sparebank 1 sr -bankmb.cision.com/main/2876/9318161/54449.pdfrecord-high oil investments expected to...

SpareBank 1 SR-BankSpareBank 1 SR-BankInvestor Presentation

September 2010

Norway’s fifth largest bank with head office in Stavanger

• 51 branches in the counties of Rogaland, Agder and Hordaland

• Leading market position in Rogaland

• High share of other operating income (above 40% in 2009)

• Competent management with high focus on continuous renewal and development of the organization

SpareBank 1 SR - Summary

Strong value creation and significant growth opportunities

• The bank has consistently delivered a high ROE and is the best performer among the Norwegian listed banks with 17% average ROE in the period 1994-2009

• 7.1% average dividend yield in the period 1994-2008

• The geographic expansion to Agder and Hordaland represents significant growth opportunities for the bank

│

opportunities for the bank

Diversified loan portfolio and good risk management

• 60% of the loan book are to retail customers (mainly good secured mortgage loans)

• Approved by the regulatory authority, as 1 of 7 banks in Norway, for using the internal rating method (IRB) in the Basel II framework

• Centre of excellence regarding credit in the SpareBank 1-Alliance

• Ratings; Moody’s A1 / P-1 / C- and Fitch A / F1 / B/C

Member of the SpareBank 1 alliance

• The bank is a member of the SpareBank 1 alliance and owns 19.5% of the SpareBank 1 Group, the second largest banking group in Norway (proforma consolidated)

SpareBank 1 SR-Bank – At a glance

• Leading financial institution in South Western Norway

• # 2 of Norwegian Banks by Total Assets in Norway (# 5 of all banks operating in Norway)

• Healthy Q2 2010 financial results underpinned by stable net interest income

– mNOK 814 profit before tax (15,6 percent ROE after tax)

– Growth in retail lending

– No growth in corporate lending

• High quality lending books – very low non-performing and problem commitments

• Capital increase of NOK 2 bn via equity and Tier 1 bond issue in 2009

– Core capital ratio: 9.1% (9,7% adjusted for transistional rules in Basel II)

– Total capital ratio: 11.5%

• Mild downturn in Norwegian economy

│

• Mild downturn in Norwegian economy

– Fairly stable activity level, low unemployment rate and rising house prices during 2009 and so far in 2010

– Core market even less effected than the economy overall

Norway and the Norwegian Economy

│

Norway and the Norwegian Economy

Robust Norwegian Economy

• In relative terms, the Norwegian economy is performing very well

• Both the Government and the Central Bank came out early with appropriate liquidity and stimulus measures

• Norway also had a good starting position, i.e. a solid surplus

• Average unemployment in Europe before the financial turmoil was higher than worst

│5

Source: Statistics Norway, Ministry of Finance, OECD , Bloomberg and Eurostat

turmoil was higher than worst case scenario for Norway

Unemployment rates

Norwegian Economy Norway saw a smaller impact of the recent crisis than the Nordic neighbours

GDP growth rates

-4,00 %

-3,00 %

-2,00 %

-1,00 %

0,00 %

1,00 %

2,00 %

Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110

3,00 %

4,00 %

5,00 %

6,00 %

7,00 %

8,00 %

9,00 %

10,00 %

Source: National Statistics AgenciesSource: National Statistics Agencies and Bloomberg

Quarter over quarter seasonally adjusted volume change

-6,00 %

-5,00 %

-4,00 %

Norway (mainland) Denmark Sweden Finland

0,00 %

1,00 %

2,00 %

2006 2007 2008 2009 2010f

Norway Denmark Sweden Finland

│

Norwegian EconomyGovernment surplus (in % of GDP)

-8,0 %

-8,2 %

-10,7 %

-13,3 %

Sweden

Japan

USA

UK

9,9 %

-5,4 %

-6,7 %

-8,0 %

-15 % -10 % -5 % 0 % 5 % 10 % 15 %

Norway

Denmark

EuroZone

Sweden

Source: OECD (Forecast for 2010)

│

Norwegian EconomyGovernment debt (in % of GDP)

