Download the Annual Report 2010 - SpareBank 1 Gruppen.

1. 1
Annual Report 2010
SpareBank 1 Gruppen

2. 2 SpareBank 1 Gruppen
Content
Board of Directors' Report for 2010 3 Note 28 Lending to and deposits with customers and
Income statement 18 credit institutions 54
Statement of comprehensive income 19 Note 29 Net loan loss provisions 55
Consolidated balance sheet 20 Note 30 Credit risk exposure for each internal risk class 56
Consolidated statement of cash flow 21 Note 31 Maximum credit risk exposure, assets pledge as
Statement of changes in equity 22 security not taken into account 57
Note 32 Contractual maturity of financial liabilities 57
Note 1 General information 23 Note 33 Age distribution of overdue, but not impaired loans
Note 2 Summary of significant accounting policies 23 and premium revenues 58
Note 3 Financial risk management 29 Note 34 Market risk related to currency exchange risk 59
Note 4 Critical accounting estimates and judgements 32 Note 35 Market risk related to interest rate risk 59
Note 5 Changes in Group structure in 2010 34
Note 6 Segment information 37 Note 36 Deposits from customers and loans and deposits from
Note 7 Net insurance premium revenue 38 credit institutions 60
Note 8 Net fee and commission income 38 Note 37 Subordinated loan capital 61
Note 9 Gains and losses from financial assets and liabilities 39 Note 38 Securities issued 61
Note 10 Net income from investment properties 40 Note 39 Capital adequacy 62
Note 11 Other operating income 40 Note 40 Reinsurance receivables 63
Note 12 Operating expenses 40 Note 41 Insurance receivables from policyholders 63
Note 13 Shareholder structure 41 Note 42 Insurance liabilites in life insurance 64
Note 14 Goodwill 41 Note 43 Incurance result and provisions in P&C insurance 65
Note 15 Other intangible assets 42 Note 44 Liabilities related to reinsurance 66
Note 16 Investments in subsidiaries - parent company 42 Note 45 Underwriting risk SpareBank 1 Livsforsikring AS 66
Note 17 Investments in associates and joint ventures 43 Note 46 Underwriting risk SpareBank 1 Skadeforsikring 68
Note 18 Property, plant and equipment 44 Note 47 Wages and other remuneration to CEO and key
Note 19 Other assets 45 management 70
Note 20 Classification of financial assets and liabilities 46 Note 48 Pensions 72
Note 21 Valuation hierarchy 47 Note 49 Employees and full-time equivalent 74
Note 22 Financial instruments designated at fair value 49 Note 50 Taxes 75
Note 23 Financial derivatives 50 Note 51 Other liabilities 76
Note 24 Financial instruments classified as available for sale 51 Note 52 Events after the balance sheet date, legal matters 76
Note 25 Bonds at amortised cost 51 Note 53 Group consolidated exclusive Bank 1 Oslo Group 77
Note 26 Fair value on financial instruments measured at Note 54 Cash flow without Bank 1 Oslo Group as
amortised cost 52 of December 31, 2010 79
Note 27 Investment property 53 Independent auditor's report 80

3. 3
Board of Directors’ Report for 2010
SpareBank 1 Gruppen
OPERATIONS IN 2010 SpareBank 1 Skadeforsikring AS’ acquisition of Unison Forsikring
High return on equity due to good results in the largest AS resulted in negative goodwill of NOK 117.9 million being
production companies entered as income. SpareBank 1 Gruppen’s total assets were NOK
The Group is well capitalised 40.7 billion as of December 31, 2010, compared to NOK 61.5
New strategic positions through acquisitions (36.51) billion as of December 31, 2009. This is a decrease of NOK
SpareBank 1 Skadeforsikring AS acquired 100 % of the shares 20.8 billion compared to 2009 and is mainly due to the separation
in Unison Forsikring AS, and took over Skandia Lifeline of the Bank 1 Oslo Group.
Norges portfolio within treatment and child insurance
SpareBank 1 Gruppen Finans AS acquired the debt The capital adequacy ratio was 16.1 % as of December 31, 2010,
collection company Conecto AS compared to 16.3% in 2009. The core capital adequacy ratio was
Bank 1 Oslo AS was sold out with effect from January 1, 2010 12.5 % compared to 11.82 % in 2009. The capital position of
The profitability improvement programme, Delta, was finished SpareBank 1 Gruppen is considered satisfactory, and it is the
successfully. opinion of the Board that the Group is well capitalized to meet the
expected requirements in the Solvency II regulations.
SpareBank 1 Gruppen AS is a holding company that, through its
subsidiaries, provides and distributes products in the fields of life and In SpareBank 1 Skadeforsikring AS the gross claims ratio was
P&C insurance, fund management, securities brokering, factoring, 77.3 % in 2010 which is 2.4 % higher than in 2009. The increase
receivables management and debt collection of old claims. in the claims ratio is due to the extreme weather conditions
during the winter season which resulted in a high frequency of
In this Directors’ Report, SpareBank 1 Gruppen AS refers to the frost, water and snow damages.
holding company and SpareBank 1 Gruppen refers to the Group
consisting of SpareBank 1 Gruppen AS and its subsidiaries. SpareBank 1 Livsforsikring AS built further reserves in 2010. A total
of NOK 125.3 million was allocated to additional provisions within
SpareBank 1 Gruppen reported a pre-tax profit of NOK 985.1 pension and paid-up policies. The securities adjustment reserve
million for 2010, compared to NOK 1,193.7 (995.51) million in in the Group portfolio increased with NOK 289.8 million in 2010
2009. The profit resulted in a return on equity after tax of 18.7%, and amounted to NOK 616.9 million as of December 31, 2010.
compared to a return of 17.5 (18.11)% in 2009. The result is pri-
marily attributable to strong financial markets, the profitability SpareBank 1 Livsforsikring AS transferred its defined benefit
improvement programme, Delta, and certain significant one-time pension portfolio to Gabler Wassum AS during 2010. Gabler Wassum
effects. The phasing-out of SpareBank 1 Gruppen`s child and AS is now responsible the management and administration of the
spouse insurance together with ending the old contractual pension portfolio.
plan resulted in a total of NOK 84.3 million being entered as
income in 2010. SpareBank 1 Gruppen AS also entered as income ODIN Forvaltning AS’s total assets under management were NOK
a repayment of NOK 43 million related to payroll tax which were 32.3 billion as of December 31, 2010, which is an increase of
earlier covered by the company on behalf of First Securities AS. NOK 4.3 billion compared to 2009.
1 Figure exclusive Bank 1 Oslo Group
2 The capital adequacy ratio and the core capital adequacy ratio for 2009, including Bank 1 Oslo Group

