Sparebanken Møre - the Group. Presentation Second quarter 2010

Transcription

1 Sparebanken Møre - the Group Presentation Second quarter 2010

2 Norway The Norwegian economy performed well during the financial crisis and was relatively strong even in Low unemployment - Rising housing prices - Increased private demand - High activity in the oil sector - Strong public sector growth Factors contributing to new growth from 2010: - Expansionary fiscal policy - Expansionary Monetary policy - Credit policy measures - Stronger growth abroad Side 2

3 Norway Moderate growth to be expected in Norway in the coming years GDP growth and the key policy rate (r.h. scale) Total GDP Mainland Norway Key policy rate Source: Central Bank of Norway, June

4 Norway Due to the strong economy housing prices in Norway will remain high in the coming years Outlook for Norwegian housing prices: The sharp rise in housing prices is probably coming to an end. This is due to gradually rising interest rates. Besides the price level is at a record high. Nevertheless, housing prices will remain high: - Although rising, interest rates will stay low in the foreseeable future - Building activity is low, reducing the supply of houses - Unemployment will not exceed 4 per cent in the period according to Statistics Norway. The high debt burden in the household sector reduces the room for higher housing prices in the coming years

5 Norway and Møre og Romsdal (Sources: NEF, ECON) Detached houses price pr. m2 in 1000 NOK Semi-detached houses price pr. m2 in 1000 NOK Norway Møre and Romsdal Norway Møre and Romsdal Cities: Average prices 2009 (m2): Oslo Bergen Tromsø Trondheim Regions: Northern Norway (except Tromsø) Møre og Romsdal Hedmark Trøndelag (except Trondheim) Country: Norway (average) Cities: Average prices 2009 (m2): Oslo Tromsø Bergen Trondheim Regions: Northern Norway Møre og Romsdal Hedmark Trøndelag Country: Norway (average)

6 Møre og Romsdal Outlook: Continued economic growth and low unemployment Good long term outlook for the manufacturing sector Continued growth in the private service sector Private service sector in M&R Production Employment Investmen (r. h. scale) Higher activity in the public sector due to political priorities Low unemployment Manufacturing in M&R Production Employment The labour market in Møre og Romsdal Investment (r. h. scale) Unemployment % Vacansies (r. h. scale) Source: Statistics Norway (volume indices 2008 = 100)

7 Møre og Romsdal The figure shows employment divided into sectors, in Norway and in Møre og Romsdal (per cent) The county is characterised with a stronger industrial sector and a stronger food producing sector (e.g. fish and fish products) compared with the rest of Norway The largest industries are: Norway Møre og Romsdal Fisheries Mechanical industry/ship yards Building and construction Furniture The county`s economic activity is underweighted in private and public services and retail/wholesale trade Agiculture, forestry and fisheries Industry Building and construction Retail trade, hotel and restaurants Transport and communication Financial services Private and public services

8 Næringsliv Møre og Romsdal sysselsetting Møre og Romsdal is the third largest export county in Norway. The companies in Møre og Romsdal experienced record high export in June Also in the first six months of 2010 the export value was 14 per cent higher than in 2009 Exports Jan-June 2009/2010 (TNOK) Svalbard 2010 Aust-Agder Hedmark Troms Nord-Trøndelag Finnmark Oppland Sør-Trøndelag Akershus Oslo Sogn og Fjordane Østfold Buskerud Nordland Telemark Vestfold Vest-Agder Møre og Romsdal Rogaland Hordaland

9 Møre og Romsdal Møre og Romsdal has over the last years been the largest or the second largest food producing county in Norway Fish and fish products Salmon, trout, codfish, herring, mackerel, etc Agriculture Potatoes, fruit and berries Other foodstuff industry Pizza, cured ham, salami, etc The county is responsible for approximately 1/3 of the nations total export of food Rogaland Møre og Romsdal Oslo Hordaland Sør-Trøndelag Nordland Østfold Hedmark Akershus Troms Nord-Trøndelag Sogn og Fjordane Oppland Vestfold Buskerud Finnmark Vest-Agder Telemark Aust-Agder Food production by county NOK million Agriculture Fish and fish farming Other food producing industry

