Annual Report SpareBank 1 Gruppen 2012

1
Annual Report 2012
SpareBank 1 Gruppen

2 SpareBank 1 Gruppen
Board of Directors' Report 3
Income Statement 18
Statement of Comprehensive Income 19
Balance Sheet 20
Consolidated Statement of Cash Flow 21
Statement of Changes in Equity 22
Note 1 General information 23
Note 2 Accounting policies 23
Note 3 Critical accounting estimates and judgements 29
Note 4 Segment information 31
Note 5 Capital adequacy ratio 32
Risk notes
Note 6 Financial risk management 33
Market risk
Note 7 Market risk related to interest rate risk 38
Note 8 Market risk related to currency risk 38
Note 9 Financial derivatives 39
Insurance risk
Note 10 Insurance risk in life insurance 40
Note 11 Insurance risk in P&C insurance 44
Credit risk
Note 12 Credit risk exposure for each internal risk class 48
Note 13 Maximum credit risk exposure, not taking
into account pledged security 49
Note 14 Age distribution of overdue but not impaired
loans and premium income 50
Liquidity risk
Note 15 Remaining contractual maturity of
financial liabilities 50
Result notes
Note 16 Net insurance premium income 51
Note 17 Net commissions 52
Note 18 Gains and losses from financial assets and liabilities 53
Note 19 Net income from investment properties 54
Note 20 Other operating income 54
Note 21 Operating costs 54
Note 22 Salaries and other remuneration of the
CEO and executive personnel 55
Note 23 Pensions 57
Note 24 Tax 59
Balance sheet notes
Note 25 Classification of financial assets and liabilities 60
Note 26 Valuation hierarchy 61
Note 27 Securities at fair value 64
Note 28 Securities available for sale 65
Note 29 Bonds at amortised cost 66
Note 30 Fair value of securities
stated at amortised cost 67
Note 31 Investments in subsidiaries 68
Note 32 Investments in associated companies
and joint ventures 68
Note 33 Investment properties 70
Note 34 Property, plant and equipment 71
Note 35 Goodwill 72
Note 36 Other intangible assets 73
Note 37 Reinsurance receivables 74
Note 38 Receivables from policyholders 74
Note 39 Lending to and deposits with customers and financial
institutions 74
Note 40 Net loan loss provisions 76
Note 41 Other assets 77
Note 42 Insurance liabilities in life insurance 77
Note 43 Technical provisions in P&C insurance 79
Note 44 Securities issued 81
Note 45 Subordinated loan capital and hybrid tier 1 capital 81
Note 46 Deposits from and liabilities to customers
and financial institutions 82
Note 47 Liabilities related to reinsurance 83
Note 48 Other liabilities 83
Other notes
Note 49 Changes in group structure 83
Note 50 Shareholder structure 85
Note 51 Number of employees and full-time equivalents 85
Note 52 Material transactions with related parties 86
Note 53 Events after the balance sheet date and legal disputes 89
Note 54 Revised balance sheet for SpareBank 1 Gruppen
as of 31 December 2011 90
Auditor's report 91
Content

3
Board of Directors' Report for 2012
SpareBank 1 Gruppen
OPERATIONS IN 2012
The Group's pre-tax profit more than doubled compared with
2011.
Record pre-tax profit for SpareBank 1 Livsforsikring AS due
to improved risk and administration results. The company
increased its buffers throughout the year. Changes to the tax
exemption method rules resulted in a significantly higher tax
cost.
A reduced claims ratio and more than doubling of its financial
income contributed to significantly improve SpareBank 1
Skadeforsikring Group's result.
A decision was taken in September to merge SpareBank 1
Livsforsikring and SpareBank 1 Skadeforsikring into a single
business area. The aim is to develop comprehensive customer
services and strong, in-house expert groups.
A reduction in average total assets resulted in lower income
and contributed to a loss for ODIN Forvaltning AS. A new CEO
was appointed in the third quarter and it has undergone a
comprehensive turnaround process.
Pressure on margins and a fall in debt collection income
resulted in a poorer result for SpareBank 1 Gruppen Finans
Group.
SpareBank 1 Markets AS focused heavily on a national capital
markets group. The company significantly strengthened its
position in the market for bond issues during the year.
SpareBank 1 Gruppen AS is a holding company that produces,
provides and distributes products within P&C insurance, life
insurance, fund management, capital markets, factoring, debt
collection and long-term monitoring via its subsidiaries.
SpareBank 1 Gruppen AS is owned by SpareBank 1 Nord-Norge
(19.5%), SpareBank 1 SMN (19.5%), SpareBank 1 SR-Bank ASA
(19.5%), Samarbeidende Sparebanker AS (19.5%), Sparebanken
Hedmark (12%) and the Norwegian Confederation of Trade Unions
(LO) and its affiliated unions (10%). SpareBank 1 Gruppen AS's
office address is in Tromsø, and the Group's primary market is
Norway.
In this Directors' Report, SpareBank 1 Gruppen AS refers to the
holding company and SpareBank 1 Gruppen refers to the Group.
2012 saw good financial markets and a drop in claims ratios.
SpareBank 1 Gruppen reported a pre-tax profit of NOK 786.6
million, compared with NOK 387.3 million in 2011. The net profit
for the period amounted to NOK 443.4 million, compared with
NOK 525.8 million in 2011. The poorer net profit for the period
was attributable to the tax cost in SpareBank 1 Livsforsikring AS
resulting from changes to the tax exemption method rules for
life insurance companies. The result represents an annualised
return on equity of 8.7%, compared with 11.1% for 2011.
Corrected for a non-recurring effect of NOK 193.0 million, due
to the aforementioned rule changes for tax in life insurance
companies, the return on equity was 12.3%.
SpareBank 1 Gruppen's total assets amounted to NOK 46.3 billion
as of 31 December 2012. This represents growth of 10.3% since
2011.
SpareBank 1 Gruppen's capital adequacy ratio as of 31 December
2012 was 14.6%, compared to 16.2% at year-end 2011. Its core
capital adequacy ratio at year-end 2012 was 13.1%, compared with
14.6% the year before. SpareBank 1 Gruppen's capital situation is
considered satisfactory and, in the opinion of the Board, the
Group is well capitalised with respect to meeting the expected
requirements of the Solvency II regulations.

SpareBank 1 Livsforsikring AS achieved the best pre-tax profit in
the company's history with improvements in both the risk and the
administration results. SpareBank 1 Livsforsikring AS further
strengthened its buffer capital throughout 2012, including by
increasing the securities adjustment reserve by NOK 405.1 million.
The company's administration result continues to improve and was
NOK 9.7 million better than in 2011. The company achieved an
interest result of NOK 268.8 million, which is NOK 99.8 million
lower than in 2011. The risk result after technical provisions was
NOK 291.5 million, which is NOK 50.1 million better than in 2011.
Claims provisions within individual policies were strengthened
by a total of NOK 147 million, and are now deemed adequate.
SpareBank 1 Livsforsikring AS's tax cost was NOK 290.2 million.
The high tax cost was due to changes to the rules for life insurance
companies that came into effect on 1 January 2012 and mean
that the tax exemption method can no longer be applied to equities,
etc. included in the group and investment choice portfolios. The
non-recurring effect of this change amounted to NOK 193.0 million
and was charged in the fourth quarter.
SpareBank 1 Skadeforsikring Group achieved a pre-tax profit of NOK
618.9 million, which is NOK 433.6 million better than in 2011. The
profit from insurance business amounted to NOK 62.4 million.
This is NOK 99.7 million better than in 2011. The improved result
was mainly attributable to better claims ratios in both the retail
market and the corporate market. SpareBank 1 Skadeforsikring
Group's gross combined ratio for 2012 was 98.7% and the gross
claims ratio was 79.1%. The claims ratio was 5.5 percentage
points lower than in 2011. SpareBank 1 Skadeforsikring Group's
premiums written increased by NOK 248 million and the total
premiums written at year-end 2012 amounted to NOK 5.45
billion.
A decision was taken in 2012 to more closely integrate the P&C and
life insurance business into the Group. The aim is to develop
comprehensive customer services and strong, in-house expert
groups. Closer collaboration between the companies will also
produce a basis for more efficient processes throughout the value
chain, greater competitiveness and lower costs. The organisation
model and legal structure of this merged insurance business is
contingent on the authorities' approval.
ODIN Forvaltning Group's total assets under management amounted
to NOK 24.8 billion as of 31 December 2012. This was NOK 1.4
billion more than at year-end 2011. The drop in average total
assets in 2012 compared with 2011 resulted in a NOK 46.4 million
reduction in management fees. The result before tax was NOK -20.4
million. Corrected for non-recurring costs of approximately NOK
30 million, the company enjoyed positive underlying operations
in 2012.
SpareBank 1 Markets AS experienced a loss of NOK 168.5 million
in 2012. It focused on investments during the year with the aim
of putting in place the required framework conditions for a strong
capital markets unit. The company strengthened its position in the
market for bond issues in 2012, primarily due to the collaboration
with SpareBank 1 SMN becoming operational in the second quarter
of 2012. The collaboration includes access to the balance sheet
capacity of SpareBank 1 SMN. The result for the year was affected
by the build up that took place.
SpareBank 1 Gruppen Finans Group, which operates in the
factoring, debt collection and long-term monitoring business
areas, achieved a pre-tax profit of NOK 25.1 million. The factoring
business area, organised in SpareBank 1 Gruppen Finans AS,
was the country's third largest with a market share of 15.7%,
compared with 14.1% in 2011. The pre-tax profit of the debt
collection business area, organised in Conecto AS, was NOK 16.7
million, compared with NOK 24.7 million in 2011. Fewer new
cases resulted in a drop in debt collection income. Higher portfolio
volumes than in 2011 resulted in increased interest income
within portfolio administration, organised in SpareBank 1 Gruppen
Finans AS. The total portfolio volume was NOK 1 504 million
as of 31 December 2012, an increase of NOK 352 million since
year-end 2011.
SpareBank 1 Gruppen has made strategic investments in impor-
tant product areas in recent years via structural changes and
acquisitions, with capital markets, debt collection, and factoring
being the most recent examples. The goal is to control the product
and value chains for the benefit of both customers and owners.
CORPORATE GOVERNANCE
Shares in SpareBank 1 Gruppen AS are not publicly traded, but
as of 31 December 2012 the company did have a bond issue listed
on Oslo ABM. The company has, as shown in the section on
«Operations in 2012», a concentrated shareholder structure. All
shareholders and groupings of shareholders are represented on the
Board, either directly or indirectly. There is continuous, good
contact with all shareholders and groupings of shareholders in the
company. The Board of SpareBank 1 Gruppen AS has discussed
the «Norwegian Code of Practice for Corporate Governance» and
has determined to comply with those sections that are relevant to
a company whose shares are not listed on a stock exchange.
The Board's overall report on the company's corporate governance
has been incorporated into the 2012 annual report.
Group executive management team
SpareBank 1 Gruppen's executive management team is responsible
for running and developing the financial group with a focus on
results and operations associated with the companies in the

