Helgeland Sparebank, Accounts for the for the 3 rd quarter of 2011

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2 Helgeland Sparebank, Accounts for the for the 3 rd quarter of The All figures concern the Helgeland Sparebank. The ownership of subsidiaries and associated companies is described in Note 12. The accounts are reported in accordance with IFRS and have not been audited. Key features as of () The pre-tax profit was NOK 106 million (NOK 155 million). In, the transition to the new early retirement scheme was recognised as income in the amount of NOK 27 million. Corrected for this non-recurring effect, the comparable profit at the same time last year was NOK 128 million. Net income from financial investments is NOK 18 million lower than for the corresponding period last year. In, the bank recorded relatively high gains on shares, whilst write-downs were performed on the share portfolio in. Return on equity as at was 6.1%, and the result for each equity certificate was NOK 3.1 (NOK 4.4). The growth in lending was higher than during the corresponding period last year. This is linked to a healthy level of activity on Helgeland. Key figures as at : (comparison as at ) Pre-tax profit of NOK 106 million (NOK 155 million) Net interest 1.53 % (1.63%) Ordinary costs 1.09 % (1.14 %) Write-downs on lending 0.12% (0.10 %) 9-month growth in lending 7.3% (5.2%) 9-month growth in deposits 5.0% (6.9%) Return on equity 6.1% (9.2%) Profit as of Net interest Net income from interest and credit commission was NOK 242 million, compared with NOK 234 million at the same time last year. As a percentage of the average bank total assets, the net interest for the past 12 months has fallen, from 1.63% as at to 1.53% as at Higher borrowing costs through and continued strong price competition in the private market is putting pressure on the net interest. Net income from commission As a result of the bank s change of non-life insurance provider from Terra Skadeforsikring to Frende Skadeforsikring in the autumn of, commission income from sales of non-life insurance products was slightly weaker than at the same time in. However, sales of insurance products were strong and during the third quarter the same level of commission income was achieved as during the corresponding period last year. Net change in value and gains/losses on financial instruments The net change in the value of financial instruments had a positive effect on the profit of NOK 8 million. Of this amount, the share of earnings in associated companies amounted to NOK 6.7 million from the first quarter. The bank has expensed a write-down on shares of NOK 8 million. Income from financial investments has been reduced by NOK 18 million from. In, a gain from the sale of equity certificates of NOK 8 million was capitalised, and the merger between the payment transfer company Nordito and Danish PBS Holding produced a gain of NOK 10 million. Operating costs Total operating costs amounted to NOK 172 million. As a percentage of the average bank total assets, ordinary operating costs were reduced and amount to 1.09%, compared with 1.14% for the corresponding period last year. The increase in operating costs in Norwegian kroner is linked to increases in ordinary wages, the payment of severance packages and somewhat higher depreciation in connection with IT investments. Expensed write-downs on commitments Moderate losses on lending were expensed and the net loss was NOK 20 million (NOK 15 million). Of this amount, the write-down of groups of loans was expensed in the amount of NOK 2 million (NOK 3 million). As a percentage of gross lending, expensed write-downs amount to 0.12%, compared with 0.10% as of Profit for the third quarter The pre-tax profit for the third quarter was NOK 31 million, compared with NOK 45 million for the corresponding period last year. Net interest during the quarter fell from 1.53% during the second quarter to 1.48% during the third quarter. This is linked to higher borrowing costs in the form of a higher NIBOR interest rate and an increase in the surcharge on new borrowing. Although Norges Bank decided not to alter the governing interest rate at the last interest 1

