Investor Relations. Supplementary information First Quarter 2012

Transcription

1 Investor Relations Supplementary information First Quarter 212

2 SpareBank 1 SMN 7467 Trondheim Chief Executive, CEO Finn Haugan For further information, please contact Kjell Fordal, Executive Director Finance Division tel Switchboard tel Address SpareBank 1 SMN, Postboks 4796 Sluppen, 7467 Trondheim Visiting address: Søndre gate 4, 711 Trondheim Information on the Internet SpareBank 1 SMN s home page Hugin-Online ECC information in general Financial Calendar st quarter 26 April nd quarter 9 August rd quarter 26 October

3 Contents 1. SpareBank 1 SMN overview Financial highlights Business description Credit ratings Equity capital certificate (MING) Financial results Main figures Net interest income Commission income Operating expenses Loans to customers Distribution of loans by industry Risk profile and write-downs Capital Adequacy Funding Financial results Segment information Extract from income statement Retail division Corporate division Markets Subsidiaries Development last ten years

4 1. SpareBank 1 SMN overview 1.1. Financial highlights First quarter 212 (Consolidated figures. Figures in parentheses refer to the same period of unless otherwise stated) Profit before tax: NOK 34m (325m) Profit: NOK 272m (255m) Return on equity: 13.% (13.2%) Lending growth 9.9% (11.4%), deposit growth 14.2% (14.1%) over past 12 months Loan losses: NOK 8m (-6m) Tier 1 capital adequacy: 1.3% (1.6%) Earnings per equity capital certificate (ECC): NOK 1.42 (1.52) - 3 -

5 1.2. Business description SpareBank 1 SMN is Mid-Norway s largest bank with assets totalling NOK 99 billion at the end of first quarter 212. Head office is in Trondheim and the Group employs about 1,97 staff. SpareBank 1 SMN is organised in six divisions to secure a customer-oriented and cost-effective organisation while respecting the differing competencies required by each division. The Retail, Corporate and Markets divisions focus on customer satisfaction, risk management and activitybased sales and counselling. Business Support focuses on cost-effective work processes and support to enable the customer-facing divisions to attain their goals, while the Finance Division provides an overall basis for decision making, risk management and financial and asset-liability management

6 Overall organisation Supervisory Board Chair Randi Dyrnes ECC holders Depositors County Council Employees External audit 4 % 17.5 % 17.5 % 25 % Deloitte Control Comitee Rolf Røkke Board of Directors Chair: Per Axel Koch Deputy chair: Kjell Bjordal Bård Benum, Paul E. Hjelm-Hansen, Aud Skrudland, Arnhild Holstad, Elbjørg Gui Standal, Venche Johnsen CEO Finn Haugan Election Comitee Widar S Andersen Internal audit KPMG SpareBank 1 SMN: Overview of the Bank's activities Datterselskaper SpareBank 1 Gruppen 19. 5% Bank 1 Oslo 19.5 % BN Bank 33 % SpareBank 1 Boligkreditt (17.8%) and Næringskredit (37%) EiendomsMegler 1 Midt-Norge 88% Skadeforsikring SpareBank 1 Finans 1% Liv og pensjon SpareBank 1 SMN Regnskap 1% Markets SpareBank 1 SMN Invest 1% Gruppen Finans Allegro Finans 91% ODIN SpareBank 1 Kvartalet 1% - 4 -

7 SpareBank 1 Alliance companies Members SpareBank 1 Group The SpareBank 1 banks operate an alliance and develop product companies through the jointly owned holding company SpareBank 1 Gruppen. The paramount objective of the SpareBank 1 Alliance is to assure the individual bank s independence and regional identity through strong competitiveness, profitability and financial soundness. The Alliance is among the largest providers of financial services in Norway and a full-fledged alternative to traditional financial groups. SpareBank 1 Alliance structure SpareBank 1 SMN SpareBank 1 SR-Bank SpareBank 1 Nord-Norge Samspar Sparebanken Hedmark LO Products, commissions, dividends Sales, loan portfolios, capital BN Bank Bank 1 Oslo SpareBank 1 Gruppen AS SpareBank 1 Covered Bonds, residential SpareBank 1 Covered Bonds, Commercial SpareBank 1 Life insurance (1%) SpareBank 1 Nonlife insurance (1%) ODIN Asset management (1%) SpareBank 1 Markets (97%) Collection (9%) SpareBank 1 Factoring (1%) Banking Cooperation - 5 -

8 1.3. Credit ratings Moody's Todays Year end rating Outlook Ratings under review Stable Stable Negative Negative Stable Positive Issuer Rating A1 A1 A1 A1 A1 Aa3 A3 Bank Deposits A1/P-1 A1/P-1 A1/P-1 A1/P-1 Aa3/P-1 Aa3/P-1 A3/P-2 Bank Financial Strenght C- C- C- C- C C+ C Senior Unsecured A1 A1 A1 A1 Aa3 Aa3 A3 Subordinate A2 A2 A2 A2 A1 A1 Baa1 Fitch Year end Todays rating Outlook Stable Stable Negative Negative Stable Stable Positive Long-term IDR A- A- A A A A A- Short-term IDR F2 F2 F1 F1 F1 F1 F2 Support rating Individual rating B/C B/C B/C B/C B B B/C 1.4. Equity capital certificate (MING) The key figures are corrected for issues. 31 March 212 the price of the Bank s ECC was NOK 36.6 (NOK 46.19). Earnings per ECC were NOK 1.42 (NOK 1.52). Book value per ECC was NOK as of end first quarter 212 (NOK 44.92). Key figures 4Q 3Q 2Q (in NOK million) ECC price Number of certificates issued, millions Booked equity capital per ECC (incl. dividend) Adjusted profit per ECC P/E per ECC P/B equity capital Stock price compared with OSEBX and OSEEX 31 March 21 to 31 March Mar. Mar 1 May 1 Jul 1 Sep 1 Nov 1 Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11 Jan 12 Mar 12 SMN OSEBX OSEEX OSEBX = Oslo Stock Exchange Benchmark Index (rebased) OSEEX = Oslo Stock Exchange ECC Index (rebased) - 6 -

