fair valuethrough shares as are loss.Other profit classified and available forsale. fair internally at reported are which and reliablymeasured, be can that Securities sale. for available and value fair categories the in shares classifies Bank The description General Noteg securitie 16–Tradin Crew Gold Corporation Clavis Pharma Biotec Pharmacon Austevoll Havfiske Aktiv Kapital Aker A-Aksjer L
isted companies 2006 477 12 440 314
37 37
6 -
P arent bank P
arent
B
2007 ank 337 2
33
84
5 2 2
- 5 1
t
Shares and units – Listed At fair value through profit or loss – Unlisted Available for sale – Listed – Unlisted (NOK million)
otal shares and units
s
P rinciple* FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV
o interest (%) wnership 0.01 0.00 0.03 1.83 0.00 0.01 0.03 0.01 0.04 0.01 1.8 0.03 0.09 1.39 0.0 0.01 0.01 0.03 0.02 0.03 0.01 0.08 0.01 0.01 0.02 0.1
6 5 6 ------
1 113 894 66 39 243 1 39 330 18 6 5 11 821 17 743 13 404 10 000 32 2 2 8 12 879 37 934 27 488 55 18 128 22 004 18 10 4 holdning 9 8 4 019 6 8 2 7 4 1 3 904 9 2 3 5 5 5 3 318 2 82 7 994 6 6 (no.) 94 000 1 000 1 3 187
O 5 6 6 5 5 6 6 ur 49 40 5 6 12 17 66 03 6 5 5 5 21 9 5 6 1 9 1 9 3 6 9 5 7
2007 665 2 3 6
13 5 56 5 5 - 7 2 2
( NOK A Group cquisition 1 1 4 1 07 5 1 421 2 801 1 044 1 2 1 0 7 080 3 197 1 13 1 284 1 233 1 123 1 7 1 128 1 1 1 1 81 1 08 2 388 cost 000 1000) 6 934 7 5 490 55 880 879 393 6 783 901 55 780 909 9 6 24 66 6 6 98 6 56 2 5
4 5 0 6 1 1 0 6 5 4 5 4 2006 477 12 314
440 37 37 m
- 6
( NOK book value arket value/ 24 10 39 1000) 2 402 3 830 5 1 093 2 5 1 04 1 1 490 1 1 2 1 218 1 030 2 282 2 24 2005 447 092
6 6 704 848 6 828 6 6 6 872 6 5 777 5 6 8 841 408 937 5 55 6 738 8 411 170 241 3 14 4 0 73 83 12 0 5 03 80 29 66 24 27 6 3 5 6 6 5 6 0 3 5 8 6 0 6
T T Others Viking Venture II Viking Venture Tjeldbergodden Utvikling Såkorninvest Midt-Norge ST-Gruppen Sparebankbygg Namsos Namsos Hotell London Mining Sparebankmateriell Spama, A-Aksjer Romsdal Eiendom I Specification of Group Others SpareBank 1 Eiendomsinvest T Teller Tangen Næringsbygg Sentrumsgården Real Estate Central Europe Hafslund Infratek
Proventure Seed B-aksjer Proventure Seed Ansvarlig lån Eksportfinans Bachke & Co NTE-Allianse Adcom Norway Royal Salmon North Bridge Property Kunnskapsparken Steinkjer Infond HitecVision Private Equity Bruhagen Sentrumsbygg Proventure Seed A-aksjer Opplev Oppdal Moldekvartalet Moldekraft ASTI Trøndelag Industriel Aqua Venture Angvik Investor Bankenes Betalingssentral Aker Exploration Aqua Venture * Explanation of accounting principle: FV - fair value, AFS - available for sale.
Salmar Det norske Oljeselskap U ** Of committed capital U Adresseavisen L otal group otal Group investments otal isted companies nlisted companies nlisted companies P
arent
B
ank
P AFS AFS AFS AFS AFS AFS AFS AFS AFS AFS AFS AFS AFS rinciple* FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV FV
o interest (%) wnership 31.30 13. 3 31.00 20.00 10.00 10.42 31.41 1 2 13.17 18.7 27.78 5 0.08 0. 5 8.22 2.24 9.30 0.80 1. 0.81 6 3. 5 3. 0.08 1.39 0.82 1.43 3.4 6 5 0.19
2.79 4.77 7. 7.30 1.1 .28 .01 . . .42 .32 ** 5 5 55 5 56 5 5 5 1 2 5 6 7 8 7 0 6 - - -
**
1 04 900 8 200 000 2 309 941 90 6 28 81 749 3 6 31 99 73 00 000 10 1 1 23 000 65 holdning 7 878 7 2 5 2 11 5 1 2 30 2 707 5 3 000 1 0 2 000 4 81 5 4 900 2 6 5 (no.) 700 121 80 134
000 200 O 6 5 6 2 6 66 3 5 5 5 6 66 6 ur 49 5 00 29 5 6 09 5 00 10 00 4 00 90 1 5 1 5 6 0 8 5 6 0 3 5 8
- - - -
( 494 659 275 731 218 928 NOK A 128 980 18 230 2 11 22 830
33 310 cquisition 6 5 1 000 2 483 2 11
8 2 2 387
2 3 4 1 5 5 1 109 9 972 1 4 5 7 9 5 6 1 39 7 13 cost 44 281 9 302
221 189 740 1 717 3 2 73 2
1000) 5 17 179 2 5 5 5 6 930 5 74 6 97 5 5 00 6 6 6 5 6 01 5 01 00 5 27 3
5 2 5 6 0 0 1 4 4 1 0 2 5 0 0 6 5
m
( NOK book value arket value/ 664 534 327 695 336 839 129 1 43 31 27 248 11 22 830 72 0 38 0 3 18 6 6 1 000
2 483 2 11
8 2 7 0 2 3 4 1 1000) 5 1 233 1 5 1 5 2 392 5 3 030
9 302 892
221 740 1 791 3 2 73 2 2 5 948 17 179 56 2 66 5 6 5 6 94 5 94 23 6 5 5 00 27 6 6 6 5 6 01 5 5 00 5 27 5 6
6 2 5 6 3 0 7 2 5 4 1 2 0 2 5 0 1 6 0 3 9
89 Notes Notes 90 Currency swaps Total currency instruments Foreign exchange derivatives (Forwards) F H Total non-standardised contracts Interest rate swaps (including cross currency) F Total currency instruments Other interest rate contracts Short-term interest rate swaps (FRA) Fx-options Currency swaps Foreign exchange derivatives (Forwards) F Currency- and interest rate intstruments (NOK million) Group notemployhedging. cash Bankdoes flow for The toderivativesnotused, purposes. and hedge toderivativesused, This appliesboth ofallinterest All derivativesare ratederivatives. bookedatrealcase asliabilitiesinthe losses valuethrough are and loss.Gains profitcarriedasassets and description General Note 18–Financialderiv All bonds and money market instruments are recognised at fair valute through profit and loss. General description Note 17–Fixedincomesecuritie C
oreing exchange instruments air value through profit and loss ixed income instruments urrency instruments edging 5 125 4 13 4 137 2006 1 1 1 1 65 66 6 6 4 6 8 8
P
arent bank
5 051 3 388 4 032 2007
180 141 340 340 5 5
38 37
t
M State – nominal – fair value Other public sector – nominal Financial enterprises – fair value – nominal Non-financial enterprises – fair value – nominal – fair value (NOK million)
otal money market certificates and bonds, fair value oney market certificates and bonds by issuer sector Contract amount
7 2 48 978
3 201 3 201 6 6 2 8 1
074 2 ate 847 499 730 6 5 6 31
0 0 2007 -
s
Assets
3 331 123 11 5 19 Fair values
8 8 7 7 3 3 6 -
s Liabilities -2 -2 -24 -222
-4 -1 -32 6 6 -7 -3 -9 8 8 5 6 -
Contract amount 17 131 43 100 1 7 1 7 1 1 284 1 917 5 999 401 56 56 1 18 5 -
2006
Assets
194 1 21 21 20 65 19 Fair values 9 2 9 9 -
Liabilities
-1 -129 -4 -4 - -11 -17 -3 5 5 -9 -2 5 5 0 4 5 5 051 3 388 4 032 2007 -
180 141 340 340 5 5 38 37 Contract amount 12 8
1 087 1 087 1 1 1 4 79
565 5 4 1 Group 6 6 00 5 5 1 9 3 6 3 3 -
2005 5 125 4 13 4 137 2006
655 65 1 1 1 1 65 66 6 6 Assets 4 6 8 8 193 177
1 1 1 23 18 6 6 6 1 1 5 Fair values -
Liabilities 3 686 1 070 1 080 2 2 2005 -2 -228 55 566 -2 41 41 5 - - -1 3 4 5 5 5 0 0 - - - - - concerned. Limited, however, to holdings in accounts denominated in the Norwegian currency. The average interest rate is calculated with a basis in interest income / interest expense in relation to the holding accounts’ average balance for the year Note 19–Creditins This note is virtually identical for the parent bank and the Group. * The market value of currency swaps and forwards and futures is carried net under other assets in the balance sheet. and fixed income instruments Interest rate swaps (including cross currency) F
T
Other interest rate contracts
T
I T
T T
nterest rate instruments otal interest rate derivatives otal currency derivatives otal non-standardised contracts otal financial derivatives otal foreign exchange air value through profit and loss 3.38 % 3.02 % 2 766 3 346 2 766 3 346 1 3 1 797 1 411 1 1 8 2 992 2006 2006 411 5 297 298 193 55 2 49 66 31 5
P arent bank
3.13 % 5 346 5 346 3 402 4.71 % 3 402 1 9 2 107 3 377 1 29 4 2 2007 2007
277 23 397 338 65 6 227
6 01 20 9 6 5 1
t
t t t
Specification of debt on key currencies D Specification of loans and receivables on key currencies L with agreed maturity or notice of withdrawal without agreed maturity or notice of withdrawal Average rate credit institutions Loans and deposits from credit institutions (NOK million) Loans and advances without agreed maturity or notice of withdrawal USD USD Loans and deposits from credit institutions Loans and advances with agreed maturity or notice of withdrawal EURO EURO NOK NOK Other Other Average rate credit institutions (NOK million) titutions –L otal otal otal otal oans and advances to credit institutions eposits from credit institutions Contract amount
91 902 15 828 97 964 1 6 061 5 828
-
2007
Assets
449 131 580 92 92 Fair values oans andad -
Liabilities
-653 -313 -408 -965 -408
-
Contract amount
77 987 16 472 81 660 1 3 673 6
472 v - ance
2006
Assets
423 228 464 228 41 s Fair values
-
Liabilities
-365 -215 -464 -21 -99 3.13 % 5 346 5 346 1 482 4.71 % 5 1 482 1 9 3 377 1 304 4 2007 2007 -
179 277 23 397 338 65 6 227 6 81 20 Contract amount 9 6 1
31 488
18 627
33 744
18
2 256 114 5 Group 13
3.38 % 3.02 % 2 766 1 873 2 766 1 873 1 3 1 411 1 7 1 8 1 2005 2006 2006
411 297 298 193 10 5 2 31 55 6 66 20 Assets 5 5 8 487 293 526 293
40 0 Fair values
Liabilities 3.23 % 2.23 % 1 029 1 029
1 010 2005 2005 454 454 170 11 40
20 2 139 -519 -260 -519 -2 5 20
48 13 5 56 29 5 6 6 3 6 0 9 -
91 Notes Notes 92 Specified by risk group Note 20–L
other customers. Interest rate subsidies on loans to employees are included in net interest income. The lending rate for employees is 7
51 320 51 320 51 001 58 860 51 320 51 001 30 2 33 781 43 918 10 333 17 44 13 927 12 439 8 902 1 1 0 6 1 787 1 791 1 2006 2006 2006 -319 -319 34 239 55 6 471 4 6 60 5 1 12 48 93 17 5 73 5 7 1 5 5 1
P P arent bank arent bank
oans andad 67 938 57 097 34 29 900 12 010 10 300 1 12 20 57 097 57 097 56 808 56 808 3 4 21 144 2 20 2 142 2 2 080 8 1 5 6 6 2007 2007 2007 -289 -289 821 8 999 082 483 470 556 5 56 5
53 42 48 66 87 9 1 5 6 6 6
n
n
t t L O L Financial lease L Bank overdraft and operating credit Building loan Very low risk Very low risk Loans to employees Other subordinated loan capital Subordinated loan capital other financial institutions Retail market Amortising loan Low risk Low risk Subordinated loan capital shown under loans to customers Corporate market Gross loans to and claims on customers Medium risk Medium risk Public sector Impairments High risk High risk Gross loans and advances Default and written down Very high risk Default and written down Very high risk Impairments Gross loans T (NOK million) otal otal oans to employees ending specified by markets oans specified by type otal contracts f this subordinated loan capital et loans to and advances to customers (amortised cost) et loans and advances
v
ance
s tos cu
tomers
70 403 3 30 82 12 90 11 132 1 59 179 59 179 58 878 59 179 58 878 3 47 091 22 910 12 5 2 2 111 2 1 2 040 1 999 8 1 5 6 6 per cent of the best mortgage rate for 2007 2007 2007 -301 -301
141
49 482 5 5 55 8 6 5 128 6 53 47 48 42 6 43 32 91 6 7 6 2 5 5 8 6
Group Group 60 454 52 819 52 819 52 819 52 488 52 488 30 27 337 33 808 43 948 11 18 88 14 147 12 439 1 0 9 302 1 791 1 88 1 1 2006 2006 2006 -330 -330 34 55 6 5 12 6 6 492 4 60 48 5 70 12 81 73 17 5 5 7 7 5 5 6 1
49 618 45 280 45 280 45 280 44 767 44 767 23 22 4 29 032 40 744 1 10 8 1 112 2 783 9 7 839 6 9 894 3 34 1 420 3 1 1 198 2005 2005 2005 - - 12 6 655 56 56 122 5 771 728 5 63 48 41 5 1 6 14 6 14 2 8 5 1 6 4 6 9
Specified by sector and industry L has not been carried out. Collectivewritedownsarecalculated basiscustomerstheofonhave who migrated negatively sinceloanapprovalthe date,forbutwhomindividual writedown reduced. was portfolio the in risk relative and significantly loss, affect expected not did 2007 in growthVolumeDirectors. of Board the byestablished loss expected commitment’s necessary economic capital. Expected average annual net loss is calculated for the next Default12 months.monitoring isbased ontheexposure’s Expected size,loss risk and migration. is Riskwithin pricing ofcorporate the commitmentsmaximum isdoneinlight limits ofexpected loss andtheforindividual Customers are rescored in the Bank’s portfolio management system on a monthly basis. customer in a risk group. classify eachcustomer.classification risk to behaviour.the impairmentfordefaults basisgiven used and Loss (LGD)of also aare Defaultasprobability used earnings, is on figures key of basis the on this does It approvaldate. loan the atportfolio loan the in customersall calculatesprobabilitiesdefault forBank The Exposures subject to individual impairment write down are placed in default category.
