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SpareBank 1 Nord-Norge

        Preliminary annual report
        and accounts 2010




    1
1
SpareBank 1 Nord-Norge Group




                               Headoffice:           Tromsø

                               Organization:         5 regions
                               Regional branches:    Hammerfest
                                                     Tromsø
                                                     Harstad
                                                     Bodø
                                                     Mo i Rana

                               Local branches:       76
                               Number of man-years
                               Group:                788




2
Organisation of the financial services group
                                                  SpareBank 1 Nord-Norge
                                                   Financial Services Group




                                                                              SpareBank 1 Gruppen AS
                                                                               Financial Services Group
                                                                                  Equity stake 19,5 %



                        SpareBank 1 Nord-Norge                                SpareBank 1 Utvikling DA
                              Invest ASA                                        Systems development
                           Investment company                                   Equity stake 17.74 %
                            Equity stake 100 %



      - Tromsø
                          SpareBank 1 Finans                                      Bank 1 Oslo AS
                            Leasing/factoring                                           Bank
      - Bodø               Equity stake 100 %                                    Equity stake 19.5 %


      - Tromsø             EiendomsMegler 1
                                                                          SpareBank 1 Boligkreditt AS
      - Bodø                 Nord-Norge AS
                                                                               Covered Bonds Company
                          Real estate brokerage
      - Alta                                                                     Equity stake 15.74 %
                           Equity stake 100 %
      - Hammerfest
      - Kirkenes
                       North-West 1 Alliance Bank                       SpareBank 1 Næringskreditt AS
      - Mo i Rana                                                                     Financing
                                 Bank
      - Harstad             Equity stake 75 %
                                                                                 Commercial property
                                                                                 Equity stake 23.5 %
      - Sandnessjøen
      - Finnsnes
                       SpareBank 1 Nord-Norge
                                                                                   BN Bank ASA
                           Forvaltning ASA                                              Bank
                            Asset Management                                     Equity stake 23.5 %
                            Equity stake 100 %




3
North Norway: Status and
    possiblities




4
North Norway is doing well
 • North Norwegian industry is less
   hit by the economic downturn
   due to:
       – Resource industries like fisheries,
         minerals and energy have
         maintained their activity and
         export
       – Positive development in tourism,
         more foreign visitors
       – Possible turning point in
         construction and building
       – A substantial part of the region's
         production and sale is to the
         public sector
 • Large public sector has a
   stabilizing effect on the economy               Northern Norway
 • Continued low unemployment                  3 counties, 88 municipalities
   rate; 2.3 % unemployment per                    465,600 inhabitants
   January 2011


 5
5
North Norway; resource base for new growth
    • Marine resources
       • All important wild fish stocks are sustainable
       • Substantial unexploited potential for fish farming
       • New potential within marine bioprospecting


    • Energy resources
       • Substantial potential for wind power (renewable)
       • Substantial potential for small-scale hydropower (renewable)
       • Substantial potential for discoveries of oil/gas in the Barents Sea and
         in the northern part of the Norwegian Sea


    • Minerals
       • Significant quantities of both known and unknown deposits of
         commercially exploitable minerals ; iron, olivine, quartz, copper,
         gold, nepheline, etc.


    • Culture and adventures
       • Coastal culture (the fisheries with its stories)
       • Native population (vibrant reindeer herding industry)


6
North Norway; resource base for new growth
    – Nature
        •   Huge untouched areas
        •   Mountains and fjords
        •   The midnight sun
        •   The Northern Light (Autora
            Borealis)

    – Climate and environment
        • Arctic climate
        • Research arena

    – Borderland
        • Where the west meets the east
        • Open border, simple
          procedures

    – Geography
        • Northern coastal route shortens
          the distance Europe/the East
          with one third


7
SpareBank 1 Nord-Norge 2010 – Highlights
    • Very good result: Profit before tax: NOK 1,002 million. Return on
      equity 15.3 %
    • Higher market share – retail market lending
    • Significant growth in deposits of 12.9 per cent. Good deposit-to-loan
      ratio: 80.3 %.
    • Loan losses reduced by half
    • Higher level of activity – more customer meetings
    • High customer acquisition rate
    • Several large new public sector customers acquired
    • Competence boost – stronger position as an adviser bank
    • The Bank's strategy of beeing acashless bank in 2012 is being
      implemented
    • Banking operations in Northwest Russia started in September 2010



8
Financial goals: New goals for group's capital
    adequacy ratio
     • Core capital ratio:   11 per cent or higher

     • SpareBank 1 Nord-Norge aims to emerge as an undisputedly solid
       bank.

     • The capital adequacy goal is based on the group's internal capital
       adequacy assessment process (ICAAP). The capital goal is
       expressed based on the current statutory regulation of capital
       adequacy.

     • The group's capital adequacy in a projected crisis scenario must
       have adequate buffers so that the core capital adequacy does not
       fall below 8 per cent.

     Adaptation to the goal of a capital adequacy ratio of 11 per cent will
     take place over time. With the expected profit performance the
     group aims to achieve this goal by the end of 2013.


9
Capital adequacy ratio - Group
       Parent bank                                                                                  Group
                                      (Amounts in NOK million)

         31.12.08 31.12.09 31.12.10                                             31.12.10 31.12.09 31.12.08

            3 466    4 030    4 351 Core capital                                   5 334    4 846    4 167
              488      831      549 Supplementary capital                            515      929      551
            3 954    4 861    4 900 Equity and related capital resources           5 849    5 775    4 718


                                    Minimum requirements subordinated capital, Basel I I
            1 619    1 818    1 954 Total credit risk IRB                       1 840    1 762       1 619


             553      487       607 Credit risk standardised approach              1 492    1 362    1 328
              43       55       130 Debt risk                                       126        50      43
              45       41        19 Equity risk                                       46       59      55
               0        0        17 Currency risk                                     17        0       0
             236      214       242 Operational risk                                284       227     283
             457        0         0 Transitional arrangements                       226       257     354
             - 88     - 69      -71 Deductions                                     - 114     - 98    - 107
            2 865    2 546    2 898 Minimum requirements subordinated capital      3 917    3 619    3 575


          11.04 % 15.27 % 13.53 % Capital adequacy ratio                        11.95 % 12.76 % 10.56 %
          9.68 % 12.66 % 12.01 % Core capital ratio                             10.89 % 10.71 %     9.32 %
          1.36 %    2.61 %   1.52 % Supplementary capital ratio                  1.05 %    2.05 %   1.23 %




1010
Financial targets


       • Capital adequacy ratio         • Effectiveness
          – Core-capital coverage:         – The targeted cost ratio is
            11 % or higher                   maximum 50% of income and
                                             shall be comparable to the
                                             level of competing banks in
                                             Norway
       • Profitability
          – ROE shall be comparable     • Top-line growth
            to the performance of
            competing banks in             – The growth in interest
            Norway. The targeted             contribution and provisions is
            after-tax return is              targeted to be 2 percentage
            minimum 6 percentage             points above the growth in
            points above the yield on        operating costs
            long-term government
            bonds




1111
Profit and loss account - Group
       (Amounts in NOK million)                         31.12.10 31.12.09

       Net interest income                                 1 129    1 173

       Net fee-, commision and other operating income
                                                            513      462

       Net income from financial investments
                                                            404      524
       Total net income                                    2 046    2 159
       Total costs                                          957      972
       Result before losses and write-downs
                                                           1 089    1 187

       Net losses and write-downs                            87      185
                                                                             ROE
       Result before tax                                   1 002    1 002   15.3 %
       Tax                                                  186      143
       Minority interests                                     0        1
       Result for the period                                816      858



1212
Quarterly Summary – Profit and loss account figures
        (Amounts in NOK million)
                                      4Q10     3Q10   2Q10    1Q10    4Q09
       Net interest income             285      291    281     272     298
       Net fee-, commision and
       other operating income           128     131     133     121    124
       Net income from financial
       investments                      148      76     104      76    229
       Total net income                 561     498     518     469    651
       Total costs                      276     237     256     188    276
       Result before losses and
       write-downs                      285     261     262     281    375

       Net losses and write-downs
                                         43       1      22      21     44

       Result before tax                242     260     240     260    331


       Return on equity capital     15.33 % 15.56 % 15.57 % 15.90 % 26.25 %
       Cost/income                  49.20 % 47.59 % 49.42 % 40.09 % 42.40 %



1313
Group companies

       Result before tax

                                                31.12.10   31.12.09
       SpareBank 1 Finans Nord-Norge AS          66 874     80 349
       SpareBank 1 Factoring AS                       0        885
       SpareBank 1 Nord-Norge Invest AS           6 985    -67 464
       Eiendomsdrift AS                               0      2 881
       EiendomsMegler 1 Nord-Norge AS             5 286      5 286
       SpareBank 1 Nord-Norge Forvaltning ASA     4 289      2 928
       North-West 1 Alliance Bank                -1 350          0
       Total                                     82 084     24 865




1414
Core banking activities


   (Amounts in NOK million)

                                    31.12.10   31.12.09   Change

  Earnings before losses                685        663        22
  Net losses                             87        185       -98
  A non-recurring effect of
  recognising income from reduced
  pension commitments                                         60
                                         60          0
  Core banking activities after
                                        538        478        60
  losses




1515
Results – Group


       Compared to 2009, the reasons for the change in the pre-tax result are as
       follows:
       • Reduction in net interest income                           -   NOK   44 mill.
       • Increase in net commission income                          + NOK     67 mill.
       • Reduction in income from financial investments             -   NOK 120 mill.
       • Reduction in other (non-interest) income                   -   NOK   16 mill.
       • Reduction in costs                                         + NOK     15 mill.
       • Reduction in net losses                                    + NOK     98 mill.
       Total                                                        + NOK      0 mill.