9 Trading statistics 1 April 21 to 31 March Apr 1 Jun 1 Aug 1 Oct 1 Dec 1 Feb 11 Apr 11 Jun 11 Aug 11 Oct 11 Dec 11 Feb 12 Total number of ECs traded (1) Market value and profit per ECC , 5, 4, 1. 3,.8 2,.6.4 1, Q 3Q 4Q 2Q 3Q 4Q Market value, NOK mill. Adjusted profit per ECC Equity certificates ratio (parent bank) Proforma* 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. (in NOK million) ECC capital 2,959 2,373 2,373 2,372 2,372 2,372 Dividend equalisation reserve 1,457 1,457 1,16 1,16 1,16 1,159 Premium reserve Unrealised gains reserve Other equity A. The equity certificate owner's capital 4,82 4,55 3,743 3,742 3,742 3,742 Saving bank reserve 2,611 2,611 2,345 2,345 2,345 2,345 Unrealised gains reserve Other equity B. The saving bank reserve 2,636 2,639 2,362 2,362 2,362 2,362 Provision for gifts Recommended dividends Equity ex. profit 7,456 6,924 6,15 6,14 6,14 6,581 Equity certificates ratio A/(A+B) 64.6 % 6.6 % 61.3 % 61.3 % 61.3 % 61.3 % *As if capital from issues were paid in as of The de facto payment was April 212. Subscription period was March

10 2 largest ECC holders Ownership Owner Number in % Reitangruppen AS Aker ASA / The Resource Group TRG Odin Norge Odin Norden Frank Mohn AS Rasmussengruppen AS Vind LV AS MP Pensjon PK C itibank N.A New York Branch (nominee) Stiftelsen Uni Morgan Stanley & Co. The Northern Trust C o. (nominee) I.K. Lykke, T.Lykke m.fl. Tonsenhagen Forretningssentrum AS Forsvarets personellservice KLP Aksje Norden VPF State Street Bank & Trust C ompany (nominee) Bank of New York Mellon SA/NV Danske Invest Norske Aksjer Inst Odin Europa SMB Total largest shareholders Other Total 6,872,514 2,86,966 2,647,458 2,194,349 2,192,236 2,13, 2,85,151 1,442,774 1,26,53 1,54, ,24 911, , ,13 788,92 744, , , , ,251 32,452,452 62,477,834 94,93, % 3.1 % 2.79 % 2.31 % 2.31 % 2.24 % 2.2 % 1.52 % 1.27 % 1.11 % 1.3 %.96 %.94 %.91 %.83 %.78 %.7 %.68 %.68 %.67 % % % 1. % ECC capital history Year Change 1991 Placing 1992 Placing 2 Employee placing 21 Employee placing 22 Employee placing 24 Bonus Issue 25 Placing 25 Employee placing 25 Split 25 Bonus Issue 27 Dividend Issue 27 Employee placing 28 Dividend Issue 28 Employee placing 29 Bonus Issue 21 Placing 21 Employee placing Issue Change in ECC capital Total ECC capital No. of ECC's ,25, ,, 6,53, ,99,432 6,148, ,9 7,685,75 9,859,317 1,97,817-1,9 4,391, ,262 5,489, ,344 53,752,23 5 1,349 53,976, ,44 1,447 57,63,748 57,861, ,736 69,434, ,36 94,397, ,373 94,95, ,373 94,923,88 * Issues in 212 will be presented in" Supplementary Information Report Q

11 2. Financial results Accounting principles SpareBank 1 SMN prepares and presents its quarterly accounts in compliance with the Stock Exchange Regulations, Stock Exchange Rules and International Financial Reporting Standards (IFRS), including IAS 34, Interim Financial Reporting. As from 27 the company accounts are also prepared and presented under IFRS. This entails that investments in associates and subsidiaries are recognised using the cost method. For this reason results recorded by associates and subsidiaries are not included in the parent bank's accounts. Further, the Group has in this quarterly report used the same accounting principles and calculation methods as in the latest annual report and accounts. The quarterly accounts do not include all the information required in a complete set of annual financial statements and should be read in conjunction with the annual accounts for. As from January the Group has implemented new requirements in IAS 34 Interim Financial Reporting as regards changes in business or financial factors that affect fair value measurement of an entity s financial assets and liabilities, and as regards transfer between levels in the fair value hierarchy used to measure the fair value of financial instruments. In addition there is the possible reclassification of financial assets resulting from a change in the purpose or application of these assets. The Group has also implemented IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments, and the new IAS 24 Related Party Disclosures. None of these standards has entailed any essential change in Group reporting. As from the first quarter of 212, return on treasury bills is to be presented as net interest income instead of, as previously, capital gains or losses. Historical data have been correspondingly restated Main figures 4Q 3Q 2Q 31 Mar. (in NOK million) Net interest ,392 1,317 Commission income and other income Net return on financial investments Total income ,789 2,555 Total operating expenses ,482 1,14 Result before losses ,36 1,414 Loss on loans, guarantees etc Result before tax ,279 1,282 Tax charge Net profit ,24 1,22 Balance sheet - condensed 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. Balance (in NOK million) Total assets 99,3 11,455 1,9 98,53 94,486 97,997 Average total assets 1,242 1,732 99,212 96,435 96,224 96,632 Gross loans to customers * 97,387 95,232 92,671 9,939 88,66 87,665 Deposits from customers 48,974 47,871 46,24 45,99 42,9 42,786 Total equity capital 8,393 8,348 8,126 7,92 7,639 7,846 * Loans to customers includes SpareBank 1 Boligkreditt Key figures 4Q 3Q 2Q 31 Mar Return on equity 13. % 13.6 % 12. % 12.9 % 13.2 % 13. % 13.2 % 12.8 % 14.6 % Core capital ratio 1.3 % 1.4 % 1.4 % 1.7 % 1.6 % 1.3 % 1.6 % 1.4 % 1.9 % Cost/income ratio group 53.3 % 53.4 % 53.5 % 53.4 % 52.2 % 53.3 % 52.2 % 53.2 % 44.6 % Growth in loans incl Boligkreditt last 12 months 9.9 % 8.6 % 7.7 % 8.6 % 11.4 % 9.9 % 11.4 % 8.6 % 13.2 % Growth in deposits last 12 months 14.2 % 11.9 % 19.1 % 11.4 % 14.1 % 14.2 % 14.1 % 11.9 % 14.9 % Deposits-to-loan ratio 68.3 % 65.5 % 64.3 % 67.1 % 62.6 % 68.3 % 62.6 % 65.5 % 61.3 % Impairment losses ratio.4 %.11 %.3 % -.1 % -.3 %.4 % -.3 %.3 %.16 % Non-performing commitm. as % of gross loans.33 %.36 %.36 %.4 %.54 %.33 %.54 %.36 %.57 % ECC price Booked equity capital per ECC (incl. dividend) Adjusted profit per ECC

