Annual Report 2010 - SpareBank 1 Gruppen – Investor relasjoner

Transcription

1
Annual Report 2010
SpareBank 1 Gruppen
2
SpareBank 1 Gruppen
Content
Board of Directors' Report for 2010
Income statement
Statement of comprehensive income
Consolidated balance sheet
Consolidated statement of cash flow
Statement of changes in equity
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Note 25
Note 26
Note 27
General information
Summary of significant accounting policies
Financial risk management
Critical accounting estimates and judgements
Changes in Group structure in 2010
Segment information
Net insurance premium revenue
Net fee and commission income
Gains and losses from financial assets and liabilities
Net income from investment properties
Other operating income
Operating expenses
Shareholder structure
Goodwill
Other intangible assets
Investments in subsidiaries - parent company
Investments in associates and joint ventures
Property, plant and equipment
Other assets
Classification of financial assets and liabilities
Valuation hierarchy
Financial instruments designated at fair value
Financial derivatives
Financial instruments classified as available for sale
Bonds at amortised cost
Fair value on financial instruments measured at
amortised cost
Investment property
3
18
19
20
21
22
23
23
29
32
34
37
38
38
39
40
40
40
41
41
42
42
43
44
45
46
47
49
50
51
51
52
53
Note 28
Note 29
Note 30
Note 31
Note 32
Note 33
Note 34
Note 35
Lending to and deposits with customers and
credit institutions
Net loan loss provisions
Credit risk exposure for each internal risk class
Maximum credit risk exposure, assets pledge as
security not taken into account
Contractual maturity of financial liabilities
Age distribution of overdue, but not impaired loans
and premium revenues
Market risk related to currency exchange risk
Market risk related to interest rate risk
Deposits from customers and loans and deposits from
credit institutions
Note 37 Subordinated loan capital
Note 38 Securities issued
Note 39 Capital adequacy
Note 40 Reinsurance receivables
Note 41 Insurance receivables from policyholders
Note 42 Insurance liabilites in life insurance
Note 43 Incurance result and provisions in P&C insurance
Note 44 Liabilities related to reinsurance
Note 45 Underwriting risk SpareBank 1 Livsforsikring AS
Note 46 Underwriting risk SpareBank 1 Skadeforsikring
Note 47 Wages and other remuneration to CEO and key
management
Note 48 Pensions
Note 49 Employees and full-time equivalent
Note 50 Taxes
Note 51 Other liabilities
Note 52 Events after the balance sheet date, legal matters
Note 53 Group consolidated exclusive Bank 1 Oslo Group
Note 54 Cash flow without Bank 1 Oslo Group as
of December 31, 2010
Independent auditor's report
54
55
56
57
57
58
59
59
Note 36
60
61
61
62
63
63
64
65
66
66
68
70
72
74
75
76
76
77
79
80
3
Board of Directors’ Report for 2010
SpareBank 1 Gruppen
OPERATIONS IN 2010
SpareBank 1 Skadeforsikring AS’ acquisition of Unison Forsikring
High return on equity due to good results in the largest
AS resulted in negative goodwill of NOK 117.9 million being
production companies
entered as income. SpareBank 1 Gruppen’s total assets were NOK
The Group is well capitalised
40.7 billion as of December 31, 2010, compared to NOK 61.5
New strategic positions through acquisitions
(36.51) billion as of December 31, 2009. This is a decrease of NOK
SpareBank 1 Skadeforsikring AS acquired 100 % of the shares
20.8 billion compared to 2009 and is mainly due to the separation
in Unison Forsikring AS, and took over Skandia Lifeline
of the Bank 1 Oslo Group.
Norges portfolio within treatment and child insurance
SpareBank 1 Gruppen Finans AS acquired the debt
The capital adequacy ratio was 16.1 % as of December 31, 2010,
collection company Conecto AS
compared to 16.3% in 2009. The core capital adequacy ratio was
Bank 1 Oslo AS was sold out with effect from January 1, 2010
12.5 % compared to 11.82 % in 2009. The capital position of
The profitability improvement programme, Delta, was finished
SpareBank 1 Gruppen is considered satisfactory, and it is the
successfully.
opinion of the Board that the Group is well capitalized to meet the
expected requirements in the Solvency II regulations.
SpareBank 1 Gruppen AS is a holding company that, through its
subsidiaries, provides and distributes products in the fields of life and
In SpareBank 1 Skadeforsikring AS the gross claims ratio was
P&C insurance, fund management, securities brokering, factoring,
77.3 % in 2010 which is 2.4 % higher than in 2009. The increase
receivables management and debt collection of old claims.
in the claims ratio is due to the extreme weather conditions
during the winter season which resulted in a high frequency of
In this Directors’ Report, SpareBank 1 Gruppen AS refers to the
frost, water and snow damages.
holding company and SpareBank 1 Gruppen refers to the Group
consisting of SpareBank 1 Gruppen AS and its subsidiaries.
SpareBank 1 Livsforsikring AS built further reserves in 2010. A total
of NOK 125.3 million was allocated to additional provisions within
SpareBank 1 Gruppen reported a pre-tax profit of NOK 985.1
pension and paid-up policies. The securities adjustment reserve
million for 2010, compared to NOK 1,193.7 (995.51) million in
in the Group portfolio increased with NOK 289.8 million in 2010
2009. The profit resulted in a return on equity after tax of 18.7%,
and amounted to NOK 616.9 million as of December 31, 2010.
compared to a return of 17.5 (18.11)% in 2009. The result is primarily attributable to strong financial markets, the profitability
SpareBank 1 Livsforsikring AS transferred its defined benefit
improvement programme, Delta, and certain significant one-time
pension portfolio to Gabler Wassum AS during 2010. Gabler Wassum
effects. The phasing-out of SpareBank 1 Gruppen`s child and
AS is now responsible the management and administration of the
spouse insurance together with ending the old contractual pension
portfolio.
plan resulted in a total of NOK 84.3 million being entered as
income in 2010. SpareBank 1 Gruppen AS also entered as income
ODIN Forvaltning AS’s total assets under management were NOK
a repayment of NOK 43 million related to payroll tax which were
32.3 billion as of December 31, 2010, which is an increase of
earlier covered by the company on behalf of First Securities AS.
NOK 4.3 billion compared to 2009.
1 Figure exclusive Bank 1 Oslo Group
2 The capital adequacy ratio and the core capital adequacy ratio for 2009, including Bank 1 Oslo Group
4
SpareBank 1 Gruppen
SpareBank 1 Gruppen Finans Group, which in 2009 was esta-
SpareBank 1 Gruppen’s main functions in the SpareBank 1-
blished as a new subgroup of SpareBank 1 Gruppen AS, produces,
alliance are two-folded:
delivers and distributes services within factoring, portfolio acqui-
Manage and develop the financial group with respect to the
sition, investment management and debt collection. SpareBank 1
production and delivery of competitive products and services
Gruppen Finans AS acquired the debt collection company
for distribution through the alliance banks and other banks that
Conecto AS in third quarter 2010. Actor Fordringsforvaltning AS
have a distribution agreement with companies in SpareBank 1
and Conecto AS were merged to one integrated company with
Gruppen and LO. This work is organised in the company
effect from January 1, 2011.
SpareBank 1 Gruppen AS.
Manage and develop the alliance cooperation with respect to
SpareBank 1 Gruppen AS owned, as at December 31, 2010,
common management, development and execution of activities
76.75 % of the shares in Argo Securities AS, which operates
that provide economies of scale and competitive advantages.
within securities brokerage.
This work is organised in the company Alliansesamarbeidet
SpareBank 1 DA.
The shares that SpareBank 1 Gruppen AS had in Bank 1 Oslo AS
were sold with effect from January 1, 2010. Consequently, Bank 1
Alliansesamarbeidet SpareBank 1 DA provides the administrative
Oslo AS became directly owned by the SpareBank 1 - banks (90%)
framework for the alliance and manages financing and ownership
and the Norwegian Confederation of Trade Unions and affiliated
of applications, concepts, contracts and brands on behalf of the
trade unions, LO, (10%). An important factor in the transfer of
alliance partners. The company is owned by SpareBank 1 SR-Bank
ownership of Bank 1 Oslo AS was the strategy to establish a clear
(17.74 %), SpareBank 1 SMN (17.74 %), SpareBank 1 Nord-Norge
boundary between production and distribution in the SpareBank 1-
(17.74 %), Samarbeidende Sparebanker Utvikling DA (17.74 %),
alliance. Bank 1 Oslo AS will continue to be a part of the
Sparebanken Hedmark (11.3 %), SpareBank 1 Gruppen AS (10.0 %)
SpareBank 1-alliance.
and Bank 1 Oslo AS (7.74 %).
SpareBank 1 Gruppen ended the profitability improvement
program, Delta, in 2010. The program identified many actions to
CORPORATE GOVERNANCE
improve the profitability in the Group.
SpareBank 1 Gruppen AS is owned by SpareBank 1 Nord-Norge
(19.5 %), SpareBank 1 SMN (19.5 %), SpareBank 1 SR-Bank
(19.5 %), Samarbeidende Sparebanker AS (19.5 %), Sparebanken
SPAREBANK 1-ALLIANCE
Hedmark (12 %) and the Norwegian Confederation of Trade Unions
The SpareBank 1-alliance consists of 18 savings banks, two com-
and affiliated trade unions, LO, (10 %). SpareBank 1 Gruppen
mercial banks and SpareBank 1 Gruppen AS with subsidiaries. The
AS has its business address in Tromsø. SpareBank 1 Gruppen’s
alliance is the second largest provider of financial products and
main market is Norway.
services in the Norwegian market. The banks in the SpareBank 1alliance distribute SpareBank 1 Gruppen’s products and colla-
The shares in SpareBank 1 Gruppen AS are not publicly traded,
borate in key areas such as developing brands, work processes,
but as of December 31, 2010 the company had bonds and subor-
development of skills and know-how, IT operations, system develop-
dinated loans listed on the Oslo ABM. The company has a con-
ment and purchasing.
centrated shareholder structure, with all shareholder groups either
directly or indirectly represented in the Board. There is ongoing
The product companies established under SpareBank 1 Gruppen AS
communication within all the owner groups. The Board of
and the alliance-banks have developed a common technology
SpareBank 1 Gruppen AS has discussed the «Norwegian Code of
platform. The sharing of experience and transfer of knowledge within
Practice for Corporate Governance» and adopted this wherever the
the alliance, based on best practice, are key elements of the further
guidelines are applicable and of relevance for a company that does
development of the alliance. As a result of these efforts, knowledge
not have shares listed on a stock exchange. The Corporate Gover-
centres have been established for Credit Management in Stavanger,
nance statement from the Board of Directors is included in the
Payments in Trondheim, and Training in Tromsø.
Norwegian version of Annual Report for 2010.
The SpareBank 1-alliance had total assets of approximately NOK 665
Group Management
billion at the end of 2010, compared to approximately NOK 616
The Group Management is responsible for managing and developing
billion at the end of 2009. The SpareBank 1-banks have 352 offices.
the financial group, and focuses on results and production in
The products of SpareBank 1 Gruppen`s subsidiaries are distributed
relation to the subsidiaries of SpareBank 1 Gruppen.
through 378 distribution offices across the entire country.
5
Remuneration
Result from subsidiaries:
Information on the remuneration of the Chief Executive Officer,
group management, Board of Directors, supervisory board, control
committee, and the auditor is provided in note 47.
Dividend policy
SpareBank 1 Gruppen AS has a long term goal of paying a dividend
of 30-50 % of the surplus on the consolidated level. In determining
the dividend for SpareBank 1 Gruppen AS, importance is placed
NOK million
Part of result from subsidiaries before tax:
SpareBank 1 Livsforsikring AS
SpareBank 1 Skadeforsikring Group*
Bank 1 Oslo Group**
ODIN Forvaltning AS
Argo Securities AS
SpareBank 1 Medlemskort AS
SpareBank 1 Gruppen Finans Group***
Correction Group
Net result before tax from subsidiaries
2010
2009
350,4
392,2
641,1
621,1
198,1
64,6
42,1
-57,6
-48,9
11,1
12,1
8,6
22,5
17,6
4,8
1 036,0 1 244,1
on maintaining a satisfactory capital and core capital adequacy
ratio in relation to the planned growth and risk associated with the
company’s operation. The financial situation must also be deemed
satisfactory with respect to internal ICAAP calculations and the
Group’s liquidity. The goal is that the core capital inclusive
*
Unison Forsikring AS was acquired by SpareBank 1 Skadeforsikring with
effect from July 1, 2010.
** Bank 1 Oslo Group was sold out from SpareBank 1 Gruppen AS with effect
from January 1, 2010.
*** Conecto AS is 100 % owned by SpareBank 1 Gruppen Finans AS with effect
from September 10, 2010. The result before this date has been registered
directly against equity.
perpetual bonds shall amount to at least 11% and capital adequacy
to at least 13 %. SpareBank 1 Gruppen AS shall maintain the
The pre-tax profit from subsidiaries was NOK 1,036.0 million in
goals related to capital coverage that will be established in the
2010, compared with NOK 1,244.1 (1,046.01) million in 2009.
Solvency II regulations with a good margin.
SPAREBANK 1 GRUPPEN – RESULTS AND KEY FIGURES
SpareBank 1 Gruppen AS and SpareBank 1 Gruppen report the
annual accounts in accordance with IFRS, International Financial
Reporting Standards, which are recognised by the EU.
Profit – SpareBank 1 Gruppen:
NOK million
Total operating costs (parent company)
Net investment charges (parent company)
Gains from sale of companies
Share of associated company
Pre-tax result
Taxes
Net result for the period
Majority interest
Minority interest
2010*
2009*
1 036,0 1 244,1
-7,6
-54,1
-43,2
-36,3
29,2
10,8
985,1 1 193,7
-153,6 -294,0
831,6
899,6
841,0
909,1
-9,5
-9,5
* Bank 1 Oslo Group was sold out from SpareBank 1 Gruppen AS with effect from
January 1, 2010.
SpareBank 1 Gruppen reported a profit after tax of NOK 831.6
million, compared with NOK 899.6 (735.11) million the previous
year. This equals a decline in profit of NOK 68.9 million. The pretax profit was NOK 985.1 million, compared with NOK 1,193.7
(995.51) million in 2009. The Group’s total tax expense was NOK
153.6 million, compared with NOK 294.0 (260.51) million in 2009.
Good financial markets, the profitability program Delta, and
several other significant factors with a one-off impact contributed
to a good result in 2010.
6
SpareBank 1 Gruppen
SPAREBANK 1 LIVSFORSIKRING AS
The company’s total assets under management were NOK 26.5
Profit SpareBank 1 Livsforsikring AS:
billion as of December 31, 2010. This equals an increase of 9.0 %
from 2009. The capital adequacy ratio was 19.3% at the end of 2010,
NOK million
Risk result after tecnical allocations
Administration result
Investment result
Reserves
Compensation guaranteed interest
Result before additional provisions
Allocation to additional provisions
Transferred to policyholders
Return on company's assets
Net profit to owner before tax
Taxes
Net profit/loss for the period
2010
2009
325,4
-186,9
317,3
-45,3
29,9
440,4
-125,3
-36,3
71,6
350,4
-60,2
290,2
352,3
-193,1
557,4
-74,5
14,6
656,7
-127,9
-209,5
73,0
392,2
392,2
compared with 19.0 % at the end of 2009. Core capital ratio constituted 17.7% at the end of 2010, compared with 16.1 % the year
before. In 2010, NOK 358.7 million was contributed to the company’s equity through group contributions. The solvency margin as of
December 31, 2010 was 290.1 %, compared with 279.2 % the year
before. The minimum requirement is a solvency margin of 100 %.
At the end of 2010, the solvency margin requirement amount to
NOK 859.0 million, compared to NOK 797.9 million in 2009.
The allocation to additional provisions was enhanced by NOK
SpareBank 1 Livsforsikring AS reported a pre-tax profit and other
125.3 million at the end of 2010, resulting in total additional pro-
P&L components of NOK 350.4 million in 2010, compared with
visions of NOK 379.3 million as of December 31, 2010. The secu-
NOK 392.2 million in 2009. The tax expense in 2010 was NOK 60.2
rities adjustment reserve was NOK 616.9 million at year end. After
million. In 2009 the tax expense of the company was zero, as the
suggested disposal of the 2010 surplus, the buffer capital in total con-
deferred tax asset was not included, in accordance with IAS 12.
stituted NOK 2.3 billion, equal to 14.6 % of the insurance provisions at the end of 2010. In comparison, the buffer capital the previous
Net risk result was NOK 325.4 million in 2010, compared with NOK
year amounted to NOK 1.8 billion, corresponding to 11.7% of the
352.3 million the year before. The main reason for the reduction
insurance provisions.
concerned changes in outstanding claims provisions within individual endowment insurances compared to the previous year. At the
Value-adjusted return on the Group portfolio was 7.1 % in 2010. The
same time, there was a significant improvement in the risk result
booked return was 5.2 %. In 2009, similar return was 9.5 % and
within individual annuity insurances and group life insurances.
7.1 % respectively.
The company reported a net administration result of minus NOK
Allocation of assets by portfolio as of 31.12.2010:
186.9 million, compared with minus NOK 193.1 million in 2009.
The majority of the administration loss arises from the operation of
group pension insurance.
Net investment result (financial income in customer portfolios
reduced with guaranteed returns) was NOK 317.3 million compared
with NOK 557.4 million in 2009. At the beginning of 2009, the value
Group portfolio
Stocks
Other
Real estate
Bonds held to maturity
Bonds
Total value (NOK million)
before a rebuilding of the securities adjustment reserve could
commence, contributed to the good investment income result in
2009. Within individual annuity insurance, NOK 45.3 million of the
Stocks
Other
Real estate
Bonds
investment income result was utilised to enhance the premium
Investment choice portfolio
reserve due to adjustments made to life expectancy ratios. Corres-
Stocks
Other
Bonds
ponding amounts in 2009 were NOK 74.5 million.
Group portfolio
Company portfolio
Total value: NOK 16 billion
17,0%
Bonds
2009
0,1 %
19,4 %
17,0 %
14,7 %
48,7 %
2 479
2010
61,0 %
0,0 %
39,0 %
6 701
2009
61,4 %
7,1 %
31,5 %
4 041
Total value: NOK 6.7 billion
Stocks
Bonds
7,1%
Real estate
50,1%
21,5%
21,8%
2010
0,1 %
17,0 %
21,7 %
11,1 %
50,1 %
2 844
Investment choice portfolio
Total value: NOK 2.8 billion
14,8%
34,8%
2009
14,5 %
5,2 %
21,7 %
24,3 %
34,2 %
15 488
Company portfolio
of the financial assets recorded at fair value was NOK 152.0 million
lower than the acquisition cost. The reversal of this lesser value,
2010
14,8 %
7,1 %
21,5 %
21,8 %
34,8 %
16 030
Other
Real estate
Stocks
11,1%
Other
39,0%
Bonds
21,7%
Stocks
61,0%
7
The company decided to invest in a model for asset-liability
In 2010, the financial income of the SpareBank 1 Skadeforsikring
management at the beginning of 2010. The model was used for the
Group was NOK 432.7 million, compared with NOK 532.6 million
test calculations in relation to the introduction of the Solvency II
in 2009. This includes a gain of NOK 20.9 million on sold property
requirements (QIS-5). The board considers the company’s com-
in the fourth quarter. The financial return on the Group’s portfolio
mercial exposure to be well adapted to its risk capabilities.
was 4.9%. The company had positive returns in all asset classes
in 2010.
SPAREBANK 1 SKADEFORSIKRING GROUP
SpareBank 1 Skadeforsikring Group had total assets of NOK 12.1
Profit SpareBank 1 Skadeforsikring Group:
billion as of December 31, 2010. This represents an increase of
15.7 % from 2009. The capital adequacy ratio at the end of 2010
NOK million
Gross written premium
Net earned premium
Net incurred claims
Net insurance operating costs
Other insurance income/costs
Changes in other technical reserves
Operating result before finance
Net financial income
Other costs
Result before changes in security reserve
Changes in security reserve
Pre-tax profit
Taxes
Net profit/loss for the period
2010
2009
4 731,8 4 271,2
4 184,4 3 814,3
-3 208,5 -2 813,1
-880,6 -858,0
132,0
0,8
39,6
-27,5
266,9
116,6
432,7
532,6
-2,7
-5,8
696,9
643,3
-55,8
-22,2
641,1
621,1
-60,1 -118,1
581,1
503,0
was 32.5 %. This equals a reduction of 1.7 percentage points
through the year.
Net combined ratio per year:
87,2%
89,9%
20,5%
20,6%
66,7%
69,3%
2005
2006
94,6%
94,0%
96,2%
97,7%
20,7%
22,5%
21,0%
21,9%
73,9%
73,7%
76,7%
72,1%
2007
2008
2009
2010
100
80
60
40
SpareBank 1 Skadeforsikring Group reported a result in 2010 of
NOK 641.1 million before tax, compared with NOK 621.1 million
20
in 2009. The Group achieved a significant growth in the premium
income, both through the traditional sales channels, such as
banks and LO (The Norwegian Confederation of Trade Unions), as
0
well as though new strategic activities such as the acquisition of
Union Forsikring AS and Skandia Lifeline Norge’s portfolio within
Claims ratio, net
Cost ratio, net
treatment and child insurance.
The net combined ratio was 97.7% in 2010, an increase of 1.5 perSpareBank 1 Skadeforsikring AS bought 100% of the shares in
centage points from 2009.
Unison Forsikring AS for NOK 56.4 million, with effect from
July 19, 2010. At the same time it contributed with NOK 150
The gross combined ratio was 98.1% as of December 31, 2010. The
million to the company’s equity through a private placing towards
gross claims ratio constituted 77.3% in 2010, which was an in-
Unison Forsikring AS. Unison Forsikring AS was consolidated
crease of 2.4 percentage points compared with 2009. The increase
with effect from July 1, 2010. Unison’s business concept is to
in the claims ratio is attributable to the cold winter, causing a high
provide tailored business solutions to defined groups of end users
frequency of frost and water related damage. Gross cost ratio in
– either through organisations or other relevant intermediary con-
2010 was 20.8%, compared with 22.1% in 2009. One-off impacts
nections such as agents and brokers.
of NOK 42.5 million related to pensions, as well as zero in profitability commission to the distributors have contributed to a reduc-
After receiving approval from Norwegian and Swedish authorities,
tion in the cost ratio.
SpareBank 1 Skadeforsikring AS has acquired Skandia Lifeline
Norge’s portfolio within treatment and child insurance with effect
SpareBank 1 Skadeforsikring Group had a total portfolio growth
from November 1, 2010. The portfolio consists of 1,200 customers
of NOK 629 million. The company’s total portfolio was NOK 4.7
and insures a total of 16,000, with a stock of approximateley
billion at the end of 2010.
NOK 30 million in premiums.
SpareBank 1 Skadeforsikring Group has ambitions of profitable
The acquisition of Unison Forsikring AS resulted in a negative
growth through both traditional channels, such as banks and LO, as
goodwill of NOK 117.9 million being entered as income, while the
well as new channels for direct distribution. The goal is to increase
selling of the insurance office in Bergen to SpareBank 1 SR-Bank
revenue by strengthening the Group’s distribution platform.
resulted in a gain of NOK 14.2 million.
8
SpareBank 1 Gruppen
ODIN FORVALTNING AS
76.75% of the shares in Argo Securities AS at the end of 2010. The
Profit ODIN Forvaltning AS:
remaining shares were owned by the employees.
NOK million
Management fees
Subscription and redemption fees
Total operating income
Total operating costs
Operating profit
Pre-tax profit
Taxes
Net profit for the period
2010
2009
317,9
317,9
-256,8
61,1
3,6
64,6
-19,3
45,3
244,8
25,9
270,7
-228,3
42,4
-0,3
42,1
-13,5
28,6
The company has continued to build up its operations through
2010. This has affected the result, which amounted to a loss before
tax of NOK 57.6 million in 2010. There has been an increase in
revenue in all business segments compared to 2009. Total revenue
in 2010 was NOK 83.3 million, compared to NOK 47.0 million in
2009. Out of the 2010 revenue, NOK 37.4 million are related to
commission income on stocks and derivatives, NOK 18.4 million in
remunerations from corporate finance, NOK 16.6 million from debt
ODIN Forvaltning AS reported a pre-tax profit of NOK 64.6 million
capital markets and NOK 10.9 million from other revenue. Along
in 2010, compared with NOK 42.1 million in 2009. The increase
with the building of the operations, the company’s cost base has also
in profit can mainly be attributed to higher average assets under
increased, and there were a total of 77 employees at the end of the year.
management throughout the year.
There is significant potential for the company through its connection
All funds yielded good absolute returns in 2010, although eight out
to the alliance and gaining access to the distributional power that it
of twelve self-managed mutual funds had returns that were weaker
represents. The work to realise this potential was started in 2010, and
than the market they invested in. This is mainly caused by a weaker
will continue throughout 2011. The company has added additional
development for investment companies than growth companies in
top competence and market power through recruitment of new
2010. ODIN Forvaltning AS is an investment manager.
employees. It is expected that the efforts over time will yield significant
increases in market shares and that this will be reflected in the results.
At the end of 2010 ODIN Forvaltning AS managed a total of NOK
32.3 billion, of which NOK 31.3 billion were managed in mutual
funds. This makes ODIN Forvaltning AS the third largest fund
SPAREBANK 1 GRUPPEN FINANS GROUP
manager in Norway. ODIN Forvaltning AS had in 2010 a net
Profit/loss in SpareBank 1 Gruppen Finans Group:
redemption in mutual funds of NOK 1.4 billion, caused by redemption from foreign customers.
Good historical returns, a broad offering of self-managed mutual
funds, introduction of combined funds, the SpareBank 1 banks’
broad distribution network, distribution through other banks and
distributors in Norway, Sweden, Finland and the Netherlands,
together with good technological solutions, and an effective and
competent organisation, provide a strong starting point for
2011.
NOK million
2010
2009
SpareBank 1 Gruppen Finans AS
Overhead costs
Business area Factoring
Business area Portefølje
Business area Debt collection
Actor Fordringsforvaltning AS
Conecto AS*
Amortisation
Pre-tax profit
Taxes
-5,7
-9,3
2,0
1,7
19,5
23,3
-3,8
13,9
-5,3
8,6
-4,3
4,3
3,3
-1,2
6,6
-2,1
24,6
24,6
27,8
-5,3
22,5
-6,7
15,9
* Conecto AS was acquired with effect from September 10, 2010.
SpareBank 1 Gruppen Finans Group produces, delivers and
ARGO SECURITIES AS
Profit/loss Argo Securities AS:
distributes services within factoring, portfolio acquisitions, portfolio management and debt collection. SpareBank 1 Gruppen
NOK million
2010
2009
Total operating income and other income
Salaries and other ordinary personnel expenses
Depreciation and amortisation
Other operating expenses
Operating result
Pre-tax loss
Taxes
Net result for the period
83,3
-89,7
-6,9
-43,2
-56,5
-1,0
-57,6
16,8
-40,8
47,0
-66,5
-9,2
-27,2
-55,9
7,0
-48,9
13,5
-35,4
Finans Group consists of SpareBank 1 Gruppen Finans AS, and its
business areas Factoring and Portfolio, as well as its subsidiaries
Actor Fordringsforvaltning AS and Conecto AS. Conecto AS was
acquired with effect from September 10, 2010. Actor Fordringsforvaltning AS and Conecto AS were merged with effect from
January 1, 2011. These companies operate within extrajudicial and
legal debt collection.
Argo Securities AS operates within corporate finance, stock broke-
SpareBank 1 Gruppen Finans Group achieved a pre-tax profit in 2010
rage and debt capital markets. SpareBank 1 Gruppen AS owned
of NOK 8.6 million, which was NOK 13.9 million lower than in 2009.
9
of 26%, but has still increased revenue with 11% from 2009. The
Business area Factoring
increase is mainly due to an increased portfolio, as well as renego-
The business area Factoring operates within financing in the areas
tiated agreements. The market is characterised by a competitive
factoring and collateral. Pre-tax profit in 2010 was NOK 2.0 million,
environment. Conecto AS not only has a good market position, but
compared with NOK 6.6 million in 2009.
good prospects for increased growth in the time to come.
The Factoring business area had total net revenues of NOK 52.4
million in 2010, compared with NOK 50.1 million in 2009. The
SPAREBANK 1 MEDLEMSKORT AS
client revenue was NOK 11.0 billion in 2010, equal to an increase
Profit in SpareBank 1 Medlemskort AS:
of 30.6 % compared with 2009. In connection with a bankruptcy
engagement, provisions for losses amounted to NOK 10.4 million
in 2010. This loss provision was the main cause for the decline of
the result in 2010.
Business area Portfolio
The Portfolio business area operates within acquisition of portfolio
NOK million
2010
2009
Total operating income
Salaries and wages
Operating result
Pre-tax profit
Taxes
62,2
-6,1
-45,7
10,4
0,8
11,1
-3,3
7,8
59,4
-7,0
-41,2
11,2
0,9
12,1
-3,5
8,6
of non-performing loans and which are recovered in the Group’s
debt collection companies. The pre-tax profit in 2010 was NOK 1.7
SpareBank 1 Medlemskort AS reported a pre-tax profit of NOK
million, compared with a loss in 2009 of NOK 2.1 million. In total
11.1 million, and a result after tax of NOK 7.8 million.
this represents an improvement in the result of NOK 3.8 million.
Additional positive development in the profit is expected in
SpareBank 1 Medlemskort AS operates LO’s affiliated trade unions’
2011. Net interest and other financial income was NOK 9.3 million
common membership database for delivering membership cards
in 2010. The business area Portfolio had a total portfolio volume
and collects the insurance premiums for group insurance. The
of NOK 620 million at the end of 2010.
company also runs and administrates the benefits-program LOfavør
with LO and the affiliated trade unions, and is the operational
for about 870,000 members. The company cooperates closely
The company operates within the debt recovery business and
supplier of the benefits-program LOfavør on behalf of LO and the
provides services related to receivables management, litigated
affiliated trade unions. The company also cooperates with the other
debt prosecution, and juridical advice. The company reported a
companies in the SpareBank 1-alliance, particularly the banks and
profit before tax in 2010 of NOK 23.3 million, compared to NOK
insurance companies.
24.6 million in 2009. In total, the company’s revenue amounted
to NOK 84.9 million, an increase of NOK 6.2 million from 2009.
The LO congress’ decision that LOfavør shall be the best known
The reduction in the pre-tax profit was mainly caused by reduced
benefits-concept by 2013 has lead to increased activity in the
fee income as a consequence of reductions in fee income rates
company. Six larger activities/campaigns have been performed,
decreed by law. The company has calculated the effect of the
and other marketing operations have increased in scope. The
changes made to the debt collection regulation as of September
company has experienced yet another year of increased use of the
2009 to be an approximately 20 % reduction of revenue. Parts of
membership benefits. The company has also experienced increased
the 2010 revenue were generated from demands that were due
demand for its services from the alliance-banks.
January 1, 2010, which was before changes were made to the
regulations. Consequently the changes have not had its full impact
in 2010.
