Quarterly Report as of 30 June 2001 SpareBank 1 SR-Bank focus on investment pays off Group profit of NOK 244 million before tax Substantial growth in net new sales of Odin funds 44,000 customers save in Odin funds Good growth in deposits, twelve-month growth rate of 13 % High contribution and increased market shares from EiendomsMegler 1 Rogaland AS High cost-effectiveness, cost percentage of 1.70 Cost reduction and organizational development program implemented Reduced growth in lending, twelve-month growth rate of 16 % Low losses and stable default rate License to carry out active investment management in subsidiary SR-Forvaltning ASA Good growth in other operating income and continued high cost-effectiveness The SpareBank 1 SR-Bank group achieved a pre-tax profit of NOK 244 million after the first six months. This is NOK 129 million less than in 2000, which was influenced by high capital gains on sales of shares in Fellesdata ASA (NOK 177 million) and cost allocations (NOK 35 million). The underlying bank operations show an improvement of NOK 35 million as compared with the first six months of 2000. The group's regular operations exhibit good growth in other operating income, particularly in the areas of insurance, securities and real estate business. Operating costs are rising, in part due to the integration of former Vår/Varde employees, but the cost percentage remains low and stable at 1.70 % of the average total assets. Losses are also low and default is stable. The income/cost ratio is 1.74:1 so far this year, and the return on equity capital after tax is 13.3 %. The group's growth in lending has softened, with a growth of 7 % so far this year and 16 % for the last 12 months. Deposit trends are good and customer deposits have increased by 13 % over the past 12 months. Net interest income and interest margin Net interest income at the end of the second quarter amounted to NOK 454 million, up from NOK 442 million in the same period last year. Compared with the average total assets, the interest income constituted 2.03 %, compared with 2.33 % for the first half of 2000. The reduction is mainly due to changed framework conditions related to hedge fund fees as well as technical accounting factors related to posting investments in interest funds and zero-coupon bonds. The lending margin has improved somewhat compared with the first half of 2000, while the deposit margin is reduced.
Other operating income After the 2nd quarter, the group has achieved operating income totaling NOK 232 million, which is NOK 74 million higher than for the same period last year. Net commission income from the sale of money transfer services shows a 12-month growth of approximately 9 % to NOK 61 million. Commission income from securities and insurance increased by 63 % and 219% respectively, totaling NOK 28 million and NOK 22 million. The increase in securities income reflects the bank's increased focus on investment. The acquisition of Vår Bank og Forsikring provides high growth in insurance income. The total capital gains of NOK 56 million are divided among NOK 15 million from foreign currency, NOK 1 million on certificates and bonds and NOK 6 million on shares, primary capital certificates and securities. In addition comes the yield of NOK 34 million from investments in Odin money market funds and zero-coupon bonds. The yield on shares and securities is about 6.5 percentage points higher than the stock index on the Oslo Stock Exchange so far this year. The deficit in Sparebank 1 Gruppen AS gives a negative owner interest share of NOK 17 million. This is mainly due to weak development in the securities market as well as substantial valueadded and goodwill write-offs in connection with the acquisition of Vår Bank og Forsikring. Other operating income increased by 47 %, or NOK 17 million, which is mainly due to significant growth in the subsidiary EiendomsMegler 1 Rogaland AS. Operating costs Group operating costs for the first half of 2001 amounted to NOK 381 million. In relation to the total assets, this constituted 1.70 % compared with 1.83 % in the first six months of 2000 (1.65 % excl. reorganization costs). In relation to operating income (excl. capital gains) the costs constitute 57.3 %. In nominal terms, total costs have climbed by NOK 68 million compared with the same period last year (excl. reorganization costs). Of this amount, personnel