3 meeting, Helgeland Sparebank also decided to increase the lending rate on existing loans with effect from 24 November due to an increase in borrowing costs. The bank works continually to facilitate the transfer of loans to the mortgage company. The has been very successful with its commission sales of insurance products following the switch to Frende, and the transfer of the portfolio is proceeding faster than budgeted. The s costs have been stable with good cost control. Ordinary operating costs during the quarter amounted to NOK 57 million. As a percentage of the average bank total assets, this amounts to 1.04%, compared with 1.10% for the corresponding period last year. Write-downs on loans and guarantees of NOK 7 million were expensed. As a percent of gross lending, expensed write-downs amount to 0.12% (0.14%). Key figures for the third quarter : (comparison third quarter ) Pre-tax profit of NOK 31 million (NOK 45 million) Net interest 1.48% (1.63%) Ordinary costs 1.04% (1.10%) Write-downs on lending 0.12% (0.14%) 3-month growth in lending 3.7 % (2.8 %) 3-month growth in deposits -0.6 % (0.5 %) Balance sheet developments During the past 12 months, the bank s total assets increased by NOK 2,542 million or 13.0%. This balance sheet growth is linked to increased liquidity buffers and growth in lending. Commitments Gross lending at the end of the quarter amounted to NOK 17,839 million. The s lending volume includes NOK 3,622 million which has been transferred to Helgeland Boligkreditt AS. During the past 12 months, lending increased by NOK 1,530 million or 9.4% (7.4%). The is experiencing growth in lending to business customers of 11.4%, whilst that for private customers was 8.2%. The share of loans to private customers is NOK 11.2 billion, or 63.0% (63.7%). Of this amount, 83.3% has been lent to customers in Helgeland. There has been a positive development in total net defaults and loss-exposed commitments, which amounted to NOK 159 million as at This 2 represents a reduction from of NOK 58 million. The total default ratio (net defaults over 90 days) was 0.8% (0.9%). Deposits by customers During the past 12 months, deposits have increased by NOK 647 million or 6.6% (7.6%). The largest growth in deposits comes from private customers. These deposits increased by 8.9%, whilst deposits from business customers increased by 2.7%. Of the total deposits of NOK 10.4 billion, NOK 6.8 billion or 65.1% originates from private customers. The has a stable deposit base, of which 92.4% consists of deposits from customers in Helgeland. The deposit-to-loan ratio as at was 58.2% in the and 74.1% in the parent bank. Borrowing from the debt capital market Fear and anxiety over the debt situation for countries in the Euro zone is still making the debt capital market here in Norway more difficult. Short-term money market rates have therefore remained relatively high and the credit spread which the banks have to pay has almost reached the levels that we saw during the financial crisis in Most of the financing takes place through covered bonds, as this market is operating the best. Other senior financing is more difficult and still works best for maturities of up to three years. The price difference between the bank s borrowing and the mortgage enterprise s borrowing almost doubled during the quarter and is now close to 1%. The bank therefore has a strong focus on transferring approved mortgages to the bank s mortgage enterprise. Risk and capital adequacy The s collective risk is managed through authorisations, objectives and limitations drawn up by the Board. The bank s liquidity situation is considered to be satisfactory, and the proportion of long-term financing is well above the target of 70%. The s deposit-to-loan ratio has fallen slightly compared with the previous quarter and is now just over 58% (measured as a percentage of gross lending). This is largely due to normal seasonal fluctuations in the liquidity of customers. At the end of the quarter, the s holdings of certificates and bonds amounted to NOK 2.7 billion (NOK 2.4 billion). The development in the bank s credit risk is being closely monitored, partly through the use of credit analyses of all private customers based on recently approved commitments per quarter and developments in the collective private market portfolio. Business customers are given close individual follow-up, in addition to monitoring of