1616
Very good underlying banking operations -
   (excl. income from financial investments)
       Group


       (Amounts in NOK million)
                                    4Q10   3Q10      2Q10   1Q10   4Q09


       Net interest income           285       291    281    272    298
       Net fee- and commission
       income                        125       128    132    120    121
       Other operating income          3        3       1      1      3
       Total costs                   276       237    256    188    276
       Income, core banking          137       185    158    205    146

       Net losses and write-downs     43        1      22     21     44

       Income, core banking after
       losses and write-downs         94       184    136    184    102




1717
Net interest income - Group

                                                                                                  4.00 %
       350
       300
                                                                                                  3.00 %
       250
       200
                                                                                                  2.00 %
       150
       100                                                                                        1.00 %
       50
         0                                                                                        0.00 %
                4Q08      1Q09   2Q09     3Q09     4Q09      1Q10      2Q10     3Q10     4Q10

                              NOK Million                           - Boligkreditt
                              Perc.of aver.tot.ass.                 Perc. incl. Boligkreditt

                                4Q08     1Q09     2Q09      3Q09      4Q09      1Q10     2Q10     3Q10   4Q10
   NOK Million                   349      302      279       294       298       272      281      291    285
   - Boligkreditt                  7       12       11        17        26        27       24       19      19
   Perc.of aver.tot.ass.      2.21 %   1.87 %   1.70 %    1.77 %    1.85 %    1.70 %   1.73 %   1.74 % 1.66 %
   Perc. incl. Boligkreditt   2.07 %   1.79 %   1.61 %    1.67 %    1.74 %    1.59 %   1.58 %   1.56 % 1.49 %




1818
Lending, Parent bank – corporate market
                                             Loan volum corporate
                                             Interest margin corporate
             23 000                                                                                      2.50

             22 000

                                                                                                         2.00
             21 000




                                                                                                                Interest contribution
             20 000
                                                                                                                                        The interest
                                                                                                         1.50                           margin is
             19 000                                                                                                                     defined as the
       NOK




                                                                                                                                        difference
             18 000                                                                                                                     between the
                                                                                                         1.00                           customer
             17 000                                                                                                                     lending
                                                                                                                                        (deposit)
                                                                                                                                        interest rate
             16 000                                                                                                                     and the Bank's
                                                                                                         0.50
                                                                                                                                        average
             15 000                                                                                                                     capital
                                                                                                                                        markets
                                                                                                                                        funding rate.
             14 000                                                                                      -
                                        jun.09




                                                                              jun.10
                      dec.08



                               mar.09




                                                   sep.09



                                                            dec.09



                                                                     mar.10




                                                                                       sep.10



                                                                                                dec.10
1919
Lending, Parent bank – retail market
                           Loan volum retail banking
                           Interest margin retail banking

             44 000                                                                                       1.80

             43 000                                                                                       1.60

             42 000                                                                                       1.40




                                                                                                                 Interest contribution
             41 000                                                                                       1.20                           The interest
                                                                                                                                         margin is
                                                                                                                                         defined as the
             40 000                                                                                       1.00                           difference
       NOK




                                                                                                                                         between the
             39 000                                                                                       0.80                           customer
                                                                                                                                         lending
                                                                                                                                         (deposit)
             38 000                                                                                       0.60
                                                                                                                                         interest rate
                                                                                                                                         and the Bank's
             37 000                                                                                       0.40                           average
                                                                                                                                         capital
                                                                                                                                         markets
             36 000                                                                                       0.20
                                                                                                                                         funding rate.

             35 000                                                                                       -
                                           jun.09




                                                                               jun.10
                      dec.08


                                 mar.0 9




                                                    sep.09


                                                             dec.09


                                                                      mar.10




                                                                                        sep.10


                                                                                                 dec.10
2020
Customer deposits, Parent bank – corporate market
                          Deposit volum c orporate
                          Interest margin corporate



             21 000                                                                                         2.00

             20 000                                                                                         1.80

                                                                                                            1.60
             19 000




                                                                                                                   Interest contribution
                                                                                                            1.40                           The interest
             18 000                                                                                                                        margin is
                                                                                                            1.20                           defined as the
             17 000                                                                                                                        difference
       NOK




                                                                                                            1.00                           between the
             16 000                                                                                                                        customer
                                                                                                            0.80                           lending
             15 000                                                                                                                        (deposit)
                                                                                                            0.60                           interest rate
                                                                                                                                           and the Bank's
             14 000
                                                                                                            0.40                           average
                                                                                                                                           capital
             13 000                                                                                         0.20                           markets
                                                                                                                                           funding rate.
             12 000                                                                                         -
                                          jun.09




                                                                                 jun.10
                      dec.08



                                 mar.09




                                                      sep.09



                                                               dec.09



                                                                        mar.10




                                                                                          sep.10



                                                                                                   dec.10
2121
Customer deposits, Parent bank – retail market
                               Deposit volum retail banking
                               Interest margin retail banking

             22 000                                                                                       2.90

                                                                                                          2.70
             21 000
                                                                                                          2.50
             20 000
                                                                                                          2.30




                                                                                                                 Interest contribution
             19 000                                                                                       2.10                           The interest
                                                                                                                                         margin is
                                                                                                          1.90
             18 000                                                                                                                      defined as the
                                                                                                                                         difference
       NOK




                                                                                                          1.70
                                                                                                                                         between the
             17 000
                                                                                                          1.50                           customer
                                                                                                                                         lending
             16 000                                                                                       1.30                           (deposit)
                                                                                                                                         interest rate
                                                                                                          1.10                           and the Bank's
             15 000
                                                                                                                                         average
                                                                                                          0.90                           capital
             14 000
                                                                                                          0.70                           markets
                                                                                                                                         funding rate.
             13 000                                                                                       0.50
                                          jun.09




                                                                               jun.10
                      dec.08


                                mar.0 9




                                                   sep.09


                                                            dec.09


                                                                     mar.1 0




                                                                                        sep.10


                                                                                                 dec.10
2222
Financial targets


       • Capital adequacy ratio         • Effectiveness
          – Core-capital coverage:         – The targeted cost ratio is
            11 % or higher                   maximum 50% of income and
                                             shall be comparable to the
                                             level of competing banks in
                                             Norway
       • Profitability
          – ROE shall be comparable     • Top-line growth
            to the performance of
            competing banks in             – The growth in interest
            Norway. The targeted             contribution and provisions is
            after-tax return is              targeted to be 2 percentage
            minimum 6 percentage             points above the growth in
            points above the yield on        operating costs
            long-term government
            bonds




2323
Group operating costs

       (NOK Million)

                                                31.12.10   31.12.09 Change
       Wages and salaries                           450        422      28
       Pension costs                                -16         42     -58
       Social costs                                  43         44      -1
       Total personnel costs                        477        508     -31

       Administration c osts                        281        284      -3
       Total personnel- and general
       administration c osts                        758        792     -34

       Deprec iation and write-downs of fixed
       assets                                        45         49      -4

       Total operating costs                        154        131     23

       Total c osts                                 957        972     -15




2424
Group operating costs

                     300                                                                                          53 %
                                                                                                                  51 %
                     250
                                                                                                                  49 %
                     200                                                                                          47 %
         NOK mill.




                                                                                                                  45 %
                     150
                                                                                                                  43 %
                     100                                                                                          41 %
                                                                                                                  39 %
                      50
                                                                                                                  37 %
                       0                                                                                          35 %
                           4Q08   1Q09   2Q09     3Q09     4Q09      1Q10          2Q10      3Q10       4Q10

                                     Group operating costs               Cost/income




                                                                                                                     4Q10
                                         4Q08



                                                 1Q09



                                                         2Q09



                                                                  3Q09



                                                                            4Q09



                                                                                      1Q10




                                                                                                 2Q10



                                                                                                           3Q10
       Group operating costs            247     243     226     227     276     188              256     237     276
       Cost/income                  51.57 % 50.10 % 50.79 % 39.27 % 42.40 % 40.09 %          49.42 % 47.59 % 49.20 %




2525
Net commission and other income/totale income

                                                             27.5 %
       28.0 %                                                                                             600
                                                                                                 26.6 %
                                                                      26.9 %
       27.0 %




                                                                                                                Net commission and other income, currency
                                                                                                          500
                                                                               26.1 %

       26.0 %




                                                                                                                       exchange gains in mill NOK
                                                    25.0 %                                                400
       25.0 %            24.6 %

                                           23.7 %
       24.0 %                                                                           23.7 %            300
                                  23.1 %
                23.6 %
       23.0 %
                                                                                                          200

       22.0 %

                                                                                                          100
       21.0 %


       20.0 %                                                                                             0
                2001      2002    2003     2004     2005     2006     2007     2008     2009     2010




2626
Profit allocation for 2010 –
   The Savings Bank Foundation SpareBank 1 Nord-Norge


   •   The Bank's Supervisory Board adopted the establishment of the
       Savings Bank Foundation SpareBank 1 Nord-Norge in March 2010.

   •   The principal purpose of the foundation is to exercise a long-term,
       stable ownership of SpareBank 1 Nord-Norge, including
       participation in future new equity issues by the bank.

   •   A total of NOK 30.5 million was set aside for this foundation in the
       year-end allocations for 2009.

   •   The bank's Main Board of Directors proposes that an additional
       NOK 124.1 million be set aside for the foundation in the year-end
       allocation for 2010.




2727
Allocation of the result for the year

            (Amounts in NOK million)
       Parent Bank's profit after tax                               597

       Set aside for cash dividend                            103
       Set aside for Dividend Equalisation Fund               103
       Total for EC-holders                  34.54 %          206   206
       Pay-out ratio EC-holders              50.00 %
       Set aside for Donations Fund                            41
       Set aside for Savings Bank's Fund                      195
       Allocated to dividends to the
       ownerless capital                                      154
       Total to bank's ownerless capital            65.46 %   470   391
       Total allocations                                            597

        •     Proposed dividend: NOK 5.75 per EC.



