Annual Report SpareBank 1 Gruppen 2012

1

Annual Report 2012SpareBank 1 Gruppen

2 SpareBank 1 Gruppen

Board of Directors' Report 3Income Statement 18 Statement of Comprehensive Income 19Balance Sheet 20Consolidated Statement of Cash Flow 21Statement of Changes in Equity 22

Note 1 General information 23Note 2 Accounting policies 23Note 3 Critical accounting estimates and judgements 29Note 4 Segment information 31Note 5 Capital adequacy ratio 32

Risk notesNote 6 Financial risk management 33

Market riskNote 7 Market risk related to interest rate risk 38Note 8 Market risk related to currency risk 38Note 9 Financial derivatives 39

Insurance riskNote 10 Insurance risk in life insurance 40Note 11 Insurance risk in P&C insurance 44

Credit riskNote 12 Credit risk exposure for each internal risk class 48Note 13 Maximum credit risk exposure, not taking

into account pledged security 49Note 14 Age distribution of overdue but not impaired

loans and premium income 50

Liquidity riskNote 15 Remaining contractual maturity of

financial liabilities 50

Result notesNote 16 Net insurance premium income 51Note 17 Net commissions 52Note 18 Gains and losses from financial assets and liabilities 53Note 19 Net income from investment properties 54Note 20 Other operating income 54Note 21 Operating costs 54Note 22 Salaries and other remuneration of the

CEO and executive personnel 55Note 23 Pensions 57Note 24 Tax 59

Balance sheet notesNote 25 Classification of financial assets and liabilities 60Note 26 Valuation hierarchy 61Note 27 Securities at fair value 64Note 28 Securities available for sale 65Note 29 Bonds at amortised cost 66Note 30 Fair value of securities

stated at amortised cost 67Note 31 Investments in subsidiaries 68Note 32 Investments in associated companies

and joint ventures 68Note 33 Investment properties 70Note 34 Property, plant and equipment 71Note 35 Goodwill 72Note 36 Other intangible assets 73Note 37 Reinsurance receivables 74Note 38 Receivables from policyholders 74Note 39 Lending to and deposits with customers and financial

institutions 74Note 40 Net loan loss provisions 76Note 41 Other assets 77Note 42 Insurance liabilities in life insurance 77Note 43 Technical provisions in P&C insurance 79Note 44 Securities issued 81Note 45 Subordinated loan capital and hybrid tier 1 capital 81Note 46 Deposits from and liabilities to customers

and financial institutions 82Note 47 Liabilities related to reinsurance 83Note 48 Other liabilities 83

Other notesNote 49 Changes in group structure 83Note 50 Shareholder structure 85Note 51 Number of employees and full-time equivalents 85Note 52 Material transactions with related parties 86Note 53 Events after the balance sheet date and legal disputes 89Note 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 2012SpareBank 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 479.4 414.1SpareBank 1 Skadeforsikring Group 618.9 185.3ODIN Forvaltning Group -20.4 21.8SpareBank 1 Markets AS -168.5 -154.8SpareBank 1 Medlemskort AS 10.4 12.1SpareBank 1 Gruppen Finans Group 25.1 27.9Group adjustments -8.5 28.7Net 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 291.5 241.4Administration result -56.2 -65.9Interest result 268.8 368.5Provisions -145.3 -187.3Remuneration for interest guarantee 25.9 22.7Total result for supplementary provisions 384.7 379.4Allocation to supplementary provisions -43.7 0.0Profit to customers -43.1 -61.5Return on the company's funds 181.5 96.2Net profit to owner before tax 479.4 414.1Tax cost -290.2 97.8Net 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 2012Equities 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 2012Equities 0.0 %Other 0.2 %Property 18.4 %Bonds - amortised cost 15.8 %Bonds - market value 65.6 %Value (NOK million) 3 120

Investment choice portfolio 2012Equities 53.2 %Other 0.4 %Bonds 46.4 %Value (NOK million) 8 239

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 5 358.2Net earned premium 5 073.1 4 695.9Accrued claims for own account -3 970.9 -3 973.5Insurance-related operating expenses for own account -1 012.9 -884.7Other insurance-related income/costs 14.3 31.8Other technical provisions -41.2 93.2Insurance result 62.4 -37.3Net financial income 537.6 260.3Other costs -0.1 0.0Operating result 599.9 223.0Change in security reserves 19.0 -37.7Pre-tax profit 618.9 185.3Tax cost -142.8 -94.6Net 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

0

20

40

60

80

100

120

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 257.1 303.5Total operating income 257.1 303.5Payroll costs -110.1 -108.5Amortisation -26.0 -23.5Other operating costs -130.6 -151.2Total operating costs -266.7 -283.2Operating result -9.6 20.3Net financial income -10.8 1.5Pre-tax profit -20.4 21.8Tax cost 1.9 -7.0Net 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 86.2Payroll and payroll-related costs -203.5 -149.7Other operating costs -104.7 -81.1Amortisation -6.5 -8.0Total operating costs -314.6 -238.8Operating result -165.0 -152.6Net financial costs -3.5 -2.2Pre-tax profit -168.5 -154.8Tax cost 44.1 41.7Net 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 12.2Management -7.1 -5.9Factoring 12.8 14.6Portfolio 6.4 3.5

Conecto AS 16.7 24.7Net result before tax from the subsidiaries 28.8 36.9Excess value amortisation -3.7 -9.0Pre-tax profit 25.1 27.9Tax cost -6.7 -8.8Net profit for the period 18.4 19.1

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 58.5Payroll costs -7.4 -6.6Operating costs Medlemskort -0.6 -2.0Operating costs LOfavør -31.5 -32.6Operating costs Reskontro -6.2 -6.1Total operating costs -45.7 -47.3Operating result 9.5 11.2Net financial income 0.9 0.9Pre-tax profit 10.4 12.1Tax cost -3.2 -3.6Net profit for the period 7.2 8.5

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 IdebøenCHIEF EXECUTIVE OFFICER

NOTE: This translation from Norwegian has been prepared for information purposes only.

Financial statements 2012SpareBank 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 11128 - 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 44638 421 26 337 Depreciation and write-downs 34, 35, 36 134 428 90 251

568 714 Other costs 42 388 60 46175 472 88 606 Total costs 10 865 934 8 583 699902 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 289214 588 43 132 Taxes 24 343 260 -138 506687 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 905Minority 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 7956 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 424692 483 413 856 Total comprehensive income for the year 453 276 442 569

Shareholders of the parent company 456 319 446 679Minority 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 147164 888 160 863 Property, plant and equipment 34 1 061 269 1 016 143

- - Reinsurance receivables 37 1 515 784 1 411 156162 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 193801 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 4233 078 2 003 Financial derivatives 9, 13, 25, 26 112 018 11 317

- - Receivables from policyholders 38 1 611 690 1 568 003269 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 LIABILITIES2 400 277 1 970 277 Shareholders equity 50 2 400 277 1 970 2771 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 5462 301 495 - Deposits from and liabilities to customers and financial institutions 15, 25, 46 2 284 581 764 1437 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 isprovided 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 IdebøenCHIEF 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 289Share of profit from associated companies and joint

- - ventures recognised according to the equity method 32 -400 15038 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 67217 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 companyShare 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 theparent 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 andSpareBank 1 Gruppen Finans AS, as well as SpareBank 1 Markets ASwith 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 andlong-term monitoring via its subsidiaries. The Group's primary market is Norway.

The consolidated financial statements were authorised for issue by theAnnual General Meeting and Supervisory Board on 10 April 2013. TheAnnual General Meeting is the Group's supreme authority.

NOTE 2 – ACCOUNTING POLICIES

Statement of complianceThe consolidated financial statements and the parent company's annualfinancial statements for 2012 for SpareBank 1 Gruppen have been prepared in accordance with International Financial Reporting Standards (IFRS) and appurtenant interpretations from the InternationalFinancial Reporting Interpretations Committee (IFRIC), as adoptedby the EU, as well as the other disclosure obligations stipulated by theNorwegian Accounting Act.

The consolidated financial statements have been prepared on a historicalcost basis. The deviations principally relate to financial derivatives,financial assets and financial liabilities recognised at fair value withvalue changes through profit or loss and financial assets classified asavailable for sale, as well as properties owned for the purpose of earning rental income or appreciating in value that are classified asinvestment properties and are recorded at fair value in accordance withIAS 40.

Preparing financial statements in accordance with IFRS requires theuse of estimates. Moreover, the management team has to exercise judgement in applying the Group's accounting policies. Areas inwhich critical judgements and estimates are required, that are highlycomplex, or areas in which judgements and estimates are material tothe consolidated financial statements, are described in note 3.

The consolidated financial statements have been prepared on thebasis of a going concern assumption.

New and revised standards applied by the GroupNo new or amended IFRS rules or IFRIC interpretations came into effectin 2012 that are deemed to have had a material effect on the Group'sannual financial statements.

SpareBank 1 Gruppen AS and SpareBank 1 Gruppen have chosen topresent comprehensive income items on a line in the statement ofchanges in equity for 2012 and 2011, ref. IAS 1.106 (d).

Standards, amendments and interpretations of existing standardsthat have not come into effect and which the Group has chosen notto adopt earlyThe Group has chosen not to adopt any new or amended IFRSs orIFRIC interpretations early.

IAS 1 Presentation of Financial Statements has been amended with theresult that items in comprehensive income must be divided into twogroups: those that will subsequently be reclassified to profit or loss andthose that will not. The amendment does not change the items thatmust be included in comprehensive income.

IFRS 9 Financial Instruments regulates the classification, measurementand accounting of financial assets and financial liabilities. IFRS 9was 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 assetsmust be divided into two categories based on the measuring method:those that are measured at fair value and those that are measured atamortised cost. The classification assessment is undertaken upon initial recognition. The classification will depend on the company'sbusiness model for dealing with its financial instruments and thecharacteristics of the contractual cash flows generated by the instrument.The requirements for financial liabilities are generally similar to thosein IAS 39. The main change, in cases where a company has chosen fairvalue for financial liabilities, is that the part of the change in fairvalue due to changes in the company's own credit risk must be recognised in the comprehensive income statement instead of theincome statement, if this does not entail accrual errors in measuringthe result. The Group has not fully assessed the impact this standardwill have on the financial statements. The Group is planning to applyIFRS 9 once the standard comes into force and is approved by the EU. The standard comes into effect for financial periods that start on1 January 2015. The Group also wants to look at the impact of theremaining 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 whethera company should be included in the consolidated financial statements.The standard provides expanded guidance on determining whethercontrol exists in cases where this is difficult. The Group has not con-sidered all the possible consequences of IFRS 10. The Group plans toapply the standard in the 2013 financial year even though the EU doesnot require its application before 1 January 2014.

IFRS 12 Disclosure of Interests in Other Entities contains disclosurerequirements for an entity's involvement in subsidiaries, joint arrangements, associated companies, unconsolidated SPEs/structuredentities. The Group has not assessed the full effects of IFRS 12. TheGroup plans to apply the standard in the 2013 financial year eventhough the EU does not require its application before 1 January 2014.

IFRS 13 Fair value Measurement defines the term «fair value» in thecontext of IFRS, provides a consistent description of how fair value isdetermined in the IFRS and specifies what additional information isto be disclosed when fair value is used. The standard does not expandthe scope of recognition at fair value, but provides guidance on theapplication method where its use is already required or permitted byother IFRSs. The Group applies fair value as the measurement crite-rion for certain assets and liabilities. The Group has not assessed thefull effects of IFRS 13. The Group is planning to apply IFRS 13 in the2013 financial year.

Besides these, there are no other IFRSs or IFRIC interpretations whichare not currently in effect and would be expected to have a materialeffect on the financial statements.

Foreign currency translationFunctional currency and presentation currencyThe accounts for each unit in the Group are measured in the currencyused where the unit primarily operates (functional currency). Tran-sactions in foreign currencies are translated into the functional currencyusing the exchange rate at the time of the transaction. The consolidatedfinancial statements are presented in Norwegian kroner (NOK) whichis the parent company's functional currency and the presentationcurrency of the Group. Foreign companies that are included in the

Notes

23

Group and which use a different functional currency are translated intoNorwegian kroner using an average exchange rate for the year forincome statement and the prevailing exchange rate on the reportingdate for the balance sheet. Any translation differences are reported incomprehensive income for the period and are disclosed separatelyunder equity. All figures are presented in NOK thousands unlessotherwise 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 liabilitiesdenominated in foreign currencies are recognised through profit or loss.If the currency position is considered to be a cash flow hedge orregarded as hedging the net investment in a foreign business, theappurtenant gains or losses are reported in comprehensive income.

Currency gains and losses in conjunction with loans, cash and cashequivalents 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 effectof the currency translation of the amortised cost in the foreign currencyand other changes in the carrying amount. Currency translation of theamortised cost is recognised through profit or loss while other changesin the carrying amount are reported in comprehensive income. Theeffects of changes in foreign exchange rates on non-monetary items(both assets and liabilities) are incorporated into the assessment of fairvalue. Exchange differences on non-monetary items, such as shares atfair value through profit or loss, are recognised through profit or lossas 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

SubsidiariesThe consolidated financial statements include SpareBank 1 GruppenAS 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 morethan half the voting rights. Subsidiaries are consolidated from the dateat which control is ceded to the Group and unconsolidated when thecontrol is lost.

The acquisition method is used when accounting for acquisitions ofsubsidiaries. Acquisition cost is measured as the fair value of assetstransferred as consideration. Identified assets, assumed liabilities andassumed or incurred contingent liabilities are recognised at fair valueat the acquisition date, irrespective of any non-controlling interests.That amount of the acquisition cost that exceeds the fair value ofidentifiable net assets in the subsidiary is recognised in the balance sheet as goodwill. If the acquisition cost is less than the fair value ofnet 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 astransactions with third parties. The effect of all transactions withnon-controlling owners is reported in equity where there is not achange in control. Such transactions will not result in goodwill or gainsor losses. When control ceases, the remaining ownership interestsare to be measured at fair value, and gains and losses are recognisedthrough profit or loss.

Associated companiesAssociated firms are firms where companies in SpareBank 1 Gruppenhave significant influence, but not control. Significant influence nor-mally exists for investments where the Group has between 20% and50% of the voting rights. Investments in associated companies are initially recognised at acquisition cost and subsequently measuredusing 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 isrecognised through profit or loss and added to the carrying value of theinvestments, in addition to the share of comprehensive income in theassociated company and the effect of any errors or policy changes. TheGroup does not recognise the share of losses if this would cause the carrying value of the investment to become negative.

Joint venturesInterests in joint ventures may consist of joint operations, joint ventureassets and joint venture activities. Joint control means that SpareBank 1Gruppen through contractual agreements exercises shared controlover economic activity with other participants. Joint ventures arerecognised using the equity method.

Investments in subsidiaries and associated companies recorded inthe parent company's financial statementsInvestments in subsidiaries and associated companies are valuedusing the cost method. If there is objective evidence of lasting impair-ment, the shares are written down. A previously recognised impairmentis reversed if the reason for the impairment no longer exists.

Segment informationOperating segments in the note are reported in the same way as in theBoard 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 collectionand 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 unitsdo no translate their figures for IFRS before they are reported internally.These segments are reported in the note in the same way that they arerecognised in accordance with IFRS.

Loans and receivablesAcquired portfolios Acquired portfolios are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. Theseare accounted for at amortised cost using the effective interest method.

Trade receivables from factoring activitiesTrade receivables from factoring activities are evaluated in two ways.

In those instances where the factoring business has not taken over thecredit risk (risk associated with debtors' inability to service and repaytheir outstanding loans) only the prepayment that has been paid onreceivables that have been transferred to the factoring company arerecorded on the balance sheet, under «Loans to customers and recei-vables from credit institutions». When the factoring business takes overthe credit risk, the gross receivables are recorded and included in thebalance sheet under «Other assets». The portion of these trade recei-vables that is not financed is included in the balance sheet under«Other liabilities».

ProvisionsLoss 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 nominalvalue less provisions for expected losses. Provisions for losses are madeon 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 orloss, either through the trading portfolio or voluntary classification.This corresponds with how the investments are followed up. Certaininvestments 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.


Regular purchases and sales of investments are recognised on the trade date, which is the date on which the Group commits to purchaseor sell the asset. All financial assets which are not recognised at fairvalue through profit or loss, are initially recognised at fair value, withthe addition of appurtenant transaction costs. Financial assets carried atfair value through profit or loss are initially recognised at fair value,and transaction costs are recognised through profit or loss. Investmentsare removed from the balance sheet when the right to receive cash flowsfrom the investment ceases or when the right has been transferred andthe Group has transferred substantially all the risks and rewards incidental to ownership of the asset. Financial assets available for saleand financial assets recognised at fair value through profit or loss arevalued at fair value following initial recognition. Investments held tomaturity are recognised at amortised cost using the effective interestmethod. Bonds which the Group intends to hold to maturity, butwhich for various reasons, including not being traded in an active market, do not fulfil the criteria for held-to-maturity portfolios underIAS 39, are classified as a separate line item in the balance sheet,«bonds at amortised cost».

The fair value of listed investments is based on the current bid price.If the securities market is not active (or if this applies to a security thatis not listed) then the Group uses valuation techniques to determinethe fair value. These include recently performed transactions at market rates, reference to other instruments that are substantiallyidentical, and the use of discounted cash flow analysis and optionmodels. The techniques emphasise market information wherever possible and only use company-specific information where necessary.

Securities and derivatives at fair value through profit or loss Securities and derivatives at fair value through profit or loss are pre-sented under «securities at fair value» and «financial derivatives» onthe balance sheet, and changes in value are presented under «netrevenues from financial instruments at fair value through profit or loss»in the ordinary income statement.

This category has two subcategories: financial assets held for trading,and financial assets that management has classified at fair valuethrough profit or loss. A financial asset is classified in this category ifit has been acquired primarily for the purpose of generating a profitfrom short-term fluctuations in price, or if management elects to classify it in this category when this is permitted by the regulations.Classification of assets at fair value option (FVO) - applies to all financial assets that are acquired unless an alternative classification hasbeen made at the date on which the investment was made. Derivativesthat have not been designated as hedging instruments are classified asheld for trading.

Gains or losses from fair value changes of assets classified as «financial assetsat fair value through profit or loss», including dividends, are included inthe income statement under «net revenues from financial instruments at fairvalue through profit or loss» in the period in which they arise.

Securities available for sale Securities available for sale are presented under the line item «securities- available for sale» in the balance sheet, and value changes are shownunder «net revenues from financial assets available for sale» in com-prehensive income and any write-downs are included in «depreciationand impairment losses» in the ordinary profit or loss. Securities available for sale are non-derivative financial assets that have beenselected for inclusion in this category or which have not been classified in any other category. Securities which have been classified inthis category are also measured at fair value, while changes in valuefrom the initial recognition are reported in comprehensive income. Shares classified as available for sale in the Group are not actively traded in the market.

Investments held to maturity Investments held to maturity are presented under «bonds held tomaturity» in the balance sheet, gains/losses on sale are shown under«net revenues from bonds held to maturity» in the ordinary profit orloss and any write-downs are included in «depreciation and impair-ment losses» in the ordinary income statement. Investments held tomaturity are non-derivative financial assets quoted in an active market, with fixed or determinable payments and a fixed maturity

which Group management positively intends to hold until maturity.Such commercial paper and bonds are measured at amortised costusing the effective interest method.

Impairment of financial assetsAssets recognised at amortised costThe Group assesses at each balance sheet date whether there is objectiveevidence that a financial asset, or a group of financial assets, is impaired.Impairment losses on financial assets or a group of financial assets arerecognised though profit or loss only if there is objective evidence ofan impairment in value as a result of one or more events that occurredafter the initial recognition of the asset (a «loss event») and this lossevent (or events) has an impact on the estimated future cash flows thatcan be reliably estimated.

For acquired portfolios and investments in bonds held to maturity theamount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flowsdiscounted at the financial asset's original effective interest rate. Thecarrying amount of the asset is reduced and the amount of the loss isrecognised in profit or loss. If the impairment loss is subsequently reduced, and the reduction can be objectively connected to an eventthat took place after the impairment loss was recognised, the previouslyrecognised impairment loss is reversed in income statement.

Assets classified as available for saleThe Group assesses at each balance sheet date whether there is objective evidence that a financial asset, or a group of financial assets,is impaired. For equity instruments classified as available for sale, asubstantial or long-term reduction in the fair value of the instrumentbelow acquisition cost will also be an indication that the value of theasset has become impaired. The Group regards a reduction in value of20% as being substantial and a reduction in value that has persistedfor more than 6 months as being long-term. If these indications exist,and impairment losses have previously been reported in comprehensiveincome, the accumulated losses that have been recognised in com-prehensive income will be reclassified to the income statement.

The amount is measured as the difference between the acquisition costand the current fair value, less impairment losses previously recognisedthrough profit or loss. Impairment losses recognised in the income statement for an investment in an equity instrument shall not bereversed through profit or loss.

Derivatives Derivatives consist of currency and interest rate instruments, andinstruments connected with structured products. Derivatives arerecorded at fair value through profit or loss on the date at which thederivatives are purchased. Subsequent changes in fair value are recorded through profit or loss.

Offsetting of financial assets and liabilities A financial asset or liability is offset and its net value presented in thebalance sheet when the company a) has a legal netting right and b)intends to settle the net basis and/or realise the asset and settle the liability at the same time.

Intangible assetsGoodwillGoodwill is the difference between the acquisition cost of a business andthe fair value of the Group's share of net identifiable assets in the busi-ness at the date of acquisition. Goodwill arising from the acquisition ofsubsidiaries is classified as an intangible asset. Goodwill is tested annu-ally for impairment, and carried at acquisition cost less a deduction forwrite-downs. Impairment losses on goodwill are not reversed. Gains orlosses on the sale of a business include the carrying amount of goodwillappurtenant to the business divestiture. In subsequent impairment testing, goodwill is allocated to the cash-generating units or groups ofcash-generating units that are expected to benefit from the synergies ofthe combination which gave rise to the goodwill.

DevelopmentCapitalised development costs include the costs of materials, directsalaries and a proportion of the overheads. Other development costs areexpensed to the profit or loss in the period in which they are incurred.

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Capitalised development costs are recorded at cost less accumulatedwrite-downs and impairment losses.

LicencesLicences have a limited useful economic life and are recognised on thebalance sheet at acquisition cost less accumulated depreciation. Licences are depreciated using the straight line method over theirexpected useful economic lives.

SoftwareStandard software that fulfils the criteria for recognition in the balancesheet is recorded at acquisition cost (including expenses in conjunctionwith making the programme operative), and is depreciated on astraight-line basis over its expected useful economic life. Software developed in-house principally follows the same policies as describedfor research and development.

Costs for maintaining the software are expensed as they are incurred.Costs directly connected to developing identifiable and unique soft-ware that is owned by the Group is recognised in the balance sheet asan intangible asset when the following criteria are fulfilled:

it is technically possible to complete the software so that it willbe available for use management intends to complete the software and use or sell it it can be demonstrated how the software will generate probablefuture economic benefitssufficient technical, financial or other resources are available tocomplete and use or sell the softwarethe costs can be reliably measured.

Direct costs include personnel costs for software development personnel and a portion of directly attributable overheads. Otherdevelopment costs that do not fulfil these criteria are expensed as incurred. Development costs that are expensed may not be recognisedin the balance sheet as an asset in subsequent periods. The carryingamount of software developed in-house is depreciated on a straight-line basis over its expected useful economic life.

Other intangible assetsIn conjunction with the acquisition of a business an analysis of excess value is undertaken, and intangible assets that are identified arerecognised in the Group's balance sheet. The Group has identifiedexcess value linked to brands, customer relationships and softwaretechnology. The excess values are calculated using historical datathat has been extrapolated, adjusted for uncertainty and subsequentlydiscounted. Customer relationships and software technology aredepreciated on a straight-line basis over their useful economic lives.

Subsequent costsSubsequent costs relating to the carrying value of intangible assets arecapitalised only when they increase the future economic benefits flowing from the asset. All other costs are expensed in the period inwhich they are incurred.

AmortisationAmortisation is calculated and expensed on a straight-line basis overthe estimated useful economic life of the intangible asset, unless its life-time is unlimited. Intangible assets are amortised from the date onwhich they are available for use.

Intangible assets with the exception of goodwill and intangible assetswith indefinite lives have estimated lifetimes of between 2 and 10years.

Intangible assets with the exception of goodwill and intangible assetswith indefinite lives are subject to impairment testing in accordancewith IAS 36 when the circumstances warrant it.

Tangible fixed assetsThe Group's tangible fixed assets consist of machinery, fixtures and fittings, vehicles and buildings used by the Group for its own activities. The Group's own properties that it uses are revalued at fair valueevery 3 or 5 years. The assessment of value is based on an internal valu-ation model described under investment properties. Other tangible

fixed assets are recognised at acquisition cost, less depreciation.Acquisition cost includes costs directly linked to acquiring the fixedasset.

Subsequent costs are added to the carrying value of the fixed asset orare recognised separately when it is probable that future economicbenefits linked to the cost will flow to the Group, and the costs can bereliably measured. The carrying amount relating to replaced parts isexpensed. Other repairs and maintenance costs are recorded throughprofit or loss in the period in which the costs are incurred.

Re-evaluations of the Group's own properties that it uses are recognisedthrough comprehensive income and as the value adjustment reserve.Decreases that offset previous fair value increases on the same asset aretreated for accounting purposes correspondingly. The difference between depreciation based on the revalued asset value (depreciationthrough profit or loss) and depreciation based on the tangible fixedasset's acquisition cost is transferred from the revaluation reserve toretained earnings.

Fixed assets are depreciated on a straight-line basis, with the tangiblefixed asset's acquisition cost, or revalued asset value being writtendown to the residual value over its expected useful economic life,which is:Buildings 50 yearsMachinery, fixtures and fittings, and vehicles 3-10 years

Tangible fixed assets which are depreciated are tested for impairmentwhen there are indications that future earnings cannot justify the carrying value of the asset. The difference between the carryingamount and the recoverable value is expensed as an impairment loss.The recoverable value is the higher of an asset's fair value less costs tosell and its value in use. At each reporting date, an assessment is madeas to whether there is an indication that previous impairment losseson non-financial assets should be decreased.

Investment propertyProperties that are leased to tenants outside the Group are classifiedas investment properties. Investment properties are measured at fairvalue. Changes in value are reported through profit or loss under theline item «net income from investment properties». The properties areevaluated individually on the basis of discounted cash flow projections.The required rate of return takes into account interest rates, the generalrisk in the property market and the specific risk for the individual property. The fair value measurement is updated every 6 months.Rental income, operating costs and the effect of value changes linkedto investment properties are presented separately in notes 19 and 33.

Impairment of non-financial assetsIntangible assets with indeterminable useful economic lives and goodwillare not amortised, but tested annually for impairment. Tangible fixedassets and intangible assets which are depreciated are tested forimpairment when there are indications that future earnings cannot justify the carrying value of the asset. The difference between thecarrying amount and the recoverable value is expensed as an impair-ment loss. The recoverable value is the higher of an asset's fair valueless costs to sell and its value in use. When testing for impairment, thefixed assets are placed into the smallest identifiable group of assets thatgenerates cash inflows that are largely independent from the cashinflows from other groups of assets (cash-generating units). At eachreporting date, an assessment is made as to whether there is an indication that previous impairment losses on non-financial assets(except goodwill) should be reversed.

Customer assets Financial instruments and other funds held by the Group but owned byinvestors (customer assets) are not recognised in the balance sheet. If thecustomer assets exceed the customer liabilities (customer debt), theovershoot is the property of the Group and is recorded in the balancesheet under the «other assets» item. If the customer assets do notfully cover the client liability, the shortfall is the Group's debt to thecustomer and is recorded under «other liabilities» in the balance sheet.

Cash and cash equivalentsCash and cash equivalents include cash and bank deposits, other


short-term, highly liquid investments with original maturities of 3months or less and bank overdrafts. Bank overdrafts are presented inthe line «deposits from and liabilities to customers and financialinstitutions».

Payable tax and deferred taxThe tax cost comprises current and deferred tax. Tax is recognisedthrough profit or loss, except to the extent that it relates to itemsreported in comprehensive income or recognised directly in equity. Inthese instances, tax is also reported in comprehensive income orrecognised directly in equity.

Current tax for the period is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date.

Deferred tax is accounted for using the liability method. Deferred taxis recognised on all temporary differences between the tax bases ofassets and liabilities and their carrying amounts. If deferred tax ariseson initial recognition of a liability or an asset in a transaction, whichis not a business combination, and at the date of the transaction doesnot affect either the financial result or the tax result then it is not recor-ded in the balance sheet. Deferred tax is determined using tax rates andlaws that have been enacted or substantively enacted by the balancesheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it isprobable that future taxable profit will be available against which thetemporary differences can be utilised.

When assessing the likelihood, historical earnings and estimated future margins are included in the evaluation.

Deferred income tax is provided on temporary differences arising oninvestments in subsidiaries and associated companies, except wherethe timing of the reversal of the temporary differences is controlled bythe Group and it is probable that the temporary differences will notreverse in the foreseeable future.

Deferred tax associated with value changes on properties owned inseparate companies has not been calculated. Realisation of the properties in practice will be through the sale of shares or interests. Anygains or losses on realising shares or interests will not be taxable dueto the tax exemption method and in the opinion of the Group the finan-cial statements provide the fairest representation of the information whenthe deferred tax is not recognised on these types of value changes.

Deferred tax assets and deferred tax shall be set off if there is a legalright to set off deferred tax assets against deferred tax, and deferred taxassets and deferred tax apply to income taxes imposed by the same taxauthority for either a taxable firm or different taxable firms that intendto settle tax liabilities and tax assets on a net basis.

Securities issuedThe Group has securities issued classified in one of the following categories: financial liabilities recorded at changes in fair value throughprofit or loss or other financial liabilities recorded at amortised cost.Securities issued are initially recognised at cost, which is the fairvalue of the received proceeds less transaction costs. After its initialrecognition, the Group measures securities issued with a variablerate at amortised cost using an effective interest rate method, while theGroup's securities issued with a fixed rate are measured at fair valuethrough profit or loss. Securities issued cease to be recognised from themoment the rights to the contractual terms are redeemed, cancelled orexpire.

Securities issued at amortised costSecurities issued that are recognised at amortised cost are recognised inthe «securities issued» item in the balance sheet and interest costs fromsecurities issued are recognised in the «interest costs» item in the ordi-nary result based on an effective interest rate method. Any differencesbetween the cost and the settlement amount at maturity are accrued overthe term of the loan by applying the effective interest rate on the loan.

Securities issued at fair value through profit or loss Securities issued at fair value through profit or loss are recognised in

the «securities issued» item in the balance sheet and changes in valueare recognised in «net income from financial instruments are fairvalue through profit or loss» in the ordinary result.