12 2.2. Net interest income Net interest income 4Q 3Q 2Q 31 Mar. (in NOK million) Interest income 1,9 1,29 1, , ,891 3,422 Interest expences ,499 2,15 Net interest income ,392 1,317 As percentage of total income 47 % 44 % 52 % 51 % 53 % 47 % 53 % 5 % 52 % As from the first quarter of 212, return on treasury bills is to be presented as net interest income instead of, as previously, capital gains or losses. Historical data have been correspondingly restated. 4Q 3Q 2Q 4Q 3Q 2Q Return on treasury bills Development in net interest income % 5.9% % % 55. % 5. % % % 4. % % % 11 2Q11 3Q11 4Q11 12 Net interest income, NOK mill As percentage of total income Changes in interest income from lending and deposits, last 12 months (in NOK million) Volume Margin Total Lending Deposits Total

13 Changes in net interest income 31 Mar. (in NOK million) 212 Change Net interest income Equity capital 8 Lending volume 15 Levy Norwegian Bank's Guarantee Fund 8 Fees on lending -7 Deposit margin -12 Deposit volume 5 Lending margin 1 Funding and liquidity buffer -33 Change Net interest income 11 Equity capital Lending volume Guarantee Fund Deposit volume Lending margin Lending fees Deposit margin Funding and liquidity buffer Net interest income

14 Margin development Definition margin: Average customer interest minus 3 months average nibor Mar. 3 Jun. 3 Sept. 31 Dec. 31 Mar. Lending margin Deposits margin Volume development NOK bn % 11.4 % % % 2 % 18 % 16 % 14 % 12 % 1 % 8 % 6 % 4 % 1 2 % 212 % 31 Mar. 3 Jun. 3 Sept. 31 Dec. 31 Mar. Lending volume Growth in loans last 12 months Deposits volume Growth in deposits last 12 monts

15 2.3. Commission income 4Q 3Q 2Q 31 Mar. (in NOK million) Guarantees SpareBank 1 Boligkreditt Commission of savings products Real estate agency Insurance Payments transmission Other Total commissions income Operating- and sales income real estate Other operating income Total other operating income Commission expenses Total commissions and other income As percentage of total income 32 % 3 % 35 % 34 % 33 % 32 % 33 % 33 % 33 % Change in commission income 31 Mar. (in NOK million) 212 Change Total Real estate agency 5 Other operating income 1 Operating- and sales income real estate 3 Insurance 6 Commission of savings products 3 Commission expenses -3 Other -8 Payments transmission -2 Guarantees 1 SpareBank 1 Boligkreditt

16 Net return on financial investments 4Q 3Q 2Q 31 Mar. (in NOK million) Income from investment in related companies of which SpareBank 1 Gruppen AS BN Bank ASA Bank 1 Oslo Akershus AS SpareBank 1 Boligkreditt AS SpareBank 1 Næringskreditt AS Polaris Media AS Other 1) Capital gains/dividens, shares and ECCs 2) of which dividends capital gains on shares capital gains on ECCs Capital gains, bonds and derivatives Net gain on trading and derivatives Markets Net return on financial investments As percentage of total income 21 % 26 % 13 % 15 % 13 % 21 % 13 % 17 % 15 % 1) These companies were essentially established to handle corporate exposures taken over from other entities. 2) Including net gain/losses from SpareBank 1 SMN Invest AS, which manages parts of the Bank's share portfolio Change in net return on financial investments 31 Mar. (in NOK million) 212 Change Total Capital gains from bonds and derivatives 39 Capital gain, SMN Markets 13 Capital gains/dividends on shares and ECC's -27 Income from investment in related companies