4 developments in risks based on the bank s score models. The capital adequacy is calculated using the standard method in Basel II. Capital adequacy as of was 11.6%, of which the tier one capital adequacy amounted to 11.3%. The Helgeland Sparebank has a target total capital adequacy of 12.5% and a tier one capital adequacy of 11%. The Board has requested authority to issue a fund bond, which will be considered at the trustees meeting on 25 October. Equity certificates - HELG Equity certificate capital amounts to NOK 935 million and is divided between approximately 2,400 owners. Note 18 presents an overview of the 20 largest owners of equity certificates. The largest owner is Sparebankstiftelsen Helgeland, with a stake of 64.7%. A turbulent share market has generally led to low prices for equity certificates. At the end of the quarter, the stock exchange price of HELG was NOK per equity certificate. Future prospects There is optimism and a high level of business activity in Helgeland, and there are high expectations of the effects of oil activity off the Helgeland coast in particular. House prices have risen, house sales are strong and many new homes are being built. The recent period of economic uncertainty and unstable financial markets could however also impact on consumer spending and investments in Helgeland. The low interest rate is contributing to strong competition and the bank s main challenge is to balance its objective of maintaining its market position against satisfactory earnings. The bank s adopted interest rate change will eventually result in a greater return on lending. Considerable effort is being put into sales of various products, with special emphasis being placed on increasing commission income from non-life insurance products to the same level as before the change in insurance provider as quickly as possible. The bank has so far been very successful in this work. The bank is moving towards a stable cost development in Norwegian kroner and expects the moderate level of losses to continue. Mo i Rana, 30 September Mo i Rana, 16 October Bjørn Johansen Thore Michalsen Gislaug Øygarden Chair Deputy chair Monica Skjellstad Ove Brattbakk May Heimdal Staff's repr. Jan Erik Furunes CEO 3

5 CONTENTS PROFIT AND LOSS ACCOUNT (amounts in NOK million)... 5 BALANCE SHEET (amounts in NOK million)... 6 CHANGE IN EQUITY CAPITAL DURING THE QUARTER REVIEW... 7 CHANGE IN EQUITY CAPITAL DURING THE QUARTER REVIEW... 7 CASH FLOW STATEMENT... 8 NOTE 1. ACCOUNTING PRINCIPLES... 8 NOTE 2. SEGMENT... 8 NOTE 3. SPECIFICATION OF NET CHANGE IN VALUE OF FINANCIAL INSTRUMENTS NOTE 4. SPECIFICATION OF TOTAL OPERATING COSTS NOTE 5. LOSSES ON LOANS GUARANTEES, ETC NOTE 6. PROFIT PER PRIMARY CERTIFICATE NOTE 7. GEOGRAPHICAL EXPOSURE NOTE 8. COMMITMENT AND LOSSES SPLIT BY SECTOR/INDUSTY NOTE 9. BAD AND DOUBTFUL LOANS (ink. guarantees) NOTE 10. INDIVIDUAL AND COLLECTIVE WRITE DOWNS OF LOANS AND GUARANTEES NOTE 11. CONTINGENT OFF BALANCE SHEET COMMITMENTS NOTE 12. SUBSIDIARIES AND ASSOCIATED COMPANIES NOTE 13. DISCLOSURES OF RELATED PARTIES NOTE 14. SECURITIES DEBT AND SUBORDINATED LOAN CAPITAL NOTE 15. FINANCIAL DERIVATIVES NOTE 17.DEPOSITS FROM CUSTOMERS SPLIT BY SECTOR/INDUSTRY NOTE 18. PRIMARY CAPITAL CERTIFICATE HELG NOTE 19. CAPITAL ADEQUACY PROFIT AND LOSS ACCOUNT ITEMS AS A PERCENTAGE OF AVERAGE ASSETS PROFIT & LOSS ACCOUNT AND BALANCE SHEET DEVELOPMENT PROFIT & LOSS ACCOUNT AND BALANCE SHEET DEVELOPMENT(cont.) OTHER KEY FIGURES

6 PROFIT AND LOSS ACCOUNT (amounts in NOK million) Interest receivable and similar income Interest payable and similar costs Net interest- and credit commission income Commissions receivable and income from banking services Commissions payable and costs relating to banking services Net commission income Gains/losses on financial assets available for sale Other operating income Costs 150 years anniversary Disposable income effect pension Operating costs Losses on loans, guarantees etc Result before tax Tax payable on ordinary result Result from ordinary operations after tax Yield per primary certificate Diluted result per PCC in Norwegian currency Extended Income Statement Result from ordinary operations after tax Net change in fair value available-for-sale fin. assets Tax on extended profit Net extended profit or loss items Total result for the period Yield per primary certificate Diluted result per PCC in Norwegian currency

