Spar Nord H1 2017 1 Interim report for H1 2017

Interim report for H1 2017 of Spar Nord Bank A/S Net profit of DKK 575 million and ... share attributable to interest expenses to holders of Additiona...

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Spar Nord H1 2017

Interim report for H1 2017

of Spar Nord Bank A/S Net profit of DKK 575 million and return on equity of 14.4%

1

Spar Nord H1 2017

 

Contents

2

Company announcement no. 5, 2017

Contents MANAGEMENT’S REVIEW Performance indicators and financial ratios – quarterly................. 3 Executive summary.............................................................................................. 5 Management commentary on H1 2017...................................................... 6 Spar Nord shares held by members of the Management team..................................................................................... 11 Overview of group companies....................................................................... 11 INTERIM REPORT H1 2017 SPAR NORD GROUP Performance indicators and financial ratios........................................... 12 Statement by the Board of Directors and the Executive Board............................................................................................ 14 Income statement................................................................................................ 15 Balance sheet........................................................................................................ 16 Statement of changes in equity................................................................... 17 Cash flow statement........................................................................................... 19 Notes .......................................................................................................................... 20 Notes without reference.................................................................................... 28 INTERIM REPORT H1 2017 SPAR NORD BANK A/S, PARENT COMPANY Performance indicators and financial ratios........................................... 32 Income statement................................................................................................ 34 Balance sheet........................................................................................................ 35 Statement of changes in equity................................................................... 36 Notes .......................................................................................................................... 38 Notes without reference.................................................................................... 42

Contact: Ole Madsen, Senior Vice President, Communication and Business Development, tel. +45 96 34 40 10

Spar Nord H1 2017

Performance indicators and financial ratios –

3

Group

Performance indicators and financial ratios – Group CORE EARNINGS – QUARTERLY H1 2017

INCOME STATEMENT DKKm Net interest income *)



H1 2016

Change in %

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Full year 2016

785.5 813.0 -3.4 393.0 392.5 395.3 412.9 417.2 1,621.2

Net income from fees, charges and commissions

573.2 518.5

Market value adjustments and dividends



285.1 186.8 52.6 121.4 163.7 104.4 142.5 114.7 433.7

Other operating income



Profit/loss on investments in associates and group enterprises

10.5 278.8 294.4 274.5 259.7 268.1 1052.7

24.5 17.3 41.6 13.7 10.8

1.4 11.0 9.7 29.7

20.2 15.0 34.7 7.3 12.9

7.1 7.5 7.4 29.6

Core income



Salaries



602.5 586.3

2.8 317.9 284.6 306.9 248.5 306.9 1,141.7

Operating expenses



346.7 327.3

5.9 170.6 176.1 192.6 140.5 149.1 660.4

Depreciation, amortization and impairment



Costs and expenses



977.4 948.0

Core earnings before impairment



711.1 602.6

Loan impairment charges etc. *)



-8.7 133.4 -106.5 -10.2

Profit/loss before tax



719.8 469.2

Tax



144.7 86.6 67.1 63.7 81.0 37.3 66.0 47.0 189.9

Profit/loss



575.1 382.6 50.3 258.3 316.8 147.9 307.7 217.9 838.2

Of which, share attributable to interest expenses to holders of Additional Tier 1 (AT1) capital

1,688.5 1,550.6

8.9

814.2 874.3

782.7 833.6

817.1 3,166.9

28.2 34.4 -18.0 13.9 14.3 43.4 16.5 17.3 94.3 3.1 502.4 475.0 542.9 405.5 473.3 1,896.4 18.0

311.8 399.3

239.8 428.1 343.8 1,270.5

1.5 54.6 54.4 78.9 242.4

53.4 322.0 397.8 185.2 373.7 264.9 1,028.1

24.1 12.0 100.8 12.0 12.1

7.9

6.2

6.1 26.1

BALANCE SHEET



DKKm



Total assets



79,595 77,476

2.7 79,595 78,329 78,473 78,957 77,476 78,473

Loans and advances



42,407 38,531

10.1 42,407 41,189 41,346 39,697 38,531 41,346



Lending, banking and leasing activities



36,351 35,003



Lending, reverse repo transactions



6,056 3,528

3.9 36,351 35,761 35,093 35,106 35,003 35,093 71.7 6,056 5,428 6,253 4,591 3,528 6,253

Deposits



62,782 59,649

5.3 62,782 60,455 61,005 60,926 59,649 61,005



Deposits, banking activities



47,610 46,295

2.8 47,610 45,581 46,464 47,046 46,295 46,464



Deposits, repo transactions





Deposits in pooled schemes



156 0 - 156 0 0 0 0 0 15,016 13,354

12.4 15,016 14,874 14,541 13,880 13,354 14,541

Subordinated debt



Holders of Additional Tier 1 (AT1)



capital instruments



Equity



7,702 7,402

4.1 7,702 8,072 7,765 7,669 7,402 7,765

Contingent liabilities



12,304 10,847

13.4 12,304 11,935 12,334 11,885 10,847 12,334

1,089 1,093 -0.4 1,089 1,090 1,093 1,095 1,093 1,093 863 397 117.4 863 876 862 404 397 862

Total risk exposure amount



Tier 1 capital **)



7,369 6,875

7.2 7,369 7,374 7,427 6,943 6,875 7,427

Impairment account and discount on commitments taken over ***)