17 2.4. Operating expenses Operating expenses 4Q 3Q 2Q 31 Mar. (in NOK million) Salary Pension costs (defined benefit plan) Employer's insurance contributions Other personnel expenses Total personnel expenses EDP and telecommunication expenses Postage and transportation services Marketing Operating exp. on properties and premises Other external services Other operating expenses Depr./write-downs of fixed & intangible assets Other expenses Total operating expenses Cost/income ratio Cost/income ratio ex financial inv month cost growth* 14.4 % 3. % 29.1 % 39.2 % 68.8 % 14.4 % 68.8 % 3. % -9. % * Year to date. Write-back of early retirement liabilities (AFP), NOK 117 mill, in 1st quarter 21, hence the high cost growth Cost/income ratio NOK mill. 9 8 % % 6 6 % 52 % % % 3 4 % 3 % 11 2Q11 3Q11 4Q11 12 Income Expenses Cost/income ratio * * Total operating expences as a percentage of total operating income 2 % Change in operating expenses 31 Mar. (in NOK million) 212 Change Total Total personnel expenses 34 Depr./write-downs of fixed & intangible assets 3 EDP and telecommunication expenses 4 Other operating expenses 9 Operating exp. on properties and premises - 1 Other external services - 1 Marketing Postage and transportation services

18 Developement of employees Employees in employment Retail market division C orporate market SpareBank 1 SMN Markets Business operations Management and staff Parent bank EiendomsMegler 1 Midt-Norge AS Allegro Finans AS SpareBank 1 SMN Finans AS SpareBank 1 SMN Regnskap AS SpareBank 1 Kvartalet and other Total 1,97 1,19 1,35 1, Employees in employment Parent bank SpareBank 1 SMN Regnskap AS Other EiendomsMegler 1 Midt-Norge AS SpareBank 1 SMN Finans AS

19 3. Loans to customers 3.1. Distribution of loans by industry Distribution of loans by industry 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. (in NOK million) Agriculture/forestry/fisheries/hunting 5,568 5,217 4,619 4,525 4,61 4,892 Fish farming 1,654 2,26 2,13 2,426 2,1 1,96 Manufacturing and mining 2,574 2,881 3,26 2,85 2,714 2,775 Construction, power and water supply 3,856 2,572 2,48 2,825 2,574 2,511 Retail trade, hotels and restaurants 2,26 2,337 2,318 2,47 2,463 2,53 Maritime sector 5,744 5,978 5,558 5,389 5,624 5,242 Property management 11,272 12,179 12,236 12,314 12,754 13,13 Business services 3,584 3,867 3,68 3,334 3,131 3,134 Transport and other services provision 2,62 2,78 2,58 2,55 1,483 1,628 Public administration Other sectors 1, , Gross loans in corporate market 4,571 4,198 39,21 38,832 38,37 38,46 Retail customers 56,816 55,34 53,65 52,17 5,569 49,619 Gross loans incl. SpareBank 1 Boligkreditt 97,387 95,232 92,671 9,939 88,66 87,665 - Adv. of this SpareBank 1 Boligkreditt 25,76 22,126 21,11 22,379 2,54 17,818 Gross loans in balance sheet 71,681 73,15 71,57 68,559 68,553 69,847 Share of loans, corporate market 41.7 % 42.2 % 42.1 % 42.7 % 42.9 % 43.4 % Share of loans, retail market 58.3 % 57.8 % 57.9 % 57.3 % 57.1 % 56.6 %

20 3.2. Risk profile and write-downs Actual risk profil, Exposure At Default NOK billion A B C D E F G H I J K Risk classification in SpareBank 1 SMN Risk class Low High A.1.1 AAA - A3 B.1.25 Baa1 - Baa2 C.25.5 Baa3 D.5.75 Ba1 E Ba2 F G Ba2 - B1 H B1 - B2 I B3 - caa3 J Default K Written down Risk class A represents the lowest risk and class K the highest risk. * Probability of default PD* in percent Corresponding ratingclass at Moody's

21 Write-downs on loans and guarantees 4Q 3Q 2Q 31 Mar. (in NOK million) Increase in and new individual write-downs Reassessments and recoveries Total individual write-downs Change in group write-downs on loans 1 Write-downs on loans and guarantees As % of gross loans incl. Boligkreditt.4 %.11 %.3 % -.1 % -.3 %.4 % -.3 %.3 %.16 % Loss on loans by segment 4Q 3Q 2Q 31 Mar. (in NOK million) Corporate Retail SMN Finans and other Collective write downs 1 Total loss on loans Q11 3Q11 4Q11 12 Corporate Retail SMN Finans and other Collective write downs

22 Individual and collective write-downs 4Q 3Q 2Q (in NOK million) Individual write-downs to cover loss on loans, guarantees at start of period Confirmed losses in the period on loans, guarantees etc., not prev. subject to ind. write down Reversal of previous years' write downs Increase in write downs of commitments not previously subject to individual write down Write downs of loans not previously subject to 31 Mar. individual write down Individual write downs to cover loss Collective write downs to cover loss on loans, guarantees at start of period Period s collective write down to cover loss on loans, guarantees etc. 1 Collective write downs to cover loss on loans, guarantees Loans and guarantees by industry Total Very low risk Wage earners 61,128 48,215 8,456 3, Public administration Agriculture and forestry 6,177 3,117 1,415 1, Sea farming industries 2,382 1, Manufacturing 3, ,48 1, Construction, power and water supply 4, ,476 1, Retail trade, hotels and restaurants 3, , Maritime sector 1, , Property management 13,332 2,57 4,332 5, Business services 4, ,639 2, Transport and other services provision 8,332 1,63 3,521 2, Finance Other sectors ,984 6,63 24,742 2,84 2,417 1, ,621 6,977 22,594 21,498 2,199 1, ,81 52,41 2,338 2,439 2,451 2, Low risk Medium risk High risk Very high risk Default and written down Write-down ratio 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. (in NOK million) Non-performing commitments (gross) Impaired commitments (gross) Gross non-performing and impaired commitments Individual write-downs Collective write-downs Write-down ratio (%) 9.5 % 85.2 % 81. % 86.8 % 74.6 % 72.1 % - 2 -