5
Group, as well as responsibility for the operational collaboration
between SpareBank 1 Gruppen and the SpareBank 1 banks.
Information about remuneration
Information about the remuneration of the CEO, executive manage-
ment team, Board, Supervisory Board and Control Committee is
provided in the financial statements' note 22, and information
about the auditor's remuneration is provided in note 21.
Dividend policy
SpareBank 1 Gruppen AS's long-term goal is to pay out 30-50% of
its profits, at a consolidated level, as a net dividend to its owners.
When fixing the net dividend for SpareBank 1 Gruppen, the focus
is on maintaining satisfactory core and total capital adequacy in
relation to planned growth, as well as maintaining a satisfactory
overall financial position in relation to internal ICAAP calculations
and the Group's liquidity. The target for the core capital ratio,
including hybrid tier 1 capital, is a minimum of 11% and for the
total capital adequacy ratio it is a minimum of 13%. SpareBank 1
Gruppen should achieve the capital adequacy goals established by
the Solvency II regulations by a good margin.
The Board's net dividend proposal for 2012 attaches weight to the
fact that SpareBank 1 Gruppen has not paid a net dividend in
recent years as well as the fact that the Group is deemed adequa-
tely capitalised to satisfy the expected Solvency II requirements.
The net dividend proposal for 2012 helps SpareBank 1 Gruppen
to achieve its targets with respect to the long-term target of paying
out 30-50% of the profit at a consolidated level.
SPAREBANK 1 GRUPPEN – RESULTS AND KEY FIGURES
SpareBank 1 Gruppen AS and the Group prepare their financial
statements in accordance with the EU approved International
Financial Reporting Standards (IFRS).
SpareBank 1 Gruppen reported a pre-tax profit of NOK 786.6
million, compared with NOK 387.3 million in 2011. The good
performance of the securities markets combined with a lower claims
ratio helped to significantly improve the result.
The net profit for the period was NOK 443.4 million, which
provided a return on equity of 8.7%. The Group's tax cost was
NOK 343.3 million, compared with tax income of NOK 138.5
million in 2011. The high tax cost was due to the non-recurring
effect of NOK 193.0 million linked to the introduction of new rules
limiting use of the tax exemption method for equities owned by
life insurance companies. Corrected for this tax charge, the return
on equity was 12.3%.
Pre-tax profit per business area:
NOK million 2012 2011
Result before tax from the subsidiaries:
SpareBank 1 Livsforsikring AS 479.4 414.1
SpareBank 1 Skadeforsikring Group 618.9 185.3
ODIN Forvaltning Group -20.4 21.8
SpareBank 1 Markets AS -168.5 -154.8
SpareBank 1 Medlemskort AS 10.4 12.1
SpareBank 1 Gruppen Finans Group 25.1 27.9
Group adjustments -8.5 28.7
Net result before tax from the subsidiaries 936.4 535.1
SpareBank 1 Livsforsikring AS
SpareBank 1 Livsforsikring AS's focus areas are within defined
contribution pensions, group life insurance and individual risk
insurance. The company's products and primarily distributed via
the banks in the SpareBank 1 Alliance, Norwegian Confederation of
Trade Unions (LO) and its affiliated unions.
Financial performance:
Risk result after technical provisions 291.5 241.4
Administration result -56.2 -65.9
Interest result 268.8 368.5
Provisions -145.3 -187.3
Remuneration for interest guarantee 25.9 22.7
Total result for supplementary provisions 384.7 379.4
Allocation to supplementary provisions -43.7 0.0
Profit to customers -43.1 -61.5
Return on the company's funds 181.5 96.2
Net profit to owner before tax 479.4 414.1
Tax cost -290.2 97.8
Net profit to owner after tax 189.2 511.9
SpareBank 1 Livsforsikring AS achieved the best pre-tax profit in
the company's history, which amounted to NOK 479.4 million
compared with NOK 414.1 million in 2011.
Sales of defined contribution pensions and individual risk insurance
have grown significantly by 26% and 15%, respectively, compared
with 2011. The company maintained a strong position in the
market for individual risk insurance in 2012. Sales of group life
insurance rose by 130% in relation to the year before.
SpareBank 1 Livsforsikring AS strengthened its buffer capital throug-
hout 2012, including through increasing the securities adjustment reser-
ve by NOK 405.1 million. The company also strengthened the building
up of reserves for higher life expectancy by NOK 145.3 million.
The total net profit after tax was NOK 189.2 million, which is
NOK 322.7 million lower than in 2011. The company's tax cost was
high at NOK 290.2 million, compared to tax income of NOK 97.8
million in 2011. New regulations concerning changes in the taxation
of equities-related investments in the management of customer

assets in life insurance companies did not contain transitional rules
for the tax-related opening value. The use of historical cost price
will thus lead to a significant non-recurring cost of NOK 193.0
million when calculating latent deferred tax.
Risk result
The net risk result has increased by NOK 50.1 million since year-
end 2011 and amounted to NOK 291.5 million. As in 2011, 2012
was spent building up claim provisions linked to disability within
individual annuity and endowment insurance. The corresponding
provisions within group pension insurance were lower than the
year before. The provisions were considered adequate for all groups
of products at year-end 2012.
Administration result
The administration result was NOK -56.2 million, which was an
improvement of NOK 9.7 million compared with 2011, despite non-
recurring costs associated with the company's restructuring process.
Investment result
The interest result was NOK 268.8 million, compared with NOK 368.5
million for 2011. The reduction was due to lower realised gains. NOK
94.7 million of the interest profit was used to strengthen the premium
reserve because of expected higher life expectancy and NOK 43.7 mil-
lion was allocated to supplementary provisions. The company's
supplementary provisions totalled NOK 374.7 million at year-end
2012, compared with NOK 344.1 million at year-end 2011.
The value-adjusted capital yield in the group portfolio as a whole was
7.3%. The booked return on assets was 4.7%. The corresponding
returns in 2011 were 2.5% and 5.4%, respectively. The capital yield
in the company portfolio was 5.7%, compared with 4.3% in 2011.
Asset allocation per portfolio as of 31 December 2012:
Group portfolio 2012
Equities 12.6 %
Other 0.7 %
Property 19.7 %
Bonds - amortised cost 27.8 %
Bonds - market value 39.2 %
Value (NOK million) 16 908
Company portfolio 2012
Equities 0.0 %
Other 0.2 %
Property 18.4 %
Bonds - amortised cost 15.8 %
Bonds - market value 65.6 %
Investment choice portfolio 2012
Equities 53.2 %
Other 0.4 %
Bonds 46.4 %
Solvency and capital situation
The company's total assets amounted to NOK 29.1 billion as of 31
December 2012. This represents an increase of 9.2% since 2011.
The buffer capital, after the proposed application of the year's
profit, amounted to NOK 2.3 billion, equivalent to 13.6% of
insurance provisions. By way of comparison, the buffer capital at
year-end 2011 amounted to NOK 1.7 billion, equivalent to 11.0%
of insurance provisions. The main reason for the stronger buffer
capital was the increase in the securities adjustment reserve to
NOK 590.0 million from NOK 184.9 million in 2011.
The company's capital adequacy ratio was 18.5% at year-end 2012,
which was unchanged from 2011. All of the primary capital comprises
core capital. The company received NOK 248.0 million in equity
through group contributions.
At year-end 2012, the interest and risk profit within group defined
benefit pensions and paid-up policies, which totalled NOK 145.3
million, was allocated to the premium reserve due to anticipated
higher life expectancy in the insurance portfolio. NOK 83.1 million
of this was allocated for group defined benefit pensions and NOK 62.2
million for paid-up policies.
The Group's solvency margin capital ratio was 309.2% as of 31
December 2012, compared to 303.5% for 2011. The minimum require-
ment for the solvency margin capital ratio is 100%. At year-end
2012, the solvency margin requirement was NOK 864.3 million,
compared to NOK 794.6 million in 2011.
The company continuously assesses the impact of, and adapts to, the
coming Solvency II regulations.
SpareBank 1 Skadeforsikring Group
SpareBank 1 Skadeforsikring Group is the leading Norwegian seller
of insurance via banks, but also sells directly to retail customers and
via broker channels to corporate market customers.
Gross written premium 5 600.4 5 358.2
Net earned premium 5 073.1 4 695.9
Accrued claims for own account -3 970.9 -3 973.5
Insurance-related operating expenses for own account -1 012.9 -884.7
Other insurance-related income/costs 14.3 31.8
Other technical provisions -41.2 93.2
Insurance result 62.4 -37.3
Net financial income 537.6 260.3
Other costs -0.1 0.0
Operating result 599.9 223.0
Change in security reserves 19.0 -37.7
Pre-tax profit 618.9 185.3
Tax cost -142.8 -94.6
Net profit for the period 476.1 90.7
Investment choice portfolio
Group portfolio
Obligasjoner - markedsverdi
Obligasjoner - amortisert kost
Eiendom
Annet
Aksjer
Obligasjoner - markedsverdi
Obligasjoner - amortisert kost
Eiendom
Annet
Aksjer
Obligasjoner
Annet
Aksjer
Company portfolio