1,901 2,024

-6.1 1,901 1,992 1,994 2,020 2,024 1,994

Contractual non-performing loans



Business volume



49,672 46,823

6.1 49,672 47,741 47,485 47,778 46,823 47,485

401 468 -14.2 401 401 443 439 468 443 236,185 222,524

6.1 236,185 232,335 230,113 228,057 222,524 230,113

*) In the core earnings format, an amount was reclassified between the items Net interest income and Loan impairment charges etc., which relates to the part of the discount on commitments taken over recognized as income. See note 3. **) Tier 1 capital for the quarters of 2017 is exclusive of recognition of profit/loss for the period. ***) Spar Nord’s impairment account amounts to DKK 1,839 million (Q1 2017: DKK 1,919 million) (note 10) and the discount on commitments taken over amounts to DKK 62 million (Q1 2017:

DKK 73 million)



Spar Nord H1 2017

Performance indicators and financial ratios –

4

Group

Performance indicators and financial ratios – Group CORE EARNINGS – QUARTERLY H1 2017

FINANCIAL RATIOS OWN FUNDS

H1 2016

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Full year 2016

Own funds ratio *)

16.9 16.8 16.9 17.6 17.7 16.6 16.8 17.7

Own funds ratio *)

14.8 14.7 14.8 15.4 15.6 14.5 14.7 15.6

Common equity tier 1 capital ratio *)

13.2 14.0 13.2 13.8 14.0 13.9 14.0 14.0





EARNINGS



Return on equity before tax excl. Additional Tier 1 (AT1) capital, % **)



Return on equity after tax excl. Additional Tier 1 (AT1) capital, % **)



Cost share of core income

0.58 0.61 0.62 0.54 0.69 0.49 0.58 0.60

Cost share of core income



- incl. loan impairment charges etc.

0.57 0.70 0.60 0.55 0.76 0.55 0.68 0.68

Return on assets, %

0.7 0.5 0.3 0.4 0.2 0.4 0.3 1.1





MARKET RISK AND LIQUIDITY



Interest rate risk, %

0.2 0.7 0.2 -0.2 1.2 0.4 0.7 1.2

Foreign-exchange position, %

3.9 3.0 3.9 3.3 3.2 3.1 3.0 3.2

9.0 6.1 4.0 4.9 2.3 4.9 3.5 13.2 7.2 5.0

3.2 3.9 1.9 4.0 2.9 10.7

Foreign-exchange risk, %

0.1 0.1 0.1 0.1 0.1 0.0 0.1 0.1

Liquidity Cover Ratio (LCR), %







176

161

176

168

171

155

161

171

CREDIT RISK



Loans and advances plus impairment account and discount hereon as % of deposits, %

70.5 67.9 70.5 71.3 70.9 68.3 67.9 70.9

Loans and advances as % of equity

5.5 5.2 5.5 5.1 5.3 5.2 5.2 5.3

Increase in loans and advances for the period, %

3.6 3.3

Sum of large exposures, %

17.5 15.9 17.5 17.1 14.5 15.8 15.9 14.5

Impairment ratio, %

0.0 0.3 0.0 0.0 0.1 0.1 0.2 0.4

1.6 1.9 0.0 0.3 0.0 3.6

EMPLOYEES AND BRANCHES



Number of employees (full-time equivalents, end of period) 1,555 1,556 1,555 1,528 1,540 1,548 1,556 1,540 Number of branches

55 70 55 56 58 66 70 58

SPAR NORD SHARE



DKK PER SHARE OF DKK 10



Share price, end of period

85 54 85 77 81 64 54 81

Net asset value (NAV), **)

63 60 63 66 63 62 60 63

Profit/loss for the period *)

4.5 3.0 2.0 2.5 1.2 2.4 1.7 6.6

Dividend

- - - - - - - 5.0

Return

- - - - - - - 38

Price/earnings **)

- - - - - - - 12

*)

Own funds for the quarters of 2017 is exclusive of recognition of profit/loss for the period.

**)

Financial ratios have been calculated as if the Additional Tier 1 (AT1) capital were treated as a liability for accounting purposes.

Spar Nord H1 2017

Executive summary

5

Executive summary Overall, we are very pleased with our financial performance in the first half of 2017. A return on equity of 14.4% is of course satisfactory, and we are particularly pleased to see that, despite heavy competition and price pressure, our business is progressing so well that we can upgrade our earnings forecast and also significantly revise down our forecast of loan impairment charges following a quarter during which our books were thoroughly reviewed by the Danish FSA, says Spar Nord’s CEO Lasse Nyby.

Spar Nord achieved a satisfactory profit after tax of DKK 575 million in H1 2017, which corresponds to an annualized return on equity of 14.4%. The profit is DKK 193 million, or 50%, higher than in H1 2016. Core income amounted to DKK 1,689 million, which is 9% higher than in the year-earlier period. Net interest income fell 3% to DKK 786 million, net income from fees, charges and commissions rose 11% to DKK 573 million, and market value adjustments rose by a full 53% to DKK 285 million. Total costs and expenses amounted to DKK 977 million, which is DKK 29 million, or 3%, higher than in H1 2016. Costs were affected by Spar Nord’s implementation of its new strategy launched six months ago, which is still at a stage of investment in measures, including in the IT area, that are intended to lead to the realisation of gains during the strategy period. Furthermore, the overall level of efficiency has still not regained the level from before the IT migration in 2016. Core earnings before impairment were DKK 711 million, which is DKK 109 million, or 18%, higher than in H1 last year and also higher than expected at the beginning of the year. Loan impairment charges etc. was an income of DKK 9 million, which is notably better than expected at the beginning of the year and compared with impairments of DKK 133 million in the year-earlier period. Developments in impairments are considered highly satisfactory in a six-month period during which the Bank was subjected to a comprehensive ordinary inspection by the Danish FSA. On the basis of developments and performance in H1, Management has resolved to upgrade the full-year forecast for core earnings before impairment from “around the DKK 1.1-1.2 billion mark” to “around DKK 1,250 million”. Loan impairments, which at the beginning of the year were expected to be “lower than in 2016”, are now expected to be substantially lower than in 2016.

