HALF-YEAR REPORT 2014

Transcription

1 HALF-YEAR REPORT 2014

2 Contents First half year Main figures Quarterly report Income Statement Balance sheet Changes in equity capital Cash flow statement Results from the quarterly accounts Notes to the accounts Editor: Trine LIse Østberg Design & production: Ferskvann reklamebyrå 2

3 Main figures First half-year 2014 First half-year Result summary (NOK mill and % of average assets) Beløp % Beløp % Beløp % Net interest income 499 2,02 % 479 2,15 % ,21 % Net commissions and other (non-interest) income 351 1,42 % 260 1,17 % 559 1,22 % Net income from financial investments 170 0,69 % 63 0,28 % 263 0,58 % Total income ,14 % 802 3,60 % ,01 % Total operating expenses before losses on loans and guarantees 481 1,95 % 458 2,05 % 916 2,01 % Profit before losses on loans and guarantees 539 2,18 % 344 1,54 % 914 2,00 % Losses on loans and guarantees 33 0,13 % 25 0,11 % 72 0,16 % Profit/loss before tax 506 2,05 % 319 1,43 % 842 1,84 % Tax charge 83 0,34 % 60 0,27 % 147 0,32 % Results for the accounting period 424 1,71 % 259 1,16 % 694 1,52 % Minority interests 2 0,01 % 1 0,00 % -10-0,02 % Profitability Return on equity capital before tax 14,7 % 10,4 % 13,3 % Return on equity capital after tax 12,3 % 8,5 % 11,0 % Return on equity capital of total result after tax 14,9 % 9,2 % 11,0 % Total operating costs in relation to total income 47,1 % 57,1 % 50,1 % Total operating costs in relation to total income excl. income from financial investments 56,6 % 62,0 % 58,5 % From the Balance Sheet Gross loans to customers Gross loans to customers including loans transferred to covered bond companies* Deposits from customers Deposits from customers in relation to gross loans to customers 83,8 % 83,4 % 80,9 % Lending growth during the last 12 months 4,0 % 6,5 % 4,9 % Lending growth in last 12 months including loans transferred to covered bond companies* 6,2 % 10,9 % 8,9 % Deposit growth during the last 12 months 4,4 % 10,5 % 7,0 % Assets Losses and commitments in default Losses on loans as a percentage of gross loans 0,2 % 0,1 % 0,2 % Commitments in default as a percentage of total commitments 0,8 % 1,2 % 0,8 % Commitments in default as a percentage of total commitments including loans transferred to 0,6 % 0,9 % 0,6 % covered bond companies* Other bad and doubtful commitments as a percentage of totalt commitments 0,6 % 0,4 % 0,6 % Other bad and doubtful commitments as a percentage of totalt commitments including loans 0,5 % 0,3 % 0,5 % transferred to covered bond companies* Net commitment in default and commitments with loss provisions as a percentage of total commitments 1,1 % 1,2 % 1,1 % Financial strength Capital adequacy ratio 14,4 % 14,7 % 16,4 % Tier 1 ratio 14,0 % 14,5 % 16,2 % Capital adequacy ratio before transitional arrangements 14,4 % 14,9 % 16,4 % Net core capital Equity ratio 14,4 % 13,6 % 14,2 % * Covered bond companies used are SpareBank 1 Boligkreditt AS and SpareBank 1 Næringskreditt AS 3

