Third quarter 2012 The Sparebanken Vest Group

24 October 2012 Stein Klakegg, Managing Director

1

Key developments in the third quarter

Sound third quarter – pre-tax profit of NOK 303 million (135) – Return on equity after tax of 12.5% (5.5%) for the quarter

Contribution to profits from product companies up NOK 60 million so far this year compared

with the same period last year

Increased net interest and credit commission for the quarter: NOK 458 million (416)

Tightening of credit spreads leads to considerable gain on the bond portfolio

High level of activity characterises cost developments – improvement programme on schedule

Improved financial strength – Core Tier 1 capital adequacy of 9.7%, compared with 9.5% in

the previous quarter – Driven by strong result and lower growth in lendings in the corporate market

2

Key figures

3

3Q 2012 3Q 20113Q 2012

Acc.3Q 2011

Acc. 2011

Operating profit / loss before write-downs and tax 329 mkr 167 mkr 812 mkr 604 mkr 858 mkr

Pre-tax profit 303 mkr 135 mkr 708 mkr 533 mkr 732 mkr

Net interest (annualised) 1,46 % 1,52 % 1,43 % 1,46 % 1,46 %

Cost ratio (annualised) 54,1 % 65,6 % 58,5 % 61,6 % 60,9 %

Deposits / Loans ratio 55,3 % 56,3 % 55,3 % 56,3 % 53,5 %

Liquidity indicator 106,6 % 103,8 % 106,6 % 103,8 % 102,6 %

Common equity 9,7 % 9,5 % 9,7 % 9,5 % 9,6 %

Total capital 11,6 % 11,5 % 11,6 % 11,5 % 11,6 %Common equity (Basel II) 13,3 % 12,5 % 13,3 % 12,5 % 12,9 %Total capital (Basel II) 16,0 % 15,2 % 16,0 % 15,2 % 15,6 %

Common equity / Total capital includes 50% of operating profit for the period, except for 2011

Key figures at the end of the third quarter, isolated and accumulated

Key figures – equity certificates

4

Return on equity after tax (%)

Profit per equity certificate (NOK)

Book equity per equity certificate (NOK)

Positive development in the most important source of income continues in the third quarter

Development in net interest and credit commission income

Comments

Positive effect of repricing in CM,

falling Nibor and tightening of credit spreads

Lending margins increase in both

RM and CM, but the deposit margins are still under pressure

Repricing of several commitments so far this year in order to achieve satisfactory pricing of risk

Continued improved net interest in order to meet new regulatory requirements

5

341

378357

377 372 376 386 382 378 385416 411 422

439458

1,53 %

1,69 %

1,52 %

1,58 %

1,54 %

1,51 %

1,47 %

1,44 %

1,42 %

1,44 %

1,52 %

1,43 %

1,39 %

1,44 %

1,46 %

0,00 %

0,50 %

1,00 %

1,50 %

2,00 %

2,50 %

3,00 %

3,50 %

0

50

100

150

200

250

300

350

400

450

500

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Per

cap

ital u

nit %

p.a

.

NO

Km

Net interest income and credit commisions (NOKm)

Net interest income and credit commisions per capital unit (% p.a.)

Continued profit improvement in associated companies Accumulated contribution at the end of the third quarter for SPV is NOK 34 million

Overall improvement in the bank's share of profit/loss as of 30 September of NOK 60 million

compared with same period last year

Positive development expected to continue

Frende: – Both the cost ratio and the loss ratio are

decreasing, helped by a good general insurance market in general

– Expecting continuing volume growth

Norne: – At the end of the third quarter, growth in

income of 21% compared with the same period last year despite a challenging market

– Adjustment of expenses has improved operations

Brage: – Good number of orders on its books – Expecting profitable growth in the time

ahead

6

TOTAL

Considerable gain on financial instruments during the quarter

7

Net gain on financial instruments in the third quarter (MNOK)

Comments

Tightening of credit spreads leads to

considerable gain on the bond portfolio

Fixed-interest portfolio also has positive effect on profit/loss because of lower interest rates

Major fluctuations – financial instruments up NOK 171 million compared with the same quarter last year

C

ertificates / bonds

Shares

Other fin.

instruments

Change in

credit spread FVO

port.

