Sparebanken Vest (SVEG) delårsrapport 1/2009. Ikke revidert

Transcription

1 Sparebanken Vest (SVEG) delårsrapport 1/2009. Ikke revidert FIRST QUARTER 2009 ((SVEG)) Results rreffl lectt maintenance o ff nett ini tterrestt income, i, lowerr crredi itt sp rreads,, higherr lossl prrovi isions and sound lil iquiditty Net interest income maintained at 1.53% and 12-month nominal growth of NOK 55m (+19%) Net loss of NOK 57m (-14m) on financial instruments, with the credit spread effect (FVO) of fixed interest debt/fixed interest loans contributing minus NOK 70m (+30m) Net loss write-downs of NOK 59m (11m) and net realised loss of NOK 4m (3m) Strengthened liquidity - liquidity indicator at 103.4% (100.7%) Capital ratio of 10.17% (9.66%) based on Basel I and 11.30% (13.76%) based on Basel II Consolidated profit NOK 89m (139m) before write-downs and tax Profit before tax NOK 30m (128m) (Figures at in brackets) Side 1 av 20

2 Maarrkkeet t conditiions rreef fleeccteed ini quaa rrt teerrl lyy rr eessul ltss The global economic downturn and continuing turmoil in the finance market are affecting the Norwegian economy. The sharp fall in interest rates has reduced money market rates, and credit spreads have been reduced to some extent, but remain at a high level. The bank s application of the Fair Value Option principle (FVO) in assessing its fixed-interest debt and fixed-interest loans has impacted negatively on the first quarter results, reducing profits by NOK 70m. A weaker real economy has also led to higher loan write-downs and a decline in the value of some of the bank s financial investments. F inaancc i iali l deevveel lopmeen t Profit and loss account payment of the full fee to the Savings Bank s Guarantee Fund in Lower interest rates reduced net interest income as the margins on equity are reduced. Period Change Amounts in NOK million Net interest income & credit commissions Net banking services Net gain/(loss) financial instruments Of this: credit spread changes FVO portfolio Other operating income Net (other) income Net operating income Total operating expenses Profit / (loss) before write-downs and tax Write-downs on loans and guarantees Profit/(loss) before tax Taxes Profits / (loss) after tax The consolidated profit in the first quarter was NOK 89m (139m) before write-downs and tax. The profit was NOK 30m (128m) before tax and NOK 3m (79m) after tax. The return on equity was 0.24% (7.52%), while earnings per PCC were NOK 0.08 (2.03). Operating income totalled NOK 385m (373m), with net interest income accounting for NOK 341m (286m) and net other operating income NOK 44m (87m). Interest Last Q months Quarter The nominal increase in net interest income compared with the first quarter of 2008 was NOK 55m (19.2%), and corresponded to 1.53% (1.53%) of average total assets in the first quarter. The corresponding figure for the fourth quarter of 2008 was 1.71%. The reduction compared with the fourth quarter was due to lower interest rates, the accumulation of liquid funds, the effects of repricing and The accumulation of long-term liquidity means that from time to time parts of these funds are invested at rates which are lower than the average funding cost. The increase also means a relatively sharp rise in the percentage basis used to calculate net interest income. Frequent changes in the key policy rate from the fourth quarter of 2008 have meant that loans and deposits have had to be repriced several times. The consolidated interest rate margin 1 in the first quarter stood at 2.31% (2.09%), against 2.38% in the fourth quarter of The higher fee payable to the Savings Banks Guarantee Fund represents an increase of NOK 9m in interest costs in the first quarter, while the effect on net interest income corresponded to 0.04 percentage points. Through Sparebanken Vest Boligkreditt AS the Group has access to the funding schemes announced by the authorities in October 2008 through the swap scheme for covered bonds. Further information about the interest rate situation is provided in note 3. Banking services Net banking services provided income of NOK 65m (79m). Development in this income group reflect the absence of direct income from the benefits programmes for the parent bank in the first quarter following the abolishment of fees in this area effective from June Market adjustment represented NOK 11m compared with the first quarter of 2008, while sales of insurance products generated income of NOK 11m (13m). 1 Interest rate margin = The total of the lending margin and the deposit margin Page 2 of 20