50 %

100 %

150 %

General government net financial liabilities2010 projections

-200 %

-150 %

-100 %

-50 %

0 %

Italy Greece United

States

France United

Kingdom

Euro area Germany Spain Denmark Sweden Norway

Source: OECD

│

Norwegian EconomySovereign CDS SpreadsConsistently in the low end among the Nordics

60

80

100

120

Norway

Source: Bloomberg

0

20

40

Sweden

Denmark

Finland

│

Record-high oil investments expected to continue

60

80

100

120

│

Source: Central Bank of Norway, (2006-prices)

0

20

40

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Petroleum investment Petroleum investment (projected)

3,0

4,0

5,0

6,0

7,0

Pe

rce

nt

Unemployment rate• The Rogaland area enjoys the highest GDP per capita outside Oslo due to the concentration of the oil and petroleum industry here

• In addition, it has an unemployment rate lower than the national rate

Strong key market area

0,0

1,0

2,0

Rogaland Norway Hordaland Agder

│

Above NOK 350.000

NOK 290 000 – 349 999

NOK 250 000 – 289 999

NOK Less than 250 000

SpareBank 1 SR-Bank

│

SpareBank 1 SR-Bank Organisational Overview and Positioning

614

536

188

1,815DnB NOR

SpareBank 1

Alliance

Nordea

Fokus

Total assets in Norway 30.06.09(BNOK, parent banks)

• The SpareBank 1 alliance’s

objective is to ensure the individual

bank’s independence and regional

anchoring through strong

competitiveness, profitability and

solidity

• Key figures for the SpareBank 1

alliance

– Founded in 1996

Description SpareBank 1The SpareBank 1 Alliance has a nationwide distribution network

Co-founder and key owner of the SpareBank 1 Alliance

352 member branches

and distribution through

378 branches

│

175

143

124

99

94

75

Handelsbanken

SpareBank 1

SR-Bank

SpareBank 1

SamSpar

SpareBank 1

SMN

SpareBank

Vest

SpareBank 1

Nord Norge

– 20 independent savings

banks

– 1.6 million customers

– 530.000 internet customers

– Total assets: NOK 614 bn

– Largest real estate brokerage

chain in Norway

– 352 branches, 6300

employees

• Market surveys indicate that

SpareBank 1 is the second most

known brand name in the

Norwegian financial industryNote: For Scandinavian banks, gross lending in Norway is used

SpareBank 1 Alliance Structure

SpareBank 1SR-Bank (19.5%)

SpareBank 1SMN (19.5%)

SpareBank 1Nord-Norge (19.5%)

SparebankenHedmark (12.0%)

SamarbeidendeSparebanker (19.5%)

SpareBank 1 Gruppen AS

LO(10.0%)

SpareBank 1Skadeforsikring

(100%)

ODIN Forvaltning(100%)

Alliance Cooperation ProgrammeFocus areas•Brand•Products•Technology•Competence

│

SpareBank 1Livsforsikring

(100%)

Argo Securities(75%)

Verdigjenvinning(100%)

SpareBank 1Factoring(100%)

Actor Fordrings-forvaltning AS (90%)

SpareBank 1Gruppen Finans Holding AS(100%)

SpareBank1 LTO(100%)

•Competence•Common processes and use of best practices•Purchasing

Regional competence centres•Payment services: Trondheim•Credit: Stavanger•Training: TromsøSpareBank 1

Medlemskort(100%)

SpareBank 1 SR-Bank

Core market – South-Western Norway Overview of SpareBank 1 SR-Bank

• SpareBank 1 SR-Bank is an independent savings bank with head office in Stavanger and 51 branches in Rogaland, Agder and Hordaland

• Norway’s fifth largest bank with NOK 125 billion in total assets and more than 200.000 customers

• Participant in the SpareBank 1 Alliance (third largest banking group in Norway), 19.5% ownership in the SB1 Group AS, 33.8% ownership in SB1 Boligkreditt, and 23.5% ownership in BN Bank ASA

Expansion areas

472 647 inhabitants

│

• Established in 1839

• Listed on the Oslo Stock Exchange in 1994

• Participated in the establishment of the SpareBank 1 alliance in 1996

• Expansion to the Agder counties in 2001

• Expansion to Hordaland in 2006

• Acquired 20% of BN Bank as part of a consortium in 2008, increased to 23.5% in 2009

424 193 inhabitants

277 250 inhabitants

Brief history of SpareBank 1 SR-Bank

SR-Bank’s Strategy

Purpose

SpareBank 1 SR-Bank will add value to the region in which we

are a part of

SpareBank 1 SR-Bank strategy

SpareBank 1 SR-Bank shall, in our market area, have the

industry’s most attractive brand name and its hallmark shall

be:

• To be the leading financial group in the region.

