gjensidige.com Interim report for Gjensidige bank Group Gjensidige bank ASa

Transcription

1 gjensidige.com Interim report for SECOND QUARTER AND FIRST HALF of 2011 Gjensidige bank Group Gjensidige bank ASa

2 GJENSIDIGE BANK GROUP HIGHLIGHTS SECOND QUARTER AND FIRST HALF of 2011 New CEO for Gjensidige Bank Start of structural reorganisation Positive profit performance compared with the previous year Gjensidige s Fordel credit card nominated to the international final in the category Best New Card 2011 Customer Service Award 2011 PROFIT PERFORMANCE before tax Gjensidige Bank Group NOK ,000 30,000 25,000 20,000 15,000 10,000 5,000 TOTAL ASSETS Gjensidige Bank Group NOK ,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 Q Q YTD 2011 YTD Q Q

3 INTERIM REPORT FOR SECOND QUARTER AND FIRST HALF of 2011 Gjensidige Bank GRoup BUSINESS Gjensidige Bank ASA was launched in 2007, with Online Retail Banking in Norway as its main area of business. The Bank has offices in Førde and Oslo. The Bank offers traditional banking products such as current accounts, savings products and secured and unsecured loans. The Bank is one of the largest actors in consumer financing in Norway. By combining Internet banking with a local presence, the Bank has achieved a unique position compared with other Internet-based banks. Gjensidige Bank ASA cooperates with Sparebanken Sogn og Fjordane, which provides support services to the Bank. The agreement expires on 31 December Distribution takes place via the group portal, and the group s 22 consultation offices at central locations throughout the country. The Bank s products are also offered through its own customer service centre. The Bank has agreements with Tekna, the Confederation of Vocational Unions (YS), the Norwegian Society of Engineers and Technolo gists (NITO) and the Norwegian Farmers and Smallholders Union (NBS) relating to the delivery of products and services to the organisations members. The Bank s products are also included in Gjensidige Forsikring s loyalty programme. Gjensidige Bank ASA is a wholly-owned subsidiary of Gjensidige Bank Holding AS, which in turn is a wholly-owned subsidiary of Gjensidige Forsikring ASA. Gjensidige Bank Boligkreditt AS is a wholly owned subsidiary of Gjensidige Bank ASA. The Bank has access to financing with covered bonds via Gjensidige Bank Boligkreditt AS. The quarterly reports are consolidated and comprise Gjensidige Bank ASA and Gjensidige Bank Boligkreditt AS. Hans Olov Harén, who formerly managed the Consumer Finance business area took over as the new CEO of Gjensidige Bank ASA on 1 June MARKETING AND GROWTH IN CUSTOMER BASE At the end of the quarter, the Bank had 94,858 customers, This is 2,456 more than at the start of the quarter. Through association with the Gjensidige brand, customer base and distribution system, the Bank differentiates itself from other players in the market. In the second quarter, the Bank mainly focused on targeting the Group s own customers through direct marketing. The Bank s products have also been advertised on the Internet, radio and in newspapers. Around half of the customers are customers interested in or holding other products and services related to banking and insurance. Gjensidige Bank s Fordel credit card was nominated in the category Best New Credit Cards of 2011 in connection with the Cards and Payments Europe 2011 conference in Frankfurt. The criteria for participation dictated that the card had to be new or relaunched with significantly unique functions, marketing strategies or programmes. The Fordel credit card did not win in its nominated category, but we are proud to have been among the finalists for such a prestigious award. Gjensidige Bank s customer centre was ranked the best in the banking industry based on an extensive blind test. Gjensidige has excelled through its expertise, accommodating attitude, rapid response and special ability to create a good customer experience, are the words used by the presenter of the award, Confex og SeeYou, to justify the ranking. PROFIT PERFORMANCE before tax Profit before tax was NOK 18.1 million for the quarter, compared with a profit of NOK 10.3 million for the corresponding period in This represents an improvement in earnings of NOK 7.8 million. Profit before tax was NOK 32.6 million for the first half of 2011, compared with a profit of NOK 15.2 million for the corresponding period in This represents an improvement in earnings of NOK 17.3 million. The improvement is attributed primarily to growth in volume and lower write-downs on loans. The profit performance is in line with the expectations. NET INTEREST AND CREDIT COMMISSION INCOME Net interest income for the quarter amounted to NOK million, compared with NOK million for the corresponding quarter in This represents an improvement in earnings of NOK 4.0 million. Net interest income for the first half year amounted to NOK million, compared with NOK million for the corresponding period in This represents an improvement in earnings of NOK 13.4 million. The improvement is attributed to volume growth. The Bank s net interest income in relation to the average total assets was 2.73 per cent at the end of the second quarter, compared with 3.03 per cent for the corresponding period in The net interest income was 2.88 per cent at the end of the year. The decline here is attributed primarily to a greater share of lending secured by a mortgage. 3