Statement of changes in equity The Bank continues to have a strong capital position with a Common Equity Tier 1 (CET1) ratio at 30 June 2017 of 13.2% and an own funds ratio of 16.9%, corresponding to an excess capital coverage of DKK 3.3 billion or 6.6 percentage points relative to the calculated capital requirement. Based on initial discussions with the resolution authorities, Spar Nord expects that the Bank, in connection with the impending implementation of the new MREL rules, will have SIFI status, which means that, over the course of a few years, it must comply with the MREL, which for SIFI institutions will equal twice the total capital requirement (solvency need and regulatory capital buffers). With a view to optimising its capital consumption, Spar Nord has resolved to examine the possibilities of switching to the use of internal rating-based models (IRB) on the capital side over the course of the coming years. In view of the above and other factors, the Board has resolved to revise Spar Nord’s capital targets so that the Bank will henceforth pursue a goal of having a Common Equity Tier 1 (CET1) ratio of 13.0% (previously “at least 12.0%”) and an own funds ratio of 16.5% (previously “at least 15.5%”). On the same occasion, it was resolved to revise the dividend policy so that Spar Nord will henceforth pursue a goal of distributing 40-50% of the net profit for the year (previously “at least two-thirds”).

Spar Nord H1 2017

Management commentary

6

on H1 2017

Management commentary on H1 2017

Spar Nord achieved a profit after tax of DKK 575 million in H1 2017, which corresponds to an annualized return on equity of 14.4%. The profit is DKK 193 million, or 50%, higher than in H1 2016 and is considered satisfactory by Management. Core income amounted to DKK 1,689 million, which is 9 % higher than in the year-earlier period.

Net fee income at a satisfactory level Net income from fees, charges and commissions amounted to DKK 573 million, which is DKK 55 million, or 11 %, higher than in the year-earlier period. Net income from fees, charges and commissions thus accounted for 42% of total net interest and fee income in H1. The increase was attributable especially to continued growth in income from mortgage loans arranged driven by both volume growth and price adjustments. In addition, there was an increase in areas such as insurance, “daily banking” etc.

NET INTEREST INCOME AND NET FEE INCOME (DKKm) Net interest income

Finally, it should be noted that specific fees were reclassified in connection with the migration to BEC.

Net income from fees, charges and commissions

1,308

373

1,245

1,462

401

569

1,332

1,359

519

573

From Q1 to Q2 net income from fees, charges and commissions fell from DKK 294 million to DKK 279 million. The decline was due to specific fees typically being charged and recognized in Q1.

Market value adjustments up 53% 935

844

893

813

786

H1 2013

H1 2014

H1 2015

H1 2016

H1 2017

Market value adjustments and dividends amounted to DKK 285 million, which is DKK 98 million, or 53%, higher than in H1 2016. The very strong improvement was driven by factors such as strong performance in fixed income operations.

Persistent pressure on net interest income Net interest income was DKK 786 million in H1 2017, against DKK 813 million in the same period of 2016.

MARKET VALUE ADJUSTMENTS AND DIVIDENDS (DKKm)

Adding to this income was a DKK 1.3 billion (4%) increase in bank and leasing lending since 1 January, while the strong competition in the market and a consequent continued drop in lending margins weighed on this item. In Q2 2017, the lending margin was thus 24 basis points lower than in Q4 2016 and 29 basis points lower than in Q2 2016, while the deposit margin in Q2 2017 was 4 basis points lower than in Q4 2016 and 13 basis points lower than in Q2 2016. The fact that lower lending margins and overall interest margins do not cause any major drop in net interest income is primarily because there were positive one-off effects in H1 totalling DKK 21 million related to interest income from two large impairment exposures. From Q1 to Q2, net interest income was unchanged at DKK 393 million, driven by continued growth in lending, a higher number of interest days and lower income due to one-off events.

2000,000000 1714,285714 1428,571429

121

311

428

187

285

H1 2013

H1 2014

H1 2015

H1 2016

H1 2017

Market value adjustments and dividends on strategic shareholdings in financial sector companies rose 19% to DKK 107 million. There were strong contributions especially from holdings in Erhvervsinvest II K/S, DLR Kredit A/S and PRAS A/S.

Spar Nord H1 2017

Management commentary

7

on H1 2017

From Q1 to Q2, market value adjustments and dividends fell from DKK 164 million to DKK 121 million. The drop was driven primarily by less favourable conditions in the bond market. Adding to performance was higher income from the bank’s equity portfolio.

From Q1 to Q2, costs and expenses rose from DKK 475 million to DKK 502 million. The increase was primarily due to higher payroll costs driven by adjustment of holiday pay obligations.

Net reversal of loan impairment charges Decent increase in other income Other operating income amounted to DKK 25 million, against DKK 17 million in H1 2016, and profit on investments in associates and group enterprises came to DKK 20 million, up from DKK 15 million last year.

