Interim Report 2 nd quarter 2010 Nordea Bank Norge Group

Transcription

1 Interim Report 2 nd quarter 200 Nordea Bank Norge Group Nordea Bank Norge is part of the Nordea Group. Nordea s vision is to be a Great European bank, acknowledged for its people, creating superior value for customers and shareholders. We are making it possible for our customers to reach their goals by providing a wide range of products, services and solutions within banking, asset management and insurance. Nordea has around 0 million customers, approx.,400 branch offices and a leading netbanking position with 6. million e-customers. The Nordea share is listed on the NASDAQ OMX Nordic Exchange in Stockholm, Helsinki and Copenhagen.

2 Key financial figures Income statement Q2 Q Change Q2 Change Jan-Jun Jan-Jun Change NOKm % 2009 % % Net interest income 2,73 2, , ,200 4,766-2 Net fee and commission income Net result from items at fair value Equity method Other operating income Total operating income 3,260 2, , ,870 5,97 - Staff costs ,499 -,550-3 Other expenses Depreciation of tangible and intangible assets Total operating expenses -,297 -, ,283-2,559-2,553 0 Profit before loan losses,963,348 46, ,3 3,364-2 Net loan losses ,2-57 Operating profit,805, ,830 2, Income tax expense Net profit for the period, ,56,55 39 Restated, see note for further details. Business volumes, key items 3 Mar Change Change NOKbn % 2009 % Loans to the public Deposits and borrowings from the public of which savings deposits Equity Total assets Ratios and key figures Q2 Q Q2 Jan-Jun Jan-Jun Earnings per share (EPS), NOK EPS, rolling 2 months up to period end, NOK Equity per share, NOK Shares outstanding, million Return on equity, % Cost/income ratio, % Tier capital ratio, excl transition rules,2, % Total capital ratio, excl transition rules,2, % Tier capital ratio,2, % Total capital ratio,2, % Tier capital,2, NOKm 27,739 26,255 26,897 27,739 26,897 Risk-weighted assets incl transition rules, NOKbn Loan loss ratio, basis points Number of employees (full-time equivalents),3 3,257 3,276 3,289 3,257 3,289 End of period. 2 Including the result for the six first months. According to Norwegian FSA rules (excluding the unaudited result for the period): Tier capital NOK 25,583m ( 2009: NOK 25,346m), capital base NOK 33,579m ( 2009: NOK 34,29m), Tier capital ratio 7.7% ( 2009: 7.7%), total capital ratio 0.% ( 2009: 0.4%). 3 The figures have been restated to not include employees on leave of absence. Throughout this report, Nordea Bank Norge and NBN refer to the parent company Nordea Bank Norge ASA, business identity code , with its subsidiaries. The registered office of the company is in Oslo. Nordea Bank Norge ASA is a wholly owned subsidiary of Nordea Bank AB (publ), the listed parent company of the whole Nordea Group. The business operations of the Nordea Group have been organised in the following business areas, all of which operate across national boundaries: Nordic Banking, Institutional & International Banking and Capital Markets & Savings. In addition the Nordea Group has the following group functions: People & Identity, Banking Products & Group Operations, Group Corporate Center and Group Credit & Risk Control. The consolidated interim report of Nordea Bank AB (publ) embraces all the activities of the Nordea Group and provides the most complete and fair view. This statutory interim report covers the operations of the legal entity Nordea Bank Norge ASA with its subsidiaries. Nordea Bank Norge Interim Report, Second Quarter 200 2

3 Nordea Bank Norge Group Result summary, second quarter 200 Total income increased 25% from the previous quarter and 29% compared to the second quarter last year. The development in the customer business continued to be strong, despite challenging conditions. Lending volumes increased by 5% and deposit volumes by 2% from the previous quarter. Lending margins were somewhat reduced the last three months, while deposit margins increased slightly. The market share increased in household mortgage lending during the quarter. Total expenses increased 3% compared to the previous quarter, and staff costs increased by 6%. Net loan loss provisions in the second quarter amounted to NOK 58m. The loan loss ratio was 5 basis points compared to 3 basis points in the first quarter. Operating profit was up 76% from the previous quarter, mainly due to a non-recurring gain of NOK 384m related to the merger of the two payment companies PBS A/S in Denmark and Nordito AS in Norway. In addition, the transaction leads to revaluation of shares in Nordito Property AS of NOK 37m and dividend pay out of NOK 45m in the second quarter this year. The inflow of new Gold- and Private Banking customers continued to be strong in the second quarter, with an increase of 6,800, or 2% annualised, compared to the first quarter 200. Acquisitions of new customers made a significant contribution. Income Total income increased 25% from the previous quarter, to NOK 3,260m. Net interest income Compared to previous quarter, net interest income increased 7% to NOK 2,73m. This was mainly due to volume growth and improved deposit margins, combined with one additional day in the second quarter against the first quarter. This was partially offset due to the temporary lag-effect on household customer loans related to the interest hike of 25 basis points in May. The decrease in net interest income of 5% compared to the same quarter last year must be seen in connection with the decrease of the official Norwegian interest rate at the end 2008 and start 2009, giving a high temporary positive effect in the two first quarters of 2009 due to the six week notice before changing the interest rate to household customers. Lending to the public increased to NOK 448bn, up 2% in the second quarter, compared to one year ago and up 5% compared to previous quarter. Corporate lending Corporate lending volumes were up 7% the last three months. The growth is mainly related to new customers, and increases in existing customers in Nordic Banking and Shipping. Part of the increase relates to a strong USD versus NOK. Corporate lending margins decreased on average 5 basis points during the quarter in Nordic Banking, but increased slightly in Shipping, reflecting continued re-pricing of credit risk. Household mortgage lending Household mortgage volumes increased 3% compared to the previous quarter and 0% compared to one year ago. The household mortgage market share continued to grow in the second quarter. Margins decreased during the second quarter compared to the first quarter this year and the same quarter last year. The decrease is due to the temporary lag effect that was particularly large in the first two quarters last year, which contributed to a high net interest income that period. Corporate and household deposits Total deposits from the public went up by 2% to NOK 220bn compared to the previous quarter and down 4% compared to one year ago. The reduction in corporate deposits relates to an increase in investor risk appetite leading to investment in shares and funds and therefore fierce competition for deposits. Deposit margins for household were improved 20 basis points the last quarter, while average corporate deposit margins showed a slight decrease, both compared to previous quarter and the same quarter last year. Net fee and commission income Net fee and commission income increased 0% to NOK 504m compared to the first quarter and 4% compared to the same quarter last year. This is mainly due to higher commission income from corporate finance and improved income on custody services. Savings related commissions Savings related commissions decreased by 6% in the second quarter to NOK 80m, mainly due to lower brokerage and deposit related commissions. Lending and payment related commissions Compared to the previous quarter, lending related commissions decreased %. Payment commissions net increased 3% compared to the previous quarter mainly due to increase in fees from cards. Nordea Bank Norge Interim Report, Second Quarter 200 3

