BN Bank ASA · 2018. 7. 24. · Non-performing loans as 1at 30 June 2012 were 1.83 per cent of gross lending (0.44 per cent). On a 12-month basis, growth in lending was 7.0 per cent

INTERIM REPORT

2ND QUARTER | 2012BN Bank ASA

Highlights first half-year to 30 June 2012 BN Bank ............................................................................................................3

Financial Ratios .......................................................................................................................................................................4

Report of the Directors ...........................................................................................................................................................5

Income Statement - Group .................................................................................................................................................. 11

Balance Sheet - Group ......................................................................................................................................................... 12

Changes in Equity - Group ................................................................................................................................................... 13

Statement of Cash Flows - Group ....................................................................................................................................... 14

Notes - Group ....................................................................................................................................................................... 15Note 1. Accounting policies..................................................................................................................................................................................................................... 16

Note 2. Change in value of financial instruments carried at fair value, gains and losses ........................................................................................................... 16

Note 3. Other operating income ............................................................................................................................................................................................................ 17

Note 4. Other expense, gains and losses .............................................................................................................................................................................................. 17

Note 5. Overview of gross lending in managed portfolio................................................................................................................................................................. 17

Note 6. Impairment losses and write-downs on loans carried at amortised cost and guarantees .......................................................................................... 18

Note 7. Borrowing (funding) ................................................................................................................................................................................................................... 20

Note 8. Results of divested operation ................................................................................................................................................................................................... 21

Note 9. Capital adequacy ......................................................................................................................................................................................................................... 23

Note 10. Contingent liabilities ................................................................................................................................................................................................................ 24

Note 11. Contingent outcomes, events after the reporting period ................................................................................................................................................ 24

Note 12. Transfer to SpareBank 1 Næringskreditt ............................................................................................................................................................................... 24

Note 13. Transfer to SpareBank 1 Boligkreditt ..................................................................................................................................................................................... 25

Note 14. Disclosures concerning operating segments in remaining entity .................................................................................................................................. 25

Note 15. Consolidated income statements for the last five quarters ............................................................................................................................................. 27

Income Statement - Parent Bank ....................................................................................................................................... 28

Balance Sheet - Parent Bank ............................................................................................................................................... 29

Changes in Equity - Parent bank ......................................................................................................................................... 30

Statement of Cash Flows - Parent Bank ............................................................................................................................ 31

Notes - Parent Bank ............................................................................................................................................................. 32Note 1. Accounting policies..................................................................................................................................................................................................................... 33


Note 3. Other operating income ........................................................................................................................................................................................................... 34

Note 4. Income from ownership interests in group companies ...................................................................................................................................................... 34










Note 14. Income statements for the last five quarters ...................................................................................................................................................................... 42

Report on Review of Interim Financial Information .......................................................................................................... 43

Statement in accordance with the Norwegian Securities Trading Act, section 5-6 ......................................................... 44

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2nd quarter 2012 Financial Ratios Directors´ Report Interim Report

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Highlights first half-year to 30 June 2012 BN Bank (Figures compared with first-half 2011)

• ProfitaftertaxofNOK66million(NOK73million)

• ProfitaftertaxofcorebusinesstotallingNOK99million(NOK67million)

• Returnonequityaftertaxof4.2percent(4.9percent)

• Returnonequityaftertaxofcorebusiness6.3percent(4.5percent)

• Tier1capitalratioof12.2percent(11.0percent);coretier1capitalratioof10.3percent(9.6percent)

• 10.3percentgrowthinbusinesslendingand3.8percentgrowthinretaillendinginthepast12months

• SpareBank1SMNtookoverNOK2.3billionoftheNOK3.1billionloanportfolioinÅlesundasof1February2012. BNBankisnowprovidingguaranteesfor60%ofthecreditriskforthisportfolio(referredtoastheGuaranteePortfolio). BNBank’smaximumlossisthusdowntoNOK443million,whichattheendoffirst-half2012was1.4percentofthe Group’stotallending.

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NOK MILLION NOTE 30.06.12 30.06.11 FULL-YEAR 2011

Summary of resultsNetincomefrominterestandcreditcommissions 169 186 385Totalotheroperatingincome 74 59 103Totalincome 243 245 488Totalotheroperatingexpense 129 135 234Operatingprofit/(loss)beforeimpairmentlosses 114 110 254Impairmentlossesonloansandadvances 23 28 62Profit/(loss)beforetax 91 82 192Computedtaxcharge 25 21 44Profit/(loss)fortheperiod,remainingentity 66 61 148

Profitability Returnonequity 1 4.2% 4.9% 5.0%Netinterestmargin 2 0.83% 0.90% 0.94%Cost-incomeratio 3 53.1% 55.1% 48.0%

Balance sheet figures Grosslending 31 238 32 758 33 439Customerdeposits 15 763 15 614 15 959Deposit-to-loanratio 4 50.5% 47.7% 47.7%Increase/decreaseinlending(gross)last12months -4.6% 5.4% 2.6%Increase/decreaseindepositslast12months 1.0% -2.8% -2.7%Averagetotalassets(ATA) 5 40 536 41 251 40 887Totalassets 38 618 40 181 40 722

Balance sheet figures remaining entity including SpareBank 1 Næringskreditt and SpareBank 1 Boligkreditt Grosslending 47 125 44 051 45 663Customerdeposits 15 763 15 614 15 959Increase/decreaseinlending(gross)last12months 7.0% 8.2% 8.0%Increase/decreaseindepositslast12months 1.0% -2.8% -2.7%Shareoflendingfundedviadeposits 33.4% 35.4% 34.9%

Losses on loans and non-performing loans Lossratiolending 6 0.14% 0.17% 0.19%Non-performingloansasapercentageofgrosslending 7 1.83% 0.44% 0.59%Otherdoubtfulcommitmentsasapercentageofgrosslending 7 1.17% 2.22% 2.02%

Solvency Capitaladequacyratio 15.1% 14.0% 13.7%Tier1capitalratio 12.2% 11.0% 11.0%Tier1capital 3 630 3 485 3 644Capitalbase 4 507 4 421 4 543

Offices and staffing Numberofoffices 2 2 2Numberoffull-timeequivalents 107 115 108

Shares Earningspershareforperiod(wholeNOK)beforediscont.operations 4.94 4.93 11.39Earningspershareforperiod(wholeNOK)inc.discont.operations 4.94 5.90 11.86

Notes 1)Profitaftertaxasapercentageofaverageequity

2)Totalnetinterestmargintodatethisyearinrelationtoaveragetotalassets(ATA)

3)Totaloperatingexpenseasapercentageoftotaloperatingincome

4)Customerdepositsasapercentageoflendingtocustomers

5)Averagetotalassets(ATA)arecalculatedasanaverageofquarterlytotalassetsandasat

1Januaryand31December

6)Netlossasapercentageofaveragegrosslendingtodatethisyear

7)ThefiguresdisclosedincludetheGuaranteePortfolio

FinancialRatios

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Summary of results for the first half-year to 30 June 2012

Allfiguresforthefirsthalf-yearto30June2012arecomparedwiththefiguresforthefirsthalf-yearto30June2011:

• GrowthinlendingofNOK3074millioninthepast12months(NOK3335million)

• ProfitaftertaxofNOK66million(NOK73million).

• ProfitaftertaxofcorebusinesstotallingNOK99million(NOK67million).

• Returnonequityaftertaxof4.2percent(4.9percent).

• Returnonequityaftertaxofcorebusiness6.3percent(4.5percent).

• ImpairmentlossesonloansandadvancesofNOK23million(NOK28million)

• Tier1capitalratioof12.2percent(11.0percent)

• Coretier1capitalratioof10.3percent(9.6percent)

Highlights of First-Half 2012

Thecomparativefiguresinparenthesesbelowarethefirst-halffiguresasat30June2011.

Forthefirsthalfof2012theBNBankGrouppostedaprofitaftertaxofNOK66million(NOK73million).Thecorebusiness(retailandbusinessbanking)sawanincreaseinpost-taxprofitofNOK32million,whileanegativetrendintheBank’sformerportfolioinÅlesundpulledprofitsdownbyNOK39million.

Totalincomeforfirst-half2012wasNOK243million(NOK245million).Anincreaseinthevolumeoflendingandpositivechangesinthevalueoffinancialinstrumentsmadeapositivecontributiontoincome,butthiswaspulleddownbyadecreaseinincomefromtheGuaranteePortfolio.

Operatingexpenses for the first half-year 2012wereNOK129million (NOK135million). Thedecrease is attributable to a reductioninmarketingcostsandsalescostsrelatingtothepropertyMunkegata21thataroseinthefirsthalfof2011.Thecost-incomeratioforfirst-half2012was53percent(55percent).

Netimpairmentlossesonloansandguaranteesinfirst-half2012totalledNOK23million(NOK28million),includingadecreaseincollectivewrite-downsofNOK20million(increaseofNOK6million).

Non-performingloansasat30June2012were1.83percentofgrosslending1(0.44percent).

Ona12-monthbasis,growth in lendingwas7.0percentandgrowth indeposits1.0percentat theendof first-half2012. Business lendinghas increasedbyNOK3.0billion,while the volumeof retail lendinghas increasedbyNOK0.5billion in thepast12months.LoanstoSpareBank1SMNasaresultofthetransferoftheÅlesundportfoliohavefallenbyNOK0.4billioninthepast12months.

Inthefirsthalfof2012,BNBankissuedordinaryseniorbondsforatotalofNOK6.0billionintheNorwegianbondsmarket. TheBankalso transferredNOK1.0billionandNOK2.7billion toSpareBank1NæringskredittandSpareBank1Boligkredittrespectively.

BNBank’scapitaladequacyratio,tier1capitalratioandcoretier1capitalratioareasfollows:

FIGURES IN % Q2 2012 Q1 2012

Capitaladequacyratio 15.1 14.2

Tier1capitalratio 12.2 11.5

Coretier1capitalratio 10.3 9.7

1GrosslendingcompriseslendingintheGroupandBNBank’sloanportfolioinÅlesund.

ReportoftheDirectors

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BNBank’stotalassetsasat30June2012wereNOK38.6billion(NOK40.2billion).SeeNote9forfurtherdetailsofthecapitaladequacyratio.

On26January2012,OsloDistrictCourtgavejudgmentinthecaseinwhichtheIcelandicbankGlitnirbankihf,hassuedBNBankASAforwhatGlitnirclaimswasanunlawfuloffsetofaboutNOK240million.Accordingtothejudgment,BNBankASAwasorderedtopayGlitnirNOK213millionplusinterest.TheCourtfoundthataboutNOK27millionwaslawfullyoffset.InBNBank’sview,theCourthasmadeanerroronakeypointrelatingtothelargestsingleitemthattheoffsetwasmadeagainst,butBNBankhasotherwisewonontheother,importantpoints.BNBankhasaccordinglyappealedthejudgmenttotheBorgartingCourtofAppeal.AsBNBankhaspreviouslyreportedtheoffsetamountaslost,thejudgmenthasonlyalimitednegativeac-countingeffectfortheBank.

BNBankhaspreviouslyenteredintoanagreementwithSpareBank1SMNforthelattertotakeovertheBank’sÅlesundportfolio.Thepartiesrevisedtheagreementon1February2012,accordingtowhichSpareBank1SMNtookoverNOK2.3billionoftheportfoliovaluedatNOK3.1billion.BNBankisnowprovidingguaranteesfor60percentofthecreditriskfortheremainingportfolio(referredtoastheGuaranteePortfolio).ThishasreducedBNBank’stheoreticalmaximumexposuretoNOK443million,whichwas1.4percentoftheBank’stotallendingat30June2012.

Economic developments

BankBNBankpresentsitsconsolidatedandseparateinterimfinancialstatementsincompliancewithInternationalFinancialReportingStandards(IFRS).SeeNote1formoreinformation.

Thesecond-quarterinterimfinancialstatementsgiveatrueandfairviewoftheBNBankGroup’sassetsandliabilities,financialpositionandperformance.Theinterimfinancialstatementsarebasedontheassumptionthattheentityisagoingconcern.

Profit performance for Q2 2012

Thecomparativefiguresinparenthesesbelowarethefirst-quarterfiguresasat31March2012.