Loan impairment charges etc. was an income of DKK 9 million, which compares to an expense of DKK 133 million in the year-earlier period. IMPAIRMENTS (DKKm)

Costs and expenses influenced by strategic initiatives The Group’s total costs and expenses amounted to DKK 977 million, which is DKK 29 million, or 3 %, higher than in the year-earlier period.

TOTAL COSTS (DKKm) 910

925

964

948

977

52

35

33

35

28

330

344

356

327

347

Operating expenses

528

546

575

586

602

Wages and salaries

H1 2013

H1 2014

H1 2015

H1 2016

H1 2017

Depreciation, amort. and impairment

Wages and salaries accounted for DKK 602 million of total costs and expenses. Realized payroll costs were DKK 16 million, or 3%, higher than in H1 2016, which is ascribable to collective agreements and increasing payroll taxes and, not least, the fact that H1 2016 included a positive one-off effect of DKK 17 million concerning the outcome of a legal action. At 30 June 2017, the Group employed 1,555 employees, which is unchanged from 30 June 2016. Other operating expenses came to DKK 347 million, which is DKK 20 million, or 6%, higher than in 2016. The change was driven by a combination of last year’s non-recurring costs for IT migration and a drop in ongoing IT expenses on the one hand and a number of costs related to the implementation of the new strategy on the other. Furthermore, there is an increase in items such as marketing expenses because customer-facing activities in H1 2016 were lower than usual because of the efforts to prepare and implement the IT migration from SDC to BEC.

205

160

166

133

-9

H1 2013

H1 2014

H1 2015

H1 2016

H1 2017

Broken down by customer segment and including the Management estimates made in Q1 (DKK 85 million concerning retail customers and DKK 25 regarding agricultural customers), the total impact from loan impairment charges etc. was DKK 64 million for retail customers, DKK -75 million for business customers ex. agriculture and DKK 2 million for agriculture. Apart from a strong credit quality in Spar Nord’s loan portfolio, the highly positive trends in impairments reflect the continued improvement of macroeconomic conditions, including a lower inflow of impairment exposures and better performance of loans already flagged as having a weak credit quality. With respect to the latter, it should be noted that, following its inspection of Spar Nord in H1 2017, the Danish FSA found, for the fourth time running, that the Bank had adequate impairments. Specifically, the authorities noted that the Bank’s credit quality is higher than 300 those of its peers. 270

240 210 THE GROUP’S LOANS, ADVANCES AND GUARANTEES *) 180 BREAKDOWN BY INDUSTRY Impairment account and discount 150 on exposures taken 120 Loans and guarantees over Industry 90 31.12.16 30.06.17 30.06.17 % 60 Agriculture, hunting and forestry 6.9 6.6 36.2 30 Fisheries 0.2 0.2 0.0 0 Industry and raw materials extraction 5.4 6.0 3.5 Energy supply

3.3 3.2 1.6

Construction and engineering

3.9 4.3 4.1

Trade

7.8 7.3 4.2

Transport, hotels and restaurants

3.4 3.6 3.4 2.757 2.663 2.572 0.4 0.4 0.2

Information and communication

Costs were generally affected by Spar Nord’s implementation of its Financing and insurance 2.159 new strategy launched six months ago, which is still at a stage of Real property 483 Other industries investment in measures, including in the IT area, that are intended to Total business customers lead to the realisation of gains in the upcoming period. Furthermore, Indesign udgave Public authorities the overall level of efficiently has still not regained the level from Retail customers before the IT migration. 1.676

2.239 5.8 5.8 5.7 1.030 863 12.2 11.8 14.0 723 562 5.4 5.7 4.4 54.7 54.9 77.3 0.1 0.0 0.0

Total

45.2 45.1 22.7 1.677 1.849 1.800 1.727 100.0 100.0 100.0

*) Excl. reverse repo transactions 2011

2012

2013

2014

2015

Spar Nord H1 2017

Management commentary

8

on H1 2017

TOTAL CREDITS ARRANGED (DKKbn)

AGRICULTURAL EXPOSURES BY PRODUCTION LINE Loans, advances and guarantees

H1 2017 DKKm

Nonaccrual loans

Of which impaired

Share impaired

Cattle producers



Pig producers



702.8

Plant cultivation



705.9 2.2 81.8 11.6

Mink farmers



Leasing



Other production lines Total



1,037.4 62.6 675.0 65.1

95.0

DKKm/%

Impairment account

342.7

1.7 20.7 6.0

Impairment for Impaired the year

Impairment ratio of exposure

1.1

111.7 2.4

1.6

2.9

1.5

Lending mortgage credit

58.5

60.4

66.1

71.5

75.3

Lending, banking activities

34.2

33.7

32.8

33.4

34.0

H1 2013

H1 2014

H1 2015

H1 2016

H1 2017

Lending, leasing

99,9999

Percentage impaired

85,7142 26.3 55.6 184.9 59.7 -7.9

Plant cultivation 44.0 6.3 2.9 71,4285

6.2 53.8

Mink farmers

20.2 0.0 4.0 21.3 44.4

Leasing



Total

682.1 87.7 2.1 20.6 58.4

2.4

106.5

79.1 1,167.1 35.2

Cattle producers 414.6 21.5 1.9 40.0 61.4 Pig producers

100.0

2.4 45.6 48.0

AGRICULTURAL IMPAIRMENTS BY PRODUCTION LINE H1 2017

95.6

8.5 332.7 47.3

432.0 1.7 11.3 2.6 3,315.8

95.6

Total

57,1428

0.2 -0.3

Other production lines 16.0 0.0 1.5 42,8571

0.6 21.5

In H1 2017, the volume of mortgage-credit loans arranged grew DKK 1.7 billion to DKK 75.3 billion, equal to 2%. In total, the volume of mortgage-credit loans arranged on behalf of retail customers (Totalkredit) amounted to DKK 63.9 billion and to DKK 11.4 billion for business customers (DLR Kredit).