4 OPERATING EXPENSES Operating expenses for the quarter amounted to NOK 81.8 million, compared with NOK 65.8 million for the corresponding quarter in This represents an increase in costs of NOK 16.0 million. Operating expenses for the first half of the year amounted to NOK million, compared with NOK million for the corresponding period in This represents a cost increase of NOK 13.0 million. The increase in operating expenses is attributed, amongst other, to higher depreciation and costs related to the restructuring. The reorganisation is part of the integration process after the acquisition of a consumer loan portfolio at the end of DEFAULT OF AND LOSS ON LENDING The Bank recognised an expense of NOK 20.7 million from the write-downs of loans in the quarter, compared with the write-down of NOK 37.3 million in the corresponding quarter in The Bank has recognised expenses of NOK 46.3 million from the write-down of loans year to date, compared with the write-down of NOK 60.3 million for the corresponding period in The write-downs are related primarily to estimated group write-downs, which are to cover losses on commitments that are not identified individually as doubtful. Loans in default over 30 days amounted to NOK million at the end of the quarter, compared with NOK million for the corresponding quarter in This is an increase of NOK million and is attributed to the acquisition of a consumer loan portfolio in December Loans in default over 30 days have increased by NOK 45.6 million since the start of the year. The increase in defaults is attributed primarily to the unsecured portfolio. Loans in default over 30 days represent 2.02 per cent as a percentage of gross lending at the end of the quarter. Unsecured loans that default are collectively assessed. The outstanding loan balance, less expected discounted cash flows from customer repayments, is recognised under group write-downs. A loss is realised when it is overwhelmingly probable that a loan will not be repaid. The annualised loss costs as a percentage of gross lending for the first six months is 0.63 per cent, compared with 0.92 per cent for the corresponding period in The decline is attributed primarily to a greater share of lending secured by a mortgage, as well as the good performance of the overall loan portfolio. The Bank considers loan performance to be satisfactory. CUSTOMER LOANS At the end of the quarter, gross loans amounted to NOK 14,596.7 million, compared with NOK 13,051.0 million for the corresponding period in This represents an increase of NOK 1,545.7 million over the past twelve months. The growth in lending for the quarter totalled NOK million. The portfolio mainly consists of loans with adjustable interest rates. The Bank lends to consumers and agricultural customers. At the end of the quarter, 80.6 per cent of the Bank s exposure to customer lending was secured by a mortgage on residential or agricultural property. The amount of the average loan secured by a mortgage on residential or agricultural property is NOK 1.3 million. There is no single exposure over NOK 11 million. CUSTOMER DEPOSITS Customer deposits amounted to NOK 9,378.6 million at the end of the quarter, compared with NOK 7,157.0 million for the corresponding period in This represents an increase of NOK 2,221.6 million in customer deposits over the past twelve months. The growth in deposits for the quarter totalled NOK 88.1 million. The deposit-to-loan ratio at the end of the quarter was 64.3 per cent, compared with 54.8 per cent for the corresponding period in The increase in the deposit-to-loan ratio compared with the corresponding period last year is attributed mainly to the positive deposit growth in the second half of The deposit-to-loan ratio was 64.6 per cent at the end of the year. SEGMENTS The Bank s main target group is the private customer segment. This segment comprises organisation customers, loyalty programme customers, agricultural customers and other 15,000,000 10,000,000 12,000,000 8,000,000 9,000,000 6,000,000 6,000,000 4,000,000 3,000,000 2,000,000 0 Q Q Q Q Q Q Q Q Q Q Q Q Customer loans Customer deposits 4

