Profit and Loss Account

Transcription

1 Profit and Loss Account 21. May December Noter 2008 Assets Interest income etc Interest expenses etc Net interest income and credit commissions Commissions receivable and income from banking services 2 Commissions payable and cost of banking services 10 Net other operating income -8 Net operating income Salaries and general administration expenses Depreciation Other operating expenses Total operating expenses Profit before write-downs and tax Write-downs and losses on loans and guarantees Profit before tax Taxes Profit after tax Allocation of profit Transferred to equity Total allocations Profit per share 4,47 Diluted profit per share 4,47

2 Balance Sheet 31. December 2008 Assets Loans to and deposits with credit institutions Net lendings Other intangible assets Total assets 7/ / Liabilities and equity Loans to and deposits with credit institutions Securitised debt Accrued expenses and prepaid income Pension commitments Deferred tax Tax provision Other liabilities Total liabilities Equity Total paid-up equity Other equity Total equity Total liabilities and equity 7/ / Bergen / Board of Knut Ravnå Pål Pedersen Inga Lise Moldestad Chairman Deputy chairman Vibeke Knudsen Egil Mokleiv CEO

3 Statement of Cash Flows 21. May December 2008 Cash flows from operations Interest, commissions and fee income Interest, commissions and fees paid Payments for goods and services Payments to employees, pension schemes, national insurance, tax deductions etc. 154 Net cash flow from operations Cash flows from investment activities Net growth in lendings Payments related to purchase of fixed assets Net cash flow from investment activities Cash flows from financing activities Net payments/revenues on loans to and receivables from other financial institutions Net revenues/payments on deposits from Norges Bank and other financial institutions Income related to bond debt Payments related to bond debt Income related to issue of equity Net cash flow from financing activities Net cash flow in period Net change in cash and cash equivalents Liquid assets at 1 January 0 Liquid assets at 31 December

4 Equity movements Share capital Other equity Sum Established Capital increase Profit for the year Equity at 31 December Equity consitiutes shares with face value NOK 1000, wholly owned by SPV

5 Note 1 GENERAL is a wholly owned special bank subsidiary of Sparebanken Vest, established under the Norwegian Covered Bonds Legislation. The company was established on 21th May 2008 with the sole purpose of issuing covered bonds backed by mortgages acquired from the owner. The head office is in Bergen. The head office address is: Kaigaten 4, NO-5016 Bergen. All amounts in the accounts and the notes to the accounts are stated in NOK thousands, unless stated otherwise. ACCOUNTING PRINCIPLES The accounts are prepared in accordance with simplified International Financial Reporting Standards (IFRS) adopted by the EU and published by the International Accounting Standards Board (IASB), and which were compulsory at 31 December The company is included in the Sparebanken Vest Group, which implemented IFRS in the consolidated accounts as of 1 January has prepared statutory accounts according to the Norwegian Ministry of Finance's regulations on annual accounts, Section 1-5, on the use of simplified IFRS (International Financial Reporting Standards) hereinafter called the simplified IFRS regulations. With the implementation of simplified IFRS, the company has applied assumptions which affect estimates of assets, liabilities, income, costs and information related to contingent liabilities. Future events may lead to changes in these assumptions. The effect of these changes will be reflected in the accounts when the new estimates can be determined with sufficient certainty. Dividends, group contributions and other allocations related to the accounting result for the year will be posted when the allocations are approved by the general meeting. RECORDING OF INTEREST AND FEES Interest is recorded when incurred. SEGMENT INFORMATION The company s activities are divided into segments: banking activities in the Retail Market (RM) and the Corporate Market (CM). The numbers are presented in note 2. The company s initial costs and related interest on deposits are not divided by segment but are part of the figure described as Unallocated by segment.