Forthesecondquarterof2012,profitaftertaxwasNOK29million(NOK37million).Thisproducedareturnonequityof3.7percent.Thedecreaseinprofitisattributabletoadecreaseinchangesinthevalueoffinancialinstrumentsandanincreaseinimpairmentlossesonloans.

Income

Totalincomeforthesecondquarterof2012wasNOK116million(NOK127million).

NOKm Q2 2012 Q1 2012 CHANGE

Totalincome 116 127 -11

Marginsandvolumesonlending/deposits 9

Feesandcommission,SpareBank1SMN -5

Sharedividend -2

Returnonunrestrictedfunds(equity) -2

Valuechanges,financialinstruments -15

Other 4

Anincreaseinlendinganddepositmarginsandanincreaseinthevolumeoflendingbroughtaboutanincreaseintotalincome,althoughadecreaseinchangesinthevalueoffinancialinstrumentspulledincomedownoverall.

Insecond-quarter2012,changesinthevalueoffinancialinstrumentswereNOK0million,whichisanegativechangeofNOK15millioncomparedwithfirst-quarter2012.SeeNote2formoreinformationaboutvaluechanges.

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Operating expense

Second-quarteroperatingexpensewasNOK62million(NOK67million).

NOKm Q2 2012 Q1 2012 CHANGE

Operatingexpense 62 67 -5

Wagesandpensioncosts -3

Marketing -1

Consultancyassistance -1

Thedecreaseinotheroperatingexpenseinsecond-quarter2012islargelyowingtoareductioninwagesandsalaries.

TheGroup’scost-incomeratioforsecond-quarter2012was53percent(53percent).

Impairment losses and non-performing loans

Impairmentlossesonloansforthesecondquarterof2012totalledNOK14million(NOK9million).

Impairmentlossesonloansinsecond-quarter2012comprisedincomerecognitionofNOK1millioninretail loans,expenserecognitionofNOK6millionincorporateloans,andexpenserecognitionofNOK9millionintheGuaranteePortfolio2.

Collectivewrite-downsweredownbyNOK1millioninthesecondquarter.

Individualandcollectiveimpairmentlossesonloansinsecond-quarter2012wereasfollows:

NOKm INDIVIDUAL COLLECTIVE

Corporate 6 0

Retail -1 0

GuaranteePortfolio 10 -1

Non-performinganddoubtful loans, less individualwrite-downs, totalledNOK810million(NOK640million)attheendofsecond-quarter2012,whichis2.59percent(1.84percent)ofgrosslending.Thisincludesnon-performinganddoubtfulloansintheGuaranteePortfolio.SeeNote6formoreinformation.

Loanlossprovisionsattheendofthesecondquarterof2012totalledNOK150million,ofwhichindividualwrite-downsacco-untedforNOK84millionandcollectivewrite-downsNOK66million.Totalloanlossprovisionsattheendofthesecondquarterwereasfollows:

LOAN LOSS PROVISIONS (NOKm) % OF GROSS LENDING GROUP

Corporate 135 0.43

Retail 14 0.04

Divestedportfolio 1 0.00

2BNBankhasprovidedguaranteesforlossesinthisportfolio.

Inaddition,provisionofNOK62millionhasbeenmadeasafinanciallossguaranteerelatingtotheGuaranteePortfolio.

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Total assets

BNBank’stotalassetswereNOK38.6billionattheendofthesecondquarterof2012,whichisNOK1.6billiondownonthepastyear.ThechangeismostlyattributabletoatransferofloanstoSpareBank1NæringskredittandSpareBank1Boligkreditt.

Growth in lending and deposits

Grosslending3hasincreasedbyNOK3.1billion,or7.0percent,inthepast12months.GrosslendingtotalledNOK47.1billionattheendofthesecondquarterof2012.

NOKbn Q2 2012 Q1 2012 Q4 2011 Q3 2011

Grosslending 47.1 45.9 45.7 44.6

Changeinthequarter 1.2 0.2 1.1 0.5

Grosslendinghadthefollowingsegmentalexposureasat30June2012:

NOKbn Q2 2012 Q2 2011

Retail 13.9 13.4

Corporate 32.0 29.0

LoanstransferredtoSpareBank1SMN 1.2 1.6

Growthincorporatelendinginthepast12monthswasNOK3.0billion,or10percent,whereasgrowthinretaillendinginthepast12monthswasNOK0.5billion,or4percent.

GrosslendingintheBNBankGroup4asat30June2012hadthefollowingsectoralexposure:

FIGURES IN % Q2 2012 Q2 2011

Realestateoperations 59 50

Retailmarket 26 33

Financialindustry 8 5

Other 7 12

Attheendofsecond-quarter2012aloanportfolioofNOK9.3billionhadbeentransferredtoSpareBank1NæringskredittandaloanportfolioofNOK6.6billiontoSpareBank1Boligkreditt.

CustomerdepositshaveincreasedbyNOK149millioninthepast12months.TotaldepositsstoodatNOK15.8billionattheendofthesecondquarterof2012.

Thedeposit-to-loanratioattheendofthesecondquarterof2012was50.5percent,whichis2.8percentagepointshigherthanasat30June2011.

3GrosslendingisthesumtotalofcorporateandretaillendinginBNBank,SpareBank1Næringskreditt,SpareBank1Boligkredittandloanstrans-ferredtoSpareBank1SMN.

4GrosslendingfortheGroupisthesumtotalofcorporateandretaillendinginBNBankandloanstransferredtoSpareBank1SMN.

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Funding and liquidity

Inthesecondquarter,BNBankhasissuedcertificatesandbondsforatotalofNOK3.7billion.

TheBank’sliquidityportfoliowasNOK6.0billionattheendofsecond-quarter2012.

BNBank’sBoardofDirectorshaveresolvedthattheBankshallatalltimeshavesufficientliquidfundstomanagewithoutac-cessinganynewexternalfundingforaperiodof12months.Attheendofthesecondquarterof2012,thistargethadbeenmetbyagoodmargin.

Subsidiaries

TheBNBankGroupcomprisesthebankBNBankASAandthecreditinstitutionsBolig-ogNæringskredittAS(BNkreditt)andBNBoligkredittAS(BNBoligkreditt).TheGroupalsoincludestherealestatecompanyCollectionEiendomAS.

BNkredittandBNBoligkredittpresentseparatefinancialstatementsincompliancewithInternationalReportingStandards(IFRS).CollectionEiendompresentsitsfinancialstatementsincompliancewithNGAAP.SeeNote1formoreinformation.

Bolig- og Næringskreditt AS

BNkredittprovideslow-riskmortgageloansoncommercialrealestate.Attheendofthesecondquarterof2012thecompanyhadaloanportfoliototallingNOK18.5billion,comparedwithNOK16.1billionasat30June2011.NOK9.3billioninloanshadbeentransferredtoSpareBank1Næringskredittasat30June2012.

BNkredittpostedaprofitaftertaxofNOK41millionforthefirsthalfof2012,comparedwithapost-taxprofitofNOK44millionforthesameperiodlastyear.Thedecreaseinprofitisprimarilyattributabletoadecreaseinnetincomefrominterestandcreditcommissions.

ImpairmentlossesonloansandadvancestotalledNOK6millionforfirst-half2012,comparedwithNOK24millionforsameperiodin2011.Collectivewrite-downsweredownbyNOK1millioninfirst-half2012andtotalledNOK41million,whichis0.22percentofgrosslendingasat30June2012.

BNkreditthadNOK4.1billioninbonddebtoutstandingasat30June2012,comparedwithNOK4.3billionasat30June2011.

BNBankhasprovidedguaranteesthatBNkredittwillhaveaminimumcapitaladequacyratioandjuniorfinancingof20percent.BNkreditt’scapitaladequacyratioandtier1capitalratiowere,respectively,15.3percentand13.0percentasat30June2012.TheamountBNBankiscedingprecedenceforinrelationtoguaranteeswasNOK937millionasat30June2012.

BN Boligkreditt AS

BNBoligkredittisBNBank’screditinstitutionforissuanceofcoveredbonds.Attheendofthefirsthalfof2012thecompanyhadaresidentialmortgageportfoliototallingNOK224million,whichisNOK2.0billionlessthanasat30June2011.

ThecompanypostedaprofitaftertaxofNOK6millionforfirst-half2012,comparedwithNOK11millionforthesameperiodof2011.Thedecreaseinprofitisattributabletoafallinthevolumeoflendingandadecreaseinchangesinthevalueoffinancialinstruments.

Thecompany’scapitaladequacyratiowas142.7percentandthetier1capitalratiowas112.1percentasat30June2011.

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Trondheim,7August2012TheBoardofDirectors

FinnHaugan (Chair)

ToreMedhus StigArneEngen HaraldGaupen HeleneJebsenAnker (DeputyChair)

KristinUndheim AnitaFinseråsBretun EllaSkjørestad GunnarHovland (EmployeeRepresentative) (ManagingDirector)

Collection Eiendom AS

CollectionEiendomASwasestablishedin2010forthepurposeofowningandmanagingrealestate.

CollectionEiendompostedazeroresultaftertaxasat30June2012.

Outlook for BN Bank

BNBankASAiswellcapitalisedandtheBank’sfundingissound.TheBoardofDirectorsarefocusingonhealthygrowthintheBank’scoreareasinaccordancewiththeadoptedbusinessstrategy.

Turbulenceinthefinancialmarketsisaffectingthesupplyandcostoffunding.Acontinuingriseinthecostoffundingmaygiverisetoanincreaseinlendinginterestratesandlowergrowthgoingforward.

LowcostswillbeessentialtoenabletheBanktorealiseitsstrategy,andforthatreasontheBankwillworkhardtoreducetheoverallcostpicturein2012comparedwith2011.

TheBoardexpecttoseecontinuingpositivedevelopmentwithinBNbank’scorebusiness.

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Group | Parent Bank

GROUP

NOK MILLION NOTE Q2 2012 Q2 2011 30.06.2012 30.06.2011 FULL-YEAR 2011

Interestandsimilarincome 399 398 829 785 1 639Interestexpenseandsimilarcharges 314 303 660 599 1 254

Net income from interest and credit commissions 85 95 169 186 385

Changeinvalueoffinancialinstrumentsatfairvalue,gains&losses 2 0 10 15 4 -20Otheroperatingincome 3 31 29 59 55 123

Total other operating income 31 39 74 59 103

Salariesandgeneraladministrativeexpenses 52 57 107 108 222Ordinarydepreciation,amortisationandwrite-downs 5 4 9 8 16Otheroperatingexpense 5 12 13 19 33Othergainsandlosses 4 0 0 0 0 -37

Total other operating expense 62 73 129 135 234

Operating profit/(loss) before impairment losses 54 61 114 110 254

Impairmentlossesonloansandadvances 6 14 -7 23 28 62

Profit/(loss) before tax 40 68 91 82 192

Tax 11 17 25 21 44

Profit/(loss) for the period, remaining entity 29 51 66 61 148

Resultofoperationsunderdivestment 8 0 5 0 12 6

Profit/(loss) for the period including discontinued operations 29 56 66 73 154

OtherComprehensiveIncomeChangeinvalueoffinancialassetsavailableforsale 0 0 0 0 0

Total P&L items recognised in equity 0 0 0 0 0

Total profit/(loss) for the period 29 56 66 73 154

IncomeStatement-Group

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Income Statement | Balance Sheet | Change in Equity | Cash Flow Statement | Notes

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Group | Parent Bank



BalanceSheet-Group GROUP


Deferredtaxassets 43 54 43Intangibleassets 21 21 20Tangiblefixedassets 11 22 102 23Repossessedproperties 31 0 0Loansandadvances 5,6,12,13 31 088 32 590 33 260Prepaymentsandaccruedincome 15 78 70Financialderivatives 721 387 865Short-termsecuritiesinvestments 5 960 5 333 5 506Cashandbalancesduefromcreditinstitutions 702 1 147 814Assetsclassifiedasheldforsale 8 15 469 121

Total assets 38 618 40 181 40 722

Sharecapital 668 649 649Sharepremium 266 190 190Retainedearnings 2 287 2 235 2 316