10 Area of operation Founding and vision Sparebanken Møre was established in 1985 through a merger of several local savings banks. The oldest of these savings banks was established in 1843 Sparebanken Møre is a fully independent bank, and the bank follows the contract banking principle when choosing its partners The bank has today 23 district banks, with a total of 32 branches The bank's head office is located in Ålesund in Møre og Romsdal county, and the county is defined as Sparebanken Møre's operating area Sparebanken Møre has been listed at Oslo Stock Exchange since 1989 (Primary Capital Certificates/PCCs, now Equity Certificates ECs) The banks vision is described within the framework Møre a vision based on an extensive effort throughout the organisation - where we aim to be the leading financial institution in Møre og Romsdal 10

11 Area of operation Sparebanken Møre a brief overview Sparebanken Møre is the 6th largest Norwegian bank the bank serves customers from the county of Møre og Romsdal The population of Møre og Romsdal is , and the population in the municipalities where the bank is located is The bank serves about customers, whereof customers in the retail market customers in the corporate market The head office of the bank is located in Ålesund ( inhabitants) branches in 24 municipalities in the county of Møre og Romsdal 23 district banks with 32 local branches The activity is based on traditional banking services Loans to the retail market: 61.4 % Loans to the corporate sectors (incl. public): 38.6 % Sparebanken Møre is a fully fledged foreign exchange bank 11

12 Area of operation contract banking Lev. Prov. av of prod/tjänst prod/serv. Contract Kontrakt Lev. Prov. av of prod/tjänst prod/serv. Contract Kontrakt Prov. Lev. of av adm.supp. adm.stöd Contract Kontrakt Contract Kontrakt Prov. Lev. of av adm.stöd supp. Prod,/serv. Prod/tjänster Contract Kontrakt Advisor Kund- Contract Kontrakt i egen regi ansvarig in-house Relation Bank s Bankens own egna resources resurser Relationship värde Contract Kontrakt Adm.stöd Adm.supp. in-house i egen regi Bank s Bankens totala resources resurser Customer Kund In 2000, SBM decided to discontinue its alliance with Sparebanken NOR in order to be an independent bank for the maximum benefit of its customers. As a consequence of this, SBM decided to implement the business model, Contract Banking. The business model means that the Bank has opted to conduct operations and manage all development in-house or together with partners/providers based on what is best for the Bank s customers and what provides the best revenue generation for the Bank. Contract Banking involves requirements for: - Competence to identify partners when this creates value both for our customers and the Bank - Competence to identify partners, enter into agreements with these partners, develop, maintain and discontinue relationships with partners 12

13 Area of operation Dominant industrial and commercial sectors in Møre og Romsdal: Fisheries Fish and fish products/foodstuff industry Chemical industry Shipbuilding/Ship equipment industry Furniture industry Shipping/Offshore Oil Tourism 13

14 Area of operation Sparebanken Møre is and aims to be the preferred bank in the county Market shares in the retail market Market shares in the corporate market , , , ,4 17, ,6 13,2 14, ,1 9 4,6 0 0 Side 14

15 Board of Directors and Senior Management Board of Directors Senior Management Group Helge Aarseth (Chairman) Roy Reite Stig Remøy Toril Hovdenak Ingvild Vartdal Elisabeth M. Støle Helge Knudsen Olav Arne Fiskerstrand (President and CEO) Magnar Bolstad Perdy Lunde Runar Sandanger Idar Vattøy Arild Sulebakk Tim Solberg Bodil Hollingsæter Bernt Krøvel Terje Krogset Terje Krøvel Trond Nydal 15

16 Deposits and loans Total assets NOK million Growth during the last 12 months Total assets 7.7 % Loans 5.0 % Deposits 11.2 % q 2010 Total assets Net Loans 16

17 Deposits and loans Breakdown of gross lending NOK mill Annual net lending growth 2006: 14.9 % 2007: 14.2 % 2008: 12.7 % % % Lending growth last 12 months Gross, retail banking 9.2 % Gross, corporate -0.8 % 0 Gross, public sector q 2010 Public sector Retail banking Corporate banking 17