23 Default in excess of 9 days NOK million Q 3Q 4Q Retail > 9 d Corporate > 9 d Net non-performing and impaired commitments NOK million 1,4 2. % 1,5 1.5 % % % %.5 % 11 2Q11 3Q11 4Q11 12 Gross non-perf. and impaired comm. Individual and collective write-downs Gross non-perf. and impaired comm. as % of net lending. %

24 4. Capital Adequacy New capital adequacy rules were introduced in Norway as from 1 January 27 (Basel II - the EU's new directive on capital adequacy). SpareBank1 SMN applied to and received permission from Finanstilsynet (Financial Supervisory Authority of Norway) to use internal rating methods (Internal Rating Based Approach - Foundation) to calculate charges for credit risk from 1 January 27 onwards. This will make the statutory minimum capital adequacy requirement more risk-sensitive, so that it better reflects the risk in the underlying portfolios. Using IRB demands high standards of the Bank s organisation, competence, risk models and risk management systems. Under interim regulations issued by Finanstilsynet, IRB banks are not yet seeing the full effect of the reduced capital requirements. As from 29, a 2% reduction of the risk-weighted basis of calculation was allowed. Subordinated debt and hybrid capital Subordinated debt ranks behind all other liabilities. Dated subordinated loans cannot constitute more than 5 per cent of tier 1 capital for capital adequacy purposes, while perpetual subordinated loans cannot constitute more than 1 per cent of tier 1 capital. Subordinated loans are classified as a liability in the balance sheet and are measured at amortised cost in the same way as other long-term loans. Hybrid capital denotes bonds with a nominal interest rate, but the bank is not obliged to pay interest in a period where dividends are not paid, and neither is the investor subsequently entitled to interest that has not been paid, i.e. interest does not accumulate. Hybrid capital is approved as an element of tier 1 capital up to limit of 15 per cent of aggregate tier 1 capital. Finanstilsynet (Norway s FSA) can require hybrid capital to be written down in proportion with equity capital should the bank s tier 1 capital adequacy fall below 5 per cent or total capital adequacy falls below 6 per cent. Written-down amounts on hybrid capital must be written up before dividends can be paid to shareholders or before equity capital is written up. Hybrid capital is shown as other long-term debt at amortised cost. For detailed information regarding subordinated debt and hybrid capital, see note 34 in the Bank s annual report

25 Capital Adequacy 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. (in NOK million) Equity certificates capital 2,373 2,373 2,373 2,373 2,373 2,373 - Own equity certificates capital Premium reserve Equalisation reserve 1,457 1,457 1,16 1,16 1,16 1,159 Savings bank's reserve 2,611 2,611 2,344 2,345 2,345 2,345 Recommended dividends Provision for gifts Reserve for unrealised gains Other equity and minority interest 1,44 1,49 1,261 1,267 1,25 1,244 Net profit Total book equity 8,393 8,348 8,126 7,92 7,639 7,846 Deferred tax, goodwill and other intangible assets Share of reserve for unrealised gains in associates Deduction for allocated dividends % deduction for expected losses on IRB, net of write-downs % capital adequacy reserve Share of non-performing, non-amortizsed estimate deviations -74 Net profit Year-to-date profit included in core capital (5%) Fund bonds 1,143 1,17 1,159 1,11 1,114 1,16 Hybrid equity State Finance Fund Total core capital 7,92 7,856 7,54 7,394 7,33 7,286 Supplementary capital in excess of core capital Perpetual subordinated capital Dated subordinated capital 1,598 1,674 1,659 1,574 1,571 1,68 financial institutions 5 % deduction for expected losses on IRB, net of write-downs % capital adequacy reserve Total supplementary capital 1,17 1,199 1,171 1,12 1,38 1,36 Net subordinated capital 9,8 9,55 8,675 8,496 8,638 8,

26 Minimum requirements subordinated capital 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. (in NOK million) Involvement with spesialised enterpises 1,466 1,456 1,375 1,48 1,389 1,386 Other corporations exposure 1,519 1,313 1,24 1,23 1,168 1,12 SME exposure Retail morgage exposure Other retail exposure Equity investments Total credit risk IRB 3,578 3,358 3,21 3,154 3,13 3,58 Debt risk Equity risk Operational risk Exposures calculated using the standardised approach 2,18 2,184 2,68 1,962 1,949 1,864 Deductions Transitional arrangements Minimum requirements subordinated capital 6,127 6,27 5,748 5,522 5,537 5,335 Core capital ratio 1.3 % 1.4 % 1.4 % 1.7 % 1.6 % 1.9 % Capital adequacy ratio 11.8 % 12. % 12.1 % 12.3 % 12.5 % 13. % Capital Adequacy 12.5 % 12.3 % 12.1 % 12. % 11.8 % 1.6 % 1.7 % 1.4 % 1.4 % 1.3 % Mar. 3 Jun. 3 Sept. 31 Dec. 31 Mar. Capital adequacy ratio Core capital ratio

27 5. Funding Funding maturity dates NOK mill > 217 Capital markets funding 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. (in NOK million) NOK Bonds 19,139 19,224 16,78 16,872 15,987 16,531 Curr Bonds 6,298 8,83 8,898 9,187 8,824 11,176 NOK CD's Interbank 5,189 5,232 5,348 6,635 7,32 7,743 Loans from central bank - 1, 1, 1, 1, 1, Gov. Swap arrangement 2,553 2,886 4,318 4,318 4,318 4,318 Bond Index Perp. Sub. Loan capital Hybrid equity The Norwegian State Finance Fund Subordinated loan capital 1,333 1,49 1,394 1,31 1,36 1,358 Other liabilities 5,249 4,655 5,856 3,24 2,67 3,58 Total 4,462 43,936 44,769 43,756 42,66 46,

