A regionally based commercial bank with strenght

Transcription

A
N
N
U
A L
1 9
R
9
E
P
O
9
A regionally
based commercial
bank with strenght
and international
network.
R
T
C
O
N
T
E
Introducing Fokus Bank
. . . . . . . . . . . . . . . . . . .
3
. . . . . . . . . . . . . . . . . . . . . . . .
4
. . . . . . . . . . . . . . . . . . . .
Executive management’s assessment .
Account analysis
6
7
10
. . . . . . . . . . . . . . . . . . .
11
. . . . . . . . . . . . . . . . . . . . .
21
Balance Sheet development
. . . . . . . . . . . .
Den Danske Bank’s network
Focus on fisheries .
22
. . . . . . . . . . .
24
. . . . . . . . . . . . . . . . . . . .
25
The Focus Academy
. . . . . . . . . . . . . . . . . .
Extensive social commitment
Effective sales tools
26
. . . . . . . . . .
27
. . . . . . . . . . . . . . . . . . .
28
Sophisticated management
information systems . . . . .
Local, but accessible
. . . . . . . . . . . . .
29
. . . . . . . . . . . . . . . . . .
30
Directors’ Report for 1999
. . . . . . . . . . . .
31
. . . . . . . . . . . . . . . .
40
. . . . . . . . . . . . . . . . . . . . . . . .
41
Profit and loss account
. . . . . . . . . . . . . . . . .
42
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
Accounting principles
Notes
. . . . .
. . . . . . . . . . . . . . . . . . . . . . . .
Operations in 1999
Balance sheet
S
1
Economic situation
Location map
T
. . . . . . . . . . . . . . . .
Financial Highlights .
Status of 1999 .
N
Control Committee’s Statement and
Audit Report . . . . . . . . . . . . . . . . . . . . .
. . . .
75
. . . . . . . . . . . . . . . . . . . . . .
76
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
Representatives .
Addresses
1
INTRODUCING
FOKUS
BANK
Fokus Bank is a regionally based commercial
The Bank aims at establishing long-term
bank operating with a local profile in the
customer relationships by providing all types
geographical areas in which the Bank has a
of financial products and services, including
strong position thanks to
its size and traditions.
Fokus Bank is part of
Den Danske Bank Group
and has the operational
responsibility for the
Group’s Norwegian
activities, which also
include Den Danske
asset-management, capital-
The core of
F o k u s B a n k ’s
strategy stands
firm - we shall
use the advantage
of being close to
the customer in
the local markets.
market and insurance
products. Fokus Bank’s
core business includes ten
regional banks and a total
of 65 branches. Its head
office is located in
Trondheim. The Bank has
1069 employees, and its
Bank’s Oslo Branch and
managing director is Svein
Danske Securities.
Sivertsen.
2
INTRODUCING
History
FOKUS
BANK
Return on Equity
• Long-term exclusive customer relation-
Fokus Bank was founded on October 1,
20
ships through proximity and a wide range
1987, through a merger between Buske-
15
of products
rudbanken A/S, Bøndernes Bank A/S,
Customer proximity and local decision-
10
Forretningsbanken A/S and Vestlands-
making procedures, combined with a full
5
banken L/L. Subsequently, the Bank
merged with Tromsbanken A/S in 1990,
and internationally competitive range of
0
Rogalandsbanken A/S in 1991 and Samvirkebanken A/S in 1993. The seven regional
95
96
97
98
99
Earnings per Share
products, will make Fokus Bank an attractive banking partner. The organisation will
focus on sales in order to develop its own
10
commercial banks that now form Fokus
8
customer base and thus establish new
Bank were established during the period
6
exclusive customer relationships.
from 1868 to 1932 and thus have a long
4
history in their respective markets. As from
2
May 1999, the Bank became a wholly owned
0
• Professional and international services
made available through customised local
subsidiary of Den Danske Bank Group.
Mission statement
95
96
97
98
99
Cost/income ratio
expertise
Customer contact will take place via the
regional banks, which provide customised
80
70
Fokus Bank will be a bank for corporate
and retail customers, providing a wide
range of products, servicing customers on a
expertise on a local and regional basis. The
60
50
Bank must also offer customers special
40
30
expertise and tailor-made solutions. As
20
regional basis and operating on the principle that banking is local. The Bank will
part of a leading Nordic financial services
10
0
95
hold a dominant market position and work
management, control and development.
Strategic elements
97
98
99
group, the Bank has the financial strength
and stability needed to service its custo-
Balance Sheet
Development
efficiently through joint back-office functions and operations as well as central
96
mers.
50,000
40,000
• Low costs through allocation of respon-
30,000
sibility and future-oriented use of informa-
20,000
tion technology
10,000
Fokus Bank’s strategy is based on the
0
following four elements:
Fokus Bank has a clearly defined allocation
95
96
Total assets
Net lending
Deposits
• Regional banking
Fokus Bank will be or must be capable of becoming
the leading commercial bank within its defined
regions. Professional, high-quality and regionally
based operations will lift growth and strengthen the
Bank’s market position.
97
98
99
of responsibility between sales activities,
operations and back-office tasks, management and control and development. Moreover, futureoriented use of information technology will enable the
Bank to maintain its high level of quality and cost
effectivenes.
3
FINANCIAL
HIGHLIGHTS
Group
NOK million
1999
1998
1997
1996
1995
1,124
1,061
917
895
916
493
312
617
419
421
1,617
1,373
1,537
1,314
1,337
991
942
902
935
916
write-downs long-term investments in securities
626
431
632
379
421
Net losses on loans and guarantees
192
53
(12)
26
8
Profit/loss/write-down fixed assets
26
3
6
109
16
0
0
0
0
0
461
381
650
462
429
Net interest and credit commissions
Total other operating income
Net operating income
Total other operating expenses
Operating result before loan losses and gains/losses/
Transferred from general provisions
Pre-tax operating result
Gross lending
38,895
36,025
33,770
29,435
26,942
Customer deposits
23,243
22,694
23,593
24,842
21,909
Total assets
44,314
42,139
39,989
35,365
31,856
9.5
7.9
19.1
12.6
10.7
Cost / income ratio 2)
Return on equity 1)
61.3
68.6
58.8
71.2
68.5
Deposit coverage ratio 3)
59.8
63.0
69.9
84.4
81.3
4.76
3.89
8.86
5.37
4.90
Equity per share 5)
Earnings per share (NOK) 4)
49.86
49.84
48.53
44.17
45.80
Capital adecuacy ratio
11.57
13.06
12.16
10.76
12.66
7.56
8.12
7.18
7.28
8.10
34,753.0
23,754.0
Core Capital ratio
34,900.5
32,181.0
26,469.0
Net NPL’s in per cent of gross lending Parent Bank*) 6)
Risk weighted assets (NOK mill.)
1.4
1.4
2.0
2.6
Total losses in per cent of gross lending Parent Bank*) 7)
0.4
0.4
0.3
0.6
Loan loss ratio 8)
0.1
(0.1)
0.1
0.0
General loan loss provision in per cent of lending 9)
0.5
0.4
0.5
0.5
Lending in per cent of total assets 10)
85.9
85.5
84.5
82.6
83,6
Number of full time positions, Group
1,010
917
991
1,002
1,174
21
24
24
26
45
Number of full time positions, subsidiaries
*)
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
The Parent Bank figures are almost identical with Group figures
Annual result in per cent of average equity
Ordinary operating expenses in per cent of the total net income and other operating income
Customer deposits in per cent of total ordinary loans
Annual result divided by average number of shares
Equity at the year-end divided on number of shares at year-end
NPL’s in per cent of customer lending
Total loan losses, excluding guarantees, in per cent of customer lending
Net loan losses, excluding guarantees, in per cent of total loans at the year-end
General loan loss provisions in per cent of total loans after deducting specific loan loss provisions
Total loans after deducting specific loan loss provisions in per cent of total assets
4
STATUS
OF
1999
No more speculation about mergers or acquisitions
chairman of the executive board of Den Danske Bank,
In December 1998, it became clear that more than 90
succeeded Stein Holst Annexstad, who had held his
per cent of the shareholders of Fokus Bank had ac-
position since 1991, as chairman of Fokus Bank’s board
cepted Den Danske Bank’s takeover bid, and the
of directors, while Jakob Brogaard, member of the exe-
application for the takeover to go through was sent to
cutive board of Den Danske Bank, took over as deputy
the Norwegian authorities on December 22. For the
chairman. Bjarne Borgersen resigned as managing direc-
first time since its reprivatisation in the autumn of
tor, having held his position since 1994. Svein Sivertsen,
1995, Fokus Bank was not the target of speculation
who had been deputy managing director under Bjarne
about mergers or acquisitions.
Borgensen, was appointed new managing director. Terje
A string of interest-rate cuts
Svendsen, who had been finance director for several
years, was appointed new deputy managing director.
The early months of 1999 saw interest rates decline,
and Fokus Bank made several cuts in January, March
At the presentation of the accounts for first six months
and April. On several occasions, Fokus Bank was the
of 1999, the accounts of Fokus Bank had already been
first Norwegian bank to announce interest-rate cuts
incorporated into those of Den Danske Bank.
with immediate effect and received positive media
coverage for such swift action. The Bank was also
Fokus Bank the first bank in world to offer
commended for its current practice of introducing
WAP-based banking services
simultaneous interest-rate cuts to existing and new
WAP, or Wireless Application Protocol, is a standard
customers. Fokus Bank also lowered its interest rates
protocol of using mobile telephones and hand-held or
in June and September.
portable PCs to access the Internet. As the first bank
New credit procedures and new tools for
reporting sales and for analysing customers
The work of implementing new tools for processing
credit applications and for reporting sales continued
relentlessly at every level during the first six months,
with the main emphasis on training. The active use of
these tools will allow Fokus Bank to process credit
applications in an effective and secure manner and to
target customer follow-up professionally.
in the world, Fokus Bank was able – on September 23,
1999 – to offer Internet-based banking services to
customers with WAP telephones. These services allow
customers to view information from Fokus Nettbank
directly on the display of their mobile telephones. The
launch of the WAP bank gave Fokus Bank the lead –
once again – when it came to introducing new technology. In April 1995, Fokus Bank was the first bank to
open its own homepage on the Internet. Fokus Nettbank was launched in August 1997, offering a range
Concession and new management
of services, including account transfers and payments,
On May 7, 1999, Den Danske Bank obtained official
and the second version of Fokus Nettbank was intro-
permission, through a concession given by the Nor-
duced late in the summer of 1999.
wegian authorities, to take over Fokus Bank, and the
work of exchanging information and co-ordinating
basic routines could begin.
Opening up in Bergen again
On October 14, 1999, Fokus Bank celebrated the opening of a full-service branch on Torgallmenningen in
The takeover also implied changes in Fokus Bank’s
Bergen. Apart from a modest representative office,
management team. On June 10, 1999, Peter Straarup,
Fokus Bank had not been present in Bergen since
5
STATUS
OF
1999
1993 when a total of ten branches were sold to
complete overhaul of all the Bank’s systems. These
Kreditkassen as part of the Bank’s plan to turn round
efforts would allow the Bank to face the exciting new
the business following the Norwegian banking crisis.
millennium with systems fully checked, upgraded and
adjusted where this was required.
Preparations for the millennial change
No major self-respecting business would risk facing
These preparations and emergency measures meant
the millennial change without any preparation. As an
that all banking staff responsible for specific tasks on
important part of Norway’s infrastructure, the finan-
New Year’s eve could report – just a few hours into
cial institutions were monitored closely by the authori-
the new millennium – that the changeover had not
ties in respect of preparation and emergency measures.
caused any problems in the Bank’s systems.
For two years, Fokus Bank allocated resources for a
ECONOMIC
SITUATION
The year 1999
After a strong recovery through most of the 90s, the
Against this background, growing credit risk was a
Norwegian economy took a deep plunge in 1998. At
focal point in 1999, with special emphasis on indu-
the beginning of 1999 forecasts showed that Gross domestic product
1995-1999
the downturn would continue, but opinions
differed as to how dramatic the downturn
Seasonally-adjusted volume
indices, 1995=100
would be. The predicted slow growth of the
115
115
economy was caused first and foremost by
110
110
a substantial reduction in investments in
105
105
offshore and offshorerelated industries and
100
100
shipbuilding, but also by slack demand for
95
95
consumer goods and services.
90
1995
90
1996
GDP
1997
1998
GDP mainland
1999
Industry
3-month money market
rates. 1997-1999
same time, the The Norwegian Central
Bank increased its leading interest rates
strongly in the last half of 1998 because of
a substantially weaker Norwegian krone.
As a result, interest rates were very high at
the beginning of 1999, which further increased credit risk.
involved in oil and shipping. At the same
time, traditionally cyclical sectors, such
as construction, hotels and restaurants,
and property companies were very much
the centre of attention.
However, throughout 1999, monetary
policy was neutral in the sense that leading interest rates were adjusted down-
The cyclical movements sparked higher
credit risk in the banking sector. At the
strial companies directly or indirectly
9
9
8
8
7
7
6
6
5
5
4
4
3
3
2
1997
Norway
2
1998
1999
Germany
wards by a total of 2 percentage points,
and money market rates fell slightly
below 6 per cent. Even so, Norwegian
interest rates are still high compared
with those of our most important
European trading partners.
6
ECONOMIC
SITUATION
Economic growth in 1999 was not as slow as many
follow seems uncertain. At the start of 2000, the
analysts had feared, but – seen in retrospect – it had
Norwegian economy was still booming, although the
the characteristics of a very modest correction.
pressure was markedly lower than a year ago.
However, the marked downturn of 1998 brought
clearly in its train a dual economy with growing
The Norwegian economy is entering the new millennium
unemployment in sectors sensitive to competition. At
in a very favourable condition. Economic prospects are
the same time, employment has risen in protected sec-
good, and activity is generally high. Unemployment is
tors – especially in private and public services. Several
low, and through high income from the oil sector, we
sectors struggle with substantial shortages of qualified
have a large external current account sur plus.
labour.
Employment trends.
1997-1999
Many of the industrial sectors that have
100
located in the West Country. In this
1000 persons
been hardest hit by the recession, for
98
2,250
96
2,200
94
2,150
92
region industrial employment suffered
quite substantially. While total employ-
2,100
the West Country went down by almost
1998
1999
90
Total employment (left axis)
Industry, total (index)
Industry, West Country (index)
ment went up by 2.9 per cent from
1997 to 1999, industrial employment in
1997
Export market share
and relative wage costs.
Index 1990=100
8 per cent during the same period.
can be avoided, and if a sensible interaction
between monetary and fiscal policy can be
Index 1997 = 100
2,300
example the shipbuilding industry, are
If excessive growth in domestic demand
pursued, the way will be paved for cost
cutting. This would bring about a sound
productivity trend after the substantial
investments made during the boom of
the 90s.
However, there are many pitfalls. The
strong foreign economy and the very
115
115
modest correction of the economy in 1999
During the latter half of the 90s, Nor-
110
110
have paved the way for a strong
wegian competitiveness in terms of rela-
105
105
Norwegian krone. The dual labour market
tive industrial wage costs worsened. As
100
100
may change the wage structure of an
a result, Norwegian exporters have lost
95
95
economy where sectors sensitive to compe-
market shares.
90
90
tition have been wage leaders. Hence, pay
90 91 92 93 94 95 96 97 98 99
Export market share
Relative wage costs
formation has been deeply rooted in the
In the longer term, a dual labour market may change
competitiveness of internationally oriented companies.
wage formation in Norway: the industrial sector has
Weaker competitiveness will lead to a reduction in
traditionally given the lead, but the service industries
companies sensitive to competition, and pressures on
may now take over. This could be bad news for
oil money might intensify.
competitiveness.
If income discipline continues and the interaction
Outlook
between monetary and fiscal policy is satisfactory, the
At the turn of last year, forecasts predicted an unmis-
outlook for the Norwegian economy is moderate and
takable consolidation of the Norwegian economy in
healthy growth. If not, the drop will be more dramatic
1999. It was now been demonstrated that the fore-
and cause a harder economic landing next time.
casts were right, but the soft landing that was to
7
EXECUTIVE
MANAGEMENT’S
ASSESSMENT
Fokus Bank
will–through our
new owner–make
our presence even
stronger as a
powerful player
in the Norwegian
market.
8
EXECUTIVE
L
MANAGEMENT’S
ocal roots within an international network
ASSESSMENT
Information technology is another important factor.
1999 was the year when the ownership of Fokus Bank
Norway has a relatively large wage bill compared with
was decided. As part of Den Danske Bank Group,
other countries in the international market. At the
Fokus Bank has now joined one of the leading Nordic
same time, the country has a well-educated population
groups within the financial sector, giving us the
with an excellent general level of expertise, which
strength and stability to service our customers even
means that we should base our competitiveness on
better. We can now concentrate on what is and must
human resources and the use of information technology.
be our primary objective: to provide and develop
competitive and up-to-date financial solutions that
Banks are a vital part of the infrastructure of the
give our corporate customers added competitiveness
corporate sector. The internationalisation of the sector
and our retail customers manageable finances tailored
also calls for the internationalisation of Norwegian
to their needs and individual resources.
banking; we must combine our knowledge of the
Norwegian market and its participants with interna-
The globalisation of the economy is intensifying in a
tional expertise, networks and products.
constantly developing technological environment. The
flows of goods and capital run across borders and the
As part of Den Danske Bank Group, Fokus Bank is
open Norwegian economy must adjust accordingly. At
fully aware of the path we should take to meet the
the same time, Norway must seek to develop new
demands of our customers. Our task is to effectively
export businesses that are competitive on the world
combine our regional roots and expertise with the
market to compensate for the oil sector’s declining
international expertise and networks that are now
share of GDP. I would like to point out two factors
available to us.
crucial for Norway’s success in the global market:
international expertise and the use of technology.
Over the past ten years, Fokus Bank has considered
regional banking the cornerstone of its strategy. This
Globalisation is likely to continue at an increasing
means that we have made the setup of regional banks
pace. International expertise is therefore a prerequisite
a key priority because they know the market in which
for competitiveness, and the knowledge of other cultu-
they operate and thus form the core business of Fokus
res and languages is essential for success on the inter-
Bank. As far as possible, we have delegated powers
national scene as national boundaries are becoming
and authorisations to our staff at the regional banks
increasingly blurred – also in the world of commerce.
so that our customers can discuss matters with
The Internet is one of the new tools that will interna-
decision-makers at the local level. We want to support
tionalise our day-to-day business and it provides
this strategy in the future and continue to set up regio-
Norwegian companies with many opportunities in the
nal units which, because of their knowledge of the
international arena.
market and banking expertise, can give our customers
the option of discussing day-to-day matters with
competent advisers.
9
EXECUTIVE
MANAGEMENT’S
ASSESSMENT