SPAREBANK 1 GRUPPEN AS
Conecto AS
sidiaries, consist of cash deposits and less material assets. The hol-
SpareBank 1 Gruppen Finans AS bought the debt collection
ding company had liquidity reserves as of December 31, 2010 of
SpareBank 1 Gruppen AS’ assets, in addition to shares in its sub-
company Conecto AS on September 10, 2010. The company
NOK 292 million, of which unutilised drawing rights accounted
reported a loss before tax of NOK 3.8 million, which was the
for NOK 200 million. The liquidity reserve decreased with NOK
result from the day of the acquisition, September 10, until the year
210 million compared to 2009.
end. The company generated revenue of NOK 86.6 million in
2010, which was NOK 9.5 million more than in 2009. Conecto AS
The equity consists of share capital, share premium account, and
has calculated the impact of the changes in the debt collection
other equity. Share capital in the holding company was NOK
regulation as of September 2009 to cause a reduction in revenue
1,782 million as of December 31, 2010, while total equity was NOK
10
SpareBank 1 Gruppen
2.758 million. The holding company had free equity of NOK 728
DIVIDEND
million at the end of 2010.
The Board proposes that a dividend of NOK 440 million be distributed from SpareBank 1 Gruppen AS for 2010. At the same time it
The capital adequacy ratio in the SpareBank 1 Gruppen AS was
will be carried out a share issue of NOK 440 million to the owners
53.7 % as of December 31, 2010, compared with 57.7% in 2009.
so that the company's financial strength is maintained.
SpareBank 1 Gruppen AS core capital adequacy ratio as of December
31, 2010 was 44.9 %, compared with 47.6 % the previous year.
RISK FACTORS
The operations of SpareBank 1 Gruppen are organised into diffeSPAREBANK 1 GRUPPEN
rent business areas through the Group’s subsidiaries. There are
Cash and cash equivalents reserve were reduced by NOK 309.3
major differences in the risk structure between each subsidiary.
million during 2010. Reason for the reduction is that net cash flow
The most important risk categories that impact the Group are
from operational activities and investment activities, amounting
related to market risk, insurance risk, ownership risk operational
to NOK 6,575 and 789.7 million respectively, did not exceed the
risk, credit risk, liquidity risk, concentration risk, as well as
cash flow of NOK 7,674 million from financing activities.
strategic and business risk.
Lending to customers and claims towards credit institutions had
Bank 1 Oslo AS was demerged out from SpareBank 1 Gruppen
a reduction of NOK 20,622 (increased of 210.91) million. Deposits
effective January 1, 2010. This has led to changed risk exposure
and debt to customers and credit institutions were reduced by
compared to last year.
1
NOK 16,835 million (294.4 ). The holding of securities increased
with a net of NOK 883.3 million. The property portfolio was
1
Responsibility for risk management and control
reduced with NOK 596.1 (488.5 ) million. Debt established by
The Group’s board of directors is responsible for risk management
issuing securities had a net reduction of NOK 5,504 (increased of
and compliance in the Group. The board of each subsidiary is
1
876.9 ) million. In 2010, dividends of NOK 120 million were
responsible for managing risk and compliance in their own
paid to the owners.
company.
The SpareBank 1 Gruppen Group, had a total equity of NOK
The responsibility for the overall risk management within the
4,809 million at year end, compared to NOK 5,293 million the year
Group lies with the Director for Strategy, Analysis and Risk
before. Capitalised goodwill in the Group as of December 31, 2010
Management in the holding company. The Director reports to the
amounted to NOK 851 million.
Chief Executive Officer of SpareBank 1 Gruppen AS.
The capital adequacy ratio in the Group was 16.1% as of
The purpose of risk management in SpareBank 1 Gruppen is to
December 31, 2010, compared with 16.31 % in 2009. The Group’s
support the Group’s strategic development and achievement of
core capital adequacy ratio as of December 31, 2010 was 12.5%,
goals as well as fulfilment of statutory capital requirements. The
1
compared with 11.8 % the previous year.
risk management shall ensure financial stability and proper Asset
Management. This shall be achieved through:
The transfer of the shares in Bank 1 Oslo AS January 1, 2010, to
the SpareBank 1-banks and LO involved a capital reduction in
a moderate risk profile
SpareBank 1 Gruppen of NOK 1.130 million as of January 1,
a strong risk culture with a high level of risk management
2010. Of this reduction, share premium account and other equity was
awareness
reduced with NOK 579 and 551 million respectively.
striving towards an optimal capital allocation within the
adopted business strategy
The annual accounts are presented under the assumption that the
exploitation of synergy and diversification effects, and
company will continue as a going concern. The board finds that
an adequate core capital in accordance with the chosen risk
the prerequisites for the going concern assumption have been
profile.
met by the annual accounts for 2010 and the result forecasts for
2011. Beyond matters mentioned in this report, no circumstances
Internal control within the Group is regulated in Group Policies
have arisen after the end of the financial year that would be of
but defined as a line responsibility. In accordance with the
material significance to the company’s financial position and
«Regulations relating to Risk Management and Internal Control»
results.
and the Group’s own guidelines, risk factors in the operations are
reviewed annually and action plans are prepared in all units,
11
which are reported to the respective subsidiary’s board of directors.
In addition, surveys are conducted across the Group with regard
Market risk
to internal control, Personal Data Act, and security matters.
The Group’s consolidated market risk is measured and reported
SpareBank 1 Gruppen has outsourced the internal auditing
quarterly to the board of directors in SpareBank 1 Gruppen AS.
function to Ernst & Young AS. The Group has benefited with
The calculations are based on a Value at Risk (VAR) model. A
increased expertise as a result of this. Internal auditing operations
corresponding model is used for the follow-up of each subsidiary.
also encompass the subsidiaries.
The subsidiaries manage and monitor risk exposure in accordance
with their own models and routines.
Developments in risk management in 2010
SpareBank 1 Gruppen is, as a financial group, subject to an
2010 has been a very good year financially for SpareBank 1 Gruppen.
extensive set of regulations which are constantly under development.
Except from Argo Securities AS all companies in SpareBank 1
Within insurance, a new set of rules is being developed for
Gruppen improved its financial position through the year. Risk
calculating capital requirement, Solvency II.
management and internal control are considered satisfactory and
have been improved in all companies during 2010.
Solvency II is expected to come in force from 2013. Similar to the
effect Basel II had on the development of risk management in
The value adjusted return in the customer portfolio of SpareBank 1
banks, Solvency II is expected to have at least the same effect on the
Livsforsikring AS was 7.1 % and the booked return was 5.2 %.
calculation of capital requirements as well as the need for developing
SpareBank 1 Livsforsikring AS’ securities adjustment reserves
new models for risk management in insurance companies. Extensive
increased from NOK 327.1 million to NOK 616.9 million during
work is being performed to prepare for the new rules, including
the year. The additional provisions were increased with NOK
participation in regulatory trial projects.
125.3 million and amounted to NOK 379.3 million at year end. The
capital and solvency margin were satisfying at the beginning of the
The Group will also be subject to the new regulations. SpareBank 1
year, and have significantly improved during the year.
Gruppen went through considerable changes in 2010 with
consequences for risk management within the Group. Among the
Despite the fact that SpareBank 1 Skadeforsikring AS has a con-
most important events in 2010 with short term impact, is that from
servative investment profile in its investment portfolio, the share
January 1, 2010 Bank 1 Oslo AS is no longer owned by SpareBank
invested in equities was 9.1% at the end of 2010 compared to
1 Gruppen AS. This separation has led to a significant reduction in
7.1% in 2009. The company has very short term maturity on its
the exposure to credit risk. Credit risk as a share of total risk exposure
interest placements. At the end of the year, 14.1% of the company’s
was reduced from 9.2% as of December 31, 2009 to 1.7% as of
investment portfolio was placed in real estate, compared to 14.4%
December 31, 2010. The separation of Bank 1 Oslo AS will not have
in 2009. Despite the increase in the equity share on the company’s
any short term effect on the work related to risk management other
financial investments, the market risk in the company is still
than reducing risk exposure for SpareBank 1 Gruppen.
considered medium-high. The company had a financial return of
4.9% in 2010 compared to 6.8 % in 2009.
At the same time, acquisition, restructuring and development of
the companies in SpareBank 1 Gruppen Finans Group and Argo
Ownership risk
Securities AS will in the future become an important part of value
Given the present risk exposure, the holding company’s financial
added in SpareBank 1 Gruppen. They will also constitute a more
position is regarded satisfactory. The development of the results
significant part of risk elements in SpareBank 1 Gruppen. From
in 2010 has entailed a significantly better financial situation than
2009, the companies were included in the overall risk calculation
at the beginning of the year.
and were also a part of the calculation of diversification effects.
Credit risk
The Group’s risk management review program has continued
The demerger of Bank 1 Oslo AS has resulted in a significantly
through 2010.
lower exposure against credit risk for the Group.
Risk categories
The credit risk in SpareBank 1 Livsforsikring AS and SpareBank
The Group’s risk exposure is related primarily to market risk,
1 Skadeforsikring AS is related to investments in commercial
insurance risk, ownership risk, credit risk, concentration risk, as
paper and bonds. SpareBank 1 Livsforsikring AS is exposed to
well as operational risk (included compliance risk), liquidity risk
Collateralized Debt Obligations (CDOs) in its portfolios, recognised
and strategic and commercial risk. For an explanation of each risk
at NOK 212 million. This amounts to approximately 0.8 % of
category, see Note 3 - Financial risk management.
total financial assets.
12
SpareBank 1 Gruppen
The risk associated with the remaining interest investments is limited
In connection with the new «Regulations relating to Risk Manage-
to companies with high credit worthiness. The credit risk in this part
ment and Internal Control», including paragraph § 6 (last section)
of the portfolio is considered low to moderate. The insurance
of these regulations, which clarifies the overlap with the «Capital
companies have in addition credit risk attached to different
Adequacy Regulations», all the framework and management
reinsures. The ratings are monitored closely and the risk is
documents in the Group was updated in 2009 and further adjustments
considered very low. In the real estate portfolio risk associated
were made in 2010 to clarify the boundaries between the risk
with operating the signed leases exists. This risk is also considered
processes that are encompassed by the internal control work and
limited.
those that are encompassed by the ICAAP work. In addition, it is
Concentration risk
which conducts continuous ongoing work related to compliance,
Concentration risk for SpareBank 1 Livsforsikring AS and
industry standards etc, but also through follow up of internal
SpareBank 1 Skadeforsikring AS is expected to be related to
guidelines. This function ensures the fulfillment of risk prosesses
investment, especially in connection with investment in bonds
required by law and effective implementation internally. Compliance
established a separate compliance function within the Group,
issued by financial institutions. Capital requirements for this risk
with statutory risk processes and an efficient implementation of
have not been calculated as of December 31, 2010. SpareBank 1
these are ensured through this work. Compliance risk on Group level
Skadeforsikring AS has a certain concentration risk attached with
is monitored through qualitative analyses as well as continuously in
reinsurers.
the daily operations. At company level compliance reports are
prepared in connection with the administration of the investment
Insurance risk
portfolio.
Insurance risk is a central part of the operations in both SpareBank
1 Livsforsikring AS and SpareBank 1 Skadeforsikring AS. Losses
Liquidity risk
in SpareBank 1 Skadeforsikring AS can arise as a consequence of
Financing structure is based on an overall liquidity strategy which
fluctuations in the current year’s claims ratio and changes in
is reviewed and approved by the board at least once a year. The
claims reserves. For SpareBank 1 Livsforsikring AS the insurance risk
liquidity risk is reduced through diversification of the deposits
comes mainly from risk products without profit sharing.
across different markets, deposit sources, instruments and maturity
terms. In 2010, the liquidity risk in SpareBank 1 Gruppen was
SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring
mainly associated with the parent company and it is considered
AS relieve risk through reinsurance. The companies either cede
to be low.
a significant level of risk within individual business areas or
cede a share of the claims from the overall insurance business to
Strategic and commercial risk
reinsurers. Reinsurance also covers cumulative claims and disasters.
SpareBank 1 Gruppen has established a contingency plan for
The risk associated with the reinsurers’ creditworthiness is placed
handling reputation-sensitive issues. The contingency plan’s
under credit risk.
agenda will be reviewed and updated every quarter. Work on
The control of the insurance risk in both SpareBank 1 Skadeforsikring
Communication.
specific matters will be initiated and managed by the Director of
AS and SpareBank 1 Livsforsikring AS is considered to be satisfactory.
Together with the Alliance’s Risk Management Forum, the Group
Operational risk
will continue to focus on the establishment of quantitative models
The operational risk in the subsidiaries is currently documented in
with the purpose of estimating the capital needs for the strategic and
connection with the work done to meet the «Regulations relating to
commercial risks in the Group.
Risk Management and Internal Control». This work normally requires the management group of each subsidiary and staff area in the
Changes in the regulations
holding company to identify the main category of operational risk
After the separation of Bank 1 Oslo AS, SpareBank 1 Gruppen is
before and after the implementation of measures. This effort did not
no longer required to prepare ICAAP calculations in accordance
identify any serious risk factors in the Group in 2010.
with the Basel II regulations. Some subsidiaries in SpareBank 1
Gruppen are still required to prepare ICAAP calculations.
In connection with the implementation of the Group’s ICAAP
SpareBank 1 Gruppen will continue to prepare ICAAP calculations
calculations, models were put in place for calculating necessary
in accordance with current Basel II regulations in 2011 as they did
capital needs for operational risk. Reference is made to the Pillar 3-
in 2010. The consequence of this will be that the requirements for
report for a more detailed description of these calculations.
similar reporting in certain subsidiaries will cease, and that complete
13
ICAAP calculations will be prepared at Group level only.
After the separation of Bank 1 Oslo AS, SpareBank 1 Gruppen is
now considered to be an insurance dominated mixed financial
group. The Group will therefore be encompassed by the Solvency II regulations. During 2010 the Group has on a consolidated
level taken part in the quantitative calculations associated with QIS
5. The results show that the Group is well prepared to meet the
expected requirements in the new regulation.
Pillar 3
Reference is made to a separate Pillar 3-report prepared in
accordance with the requirements stipulated in Part IX, Chapters
45 and 46, of the Capital Adequacy Regulations. The report has
also been prepared to meet the market’s increased demand for
transparency and openness with regard to risk in general and a
more detailed review of the company’s capital and risk situation.
For the Pillar 3-report we reference to http://investor.sparebank1.no.
ORGANISATION AND WORKING ENVIRONMENT
AT SPAREBANK 1 GRUPPEN AS
Organisation
In SpareBank 1 Gruppen there were a total of 1,196 employees and
1,162 full-time equivalents in 2010. The corresponding figures for
2009 were 1,441 and 1,409 respectively. The decrease in the workforce
is related primarily to the demerger of Bank 1 Oslo AS from
January 1, 2010, and restructuring processes in parts of the Group.
SpareBank 1 Gruppen AS had 220 employees and 213 full-time
equivalents as of December 31, 2010.
The total turnover in 2010 was 9.9%. The corresponding figure for
2009 was 7.1%. Adjusted for early retirement pensions (AFP), old
age pensions and disability pensions, the Group’s turnover was
7.6% compared to 4.9% in 2009.
All business areas are organised in subsidiaries. The Chief Executive
Officers in the subsidiaries, together with the directors for Finance,
Communication and Strategy & Business development, partake in
the corporate management group of SpareBank 1 Gruppen.
HR Strategy
SpareBank 1 Gruppen’s HR strategy is based on the Group’s
vision, values, goals and success factors. The main goal is to
ensure that SpareBank 1 Gruppen:
Attracts the right employees by focusing on the values «to be
an expert and close to you».
Retains the best employees by giving them responsibilities,
communicating with them and rewarding them for good
performance.
14
SpareBank 1 Gruppen
Develops employees through involvement, establishment of
clear goals and follow-up.
3.0 % in 2010. Training in various HSE disciplines was provided
for managers and safety coordinators in 2010. This was carried out
in consultation with the individual working environment
The HR strategy follows the employment cycle of an employee and
committees.
contains frameworks and guidelines for how the company as an
employer should manage and develop its employees. The HR
SpareBank 1 Gruppen’s ethical guidelines specify rules for how
strategy includes guidelines that will develop SpareBank 1 Gruppen
the employees and representatives shall give notice if they become
as an attractive and including working place without any form for
aware of matters that are in violation of laws, regulations or the
discrimination.
Group’s internal rules. A separate notification routine has also been
established.
Central areas in our HR Strategy are:
SpareBank 1 Gruppen started the project «the Workplace of the
The trainee programme
Future» with a rebuilding of the headquarters in Hammersborggata
Since the trainee programme was introduced in 2006 a total of 15
2 in 2010. During 2011 most of the employees in the Group will
trainees have completed their trainee period. All of them have
make use of modern and contemporary facilities that contributes
central positions within the Group. SpareBank 1 Gruppen has
to increased interaction and knowledge sharing.
currently nine trainees and will recruit a new group of trainees in
2011. The purpose of the trainee programme is to recruit future
Development of expertise
managers and technical specialists who, during a two-year period,
Work related to human resources and expertise development in the
will acquire wide-ranging expertise in the Group’s various busi-
alliance is organised in a HR-Committee. The HR-Committee is
ness areas.
mandated to develop a common overarching HR strategy including
a focus on attracting the right, keep the best and develop the
The remuneration policy
employees.
Regular analyses are conducted to ensure that the Group offers
competitive terms. The incentive scheme and profit sharing at the
SpareBank 1 Gruppen has a collective strategy of expertise. The
Group level and bonus scheme at the company level was continued
subsidiaries initiate vocational training and other skills upgrading
in 2010.The incentive scheme is adapted to the principles of
initiatives if required. The Group has joint programmes for
dynamic management, where relative performance is rewarded.
leadership development. SpareBank 1 Skadeforsikring AS has
The Group’s bonus scheme will be adapted to the new regulations and
joined the accreditation scheme for insurance-claims advisors. At
guidelines from the FSA on compensation in financial institutions.
the end of 2010, 468 insurance advisors had approved the
accreditation tests.
Working environment and sickness leave
Annual work climate surveys are conducted. From 2010 the
Life Phase and equal opportunities
organisation uses a new survey which gives better estimates of the
The Group’s Life Phase Committee ensures that the Group
performance culture and dynamic management to underpin the
complies with the Norwegian Gender Equality Act. The committee
culture the Group wants to develop. The working environment in
also focuses on how SpareBank 1 Gruppen can be an attractive
the Group is considered to be good, but there are variations in the
employer for employees in various life phases.
different departments. The survey makes it possible to be targeted
on the basis of the different departments` needs. The survey will
In connection with the Group’s life phase policy it was decided
be conducted regularly so that we can follow the development
to change the policy in 2008 in order to fulfil the goal of
from year to year.
increasing the real pension age in the Group. The intention of the
Each subsidiary in SpareBank 1 Gruppen has its own working-
of useful expertise.
new policy is to reduce the need for recruitment and take advantage
environment committee. The assigned safety personnel in each
subsidiary make an active contribution as well, and a central
Of the Group’s employees, 47% are women and 53% are men.
Workplace Anti-Alcoholism and Drug Addiction Dependency
5.2% of all female employees work on a part-time basis, compared
Committee have been appointed.
with 1.5% of the male employees. In the Group Management, two
out of nine members are women, and in the Alliance Management,
SpareBank 1 Gruppen continued the agreement on an Inclusive
two out of eight members are women. The central management
Workplace. Absence due to sickness was 3.7% in 2010. These rates
groups in the parent company and subsidiaries have 23% female
are among the lowest in the industry. Physician reported absence was
representation overall. There were two women among the eight
15
members of the Executive Board at the end of the year, while female
social progress and
representation on the subsidiary boards was 34% overall.
positive influence in society
SpareBank 1 Gruppen uses a method for reviewing roles and
Our goal is to make money, but value creation has to be in line with
positions to ensure objective wage setting. The placing in wage
sustainable development. Our social commitment is thus about
categories is done with sex neutral tool for position evaluations.
how value is created.
In connection with the annual evaluations of salary, equal pay
associated with work of equal value is a topic. The main cause why
We are committed to take into account how our behaviour affects
the wage level is somewhat higher for men than women in the
people, the environment and the society. This responsibility
Group is that there are more men than women in management and
makes demands beyond the laws, which the financial markets are
specialist positions. Analysis related to equal opportunities and
subject to. Social Responsibility covers everything from investment
pay is conducted in the HR reporting of the Group and deviations
management to labour rights.
are reported to Group Management.
Social Responsibility is also about fraud and injury prevention
As a member of the Norwegian Financial Services Association,
measures, protection of life, health and values, good products to
SpareBank 1 Gruppen AS has participated in the FUTURA
customers, business ethics, environmental impact, credit policies,
programme. This is a development programme that aims to
attitudes and local involvement.
increase the share of women in the recruitment basis for leading
positions.
An active community involvement consists of a long-term
perspective on all aspects and consequences of business in
Attractive employer
society.
SpareBank 1 Gruppen experiences an increased interest by young
employees. This is a result of the fact that the Group has a strong
Environment and climate accounting
brand in the SpareBank 1-name and the activities that are carried out
Although SpareBank 1 Gruppen does not pollute in the same
to market the Group as an attractive employer at universities and
way as traditional industry, we have an impact on the environment
colleges. SpareBank 1 Gruppen recruited 153 new employees in
- both directly and indirectly. This includes waste, energy use, travel,
2010. The majority of those employed had at least three years of
transportation, materials, procurement and water consumption.
education beyond high school. Most new employees were aged 26
to 35 years, but the Group has recruited employees of all ages in
SpareBank 1 Gruppen will, for the third consecutive year, prepare
2010. The average age of employees in SpareBank 1 Gruppen
a climate accounting based on the total energy consumption related
was 42.1 years at the end of 2010.
to daily operations.
SpareBank 1 Gruppen AS was selected as the twelfth most attractive
The climate accounting will be presented at:
employer among people having worked 2-5 years. This is an
http://investor.sparebank1.no
improvement from the thirtieth place in 2009, and SpareBank 1
Gruppen was this year’s climber.
Community involvement
SpareBank 1 Gruppen is involved in the micro credit company
Efforts to emerge as an attractive employer with exciting career
Kolibri Kapital. Micro credit consists of small loans to the under-
opportunities and competitive terms will continue in 2011.
privileged and enterprising individuals in developing countries,
for the development of business activity or improvement of housing
conditions. Kolibri Capital collects money in Norway through
SOCIAL RESPONSIBILITY
an ongoing expansion of its share capital. This is in its entirety
SpareBank 1 Gruppen has the following definition of community
loaned out to micro-banks in South Africa, Asia and South
involvement:
America. SpareBank 1 Gruppen contributes with share capital.
«We are committed to contribute to sustainable economic development together with our employees, their families, the community
and society in general to improve the quality of life for most
CHANGES TO THE BOARD AND EXECUTIVE MANAGEMENT
people». This work is based on four principles:
Hans Olav Karde, CEO of SpareBank 1 Nord-Norge, was elected
Chairman of the Board in April 2010. He succeeded Harry
economic growth,
Konterud who had been Chairman of the Board since April 2009.
environmental balance,
Harry Konterud resigned from the Board in April 2010, and
16
SpareBank 1 Gruppen
Richard Heiberg, who took over as CEO of Sparebanken Hedmark
Livsforsikring AS. It is the opinion of the Board that SpareBank 1
after Harry Konterud, was elected. On January 26, 2011 Tor-Arne
Gruppen is well capitalised to meet anticipated requirements in
Solbakken, Vice Chairman of the LO, replaced Bente N. Halvorsen,
connection with the Solvency II framework.
as a member of the Board. At the same time Terje Vareberg
resigned from the Board. Arne Austereid, who took over as CEO
Argo Securities AS, the Group's investment and brokerage house,
of SpareBank 1 SR-Bank on January 1, 2011 after Terje Vareberg,
has not yet achieved satisfactory profitability. Actions have been
was elected as Vice Chairman of the Board.
taken to address this area and are expected to yield results in 2011.
Significant investment costs in the company imply that
Within Group Management there were two changes during 2010.
profitability will be achieved in the medium to long run.
Jarle Haug was appointed CEO of SpareBank 1 Gruppen Finans AS
from January 2010 and became a member of Group Management.
SpareBank 1 Gruppen is exposed to the securities market through
Øyvind Aass, head of the alliance partnership, joined the Group
its various subsidiaries and thus the development in stock prices
Management from May 2010. He has led the alliance partnership
and interest rates affect the earnings of the Group to a large extent.
since December 2007.
The outlook for the Norwegian economy in 2011 is good. Growth in
the mainland economy is expected to be 3%, driven by increased
private consumption and rising investment. For households, there
OUTLOOKS
is increasing optimism grounded in low unemployment, low
2010 was a profitable year for SpareBank 1 Gruppen. Return on
interest rates and low inflation that is already contributing to
equity was in the top league of financial service companies in the
increased purchasing power of households. Norges Bank will
Nordic countries due to good earnings in the major product
probably increase interest rates gradually and in small steps back
companies, aided by favourable investment markets, the
to a more normal level over the next 2-3 years. Favourable macro-
profitability program, Delta, and one-off effects. The profitability
economic conditions and expected good performance in the
program has also helped improve the underlying operations.
securities market will provide Sparebank 1 Gruppen basis for
continued growth, and the board expects a good result in 2011.
The pension reform will increase focus on the need for own
retirement savings. It is the opinion of the Board, that
SpareBank 1 Gruppen is well positioned to increase business
A WORD OF GRATITUDE
volume in this area.
The employees have shown a strong willingness to «go the extra
mile» in 2010. Collaboration with the employee organizations
During 2010, the Group's capacity to bear risk further improved,
was close and productive. The Board is highly satisfied with the
due to a number of factors such as the strengthening of the securities
results for 2010 and would like to extend thanks to all the employees
adjustment reserves and additional provisions in SpareBank 1
of SpareBank 1 Gruppen for their excellent efforts.
Oslo, 31. March 2011
Hans Olav Karde
Arne Austereid
Bjørn Engaas
Finn Haugan
Knut Bekkevold
Richard Heiberg
Tor-Arne Solbakken
Venche Johnsen
CHAIRMAN OF THE BOARD
Kirsten Idebøen
CHIEF EXECUTIVE OFFICER
NOTE: This translation from Norwegian has been prepared for information purposes only.
Financial statements 2010
SpareBank 1 Gruppen
18
SpareBank 1 Gruppen
SPAREBANK 1 GRUPPEN – INCOME STATEMENT
Parent company
Group
2010
2009
NOK 1,000
15 920
61 422
-45 502
-1 310
3 641
606 274
4
563 107
31 437
63 318
-31 881
18 245
203 442
189 807
Gross Insurance premium revenue
- reinsurers' share
Interest income
Interest expense
Net interest income
Fee and commission income
Fee and commission expense
Net gains in financial assets designated at fair value
Net gains in financial instruments classified as avalable-for-sale
Net income from bonds at amortised cost
Net income from bonds held-to-maturity
Share of profit and group contribution from subsidiaries
Total income
-25 957
33 325
276
7 644
555 463
21 850
31 718
3 261
56 829
132 978
555 463
109 008
446 455
132 978
115 731
17 247
Insurance benefits and claims
Insurance claims recovered from reinsurers
Securities adjustment reserve for life insurance
Transferred to policyholders - life insurance
29
Operating expenses
12
Depreciations and amortisation expenses
14, 15, 18
Total operating Expenses
Operating Profit
Share of profit of associates and jointly controlled entities accounted
for by the equity method
17
Profit before tax
Income tax expense
50
Profit after tax
Profit attributable to:
Shareholders of the parent company
Minority interests
Earnings per share (expressed in NOK)
Diluted earnings per share (expressed in NOK)
Note
7
9
8
9
9
9
9
10
11
2010
2009
8 213 841
535 217
7 678 624
98 447
85 196
13 251
715 505
846 205
-130 700
1 547 267
30 596
75 049
259 255
399 410
384 321
10 257 073
7 556 607
488 185
7 068 422
1 066 328
798 280
268 049
855 270
752 100
103 170
2 443 931
48 046
3 362
271 779
306 848
324 887
10 838 494
7 496 694
-488 154
289 732
142 363
10 405
1 674 173
91 300
55 427
9 271 940
985 133
7 013 788
-331 006
327 145
170 766
127 918
123 168
2 077 123
124 317
11 226
9 644 445
1 194 049
985 133
153 586
831 547
-386
1 193 663
294 020
899 643
841 025
-9 478
909 115
-9 472
467
472
505
510
19
SPAREBANK 1 GRUPPEN – STATEMENT OF COMPREHENSIVE INCOME
Consolidated statement of income, expenses and value change
Group
NOK 1,000
2010
2009
Profit for the year
Actuarial gains and losses in pension
Revaluation of property
Adjustment of insurance liabilities
Change in available-for-sale financial assets
Income tax
Total complrehensive income for the year
831 547
-76 215
-12 656
3 228
-814
23 980
769 070
899 643
-9 477
1 595
-819
-594
2 436
892 784
Shareholders' of the parent company
Minority interests
778 548
-9 478
902 256
-9 472
2010
2009
446 455
-1 057
296
445 694
17 247
-12 567
3 519
8 199
Parent company
NOK 1,000
Profit for the year
Income tax
Total comprehensive income for the year
20
SpareBank 1 Gruppen
SPAREBANK 1 GRUPPEN – CONSOLIDATET BALANCE SHEET
Parent company
31.12.10
31.12.09
93 664
4 469 691
10 147
127 501
243 351
17 583
122 580
692
93 520
5 178 729
Group
NOK 1,000
Note
31.12.10
31.12.09
101 933
5 042 709
18 000
76 955
193 758
15 335
250 000
101 198
5 799 888
ASSETS
Deferred income tax asset
50
Goodwill
5, 14, 52
15
Investment in subsidiaries
16
Investment in associates and jointly controlled entities
17
18
Reinsurance receivables
40
Insurance receivables from policyholders
41
Other assets
19
Investment property
27
20, 25, 26, 31
20, 25, 26, 31
Financial instruments - available for sale
20 ,21, 24, 31
Lending to customers and deposits with credit institutions 20, 21, 26, 28, 31, 33
20, 21, 22, 31
Derivative financial instruments
20, 21, 23
Cash and cash equivalents
20, 26
TOTAL ASSETS
850 819
142 933
9 010
1 340 389
1 494 338
1 394 441
616 077
4 094 812
4 679 131
1 249 291
20 216
658 452
23 024 332
130 605
985 375
40 690 221
760 486
63 880
120 553
526 991
1 150 842
1 108 015
482 731
4 690 887
5 020 382
764 626
42 944
21 280 928
23 938 155
220 787
1 294 653
61 466 859
2 030 277
727 859
2 758 136
2 609 496
822 945
3 432 441
EQUITY AND LIABILITIES
Shareholders equity
Retained earnings
Revaluation reserve
Minority interests
Total equity
2 030 277
2 691 636
71 454
15 446
4 808 813
2 609 496
2 588 291
65 221
30 300
5 293 308
433 846
683 892
74 966
1 376 914
534 867
5 178 729
103 318
500 531
578 005
501 700
5 799 888
848 846
616 870
22 315 681
8 067 303
325 355
253 417
85 081
1 376 914
77 706
160 265
1 129 898
624 072
40 690 221
1 769 568
327 145
20 843 433
6 821 960
460 453
155 643
137 653
6 880 478
95 123
219 064
1 004 101
17 458 930
61 466 859
Subordinated loan capital and perpetual
subordinated loan capital securities
20, 32, 37
Securities adjustment reserve
Provisions in life insurance
42
Premium and claims provisions in P&C Insurance
43
Net retirement benefit obligations
48
Deferred income tax liability
50
Payable taxes
50
Securities issued
20, 21, 32, 38
Liabilities related to reinsurance
44
20, 21, 23
Other liabilities
51
Deposits from and liabilities to customers and credit institurions 20, 21, 32, 36
TOTAL EQUITY AND LIBILITIES
Oslo, 31. March 2011
Hans Olav Karde
Arne Austereid
Bjørn Engaas
Finn Haugan
Knut Bekkevold
Richard Heiberg
Tor Arne Solbakken
Venche Johnsen
CHAIRMAN OF THE BOARD
Kirsten Idebøen
CHIEF EXECUTIVE OFFICER
NOTE: This translation from Norwegian has been prepared for information purposes only.