7 BALANCE SHEET (amounts in NOK million) ASSETS Cash and claims on central banks Loans to and claims on credit institutions Loans to and claims on customers Financial derivatives Certificates, bonds and shares available for sale Investments in associated companies Investments in subsidiaries Deferred tax benefit Fixed assets Other assets Total assets LIABILITIES AND EQUITY CAPITAL Liabilities to credit institutions Deposits from customers and liabilities to customers Borrowings through the issuance of securities Financial derivatives Other liabilities Total liabilities Paid-in equity capital Accrued equity capital/retained earnings Result from ordinary operations after tax Total equity capital exclusive minority interest Minority interest Total equity capital Total liabilities and equity capital

8 CHANGE IN EQUITY CAPITAL DURING THE QUARTER REVIEW CHANGE IN EQUITY CAPITAL DURING THE QUARTER REVIEW Parent Bank PCCcapital Premiu Own Res. for Savings Donat Char. Divid. Dividend Dther Min Total m Fund PCCs valu- ation variance Bank's Fund Fund Foun d. Equal Res. Equ. Cap. int Equity capital as at Distr. To Savings bank fund Distr. to gift charity Gift fund disbursed Change in other reserves result for the period 77 Extended profit or loss items Net change in fair value fin Tax on extended profit or loss 1 1 Sum total ext. profit or loss -9-9 Transactions with owners Provision for equalisation fund Provision for dividend Dividend paid Equity capital PCCcapital Premi Own Res. for Savings Donat charitable Divid. Dividend total um Fund PCCs valuation variances Bank's Fund Fund foundation Equal Res. Equity capital as at Distr. To Savings bank fund Distr. to gift/charity foundation Gift fund disbursed Change in other reserves Extended profit or loss items 71 Net change in fair value fin -3 7 Tax on extended profit or loss -1 Sum total extended profit or loss -3 6 Transactions with owners Provision for equalisation fund Provision for dividend Dividend paid Equity capital

9 CASH FLOW STATEMENT Result of ordinary operations Ordinary depreciation/amortisation Writedowns and gain/loss on fixed assets Losses on loans, guarantees, etc Tax expense =Provided from the years operations Change miscellaneous debt: + increase/-decrease Change miscellaneous claims: - increase/+ decrease Change loans to and balances with customers:- incr./+ decr Change deposits from and liabilities to customers:+ incr/-decr Change liabilities to credit institutions : + increase Change liabilities to credit institutions : + Decrease A Net liquidity change from operating activities Invested in tangible fixed assets Sale of tangible fixed assets Investment in long-term securities Sale in long-term securities B Liquidity change from investing activities Dividend paid on PCCs Issue debt securities Redemption debt securities Change subordinated loan capital/primary capital + incr.- decr C Liquidity change from financing activities A+B+C Sum total change liquid assets Liquid assets at the start of the period =Liquid assets at the close of the period NOTE 1. ACCOUNTING PRINCIPLES Both the consolidated financial statements and the Parent Bank s separate financial statements have been prepared in compliance with IFRS, while the accounting policies applied in individual areas are described in the annual financial statements for. The interim report for the third quarter is in compliance with IAS 34 and has not been audited NOTE 2. SEGMENT The has defined its geographical segment as a main area of Norway Helgeland. The 's exposure to credit risk is mainly concentrated on this area. The only has smaller exposure to credit risk in areas other than its geographically defined main area. Helgeland is the home region of the Parent Bank who is the 's operating company. The group has split the bank into two segments, corporate and retail banking. 8

10 The group has split the bank into two segments, corporate and retail banking: Retail Corp. 3Not divided Total Segment information Retail Corp. Not divided Total Net interest and credit commission income Net commission income Other operating income Operating costs Losses on loans guaranteed Result before tax Loans to and claims on customers Individual write-downs Collective write-downs on loans Other assets Total assts per segment Deps from customers and liabilities Other liabilities and equity Total liabilities and equity per segment The group has split the bank into two segments, corporate and retail banking: Retail Corp. Not divided Total Segment information Retail Corp. Not divided Total Net interest and credit commission income Net commission income Other operating income Operating costs Losses on loans guaranteed Result before tax Loans to and claims on customers Individual write-downs Collective write-downs on loans Other assets Total assts per segment Deposits from customers and liabilities to Other liabilities and equity Total liabilities and equity per segment