18 Deposits and loans Corporate loans by different industrial and commercial sectors as of Shipbuilding 2,0 % Private/public services, transport 10,8 % Other industry 3,4 % Management/holding companies 4,2 % Fishing industry 3,2 % Maritime transport/supply sector 15,1 % Building and construction 5,6 % Service industry 4,2 % Fisheries 19,5 % Agriculture 3,1 % Aquaculture 0,7 % Restaurant and hotel industry 0,6 % Furniture 0,4 % Property management 25,6 % Retail and wholesale trade 5,3 % 18

19 Deposits and loans Breakdown of deposits NOK mill Annual deposit growth 2006: 17.3 % 2007: 15.1 % 2008: 6.6 % 2009: 5.4 % 2010: 11.2 % Deposit growth during the last 12 months Retail banking 7.0 % Corporate banking 15.9 % 0 Public sector 22.8 % q 2010 Corporate banking Retail banking Public sector 19

20 Funding and hedging Total financing Deposits Norwegian bonds CDs Covered Bonds F-loan Long-term international Subordinated loans Long-term domestic Domestic banks International banks Deposits from customers 23, % Total capital market funding 15, % Total financing 38, % Long Term capital market funding 13,487 34,2% Long Term facilities, undrawn 1, % Long Term funding and facilities (>1 year) 14, % Short Term market funding (<1 year) 1, % 364 days facility % Short Term capital market funding in excess of facilities % 20

21 Funding and hedging Long-term funding as of volume and maturity (NOK thousands) Senior bonds Maturity Amount NOK thousands MORG Tingvoll MORG MORG MORG MORG Tingvoll MORG MORG MORG MORG MORG MORG MORG MORG MORG MORG MORG Total Other LT funding Maturity Amount Revolving facility DnB/Lloyds/Swed Termloan misc. Lloyds/Intesa NIB DnB/Lloyds/Swed Eksportfinans ASA LB Rheinland Pfalz Total Covered + F-loan Maturity Amount F-lån Swap agreement Swap agreement Swap agreement MOBK Jun Swap agreement Swap agreement Swap agreement MOBK Apr MOBK01 Feb MOBK Apr MOBK02 May Total Subordinated Maturity Amount NO NO Total Side 21

22 Funding and hedging Long term funding Per cent Long term financing as a percentage of illiquid assets (defined by the Norwegian FSA) has been the main quantitative target in Møre`s funding strategy since December 2008 The bank`s target is to stay above 100 % By half year end the indicator stands at % 40 Side 22

23 Funding and hedging Off-balance activity - quarterly NOK MLN Moderate risk profile in the interest rate, equity and FX markets Sparebanken Møre has no trading portfolio in these or other similar markets/instruments Client's positions are hedged in the market The bank's positions are hedged Increased volume in NOK derivatives and in FXinstruments IRS (NOK & Curr.) Forward FX Cross Currency Swap FRA (NOK & Curr.) Caps/Floors FX-Options 23

24 Funding and hedging Payments No of SWIFT Commercial payments Incoming Outgoing No of outgoing SWIFT commercial payments by currency NOK; ; 28 % EUR; ; 30 % USD; ; 13 % SEK; ; 10 % Others; ; 3 % DKK; ; 7 % PLN; ; 6 % GBP; ; 3 %

25 Results Main figures 2 q q 2009 Change during last 12 months From the Profit and Loss Account NOK mill. % NOK mill. % NOK mill. P. points % Net interest income/av. int. margin Other (non-interest) income Total income Personnel costs Other costs Total ordinary operating costs Result before credit losses Losses on loans and guarantees , Result before tax cost Tax cost Result after tax cost From the Balance Sheet Total assets 43,800 40, Net lending 36,718 34,980 1, Deposits 23,449 21,079 1, Equity and related capital 3,630 3, Capital adequacy ratio Core capital ratio Percentage return on equity capital Costs as a percentage of income Earnings per EC (the Bank)

26 Results Result after tax NOK million

27 Results Result as a percentage of average assets 2,25 2,2 1,75 1,25 1,65 1,95 1,93 1,09 1,10 1,68 1,34 1,54 1,44 1,41 1,32 1,40 1,32 1,44 1,27 1,35 1,15 1,66 1,53 Result from ordinary operations before losses Result before taxation 0,75 0,86 0,83 0,25-0,25 0,55 0,34 0,17 0,2 0,1 0,13 0-0, q 2010 Losses 27