Securities issued are classified in this category if the classification eliminates or significantly reduces measurement inconsistencies thatwould otherwise have arisen when measuring borrowing or whenrecognising related gains or losses on the basis of various factors.

Fair value is based on the current sales price. If the market is not active (or if this applies to a security that is not listed), then theGroup uses valuation techniques to determine the fair value. Theseinclude recently performed transactions at market rates, reference toother instruments that are substantially identical, and the use of discounted cash flow analysis and option models. The techniquesemphasise market information wherever possible and only use company-specific information where necessary.

PensionsThe Group has both defined contribution pension plans and definedbenefit pension schemes. The pension schemes are funded by pay-ments to SpareBank 1 Livsforsikring AS.

A defined contribution plan is a pension scheme in which the Groupmakes a fixed payment to the insurance company. The Group does nothave any legal or other obligation to make additional payments if theinsurance company does not have sufficient funds to pay all theemployees the benefits that have accrued during current and prior periods. The contributions are accounted for as payroll cost as they falldue for payment.

A defined benefit plan is a pension scheme which defines a specifiedmonthly benefit that the employee will receive on retirement. TheGroup's group defined benefit scheme ensures members a pension thatamounts to 70% of final salary (up to 12G) until they are 77 years oldwith subsequent gradual reductions. Salary payments exceeding 12 Gare secured by a defined contribution-based arrangement. The definedbenefit scheme was closed to new employees from 1 May 2005 onwards.

In addition, there are obligations in conjunction with contractual pen-sions (AFPs) and certain special agreements relating to early pensionersand supplementary pensions. The old AFP provision contains simplya provision for former employees aged between 64 and 67 years oldwho are currently AFP pensioners. The old AFP scheme will be fullyphased out by 2015.

The liability recorded in the balance sheet linked to defined benefitschemes is the present value of defined benefits at the balance sheetdate less the fair value of pension plan assets. The pension liabilitiesare calculated annually by an independent actuary using a straight lineaccrual method.

The present value of the defined benefits is determined by discountingestimated future payments with a discount rate based on the rate fora bond issued by a company with a high credit rating, the covered bondrate since this market is regarded as deep enough. The covered bondrate must have almost the same maturity as the related pension liabi-lities. Use of the corporate bond rate as the discount rate requires theexistence of corporate bonds with long maturities and high quality inthe same currency, as well as a deep market for such bonds. Marketplayers have asserted that the covered bond market is sufficientlydeep and that pricing in the market is reliable. Analyses conducted by,for example, market players such as Gabler-Wassum and the Bank'sown analyses, which take into account interest rate swap agreements,support the assertion that a deep and liquid market exists for corpo-rate bonds with a high credit rating, concentrated on covered bonds.The Norwegian covered bond market has become better developed afterthe financial crisis and has a high credit rating. The companies in SpareBank 1 Gruppen have therefore chosen the covered bond rate astheir discount rate for calculating pension liabilities. In its updated guidelines for pension assumptions dated 31 December 2012, NRS alsoconcludes that the covered bond rate cannot be rejected as a basis forfixing the discount rate. The remaining average accrual period for members of the defined benefit plan in SpareBank 1 Gruppen has beencalculated as around 9 years.

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SpareBank 1 Gruppen has also chosen to strengthen the current lifeexpectancy table, K2005, by 10% since the new life expectancy table,K2013, from the authorities will be published in March 2013. Actuarialgains or losses (estimate discrepancies) due to new information orchanges in the actuarial assumptions are recognised in comprehensiveincome/equity in the period in which they arise.

Amendments to the pension plan's benefits are recognised through pro-fit or loss or recognised in income on an ongoing basis, unless the rightsunder the new pension scheme are conditional upon the employeeremaining in service for a specific period of time (the vesting period).In this case, the cost linked to the change in benefits is amortised ona straight-line basis over the vesting period.

A law on state subsidies to employees who take out contractual pensions in the private sector (AFP) came into force on 19 February2010. Employees who take early retirement under the AFP scheme witheffect from 2011 or later, will be given benefits under the new scheme.The new AFP scheme constitutes a lifelong entitlement in addition tothe National Insurance Scheme and can be taken out from the age of62. In the new AFP scheme the plan is for the company to pay a totalpremium based on the annual salary of the employee. The premiumis calculated based on a fixed percentage of annual salary between 1and 7.1 times the average National Insurance Scheme base amount (G).The annual premium rate for 2012 represents 1.75%. Premiums shallnot be paid for employees after the year in which they become 61 yearsold. The accrued entitlements in the new scheme are calculated basedon the employee's lifetime income, which includes all prior workyears in the basis for the pension entitlement. The new scheme is funded by the Government covering 1/3 of the pension expenses andthe employer covering 2/3.

Subordinated loans and hybrid tier 1 capital Subordinated loans have a lower priority than all other types of debt.A time limited subordinated loan can account for 50% of the core capital in the capital adequacy ratio, while perpetual subordinatedloans may account for up to 100% of the core capital. Subordinatedloans are classified as a liability on the balance sheet and are measuredat amortised cost.

Hybrid tier 1 capital is a bond with a nominal interest rate, where SpareBank 1 Gruppen is not under a duty to pay interest during periods when dividends cannot be disbursed, and neither is the investorentitled to interest payments that have not been made, i.e. the interestdoes not accrue. Hybrid tier 1 capital is approved as a constituent ofcore capital, up to a limit of 15% of total core capital. The FinancialSupervisory Authority of Norway may require that the hybrid tier 1capital be written down proportionally with equity if SpareBank 1Gruppen's core capital adequacy falls below 5% or total capital adequacy is under 6%. The written down amount relating to thehybrid tier 1 capital shall be written up before dividends can be disbursed to shareholders or the equity written up. Hybrid tier 1 capital is recognised at amortised cost.

Insurance provisions – life insuranceAll the products in SpareBank 1 Livsforsikring AS are classified asinsurance contracts.

Insurance contracts shall be evaluated in accordance with IFRS 4. Thestandard does not contain specific valuation principles beyond certainlimited conditions. Accounting policies applied by the accounting entity in the preparation of prior financial statements are permitted onthe condition that the insurance provisions are sufficient under Norwegian regulations. In order to document this, the company mustcarry out an adequacy test. SpareBank 1 Livsforsikring AS carriesout such a test annually. This shows that previously applied policiesrelating to insurance provisions for life insurance may be applied.

The technical provisions in life insurance consist of the premiumreserve, supplementary provisions, securities adjustment reserve,claims provisions, risk equalisation fund and other technical provi-sions. The provisions also include the contribution fund, premium fundand pensioner's profit fund.

Critical assumptions and changes in technical conditionsThe guaranteed rate follows the regulations established by the Financial Supervisory Authority of Norway. From 1 January 2011 theguaranteed rate was 2.5% for new contracts, while the guaranteed ratefor newly accrued entitlements for group pensions was 2.5% from 1January 2012. Moreover, new earnings and accrued entitlements follow the maximum permitted guaranteed rate that applied at the timethe entitlements were earned.

The mortality assumptions are largely based on common surveys inFNO, while the estimates for disability are mainly based on the company's own experience. The mortality assumptions for peoplewith a disability take into account the correlation between disabilityand mortality. A new industry tariff with safety margins that takeaccount of higher life expectancy, K2005, was introduced in 2008 forgroup defined benefit pensions and paid-up policies from group defined pensions.

The reserve provisions and premiums are established on the basis ofa policy that there should be a safety margin in the reserves and thepremiums. The safety margins in the premiums and reserves are notquantified, but assessed by considering the levels of uncertainty andthe maturities of the liabilities.

The ordinary premium reserve in the company is calculated using prospective policies on the same tariff basis as the premium tariff. IBNRand RBNS provisions have been made, using statistical methods basedon SpareBank 1 Livsforsikring AS's own experience.

The securities adjustment reserve Provisions for the securities adjustment reserve correspond to the netunrealised excess value of financial assets, with the exception ofinvestments in property, measured at fair value and included in thegroup portfolio of SpareBank 1 Livsforsikring AS. The net unrealisedvalue is determined by undertaking a total assessment of the portfolio.

Risk equalisation fundThe purpose of the fund is to absorb fluctuations in the risk result overtime. The provisions are not distributed across the individual insurancecontracts and classified as equity.

Technical provisions - general insuranceInsurance contracts shall be evaluated in accordance with IFRS 4. Thestandard does not contain specific valuation principles beyond certainlimited conditions.

The Financial Supervisory Authority of Norway has established mini-mum requirements for the various types of provisions, and provisionshave been made for unearned premiums, claim provisions, securityprovisions and reinsurance provisions. The minimum requirements forpremium provisions and claim provisions have also been met foreach industry, and for security provisions in each industry group.

The regulation on claim provisions in insurance activities has beendefined more precisely to also include expected indirect costs ofclaims in connection with incidents of harm which have occurred ata certain date but have not yet been settled (IBNS losses). Please referto the 2011 annual report for more information on implementation. Theclarification concerning claim provisions means claims processing costsmust be included in the measurement of the year's compensationcosts.

Natural hazard provisions and guarantee provisions are not regardedas technical insurance provisions under IFRS 4. These provisions aredisclosed under retained earnings.

The reinsured's portion of technical provisions is presented as a recei-vable in the consolidated financial statements under IFRS.

ProvisionsThe Group recognises a provision for restructuring and legal claimswhen there is a present legal or constructive obligation that has arisenas a result of a past event, payment is probable and the amount can beestimated with sufficient reliability. Provisions for restructuring costsinclude termination benefits for employees. No provisions are made


for operating losses. Provisions are assessed at each balance sheetdate and adjusted to reflect the latest best estimates.

In instances where there are several liabilities of the same type, the likelihood that the liabilities will be settled is determined by evaluatingsuch liabilities as a whole. Therefore a provision is made even thoughthe likelihood of a settlement associated with certain individual circumstances may be low.

Provisions are measured at the discounted present value of the expectedstream of payments to fulfil the obligation. An estimated risk-freeinterest rate is used as the discount rate before tax which reflects thecurrent market situation and the specific risk linked to the liability.

Termination benefitsTermination benefits are paid when employment is terminated bythe Group prior to the normal date of retirement or when an employeeaccepts voluntary retirement in return for these benefits. The Grouprecognises termination benefits when it has demonstrably committedto either terminate the employment of current employees in accordancewith a formal, detailed plan which the Group is irrevocably committedto, or to provide termination benefits as a result of an offer that wasmade to encourage early retirement. Termination benefits which aredue more than 12 months after the balance sheet date are discountedto their net present value.

Trade payables and other current liabilitiesTrade payables are measured at fair value upon initial recognition. Sub-sequent measurements of trade payables are made at amortised cost,determined using the effective interest method.

Deposits from and liabilities to customers and financial institutionsDeposits from and liabilities to customers and financial institutions arelargely valued at amortised cost.

Interest income and interest costsInterest income and interest costs linked to assets and liabilities measured at amortised cost are recognised through profit or loss on anongoing basis based on the effective interest method. For deposits fromcustomers and financial institutions and liabilities to financial institutions carried at fair value, the interest portion is expensed as interest expense, while other value changes are classified as incomefrom financial instruments. All fees in conjunction with interest-bearing deposits and loans are included in the calculation of effectiveinterest rates and are thus amortised over the expected maturities.

Commissions and commission costsCommissions and commission costs are generally recognised on anaccrual basis as the services are provided. Fees in conjunction withinterest-bearing instruments are not recorded as commissions, butare included in calculating the effective interest rate and recognisedthrough profit or loss accordingly. Fees from counselling are earned inaccordance with counselling agreements, generally as the servicesare rendered. The same applies to ongoing management services.Fees in conjunction with selling or acting as an intermediary forfinancial instruments, property or other investments which do notgenerate balance sheet items in the SpareBank 1 Gruppen's consoli-dated financial statements, are recognised through profit or loss whenthe transactions are completed.

Revenues from debt collection operationsUnresolved debt collection cases are evaluated in accordance with thepercentage-of-completion method. This method requires revenues tobe recognised in the accounting period in which the debt collection services are rendered, in line with progress in the debt collectioncase. The evaluation of earned income at the balance sheet date is deter-mined on the basis of an assessment of the debt collection cases' turnover rate, estimated degree of completion and actual fee incomeduring the last 6 months.

Fee income is recognised when payments from the debt collection casesare received. Changes in the carrying value of unresolved debt collection cases are presented in the income statement under the lineitem «other income». Book value is recognised as current assets underthe line item «other assets».

Dividend income Dividends are recognised as income through profit or loss when theright to receive payment is established.

Events after the balance sheet dateThe financial statements are regarded as having been approved forpublication once they have been considered by the Board. The AnnualGeneral Meeting, the Supervisory Board and regulating authorities maysubsequently decide not to authorise the financial statements, butmay not change them.

Events that take place before the date on which the financial statementsare approved for publication, and which affect conditions that werealready known on the balance sheet date, will be incorporated into thepool of information that is used when making accounting estimates andare thereby fully reflected in the financial statements. Events thataffect conditions which were not known about at the balance sheet dateare disclosed if they are material.

The financial statements have been prepared on the basis of a goingconcern assumption. In the opinion of the Board, the conditions formaking this assumption existed at the time the financial statementswere approved for presentation.

Share capital and share premiumOrdinary shares are classified as equity. Costs which directly relate tothe issuance of new shares or options with tax deductions are recog-nised as a reduction of compensation received in equity.

DividendsThe Board's proposed dividend distribution is included in the Directors'Report and the statement of changes in equity. Proposed dividends tothe parent company's shareholders are classified as equity until finallyapproved at the Annual General Meeting. From the date on which thedividends are approved, they are classified as liabilities.

Group contributionsGroup contributions to subsidiaries are recorded as an increase ininvestments in subsidiaries given that the transfer increases the valueof the parent company's shares in the subsidiary. Proposed groupcontributions rendered are classified as equity until finally approvedat the Annual General Meeting. From the date on which the group contributions are approved, they are classified as liabilities.

NOTE 3 – CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Group prepares estimates and makes assumptions concerning thefuture. These estimates and judgements are continually re-evaluatedand are based on historical experience and a number of other factors suchas future expectations believed reasonable given the current circum-stances. Yet, as per definition, these accounting estimates will seldomfully match the actual results. Estimates and assumptions that representa significant risk of material adjustments to the carrying amounts of assetsand liabilities for the next financial year are discussed below.

Fair value of derivatives and other financial instrumentsThe fair values of financial instruments that are not traded in an activemarket are determined using varying valuation techniques. The Groupconsiders and chooses techniques and assumptions that reflect marketconditions on the balance sheet date as closely as possible. For a number of financial assets classified as held for sale yet not traded in an active market, the Group has used discounted future cash flows forvaluation. The valuations require a high degree of judgement. When assessing whether fair value is lower than cost, the Group takes into consideration, among other factors, the future prospects in the relevantindustry, the company’s financial position and technological develop-ment.

Investment propertiesThe insurance companies in SpareBank 1 have large property investmentportfolios. The properties are owned by wholly owned private limitedcompanies, which own each individual property. The properties are valued individually using the company's internal valuation model by

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discounting estimated future cash flows for the individual property.The required rate of return takes into account interest rates, generalrisk in the property market and the specific risk for the individual property.

For control purposes, external valuations are carried out for a sample of properties in the portfolio in parallel with the internalvaluation. The sample consists of a randomly selected, predefinednumber of properties. The sample subject to external valuation is rolled over for a period of 3 years.

The property portfolio is assessed at fair value on the balance sheetday. Fair value is the amount the individual property could be sold forin an arm's length transaction between well-informed, voluntary parties. The effect of latent tax is calculated outside the valuation modelwhen the properties are valued. The latent tax often results in a discountin relation to the property value when trading such companies thatown properties. Latent tax is calculated at 7% of the difference between fair value and taxable value, reduced by booked deferred tax inthe company financial statements for the properties. The net effect is treated as a write-down of the value of the property companies.

Please also refer to note 33 Investment properties.

Sensitivity associated with propertiesProperties are especially sensitive to the discount rate. If no other parameters change, a rise/fall of 0.25% in the required rate of return willreduce/increase the values by around NOK 166 million, or about 3.4%.After an existing tenancy expires, premises are leased out again on thecurrent market terms. If the net lease income decreases/increases by 1%when properties are leased out again, their market value will fall/rise byaround 0.80%. This represents a change in value of around NOK 40 million. A 1% higher/lower expected floor space vacancy will reduce/increase values by 1% or around NOK 50 million.

PensionsThe net present value of pension liabilities depends on several factors asdetermined by actuarial assumptions. The assumptions used in calculating net pension cost (income) include among other things, the discount rate. Changes in these assumptions affect the carrying amountof the pension liabilities.

The Group determines a suitable discount rate at the end of each year.This discount rate is used to calculate the net present value of future estimated cash out-flows needed to settle the pension liabilities. TheGroup has from 31 December 2012 switched to using the covered bondrate when fixing a suitable discount rate since this market is considereddeep enough.

Other pension assumptions are partly based on market conditions. Moredetailed information is provided in note 23.

Potential changes regarding expected annual increases in salaries, discount rates and so on, can have a significant impact on the calculated employee pension liabilities. The guidance note issued by theNorwegian Accounting Standards Board specifies that changes of +/- 1%in the discount rate represent a change of 15 - 20% in total pension liabilities.

Estimated impairment of goodwillThe Group conducts annual impairment tests to identify any possible impairment of goodwill (as described in note 35). The recoverableamount for cash generating units is determined by calculating discounted future cash flows. These calculations require estimates consistent with the Group's market valuation.

Insurance provision estimates in life insuranceInsurance provisions in life insurance are based on factors such as lifeexpectancy and mortality rate, disability rate, and interest rate expecta-tions. Changes in such assumptions affect the size of the insurance provisions. The premium provision is calculated as the cash value of thecompany’s liabilities less the cash value of future premiums. The guaranteed rate used in the calculation is the guaranteed rate that applies for the individual insurance contract, and the calculation isdone according to the regulations governing premiums and insurancefunds in life insurance. The maximum accepted guaranteed rate is assessed by the authorities on the basis of the interest rate for long-term government bonds. Potential changes in the guaranteed rate willaffect the size of the liabilities.

The mortality assumptions are largely based on common surveys inFNO, while the estimates for disability are mainly based on the company's own experience.

There are claim provisions for all products, including both reported butnot settled (RBNS) and incurred but not reported (IBNR) losses. IBNR provisions and RBNS provisions are calculated using statistical methodsbased on the company’s own experience.

Insurance provision estimates in P&C insuranceIn P&C insurance, estimates are primarily used in the calculation of technical provisions related to claim provisions. Insurance productsare classified in two main groups: short-tailed business and long-tailedbusiness. The classification is based on the time span from when a lossor damage occurs until the loss or damage is reported and finally settled.Long-tailed business primarily involves insurance related to personal injuries.

The basis for the claim provisions in SpareBank 1 SkadeforsikringGroup is the expected loss from claims incurred or future claims basedon reported damages. In addition to ongoing follow-up related to currentclaims, unsettled claims must be assessed annually. Provisions for IBNRand potential additional provisions related to long-tailed businessesare measured using models. Regression models are used as a starting pointfor vehicle or bodily injury, occupational injury and safety. Potential issues related to changes in the portfolio are also assessed. For short-tailed businesses, the IBNR is determined on the basis of reviews of theempirical data pertaining to the lag in the risk group during previousyears, in addition to changes in the portfolio, the frequency of claims,major injuries and so on. A retrospective measurement is also made toassess the estimates for the claim provisions against the development ofthe factors involved in the calculation: paid claims, individual provisions for reported claims and IBNR.

Provisions for losses related to a reinsurer's bankruptcy are measured atnet present value. The parameters in the basis of the calculation are future expected dividends, inflation and the payment status of the claim.

Sensitivity analysis for the life insurance company's assets The asset side of SpareBank 1 Livsforsikring AS is stress tested to indi-cate what the effect on the owner's profit would be were the followingscenarios to occur: A 20% fall in equity markets, 1.5% increase in inte-rest rates and 12% fall in the property market. These stress factorsmatch the stress factors in Stress Test II for equivalent risks. The stresstest scenarios were calculated as of 31 December 2012.

Scenario Impairment in NOK million

Fall in equity markets - 20% 427Rise in interest rates + 1.5% 255Fall in property values - 12% 447


31

NOTE 4–SEGMENT INFO

RMATION

Debt collections of old

claims and factoring

Life insurance

P&C insurance

Fund managem

ent

Brokering business

business

Other operations

Eliminations

Total

NOK 1 000

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

Total incom

e 1)

5 800 818

3 735 761

5 239 729

4 629 528

250 755

295 722

150 573

86 271

229 361

225 584

1 033 606

626 426

-1 052 274

-628 455

11 652 567

8 970 838

Segm

ent result

470 947

442 537

618 876

185 321

-20 386

21 842

-168 506

-154 793

25 152

27 875

912 426

490 520

-1 051 874

-626 163

786 634

387 139

Net profit for the period

182 884

531 041

476 130

90 699

-18 529

14 782

-124 372

-113 117

18 378

19 076

694 687

443 851

-785 803

-460 537

443 374

525 795

Minority interests' share of the profit

- -

- -

- -3 043

-4 110

- -

- -

- -

-3 043

-4 110

Assets per segm

ent

29 058 761

26 607 066

14 827 999

13 265 200

195 175

223 200

585 570

507 089

1 435 421

997 598

7 592 859

5 894 272

-7 392 323

-5 505 285

46 303 462

41 989 140

Liabilities per segm

ent

26 382 504

23 970 633

11 184 607

9 889 606

72 667

74 139

419 147

360 046

1 010 200

604 109

3 728 523

2 707 727

-1 797 857

-559 481

40 999 792

37 046 779

1)Costs directly related to income are included.

The Group's business areas are divided into life insurance, P&C insurance, fund managem

ent, brokering activities, debt collection and factoring, and other activities. The Group has no secondary segm

ent reporting.

This is consistent with internal reporting. Operating segm

ents are reported differently in the note than in the Board of Directors' Report. In the Board of Directors' Report the segm

ents are reported in the same way as for internal reports to

the Group's Board. This is due to the fact that som

e units do no translate their figures for IFRS before they are reported internally. These segm

ents are reported in the segm

ent note in the same way that they are accounted for under IFRS.

32

NOTE 5 – CAPITAL ADEQUACY RATIO

SpareBank 1 Gruppen is subject to the same capital requirements rules as insurance companies and other financial institutions.The requirement is 8% primary capital in relation to a risk weighted assets.


2012 2011 NOK 1 000 Weighting 2012 2011

Risk weighted assets- - Government, central banks, etc. 0 % - - - - Securities 10 % 400 659 354 185

69 306 56 799 Financial institutions 20 % 2 447 107 2 302 693- - Secured loans, etc. 50 % 391 791 357 362

6 604 060 5 710 999 Fixed assets 100 % 15 252 984 13 528 894- - Other assets 150 % 32 454 47 223

163 882 233 325 Goodwill and other intangible assets - - - - Assets related to investment choices 1 641 452 1 379 172

6 837 248 6 001 123 Total risk weighted assets 20 166 446 17 969 529

-163 882 -233 325 Excluding goodwill and other intangible assets - - 174 062 77 916 Posting outside the balance sheet 26 653 4 353

- - Net basis for calculation for institutions reporting in accordance with Basel II 2 806 477 2 001 138

- - Unrealised gains on financial investments -406 846 -218 338-45 863 -27 136 Deduction for primary capital in other financial institutions - -27 136

6 801 564 5 818 578 Total recorded assets and postings outside the balance sheet and weighted assets 22 592 730 19 729 5467 570 985 5 865 479 Total recorded assets 46 303 462 41 989 140

3 173 053 2 736 698 Equity 4 763 455 4 379 939- - Hybrid tier 1 capital 200 000 200 000

-22 932 -13 568 - 50% deduction for primary capital in other financial institutions - -13 568- - - Minimum requirement for reassurance coverage -39 591 -37 306

-687 488 -433 900 - Deduction for suggested dividends -687 488 -433 900- - - Deduction for unrealised gains on investment properties/tangible fixed assets -125 168 -128 978

- Unrealised gains/losses allocated to the company portfolio -22 865 -163 882 -233 325 - Deduction for deferred tax asset - -

- - - Intangible assets and goodwill -1 136 598 -1 092 6582 298 751 2 055 905 Total core capital 2 951 745 2 873 529

283 000 283 000 Perpetual subordinated loans 283 000 283 000- - 45% of unrealised value of properties 56 326 56 326

-22 932 -13 568 - 50% deduction for primary capital in other financial institutions - -13 568260 068 269 432 Total supplementary capital 339 326 325 758

2 558 820 2 325 337 Net primary capital 3 291 071 3 199 287

37,6 % 40,0 % Capital adequacy ratio 14,6 % 16,2 %

2 014 695 1 859 851 Surplus of primary capital 1 483 652 1 620 923

SpareBank 1 Gruppen

Note 6 – FINANCIAL RISK MANAGEMENT

Reporting financial risk factorsThis note describes risk management work in SpareBank 1 Gruppen. It describes the Group's:

General goalsOrganisation of the risk management function and establishedpolicy documentsMaterial risk exposuresFollow-up and management of risk factors

General goalsRisk management in SpareBank 1 Gruppen should support the Group'sstrategic development and achievement of its objectives, and ensurethe fulfilment of statutory capital requirements. Risk management isintended to ensure financial stability and sound asset management.This should be achieved by:

A moderate risk profileA strong risk culture characterised by a high awareness of riskmanagementStriving for optimal capital application within the adopted business strategyMaking the most of all synergy and diversification effectsAdequate core capital for the chosen risk profileAlways satisfying the current capital and solvency requirementsestablished by the authorities

Risk management organisationSpareBank 1 Gruppen introduced corporate risk management at thebeginning of 2012. The aim of this was to merge the Group's expert riskmanagement groups from SpareBank 1 Gruppen AS, SpareBank 1Skadeforsikring Group, SpareBank 1 Livsforsikring AS, SpareBank 1Markets AS, SpareBank 1 Gruppen Finans Group, and ODIN ForvaltningGroup. The goal is higher quality and more consistent risk managementinformation for the Group's board. With this structure the risk manage-ment functions in the subsidiaries report, in parallel, to their ownboards and the risk management function in SpareBank 1 Gruppen AS.

The Board of SpareBank 1 Gruppen AS is responsible for the generalstructure of the Group's risk management. Responsibility for overall riskmanagement in the Group lies with the executive vice presidentresponsible for strategy, risk management and analysis. This positionreports directly to the CEO of SpareBank 1 Gruppen AS. The risk management function in the parent company bears operational responsibility for structuring the Group's risk management. The riskmanagement function is responsible for ensuring consistent and comprehensive risk management across the Group's business areas. Itis also has a responsibility to identify specific Group level risks thatare not necessarily visible at a subsidiary level.

The Board receives reports on the Group's risk profile and expectedcapital needs on a quarterly basis, or as needed. The risk managementinformation provides a basis for the Group's capital planning.

Control CommitteeThe committee shall supervise that SpareBank 1 Gruppen's activitiesare conducted in an appropriate and reasonable manner in accordancewith laws and regulations, the articles of association, guidelines

established by the Supervisory Board and the Annual General Meeting,and directives issued by the Financial Supervisory Authority of Norway.

Audit CommitteeThe purpose of the Audit Committee is to function as a preparatoryorgan for the Group's board in matters relating to monitoring financialinformation and the Group's internal control and risk management.

Policy provisionsPolicy documents that have been approved by the Board at a Grouplevel provide a basis for the risk management structure and limits insubsidiaries. Group level policies have so far been established in thefollowing areas:

General risk management and internal control policyInternal control policyCompliance policyCapital management policyICAAP policyLiquidity and capital management contingency plan

Corresponding policies have been established at a subsidiary level thatsupport the Group's policies and guidelines.

Material risk exposuresSpareBank 1 Gruppen is an insurance dominated financial group.Financial risk arises as a result of uncertainty in connection with theachievement of goals during the ordinary activities of the Group'scompanies. Naturally enough, the Group's greatest exposure is relatedto life and P&C insurance activities. The risk associated with insuranceoperations arises as a result of the uncertainty concerning the frequencyand amount of payments in comparison with the companies' income.The insurance premium is invested in order to produce a return, andtherefore also creates financial exposure to market risk. At the sametime, events associated with operational and strategic risks, involvingpossible negative consequences for the Group's reputation, will poten-tially be risks inherent in the Group's activities.

The risk exposures that SpareBank 1 Gruppen regards as material, andwhich are encompassed by the Group's risk management systems,are described below.

Market riskThe risk of losses caused by changes in observable market variables,the most important of which are interest rates, currency exchange rates,security prices and property.

Ownership riskOwnership risk is defined as the risk that arises as a result of being anowner of a company, for example relating to the risk that the productcompanies assume in their operations, as well as the risk of a need toinject new equity into one or more of these companies.

Credit riskThe risk that the company's borrowers, intermediaries and reinsurersare unable to fulfil their obligations to SpareBank 1 Gruppen. Creditrisk also includes the risk of changes in general credit prices, the so-called spread risk, and reinsurance risk in the insurance companies.

Concentration riskThe risk associated with major commitments, industry concentrationand geographic concentration in credit or investment portfolios.

Insurance riskPremium risk is the uncertainty concerning the frequency and cost offuture insurance claims, and the risk of extreme events (disasters), incomparison with the premium income from the insurance business.Reserve risk is the uncertainty linked to reserves which have alreadybeen allocated for insurance events that have arisen.

Operational riskRisk that is due to inadequate or failing internal processes, failures byhumans, or failures in systems or external events. The definition alsoencompasses legal risk.

33

SpareBank 1 Gruppen AS

Risk management/compliance

SpareBank 1Livsforsikring AS

100 %

SpareBank 1SkadeforsikringGroup 100 %

SpareBank 1Markets AS

97,2 %

SpareBank 1Gruppen FinansGroup 100 %

ODIN Forvaltning AS

100 %






The figure shows the organisation of the risk management functionin SpareBank 1 Gruppen

The table below shows gross market risk (i.e. before making deductions for the securities adjustment reserve and additional provisions) basedon the VaR model:

Marked risk 99,5% confidence levelSpareBank 1 Gruppen group

MNOK 2012 2011

Interest rate risk 1 112 1 010Spread risk 893 575Equity risk 1 382 1 451Currency risk 61 48Risk linked to property 917 914Diversification -488 -538Total marked risk 3 876 3 460Diversification in % 13 % 16 %

SpareBank 1 Gruppen

Liquidity riskThe risk of not managing to refinance obligations or to finance anyincreased funding needs without substantial added cost.