4. 4 SpareBank 1 Gruppen
SpareBank 1 Gruppen Finans Group, which in 2009 was esta- SpareBank 1 Gruppen’s main functions in the SpareBank 1-
blished as a new subgroup of SpareBank 1 Gruppen AS, produces, alliance are two-folded:
delivers and distributes services within factoring, portfolio acqui- Manage and develop the financial group with respect to the
sition, investment management and debt collection. SpareBank 1 production and delivery of competitive products and services
Gruppen Finans AS acquired the debt collection company for distribution through the alliance banks and other banks that
Conecto AS in third quarter 2010. Actor Fordringsforvaltning AS have a distribution agreement with companies in SpareBank 1
and Conecto AS were merged to one integrated company with Gruppen and LO. This work is organised in the company
effect from January 1, 2011. SpareBank 1 Gruppen AS.
Manage and develop the alliance cooperation with respect to
SpareBank 1 Gruppen AS owned, as at December 31, 2010, common management, development and execution of activities
76.75 % of the shares in Argo Securities AS, which operates that provide economies of scale and competitive advantages.
within securities brokerage. This work is organised in the company Alliansesamarbeidet
SpareBank 1 DA.
The shares that SpareBank 1 Gruppen AS had in Bank 1 Oslo AS
were sold with effect from January 1, 2010. Consequently, Bank 1 Alliansesamarbeidet SpareBank 1 DA provides the administrative
Oslo AS became directly owned by the SpareBank 1 - banks (90%) framework for the alliance and manages financing and ownership
and the Norwegian Confederation of Trade Unions and affiliated of applications, concepts, contracts and brands on behalf of the
trade unions, LO, (10%). An important factor in the transfer of alliance partners. The company is owned by SpareBank 1 SR-Bank
ownership of Bank 1 Oslo AS was the strategy to establish a clear (17.74 %), SpareBank 1 SMN (17.74 %), SpareBank 1 Nord-Norge
boundary between production and distribution in the SpareBank 1- (17.74 %), Samarbeidende Sparebanker Utvikling DA (17.74 %),
alliance. Bank 1 Oslo AS will continue to be a part of the Sparebanken Hedmark (11.3 %), SpareBank 1 Gruppen AS (10.0 %)
SpareBank 1-alliance. and Bank 1 Oslo AS (7.74 %).
SpareBank 1 Gruppen ended the profitability improvement
program, Delta, in 2010. The program identified many actions to CORPORATE GOVERNANCE
improve the profitability in the Group. SpareBank 1 Gruppen AS is owned by SpareBank 1 Nord-Norge
(19.5 %), SpareBank 1 SMN (19.5 %), SpareBank 1 SR-Bank
(19.5 %), Samarbeidende Sparebanker AS (19.5 %), Sparebanken
SPAREBANK 1-ALLIANCE Hedmark (12 %) and the Norwegian Confederation of Trade Unions
The SpareBank 1-alliance consists of 18 savings banks, two com- and affiliated trade unions, LO, (10 %). SpareBank 1 Gruppen
mercial banks and SpareBank 1 Gruppen AS with subsidiaries. The AS has its business address in Tromsø. SpareBank 1 Gruppen’s
alliance is the second largest provider of financial products and main market is Norway.
services in the Norwegian market. The banks in the SpareBank 1-
alliance distribute SpareBank 1 Gruppen’s products and colla- The shares in SpareBank 1 Gruppen AS are not publicly traded,
borate in key areas such as developing brands, work processes, but as of December 31, 2010 the company had bonds and subor-
development of skills and know-how, IT operations, system develop- dinated loans listed on the Oslo ABM. The company has a con-
ment and purchasing. centrated shareholder structure, with all shareholder groups either
directly or indirectly represented in the Board. There is ongoing
The product companies established under SpareBank 1 Gruppen AS communication within all the owner groups. The Board of
and the alliance-banks have developed a common technology SpareBank 1 Gruppen AS has discussed the «Norwegian Code of
platform. The sharing of experience and transfer of knowledge within Practice for Corporate Governance» and adopted this wherever the
the alliance, based on best practice, are key elements of the further guidelines are applicable and of relevance for a company that does
development of the alliance. As a result of these efforts, knowledge not have shares listed on a stock exchange. The Corporate Gover-
centres have been established for Credit Management in Stavanger, nance statement from the Board of Directors is included in the
Payments in Trondheim, and Training in Tromsø. Norwegian version of Annual Report for 2010.
The SpareBank 1-alliance had total assets of approximately NOK 665 Group Management
billion at the end of 2010, compared to approximately NOK 616 The Group Management is responsible for managing and developing
billion at the end of 2009. The SpareBank 1-banks have 352 offices. the financial group, and focuses on results and production in
The products of SpareBank 1 Gruppen`s subsidiaries are distributed relation to the subsidiaries of SpareBank 1 Gruppen.
through 378 distribution offices across the entire country.

5. 5
Remuneration Result from subsidiaries:
Information on the remuneration of the Chief Executive Officer,
NOK million 2010 2009
group management, Board of Directors, supervisory board, control
committee, and the auditor is provided in note 47. Part of result from subsidiaries before tax:
SpareBank 1 Livsforsikring AS 350,4 392,2
SpareBank 1 Skadeforsikring Group* 641,1 621,1
Bank 1 Oslo Group** - 198,1
Dividend policy
ODIN Forvaltning AS 64,6 42,1
SpareBank 1 Gruppen AS has a long term goal of paying a dividend Argo Securities AS -57,6 -48,9
SpareBank 1 Medlemskort AS 11,1 12,1
of 30-50 % of the surplus on the consolidated level. In determining SpareBank 1 Gruppen Finans Group*** 8,6 22,5
the dividend for SpareBank 1 Gruppen AS, importance is placed Correction Group 17,6 4,8
Net result before tax from subsidiaries 1 036,0 1 244,1
on maintaining a satisfactory capital and core capital adequacy
* Unison Forsikring AS was acquired by SpareBank 1 Skadeforsikring with
ratio in relation to the planned growth and risk associated with the
effect from July 1, 2010.
company’s operation. The financial situation must also be deemed ** Bank 1 Oslo Group was sold out from SpareBank 1 Gruppen AS with effect
from January 1, 2010.
satisfactory with respect to internal ICAAP calculations and the *** Conecto AS is 100 % owned by SpareBank 1 Gruppen Finans AS with effect
Group’s liquidity. The goal is that the core capital inclusive from September 10, 2010. The result before this date has been registered
directly against equity.
perpetual bonds shall amount to at least 11% and capital adequacy
to at least 13 %. SpareBank 1 Gruppen AS shall maintain the The pre-tax profit from subsidiaries was NOK 1,036.0 million in
goals related to capital coverage that will be established in the 2010, compared with NOK 1,244.1 (1,046.01) million in 2009.
Solvency II regulations with a good margin.
SPAREBANK 1 GRUPPEN – RESULTS AND KEY FIGURES
SpareBank 1 Gruppen AS and SpareBank 1 Gruppen report the
annual accounts in accordance with IFRS, International Financial
Reporting Standards, which are recognised by the EU.
Profit – SpareBank 1 Gruppen:
NOK million 2010* 2009*
Net result before tax from subsidiaries 1 036,0 1 244,1
Total operating costs (parent company) -7,6 -54,1
Net investment charges (parent company) -43,2 -36,3
Gains from sale of companies - 29,2
Share of associated company - 10,8
Pre-tax result 985,1 1 193,7
Taxes -153,6 -294,0
Net result for the period 831,6 899,6
Majority interest 841,0 909,1
Minority interest -9,5 -9,5
* Bank 1 Oslo Group was sold out from SpareBank 1 Gruppen AS with effect from
January 1, 2010.
SpareBank 1 Gruppen reported a profit after tax of NOK 831.6
million, compared with NOK 899.6 (735.11) million the previous
year. This equals a decline in profit of NOK 68.9 million. The pre-
tax profit was NOK 985.1 million, compared with NOK 1,193.7
(995.51) million in 2009. The Group’s total tax expense was NOK
153.6 million, compared with NOK 294.0 (260.51) million in 2009.
Good financial markets, the profitability program Delta, and
several other significant factors with a one-off impact contributed
to a good result in 2010.
1 Figure exclusive Bank 1 Oslo Group