4 Half-year report First half year 2014 Summary The Sparebanken Hedmark posted a profit after tax for the first half of the year of NOK 424 (259) million (last year's figure in brackets). The return on equity was 12.3 (8.5) per cent. The earnings improvement is attributed to better results from partly-owned companies, improved banking operations, lower financial item costs and a positive development for subsidiaries. The 's equity was NOK 7.2 (6.3) billion, which is equivalent to 14.4 (13.6) per cent of the unweighted balance sheet. The core equity tier 1 ratio was 14.0 (14.5) per cent. The posted a net interest income for the first half of Sparebanken Hedmark the year of 2.02 (2.15) per cent of average total assets, while operating costs as a percentage of income were 47.1 (57.1) per cent. The twelve-month growth in lending and deposits was 6.2 (10.9) per cent and 4.4 (10.5) per cent, respectively. At the end of the first half of the year, the deposit-to-loan ratio was 83.8 (83.4) per cent. The 's profit for the first half of the year was NOK 297 (258) million after tax. The 's profit for the second quarter of 2014 in isolation was NOK 197 (186) million after tax. The prepares its financial statements in accordance with the IAS 34 accounting standard. The consists of Sparebanken Hedmark and the consolidated, wholly owned subsidiaries EiendomsMegler 1 Hedmark Eiendom AS, SpareBank 1 Finans Østlandet AS and Vato AS, as well as SpareBank 1 Regnskapshuset Østlandet AS with an ownership interest of 60 per cent. The Bank owns 40.5 per cent of Bank 1 Oslo Akershus AS, 11 per cent of SpareBank 1 Gruppen AS, 16.6 per cent of SpareBank 1 Markets AS and 8 per cent of SpareBank 1 Kredittkort AS, as well as 9.4 per cent of SpareBank 1 Boligkreditt AS and 4.1 per cent of SpareBank 1 Næringskreditt AS (the mortgage companies). The profit/loss attributable to these companies is recognised in the Bank's consolidated financial statements proportionate to the Bank's ownership interest. Specification of the consolidated profit after tax in NOK million: 's profit after tax 297 Dividends received from subsidiaries/associates Profit/loss attributable to: SpareBank 1 Gruppen AS 85 Bank 1 Oslo Akershus AS 119 SpareBank 1 Boligkreditt and Næringskreditt AS 8 EiendomsMegler 1 Hedmark Eiendom AS 6 SpareBank 1 Finans Østlandet AS 37 SpareBank 1 Regnskapshuset Østlandet AS 5 Other subsidiaries/associates 1 Consolidated profit after tax 424 The 's return on equity after tax was 12.3 (8.5) per cent for the first half of the year. Interest and other income Net interest income for the first half of the year was NOK 499 (479) million. Total net interest income, including commissions from loans transferred to the mortgage companies (recognised as commission income), amounted to NOK 622 (569) million. This represents an increase of 9.3 (10.5) per cent compared with the first half of In connection with the establishment of SpareBank 1 Kredittkort AS, the Bank sold its credit card portfolio totalling NOK 306 million to this company. Previously the return on the Bank's credit card portfolio was included in net interest income. After the sale, net interest income from the credit card portfolio is recognised as commission income, based on the same principle as loans transferred to a mortgage company. This change has a negative impact on the Bank's reported interest margin. The 's lending margin for the first half of the year, including transferred loans, was 3.03 (2.97) per cent. The deposit margin was minus 0.62 (-0.66) per cent. In the first half of the year, the 's interest margin was 2.41 (2.31) per cent. Net commission and other income increased from NOK 260 million for the first half of last year to NOK 351 million for the first half of this year. Of the increase of NOK 76 million in commission income, higher commissions from loans transferred to the mortgage companies accounted for NOK 33 million, a gain on the sale of the credit portfolio accounted for NOK 25 million and commissions from the credit portfolio accounted for NOK 15 million. Of the increase in other income of NOK 19 million, the higher revenue from the accounting- and real estate brokerage business accounted for NOK 18 million. Net income from financial assets and liabilities Net result from financial assets and liabilities was NOK 170 (63) million for the first half of the year. This consisted of profit from ownership interests of NOK 195 (107) million, dividends of NOK 12 (18) million and a result from other financial items of minus NOK 37 (-62) million. Of the profit from ownership interests, the profit attributable to Bank 1 Oslo Akershus AS accounted for NOK 119 (53) million. In the second quarter of 2013, Sparebanken Hedmark increased its ownership interest in Bank 1 Oslo Akershus AS from 12 to 40.5 per cent. The profit attributable to SpareBank 1 Gruppen AS totalled NOK 85 (47) million. The result from other financial assets and liabilities was minus NOK 37 (-62) million, and this is attributed primarily to market value fluctuations. The Bank's securities debt, fixed-income investments and fixed-rate products to customers are assessed at fair value through profit and loss pursuant to IAS 39, and changes in the market value are recognised in profit and loss. The total net market value fluctuations for fixed-income securities amounted to minus NOK 51 (-39) million, while value fluctuations for fixed-rate loans was NOK 4 (-29) million. In the first quarter, a contract was entered into to sell the company's ownership interests in the payment transfer company Nets Holding ASA. The transaction was completed early in the third quarter. The Bank's ownership interest is classified as "financial assets available for sale" in accordance with IAS 39, and the unrealised gain or loss in relation to the market value is recognised in other comprehensive income pursuant to IAS 1. Income from the sale of shares totalled 4