28 Results Net interest income AS A PERCENTAGE OF AVERAGE ASSETS Net interest income NOK38 million higher than by second quarter 2009 Higher also measured against average assets, 0.10 p.p. Changes: Higher income from the bank s free capital Higher margins on loans to the corporate sector Still high competition related to deposits, but market funding is less expensive More liquidity on the balance with higher quality modifies 3 2,5 2 1,5 1 0,5 0 2,14 2,09 2,17 1,97 2,01 1, q q

29 Results Other operating income Higher other operating income, NOK 192 million against NOK 131 million by second quarter 2009 Higher income Dividend NOK 68 million gain following the merger between Nordito and PBS 1,00 0,75 0,50 AS A PERCENTAGE OF AVERAGE ASSETS 0,91 0,66 0,67 0,65 0,63 0,52 Lower income e.g. from Part of fair value valuation - IFRS Payment services FX-operations 0,25 0, q q

30 Results Cost/Income ,8 49,3 46,4 46,7 48,5 43, q q

31 Results Net loans in default 250 NOK million As a percentage of Gross Loans ,6 0,5 0,4 0,38 0,34 0,40 0,44 0, ,3 0,2 50 0, q q

32 Results Losses Total losses totalled NOK 27.0 million 0,40 Measured against average assets Corporate NOK 24 million Retail NOK 0 million Group of loans NOK 0 million 0,20 Other NOK 3 million Total provisions amounted to 0,17 0,2 0,26 0,13 NOK 458 million by ,00 0-0, q q ,20 32

33 Results Losses - details NOK million

34 Equity Equity and related capital 0 NOK mill. 2, , , , , q 2010 Miscellaneous Supplementary capital Capital Bonds Savings Bank's Fund Dividend Equalisation Fund Premium Fund ECs % 15,00 14,00 13,00 12,00 11,00 10,00 9,00 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0, ,51 1,44 0,91 0,87 5,09 5,36 1,39 1,34 0,36 0, ,16 0,10 1,75 1,70 1,70 1,69 1,65 0,71 5,27 5,14 4,80 1,43 0,94 1,13 0,66 0,68 0,44 2,50 2,39 2,09 2,36 2, q 2010 Target ratio for equity and related capital: 12.0 % : % Target ratio for core capital: 10.0% : % 34

35 Equity Certificates Dividend policy Based on the fact that new legal rules relating to capital and organisation forms in the savings bank sector etc. were sanctioned at a Cabinet Meeting on on the basis of coming into force on , Sparebanken Møre has changed its dividend policy with effect from the 2009 accounting year. The new dividend policy reads as follows: Sparebanken Møre s aim is to achieve financial results which provide a good and stable return on the Bank s equity capital. The results shall ensure that the owners of the equity capital receive a competitive, long-term return in the form of dividends and increase in the value of the equity capital. The equity capital owners share of the net result being set aside as dividend funds, will be adapted to the Bank s equity capital situation. Sparebanken Møre s allocation of earnings shall ensure that all equity capital owners are guaranteed equal treatment. 35

36 Equity Certificates Dividend and EC-price The PCCs/ECs of Sparebanken Møre have been listed at Oslo Stock Exchange since 1989 Total EC capital: NOK 778 million by June 2010 Dividend pr. EC:

37 Future prospects The Board of Directors: Future prospects The Board of Directors expects demand for lending to remain moderate this year. The Board of Directors expects net interest income to remain stable for the rest of the year due to the strong and growing competition for traditional deposits in the financial market. High employment, due to the positive development of business and industry in Møre og Romsdal, will help to ensure a satisfactory net result for the Group in

38 Sparebanken Møre and peers ROE per cent 25, , ,0 14,0 20,2 17,7 17,1 19,217,3 16,5 16,4 14,9 15,0 11,5 10,1 10,2 15,6 14,0 14,1 13,4 12,8 5 5,3 0 0, ,5 38

39 Sparebanken Møre and peers Our image: Competence and solidity Side 39

40 Sparebanken Møre and peers 14 Strong and stable capital* (period ) High Low Average Sparebanken Møre Sparebanken Vest Sparebank 1 SMN Sparebank 1 SR Sparebank 1 Nord Norge * Source: First Securities Side 40