7
SpareBank 1 Skadeforsikring Group achieved a pre-tax profit of
NOK 618.9 million for 2012, compared with NOK 185.3 million
for 2011. The strong improvement in the result was due to high net
financial income and the significantly improved insurance result
in the parent company.
SpareBank 1 Skadeforsikring Group's premium income for own
account amounted to NOK 5.1 billion, corresponding to growth of
8.0% since 2011. SpareBank 1 Skadeforsikring Group's premiums
written grew by NOK 248 million, which corresponds to growth
of 4.8% since 2011. There was growth within bank distribution,
the Norwegian Confederation of Trade Unions (LO) and the
subsidiary Unison Forsikring AS. Total premiums written at year-
end 2012 amounted to around NOK 5.45 billion.
Claims costs
SpareBank 1 Skadeforsikring Group's gross claims ratio was
79.1%, which represents a 5.5 percentage point improvement
since 2011. The good growth is attributable to premium measures
that produced good income growth at the same time as claims costs
were reduced. Significant profits from prior years for key product
groups and the claims costs project, which aims to reduce
purchasing costs within claims settlements, have contributed to
lower claims costs.
The natural perils result improved despite a substantial change in
the claims reserve, which was due to the storms «Berit» and
«Dagmar» resulting in higher compensation payments than
estimated as of 31 December 2011.
SpareBank 1 Skadeforsikring Group again saw a large number of
major claims in 2012. Seven major claims involving compensation
sums of more than NOK 10 million occurred during the year.
Total compensation costs relating to larger claims amounted to
NOK 138 million and accounted for 2.5 percentage points of the
Group's gross claims ratio. In 2011, there were six equivalent
claims for more than NOK 10 million with total compensation
costs of NOK 144 million.
Operating costs
The gross claims ratio was 19.6%, which represents an increase
of 0.7 percentage points since 2011. The increase is mainly
attributable to non-recurring costs associated with restructuring.
Profit commissions for the owner banks amounted to 0.9 percentage
points of the cost/income ratio, compared with 0.6 percentage
points in 2011.
The combined ratio for own account, including natural perils, was
98.2%, which is 5.3 percentage points higher than in 2011.
Development of combined ratio, net (%):
The provision concerning claim provisions in the act relating to
insurance activities was clarified in 2012. In accordance with
this clarification, indirect claim processing costs must be included
in the measurement of compensation costs, while before they
were classified as operating costs. This entails an allocation from
administration costs to paid claims. The change has no effect on
the result, but does entail an increase in the claims ratio for own
account of 4.1 percentage points and a corresponding reduction
in the cost/income ratio. Comparable figures for previous years
have been restated in accordance with the new regulations.
Financial result
2012 was a good year in the financial markets, which is reflected
in the higher net financial income compared with 2011. SpareBank 1
Skadeforsikring Group's net investment income totalled NOK 537.6
million, compared with NOK 260.3 million in 2011. The financial
return on the Group's portfolio was 5.2%. The improvement in the
financial result is attributable to the high return on equities of 19.7%,
as well as a satisfactory return in the fixed income portfolio.
Capital situation
At year-end 2012, SpareBank 1 Skadeforsikring Group's total
assets amounted to NOK 14.8 billion. This is an increase of NOK
1.6 billion since 2011. The capital adequacy ratio was 37.1% at
year-end 2012, which corresponds to excess coverage of NOK 1 800
million in relation to the authorities' minimum requirements.
The capital adequacy ratio was 4.3 percentage points stronger than
at year-end 2011.
Unison Forsikring AS
Unison Forsikring AS is a wholly owned subsidiary of SpareBank 1
Skadeforsikring AS. Unison Forsikring AS experienced a NOK
-250.4 million loss before tax. The loss before tax in 2011 amounted
to NOK -197.2 million. A number of profitability improvement
Costs ratioClaims ratio
20122011201020092008
94.0 96.2 97.7
103.5 98.2
18.2
75.8
18.8
77.4
17.4
80.3
18.8
84.7
20.0
78.2

measures have been and will be implemented in Unison Forsikring
AS, including disposals and repricing a number of the company's
insurance portfolios. This will also entail a considerable reduction
in the number of employees in the company. A decision has been
made to merge Unison Forsikring AS into SpareBank 1 Skade-
forsikring AS with accounting effect from 1 January 2013. The
merger is contingent on the approval of the authorities.
ODIN Forvaltning Group
ODIN Forvaltning Group is one of Norway's largest managers of
equity funds. ODIN Forvaltning Group is a value-oriented equity
fund manager, which on behalf of its unit holders invests in
undervalued companies with good products, a strong cash flow,
solid balances and a high dividend capacity.
Management fees 257.1 303.5
Total operating income 257.1 303.5
Payroll costs -110.1 -108.5
Amortisation -26.0 -23.5
Other operating costs -130.6 -151.2
Total operating costs -266.7 -283.2
Operating result -9.6 20.3
Net financial income -10.8 1.5
Pre-tax profit -20.4 21.8
Tax cost 1.9 -7.0
Net profit for the period -18.5 14.8
ODIN Forvaltning Group experienced a NOK 20.4 million loss
before tax in 2012, compared with a profit of NOK 21.8 million in
2011. The organisation underwent a restructuring process focused
on improving administration processes and cost reducing measures
in the second half of 2012. The Group's operating result for 2012
was NOK -9.6 million compared with NOK 20.3 million in 2011.
The fall in the result is attributable to a combination of lower
average total assets during the year and non-recurring costs of
around NOK 30 million.
10 out of ODIN's 12 equity funds, all five bond funds and all three
combination funds produced returns ahead of their respective
benchmark indices in 2012.
Total assets
At year-end 2012, ODIN Forvaltning Group had assets totalling
NOK 24.8 billion under management: NOK 22.9 billion of which
were in equity funds, NOK 0.9 billion in combination funds and
NOK 1.0 billion in bond funds.
The equity funds saw net redemption of NOK 1.8 billion. This, in
combination with a relatively weak return in ODIN Forvaltning
Group's two largest funds, resulted in its market share for equity
funds falling to 8.2% from 8.9% in 2011.
Net new fund subscriptions amounted to NOK 184 million in
ODIN Forvaltning Group's combination funds. It has a market
share for combination funds of 4.4%, compared with 3.8% in 2011.
Its five bond funds saw net new fund subscriptions of NOK 203.5
million, and its market share for bond funds was 0.4% at year-end
2012.
SpareBank 1 Markets AS
SpareBank 1 Markets AS is an analysis based capital markets
unit that is active within corporate finance, foreign capital and
stockbroking. SpareBank 1 Gruppen AS owned 97.55% of the
shares in SpareBank 1 Markets AS at year-end 2012. The remainder
of the shares were owned by employees.
Total income 149.6 86.2
Payroll and payroll-related costs -203.5 -149.7
Other operating costs -104.7 -81.1
Amortisation -6.5 -8.0
Operating result -165.0 -152.6
Net financial costs -3.5 -2.2
Pre-tax profit -168.5 -154.8
Tax cost 44.1 41.7
Net profit for the period -124.4 -113.1
The result before tax for 2012 was a loss of NOK 168.5 million.
Total sales amounted to NOK 149.6 million, which is an improve-
ment of NOK 63.3 million on 2011. Income from the area of foreign
capital amounted to NOK 54.1 million, which is an improve-
ment of NOK 42.5 million on 2011. This progress is largely
attributable to the company having strengthened its position in the
market for bond issues throughout the year, mainly due to the
collaboration with SpareBank 1 SMN. Broker's commissions from
the equities and high yield business area amounted to NOK 39.8
million, corporate finance fees were NOK 50.7 million and other
operating income was NOK 5.1 million.
SpareBank 1 Markets AS has undergone restructuring in the last
2 years. During this period the resources have been used to put in
place the necessary framework for a strong capital markets unit.
The result for 2012 was affected by this restructuring and a
challenging market situation within the equities market that
affected the earnings potential of all market players in the industry.
In 2012, SpareBank 1 Markets AS established a formalised colla-
boration with SpareBank 1 SMN concerning own account trading
in bonds and derivatives. The collaboration supports issuing
activities and thus investment capacity. The greater balance
sheet capacity has put SpareBank 1 Markets AS in a better position
to effectively arrange capital between borrowers and investors, and

9
offer its customers relevant risk management solutions. The
company is now established as a central player in the market for
senior bank funding.
SpareBank 1 Gruppen Finans Group
SpareBank 1 Gruppen Finans AS produces, delivers and distributes
services within factoring, portfolio acquisition and portfolio manage-
ment. The company's registered address is in Oslo and it runs its
factoring operations in Ålesund and Tromsø. SpareBank 1 Gruppen
Finans AS owns 100% of the shares in Conecto AS, which works
within out of court and legal debt collection. Both companies are
organised in a sub-group of SpareBank 1 Gruppen AS that is
owned and managed by SpareBank 1 Gruppen Finans AS.
SpareBank 1 Gruppen Finans AS 12.1 12.2
Management -7.1 -5.9
Factoring 12.8 14.6
Portfolio 6.4 3.5
Conecto AS 16.7 24.7
Net result before tax from the subsidiaries 28.8 36.9
Excess value amortisation -3.7 -9.0
Tax cost -6.7 -8.8
SpareBank 1 Gruppen Finans Group achieved a pre-tax profit of NOK
25.1 million, which is NOK 2.8 million weaker than in 2011.
SpareBank 1 Gruppen Finans AS
SpareBank 1 Gruppen Finans AS achieved a pre-tax profit of
NOK 12.1 million, which is on a par with 2011. The company can
point to good result progress in portfolio activities due to higher
portfolio volumes and increased interest income. Factoring
activities saw good growth, but lower margins are squeezing
earnings. SpareBank 1 Gruppen Finans AS reported total income
of NOK 85.0 million, compared with NOK 73.2 million in 2011.
Factoring
The factoring business area is involved in funding within the
areas of factoring and guarantees. Its pre-tax profit amounted to
NOK 12.8 million, compared to NOK 14.6 million for 2011.
Factoring achieved net operating income of NOK 61.0 million,
which represents an increase of NOK 2.2 million since 2011.
Client turnover experienced a good increase of 18.1%. The business
area's market share was 15.7%, compared with 14.1% in 2011.
Portfolio
The portfolio business area is involved in the acquisition of port-
folios of monetary claims that are then recovered by the Group's
debt collection company. Its pre-tax profit was NOK 6.4 million,
compared with NOK 3.5 million in 2011, which represents an
improvement of NOK 2.9 million. Turnover increased by NOK 9.9
million in relation to 2011. Portfolio volume grew by 31% and was
NOK 1 504 million as of 31 December 2012. The book value at
year-end 2012 was NOK 120.6 million, which is an increase of
NOK 42.3 million since 2011.
Conecto AS
Conecto AS is primarily involved in the collection of invoiced
claims. The company also provides fund management, legal debt
collection services and legal advice.
Its pre-tax profit amounted to NOK 16.7 million, compared to NOK
24.7 million for 2011. The debt collection market is currently
stagnant. Conecto AS's turnover amounted to NOK 153.6 million,
a reduction of NOK 9.2 million since 2011. The fall was due to
fewer incoming cases. The company produces a good resolution
rate for its customers.
SpareBank 1 Gruppen Finans Group built the foundation for fur-
ther growth and profitability in 2012. The collaboration with the
SpareBank 1 banks will in the future provide new opportunities
for cross-sales of debt collection services to the banks' corporate
customers.
SpareBank 1 Medlemskort AS
SpareBank 1 Medlemskort AS is tasked with operating the joint
membership database of the unions affiliated to the Norwegian
Confederation of Trade Unions (LO) that is used to administer
membership card deliveries, collect premiums for group insurance,
and run and administer the LOfavør advantage card scheme for
around 880 000 members. The company works closely with LO
and the unions.
Operating income 55.2 58.5
Payroll costs -7.4 -6.6
Operating costs Medlemskort -0.6 -2.0
Operating costs LOfavør -31.5 -32.6
Operating costs Reskontro -6.2 -6.1
Operating result 9.5 11.2
Net financial income 0.9 0.9
Tax cost -3.2 -3.6
The pre-tax profit for the year amounted to NOK 10.4 million,
compared to NOK 12.1 million for 2011. The net profit for the
period was NOK 7.2 million, which is NOK 1.3 million lower than
in 2011.