Strategic and commercial risk Strategic and commercial risk is the risk of losses resulting fromchanges in external circumstances beyond the control of the company,such as regulatory matters, or inadequate earnings or supply of capital due to an erosion of confidence and the company's reputationin the market, i.e. with customers, counterparties, shareholders and theauthorities (reputation risk). Strategic risk also includes the risk oferrors of judgement in connection with, for example, company acquisitions or large IT investments.

Financial instruments strategyThe Group actively uses financial instruments to take positions in themarket and to reduce risk. The use of financial instruments is limitedto those instruments for which the risk and market value can be measured and monitored by the Group's risk management and profitability measurement systems. Derivatives which are not tradedin an active market are used solely for hedging purposes or if the Groupseeks physical settlement of the underlying asset/liability.

Capital managementThe Board of SpareBank 1 Gruppen AS has adopted a common riskmanagement policy for the Group, which is subject to annual review.A strategy, policies and limits have been established in connection witheach of the risk factors in the individual legal entities. Strategic decisions are also made in relation to asset allocations within each company. See note 5 on capital adequacy.

Risk-adjusted capitalSpareBank 1 Gruppen AS determines its capital requirements based onthe different risk categories. The risk-adjusted capital requirements arecalculated for each subsidiary and for the Group overall. Statistical methods and expert assessments and judgements are used as a basiswhen performing these calculations. It is not very likely that all the lossevents would occur simultaneously, and therefore a diversificationeffect arises when considering all the risk categories together. Risk capital shall cover the unexpected losses and correspond to 99.5% ofpossible losses in all risk categories for a time horizon of one year. TheGroup also calculates the risk-adjusted profitability per product groupin the insurance activities.

Capital requirementsSpareBank 1 Gruppen must have sufficient capital to cover unexpectedlosses. The Group is subject to the regulations for minimum levels ofcapital adequacy and solvency. The Capital Requirements Regulationsalso stipulate that the capital requirements must be assessed in relationto both the risk profile and the quality of risk management and controlsystems. The capital management policy is subject to annual updatesand board approval, and was most recently updated and approved bythe Board in June 2012. The capital management policy shall ensurethat SpareBank 1 Gruppen has an optimal level of equity in relationto the defined risk tolerance, risk profile and scope of the business.

SpareBank 1 Gruppen uses risk-adjusted return as one of severalfinancial management parameters. The risk-adjusted return for theGroup as a whole and per subsidiary is reported every quarter. The useof risk-adjusted returns will become increasingly important in thefuture.

Follow-up and management of risk factorsMarket riskThe Group's consolidated market risk is measured and reported quarterlyto the Board of SpareBank 1 Gruppen AS. The calculations are basedon a Value at Risk (VaR) model. A corresponding model is used for thefollow-up of each subsidiary, and each company in the Group also follows up and manages its own risk exposure in accordance with itsown models and routines. The routines describe the model (VaRmodel) and definitions for calculating the Group's general risk, aswell as the actual exposure at year-end.

Estimates and assumptions in the VaR modelThe Board has decided that risks are to be reported at a 99.5% confidencelevel. The holding period is 12 months. Correlations are also calculatedusing a similar method to last year's. The securities adjustment reserve,supplementary provisions, investment returns, and interest rate guarantees have not been taken into account.

Market risk is calculated using the following formula:VaR = Market risk * σ * √T * nc.

σ = Standard deviation assetT = Holding period nc = Number of standard deviations given the confidence level

(99.5% one sided confidence level = 2.58)

Interest rate riskInterest rate risk is the risk of loss incurred due to changes in interestrates. The risk primarily arises as a result of investments in fixedincome securities, from fixed rate loans, financing using fixed incomesecurities, and from using derivatives.

Value at Risk is given as the value of an asset multiplied by the asset'ssensitivity to changes in interest rates multiplied by the maximumnegative change in interest rates for a given holding period and confidence level.

The bond portfolio is weighted by duration in the following timeintervals: (1-3 months), (3-12 months), (1-3 years), (3-5 years) and(over 5 years). The duration expresses each interval's price sensitivityin relation to a change in interest rates. Based on time series data ofmonthly historical interest rates dating back to 1994, the standard devi-ation of the complete interest rate time series is calculated, and average interest rates are calculated to match the intervals.

Based on the duration-weighted exposure, historical interest rate fluctuations, the holding period and confidence level, VaR is calculatedfor each time interval, and subsequently aggregated to a total VaR onfixed income securities.

34

SpareBank 1 SpareBank 1 SpareBank 1SpareBank 1 Skade- Livs- SpareBank 1 Gruppen

Gruppen forsikring forsikring Markets FinansParameter AS Group AS AS Group Total

Resultatendring i MNOK før skatt1 % poeng økning i rentenivået -23 -19 -172 -3 1 -2161 % poeng reduksjon i rentenivået 23 19 172 3 -1 216

35

Sensitivity analysis of market risk linked to interest rate riskSpareBank 1 Gruppen is exposed to market risk linked to interest rate risk.Interest rate risk is primarily linked to the investment portfolios in SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring Group.Below we show a sensitivity analysis per company related to interest raterisk.

The table above shows an estimate of the expected effect on the income statement of an immediate change in interest rates. The tablehas been prepared in connection with internal risk monitoring inSpareBank 1 Gruppen AS. The calculations are based on changes invalue and changes in cash flow 12 months into the future in moneymarket instrument and bond portfolios in SpareBank 1 LivsforsikringAS, SpareBank 1 Skadeforsikring Group and SpareBank 1 Markets AS.For SpareBank 1 Gruppen AS and SpareBank 1 Gruppen FinansGroup, the effect on the income statement is linked to net interest-bearing liabilities.

Spread riskSpread risk is the risk of changes in the market value of bonds and commitments as a result of general changes in credit spreads. Spreadrisk is incorporated into SpareBank 1 Gruppen Group's VaR model andincluded in calculations in accordance with the Capital RequirementRegulations.

Equity riskThe equity risk of securities is the risk of loss that arises from changesin the value of equities and other equity instruments in which theGroup has invested. For the purposes of calculating risk, the equitiesare divided into Norwegian and international equities.

Historical returns for Norwegian and foreign equities are calculatedseparately dating back to 1994 based on a Norwegian index and a worldindex. The returns are used to determine a standard deviation, whichis adjusted for the holding period and confidence level and subse-quently multiplied by the exposure in the various classes of equity. Theexposure corresponds to the market value of the equity portfolio on thebalance sheet date.

In order to be based on the volatility of the indices, SpareBank 1Gruppen assumes a well-diversified portfolio of equity instruments within the classes of equity, equivalent to β=1. SpareBank 1 Gruppen considers it is reasonable to assume that the portfolios in SpareBank 1Livsforsikring AS and SpareBank 1 Skadeforsikring Group are well-diversified.

Currency riskCurrency risk is the risk of loss arising from changes in exchangerates. The Group measures currency risk on the basis of net positionsin the different currencies.

Historical foreign exchange rates are used to determine the volatilityof the pertinent currencies, which forms a basis for calculating the riskexposure, for a given level of confidence.

Risk linked to propertySpareBank 1 Group has substantial property exposure in both SpareBank 1 Livsforsikring AS and SpareBank 1 SkadeforsikringGroup. The property portfolio is part of the ongoing allocation ofassets in the companies, which aims to achieve the highest possiblereturn for the exposure. Responsibility for its management is assignedto a separate property department in SpareBank 1 Livsforsikring AS.For SpareBank 1 Skadeforsikring Group, management of the proper-ties has been outsourced in its entirety to external managers.

The Group's properties are exposed to risk from changes in the propertymarket. The value of the property portfolio is affected by a number offactors, including local economic development, the properties' location, tenants' creditworthiness, maintenance follow-up and competition in the local property market.

Property volatility is calculated based on the historical performanceof property prices for offices and commercial properties respectivelydrawn from price indices published by Statistics Norway. The risk linked to property is treated separately when preparing SpareBank 1Gruppen's ICAAP.

See note 3 for information about the sensitivity of these figures and note33 for information on exposure.

Hedge fundsThe risk associated with hedge funds is determined on the basis of thevolatility in an international hedge fund index. The risk is calculatedin accordance with a similar method to that used for securities. Exposure to hedge funds has been significantly reduced in recentyears.

Correlation – Portfolio risk market riskBased on the time series, a correlation matrix is calculated between thedifferent asset classes in market risk. The correlations are determinedby analysing historical data going back to 1994, or as far back as datais available, based on a 12 month moving average. In order to make thecalculations more conservative, an average of the average correlationsand the highest correlation in the period is used. Based on the correlation matrix, a covariance matrix is calculated which is used todetermine the Value at Risk (standard deviation) of the total portfolio.

See notes 7 and 8 for further information on market risk in SpareBank 1Gruppen.

Ownership riskOwnership risk is defined as the risk that arises as a result of being anowner of a company. SpareBank 1 Gruppen AS's ownership risk in subsidiaries is related to the risk that the individual product companies assume in their operations, as well as the risk of a need toinject fresh capital into one or more of these companies. A capitalmanagement policy has been established at the Group level to ensure that the companies operate in accordance with the owner's capacity and appetite for risk.

Credit riskThe Group's credit risk is primarily linked to SpareBank 1 LivsforsikringAS, SpareBank 1 Skadeforsikring Group, and SpareBank 1 Markets AS,as well as the business in SpareBank 1 Gruppen Finans AS. SpareBank1 Gruppen Finans Group is exposed to credit risk from lending to andreceivables from customers and financial institutions.

The credit risk in SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring Group relates to money market investments (commercial paper and bonds), and reinsurance. SpareBank 1 MarketsAS is also exposed to credit risk through the company's investmentportfolio. The boards of these companies have adopted limits for thevarious securities issuers. In addition, a minimum level for the creditratings within the different issuing groups has been stipulated. Detailed regulations regarding the permitted levels of risk on investments have been issued in a separate mandate to external managers.

SpareBank 1 Gruppen

An overview of the 15 largest exposures to issuers is provided.

Marked risk NOK million as of 31.12.12SpareBank 1 SpareBank 1

Livs- Skade- Total Percentage forsikring forsikring SpareBank 1 market of total

Issuer AS Group Markets AS value portfolio

Nordea Eiendoms-kreditt AS 310 112 383 804 3.1%SpareBank 1 Boligkreditt AS 284 146 228 659 2.5%DNB Bank ASA 383 259 2 644 2.5%Sparebanken Vest 168 174 267 609 2.3%SpareBank I SMN 193 175 83 451 1.7%Bustadkreditt Sogn og Fjordane AS 56 62 312 430 1.7%Dnb Boligkreditt AS 296 117 10 423 1.6%Terra Boligkreditt AS 209 - 202 411 1.6%SpareBank 1 SR Bank ASA 202 191 393 1.5%BN Bank ASA 120 122 148 390 1.5%Sparebanken Sør 172 203 - 375 1.4%SpareBank 1 Nord Norge 181 167 1 349 1.3%Storebrand Boligkreditt AS 179 167 - 346 1.3%Sør Boligkreditt AS 121 - 200 321 1.2%Sparebanken Møre 29 287 - 317 1.2%

See notes 12, 13 and 14 for further information about the credit risk inSpareBank 1 Gruppen.

Concentration riskThe Group is considered to have a low level of concentration risk. Theinsurance portfolio in SpareBank 1 Skadeforsikring Group is deemedto be relatively well diversified through a large number of customers,and the insurance contracts relate to different geographic areas and anumber of different products. A concentration risk in P&C insuranceis the exposure to natural disasters, but in Norway this is very limitedvia participation in the Norwegian Natural Perils Pool. The insuranceportfolio in SpareBank 1 Livsforsikring AS is well-diversified asregards insurance risk. It is largely comprised of individual insurancesand group insurances where the insurance risk is not concentrated.There is some concentration risk linked to the life insurance company's investment portfolio, largely to the finance industry. Fromthe viewpoint of the Group, other companies have only a modestexposure to concentration risk.

Liquidity risk and counterparty riskManagement of the Group's financial structure is based on an overallliquidity strategy that is assessed and approved by the Board at leastannually. Each subsidiary has a corresponding liquidity strategy, subject to the associated board's approval. The liquidity risk is reduced by the diversification of funding sources, instruments andmaturity periods. A Group account scheme has been established in SpareBank 1 Gruppen in order to reduce liquidity risk.

The liquidity risk in SpareBank 1 Gruppen is mainly linked to theparent company, and is considered to be low to moderate.

The guidelines for liquidity management are updated annually. Thecontingency plan for capital adequacy and liquidity managementseeks to highlight the overarching liquidity management in the Group,as well as identify and explain events that can occur and prepare plansto meet these events. The contingency plan also provides a clear description of the division of responsibilities. Events that may affectliquidity levels include:

Identified losses in subsidiaries that require an injection of capitalLiquidity buffers below target levelsCancellation of uncommitted lines of credit

The requirement for day-to-day liquidity management is that theparent company must have a liquidity buffer of NOK 150 million at all times. The liquidity buffer shall consist of bank deposits and

continuously traded marketable securities. The liquidity buffer mayalso contain committed credit facilities. The liquidity buffer toppedNOK 150 million as of 31 December 2012.

The CFO is responsible for monitoring that the liquidity buffer iswithin target levels. If the liquidity buffer is more than 20% below thetarget level, this must be reported to the CEO in SpareBank 1 GruppenAS. A plan must be drawn up that specifies how the liquidity buffercan be restored to its target level as quickly as possible. The plan mustbe presented to the Group executive management team. The require-ments as set out in the guidelines have been fulfilled during the period,and the liquidity situation in the parent company is considered good.

SpareBank 1 Gruppen has established a close collaboration with theSpareBank 1 banks for funding purposes. The chance of resolving any liquidity challenges is substantially improved by this type of collaboration.

See note 15 for further information on liquidity risk and settlement riskin SpareBank 1 Gruppen.

The Group's insurance activitiesSince SpareBank 1 Gruppen is an insurance dominated financialgroup, a more exhaustive description of the Group's risk manage-ment within P&C and life insurance is provided below.

SpareBank 1 Skadeforsikring GroupInsurance riskThe insurance risk in each contract is the probability that the insuredevent will occur and the uncertainty surrounding the size of the resulting claim. The nature of insurance contracts is such that the riskis random and therefore must be estimated. For a portfolio of insurancecontracts where probability theory has been used in determining theprice and technical provisions, the largest risk the company faces inrelation to insurance contracts is that the actual claim payouts willexceed the provisions that have been made. The risk relating to insurance contracts depends upon how the contract has been written.There is greater uncertainty associated with so-called long-tailed products, with long claims settlement periods, than short-tailed products, where the final compensation amount is determined morequickly. The insurance company is also exposed to large claims, butthese are, for the most part, covered by reinsurance contracts.

2012 saw a profit of NOK 62.4 million from insurance activities compared to a loss of NOK 37.3 million in 2011. The improvement in the result was attributable a lower claims ratio. SpareBank 1 Skadeforsikring Group is still experiencing a high proportion of largeclaims. In 2012, seven large claims involving compensation sums ofmore than NOK 10 million, and total compensation of NOK 138 million, accounted for 2.5 percentage points of the Group's grossclaims ratio. In 2011, there were six corresponding claims for more thanNOK 10 million with total compensation of NOK 144 million.

Market riskThe investment strategy describes the target risk profile, and defineslimits that are tailored to the Group's risk tolerance. Market risk is therefore continually assessed in relation to the Group's risk capital,and is monitored by stress tests that are based on the provisions of theasset management regulations, as well as the Group's own risk models.SpareBank 1 Skadeforsikring Group does not use currency instrumentsas a general rule, but makes an exception when hedging underlyinginvestments. Foreign investments are hedged against currency risk tothe maximum extent possible. The Group's allocation of investmentsbetween different instruments has been stable during the year. SpareBank 1 Skadeforsikring Group's exposure to equities is limitedin relation to the Group's solvency. The Group's total exposure tomarket risk is considered moderate from the perspective of the company's total buffer capital.

Liquidity riskThe majority of the SpareBank 1 Skadeforsikring Group's investmentportfolio is invested in money market instruments with good liquidity.The Group's liquidity risk is therefore low. The boards in SpareBank 1Skadeforsikring Group have prepared guidelines for what proportion

36

37

of the investment portfolio should comprise liquid investments atany time.

Credit risk and counterparty riskSpareBank 1 Skadeforsikring Group is primarily exposed to counter-party risk through fixed income securities in the investment portfolio,the reinsurance portion of technical provisions and actual claimsagainst reinsurers. The reinsurance programme aims to reduce counter-party risk through a recommended minimum rating of A(-) from S&P,at the same time as exposure to certain entities is evaluated. As a resultof the turbulent times in recent years, counterparty risk is closelymonitored. Investments are undertaken with financially sound counter-parties. The specified investment limits are involved in determiningcounterparty risk, and the portfolio is regarded as being well diversified.Moreover, there have not been any material breaches of the investmentlimits in 2012.

Concentration of insurance riskSpareBank 1 Skadeforsikring Group has prepared contractual regula-tions that stipulate which insurance items the companies accept intheir portfolios. Checks are performed to ensure compliance withthese contractual regulations. In addition, the insurance system incor-porates automatic checks on accumulated balances when signing a newportfolio. The reinsurance cover is adapted to the risk exposure of theinsurance portfolio.

See note 11 for further information on insurance risk in SpareBank 1Skadeforsikring Group.

SpareBank 1 Livsforsikring ASSpareBank 1 Livsforsikring AS provides pension products that containinterest rate guarantees, i.e. the customers are guaranteed a minimumreturn each year. The company's average yearly guaranteed interest rateis 3.32%. The investment strategy and thus the market risk for the various portfolios in SpareBank 1 Livsforsikring AS is adjusted to thecompany's risk tolerances for various products, contracts and primarycapital. Active risk management in the customer portfolios reduces thelikelihood of failing to achieving the interest rate guarantee. The RiskManagement Department monitors market risk in the company and follows up the limits and guidelines that apply to the company.

The company's investment strategy contains limits for how the companyshall invest and manage its assets, including permitted markets, assetclasses and financial instruments. The investment strategy also containsguidelines and limits for credit exposure, counterparty exposure, currency risk and the use of derivatives in hedging strategies. The company's investment strategy is adopted by its board.

The risk management in SpareBank 1 Livsforsikring AS is taskedwith contributing to satisfactory returns for customers and owners within an acceptable level of risk, by securing good management andcontrol of the risk that the company is exposed to. The risk levelshall correspond with its board's appetite for risk. Risk managementshould support the company's strategic development and achievementof its objectives, secure financial stability and sound capital manage-ment.

The company's risk management strategy has been adopted by theboard and includes processes, limits and trading rules that the com-pany must adhere to when the risk exposure in the company exceedsspecific levels. The risk management function is handled by the RiskManagement Department, with responsibility for monitoring and fol-lowing up financial risk, reporting and compliance. The departmentis part of Finance and Risk Management and is independent from operational functions. The company's total risk exposure is describedin the company's risk report which is considered by its board. SpareBank 1 Gruppen AS has the overarching responsibility for riskmanagement in the Group.

Market riskSpareBank 1 Livsforsikring AS continuously assesses the market riskin the company with stress tests. The company also uses other statis-tical tools and methods to assess market risk. The company is workingon developing models to measure and monitor risk. The company also

manages market risk through a minimum required rate of returnwhich is intended to help the company achieve predefined income targets. The company has defined trading rules for risk reducing measures if the return falls short of the minimum requirements or buffer capital utilisation reaches predefined levels.

Interest rate riskThe company's financial risk mainly relates to whether the companyis able to fulfil its annual interest rate guarantee. The company has assumed a substantial interest rate risk in its interest rate and pensioninsurance. The company's average annual interest rate guarantee is3.32%, calculated on the basis of the average insurance fund. New contracts were offered with a guaranteed rate of 2.5% in 2012. Enduring low interest rates will increase the risk associated with theinterest rate guarantee. If the annual return looks like it will be less thanthe interest rate guarantee, financial measures are enacted to ensure thatthe return is on a par with the interest rate guarantee. The securitiesadjustment reserve will act as a buffer. If this is insufficient, funds willbe taken from supplementary provisions to cover the guarantee. Anynegative returns must be covered by the company's equity. In goodfinancial years, part of the profit is correspondingly allocated to supplementary provisions. A ceiling of 12% of the contract's premium reserve applies.

Average interest rate guarantee 2012

Individual endowment insurance 2.61%Individual annuity and pension insurance 3.73%Group pension insurance 3.19%Total 3.32%

The table above shows the average interest rate guarantee per productgroup for 2012.

Insurance riskThe company offers disability cover for most product groups, eitherthrough a disability pension, premium exemption or disability capital.Whole life insurance is offered within individual contracts and grouplife insurance. In group pensions the company offers survivor pensionbenefits that come into effect in the event of the insured party's death.Changes in the payment regulations in the National Insurance Schemefor disability payments, etc. will have a substantial effect on disabilitynumbers and provisions. In relation to the change in the risk of mortality, the steadily higher life expectancy affects whether the dateon which payments actually commence matches the forecasts. Steadilyhigher life expectancy means the company's future old age pension payments will rise compared with previous years.

Managing insurance riskRisk manuals have been prepared which contain guidelines for riskassessments including health and contractual regulations when acquiringpotential customers. A health assessment of the insured party is carriedout when signing individual risk products. The result of this assessmentis reflected in the level of the risk premium required. When signing groupagreements with risk cover, an assessment is carried out of the firm's risk(underwriting). When underwriting, the company's financial position,industry and sickness and disability history are evaluated.

In the company's existing portfolio, the insurance risk is monitored foreach product group. The risk result from each product group is dividedinto mortality, disability and survival elements. Risk result performancesare monitored throughout the year. For each type of risk the ordinary riskresult for a period is the difference between the risk premiums that thecompany has received for the period and the compensation paid relatingto the period. Insurance events which the company has not been notifiedabout, but which are likely to have occurred based on experience, areincluded in this assessment. The company has prepared a framework formanaging and controlling insurance risk as part of its risk-based super-vision.

ReinsuranceThe company's reinsurance strategy is reviewed by the Board every year.The strategy includes targets for the company's reinsurance programme andspecifies how the reinsurance programme will be monitored.

38

The company has signed reinsurance cover on quotas, reinsuredamounts, and excess of loss/catastrophic risk.

Concentration riskThe insurance portfolio is well diversified with respect to insurancerisk. It is largely comprised of individual insurances and group insurances where the insurance risk is not concentrated.

See note 37 for further information on receivables from reinsurers, andnotes 10 and 11 on insurance risks for SpareBank 1 Livsforsikring ASand SpareBank 1 Skadeforsikring Group respectively.

Operational riskOperational risk is defined as the risk of losses resulting from inadequateor failed internal processes or systems, human error or external events.In SpareBank 1 Gruppen Group legal risk is included in operational risk.All companies in the Group are exposed to operational risk.

Operational risk in the subsidiaries is currently documented in connection with work relating to compliance with the «Regulations onRisk Management and Internal Control». The work undertaken inconnection with risk reporting is primarily documented through theannual ICAAP report, and at the same time an annual internal controlreport which is approved by management is also presented. Databasesfor managing and following up measures in connection with reportsfrom the Financial Supervisory Authority of Norway, internal audit andinternal control have been implemented.

In addition, SpareBank 1 Gruppen has a separate compliance functionin the parent company, while the subsidiaries also have a compliancefunction. The compliance forum meets regularly at the Group level andis attended by the compliance manager in each of the companies.

The work on compliance shall ensure that SpareBank 1 Gruppencomplies with and adheres to the relevant laws and regulations,industry standards and internal guidelines. The work also encompassesthe task of monitoring developments in the areas, and explaining thepotential consequences of failing to follow up changes in these areas.Compliance risk is the risk that the Group incurs public sanctions,financial loss or its reputation becomes tarnished as a result of failingto comply with and adhere to the relevant laws and regulations,industry standards and internal guidelines. Compliance risk is regardedas part of operational risk. Compliance is reported quarterly to theBoard of SpareBank 1 Gruppen AS in accordance with compliance templates for the Group.

Strategic and commercial riskStrategic and commercial risk in capital requirement calculations hasbeen determined on a discretionary basis to date. A process for quanti-fying the risk associated with this has not yet been established. SpareBank 1 Gruppen is working on determining parameters thatwould allow it to calculate strategic and commercial risk quantitatively.

Together with the alliance's risk management forum, SpareBank 1Gruppen will continue to focus on the establishment of quantitativemodels with a view to estimating the capital needs for the strategic andcommercial risk in the Group.

Correlation – Portfolio riskNot all events are expected to take place at the same point in time. Therefore it is reasonable to take into account the diversificationeffects between different classes of assets. A correlation matrix betweenthe asset classes is used, in which correlations between market risk,credit risk, insurance risk and property are calculated.

SpareBank 1 Gruppen

NOTE 7 – MARKET RISK RELATED TO INTEREST RATE RISK

SpareBank 1 Gruppen Group is exposed to market risk linked to interest rate risk. The main part of the interest rate risk in SpareBank 1 Gruppenis linked to the investment portfolios in SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring Group. An interest rate risk sensitivityanalysis per company is provided below.

SpareBank 1 SpareBank 1 SpareBank 1Skade- Livs- SpareBank 1 Gruppen

SpareBank 1 forsikring forsikring Markets FinansParameter Gruppen AS Group AS AS Group Total

Change in result in NOK millions before tax1 percentage point rise in interest rates -23 -19 -172 -3 1 -2161 percentage point fall in interest rates 23 19 172 3 -1 216

The table above is an estimate of the expected profit or loss impact in the event of an immediate change in interest rates. The table is prepared aspart of risk monitoring in SpareBank 1 Gruppen. The calculations are based on changes in value and changes in cash flow 12 months into the future in money market instrument and bond portfolios in SpareBank 1 Livsforsikring AS, SpareBank 1 Skadeforsikring Group and SpareBank 1Markets AS. For SpareBank 1 Gruppen and SpareBank 1 Gruppen Finans Group the profit or loss effects are related to net interest bearing debt.

NOTE 8 – MARKET RISK RELATED TO CURRENCY RISK

It is mainly SpareBank 1 Livsforsikring AS which is exposed to currency risk in SpareBank 1 Gruppen. The risk in SpareBank 1 Gruppen primarilyrelates to investment portfolios and the Group seeks to neutralise the currency risk in underlying portfolios with currency futures as part of its riskstrategy. Only the currency exposure in SpareBank 1 Livsforsikring AS is shown below, since SpareBank 1 Skadeforsikring Group's currency exposure is negligible and there is no currency exposure SpareBank 1 Markets AS's investment portfolio. The exposure is as follows:

2012 2011Effect of 3% Effect of 3%

Net currency change on Net currency change onpositions result Figures in NOK 1 000 positions result

Currency913 042 27 391 EUR 85 181 2 555

1 994 338 59 831 USD 175 740 5 272695 710 20 871 Other 40 718 1 222

3 603 090 108 093 Total 301 639 9 049

The table above shows an estimate of the expected effect on the income statement of an immediate change in exchange rates. The table is prepared as part of internal risk monitoring in SpareBank 1 Gruppen. The calculations are based on money market instrument and bond portfolios in SpareBank 1 Livsforsikring AS which actually have some exposure.

NOTE 9 – FINANCIAL DERIVATIVES

General descriptionCurrency futures: Contracts to buy or sell a specific amount in foreign currency on a specified future date at a fixed price.Interest rate swaps: An agreement regarding the swapping of interest rate conditions over an agreed period and for a fixed amount.Options: Contracts where the seller gives the buyer the right, but not the obligation to buy (call option) or sell (put option) a financial instrument or currency before or on a specified date at a predetermined and fixed price.All derivatives are stated at fair value through profit or loss. Gains are recorded as assets and losses are recorded as liabilities for all interestrate derivatives.

Group 2012

Contract Fair value Fair valueNOK 1 000 total assets liabilities

Equity instrumentsDerivative underlying CDOs 370 000 - 174 200 Options 182 523 567 - Total equity instruments 552 523 567 174 200

Foreign exchange instrumentsCurrency futures (forwards) 3 358 733 89 621 1 787 Total foreign exchange instruments 3 358 733 89 621 1 787

Interest rate instrumentsInterest rate swaps, incl. cross-currency swaps 3 342 411 21 830 1 114 Total interest rate instruments 3 342 411 21 830 1 114

Total Financial Derivatives 7 253 667 112 018 177 101

Group 2011 Contract Fair value Fair value

NOK 1 000 total assets liabilities

Equity instrumentsDerivative underlying CDOs 370 000 - 162 400Options 27 756 2 161 1 549Total equity instruments 397 756 2 161 163 949

Foreign exchange instrumentsCurrency futures (forwards) 4 087 547 3 973 74 224 Total foreign exchange instruments 4 087 547 3 973 74 224

Interest rate instrumentsInterest rate swaps, incl. cross-currency swaps 5 158 815 5 183 6 627 Total interest rate instruments 5 158 815 5 183 6 627

Total Financial Derivatives 9 644 118 11 317 244 800

Parent company 2012Contract Fair value Fair value


Interest rate instrumentsInterest rate swaps, incl. cross-currency swaps 65 000 3 078 - Total interest rate instruments 65 000 3 078 -

Total Financial Derivatives 65 000 3 078 -

Parent company 2011Contract Fair value Fair value


RenteinstrumenterInterest rate swaps, incl. cross-currency swaps 65 000 2 003 - Total interest rate instruments 65 000 2 003 -

Total Financial Derivatives 65 000 2 003 -

39

NOTE 10 – INSURANCE RISK IN LIFE INSURANCE

Group 2012

Important assumptions and changes in assumptions• The guaranteed interest rate complies with rules laid down by the Financial Supervisory Authority of Norway. From and including 1 January

2012, the guaranteed rate for new contracts was 2.5%. Moreover, new earnings and accrued entitlements follow the maximum permitted guaranteed rate that applied at the time the entitlements were earned.

• The mortality assumptions are largely based on common surveys in FNO, while the estimates for disability are mainly based on the company'sown experience. The mortality assumptions for people with a disability take into account the correlation between disability and mortality.

• A new industry tariff with safety margins that take account of higher life expectancy, K2005, was introduced in 2008 for group defined benefitpensions and paid-up policies from group defined pensions. A new mortality table, K2013, has been developed and submitted to the FinancialSupervisory Authority of Norway for approval. Because of this, allocations have been made to build up reserves for defined benefit pensionsand paid-up policies.

• A new mortality basis for individual annuity and pension that takes account of greater life expectancy is also being developed under the auspices of the FNO. Provisions have already been built up for this.

• The reserve provisions and premiums are established on the basis of a policy that there should be a safety margin in the reserves and the premiums. The safety margins in the premiums and reserves are not quantified, but assessed by considering the levels of uncertainty and thematurities of the liabilities.

• The company's ordinary premium provisions are calculated according to prospective principles based on the same tariff terms as the premiumtariff. IBNR and RBNS provisions have been made, using statistical methods based on the company's own experience.