Total equity 3 221 3 074 3 155

Subordinatedloancapital 7 1 461 1 459 1 451Liabilitiestocreditinstitutions 824 2 046 1 178Debtsecuritiesinissue 7 16 388 16 983 17 950Accruedexpensesanddeferredincome 6 156 158 131Othercurrentliabilities 184 125 11Taxpayable 0 0 37Financialderivatives 620 279 839Customerdeposits&accountspayabletocustomers 15 763 15 614 15 959Liabilitiesclassifiedasheldforsale 8 0 443 11

Total liabilities 35 397 37 107 37 567

Total equity and liabilities 38 618 40 181 40 722

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Group | Parent Bank


GROUP

OTHER SHARE SHARE PAID-UP OTHER TOTALNOK MILLION CAPITAL PREM. RES. SHARE CAPITAL RESERVES EQUITY

BalanceSheetasat1January2011 619 68 0 2 315 3 002Dividendpaid 0 0 0 -152 -152Sharecapitalincrease 30 122 0 0 152Resultfortheperiod 0 0 0 72 72

Balance Sheet as at 30 June 2011 649 190 0 2 235 3 074

Resultfortheperiod 0 0 0 81 81

Balance Sheet as at 31 December 2011 649 190 0 2 316 3 155

Dividendpaid 0 0 0 -95 -95Sharecapitalincrease 19 76 0 0 95Resultfortheperiod 0 0 0 66 66

Balance Sheet as at 30 June 2012 668 266 0 2 287 3 221

ChangesinEquity-Group


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Group | Parent Bank


StatementofCashFlows-Group GROUP

NOK MILLION 30.06.12 30.06.11 FULL-YEAR 2011

Cash flows from operating activitiesInterest/commissionreceivedandfeesreceivedfromcustomers 1 172 955 2 353Interest/commissionpaidandfeespaidtocustomers -52 -45 -433Interestreceivedonotherinvestments 174 173 300Interestpaidonotherloans -497 -517 -882Receipts/disbursements(-)onloanstocustomers 1 995 -193 -1 948Receipts/paymentsoncustomerdeposits&accountspayabletocustomers -218 -1 258 -1 465Receipts/payments(-)onliabilitiestocreditinstitutions -520 71 -232Receipts/payments(-)onsecuritiesinissue -1 624 570 1 395Receiptsonpreviouslywritten-offdebt 2 15 44Otherreceipts/payments 25 25 114Paymentstosuppliersforgoodsandservices -52 -79 -152Paymentstoemployees,pensionsandsocialsecurityexpenses -60 -64 -102Taxpaid -2 0 -2

Net cash flow from operating activities 343 -347 -1 010

Cash flows from investing activitiesReceipts/payments(-)onreceivablesfromcreditinstitutions 22 261 666Receipts/payments(-)onshort-termsecuritiesinvestments -436 470 285Proceedsfromsaleofoperatingassetsetc. 0 25 25Purchaseofoperatingassetsetc. -41 -45 -65Proceedsfromsaleofsubsidiaries 0 0 129

Net cash flow from investing activities -455 711 1 040

Cash flow from financing activitiesReceipts/payments(-)ofsubordinatedloancapital 0 -229 -228

Net cash flow from financing activities 0 -229 -228

Net cash flow for the period -112 135 -198

Cashandbalancesduefromcentralbanksasat1January 814 1 012 1 012

Cash and balances due from central banks at close of period 702 1 147 814

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Group | Parent Bank


Notes-GroupNote 1. Accounting policies..................................................................................................................................................................................................................... 16


Note 3. Other operating income ............................................................................................................................................................................................................ 17

Note 4. Other expense, gains and losses .............................................................................................................................................................................................. 17










Note 14. Disclosures concerning operating segments in remaining entity .................................................................................................................................. 25

Note 15. Consolidated income statements for the last five quarters ............................................................................................................................................. 27

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NOTE 1. ACCOUNTING POLICIES

Thefirst-halfinterimconsolidatedfinancialstatementsfortheperiod1Januaryto30June2012havebeenpreparedincompliancewithIFRS,includingIAS34InterimFinancialReporting.AdescriptionoftheaccountingpoliciesonwhichtheinterimconsolidatedfinancialstatementsarebasedisprovidedintheAnnualReportfor2011.

NOTE 2. CHANGE IN VALUE OF FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE, GAINS AND LOSSES

GROUP

NOK MILLION Q2 2012 Q2 2011 30.06.12 30.06.11 FULL-YEAR 2011

Changeinvalueofinterestratederivativesobligedtobecarriedatfairvaluethroughprofitorloss1,4 -1 -2 3 -7 -5Changeinvalueofcurrencyderivativesobligedtobecarriedatfairvaluethroughprofitorloss2 -17 29 43 -3 -117Changeinvalueofequity-linkedoptions&equityoptionsoblig.carriedatfairvaluethroprofitorloss1 0 14 0 11 19

Total change in value of financial instruments obliged to be carried at fair value -18 41 46 1 -103

Changeinvalueofdepositsselectedforfairvaluecarryingthroughprofitorloss4 4 3 -1 1 -6Changeinvalueofborrowingsselectedforfairvaluecarryingthroughprofitorloss4 9 -19 3 12 -5Changeinvalueofloansselectedforfairvaluecarryingthroughprofitorloss4 -2 10 3 -11 -12Changeinvalueofshort-termfinancialinvestmentsselectedforfairvaluecarrying3 -4 7 13 6 -1

Total change in value of financial instruments selected for fair value carrying 7 1 18 8 -24

Changeinvalueofinterestratederivatives,hedging5 18 27 25 -6 69Changeinvalueofborrowings,hedged5 -18 -27 -25 6 -70

Total change in value of financial instruments for hedging 0 0 0 0 -1

Total change in value of financial instruments carried at fair value -11 42 64 9 -128

Realisedexchangegains/losses(-)bondsandcertificatescarriedatamortisedcost -6 -5 -9 -8 -10Exchangegains/lossesonborrowingsandloanscarriedatamortisedcost2 17 -27 -40 3 118

Total change in value of financial instruments carried at fair value, gains and losses 0 10 15 4 -20

1Inconnectionwiththesaleand/orissueofthestructuredproducts,BNBankhashedgedexposureintheformofequityoptions,equity-linkedoptionsandinterestrateswapagreements.Theearlierturbulenceinthefinancialmarketscausedthelossofsomecontractualcounterparties,anditwasnotpossibleatthetimetoreplacethesehedgingtransactions.BNBankisthereforepartiallyexposedtothemarketdevelopmentofalimitednumberofproducts.Changesinexposurearerecognisedinprofitandlossimmediatelyandasat30June2012therewasnoprofit-and-losseffect,comparedwithrecognisedexpenseofNOK2millionforthesameperiodof2011.NOK8millionwasrecognisedasexpenseforfull-year2011.

2Exchangegains/lossesonborrowingsandloanscarriedatamortisedcostarechieflyattributabletoexchangegain/losseffectswhicharisewhenborrowingandlendinginforeigncurrenciesaretranslatedatthecurrentexchangerate.Forwardexchangecontractsandcombinedinterestrateandcurrencyderivativesarecarriedatfairvaluewithchangesinvaluecarriedthroughprofitorloss.ThenetforeignexchangeeffectfortheGroupwasrecognisedincomeofNOK3millionfortheperiodto30June2012,comparedwithnoP&Leffectfortheperiodto30June2011.Theequivalentfigureforfull-year2011wasNOK1millionrecognisedasincome.Exposuretoexchangeratefluctuationsislow.

3ChangesinthevalueoffinancialinvestmentsselectedforfairvaluecarryinggaverisetorecognisedincomeofNOK13millionfortheperiodto30June2012,comparedwithrecognisedincomeofNOK6millionforthesameperiodof2011.NOK1millionwasrecognisedasexpenseforfull-year2011.Turbulenceinthefinancialmarketshascausedbigfluctuationsinthevalueoftheseinvestments.

4TheneteffectofinterestratederivativesobligedtobecarriedatfairvalueandchangesinthevalueoffinancialinstrumentsselectedforfairvaluecarryingwasrecognisedincomeofNOK8millionfortheperiodto30June2012,comparedwithrecognisedincomeofNOK8millionforthesameperiodof2011.NOK1millionwasrecognisedasexpenseforfull-year2011.

5From2010,BNBankhasusedfairvaluehedgesfornewfixed-rateborrowingsandrelatedhedgeinstruments.Theborrowingsarehedged1:1throughexternalcontractswheretheprincipal,intereststream,termandhedgingtransactionmatch.Itistheinterestrateriskthatishedgedandthehedgingtransactionsenteredintoaredocumented.Withfairvaluehedges,thehedgeinstrumentisac-countedforatfairvalue,andthehedgeobjectisaccountedforatfairvalueforthehedgedrisk.Changesinthesevaluesfromtheopeningbalancesheetarecarriedinprofitorloss.Thecreditriskisnothedgedandthereforedoesnotaffectthevaluations.Thevalueofthehedginginstrumentsasat30June2012waspositivebyNOK119million.

6Realisedexchangegains/lossesonbonds,certificatesandborrowingscarriedatamortisedcostgaverisetorecognisedexpenseofNOK9millionfortheperiodto30June2012comparedwithrecog-nisedexpenseofNOK8millionforthesameperiodof2011.NOK10millionwasrecognisedasexpenseforfull-year2011.

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NOTE 3. OTHER OPERATING INCOME

GROUP


Guaranteecommission 0 5 2 10 22Netcommissionincome/charges1 31 23 54 44 99Otheroperatingincome 0 1 3 1 2


1CommissionincomerelatingtothemanagementoftheportfoliosinSpareBank1NæringskredittandSpareBank1BoligkreditttotalledNOK47millionasat30June2012andNOK37millionforthesameperiodof2011.NOK72millionwasrecognisedasincomeforfull-year2011.

NOTE 4. OTHER EXPENSE, GAINS AND LOSSES

ThebuildingMunkegata21wassoldandtakenoverbythenewowneron15September2011.AnaccountingprofitofNOK37millionwasreportedinQ32011.

Statement of cash flows: GROUP

NOK MILLION

Bookvalueofthebuildingatdateofsale 91Debtandotheritems -95

Net equity -4

Saleprofittothecompany 37Intercompanydebtsettled 96

Total added upon sale subsidiary 129

NOTE 5. OVERVIEW OF GROSS LENDING IN MANAGED PORTFOLIO

GROUP


LoansCorporateMarketandRetailMarket,Group 30 045 31 137 32 225Seller’scredit 1 193 1 621 1 214

Loans in remaining entity (continuing operations) 31 238 32 758 33 439

LoanstransferredtoSpareBank1Næringskreditt 9 256 8 065 8 263LoanstransferredtoSpareBank1Boligkreditt 6 631 3 228 3 961

Total loans in managed portfolio 47 125 44 051 45 663

Divestedportfolio 92 145 101


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NOTE 6. IMPAIRMENT LOSSES AND WRITE-DOWNS ON LOANS CARRIED AT AMORTISED COST AND GUARANTEES

Thevariouselementsincludedinimpairmentlosses&write-downsonloansaresetoutinNote1,2011AnnualReport.Loanspastduemorethan3monthsaredefinedasloansnotservicedundertheloanagreementfor3monthsormore.AsafirstmortgagelendertheGroupcanaccessrevenueeitherthroughthecourtsorbysomevoluntarysolution.Impairmentlosses&write-downsdescribedhereapplytoloanscarriedatamortisedcostandchangesinvalueandgains/lossesonthesaleofrepossessedpropertiesinthecurrentperiod.