2828
Key figures balance sheet



   (Amounts in NOK million)


  STATEMENT OF                      31.12.10   31.12.09   Change   Change %

       Total assets                  68 780     64 239     4 541      7.1%
       Gross lending                 49 046     48 180       866      1.8%
       Loans and advances to
       customers including agency    63 334     59 061     4 273      7.2%
       loans
       Deposits from customers       39 389     34 877     4 512     12.9%




2929
Good development of customer deposits



                         Deposits from customers

  40 000

  39 000
                                                                          Volume according to
  38 000                                                                   markets 31.12.10
  37 000

  36 000

  35 000

  34 000
                                                                              Corp.
                                                                              30 %
                                                                                       Retail
  33 000
                                                                                       51 %
  32 000
                                                                              Public
  31 000
                                                                              19 %
           4Q08   1Q09   2Q09   3Q09   4Q09   1Q10   2Q10   3Q10   4Q10




3030
Deposit growth households



                                               Deposit growth households. 12 mth. growth

                          12

                          10

                            8
                  %




                            6

                            4

                            2

                            0
                            01



                                      07



                                                 01



                                                           07



                                                                     01



                                                                                07



                                                                                             01



                                                                                                       07



                                                                                                                 01



                                                                                                                           07
                           M



                                      M



                                                M



                                                           M



                                                                     M



                                                                               M



                                                                                          M



                                                                                                       M



                                                                                                                 M



                                                                                                                           M
                         06



                                    06



                                              07



                                                         07



                                                                   08



                                                                             08



                                                                                        09



                                                                                                     09



                                                                                                               10



                                                                                                                         10
                      20



                                 20



                                           20



                                                      20



                                                                20



                                                                          20



                                                                                     20



                                                                                                  20



                                                                                                            20



                                                                                                                      20
                                                                 SNN, Retail clients          Households



Source: Statistisk Sentralbyrå, The money supply M2, January 2010 & SNN Bare, January 2010
Deposit growth corporates



                                            Deposit growth corporates. 12 mth. growth

                  40

                  35
                  30

                  25
                  20
              %




                  15

                  10
                    5

                    0
                        2006M01



                                  2006M07



                                             2007M01



                                                       2007M07



                                                                   2008M01



                                                                             2008M07



                                                                                       2009M01



                                                                                                  2009M07



                                                                                                            2010M01



                                                                                                                      2010M07
                   -5
                  -10

                                                            SNN, Corporate clients         Corporates



Source: Statistisk Sentralbyrå, The money supply M2, January 2010 & SNN Bare, January 2010
Group lending portfolio according to markets
                                                                                       Volume according to
                                                                                        markets 31.12.10

       70 000          Boligkreditt

                       Loans and advances                                                      Corp/
                       to c ustomers                                                            Pub
       60 000                                                                                  30 %
                                                                                                         Retail
                                                                                                           incl.
                                                                                                         Bolig-
                                                                                                         kreditt
       50 000                                                                                             70 %




       40 000
                                                                                         Volume incl. Boligkreditt

       30 000



       20 000
                                                                                              Corp/
                                                                                               Pub      Retail
                                                                                              39 %       excl.
                                                                                                        Bolig-
                                                                                                        kreditt
       10 000                                                                                            61 %




           0
                4Q08      1Q09        2Q09   3Q09   4Q09   1Q10   2Q10   3Q10   4Q10

                                                                                           Volume excl. Boligkreditt




3333
Credit growth households

                      18

                      16

                      14

                      12

                      10
              %




                        8

                        6

                        4

                        2

                        0
                        01



                                   07



                                              01



                                                         07



                                                                    01



                                                                                07



                                                                                           01



                                                                                                       07



                                                                                                                 01



                                                                                                                           07
                       M



                                  M



                                             M



                                                        M



                                                                   M



                                                                               M



                                                                                          M



                                                                                                       M



                                                                                                                 M



                                                                                                                           M
                     06



                                06



                                           07



                                                      07



                                                                 08



                                                                             08



                                                                                        09



                                                                                                     09



                                                                                                               10



                                                                                                                         10
                  20



                             20



                                        20



                                                   20



                                                              20



                                                                          20



                                                                                     20



                                                                                                  20



                                                                                                            20



                                                                                                                      20
                                                                SNN, Retail clients              Households



Source: Statistisk Sentralbyrå, The credit indicator C2, January 2011 & SNN Bare, January 2011




34
Credit growth corporates



                      24
                      22
                      20
                      18
                      16
                      14
                      12
             %




                      10
                       8
                       6
                       4
                       2
                       0
                      -2
                       01



                                   07



                                              01



                                                          07



                                                                     01



                                                                                07



                                                                                            01



                                                                                                      07



                                                                                                                01



                                                                                                                          07
                      M



                                  M



                                             M



                                                         M



                                                                    M



                                                                               M



                                                                                           M



                                                                                                      M



                                                                                                                M



                                                                                                                          M
                    06



                                06



                                           07



                                                       07



                                                                  08



                                                                             08



                                                                                         09



                                                                                                    09



                                                                                                              10



                                                                                                                        10
                 20



                             20



                                        20



                                                    20



                                                               20



                                                                          20



                                                                                      20



                                                                                                 20



                                                                                                           20



                                                                                                                     20
                                                               SNN, Corporate clients            Corporates



Source: Statistisk Sentralbyrå, The credit indicator C2, January 2010 & SNN Bare, January 2010



  35
Credit area
     •   Quality
     •   Portfolio
     •   Migration, commitments in default and losses




36
Portfolio


 •   High quality in lending portfolio. Stable level of default - still at low
     levels.
 •   A cautious lending policy and growth in 2006 – 2009 and few
     corporate exposures in high risk industries has contributed to an
     overall low portfolio risk.
 •   The Group's total write-downs in 2010 is lower than the expected
     normalized level.
 •   The Group's corporate portfolio is well diversified
 •   Exposure to certain sectors with high risk for the bank was reduced
     last year
     − Property project
 •   Growth in portfolio in sectors with low/moderate risk
     − Building and construction
     − Retail trade
     − Power and water supply
 •   Positive migration developments in corporate portfolio



37
Portfolio
          - exposure as of 31.12.10

                30.000



                25.000



                20.000
     NOK mill




                15.000



                10.000



                 5.000



                    0
                             Low risk   Medium risk          High risk      Default/impaired

                    Retail market        C orporate market               SB1 Boligkreditt




38
Risk change
                - portfolio change Q4/09 - Q4/10
           4.000




           3.000




           2.000
NOK mill




           1.000




               0




           -1.000



                    Low risk       Medium risk                       High risk        Default & impaired
           -2.000



                                SB1 Boligkreditt   Retail market   Corporate market



     39
Group lending by sector

(NOK million)                                            31.12.10   Share   31.12.09    Share   Change     Change in %
Agriculture and forestry                                      903     2%          817     2%          86        10,5 %
Fishing vessels                                               984     2%        1.477     3%        -493       -33,4 %
Fish farming                                                  295     1%          251     1%          44        17,5 %
Extraction of crude oil and natural gas                        43     0%          125     0%         -82       -65,6 %
Mining                                                         78     0%           21     0%          57      271,4 %
Fishing industry                                              822     2%          649     1%         173        26,7 %
Other industries                                              517     1%          570     1%         -53        -9,3 %
Power and water supply                                      1.619     3%        1.276     3%         343        26,9 %
Building and construction                                   1.094     2%        1.132     2%         -38        -3,4 %
Retail trade                                                1.151     2%          629     1%         522        83,0 %
Wholesale trade                                               346     1%          368     1%         -22        -6,0 %
Hotel and restaurant                                          397     1%          358     1%          39        10,9 %
Intern. shipping and pipeline transport                       599     1%          419     1%         180        43,0 %
Transport and communication                                 1.615     3%        1.795     4%        -180       -10,0 %
Finance and insurance                                         414     1%          374     1%          40        10,7 %
Property
  Housing cooperatives                                     1.607      3%       1.523      3%          84        5,5 %
  Property project                                           955      2%       1.023      2%         -68       -6,6 %
  Property hiring out                                      3.784      8%       3.621      8%         163        4,5 %
  Real estate business                                       235      0%         140      0%          95       67,9 %
Business services                                            642      1%         639      1%           3        0,5 %
Other sectors                                                824      2%         789      2%          35        4,4 %
Insurance, fund management and financial services             85      0%         157      0%         -72      -45,9 %
Central government- and social security administration       -        0%           1      0%          -1
Counties and municipalities                                  157      0%         170      0%         -13       -7,6 %
Retail banking sector                                     29.880     61 %     29.856     62 %         24        0,1 %
TOTAL                                                     49.046    100 %     48.180    100 %        866        1,8 %

Loans transferred to SB1 Boligkreditt                      14.288             10.283               4.005       39,0 %




 40
Corporate property lending portfolio

     90,0 %        85,5 %

     80,0 %

     70,0 %                                                                 • Lowest – Low risk,
     60,0 %
                                                                              expected loss 0 % -
                                                                              0,50 %
     50,0 %

     40,0 %
                                                                            • Medium risk,
                                                                              expected loss 0,50 -
     30,0 %
                                                                              2,00 %
     20,0 %
                                        8,6 %                               • High - Highest risk,
                                                               5,9 %
     10,0 %
                                                                              expected loss over
      0,0 %                                                                   2,00 %
                 Lowest - Low           Medium             High - Highest




     The portfolio of corporate property lending represents the Group's highest single
     sector concentration

     – Represents about 11 percent of total exposure (EAD)
     The portfolio of corporate property lending is dominated by commitments with low risk




41
Losses and commitments in default


      • Normalized loss development. No new losses of essential
        character.

      • High risk exposure within certain sectors was reduced last year
         – Property projects
         – Property hiring out

      • Commitments in default and commitments in certain sectors
        are monitored very closely
         – Property projects
         – Property rentals
         – Housing co-operatives




42
Non-performing and impaired commitments

                          3,0 %                                                                                                 1200

                                  2,7 %
                                          1005
                          2,5 %                          962                                                                    1000
                                                 2,3 %
                                                                                                                        870

                                                                                                            803
                          2,0 %                                                                756                              800
                                                                       760
       % of gross loans




                                                                                                                    1,8 %
                                                               1,6 %                                   1,7 %




                                                                                                                                       MNOK
                                                                                           1,5 %
                          1,5 %                                                                                                 600
                                                                                     563

                                                                             1,1 %

                          1,0 %       0,9 %                                                                                     400

                                                     0,6 %
                                                                                                                        0,6 %
                                                                                                            0,5 %
                          0,5 %                                    0,4 %                       0,4 %                            200
                                                                                 0,3 %



                          0,0 %                                                                                                 0
                                  31.12.04       31.12.05      31.12.06      31.12.07      31.12.08    31.12.09     31.12.10
                              Non-performing and impaired commitments                      Individual write-down for impaired value
                              Non-performing and impaired commitments




43
Losses on loans and guarantees - Group

                350                                                                                                   1.40 %
                300                                                                                                   1.20 %
                250                                                                                                   1.00 %
     NOK mill




                200                                                                                                   0.80 %
                150                                                                                                   0.60 %
                100                                                                                                   0.40 %
                 50                                                                                                   0.20 %
                  0                                                                                                   0.00 %
                -50                                                                                                   -0.20 %
                       2004          2005            2006        2007         2008          2009            2010


                                     Net losses        Net losses in % of gross lending incl.agency loans



                                                                   2004     2005    2006      2007     2008        2009 31.12.10
           Individual write-downs for impaired value                206      112      20        55      202         163      133

           Collective write-downs imp. value                         -1      -25      -36      -13          40      36       -39

           Recoveries, previously confirmed losses                   35       22       27       25          59      14         7

           Net losses                                               170       65      -43       17      183         185        87
           Net losses in % of gross lending incl.agency loans    0.45 %   0.16 % -0.09 %    0.03 %   0.32 %      0.31 %   0.14 %




44
Loan losses: The Group's write-downs in 2010


                                                Write-downs
                                                                4th quarter   4th quarter
                                                   2010                                     2009
                                                                   2010          2009
Individual write-downs
 Retail market                                         16                5              5       13
 Corporate market                                     100               37             30      127
 SpareBank 1 Finans Nord-Norge                             7              1             5          11
 Other group units                                         4              1             0           1
Total individual write-downs                          127               44             40      152

Collective write downs and other value change
                                                          -40            -1             4          33
items


Total write-down on loans and guarantees                  87             43            44      185



       • The Group's total write-downs in 2010 is lower than the expected
         normalized level.




