BN Bank ASA T INTERIM REPOR 1st QUARTER 2012

Transcription

1 BN Bank ASA INTERIM REPORT 1s QUARTER 2012

2 Summary Financial Raios Direcor s Repor Inerim Repor Conen Summary of resuls Q Financial Raios...4 Repor of he Direcors...5 Consolidaed Income Saemen - Group Consolidaed Balance Shee - Group Saemen of Changes in Equiy - Group Saemen of Cash Flows - Group Noes - Group Noe 1. Accouning policies...16 Noe 2. Change in value of financial insrumens carried a fair value...16 Noe 3. Oher operaing income...17 Noe 4. Oher expense, gains and losses...17 Noe 5. Overview of gross lending in managed porfolios...17 Noe 6. Impairmen losses and wrie-downs on loans carried a amorised cos and guaranees Noe 7. Borrowing (funding)...20 Noe 8. Resuls of divesed operaions...21 Noe 9. Capial adequacy...23 Noe 10. Coningen liabiliies...24 Noe 11. Coningen oucomes, evens afer he reporing period...24 Noe 12. Transfer o SpareBank 1 Næringskredi...24 Noe 13. Transfer o SpareBank 1 Boligkredi...25 Noe 14. Disclosures concerning operaing segmens, remaining eniy...25 Noe 15. Consolidaed income saemens for he las five quarers...27 Income Saemen - Paren Bank Balance Shee - Paren Bank Saemen of Changes in Equiy - Paren Bank Saemen of Cash Flows - Paren Bank Noes - Paren Bank Noe 1. Accouning policies...33 Noe 2. Change in value of financial insrumens carried a fair value, gains and losses...33 Noe 3. Oher operaing income...34 Noe 4. Income from ownership ineress in group companies...34 Noe 5. Overview of gross lending in managed porfolios...34 Noe 6. Impairmen losses and wrie-downs on loans carried a amorised cos and guaranees Noe 7. Borrowing (funding)...37 Noe 8. Resuls of divesed operaion...38 Noe 9. Capial adequacy...40 Noe 10. Coningen liabiliies...41 Noe 11. Coningen oucomes, evens afer he reporing period...41 Noe 12. Transfer o SpareBank 1 Næringskredi...41 Noe 13. Transfer o SpareBank 1 Boligkredi...42 Noe 15. Consolidaed income saemens for he las five quarers...42 Repor on Review of Inerim Financial Informaion Saemen in accordance wih he Norwegian Securiies Trading Ac, secion

3 Summary Financial Raios Direcor s Repor Inerim Repor Summary of resuls Q Profi afer ax of NOK 37 million (NOK 17 million Q1 2011) Reurn on equiy afer ax of 4.8 per cen (1.4 per cen Q1 2011) Impairmen losses on loans and advances of NOK 9 million which is equivalen o a loss raio lending of 0.11 per cen (0.44 per cen Q1 2011) Tier capial raio of 11.5 per cen (10.9 per cen Q1 2011) 10 per cen growh in lending in he corporae marke and 2 per cen growh in lending in he reail marke in he las 12 monhs 3

4 Summary Financial Raios Direcor s Repor Inerim Repor Financial Raios NOK MILLION NOTE % OF ATA % OF ATA ÅRET 2011 % OF ATA Summary of resuls Ne income from ineres and credi commissions % % % Toal oher operaing income % % % Toal income % % % Toal oher operaing expense % % % Operaing profi/(loss) before impairmen losses % % % Impairmen losses on loans and advances % % % Profi/(loss) before ax % % % Compued ax charge % % % Profi/(loss) for he period, remaining eniy % % % Profiabiliy Reurn on equiy % 1.4 % 5.0 % Ne ineres margin % 0.86 % 0.94 % Cos-income raio % 55.9 % 48.0 % Balance shee figures Gross lending Cusomer deposis Deposi-o-loan raio % 46.3 % 47.7 % Increase/decrease in lending (gross) las 12 monhs 1.3 % 5.9 % 2.6 % Increase/decrease in deposis las 12 monhs 4.0 % -3.8 % -2.7 % Average oal asses (ATA) Toal asses Balance shee figures remaining eniy including SpareBank 1 Næringskredi and SpareBank 1 Boligkredi Gross lending Cusomer deposis Increase/decrease in lending (gross) las 12 monhs 5.3 % 11.2 % 8.0 % Increase/decrease in deposis las 12 monhs 4.0 % -3.8 % -2.7 % Share of lending financed via deposis 35.2 % 35.6 % 34.9 % Losses on loans and non-performing loans Loss raio lending % 0.44 % 0.19 % Non-performing loans as a percenage of gross lending % 0.49 % 0.59 % Oher doubful commimens as a percenage of gross lending % 3.52 % 2.02 % Solvency Capial adequacy raio 14.2 % 13.8 % 13.7 % Tier 1 capial raio 11.5 % 10.9 % 11.0 % Tier 1 capial Capial base Offices and saffing Number of offices Number of full-ime equivalens Shares Earnings per share for period (whole NOK) before discon. operaions Earnings per share for period (whole NOK) inc. discon. operaions Noe 1) Profi afer ax as a percenage of average equiy 2) Toal ne ineres margin o dae his year in relaion o average oal asses (ATA) 3) Toal operaing expense as a percenage of oal operaing income 4) Cusomer deposis as a percenage of lending o cusomers 5) Average oal asses (ATA) are calculaed as an average of quarerly oal asses and as a 1 January and 31 December 6) Ne loss as a percenage of average gross lending o dae his year 7) The figures disclosed include he Guaranee Porfolio 4