6. 6 SpareBank 1 Gruppen
SPAREBANK 1 LIVSFORSIKRING AS The company’s total assets under management were NOK 26.5
Profit SpareBank 1 Livsforsikring AS: billion as of December 31, 2010. This equals an increase of 9.0 %
from 2009. The capital adequacy ratio was 19.3% at the end of 2010,
NOK million 2010 2009
compared with 19.0 % at the end of 2009. Core capital ratio con-
Risk result after tecnical allocations 325,4 352,3 stituted 17.7% at the end of 2010, compared with 16.1 % the year
Administration result -186,9 -193,1
Investment result 317,3 557,4 before. In 2010, NOK 358.7 million was contributed to the compa-
Reserves -45,3 -74,5
ny’s equity through group contributions. The solvency margin as of
Compensation guaranteed interest 29,9 14,6
Result before additional provisions 440,4 656,7 December 31, 2010 was 290.1 %, compared with 279.2 % the year
Allocation to additional provisions -125,3 -127,9
Transferred to policyholders -36,3 -209,5
before. The minimum requirement is a solvency margin of 100 %.
Return on company's assets 71,6 73,0 At the end of 2010, the solvency margin requirement amount to
Net profit to owner before tax 350,4 392,2
Taxes -60,2 - NOK 859.0 million, compared to NOK 797.9 million in 2009.
Net profit/loss for the period 290,2 392,2
The allocation to additional provisions was enhanced by NOK
SpareBank 1 Livsforsikring AS reported a pre-tax profit and other 125.3 million at the end of 2010, resulting in total additional pro-
P&L components of NOK 350.4 million in 2010, compared with visions of NOK 379.3 million as of December 31, 2010. The secu-
NOK 392.2 million in 2009. The tax expense in 2010 was NOK 60.2 rities adjustment reserve was NOK 616.9 million at year end. After
million. In 2009 the tax expense of the company was zero, as the suggested disposal of the 2010 surplus, the buffer capital in total con-
deferred tax asset was not included, in accordance with IAS 12. stituted NOK 2.3 billion, equal to 14.6 % of the insurance provisi-
ons at the end of 2010. In comparison, the buffer capital the previous
Net risk result was NOK 325.4 million in 2010, compared with NOK year amounted to NOK 1.8 billion, corresponding to 11.7% of the
352.3 million the year before. The main reason for the reduction insurance provisions.
concerned changes in outstanding claims provisions within indi-
vidual endowment insurances compared to the previous year. At the Value-adjusted return on the Group portfolio was 7.1 % in 2010. The
same time, there was a significant improvement in the risk result booked return was 5.2 %. In 2009, similar return was 9.5 % and
within individual annuity insurances and group life insurances. 7.1 % respectively.
The company reported a net administration result of minus NOK Allocation of assets by portfolio as of 31.12.2010:
186.9 million, compared with minus NOK 193.1 million in 2009.
Group portfolio
The majority of the administration loss arises from the operation of 2010 2009
group pension insurance. Stocks 14,8 % 14,5 %
Other 7,1 % 5,2 %
Real estate 21,5 % 21,7 %
Bonds held to maturity 21,8 % 24,3 %
Net investment result (financial income in customer portfolios
Bonds 34,8 % 34,2 %
reduced with guaranteed returns) was NOK 317.3 million compared Total value (NOK million) 16 030 15 488
with NOK 557.4 million in 2009. At the beginning of 2009, the value Company portfolio
of the financial assets recorded at fair value was NOK 152.0 million 2010 2009
Stocks 0,1 % 0,1 %
lower than the acquisition cost. The reversal of this lesser value, Other 17,0 % 19,4 %
Real estate 21,7 % 17,0 %
before a rebuilding of the securities adjustment reserve could
Bonds held to maturity 11,1 % 14,7 %
commence, contributed to the good investment income result in Bonds 50,1 % 48,7 %
Total value (NOK million) 2 844 2 479
2009. Within individual annuity insurance, NOK 45.3 million of the
investment income result was utilised to enhance the premium Investment choice portfolio
2010 2009
reserve due to adjustments made to life expectancy ratios. Corres- Stocks 61,0 % 61,4 %
Other 0,0 % 7,1 %
ponding amounts in 2009 were NOK 74.5 million.
Bonds 39,0 % 31,5 %
Total value (NOK million) 6 701 4 041
Group portfolio Company portfolio Investment choice portfolio
Total value: NOK 16 billion Total value: NOK 2.8 billion Total value: NOK 6.7 billion
14,8%
Bonds 17,0% Bonds Stocks
34,8% 7,1%
Bonds held to maturity Real estate 39,0% Bonds
50,1%
21,7%
21,5% Real estate Other 61,0%
21,8% Stocks Bonds held to maturity
11,1%
Other Stocks

7. 7
The company decided to invest in a model for asset-liability In 2010, the financial income of the SpareBank 1 Skadeforsikring
management at the beginning of 2010. The model was used for the Group was NOK 432.7 million, compared with NOK 532.6 million
test calculations in relation to the introduction of the Solvency II in 2009. This includes a gain of NOK 20.9 million on sold property
requirements (QIS-5). The board considers the company’s com- in the fourth quarter. The financial return on the Group’s portfolio
mercial exposure to be well adapted to its risk capabilities. was 4.9%. The company had positive returns in all asset classes
in 2010.
SPAREBANK 1 SKADEFORSIKRING GROUP SpareBank 1 Skadeforsikring Group had total assets of NOK 12.1
Profit SpareBank 1 Skadeforsikring Group: billion as of December 31, 2010. This represents an increase of
15.7 % from 2009. The capital adequacy ratio at the end of 2010
NOK million 2010 2009
was 32.5 %. This equals a reduction of 1.7 percentage points
Gross written premium 4 731,8 4 271,2 through the year.
Net earned premium 4 184,4 3 814,3
Net incurred claims -3 208,5 -2 813,1
Net insurance operating costs -880,6 -858,0
Net combined ratio per year:
Other insurance income/costs 132,0 0,8
Changes in other technical reserves 39,6 -27,5 87,2% 89,9% 94,6% 94,0% 96,2% 97,7%
Operating result before finance 266,9 116,6 100
Net financial income 432,7 532,6
Other costs -2,7 -5,8
Result before changes in security reserve 696,9 643,3 80 22,5% 21,0%
20,7% 21,9%
Changes in security reserve -55,8 -22,2 20,6%
20,5% 76,7%
Pre-tax profit 641,1 621,1 73,9% 72,1% 73,7%
Taxes -60,1 -118,1 69,3%
60 66,7%
Net profit/loss for the period 581,1 503,0
40
SpareBank 1 Skadeforsikring Group reported a result in 2010 of
NOK 641.1 million before tax, compared with NOK 621.1 million
20
in 2009. The Group achieved a significant growth in the premium
income, both through the traditional sales channels, such as
0
banks and LO (The Norwegian Confederation of Trade Unions), as 2005 2006 2007 2008 2009 2010
well as though new strategic activities such as the acquisition of
Claims ratio, net Cost ratio, net
Union Forsikring AS and Skandia Lifeline Norge’s portfolio within
treatment and child insurance.
The net combined ratio was 97.7% in 2010, an increase of 1.5 per-
SpareBank 1 Skadeforsikring AS bought 100% of the shares in centage points from 2009.
Unison Forsikring AS for NOK 56.4 million, with effect from
July 19, 2010. At the same time it contributed with NOK 150 The gross combined ratio was 98.1% as of December 31, 2010. The
million to the company’s equity through a private placing towards gross claims ratio constituted 77.3% in 2010, which was an in-
Unison Forsikring AS. Unison Forsikring AS was consolidated crease of 2.4 percentage points compared with 2009. The increase
with effect from July 1, 2010. Unison’s business concept is to in the claims ratio is attributable to the cold winter, causing a high
provide tailored business solutions to defined groups of end users frequency of frost and water related damage. Gross cost ratio in
– either through organisations or other relevant intermediary con- 2010 was 20.8%, compared with 22.1% in 2009. One-off impacts
nections such as agents and brokers. of NOK 42.5 million related to pensions, as well as zero in profit-
ability commission to the distributors have contributed to a reduc-
After receiving approval from Norwegian and Swedish authorities, tion in the cost ratio.
SpareBank 1 Skadeforsikring AS has acquired Skandia Lifeline
Norge’s portfolio within treatment and child insurance with effect SpareBank 1 Skadeforsikring Group had a total portfolio growth
from November 1, 2010. The portfolio consists of 1,200 customers of NOK 629 million. The company’s total portfolio was NOK 4.7
and insures a total of 16,000, with a stock of approximateley billion at the end of 2010.
NOK 30 million in premiums.
SpareBank 1 Skadeforsikring Group has ambitions of profitable
The acquisition of Unison Forsikring AS resulted in a negative growth through both traditional channels, such as banks and LO, as
goodwill of NOK 117.9 million being entered as income, while the well as new channels for direct distribution. The goal is to increase
selling of the insurance office in Bergen to SpareBank 1 SR-Bank revenue by strengthening the Group’s distribution platform.
resulted in a gain of NOK 14.2 million.