11 NOTE 3. SPECIFICATION OF NET CHANGE IN VALUE OF FINANCIAL INSTRUMENTS Value change in interest-bearing securities Net gain/loss in interest-bearing securities Net gain/loss shares Income AC Share dividend Value change in value on lending Value change on funding and derivatives Total value change financial instruments NOTE 4. SPECIFICATION OF TOTAL OPERATING COSTS Specification of total operating costs Wages, salaries and social costs General administration costs Depreciation etc of fixed- and intangible assets Other operating costs Total operating costs Costs 150 years anniversary Disposable income effect pension NOTE 5. LOSSES ON LOANS GUARANTEES, ETC Losses on loans, guarantees etc /- Period's change in individual write-downs + Period's change in collective write-downs Period's conf. Losses against which ind. write-downs were made in prev. years Period's confirmed losses against which no individual write-downs were made in previous years Period's recoveries from previous periods' conf.losses Total losses on loans, guarantees etc

12 NOTE 6. PROFIT PER PRIMARY CERTIFICATE Profit per primary certificate: Profit % 74.4 % 74,9% PCC percentage 74.9 % 74.4 % 74.4 % Yield per primary certificate Diluted result per PCC in Norwegian currency NOTE 7. GEOGRAPHICAL EXPOSURE Geographical exposure within the loan portfolio was as follows: % % % % Helgeland Areas other than Helgeland International Total NOTE 8. COMMITMENT AND LOSSES SPLIT BY SECTOR/INDUSTY Gross loans %-stake Loss Defaults Gross loans %-stake Loss Defaults prov. prov. Municipalities and municipal enterp % ,0 % 0 0 Insurance and finance % ,0 % 0 0 Agriculture and forestry % ,5 % 1 0 Fisheries and aquaculture % ,1 % 3 3 Mining and industry % ,4 % 9 2 Building and construction % ,5 % 1 0 Trade, hotel, restaurants % ,0 % 3-3 Transport and services % ,0 % 2 3 Property, property development % ,8 % 25 8 Retail market % ,7 % 9-1 Total % % Change collective write-downs 2 3 Total

13 Gross loans %-stake Loss Defaults Gross loans %- stake Loss Defaults prov. prov. Municipalities and municipal enterp. 0 0,0 % ,0 % 0 0 Insurance and finance 30 0,2 % ,0 % 0 0 Agriculture and forestry ,0 % ,3 % 1 0 Fisheries and aquaculture 733 5,2 % ,8 % 3 3 Mining and industry 515 3,6 % ,8 % 9 2 Building and construction 807 5,7 % ,2 % 1 0 Trade, hotel, restaurants ,0 % ,3 % 3-3 Transport and services 674 4,7 % ,4 % 2 3 Property, property development ,2 % ,0 % 25 8 Retail market ,5 % ,3 % 9-1 Total % % Change collective write-downs 2 3 Total NOTE 9. BAD AND DOUBTFUL LOANS (ink. guarantees) Loans, guarantees etc. in default Loss provisions for loans, guarantees etc. in default Total net loans, guarantees etc. in default Other bad and doubtful loans and guars., not in default Loss provisions for other bad and doubtful loans, guarantees etc., not in default Total net bad and doubtful commitments, not in default