At the same time, we realise how important it is to
one of the leaders in providing Internet solutions. In
assist our customers in international markets. For
1995, Fokus Bank was the first Norwegian bank to
example, we see an increasing demand for products
present Internet homepages and since then we have
such as international cash management, an increased
extended this area significantly. Around 10 per cent of
interest in our knowledge of and
our retail customers use our
ability to act as a partner in the
Internet-based banking facilities
international market, and an
as their primary payment service
extended demand for network
channel. In 2000, we will intro-
services. Norwegian companies
duce web-based cash manage-
need banks with a broad inter-
ment solutions to our corporate
national network of branches
customers. Our clear objective is
and business partners. Den
to be one of the leading banks
Danske Bank’s strong position
within web-based banking,
in international markets, the
which means that we – as an
strength of the Group in capital
organisation – must be purpose-
markets and its international
ful and aggressive in our use
solutions also make Fokus Bank
and understanding of the
fully competitive by interna-
Internet as an important means
tional standards. Against this
of reaching customers and
background, our challenge is to
distributing products.
make international expertise, products and networks
visible and accessible to our customers.
Our main ambition is to grow. On the basis of a
strong regional organisation with local roots, interna-
Technology in general, and the Internet in particular,
tional solutions and expertise, and an extensive use of
is another area in which we have to keep our know-
technology, we will reach our goals.
ledge updated. In recent years, Fokus Bank has been
Yours sincerely,
Svein Sivertsen
Managing Director
10
LOCATION
MAP
Fokus
Tromsbanken
Fokus
Vestlandsbanken
Bergen
Fokus
Nord-Trøndelagsbanken
Fokus
Forretningsbanken
Fokus
NordVestbanken
Fokus
Vestlandsbanken
Fokus
Vestlandsbanken Bergen
Fokus
Sunnhordlandsbanken
Fokus
Rogalandsbanken
Fokus
Bøndernes Bank
Fokus
Telemarksbanken
Tromsbanken
Tromsø
Polarsenteret (opened
February 2000)
Finnsnes
Bardufoss
NordTrøndelagsbanken
Steinkjer
Namsos
Rørvik
Stjørdal
Værnes
Levanger
Verdal
Forretningsbanken
Trondheim
Brekstad
Bjugn
Orkanger
Hitra
Oppdal
Røros
Tunga
Lade
Heimdal
Ila
RiT
Melhus
Munkegata
Nidarvoll
Gløshaugen
Søndre gt.
NordVestbanken
Kristiansund
Molde
Sunndalsøra
Surnadal
Vestlandsbanken
Sogndal
Øvre Årdal
Årdalstangen
Høyanger
Førde
Florø
Sunnhordlandsbanken
Stord
Vikedal
Haugesund
Ullensvang
Nå
Eidfjord
Odda
Rogalandsbanken
Stavanger
St. Olav
Klubbgt.
Hillevåg
Jørpeland
Sandnes
Sola
Bryne
Nærbø
Egersund
Moi
Flekkefjord
Telemarksbanken
Skien
Kjørbekk
Porsgrunn
Bamble
Bø
Ytre Vinje
Rjukan
Bøndernes Bank
Egertorget
Skøyen
Økern
Ås
11
OPERATIONS
IN
1999
We s h a l l c o m b i n e
our local presence
with new products
and a strong,
international
network.
12
OPERATIONS
G
IN
1999
The Norwegian business also includes a number of
eneral
Den Danske Bank Group’s Norwegian operations
product suppliers. The Bank’s own capital-market
include Fokus Bank ASA, Danske Securities ASA and
unit, Fokus Kapitalmarked, in collaboration with the
Den Danske Bank’s Oslo Branch. The executive
regional banks, provides financial advisory and
management of Fokus Bank has the administrative
broking services to customers in respect of currency,
responsibility for all activities in the Norwegian market.
interest-rate and equity products. Fokus Kapitalforvaltning is responsible for all the Bank’s asset-manage-
The regionally based business of servicing retail and
ment services, including the actual management of
corporate customers in Norway is Fokus Bank’s core
funds, advisory services and the sale of products. The
business. Den Danske Bank’s Oslo Branch represents a
unit consists of Fokus Forvaltning and Aktiv
professional, specialised and expert environment that
Forvaltning. The Bank’s financing company, Fokus
– in terms of marketing – is integrated with Fokus
Finans AS, offers lease financing. The Bank also sells
Bank. This unit will co-operate with the regional
insurance products in collaboration with Norden-
banks to service major customers.
fjeldske Forsikring. This company was established in
co-operation with Codan, a Danish-based insurer. In
Danske Securities ASA (formerly Saga Securities ASA)
1999, the Bank decided to set up its own mortgage-
is responsible for Danske Securities’ activities in
credit business – Fokus Kreditt AS. This unit will
Norway and is organised as an independent legal
concentrate on providing basic long-term financing of
entity. Danske Securities is one of the leading Nordic
residential and non-residential housing.
investment-banking operators with offices in Oslo,
Helsinki, Copenhagen, Stockholm and London.
Organisational chart of the Norwegian business
The Norwegian market
Den Danske
Bank's Oslo Branch
Fokus
Finans AS
Corporate banking
Regional banks
Nordenfjeldske
forsikring AS
Fokus
Kapitalmarked
Fokus Kapitalforvaltning
Den Danske Bank
Danske
Securities ASA
Fokus
Kreditt AS
Investment banking
13
OPERATIONS
Co-operation in Den Danske Bank
1999
Finance, Fokus Academy, Public
Staff
composition
Group
Co-operation and integration within the
IN
Relations, IT, Legal Department, Control,
1,200
200
Staff, Central Credits and Group Secre-
150
tariat. Fokus Development Centre is the
100
Bank’s development unit, consisting of
50
functions dealing with strategic and busi-
0
ness development, product and concept
1,000
Group are important key words for
800
Fokus Bank. Working actively to these
600
ends has two main objectives: to streng-
400
200
then the Bank’s competitiveness and to
0
lower costs.
Region Banks
Total
96
97
98
99
Capital Markets
Group Staff
Fokus Service Centre
Subsidiaries
tise – also in areas in which Fokus Bank’s
existing customer portfolio represents a
sales, research, culture and society and
web-based services. Fokus Service Centre,
An important challenge is to develop
competitive products and build up exper-
development, markets and distribution,
Deposit Coverage Ratio
Ordinary deposits in per cent
of net lending
which handles back-office tasks and operations, provides services to the regional
banks.
100
critical mass that is too small. Conse-
80
quently, the Bank has to rely on joint
60
Strategy
investment in technology, product devel-
40
Fokus Bank will operate as a regionally
opment, web-based solutions and other
20
based bank that focuses on long-term
development areas. Furthermore, the
0
95
96
97
98
exclusive customer relationships. Another
strategic element is low costs. A regional
Bank aims at lowering costs by sharing
back-office facilities.
99
freedom to establish a sales organisation as well as a
professional credits organisation that can meet custo-
So far, a collaborative project has been launched to
mers’ demands for swift processing ensures market-
integrate business and technology, and several business
oriented and decentralised operations in the individual
areas are now working together. A shared technologi-
regions. In this process, low costs are secured through
cal platform will provide the basis for obtaining other
targeted centralisation of all back-office and operational
synergies. Efforts are being made to identify and deve-
tasks.
lop other areas where co-operation can be successfully
established.
The ten regional banks are the hub of Fokus Bank’s
core business. The market activities of the regional
Head office
banks are clearly based on regional and local characte-
The Bank’s head office in Trondheim is divided into
ristics so as to meet the demands of the individual
three main units. Group Staff is the Group manage-
markets. The objective of each regional bank is to be
ment’s support function. It includes departments such as
one of the leading commercial banks in its region.
14
OPERATIONS
1. Regional banking
IN
1999
and international range of financial solutions serve to
Fokus Bank will be or must be capable of becoming
make the Bank an obvious alternative to both the regi-
the leading commercial bank within its defined regi-
onal savings banks and the national commercial banks.
ons. Professional, high-quality and regionally based
operations will lift growth and strengthen the
Bank’s market position.
Organisation
Establishing a suitable allocation of responsibility
between central and regional or local units is important
2. Long-term exclusive customer relationships through
to Fokus Bank. Accordingly, the Bank’s business poli-
proximity and a wide range of products
cies clearly specify that customer contact must take
Customer proximity and local decision-making
place at the regional banks, while all operational tasks
procedures, combined with a full and internationally
and a great number of back-office functions must be
competitive range of products, will make Fokus
carried out on a centralised basis. Making the regional
Bank an attractive banking partner. The organisation
banks dedicated sales and marketing units has proved
will focus on sales in order to develop its own
vital to achieving an optimum combination of market
customer base and thus establish new exclusive
proximity, on the one hand, and low costs through
customer relationships.
economies of scale, on the other hand. In addition to
running their own business, Fokus Kapitalmarked,
3. Professional and international services made
Fokus Kapitalforvaltning and the subsidiaries are sup-
available through customised local expertise
porting the branches by providing expertise, products
Customer contact will take place via the regional
and solutions. Fokus Service Centre contributes with
banks, which provide customised expertise on a
rational and cost-effective back-office solutions and
local and regional basis. The Bank must also offer
processes.
customers special expertise and tailor-made solutions. As part of a leading Nordic financial services
Management and control of operations, including strate-
group, the Bank has the financial strength and
gic implementation and fulfilment of targets, are carried
stability needed to service its customers.
out by central staff and development units. The Bank’s
management control and reporting systems have been
4. Low costs through allocation of responsibility and
significantly improved and developed over recent years.
future-oriented use of information technology
Fokus Bank has a clearly defined allocation of
Management by result is central to all the Bank’s
responsibility between sales activities, operations and
management control and reporting systems (both in
back-office tasks, management and control and deve-
terms of management tools and/or methods and pro-
lopment. Moreover, future-oriented use of informa-
cesses). The Bank’s management control systems are
tion technology will enable the Bank to maintain its
designed on the principle that there must be a clear
high level of quality and cost effectiveness.
and consistent connection between overall strategy
and targets, on the one hand, and measures applied at
The regional strength and strong customer relation-
the practical level, on the other hand. The systems
ships contribute to cost-effective banking operations
focus on factors that, at any time, are considered criti-
and thus make Fokus Bank a natural choice in the
cal to strategic implementation and fulfilment of tar-
market. Local presence and expertise as well as a wide
gets.
15
OPERATIONS
IN
1999
responsible for developing and adapting the general
The Bank’s organisational policies reflect its strategy
programme of training activities, co-ordinating these
and are based mainly on these two elements:
activities and concluding agreements with universities,
colleges, schools and other providers of training and
√ Focus on the market through a decentralised distri-
education. Furthermore, the Academy provides both
individual staff members and business units with edu-
bution network
√ Low costs through centralised operations, back-
cational support in framing defined training needs.
office tasks, development and staff functions
Regional banking assumes knowledge of and interDevelopment of expertise
action with the local market. To the ten regional
Fokus Bank considers the development of expertise an
banks, such expertise is a vital element in their busi-
important strategic element. Development takes place
ness. This expertise is adapted to the market and is
mainly at two levels. The Fokus Academy is respon-
therefore differentiated. The structure of the corporate
sible for the development of general expertise, the
sector, the current infrastructure and demography as
objective being to raise the individual staff members’
well as the mix of the regional banks’ customer port-
formal competence. The development of specific
folios are factors that determine the type of expertise
expertise is tailored to meet regional and local busi-
the Bank needs regionally and locally.
ness demands. This type of expertise is based on a
deliberate selection of staff and the development of
Risk management and credit control
empirical expertise at the regional banks.
Fokus Bank has increased its risk management activities, putting particular emphasis on credit risk.
It is the responsibility of the Fokus Academy to ensure
Applying internationally acknowledged methods based
that Fokus Bank always has the right mix of expertise.
on risk-adjusted profitability and the creation of
At the Academy’s start in 1996, the main task was to
added value, the Bank has introduced methods and
design a systematic and comprehensive programme to
tools for identifying, measuring and managing credit
transform the existing front-office culture into a sales
risk. The economic and industrial trends as well as
culture on the basis of the Bank’s characteristics, his-
company-specific issues are being integrated in this
tory and traditions. The commitment to developing
process. This activity contributes to increasing and
expertise was necessitated by the increasing demand for complex financial soluti-
stabilising the Bank’s long-term return on
Problem loans
equity.
2,000
ons, the general level of training and education in Norway and a clear emphasis
on human resources as a valuable source
of expertise.
1,500
any teaching or training on its own, but is
and automate the Bank’s credit control
procedures and to establish guidelines for
500
0
The Focus Academy does not perform
Efforts are also being made to improve
1,000
centralised and decentralised control as
95
96
97
30-60 days
60-90 days
Soft loans
Net doubtful loans
Net NPLs
98
99
well as for current reporting.
16
OPERATIONS
IN
1999
The regional banks
regional corporate centres through higher expertise
The regional banks demonstrate a clear local orientati-
tailored to its customer base and corporate structure.
on in their activities in order to meet the demands of
At the same time, it is also important for the regional
the markets in which they operate. The objective of
banks to focus on customer-oriented tasks. Through a
each regional bank is to be one of the leading commer-
professional and cost-effective Fokus Service Centre,
cial banks in its region. The ten regional banks that
the resources of the regional banks can be allocated to
make up Fokus Bank are largely independent units in
cross-selling and customer contact.
terms of their local market operation, and their regional
characteristics and independence are underlined by the
fact that they have their own advisory boards. This
decentralised market approach is a key element in
Fokus Bank’s strategy. Market presence and local
decision-making procedures ensure strong
high market shares in all
its target regions (especially in the corporate
segment). Each regional bank must
through sales and market efforts. The objective is to
make all customers "exclusive" customers. This means that customers will purchase all their
financial services exclusively
and long-term customer relations.
Fokus Bank has relatively
Fokus Bank gives priority to existing customers
Fokus
Tromsbanken
from Fokus Bank. Cross-selling –
that is, selling new products to existing
customers – is vital to lifting profitability and
the value of the customer base. The overall aim of
regional sales is to raise the number of products per
customer. The development of new sales tools and a
new customer database will make sales efforts more
efficient and targeted. A strategy involving active sales
develop and
and advisory services will aim at offering customised
strengthen its
financial solutions that can meet individual demands.
Fokus
Den Danske Bank’s Oslo Branch
Den Danske Bank’s Oslo Branch provides services and
products to major customers in Norway. The unit co-
Fokus
NordVestbanken
Fokus
Forretningsbanken
Fokus Vestlandsbanken
Fokus
Vestlandsbanken - Bergen
Fokus
Fokus
SunnhordlandsBøndernes Bank
banken
Fokus
Telemarksbanken
Fokus
Rogalandsbanken
operates with the regional banks in their marketing
efforts. Den Danske Bank has a wide and internationally competitive range of products for major customers. Solutions and expertise offered to this customer
segment are therefore an important competitive parameter for the Norwegian business in the coming years.
Den Danske Bank’s Oslo Branch is headed by Torben
With and has about 40 employees. In addition to its
customer base, the unit has a strong portfolio of capital-market and cash-management products.
17
OPERATIONS
IN
1999
The competence and
the products from
Den Danske Bank
will enhance our
efforts to grow in the
Norwegian market.
18
OPERATIONS
IN
1999
Fokus Kapitalmarked
Following a very dull Norwegian equity market in
Through Fokus Kapitalmarked (Capital Markets),
1998, the Oslo Stock Exchange all-share index soared
Fokus Bank is offering its customers a wide range of
by more than 45 per cent in 1999. A stronger
financial products and services. The integration follo-
Norwegian krone, low interest rates and record-high
wing the acquisition by Den Danske Bank meant that
oil prices contributed to this growth. At the same
Fokus Kapitalmarked was reorganised so as to reap
time, the much-feared hard landing of the Norwegian
the benefits of being part of a Nordic and internatio-
economy was reduced to a soft landing – not least
nal financial services group. One consequence of this
because of the reassuring monetary stance taken by
reorganisation is that the activities of Fokus Kapital-
the central bank. Naturally, a strong Norwegian equi-
marked are now an integrated part of Den Danske
ty market must also be seen in the light of the buoyant
Bank’s national as well as international operations.
international markets. As in many other areas, the
USA led the way, and particularly "new economy"
Fokus Capital Markets must be the natural first choice
shares in IT, communications and technological com-
of banking partner for customers in the markets in
panies became popular. This trend also fed through to
which Fokus Bank is represented. The unit is also an
the Norwegian market, leading to a surge in activity
important partner for the regional banks as it co-ope-
in the unlisted securities market in 1999.
rates directly with the corporate centres in customising
solutions for individual customers. The customers of
To meet the demands of its customers, Fokus Capital
this unit typically demand financial advice (as well as
Markets is divided into units offering financial advisory
products and services) on return maximisation, risk
and broking services to customers in respect of
management and corporate finance.
currency, interest-rate and equity products as well as
research.
The beginning of 1999 marked the launch of the euro;
most market players did not experience any problems
Co-operation with Den Danske Bank has been very
as a result of the launch. The introduction of a single
constructive, and being able to rely on a large and
currency in a number of EU member states did not
professional player with substantial and differentiated
lead to any major decrease in Fokus Bank’s currency
expertise is important when it comes to servicing our
trading. The international fixed-income markets were
customers. Of particular value is Den Danske Bank’s
uneven during some periods, while Norway saw
research capability in the areas of macroeconomics,
falling short-term rates and rising long-term rates.
fixed-income and currency markets, and equities.
Fokus Capital Markets has its own departments for
Fokus Capital Markets is now a market maker of
settlements, accounting, risk management, IT and
Norwegian government bonds and is the main govern-
control, and they all support the activities of this unit.
ment-bond dealer for the Norwegian Central Bank.
Fokus Capital Markets has 40 employees and is
During 1999, the Bank increased its market share of
headed by Jo Temre.
bond trading substantially. Large movements in the
currency markets made customers more alert, increasing the demand for hedging products.
19
OPERATIONS
