SpareBank 1 Nord-Norge - second quarter report and accounts 2008

Tuesday, 12. August 2008 08:05
Significant improvement, but the result is still affected by the
unsettled financial markets

SpareBank 1 Nord-Norge's underlying banking operations at the end of
the second quarter of 2008 were very good. Core operations, before
credit losses, generated a result of NOK 346 million, up from NOK 320
million at the same time last year. The unsettled financial markets
are still having an adverse impact on overall results and the Bank
ended up with an aggregate operating result of NOK 262 million, as
against NOK 452 million at the same time last year.

"We are very pleased that our core operations are doing well and that
the second quarter result was substantially better than the first
quarter. However, the global financial markets remain unsettled, and
we have again experienced unrealised losses on the Bank's equity- and
bond portfolios, " says Hans Olav Karde, SpareBank 1 Nord-Norge's
Chief Executive Officer.

During the last 12 months, the Bank's lending growth was 10.6 per
cent and its deposit growth of 4.3 per cent, the corresponding
figures a year ago being 13 and 14.3 per cent respectively. Net
losses on loans have increased to NOK 28 million, as opposed to NOK 7
million at the end of the second quarter of 2007.

"Higher losses and lower deposit growth might suggest that people in
general are beginning to feel the effect of the interest rate
increases introduced by Norges Bank. Nevertheless, we have not yet
seen any dramatic impact of this, " explains Karde.

Here are the financial highlights at the end of the second quarter of

Main features (amounts and percentages in brackets refer to the same
period in 2007):

Pre-tax operating result of NOK 262 million (NOK 452 million)
-After-tax return on equity capital: 8.7 per cent (19.3 per cent)
-Result per Primary Capital Certificate (PCC) so far this year
(Parent Bank): NOK 4.45 (NOK 5.98)
The underlying banking operations remain very good; the result from
core operations before credit loses totalled NOK 345 million (NOK 320
Result from financial investments totalled NOK -55 million (NOK 139
-Reduced result contribution from SpareBank 1 Gruppen AS, the Bank's
share thereof amounting to NOK 49 million (NOK 116 million)
-NOK 65 million charged to the accounts in respect of losses on the
Bank's share portfolio
-NOK 75 million charged to the accounts in respect of losses on the
Bank's interest- bearing securities portfolio
-Gains from foreign exchange and financial derivatives and assets
totalled NOK 23 million.
Overall cost ratio: 62.9 per cent (50.9 per cent)
Losses on loans: Net losses of NOK 28 million (NOK 7 million)
Lending growth during the last 12 months (including loans transferred
to SpareBank 1 Boligkreditt): 10.9 per cent (12.5 per cent)
-Retail banking market - 10.8 per cent (including SpareBank 1
-Corporate market - 10.3 per cent
The accounts show lending growth in the last 12 months of 4.3 per
cent (9.3 per cent).
Deposit growth during the last 12 months: 4.3 per cent (14.4 per
Overall deposit coverage ratio: 67.7 per cent (67.7 per cent)
The Bank's liquidity remains satisfactory despite the unsettled
financial markets.

More detailed information about the Group's operations will be found
in the attached reports.

Any questions in this connection should be directed to Hans Olav
Karde, Chief Executive Officer, telephone number: 77 62 24 01, or
Oddmund Aasen, Deputy Chief Executive Officer, telephone number: 77
62 20 94. Reference is also made to the Bank's home page on the

Some brief background information on SpareBank 1 Nord-Norge
SpareBank 1 Nord-Norge is a leading provider of financial products
and services to the retail banking- and corporate markets and to the
public sector in the region. The Bank has an aggregate customer base
of some 245,000 retail banking customers, about 40,500 corporate
customers, including public sector entities, clubs and associations,
and approximately 100,000 insurance product customers. The Bank has
81 branches in Finnmark, Troms, Nordland and on Svalbard
(Spitzbergen). SpareBank 1 Nord-Norge has its own
representative office in Murmansk and is a shareholder in the Russian
bank, Tavrichesky OJSC, whose head office is located in St.

Tromso, 12 August 2008
For and on behalf of SpareBank 1 Nord-Norge

Kjell Kolbeinsen
Director, Information and Public Relations

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