GROUP


Write-offsinexcessofprior-yearwrite-downs 0 1 0 5 23Write-offsonloanswithoutpriorwrite-downs 0 0 0 5 8Write-offstransferredtodivestedportfolio 0 0 0 0 0

Write-downs for the period: Changeincollectivewrite-downs 0 -8 -19 -4 2Changeincollectivewrite-downsrelatedtoGuaranteePortfolio -1 0 -1 0 1Changeincollectivewrite-downstransferredtodivestedportfolio 0 6 0 10 0

Total change in collective write-downs -1 -2 -20 6 3

Increaseinloanswithprior-yearwrite-downs1 12 12 26 28 28Provisionsagainstloanswithoutpriorwrite-downs 5 5 19 12 24Decreaseinloanswithprior-yearwrite-downs -2 -10 -2 -15 -9Changeinindividualwrite-downstransferredtodivestedportfolio 0 0 0 0 0

Total change in individual write-downs 15 7 43 25 43

Grossimpairmentlosses 14 6 23 41 77Recoveriesonpreviouswrite-offs2 0 13 0 13 15

Impairment losses on loans 14 -7 23 28 62

Revenuerecognitionofinterestonwritten-downloans 1 2 3 7 10

1ChangesinvaluerelatingtorepossessedpropertiestotalledNOK10millionasat30June2012.

2NOK9millonrelatestothereportedprofitonthesaleofapreviouslyrepossessedpropertyinTromsøinthesecondquarterof2011.

GROUP


Individualwrite-downstocoverimpairmentlossesatstartoftheperiod 85 92 94 78 78Write-offscoveredbyprior-yearindividualwrite-downs 0 -13 -12 -13 -23

Write-downs for the period: Increaseinloanswithprior-yearindividualwrite-downs 1 6 4 13 14Write-downsonloanswithoutpriorindividualwrite-downs 0 2 0 2 15Decreaseinloanswithprior-yearindividualwrite-downs -2 -7 -2 -16 -6Transferredassetsclassifiedasheldforsale 0 0 0 16 16

Individual write-downs to cover impairment losses at end of the period 84 80 84 80 94

Collectivewrite-downstocoverimpairmentlossesatstartoftheperiod 66 91 85 83 83Collectivewrite-downsfortheperiodtocoverimpairmentlosses 0 -8 -19 -4 2Transferredassetsclassifiedasheldforsale 0 6 0 10 0

Collective write-downs to cover impairment losses at end of the period 66 89 66 89 85


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Lossprovisionfinancialguaranteerel.toGuaranteePortfolioatstartofperiod1 46 41 28 26 26Write-offscoveredbyprior-yearindividualwrite-downs 0 0 0 0 -7

Write-downs for the period: Increaseinloanswithprior-yearindividualwrite-downs 5 6 9 13 4Write-downsonloanswithoutpriorindividualwrite-downs 5 3 19 10 9Decreaseinloanswithprior-yearindividualwrite-downs 0 -5 0 -4 -4

Loss provision financial guarantee rel. to Ålesund portfolio at end of period 1 56 45 56 45 28

Collectivewrite-downsrelatedtoÅlesundportfolioatstartoftheperiod 7 0 20 0 19Collectivewrite-downsfortheperiodtocoverlossesinÅlesundportfolio -1 0 -14 0 1

Collective write-downs related to Ålesund portfolio at end of the period 1 6 0 6 0 20

Individualwrite-downsrelatedtoÅlesundportfolioclassifiedasheldforsale 0 2 0 2 2Collectivewrite-downsrelatedtoÅlesundportfolioclassifiedasheldforsale 0 9 0 9 0

Total loss provisions related to Ålesund portfolio 62 56 62 56 50

1BNBankhaspreviouslyenteredintoanagreementwithSpareBank1SMNforthelattertotakeovertheÅlesundportfolio.Thepartiesrevisedtheagreementon1February2012accordingtowhichSpareBank1SMNtookoverNOK2.3billionoftheportfoliovaluedatNOK3.1billion.BNBanknowprovidesguaranteesfor60%ofthecreditriskforthisportfolio(referredtoastheGuaranteePortfolio).TheBank’smaximumexposureisthusdowntoNOK443million,whichattheendofthesecondquarterof2012was1.4%oftheBank’stotallending.ThetotalprovisionforlossesintheGuaranteePortfoliowasNOK62millionat30June2012.BNBankwillprovideguaranteesforlossesintheGuaranteePortfolioforaperiodof3-5yearsfromtheinceptionoftheoriginalagreement.Thelossprovi-sionisclassifiedunderAccruedexpensesanddeferredincome.

Loans past due more than 3 months 1

GROUP


Grossprincipal 583 158 213Individualwrite-downs 53 5 40

Net principal 530 153 173

Other loans with individual write-downs 1

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Loans past due more than 3 months by sector and as a percentage of loans 1, 2

GROUP

GROSS GROSS GROSS OUTSTANDING OUTSTANDING OUTSTANDINGNOK MILLION 30.06.12 % 30.06.11 % 2011 %

Corporatemarket 508 2.12 70 0.31 126 0.55Retailmarket 56 0.77 66 0.65 66 0.71Ålesundportfolio 19 2.52 22 1.64 21 0.74

Total 583 1.83 158 0.44 213 0.59

1Withregardtodisclosuresinthenotesconcerningloanspastdue(non-performingloans),otherloanswithindividualwrite-downs,andloanspastduebysectorandasapercentageofloans,thefigu-resstatedincludeBNBank’soperationsinÅlesund,whichareotherwisetreatedasdivestedoperations,andtheGuaranteePortfoliovis-a-visSpareBank1SMN.

2Loanspastduemorethan3monthsasapercentageofloansarecalculatedonthebasisofloansintheremainingentityandtheGuaranteePortfolio.

NOTE 7. BORROWING (FUNDING)

Fixed-rateborrowingsthatarepartofindexlinkingarecarriedintheconsolidatedbalancesheetatamortisedcost,wihileotherfixed-rateborrowingsareselectedforfairvaluecarrying.Floating-rateborrowingsarecarriedatamortisedcost.

Debt securities in issue

TheBNBankGrouphadissuedbondsandcertificateswithafacevalueofNOK6043millionasat30June2012,eitherasnewissuesorincreasesinexistingtapissues.

GROUP

NOK MILLION CERTIFICATES BONDS TOTAL

Netdebt(facevalue)asat1January2012 2 646 15 051 17 697Newissues 0 1 515 1 515Increaseinexistingissues 60 730 790Purchaseandmaturityofexistingissues -665 -1 491 -2 156

Net debt (face value) as at 31 March 2012 2 041 15 805 17 846

Newissues 2 154 800 2 954Increaseinexistingissues 0 784 784Purchaseandmaturityofexistingissues -1 068 -4 349 -5 417

Net debt (face value) as at 30 June 2012 3 127 13 040 16 167

Subordinated loan capital and perpetual subordinated loan capital securitiesTheBNBankGrouphadissuednoperpetualsubordinatedloancapitalsecuritiesorsubordinatedloansasat30June2012. GROUP

PERPET. SUBORD. SUBORDINATEDNOK MILLION LOAN CAP. SEC. LOAN CAPITAL TOTAL

Netdebt(facevalue)asat1January2012 650 800 1 450Newissues 0 0 0Increaseinexistingissues 0 0 0Purchaseandmaturityofexistingissues 0 0 0

Net debt (face value) as at 31 March 2012 650 800 1 450

Newissues 0 0 0Increaseinexistingissues 0 0 0Purchaseandmaturityofexistingissues 0 0 0

Net debt (face value) as at 30 June 2012 650 800 1 450

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RECOGNISED VALUES GROUP


Certificatescarriedatamortisedcost 518 0 1 250Certificatesselectedforfairvaluecarrying 2 644 2 020 1 420

Total recognised value of certificates 3 162 2 020 2 670

Bondscarriedatamortisedcost 8 766 5 554 10 010Bondscarriedatamortisedcost(secureddebt) 3 111 1 979 2 074Bondsselectedforfairvaluecarrying 1 349 7 430 3 196

Total recognised value of bonds 13 226 14 963 15 280

Total recognised value of debt securities in issue 16 388 16 983 17 950

GROUP


Perpetualsubordinatedloancapitalsecuritiescarriedatamortisedcost 483 485 482Perpetualsubordinatedloancapitalsecuritiesselectedforfairvaluecarrying 175 173 169

Total recognised value of perpetual subordinated loan capital securities 658 658 651

Subordinatedloanscarriedatamortisedcost 803 801 800Subordinatedloansselectedforfairvaluecarrying 0 0 0

Total recognised value of subordinated loans 803 801 800

Total recognised value of subordinated loans and perpetual subordinated loan capital securities 1 461 1 459 1 451

NOTE 8. RESULTS OF DIVESTED OPERATION

ThebankingoperationinÅlesund,whichchieflycomprisesbusinesslending,becameorganisationallysubordinatetoSpareBank1SMNfromQ42009.AsofQ32009inclusivetheÅlesundoperationhasbeenreportedasadiscontinuedoperationunderIFRS5.Thesplit-offfromBNBankbeganinQ42009andwaslargelycompletedinQ22012.ForthisreasontherearenoP&Leffectsclassifiedasdiscontinuedoperationin2012.

P&LeffectsrelatingtotheGuaranteePortfolio,whicharereferredtoingreaterdetailinNote6,areclassifiedunderremainingentity.

Specification of results of divested operation GROUP


Netincomefrominterestandcreditcommissions 0 1 0 3 4Totalotheroperatingincome 0 0 0 1 1Totalotheroperatingexpense 0 0 0 -3 -3Totalimpairmentlossesonloansandadvances 0 -6 0 -10 -1

Pre-tax profit/(loss) 0 7 0 17 9

Computedtaxcharge 0 2 0 5 3

Profit/(loss) from discontinued operation after tax 0 5 0 12 6

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Statement of cash flows related to divested operation GROUP


Cashflowfromoperatingactivities 0 1 0 7 8Cashflowfrominvestingactivities 0 0 0 0 0Cashflowfromfinancingactivities 0 0 0 0 0

Net cash flow for the period 0 1 0 7 8

Specification of results of remaining entity GROUP


Netincomefrominterestandcreditcommissions 85 95 169 186 385Totalotheroperatingincome 31 39 74 59 103Totalotheroperatingexpense 62 73 129 135 234

Operating profit/(loss) before impairment losses on loans 54 61 114 110 254

Impairmentlossesonloansandadvances 14 -7 23 28 62

Pre-tax profit/(loss) of remaining entity 40 68 91 82 192


Profit/(loss) after tax of remaining entity 29 51 66 61 148

Specification of results of divested operation and the Guarantee Portfolio GROUP

MILLIONER KRONER 30.06.12 30.06.11 FULL-YEAR 2011

Netincomefrominterestandcreditcommissions -18 -3 2Totalotheroperatingincome 1 10 21Totalotheroperatingexpense 0 -3 -3Totalimpairmentlossesonloansandadvances 29 1 26

Pre-tax profit/(loss) -46 9 0

Computedtaxcharge -13 3 0

Profit/(loss) of divested operation and Guarantee Portfolio -33 6 0

Other assets and liabilities classified as held for sale

In connection with a loan defaulted on in 2010, BN Bank took over 100% of the shares in a company. BN Bank intends to sell the company on.

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NOTE 9. CAPITAL ADEQUACY

Process for assessing the capital adequacy requirementBNBankhasestablishedastrategyandprocessforriskmanagementandassessmentofthecapitaladequacyrequirementandhowcapitaladequacycanbemaintained. ThecollectivetermforthisisICAAP(InternalCapitalAdequacyAssessmentProcess).Assessingthecapitaladequacyrequirementincludesassessingthesize,composition anddistributionofthecapitalbaseadaptedtothelevelofrisksthattheBankisormaybeexposedto.Theassessmentsarerisk-basedandforward-looking.RiskareasassessedinadditiontothePillar1risksareconcentrationriskinthecreditportfolio,interestrateandforeignexchangeriskinthebankportfolio,liquidityrisk,marketrisk,owner’s riskandreputationrisk.ICAAPisnotfocusedonasinglemethodorasinglefigure,butpresentsasetofcalculationsincludingdifferenttimehorizons,confidencelevelsandassumptions. GROUP


Sharecapital 668 649 649Otherreserves 2 520 2 388 2 506Perpetualsubordinatedloancapital(perpetualsubordinatedloancapitalborrowings)1 658 659 647

Less:Perpetualsubordinatedloancapital(perpetualsubord.loancapitalborrowings)thatcannotbeincluded1 -113 -136 -95Intangibleassets -21 -21 -20Deferrredtaxassets -43 -54 -43Otherdeductionsintier1capital -39 0 0

Tier 1 capital 3 630 3 485 3 644

Fixed-termsubordinatedloancapital 916 937 899

Less:Fixed-termsubordinatedloancapitalthatcannotbeincluded 0 0 0Otherdeductionsintier2capital -39 0 0

Net tier 2 capital 877 937 899

Total capital base 4 507 4 422 4 543

Risk-weightedassets 29 820 31 666 33 171Tier1capitalratio(%) 12.2 11.0 11.0

Capital adequacy ratio (%) 15.1 14.0 13.7

1Formoredetails,seeNote7.