51 320 51 320 58 867 21 732 3 33 781 1 oans specified by geographic areas 2 1 4 5 3 411 1 102 1 77 5 1 1 074 8 1 2 1 110 1 098 1 00 1 37 1 79 2006 2006 2006 2006 737 344 44 313 1 7 118 10 55 47 5 274 5 271 982 5 93 82 90 42 6 94 12 5 32 20 43 66 7 6 1 5 5 6 7 7 5 5 5
P P arent bank arent bank 57 097 57 097 67 938 2 38 443 3 17 1 10 2 884 1 1 3 712 3 378 1 719 1 1 9 1 70 9 772 2 784 7 3 908 1 74 1 4 1 099 8 4 1 4 4 091 5 5 2007 2007 2007 2007 121 342 709 8 800 300
2
65 5 6 55 55
87 3 1 42 1 5 66 12 5 70 6 6 5 5
6 6 3 6 2 7 5 5 6 5 6 0 7 2 9 0 1
t t t
t Very low risk Construction, power and water supply Sør-Trøndelag Manufacturing Agruculture/forestry/fisheries/hunting Sea farming industries Public administration Wage earners Wage earners Agruculture/forestry/fisheries/hunting Public administration Manufacturing Sea farming industries Low risk Retail trade, hotels and restaurants Nord-Trøndelag Construction, power and water supply Medium risk Maritime sector Nordland Møre og Romsdal Retail trade, hotels and restaurants High risk Property management Other counties Maritime sector Very high risk Default and written down Other sectors Business services Transport and other services provision Abroad Property management Other sectors Business services Transport and other services provision Gross loans E T L otal otal otal otal otal contracts oans specified by geographic areas xpected annual average net loss
59 179 59 179 70 403 38 739 3 2 18 232 4 137 1 1 3 774 1 3 09 1 91 2 0 9 929 2 493 1 70 3 219 1 1 3 7 4 130 1 74 4 299 1 720 8 498 6 6 2007 2007 2007 2007 130 7 141 128 800 28 339
6 65 5 55 2 55 3 18 4 17 5 5 0 5 5 0 6 7 7 3 3 5 5 6 6 4 6 5 5 1 0 5 5 2 3 0
Group Group 52 819 52 819 60 454 3 33 808 22 1 4 847 3 1 08 2 301 1 238 2 0 8 272 1 907 1 074 2 8 1 179
1 110 1 984 1 37
1 00 5 5 6 1 2 5 6 2006 2006 2006 2006 122 10
4 12
972 274 224 2 370
97 5 6 6 5 5 42 13 32 21 13 6 99 82 04 66 6 6 5 43
7 6 7 5 6 5 3 8 2 5 6 6
45 280 45 280 49 618 29 381 18 14 203 29 032 3 439 1 7 172 1 331 2 4 44 1 319 1 140
3 14 1 072 1 907 1 092 6 2005 2005 2005 2005 150 8
240 78 791
290 3 5 122 55 812 665 5 5 5 801 3 55 23 7 42 6 87 3 92 80 6 56 1 3 7 8 5 7 6 5 5 5 2 4
93 Notes Notes 94
-
2006 2006 2006
118 143 29 10 33 24 34 12 23 12 14 18 - 0 0 4
------4 8 0 6 8 - 2 9 - 1 5 5
2007 2007 2007 121 113 34 3 31 11 11 27 10 13 18 ------2 9 9 1 0 1 4 - 1
- 1 1 1 4 6 5 6 -
t t
t t
in the following way: Gross advances related to financial leasing Sea farming industries Agruculture/forestry/fisheries/hunting Manufacturing Public administration Wage earners Manufacturing Sea farming industries Public administration Agruculture/forestry/fisheries/hunting Wage earners Construction, power and water supply – Maturity less than 1 year – Maturity less than 1 year Construction, power and water supply Maritime sector Retail trade, hotels and restaurants – Maturity more than 1 year but not more than – Maturity more than 1 year but not more than Retail trade, hotels and restaurants Property management – Maturity more than – Maturity more than Property management Other sectors Transport and other services provision Business services Other sectors Transport and other services provision Business services Received income related to financial leasing, not yet earned Net investments related to financial leasing Net investments in financial leasing may be analysed L E I ndividual impairment otal otal otal otal oans and advances to customers related to financial leasing xpected annual average net loss
5 5
years years
5 5 years years
1 999 2 148 1 238 1 387 2 192 2007 2007 2007 130 116 142 142 6 6 10 37 31 3 11 11 13 27 18 10 19 19 44 0 2
1 1 9 7
1 3
1 3 6 5 5 5
1 500 1 469 1 2006 2006 2006 122 147 124 122 9 943 408 404 5 33 34 10 2 13 13 1 23 18 13 29 32 6 00 - 4 8 0 0 0 7 9 3
1 5 7 5 5 5
1 110 1 084 1 110 2005 2005 2005 150 236 842 822 172 1 37 24 11 38 3 10 9 94 18 56 21 6 28 49 29 2 3 5 1 0 6 6 5 6 3 0 0 8 0 6 6
m m t cm rm t cm rm t cm rm
Note 21–Allowance lo for sse
-19 -18 -14 -13 46 31 14 20 37 10 -4 -4 - 2 4 0 0 0 0 6
2006 2006 2006 130 112 202 19 -80 -71 -72 - -18 - -84 6 31 5 2 3 1 1 0 0 0 0 0 5 6
P arent bank 176 143 233 2 -84 -90 -90 -7 -32 - -90 otal otal otal 77 5 3 66 3 5 1 0 0 0 0 4 5
m m t cm rm m m t cm rm t cm rm -21 46 35 13 10 38 4 -6 - -9 -3
2 0 0 5 0 0 0 0 6
2007 2007 2007 130 109 130 -42 -18 -13 -31 78 42 1 -6 9 0 0 1 0 0 0 0 5
otalt 176 113 14 17 otal otal -12 -47 -39 -22 -34 47 11 14 2 0 0 0 0 0 0 5 6 6
t
c ii R
Actual losses on loans = cover loss on loans, guarantees etc. + Increase in write downs of commitments Period’s change in collective write downs = + Period’s collective write down to down loans, guarantees etc. subject to individual write down - Confirmed losses in the period on Confirmed losses on loans + Merger Romsdals Fellesbank - Reduction at 01.01., implementation + Merger Romsdals Fellesbank - Reduction at 01.01., implementation Incomings on previously written - Reversal of previous years’ write downs Period’s change in individual write downs + Write downs of loans not previously loss on loans, guarantees etc. effect of lending regulations on loans, guarantees at 01.01 on loans, guarantees etc. not previously subject to individual loans, guarantees etc. not previously effect of lending regulations on loans, guarantees etc. at 01.01. not previously written down previously written down Individual write downs to cover loss Collective write downs to cover loss (NOK million) write downr otal losses on loans, guarantees etc. ndividual write downs ollective write downs C I ndividual write downs to cover loss ollective write down to cover
s onloan andad
m m t cm rm m m t cm rm m m t cm rm -21 47 35 13 10 38 4 -5 - -9 -2 5 2 1 1 5 0 0 0 0 6
2007 2007 2007 v 138 113 138 ance -18 -44 -1 -32 81 47 18 -2 9 0 0 1 5 0 0 0 0
185 116 1 184 otal otal otal -40 -24 -49 -34 11 14 28 5 -6 s 3 1 1 0 0 0 0 0
m m t cm rm m m t cm rm m m t cm rm -19 -18 -13 -14 46 31 14 20 10 37 -4 -4 - 2 6 0 0 0 0 4
2006 2006 2006 138 116 199 214 -80 -7 -7 -19 -48 - -83 32 6 28 4 1 6 6 4 0 0 0 0
Group 184 147 23 278 otal otal otal -84 -94 -94 -32 - -78 -89 78 5 38 3 2 2 0 0 0 0 6 m m t cm rm m m t cm rm m m t cm rm
112 -14 -32 -32 -20 -4 64 37 28 32 1 1 12 23 - 0 0 6 6 5 5 1
2005 2005 2005 214 199 178 2 -66 -1 -1 -8 -44 -81 -72 - 81 19 2 71 6 37 5 6 6 6 5 0 0 3
-113 278 236 113 290 314 otal otal otal -38 -1 -1 -98 -7 -78 -80 -4 2 41 8 6 6 5 6 6 5 0 8
95 Notes Notes 96
The realisation value of collateral for individually-written-down loans amounts to NOK 179 million for the Group at end-2007. Interest taken to income on defaulted and problem assets totals NOK 11,1 million.