3 The bank s premium volume from Frende Forsikring is developing well and better than expected.. Financial instruments Sparebanken Vest s accounting principles have been maintained and there was no reclassification of the bond portfolio in autumn of Financial instruments have continued to perform poorly, showing a net loss of NOK 57m (-14m). Sparebanken Vest recognises fixed interest debt and fixed interest lendings at fair value, and credit spreads are also taken into account. The consolidated accounts include a charge of NOK 70m against profits to reflect the decline in credit spreads since year- end. In the corresponding period last year NOK 30m was taken to income. Net value assessments in excess of the credit spread effects in the first quarter totalled NOK 39m (-6m) for the portfolio of fixed interest lendings and fixed interest debt. Gains on holdings of bonds and commercial paper came to NOK 18m ( -12m). The value of the Group s share portfolio fell by NOK 49m (45m) in the first quarter and related mainly to shares with a long-term investment horizon. At the same time, the trading portfolio made a positive contribution of NOK 5m (-18m). Further specification is provided in note 4. Operating costs Operating costs totalled NOK 296m (234m), with higher pension costs accounting for NOK 27m. Pension costs in the first quarter of 2008 were very low (NOK 2m) due to the accounting effect of implementation of pension scheme plan changes. Payroll and social security costs were NOK 17m higher in the first quarter. After adjusting for financial instruments, the ratio of costs to income stood at 67.0% (60.5%). Further specification is provided in note 5. Lendings and deposits The pace of lending growth is declining. At the end of the period net lendings came to NOK 76.9m (67.3m), reflecting growth of 14.2% over a 12-month period. Net lending growth in the first quarter stood at NOK 0.7bn (0.9%). Loans from Sparebanken Vest Boligkreditt AS account for NOK 7.6bn of Group lendings. The year-end figure was NOK 8.2bn. At the end of the first quarter deposits totalled NOK 40.6bn (38.6bn) and the funding ratio was 52.8% (57.4%). Risk and capital Credit risk The risk profile attached to the bank s credit portfolios again increased slightly in the first quarter, due to the economic development. The risk profile for the retail market portfolio is still considered to be low, and the level of risk in this area in the period ahead will be affected by developments related to the level of unemployment, interest rates and the availability of credit from the banks. Sparebanken Vest s strategy is firmly targeted on strengthening the bank s position in the corporate sector and this, along with exchange rate developments, resulted in strong volume growth in This situation changed in the first quarter of 2009 which saw considerably less growth. This development was a reflection of a strict credit policy, lower demand and strengthening of the Norwegian krone. The risk profile attached to the corporate market portfolio continued to increase in the first quarter, in line both with the bank s expectations and macro-economic developments. The increased risk is reflected in a higher probability of defaults and an increase in both individual write- downs and write-downs of loan groups. Loan group write-downs also take account of the expectation of a higher risk in volatile industries. The bank has an ongoing programme of initiatives aimed at maintaining the satisfactory quality of the portfolio. The Board considers the risk attached to the corporate market portfolio to be moderate. Retail market commitments in default for more than 90 days amount to NOK 217m (125m), while the figure for the corporate market is NOK 107m (61m). The default ratio (more than 90 days) has developed as follows: PM 0,39 % 0,35 % 0,33 % 0,30 % 0,25 % BM 0,51 % 0,46 % 0,37 % 0,29 % 0,39 % Total 0,42 % 0,39 % 0,34 % 0,30 % 0,28 % Page 3 of 20