The membership base in LO is an important basis for SpareBank 1
Medlemskort AS. The membership base is growing and is expected
to surpass 900 000 in 2013.
SpareBank 1 Gruppen AS
In addition to shares in subsidiaries, SpareBank 1 Gruppen AS's
assets consist of bank deposits and other minor assets. Bank
deposits were NOK 269.2 million as of 31 December 2012,
compared with NOK 213.7 million as of 31 December 2011.
The equity consists of share capital, a share premium reserve
and retained earnings. The share capital in SpareBank 1 Gruppen
AS amounted to NOK 1 956 million as of 31 December 2012,
while total equity amounted to NOK 3 861 million. The company
had distributable equity amounting to NOK 1 335 million at year-
end 2012.
The capital adequacy ratio was 37.6%, compared with 40.0% in
2011. The company's core capital adequacy ratio was 33.8% in
2012 and 35.4% in 2011.
SpareBank 1 Gruppen
The Group's cash and cash equivalents decreased by NOK 521.1
million in 2012 to NOK 755.0 million. The reduction was due to net
cash flows from financing activities and investing activities of NOK
-1 070 million and NOK -275.5 million, respectively, exceeding the
cash flow from operating activities of NOK 824.5 million.
The biggest changes between the operating result and cash flow
from operating activities for 2012 are attributable to the increase
in technical provisions of NOK 3 067 million, increase in deposits
from and liabilities to customers and financial institutions of
NOK 1 519 million, and a negative cash flow from securities at fair
value held to maturity of NOK -3 481 million. Securities issued
decreased by NOK 1 066 million to NOK 833.8 million. The dividend
paid to owners amounted to NOK 433.9 million in 2012.
SpareBank 1 Gruppen's total equity at year-end 2012 amounted to
NOK 5 304 million, compared with NOK 4 942 million at year-end
2011. Recognised goodwill in the Group totalled NOK 839.2
million as of 31 December 2012, compared to NOK 861.1 million
at year-end 2011.
The Group's capital adequacy ratio was 14.6% as of 31 December
2012, compared to 16.2% in 2011. The Group's core capital
adequacy ratio was 13.1% as of 31 December 2012, compared to
14.6% as of year-end 2011.
The annual financial statements have been prepared on the basis of
a going concern assumption. The Board finds that the prerequisites
for such a going concern assumption are met by the financial
statements for 2012 and the earnings forecast for 2013. Beyond
matters mentioned in this report, no circumstances have arisen
after the end of the accounting year that would be of material
significance to the company's position and results.
DIVIDEND
The Board proposes that SpareBank 1 Gruppen AS distribute a
dividend of NOK 686.7 million for 2012.
RISK FACTORS
The operations of SpareBank 1 Gruppen are organised into different
business areas through subsidiaries. There are major differences
in the individual subsidiaries' risk profile. The most important risk
categories to which the Group is exposed are market risk, insurance
risk, ownership risk, operational risk, credit risk, liquidity risk,
concentration risk, and strategic and commercial risk.
See note 6 on financial risk management for a more detailed
description of the overall risk management in SpareBank 1 Gruppen.
Responsibility for risk management, compliance and control
The Group's board is responsible for risk management and compliance
in the Group. The company boards are responsible for their own
company's risk management and compliance.
Responsibility for the overall risk management within the orga-
nisation lies with the executive vice president responsible for
strategy, risk management and analysis in the parent company. This
position reports directly to the CEO of SpareBank 1 Gruppen AS.
Risk management in SpareBank 1 Gruppen should support the
Group's strategic development and achievement of its objectives,
and ensure the fulfilment of statutory capital requirements. Risk
management is intended to ensure financial stability and sound
asset management. This should be achieved by:
A moderate risk profile
A strong risk culture characterised by a high awareness of risk
management
Striving for an optimum application of capital within the
adopted business strategy.
Making the most of all synergy and diversification effects.
Adequate core capital for the chosen risk profile.
Ensuring the Group complies with all regulatory capital and
solvency margin requirements.
The risk management function in SpareBank 1 Gruppen AS estimates
the Group's risk profile each year. A more comprehensive self-
assessment of the Group's overall capital requirements is carried
out at least once a year. The purpose of the risk calculations is to
monitor the Group's risk exposures and assess the Group's future

11
capital requirements in light of the owners' appetite for risk. The
risk calculations are also tied to the established liquidity and
contingency plans.
Risk management functions have been established at a company
level in the Group's subsidiaries. The risk management functions
report both to their own boards and the risk management function
in SpareBank 1 Gruppen AS, which bears overall responsibility.
Internal control in the Group is regulated by key mandatory guide-
lines, but is primarily defined as a line management responsibility.
In accordance with the "Regulations on Risk Management and
Internal Control" and the Group's own guidelines, risk factors in
the operations are reviewed annually and action plans are prepared
in all units, which are reported to the respective company boards.
Information from this company-by-company reporting is aggre-
gated and reported to the Group's board. In addition, the Group
also conducts surveys across the Group with regard to internal
control, the Personal Data Act, and security matters. SpareBank 1
Gruppen has outsourced internal auditing to Ernst & Young. This
has supplied added expertise to the Group. The internal auditing
operations also encompass the subsidiaries.
Development of risk management in 2012
The improvements to the Group's risk management have largely
focused on improving the consistency and quality of risk manage-
ment information. This work will continue in 2013. Developing and
integrating risk management into the Group's operations and
strategic decisions are thus priority tasks. SpareBank 1 Gruppen
introduced corporate risk management at the beginning of 2012. The
goal is to bring together the Group's risk management resources and
strengthen its expertise within risk management.
The risk management function in SpareBank 1 Gruppen AS
conducted a review of the Group's overall risk management in the
first half of 2012. The work resulted in a unified, long-term concept
for developing the Group's risk management during the next planned
period. As an insurance dominated financial group, SpareBank 1
Gruppen will also be subject to the group provisions in the coming
Solvency II regulations. The introduction of the regulations will
probably be postponed until 2016 at the earliest. National
adaptations can be expected from 2014. The aims of the Solvency
II adaptation therefore match the future long-term aims for risk
management.
A joint risk management function has been established as part of
the work of forging a closer collaboration between SpareBank 1
Skadeforsikring AS and SpareBank 1 Livsforsikring AS. This
strengthens the efficiency of, and expert environment for, risk
management in the Group.
Risk categories
Market risk
The Group's consolidated market risk is measured and reported
quarterly to the Board of SpareBank 1 Gruppen AS. The calculations
are based on a Value-at-Risk model. A corresponding model is used
to follow-up each individual company. The subsidiaries in the
Group manage and also monitor their own risk exposure in accor-
dance with their own models and routines.
SpareBank 1 Gruppen is exposed to market risk through the
investment portfolios in SpareBank 1 Livsforsikring AS, SpareBank 1
Skadeforsikring Group and SpareBank 1 Markets AS. The investment
portfolios are heavily slanted towards fixed income securities, and
particularly exposure to the Norwegian interest rate market. The
development of global and Norwegian securities markets produced
positive growth for the Group's total investment portfolios in
2012. The financial result for 2012 was far higher than the financial
result for 2011.
The value-adjusted return in SpareBank 1 Livsforsikring AS's group
portfolios was 7.3%, while the booked return was 4.7%. The company
portfolio saw a return of 5.7%. The allocation of assets towards
equities was reduced during the year. The company's securities
adjustment reserve grew to NOK 590.0 million in 2012, from
NOK 184.9 million in 2011. Supplementary provisions had, as of
31 December 2012, increased to NOK 374.7 million from NOK
344.1 million as of 31 December 2011 due to the interest surplus
linked to old individual products being allocated to supplemen-
tary provisions.
SpareBank 1 Skadeforsikring AS has a conservative investment
profile. Nonetheless, the investment portfolios delivered a strong
financial return of 5.2%, compared with 2.8% for 2011. At year-end
2012, the company had a total portfolio of NOK 10 953 million,
of which the equities portfolio accounts for 8.2%. The return on
the equities portfolio was 19.7%. The company's fixed income
investments have a very short maturity. As of 31 December 2012,
70.7% of the investment portfolio was invested in short-term bonds
and 10.1% in loans and receivables. The returns on these asset
classes were 3.8% and 5.5%, respectively. 11.0% of the portfolio was
invested in property, and achieved an overall return of 5.4%. The
market risk in the P&C insurance portfolio is considered medium high.
The market risk in SpareBank 1 Markets AS is estimated on the
basis of published limits. Besides the equity instrument limits, the
company is exposed to market risk through an investment portfolio
in fixed income securities that, as of 31 December 2012, had a market
value of NOK 3.9 billion. The portfolio refers to the collaboration
with SpareBank 1 SMN and mainly consisted at year-end 2012 of
bonds with variable rates (floating rate notes) where the coupon
payments are variable and renewed every 6 months.