21
CONSOLIDATED STATEMENT OF CASH FLOW
Parent company
Group**
2010
2009
NOK 1,000
446 455
-
17 247
-
33 325
127 420
-566 029
31 718
-50 000
100 000
-68 660
-
-
-501 700
-460 529
-9 353
20 952
-692
256 034
-258 282
-50 546
-53 486
203 384
-218 566
-32 949
-48 131
Increase in financial instruments designated at fair value
Reduction of financial instruments designated at fair value
Increase in financial instruments held to maturity
Reduction of financial instruments held to maturity
Increase in financial instruments available for sale
Reduction of financial instruments available for sale
Payment of group contributions *
Additions investment property
Disposals and gain Investment property
Increse property, plant and equipment
Net cash flow used in investing activities
-250 046
-120 000
876 383
506 337
176 000
-800 000
-624 000
Receipts on subordinated loan capital
Payments related to redemption of subordinated loan capital
Receipts on new equity
Effect of demerged of Bank 1 Oslo AS
Dividends
Increase of securities issued
Reduction of securities issued
Net cash flow from financing activities
-7 678
-651 179
Net receipts/payments of cash
101 198
752 377
Cash and cash equivalents as at January 1
93 520
101 198
Cash and cash equivalents as at December 31
Note
2010
2009
831 547
899 643
91 300
-148 187
10 388
-343 496
20 612 088
3 007 315
-650 891
-386
124 317
18 077
123 168
-50 880
-1 153 527
2 561 504
286 627
-
454 978
36
-16 834 858
6 575 207
3 263 521
22, 23
22
1 004 005
-143 414
22 728
-24 942
803 601
-872 245
789 733
-4 871 025
147 718
-12 595
-48 015
-67 128
-4 851 045
-920 722
-1 129 932
-120 000
-5 503 564
-7 674 218
535 100
-100 000
176 000
-800 000
919 230
730 330
-309 278
-857 194
1 294 653
2 151 847
985 375
1 294 653
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after tax
Share of profit or loss from associates and jointly controlled
entities accounted for by the equity method
Revision of investment property values
Increase reinsurance receivables
Increase in lending to customers
Reduction in lending to customers
Change in insurance provisions
Change in accrued expenses and prepaid revenues
Increase in deposits from customers and loans and
deposits from credit institutions
Reduction in deposits from customers and loans and
deposits from credit institutions
Net cash flow generated from operating activities
17
15, 18
27
29
40
28, 29
28
CASH FLOWS FROM INVESTING ACTIVITIES
26
24
24
27
27
18
CASH FLOWS FROM FINANCING ACTIVITIES
*
37
37
53
38
38
20, 26
The group contribution payment is registrered as an increase in subsidiary investment.
Other granted and received group contribution is recognised through profit and loss, and is not presented here.
** Group consolidated exclusive Bank 1 Oslo AS per December 31, 2010, is showed in note 54.
22
SpareBank 1 Gruppen
STATEMENT OF CHANGES IN EQUITY
Parent company
NOK 1,000
Note
Equity as at 31 December 2008
Share capital
Share premium
reserve
Retained
earnings
Total
equity
1 747 200
986 296
1 375 944
4 109 440
17 247
Profit for the year
-
-
17 247
Actuarial gains and losses on pension
Capital increase
-
-
-9 048
-9 048
35 200
140 800
-
176 000
-
-300 000
300 000
-
1 782 400
827 096
-800 000
-61 199
822 945
-800 000
-61 199
3 432 441
Capital reduction
Dividends
Other postings through equity
Profit for the year
-
-
446 455
446 455
Actuarial gains and losses on pension
Capital increase
-
-
-761
-761
-
-
-
-
Capital reduction/demerger of Bank 1 Oslo AS
-
-579 219
-420 781
-1 000 000
1 782 400
247 877
-120 000
727 859
-120 000
2 758 136
Retained
earnings
Revaluation
reserve
Noncontrolling
interests
Total
equity
Dividends
Group
NOK 1,000
Note
Share premium
Share capital
reserve
1 747 200
986 296
2 211 791
66 048
42 825
5 054 160
Profit for the year
-
-
909 115
-
-9 472
899 643
-
-
-6 853
-
-
-6 853
Revaluation property
Financial assets available for sale
-
-
-
-827
-
-827
-
-
-594
-
-
-594
176 000
Capital increase
Capital reduction
35 200
140 800
-
-
-
-
-300 000
300 000
-
-
-
Dividends
Disposal minority interest
Other postings thorugh equity
-
-
-800 000
-
-
-800 000
1 782 400
827 096
-25 167
2 588 291
65 221
-3 054
30 300
-3 054
-25 167
5 293 308
Profit for the year
Revaluation property
Financial assets available for sale
Capital increaes
Capital reduction/demerger of Bank 1 Oslo AS
Dividends
Disposal minority interst
Correction previous year
1 782 400
-579 219
247 877
841 025
-54 875
-814
-550 713
-120 000
-15 345
4 068
2 691 636
-9 112
15 345
71 454
-9 478
-5 377
15 446
831 547
-54 875
-9 112
-814
-1 129 932
-120 000
-5 377
4 068
4 808 813
23
Notes
NOTE 1 – GENERAL INFORMATION
As of December 31, 2010, SpareBank 1 Gruppen Group consisited of
the parent company SpareBank 1 Gruppen AS and the wholly-owned
subsidiaries; ODIN Forvaltning AS, SpareBank 1 Livsforsikring AS,
SpareBank 1 Skadeforsikring AS, SpareBank 1 Medlemskort AS,
Sparebankutvikling AS and SpareBank 1 Gruppen Finans AS, as well
as Argo Securities AS with an owner share of 76,75%.
SpareBank 1 Gruppen AS' ownershare in Bank 1 Oslo AS was
distributed to the SpareBank 1 banks (90%) and LO (10%) with effect
from January 1, 2010.
Alliansesamarbeidet SpareBank 1 DA is recognised through using
the equity method, and the Group's owner share is 10%.
SpareBank 1 Gruppen AS has its office address in Tromsø, Norway.
SpareBank 1 Gruppen AS is a holding company that, through its
subsidiaries, provides and distributes products in the fields of life and
P&C insurance, fund management, securities brokering, factoring,
receivables management and debt collection of old claims. The Group's
primary market is Norway.
The Group's consolidated financial statements have been authorised
for issue by the supervisory board and the shareholder's committee on
April 27, 2011. The General Meeting is the Group's upper body.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of preparation for the consolidated financial statements
The consolidated financial statement for SpareBank 1 Gruppen and the
financial statement for the parent company for the fiscal year 2010 have
been prepared in accordance with International Financial Reporting
Standards (IFRS), which are approved by the EU, as well as in accordance
with existing additional Norwegian regulations. This also includes
IFRIC (The International Financial Reporting Interpretations Committee)
interpretations and those of its predecessor SIC (The Standing Interpretations Committee).
The consolidated financial statements have been prepared under the
historical cost principle, except for financial derivatives, financial
assets and financial liabilities held at fair value through profit or loss
and financial assets available-for-sale. Properties owned for the purpose of gathering rent income or an increase in value are measured at
fair value according to IAS 40.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise it judgement in the process of applying the
Group’s accounting policies. The areas involving a greater degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements are disclosed
in Note 4.
The financial statements are presented based on IFRS standards and
interpretations mandatory for financial statements as of December
31, 2010.
New and amended Standards adopted by the Group
The Group has in 2010 adopted the following new standards and
amendments:
IFRS 3 ‘Business Combinations’ (revised) and consequential amendments to IAS 27 ‘Consolidated and separate financial statements’,
IAS 28 ‘Investments in associates’, and IAS 31 ‘Interests in joint
Ventures’ are effective prospectively to business combinations for
which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after January 1, 2010.
The revised standard continues to apply the acquisition method to
business combinations but with some significant changes. The revised
standard requires that the effects of all transactions with noncontrolling shareholders be recorded in equity when there is no
change in control. Such transactions will no longer result in goodwill
or gains or losses. When control ceases, remaining ownership interest
is measured at fair value and gains or losses are recognised through the
income statement.
The revised standard requires goodwill to be determined only at the
acquisition date rather than at each step of the acquisition. The
determination of goodwill includes the previously held equity interest
to be adjusted to fair value, with any gain or loss recorded in the
income statement. A contingent consideration will be recognised at fair
value at the acquisition date. After the previous rules, the contingent
consideration would have been recognized at the date when the
probability requirement is not met. Transaction costs are expensed.
Previously these would have been included in the purchase price.
IAS 24 ‘Related party disclosures’ (revised) supersedes IAS 24 issued
in 2003. The standard is mandatory for accounting periods beginning on
or after January 1, 2011. As permitted, the Group has opted for an
earlier application of this standard. The revised standard clarifies
and simplifies the definition of related party, and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities.
IAS 27 ‘Consolidated and separate financial statements’ (revised)
requires the effects of all transactions with non-controlling interests to
be recorded in equity if there is no change in control. Such transactions
will no longer result in goodwill or gains and losses. The standard also
specifies the accounting when control is lost. Any remaining interest in
the entity is re-measured to fair value, and a gain or loss is recognised in
profit or loss. IAS 27 (revised) has no impact on the current period, as
none of the non-controlling interests have a deficit balance; there
have not been transactions whereby an interest in the entity is retained
after the loss of control of that entity, and there have not been transaction with non-controlling interests.
New and amended standards, and interpretations adopted by
the Group but not currently relevant (although they may affect
the accounting for future transactions and events)
IFRIC 9 ‘Reassessment of embedded derivatives’ (amended) and
IAS 39, ‘Financial Instruments: Recognition and measurement’. The
amendment to IFRIC 9 requires an entity to assess whether an
embedded derivative should be separated from a host contract when
the entity reclassifies a hybrid financial asset out of the ‘fair value
through profit and loss’ category. This assessment is to be made based
on circumstances that existed on the later of: a) the date the entity first
became a party to the contract and b) the date of any contract
amendments that significantly change the cash flows of the contract.
If a reliable measurement is not possible, the reclassification should
not be made.
IFRIC 16 ‘Hedges of a net investment in a foreign operation’ (amended).
The amendment states that, in a hedge of a net investment in a foreign
operation, qualifying hedging instruments may be held by any entity
or entities within the Group, including the foreign operation itself,
as long as the designation, documentation and effectiveness
requirements of IAS 39 that relate to a net investment are satisfied. In
particular, the Group should clearly document its hedging strategy due
to the possibility of different designations at different levels of the
Group.
IAS 38 ‘Intangible Assets’ (amended) clarifies the requirements for fair
value measurement of intangible assets acquired through business
24
SpareBank 1 Gruppen
combinations. In particular cases, intangible assets with similar economic
lives can be treated as a single asset.
IAS 1 ‘Presentation of Financial Statements’ (revised). The revised
standard requires that income and expense items previously recognized
directly in equity should be presented in the statement of comprehensive income. In the equity statement, transactions with owners and
income and expense items are presented separately and as previously,
categorized according to type of equity. Comparative figures have
been modified for consistency with the revised standard. The change
affects only the presentation and not earnings per share.
IAS 36 ‘Impairment’. The amendment clarifies that the largest cashgenerating unit (or Group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment,
as defined by paragraph 5 of IFRS 8, ‘Operating Segments’ (that is, before the aggregation of segments with similar economic characteristics
as the referenced to IFRS 8, paragraph 12).
IFRS 2 (amended) ‘Group cash-settled share-based payment’. In addition
to incorporating IFRIC 8, 'Scope of IFRIC 2' and IFRIC 11 IFRS 2 –
Group and Treasury share Transactions, the amendment involves an
expansion in the guidance in IFRIC 11 regarding the accounting of
equity transactions in the consolidation.
New standards, amendments and interpretations issued but not
effective for the financial year and not early adopted
The impact of these changes is expected to be:
IFRS 9 ‘Financial Instruments’ (new) is the first step in the process of
replacing IAS 39. IFRS 9 introduces new requirements for classifying
and measuring financial assets and liabilities, and is likely to affect the
Group`s accounting of its financial assets. The standard is mandatory
from January 1, 2013, but can be adopted early. The standard has not
yet been endorsed by the EU.
The Group has not yet assessed the full effect of IFRS 9. However,
initial indications are that it may affect the Group’s accounting for its
debt available-for-sale financial assets, as IFRS 9 only permits the
recognition of fair value gains and losses in other comprehensive
income if they relate to equity investments that are not held for trading.
Fair value gains and losses on available-for-sale debt investments,
for example, will therefore have to be recognised directly in profit or loss.
IAS 32 ‘Classification of rights issues’ (amendment). The amendment
applies to annual periods beginning on or after February 1, 2010.
Earlier application is permitted. The amendment addresses the
accounting for rights issues that are denominated in a currency other
than the functional currency of the issuer. Provided certain conditions
are met, such rights issues are now classified as equity regardless of
the currency in which the exercise price is denominated. Previously,
these issues had to be accounted for as derivative liabilities.
The amendment applies retrospectively in accordance with IAS 8
‘Accounting policies, changes in accounting estimates and errors’.
The Group will apply the amended standard from January 1, 2011.
IFRIC 19, ‘Extinguishing financial liabilities with equity instrument’
becomes effective July 1, 2010. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated
and result in the entity issuing equity instruments to a creditor of the
entity to extinguish all or part of the financial liability (debt for equity
swap). It requires a gain or loss to be recognised in profit or loss, which
is measured as the difference between the carrying amount of the
financial liability and the fair value of the equity instruments issued.
If the fair value of the equity instruments issued cannot be reliably
measured, the equity instruments should be measured to reflect the fair
value of the financial liability extinguished. The Group will apply the
interpretation from January 1, 2011, subject to endorsement by the EU.
It is not expected to have any impact on the Group or the parent
entity’s financial statements.
IFRIC 14 ‘Prepayment of a minimum funding requirement’ (amendment).
The amendments correct an unintended consequence of IFRIC 14, ‘IAS
19 - The limit on a defined benefit asset, minimum funding requirements and their interaction’. Without the amendments, entities are not
permitted to recognise as an asset some voluntary prepayments for
minimum funding contributions. The amendments are effective for
annual periods beginning January 1, 2011. Earlier application is
permitted. The amendments should be applied retrospectively to the
earliest comparative period presented. The Group will apply these
amendments for the financial reporting period commencing on
January 1, 2011.
The annual improvements for 2010 have resulted in a number of
minor changes to the following standards and interpretations that
can be of relevance for the entity: IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS
27, IAS 34 and IFRIC 13. The improvements in IFRS 3 and IAS 27 apply
to annual periods beginning July 1, 2010. The remaining changes are
effective for annual periods beginning January 1, 2011. The changes
have not yet been endorsed by the EU.
IFRS 7 ‘Financial instruments’ (amendment). The amendment
introduces new disclosure requirements related to continued exposure
to assets that are removed from the balance sheet and the transfer of
assets that remain completely or partially capitalized. The amendments
are effective for annual periods beginning July 1, 2011. An entity will
not be required to revise additional information related to the
providing of comparative disclosure. The amendment has not yet
been endorsed by the EU.
Presentation currency
Items included in the financial statements of each of the Group’s entities
are measured using the currency of the primary economic environment
in which the entity operates («the functional currency»). Foreign
currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. The
consolidated financial statements are presented in Norwegian kroner
(NOK), which is the parent company’s functional currency and the
Group’s presentation currency. Foreign companies in the Group having
another functional currency are converted to NOK by converting
income and expenses at average exchange rates for the year, while the
assets and liabilities are converted at the exchange rate at the closing
date. All resulting exchange differences are recognised in other
comprehensive income and are separately specified in the equity
statement. All amounts are presented in NOK thousands unless
otherwise stated.
Consolidation
a) Subsidiaries
The consolidated financial statements include SpareBank 1 Gruppen
AS and all subsidiaries. Subsidiaries are all entities over which
SpareBank 1 Gruppen has the power to govern the financial and
operational policies generally accompanying a shareholding of more
than one half of the voting rights. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are
de-consolidated from the date on which control ceases.
The Group uses the acquisition method of accounting to account for
business combinations. The consideration transferred for the acquisition
of a subsidiary is the fair values of the assets transferred. Identifiable
assets acquired and liabilities and contingent liabilities incurred or
assumed are measured initially at their fair values at the acquisition
date, irrespective of the extent of the minority interests. The excess of
the cost of acquisition over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in the income statement.
Significant inter-company transactions and balances are eliminated.
The effects of all transactions with minority interests are recorded to
equity when there is not a change in control. Such transactions will
no longer result in goodwill or gains or losses. When control cedes, the
remaining ownership interest shall be measured to fair value, and gains
and losses recorded to income or loss.
b) Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates are
accounted for by the equity method of accounting and are initially
25
recognised at cost. The Group’s investment in associates includes
goodwill identified on acquisition, net of any accumulated impairment
loss.
The Group’s share of its associates’ post-acquisition profits or losses
is recognised in the income statement and assigned a recognised
value of the investments together with share of comprehensive income
in the associate, and impacts of possible errors or amendments of
principles. When the Group’s share of losses in an associate equals or
exceeds its interest in the associate the Group does not recognise
further losses.
c) Jointly controlled entities
Jointly controlled activity can consist of jointly controlled operations,
jointly controlled assets and jointly controlled entities. Joint control
means that SpareBank 1 Gruppen through contract exercises control
in cooperation with other participants. Jointly controlled entities are
accounted for by the equity method.
Investments in subsidiaries and associated accounted for in the
parent company’s financial statements
Investments in subsidiaries and associates are stated at historical
cost. If there is permanent decrease in value, an impairment of the
shares will be done. Executed impairments will be reversed if the basis
for impairment is no longer present.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating
resources to and assessing performance of the operating segments, has
been identified as the Group Management. The Group`s operating
segments are divided into life insurance, P&C insurance, funds
management, brokering business, debt collection of old claims,
factoring and other operations. The Group has no secondary segment
reporting.
Loans and receivables
Acquired Portfolios
Acquired Portfolios are non-derivative financial assets with payments
that are fixed or determinable, and not quoted in an active market.
These are carried at amortized cost using the effective interest method.
Receivables related to Factoring
Accounts receivable factoring is assessed in two ways. In cases where
the factor has not taken over credit risk (risk of debtor's insolvency) only
the part of the asset paid in advance on transferred receivables is
capitalised as «Lending to customers and deposits with credit
institutions». In cases where the factor receives the credit risk, the
receivable is not capitalised at a higher amount than the received
credit risk as «Lending to customers and deposits with credit
institutions». Practically, it is difficult to book such receivables to the
credit risk taken, when such a guarantee is an off-balance sheet
liability that is reported on a separate line under the liabilities side of
balance. We have brought claims for which credit is taken over by the
gross amount as the item «Lending to customers and deposits with
credit institutions». The part of these accounts receivable that are not
financed is listed under item «Margin payments and other accounts
arrangements with customers», in the balance post «Other liabilities».
Provisions for loss
Provisions for loss on loans and collateral (debtors) are listed under the
item «write-downs/loan loss provisions».
Loans and receivables
Loans and receivables are non-derivative financial assets with payments that are fixed or determinable, and that are not quoted in an
active market. Loans and receivables are carried at amortized cost
using the effective interest method.
Other receivables
Other receivables are stated at nominal value less provisions for
expected losses in the balance sheet. Provisions for losses are made on
the basis of individual assessment of each receivable.
Securities and derivatives
The Group has financial assets held for trading, voluntarily designated
at fair value through income, loans and receivables, investments held
to maturity and securities available for sale. The main rule is to classify
investments at fair value through income, either through held for
trading or optional designation. This is consistent with the way the
investments are treated. Certain investments in bonds/commercial
papers are still designated in the categories loans and receivables or
held to maturity. This is done in connection with the transaction.
Ordinary purchases and sales of financial assets are recognised on the
trade-date, the date on which the Group commits to purchase or sell the
asset. Financial assets that are not carried at fair value through income
are initially measured at fair value plus transaction costs that are
directly attributable to their acquisition. Financial assets carried at fair
value through income are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are
derecognised when the rights to receive cash flows from them have
expired or where they have been transferred and the Group has also
transferred substantially all risks and rewards of ownership. Financial
assets available-for-sale and financial assets designated at fair value
through income are subsequently carried at fair value. Financial assets
held-to-maturity are carried at amortised cost using the effective interest
method.
Financial instruments and derivatives designated at fair value through
income
This category has two sub-categories: financial assets held for trading and
financial assets designated by the management at fair value through
income. A financial asset is classified into the ‘financial assets at fair
value through income’ category if acquired principally for the purpose
of selling in the short term, or designated as such by management.
Derivatives are also classified as held for trading unless they are
designated as hedges.
Gains or losses from changes in fair value of assets classified as
‘financial assets at fair value through income’, including dividends, are
included in the income statement under ‘Net income from financial
investments at fair value’ in the transaction period.
Financial instruments available-for-sale
Available-for-sale investments are non-derivative financial assets
which are chosen to this designation or which are not classified in any
another category. Financial assets classified in this category are
measured at fair value, while the change in value from the opening
balance is recognised in the statement of comprehensive income.
Shares classified as available-for-sale in the Group are not actively
traded in the market.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets listed
on an active market with fixed or determinable payments and fixed
maturities that the Group’s management has the positive intention and
ability to hold to maturity. These certificates and bonds are
carried at amortised cost using the effective interest rate method.
Impairment testing
The Group assesses at the end of each reporting period whether there
exists objective evidence that a financial asset or group of financial
assets has been impaired. For shares classified as available for sale, a
significant or prolonged decline in the fair value of the security below
its cost gives objective evidence of impairment. If any such quantitative
evidence exists for financial assets available-for-sale, the total loss –
measured as the difference between the acquisition cost and the
current fair value, less any impairment loss on that financial asset
previously recognised in profit or loss – is removed from equity and
recognised in the consolidated income statement. Impairment losses
on equity instruments and similar instruments, recognised in the
consolidated income statement are not reversed.
If in a subsequent period the fair value of a debt instrument held to
maturity classified as available for sale increases and the increasement
can be objectively related to an event occurring after the impairment
loss was recognised in profit or loss, the impairment loss is reversed
through the consolidated income statement.
The recoverable amount for investments in bonds held to maturity is
26
SpareBank 1 Gruppen
calculated at the present value of future expected cash flows discounted
at the latest fixed effective interest rate (i.e. the effective interest rate
calculated at initial recognition of these financial assets).
When financial assets classified as available-for-sale are sold or
impaired, total value regulation in the equity statement is recognised
in the income statement as gain or loss from investments in financial
assets. Dividends from shares classified as available-for-sale are
recognised through profit and loss when the Group’s entitlement to the
dividends is determined.
The fair value of listed investments is based on current purchase
price. If the market for the financial assets is inactive (or non-listed
financial asset), valuation methods are used to determine the fair
value. These methods refer to recently completed transactions at
market terms, other similar comparable instruments, use of discounted
cash flow analysis or option pricing models. These techniques place
greatest emphasis on market information and least importance on
company specific information.
Bonds that the Group intends to hold to maturity, but that do not fulfil
the requirements for hold-to-maturity portfolios in IAS 39 for being
listed on an active market etc, are classified separately in the balance
sheet as, «Bonds at amortised cost».
Derivatives
Derivatives consist of currency and interest instruments, and structured
instrument products. Derivatives are recognised at fair value through
income at the transaction date. Subsequent changes in the fair value
are recognised through profit or loss.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group’s share of the net identifiable assets of the acquired
subsidiary or associate at the acquisition date. Goodwill as a result of the
acquisition of subsidiaries is classified as an intangible asset. Goodwill
is tested annually for impairment and carried at cost less accumulated
impairment losses. Impairment of goodwill is not reversible. Gains and
losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating
units or Group of cash-generating units for the purpose of impairment
testing. The cash-generating units or Group of cash-generating units are
expected to benefit from the acquisition that generated goodwill.
Research and development
Research expenses carried out with an expectation of gaining new
scientific or technical knowledge and understanding are recognised as
expenses in the consolidated income statement the period the expenses
accrue. Expenses related to development activities, where the research
results are used in a plan or model for production of new or significantly
improved products or in processes, are capitalised if the product or
process is technical and commercially plausible. Capitalised
expenses include material costs, direct labour costs and a share of the
joint expenses. Other development expenses are recognised in the
consolidated income statement the period the expenses accrue.
Capitalised development expenses are recognised in the balance
sheet at acquisition cost less accumulated depreciations and impairment
costs.
Licences
Licences have a finite useful life and are carried at cost less accumulated
amortisation and impairment. Amortisation is calculated using the
straight-line method to allocate the cost of licences over its expected
useful life.
Computer software
Standard computer software fulfilling capitalisation criteria are carried at
acquisition cost (including implementation expenses), and depreciated
using the straight-line method such that the cost is allocated over
expected useful life. The policies for computer software development
largely follow those as described for Research and Development.
Costs associated with maintaining computer software programmes are
recognised as an expense as incurred. Development costs that are
directly attributable to the design and testing of identifiable and unique
software products controlled by the Group are recognised as intangible
assets when the following criteria are met:
• It is technically feasible to complete the software product so that it
will be available for use;
• Management intends to complete the software product and use or sell it;
• There is an ability to use or sell the software products;
• It can be demonstrated how the software product will generate
probable future economic benefits;
• Adequate technical, financial and other resources to complete the
development and to use or sell the software product are available; and
• The expenditure attributable to the software product during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the software
product include costs related to software development employees
and an appropriate portion of relevant overhead. Other development
expenditures that do not meet these criteria are recognised as an
expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period. Computer
software development costs recognised as assets are amortised over
their estimated useful lives.
In connection with acquisition of entities, excess value analysis is performed and identifiable intangible assets are recognised in the consolidated balance sheet. The Group identified excess values linked to
earn-out contracts, trademarks and contractual customer relationships. The excess values are calculated based on projected historical
data, and adjusted for uncertainty before being discounted. These
values are amortised over the related contracts’ average useful lives.
Subsequent expenses
Subsequent expenses regarding capitalised intangible assets are only
capitalised when they increase the future financial benefit related to this
asset. All other costs are expensed as incurred.
Depreciations
Depreciation of intangible assets is calculated using the straight-line
method to allocate their cost over their estimated useful life, unless
their useful life is indefinite. Intangible assets are depreciated from the
date they are available for use.
Intangible assets except for goodwill and time indefinite intangible
assets have an estimated useful life of between 2 and 10 years.
Intangible assets except for goodwill and indefinite life intangible
assets are subject to impairment testing in accordance with IAS 36
when indications of impairment are present.
The Groups’ property, plant and equipment consist of machines,
furniture, means of transport and buildings occupied by the Group for
its own operations. Buildings are shown at fair value, based on annual
valuations by an internal valuation model described under the section
‘Investment property’. The valuation is compared to external valuation
appraisals on a regular basis. Buildings are depreciated subsequent of the
valuation. All other property, plant and equipment are stated at historical
cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the income statement as incurred.
Increases in the carrying amount arising on the revaluation of buildings
are credited to the revaluation surplus in shareholders’ equity.
Decreases that offset previous increases of the same asset are charged
against fair value provisions accordingly. Each year, the difference
between depreciation based on the revaluated carrying amount of the
asset charged to the income statement and depreciation based on the
asset’s original cost, net of any related deferred income tax, is transferred from the revaluation surplus to retained earnings.
27
Depreciation is calculated using the straight-line method to allocate
their cost or revaluated amounts to their residual values over their
estimated useful lives, as follows:
Buildings:
50 years
Machines, furniture and means of transportation: 3-10 years
Property, plant and equipment under depreciation are considered for
impairment when there exists indication that future cash flows cannot recover the asset’s carrying amount. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. The possibility of
reversing previous write-downs of non-financial assets is considered
at each reporting date.
Investment property
Property held for long-term rental yields that are not occupied by the
companies within the Group are classified as investment property.
Investment property is carried at fair value. Changes in fair value are
recognised in the consolidated income statement. The properties are
assessed individually based on the projected discounted future cash flow.
The rate of return considers the interest rate, the overall risk in the real
estate market and the property specific risk. To support the internal valuations they are compared to external valuations of the properties. The
fair value calculation is updated every six months. Rental income,
operating expenses and the effect of changes in investment property
value are separately disclosed in note 10 and 27.
Impairment of non-financial assets
Goodwill and assets that have an indefinite useful life are not subject
to amortisation but are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). The possibility of
reversing previous write-downs of non-financial assets (except goodwill) is considered at each reporting date.
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts
are presented on the line «Deposits from and liabilities to customers and
credit institutions».
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax
is recognised in the income statement, except to the extent that it
relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the end of the reporting period.
Deferred income tax is recognised, using the liability method, on
temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, if the deferred income tax arises from initial recognition of an
asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable
profit or loss, it is not accounted for. Deferred income tax is determined
using tax rates and laws that have been enacted or substantively
enacted by the end of the reporting period and are expected to apply
when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the temporary
differences can be utilised.
In assessing the probability of historical earnings and expected earnings,
future margins will be assumed.
Deferred income tax is provided on temporary differences arising on
investments in subsidiaries and associates, except where the Group
controls the timing of the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax arising on changes in value of properties owned by Special
Purpose Entities (SPE) is not calculated. Realisation of the properties will
in practice be through the disposals of stocks or shares. Potential gains
or losses at realisation of shares will not be taxable under «the taxation
exemption principle» in the Norwegian tax regime. Therefore it is, in the
Group’s opinion that the deferred tax should not be recognised on
such value fluctuations.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income taxes assets and liabilities
relate to income taxes levied by the same taxation authority on either
the taxable entity or different taxable entities where there is an intention
to settle the balances on a net basis.
Long term funding
Funding is initially recognised at the fair value of the received compensation less transaction costs. Funding at fixed-rate is measured at
fair value through the consolidated income statement, while funding
with floating rate is measured at amortised cost. Any difference between initial recognition and the settlement amount at maturity will
thus be accrued over maturity by means of the funding’s effective interest
rate.
Pensions
The Group has both defined contribution schemes and defined
benefit schemes. The pension schemes are financed via payments to
SpareBank 1 Livsforsikring AS.
In the defined contribution scheme, the Group pays fixed contributions
to the insurance company. The Group has no legal or other liabilities
to pay further contributions if the insurance company does not have
enough means to pay all employees benefits related to earning in
current and previous periods. The contributions are accounted for as
employee benefit expenses as they fall due.
A defined benefit scheme is a pension scheme defining a pension
benefit that an employee will receive upon retirement. The Group’s
benefit based scheme guarantees the members a retirement benefit of
70% of their salary up to a limit of 12 G (National Insurance Scheme’s
basic amount). Salary exceeding 12 G is secured through a contribution
based scheme. Entrance to the defined benefit scheme was no longer
available for new employees from May 1, 2005.
Additionally, there exist liabilities relating to «Contractual Early
Retirement» (AFP) and certain exceptional agreements on early
retirements and additional pensions.
The liability in the balance sheet related to benefit schemes is the
present value of the defined benefits on the balance sheet-date less fair
value of the pension liabilities, adjusted for differences on estimates
not recognised through the income statement and costs on pension
benefits earned in earlier periods. The pension liability is calculated
annually by an independent actuary using a linear earnings method.
The present value of the defined pension benefits is determined by discounting estimated future payments at Norwegian 10 year government
bond interest rate including a margin to consider relevant maturity on
the liabilities as of the balance sheet date.
Actuarial gains and losses due to new information or changes in the
actuarial assumptions are recognised in the comprehensive income
statement in the period they arise.