5 NOK 271 million. Since settlement took place in the third quarter, the sales gain of NOK 158 million will not be reclassified from equity to profit under "net profit from other financial assets and liabilities" until the third quarter. Costs, losses and problem loans The 's operating costs for the first half of the year amounted to NOK 481 (458) million. This represents an increase of 5.2 (5.0) per cent, compared with the corresponding period last year. As a percentage of the total income, the operating costs were 47 (57) per cent in the first half of the year. Losses remain low and amounted to NOK 33 (25) million for the first half of the year. Non-performing loans accounted for 0.8 (1.2) per cent of gross commitments on the Bank's own balance sheet, while other impaired commitments accounted for 0.6 (0.4) per cent of gross commitments. Overall, the 's problem loans accounted for 1.4 (1.6) per cent of the Bank's gross commitments on its own balance sheet at the end of the first half of the year. Assets and financing Gross lending to customers at the end of the first half of the year, including loans transferred to the mortgage companies, totalled NOK 53.9 (50.8) billion. At the end of the first half of the year, loans totalling NOK 15.0 (13.7) billion had been transferred to SpareBank 1 Boligkreditt AS and loans totalling NOK 0.7 (0.3) billion has been transferred to SpareBank 1 Næringskreditt AS. The 's twelve-month lending growth, including transferred loans, was 6.2 (10.9) per cent. Deposits from customers at the end of the first half of the year totalled NOK 32 (30.7) billion. Growth in deposits over the past twelve months was 4.4 (10.5) per cent. Deposits represented 83.8 (83.4) per cent of gross lending. Liabilities to financial institutions and securities issued at the end of the first half of the year totalled NOK 9.1 billion (7.9) billion. The average term to maturity of the bank's long-term funding was 4.3 (4.6) years. The average term to maturity for all borrowing was 4.0 (3.8) years. Liquidity has been good throughout the first half of the year. At the end of the first half of the year, the Bank could operate normally for 18 (16) months without requiring external funding. In the opinion of the Board of Directors, the bank's liquidity risk is low. The 's equity at the end of the first half of the year amounted to NOK 7.2 (6.3) billion, which is equivalent to 14.4 (13.6) per cent of the balance sheet. The 's core equity tier 1 ratio was 14.0 (14.5) per cent. The capital adequacy ratio was 14.4 (14.7) per cent. For a specification of the 's results for the second quarter in isolation, reference is made to refer to page 12 of the half-year report. Rating Sparebanken Hedmark is rated by Moody's as A2 (long-term senior debt and deposit rating). The Bank's individual rating (standalone financial strength rating) is C-. In May, Moody's changed Sparebanken Hedmark's rating from A2, Stable Outlook to A2, Negative Outlook. The reason for this was the EU's adoption of the Bank Recovery and Resolution Directive, the so-called "bail-in". This change applied to all of the savings banks in Norway. Sparebanken Hedmark Parent bank Results The profit after tax for the first half of the year was NOK 297 (258) million. The banking operations, defined as net interest income plus other operating income minus operating costs and losses, posted a profit of NOK 244 (212) million, which corresponds to an improvement of 15 per cent. The accumulated interest margin after six months was 2.48 (2.42) per cent. The lending margin was 3.10 (3.08) and the deposit margin was minus 0.62 (-0.66) percentage points. Net interest income Net interest income for the first half of the year, including loans transferred to the mortgage companies, amounted to NOK 524 (486) million. The improvement is attributed primarily to volume growth, higher lending margins and increased commissions from the mortgage companies, as well as somewhat falling deposit rates. The interest margin for the first half of the year within the retail market was 2.36 (2.35) per cent, while in the corporate market it was 2.69 (2.52) per cent. In general, the lending margins have fallen since the beginning of the year, but better deposit margins have compensated for this to a great extent. Net commission income Net commission income was NOK 254 (181) million. Of this, commissions on loans transferred to the mortgage companies accounted for NOK 123 (90) million. The net margin for the portfolio transferred to SpareBank 1 Boligkreditt AS was 1.61 (1.37) percentage points for the first half of the year. Net income from financial assets and liabilities Income from this area was NOK 93 (94) million. Income from dividends amounted to NOK 12 (18) million, while the net profit from ownership interests amounted to NOK 118 (139) million. This was primarily dividends from wholly owned companies and alliance companies. The net profit from other financial assets and liabilities was minus NOK 37 (-62) million. Operating costs Total operating costs were NOK 359 (344) million. Costs increased by 4.3 (5.2) per cent compared with the previous year. Personnel expenses increased by NOK 15 million and IT expenses increased by NOK 5 million. At the end of June the had 463 (466) full-time equivalents. The operating costs represented 48 (51) per cent of total income. Losses on loans and guarantees The net loss on lending and guarantees was NOK 27 (21) million for the first half of the year. NOK 3 (4) million of the losses were in the retail market, while NOK 23 (17) million of the losses were in the corporate market. Lending Gross lending to customers, including loans transferred to the mortgage companies, totalled NOK 49.5 (46.7) billion as at 30 June The 's lending growth for the last twelve months, including loans transferred to the mortgage companies, was 6.0 (9.9) per cent. Growth, including transferred loans, was 6.1 (8.4) per cent in the retail market and 5.7 (13.6) per cent in the corporate 5