Ownership risk
SpareBank 1 Gruppen AS's financial position is regarded as satis-
factory overall, given the current risk exposure. Financially, the
holding company is deemed to have sufficient financial capacity
to support the subsidiaries' adopted strategies.
Credit risk
The credit risk in SpareBank 1 Livsforsikring AS, SpareBank 1
Skadeforsikring Group and SpareBank 1 Markets AS is related to
investments in money market instruments and bonds. Invest-
ments in this area are generally made in high rated papers.
The insurance companies are also exposed to a credit risk
associated with various reinsurers. Their rating is monitored
closely, and the risk is considered to be low. In the real estate port-
folio there is risk associated with the servicing of lease agreements.
The risk in this category is also considered to be limited.
The credit risk in SpareBank 1 Gruppen Finans Group is related
to factoring and debt collection activities. Overall the credit risk
in this portfolio is considered limited.
Concentration risk
SpareBank 1 Livsforsikring AS, SpareBank 1 Skadeforsikring
Group and SpareBank 1 Markets AS are assumed to have some
exposure to concentration risk on the investment side, particularly
related to investments in bonds issued by financial institutions.
The risk management function in SpareBank 1 Gruppen AS monitors
the total concentration in these investment portfolios every quarter.
Insurance risk
Insurance risk is an inherent part of the business of both SpareBank 1
Livsforsikring AS and SpareBank 1 Skadeforsikring Group.
However, the nature of the risks in the two companies differ
somewhat. Losses in SpareBank 1 Skadeforsikring Group can arise
as a result of fluctuations in the year's claims ratio and prior-year
losses. For SpareBank 1 Livsforsikring AS the risk is primarily
associated with risk products without profit sharing, but also
with higher life expectancy and disability.
Both SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring
Group reduce risk through reinsurance, partly by the reinsurers
assuming portions of the risk within individual business seg-
ments and partly by limiting the own account share for individual
claims through reinsurance. Reinsurance also covers cumulative
claims and disasters. Risk associated with the reinsurers' credit-
worthiness is categorised under credit risk.
The control of the insurance risk within P&C and life insurance is
deemed satisfactory.
Operational risk
Operational risk in the subsidiaries is documented in connection
with work relating to compliance with the "Regulations on Risk
Management and Internal Control". This work normally requires
the management group of a particular subsidiary and staff area in
SpareBank 1 Gruppen AS to identify operational risk both before
and after the implementation of measures. This work did not
identify any serious risk factors in the Group in 2012.
In connection with the implementation of the Group's ICAAP
calculations, calculation methods have been established for cal-
culating the necessary capital requirements for operational risk.
The Group's compliance function monitors compliance with
legislation, regulations, industry standards and so on, as well as
internal guidelines. Compliance with statutory risk processes
and an efficient implementation of these are ensured through
this work. At a Group level, compliance risk is primarily followed
up in the form of regular qualitative analyses, as well as contin-
uously in day-to-day operations. At a company level, compliance
reports are also produced in connection with the management of
the investment portfolios. Compliance is reported to both the
boards of both SpareBank 1 Gruppen AS and the subsidiaries
every quarter.
Liquidity risk
Management of the Group's financial structure is based on an
overall liquidity strategy that is assessed and approved by the
Board at least annually. The liquidity risk in SpareBank 1 Gruppen
was primarily linked to the parent company and was judged to
be low. The group account scheme introduced in 2011 reduces
liquidity risk. A substantial part of the parent company's funding
is secured through a close collaboration between the larger
SpareBank 1 banks in this area.
Strategic and commercial risk
SpareBank 1 Gruppen has established a contingency plan for
handling sensitive public relations issues. Part of this is a list of
relevant issues, which is reviewed and updated every quarter.
Work on a concrete issue is initiated and led by the executive vice
president for communication.
Together with the alliance's risk management forum, the Group
will continue to focus on the establishment of quantitative models
with a view to estimating the capital needs for the strategic and
commercial risk in the Group.
Pillar 3
Please refer to the separate Pillar 3 report for a more detailed
review of the company's capital and risk situation. The report is
produced in accordance with the requirements stipulated in part

IX, chapters 45 and 46, of the Capital Requirements Regulations,
as well as to satisfy the market's stricter requirements concerning
transparency and openness concerning risk issues in generally. The
Pillar 3 report is published on: http://investor.sparebank1.no.
ORGANISATION AND WORKING ENVIRONMENT
Organisation
SpareBank 1 Gruppen had a total of 1 331 employees, corresponding
to 1 297 full-time equivalents. The corresponding figures for 2011
were 1 272 and 1 237 full-time equivalents. SpareBank 1 Gruppen
AS had 272 employees, corresponding to 267 full-time equivalents.
The corresponding figures for 2011 were 234 employees and 229
full-time equivalents.
A total of 92 employees left in 2012. Total turnover was 7.0%, com-
pared with 6.4% in 2011. Corrected for statutory early retirement
pensions, retirement pensions and disability pensions, the Group's
turnover was 6.4%, compared with 4.9% in 2011.
Measures were implemented to reduce staffing levels as part of the
work on forging a closer collaboration between SpareBank 1
Skadeforsikring AS and SpareBank 1 Livsforsikring AS. Most of
this reduction in staffing will take place in 2013. The process of
reducing staffing is being carried out in consultation with the
unions. So far terminations have been avoided.
HR-strategy
SpareBank 1 Gruppen's HR strategy is based on the company's
vision and values. The main goal of the HR strategy is to ensure
that SpareBank 1 Gruppen:
Attracts the right employees by focusing on the values
«experts and close to you»
Retains the best employees by giving them responsibilities,
communicating with them and rewarding them for good
performance
Develops employees by involving them, giving them clear
objectives and following them up
Key areas of SpareBank 1 Gruppen's HR strategy include: The
trainee scheme, pay and rewards, health and safety (HSE), skills
training, life phases and equality, and career opportunities.
Trainee scheme
The trainee scheme was introduced in 2006 and has been active
ever since. A total of 23 trainees have concluded their trainee period
since the start of the scheme. Several of these now work in key
positions in the Group. SpareBank 1 Gruppen had 10 trainees in
2012 and will recruit a new group of trainees in 2013.
Pay and remuneration
Regular analyses are conducted to ensure that the Group offers
competitive terms without being a pay leader. As well as fixed
salaries, SpareBank 1 Gruppen has an incentive scheme which
rewards relative performance.
Company bonus
The company level bonus relates to the individual company's
target attainment and provides the same bonus for all employees.
The size of the company bonus depends on how well the company
has done compared with its competitors.
Individual non-recurring bonus
In addition to the company bonus, a bonus pot is allocated for
individual non-recurring bonuses if the return on equity in
SpareBank 1 Gruppen is among the top three in a league table of
mixed financial groups in the Nordic region. This is additional to the
ordinary salary pot in the annual pay reviews as per 1 January.
Executive personnel
Executive personnel in SpareBank 1 Gruppen are not covered by
the general bonus schemes, but do have their own schemes. The
maximum achievable bonus amount for executive personnel,
who are defined as the group executive management team, with an
individual bonus agreement is 1-3 months' salary in SpareBank 1
Gruppen. The bonus for meeting targets for a year is paid out in
accordance with the Ministry of Finance's regulations relating to
remuneration in financial institutions.
Working environment and sick leave
The company's working environment is considered good. Annual
organisation surveys are conducted in the Group, with further
follow-up through systematic activities in the organisation to
remedy any weaknesses identified in the surveys.
SpareBank 1 Gruppen has separate working environment com-
mittees in each company. The safety service in the companies is
proactive and a central Workplace Anti-Alcoholism and Drug
Addiction Dependency Committee has also been appointed. The
work with the unions has been very constructive and made a
positive contribution to operations and the results in 2012.
SpareBank 1 Gruppen continued its 'Inclusive Workplace' agree-
ments for the companies in the Group in 2012. The sick leave rate
was 4%, which was made up of 3.1% who submitted a medical
certificate and 0.9% who were self-certified. Sick leave is low
compared with the rest of the industry. E-learning courses with
exams in various HSE disciplines were provided for both
managers and safety deputies in 2012. These were organised in
consultation with the individual working environment committees.
13

SpareBank 1 Gruppen's code of conduct specifies notification
rules for employees and representatives should they become
aware of matters that are in violation of laws, regulations or the
Group's internal rules. A separate notification routine has also been
established.
Skills development
SpareBank 1 Gruppen AS has its own general skills strategy.
Technical and professional training and other skills development
measures are initiated and run primarily in the individual subsi-
diary as needed. Management development programmes have
also been established at different levels, and these are managed
jointly by SpareBank 1 Gruppen AS on behalf of the companies.
Continuous improvement is a key element of skills development.
A central project group has been established to develop relevant
methods and tools for continuous improvement. At the same
time, managers and coaches also undergo training in the use of
continuous improvement methods and tools.
Life phase and equality
The Group has a life phase and equality committee that is tasked
with following up matters such as ensuring compliance with the
Gender Equality Act in the organisation. The committee also focuses
on how SpareBank 1 Gruppen can be an attractive employer for
employees in various life phases.
Of the Group's employees, 46% were women and 54% were men.
5.9% of female and 1.6% of male employees work part-time. Two
of the nine members of the executive management team are
women. The key management teams in the holding company and
subsidiaries have 22% female representation. 32% of all managers
are women. One of the eight board members of the Group's board was
female at year-end 2012. 37% of the subsidiaries' board members are
women.
SpareBank 1 Gruppen applies a method of assessing roles and
positions in order to ensure it fixes pay levels objectively. Equal
pay in relation to work of equal worth is also a topic in annual
salary reviews. The main reason that the pay level of men is
slightly higher than for women in the Group is that there are
more men in both senior positions and highly technical positions.
Attractive employer
SpareBank 1 Gruppen is experiencing greater interest from young
employees. The Group regards this as a result of SpareBank 1's
strong branding combined with the targeted marketing of
SpareBank 1 Gruppen as an attractive employer at universities and
university colleges. In a nationwide university survey conducted
in 2012, SpareBank 1 Gruppen was ranked the joint 25th most
attractive employer and was one of the top three financial groups.
149 new employees were recruited in 2012. The majority of
those who were recruited have at least 3 years' education after
upper secondary school. Most new employees are aged between
26 and 35. The average age of employees in SpareBank 1 Gruppen
was 42.8.
CORPORATE RESPONSIBILITY
SpareBank 1 Gruppen undertakes to take into consideration how
the Group's behaviour impacts people, society and the environment.
This responsibility entails setting targets that exceed those in the
legislation to which the financial markets are subject. Corporate
responsibility covers everything from asset management and
investments in inclusive workplaces and employee rights.
The environment, climate accounts and the Eco-Lighthouse
SpareBank 1 Gruppen's impact on the external environment, both
direct and indirect, is limited. This includes through waste, energy
use, travel, transport, material choices, purchasing and water
consumption.
SpareBank 1 Gruppen will, for the fifth year in a row, prepare climate
accounts based on the total energy consumed by the organisation's
daily operations. The climate accounts are published on:
http://investor.sparebank1.no. SpareBank 1 Gruppen was Eco-
Lighthouse certified in 2012 and thus satisfies all the criteria
stipulated by the Eco-Lighthouse Foundation for this type of
industry.
Social engagement
SpareBank 1 Gruppen has involved itself in a microcredit company,
Kolibri Kapital. Microcredit involves providing small loans to
poor, enterprising people in developing countries that can be
used to develop a business or improve living conditions. Kolibri
Kapital raises money in Norway by continuously expanding its
share capital. All the loans are made to microbanks in South
Africa, Asia and South America. SpareBank 1 Gruppen contributes
share capital.
SpareBank 1 Gruppen worked with the Norwegian Association of
the Blind and Partially Sighted (NAPB) in 2012. NAPB contributed
valuable input to SpareBank 1 concerning how banking services
can be designed for the visually impaired. SpareBank 1 Gruppen
provided financial support for renovating and remodelling the
Hurdal rehabilitation centre.
CHANGES TO THE BOARD AND THE GROUP EXECUTIVE
MANAGEMENT TEAM
Finn Haugan, CEO of SpareBank 1 SMN, was elected Chairman of
the Board in April 2012. He succeeded Arne Austreid, CEO of
SpareBank 1 SR-Bank ASA, who had been the chairman since
April 2011. In April 2012, Per Halvorsen, CEO of SpareBank 1