costs account for NOK 36 million. The average number of man-years rose from 687 in the first half of 2000 to 789 in the first half of 2001. The increase is largely due to the integration of former Vår/Varde employees as from 1 January 2001, as well as expansion in EiendomsMegler 1 Rogaland AS. The group has implemented reorganization measures which will lead to the departure of 35 persons from the group during the course of 2001 and 2002. A cost reduction and organizational development program has been implemented to ensure continued high cost-effectiveness. Deposits, investments and lending Customer deposits from the private market are rising, with a growth rate of 12% compared with 14 % last year. Deposits from the business market are affected by changes in significant individual commitments. The annual growth rate from the business market is 14 %, compared with 17 % at the beginning of the year. The total growth in deposits on a 12-month basis shows a weak reduction from 15% at the beginning of the year to 13 % at the end of June 2001. The bank's sales of ODIN mutual and interest funds show a very good trend. Net new sales of Odin funds increased from NOK 107 million in the first six months of 2000 to NOK 378 million in the first six months of 2001. SpareBank 1 SR-Bank's share of the SpareBank 1 banks' total assets in Odin mutual funds has increased from approximately 29 % to about 32 % in the last 12 months. In addition come the sale of guaranteed products which yielded a volume of NOK 248
million in the first half year. Net new subscriptions of Odin funds so far this year and guaranteed products amount to an annual growth in customer deposits of 4.6 %. So far this year, lending has increased by 7 % to NOK 42.0 billion, while the 12-month growth is 16 %. The growth is in line with the adopted plans, reduced from 20 % at the beginning of the year. The growth in lending is divided between 18 % in the private market and 14 % in the business market, and the volume distribution between the private and business markets is 65/35%. Default Gross default over 90 days amounted to NOK 307 million at the end of June, NOK 13 million lower than at the end of last year. Gross and net default at the end of the quarter constituted 0.7 % and 0.5 % of gross lending respectively. The specified loss allocation on the default portfolio is NOK 101 million, which is equivalent to an allocation rate of 33 %. In addition, the specified loss allocation on commitments not in default is NOK 158 million, which is equivalent to an allocation rate of 38 %. So far this year, the group has had net losses of NOK 50 million. Unspecified loss allocations have increased by NOK 15 million in the second quarter and now total NOK 323 million. This is equivalent to 0.8 % of the lending portfolio. Capital adequacy ratio At the end of June, the capital adequacy ratio for the group was 13.70 %, excluding the profit for the year and 14.63 % for the parent bank. The core capital adequacy for the group and the parent bank were 7.97 % and 7.74 % respectively. The amended capital adequacy rules that entered into force on 1 April 2000, improved the capital adequacy ratio for the parent bank as of 30 June 2001 by 0.62 percentage points. Subsidiaries EiendomsMegler 1 Rogaland AS has experienced very high turnover so far this year and revenues from the real estate business have increased by 51 % compared with last year. This is a result both of expansion and generally good market activity. Westbroker Finans AS is delivering good results, with a stable interest margin compared with last year. The bank's subsidiary, SR-Forvaltning ASA, has recently received a license to carry out active investment management. As of 30 June 2001, the company manages approximately NOK 1.1 billion. The formation of the subsidiary will be reflected in the accounts in the next quarterly report. Market development SpareBank 1 SR-Bank's market share in the private market in Rogaland is increasing steadily and has now reached 44 %. This is an increase of about 4.5 percentage points over the past five years. The acquisition of Vår Bank yielded an increase of nearly one full percentage point. The bank's goal in the Agder counties is controlled growth with primary focus on the private market. We have new bank offices in Kristiansand and Mandal, and we plan to set up offices in Arendal and Lyngdal.