4 Commission expenses Commission expenses went up 0% to NOK 206m, mainly related to increased number of payment transactions. Net result from items at fair value Net result from items at fair value amounted to NOK 445m. The result includes a non-recurring gain due to the merger between PBS and Nordito. Income from interest related instruments went down to NOK -74m. This is due to trading loss and lower fair value of the fixed income portfolio in Treasury and Markets caused by slightly higher interest rate levels. Results from foreign exchange instruments went up to NOK 49m, mainly related to activities in Markets, Nordic Banking and improved result in Treasury from FX derivatives. The customer-driven capital market activities continued to perform well and market volumes, in particular the fixed income and foreign exchange products, increased compared to the previous quarter as corporate hedging activity picked up due to the financial turmoil. Equity method Net result under the equity method was NOK 93m, which is from the 23.2% holding in Eksportfinans ASA and relates to the movement in credit spreads, which in second quarter increased due to the challenging market conditions. Other income Other income was NOK 45m compared to NOK 49m in the previous quarter. Expenses Total expenses increased 3% compared to the previous quarter to NOK,297m. Staff costs increased 6% to NOK 772m and other expenses went down 2% to NOK 489m. Compared to the same quarter last year, total expenses increased by % due to reduction in staff costs by 2% compensating partly for a 6% increase in other expenses. Provisions for performance related salaries in the second quarter were NOK 69m, up 37% compared to the previous quarter and down 29% compared to the second quarter last year. Pension expenses ended at NOK 27m, up 24% from the same quarter last year, and an increase from the first quarter of 22%. This relates to updated actuarial calculations at end of 2009 affecting 200 figures. The current AFP (AvtaleFestet Pensjon) plan (old plan) changed during the first quarter 200. The recommendation by Norsk Regnskapsstiftelse (NRS) was not to account for the changed plan (new plan) as a new plan in the first quarter 200. The reason was that it was not possible to accurately calculate the obligation under the new plan to date in the first quarter. This is also the status at the end of second quarter 200. On the other hand, the recommendation was to account for the old plan as settled already in the first quarter 200. NBN still has an obligation to the employees and while awaiting final calculations for the new plan, the old plan is assessed as the best estimate of the new plan. To provide a true and fair view, the old plan is not accounted for as settled in the second quarter 200. The number of employees (FTEs) at the end of the second quarter was 3,257, a decrease of 9 or 0.6% compared to the first quarter. The cost/income ratio was 40%, compared to 48% in the previous quarter and 5% one year ago, including the results from the PBS-Nordito merger. Excluding the gain from the merger, cost/income ratio for the second quarter was 46%. Net loan losses Net loan losses were NOK 58m in the second quarter this year. The loan loss ratio was 5 basis points in the second quarter, compared to 5 basis points in the same quarter last year and 3 basis points in the previous quarter. Taxes The effective tax rate for the second quarter was 22.7%. The low rate is mainly related to the tax exempt method on the gains from the PBS-Nordito merger. Net profit Net profit increased 83% compared to the previous quarter to NOK,395m, corresponding to a return on equity of 20.9%. Net profit increased 22% the last three months when excluding the gain from the PBS-Nordito transaction. Result summary, January - June 200 The first half year of 200 showed decreased total income of % due to a very strong first half year of 2009, mainly affecting net interest income. Operating profit increased 26%, due to higher result from items at fair value and higher net fee and commission income, combined with lower net loan losses. Income Net interest income decreased by 2% to NOK 4,200m compared to the first half year last year, mainly due to high contribution last year on household margins due to declining interest rates, combined with lower deposits which fell 4% compared to the last year. Nordea Bank Norge Interim Report, Second Quarter 200 4