• To have satisfied customers that reccommend our bank to

others.

• To be best at creating value together with the customers.

│

Values

Courage to speak your mind, strength to create

Able to view things in a long-termperspective, and being

open and sincere

By showing responsibility andrespect, a will and ability

to improve

• To be best at creating value together with the customers.

• To be one of the best within the savings and pension

market.

• To be the best with the ability to attract, challenge and

develop the most competent employees.

• To be one of the most profitable finance institutions in the

Nordic region.

SR-Bank’s Activities

• Leasing• Financing

• Investment in long-term equity

• Asset management

EiendomsMegler

1 SR-Eiendom AS100%

SpareBank 1

SR-Finans AS

100%

SR Investering AS

100%

SR-Fondsforvaltning

AS

100%

• Property management

Vågen Eiendomsforvaltning

AS 100%

• Real-estate agency:- Houses- Business- Projects

•

SR-Forvaltning

ASA

100%

SpareBank 1 SR-Bank (parent bank)

Retail market Corporate market Capital market

• Securities’ fund management

│

• Product companies

- Projects• Market leader in

Rogaland

BN Bank AS (23.5%) Bank 1 Oslo (19.5%)SpareBank 1

Boligkreditt (33%)

SpareBank 1

Næringskreditt (23.5%)

• Commercial bank located in Oslo and Trondheim (former Glitnir)

• Commercial bank located in Oslo

• Covered bond company (mortages)

• Covered bond company (commercial real estate)

SpareBank 1

Gruppen AS 19.5%

SR-Bank has a strong market position in Rogaland (the traditional core market)

• SpareBank 1 SR-Bank has a strong market position in a growing market in Rogaland

• 35-40% market share within retail

• 25-30% market share within corporate

• Growth well above national average in the retail market indicates we are gaining market shares

•

• The region’s business community maintains an optimistic outlook

• Unemployment rates remains low

• Low interest rates and expansionary fiscal policy is stimulating the economy

36,7 38,5

Lending Deposits

Retail Market ShareYE 2008 (%)

the economy

• Oil prices up sharply from levels seen in first half of 2009

• Petroleum investments expected to remain at high levels

27,1 25,5

Lending Deposits

Source: Statistics Norway per 31 Dec 2008 (latest available on regional basis), SpareBank 1 SR-Bank

Non-financial Corporate Market Share YE 2008 (%)

│

SpareBank 1 SR-Bank

│

SpareBank 1 SR-BankFinancial Performance

Financial Performance – 1st half 2010

• Very good result for the period

• Stable net interest income

• Good growth in lending in retail market, zero growth in corporate market

• Moderate losses521 492

814

2008 2009 2010

MNOK

Result before tax pr 30.06

545 516

645

2008 2009 2010

MNOK

Result before losses and tax underlying operations

pr 30.06

│

• Pre-tax profit of mNOK 814 million (mNOK 492 in 2009)

• Return on equity after tax of 15.6% (12.6%)

• Bolstered capital strength by increased equity (mNOK 1,228) and Tier 1 perpetual bond issue (mNOK 800) in 2009

• Core capital ratio increased in 2009 from 6.4% to 9.6%

Key figures

30.06 Q2 30.06 Q2 31.12

2010 2010 2009 2009 2009

Return on equity after tax 15,6 % 16,5 % 12,6 % 19,9 % 17,5 %

Net interest margin 1,38 % 1,34 % 1,23 % 1,31 % 1,35 %

Cost ratio 44,0 % 47,4 % 52,2 % 46,5 % 46,7 %

Loss in % of gross loans incl. SpareBank 1 SR-Bank 0,20 % 0,20 % 0,36 % 0,36 % 0,31 %