6 market. The risk profile for the Bank's granting of credit has not changed in the first half of the year. Deposits Deposits from and liabilities to customers as at 30 June 2014 totalled NOK 32.1 (30.7) billion. In the last twelvemonth period, deposits increased by 4.5 (10.4) per cent, divided between 3.0 (6.6) per cent in the retail market and 6.9 (17.8) per cent in the corporate market. Subsidiaries The financing company SpareBank 1 Finans Østlandet AS posted a profit after tax of NOK 37 (27) million. The financing company's gross loans at the end of the first half of the year totalled NOK 4.5 (4.1) billion. Gross lending growth over the past twelve months was 10.8 (21.5) per cent. SpareBank 1 Regnskapshuset Østlandet AS posted revenues of NOK 72 (60) million for the first half of the year and achieved a profit after tax of NOK 5 (3) million. The real estate brokerage company EiendomsMegler 1 Hedmark Eiendom AS posted revenues of NOK 36 (28) million and achieved a profit after tax of NOK 6 (2) million. Partly-owned companies SpareBank 1 Gruppen AS (11 per cent interest) posted a consolidated profit after tax of NOK 785 (402) million for the first half of the year. In the same period, Bank 1 Oslo Akershus AS (40.5 per cent stake) posted a profit after tax of NOK 294 (132) million. This profit corresponds to a return on equity of 21.2 (12.2) per cent. The earnings improvement is attributed primarily to the revaluation of shares in Nets Holding ASA and an increase in commission income from SpareBank 1 Boligkreditt AS. At the end of the first half of the year, the Bank's gross lending totalled NOK 41.1 (39.1) billion, including loans transferred to SpareBank 1 Boligkreditt AS. Lending growth over the past twelve months was 5 per cent. The core equity tier 1 ratio at the end of the first half of the year was 11.5 (11.6) per cent. Financial strength The core equity tier 1 ratio was 18.9 (20.3) per cent at the end of the first half of the year. The Bank's equity of NOK 6.6 (6.0) billion consists entirely of retained earnings and represented 13.3 (13.1) per cent of the balance sheet. Outlook for the rest of the year Economic activity in Norway is expected to remain approximately at its current level. Sparebanken Hedmark's primary market is the Interior Region, which encompasses the counties of Hedmark and Oppland. This region has traditionally been less exposed to cyclical fluctuations than other regions. However, international developments may affect the situation in Norway and thus the Interior Region as well. In addition, we do not see any special Norwegian circumstan- Board of Directors of Sparebanken Hedmark Hamar, 12. august 2014 Siri J. Strømmevold Bjørnar Håkensmoen Erik Garaas Board Chair Espen Bjørklund Larsen Nina C. Lier Aud Christensen Morten Herud Richard Heiberg CEO 6

7 Statement of the Board of Directors and CEO We confirm that the half-year financial statements for the period 1 January to 30 June 2014, to the best of our knowledge, have been prepared in accordance with IAS 34 Interim Financial Reporting, and that the disclosures in the interim report provide a true and fair view of the and the 's assets, liabilities, financial positions and results as a whole, and give a fair summary of the information mentioned in Section 5-6 of the Securities Trading Act. Board of Directors of Sparebanken Hedmark Hamar, 12. august 2014 Siri J. Strømmevold Bjørnar Håkensmoen Erik Garaas Board Chair Espen Bjørklund Larsen Nina C. Lier Aud Christensen Morten Herud Richard Heiberg CEO 7