6 FINANCIAL ASSETS Financial assets are valued in accordance with IAS 39, and the presentation is in accordance with IFRS 7. Value changes in the period are posted in the profit and loss account. The date of the agreement has been chosen as the accounting date. Loans and accounts receivable Loans and accounts receivable are non-derivative financial assets with fixed or determinable payments and which are not traded in an active market. Loans and receivables in the balance sheet comprise floating-rate loans, fixed-rate loans and loans with a built-in derivative. Floating rate loans Loans are initially recognised at fair value plus direct transaction costs. In periods after the initial valuation assessment, loans are recognised at amortised cost based on the effective interest rate method, as an expression of the fair value of the loan. If there is objective evidence of a decline in the value of an individual loan or groups of loans, the loans are written down. The amount of the write-down is calculated as the difference between the balance sheet value and the present value of future cash flows, based on the expected lifetime of the loan. Write-downs are classified as a chargeable cost. Interest income is taken to income on the basis of the effective interest rate method. In respect of commitments with individually determined write-downs, the effective interest rate is locked in cases where a) the loan is not in default, or b) the changed rate is regardless of the fact that the loan is in default and the interest rate change affects the expected cash flow. Loans with a built-in derivative Loans with interest cap have a built-in derivative and are stated at fair value. An agreement signed between the company and Sparebanken Vest states that when transferring loans with interest cap from Sparebanken Vest to the company, it s the loan and not the derivative that is to be transferred to. INTANGIBLE ASSETS Developed software Software that has been developed is posted in the balance sheet under intangible assets when the amounts involved are deemed to be material and the items are expected to have lasting value. In the development of software, costs related to use of own resources, pre-planning, implementation and training are charged in the profit and loss

7 account. Software that has been developed by the bank and posted in the balance sheet is depreciated over its expected lifetime. There is continuous assessment of the need for write-downs where the expected economic benefits are less than the balance sheet value. FINANCIAL LIABILITIES Financial liabilities at a floating rate are stated at amortised cost. Amortised cost is defined as the initial amount of the instrument recognised in the accounts (cost price) less repayments of principal, with an addition or deduction for accumulated amortisation of all differences between cost price and the nominal amount, less all write-downs. Amortisation is based on the effective interest rate method. When the company buys back its own securities, the difference between the balance sheet value and the consideration paid is posted as Net gain/(loss) on financial instruments. The buy-back of securities issued by the company is netted against securities debt in the balance sheet. IMPORTANT ASSESSMENTS MADE IN RELATION TO THE COMPANY S ACCOUNTING PRINCIPLES In applying accounting principles related to certain IFRS accounting standards, the company makes evaluations based on its own judgement. Estimates and assumptions represent a considerable risk of major changes in the balance sheet value of assets and liabilities, the most important of which are discussed below. Loan write-downs All commitments which are subject to an individual valuation shall be assessed to determine whether there is objective evidence showing that a loss event has occurred and that the loss event has reduced the estimated future cash flows from the loan. If there is objective evidence of loan impairment, the loan loss is calculated as the difference between the balance sheet value (loan principal + accrued interest at the date of valuation) and the present value of future cash flows discounted taking account of the effective rate of interest and the expected lifetime of the loan. In estimating future cash flows, account is only taken of the credit loss caused by the loss events which have arisen. Pension commitments The net present value of pension commitments depends on current economic and actuarial assumptions. Any change made to these assumptions affects the pension commitment amount recorded in the balance sheet and the pension expense.

8 The calculation is based on guidelines on assumptions issued by the Norwegian Accounting Foundation. TAXATION Deferred tax and deferred tax assets are stated in the balance sheet in accordance with IAS 12 Deferred Tax. The tax charge in the profit and loss account includes both the tax payable for the period and the change in deferred tax. Deferred tax/deferred tax assets are calculated at a tax rate of 28% on the basis of timing differences between values for accounting and taxation purposes at year-end. Taxable and tax-deductible timing differences which are reversed or can be reversed within the same time interval are netted against each other and entered net. Deferred tax assets are posted in the balance sheet on the basis of expectations of taxable income through earnings in future years. Tax payable in the balance sheet relates to the tax on the profit for the year, tax payable on capital assets, and tax linked to the group contribution. PENSION COMMITMENTS Pension commitments are calculated in accordance with IAS 19. Economic assumptions used to calculate the pension commitments are updated at year-end, including the discount rate which is based on year-end market rates. IAS 19 permits the effect of divergence between estimated and actual assumptions to be entered in a corridor. Deviations from estimates and assumptions are measured against the larger of gross pension commitments and total pension fund assets. If the deviations exceed 10% of the basis of measurement, the difference is amortised over the average remaining period of service. The net pension commitments are calculated and posted as a long-term liability in the accounts. Net pension commitments are the difference between gross pension commitments (the present value of expected future pensions) and the balance on pension funds assets in the insurance fund and the pension premium fund. The figure for net pension commitments corrected for deviations from estimates and changes in pension assumptions, including employer s national insurance contributions, appears in the balance sheet. The pension charge for the year is stated net in the profit and loss account under «Salaries and general administration expenses». STATEMENT OF CASH FLOWS The statement of cash flows is prepared on the basis of gross cash flows from operations, investment and financing activities.