5 Summary Financial Raios Direcor s Repor Inerim Repor Repor of he Direcors Summary of resuls for he hree monhs o 31 March 2012 All figures for he hree monhs o 31 March 2012 are compared wih he equivalen figures for he hree monhs o 31 March 2011: Growh in lending of NOK million in he pas 12 monhs. Profi of NOK 37 million (NOK 17 million). Reurn on equiy of 4.8 per cen (1.4 per cen). Impairmen losses on loans and advances of NOK 9 million (NOK 35 million) Tier 1 capial raio of 11.5 per cen (10.9 per cen) Core ier 1 capial of 9.7 per cen (9.2 per cen) Highlighs of Q For he firs quarer of 2012 he BN Bank Group posed a profi afer ax of NOK 37 million, compared wih a pos-ax profi of NOK 17 million for he same period of The increase in profi is mainly aribuable o an increase in posiive changes in he value of financial insrumens and a reducion in impairmen losses on loans. In he following he firs-quarer figures are compared wih he figures for fourh-quarer Toal income for he firs quarer of 2012 was NOK 127 million (NOK 132 million). There was a decrease in ne ineres margin and income from fees, alhough his was parially compensaed for by posiive changes in value. Operaing expense for he firs quarer 2012 was NOK 67 million (NOK 71 million). Ne impairmen losses on loans and guaranees oalled NOK 9 million in firs-quarer 2012 (NOK 18 million), including a decrease in collecive wrie-downs of NOK 19 million (increase of NOK 4 million). Non-performing loans a he end of he firs quarer 2012 were 1.55 per cen of gross lending 1 (0.49 per cen). On a 12-monh basis growh in lending was 5.3 per cen and growh in deposis 4 per cen a he end of firs-quarer In he firs quarer of 2012, BN Bank issued ordinary senior bonds for a oal of NOK 2.3 billion in he Norwegian bonds marke. The Bank also ransferred NOK 8.1 billion and NOK 3.8 billion o SpareBank 1 Næringskredi and SpareBank 1 Boligkredi respecively. BN Bank s capial adequacy raio, ier 1 capial raio and core ier 1 capial raio are as follows: FIGURES AS % Q Q Capial adequacy raio Tier 1 capial raio Core ier 1 capial raio BN Bank s oal asses were NOK 42.3 billion as a 31 March Gross lending comprises lending in he Group and BN Bank s Ålesund loan porfolio. 5

6 Summary Financial Raios Direcor s Repor Inerim Repor On 26 January 2012, Oslo Disric Cour gave judgmen in he case in which he Icelandic bank Glinir banki hf, has sued BN Bank ASA for wha Glinir claims was an unlawful offse of abou NOK 240 million. According o he judgmen, BN Bank ASA was ordered o pay Glinir NOK 213 million plus ineres. The Cour found ha abou NOK 27 million was lawfully offse. In BN Bank s view, he Cour has made an error on a key poin relaing o he larges single iem ha he offse was made agains, bu BN Bank has oherwise won on he oher, imporan poins. BN Bank has accordingly appealed he judgmen o he Borgaring Cour of Appeal. As BN Bank has previously repored he offse amoun as los, he judgmen has only a limied negaive accouning effec for he Bank. BN Bank has previously enered ino an agreemen wih SpareBank1 SMN o ake over he Bank s Ålesund porfolio. The paries revised he agreemen on 1 February 2012, according o which SpareBank1 SMN ook over NOK 2.3 billion of he porfolio valued a NOK 3.1 billion. BN Bank now provides guaranees for 60 per cen of he credi risk for his porfolio (referred o as he Guaranee Porfolio) of NOK 738 million. This has reduced BN Bank s maximum exposure o NOK 443 million, which was 1.3 per cen of he Bank s oal lending a he end of he firs quarer of Economic developmens BN Bank presens is consolidaed and separae inerim financial saemens in compliance wih Inernaional Financial Reporing Sandards (IFRS). See Noe 1 for more informaion. Profi performance for Q For he firs quarer of 2012, profi afer ax was NOK 37 million, compared wih NOK 26 million for he fourh quarer of This produced a reurn on equiy of 4.8 per cen. The increase in profi is aribuable o an increase in posiive changes in he value of financial insrumens and reduced impairmen losses on loans. Income Toal income for he firs quarer of 2012 was NOK 127 million, compared wih NOK 132 million for fourh-quarer NOKm Q Q CHANGE Toal income Margins and volumes on lending/deposis 4 Fees, early redempion charges, commission -19 One-off accouning effecs -8 Reurn on unresriced funds (equiy) -4 Value changes, financial insrumens 26 Oher -4 The mos imporan reason for he change in oal income is lower income from fees, a decrease in commission income from he Guaranee Porfolio, and a one-off accouning effec in fourh-quarer This was parially compensaed for by an increase in posiive changes in he value of financial insrumens. In firs-quarer 2012, value changes had a posiive effec on operaing income by NOK 15 million. This is a posiive change of NOK 26 million compared wih fourh-quarer See Noe 2 for more informaion abou hese value changes. 6