8 Income Statement (NOK million) Notes Interest income Interest expenses Net interest income Commission income Commission expenses Other operating income Net commission and other income Dividends Net profit from ownership interests Net profit from other financial assets and liabilities Net income from financial assets and liabilities Total net income Personnel expenses Other operating expenses Total operating expenses before losses on loans and guarantees Profit before losses on loans and guarantees Losses on loans and guarantees Profit/loss before tax Tax charge Results for the accounting period Majority interests Minority interests Statement of comprehensive income according to IAS Actuarial gains / losses on pensions Tax effect of actuarial gains / losses on pensions Share of other comprehensive income from associates and joint ventures Total items not reclassified through profit or loss Change in value of financial assets available for sale Financial assets available for sale transferred to profit and loss on write-down due to permanent impairment of value Financial assets available for sale transferred to profit and loss on realisation 3 Share of other comprehensive income from associates and joint ventures Total items reclassified through profit or loss Total profit and loss items recognised in equity Total profit / loss for the accounting year Majority share of comprehensive income Minority interest of comprehensive income

9 Balance sheet (NOK million) Notes ASSETS Cash and deposits with central banks Loans to and receivables from credit institutions Loans to and receivables from customers 5, Certificates, bonds and fixed-income funds Financial derivatives Shares, units and other equity interests Investments in associates and joint ventures Investments in subsidiaries 1 Assets held for sale Property, plant and equipment Goodwill and other intangible assets Deferred tax asset Other assets Total assets LIABILITIES Deposits from and liabilities to credit institutions Deposits from and liabilities to customers Liabilities arising from issuance of securities Financial derivatives Current tax liabilities Other debt and liabilities recognised in the balance sheet Subordinated loan capital Total liabilities EQUITY CAPITAL Primary capital Endowment fund Fund for unrealised gains Other equity Results for the accounting year Minority interests Total equity capital Total liabilities and equity capital

10 Changes in equity capital Parent bank (NOK million) Earned equity Primary Endowment capital fund Fund for unrealised gains Total equity capital Equity at 1 January Results for the accounting year Actuarial gains / losses on pensions 0 Change in value of financial assets available for sale Donations distributed from profit Grants from endowment fund in Equity at 30 June Equity at 1 January Results for the accounting year Actuarial gains / losses on pensions Change in value of financial assets available for sale Donations distributed from profit Grants from endowment fund in Equity at 31 December Equity at 1 January Results for the accounting year Actuarial gains / losses on pensions Change in value of financial assets available for sale Donations distributed from profit Grants from endowment fund in Equity at 30 June (NOK million) Primary capital Earned equity Endowment fund Fund for unrealised gains Other equity Minority interests Total equity capital Equity at 1 January Results for the accounting year Actuarial gains / losses on pensions Change in value of financial assets available for sale Adjustment to equity from associated companies and joint ventures -2-2 Donations distributed from profit Grants from endowment fund in Equity at 30 June Equity at 1 January OB correction: Correction of previous years' errors -6-6 Adjusted equity at 1 January Results for the accounting year Actuarial gains / losses on pensions Share of other comprehensive income from associated companies and joint ventures not reclassified through profit or loss 1 1 Change in value of financial assets available for sale Share of other comprehensive income from associated companies and joint ventures reclassified through profit or loss 4 4 Adjusted equity in associated companies and joint ventures 2 2 Change in the group composition 4 4 Donations distributed from profit Grants from endowment fund in Equity at 31 December Equity at 1 January OB correction: Correction of previous years' errors -1-1 Adjusted equity at 1 January Results for the accounting year Actuarial gains / losses on pensions Share of other comprehensive income from associated companies and joint ventures not reclassified through profit or loss 4 4 Change in value of financial assets available for sale Share of other comprehensive income from associated companies and joint ventures reclassified through profit or loss 0 Adjusted equity in associated companies and joint ventures 0 Change in the group composition Donations distributed from profit Grants from endowment fund in Equity at 30 June