9 Cash flows from operations are defined as ongoing interest related to customer borrowings and deposits, net receipts/payments related to lending and deposit activities, and payments related to the cost of ordinary operations. Cash flows from other securities transactions, as well as the issue and repayment of bond debt and equity are defined as financing activities. EQUITY Equity consists and share capital and other equity.

10 Note 2 Segments profit and loss account Primary report: Corporate Market Retail Market Unallocated segment Total Result 2008 Net interest income Operating income -8-8 Operating expenses Losses Pre-tax profit Taxes Profit after tax Balance Sheet 2008 Net lendings Other assets Other liabilities and equity ) Costs attached to establishing and rating of SPV Boligkreditt AS is not allocated to segments Note 3 Net interest income and credit commissions 21. May December 2008 Interest etc. on loans to and deposits with credit institutions Interest etc. on loans to and receivables from customers: - stated at amortised cost stated at fair value Interest income Interest etc. on loans from credit institutions Interest etc. on securities issued Interest costs Net interest income and credit commissions

11 Note 4 Salaries and general administration expenses 21. May December 2008 Salaries Pensions 1) 104 Social security contributions 170 Administration expenses Salaries and general administration expenses ) See note 13 The average number of employees in 2008 was 2. Senior employees Salary/ fees Additional fees Pension CEO Egil Mokleiv 2) Board of directors Knut Ravnå, chairman 32 Pål Pedersen, deputy chairman 3) 6 Inga Lise Moldestad 29 Vibeke Knudsen 29 Benedicte Schilbred Fasmer 4) 34 Total ) Employed from 27/6 3) Pål Pedersen started as deputy chairman 7/11 4) Benedicte Schilbred Fasmer acted as chairman until 7/11 Board fees and additional fees for participation in committees is pursuant to a resolution of the Corporate Assembly. Loans and guarantees to the managing director and deputy managing director (NOK 1 000) CEO Egil Mokleiv 693 The loans are on standard terms for employees The cost of subsidising the interest rate on loans to the employees is not booked as an operating expense and affec are subsidised in the form of a 20% rebate on standard customer terms. Note 5 Other operating expenses 21. May December 2008 Fixed assets charged against income 20 Other operating expenses Andre driftskostnader Fee to elected auditor (NOK 1 000) 2008 Audit fee 63 Establishment and increase of capital 75 Assistance Covered Bond Programme 141 Total 278

12 Note 6 Taxes Tax charge for the year 2008 Tax payable 814 Change in deferred tax -29 Tax charge for the year 784 Pre-tax profit % tax on pre-tax profits 783 Non-deductable costs 1 Tax charge 784 Effective rate of tax 28 % Change in deferred tax assets in the balance sheet: 2008 Balance sheet value (deferred tax assets) at 1 January 0 Posted in profit and loss account -29 Timing difference group contribution 560 Balance sheet value at 31 December 531 The calculation of deferred tax /deferred tax assets is based on the timing differences between accounting an end and the tax loss to be carried forward. Deferred tax assets in the profit and loss account relates the following timing difference 2008 Pension commitments 29 Total deferred tax assets 29 Deferred tax liabilities in the profit and loss account relates the following timing differences: Group contribution 560 Total deferred tax liabilities 560 Net deferred tax -531 Note 7 Classification of financial instruments Assets 31/12-08 Balance sheet Adjustment value to fair value Loans to and deposits with credit institutions Customer loans at fair value Customer loans at amortised cost Loans Total Liabilities Debt to credit institutions at amortised cost Securitised debt at amortised cost Total