Specification of risk-weighted assets GROUP


RECOGNISED WEIGHTED RECOGNISED WEIGHTED RECOGNISED WEIGHTEDRISK-WEIGHTING AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

0% 1 000 0 2 091 0 1 004 010% 2 009 201 1 404 140 1 503 15020% 4 984 997 4 985 997 4 725 94535% 7 954 2 784 9 939 3 479 9 560 3 34650% 0 0 658 329 420 21075% 40 30 681 511 345 259100% 25 809 25 809 26 210 26 210 28 261 28 261Investmentsincludedinthetradingportfolio 0 0 0 0 0 0Negotiabledebtinstrumentsincludedinthetradingportfolio 0 0 0 0 0 0

Total risk-weighted assets 41 796 29 820 45 968 31 666 45 818 33 171


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NOTE 10. CONTINGENT LIABILITIES

Sale of structured products

BNBankwassuedinagroupactionoverstructuredsavingsproductsin2008.TheSupremeCourtruledinFebruary2010thatgrouplitigationisnotappropriateforassessingthistypeofproduct.ThegroupactionagainstBNBankhasthusbeenbroughttoaconclusion.

Threeofthebank’scustomersthensuedtheBankindividuallyintheOsloDistrictCourt,buttheCourtfoundinfavourofBNBankon8July2011.ThejudgmentwasappealedtoBorgartingCourtofAppeal.TheappealwillbeheardinMarch2013.Thetotalloancommitmentasat30June2012wasNOK4million.

BNBankhasalsoprovidedloanstofinanceArtemisstructuredproducts.BNBankisnowbeingsuedbysixcustomers,threeofwhomarelimitedcompanies,withthetotalloanfinancingontheseproductsamountingtoNOK106million.Theamountsindisputeareinterestpayments.

Inconnectionwiththesaleand/orissueofthestructuredproducts,BNBankhashedgedexposureintheformofequityoptions,equity-linkedoptionsandinterestrateswapagreements.Theturbulenceinthefinancialmarketsin2008causedthelossofsomecontractualcounterparties,andithasnotbeenpossibletoreplaceallthesehedgingtransactions.Theliquidatorofoneofthecontractualcounterpartiesfiledacounter-claimin2011,whichBNBankdisputes.Theoutcomeisunclear,andlitigationisunderway.ThetotalclaimamountstoNOK12million.

Bankruptcy dividend/offset against Glitnir banki hf, Iceland

On26January2012OsloDistrictCourtgavejudgmentinthecaseinwhichGlitnirbankihf.hadsuedBNBankASAforwhatGlitnirclaimswasanunlawfuloffsetofaboutNOK240million.AccordingtothejudgmentBNBankASAwasorderedtopayGlitnirNOK213millionplusinterest.TheCourtfoundthataboutNOK27millionwaslawfullyoffset.InBNBank’sviewtheCourthasmadeanerroronakeypointrelatingtothelargestsingleitemthattheoffsetwasmadeagainst,butBNBankhasotherwisewonontheother,importantpoints.BNBankhasaccordinglyappealedthejudgmenttotheBorgartingCourtofAppeal.AstheBankhaspreviouslyreportedtheoffsetamountaslost,thejudg-menthasonlyalimitednegativeaccountingeffect.

NOTE 11. CONTINGENT OUTCOMES, EVENTS AFTER THE REPORTING PERIOD

ApartfromthemattersmentionedinNote10above,therearenoassetsorliabilitiestowhichcontingentoutcomesareattachedandwherethoseoutcomescouldhaveasignificantimpactontheGroup’sfinancialpositionandresults.

Therewerenosignificanteventsafterthereportingperiod.

NOTE 12. TRANSFER TO SPAREBANK 1 NÆRINGSKREDITT

SpareBank1NæringskredittASwasestablishedin2009andgrantedalicencebytheFinancialSupervisoryAuthorityofNorwaytooperateasacreditinstitution.Thecompany’sbondshaveanAa3ratingfromMoody’s.ThecompanyisownedbythesavingsbanksthatformtheSpareBank1consortiumandisco-locatedwithSpareBank1BoligkredittASinStavanger.ThesamebanksownSpareBank1NæringskredittasownBNBank.Thepurposeofthecompanyistosecurefortheconsortiumbanksasourceofstable,long-termfinancingofcommercialrealestateatcompetitiverates.SpareBank1Næringskredittprocuresloanswithmortgagesoncommercialpropertiesandissuescoveredbondswithintheregulationsgoverningsuchbondsestablishedin2007.Aspartoftheconsortium,BNBankmaytransferloanstothecompanyand,aspartoftheBank’sfundingstrategy,loanshavebeentransferredfromBNkreditt.Asat30June2012,thebookvalueoftransferredloanswasNOK9.3billion.BNBankisresponsibleformanagingthetransferredloansandBNkredittreceivesacommissionbasedonthenetreturnontheloanstransferredbytheBankandthecoststothecompany.

Inordertoattendtotheinterestsofexistingbondholders,inconnectionwiththetransferBNBankguaranteedthatBNkredittwillhaveacapitaladequacyratioofatleast20percentatalltimes.Shouldthecapitaladequacyratiofallbelow20percent,theParentBankwillcedeprecedencewithrespecttoitsaccountsreceivablewithBNkredittand/orprovideaguarantee.Asat30June2012,BNkreditt’scapitaladequacyratiowas15.3percent.TheamounttheParentBankiscedingprecedenceforstoodatNOK937millionasat30June2012.

BNBankhasputupguaranteesforthetransferredloancommitmentswheretheyexceed25percentofSpareBank1Næringskreditt’scapitalbase.Asat30June2012,theseguaranteestotalledNOK331million.

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NOTE 13. TRANSFER TO SPAREBANK 1 BOLIGKREDITT

SpareBank1BoligkredittisownedbythesavingsbanksthatformtheSpareBank1consortiumandisco-locatedwithSpareBank1NæringskredittASinStavanger.Thepurposeofthecompanyistosecureforthebankswithintheconsortiumasourceofstable,long-termfinancingofresidentialmortgageloansatcompetitiverates.Thecompany’sbondshaveratingsofAaaandAAAfromMoody’sandFitchrespectively.SpareBank1Boligkredittprocuresloanswithmortgagesonresidentialpropertiesandissuescoveredbondswithintheregulationsgoverningsuchbondsestablishedin2007.Aspartoftheconsortium,BNBankmaytransferloanstothecompanyand,aspartoftheBank’sfun-dingstrategy,loansweretransferredfromBNBoligkredittin2010and2011.At30June2012,thebookvalueoftransferredloanswasNOK6.6billion.BNBankisresponsibleformanagingthetransferredloansandreceivesacommissionbasedonthenetreturnontheloanstransferredbytheBankandthecoststothecompany.

NOTE 14. DISCLOSURES CONCERNING OPERATING SEGMENTS IN REMAINING ENTITY

Segmentreportingisregularlyreviewedwiththemanagement.Fortheremainingentity,themanagementhavechosentodivideupthereportingsegmentsaccordingtotheunderlyingbusinessareas.

GROUP

GUARANTEE TOTALNOK MILLION CORPORATE RETAIL PORTF. SMN 30.06.12

Net income from interest and credit commissions 122 66 -18 169

Changeinvalueoffinancialinstrumentscarriedatfairvalue 10 5 0 15Otheroperatingincome 49 9 1 59

Total other operating income 58 14 1 74

Salariesandgeneraladministrativeexpenses -45 -62 0 -107Ordinarydepreciation,amortisationandwrite-downs -4 -5 0 -9Otheroperatingexpense -6 -8 0 -13Otherexpense,gainsandlosses 0 0 0 0

Total other operating expense -55 -74 0 -130

Operating profit/(loss) before impairment losses 125 5 -17 114

Impairmentlossesonloansandadvances -7 13 -29 -23

Operating profit/(loss) after impairment losses 119 18 -45 91

Computedtaxcharge -34 -4 13 -25

Profit/(loss) for remaining entity after tax 85 14 -33 66

GROUP


Lending(gross)includingloansincoveredbondscompanies 32 048 13 884 1 193 47 125Customerdepositsandaccountspayabletocustomers 1 314 14 449 - 15 763

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GROUP


Net income from interest and credit commissions 135 56 -6 186

Changeinvalueoffinancialinstrumentscarriedatfairvalue 2 1 0 4Otheroperatingincome 45 1 9 55

Total other operating income 48 2 9 59

Salariesandgeneraladministrativeexpenses -47 -61 0 -108Ordinarydepreciation,amortisationandwrite-downs -4 -4 0 -8Otheroperatingexpense -10 -9 0 -19Otherexpense,gainsandlosses 0 0 0 0

Total other operating expense -61 -74 0 -135

Operating profit/(loss) before impairment losses 122 -15 3 110

Impairmentlossesonloansandadvances -10 -6 -12 -28

Operating profit/(loss) after impairment losses 112 -22 -9 81

Computedtaxcharge -30 6 2 -21

Profit/(loss) for remaining entity after tax 82 -15 -7 60

GROUP


Lending(gross)includingloansincoveredbondscompanies 29 052 13 378 1 621 44 051Customerdepositsandaccountspayabletocustomers 1 290 14 325 - 15 615

TheGroupoperatesinageographicallylimitedareaandreportingongeographicalsegmentsprovideslittleadditionalinformation.

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NOTE 15. CONSOLIDATED INCOME STATEMENTS FOR THE LAST FIVE QUARTERS

GROUP

NOK MILLION Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011

Interestandsimilarincome 399 430 439 415 398Interestexpenseandsimilarcharges 314 346 333 322 303


Changeinvalueoffinancialinstrumentscarriedatfairvalue,gainsandlosses 0 15 -11 -13 10Otheroperatingincome 31 28 37 31 29


Salariesandgeneraladministrativeexpenses 52 55 61 53 57Depreciation,amortisationandwrite-downs 5 4 4 4 4Otheroperatingexpense 5 8 7 7 12Otherexpense,gainsandlosses 0 0 -1 -36 0



Impairmentlossesonloansandadvances 14 9 18 16 -7



Profit/(loss) remaining entity 29 37 32 55 51

Profit/(loss)ofoperationunderdivestmentaftertax 0 0 -6 0 5

Profit/(loss) including divested operation 29 37 26 55 56

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PARENT BANK

NOK MILLION NOTE Q2 2012 Q2 2011 30.06.12 30.06.11 FULL-YEAR 2011

Interestandsimilarincome 305 275 628 538 1 168Interestexpenseandsimilarcharges 265 239 551 471 1 013


Changeinvalueoffinancialinstrumentsatfairvalue,gains&losses 2 16 11 31 11 -20Otheroperatingincome 3 8 10 21 19 52


Salariesandgeneraladministrativeexpenses 33 38 70 72 150Ordinarydepreciation,amortisationandwrite-downs 5 4 9 8 15Otheroperatingexpense 0 0 3 1 5



Impairmentlossesonloansandadvances 6 14 2 20 4 19

Operating profit/(loss) after impairment losses 12 13 27 12 -2

Incomefromownershipinterestsingroupcompanies 4 164 99 164 99 131

Profit/(loss) before tax 176 112 191 111 129

Taxcharge 48 43 52 43 40

Profit/(loss) for the period, remaining entity 128 69 139 68 89

Resultofoperationsunderdivestment 8 0 4 0 12 6

Profit/(loss) for the period, including discontinued operations 128 73 139 80 95

Other Comprehensive Income Changeinvalueoffinancialassetsavailableforsale 0 0 0 0 0

Total P&L items recognised in equity 0 0 0 0 0

Total profit/(loss) for the period 128 73 139 80 95

IncomeStatement-ParentBank

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BalanceSheet-ParentBank PARENT BANK