Loss percentage 0,25 % 0,25 % 0,43 % 0,43 % 0,38 %

Non-performing and other problem commitments in % of gross loans incl. SpareBank 1 SR-Bank 1,08 % 1,08 % 1,17 % 1,17 % 0,97 %

Non-performing and other problem commitments in % of gross loans 1,37 % 1,37 % 1,39 % 1,39 % 1,23 %

Annual growth in loans to customers, gross (incl Boligkreditt) 6,0 % 6,0 % 12,6 % 12,6 % 5,3 %

│

Annual growth in loans to customers, gross (incl Boligkreditt) 6,0 % 6,0 % 12,6 % 12,6 % 5,3 %

Annual growth in deposits from customers 3,1 % 3,1 % -6,2 % -6,2 % 2,4 %

Total assets, BNOK 129 129 125 125 125

Mortgage loans transferred to SpareBank 1 Boligkreditt, BNOK 26 26 18 18 25

Finanstilsynet's liquidity indicator (excl. draw. facil.)* 98,5 % 98,5 %

Result per equity certificate (EC), NOK 3,3 1,8 2,4 1,9 6,9

Book value per equity certificate (EC), NOK 42,4 42,4 38,4 38,4 42,1

Number of certificates issued, millions 121 121 90 90 121

* Key figure for the group not calculated for 2009

High Return on equity and total return1997-2009

*Cpital gaint + re-invested dividend for the period 1997-2009

8%

10%

12%

14%

16%

18%

20%

Average ROE last 15 years

Total return incl. re-invested dividend

Total return to investor vs average RCE**Capital gain + re-invested dividend for the period 1997-2009

Total return nordic bank shares: 1997-2009Adjusted for dividend (re-invested). Log-scale

│

0%

2%

4%

6%

SHB ROGG SWED DnB

NOR

MING NDA MORG NONG SEB SVEG TOTG

Source: First Securities

Income statement

MNOK

30.06 2010

30.06 2009 Q2 10 Q1 10 Q4 09 Q3 09 Q2 09

Net interest income 864 756 427 437 455 465 407

Net commission and other income 554 451 294 260 285 262 243

Net return on investment securities 251 259 172 79 209 237 201

Total income 1.669 1.466 893 776 949 964 851

Total operating expenses 735 765 423 312 438 376 396

Operating profit before losses 934 701 470 464 511 588 455

│

Loss on loans and guarantees 120 209 51 69 74 85 77

Operating profit before tax and min. int. 814 492 419 395 437 503 378

Tax expense 178 110 81 97 107 104 77

Net profit 636 382 338 298 330 399 301

Of which minority interests 0 2 0 0 0 0 0

Net losses last 10 years

357386 368

0,310,35

0,36

0,75

0,49

0,410,38

0,3

0,55

0,8

300

400

500

600

700

800

%MNOK

│

56

-72

169

236

81

-70-92

10

120

0,31

0,14

-0,12 -0,13

0,01

0,25

-0,2

0,05

-200

-100

0

100

200

Net losses Loss percentage

Impaired loans - as at 30.06.2010

348395

3490,21 %0,14 %

0,35 %0,42 %

0,36 %

%MNOK

331

647

1264

753

976

0,54 %

0,27 %

0,73 %

1,26 %

0,81 %

1,01 %

%MNOK

Gross non-performing commitments Problem commitments (not non-performing)

Gross non-performing commitments – non-performing loans before deduction of loss provisions. Non-performing over 90 days.