8. 8 SpareBank 1 Gruppen
ODIN FORVALTNING AS 76.75% of the shares in Argo Securities AS at the end of 2010. The
Profit ODIN Forvaltning AS: remaining shares were owned by the employees.
NOK million 2010 2009
The company has continued to build up its operations through
Management fees 317,9 244,8 2010. This has affected the result, which amounted to a loss before
Subscription and redemption fees - 25,9
Total operating income 317,9 270,7 tax of NOK 57.6 million in 2010. There has been an increase in
Total operating costs -256,8 -228,3
revenue in all business segments compared to 2009. Total revenue
Operating profit 61,1 42,4
Net financial income 3,6 -0,3 in 2010 was NOK 83.3 million, compared to NOK 47.0 million in
Pre-tax profit 64,6 42,1
Taxes -19,3 -13,5
2009. Out of the 2010 revenue, NOK 37.4 million are related to
Net profit for the period 45,3 28,6 commission income on stocks and derivatives, NOK 18.4 million in
remunerations from corporate finance, NOK 16.6 million from debt
ODIN Forvaltning AS reported a pre-tax profit of NOK 64.6 million capital markets and NOK 10.9 million from other revenue. Along
in 2010, compared with NOK 42.1 million in 2009. The increase with the building of the operations, the company’s cost base has also
in profit can mainly be attributed to higher average assets under increased, and there were a total of 77 employees at the end of the year.
management throughout the year.
There is significant potential for the company through its connection
All funds yielded good absolute returns in 2010, although eight out to the alliance and gaining access to the distributional power that it
of twelve self-managed mutual funds had returns that were weaker represents. The work to realise this potential was started in 2010, and
than the market they invested in. This is mainly caused by a weaker will continue throughout 2011. The company has added additional
development for investment companies than growth companies in top competence and market power through recruitment of new
2010. ODIN Forvaltning AS is an investment manager. employees. It is expected that the efforts over time will yield significant
increases in market shares and that this will be reflected in the results.
At the end of 2010 ODIN Forvaltning AS managed a total of NOK
32.3 billion, of which NOK 31.3 billion were managed in mutual
funds. This makes ODIN Forvaltning AS the third largest fund SPAREBANK 1 GRUPPEN FINANS GROUP
manager in Norway. ODIN Forvaltning AS had in 2010 a net Profit/loss in SpareBank 1 Gruppen Finans Group:
redemption in mutual funds of NOK 1.4 billion, caused by redemp-
NOK million 2010 2009
tion from foreign customers.
SpareBank 1 Gruppen Finans AS -5,7 3,3
Overhead costs -9,3 -1,2
Good historical returns, a broad offering of self-managed mutual Business area Factoring 2,0 6,6
Business area Portefølje 1,7 -2,1
funds, introduction of combined funds, the SpareBank 1 banks’
Business area Debt collection 19,5 24,6
broad distribution network, distribution through other banks and Actor Fordringsforvaltning AS 23,3 24,6
Conecto AS* -3,8 -
distributors in Norway, Sweden, Finland and the Netherlands, Net result before tax from subsidiaries 13,9 27,8
together with good technological solutions, and an effective and Amortisation -5,3 -5,3
Pre-tax profit 8,6 22,5
competent organisation, provide a strong starting point for Taxes -4,3 -6,7
Net profit for the period 4,3 15,9
2011.
* Conecto AS was acquired with effect from September 10, 2010.
ARGO SECURITIES AS SpareBank 1 Gruppen Finans Group produces, delivers and
Profit/loss Argo Securities AS: distributes services within factoring, portfolio acquisitions, port-
folio management and debt collection. SpareBank 1 Gruppen
NOK million 2010 2009
Finans Group consists of SpareBank 1 Gruppen Finans AS, and its
Total operating income and other income 83,3 47,0 business areas Factoring and Portfolio, as well as its subsidiaries
Salaries and other ordinary personnel expenses -89,7 -66,5
Depreciation and amortisation -6,9 -9,2 Actor Fordringsforvaltning AS and Conecto AS. Conecto AS was
Other operating expenses -43,2 -27,2
acquired with effect from September 10, 2010. Actor Fordrings-
Operating result -56,5 -55,9
Net financial income -1,0 7,0 forvaltning AS and Conecto AS were merged with effect from
Pre-tax loss -57,6 -48,9
Taxes 16,8 13,5
January 1, 2011. These companies operate within extrajudicial and
Net result for the period -40,8 -35,4 legal debt collection.
Argo Securities AS operates within corporate finance, stock broke- SpareBank 1 Gruppen Finans Group achieved a pre-tax profit in 2010
rage and debt capital markets. SpareBank 1 Gruppen AS owned of NOK 8.6 million, which was NOK 13.9 million lower than in 2009.

9. 9
SpareBank 1 Gruppen Finans AS of 26%, but has still increased revenue with 11% from 2009. The
Business area Factoring increase is mainly due to an increased portfolio, as well as renego-
The business area Factoring operates within financing in the areas tiated agreements. The market is characterised by a competitive
factoring and collateral. Pre-tax profit in 2010 was NOK 2.0 million, environment. Conecto AS not only has a good market position, but
compared with NOK 6.6 million in 2009. good prospects for increased growth in the time to come.
The Factoring business area had total net revenues of NOK 52.4
million in 2010, compared with NOK 50.1 million in 2009. The SPAREBANK 1 MEDLEMSKORT AS
client revenue was NOK 11.0 billion in 2010, equal to an increase Profit in SpareBank 1 Medlemskort AS:
of 30.6 % compared with 2009. In connection with a bankruptcy
NOK million 2010 2009
engagement, provisions for losses amounted to NOK 10.4 million
in 2010. This loss provision was the main cause for the decline of Total operating income 62,2 59,4
Salaries and wages -6,1 -7,0
the result in 2010. Other operating expenses -45,7 -41,2
Operating result 10,4 11,2
Net financial income 0,8 0,9
Business area Portfolio Pre-tax profit 11,1 12,1
Taxes -3,3 -3,5
The Portfolio business area operates within acquisition of portfolio Net profit for the period 7,8 8,6
of non-performing loans and which are recovered in the Group’s
debt collection companies. The pre-tax profit in 2010 was NOK 1.7 SpareBank 1 Medlemskort AS reported a pre-tax profit of NOK
million, compared with a loss in 2009 of NOK 2.1 million. In total 11.1 million, and a result after tax of NOK 7.8 million.
this represents an improvement in the result of NOK 3.8 million.
Additional positive development in the profit is expected in SpareBank 1 Medlemskort AS operates LO’s affiliated trade unions’
2011. Net interest and other financial income was NOK 9.3 million common membership database for delivering membership cards
in 2010. The business area Portfolio had a total portfolio volume and collects the insurance premiums for group insurance. The
of NOK 620 million at the end of 2010. company also runs and administrates the benefits-program LOfavør
for about 870,000 members. The company cooperates closely
Actor Fordringsforvaltning AS with LO and the affiliated trade unions, and is the operational
The company operates within the debt recovery business and supplier of the benefits-program LOfavør on behalf of LO and the
provides services related to receivables management, litigated affiliated trade unions. The company also cooperates with the other
debt prosecution, and juridical advice. The company reported a companies in the SpareBank 1-alliance, particularly the banks and
profit before tax in 2010 of NOK 23.3 million, compared to NOK insurance companies.
24.6 million in 2009. In total, the company’s revenue amounted
to NOK 84.9 million, an increase of NOK 6.2 million from 2009. The LO congress’ decision that LOfavør shall be the best known
The reduction in the pre-tax profit was mainly caused by reduced benefits-concept by 2013 has lead to increased activity in the
fee income as a consequence of reductions in fee income rates company. Six larger activities/campaigns have been performed,
decreed by law. The company has calculated the effect of the and other marketing operations have increased in scope. The
changes made to the debt collection regulation as of September company has experienced yet another year of increased use of the
2009 to be an approximately 20 % reduction of revenue. Parts of membership benefits. The company has also experienced increased
the 2010 revenue were generated from demands that were due demand for its services from the alliance-banks.
January 1, 2010, which was before changes were made to the
regulations. Consequently the changes have not had its full impact
in 2010. SPAREBANK 1 GRUPPEN AS
SpareBank 1 Gruppen AS’ assets, in addition to shares in its sub-
Conecto AS sidiaries, consist of cash deposits and less material assets. The hol-
SpareBank 1 Gruppen Finans AS bought the debt collection ding company had liquidity reserves as of December 31, 2010 of
company Conecto AS on September 10, 2010. The company NOK 292 million, of which unutilised drawing rights accounted
reported a loss before tax of NOK 3.8 million, which was the for NOK 200 million. The liquidity reserve decreased with NOK
result from the day of the acquisition, September 10, until the year 210 million compared to 2009.
end. The company generated revenue of NOK 86.6 million in
2010, which was NOK 9.5 million more than in 2009. Conecto AS The equity consists of share capital, share premium account, and
has calculated the impact of the changes in the debt collection other equity. Share capital in the holding company was NOK
regulation as of September 2009 to cause a reduction in revenue 1,782 million as of December 31, 2010, while total equity was NOK