7 Summary Financial Raios Direcor s Repor Inerim Repor Operaing expense Firs-quarer operaing expense was NOK 67 million, compared wih NOK 71 million for fourh-quarer NOKm Q Q CHANGE Operaing expense Wages and oher personnel expenses 7 Markeing -2 Consulancy assisance -10 Oher 1 The decrease in oher operaing expense is largely owing o a reducion in he use of consulancy services. Operaing expense as a percenage of average oal asses in firs-quarer 2012 was 0.65 per cen, compared wih 0.69 per cen in fourh-quarer The Group s cos-income raio was 53 per cen (54 per cen). Impairmen losses and non-performing loans Impairmen losses on loans for he firs quarer of 2012 oalled NOK 9 million. Impairmen losses on loans in firs-quarer 2012 comprised income recogniion of NOK 12 million in reail loans and NOK 0 million in corporae loans, and expense recogniion of NOK 20 million in he Guaranee Porfolio 2. Collecive wrie-downs were down by NOK 19 million in he firs quarer, owing o he lapse of he loss guaranee on loans ransferred o SpareBank 1 Næringskredi AS. In addiion, in he firs quarer BN Bank reduced collecive wriedowns wihin is reail porfolio following calibraion of he Bank s inernal risk models. Individual and collecive impairmen losses in firs-quarer 2012 were as follows: NOKm INDIVIDUAL COLLECTIVE Corporae 8-8 Reail 0-12 Guaranee Porfolio 19 1 Non-performing and doubful loans, less individual wrie-downs, oalled NOK 640 million (NOK 766 million) a he end of firs-quarer 2012, which is 1.84 per cen (2.11 per cen) of gross lending. This includes non-performing and doubful loans in he Guaranee Porfolio. See Noe 6 for more informaion. Loan loss provisions a he end of he firs quarer of 2012 oalled NOK 151 million, of which individual wrie-downs accouned for NOK 85 million and collecive wrie-downs NOK 66 million. Toal loan loss provisions a he end of he firs quarer were as follows: LOAN LOSS PROVISIONS (NOKm) % OF GROSS LENDING Corporae Reail Divesed porfolio 1 0 In addiion, provision of NOK 53 million has been made for a financial loss guaranee relaing o he Guaranee Porfolio. 2 BN Bank has provided guaranees for losses in his porfolio. 7

8 Summary Financial Raios Direcor s Repor Inerim Repor Toal asses BN Bank s oal asses were NOK 42.3 billion a he end of he firs quarer 2012, compared wih NOK 41.4 billion a he end of he firs quarer of The change is mosly aribuable o growh in lending and an increase in shorerm securiies invesmens. Growh in lending and deposis Gross lending 3 has increased by NOK 2.3 billion, or 5.3 per cen, in he pas 12 monhs. Gross lending oalled NOK 45.9 billion a he end of he firs quarer of NOKbn Q Q Q Q Gross lending Change in he quarer Gross lending had he following segmenal exposure as a 31 March 2012: NOKbn Q Q Reail Corporae Loans ransferred o SpareBank 1 SMN Growh in corporae lending in he pas 12 monhs was NOK 2.8 billion, or 10 per cen, whereas growh in reail lending in he pas 12 monhs was NOK 318 million, or 2 per cen. Gross lending in he BN Bank Group 4 as a 31 March 2012 had he following secoral exposure: FIGURES IN % Q Q Real esae operaions Reail marke Financial indusry 7 6 Oher 8 12 A he end of firs-quarer 2012 a loan porfolio of NOK 8.1 billion had been ransferred o SpareBank 1 Næringskredi and a loan porfolio of NOK 3.8 billion o SpareBank 1 Boligkredi. Cusomer deposis have increased by NOK 0.6 billion in he pas 12 monhs. Toal deposis sood a NOK 16.2 billion a he end of he firs quarer of The deposi-o-loan raio a he end of he firs quarer of 2012 was 47.5 per cen, which is 1.2 percenage poins higher han as a 31 March Gross lending is he sum oal of corporae and reail lending in BN Bank, SpareBank 1 Næringskredi, SpareBank 1 Boligkredi and loans ransferred o SpareBank 1 SMN. 4 Gross lending for he Group is he sum oal of corporae and reail lending in BN Bank and loans ransferred o SpareBank 1 SMN. 8

9 Summary Financial Raios Direcor s Repor Inerim Repor Funding and liquidiy In he firs quarer, BN Bank has issued cerificaes and bonds for a oal of NOK 2.3 billion. The Bank s liquidiy porfolio was NOK 6.4 billion a he end of firs-quarer BN Bank s Board of Direcors have resolved ha he Bank shall a all imes have sufficien liquid funds o manage wihou accessing any new exernal funding for a period of 12 monhs. A he end of he firs quarer of 2012, his arge had been me by a good margin. The firs-quarer inerim financial saemens give a rue and fair view of he BN Bank Group s asses and liabiliies, financial posiion and performance. The inerim financial saemens are based on he assumpion ha he eniy is a going concern. Subsidiaries The BN Bank Group comprises he bank BN Bank and he credi insiuions Bolig- og Næringskredi AS (BNkredi) and BN Boligkredi AS (BN Boligkredi). The Group also includes he real esae company Collecion Eiendom AS. BNkredi and BN Boligkredi presen separae financial saemens in compliance wih Inernaional Reporing Sandards (IFRS). Collecion Eiendom presens is financial saemens in compliance wih NGAAP. See Noe 1 for more informaion. Bolig- og Næringskredi AS BNkredi provides low-risk morgage loans on commercial real esae. A he end of he firs quarer of 2012 he company had a loan porfolio oalling NOK 18.2 billion, compared wih NOK 15.7 billion as a 31 March NOK 8.1 billion in loans had been ransferred o SpareBank1 Næringskredi as a 31 March BNkredi posed a profi afer ax of NOK 19 million for firs-quarer 2012, compared wih a pos-ax profi of NOK 30 million for fourh-quarer The decrease in profi is aribuable o lower ne ineres margin as a resul of higher funding coss and also o a decrease in changes in he value of financial insrumens. Impairmen losses on loans and advances oalled NOK 6 million for he firs quarer of 2012, compared wih NOK 9 million for he previous quarer. Individual wrie-downs were NOK 50 million as a 31 March 2012, while collecive wriedowns oalled NOK 44 million a he end of firs- quarer 2012, which is 0.24 per cen of lending. BNkredi had NOK 4.7 billion in bond deb ousanding as a 31 March 2012, compared wih NOK 4.5 billion as a 31 December BN Bank has provided guaranees ha BNkredi will have a minimum capial adequacy raio or junior financing of 20 per cen. BNkredi s capial adequacy raio and ier 1 capial raio were, respecively, 16.6 per cen and 14.2 per cen as a 31 March BN Boligkredi AS BN Boligkredi is BN Bank s credi insiuion for issuance of covered bonds. A he end of he firs quarer of 2012 he company had a residenial morgage porfolio oalling NOK 1.9 billion, which is NOK 0.9 billion less han as a 31 March The company posed a profi afer ax of NOK 7 million for firs-quarer 2012, which is on a par wih profi for fourhquarer A decrease in changes in he value of financial insrumens was compensaed for by income recogniion on collecive wrie-downs. The company s capial adequacy raio was 14.2 per cen while he ier 1 capial raio was 11.5 per cen as a 31 March BN Bank has enered ino an agreemen wih SpareBank 1 Boligkredi AS whereby BN Bank will primarily use his company for fuure financing of residenial morgage loans. 9