41 Sparebanken Møre and peers Stability in ROE q Sparebanken Møre Sparebanken Vest Sparebank 1 SMN Sparebank 1 SR Sparebank 1 Nord Norge Side 41

42 Sparebanken Møre and peers with lower gearing Sparebanken Møre has focused on a high and stable capital adequacy ratio compared with peers The stability is maintained through good results and issues of new capital not by changing the risk weighted asset base Sparebanken Møre has adopted the Basel II Standardised Approach when reporting credit risk and market risk, the Basic Indicator Approach for operational risk More sophisticated models are used internally for assessing risks Side 42

43 Contact Head Office Keiser Wilhelmsgt P.O.Box Ålesund Tel: Telex: Reuters Dealing: MORE spare n Fax: General Management Corporate Division Retail Customers Division Treasury/FX International payments Web: International Business and Treasury Division Head of Division Runar Sandanger, EVP and CFO, runar.sandanger@sbm.no Chief Economist Inge Furre, inge.furre@sbm.no Foreign Exchange Aud Janne Myklebust, Vice President, aud.janne@sbm.no Hilde Sveen, hilde.sveen@sbm.no Roger Lervik, roger.lervik@sbm.no Trond Hugo Stenseth, trond.hugo.stenseth@sbm.no Treasury and Risk Management Ove T. Ness, Vice President, ove.ness@sbm.no Louis Helge Nordstrand, louis.nordstrand@sbm.no Kristin Eriksen, kristin.eriksen@sbm.no International Payments and Settlements Karl Otto Hessen, Assistant VP, karl.otto.hessen@sbm.no Aage Skauvik, aage.skauvik@sbm.no Elin Sperre, elin.sperre@sbm.no Solbjørg Lunheim, solbjorg.lunheim@sbm.no Else Tomren, else.tomren@sbm.no Kristin Aarset, kristin.aarset@sbm.no Anne Grete Fjørtoft, annegrete.fjortoft@sbm.no Astrid-Grethe Rye, astrid-grethe.rye@sbm.no Iren Gullhav, irene.gullhav@sbm.no Karin Krogen, karin.krogen@sbm.no Møre Boligkreditt AS Ole Andre Kjerstad, CEO, ole.andre.kjerstad@sbm.no Ole Viggo Tynes, ole.viggo.tynes@sbm.no

44 Møre Boligkreditt AS

45 The Norwegian covered bond legislation The Norwegian covered bond legislation was adopted in June It was written in close dialogue between the authorities, the financial sector and rating agencies. Thus it is a modern and up to date legislation that provides investors strong protection from the cover pool. The most important laws and regulations setting the legal framework for mortgage companies in Norway are: The Financial Institution Act (amended 6 March 2007) The regulation on mortgage credit institutions issuing covered bonds (25 May 2007) In Norway, a commercial bank or a savings bank will not be able to issue covered bonds in its own name, but may establish a mortgage credit institution as a subsidiary. These institutions are licensed credit institutions, supervised by The Financial Supervisory Authority of Norway Finanstilsynet and are subject to the ordinary Norwegian regulation of credit institutions which is in line with the corresponding EU rules According to the Act, the cover pool may consist of the following assets: - Mortgage assets (residential < 75 % LTV, commercial < 60 % LTV) - Public assets - Substitution assets (maximum 20 % of the cover pool) 45

46 Møre Boligkreditt AS Møre Boligkreditt AS, a mortgage credit institution 100 % owned by Sparebanken Møre, was established in October The main reason for this establishment is to contribute to a further expansion of the bank's funding platform, and Møre Boligkreditt AS received its license from the Norwegian FSA 6th of November 2008 By March 2009 the bank had received all necessary approvals and adjustments in relation to the loan agreements, and 9th March the first transaction between Sparebanken Møre and Møre Boligkreditt AS took place Møre Boligkreditt AS has so far issued 5 covered bonds with a face value of NOK 4.35 billion. The first 3 bonds issued in march 2009 (NOK 3,25 billion) were all purchased by Sparebanken Møre mainly used in the Norwegian governmental arrangement. In 2010 Møre Boligkreditt AS has issued 2 bonds, (NOK 1.1 billion) which have been sold directly in the market and are listed on Oslo Stock Exchange. All covered bonds issued by Møre Boligkreditt AS are given Aaa-rating by Moody s Møre Boligkreditt AS' equity and related capital amounted to NOK 421 million at the end of Q