5 Net fee and commission income has recovered from the weak first half year 2009 and increased by 7%. Net results from items at fair value increased by NOK 323m compared to the same period last year. This growth is due to the results from the PBS-Nordito merger. Income under equity method was NOK 48m and other income was NOK 94m. Expenses Total expenses was stable at NOK 2,559m, with a decrease in staff costs of 3% compensating for the increase in other expenses and depreciation compared to the first six months last year. Net loan losses Net loan losses decreased 57% to NOK 48m, compared to the same period last year, corresponding to a loan loss ratio of 23 basis points against 46 basis points for the same period last year. Taxes The effective tax rate in the first half year was 24% compared to 3% last year. The low rate is due to the PBS- Nordito transaction which is recognised according to the tax-exempt method. Other information Group initiatives 200 In connection with the year-end report, Nordea in February 200 launched nine Group initiatives to support the prudent growth strategy. Activities related to the initiatives are well on track in all areas. More information is disclosed in the Nordea Bank AB (publ) interim report. Credit portfolio Total lending to the public increased 5% to NOK 448bn, compared to the previous quarter and increased 2% compared to one year ago. Impaired loans gross have increased 3% in the second quarter compared to the first quarter 200 and ended at NOK 5,838m, corresponding to 24 basis points of total gross lending. 3% of impaired loans gross are performing loans and 69% are non-performing loans. Impaired loans net, after allowances, amounted to NOK 2,942m. This corresponds to 62 basis points of total net lending at the end of the quarter. Balance Sheet Total assets in the balance sheet went up 5% compared to the first quarter and down % compared to one year ago, and ended at NOK 532bn. Capital position and risk weighted assets At the end of the second quarter, NBN s risk-weighted assets (RWA) were NOK 285 bn excluding transition rules, up 6,2% compared to the previous quarter and down,0% compared to one year ago, when RWA were NOK 288 bn. During the second quarter, the changes in RWA were mainly due to increased lending to the corporate segment. RWA including transition rules amounted to NOK 333 bn at the end of the second quarter. The core tier ratio, ie excluding transition rules under Basel II, was 8,3%. The tier capital ratio and the total capital ratio are above the targets in Nordea s capital policy. The capital base of NOK 34 bn exceeds the Pillar capital requirements of NOK 23 bn excluding transition rules by NOK bn. The tier capital of NOK 26 bn exceeds the Pillar capital requirements (excluding transitions rules) by NOK 3 bn. The hybrid capital constituted 7,4% of the tier capital, an increase from 6,8% in the first quarter due to changes in the FX exchange rate; the underlying hybrid capital has not changed. The portion of hybrid capital is low. The statutory limit is 5%. Outlook 200 Nordea Group expects the macroeconomic recovery to continue in 200. Although the global development is still fragile and hence uncertainty remains, the outlook for the Nordic markets has improved during the year. Excluding currency effects in 200, Nordea expects cost growth to be broadly in line with 2009, including the effects from growth and efficiency initiatives. Nordea expects risk-adjusted profit to be lower in 200 compared to 2009, due to lower income in Treasury and Markets. Net loan losses in 200 are expected to be lower than in Credit quality continues to stabilise, in line with the macroeconomic recovery. Nordea Bank Norge is expected to contribute to the above mentioned development. The industries with the largest provision were shipping and offshore and real estate management and investments. Nordea Bank Norge Interim Report, Second Quarter 200 5

6 Quarterly development Q2 Q Q4 Q3 Q2 Jan-Jun Jan-Jun NOKm Net interest income 2,73 2,027 2,44 2,60 2,286 4,200 4,766 Net fee and commission income Net result from items at fair value Equity method Other operating income Total operating income 3,260 2,60 2,695 2,63 2,528 5,870 5,97 General administrative expenses: Staff costs ,499 -,550 Other expenses Depreciation of tangible and intangible assets Total operating expenses -,297 -,262 -,523 -,248 -,283-2,559-2,553 Profit before loan losses,963,348,72,383,245 3,3 3,364 Net loan losses ,2 Operating profit,805, ,830 2,252 Income tax expense Net profit for the period, ,56,55 Earnings per share (EPS), NOK EPS, rolling 2 months up to period end, NOK Nordea Bank Norge Interim Report, Second Quarter 200 6

7 Income statement Q2 Q2 Jan-Jun Jan-Jun Full year NOKm Note Operating income Interest income 4,6 4,700 7,983 0,620 8,56 Interest expense -,988-2,44-3,783-5,854-9,446 Net interest income 2,73 2,286 4,200 4,766 9,070 Fee and commission income ,355,262 2,746 Fee and commission expense Net fee and commission income ,009 Net result from items at fair value Equity method Other operating income Total operating income 3,260 2,528 5,870 5,97,243 Operating expenses General administrative expenses: 5 Staff costs ,499 -,550-3,257 Other expenses ,939 Depreciation of tangible and intangible assets Total operating expenses -,297 -,283-2,559-2,553-5,324 Profit before loan losses,963,245 3,3 3,364 5,99 Net loan losses ,2-2,004 Operating profit, ,830 2,252 3,95 Income tax expense ,28 Net profit for the period, ,56,55 2,634 Restated, see note for further details. Attributable to: Shareholder of Nordea Bank Norge ASA, ,56,55 2,634 Total, ,56,55 2,634 Earnings per share, NOK Statement of comprehensive income Q2 Q2 Jan-Jun Jan-Jun Full year NOKm Net profit for the period, ,56,55 2,634 Currency translation differences during the period Other comprehensive income, net of tax Total comprehensive income, ,60,553 2,589 Attributable to: Shareholder of Nordea Bank Norge ASA, ,60,553 2,589 Total, ,60,553 2,589 Nordea Bank Norge Interim Report, Second Quarter 200 7