10. 10 SpareBank 1 Gruppen
2.758 million. The holding company had free equity of NOK 728 DIVIDEND
million at the end of 2010. The Board proposes that a dividend of NOK 440 million be distri-
buted from SpareBank 1 Gruppen AS for 2010. At the same time it
The capital adequacy ratio in the SpareBank 1 Gruppen AS was will be carried out a share issue of NOK 440 million to the owners
53.7 % as of December 31, 2010, compared with 57.7% in 2009. so that the company's financial strength is maintained.
SpareBank 1 Gruppen AS core capital adequacy ratio as of December
31, 2010 was 44.9 %, compared with 47.6 % the previous year.
RISK FACTORS
The operations of SpareBank 1 Gruppen are organised into diffe-
SPAREBANK 1 GRUPPEN rent business areas through the Group’s subsidiaries. There are
Cash and cash equivalents reserve were reduced by NOK 309.3 major differences in the risk structure between each subsidiary.
million during 2010. Reason for the reduction is that net cash flow The most important risk categories that impact the Group are
from operational activities and investment activities, amounting related to market risk, insurance risk, ownership risk operational
to NOK 6,575 and 789.7 million respectively, did not exceed the risk, credit risk, liquidity risk, concentration risk, as well as
cash flow of NOK 7,674 million from financing activities. strategic and business risk.
Lending to customers and claims towards credit institutions had Bank 1 Oslo AS was demerged out from SpareBank 1 Gruppen
a reduction of NOK 20,622 (increased of 210.91) million. Deposits effective January 1, 2010. This has led to changed risk exposure
and debt to customers and credit institutions were reduced by compared to last year.
1
NOK 16,835 million (294.4 ). The holding of securities increased
with a net of NOK 883.3 million. The property portfolio was Responsibility for risk management and control
1
reduced with NOK 596.1 (488.5 ) million. Debt established by The Group’s board of directors is responsible for risk management
issuing securities had a net reduction of NOK 5,504 (increased of and compliance in the Group. The board of each subsidiary is
1
876.9 ) million. In 2010, dividends of NOK 120 million were responsible for managing risk and compliance in their own
paid to the owners. company.
The SpareBank 1 Gruppen Group, had a total equity of NOK The responsibility for the overall risk management within the
4,809 million at year end, compared to NOK 5,293 million the year Group lies with the Director for Strategy, Analysis and Risk
before. Capitalised goodwill in the Group as of December 31, 2010 Management in the holding company. The Director reports to the
amounted to NOK 851 million. Chief Executive Officer of SpareBank 1 Gruppen AS.
The capital adequacy ratio in the Group was 16.1% as of The purpose of risk management in SpareBank 1 Gruppen is to
December 31, 2010, compared with 16.31 % in 2009. The Group’s support the Group’s strategic development and achievement of
core capital adequacy ratio as of December 31, 2010 was 12.5%, goals as well as fulfilment of statutory capital requirements. The
1
compared with 11.8 % the previous year. risk management shall ensure financial stability and proper Asset
Management. This shall be achieved through:
The transfer of the shares in Bank 1 Oslo AS January 1, 2010, to
the SpareBank 1-banks and LO involved a capital reduction in a moderate risk profile
SpareBank 1 Gruppen of NOK 1.130 million as of January 1, a strong risk culture with a high level of risk management
2010. Of this reduction, share premium account and other equity was awareness
reduced with NOK 579 and 551 million respectively. striving towards an optimal capital allocation within the
adopted business strategy
The annual accounts are presented under the assumption that the exploitation of synergy and diversification effects, and
company will continue as a going concern. The board finds that an adequate core capital in accordance with the chosen risk
the prerequisites for the going concern assumption have been profile.
met by the annual accounts for 2010 and the result forecasts for
2011. Beyond matters mentioned in this report, no circumstances Internal control within the Group is regulated in Group Policies
have arisen after the end of the financial year that would be of but defined as a line responsibility. In accordance with the
material significance to the company’s financial position and «Regulations relating to Risk Management and Internal Control»
results. and the Group’s own guidelines, risk factors in the operations are
reviewed annually and action plans are prepared in all units,
1 Figure exclusive Bank 1 Oslo Group