  45
Securities




46
Income from financial investments
       (Amounts in NOK million)

                                     31.12.10 31.12.09
       Dividends                          43       23

       Income from joint ventures
                                        251      281
       Gains/losses and net value
       changes on certificates and
       bonds                               3       21
       Gains/losses and net value
       changes on shares                  90     118
       Gains/losses and net value
       changes on foreign exchange
                                          32       49
       Gains/losses and net value
       changes on other financial
       derivatives                       -15       32
       Income from financial
       investments                      404      524

4747
Equity certificate holders




48
SpareBank 1 Nord-Norge: Relative share price
performance over 3 years




                                               49
49
The Bank's equity certificates: Bonus issue and split


     •   The bank's Main Board of Directors proposes the transfer of NOK
         300 million from the bank's equalisation reserve to the equity
         certificate capital.


     •   This entails the issuance of 5,970,691 new equity certificates with
         a nominal value of NOK 50.-, with 3 old equity certificates giving
         entitlement to one new equity certificate.


     •   In addition, a split of the bank's equity certificates is proposed, i.e.
         each equity certificate will be split into two after the bonus issue.
         The new nominal value per equity certificate will then be NOK 25.

     •   The bonus issue and split will be reviewed by the Bank's
         Supervisory Board on 29 and 30 March 2011. The practical
         execution will start as soon as possible thereafter.



50
SNN's equity certificates (ECCs):
 Bonus issue and split - new value

     Theoretical value after bonus issue and split


     Bonus issue
     Number of old ECCs per new                                3
     Nominal value ex dividend                           120,000
     Number of ECCs before bonus issue                17 912 073
     Total market value ECCs (mnok)                        2 149
     Number of ECCs after bonus issue                 23 882 764
     New theoretical value after bonus issue                  90

     Split 1:2 after bonus issue
     Number of ECCs after split (1 000)                47 765 528
     New theoretical value after bonus issue and split         45




51
Equity Certificates (EC) - holder structure
       35
                  31.12.09        31.12.10


       30




       25




       20
       %
                                                                       29.7


       15                                        28.8
                                       27.3                  26.5
              21.4     21.6

       10




       5
                                                                                  7.3
                                                                                           5.5
       0
             10 largest Equity        20 largest Equity    Holders residing in   Foreign Holders
            Certificate holders      Certificate holders     North Norway




5252
The 20 largest EC holders as at 31.12.10
                                                 Number of              Share of total
   Equity Certificate holders            Equity Certificates Equity Certificate capital
   Pareto Aksjer Norge                          1 057 473                      5.90 %
   Pareto Aktiv                                   471 960                      2.63 %
   MP Pensjon                                     418 279                      2.34 %
   Frank Mohn AS                                  381 362                      2.13 %
   Tonsenhagen Forretningssentrum AS              319 126                      1.78 %
   Citibank N.A.                                  283 588                      1.58 %
   Nordea Bank Norge ASA                          280 000                      1.56 %
   Framo Development AS                           238 798                      1.33 %
   Sparebanken Rogalands Pensjonskasse            220 081                      1.23 %
   Pareto VPF                                     203 948                      1.14 %
   Forsvarets Personellservice                    174 334                      0.97 %
   Karl Ditlefsen, Tromsø                         154 359                      0.86 %
   Sparebankstiftelsen                            153 478                      0.86 %
   Trond Mohn                                     143 279                      0.80 %
   Fred Olsen & Co’s pensjonskasse                121 787                      0.68 %
   Troms Kraft Invest AS, Tromsø                  115 113                      0.64 %
   Ringerike Sparebank                            113 741                      0.63 %
   Terra Utbytte Verdipapirfond                   112 734                      0.63 %
   Taj Holding AS, Finnsnes                       100 000                      0.56 %
   Tromstrygd, Tromsø                               97 000                     0.54 %
   SUM                                         5 160 440                     28.81 %



5353
Liquidity/funding




5454
Liquidity buffer as per 31.12.10
                 10

                  9

                  8

                  7
Billion NOK




                  6

                  5

                  4

                  3

                  2

                  1

                  0
                                                  1




                                                                      1




                                                                                                                                          2




                                                                                                                                                              2
                             11




                                                           11




                                                                                                                     12




                                                                                                                                                   12
                                        1




                                                                              11




                                                                                                                                2




                                                                                                                                                                      12
                  11




                                                                                       11




                                                                                                 11


                                                                                                          11
                                                                                                  1
                            11




                                        1




                                                                                                                    12




                                                                                                                                2
                                                .1




                                                                   l.1




                                                                                                                                        .1




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                                      .1




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                c.




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  • Liquidity buffer: Cash, drawing rights in Norges Bank, bond portfolio
    (not deposited in Norges Bank), equities and mortgage loans
    prepared for transfer to SpareBank 1 Boligkreditt.
  • Assumption: No new capital markets funding and 7 % growth in both
    lending and deposits.



55
SpareBank 1 Nord-Norge 4th quarter report 2010
 Very good result. The Bank’s financial strength remains strong .

 Main features (figures and percentages in brackets refer to the same interim period in 2009):

                                                              • Low loan losses: Net losses totalled NOK 87
     • Operating result before tax NOK 1 002                    million (NOK 185 million).
       million (NOK 1 002 million).
         • Return on equity capital after tax 15.3 per cent
                                                              • Lending growth during the last 12 months
           (18.2 per cent).                                     (including loans transferred to SpareBank 1
         • Result per Equity Certificate (EC) (Parent
                                                                Boligkreditt): 7.2 per cent (4.0 per cent).
           Bank): NOK 15.59 (NOK 16.39).                           • Retail banking market 8.4 per cent      (including
                                                                     SpareBank 1 Boligkreditt)
     • The underlying banking operations is
                                                                   • Corporate banking market 4.7 per cent
       good. Result from core operations before
       losses NOK 685 million (NOK 663 million).              • Deposit growth last 12 months: 12.9 per cent
     • The total pre-tax result from subsidiaries               (0.9 per cent).
       is NOK 82 million (NOK 25 million).                         • Retail market 6.7 per cent
                                                                   • Corporate market 19.1 per cent
     • Net result from financial investments NOK
       404 million (NOK 479 million);                              • Public market 22.3 per cent

         • SpareBank 1 Gruppen AS' NOK 164 million            • Overall deposit coverage ratio: 80.3 per cent
         • Other joint ventures in the SpareBank 1              (72.4 %).
           Alliance NOK 87 million                            • The Bank has good financial strength with the
         • Gains on the bank's share portfolio NOK 133          Group’s core capital adequacy ratio at 10.9 per
           million                                              cent.
         • Net gains interest-bearing portfolio NOK 3 mill
                                                              • Continued satisfactory liquidity.
         • FX and financial derivatives NOK 17 million
                                                              • Proposed payment of cash dividend: NOK 5.75
     • Overall cost control under control. Cost                 per Equity Certificate
       income ratio: 46.8 % (45.0 %).
                                                              • Bonus issue and split of the Bank's Equity
     • Low loan losses: Net losses totalled NOK                 certificate
       87 million (NOK 185 million).




56
Contact information

       SpareBank 1 Nord-Norge
       P O Box 6800
       9298 Tromsø



       CEO                                      Deputy CEO             CFO
       Hans Olav Karde                          Oddmund Åsen           Rolf Eigil Bygdnes
       Tlph 901 51 981                          Tlph 906 72 757        Tlph 905 19 774




   Internet:                                                           Financial calendar 2011
   SNN home page and internet bank:          www.snn.no                Q1    29. April
   Hugin Online:                             www.huginonline.no        Q2   10. August
   Equity capital certificates in general:   www.egenkapitalbevis.no   Q3   26. October




5757
Additional information -   www.snn.no




5858
Enclosures




5959
Summary – key figures
       Group
       Amounts in NOK million               31.12.10   31.12.09   Change   Change %
       RESULT
       Result before tax                      1 002      1 002         0      0.0%
       STATEMENT OF FINANCIAL POSITION
       Total assets                          68 780     64 239     4 541      7.1%
       Gross lending                         49 046     48 180       866      1.8%
       Deposits from customers               39 389     34 877     4 512     12.9%

       KEY FIGURES                          31.12.10   31.12.09   Change   Change %
       Core capital adequacy ratio            10.9%      10.7%                 0.2%
       After-tax return on equity capital     15.3%      18.2%                -2.9%
       Cost/income                            46.8%      45.0%                 1.8%
       Manyear                                  788        778        10
       Parent bank
       Result per Equity Certificate          11.51      13.85     -2.33




6060
Loan to value – LTV in % of collateral

        90,00 %
                      80,9 %
        80,00 %                                                    Exposure
                                                                  Exposure
        70,00 %                                                    Balance
                                                                  Balance incl
                                                                   incl Boligkreditt
        60,00 %                                                   Boligkreditt

        50,00 %

        40,00 %   36,4 %

        30,00 %                27,5 %

                                                 19,1 %
        20,00 %
                                        10,2 %                        8,2 %            8,8 %
        10,00 %                                           5,1 %
                                                                              1,3 %            2,5 %
         0,00 %
                  Within 60%    60-75%            75-90%               90-100%         Over 100%


     The calculation is based on the market value of the collateral. By exposure the
     whole loan is included in the bucket while by balance, including Boligkreditt,
     the loan is distributed in the different intervals. The numbers include the
     Group's share of SB1 Boligkreditt-portfolio.