8 Balance sheet 3 Dec NOKm Note Assets Cash and balances with central banks 8,860 20,60 7,982 Loans to credit institutions 7 9,388 0,398 6,464 Loans to the public 7 448,85 422, ,24 Interest-bearing securities 36,653 58,686 46,49 Financial instruments pledged as collateral 00 2,62 20 Shares 2,596 2,952 2,284 Derivatives 0 3,606,738,30 Fair value changes of the hedged items in portfolio hedge of interest rate risk Investments in associated undertakings,44,257,72 Intangible assets Property and equipment Deferred tax assets Other assets 8,099,207 8,268 Prepaid expenses and accrued income 2,002,779 2,020 Total assets 53, , ,72 Liabilities Deposits by credit institutions 254,77 255, ,647 Deposits and borrowings from the public 220,9 27,65 229,37 Debt securities in issue 3,00 3,740 2,97 Derivatives 0,30,52 2,094 Fair value changes of the hedged items in portfolio hedge of interest rate risk Current tax liabilities 843 2,99 77 Other liabilities 9,89 3,443 0,252 Accrued expenses and prepaid income 2,803,797 3,44 Deferred tax liabilities Provisions Retirement benefit obligations,826,850,684 Subordinated liabilities 0,464 9,560 0,563 Total liabilities 504,32 507,283 50,5 Equity Non-controlling interests Share capital 3,860 3,860 3,860 Share premium reserve Retained earnings 22,599 2,927 20,844 Total equity 27,46 26,745 25,66 Total liabilities and equity 53, , ,72 Assets pledged as security for own liabilities 33,528 45,988 69,097 Contingent liabilities ,90 Commitments 273, , ,976 Nordea Bank Norge Interim Report, Second Quarter 200 8

9 Statement of changes in equity NOKm Share capital Share premium reserve Retained earnings Minority interests Total equity Opening balance at Jan 200 3, , ,745 Total comprehensive income 2,60 2,60 Non-controlling interests (Privatmegleren AS) - - Dividend for ,500 -,500 Share-based payments 2 Other changes Closing balance at 200 3, , ,46 NOKm Share capital Share premium reserve Retained earnings Minority interests Total equity Opening balance at Jan , , ,46 Total comprehensive income 2,589 2,589 Non-controlling interests (Privatmegleren AS) Dividend for ,000-3,000 Share-based payments Closing balance at 3 Dec , , ,745 NOKm Share capital Share premium reserve Retained earnings Minority interests Total equity Opening balance at Jan , , ,46 Total comprehensive income,553,553 Dividend for ,000-3,000 Share-based payments Other changes Closing balance at , , ,66 Total shares registered were 55m (3 Dec 2009: 55m, 2009: 55m). 2 Refers to the Long Term Incentive Programme (LTIP). Nordea Bank Norge Interim Report, Second Quarter 200 9

10 Cash flow statement Jan-Jun Jan-Jun Full year NOKm Operating activities Operating profit 2,830 2,252 3,95 Adjustments for items not included in cash flow 2,42 2,859 2,40 Income taxes paid -2, Cash flow from operating activities before changes in operating assets and liabilities 3,234 5,070 5,924 Changes in operating assets and liabilities -6,923-5,209-6,606 Cash flow from operating activities -3,689-0,39-0,682 Investing activities Dividend from associated undertakings Property and equipment Intangible assets Cash flow from investing activities Financing activities Other changes in equity 0-0 Dividend paid -,500-3,000-3,000 Cash flow from financing activities -,490-3,00-3,000 Cash flow for the period -5,08-3,96-3,944 Cash and cash equivalents at beginning of period 2,839 35,78 35,78 Exchange rate difference Cash and cash equivalents at end of period 6,734 22,585 2,839 Change -5,08-3,96-3,944 Cash and cash equivalents 3 Dec The following items are included in cash and cash equivalents (NOKm): Cash and balances with central banks 8,860 7,982 20,60 Loans to credit institutions, payable on demand 7,874 4,603,679 Cash comprises legal tender and bank notes in foreign currencies. Balances with central banks consist of deposits in accounts with central banks and postal giro systems under government authority, where the following conditions are fulfilled: - the central bank or the postal giro system is domiciled in the country where the institution is established - the balance on the account is readily available at any time. Loans to credit institutions, payable on demand include liquid assets not represented by bonds or other interest-bearing securities. Nordea Bank Norge Interim Report, Second Quarter 200 0