c 2003 524 370 894 439 4 55 2006 -84 -31 -7 -14
11 11 12 - 1 1 6 1 6 2004
381 28 312 3 5 5 4
2005 389 233 270 3 22 5 2
2006 2007 332 143 47 2 210 -12 65 -10 5 -1 -3 -3 -7 - 8 3 1
- -
l 2007
324 113 437 228 209
n
Agriculture, forestry, fisheries and hunting Building and construction, power and water supply Industry and mining Fish farming Other transport and communication Wholesale and retail trade; hotel og restaurant industry
Financing, property management and business services Abroad and others Private sector Collective write down, corporate Collective write down, retail L osses on loans to customers osses specified by sector and industry Individual write downs Total commitments in default Commitments in default not at risk of loss Commitments in default at risk of loss commitments at risk of loss ommitments in default and et commitments in default
2007 347 11 4 232 231 6
6 3
2006 343 147 490 272 218
2005 387 23 270 3 23 5 2007 6 3
-10
-6 -1 -3 -1 -7 0 - 9 5 1 1 2004
376 290 312 3
5 4
2003 515 379 894 439 4 2006 -84 -31 -80 -14
11 1 12 - 1 6 5 5 1 1
1 1
2002 630 31 6 92 1 9
1 11 2005 2001 699 417 484 -38 - -14 -12 2 11 32 5 11 -1 -9 -4 6 2 6 1 4
Note 22–D
30 183 14 481 13 197 30 183 30 183 27 410 1.9 1 297 2 2 4 284 2 2 233 2 2 1 314 2 772 9 3 1 480 2006 2006 2006 243
242 6 717 5 5 5 893 5 2 5 79 82 24 6 % 6 2 0 9
P arent bank ue tos cu 32 616 32 616 32 616 1 13 27 410 10 3 3.3 1 1 349 2
2 7 4 3 421 2 22 1 971 2 331 6 5 2007 2007 2007 12 070 892 20 2 110 313 737 5 5 5 656 6
3 17 9 6 5 6 % 5 6 6 6 2 0 8 6
t
t
t Fixed interest deposits account for 9 % of total deposits. Manufacturing Sea farming industries Agriculture, forestry, fisheries and hunting Public administration Wage earners Average interest rate Sør-Trøndelag Construction, power and water supply Deposits from and liabilities to customers with agreed maturity Deposits from and liabilities to customers without agreed maturity Nord-Trøndelag Retail trade, hotels and restaurants Nordland Møre og Romsdal Maritime sector Other counties Property management Abroad Other sectors Transport and other services provision Business services D D (NOK million) otal deposits from customers broken down by sector and industry otal due to customers otal deposits broken down by geographic area eposits specified by geographic area eposits specified by sector and industry tomers
32 434 32 434 32 434 1 27 228 10 3 13 414 3.3 1 349 2 1
4 2 7 3 421 2 331 1 9 2 124 6 5 2007 2007 2007 12 070 20 892 2 110 313
5 5 656 66 6 17 3 6 5 6 6 % 6 5 6 2 0 8 0 8
Group 30 136 30 136 30 136 14 481 27 3 13 1 1.9 1 314 2 1 297 2 772 4 284 9 3 2 2 2 2 1 480 2 233 2006 2006 2006 242 717 243
8 6 5 5 5 5
2 6 5 5 79 5 82 5 24 6 % 6 4 1 2 0 4 2
27 048 27 048 27 048 14 080 24 4 11 187 1.41 % 1 233 2 414 2 4 8 383 2 17 2 093 2 009 1 31 1 732 2005 2005 2005
787 214 1 489 48 5 5 6
5 92 84 6 83 6 7 4 6 9 5 5
97 Notes Notes 98 securities holding.
Average interest rate calculated on basis of actual interest expense in the year including any interest rate and currency swaps in per cent of average Note 23–Debtsecuritie
21 911 21 911 20 958 12 129 20 9 3.81 % 2.91 % 9 4 183 2 197 2 9 3 30 3 723 3 804 2006 2006 2006 9 5 240 202 483 -22 5 5 42 5 82 8 3 0 6 0 0 -
P arent bank
23 950 21 392 23 950 21 392 12 10 782 2. 4.4 2 2 710 3 441 4 12 3 74 4 2 1 79 2007 2007 2007 6 6 55 55 65 6 9 % 6
-33 1 6 09 79 % 5 8 2 5 5 9 6 2 0 0
d
b
t
b
t Average interest, money market certificates Average interest, bond debt NOK Certificates and other short-term borrowings Bond debt 200 EUR 2007 Other 2008 2009 2010 2011 2012 2013 2014 201 203 Currency agio Market value, structured bonds Own holding at market value (NOK million) otal debt securities in issue otal debt distributed on significant currencies ond debt and other long-term borrowings ond debt specified by maturity ebt distributed on significant currencies 6 6 5
s inissue
(NOK million)
23 950 21 392 23 950 21 392 12 10 782 2. 4.4 2 2 710 3 441 4 12 3 74 4 2 1 79 2007 2007 2007 6 55 6 55 65 6 9 % 6 -33 1 6 09 79 % 8 5 2 5 5 9 6 2 0 0
Group 21 911 20 9 21 911 20 958 12 129 3.81 % 2.91 % 9 4 183 2 197 2 9 3 30 3 723 3 804 2006 2006 2006 9 5 240 202 483 -22 5 5 42 5 82 5 3 8 0 6 0 0 -
18 036 1 18 036 15 833 12 9 3.2 2.13 % 2 204 5 3 190 4 3 4 408 2 03 1 838 3 243 2005 2005 2005 -142 833 71 410 6 201 5 -14 -17 6 5 00 80 % 3 7 6 6 - -
Note 24–Subordinated loan capital
4.43 % 2 383 1 478 2006 .09 % 455 450 100 100 1 189 4 470 300 227 -72 -10 - 27 6 5 6 2 0 0 0 2 7
P arent bank 6 6 2 647 1 810 2007 .39 % .74 % -118 409 429 100 5 1 189 4 107 34 470 300 227
-18 -94 27 6 5 -4 0 2 0 6 4 h
t
t
t
t W 2014 3 mnd Nibor + 1.1 (Call option 2007) 2012 3 mnd Nibor + 1. Hybrid equity 30 years Libor + margin (USD 7 2013 fast rente 7.2 (Call option 2008) - Hybrid equtiy currency agio 2013 3 mnd Nibor + 1. Average rate NOK 2013 fast rente 201 2013 3 mnd Nibor + 1. Average rate USD 203 - Premiumdiscount subordinated debt - Currency agio dated Perpetual non-call: Perpetual non call 3 month Nibor + 0,8 Perpetual non call 3 month Libor + (USD1% 2 - Discount perpetual subordinated debt - perpetual non-call currency agio (NOK million) otal hybrid equity otal subordinated loan capital otal with definite maturity otal perpetual non-call ybrid equity: ith definite maturity 5 6 3 mnd Nibor + 0.43 (Call option 2009) fixed rate 2.94 %
6
.
65
(Call option 2013)
5 6 6
(Call option 2010) (Call option 2008) (Call option 2013)
5
% (Call option 201
5
mill.) 5 mill.)
6 )
6 6 2 647 1 810 2007 .39 % .74 % -118 409 429 100 5 1 189 107 34 4 470 300 227 -18 -94 27 6 5 -4 0 2 6 0 4
Group 4.43 % 2 383 1 478 2006 .09 % 455 450 100 100 5 1 189 4 470 300 227 -72 -10 - 27 6 5 6 2 0 0 0 2 5 7
4.43 % 1 667 1 007 2005 . 5 495 164 100 100 5 1 189 4 227 9 % -32 - 27 6 5 56 -7 2 0 0 0 0 7 0 0 99 Notes 100 Notes
Provision for loss has been made where appropriate. The Group is involved in legal disputes not considered to be of substantial significance for the Group’s financial position. Securities Note 25–O
O ngoing lawsuits 1 219 6 487 9 454 1 748 2 3 248 2 8 2006 231 403 2 5 920 207 987 44 123 94 24 5 33 91 37 99 5 7 1 2 0 6 7 0 0 3 0 2 0
P arent bank
ther liabilitie 10 072 13 302 1 371 1 859 8 2 1 090 3 248 2 8 2007
T 5 12 72 6 5 872 242 101 424 6 247 otal
29 18 39 33 78 98 1 18 98 5 6 5 0 0 5 0 0 0 2 0 o
t
t t
t
Guarantee commitments O Accruals Provisions Securities pledged Creditors Payment guarantees Unutilised credits Securities pledged in 2007 Drawing debt Performance guarantees Loan guarantees Unutilised guarantee commitments Loan approvals (not discounted) Documentary credits Debt from securities Debt available for sale Other liabilities Guarantees for taxes Relevant liability 2007 Total other liabilities Guarantees for Savings Banks’ Guarantee Fund Other guarantee commitments Pension liabilities (note 2 Securities pledged in 200 Relevant liability 200 Securities pledged in 200 Relevant liability 200 otal other liabilities otal other commitments otal commitments otal guarantee commitments ther commitments ther liabilities
s
(NOK million)
6 5
6 6 5
)
Securities 12 807 1 596 9 352 1 859 1 090 7 919 2 3 248 2 8 2007
12 1 701 872 72 242 101 5 399 247 6 6 31 33 98 78 1 0 5 3 6 5 0 0 5 0 0 6 0 2 0
Group 1 331 5 969 9 048 1 748 4 713 2 3 248 2 8 2006
T 149 47 920 2 987 207 5 437 56 6 otal 9 4 5 6 33 37 91 11 5 6 5 6 7 2 0 1 7 0 3 0 0 2 0
2 357 4 773 8 498 1 368 1 247 3 427 1 2005 19 448 5 5 987 148 428 271 6 6 23 87 02 99 6 47 7 5 0 1 1 6 0
offered in2008. pension contribution transition todefined voluntary be will employees All 2008. January 1 on ceases pension Spouse’s pensions. occupational mandatory on requirements the to conforms scheme pension The age at who take out early retirement. The Bank has 100 % responsibility each year from age pension retirement early on agreement an established (‘AFP’) for have employees from age industry financial the and Bank previously. The as continue operations by funded pensions Gift spouse’sSpareBank rules. 1 Midt-Norge children’s2007. 12G out arrangementthe phased on 1 pension, further January under disability pension and pension benefits pension from age future confer and to specific entitlement scheme areby administered a pension schemes pension The Note 26–Pension
2006 2006 - 123 5 124 104 -33 -18 22 27 27 27 19 22 19 -1 -1 2 and 100 % at age at % 100 and 62 0 3 9 -
Estimated early retirement outtake at age Expected voluntary retirement Employers contribution Expected increase in current pension Expected adjustment of basic amount (G) Expected future wage and salary growth Expected rate of return on plan assets Discount rate A 2007 2007 -
ctuarial assumptions 123 5 6 129 102 -37 -2 30 29 23 29 44 72 29 21 1 14 -1 7 1 6 5 4. Expenses on the early retirement scheme will be systematically distributed over the average remaining qualifying period. period. qualifying remaining average the over distributed systematically be will scheme retirement early the on Expenses 64.
t
n
62. The Bank’s contribution corresponds to the National Insurance Scheme’s accumulation of fordisbursed pensions employees
P N Present value of pension accumulated in the year Estimated value of pension assets Net present value of pension liabilities in covered schemes Interest cost of pension liabilities Net pension liability in covered schemes Expected rate of return on plan assets Actuarial gains or losses Estimated discrepancies not incl in profit and loss account Net pension commitment in the balance sheet Net pension expenses exc. employer’s contribution Non-recorded effect of plan change exc. employer’s contributtion Net pension cost related to defined benefit plans Employer’s contribution - subject to accrual accounting Employer’s contribution Of which unfunded pension commitment Actual return on plan assets otal pension cost incl employer’s contributions ension cost for the year et pension liability in the balance sheet et pension commitment in the balance sheet
6 2
5 14.1 % (NOK million) 0.0 % 0.0 % 2. 3. 4.0 % 6 4. C .8 % osts 5 5 5 % % %
62 to 2007
c
ommitment 64. Calculations are based on the assumption that
14.1 % 0.0 % 0.0 % 4.0 % 4.0 % 4. 4.8 % 7.0 % 5 %
14.1 % 2007 2007 0.0 % 0.0 % 2. 2. 3.3 % 4. 7.0 % C - 733 149 5 1 124 osts 5 5 5 -40 -32 38 32 31 39 7 5 39 2 17 22 % % % -1 1 8 2006 6 7 5
c
ommitment 67. also include schemes The 14.1 % 0.0 % 0.0 % 2. 3. 4.0 % 4. .8 % 5 5 5 2006 2006 - % % % 149 723 56 1 12 -3 -28 33 3 30 5 33 29 24 11 48
-1 -1 6 9 6 4 4 6
50 % will retire 14.1 % 2005 2005 2005 0.0 % 0.0 % 2. 2. 3.3 % 4. - .2 % 195 6 5 132 171 5 5 5 -33 24 48 29 1 2 40 24 20 24 10 5 % % % -1 -1 6 5 4 9
101 Notes 102 Notes
2006 2006 997
300 123 1 6 -47 56 97 22 -7 - -
1 010 2007 2007 123 701 309 -10 - 98 29 5 9 0 3
t
i
n
Equities Money market Bonds held to maturity Other Real estate are therefore shown at group level. Current bonds Pension assets are stated at book value in the Pension Fund. Assets in the Fund are not managed on a company basis and and basis company a on managed not are Fund the in Assets Fund. Pension the in value book at stated are assets Pension M M Net pension liability in the balance sheet 1.1 Number of persons included in pension scheme of which active Curtailment/Settlement Romsdal Fellesbank of which retirees and disable Zero setting of estimate variance * Acquisition of Romsdal Fellesbank ASA Net defined-benefit pension cost in profit and loss account * zero setting of estimate variance for 2004 is included in the note. This is not implemented in the balance sheet. Paid-in pension premium, defined-benefit schemes nvestment og pension assets in the pension fund otal et pension liability in the balance sheet 31.12 ovement in net pension liability in the balance sheet embers
1 1 2007 2007 2007 629 10 112 187 218 149 837 320 126 -11 -10 - 18 5 39 6 5 7 0 9 1
1 137 2006 2006 2006 591 1 11 19 103 82 312 149 19 -72 18 5 33 -7 4 4 5 6 5 5 0 0
1 047 2005 2005 2005
478 124 102 1 721 32 195 149 -38 78 20 5 5 33 - 4 6 2 0 -
Figures in the note for 200 Note andrelated 27–Equity capital -capital adequacy ratio
Asset base for calculations reduced to 9
12.16 %
39 473 39 193 3.4 8.70 % 1 365 4 799 3 377 3 433 1 017 1 477 1 2 1 2006 - -111 - -319 -440 2 56 4 56 56 4 6 56 5 6 55 41 % 0 2 2 2 2 3 ------
P arent bank 12.29 % 44 870 4
8.0 4.23 % -2 3 1 896 5 513 4 382 3 617 6 1 0 1 814 1 349 1 77 2007 -343 - -289 -447 -343 -410 873 5 281 42 6 138 6 410 408 6
/200 5 8 1 6 93 27 % 3 5 6 5 6 2 0 ------r
t n
t
c
t
t
6 are therefore unchanged and are not directly comparable with balance sheet figures for these years.