Deferredtaxassets 0 0 0Intangibleassets 21 21 20Ownershipinterestsingroupcompanies 1 877 1 877 1 877Ownfundslending 526 527 527Tangiblefixedassets 22 22 23Loansandadvances 5,6,12,13 12 504 14 625 14 396Prepaymentsandaccruedincome 18 111 70Financialderivatives 649 284 699Short-termsecuritiesinvestments 5 437 4 816 4 984Cashandbalancesduefromcreditinstitutions 12 486 10 781 10 886Assetsclassifiedasheldforsale 8 16 470 122

Total assets 33 556 33 534 33 604

Sharecapital 668 649 649Sharepremium 266 190 190Retainedearnings 1 217 1 158 1 173

Total equity 2 151 1 997 2 012

Deferredtax 47 35 1Subordinatedloancapital 7 1 461 1 459 1 451Liabilitiestocreditinstitutions 1 232 3 036 1 864Debtsecuritiesinissue 7 12 006 10 477 11 354Accruedexpensesanddeferredincome 6 122 116 114Othercurrentliabilities 185 125 12Taxpayable 0 0 36Financialderivatives 589 231 790Customerdeposits&accountspayabletocust. 15 763 15 615 15 959Liabilitiesclassifiedasheldforsale 8 0 443 11

Total liabilities 31 405 31 537 31 592

Total equity and liabilities 33 556 33 534 33 604

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Group | Parent Bank

PARENT BANK

SHARE OTHER SHARE PREMIUM PAID-UP OTHER TOTALNOK MILLION CAPITAL RESERVE SHARE CAPITAL RESERVES1 EQUITY

BalanceSheetasat1January2011 619 68 282 948 1 917Dividendpaid 0 0 0 -152 -152Sharecapitalincrease 30 122 0 0 152Resultfortheperiod 0 0 0 80 80

Balance Sheet as at 30 June 2011 649 190 282 876 1 997

Resultfortheperiod 0 0 0 15 15

Balance Sheet as at 31 Dec. 2011 649 190 282 891 2 012

Dividendpaid 0 0 0 -95 -95Sharecapitalincrease 19 76 0 0 95Resultfortheperiod 0 0 0 139 139

Balance Sheet as at 30 June 2012 668 266 282 935 2 151

1ThereserveforunrealisedgainsisincludedinOtherreserves.ProvisionofNOK193millionhadbeenmadeasat31December2011.

ChangesinEquity-Parentbank


tIncome Statement | Balance Sheet | Change in Equity | Cash Flow Statement | Notes

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Group | Parent Bank

StatementofCashFlows-ParentBank PARENT BANK


Cash flows from operating activities Interest/commissionreceivedandfeesreceivedfromcustomers 632 477 1 114Interest/commissionpaidandfeespaidtocustomers -65 -53 -450Interestreceivedonotherinvestments 113 148 320Interestpaidonotherloans -298 -296 -587Receipts/disbursements(-)onloansandadvancestocustomers 1 741 99 -488Receipts/paymentsoncustomerdeposits&accountspayabletocustomers -218 -1 258 -1 465Receipts/payments(-)onliabilitiestocreditinstitutions -799 585 -21Receipts/payments(-)onsecuritiesinissueandsecuritiesbuy-back 517 2 845 3 628Receiptsonpreviouslywritten-offdebt 2 6 35Otherreceipts/payments 133 39 178Paymentstosuppliersforgoodsandservices -27 -27 -100Paymentstoemployees,pensionsandsocialsecurityexpenses -40 -46 -65Taxpaid -81 0 0

Net cash flow from operating activities 1 610 2 519 2 099

Cash flows from investing activities Receipts/payments(-)onreceivablesfromcreditinstitutions -1 331 -2 399 -2 374Receipts/payments(-)onshort-termsecuritiesinvestments -437 470 289Receipts/payments(-)onlong-termsecuritiesinvestments 164 99 99Purchaseofoperatingassetsetc. -10 -13 -20Proceedsfromsaleofsubsidiaries 0 0 33

Net cash flow from investing activities -1 614 -1 843 -1 973

Cash flow from financing activities Receiptsofsubordinatedloancapital 0 -228 -228

Net cash flow from financing activities 0 -228 -228

Net cash flow for the period -4 448 -102

Cashandbalancesduefromcentralbanksasat1January* 4 106 106

Cash and balances due from central banks at the end of the period 0 554 4

*InthecaseoftheParentBank,cashandbalancesconsistofdepositsinNorgesBank.


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Group | Parent Bank

Notes-ParentBankNote 1. Accounting policies..................................................................................................................................................................................................................... 33


Note 3. Other operating income ........................................................................................................................................................................................................... 34

Note 4. Income from ownership interests in group companies ...................................................................................................................................................... 34










Note 14. Income statements for the last five quarters ...................................................................................................................................................................... 42


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NOTE 1. ACCOUNTING POLICIES

SeethedescriptionfortheGroup’sinterimconsolidatedfinancialstatements.ThesameaccountingpoliciesapplyfortheParentBank.

NOTE 2. CHANGE IN VALUE OF FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE, GAINS AND LOSSES

PARENT BANK


Changeinvalueint.ratederiv.obligedcarriedatfairvaluethroprofitorloss1,4 7 1 18 25 17Changeinvaluecurrencyderiv.obligedcarriedatfairvaluethroprofitorloss2 -16 29 42 -3 -117Changevalueequity-linkedoptions&equityoptionsoblig.fairvalthroprofit/loss1 0 14 0 11 19

Total change in value of financial instruments obliged to be carried at fair value -9 44 60 33 -81

Changeinvalueofdepositsselectedforfairvaluecarryingthroughprofitorloss4 4 3 -1 1 -6Changeinvalueborrowingsselectedforfairvaluecarryingthroughprofitorloss4 -6 -26 -19 -30 -61Changeinvalueofloansselectedforfairvaluecarryingthroughprofitorloss4 9 -16 -5 -18 13Changeinvalueshort-termfinancialinvestmentsselectedforfairvaluecarrying3 -4 7 13 6 -1

Total change in value of financial instruments selected for fair value carrying 3 -32 -12 -41 -55

Changeinvalueofinterestratederivatives,hedging5 19 20 27 0 53Changeinvalueofborrowings,hedged5 -19 -20 -27 0 -54

Total change in value of financial instruments for hedging 0 0 0 0 -1

Total change in value of financial instruments carried at fair value -6 12 48 -8 -137

Realisedexchangegains/losses(-)bonds&certificatesatamortisedcost6 0 -2 -2 -4 -6Exchangegains/lossesonborrowingsandloanscarriedatamortisedcost2 22 1 -15 23 123

Total change in value financial instruments carried at fair value, gains and losses 16 11 31 11 -20

1Inconnectionwiththesaleand/orissueofthestructuredproducts,BNBankhashedgedexposureintheformofequityoptions,equity-linkedoptionsandinterestrateswapagreements.Theearlierturbulenceinthefinancialmarketscausedthelossofsomecontractualcounterparties,anditwasnotpossibleatthetimetoreplacethesehedgingtransactions.BNBankisthereforepartiallyexposedtothemarketdevelopmentofalimitednumberofproducts.Changesinexposurearerecognisedinprofitandlossimmediately,andasat30June2012therewasnoP&Leffectcomparedwithrecogni-sedexpenseofNOK2millionforthesameperiodof2011.NOK8millionwasrecognisedasexpenseforfull-year2011.

2Exchangegains/lossesonborrowingsandloanscarriedatamortisedcostarechieflyattributabletoexchangegain/losseffectswhicharisewhenborrowingandlendinginforeigncurrenciesaretranslatedatthecurrentexchangerate.Forwardexchangecontractsandcombinedinterestrateandcurrencyderivativesarecarriedatfairvaluewithchangesinvaluecarriedthroughprofitorloss.ThenetforeignexchangeeffectfortheGroupwasrecognisedincomeofNOK3millionfortheperiodto30June2012,comparedwithnoP&Leffectfortheperiodto30June2011.Theequivalentfigureforfull-year2011wasNOK1millionrecognisedasincome.Exposuretoexchangeratefluctuationsislow. 3ChangeinthevalueoffinancialinvestmentsselectedforfairvaluecarryinggaverisetorecognisedincomeofNOK13millionfortheperiodto30June2012,comparedwithrecognisedincomeofNOK6millionforthesameperiodof2011.NOK1millionwasrecognisedasexpenseforfull-year2011.Turbulenceinthefinancialmarketshascausedbigfluctuationsinthevalueoftheseinvestments. 4TheneteffectofinterestratederivativesobligedtobecarriedatfairvalueandchangesinthevalueoffinancialinstrumentsselectedforfairvaluecarryingwasrecognisedincomeofNOK17millionfortheperiodto30June2012,comparedwithrecognisedincomeofNOK11millionforthesameperiodof2011.NOK5millionwasrecognisedasexpenseforfull-year2011.

5From2010,BNBankhasusedfairvaluehedgesfornewfixed-rateborrowingsandrelatedhedgeinstruments.Theborrowingsarehedged1:1throughexternalcontractswheretheprincipal,intereststream,termandhedgingtransactionmatch.Itistheinterestrateriskthatishedgedandthehedgingtransactionsenteredintoaredocumented.Withfairvaluehedges,thehedgeinstrumentisac-countedforatfairvalue,andthehedgeobjectisaccountedforatfairvalueforthehedgedrisk.Changesinthesevaluesfromtheopeningbalancesheetarecarriedinprofitorloss.Thecreditriskisnothedgedandthereforedoesnotaffectthevaluations.Thevalueofthehedginginstrumentsasat30June2012waspositivebyNOK89million.

6Realisedexchangegains/lossesonbonds,certificates&borrowingscarriedatamortisedcostgaverisetorecognisedexpenseofNOK2millionfortheperiodto30June2012comparedwithrecogni-sedexpenseofNOK4millionforthesameperiodof2011.NOK6millionwasrecognisedasexpenseforfull-year2011.

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NOTE 3. OTHER OPERATING INCOME

PARENT BANK


Guaranteecommission 0 5 2 10 22Netcommissionincome/charges1 6 3 12 6 23Otheroperatingincome 2 2 7 3 7


1CommissionincomerelatingtothemanagementoftheportfoliosinSpareBank1BoligkreditttotalledNOK6millionasat30June2012,whiletherewasrecognisedexpenseofNOK1millionforthe

sameperiodof2011.Forfull-year2011NOK3millionwasrecognisedasincome.

NOTE 4. INCOME FROM OWNERSHIP INTERESTS IN GROUP COMPANIES

TheAnnualGeneralMeetingsofthesubsidiariesBNkredittASandBNBoligkredittAShaveresolvedtorendergroupcontributionof,respectively,NOK128millionandNOK37millionbeforetaxtocoverprior-yearlosses.

NOTE 5. OVERVIEW OF GROSS LENDING IN MANAGED PORTFOLIO

PARENT BANK


LoansCorporateMarketandRetailMarket 11 278 13 078 13 253Seller’scredit 1 193 1 620 1 214

Loans in remaining entity 12 471 14 698 14 467

LoanstransferredtoSpareBank1Boligkreditt 6 631 3 228 3 961

Total loans inc. loans transferred to SpareBank 1 Boligkreditt 19 102 17 926 18 428

Divestedportfolio 92 145 101

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NOTE 6. IMPAIRMENT LOSSES AND WRITE-DOWNS ON LOANS CARRIED AT AMORTISED COST AND GUARANTEES

Thevariouselementsincludedinimpairmentlossesandwrite-downsonloansaresetoutinNote1totheAnnualReportfor2011.Loanspastduemorethan3monthsarede-finedasloansnotservicedundertheloanagreementfor3monthsormore.Asafirstmortgagelender,BNBankcanhowevergainaccesstorevenue,eitherthroughthecourtsorbysomevoluntarysolution.Impairmentlossesandwrite-downsonloansdescribedinthisnoteapplytoloanscarriedatamortisedcostandchangesinvalueandgains/lossesonthesaleofrepossessedpropertiesinthecurrentperiod.