61
Group loan write-downs
                               Change in group write-downs

                      40
                      30
                      20
        NOK million



                      10
                       0
                            2008             2009            2010
                      -10
                      -20
                      -30
                      -40
                      -50



     Due to the positive migration, for the corporate market portfolio in
     particular, group write-downs were NOK 38 million lower in 2010. The level
     of write-downs is considered reasonable based on an assessment of the
     bank’s portfolio and external variables.




62
Interest-bearing portfolio


                                         ABS
                  Industry,             0,1 % CDO
                   Norway                    1,3 %
                    5,1 %     Subord. debt,                    Cert.
                                Norway           Gov. cert.   10,3 %
          Fin. sector,           1,9 %            7,9 %             Gov. guar.
            abroad                                                    bonds
             7,0 %                                                    2,3 %
                                                               Public bond
                                                                 1,2 %

         Fin. sector,
           Norway
           19,8 %

                                                        Covered bonds
                                                           43,2 %




 Total portfolio 11.541 mnok


63
Funding instruments/diversification as per 31.12.10


         Category                    <1yr >1yr Total
         Lower Tier 2, EUR               0      0       0
         Lower Tier 2, NOK               0 1.000 1.000
         EMTN, EUR                   2.493    312 2.804
         Tier 1, Perpetual, USD          0    349    349
         BONDS, NOK                  2.101 10.842 12.943
         Government, NOK                 0 1.000 1.000
         Schuldschein, EUR             218      0    218
         Cert's, NOK                     0      0       0
         Gov. swap arr., NOK             0 2.562 2.562
         TOTAL, Short term funding   4.812
         TOTAL, Long term funding          16.065
         TOTAL, All funding                        20.877




64
Funding and liquidity management
            Maturity profile of capital markets funding as per 31.12.10

                                                                     Funding maturity next 12 months

                     2,500
                     2,250
                                                                                                                                                                   •   Good liquidity
                     2,000
   B illio n N O K




                     1,750
                     1,500
                     1,250
                     1,000
                     0,750
                     0,500
                     0,250
                                                                                                                                                                   •   Liquidity buffer NOK 7,9
                                                                                                                                                                       billion per 31.12.10
                     0,000
                                                         1




                                                                                                                   11
                                                                                                          1
                                  1




                                                                                             1




                                                                                                                             11


                                                                                                                                         1


                                                                                                                                                  11


                                                                                                                                                              11
                                                                                  1
                                           11




                                                                     1
                                                    01




                                                                                                     01
                             01




                                                                                         01




                                                                                                                                       01
                                                                              01
                                                                  01




                                                                                                                 20


                                                                                                                         20




                                                                                                                                              20


                                                                                                                                                         20
                                        20


                                                    .2




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                                                                                                                                                                   •   Net refinancing need next
                                                                         Yearly funding maturity
                                                                                                                                                                       12 months NOK 4,75 billion
                     6,000

                     5,000

                     4,000
 Billion NOK




                     3,000

                     2,000

                     1,000

                     0,000
                                      2010          2011               2012             2013              2014          2015           2016            2017




65
Exposure in Russia per 31.12.10


     Bank Tavrichesky
     • 10% stake, equivalent of                                  NOK 82 mill
     • Subordinated loan EUR 4 mill                              NOK 32 mill

     North-West 1 Alliance Bank
     • Shares 75 % + assets                                      NOK 34 mill
     • Issue 2011 RUR 150 mill                                   NOK 30 mill
     • Funding agreement up to RUR 500 mill                      NOK 100 mill
             – Drawn NOK 41 mill
     •   Subordinated loan EUR 1,5 mill                          NOK 12 mill



     Costs for Norwegian staff in Russia is charged in the Parent bank's 2010 accounts.
     The profit share (75 % fra NW1AB) is -0,6 mnok




66
The SpareBank 1 Alliance
 SpareBank 1 Nord Norge: Co-founder and one of the key partners in
 the SpareBank 1 Alliance

Description of the SpareBank        The SpareBank 1 Alliance has a    Total assets in Norway 31.12.09
          1 Alliance                nationwide distribution network   (NOK bn, parent banks)

• The SpareBank 1 Alliance’s
  objective is to ensure the
  individual bank’s independence
  and regional anchoring through    352 member branches
  strong competitiveness,           and distribution through
  profitability and solidity            378 branches
• Key figures for the SpareBank 1
  Alliance
    – Founded in 1996
    – 20 independent savings
      banks
    – 1.6 million customers,
      530,000 internet customers
    – Total assets: NOK 628bn
    – 2nd largest mortgage lender
    – 2/3 in retail lending
    – 352 branches, 6,300
      employees
• Market surveys indicate that
                                                                      Source: company reports
  SpareBank 1 is the second most
                                                                      Note: (1) For Scandinavian banks, gross lending in Norway is
  known brand name in the                                             used; (2) loans transferred to Boligkredit (Covered bond
  Norwegian financial industry                                        company) are included




67 67
The SpareBank 1 Alliance
        Strategic platform for the Alliance


           Purpose
                          Ensure the independence and regional foothold of the individual
                          member banks by maximizing their:
                               - Competitiveness
                               - Profitability
                               - Capital strength
                          Efficiency                                 Local Market Focus
           Cornerstones




                          As a group, the banks seek to              Each bank continues to maintain its
                          increase their efficiency compared to      link with its local community by:
                          competitors by:
                                                                          - Keeping its own name and legal
                               - Economies of scale                         identity
                               - Mutually increasing critical core        - Taking advantage of its
                                 competencies                               proximity to the local market
                               - Sharing development
                                 investments




                                ALLIANCE PROGRAMME                      SEPARATE LEGAL ENTITIES
                                                                        COMMON SUPERBRAND




68 68
Presentation of 4th quarter 2010

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Presentation of 4th quarter 2010