4.7 77.0

28,5714 14,2857

With respect to the Bank’s agricultural loans, it should be noted that 0,0000 the overall exposure to pig and milk producers has been reduced by about DKK 170 million since the start of the year. The reason is partly the improved settlement prices for milk and pork, partly the fact that approximately DKK 80 million was 99,9999 written off in connection with farm closures. 85,7142

TOTAL DEPOSITS (DKKbn) 59.6

62.6

50.4

53.2

56.6

Deposits, pooled schemes

7.9

10.7

12.5

Deposits, banking activities

42.5

42.5

44.1

46.3

47.6

H1 2013

H1 2014

H1 2015

H1 2016

H1 2017

Total

13.3

15.0

71,4285

At 30 June 2017, Spar Nord estimated the impact of the new impairment rules that follow from IFRS 9 and 57,1428 how they will affect the Bank’s loan impairment charges etc. when42,8571 they enter into force at the beginning of 2018. The estimate shows an effect of about 2-3% 28,5714 of shareholders’ equity.

14,2857 0,0000

Profit before tax of DKK 720 million and net profit of DKK 575 million

99,9999

The profit before tax was DKK 720 million against DKK 469 million 85,7142 in H1 2016. The Group’s effective tax rate was 20%, bringing the net 71,4285 profit to DKK 575 million, up from DKK 383 million in the same period last year. 57,1428

Deposits, banking activities increased by DKK 1.1 billion, or 2%, in H1 while deposits in pooled schemes climbed DKK 0.5 billion, or 3%. Finally, customers’ custodianship accounts have increased DKK 1.5 billion, or 3%, since end-2016.

42,8571 Business volume growing to DKK 236 billion28,5714

14,2857

The Group’s total business volume (deposits, loans, advances and 0,0000 guarantees, mortgage credits arranged and customers’ custodianship accounts) amounted to DKK 236.2 billion at 30 June 2017, which was DKK 6.1 billion, or 3%, higher than at end-2016. 59,99994

51,42852

Compared with end-2016, bank and leasing loans rose DKK 1.3 bil42,85710 lion, or 4%. Of the increase in bank and leasing loans, DKK 0.9 billion was attributable to business customers and DKK 0.4 billion to retail 34,28568 customers.

25,71426 17,14284 8,57142 0,00000

Strategic liquidity of DKK 20.5 billion Spar Nord has defined strategic liquidity as the difference between bank and leasing lending and the long-term funding (bank deposits, senior loans, issued bonds, subordinated debt and equity). Subordinated debt, senior loans and issued bonds due within 12 months are not included in the Bank’s strategic liquidity. 2.572

2.663

2.159

2.239

483

562

723

1.676

1.677

1.849

1.800

2011

2012

2013

2014

863

Indesign udgave

Spar Nord H1 2017

Management commentary

9

on H1 2017

STRATEGIC LIQUIDITY

New capital targets and new dividend policy

DKKbn

30.06.17

31.03.17

31.12.16

30.09.16

30.06.16

Deposits, banking activities

47.6 45.6 46.5 47.0 46.3

Senior loans/bond issues

0.0 0.0 0.0 0.0 0.0

Equity and subordinated debt

9.7 10.0 9.7 9.2 8.9

Liquidity procurement

57.3 55.6 56.2 56.2 55.2

Lending, banking and leasing activities 36.4 35.8 35.1 35.1 35.0 Maturity, senior issued bonds & subordinated debt <1 year



Strategic liquidity, total

20.5 19.4 20.7 21.1 20.2

0.4 0.4 0.4 0.0 0.0

At the end of June 2017, Spar Nord’s strategic liquidity amounted to DKK 20.5 billion, down DKK 0.2 billion compared with end-2016. Spar Nord’s LCR ratio at 30 June 2017 was 176%.

Strong capital position At 30 June 2017, the Common Equity Tier 1 (CET1) ratio was 13.2%, while the own funds ratio was 16.9%. This should be viewed relative to the individual solvency need calculated by Spar Nord at 9.0% plus the 1.3% combined buffer requirement, as a result of which the total capital requirement is 10.3%. Thus, Spar Nord has an excess capital coverage of 6.6 percentage points, equal to DKK 3.3 billion. On the basis of fully phased-in CRD IV rules, the current capital position would correspond to a Common Equity Tier 1 (CET1) ratio of 13.1%. Due to stricter administrative requirements, for instance with respect to external reviews, Spar Nord has decided that the ongoing consolidation will no longer be recognised in the own funds on a quarterly basis but annually. If Spar Nord had opted to include the consolidation for H1, the Common Equity Tier 1 (CET1) ratio would have been 13.6%, while the own funds ratio would have been 17.4%.

MREL and potential IRB project Based on initial discussions with the Danish resolution authorities, Spar Nord expects that the Bank, in connection with the impending implementation of the new MREL rules, will have SIFI status, which means that, over the course of a few years, it must comply with the MREL, which for SIFI institutions will equal twice the calculated capital requirement. The Bank currently expects that the new MREL rules will be phased in successively over the course of five years. With a view to optimising its capital consumption, Spar Nord has resolved to examine the possibilities of switching to the use of internal rating-based models (IRB) on the capital side. We will commence these efforts in H2 2017.