Changes in the pension scheme’s benefits are recognised through the
income statement on an ongoing basis, unless the rights under the new
pension scheme are conditional on continued service of the employee
28
SpareBank 1 Gruppen
in their current post for a specified period of time (the contribution
period). In this case, the cost related to the benefit change is amortised
linearly over the contribution period.
Law on state subsidies to workers who take out contractual early retirement in the private sector (AFP grants Act) came into force on February
19, 2010. Workers who take early retirement effective date in 2011 or
later, will be given benefits under the new scheme. The new pension
scheme represents a lifelong premium on the National Insurance
scheme and can be taken out from the age of 62. Employees annually
earn the right to early retirement with 0.314% of pension qualifying
income up to 7.1 G up to 62 years. Accrual in the new scheme is calculated on the basis of the worker's lifetime income, so that all earlier
working years are included in the accrual basis. The new scheme
will be financed by the state covering 1/3 of pension expenditure
and the employers covering 2/3 of pension expenditure. Employers'
premiums will be determined as a percentage of salaries between 1 G
and 7.1 G.
The new contractual early retirement scheme for accounting purposes
is considered to be a defined benefit-based multi-employer scheme.
This means that each enterprise will account for its proportionate share
of the scheme's pension liabilities, retirement funds and pension
costs. If no available calculations of the individual components of the
scheme and a consistent and reliable basis for allocation exists, the new
pension scheme is recognized as a defined contribution scheme.
Termination benefits
Termination benefits are payable when employment is terminated by
the Group before the normal retirement date, or in situations where an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it has demonstrably committed to either: terminate the employment of current
employees according to a detailed formal plan without possibility of
withdrawal; or provide termination benefits as a result of an offer made
to encourage voluntary redundancy. Benefits falling more than 12
months after the date of the consolidated statement of financial position are discounted to present value.
Subordinated loan capital and perpetual subordinated loan capital
Subordinated loan capital has last priority after other liabilities. Time
limited subordinated loan capital can account for 50 per cent of the core
capital in the capital adequacy ratio, while perpetual subordinated loan
capital can account for up to 100 percent of the core capital adequacy ratio.
Subordinated loan capital is classified as a liability in the balance sheet
and is measured at amortised cost.
A perpetual subordinated loan capital security consist of capital
securities with floating interest rates, where SpareBank 1 Gruppen is
not obligated to pay interest in a period when one cannot pay
dividends. The investor has no subsequent liabilities on unpaid
interest, i.e. the interest does not accrue. Perpetual subordinated loan
capital securities are approved as an element in the core capital within a limit of 15 per cent of total core capital. The Financial Supervisory Authority of Norway can require that the perpetual subordinated
loan capital securities are impaired proportionally with the equity if
the core capital adequacy of SpareBank 1 Gruppen falls below 5 per
cent or total capital adequacy falls below 6 per cent. Impaired amounts
on the perpetual subordinated loan capital securities are to be written
up before one can achieve payable dividends to the shareholders or
before the equity can be written up. Perpetual subordinated loan
capital securities are measured as long term liabilities at amortised cost.
Insurance provisions life insurance
All the lifeinsurance product groups are classified as insurance
contracts. Insurance contracts are assessed in accordance with IFRS 4.
The standard does not contain specific valuation principles beyond
certain limited conditions. Use of accounting principles employed by
the accounting unit in earlier financial statements is allowed conditional upon that the insurance provisions are sufficient by Norwegian
rules. To document this, the company must complete an adequacy test,
which SpareBank 1 Livsforsikring AS completes annually. This
indicates that previously employed principles related to insurance
provisions for life insurance can be used.
The insurance provisions within life insurance consist of legal provision and contingency provision. The legal provision includes the
premium provision, additional provision, premium and pension
regulation fund, claims provisions and other technical provisions.
Important assumptions and changes in technical insurance terms:
The basic interest rate is continuously assessed based on the interest
rate on long term government bonds, according to the guidelines on
premium and insurance funds in life insurance. For life insurance policies taken out from January 1, 2006, the basic interest rate is 2.75 %.
The basic interest rate for new group pension contracts sold from
January 1, 2006 is 2.70%. The base interest rate for new contracts will
be 2.5%, with effect from January 1, 2011, while the base interest rate
for new accrual for group pension contracts will be 2.5 % from
January 1, 2012. Else, the maximum allowed base interest rate that was
applicable at the vesting date will be applicable for new accrual and
accrued rights.
The mortality assumptions are principally based on common
research from the Norwegian Financial Services Association (FNH),
while assumptions on disability are principally based on the
company’s own knowledge. Mortality assumptions take into account
the correlation between disability and mortality. As of 2008, group
defined benefit pension and paid-up policies from group defined
pensions, follow the new industry tariff K2005 with security
margins that take into account increased life expectancy.
The allocation of provisions and the premiums are determined
from the principle of security margins. The security margins are not
quantified, but assessed by taking in contingent and long term
liabilities into consideration.
The ordinary premium provision of the company is calculated
using prospective principles on the same tariff terms as the premium
tariff. Provisions for IBNR and RBNS are allocated using statistical
methods based on the company’s own knowledge.
Allocations to the securities adjustment reserves is equal to net unrealised excess value on financial assets, except for property investments, measured at fair value and is entered into the securities adjustment reserves of SpareBank1 Livsforsikring AS. Net unrealised value
is determined by a collective assessment of the portfolio.
Insurance provisions P&C insurance
Insurance contracts are assessed in accordance with IFRS 4. The
standard does not contain specific valuation principles beyond certain
limited conditions. Use of accounting principles employed by the
accounting unit in earlier financial statements is allowed conditional
upon that the insurance provisions are sufficient by Norwegian
regulation, and are not used to cover future claims without contracts.
This indicates that previously employed principles related to insurance
provisions for P&C insurance can be used.
The Financial Supervisory Authority of Norway has developed minimum requirements for the various provisions. Provisions are made to
unearned premium, claims provisions, security provisions, reinsurance
provisions and administration provisions. The minimum requirements within premium and claims provision are also fulfilled per
industry and for the security provisions by industry group.
The guarantee provision is not considered as an insurance provision
according to IFRS 4. This has been the Group’s policy since the implementation of IFRS in 2005. The guarantee scheme is meant to ensure
that insured under direct non-life insurance contracts in Norway
receive fulfilment of insurance claims according to the insurance
agreements.
Based on new regulations on financial statements for insurance, the
Group has reclassified the natural catastrophe provision and the
administration provision. These provisions do not fulfil the liability
definition according to IFRS and are thus transferred to equity
effective from January 1, 2007.
29
Reinsurance share of insurance technical provisions is disclosed as a
receivable in the IFRS consolidated accounts.
Provisions
The Group recognises provisions when there is a legal or self-imposed
liability due to previous events, and it is more likely than not that the
liability will be at settlement through transfer of financial goods and
the liability can be estimated at adequate degree of reliability. Provisions
are assessed at every balance-sheet date and are adjusted to reflect the
updated best estimate.
When there are several liabilities with similar characteristics, the
likelihood of settlement is determined by assessing the liabilities of this
kind as a whole. There is therefore made a provision even though the
likelihood of settlement related to each individual case can be low.
Provisions are measured at the present value of expected future payments required to meet the liability. An estimated risk fee interest rate
is used as discount rate before tax reflecting current market situation
and liability specific risk.
Accounts payable and other short term commitments
Accounts payable are recognised initially at fair value and subsequently measured at amortised cost determined by using the effective
interest method. Accounts payable and other short term commitments where the effect of amortisation is small, can be recognised at
cost.
Deposits from and liabilities to customers and credit institutions
Deposits from and liabilities to customers and credit institutions are
at large measured at amortised cost. Some smaller fixed-rate deposits
and lending are measured at fair value.
Interest income and interest costs
Interest income and interest costs related to assets and liabilities measured at amortised cost are recognised through the income statement
using the effective interest rate method. For loans to customers measured at fair value the interest element is recognised as interest income,
while remaining value changes are classified as income from financial
instruments. All fees related to interest bearing funding and lending
are included in the calculation of effective interest and are amortised
such over expected maturity.
Commission income and expenses
Fees and commissions are generally recognised on an accrual basis
when the service has been provided. Commission related to interest
bearing instruments is not recognised as commission, but is included
in the calculation of effective interest rate and is recognised through
the income statement correspondingly. Commission arising from
advisory services are recognised according to the entered contract,
generally over the period in which the service is provided. The same
principle is applied for asset management commissions. Remuneration
and fees related to trade or promotion of financial instruments, property
or other investment objects not generating balance sheet items in
SpareBank 1 Gruppen’s financial statements are recognised on the
completion of the underlying transaction.
Dividend income
Dividend income is recognised when the right to receive payment is
established.
Events after the balance sheet date
The financial statements are considered as approved for issuing when
the board of directors has considered the financial statements. The
Annual General Meeting, the shareholders board and regulating
authorities can refuse to approve the financial statements, but cannot
change them.
Subsequent events up until issuance of the financial statements concerning situations known on the balance-sheet date, will be included
in the information basis used to determine accounting estimates and
will thus be fully reflected in the financial statements. Subsequent
events not known on the balance-sheet date will be disclosed if
significant.
The financial statements are presented under the assumption of going
concern. This assumption was in the board of director’s opinion
present at the time of endorsement of the issuance.
Share capital and share premium
Ordinary shares are classified as equity. Expenses directly related to
issuance of new shares or deductible share options, are recognised as
received compensation in the equity statement.
Dividend distribution
The board of director’s proposal of dividend distribution is specified
in the Board of Directors’ Report and statement of changes in equity.
The proposed dividend for the shareholders of the parent company is
classified as equity until final acceptance at the Annual General
Meeting. From the time of final acceptance the dividend is classified
as a liability.
NOTE 3 – FINANCIAL RISK MANAGEMENT
Financial risk factors
Note 3 – Financial risk management gives a description of the risk
management processes in SpareBank 1 Gruppen. We present the overall organisation, responsibilities and purpose of risk managing, as
well as the different risk categories, models in use and ongoing work
in connection with risk management in general. We refer directly to the
notes where quantitative presentations of each risk category as well as
related sensitivity analysis are given. References to the specific notes
are commented where relevant.
A report has been written with the aim to cover part IX, chapter 45 and
46 of the Norwegian Minimum Standards of Capital Adequacy (Pillar
3) and to cover the market’s request for higher transparency and openness towards risk matters in general. A more detailed study of the
Group’s capital and risk matters is included in this report along with
a more in depth description of the models and guidelines for risk
management in SpareBank 1 Gruppen AS, risk exposure in the different risk classes, the development in risk exposure over time. It also
gives a detailed overview of the Group’s regulatory capital and
economic capital.
Organisation, responsibility and purpose
The Group’s board of directors is responsible for risk management and
compliance in the Group. The board of each subsidiary is responsible
for managing risk and compliance in their own company. The responsibility for the overall risk management within the Group lies with the
Director for Strategy, Analysis and Risk Management in the holding
company. The Director reports to the Chief Executive Officer of
SpareBank 1 Gruppen AS.
SpareBank 1 Gruppen’s risk management aims to ensure solidity and
fulfilment of regulatory capital requirements and safeguard capital
management. This involves keeping a medium risk profile by focusing on:
A moderate risk profile
A strong risk culture with high focus on risk management
Optimal capital allocation within the banks agreed on strategies
Exploration of synergies and diversification
Sufficient core capital representing the chosen risk profile
Financial risk factors
The Group’s exposure to different kinds of financial risk is allocated unevenly to each subsidiary. Financial risks involves market risk (interest rate
risk, risk related to share prices, currency risk, risk related to fair value
changes on investment property included), ownership risk, credit risk,
concentration risk, insurance risk, reinsurance risk, operational risk,
business risk and liquidity risk. The definitions of the different risk factors
are as follows:
30
SpareBank 1 Gruppen
Market risk
Market risk is defined as the losses in association with changes in
observable market parameters such as interest rates, exchange rates,
prices or property.
Ownership risk
Ownership risk is defined as the risk arising from being the owner of an
entity -for example, the risk the subsidiaries are exposed to on a day-to-day
basis and the risk of need for more capital in one or more of these
companies.
Credit risk
Credit risk is defined as the risk that the company’s borrowers,
suppliers and reinsurers cannot fulfil their obligations towards
SpareBank 1 Gruppen. Credit risk also includes the risk of changes in
spread risk and reinsurance risk in the insurance companies.
Concentration risk
Risk connected to large commitments, industry concentration and
geographical concentration in loan or investment portfolios.
Underwriting risk
Risk connected to uncertainty towards future number and size of
insurance claims and the risk for extreme incidents (catastrophes).
Operational risk
Risk related to insufficient or failing internal processes, human errors
and system failures or external factors. Legal risk is also included in
the definition.
Liquidity risk
Liquidity risk is the risk of not being able to refinance the liabilities and
to increase the need of finance without extra costs.
Strategic and business risk
Strategic and business risk is the risk of losses as a consequence of
changes in the external environment. For example a change in the
regulatory environment, a decrease in profit or access to capital as a
result of lack of confidence and reputation among the market participants, i.e. among customers, opponents, shareholders and authorities
(reputation risk).
Strategy related to the use of financial instruments
The Group uses financial instruments to both take positions in the
market and to reduce risk. The use of financial instruments is limited
to instruments where risk and value is measurable and where it is
possible to monitor it within the Group’s systems for risk management
and profitability measurement. Instruments not traded in an active
market are only used for hedging purposes or for conversion of a
derivative’s underlying asset or liability.
Capital management
A common risk management policy is approved by the board of
directors in SpareBank 1 Gruppen AS. The policy is subject to annual
review. Strategy, policy and limits are developed for each risk factor in
each legal entity. In addition strategic decisions are made for each
entity’s allocation of assets. For more information see note 39, Capital
Adequacy.
The table below shows the market risk based on VaR model
(the figures for 2009 are pro forma, excluding Bank 1 Oslo):
Market risk 99.5%
Amount in NOK million
Interest rate risk*
Equity risk
Currency risk
Risk associated with property
Diversification
Total market risk
Diversification (%)
Risk weighted capital
SpareBank 1 Gruppen calculates capital requirements for each risk category. Risk weighted capital is calculated for each subsidiary as well as
for the overall group. The calculations are based on statistical methods,
professional judgement and some estimates. The probability that all
loss events happen at once is low. Therefore diversification effects
arise when all risk categories are evaluated at the same time. Risk
weighted capital is supposed to cover the unexpected losses and shall
for all risk categories equal 99.5 % of possible losses using a one year time
horizon.
Capital requirement
SpareBank 1 Gruppen needs sufficient capital to cover unexpected
losses. The Group is within jurisdiction for minimum capital requirement
and solidity. In addition, The Norwegian Regulation on Minimum
standards for Capital Adequacy requires that the need for capital is to be
measured against both risk profile and the quality of risk management
and control systems. The capital management policy is updated and
endorsed by the board of directors annually. The latest update and
endorsement took effect May 2011. The capital management policy is
endorsed to ensure that SpareBank 1 Gruppen’s equity level has an
optimal definition of risk tolerance, risk profile and the size of the
business.
SpareBank 1 Gruppen uses risk adjusted rate of return as an important
governance tool. The risk adjusted rate of return is reported in the
quarterly risk reports for the Group as a whole, for each subsidiary, and
for each subsidiary’s retail and commercial business line.
Risk factor follow-up and managing
Market risk
The Group’s consolidated market risk is measured and reported to the
board of directors in SpareBank 1 Gruppen AS on a quarterly basis. The
calculation is based on a VaR-model. In addition to each subsidiary’s
monitoring of risk exposure through the use of own models and policies,
a similar model to that of the VaR is used follow-up each subsidiary.
The VaR-model is described below and includes the definitions for
calculation of the overall risk in the Group and real exposure as of end
of end.
Assumptions for the VaR-model
The board of directors has decided that risk reporting shall use a
99.5 % confidence level. Ownership is 12 months. Correlation is
calculated using similar methods to last year. Value adjustment funds,
supplementary reserves, returns on investments and guaranteed rate
of returns are not included in the model.
Market risk is calculated with the help of the following formula:
VaR = Value * σ * √T * nc.
σ = Standard deviation, asset
T = Duration/ownership
nc = Standard deviation given confidence level
(99.5 % single tailed standard deviation = 2.58)
Interest rate risk
The interest rate risk is the risk of losses from changes in the interest
rate level. The risk arises mainly due to investments in commercial
paper, granted loans with fixed interest rates, use of fixed interest
instruments for funding and the use of derivatives.
SpareBank 1 Gruppen Group
2010
1 656
1 432
65
995
-570
3 578
13,7%
* The calculation of interest rate risk has changed in the period. Spread risk in life insurance and P&C insurance is now calculated in
accordance with the Norwegian Financial Supervisory Authority's Risk-based Supervision (RBT).
2009
847
1 286
55
892
-443
2 637
14,4%
31
Value at Risk equals asset value multiplied by the asset’s sensitivity for
changes in the interest rate multiplied by maximum interest rate
decrease given duration and confidence level.
The bond portfolio is divided into duration classes of 1–3 months, 3–12
months, 1-3 years, 3-5 years and greater than 5 years. The duration
describes each class’s price sensitivity to a change in interest rates.
Based on time series containing monthly historical data back to 1994
the standard deviation for the absolute development in interest rates
is calculated. An average monthly interest rate is calculated to match
the duration classes.
VaR for each time interval is calculated based on duration weighted
exposure, historical changes in interest rate, period of ownership and
confidence level before it is summarised to total VaR on interest rate
instruments.
Spread risk
Spread risk is the risk for changes in bonds and holdings market
value resulting from general changes in credit spreads. The spread risk
for 2010 is included in SpareBank 1 Gruppen’s VaR model. We refer
to the Pillar 3 report for more information on spread risk.
Equity risk
Risk related to equity instruments is the risk of losses from changes in
the value of the Group’s shares and other equity instruments. The
instruments are divided into Norwegian and international shares for
risk measurement purposes.
Based on an Oslo Børs Bechmark Index (OSEBX) and MSCI World,
historic return for Norwegian and foreign shares are calculated
separately back to year 1994. The standard deviation is calculated based
on the return rates, adjusted for time of ownership and confidence
level, thereafter multiplied by the different exposure of equity classes.
Exposure equals the portfolio’s fair value on the balance sheet day.
We assume a diversified equity instrument portfolio in between the
equity classes for being able to take advantage of the volatility in the
respective indexes, that is . We believe that the portfolios in SpareBank
1 Livsforsikring AS and SpareBank 1 Skadeforsikring AS are well
diversified.
Currency risk
VCurrency risk is the risk for losses arising from changes in exchange
rates. The Group measures currency risk by using net positions in the
different currencies.
Volatility for each relevant currency is measured based on historic
exchange rates, which forms a basis for calculating risk bundled to
exposure given a fixed confidence level.
Risk associated to property
The Group’s properties are exposed to risk regarding changes in the
real-estate market. The real-estate portfolio’s value is influenced by
many factors such as local economic development, property location,
maintenance and competition in the local real-estate market.
Real-estate volatility is calculated based on historic development in
real-estate prices given by price indexes published by Statistics
Norway for office and corporate buildings.
Hedgefond
Risk associated to hedge funds is calculated with basis in volatility as
published in an international hedge fund index. The risk is calculated
in accordance to the same method as for shares.
Correlation – Portfolio risk market risk
Based on the time series, a correlations matrix is made showing the
different market risk asset classes. Correlation is calculated by a 12
month rolling average based on information since 1994 or as far back
as data exists. To ensure relevant calculations, an average of average
correlations and the highest correlation measured during the period,
is used. The correlation matrix is used to arrive at a covariance matrix
as the first step in calculating Value at Risk (standard deviation) for the
whole portfolio.
For more information regarding market risk in SpareBank 1 Gruppen AS,
we refer to note 34 to 35.
Ownership risk
Ownership risk is related to the owning of a company. SpareBank 1
Gruppen AS’ ownership risk in subsidiaries is connected to the risk
each subsidiary undertakes on a day-to-day basis, and the risk for the
need of an influx of capital to one or more of these companies.
Credit risk
The Group's credit risk is primarily related to SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring AS, as well as some risk
within the factoring business in the Group
Credit risk in SpareBank 1 Skadeforsikring AS and SpareBank 1 Livsforsikring AS is related to investments in bonds and commercial
papers, real-estate and reinsurance. The company’s board of directors
has endorsed limits for each investment firm. In addition they have set
limits on minimum credit rating for each investment group. Detailed
guidelines for accepted risk level for each investment are endorsed and
functions as the fund managers’ authorization.
For more information about the credit risk in SpareBank 1 Gruppen AS,
please refer to note 30 and 31.
Concentration risk
Concentration risk for the Group is considered low. The Insurance
Portfolio in SpareBank 1 Skadeforsikring AS is considered relatively
well-diversified for the following reasons: a large number of customers,
subscriptions in different geographical areas and variety in the products
provided. Exposure to natural disaster constitutes the major concentration risk in insurance. In Norway however, this risk is very limited
due to participation in the Norwegian Natural Perils Pool.
Insurance stocks in SpareBank 1 Livsforsikring AS are well diversified
as that they mainly consist of individual insurance and group insurance
policies where insurance risk is not highly concentrated. There is
however some risk related to the life company's investment portfolio,
mainly in the financial sector.
From a group perspective the other companies are only moderately
exposed to concentration risk.
Liquidity and settlement risk
The management of the Group’s financial structure is based on an overall liquidity strategy annually reviewed and endorsed by the board of
directors. Each subsidiary has their own liquidity strategy requiring unanimous endorsement of the board. Liquidity risk is reduced by diversifying
the funding in different markets, sources, instruments and duration.
SpareBank 1 Gruppen’s liquidity risk is mainly connected to the
parent company and is assumed to be low-moderate.
The emergency plan for capital adequacy and liquidity management
is annually reviewed and endorsed by the board of directors – most
recently in May 2011. The emergency plan seeks to visualize the
overall liquidity management in the Group, as well as identify and
explain possible events and solutions to should they materialise. The
emergency plan gives a clear description of the segregation of duties.
The following incidents can affect liquidity:
Capital injections in subsidiaries with losses
Liquidity buffers below agreed levels
Withdrawal of uncommitted lines of credit
SpareBank 1 Gruppen’s emergency plan states that the liquidity
buffers are to cover:
One year’s operation expenses and interests; and
Capital injections equal to 10 % of the subsidiary’s recorded equity.
The day-to-day liquidity management requires that the parent company
has a NOK 400 million liquidity buffer at all time. The liquidity
buffer is to consist of deposits and frequently traded securities (cash
equivalents). In addition, the liquidity buffer can consist of committed
credit lines with minimum 12 month duration. The management of
32
SpareBank 1 Gruppen
loan instalments, as well as loans payable, are not included in the liquidity buffer. It is presupposed that the refinance of a loan is planned
minimum 6 months before maturity.
The CFO is responsible for monitoring that the liquidity buffer is
within its limits. The CEO is to be informed should the buffer fall below
the 20 % prescribed limit. The recovery of the liquidity buffer is to be
planned. The plan is to be presented to Group Management. The
emergency plans requirements have been complied with during the
whole period and the liquidity situation in the parent company is
considered as good.
Please refer to Note 32 for further information on liquidity and settlement risk in Sparebank 1 Gruppen AS.
Insurance risk (underwriting)
Insurance risk in SpareBank 1 Skadeforsikring AS
The risk related to each insurance contract consists of both the probability of an accident occurring and the uncertainty of the claims size.
The uncertainty in the insurance risk of a portfolio is influenced by
many different factors such as regulatory changes and court decisions
-which are of specific significance for personal injuries.
The characteristics of the policy holders that the company accepts as
customers are described in the company’s risk manual. In addition,
there exist automatic controls in the insurance system regarding new
additions to the portfolio. An automatic system for monitoring the
insurance risk concentration is in progress. This also concerns the
concentration of real-estate risk and consequential losses in regard to
fire and other accidents. Concentration control and follow-up is also
conducted for personal injury risk and for other customer relations.
Adjustments to reinsurance coverage are made to represent the risk
exposure in the insurance portfolio.
Insurance risk in SpareBank 1 Livsforsikring AS
SpareBank 1 Livsforsikring AS offers savings, pension and insurance
products. The life insurance company has through its products
established liabilities to its customers, resulting in different types of
risk for the company. The savings products offered have long duration.
Life expectancy affects both future expected payments and provisions.
The company offers coverage in case of mortality and disability.
Changes in the Norwegian Insurance Scheme’s regulations for disability
payment might highly influence the number of disabled persons and
the provisions for disability.
The insurance risk is managed through reinsurance, risk selection,
underwriting policies and tariff adjustments. Tariff adjustments also
include reserve increases.
The company has endorsed policies and guidelines concerning the
release of new products, changes in existing products and system
solutions. The company’s premiums are based on statistics and are
reported to The Financial Supervisory Authority of Norway. Changes
in mortality and disability rates are closely monitored and provisions
are frequently reconsidered.
Guidelines for risk considerations concerning health and underwriting
regulation, as well as risk classification for acquisition of new customers,
are described in the company’s risk policies. The risk policies also
include when a health assessment or inability to work documentation is
required. The result of this judgement is reflected through the risk
premium level.
Reinsurance is an important tool for the company’s insurance risk
management. The reinsurance strategy describes goals and limits for
the company’s reinsurance program and follow-up of the programs. The
reinsurance strategy is annually revised by the Board of Directors.
According to IFRS 4 a liability adequacy test is required.
Please refer to note 45 for more information concerning insurance risk
within SpareBank 1 Gruppen AS.
Operational risk
Operational risk is defined as the risk of loss due to insufficient or f
ailing internal processes, human and system failures, or other external factors, including legal risk. All group companies are exposed to
operational risk.
Operational risk at the subsidiary level is documented in accordance
with the process required in the regulations on Responsibility for
Internal Control and on Documentation and Confirmation of Internal
Control (“Internkontrollforskriften”). Risk reporting occurs in the
form of an annual ICAAP-report, as well a published internal control
report with supplementary title management verification. Databases
have been implemented for the governance and follow-up of actions
in connection with reports from The Norwegian Financial Supervisory
Authority, internal audit and internal control.
A compliance department has been established in the parent company
and a compliance forum for the Group. The head of compliance
within each subsidiary form the members of the compliance forum. The
focus on compliance is to ensure that SpareBank 1 Gruppen acts in
accordance with relevant laws and regulations, industry standards and
Group internal policies. This includes the duties of monitoring changes
in business areas, as well as the possible consequences of ignoring
changes in the business areas. Compliance risk is of receiving governmental sanctions, financial losses or reputation damages as a consequence of not acting in accordance with relevant laws and regulation,
industry standards and Group internal policies. Compliance risk is part
of operational risk. Compliance is reported on a quarterly basis to the
board of directors in SpareBank 1 Gruppen in accordance with the
Group’s compliance policy.
Strategic and business risk
The capital adequacy calculations estimate strategic and business
risk. No processes have yet been established for measuring strategic and
business risk. SpareBank 1 Gruppen is in the progress of creating
parameters for calculating strategic and business risk quantitatively.
Together with the Alliances forum for risk management, SpareBank 1
Gruppen will continue to have a focus on establishing quantitative
models for estimating the Group’s capital requirement for strategic and
business risk.
Correlation – portfolio risk
It is assumed reasonable that not all incidents occur simultaneously
and thus we take into account the effect of diversification between asset
classes. We implement a correlations matrix to calculate the correlation
between market risk, credit risk, insurance risk, business risk and
risk associated to property between each class of assets.
NOTE 4 – CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENTS
The Group arrives at estimates and assumptions concerning the future
based on historical experience and a number of other factors such as
future expectations believed reasonable under the current circumstances. These estimates and judgements are continually re-evaluated.
Yet, as inherent in the term, these accounting estimates will seldom equal
the actual results. Find addressed below the estimates and assumptions
that represent a significant risk for essential adjustments to the carrying
amounts of assets and liabilities for the next financial year.
Fair value of derivatives and other financial instruments
The fair values of financial instruments that are not traded in an active
market are determined using varying valuation techniques. The Group
considers, and chooses, techniques and assumptions reflecting market
conditions on the balance sheet date as closely as possible. For a
number of financial assets classified as available-for-sale yet not traded
in an active market, the Group has used discounted future cash flows for
valuation. The valuations require a high degree of judgement. When
assessing whether fair value is lower than cost, the Group takes into
consideration, among other factors, the future prospects in the relevant
industry, the company’s financial position and technological development.
33
Investment property
The Group performs the valuation of its own investment property. The
properties are individually assessed based on expected future cash flow
discounted with the risk-adjusted required rate of return on the respective properties. The required rate of return depends is based on the
long-term risk-free interest rate and a risk premium that depends on
the property’s quality, location, property category, the rental contract’s
maturity etc. A further description of the valuation of investment
property is included in note 27. The internal valuations are benchmarked against independent external appraisals.
Pension commitments
The net present value of pension commitments depends on several
factors as determined by actuarial assumptions. The assumptions used
in calculating net pension cost (income) include among other things, the
discount rate. Changes in these assumptions affect the value of the
pension commitments in the balance sheet.
The Group determines a suitable discount rate at the end of each year.
This discount rate is used to calculate the net present value of future
estimated cash out-flows needed to settle the pension commitments. The
suitable discount rate is determined in reference to 10-year Norwegian
government bonds adjusted for the average remaining period of service.
Other pension assumptions are partly based on market conditions. More
detailed information is given in note 48.
Potential changes regarding expected annual increase in salaries, discount rate and so on, can have a significant impact on the calculated
employee pension commitments. The guidance note issued by the Norwegian Accounting Standards Board specifies that changes of +/- 1 %
in the discount rate represent a change of 15 – 20 % in the total
pension commitment.
Estimated impairment of goodwill
The Group performs annual impairment tests to identify a possible
impairment of goodwill (as described in note 14). The recoverable
amount of cash generating units is determined by calculating
discounted future cash flows. These calculations require estimates
consistent with the Group market valuation.
Estimates on insurance provisions in life insurance
Insurance provisions in life insurance are based on factors such as life
expectancy, expectations of mortality rate, disability rate, and interest
rates. Changes in such assumptions affect the size of the insurance provisions. The premium provision is calculated as the cash value of the
company’s liabilities less the cash value of future premiums. The basic
interest rate used in the calculation that valid for the individual insurance
contract, and the calculation is done according to the Act on premiums
and insurance funds in life insurance. Maximum accepted basic interest
rate is reviewed by the authorities considering the interest on long term
government bonds. Potential changes in the basic interest rate will affect
the size of the liabilities.
Assumptions concerning the mortality rate are mainly based on collective surveys done by the Norwegian Financial Services Association
(FNH), while those concerning the disability rate are mainly based on the
company’s own experiences.
There are claims provisions for all products including both reported
(RBNS) and unreported damages (IBNR). IBNR provisions and RBNS
provisions are calculated using statistical methods based on the
company’s own experience.
Estimates related to insurance provisions in P&C insurance
The use of estimates in the calculation of insurance provision for P&C
insurance is primarily related to provisions for claims. Insurance products
are classified in two main groups: short-tailed business and long-tailed
business. The classification is based on the time span from when a loss
or damage occurs until the loss or damage is reported and finally settled.
A long-tailed business often refers to insurance related to personal
injuries.