Deductions: E of which core capital Currency risk and items in trading portfolio Assets which are not part of the trading portfolio Off-balance sheet items which are not part of trading portfolio Perpetual non-call Subordinated loan capital Capital adequacy reserve Subordinated capital in other financial institutions Primary capital certificates of which supplementary capital Use of equity method in the company accounts Subordinated capital in other financial institutions – Holding of own primary capital certificates Loss provisions Premium fund Dividend Equalisation Fund Capital adequacy reserve (SpareBank 1 Gruppen) SparBank 1 Fund Risk-weighted volume reduced to 9 Consolidated equity capital associated companies Other equity Set aside to dividend and gifts Minority interest Deferred tax, goodwill and other intangible assets Hybrid equity Portion of own funds ( Allocated to dividend and gifts Share of zeroed-out unamortised estimate variances Positive values of adjusted expected loss under IRB approach ( Capital adequacy reserve ( Supplementary capital in addition to core capital 5 otal supplementary capital otal asset base for calculations otal equity capital otal core capital quity apital adequacy ratio isk-weighted calculation base et equity and related capital % of overall risk-weighted assets as from 2007 under transitional rules in the capital requirements regulations. (NOK million)
5
0 %) in other financial institutions
5
0 %)
5 %
5 0 %)
12.51 % 44 453 4 8.33 % 4.18 % -2 340 1 857 5 560 4 518 3 703 6 1 0 1 814 1 349 1 830 2007 -379 -301 -7 -4 -410 -379
281 5 42 138 6 410 103 408 2 5 7 5 12 6 30 -4 -7 -4 5 3 5 5 7 1 0 - - -
Group 11.88 % 40 473 40 2 8. 3.24 %
1 311 4 809 3 461 3 498 1 017 1 477 1 2 1 2006 6 - -111 -331 - -4 2 4 6 55 6 56 4 4 % 56 5 5 08 6 08 83 6 55 4 -8 -8 8 0 2 2 3 0 2 5 ------
10.89 % 34 914 34 7 8.80 % 2.09 % 3 803 3 122 3 073 1 2 1 3 2005
-44 - -44 - 730 344 783 18 99 5 491 5 4 5 6 14 6 11 6 - - 1 6 5 6 5 5 2 0 0 6 0 9 0 1 ------
103 Notes 104 Notes Outstanding loans as at 1.1. at monthlycapped criteria,and four times subjecttospecific salary. bonus performance-related hasacontractual CEO The pension. occupational age at down step to entitled is CEO The months. 24 to up for benefits supplementary other and salary pay to undertakes Bank the CEO, the with agreement employee the Under CEO tothe Emoluments for. contribution. pension earlier inthe collectivearrangement reason, alsoreceive same asupplementary employees Forthe participating compensated also is contribution pension the payableon tax with, To1. dispensed bySpareBankdelivered now products in scheme the to equivalence ensure 2007 whereby employees earning above 12G receive a pension contribution of 16 % of salary above 12G. The pension contribution will used for pension saving 1 January 2007. The Board backed approximately identical pension rights for all employees. An individual high-pension As arrangementa result was of changes accordinglyin the tax introduced rules governing in high pensions the Board decided to dispense with the collective pension scheme for salaries above 12G as from salary. agreement noranyagreement onpost-employment abonus Board chairmanhasneither The D L senior employees. and Board ofDirectors the Bankand between the havebeen carried out Nosignificanttransactions applied atcustomers. generallyrates the grantedat are parties related other to Loans margin. + Nibor grantedat are ventures joint and companies associated subsidiaries, to Loans at NOK4.9 rate isbased. interest onwhichtaxationofemployee onthe millionbased benefits All loans to related parties are recorded at the parent bank. Strict requirements are applied to collateral for such loans. The interest subsidy for 2007 is calculated Note 28–Related partie Deposits as as 1.1. Loans issued in the period
Contribution received during the period Repayments
Withdrawals O T D Interest rate income Interest rate expenses Losses on loans otal oans eposits eposits as as 31.12. utstanding loans as at 31.12.
(NOK million) Salary and other short-term benefits Pension contribution for salaries above 12G Pensions and other post-employment benefits Share based remuneration (NOK million)
0 with a pension equal to equal pension a with 60
(NOKt)
B oard of
193 172 2007 2007 80 51 65 43 31 28 3 1 0
s 8 per cent of his pensionable income. The pension commitment to the CEO is included in the Bank’sgroup the in included is CEO the to commitment pension The income. pensionable his of cent per 68 D
irectors and top management
4 232 3 0 2007 2006 2006 842 170 307 14 65 31 48 44 6 27 1 8 6 6 5 1 0 0
3 169 2 479 2006 2005 2005 48 18 37 20 90 31 6 1 0 0 0 1 0 0
a 10 4 10 088 1 998 3 925 2 21 1 1 1 2005 435 5 899 479 2007 2007 65 78 6 4 89 21 5 0 8 5 0
ssociated companies
1 578 1 0 2006 2006 30 198 143 449 55 5 70 3 2 6 6 1 0
1 052 2005 2005 9 1 9 299
306 898 443 210 6 56 19 2 7 0
2007 2007 O 0 4 0 7 0 1 0 4 0 0 0
ther related parties
2006 2006 0 7 0 8 0 1 0 2 0 0 0
2005 2005 0 8 0 1 0 9 0 2 0 0 0
L T T E T E T E T E any salary eraned in other employment. executive director are fixed by discretionary assessment. The executive directors have an agreement on post-employment salary for 24 months, toAll be executivereduced by directors have bonus agreements whose criteria are established by the Bank’s Board of Directors at an annual review where the criteria for each E T T E E T E T otal otal otal otal otal otal benefits to management exc. otal otal otal egal xecutive xecutive xecutive xecutive xecutive xecutive xecutive moluments to management
E Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits Share based remuneration Pensions and other post-employment benefits Pension contribution for salaries above 12G Salary and other short-term benefits xecutive D D D D D D D irector, irector, irector, Spare irector, irector, irector, irector, D irector R F C R B C inance ommunications orporate usiness omsdal etail B D ank 1 ivision ( F O (NOK 1000) D ellesbank perations ivison
M arkets CEO D
eputy
D
ivision
CEO )
17 199 1 626 2 919 2 231 1 151 1 726 2 192 2 519 1 26 1 0 1 237 2 4 1 711 1 279 1 713 2 001 2007 201 330 1 290 172 333 892 243 3 229 23 2 249 5 65 1 5 5 1 1 79 1 5 1 1 5 0 9 0 0 6 4 9 6 0 6 6 6 2 6 5 6 4 105 Notes 106 Notes A at the end of the balance sheet date. Fair value is estimated by comparing the market interest rate at first-time recognition with the market rate offered in connection F with similar financial instruments Book value is deemed to equal fair value of finanacial assets and liabilities which are liquid or where little time remains to maturity (less than three months). Note 29–F
Subordinated debt and bond debt are valued against market rates on similar securities.
30 183
1 P
5
61 322 57 710 inancial instruments with fixed interest.
1 027 3 34 rinciples used to determine fair value of financial instruments not accounted for at fair value. ssets where fair value is deemed equal to book value. 2 7 1 748 3 248 6 5 1 3 1 001 value Book 487 87 4 03 798 12 47 66 6 56 7 5 7 6 6 6 5 0 5
2006
Change to Fair Value 34 29
P
arent bank - - - - - 5 ------
66 024 air v 32 1 65 230 10 072 value Book
1 492 7 283 1 1 3 402
5 1 8 2 6 5 34
090 0 6 5 66 6 718 337 42
2007 5 1 33 71 56 5
6 9 6 7 1 0 6
alue offinancialins
Change
to Fair Value
57 20 37 ------
t
t
O L commitments Liabilities (see Note 2 Debt to credit institutions Guarantee commitments Deposits from and debt to customers Collateral furnished Securities debt at amortised cost A Derivatives Securities debt at fair value Subordinated debt at amortised cost Loans to and claims on credit institutions Subordinated debt at fair value Loans to and claims on credit institutions Loans to and claims on customers at fair value Shares Bonds at fair value Bonds held to maturity Derivatives
otal financial liabilities otal financial assets iabilities ssets ff-balance sheet liabilities and guarantee
(NOK million)
5
)
trument
s
65 048
32 434 1 66 502 5
7 283 1 1 1 492 Bookt value 9 3 5 1 8 2 6 1 482 8 1 5 34
0 5 66 6 718 665 427
5 5 33 71 56 6 5 2 6 9 7 0 1 0
2007 Change
to Fair Value 57 20 37 ------
58 528 60 860 30 13 1 2 7
1 331 1 027 1 3 1 748 3 248 5 6 1 873 1 707
value Book 9 03 87 12
798 781 5 6 66 56 7 9 6 6 5 5 0 5
Group 2006 Change to Fair Value 34 29
-
------5 - - - - -
57 368 49 841 27 048 18 03 44 7 1 029 7 231 2 3 1 0 4 773 1 3 2 8 3 value Book
487
6 4 447 6 6 5 5 08 5 5 6 8 8 2 6 7 4 9 7 0 6 0
2005
Change to Fair Value 28 11 17
------
Loans to and claims on customers Loans and claims on credit institutions N Collective write down of loans to and claims on customers Individual write down of loans to and claims on customers Cash and claims on central banks Securities – designated at fair value through profit/loss L Securities – held for trading Deposits from and debt to customersr Debt to credit institutions
2007 P The table below shows an analysis of assets and liabilities maturing one year or otherwise after the balance sheet date. Note 30–Maturity analy T Other assets Property, plant and equipment Intangible assets Investment in associates and joint ventures Securities – available for sale Derivatives Debt created by issuance of securities A Other liabilities Liabilities in connection with period tax Liabilities in connection with deferred tax Derivatives T Subordinated loan capital otal assets otal debt iabilities arent bank ssets et loans to customers (NOK million)
si ofasset
s andliabilitie demand 35 265 32 289 4 301 2 39 2 97 1 4 O n 33 114
55 ------2
6 5 6
- -
3 months B 13 467 18 897 13 4 6 378 elow 3 402 1 1 2 370 2 40 438 42 847
6
19 6 5 6 71
------4 - 7 9 7 6 5 - -
s months 3 009 4 101 3 419 3 298 2 871 3–12 -17 -113 119 93 118 240 1 38 32 5 ------
6 5 6 1
10 089 15 905 1 7 290 1–5 yrs 7 290 2 5 20 141
22 5 5 28 30 3 39 ------5 6 5 - -
above 5 yrs 33 042 33 595 33 042 5 632 3 13 2 49 447 14 93 ------6 6
t 56 808 70 982 66 600
32 23 9 5 2 39 3 402
1 4
1 104 2 7 097 5 5 -17 -113 328 34 142 447
42 0 2
5 6 6 6 otal 19 55 5 1 5 71 5 48 2
6 6 6 6 9 6 9 6 0
107 Notes 108 Notes Loans to and claims on customers Loans and claims on credit institutions Securities – designated at fair value through profit/loss Securities – held for trading N Collective write down of loans to and claims on customers Individual write down of loans to and claims on customers Cash and claims on central banks L Deposits from and debt to customers Debt to credit institutions
2007 Group Property, plant and equipment Intangible assets Investment in associates and joint ventures Securities – available for sale Derivatives Debt created by issuance of securities A T Other assets Other liabilities Liabilities in connection with period tax Liabilities in connection with deferred tax Derivatives T Subordinated loan capital otal assets otal debt iabilities ssets et loans to customers (NOK million)
demand 35 083 32 107 4 291 2 39 2 97 1 103 O n
127 6
13 5 ------
6 6 1
3 months 13 467 17 058 13 4 B 6 603 1 482 1 1 2 370 2 40 1 0 elow 427
5 6
2 6 5 6 19 65 71 ------4 -
7 9 7 5 6
months 5 078 6 171 3 420
2 871 3–12 5 -18 -11 119 379 93 118 247 1 39 32 5 ------5 5 6 1
10 374 15 905 1 7 290 1–5 yrs 7 290 2 5 20 141 313
22 5 5 30 3 39 ------5 6 5
above 5 yrs 33 042 33 608 33 042 5 632 3 13 2 49 4 93 14 6 ------0 6 6
t 58 878 71 503 66 643
32 434 23 9 5 2 39 1 482
1 103 2 1 322 9 178 5 5 -11 -18 328 34 337 427 4
440 273
6 6 6 otal
5 6 01 71 5 48 - 6 5 6 6 1 0 0
E The table below shows maximum exposure to credit risk for balance sheet components, including derivatives. Note 31–Maximumsk e creditri
71 102 64 925 62 866 71 102 27 031 17 743 10 38 xposures are shown on a gross basis before collateral and permitted set-offs. 6 177 exposure 1 748 8 236 3 34 1 001 8 1 892 2006 2006 Gross 137 103 39
849 231 987 4 93 1 313 5 6 2 5 6 7 37 04 6 0 6 6 9 5 6 5 9
P arent bank 82 914 77 100 70 982 11 932 82 914 33 190 21 09
12 56
5 814 exposure 2 39
3 402
9 4 2 1 8 8 1 090 5 5 2007 2007 Gross 313 449 808 328 0 3 42 313 344 6 56 6
5 94 5 56 5 6 39 2 6 6 3 9 6 1 2 0
b
t
t
t t
t t a F C Cash and claims on central banks Sør-Trøndelag Norway Loans to and claims on credit institutions Europe/Asia Nord-Trøndelag Loans to and claims on customersr USA Securities – held for trading Møre og Romsdal Securities – designated at fair value through profit/loss Nordland Derivatives Securities– available for sale Rest of Norway Other assets Other countries Liabilities Conditional liabilities Unutilised credits Loan approvals Other exposures ank activities ssets otal otal distributed by geographical area otal otal assets otal financial guarantees provided otal credit risk exposure inancial instruments redit risk exposure related to financial assets distributed by geographical area.