Problem commitments – Commitments that are not non-performing for which a loss provision has been made

31% 30% 28% 18% 26% 32%

130 111 92

348 3490,14 % 0,10 %

2005 2006 2007 2008 2009 30.06.2010

Share provisions for individual impairment losses

Gross non-performing loans

Gross non-performing loans in % of gross lending

37% 37% 12%

23% 31% 28%

331

210

2005 2006 2007 2008 2009 30.06.2010

Share provisions for individual impairment losses

Problem commitments

Problem commitments in % of gross lending

│

Growth outlook

• Credit growth in Norway halved during 2009 from 10 to 5 percent, (growth in corporate sector turned negative), increased growth rate in January 2010 for the first time since spring 2008

• Similar pattern in SR-Bank

• SR-Bank is well capitalised with steady financial performance – hence positioned for growth going forward

• Growth in SR-Bank in 2010 expected to be 5-10 percent

• 6% in the first half of 2010

│

Source: Argo Securities

SpareBank 1 SR-Bank

│

SpareBank 1 SR-BankFunding, Liquidity and Capital Adequacy

Funding and liquidity management

• Very good liquidity

• Liquidity buffer of NOK 17.9 billion at 30.06.2010

• Net refinancing needs in 2010 is NOK 5.8 billion

• OMF (covered bonds) equalling NOK 9.3 billion used in the swap arrangement in 2009

• Majority of these will mature in 2014

• To be refinanced via SpareBank 1 Boligkreditt AS

Funding next 12 months

Funding per year

│

Liquidity buffer and bond portfolio

Assets class

Market value

BNOK Share

Of which,

securities classified to amortised

cost BNOK

Norwegian state/municipal 0,4 3 % 0,1 Norwegian bank/finance 2,8 16 % 0,6 Norwegian industry 0,1 1 % 0,0 Norwegian other 0,2 1 % 0,1 Foreign bank and finance 1,9 11 % 1,1 Other Norwegian covered bonds 11,8 68 % 9,6 Total 17,2 100 % 11,5

Liquidity buffer Bond portfolio

│

• Liquidity buffer: cash, short-term placements, drawing rights in Norges Bank (bonds including covered bonds) and home loans that are ready to be transferred to Boligkreditt.

• Provided deposits and lending remain unchanged, with no new borrowing during the period.

Liquidity Risk – Market Funding

Swap withCB Domestic EMTN Boligkredi

tt

Description

Gov’t Bonds vs.

Covered Bonds

Certificate of

Deposits/ Debentures

Euro medium-term debt instruments

Covered Bonds

Status Gov’t Bonds

Senior unsecured/Subordinat

ed

Senior unsecured/ Subordinat

ed

Senior secured

EMTN35 %

Schuldschein2 %

Subordinated Tier I2 %

Subordinated Tier II4 %

Repos with CB3 % Govt Swap

Scheme14 %

Diversification of sources as per 30.06.2010 Funding programmes

│

Size NOK 350 bn Unlimited EUR 7.5 bnEUR 10 bn

Maturity Up to 5 years

1 month plus

1 to 30 years

1 year plus

Status TerminatedMoney Market

2 %

NOK Bonds37 %

Covered bonds - SpareBank 1 Boligkreditt

• SpareBank 1 Boligkreditt (“SB1B”) is a separate legal entity wholly owned by SpareBank 1 Alliance banks

• Shareholding of Alliance banks in covered bond company is based on percentage of assets of the alliance bank in SB1B

• Experienced and full-time management team with the sole purpose of managing SB1B and programme

• The mortgages are physically moved from the local bank into SB1B, and included in SB1B’s balance sheet (true sale)

Ownership

SpareBank 1 SR-Bank;

33 %

Sparebanken Hedmark ;

6 %

Bank 1 Oslo ; 5 %

SamSpar; 21 %

• Support from the owners

• Strong commitment to maintain sound core capital ratio

• SB1B can set-off up to 1 year of credit losses in the portfolio with the excess margin payable to the owners

• Diversified owner structure increases the remoteness to bankruptcy in originating banks

• Bonds issued have been given a AAA/Aaa rating by Fitch and Moody’s.

SpareBank 1 SMN ; 21 %

SpareBank 1 Nord-

Norge; 15 %

6 %

│

Funding Strategy of SpareBank 1 SR-Bank

• SpareBank 1 SR-Bank still continues to benefit from a strong domestic deposit base and senior unsecured capital markets funding.