In view of the above and other factors, and in light of the comments made by the Danish FSA to the previous wording, Spar Nord’s Board of Directors has resolved to revise Spar Nord’s capital targets so that the Bank will henceforth pursue a goal of having a Common Equity Tier 1 (CET1) ratio of 13% (previously “at least 12%”) and an own funds ratio of 16.5% (previously “at least 15.5%”). On the same occasion, it was resolved to revise the dividend policy, which will now have the following wording: Spar Nord pursues the goal of generating a competitive return for its shareholders – by way of share price performance and dividends. Spar Nord aims to distribute 40-50% of the net profit for the year as ordinary dividends with due consideration to meeting the Bank’s capital targets. In case the Bank has extensive excess capital after the distribution of ordinary dividends, the Board of Directors will assess whether such capital can be returned to the shareholders in the form of extraordinary dividends or share buybacks.

Implementation of new strategy Since it launched its new strategy The Personal Bank in a Digital World in November 2016, Spar Nord has worked with a number of important preconditions, including in the IT and process area, partly aimed at facilitating the day-to-day duties of branch employees as efficiency in this area has still not reached previous levels after the IT migration process. Another aim was to implement the more customer-facing initiatives. Furthermore, the Bank worked with a number of customer-oriented initiatives in H1, including The Good Banking Experience project, in which all employees attended a training course focusing on good customer service, and which also involved the implementation of a new interior design concept. Another customer-facing project is Customer Service of the Future, in which Spar Nord aims to provide customers and the Bank itself with a more optimum distribution of tasks between local banks and the central customer service unit. One of the important events recently has been Spar Nord’s efforts to select and implement a new Customer Engagement Management platform, which is scheduled to be rolled out throughout the Bank from 2018, and which, once commissioned, is expected to provide substantial gains both in terms of income and costs. Finally, at the end of June, the first specific results of the Bank’s digital innovation strategy materialized with the market launch of the SubHub service, which assists customers in keeping track of their subscriptions. Later in the year, the Bank will launch the digital/ physical piggy bank Ernit.

Spar Nord H1 2017

Management commentary

10

on H1 2017

The Supervisory Authority Diamond Test Model

Outlook for 2017

The Supervisory Authority Diamond Test Model lists a number of reference points delineating what can be basically considered a financial institution with an increased risk profile. Violations of the principles contained in the Supervisory Authority Diamond Test Model are subject to supervisory reactions by the Danish FSA.

On the basis of developments and performance in H1, Management has resolved to upgrade the full-year forecast for core earnings before impairment from “around the DKK 1.1-1.2 billion mark” to “around DKK 1,250 million”.

At 30 June 2017, Spar Nord was comfortably within all threshold values in the Supervisory Authority Diamond Test Model. At 30 June 2017, Spar Nord could report the following values in respect of the defined reference points:

Large exposures <125%

Lending growth <20%

Spar Nord:

Spar Nord:

3.9%

14.0% Funding ratio <1

Property exposure <25%

Spar Nord:

Spar Nord:

0.5

11.6% Liqudity coverage ratio >50% Spar Nord: 320.8

%

With reference to the calculation method for the reference point Large exposures specified by the Danish FSA, with the benchmark for the 20 largest exposures being fixed at 175% of the Common Equity Tier 1 (CET1), Spar Nord’s 20 largest exposures amounted to 95.5% at 30 June 2017.

Loan impairments, which at the beginning of the year were expected to be “lower than in 2016” are now expected to be substantially lower than in 2016.

Spar Nord H1 2017

Spar Nord shares held by members of the Management team

11

Overview of group companies

Spar Nord shares held by members of the Management team BOARD OF DIRECTORS Kjeld Johannesen Per Nikolaj Bukh Kaj Christiansen Morten Bach Gaardboe Laila Mortensen Ole Skov Jannie Skovsen Gitte Holmgaard Sørensen John Sørensen

At 30.06.17 50,000 27,200 21,100 3,620 0 7,054 7,404 1,566 5,160

AT 31.03.17 50,000 27,200 21,100 3,620 0 7,054 7,404 2,486 5,160

EXECUTIVE BOARD

At 30.06.17 47,784 71,113 65,460

Lasse Nyby John Lundsgaard Lars Møller

AT 31.03.17 47,784 71,113 65,460

The holdings comprise all shares held by all members of the household.

Overview of group companies Consolidated subsidiaries Aktieselskabet Skelagervej 15, Aalborg *) According to the most recent annual report. The company is a wholly subsidiary in 2016 and 2017.

Share capital end of period*) DKKm

Equity end of period*) DKKm

27.0

1,583.7

Profit/loss *) DKKm

74.9

Spar Nord H1 2017

Performance indicators and financial ratios –

12

Group

Performance indicators and financial ratios – Group THE DANISH FSA’S LAYOUT AND RATIO SYSTEM H1 2017

INCOME STATEMENT DKKm Interest income



Interest expenses



Net interest income



Dividends on shares, etc.