(NOK million)
(NOK million)
(NOK million) xposure, direg
arding collateral 82 715 76 571 71 503 11 212 82 715 31 183
21 8 12 842 5 exposure 6 144 2 39
1 482
9 981 2 1 8 7 919 1 090 5 8 878 5 2007 2007 Gross
449 328 33 427 400 312 344 6 6
41 5 5 5 0 6 6 3 3 6 1 5 0
70 896 64 719 63 178 70 896 2
18 2 10 490 5 exposure 6 177 7 718
1 873
8 2 190 1 748 4 713 5 6 2 488 5 Group 2006 2006 Gross 4 137 103 93 103 1 39
313 849 987 2 5 6 37 5 65 6 7 99 6 0 6 9 6 5 9
exposure 60 468 55 847 54 327 60 468 22 1 2005 Gross 44 7 4 621 6 141 4 247 8 4 098 7 787 2 817 1 3 3 427 1 247 1 5 2005 371 90 487 271 708 66 555 4 6 3 99 5 6 20 6 - 3
9 4 7 6 6 8
109 Notes 110 Notes T T T T Unquoted bonds Corporate market Retail market Retail market
L 2006 L 2007 P T The Bank manages the credit quality of financial assets by means of internal credit rating guidelines. See section on credit risk in the directors’ report. Note 32–Creditquality perclassoffinancialaet Quoted other bonds Unquoted bonds Quoted other bonds Quoted government bonds Quoted government bonds L L T T Corporate market
F F otal otal otal otal otal otal oans to and claims on credit institutions oans to and claims on credit institutions oans to and claims on customers oans to and claims on customers inancial investments inancial investments he table below shows credit quality per class af assets for loan-related assets in the balance sheet, based on the arent
(NOK million) (NOK million)
B ank
Note Note
17 17 17 17 17 17 19 19 20 20 20 20
35 213 33 261 21 207 1 952 3 402 1 08 8 Very low Very low 31 741 29 549 20 289 3 346 8
2 192 65 risk risk 5 6 834 8
91
0 5 5 7 2
5 07
1 5
11 394 12 503 10 275 2 529 2 228 8 865 1 27 1 733
2 827 3 6 6 9 797
038 Low Low 6 6 risk risk 5 31 44
- - - - 5 2
N N either fallen due nor written down either fallen due nor written down 12 962 12 558 12 982 12 111 7 0
5 Medium Medium 6 6 404 3
871
17 001 110 5 6 risk risk
5 5 5 0 - 9
- - - 4 0 2 6 6 5
s 1 580 2 104 1 580 2 104 1 232 871 880 700 High High risk risk
------
B ank’s own credit rating system. 1 595 2 034 1 595 2 034 1 21 Very high Very high 794 818 801 risk risk
------6
written down written down Fallen due or Fallen due or individually individually 518 714 518 714 274 337 244 377 ------
59 790 65 550 54 666 60 499 33 781 3 17 21 231 5 125 5 051 3 346 3 402 3 0 2 921 1 994 1 5
8 Total Total 6 5 5 5 97 07 66 39 0 7
T T T Unquoted bonds T Retail market T Corporate market Retail market Quoted other bonds T Unquoted bonds Quoted other bonds Quoted government bonds Quoted government bonds T Quoted other bonds Quoted government bonds Unquoted bonds F T Corporate market Retail market Corporate market
L 2005 L 2006 L 2007 Group L F L L T
F
otal otal otal otal otal otal otal otal otal oans to and claims on credit institutions oans to and claims on credit institutions oans to and claims on credit institutions oans to and claims on customers inancial investments oans to and claims on customers oans to and claims on customers inancial investments inancial investments
(NOK million) (NOK million) (NOK million)
Note Note Note 17 17 17 17 17 17 17 17 17 20 20 20 20 20 19 19 19 20
Very low Very low Very low 31 143 34 214 32 263 27 668 28 951 24 135 18 014 21 311 20 347 risk risk risk 1 952 2 192 3 533 1 873 1 482 1 08 1 02 1 9 4
6 5 454 8 834 8 9 731
5 55 66 6 07 5 5 6 0
5 7 1 3 4 5 9 7
11 899 13 381 11 153 12 205 12 180 2 228 2 529 9 370 1 27 1 733 8 784 4 4 3 314
3 39 6 6 9 797
0 Low Low Low 6 risk risk risk 25 2 5 97 5 55
------5 2 5 7 6
N N N either fallen due nor written down either fallen due nor written down either fallen due nor written down 12 980 13 289 12 418 12 576 7 120 6 992 1 888
7 137
6 6 5 5 Medium Medium Medium 871 404 128
17 3 128 0 3 440 104 6 risk risk risk
9 5 5 5 6
------6 5 4 0 9 0
1 641 1 923 1 923 1 466 1 641 1 466 1 040 882
7 888 927 High High High 5 risk risk risk 39 5
------3
1 627 2 078 2 078 1 627 1 24 Very high Very high Very high 833 823 804 risk risk risk 75 75
23 5
------2 5
written down written down written down Fallen due or Fallen due or Fallen due or individually individually individually 528 826 826 886 528 886 330 3 4 2 27
556 5 6 5 ------9 7 5 3
59 818 65 712 60 661 49 419 54 693 45 734 29 3 23 038 33 808 19 011 1 5 051 5 125 3 686 1 873 1 482 3 0 1 994 2 921 1 1 1 1 6 5 454
9 141
Total Total Total 5 6 5 6 6 5 07 97 5 5 79 07 72 0 7 3 3
111 Notes 112 Notes T Default and written down High risk Very high risk (NOK million) Very low risk Medium risk Low risk A R R The Bank’s exposures are classified in one of five risk groups based on risk class and collateral class. See the table below. The link between the credit modell and Moody’s rating is also shown in the table. This is to explain the further relationship to risk groups. See the chapterThe tables entitled show ‘Risk the linkmanagement in the andBank’s capital credit allocation’ model between and the probability section entitled of default ‘Capital and allocation’.risk classification, and the link between collateral class and collateral cover. Note 33–Creditriske Very low risk A (NOK million)
Medium risk Low risk High risk Default and written down Very high risk B B
Group T C J D E G F C H D K I
E G F P
H I K J
otal otal
arent bank
isk class isk class
Written down
f
10.00 % Very low risk 1 Very low risk Very low risk Default and Low risk Medium risk High risk Medium risk High risk Very high risk Default and written down written down 0.00 % 0. 1.00 % 2.00 % 5 3.00 % 0.10 % Default 7.
.00 % 5 5 0 % 0 % rom P robability of default
t
100.00 % 10.00 % 0. 1.00 % 2.00 % 3.00 % 0.10 % 7. .00 % 5 5 o 0 % 0 % m unhedged A unhedged exposure Very low risk 2 C Very low risk Very low risk Default and Low risk High risk Medium risk Medium risk Very high risk High risk Default and written down written down A exposure 1 13. 22.4 1 13. 1 22.4 1 veraged ollateral class
2007 veraged 2007 6 0.20 % 5 0.20 % 6 5 7.91 %
7.91 % .28 % .94 % .28 % .94 % 6 6
6 8 % 8 % 6 % %
ure for each internalriskratin each xposure for g
Aaa–A3 Baa1–Baa3 Ba1 Ba2–Ba3 B1 B2
B3 Caa/C
oody’s
h
Very low risk 3 Very low risk Very high risk Low risk Default and Medium risk High risk Medium risk Medium risk High risk Default and written down written down
commitment commitment istorical default 12 010 1 34 70 403 67 938 1 3 12 90
2 2 20
6 2 6 2 111 5 2007 2007 T T 0.07 % 0.23 % 0. 1.28 % 2. 4.2 5 8. 2.92 % 082 483
56 5 6 49 6 55 otal otal
.04 %
6 5 6
9
91 43
8 % 3 % 5 8 % 1 6 6 6 7 5 %
4 Very low risk Low risk Very high risk Medium risk Medium risk Medium risk Medium risk Default and High risk Very high risk written down Default and written down
unhedged
A unhedged exposure
exposure
A 20.24 % 1 20.32 % 13.9 10.17 % 20.32 % 20.24 % 1 veraged 13.9 10.17 % 2006 veraged 6 0.30 % 2006 0.30 % 6 .03 % .03 % 5 5 %
% 5 Very low risk Low risk Medium risk Very high risk Medium risk High risk Medium risk Very high risk Default and Very high risk written down Default and written down
t t C ollateral class
commitment
commitment 58 860 60 454 10 333 30 13 927
14 147 30 11
2006
1 791 1 787
1 2 3 4 6 5 7 2006
1 791 1 88 otal
otal 471
55 492 55 5 81
1 6 7
l 6 Very low risk Medium risk Very high risk Medium risk Medium risk Very high risk High risk Very high risk Very high risk written down Default and written down Default and
C ollateral cover ower limit unhedged exposure
A 30.0 21.0 120 100 17.28 % veraged 8.49 % 0.18 % 2005 80 6 20 40 7.4
0 0
6 5 5
% % %
u
t 7 Lav Medium risk Very high risk Medium risk Medium risk Very high risk High risk Very high risk Very high risk written down Default and written down Default and commitment pper limit 49 618 2005 10 8 23 3 34 1 420 9 otal 120 100 771 655 56 80 40 6 20 6 0
6 4 1
2005 2006 2007 Group 2006 2007 P T Note ofloan 34–Agebreakdown s fallen not but due written down T Corporate market Corporate market Of the total amount of loans fallen due but not written down, the fair value of associated collateral was NOK T Corporate market Retail market Loans to and claims on customers T Corporate market Retail market Loans to and claims on customers Retail market Loans to and claims on customers Corporate market Retail market Loans to and claims on customers Retail market Loans to and claims on customers T T Of the total amount of loans fallen due but not written down, the fair value of associated collateral was NOK 4 otal otal otal otal otal he table shows amounts fallen due on loans and overdrafts on credits/deposits by number of days past due date not caused by payment service delays. arent bank
(NOK million) (NOK million) (NOK million) (NOK million) (NOK million)
Up to 30 days Up to 30 days Up to 30 days Up to 30 days Up to 30 days 10 1 1 - - 1 1 4 9 2 3 7 0 4 5
31–60 days 31–60 days 31–60 days 31–60 days 31–60 days 208 201 130 1 42 79 6 283 102 263 109 131 173 132 0 88 14
5 6 74 million at 31.12.2007. 7 million at 31.12.2007. 61–90 days 61–90 days 61–90 days 61–90 days 61–90 days 39 88 31 31
56 101 7 50 66
32 3 39 34 11
65
6
o o o o o ver 91 days ver 91 days ver 91 days ver 91 days ver 91 days 123 154 168 201 128 121 81 73 81 42
91 77 81 80 47
t t t t t 562 357 465 371 445 2 293 249 211 243 2 21 14 179 128 otal otal otal otal otal 6 66 8 6 6
113 Notes 114 Notes
2005 2006 2007 Group sheet. are cashbalance notentered flowsare payment inthe shown.These and receipt estimated ofderivatives,future case In the current unrealised and market interest by ofderivatives,recognised case valuesare valuesofaccrued noteshowscommitments shown. term.Inthe The Note 35–Re Deposits from and debt to customers Debt to credit institutions Deposits from and debt to customers Deposits from and debt to customers Debt to credit institutions Debt to credit institutions Debt created by issuance of securities Debt created by issuance of securities Debt created by issuance of securities Contractual cash flows out T Subordinated loan capital Other commitments Derivatives Subordinated loan capital Other commitments Derivatives Other commitments Subordinated loan capital Derivatives Contractual cash flows in Contractual cash flows out T Contractual cash flows out T N Contractual cash flows in Contractual cash flows in N N otal commitments otal commitments otal commitments et contractual cash flows et contractual cash flows et contractual cash flows (NOK million) (NOK million) (NOK million)