The basis for the claims provision in SpareBank 1 Skadeforsikring AS is
the expected loss from claims incurred or future claims based on
reported damages. In addition to ongoing follow-up related to current
claims, an assessment of all unsettled claims shall be performed annually. Provisions for IBNR and potential additional provisions related to
long-tailed businesses are measured using models. Regression models are
used as a starting point for vehicle or bodily injury, occupational
injury and safety. An assessment of potential issues related to changes
in the portfolio is also performed. For short-tailed businesses, the IBNR
is determined based on reviews of the experience data pertaining to the
lag in the risk group during previous years, in addition to changes in the
portfolio, the frequency of claims, major injuries and so on. A
retrospective measurement is also made to assess the estimates for the
claims provision against the development of the factors involved in the
calculation: paid claims, individual provisions for reported claims and
IBNR.
Provisions for losses related to a reinsurer’s bankruptcy are measured at
net present value. The parameters in the basis of the calculation are
future expected dividends, inflation and the payment status of the claim.
Sensitivity of properties
Properties are especially sensitive to the discount rate. If everything is
hold as it, a raise of 0.25 % will reduce the values with NOK 175 million,
or about 3.6 %.
34
SpareBank 1 Gruppen
NOTE 5 – ACQUISITIONS 2010
Unison Forsikring AS
SpareBank 1 Skadeforsikring AS acquired all the shares in Unison Forsikring AS in 2010. SpareBank 1 Skadeforsikring AS placed a bid for all
shares in Unison Forsikring AS June 9, 2010 that was pre-accepted by more than 95% of the then current shareholders by the end of the month.
In July 2010, a private placement from Unison Forsikring AS against SpareBank 1 Skadeforsikring AS of NOK 150 million was completed. For
practical purposes, Unison Forsikring AS was consolidated from July 1, 2010, even though the transaction date was July 19, 2010.
Unison Forsikring AS is a Norwegian insurance company offering insurance for individuals, organisations and businesses. The company develops customised solutions for organisations, associations and their members. SpareBank 1 Skadeforsikring AS aims to strengthen its presence
in new distribution channels. It therefore hopes that Unison will function as the company's extended arm into the market outside of the Group
and the Norwegian Confederation of Trade Unions and affiliated trade unions, LO. Unison Forsikring AS enters as a subsidiary of SpareBank 1
Skadeforsikring AS and will operate as an independent entity in the market.
The acquisition is an undertaking that is regulated by IFRS 3R. In the consolidated financial statements the purchase method is used for acquisition of subsidiaries. Cost comprises the fair value of the assets given as consideration. Identified assets and liabilities are carried at fair value
at the acquisition date. The shares in Unison Forsikring AS cost NOK 56.4 million. The final acquisition analysis shows the following fair values for identifiable assets and liabilities:
Book value
30.06.10
Fair value
30.06.10
Fair value
adjustments
Customer relations
Goodwill
Immaterial assets
Financial assets
Reinsures’' share of unearned gross premium
Reinsurance share of gross claims reserves
Receivables from policy holders
Receivables in connection with reinsurance
Other receivables
Other assets
Deferred tax assets
Total assets
8,6
283,2
33,0
366,6
79,1
44,7
1,1
78,4
16,9
911,6
14,0
-117,9
8,6
283,2
33,0
366,6
79,1
44,7
1,1
78,4
130,0
920,8
14,0
-117,9
113,1
9,2
Share capital
Administration provision
Provisions for natural disaster fund
Provisions for guarantee
Security provisions
Other retained earnings
Total equity
Deferred tax
Provision for unearned premiums
Gross provision for claims
Pension obligations
Liabilities in connection with reinsurance
Administration provision Run-off portfolio
Liability reinsurance contract (MYML)
Other liabilities
Total equity and liabilities
56,4
10,9
5,6
8,2
40,3
-53,8
67,7
25,4
122,7
635,2
13,2
30,8
16,6
911,6
56,4
22,8
122,7
635,2
15,0
30,8
6,3
15,0
16,6
920,8
-11,3
-2,6
1,8
6,3
15
9,2
Figures in Million NOK
35
The negative goodwill is primarily a result of tax losses carried forward in Unison Forsikring AS at about NOK 400 million. According to IFRS 3.34R
negative goodwill shall be recognised at the acquisition date. The final purchase price allocation was completed in November 2010 and a negative
goodwill of NOK 117.9 million was then recognised in the consolidated financial statements under Other insurance related income.
In the consolidated financial statements for 2010, the following figures from Unison Forsikring AS after the acquisition July 1 are included:
Figures in 1000 NOK
Gross premiums
Premiums earned for own account
Profit before tax
Other comprehensive income
Total profit
2010
116 765
105 771
-19 489
-1 876
-21 365
Had the acquisition date been January 1, 2010 the figures for the fiscal year 2010 fiscal consolidated financial statements for SpareBank 1 Gruppen would have been as follows:
Figures in 1000 NOK
Gross premiums
Premiums earned for own account
Profit before tax
Other comprehensive income
Total profit
2010
4 899 795
39 546
620 936
-63 377
502 002
It is recognised expenses related to the acquisition with a total of NOK 13.5 million in the Group in 2010, divided into NOK 6.2 million in
SpareBank 1 Skadeforsikring AS and NOK 7.3 million in Unison Forsikring AS. Of the NOK 7.3 million in Unison Forsikring AS, 2.5 million
relates to the private placement against SpareBank 1 Skadeforsikring AS that could not be activated cf IAS 39, due to negotiations on the
amount.
Skandia Helseforsikring
Sparebank 1 Skadeforsikring AS announced in January 2010 its complete purchase of the insurance business in Skandia Life Line Norway from
Skandia Insurance Company Ltd. The agreement was contingent upon necessary approvals from the Norwegian and Swedish authorities.
Approval of the transaction was given in November 2010.
The acquired health insurance business is integrated into SpareBank 1 Skadeforsikring AS’ portfolio at the end of 2010. No purchase price
allocation was completed as of December 31, 2010. Skandia is therefore included in SpareBank 1 Skadeforsikring AS with preliminary figures.
The acquisition cost of the business was NOK 1 million.
Conecto AS
The companies SpareBank 1 Factoring AS, Actor Portefølje AS and SpareBank 1 Gruppen Finans Holding AS merged with effect from January 1,
2010. The new company carried the name SpareBank 1 Gruppen Finans AS.
SpareBank 1 Gruppen Finans AS entered into an agreement to purchase the company Conecto AS in June 2010. The payment for the company
included a combination of cash and an earn-out agreement on with the sellers. Earn-outs are mainly related to the company's future earnings
performance. The acquisition aims to create an operator that is among the three largest in Norway’s debt market. Conecto AS was taken over on
September 9, 2010 with effective consolidation into Sparebank 1 Gruppen from that date.
A preliminary acquisition analysis in accordance with IFRS 3R has been made as a basis for the annual accounts for December 31, 2010.
A review will be conducted within 3 Q 2011, which is within the 12 month period after the acquisition date cf. IFRS3R. Identified assets and
liabilities are carried at fair value at the acquisition date. The cost of the shares, with the assumptions concerning future earn out, is estimated to
be NOK 154.8 million.
In addition to the identified value, the company also acquired human capital. A business organisation is a not identifiable asset under IAS 38
and may therefore not be recorded as such. This is evident in the comments about the start-up cost in IAS 38 paragraph 69. There is a
longstanding and unique practice that the values inherent in an established organisation are mainly regarded as goodwill in a business
combination. Please refer to the identified value in the table below for our preliminary acquisition analysis.
36
SpareBank 1 Gruppen
Calculations based on real values:
Currency NOK 1,000
2010
Acquisition cost
Correction based on uncertainty at acquisition date
Interest until payment date
Estimation on earn out
Estimated total acquisition cost per 31.12.2010
130 000
-7 391
690
31 535
154 834
Equity on acquisition time
SpareBank 1 Gruppen Finans shares on 100% basis
Excess value:
Brand
Customer relationships
Technology, processes and routines
Deferred taxes
Acquisition goodwill
-which «Assembled Workforce»
Identified Excess Value
Total Goodwill and Excess Value
17 859
17 859
5 629
32 096
4 808
42 533
11 808
106 611
13 607
42 173
148 784
The final acquisition analysis showed the following fair values of identifiable assets and liabilities:
Oversikt over virkelig verdi justeringer
Currency NOK 1,000
Book
Value
09.09.10
Fair
Fair
Value
Value
09.09.10 adjustment
Fair
Deferred verdi incl.
tax
Def. tax
Research & Development 1)
Deferred tax asset
Brand 1)
Technology, process and routines 1)
Customer relationships 1)
Goodwill 2)
Assembled workforce (part of goodwill) 2)
Furniture and fixtures
Account receivables
Other receivables
Cash part of working capital
Excess cash
Total Assets
8 264
230
2 395
9 536
2 493
13 444
6 430
42 792
230
5 269
13 072
32 096
81 196
13 607
2 395
9 536
2 493
13 444
6 430
179 768
-8 264
5 269
13 072
32 096
81 196
13 607
136 976
11 808
11 808
230
5 269
13 072
32 096
93 004
13 607
2 395
9 536
2 493
13 444
6 430
191 576
Equity 3)
Debt to credit institutions
Account payable
Payable tax
Public debt
Deferred tax liability
Other short term liabilities
Total shareholders equity and libabilities
17 858
8 096
3 704
4 292
5 514
3 328
42 792
154 834
8 096
3 704
4 292
5 514
3 328
179 768
136 976
136 976
11 808
11 808
154 834
8 096
3 704
4 292
5 514
11808
3 328
191 576
1)
Total Excess values er TNOK 42.173
Goodwill is TNOK 106.611
3)
TNOK 154.834 under the Fair Value column is the acquisition cost for Conecto
2)
Sparebank 1 Gruppen has consolidated Conecto AS’ results from September 9, 2010.
Profit from the period of September 9 to December 31 was NOK -3.7 million before tax.
If the acquisition had occurred January 1, 2010 the following amounts would have been consolidated into our financial statements:
Currency NOK 1,000
Total income
Total expenses
Net operating income
Profit before tax
Tax
Profit after tax
2010
86 636
-78 156
8 481
8 487
-2 238
6 249
2)
1)
Banking
2009
2009
Life insurance
2010
2010
2009
P&C insurance
849 466 5 240 876 5 476 539 4 437 243 4 010 385
2 381
195 743
363 002
396 815
641 144
621 096
164 559
299 159
239 272
581 054
502 956
- 25 627 540 26 482 903 24 366 120 12 096 732 10 471 321
- 24 497 608 24 219 954 22 353 505 8 691 961 7 499 748
2010
Includes EiendomsMegler 1
Costs directly related to income are included
SpareBank 1 Gruppen Group has no secondary reporting segment
Total income 2)
Share of profit from associates
Segment result
Profit after income tax
Minority share of profit
Total assets
Total liabilities
NOK 1,000
1)
NOTE 6 – SEGMENT INFORMATION
307 431
64 628
45 325
299 213
103 426
2010
266 898
42 088
28 564
311 514
84 369
2009
Fund management
84 264
-57 562
-40 765
-9 478
301 923
212 321
2010
56 698
-48 930
-35 408
-9 472
220 919
87 512
2009
172 207
8 600
4 311
1 000 829
591 158
2010
120 950
22 541
15 889
658 306
418 213
2009
Debt collections of old
claims and factoring
Brokering business
business
626 109
566 598
454 275
5 315 966
2 543 527
2010
249 638
0
145 096
25 849
5 840 725
2 396 380
2009
Other operations
-611 057
-601 277
-511 813
9 478
-4 807 345
-480 939
2010
Total
2010
2009
-192 079 10 257 073 10 838 495
-2 767
-386
-180 401
985 133 1 194 048
-42 038
831 546
899 643
-9 472
-6 029 586 40 690 221 61 466 859
-1 163 783 35 881 408 56 173 552
2009
Eliminations
37
38
SpareBank 1 Gruppen
NOTE 7 – NET INSURANCE PREMIUM REVENUE
SpareBank 1
Livforsikring AS
NOK 1,000
Gross premium revenue
- Reinsurers' share
Net premium revenue
SpareBank 1
Skadeforsikring Group
Group
2010
2009
2010
2009
2010
2009
3 646 233
152 037
3 494 196
3 411 765
157 669
3 254 096
4 567 608
383 179
4 184 429
4 144 842
330 516
3 814 326
8 213 841
535 216
7 678 624
7 556 607
488 185
7 068 422
LIFE INSURANCE
The following premium in SpareBank 1 Livsforsikring AS is related to new subscriptions for the past two years divided by industry:
Ind. Annuity Individual
and pension endowment
NOK 1,000
2010
2009
86 668
92 082
150 209
196 483
Group Individual
pension
life
Group
life
Total
7 589
7 729
321 759
390 872
47 353
64 903
29 940
29 675
Other
Total
Personal
Lines
21 611
15 774
3 618 949
3 338 205
P&C INSURANCE
For SpareBank 1 Skadeforsikring Group, earned premium is divided into different classes:
Personal Lines
Onshore
property
NOK 1,000
Earned premium 2010
Earned premium 2009
1 579 951
1 482 648
of which
third party
Motor
liability
Yacht
Accident
Travel
insurance
627 641
561 941
66 572
61 789
155 053
151 953
294 957
272 905
1 500 805
1 353 136
Commercial Lines
NOK 1,000
Earned premium 2010
Earned premium 2009
of which
third party
Motor
liability
Onshore
Onshore
property
property
insdustrial commercial
11 180
10 854
329 163
280 931
227 627
194 577
68 679
62 434
Workmen's
compenLiability
sation
24 969
10 571
126 620
95 230
Total
Marine
Energy/
oil
1 068
-
-7
-114
Safety
68 054
74 387
Total
Commercial
Other
Lines
30 650
4 784
818 263
671 334
ReNatural
insurance perils tool
Total
Other
Lines
Other Lines
NOK 1,000
Earned premium 2010
Earned premium 2009
52
60
129 283
135 357
130 396
135 303
NOTE 8 – NET FEE AND COMMISSION INCOME
Group
NOK 1,000
2010
2009
Fee and commission income
Subscription fees (from customer)
Redemption fees (from customer)
Management fees
Guarantee commission
Payments system
Other commissions
Total fee and commission income
566 418
15 060
134 027
715 505
51 527
5 870
426 055
7 943
80 545
283 330
855 270
Fee and commission expense
Distributor commission paid
Payments system
Other commissions expences
Total fee and commission expense
845 299
906
846 205
719 231
22 792
10 077
752 100
-130 700
103 170
39
NOTE 9 – GAINS AND LOSSES FROM FINANCIAL ASSETS AND LIABILITIES
Parent company
2010
Group
2009
NOK 1,000
Net gain on financial instruments designated at fair value
Shareholdings
Dividends from shareholdings
Net gains/losses from realisation of shareholdings
Net unrealised gains/losses from shareholdings
Total net gains/losses on shareholdings
2010
2009
13 289
151 972
909 494
1 074 754
4 805
-152 493
1 697 255
1 549 567
248 515
217 949
31 066
381 508
364 892
65 358
497 530
811 757
1 348
-36 600
10 234
-25 018
9 349
-19 920
93 177
82 606
1 547 267
2 912
-2 238
444
2 443 931
252 498
6 757
259 255
264 659
7 120
271 779
-
-
-
-
-
-
-1 310
-1 310
-
-1 310
-
Other financial instruments
Interest income received and earned
Net gains/losses from realisation of derivatives and other financial assets
Net unrealised gains/losses from derivatives and other financial assets
Total derivatives and other financial assets*
*Applied to hedging:
Net change in value of hedged bonds and derivatives
Net change in value of fixed rate loans and appurtenant derivatives
Net change in value of remaining derivatives
Net income and gains/losses from financial assets designated at fair value
-
-
Net income from bonds measured at amortised cost
Interest income received and earned from bonds held to maturity
Net unrealised gains/losses from bonds held to maturity
Net gains/losses from realisation of bonds held to maturity
-
-
Interest income received and earned from other bonds at amortised cost
Net gains/losses from realisation of other bonds at amortised cost
Net unrealised gains/losses from other bonds at amortised cost
Net income and gains/losses from bonds at amortised cost
38 310
1 412
35 327
75 049
13 721
-23 199
12 840
3 362
3 641
3 641
18 245
18 245
Net income from securities available-for-sale
Dividends from shareholdings
Net gains from realisation of shareholdings
Net gains/losses on financial instruments classified as available-for-sale
12 993
17 603
30 596
6 972
41 074
48 046
1 881
4 709
9 330
15 920
2 041
8 264
4 930
16 202
31 437
Income from loans and receivables
Interest income from lending to customers and deposits with credit institutions
Interest income from bank deposits
Interest income from other receivables
Interest income from internal loans
Total interest income from loans and receivables
58 408
40 052
-14
98 447
1 014 288
42 039
10 001
1 066 328
-9 509
-24 624
-27 289
-61 422
-2 448
-31 993
-28 876
-1
-63 318
Expense from financial liabilities
Interest expense from deposits from customers and loans from credit institutions
Interest expense from securities issued
Interest expense from subordinated loan capital
Interest expense from other financial liabilities
Total interest expense from financial liabilities
-17 748
-24 624
-37 864
-4 961
-85 196
-454 845
-253 754
-67 604
-22 077
-798 280
Bonds and commercial paper
Interest received and earned
Net gains/losses from realisation of fixed income securities
Net unrealised gains/losses from fixed income securities
Total net income from bonds, commercial paper, interest funds
and other securities with fixed income
Changes in fair value related to fixed-rate loan are part of
«Net income from financial assets designated at fair value».
Changes in fair value related to funding from securities are part of
«Net income from financial assets designated at fair value»
40
SpareBank 1 Gruppen
NOTE 10 – NET INCOME FROM INVESTMENT PROPERTIES
Group
NOK 1,000
Rental income from investment properties
Value changes in investment properties
Expenses from investment properties
Total net income from investment properties
2010
2009
320 724
148 283
-69 597
399 410
353 827
-18 077
-28 902
306 848
Also see Note 27 Investment properties for further information.
NOTE 11 – OTHER OPERATING INCOME
Parent company
Group
2010
2009
4
4
-
NOK 1,000
Management of LOfavør concept
Brokerage fee
Income from debt capital
Remuneration Corporate Finance
Sundry income life insurance
Income from debt collectoin business
Compensation regarding IT-systems incl refund from VAT
Actuarial calculations
Acquisition of Unison Forsikring AS resulted in negative goodwill
Late payment charges
Other
Total other operating income
2010
2009
62 227
37 384
16 644
18 184
24 405
96 788
4
117 900
2 040
8 745
384 321
59 389
26 441
16 954
19 417
78 620
65 639
3 193
2 223
53 010
324 887
NOTE 12 – OPERATING EXPENSES
Parent company
2010
2009
52 481
-429
640
-78 649
-25 957
37 985
1 677
434
-18 246
21 850
511
28
16
346
560
343
Group
NOK 1,000
2010
2009
Personnel expenses
IT expenses
Marketing
Other operating expenses*
Total operating expenses
831 543
286 132
144 485
412 013
1 674 173
1 140 824
255 674
82 858
597 767
2 077 123
Remuneration to auditor
Statutory audit
Other certification services
Tax-related advice
Other services
3 791
468
276
863
4 856
461
61
1 544
Personnel expenses
Salaries
Employer's national insurance contribution
Pension costs
Refund salaries, pension subsidiary
Social expenses
Other personnel expenses
Total personnel expenses
645 092
122 160
-9 159
46 467
26 983
831 543
751 984
148 146
88 907
39 242
112 545
1 140 824
Specification of pension costs
Defined contribution plans
Defined benefit plans
Total pension costs
31 365
-40 524
-9 159
29 278
59 628
88 907
Remuneration to auditor includes VAT
*
166 980
25 699
-1 475
-151 588
2 805
10 060
52 481
148 154
23 356
25 991
-168 211
633
8 062
37 985
8 499
-9 974
-1 475
7 153
18 838
25 991
In 2010 SpareBank 1 Gruppen AS also entered as income a repayment of NOK 43 664 thousand related to payroll tax which were earlier
covered by the company on behalf of First Securities AS.
41
NOTE 13 – SHAREHOLDER STRUCTURE
Shareholder structure in SpareBank 1 Gruppen AS as at December 31, 2010:
SpareBank 1 Nord-Norge
SpareBank 1 SMN
SpareBank 1 SR-Bank
Samarbeidende Sparebanker AS
Sparebanken Hedmark
Norwegian Confederation of Trade Unions (LO) and affiliated trade unions
Total number of Shares
Shareholder structure in SpareBank 1 Gruppen AS as at December 31, 2009:
SpareBank 1 Nord-Norge
SpareBank 1 SMN
SpareBank 1 SR-Bank
Samarbeidende Sparebanker AS
Sparebanken Hedmark
Norwegian Confederation of Trade Unions (LO) and affiliated trade unions
Total number of shares
Number
of shares
Shareholder
share
347 568
347 568
347 568
347 568
213 888
178 240
1 782 400
19,50 %
19,50 %
19,50 %
19,50 %
12,00 %
10,00 %
100 %
Number
of shares
Shareholder
share
347 568
347 568
347 568
347 568
213 888
178 240
1 782 400
19,50 %
19,50 %
19,50 %
19,50 %
12,00 %
10,00 %
100 %
NOTE 14 – GOODWILL
NOK 1,000
Cost
Goodwill from acquisition of 78,2% of
87 579
SpareBank 1 Livsforsikring in 1994
10 712
Goodwill from acquisition of 21.8 % of DAVID AS in 1996
Goodwill from acquisition of VÅR Livsforsikring AS in 2000
280 365
Goodwill from acquisition of 49 % of
ODIN Forvaltning AS in 2000
158 263
Goodwill ODIN from acquisition of Rahastotori/Fondex in 2008
50 060
Goodwill from acquisition of VÅR Skadeforsikring AS in 2000
553 616
Goodwill from acquisition of Actor Fordringsforvaltning AS
89 769
Goodwill from acquisition of SpareBank 1 Factoring AS in 2009
10 245
Goodwill from acquisition of Actor Verdigjenvinning AS in 2009
Goodwill from acquisition of
Eiendomsmegler 1 Oslo Akershus AS in 2009
Goodwill from acquisitoin of Areal Eiendomsmegling in 2009
58 020
Goodwill from acquisition of Argo Securities AS in 2008
42 709
Goodwill from acquisition of NK Corporate AS in 2009
7 268
Goodwill from acquisition of Conecto AS in 2010
Total goodwill
1 348 606
2010
Additions
2010
Impairment
2010
Book Value
2009
Book value
-
-
7 758
2 950
189 245
7 758
2 950
189 245
8 500
-
-
79 131
49 896
264 003
98 269
10 245
-
79 131
49 896
264 003
71 932
10 245
3 205
106 611
115 111
-21 736
-3 045
-24 781
42 709
106 611
850 819
14 632
21 736
42 709
3 045
760 486
During 2010, Actor Fordringsforvaltning AS and Actor Verdigjenvinning AS have merged. Conecto AS was acquired in September 2010. As of
January 1, 2011, Conecto AS and Actor Fordringsforvalning AS have merged. The addition on Actor Fordringsforvaltning AS of NOK 8.5 million
in 2010 is related to earn out. SpareBank 1 Gruppen Finans Holding AS, SpareBank 1 Factoring AS, as well as Actor Portefølje AS were also merged
during 2010. The new name is SpareBank 1 Gruppen Finans AS. NK Corporate AS and Argo Securities AS were merged in 2010. As of January 1,
2010, Bank 1 Oslo AS was demerged from SpareBank 1 Gruppen.
When acquiring control in a business (business merger) all identifiable assets and liabilities are recorded at fair value in accordance with IFRS
3R. A positive difference between fair value of the purchase price and fair value of net identifiable assets and liabilites are recorded as goodwill,
while a negative difference would be recorded as income at the time of the purchase. Goodwill is acquired when there is a difference between
fair value of the purchase price when aquiring a business and fair value of net identifiable assets and liabilities. Goodwill is assumed to have an
indefinite useful life. Acquisition of a company is among other factors based on strategic adaption and expected economic profitability over a
long time period. Goodwill is allocated to cash-generating units. Goodwill is not subject to amortisation, but is subject to annual impairment testing with the purpose of identifying any indications that impairment may have occurred, in accordance with IAS 36.
Determination of recoverable amount:
It is used cash flow forecasts (before tax) based on 5 year projections. Recoverable amount on the balance sheet date is assessed annually for goodwill with an indefinite useful life. The value of each of the cash-generating units is assed as of December 31, 2010. In determining the recoverable amount of the cash-generating units, SpareBank 1 Gruppen takes into account the pricing of comparable financial institutions (taking into
consideration companies that have performed better than market expectations for the past few years), dividend policies, ownership structure of
SpareBank 1 Gruppen and the distributors of insurance products.
For SpareBank 1 Gruppen, there will be a considerable variation in the values depending on whether the value assessments are based on a «going concern» or as part of a transaction of structure. The value assessments results in 3 scenarioes; a pessimistic value, an expected value and an optimistic value.
The calculated value is significantly higher than the book value, and the analysis indicates that there is no sign of impairment.
For Argo Securities AS, a valuation has been performed based on expected cash flows for the company in the period 2011 - 2014, with a calculated
residual value of the company at the end of the period. The calculation is sensitive in respect of the level of expected cash flows, and the hurdle
rate. The calculation uses a hurdle rate of 15 %. Based on these assumptions, the calculated value of the company is NOK 193 million. The
sensitivity related to the given assumptions are as follows:
+/- 10% change in cash flow
= +/- 29 mill i verdi
+/- 1% change in require rate of return
= +/- 12 mill. i verdi
42
SpareBank 1 Gruppen
NOTE 15 – OTHER INTANGIBLE ASSETS
NOK 1,000
Cost at January 1, 2009
Additions
Developed internally
Bought separately
From the acquisition of intangible assets
Disposals
Cost at December 31, 2009
Insurance
systems
in use
Group*
Total
147 091
22 952
3 364
3 364
26 316
1 540
-1 540
-
464 940
-464 940
-
41 485
1 500
1 500
42 985
618 721
64 151
3 364
1 500
-466 480
216 392
59 513
11 272
38 390
-
10 102
5 230
-
1 540
-1 540
414 940
-414 940
18 807
9 186
-
504 902
25 688
38 390
-416 480
109 175
15 332
-
-
27 993
152 500
Exchange differences
Recorded value as at December 31, 2009
37 916
12
10 972
-
-
14 992
12
63 880
Cost at January 1, 2010
Additions
Developed internally
Bought separately
From the acquisition of intangible assets
Disposals
Cost at December 31, 2010
147 091
15 174
8 600
-63 011
99 254
26 316
18 798
-13
45 101
-
25 825
25 825
42 985
56 173
14 000
-17 985
81 173
216 392
115 970
22 600
-80 996
-13
251 353
Accumulated depreciation as at January 1, 2010
Depreciation
Amortisation
Disposal depreciation and amortisation
Accumulated depreciation and
amortisation December 31, 2010
Recorded value as at December 31, 2010
109 175
9 143
10 792
-63 011
-
15 332
5 855
-3
-
-
27 993
6 663
-13 520
-
152 500
21 661
10 792
-76 531
-3
66 099
33 155
21 184
23 917
-
25 825
21 136
60 037
108 419
142 933
3-5 years
5-7 years
10 years
Accumulated depreciation as at January 1, 2009
Depreciation
Amortisation
Disposal depreciation and amortisation
Accumulated depreciation and
amortisation December 31, 2009
Useful life and linear method of depreciation
*
87 804
59 287
-
Electronic
Insurance
archive not an systems under
Licences
asset group development
5 years
Is related to intangible assets in the Group from the acquisition of Actor Fordringsforvaltning AS and Conecto AS.
NOTE 16 – INVESTMENTS IN SUBSIDIARIES – PARENT COMPANY
2010
NOK 1,000
Companies
SpareBank 1 Skadeforsikring AS
Sparebankutvikling AS
Odin Forvaltning AS
Argo Securities AS*
Total investments in subsidiaries
Business
office
Ownership
share (%)
Share capital
Nominal value
per share
Book
value
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
100
100
100
100
100
100
76,75
348 400
132 000
150
100
9 238
212 200
20 000
200
100
50
1 000
1 000
1 000
1 000
2 637 396
1 100 000
1 600
100
176 045
389 699
164 851
4 469 691
SpareBank 1 Gruppen Finans Holding AS was the parent company of SpareBank 1 Factoring AS, Actor Portefølje AS and Actor Fordringsforvaltning
AS. Actor Portefølje AS owned Actor Verdigjenvinning AS. In 2010 SpareBank 1 Gruppen Finans Holding AS and Actor Portefølje AS have
merged with SpareBank 1 Factoring AS, where SpareBank 1 Factoring AS was the acquiring company. The acquiring company has at the same
time changed its name to SpareBank 1 Gruppen Finans AS.
Actor Verdigjenvinning AS has merged with Actor Fordringsforvaltning AS by transferring all its assets, rights and obligations to the
latter company.
43
2009
NOK 1,000
Companies
Sparebankutvikling AS
Odin Forvaltning AS
Bank 1 Oslo AS
SpareBank 1 Gruppen Finans Holding AS
Argo Securities AS*
Total investments in subsidiaries
Business
office
Ownership
share (%)
Share capital
Nominal value
per share
Book
value
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
100
100
100
100
100
100
100
73,25
348 400
132 000
150
100
9 238
291 000
179 200
20 000
200
100
50
1 000
1 000
100
400 000
1 000
2 379 114
1 100 000
1 600
100
176 045
1 000 000
224 699
161 150
5 042 709
In 2009, Actor Fordringsforvaltning AS has become part of SpareBank 1 Gruppen Finans Holding Group.
* There is a shareholders' agreement between SpareBank 1 Gruppen AS and employee shareholders. The shareholders in the company have
priority in connection with capital increaeses in line with the principles in the Norwegian Comapnies Act.
NOTE 17 – INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Alliansesamarbeidet SpareBank 1 Total owner
SpareBank 1 Boligkreditt
share in
DA
AS
associated
10,00 %
2,81 %
company
2010
NOK 1,000
As at January 1
Increased/decreased ownership share
Adjustment as at January 1
Share of profit/loss IFRS
Share of tax
Disbursement of share dividend
As at December 31
16 862
-7 853
1 137
-1 137
9 010
103 692
-103 692
-
120 554
-111 545
1 137
-1 137
9 010
SpareBank 1 Boligkreditt AS is no longer a jointly controlled operation in SpareBak 1 Gruppen Group, as it now is Bank 1 Oslo AS that
holds ownerhip shares in the company.
AllianseFirst samarbeidet SpareBank 1 Total owner
2009
Securities SpareBank 1 Boligkreditt
share in
AS
DA
AS
associated
NOK 1,000
0,00 %
17,74 %
2,81 %
company
As at January 1
Increased/decreased ownership share
Equity movements/ dilution of equity
Share of profit/loss IFRS
Share of tax
Disbursement of share dividend
As at December 31
79 132
-79 132
-
19 629
-2 767
16 862
93 996
8 963
2 381
-1 648
103 692
192 757
-70 169
-386
-1 648
120 553
Associates are not marketable securities, thus an objective fair value of the shares in the associates does not exist.
Summarised financial information of the Group's associates is set out below
Alliansesamarbeidet
SpareBank 1
DA
2010
NOK 1,000
Assets
Liabilities
Income
Profit after taxes
Owner share
2009
NOK 1,000
Assets
Liabilities
Income
Profit after taxes
Owner share
380 791
276 825
418 517
1 500
10,00 %
Alliansesamarbeidet SpareBank 1
SpareBank 1 Boligkreditt
DA
AS
315 855
213 389
506 075
-15 948
17,74 %
84 235 761
80 552 987
136 524
84 744
2,81 %
44
SpareBank 1 Gruppen
The parent company has the following receivables and liabilities with the associates:
Receivables
Outstanding SpareBank 1 Utvikling DA
95 454
Investments in associates in the parent company SpareBank 1 Gruppen AS
NOK 1,000
Shares in Alliansesamarbeidet SpareBank 1 DA
Total shares in associates
2010
2009
10 147
10 147
18 000
18 000
According to IFRS, shares in associates are recognised at cost in the parent company's financial statements and are tested for impairment.