Management of risk due to insurance contracts• Assessment of insurance risk

Risk manuals have been prepared which contain guidelines for risk assessments including health and contractual regulations when acquiringpotential customers. A health assessment of the insured party is carried out when signing individual risk products. The result of this assessmentis reflected in the level of the risk premium required. When signing group agreements with risk cover, an assessment is carried out of the firm'srisk (underwriting). When underwriting, the company's financial position, industry and sickness and disability history are evaluated.

• Controlling insurance riskIn the company's existing portfolio, the insurance risk is monitored for each product group. The risk result from each product group is dividedinto mortality, disability and survival elements. Risk result performances are monitored throughout the year. For each type of risk the ordinaryrisk result for a period is the difference between the risk premiums that the company has received for the period and the compensation paidrelating to the period. Insurance events which the company has not been notified about, but which are likely to have occurred based on experience, are included in this assessment. The company has prepared a framework for managing and controlling insurance risk as part of itsrisk-based supervision.

Risk result 2012Individual

annuity and Individual Group Individual GroupNOK million pension endowment pension life life TotalRisk of death (incl. accident risk) 16.879 208.446 -19.154 - 69.630 275.801 Disability -69.136 -89.766 79.673 - 76.041 -3.188Individual life - - - 37.392 - 37.392 Risk result before technical provisions -52.257 118.680 60.519 37.392 145.671 310.004 Technical provisions 1.990 1.991 -0.097 -5.214 -17.168 -18.498Risk result after technical provisions -50.266 120.670 60.422 32.178 128.503 291.506 Provisions - - -50.616 - - -50.616Net risk result -50.266 120.670 9.805 32.178 128.503 240.890

The table below shows the total risk result for 2012 with a reduction in mortality of 10% and 20%, respectively, or an increase in disability of10% or 20%, respectively.

Individualannuity and Individual Group Individual Group

NOK million pension endowment pension life life Total10% reduction in mortality -54.166 133.290 55.515 37.392 171.472 343.503 20% reduction in mortality -56.076 147.901 50.512 37.392 197.273 377.002 10% increase in disability -78.484 104.195 45.780 37.392 131.828 240.712 20% increase in disability -104.711 89.711 31.042 37.392 117.985 171.420

The effect the risk result has on the net profit to owner depends on which profit model is applied for the various products.

• ReinsuranceThe company's reinsurance strategy is reviewed by the Board every year. The strategy includes targets for the company's reinsurance programme and specifies how the reinsurance programme will be monitored.

The company has the following types of reinsurance cover:

Quota reinsuranceIn quota reinsurance the risk is divided between two parties, meaning that an agreement-specific proportion of the risk is transferred to a reinsurer.


Surplus reinsuranceAn excess is fixed in contracts according to the type of risk. All risk that exceeds the excess is reinsured. Surplus reinsurance is, like quotareinsurance, a proportional arrangement, but differs because the percentage varies in the different contracts. Surplus reinsurance is particular-ly used for individual contracts.

Excess of loss/catastrophe reinsuranceThrough excess of loss, the reinsurer covers the amount that exceeds the company's risk amount, often limited to a specified maximum level.A claim can be defined per risk or per event. An example of an excess of loss is a catastrophe reinsurance. In those circumstances where theclaim is defined per risk, excess of loss can be very similar to surplus reinsurance.

• Adequacy testIFRS 4 requires the company to carry out an adequacy test of the company's reserves. This test has been performed using the same principles since 2004. The calculations are based on forecasts from the company's finance model that include both assets and liabilities.The administration result and the risk result is assumed to be at the current level and the financial return is assumed to be 4.5%.

As life expectancy increases, the reserves for retirement pensions are expected to be too low for group pensions. Long life reserves forindividual pensions have been built up, although some adjustments will be required when final calculations are made in the administrative system. The risk surplus and surplus return from both group defined benefit pensions and paid-up policies were allocatedto building up reserves in 2012. FNO's proposed new tariff is currently being assessed by the Financial Supervisory Authority of Norwayand the final amount by which reserves need to be built up is therefore unknown. The adequacy test assumes that around 2% needs to bebuilt up for group defined benefit pension pensions over 2 years and around 4.5% for paid-up policies over 4 years.

The adequacy test indicates that the premium reserve is sufficient based on the assumptions used.

Conditions and terms in insurance contracts• Insurance risk

For the majority of product groups, the company offers disability cover, either through a disability pension, premium exemption or disability capital. Whole life insurance is offered within individual contracts and group life insurance. In group pensions the company offers survivor pension benefits that come into effect in the event of the insured party's death.

Changes in the payment regulations in the National Insurance Scheme for disability payments etc. will have a substantial effect on disability numbers and provisions. In relation to the change in the risk of mortality, the steadily increasing longevity affects whether thedate on which payments actually commence matches the forecasts.

Steadily higher life expectancy means the company's future old age pension payments will rise compared with previous years.

• Interest rate riskThe company has assumed a substantial interest rate risk in its annuity and pension insurance. The company's average annual interestrate guarantee is 3.32%, calculated on the basis of the average insurance fund. New contracts were offered with a guaranteed rate of 2.5%in 2012 . Enduring low interest rates will increase the risk associated with the interest rate guarantee. If the annual return looks like it willbe less than the interest rate guarantee, financial measures are enacted to ensure that the return is on a par with the interest rate guarantee.If this is insufficient, funds are taken from the supplementary provisions to cover the guarantee. Any negative returns must be covered bythe company's equity. In good financial years, part of the profit is correspondingly allocated to supplementary provisions. A ceiling of12% of the contract's premium reserve applies.

Average interest rate guarantee 2012Individual endowment insurance 2.61 %Individual annuity and pension insurance 3.73 %Group pension insurance 3.19 %Group life insurance 0.00 %Accident insurance 0.00 %Total 3.32 %

• Profit modelsThe company has models with and without rights to profits according to the rules in the Insurance Act.

- New profit model: Group defined benefit pensions, defined contribution pensions with guaranteed return, guarantee account, individualsaving contracts entered into from 2008 and group life with profit fund.

- Modified profit model: Paid-up policies terminated from group pension.- Profit sharing according to previous rules: Individual endowment and individual pensions with profit sharing entered into prior to 2008.- Without right to profits: Group life (excluding group life with profit fund), group risk pensions without paid-up policies, individual

annuity, individual endowment and life insurance.- With investment choice: Defined contribution pensions with investment choice, individual endowment and individual annuity.

• Profit allocationThe allocation of profit to each customer is determined by to which product group the contract belongs.

For individual endowment insurance, the profits will be accumulated on the different contracts and paid out with the amount insured.For individual annuity and pension insurance, the secured benefit is written up with the profit. Individual contracts terminated fromgroup schemes are treated in the same way.

For group pensions, the profits are allocated to the scheme's premium fund and pensioner's profit fund in accordance with the regulationsset in the Company Pension Scheme Act. In schemes not subject to these regulations the profits are allocated to the premium fund.

• Products without profit rights expose the company to cost risk and insurance risk.

41

• The right to transfer, where the settlement deadline is only 2 months after the cancellation deadline expires for contracts where the transfervalue exceeds NOK 300 million, can represent a liquidity risk should one or more major contracts be transferred within a short space of time.The maximum transfer fee is NOK 5 000 . Greater outward transactions than inward transactions over time will affect future cash flow.

• In general, changes in framework conditions for the industry can influence future cash flows. For example, adapting to new legislation formandatory occupational pensions will affect cash flow.

• Maturity analysisThe best estimate for when liabilities for savings products are due for payment. The estimate takes account of disposals. Newly accruedentitlements for group defined benefit pensions are not taken into account.

2012Book

NOK million value 0-5 years 5-10 years 10-15 years 15-20 years > 20 years

Payments (not discounted) 5 295 4 022 3 027 2 239 4 009Total net premium reserves (discounted) 12 822

Insurance risk concentration• The insurance portfolio is well diversified with respect to insurance risk. It is largely comprised of individual contracts and group

contracts in which the insurance risk is not concentrated.

Group 2011

Important assumptions and changes in assumptions

• The guaranteed interest rate complies with rules laid down by the Financial Supervisory Authority of Norway. From 1 January 2011 the guaranteed interest rate was 2.5% for new contracts, while the guaranteed rate for newly accrued entitlements for group pensions was 2.5%from 1 January 2012. Moreover, new earnings and accrued entitlements follow the maximum permitted guaranteed rate that applied at the timethe entitlements were earned.

• The mortality assumptions are largely based on common surveys in FNO, while the estimates for disability are mainly based on the company'sown experience. The mortality assumptions for people with a disability take into account the correlation between disability and mortality.

• A new industry tariff with safety margins that take account of higher life expectancy, K2005, was introduced in 2008 for group defined benefitpensions and paid-up policies from group defined pensions. A new mortality basis for group life pensions, K2013, is being developed under theauspices of the FNO. Because of this, a process has begun to build up reserves for defined benefit pensions and paid-up policies.

• A new mortality basis for individual annuity and pension that takes account of greater life expectancy is also being developed under the auspices of the FNO. Because of this, a process has begun to build up reserves for this business.

• The reserve provisions and premiums are established on the basis of a policy that there should be a safety margin in the reserves and the premiums. The safety margins in the premiums and reserves are not quantified, but assessed by considering the levels of uncertainty and thematurities of the liabilities.

• The company's ordinary premium provisions are calculated according to prospective principles based on the same tariff terms as the premiumtariff. IBNR and RBNS provisions have been made, using statistical methods based on the company's own experience.

Management of risk due to insurance contracts

• Assessment of insurance riskRisk manuals have been prepared which contain guidelines for risk assessments including health and contractual regulations when acquiringpotential customers. A health assessment of the insured party is carried out when signing individual risk products. The result of this assessmentis reflected in the level of the risk premium required. When signing group agreements with risk cover, an assessment is carried out of the firm'srisk (underwriting). When underwriting, the company's financial position, industry and sickness and disability history are evaluated.

• Controlling insurance riskIn the company's existing portfolio, the insurance risk is monitored for each product group. The risk result from each product group is dividedinto mortality, disability and survival elements. Risk result performances are monitored throughout the year. For each type of risk the ordinaryrisk result for a period is the difference between the risk premiums that the company has received for the period and the compensation paidrelating to the period. Insurance events which the company has not been notified about, but which are likely to have occurred based on experience, are included in this assessment. The company has prepared a framework for managing and controlling insurance risk as part of itsrisk-based supervision.

Risk result 2011Individual

annuity and Individual Group Individual GroupNOK million pension endowment pension life life TotalRisk of death (incl. accident risk) -14.866 171.626 4.949 - 63.328 225.037 Disability -72.314 -8.223 -3.534 - 78.434 -5.637Individual life - - - 57.640 - 57.640 Risk result before technical provisions -87.180 163.403 1.414 57.640 141.762 277.040

The table below shows the total risk result for 2011 with a reduction in mortality of 10% and 20%, respectively, or an increase in disability of10% or 20%, respectively.


Individualannuity and Individual Group Individual Group

NOK million pension endowment pension life life Total10% reduction in mortality -87.598 177.556 5.762 57.640 165.719 319.079 20% reduction in mortality -88.016 191.709 10.109 57.640 189.677 361.119 10% increase in disability -110.673 157.099 -15.189 57.640 127.942 216.820 20% increase in disability -134.166 150.795 -31.792 57.640 114.123 156.600

The effect the risk result has on the net profit to owner depends on which profit model is applied for the various products.

• ReinsuranceThe company's reinsurance strategy is reviewed by the Board every year. The strategy includes targets for the company's reinsurance programme and specifies how the reinsurance programme will be monitored.

The company has the following types of reinsurance cover:

Quota reinsuranceIn quota reinsurance the risk is divided between two parties, meaning that an agreement-specific proportion of the risk is transferred to a reinsurer.

Surplus reinsuranceAn excess is fixed in contracts according to the type of risk. All risk that exceeds the excess is reinsured. Surplus reinsurance is, like quotareinsurance, a proportional arrangement, but differs because the percentage varies in the different contracts. Surplus reinsurance is particularly used for individual contracts.

Excess of loss/catastrophe reinsuranceThrough excess of loss, the reinsurer covers the amount that exceeds the company's risk amount, often limited to a specified maximum level.A claim can be defined per risk or per event. An example of an excess of loss is a catastrophe reinsurance. In those circumstances where theclaim is defined per risk, excess of loss can be very similar to surplus reinsurance.

• Adequacy testIFRS 4 requires the company to carry out an adequacy test of the company's reserves. This test has been performed using the same principles since 2004. The calculations are based on forecasts from the company's finance model that include both assets and liabilities.This model has been extrapolated to 2015. The administration result and risk result are assumed to be the average for the period 2011-2015, and the financial return is assumed to be 5.2%.

The reserves for retirement pensions are expected to be too low for both individual and group pensions due to higher life expectancy.Long life reserves for individual pensions have been built up, although some adjustments will be required when final calculations aremade in the administrative system. 2% of the premium reserve has been set aside in 2011 to build up reserves, both for group definedbenefit pensions and paid-up policies group defined pensions. It is estimated that around 4% needs to be built up for each of these typesof business over 2 years.

The adequacy test indicates that the premium reserve is sufficient based on the assumptions used.

Conditions and terms in insurance contracts

• Insurance riskFor the majority of product groups, the company offers disability cover, either through a disability pension, premium exemption or disabi-lity capital. Whole life insurance is offered within individual contracts and group life insurance. In group pensions the company offers survivor pension benefits that come into effect in the event of the insured party's death.

Changes in the payment regulations in the National Insurance Scheme for disability payments etc. will have a substantial effect on disabi-lity numbers and provisions. In relation to the change in the risk of mortality, the steadily increasing longevity affects whether the date onwhich payments actually commence matches the forecasts.

Steadily higher life expectancy means the company's future old age pension payments will rise compared with previous years.

• Interest rate riskThe company has assumed a substantial interest rate risk in its annuity and pension insurance. The company's average annual interestrate guarantee is 3.13 %, calculated on the basis of the average insurance fund. New contracts were offered with a guaranteed rate of 2.5%in 2011 . Enduring low interest rates will increase the risk associated with the interest rate guarantee. If the annual return looks like it willbe less than the interest rate guarantee, financial measures are enacted to ensure that the return is on a par with the interest rate guarantee.If this is insufficient, funds are taken from the supplementary provisions to cover the guarantee. Any negative returns must be covered bythe company's equity. In good financial years, part of the profit is correspondingly allocated to supplementary provisions. A ceiling of12% of the contract's premium reserve applies.

Average interest rate guarantee 2011Individual endowment insurance 2.63 %Individual annuity and pension insurance 3.64 %Group pension insurance 2.91 %Group life insurance 0.00 %Accident insurance 0.00 %Total 3.13 %

43

• Profit modelsThe company has models with and without rights to profits according to the rules in the Insurance Act.

- New profit model: Group defined benefit pensions, defined contribution pensions with guaranteed return, guarantee account, individualsaving contracts entered into from 2008 and group life with profit fund.

- Modified profit model: Paid-up policies terminated from group pension.- Profit sharing according to previous rules: Individual endowment and individual pensions with profit sharing entered into prior to 2008.- Without right to profits: Group life (excluding group life with profit fund), group risk pensions without paid-up policies, individual

annuity, individual endowment and life insurance.- With investment choice: Defined contribution pensions with investment choice, individual endowment and individual annuity.

• Profit allocationThe allocation of profit to each customer is determined by to which product group the contract belongs.

For individual endowment insurance, the profits will be accumulated on the different contracts and paid out with the amount insured.For individual annuity and pension insurance, the secured benefit is written up with the profit. Individual contracts terminated fromgroup schemes are treated in the same way.

For group pensions, the profits are allocated to the scheme's premium fund and pensioner's profit fund in accordance with the regulationsset in the Company Pension Scheme Act. In schemes not subject to these regulations the profits are allocated to the premium fund.

• Products without profit rights expose the company to cost risk and insurance risk.

• The right to transfer, where the settlement deadline is only 2 months after the cancellation deadline expires for contracts where the transfer value exceeds NOK 300 million, can represent a liquidity risk should one or more major contracts be transferred within a shortspace of time. The maximum transfer fee is NOK 5 000 . Greater outward transactions than inward transactions over time will affect futurecash flow.

• In general, changes in framework conditions for the industry can influence future cash flows. For example, amendments to pension legis-lation may result in many customers cancelling defined benefit schemes or switching to contribution-based schemes.

• Maturity analysisThe best estimate for when liabilities for savings products are due for payment. The estimate takes account of disposals. Newly accruedentitlements for group defined benefit pensions are not taken into account.

2011Book

NOK million value 0-5 years 5-10 years 10-15 years 15-20 years > 20 years

Payments (not discounted) 4 894 2 979 2 185 1 652 3 144Total net premium reserves (discounted) 12 392

Insurance risk concentration• The insurance portfolio is well diversified with respect to insurance risk. It is largely comprised of individual contracts and group

contracts in which the insurance risk is not concentrated.

NOTE 11 – INSURANCE RISK IN P&C INSURANCE

2012

The insurance risk in each contract is the probability that the insured event will occur and the uncertainty surrounding the size of the resulting claim. The nature of insurance contracts is such that the risk is random and therefore must be estimated.

For a portfolio of insurance contracts where probability theory has been used in determining the price and technical provisions, the largestrisk the Group faces in relation to insurance contracts is that the actual claim payouts will exceed the provisions that have been made.Insurance events strike randomly and the observed number of events and degree of compensation will thus naturally vary from year to year inrelation to that estimated using statistical techniques.

Experiences shows that the larger the portfolio of uniform insurance contracts, the less the expected results will vary. A more diversifiedportfolio will have less chance of interference from changes in a sub-portfolio. The Group's subscription strategy is designed to reduce variability in the expected result by increasing the spread between different types of insurance risk and achieving a sufficiently large insurance stock within each sector. Reassurance is used to equalise the Group's risk in relation to large claims.

Sensitivity to insurance riskThe table below shows the impact on earnings and equity (before tax) of a 1% change in gross premiums earned and 1% change in the combined ratio for own account. The combined ratio is the most widely used criterion for measuring profitability in general insurance. A change in the combined ratio may be due to a change in the claim frequency, compensation level and/or administration costs.

Sensitivity analysis – P&C insurance

Profit effect before tax (for own account) Effect in NOK million1 percentage point change in combined ratio Retail +/- 43.41 percentage point change in combined ratio Corporate +/- 6.61 % change in premium level +/- 50.1


Concentration of insurance riskThe Group has prepared contractual regulations that stipulate which insurance items the companies accept in their portfolios. Checks are performed to ensure compliance with these contractual regulations. The insurance system also incorporates automatic checks on signing a newportfolio. The reinsurance cover is adapted to the risk exposure of the insurance portfolio. The Group's reinsurance cover consists of a quotaprogram and large comprehensive reinsurance cover (XL reinsurance).

Gross written premium per insurance product

Figures in NOK 1 000

Onshore property 1 910 222 Industrial fire insurance 10 622 Marine 6Motor 1 861 954 Onshore property commercial Fire 379 408 Energy/oil -Yacht 78 396 Motor commercial 278 472 Total in. reass. 16Accident insurance 162 605 Liability 62 804 Total marine, energy, reass. 22Travel insurance 376 907 Occupational injury 170 166Other retail insurance 26 484 Safety 94 619 Natural perils pool 109 982

Other 77 724Total retail lines 4 416 568 Total commercial lines 1 073 815 Total gross written premium5 600 387

Claim provisionsClaim provisions are measured at an unbiased level, such that no security buffer is included in the provisions. Based on the Financial Supervisory Authority of Norway's rules for technical provisions, the Group must at all times have provisions that fully cover the Group'stechnical liability and other risk derived from the insurance business. The Group must at all times have provisions that, as a minimum, correspond to the minimum requirements for the premium reserve and claim provisions for own account (after deductions for reinsurance)stipulated by the Financial Supervisory Authority of Norway, within all product lines. The premium reserve must cover the risk, that has notbeen run-off, of losses that have not yet occurred in existing insurance contracts on the balance sheet date.

Claim provisions have not been discounted, except within marine insurance.

The security provisions must cover extraordinary fluctuations and shall together with the actual claim provisions cover the Group's technicalliabilities with a likelihood of 99%.

Analysis of claims trendsInsurance liabilities and reinsuranceThe table below shows actual claims compared to earlier estimates (i.e. claims trend). The specification only covers organically developingportfolios, i.e. portfolios without transfers.

Claims trend gross

Analysis of claims trends

NOK million 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total

GROSS Calculated compensation costsAt start of claim year 2 319.7 2 303.4 2 312.0 2 525.3 2 786.8 2 844.2 3 061.3 3 505.3 4 070.2 4 212.4One year later 2 258.1 2 254.0 2 324.6 2 518.3 2 787.2 2 905.4 3 167.4 3 657.4 4 059.1 -Two years later 2 250.7 2 170.2 2 257.2 2 456.8 2 740.5 2 990.3 3 090.9 3 599.2 - -Three years later 2 229.9 2 145.5 2 224.6 2 431.5 2 813.3 2 955.1 3 087.1 - - -Four years later 2 241.6 2 128.9 2 218.5 2 474.8 2 773.2 2 959.2 - - - -Five years latere 2 250.7 2 118.5 2 211.2 2 420.4 2 757.7 - - - - -Six years later 2 257.0 2 120.4 2 205.5 2 412.5 - - - - - -Seven years later 2 256.2 2 119.4 2 207.3 - - - - - - -Eight years later 2 254.2 2 118.9 - - - - - - - -Nine years later 2 252.4 - - - - - - - - -

Calculated amount as at 31.12.2012 2 252.4 2 118.9 2 207.3 2 412.5 2 757.7 2 959.2 3 087.1 3 599.2 4 059.1 4 212.4Total paid to date 2 201.8 2 023.5 2 068.3 2 208.1 2 492.6 2 603.5 2 567.7 2 903.7 2 954.8 2 122.8Claims provisions31.12.2012 50.6 95.4 138.9 204.4 265.1 355.7 519.3 695.6 1 104.3 2 089.6 5 518.9Claims provisions for claims before 2003 - - - - - - - - - - 236.5Total claims provisions land-based - - - - - - - - - - 5 755.4Claims provisions Marine/Energy/Opening Re in Runoff - - - - - - - - - - 81.1Claims provisions pools - - - - - - - - - - 181.1Indirect claims handling costs - - - - - - - - - - 291 .1Total 6 308.7

45

Claims trend for own account

NOK million 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total

FOR OWN ACCOUNTCalculated compensation costsAt start of claim year 1 518.5 1 661.8 1 781.9 2 356.4 2 546.8 2 643.7 2 775.9 3 212.1 3 651.2 3 872.4One year later 1 489.1 1 618.8 1 782.4 2 355.1 2 541.0 2 695.9 2 848.8 3 383.6 3 649.9 -Two years later 1 473.8 1 547.7 1 723.8 2 305.4 2 496.4 2 722.6 2 793.9 3 334.4 - -Three years later 1 452.5 1 524.7 1 696.0 2 280.4 2 523.5 2 693.9 2 785.0 - - -Four years later 1 457.6 1 513.9 1 694.8 2 298.1 2 491.6 2 696.7 - - - -Five years later 1 459.9 1 507.7 1 689.6 2 250.9 2 474.2 - - - - -Six years later 1 463.7 1 510.3 1 680.9 2 241.5 - - - - - -Seven years later 1 461.8 1 508.3 1 682.3 - - - - - - -Eight years later 1 461.7 1 508.2 - - - - - - - -Nine years later 1 460.4 - - - - - - - - -

Calculated amount as at 31.12.2012 1 460.4 1 508.2 1 682.3 2 241.5 2 474.2 2 696.7 2 785.0 3 334.4 3 649.9 3 872.4Total paid to date 1 444.8 1 455.2 1 583.3 2 064.1 2 258.1 2 412.3 2 361.7 2 724.7 2 715.1 2 063.5Claims provisions31.12.2012 15.7 53.0 99.0 177.4 216.2 284.4 423.3 609.7 934.9 1 808.9 4 622.4Claims provisions for claims before 2003 - - - - - - - - - - 196.2Deduction XL-reassuranse - - - - - - - - - - -27.9Total claims provisions land-based - - - - - - - - - - 4 790.8Claims provisions Marine/Energy/Opening Re in Runoff - - - - - - - - - - 12.0Claims provisions pools - - - - - - - - - - 114.9Indirect claims handling costs - - - - - - - - - - 291.1Total 5 208.8

2011

The insurance risk in each contract is the probability that the insured event will occur and the uncertainty surrounding the size of the resul-ting claim. The nature of insurance contracts is such that the risk is random and therefore must be estimated.

For a portfolio of insurance contracts where probability theory has been used in determining the price and technical provisions, the largestrisk the company faces in relation to insurance contracts is that the actual claim payouts will exceed the provisions that have been made.Insurance events strike randomly and the observed number of events and degree of compensation will thus naturally vary from year to year inrelation to that estimated using statistical techniques.

Experiences shows that the larger the portfolio of uniform insurance contracts, the less the expected results will vary. A more diversifiedportfolio will have less chance of interference from changes in a sub-portfolio. The Group's subscription strategy is designed to reduce varia-bility in the expected result by increasing the spread between different types of insurance risk and achieving a sufficiently large insurancestock within each sector. The Group's reinsurance cover is intended to protect it against large claims/events. Quota reinsurance is also usedto stabilise product dimensions.

Sensitivity to insurance riskThe table below shows the impact on earnings and equity (before tax) of a 1% change in gross premiums earned and 1% change in the combined ratio for own account. The combined ratio is the most widely used criterion for measuring profitability in general insurance.A change in the combined ratio may be due to a change in the claim frequency, compensation level and/or administration costs.

Sensitivity analysis – P&C insurance

Profit effect before tax (for own account) Effect in NOK million1 percentage point change in combined ratio Private +/- 39.61 percentage point change in combined ratio Corporate +/- 6.41 % change in premium level +/- 46.1

Concentration of insurance riskThe Group has prepared contractual regulations that stipulate which insurance items the companies accept in their portfolios. Checks are performed to ensure compliance with these contractual regulations. In addition, the insurance system incorporates automatic checks onaccumulated balances when signing a new portfolio. The reinsurance cover is adapted to the risk exposure of the insurance portfolio.


Gross written premium per insurance product

Figures in NOK 1 000

Onshore property 1 804 979 Industrial fire insurance 10 410 Marine 244Motor 1 790 602 Onshore property commercial Fire 377 520 Energy/oil 0Yacht 75 934 Motor commercial 280 564 Total in. reass. 59Accident insurance 164 079 Liability 54 863 Total marine, energy, reass. 303Travel insurance 336 029 Occupational injury 167 342Other retail insurance 23 683 Safety 89 606 Natural perils pool 120 957

Other 61 306Total retail lines 4 195 307 Total commercial lines 1 041 612 Total gross written premium5 358 180

Claim provisionsClaim provisions are measured at an unbiased level, such that no security buffer is included in the provisions. Based on the Financial Super-visory Authority of Norway's rules for technical provisions, the Group must at all times have provisions that fully cover the Group's technicalliability and other risk derived from the insurance business. The Group must at all times have provisions that, as a minimum, correspond tothe minimum requirements for the premium reserve and claim provisions for own account (after deductions for reinsurance) stipulated by theFinancial Supervisory Authority of Norway, within all product lines. The premium reserve must cover the risk, that has not been run-off, oflosses that have not yet occurred in existing insurance contracts on the balance sheet date.

Claim provisions have not been discounted, except within marine insurance.

The security provisions must cover extraordinary fluctuations and shall together with the actual claim provisions cover the company's techni-cal liabilities with a likelihood of 99%.

Analysis of claims trends

NOK million 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total

GROSSCalculated compensation costsAt start of claim year 2 319.7 2 303.4 2 312.0 2 525.3 2 786.8 2 844.2 3 061.3 3 505.3 4 070.2One year later 2 258.1 2 254.0 2 324.6 2 518.3 2 787.2 2 905.4 3 167.4 3 657.4 -Two years later 2 250.7 2 170.2 2 257.2 2 456.8 2 740.5 2 990.3 3 090.9 - -Three years later 2 229.9 2 145.5 2 224.6 2 431.5 2 813.3 2 955.1 - - -Four years later 2 241.6 2 128.9 2 218.5 2 474.8 2 773.2 - - - - Five years later 2 250.7 2 118.5 2 211.2 2 420.4 - - - - - Six years later 2 257.0 2 120.4 2 205.5 - - - - - - Seven years later 2 256.2 2 119.4 - - - - - - - Eight years later 2 254.2 - - - - - - - -

Calculated amount as at 31.12.2011 2 254.2 2 119.4 2 205.5 2 420.4 2 773.2 2 955.1 3 090.9 3 657.4 4 070.2Total paid to date 2 188.7 2 014.6 2 049.9 2 186.3 2 409.5 2 500.6 2 497.7 2 755.9 2 051.4Claims provisions31.12.2011 65.6 104.8 155.6 234.1 363.7 454.5 593.2 901.5 2 018.7 4 891.7Claims provisions forclaims before 2003Deduction XL-reassuranse - - - - - - - - - 304.0Total claims provisions land-based - - - - - - - - - 5 195.7Claims provisions Marine/Energy/Opening Re in Runoff - - - - - - - - - 184.7Claims provisions pools - - - - - - - - - 150.2Indirect claims handling costs - - - - - - - - - 264.7Total 5 795.2

47


NOK million 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total

FOR OWN ACCOUNTCalculated compensation costsAt start of claim year 1 518.5 1 661.8 1 781.9 2 356.4 2 546.8 2 643.7 2 775.9 3 212.1 3 651.2One year later 1 489.1 1 618.8 1 782.4 2 355.1 2 541.0 2 695.9 2 848.8 3 383.9 -Two years later 1 473.8 1 547.7 1 723.8 2 305.4 2 496.4 2 722.6 2 793.9 - -Three years later 1 452.5 1 524.7 1 696.0 2 280.4 2 523.5 2 693.9 - - -Four years later 1 457.6 1 513.9 1 694.8 2 298.1 2 491.6 - - - -Five years later 1 459.9 1 507.7 1 689.6 2 250.9 - - - - -Six years later 1 463.7 1 510.3 1 680.9 - - - - - -Seven years later 1 461.8 1 508.3 - - - - - - -Eight years later 1 461.7 - - - - - - - -

Calculated amount as at 31.12.2011 1 461.7 1 508.3 1 680.9 2 250.9 2 491.6 2 693.9 2 793.9 3 383.9 3 651.2Total paid to date 1 438.9 1 452.5 1 570.0 2 045.0 2 198.2 2 336.3 2 306.4 2 595.4 1 918.4Claims provisions31.12.2011 22.8 55.8 110.9 205.9 293.5 357.5 487.5 788.5 1 732.8 4 055.1Claims provisions for claims before 2003 - - - - - - - - - 253.3Deduction XL-reassuranse - - - - - - - - - -31.5Total claims provisions land-based - - - - - - - - - 4 276.9Claims provisions Marine/Energy/Opening Re in Runoff - - - - - - - - - 118.7Claims provisions pools - - - - - - - - - 150.0Indirect claims handling costs - - - - - - - - - 264.7Total 4 810.3

NOTE 12 – CREDIT RISK EXPOSURE FOR EACH INTERNAL RISK CLASS

The credit risk in SpareBank 1 Gruppen is mainly linked to the operations of SpareBank Gruppen Finans AS's factoring business area.