IN
1999
Danske Securities ASA
At the end of 1999, Danske Securities ASA had 35
With offices in Oslo, Helsinki, Copenhagen, Stock-
employees (excluding advisors) and is headed by
holm and London, Danske Securities is one of the
Torbjørn Gladsø.
leading investment-banking operators in the Nordic
Fokus Kapitalforvaltning
countries. The core business of Danske Securities is
Fokus Kapitalforvaltning (Capital Management) is
securities trading, research and financial advice.
responsible for Fokus Bank’s asset-management
Danske Securities, which is a division of Den Danske
services, including the actual management of funds,
Bank, has a total of 275 employees.
advisory services and the sale of products. Fokus
Danske Securities ASA (formerly Saga Securities ASA) is
Kapitalforvaltning consists of Fokus Forvaltning and
responsible for Danske Securities’ Norwegian operations
Aktiv Forvaltning. Fokus Kapitalforvaltning co-ope-
and is organised as an independent legal entity. In 1999,
rates closely with Danske Capital Management, which
the main activities of Danske Securities
Fund Management Development
is a division of Den Danske Bank. Fokus
Kapitalforvaltning is located at Fokus
ASA were securities trading, research and
2,500
Bank’s head office in Trondheim, has a
advice to help companies raise capital. As
2,000
staff of 20 and is headed by Hans
from January 1, 2000, Den Danske Bank
1,500
Nergård.
will be responsible for providing financial
1,000
advisory services, allowing Danske
The unit is a supplier and a provider of
500
Securities ASA to concentrate solely on
0
securities trading and research.
95
In 1999, Danske Securities ASA’s share of
96
97
98
99
Money market
Bond
Combination
Equity
advice and top expertise to Fokus Bank’s
regional banks. Through Fokus Kapitalforvaltning, the Bank also offers a
the equity market was just below 5 per cent, making it
number of funds from the largest independent fund
one of the ten largest operators on the Oslo Stock
management company in the world, Fidelity
Exchange. Trading in financial derivatives was satisfac-
Investments.
tory, ranking Danske Securities ASA among the three or
four leading operators in this respect.
Throughout 1999, Fokus Kapitalforvaltning – together with the regional banks – took on 13 new invest-
Research activities are now integrated with those of
ment advisors. They will seek to meet the demands of
the other units of Danske Securities. The business
major customers (of Fokus Bank as well as other banks).
covers about 200 Nordic companies and is divided
into 15 sectors.
The market share of Norwegian equity funds was 3.6
per cent in 1999, against 2.3 per cent in 1998. During
March 1999 saw Danske Securities ASA become a
1999, the number of customers rose from 30,068 to
wholly owned subsidiary of Den Danske Bank, follo-
44,230. At the year-end, the total assets of Fokus
wing Den Danske Bank ’s acquisition of 51 % of the
Kapitalforvaltning amounted to a good NOK 4.7
company’s shares. At the turn of the year, Fokus Bank
billion, which is an increase of more than NOK 1.4
acquired all shares in Danske Securities ASA from Den
billion.
Danske Bank.
20
OPERATIONS
IN
1999
Fokus Finans
Fokus Service Centre
As the Bank’s financing company, Fokus Finans AS
Fokus Bank defines low costs as a strategic element.
offers lease financing. Its portfolio totals about NOK
The most important factor in reducing costs is the
260 million.
centralisation of all back-office and operational tasks
at Fokus Service Centre. The latest development in
Fokus Finans has seven employees and is headed by
this process is the establishment of a central depart-
Jarl E. Riise. As at January 1, 2000, the company was
ment, Fokus Customer Service. This department
split up into two business areas: cars and movables. It
handles customer inquiries via telephone, (electronic)
will work actively to service suppliers as well as cust-
mail and fax for the entire Group. By placing these
omers in these two areas.
tasks in one unit, the Bank will achieve economies of
scale in terms of finances, quality and accessibility.
During 2000, Fokus Finans AS will spend resources
on establishing a distribution network that covers a
The objective of Fokus Service Centre is to be the
large part of the country, thus making it easier for
leading provider of centralised back-office tasks and
customers to contact Fokus Finans.
services. A vital part of the efforts made to achieve
this objective is the development of process expertise.
Working closely together with the other leasing com-
Analysing and possibly redesigning the Bank’s back-
panies in Den Danske Bank Group, Fokus Finans AS
office and sales processes will enhance efficiency and
is able to offer leasing solutions across the Nordic
contribute to higher quality. These changes will
region.
demand new IT solutions.
21
OPERATIONS
IN
1999
Account analysis in NOK million
Interest income and related income
Interest expenses and related expenses
Dividend and other income from securities
Commissions and income from banking services
Commissions and expenses from banking services
Net profit/loss securities
Net profit/loss foreign exchange and financial derivatives
Other operating income
Salaries, pensions and personnel expenses
Restructuring expenses
General administration expenses
Other operating expenses
Operating result before losses on loans and profit/loss/
write-downs long-term investment in securities
Write-downs and profit/loss long-term investment in securities
Net losses (reversals) on loans and guarantees
Transferred from general loan loss provisions
Result from ordinary operations before tax
Extraordinary expenses
Pre-tax result
Average total assets
Account analysis in per cent
Commissions and income from banking services
Commissions and expenses from banking services
Net profit/loss securities
Net profit/loss foreign exchange and financial derivatives
Salaries, pensions and personnel expenses
Restructuring expenses
General administration expenses
Operating result before losses on loans and profit/loss/
write-downs long-term investment in securities
Write-downs and profit/loss long-term investment in securities
Net losses (reversals) on loans and guarantees
Result from ordinary operations before tax
Extraordinary expenses
Pre-tax result
–
ACCOUNT
A N A LY S I S
1999
3,616.7
2,492.5
1,124.2
46.9
280.2
(64.0)
120.3
52.5
57.4
493.1
414.8
0
355.9
220.2
990.9
1998
3,183.2
2,122.7
1,060.5
60.0
274.3
(66.0)
(117.0)
78.3
82.6
312.2
417.6
0
307.5
216.7
941.8
Group
1997
2,392.5
1,475.9
916.6
68.2
305.9
(71.4)
139.1
63.2
111.8
616.8
402.9
0
279.2
219.7
901.8
1996
2,506.2
1,611.6
894.6
56.3
260.3
(67.6)
62.3
39.6
68.5
419.4
367.4
29.0
200.4
338.5
935.3
1995
2,395.5
1,479.8
915.7
54.9
243.4
(63.4)
60.3
46.4
79.1
420.7
373.8
100.0
195.1
246.9
915.8
626.4
26.0
191.5
430.9
3.1
53.2
631.6
6.0
(12.9)
378.7
108.5
25.5
420.6
15.9
7.8
460.9
0
460.9
43,890
380.8
32.5
348.3
41,845
650.5
0
650.5
38,545
461.7
0
461.7
34,438
428.7
0
428.7
30,276
8.24
5.68
2.56
0.11
0.64
(0.15)
0.27
0.12
0.13
1.12
0.95
0
0.81
0.50
2.26
7.61
5.07
2.54
0.14
0.66
(0.16)
(0.29)
0.19
0.20
0.76
1.00
0.00
0.73
0.49
2.00
6.21
3.83
2.38
0.18
0.79
(0.19)
0.37
0.17
0.30
1.60
1.05
0.00
0.72
0.57
2.34
7.28
4.68
2.60
0.17
0.76
(0.20)
0.19
0.12
0.21
1.22
1.07
0.08
0.58
0.99
2.72
7.91
4.89
3.02
0.19
0.80
(0.22)
0.21
0.16
0.27
1.41
1.23
0.33
0.64
0.82
3.02
1.43
0.06
0.44
1.05
1.03
0.01
0.13
0.91
0.08
0.83
1.64
0.02
(0.03)
1.69
1.10
0.33
0.08
1.34
1.39
0.05
0.03
1.42
1.69
1.34
1.42
1.05
22
OPERATIONS
IN
1999
–
BALANCE
SHEET
DEVELOPMENT
Group
NOK million
31.12.99
31.12.98
31.12.97
31.12.96
31.12.95
Cash and receivables from Central Banks
387.9
851.3
309.3
495.6
322.4
Loans to and receivables from credit institutions
553.1
665.1
304.9
468.1
157.5
Total lending
38,898.1
36,024.5
33,769.9
29,434.8
26,942.0
Specific loan loss provisions
811.4
724.1
743.6
1,036.1
1,223.3
General loan loss provisions
171.7
161.3
141.1
139.6
139.2
37,915.0
35,139.1
32,885.2
28,259.1
25,579.5
3,423.4
3,350.4
4,105.4
3,764.6
3,066.5
1,044.5
Net lending
Securities
Fixed assets
490.8
495.0
721.2
918.9
Other assets
1,543.9
1,628.8
1,639.7
533.1
1,685.6
Total assets
44,314.0
41 308.2
39,076.6
35,364.9
31,856.0
Debt to credit institutions
3,428.5
2,065.9
2,488.1
1,255.3
2,153.0
Customer deposits
23,243.1
22,693.8
23,593.2
24,841.6
21,909.2
Debt securities in issue
10,826.0
10,940.5
7,520.7
4,233.0
2,715.9
Other liabilities and provisions
1,378.9
1,106.1
1,537.9
1,317.8
1,269.1
Subordinated loan capital
1,813.3
1,710.0
1,660.9
815.9
800.8
3,624.3
3,623.0
3,187.9
2,901.3
3,008.0
44,314.1
42,139.3
39,988.7
35,364.9
31,856.0
Net pension fund
Equity
Total liabilities and equity
Key figures subsidiaries
NOK 1,000
Credit institutions
Profit
Assets
Debt
Equity
Fokus Finans A.S
3,125
234,915
166,953
71,087
Central Finans A.S
3,535
100,116
34,502
145,784
Eikeveien 3 A.S
2,352
2,217
7
2,277
Other companies
Fokus Eiendomsmegling Telemark A.S
810
2,773
1,469
1,309
Fokus Forvaltning A.S
3,531
17,263
9,257
9,863
Fokus Kredittforsikring A.S
3,302
56,306
25,630
30,676
(2)
67
4
Skårersletta Eiendom A.S
Danske Securities AS
13,113
4,842
55,087
23
Tr u s t i s t h e
foundation of
every customer
relationship
24
A
R E G I O N A L LY
BASED
BANK
WITH
STRENGTH
AND
INTERNATIONAL
NETWORK
Fokus Bank is part of Den Danske Bank Group,
The Group is based on a strong and extensive inter-
which is one of the leading financial institutions in the
national network with branches in London, Hamburg,
Nordic region. Den Danske Bank Group has total
Luxembourg, New York, Singapore and Hong Kong,
assets of DKK 701.4 billion, a full-time staff of
Helsinki and Oslo in addition to the wholly owned
12,397 and 1,128 employees in non-consolidated
Swedish subsidiary bank, Östgöta Enskilda Bank.
insurance companies all over the world. The Group’s
profit after tax was DKK 5,028 million in 1999.
Hong Kong
Sweden
UK
Singapore
Norway
USA
Finland
Germany
Denmark
25
FOCUS
ON
FISHERIES
–
DEVELOPMENT
OF
TRADE
ON
THE
BASIS
OF
OWN
RESOURCES
If we disregard the oil industry, the fishing industry
Fokus Bank has increased its expertise and capacity in
has generated the largest increase in value and the
the fisheries area. Each of the regional banks that
highest export income in Norway during the past few
includes fishing industries in their portfolios has
years. The industry’s position was confirmed in 1999
appointed staff with expert knowledge in these
despite a small decline in export income compared
matters. Tromsbanken, which is responsible for
with 1998.
serving fishing industries at Group level, has recruited
six new staff members during the past five years who
An increasing number of leading industries and central
are all well-versed in this line of business. The regional
authorities single out the fishing industry as the most
commitment is deliberate on the grounds that an
important element in the development of the future
increase in value in the fishing industry takes its
industrial Norway. One of the many visible proofs of
starting point in our long coast where the prospect of
this is the millennial event "Fisk 2000" (Fish 2000) in
further development is largest.
Tromsø in December 1999 which was opened by King
Harald of Norway.
The fishing industry is facing new challenges in the
years to come. Growing internationalisation opens up
Fokus Bank has increased its stake in the fishing
new markets and business areas. Further development
industry during recent years in view of its importance
of fish farming will also be an important supplement
to the northern regions of Norway and the rest of the
to today’s product range.
country as well as in view of the industry’s development prospects.
A close relationship and a direct dialogue with our
customers will also be important to the Bank in future.
Investment means commitment
This is the best way for us to advise and support our
As a banker, our aim, of course, is to be able to
customers professionally and to help our customers
furnish our customers with the financial instruments
realise profitable investments.
and services they demand. This implies that our staff
know what our customers demand today and what
they might need in the years to come. By participating
actively in the forums where the industry is represented
and by co-operating with the industry’s own trade
organisations, our staff’s knowledge improves and our
network strengthens.
26
THE
FOKUS
ACADEMY
OF
EXPERTISE
AND
ORGANISATIONAL
DEVELOPMENT
The Fokus Academy was set up in September 1996.
The Fokus Academy has been running for three years
Its main objective was to design a centralised pro-
now, and the results are extensive. We can proudly say
gramme to ensure that Fokus Bank had the right mix
that advisers of retail customers now have a
of expertise to meet the demands of the future. The
considerably higher level of expertise than before the
programme was launched in 1997.
Academy was set up. Our customers appreciate this
development, and, combined with other factors, it
An analysis was made to determine the discrepancy
underlines the public image of Fokus Bank as an
between the ideal level of expertise and the actual
organisation of competent customer advisers.
situation at Fokus Bank. Measures were taken at
At the end of 1999, a total of about 1,200 examina-
several levels to:
tions were held in different subjects with results that
were beyond all expectations. The employees of Fokus
• define a joint basic platform of expertise
Bank outshine full-time students in many cases.
• establish a lower limit of expertise (this is particularly relevant to the recruitment of new staff)
Naturally, these efforts are putting demands on time
• establish an ideal level of expertise for customer
and resources. At present, many employees are fina-
advisers
• establish a principle that requires all employees to
lising the "mandatory" activities. This means that the
Fokus Academy, to a large extent, can concentrate on
possess specialist expertise in order to be allowed to
the development of specialist expertise, while reaping
work in a specialist field
the benefits of efforts and investments previously
• establish an organisational principle that all local
made.
banks must have special expertise reflecting their
own portfolios
• establish policies that call for all employees,
irrespective of previous expertise, to follow a course
of six months to raise their level of expertise
To the Fokus Academy, skills instruction, change of
attitude and product training will all be tasks of the
future.
27
EXTENSIVE
SOCIAL
COMMITMENT
Fokus Bank shows extensive social commitment
cutives of both the Bank and the theatre. Each year,
through co-operative agreements and sponsorships,
Fokus Bank awards a travelling bursary of NOK
both at Group and regional levels. The Bank is greatly
50,000 to two members of the theatre’s staff. In 1999,
preoccupied with supporting various cultural activities
the bursaries were awarded to Lasse Kolsrud, an actor,
that help underpin Fokus Bank’s strategy and market
and to Rolf Larsen, who works backstage as a black-
operations and that give existing as well as potential
smith.
customers many memorable moments.
Science: Det Kongelige Norske Videnskabers
Our most important partners include:
Selskab (DKNVS)
DKNVS of Trondheim is Norway’s oldest scientific
Sport: Rosenborg Ballklub (RBK)
institution and the forerunner of what was to become
Fokus Bank has collaborated with the Norwegian
the NTNU (the Norwegian University of Science and
soccer club, RBK, for many years in good times and
Technology in Trondheim). DKNVS runs an extensive
bad. The soccer club’s success at home and interna-
business of communication in the borderland of
tionally has been a source of pleasure to the citizens of
research and general education. Being a large financial
Trondheim and all Norwegian soccer fans. The co-
institution with its head office in Trondheim, Fokus
operative agreement with RBK is used actively: the
Bank is aware of its responsibility of uniting the
Bank’s customers are invited to home matches at Lerk-
research institutions of the city with the business
endal stadion as well as to events and seminars to
community and the general public. Through the years,
mark away matches in the Champions League. Both
the Bank has contributed substantially to the presen-
the players and the management of RBK make an
tation programme "Byen, bygdene and kunnskapen"
appearance when Fokus Bank arranges other types of
(the city, the districts and knowledge), which assem-
functions for both children and adults.
bles large audiences at lectures and excursions several
times each month. This co-operative agreement pro-
Arts: Det Norske Teatret
vides Fokus Bank with a strong network in the
Since 1998, Fokus Bank has been the main sponsor of
research world from which it can always profit when
Det Norske Teatret in Oslo. Det Norske Teatret is a
it arranges its own lectures for both customers and staff.
natural partner for a bank that has a regional profile
and communicates with its customers in the two main
Both the Group and several of the regional banks have
Norwegian languages, Bokmål and Nynorsk. The the-
entered into co-operative agreements that cover almost
atre is the most modern theatre in Norway and is
everything from symphony orchestras, opera projects
known for its high-quality and bold repertoire. Fokus
and concerts, art exhibitions and festivals to children’s
Bank uses the theatre for a number of events through
skiing competitions and the whole spectrum of athletic
the year both for customers and staff. The activities
contests and sports days for children and adults.
are planned by a committee consisting of chief exe-
28
EFFECTIVE
SALES
TOOLS
Apart from credit facilities, sales had a high priority at
KAM was implemented at executive levels in Fokus
Fokus Bank in 1999. The sales project launched in
Bank during the spring, while all advisers and/or sales
May 1998 enabled Fokus Bank to make a quantum
representatives were given access to the tool during
leap forward in 1999 in its efforts to enhance both the
the autumn.
efficiency and the quality of its sales processes.
The customer analysis model allows Fokus Bank to
On the basis of the diagram shown below, factors of
take a lead in Nordic banking when it comes to provi-
success were defined for the individual stages of the
ding its sales representatives with distributed tools
sales process. At the Analysis and Target group stages,
based on data warehousing technology and manage-
research demonstrated that Fokus Bank did not have
ment information systems (LIS).
adequate customer segmentation systems. So, through
the sales project, a new model was designed in 1999
The need for consistent follow-up on sales was also
to allow the segmentation of both retail and corporate
identified in this process. This led to the development
customers. The purpose of this model is to identify
of an electronic sales tool – known as SARA – which
customer groups so as to target follow-up and addi-
was launched at the beginning of 1999. Rather than
tional sales.
allowing its units to use their own set of tools, the
Bank implemented a system that enabled it to focus
To make the segmentation model an operational tool,
on sales areas of high priority on a centralised basis.
the Bank decided to develop a customer analysis
SARA allows the breakdown of any activity and any
model known as KAM. The main requirements were
sale at Fokus Bank by individual sales representatives.
that KAM should be user-friendly and that the Bank’s
The employee representatives of the Bank took part in
data warehouse and its WEB-based user interface
the development, and staff members are taking a posi-
should make up the technological platform. The
tive attitude towards SARA.
model is based on the principle that users must be able
to make selections from the pool of available demo-
State-of-the-art sales tools are a solid platform that
graphic data on our customers and combine these
allows Fokus Bank to further develop its sales culture.
selections with information about products, volumes,
earnings figures, etc.
Sales process
Analysis
Target group
Market
dialog
Sales/
advice
Setup/
production
Follow-up
29
SOPHISTICATED
MANAGEMENT
INFORMATION
SYSTEMS
The Balanced Scorecard (BSC) together with rollover
Visually and simple
forecasts constitutes the hub of the Bank’s manage-
The Bank has made a great effort to ensure that the
ment information and follow-up systems. The
information in BSC is presented visually, simple,
Balanced Scorecard was put to use the first time in
focused and automated. Today’s advanced technology
1998 and has since then been refined and adapted to
makes it possible to use web-technology. The users
match the Bank’s current strategy.
access BSC through the Bank’s intranet.
The Balanced Scorecard is an integrated management
The Balanced Scorecard includes a number of
information system which combines strategy and acti-
functions. One of them is a ranking which allows