  • 1. SpareBank 1 Nord-Norge Preliminary annual report and accounts 2010 1 1
  • 2. SpareBank 1 Nord-Norge Group Headoffice: Tromsø Organization: 5 regions Regional branches: Hammerfest Tromsø Harstad Bodø Mo i Rana Local branches: 76 Number of man-years Group: 788 2
  • 3. Organisation of the financial services group SpareBank 1 Nord-Norge Financial Services Group SpareBank 1 Gruppen AS Financial Services Group Equity stake 19,5 % SpareBank 1 Nord-Norge SpareBank 1 Utvikling DA Invest ASA Systems development Investment company Equity stake 17.74 % Equity stake 100 % - Tromsø SpareBank 1 Finans Bank 1 Oslo AS Leasing/factoring Bank - Bodø Equity stake 100 % Equity stake 19.5 % - Tromsø EiendomsMegler 1 SpareBank 1 Boligkreditt AS - Bodø Nord-Norge AS Covered Bonds Company Real estate brokerage - Alta Equity stake 15.74 % Equity stake 100 % - Hammerfest - Kirkenes North-West 1 Alliance Bank SpareBank 1 Næringskreditt AS - Mo i Rana Financing Bank - Harstad Equity stake 75 % Commercial property Equity stake 23.5 % - Sandnessjøen - Finnsnes SpareBank 1 Nord-Norge BN Bank ASA Forvaltning ASA Bank Asset Management Equity stake 23.5 % Equity stake 100 % 3
  • 4. North Norway: Status and possiblities 4
  • 5. North Norway is doing well • North Norwegian industry is less hit by the economic downturn due to: – Resource industries like fisheries, minerals and energy have maintained their activity and export – Positive development in tourism, more foreign visitors – Possible turning point in construction and building – A substantial part of the region's production and sale is to the public sector • Large public sector has a stabilizing effect on the economy Northern Norway • Continued low unemployment 3 counties, 88 municipalities rate; 2.3 % unemployment per 465,600 inhabitants January 2011 5 5
  • 6. North Norway; resource base for new growth • Marine resources • All important wild fish stocks are sustainable • Substantial unexploited potential for fish farming • New potential within marine bioprospecting • Energy resources • Substantial potential for wind power (renewable) • Substantial potential for small-scale hydropower (renewable) • Substantial potential for discoveries of oil/gas in the Barents Sea and in the northern part of the Norwegian Sea • Minerals • Significant quantities of both known and unknown deposits of commercially exploitable minerals ; iron, olivine, quartz, copper, gold, nepheline, etc. • Culture and adventures • Coastal culture (the fisheries with its stories) • Native population (vibrant reindeer herding industry) 6
  • 7. North Norway; resource base for new growth – Nature • Huge untouched areas • Mountains and fjords • The midnight sun • The Northern Light (Autora Borealis) – Climate and environment • Arctic climate • Research arena – Borderland • Where the west meets the east • Open border, simple procedures – Geography • Northern coastal route shortens the distance Europe/the East with one third 7
  • 8. SpareBank 1 Nord-Norge 2010 – Highlights • Very good result: Profit before tax: NOK 1,002 million. Return on equity 15.3 % • Higher market share – retail market lending • Significant growth in deposits of 12.9 per cent. Good deposit-to-loan ratio: 80.3 %. • Loan losses reduced by half • Higher level of activity – more customer meetings • High customer acquisition rate • Several large new public sector customers acquired • Competence boost – stronger position as an adviser bank • The Bank's strategy of beeing acashless bank in 2012 is being implemented • Banking operations in Northwest Russia started in September 2010 8
  • 9. Financial goals: New goals for group's capital adequacy ratio • Core capital ratio: 11 per cent or higher • SpareBank 1 Nord-Norge aims to emerge as an undisputedly solid bank. • The capital adequacy goal is based on the group's internal capital adequacy assessment process (ICAAP). The capital goal is expressed based on the current statutory regulation of capital adequacy. • The group's capital adequacy in a projected crisis scenario must have adequate buffers so that the core capital adequacy does not fall below 8 per cent. Adaptation to the goal of a capital adequacy ratio of 11 per cent will take place over time. With the expected profit performance the group aims to achieve this goal by the end of 2013. 9
  • 10. Capital adequacy ratio - Group Parent bank Group (Amounts in NOK million) 31.12.08 31.12.09 31.12.10 31.12.10 31.12.09 31.12.08 3 466 4 030 4 351 Core capital 5 334 4 846 4 167 488 831 549 Supplementary capital 515 929 551 3 954 4 861 4 900 Equity and related capital resources 5 849 5 775 4 718 Minimum requirements subordinated capital, Basel I I 1 619 1 818 1 954 Total credit risk IRB 1 840 1 762 1 619 553 487 607 Credit risk standardised approach 1 492 1 362 1 328 43 55 130 Debt risk 126 50 43 45 41 19 Equity risk 46 59 55 0 0 17 Currency risk 17 0 0 236 214 242 Operational risk 284 227 283 457 0 0 Transitional arrangements 226 257 354 - 88 - 69 -71 Deductions - 114 - 98 - 107 2 865 2 546 2 898 Minimum requirements subordinated capital 3 917 3 619 3 575 11.04 % 15.27 % 13.53 % Capital adequacy ratio 11.95 % 12.76 % 10.56 % 9.68 % 12.66 % 12.01 % Core capital ratio 10.89 % 10.71 % 9.32 % 1.36 % 2.61 % 1.52 % Supplementary capital ratio 1.05 % 2.05 % 1.23 % 1010
  • 11. Financial targets • Capital adequacy ratio • Effectiveness – Core-capital coverage: – The targeted cost ratio is 11 % or higher maximum 50% of income and shall be comparable to the level of competing banks in Norway • Profitability – ROE shall be comparable • Top-line growth to the performance of competing banks in – The growth in interest Norway. The targeted contribution and provisions is after-tax return is targeted to be 2 percentage minimum 6 percentage points above the growth in points above the yield on operating costs long-term government bonds 1111
  • 12. Profit and loss account - Group (Amounts in NOK million) 31.12.10 31.12.09 Net interest income 1 129 1 173 Net fee-, commision and other operating income 513 462 Net income from financial investments 404 524 Total net income 2 046 2 159 Total costs 957 972 Result before losses and write-downs 1 089 1 187 Net losses and write-downs 87 185 ROE Result before tax 1 002 1 002 15.3 % Tax 186 143 Minority interests 0 1 Result for the period 816 858 1212
  • 13. Quarterly Summary – Profit and loss account figures (Amounts in NOK million) 4Q10 3Q10 2Q10 1Q10 4Q09 Net interest income 285 291 281 272 298 Net fee-, commision and other operating income 128 131 133 121 124 Net income from financial investments 148 76 104 76 229 Total net income 561 498 518 469 651 Total costs 276 237 256 188 276 Result before losses and write-downs 285 261 262 281 375 Net losses and write-downs 43 1 22 21 44 Result before tax 242 260 240 260 331 Return on equity capital 15.33 % 15.56 % 15.57 % 15.90 % 26.25 % Cost/income 49.20 % 47.59 % 49.42 % 40.09 % 42.40 % 1313
  • 14. Group companies Result before tax 31.12.10 31.12.09 SpareBank 1 Finans Nord-Norge AS 66 874 80 349 SpareBank 1 Factoring AS 0 885 SpareBank 1 Nord-Norge Invest AS 6 985 -67 464 Eiendomsdrift AS 0 2 881 EiendomsMegler 1 Nord-Norge AS 5 286 5 286 SpareBank 1 Nord-Norge Forvaltning ASA 4 289 2 928 North-West 1 Alliance Bank -1 350 0 Total 82 084 24 865 1414
  • 15. Core banking activities (Amounts in NOK million) 31.12.10 31.12.09 Change Earnings before losses 685 663 22 Net losses 87 185 -98 A non-recurring effect of recognising income from reduced pension commitments 60 60 0 Core banking activities after 538 478 60 losses 1515
  • 16. Results – Group Compared to 2009, the reasons for the change in the pre-tax result are as follows: • Reduction in net interest income - NOK 44 mill. • Increase in net commission income + NOK 67 mill. • Reduction in income from financial investments - NOK 120 mill. • Reduction in other (non-interest) income - NOK 16 mill. • Reduction in costs + NOK 15 mill. • Reduction in net losses + NOK 98 mill. Total + NOK 0 mill. 1616
  • 17. Very good underlying banking operations - (excl. income from financial investments) Group (Amounts in NOK million) 4Q10 3Q10 2Q10 1Q10 4Q09 Net interest income 285 291 281 272 298 Net fee- and commission income 125 128 132 120 121 Other operating income 3 3 1 1 3 Total costs 276 237 256 188 276 Income, core banking 137 185 158 205 146 Net losses and write-downs 43 1 22 21 44 Income, core banking after losses and write-downs 94 184 136 184 102 1717
  • 18. Net interest income - Group 4.00 % 350 300 3.00 % 250 200 2.00 % 150 100 1.00 % 50 0 0.00 % 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 NOK Million - Boligkreditt Perc.of aver.tot.ass. Perc. incl. Boligkreditt 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 NOK Million 349 302 279 294 298 272 281 291 285 - Boligkreditt 7 12 11 17 26 27 24 19 19 Perc.of aver.tot.ass. 2.21 % 1.87 % 1.70 % 1.77 % 1.85 % 1.70 % 1.73 % 1.74 % 1.66 % Perc. incl. Boligkreditt 2.07 % 1.79 % 1.61 % 1.67 % 1.74 % 1.59 % 1.58 % 1.56 % 1.49 % 1818
  • 19. Lending, Parent bank – corporate market Loan volum corporate Interest margin corporate 23 000 2.50 22 000 2.00 21 000 Interest contribution 20 000 The interest 1.50 margin is 19 000 defined as the NOK difference 18 000 between the 1.00 customer 17 000 lending (deposit) interest rate 16 000 and the Bank's 0.50 average 15 000 capital markets funding rate. 14 000 - jun.09 jun.10 dec.08 mar.09 sep.09 dec.09 mar.10 sep.10 dec.10 1919
  • 20. Lending, Parent bank – retail market Loan volum retail banking Interest margin retail banking 44 000 1.80 43 000 1.60 42 000 1.40 Interest contribution 41 000 1.20 The interest margin is defined as the 40 000 1.00 difference NOK between the 39 000 0.80 customer lending (deposit) 38 000 0.60 interest rate and the Bank's 37 000 0.40 average capital markets 36 000 0.20 funding rate. 35 000 - jun.09 jun.10 dec.08 mar.0 9 sep.09 dec.09 mar.10 sep.10 dec.10 2020
  • 21. Customer deposits, Parent bank – corporate market Deposit volum c orporate Interest margin corporate 21 000 2.00 20 000 1.80 1.60 19 000 Interest contribution 1.40 The interest 18 000 margin is 1.20 defined as the 17 000 difference NOK 1.00 between the 16 000 customer 0.80 lending 15 000 (deposit) 0.60 interest rate and the Bank's 14 000 0.40 average capital 13 000 0.20 markets funding rate. 12 000 - jun.09 jun.10 dec.08 mar.09 sep.09 dec.09 mar.10 sep.10 dec.10 2121
  • 22. Customer deposits, Parent bank – retail market Deposit volum retail banking Interest margin retail banking 22 000 2.90 2.70 21 000 2.50 20 000 2.30 Interest contribution 19 000 2.10 The interest margin is 1.90 18 000 defined as the difference NOK 1.70 between the 17 000 1.50 customer lending 16 000 1.30 (deposit) interest rate 1.10 and the Bank's 15 000 average 0.90 capital 14 000 0.70 markets funding rate. 13 000 0.50 jun.09 jun.10 dec.08 mar.0 9 sep.09 dec.09 mar.1 0 sep.10 dec.10 2222