Quantitative risk analyses are being developed for the factoring business area. The credit risk in factoring is associated with financing/lendingrisk and the risk related to domestic and foreign customer credit guarantees.

SpareBank 1 Gruppen Finans AS uses the standard method for calculating credit risk in connection with its ICAAP.The internal credit model is a combination of a risk model and efficiency model (how fit for purpose factoring is and how efficiently SpareBank 1Gruppen can perform the contract). The model is thus not directly transferable to a risk model with two dimensions/axes: customer rating andsecurity coverage.

Risk matrix Taking factoring's risk classification system as a starting point, the following risk matrix must be used as a basis for delegating credit authorisations. Objective scores from Lindorff Decision and SpareBank 1 Gruppen Finans AS's internal processing rules determine in which risk class limited companies, sole proprietorships and personal businesses registered in the Register of Business Enterprises are placed.

Customer rating vs. structure rating [4–5] [3,5–4> [3–3,5> [2–3> [1–2>

5 Low risk Low risk Low risk Medium risk High risk 4 Low risk Low risk Medium risk Medium risk High risk 3 Low risk Low risk Medium risk High risk High risk 2 Low risk Medium risk Medium risk High risk High risk 1 Medium risk High risk High risk High risk High risk Non-performing High risk High risk High risk High risk High risk Losses High risk High risk High risk High risk High risk

Description of the model:One axis uses the customer rating based on the Lindorff Decision Score, where 1 is the worst and 5 is the best. The other axis rates the structure, againwith 1 being the worst and 5 the best. The structure rating means the factorability both in relation to the efficient performance of the contract and SpareBank 1 Gruppen Finans AS having good security in the receivable. A model has therefore been developed in which different parameters relatingto factorability are assessed and scored.

The parameters considered are:1. Debtor's creditworthiness2. Repurchase rate3. Credit note turnover rate4. Age distribution5. Business sector

49

The customer and structure rating model results in a matrix that determines whether something is low risk, medium risk or high risk, based on the combination of the customer rating and structure rating.

Lending specified by risk classes:Factoring. Customer rating vs. Structure rating [4 - 5] [3,5 - 4> [3 - 3,5> [2 - 3> [1 - 2> Total Summary

5 Low riskLending 17.7 % 16.0 % 31.1 % 0.7 % 0.0 % 65.5 % 76.1 %4 Low riskLending 3.6 % 2.7 % 5.2 % 1.5 % 0.0 % 13.0 % 76.1 %3 Medium riskLending 0.2 % 1.9 % 6.7 % 1.1 % 0.0 % 9.9 % 18.7 %2 High riskLending 2.8 % 1.6 % 3.1 % 3.1 % 0.0 % 10.6 % 5.2 %1 High riskLending 0.0 % 0.6 % 0.1 % 0.2 % 0.0 % 1.0 % 5.2 %Non-performing/exposed Non-performingLending 0.0 % 0.0 %Losses LossesLending 0.0 % 0.0 %

NOTE 13 – MAXIMUM CREDIT RISK EXPOSURE, NOT TAKING INTO ACCOUNT PLEDGED SECURITY

The below table shows the maximum credit risk exposure for the different balance sheet items, derivatives included.Exposure is shown before assets pledged as security and permitted offsetting.

Parent company GroupGross exposure Gross exposure

2012 2011 NOK 1 000 2012 2011

ASSETS

269 191 213 717 Cash and cash equivalents 755 000 1 276 149 801 901 152 580 Loans and deposits with financial institutions 22 63 366

- - Loans to and receivables from customers 1 231 344 830 905 - - Securities stated at fair value through profit or loss (FVO) 25 491 995 21 163 098 - - Securities held for trading 2 449 502 2 962 992

3 078 2 003 Financial derivatives 112 018 11 317 - - Bonds held to maturity 4 477 834 4 522 630 - - Bonds at amortised cost 1 825 434 1 368 467

21 102 17 583 Securities - available for sale 24 538 19 193 - - Other financial assets 27 748 29 334

152 844 202 067 Other assets 312 681 442 607 1 248 116 587 950 Total financial assets 36 708 117 32 690 057

LIABILITIES

866 905 387 253 Financial guarantee contracts 248 215 359 838 403 099 - Used credit lines - -

- - Loan commitments - - 1 270 004 387 253 Total financial guarantees 248 215 359 838

2 518 120 975 203 Total credit risk exposure 36 956 332 33 049 896

SpareBank 1 Gruppen

NOTE 14 – AGE DISTRIBUTION OF OVERDUE BUT NOT IMPAIRED LOANS AND PREMIUM INCOME

The table below shows overdue amounts on loans, overdrafts on credits/deposits and premium revenues by number of days after their duedate that are not due to delays in payment systems.

Group 2011Upon Up to Over

NOK 1 000 request 30 days 31 - 60 days 61 - 90 days 91 days Total

Loans to and receivables from customersRetail market 1) - - - - 122 973 122 973 Corporate market - - - - - -

Overdue but not paid insurance premiums - 22 509 2 679 1 115 25 508 51 811 Total - 22 509 2 679 1 115 148 481 174 784 1) The portfolio consists of acquired non-performing demands (all demands over 90 days) in SpareBank 1 Gruppen Finans AS's portfolio

business area. Fulfilment of the claims in the portfolios depends onthe debtor's ability to pay.

Group 2011Upon Up to Over

NOK 1 000 request 30 days 31 - 60 days 61 - 90 days 91 days Total

Loans to and receivables from customersRetail market 1) - - - - 78 368 78 368 Corporate market - - - - - -

Overdue but not paid insurance premiums 30 954 110 554 3 451 1 007 9 069 155 035 Total 30 954 110 554 3 451 1 007 87 437 233 403 1) The portfolio consists of acquired non-performing demands (all demands over 90 days) in SpareBank 1 Gruppen Finans AS's portfolio

business area. Fulfilment of the claims in the portfolios depends on the debtor's ability to pay.

NOTE 15 – REMAINING CONTRACTUAL MATURITY OF FINANCIAL LIABILITIES

Group 2012Upon Less than 3–12 More than No due

NOK 1 000 request 3 months months 1–5 years 5 years date Total

Deposits from and liabilities to customers and financial institutions - 459 822 730 310 1 057 837 - - 2 247 969 Securities issued - 10 576 117 624 739 295 - - 867 495 Derivatives - 2 901 6 600 167 600 - - 177 101 Subordinated loan capital and hybrid tier 1 capital - 5 596 15 211 81 053 - 483 000 584 860 Loan commitments 161 233 - - - - - 161 233 Total financial liabilities 161 233 478 894 869 745 2 045 785 - 483 000 4 038 657

Interest rate as of year-end 2012 is used to calculate the cash flow for the subordinated loan capital.Cash flow for perpetual subordinated loan capital is calculated from 1 to 5 years. The total amount is added without maturity.

Group 2011Upon Less than 3–12 More than No due


Deposits from and liabilities to customers and financial institutions - 631 160 - - - - 631 160 Securities issued - 610 070 430 784 960 764 - - 2 001 618 Derivatives - 75 773 - 169 810 -783 - 244 800 Subordinated loan capital and hybrid tier 1 capital - 7 040 19 486 103 832 - 483 000 613 358 Loan commitments 285 831 - - - - - 285 831 Total financial liabilities 285 831 1 324 042 450 270 1 234 406 -783 483 000 3 776 766

Interest rate as of year-end 2011 is used to calculate the cash flow for the subordinated loan capital.Cash flow for perpetual subordinated loan capital is calculated from 1 to 5 years. The total amount is added without maturity.

Parent company 2012Upon Less than 3–12 More than No due


Deposits from and liabilities to customers and financial institutions - 615 197 730 310 1 057 837 - - 2 403 344Securities issued - 10 576 117 624 739 295 - - 867 495Derivatives - - - - - - -Subordinated loan capital and hybrid tier 1 capital - 4 090 10 677 56 893 - 283 000 354 660Loan commitments - - - - - - - Total financial liabilities - 629 863 858 611 1 854 025 - 283 000 3 625 499

Interest rate as of year-end 2012 is used to calculate the cash flow for the subordinated loan capital.

50

NOTE 16 – NET INSURANCE PREMIUM INCOME

SpareBank 1 SpareBank 1 Livforsikring AS Skadeforsikring Group Group

NOK 1 000 2012 2011 2012 2011 2012 2011

Gross premium income 4 185 378 3 986 259 5 549 855 5 140 040 9 735 233 9 126 299- reinsurers' share 154 542 160 365 476 776 444 113 631 318 604 478Total net premium income for own account 4 030 836 3 825 894 5 073 079 4 695 927 9 103 915 8 521 821

LIFE INSURANCE

The distribution of SpareBank 1 Livsforsikring AS's earned premium income from different business is as follows:

Ind. annuity Individual Group Individual Group NOK 1 000 pension endowment pension life life Total

2012Gross premium income 383 791 745 341 2 200 787 222 976 632 483 4 185 378of which new subscriptions: 99 658 71 628 73 150 35 522 10 227 290 185

2011Gross premium income 375 589 776 182 2 030 465 199 576 604 446 3 986 259of which new subscriptions: 89 613 126 473 74 388 31 418 13 284 335 176

P&C INSURANCE

The distribution of SpareBank 1 Skadeforsikring Group's earned premium income from different product categories is as follows:

Retail linesCombined Of which Other Totalinsurance liability Accident Travel insurance private

NOK 1 000 Fire Motor motor Yacht insurance insurance private insurance

Earned premium 2012 1 887 084 1 839 986 787 626 77 541 163 852 366 295 24 950 4 359 708Earned premium 2011 1 728 618 1 689 545 722 845 73 383 161 269 327 344 21 979 4 002 139

Corporate linesIndustry Combined Of which Total insurance insurance liability Occupational industry

NOK 1 000 fire med. fire Motor motor Liability injury Safety Other insurance

Earned premium 2012 10 704 381 370 287 262 91 637 61 401 168 832 92 769 74 107 1 076 444Earned premium 2011 10 766 368 459 272 380 89 179 51 256 162 177 89 040 60 413 1 014 491

Other linesEnergy/ In. Nature Total other

NOK 1 000 Marine oil reinsurance pools insurance

Earned premium 2012 6 - 16 113 681 113 703Earned premium 2011 - - 59 123 350 123 410

51

Parent company 2011Upon Less than 3–12 More than No due


Deposits from and liabilities to customers and financial institutions - - - - - - -Securities issued - 610 070 430 784 960 764 - - 2 001 618Derivatives - - - - - - -Subordinated loan capital and hybrid tier 1 capital - 4 845 12 877 68 613 - 283 000 369 334Loan commitments - - - - - - - Total finansielle forpliktelser - 614 914 443 661 1 029 377 - 283 000 2 370 952

Interest rate as of year-end 2011 is used to calculate the cash flow for the subordinated loan capital.


NOTE 17 – NET COMMISSIONSGroup

NOK 1 000 2012 2011

CommissionsManagement fees 482 337 540 905Guarantee commissions 11 313 13 545Other commissions 134 240 145 330Total commissions 627 890 699 780

Commission costsDistributor commission paid 933 969 921 900Other commission costs 4 921 2 956Total commission costs 938 890 924 856Total net commissions -311 000 -225 076

53

NOTE 18 – GAINS AND LOSSES FROM FINANCIAL ASSETS AND LIABILITIES


2012 2011 NOK 1 000 2012 2011

Net income from financial instruments at fair value through profit or lossEquities and units

- - Dividends from equities and units 29 151 35 349- - Net gains from realisation of equities 84 993 170 408

-406 - Net unrealised gains/losses from equities and units 575 594 -1 056 847-406 - Total net gains/losses from equities and units 689 739 -851 090

Bonds and commercial paper - - Interest received and earned 629 729 380 378- - Net gains/losses from realisation of fixed income securities 270 655 138 510- - Net unrealised gains/losses from fixed income securities 10 911 -11 627

Total net income from bonds, commercial paper, interest funds - - and other fixed income securities 911 295 507 262

Other financial instruments- - Interest received and earned 13 204 124 384

1 075 1 311 Net gains/losses from realisation of derivatives and other financial assets 82 795 61 927- - Net unrealised gains/losses from derivatives and other financial assets 174 790 -91 923

1 075 1 311 Total derivatives and other financial assets 270 789 94 388

Securities issued1 083 -671 Net gains/losses from securities issued 1 083 -6711 083 -671 Total securities issued 1 083 -671

Net income and gains/losses from financial instruments 1 752 640 at fair value through profit or loss 1 872 905 -250 111

Net income from bonds stated at amortised cost- - Interest received and earned from bonds held to maturity 234 137 236 612- - Net gains/losses from realisation of bonds held to maturity 3 144 6 365- - Net income from bonds held to maturity 237 280 242 977

- - Interest received and earned from other bonds at amortised cost 67 015 52 427- - Net unrealised gains/losses from other bonds at amortised cost -42 -1 178- - Net gains/losses from realisation of other bonds at amortised cost - -4 202- - Net income and gains/losses from bonds at amortised cost 66 973 47 046

Net income from securities available for sale- - Dividends from equities 32 622

28 - Net gains from realisation of equities 70 - 28 - Net income and gains/losses from securities available for sale 102 622

Income from lending and receivables Interest income from lending to customers and

1 878 1 951 deposits with financial institutions 72 180 58 9416 140 16 001 Interest income from bank deposits 58 414 77 109

- - Interest income from other receivables 9 667 2 24310 524 5 903 Interest income from internal loans - - 18 543 23 856 Total interest income from lending and receivables 140 260 138 293

Costs from financial liabilitiesInterest costs from deposits from customers and

-48 290 -16 370 liabilities to financial institutions -65 207 -30 170-28 536 -48 103 Interest costs from securities issued -28 536 -48 103-16 984 -22 285 Interest costs from subordinated loans -27 839 -32 919-4 567 - Interest costs from other financial liabilities -5 529 -451-98 377 -86 758 Total interest costs from financial liabilities -127 111 -111 643

54

NOTE 19 – NET INCOME FROM INVESTMENT PROPERTIESGroup

NOK 1 000 2012 2011

Net lease income from investment properties2) 359 502 268 309Revision of investment property values -70 975 -5 305Total net income from investment properties1) 288 527 263 003

See note 33 on investment properties for further information.1) Direct operating costs (incl. maintenance costs) that stem from investment properties that do not generate lease income amounted toNOK 3.3 million in 2012 and NOK 6.4 million in 2011.

2) Net lease income is lease income less operating costs for investment properties.

NOTE 20 – OTHER OPERATING INCOME


2012 2011 NOK 1 000 2012 2011

- - Administration of LOfavør concept 55 237 58 480- - Brokerage fees 35 370 36 038- - Income from debt capital 19 585 14 969- - Remuneration Corporate Finance 50 211 29 588- - Sundry income life insurance 16 408 23 589- - Income from debt collection business 134 027 146 621- - Late payment charges 1 594 1 747- - Other 64 927 29 942- - Total other operating income 377 359 340 974

NOTE 21 – OPERATING COSTS


2012 2011 NOK 1 000 2012 2011

59 924 44 047 Personnel costs1) 1 122 638 988 67045 098 -1 391 IT costs 331 714 258 582

571 2 929 Marketing 137 059 153 059Billed costs for SpareBank 1 Kredittkort AS and

-73 972 - SpareBank 1 Verdipapirservice AS - - 4 861 15 969 Other operating costs 363 801 600 136

36 483 61 554 Total operating costs 1 955 211 2 000 446

Remuneration to auditor500 523 Statutory auditing 5 257 3 261214 154 Other certification services 407 469327 272 Tax advice 538 1 084- - Other services - 295

Remuneration to auditor incl. VAT

Personnel costs172 215 158 029 Salaries 735 079 664 077

- - Termination benefits 72 361 - 31 989 27 518 Employer's NI contributions 130 524 146 04929 423 22 597 Pension costs 84 083 82 301

-186 015 -178 006 Refund salaries, pension subsidiaries - - 3 385 3 225 Social costs 44 607 44 8238 928 10 684 Other personnel costs 55 984 51 420

59 924 44 047 Total personnel costs 1 122 638 988 670

Specification of pension costs14 518 8 631 Defined contribution plans 51 713 37 10614 905 13 966 Defined benefit plans 32 370 45 19529 423 22 597 Total pension costs 84 083 82 301

1) Personnel costs include termination benefits totalling NOK 72.4 million in the Group.

SpareBank 1 Gruppen

NOTE 22 – SALARIES AND OTHER REMUNERATION OF THE CEO AND EXECUTIVE PERSONNEL

Accrued

Salaries/ Other pension

NOK 1 000 remuneration1) Bonus2) remuneration costs

Group executive management teamKirsten Idebøen 3 426 230 169 1 025 Torbjørn Martinsen 2 837 162 151 594 Turid Grotmoll from 14.06.2012 3)4) 2 460 108 157 494 Magne Nilsen from 01.10.2012 uttil 31.12.2012 1 394 114 148 52 Aud Lysenstøen uttil 28.09.2012 5) 2 880 147 177 611 Tore Tenold uttil 30.09.2012 3) 3 268 135 173 676 Rune Selmar from 01.08.2012 1 100 - 67 - Leif Ola Rød uttil 30.06.2012 2 423 317 20 - Thoralf Granerød 2 007 102 179 421 Jarle Haug 2 330 - 154 318 Øyvind Aass 2 218 105 171 503 Sigurd Aune 2 175 112 158 398 Total 2012 28 519 1 532 1 724 5 092 Total 2011 20 643 5 608 2 774 4 133

1) Salaries/remuneration is the salaries/remuneration paid out in the 2012 financial year.2) The bonus amount is the bonus paid out in the 2012 financial year.3) Turid Grotmoll was appointed the new CEO of SpareBank 1 Skadeforsikring AS in June 2012, succeeding Tore Tenold. Turid Grotmoll had

been the acting CEO since March 2012 and was previously the deputy CEO of SpareBank 1 Skadeforsikring AS.4) A decision was made in September to merge the P&C and life insurance businesses into a single unit. As part of this process Turid Grot-

moll was appointed the new head of the joint business unit.5) If executive personnel in the Group leave before reaching retirement age, they are entitled to termination benefits for 12 months after their

period of notice (6 months). Aud Lysenstøen is, pursuant to this agreement, owed NOK 2.9 million as of 31 December 2012. In accordancewith the agreement, the salary she receives from her new position will be deducted from the agreed termination benefits.

Other

NOK 1 000 Remuneration6) remuneration

BoardArne Austreid - - Finn Haugan 197 - Per Halvorsen 104 9 Hans Olav Karde 7) 264 9 Bjørn Engaas until 11.04.2012 197 - Knut Bekkevold 197 - Tor-Arne Solbakken 184 4 Steinar Karlsen, attending substitute board member 165 4 Sally Lund-Andersen 164 - Richard Heiberg 184 9 Total 2012 1 810 35 Total 2011 1 401 -

7) Hans Olav Karde stepped down from the Board in January 2013. He was replaced by Jan-Frode Janson at a meeting of the SupervisoryBoard held on 23 January 2013. Jan-Frode Janson received no remuneration in 2012.

Other


Control CommitteeDag Nafstad 161 - Knut Ro 119 - Ivar Listerud 119 - Odd Broshaug 119 - Rolf Røkke 119 - Total 2012 637 - Total 2011 615 1

55

56

Other


Supervisory BoardPetersen Kjell Olav - - Stenrud Ellen 7,5 4 Elvegård Kyrre 7,5 - Eidesvik Kristian 7,5 - Koch Per Axel 54,0 - Falkenhaug Arne H. 18,0 - Strømmevold Siri - - Tronrud Haakon 7,5 - Thorseth Bjørg 7,5 - Bourne Philip 7,5 - Stubne Liv Berit 7,5 - Aske Øyvind 7,5 - Supervisory Board 2012 132 4 Supervisory Board 2011 230 -

6) The remuneration amount is the remuneration paid out in the 2012 financial year.

The maximum achievable bonus amount for executive personnel, who are defined as the group executive management team, with an individualbonus agreement is 1-3 months' salary in SpareBank 1 Gruppen. The bonus for meeting targets in 2012 will be paid out in accordance with theMinistry of Finance's regulations relating to remuneration schemes in financial institutions. This means half of the achieved bonus amount willbe paid out in 2013 and the remaining half will be paid out on a pro rata basis in 2014, 2015, and 2016. Deferred bonus payments will be relatedto the returns on selected equity certificates and shares in SpareBank 1 Gruppen's owner banks (synthetic equity certificate).

In addition to the bonus payment for 2012, executive personnel covered by the deferred bonus payment provision in the Ministry of Finance's regulations will receive a third of their deferred bonus payment for 2011. Payments are corrected for price changes for the synthetic equitycertificates.

Employee-elected board members in SpareBank 1 Gruppen are covered by the general bonus scheme for other employees of the company. Board members otherwise receive no other form of variable remuneration.

The CEO is entitled to a pension amounting to 70% of annual salary from the year he or she turns 60. The right is earned on a pro rata basis.The CEO's salary and bonus are based on an overall evaluation of a combination of the Group's profit, the Group's target attainment comparedto other comparable financial institutions, the CEO's individual performance, and average salary for comparable management positions. Anybonus is determined by the Board and an assessment of the bonus that will be paid out for one financial year must be made before the nextfinancial year ends.

No obligation exists to award the Chairman of the Board any special remuneration upon resigning, or changes being made to, the post. Nor doany agreements exist concerning bonuses, profit sharing, options or similar benefits for the Chairman of the Board.

Employee discounts are granted for loans and some insurance services. The benefits awarded to executive personnel and board members donot differ from the benefits awarded to other employees. The discounts given are about 25% on the ordinary terms for customer for individualinsurance services. SpareBank 1 Livsforsikring AS offers no discounts to employees or board members. All insurance contracts are based onthe ordinary terms for customers. Loans to employees are granted by Bank 1 Oslo Akershus AS and the security provided satisfies the requirements of section 2-15 of the Financial Institutions Act. Employees are granted loans with a 20% discount compared to ordinary customers. The various companies in the Group are charged for their share of the discount.

SpareBank 1 Gruppen AS's sole business is to administer its interests in its subsidiaries. All transactions with close associates are enteredinto on normal business terms. All intergroup payments not related to sales and portfolio management are priced at cost. See note 52.

Insurance premium SpareBank 1 Skadeforsikring AS 2012Group executive Control Associated Other close

NOK 1 000 management Board Committee companies associates

Annual premium 198 165 33 See note 52 107 Claims 74 60 - See note 52 15

Insurance premium SpareBank 1 Skadeforsikring AS 2011Group executive Control Associated Other close

NOK 1 000 management Board Committee companies associates

Annual premium 158 160 37 See note 52 144 Claims 61 60 - See note 52 146

SpareBank 1 Gruppen

NOTE 23 – PENSIONS

General description of the company's pension liabilities: The employees are part of SpareBank 1 Gruppen's pension scheme which is administered by SpareBank 1 Livsforsikring AS. The definedbenefit plan ensures most of the employees a pension payment that constitutes 70% of the expected final salary until the age of 77 with subsequent decreases in payments. In addition, a defined contribution plan has been established for employees from 01.01.2005. The definedbenefit plan was closed for new employees as of the same date.

For the parent company, the defined benefit plan covers 87 current employees and 76 pensioners, and the defined contribution plan 197 people. For the total group the defined benefit plan covers 435 current employees and 482 pensioners. 936 employees are covered by theGroup's defined contribution scheme.

Estimates are used for preparing the valuation of the pension retirement benefit and for the resulting excess or deficit. Adjustments to thesevalues are made on an annual basis and in accordance to statements of the transfer value from the life insurance company and actuarial valuations of the liability's size.

The costs are calculated based on the assumptions made for the opening balance. The pension liabilities are revised and calculations updatedas of 31.12 according to the assumptions made at year end. Actuarial gains and losses (changes in estimates) are presented in the statement ofcomprehensive income/equity. The period's pension costs consist of the pension entitlements accrued in the period and interest costs on thepension liabilities, less the expected return and accrued employer's national insurance contribution. Payments according to the defined contribution scheme are registered through profit or loss in the year of payment.

A new act relating to state subsidies to workers who take a statutory early retirement pension in the private sector came into force on 19February 2010. Workers who take early retirement from 2011 or later will be given benefits under the new scheme. The new pension schemeconstitutes a lifelong entitlement from the National Insurance Scheme and can be taken from age of 62. Employees earn the right to a statutoryearly retirement pension retirement annually at a rate of 0.314% of pensionable income up to 7.1G at the age of 62. Vesting of the new schemeis calculated on the basis of the worker's lifetime income, so that all earlier working years are included in the accrual basis. The new schemewill be financed by the state covering 1/3 of pension expenditure and 2/3 which shall be borne by the employers. Employers' premiums willbe determined as a percentage of salaries between 1G and 7.1G.

The new statutory early retirement pension scheme is recognised as a defined contribution agreement.

SpareBank 1 Gruppen has chosen to strengthen provisions for higher life expectancy by 10% more than the K2005 mortality table. A newmortality table, K2013, will be issued by the authorities in March 2013. SpareBank 1 Gruppen uses the covered bond interest rate as a dis-count rate. Please see note 2 on accounting policies for further information about pensions and the use of the covered bond interest rate.


2012 2011 NOK 1 000 2012 2011

Pension liabilities related to defined benefit pensions249 090 213 972 Present value of pension liabilities as of 01.01 1 111 629 974 623

- - Pension liabilities additions - - 14 329 12 565 Pension entitlements accrued in the period 35 530 41 2485 136 6 650 Interest costs on pension liabilities 24 246 32 037

- - Terminated pension plans - - -7 217 26 319 Actuarial losses/gains -23 746 128 266-14 407 -10 413 Benefits paid -71 126 -64 545

- - Other changes -2 587 - 246 931 249 090 Present value of pension liabilities as of 31.12 1 073 946 1 111 629211 153 217 217 of which fund-based 969 163 991 18235 777 31 876 of which not fund-based 104 783 120 447

Pension assets161 795 148 106 Pension assets as of 01.01 766 729 692 924

- - Pension assets additions - - 6 402 6 974 Expected return in the period 29 633 33 542

- - Terminated pension plans - - -1 137 221 Actuarial losses/gains -12 520 29 14311 716 10 972 Employer's NI contributions 41 177 51 086-10 326 -4 478 Benefits paid -50 632 -39 966

- - Other changes -812 - 168 450 161 795 Pension assets as of 31.12 773 575 766 729

Financial status as of 31.12246 931 249 090 Present value of pension liabilities as of 31.12 1 073 946 1 111 629168 450 161 795 Pension assets as of 31.12 773 575 766 72978 481 87 295 Net pension liabilities as of 31.12 300 371 344 900

57

58

2012 2011 NOK 1 000 2012 2011

78 481 87 295 Net pension liabilities as of 31.12, excl. employer's NI contributions 300 371 344 90012 120 9 100 Employer's NI contributions as of 01.01 48 448 39 689

- - Employer's NI contributions additions - - 1 842 1 726 Costs related to employer's NI contributions 4 257 5 451

- - Net employer's NI contributions related to terminated pension plans - - -857 3 679 Actuarial losses/gains -1 583 13 976

-2 228 -2 384 Benefits paid -8 696 -10 669- - Other changes -261 -

10 877 12 120 Employer's NI contributions as of 31.12 42 165 48 448- - Other changes - -

89 358 99 419 Net pension liabilities in the balance sheet 342 535 393 347

Pension costs for the period 14 329 12 565 Accrued defined benefit-based pensions 35 530 41 2485 136 6 650 Interest costs on pension liabilities 24 246 32 037-6 402 -6 974 Expected return on pension assets -29 633 -33 54213 063 12 240 Net defined benefit-based pension costs without employer's NI contributions 30 143 39 7431 842 1 726 Accrued employer's NI contributions 4 257 5 45114 905 13 966 Net defined benefit-based pension costs recognised in profit or loss 34 400 45 194

- applied to secured defined benefit pension costs including 8 760 9 270 employer's NI contributions 36 749 36 45314 518 8 631 Defined contribution-based pension costs, incl. employer's NI contributions 51 713 37 10629 423 22 597 Pension costs in the period recognised in the income statement 86 113 82 301

- - Run-off gain due to cessation of salary increases, incl.employer's NI contribution -2 030 - - - Run-off gains upon termination and issuance of paid-up policies - -

29 423 22 597 Total pension costs defined benefit and contribution pensions, incl. run-off gains 84 083 82 301

Estimated pension costs defined benefit and contribution pensions 29 177 19 679 for 2013, incl. employer's NI contributions 107 062 78 693

58 531 60 405 Pensionable salary 257 846 273 494

Actuarial losses/gains4 995 -21 438 Actuarial gains/(losses) for the period, recognised in equity after tax 10 442 -81 432

-85 211 -90 206 Actuarial gains/(losses), recognised in equity after tax -415 034 -425 476

Composition of pension assets19.23 % 21.93 % Property 19.23 % 21.93 %23.84 % 31.60 % Bonds at amortised cost 23.84 % 31.60 %13.21 % 10.57 % Equities and units 13.21 % 10.57 %43.04 % 39.42 % Bonds at fair value 43.04 % 39.42 %0.68 % -3.52 % Other assets 0.68 % -3.52 %

100.00 % 100.00 % Total pension assets 100.00 % 100.00 %

6 402 6 974 Actual return on pension assets 29 633 33 542

Assumptions3.80 % 2.40 % Discount rate 3.80 % 2.40 %3.80 % 3.90 % Expected return on pension assets 3.80 % 3.90 %3.50 % 4.00 % Future salary growth rate 3.50 % 4.00 %3.25 % 3.75 % Adjustment of national insurance basic amount (G) 3.25 % 3.75 %2.00 % 0.60 % Pension adjustment 2.00 % 0.60 %14.10 % 14.10 % Employer's NI contributions 14.10 % 14.10 %

4% og 2% 4% og 2% Voluntary staff turnover 4% og 2% 4% og 2%

Demographic assumptionsADJUSTED ADJUSTED

K2005 K2005 Mortality K2005 K2005IR2003 IR2003 Disability IR2003 IR2003

Development during the last few years of the Group's defined benefit based pension plan

2012 2011 NOK 1 000 2012 2011 2010 2009 2008

Present value of pension 246 931 249 090 liabilities as of 31.12 1 073 946 1 111 629 974 623 1 272 038 1 265 003168 450 161 795 Pension assets as of 31.12 773 575 766 729 692 924 868 457 845 74878 481 87 295 Deficit 300 371 344 900 281 699 403 581 419 255

Experienced adjustments-7 217 26 319 on pension liabilities -23 746 128 266 -50 623 -32 286 98 632

Experienced adjustments-1 137 221 on pension assets -12 520 29 143 -33 409 -40 416 -92 357

SpareBank 1 Gruppen

59

NOTE 24 – TAX

Correlation between pre-tax profit and tax base


2012 2011 NOK 1 000 2012 2011

902 076 478 425 Pre-tax profit 786 634 387 289-64 920 24 030 Change in temporary differences -450 034 254 945

-1 048 478 -657 958 Permanent differences -231 723 143 325937 441 304 741 Received group contributions with tax effect - - 79 398 74 760 Loss allowance carried forward -100 662 -208 469

- -941 Correction for previous years -9 -25 808805 517 223 057 Basis for payable tax in the income statement 4 206 551 282-805 517 -223 057 Distributed group contribution with tax effect - -

- - Effect of policy changes - 56 885- - Other differences - -5 511- - Basis for payable tax in the balance sheet 4 206 602 656

- - Payable tax 1) 2) 1 178 168 744-5 997 -19 324 Change in deferred tax asset 347 991 -266 088

220 587 62 456 Taxable distributed group contributions - - -2 - Insufficient/excess tax provision previous years -2 -66 399- - Other tax effects (net) -5 907 25 237

214 588 43 132 Tax cost(+)/tax income(-) 343 260 -138 506

214 588 43 132 Tax before other income elements 343 260 -138 5061 943 -8 337 Tax on other income elements 2 367 -32 424

Of which related to:1 943 -8 337 Estimate variances in the pension agreement 2 296 -31 668

- - Change in financial assets available for sale 71 - - - Revaluation of properties - -756

216 531 34 795 Total tax including other income elements 345 627 -170 930

Net deferred tax asset as of 31.12 - - Fixed assets 537 189- - Securities 142 100 2 937- - Shares in associated companies 130 291 - - - Insurance provisions (equity) 369 845 358 742- - Other changes 1) 104 098 29 471- - Total deferred tax 746 871 391 339

-40 379 -56 283 Fixed assets -49 750 -65 866- - Securities - -64 560

-268 -267 Shares in associated companies -268 -267- - Receivables -47 -145

-545 - Provisions -40 330 -16 206-25 020 -27 837 Pension liabilities -95 921 -110 924

- - Other changes - - -66 212 -84 387 Total deferred tax asset -186 316 -257 968

-59 170 -36 938 Deferred tax asset linked to tax losses carried forward - -146 771-125 382 -121 325 Deferred tax/deferred tax asset 560 555 -13 400

-125 382 -121 325 Deferred tax asset 560 555 -13 400- - Deferred tax asset, not recorded - 5 374

-125 382 -121 325 Net deferred tax asset(+)/deferred tax asset(-) 560 555 -8 026

Reconciliation of tax cost/tax income 252 581 133 959 28% of pre-tax profit 220 257 107 335-293 573 -184 228 Permanent differences (28%) -64 882 40 131257 526 85 328 Tax on group contribution - -

-3 -264 Correction for previous years -5 -222 973-1 943 8 337 Transactions directly against equity -4 235 16 208

- - Other differences 3) 4) 192 125 -79 207214 588 43 132 Calculated tax cost(+)/tax income(-) 343 260 -138 506

The deferred tax asset in the parent company is recognised in the balance sheet since forecasts of the results of our subsidiaries indicate thatour tax positions will be utilised within a 3-5 year perspective.