11 Notes to the financial statement Note - Accounting policies Nordea s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) endorsed by the EU. These statements are presented in accordance with IAS 34 Interim Financial Reporting. Changed accounting policies and presentation The accounting policies, basis for calculations and presentation are, in all material aspects, unchanged in comparison with the 2009 Annual Report, except for the classification of lending commissions further described below. Classification of lending commissions The accounting treatment of lending commissions, including the classification in the income statement, depends on for which purpose the commission is received. Commissions that are considered to be an integral part of the effective interest rate of a loan are included in the calculation of effective interest and classified as Net interest income in the income statement, while commissions considered to be compensation for performed services are classified as Net fee and commission income. Judgement has to be exercised when deciding on whether or not a commission shall be included in the calculation of the effective interest of a loan, and to what extent Nordea reassessed this judgement during the first quarter 200, which leads to a reclassification of commissions from Net interest income to Net fee and commission income. The comparable figures were restated accordingly and the impact is, together with the impact on the first quarter 200, disclosed in the below table. Q2 200 Q 200 Q Full year 2009 Pre policy Pre policy NOKm Restated change Restated change Restated Reported Restated Reported Net interest income 2,73 2,283 2,027 2,36 2,286 2,400 9,070 9,532 Net fee and commission income ,009,547 Exchange rates Jan-Jun Full year Jan-Jun EUR = NOK Income statement (average) Balance sheet (at end of period) USD = NOK Income statement (average) Balance sheet (at end of period) SEK = NOK Income statement (average) Balance sheet (at end of period) DKK = NOK Income statement (average) Balance sheet (at end of period) Nordea Bank Norge Interim Report, Second Quarter 200

12 Note 2 - Segment reporting Group Operating Segments Income statement, NOKm Nordic Banking Financial Institutions Shipping, Oil Services & International Group Corporate Center Other Operating segments Total operating segments Group Functions & Elimination Total Group Total operating income 4,386 4, ,48 5, ,870 5,97 Operating profit,992 2, ,469 2, ,830 2, Balance sheet, NOKbn Loans to the public Deposits and borrowings from the public Reconciliation between total operating segments and financial statements Total operating income, NOKm Operating profit, NOKm Loans to the public, NOKbn Deposits and borrowings from the public, NOKbn Total operating income, NOKm Operating profit, NOKm Loans to the public, NOKbn Deposits and borrowings from the public, NOKbn Total Operating segments 5,48 2, ,947 2, Group functions Eliminations Differences in accounting policies Total 5,870 2, ,97 2, Consists of Group Management Secretariat, Group Internal Audit, Group Credit and Risk Control, People and Identity and Group Legal. 2 Internally developed and bought software is expensed as incurred in the operating segments, but capitalised as required by IAS 38 in the entity s balance sheet. Nordea Bank Norge Interim Report, Second Quarter 200 2

13 Note 2 - Segment reporting, continued Basis of segmentation and measurement of segment profit or loss In November 2006 the IASB issued IFRS 8 Operating Segments, which is mandatory for periods beginning on or after January IFRS 8 has had an impact on the reportable segments in Nordea, mainly as the previously aggregated segment Institutional & International Banking has been divided into two individual reportable segments (Financial Institutions and Shipping, Oil Services & International). Other operating segments below the quantitative thresholds in IFRS 8 are included in Other operating segments. Comparative information has been restated accordingly. The accounting policies of the operating segments complies with the Group s significant accounting policies described in note, except for that software is, as from Q 2009, expensed as incurred in the operating segments, but capitalised as required by IAS 38 in the Group s balance sheet. Reportable Operating segments Nordea s operating model defines four areas in the organisation reflecting different responsibilities; Customer areas, Product areas, Group operations and Support areas. The Operating segments have been identified based on the Customer areas in the operating model and on the internal reporting structure. The Customer areas are responsible for the overall business relation with a customer or customer group. Nordic Banking conducts a full service banking operation. It is Nordea s largest customer area and serves household customers and corporate customers in the Nordic markets. Customers within Nordic Banking are offered a complete range of banking products and services including account products, transaction products, market products and insurance products. The Financial Institutions segment is responsible for Nordea s customers within the financial institution industry. Nordea s financial institution services include single products such as funds, equity products etcetera as well as consulting services within asset allocation and fund sales. The segment Shipping, Oil Services & International is responsible for Nordea s customers within the shipping, offshore and oil services industries. Nordea Bank Norge Interim Report, Second Quarter 200 3

14 Note 3 - Net fee and commission income Q2 Q Q2 Jan-Jun Jan-Jun Full year NOKm Asset Management commissions Life insurance Brokerage Custody Deposits Total savings related commissions Payments Cards Total payment commissions ,09 Lending Guarantees and documentary payments Total lending related commissions Other commission income Fee and commission income ,355,262 2,746 Payment expenses Other commission expenses Fee and commission expenses Net fee and commission income ,009 Restated, see note for further details. 2 Commission income from Trading Infrastructure Program in Markets has been reclassified from the line Other commission income to the line Brokerage in the second quarter Note 4 - Net result from items at fair value Q2 Q Q2 Jan-Jun Jan-Jun Full year NOKm Shares/participations and other share-related instruments Interest-bearing securities and other interest-related instruments Other financial instruments Foreign exchange gains/losses Total Note 5 - General administrative expenses Q2 Q Q2 Jan-Jun Jan-Jun Full year NOKm Staff ,499,550 3,257 Information technology Marketing Postage, telephone and office expenses Rents, premises and real estate expenses Other Total,26,226,249 2,487 2,497 5,96 Refers to IT operations, service expenses and consultant fees. Total IT-related costs including staff etc, were NOK 23m in Q2 200 and NOK 424m for Jan-Jun 200 (Q 200: NOK 2m, Q2 2009: NOK 204m, Jan-Jun 2009: NOK 406m, Jan-Dec 2009: NOK 880m). Nordea Bank Norge Interim Report, Second Quarter 200 4