on by means of strategic management parameters,
comparison with like units (benchmarking). The
management systems and the IT infrastructure. The
objective is to make people more competitive and
essential elements of BSC are:
identify potential areas for improvement.
• Strong link between management parameters and
strategy.
• Focus on both financial and non-financial management parameters.
• Focus on key internal processes that are essential for
successful and profitable operations.
The right direction
By introducing BSC the Bank has taken a long step in
the right direction. BSC has made the organisation
focus increasingly on future overall performance. BSC
represents an ongoing process and the challenge is
continually to use BSC as a strategic tool which aims
The objective of BSC is to communicate strategic
at changing attitudes.
intent to the organisation in practical terms and to
generate feed back to the management that shows
The idea "You get what you measure" sums up the
whether the strategy is successful. The aim is for BSC
essence of the philosophy behind the Balanced score-
to change employee focus to match current overall
card. By measuring and following up on essential
targets and strategies. Management at all levels has
processes, we ensure that the organisation works in
access to focused information that enables them to
accordance with our overall targets and strategies.
follow up on their unit’s performance.
Since the Balanced Scorecard is part of the Banks
planning and targeting process it is evaluated and
redesigned each year to match current strategies and
targets. The strategy forms the basis for establishing
new management parameters or changing existing
ones.
30
LOCAL,
BUT
ACCESSIBLE
ALL
OVER
THE
WORLD
24
HOURS
A
D AY
Customers consider Fokus Bank to be a banking
A very large number of Fokus Bank’s customers are
partner which is familiar with the local environment,
using its Internet-based services on a regular basis and
which has local credentials and which provides excel-
only visit the Bank’s offices when they need individual
lent services. The Bank is easily accessible through
advice. The Internet-based services have made the
branches, mini-banks, ATMs and its web-based bank,
Bank accessible as never before, also to new custom-
Fokus Nettbank.
ers. Web technology enables Fokus Bank to develop
new and interactive services, which can be customised
State-of-the-art solutions ensure adequate management
to meet individual demands.
and control, effective operations and competitive
prices for customers. The use of web technology
Last autumn, Fokus Bank became the first bank in the
allows the Bank to share knowledge through its
world to offer Internet-based banking services through
intranet.
the use of WAP telephony. Once again, Fokus Bank
took the lead when it came to developing techno-
Branches providing excellent services offered by
logical solutions. In 1995, Fokus Bank became the
competent advisers must remain the hub of Fokus
first bank to launch its own homepage on the Internet.
Bank’s future distribution network. But the develop-
Ever since, the use of Internet-based banking services
ment of high-quality and future-oriented technological
has escalated beyond the wildest expectations.
solutions will also be given high priority in the years
ahead.
As part of a large group like Den Danske Bank, which
has many resources as well as a strong commitment to
technological development, Fokus Bank is able to
offer state-of-the-art and future-oriented solutions to
Norwegian customers.
31
DIRECTORS’
REPORT
FOR
1999
Through a targeted
effort, we shall
make use of our
advantage and
increase our efforts
towards customers
and industries where
we have been too
small to compete.
32
DIRECTORS’
T
he Fokus Bank Group’s result
REPORT
FOR
Net interest income/operating expenses
from ordinary operations before tax
120
amounted in 1999 to NOK 460.9 million,
100
Fokus bank ASA – now part of Den
Danske Bank
On May 7, 1999, the Norwegian finance
80
against NOK 380.8 million in 1998. The
1999
ministry approved Den Danske Bank’s offer
60
result from ordinary operations after tax
40
equals earnings per share of NOK 4.76.
20
The result from ordinary operations
95
96
97
98
99
Net interest income and other
operating income
12.7 per cent, while the result from ordi-
on equity of 9.54 per cent.
through a Norwegian holding company,
0
before tax equals a return on equity of
nary operations after tax equals a return
to buy the shares of Fokus Bank ASA
DDB Fokus Invest AS. At the redemption
of the shares of the remaining shareholders,
Fokus Bank ASA became a wholly owned
subsidiary of Den Danske Bank as from
2,000
June 1, 1999.
1,500
1,000
In 1999, the result was affected by the
The change of ownership also involved
500
change of ownership in May, which
0
implied takeover costs of NOK 62 milli-
changes in the Board of Directors. Peter
95
96
97
98
99
on. The Bank’s income advanced in
Straarup, Chairman of the Executive Board
of Den Danske Bank, succeeded Stein Holst
Parent Bank lending
growth
1999, as compared with 1998. This
applies in particular to income from
Annexstad as chairman of Fokus Bank’s
Board of Directors. Jakob Brogaard,
3,000
buying and selling securities.
Member of the Executive Board of Den
2,500
Danske Bank, took over as deputy chair-
2,000
1,500
In 1999, total assets rose by NOK 2.2
man. On June 10, 1999, Svein Sivertsen
1,000
billion to NOK 44.3 billion. This is a
growth rate of 5.2 per cent. Ordinary
0
l
l
s
r
e
e
g y
il
ta in str tel tat ag na the ota
T
Re /fish ndu e/ho l es stor atio O
I ad ea rt/ rn
g
e
in
R
o
t
Tr
sp In
rm
fa
an
Tr
ish
deposits increased by 2.4 per cent, while
gross lending advanced by 8.0 per cent.
was appointed managing director after
500
F
Bjarne Borgersen.
Fokus Bank aims at developing its business
Growth in lending was strongest in the corporate
and profile on the basis of its regional concept. The
customer segment.
Bank’s strong qualities, which have generated favourable results during the past few years, will be further
At the year-end, the Group had a solvency ratio of
developed. Fokus Bank will rely on the product range,
11.57 per cent and a tier 1 ratio of 7.56 per cent.
expertise, financial strength and international presence
of Den Danske Bank to gain a competitive edge in the
Norwegian market. The period following the takeover
was affected not only by the current operations and
development of the Bank, but also by co-ordination
efforts with Den Danske Bank to reap the benefits of
33
DIRECTORS’
REPORT
FOR
1999
being part of Den Danske Bank Group. These efforts
quality mortgage-credit products to retail and corpo-
will continue in 2000 with the integration of IT
rate customers. On the strength of its position as a
systems as an important area.
wholly owned subsidiary and on the basis of very
cost-effective and state-of-the-art back-office functi-
In line with the intentions of the concession applica-
ons, Fokus Kreditt AS intends to provide new, compe-
tion sent by Den Danske Bank, Fokus Bank ASA
titive products to finance residential and non-residen-
acquired all shares of Danske Securities ASA (formerly
tial housing. The products will be distributed through
Saga Securities) as of December 30, 1999. Organisa-
the Bank’s offices and via Fokus Nettbank.
tionally, the company became a wholly owned Norwegian subsidiary of Fokus Bank ASA. On the basis
Throughout 1999, the Bank strengthened its capacity
of a staff of 33, the company offers securities broking
and expertise in areas such as savings and investment
and research services to institutional and major cust-
products and credit assessment procedures. This
omers. Danske Securities ASA co-operates with Fokus
improvement was reflected, inter alia, by an increase
Capital Markets, a business unit of the Parent Bank,
in the staff of 93 full-time equivalents (FTEs).
to provide securities broking and research services to
all customer segments.
Fokus Bank developed a new system for measuring
and reporting risk-adjusted profitability in 1999. The
Developing the Bank
purpose of this system is to reduce credit risk, to opti-
Fokus Bank’s strategy is to be a regionally based com-
mise the portfolio composition and to ensure a correct
mercial bank. This means that the Bank focuses on
correlation between price and risk in the Bank’s
regions in which it has a strong market position, a
lending portfolio. This model is based on internatio-
long-time presence and a broad customer base. In these
nally recognised methods and is adjusted to that used
regions, the Bank offers a large selection of products
by Den Danske Bank.
and aims at long-term exclusive customer relationships.
Having operated in nine regions for the past few
years, the Bank opened a new regional bank in Bergen
on October 14, 1999. So now the Bank has ten regional banks and a total of 65 branches. Its head office is
in Trondheim.
In the autumn of 1999, Fokus Bank ASA applied to
the Norwegian Banking, Insurance and Securities
Commission for its permission to establish a mortgage-credit business, Fokus Kreditt AS. The reason
was that the Bank wanted to be able to offer high-
34
DIRECTORS’
REPORT
FOR
1999
Profit and loss account
The book value of the trading portfolio was NOK
The Group’s result from ordinary operations amoun-
402.2 million at the year-end. This is a rise of NOK
ted to NOK 460.9 million in 1999. The result was
138.5 million on 1998 and is primarily due to an
positively affected by a substantial improvement in
increase in the value of the portfolio.
income, as compared with 1998. This applied to the
return on the Bank’s securities portfolios in particular.
Net fees and commissions advanced by NOK 7.7
On the other hand, costs and losses on loans in 1999
million to NOK 216.0 million. Net gains on foreign
rose on 1998 figures.
exchange and financial derivatives decreased by NOK
25.8 million to NOK 52.5 million. Interest rates were
Net interest and credit commissions increased in 1999
more stable in 1999 than in 1998, so this reduced
by 6.0 per cent, as compared with 1998, while
income from foreign exchange and financial instru-
average total assets rose by 5.2 per cent from 1998 to
ments. Moreover, the swift integration of these areas
1999. In percentage terms of average total assets, net
with Den Danske Bank briefly slowed down the
interest income totalled 2.56 per cent,
against 2.53 per cent in 1998. Interest
income from previous periods amounted
to NOK 9.9 million, against NOK 26.5
Bank’s market activities.
Net interest income
1,200
3.5
The Bank’s total operating expenses came
1,000
800
3.0
600
million in 1998.
400
2.5
The 1999 Accounts show that net interest
95
96
97
NOK
is 61, down from 69 in 1998. The Bank
aims at reducing this ratio to a target of
55.
98
2.0
99
% of average
total assets
income exceeds ordinary operating expenses by 13.5 per cent. The cost/income ratio
700
2.0
500
1.5
400
1.0
ses. In percentage terms of average total
2.26 % in 1999, as compared with 2.25 %
in 1998.
100
0
95
96
97
NOK
rose by NOK 237.3 million to NOK
98
99
0.5
% of average
total assets
kroner from 1998. Net gains on securities
120.3 million. The Bank’s short-term
takeover by Den Danske Bank, accounted
assets, operating expenses amounted to
600
200
493.1 million, up by NOK 180.9 million
those rendered in connection with the
for NOK 62 million of operating expen-
300
Other operating income totalled NOK
NOK 49.1 million on 1998. Financial and
strategic consulting services, including
200
0
to NOK 990.9 million, an increase of
1999 than in 1998. The main reason for
this decrease was a payment of NOK 18.8
1,000
securities portfolios were booked at
980
market value as at December 31, 1999.
940
Staff costs were NOK 2.8 million lower in
3.5
million in 1998 to a general profit-sharing
scheme for the Bank’s employees. No such
960
3.0
payment was charged to the 1999
920
900
2.5
880
The Bank maintained a relatively modest
trading portfolio throughout 1999, following a considerable reduction in 1998.
from 917 to 1,010. This was mainly attri-
860
840
Accounts. The FTE figure rose in 1999
95
NOK
96
97
98
99
2.0
% of average
total assets
butable to an increase in the number of
employees in the regional banks.
35
DIRECTORS’
Net losses on loans and guarantees
REPORT
FOR
Lending in per cent
1999
The Balance Sheet of the 1999 Accounts
amounted to NOK 191.5 million in 1999,
contains a deferred tax credit item as a
against NOK 53.2 million in 1998. Write-
result of a loss being carried forward.
downs and gains or losses on long-term
Reduced by NOK 114.1 million during
securities totalled a gain of NOK 26.0
1999, this deferred tax credit amounted
million, with NOK 18.8 million coming
to NOK 734.8 million at the end of
from a reduction of the Bank’s stake in
Eksportfinans AS. The Bank reduced its
Retail consumption 4,4
Retail mortgages 41,2
Corporate 54,4
1999. The tax credit is contingent upon
the Bank winning the tax case.
holding from 20.08 to 9.97 per cent in
October 1999.
Corporate lending
in per cent
Losses on loans and guarantees
For the Group, net losses on loans
The Bank’s tax situation remains unde-
amounted to NOK 191.5 million,
cided. In 1995, the Norwegian tax
against NOK 53.2 million in 1998.
authorities raised the question of banks’
Income from claims previously written
right to deduct write-downs on preference
off came to NOK 54.8 million. Gross
share capital issued during the Norwegian
banking crisis. Fokus Bank’s preference
share capital was NOK 2.15 billion. The
Tax Committee in Trondheim supported
the Bank’s views, but the Sør Trøndelag
County Tax Committee overruled this
losses on loans totalled NOK 246.3
Public 3,1
Transport/storage 9,5
International 4,2
Services 7,0
Agriculture/forestry 3,8
Fish farming/fisheries 5,2
Real estate 20,8
Trade/hotels 15,7
Industry 24,7
Building/construction 6,0
decision in April 1998.
million, or 0.63 per cent of gross
lending. Gross losses included an increase in general loan loss provisions of
NOK 10.4 million. In 1998, gross losses
on loans amounted to 0.38 per cent of
gross lending.
Total loan losses
in per cent
In September 1998, the Bank chose to
The increase in losses on loans was
take legal action against the Norwegian
attributable partly to a higher credit risk
government represented by the Sør-
during 1999 in the regions and business
Trøndelag County Tax Committee and
sectors in which the Bank operates and
subsequently petitioned for the case to be
partly to a thorough examination of the
postponed. This request was granted and
the case was suspended for 18 months.
Transport/storage 7,2
Real estate 10,2
International 5,1
Services 2,5
Trade/hotels 24,8
Retail 10,2
Agriculture/forestry 1,5
Fish farming/fisheries 0,6
Building/construction 13,5
Industry 28,4
Bank’s lending portfolio.
Losses on retail customers accounted for
10.1 per cent, while those on corporate
customers accounted for 89.9 per cent.
Confirmed losses on loans amounted to
9.4 per cent of gross losses on loans.
36
DIRECTORS’
REPORT
FOR
1999
As at December 31, 1999, specific loan loss provisions
Balance sheet
covered 55.7 per cent of total non-performing loans.
In 1999, the Group’s total assets increased by NOK
For the retail and corporate segments, specific loan
2.2 billion – or 5.2 per cent – and totalled NOK 44.3
loss provisions totalled 2.2 per cent and 1.9 per cent,
billion at the year-end.
respectively, of gross lending. Total provisions, including general loan loss provisions, amounted to 2.53
Gross lending totalled NOK 38.9 billion – an increase
per cent of gross lending. At the end of 1998, the
of 8.0 per cent – of which corporate lending accoun-
figure was 2.46 per cent.
ted for 10 per cent and retail lending for 5.7 per cent.
Customer deposits reached NOK
The Bank increased its general
loan loss provisions by NOK 10.4
From left: Torbjørn Skjerve,
Mette Cecilie Greve and
Per Kristian Hanssen
23.2 billion at the end of 1999 –
NOK 0.5 billion, or 2.4 per cent,
million in 1999. General loan loss
more than was recorded the year
provisions of NOK 171.7 million
before.
are, together with specific loan
loss provisions, regarded as suffi-
The Bank’s deposit coverage ratio
cient to cover the portfolio risk at
– defined as customer deposits as
the year-end.
a percentage of gross lending –
stood at 59.8 per cent at end of
In 1999, net non-performing loans
the year, a reduction of 3.2 per-
decreased by NOK 10 million to
centage points compared with the
NOK 509 million. As at
end-1998 result.
December 31, 1999, net doubtful
loans and soft loans amounted to
At December 31, 1999, the
NOK 348 million and NOK 107
million, respectively.
Bank’s liabilities incurred by issuFrom left: Steinar Sivertsen,
Jakob Brogaard and
Anton Jenssen jr.
ing securities totalled NOK 10.8
billion – a level similar to that of
Allocation of the result
1998. In future, Fokus Bank will
On the basis of the 1999
seek to profit from the advan-
Accounts, the Board of Directors
tages that Den Danske Bank’s
proposes to allocate the profit of
ownership and market position
the Parent Bank of NOK 341.4
present and reduce the costs
million and the Group contribution
incurred in connection with
of NOK 4.4 million as follows:
short-term funding and issuing of
NOK 340.9 million to be paid out
certificates and bonds.
as dividend and NOK 4.9 million
to be transferred to a value equalisation fund.
37
DIRECTORS’
REPORT
FOR
1999
Equity capital
At the end of the year, the net
equity and subordinated capital of
Balance sheet and risk
From left: Peter Straarup,
Jo Morten Aunet and
Margunn Kleveland
management
Fokus Bank has established a risk
Fokus Bank Group totalled NOK
management committee, which
4.021 billion, which equals a sol-
includes the Bank’s senior mana-
vency ratio of 11.57 per cent. The
gement, to review all major risk
Parent Bank’s solvency ratio
factors of the Bank. Credit risk
amounted to 11.50 per cent. The
represents the largest single risk
tier 1 ratios of the Group and the
and therefore special attention is
Parent Bank reached 7.56 per cent
devoted to monitoring it. Market
and 7.50 per cent, respectively.
risk – identified as potential future
movements in interest rates, equity
At December 31, 1999, the risk-
prices and exchange rates – is
weighted assets amounted to
relatively small in terms of the
NOK 34.7 billion against NOK
Bank’s equity capital. The Bank
34.9 billion at the end of 1998 – a
has reduced its market risk over
fall of 0.6 per cent triggered by
the Bank’s reduction of its stake in
From left: Jan Henry T. Olsen
and Svein Sivertsen
the year due to the changed product range in the capital markets
following the merger with Den
Eksportfinans.
Danske Bank.
Booked equity per share amounted to NOK 49.9 at the end of
Fokus Bank’s credit control
1999.
system combines the advantage of
local expertise, decision-making
The 1999 annual accounts were
in accordance with uniform
prepared on the basis of the going
guidelines and centralised moni-
concern concept.
toring of the Bank’s credits portfolio. Moreover, the Bank applies
its sectoral expertise when assessing credit applications. The
Board of Directors and the Supervisory Board define a
uniform credit policy and prepare an annual credit
management policy statement, including macroeconomic analyses and dynamic sectoral limits. All
credit exposures are classified on the basis of a defined
set of factors.
38
DIRECTORS’
REPORT
FOR
1999
The Bank aims at keeping its interest-rate risk at a
The Bank focuses on the health, safety and job satis-
minimum. The trading portfolio is subject to moderate
faction of the staff. To this end, Fokus Bank has exa-
limits, enabling the Bank to take on interest-rate posi-
mined its organisation, encouraging the staff to give
tions on the basis of its own expectations of future
feedback to their heads of departments and branches.
interest rates. The limits factor in various changes to
This process has resulted in several new measures.
the yield curve. The Bank’s funding policy defines the
limits for short-term funding in relation to liquidity
Furthermore, a local agreement has come into
risk. Fokus Bank has fixed limits for the liquidity level
existence under which the Bank commits itself to
it intends to maintain above the minimum level
providing flexible working hours for the staff, devel-
required by the Banking, Insurance and Securities
oping its professional skills and introducing new
Commission. As regards risk taken on currency posi-
recruitment and remuneration systems.
tions, the maximum position taking is limited in
accordance with external regulations. The Bank
The Bank has its own occupational health service
frequently reviews its positions and it has imple-
department to ensure the well-being of the staff. The
mented stop-loss provisions to reduce possible losses.
department did not register any accidents or injuries at
A central unit within the Bank manages all currency
Fokus Bank in 1999.
positions. Similar to the limits set up for interest-rate
risk, the Bank has also established limits for equity