13 Note 8 Loans 21. May December Distribution of loans by sector - nominal amount of loan principal Overdraft facilities Instalment loans Gross loans to customers Individual loan write-downs 0 Loans to customers after individual write-downs Accrued interest Write-down of loan groups -790 Loans to and receivables from customers at amortised cost Market distribution of loans Wage earners Corporate Gross loans and receivables Accrued interest Write-down of loan groups -790 Loans to and receivables from customers Net loans and guarantees distributed by main industries and retail market Net loans Unapplied credit limits Write-downs on loans and guarantees Write-down of loan groups Group Retail customers Foreign (retail clients) Total - retail clients Primary industries Manufacturing and mining Building and construction, power and water supply Commerce, hotels and restaurant operations Transportation, post and telecomunications Real estate operations Other Total - commercial sector Group write-downs, commercial sector 790 Total Write-downs and losses 2008 Change in individual write-downs in period 0 Change in loan group write-downs in period 790 Write-downs and loan losses 790 Realised losses on loans covered by previous write-downs 0 Realised losses on guarantees not covered by previous loss provisions 0 Realised losses 0 Defaulted commitments 2008 Defaulted commitments days days 0 Over 90 days 0 Total 1) ) The expected loss on defaulted commitments in the Retail market is included in the write-down on loan groups.

14 Note 8 Loans cont. I Credit risk The credit risk is the risk of loss if the bank's customers are unable to meet their obligations related to loans, credit facitlites, guarantees and the like. The credit risk is managed on the basis of targets set for risk profile, rate of return and growth. A key element in quantification of the bank's risk profile is calculation of the default probability for individual customers and portfolios, - see below. The target rate of return is based on the Return on Risk-Adjusted Capital (RORAC). The concentration risk is managed on the basis of the targets set for the proportion for each sector, the largest individual commitments and the overall figure set for major commitments. Risk classification of loans and guarantees Sparebanken Vest Boligkreditt's credit portfolio is split into 11 risk classes from A to K based on debt-servicing ability (default probability).the default probability is defined as the likelihood that the customer will default on the loan within the next 12 months. A default may relate to a failure to service debt and 90 days have elapsed or other specific circumstances ("unlikely to pay", cf. Basel II), affecting the customer's ability to service the debt. The default probability is calculated using statistical models (score cards) based on logical regression. The models combine internal and external data to establish statistical relationships. The results are interpreted and form the basis of logical key figures. Risk classification of all commitments is carried out each month using the automatic collection of data from internal and external sources. There is also manual monitoring of corporate commitments. The frequency of risk classification assessment depends on the size of the commitmment and the nature of the risk. Commitments are priced to reflect the level of exposure. Those with the highest exposure therefore have the highest pric Distribution of loans by risk group Risk class Probability of default Starting at Until A 0,01 0,15 B 0,15 0,30 C 0,30 0,45 D 0,45 0,62 E 0,62 0,78 F 0,78 1,01 G 1,01 1,41 H 1,41 2,59 I 2,59 4,48 J 4,48 15,47 K 15,47 Written down Distribution of loans by risk class Commitment Individual write-downs 31/ /12-08 A-E F-H I-J K Total Sparebanken Vest Boligkreditts net losses in 2008 corresonded to -0,01 % of total gross lendings. The expected annual average net loss has been calculated for the next 12 months and is within the parameters for expected losses set by the Board of Directors. Distribution of loans by geographical area Proportion Loans Writedowns Hordaland 91, Sogn og Fjordane 6,6 537 Rogaland 1,5 121 Total - Norway 99, Foreign 0,2 13 Total - geographical areas 100,

15 Note 8 Loans cont. II Loan write-downs posted in the balance sheet 31/12-08 Individual write-downs Loan write-downs at 1 January (nominal values) 0 Realised losses on loans covered by previous write-downs 0 Increase in write-down of loans written down previously 0 Write-down of loans not written down previously 0 Reduction in previous years' write-downs of individually assessed loans 0 Individual write-downs 0 Group write-downs Write-down of loan groups at 1 January (nominal values) 0 Increase in write-down of loan groups 790 Reduction in write-down of loan groups 0 Write-down of loan groups 790 Total write-downs of commitments 790 All commitments which are to be individually assessed shall be considered to determine if there is objective evidence that a loss has arisen and that the loss event will reduce the loan's estimated future cash flows. If objective evidence of impairment is found, the loss on the loan is calculated as the difference between the balance sheet value (balance + accrued interest at date of assessment) and the present value of future cash flows. In estimating future cash flows only the credit loss caused by the loss event that has occurred shall be taken into account. The estimation of future cash flows from a loan shall also take account of the takeover and sale of related loan collateral, including the transaction costs. When the best estimate of the future cash flow is estimated and recorded, the system will calculate the new value of the loan (amortised cost) and the difference will be the amount of the write-down. The write-down of the loss (against the customer's commitment) shall be carried out when the entire loan collateral has been realised and it is certain that no further payments will be received on the commitment. The claim on the customers remains and will be followed up, unless an agreement has been made with the customer to waive the claim. Note 9 Loans to and receivables from credit institutions 31/12-08 Deposits with credit institutions with no agreed term or period of notice Net loans to and deposits with credit institutions Geographical areas Hordaland Total

