From 1 January 2005 all groups in the EU (including the EEA countries) listed on the stock exchange must present their quarterly and annual accounts according to international accounting standards (the IAS/IFRS regulations).

Sparebank 1 SR-Bank, which is a listed group, will present its accounts for the first quarter of 2005 on 28 April 2005 according to the new regulations now in force.

The draft for the opening balance sheet for 2004 and 2005 has been reworked on the basis of our present understanding of the IFRS regulations. The opening balance sheet has not been audited.

 

In accordance with IAS 1 (First-time Adoption of International Financial Reporting Standards), the transition effects of the initial implementation must be entered against equity.

In general the transition should take place on 1 January 2004, but an exception has been granted for IAS 39, where the transition will take place on 1 January 2005. In the case of SpareBank 1 SR-Bank's consolidated accounts, this concerns items related to loans/losses, securities and other financial instruments.

 

In summary, from 31 December 2003 to 1 January 2005 our equity increases with NOK 180 million, once all the implementation effects as of 1 January 2004 and 1 January 2005 have been carried out.

One of the changes being made is that allocated dividends remain under equity until a resolution is made by the Supervisory Board. As of 1 January 2005, this amounts to NOK 208 million. If one disregards this effect, which is only temporary, the net change in equity will be a reduction of NOK 28 million. This is lower than the amount mentioned when the annual profit for 2004 was presented. At that time the estimate was NOK -100 million.

The effects on equity are charged to the Equalization Reserve and the Savings Banks' Reserves in accordance with the ratio of primary capital certificates on 31 December 2004. (56.32% from the Equalization Reserve and 43.68% from the Savings Banks' Reserves).

 

 

The net effect on equity is distributed on the following main items:

 

Pension corridor	- 194
Effect from interest in the Sparebank 1 Group	-  39
Reduction of previous, unspecified losses	+ 141
Shares assessed at market value	+  48
Changes re. loans/loans fees	-  11
Changes in various financial instruments	-  10
Misc. changes	+   8
Changes in the 2004 annual profit from
Norw. Accounting Standard (NAS) to IFRS	+  29
Net effect before the change in dividend	-  28
Allocated dividend 31 December 2004	208
Net effect as of 1 January 2005	+ 180

 

(The figures are given in Million NOK and adjusted for the tax effect where relevant.)

 

 

So far savings banks are not permitted to apply the IAS/IFRS regulations to their company accounts. Statements from the (Norwegian) Banking, Insurance and Securities Commission indicate that this will be possible from the 4th quarter of 2005 at the earliest. Until then, company accounts will be prepared according to the NAS regulations. For purposes of comparison, the bank will prepare a pro forma IFRS company account which will be presented together with the consolidated profit.

 

 

Please find enclosed:

 - Balance sheet reconciliation NAS-IFRS 1 January 2004

 - Balance sheet reconciliation NAS-IFRS 1 January 2005

 - Income statement reconciliation NAS-IFRS 31 January 2004

 - Accounting principles

 

 

Stavanger, April 22, 2005
SpareBank 1 SR-Bank