SpareBank 1 SR-Bank is also expanding in Rogaland, recently opening a new office in Klepp. Another new branch will be opened in Sauda this autumn. A new office concept will be implemented for the new offices, as well as for the existing offices to some extent. The concept reinforces the office's public profile and role as an active marketplace. The personal and advisory bank is emphasized, and the new concept also provides improved synergy with EiendomsMegler 1. The growth in the number of Internet bank customers continues to be significant, with an increase over the past 12 months of approximately 54 % (to just over 46,000 customers). The growth so far this year is at about 21 %. Approximately 23% of our full-service customers now have signed on to the Internet bank product, compared with 16% one year ago. The bank has recently launched a new and improved version of the Internet bank. The activity level within the business and commercial market is good, with rising activity in oilrelated business. This provides positive ripple effects for the region. The bank's commercial portfolio shows few loses and stable default. The bank's primary capital certificates The bank's primary capital certificates were quoted at NOK 233 at the end of June. The number of primary capital certificate owners declined by 80 in the second quarter to 6348. At the end of the quarter, the percentage held by foreigners was 11.0 %, while Rogaland-based owners accounted for 46.9 %. The 20 largest owners accounted for 32.5 % of the primary capital certificates. 1. Swedbank Markets 741 950 9.9 % 2. National Insurance Fund 366 600 4.9 % 3. Tveteraas Finans AS 191 351 2.6 % 4. Gjensidige NOR Sparebank 124 450 1.7 % 5. SpareBank 1 Midt-Norge 104 674 1.4 % 6. Arne B. Corneliussen Invest 80 000 1.1 % 7. Clipper Shipping AS 80 000 1.1 % 8. Stiftelsen UNI 79 370 1.1 % 9. Frank Mohn AS 79 250 1.1 % 10. Pareto AS 71 800 1.0 % 11. Otto B. Morcken 65 000 0.9 % 12. Solvang Shipping AS 60 000 0.8 % 13. Audley AS 55 000 0.7 % 14. Ringerikes Sparebank 50 700 0.7 % 15. Westco AS 50 400 0.7 % 16. Brown Brothers Harriman 50 000 0.7 % 17. Helland AS 50 000 0.7 % 18. Erik Steen 45 100 0.6 % 19. Sentralinvest AS 44 500 0.6 % 20. Verdipapirfondet Avanse Finans 43 900 0.6 % Total - 20 largest 2 434 045 32.5 %
Outlook for the future The Board expects satisfactory profit performance for the remainder of the year. Stavanger, 9 August 2001 The Board of Sparebanken Rogaland
Highlights SpareBank 1 SR-Bank focus on investment pays off Group profit of NOK 244 million before tax Substantial growth in net new sales of Odin funds 44,000 customers save in Odin funds Good growth in deposits, twelve-month growth rate of 13 % High contribution from EiendomsMegler 1 Rogaland AS High cost-effectiveness, cost percentage of 1.70 License to carry out active investment management in subsidiary SR-Forvaltning ASA Highlights 30.06. 30.06. 30.06. 30.06. Year-end 2001 2001 2000 2000 2000 2000 MAIN FIGURES NOK mill % NOK mill % NOK mill % Net interest income 454 2,03 442 2,33 934 2,33 Net other operating income 232 1,05 158 0,83 332 0,83 Total operating income 686 3,07 600 3,16 1 266 3,16 Reorganization 0 0,00 35 0,18 47 0,12 Operating costs 381 1,70 313 1,65 658 1,64 Total operating costs 381 1,70 348 1,83 705 1,76 Result before losses and write-downs 305 1,36 252 1,33 561 1,40 Losses and write-downs 61 0,27-121 -0,63-72 -0,18 Result of ordinary activities 244 1,09 373 1,96 633 1,58 Taxes 69 0,31 98 0,52 170 0,42 Profit 175 0,78 275 1,44 463 1,16 Key figures 30.06. 2001 30.06. 