10 Summary Financial Raios Direcor s Repor Inerim Repor Collecion Eiendom AS Collecion Eiendom AS was esablished in 2010 for he purpose of owning and managing real esae. Collecion Eiendom posed a zero resul afer ax as a 31 March Oulook for BN Bank BN Bank ASA is well capialised and he Bank s funding is sound. The Board of Direcors are focusing on healhy growh in he Bank s core areas in accordance wih he adoped business sraegy. Low coss will be essenial for enabling he Bank o realise is sraegy, and for ha reason he Bank will work hard o reduce he overall cos picure in 2012 compared wih The Board are saisfied wih he resuls for he firs quarer of 2012 and expec o see coninuing posiive developmen for he res of Trondheim, 24 April 2012 Finn Haugan (Chair) Tore Medhus Sig Arne Engen Harald Gaupen Helene Jebsen Anker (Depuy Chair) Krisin Undheim Ania Finserås Breun Ella Skjøresad Gunnar Hovland (Employee Represenaive) (Managing Direcor) 10

11 Group Paren Bank Summary Financial Raios Direcor s Repor Inerim Repor Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Consolidaed Income Saemen - Group FULL -YEAR NOK MILLION NOTE Q Q Ineres and similar income Ineres expense and similar charges Ne income from ineres and credi commissions Change in value of financial insrumens a fair value, gains & losses Oher operaing income Toal oher operaing income Salaries and general adminisraive expenses Depreciaion, amorisaion and wrie-downs Oher operaing expense Oher gains and losses Toal oher operaing expense Operaing profi/(loss) before impairmen losses Impairmen losses on loans and advances Operaing profi/(loss) afer impairmen losses Profi/(loss) before ax Compued ax charge Profi/(loss) for he period, remaining eniy Resul of operaions under divesmen Profi/(loss) for he period including disconinued operaions Oher Comprehensive Income under IAS 1 Change in value of financial asses available for sale Toal P&L iems recognised in equiy Toal profi/(loss) for he period

12 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Consolidaed Balance Shee - Group NOK MILLION NOTE Deferred ax asses Inangible asses Own funds lending Tangible fixed asses Repossessed properies Loans and advances 5, 6, 12, Prepaymens and accrued income Financial derivaives Shor-erm securiies invesmens Cash and balances due from credi insiuions Asses classified as held for sale Toal asses Share capial Reained earnings Toal equiy Subordinaed loan capial Liabiliies o credi insiuions Deb securiies in issue Accrued expenses and deferred income Oher curren liabiliies Tax payable Financial derivaives Cusomer deposis & accouns payable o cusomers Liabiliies classified as held for sale Toal liabiliies Toal equiy and liabiliies Trondheim, 24 April 2012 The Board of Direcors 12

13 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Saemen of Changes in Equiy - Group OTHER PAID-UP SHARE SHARE OTHER TOTAL NOK MILLION CAPITAL CAPITAL RESERVES EQUITY Balance Shee as a 1 January Resul for he period Balance Shee as a 31 March Dividend paid Share capial increase Resul for he period Balance Shee as a 31 December Resul for he period Balance Shee as a 31 March Trondheim, 24 April 2012 The Board of Direcors 13

14 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Saemen of Cash Flows - Group Cash flows from operaing aciviies Ineres/commission received and fees received from cusomers Ineres/commission paid and fees paid o cusomers Ineres received on oher invesmens Ineres paid on oher loans Receips/disbursemens (-) on loans o cusomers Receips/paymens on cusomer deposis & accouns payable o cusomers Receips/paymens (-) on liabiliies o credi insiuions Receips/paymens (-) on securiies in issue Receips on wrien-off deb Oher receips/paymens Paymens o suppliers for goods and services Paymens o employees, pensions and social securiy expenses Tax paid Ne cash flow from operaing aciviies Cash flows from invesing aciviies Receips/paymens (-) on receivables from credi insiuions Receips/paymens (-) on shor-erm securiies invesmens Receips/paymens (-) on long-erm securiies invesmens Proceeds from sale of operaing asses ec Purchase of operaing asses ec Proceeds from sale of subsidiaries Ne cash flow from invesing aciviies Cash flow from financing aciviies Receips/paymens (-) of subordinaed loan capial Ne cash flow from financing aciviies Ne cash flow for he period Cash and balances due from cenral banks as a 1 January Cash and balances due from cenral banks as a 31 December