idual contractual term ofcommitment term sidual contractual
N N N ote ote ote 2 2 2
5 5 5
C C C 35 571 33 716 30 321 32 107 29 37 2 urrent urrent urrent 2 97 2 229 1 110 1 331 2 3 6
231 781 488
6 23 5 ------
6 5 7
3 months 3 months 3 months B B B 6 065 1 827 2 879 2 370 2 40 1 808 elow elow elow
-2 241 107 44
338
4
5 5 55 6 5 14 -11 -8 -79 81 67
74 6 37 81 71 6 19 56 - - - - -
7 5 5 2 7 6 5
s months months months 3 178 3 812 2 817 2 871 3 7 2 4 3–12 3–12 3–12 436 -33 -341 - 118 3 772 1
383 55 5
-39
38 42 6 5 5 6 5 97 ------1 3 1 4 1 6 8
15 738 13 797 12 352 1 12 11 8 -1 686 1 210 -1 2 -3 079 -2 40 1–5 yrs 1–5 yrs 1–5 yrs 2 471 2 47 1 393 5 141 4 318
1 5 6 6
70 5 5 39 9 66 42 6 6 ------9 8 6 8 1 6 6
a a a
bove 5 yrs bove 5 yrs bove 5 yrs 6 093 5 843 2 287 -1 187 2 49 3 13 4 102 1 741 1 499 -1048 -183 -200 4 788 1 139 182
-14 -18 6 6 ------1 6 6 9
t t t 66 643 58 995 50 656 32 434 30 13 27 048 23 9 21 911 18 03 -1 672 1 713 -2 03 -3 704 -4 2
2 7 1 029 1 2 1 331 2 3 3 749 2 383 1 3 319 2 032 5 -950 34
4
5 6 6 5 66 otal otal otal 66 9 48 5 71 6 5 19 6
6 6 6 0 7 7 6 7 6 9
Sensitivity of net interes income
Bank managesitsforeignThe suchrisk. Seenote3for withaviewtonotincurring exchangeexposure detailsrelated toforeign exchangerisk. Note 37–Marketriskrelated togn e forei p 2006 rate point. eventofaninterest changeof1percentage inthe income interest of net The Bank manages its interest rate risk with a view to minimising such risk. See note 3 for more details related to interest rate risk. The table shows sensitivity Note 36–Marketriskrelated to intere
2006 11 13 -12 100 -47 -10 -2
1 1 -1 5 0
arent bank
P arent bank 2007
-3 -1 0 0
2007 100
-3 5 6 1 9 0 0
t
C N EUR USD Other Result effect of 3 % change Total per currency Overall currency limit otal urrency et foreign exchange exposure Other USD EUR NOK C (NOK million) urrency
C hange in basis points (NOK million)
+100 +100 +100 +100 s
t rate risk
x change risk
Sensitivity of net interes income 2007 -3 -1 2007 0 0 100
-3 5 6 1 9 0 0
Group Group 2006 13 11 2006 1 1 100 -47 -12 -10 -2
-1 5 5 0
2005 -19 2005 83 -2 100 0
-1 -2 - -0 5 7 6 0
115 Notes 116 Notes 2007 2007 200 200 Terra Utbytte Verdipapirfond 200 Bank of New York, Belgia, (nominee) Goldman Sachs & Co, USA (nominee) Tonsenhagen Forretningssentrum AS 200 Heglund Holding AS Meieribrukets Pensjonskasse 2004 T Citibank N.A., UK (nominee) Mellon Bank AS, USA (nominee) Sparebanken Rogaland Pensjonskasse Haugaland Kraft AS Jow Invest AS Tveteraas Invest AS and others Frank Mohn AS 2002 Others I.K. Lykke, T. Lykke and others T 2001 Protector Eiendom AS Citibank N.A., USA, (nominee) 2000 Romern AS J P Morgan Chase Bank, UK (nominee) State Street Bank & Trust Corp.,USA (nominee) 1992 Reitangruppen AS Y PPC capital history 20 largest The table below lists the 20 largest PCC holders as of 31 December 2007. Note 38–PCC capital andownership 1991 otal issued ear he 20 largest 5 5 5 5
PCC
PCC
PCC holders s
Employee placing Dividend issue Bonus issue Split Employee placing Placing Bonus issue Employee placing Employee placing Employee placing Placing
Placing C
holders in total hange
tructure PCC C hange in capital 2 217 1 5 82 24 5 5 7 2
- 5 3 4 5 5 5 5 5
20 383 992 53 976 003 33 N PCC 1 041 19 1 119 300 1 787 74 1 19 4 2 741 334 2 701 249 o. of 42 4 487 920 41 4 5 38 289 900 300 324 320 803 327 272 5 29 5 5 5 6 42 322 48 727 92 011 31 849 capital 1 349 1 344 1 2 1 009 1 009 4 5 9 287 5 5 6 6 PCC T 91 98 822 7
410
391
5 6 6 6 6 6 5 otal 6 88 6 3 14 10 0 00 2 2 6 6 8 6 6 5 6 5 s
40 391 2 10 097 817
5 5 5 9 8 7
N 3 7 0 489 08 6 6 6 3 97 6 5 100.00 % o.of 148 0 099 432 0 000 000 2 6 6 37.76 % 5 5 8 5 5 0.84 % 0.87 % 1.00 % 0. 0. 0. 0. 1.02 % 0. 2.07 % 2.24 % 3.31 % 2.22 % 5 5 8.40 % 0.90 % 1.93 % 0.79 % 0.77 % 0.71 % 2 203 9 317 5 3 099 6 0 000 .08 % .00 % Share PCC 5 56 5 6 55 07 003 4 % 9 % 1 % 6 6 % % 5 8 5 0 s
I Note 41–Incomes SpareBank 1Midt-Norge inthe ofmaterialsignificance Group acquisitions wereThere in2007. nobusiness Notesine sition ofbu 40–Acqui affect datethat sheet balance No significanteventshavebeen recordedafter the Bank’s the accounts. Note 39–Sub ( Interest expenses Interest income N Fee and commission expense Fee and commission income Other operating income N Staff costs T Other operating expenses Administration costs Dividends O T Income from investment in related companies Net gain on securities trading Net gain on currency trading and derivatives Write-down/reversal of write-down and gain/loss on financial assets valued at fair value N Loss in loans, guarantees etc. Write down on financial assets R Tax charge N NOK ncome statement otal income otal operating profit esult before tax rdinary operating profit et interest income et fee and commission income and other income et return on financial investments et profit million)
equent e sequent
tatement andB
vent
s ss alance sheet-Impact N 1 365 2 3 1 379 GAAP 2006 973 392 533 832 366 984 779 4 278 392 1 180 20 -84 5 6 80 6 17 70 42 2 7 5 2 8 0 5
s ofIFRSP C hanges -180 -21 -32 -21 26 94 5 -6 -9 - 0 0 4 0 0 4 0 0 0 0 8 6 2 0 0 2
arent B ank 1 369 2 3 1 379 2006 IFR 973 396 811 559 334 977 771 471 278 392 141 111 127 207 -84 5 80 3 6 2 5 S 0 6 0 0
117 Notes 118 Notes
B ( Cash and receivables from central banks Deposits with loans to credit institutions Gross loans to customers before write down - Write downs by loan category - Specified write downs Net loans to and receivables from customers Fixed-income CDs and bonds at fair value Shares, units and other equity interests - at fair valute through profit or loss - valued at cost - valued as available for disposal Investment in group companies Investment in related companies Goodwill Other assets A Deposits from credit institutions Deposits from and debt to customers Debt created by issue og securities Subordinated loan capital Other liabilities T Primary capital certificates Holding of own primary capital certificates Dividend equalisation fund Equity premium fond Other equity capital Savings bank’s reserve T D NOK otal liabilities otal equity exc. alance sheet ssets ebt and equity capital million)
D
ividends
31.12.2005 53 607 N 50 485 53 607 44 240 43 741 27 11 17 9 3 122 1 1 344 3 1 793 1 029 1 2 728 1 2 1 3 GAAP -233 -2 66 6 3 423 1 430 65 491 66 8 6 5 6 6 6 9 6 3 0 0 0 8 5 0 3 2 0 0 9 0
C hanges opening balance 435 364 435 37 3 -37 - -23 71 6 6 84 6 1 77 14 6 -7 0 0 0 1 0 1 0 0 0 0 3 6 5 0 4 0 0 0 3 8
01.01.2006 54 042 50 556 54 042 44 301 43 801 27 119 18 03 3 486 1 1 344 3 2 1 1 029 1 2 704 1 2 1 373 -233 -2 IFR 66 6 447 411 38 447 66 483 3 66 8 3 94 6 6 6 9 S 6 0 6 6 8 6 7 2 0 0 8
Statement Flow Cash
-1 219 -5 150 -2 002 -1 439 -7 17 1 219 4 397 4 0 1 1 737 3 0 2006 -465 -124 -3 -28 -9 732 4 66 730 888 771 -19 - -84 5 5 6 5 6 5 4 0 4 9 0 9 6 3 8 8 5 9 6 -
P arent bank -1 945 - 2 127 1 945 2 39 2 033 2 433 2 5 2007 -475 -39 - 79 294 665 4 270 139 22 56 5 3 6 -49 - -12 5 80 74 38 5 20
-7 0 9 3 7 -
n
c a
b
a
n
200 Cash and cash equivalents at 31.12 Increase/(reduction), other long-term debt Cash and cash equivalents at 01.01 Increase/(decrease) in subordinated loan capital Net investments in long-term shares and partnerships Increase/(decrease) in equity Adjustment of equity Dividends and donations Paid-up capital, associated companies Takeover of RomsdalsFellesbank Reductions in tangible fixed assets Increase in tangible fixed assets Increase/(decrease) deposits and debt to customers Decrease/(increase) loans credit institutions Increase/(decrease) debt to credit institutions Increase/(decrease) in short term investments Decrease/(increase) loans to customers Decrease/(increase) other receivables Increase/(decrease) short term debt (NOK million) + Losses on loans and guarantees + Gains/Loss om sale of fixed assets Profit before tax ) ) ) + ) et changes in cash and cash equivalents et cash increase from ordinary opertions N N N 5 et cash flow from financial activities et cash flow from investment et cahs flow operations B includes changes in RomsdalsFellesbank from 01.01 to 31.12. ) + C ) N
et changes in cash and cash equivalents
-1 945 - 2 131 1 945 2 39 2 033 2 297 6 2 2007 -585 -39 -188 -322 3 400 905 4 270 22 391 5 4 844 -81 5 74 5 80 6 37 6 -4 - 6 0 5 6 5 2 8 6 7 -
Group -1 219 -4 828 -1 439 -1 419 -7 -1 078 1 219 4 208 1 3 87 3 088 1 737 1 0 2006 -598 -3 -28 -32 863 4 66 71 6 89 -2 -17 -84 5 66 41 37 56 5 0 9 5 6 6 6 6 6 1 - -
-1 755 -1 -4 -1 324 3 299 1 2 747 2 018 1 849 -680 -864 -177 -711 2005 680 722 66 989 120 474 13 6 112 5 97 - -77 -74 -38 66 6 02 07 71 43 9 5 4 6