11 Cash flow statement Parent bank (NOK million) This year's downpayment on repayment loans etc. to customers Change in advance rent leasing Newly discounted repayment loans etc. to customers for the year Change in balances of foreign currency lending Change in balances of credits Interest and commission income on lending Included in previous years' realised losses on lending Net cash flow relating to bankruptcies 1 Net cash flow from assets held for sale Cash flow from lending operations (A) Change in balances of deposits from customers at call Change in balances of deposits from customers with agreed maturity dates Interest payments to customers Cash flow from deposit operations (B) Net cash flow from securities held short term Cash flow linked to exchange rate gains / losses on securities held short term Interest received on bonds and certificates Share dividends received from securities held short term Cash flow from investments in securities (C) Change in receivables from credit institutions with agreed maturity dates Interest received on deposits in credit institutions Cash flow from deposits in credit institutions (D) Other income Operating expenses payable Tax payments Donations Net cash flow from change in other assets Net cash flow from change in accruals Net cash flow from change in other liabilities Remaining cash flow from current operations (E) CASH FLOW FROM OPERATIONS (A+B+C+D+E=F) Change in deposits from credit institutions Receipts arising from issuance of securities Payments arising from redemption of securities issued Buy-back of own securities Interest payments on financing Cash flow from financing activities (G) Investments in fixed assets and intangible assets Sales of fixed assets and intangible assets at sales price Purchase of long-term securities Sale of long-term securities Share dividends from securities held long term Cash flow from investments (H) Liquidity effect of acquisition and sale of ownership interests (I) Liquidity effect from placements in subsidaries (L) CHANGE IN CASH AND CASH EQUIVALENTS (F+G+H+I+L) Cash and cash equivalents at 1 January Cash and cash equivalents at 30 June Cash and cash equivalents at 30 June comprise: Cash and deposits with central banks Deposits etc. at call with banks Cash and cash equivalents at 30 june

12 Results from the quarterly accounts (Isolated figures in NOK million) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q Interest income Interest expenses Net interest income Commission income Commission expenses Other operating income Net commission and other income Dividends Net profit from ownership interests Net profit from other financial assets and liabilities Net income from financial assets and liabilities Total net income Personnel expenses Other operating expenses Total operating expenses before losses on loans and guarantees Profit before losses on loans and guarantees Losses on loans and guarantees Profit/loss before tax Tax charge Results for the accounting period

13 Notes to the accounts Note 1 Accounting principles The financial statements for Sparebanken Hedmark comprise the period The financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, currently valid IFRS standards and IFRIC interpretations. The consolidated financial statements have been prepared according to IFRS rules and regulations since 1 January The financial Statement are not audited. The reporting currency is Norwegian kroner (NOK), which is also the functional currency of all of the 's units. All figures are stated in millions of NOK unless otherwise stated. The financial statements in this interim report have been prepared using the same principles and calculation methods as used in the most recent annual financial statements. The interim financial statements do not contain all of the information required for complete annual financial statements, and should be read in conjunction with the annual financial statements for Further, the has in this quarterly report used the same accounting principles and calculation methods as in hte latest annual report and accounts, except: IFRS 10 Consolidated Financial Statements This standard deals with defining subsidiary, and gives more weight to actual control than earlier rules. Control exists only where and investor has power over relevant activities of the investee, exposure to variable returns, and in addition the ability to use its power to affect the investee s returns. In cases where loan terms are breached, the Bank will consider whether it has achieved genuine power under IFRS 10. The standard is implemented from 1 January IFRS 11 Joint Arrangements IFRS 11 removes the opportunity to apply proportional consolidation for jointly-controlled entities. The Bank has considered the effect of the new standard and concluded that it will not be of essential significance for the s reporting. The standard is implemented from 1 January IFRS 12 Disclosure of Interests in Other Entities. This standard extends the disclosure requirement in next year s annual accounts as regards investments in subsidiaries, associates, jointly controlled entities and structured entities. The standard is implemented from 1 January Note 2 Changes in the group composition 2014 Sparebanken Hedmark sold it's shares in SpareBank 1 Verdipapirservice AS (8.9 percent) and SpareBank 1 Kundesenter AS (9.7 percent) to Alliansesamarbeidet SpareBank 1 DA.The companies are still owned indirectly by Sparebanken Hedmark through Alliansesamarbeidet (11.30 percent) Sparebanken Hedmark sold its stake in Consis Credit AS to Conecto AS Conecto AS is a wholly owned subsidiary of SpareBank 1 Gruppen AS, thus 12 percent (11 percent from ) of Consis Credit AS is still indirectly owned by Sparebanken Hedmark. Sparebanken Hedmark increased its stake from 12 percent to 40.5 percent in Sparebank 1 Oslo Akershus AS through acquisition of shares from the other shareholders in the bank. The transaction was completed with effect from Sparebanken Hedmark acquired in the third quarter 14.7 percent of SpareBank1 Markets AS. Sparebanken Hedmark previously owned 12 percent of SpareBank1 Markets AS through its ownership in SpareBank1 Gruppen AS. Final purchase price allocation is made in accordance with IFRS 3 where 21.7 NOK million, is allocated to the fair value of assets and liabilities. The previously indirectly owned 12 percent has kept its book value. The difference between the identifiable net assets and the cost of increased ownership, one NOK million, is in accordance with IAS 28 recognized as income in the third quarter. Sparebanken Hedmark sold one percent of the shares in SpareBank 1 Gruppen AS to Bank 1 Oslo Akershus AS. 13