4 The following table summarises defaults and write-downs recorded in the balance sheet: MNOK Gross lending Defaulted commitments ( > 90 days) Potential bad debts not defaulted commitments Total Loan write-downs of default commitments posted in the balance sheet Loan write-downs of not default commitments posted in the balance sheet Write-down of loan groups Total write-downs posted in the balance sheet Loan write-downs against default and bad debts commitments 50 % 38 % 53 % Loan write-downs against gross lending 0,49 % 0,23 % 0,43 % Write-downs of loan groups RM Write-downs of loan groups CM Individual write-downs RM Individual write-downs CM Total write-downs posted in the balance sheet Specified provisions to cover losses on guarantees Loan write-downs in the first quarter totalled NOK 59m (11m), with write-downs of loans groups accounting for NOK 5m. Realised losses in the period came to NOK 9m (5m), and of this NOK 3m (1m) was covered by recoveries on previous realised losses. Overall losses correspond to 0.31% of average gross lendings. Market riisk and operationall riisk The bank s market risk (interest rates, foreign currency and shareholdings) is considered to be at an acceptable level, while the interest rate and the foreign exchange risk remains low. Market volatility had a considerable negative impact of the first quarter results. Reference is made to the section above on Financial instruments. At normative level, the bank s control parameters for shareholdings (excluding subsidiaries and associated companies) focus on the overall exposure and the portfolio concentration in relation to companies and industries. At the end of the first quarter the bank s exposure was NOK 531m against NOK 530m at year-end. The identification, analysis and monitoring of operational risk is carried out at normative level on the basis of expert assessments, management confirmations and events. Initiatives related to the identification of matters of relevance are followed up in a satisfactory manner. Liquidity and funding The bank s liquidity exposure is managed at normative level through the liquidity indicator, structural liquidity and the funding ratio. At the end of the first quarter the liquidity indicator for the Group in accordance with Norges Bank s norm stood at 103.4% (100.7%), including drawing rights. Credit spreads in the capital market are still at a historically high level, although they have lessened recently. The availability of funding has still not returned to a normal level, although steps taken by the authorities to strengthen bank liquidity and reduce interest rates appear to be having an effect.. The Group had good liquidity at the end of the first quarter, with holdings of commercial paper and bonds totalling NOK 11.9bn.. The bank s aim is to have 12 months structural liquidity (the period when the bank can conduct its operations without access to funding from the capital market), effective from the end of March. At the end of the first quarter the achieved figure was 12.5 months. After the home mortgage company s became operative in the fourth quarter of 2008 the Group s funding structure has changed with the issue of covered bonds and the related access to long-term funding through the swap scheme with Norges Bank. At the end of the first quarter covered bonds totalling NOK 6bn had been issued by the home mortgage company, NOK 5.5bn of which was owned by the parent bank. There is still scope for the bank to utilise the public swap scheme to a greater extent. Sparebanken Vest is rated by Moody s and Fitch Ratings. The bank s rating for long-term funding has been maintained at A1 by Moody s and at A- by Fitch. Both ratings indicate a stable outlook for the bank. Capital base and primary capital certificates 20,00 % 18,00 % 16,00 % 14,00 % 12,00 % 10,00 % 8,00 % 6,00 % 4,00 % 2,00 % 0,00 % 9,66 % 1,31 % 8,35 % 1 Q Basel I 13,76 % 1,87 % 11,89 % 1 Q Basel II 9,06 % 1,33 % 7,73 % 4 Q 2008 Basel I 11,75 % 1,73 % 10,02 % 4 Q 2008 Basel II 10,17 % 1,65 % 8,52 % 1 Q 2009 Basel I 11,30 % 1,64 % 9,66 % 1 Q 2009 Basel II (adjusted IRB Boligkreditt) The Group s capital ratio under the transitional scheme and in accordance with Basel II is shown in the figure. The capital ratio under the transitional scheme developed positively in the first quarter, mainly due to downscaling of the basis of calculation. It is now in excess of the bank s target figure which is a capital ratio of 10% and a core capital ratio of 7% in The bank calculates its capital applying the basic IRB method for calculating credit risk under Basel II. Applying this method, the capital calculation is more volatile because of changes in the risk profile. A weaker macro- situation increases the credit risk attached to the portfolio, Page 4 of 20