Net gain

Dividend

High level of activity characterises cost developments

Change in operating expenses third quarter 2011 – third quarter 2012

Comments

Hardanger, provisions and non-recurring expenses

account for over 70% of the gross increase in expenses compared with the third quarter 2011

Effects of ongoing improvement programme with a reduction of 50 full-time equivalents by June 2013

– At the end of the third quarter, finalised and signed severance agreements amounted to 41 full-time equivalents

Employment of 15 full-time equivalents in IT replacing

advisers will lead to further savings of NOK 12 million in 2013

Further measures to counteract future increases in costs are under evaluation

8

Costs Q3 2012 388Costs Q3 2011 318Change 70

Details:

Personell expenses Hardanger* 7Other operating expenses Hardanger 5Total Hardanger Sparebank 12

Change in FTEs and salaries 1Provisions improvement program and bonus 39Pension expenses 6IT expenses 6Other expenses and Eiendomsmegler Vest 6Sum Sparebanken Vest 58

*) Including pension expenses

Reduced growth in lendings during the third quarter – in step with the goals for the year

9

Development in year-on-year organic* growth in gross lendings (%)

Comments

Organic* year-on-year growth in

lendings of 9.5% – down 0.8% on the previous quarter

– Including Hardanger, the year-on-year growth in lendings is 13.4% at the end of the third quarter

The decrease during the quarter is

due to reduced growth in lendings in CM

– Growth in lendings of -0.3% in CM in Q3 seen in isolation

Stable growth in lendings in RM compared with both the previous quarter and the same period last year

* Excluding growth in lendings as a result of the merger with Sparebanken Hardanger

10,3 %9,5 %

14,1 %

11,1 %

8,9 % 8,9 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12

Total Corporate Market Retail market

10

Index present versus future end of September Outlook – Western Norway

Continued general optimism – 7 of 10 businesses

in Western Norway are optimistic about the future Fewer optimists in industry – strong Norwegian

krone making its mark Moderate investment level – fewer businesses

envisaging increased investments in the time ahead

Expectations of positive developments in

profitability unchanged since previous survey

The oil price is an important premise for the overall level of activity in the region

Strengthening of net interest into the fourth quarter – Maintaining the margins necessary to comply with new regulatory requirements

Strong position and sound portfolio in the retail market – equipped for future competition

Further measures to counteract the bank's increase in costs are under evaluation

– Effects of ongoing improvement programme are expected in 2013

Continuing positive profit development expected from associated companies

Limited growth in lendings pending clarification with respect to future regulatory regime – Goal of overall growth in lendings in CM of 5% for the year still applies

Good liquidity and financial strength – stable risk profile for the lending portfolio

11

Outlook for Sparebanken Vest

Third quarter 2012 The Sparebanken Vest Group : Accounting and finance

24 October 2012 Eivind Areklett Norebø, CFO

12

13

Profit/loss development third quarter 2011–2012

135

42 415

136

44 6

9 12

58

303

0

50

100

150

200

250

300

350

400

450

Q3 2011 R

eported

Net interest

Net banking services/other

income

Associated com

panies

Com

mercial papers and

bonds

Shares

Loan losses

Other financial instrum

ents

Operating expenses

Hardanger

Other operating expenses

Q3 2012 R

eported

NOKm

Change in net interest third quarter 2011 – third quarter 2012

14

416

19 27

61 5

40 25 4 458

-

100

200

300

400

500

600

Net interest incom

e Q3

2011

Lending volume

Deposit volum

e

Lending margin

Equity capital

Deposit m

argin

Com

mercial papers and

bonds

Shares

Net interest incom

e Q3

2012

15 * Parent bank and housing credit company

Product margins and interest margin* seen in relation to the bank's intra-group interest

Stable interest margin compared with the third quarter last year

0,85 %

1,05 %

1,25 %

1,05 %

2,10 % 2,10 %

0,00 %

0,50 %

1,00 %

1,50 %

2,00 %

2,50 %

Q1 2007

Q2 2007

Q3 2007

Q4 2007

Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

% p

.a.