There is no basis for impairment by the end of 2010.
NOTE 18 – PROPERTY, PLANT AND EQUIPMENT
2009
Parent company
Machinery,
equipment
and vehicles
Group
NOK 1,000
Machinery,
equipment
and vehicles
Buildings
and other
properties
Total
225 576
30 557
-3 676
252 457
Cost or valuation as at January 1, 2009
Additions
Disposals
Revision of property value
Cost or valuation as at December 31, 2009
449 438
66 276
-5 189
-407
510 118
411 342
607
2 518
414 467
860 780
66 883
-5 189
2 518
-407
924 585
147 294
31 622
-3 414
175 502
Accumulated depreciation and impairment as at January 1, 2009
Depreciation charge
Disposals
Impairment charge
Accumulated depreciation and impairment as at December 31, 2009
330 666
53 957
-3 414
-479
380 730
9 724
7 141
16 865
340 390
61 098
-3 414
-479
397 595
Net book value as at December 31, 2009
129 389
397 602
526 991
76 955
If buildings and other properties were stated at historical cost, the book values would be as follows:
Historical cost
Value adjustment reserves as at December 31, 2009
Value adjustment funds
Collateral
The company has not pledge any fixed assets as security or guarantee.
Unoccupied buildings and other properties
A total area of 400 649 (gross amount of capitalised buildings) is fully utilised.
268 519
99 016
65 221
45
2010
Parent company
Machinery,
equipment
and vehicles
Group
NOK 1,000
Machinery,
equipment
and vehicles
Buildings
and other
properties
Total
252 457
87 001
-3 826
335 632
Cost or valuation as at January 1, 2010
Additions
Disposals
Revision of property value
Cost or valuation as at December 31, 2010
510 118
113 652
-137 176
358
486 952
414 467
808 144
-29 955
-18 398
1 174 258
924 585
921 796
-167 131
-18 398
358
1 661 211
175 502
33 325
-695
208 132
Accumulated depreciation and impairment as at January 1, 2010
Depreciation charge
Disposals
Impairment charge
Accumulated depreciation and impairment as at December 31, 2010
380 730
54 466
-131 545
248
303 899
16 865
4 381
-4 323
16 923
397 595
58 847
-135 868
248
320 822
127 501
Net book value as at December 31, 2010
183 053
1 157 335
1 340 389
If buildings and other properties were stated at historical cost, the book values would be as follows:
Historical cost
Value adjustment reserves as at December 31, 2010
Value adjustment funds
1 046 708
80 618
71 454
Collateral
The company has not pledged any fixed assets as security or guarantee.
Unoccupied buildings and other properties
Of the total gross amount of buildings recorded at NOK 1,132 million, 1 % was unoccupied.
NOTE 19 – OTHER ASSETS
Parent company
2010
2009
57
239 922
3 372
243 351
170
352
192 775
461
193 758
Group
NOK 1 000
Accrued income
Prepaid expenses
Prepaid claims SOS travel
Receiveables
Other
Total other assets
2010
2009
71 515
21 866
17 035
497 341
8 320
616 077
50 761
30 208
24 373
349 932
27 457
482 731
46
SpareBank 1 Gruppen
NOTE 20 – CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
Group 2010
Loans and
receivables
Held to
maturity
Fair value
trading
Fair value
FVO
Available
for sale
Amortised
cost
Total
Financial assets
985 375
Shareholdings
Commercial paper and bonds
1 249 291
Other financial assets
Lending to and deposits with credit institutions
169 132
Lending to customers
489 320
2 893 118
Total financial assets
4 679 131
4 679 131
3 055 697
1 123 184
38 158
130 605
4 347 644
4 277 018
14 385 756
144 519
18 807 293
20 216
20 216
-
985 375
7 352 931
21 437 362
182 677
169 132
489 320
130 605
30 747 402
-
-
160 265
160 265
-
-
848 846
275 316
348 756
1 376 914
2 849 832
848 846
275 316
348 756
1 376 914
160 265
3 010 097
Loans and
receivables
Held to
maturity
Fair value
trading
Fair value
FVO
Available
for sale
Amortised
cost
Total
Financial assets
1 294 653
Shareholdings
764 626
Other financial assets
197 678
Lending to customers
20 415 125
22 672 082
5 020 382
5 020 382
3 960 676
8 604 244
26 072
220 787
12 811 779
2 430 071
8 278 282
638 809
668 125
12 015 287
42 944
42 944
-
1 294 653
6 433 691
22 667 534
664 881
197 678
21 083 250
220 787
52 562 474
-
-
213 581
213 581
53 770
2 711 834
5 483
2 771 087
-
1 769 568
2 597 373
14 807 787
4 168 644
23 343 372
1 769 568
2 597 373
14 861 557
6 880 478
219 064
26 328 040
Loans and
receivables
Held to
maturity
Fair value
trading
Fair value
FVO
Available
for sale
Amortised
cost
Total
93 520
122 580
216 100
-
692
692
-
17 583
17 583
-
93 520
17 583
122 580
692
234 375
-
-
-
-
-
433 846
1 376 914
1 810 760
433 846
1 376 914
1 810 760
NOK 1,000
Financial liabilities
Subordinated loan capital
Loans and deposits from credit institutions
Deposits from customers
Securities issued
Total financial liabilities
Group 2009
NOK 1,000
Loans and deposits from credit institutions
Securities issued
Parent company 2010
NOK 1,000
Financial assets
Shareholdings
Securities issued
47
Parent company 2009
NOK 1,000
Loans and
receivables
Held to
maturity
Fair value
trading
Fair value
FVO
Available
for sale
Amortised
cost
Total
101 198
250 000
351 198
-
-
-
15 335
15 335
-
101 198
15 335
250 000
366 533
-
-
-
-
-
-
-
-
-
-
683 892
500 531
501 700
1 686 123
683 892
500 531
501 700
1 686 123
LEVEL 3
Financial assets
Shareholdings
Securities issued
Loans and deposits from credit institution
NOTE 21 – VALUATION HIERARCHY
Group 2010
LEVEL 1
LEVEL 2
Quoted prices
Valuation based
Valuation
in active
on observable
based on non-
markets
NOK 1,000
Financial instruments available for sale
Lending to customers and deposits with credit institutions
Financial assets held for trading
Financial assets designated at fair value through profit or loss (FVO)
Financial Derivatives
Total assets
Securities issued
Total liabilities
market observable market
information
information
Total
4 143 389
15 065 294
126 048
19 334 731
394
53 827
3 741 999
4 557
3 800 777
19 822
19 823
39 645
20 216
4 217 039
18 807 293
130 605
23 175 153
-
160 265
160 265
-
160 265
160 265
Reconciliation of Level 3
Opening balance
Gains and losses through profit and loss
Gains and losses in other profit components
Investments
Sale
Closing balance
Group 2009
141 081
43 064
-814
2 248
-145 935
39 645
LEVEL 1
LEVEL 2
Quoted prices
Valuation based
Valuation
in active
on observable
based on non-
markets
NOK 1,000
Financial assets held for trading
Financial assets designated at fair value through profit or loss (FVO)
Total assets
Securities issued
Total liabilities
Opening balance
Gains and losses through profit and loss
Gains and losses in other profit components
Investments
Sale
Closing balance
LEVEL 3
information
information
Total
9 245 473
10 611 569
19 857 042
341
668 125
3 343 825
638 809
220 787
4 871 887
42 603
1 694
96 784
141 081
42 944
668 125
12 590 992
11 347 162
220 787
24 870 010
-
2 711 834
53 770
219 064
2 984 668
-
2 711 834
53 770
219 064
2 984 668
90 928
37 698
-594
17 254
-4 204
141 081
48
SpareBank 1 Gruppen
Parent company 2010
LEVEL 1
LEVEL 2
Quoted prices
Valuation based
Valuation
in active
on observable
based on non-
markets
NOK 1,000
LEVEL 3
information
information
Total
Total assets
-
692
692
17 583
17 583
17 583
692
18 275
Total liabilities
-
-
-
-
Opening balance
Investments
Closing balance
Parent company 2009
15 335
2 248
17 583
LEVEL 1
LEVEL 2
Quoted prices
Valuation based
Valuation
in active
on observable
based on non-
markets
NOK 1,000
LEVEL 3
information
information
Total
Total assets
-
-
15 335
15 335
15 335
15 335
Total liabilities
-
-
-
-
Opening balance
Investments
Closing balance
153
15 182
15 335
Definition of levels used for measuring financial instruments at fair value:
Level 1 - Valuation is done by using quoted prices in an active market for identical assets/liabilities. A financial instrument is considered as
quoted in an active market if the quotation is easily accessible from a stock exchange, trading agency, broker, industrial classification agency,
valuation service or governmental institution and these quotiations shall further represent reliable and frequent market transactions by use of
the arms length principle. The category includes listed shares, bonds and commercial papers, among others.
Level 2 - Valuation is done on the basis of information for the asset/liability that can be directly or indirectly observable and that are not covered by level 1. Where there is not an accesible quoted price for active markets, the instruments are measured using valuation methods based
on observable input and/or similar instruments/products. The pricing of commercial paper and bonds, including loans with fixed interest
rate are based on interest rate curves published in active markets.
Level 3 - Valuation on the basis of data that is not observable market information. If the valuation cannot be done according to level 1 and
level 2, then the valuation method shall be based on non-observable market information.
Financial assets available for sale (level 2 and 3)
Financial assets available for sale consist of equity, and valuation is based on non-observable information.
Expected future cash flow forms the basis for the valuation.
Lending to customers and deposits with credit institutions (level 2)
Lending to customers and deposits with credit institutions consist of loans with fixed interest rate. The valuation is based on interest rate curves
published in active markets.
Financial assets held for trading (level 2 and 3)
This category encompasses equity, bonds and commercial papers. The financial instruments are primarily valued through valuation methods based
on information that can be observable and/or similar instruments/products. The pricing of commercial paper and bonds is based on interest rate
curves published in active markets. Instruments classified as level 3 consist of equity where the valuation is based on expected future cash-flow.
Financial assets designated at fair value through profit or loss (fair value option) (level 2 and 3)
Instruments classified in level 2 encompass mainly bonds. Valuation of commercial papers is based on interest rate curves published in active
markets. Instruments classified as level 3 consist of equity where valuation is based on expected future cash-flow.
Financial derivatives (level 2)
The financial derivatives consist mainly of currency futures, interest rate swaps and currency swaps. The valutation is based on observable
market data and/or prices on similar instruments/products.
Securities issued (level 2)
The valuation is based on interest rate curves published in active markets.
Deposits from customers (level 2)
The valuation is based on interest rate curves published in active markets.
49
NOTE 22 – FINANCIAL INSTRUMENTS DESIGNATED AT FAIR VALUE
Group
SHAREHOLDINGS
2010
Book value/
Acquisition
cost
fair value
NOK 1,000
Norwegian shares
Norwegian mutual funds
Foreign shares
Foreign mutual funds
Total shareholdings designated at fair value
361 130
1 095 987
456 804
4 019 710
5 933 631
381 750
1 659 472
470 987
4 820 506
7 332 715
2009
Acquisition
Book value/
cost
fair value
96 729
1 194 696
45 243
4 431 582
5 768 249
159 674
1 567 789
33 863
4 629 421
6 390 748
BONDS AND CERTIFICATES
2010
Acquisition
Book value/
cost
fair value
NOK 1,000
2009
Acquisition
Book value/
cost
fair value
Norwegian
Government and government-guaranteed
State Bond Fund
Government enterprises
Credit institutions and banks
Norwegian guaranteed bonds
Municipalities and provinces
Mortgage institutions and banks
Bond funds
Money market funds
Other bonds
Money market funds
Corporate
Total Norwegian bonds and certificates
0%
0%
10 %
10 %
20 %
20 %
20 %
20 %
20 %
20 %
100 %
100 %
100 %
1 427 175
35 466
1 171 482
433 740
4 546 609
2 756 536
1 869 970
426 333
622 457
13 289 768
1 440 699
35 576
1 178 296
438 684
4 615 643
2 765 382
1 863 350
427 498
645 577
13 410 705
615 370
334 518
70 994
561 923
7 430 167
1 277 333
2 004 849
3 390
19 924
240 525
366 524
12 925 517
620 732
324 262
72 956
565 971
7 569 968
1 284 596
2 009 614
3 410
16 663
242 075
378 488
13 088 735
Foreign
Government and government-guaranteed
AUR Credit Suisse - Unit Link
Foreign guaranteed bonds
Bond funds
Bond funds
Corporate
Total foreign bonds
0%
4%
20 %
20 %
20 %
20 %
50 %
100 %
711 350
545 274
2 391
512 510
143 288
167 963
2 082 776
712 022
556 834
2 344
497 087
157 409
172 538
2 098 234
1 965 939
3 104
989 155
224 303
483 305
125 200
3 791 006
1 975 408
2 555
987 672
223 205
477 751
127 200
3 793 791
15 372 544
15 508 939
16 716 523
16 882 526
Total commercial paper and bonds designated at fair value
OTHER FINANCIAL INSTRUMENTS
NOK 1,000
Hedge funds
Tax related receivables
Deposits and other receivables
Bank fund Investment choice portfolio
Foreign special deposits
Total other financial instruments at fair value
TOTAL FINANCIAL ASSETS DESIGNATED AT FAIR VALUE
Parent company
The parent company has no financial intruments designated at fair value.
2010
Acquisition
Book value/
cost
fair value
2009
Acquisition
Book value/
cost
fair value
19 875
146 718
20 100
186 693
16 642
146 213
19 823
182 678
47 486
47 486
43 081
1 694
221 665
397 379
1 062
664 881
21 492 868
23 024 332
22 532 259
23 938 155
50
SpareBank 1 Gruppen
NOTE 23 – FINANCIAL DERIVATIVES
General descriptions:
Currency futures: Contracts to buy or sell a specific amount in foreign currency on a specified future date at a fixed price.
Interest rate swaps: An agreement regarding the swapping of interest rate conditions over an agreed period and on a fixed amount.
Options: Contracts where the seller gives the buyer the right, but not the obligation to buy (call option) or sell (put option) a financial instrument or currency before or on a specified date at a predetermined and fixed price.
All derivates are designated at fair value through profit or loss. For all interest rate derivatives, gains are recorded as assets and losses are
recorded as liabilities.
Group 2010
Contract total
Fair value
Assets
Fair value
Liabilities
Equity instruments
Derivative underlying CDO's
Options
Total equity instruments
-
3 865
3 865
-157 600
-2 665
-160 265
Foreign exchange instruments
Forward contracts
Total foreign exchange instruments
-
120 897
120 897
-
65 000
65 000
5 843
5 843
-
-
130 605
-160 265
Contract total
Fair value
Assets
Fair value
Liabilities
-
11
11
-159 000
-944
-159 944
306 077
306 077
22 636
22 636
-282
-282
7 565 340
7 565 340
198 126
14
198 140
-58 838
-58 838
-
220 787
-219 064
Contract total
Fair value
Assets
Fair value
Liabilities
65 000
65 000
692
692
-
-
692
-
NOK 1,000
Interest rate instruments
Interest rate swaps, incl. cross-currency swaps
Other interest rate contracts
Total interest rate instruments
Total Financial Derivatives
Group 2009
NOK 1,000
Equity instruments
Derivative underlying CDO's
Options
Total equity instruments
Foreign exchange instruments
Forward contracts
Total foreign exchange instruments
Parent company 2010
NOK 1,000
Parent company 2009
The parent company had no financial derivatives in 2009.
51
NOTE 24 – FINANCIAL INSTRUMENTS CLASSIFIED AS AVAILABLE FOR SALE
2010
Parent company
Acquisition
cost
Book value/
fair value
16 530
1 053
17 583
16 530
1 053
17 583
15 182
153
15 335
15 182
153
15 335
Group
Acquisition
cost
Book value/
fair value
Norsk Tillitsmann
Norsk Pensjon AS
Eiendomsverdi AS
Other
Total financal assets available for sale
919
1 600
16 530
1 781
20 830
1 210
945
16 530
1 531
20 216
Oslo Kongressenter Folkets Hus BA
Finansnæringens Hus
Norsk Tillitsmann
Norsk Pensjon AS
SpareBank 1 Eiendomsinvest I AS
SR Eiendomsinvest Tyskland I AS
Eiendomsverdi AS
Other
Total financal assets available for sale
7 009
5 813
919
1 600
5 000
4 889
15 182
3 477
43 889
7 009
6 246
1 233
930
3 475
4 889
15 182
3 980
42 944
NOK 1,000
2009
NOTE 25 – BONDS AT AMORTISED COST
Group
Acquisition
cost
2010
Book
value
Fair
value
Acquisition
cost
2009
Book
value
Fair
value
Bonds held-to-maturity
Accrued interests on bonds held-to-maturity
Total bonds held-to-maturity
4 527 549
4 527 549
4 545 378
133 753
4 679 131
4 676 404
4 676 404
4 866 298
4 866 298
4 879 453
140 929
5 020 382
4 949 046
4 949 046
Other bonds at amortised cost
Accrued interests on bonds at amortised cost
Total other bonds at amortised cost
1 230 663
1 230 663
1 229 840
19 451
1 249 291
1 222 471
1 222 471
637 351
637 351
650 190
114 435
764 626
682 366
682 366
Total bonds at amortised cost
5 758 212
5 928 422
5 898 875
5 503 649
5 785 008
5 631 412
Risk
weight
Acquisition
cost
2010
Book
value
Fair
value
Acquisition
cost
2009
Book
value
Fair
value
0%
10 %
20 %
20 %
100 %
294 550
1 002 434
374 972
2 616 317
1 469 938
5 758 212
3 991 154
301 771
1 023 319
383 761
2 711 259
1 508 312
5 928 422
4 122 124
297 901
1 021 839
383 898
2 693 595
1 501 641
5 898 875
4 096 992
318 900
804 916
342 865
2 505 244
1 531 724
5 503 649
3 852 242
326 664
825 439
350 151
2 712 069
1 570 684
5 785 008
3 975 898
320 031
815 523
345 515
2 607 565
1 542 778
5 631 412
3 927 326
2010
2009
5 785 006
617 238
-483 663
9 841
5 928 422
5 932 725
389 809
-539 020
1 493
5 785 008
NOK 1,000
NOK 1,000
Goverment and goverment-guaranteed
Norwegian and foreign bonds with collateral
Manufactoring loans
Total commercial paper and bonds
Of which listed instruments
Changes in holdings during the year
Opening balance as of January 1
Additions
Disposals
Accrued premium/discount for the year (redemptions)
Closing balance as of December 31
Duration
Average effective interest rate
Parent company
The parent company had no bonds at amortised cost in 2010 as well as 2009.
2010
P&C
Insurance
business
2010
Life
Insurance
business
2009
P&C
Insurance
business
2009
Life
Insurance
business
3,0
4,4
5,5
4,6
3,0
3,6
5,8
4,5
52
SpareBank 1 Gruppen
NOTE 26 – FAIR VALUE ON FINANCIAL INSTRUMENTS MEASURED AT AMORTISED COST
Parent company
Group
2009
2010
Book
value
Fair
value
Book
value
2010
Fair
value
122 580
122 580
250 000
250 000
93 520
216 100
93 520
216 100
101 198
351 198
101 198
351 198
1 376 914
1 365 507
501 700
500 531
501 700
500 531
433 846
1 810 760
431 083
1 796 590
683 892
1 686 123
670 842
1 673 073
133 000
200 000
-
-
NOK 1,000
Assets
Lending to and deposits
with credit institutions
Lending to and deposits
with customers
Bank deposits
Liabilities
Loans and deposits from
credit institutions
Securities issued
Subordinated loan capital at
amortised cost
Off balance sheet liabilities and
guarantee commitments
Undrawn guarantees
Loan commitments
Documentary credits
Assets pledged as security
2009
Book
value
Fair
value
Book
value
Fair
value
169 132
169 132
197 678
197 678
489 320
5 928 422
985 375
7 572 249
489 320 20 415 125 20 404 812
5 898 875 5 785 008 5 631 412
985 375 1 294 653 1 294 652
7 542 702 27 692 464 27 528 554
275 316
348 756
1 376 914
275 316 2 741 507 3 241 507
348 756 14 717 423 14 217 423
1 365 507 4 168 644 4 176 458
848 846
2 849 832
802 697 1 769 568 1 753 339
2 792 276 23 397 142 23 388 727
451 318
623 928
642 234
1 877 538
475 000
2 078 500
Amortised cost is the measurement of a financial asset or liability by cumulative amortisation of cash flows estimated at initial recognition
adjusted for depreciation. These measurements are not always consistent with market participant's measurements of the same instruments.
Different views on macro economic development, market conditions, risk, expected rate of return as well as access to information might lead
to such differences.
The table above displays an overview over calculated fair value of line items designated at amortised cost. The value is calculated by using
internal models that are calculated based on either a theoretical value in absence of an active market or on a comparison of the instrument's
last traded prices in the market against the value registered in the portfolio. An estimate based on judgement is made where no relevant price
information is available. High uncertainty is connected to fair value measurements.
Bonds at amortised cost consist mainly of CDO's. The CDO's are divided into a principal and a derivative. The principal is recognised as a
bond designated at amortised cost, while the derivatives part is recognised as a financial asset designated at fair value. The CDO's fair value
adjustments are based on probability of default published by established rating agencies.
Loans and deposits from credit institutions and deposits from customers
Loans from credit institutions and deposits from customers are measured at amortised cost. Minor deposits with index-linked returns (BMB)
are designated at fair value. The fair value of currently priced deposits equals amortised cost.
Securities issued and subordinated loan capital
Securities issued with fixed interests rates are designated at fair value, while securities issued with a floating interest rate and subordinated
loan capital are measured at amortised cost. The valuation of debt measured at amortised cost is either based on broker quotes or calculated
on the basis of swap curves published by Reuters. Similar to loans, the value of assumed new issuance is used.
53
NOTE 27 – INVESTMENT PROPERTY
Group
SpareBank 1 Gruppen's real-estate portforilo consisted of 246 116 m2 divided across 21 buildings as at December 31, 2010. Of this,
SpareBank 1 Gruppen uses 51 221 m2 in their own business. Total vacancy rate is 2,9 percent. Weighter remaining tenancy period for the
entier portfolio is 6 years.
NOK 1,000
Additions/disposals and value adjustments
Acquisition cost as of January 1
Additions in year
Disposals in year
Acquisition cost as of December 31
Accumulated depreciation January 1
Ordinary depreciation in year
Accumulated depreciation December 31
Accumulated value adjustment January 1
Value adjustment in year
Accumulated value adjustment December 31
Book value as of December 31
2010
2009
4 061 127
24 942
-769 199
3 316 870
629 755
148 187
777 942
4 094 812
4 013 112
48 015
4 061 127
647 836
-18 077
629 759
4 690 887
Average end
of lease
term
2010
NOK 1,000
Type of building
Office building
Office building
Office building
Office building
Shopping center
Office building/stores
Other
Total
City/area
Oslo centre
Skøyen
Oslo other
Tønsberg
Oslo other
Oslo centre
Akershus
Oslo
Historical
cost price
Book
value
Rental
income
Area
in m2
645 818
1 068 642
397 528
12 233
282 046
482 676
111 828
124 658
3 125 429
846 516
1 460 668
472 570
25 427
289 919
731 812
141 271
126 628
4 094 812
85 365
102 363
33 600
2 389
24 570
48 163
14 946
9 328
320 724
32 672
75 877
18 013
2 503
19 054
31 090
16 362
60
195 631
Historical
cost price
Book
value
Rental
income
Area
in m2
1 106 605
1 068 642
581 974
297 632
440 157
100 550
133 894
3 729 454
1 206 674
1 453 358
680 577
291 520
789 813
130 111
138 833
4 690 887
74 006
121 856
50 054
24 058
62 308
13 457
8 088
353 827
53 430
75 877
39 002
18 196
31 097
13 535
60
231 197
2009
NOK 1,000
Type of building
Office building
Office building
Office building
Shopping center
Other
Total
City/area
Oslo centre
Skøyen
Oslo other
Oslo other
Oslo centre
Akershus
Oslo
2016
2015
2023
2011
2016
2013
2015
2096
Average end
of lease
term
2013
2015
2020
2015
2011
2012
2096
The company utilises an internal cash flow model to calculate fair valie for the properties. In the model, a 30-year cash flow is estimated on
the basis of expected future costs and income for each property. After the end of the 30th year of the cash flow, a terminal value is calculate.
The cash flow and terminal value are then inflated to correct for expected increase in prices and discounted with a required rate of return
consisting of risk free interest and a risk premium. The risk premium is set separately for each property.
Parent company
The parent company had no investmest property in 2010 as well in 2009.
54
SpareBank 1 Gruppen
NOTE 28 – LENDING TO AND DEPOSITS WITH CUSTOMERS AND CREDIT INSTITUTIONS
NOK 1,000
2010
2009
Lending to and deposits with credit institutions without maturity date
Lending to and deposits with credit institutions with maturity date
Total net lending and deposits with credit institutions
169 133
169 133
197 678
197 678
Lending and deposits specified by currency
NOK
SEK
USD
JPY
GBP
EUR
CAD
CHF
Other currencies
Total
166 539
813
1 011
40
730
169 133
25 769
10 589
57 753
11 375
15 984
64 758
4 698
4 371
2 381
197 678
2010
2009
Loans specified
Cash advances and bank overdrafts
Mortgage loans
Term loans
Other loans
Portfolio of outstanding receivables
Gross lending to and deposits with customers
468 570
98
34 252
502 920
2 690 072
495 983
18 145 881
21 331 936
Impairments
Net lending to and deposits with customers
Total loans to customers and credit institutions
-13 600
489 320
658 452
-248 687
21 083 249
21 280 928
2010
2009
Employees
Divided by business
Gross loans and deposits with customers
34 252
468 667
502 920
14 492 094
6 839 842
21 331 936
Impairments
Net loans and deposits with customers
Of which, loans to employees
Interest rate offered to employees is 80 % of the lowest offered interest rate to customers.
-13 600
489 320
28 366
-248 687
21 083 249
1 153 925
2010
2009
7 021
8 565
487 334
502 920
12 188 946
7 009 227
2 133 763
21 331 936
2010
2009
43 868
762
1 365
258 594
24 673
40 533
925
93 372
13 906
1
10 258
11 085
3 579
502 920
14 492 094
47 178
7
390 574
72 984
452 623
213 183
95 357
500 238
4 605 910
174 453
196 705
90 630
21 331 936
Loans to customers
NOK 1,000
Loans divided by market
NOK 1,000
Gross loans divided by geographical area
NOK 1,000
Oslo
Akershus
Other
Total gross loans divided by geographical area
Gross loans divided by sector and industry
NOK 1,000
Without industry association
Agriculture
Fishing industry and fishery related businesses
Manufacturing
Construction and building, power and water suppliers
Commodity trade
Hotels and restaurants
Transport and storage
Business services
Property management
Information and technology
Finance
Other industries
Total gross loans divided by sector and industry
55
Individual write-downs divided by sector and industry
NOK 1,000
Employees
Manufacturing
Construction and building
Commodity trade
Business services
Property management
Information and technology
Other industries
Specific provisions SpareBank 1 Gruppen Finans AS
Total individual write-downs divided by sector and industry
2010
2009
13 600
13 600
23 192
1
3 259
875
8
74
1 474
91 985
2 364
26 975
150 207
2010
2009
32 580
90 000
122 580
125 000
75 000
50 000
250 000
2010
2009
10 650
505
16
-766
10 405
88 167
34 407
1 852
-1 258
123 168
2010
2009
-233
100
10 486
10 353
1
3 261
-184
73
58 664
20 474
19 852
32 808
-10 523
124 426
SpareBank 1 Gruppen's lending portfolio lies in the subsidiary SpareBank 1 Gruppen Finans AS in 2010.
Parent company
NOK 1,000
Subordinated loan capital to First Securities AS
Subordinated loan capital to SpareBank 1 Livsforsikring AS
Subordinated loan capital to SpareBank 1 Skadeforsikring AS
Credit line to Argo Securities AS
Total granted loans
Loans are measured and recognised at amortised cost.
NOTE 29 – NET LOAN LOSS PROVISIONS
Group
NOK 1,000
Change in write-downs
Incurred losses on loans with previous write-offs
Incurred losses on loans without previous write-offs
Income received on claims previously written-off
Total loss on loans and deposits
Gross loan losses divided by sector and business line
NOK 1,000
Manufacturing and mining
Construction and building, power and water supply
Commodity trade, hotels and restaurants
Transport and other services
Financing, property management and other trade services
Other countries
Retail
Group write-downs corporate
Group write-downs retail
Gross loan losses customers
Non-performing and impaired loans
Non-performing loans (more than 90 days due)
Other impaired loans
Total impaired loans
Individual write-downs
Net impaired loans
*
2010
2009
2008
2007
2006
34.242*
34.242*
34.242*
416 568
23 038
439 606
149 485
589 091
268 741
131 855
400 596
88 323
312 273
112 378
53 444
165 822
42 004
123 818
95 629
145 313
240 942
87 350
153 592
As a basis the portfolio consists of obtained loans where requirements have not been met (all demands over 90 days) in SpareBank 1
Gruppen Finans AS' business area Portfolio in 2010. Fulfillment of the claims in the portfolios depend on the debtors ability to fulfill.
Parent company
The parent company has no net loan loss provisions.
56
SpareBank 1 Gruppen
NOTE 30 – CREDIT RISK EXPOSURE FOR EACH INTERNAL RISK CLASS
The credit risk in the SpareBank 1 Gruppen is mainly related to the operatoins of the business area factoring.
Work is being performed to prepare quantitative risk analyses for the business area factoring. The credit risk in the business area is related to
financing / lending risk and risk related to domestic and foreign customer credit guarantees.
In connection with ICAAP, SpareBank 1 Gruppen uses the standard method for calculating credit risk.
The internal credit model is a combination of a risk model and effectiveness model (how well adapted is the business area factoring and how
efficient can SpareBank 1 Gruppen run the agreement).
Thus the model is not directly transferable to a risk model with two dimensions / axes; rating on client / customer and security coverage.
Risk matrix
With the business area factoring's system for risk classification as a starting point, the following risk matrix is used as a basis for delegation
of credit authorisations. Objective score from Lindorff Decision and SpareBank 1 Gruppen Finans AS' internal rules of procedures, decides in
which risk class limited companies, one-man businesses and personal business registered in the Register of Business Enterprises are placed.
Kombinasjoner av risikoklasser og sikkerhetsklasser oppsummeres i følgende risikogrupper:
Client rating /structure rating
[4 - 5]
[3,5 - 4>
[3 - 3,5>
[2 - 3>
[1 - 2>
5
4
3
2
1
Default
Default /impaired
Low risk
Low risk
Low risk
Low risk
Medium risk
High risk
High risk
Low risk
Low risk
Low risk
Medium risk
High risk
High risk
High risk
Low risk
Medium risk
Medium risk
Medium risk
High risk
High risk
High risk
Medium risk
Medium risk
High risk
High risk
High risk
High risk
High risk
High risk
High risk
High risk
High risk
High risk
High risk
High risk
Description of the model:
On one axis the client rating based in the Lindorf Decision Score i used, where 1 is the worst and 5 is the best.
On the other axis, it is the structure that is given a rating between 1 and 5, 5 being the best. Structure rating implies the factorability both in connection
with the effects from operating the agreement and that SpareBank 1 Gruppen has good collateral in the receivable. It has therefore been developed a
model where different parameters that say something about the factorability are considered and given a score.