119 Cash Flow Statement 120 Annual Report 2007 We have audited the annual financial statements of SpareBank 1AUDIT Midt-Norge REPORT FOR 2007 for the accounting year 2007, showing To the Supervisory Board of SpareBank 1 Midt-Norge Translation from the original Norwegian version State Authorised Public Accountant (Norway) Per Kr. Forseth Deloitte AS Trondheim, 27 February 2008 • • • In our opinion, and internal control systems. We believe that our audit provides a reasonable basis for our opinion. auditanalsocomprises reviewmanagementtheaof company’stheof financial affairs accountingits and includes the content audit and presentation An of the financial statements. misstatement. To the extent required by material goodaudit accounting alsopractice of includes assessing free the are accounting principles statements examining,used on and a testsignificant financial basis, evidence estimatessupporting the the amountsmade, and asdisclosures whether well in theas financial evaluatingabout statements. An assurance reasonable obtain to audit the perform and plan we that require standards auditing These in practice Accountants. auditing Public of good Institute Norwegian the and by adopted auditing regulations on standards law,Norway, including with accordance in audit our conducted have We requirements of the Norwegian Act on Auditing and Auditors. the accordance with information in other on statements financial and these on opinion an express to is responsibilityOur CEO. Directorsandcompany’s of theresponsibility Board the of areDirectors’report been applied to produce the parent company’s financial statements. Thedisclosures financial to statements the andaccounts. the BoardInternational of Financial Reportingcomprise Standardsthe profit andas lossadopted account, balanceby sheet,the cashEuropean flow statement,Union statementhave of changescompany’s in equity financial and statements and the group’s financialassumption, statements. and The theparent proposal company’s for financialthe allocation statements of theaudited profit.the information The annualin thefinancial Board statementsof Directors’ comprise report theconcerninga profitparent the of financial NOK 620,000,000 statements, for the the going parent concern company and a profit of NOK 845,000,000 for the group. We have also
in compliance with the law and regulations. assumption and the proposal for the allocation of the profit is consistent withinformationthe Directors’Board thetheofin reportfinancialconcerning financialthe statements statements, going the concern and of accounting information in accordance with the law and good bookkeeping practice in Norway Financial Reporting Standards as adopted by the European Union and its cash flows and the changes in equity for the andyear fair there view thenof the ended,financial in position accordance of the with group International as of 31 Decembertheannual financial2007 statementsand the are prepared results accordancein ofwith the law and itsregulations operations and givetrue a the management has fulfilled its duty to produce a proper and clearly set out registration and documentation
SpareBank 1 Midt-Norge the Supervisory Board of To financial statements for 2007. TheSupervisory Board mayadopt theprofit and loss account and the balance sheet the as Bank’s (Norwegian) Savings Banks Act and of the Financial Supervisory Authority of Norway. the provisionsof the accordancewith insubmitted been haveaccounts and reports annual The provisions with which the Bank is obliged to comply. The Bank’s activities in 2007 were in accordance with the (Norwegian) Savings Banks Act, and other Act and the instructions for the committee. The Control Committee has carried out its duties in accordance with the (Norwegian) Savings Banks The Control Committee’s statement for 2007 Rolf Røkke Chairman Trondheim, 29 February 2008 Sparebanken Midt-Norge The Control Committee Tone Valmot of Aud Skrudland 121 Annual Report 2007 122 Financial Summary Group Interest income A D Interest expenses P Net interest and credit comission income Minority interests Commision and fee income Taxes Share of profit SpareBank 1 Gruppen AS O Losses on loans and guarantees Salaries, fees and other personnel costs O Other operating expenses Return on financial investements Interest income T T Total costs including SpareBank 1 Boligkreditt Growth in lending (gross) Group Summary Financial Interest expenses Return on financial investements Commision and fee income Growth in deposits Share of profit SpareBank 1 Gruppen AS N Operating profit before losses Losses on loans and guarantees Taxes Operating profit Profit of the year Loans before loss provisions CDs, bonds and other interest-bearing securities Cash and loans to and claims on credit institutions Dividend B - Specified loan loss provisions - Unspecified loan loss provisions Debt to credit institutions Other assets Deposits from and debt to customers T Debt created by issuance of securities Other debt and accrued expences etc. Subordinated debt Total assets K Total equity Average total assets T Loans to and claims on customers (net) Core capital Primary capital Deposits from and debt to customers Risk weighted volume Ordinary lending financed by ordinary deposits Capital ratio Losses on loans Of which core capital ratio Cost/income ratio Return of equity after tax PCC price (NOK) I otal costs otal income otal assets otal liabilities and equity ncome statement rofit of the year ey figures s a percentage of average total assets alance sheet ividend perating profit perating profit before losses et interest and credit comission income
in NOK million
in NOK million
12. -0.01 % 71 503 71 503 5 32 434 23 9 71 6 5 32 434 44 4 1. 1.00 % 0.3 1. 1. 1. 0.30 % 1.2 3.49 % 8.33 % 0.48 % 5 0.17 % 18.9 % 17.2 % -0.0 % 1 045 2 142 1 039 1 103 1 125 72.2 3 470 2 34 3 878 7 24 9 178 5 1 2 2 2 4 8 7 202 8 878 3 703 5 .1 2007 7. 6 6 55 56 5 5 34
324 844 200 5 5 113 6 233 11 18 5 6 5 56 6 7 % 5 4 % 6 6 1 % 1 % 83 19 71 02 5 65 48 03 6 5 % % % % % % % - 2 6 5 6 5 6 0 0 0 3 5
11.88 % 63 178 -0.1 63 178 30 13 21 911 30 13 40 473 4.21 % 1.03 % 0.34 % 1 1.83 % 0.39 % 1. 0. 2.43 % 0.43 % 8. 11.4 % 1.98 % 1.79 % 1.7 23.7 % -0.2 % 1 116 2 022 1 032 1 008 82.00 2 37 1 3 2 323 2 819 2 7 2 7 1 799 2 383 3 178 4 183 2 488 3 498 4 809 6 2006 5 5 6 49 %
434 303 896 . 990 219 478 233 190 6 147 184 6 6 5 9 % 4 % 7 % 4 % -84 12 6 92 02 66 65 % % % 1 6 9 6 6
10.92 % -0.08 % 54 327 54 327 4 27 048 18 03 47 7 44 780 27 048 34 873 4.01 % 2.00 % 2.01 % 0.2 0.3 32.3 % 30. 1.84 % 1. 0. 8.81 % 23.3 % 0.42 % 1.90 % 1.92 % 1.12 % -0.1 % 1 787 78.2 1 91 2 123 4 133 5 1 029 3 304 2 87 1 4 327 3 3 073 3 808 2005 5 5 280 278 717 919 881 906 961 199 48 421 9 1 119 23 278 66 6 5 6 5 0 % 8 % 0 % 1 % -38 55 6 44 71 5 % % % 3 5 6 3 6 6 6 7 3
12. 10.8 38 505 38 505 34 22 20 72 13 048 38 3 33 20 72 2 4.32 % 2.34 % 1.20 % 0.0 1. 0.22 % 0.39 % 20.0 % 1.98 % 0.41 % 1.97 % 0.1 1.1 1.77 % 1 385 1 1 2 1 347 2 6 2 773 3 239 5 2004 4.3 % 0.2 % 55 6 9
152 430 574 655 729 864 .1 % 144 379 3 5 732 443 5 566 290 314 77 822 5 5 6 56 6 5 6 2 % 7 % 5 3 % .00 81 5 9 23 41 48 0 1 65 22 % % % % % 0 6 6 5 5 5 5 5 2
13.92 % 10.10 % -0.01 % 36 876 36 876 32 19 87 11 3 3 3 31 8 19 87 24 483 2.34 % 0.22 % 0.84 % 0. 0.24 % 0. 0.30 % 1.4 10.2 % 0.90 % 1.99 % 3.7 1 273 2 249 1 38 2 481 1 417 1 114 1 123 1 6 2 19 6 2 474 38.40 3 407 4.3 % .10 % 2003 4.7 % 0.7 % 6 6 87 8 109 222 311 540 733 864 229 3 3 332 55 380 318 7 56 6 6 2 % 0 % 2 % 8 % 89 6 65 81 6 6 6 55 % % - 8 5 5 3 6 1 9 0 6 6 2 6
11.11 % -0.07 % -0.49 % 35 991 35 991 31 089 19 049 10 778 3 34 140 30 194 19 049 2 2. 0.83 % 0.23 % 0. 0.21 % 0.02 % 1.99 % 0.90 % 0.13 % 8.12 % 7.93 % 23.20 2 707 1 811 2 342 2 033 2 131 1 422 1 0 5 2 10 2 049 2 802 5 .30 % 0.4 % 2002 0.7 % 6 6 -1 991 223 .2 % . 987 306 681 896 229 331 3 282 3 8 3 % 6 7 % 3 % 9 % -23 46 77 70 5 6 31 6 6 6 % 7 0 8 4 3 4 6
12.07 % -0.18 % 33 286 33 286 29 278 17 871 33 28 31 7 28 473 17 871 23 8.24 % 2. 0.8 0.2 10.0 % 1.00 % 0.33 % 0. 0.34 % 8.83 % 1.44 % 0.44 % 2.10 % 10.1 % 1 123 31.84 2 1 790 1 8 1 021 2 093 1 923 9 18 1 113 2 147 2 079 2 842 . 0. 3.4 % 2001 6 6 6 109 212 318 456 667 827 10 138 334 333 6 272 417 388 877 55 4 % 1 % 6 6 7 % 3 % 9 % 5 - 17 82 5 6 6 % % % 6 8 8 5 6 3 4
10. -0.03 % 30 929 30 929 2 17 287 30 929 27 883 2 17 287 23 019 2.82 % 0.87 % 0.32 % 1 2.28 % 1.23 % 0.34 % 0.89 % 0.37 % 8.34 % 13.4 % 12. 0.47 % 8.11 % 1.70 % 1 110 2 2 1 47 1 79 1 8 6 1 4 1 4 8 292 2 0 1 920 5 2 4 29.92 .29 % 6 0. 2000 6
824 103 249 .0 % 344 474 635 785 130 323 312 244 6 434 3 934 900 7 % 7 % 9 % 5 6 9 89 6 5 11 5 5 5 55 6 % % -9 5 1 5 6 7 3 3 2 0
10.94 % 26 369 26 369 22 9 1 2 23 97 22 20 1 19 73 3.20 % 0.81 % 0.03 % 0. 14.0 % 2.34 % 2.27 % 1.83 % 1.38 % 18.2 % 0.44 % 0.4 0.43 % 9.4 4.77 % 11.7 % 7.97 % 1 105 1 912 1 14 1 7 1 272 1 378 1 138 5 6 1 884 1 8 3 2 1 5 0. 1999 5 238
3 6 238 102 331 438 545 560 767 107 10 28 13 274 194 448 302 6 73 7 % 5 9 % 1 % 6 5 .48 5 5 34 00 6 6 6 % % % 6 6 6 8 5 2 7 5 9 6 7 6 0 6
1000 1200 Financial Summary Group Summary Financial 1000 1200 200 400 600 800 1000 200 400 600 800 200 400 600 800 mNOK 0 mNOK 0 mNOK mNOK 0 1997 Operating expenses Operating 1997 Net interest income Net interest 1997 Net profit and return onequity return Net profit and 1998 1998 mNOK 1998 Net profit inmNOK 1999 1999 1999 2000 2000 2000 2001 2001 2001 2002 As aPercentage ofATA 2002 2002 2003 2003 2003 Return onequity Return 2004 As aPercentage ofATA 2004 2004 2005 2005 2005 2006 2006 2006 2007 per cent per 2007 2007 per cent per per cent per 0,0 0,5 1,0 1,5 2,0 2,5 3,0 0 5 10 15 20 25 0,0 1,0 2,0 3,0 4,0 bnNOK 10 20 30 40 50 60 70 80 1000 0 12 15 200 400 600 800 0 3 6 9 0 1997 Loans and deposits deposits and Loans 1997 Capital ratio 1997 Person-years worked 1998 Deposits 1998 Core capital 1998 Parent bank 1999 1999 1999 2000 2000 2000 2001 Loans 2001 2001 2002 Subordinated loancapital Subordinated 2002 2002 2003 2003 Subsidiaries 2003 2004 2004 2004 2005 2005 2005 2006 2006 2006 2007 2007 2007 123 Financial Summary Group 124 Primary Capital Certificate (PCC) Capital equity. isto achieve results that yield agood, stable return on total Midt-Norge’sSpareBankfinancial of The1 goal operations Dividend policy for the number of old PCCs not qualifying for a new PCC. issued; instead a cash dividend of NOK 6 be perwill PCCs PCCof fractionswill nor rightssubscription be Neither paid will decide how many PCCs are to qualify for one new PCC. the subscription period, which is 1–11 April 2008. The price Theissue price is to be set immediately prior to the start of PCCs must proactively notify this preference. totheprovision fordividend). Anyone preferring dividend The issue amount is capped at NOK 324 million (equivalent incentive to opt for dividend PCCs rather than cash dividend. The Board of Directors expects the issue price to provide an holders will benefit from reduced dilution. the provision made for dividend as equity capital, and PCC of new PCCs. A dividend issue of this type will retain part of conditionsformdividenddesired,theouttake ifinto and specificentitled, on be willholders PCC(dividendissue). holders PCC existing with out carried be to is placing A Dividend ssue and non-profit causes (NOK 86 million). distributed between the SpareBank 1 Fund (NOK 210 million) 49 million to the dividend equalisation fund. The NOK dividendsremainderandallocated to ismillion 324 year, NOK is application of profit. Of the profit of NOK 669 million for the from2007. Theparent bank’s accounts arethebasis forthe as IFRS under presented are accountsbank’s parent The the year Application oftheprofitfor nominal value of NOK 25 each. a milliondistributed53,976,0031,349withPCCsNOKon At end-2007 SpareBank 1 Midt-Norge’s PCC capital totalled Capital (PCC) Certificate Capital Primary