PARENT BANK


Write-offsinexcessofprior-yearwrite-downs 0 1 0 1 19Write-offsonloanswithoutpriorwrite-downs 0 0 0 0 0Write-offstransferredtodivestedoperation 0 0 0 0 0

Write-downs for the period: Changeincollectivewrite-downs 4 -8 -14 -14 -1Changeincollectivewrite-downsrelatedtoGuaranteePortfolio -1 0 -1 0 1Changeincollectivewrite-downstransferredtodivestedoperation 0 6 0 10 0

Total change in collective write-downs 3 -2 -15 -4 0

Increaseinloanswithprior-yearwrite-downs1 7 9 18 16 7Provisionsagainstloanswithoutpriorwrite-downs 5 3 19 10 9Decreaseinloanswithprior-yearwrite-downs -1 -5 -2 -15 -10Changeinindividualwrite-downstransferredtodivestedoperation 0 0 0 0 0

Total change in individual write-downs 11 7 35 11 6

Grossimpairmentlosses 14 6 20 8 25Recoveriesonpreviouswrite-offs 0 4 0 4 6

Impairment losses on loans and advances 14 2 20 4 19

Revenuerecognitionofinterestonwritten-downloans 0 1 0 2 2

1ChangesinvaluerelatingtorepossessedpropertiestotalledNOK5millionasat30June2012.

PARENT BANK


Individualwrite-downstocoverimpairmentlossesatstartoftheperiod 35 38 34 43 43Write-offscoveredbyprior-yearindividualwrite-downs 0 0 0 -9 -19

Write-downs for the period: Increaseinloanswithprior-yearindividualwrite-downs 2 3 4 3 3Write-downsonloanswithoutprior-yearindividualwrite-downs 0 0 0 0 0Decreaseinloanswithprior-yearindividualwrite-downs -1 -1 -2 -13 -9Transferredassetsclassifiedasheldforsale 0 0 0 16 16

Individual write-downs to cover impairment losses at end of the period 36 40 36 40 34

Collectivewrite-downstocoverimpairmentlossesatstartoftheperiod 19 36 37 38 38Collectivewrite-downsfortheperiodtocoverimpairmentlosses 4 -8 -14 -14 -1Transferredassetsclassifiedasheldforsale 0 6 0 10 0

Collective write-downs to cover impairment losses at end of the period 23 34 23 34 37

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PARENT BANK


LossprovisionfinancialguaranteerelatingtoGuaranteePortf.atstartofperiod1 46 41 28 26 26Write-offscoveredbyprior-yearindividualwrite-downs 0 0 0 0 -7

Write-downs for the period: Increaseinloanswithprior-yearindividualwrite-downs 5 6 9 13 4Write-downsonloanswithoutprior-yearindividualwrite-downs 5 3 19 10 9Decreaseinloanswithprior-yearindividualwrite-downs 0 -5 0 -4 -4

Loss provision financial guarantee relating to Guarantee Portfolio at end of period 1 56 45 56 45 28

Collectivewrite-downsrelatingtoÅlesundportfolioatstartoftheperiod 7 0 20 0 19Collectivewrite-downsfortheperiodtocoverlossesinÅlesundportfolio -1 0 -14 0 1

Collective write-downs relating to Ålesund portfolio at end of the period 1 6 0 6 0 20

Individualwrite-downsrelatingtoÅlesundportfolioclassifiedasheldforsale 0 2 0 2 2Collectivewrite-downsrelatingtoÅlesundportfolioclassifiedasheldforsale 0 9 0 9 0

Total loss provisions relating to Ålesund portfolio 62 56 62 56 50

1BNBankhaspreviouslyenteredintoanagreementwithSpareBank1SMNforthelattertotakeovertheÅlesundportfolio.Thepartiesrevisedtheagreementon1February2012accordingtowhichSpareBank1SMNtookoverNOK2.3billionoftheportfoliovaluedatNOK3.1billion.BNBanknowprovidesguaranteesfor60%ofthecreditriskforthisportfolio(”GuaranteePortfolio”).TheBank’smaximumexposureisthusdowntoNOK443million,whichattheendofsecond-quarter2012was1.4%oftheBank’stotallending.ThetotalprovisionforlossesintheGuaranteePortfoliowasNOK62millionat30June2012.BNBankwillprovideguaranteesforlossesintheGuaranteePortfolioforaperiodof3-5yearsfromtheinceptionoftheoriginalagreement.ThelossprovisionisclassifiedunderAcruedexpensesanddeferredincome.

Loans past due more than 3 months 1

PARENT BANK




Other loans with individual write-downs 1

PARENT BANK




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Loans past due more than 3 months by sector and as a percentage of loans 1, 2

PARENT BANK

GROSS GROSS GROSS OUTSTANDING OUTSTANDING OUTSTANDINGNOK MILLION 30.06.12 % 30.06.11 % 2011 %

CorporateMarket 63 1.16 5 0.07 0 0.00RetailMarket 56 0.80 55 0.69 51 0.70Ålesundportfolio 19 2.52 22 0.64 21 0.74

Total 138 1.04 82 0.45 72 0.82

1Withregardtodisclosuresinthenotesconcerningloanspastdue(non-performingloans),otherloanswithindividualwrite-downs,andloanspastduebysectorandasapercentageofloans,thefigu-resstatedincludeBNBank’soperationsinÅlesund,whichareotherwisetreatedasdivestedoperations,andtheGuaranteePortfoliovis-a-visSpareBank1SMN.2Loanspastduemorethan3monthsasapercentageofloansiscalculatedonthebasisofloansintheremainingentityandtheGuaranteePortfolio.

NOTE 7. BORROWING (FUNDING)

Fixed-rateborrowingsthatarepartofindexlinkingarecarriedinthebalancesheetatamortisedcost,wihileotherfixed-rateborrowingsareselectedforfairvaluecarrying.Floating-rateborrowingsarecarriedatamortisedcost.

Debt securities in issueTheParentBankhadissuedbondsandcertificateswithafacevalueofNOK4778millionasat30June2012,eitherasnewissuesorincreasesinexistingtapissues.

PARENT BANK

NOK MILLION CERTIFICATES BONDS TOTAL

Netdebt(facevalue)asat1January2012 2 646 8 615 11 261Newissues 0 1 515 1 515Increaseinexistingissues 60 165 225Purchaseandmaturityofexistingissues -665 -651 -1 316

Net debt (face value) as at 31 March 2012 2 041 9 644 11 685

Newissues 1 954 300 2 254Increaseinexistingissues 0 784 784Purchaseandmaturityofexistingissues -1 068 -1 795 -2 863

Net debt (face value) as at 30 June 2012 2 927 8 933 11 860

Subordinated loan capital and perpetual subordinated loan capital securitiesTheParentBankhadissuednoperpetualsubordinatedloancapitalsecuritiesorsubordinatedloansasat30June2012. PARENT BANK

PERPET SUBORD. LOAN SUBORDINATED NOK MILLION CAP. SEC. LOAN CAPITAL TOTAL

Netdebt(facevalue)asat1January2011 650 800 1 450Newissues 0 0 0Increaseinexistingissues 0 0 0Purchaseandmaturityofexistingissues 0 0 0

Net debt (face value) as at 31 March 2011 650 800 1 450

Newissues 0 0 0Increaseinexistingissues 0 0 0Purchaseandmaturityofexistingissues 0 0 0

Net debt (face value) as at 30 June 2011 650 800 1 450

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Recognised values PARENT BANK


Certificatescarriedatamortisedcost 518 0 1 250Certificatescarriedatfairvalue 2 444 2 020 1 420

Total recognised value of certificates 2 962 2 020 2 670

Bondscarriedatamortisedcost 7 018 6 598 7 073Bondscarriedatamortisedcost(secureddebt) 1 805 1 245 1 300Bondsselectedforfairvaluecarrying 221 614 311

Total recognised value of bonds 9 044 8 457 8 684

Total recognised value of debt securities in issue 12 006 10 477 11 354

Perpetualsubordinatedloancapitalsecuritiescarriedatamortisedcost 483 485 482Perpetualsubordinatedloancapitalsecuritiescarriedatfairvalue 175 173 169

Total recognised value of perpetual subordinated loan capital securities 658 658 651

Subordinatedloanscarriedatamortisedcost 803 801 800Subordinatedloansselectedforfairvaluecarrying 0 0 0

Total recognised value of subordinated loans 803 801 800

Total recognised value of subordinated loans and perpetual subordinated loan capital securities 1 461 1 459 1 451

NOTE 8. RESULTS OF DIVESTED OPERATION

ThebankingoperationinÅlesund,whichchieflycomprisesbusinesslending,becameorganisationallysubordinatetoSpareBank1SMNfromQ42009.AsofQ32009inclusivetheÅlesundoperationhasbeenreportedasadiscontinuedoperationunderIFRS5.Thesplit-offfromBNBankbeganinQ42009andwaslargelycompletedinQ22012.ForthisreasontherearenoP&Leffectsclassifiedasdiscontinuedoperationin2012. P&LeffectsrelatingtotheGuaranteePortfolio,whicharereferredtoingreaterdetailinNote6,areclassifiedunderremainingentity.

Specification of results of divested operation PARENT BANK


Netinterestandcreditcommissions 0 1 0 3 4Totalotheroperatingincome 0 0 0 1 1Totalotheroperatingexpense 0 0 0 -3 -3Impairmentlossesonloansandadvances 0 -6 0 -10 -1



Profit/(loss) of discontinued operation after tax 0 5 0 12 6

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Specification of results of remaining entity PARENT BANK


Netinterestandcreditcommissions 40 36 77 67 155Totalotheroperatingincome 24 21 52 30 32Totalotheroperatingexpense 38 42 82 81 170


Impairmentlossesonloansandadvances 14 2 20 4 19

Pre-tax profit/(loss) of remaining entity 12 13 27 12 -2

Incomefromownershipinterestsingroupcompanies 164 99 164 99 131



Profit/(loss) after tax of remaining entity 128 69 139 68 89

Other assets classified as held for sale In connection with a loan defaulted on in 2010, BN Bank took over 100% of the shares in a company. BN Bank intends to sell the company on.

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NOTE 9. CAPITAL ADEQUACY

Process for assessing the capital adequacy requirementBNBankhasestablishedastrategyandprocessforriskmanagementandassessmentofthecapitaladequacyrequirementandhowcapitaladequacycanbemaintained.ThecollectivetermforthisisICAAP(InternalCapitalAdequacyAssessmentProcess).Assessingthecapitaladequacyrequirementincludesassessingthesize,compositionanddistributionofthecapitalbaseadaptedtothelevelofrisksthattheBankisormaybeexposedto.Theassessmentsarerisk-basedandforward-looking.RiskareasassessedinadditiontothePillar1risksareconcentrationriskinthecreditportfolio,interestrateandforeignexchangeriskinthebankportfolio,liquidityrisk,marketrisk,owner’sriskandreputationrisk.ICAAPisnotfocusedonasinglemethodorasinglefigure,butpresentsasetofcalculationsincludingdifferenttimehorizons,confidencelevelsandassump-tions. PARENT BANK


Sharecapital 668 838 649Otherreserves 1 413 1 119 1 363Perpetualsubordinatedloancapital(perpetualsubordinatedloancapitalborrowings)1 658 659 647

Less: Perpetualsubordinatedloancapital(perpetualsubordinatedloancapitalborrowings)thatcannotbeincluded1 -302 -318 -296Intangibleassets -21 -21 -20Deferredtaxassets 0 0 0Otherdeductionsintier1capital -39 0 0

Tier 1 capital 2 377 2 277 2 343

Fixed-termsubordinatedloancapital 1 104 1 119 1 100

Less: Fixed-termsubordinatedloancapitalthatcannotbeincluded -94 -151 -104Otherdeductionsintier2capital -39 0 0

Net tier 2 capital 971 968 996

Total subordinated loan capital 3 348 3 245 3 339

Risk-weightedassets 17 470 18 220 19 131Tier1capitalratio(%) 13.6 12.5 12.2


1Formoredetails,seeNote7.