1) The Group's payable tax in 2012 was reduced by the tax effects of the group contributions since SpareBank 1 Gruppen believes it is likely that thedecisions about group contributions will be approved, even though the group contributions will first be recognised in the year the decisions aremade. Deferred tax has increased correspondingly.

2) The Group's payable tax in 2011 was offset with group contributions. However, the tax effects of group contributions were not recognised beforethe year a decision was made, since both their approval and amounts were uncertain. The Group's recognised payable tax in 2011 was thereforenot reduced by the tax effect of the group contributions.

3) Other differences for SpareBank 1 Gruppen in 2012 were mainly due to the effects of implementing changes to the rules for using the tax exemption method for life insurance companies.

4) Other differences in 2011 for SpareBank 1 Gruppen were primarily linked to the tax effects that follow from the disappearance of temporary differences in the conversion of subsidiaries from associated companies to limited companies, and the effects linked to changes in the TaxationAct concerning the 3% rule in the tax exemption method.


NOTE 25 – CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES

Group 2012Loans and Held to Fair value Fair value Available

NOK 1 000 Note receivables maturity trading FVO for sale Total

Financial assetsCash and cash equivalents 13, 30 755 000 - - - - 755 000 Equities and units 13, 26, 27, 28 - - 1 916 185 5 638 263 24 538 7 578 986 Bonds and commercial paper 13, 26, 27, 29, 30 1 825 434 4 477 834 533 317 19 853 732 - 26 690 318 Other financial assets 13, 26, 27 - - 27 748 - - 27 748 Lending to financial institutions 13, 14, 26, 30, 39 22 - - - - 22 Lending to customers 13, 14, 26, 30, 39 1 231 344 - - - - 1 231 344 Financial derivatives 9, 13, 26 - - 112 018 - - 112 018 Other assets 13, 41 312 681 - - - - 312 681 Total financial assets 4 124 481 4 477 834 2 589 269 25 491 995 24 538 36 708 117

Amortised Held to Fair value Fair value Available NOK 1 000 Note cost maturity trading FVO for sale Total

Financial liabilitiesSubordinated loan and hybrid tier 1 capital 15, 30, 45 483 544 - - - - 483 544Liabilities to financial institutions 15, 26, 30, 46 1 797 246 - - - - 1 797 246Deposits from and liabilities to customers 15, 26, 30, 46 348 874 - - - - 348 874Securities issued 15, 26, 27, 30, 44 773 017 - - 60 801 - 833 818Financial derivatives 9, 26 - - 177 101 - - 177 101Other liabilities 48 820 743 - - - - 820 743Total financial liabilities 4 223 424 - 177 101 60 801 - 4 461 325

Group 2011Loans and Held to Fair value Fair value Available


Financial assetsCash and cash equivalents 13, 30 1 276 149 - - - - 1 276 149Equities and units 13, 26, 27, 28 - - 1 925 682 4 812 847 19 193 6 757 722Bonds and commercial paper 13, 26, 27, 29, 30 1 368 467 4 522 630 1 037 309 16 350 251 - 23 278 657Other financial assets 13, 26, 27 - - 29 334 - - 29 334Lending to financial institutions 13, 14, 26, 30, 39 63 366 - - - - 63 366Lending to customers 13, 14, 26, 30, 39 830 905 - - - - 830 905Financial derivatives 9, 13, 26 - - 11 317 - - 11 317Other assets 13, 41 442 607 - - - - 442 607Total financial assets 3 981 494 4 522 630 3 003 642 21 163 098 19 193 32 690 057


Financial liabilitiesSubordinated loan and hybrid tier 1 capital 15, 30, 45 483 568 - - - - 483 568Liabilities to financial institutions 15, 26, 30, 46 344 393 - - - - 344 393Deposits from and liabilities to customers 15, 26, 30, 46 286 767 - - - - 286 767Securities issued 15, 26, 27, 30, 44 1 771 821 - - 133 204 - 1 905 025Financial derivatives 9, 26 - - 244 800 - - 244 800Other liabilities 48 844 902 - - - - 844 902Total financial liabilities 3 731 450 - 244 800 133 204 - 4 109 454

Parent company 2012Loans and Held to Fair value Fair value Available


Financial assetsCash and cash equivalents 13, 30 269 191 - - - - 269 191Equities and units 13, 26, 27, 28 - - - - 21 102 21 102Lending to financial institutions 13, 26, 30, 39 801 901 - - - - 801 901Financial derivatives 9, 13, 26 - - 3 078 - - 3 078Other assets 13, 41 152 844 - - - - 152 844Total financial assets 1 223 936 - 3 078 - 21 102 1 248 116


Financial liabilitiesSubordinated loan capital 15, 30, 45 283 544 - - - - 283 544Liabilities to financial institutions 15, 26, 30, 46 2 301 495 - - - - 2 301 495Securities issued 15, 26, 27, 30, 44 773 017 - - 60 801 - 833 818Financial derivatives 9, 26 - - - - - - Other liabilities 48 159 797 - - - - 159 797Total financial liabilities 3 517 853 - - 60 801 - 3 578 654

Parent company 2011Loans and Held to Fair value Fair value Available


Financial assetsCash and cash equivalents 13, 30 213 717 - - - - 213 717Equities and units 13, 26, 27, 28 - - - - 17 583 17 583Lending to financial institutions 13, 26, 30, 39 152 580 - - - - 152 580Financial derivatives 9, 13, 26 - - 2 003 - - 2 003Other assets 13, 41 202 067 - - - - 202 067Total financial assets 568 364 - 2 003 - 17 583 587 950


Financial liabilitiesSubordinated loan capital 15, 30, 45 283 568 - - - - 283 568 Liabilities to financial institutions 15, 26, 30, 46 - - - - - - Securities issued 15, 26, 27, 30, 44 1 771 821 - - 133 204 - 1 905 025 Financial derivatives 9, 26 - - - - - - Other liabilities 48 364 214 - - - - 364 214 Total financial liabilities 2 419 603 - - 133 204 - 2 552 807

NOTE 26 – VALUATION HIERARCHY

Group 2012LEVEL 1 LEVEL 2 LEVEL 3

Quoted Valuation based Valuation based

prices in on observable on non-observable

NOK 1 000 active markets market data market data Total

Securities available for sale - 4 855 19 683 24 538 Lending to customers and deposits with financial institutions - - - - Securities held for trading 2 435 472 19 085 22 693 2 477 250 Securities stated at fair value through profit or loss (FVO) 25 069 749 422 246 - 25 491 995 Financial derivatives - 112 018 - 112 018 Total assets 27 505 221 558 204 42 376 28 105 801

Securities issued - 60 801 - 60 801 Deposits from and liabilities to customers - - - - Derivatives - 177 101 - 177 101 Total liabilities - 237 902 - 237 902

61

SpareBank 1 Gruppen

Reconciliation of level 3Equities and Bonds and Other

NOK 1 000 units commercial paper securities

Financial instruments at fair valueOpening balance 18 602 22 253 314Net gains/losses on financial instruments recognised in profit or loss - 440 - Net change in value recognised in comprehensive income against equity (see change in equity) 256 - - Additions/acquisitions - - 699Disposals -1 - -187Transferred from level 1 or 2 - - - Transferred to level 1 or 2 - - - Closing balance 18 857 22 693 826

Group 2011LEVEL 1 LEVEL 2 LEVEL 3




Securities available for sale - 278 18 915 19 193Lending to customers and deposits with financial institutions - - - - Securities held for trading 2 958 320 11 751 22 254 2 992 325Securities stated at fair value through profit or loss (FVO) 20 682 025 481 072 - 21 163 097Financial derivatives - 11 317 - 11 317Total assets 23 640 345 504 419 41 169 24 185 933

Securities issued - 133 204 - 133 204Deposits from and liabilities to customers - - - - Derivatives - 244 800 - 244 800Total liabilities - 378 004 - 378 004



Financial instruments at fair valueOpening balance 19 822 19 823 314Net gains/losses on financial instruments recognised in profit or loss -1 210 2 430 - Net change in value recognised in comprehensive income against equity (see change in equity) -10 - - Additions/acquisitions - - - Disposals - - - Transferred from level 1 or 2 - - - Transferred to level 1 or 2 - - - Closing balance 18 602 22 253 314

Parent company 2012LEVEL 1 LEVEL 2 LEVEL 3




Securities available for sale - 3 519 17 583 21 102Financial derivatives - 3 078 - 3 078Total assets - 6 597 17 583 24 180

Securities issued - 60 801 - 60 801 Total liabilities - 60 801 - 60 801



Financial instruments at fair valueOpening balance 17 583 - - Net change in value recognised in comprehensive income against equity (see change in equity) - - - Additions/acquisitions - - - Disposals - - - Transferred from level 1 or 2 - - - Transferred to level 1 or 2 - - - Closing balance 17 583 - -

62

63

Parent company 2011LEVEL 1 LEVEL 2 LEVEL 3




Securities available for sale - - 17 583 17 583Financial derivatives - 2 003 - 2 003Total assets - 2 003 17 583 19 585

Securities issued - 133 204 - 133 204Total liabilities - 133 204 - 133 204



Financial instruments at fair valueOpening balance 17 583Net change in value recognised in comprehensive income against equity (see change in equity) - - - Additions/acquisitions - - - Disposals - - - Transferred from level 1 or 2 - - - Transferred to level 1 or 2 - - - Closing balance 17 583 - -

Definition of levels used to measure financial instruments at fair value:Level 1 - Valuations are arrived at based on using quoted prices in an active market for identical assets/liabilities. A financial instrument isconsidered quoted in an active market if the price is easily accessible from a stock exchange, trading agency, broker, industrial classificationagency, valuation service or governmental institution, and these prices also represent reliable and frequent market transactions based on thearm's length principle. The category includes listed equities, bonds and commercial papers.

Level 2 - Valuations are arrived at based on information for the asset/liability that can be directly or indirectly observed and that is not covered by level 1 (derived prices). Where there is no accessible quoted price for active markets, the instruments are primarily measuredusing valuation methods based on observable input and/or similar instruments/products. The pricing of commercial paper and bonds, including fixed-rate loans are based on interest rate curves published in active markets.

Level 3 - Valuations are arrived at based on data that is not observable market information. If a valuation cannot be arrived at based on level 1and level 2, then valuation methods based on non-observable market data are used.

Securities available for sale (levels 2 and 3)Securities available for sale consist of equities. Valuations are based on expected future cash flows.

Securities held for trading (levels 2 and 3)This category consists of equities and units. The securities are primarily valued using valuation methods based on information that can beobserved and/or similar instruments/products. Securities classified as level 3 consist of units where the valuation is based on expected futureearnings.

Securities stated at fair value through profit or loss (FVO) (levels 2)Securities classified as level 2 are mainly bonds. The pricing of interest-bearing papers is based on interest rate curves published in activemarkets.

Financial derivatives (level 2)Derivatives mainly consist of equity instruments, currency futures and interest rate swaps. The valuation is based on observable market dataand/or prices for similar instruments/products.

Securities issued (level 2)Valuations are based on interest rate curves published in active markets.

64

NOTE 27 – SECURITIES AT FAIR VALUE

Group

Equities and units2012 2011

Acquisition Book value/ Acquisition Book value/NOK 1 000 cost fair value cost fair value

Norwegian equities 392 965 404 590 371 128 339 286Norwegian unit trusts 1 223 296 1 533 633 1 143 279 1 279 817Foreign equities 532 451 559 772 521 778 531 482Foreign unit trusts 4 486 840 5 056 453 4 360 904 4 587 943Total equities and units at fair value 6 635 552 7 554 448 6 397 089 6 738 529

Bonds and commercial paper2012 2011


Norwegian Government and government guaranteed 0 % 1 289 749 1 295 611 1 101 627 1 110 434Financial institutions and banks 10 % 2 467 829 2 528 051 222 378 223 963Norwegian guaranteed bonds 10 % - - 1 494 838 1 512 557Municipalities and counties 20 % 140 538 145 851 128 762 133 803Financial institutions and banks 20 % 4 490 014 4 583 930 4 755 469 4 796 781Bond funds 20 % 2 682 847 2 744 564 2 226 829 2 237 473Money market funds 20 % 2 652 359 2 654 098 2 486 505 2 485 441Bond funds 50 % 772 771 782 976 640 388 714 253Financial institutions and banks 100 % 382 901 385 830 298 015 303 707Bond funds 100 % 597 223 593 999 102 994 102 638Money market funds 100 % 496 869 496 967 398 800 397 771Corporate 100 % 823 924 837 718 770 256 783 916Total Norwegian bonds and commercial papers 16 797 024 17 049 595 14 626 860 14 802 738

ForeignGovernment and government guaranteed 0 % 567 918 584 909 878 086 895 359Foreign guaranteed bonds 10 % 502 848 515 408 503 186 519 135Municipalities and counties 20 % 37 627 36 793 83 002 83 303Financial institutions and banks 20 % 950 481 929 797 417 984 398 724Bond funds 20 % 237 909 298 730 178 897 211 060Bond funds 100 % 540 518 615 584 240 000 257 164Financial institutions and banks 100 % 44 361 45 203 44 361 44 432Corporate 100 % 310 437 311 030 177 719 175 646Total foreign bonds and commercial papers 3 192 099 3 337 454 2 523 235 2 584 823

Total bonds and commercial papers at fair value 19 989 123 20 387 049 17 150 095 17 387 560

Other securities2012 2011


Hedge funds 55 17 6 565 4 300Bank fund investment choice portfolio 20 100 22 693 20 100 22 253Other financial assets 5 977 5 038 3 077 2 782Total other financial securities at fair value 26 132 27 748 29 742 29 334

Total financial assets at fair value 26 650 807 27 969 245 23 576 927 24 155 423

SpareBank 1 Gruppen

Group

Loans2012 2011


Securities issued 57 000 60 801 125 500 133 204

Total financial liabilities at fair value 57 000 60 801 125 500 133 204

Parent company

Loans2012 2011


Securities issued 57 000 60 801 125 500 133 204

Total financial liabilities at fair value 57 000 60 801 125 500 133 204

NOTE 28 – SECURITIES AVAILABLE FOR SALE

2012Parent company Group

Acquisition Book value/ Acquisition Book value/cost fair value NOK 1 000 cost fair value

- - Norsk Pensjon AS 1 600 1 250 16 530 16 530 Eiendomsverdi AS 16 530 16 530 4 572 4 572 Other 7 067 6 758 21 102 21 102 Total securities available for sale 25 197 24 538

2011Parent company Group

Acquisition Book value/ Acquisition Book value/cost fair value NOK 1 000 cost fair value

- - Norsk Pensjon AS 1 600 99416 530 16 530 Eiendomsverdi AS 16 530 16 5301 053 1 053 Other 1 978 1 66917 583 17 583 Total securities available for sale 20 108 19 193

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NOTE 29 – BONDS AT AMORTISED COST

Group2012 2011

Acquisition Book Fair Acquisition Book FairNOK 1 000 cost value value cost value value

Bonds held to maturity 4 333 934 4 353 033 4 616 898 4 377 291 4 398 085 4 603 016Accrued interest on bonds held to maturity - 124 801 - - 124 545 - Total bonds held to maturity 4 333 934 4 477 834 4 616 898 4 377 291 4 522 630 4 603 016

Other bonds at amortised cost 1 790 256 1 787 717 1 881 261 1 343 889 1 342 386 1 369 567Accrued interests on bonds at amortised cost - 37 717 - - 26 081 - Total other bonds at amortised cost 1 790 256 1 825 434 1 881 261 1 343 889 1 368 467 1 369 567Total bonds at amortised cost 6 124 190 6 303 268 6 498 159 5 721 180 5 891 097 5 972 582

2012 2011Risk Acquisition Book Fair Acquisition Book Fair

NOK 1 000 weighting cost value value cost value value

Government and government guaranteed 0 % 333 364 340 218 362 400 333 364 340 531 353 902Norwegian and foreign bonds with security 10 % 1 480 792 1 516 988 1 594 780 1 333 349 1 365 008 1 394 504Municipalities and counties 20 % 569 229 582 636 605 998 289 885 298 198 313 477Financial institutions and banks 20 % 2 234 529 2 316 807 2 337 727 2 268 946 2 351 358 2 345 308Financial institutions and banks 100 % 589 436 602 497 619 150 589 436 602 463 613 833Manufacturing loans 100 % 916 840 944 122 978 104 907 200 933 539 951 558Total bonds and commercial papers 6 124 190 6 303 268 6 498 159 5 722 180 5 891 097 5 972 582Of which listed instruments 4 566 537 4 709 098 4 847 816 4 466 002 4 606 202 4 657 544

Changes in holdings during the year 2012 2011

Opening balance as of 01.01 5 891 097 5 928 422Additions 606 244 316 060Disposals -198 696 -357 574Year's accrued premium/discount (amortisation) 4 624 4 190Closing balance as of 31.12 6 303 268 5 891 097

2012 2011P&C Life P&C Life

insurance insurance insurance insurancebusiness business business business

Duration 3.2 5.0 3.4 5.3Average effective interest rate 3.1 3.2 4.1 3.9

Parent companyThe parent company had no bonds measured at amortised cost in 2012 or 2011.

SpareBank 1 Gruppen

NOTE 30 – FAIR VALUE OF SECURITIES STATED AT AMORTISED COST


2012 2011 2012 2011Book Fair Book Fair Book Fair Book Fairvalue value value value NOK 1 000 value value value value

AssetsLoans and deposits

801 901 801 901 152 580 152 580 with financial institutions 22 22 63 366 63 366Loans to and receivables

- - - - from customers 1 231 344 1 012 111 830 906 830 906- - - - Bonds at amortised cost 6 303 268 6 530 686 5 891 097 5 907 053

269 191 269 191 213 717 213 717 Cash and cash equivalents 755 000 755 000 1 276 149 1 276 1491 071 092 1 071 092 366 297 366 297 Total financial assets 8 289 634 8 297 820 8 061 517 8 077 473

Liabilities2 301 495 2 301 495 - - Liabilities to financial institutions 1 797 246 1 797 246 344 393 344 393

Deposits from and liabilities - - - - to customers 348 874 348 874 286 767 286 767

773 017 773 017 1 771 820 1 764 242 Securities issued 773 017 773 017 1 771 820 1 764 242Subordinated loan capital

283 544 282 560 283 568 281 374 at amortised cost 483 544 458 480 483 568 454 6743 358 056 3 357 072 2 055 388 2 045 617 Total financial liabilities 3 402 680 3 377 616 2 886 548 2 850 077

Off balance sheet liabilities and 866 905 387 253 guarantee commitments 248 215 359 838

- - Unused guarantees - - 907 348 750 000 Unused drawing rights 987 348 988 892

- - Documentary credits - - - - Assets pledged as security 267 000 713 473

Amortised cost is the measurement of a financial asset or liability by cumulative amortisation of cash flows estimated at initial recognitionadjusted for depreciation. These measurements are not always consistent with the market's measurements of the same instruments. Differingviews on the macroeconomic outlook, market conditions, risk, expected rate of return and access to information might lead to such differences.

The table above displays an overview over calculated fair value of line items stated at amortised cost. The value is calculated using internalmodels that calculate based on a theoretical value in the absence of an active market or on a comparison of the instrument's last traded pricesin the market against the value registered in the portfolio. An estimate based on judgement is made where no relevant price information isavailable. A high level of uncertainty is associated with fair value measurements due to their very nature.

Bonds at amortised costBonds held to maturityThere are no objective indications that these fell in value in 2012. In addition to continuously assessing the various investments, formal quarterly valuation meetings are held in which the exposure is reviewed in detail with a view to revealing changes in underlying risk. Changes in credit assessments, changes in interest rates and credit premiums, as well as specific macro risks, are important parameters forassessing whether or not a fall in value occurred in 2012.

Lending and receivables measured at amortised costIn addition to continuously assessing whether or not changes have occurred in the value of instruments included in lending and receivables,formal quarterly valuation meetings are held in which the exposure is reviewed in detail with a view to revealing changes in underlying risk.Key to assessing the value are credit assessments and the likelihood of default, as well as changes in interest rates and credit premiums.

Liabilities to financial institutions and deposits from customersLiabilities to financial institutions and deposits from customers are stated at amortised cost. Minor deposits with index-linked returns (BMB)are stated at fair value. The fair value of currently priced deposits equals amortised cost.

Securities issued and subordinated loan capitalSecurities issued with fixed interest rates are designated at fair value, while securities issued with a floating interest rate and subordinatedloan capital are stated at amortised cost. The valuation of debt measured at amortised cost is either based on broker quotes or calculated onthe basis of swap curves published by Reuters. Similar to lending, the value of assumed new issuance is used.

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NOTE 31 – INVESTMENTS IN SUBSIDIARIES

2012

NOK 1 000 Registered Ownership Share Nominal value BookCompanies office interest % capital per share value

SpareBank 1 Livsforsikring AS Oslo 100 348 400 200 3 045 997SpareBank 1 Skadeforsikring AS Oslo 100 132 000 100 1 868 952SpareBank 1 Medlemskort AS Oslo 100 150 50 1 600Odin Forvaltning AS Oslo 100 9 238 1 000 176 045SpareBank 1 Gruppen Finans AS Oslo 100 215 200 1 000 421 887SpareBank 1 Markets AS1) Oslo 97,55 60 000 1 000 498 623Total investments in subsidiaries 6 013 104

SpareBank 1 Gruppen AS increased its ownership interest in SpareBank 1 Markets AS in 2012 from 97.22% to 97.55%. Sparebankutvikling AS wassold in 2012.

1) A shareholder agreement exists between SpareBank 1 Gruppen AS and employee shareholders. The shareholders in the company have pre-emptive rights when capital increases are carried out in line with the principles in the Limited Liability Companies Act.

2011

NOK 1 000 Registered Ownership Share Nominal value BookCompanies office interest % capital per share value

SpareBank 1 Livsforsikring AS Oslo 100 348 400 200 2 797 997SpareBank 1 Skadeforsikring AS Oslo 100 132 000 100 1 266 034SpareBank 1 Medlemskort AS Oslo 100 150 50 1 600Sparebankutvikling AS Oslo 100 100 1 000 100Odin Forvaltning AS Oslo 100 9 238 1 000 176 045SpareBank 1 Gruppen Finans AS Oslo 100 212 200 1 000 389 699SpareBank 1 Markets AS1) Oslo 97,22 60 000 1 000 353 719Total investments in subsidiaries 4 985 194

SpareBank 1 Gruppen AS increased its ownership interest in SpareBank 1 Markets AS in 2011 from 76.75% to 97.22%.

1) A shareholder agreement exists between SpareBank 1 Gruppen AS and employee shareholders. The shareholders in the company have pre-emptive rights when capital increases are carried out in line with the principles in the Limited Liability Companies Act.

NOTE 32 – INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT VENTURES

Total2012 ownership

SpareBank 1 DA interest in alliance joint

NOK 1 000 10,00 % ventures

As of 01.01 10 147 10 147Increase/reduction in ownership interest - - Correction of OB - - Share of profit/loss from previous years 400 400Share of tax - - Dividend paid from equities and units - - As of 31.12 10 547 10 547

Voting rights match ownership interest. The SpareBank 1 DA alliance's registered office is in Oslo.

Total2011 ownership

SpareBank 1 DA interest in alliance joint

NOK 1 000 10,00 % ventures

As of 01.01 9 010 9 010Increase/reduction in ownership interest - - Correction of OB 987 987Share of profit 150 150Share of tax - - Dividend paid from equities and units - - Per 31.12 10 147 10 147

Voting rights match ownership interest. The SpareBank 1 DA alliance's registered office is in Oslo.

SpareBank 1 Gruppen

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Financial information about joint ventures

2012SpareBank 1 DA

NOK 1 000 alliance

Assets 520 199Liabilities 415 326Income 660 862Net profit for the period -593Ownership interest 10,00 %

2011SpareBank 1 DA

NOK 1 000 alliance

Assets 547 584Liabilities 442 118Income 577 341Net profit for the period 1 501Ownership interest 10,00 %

The parent company has the following receivables and liabilities with joint ventures

NOK 1 000 2012 2011

Receivables the SpareBank 1 DA alliance 60 228 110 165 Total receivables from joint ventures 60 228 110 165

Investments in joint ventures in the parent company SpareBank 1 Gruppen AS

NOK 1 000 2012 2011

Units in the SpareBank 1 DA alliance 10 147 10 147 Total equities and units in joint ventures 10 147 10 147

Units in the SpareBank 1 DA alliance are, following the changeover to IFRS, recognised at original cost and tested for impairment in the parent company's financial statements. No basis for impairment was found at year-end 2012, or year-end 2011.

SpareBank 1 Gruppen

NOTE 33 – INVESTMENT PROPERTIES

GroupSpareBank 1 Gruppen's total property portfolio consisted of 238 568 m2 in 21 buildings as of 31 December 2012. Of this SpareBank 1 Gruppenuses 31 379 m2 for its own business. The total vacancy rate is 7.4%. The weighted remaining tenancy period for the entire portfolio is 4.3 years.Note 3 on critical accounting estimates and judgements discusses sensitivity in more detail.

NOK 1 000 2012 2011

Additions/disposals and value adjustmentsAcquisition cost as of 01.01 3 449 141 3 472 146Year's additions 53 808 185 621Year's disposals -5 000 -208 626Acquisition cost as of 31.12 3 497 949 3 449 141Accumulated depreciation as of 01.01 15 798 7 949Year's depreciation - 7 849Year's disposals -15 798 - Accumulated depreciation as of 31.12 - 15 798Accumulated value adjustments as of 01.01 720 535 725 840Year's revision of property value -70 975 -5 305Accumulated value adjustments as of 31.12 649 560 720 535Book value as of 31.12 4 147 509 4 153 878

2012 AverateCity/ Cost Book Lease Area end of

NOK 1 000 area price value income in m2 lease

Type of buildingOffice building Oslo Sentrum 830 938 837 326 1 668 264 37 253 2015-2017Office building Skøyen 562 615 763 427 1 326 042 34 094 2016-2017Office building Oslo øvrig 217 522 248 683 466 205 9 296 2023Office building Tønsberg 12 233 19 714 31 947 2 503 2014Office building/shops Oslo Sentrum 638 433 875 542 1 513 975 36 333 2017-2018Office building/shops Skøyen 705 421 935 529 1 640 950 51 933 2017-2018Shopping centre Oslo øvrig 282 046 279 859 561 905 19 068 2018Office building/shops Akershus 111 828 142 558 254 386 16 709 2017Plots of land Oslo/skien 41 190 44 871 86 061 - 2096Total 3 402 226 4 147 509 7 549 735 207 189

2011 AverateCity/ Cost Book Lease Area end of

NOK 1 000 area price value income in m2 lease

Type of buildingOffice building Oslo Sentrum 644 044 821 471 2 059 55 956 2014Office building Skøyen 368 406 549 542 80 574 23 559 2014Office building Oslo øvrig 217 522 261 071 19 307 9 296 2022Office building Tønsberg 12 233 25 481 1 476 2 503 2013Office building/shops Oslo Sentrum 829 521 1 063 964 39 049 37 141 2015Office building/shops Skøyen 700 236 953 619 109 947 52 318 2016Shopping centre Oslo øvrig 282 046 288 726 24 288 19 054 2017Office building/shops Akershus 111 828 145 922 14 414 16 560 2017Other Oslo 41 190 44 082 2 622 - 2096Total 3 207 026 4 153 878 293 736 216 387

The companies utilise an internal cash flow model to calculate fair value for the properties. In the model, a 30-year cash flow is estimated on thebasis of expected future costs and income for each property. After the end of the 30th year of the cash flow, a terminal value is calculated. Thecash flow and terminal value are then inflated to correct for expected price inflation and discounted by a required rate of return consisting of arisk free interest rate and a risk premium. The risk premium is set separately for each property.