5 customers. Since the second quarter of 2010, the Bank has been offering a deposit product aimed specially at the corporate market. These customers are spread throughout Norway. CAPITAL ADEQUACY At the end of the quarter, the Gjensidige Bank Group had a capital adequacy ratio of 14.6 per cent, compared with 15.3 per cent for the corresponding period in The capital adequacy rate was 16.1 per cent at the end of The decline in the capital adequacy ratio was expected and is attributed primarily to the payment of a group contribution and higher lending volume. At the end of the quarter, net equity and subordinated loan capital amounted to NOK 1,154.5 million. The Bank s lower limit for capital adequacy is 12 per cent. DEBT SECURITIES ISSUED Net issues of debt securities amounted to NOK 4,497.5 million at the end of the quarter, compared with NOK 5,190.2 million for the corresponding period in The decline in the debt securities issued is attributed to the high growth in deposits in the second half of Of the nominal value of the debt securities issued of NOK 4,500.0 million, NOK million will mature over the next 12 months. Gjensidige Bank ASA has a reserve of covered bonds totalling NOK million issued by Gjensidige Bank Boligkreditt AS. Of this reserve, NOK million is utilised in the swap arrangement with Norges Bank (the central bank of Norway). The swap arrangement has provided the Group with NOK million in liquid treasury bills. LIQUIDITY At the end of the quarter, the Gjensidige Bank Group had net liquid assets of NOK 1,699.7 million divided between NOK million in bank deposits and NOK 1,325.4 million in bonds, certificates and money market funds. NOK million of these assets were investments in covered bonds from Gjensidige Bank Boligkreditt AS (eliminated in the consolidated accounts) that were not utilised in the swap arrangement with Norges Bank. Some of these assets are listed on the Oslo Alternative Bond Market (ABM). The net liquid assets are sufficient to cover the debt payments that will fall due over the next 16 months. KEY RISK AND UNCERTAINTY FACTORS Financial risk The Bank s financial risk mainly comprises credit, liquidity and interest rate risk. Risk is reported monthly and is assessed in accordance with the principles, strategies and limits on risk adopted by the Board. Credit risk represents the risk of losses arising from customers and other counterparties failing to repay their debts when they are due. The Bank uses risk classification models to calculate the risk associated with its exposure to customers. The Bank considers its loan performance to be satisfactory, and monitors its portfolio closely. Liquidity risk is the risk that the Bank will be unable to meet all of its financial obligations when they are due, or be unable to fund its lending activities. Limits have been determined for the necessary access to liquid funds. In order to reduce the risk, liquidity forecasts are continuously updated. The Bank also holds an adequate liquidity buffer, designed to give it sufficient time to implement necessary measures in the event of an acute liquidity freeze. Interest rate risk is the risk that equity will fall in value as a result of unexpected changes in general interest rate levels. Such changes in the interest rate levels may lead to the market value of assets with fixed-interest periods falling. Alternatively, the market value of fixed-interest debt/liabilities may increase. The Bank s exposure to general interest rate levels shall be kept low in relation to its core capital. EVENTS AFTER THE BALANCE SHEET DATE No significant events have occurred after the end of the period. OUTLOOK The Bank is continuously working to ensure increased profitability and continued growth in volume. The restructuring programme that was implemented in the second quarter of 2011 will gradually reduce the Bank s cost base towards the end of The foundations are in place for continued growth. The Board strongly believes that the performance of Gjensidige Bank ASA will be satisfactory going forward. Førde, 10. August 2011 bjørn Walle Per Kumle ingun Ranneberg-Nilsen Chairman of the Board Marianne B. Einarsen britt Tjønneland Hans Olov Harén CEO 5