14 NOTE 10. INDIVIDUAL AND COLLECTIVE WRITE DOWNS OF LOANS AND GUARANTEES Individual write-downs to cover losses on loans and guarantees as at Period s conf. losses, against which indi. Write-down was previously made Period s increased individual write-downs, against which write-down was previously made New individual write-downs during the period Reversal of individual write-downs during the period = Total individual write-downs on loans *Of which individual write-downs on loans accounted for * Of which ind. Write-downs on guars. Accounted for Collective write-downs: Collective write-downs to cover losses on loans at /- Period s change in collective write-downs Total collective write-downs NOTE 11. CONTINGENT OFF BALANCE SHEET COMMITMENTS Guarantee obligations Write-downs on gurantee Net guarantee obligation NOTE 12. SUBSIDIARIES AND ASSOCIATED COMPANIES The Parent Bank's accounts have been presented and prepared in accordance with the requirements laid down by law and regulation governing savings banks in Norway. Subsidiaries where the ownership stake is more than 50 % are consolidated and substantial ownership interests have been included in the accounts using the equity method. Investment in AC Share capital Number of shares Equity stake Market value Helgeland Invest AS 48 % Eiendomsmegler Helgeland AS % Storgt. 73 AS % Total investment in AC Investment in AC Parent Bank Share capital Number of shares Equity stake Market value Helgeland Invest AS 48 % Eiendomsmegler Helgeland AS % Storgt. 73 AS % 0,1 0 0,1 Total investment in AC

15 Subsidiaries Parent Bank Share capital Number of shares Equity stake Market value ANS Bankbygg Mo % Helgeland Boligkreditt AS % AS Sparebankbygg 0, % 0,1 0,1 0.1 Helgeland Spb.eiend.selskap AS % 0,4 0,4 0.4 Helgeland Utviklingsselskap AS 0, % Market/Book value NOTE 13. DISCLOSURES OF RELATED PARTIES The information have been prepared in accordance to IAS 24 for disclosures of related parties Transaction against bank\s senior management and bank s elected representatives are showed in note from annual report. Helgeland Sparebank defines its subsidiaries and associated companies as related parties in relation to this accounting standard. Transactions between the Parent Bank, group companies and associated companies are made in accordance with normal commercial principles and on normal commercial terms. Intercompany transactions Income Statement Income from interest and credit commissions received from subsidiaries Interest on deposits to subsidiaries Rent expense Refund of operating expenses Balance Sheet Lending to subsidiaries Covered bonds Deposits from subsidiaries Accounts receivable, group contribution Helgeland Boligkreditt Helgeland Boligkreditt is a wholly owned subsidiary of Helgeland Sparebank. There was growth in in transferred gross lending to customers amounting to NOK 659 million and transferred loans as of 30. September totalled NOK million, NOK million of which was financed through covered bonds and NOK 554 million financed with short-term lines of credit. NOK 900 million of the covered bonds were purchased by Helgeland Sparebank. In, Helgeland Sparebank received interest income on covered bonds totalling NOK 39 million and interest income on lines of credit. During the same period, the Bank paid interest charges to Helgeland Boligkreditt AS for NOK 4 million related to the mortgage company s operating account. Management fees for transferred loans to customers were charged totalling NOK 7 million Miscellaneous Helgeland Sparebank owns about 9% of the shares in Frende Holding AS and in received commission for the distribution of life insurance products for a total of NOK 2.1 million. The Bank has also participated in the establishment of the securities firm Norne Securities AS with an ownership interest of 6.5% and of a new leasing company, Brage Finans AS, with an ownership interest of 10 % 14

16 NOTE 14. SECURITIES DEBT AND SUBORDINATED LOAN CAPITAL Parent Bank F-loans Norges Bank Loans from Norges Bank Other loans Total loans from Norges Bank Certificate debt Bond debt Covered bonds Total securities debt NOTE 15. FINANCIAL DERIVATIVES Parent Bank Nominal value Market Value Nominal value Market value Total Assets Commit. Total Assets Commit Interest rate swaps- fixed interest rate loans Interest rate swaps- bank deposits with share Yield Total financial derivatives Interest rate swaps fixed interest rate loans Total securing funding Parent Bank Konsern Nominal value Market Value Nominal value Market value Total Assets Commit. Total Assets Commit Interest rate swaps- fixed interest rate loans Interest rate swaps- bank deposits with share Yield Total financial derivatives Interest rate swaps fixed interest rate loans Total securing funding NOTE 16. GEOGRAPHICAL EXPOSURE DEPOSITS FROM AND LIABILITIES TO CUSTOMERS % % % % 93,3 % ,5 % Helgeland ,4 % ,3 % 5,8 % 579 6,7 % 706 Areas other than Helgeland 706 6,8 % 568 5,8 % 0,9 % 88 0,8 % 83 International 83 0,8 % 86 0,9 % 100,0 % ,0 % Total ,0 % ,0 % 15