5 and thus increases effect in the capital calculation. Capital calculation under Basel II assumes that the bank s subsidiary, Sparebanken Vest Boligkreditt AS, is IRB approved, and approval is expected in the near future. In addition to the weaker risk profile, the development from the fourth quarter of 2008 must also be considered taking account of the fact that there was an error year-end reporting which has now been corrected. If 50% of the qualifying profit in the first quarter is included, the capital ratio calculated under Basel II increases to 11.41%. Reference is made to note 14. In this note the Basel II figures have been calculated without assuming IRB approval of the home mortgage company. In the autumn of 2008 the Board adopted a capital base target figure to apply from 2010 (with full implementation of Basel II), corresponding to a capital ratio of 12% and a core capital ratio of 9%. The bank s ICAAPscenarios for capital calculation were updated in the first quarter of The Board finds the capital base at the end of the first quarter satisfactory, in both absolute and relative terms, but will keep the capital situation under constant review based on the economic climate, the market s capital requirements and the terms applicable for possible utilisation of the Norwegian State Finance Fund. The legislation governing savings banks and financial institutions not organised as joint stock companies is currently being revised. Odelsting Bill No. 75 ( ) was published on 24 April The Bill, which is based on a draft from the Banking Law Commission, contains a number of important proposals affecting savings banks. This includes proposed new regulations relating to capital and structural changes for savings banks. The proposals provide scope for improving the quality of the bank s equity instrument, while retaining a number of the special features of the savings bank model. The bank will be assessing the proposed new regulations and possible adjustments this might entail for Sparebanken Vest. Subsidiaries and associated companies Sparebanken Vest Boligkreditt AS became operative in the fourth quarter of The company s activity is to manage home loans taken over from Sparebanken Vest. The company has total assets of NOK 8bn and is mainly funded through the issue of covered bonds (for NOK 6bn) and seller credit from the parent company. In the first quarter the company recorded pre-tax profits of NOK 14.8m. Eiendomsmegler Vest AS reported a positive profit trend in the first quarter, in a wait-and-see property market. As the leading regional player in this market, Eiendomsmegler Vest has strengthened its position and as a result it has had a good inflow of assignments. The Group has taken over two previous Notar real estate offices in Rogaland. Eiendomsmegler Vest AS had pre-tax profits of NOK 5.5m (-1.7m) in the first quarter. Frende Forsikring (44.3% ownership). The companies reported a good increase in the customer base and premiums from both non-life and life activities. Fende Forsikring is now introducing corporate market products. Despite strong growth, Frende Skade s gross non-life claims ratio is a moderate 70.7 %. Norne Securities AS (38% ownership) continued to build up its the organisation in the first quarter. The company is preparing to provide share trading services for its owner banks through their online banking services. The results from associated companies have been incorporated applying the equity method This reduced income by NOK 11m (4m). Amended organisational structure Changed macro- economic conditions and the continuation of intense competition call for a more unified response and the ability to act quickly. On this basis, the bank s organisational structure was amended with effect from The new organisational structure can be accessed at Outlook Updated estimates from the Central Bureau of Statistics indicate that Norway s GNP from mainland activities can be expected to show negative growth of 1.7%, while 2008 was the best year ever. The main reasons for this are the contribution from net exports, the level of gross real investments and private consumption. Consumption is likely to be lower due to the increasing level of unemployment and expectations of a higher savings rate. The commercial sector in the West of Norway is largely geared to the international market and oil- related activities. This has helped the region to maintain a high level of activity. If the negative forecasts and expectations concerning the international economy prove to be correct, this will have repercussions for the commercial sector in our region. Based on macro-economic uncertainty and the likelihood of a further weakening of the real economy, Norges Bank has adjusted its interest rate forecast with rates expected to bottom out at 1%. Lower interest rates could stimulate demand for goods and services, but it could also put further pressure on net interest income, especially on the deposit side. There are indications that the banking and financial sector is in the process of stabilising. While credit spreads in the capital market are lower than they were last autumn, they are still far Page 5 of 20

6 higher than before the autumn of 2007 when the financial turmoil started. The Board keeps the capital structure under constant review in the light of macro-economic developments and changes in market requirements. Implementation of the bank s benefits programme is continuing, with a focus on higher margins, a reduction in input factors and improved business processes. At the same time, the process of preventing and limiting losses on the loan portfolio is being intensified. Sparebanken Vest s strategy has met with success over the last three years and the strategic direction remains unchanged. Bergen, 5 May 2009 The Board of Directors of Sparebanken Vest Trygve Bruvik Anne Kverneland Bogsnes Jan O. Yttredal Chairman Deputy chairman Marit Solberg Richard Rettedal Øyvind A. Langedal Arve Havnerås Gerd Kjellaug Berge Tone Mattsson Page 6 of 20

7 Profit and Loss Account group Unaudited Notes 31/ / /12-08 Interest income etc Interest expenses etc Net interest income and credit commissions Commissions receivable and income from banking services Commissions payable and cost of banking services Net gain/(loss) on financial instruments Other operating income Net other operating income 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 Majority interests Minority interests Profit per PCC (based on the PCC proportion of capital base) 0,08 2,03 5,34 Diluted profit per PCC 0,08 2,03 5,34 Balance Sheet group Unaudited Notes 31/ / /12-08 Assets Cash and deposits with central banks Loans to and deposits with credit institutions Net lendings 7, Shares at fair value over profit or loss Commercial paper and bonds Shares available for sale Financial derivatives Shareholdings in associated companies Deferred tax assets 0 81 Other intangible assets Fixed assets Prepaid expenses Customer funds - contribution-based pension agreements Other assets Total assets Liabilities and equity Debt to credit institutions Deposits Securitised debt Financial derivatives Accrued expenses and prepaid income Pension costs Deferred tax Other provisions for commitments Tax provicion Subordinated loan capital Other liabilities Total liabilities Primary capital certificates Holdings of own primary capital certificates PPC premium reserve Totale paid-up equity Reserve for valuation variances Gift fund Equalisation reserve Other equity Minority interest Totale retained earnings Total equity Interim profit (unallocated) 3 79 Total liabilities and equity Page 7 of 20