6 Profit & loss Account and balance sheet Gjensidige Bank Group PROFIT & LOSS ACCOUNT NOK thousand Note 2. q q Interest income etc. 216, , , , ,585 Interest costs etc. 108,533 88, , , ,568 Net interest income 107, , , , ,017 Commission income and income from bank services 5,066 10,098 9,672 19,957 39,466 Commission costs and costs of bank services 1,190 1,116 2,475 2,140 4,665 Income from other financial investments 3,002 (129) 4, (5,594) Other operating income 6, ,016 1,450 8,340 Net other operating income 12,892 9,726 22,196 19,282 37,547 Total income 120, , , , ,564 Wages, salaries and general administration expenses 62,525 48, , , ,267 Depreciation of fixed assets 6,638 4,351 12,957 8,435 18,243 Other operating expenses 12,680 12,537 26,348 28,635 52,637 Total operating expenses 81,843 65, , , ,146 Profit / (loss) before loan losses 38,841 47,659 78,875 75, ,417 Write-down on loans 4 20,748 37,319 46,309 60, ,359 Profit / (loss) before tax expense 18,093 10,340 32,566 15,247 33,059 Tax expense 5,066 2,895 9,119 4,269 8,468 PROFIT / (LOSS) FOR THE PERIOD 13,027 7,445 23,448 10,978 24,591 Earnings per share (NOK ) (basic and diluted) BALANcE sheet NOK thousand Note ASSETS Cash and claims from central banks 308, , ,777 Loans to and claims from credit institutions 2 65, ,898 59,237 Loans to and claims from customers 4 14,596,735 13,051,033 14,119,485 -Write-downs (151,371) (73,761) (117,148) Net loans to customers 14,445,364 12,977,272 14,002,337 Certificates, bonds and other interest-bearing 515, , ,058 Shares (and other securities with variable yield) 447,300 89, ,636 Intangible assets 66,135 45,750 62,826 Fixed assets 3,568 4,359 4,414 Other assets 3, ,984 6,406 Advance payments and accrued income 44,628 40,764 33,941 Total assets 15,900,591 14,350,606 15,763,631 LIABILITIES Liabilities to credit institutions 6 513, , ,108 Deposits and liabilities to customers 2 9,378,632 7,156,986 9,120,004 Liabilities opened for the issue of securities 3 4,497,519 5,190,211 4,763,068 Other liabilities 54,302 59,376 19,802 Accrued costs and advance payment of income 209, ,772 53,313 Provision for commitments and costs 4,417 3,605 4,417 Total liabilities 14,657,226 13,074,058 14,473,712 EQUITY Share capital 876, , ,000 Premium reserve 332, , ,192 Other paid-in equity 3, ,104 73,780 Other equity 31,394 (133,748) 7,946 Total equity 1,243,365 1,276,548 1,289,918 Total liabilities and equity 15,900,591 14,350,606 15,763,631 6

7 COMPONENTS OF OTHER COMPREHENSIVE INCOME Gjensidige Bank Group NOK thousand 2. q q Profit for the period 13,027 7,445 23,448 10,978 24,591 Other components of profit / loss Actuarial gains and loss on pensions (4) (1,437) Tax on other result components Total other profit / loss components (3) (1,035) TOTAL PROFIT / LOSS FOR THE PERIOD 13,027 7,445 23,448 10,975 23,556 STATEMENT OF CHANGES IN EQUITY Gjensidige Bank Group NOK thousand Share capital Premium reserve Fund Other paid-in CCAPITAL Total paid-in CCAPITAL Other equity The CCAPITAL Total equity The CCAPITAL Equity , ,192 93,218 1,301,410 (89,117) 1,212,293 Group contributions received (after tax) ,280 53,280 53,280 Profit for the period ,978 10,978 Other components of profit / loss Implementing pension liability Actuarial gains and loss on pensions (4) (4) Tax on other result components 1 1 Total other profit/loss components (3) (3) Total profit / loss for the period ,975 10,975 Equity as of , , ,498 1,354,690 (78,142) 1,276,548 Share-based payment transactions settled in equity Profit for the period ,581 12,581 To cover the uncovered losses (73,508) (73,508) 73,508 Equity as of , ,192 73,780 1,281,972 7,946 1,289,918 Equity , ,192 73,780 1,281,972 7,946 1,289,918 Group contribution paid (after tax) (70,001) (70,001) (70,001) Profit for the period ,448 23,448 Other components of profit / loss Total other profit/loss components Total profit / loss for the period ,448 23,448 Equity as of , ,192 3,779 1,211,971 31,394 1,243,365 No. shares at end of period 876,000 7