17 NOTE 17.DEPOSITS FROM CUSTOMERS SPLIT BY SECTOR/INDUSTRY % % % % 2,6 % 257 2,7 % 282 Financial institutions 146 1,4 % 106 1,1 % 8,3 % 820 8,2 % 869 Municipalities and municipal enterp ,4 % 820 8,4 % 2,5 % 246 2,6 % 271 Agriculture and forestry 271 2,6 % 246 2,5 % 2,4 % 239 1,5 % 163 Fisheries and aquaculture 163 1,6 % 239 2,5 % 1,7 % 170 1,8 % 187 Mining and industry 187 1,8 % 170 1,7 % 4,9 % 490 4,5 % 477 Building and construction 477 4,6 % 490 5,0 % 2,9 % 289 3,2 % 339 Trade, hotel, restaurants ,3 % 289 3,0 % 6,4 % 635 6,0 % 634 Transport and services 634 6,1 % 635 6,5 % 5,8 % 571 5,4 % 571 Property, property development 536 5,2 % 531 5,5 % 62,5 % ,0 % Retail market ,1 % ,8 % 100 % % Total % % NOTE 18. PRIMARY CAPITAL CERTIFICATE HELG Per Numbers % share Numbers % share Sparebankstiftelsen Helgeland Terra utbytte Sparebank 1 Midt-Norge Nervik, Steffen MP Pensjon Hartviksen, Harald Skagen Vekst Tromstrygd Sparebanken Øst Brage Invest AS Helgelandskraft AS Coop Norge SA Sparebankstiftelsen DnB NOR Institutt for sammenligning Nordisk Finans Invest Arnesen Dag Fredrik Jebsen Haslum Industri AS Sivesind Invest AS Sparebanken Vest Skandinaviska Enskilda Sum 10 største eiere Sum 20 største eiere The bank has issued a total of primary certificates value of NOK 50,-. 16

18 NOTE 19. CAPITAL ADEQUACY The first part of the note shows the calculation base and capital adequacy under Basel II Parent Bank PCC-capital Premium Fund Own PCCs Total paid-in capital Savings Bank s fund Reserve for valuation variances Donations Fund Dividend equalisation reserve Cash dividend Other equity capital Total accrued equity capital Deduction: Not realized profits Cash dividend /gifts employee Intangible assets Total core capital Net nor realized profits Total net supplementary capital Total net equity and related capital Weight assets calculation basis *) % % % Capital adequacy ratio i % % % % % % % Of which core capital accounted for % % % % *) Capital adequacy has risen by 0.26 percentage points from the 1st quarter of, an error was discovered on the part of our data supplier in reporting of the basis for calculation. The error is now corrected and this has given a lower basis for calculation and higher capital adequacy. The note shows the calculation basis and capital adequacy according to Basel II (standard method credit risk). Capital requirement Basel II States and central banks Local and regional authorities Publicly owned enterprises Institutions Enterprises Mass market loans Loans secured by real property Loans overdue Covered bonds Units in securities funds Other loans and commitments Capital requirement credit risk Capital requirement operational risk Deducted from capital requirement Total capital requirement

19 PROFIT AND LOSS ACCOUNT ITEMS AS A PERCENTAGE OF AVERAGE ASSETS Interest receivable and similar income Interest payable and similar costs Net interest- and credit commission income Commissions receivable and income from banking services Commissions payable and costs relating to banking services Net commission income Gains/losses on financial assets available for sale Other operating income Costs 150 years anniversary Disposable income effect pension Operating costs Losses on loans, guarantees etc. and fixed assets result before tax Tax payable on ordinary result Result from ordinary operations after tax