Loans Deposits Interest margin

Increased lending margins seen in relation to average 3-month NIBOR* Deposit margins still under pressure

16 Definition: The quarter's average customer interest rate minus average 3-month NIBOR

Deposit margins down 12bp for CM and 5bp for RM compared with the previous quarter

Lending margins up 18bp for CM and 6bp for RM compared with the previous quarter

0,30

0,56 0,62 0,48

0,46

0,63 0,82

0,77

0,02

-0,17 -0,23

0,24

0,42 0,46

0,31 0,32

0,43 0,57

0,55

-0,05 -0,16

-0,28 -0,40

-0,20

-

0,20

0,40

0,60

0,80

1,00

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

1,68 1,42 1,38 1,50 1,41

1,22 1,09

1,09

1,73 1,89 1,95

2,41 2,37 2,39 2,41 2,28 2,18 2,23

2,20 2,69

2,69 2,87

-

0,50

1,00

1,50

2,00

2,50

3,00

3,50

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Retail Market Corporate Market Corporate Market Retail Market

Stable deposits and deposits/loan ratio on a par with the second quarter

17

Growth in deposits in the last 12 months of 11.3% including Hardanger Excluding. Hardanger, the growth in deposits in the last 12 months is 6.9% – 2.5% for CM and 10.4% for RM

24,0

25,6

24,3

25,4

25,4

26,9

25,5

26,1

26,2

28,2

27,5

27,6

27,8

29,9

29,2

31,2

31,8

34,3

34,0

14,6

15,8

18,0

15,1

15,2

17,5

17,8

18,8

19,1

20,3

21,0

21,2

20,7

22,7

23,3

21,9

24,7

23,8

24,4

20 %

25 %

30 %

35 %

40 %

45 %

50 %

55 %

60 %

0

10

20

30

40

50

60

70

Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

NO

Kbn

Retail market Corporate market Customer deposits to net customer lending

The RM portfolio – large proportion secured by mortgage Good security coverage with low LTV ratios

18 18

Ordinary instalment loans are normally furnished for up to 85% of a house's value pursuant to the new guidelines

Up to 100% LTV ratio permitted if additional security is furnished, or following a separate assessment of creditworthiness

93% of the total volume of housing loans are within 70% of the house's value provided that all loans are split

93,1 %

4,4 % 2,5 %0,0 %

10,0 %

20,0 %

30,0 %

40,0 %

50,0 %

60,0 %

70,0 %

80,0 %

90,0 %

100,0 %

LTV <= 70 % 70 - 85 % LTV > 85 %

95% of RM exposed to housing loans Good security coverage

95% of the RM portfolio consists of loans secured by mortgage*

33% of housing loans are flexible loans** (overdraft facilities), the remainder are ordinary instalment loans

*) Incl. housing credit company, group figures **) Can be furnished for up to 70% of the house's market value or by

furnishing additional security pursuant to the new guidelines.

5,2 %

67,1 %

32,9 %

94,8 %

Other Retail Mortgages Instalment loans Flexible loans

The RM portfolio constitutes 70% of the total lending portfolio Well-diversified CM portfolio

19

Breakdown of segments, total lending portfolio end of third quarter Comments

The RM portfolio dominates the

total lending portfolio

The CM portfolio is well-diversified Real estate constitutes the

biggest single segment, 11.1% of the total portfolio

No significant changes in the composition of segments in the quarter Slight decline in the real

estate and shipping segments compared with the second quarter

70,0 %

11,1 %

3,8 %

4,4 %

1,3 %1,9 %

1,2 % 1,5 %

0,8 % 1,1 %1,1 %

0,5 %0,7 %

0,4 %Retail market

Real estate

Shipping

Other

Primary industries

Building and construction

Shipyard

Wholesale and retail trade

Fish farming

Fisheries/seafood industry

Energy

Mainland transportation

Agriculture and forestry

Hotels and restaurants

Stable and low risk profile in the retail market dominates the overall risk profile

20

* From 2012, the bank uses a new loss calculation method that affects the classification. This means that the data are not directly comparable with previous periods.

80,1 %

80,7 %

80,5 %

79,9 %

78,8 %

78,9 %

81,0 %

82,8 %

83,2 %

14,2 % 12,9 % 14,1 % 14,1 % 14,7 % 14,3 % 10,6 % 10,2 % 9,4 %

5,7 % 6,4 % 5,5 % 6,0 % 6,6 % 6,8 % 8,4 % 7,0 % 7,5 %

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

< 0,2 % 0,2 % > < 0,75 % > 0,75 %

Debt-servicing ability + security coverage (PD/LGD)* improved during the quarter Comments