47 Programme set-up * Transfer and Servicing Agreement

48 Organisation and regulation of Møre Boligkreditt AS General meeting Control Committee Supervisory Board External auditor The Board of Directors Internal auditor CEO

49 The Norwegian covered bond market (1) Before the financial meltdown, the major issuances of Norwegian covered bonds were denominated in Euros. After the meltdown, the very largest issuers of Norwegian covered bonds already have been present in the international capital markets on a regular basis, and more Norwegian issuers are expected to follow. Norwegian covered bonds are compliant with the Capital Requirement Directive and are eligible as collateral in ECB. Norwegian covered bonds are attractive to investors looking for high-quality instruments with low credit and market risk. 49

50 The Norwegian covered bond market (2) Outstanding amount (NOK issues only) As of spring 2010 there are around NOK 470 bn. Norwegian covered bonds outstanding, including international issues. A total of NOK 230 bn. of this amount has been pledged as collateral for long term funding to Norwegian banking groups from the government arrangement. 50

51 The Norwegian covered bond market (3) As of August 2010 there are a total of 22 issuers of residential or commercial covered bonds in the Norwegian market 51

52 Outstanding covered bonds of Møre Boligkreditt AS Issue date Currency Balance Borrowing Soft call Final Maturity Interest rate nominal limit type MØRE BOLIGKREDITT AS 09/ NOK Floating rate MØRE BOLIGKREDITT AS 09/ NOK Floating rate MØRE BOLIGKREDITT AS 09/ NOK Floating rate MØRE BOLIGKREDITT AS 10/ NOK Floating rate MØRE BOLIGKREDITT AS 09/ NOK Floating rate Covered bonds issued so far are FRN 3MNibor based 52

53 Credit process and selection criteria Acquisition of loan portfolio from Sparebanken Møre main criteria Household mortgages Value pr. loan: NOK 100,000 NOK 10,000,000 Primary floating interest mortgages Minimum remaining duration of 2 years Acquire loans only when debtor is internal scored in risk category A to I Probability of Default (PD) between 0-8 % Debtors with loans in default more than 30 days or with write-downs are excluded 53

54 Distribution of loans as of Number of loans according to size of loans 2500 Number of loans Size of loans (NOK 1 000) Value of loans according to size of loans Value of loans (NOK million) Size of loans (NOK 1 000) 54

55 Property valuation method Upon inclusion of loans in the cover pool, a prudent market value shall be set. The market value for a property shall be set individually by an independent and competent person. The valuation shall be documented. However, valuation of residential properties may be based on general price levels. Predominantly, residential properties in Norway are sold in an open auction in the market. Hence the actual selling price in principle reflects the market value and a recent sales contract may serve as documentation of the market value of a property. The mortgage credit institution shall establish systems for monitoring subsequent price developments. Should property prices later fall, that part of a mortgage that exceeds the relevant LTV limit is still part of the cover pool and protects the holders of preferential claims. However, that part of of a loan that exceeds the LTV limit is not taken into account when calculating the value of the cover pool compared with outstanding covered bonds. The same principle applies to loans that are in default, i.e. more than 90 days in arrears. Loan to value ratios (LTV) and monitoring are fixed by the Regulation, in accordance with the EU Directive 2006/48/EC. For residential mortgages the loan to value ratio (LTV) is 75 %, and for other mortgages 60 %. The mortgage credit institution shall monitor the development of the LTV of the individual asset as well as the market of the underlying assets, according to the Act, and in accordance with the said directive. 55