20 PROFIT & LOSS ACCOUNT AND BALANCE SHEET DEVELOPMENT Profit and loss account (Amounts in NOK million) 2.q. 1.q. 4.q. 2.q. Interest receivable and similar income Interest payable and similar costs Net interest- and credit commission income Commissions receivable and income from banking services Commissions payable and costs relating to banking services Net commission income Gains/losses on financial assets available for sale Other operating income Operating costs Costs 150 years anniversary Disposable income effect pension Losses on loans, guarantees etc Result before tax Tax payable on ordinary result Result from ordinary operations after tax Balance sheet (Amounts in NOK million) ASSETS Cash and claims on central banks Loans to and claims on credit institutions Loans to and claims on customers Financial derivatives Certificates, bonds and shares available for sale Investments in associated companies Deferred tax benefit Fixed assets Other assets Total assets LLIABILITIES AND EQUITY CAPITAL Liabilities to credit institutions Deposits from customers and liabilities to customers Borrowings through the issuance of securities Financial derivatives Other liabilities Total liabilities Paid-in equity capital Accrued equity capital/retained earnings Profit after taxes Minority interest Total equity capital Total liabilities and equity capital

21 PROFIT & LOSS ACCOUNT AND BALANCE SHEET DEVELOPMENT(cont.) Profit and loss account (Amounts in NOK million) Parent Bank 2.q. 1.q. 4.q. 2.q. Interest receivable and similar income Interest payable and similar costs Net interest- and credit commission income Commissions receivable and income from banking services Commissions payable and costs relating to banking services Net commission income Gains/losses on financial assets available for sale Other operating income Operating costs Costs 150 years anniversary 0-1 Disposable income effect pension 0-8 Losses on loans, guarantees etc Result before tax Tax payable on ordinary result Result from ordinary operations after tax Parent Bank Balance Sheet (Amounts in NOK million) ASSETS Cash and claims on central banks Loans to and claims on credit institutions Loans to and claims on customers Financial derivatives Certificates, bonds and shares available for sale Investments in associated companies Investments in subsidiaries Deferred tax benefit Fixed assets Other assets Total assets LIABILITIES AND EQUITY CAPITAL Liabilities to credit institutions Deposits from customers and liabilities to customers Borrowings through the issuance of securities Financial derivatives Other liabilities Total liabilities Paid-in equity capital Accrued equity capital/retained earnings Profit after taxes Total equity capital Total liabilities and equity capital

22 OTHER KEY FIGURES Parent Bank BALANCE SHEET Development in the last 9 months Total assets Gross lending Deposit Development in the last 12 months Total assets Gross lending Deposit Deposit coverage as a percentage of gross loans Lending to retail customers Average assets Gross loans Individual write-downs Period's change in collective write downs Individual write-downs on guarantees Capital adequacy ratio as percentage Core capital ratio as percentage Equity capital ratio Rate of return on equity capital Return on assets Costs as a percentage of income Cost in percentage of average total assets Number of man-years KEY FIGURES PCC Yield per primary certificate Diluted result per PCC, in Norwegian currency PCC price quoted on the stock exchange P/E (price as at divided by profit per PCC) P/B (price as ar divided by book value of equity capital LOSSES ON LOANS AND GROSS DEFAULTS Specified loan provision in % of gross default on loan As a percentage of gross lending Gross defaults over 90 days Net defaults over 90 days Total loan loss provision Losses on lending

23 Information concerning Helgeland Sparebank Head Office Postal address Postboks 68, 8601 Mo i Rana Office address Jernbanegata 15, 8622 Mo i Rana Telephone Website Organisation number Board of Directors of Helgeland sparebank Bjørn Johansen, Chair Thore Michalsen, Deputy Chair Gislaug Øygarden Ove Brattbakk Monica Skjellstad May Heimdal Investor Relations Inger Lise Strøm, General manager Corporate staff tel: Tore Stamnes, Bank Director, Treasury tel.: Other sources of information Annual reports The annual report for Helgeland Sparebank is available at Quarterly publications Quarterly reports and presentations are available at 22