15 Note 6 - Net loan losses Q2 Q Q2 Jan-Jun Jan-Jun Full year NOKm Loan losses divided by class Loans to credit institutions Loans to the public ,083 -,97 - of which provisions ,50 -,993 - of which write-offs of which allowances used for covering write-offs of which reversals of which recoveries Off-balance sheet items Total ,2-2,004 Included in Provisions in the balance sheet Key ratios Q2 Q Q2 Jan-Jun Jan-Jun Full year Loan loss ratio, basis points of which individual of which collective Net loan losses (annualised) divided by opening balance of loans to the public (lending). Nordea Bank Norge Interim Report, Second Quarter 200 5

16 Note 7 - Loans and their impairment Total 3 Mar 3 Dec NOKm Loans, not impaired 464,63 437, ,9 453,28 Impaired loans 5,838 5,73 5,346 4,724 - Performing,80,525 2,403 2,28 - Non-performing 4,028 3,648 2,943 2,506 Loans before allowances 470, , , ,005 Allowances for individually assessed impaired loans -,863 -,783 -,549 -,429 - Performing Non-performing -,42 -,30 -, Allowances for collectively assessed impaired loans -,033 -,78 -, Allowances -2,896-2,96-2,767-2,47 Loans, carrying amount 467, ,52 432, ,588 Credit institutions The public 3 Mar 3 Dec 3 Mar 3 Dec NOKm Loans, not impaired 9,388,793 0,400 6, , ,56 49,79 436,87 Impaired loans ,86 5,5 5,324 4,702 - Performing ,80,525 2,403 2,28 - Non-performing ,006 3,626 2,92 2,484 Loans before allowances 9,40,85 0,422 6,486 45, , ,043 44,59 Allowances for individually assessed impaired loans , Performing Non-performing ,399 -,279 -, Allowances for collectively assessed impaired loans ,033 -,78 -, Allowances ,874-2,939-2,743-2,395 Loans, carrying amount 9,388,793 0,398 6, ,85 427, , ,24 Allowances and provisions 3 Mar 3 Dec NOKm Allowances for items in the balance sheet -2,896-2,96-2,767-2,47 Provisions for off balance sheet items Total allowances and provisions -2,99-2,984-2,79-2,459 Key ratios 3 Mar 3 Dec Impairment rate, gross, basis points Impairment rate, net 2, basis points Total allowance rate 3, basis points Allowances in relation to impaired loans 4, % Total allowances in relation to impaired loans 5, % Non-performing, not impaired 6, NOKm Individually assessed impaired loans before allowances divided by total loans before allowances. 2 Individually assessed impaired loans after allowances divided by total loans before allowances. 3 Total allowances divided by total loans before allowances. 4 Allowances for individually assessed impaired loans divided by individually assessed impaired loans before allowances. 5 Total allowances divided by total impaired loans before allowances. 6 Past due loans, not impaired due to future cash flows (included in Loans, not impaired). Nordea Bank Norge Interim Report, Second Quarter 200 6

17 Note 8 - Classification of financial instruments Held to maturity Held for trading Fair value option Derivatives used for hedging Available for sale NOKm Loans Total Financial assets Cash and balances with central banks 8,860 8,860 Loans to credit institutions 7,398, ,388 Loans to the public 446,63, ,85 Interest-bearing securities 2,595 24, ,653 Financial instruments pledged as collateral Shares 2, ,596 Derivatives 3, ,606 Fair value changes of the hedged items in portfolio hedge of interest rate risk Other assets 2,462 5,625 8,087 Prepaid expenses and accrued income,648 30,958 Total ,297 2,595 32,898 6, ,73 Total 3 Dec ,206 5,485 53,743 8, ,92 Total ,439 6,669 33,8, ,88 Held for trading Fair value option Derivatives used for hedging Other financial liabilities NOKm Total Financial liabilities Deposits by credit institutions,377 23, , ,77 Deposits and borrowings from the public 220,9 220,9 Debt securities in issue 3,00 3,00 Derivatives ,30 Fair value changes of the hedged items in portfolio hedge of interest rate risk Other liabilities,399 5,589 2,29 9,7 Accrued expenses and prepaid income 433,55,984 Subordinated liabilities 0,464 0,464 Total 200 3,47 29, , ,738 Total 3 Dec ,38 7, , ,94 Total ,50 26, ,70 506,38 Note 9 - Financial instruments Determination of fair value from quoted market prices or valuation techniques Quoted prices in active markets for same instrument (Level ) Valuation technique using observable data (Level 2) Valuation technique using non-observable data (Level 3) 200, NOKm Total Assets Loans to credit institutions,990,990 Loans to the public,554,554 Interest-bearing securities 9,803 4,253 24,057 Shares 2, ,695 Derivatives 42 3,564 3,606 Other assets 5,625 5,625 Prepaid expenses and accrued income Liabilities Deposits by credit institutions Derivatives Other liabilities Accrued expenses and prepaid income NOK 00m relates to the balance sheet item Financial instruments pledged as collateral. Nordea Bank Norge Interim Report, Second Quarter 200 7