8 Statement of cash flows group Unaudited 31/ / /12-08 Cash flow from operations Interest, commission and fee income Interest, commissions and fees paid Receivables from commitments previously written off Net increase/decrease in instalment loans Change in utilised overdraft facilities Net increase/decrease in customer deposits Payments for goods and services Payments to employees, pension schemes, national insurance, tax deductions etc Payment of taxes and public dues Income from sale of securities for short-term trading purposes Payments on purchase of securities for short-term trading purposes Net cash flow from operations Cash flow from investment activities Sale of shareholdings and investments in other companies Purchase of shareholdings and investments in other companies Purchase of other short-term securities Revenues from other short-term securities Revenues from sale of securities, real estate etc Purchase of securities, real estate etc Revenues from sale of fixed assets etc. 0 0 Purchase of fixed assets etc Net cash flow from investment activities Cash flow 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 Subordinated loan capital received Repayment related to subordinated loan capital Income related to bond debt Repayment related to bond debt Dividends paid / Gift for the public benefit Net cash flow from financing activities Net cash flow in period Net change in cash and cash equivalents Liquid assets at start of period Liquid assets at end of period Page 8 of 20

9 Equity movements group PCC capital Holdings of own PCC's PCC premium reserve Reserve for valuation variances 1) Gift fund Dividend equalisation reserve Other equity Minority interest Total Equity at 31/ Sale of own PCCs 0 Purchase of own PCCs 0 Payment of dividend and gifts Equity at 31/ Sale of own PCCs Purchase of own PCCs Dividend issue Payment of dividends and gifts -1-1 Minority's share of profit for the year 1 1 Dividend from holdings of own PCCs 1 1 Allocation of profit for the year Equity at 31/ Sale of own PCCs Purchase of own PCCs Payment of dividend and gifts Equity at 30 September ) Of this, unrealised gains on shares available for sale not posted in accounts amounted to NOK 60m at 31/ Note 1 Accounting principles The consolidated accounts and the accounts of the parent bank are prepared in accordance with the Norwegian Securities Trading Act, Kredittilsynet s (The Financial Supervisory Authorithy of Norway) regulations governing annual accounts and IAS 34. The accounts are prepared applying the same principles and methods of estimation as used in the annual report for The principles are described in the annual report for The 3 months accounts have not been audited. All amounts are stated in NOK million and relate to the Group, unless stated otherwise. Page 9 of 20

10 Note 2 Segment information Banking activity Profit and Loss Account Corporate Market Retail Market Capital Market Estate Agency Activities Unallocated by segment Total 31/03-09 Net interest income Operating income Operating expenses Losses Profit before tax Taxes Profit after tax /03-08 Net interest income Operating income Operating expenses Losses Profit before tax Taxes Profit after tax /12-08 Net interest income Operating income Operating expenses Losses Profit before tax Taxes Profit after tax Operating income and expenses are allocated directly, with the exception of staff-related costs and depreciation. Net interest is allocated on the basis of internationally calculated intra-group interest based on 3-month NIBOR. Balance Sheet 31/03-09 Net lendings Other assets Deposits Other liabilities and equity /03-08 Net lendings Other assets Deposits Other liabilities and equity /12-08 Net lendings Other assets Deposits Other liabilities and equity Page 10 of 20

11 Note 3 Net interest income and credit commissions 31/ / Q Q Q Q /12-08 Changes 31/ /3-08 1Q09-1Q08 4Q08-1Q09 Interest etc. on loans to and deposits with credit institutions Interest etc. on loans to and receivables from customers Interest etc. on commercial paper, bonds and other interest-earning securities Total Interest etc. on loans from credit institutions Interest. etc. on deposits and loans from customers Interest etc. on securities issued Interest payable on subordinated loan capital Other interest and similar costs 1) Fee to Banks Guarantee Fund Total Net interest income and credit commissions The changes are due to Volume of lendings and deposits Margins on lendings and deposits Other net interest income Fee to Banks Guarantee Fund ) Interest from derivative contracts made to manage the interest rate risk attached to the bank's ordinary portfolios is classified as interest income and posted as an adjustment of the bank's other interest income/interest expenses. Note 4 Net gain/(loss) on financial instruments 31/ / Q Q Q Q /12-08 Changes 31/ /3-08 1Q09-1Q08 4Q08-1Q09 Guarantee commissions Payment transfer charges/interbank credit charges Other commissions and fees receivable Commission income receivable and income from banking services Payment charges/bbs/eftpos Payment transfer charges/interbank debit charges Other commissions and fees payable Commission income payable and cost of banking services Net banking services 1) Dividends Income from owner interests in group companies Income from owner interests in associated companies Gain/loss(-) on shares and securities Net gain/loss(-) on other financial instruments Net gain/loss(-) on credit spread changes FVO portfolio Product margin, amortised Net gain on financial instruments Brokerage fees Other operating income Other operating income Net other operating income ) Income and costs of banking services specified Guarantee commissions Payment transfers Insurance Equity fund and other investmentproducts Customer benefitiary programs Other income Net banking services Page 11 of 20