15
Telemark, was elected to the Board as a representative of
Samarbeidende Sparebanker AS. He succeeded Bjørn Engaas,
CEO of SpareBank 1 Nøtterøy-Tønsberg. Hans Olav Karde, former
CEO of SpareBank 1 Nord-Norge, retired on 31 December 2012 and
at a meeting of the Supervisory Board held on 23 January 2013 his
successor as CEO of SpareBank 1 Nord-Norge, Jan-Frode Janson,
was elected to the Board.
The following changes were made to the executive management
team in 2012: Turid Grotmoll and Rune Selmar joined the
executive management team, while Tore Tenold, Leif Ola Rød
and Aud Lysenstøen left.
Turid Grotmoll was appointed the new CEO of SpareBank 1
Skadeforsikring AS in June 2012, succeeding Tore Tenold who left
the company. Turid Grotmoll had been the acting CEO since
March 2012 and was previously the deputy CEO of SpareBank 1
Skadeforsikring AS.
In March 2012, Leif Ola Rød gave notice that he wished to resign
his position as the head of ODIN Forvaltning AS. Rune Selmar was
appointed in his place and started work on 1 August 2012. Rune
Selmar has extensive experience from the wealth management
sector.
OUTLOOK
The outlook for the Norwegian economy was good at the start of
2013. High oil prices, a continued high level of activity in the oil
sector, low interest rates and record low unemployment are
contributing to the optimism. There is reason to believe that 2013
will also be a relatively good year for Norway with continued low
unemployment, low interest rates and low price inflation. The
macroeconomic conditions for profitable growth should, therefore,
be relatively good in 2013. On the other hand, there is uncertainty
surrounding developments in Europe. Weak growth in the
European economy and instability in the financial markets may
have a negative effect on the Norwegian economy. This in turn
could affect SpareBank 1 Gruppen's financial results, which
account for a substantial proportion of the Group's value creation.
The SpareBank 1 Alliance is stronger than ever. Both the alliance
banks and the product areas are doing well in the current compe-
tition situation, and financial performance is good. SpareBank 1
Gruppen will, in close cooperation with the alliance banks,
continue its work on strengthening the alliance's position. At the
same time, the Group will continue its work on collaboration
across the companies to extract efficiency gains within costs,
income and skills.
The general public's increased focus on pensions indicates long-
term growth in the market for security products and pension
savings. The life insurance company's product breadth combined
with its collaboration with the Norwegian Confederation of
Trade Unions (LO), affiliated unions, and the SpareBank 1 banks'
distribution network provide a good starting point for growing
business volumes. The Norwegian Banking Law Commission has
submitted its report on new occupational pension products, NOU
2012:13, to the Ministry of Finance. SpareBank 1 Livsforsikring AS
views the new occupational pension products positively since they
will be simpler to manage and provide customers with more
choice. SpareBank 1 Livsforsikring AS is considered to be well-
positioned in relation to the future pensions market in which
higher capital requirements and a further focus on profitability will
be key.
A closer collaboration between SpareBank 1 Livsforsikring AS
and SpareBank 1 Skadeforsikring AS will contribute to greater
competitiveness through opportunities for cross-sales and a more
comprehensive offer for customers. It will also contribute to more
efficient processes and provide a basis for further rationalisation.
The future strategy will focus on profitable growth in the
companies' main products. SpareBank 1 is a leader in the sale of
individual risk insurance products and the Board expects
continued growth in 2013 within this product area. SpareBank 1
Skadeforsikring will continue to systematically improve both its
claim and cost/income ratio in the future, and this is expected to
result in a further reduction in the combined ratio in 2013.
2012 was characterised by restructuring in SpareBank 1 Markets
AS. Its competitiveness following the phasing in of new resources
and the advantage of being a bank-owned securities firm with
access to the bank's balance, good expertise and good customer
relationships suggest the company is starting 2013 with a significant
upside with respect to earnings. The focus going forward, for
both the company and the SpareBank 1 Alliance, will be on realising
this potential. The Board is expecting a substantial improvement
in its result in 2013.
Profitability in the debt collection industry and in Conecto AS is
being squeezed. The company expects to improve profitability
through growth and goal-oriented efficiency improvements in
2013. The better growth will take place without a significant
increase in capacity. Factoring has enjoyed good growth, but at
the same time its margins are under pressure. Lending losses in
the company are low and the loss situation is not expected to
deteriorate. The focus going forward will be on improving
revenues and profitable growth.
ODIN Forvaltning AS's future development depends on develop-
ments in the equities markets, the funds' returns, and net new
equity fund, combination fund and bond fund subscriptions. The
company's primary goal is to provide the funds' unit holders

with a better return than the markets the funds invest in and to
grow its market shares in a savings and investment market that is
expected to grow in coming years. The turnaround process
completed in 2012 is expected to have a significant impact on both
income and costs.
In the opinion of the Board, SpareBank 1 Gruppen will be able to
cope well with continued volatility in the financial markets in
2013 as well. SpareBank 1 Gruppen is exposed to the securities
market through its various subsidiaries, and the development of
equity prices and interest rates has a major effect on the Group's
earnings. Given a normal return in the securities market, the
Board expects an improved result in 2013.
A WORD OF THANKS
Our colleagues made good contributions in 2012 and the colla-
boration with the unions was close and fruitful. The Board would
like to thank all of SpareBank 1 Gruppen's employees for their
efforts in 2012.
Oslo, 13 March 2013
Finn Haugan Jan-Frode Janson Per Halvorsen
CHAIRMAN OF THE BOARD
Arne Austreid Knut Bekkevold Richard Heiberg
Tor-Arne Solbakken Sally Lund-Andersen Kirsten Idebøen
CHIEF EXECUTIVE OFFICER
NOTE: This translation from Norwegian has been prepared for information purposes only.

Financial statements 2012
SpareBank 1 Gruppen

SPAREBANK 1 GRUPPEN – INCOME STATEMENT
Parent company Group
2012 2011 NOK 1 000 Note 2012 2011
- - Gross insurance premium income 9 735 233 9 126 299
- - - reinsurers' share -631 318 -604 478
- - Net insurance premium income 16 9 103 915 8 521 821
18 543 23 856 Interest income 140 260 138 293
-98 377 -86 758 Interest costs -127 111 -111 643
-79 834 -62 902 Net interest income 18 13 149 26 650
- - Commissions 627 890 699 780
- - Commission costs -938 890 -924 856
- - Net commissions 17 -311 000 -225 076
1 752 640 Net income from financial instruments at fair value through profit or loss 18 1 872 905 -250 111
28 - Net income from financial assets available for sale 18 102 622
- - Net income from bonds at amortised cost 18 66 973 47 046
- - Net income from bonds held to maturity 18 237 280 242 977
- - Net income from investment properties 19 288 527 263 003
1 055 602 629 293 Share of profit and group contribution from subsidiaries 3 356 2 932
- - Other operating income 20 377 359 340 974
977 548 567 031 Total net income 11 652 567 8 970 838
- - Insurance benefits and claims 8 692 561 7 238 159
- - Insurance claims recovered from reinsurers -413 101 -406 294
- - To/(from) securities adjustment reserve for life insurance 405 143 -431 997
- - Transferred to policyholders - life insurance 4 827 31 104
- - Allocation to supplementary provisions 43 699 -
- - Losses on loans, guarantees 40 776 1 569
36 483 61 554 Operating costs 21, 22 1 955 211 2 000 446
38 421 26 337 Depreciation and write-downs 34, 35, 36 134 428 90 251
568 714 Other costs 42 388 60 461
75 472 88 606 Total costs 10 865 934 8 583 699
902 076 478 425 Operating result 786 634 387 139
Share of profit from associated companies and joint
- - ventures recognised according to the equity method 32 - 150
902 076 478 425 Pre-tax profit 786 634 387 289
214 588 43 132 Taxes 24 343 260 -138 506
687 488 435 293 Net profit for the year 443 374 525 795
Allocation of profit for the year:
Shareholders of the parent company 446 417 529 905
Minority interests -3 043 -4 110
SpareBank 1 Gruppen18

SPAREBANK 1 GRUPPEN – STATEMENT OF COMPREHENSIVE INCOME
Consolidated income statement, costs and value changes
2012 2011 NOK 1 000 Note 2012 2011
687 488 435 293 Profit for the year 443 374 525 795
6 938 -29 774 Actuarial gains/losses on pensions 23 12 809 -113 099
- - Revaluation of properties 34 - -2 700
- - Adjustment of insurance liabilities - -
- - Change in financial assets available for sale 25, 28 256 -301
- - Translation differences 2 -796 450
-1 943 8 337 Tax 24 -2 367 32 424
692 483 413 856 Total comprehensive income for the year 453 276 442 569
Shareholders of the parent company 456 319 446 679
Minority interests -3 043 -4 110
19