11. 11
which are reported to the respective subsidiary’s board of directors.
In addition, surveys are conducted across the Group with regard Market risk
to internal control, Personal Data Act, and security matters. The Group’s consolidated market risk is measured and reported
SpareBank 1 Gruppen has outsourced the internal auditing quarterly to the board of directors in SpareBank 1 Gruppen AS.
function to Ernst & Young AS. The Group has benefited with The calculations are based on a Value at Risk (VAR) model. A
increased expertise as a result of this. Internal auditing operations corresponding model is used for the follow-up of each subsidiary.
also encompass the subsidiaries. The subsidiaries manage and monitor risk exposure in accordance
with their own models and routines.
Developments in risk management in 2010
SpareBank 1 Gruppen is, as a financial group, subject to an 2010 has been a very good year financially for SpareBank 1 Gruppen.
extensive set of regulations which are constantly under development. Except from Argo Securities AS all companies in SpareBank 1
Within insurance, a new set of rules is being developed for Gruppen improved its financial position through the year. Risk
calculating capital requirement, Solvency II. management and internal control are considered satisfactory and
have been improved in all companies during 2010.
Solvency II is expected to come in force from 2013. Similar to the
effect Basel II had on the development of risk management in The value adjusted return in the customer portfolio of SpareBank 1
banks, Solvency II is expected to have at least the same effect on the Livsforsikring AS was 7.1 % and the booked return was 5.2 %.
calculation of capital requirements as well as the need for developing SpareBank 1 Livsforsikring AS’ securities adjustment reserves
new models for risk management in insurance companies. Extensive increased from NOK 327.1 million to NOK 616.9 million during
work is being performed to prepare for the new rules, including the year. The additional provisions were increased with NOK
participation in regulatory trial projects. 125.3 million and amounted to NOK 379.3 million at year end. The
capital and solvency margin were satisfying at the beginning of the
The Group will also be subject to the new regulations. SpareBank 1 year, and have significantly improved during the year.
Gruppen went through considerable changes in 2010 with
consequences for risk management within the Group. Among the Despite the fact that SpareBank 1 Skadeforsikring AS has a con-
most important events in 2010 with short term impact, is that from servative investment profile in its investment portfolio, the share
January 1, 2010 Bank 1 Oslo AS is no longer owned by SpareBank invested in equities was 9.1% at the end of 2010 compared to
1 Gruppen AS. This separation has led to a significant reduction in 7.1% in 2009. The company has very short term maturity on its
the exposure to credit risk. Credit risk as a share of total risk exposure interest placements. At the end of the year, 14.1% of the company’s
was reduced from 9.2% as of December 31, 2009 to 1.7% as of investment portfolio was placed in real estate, compared to 14.4%
December 31, 2010. The separation of Bank 1 Oslo AS will not have in 2009. Despite the increase in the equity share on the company’s
any short term effect on the work related to risk management other financial investments, the market risk in the company is still
than reducing risk exposure for SpareBank 1 Gruppen. considered medium-high. The company had a financial return of
4.9% in 2010 compared to 6.8 % in 2009.
At the same time, acquisition, restructuring and development of
the companies in SpareBank 1 Gruppen Finans Group and Argo Ownership risk
Securities AS will in the future become an important part of value Given the present risk exposure, the holding company’s financial
added in SpareBank 1 Gruppen. They will also constitute a more position is regarded satisfactory. The development of the results
significant part of risk elements in SpareBank 1 Gruppen. From in 2010 has entailed a significantly better financial situation than
2009, the companies were included in the overall risk calculation at the beginning of the year.
and were also a part of the calculation of diversification effects.
Credit risk
The Group’s risk management review program has continued The demerger of Bank 1 Oslo AS has resulted in a significantly
through 2010. lower exposure against credit risk for the Group.
Risk categories The credit risk in SpareBank 1 Livsforsikring AS and SpareBank
The Group’s risk exposure is related primarily to market risk, 1 Skadeforsikring AS is related to investments in commercial
insurance risk, ownership risk, credit risk, concentration risk, as paper and bonds. SpareBank 1 Livsforsikring AS is exposed to
well as operational risk (included compliance risk), liquidity risk Collateralized Debt Obligations (CDOs) in its portfolios, recognised
and strategic and commercial risk. For an explanation of each risk at NOK 212 million. This amounts to approximately 0.8 % of
category, see Note 3 - Financial risk management. total financial assets.

12. 12 SpareBank 1 Gruppen
The risk associated with the remaining interest investments is limited In connection with the new «Regulations relating to Risk Manage-
to companies with high credit worthiness. The credit risk in this part ment and Internal Control», including paragraph § 6 (last section)
of the portfolio is considered low to moderate. The insurance of these regulations, which clarifies the overlap with the «Capital
companies have in addition credit risk attached to different Adequacy Regulations», all the framework and management
reinsures. The ratings are monitored closely and the risk is documents in the Group was updated in 2009 and further adjustments
considered very low. In the real estate portfolio risk associated were made in 2010 to clarify the boundaries between the risk
with operating the signed leases exists. This risk is also considered processes that are encompassed by the internal control work and
limited. those that are encompassed by the ICAAP work. In addition, it is
established a separate compliance function within the Group,
Concentration risk which conducts continuous ongoing work related to compliance,
Concentration risk for SpareBank 1 Livsforsikring AS and industry standards etc, but also through follow up of internal
SpareBank 1 Skadeforsikring AS is expected to be related to guidelines. This function ensures the fulfillment of risk prosesses
investment, especially in connection with investment in bonds required by law and effective implementation internally. Compliance
issued by financial institutions. Capital requirements for this risk with statutory risk processes and an efficient implementation of
have not been calculated as of December 31, 2010. SpareBank 1 these are ensured through this work. Compliance risk on Group level
Skadeforsikring AS has a certain concentration risk attached with is monitored through qualitative analyses as well as continuously in
reinsurers. the daily operations. At company level compliance reports are
prepared in connection with the administration of the investment
Insurance risk portfolio.
Insurance risk is a central part of the operations in both SpareBank
1 Livsforsikring AS and SpareBank 1 Skadeforsikring AS. Losses Liquidity risk
in SpareBank 1 Skadeforsikring AS can arise as a consequence of Financing structure is based on an overall liquidity strategy which
fluctuations in the current year’s claims ratio and changes in is reviewed and approved by the board at least once a year. The
claims reserves. For SpareBank 1 Livsforsikring AS the insurance risk liquidity risk is reduced through diversification of the deposits
comes mainly from risk products without profit sharing. across different markets, deposit sources, instruments and maturity
terms. In 2010, the liquidity risk in SpareBank 1 Gruppen was
SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring mainly associated with the parent company and it is considered
AS relieve risk through reinsurance. The companies either cede to be low.
a significant level of risk within individual business areas or
cede a share of the claims from the overall insurance business to Strategic and commercial risk
reinsurers. Reinsurance also covers cumulative claims and disasters. SpareBank 1 Gruppen has established a contingency plan for
The risk associated with the reinsurers’ creditworthiness is placed handling reputation-sensitive issues. The contingency plan’s
under credit risk. agenda will be reviewed and updated every quarter. Work on
specific matters will be initiated and managed by the Director of
The control of the insurance risk in both SpareBank 1 Skadeforsikring Communication.
AS and SpareBank 1 Livsforsikring AS is considered to be satisfactory.
Together with the Alliance’s Risk Management Forum, the Group
Operational risk will continue to focus on the establishment of quantitative models
The operational risk in the subsidiaries is currently documented in with the purpose of estimating the capital needs for the strategic and
connection with the work done to meet the «Regulations relating to commercial risks in the Group.
Risk Management and Internal Control». This work normally requi-
res the management group of each subsidiary and staff area in the Changes in the regulations
holding company to identify the main category of operational risk After the separation of Bank 1 Oslo AS, SpareBank 1 Gruppen is
before and after the implementation of measures. This effort did not no longer required to prepare ICAAP calculations in accordance
identify any serious risk factors in the Group in 2010. with the Basel II regulations. Some subsidiaries in SpareBank 1
Gruppen are still required to prepare ICAAP calculations.
In connection with the implementation of the Group’s ICAAP SpareBank 1 Gruppen will continue to prepare ICAAP calculations
calculations, models were put in place for calculating necessary in accordance with current Basel II regulations in 2011 as they did
capital needs for operational risk. Reference is made to the Pillar 3- in 2010. The consequence of this will be that the requirements for
report for a more detailed description of these calculations. similar reporting in certain subsidiaries will cease, and that complete