The business of Fokus Bank is of a nature which does
investment. Furthermore, stop-loss provisions may be
not have any noticeable polluting effect on the exter-
applied to reduce potential losses. The limit is moderate
nal environment.
in relation to the equity of Fokus Bank.
The Board of Directors would like to thank each staff
The Bank has thoroughly reviewed its credits portfolio
member for the efforts made in 1999 and to express
and implemented up-to-date systems to control credit
its acknowledgement of the work performed.
risk. These factors, combined with the expectations of
improving business trends in the regions and industries
The board of directors
in which the Bank is exposed, mean that Fokus Bank
The Board of Directors of Fokus Bank consists of:
is likely to record a smaller loss on credit facilities in
2000 compared with that of 1999.
Peter Straarup, Chairman
Jakob Brogaard, Vice Chairman
Staff
Torbjørn Skjerve
At the end of 1999, the number of staff within the
Mette Cecilie Greve
Group totalled 1,069, corresponding to a number of
Anton Jenssen jr.
full-time equivalents of 1,010, of whom the Parent
Jan Henry T. Olsen
Bank employed 989. Over the year, the FTE figure
Steinar Sivertsen, Group Director
increased by 93.
Svein Sivertsen, Managing Director
Jo Morten Aunet, elected by the staff
39
DIRECTORS’
REPORT
FOR
1999
Terje Svendsen is the alternate of Svein Sivertsen and
On the basis of the trend in certain important sectors
attends board meetings. Margunn Kleveland (elected
as well as other factors, Fokus Bank expects to see
by the staff) and Per-Kristian Hanssen (elected by the
controlled growth. In 2000, the Bank will continue to
staff) have been alternates of Jo Morten Aunet and
focus on measures to improve the quality of its credits
have attended board meetings.
portfolio, for example by implementing risk management systems.
Future prospects
Following a period of long-lasting and prosperous
In recent years, Fokus Bank has aimed at developing
growth, the Norwegian economy recorded a consoli-
its business in line with its strategy and new and diffe-
dating growth break in 1999. The growth of the
rent customer demands. As part of Den Danske Bank,
mainland economy slowed down particularly due to
Fokus Bank will continue to take advantage of the
modest activity in the industrial sector. In 2000, we
possibilities this structure offers, such as improving
expect to see moderate growth without recession. The
expertise, offering a wide range of high-quality pro-
demand curve for credit facilities is likely to show an
ducts regionally, nationally and globally, and devel-
upward trend, but we do not expect the slope of the
oping efficient and high-quality joint services. This
curve to be as steep as the slope recorded in recent
should strengthen the position of Fokus Bank.
years.
Peter Straarup
Chairman
Mette Cecilie Greve
Torbjørn R. Skjerve
Steinar Sivertsen
Jan Henry T. Olsen
Anton Jenssen jr.
Jo Morten Aunet
Jakob Brogaard
Svein Sivertsen
Managing Director
40
PROFIT
AND
LOSS
ACCOUNT
Parent Bank
Group
31.12.98
31.12.99
3,176.4
3,607.1
NOK million
2,131.0
2,500.5
1,045.4
1,106.6
Note
31.12.99
31.12.98
7.1, 7.2, 8.5
3,616.7
3,183.2
7.2, 8.5
2,492.5
2,122.7
1,124.2
1,060.5
65.2
57.1
46.9
60.0
250.7
258.9
Commissions and other income from banking services
280.2
274.3
(66.0)
(64.2)
Commissions and other expenses from banking services
(64.2)
(66.0)
(116.9)
120.3
Net profit(loss) securities
120.3
(117.0)
78.3
52.5
Net profit(loss) foreign exchange and financial derivatives
52.5
78.3
55.0
48.6
266.3
473.2
1,311.7
1,579.8
404.7
402.1
Salaries, pensions and other personnel expenses
295.6
343.9
Net other operating income
7.3
Total operating income
57.4
82.6
493.1
312.2
1,617.3
1,372.7
6.1, 6.2
414.8
417.6
Administration expenses
6.1
355.9
307.5
57.8
53.9
Depreciations and write-downs fixed assets
5.1
56.1
60.7
153.9
163.1
7.4
164.1
156.0
912.0
963.0
Total operating expenses
990.9
941.8
399.7
616.8
Operating result before loan losses and net profit long-term investments in securities
626.4
430.9
59.7
189.8
Net losses(reversals) on loans and guarantees
191.5
53.2
1.3
25.9
341.3
452.9
Pre-tax result from ordinary operations
1.3, 1.4
Write-downs and profit/loss long-term investments in securities
74.7
111.5
Tax ordinary operations
266.6
341.4
Result from ordinary operations after tax
32.5
0.0
Ekstraordinary expenses
0.0
0.0
Tax from extraordinary result
234.1
341.4
8.3
6.2
Result for the year
26.0
3.1
460.9
380.8
115.1
80.4
345.8
300.4
0.0
32.5
0.0
0.0
345.8
267.9
Adjustments and allocations
19.1
4.4
Group contributions
0.0
0.0
19.1
4.4
Total contributions
0.0
0.0
218.1
340.9
340.9
218.1
0.0
4.9
Transferred to reserve for valuation differences
35.1
0.0
Transferred to retained earnings
253.2
345.8
Dividend
Total allocations
3.1
0.0
0.0
4.9
49.8
345.8
267.9
41
BALANCE
Parent Bank
SHEET
NOK million
Group
31.12.98
31.12.99
851.3
387.9
Assets
Cash and receivables from central banks
Note
663.8
520.5
Lending to and receivables from credit institutions
1,515.1
908.4
Lending to and receivables from central banks, credit institutions etc.
35,988.1
38,865.4
720.7
807.2
- Specific loan loss provisions
159.0
169.0
- General loan loss provisions
35,108.4
37,889.2
9.6
3.0
2,619.7
2,676.9
339.3
669.2
Gross lending to customers
Ownership in consolidated companies
790.9
682.1
Intangible assets
461.4
452.5
Fixed assets
246.3
111.2
Other assets
Accrued income and prepaid expenses
466.3
44,189.2
2,065.9
3,428.5
1.1, 1.4 - 1.9, 6.3, 8.5
38,895.1
36,024.5
1.2, 1.6
811.4
724.1
1.2, 1.6
171.7
161.3
Shares and other securities
48.4
506.0
665.1
1,516.4
Certificates and bonds
282.0
851.3
553.1
Repossessed assets
380.1
31.12.98
387.9
941.0
Net lending to customers
160.2
42,137.0
1.10
31.12.99
37,912.0
35,139.1
5.3
3.0
9.6
4.1
2,684.9
2,630.4
4.2, 4.5
690.1
339.9
380.1
Ownership in associated companies
4.3
48.4
4.4, 4.6, 8.5
0.0
0.0
5.1
833.5
878.8
5.1, 5.2, 5.4
490.8
495.0
110.5
245.6
6.2, 8.3
Total assets
599.9
504.4
44,314.1
41,139.3
Liabilities and equity
Due to credit institutions
2.1
3,428.5
2,065.9
22,824.7
23,358.9
Deposits from and liabilities to customers
2.2
23,243.1
22,693.8
10,940.5
10,826.0
2.3
10,826.0
10,940.5
7.1
430.5
505.7
718.3
358.7
230.1
241.7
501.9
329.0
Other liabilities
348.6
698.8
Accrued expenses and prepaid income
236.4
223.8
Provisions for commitments and expenses
1,710.0
1,813.3
38,628.0
40,678.3
Total liabilities
1,109.0
1,109.0
Paid- in capital
2,400.0
2,401.9
Retained earnings
3,509.0
3,510.9
Equity capital
42,137.0
44,189.2
6.2, 8.3, 8.6
2.4
3.3
3.1, 3.2
Total liabilities and equity capital
1,813.3
1,710.0
40,689.8
38,516.3
1,109.0
1,109.0
2,515.3
2,514.0
3,624.3
3,623.0
44,314.1
42,139.3
Off Balance Sheet commitments: Cf. Note 8.1, 8.2, 8.4, 8.7
*) Share capital:
Total 72,687,904 shares with nominal value NOK 11.-
Trondheim, 10th March 2000
Peter Straarup
Chairman
Mette Cecilie Greve
Torbjørn R. Skjerve
Steinar Sivertsen
Jan Henry T. Olsen
Anton Jenssen jr.
Jo Morten Aunet
Jakob Brogaard
Svein Sivertsen
Managing Director
42
ACCOUNTING
General
The annual financial statements have been prepared in compliance
with accounting principles laid down by laws
and regulations for commercial banks, as well as generally accepted
accounting practices.
As a consequence of the new accounting law, deferred tax benefits have been included in the Balance Sheet as Intangible Assets.
Furthermore, associated companies have been included in the Parent
Bank’s accounts according to the equity method. The Financial
instruments included in the Trading portfolio are booked at a markto-market value. The changes have been booked directly against the
equity. Furthermore, according to demand from the Banking,
Insurance and Securities Commission, there are changes in the classification of certain items on the Profit and Loss Account and the
Balance Sheet. Pro forma figures have been produced for previous
years in order to make figures comparable. Shares in subsidiaries are
included in the Parent Bank account according to the cost method.
Consolidation
The Group Accounts include Fokus Bank and companies in which
the Bank alone or with subsidiaries have a shareholding in excess of
50 % of the share capital. These companies are presented in Note
4.4. Furthermore, associated companies (20-50 % ownership) where
the ownership gives influence and is considered a long-term investment for the Group, have been included in the consolidated figures.
These companies are listed in Note 4.3.
Associated companies are carried in the Group Accounts according to the equity method. Shareholdings in subsidiaries acquired by
take-overs have been eliminated according to the acquisition method
of accounting. Any surplus (goodwill) on acquisition of subsidiaries is
evaluated and written-off based on the same principles as fixed
assets. Inter-company balances, interest, commissions and internal
profits between companies in the Group have been eliminated. For
subsidiaries acquired in the accounting year, the Profit and Loss
Account has been consolidated from the time of acquiring.
Accounting principles for loan losses
Loans are recorded at nominal value less a reduction for loan loss
provisions. Loan loss provisions are made subsequent to a risk evaluation of the individual exposure. When performing this evaluation,
emphasis is placed on the customer’s financial situation as well as the
realisation value of the existing collateral.
When a credit facility is defined as non-performing or doubtful,
interest will as a general rule no longer be recognised. Likewise, previously capitalised but unpaid interest on the same facility will as a
general rule be reversed in the current year’s Profit and Loss Account.
As confirmed losses are calculated all losses resulting from bankruptcies, debt renegotiation or other similar proceedings.
Specific loan loss provisions are provisions made to cover
probable losses on exposures having been identified as non
-performing or doubtful at the reporting date. Calculated loan losses
represent the difference between the facility's nominal value and the
value of the collateral if any. In performing this evaluation, account
will be taken of the customer's overall financial situation and any
steps which may have been taken to improve this.
An exposure is defined as non-performing when payment is not
performed according to the agreement, and at the latest when payment is 90 days unpaid and overdue.
In situations where the loan conditions are changed leading to
PRINCIPLES
the value of the loan being substantially less than what the value
would have been under normal interest conditions, the gap will be
treated as a confirmed loss. The difference between the face value
and the write-down of the loan will be taken to income over the
remaining maturity-time.
In certain situations the Bank will assume title to assets which
has been pledged as security for the credit exposure. When these
assets are acquired for quick disposal, it will be valued at real value
and be included in a separate caption under current assets in the
Balance Sheet.
If the Bank repossesses such assets for its own use or consider the
assets long-term investments, it will be evaluated at real value at the
time of acquisition and classified as fixed assets.
General provision for loan losses
The general provision for loan losses cover provisions for probable
losses on credit facilities not identified nor assessed according to regulations concerning specific provisions. The general loan loss provision
includes provisions made for three groups of borrowers:
- retail customers
- major corporates
- other corporates
At the year-end, the Bank had not identified specific industries or
geographic areas requiring general loan loss provisions. The provisions made are based on experience and relevant statistics.
Valuation of real estate
The valuation of bank buildings and other real estate is based on the
accounting regulations laid down by the Norwegian Banking,
Insurance and Securities Commission as well as the requirements of
the Norwegian Companies' Act applicable to fixed assets.
Repossessed assets are valued on the bases of the accounting
regulations laid down by the Norwegian Banking, Insurance and
Securities Commission as well as the requirements of the Norwegian
Companies' Act applicable to current
assets (Cf. Note 5.4).
Securities
Bonds and certificates have been split in two portfolios, the trading
portfolio and the bank portfolio. Included in the trade portfolio are
liquid securities aimed for sale. The bank portfolio includes securities
with little or no turnover. The trade portfolio is valued at market
value, whilst the bank portfolio is valued at the lower of cost and
market value.
The shares held are split into three portfolios, namely short-term
shareholdings, shares in subsidiaries and other long-term shareholdings. Shares are defined as long-term when ownership is considered
to be long-term, as well as subsidiaries.
Short-term shareholdings have been split in two portfolios, a
trade portfolio and a bank portfolio. Included in the trade portfolio
are securities being traded in an active and liquid market. The bank
portfolio includes securities with little turnover. The same valuation
principles are applied for these portfolios as for bonds and certificates.
43
ACCOUNTING
Shares held as long-term shareholdings are recorded at cost. If the
value of a company is lower than the book value of the shares and
this deficit is considered to be of a permanent nature, the value of the
long-term shareholding will be written down to actual value.
Major participations in unlimited companies (Norwegian: ANS)
are included in the accounts on a gross-method basis, while minor
participations are included in the accounts based on the cost method.
The participations are shown in Note 4.6.
Bonds issued
Bonds issued are recorded in the Balance Sheet at market value at the
date of issue. Over- and under- market rates on
issued bonds are amortised linearly for the remaining period to
maturity. (Cf. Note 2.3).
Leasing
Leasing contracts where the Group acts as the leaser, are mainly
financial leasing contracts. Financial leasing is classified as lending in
the Balance Sheet. The interest element of the lease is accrued as
income whereas the installments are booked as down payment on
loans. The Group’s leasing agreements are made by the subsidiary
Fokus Finans AS, and is mainly related to cars. Leasing agreements
on machinery and office equipment do take place, but infrequently.
Foreign exchange
Assets and liabilities in foreign currencies are calculated in NOK based
on mid-market rates as at 31.12.99. Net profit or loss is booked as net
profit/loss foreign exchange. Assets and liabilities in foreign currencies
are hedged either by a similar item on the opposite side of the Balance
Sheet or by off-balance hedging transactions. Unrealised gains or losses
on assets and liabilities in foreign currencies are netted against the related profits and losses on the hedging transactions. Income and expenses
in foreign currencies are converted to NOK at the current rate at the
time the amount is booked. Cf. Notes 8.1. and 8.7.
Financial derivatives
Financial derivatives are classified in two portfolios; the bank portfolio and the trading portfolio. The Bank portfolio includes derivatives traded with the purpose of hedging specific Balance Sheet items.
All other derivatives are included in the trading portfolio. Contracts
made to fix a future interest or currency rate applicable to items in
the Bank’s Balance Sheet are defined as hedging contracts. Hedging
contracts are normally defined by a 1:1 relationship against an
underlying Balance Sheet item. When the items are too small to be
hedged 1:1, these are hedged with hedging contracts with almost
identical maturity time and principle amount. The Balance Sheet item
and the corresponding hedging are identified by own portfolio or by
the 1:1 relation being established and reported together. This is mainly the case for interest rate derivatives.
Financial derivatives hedging balance sheet items are periodised
and booked as interest income/ expense.
All agreements not hedging Balance Sheet are defined as trading
contracts.
Foreign exchange derivatives are included in the result according to
the principle of market value and booked as net gain foreign
exchange and financial derivatives.
The result from interest rate derivatives is booked according the
principle of market value as gain foreign exchange and financial
instruments.
PRINCIPLES
The market valuations are based on observed values in the markets,
alternatively the calculation of market value based on yield curves or
similar. The value of the portfolio is calculated as if liquidated at the
time of reporting. The value does not necessarily correspond with the
value the company might achieve in the market.
Portfolio and other risk management
The Bank has a portfolio management system registering all lending
commitments. All customers have been classified in a risk category
with consequent risk. This tool enables better management and
monitoring of the bank’s credit risk, cf. the caption describing loan
losses and loan loss provisions.
The Bank uses derivatives to secure interest rate and currency risk
as well as investments in securities. For interest risk management
purposes, sensitivity limits are used. A calculation of positions and the
related effects follows the framework of these
limits. Cf. Note 8.2.
Accruals, commissions and fees
Interest, commissions and fees are accrued in the financial statements
as they are accrued as income or charged as expenses. Fees which
constitute a direct income for services performed are taken to income
on payment. Fees exceeding the costs associated with the establishment of the loan are amortised.
Depreciation
Fixed assets are booked at cost added positive revaluations and less
accumulated ordinary depreciations and write-downs.
The depreciation rates used are based on the estimated financial
durability of the assets. Depreciation is calculated linearly.
The following depreciation rates have been used: Machinery and
fixtures 10 %, vehicles 20%, EDP 20-30% and buildings 2 %.
Activated development costs are amortised over four years. The rate
used to depreciate a revaluation surplus will be the same as that used
for ordinary depreciation. Fixed assets are written down if a substantial and non-reversible reduction in the value is evident. Leasing assets
will normally be depreciated based on the annuity method.
Pensions
Pension costs have been treated in accordance with the temporary
Norwegian accounting principles regarding Pension costs. Net
pension costs are included in personnel expenses in the Profit and
Loss Account. Net pension funds, however, are included in the excess
pension fund item in the Balance Sheet.
Tax
Deferred tax and deferred tax benefits are handled according to
preliminary accepted accounting standard for tax.
Payable tax and changes in deferred tax and deferred tax benefits
are shown as tax cost of the year in the Profit and Loss Account.
Deferred tax is calculated on the basis of temporary differences
between accounting figures and tax figures by the end of the year.
Positive and negative differences within the same time-frame are
assessed against each other. Certain items however are specially
assessed, such as pension commitments and positive revaluations.
Deferred tax benefits arise when preliminary differences lead to
future tax deduction. Deferred tax benefits is presented as an asset on
the Balance Sheet.
44
NOTES
Chap. 1
Note 1.1
Lending and loan losses
Distribution of loans and loan losses by customer
segment and industries
Note 1.2 Changes in specific and general provisions for losses
Note 1.3 Losses on loans and guarantees
Note 1.4 Region Banks’ loans and losses
Note 1.5 Doubtful, non-performing and non-interest bearing
exposures
Note 1.6 Key figures related to loan loss provisions and
non-performing loans
Note 1.7 Development of accounts with overdrawn/overdue
amounts in the Parent Bank’s ordinary loan portfolio
Note 1.8 Distribution of leasing agreements by Parent Bank
and others
Note 1.9 Loans granted as subordinated loan capital
Note 1.10 Deposits in and loans to credit institutions
Note 1.11 Changes in accrued not recognised interests
Chap. 2
Note 2.1
Note 2.2
Note 2.3
Note 2.4
Deposits
Deposits from credit institutions
Deposits from customers
Bonds issued
Chap. 3
Note 3.1
Note 3.2
Note 3.3
Equity capital
Specification of changes in equity capital
Capital adequacy
Ownership
Chap. 4
Note 4.1
Note 4.2
Note 4.3
Note 4.4
Note 4.5
Note 4.6
Securities
Bonds - certificates
Short-term investments in shares and participations
Associated companies
Shares in subsidiaries
Long-term investments in shares and participations
Participation in unlimited companies
Chap. 5
Note 5.1
Note 5.2
Note 5.3
Note 5.4
Assets
Changes in fixed assets
Investments in and sale of fixed assets 1994-1999
Repossessed assets