Specification of risk-weighted assets PARENT BANK


RECOGNISED WEIGHTED RECOGNISED WEIGHTED RECOGNISED WEIGHTEDRISK-WEIGHTED AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

0% 1 000 0 2 091 0 1 004 010% 2 009 201 1 404 140 1 504 15020% 16 700 3 340 14 746 2 949 14 915 2 98335% 7 225 2 529 7 283 2 549 6 986 2 44550% 0 0 633 317 419 21075% 40 30 681 511 345 259100% 11 370 11 370 11 754 11 754 13 084 13 084Investmentsincludedinthetradingportfolio 0 0 0 0 0 0Negotiabledebtinstrumentsincludedinthetradingportfolio 0 0 0 0 0 0

Total risk-weighted assets 38 344 17 470 38 592 18 220 38 257 19 131


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NOTE 10. CONTINGENT LIABILITIES

Sale of structured products

BNBankwassuedinagroupactionoverstructuredsavingsproductsin2008.TheSupremeCourtruledinFebruary2010thatgrouplitigationisnotappropriateforassessingthistypeofproduct.ThegroupactionagainstBNBankhasthusbeenbroughttoaconclusion.

Threeofthebank’scustomersthensuedtheBankindividuallyintheOsloDistrictCourt,buttheCourtfoundinfavourofBNBankon8July2011.ThejudgmentwasappealedtoBorgartingCourtofAppeal.TheappealwillbeheardinMarch2013.Thetotalloancommitmentasat30June2012wasNOK4million.

BNBankhasalsoprovidedloanstofinanceArtemisstructuredproducts.BNBankisnowbeingsuedbysixcustomers,threeofwhomarelimitedcompanies,withthetotalloanfinancingontheseproductsamountingtoNOK106million.Theamountsindisputeareinterestpayments.

Inconnectionwiththesaleand/orissueofthestructuredproducts,BNBankhashedgedexposureintheformofequityoptions,equity-linkedoptionsandinterestrateswapagreements.Theturbulenceinthefinancialmarketsin2008causedthelossofsomecontractualcounterparties,andithasnotbeenpossibletoreplaceallthesehedgingtransactions.Theliquidatorofoneofthecontractualcounterpartiesfiledacounter-claimin2011,whichBNBankdisputes.Theoutcomeisunclear,andlitigationisunderway.ThetotalclaimamountstoNOK12million.

Bankruptcy dividend/offset against Glitnir banki hf, Iceland

On26January2012OsloDistrictCourtgavejudgmentinthecaseinwhichGlitnirbankihf.hadsuedBNBankASAforwhatGlitnirclaimswasanunlawfuloffsetofaboutNOK240million.AccordingtothejudgmentBNBankASAwasorderedtopayGlitnirNOK213millionplusinterest.TheCourtfoundthataboutNOK27millionwaslawfullyoffset.InBNBank’sviewtheCourthasmadeanerroronakeypointrelatingtothelargestsingleitemthattheoffsetwasmadeagainst,butBNBankhasotherwisewonontheother,importantpoints.BNBankhasaccordinglyappealedthejudgmenttotheBorgartingCourtofAppeal.AstheBankhaspreviouslyreportedtheoffsetamountaslost,thejudg-menthasonlyalimitednegativeaccountingeffect.

NOTE 11. CONTINGENT OUTCOMES, EVENTS AFTER THE REPORTING PERIOD

ApartfromthemattersmentionedinNote10above,therearenoassetsorliabilitiestowhichcontingentoutcomesareattachedandwherethoseoutcomescouldhaveasignificantimpactontheGroup’sfinancialpositionandresults.

NOTE 12. TRANSFER TO SPAREBANK 1 NÆRINGSKREDITT

SpareBank1NæringskredittASwasestablishedin2009andgrantedalicencebytheFinancialSupervisoryAuthorityofNorwaytooperateasacreditinstitution.Thecompany’sbondshaveanAa3ratingfromMoody’s.ThecompanyisownedbythesavingsbanksthatformtheSpareBank1consortiumandisco-locatedwithSpareBank1BoligkredittASinStavanger.ThesamebanksownSpareBank1NæringskredittasownBNBank.Thepurposeofthecompanyistosecurefortheconsortiumbanksasourceofstable,long-termfinancingofcommercialrealestateatcompetitiverates.SpareBank1Næringskredittprocuresloanswithmortgagesoncommercialpropertiesandissuescoveredbondswithintheregulationsgoverningsuchbondsestablishedin2007.Aspartoftheconsortium,BNBankmaytransferloanstothecompanyand,aspartoftheBank’sfundingstrategy,loanshavebeentransferredfromBNkreditt.Asat30June2012,thebookvalueoftransferredloanswasNOK9.3billion.BNBankisresponsibleformanagingthetransferredloansandBNkredittreceivesacommissionbasedonthenetreturnontheloanstransferredbytheBankandthecoststothecompany.

Inordertoattendtotheinterestsofexistingbondholders,inconnectionwiththetransferBNBankguaranteedthatBNkredittwillhaveacapitaladequacyratioofatleast20percentatalltimes.Shouldthecapitaladequacyratiofallbelow20percent,theParentBankwillcedeprecedencewithrespecttoitsaccountsreceivablewithBNkredittand/orprovideaguarantee.Asat30June2012,BNkreditt’scapitaladequacyratiowas15.3percent.TheamounttheParentBankiscedingprecedenceforstoodatNOK937millionasat30June2012.

BNBankhasputupguaranteesforthetransferredloancommitmentswheretheyexceed25percentofSpareBank1Næringskreditt’scapitalbase.Asat30June2012,theseguaranteestotalledNOK331million.

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NOTE 13. TRANSFER TO SPAREBANK 1 BOLIGKREDITT

SpareBank1BoligkredittisownedbythesavingsbanksthatformtheSpareBank1consortiumandisco-locatedwithSpareBank1NæringskredittASinStavanger.Thepurposeofthecompanyistosecureforthebankswithintheconsortiumasourceofstable,long-termfinancingofresidentialmortgageloansatcompetitiverates.Thecompany’sbondshaveratingsofAaaandAAAfromMoody’sandFitchrespectively.SpareBank1Boligkredittprocuresloanswithmortgagesonresidentialpropertiesandissuescoveredbondswithintheregulationsgoverningsuchbondsestablishedin2007.Aspartoftheconsortium,BNBankmaytransferloanstothecompanyand,aspartoftheBank’sfun-dingstrategy,loansweretransferredfromBNBoligkredittin2010and2011.At30June2012,thebookvalueoftransferredloanswasNOK6.6billion.BNBankisresponsibleformanagingthetransferredloansandreceivesacommissionbasedonthenetreturnontheloanstransferredbytheBankandthecoststothecompany.

NOTE 14. INCOME STATEMENTS FOR THE LAST FIVE QUARTERS

PARENT BANK


Interestandsimilarincome 305 323 324 306 275Interestexpenseandsimilarcharges 265 286 278 264 239

Net interest and credit commissions 40 37 46 42 36

Changeinvalueoffinancialinstrumentsatfairvalue,gainsandlosses 16 15 -18 -13 11Otheroperatingincome 8 13 20 13 10


Salariesandgeneraladministrativeexpenses 33 37 42 36 38Depreciation,amortisationandwrite-downs 5 4 4 3 4Otheroperatingexpense 0 3 1 3 0



Impairmentlossesonloansandadvances 14 6 10 5 2

Operating profit/(loss) after impairment losses 12 15 -9 -5 13

Incomefromownershipinterestsingroupcompanies 164 0 0 32 99

Pre-tax profit/(loss) 176 15 -9 27 112

Computedtaxcharge 48 4 -3 0 43

Profit/(loss) remaining entity 128 11 -6 27 69

Profit/(loss)fromoperationunderdivestment 0 0 -6 0 4

Profit/(loss) including divested operation 128 11 -12 27 73

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PricewaterhouseCoopers AS,T: 02316, www.pwc.noOrg.no.: 987 009 713 MVA, Medlem av Den norske

To the Board of Directors of BN Bank ASA

Report on Review of Interim Financial Information

Introduction

We have reviewed the accompanying interim financial information of BN Bank ASA,the financial statements of the group and the financial statements of the parent company. Thefinancial statements of the group and the financial statements of the parent company comprisebalance sheet as of 30. Juneflows for the six-month period then ended.presentation of this interim financial information in accordance with International AccountingStandard 34 "Interim Financial Reporting".interim financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410,"Review of Interim Financial Information Performed by the Independent Auditor of the Entity".

A review of interim financial information consists of making inquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical and other revie

A review is substantially less in scope than an audit conducted in accordance with standards onauditing adopted by Den Norske Revisorforening, and consequently does not enable us to obtainassurance that we would become aware of all signifiAccordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that theaccompanying interim financial information is not prepawith International Accounting Standard 34 "Interim Financial Reporting".

Trondheim, 7. August 2012PricewaterhouseCoopers AS

Rune Kenneth S. LædreState Authorised Public Accountant

Note: This translation from Norwegian has been prepared for information purposes only.

PricewaterhouseCoopers AS, Brattørkaia 17 B, NO-7492 Trondheim

713 MVA, Medlem av Den norske Revisorforening

To the Board of Directors of BN Bank ASA

Report on Review of Interim Financial Information

We have reviewed the accompanying interim financial information of BN Bank ASA,the financial statements of the group and the financial statements of the parent company. Thefinancial statements of the group and the financial statements of the parent company comprise

June 2012 and the related statements of income, changes in equity and cashperiod then ended. Management is responsible for the preparation and

presentation of this interim financial information in accordance with International Accountingnancial Reporting". Our responsibility is to express a conclusion on this

interim financial information based on our review.

We conducted our review in accordance with International Standard on Review Engagements 2410,nancial Information Performed by the Independent Auditor of the Entity".

A review of interim financial information consists of making inquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical and other revie

A review is substantially less in scope than an audit conducted in accordance with standards onauditing adopted by Den Norske Revisorforening, and consequently does not enable us to obtainassurance that we would become aware of all significant matters that might be identified in an audit.Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that theaccompanying interim financial information is not prepared, in all material respects, in accordancewith International Accounting Standard 34 "Interim Financial Reporting".

2012PricewaterhouseCoopers AS

State Authorised Public Accountant

from Norwegian has been prepared for information purposes only.

We have reviewed the accompanying interim financial information of BN Bank ASA, which comprisethe financial statements of the group and the financial statements of the parent company. Thefinancial statements of the group and the financial statements of the parent company comprise

ements of income, changes in equity and cashManagement is responsible for the preparation and

presentation of this interim financial information in accordance with International AccountingOur responsibility is to express a conclusion on this

We conducted our review in accordance with International Standard on Review Engagements 2410,nancial Information Performed by the Independent Auditor of the Entity".

A review of interim financial information consists of making inquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with standards onauditing adopted by Den Norske Revisorforening, and consequently does not enable us to obtain

cant matters that might be identified in an audit.

Based on our review, nothing has come to our attention that causes us to believe that thered, in all material respects, in accordance

from Norwegian has been prepared for information purposes only.

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ReportonReviewofInterimFinancialInformation

43


FinnHaugan (Chair)

ToreMedhus StigArneEngen HaraldGaupen HeleneJebsenAnker (DeputyChair)

KristinUndheim AnitaFinseråsBretun EllaSkjørestad GunnarHovland (EmployeeRepresentative) (ManagingDirector)

StatementinaccordancewiththeNorwegianSecuritiesTradingAct,section5-6

Wecertifythat,tothebestofourknowledgeandbelief,thefirst-halfinterimfinancialstatementsfortheperiod1Januaryto30June2012fortheCompanyandfortheGrouphavebeenpreparedincompliancewithIAS34InterimFinancialReporting,andthatthedisclosuresintheinterimfinancialstatementsgiveatrueandfairviewoftheassets,liabilities,financialpositionandperformanceasawholeoftheCom-panyandoftheGroup. Tothebestofourknowledgeandbelief,thefirst-halffinancialstatementsgiveatrueandfairviewofimportanteventsduringtheac-countingperiodandtheireffectontheinterimaccounts,andadescriptionofthemostsignificantrisksanduncertaintyfactorsfacingtheCompanyandtheGroupinthenextaccountingperiod.

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44

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BN Bank ASA · 2018. 7. 24. · Non-performing loans as 1at 30 June 2012 were 1.83 per cent of gross lending (0.44 per cent). On a 12-month basis, growth in lending was 7.0 per cent