2000 Year-end 2000 Average total assets 44 747 38 041 40 010 Total assets 46 132 39 459 43 624 Net loans to customers 41 457 35 616 38 789 Deposits from customers 23 482 20 805 22 120 Growth in loans 16 % 19 % 20 % Growth in deposits 13 % 13 % 15 % Capital adequacy ratio 13,70 10,94 11,65 Core capital ratio 7,97 7,79 8,15 Net equity and subordinated loan capital 4 126 3 029 3 444 Return on equity * 13,3 23,4 19,5 Income per cost krone ** 1,74 1,68 1,72 Number of man-years 790 687 711 Number of offices 52 54 50 Market price at the close of the quarter 233 249 247 Profit per primary capital certificate *** 14,7 24,0 40,4 * Profit as a percentage og average equity ** Profit income (excluding net exchange and capital gain/loss that are not related to money market fund and zero interest coupon), divided by total operating costs. *** Profit for the year multiplied by the primary capital certificate percentage and divided by the number of primary capital sertifikates. KHT/09.08.01 Kvartal22001A.xls
Main Figures from the Profit and Loss Account and balance sheet SpareBank 1 SR-Bank PROFIT AND LOSS ACCOUNT Year-end 30.06. 30.06. 30.06. 30.06. Year-end 2000 2000 2001 (Amount in NOK million) 2001 2000 2000 2 813 1 264 1 664 Interest income 1 743 1 346 2 977 1 935 850 1 240 Interest costs 1 289 904 2 043 878 414 424 Net interest income 454 442 934 24 15 14 Dividends 14 15 24 15 23 2 Income from ownership interests -17 5-10 260 119 154 Commission income 164 121 264-71 -34-37 Commission costs -37-36 -74 52 17 56 Net exchange and capital gains 56 17 52 8 3 3 Other operating income 52 36 76 288 143 192 Net other operating income 232 158 332 1 166 557 616 Total operating income 686 600 1 266 471 224 253 Wages and general administration costs 298 257 538 47 35 0 Reorganization 0 35 47 106 51 65 Other operating costs 83 56 120 624 310 318 Total operating costs 381 348 705 542 247 298 Profit before losses and write-downs 305 252 561-207 -164 11 Loss/gain finansiel fixed assets 11-166 -209 125 45 50 Loss on loans and guarantees 50 45 137 624 366 237 Result og ordinary activities 244 373 633 161 92 62 Taxes 69 98 170 463 275 175 Profit 175 275 463 40,4 24,0 14,7 Profit per primary capital certificate 14,7 24,0 40,4 SpareBank 1 SR-Bank BALANSE 31.12. 30.06. 30.06. 30.06. 30.06. 31.12. 2000 2000 2001 (Amount in NOK million) 2001 2000 2000 Assets 613 193 274 Cash and claims on central banks 274 193 613 1 154 1 033 1 157 Claims on credit institutions 209 386 186 36 851 33 560 39 614 Gross loans to customers 42 039 36 126 39 383-270 -251-253 -Specified loss provisions -259-257 -286-296 -242-311 - Unspecified loss provisions -323-253 -308 36 285 33 067 39 050 Net loans to customers 41 457 35 616 38 789 12 6 12 Acquired assets 16 8 21 3 286 2 840 3 385 Securities 3 163 2 620 3 083 393 354 395 Fixed assets 431 367 426 463 252 465 Other assets 582 269 506 42 206 37 745 44 738 Total assets 46 132 39 459 43 624 Liabilities and equity 5 183 5 289 5 478 Debt to credit institutions 5 473 5 490 5 177 21 022 19 775 22 439 Deposits from customers 23 482 20 805 22 120 11 124 8 021 10 702 Debt established on issue of securities 10 702 8 229 11 142 882 1 039 1 260 Other debt 1 544 1 242 1 118 1 456 1 131 2 145 Subordinated loan capital 2 217 1 203 1 528 2 539 2 215 2 539 Equity 2 539 2 215 2 539 275 175 Profit 175 275 42 206 37 745 44 738 Total liabilities and equity 46 132 39 459 43 624 Off-balance-sheet: 1 276 1 345 1 340 Contingent liabilities (guarantees) 1 340 1 345 1 276 KHT/09.08.01 Kvartal22001B.xls
Loans for which loss provisions have been made SpareBank 1 SR-Bank 31.12. 30.06. 30.06. 30.06. 30.06. 31.12. 2000 2000 2001 (Amounts in NOK million) 2001 2000 2000 Non-performing loans for which loss provisions have been made 287 229 284 Gross non-performing loans 307 254 320 120 90 99 Specified loss provisions 101 92 132 167 139 185 Net non-performing loans 206 162 188 42 % 39 % 35 % Loan loss provision ratio 33 % 36 % 41 % 143 95 114 Of which gross non-aaccrual loans 127 113 172 Performing loans for which loss provisions have been made 464 426 408 Performing loans with loss provision 414 465 472 150 161 154 Specified loss provisions 158 165 154 314 265 254 Net performing loans 256 300 318 32 % 38 % 38 % Loan loss provision ratio 38 % 35 % 33 % Total loans for a customer are regarded as non-performing and included in the bank's overviews of non-performing loans when due instalments or interest payments have not been paid within 90 days after the due date or a line of credit is overdrawn for 90 days or more. Loss assessments are made of loans that are non-performing for more than 60 days. Loss provisions SpareBank 1 SR-Bank 31.12. 