Real estate and tenancy agreements
Chap. 6
Note 6.1
Note 6.2
Note 6.3
Personnel expenses
Salaries and general administration expenses
Pensions Parent Bank
Loans to Directors, Representatives and employees
Chap. 7
Note 7.1
Note 7.2
Note 7.3
Note 7.4
Other notes related to the Profit and Loss Account
Periodically recorded commissions and fees
Interest income and interest expenses
Auditor’s fees and other operating expenses
Chap. 8
Note 8.1
Note 8.2
Note 8.3
Note 8.4
Note 8.5
Note 8.6
Note 8.7
Other Balance Sheet and off Balance Sheet Notes
Time to maturity for main items at 31.12.99
Agreed/expected time for changed interest rate on
main items at 31.12.99
Taxation Parent Bank
Guarantees / pledged assets
Subsidiaries
Provisions for commitments and expenses
Financial derivatives and financial risk management
Chap. 9
Note 9.1
Note 9.2
Other
Contingencies
Cash flow statement
45
NOTES
Chap. 1
Lending and loan losses
Note 1.1
Distribution of loans and loan losses by customer segments and industries
NOK million
Segment/industry sector
Retail market
Corporate market
Of which:
Agriculture/forestry
Fishing/fish farming
Industry, mining, oil, gas, shipping
Building and construction,
power, water supply
Trade/hotels/restaurants
Real estate and services
Transport, storage
Public sector
International
Parent Bank (total)
Gross loans
1999
1998
17,690
16,739
19,641
17,701
NOK million
Segment/industry sector
Retail market
Corporate market
Of which:
Agriculture/forestry
Fishing/fish farming
Industry, mining, oil, gas, shipping
Building and construction,
power, water supply
Trade/hotels/restaurants
Real estate and services
Transport, storage
Public sector
International
Parent Bank (total)
Non-performing loans
1999
1998
515
513
576
502
Overdrafts
facilities
1999
175
5,655
Guarantees
1999
1998
79
77
1,962
2,011
797
1,097
5,231
764
923
4,846
7
7
730
6
7
768
151
156
1,787
1,285
3,328
5,891
2,012
652
882
38,865
742
3,389
5,151
1,886
359
1,189
35,988
397
322
386
113
2
1,064
3,107
421
251
404
154
1
2,035
4,124
289
2,237
777
258
1,158
106
7,094
Doubtful
loans
1999
1998
59
55
455
189
27
6
143
21
8
153
13
15
43
116
100
141
43
92
90
107
31
59
1,150
132
1,147
Specific loan
loss provisions
1999
1998
378
390
396
277
25
15
5
101
14
5
85
210
85
32
72
29
30
15
75
49
93
79
54
24
59
42
48
514
244
33
807
54
721
46
NOTES
Note 1.2
Changes in specific and general provisions for losses
Parent Bank
1998
1999
740.7
720.7
62.7
38.0
66.5
61.8
720.7
90.8
37.3
173.7
33.7
807.2
Parent Bank
1998
1999
139.0
159.0
20.0
10.0
159.0
169.0
159.0
169.0
0.0
0.0
Note 1.3
Group
NOK million
Specific provision for losses on loans, guarantees etc. at 01.01.
- Confirmed losses on loans, guarantees etc. in the period
previously provided for by specific provisions
+ Increased specific provision for losses on loans
+ New specific provision for losses on loans
- Reversals on specific provisions for losses on loans
Specific provision for losses on loans, guarantees etc. at 31.12.
1999
724.1
1998
743.6
90.8
37.3
174.5
33.7
811.4
62.7
38.0
67.0
61.8
724.1
NOK million
General provision for losses on loans, guarantees etc. at 01.01.
+ General provisions for losses on loans, guarantees etc. in the period
General provision for losses on loans, guarantees etc. at 31.12.
Of which general provision for loan losses at 31.12.
Of which general provision for guarantees at 31.12.
1999
166.6
10.4
177.0
171.7
5.3
Group
1998
163.3
3.3
166.6
161.3
5.3
Losses on loans and guarantees
Parent Bank
1998
1999
(20.0)
86.5
20.0
10.0
62.7
90.8
13.1
23.0
23.5
7.4
59.7
21.0
0.0
189.3
NOK million
Specific loan loss provisions in the period
+ General loan loss provision in the period
+ Confirmed losses on credit facilities previously
provided for by specific provisions
+ Confirmed losses on credit facilities not previously
provided for by specific provisions
- Recoveries from previously confirmed losses
+ Debt remission subsidiaries
Losses on loans, guarantees etc.
Group
1999
1998
87.3
(19.5)
10.4
20.2
91.8
62.7
23.0
13.3
21.0
0.0
191.5
23.5
0.0
53.2
47
NOTES
Note 1.4
Region Banks’ loans and losses
NOK million
Gross loans 31.12.99
Region Bank
Retail Corporate
Total %
Fokus Tromsbanken
1,175
2,212
3,387
9
Fokus Nord-Trøndelagsbanken 2,148
1,544
3,692
9
Fokus Forretningsbanken
4,791
5,584 10,375 27
Fokus NordVestbanken
700
1,892
2,592
7
Fokus Vestlandsbanken
1,213
935
2,148
6
Fokus Vestlandsbanken Bergen
38
49
87
0
Fokus Sunnhordlandsbanken
1,185
1,175
2,360
6
Fokus Rogalandsbanken
2,083
2,493
4,576 12
Fokus Telemarksbanken
1,919
1,949
3,868 10
Fokus Bøndernes Bank
2,202
2,933
5,135 13
Shared capital
236
409
645
2
Parent Bank
17,690
21,175 38,865 100
Subsidiaries
12
247
259
Eliminations
-229
-229
Group
17,702
21,193 38,895
Total
37
17
34
7
11
3
13
22
44
46
10
244
2
246
Losses 1999
Recoveries
4
6
18
3
1
1
7
4
11
55
55
Net
33
11
16
4
10
3
12
15
40
35
10
189
2
Accrued not
recognised interest *)
Amount
%
6
13
4
9
13
28
2
4
2
4
0
0
2
4
7
15
5
11
6
13
0
47 100
191
Cf. page 10 for further specification of Region Bank branches.
*) “Accrued not recognised interest” are interest on credit facilities defined as non-performing/doubtful. Interest on such facilities is, according to
regulations from the Norwegian Banking, Insurance and Securities Commission, not to be booked as income and will therefore reduce the Parent Bank's
net interest.
Cf. definition of non-interest bearing exposures, Note 1.5.
48
NOTES
Note 1.5
Doubtful, non-performing and non-interest bearing exposures
NOK million
31.12.99
Doubtful loans *)2)
Total doubtful loans
514
166
Net doubtful loans
348
Loan loss provisions in % of tot. doubtful loans
32
Non-performing loans *)3)
Total non-performing loans
1,150
641
Net non-performing loans
509
Loan loss prov. in % of total non-perf. loans
56
Net non-performing in % of gross loans
1.3
*) Of these:
Non-interest bearing exposures 4)
Total non-performing loans
919
641
Net non-performing loans
278
Loan loss prov. in % of total non-perf. loans
70
Net non-performing in % of gross loans
0.7
Accrued not recognised interests
47
Development softloans 5)
Softloans
107
31.12.98
Total Parent Bank 1)
31.12.97
31.12.96
31.12.95
244
93
151
38
276
115
161
42
547
202
345
37
683
243
440
36
1,147
628
519
55
1.4
1,100
626
474
57
2.0
1,413
831
582
59
2.0
1,690
977
713
58
2.6
993
628
365
63
1.0
37
955
626
329
66
1.0
34
1,240
831
409
67
1.4
43
1,443
977
466
68
1.7
56
113
100
119
136
1) The Parent Bank figures are almost identical with the Group figures.
2) Doubtful loans are loans where an evaluation of the customer’s financial situation has led to a specific loan loss provision being made, even though the
loan is currentley performing.
3) Loans with overdrawn/overdue amount, are classified as non-performing, unless the situation is not assessed as temporary. If the loan has been overdrawn
for more than 90 days it is always classified as non-performing.
4) Non-interest bearing exposures are loans with accrued not recognised interests and provisions.
5) Loans where an agreement between the customer and the Bank has been made due to the customer’s financial situation. This implicates an interest rate
lower than the market rate for a period of time.
Note 1.6
Key figures related to loan loss provisions and non-performing loans
NOK million
Gross loans
General loan loss provision
Total loan loss provisions
Total non-performing
Total non-performing in % of gross loans
Specific loan loss provisions in % of gross loans
Specific loan loss provisions in % of total non-performing
General loan loss provisions in % of gross loans
Total loan loss provisions in % of gross loans
31.12.99
38,865
807
169
976
1,150
3.0
2.1
70.2
0.4
2.5
31.12.98
35,988
721
159
880
1,147
3.2
2.0
62.9
0.4
2.4
49
NOTES
Note 1.7
Development of accounts with overdrawn/overdue amounts in the Parent Bank’s ordinary loan portfolio
The table shows the development in the balances of accounts with overdrawn/overdue amounts. The amounts are shown
on the basis of the number of days since payment was due or the date the account was overdrawn.
NOK million
As at:
31.12.98
31.03.99
30.06.99
30.09.99
31.12.99
Total change
Note 1.8
30 - 60 days
Amount
Change
240
269
29
285
16
296
11
273
-23
33
60 - 90 days
Amount
Change
70
75
5
81
6
125
44
77
-48
7
Distribution of leasing agreements by Parent Bank and subsidiaries
Agreements at 31.12.99
Retail
Corporate
Total
0.0
0.0
0.0
10.0
247.0
257.0
0.0
10.0
247.0
257.0
NOK million
Parent Bank 1)
Subsidiaries 2)
Eliminations
Group
Losses on agreements in 1999
Total
Recoveries
Net
0.0
0.0
0.0
1.7
1.7
1.7
0.0
1.7
1999
2.8
1998
2.8
0.0
2.8
15.0
17.8
1) The Parent Bank has no leasing agreements at 31.12.1999.
2) The leasing agreements relate to the subsidiary Fokus Finans AS.
Note 1.9
Loans granted as subordinated loan capital
Loans granted as subordinated loan capital to credit institutions are divided between:
NOK million
Bonds and other interest bearing securities
Total granted to finance institutions
Granted to other institutions
Total granted subordinated loan capital
2.8
2.9
5.7
Note 1.10 Deposits in and loans to credit institutions
Parent Bank
1998
1999
454.7
467.7
209.1
52.8
663.8
520.5
NOK million
Undated lending to and receivables from credit institutions
Dated lending to and receivables from credit institutions
Total lending to and receivables from credit institutions
Group
1999
500.3
52.8
553.1
1998
456.0
209.1
665.1
Note 1.11 Accrued, not recognised interests on loans
Parent Bank
1998
1999
106.0
91.6
31.1
16.1
20.4
26.4
37.1
46.6
91.6
95.7
Group
NOK million
1999
Accrued, not recognised interest on balance sheet loans as at 1 january 91.6
- Earlier periods interest income on loans, recognised this period
16.1
- Accrued, not recognised interest on loans that is no longer
on the balance sheet
26.4
+ The period’s accrued, not recognised interest on loans identified
46.6
as doubtful commitments
Accrued, not recognised interest on balance sheet loans as at 31 December
95.7
1998
106.0
31.1
20.4
37.1
91.6
50
NOTES
Chap. 2
Deposits
Note 2.1
Deposits from credit institutions
Parent Bank NOK million
1998
1999
89.3
272.9 Undated loans and deposits from credit institutions
1,976.5 3,155.6 Dated loans and deposits from credit institutions
2,065.8 3,428.5 Total loans and deposits from credit institutions
Group
1999
272.9
3,155.6
3,428.5
1998
89.3
1,976.5
2,065.8
Specification of debt in main currencies. The amount has been recalculated according to NOK rate at 31.12.99.
USD
EUR
DEM
2.385.4 mill
342.7 mill
5.7 mill
The average rate for loans and deposits from credit institutions amounts to 5.83 %.
The calculation of average rate is based on real interest expenses in relation to average capital.
No accounts have special rates.
Note 2.2
Deposits from customers
Parent Bank NOK million
1998
1999
21,844.9 22,334.6 Call deposits and other related liabilities to customers
979.8 1,024.3 Time deposits and other related liabilities to customers
22,824.7 23,358.9 Total deposits from customers
Specification of debt in main currencies. The amount has been recalculated according to NOK rate at 31.12.99.
USD
EUR
DEM
384.7 mill
69.4 mill
37.1 mill
The average rate for loans and deposits from credit institutions amounts to 5.96 %.
The calculation of average rate is based on real interest expenses in relation to average capital.
No accounts have special rates.
Group
1999
22,218.8
1,024.3
23,243.1
1998
21,714.0
979.8
22,693.8
51
NOTES
Note 2.3
Bonds issued
NOK million
Issued
19.06.96
16.07.97
19.03.98
19.03.97
22.02.99
06.02.98
14.05.98
12.06.98
26.02.97
24.08.98
19.08.97
01.09.98
Category
Closed
Open
Open
Open
Open
Open
Open
Closed
Open
Open
Open
Open
Rate
100
100
100
100
99.874
100
99.783
100
100
99.26
100
99.74
Maturity Currency
19.06.00
NOK
16.07.00
NOK
19.03.01
NOK
21.03.01
NOK
22.02.02
USD
06.02.03
NOK
14.05.03
USD
12.12.03
NOK
26.02.04
NOK
02.07.04
GBP
19.08.04
DEM
01.09.05
USD
Amount in
currency
300.0
300.0
12.0
250.0
250.0
Amount
in NOK
500.0
815.0
500.0
200.0
2,417.7
330.0
2,417.7
150.0
300.0
156.4
1,033.8
2,014.8
Interest conditions
Fixed 5.85 %
Fixed 4.80 %
Fixed 5.15 %
Floating rate with interest rate floor
Floating USD
Floating rate with interest rate cap
Floating USD
Share index
Floating rate with interest rate floor
Fixed 6.5 %
Floating DEM
Floating USD
*) The currency amounts are calculated at mid-rate USD 8.059, GBP 13.035 and DEM 413.5073 at 31.12.99.
The bonds issued have been secured hedged with interest swaps at 1:1
NOK million
Amount of USD bonds - in NOK (nominal value)
Amount of DEM bonds - in NOK (nominal value)
Amount of GBP bonds - in NOK (nominal value)
Bond issues in NOK - (nominal value)
Total bonds issued
Booked deficit rate
Balance Sheet value of bonds issued
Certificates issued
Total Balance Sheet value
Booked value is equal to the nominal value. Deficit rate and own portfolio are booked separately.
At 31.12.99, the bonds issued had a total market value of NOK 10,952.8 mill.
At 31.12.98, the bonds issued had a total market value of NOK 9,139.5 mill.
Special conditions
Fokus Bank equity linked bond 12.12.2003.
Fokus Bank has issued an equity linked bond with maturity 12.12.2003.
The return will depend on the development of six different equity indexes.
The return of the bond will be paid at maturity.
The issue has been secured with an asset swap at 1:1.
Fokus Bank 06.02.2003.
Fokus Bank has issued NOK bonds with maturity 06.02.2003.
The return has been linked to an option element giving the investor a cap on the return.
The bond issue has been secured with an interest rate option and interest rate swap at 1:1.
Average rate 5.25 %.
Average rate has been calculated as interest income in relation to average annual capital.
1999
6,850.2
1,033.8
156.4
2,795.0
10,835.4
-9.2
10,826.2
0.0
10,826.2
1998
5,320.0
1,133.3
151.4
3,795.0
10,399.7
(9.2)
10,390.5
550.0
10,940.5
52
NOTES
Note 2.4
Parent Bank numbers.
The Bank’s subordinated loan capital of NOK 1,813.3 million has been issued in foreign currency.
Initial draw
down date
1999
1996
1997
Sum
Maturity
year
2009
2006
Perpetual
Amount
in currency
USD 75.0 mill.
USD 50.0 mill.
USD 100.0 mill.
USD 225.0 mill.
Equivalent in
NOK mill.
604.4
403.0
805.9
1,813.3
Interest
rate
6.93125
6.79000
6.63750
Original
value
589.6
328.2
675.5
1,593.3
The currency loans are converted at midrate USD 8.059 at 31.12.99. The outstanding liabilities in foreign currency bear
a floating interest rate which is regulated every 6th month, and the rates presented are valid at the end of the year.
The currency loans are included in the Bank’s overall net currency position and are therefore continuously hedged against
currency fluctuations.
53
NOTES
Chap. 3
Equity capital
Note 3.1
Specification of changes in equity capital
Parent Bank
Share
NOK million
capital
Fokus Bank ASA 31.12.98
799.6
Transfered to other equity
Implementation of equity method for
associated companies
Implementation of deferred tax benefit
799.6
Devaluation 1999 shares
Sale of shares in Eksportfinans
Allocation of 1999 result
799.6
Premium
fund
309.4
309.4
Parent Bank
NOK million
Fokus Bank Group 31.12.98
Transfered to other equity
Correction of previous years
Implementation of deferred
tax benefit
Devaluation 1999 shares
Allocation of 1999 result
Share
capital
799.6
Legal
reserves
488.6
(488.6)
General
reserves
898.4
(898.4)
Reserve for
valuation
differences
245.5
309.4
0.0
0.0
245.5
0.0
0.0
(123.6)
4.9
126.8
Premium
fund
309.4
Legal
reserves
0.0
General
reserves
130.2
(130.2)
799.6
309.4
0.0
0.0
0.0
799.6
309.4
0.0
0.0
0.0
Reserve for
valuation
differences
Other
Equity
0.0
1,387.0
25.7
741.8
2,154.5
(3.0)
123.6
Total
2,496.0
0.0
2,275.1
271.2
741.8
3,509.0
(3.0)
0.0
4.9
3,510.9
Other
Equity
1,553.2
130.2
1.0
Total
2,792.4
0.0
1.0
829.6
2,514.0
(3.6)
4.9
2,515.3
829.6
3,623.0
(3.6)
4.9
3,624.3
54
NOTES
Note 3.2
Capital adequacy
According to regulations concerning minimum capital requirements in financial institutions, the Parent Bank and the Group
are required to achieve a capital adequacy ratio totalling at least of 8 % of risk-weighted assets.
At 31.12, Fokus Bank had the following capital adequacy:
Parent Bank
1998
1999
800
800
1,695
1,916
108
102
2,387
2,614
838
838
0
102
838
736
676
676
1,514
1,412
3,901
4,026
61
20
3,840
4,006
33,087
34,836
7.21
7.50
11.61
11.50
Group
NOK million
Share capital
Other equity
- Excess pension funds not to be included
Total core capital
Booked subordinated loan capital
- Subordinated loan capital not to be included
Total included subordinated loan capital
Other additional capital
Total additional capital
Total equity and subordinated capital
Deduction
Net equity and subordinated capital
Risk-weighted assets
Core capital ratio
Capital adequacy ratio
1999
800
1,931
102
2,629
838
102
736
676
1,412
4,041
20
4,021
34,753
7.56
11.57
1998
800
2,140
108
2,832
1,212
99
1,113
676
1,789
4,621
64
4,557
34,900
8.11
13.06
Specification of risk-weighted assets:
Parent Bank
1998
1999
29,974
32,261
2,080
1,600
1,033
975
33,087
34,836
Group
NOK million
Assets not included in the trade portfolio
Off-balance sheet items not included in the trade portfolio
Items included in the trade portfolio
Risk-weighted assets
1999
32,107
1,600
1,046
34,753
1998
31,763
2,104
1,033
34,900
Subordinated loan capital is included as additional capital subsequent to the regulations concerning
Parent Bank capital adequacy, with:
Perpetual subordinated loan capital
Timed subordinated loan capital
Total subordinated loan capital
Timed subordinated loan capital
Reductions last 5 years
Included timed subordinated loan capital
Perpetual subordinated loan capital (included in other additional capital)
Included subordinated loan capital
*Total booked subordinated loan capital in the Balance Sheet at 31.12.99: NOK 1,813.3 million.
The difference is due to correction at lower rate.
Perpetual loan in USD is included as other additional capital in the capital adequacy calculation.
In the Group, the share from associated companies is included in core and additional capital.
675.5
838.0
1,513.5 *
838.0
102.0
736.0
675.5
1,411.5
55
NOTES
Specification of difference between core capital and Balance Sheet equity.
Parent Bank
1998
1999
2,387
2,614
3,509
3,511
1,122
897
Group
NOK million
Core Capital
Balance Sheet Equity
Difference
1999
2,629
3,624
995
1998
2,832
3,623
791
The difference is due to the fact that reserve for valuation differences, excess pension funds and other intangible assets
have been deducted from the core capital when calculating the capital adequacy.
Note 3.3
Ownership
Fokus Bank ASA is wholly-owned by DDB Fokus Invest AS.
The share capital at 31.12.99 consists of a total of 72,687,904 shares with nominal value of NOK 11.-.
56
NOTES
Chap. 4
Securities
Note 4.1
Bonds – certificates
The portfolios of bearer bonds and certificates are composed as follows:
Parent Bank
31.12.98
31.12.99
1,476.2
1,473.3
-2.9
1,026.7
50.0
100.0
1,176.7
1,162.9
-13.8
Trade portfolio
NOK million
Bonds quoted on the Stock Exchange
Goverment and government-guaranteed bonds
Municipalities and financial institutions
Other bearer bonds
Bearer bonds at cost
Bearer bonds at market value / booked value
Surplus value bearer bonds
1,140.2
10.0
1,150.2
1,146.4
-3.8
926.6
311.9
1,238.5
1,238.3
-0.2
Certificates quoted on the Stock Exchange
Government and government-guaranteed certificates
Municipalities and financial institutions
Certificates at cost
Market value / booked value certficates
Surplus value certificates
1,149.6
326.6
10.0
10.0
10.0
0.0
10.0
10.0
10.1
0.1
Bank portfolio
Bonds quoted on the Stock Exchange
Other bearer bonds
Bearer bonds at cost
Bearer bonds at market value / booked value
Surplus value bearer bonds
Group
31.12.99
31.12.98
1,026.7
50.0
100.0
1,176.7
1,162.9
-13.8
1,149.6
326.6
1,476.2
1,473.3
-2.9
934.6
311.9
1,246.5
1,246.3
-0.2
1,150.9
10.0
1,160.9
1,157.1
-3.8
10.0
10.0
10.1
0.1
10.0
10.0
10.0
0.0
All bonds and certificates owned by the Group are quoted on the Stock Exchange.
At 31.12.99, the Group has no securities classified as long-term holdings for the purpose of permanent ownership or use.
Nominal value of own bonds is NOK 265.7 million.
Average actual rate for trade portfolio: 5.95.
Average actual rate is calculated as interest income in relation to average annual capital.
Note 4.2
Short-term investment in shares and participations
Shares in other companies and mutual funds recorded in the Balance Sheet as current assets:
Parent Bank
31.12.98
31.12.99
311.3
274.1
(47.6)
117.3
263.7
391.4
263.7
391.4
NOK million
Aquisition cost short-term investments in shares etc.
- Write-down of portfolio
Book value short-term investment in shares etc.
Market value short-term investments in shares etc.
31.12.99
285.4
116.8
402.2
402.2
Group
31.12.98
311.3
(47.6)
263.7
263.7
57
NOTES
Specification of short-term investment in shares and parts
Company name
Number of
Ownership
NOK 1,000
shares/parts
share(%)
Portfolios of commerce
Listed on the Stock Exchange
Adresseavisen ASA
83,854
4.41
Aker Maritime ASA
70,000
0.12
Bergesen d.y. ASA B-aksjer
50,000
0.22
Chr. Bank og Kreditkasse ASA
350,000
0.06
Elkem ASA
60,000
0.12
Fred Olsen Energy