is communicated to the market via quarterly investor investor quarterly via market the to communicated is a means of instilling investor market confidence. Information timely information on the Bank’s progress and performance as The Bank attaches much importance to correct, relevant and Inve 8.72 per PCC. The cash dividend is NOK 6 per PCC. NOK profit was theholders’end-2007PCC ofsharetheAt capital. needgivetoapriority developmentto theBank’sof equity betweencash dividends and equalisation reserve if there is dividend.Variationsrelative thedistribution inoccur may SpareBank 1 Midt-Norge’s policy is to pay a competitive cash the event the gift fund, on a pro rata basis. the SpareBank 1 Fund, the dividend equalisation fund or, in shares of the Bank’s equity capital. Any respective deficit is their charged to with accordance in Fund 1 SpareBank the and holders PCC the between distributed are Profits Other links to financial information: www.huginonline.no SpareBank 1 Midt-Norge’s home page: www.smn.no on the internet. Information for investors, the press and brokers is available Information ontheinternet on a regular basis, mainly in London. international partners, lenders and investors are also and arranged reports releases on the press accounts sent website, to PCC Bank’s holders. Presentations the for presentations, 1st quarter: Financial calendar for 2008 2nd quarter: 3rd quarter: 4th quarter: s tor policy
30 12 30 4
April August February October
2008 2008 2009 2008
for 20 (20) per cent. Norwegian investors for 47 (44) per cent and foreign holders othertotal, the of centper (36) 33 Romsdalaccountfor og PCCs owned by investors in Sør- og Nord-Trøndelag and Møre Exchange in 2007. Stock Oslo the on symbol ticker MING the under traded were PCCsmillion year-end,14 Bank’satand thePCCs of cent per 38controlled holders PCC largestBank’s 20 The 2007. in 9,111 to 290 by fell holders PCC of number The regional investors and Norwegian and foreign institutions. achieve a good spread of PCC holders representing customers, SpareBank 1 Midt-Norge aims for good PCC liquidity and to Ownership RISK amount 7) PCC fraction Payout ratio Price-Book Value Ratio Price-Earnings Ratio Profit per PCC 4) Book value per PCC 3) Dividend yield 2 Direct return 1) Dividend per PCC PCC premium reserve (NOKm) Equalisation fund (NOKm) PCC capital (NOKm) Market value (NOKm) No. of PCCs issued, million Quoted price 6 2) 1) figures under IFRS. Key figures (exc. PCC capital and equalisation fund) are adjusted for the effect of the bonus issue and split. As from 2005 the key figures are consolidated Key figures and ratios Direct return on the PCC was 8.3 per cent. At end-2007 the market price of SpareBank 1 Midt-Norge’s PCC (MING) was NOK 72.2 M 7) 3) 5 4) ) )
arket Dividend in per cent of quoted price at year-end. Book equity of PCC holders (after deduction of own PCCs) in per cent of parent bank’s equity at year-end (after deduction of own PCCs and other equity). equity). other and PCCs own of deduction (after year-end at bank’s equity parent of cent per in PCCs) own of deduction (after holders PCC of equity Book As from the income year 200 The rate applies as from 1 January the following year. Price rise over the year plus paid dividend in per cent of quoted price at start of year. Dividend per PCC in per cent of profit per PCC. PCCs’ portion of the consolidated result (less own PCCs). Book equity (after deduction of own PCCs) multiplied by the PCC fraction divided by the number of PCCs (less own PCCs) including cash dividend. T 5
6 ) rend for the )
6 B no RISK amount is computed, the ank’s PCC in 2007 RISK
5 -4. 72.2 1 349 3 900 5 4.2 % 8.3 % 2007 rules having been replaced by rules on tax credits. 6 8.29 6 1.42 3.98 8.72 138 6 9 % 6 ,00 5 7 % 1 5
the income year. assignedthetoholder theofshare/PCC December31on of is credit tax The regulations. in Finance of Ministry the bydetermined is rateinterest tax-free The value.opening share’s/PCC’sthe equals base tax-credit The rate. interest tax-free a by multipliedshare’s/PCC’s basethe tax-credit Tax Act). The tax credit, computed forthe of each10–12(section credits share/PCC, tax on rules equalsby replaced are of Taxed Capital). As from the income year 2006 these rules ValueOpeningAdjustmentof for Norwegianacronym the has been adjusted each year under the holders, the tax-related opening value for Norwegian holders In order to prevent double taxation of the Bank and its PCC credit Risk adju 12. 4 82.00 1 2 4 140 5 3.7 % 200 7.3 % 8.2 6 0.49 9.94 1.71 . At end-200 0 % 5 .3 .00 24 6 % 6 5 6 0 2
tment replacedby tax 6 78.2 1 2 3 9 42.11 2.3 % 200 the price was NOK 82.00. 7.0 % 2.39 8. 1.8 0.49 9.19 .1 % 5 . 5 5 81 6 5 % 5 1 6 0 0 2 1
49.8 % 38.43 2 113 34.78 3. 2004 7.3 % 2.2 1. 4.00 9.48 400 7 9 % 6 .00 5 10 6 % .8 6 8 9
RISK 12.4 38.43 38.40 1 47 1.4 % 2003 7. 93 % 0.37 1.21 3.09 31.8 2.88 .9 % 482 rules (RISK being 5 10 07 % 5 6
-13, 137 % 2 23,20 38,43 3,0 % -0, 2002 6 0,87 1,20 0,77 ,2 % 472 891 6 , 5 5 30 10 03 % 2 4
125 Primary Capital Certificate (PCC) Capital 126 Primary Capital Certificate (PCC) Capital Primary Capital Certificate (PCC) Capital (PCC) Certificate Capital Primary 100 150 200 250 300 350 10 15 20 25 30 50 10 0 5 01.01.04 0 2 4 6 8 1999 P/E peers 1997 Price/earnings compared withpeers Dividend and profit per PCC(NOK) profit per and Dividend 1998 Profit PCC per 2000 1999 01.07.04 2001 2000 2002 2001 (relative 1.1.2004 pricetrend, =100) price2004–2007 Stock 2003 01.01.05 2002 P/E SpareBank 1Midt-Norge Dividend 2003 2004 2004 2005 01.07.05 2005 2006 2006 2007 2007 01.01.06 01.07.06 1000 2000 3000 4000 5000 0,5 1,0 1,5 2,0 2,5 0 0 P/B peers 1999 Price/book compared withpeers 1997 Market value(NOKm) 2000 01.01.07 1998 1999 2001 2000 2002 01.07.07 2001 2003 P/B SpareBank 1Midt-Norge 2002 2004 2003 01.07.08 2004 2005 2005 2006 2006 OSEBX Midt-Norge SpareBank 1 2007 2007
* Includes PCCs owned by the individual’s close associates, by companies he/she controls and by companies on whose behalf he/she is appointed. County Council Appointees Depositor Appointees PCCs holders Board Supervisory The Deputy chair
Chair
Ingvild Kjerkol Borgny Kjølstad Grande Aage Rostad Odd Reitan Domicile Ingjer Ofstad Kirsten Indgjerd Værdal Mildrid Finnehaug Gunnar Heglund Hans Martin Storø Terje Skjønhals Per Brovold Tore O. Sandvik Alf Erevik Aud Skrudland Hallgeir Grøntvedt Yngve Brox Øystein Sandaa Erik Sture Larre Terje Vareberg Jonny Meland Ingrid Kvande Trond Brekke Per Ivar Maudal Widar Slemdal Andersen Johan Brobakke Sverre Petter Berg Rolf Haukdal Tor E. Stigum Lars Sjømo Stig Jacobsen Tone Valmot Bjørn Thommesen Asbjørn Tronsgård
Trondheim Steinkjer Domifile Domifile Stjørdal Inderøy Kolvereid Verdal Trondheim Trondheim Trondheim Lund Rissa Trondheim Brekstad Hønefoss Averøy Stavanger Trondheim Sunndalsøra Trondheim Molde Oslo Trondheim Rælingen Molde Oppdal Trondheim Trondheim Angvik Trondheim Oslo Trondheim Sunndalsøra Oslo
Incl. close associates Incl. close associates Incl. close associates
Number of PCC Number of PCC Number of PCC 4 2 74 5 38 209 8 208 198 4 2 244 494 12 147 18 000 31 849 6 5 1 88 818 21 8 17 23 5 9 287 4 1 6 2 4 8 7 4 90 5 6 300 737 800
3 008 6 55 3 5 21 3 5 66 27 6 5 56 65 0 0 0 0 0 0 0 0 0 0 6 7 8 3 4 6 5
* * * * * * * * * * *
Chair Chair Chair Board of Directors Election Comittee Control Comittee Employees Deputy Chair Member Member Member Member
Member Member
Member Alternate
Alternate Alternate Alternate
Rolf Bratlie Thorbjørn Røsæg Alvhild S. Jensen Randi Aune Rolf Røkke
Domicile Inge Lindseth Tone Valmot Aud Skrudland Geir Tore Mathisen Jan Skogrand Randi Selnes Herskedal Sigrid Fjørtoft
Ingvild Kjerkol Per Brovold Thorbjørn Røsæg Per Axel Koch Widar Slemdal Andersen Eli Arnstad Christel Borge Anne-Brit Skjetne Kjell Bjordal Kjell Eriksen Terje Roll Danielsen Odd Tore Finnøy Venche Johnsen Jan Gunnar Kvam Kjell Flønes Randi Dille Liv Thun
Rælingen Rissa Stjørdal Steinkjer Domifile Melhus Steinkjer Namsos Levanger Trondheim Trondheim Domifile Domifile Number of PCC Trondheim Skatval Trondheim Levanger Oslo Molde Trondheim Averøy Trondheim Trondheim Molde Trondheim Trondheim Trondheim Fræna Elnesvågen Trondheim Namsos Steinkjer
Incl. close associates Incl. close associates Incl. close associates Incl. close associates Number of PCC Number of PCC Number of PCC 172 723 304 27 2 18 000 5 1 2 9 3 10 4 90 5 2 727 4 6 8 2 9 5 4
8 737 55 55 200 5 113 6 5 6 90 6 0 0 9 5 6 0 0 0 5 0 0 4 8 0 0 0 4 9 0 0 3 0
* * * * 127 The Supervisory Board 128 Supervisory Boards B Board Supervisory jørn Y R ngve T olf hommesen B B ratlie rox
R andi S. P Sverre er B rovold H P erskedal Stig etter B I erg ngvild i K ngrid O jerkol . Jacobsen John Geir K vande M ildrid
Jonny F innehaug M eland H osking I H nge ans L M indseth artin Storø a rnhild B L jørshol ars Sjømo t horbjørn A ud Skrudland R øsæg r L eif Singstad andi A une C Johan ontrol T B or robakke C ommittee: E . Stigum Joar Grimsbu W
idar S. R olf A ndersen Johanne Storler R økke a A lvhild S. Jensen ud Skrudland Ø ystein Sandaa T erje Skjønhals K jell H agan
A rne A R age ian
R ostad
A sbjørn
T ronsgård Gunnar e I P photo taken: Not present when ngjer er H eglund I var rik Sture O fstad M audal L arre 129 Supervisory Boards