SPAREBANK 1 GRUPPEN – CONSOLIDATED BALANCE SHEET
31.12.12 31.12.11 NOK 1 000 Note 31.12.12 31.12.111)
ASSETS
125 382 121 325 Deferred tax asset 24 - 8 026
- - Goodwill 35, 49 839 193 861 140
- - Other intangible assets 36 297 405 233 984
6 013 104 4 985 194 Investments in subsidiaries 31 - -
10 147 10 147 Investments in associated companies and joint ventures 32 10 547 10 147
164 888 160 863 Property, plant and equipment 34 1 061 269 1 016 143
- - Reinsurance receivables 37 1 515 784 1 411 156
162 192 202 067 Other assets 41 424 629 479 212
- - Investment properties 33 4 147 509 4 153 878
- - Bonds held to maturity 13, 25, 29, 30 4 477 834 4 522 630
- - Bonds at amortised cost 13, 25, 29, 30 1 825 434 1 368 467
21 102 17 583 Securities - available for sale 13, 25, 26, 28 24 538 19 193
801 901 152 580 Lending to customers and deposits with financial institutions 13, 14, 25, 30, 39 1 231 366 894 271
- - Securities at fair value 13, 25, 26, 27 27 969 246 24 155 423
3 078 2 003 Financial derivatives 9, 13, 25, 26 112 018 11 317
- - Receivables from policyholders 38 1 611 690 1 568 003
269 191 213 717 Cash and cash equivalents 13, 25, 30 755 000 1 276 149
7 570 985 5 865 479 TOTAL ASSETS 46 303 462 41 989 140
EQUITY AND LIABILITIES
2 400 277 1 970 277 Shareholders equity 50 2 400 277 1 970 277
1 460 265 1 201 715 Retained earnings 2 906 097 2 974 364
- - Other equity - not recognised through profit or loss - -
- - Minority interests -2 704 -2 280
3 860 542 3 171 992 Total equity 5 303 671 4 942 361
283 544 283 568 Subordinated loan capital and hybrid tier 1 capital 15, 25, 30, 45 483 544 483 568
- - Securities adjustment reserve 590 016 184 872
- - Insurance provisions in life insurance 42 24 710 118 22 620 517
- - Premium and claims provisions in P&C Insurance 43 9 692 942 9 120 199
89 358 99 419 Net pension liabilities 23 342 535 393 347
- - Deferred tax liability 24 560 555 -
- - Payable tax 24 1 178 168 744
833 818 1 905 025 Securities issued 15, 25, 26, 27, 30, 44 833 818 1 905 025
- - Liabilities related to reinsurance 47 207 335 74 017
- - Financial derivatives 9, 25, 26 177 101 244 800
202 228 405 475 Other liabilities 48 1 116 068 1 087 546
2 301 495 - Deposits from and liabilities to customers and financial institutions 15, 25, 46 2 284 581 764 143
7 570 985 5 865 479 TOTAL EQUITY AND LIABILITIES 46 303 462 41 989 140
1)
The balance sheet as of 31 December 2011 has been revised to show comparable figures. A more detailed description of the changes is
provided in note 54.
Oslo, 13 March 2013
Finn Haugan Jan-Frode Janson Per Halvorsen
CHAIRMAN OF THE BOARD
Arne Austreid Knut Bekkevold Richard Heiberg
Tor-Arne Solbakken Sally Lund-Andersen Kirsten Idebøen
CHIEF EXECUTIVE OFFICER
NOTE: This translation from Norwegian has been prepared for information purposes only.

CONSOLIDATED STATEMENT OF CASH FLOW
Parent company Group2),3)
2012 2011 NOK 1 000 Note 2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
902 076 478 425 Pre-tax profit 786 634 387 289
Share of profit from associated companies and joint
- - ventures recognised according to the equity method 32 -400 150
38 421 26 337 Depreciation and write-downs 34, 36 134 428 90 251
- - Losses on loans/guarantees 40 776 1 569
- - Revision of investment property values 33 55 177 13 154
- - Change in securities at fair value 18 -739 943 1 080 177
79 834 62 902 Net interest income/interest costs 18 -13 149 -26 650
-101 562 -82 787 Interest costs paid -130 296 -107 672
17 910 23 709 Interest income received 140 326 138 284
Difference between cost recognised pensions and
-3 126 8 110 receipts/payments in pension schemes 23 -38 005 -47 501
- - Period's paid tax
- - Increase in reinsurance receivables 37 -104 628 -
- - Reduction in reinsurance receivables 37 - 83 182
-649 321 -30 000 Increase in lending to customers 39 -337 871 -311 285
- - Reduction in lending to customers 39 - -
- - Change in technical provisions 42, 43 3 067 486 677 239
Increase in deposits from and liabilities to customers
2 299 649 1 145 and financial institutions 46 1 518 593 230 892
Reduction in deposits from and liabilities to customers
- - and financial institutions 46 - -
-163 839 -158 245 Change in accrued expenses and prepaid revenues -33 239 -85 543
- -1 311 Net increase in securities at fair value 9, 27 -3 073 880 -2 124 759
- - Additions of securities held to maturity 29 -606 244 -316 060
- - Remuneration from disposal of securities held to maturity 29 198 696 357 574
2 420 042 328 285 Net cash flow generated from operating activities 824 461 40 301
CASH FLOWS FROM INVESTING ACTIVITIES
-3 519 - Additions of securities available for sale 28 -5 276 -188
- - Remuneration from disposal of securities available for sale 28 188 1 210
-1 232 693 -525 608 Payment of group contributions 1) - -
-15 904 - Additions of investments in subsidiaries - -
128 - Disposal of investments in subsidiaries - -
- - Additions of investment properties 33 -53 808 -185 625
- - Remuneration from disposal of investment properties 33 5 000 204 424
- - Additions of intangible assets 36 -114 197 -123 586
- - Remuneration from intangible assets 36 - -
-42 446 -60 312 Additions of own property, plant and equipment 34 -108 113 -140 325
- - Remuneration from own property, plant and equipment 34 730 225 946
-1 294 434 -585 920 Net cash flow used in investing activities -275 476 -18 144
CASH FLOWS FROM FINANCING ACTIVITIES
- - Receipts - subordinated loan capital 45 - -
- -150 278 Payments - redemption of subordinated loan capital 45 - -365 278
430 000 440 000 Receipts - new equity 430 000 440 000
-433 933 -440 000 Payments - dividends -433 933 -440 000
- 528 111 Increase in securities issued 44 - 528 111
-1 066 201 - Reduction in securities issued 44 -1 066 201 -
-1 070 134 377 833 Net cash flow from financing activities -1 070 134 162 833
55 474 120 197 Net cash flow for the period -521 149 184 990
213 717 93 520 Cash and cash equivalents as of 01.01 1 276 149 1 091 159
269 191 213 717 Cash and cash equivalents as of 31.12 755 000 1 276 149
1)
Group contribution payments are recognised as increases in investments in subsidiaries. Group contributions received by
SpareBank 1 Gruppen are recognised through profit or loss
21

STATEMENT OF CHANGES IN EQUITY
Parent company
Share premium Retained Total
NOK 1 000 Note Share capital reserve earnings equity
Equity as of 31.12.10 1 782 400 247 877 727 859 2 758 136
Profit for the year - - 435 293 435 293
Year's comprehensive income - - -21 437 -21 437
Year's total comprehensive income - - 413 856 413 856
Capital increase 88 000 352 000 - 440 000
Capital reduction - -500 000 500 000 -
Dividend paid - - -440 000 -440 000
Total transactions with shareholders 88 000 -148 000 60 000 -
Equity as of 31.12.11 1 870 400 99 877 1 201 715 3 171 992
Profit for the year - - 687 488 687 488
Year's comprehensive income - - 4 995 4 995
Year's total comprehensive income - - 692 483 692 483
Capital increase 86 000 344 000 - 430 000
Dividend paid - - -433 933 -433 933
Total transactions with shareholders 86 000 344 000 -433 933 -3 933
Equity as of 31.12.12 50 1 956 400 443 877 1 460 265 3 860 542
Group Other equity
- not recognised
Share premium Retained through Minority Total
NOK 1 000 Note Share capital reserve earnings profit or loss interests equity
Equity as of 31.12.10 1 782 400 247 877 2 691 636 71 454 15 446 4 808 813
Changes booked directly against equity 1)
-180 960 -180 960
Revised equity as of 31.12.10 1 782 400 247 877 2 510 676 71 454 15 446 4 627 853
Profit for the year - - 529 905 - -4 110 525 795
Year's comprehensive income - - -11 772 -71 454 - -83 226
Year's total comprehensive income - - 518 134 -71 454 -4 110 442 569
Capital increase 88 000 352 000 - - - 440 000
Capital reduction - -500 000 500 000 - - -
Dividend paid - - -440 000 - - -440 000
Disposals minority interests - - - - -13 616 -13 616
Total transactions with shareholders 88 000 -148 000 60 000 - -13 616 -13 616
Other items booked directly against equity 2)
- - -114 446 - - -114 446
Other items booked directly against equity - - -114 446 - - -114 446
Equity as of 31.12.11 1 870 400 99 877 2 974 364 - -2 280 4 942 361
Profit for the year - - 446 417 - -3 043 443 374
Year's comprehensive income - - 9 902 - - 9 902
Year's total comprehensive income - - 456 319 - -3 043 453 276
Capital increase 86 000 344 000 - - - 430 000
Dividend paid - - -433 933 - - -433 933
Disposals minority interests - - - - 2 619 2 619
Total transactions with shareholders 86 000 344 000 -433 933 - 2 619 -1 314
Corrections from previous years 3)
- - -88 547 - - -88 547
Equity as of 31.12.12 50 1 956 400 443 877 2 906 097 - -2 704 5 303 671
1)
Equity as of 31.12.10 has been revised to show comparable figures. A detailed description of the change booked directly against equity can be found in
note 2 «accounting policies» in the the section on «Changes in the policies for determining claim provisions» and other descriptions of changes in note 54
in the 2011 annual report.
2)
Other items booked against equity primarily concern changes in provisions for insurance (natural disaster claims, guarantees) and business mergers.
3)
Other items booked against equity primarily concern changes in the tax effect from changed group contributions in relation to what is assumed when the
accounts are closed.