8 STATEMENT OF CASH FLOW Gjensidige Bank Group NOK thousand Operating activities Net payment of loans to customers (477,250) (1,475,428) (2,543,880) Net payment of deposits by customers 258, ,544 2,569,562 Payment of interest from customers 415, , ,803 Payment of interest to customers (1,602) (547) (208,077) Net payment of interest from credit institutions etc. 2,231 (21,112) 6,631 Taxes paid (2,896) (161) Net other commission income 17,213 16,558 35,677 Payment to operations (144,092) (135,612) (283,904) Net paid/received upon purchase and sale of financial instruments and interest-bearing securities (156,910) 20,583 (136,741) Net cash flow from operating activities (89,067) (632,051) 170,911 Investment activities Net purchase of intangible assets and fixed assets (15,420) (10,047) (36,271) Net cash flow from investment activities (15,420) (10,047) (36,271) Financing activities Net paid(-)/received when taking out loans from credit institutions (265,550) 823, ,343 Net payment of interest on financing activities (76,175) (57,591) (146,098) Net paid(-)/received for other short-term positions 37,544 (94,229) (15,799) Net intragroup contribution/dividend received (74,070) 74,000 74,000 Net cash flow from financing activities (378,250) 745, ,446 Total cash flow (482,737) 103, ,086 Cash flow for the period Liquid assets at start of period 857, , ,928 Liquid assets at end of period 374, , ,014 Net payment made(-)/received of cash (482,737) 103, ,086 Specification of liquid assets Claims from central banks 308, , ,777 Deposits with financial institutions 65, ,898 59,237 Liquid assets in statement of cash flow 374, , ,014 The analysis of cash flow displays payments made and received of cash and cash equivalents throughout the year. The analysis has been adjusted for items which do not initiate cash flow, such as provisions, depreciation and write-down of loans and guarantees. Cash flow is classified as operating activities, investment activities or financing activities. The liquid assets are defined as cash and claims from central banks and loans to and claims from credit institutions. 8

9 Notes Gjensidige Bank Group 1 Accounting policies The Gjensidige Bank Group comprises Gjensidige Bank ASA and its subsidiary Gjensidige Bank Boligkreditt AS. The Group prepares its accounts in accordance with international financial reporting standards (IFRS ) and the interim accounts for the first half year have been prepared in accordance with IAS 34 Interim reports. The same accounting principles and calculation methods have been used as last annual report. For more detailed information on accounting principles, we refer to the annual report for 2010 for Gjensidige Bank ASA. Based on the assessments that have been made so far, the IFRS s and interpretation statements that have been issued up until 10 August 2011, the use of which is not mandatory as at 30 June 2011; i.e. IFRS 9, IRFS 10, IFRS 12, IFRS 13 and amendments to IFRS 7, IAS 12, IAS 1 and IAS 19 are assumed to not have a significant effect on reported figures. Preparation of the interim accounts involves the use of assessments, estimates and assumptions that affect the use of accounting policies and recognised amounts for assets and liabilities, revenues and expenses. Actual results may deviate from these estimates. The most material assess ments connected with the use of the company s accounting policies and the key sources of uncertainty in the estimates are the same in preparing the interim accounts as in the annual accounts for The Gjensidige Bank Group was established in the third quarter of 2009 with the establishment of Gjensidige Bank Boligkreditt AS. Share capital totals NOK 143 million and Gjensidige Bank ASA owns all shares. The company was established with the objective of taking over parts of the loan portfolio in Gjensidige Bank ASA with the aim of issuing covered bonds. All amounts are shown in NOK thousand unless otherwise indicated. Due to rounding differences, figures and percentages may not exactly add up to totals indicated. 2 Segment information NOK thousand Deposit from customers divided per sector and industry Employees etc. 9,378,632 9,290,546 9,120,004 7,897,256 7,156,986 6,702,886 6,550,442 6,364,371 6,455,654 Total deposits 9,378,632 9,290,546 9,120,004 7,897,256 7,156,986 6,702,886 6,550,442 6,364,371 6,455,654 Loans to customers divided per sector and industry Employees etc. 14,596,735 14,247,902 14,119,485 13,574,812 13,051,033 12,221,875 11,575,604 8,281,289 7,776,284 Gross loans 14,596,735 14,247,902 14,119,485 13,574,812 13,051,033 12,221,875 11,575,604 8,281,289 7,776,284 3 LIABILITIES ON THE ISSUE OF SECURITIES NOK thousand Nominal value Book value Bonded debt 4,300,000 4,050,000 4,750,000 4,294,899 4,046,718 4,744,173 - Own non-amortised certificates/bonds -100, , ,000-99, , ,903 Debt securities at amortised cost 4,200,000 3,839,000 4,465,000 4,194,969 3,835,861 4,459,270 Certificate debt and other short-term borrowings 300,000 1,350, , ,550 1,354, ,798 Bonded debt - Own non-amortised certificates/bonds Securities issued determined at fair value 300,000 1,350, , ,550 1,354, ,798 Total debt securities 4,500,000 5,189,000 4,765,000 4,497,519 5,190,211 4,763,068 Certificate and bond debt divided on due date (nominal value): ,589, , ,000 1,165, ,750,000 1,750,000 1,750, , , , ,300, , , , , ,000 75,000 Total debt securities (nominal value) 4,500,000 5,189,000 4,765,000 New issues in ,000 Repayments in ,215,000 9