  • 23. Financial targets • Capital adequacy ratio • Effectiveness – Core-capital coverage: – The targeted cost ratio is 11 % or higher maximum 50% of income and shall be comparable to the level of competing banks in Norway • Profitability – ROE shall be comparable • Top-line growth to the performance of competing banks in – The growth in interest Norway. The targeted contribution and provisions is after-tax return is targeted to be 2 percentage minimum 6 percentage points above the growth in points above the yield on operating costs long-term government bonds 2323
  • 24. Group operating costs (NOK Million) 31.12.10 31.12.09 Change Wages and salaries 450 422 28 Pension costs -16 42 -58 Social costs 43 44 -1 Total personnel costs 477 508 -31 Administration c osts 281 284 -3 Total personnel- and general administration c osts 758 792 -34 Deprec iation and write-downs of fixed assets 45 49 -4 Total operating costs 154 131 23 Total c osts 957 972 -15 2424
  • 25. Group operating costs 300 53 % 51 % 250 49 % 200 47 % NOK mill. 45 % 150 43 % 100 41 % 39 % 50 37 % 0 35 % 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Group operating costs Cost/income 4Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 Group operating costs 247 243 226 227 276 188 256 237 276 Cost/income 51.57 % 50.10 % 50.79 % 39.27 % 42.40 % 40.09 % 49.42 % 47.59 % 49.20 % 2525
  • 26. Net commission and other income/totale income 27.5 % 28.0 % 600 26.6 % 26.9 % 27.0 % Net commission and other income, currency 500 26.1 % 26.0 % exchange gains in mill NOK 25.0 % 400 25.0 % 24.6 % 23.7 % 24.0 % 23.7 % 300 23.1 % 23.6 % 23.0 % 200 22.0 % 100 21.0 % 20.0 % 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2626
  • 27. Profit allocation for 2010 – The Savings Bank Foundation SpareBank 1 Nord-Norge • The Bank's Supervisory Board adopted the establishment of the Savings Bank Foundation SpareBank 1 Nord-Norge in March 2010. • The principal purpose of the foundation is to exercise a long-term, stable ownership of SpareBank 1 Nord-Norge, including participation in future new equity issues by the bank. • A total of NOK 30.5 million was set aside for this foundation in the year-end allocations for 2009. • The bank's Main Board of Directors proposes that an additional NOK 124.1 million be set aside for the foundation in the year-end allocation for 2010. 2727
  • 28. Allocation of the result for the year (Amounts in NOK million) Parent Bank's profit after tax 597 Set aside for cash dividend 103 Set aside for Dividend Equalisation Fund 103 Total for EC-holders 34.54 % 206 206 Pay-out ratio EC-holders 50.00 % Set aside for Donations Fund 41 Set aside for Savings Bank's Fund 195 Allocated to dividends to the ownerless capital 154 Total to bank's ownerless capital 65.46 % 470 391 Total allocations 597 • Proposed dividend: NOK 5.75 per EC. 2828
  • 29. Key figures balance sheet (Amounts in NOK million) STATEMENT OF 31.12.10 31.12.09 Change Change % Total assets 68 780 64 239 4 541 7.1% Gross lending 49 046 48 180 866 1.8% Loans and advances to customers including agency 63 334 59 061 4 273 7.2% loans Deposits from customers 39 389 34 877 4 512 12.9% 2929
  • 30. Good development of customer deposits Deposits from customers 40 000 39 000 Volume according to 38 000 markets 31.12.10 37 000 36 000 35 000 34 000 Corp. 30 % Retail 33 000 51 % 32 000 Public 31 000 19 % 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 3030
  • 31. Deposit growth households Deposit growth households. 12 mth. growth 12 10 8 % 6 4 2 0 01 07 01 07 01 07 01 07 01 07 M M M M M M M M M M 06 06 07 07 08 08 09 09 10 10 20 20 20 20 20 20 20 20 20 20 SNN, Retail clients Households Source: Statistisk Sentralbyrå, The money supply M2, January 2010 & SNN Bare, January 2010
  • 32. Deposit growth corporates Deposit growth corporates. 12 mth. growth 40 35 30 25 20 % 15 10 5 0 2006M01 2006M07 2007M01 2007M07 2008M01 2008M07 2009M01 2009M07 2010M01 2010M07 -5 -10 SNN, Corporate clients Corporates Source: Statistisk Sentralbyrå, The money supply M2, January 2010 & SNN Bare, January 2010
  • 33. Group lending portfolio according to markets Volume according to markets 31.12.10 70 000 Boligkreditt Loans and advances Corp/ to c ustomers Pub 60 000 30 % Retail incl. Bolig- kreditt 50 000 70 % 40 000 Volume incl. Boligkreditt 30 000 20 000 Corp/ Pub Retail 39 % excl. Bolig- kreditt 10 000 61 % 0 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Volume excl. Boligkreditt 3333
  • 34. Credit growth households 18 16 14 12 10 % 8 6 4 2 0 01 07 01 07 01 07 01 07 01 07 M M M M M M M M M M 06 06 07 07 08 08 09 09 10 10 20 20 20 20 20 20 20 20 20 20 SNN, Retail clients Households Source: Statistisk Sentralbyrå, The credit indicator C2, January 2011 & SNN Bare, January 2011 34
  • 35. Credit growth corporates 24 22 20 18 16 14 12 % 10 8 6 4 2 0 -2 01 07 01 07 01 07 01 07 01 07 M M M M M M M M M M 06 06 07 07 08 08 09 09 10 10 20 20 20 20 20 20 20 20 20 20 SNN, Corporate clients Corporates Source: Statistisk Sentralbyrå, The credit indicator C2, January 2010 & SNN Bare, January 2010 35
  • 36. Credit area • Quality • Portfolio • Migration, commitments in default and losses 36
  • 37. Portfolio • High quality in lending portfolio. Stable level of default - still at low levels. • A cautious lending policy and growth in 2006 – 2009 and few corporate exposures in high risk industries has contributed to an overall low portfolio risk. • The Group's total write-downs in 2010 is lower than the expected normalized level. • The Group's corporate portfolio is well diversified • Exposure to certain sectors with high risk for the bank was reduced last year − Property project • Growth in portfolio in sectors with low/moderate risk − Building and construction − Retail trade − Power and water supply • Positive migration developments in corporate portfolio 37
  • 38. Portfolio - exposure as of 31.12.10 30.000 25.000 20.000 NOK mill 15.000 10.000 5.000 0 Low risk Medium risk High risk Default/impaired Retail market C orporate market SB1 Boligkreditt 38
  • 39. Risk change - portfolio change Q4/09 - Q4/10 4.000 3.000 2.000 NOK mill 1.000 0 -1.000 Low risk Medium risk High risk Default & impaired -2.000 SB1 Boligkreditt Retail market Corporate market 39
  • 40. Group lending by sector (NOK million) 31.12.10 Share 31.12.09 Share Change Change in % Agriculture and forestry 903 2% 817 2% 86 10,5 % Fishing vessels 984 2% 1.477 3% -493 -33,4 % Fish farming 295 1% 251 1% 44 17,5 % Extraction of crude oil and natural gas 43 0% 125 0% -82 -65,6 % Mining 78 0% 21 0% 57 271,4 % Fishing industry 822 2% 649 1% 173 26,7 % Other industries 517 1% 570 1% -53 -9,3 % Power and water supply 1.619 3% 1.276 3% 343 26,9 % Building and construction 1.094 2% 1.132 2% -38 -3,4 % Retail trade 1.151 2% 629 1% 522 83,0 % Wholesale trade 346 1% 368 1% -22 -6,0 % Hotel and restaurant 397 1% 358 1% 39 10,9 % Intern. shipping and pipeline transport 599 1% 419 1% 180 43,0 % Transport and communication 1.615 3% 1.795 4% -180 -10,0 % Finance and insurance 414 1% 374 1% 40 10,7 % Property Housing cooperatives 1.607 3% 1.523 3% 84 5,5 % Property project 955 2% 1.023 2% -68 -6,6 % Property hiring out 3.784 8% 3.621 8% 163 4,5 % Real estate business 235 0% 140 0% 95 67,9 % Business services 642 1% 639 1% 3 0,5 % Other sectors 824 2% 789 2% 35 4,4 % Insurance, fund management and financial services 85 0% 157 0% -72 -45,9 % Central government- and social security administration - 0% 1 0% -1 Counties and municipalities 157 0% 170 0% -13 -7,6 % Retail banking sector 29.880 61 % 29.856 62 % 24 0,1 % TOTAL 49.046 100 % 48.180 100 % 866 1,8 % Loans transferred to SB1 Boligkreditt 14.288 10.283 4.005 39,0 % 40
  • 41. Corporate property lending portfolio 90,0 % 85,5 % 80,0 % 70,0 % • Lowest – Low risk, 60,0 % expected loss 0 % - 0,50 % 50,0 % 40,0 % • Medium risk, expected loss 0,50 - 30,0 % 2,00 % 20,0 % 8,6 % • High - Highest risk, 5,9 % 10,0 % expected loss over 0,0 % 2,00 % Lowest - Low Medium High - Highest The portfolio of corporate property lending represents the Group's highest single sector concentration – Represents about 11 percent of total exposure (EAD) The portfolio of corporate property lending is dominated by commitments with low risk 41
  • 42. Losses and commitments in default • Normalized loss development. No new losses of essential character. • High risk exposure within certain sectors was reduced last year – Property projects – Property hiring out • Commitments in default and commitments in certain sectors are monitored very closely – Property projects – Property rentals – Housing co-operatives 42
  • 43. Non-performing and impaired commitments 3,0 % 1200 2,7 % 1005 2,5 % 962 1000 2,3 % 870 803 2,0 % 756 800 760 % of gross loans 1,8 % 1,6 % 1,7 % MNOK 1,5 % 1,5 % 600 563 1,1 % 1,0 % 0,9 % 400 0,6 % 0,6 % 0,5 % 0,5 % 0,4 % 0,4 % 200 0,3 % 0,0 % 0 31.12.04 31.12.05 31.12.06 31.12.07 31.12.08 31.12.09 31.12.10 Non-performing and impaired commitments Individual write-down for impaired value Non-performing and impaired commitments 43
  • 44. Losses on loans and guarantees - Group 350 1.40 % 300 1.20 % 250 1.00 % NOK mill 200 0.80 % 150 0.60 % 100 0.40 % 50 0.20 % 0 0.00 % -50 -0.20 % 2004 2005 2006 2007 2008 2009 2010 Net losses Net losses in % of gross lending incl.agency loans 2004 2005 2006 2007 2008 2009 31.12.10 Individual write-downs for impaired value 206 112 20 55 202 163 133 Collective write-downs imp. value -1 -25 -36 -13 40 36 -39 Recoveries, previously confirmed losses 35 22 27 25 59 14 7 Net losses 170 65 -43 17 183 185 87 Net losses in % of gross lending incl.agency loans 0.45 % 0.16 % -0.09 % 0.03 % 0.32 % 0.31 % 0.14 % 44
  • 45. Loan losses: The Group's write-downs in 2010 Write-downs 4th quarter 4th quarter 2010 2009 2010 2009 Individual write-downs Retail market 16 5 5 13 Corporate market 100 37 30 127 SpareBank 1 Finans Nord-Norge 7 1 5 11 Other group units 4 1 0 1 Total individual write-downs 127 44 40 152 Collective write downs and other value change -40 -1 4 33 items Total write-down on loans and guarantees 87 43 44 185 • The Group's total write-downs in 2010 is lower than the expected normalized level. 45
  • 47. Income from financial investments (Amounts in NOK million) 31.12.10 31.12.09 Dividends 43 23 Income from joint ventures 251 281 Gains/losses and net value changes on certificates and bonds 3 21 Gains/losses and net value changes on shares 90 118 Gains/losses and net value changes on foreign exchange 32 49 Gains/losses and net value changes on other financial derivatives -15 32 Income from financial investments 404 524 4747