NOTE 1 – GENERAL INFORMATION
As of 31 December 2012, SpareBank 1 Gruppen consisted of the
parent company SpareBank 1 Gruppen AS and the wholly owned
subsidiaries SpareBank 1 Livsforsikring AS, SpareBank 1 Skade-
forsikring AS, ODIN Forvaltning AS, SpareBank 1 Medlemskort AS and
SpareBank 1 Gruppen Finans AS, as well as SpareBank 1 Markets AS
with an ownership interest of 97.55%.
The SpareBank 1 DA alliance is recognised according to the equity
method, and the Group's ownership interest is 10%.
SpareBank 1 Gruppen AS's registered office is in Tromsø.
SpareBank 1 Gruppen AS is a holding company that produces,
provides and distributes products within P&C insurance, life insurance,
fund management, capital markets, factoring, debt collection and
long-term monitoring via its subsidiaries. The Group's primary
market is Norway.
The consolidated financial statements were authorised for issue by the
Annual General Meeting and Supervisory Board on 10 April 2013. The
Annual General Meeting is the Group's supreme authority.
NOTE 2 – ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements and the parent company's annual
financial statements for 2012 for SpareBank 1 Gruppen have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and appurtenant interpretations from the International
Financial Reporting Interpretations Committee (IFRIC), as adopted
by the EU, as well as the other disclosure obligations stipulated by the
Norwegian Accounting Act.
The consolidated financial statements have been prepared on a historical
cost basis. The deviations principally relate to financial derivatives,
financial assets and financial liabilities recognised at fair value with
value changes through profit or loss and financial assets classified as
available for sale, as well as properties owned for the purpose of
earning rental income or appreciating in value that are classified as
investment properties and are recorded at fair value in accordance with
IAS 40.
Preparing financial statements in accordance with IFRS requires the
use of estimates. Moreover, the management team has to exercise
judgement in applying the Group's accounting policies. Areas in
which critical judgements and estimates are required, that are highly
complex, or areas in which judgements and estimates are material to
the consolidated financial statements, are described in note 3.
The consolidated financial statements have been prepared on the
basis of a going concern assumption.
New and revised standards applied by the Group
No new or amended IFRS rules or IFRIC interpretations came into effect
in 2012 that are deemed to have had a material effect on the Group's
annual financial statements.
SpareBank 1 Gruppen AS and SpareBank 1 Gruppen have chosen to
present comprehensive income items on a line in the statement of
changes in equity for 2012 and 2011, ref. IAS 1.106 (d).
Standards, amendments and interpretations of existing standards
that have not come into effect and which the Group has chosen not
to adopt early
The Group has chosen not to adopt any new or amended IFRSs or
IFRIC interpretations early.
IAS 1 Presentation of Financial Statements has been amended with the
result that items in comprehensive income must be divided into two
groups: those that will subsequently be reclassified to profit or loss and
those that will not. The amendment does not change the items that
must be included in comprehensive income.
IFRS 9 Financial Instruments regulates the classification, measurement
and accounting of financial assets and financial liabilities. IFRS 9
was published in November 2009 and October 2010, and replaces
those parts of IAS 39 which deal with recognising, classifying and
measuring financial instruments. According to IFRS 9, financial assets
must be divided into two categories based on the measuring method:
those that are measured at fair value and those that are measured at
amortised cost. The classification assessment is undertaken upon
initial recognition. The classification will depend on the company's
business model for dealing with its financial instruments and the
characteristics of the contractual cash flows generated by the instrument.
The requirements for financial liabilities are generally similar to those
in IAS 39. The main change, in cases where a company has chosen fair
value for financial liabilities, is that the part of the change in fair
value due to changes in the company's own credit risk must be
recognised in the comprehensive income statement instead of the
income statement, if this does not entail accrual errors in measuring
the result. The Group has not fully assessed the impact this standard
will have on the financial statements. The Group is planning to apply
IFRS 9 once the standard comes into force and is approved by the
EU. The standard comes into effect for financial periods that start on
1 January 2015. The Group also wants to look at the impact of the
remaining part phases of IFRS 9 once these are finalised by IASB.
IFRS 10 Consolidated Financial Statements is based on the current
policy of using control as the decisive criteria for determining whether
a company should be included in the consolidated financial statements.
The standard provides expanded guidance on determining whether
control exists in cases where this is difficult. The Group has not con-
sidered all the possible consequences of IFRS 10. The Group plans to
apply the standard in the 2013 financial year even though the EU does
not require its application before 1 January 2014.
IFRS 12 Disclosure of Interests in Other Entities contains disclosure
requirements for an entity's involvement in subsidiaries, joint
arrangements, associated companies, unconsolidated SPEs/structured
entities. The Group has not assessed the full effects of IFRS 12. The
Group plans to apply the standard in the 2013 financial year even
though the EU does not require its application before 1 January 2014.
IFRS 13 Fair value Measurement defines the term «fair value» in the
context of IFRS, provides a consistent description of how fair value is
determined in the IFRS and specifies what additional information is
to be disclosed when fair value is used. The standard does not expand
the scope of recognition at fair value, but provides guidance on the
application method where its use is already required or permitted by
other IFRSs. The Group applies fair value as the measurement crite-
rion for certain assets and liabilities. The Group has not assessed the
full effects of IFRS 13. The Group is planning to apply IFRS 13 in the
2013 financial year.
Besides these, there are no other IFRSs or IFRIC interpretations which
are not currently in effect and would be expected to have a material
effect on the financial statements.
Foreign currency translation
Functional currency and presentation currency
The accounts for each unit in the Group are measured in the currency
used where the unit primarily operates (functional currency). Tran-
sactions in foreign currencies are translated into the functional currency
using the exchange rate at the time of the transaction. The consolidated
financial statements are presented in Norwegian kroner (NOK) which
is the parent company's functional currency and the presentation
currency of the Group. Foreign companies that are included in the
Notes
23

Group and which use a different functional currency are translated into
Norwegian kroner using an average exchange rate for the year for
income statement and the prevailing exchange rate on the reporting
date for the balance sheet. Any translation differences are reported in
comprehensive income for the period and are disclosed separately
under equity. All figures are presented in NOK thousands unless
otherwise specified.
Transactions and balance sheet items
Transactions in foreign currencies are translated into the functional
currency using the exchange rate at the time of the transaction.
Realised currency gains and losses on settlements and from the trans-
lation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised through profit or loss.
If the currency position is considered to be a cash flow hedge or
regarded as hedging the net investment in a foreign business, the
appurtenant gains or losses are reported in comprehensive income.
Currency gains and losses in conjunction with loans, cash and cash
equivalents are presented (net) as interest income or interest expense.
Changes in the fair value of commercial paper and bonds in foreign
currencies classified as available for sale are split between the effect
of the currency translation of the amortised cost in the foreign currency
and other changes in the carrying amount. Currency translation of the
amortised cost is recognised through profit or loss while other changes
in the carrying amount are reported in comprehensive income. The
effects of changes in foreign exchange rates on non-monetary items
(both assets and liabilities) are incorporated into the assessment of fair
value. Exchange differences on non-monetary items, such as shares at
fair value through profit or loss, are recognised through profit or loss
as part of total gains and losses. Exchange differences on shares
classified as available for sale are included in changes in value
reported in comprehensive income.
CONSOLIDATION
Subsidiaries
The consolidated financial statements include SpareBank 1 Gruppen
AS and all its subsidiaries. Subsidiaries are all the units where
SpareBank 1 Gruppen has the power to control the financial and
operating policies of the entity, normally through ownership of more
than half the voting rights. Subsidiaries are consolidated from the date
at which control is ceded to the Group and unconsolidated when the
control is lost.
The acquisition method is used when accounting for acquisitions of
subsidiaries. Acquisition cost is measured as the fair value of assets
transferred as consideration. Identified assets, assumed liabilities and
assumed or incurred contingent liabilities are recognised at fair value
at the acquisition date, irrespective of any non-controlling interests.
That amount of the acquisition cost that exceeds the fair value of
identifiable net assets in the subsidiary is recognised in the balance
sheet as goodwill. If the acquisition cost is less than the fair value of
net assets in the subsidiary, the difference is recognised through
profit or loss.
Material intragroup transactions, receivables and payables are
eliminated.
Transactions with non-controlling ownership interests are treated as
transactions with third parties. The effect of all transactions with
non-controlling owners is reported in equity where there is not a
change in control. Such transactions will not result in goodwill or gains
or losses. When control ceases, the remaining ownership interests
are to be measured at fair value, and gains and losses are recognised
through profit or loss.
Associated companies
Associated firms are firms where companies in SpareBank 1 Gruppen
have significant influence, but not control. Significant influence nor-
mally exists for investments where the Group has between 20% and
50% of the voting rights. Investments in associated companies are
initially recognised at acquisition cost and subsequently measured
using the equity method. Investments in associated companies
include goodwill identified at the date of acquisition, reduced there-
after by any write-downs.
The Group's share of profits or losses in associated companies is
recognised through profit or loss and added to the carrying value of the
investments, in addition to the share of comprehensive income in the
associated company and the effect of any errors or policy changes. The
Group does not recognise the share of losses if this would cause the
carrying value of the investment to become negative.
Joint ventures
Interests in joint ventures may consist of joint operations, joint venture
assets and joint venture activities. Joint control means that SpareBank 1
Gruppen through contractual agreements exercises shared control
over economic activity with other participants. Joint ventures are
recognised using the equity method.
Investments in subsidiaries and associated companies recorded in
the parent company's financial statements
Investments in subsidiaries and associated companies are valued
using the cost method. If there is objective evidence of lasting impair-
ment, the shares are written down. A previously recognised impairment
is reversed if the reason for the impairment no longer exists.
Segment information
Operating segments in the note are reported in the same way as in the
Board of Directors' Report and internal reporting to the Board.
The Group's business areas are divided into life insurance, P&C
insurance, fund management, brokering activities, debt collection
and factoring, and other activities. The Group has no secondary
segment reporting. This is consistent with internal reporting.
The figures in the internal reporting are slightly different to those
presented in the segment note. This is due to the fact that some units
do no translate their figures for IFRS before they are reported internally.
These segments are reported in the note in the same way that they are
recognised in accordance with IFRS.
Loans and receivables
Acquired portfolios
Acquired portfolios are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. These
are accounted for at amortised cost using the effective interest method.
Trade receivables from factoring activities
Trade receivables from factoring activities are evaluated in two ways.
In those instances where the factoring business has not taken over the
credit risk (risk associated with debtors' inability to service and repay
their outstanding loans) only the prepayment that has been paid on
receivables that have been transferred to the factoring company are
recorded on the balance sheet, under «Loans to customers and recei-
vables from credit institutions». When the factoring business takes over
the credit risk, the gross receivables are recorded and included in the
balance sheet under «Other assets». The portion of these trade recei-
vables that is not financed is included in the balance sheet under
«Other liabilities».
Provisions
Loss provisions for loans and guarantees (debtors) are included under
«losses on loans and guarantees».
Other receivables
Other receivables are recognised in the balance sheet at nominal
value less provisions for expected losses. Provisions for losses are made
on the basis of individual evaluations of each receivable.
Securities and derivatives
The Group has financial assets in the trading portfolio, voluntarily
categorised at fair value through profit or loss, loans and receivables,
investments held to maturity and securities available for sale. The
principal rule is to classify investments at fair value through profit or
loss, either through the trading portfolio or voluntary classification.
This corresponds with how the investments are followed up. Certain
investments in commercial paper and bonds are nonetheless
classified into loans and receivables or held to maturity. This is under-
taken in conjunction with the transaction.

Annual Report SpareBank 1 Gruppen 2012

Annual Report SpareBank 1 Gruppen 2012

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Annual Report SpareBank 1 Gruppen 2012