16 Note 10 Intangible assets Software Sum and licences Accounting year 2008 Book value at 1/ Additions Write-down of goodwill Book value at 31/ At 31 December 2008 Cost Accumulated depreciation Book value at 31/ Software/licences are depreciated on a straight line basis over their expected economic lifetime which is estimated at 3 years. Note 11 Debt to credit institutions Debt to credit institutions is classified at amortised cost 31/12-08 No agreed term or period of notice Debt to credit institutions Debt is financed through SPVs programme for financing. Compensation amounts to the average cost of funding for SPV Note 12 Securitised debt Securitised debt is classified as being valued at amortised cost or recognised at fair value through profit or loss. Covered bonds ISIN code Currency Nominal Coupon Issued Maturity 31/12-08 NO NOK Float 3M Nibor + 0,45 % Cover pool 31/12-08 Mortgages Substitute collateral Cover pool Overcollateralisation 191 %

17 Note 13 Pension commitments Under the Compulsory Occupational Pension Act, the Sparebanken Vest Group is required to have an occupational pension scheme, and the Group's scheme meets the requirements of the Act. Economic assumptions used to calculate pension costs and commitments: Kostnader Forpliktelse Percentage /12-08 Discount rate 4,30 3,80 Expected return on pension fund assets: 6,30 5,80 Annual salary growth: 4,50 4,00 Annual pension regulation: 2,00 1,50 Change in national insurance base rate: 4,25 3,75 Voluntary withdrawals (over/under 40 years of age) 0-8,00 0-8,00 Sparebanken Vest Boligkreditt uses the special "corridor" equalisation method for the accounting treatment of changes in estimates and the difference between the expected and the actual return on pension fund assets, and changes in economic assumptions used to calculate pension commitments. Pension costs 2008 Accumulated pension rights for year 85 Interest charge on accrued pension commitments 6 Net pension cost 91 Employer's national insurance contributions 13 Pension cost posted in profit and loss account *) 104 Pension commitment 31/12-08 Net present value of pension commitment 350 Pension fund assets stated at fair value 0 Net pension commitment 350 Employer's national insurance contributions 49 Unposted effect of changed estimates 104 Net pension commitment in balance sheet 503 Change in pension commitment in year Pension fund assets (fair value) at 1 January Pension commitment from Sparebanken Vest 350 Premium paid / paid in to premium fund 85 Interest charge on accrued pension commitments 6 Estimate divergences -91 Pension commitment at 31 December 350

18 Note 14 Capital adequacy Net capital base 31/12-08 Equity Other equity Sum equity Intangible capital Group contribution Deductions Core capital Net supplementary capital 0 Net capital base Capital requirement, Basel II 31/12-08 Credit risk, Standard method Market risk 0 Operational risk 542 Capital requirement, Basel II Capital adequacy, Basel II 31/12-08 Basis of calculation, Basel II Net core capital (%) 13,63 % Net capital base (%) 13,63 % Calculated regulatory surplus, Basel II Note 15 Liquidity risk Liquidity risk means the risk that the bank is unable to refinance its debt as it matures, or is unable to fund increases in assets. 0-1 month 1-3 months Total Residual maturity of balance sheet items at 31 December months years Debt to credit institutions Securitised debt Total payments Nominal values in NOK.

19 Note 16 Market risk The company's only market risk stems from the NOK 4,5 bn covered bond with floating rates. Note 17 Transactions with associated companies This information is provided in accordance with the provisions of IAS 24 concerning "Information about associated companies". Transactions involving senior employees and elected officers appear in note 4. Sparebanken Vest Boligkreditt is a wholly owned subsidiaries and is defined as associated company All intra-group transactions and transactions with associated companies are conducted in conformity with normal commercial terms and principles. Total intra-group transactions (NOK 1 000) 2008 Profit and loss Interest received from SPV on deposit Interest paid on debt to SPV Administration fee Balance Sheet Deposit in SPV Debt to SPV Securitised debt

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