• Covered bonds forms part of the core funding sources

• Domestic and international issuance

• Access to public and private markets

• Extending maturity profile

• To ensure the ability to enter the capital markets at any time for liquidity purposes

• Diversifying the investor base• Diversifying the investor base

• SpareBank 1 SR-Bank is committed to the international market

• Committed to develop and maintain a EUR benchmark curve

• Actively develop (international) debt investor relations

• Issuance of private placements

│

Credit Ratings

FitchMoody’s

Long-term debt A1 Long-term IDR A

Outlook Stable Outlook Negative Outlook

Last updated 7th September 2010 12th March 2010

│

Financial Ratios

30.06.2010

Return on equity after tax 15,6 %

Core capital ratio 9,1 %

Capital adequacy ratio 11,5 %

│

• The aim of SpareBank 1 SR-Bank is to be among the top third in return on equity of comparable banks

• SpareBank 1 SR-Bank aims for a core capital ratio of minimum 9 percent

• Core capital ratio equals 9,7 % adjusted for the transitional rules in Basel II.

Why consider becoming a limited liabilitysavings bank?

• The group has a strong market position, profitability has been good over many years, and the group is well-positioned for profitable growth

– However, access to capital can be subject to more intensive competition

• One must expect the finance markets to be subject to more unrest and rapid changes in the years to come, compared with the last two decades

– Demands relating to capital strength will intensify, and access to equity and external

capital will, in some periods, be more demanding than has previously been the case

– Significantly sharper focus on the banks’ capitalisation by investors, rating agencies

and the funding market, especially regarding core capital ratios

• Through the equity capital certificate, SpareBank 1 SR-Bank has some selfimposed limitations which in light of market trends may be unnecessarily

• demanding when it comes to ensuring a foundation for growth by way of raising competitive equity and external capital in the Norwegian and international markets

• The Board of Directors will present its final assessment to the Supervisory Board in the autumn of this year

│

Why consider becoming a limited liabilitysavings bank?

• Increase ROGG’s comparability to other listed shares.

• Provide increased interest in ROGG from new investor groups, especially foreign investors. The EC perceived as more complexed than shares in general.

• Given sufficiently capitalized value, the bank's shares enters into the OSE Main Index.

• Current regulations limit the equity owners' influence in the bank to 40% even if their stake exceeds this limit. An equity model ensures owners their rightful influence. Shareholders have full representation at the General Assembly.

• Debt market may perceive a conversion positive and it may have a positive effect on future funding margins.

• Rating agencies may consider that the ability to raise equity capital increases and may take this into consideration in their rating.

│

Appendix

│

Appendix

RM; 61,1 %

CM; 38,9 %

30,8 %28,8 % 29,2 %

20,8 %

13,5 %

5,9 %

-1,3 %-2,1 %-2,7 %-5 %

0 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

(10.000)

-

10.000

20.000

30.000

40.000

50.000

60.000

Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210

MNOK

Lending volume - CM

Lending growth - 12 months

Corporate Market Volume (incl Boligkreditt) 20.06.10

13,6 %13,5 %13,7 %

12,0 %11,6 %

11,1 %

10,7 %

12,1 % 12,4 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

18 %

-

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210

MNOK

Lending volume - RM incl. SpareBank 1 Boligkreditt

Growth % - RM incl. SpareBank 1 Boligkreditt

Lending volume - CM

Growth % - CM

│

• Growth in loans in CM year-to-date: 0,3 % (of which growth in Q2 10: -0,8 %)

• Growth in loans in RM year-to-date: 5,6 % (of which growth in Q2 10: 3,4 %)

• High share of lending to retail market (mortages) and in general a well diversified lending book

Retail Market

Agriculture/forestry; 2,6 % (2,6 %)

Fishing/fish farming;

0,2 % (0,2 %)

Oil/gas exploitation;

2,0 % (2,8 %)Industry; 2,5 %

(2,5 %)

Power/water supply; 0,3 % (0,3 %)

Construction and

building; 2,2 % (1,8 %)

Commodity trade/hotels; 2,1 % (2,3 %)

Shipping/offshore;

5,1 % (5,2 %)

Retail customers;

Loans by industry- as of 30.06.2010

Development and sale of fixed property; 2,5 % (2,7 %)

Purchase and sale of fixed property; 1,9 % (1,8 %)