More about the most important assumptions:

Rental income The companies use a special model for office space, which accounts for the largest category of floor space in the portfolio, to estimate the expected long-term cash flow after expiry of the current leases. The basic data contains both the individual property's price history from real, signed contracts and market statistics for the same geographic area, and these are used to estimate the expected future rent for the space.

The expected rent per square metre in the area is estimated by calculating the average market rent per square meter over the last 10 years, adjusted for the present value of the NOK. The area's expected rent is then adjusted for the individual property. The adjustment is based on rentsfrom real, signed contracts, which are compared with historical market rents for the same area.

This results in an expected cash flow per office space based on real willingness to pay trends and cash flows for space in the area.

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The companies' own assessments are used to determine future income for categories of space not covered by rent statistics.

Costs Expected costs are estimated on the basis of the average historical operating costs and the companies' expectations per property. OPAK's estimates are used to estimate representative market expectations if the historical costs have been lower or higher than OPAK's limits for normalowner costs.

Owner costs are assumed to climb with a property's age and grow linearly to OPAK's limit for high owner costs over the duration of the cashflow.

Required rate of return The required rate of return consists of the risk free interest rate, which changes over the duration of the cash flow, and the risk premium, whichis individual to each property.

Risk free interest rate The companies have chosen to use a 10-year swap rate for the first 10 years of the cash flow, and an estimated long-term normal rate of 5% forthe last 10 years and for the final value. Interpolation between the two rates is used for the intervening years, i.e. from year 10 to year 20.

Risk premium The companies use a categorisation tool to estimate the risk premium per property. Location, contract length, and the assumed degree of thecyclical nature of the cash flow for the individual property are all elements used to place a property's weighted risk properties on a points scale.A property's placement on the points scale is then used to find the property's specific risk premium within a range between an estimated highand low risk premium in the market. This range is calibrated against observed key figures from the transactions market. Categorisation and calibration must together contribute to market-related and consistent value assessments at fair value, both across properties and over time.

NOTE 34 – PROPERTY, PLANT AND EQUIPMENT

2012


Machinery, Machinery Buildings andequipment and equipment and other real

vehicles NOK 1 000 vehicles estate Totalt

275 503 Acquisition cost or valuation as of 01.01.12 446 858 808 440 1 255 298- Reclassified to investment properties - - - - Reclassified from investment properties - - -

42 446 Additions 59 309 48 804 108 113- Disposals -1 195 - -1 195- Value adjustment - - - - Translation differences -537 - -537

317 949 Acquisition cost or valuation as of 31.12.12 504 435 857 244 1 361 679

114 640 Accumulated depreciation and write-downs as of 01.01.12 233 094 6 061 239 15538 421 Year's depreciation 61 462 241 61 703

- Year's disposals -465 - -465- Year's write-downs - - - - Translation differences 17 - 17

153 061 Accumulated depreciation and write-downs as of 31.12.12 294 108 6 302 300 410

164 888 Carrying amount as of 31.12.12 210 327 850 942 1 061 269

Value adjustment reserve as of 31.12.12 -Value adjustment fund -

SecurityThe company has not pledged any fixed assets as security or guarantees.

Unused buildings and other real estate1% of the space in activated buildings was not in use.

SpareBank 1 Gruppen

2011


Machinery, Machinery Buildings andequipment and equipment and other real

vehicles NOK 1 000 vehicles estate Totalt

335 632 Acquisition cost or valuation as of 01.01.2011 482 974 998 818 1 481 792- Reclassified to investment properties - -187 041 -187 041- Reclassified from investment properties - 1 244 1 244

107 594 Additions 139 800 519 140 319-167 723 Disposals -178 052 -2 400 -180 452

- Value adjustment - -2 700 -2 700- Translation differences 2 138 - 2 138

275 503 Acquisition cost or valuation as of 31.12.2011 446 858 808 440 1 255 298

208 131 Accumulated depreciation and write-downs as of 01.01.11 303 870 19 305 323 17526 337 Year's depreciation 53 709 182 53 891

-119 828 Year's disposals -124 477 -13 426 -137 903- Year's write-downs - - - - Translation differences -8 - -8

114 640 Accumulated depreciation and write-downs as of 31.12.11 233 094 6 061 239 155

160 863 Carrying amount as of 31.12.11 213 764 802 379 1 016 143

Value adjustment reserve as of 31.12.11 -Value adjustment fund -

SecurityThe company has not pledged any fixed assets as security or guarantees.

Unused buildings and other real estateAll the space in activated buildings is in use.

NOTE 35 – GOODWILL2012 2012 2012 2011

NOK 1 000 Acquisition cost Additions Amortisation Book value Book value

Goodwill from acquisition of SpareBank 1 Livsforsikring AS 378 656 - - 199 953 199 953 Goodwill from acquisition of 49% of ODIN Forvaltning AS 158 263 - - 79 131 79 131 Goodwill ODIN from acquisition of Rahastotori/Fondex 50 060 - -12 626 37 270 49 896 Goodwill from acquisition of SpareBank 1 Skadeforsikring AS 553 616 - - 264 003 264 003 Goodwill from acquisition of SpareBank 1 Gruppen Finans AS 10 245 - - 10 245 10 245 Goodwill from acquisition of SpareBank 1 Markets AS 42 709 - - 42 709 42 709 Goodwill from acquisition of SB Securities LLP 9 321 - -9 321 - 9 321 Goodwill from acquisition of Conecto AS 205 882 - - 205 882 205 882 Total goodwill 1 408 752 - -21 947 839 193 861 140

When acquiring control in a business (business merger) all identifiable assets and liabilities are recorded at fair value in accordance withIFRS 3R. A positive difference between the fair value of the acquisition price and fair value of net identifiable assets and liabilities is recordedas goodwill, while a negative difference would be recorded as income at the time of the acquisition. Goodwill is acquired when there is a difference between the fair value of the acquisition price when acquiring a business and the fair value of net identifiable assets and liabilities.Goodwill is assumed to have an indefinite useful life. Company acquisitions are, in part, based on factors such as strategic adaptation andexpected economic profitability over a long time period. Goodwill is allocated to cash generating units. Goodwill is not subject to amortisation,but is subject to annual impairment testing with the purpose of identifying any indications that impairment may have occurred, in accordancewith IAS 36.

Determination of recoverable amount:Cash flow forecasts (before tax) based on 5 year projections are used. The recoverable amount on the balance sheet date is assessed annually forgoodwill with an indefinite useful life. The value of each of the cash generating units was assessed as of 31 December 2012. In determining therecoverable amount of cash generating units, SpareBank 1 Gruppen takes into account the pricing of comparable financial institutions (takinginto consideration companies that have performed better than market expectations for the past few years), dividend policies, ownership structure, and the distributors of insurance products.

For SpareBank 1 Gruppen, there will be a considerable variation in the values depending on whether the value assessments are based on agoing concern assumption or as part of a transaction of structure. The value assessments results in three scenarios; a pessimistic value, anexpected value and an optimistic value.

The calculated value is significantly higher than the carrying amount, and the analysis indicates no sign of impairment. However, a write-down was carried out in a subsidiary of ODIN Forvaltning AS, Rahastotori, in the amount of NOK 12.6 million as of 31 December 2012 and ina former subsidiary of SpareBank 1 Markets AS, SB Securities LLP, all of the previous goodwill amounting to NOK 9.3 million was writtendown when the company ceased trading in London.

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For SpareBank 1 Markets AS, a valuation has been performed based on expected cash flows for the company in the period 2013 - 2016, with acalculated residual value of the company at the end of the period. The calculation is sensitive with regard to the level of expected cash flowsand the hurdle rate. The calculation uses a hurdle rate of 12% after tax. Based on these assumptions, the calculated value of the company isNOK 570 million. The sensitivity related to the given assumptions are as follows:+/- 10% change in net cash flow = +/- NOK 67 million in value+/- 1% change in required rate of return = +/- NOK 82.5 million in value

NOTE 36 – OTHER INTANGIBLE ASSETS

2012IT- Selfdeveloped Insurance

systems insurance systems under CustomerNOK 1 000 in use Licences systems development relationships Brands Total

Acquisition cost as of 01.01.121) 119 878 72 151 39 164 75 816 17 318 63 625 387 950Year's additions 117 302 37 893 22 426 9 997 - - 187 618Of which developed internally - 5 835 22 426 - - - 28 262Of which bought separately 117 302 32 057 - 9 997 - - 159 356Of which intangibleassets upon acquisition - - - - - - -

Year's disposals -24 783 - - -74 371 - - -99 154Acquisition cost as of 31.12.12 212 397 110 044 61 590 11 442 17 318 63 625 476 414

Accumulated depreciation and write-downs as of 01.01.12 85 350 32 551 3 950 2 561 4 615 24 939 153 966Year's depreciation 23 866 16 862 1 241 26 3 355 3 892 49 242Year's write-downs - - 1 536 - - - 1 536Year's disposals depreciationg -24 783 - - -2 562 - - -27 345Year's disposals write-downs 295 1 317 - - - - 1 612Accumulated depreciation and write-downs as of 31.12.2012 84 728 50 729 6 727 25 7 970 28 831 179 010Carrying amount as of 31.12.12 127 669 59 315 54 863 11 417 9 348 34 794 297 405

Useful life and straight line depreciation method 3-5 år 5-7 år 10 år 5 år

1) Opening balance for brands was reduced by TNOK 3.950 and self-developed insurance systems was increased by TNOK 3.950 in line withthe acquisition cost on 01.01.12 and accumulated depreciation and write-downs as of 01.01.12

2011IT- Selfdeveloped Insurance

systems insurance systems under CustomerNOK 1 000 in use Licences systems development relationships Brands Total

Acquisition cost as of 01.01.2011 99 254 45 101 13 848 15 927 14 000 67 173 255 303Correction acquisition cost 01.01.11 537 -1 - 8 525 - - 9 061Revised acquisition cost 01.01.11 99 791 45 100 13 848 24 452 14 000 67 173 264 364Year's additions 20 087 27 051 21 366 51 364 3 318 400 123 586Of which developed internally 257 - 21 366 - - - 21 623 Of which bought separately 19 830 27 051 - 51 364 - - 98 245 Of which intangible assets upon acquisition - - - - 3 318 400 3 718

Year's disposals - - - - - - - Acquisition cost as of 31.12.2011 119 878 72 151 35 214 75 816 17 318 67 573 387 950

Accumulated depreciation and write-downs as of 01.01.2011 66 099 21 184 - - 1 400 19 736 108 419Correction depreciation and write-downs as of 01.01.11 8 069 1 - 993 - - 9 063Revised depreciation and write-downs as of 01.01.11 74 168 21 185 - 993 1 400 19 736 117 482Year's depreciation 11 182 11 243 - 1 568 3 215 9 153 36 361Year's write-downs - - - - - - - Year's disposals depreciation - 123 - - - - 123Year's disposals write-downs - - - - - - - Accumulated depreciation and write-downs as of 31.12.2011 85 350 32 551 - 2 561 4 615 28 889 153 966Carrying amount as of 31.12.11 34 528 39 600 35 214 73 255 12 703 38 684 233 984

Useful life and straight line depreciation method 3-5 år 5-7 år 10 år 5 år

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NOTE 37 – REINSURANCE RECEIVABLESGroup

NOK 1 000 2012 2011

Reinsurance receivables in P&C Insurance 94 963 107 204Reinsurance receivables in life insurance 150 413 152 459Reinsurer's share gross claims provisions 1 100 673 985 268Reinsurer's share gross unearned premium 169 735 168 328Reclassified reinsurance provisions - -2 103Total reinsurance receivables 1 515 784 1 411 156

NOTE 38 – RECEIVABLES FROM POLICYHOLDERSGroup

NOK 1 0002012 2011

Due invoiced receivables P&C Insurance 423 749 472 871Due unbilled receivables P&C Insurance 1 091 640 990 859Accounts receivable life insurance 96 301 104 273Total receivables from policyholders 1 611 690 1 568 003

NOTE 39 – LENDING TO AND DEPOSITS WITH CUSTOMERS AND FINANCIAL INSTITUTIONS

Group

Lending to and deposits with financial institutions

NOK 1 000 2012 2011

Lending to and deposits with financial institutions without agreed maturity 22 63 366Lending to and deposits with financial institutions with agreed maturity - - Total lending to and deposits with financial institutions 22 63 366

Specification of lending and deposits by most important currenciesNOK 22 56 874SEK - 2 190USD - - JPY - - GBP - 293EUR - 3 557CAD - - CHF - - Other currency - 452Total 22 63 366

Lending to customers

NOK 1 000 2012 2011

Lending specifiedCash advances and bank overdrafts 890 850 533 922 Building loans - - Repayment loans - - Other lending - - Portfolio of outstanding receivables 341 034 297 673 Gross lending to and deposits with customers 1 231 884 831 595

Write-downs/loss provisions -540 -690Net lending to and deposits with customers 1 231 344 830 905

Lending to and deposits with customers and financial institutions 1 231 366 894 271

SpareBank 1 Gruppen

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Lending to and deposits with customers by market 2012 2011

Employees 122 973 78 368 By industry 1 108 911 753 227 Gross lending to and deposits with customers 1 231 884 831 595

Write-downs/loss provisions -540 -690Net lending to and deposits with customers 1 231 344 830 905

Gross lending by geographic area 2012 2011

Akershus 4 140 5 642 Oslo 29 335 16 318 Møre og Romsdal 347 327 221 770 Other 851 082 587 865 Total gross lending by geographic area 1 231 884 831 595

Gross lending by sector and industry 2012 2011

No industry affiliation 127 457 87 082 Agriculture 1 606 2 082 Fishing and fish processing 138 378 6 106 Services related to extraction of crude oil and natural gas 62 772 7 767 Manufacturing 413 498 278 145 Building and construction, power and water supply 17 809 17 160 Wholesale and retail trade 207 053 79 920 Hotel and restaurant 359 - Transport and storage 12 518 106 421 Business services 6 790 7 399 Property management - 19 Information and technology 10 426 7 905 Finance 230 794 227 127 Other sectors 2 424 4 462 Total gross lending by sector and industry 1 231 884 831 595

Individual write-downs/loss provisions by sector and industry 2012 2011

Employees, etc. - - Manufacturing - - Building and construction - - Wholesale and retail trade - - Hotel and restaurant - - Transport and storage - - Business services - - Property management - - Information and technology - - Other sectors - - Specific loss provisions SpareBank 1 Gruppen Finans AS 540 690 Total individual write-downs/loss provisions by sector and industry 540 690

SpareBank 1 Gruppen's lending portfolio was mainly in its subsidiary SpareBank 1 Gruppen Finans AS and SpareBank 1 Markets AS in 2012 and 2011.

Parent company

NOK 1 000 2012 2011

Subordinated loan to First Securities AS - 32 580 Long-term loan to SpareBank 1 Gruppen Finans AS 150 000 - Subordinated loan to SpareBank 1 Gruppen Finans AS 55 000 - Credit line for SpareBank 1 Markets AS - 120 000 Lending to corporate account 596 901 - Total lending 801 901 152 580

Loans are stated at amortised cost.

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NOTE 40 – NET LOAN LOSS PROVISIONS

Group

NOK 1 000 2012 2011

Incurred losses and provisions for calculated lossesDebtors:Incurred losses on loans with previous write-offs - specified loss provisions 100 168 Incurred losses on loans with previous write-offs - unspecified loss provisions - - Incurred losses on loans with no previous write-offs 638 1 183Incurred losses 738 1 351

Specified provisions 01.01 395 229- Reversed previous write-offs specified losses -395 -229+ Period's specified losses 473 395Specified provisions 31.12 473 395

Unspecified provisions 01.01 - - - Incurred losses - - + Period's unspecified provisions - - Unspecified provisions 31.12 - -

NOK 1 000 2012 2011

Customers:Incurred losses on loans with previous write-offs - specified loss provisions 156 13 016Incurred losses on loans with previous write-offs - unspecified loss provisions - - Incurred losses on loans with no previous write-offs - 42 Incurred losses 156 13 058

Fixed income recognised as income - -

Specified provisions losses customers 01.01 690 13 600- Reversed previous write-offs specified losses -149 -13 016+ Period's specified losses - 106Specified provisions losses customers 31.12 1) 540 690

- Reversed previous write-offs group write-downs customers - - - Included in previously incurred losses -46 -94Income/losses in profit or loss 776 1 569

1) Specified provisions in 2011 are primarily due to a single standing event in 2010.

Gross net loan loss provisions by sector and industry

NOK 1 000 2012 2011

No industry affiliation 255 - Agriculture, forestry, fishing and hunting at sea - - Manufacturing and mining 365 - Building and construction, power and water supply - 295 Wholesale and retail trade, hotel and restaurant trade - 30 Transport and other services 157 - Financing, property management and other business services - 100 Other countries - - Retail market - 1 144 Group write-downs corporate - - Group write-downs retail - - Gross net loan loss provisions to customers 776 1 569

Non-performing and impaired loans

NOK 1 000 2012 2011 2010 2009 2008

Non-performing loans (more than 90 days overdue) 122 973 1) 78 368 1) 34 252 1) 416 568 268 741Other impaired loans - - - 23 038 131 855Total impaired loans 122 973 1) 78 368 1) 34 252 1) 439 606 400 596Individual write-downs - - - 149 485 88 323Net impaired loans 122 973 1) 78 368 1) 34 252 1) 589 091 312 273

1) The portfolio consists of acquired non-performing demands (all demands over 90 days) in SpareBank 1 Gruppen Finans AS's business areaPortfolio in 2012, and the same is true for 2010 and 2011. Fulfilment of the claims in the portfolios depends on the debtor's ability to pay.

Parent companyThe parent company has no net loan loss provisions.

SpareBank 1 Gruppen

NOTE 41 – OTHER ASSETS


2012 2011 NOK 1 000 2012 2011

1 074 66 Accrued income 89 572 45 6739 349 - Prepaid costs 72 384 23 419

- - Prepaid claims SOS travel 39 564 13 186- - Receivables management companies 15 097 118 168

60 228 113 471 Receivables the SpareBank 1 DA alliance 60 228 113 47116 497 5 212 Trade receivables 40 940 29 31875 045 79 102 Other receivables 1) 104 625 130 061

- 4 216 Other assets 2 220 5 916162 192 202 067 Total other assets 424 629 479 212

1) Other receivables in the Group in 2012 include receivables related to the natural disaster pool in SpareBank 1 Skadeforsikring Group thatamounts to NOK 49 million and ordinary receivables in the property companies owned by SpareBank 1 Skadeforsikring which amount to NOK28 million. Other receivables in SpareBank 1 Gruppen AS in 2012 include ordinary intragroup balances amounting to NOK 63.3 million.

NOTE 42 – INSURANCE LIABILITIES IN LIFE INSURANCE

Group2012 Premium fund,

Gross contribution fundpremium Additional and pensioners' Claims Security

NOK 1 000 reserve provisions profit fund provisions provisions Total

Individual annuity and pension 6 078 803 134 868 - 234 860 - 6 448 531 - Profit model pursuant to section 9-9 of the Insurance Activity Act 73 920 411 - -

- Profit model pursuant to previously applicable provisions of the Act of 10 June 1988 relating toinsurance activity, section 8-1, and relevant regulations 3 943 524 134 457 - 22 500 -

- Contracts without right to profit sharing 505 659 - - 212 117 - - Investment choice 1 555 700 - - 243 -

Individual endowment 1 963 498 8 744 - 250 010 - 2 222 252- Profit model pursuant to section 9-9 of the Insurance Activity Act 271 961 - - -

- Profit model pursuant to previously applicable provisions of the Act of 10 June 1988 relating toinsurance activity, section 8-1, and relevant regulations 491 148 8 744 - 50 300 -

- Contracts without right to profit sharing - - - 199 025 - - Investment choice 1 200 389 - - 685 -

Group pension 13 466 059 231 104 488 221 381 063 - 14 566 447 - Defined benefit-based pension schemes without investment choice 3 326 506 152 612 245 379 115 567 -

- Paid-up policies 4 064 849 78 492 - 52 500 - - Defined contribution-based pension schemes (incl. pension capital certificates) without investment choice 552 685 - 20 120 11 072 -

- Defined contribution-based pension schemes (incl. pension capital certificates) with investment choice 5 361 635 - 218 985 103 782 -

- Contracts without right to profit sharing 160 384 - 3 737 98 142 -

Group life 154 012 - 236 547 745 216 446 1 136 221

Accident insurance - - - 277 139 59 528 336 667- Contracts without right to profit sharing - - - 277 139 59 528

Total all industries 21 662 372 374 716 724 768 1 888 288 59 974 24 710 118

77

SpareBank 1 Gruppen

Group2011 Premium fund,

Gross contribution fundpremium Additional and pensioners' Claims Security

NOK 1 000 reserve provisions profit fund provisions provisions Total

Individual annuity and pension 5 929 666 93 752 1 172 355 200 - 6 379 790 - Profit model pursuant to section 9-9 of the Insurance Activity Act 64 686 319 - - -

- Profit model pursuant to previously applicable provisions of the Act of 10 June 1988 relating toinsurance activity, section 8-1, and relevant regulations 4 169 087 93 432 1 172 22 458 -

- Contracts without right to profit sharing 175 940 - - 332 742 - - Investment choice 1 519 953 - - - -

Individual endowment 2 096 684 8 307 - 186 123 540 2 291 654- Profit model pursuant to section 9-9 of the Insurance Activity Act 321 254 - - - -

- Profit model pursuant to previously applicable provisions of the Act of 10 June 1988 relating toinsurance activity, section 8-1, and relevant regulations 590 389 8 307 - 68 846 540

- Contracts without right to profit sharing - - - 117 092 - - Investment choice 1 185 041 - - 185 -

Group pension 11 463 703 242 063 485 606 322 472 - 12 513 844 - Defined benefit-based pension schemes without investment choice 3 118 807 167 414 264 466 107 567 -

- Paid-up policies 3 696 710 74 649 - 34 500 - - Defined contribution-based pension schemes (incl. pension capital certificates) without investment choice 440 660 - 23 985 10 971 -

- Defined contribution-based pension schemes (incl. pension capital certificates) with investment choice 4 074 660 - 197 155 89 028 -

- Contracts without right to profit sharing 132 866 - - 80 407 -

Group life 398 235 - - 720 479 - 1 118 714

Accident insurance - - - 258 777 57 738 316 515- Contracts without right to profit sharing 258 777 57 738

Total all industries 19 888 288 344 121 486 778 1 843 051 58 279 22 620 517

78

NOTE 43 –TECHNICAL PROVISIONS IN P&C INSURANCE

Group

2012

1 PERS

ONAL

LINES

2 CO

MMER

CIAL

LINES

Of which

TOTA

LOn

shore

Onshore

Of which

Workm

en's

TOTA

L3

45

Natural

Onshore

third

party

Travel

PERS

ONAL

property

property

third

party

compen-

COMMER

CIAL

Total

Energy/

Total

Perils

NOK 1 000

property

Motor

liability

Yacht

Accident insurance

Others

LINE

S industrialcom

mercial

Motor

liability

Liability

sation

Safety

Other

LINE

S Marine

oil reinsurance

pool

TOTA

L

Gross u

nearned

prem

ium provisio

ns

as of 01.01.12

632 750

893 770

385 771

36 818

40 090

131 344

11 016

1 745 788

4 462

165 579

127 531

41 110

11 005

67 928

6 552

12 676

395 734

- -

- 38 440

2 179 962

Gross u

nearned

prem

ium provisio

ns

as of 31.12.12

655 888

915 738

395 696

37 673

38 843

141 956

12 550

1 802 649

4 380

163 616

118 740

36 573

12 408

69 262

8 402

16 294

393 102

- -

- 34 741

2 230 493

Gross claims

provisions

as of 01.01.12

1 110 124

1 650 686

1 248 813

32 479

359 156

162 109

12 300

3 326 852

10 637

422 895

292 421

207 026

78 759

976 912

295 274

30 602

2 107 500

102 529

55 815

43 312

159 240

5 795 249

Gross claims

provisions

as of 31.12.12

1 213 847

1 888 856

1 557 578

27 287

416 276

203 434

14 941

3 764 640

11 685

423 808

319 464

244 136

99 836

1 016 304

319 293

63 062

2 253 452

62 823

40 116

59 856

125 641

6 306 529

Security

provisions

as of 01.01.12

582 824

211 578

2 273

- 8 222

804 897

Statutory minimum

requirements as of 01.01.12

560 021

208 642

2 273

- 8 222

779 158

Security provisions

as of 31.12.12

577 837

198 877

--

1 806

778 520

Statutory minimum


546 066

190 032

--

1 806

737 905

Other technical

provisions as o

f 01.01.12

340 091

- 340 091

Other technical

provisions as o

f 31.12.12

377 399

- 377 400

Total as of 01.01.12

9 120 199


9 692 942

79


Group

2011

1 PERS

ONAL

LINES

2 CO

MMER

CIAL

LINES

Of which

TOTA

LOn

shore

Onshore

Of which

Workm

en's

TOTA

L3

45

Natural

Onshore

third

party

Travel

PERS

ONAL

property

property

third

party

compen-

COMMER

CIAL

Total

Energy/

Total

Perils

NOK 1 000

property

Motor

liability

Yacht

Accident insurance

Others

LINE

S industrialcom

mercial

Motor

liability

Liability

sation

Safety

Other

LINE

S Marine

oil reinsurance

pool

TOTA

L

Gross u

nearned

prem

ium provisio

ns

as of 01.01.11

556 389

793 219

325 971

32 802

37 279

120 582

12 854

1 553 125

4 818

156 545

118 597

32 448

7 398

62 762

4 553

14 728

369 402

- -

- 39 293

1 961 820

Gross u

nearned

prem

ium provisio

ns

as of 31.12.11

632 750

893 770

385 771

36 818

40 090

131 344

11 016

1 745 788

4 462

165 579

127 531

41 110

11 005

67 928

6 552

12 676

395 734

- -

- 38 440

2 179 962

Gross claims

provisions

as of 01.01.11

944 084

1 477 788

1 116 074

20 037

325 967

132 095

10 354

2 910 324

12 982

345 564

232 471

156 276

88 302

913 243

250 353

48 051

1 890 966

157 823

68 242

47 769

48 818

5 123 942

Gross claims

provisions

as of 31.12.11

1 110 124

1 650 686

1 248 813

32 479

359 156

162 109

12 300

3 326 852

10 637

422 895

292 421

207 026

78 759

976 912

295 274

30 602

2 107 500

102 529

55 815

43 312

159 240

5 795 249

Security provisions

as of 01.01.11

500 480

251 285

1 224

- 14 208

767 198

Statutory minimum


500 480

251 285

1 224

- 14 208

767 198

Security provisions

as of 31.12.11

582 824

211 578

2 273

- 8 222

804 897

Statutory minimum


560 021

208 642

2 273

- 8 222

779 158

Other technical

provisions as o

f 01.01.11

452 531

- 452 531

Other technical

provisions as o

f 31.12.11

340 091

- 340 091


8 305 494


9 120 199

NOTE 44 – SECURITIES ISSUED

Parent company GroupAverage Average Average Average

interest rate interest rate interest rate interest rate 2012 2012 2011 2011 NOK 1 000 2012 2012 2011 2011

Commercial papers and other - - 635 000 3.39 % other short-term loans - - 635 000 3.39 %

829 500 3.29 % 1 255 500 4.04 % Bond debt 829 500 3.29 % 1 255 500 4.04 %1 590 - 2 673 - Value adjustments 1 590 - 2 673 - 2 728 - 11 852 - Accrued interest 2 728 - 11 852 -

833 818 1 905 025 Total securities issued 833 818 1 905 025

Liabilities by maturity date- 980 000 2012 - 980 000

100 000 100 000 2013 100 000 100 000444 500 525 500 2014 444 500 525 500285 000 285 000 2015 285 000 285 000

- - 2016 - - - - 2017 - - - 2018 - -

1 590 2 673 Value adjustments 1 590 2 6732 728 11 852 Accrued interest 2 728 11 852

833 818 1 905 025 Bond debt and other loans 833 818 1 905 025

NOTE 45 – SUBORDINATED LOAN CAPITAL AND HYBRID TIER 1 CAPITAL


2012 2011 NOK 1 000 Interest rate Call date Maturity 2012 2011

Perpetual

83 209 83 230 Owner bank and Sparebanken Vest NIBOR plus 3.00% perpetual 83 209 83 230

200 335 200 338 Owner bank, Sparebanken Vest and Swedbank NIBOR plus 3.00% perpetual 200 335 200 338

283 544 283 568 Total perpetual 283 544 283 568

Hybrid tier 1 capital

15.06.2006 - Hybrid tier 1 capital

- - Norsk Tillitsmann ASA NIBOR plus 1.17% perpetual 200 000 200 000

- - Total hybrid tier 1 capital 200 000 200 000

283 544 283 568 Total subordinated loan capital and hybrid tier 1 capital 483 544 483 568

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82

NOTE 46 – DEPOSITS FROM AND LIABILITIES TO CUSTOMERS AND FINANCIAL INSTITUTIONS


2012 2011 NOK 1 000 2012 2011

596 901 - Loans and deposits from financial institutions without agreed maturity date 92 652 300 877 1 704 594 - Loans and deposits from financial institutions with agreed maturity date 1 704 594 43 516

- - Bank deposits from and liabilities to customers without agreed maturity 348 874 286 767 - - Bank deposits from and liabilities to customers with agreed maturity - - - - Liabilities to policyholders 138 461 132 983

2 301 495 - Total deposits from and liabilities to customers and financial institutions 2 284 581 764 143

2012 2011 2012 2011Deposits Deposits NOK 1 000 Deposits Deposits

- - Deposits from and liabilities to customers without agreed maturity 348 874 286 767 - - Deposits from and liabilities to customers with agreed maturity - - - - Total deposits from customers 348 874 286 767

- - No industry affiliation 207 318 169 905 - - Agriculture - - - - Fishing and fish processing 327 7 824 - - Oil related industry 2 188 - - - Manufacturing 64 165 44 695 - - Power and water supply 504 395 - - Building and construction, power and water supply 24 167 29 937 - - Wholesale and retail trade 18 261 14 163 - - Hotel and restaurant - 128 - - Transport and storage 729 3 791 - - Business services 7 855 5 822 - - Property management 62 21 - - Public sector - - - - Shipping - - - - Shipbuilding industry - - - - Information and technology 15 572 5 462 - - Finance 6 108 4 468 - - Other sectors 1 618 156 - - Total deposits by sector and industry 348 874 286 767

2012 2011 Deposits by geographic area 2012 2011- - Akershus 15 788 1 989 - - Oslo 21 568 9 760 - - Hedmark 2 103 2 952 - - Buskerud 2 254 1 538 - - Oppland 772 1 809 - - Østfold 7 218 - - Vestfold 3 930 7 089 - - Telemark 5 082 172 - - Øst-Agder - 16 - - Vest-Agder 49 86 - - Rogaland 4 734 838 - - Hordaland 2 035 6 504 - - Sogn og Fjordane 14 337 17 351 - - Møre og Romsdal 39 285 30 119 - - Sør Trøndelag 9 872 5 969 - - Nord Trøndelag - - - - Nordland 9 301 16 942 - - Troms 8 601 11 315 - - Finnmark 2 530 3 098 - - Not by geographic area 206 626 169 002 - - Total deposits by geographic area 348 874 286 767

SpareBank 1 Gruppen

NOTE 47 – LIABILITIES RELATED TO REINSURANCE

Group

NOK 1 000 2012 2011

Reinsurance liabilities in life insurance 35 003 30 356Reinsurance liabilities in P&C insurance 172 332 43 661Total liabilities related to reinsurance 207 335 74 017

NOTE 48 – OTHER LIABILITIES


2012 2011 NOK 1 000 2012 2011

135 890 111 316 Accounts payable 205 728 140 04012 545 10 430 Advance tax deduction 59 790 54 3988 799 9 904 Public fees 41 759 41 58721 087 20 927 Owed salaries and holiday pay 129 039 146 660

- - Termination benefits 64 735 - 23 618 27 860 Other accruals 105 449 145 006

- - Commissions liabilities 120 874 101 811- - Margin payments or other account arrangements with customers 102 601 50 195- 223 057 Provisions for group contributions - - - - Occupational injury insurance claim to RTV 45 647 36 038- - Premium deposits 138 846 138 846

289 1 981 Other liabilities 1) 101 599 232 966202 228 405 475 Total other liabilities 1 116 068 1 087 546

1) Other liabilities in the Group in 2012 include liabilities amounting to NOK 44 million in Unison Forsikring AS that relate to liabilities inconnection with the settlement of claims.