30.06. 30.06. 30.06. 30.06. 31.12. 2000 2000 2001 (Amounts in NOK million) 2001 2000 2000 Specified loss provisions: 259 256 270 Specified loss provision pr. 01.01. 286 262 265 - Actual loan losses during the period for which -60-39 -61 specified loss provisions have been made previously -72-40 -62 71 34 44 +/- The period's specified loss provisions 45 35 83 270 251 253 Specified loss provisions 259 257 286 Unspecified loss provisions: 222 222 296 Unspecified loss provisions pr. 01.01. 308 233 233 74 20 15 +/-The period's change in unspecified loss provision 15 20 75 296 242 311 Unspecified loss provisions 323 253 308 Loans and losses in 2001 Loans and Gross Recoveries Net Loss (Amounts in NOK million) guarantees loans of losses loss ratio Corporate 15 902 74 31 43 0,27 % Private customers 27 477 16 24-8 -0,03 % Transferred to unspesified Sum 43 379 105 55 50 0,12 % KHT/09.08.01 Kvartal22001C.xls
RESULTS FROM THE QUARTERLY ACCOUNTS 2001 2001 2000 2000 2000 2000 1999 1999 1999 Net interest income 227 227 248 244 224 218 240 230 214 Net other operating income 130 102 63 111 75 83 106 90 82 Total operating income 357 329 311 355 299 301 346 320 296 Total operating costs 195 186 189 168 193 155 176 159 147 Result before losses and write-downs 162 143 122 187 106 146 170 161 149 Losses and write-downs 21 40 45 4-145 24 31 24 7 Result of ordinary activities 141 103 77 183 251 122 139 137 142 Taxes 38 31 26 46 68 30 42 37 37 Profit 103 72 51 137 183 92 97 100 105 BALANCE SHEET FIGURES FROM THE QUARTERLY ACCOUNTS 2001 2001 2000 2000 2000 2000 1999 1999 1999 Deposits from customers 23 482 22 850 22 120 21 378 20 805 19 347 19 211 18 673 18 448 Gross loans to customers 42 039 40 278 39 383 37 823 36 126 34 516 32 873 31 501 30 407 Loan loss provisions 582 573 594 547 510 504 495 495 488 Net loans to customers 41 457 39 705 38 789 37 276 35 616 34 012 32 378 31 006 29 919 Total assets 46 132 44 674 43 624 41 737 39 459 38 051 36 397 34 589 33 940 Average total assets 44 747 44 162 40 010 39 003 38 041 37 069 33 965 33 355 32 889 NON-PERFORMING LOANS AND NON-ACCRUAL LOAN 2001 2001 2000 2000 2000 2000 1999 1999 1999 Gross non-performing loans 307 296 320 299 254 287 275 233 244 Specified loan loss provisions -101-104 -132-119 -92-114 -121-105 -83 Net non-permorming loans 206 192 188 180 162 173 154 128 161 Gross non-accrual loans 127 136 172 114 113 137 159 157 133 Net non-accrual loans 57 50 60 39 45 48 60 70 58 CAPITAL ADEQUACY 2001 2001 2000 2000 2000 2000 1999 1999 1999 The bank's reserves 1 024 1 033 1 033 847 836 836 837 720 730 Primary capital certificate 749 749 749 749 744 744 744 744 744 Other reserves 627 625 628 582 578 577 582 430 430 Core capital 2 400 2 407 2 410 2 178 2 158 2 157 2 163 1 894 1 904 Additional capital 2 077 1 402 1 402 1 339 1 102 1 102 1 102 1 095 743 Deductions -351-354 -368-384 -231-231 -228-264 -263 Net equity and subord.loan capital 4 126 3 455 3 444 3 133 3 029 3 028 3 037 2 725 2 384 Total basis for calculation 30 125 30 188 29 565 28 586 27 687 26 526 25 052 24 183 23 579 Capital adequacy ratio 13,70 % 11,44 % 11,65 % 10,96 % 10,94 % 11,42 % 12,12 % 11,27 % 10,11 % KEY FIGURES FOR 7.489.689 PRIMARY CAPITAL CERTIFICATES 2001 2001 2000 2000 2000 2000 1999 1999 1999 Marked price at the close of the quarter 233 237 247 250 249 245 253 233 194 Book equity per primary capital certificate 214 214 214 195 193 193 193 172 172 Primary capital certificate ratio 63,0 63 63 65,3 64,8 64,8 64,8 66,6 66,6 KHT/09.08.01 Kvartal22001D.xls