28 6. Financial results Financial results 4Q 3Q 2Q 31 Mar. (in NOK million) Interest income 1,9 1,29 1, , ,891 3,422 Interest expenses ,499 2,15 Net interest ,392 1,317 Commission income Commission expenses Other operating income Commission income and other income Dividends Income from investment in related companies Net return on financial investments Net return on financial investments Total income ,789 2,555 Staff costs Administration costs Other operating expenses Total operating expenses ,482 1,14 Result before losses ,36 1,414 Loss on loans, guarantees etc Result before tax ,279 1,282 Tax charge Net profit ,24 1,22 Majority share ,16 1,17 Minority interest Balance sheet 31 Mar. 31 Dec. 3 Sept. 3 Jun. 31 Mar. 31 Dec. (in NOK million) Cash and receivables from central banks 65 1, , ,112 Deposits with and loans to credit institutions 1,576 2,557 1,142 1, Gross loans to customers before write-down 71,681 73,15 71,57 68,559 68,553 69,847 - Specified write-downs Write-downs by loan category Net loans to and receivables from customers 71,227 72,643 71,121 68,92 68,46 69,336 Fixed-income CDs and bonds at fair value 13,278 12,918 15,424 14,988 15,579 16,98 Derivatives 3,645 3,697 3,316 1,619 1,411 1,825 Shares, units and other equity interests Investment in related companies 4,582 4,259 4,258 4,215 4,119 3,526 Goodwill Other assets 2,974 2,759 3,278 3,17 3,96 2,722 Assets 99,3 11,455 1,9 98,53 94,486 97,997 Deposits from credit institutions 7,742 9,118 1,666 11,953 12,621 13,62 Deposits from and debt to customers 48,974 47,871 46,24 45,99 42,9 42,786 Debt created by issue of securities 25,569 28,148 25,885 26,382 25,78 27,941 Derivatives 3,12 3,158 3,8 1,559 1,265 1,684 Other liabilities 2,656 2,122 3,638 2,21 2,329 1,922 Subordinated loan capital 2,576 2,69 2,663 2,516 2,655 2,758 Total liabilities 9,637 93,17 91,884 9,61 86,847 9,152 Equity capital certificate 2,373 2,373 2,373 2,373 2,373 2,373 Own holding of ECCs Premium fund Dividend equalisation fund 1,457 1,457 1,16 1,16 1,16 1,159 Recommended dividends Provision for gifts Savings bank s reserve 2,611 2,611 2,344 2,345 2,345 2,345 Unrealised gains reserve Other equity capital 1,268 1,274 1,127 1,138 1,152 1,147 Result of the period Minority interests Total equity capital 8,393 8,348 8,126 7,92 7,639 7,846 Total liabilities and equity 99,3 11,455 1,9 98,53 94,486 97,

29 Key figures 4Q 3Q 2Q 31 Mar Return on equity 13. % 13.6 % 12. % 12.9 % 13.2 % 13. % 13.2 % 12.8 % 14.6 % Cost/income ratio group 53.3 % 53.4 % 53.5 % 53.4 % 52.2 % 53.3 % 52.2 % 53.2 % 44.6 % Cost/income ratio group, ex. financial inv % 72.3 % 61.5 % 62.6 % 6.3 % 67.8 % 6.3 % 64.1 % 52.5 % Cost/income ratio parent bank 55.1 % 61.4 % 54.8 % 37.9 % 53.7 % 55.1 % 53.7 % 5.5 % 4.2 % 12-month cost growth* 14.4 % 3. % 29.1 % 39.2 % 68.8 % 14.4 % 68.8 % 3. % -9. % Gross loans to customers incl. Boligkreditt 97,387 95,232 92,671 9,939 88,66 97,387 88,66 95,232 87,665 Growth in loans incl Boligkreditt last 12 months 9.9 % 8.6 % 7.7 % 8.6 % 11.4 % 9.9 % 11.4 % 8.6 % 13.2 % Growth in loans incl Boligkreditt this period 2.3 % 2.8 % 1.9 % 2.6 % 1.1 % 2.3 % 1.1 % 8.6 % 13.2 % Deposits from customers 48,974 47,871 46,24 45,99 42,9 48,974 42,9 47,871 42,786 Growth in deposits last 12 months 14.2 % 11.9 % 19.1 % 11.4 % 14.1 % 14.2 % 14.1 % 11.9 % 14.9 % Growth in deposits this period 2.3 % 4. %.1 % 7.2 %.3 % 2.3 %.3 % 11.9 % 14.9 % Ordinary lending financed by ordinary deposits 68.3 % 65.5 % 64.3 % 67.1 % 62.6 % 68.3 % 62.6 % 65.5 % 61.3 % Total assets 99,3 11,455 1,9 98,53 94,486 99,3 94,486 11,455 97,997 Average total assets 1,242 1,732 99,212 96,435 96,224 1,242 96,224 98,465 91,317 Employees in employment group 1,97 1,19 1,19 1,47 1,57 1,97 1,57 1,19 1,35 Employees in employment parent bank Employees in employment subsidiares Number of branches Lending margin Deposit margin Net other operating income of total income 31.5 % 3. % 34.6 % 34.4 % 33.2 % 31.5 % 33.2 % 33. % 33.5 % Capital adequacy ratio 11.8 % 12. % 12.1 % 12.3 % 12.5 % 11.8 % 12.5 % 12. % 13. % Core capital ratio 1.3 % 1.4 % 1.4 % 1.7 % 1.6 % 1.3 % 1.6 % 1.4 % 1.9 % Total core capital 7,92 7,856 7,54 7,394 7,33 7,92 7,33 7,856 7,286 Net subordinated capital 9,8 9,55 8,675 8,496 8,638 9,8 8,638 9,55 8,646 Impairment losses ratio.4 %.11 %.3 % -.1 % -.3 %.4 % -.3 %.3 %.16 % Non-performing commitm. as % of gross loans.33 %.36 %.36 %.4 %.54 %.33 %.54 %.36 %.57 % Other doubtfull commitm. as % of gross loans.19 %.21 %.24 %.2 %.23 %.19 %.23 %.21 %.24 % ECC price Number of certificates issued, millions Booked equity capital per ECC (incl. dividend) Adjusted profit per ECC P/E per ECC P/B equity capital * Year to date. Write-back of early retirement liabilities (AFP), NOK 117 mill, in 1st quarter 21, hence the high cost growth