10 4 LOSS ON LOANS AND GUARANTEES NOK thousand Change for the period in individual write-downs (131) Change for the period in Group impairment 34,144 58, ,978 Confirmed loss for the period covered by previous write-downs Confirmed loss for the period without previous indirect write-downs 14,901 1,717 7,599 Opening for the period with confirmed losses from previous periods (3,546) (7) (148) = Loan losses for the period 46,309 60, ,359 Provision for loss on loans and guarantees Individual write-down at start of period Increase in ind. write-down of position where write-down has been made previously Reversal of ind. write-down from previous periods Write-down of position where ind. write-down has not been carried out previously Confirmed loss for the period where previous ind. write-down has been made Individual write-down at end of period Confirmed loss for the period 15,632 1,791 7,660 Group write-down at the start of the period 116,463 14,485 14,485 + Change for the period in Group impairment 34,144 58, ,978 Group write-down at the end of the period 150,607 72, ,463 Total write-down at end of period 151,371 73, ,148 Defaulted positions and positions exposed to loss Defaulted loans Gross default over 30 days 294, , ,913 -individual write-down Net default loans 293, , ,228 Loss severity 0.3 % 0.4 % 0.3 % Other positions exposed to loss Positions exposed to loss (not defaulted) Individual write-downs (4) 28 Net other positions exposed to loss 455 Loss severity 0 % 0 % 5.8 % 5 CAPITAL ADEQUACY NOK thousand Subordinated loan capital Share capital and premium reserve fund 1,208,192 1,208,192 1,208,192 Other equity 11,725 57,378 80,936 Equity 1,219,917 1,265,570 1,289,128 Interim results included in core capital Deduction Goodwill and other intangible assets (64,673) (45,750) (62,113) Deferred tax asset (713) (714) Group contributions Core capital 1,154,531 1,219,820 1,226,301 Net equity and sub-ordinated loan capital 1,154,531 1,219,820 1,226,301 10