Housing cooperative;

Real estate;

17,4 % (18,7 %)

Service industry;

4,0 % (5,4 %)

Pub. management and

financial services; 0,4 % (0,5 %)

SpareBank 1

Boligkreditt; 21,0 % (15,7 %)

Retail customers; 40,1 % (42,0 %)

Retail customers incl. SpareBank 1 Boligkreditt

61,1 % (57,6 %)

Housing cooperative;

1,1 % (1,1 %)

Letting of fixed property;

11,5 % (12,2 %)

Property management; 0,4 % (0,7 %)

Figures for the same period in 2009 in parentheses.

Including mortgages transferred to SpareBank 1 Boligkreditt.

│

RM; 49,0 %

CM; 51,0 %

Deposit growth - 12 months

22,7 %

7,9 %

-1,4 %

-4,8 %

-17,4 %

-5,0 %

2,6 %

-3,5 %

3,2 %

-20 %

-10 %

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

-10.000

-5.000

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210

MNOK

Deposits volume - CM

Corporate Market Volume 30.06.2010

• Growth in deposits in CM year-to-date: -2,4 % (of which growth in Q2 10: 2,4 %)

• Growth in deposits in RM year-to-date: 8,4 % (of which growth in Q2 10: 7,6 %)

Deposits volume - CM

Growth % - CM

11,9 %10,7 %

14,3 %

12,7 %

10,7 %

8,3 %

2,7 %3,3 %

3,9 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

18 %

-

5.000

10.000

15.000

20.000

25.000

30.000

Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210

MNOK

Deposits volume - RM

Growth % - RM

Retail Market

│

Net interest, lending and deposit margins

43 5753

450

500

│

Definition: Average customer interest minus 3 months average nibor

393

442 431

349

407

465 455 437 427

7

108

22

24

5343

0

50

100

150

200

250

300

350

400

450

Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

MNOK

Net interest income

Commission income SpareBank 1 Boligkreditt

Net commission income and other income

30.06 30.06

MNOK 2010 2009 Q2 10 Q1 10 Q4 09 Q3 09 Q2 09

Payment facilities 98 90 50 48 45 53 46Savings/placements 72 52 41 32 32 32 28Insurance products 55 48 29 27 34 26 25Commission income real estate (EM1) 177 153 105 72 79 83 86Commission income SpareBank 1 Boligkreditt 96 46 43 53 57 43 24Guarantee commission 25 26 13 12 10 11 14Salesprofit, building 0 0 0 0 8 0 0Arrangement- and customer fees 18 18 9 9 15 8 15Income Vågen Eiendom 8 7 4 4 3 3 3

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Income Vågen Eiendom 8 7 4 4 3 3 3Other 5 10 2 3 2 3 2Net commission and other income 554 451 294 260 285 262 243

Net return on investment securities

30.06 30.06

MNOK 2010 2009 Q2 10 Q1 10 Q4 09 Q3 09 Q2 09

Dividend 46 5 46 0 17 1 2Investment income, associates 103 72 54 49 128 98 71Securities gains/losses 62 83 41 21 8 103 66 - of which capital change in shares and certificates 52 35 45 7 1 36 39

- of which capital change in certificates and bonds 10 48 -5 15 7 67 27

Currency/interest gains/losses 40 99 31 9 56 35 62 - of which currency customer- and own-account trading 68 72 31 37 45 30 36

- of which IFRS-effects -28 27 0 -28 11 5 26

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- of which IFRS-effects -28 27 0 -28 11 5 26

Net return on investment securities 251 259 172 79 209 237 201

SpareBank1 SR-Bank’s Risk ProfileHigh share of commitments with low risk

• The upper figure shows that 90% of the loan exposure, corresponding to 91% of the customers, meets the criteria for low or lowest risk. Expected losses in this part of the portfolio is extremely limited, amounting to 0.05%

• Exposure to high or highest risk corresponds to 2% of the loan exposure or 3% of the customers. Expected losses on this part of the portfolio amounts to about 3.5%