  • 49. SpareBank 1 Nord-Norge: Relative share price performance over 3 years 49 49
  • 50. The Bank's equity certificates: Bonus issue and split • The bank's Main Board of Directors proposes the transfer of NOK 300 million from the bank's equalisation reserve to the equity certificate capital. • This entails the issuance of 5,970,691 new equity certificates with a nominal value of NOK 50.-, with 3 old equity certificates giving entitlement to one new equity certificate. • In addition, a split of the bank's equity certificates is proposed, i.e. each equity certificate will be split into two after the bonus issue. The new nominal value per equity certificate will then be NOK 25. • The bonus issue and split will be reviewed by the Bank's Supervisory Board on 29 and 30 March 2011. The practical execution will start as soon as possible thereafter. 50
  • 51. SNN's equity certificates (ECCs): Bonus issue and split - new value Theoretical value after bonus issue and split Bonus issue Number of old ECCs per new 3 Nominal value ex dividend 120,000 Number of ECCs before bonus issue 17 912 073 Total market value ECCs (mnok) 2 149 Number of ECCs after bonus issue 23 882 764 New theoretical value after bonus issue 90 Split 1:2 after bonus issue Number of ECCs after split (1 000) 47 765 528 New theoretical value after bonus issue and split 45 51
  • 52. Equity Certificates (EC) - holder structure 35 31.12.09 31.12.10 30 25 20 % 29.7 15 28.8 27.3 26.5 21.4 21.6 10 5 7.3 5.5 0 10 largest Equity 20 largest Equity Holders residing in Foreign Holders Certificate holders Certificate holders North Norway 5252
  • 53. The 20 largest EC holders as at 31.12.10 Number of Share of total Equity Certificate holders Equity Certificates Equity Certificate capital Pareto Aksjer Norge 1 057 473 5.90 % Pareto Aktiv 471 960 2.63 % MP Pensjon 418 279 2.34 % Frank Mohn AS 381 362 2.13 % Tonsenhagen Forretningssentrum AS 319 126 1.78 % Citibank N.A. 283 588 1.58 % Nordea Bank Norge ASA 280 000 1.56 % Framo Development AS 238 798 1.33 % Sparebanken Rogalands Pensjonskasse 220 081 1.23 % Pareto VPF 203 948 1.14 % Forsvarets Personellservice 174 334 0.97 % Karl Ditlefsen, Tromsø 154 359 0.86 % Sparebankstiftelsen 153 478 0.86 % Trond Mohn 143 279 0.80 % Fred Olsen & Co’s pensjonskasse 121 787 0.68 % Troms Kraft Invest AS, Tromsø 115 113 0.64 % Ringerike Sparebank 113 741 0.63 % Terra Utbytte Verdipapirfond 112 734 0.63 % Taj Holding AS, Finnsnes 100 000 0.56 % Tromstrygd, Tromsø 97 000 0.54 % SUM 5 160 440 28.81 % 5353
  • 55. Liquidity buffer as per 31.12.10 10 9 8 7 Billion NOK 6 5 4 3 2 1 0 1 1 2 2 11 11 12 12 1 11 2 12 11 11 11 11 1 11 1 12 2 .1 l.1 .1 l.1 .1 .1 t.1 r.1 r.1 n. n. n. n. c. g. p. v. c. g. b. b. ay ai ar ar ju ju oc ap ap ja ju ja ju de au se no de au m fe fe m m m • Liquidity buffer: Cash, drawing rights in Norges Bank, bond portfolio (not deposited in Norges Bank), equities and mortgage loans prepared for transfer to SpareBank 1 Boligkreditt. • Assumption: No new capital markets funding and 7 % growth in both lending and deposits. 55
  • 56. SpareBank 1 Nord-Norge 4th quarter report 2010 Very good result. The Bank’s financial strength remains strong . Main features (figures and percentages in brackets refer to the same interim period in 2009): • Low loan losses: Net losses totalled NOK 87 • Operating result before tax NOK 1 002 million (NOK 185 million). million (NOK 1 002 million). • Return on equity capital after tax 15.3 per cent • Lending growth during the last 12 months (18.2 per cent). (including loans transferred to SpareBank 1 • Result per Equity Certificate (EC) (Parent Boligkreditt): 7.2 per cent (4.0 per cent). Bank): NOK 15.59 (NOK 16.39). • Retail banking market 8.4 per cent (including SpareBank 1 Boligkreditt) • The underlying banking operations is • Corporate banking market 4.7 per cent good. Result from core operations before losses NOK 685 million (NOK 663 million). • Deposit growth last 12 months: 12.9 per cent • The total pre-tax result from subsidiaries (0.9 per cent). is NOK 82 million (NOK 25 million). • Retail market 6.7 per cent • Corporate market 19.1 per cent • Net result from financial investments NOK 404 million (NOK 479 million); • Public market 22.3 per cent • SpareBank 1 Gruppen AS' NOK 164 million • Overall deposit coverage ratio: 80.3 per cent • Other joint ventures in the SpareBank 1 (72.4 %). Alliance NOK 87 million • The Bank has good financial strength with the • Gains on the bank's share portfolio NOK 133 Group’s core capital adequacy ratio at 10.9 per million cent. • Net gains interest-bearing portfolio NOK 3 mill • Continued satisfactory liquidity. • FX and financial derivatives NOK 17 million • Proposed payment of cash dividend: NOK 5.75 • Overall cost control under control. Cost per Equity Certificate income ratio: 46.8 % (45.0 %). • Bonus issue and split of the Bank's Equity • Low loan losses: Net losses totalled NOK certificate 87 million (NOK 185 million). 56
  • 57. Contact information SpareBank 1 Nord-Norge P O Box 6800 9298 Tromsø CEO Deputy CEO CFO Hans Olav Karde Oddmund Åsen Rolf Eigil Bygdnes Tlph 901 51 981 Tlph 906 72 757 Tlph 905 19 774 Internet: Financial calendar 2011 SNN home page and internet bank: www.snn.no Q1 29. April Hugin Online: www.huginonline.no Q2 10. August Equity capital certificates in general: www.egenkapitalbevis.no Q3 26. October 5757
  • 58. Additional information - www.snn.no 5858
  • 60. Summary – key figures Group Amounts in NOK million 31.12.10 31.12.09 Change Change % RESULT Result before tax 1 002 1 002 0 0.0% STATEMENT OF FINANCIAL POSITION Total assets 68 780 64 239 4 541 7.1% Gross lending 49 046 48 180 866 1.8% Deposits from customers 39 389 34 877 4 512 12.9% KEY FIGURES 31.12.10 31.12.09 Change Change % Core capital adequacy ratio 10.9% 10.7% 0.2% After-tax return on equity capital 15.3% 18.2% -2.9% Cost/income 46.8% 45.0% 1.8% Manyear 788 778 10 Parent bank Result per Equity Certificate 11.51 13.85 -2.33 6060
  • 61. Loan to value – LTV in % of collateral 90,00 % 80,9 % 80,00 % Exposure Exposure 70,00 % Balance Balance incl incl Boligkreditt 60,00 % Boligkreditt 50,00 % 40,00 % 36,4 % 30,00 % 27,5 % 19,1 % 20,00 % 10,2 % 8,2 % 8,8 % 10,00 % 5,1 % 1,3 % 2,5 % 0,00 % Within 60% 60-75% 75-90% 90-100% Over 100% The calculation is based on the market value of the collateral. By exposure the whole loan is included in the bucket while by balance, including Boligkreditt, the loan is distributed in the different intervals. The numbers include the Group's share of SB1 Boligkreditt-portfolio. 61
  • 62. Group loan write-downs Change in group write-downs 40 30 20 NOK million 10 0 2008 2009 2010 -10 -20 -30 -40 -50 Due to the positive migration, for the corporate market portfolio in particular, group write-downs were NOK 38 million lower in 2010. The level of write-downs is considered reasonable based on an assessment of the bank’s portfolio and external variables. 62
  • 63. Interest-bearing portfolio ABS Industry, 0,1 % CDO Norway 1,3 % 5,1 % Subord. debt, Cert. Norway Gov. cert. 10,3 % Fin. sector, 1,9 % 7,9 % Gov. guar. abroad bonds 7,0 % 2,3 % Public bond 1,2 % Fin. sector, Norway 19,8 % Covered bonds 43,2 % Total portfolio 11.541 mnok 63
  • 64. Funding instruments/diversification as per 31.12.10 Category <1yr >1yr Total Lower Tier 2, EUR 0 0 0 Lower Tier 2, NOK 0 1.000 1.000 EMTN, EUR 2.493 312 2.804 Tier 1, Perpetual, USD 0 349 349 BONDS, NOK 2.101 10.842 12.943 Government, NOK 0 1.000 1.000 Schuldschein, EUR 218 0 218 Cert's, NOK 0 0 0 Gov. swap arr., NOK 0 2.562 2.562 TOTAL, Short term funding 4.812 TOTAL, Long term funding 16.065 TOTAL, All funding 20.877 64
  • 65. Funding and liquidity management Maturity profile of capital markets funding as per 31.12.10 Funding maturity next 12 months 2,500 2,250 • Good liquidity 2,000 B illio n N O K 1,750 1,500 1,250 1,000 0,750 0,500 0,250 • Liquidity buffer NOK 7,9 billion per 31.12.10 0,000 1 11 1 1 1 11 1 11 11 1 11 1 01 01 01 01 01 01 01 20 20 20 20 20 .2 l.2 .2 .2 t.2 .2 r .2 g. p. v. c. b. ar n n ay ju oc ap au se no de ja ju fe m m • Net refinancing need next Yearly funding maturity 12 months NOK 4,75 billion 6,000 5,000 4,000 Billion NOK 3,000 2,000 1,000 0,000 2010 2011 2012 2013 2014 2015 2016 2017 65
  • 66. Exposure in Russia per 31.12.10 Bank Tavrichesky • 10% stake, equivalent of NOK 82 mill • Subordinated loan EUR 4 mill NOK 32 mill North-West 1 Alliance Bank • Shares 75 % + assets NOK 34 mill • Issue 2011 RUR 150 mill NOK 30 mill • Funding agreement up to RUR 500 mill NOK 100 mill – Drawn NOK 41 mill • Subordinated loan EUR 1,5 mill NOK 12 mill Costs for Norwegian staff in Russia is charged in the Parent bank's 2010 accounts. The profit share (75 % fra NW1AB) is -0,6 mnok 66
  • 67. The SpareBank 1 Alliance SpareBank 1 Nord Norge: Co-founder and one of the key partners in the SpareBank 1 Alliance Description of the SpareBank The SpareBank 1 Alliance has a Total assets in Norway 31.12.09 1 Alliance nationwide distribution network (NOK bn, parent banks) • The SpareBank 1 Alliance’s objective is to ensure the individual bank’s independence and regional anchoring through 352 member branches strong competitiveness, and distribution through profitability and solidity 378 branches • Key figures for the SpareBank 1 Alliance – Founded in 1996 – 20 independent savings banks – 1.6 million customers, 530,000 internet customers – Total assets: NOK 628bn – 2nd largest mortgage lender – 2/3 in retail lending – 352 branches, 6,300 employees • Market surveys indicate that Source: company reports SpareBank 1 is the second most Note: (1) For Scandinavian banks, gross lending in Norway is known brand name in the used; (2) loans transferred to Boligkredit (Covered bond Norwegian financial industry company) are included 67 67
  • 68. The SpareBank 1 Alliance Strategic platform for the Alliance Purpose Ensure the independence and regional foothold of the individual member banks by maximizing their: - Competitiveness - Profitability - Capital strength Efficiency Local Market Focus Cornerstones As a group, the banks seek to Each bank continues to maintain its increase their efficiency compared to link with its local community by: competitors by: - Keeping its own name and legal - Economies of scale identity - Mutually increasing critical core - Taking advantage of its competencies proximity to the local market - Sharing development investments ALLIANCE PROGRAMME SEPARATE LEGAL ENTITIES COMMON SUPERBRAND 68 68