15 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Noes - Group Noe 1. Accouning policies...16 Noe 2. Change in value of financial insrumens carried a fair value...16 Noe 3. Oher operaing income...17 Noe 4. Oher expense, gains and losses...17 Noe 5. Overview of gross lending in managed porfolios...17 Noe 6. Impairmen losses and wrie-downs on loans carried a amorised cos and guaranees Noe 7. Borrowing (funding)...20 Noe 8. Resuls of divesed operaions...21 Noe 9. Capial adequacy...23 Noe 10. Coningen liabiliies...24 Noe 11. Coningen oucomes, evens afer he reporing period...24 Noe 12. Transfer o SpareBank 1 Næringskredi...24 Noe 13. Transfer o SpareBank 1 Boligkredi...25 Noe 14. Disclosures concerning operaing segmens, remaining eniy...25 Noe 15. Consolidaed income saemens for he las five quarers

16 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes NOTE 1. ACCOUNTING POLICIES The firs-quarer inerim consolidaed financial saemens for he hree monhs o 31 March 2012 have been prepared in compliance wih IFRS, including IAS 34 Inerim Financial Reporing. A descripion of he accouning policies on which he inerim consolidaed financial saemens are based is provided in he Annual Repor for NOTE 2. CHANGE IN VALUE OF FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE FULL -YEAR Change in value of ineres rae derivaives obliged o be carried a fair value hrough profi or loss 1, 3, Change in value of currency derivaives obliged o be carried a fair value hrough profi or loss Change in value equiy-linked opions & equiy opions oblig. carried a fair value hrough profi or loss Toal change in value of financial insrumens obliged o be carried a fair value Change in value of deposis seleced for fair value carrying hrough profi or loss Change in value of borrowings seleced for fair value carrying hrough profi or loss Change in value of loans seleced for fair value carrying hrough profi or loss Change in value of shor-erm financial invesmens seleced for fair value carrying Toal change in value of financial insrumens seleced for fair value carrying Change in value of ineres rae derivaives, hedging Change in value of borrowings, hedged Toal change in value of financial insrumens for hedging Toal change in value of financial insrumens carried a fair value Realised exchange gains/losses(-) bonds and cerificaes carried a amorised cos Exchange gains/losses on borrowings and loans carried a amorised cos Toal change in value of financial insrumens carried a fair value, gains and losses In connecion wih he sale and/or issue of he srucured producs, BN Bank has hedged exposure in he form of equiy opions, equiy-linked opions and ineres rae swap agreemens. The earlier urbulence in he financial markes caused he loss of some conracual counerparies, and i was no possible a he ime o replace hese hedging ransacions. BN Bank is herefore parially exposed o he marke developmen of a limied number of producs. Changes in exposure are recognised in profi and loss immediaely and as a 31 March 2012 here was no profi-and-loss effec, compared wih recognised expense of NOK 4 million for he same period of NOK 8 million was recognised as expense for full-year Exchange gains/losses on borrowings and loans carried a amorised cos are chiefly aribuable o exchange gain/loss effecs which arise when borrowing and lending in foreign currencies are ranslaed a he curren exchange rae. Forward exchange conracs and combined ineres rae and currency derivaives are carried a fair value wih changes in value carried hrough profi or loss. The ne foreign exchange effec for he Group was recognised income of NOK 2 million for he period o 31 March 2012, compared wih recognised expense of NOK 2 million for he period o 31 March The equivalen figure for full-year 2011 was NOK 1 million recognised as income. Exposure o exchange rae flucuaions is low. 3 Changes in he value of financial invesmens seleced for fair value carrying gave rise o recognised income of NOK 17 million for he period o 31 March 2012, compared wih recognised expense of NOK 1 million for he same period of NOK 1 million was recognised as expense for full-year Turbulence in he financial markes has caused big flucuaions in he value of hese invesmens. 4 The ne effec of ineres rae derivaives obliged o be carried a fair value and changes in he value of financial insrumens seleced for fair value carrying was recognised expense of NOK 1 million for he period o 31 March 2012, compared wih recognised income of NOK 4 million for he same period of NOK 1 million was recognised as expense for fullyear From 2010, BN Bank has used fair value hedges for new fixed-rae borrowings and relaed hedge insrumens. The borrowings are hedged 1:1 hrough exernal conracs where he principal, ineres sream, erm and hedging ransacion mach. I is he ineres rae risk ha is hedged and he hedging ransacions enered ino are documened. Wih fair value hedges, he hedge insrumen is accouned for a fair value, and he hedge objec is accouned for a fair value for he hedged risk. Changes in hese values from he opening balance shee are carried in profi or loss. The credi risk is no hedged and herefore does no affec he valuaions. The value of he hedging insrumens as a 31 March 2012 was posiive by NOK 86 million. 6 Realised exchange gains/losses on bonds, cerificaes and borrowings carried a amorised cos gave rise o recognised expense of NOK 3 million for he period o 31 March 2012 compared wih recognised expense of NOK 3 million for he same period of NOK 10 million was recognised as expense for full-year

17 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes NOTE 3. OTHER OPERATING INCOME Guaranee commission Ne commission income/charges Oher operaing income Toal oher operaing income Commission income relaing o he managemen of he porfolios in SpareBank 1 Næringskredi and SpareBank 1 Boligkredi oalled NOK 18 million as a 31 March 2012 and NOK 19 million for he same period of NOK 72 million was recognised as income for full-year NOTE 4. OTHER EXPENSE, GAINS AND LOSSES The building Munkegaa 21 was sold and aken over by he new owner on 15 Sepember An accouning profi of NOKm 37 was repored in Q Saemen of cash flows (NOKm) NOK MILLION Book value of he building a dae of sale 91 Deb and oher iems -95 Ne equiy -4 Sale profi o he company 37 Inercompany deb seled 96 Toal added upon sale subsidiary 129 NOTE 5. OVERVIEW OF GROSS LENDING IN MANAGED PORTFOLIOS Loans Corporae Marke and Reail Marke, Group Seller s credi Loans in remaining eniy (coninuing operaions) Loans ransferred o SpareBank 1 Næringskredi Loans ransferred o SpareBank 1 Boligkredi Toal loans in managed porfolios Divesed porfolio