• The lower figure shows that 99% of the customers, corresponding to 68% of the loan exposure involve corresponding to 68% of the loan exposure involve commitments of less than NOK 10 million. A limited number of customers have an exposure in excess of NOK 100 million. These have a lower default probability than the portfolio average

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SpareBank1 SR-Bank’s Risk Profile Moderate risk profile, stable trends in credit quality

• The group has a moderate risk profile

• The downturn in the Norwegian economy has been limited, and low interest rates have contributed to a higher activity level and rising housing prices. At the same time, unemployment has stayed low

• These trends, together with ongoing internal focus on risk-reducing measures contribute to maintaining the

sound credit quality in the group’s portfolio

Measurements of risk exposure are based on a long-term average throughout the business cycle. This implies greater stability in default estimates. The bank decided to change the long-term average in the corporate market portfolio with effect from the turn of the year. The effect of this has been incorporated in all data.

Figures include the portfolio transferred to Boligkreditt.

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Retail market – Risk Profile The quality of the portfolio is very good and potential losses are low

• The quality of the portfolio is very good and the development in the portfolio quality is stable

• Most of the portfolio is secured by way of mortgages on real estate. Collateral coverage is good, which implies limited potential losses so long as the value of the collateral is not significantly impaired

Measurements of risk exposure are based on a long-term average throughout the business cycle. This implies greater stability in default estimates.

Figures include the portfolio transferred to Boligkreditt.

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Mortgage portfolio - Loan to value ratio High quality collateral – low risk

• There is still considerable focus on measuring potential losses in terms of loan exposure as a percentage of the market value of the collateral lodged. The figure shows an overall moderate borrowing in terms of collateral values. Less than 2% of the exposure exceeds 100% of collateral values.

• Internally, the group focuses commitment based loss ratio when assessing loss potential. The realisation value of the collateral lodged is then used as the starting point. This is considerably lower than the market value (for home mortgages the reduction factor used is 20%) and this shall reflect a secure value in the case of realisation in an economic downturn. downturn.

The calculation of LTV is based on the market value of the collateral. In the case of balance-distributed LTV, loans that exceed 60% of the collateral’s market value the excess amount is distributed among the other intervals. In the case of totally distributed LTV the entire loan is allocated to one and the same interval.

The figures include the portfolio transferred to Boligkreditt.

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Corporate market portfolio – Risk ProfileThe portfolio quality is good, but growth in lending is still low

• The portfolio credit quality is good with stable development

• There are general signs of improvement in the earnings of companies, which has a positive impact on credit quality

• Growth in lending remains low because of the low level of investment willingness and credit demand from trade and industry

Measurements of risk exposure are based on a long-term average throughout the business cycle. This implies greater stability in default estimates. The bank decided to change the long-term average in the corporate market portfolio with effect from the turn of the year. The effect of this has been incorporated in all data.

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Commercial property portfolioDominated by commitments with low risk

• The portfolio of commercial property represents the group’s largest concentration on a single sector– Accounts for approx. 15% of total exposure

(EAD) including retail market customers

• The commercial property portfolio is dominated by low risk commitments. The credit quality is stable and this has tended to strengthen over the last quarter– 78% of the exposure is now classified as “low

risk”, whilst less than 3% is classified as “high risk”

• A significant part of the portfolio is interest-hedged, mainly by way of hedging contacts with a term of more than 5 years

Må oversettes

• The portfolio is characterised by long-term leases with financially sound tenants. The vacant area is limited

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Shipping and crude oil/natural gas portfolio The portfolio is dominated by commitments with low risk

• In the shipping sector the group has a total exposure of NOK 5.4 billion. A significant part of this exposure is to the offshore service vessels, with good contractual coverage involving North Sea operations

• The exposure to chemical carriers and product tankers is moderate and involves a relatively modern fleet of vessels built at well-renowned yards

• To a limited extent the group is exposed to gas tankers, primarily LNG carriers with long-term charters. The group is not exposed to any large charters. The group is not exposed to any large degree to dry cargo carriers, container vessels, roro vessels or tankers

• In the field of crude oil and natural gas the total exposure is NOK 2.8 billion. Most commitments involve, in their entirety, operations and maintenance, rather than newbuildings

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