70,000
0.12
Hafslund B-aksjer
150,000
0.32
Merkantildata ASA
100,000
0.08
Narvesen ASA
25,000
0.25
Navia ASA
250,000
1.21
Norsk Hydro ASA
100,000
0.04
Nordic VLSI ASA
70,000
1.28
Nordlandsbanken ASA
244,400
3.57
Nycomed Amersham
100,000
0.05
Orkla ASA
200,000
0.09
Pan Fish ASA
100,000
0.40
Petroleum Geo-service A-aksjer
20,000
0.02
Sagatex ASA
321,000
3.43
SAS Norge ASA B-aksjer
70,000
0.30
Scana Industrier ASA
175,500
0.83
Tandberg ASA
100,000
0.37
Tandberg Television ASA
150,000
0.28
TGS Nopec
147,600
0.61
Vmetro
130,000
0.54
Companies not listed on the Stock Exchange:
Romsdals Fellesbank AS
195,327
9.34
Trondheim Næringsbygg AS
10,441
12.30
Other companies
Total short-term shares owned by Fokus Bank ASA
Parts in equity and money market funds
Fokus Balansert
10,000
Fokus Garanti Vekst Global
3,080
Fokus Garanti Global
2,025
Total held by Fokus Bank ASA
Total shares and parts owned by Fokus Bank ASA
The Group’s short-term investments in shares etc.
In addition, the following shares have been classified as repossessed assets:
Fesil ASA
150,000
1.88
Fireguard Scandinavia A.S 1)
688,838
4.45
Total
Acquisition
cost
Book
value
13,508
6,028
5,746
11,673
8,530
4,709
4,541
8,085
4,608
7,480
31,357
3,171
29,103
4,676
21,704
2,388
2,482
11,153
5,279
4,915
2,414
2,634
10,650
5,491
30,187
4,410
6,850
13,825
11,100
4,095
4,635
9,700
6,125
6,250
33,601
3,465
52,547
4,990
27,600
7,200
2,860
9,630
6,090
3,247
10,500
16,650
12,325
8,450
15,792
19,706
6,813
254,636
48,832
21,404
3,109
369,677
10,000
5,215
4,255
19,470
274,106
285,377
11,499
5,567
4,676
21,742
391,419
402,139
1,265
1
1,266
5,400
0
5,400
58
NOTES
Note 4.3
Associated companies
Business- Ownership
office
in per cent
Company name
Held by Fokus Bank ASA:
Nordenfjeldske
Livsforsikring AS
Trondheim
Meglerhuset Nylander A.S
Trondheim
Fokus regnskap Brekstad AS Ørlandet
Shares in associated companies
Balance
Sheet
Equity at
valuation Additions/
time of Balance
31.12.98 disposals
acquisheet
NOK 1,000
this year
sition goodwill
39.00
40.00
38.70
6,688
2,254
116
9,058
36,782
26,084
36,782
17,386
17,386
Share of
result in
NOK 1,000
2,700
0
0
2,700
Balance
Sheet
valuation
Goodwill
31.12.99
write-off NOK 1,000
145
145
46,025
2,254
116
48,395
Equity
Result this
capital in
year in
NOK 1,000 NOK 1,000
Book
value in
NOK 1,000
29 % of the shares in Nordenfjeldske Livsforsikring AS were purchased 08.12.99.
The company has been classified as an associated company from the same date.
None of the companies are listed on the Stock Exchange.
Note 4.4
Shares in subsidiaries
Consolidated subsidiaries of Fokus Bank ASA
Business-office
Credit institutions
Fokus Finans A.S
Other companies
Danske Securities AS
Central Finans A.S
Eikeveien 3 A.S
Fokus Eiendomsmegling
Telemark A.S
Fokus Forvaltning A.S
Fokus Kredittforsikring A.S
Skårersletta Eiendom A.S
Total
Share
capital in
NOK 1,000
Nominal
Number
value in
of shares NOK 1,000
Ownership
share in
per cent
Trondheim
60,000
60,000
60,000
100.0
71,087
3,125
59,000
Oslo
Stavanger
Stavanger
30,000
58,333
50
60,000
58,333,000
50
60,000
58,333
50
100.0
100.0
100.0
55,087
145,784
2,277
13,113
3,535
2,352
121,800
53,041
0
Skien
Trondheim
Trondheim
Oslo
500
6,000
20,900
50
500
6,000
209,000
50
500
6,000
20,900
50
100.0
100.0
100.0
100.0
1,309
9,863
30,676
4,842
810
3,531
3,302
-2
500
8,200
39,482
0
282,023
Additions/disposals of subsidiaries
The subsidiary Danske Securities AS was purchased at 31.12.99.
Danske Securities is thus not included in the Group’s result for 1999.
Fokus Bank ASA has neither sold nor purchased subsidiaries in 1999.
None of the companies are listed on the Stock Exchange.
59
NOTES
Note 4.5
Long-term investments in shares and parts
Owned by Fokus Bank ASA:
Credit Institutions
Eksportfinans A.S
Share
capital in
NOK 1,000
Number
of shares
Nominal
value in
NOK 1,000
Ownership
share in
per cent
Book
value in
NOK 1,000
1,354,751
12,866
135,093
10.0
203,791
5,325
116
39,000
50
8,737
120
18.7
38.7
39.0
10.0
13.2
40.0
3,157
116 *
46,025 *
0
13,455
2,254 *
57,394
326,192
48,395
Other companies
Europay
28,400
5,325
Fokus Bank Regnskap Brekstad A.S
300
116
Nordenfjeldske Livsforsikring AS
100,000
3,900
Rosenborg Sport A.S
500
50
Trøndelag Vekst A.S
66,000
87,369
Meglerhuset Nylander A.S
300
4
Other companies
Total owned by Fokus Bank ASA
Of which shares in associated companies *) (Cf. Note 4.3)
Note 4.6
Participation in unlimited companies
The following companies have been included in the Accounts on a gross method basis:
Company name
Bomveien 3 ANS
Roby ANS
Total owned by the Group
Ownership
in per cent
50.0
100.0
Share of
current assets
in NOK 1,000
34.4
22.8
57.2
Share of
fixed assets
in NOK 1,000
16,765.4
30,705.6
47,471.0
Share of
liabilities
in NOK 1,000
18,185.8
30,728.4
48,914.2
Profit/loss
included in
Accounts
in NOK 1,000
-138.9
0.0
-138.9
60
NOTES
Chap. 5
Assets
Note 5.1
Changes in fixed assets
Machinery,
fixtures and
NOK million
vehicles
Acquisition cost at 01.01.99
167.9
+ Additions this year
33.4
- Disposals this year
74.8
Acquisition cost at 31.12.99
126.5
+ Book value positiv e revaluations at 01.01.99
- accumulated depreciations and
write-downs at 01.01.99
23.0
- ordinary depreciations this year
35.2
- depreciation on positive revaluations this year
- other depreciation/write-downs this year
0.2
Book value at 31.12.99
68.1
Booked gain sales/disposals
0.6
Booked loss sales/disposals
0.2
Rate for ordinary depreciations
10-30 %
Note 5.2
160.1
7.6
1.6
0.0
384.4
0.3
0.0
2%
Intangible
assets
38.1
13.8
3.7
48.2
6.6
9.0
0.1
32.5
0.0
0.0
20-30 %
Group
Machinery, Bank buildings
fixtures and
and other Intangible
vehicles
real estate
assets
175.6
515.6
38.1
51.7
6.5
13.8
75.7
1.6
3.7
151.6
520.5
48.2
68.9
34.9
40.4
0.2
0.0
761.1
0.0
0.0
10-30 %
168.8
8.3
1.6
0.0
414.7
0.3
0.0
2%
Goodwill
0.0
66.7
0.0
66.7
6.6
9.0
0.1
32.5
0.0
0.0
20-30 %
66.7
10 %
Investments in and sale of fixed assets 1995 - 1999
NOK million
1995
1996
1997
1998
1999
Note 5.3
Parent Bank
Bank buildings
and other
real estate
480.2
6.0
1.3
484.9
68.9
Parent Bank
Machinery,
Bank buildings
fixtures and
and other
vehicles
real estate
Invested
Sold
Invested
Sold
24.3
1.0
3.7
13.2
68.4
11.6
1.0
34.1
24.5
0.7
5.3
50.7
27.2
2.4
0.0
190.4
33.4
0.7
6.0
1.4
Group
Machinery,
fixtures and
vehicles
Invested
Sold
25.9
8.6
69.0
11.6
28.0
1.9
28.3
2.4
34.1
0.9
Bank buildings
and other
real estate
Invested
Sold
11.4
138.1
1.1
34.2
40.2
135.2
0.0
195.0
6.5
1.7
Repossessed assets
Parent Bank
1998
1999
1.9
0.0
0.3
0.0
1.7
1.6
5.7
1.4
9.6
3.0
Group
NOK million
Commercial real estate
Building sites
Residentials
Other assets
Total repossessed assets
1999
0.0
0.0
1.6
1.4
3.0
1998
1.9
0.3
1.7
5.7
9.6
61
NOTES
Note 5.4
Real estate and tenancy agreements
The Group’s real estate portfolio is split into two categories depending on the objective and time perspective
applicable to the usage/realisation of the asset.
The following categories are used:
Own buildings for banking
Staff residences etc.
Bank buildings and other real estate
Building sites
Book value
NOK million
407.6
5.2
412.8
1.0
Gross area
m2
59,026
1,094
60,120
0
Book value
Number per m2 (NOK)
28
6,905
5
4,727
33
4
Utilisation of area (m2)
Utilisation of real estate:
Staff residences etc.
Total
Own use
35,721
0
35,721
Rental
14,926
1,094
16,020
Vacant
8,379
0
8,379
Real estate purchased for banking operations, and where Fokus Bank's main activities in the area are to be run from
these premises, are included in “Own buildings for banking”.
Own buildings are assessed as one portfolio and are recorded at acquisition cost less ordinary depreciations including
revaluations and write-downs.
Tenancy agreements
The Bank has entered into tenancy agreements for properties which to a varying extent is used by the Bank or sub-let.
The net cost of tenancy agreements for properties not used by the bank, is discounted for the time of the agreement at an
interest rate of 7 %.
62
NOTES
Kap. 6
Personnel expenses
Note 6.1
Salaries and general administration expenses
Parent Bank
1998
1999
306.0
300.9
25.8
32.8
72.9
68.4
404.7
402.1
9.2
12.7
52.9
55.4
142.7
134.9
90.8
140.9
295.6
343.9
Group
NOK million
Salary
Pensions
Other personnel expenses
Total personnel expenses
Training
Offices
Rent/operation of EDP
Other administration expenses
Total administration expenses
1999
313.4
32.9
68.5
414.8
12.9
56.1
135.7
151.2
355.9
1998
317.4
26.3
73.9
417.6
9.4
53.6
144.5
100.0
307.5
In the accounting year 1999, the average number of employees was 991 and 1,025 in the Parent Bank and the Group
respectively.
For the Parent Bank, total expenses related to salary, pension commitments and other benefits to the Managing Director,
Members of the Board, and other representatives amount to NOK 9,096,884, of which NOK 1,375,235 is salary and other
benefits to Managing Director Svein Sivertsen.
Fokus Bank ASA has made an agreement with the Managing Director concerning two years guaranteed salary if employment is terminated as a result of specific circumstances. Apart from this, Fokus Bank ASA has not made any obligations
towards the Managing Director or the Chairman of the Board concerning specific compensation if the employment
situation or the assignment is changed or terminated. Furthermore, no special agreements regarding bonuses, options etc.,
exist for these persons. The Managing Director has an agreement concerning retirement at the age of sixty.
Note 6.2
Pensions Parent Bank
Fokus Bank ASA has its own pension fund covering the standard pension commitments. The pension commitments are
based on the number of years of service as well as the wage level at pension age. The pension funds are primarily invested
in shares and bonds.
At 31.12.99, the number of persons included in the company's pension agreement, is:
Working
Retired
1,154
568
In addition, the Bank has pension commitments being financed by the operations. This includes commitments related to
early retirements, supplementary pensions as well as commitments to managers who can retire before ordinary retirement age.
At 31.12.99, the following number of persons was included by the company's pension agreement for pensions financed
by operations:
Working
40
Retired
327
In accordance with the GRS standard for pension costs, a future commitment related to the Contractual Early Retirement
Scheme (CERS) for the financial industry has been calculated in 1999.
In 1998, the CERS was extended to include 62 year olds. All employees are included by the arrangement, and the Bank has
chosen to calculate the cost based on 50 per cent utilisation. The increased commitment as a result of the reduced pension
age is in accordance with the GRS standard for pension costs dealt with as planning change. The Bank can chose between
booking the expense immediately or amortise over the remaining maturity time. The Bank has chosen the latter alternative.
63
NOTES
Pension funds and pension commitments:
Financial conditions:
Discount rate
Wage regulation
Regulation of running pensions
Regulation of National Insurance’s basis amount
Regulation of unrestricted policies
Yield on pension funds
1999
6.0 %
3.0 %
3.0 %
2.0 %
2.0 %
7.0 %
1998
6.0 %
3.0 %
3.0 %
2.0 %
2.0 %
7.0 %
1999
793.5
912.2
16.9
(101.8)
1998
748.5
918.2
61.3
(108.4)
1999
23.2
44.4
60.6
0.4
6.6
1998
20.7
41.9
60.9
0.4
1.3
Pensions financed by operations
NPV of pensions financed by operations
Early retirements etc.
CERS total commitments
- Deferred commitments
CERS commitments over operations
Total booked commitments
1999
101.2
89.7
-40.3
49.4
150.6
1998
117.3
73.0
-34.0
39.0
156.3
The year’s pension expense financed by operations: NOK million
Pension payment financed by operations
Change pension commitments etc *)
The year’s ordinary CERS
The year’s pension expense financed by operations
1999
31.9
(16.1)
10.4
26.2
1998
28.6
(10.6)
6.5
24.5
Pension fund: NOK million
Earned pension commitments
Pension funds
Delayed commitments at (loss)/revenue
Net pension commitments
The year’s pension expenses from the pension fund: NOK million
The year’s pension earned
Interest expenses
Yield on pension funds *)
Paid from operation
The year’s pension expenses
*) Yield on pension funds has been estimated for 1999. The actual yield for 1999 is NOK 84.2 million.
The accumulated difference between estimated (used) and actual yield was NOK 24.7 million at 31.12.99.
64
NOTES
Note 6.3
Loans to Directors, Representatives and employees
At 31.12.99, loans to employees amounted to NOK 529.4 million, of which mortgages amounted to NOK 493.2 million.
The cost of providing preferential rates of interest on loans to employees amounted to NOK 4.9 million in 1999, based on
normal actual annual interest rate of 7.7 %.
Included in the above amounts are representatives, employees, former employees who have a contractual agreement to continue
to receive preferential employee interest rates, as well as retired employees. Preferential rate of interest reduces the overall net
margin of the bank.
Average interest rate to employees was 0.38 per cent above average marginal cost in 1999.
Loans to the Managing Director, top management, Board of Directors, the Supervisory Board and the
Control Committee:
Svein Sivertsen
468,204
Torbjørn Ragnar Skjerve
826,118
Erik Franck
395,877
Terje Svendsen
1,140,408
Johnny Johnsen
477,346
The other members of the Board of Directors, the Supervisory Board or the Control Committee have no loans or
guarantees at 31.12.99.
65
NOTES
Chap. 7
Other notes related to the Profit and Loss Account
Note 7.1
Periodically recorded commissions and fees
At 31.12.1999, NOK 37.2 million in paid not recognised commissions and fees have been recorded.
The amount remains unchanged from 31.12.1998.
Note 7.2
Interest income and interest expenses
Parent Bank
1998
1999
98.4
126.3
2,942.4
3,327.7
135.6
153.1
3,176.4
3,607.1
Interest
Interest
Interest
Interest
238.7
1,213.0
481.2
114.1
44.9
39.1
2,131.0
Interest on debt to credit institutions
Interest on deposits from and debt to customers
Interest on issued securities
Interest on subordinated loan capital
Other interest expenses
Levy to Commerical Bank Guarantee Fund
Interest expenses
233.0
1,319.3
600.0
111.0
195.9
41.3
2,500.5
NOK million
from loans to and receivables from credit institutions
from loans to and receivables from customers
from certificates, bonds and other securities
income
Group
1999
126.3
3,336.9
153.5
3,616.7
1998
98.6
2,948.4
136.2
3,183.2
225.0
1,319.3
600.0
111.0
195.9
41.3
2,492.5
230.4
1,213.0
481.2
114.1
44.9
39.1
2,122.7
66
NOTES
Note 7.3 Other operating income
Parent Bank
1998
1999
27.4
15.7
26.7
31.2
6.1
10.2
60.2
57.1
30.8
31.0
15.5
14.1
39.0
39.5
153.9
163.2
7.3
7.2
4.2
3.9
250.7
258.9
(6.2)
4.1
(59.8)
60.1
(66.0)
64.2
(12.7)
6.2
(104.2)
114.1
(116.9)
120.3
95.8
(103.3)
(17.5)
155.8
78.3
52.5
(38.6)
172.8
21.3
18.4
2.3
1.0
31.4
29.2
55.0
48.6
261.3
473.2
Note 7.4
Group
NOK million
Income from shares and other securities
Income from ownership in associated companies
Income from ownership in subsidiaries
Guarantee commisions
Credit broking
Securities trading and asset management
Payment transactions
Insurance services
Other operations
Total income commissions and fees
Securities trading and asset management
Payment transactions
Total expenses commissions and fees
Net profit(loss) certificates, bonds etc.
Net profit(loss) shares and other securities
Net profit(loss) securities
Net profit(loss) foreign exchange
Net profit(loss) financial derivatives
Net profit(loss) foreign exchange and derivatives
Net gains securities, foreign exchange and derivatives
Operating income real estate
Gain from sale of fixed assets
Total operating income
1999
15.7
31.2
0.0
46.9
31.0
14.1
60.8
163.2
7.2
3.9
280.2
4.1
60.1
64.2
6.2
114.1
120.3
(103.3)
155.8
52.5
172.8
27.0
1.0
29.4
57.4
493.1
1998
28.5
31.5
0.0
60.0
30.8
15.5
62.6
153.9
7.3
4.2
274.3
(6.2)
(59.8)
(66.0)
(12.7)
(104.3)
(117.0)
95.8
(17.5)
78.3
(38.7)
24.5
5.2
52.9
82.6
312.2
Parent Bank
1998
1999
51.6
52.5
1.5
1.4
7.6
8.4
0.2
0.2
93.0
100.6
153.9
163.1
Group
NOK million
Rent
Operating expenses real estate
Maintenance EDP
Loss from sale of fixed assets
Total
1999
48.7
1.4
8.4
0.2
105.4
164.1
In 1999, the Group has paid fees to the external auditor related to the accounting year 1999 amounting
NOK 2,286,000. Of this NOK 420,000 is related to consultancy.
1998
48.4
1.5
7.6
0.2
98.3
156.0
67
NOTES
Kap. 8
Other Balance Sheet and Off Balance Sheet notes
Note 8.1
Time to maturity for main items at 31.12.99
Up to
1 month
From 1-3
months
NOK million
Assets NOK
Cash and receivables on central banks, and loans
that can be refinanced in central banks
0.0
0.0
67.3
123.4
Loans to and receivables from customers
6,707.6 2,366.2
Bonds, certificates and other interest
bearing securities
0.0
308.9
Other assets with maturity time
0.0
0.0
Assets without maturity time
0.0
0.0
Total assets NOK
6,774.9 2,798.5
Liabilities and equity NOK
640.5
50.0
19,489.8 1,860.6
0.0
0.0
Other debt with maturity time
0.0
0.0
Debt without maturity time
0.0
0.0
0.0
0.0
Equity
0.0
0.0
Total liabilities and equity NOK
20,130.3 1,910.6
Assets CURRENCY
Cash and receivables on central banks, and loans
that can be refinanced in central banks
0.0
0.0
Loans to and receivables from credit institutions 124.2
0.0
78.2
28.7
Bonds, certificates and other interest
bearing securities
0.0
0.0
0.0
0.0
0.0
0.0
Total assets CURRENCY
202.4
28.7
Liabilities and equity CURRENCY
2,529.7
192.6
27.5
19.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Equity
0.0
0.0
Total liabilities and equity CURRENCY
2,557.2
211.6
Net liquidity exposure
Total Balance Sheet items
-15,710.2
705.0
Payments (in/out) off balance
financial derivatives
NOK
-1,203.0 -8,652.2
Currency
1,213.2 8,811.2
Net total all items
-15,700.0
864.0
From
3 months
to 1 year
From
1 year
to 5 years
Over
5 years
Without
time
to maturity
Total
0.0
165.6
275.0
0.0
0.0
40.0
0.0
4,732.4 19,722.1
372.9
372.9
0.0
396.3
0.0 33,803.3
1,080.9
0.0
0.0
1,521.5
1,180.9
106.1
0.0
0.0
0.0
0.0
5,953.3 19,828.2
0.0 2,676.8
0.0
0.0
2,598.4 2,598.4
2,971.3 39,847.7
0.0
1,407.4
1,315.0
0.0
0.0
0.0
0.0
2,722.4
0.0
0.0
1,480.2
0.0
0.0
0.0
0.0
1,480.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
690.5
0.0 22,757.8
0.0 2,795.2
0.0
0.0
799.6
799.6
0.0
0.0
3,855.9 3,855.9
4,655.5 30,899.0
0.0
0.0
117.7
0.0
0.0
1,801.8
0.0
0.0
1,503.0
15.0
0.0
556.5
15.0
124.2
4,085.9
0.0
0.0
0.0
117.7
0.0
0.0
0.0
1,801.8
0.0
0.0
0.0
1,503.0
0.0
0.0
120.5
692.0
0.0
0.0
120.5
4,345.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6,025.6
0.0
0.0
0.0
0.0
6,025.6
0.0
0.0
2,005.2
0.0
0.0
1,813.3
0.0
3,818.5
15.6 2,737.9
554.6
601.1
0.0 8,030.8
0.0
0.0
111.2
111.2
0.0 1,813.3
0.0
0.0
681.4 13,294.3
-1,083.2
249.3 17,512.7
-1,673.6
0.0
-35.6
39.2
-1,079.6
-49.8
0.0
66.3
0.0
265.8 17,512.7
0.0 -9,940.6
0.0 10,129.9
-1,673.6
189.3
68
NOTES
Note 8.2
Agreed time for changed interest rate on main items at 31.12.99
Up to
1 month
NOK million
Assets NOK
Cash and receivables from central banks, and
loans that can be refinanced in central banks
0.0
67.3
30,294.6
Bonds, certificates and other
interest bearing securities
72.1
0.0
0.0
Total assets NOK
30,434.0
Liabilities and equity NOK
640.5
19,489.8
0.0
0.0
0.0
0.0
Equity
0.0
Total liabilities and equity NOK
20,130.3
Assets CURRENCY
Cash and receivables from central banks, and
loans that can be refinanced in central banks
0.0
Loans to and receivables from credit institutions 124.2
529.4
Bonds, certificates and other
interest bearing securities
0.0
0.0
0.0
Total assets CURRENCY
653.6
Liabilities and equity CURRENCY
2,529.7
27.5
0.0
0.0
0.0
0.0
Equity
0.0
Total debt and equity CURRENCY
2,557.2
Net interest rate exposure
8,400.1
Off balance sheet financial derivatives
influencing interest rate exposure
NOK
-1,203.0
Currency
1,213.2
Net total all items
8,410.3
Information regarding interest rate risk sensitivity at
Effects on the profit and loss account from an
interest rate increase of 1 %
Trade
Profit and Loss effect of 1 % interest rate increase -1,809.6
From 1-3
months
From
3 months
to 1 year
From
1 year
to 5 years
Over
5 years
Without
interest rate
exposure
0.0
123.4
993.9
0.0
165.6
401.8
0.0
40.0
2,076.0
0.0
0.0
37.0
372.9
372.9
0.0
396.3
0.0 33,803.3
771.2
0.0
0.0
1,888.5
1,833.5
0.0
0.0
2,400.9
0.0
0.0
0.0
2,116.0
0.0
0.0
0.0
37.0
0.0 2,676.8
0.0
0.0
2,598.4 2,598.4
2,971.3 39,847.7
50.0
1,860.6
830.0
0.0
0.0
0.0
0.0
2,740.6
0.0
1,407.4
1,815.0
0.0
0.0
0.0
0.0
3,222.4
0.0
0.0
150.2
0.0
0.0
0.0
0.0
150.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
690.5
0.0 22,757.8
0.0 2,795.2
0.0
0.0
799.6
799.6
0.0
0.0
3,855.9 3,855.9
4,655.5 30,899.0
0.0
0.0
2,294.1
0.0
0.0
705.9
0.0
0.0
0.0
0.0
0.0
0.0
15.0
0.0
556.5
15.0
124.2
4,085.9
0.0
0.0
0.0
2,294.1
0.0
0.0
0.0
705.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
120.5
692.0
0.0
0.0
120.5
4,345.6
192.6
19.0
7,884.0
0.0
0.0
604.4
0.0
8,700.0
-7,258.0
0.0
0.0
146.8
0.0
0.0
1,208.9
0.0
1,355.7
-1,471.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1,965.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
37.0
15.6 2,737.9
554.6
601.1
0.0 8,030.8
0.0
0.0
111.2
111.2
0.0 1,813.3
0.0
0.0
681.4 13,294.3