18 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes NOTE 6. IMPAIRMENT LOSSES AND WRITE-DOWNS ON LOANS CARRIED AT AMORTISED COST AND GUARANTEES The various elemens included in impairmen losses & wrie-downs on loans are se ou in Noe 1, 2011 Annual Repor. Loans pas due more han 3 monhs are defined as loans no serviced under he loan agreemen for 3 monhs or more. As a firs morgage lender he Group can access revenue eiher hrough he cours or by some volunary soluion. Impairmen losses & wrie-downs described here apply o loans carried a amorised cos. Wrie-offs in excess of prior-year wrie-downs Wrie-offs on loans wihou prior wrie-downs Wrie-offs ransferred o divesed porfolio Wrie-downs for he period: Change in collecive wrie-downs Change in collecive wrie-downs relaed o Ålesund porfolio Change in collecive wrie-downs ransferred o divesed porfolio Toal change in collecive wrie-downs Increase in loans wih prior-year wrie-downs Provisions agains loans wihou prior wrie-downs Decrease in loans wih prior-year wrie-downs Change in individual wrie-downs ransferred o divesed porfolio Toal change in individual wrie-downs Gross impairmen losses Recoveries on previous wrie-offs Impairmen losses Revenue recogniion of ineres on wrien-down loans NOK 9 million relaes o he repored profi on he sale of a previously repossessed propery in Tromsø in he second quarer of Individual wrie-downs o cover impairmen losses a sar of he period Wrie-offs covered by prior-year individual wrie-downs Wrie-downs for he period: Increase in loans wih prior-year individual wrie-downs Wrie-downs on loans wihou prior individual wrie-downs Decrease in loans wih prior-year individual wrie-downs Transferred asses classified as held for sale Individual wrie-downs o cover impairmen losses a end of he period Collecive wrie-downs o cover impairmen losses a sar of he period Collecive wrie-downs for he period o cover impairmen losses Transferred asses classified as held for sale Collecive wrie-downs o cover impairmen losses a end of he period

19 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Loss provision financial guaranee relaing o Ålesund porfolio a sar of he period Wrie-offs covered by prior-year individual wrie-downs Wrie-downs for he period: Increase in loans wih prior-year individual wrie-downs Wrie-downs on loans wihou prior individual wrie-downs Decrease in loans wih prior-year individual wrie-downs Loss provision financial guaranee re. Ålesund porfolio a end of he period Collecive wrie-downs relaed o Ålesund porfolio a sar of he period Collecive wrie-downs for he period o cover losses in Ålesund porfolio Collecive wrie-downs relaed o Ålesund porfolio a end of he period Individual wrie-downs relaing o Ålesund porfolio classified as held for sale Collecive wrie-downs relaed o Ålesund porfolio classified as held for sale Toal loss provisions relaing o Ålesund porfolio BN Bank has previously enered ino an agreemen wih SpareBank1 SMN o ake over he Ålesund porfolio. The paries revised he agreemen on 1 February 2012 according o which SpareBank1 SMN ook over NOK 2.3 billion of he porfolio valued a NOK 3.1 billion. BN Bank now provides guaranees for 60% of he credi risk for his porfolio (referred o as he Guaranee Porfolio). The Bank s maximum exposure has hus been reduced o NOK 443 million, which a he end of he firs quarer of 2012 was 1.3% of he Bank s oal lending. The oal provision for losses in he Guaranee Porfolio was NOK 53 million a 31 March BN Bank will provide guaranees for losses in he Guaranee Porfolio for a period of 3-5 years from he incepion of he original agreemen. The loss provision is classified under Accrued expenses and deferred income. Loans pas due more han 3 monhs 1 Gross principal Individual wrie-downs Ne principal Oher loans wih individual wrie-downs 1 Gross principal Individual wrie-downs Ne principal

20 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Loans pas due more han 3 monhs by secor and as a percenage of loans 1, 2 GROSS GROSS GROSS OUTSTANDING OUTSTANDING OUTSTANDING NOK MILLION % % 2011 % Corporae marke Reail marke Divesed loan porfolio Toal Wih regard o disclosures in he noes concerning loans pas due (non-performing loans), oher loans wih individual wrie-downs, and loans pas due by secor and as a percenage of loans, he figures saed include BN Bank s operaions in Ålesund, which are oherwise reaed as divesed operaions, and he Guaranee Porfolio vis-a-vis SpareBank 1 SMN. 2 Loans pas due more han 3 monhs as a percenage of loans is calculaed on he basis of loans in he remaining eniy and he Guaranee Porfolio. NOTE 7. BORROWING (FUNDING) Deb securiies in issue The BN Bank Group had issued bonds and cerificaes wih a face value of NOK million as a 31 March 2012, eiher as new issues or increases in exising ap issues. Fixed-rae loans are carried in he consolidaed balance shee a fair value, while variable-rae loans are carried a amorised cos. NOK MILLION CERTIFICATES BONDS TOTAL Ne deb (a face value) 1 January New issues Increase in exising issues Purchase and mauriy of exising issues Ne deb (a face value) as a 31 March Subordinaed loans capial and perpeual subordinaed loan capial securiies The BN Bank Group had issued no perpeual subordinaed loan capial securiies or subordinaed loans as a 31 March Fixed-rae loans are carried in he consolidaed balance shee a fair value, while variable-rae loans are carried a amorised cos. PERPET. SUBORD. SUBORDINATED NOK MILLION LOAN CAP. SEC. LOAN CAPITAL TOTAL Ne deb (a face value) as a 1 January New issues Increase in exising issues Purchase and mauriy of exising issues Ne deb (a face value) as a 31 March