14 Note 3 Segment information This segment information is linked to the way the is run and followed up internally in the entity through reporting on performance and capital, authorisations and routines. Reporting on segments is divided into following areas: - Retail banking, corporate banking, property, financing, accounting and other activities. - Property brokerage, leasing, financing and accounting are organised as independent companies. - The result of the elimination of companies appears with other activities in a separate column Income statement Retail banking Corporate banking SpareBank 1 Finans Østlandet Eiendomsmegler 1 Hedmark Eiendom SpareBank 1 Regnskapshuset Østlandet Other Total Net interest income of which internal items Net commission and other income of which internal items -1 1 Net return on financial investments Operating expenses* Profit before losses by segment: Losses on loans and guarantees Profit / loss per segment Balance sheet Lending to customers of which internal items Individual loan write-downs Collective loan write-downs Other assets Total assets per segment Deposits from and liabilities to customers of which internal items Other liabilities and equity Total equity and liabilities per segment Income statement Retail Corporate banking banking SpareBank 1 Finans Østlandet Eiendomsmegler 1 Hedmark Eiendom SpareBank 1 Regnskapshuset Østlandet Other Total Net interest income of which internal items Net commission and other income of which internal items -1 1 Net return on financial investments Operating expenses* Profit before losses by segment: Losses on loans and guarantees Profit / loss per segment Balance sheet Lending to customers of which internal items Individual loan write-downs Collective loan write-downs Other assets Total assets per segment Deposits from and liabilities to customers of which internal items Other liabilities and equity Total equity and liabilities per segment

15 Income statement Retail Corporate banking banking SpareBank 1 Finans Østlandet Eiendomsmegler 1 Hedmark Eiendom SpareBank 1 Regnskapshuset Østlandet Other Total Net interest income of which internal items Net commission and other income of which internal items -1 1 Net return on financial investments Operating expenses* Profit before losses by segment: Losses on loans and guarantees Profit / loss per segment Balance sheet Lending to customers of which internal items Individual loan write-downs Collective loan write-downs Other assets Total assets per segment Deposits from and liabilities to customers of which internal items Other liabilities and equity Total equity and liabilities per segment *) Operating expenses in Retail and Corporate consist of directly attributable payroll and administration costs. 15

16 Note 4 Capital adequacy Primary capital Endowment fund Revaluation fund / equalisation reserve Results for the accounting period Other equity Minority interests Total equity carried Tier 1 capital -129 Results for the accounting year not included Unrealised value change due to reduced / increased value of liabilities Deferred tax, goodwill and other intangible assets Net unrealised gains on shares available for sale % deduction for expected losses on IRB, net of write-downs Deduction for subordinated capital in other financial institutions Capital adequacy reserve Additional tier 1 capital Total tier 1 capital Supplementary capital per cent of unrealised gain on shares classified as available for sale Non-perpetual additional tier 1 capital Deduction for expected losses on IRB, net of write-downs Deduction for subordinated capital in other financial institutions Capital adequacy reserve Total supplementary capital Net subordinated capital Involvement with specialized enterprises Other corporate exposures SME exposure Retail morgage exposure Other retail exposure Equity investments Risk-weighted assets credit risk IRB Exposures calculated using the standardised approach Market risk Transitional arrangements Operational risk Deductions Risk-weighted assets Capital adequacy ratio 21,7 % 20,3 % 18,9 % Capital adequacy ratio 14,4 % 14,7 % 16,4 % 21,7 % 20,3 % 18,9 % Core equity tier 1 ratio 14,0 % 14,5 % 16,2 % 21,7 % 20,5 % 18,9 % Capital adequacy ratio before transitional arrangements 14,4 % 14,9 % 16,4 % 16

17 Note 5 Loans to and receivables from customers Loans by type of receivable Financial leasing Overdraft facilities and operating credits Building loans Repayment loans Accrued interest Gross loans to and receivables from customers Write-downs Loans to and receivables from customers Loans by type of market Private customers Corporate Public sector Gross loans to and receivables from customers Write-downs Loans to and receivables from customers Private customers Public sector Primary industries Paper and pulp industries Other industry Building and construction Power and water supply Wholesale and retail trade Hotel and restaurants Real estate Commercial services Transport and communications Other Total commitments by sector and industry Private customers Public sector Primary industries Paper and pulp industries Other industry Building and construction Power and water supply Wholesale and retail trade Hotel and restaurants Real estate Commercial services Transport and communications Other Total gross loans by sector and industry