High RM share makes positive

contribution to the overall low risk profile

Large proportion secured by mortgage and low LTV ratio

> 83% of the overall portfolio has low risk

Stable / strengthened development during the quarter

Both the percentage provided for and default of payment on a par with the previous quarter

21

Total percentage provided for of 0.67% Default of payment for more than 90

days for both RM and CM on a par with the second quarter

243

261

273

275

276

281

287

301

335

336

338

283

288

291

291

290

298

312

330

343

367

377

0,62 %

0,63 %

0,64 %

0,64 %

0,63 %

0,63 %

0,64 %

0,63 %

0,66 %

0,67 %

0,67 %

0

100

200

300

400

500

600

700

800

0,50 %

0,52 %

0,54 %

0,56 %

0,58 %

0,60 %

0,62 %

0,64 %

0,66 %

0,68 %

0,70 %

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Cap

ital

ised

wri

te-d

owns

NO

K m

Pro

visi

on

s in

% o

f lo

ans

Individual write-downs Group write-downs Percentage provided for

0,00 %

0,20 %

0,40 %

0,60 %

0,80 %

1,00 %

1,20 %

1,40 %

1,60 %

Default rate 90 days, Retail Default rate 90 days, Corporate

Default rate 90 days, Total

Low losses in the third quarter

22

-11

-21

-57

-115

-59-53

-93

-65

-16

-35-29

-47

-11

-28-32

-55-50

-28 -26

-120

-100

-80

-60

-40

-20

0

Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Losses on loans in the third quarter of NOK 26 million Comments

• Loss cost in the third quarter

of NOK 26 million, down NOK 6 million compared with the same period last year

• This corresponds to 0.10% (0.14%) per annum of average gross lendings

• Accumulated for the third quarter, it is 0.13% (0.10%)

Good liquidity – within control parameters

23

Composition of liquidity portfolio 3Q 2012 Structural liquidity of 18 months Half of the liquidity portfolio consists of covered bonds

-

5

10

15

20

25

30

-4.000

-2.000

-

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

3 kv. 2010

4 kv. 2010

1 kv. 2011

2 kv. 2011

3 kv. 2011

4 kv. 2011

1 kv. 2012

2 kv. 2012

3 kv. 2012

mnd

State Local and county authorities

Banks Others

Covered bonds Equities

Interbank "Used as collateral in NB"

Strukturell likviditet

Mill

.

Kommuner og fylkeskommuner

21 %

Banks20 %

Others2 %

Covered bonds52 %

Equities5 %

Interbank 1 %

Capital adequacy transitional arrangement and Basel II Core Tier 1 capital strengthened under both regimes

24 * The figures for the quarter include 50% of the accumulated profit after tax.

Pursuant to the transitional arrangement* Pursuant to Basel II*

2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3Total Capital 11,5 % 11,6 % 12,3 % 11,4 % 11,6 %Additional Capital 0,8 % 0,8 % 1,2 % 0,3 % 0,3 %Hybrid Capital (Tier 1) 1,3 % 1,2 % 1,6 % 1,6 % 1,6 %Common Equity 9,4 % 9,6 % 9,5 % 9,5 % 9,7 %

9,4 % 9,6 % 9,5 % 9,5 % 9,7 %

1,3 % 1,2 % 1,6 % 1,6 % 1,6 %0,8 % 0,8 %

1,2 %0,3 % 0,3 %

11,5 % 11,6 %12,3 %

11,4 % 11,6 %

0,0 %

2,0 %

4,0 %

6,0 %

8,0 %

10,0 %

12,0 %

14,0 %

16,0 %

18,0 %

2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3Total Capital 15,2 % 15,6 % 16,6 % 15,6 % 16,0 %Additional Capital 1,1 % 1,0 % 1,6 % 0,4 % 0,5 %Hybrid Capital (Tier 1) 1,7 % 1,7 % 2,2 % 2,3 % 2,2 %Common Equity 12,4 % 12,9 % 12,8 % 12,9 % 13,3 %

12,4 % 12,9 % 12,8 % 12,9 % 13,3 %

1,7 %1,7 % 2,2 % 2,3 % 2,2 %1,1 %1,0 %

1,6 % 0,4 % 0,5 %15,2 %15,6 %

16,6 %15,6 % 16,0 %

0,0 %

2,0 %

4,0 %

6,0 %

8,0 %

10,0 %

12,0 %

14,0 %

16,0 %

18,0 %

Questions?