21 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Recognised values Cerificaes carried a amorised cos Cerificaes seleced for fair value carrying Toal recognised value of cerificaes Bonds carried a amorised cos Bonds carried a amorised cos (secured deb) Bonds seleced for fair value carrying Toal recognised value of bonds Toal recognised value of deb securiies in issue Perpeual subordinaed loan capial securiies carried a amorised cos Perpeual subordinaed loan capial securiies seleced for fair value carrying Toal recognised value of perpeual subordinaed loan capial securiies Subordinaed loans carried a amorised cos Subordinaed loans seleced for fair value carrying Toal recognised value of subordinaed loans Toal recognised value of subordinaed loans and perpeual subordinaed loan capial securiies NOTE 8. RESULTS OF DIVESTED OPERATIONS The banking operaion in Ålesund, which chiefly comprises business lending, became organisaionally subordinae o SpareBank 1 SMN from Q The splioff from BN Bank began in Q and is expeced o be compleed by Q As a 31 March 2012 here remains NOK 92 million in loans o be moved o SpareBank 1 SMN. From Q inclusive, he Ålesund operaion has been repored as a disconinued operaion under IFRS 5. Specificaion of resuls of divesed operaion Ne income from ineres and credi commissions Toal oher operaing income Toal oher operaing expense Toal impairmen losses on loans and advances Pre-ax profi/(loss) Compued ax charge Profi/(loss) from disconinued operaion afer ax

22 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes Saemen of cash flows relaing o divesed operaion Cash flow from operaing aciviies Cash flow from invesing aciviies Cash flow from financing aciviies Ne cash flow for he period Specificaion of resuls of remaining eniy Ne income from ineres and credi commissions Toal oher operaing income Toal oher operaing expense Operaing profi/(loss) before impairmen losses on loans Impairmen losses on loans and advances Pre-ax profi/(loss) from remaining eniy Compued ax charge Profi/(loss) afer ax from remaining eniy Specificaion of resuls of divesed operaion and he Guaranee Porfolio Ne income from ineres and credi commissions Toal oher operaing income Toal oher operaing expense Toal impairmen losses on loans and advances Pre-ax profi/(loss) Compued ax charge Profi/(loss) from divesed operaion and Guaranee Porfolio Oher asses and liabiliies classified as held for sale In connecion wih a loan defauled on in 2010, BN Bank ook over 100% of he shares in a company. BN Bank inends o sell he company on. 22

23 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes NOTE 9. CAPITAL ADEQUACY Process for assessing he capial adequacy requiremen BN Bank has esablished a sraegy and process for risk managemen and assessmen of he capial adequacy requiremen and how capial adequacy can be mainained. The collecive erm for his is ICAAP (Inernal Capial Adequacy Assessmen Process). Assessing he capial adequacy requiremen includes assessing he size, composiion and disribuion of he capial base adaped o he level of risks ha he Bank is or may be exposed o. The assessmens are risk-based and forward-looking. Risk areas assessed in addiion o he Pillar 1 risks are concenraion risk in he credi porfolio, ineres rae and foreign exchange risk in he bank porfolio, liquidiy risk, marke risk, owner s risk and repuaion risk. ICAAP is no focused on a single mehod or a single figure, bu presens a se of calculaions including differen ime horizons, confidence levels and assumpions. Share capial Oher reserves EPerpeual subordinaed loan capial (perpeual subordinaed loan capial borrowings) Less: Perpeual subordinaed loan capial (perpeual subord. loan capial borrowings) ha canno be included Inangible asses Deferred ax asses Oher deducions in ier 1 capial Tier 1 capial Fixed-erm subordinaed loan capial Less: Fixed-erm subordinaed loan capial ha canno be included Oher deducions in ier 2 capial Ne ier 2 capial Toal capial base Risk-weighed asses Tier 1 capial raio (%) 11,5 10,9 11,0 Capial adequacy raio (%) For more deails, see Noe 7. Specificaion of risk-weighed asses NOK MILLION RECOGNISED WEIGHTED RECOGNISED WEIGHTED RECOGNISED WEIGHTED RISK-WEIGHTING AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT 0 % % % % % % % Invesmens included in he rading porfolio Negoiable deb insrumens included in he rading porfolio Toal risk-weighed asses Capial adequacy raio (%)