Fees, charges and commissions received



Fees, charges and commissions paid



Net income from interest, fees, charges and commissions Market value adjustments



Other operating income



Staff costs and administrative expenses



Amortization, depreciation and impairment of intangible assets and property, plant and equipment

867.0

H1 2016

Change in %

917.8

H1 2017

H1 2016

H1 2015

H1 2014

H1 2013

Full year 2016

-5.5 867.0 917.8 1,029.1 1,143.3 1,493.5 1,815.5

54.0 76.3 -29.2 54.0 76.3 113.2 267.2 356.5 144.7 813.0 841.5

-3.4 813.0 841.5 915.9 876.1 1,137.0 1,670.8

18.2 48.9 -62.8 18.2 48.9 54.5 38.8 20.8 47.9 638.2 571.4

11.7 638.2 571.4 610.1 432.6 404.0 1,174.8

65.0 52.9 22.9 65.0 52.9 40.9 32.2 30.8 122.1 1,404.4 1,408.9

-0.3 1,404.4 1,408.9 1,539.6 1,315.3 1,531.0 2,771.4

266.9 137.9 93.5 266.9 137.9 373.5 284.1 114.0 385.8 24.5 17.3 41.6 24.5 17.3 17.0 26.9 57.1 29.7 944.6 908.7

4.0 944.6 908.7 929.3 878.1 880.1 1,788.8

28.2 34.4 -18.0 28.2 34.4 32.9 34.5 65.8 94.3

Other operating expenses



Loan impairment charges etc.



Profit/loss on investments in associates and group enterprises



Profit/loss before tax



719.8 469.2

Tax



144.7 86.6 67.1 144.7 86.6 108.8 71.5 72.1 189.9

Profit/loss



575.1 382.6 50.3 575.1 382.6 632.3 440.4 259.8 838.2

4.6 4.9 -6.1 4.6 4.9 51.5 60.9 57.6 13.3 18.8 161.9 -88.4 18.8 161.9 188.1 194.0 411.0 292.0 20.2 15.0 34.7 20.2 15.0 12.8 53.1 44.3 29.6 53.4 719.8 469.2

741.1

511.9 331.9 1,028.1

BALANCE SHEET



DKKm



Total assets



79,595 7 7,476

2 .7 7 9,595 7 7,476 7 9,83 2 7 7,933 75,8 42 78 , 473

Loans and advances



42,407 38,531

10.1 42,407 38,531 34,413 36,935 37,684 41,346



Lending, banking and leasing activities



36,351 35,003



Lending, reverse repo transactions



6,056 3,528

3.9 36,351 35,003 33,935 35,166 37,112 35,093 71.7 6,056 3,528

478 1,769

572 6,253

Deposits



62,782 59,649

5.3 62,782 59,649 56,623 53,237 50,359 61,005



Deposits, banking activities



47,610 46,295

2.8 47,610 46,295 44,098 42,500 42,426 46,464



Deposits, repo transactions





Deposits in pooled schemes



Subordinated debt



Equity



Contingent liabilities



156 0 - 156 0 0 0 0 0 15,016 13,354

12.4 15,016 13,354 12,525 10,737 7,933 14,541

1,089 1,093 -0.4 1,089 1,093 1,351 1,711 2,329 1,093 8,565 7,799 12,304 10,847

9.8 8,565 7,799 7,618 6,855 6,249 8,627 13.4 12,304 10,847 10,349 5,957 5,693 12,334

Total risk exposure amount



Tier 1 capital *)



7,369 6,875

Loan impairment charges etc.



1,839 1,898 -3.1 1,839 1,898 1,819 1,688 1,585 1,891

Contractual non-performing loans



401 468 -14.2 401 468 536 628 997 443

*)

49,672 46,823

Tier 1 capital for H1 2017 is exclusive of recognition of profit/loss for the period.

6.1 49,672 46,823 48,372 44,615 43,928 47,485 7.2 7,369 6,875 6,847 6,580 7,269 7,427

Spar Nord H1 2017

Performance indicators and financial ratios –

13

Group

Performance indicators and financial ratios – Group THE DANISH FSA’S LAYOUT AND RATIO SYSTEM H1 2017

FINANCIAL RATIOS Own funds

H1 2016

H1 2017

H1 2016

H1 2015

H1 2014

H1 2013

Full year 2016

Own funds ratio *)



16.9 16.8 16.9 16.8 16.3 16.9 16.8 17.7

Tier 1 capital ratio *)



14.8 14.7 14.8 14.7 14.2 14.7 16.5 15.6

Earnings



Return on equity before tax, %



Return on equity after tax, %



6.7 4.9 6.7 4.9 8.6 6.6 4.3 10.2

Income/cost ratio



1.72 1.42 1.72 1.42 1.62 1.44 1.23 1.47

Return on assets, %



0.7 0.5 0.7 0.5 0.8 0.6 0.3 1.1

8.4 6.0 8.4 6.0 10.1 7.6 5.4 12.5

Market risk and liquidity



Interest rate risk, %



0.2 0.7 0.2 0.7 0.6 0.5 -0.7 1.2

Foreign-exchange position, %



3.9 3.0 3.9 3.0 3.8 2.4 5.6 3.2

Foreign-exchange risk, %



Excess coverage relative to statutory liquidity requirement, %

0.1 0.1 0.1 0.1 0.1 0.0 0.1 0.1 321.3 283.1 321.3 283.1 268.0 230.2 209.4 308.3

Credit risk



Loans and advances as % of deposits, %



67.5 64.6 67.5 64.6 60.8 69.4 74.8 67.8

Loans and advances plus impairment as % of deposits, %

70.4 67.7 70.4 67.7 63.9 72.5 78.0 70.7

Loans and advances as % of equity, %



5.0 4.9 5.0 4.9 4.5 5.4 6.0 4.8

Increase in loans and advances for the period, %

3.6 3.3 3.6 3.3 -4.4 -1.9 -4.7 3.6

Sum of large exposures, %



17.5 15.9 17.5 15.9 16.6 0.0 14.3 14.5

Impairment ratio for the period



0.0 0.3 0.0 0.3 0.4 0.4 0.9 0.5

THE SPAR NORD SHARE



DKK per share of DKK 10



Profit/loss for the period



4.7 3.1 4.7 3.1 5.0 3.5 2.1 6.8

Net asset value (NAV)