The parameters that are considered are:
1. Debtors credit worthiness
2. Repurchase rate
3. Credit note turnover rate
4. Age distribution
5. Business sector
The client and structure rating model results in a matrix, that gives the conclusion low risk, medium risk or high risk, based on the combination
between client rating and structure rating.
Loans divided by risk classes:
Business area factoring
Client rating vs. Structure rating
5
Loans
4
Loans
3
Loans
2
Loans
1
Loans
Default / put off
Loans
Impairments
Loans
[4 - 5]
[3,5 - 4>
[3 - 3,5>
[2 - 3>
[1 - 2>
Total
6,6 %
7,4 %
11,7 %
0,1 %
0,0 %
25,7 %
4,5 %
4,9 %
22,9 %
0,8 %
0,0 %
33,1 %
4,2 %
4,5 %
8,5 %
1,4 %
0,0 %
18,6 %
3,0 %
2,2 %
6,4 %
2,7 %
0,0 %
14,4 %
0,0 %
2,4 %
0,2 %
0,2 %
0,0 %
2,8 %
Summarised
Low risk
46,8 %
Medium risk
1,8 %
3,6 %
The model divides the portfolio into the risk classes low, medium and high risk, as well as default/put off and impairments in 2010.
40,9 %
High risk
6,9 %
Default
1,8 %
Impaired
3,6 %
57
NOTE 31 – MAXIMUM CREDIT RISK EXPOSURE, ASSETS PLEDGE AS SECURITY NOT TAKEN INTO ACCOUNT
The below table displays maximum credit risk exposure for the different balance sheet items, derivatives included.
The exposure is before assets pledged as security and allowed offsetting.
Parent company
Gross exposure
Group
Gross exposure
2010
2009
93 520
-
101 198
-
17 583
243 351
354 454
15 335
193 758
310 291
-
-
354 454
310 291
NOK 1,000
2010
2009
985 375
169 132
489 320
1 294 653
197 678
21 083 250
18 807 293
4 217 039
130 605
4 679 131
1 249 291
20 216
616 077
31 363 479
11 347 162
12 590 992
220 787
5 020 382
764 626
42 944
482 731
53 045 205
111 953
206 360
318 313
611 386
1 877 538
475 000
2 963 924
31 681 792
56 009 129
ASSETS
Lendring to and deposits with customers
Financial instruments designated at fair valie through
profit or loss (fair value option)
Financial instruments held for trading
Derivatives
Financial instruments held to maturity
Financial instruments held at amortised cost
Other assets
LIABILITIES
Financial guarantee contracts
Unutilised credit lines
Commitments
Total financial guarantees
Total credit risk exposure
NOTE 32 – CONTRACTUAL MATURITY OF FINANCIAL LIABILITIES
Group 2010
NOK 1,000
Deposit from and liabilities to
customers and credit
Securities issued
Derivatives
Other commitments
Commitments
Total debt
On
demand
Less than 3
months
3–12
months
1–5 years
More than
5 years
Without
maturity
Total
6 473
11 413
2 664
-
59 323
185 896
21 578
476 626
5 616
817 359
131 200
-
26 400
-
-
65 796
1 491 294
160 264
27 194
283 846
206 360
510 756
4 603
271 400
13 657
495 899
222 780
1 171 339
212 747
239 147
200 000
200 000
937 633
206 360
2 888 541
Interest rate as of year end 2010 is used to calculate the cash flow for the subordinated loan capital.
Cash flow for perpetual subordinated loan capital is calculated from one to five years. The total amount is added without maturity.
Group 2009
NOK 1,000
Securities issued
Derivatives
Other commitments
Commitments
Total debt
On
demand
Less than 3
months
3–12
months
1–5 years
More than
5 years
Without
maturity
Total
14 412 414
2 424 332
1 378 612
126 020
17 299
274 114
328 203
2 958 546
41 232
-
1 617 320
3 940 050
123 051
-
471 746
197 774
-
-
17 736 549
7 496 362
379 356
2 698 446
283 570
475 000
17 595 316
10 223
1 806 268
281 003
3 608 984
793 095
6 473 516
350 000
1 019 520
200 000
200 000
1 917 891
475 000
30 703 604
Cash flow for perpetual subordinated loan capital is calculated from one to five years. The total amount is added without maturity.
58
SpareBank 1 Gruppen
Parent company 2010
NOK 1,000
Securities issued
Derivatives
Commitments
Total debt
On
demand
Less than 3
months
3–12
months
1–5 years
More than
5 years
Without
maturity
Total
11 413
-
159 334
-
476 626
-
817 359
-
-
-
1 464 732
-
283 846
295 259
1 195
160 529
3 545
480 172
168 700
986 059
-
-
457 286
1 922 018
Parent company 2009
NOK 1,000
Securities issued
Derivatives
Commitments
Total debt
On
demand
Less than 3
months
3–12
months
1–5 years
More than
5 years
Without
maturity
Total
200 617
-
301 083
2 836
-
502 836
-
-
-
-
501 700
505 671
-
283 570
484 187
2 654
306 573
257 876
760 711
153 876
153 876
-
-
697 977
1 705 347
NOTE 33 – AGE DISTRIBUTION OF OVERDUE, BUT NOT IMPAIRED LOANS AND PREMIUM REVENUES
The table below shows overdue amounts on loans, overdrafts on credits/deposits and premium revenues broken down on number of days
after the due date that are not due to delays in payments transfers.
2010
NOK 1,000
Lending to and deposits from customers
Retail
Corporate
Past due but not paid insurance premiums
Total
Upon request*
Up to 30 days
31–60 days
61–90 days
Over 91 days
Total
34 252
34 252
26 147
26 147
1 716
1 716
-
-
34 252
27 863
62 115
* The portfolio consists of acquired non-fulfilled claims (all claims more than 90 days past due) in SpareBank 1 Gruppen Finans AS'
business area Portfolio. Payment depends on the debtors ability to redeem the claim.
2009
NOK 1,000
Lending to and deposits from customers
Retail
Corporate
Past due but not paid insurance premiums
Total
Upon request*
Up to 30 days
31–60 days
61–90 days
Over 91 days
Total
24 474
24 474
2 630
13 772
24 577
40 979
4 053
44
2 787
6 884
1 627
7
1 634
27 111
16 691
43 802
59 895
30 514
27 364
117 773
* The portfolio consists of acquired non-fulfilled claims (all claims more than 90 days past due) in SpareBank 1 Gruppen Finans AS'
business area Portfolio. Payment depends on the debtors ability to redeem the claim.
59
NOTE 34 – MARKET RISK RELATED TO CURRENCY EXCHANGE RISK
In the Group it is mainly SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring Group that are exposed to currency risk. Both the life
insurance and damage insurance company’s exposure to foreign currency is mainly related to its investment portfolios. As part of the companies’
risk management, efforts are made to neutralise the main part of the currency risk in underlying portfolios through foreign exchange contracts.
The foreign exchange risk exposure is as follows:
2009
2010
Net
currency
positions
in NOK
Change in
result by a
3 % change
in exposure
72 222
139 648
49 569
261 439
2 167
4 189
1 487
7 843
NOK 1,000
Currency
EUR
USD
Other
Total
Net
currency
positions
in NOK
Change in
result by a
3 % change
in exposure
266
744
1 933
2 943
8
22
58
88
NOTE 35 – MARKET RISK RELATED TO INTEREST RATE RISK
The Group is exposed to market risk related to interest rate risk. The main part of the interest rate risk in SpareBank 1 Gruppen is related to the
investment portfolios in SpareBank 1 Livsforsikring and SpareBank 1 Skadeforsikring. Below we show a sensitivity analysis per company
related to interest rate risk.
Parameter
Change in result in NOK million before tax
1% increase in interest rate
1% reduction in interest rate
SpareBank 1
Gruppen
AS (parent)
-15
15
SpareBank 1 SpareBank 1
SkadeLivsforsikring
forsikring
Group
AS
35
-35
-75
75
ODIN
Forvaltning
AS
Argo
Securities
AS
SpareBank 1
Gruppen
Finans
Group
Total
-
-10
10
-2
2
-67
67
* The table above is an estimate of expect profit and loss impact. The table is prepared in connection with monitoring of risk in SpareBank 1
Gruppen. The numbers are based on changes in value and changes in cash flow during the first year in certificates and bond portfolios in
SpareBank 1 Livsforsikring AS, SpareBank 1 Skadeforsikring Group and Argo Securities AS in the case of a momentary change in interest
rates. For SpareBank 1 Gruppen and SpareBank 1 Finans Group, the profit and loss impact is related to net interest bearing debt.
60
SpareBank 1 Gruppen
NOTE 36 – DEPOSITS FROM CUSTOMERS AND LOANS AND DEPOSITS FROM CREDIT INSTITUTIONS
Parent company
Group
2010
2009
-
501 700
501 700
2010
Deposits
2009
Deposits
-
-
-
-
2010
2009
-
-
NOK 1,000
2010
2009
239 236
36 082
115 289
233 466
624 072
268 377
2 328 996
9 458 072
5 220 287
183 198
17 458 930
2010
Deposits
2009
Deposits
Deposits from and liabilities to customers without maturity date
Deposits from and liabilities to customers with maturity date
Total deposits from customers
115 289
115 289
9 458 072
5 220 287
14 678 359
Wage-earners
Agriculture
Fishing industry and fishery related businesses
Oil related industry
Manufacturing
Construction and building, power and water suppliers
Commodity trade
Business services
Poroperty management
Public sector
Shipbuilding industry
Information an technology
Finance industry
Other industries
Total deposits divided by industry and sector
1 370
17 677
60 763
6 094
7 251
4
643
4 041
9 863
7 167
416
115 289
4 236 541
162
13 517
650
135 891
158 439
333 865
126 560
70 913
6 787 682
978 518
13 157
569
121 773
1 624 178
75 944
14 678 359
2010
2009
4 930
2 080
725
428
8 159
117
487
54
7 199
28 261
38 160
5 012
1 269
6 176
11 703
529
115 289
1 945 840
12 173 336
559 183
14 678 359
Loans and deposits from credit institutions without matuiry date
Loans and deposits from credit institutions with maturity date
Deposits from and liabilities to customers without maturity date
Deposits from and liabilities to customers with maturity date
Liabilities to policy holders
Total deposits from and liabilities to customers an institutions
NOK 1,000
Geographic allocation of deposits
Akershus
Oslo
Hedmark
Oppland
Østfold
Vestfold
Vest-Agder
Rogaland
Hordaland
Sogn og Fjordane
Møre og Romsdal
Sør Trøndelag
Nordland
Troms
Finnmark
Other
Total deposits divided by geographic areas
61
NOTE 37 – SUBORDINATED LOAN CAPITAL
Parent company
Group
2010
2009
NOK 1,000
Interest rate
150 145
150 145
250 202
150 120
400 322
Term subordinated loan capital:
21.12.2005 - Norsk Tillitsmann AS
21.12.2006 - Norsk Tillitsmann AS
30.06.2009 - LO
28.06.2006 - BN Bank ASA
30.11.2008 - SpareBank 1 NN
15.02.2006 - Norsk Tillitsmann ASA
Total time subordinated loan capital
NIBOR + 0,62%
NIBOR + 0,53%
NIBOR + 2,75%
NIBOR + 0,60%
NIBOR + 0,70%
NIBOR + 0,45%
83 197
83 152
200 504
283 701
200 418
283 570
Perpetual subordinated loan capital:
Norwegian owner banks and Sparebanken Vest NIBOR + 2,25%
SpareBank 1 Gruppen AS' owners,
Sparebanken Vest and Swedbank
NIBOR + 3,00%
Total perpetual subordinated loan capital
-
-
Perpetual subordinated loan capital securities
30.12.2004 - LO / Affiliated trade unions
NIBOR + 1,7%
15.06.2006 - Norsk Tillitsmann
NIBOR + 1,17%
Total perpetual subordinated loan capital securities
433 846
683 892
Call date Maturity
2010
2009
21.12.15
21.12.16
30.06.19
28.06.16
30.11.18
15.06.16
150 145
15 000
200 000
365 145
250 202
150 120
500 136
15 000
20 000
200 222
1 135 680
perpetual
83 197
83 152
perpetual
200 504
283 701
200 418
283 570
Call opsjon 2014* perpetual
perpetual
200 000
200 000
150 032
200 286
350 318
848 846
1 769 568
21.12.10
21.12.11
30.03.14
28.06.11
30.11.13
15.06.11
Total subordinated loan capital
* The mark-up is 1.0 % in case the perpetual subordinated loan capital securities are not paid back by 2014.
NOTE 38 – SECURITIES ISSUED
2010
605 000
760 500
2 002
9 412
1 376 914
605 000
350 000
125 500
285 000
2 002
9 412
1 376 914
Parent company
Average
interest
rate 2010
2009
3,08 %
3,60 %
-
500 000
531
500 531
500 000
531
500 531
Average
interest
rate 2009
3,09 %
0,00 %
-
NOK 1,000
2010
Commercial papers and
other short-term debt
Bond debt
Fair value adjustments
Accrued interst
Total securities issued
605 000
760 500
2 002
9 412
1 376 914
Bond debt broken down
on maturity date
2010
2011
2012
2013
2014
2015
2017
Fair value adjustments
Accrued interst
Bond debt and other debt
605 000
350 000
125 500
285 000
2 002
9 412
1 376 914
Group
Average
interest
rate 2010
2009
3,08 %
3,60 %
-
1 000 000
5 680 000
105 873
94 605
6 880 478
2 750 000
1 200 000
800 000
500 000
1 020 000
410 000
105 873
94 605
6 880 478
Average
interest
rate 2009
4,14 %
3,30 %
-
62
SpareBank 1 Gruppen
NOTE 39 – CAPITAL ADEQUACY
SpareBank 1 Gruppen group is subject to the same capital requirements rules as insurance companies and other financial institutions. The
requirement is 8 % liable equity compared with its risk weighted assets. In 2009, SpareBank 1 Gruppen group was subject to the Basel II
regulatoins. After Bank 1 Oslo AS was demerged on January 1, 2010, the group is subject to the Basel I regulations.
Parent company
2010
NOK 1,000
Group
2010
Vekt
5 005 932
-93 664
40 203
4 952 471
Risk wighted assets
Government, central banks, etc
Securities
Financial institutions
Secured loans, etc
Fixed assets
Other assets
Goodwill and other intangible assets
Assets related to investment choices
Total recorded assets
Total risk weighted assets
Excluding goodwill and other intangible assets
Positing outside the balance sheet
Net basis for calculation for institutions reporting in accordance with Basel II
Deduction for liable capital in other financial institutions
Total recorded assets and postings outside the balance sheet and weighted assets
2 758 135
-440 000
-93 664
2 224 471
Equity
Bond funds
- 50% deduciton for liable capital in other financial institutions
- Minimum requirement for reassurance coverage
- Suggested dividends
- Unrealised gains on investment portperiy / fixed assets
- Deferred tax asset
- Intangible assets and goodwill
Total core capital
3 701 048
200 000
-4 614
-34 341
-440 000
-71 454
-993 752
2 356 887
283 000
150 000
433 000
Perpetual secured loans
Time limited secured loans
45% of unrealised value of properties
45% of unrealised gain on shares
- 50% deduction for liable capital in other financial institutions
Total additional capital
283 000
350 845
32 154
-4 614
661 385
43 220
4 869 048
93 664
-
0%
10 %
20 %
50 %
100 %
150 %
20 %
3 748 597
2 534 344
11 929 733
629 035
12 722 948
44 349
993 752
6 700 517
39 303 275
253 434
2 385 947
314 518
12 722 948
66 524
1 340 103
17 083 473
-993 752
2 219 805
40 529 328
50 516
1 593 587
-9 228
18 718 348
2 657 471
Net liable capital
3 018 272
53,7 %
Capital coverage
16,1 %
2 261 273
Parent company
2009
Suprplus of liable capital
NOK 1,000
1 520 804
Group
2009
1 782 400
827 096
702 945
120 000
3 432 441
Share capital
Share premium reserve
Other equity
Dividends
Fund for unrealised gains
Minority interests
Total equity, exclusive perils reserves
1 782 400
827 096
1 472 320
120 000
65 221
30 299
4 297 336
-101 933
-120 000
3 210 508
Core capital
Deferred tax, goodwill and other intangible assets
Fund for unrealised gains available for sale
Deduction for dividends, payable
Deduction for reinsurance provisions
50 % deduction eligible primary capital in other financial institutions
50 % deduction in expected losses IRB less loan loss provisions
50 % capital adequacy reserve
Portion of unrecognised actuarial gains/losses
Perpetual subordinated loan capital securities
Total core (Tier 1) capital
-824 369
-65 221
-120 000
-34 133
-108 186
350 000
3 495 427
63
283 000
400 000
683 000
3 893 508
Tier 2 capital
Perpetual eligible primary capital
Term eligible primary capital
45 % unrealized gains on investment properties
50 % deduction eligible primary capital in other other financial institutions
50 % deduction in expected losses IRB less loan loss provisions
50 % capital adequacy reserve
Total Tier 2 capital
283 000
1 129 000
29 349
-108 186
1 333 163
Net liable capital
4 828 590
449 294
449 294
Minimum requirement eligible primary capital Basel II
Standarised approach
Special lending
Other corporates
SMB
Retail
Other retail
Equity positions
Total IRB credit risk
90 793
540 087
Credit risk
Equity risk
Foreign exchange risk
Operational risk
Transitional rules
Commitments calculated after the Basel I requirements
Capital requirements for insurance
Deductions
Minimum requirement eligible primary capital
57,67 %
47,56 %
10,12 %
Capital adequacy ratio as of December 31
Tier 1 capital ratio
Tier 2 capital ratio
133 485
427 082
163 747
3 467
164 091
26 543
918 415
93 889
3
155 453
20 008
1 194 688
-11 013
2 371 443
16,29 %
11,79 %
4,50 %
NOTE 40 – REINSURANCE RECEIVABLES
Group
NOK 1,000
Reinsurance receivables within P&C Insurance
Reinsurer's claims provisions life insurance
Reinsurer's share gross claims provisions
Reinsurer's share gross unearned premium
Reclassified reinsurance provisions
Total reinsurance receivables
2010
2009
294 855
148 801
1 034 542
179 531
-163 391
1 494 338
249 366
152 021
777 552
119 728
-147 825
1 150 842
NOTE 41 – INSURANCE RECEIVABLES FROM POLICYHOLDERS
Group
NOK 1,000
Due invoiced receivables P&C Insurance
Due unbilled receivables P&C Insurance
Accounts receivable life insurance
Total insurance receivables from policyholders
2010
2009
370 607
902 205
121 629
1 394 441
253 675
776 727
77 613
1 108 015
64
SpareBank 1 Gruppen
NOTE 42 – INSURANCE LIABILTES IN LIFE INSURANCE
Group
2010
NOK 1,000
Individual annuity and pension
- Profit model according to the Insurance Act § 9-9
- Profit model according to previous rules from the
Insurance Act of June 10, 1988 § 8-1 with guidelines
- Contracts without rights to share of profits
- Investment choice
Individual endowment
- Profit model according to the Insurance Act § 9-9
- Profit model according to previous rules from the
Insurance Act of June 10, 1988 § 8-1 with guidelines
- Contracts without right to share of profits
- Investment choice
Group pension
- Defined benefit-based pension schemes without
investment choice
- Paid-up policies
- Defined contribution-based pension schemes (including
pension capital certificates without investment choice
- Defined contribution-based pension schemes (including
pension capital certificates) with investment choice
Group life
Accident
Total all businesses
Gross
premium
reserve
Premium and
Additional
pension
provision adjustm.fund
Claims
provisions
Security
provisions
Total
6 430 913
51 816
104 084
321
1 764
-
214 906
-
-
6 751 668
-
4 386 797
131 717
1 860 583
103 763
-
1 764
-
22 450
192 456
-
-
-
2 338 902
353 666
9 490
-
-
177 221
-
679
-
2 526 292
-
621 726
68
1 363 442
9 490
-
-
72 164
104 872
185
679
-
-
10 625 774
265 680
416 373
344 617
-
11 652 445
3 548 018
3 254 126
192 602
73 078
268 975
-
107 567
34 500
-
-
344 175
3 386 947
92 508
-
14 484
10 422
-
-
-
117 709
15 205
103 157
88 972
-
-
393 386
-
-
695 561
-
1 088 947
-
-
-
242 011
242 011
54 317
54 317
296 328
19 788 975
379 255
418 137
1 674 317
54 996
22 315 681
903 430 1 400 747
Gross claims
provision as at
December 31, 2010
-
-
-
-
-
Security provision
as at December 31, 2010
Statutory minimum
requirement as at
December 31, 2010
Other technical
provision as at
January 1, 2010
Other technical
provision as at
December 31, 2010
Total as at January 1, 2010
Total as at December 31, 2010
-
Statutory minimum
requirement January 1, 2010 -
-
-
-
-
-
Security provision as
at January 1, 2010
725 412 1 253 902
793 219
Gross unearned premium
provision as at
December 31, 2010 556 389
Gross claims
provision as at
January 1, 2010
686 310
Onshore
property
-
-
-
-
-
-
832 189
998 037
325 971
294 824
-
-
-
-
-
-
19 144
19 783
32 802
30 477
1 PERSONAL LINES
Of which
third party
Motor
liability
Yacht
Gross unearned premium
provision as at
January 1, 2010
495 302
NOK 1,000
Group
2010
-
-
-
-
-
-
307 602
256 023
37 279
36 284
-
-
-
-
-
-
126 346
97 531
120 582
112 142
Travel
Accident insurance
-
-
-
-
-
-
452 531
497 337
500 480
500 480
469 225
469 225
10 053 2 767 323
4 567 2 357 218
12 854 1 553 126
8 147 1 368 662
-
-
-
-
-
-
12 983
5 719
4 818
4 847
-
-
-
-
-
-
333 926
336 874
156 545
125 520
2 COMMERCIAL LINES
TOTAL Onshore Onshore
PERSONAL property property
Others
LINES industrial commercial
NOTE 43 – INSURANCE RESULT AND PROVISIONS IN P&C INSURANCE
-
-
-
-
-
-
220 352
187 755
118 597
88 886
-
-
-
-
-
-
125 099
139 007
32 448
28 520
Of which
third party
Motor
liability
-
-
-
-
-
-
82 525
24 421
7 398
4 647
-
-
-
-
-
-
878 220
644 081
62 762
34 778
Workmen's
compenLiability
sation
-
-
-
-
-
-
235 354
230 160
4 553
3 924
Safety
369 402
265 009
-
-
-
-
-
-
-
-
251 285
251 285
231 474
231 474
46 587 1 809 947
3 573 1 432 583
14 728
2 405
-
-
-
-
-
-
157 809
340
-
-
TOTAL
3
COMMERCIAL Total
Other
LINES
Marine
-
-
-
-
-
-
66 252
52 296
-
-
4
Energy/
oil
-
-
15 432
15 432
10 721
10 721
37 826
40 732
-
-
5
Reinsurance
TOTAL
-
-
-
-
-
-
6 821 960
8 067 303
452 531
497 337
767 198
767 198
711 421
711 421
46 595 4 885 752
55 126 3 938 296
39 293 1 961 821
41 235 1 674 906
Natural
Perils
pool
65
66
SpareBank 1 Gruppen
NOTE 44 – LIABILITIES RELATED TO REINSURANCE
Group
NOK 1,000
Reinsurance liabilities in life insurance
Reinsurance liabilities in P&C insurance
Total liabilities related to reinsurance
2010
2009
33 301
44 405
77 706
36 079
59 044
95 123
NOTE 45 – UNDERWRITING RISK SPAREBANK 1 LIVSFORSIKRING AS
Important calculation assumptions and changes in the assumptions
•
The basic interest rate is in accordance with the Insurance Act and is assessed on an ongoing basis with the interest rate for long-term government bonds. The basic interest rate is currently 2.75 %for new life insurance contracts beginning on January 1, 2006. The basic interest rate for
new goup pension contracts sold from January 1, 2006 is 2.70%. The basic interest rate for accrual of benefits on group pension is 3 %, with
effect from renewals in 2004. The basic interest rate for new individual life insurance contracts sold in the period 1994 - 2005 is 3%. Otherwise
the basic interest is 4 %. The basic interst will change in 2011 according to the Norwegian Financial Supervisory Board's decison to reduce the
maximum basic interest.
•
The mortality rate assumptions are primarliy based on research done by the Norwegian Financial Services Association (FNH), while assumptions on disability are based on the company's own experiences. The mortality rate assumptions for the disabled take into consideration the correlation between disability and mortality. As of 2008, group defined benefit pension and paid-up policies from group defined pensions, follow
the new industry tariff K2005 with security margins that take into account increased life expectancy.
•
The allocation for reserves and premium provisions is determined based on the principle of security margins in the reserves and in the premiums. The safety margins in premiums and reserves are not quantified, but assessed by the level of uncertainty and longevity of the liabilities.
•
The ordinary premium reserve of the company is calculated based on the prospecitve principles on the same tariff basis as the premium tariff.
IBNR and RBNS provisions are allocated using statistical methods based on the company's own experiences.
•
There has been an effort by Finance Norway (FNO) to develop new tariffs for individual annuity and pension taking increased life expectancy
into account. As a result of this, there is a process for increasing the provisions for individual annuity and pension.
Risk management for insurance contracts
•
Evaluation of insurance risk
Risk manuals with guidelines on risk assessment including health rules and writing of potential customers have been prepared. When writing
individual risk products, the policy holder is required to undergo a health check. The result of this health check is reflected in the level of the
required premium. When arranging group contracts with risk coverage, the company must undergo a risk assessment. In the assessment the
company's financial position, industry and health and disablement background will be examined.
•
Control and monitoring of insurance risk
In the company's existing portfolio the insurance risk is monitored within each specific product group. The risk result in each product group is
divided into the following elements: mortality rate, disability rate and probability of survival. The development of the risk results is monitored
throughout the year. For every risk type the ordinary risk result for a period is the difference between the risk premiums undertaken during the
period and the claims incurrend in the same period. Events that have not yet been reportet but which the company, on the basis of experience,
assumes have occurred (IBNR) are taken into account. The company has developed a framework for control and monitoring of insurance risk in
connection with risk based supervision.
Risk result in 2010
MNOK
Risk of death (including accident risk)
Disability
Accident
Risk result technical provisions
Individual Individual
annuity and
endowpension
ment
-17,94
33,30
15,36
149,22
-20,24
128,98
Group
pension
Accident
Group
life
Total
-1,84
14,05
12,21
40,65
40,65
74,11
82,28
156,39
203,56
109,39
40,65
353,60
The table below shows the total risk result for 2010 after a reduction in mortality rate of 10 % and 20 %, respectively, or an increase in the
disability rate of 10 % or 20 %, respectively.
MNOK
10 per cent reduction in mortality rate
20 per cent reduction in mortality rate
10 per cent increase in disability rate
20 per cent increase in disability rate
Individual Individual
annuity and
endowpension
ment
15,26
15,16
2,36
-10,65
141,95
154,92
121,83
114,68
Group
pension
Accident
Group
life
Total
10,74
9,26
-0,25
-12,72
40,65
40,65
40,65
40,65
178,32
200,25
143,02
129,64
386,92
420,24
307,60
261,60
The effect that the risk result has on the result to the shareholders depends on which profit model is applied for the various products.
67
•
Reinsurance
The Board of Directors reviews the company's reinsurance strategy on an annual basis. The strategy comprises amongst other targets for
the company's reinsurance program and how the reinsurance program is to be monitored.
The company has the following types of reinsurance coverages:
•
Quota reinsurance
Through quota reinsuance the risk is divided between two parties. Therefore parts of the risk are transferred to a reinsurer, where the part
transferred is previously agreed on.
• Surplus reinsurance
Surplus reinsurance covers risk that exceeds the maximum risk amount for own account specified in the contracts. Excess reinsurance is,
like quota reinsurance, a proportional arrangement, but differs because the percentage varies in the different contracts. Excess reinsurance
is in particular used for individual contracts.
• Excess of loss / Catastrophe reinsurance
Through excess of loss, the reinsurer covers the amount that exceeds the company's risk amount, often limited to a specified maximum
level. A claim can be defined per risk or per incident. An example of an excess of loss is a catastrophe reinsurance. In the case where the
claim is defined per risk, excess of loss can be similar to the surplus reinsurance.
•
Sufficiency test
IFRS 4 requires the company to carry out a sufficiency test of the company's reserves. This test has been performed using the same principles since 2004. The calculations are based on forecasts from the company's finance model, where both assets and liabilities are included.
This model is proceeded till 2015. The administration result and the risk result is assumed to be on the average level of the period 2010 2015, and the financial return is assumed to be 5.2 %.
As life expectancy increases, the reserves for retirement pension is expected to be too low for individual pension. The calculations assume that 0.6 per cent of the reserve lacks and that this is divided over 2 years.
The sufficiency test shows that the premium reserve is adequate using the specified assumptions.
Conditions and terms in insurance contracts
•
Insurance risk
The company offers cover for disability through most product groups, either through disability pension, waiver of premium or one-off
payment. Individual contracts and goup life contracts also include life cover. Group pension includes widow or widower's cover with
payments commencing on the policy holder's time of death.
Changes in the rules for payment from the national social security scheme for disability benefits etc. may have a significant impact on the
number of claims for disability and disability reserves. In terms of changes in death benefits, the increasing life expectancy will have an
effect om whether or not expected payment time will be as assumed.
With a steady increase in life expectancy the company's future payments to retirement pension will be higher compared to previous years.
•
Interest rate risk
The company has taken on a significant interest rate risk within annuity and pension insurance. The company's average annual guaranteed rate of return is 3.18 %, calculated from average insurance fund. All new contracts in 2010 are offered with a basic interest rate of 2.75
% for individual insurance and 2.70 % for group defined benefit pension. A persistent low interest rate level will increase the risk related
to the guaranteed rate of return. If the annual rate of return seems to be lower than the guaranteed rate of return, financial efforts are made
to secure returns on the same level as the guaranteed rate of return. If this not is sufficient, allocations from additional provisions will be
made to cover the guarantee. Potential negative rates of return must be covered from the comopany's equity. In good fiscal years funds
from the profit are transferred to the additional provisions. This is regulated upward to 12 % of the contract's premuim reserve.
Average interest rate guarantee
Individual endowment insurance
Individual annuity/pension insurance
Group pension insurance
Group life insurance
Accident insurance
Total
•
•
•
•
•
•
•
2010
2,38 %
3,41 %
3,15 %
0,00 %
0,00 %
3,18 %
Profit models
The company has models with and without rights to profits according to the rules in the Insurance Act.
New profit model: Group pension, Defined contribution pension with return guarantee, Guarantee account, Individual saving products
entered into from 2008 and Group life with profit fund.
Modified profit model: Paid-up policies terminated from group pension.
Profit sharing according to previous rules: Individual endowment and Individual pension with profit sharing entered into prior to 2008.
Without right to profits: Group life (without Group life with profit fund), Group risk pension insurance without paid-up policy, Individual annuity, Individual endowment and Accident insurance.
With investment choice: Defined contribution schemes with investment choice, Induvidual endowment and Individual annuity.
Profit allocation
The allocation of profit to each customer is determined by which product group the contract belongs to.
For individual endowment insurance, the profits will be accumulated on the different contracts and paid out with the amount insured.
For individual annuity and pension insurance, the secured contribution is written up with the profit. Individual contracts terminated
from group pension treated in the same way.