12 Note 5 Operating expenses Changes 31/ / Q Q Q Q / / /3-08 1Q09-1Q08 4Q08-1Q09 Salaries Pensions Social security contributions IT costs Administration expenses Total Ordinary depreciation of fixed assets Write-down of goodwill Depreciation Real estate operating expenses Office rental and other running costs Fixed assets charged against income Other operating expenses Capital taxes Total Total operating expenses Note 6 Losses on loans and guarantees 31/ / Q Q Q Q /12-08 Changes 31/ /3-08 1Q09-1Q08 4Q08-1Q09 Change in individual write-downs in period Change in loan group write-downs in period Actual losses not covered by previous write-downs Recoveries on losses realised previously Write-downs and loan losses Realised losses on guarantees not covered by previous loss provisions Change in loss provisions for guarantees in period Loss on guarantees Total losses on loans and guarantees Realised losses on loans covered by previous write-downs Realised losses on guarantees not covered by previous loss provisions Realised losses on loans not covered by previous write-downs Realised losses Note 7 Net loans 31/ / /12-08 Valued at amortised cost: Fair value through profit or loss Total The fair value is calculated by discounting the cash flow from the loans using a required rate of return derived from the zero coupon curve. Where the loan interest period is set for a short period the book value is virtually the same as the fair value. All of the bank's fixed interest loans are included in the portfolio of loans assessed at actual value. Note 8 Write-downs for decline in value of commitments Individual assessment 31/ / /12-08 Non-performing commitments Gross non-performing commitments assessed for decline in value Write-down Net non-performing commitments assessed for decline in value Percentage provided for 13 % 4 % 8 % Potential bad debts and defaults (in excess of 90 days) where the balance in default on one of the commitments is more than NOK Performing commitments Gross commitments assessed for decline in value Write-down Net commitments assessed for decline in value Percentage provided for 23 % 15 % 22 % Page 12 of 20

13 Note 9 Defaulted commitments The table shows defaults older than 30 days where the amount in default is more than NOK on one of the commitment accounts. 31/ / /12-08 Retail Market days days Over 90 days Total 1) Corporate Market days days Over 90 days Total days days Over 90 days Total ) The expected loss on defaulted commitments in the Retail market is included in the write-down on loan groups. Note 10 Loan write-downs posted in the balance sheet Movements in loan write-downs and provisions for losses on guarantees in period 31/ / /12-08 Individual write-downs Loan write-downs at 1 January (nominal values) Realised losses on loans covered by previous write-downs Increase in write-down of loans written down previously Write-down of loans not written down previously Reduction in previous years' write-downs of individually assessed loans Individual write-downs Write-down of loan groups Write-down of loan groups at 1 January (nominal values) Increase in write-down of loan groups Reduction in write-down of loan groups Write-down of loan groups Total write-downs of commitments Provisions for losses on guarantees Provisions to cover losses on guarantees at 1 January Provisions for losses on guarantees not provided for prerviously Reduction in previous years' loss provisions (write-back) Realised loss on guarantees covered by previous loss provisions Specified provisions to cover losses on guarantees Note 11 Net loans distributed by main industries and retail market 31/ / /12-08 Primary industries Manufacturing and mining Building and construction, power and water supply Commerce, hotels and restaurants International shipping and pipe transportation Transportation, post and telecommunications Real estate operations Insurance and finance Services Municipal/public sector Foreign Total- commercial sector Retail clients Total- retail and commercial clients Page 13 of 20