11 5 CAPITAL ADEQUACY (cont.) NOK thousand Minimum requirement subordinated capital Credit risk: Of which: Institutions 1,586 1,705 1,078 Enterprises 1,258 3,872 1,557 Mass market positions 222, , ,417 Positions secured by mortgage 345, , ,391 Overdue positions 37,722 3,076 25,169 Covered bonds Shares in securities' fund 7,157 7,124 3,866 Other positions , Total minimum requirement credit risk 616, , ,924 Operational risk 28,754 7,404 28,754 Deduction: Group write-down (11,909) (5,839) (9,317) Minimum requirement equity and subordinated loan capital 633, , ,361 Surplus subordinated capital 521, , ,940 Basis of calculation balance sheet items not included in trading portfolio 6,755,005 6,796,811 6,442,452 Basis of calculation off balance sheet items not included in trading portfolio 952,143 1,179, ,484 Capital adequacy Capital adequacy ratio 14.6 % 15.3 % 16.1 % Core capital adequacy 14.6 % 15.3 % 16.1 % 6 CLOSELY RELATED PARTIES Gjensidige Forsikring ASA, Gjensidige Bank ASA and Gjensidige Bank Boligkreditt AS are considered to be closely related parties. All transactions and agreements with these parties are carried out in accordance with arm s length principles. Significant transactions with closely related parties as of are as follows: Gjensidige Bank ASA has purchased services from Gjensidige Forsikring ASA of NOK 14.6 million and the balances is NOK 7.5 million. At the time Gjensidige Bank Boligkreditt AS was established, an agreement was signed with Gjensidige Bank ASA regarding the provision of services relating to loan servicing and the running of the company. Gjensidige Bank Boligkreditt AS was granted a long-term credit facility of up to NOK 250 million of which NOK million has been used. At times Gjensidige Bank Boligkreditt AS has been granted seller s credit. Revenue and interest on these agreements amounts to NOK 6.4 million. These items have been eliminated in the consolidated financial statements. Gjensidige Bank ASA has invested NOK million in covered bonds issued by Gjensidige Bank Boligkreditt AS, of which NOK million is used in Norges Bank s swap arrangement. Interest on bonds amounted to NOK 10.4 million and is eliminated on the consolidated financial statements. Gjensidige Bank Boligkreditt AS has deposits with Gjensidige Bank ASA of NOK million and interest totals NOK 1.2 million. Both items have been eliminated on the consolidated financial statements. The General Assembly of Gjensidige Bank Boligkreditt AS decided a capital increase of NOK 90 million, which was settled on 4 July The amount is recorded as liabilities in the Gjensidige Bank ASA and is eliminated in the consolidated financial statements. 7 CONTINGENT LIABILITIES AND SECURITY NOK thousand Loan commitment 1,487,725 2,240,563 1,549,478 Unutilised overdraft facility 1,760,021 1,694,647 1,693,799 Total contingent liabilities 3,247,746 3,935,210 3,243,277 Securities offered as security for loans/ overdraft facility in Norges Bank 745, , ,537 Securities provided as security for the swap arrangement of treasury bills for covered bonds 586, , ,559 Guarantee declaration Bankenes Sikringsfond 3,426 3,426 3,426 Total securities provided 1,335,635 1,097,523 1,346,522 The accounts for the period have not been audited. 11

12 DECLARATION DECLARATION FROM THE BOARD OF DIRECTORS AND CEO We declare to the best of our knowledge that the financial statements for the period 1 January 30 June 2011 is prepared in accordance with applicable accounting standards, and that the information in the financial statements give a true picture of the assets, liabilities, financial position and results of the group. Furthermore, the interim report provides a fair view of important events in the accounting period and their impact on the financial statements, the most important risk- and safety factors the company are facing in the next accounting period and the related parties significant transactions. Førde, 10. August 2011 The Board of Gjensidige Bank ASA bjørn Walle Per Kumle ingun Ranneberg-Nilsen Chairman of the Board Marianne B. Einarsen britt Tjønneland Hans Olov Harén CEO 12