13. 13
ICAAP calculations will be prepared at Group level only.
After the separation of Bank 1 Oslo AS, SpareBank 1 Gruppen is
now considered to be an insurance dominated mixed financial
group. The Group will therefore be encompassed by the Solven-
cy II regulations. During 2010 the Group has on a consolidated
level taken part in the quantitative calculations associated with QIS
5. The results show that the Group is well prepared to meet the
expected requirements in the new regulation.
Pillar 3
Reference is made to a separate Pillar 3-report prepared in
accordance with the requirements stipulated in Part IX, Chapters
45 and 46, of the Capital Adequacy Regulations. The report has
also been prepared to meet the market’s increased demand for
transparency and openness with regard to risk in general and a
more detailed review of the company’s capital and risk situation.
For the Pillar 3-report we reference to http://investor.sparebank1.no.
ORGANISATION AND WORKING ENVIRONMENT
AT SPAREBANK 1 GRUPPEN AS
Organisation
In SpareBank 1 Gruppen there were a total of 1,196 employees and
1,162 full-time equivalents in 2010. The corresponding figures for
2009 were 1,441 and 1,409 respectively. The decrease in the workforce
is related primarily to the demerger of Bank 1 Oslo AS from
January 1, 2010, and restructuring processes in parts of the Group.
SpareBank 1 Gruppen AS had 220 employees and 213 full-time
equivalents as of December 31, 2010.
The total turnover in 2010 was 9.9%. The corresponding figure for
2009 was 7.1%. Adjusted for early retirement pensions (AFP), old
age pensions and disability pensions, the Group’s turnover was
7.6% compared to 4.9% in 2009.
All business areas are organised in subsidiaries. The Chief Executive
Officers in the subsidiaries, together with the directors for Finance,
Communication and Strategy & Business development, partake in
the corporate management group of SpareBank 1 Gruppen.
HR Strategy
SpareBank 1 Gruppen’s HR strategy is based on the Group’s
vision, values, goals and success factors. The main goal is to
ensure that SpareBank 1 Gruppen:
Attracts the right employees by focusing on the values «to be
an expert and close to you».
Retains the best employees by giving them responsibilities,
communicating with them and rewarding them for good
performance.

14. 14 SpareBank 1 Gruppen
Develops employees through involvement, establishment of 3.0 % in 2010. Training in various HSE disciplines was provided
clear goals and follow-up. for managers and safety coordinators in 2010. This was carried out
in consultation with the individual working environment
The HR strategy follows the employment cycle of an employee and committees.
contains frameworks and guidelines for how the company as an
employer should manage and develop its employees. The HR SpareBank 1 Gruppen’s ethical guidelines specify rules for how
strategy includes guidelines that will develop SpareBank 1 Gruppen the employees and representatives shall give notice if they become
as an attractive and including working place without any form for aware of matters that are in violation of laws, regulations or the
discrimination. Group’s internal rules. A separate notification routine has also been
established.
Central areas in our HR Strategy are:
SpareBank 1 Gruppen started the project «the Workplace of the
The trainee programme Future» with a rebuilding of the headquarters in Hammersborggata
Since the trainee programme was introduced in 2006 a total of 15 2 in 2010. During 2011 most of the employees in the Group will
trainees have completed their trainee period. All of them have make use of modern and contemporary facilities that contributes
central positions within the Group. SpareBank 1 Gruppen has to increased interaction and knowledge sharing.
currently nine trainees and will recruit a new group of trainees in
2011. The purpose of the trainee programme is to recruit future Development of expertise
managers and technical specialists who, during a two-year period, Work related to human resources and expertise development in the
will acquire wide-ranging expertise in the Group’s various busi- alliance is organised in a HR-Committee. The HR-Committee is
ness areas. mandated to develop a common overarching HR strategy including
a focus on attracting the right, keep the best and develop the
The remuneration policy employees.
Regular analyses are conducted to ensure that the Group offers
competitive terms. The incentive scheme and profit sharing at the SpareBank 1 Gruppen has a collective strategy of expertise. The
Group level and bonus scheme at the company level was continued subsidiaries initiate vocational training and other skills upgrading
in 2010.The incentive scheme is adapted to the principles of initiatives if required. The Group has joint programmes for
dynamic management, where relative performance is rewarded. leadership development. SpareBank 1 Skadeforsikring AS has
The Group’s bonus scheme will be adapted to the new regulations and joined the accreditation scheme for insurance-claims advisors. At
guidelines from the FSA on compensation in financial institutions. the end of 2010, 468 insurance advisors had approved the
accreditation tests.
Working environment and sickness leave
Annual work climate surveys are conducted. From 2010 the Life Phase and equal opportunities
organisation uses a new survey which gives better estimates of the The Group’s Life Phase Committee ensures that the Group
performance culture and dynamic management to underpin the complies with the Norwegian Gender Equality Act. The committee
culture the Group wants to develop. The working environment in also focuses on how SpareBank 1 Gruppen can be an attractive
the Group is considered to be good, but there are variations in the employer for employees in various life phases.
different departments. The survey makes it possible to be targeted
on the basis of the different departments` needs. The survey will In connection with the Group’s life phase policy it was decided
be conducted regularly so that we can follow the development to change the policy in 2008 in order to fulfil the goal of
from year to year. increasing the real pension age in the Group. The intention of the
new policy is to reduce the need for recruitment and take advantage
Each subsidiary in SpareBank 1 Gruppen has its own working- of useful expertise.
environment committee. The assigned safety personnel in each
subsidiary make an active contribution as well, and a central Of the Group’s employees, 47% are women and 53% are men.
Workplace Anti-Alcoholism and Drug Addiction Dependency 5.2% of all female employees work on a part-time basis, compared
Committee have been appointed. with 1.5% of the male employees. In the Group Management, two
out of nine members are women, and in the Alliance Management,
SpareBank 1 Gruppen continued the agreement on an Inclusive two out of eight members are women. The central management
Workplace. Absence due to sickness was 3.7% in 2010. These rates groups in the parent company and subsidiaries have 23% female
are among the lowest in the industry. Physician reported absence was representation overall. There were two women among the eight

15. 15
members of the Executive Board at the end of the year, while female social progress and
representation on the subsidiary boards was 34% overall. positive influence in society
SpareBank 1 Gruppen uses a method for reviewing roles and Our goal is to make money, but value creation has to be in line with
positions to ensure objective wage setting. The placing in wage sustainable development. Our social commitment is thus about
categories is done with sex neutral tool for position evaluations. how value is created.
In connection with the annual evaluations of salary, equal pay
associated with work of equal value is a topic. The main cause why We are committed to take into account how our behaviour affects
the wage level is somewhat higher for men than women in the people, the environment and the society. This responsibility
Group is that there are more men than women in management and makes demands beyond the laws, which the financial markets are
specialist positions. Analysis related to equal opportunities and subject to. Social Responsibility covers everything from investment
pay is conducted in the HR reporting of the Group and deviations management to labour rights.
are reported to Group Management.
Social Responsibility is also about fraud and injury prevention
As a member of the Norwegian Financial Services Association, measures, protection of life, health and values, good products to
SpareBank 1 Gruppen AS has participated in the FUTURA customers, business ethics, environmental impact, credit policies,
programme. This is a development programme that aims to attitudes and local involvement.
increase the share of women in the recruitment basis for leading
positions. An active community involvement consists of a long-term
perspective on all aspects and consequences of business in
Attractive employer society.
SpareBank 1 Gruppen experiences an increased interest by young
employees. This is a result of the fact that the Group has a strong Environment and climate accounting
brand in the SpareBank 1-name and the activities that are carried out Although SpareBank 1 Gruppen does not pollute in the same
to market the Group as an attractive employer at universities and way as traditional industry, we have an impact on the environment
colleges. SpareBank 1 Gruppen recruited 153 new employees in - both directly and indirectly. This includes waste, energy use, travel,
2010. The majority of those employed had at least three years of transportation, materials, procurement and water consumption.
education beyond high school. Most new employees were aged 26
to 35 years, but the Group has recruited employees of all ages in SpareBank 1 Gruppen will, for the third consecutive year, prepare
2010. The average age of employees in SpareBank 1 Gruppen a climate accounting based on the total energy consumption related
was 42.1 years at the end of 2010. to daily operations.
SpareBank 1 Gruppen AS was selected as the twelfth most attractive The climate accounting will be presented at:
employer among people having worked 2-5 years. This is an http://investor.sparebank1.no
improvement from the thirtieth place in 2009, and SpareBank 1
Gruppen was this year’s climber. Community involvement
SpareBank 1 Gruppen is involved in the micro credit company
Efforts to emerge as an attractive employer with exciting career Kolibri Kapital. Micro credit consists of small loans to the under-
opportunities and competitive terms will continue in 2011. privileged and enterprising individuals in developing countries,
for the development of business activity or improvement of housing
conditions. Kolibri Capital collects money in Norway through
SOCIAL RESPONSIBILITY an ongoing expansion of its share capital. This is in its entirety
SpareBank 1 Gruppen has the following definition of community loaned out to micro-banks in South Africa, Asia and South
involvement: America. SpareBank 1 Gruppen contributes with share capital.
«We are committed to contribute to sustainable economic develop-
ment together with our employees, their families, the community
and society in general to improve the quality of life for most CHANGES TO THE BOARD AND EXECUTIVE MANAGEMENT
people». This work is based on four principles: Hans Olav Karde, CEO of SpareBank 1 Nord-Norge, was elected
Chairman of the Board in April 2010. He succeeded Harry
economic growth, Konterud who had been Chairman of the Board since April 2009.
environmental balance, Harry Konterud resigned from the Board in April 2010, and