14 Note 12 Distribution of deposits from and debt to customers 31/ / /12-08 Primary industries Manufacturing and mining Building and construction, power and water supply Commerce, hotels and restaurants International shipping and pipe transportation Transportation, post and telecommunications Real estate operations Insurance and finance Services Municipal/public sector Foreign Total- commercial sector Retail clients Total- retail and commercial clients Note 13 Securitised debt and subordinated loan capital Securitised debt 31/ / /12-08 Commercial paper, nominal amount Bonds, nominal amount Adjustments Total securitised debt Balance sheet Matured/ Exchange rate Other Balance sheet 31/03 Issued redeemed movements adjustments 31/12 Changes in securitised debt Commercial paper, nominal amount Bonds, nominal amount Adjustments Total securitised debt Subordinated loan capital and capital loan Term subordinated loan capital, nominal amount Perpetual subordinated loan capital securities, nominal amount Adjustments Subordinated loan capital and capital loan Remaining terms to maturity 0-1 month 1-3 months 3-12 months 1-5 years Over 5 years Total Securitised debt, nominal amount Subordinated loan capital, nominal amount Financial debt with an agreed term or period of notice Note 14 Capital adequacy As an IRB bank, the authorities have provided for a gradual scaling down of the capital requirement up to and including (95% of the basis of calculation pursuant to Basel I in 2007, 90% in 2008 and 85% in 2009) 31/ / /12-08 Basis of calculation - Basel II: Credit risk / Counterparty risk: Market risk: Foreign curency risk: Operational risk : Initial and excepted commitments under IRB: IRB reporting of lower parameters Basis of calculation - transitional scheme % % % Capital adequacy - transitional scheme 2007: Capital ratio: ,17 % ,66 % ,06 % Net core capital ,52 % ,35 % ,73 % Net supplementary capital 793 1,65 % 623 1,31 % 714 1,33 % Capital requirement - transitional scheme 2007: ,00 % ,00 % ,00 % Calculated regulatory surplus / deficit Capital adequacy - Basel II: Capital ratio: ,72 % ,76 % ,21 % Net core capital ,16 % ,89 % ,56 % Net supplementary capital 676 1,56 % 623 1,87 % 714 1,65 % Capital requirement - Basel II: ,00 % ,00 % ,00 % Calculated regulatory surplus / deficit Page 14 of 20

15 Note 15 Key information about Primary Capital Certificates - Sec. No (31/03-09) 20 Largest owners No. of PCCs Proportion of PCC capital (%) Frank Mohn AS ,93 Bergen Kommunale Pensjonskasse ,80 Nistad gruppen AS ,01 MP Pensjon ,98 Kaare Holmefjord AS ,65 Solvang ASA ,48 Sparebanken Vest ,48 Aske Investering AS ,31 Goldman Sachs & Co ,31 Per Gunnar Sælemyr ,13 Citibank N.A ,09 Forsvarets personellservice ,02 Terra utbytte ,92 DnB NOR,Luxembourg ,87 Aristar AS ,86 Flyfisk AS ,79 Jan H. Freuchen ,73 Albrecht Halvor Paul Eika ,70 Torbertra kapital AS ,68 Neumann invest AS ,64 Total ,38 Turnover in last 12 months Month Volume (number) April May June July August September October November December January February March NOK PCC price development - last 12 months Rate April May June July Aug Sept Oct Nov Dec Jan Feb March Page 15 of 20

16 Note 16 Transactions with associated companies Important transactions with close associates during the first three months are as follows: Frende Forsikring As per 31 March 2009 Sparebanken Vest holds a 44.30% ownership interest in Frende Holding AS. The ownership interest is incorporated in the consolidated accounts by the equity method. Share of the result as per 31 March 2009 estimates to NOK -9m. In the first quarter 2009 Sparebanken Vest has participated in a cash issue and paid up NOK 66,5m in new equity to the company. As per 31 March, in accordance with the equity method, the capitalised value of the interests estimates to NOK 155m. In the first quarter 2009 Sparebanken Vest has received commisions for distribution of life assuranceand general insurance policies from Frende. The commisions amount to NOK 5m. The transactions have been agreed on ordinary market terms as if they were between independent parties. Frende Livsforsikring AS has per 1 January 2009 taken over as the provider of Mandatory Occupational Pension Scheme (MOP) and Defined-contribution Occupational Pension Scheme (DOP) for Sparebanken Vest. The combined fund assets managed by external providers has accordingly been transferred to Frende Livsforsikring AS. As per 1 January the capitalised value of these fund assets amounts to NOK 96,4m. Sparebanken Vest has not received other compensation for the MOP and DOP agreement with Frende Livsforsikring AS. After the transfer, Sparebanken Vest distributes MOP and DOP on behalf of Frende Livsforsikring AS. Page 16 of 20

17 Profit and Loss Account parent bank Unaudited 31/ / /12-08 Interest income etc Interest expenses etc Net interest income and credit commissions Commissions receivable and income from banking services Commissions payable and cost of banking services Net gain/(loss) on financial instruments Other operating income Net operating income 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 for the period Profit per PCC (based on the PCC proportion of capital base) 0,10 2,12 6,45 Diluted profit per PCC 0,10 2,12 6,45 Balance Sheet parent bank Unaudited 31/ / /12-08 Assets Cash and deposits with central banks Loans to and deposits with credit institutions Net lendings Shares at fair value over profit or loss Commercial paper and bonds Shares available for sale Financial derivatives Shareholdings in group companies Shareholdings in associated companies Deferred tax assets Other intangible assets Fixed assets Prepaid expenses Customer funds - contribution-based pension agreements Other assets Total assets Liabilitites and equity Debt to credit institutions Deposits Securitised debt Financial derivatives Accrued expenses and prepaid income Pension costs Deferred tax Other provisions for commitments Tax provision Subordinated loan capital Other liabilities Total liabilities Primary capital certificates Holdings of own primary capital certificates PCC premium reserve Total paid-up equity Reserve for valuation variances Gift fund Equalisation reserve Other equity Total retained earnings Total equity Interim profit (unallocated) 4 83 Total liabilities and equity Page 17 of 20