18 Note 0 - Derivatives Fair value Dec NOKm Assets Liabilities Assets Liabilities Assets Liabilities Derivatives held for trading Interest rate derivatives Equity derivatives Foreign exchange derivatives 3,29 555, ,460 Other derivatives Total 3,560 64,545,00,023,642 Derivatives used for hedging Interest rate derivatives Foreign exchange derivatives Total Total fair value Interest rate derivatives Equity derivatives Foreign exchange derivatives 3,29 555, ,460 Other derivatives Total 3,606,30,738,52,30 2,094 Nominal amount 3 Dec NOKm Derivatives held for trading Interest rate derivatives 43,753 34,836 92,592 Equity derivatives 2,958 2,473 2,059 Foreign exchange derivatives 2,957 03,637 72,970 Other derivatives Total 68,772 4,340 67,88 Derivatives used for hedging Interest rate derivatives 6,204 00,606 20,264 Foreign exchange derivatives 0 2,5 0 Total 6,204 03,7 20,264 Total nominal amount Interest rate derivatives 59,957 35,442 2,856 Equity derivatives 2,958 2,473 2,059 Foreign exchange derivatives 2,957 06,48 72,970 Other derivatives Total 84, ,457 88,082 Nordea Bank Norge Interim Report, Second Quarter 200 8

19 Note - Capital adequacy Capital Base 3 Dec NOKm Core Tier Capital 23,698 23,837 23,490 Tier capital 25,583 25,509 25,346 Total capital base 33,579 32,96 34,29 3 Dec 3 Dec Capital requirement NOKm Capital requirement RWA Capital requirement RWA Capital requirement RWA Credit risk 20,888 26,0 9, ,544 2, ,02 IRB 8, ,297 7,585 29,87 8, ,344 - of which corporate 4,548 8,843 4,053 75,66 4,934 86,677 - of which institutions 564 7, , ,495 - of which retail 3,444 43,044 2,860 35,746 3,5 39,396 of which retail SME 4,759 24,55 33,668 of which retail real estate 2,48 26,847,594 9,925,740 2,752 of which retail other,55 4,438,42 4,270,278 5,976 - of which other 08,356 07,343 42,776 Standardised 2,224 27,804 2,059 25,727 2,373 29,668 - of which sovereign of which other 2,99 27,492 2,025 25,304 2,349 29,363 Market risk 493 6, , ,634 - of which trading book, VaR 74 2, , ,659 - of which trading book, non-var 39 3, , ,975 - of which FX, non-var Operational risk,458 8,227,287 6,093,287 6,093 Standardised,458 8,227,287 6,093,287 6,093 Sub total 22, ,493 2, ,294 23,08 287,739 Adjustment for transition rules Additional capital requirement according to transition rules 3,768 47,090 3,548 44,344 3,434 42,924 Total 26, ,583 25,092 33,638 26, ,663 Capital ratio 3 Dec Core Tier ratio, %, incl profit Tier I ratio, %, incl profit Capital ratio, %, incl profit Core Tier ratio, %, excl profit Tier I ratio, %, excl profit Capital ratio, %, excl profit Analysis of capital requirements Exposure class, 200 Average risk weight (%) Capital requirement (NOKm) Corporate 64 4,548 Institutions Retail 2 3,443 Sovereign 2 25 Other 35 2,308 Total credit risk 43 20,888 Nordea Bank Norge Interim Report, Second Quarter 200 9

20 Note 2 - Risks and uncertainties Nordea s revenue base reflects the Group s business with a large and diversified customer base, comprising both household and corporate customers, representing different geographic areas and industries. Nordea s main risk exposure is credit risk. The Group also assumes risks such as market risk, liquidity risk and operational risk. For further information on risk composition, see the Annual Report The financial crisis and the deteriorating macroeconomic situation have not had material impact on Nordea s financial position. However, the macroeconomic development remains uncertain, as communicated in the Outlook on page 5. None of the above exposures and risks is expected to have any significant adverse effect on the Group or its financial position in the medium term. Within the framework of the normal business operations, the Group faces claims in civil lawsuits and other disputes, most of which involve relatively limited amounts. None of these disputes are considered likely to have any significant adverse effect on the Group or its financial position in the next six months. Note 3 - Related-party transactions Nordea defines related parties as Shareholders with significant influence, Group undertakings, Associated undertakings, Key management personnel and Other related parties. Key management personnel include the Board of Directors, the Chief Executive Officer, Control committee, Board of Representatives and the Group Executive Management. Other related parties comprise companies significantly influenced by Key management personnel in Nordea Group as well as companies significantly influenced by close family members to these Key management personnel. Transactions with Other related parties are normally made in Nordea s and the related companies ordinary course of business and on the same criteria and terms as those for comparable transactions with companies of similar standing. During the second quarter 200 an associated undertaking in the Nordea Group, PBS A/S, acquired the shares in Nordito AS in which Nordea Bank Norge ASA had an insignificant influence with a holding of 0.8%. The acquiring company is still, after the transaction, an associated undertaking in the Nordea Group and continues to be accounted for under the equity method, while at fair value in NBN on the 4.92% received shares in the acquiring company. Nordea Bank Norge Interim Report, Second Quarter