13 Quarterly earnings performance Gjensidige Bank Group NOK thousand 2. q q q q q q q q q Interest income etc. 216, , , , , ,177 90,945 64,823 76,706 Interest costs etc. 108, , , ,932 88,718 79,602 65,859 54,808 65,703 Net interest income 107, , , , ,757 96,575 25,086 10,015 11,003 Commission income and income from bank services 5,066 4,606 8,532 10,976 10,098 9,859 4,519 3,262 2,844 Commission costs and costs of bank services 1,190 1,285 1,275 1,249 1,116 1,024 1, Income from other financial investments 3,002 1,982 (2,678) (2,931) (129) 144 (648) 3,960 2,256 Other operating income 6,015 4,001 6, (22) 37 Total income 120, , , , , ,131 27,783 16,416 15,195 Salary and general administration costs 62,525 55,218 65,638 58,650 48,936 58,042 28,585 22,545 15,995 Depreciation of fixed assets 6,638 6,320 5,212 4,596 4,351 4,084 3,926 3,424 3,210 Other operating costs 12,680 13,668 12,525 11,478 12,537 16,097 17,225 9,000 9,225 Total operating costs 81,843 75,206 83,375 74,724 65,824 78,223 49,736 34,969 28,430 Result before loss 38,841 40,034 31,357 35,495 47,659 27,908 (21,953) (18,553) (13,235) Write-down on loans (20,748) (25,561) (27,644) (21,396) (37,319) (23,000) 595 (2,592) (151) Profit before tax for the period 18,093 14,473 3,713 14,098 10,340 4,908 (21,358) (21,145) (13,386) The Gjensidige Bank Group was established in the third quarter of 2009 and figures for this period and the subsequent quarter are consolidated figures. KEY FIGURES Gjensidige Bank Group NOK thousand Net interest as a percentage of average administration capital 1) % Loss costs as a percentage of gross loans % Non-performing loans as a percentage of gross loans % Return on equity - annualised 2) % Deposit-to-loan ratio at the end of the period 3) % Capital adequacy 4) % Average assets under management NOK thousand 15,802,307 13,345,283 14,143,625 Average number of FTEs Number Registered customers at end of period Number 94,858 80,885 89,594 Registered customers who are also insurance customers at end of period Number 46,823 39,850 43,764 1) Net interest as per cent, annualised net interest and credit commission income/average total assets 2) Return on equity, annualised profit before tax / average equity during the period 3) Deposit-to-loan ratio deposits as a percentage of gross lending 4) Capital adequacy equity and subordinated loan capital / basis of calculation for credit risk, market risk and operational risk 13

14 PROFIT & LOSS ACCOUNT Gjensidige Bank ASA Profit & loss account NOK thousand Interest income etc. 406, , ,563 Interest costs etc. 200, , ,997 Net interest income 206, , ,566 Commission income and income from bank services 9,473 19,947 39,405 Commission costs and costs of bank services 2,475 2,140 4,665 Income from other financial investments 4, (5,594) Other operating income 10,385 1,724 8,992 Net other operating income 22,366 19,546 38,139 Total income 228, , ,705 Wages, salaries and general administration expenses 117, , ,418 Depreciation of fixed assets 12,637 8,114 17,601 Other operating expenses 25,339 27,594 50,691 Total operating expenses 155, , ,710 Profit / (loss) before loan losses 73,015 71, ,995 Write-down on loans 46,121 59, ,037 Profit / (loss) before tax expense 26,893 12,105 22,958 Tax expense 7,530 3,389 5,639 PROFIT / (LOSS) FOR THE PERIOD 19,363 8,716 17,319 Earnings per share (NOK ) (basic and diluted) BALANcE sheet NOK thousand Assets Cash and claims from central banks 308, , ,777 Loans to and claims from credit institutions 233,688 1,186, ,836 Loans to and claims from customers 11,682,466 10,383,949 11,764,477 Write-downs (149,631) (72,008) (115,596) Net loans to customers 11,532,835 10,311,941 11,648,882 Certificates, bonds and other interest-bearing 1,464,694 1,755,928 1,303,958 Shares (and other securities with variable yield) 447,300 89, ,636 Ownership interest in group companies 220, , ,030 Intangible assets 65,422 44,360 61,792 Fixed assets 3,568 4,359 4,414 Other assets 3, ,984 6,406 Advance payments and accrued income 47,621 42,320 38,985 Total assets 14,327,381 14,095,452 14,749,716 LIABILITIES Liabilities to credit institutions 614, , ,947 Deposits and liabilities to customers 9,378,632 7,156,986 9,120,004 Liabilities opened for the issue of securities 2,750,629 4,890,211 3,716,080 Other liabilities 52,714 58,335 16,907 Accrued costs and advance payment of income 295, ,629 51,378 Provision for commitments and costs 4,417 3,503 4,417 Total liabilities 13,096,037 12,821,831 13,467,733 EQUITY Share capital 876, , ,000 Premium reserve 332, , ,192 Other paid-in equity 3, ,104 73,790 Other equity 19,363 (136,675) Total equity 1,231,344 1,273,621 1,281,982 Total liabilities and equity 14,327,381 14,095,452 14,749,716 14

15 gjensidige.com Gjensidige Bank ASA P.O.Box 313 NO 6802 Førde NORWAY Phone: 03100