30 7. Segment information 7.1. Extract from income statement Group (in NOK million) Retail Corporate SpareBank 1 SMN Markets Eiendoms Megler 1 Midt- Norge SpareBank 1 SMN Finans Allegro Finans SpareBank 1 SMN Regnskap Uncollated Total Net interest Allocated Total interest income Commission income and other income Net profit on financial investments Total income Total operating expenses Ordinary operating profit Loss on loans, guarantees etc Result before tax Post-tax return on equity 16.4 % 11.6 % 13. % Balance sheet Loans and advances to customers 53,538 39,295 2,968 1,587 97,387 adv. of this to Boligkreditt -24, ,76 Individual allowance for impairment on loan Group allowance for impairment on loan Other assets , ,327 27,83 Total assets 29,54 39, ,766 99,3 Deposits to customers 21,386 25,458 1,27 47,871 Other liabilities and equity 8,154 13, ,739 51,159 Total liabilites 29,54 39, ,766 99,3-28 -

31 Interest income, Retail and Corporate 4Q 3Q 2Q 31 Mar. (in NOK million) Retail Corporate Net interest income ,34 1,293 Developement in margin, Retail and Corporate* 4Q 3Q 2Q 31 Mar. Lending (in percentage) Retail Corporate Total Q 3Q 2Q 31 Mar. Deposits (in percentage) Retail Corporate Total *Definition margin: Average customer interest minus 3 months average nibor Development in volume, Retail and Corporate 4Q 3Q 2Q 31 Mar. Lending* (in NOK million) Retail 53,538 52,55 5,73 49,317 47,919 53,538 47,919 52,55 46,932 Corporate 39,295 38,655 37,499 37,245 36,485 39,295 36,485 38,655 36,379 Total 92,833 9,711 88,228 86,561 84,44 92,833 84,44 9,711 83,311 * Gross loans to customers includes SpareBank 1 Boligkreditt 4Q 3Q 2Q 31 Mar. Deposits (in NOK million) Retail 21,386 21,185 2,519 2,661 19,317 21,386 19,317 21,185 19,98 Corporate 25,458 25,345 23,932 23,64 21,81 25,458 21,81 25,345 22,79 Total 46,844 46,531 44,451 44,32 41,118 46,844 41,118 46,531 41,86 Developement in commision income, Retail and Corporate 4Q 3Q 2Q 31 Mar. (in NOK million) Retail Corporate Total

32 7.2. Retail division The Retail Market Division is responsible for all activity directed at the region s retail customers. The Division provides personal financial advice. The Division s aims to attract and retain customers by developing a strong product range, first class advisers, unique accessibility and excellent customer handling. The write-back of accumulated pension liabilities in 21 is not distributed on RM, CM and Markets. Business description 31 Mar. 31 Mar. Facts about the Divisjon 212 Lending volume 53,538 47,919 Deposits volume 21,386 19,317 No. of debit cards 145, ,845 No. of credit cards 84,495 83,21 No. of internet bank customers 133, ,783 No. of telephone bank customers 139,348 15,782 No. of active customers 185, ,768 FTEs Financial performance 4Q 3Q 2Q (in NOK million) Net interest income lending Net interest income deposits Net interest income allocated capital Total interest income Net guarantee commision, incl. Boligkreditt Net commision of savings products Net commision insurance services Net commision payment trans. services Other commision income - 1 Net fee and commission income Net profit on financial investments Total income Total operating expences* Results Loss on loans, guarantees etc Results before tax *) Includes both direct and distributed expences 31 Mar. Post-tax return on equity (annualized) 16.4 % 22.3 % 21.3 % 25.5 % - 3 -

33 Development in margin Definition margin: Average customer interest minus 3 months average nibor Q 3Q 4Q Lending margin Deposits margin Development in lending volume 12 % 11.7% NOK mill. 55, 1 % 8 % 6 % 9.4% , 4 % 47, 2 % % , 2Q 3Q 4Q Lending volume Growth in loans last 12 months Development in deposits volume 12 % 1.7% NOK mill. 23, 1 % 8 % , 21, 6 % 4 % % 2, 19, 2 % 18, % , 2Q 3Q 4Q Deposits volume Growth in deposits last 12 months