18 Private customers Primary industries Paper and pulp industries Other industry Building and construction Wholesale and retail trade Hotel and restaurants Real estate Commercial services Transport and communications Total individual write-downs by sector and industry Note 6 Losses on loans and guarantees Change in individual write-downs in the period Change in collective write-downs in the period Realised losses on commitments previously written down Realised losses on commitments not previously written down Recoveries on loans and guarantees previously written down Total losses on loans and guarantees Individual write-downs to cover losses on loans and guarantees at 1 January Realised losses in the period on loans and guarantees previously written down individually Reversal of write-downs in previous years Increase in write-downs on commitments previously written down individually Write-downs on commitments not previously written down individually Individual write-downs to cover losses on loans and guarantees at 141 the end of period *) *) Guarantee provisions are included under Other liabilities in the balance sheet, see Note Collective write-downs to cover losses on loans and guarantees at 1 January Collective write-downs to cover losses on loans and guarantees in the period Collective write-downs to cover losses on loans and guarantees Defaulted commitments Other doubtful commitments Total defaulted and doubtful commitments Individual write-downs on loans and guarantees Net defaulted and doubtful commitments

19 Note 7 Financial derivatives and At fair market value through p & l account Contract sum Fair market value Foreign exchange instruments Assets Liabillities Forward exchange contracts Currency swap contracts Total foreign exchange instruments Interest rate instruments Interest rate swaps (inc. int. rate & currency) Other interest rate contracts Total interest rate instruments Other financial derivatives Guarantee liability - Eksportfinans ASA 66 2 Total curr.- and int. rate instruments Total currency instruments Total interest rate instruments Total other financial derivatives Total At fair market value through p & l account Contract sum Fair market value Foreign exchange instruments Assets Liabillities Forward exchange contracts Currency swap contracts Total foreign exchange instruments Interest rate instruments Interest rate swaps (inc. int. rate & currency) Other interest rate contracts Total interest rate instruments Other financial derivatives Guarantee liability - Eksportfinans ASA 66 1 Total curr. and int. rate instruments Total currency instruments Total interest rate instruments Total other financial instruments Total At fair market value through p & l account Contract sum Fair market value Foreign exchange instruments Assets Liabillities Forward exchange contracts Currency swap contracts Total foreign exchange instruments Interest rate instruments Interest rate swaps (inc. int. rate & currency) Other interest rate contracts Total interest rate instruments Other financial derivatives Guarantee liability - Eksportfinans ASA 66 3 Total curr. and int. rate instruments Total currency instruments Total interest rate instruments Total other financial instruments Total

20 Note 8 Determination of fair value of financial instruments In connection with implementation of IFRS 13, interim financial statements are required to present fair value measurments per level with the following division into levels for fair value measurement: - Level 1: Quoted prices for similar asset or liability on an active market - Level 2: Valuation based on other observable factors either direct (price) or indirect (deduced from prices) than the quoted price (used on level 1) for the asset or liability - Level 3: Valuation based on factors not based on observable market data (non-observable inputs) All figures are identical for the parent bank and the. Per Level 1 Level 2 Level 3 Total Assets Financial assets at fair value through profit and loss - Derivatives Bonds and certificates Fixed-rate loans Loans with interest-rate guarantees 3 3 Financial assets available for sale 0 - Equity instruments Total assets Liabilities Financial liabilities at fair value through profit and loss - Derivatives Securities issued Subordinated loan capital Fixed-rate deposits Total liabilities Per Level 1 Level 2 Level 3 Total Assets Financial assets at fair value through profit and loss - Derivatives Bonds and certificates Fixed-rate loans Loans with interest-rate guarantees 3 3 Financial assets available for sale - Equity instruments Total assets Liabilities Financial liabilities at fair value through profit and loss - Derivatives Securities issued Subordinated loan capital Fixed-rate deposits Term deposits Total liabilities Per Level 1 Level 2 Level 3 Total Assets Financial assets at fair value through profit and loss - Derivatives Bonds and certificates Fixed-rate loans Loans with interest-rate guarantees 3 3 Financial assets available for sale - Equity instruments Total assets Liabilities Financial liabilities at fair value through profit and loss - Derivatives Securities issued Subordinated loan capital Fixed-rate deposits Term deposits Total liabilities