16. 16 SpareBank 1 Gruppen
Richard Heiberg, who took over as CEO of Sparebanken Hedmark Livsforsikring AS. It is the opinion of the Board that SpareBank 1
after Harry Konterud, was elected. On January 26, 2011 Tor-Arne Gruppen is well capitalised to meet anticipated requirements in
Solbakken, Vice Chairman of the LO, replaced Bente N. Halvorsen, connection with the Solvency II framework.
as a member of the Board. At the same time Terje Vareberg
resigned from the Board. Arne Austereid, who took over as CEO Argo Securities AS, the Group's investment and brokerage house,
of SpareBank 1 SR-Bank on January 1, 2011 after Terje Vareberg, has not yet achieved satisfactory profitability. Actions have been
was elected as Vice Chairman of the Board. taken to address this area and are expected to yield results in 2011.
Significant investment costs in the company imply that
Within Group Management there were two changes during 2010. profitability will be achieved in the medium to long run.
Jarle Haug was appointed CEO of SpareBank 1 Gruppen Finans AS
from January 2010 and became a member of Group Management. SpareBank 1 Gruppen is exposed to the securities market through
Øyvind Aass, head of the alliance partnership, joined the Group its various subsidiaries and thus the development in stock prices
Management from May 2010. He has led the alliance partnership and interest rates affect the earnings of the Group to a large extent.
since December 2007. The outlook for the Norwegian economy in 2011 is good. Growth in
the mainland economy is expected to be 3%, driven by increased
private consumption and rising investment. For households, there
OUTLOOKS is increasing optimism grounded in low unemployment, low
2010 was a profitable year for SpareBank 1 Gruppen. Return on interest rates and low inflation that is already contributing to
equity was in the top league of financial service companies in the increased purchasing power of households. Norges Bank will
Nordic countries due to good earnings in the major product probably increase interest rates gradually and in small steps back
companies, aided by favourable investment markets, the to a more normal level over the next 2-3 years. Favourable macro-
profitability program, Delta, and one-off effects. The profitability economic conditions and expected good performance in the
program has also helped improve the underlying operations. securities market will provide Sparebank 1 Gruppen basis for
continued growth, and the board expects a good result in 2011.
The pension reform will increase focus on the need for own
retirement savings. It is the opinion of the Board, that
SpareBank 1 Gruppen is well positioned to increase business A WORD OF GRATITUDE
volume in this area. The employees have shown a strong willingness to «go the extra
mile» in 2010. Collaboration with the employee organizations
During 2010, the Group's capacity to bear risk further improved, was close and productive. The Board is highly satisfied with the
due to a number of factors such as the strengthening of the securities results for 2010 and would like to extend thanks to all the employees
adjustment reserves and additional provisions in SpareBank 1 of SpareBank 1 Gruppen for their excellent efforts.
Oslo, 31. March 2011
Hans Olav Karde Arne Austereid Bjørn Engaas
CHAIRMAN OF THE BOARD
Finn Haugan Knut Bekkevold Richard Heiberg
Tor-Arne Solbakken Venche Johnsen Kirsten Idebøen
CHIEF EXECUTIVE OFFICER
NOTE: This translation from Norwegian has been prepared for information purposes only.

17. Financial statements 2010
SpareBank 1 Gruppen

18. 18 SpareBank 1 Gruppen
SPAREBANK 1 GRUPPEN – INCOME STATEMENT
Parent company Group
2010 2009 NOK 1,000 Note 2010 2009
- - Gross Insurance premium revenue 8 213 841 7 556 607
- - - reinsurers' share 535 217 488 185
- - Net insurance premium revenue 7 7 678 624 7 068 422
15 920 31 437 Interest income 98 447 1 066 328
61 422 63 318 Interest expense 85 196 798 280
-45 502 -31 881 Net interest income 9 13 251 268 049
- - Fee and commission income 715 505 855 270
- - Fee and commission expense 846 205 752 100
- - Net fee and commission income 8 -130 700 103 170
-1 310 - Net gains in financial assets designated at fair value 9 1 547 267 2 443 931
3 641 18 245 Net gains in financial instruments classified as avalable-for-sale 9 30 596 48 046
- - Net income from bonds at amortised cost 9 75 049 3 362
- - Net income from bonds held-to-maturity 9 259 255 271 779
- - Net income from investment properties 10 399 410 306 848
606 274 203 442 Share of profit and group contribution from subsidiaries - -
4 - Other operating income 11 384 321 324 887
563 107 189 807 Total income 10 257 073 10 838 494
- - Insurance benefits and claims 7 496 694 7 013 788
- - Insurance claims recovered from reinsurers -488 154 -331 006
- - Securities adjustment reserve for life insurance 289 732 327 145
- - Transferred to policyholders - life insurance 142 363 170 766
- - Allocation to additional provisions - 127 918
- - Net loan loss provisions 29 10 405 123 168
-25 957 21 850 Operating expenses 12 1 674 173 2 077 123
33 325 31 718 Depreciations and amortisation expenses 14, 15, 18 91 300 124 317
276 3 261 Other operating expenses 55 427 11 226
7 644 56 829 Total operating Expenses 9 271 940 9 644 445
555 463 132 978 Operating Profit 985 133 1 194 049
Share of profit of associates and jointly controlled entities accounted
- - for by the equity method 17 - -386
555 463 132 978 Profit before tax 985 133 1 193 663
109 008 115 731 Income tax expense 50 153 586 294 020
446 455 17 247 Profit after tax 831 547 899 643
Profit attributable to:
Shareholders of the parent company 841 025 909 115
Minority interests -9 478 -9 472
Earnings per share (expressed in NOK) 467 505
Diluted earnings per share (expressed in NOK) 472 510

19. 19
SPAREBANK 1 GRUPPEN – STATEMENT OF COMPREHENSIVE INCOME
Consolidated statement of income, expenses and value change
Group
NOK 1,000 2010 2009
Profit for the year 831 547 899 643
Actuarial gains and losses in pension -76 215 -9 477
Revaluation of property -12 656 1 595
Adjustment of insurance liabilities 3 228 -819
Change in available-for-sale financial assets -814 -594
Income tax 23 980 2 436
Total complrehensive income for the year 769 070 892 784
Shareholders' of the parent company 778 548 902 256
Minority interests -9 478 -9 472
Parent company
NOK 1,000 2010 2009
Profit for the year 446 455 17 247
Actuarial gains and losses in pension -1 057 -12 567
Income tax 296 3 519
Total comprehensive income for the year 445 694 8 199