21 Nordea Bank Norge ASA Income statement Q2 Q2 Jan-Jun Jan-Jun Full year NOKm Operating income Interest income 3,607 4,387 7,0 9,993 7,35 Interest expense -,787-2,357-3,539-5,780-9,283 Net interest income,820 2,030 3,562 4,23 8,068 Fee and commission income ,355,264 2,753 Fee and commission expense Net fee and commission income ,04 Net result from items at fair value Dividends and group contribution Other operating income Total operating income 3,22 3,98 5,60 5,89,226 Operating expenses General administrative expenses: Staff costs ,430 -,476-3,096 Other expenses ,890 Depreciation of tangible and intangible assets Total operating expenses -,239 -,236-2,436-2,445-5,03 Profit before loan losses,982,962 3,65 3,446 6,23 Net loan losses ,834 Operating profit,89,443 2,777 2,459 4,289 Income tax expense ,202 Net profit for the period,539,022 2,209,75 3,087 Restated, see note for further details Nordea Bank Norge Interim Report, Second Quarter 200 2

22 Nordea Bank Norge ASA Balance sheet 3 Dec NOKm Assets Cash and balances with central banks 8,860 20,60 7,982 Loans to credit institutions 45,45 22,45 48,784 Loans to the public 35, , ,70 Interest-bearing securities 0,653 58,686 46,099 Financial instruments pledged as collateral 00 2,62 20 Shares 2,596 2,950 2,282 Derivatives 3,752,738,057 Fair value changes of the hedged items in portfolio hedge of interest rate risk Investments in group undertakings 2,856 2,24 2,24 Investments in associated undertakings Intangible assets Property and equipment Deferred tax assets Other assets 8,28,002 8,27 Prepaid expenses and accrued income,420,38,578 Total assets 528, ,784 53,723 Liabilities Deposits by credit institutions 254, , ,9 Deposits and borrowings from the public 220,208 27,94 229,326 Debt securities in issue 3,00 3,740,733 Derivatives,30,509,977 Fair value changes of the hedged items in portfolio hedge of interest rate risk Current tax liabilities 420 2,4 684 Other liabilities 9,282 3,362 0,75 Accrued expenses and prepaid income 2,293,335 2,99 Deferred tax liabilities Provisions Retirement benefit obligations,773,778,620 Subordinated liabilities 0,464 9,560 0,562 Total liabilities 503, , ,909 Equity Share capital 3,860 3,860 3,860 Share premium reserve Retained earnings 20,06 9,337 8,00 Total equity 24,874 24,50 22,84 Total liabilities and equity 528, ,784 53,723 Assets pledged as security for own liabilities 33,528 45,988 69,097 Contingent liabilities 4,27 4,379,90 Commitments 277, , ,639 Nordea Bank Norge Interim Report, Second Quarter

23 Nordea Bank Norge ASA Note - Equity NOKm Share capital Share premium account Retained earnings Total equity Opening balance at Jan 200 3, ,337 24,50 Total comprehensive income 2,23 2,23 Share based payments 2 Dividend ,500 -,500 Closing balance at 200 3, ,06 24,874 NOKm Share capital Share premium account Retained earnings Total equity Opening balance at Jan , ,272 24,085 Total comprehensive income 3,055 3,055 Share based payments Dividend for ,000-3,000 Other changes Closing balance at 3 Dec , ,337 24,50 NOKm Share capital Share premium account Retained earnings Total equity Opening balance at Jan , ,272 24,085 Total comprehensive income,724,724 Share based payments Dividend for ,000-3,000 Closing balance at , ,00 22,84 Total shares registered were 55,358,576 with face value NOK 7. 2 Refers to the Long Term Incentive Programme (LTIP). Nordea Bank AB (Publ), corporate registration no , owns 00 per cent of the shares in Nordea Bank Norge ASA. Nordea Bank Norge Interim Report, Second Quarter

24 STATEMENT BY EXECUTIVE AND SUPERVISORY BOARD The supervisory and executive boards have today considered and approved the condensed consolidated interim report of Nordea Bank Norge ASA as at e 200 and for the first half year 200 including condensed consolidated comparative figures as at e 2009 and for the first half year 2009 (the interim report). The interim report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and additional Norwegian disclosure requirements for interim financial reports of listed and State-owned public limited companies. We consider the accounting policies applied to be appropriate. Accordingly, the interim report gives a true and fair view of the Group s assets, liabilities and financial position as at e 200 and as at e 2009 and of the results of the Group s operations and cash flows for the first half year of 200 and the first half year of According to our best knowledge, the Board of Director s report gives a true and fair view of important incidents in the accounting period and the effect on the interim accounts. The description of the most relevant risk factors the company faces the coming year, including disclosure of related party transaction, gives to our knowledge true and fair view. Oslo, 20 July 200 Executive board: Gunn Wærsted Managing director Supervisory board: Ari Kaperi Fredrik Rystedt Mary Helene Moe Chairman Deputy chairman Karin S. Thorburn Steinar Nickelsen Employee representative Nordea Bank Norge Interim Report, Second Quarter

25 Nordea Bank Norge ASA Middelthunsgt. 7 P.O. Box 66 Sentrum 007 Oslo Tel Fax