-1,673.6
0.0
-8,652.2
8,811.2
-7,099.0
year-end
1,289.4
39.2
-142.7
1,245.2
66.3
3,277.3
0.0
0.0
37.0
0.0 -7,320.6
0.0 10,129.9
-1,673.6 2,809.3
Total
Bank
Total
-14,101.5 -15,911.1
The figures show effects on the Profit and Loss Account considering an interest rate increase 0,81 % influencing all net-positions in all
foreign currencies.
69
NOTES
Note 8.3
Taxes for the parent company
There exist offsetting differences between financial and tax values at 31 Dec. 1999. The deferred tax liabilities/deferred tax
assets are calculated on basis of these differences.
01.01-31.12
Current tax
1999
1998
Profit before taxes and extraordinary items
452.9
341.3
Profit before taxes on extraordinary items
0.0
-32.5
Permanent differences
3.6
4.1
Contributions from group companies
4.4
19.1
Changes in temporary differences
39.4
267.3
Income from non-consolidated investees
-31.1
0.0
Differences on profit/loss from financial investments
-172.2
63.7
Loss carry forward
-297.0
-663.0
Basis for current tax
0.0
0.0
Tax 28 %
0.0
0.0
Compensation for taxes on dividends received
Current tax
0.0
0.0
Tax expense for the year
Current tax
Deferred tax - gross changes
Deferred tax - due to change in accounting principles recorded against equity
Total expense for the year
Current taxes payable:
Current tax on net income
Taxes payable on contributions from group companies
Total current taxes payables
Spesification on the basis for deferred taxes:
Offsetting differences:
Pension funds
Fixed assets
Profit-/ loss-accounts
Liabilities
Pension liabilities
Offsetting differences of general partnerships
Changes in market value of current financial assets
Loss carry forward
Total
Deferred tax liability/ deferred tax asset
Unused compensation for taxes on dividends received
Total deferred tax asset
Differences that are not off set:
"Write-up" of fixed assets
Total
Deferred tax liability/ deferred tax asset
0.0
111.5
0,0
111,5
0.0
74.7
0,0
74,7
31.12.1999
01.01.1999
0,0
0,0
0,0
0,0
0,0
0,0
101,8
-513,0
-1,072,0
-54,1
-150,6
48,8
83,0
-422,0
-1,978,1
-553,9
-95,2
-649,1
108,4
-470,0
-1,072,0
-61,0
-155,7
48,7
-83,3
-719,0
-2,403,9
-673,1
-88,0
-761,1
67,3
67,3
18,8
68,9
68,9
19,3
Tax loss carry forwards expire in 2004. Note 9.1 Contingencies give some more information regarding this matter.
Deferred tax asset in the consolidated financial statement:
Some of the subsidiaries have negative temporary differences. Net deferred tax asset at 31 Dec.1999 are booked with
totally NOK 85 mill.
70
NOTES
Note 8.4.
Guarantees / pledged assets
Parent Bank
1998
1999
1,619
1,558
704
714
1,790
819
7
6
4
10
4,124
3,107
Note 8.5
1,830
1,930
25
1,805
17.3
0.2
0
1,930
17.0
0.2
Group
NOK million
Payment guarantees
Contract guarantees
Loan guarantees
Guarantees for taxes due etc.
Other guarantee liabilities
Guarantee liabilities
Pledged assets
Government bonds and certificates with a total book value of:
Pledged as security for:
The Group’s property and stockbroking activities amounting to:
Group daily lending from Norges Bank in total:
Total book value of bank buildings and other real estate:
Pledged as securities for loans amounting to:
1999
1,558
714
819
6
10
3,107
1998
1,619
704
1,790
7
4
4,124
1,930
1,830
0
1,930
17.0
0.2
25
1,805
17.3
0.2
Subsidiaries
The Parent Bank’s Profit and Loss Account includes the following items relating to subsidiaries:
NOK million
Loans and other receivables
Certificates, bonds and other interest bearing
securites with fixed return
Other receivables
Total loans and receivables
Deposits and other liabilities
Deposits from and debt to customers
Total deposits and other liabilities
Guarantees
Note 8.6
1999
1998
200.3
0.0
156.6
0.0
28.5
4.4
233.2
30.9
20.7
208.2
0.0
116.0
0.0
0.0
116.0
0.0
0.1
131.0
0.0
0.0
131.1
0.0
Provisions for commitments and costs
Parent Bank
1998
1999
155.7
150.6
0.0
0.0
80.3
73.3
236.0
223.9
Group
NOK million
Pension commitments etc.
General provisions for guarantee responsibilities
Other provisions for commitments and costs
Total provisions for commitments and costs
1999
150.6
5.3
74.3
230.2
1998
155.7
5.2
80.4
241.3
71
NOTES
Note 8.7
Financial derivatives and financial risk management
The information in this note applies to Fokus Bank ASA only. The other consolidated group companies do not perform
any such business.
Financial derivatives is the blanket term describing agreements where the value is dependent on one or more financial
products. Fokus Bank enters into agreements for determining future rates of exchange and interest rate conditions both as
a service to customers and from a commercial perspective.
Hedging contracts
Currency derivatives and interest rate derivatives are used actively to hedge Balance Sheet items and thus reduce exchange
and interest rate risk. Hedging contracts are immediately taken out of the Bank’s trading portfolio at time of entering, but
are reported as a part of the Bank’s total exchange and interest rate positions. All other financial derivatives are termed as
trading contracts.
At 31.12.99, the Bank had the following outstanding financial derivatives:
NOK 1,000
Currency derivatives
Currency term contracts
Purchased currency options
Sold currency options
Interest rate and currency swaps
Interest rate derivatives
FRA
Futures
Interest rate swaps
Purchased interest rate options
Sold interest rate options
Nominal values 1999
Hedging
Trade
Acutal value 1999
Hedging
Trade
1,254,676
16,165,659
72,788
72,788
-
-71,163
161,710
760
-989
-
7,365,141
155,000
330,000
13,850,000
1,703,663
592,538
592,538
-5,895
5,082
-10,820
281
437
6,036
-6,036
Comments
Internal transactions have not been included. Only one part of the currency related agreements have been included, that is
the part the Bank is to receive.
The nominal value is calculated from the contractual amount being used as the bases for the interest rate calculation or the
bases for a possible future currency exchange.
The contractual amounts in foreign currencies have been re-calculated in NOK based on the year-end exchange rates.
Credit and market risk
The Bank’s exposure in currency and interest rate instruments is credit exposed. The major transactions are mainly
carried out with Den Danske Bank. Trading in the instruments are evaluated by the Bank’s ordinary credit
committees. The individual counterparties are evaluated and limits are established for the credit risk each naturally
can undertake for these kinds of instruments. The instruments that each can utilise are specified within the limits.
The products weight differently within the limits subject to the credit risk inherent in each product. The Bank’s
foreign exchange system is updated with the customers’ utilisation of single products as well as groups of products
within the established limits.
The assigned limits are surveyed in order to avoid limit overdraft.
72
NOTES
Control of credit authorisation is maintained by regular reporting between the Foreign Exchange Department and the
credit committees, as regards limit utilisation and maintaining the limits.
Contractual set-off has been arranged with other banks. For other customers, set-off agreements are sought
established, whilst this type of business is also included by established collatteral.
At 31. 12 1999, the Bank’s credit equivalet values amounted to:
NOK 1,000
Currency derivatives
Currency term contracts
Currency options
Interest rate and currency swaps
Interest rate derivatives
FRA
Futures
Interest rate swaps
Interest rate options
Total
Credit equivalent value 1999
Hedging
Trade
Total
62,734
414,303
1,488
-
414,303
1,488
62,734
91,305
5,857
159,896
15,138
20,830
8,232
459,991
15,138
112,135
14,089
619,887
The credit equivalent value is calculated as the total risk related to contracts which, according to the current market
value, will give the bank a gain and the probability of further gain follows the future development of market values.
The contractual amounts in foreign currency have been recalculated to NOK at 31.12.99.
Market risk is limited by position limits and continuos reporting and monitoring of foreign exchange and interest
rate positions. Position limits are defined at section and department levels based on overall limits established by the
Bank’s Board of Directors and administration. Foreign exchange exposure is largely based on the recommendations
and limits laid down by Norges Bank. The limits for interest rate positions have been established at a level which
reduces risk while at the same time allowing a reasonable level of daily business to be conducted. All interest rate
limits are based on sensitivity limits distributed on gap. The Capital Markets department conducts ordinary
monitoring of trading activities. In addition, the settlements department carries out an independent monitoring/
supervision of position limits. Positions in equity instruments are controlled by position limits that are followed up
by the performing department and the settlements department. The Bank’s liquidity risk is controlled by guidelines
for the composition of the Bank’s funding. The guidelines are followed up daily by the head of the department and
through monthly reporting to the Bank’s management.
Foreign exchange rate sensitivity at year-end
The result effects of negative foreign exchange rate developments
All currencies
1.0 % foreign exchange rate change
Trade
3,902
39
Bank
0
0
Total
3,902
39
The figures show the result effect if the foreign exchange rate development for all net positions per currency is
negative. The total of all absolute values per currency is used to calculate the result effect.
Lending commitments
The Bank has committed itself to future transactions, which may result in the Bank taking on a credit exposure.
At 31.12.99, these commitments amounted to NOK 172.5 million in addition to the amounts presented in the
Bank’s Balance Sheet.
73
NOTES
Kap. 9
Other
Note 9.1
Contingencies
The Bank is, as a consequence of the ordinary operation, involved in legal disputes and procedures concerning disputed
claims, including claims for damages directed at the Bank. The claims have been assessed in accordance with Norwegian
Accounting standard concerning contingencies. The assessment concludes that it is not likely that the advanced claims will
lead to any substantial compensations. Hence, no specific provision concerning such payments has been made in the
accounts.
In 1991, the Commercial Bank Guarantee Fund injected equity capital in the Bank as preference capital amounting to
NOK 2,150 million. The preference capital was later written down to zero against uncovered losses. The tax authorities
have given the Bank notice of changed taxation for the period 1992-1994. The Bank has objected the notice from the tax
authorities, which claims that the loss carried forward is to be reduced with an amount equalling the preference capital.
Fokus Bank ASA has taken legal action against the Government represented by Sør-Trøndelag Tax Office, following
the Sør-Trøndelag County Tax Committee overruling the decision in the Trondheim Tax Committee, the latter
committee supporting the Bank’s view. The case in Trondheim has been postponed awating final ruling in similar
cases against DnB and CBK.
Based on the Accounting Practice’s recommendation regarding contingencies, the Bank has decided not to allocate funds
to taxes. Assuming that the Bank’s appeal is successful, the tax loss carried forward will amount to approximately NOK
422 million at 31.12.99. Should the Bank loose the case, the Bank has a tax commitment of NOK 28.2 million at the end
of 1999.
A further NOK 250 million of the loss carried forward may be annulled as a result of matters relating to an unlimited
company (ANS) with investments in real estate. The Bank has deducted a loss of NOK 250 million as a result of its
involvement. At this date, the tax authorities have not given any formal notice of changed taxation, but the Bank has
been asked to produce documentation concerning the matter.
An annulment of the loss carried forward resulting from the matters highlighted above, means that the Bank is in a
tax position.
74
NOTES
Note 9.2
Cash flow statement
Parent Bank
1998
Group
1999
3,120
3,610
2,077
(2,501)
384
256
953
(898)
85
55
NOK million
Interest income and credit commissions received
Interest expenses
Other operating income received
Other operating expenses paid
Recoveries from previously made loan loss provisions
1998
3,620
3,127
(2,493)
2,069
305
435
(924)
979
55
85
0
0
0
0
559
522
Net operating cash flow
562
599
(362)
143
Reduction/(increase) in loans to/deposits in credit institutions
112
(360)
(2,378)
(3,025)
(3,019)
(2,392)
47
52
(87)
36
(422)
1,363
1,363
(422)
(873)
534
549
(899)
0
(1,481)
(1,530)
0
(719)
14
(6,238)
(919)
(27)
39
243
405
216
365
4,900
(115)
49
103
682
(3)
5,631
(14)
169
(542)
Tax paid
1999
Reduction/(increase) in lending
Reduction/(increase) in other receivables
Increase/(reduction) in loans and deposits from credit institutions
Increase/(reduction) in deposits from customers
Increase/(reduction) in certificates liability
Increase/(reduction) in other liabilities
Net cash flow from ordinary financial activities
Investments in fixed assets
Sale of fixed assets
Net cash flow from investments in fixed assets
Increase/(reduction) in bonds issued
Increase/(reduction) in subordinated loan capital
122
(706)
(960)
(6,224)
41
(28)
425
196
385
168
(115)
4 900
103
49
(4)
682
Net cash flow from financing
(15)
5,631
(46)
Net change in cash and short-term investments
(29)
174
463
(Reduction)/increase in cash
463
(542)
Added share capital/preference capital
(296)
(194)
Dividend paid for last year
(194)
(296)
669
(223)
Net purchase/(sale) of short-term investments in securities
(241)
664
(169)
46
29
(174)
Total change in cash and change in short-term investments
75
CONTROL
COMMITTEE’S
STATEMENT
AND
AUDIT
REPORT
To the Supervisory Board and Annual General Meeting of Fokus Bank ASA
The opinion of the Board of Directors, as it is expressed in the Board of Directors’ Report and the Annual Financial
Statements presented, gives, in the opinion of the Committee, a fair representation of the financial position of both the Bank
and the Group.
The Control Committee, referring to the Control Committee’s report for 1998 and the audit report from KPMG AS
dated March 10, 1999, recommends the Supervisory Board to propose that the Annual General Meeting approves the Profit
and Loss Account and Balance Sheet of the Bank and the Group as presented by the Board of Directors.
Trondheim, March 30, 2000
Christen Mellbye Gjesdahl
Ole Hovland
Per Fr. Andersen
Auditor’s report for 1999
Respective Responsibilities of Directors and Auditors
We have audited the annual financial statements of the Fokus Bank ASA as of 31 December 1999, showing a profit of NOK
341.4 mill. for the parent company and a profit of NOK 345.8 for the group. We have also audited the information in the
Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The financial statements comprise the balance sheet, the statements of income and cash flows, the
accompanying notes and the group accounts. These financial statements are the responsibility of the Company’s Board of
Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on the other
information according to the requirements of the Norwegian Act on Auditing and Auditors.
Basis of Opinion
We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and good auditing practice in
Norway. Good auditing practice require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent
required by law and good auditing practice an audit also comprises a review of the management of the Company's financial
affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion,
• the financial statements are prepared in accordance with the law and regulations and present the financial position of the
Company and of the Group as of December 31, 1999, and the results of its operations and its cash flows for the year then
ended, in accordance with good accounting practice in Norway
• the company's management has fulfilled its duty to produce a proper and clearly set out registration and documentation of
accounting information in accordance with the law and good accounting practice
• the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and
the proposal for the allocation of the profit are consistent with the financial statements and comply with the law and
regulations.
Trondheim, March 10, 2000
KPMG AS
Hallvard Strømme
State Authorised Public Accountant
76
Directors
and
Board of Directors
Petter Straarup, chairman
Jakob Brogaard, deputy chairman
Torbjørn Skjerve
Mette Cecilie Greve
Anton Jenssen jr.
Jan Henry T. Olsen
Steinar Sivertsen
Svein Sivertsen
Jo Morten Aunet
Alternate Members
København
København
Steinkjer
Bergen
Trondheim
Tromsø
Oslo
Trondheim
Namsos
Alternate Members
Bjørn Arnestad
Olav Egge Syre
Terje Svendsen
Margunn Kleveland
Per Kristian Hanssen
Skien
Nærbø
Trondheim
Oslo
Stjørdal
The Supervisory Board
Oddbjørn Nordset, chairman
Jarle Benum, deputy chairman
Edgar Ingebrigtsen
Harald Ellefsen
Aase Gravås Ingimundar
Stig Fische
Ole Hovland
Hans Olav Torsen
Hans Petter Wist
Thoralf Willumsen
Knut Haukaas
Margaret E. Hystad
Rakel Sand
Rønnaug Tunheim
Folke Hermansen
Hans Eirik Kåsa
Anne Guri Kåsene
Asbjørn Bjørnstad
Einar Enger
Christen Mellbye Gjesdahl
Jørn Holene
Ole Wæhre
representatives
Verdal
Verdal
Gjesvær
Trondheim
Steinkjer
Trondheim
Trondheim
Trondheim
Trondheim
Tromsø
Molde
Kopervik
Sandnes
Nærbø
Stavanger
Skien
Bø
Gjøvik
Oslo
Oslo
Oslo
Oslo
Ketil Arnesen
Kirsten Indgjerd Værdal
Lars Erik Amdam
Per Fr. Anderssen
Rigmor Austgulen
Siri Fristad Mathisen
Anne Cathrine Menne
Joralf Grøseth
Erik Ohr
Inge Bungum
Magne Ahlin
Sigmund Lundal
Lars Åge Myhre
Leif Hestad
Susann Kolbjørnsen
Trygve Middelthon
Gabriel Joa
Leif Åge Eilertsen
Knut Hoff
Turid Jødahl
Dagfinn Sundsbø
Flemming Devor
Tromsø
Sakshaug
Trondheim
Trondheim
Trondheim
Trondheim
Trondheim
Orkanger
Kristiansund
Førde
Slinde
Førdesfjorden
Sagvåg
Kolbeinsvik
Bergen
Forus
Sola
Porsgrunn
Oslo
Oslo
Oslo
Oslo
Appointed by the Employees
Region Bank/Unit
Bernt Malvik
Roy Nesset
Karin Riksheim
Bjarne Nerland
Kjell Gunnar Lilleøren
Margun Kleveland
Head-office
Forretningsbanken
Head-office
NordVestbanken
Vestlandsbanken
Bøndernes Bank
Alternate Members
Liv Ulriksen
Nils H. Brørs
Ivar Nøvik
Sverre Salomonsen
Tromsbanken
Sunnhordlandsbanken
Main Control Committee
Christen Mellbye Gjesdahl, chairman
Ole Hovland
Per Fr. Anderssen
Oslo
Trondheim
Trondheim
Alternate Members
Hans Petter Wist
Trondheim
77
ADDRESSES
Head Office Trondheim
Postal address: 7466 TRONDHEIM
Visiting address: Vestre Rosten 77
Telephone: 47 72 88 20 11
Telefax: 47 72 88 20 61
Home page: http://fokus.no
Fokus Customer Service
Telephone: 47 810 00 900
Telefax: 47 810 00 901
E-mail: [email protected]
Fokus Finans AS
Jarl Erik Riise
Managing Director
Telephone: 47 72 88 21 84
Telefax: 47 72 88 85 90
Fokus Forvaltning AS
Stein Jodal
Managing Director
Telephone: 47 72 88 34 19
Telefax: 47 72 88 34 01
International Department
Vestre Rosten 77,
N-7466 TRONDHEIM
Telephone: 47-72 88 22 11
Telefax: 47-72 88 26 90
SWIFT: FOKBNO 22
Telex: 55050 FOKUS N
International Relations
Steinar Robertsen
General Manager
Head of International Department
Telephone: 47 72 88 22 40
Leif Nevermo
Assistant General Manager
Telephone: 47 72 88 22 84
International Payment Centre
Leif Nevermo
Assistant General Manager
International Payments
Telephone: 47 72 88 22 84
Tove Follan
International Payments
Telephone: 47 72 88 22 52
Torodd Antonsen
Letters of Credit
Telephone: 47 72 88 22 78
Mari Charlott Skaugstad Midtsian
Collections
Telephone: 47 72 88 22 57
Maria Reguilon Aune
International Finance
Telephone: 47 72 88 22 15
Fokus Capital Markets
Vestre Rosten 77,
N-7466 TRONDHEIM
Telephone: 47 72 88 20 11
Telefax: 47 72 88 22 90
SWIFT: FOKBNO22
Telex: 55039
Home page: http://fokus.no
Senior Management
Jo Temre, Director
Head of Fokus Capital Markets
Telephone: 47 72 88 26 78
Treasury
Rolf E. Geving
Telephone: 47 72 88 22 96
Telefax: 47 72 88 22 90
Settlements
Kjetil Malvik, Head of Settlements
Telephone: 47 72 88 22 70
Telefax: 47 72 88 21 55
Trading
Odd Ståle Nerland,
Head of Trading
Telephone: 47 72 88 25 52
Telefax: 47 72 88 22 90
Reuter dealing: FORR
Reuter Monitor: FOBE, FOBR-T
Telerate: 3325/6
Fixed income/FX
Roar Bakken,
Chief Dealer
Telephone: 47 72 88 25 54
Telefax: 47 72 88 22 90
Equities
Jomar Kokaas,
Chief Dealer
Telephone: 47 72 88 26 68
Telefax: 47 72 88 26 60
Return to: Fokus Bank
N-7466 Trondheim
Norway
TRB / Adresseavisen Offset. Photo: Glenn Rókeberg, Tiofoto, Tony Stone, Image Bank
English

A regionally based commercial bank with strenght

Transcription

Similar documents

HNSA thanks Ed Zajkowski for his generous loan of the original

Teambuilding Aktiv Fritid - Aktiv Fritid

special auto, bike, boat and RV rates

art snorkelling

MicroCity Loan Program - Greater Cincinnati Microenterprise Initiative

media information 2016

Mortgage Services

EQUITY - RBFCU

Powerone FCU News - Power One Federal Credit Union

Newsletter 01-15.indd