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

 

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

 

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

 

 

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

 

Pre-tax operating result of NOK 262 million (NOK 452 million)

-After-tax return on equity capital:  8.7 per cent (19.3 per cent)

-Result per Primary Capital Certificate (PCC) so far this year (Parent Bank):  NOK 4.45 (NOK 5.98)

The underlying banking operations remain very good;  the result from core operations before credit loses totalled NOK 345 million (NOK 320 million)

Result from financial investments totalled NOK -55 million (NOK 139 million).

-Reduced result contribution from SpareBank 1 Gruppen AS, the Bank's share thereof amounting to  NOK 49 million (NOK 116 million)

-NOK 65 million charged to the accounts in respect of losses on the Bank's share portfolio

-NOK 75 million charged to the accounts in respect of losses on the Bank's interest- bearing securities portfolio

-Gains from foreign exchange and financial derivatives and assets totalled NOK 23 million.

Overall cost ratio:  62.9 per cent (50.9 per cent)

Losses on loans:  Net losses of NOK 28 million (NOK 7 million)

Lending growth during the last 12 months (including loans transferred to SpareBank 1 Boligkreditt):  10.9 per cent (12.5 per cent)

-Retail banking market  -  10.8 per cent (including SpareBank 1 Boligkreditt)

-Corporate market  -  10.3 per cent

The accounts show lending growth in the last 12 months of 4.3 per cent (9.3 per cent).

Deposit growth during the last 12 months:  4.3 per cent (14.4 per cent)

Overall deposit coverage ratio:  67.7 per cent (67.7 per cent)

The Bank's liquidity remains satisfactory despite the unsettled financial markets.

 

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

 

Any questions in this connection should be directed to Hans Olav Karde, Chief Executive Officer, telephone number: 77 62 24 01, or Oddmund Aasen, Deputy Chief Executive Officer, telephone number: 77 62 20 94.  Reference is also made to the Bank's home page on the Internet:  www.snn.no

 

Some brief background information on SpareBank 1 Nord-Norge

SpareBank 1 Nord-Norge is a leading provider of financial products and services to the retail banking- and corporate markets and to the public sector in the region.  The Bank has an aggregate customer base of some 245,000 retail banking customers, about 40,500 corporate customers, including public sector entities, clubs and associations, and approximately 100,000 insurance product customers.  The Bank has 81 branches in Finnmark, Troms, Nordland and on Svalbard (Spitzbergen).  SpareBank 1 Nord-Norge has its own

representative office in Murmansk and is a shareholder in the Russian bank, Tavrichesky OJSC, whose head office is located in St. Petersburg.

 

Tromso, 12 August 2008

For and on behalf of SpareBank 1 Nord-Norge

 

Kjell Kolbeinsen

Director, Information and Public Relations