18 Group Key Figures Quarterly Results (cum.) PROFIT AND LOSS ACCOUNT SUMMARY 31/ / / / /03-08 Interest income etc Interest expenses etc Net interest income and credit commissions Commissions receivable and income from banking services Commissions payable and cost of banking services Net banking services Net gain/(loss) on financial instruments Other operating income Net operating income 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 for the period Majority interests Minority interests AVERAGE TOTAL ASSETS RESULTS AS A PERCENTAGE OF AVERAGE TOTAL ASSETS Interest income etc. 5,47 6,80 6,69 6,51 6,42 Interest expenses etc 3,95 5,20 5,13 4,98 4,89 Net interest income and credit commissions 1,53 1,60 1,57 1,53 1,53 Commissions receivable and income from banking services 0,38 0,48 0,50 0,52 0,53 Commissions payable and cost of banking services 0,09 0,09 0,10 0,10 0,10 Net banking services 0,29 0,39 0,41 0,42 0,42 Net gain/(loss) on financial instruments -0,26-0,11-0,03 0,10-0,08 Other operating income 0,16 0,19 0,14 0,15 0,12 Net operating income 0,20 0,46 0,52 0,68 0,47 Net operating income 1,72 2,06 2,09 2,21 2,00 Salaries and general administration expenses 1,05 1,03 1,04 1,06 0,97 Depreciation 0,09 0,11 0,10 0,10 0,10 Other operating expenses 0,18 0,17 0,19 0,19 0,19 Total operating expenses 1,33 1,31 1,33 1,35 1,25 Profit before write-downs and tax 0,40 0,75 0,76 0,85 0,75 Write-downs and losses on loans and guarantees 0,26 0,25 0,15 0,08 0,06 Profit before tax 0,13 0,50 0,61 0,77 0,69 Taxes 0,12 0,25 0,25 0,26 0,26 Profit for the period 0,01 0,25 0,36 0,51 0,42 Majority interests 0,01 0,25 0,36 0,51 0,42 Minority interests 0,00 0,00 0,00 Page 18 of 20

19 Group Key Figures Quarterly Results (cum.) continue QUARTERLY RESULTS (non-cumulative) 1st Qtr rd Qtr rd Qtr nd Qtr st Qtr Interest income etc Interest expenses etc Net interest income and credit commissions Commissions receivable and income from banking services Commissions payable and cost of banking services Net banking services Net gain/(loss) on financial instruments Other operating income Net operating income 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 for the period Majority interests Minority interests AVERAGE TOTAL ASSETS (non-cumulative) RESULTS AS A PERCENTAGE OF AVERAGE TOTAL ASSETS (non-cumulative) Interest income etc. 5,47 7,14 7,00 6,60 6,42 Interest expenses etc. 3,95 5,43 5,36 5,08 4,89 Net interest income and credit commissions 1,53 1,71 1,64 1,52 1,53 Commissions receivable and income from banking services 0,38 0,42 0,47 0,52 0,53 Commissions payable and cost of banking services 0,09 0,08 0,09 0,10 0,10 Net banking services 0,29 0,34 0,38 0,41 0,42 Net gain/(loss) on financial instruments -0,26-0,35-0,26 0,28-0,08 Other operating income 0,16 0,30 0,11 0,19 0,12 Net operating income 0,20 0,30 0,23 0,88 0,47 Net operating income 1,72 2,01 1,87 2,40 2,00 Salaries and general administration expenses 1,05 1,03 1,00 1,15 0,97 Depreciation 0,09 0,12 0,10 0,10 0,10 Other operating expenses 0,18 0,12 0,18 0,20 0,19 Total operating expenses 1,33 1,27 1,27 1,45 1,25 Profit before write-downs and tax 0,40 0,74 0,60 0,95 0,75 Write-downs and losses on loans and guarantees 0,26 0,51 0,27 0,11 0,06 Profit before tax 0,13 0,22 0,32 0,85 0,69 Taxes 0,12 0,25 0,23 0,25 0,26 Profit for the period 0,01-0,03 0,09 0,59 0,42 Majority interests 0,01-0,03 0,09 0,59 0,42 Minority interests 0,00 0,00 0,00 Page 19 of 20