56 Automated valuation method Møre Boligkreditt AS and Sparebanken Møre make use of the services of Eiendomsverdi AS when it comes to valuation of residential property - Eiendomsverdi AS is an independent Norwegian AVM (automated valuation method) provider used by most Norwegian banks - Eiendomsverdi AS receives information on more than 90 % of all housing sales in Norway, and uses statistical models for calculating residential property values - Each mortgage will be assessed according to the value of the related property received from the models of Eiendomsverdi AS, and will only qualify to Møre Boligkreditt AS if the mortgage is below 75 % LTV - Eiendomsverdi AS categorises the estimates according to 7 accuracy levels. In order to reduce the overestimation, the estimate can be downgraded up to 40% depending on level of accuracy. - The value of the residential properties serving as collateral for the portfolio of mortgages are updated quarterly using the models of Eiendomsverdi AS. If a mortgage on a later stage exceeds 75 % LTV, only the portion of the mortgage below 75 % will be included in the cover pool - We do not allow additional information to be put into the valuation model unless this information is documented. Previously, some estimates where calculated with additional information without checking whether this information could be documented

57 Details of the cover pool as of Portfolio and LTV distribution Portfolio and Risk category distribution 1) NOK million NOK million < 20% 20% - 30% 30% - 40% 40% - 60% 60% - 75% > 75% 0 A B C D E F G H I J LTV Risk category Property valuations by external appraiser, selling price or certified valuation assessment (by broker or the use of Eiendomsverdi's database) 97,98% of all loan in the cover pool are in risk category A I 2) (Cover pool target is minimum 90%) 1) Based on Sparebanken Møre's internal risk scoring models on PD (probability of default) 2). Risk category A B C D E F G H I J PD range (%) 0,00-0,10 0,10-0,25 0,25-0,50 0,50-0,75 0,75-1,25 1,25-2,00 2,00-3,00 3,00-5,00 5,00-8,00 8,00-57

58 Geographical location of the cover pool More than 80% of the cover pool origins from Møre og Romsdal; Sparebanken Møre main area of operation...and more than 2/3 of the pool origins from Ålesund, including surrounding municipalities and the regional capital Molde 58

59 Geographical location of the cover pool The highest regional concentration is in Møre og Romsdal county, mainly centralized in areas with well functioning real estate markets Mortgage lending by county 1,9 % 1,0 % 3,5 % 5,1 % 7,0 % 81,5 % MØRE OG ROMSDAL OSLO AKERSHUS HORDALAND SØR TRØNDELAG ANDRE Mortgage lending municipalities in Møre og Romsdal county 4,6 % 3,5 % 4,3 % 3,8 % 4,7 % 4,3 % 4,6 % 13,2 % Ålesund Molde Giske 36,5 % Sykkylven Sula Herøy Haram Ulstein Hareid Vestnes 11,4 % Andre 9,2 % The geographical location is based on the location of the collateral and is calculated by loan amount 59

60 Cover pool and the portfolio of mortgages 1) Type of collateral Number of loans/credits Loan value - average LTV weighted average 100 % residential properties NOK % (based on balance) Loans in default No loans in default or write-downs Value of the mortgage portfolio NOK Reduction of the value of the portfolio NOK (value of loans > 75 % LTV) Eligible value of the portfolio NOK Supplementary assets NOK Eligible value of the cover pool NOK Over-collateralisation % 1) As of Q Side 60

61 Future plans for Møre Boligkreditt AS Based on the strategy of Sparebanken Møre group, Møre Boligkreditt AS will be the main vehicle for catering the refinancing needs of the Sparebanken Møre group As the Norwegian governmental arrangement (swap arrangement) has been terminated, the mortgage company will issue its covered bonds both in the national and international market Møre Boligkreditt AS plans to issue additional approximatly NOK 4 billion of covered bonds the next couple of years, up to 20 % of the consolidated loan book of Sparebanken Møre (possibly even beyond 20% if this is feasible without any negative implications on rating or international loan agreements) This autumn, Møre Boligkreditt AS are planning an international issue in the equivalent of MNOK Møre Boligkreditt AS are also considering setting up a Medium Term Note programme (MTN) to facilitate further isssues 61

62 Contacts Ole Kjerstad, Chief Executive Officer, Møre Boligkreditt AS Telephone: Fax: Runar Sandanger, Chief Financial Officer, International Business and Treasury Division, Sparebanken Møre Telephone: / Fax: Ove T. Ness, Vice President - Finance, International Business and Treasury Division, Sparebanken Møre Telephone: / Fax: ove.ness@sbm.no 62

63 Balance sheet 63