24 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes NOTE 10. CONTINGENT LIABILITIES Sale of srucured producs BN Bank was sued in a group acion over srucured savings producs in The Supreme Cour ruled in February 2010 ha group liigaion is no appropriae for assessing his ype of produc. The group acion agains BN Bank has hus been brough o a conclusion. Three cusomers hen sued he Bank individually in he Oslo Disric Cour, bu he Cour found in favour of BN Bank on 8 July The judgmen was appealed o Borgaring Cour of Appeal. The appeal will be heard in March The oal loan commimen as a 31 March 2012 was NOK 4 million. BN Bank has also provided loans o finance Aremis srucured producs. BN Bank is now being sued by six cusomers, hree of whom are limied companies, wih he oal loan financing on hese producs amouning o NOK 106 million. The amouns in dispue are ineres paymens. In connecion wih he sale and/or issue of he srucured producs, BN Bank has hedged exposure in he form of equiy opions, equiy-linked opions and ineres rae swap agreemens. The urbulence in he financial markes in 2008 caused he loss of some conracual counerparies, and i has no been possible o replace all hese hedging ransacions. The liquidaor of one of he conracual counerparies filed a couner-claim in 2011, which BN Bank dispues. The oucome is unclear, and liigaion is underway. The oal claim amouns o NOK 12 million. Bankrupcy dividend/offse agains Glinir banki hf, Iceland On 26 January 2012 Oslo Disric Cour gave judgmen in he case in which Glinir banki hf. had sued BN Bank ASA for wha Glinir claims was an unlawful offse of abou NOK 240 million. According o he judgmen BN Bank ASA was ordered o pay Glinir NOK 213 million plus ineres. The Cour found ha abou NOK 27 million was lawfully offse. In BN Bank s view he Cour has made an error on a key poin relaing o he larges single iem ha he offse was made agains, bu BN Bank has oherwise won on he oher, imporan poins. BN Bank has accordingly appealed he judgmen o he Borgaring Cour of Appeal. As he Bank has previously repored he offse amoun as los, he judgmen has only a limied negaive accouning effec. NOTE 11. CONTINGENT OUTCOMES, EVENTS AFTER THE REPORTING PERIOD Apar from he maers menioned in Noe 10 above, here are no asses or liabiliies o which coningen oucomes are aached and where hose oucomes could have a significan impac on he Group s financial posiion and resuls. There were no significan evens afer he reporing period. NOTE 12. TRANSFER TO SPAREBANK 1 NÆRINGSKREDITT SpareBank 1 Næringskredi AS was esablished in 2009 and graned a licence by he Financial Supervisory Auhoriy of Norway o operae as a credi insiuion. The company s bonds have an Aa3 raing from Moody s. The company is owned by he savings banks ha form he SpareBank 1 consorium and is co-locaed wih SpareBank 1 Boligkredi AS in Savanger. The same banks own SpareBank 1 Næringskredi as own BN Bank. The purpose of he company is o secure for he consorium banks a source of sable, long-erm financing of commercial real esae a compeiive raes. SpareBank 1 Næringskredi procures loans wih morgages on commercial properies and issues covered bonds wihin he regulaions governing such bonds esablished in As par of he consorium, BN Bank may ransfer loans o he company and, as par of he Bank s funding sraegy, loans have been ransferred from BNkredi. As a 31 March 2012, he book value of ransferred loans was NOK 8.1 billion. BN Bank is responsible for managing he ransferred loans and BNkredi receives a commission based on he ne reurn on he loans ransferred by he Bank and he coss o he company. In order o aend o he ineress of exising bond holders, in connecion wih he ransfer BN Bank guaraneed ha BNkredi will have a capial adequacy raio of a leas 20 per cen a all imes. Should he capial adequacy raio fall below 20 per cen, he Paren Bank will cede precedence wih respec o is accouns receivable wih BNkredi and/or provide a guaranee. As a 31 March 2012, BNkredi s capial adequacy raio was 16.6 per cen. The amoun he Paren Bank is ceding precedence for sood a NOK 645 million as a 31 March BN Bank has pu up guaranees for he ransferred loan commimens where hey exceed 25 per cen of SpareBank 1 Næringskredi s capial base. As a 31 March 2012, hese guaranees oalled NOK 311 million. 24

25 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes NOTE 13. TRANSFER TO SPAREBANK 1 BOLIGKREDITT SpareBank 1 Boligkredi is owned by he savings banks ha form he SpareBank 1 consorium and is co-locaed wih SpareBank 1 Næringskredi AS in Savanger. The purpose of he company is o secure for he banks wihin he consorium a source of sable, long-erm financing of residenial morgage loans a compeiive raes. The company s bonds have raings of Aaa and AAA from Moody s and Fich respecively. SpareBank 1 Boligkredi procures loans wih morgages on residenial properies and issues covered bonds wihin he regulaions governing such bonds esablished in As par of he consorium, BN Bank may ransfer loans o he company and, as par of he Bank s funding sraegy, loans were ransferred from BN Boligkredi in 2010 and A he end of March 2012, he book value of ransferred loans was NOK 3.8 billion. BN Bank is responsible for managing he ransferred loans and receives a commission based on he ne reurn on he loans ransferred by he Bank and he coss o he company. NOTE 14. DISCLOSURES CONCERNING OPERATING SEGMENTS, REMAINING ENTITY Segmen reporing is regularly reviewed wih he managemen. The managemen have chosen o divide up he reporing segmens according o he underlying business areas. GUARANTEE PORT. TOTAL NOK MILLION CORPORATE RETAIL SMN Ne income from ineres and credi commissions Change in value of financial insrumens carried a fair value Oher operaing income Toal oher operaing income Salaries and general adminisraive expenses Ordinary depreciaion, amorisaion and wrie-downs Oher operaing expense Oher expense, gains and losses Toal oher operaing expense Operaing profi/(loss) before impairmen losses Impairmen losses on loans and advances Operaing profi/(loss) afer impairmen losses Compued ax charge Profi/(loss) for remaining eniy afer ax GUARANTEE PORT. TOTAL NOK MILLION CORPORATE RETAIL SMN Lending (gross) including loans in covered bonds companies Cusomer deposis and accouns payable o cusomers

26 Summary Financial Raios Direcor s Repor Inerim Repor Group Paren Bank Income saemen Balance Shee Change in Equiy Cash Flow Saemen Noes GUARANTEE PORT. TOTAL NOK MILLION CORPORATE RETAIL SMN Ne income from ineres and credi commissions Change in value of financial insrumens carried a fair value Oher operaing income Toal oher operaing income Salaries and general adminisraive expenses Ordinary depreciaion, amorisaion and wrie-downs Oher operaing expense Oher expense, gains and losses Toal oher operaing expense Operaing profi/(loss) before impairmen losses Impairmen losses on loans and advances Operaing profi/(loss) afer impairmen losses Compued ax charge Profi/(loss) for remaining eniy afer ax GUARANTEE PORT. TOTAL NOK MILLION CORPORATE RETAIL SMN Lending (gross) including loans in covered bonds companies Cusomer deposis and accouns payable o cusomers The Guaranee Porfolio SMN consiss of he sum oal of he Guaranee Porfolio and seller s credi. The Group operaes in a geographically limied area and reporing on geographical segmens provides lile addiional informaion. 26