NOTE 49 – CHANGES IN GROUP STRUCTURE

Changes in 2012SB Securities LLPSB Securities LLP was acquired on 3 June 2011 by SpareBank 1 Markets AS. The positive difference between the fair value of the purchasesum paid and fair value of the identifiable assets and liabilities has been recorded as goodwill in the balance sheet since the moment of acquisition. As of 31 December 2011, this amounted to TNOK 9.321 (including translation differences). The goodwill was associated withcustomer relations, infrastructure and human capital.

The London office was reorganised in September 2012 with outstanding customer relationships being "transferred" to the Oslo office. Following this, all customer relationships with institutional investors based in the UK/US/Europe are directly managed from Norway.The London office was subsequently tasked with driving sales trading, work that was intended to support the Oslo brokers' primary contactwith the relevant customers. The profitability of sales traders is significantly affected by the general liquidity of the equities market. Second-hand trading in securities fell to extremely low levels, levels that do not financially justify the employment of four sales traders inLondon. Therefore, it became clear in 2012 that the sales trading function would have to be drastically downscaled by concentrating resources on the trading desk in Oslo. Thus the winding up of the branch office in London is a logical and necessary final step in the processthat has been taking place since September 2012. With the activities in London being wound up there is no longer any basis for recording theTNOK 9.321 goodwill item in the balance sheet. This was written down completely as of 31 December 2012.

SpareBank 1 Livsforsikring AS and SpareBank 1 Skadeforsikring ASIn September, a decision was taken to merge SpareBank 1 Livsforsikring and SpareBank 1 Skadeforsikring into a single business area. The aimis to develop comprehensive customer services and strong, in-house expert groups.

Changes in 2011 Skandia HelseforsikringIn January 2010, SpareBank 1 Skadeforsikring AS acquired Skandia Lifeline Norway's entire health insurance business from Skandia Insurance Company Ltd. The agreement was contingent upon the necessary approvals being granted by the Norwegian and Swedish authorities. These approvals were granted in October 2010. For practical purposes, the takeover date was set as 1 November 2010. The acquisition analysis had not been completed as of 31 December 2010 and Skandia was included in the financial statements of SpareBank 1Skadeforsikring AS for 2010 with preliminary figures. At year-end 2010, the taken over health insurance business had been integrated intoSpareBank 1 Skadeforsikring AS's existing portfolio.

The taken over business sells health insurance to corporate customers and retail customers. The health insurance guarantees treatment within a given time frame for specified illnesses and injuries.

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84

SpareBank 1 Skadeforsikring AS bought the business because it wants to focus on a growing segment in the Norwegian insurance market.The acquisition provides SpareBank 1 Skadeforsikring AS with a share of the health insurance market, and SpareBank 1 Skadeforsikring AS'sdistributors will be able to offer health insurance on an equal footing with SpareBank 1 Skadeforsikring AS's other insurance cover.

The acquisition was finally completed in April 2011. The acquisition is a transfer of business regulated by IFRS 3R. The acquisition cost isstated at the fair value of the assets transferred as remuneration. Identified assets and liabilities are recognised at their fair value on the acqui-sition date. The final acquisition analyses indicated the following fair values for identified assets and liabilities:

Book valueBook value reclassified Fair value Fair value

NOK 1 000 01.11.10 01.01.11 01.01.11 adjustments

Statistics and products - - 3 318.0 3 318.0Goodwill - - -10 476.3 -10 476.3Accounts receivable 1 247.3 1 247.3 1 247.3 -IT 21.0 - - -Art 20.8 - - -Cash and cash equivalents 29 502.2 29 502.2 29 502.2 -Total assets 30 791.3 30 749.5 23 591.2 -7 158.3

Premium reserve additions - 5 000.0 - -5 000.0Claim processing costs - 3 200.0 - -3 200.0Other equity - -41.7 - 41.7Cost price - - 1 000.0 1 000.0Total equity - 8 158.3 1 000.0 -7 158.3Provisions - personnel 509.8 509.8 509.8 -Other liabilities 218.9 218.9 218.9 -Premium reserve 13 687.3 8 687.3 8 687.3 -Claim provisions 16 375.2 13 175.2 13 175.2 -Total equity and liabilities 30 791.2 30 749.5 23 591.2 -7 158.3

The negative goodwill is primarily a result of a favourable acquisition, i.e. the value of the identifiable assets and liabilities exceeds the totalremuneration. According to the revised IFRS 3.34, negative goodwill should be recognised as income on the day of the takeover. The finalacquisition analysis was completed in April 2011 and negative goodwill of NOK 10.5 million was recognised as income in the consolidatedfinancial statements under «other operating income».

The health insurance business contributed the following figures in the consolidated financial statements for 2011:

NOK 1 000 2011

Gross premiums 33 517Premium income for own account 32 853Pre-tax profit -3 363Total profit -2 421

Costs totalling NOK 1.55 million associated with the takeover were recognised as costs. Of this, NOK 1.26 million was recognised as costs in 2010.

Acquisition of SB Securities LLPSB Securities LLP was acquired by SpareBank 1 Markets AS in 2011. The acquisition method is used when accounting for acquisitions of subsidiaries in the consolidated financial statements. The acquisition cost is stated at the fair value of the assets transferred as remuneration. Identified assets and liabilities are recognised at their fair value on the acquisition date. The company was consolidated with effect from 3 June 2011.

The company's offices are located at 1 Bow Churchyard in London, and it is a securities company that primarily focuses on Nordic equities.The company was established in July 2008 under the name US Securities London LLP. As a result of the acquisition its name was changed toSB Securities LLP on 16 August 2011. The company had four employees as of 31 December 2011. Two new employees started on 1 January2012. The value in the company lies in its established organisation and human capital, as well as the network of customer relationships it hasbuilt up within the institution segment in London. There are no identifiable assets pursuant to IFRS 3R, and the entire difference betweenidentifiable assets and the purchase price is therefore recognised as goodwill.

OwnershipFigures in NOK 1 000s Date NOK GBP interest Price

Cost price on acquisition date 03.06.11 9 000 1 024 99.9% 8.7848Identifiable assets (99.9%) 03.06.11 179 20 99.9% 8.7848Goodwill on acquisition date 1 004Translation differences 142Goodwill 31.12.11 9 321 1 004 9.2829

SpareBank 1 Markets AS held the following book value of shares in SB Securities LLP as of 31.12.11.Ownership

Figures in NOK 1 000s Date NOK GBP interest Price

Cost price of shares 03.06.2011 9 000 1 024 99,9% 8,7848Share issue 12.12.2011 2 711 300 99,9% 9,0372Book value of shares 31.12.2011 11 711 1 324

SpareBank 1 Gruppen

NOTE 50 – SHAREHOLDER STRUCTURE

Shareholder structure in SpareBank 1 Gruppen AS as of 31 December 2012:Ownership

No. of shares interest

SpareBank 1 Nord-Norge 381 498 19.50 %SpareBank 1 SMN 381 498 19.50 %SpareBank 1 SR-Bank ASA 381 498 19.50 %Samarbeidende Sparebanker AS 381 498 19.50 %Sparebanken Hedmark 234 768 12.00 %Norwegian Confederation of Trade Unions (LO)/affiliated unions 195 640 10.00 %Total number of shares 1 956 400 100 %

The nominal value of the share is NOK 1 000. Voting rights match ownership interest.

Shareholder structure in SpareBank 1 Gruppen AS as of 31 December 2011:Ownership

No. of shares interest

SpareBank 1 Nord-Norge 364 728 19.50 %SpareBank 1 SMN 364 728 19.50 %SpareBank 1 SR-Bank 364 728 19.50 %Samarbeidende Sparebanker AS 364 728 19.50 %Sparebanken Hedmark 224 448 12.00 %Norwegian Confederation of Trade Unions (LO)/affiliated unions 187 040 10.00 %Total number of shares 1 870 400 100 %

The nominal value of the share is NOK 1 000. Voting rights match ownership interest.

2012 2011

Dividend paid per share 222 232

NOTE 51 – NUMBER OF EMPLOYEES AND FULL-TIME EQUIVALENTS

Average Average no.Full-time no. of of full-time

Employees as equivalents as employees equivalents31.12.2012 of 31.12.2012 2012 2012

SpareBank 1 Gruppen AS 272 267 253 248SpareBank 1 Livsforsikring AS 267 258 258 249SpareBank 1 Skadeforsikring AS 392 381 393 381Unison Forsikring AS 28 28 32 31ODIN Forvaltning AS 59 59 60 59SpareBank 1 Medlemskort AS 10 9 10 9SpareBank 1 Gruppen Finans AS 50 49 50 48Conecto AS 145 139 145 138SpareBank 1 Markets AS 104 104 98 98SB Securities LLP 1) 4 4 5 5Total 1 331 1 297 1 302 1 267

Average Average no.Full-time no. of of full-time

Employees as equivalents as employees equivalents31.12.2011 of 31.12.2011 2011 2011

SpareBank 1 Gruppen AS 234 229 227 221SpareBank 1 Livsforsikring AS 249 241 248 239SpareBank 1 Skadeforsikring AS 394 382 379 367Unison Forsikring AS 35 34 32 32ODIN Forvaltning AS 60 60 59 58SpareBank 1 Medlemskort AS 9 8 9 8SpareBank 1 Gruppen Finans AS 50 48 49 47Conecto AS 144 138 147 141SpareBank 1 Markets AS 92 92 84 84SB Securities LLP 1) 5 5 3 3Total 1 272 1 237 1 234 1 200

1) SpareBank 1 Markets AS acquired a 99.9% ownership interest in SB Securities LLP, which has offices in London, in 2nd quarter 2011.

85

SpareBank 1 Gruppen

NOTE 52 – MATERIAL TRANSACTIONS WITH RELATED PARTIES

Org. OwnershipOWNERS OF SPAREBANK 1 GRUPPEN AS REGARDED AS RELATED PARTIES number interest

SpareBank 1 SR-Bank ASA 937 895 321 19.5 %SpareBank 1 Nord-Norge 952 706 365 19.5 %SpareBank 1 SMN 937 901 003 19.5 %Sparebanken Hedmark 920 426 530 12.0 %Samarbeidende SpareBanker AS 977 061 164 19.5 %

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATED COMPANIES, ETC. OF OWNERS OF Org. OwnershipSPAREBANK 1 GRUPPEN AS REGARDED AS RELATED PARTIES number interest

SPAREBANK 1 SR-BANK ASA:SpareBank 1 SR-Finans AS 925 102 512 100.0 %EiendomsMegler 1 SR-Eiendom AS 958 427 700 100.0 %Westbroker Finans AS 950 475 978 100.0 %SR-Forvaltning AS 983 054 560 100.0 %SR-Investering AS 989 005 464 100.0 %SpareBank 1 SR-Forretningsservice AS 990 945 748 100.0 %Kvinnherad Sparebank Eigedom AS 977 242 304 100.0 %Etis Eiendom 894 898 682 100.0 %Rygir Industrier 982 480 647 100.0 %Rygir Forvaltning 988 849 715 100.0 %Rygir Portefølje 988 849 685 100.0 %HiLoad Holding 988 034 622 97.2 %Torp LNG AS 987 904 070 90.0 %Torp LNG Load 993 874 728 100.0 %Torp Italy AS 993 943 134 100.0 %Torp Technoloy AS 994 316 559 100.0 %

Vitico AS 893 075 992 100.0 %Viti Invest AS 891 355 572 66.7 %Greg Invest AS 991 739 831 100.0 %

SPAREBANK 1 NORD-NORGE:SpareBank 1 Nord-Norge Invest AS 935 491 533 100.0 %SpareBank 1 Finans Nord-Norge AS 930 050 237 100.0 %EiendomsMegler 1 Nord-Norge AS 931 262 041 100.0 %

Folk i husan Eiendomsmegling AS 968 382 454 60.0 %North-West 1 Alliance Bank (25 % owned by Saint-Petersburg Commercial Bank «Tavrichesky». The Bank is registered in Russia and regulated by Russian legislation) - 75.0 %SpareBank 1 Nord-Norge Forvaltning ASA 982 699 355 100.0 %SNN Økonomihus Holding AS 997 580 095 100.0 %SNN Økonomipartner Alta AS 983 381 138 100.0 %Merkantiservice AS 851 987 142 100.0 %

SPAREBANK 1 SMN:SpareBank 1 SMN Finans AS 938 521 549 90.1 %SpareBank 1 SMN Invest AS 990 961 867 100.0 %GMA Invest AS 994 469 096 100.0 %

EiendomsMegler 1 Midt-Norge AS 936 159 419 87.0 %SpareBank 1 SMN Kvartalet AS 990 283 443 100.0 %SpareBank 1 SMN Regnskap AS 936 285 066 100.0 %Consis AS 967 661 643 40.0 %Leksvik Regnskapskontor AS 980 491 064 50.0 %Calculus AS 992 483 083 100.0 %Røros Regnskap AS 934 359 909 100.0 %

Allegro Finans ASA 980 300 609 90.1 %SpareBank 1 Bygget Steinkjer AS 934 352 718 100.0 %SpareBank 1 Bygget Trondheim AS 993 471 232 100.0 %SpareBank 1 SMN Card Solutions AS 990 222 991 100.0 %Oppistu AS 998 534 976 100.0 %Brannstasjonen SMN AS 998 042 577 100.0 %TKR Invest AS 998 782 864 100.0 %St. Olavs Plass 1 SMN AS 999 263 380 100.0 %SpareBank 1 Bilplan AS 979 945 108 100.0 %

SPAREBANK 1 SMN – INVESTMENTS IN ASSOCIATED COMPANIES:PAB Consulting AS 967 171 344 34.0 %Molde Kunnskapspark AS 981 036 093 20.0 %Grilstad Marina AS 991 340 475 35.0 %

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GMN 1 AS 994 254 596 35.0 %GMN 4 AS 994 254 626 35.0 %GMN 6 AS 994 254 707 35.0 %GMN 51 AS 996 534 316 30.0 %GMN 52 AS 996 534 413 30.0 %GMN 53 AS 996 534 502 30.0 %GMN 54 AS 996 534 588 30.0 %Hommelvik Sjøside AS 992 469 943 40.0 %Polaris Media ASA 992 614 145 23.5 %Moldekvartalet AS 986 754 083 20.0 %Sentrumsgården AS 975 856 828 35.3 %Aqua Venture AS 891 165 102 37.6 %Maritech Systems AS 997 929 217 23.1 %Omega-3 Invest AS 996 814 262 33.6 %Tjeldbergodden Utvikling AS 979 615 361 23.0 %

SPAREBANKEN HEDMARK:Eiendomsmegler 1 Hedmark AS 945 727 306 100.0 %SpareBank 1 Finans Østlandet AS 975 963 748 100.0 %Consis AS 967 661 643 60.0 %Consis Credit AS 989 644 777 74.5 %Vato AS 932 378 094 100.0 %

SPAREBANKEN HEDMARK - INVESTMENTS IN JOINT VENTURES:Torggt 22 AS 982 786 150 50.0 %

SAMARBEIDENDE SPAREBANKER AS:Samarbeidende SpareBanker Fellestjenester AS 992 258 381 100.0 %

OTHER JOINT VENTURES AND ASSOCIATED COMPANIES OWNED BY SOME OF SPAREBANK 1 GRUPPEN'S OWNERS (who in turn treat SpareBank 1 Gruppen AS as a joint venture) Org. number

Alliansesamarbeidet SpareBank 1 DA 986 401 598SpareBank 1 Boligkreditt AS 988 738 387SpareBank 1 Næringskreditt AS 894 111 232Bank 1 Oslo Akershus AS 910 256 351BN Bank ASA 914 864 445SpareBank 1 Kredittkort AS 975 966 453SpareBank 1 Verdipapirservice AS 998 240 603SpareBank 1 Kundesenter AS 998 830 214

Org. OwnershipSUBSIDIARIES OF SPAREBANK 1 GRUPPEN AS REGARDED AS CLOSE ASSOCIATES number interest

SpareBank 1 Skadeforsikring AS 915 651 232 100.0 %SpareBank 1 Livsforsikring AS 915 651 321 100.0 %ODIN Forvaltning AS 957 486 657 100.0 %SpareBank 1 Medlemskort AS 964 422 206 100.0 %SpareBank 1 Gruppen Finans AS 948 396 882 100.0 %SpareBank 1 Markets AS 992 999 101 97.55 %

Org. OwnershipSUBSIDIARIES OF SUBSIDIARIES OF SPAREBANK 1 GRUPPEN AS number interest

SPAREBANK 1 SKADEFORSIKRING AS:Unison Forsikring AS 983 336 027 100.0 %Falck Ytters Plass Eiendom AS 979 275 617 100.0 %Herkules tomt AS 982 749 522 100.0 %Teglverkstomta AS 982 749 549 100.0 %Tårnhuset AS 987 004 339 100.0 %Sjølyst Forretningsbygg Senterdrift AS 976 102 363 100.0 %

Bøler Senter Næring AS 988 329 932 100.0 %Bøler Sentrum AS 934 007 069 100.0 %

Kongeveien 49 Kolbotn AS 988 330 116 100.0 %Grev Wedelsgate 3 AS 996 963 772 100.0 %Jernbanetorget 2 AS 997 666 445 99.0 %Jernbanetorget 2 DA (title holding company for Jernbanetorget 2 AS) 963 431 902 99.0 %

Hammersborggata 9 AS 996 860 779 50.0 %Storgaten 33 Oslo AS 997 671 643 11.0 %Storgaten 33 Oslo DA (title holding company for Storgaten 33 Oslo AS) 965 742 891 11.0 %

Drammensveien 130 Bygning 9 AS 997 666 399 1.0 %Bygning 9 DA (title holding company for Drammensveien 130 Bygning 9 AS) 960 200 497 1.0 %

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SPAREBANK 1 LIVSFORSIKRING AS:Calmeyersgate 1 AS 996 901 505 100.0 %Hammersborggata 9 AS 996 860 779 50.0 %Ørn Eiendom AS 980 390 764 100.0 %Hammersborggata 2 AS 997 666 267 1.0 %

Tordenskioldsgate 2 Oslo AS 888 455 442 100.0 %Storgaten 1 AS 876 855 712 100.0 %Storgaten 1 Eiendom AS 889 496 932 100.0 %

Tukthuset DA (title holding company for Hammersborggata 2 AS) 979 945 132 1.0 %Hammersborggata 2 AS 997 666 267 99.0 %Tukthuset DA (title holding company for Hammersborggata 2 AS) 979 945 132 99.0 %

Storgaten 33 Oslo AS 997 671 643 89.0 %Storgaten 33 Oslo DA (title holding company for Storgaten 33 Oslo AS) 965 742 891 89.0 %

Drammensveien 130 Bygning 9 AS 997 666 399 99.0 %Bygning 9 DA (title holding company for Drammensveien 130 Bygning 9 AS) 960 200 497 99.0 %

Jernbanetorget 2 AS 997 666 445 1.0 %Jernbanetorget 2 DA (title holding company for Jernbanetorget 2 AS) 963 431 902 1.0 %

Provita AS 975 918 173 100.0 %Ostara AS 975 918 106 100.0 %Saturna AS 975 918 254 100.0 %Ramira AS 975 918 211 100.0 %Benull AS 974 483 769 100.0 %Norsk Moteforum AS 977 363 004 100.0 %Moteuka DA (99% owned by Norsk Moteforum AS and 1% by Senterforeningen) 992 079 487 100.0 %

ODIN FORVALTNING AS:Fondex OY, Finland - Separate Finnish company and only liable for tax in Finland 1628289-0 100.0 %ODIN Fonder - Swedish branch of ODIN Forvaltning AS - 100.0 %

SPAREBANK 1 GRUPPEN FINANS AS:Conecto AS 952 226 010 100.0 %

Group's transactions with related parties:The general principle for transactions between SpareBank 1 Gruppen AS and related parties is that they must be carried out on ordinary businessterms and conditions.

The cost division principle is used, without a profit premium, for services provided directly to group companies, as well as common services thatSpareBank 1 Gruppen AS provides for subsidiaries and the alliance through Alliansesamarbeidet SpareBank 1 DA. A premium and other marketconsiderations are used to set the price for other transactions between SpareBank 1 Gruppen AS and group companies.


2012 20111) NOK 1 000 2012 20111)

Sales of services (income):- - Parent company - -- - Companies with joint control or significant influence over the company 134 823 55 204

144 846 122 682 Subsidiaries - -- - Associated companies - -

498 230 475 723 Joint ventures in which the company is a participant - -- - Key personnel in the management of the company or the company's parent company - -- - Other related parties 22 946 23 492

Purchases of services (costs):- - Parent company - -- - Companies with joint control or significant influence over the company -799 692 -766 923

-35 733 -27 378 Subsidiaries - -- - Associated companies - -- - Joint ventures in which the company is a participant - -- - Key personnel in the management of the company or the company's parent company - -- - Other related parties -65 716 -62 199

Balance sheet items due to sales or purchases of services- - Parent company - -- - Companies with joint control or significant influence over the company - -

55 991 46 031 Subsidiaries - -- - Associated companies - -- - Joint ventures in which the company is a participant - -- - Key personnel in the management of the company or the company's parent company - -- - Other related parties -79 715 -63 812

SpareBank 1 Gruppen

NOTE 53 – EVENTS AFTER THE BALANCE SHEET DATE AND LEGAL DISPUTES

Group 2012

Events after the balance sheet dateNo events have been registered after the balance sheet date that would have a material effect on the consolidated financial statements of SpareBank 1 Gruppen.

Legal disputesAs of 31 December 2012, SpareBank 1 Gruppen was party to 26 legal disputes. 24 of these are disputes with policyholders and other insurance companies, and concern claims settlements in insurance contracts. Provisions are made in the insurance companies' accounts forthese disputes as they occur, and the outcome of these cases is immaterial for the Group's financial position. There are also two disputes between Unison Forsikring AS and former agents concerning claims for commissions and disagreement about the calculation of gains. Provisions have been made for these cases in Unison Forsikring AS's financial statements. The outcome of the cases will not have a materialeffect on the Group's financial position.

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2012 20111) NOK 1 000 2012 20111)

Net lease income- - Parent company - -- - Companies with joint control or significant influence over the company - -

-22 510 -9 521 Subsidiaries - -- - Associated companies - -

17 367 13 819 Joint ventures in which the company is a participant - -- - Key personnel in the management of the company or the company's parent company - -- - Other related parties - -

Purchase(-)/Sale(+) fixed assets- - Parent company - -- - Companies with joint control or significant influence over the company - -- - Subsidiaries - -- - Associated companies - -- - Joint ventures in which the company is a participant - -- - Key personnel in the management of the company or the company's parent company - -

-317 47 274 Other related parties - -

Lending, receivables and other financial transactions - - Parent company - -

6 986 9 293 Companies with joint control or significant influence over the company 66 280 24 642832 994 180 930 Subsidiaries - -

- - Associated companies - -60 228 113 471 Joint ventures in which the company is a participant - -

- - Key personnel in the management of the company or the company's parent company - -271 872 216 438 Other related parties 135 314 168 192

Loans, liabilities and other financial transactions- - Parent company - -

-1 988 173 -284 932 Companies with joint control or significant influence over the company -1 988 444 -284 932- -223 057 Subsidiaries - -- - Associated companies - -- - Joint ventures in which the company is a participant - -- - Key personnel in the management of the company or the company's parent company - -

-596 901 -817 Other related parties -93 252 -1 322

The remuneration of executive personnel in the group executive management team, Board, Control Committee and Supervisory Board are discussed in: note 22 - Salaries and other remuneration of the CEO and executive personnel

1) Material transactions with related parties for 2011 concern those who were counted as related parties in 2011. Note 52 of the 2011 annualreport describes who this concerns.

NOTE 54 – REVISED BALANCE SHEET FOR SPAREBANK 1 GRUPPEN GROUP AS OF 31 DECEMBER2011

GroupRevised

Balance Sheet Re- balance sheetNOK 1 000 31.12.2011 classifications 31.12.2011

ASSETSDeferred tax asset 8 026 - 8 026Goodwill 861 140 - 861 140Other intangible assets 233 984 - 233 984Investments in subsidiaries - - - Investments in associated companies and joint ventures 10 147 - 10 147Property, plant and equipment 1 016 143 - 1 016 143Reinsurance receivables 1 411 156 - 1 411 156Other assets 1) 698 476 -219 263 479 212Investment properties 4 153 878 - 4 153 878Bonds held to maturity 4 522 630 - 4 522 630Bonds at amortised cost 1 368 467 - 1 368 467Securities - available for sale 19 193 - 19 193Lending to customers and deposits with financial institutions 1) 675 008 219 263 894 271Securities at fair value 24 155 423 - 24 155 423Financial derivatives 11 317 - 11 317Receivables from policyholders 1 568 003 - 1 568 003Cash and cash equivalents 1 276 149 - 1 276 149TOTAL ASSETS 41 989 140 - 41 989 140

EQUITY AND LIABILITIESShareholders equity 1 970 277 - 1 970 277Retained earnings 2 974 364 - 2 974 364Other equity - not recognised through profit or loss - - - Minority interests -2 280 - -2 280Total equity 4 942 361 - 4 942 361

Subordinated loan capital and hybrid tier 1 capital 483 568 - 483 568Securities adjustment reserve 184 872 - 184 872Insurance provisions in life insurance 22 620 517 - 22 620 517Premium and claims provisions in P&C Insurance 9 120 199 - 9 120 199Net pension liabilities 393 347 - 393 347Deferred tax liability - - - Payable tax 168 744 - 168 744Securities issued 1 905 025 - 1 905 025Liabilities related to reinsurance 74 017 - 74 017Financial derivatives 244 800 - 244 800Other liabilities 2) 1 256 094 -168 547 1 087 546Deposits from and liabilities to customers and financial institutions 2) 595 596 168 547 764 143TOTAL EQUITY AND LIABILITIES 41 989 140 - 41 989 140

1) Lending to and deposits with customers and security companies in SpareBank 1 Markets AS have been reclassified from other assets tolending to customers and deposits with financial institutions.

2) Customer and broker liabilities in SpareBank 1 Markets AS have been reclassified from other liabilities to deposits from and liabilities tocustomers and financial institutions.


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PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 OsloT: 02316, org. no.: 987 009 713 MVA, www.pwc.noStatsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap

To the Annual Shareholders' Meeting of SpareBank 1 Gruppen AS

Independent auditor’s report

Report on the Financial Statements

We have audited the accompanying financial statements of SpareBank 1 Gruppen AS, which comprisethe financial statements of the parent company and the financial statements of the group. Thefinancial statements of the parent company and the financial statements of the group comprise thebalance sheet as at 31 December 2012, income statement, statement of comprehensive income,changes in equity and cash flow for the year then ended, and a summary of significant accountingpolicies and other explanatory information.

The Board of Directors and the Managing Director’s Responsibility for the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation and fairpresentation of these financial statements in accordance with International Financial ReportingStandards as adopted by EU, and for such internal control as the Board of Directors and the ManagingDirector determine is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with laws, regulations, and auditing standards and practicesgenerally accepted in Norway, including International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Opinion

In our opinion, the financial statements are prepared in accordance with the law and regulations andpresent fairly, in all material respects, the financial position for the parent company and the groupSpareBank 1 Gruppen AS as at 31 December 2012, and its financial performance and its cash flows for

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Independent auditor’s report

Independent auditor's report - 2012 - SpareBank 1 Gruppen AS, page 2

(2)

the year then ended in accordance with International Financial Reporting Standards as adopted byEU.

Report on Other Legal and Regulatory Requirements

Opinion on the Board of Directors’ report and statement of corporate governance principles andpractices

Based on our audit of the financial statements as described above, it is our opinion that theinformation presented in the Board of Directors report and statement of corporate governanceprinciples and practices concerning the financial statements and the going concern assumption, andthe proposal for the allocation of the profit is consistent with the financial statements and complieswith the law and regulations.

Opinion on Registration and Documentation

Based on our audit of the financial statements as described above, and control procedures we haveconsidered necessary in accordance with the International Standard on Assurance Engagements ISAE3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, it isour opinion that management has fulfilled its duty to produce a proper and clearly set out registrationand documentation of the company’s accounting information in accordance with the law andbookkeeping standards and practices generally accepted in Norway.

Oslo, 13 March 2013PricewaterhouseCoopers AS

Magne SemState Authorised Public Accountant (Norway)

Note: This translation from Norwegian has been prepared for information purposes only.


Annual Report SpareBank 1 Gruppen 2012

Investor Relations

Transcript of Annual Report SpareBank 1 Gruppen 2012