34 7.3. Corporate division The Corporate Market Division focuses on financial counseling in investment and operations financing, insurance of individuals and buildings/operating equipment, investment of surplus liquidity and electronic and manual money transfers, domestic and foreign. The business is physically located across the entire market area in order to secure proximity to customers, while bearing in mind the need to ensure that competence units are of sufficient size. The business is highly skills-intensive, and requires a continuous focus on the competence of the individual staff member. To this end the Bank has established an educational facility offering module-based training for all staff. The write-back of accumulated pension liabilities in 21 is not distributed on RM, CM and Markets. Business description 31 Mar. 31 Mar. Facts about the Divisjon 212 Lending volume 39,295 36,485 Deposits volume 25,458 21,81 No. of active customers 13,318 13,27 FTEs Financial performance 4Q 3Q 2Q 31 Mar. (in NOK million) Net interest income lending Net interest income deposits Net interest income allocated capital Total interest income Net guarantee commision, incl. Boligkreditt Net commision of savings products Net commision insurance services Net commision payment trans. services Other commision income Net fee and commission income Net profit on financial investments Total income , Total operating expences* Results Loss on loans, guarantees etc Results before tax *) Includes both direct and distributed expences Post-tax return on equity (annualized) 11.6 % 18.9 % 13.8 % 12. %

35 Development in margin Definition margin: Average customer interest minus 3 months average nibor Q 3Q 4Q Lending margin Deposits margin Development in lending volume 3 % % 2 % 15.4% 15 % NOK mill. 38, 34, 3, 26, 1 % 7.7% 22, 5 % 18, % , 2Q 3Q 4Q Lending volume Growth in loans last 12 months Development in deposits volume 3 % % NOK mill. 28, 24, 2 % 15 % 1 % 15.9% 16.8% 2, 16, 12, 8, 5 % 4, % 212 2Q 3Q 4Q Deposits volume Growth in deposits last 12 months

36 7.4. Markets SpareBank 1 Markets is a fully fledged investment firm organised as a division in its own right within the Bank. It comprises three income generating units: Fixed Income/Foreign Exchange, Securities and Corporate Finance along with Back Office and Mid Office. The division has risk operations in the fixed income and securities area. All risk business is done from Head Office in Trondheim, while activity in Molde and Ålesund is in the hands of customer brokers who primarily provide services in the fixed income and foreign exchange area. SpareBank 1 SMN Markets ambition is to be the leading capital market operation in Trøndelag and in Nordvestlandet. This ambition will be achieved through a continuous focus on specialist competence and market knowledge. The division collaborates closely with Argo Securities on delivery of analysis and settlement services in the securities field. We expect the business collaboration, primarily in the securities area, to expand in the years ahead. The write-back of accumulated pension liabilities in 21 is not distributed on RM, CM and Markets. SpareBank 1 SMN Markets Financial performance 4Q 3Q 2Q 31 Mar. (in NOK million) Net interest income Net interest income allocated capital Total interest income Net fee and commission income Capital gain/agio Securities Total income Total operating expences Results Loss on loans, guarantees etc Results before tax Cost and income (NOK mill.) Result before tax (NOK mill.) Q 3Q 4Q Total operating expences Total income Results before tax

37 7.5. Subsidiaries EiendomsMegler 1 Midt-Norge AS EiendomsMegler 1 Midt-Norge has a solid market-leader position in Nord-Trøndelag and Sør- Trøndelag as well as Møre and Romsdal. The company is owned by SpareBank 1 SMN (87 per cent), SpareBank 1 Nordvest (7.6 per cent) and SpareBank 1 Søre Sunnmøre (5.4 per cent). Financial performance 4Q 3Q 2Q 31 Mar. (in NOK million) Total interest income Commission income and other income Total income Staff costs Administration costs Other operating expenses Total operating expenses Result before tax Cost and income (NOK mill.) Result before tax (NOK mill.) Q 3Q 4Q Total operating expenses Total incom e Result before tax

38 SpareBank SMN 1 Finans AS SpareBank 1 SMN Finans is the region s leading finance company and an active partner for businesses. SpareBank 1 SMN Finans emphasises local competence, and works for greater value creation in Trøndelag and Nordvestlandet. The company services the market through its own sales operation and through the Bank s offices and suppliers. SpareBank 1 SMN Finans owns the subsidiary SpareBank 1 Bilplan which specialises in car fleet management and offers one-stop solutions for industry and the public sector nationwide. Financial performance 4Q 3Q 2Q 31 Mar. (in NOK million) Total interest income Commission income and other income Net profit on financial investments Total income Staff costs Administration costs Other operating expenses Total operating expenses Ordinary operating profit Loss on loans, guarantees etc Total costs incl. loss on loans Result before tax Cost and income (NOK mill.) 3 Result before tax (NOK mill.) Q 3Q 4Q Total costs incl. loss on loans Total income Result bef ore tax

39 SpareBank 1 SMN Regnskap AS SpareBank 1 SMN Regnskap is a wholly-owned subsidiary of SpareBank 1 SMN. With it s head office in Trondheim and divisional offices in Stjørdal, Levanger, Verdal, Namsos and Rissa, the company has a strong local footing in Trøndelag. In SpareBank 1 SMN Regnskap took over and absorbed six accounting firms in Trøndelag: Sollie Regnskap, Ingrid Forseth Regnskapskontor, Status Regnskapskontor, Consis Namsos, Consis Steinkjer and Consis Trondheim. 5 per cent of the shares of Leksvik Regnskapskontor were also acquired. The operations of all acquired firms have been coordinated with the company s existing business. In the past year SpareBank 1 SMN Regnskap collaborated closely with its alliance partner Sparebanken Hedmark on acquiring Consis, one of the country s largest providers of finance and accounting services with 33 offices, 35 staff and 6,5 customers. Financial performance 4Q 3Q 2Q 31 Mar. (in NOK million) Total interest income Commission income and other income Total income Staff costs Administration costs Other operating expenses Total operating expenses Result before tax Cost and income (NOK mill.) Result before tax (NOK mill.) Q 3Q 4Q Total operating expenses Total income Result bef ore tax