68
SpareBank 1 Gruppen
For group pension, the profits are allocated to the scheme's premium reserve and the pensioner's profit reserve in accordance with the
regulations set in the Company Pension Scheme Act. For schemes without these regulations the profits are allocated to the premium fund.
•
For products without profit rights the compay will be exposed for the product's cost risk and insurance risk.
•
The right to transfer insurance between companies, where the time limit for settlement is only two months after the delay of cancellation
for contracts where the transaction value is above NOK 300 million, can represent a liquidity risk if one or more of the greater contracts
are transferred within a short amount of time. The transaction fee has an upper limit of NOK 5 000. Bigger outward transactions than
inward transactions over a defined time period will affect the future cash flow.
•
In general, changes in framework conditions for the industry can influence future cash flows. For instance, changes in the Pensions Act
result in the termination of defined benefit-based pensionl or in transfers to the defined contribution-based pension.
•
Maturity analysis
The best estimate for when the liabilites for savings products are due for payment. In the estimate disposals have been taken into account.
2010
MNOK
Payments (not discounted)
Total net premium reserves (discounted)
Book
value
0-5 years
5 027
5-10 years 10-15 years 15-20 years
5 017
3 717
>20 years
2 914
6 502
12 560
Insurance risk concentration
• The insurance portfolio is well diversified with respect to insurance risk. The portfolio is composed primarily of individual policies and
group policies where the insurance risk is not concentrated.
NOTE 46 – UNDERWRITING RISK SPAREBANK 1 SKADEFORSIKRING
Risk in P&C insurance
The insurance risk in each contract entails the probability that the insured event occurs and the uncertainty surrounding the resulting claim.
The nature of the insurance contract is such that the risk is random and therefore must be estimated.
For insurance contracts portfolios utilizing probability theory to calculate price and technical provisions, the biggest risk facing the company
is that the actual compensation exceed the amount set aside. Insurance events strike randomly and the observed number of events and degree
of compensation will naturally vary from year to year compared to that estimated by statistical techniques.
Empirically, a larger portfolio of standard insurance contracts will have expected results that vary less. A more diversified portfolio will have
less chance of interference from changes in a sub-portfolio. The Group's subscription strategy is designed to reduce variability in the expected
result by increasing the spread between different types of insurance risk through a sufficiently large insurance stock within each sector. Reinsurance is used to reduce the Group's risk to major damages.
Sensitivity to insurance risk
The table below shows the impact on earnings and equity (before tax) of a 1% change in gross premiums earned and 1 % change in the
Combined Ratio for own account. Combined Ratio is the most widely used criterion for measuring profitability in general insurance.
A change in the Combined Ratio can result of a change in the injury frequency, compensation level and / or administrative costs.
Sensitivity analysis – general insurance
Change in profit (before tax)
1 % change in combined ratioRetail
1 % change in combined ratioCorporate
1 % change in insurance premium level
Change in
MNOK
+/- 35,9
+/- 5,0
+/- 40,9
Concentration of insurance risk
The Group has prepared guidelines describing which insurance objects the companies can accept in their portfolios. Compliance with the
guidelines will be controlled. In addition automatic controls for entry of new portfolio have been incorporated into the insurance system. The
reinsurance cover is adapted to the risk exposure of the insurance portfolio. The Group has a reinsurance cover consisting of a quota program
and large comprehensive reinsurance cover (XL reinsurance).
69
Gross premiums written per insurance product
Figures in NOK 1,000
Combined Insurance
Fire
Motor vehicle
Leisure boat
Accident insurance
Travel insurance
Other private insurances
1 628 536
1 562 159
68 897
155 019
303 396
23 324
Onshore property industrial fire
Onshore property commersial fire
Motor vehicle industry
Liabilty
Occupational injury
Assurance
Other
11 152
352 660
243 362
24 854
126 226
68 683
35 242
Total personal lines
3 741 331
Total commercial lines
862 179
Sea
Energy/oil
Total incoming reinsurance
Total sea, energy, reinsurance
Nature/pools
908
2
52
962
127 341
Total gross premiums
written
4 731 813
Claims provisions
Claims provisions are measured at an unbiased level, such that there is no security buffer included in the provision. The company must have
provisions covering in full that corresponding to the minimum requirements on premium provisions and claims provision for own account
(after ceded reinsurance) as determined by the Financial Supervisory Authority of Norway for each industry group. The company's actual claims
provisions for own account shall at all times exceed the minimum requirements set by the Financial Supervisory Authority of Norway within all
product lines. The fiscal year end premium provision shall cover not run-off risk on damages not yet incurred on agreements contracts.
Provisions for claims have not been discounted, except for within marine insurance.
The security provision shall cover extraordinary fluctuations and shall together with the outstanding claims provisions cover the company’s
insurance liabilities with a likelihood of 99 %.
Analysis of claims development
Insurance liabilities and reinsurance
The table below shows the actual claims compared with previous estimates (ie claims development). The specification includes only portfolios which have a natural development, that is, without portfolio transfers.
Gross claims development
Gross – shore based business ex. incoming reins./sea/pooler
2005
and earlier
2006
2007
2008
2009
2010
Total
2 976,8
2 985,4
3 036,2
3 030,8
3 031,5
3 066,3
1 299,7
1 306,1
1 240,7
1 210,7
1 206,2
-
1 436,5
1 480,5
1 437,6
1 437,4
-
1 436,6
1 575,5
1 554,6
-
1 553,6
1 618,4
-
1 598,0
-
10 301,2
8 965,9
7 269,1
5 678,9
4 237,7
3 066,3
901,0
500,6
367,6
305,0
215,0
5,9
2 295,2
569,8
124,0
70,0
62,1
70,8
896,7
648,3
125,0
87,0
101,5
961,7
711,1
143,2
125,5
979,8
666,3
159,5
825,9
3 496,5
892,8
524,5
367,1
215,0
463,2
5 959,2
Run-off results in 2010 – own business
Run-off results in 2010 – energy/ incoming reinsurance
Run-off results in 2010 – pools
Total run-off results in 2010
-36,2
1,8
-4,5
19,7
2,3
-16,8
0,3
5,6
-10,9
Total gross claims provision closing balance
771,2
309,6
475,6
574,8
792,6
MNOK
CLAIMS PROVISIONS
Year end
One year later
Two years later
Three years later
Four years later
Five years later
PAID CLAIMS
One year later
Two years later
Three years later
Four years later
Five years later
Total Unison
Total unpaid
Claims provisions – portfolios undertaken
Gross claims provisions sea/incoming reinsurance
Pools
Total gross claims provision in the balance sheet
1 598,0
4 521,7
52,7
264,8
46,6
4 885,8
70
SpareBank 1 Gruppen
Development in claims for own account
For own account before XOL - i.e. only for own account proportionally after ceded reinsurance.
2005
MNOK
and earlier
2006
2007
2008
2009
2010
Total
CLAIMS PROVISIONS
Year end
One year later
Two years later
Three years later
Four years later
Five years later
1 677,5
1 688,3
2 164,8
2 156,8
2 155,6
2 187,4
1 112,9
1 127,3
1 061,8
1 033,5
1 029,9
-
1 199,6
1 198,6
1 160,1
1 163,8
-
1 206,5
1 293,6
1 275,3
-
1 269,1
1 301,1
-
1 396,4
-
7 861,8
6 608,7
5 662,0
4 354,1
3 185,5
2 187,4
681,1
361,6
248,5
212,5
165,9
4,5
1 674,1
531,3
115,8
46,8
52,6
19,7
766,0
589,2
115,0
42,3
31,6
778,1
657,1
114,8
60,2
832,2
585,8
81,0
666,7
-
3 044,4
707,2
337,6
265,0
165,9
196,9
4 717,1
Run-off results in 2010
Run-off result`s part XOL
Run-off result - incoming reinsurance/energy
Ruf-off results in 2010 - pools
Total Run-off result for own account 2010
-33,6
-
1,7
-
-5,5
-
19,4
-
-6,5
-
-
-24,5
0,1
0,4
5,4
-18,6
For own account claims provisions closing balance
Claims provisions – portfolios undertaken
Deduction XOL-reinsurance
Claims provisions for own account sea/incoming reinsurance
Pools
Total claims provisions for own accounts in the balance sheet
513,2
-
263,9
-
385,8
-
443,1
-
634,4
-
1 396,4
-
3 636,7
43,9
-26,8
151,3
45,8
3 850,9
Salaries
Bonus1)
Other
remuneration
Accrued
pension
cost
2 900
2 473
2 131
1 948
2 324
1 768
1 647
1 958
1 831
18 980
25 640
594
493
361
413
1 070
295
267
350
3 843
4 136
443
385
355
219
42
285
293
296
306
2 622
2 234
359
356
251
634
301
131
271
402
2 704
4 774
100
168
184
228
153
168
184
153
154
123
1 615
1 184
-
19
20
6
18
18
82
-
-
CLAIMS PAID
One year later
Two years later
Three years later
Four years later
Five years later
Total Unison
Total paid
NOTE 47 – WAGES AND OTHER REMUNERATION TO CEO AND KEY MANAGEMENT
NOK 1,000
GROUP MANAGEMENT
Kirsten Idebøen
Torbjørn Martinsen
Aud Lysenstøen
Tore Tenold
Leif Ola Rød
Thoralf Granerød
Jarle Haug
Øyvind Aass
Sigurd Aune
Total 2010
Total 2009
BOARD OF DIRECTORS
Terje Vareberg
Finn Haugan
Hans Olav Karde
Harry Konterud
Bjørn Engaas
Bente N. Halvorsen
Knut Bekkevold
Venche Johnsen
Steinar Karlsen
Per Gunnar Gulseth
Total 2010
Total 2009
71
Control committee
Dag Nafstad
Knut Ro
Ivar Listerud
Odd Broshaug
Rolf Røkke
Total 2010
Total 2009
150
110
110
110
110
590
783
-
-
-
Shareholders committee
Shareholders committee
113
159
-
-
-
1)
The bonus amount relates to paid out bonus in 2010.
The CEO possess the right to a defined benefit pension amounting 70 % of annual salary from the year she turns 60. The right is earned on a
pro rata basis. The CEO's salary and bonus are based on an overall evaluation of a combination of the Group's profit, the Groups goal
achievement compared to other comparable financial institutions, the CEO's own achievments and average salary for comparable
management positions. A possible bonus is decided by the Board of Directors and the bonus provision for one financial year is to be paid
before the next financial year ends.
The board is not committed to give the chairman of the board any benefits by resignation or change of the duty.
Neither do any agreements on bonus, profit sharing, options and similar benificial to the chairman of the board exist.
Loans to employees are granted by Bank 1 Oslo AS and collateral given is according to the Financial Institutions Act § 2-15.
Employees are granted loans with a 20 % discount compared to other customers. The cost of the discount is allocated to the different
subsidiaries based on each company's share. The employees in SpareBank 1 Gruppen Group have a total loan of NOK 813 780 thousand with
discount.
Employee discounts are granted on loans and some insurance services. Benefits given to management and members of the board do not
diverge from benefits given to other employees. All loans to employees and the board are endorsed by the Control Committee. The discounts
given are about 25 % of the ordinary customer conditions. SpareBank 1 Livsforsikring AS does not offer any discounts to employees or board
members. All insurance contracts are based on ordinary customer conditions. Three memebers of the Group Management have signed pension
agreements that diverge from the pension schemes offered to other employees.
SpareBank 1 Gruppen AS sole business is to administrate its investment in the subsidiaries. All related-party transactions are singed on
business conditions only. All inter group benefits not related to sale and portfolio management are priced at cost.
DEPOSITS 2010
NOK 1,000
Deposits as of January 1
Deposits received during the year
Withdrawals
Deposits as of December 31
Interest expense
Group
management
Board of
Directors
Control
committe
Jointly
controlled
entilities
Other
related
parties
1 470
23 211
23 172
1 509
1 379
2 783
2 405
1 757
5
123
119
9
-
-
32
28
-
-
-
Group
management
Board of
Directors
Control
committe
Jointly
controlled
entilities
Other
related
parties
759
21 421
20 299
1 882
1 250
2 465
2 336
1 379
18
141
154
5
-
-
41
29
-
-
-
136
37
197
213
45
-
-
-
2010
2009
39 351
679 169
46 827
640 760
DEPOSITS 2009
NOK 1,000
Deposits as of January 1
Deposits received during the year
Withdrawals
Deposits as of December 31
Interest expense
Insurance premium SpareBank 1 Skadeforsikring AS 2009
Insurance premium in year
Insurance claims
SERVICES PURCHASED FROM RELATED PARTIES
Services purchased from Alliansesamarbeidet SpareBank 1 DA
Commission cost to controlling ownerbanks
72
SpareBank 1 Gruppen
NOTE 48 – PENSIONS
General description of the company's pension liabilities:
The employees are part of SpareBank 1 Gruppen's Group pension scheme which is administrated by SpareBank 1 Livsforsikring AS. The
defined benefit plan ensures most of the employees a pension payment that constitutes 70 % of the expected final salary until the age of 77
with a future decrease in payments. In addition, a defined contribution plan has been established for employees starting on January 1, 2005
and later. The defined benefit plan was closed for new employees as of the same date.
For the parent company, the defined benefit plan includes 105 current employees and 74 pensioners. For the total group the defined benefit
plan includes 526 current employees and 491 pensioners.
Estimates are used for preparing the valuation of the pension retirement benefit and for the resulting excess or deficit. Adjustments to these
values are made on a yearly basis and in accordance to statements of the transfer value from the life insurance company and actuarial
valuations of the liability's size.
The costs are calculated based on the assumptions made for the opening balance. The pension liabilities are revised and calculations updated
as of December 31 according to the assumptions made by year end. Actuarial gaines and losses (changes in estimates) are presented in the
statement of comprehensive income. The periods pension cost consists of the pension entitlement accrued in the period and interest cost on
the pension liability less expected return and accrued employers' national insurance contribution. Payments according to the defined
contribution scheme are registered through profit and loss in the year of payment. If the company had used the assumptions given by the
Norwegian accounting foundation as of December 31, 2010, the pension commitment would have been 15 and 66 million lower in the parent
company and Group's annual accounts respectively. Equity would have been higher with equal amounts.
A law on state subsidies to wokers who take early retirement in the private sector (AFP-tilskuddsloven) came into force on February 19, 2010.
Workers who take early retirement from 2011 or later, will be given benefits under the new scheme. The new pension scheme contitutes a
lifelong entitlement from the National Health Service (Folketrygden) and can be taken from age of 62. Annually the employees earn the right
to early retirement with 0,314% of pensionable income up to 7,1 G at the age of 62. Vesting of the new scheme is calculated on the basis of the
worker's lifetime income, so that all earlier working years are included in the accrual basis. The new scheme will be financed by the state
covering 1/3 of pension expenditure and 2/3 which shall be borne by the employers. Employers' premiums will be determined as a percentage of salaries between the 1G and 7,1G.
The new pension scheme is for accounting purpose considered to be a defined benefit multiemployer scheme . This means that each entity
should account for its proportionate share of the scheme's pensions liabilities, pension funds and pensions costs.
In the absence of estimates of the individual components and a consistent and reliable basis for allocation recorded, the new pension sheme
shall be considered a defined contribution scheme.
In connection with the implementation of new law the previous scheme for accounting purposes is considered as closed and under
termination, and will be treated in accordance with curtailment and settlement. For employees born after December 31, 1948 , the effect of the
new scheme is accounted for in the first half of 2010. For retired employees with previous scheme, the acounting remain unchanged.
As a result the parent company entered an income of NOK 10 milion and the Group NOK 46 million at the end of first half of 2010.
At the year end provisions have been made for the Groups new pension scheme accrued since February 2010.In the parent company the
provision has been based on judgement. In 2010 the child and spouce insurance were closed. This has resulted in gain of NOK 13,3 and 45,7
million in parent company and the Group.
73
Parent company
Group
2010
2009
NOK 1,000
2010
2009
238 365
12 169
7 846
-32 382
-12 025
213 972
186 546
27 426
219 947
16 203
8 489
3 386
-9 660
238 365
198 645
39 720
Pension liabilities related to Defined benefit pension
Present value of pension liabilities as of January 1
Pension liabilities additions
Pension entitlements accrued in the period
Interest cost on pension liabilities
Terminated pension plans
Actuarial losses/gains
Benefits paid
Other changes
Present value of pension liabilities as of December 31
of which funded
of which unfunded
1 003 251
29 021
41 499
35 950
-11
-48 747
-79 661
-1 293
980 009
856 728
94 074
1 265 002
5 462
50 941
50 018
-32 286
-67 099
1 272 038
1 124 929
147 209
147 651
8 067
-12 620
10 097
-5 089
148 106
140 477
8 182
-7 628
10 333
-3 713
147 651
Pension assets
Pension assets as of January 1
Pension assets additions
Expected return in the period
Terminated pension plans
Employers NI contributions
Benefits paid
Other changes
Pension assets as of December 31
689 043
9 272
38 389
-33 409
40 905
-50 059
-1 217
692 924
845 747
1 662
48 698
-40 416
50 029
-37 263
868 457
213 972
148 106
65 866
238 365
147 651
90 714
Financial status as of December 31
Present value of pension liabilities as of December 31
Net pension liabilities as of December 31
980 009
692 924
287 085
1 272 038
868 457
403 581
65 866
12 604
1 685
-2 786
-2 402
9 100
74 966
90 714
11 023
2 328
1 553
-2 299
12 604
103 318
Net pension liabilities as of December 31, excluding employers NI contribution
Employers NI contribution January 1
Employers NI contribution additions
Costs related to employers NI contributions
Net employers contribution related to terminated contracts
Benefits paid
Employers NI contribution as of December 31
Net pension liabilities in the balance sheet
287 085
44 458
642
5 508
-2 395
-9 941
38 273
325 355
403 581
59 088
333,0
7 368
1 348
-11 265
56 873
460 453
12 169
7 846
-8 067
11 947
1 685
13 631
16 203
8 489
-8 181
16 510
2 328
18 838
44 843
36 404
-38 769
42 478
5 970
48 449
50 941
50 018
-48 699
52 260
7 367
59 628
10 202
8 499
22 131
11 594
7 153
25 991
33 000
31 365
79 814
49 918
29 279
88 907
-10 271
-13 335
-
-44 988
-43 985
-
-1 475
25 991
Pension costs for the period
Accrued defined benefit-based pension
Interest cost on pension liabilities
Expected return on pension assets
Net defined benefit-based pension costs without employers NI contributions
Accrued employers NI contribution
Net defined benefit-based pension cost booked to profit and loss
- applied to secured defined benefit pension cost including
employer's NI contribution
Defined contribution-based pension cost, including employers NI contribution
Pension costs in the period recognised in the income statement
Run-off gain due to cessation of salary increases, including
employers NI contribution
Run-off gains upon termination and issuance of paid-up policies
Total pension cost defined benefit and contribution
pension, including run-off gains
-9 159
88 907
19 424
20 403
Estimated pension cost defined benefit and contribution
pension for 2011 including employers NI contribution
74 157
81 895
65 019
61 681
Pensionable salary
298 805
333 172
761
-67 246
-9 048
-68 007
-48 622
-395 720
-6 824
-347 098
Actuarial gaines and losses
Actuarial gains/(losses) for the period, recognised in equity after tax
Cumulative actuarial gains/(losses) for the period, recognised in equity after tax
74
SpareBank 1 Gruppen
20,40 %
18,40 %
15,70 %
43,20 %
2,30 %
100,00 %
21,20 %
27,10 %
13,80 %
36,20 %
1,70 %
100,00 %
Composition of pension assets
Property and real estate
Investments Held to maturity
Shareholdings
Other assets
Total pension assets
20,40 %
18,40 %
15,70 %
43,20 %
2,30 %
100,00 %
21,20 %
27,10 %
13,80 %
36,20 %
1,70 %
100,00 %
8 067
8 182
Actual return on pension assets
38 389
48 698
3,50 %
4,60 %
4,00 %
3,75 %
1,30 %
14,10 %
4% og 2%
40,0 %
4,40 %
5,80 %
4,50 %
4,25 %
2,50 %
14,10 %
4% og 2%
40,0 %
3,50 %
4,60 %
4,00 %
3,75 %
1,30 %
14,10 %
4% og 2%
40,0 %
4,40 %
5,80 %
4,50 %
4,25 %
2,50 %
14,10 %
4% og 2%
40,0 %
K2005
IR2003
K2005
IR2003
K2005
IR2003
K2005
IR2003
Assumptions
Discount rate
Anticipated return on pension assets
Future salary growth rate
Increase in basic amount (G)
Rise in pensions
Employers NI contribution
Staff turnover
Anticipated Early retirement plan acceptance from 62 years-old
Demographic assumptions:
Mortality rate
Disability
Development during the last five years for the Groups defined benefit-based pension plan
2010
2009
213 972
148 106
65 866
256 782
154 824
101 958
-32 382
3 389
-12 620
-7 628
NOK 1,000
Present value of pension
liabilities as of 31.12
Deficit
Experienced adjustments on
pension liabilities
Experienced adjustments on
pension assets
2010
2009
2008
2007
2006
980 009
692 924
287 085
1 272 038
868 457
403 581
1 272 038
868 457
403 581
1 105 713
838 876
266 837
1 077 832
786 711
291 121
-48 747
-32 286
98 632
-5 277
-287 402
-33 409
-40 416
-92 357
7 738
-49 052
Employees
31.12.2010
Full-time
equivalent
31.12.2010
Average nbr.
of employees
in 2010
Average nbr.
fulltime
equivalents
in 2010
220
246
392
57
9
65
47
84
75
1 195
213
238
382
57
8
63
45
81
75
1 162
219
249
389
54
9
62
45
84
71
1 181
213
242
380
54
9
59
42
81
71
1 150
Employees
31.12.2009
Full-time
equivalent
31.12.2009
Average nbr.
of employees
in 2009
Average nbr.
fulltime
equivalents
in 2009
217
251
386
272
50
9
94
50
1
8
41
66
1 445
212
245
378
266
50
9
90
49
1
7
39
66
1 411
213
270
394
273
51
9
94
50
1
8
20
53
1 436
207
262
384
268
50
9
90
49
1
6
19
53
1 398
NOTE 49 – EMPLOYEES AND FULL-TIME EQUIVALENT
SpareBank 1 Gruppen AS
ODIN Forvaltning AS
Conecto AS
Argo Securities AS
Total
SpareBank 1 Gruppen AS
Bank 1 Oslo AS*
ODIN Forvaltning AS
EiendomsMegler 1 Oslo Akershus AS*
SpareBank 1 Gruppen Finans Holding AS
Actor Portefølje AS
Actor Verdigjenvinning AS
SpareBank 1 Factoring AS
Argo Securities AS
Total
* Bank 1 Oslo AS including the subsidiaries Eiendomsmegler 1 Oslo Akershus AS was demerged as of January 1, 2010 and is no longer part
of SpareBank 1 Gruppen Group.
75
NOTE 50 – TAXES
Connection between profit before tax and tax base
Parent company
Group
2010
2009
555 463
-11 742
-600 950
433 743
-17 789
358 725
-358 725
-
132 978
29 346
-235 181
504 239
-16 243
-2 044
413 095
-413 095
-
8 269
100 443
296
109 008
NOK 1,000
2010
2009
Profit before tax
Change in temporary differences
Permanent differences
Received group contribution with tax effect
Loss allowance carried forward
Correction previous year(s)
Basis for payable taxes in the income statement
Distributed group contribution with tax effect
Basis for payable taxes in the balance sheet
985 133
-182 228
-647 805
87 053
61 707
303 860
303 860
1 193 663
-61 024
116 600
-757 620
-140 164
351 455
351 455
-3 669
115 666
215
3 519
115 731
Payable taxes
Change in deferred tax asset
Taxable distributed group distribution
Insufficient/excess tax provision previous years
Other tax effects (net)
Total taxes
85 081
58 826
3 484
6 195
153 586
137 653
149 064
17 677
-10 374
294 020
109 008
-296
115 731
-3 519
153 586
-23 980
294 020
-2 436
-296
108 712
-3 519
112 212
Tax before other income elements
Tax on other income elements
Of which related to:
Estimate variances in the pension agreement
Revaluation of proverty
Adjustment of insurance commitments
Total tax including other income elements
-21 340
-3 544
904
129 606
-2 654
447
-229
291 584
32
32
-
Temporary differences as of December 31
Fixed assets
Financial instruments
Shares in associated companies
Profit and loss account
Insurance provisions (equity)
Other changes *
Total taxable temporary differences
71 602
59 715
270 109
1 659 015
704 941
2 765 382
150 779
171 651
269 435
2 918
1 487 403
8 659
2 090 845
-190 000
-87 383
-277 383
-160 942
-128 152
-289 094
Fixed assets
Financial instruments
Accounts receivables
Provisions
Retirement benefit contributions
Other changes
Total tax-deductable temporary differences
-201 417
-36 178
-62
-43 158
-340 380
-621 195
-169 337
-265 105
-52
-22 894
-484 883
-3 499
-945 770
-57 163
-334 546
-74 953
-364 047
Losses carried forward
Basis for deferred tax liability / asset
-1 256 822
887 364
-589 206
555 869
-93 664
-93 664
-101 933
-101 933
Deferred tax asset
Deferred tax liability
Deferred tax asset, not recorded
Net deferred tax asset
248 461
4 956
253 417
155 643
155 643
155 530
-168 266
121 448
296
109 008
37 234
-65 851
141 187
-358
3 519
115 731
276 884
-181 653
44 355
2 872
2 708
8 420
153 586
294 597
30 432
-5 557
5 314
2 077
-32 843
294 020
Balancing tax charges:
28 % of profit before tax
Pemanent differences (28 %)
Tax on group contribution
Correction previous year(s)
Transactions directly to equity
Other differnces
Change in unutilised dividends carried forward
Current income tax calculated
The deferred tax benefit in the parent company is recognised in the balance sheet since our expectations for results in subsidiaries are such
that we can realise the benefit within a 3-5 year perspective. Recorded taxes payable in the balance sheet will be settled through tax positions
in the Group during 2011. The actual payable tax in the Group is zero.
* Tax relief has been claimed for provisions to the exchange equalisation fund in 2009 and 2010, of respectively NOK 327,1 and 289,7 million in Sparebank 1 Livsforsikring AS. When calculating the tax cost, corrections have been made related to uncertainty related to approval
for the tax relief of NOK 634,6 million. It is known that the tax authorities are working on the matter and that the current law is unclear.
76
SpareBank 1 Gruppen
NOTE 51 – OTHER LIABILITIES
Parent company
2010
2009
111 616
9 066
7 342
18 061
25 177
358 725
4 880
534 867
96 164
8 449
1 172
21 712
25 885
413 095
11 528
578 005
Group
NOK 1,000
Accounts payable
Advance tax deduction
Governmental fees
Owed salaries and holiday pay
Other accruals
Commision liabilities
Margin payments or other account arrangements with customers
Provision for group contribution
Occupational injury insurance claim to RTV
Premium deposits
Other liabilities
Total other liabilities
2010
2009
150 821
56 367
31 852
113 492
204 541
73 486
70 273
56 796
133 847
238 423
1 129 898
121 309
59 939
34 164
133 419
146 375
83 322
79 160
56 264
128 995
161 154
1 004 101
NOTE 52 – EVENTS AFTER THE BALANCE SHEET DATE, LEGAL MATTERS
Events after the balance sheet date
No events have been registered after the balance sheet date that will affect the annual accounts of SpareBank 1 Gruppen Group.
Legal disputes
As of December 31, 2010, SpareBank 1 Gruppen Group was a party in 32 legal disputes. Each and all of these concern disputes with
insurance holders and other insurance companies, and are related to claims settlements in insurance contracts. Provisions are made in
the companies' accounts for these disputes as they occur, and the outcome is not material for the Group's financial position.
77
NOTE 53 – GROUP CONSOLIDATED EXCLUSIVE BANK 1 OSLO GROUP
Income statement
NOK 1,000
2009
Gross insurance premium revenue
- Reinsurers' share
Interest income
Interest expense
Net interest income
Net fee and commission expense
Net gains on financial assets measured at fair value
Net gains on financial instruments classified as available-for-sale
Net income from bonds to amortised cost
Share of profit and group contrifbution from subsidiaries
Total income
7 556 607
488 185
7 068 422
804 104
842 285
-38 181
600 373
791 547
-191 174
2 209 864
42 707
3 362
271 779
299 681
322 566
9 989 026
Insurance benefits and claims
Insurance claims recovered from reinsurers
Securities adjustment reserve for life insurance
Transferred to policyholders - life insurance
Operating Expenses
Total expenses
Operating profit
7 013 788
-331 006
327 145
170 766
127 918
155 204
118 845
11 226
8 990 722
998 304
Share of profit of associates and jointly controlled entities accounted for using the equity method
Profit before tax
Income tax expense
Profit after tax
-2 767
995 537
260 455
735 082
Profit attributable to:
Shareholders of the parent company
Minority interests
744 554
-9 472
Earnings per share (expressed in NOK)
Diluted earnings per share (expressed in NOK)
412
418
78
SpareBank 1 Gruppen
Balance sheet
NOK 1,000
Assets
Deferred income tax assets
Goodwill
Investments in subsidiaries
Investments in associates and jointly controlled entities
Reinsurance receivables
Insurance receivables from policyholders
Other assets
Investment property
Cash and cash equivalentes
Total assets
Equity and liabilities
Shareholders equity
Retained earnings
Revaluation reserve
Minority interests
Total equity
Subordinated loan capital and perpetual subordinated loan capital securities
Provisions in life insurance
Premium and claims provisions in P&C Insurance
Net retirement benefit obligations
Deferred income tax liability
Payable taxes
Securities issued
Liabilities related to reinsurance
Other liabilities
Deposits from and liabilities to customers and credit institutions
Total equity and liabilities
2009
738 750
59 415
16 861
523 795
1 150 842
1 108 015
423 013
4 583 273
5 020 382
764 626
24 184
457 940
20 530 618
23 772
1 051 251
36 476 737
2 268 496
1 799 359
65 221
30 300
4 163 376
1 118 000
327 145
20 843 433
6 821 960
359 165
155 258
139 476
500 000
95 123
165 427
869 889
918 485
36 476 737
79
NOTE 54 – CASH FLOW WITHOUT BANK 1 OSLO GROUP AS OF DECEMBER 31, 2010
The cash Flow below shows Cash Flow without Bank 1 Oslo Group as of December 31, 2010
NOK 1,000
Proforma
31.12.10
Cash flows from operating activities
Profit after tax
Revision of investment property values
Increase reinsurance receivables
Increase in lending to customers
Change in insurance provisions
Change in accrued expenses and prepaid revenues
Reduction in deposits from customers and loans and deposits from credit institutions
Net cash flow generated from operating activities
831 547
91 300
-148 187
10 388
-343 496
-210 900
3 007 315
-611 654
-294 413
2 331 901
Cash flows from investing activities
Increase in financial instruments designated at fair value and adjusted for value changes
Reduction of financial instruments held to maturity
Reduction of financial instruments available for sale
Investment property additions
Investment property disposals
Investment property gains
Increase property, plant and equipment
Net cash flow used in investing activities
Cash flows from financing activities
Payments related to redemption of subordinated loan capital
External dividends paid
Increase in securities issued
Net cash flow from financing activities
Net receipts/payments of cash
Cash and cash equivalents as of January 1
Cash and cash equivalents as of December 31
-2 600 547
-143 414
3 968
-24 942
661 590
34 402
-816 594
-2 885 537
-269 154
-120 000
876 914
487 760
-65 876
1 051 251
985 375
80
SpareBank 1 Gruppen
Independent auditor's report
81

Annual Report 2010 - SpareBank 1 Gruppen – Investor relasjoner

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