interim report 1st kvartal 2008 BN Boligkreditt AS

interim report 1st kvartal 2008 BN Boligkreditt AS

innhold Styrets beretning...3 Resultatregnskap...4 Balanse...4 Endring i egenkapital...5 Kontantstrømanalyse...5 Noter...6 [ 2 ]

BN Boligkreditt Accounting policies BN Boligkreditt AS presents its consolidated accounts in compliance with International Financial Reporting Standards (IFRS). No changes were made to the accounting policies in the first quarter of 2008. Operations BN Boligkreditt s owner, Bolig- og Næringsbanken ASA, merged with Glitnir Bank ASA in March 2008. Both banks were wholly owned by the Icelandic banking group, Glitnir banki hf. Bolig- og Næringsbanken ASA was the acquiring bank in the merger, and the name of the new bank is Glitnir Bank ASA. BN Boligkreditt has been retained as a separate subsidiary without any changes or amendments to the Company s operations or Articles of Associations. Glitnir Bank ASA is owned by Glitnir banki hf. Glitnir Bank ASA is a Norwegian bank subject to Norwegian regulations and supervision, and it is a member of the Banks Guarantee Fund on a par with other Norwegian banks. BN Boligkreditt AS is licensed by the Financial Supervisory Authority of Norway to operate as a credit institution. BN Boligkreditt AS is Glitnir Bank s company for issuing bonds with pre-emptive rights, and the plan is to finance home loans within the Group chiefly through BN Boligkreditt. In January 2008, the Company acquired a portfolio of home loans totalling NOK 9.2 billion. The acquisition was financed by the Parent Bank by means of a capital increase, subordinated loans and ordinary external financing. BN Boligkreditt plans to finance a large proportion of these outstanding loans over the longer term by issuing bonds with pre-emptive rights. The financial markets have suffered turbulence since the summer of 2007, with particular attention focusing on credit risk. The price differential between bonds with a higher and lower credit quality has increased as a result of the turmoil. The Company will keep a close eye on developments in the market with a view to determining the most favourable time for raising loans and implementing various borrowing strategies. The Company aims to issue bonds during the second quarter of 2008. Profit performance and balance sheet development for the 1st Quarter BN Boligkreditt posted a pre-tax profit of NOK 1 million as of 31 March 2008. The relatively low profit is owing to the fact that interest rates on home loans must be adjusted with six weeks notice to borrowers, and during periods of rising interest rates profits will be weakened. Net interest income for the quarter totalled NOK 10 million, while operating expenses amounted to NOK 9 million. At 31 March 2008, the loan portfolio totalled NOK 8.5 billion. The decrease compared with 2007 is owing to ordinary loan instalments and extraordinary loan redemptions during the period. No further loans were acquired during the period. Solvency BN Boligkreditt s capital base, including 50 per cent of operating profit for the period after impairment losses on loans, amounted to NOK 352 million at the end of the period, giving a capital adequacy ratio of 11.1 per cent. Tier 1 capital was NOK 276 million, giving a tier 1 capital ratio of 8.7 per cent at the end of March 2008. Risk-weighted assets were NOK 3 156 million at the same date. The Board of Directors views the ratio between BN Boligkreditt s solvency and relevant risks as satisfactory. Outlook BN Boligkreditt has a good foundation for financing the Company s activities, although continued turmoil in the credit markets will impact negatively on financing possibilities. The Company has a low-risk loan portfolio and an operational form well suited to its business. A more normalised correlation between lending and borrowing conditions, and the issuance of bonds with pre-emptive rights, is expected to increase earnings as 2008 progresses. Changes in the value of financial instruments may have more of an impact on profits in 2008 than normally, owing to major fluctuations in interest rate differences between different types of instrument. [ 3 ]

Income Statement nok million Note 1q 2008 4q 2007 1q 2007 full-year 2007 Interest and similar income 121 2 0 2 Interest expense and similar charges 111 0 0 0 Net income from interest and credit commissions 10 2 0 2 Change in value of fin instr carried at fair value Other operating income Total other operating income 0 0 0 0 Salaries and general administrative expenses 9 3 0 3 Other operating expenses 2 0 2 Other gains and losses Total other operating expenses 9 5 0 5 Operating profit/loss before impairment losses 1-3 0-3 Impairment losses on loans and advances Operating profit/loss after impairment losses 1-3 0-3 Tax charge 0-1 0-1 Net profit/loss for the period 1-2 0-2 Earnings per share (whole NOK) 2.22 (4.44) - (4.44) Balance Sheet nok million Note 31.03.08 31.03.07 31.12.07 Loans and advances 8 525 0 0 Prepayments and accrued income 4 0 3 Cash in hand and receivables from credit institutions 858 45 47 Total assets 9 387 45 50 Share capital 2 101 45 45 Retained earnings 175 0 0 Total equity 276 45 45 Subordinated loan capital 76 0 0 Liabilities to credit institutions 9 032 0 0 Accrued expenses and deferred income 2 0 2 Other short-term liabilities 1 0 3 Total liabilities 9 111 0 5 Total equity and liabilities 9 387 45 50 The Board of Directors Trondheim, 6 May 2008 [ 4 ]

Change in Equity Share Share premium Other contrib. Other Total nok million capital reserve equity reserves equity Balance Sheet at 1 January 2007 45 45 Result for the period 0 Balance Sheet at 31 March 200745 0 0 0 45 Result for the period -2-2 Group contribution received 2 2 - of which, used to cover loss -2 2 0 Balance Sheet at 31 December 200745 0 0 0 45 Capital increase 56 174 230 Result for the period 1 1 Balance Sheet at 31 March 2008101 174 0 1 276 The Board of Directors Trondheim, 6 May 2008 Cash Flow Statement nok million 1q 2008 1q 2007 full-year 2007 Cash flows from operating activities Interest/commission received and fees received from customers 71 0 0 Interest received on other investments 6 0 2 Receipts/payments (-) on loans and advances to customers -8 481 0 0 Receipts/payments on customer deposits and debt -18 0 4 Receipts/payments (-) on liabilities to credit institutions 8 938 0-5 Payments to suppliers for goods and services -10 0 0 Payments to employees, pensions and social security expenses 0 0 0 Tax paid 0 0 0 Net cash flow from operating activities 506 0 1 Cash flows from investing activities Cash flows from financing activities Subordinated loan capital receipts 75 0 0 Change in capital (share issues, etc.) 230 0 0 Net cash flow from financing activities 305 0 0 Net cash flow for the period 811 0 1 Cash and receivables from central banks at 1 January 47 46 46 Cash and receivables from central banks at 31 December 858 46 47 [ 5 ]

Notes 1. Accounting policies The interim financial statements for the first quarter of 2008 have been prepared in compliance with IFRS, including IAS 34 on Interim Financial Reporting. A description of the accounting policies on which the Company bases its presentation of the financial statements appears in the Annual Report for 2007. 2. Capital increase The Company increased its share capital by NOK 56 million in the first quarter, with an increase in the face value of the share from NOK 100 to NOK 225. In addition, the share premium reserve was increased by NOK 174 million. [ 6 ]

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[ 8 ] Styrets beretning / BNbank årsberetning 2007 bn boligkredit as Onr. 939 061 045