63 60 63 60 58 55 50 63

Dividend



Share price/profit/loss for the period



Share price/NAV



*)

- - - - 2.0 - - 5.0 18.1 17.4 18.1 17.4 14.8 17.1 17.6 11.9 1.3 0.9 1.3 0.9 1.3 1.1 0.7 1.3

Own funds for H1 2017 is exclusive of recognition of profit/loss for the period.

Spar Nord H1 2017

Management’s statement on the Interim Report

Management’s statement on the Interim Report The Board of Directors and the Executive Board have today discussed and adopted the Interim Financial Statements of Spar Nord Bank A/S for the period from 1 January to 30 June 2017. The Interim Financial Statements have not been audited or subjected to a review by the Group’s auditor. The Consolidated Interim Financial Statements are presented in accordance with IAS 34 “Interim Financial Reporting”, as adopted by the EU, and the Interim Financial Statements of the Parent Company are presented in accordance with the Danish Financial Business Act. Moreover, the Interim Financial Statements are presented in accordance with additional Danish disclosure requirements regarding interim financial statements of listed financial institutions. In our opinion, the Interim Financial Statements give a true and fair view of the Group’s and Parent Company’s financial position at 30 June 2017 and of the results of the Group’s and Parent Company’s operations and the Group’s cash flows for the period from 1 January to 30 June 2017. In addition, we consider the Management’s review to give a fair presentation of the development in the Group’s and Parent Company’s activities and financial affairs as well as a description of the significant risks and elements of uncertainty that may affect the Group or Parent Company.

EXECUTIVE BOARD

Lasse Nyby Chief Executive Officer

John Lundsgaard Managing Director

Lars Møller Managing Director

BOARD OF DIRECTORS

Kjeld Johannesen Chairman

Per Nikolaj Bukh Deputy Chairman of the Board of Directors

Kaj Christiansen

Aalborg, 16 August 2017

Morten Bach Gaardboe

Laila Mortensen Ole Skov Elected by the employees Jannie Skovsen Elected by the employees Gitte Holmgaard Sørensen Elected by the employees John Sørensen

14

Spar Nord H1 2017

Income statement – Group

Income statement – Group NOTE

4

Interest income

5

Interest expenses Net interest income

H1 2017 DKKm

H1 2016 DKKm

Q2 2017 DKKm

15

Q2 2016 DKKm

Full year 2016 DKKm

867.0 917.8 430.6 475.1 1,815.5 54.0 76.3 26.5 35.8 144.7 813.0 841.5 404.1

439.3 1,670.8

Dividends on shares, etc. 6

Fees, charges and commissions received

6

Fees, charges and commissions paid

18.2 48.9 14.8 47.7 47.9 638.2 571.4 313.7 301.6 1,174.8 65.0 52.9 34.9 33.5 122.1

Net income from interest, fees, charges and commissions 1,404.4 1,408.9

697.7

755.1 2,771.4

7

Market value adjustments Other operating income

8

Staff costs and administrative expenses Amortization, depreciation and impairment of intangible assets and property, plant and equipment Other operating expenses

10

Loan impairment charges etc. Profit/loss on investments in associates and group enterprises Profit/loss before tax

266.9 137.9 106.6 67.0 385.8 24.5 17.3 13.7

9.7 29.7

944.6 908.7 486.3 453.2 1,788.8 28.2 34.4 13.9

17.3 94.3

4.6 4.9 2.2 2.8 13.3 18.8 161.9

0.9 101.0 292.0

20.2 15.0

7.3

7.4 29.6

719.8 469.2 322.0 264.9 1,028.1

Tax

144.7 86.6 63.7 47.0 189.9

Profit/loss

575.1 382.6 258.3

217.9 838.2



APPROPRIATION:



The shareholders of the Parent Company Spar Nord Bank A/S Holders of Additional Tier 1 (AT1) capital instruments



Profit/loss



551.0 370.6 246.3 24.1 12.0 12.0 575.1 382.6 258.3

211.8 812.1 6.1 26.1 217.9 838.2

EARNINGS PER SHARE Earnings per share (DKK)



Diluted earnings per share (DKK)

4.5 3.0 2.0 1.8 6.6 4.5

3.0

2.0

1.8

6.6



STATEMENT OF COMPREHENSIVE INCOME Profit/loss for the period



575.1 382.6 258.3

217.9 838.2

Other comprehensive income Items that cannot be reclassified to the income statement: Net revaluation of domicile property



0.8 0.8 0.4 0.4 -5.0

Other comprehensive income after tax

0.8 0.8 0.4 0.4 -5.0

Total comprehensive income







Appropriation:



The shareholders of the Parent Company Spar Nord Bank A/S Holders of Additional Tier 1 (AT1) capital instruments



Total comprehensive income



575.9 383.4 258.7 218.3 833.2

551.8 371.4 246.7 212.2 807.1 24.1 12.0 12.0

6.1 26.1

575.9 383.4 258.7 218.3 833.2

Spar Nord H1 2017

Balance sheet – Group

Balance sheet – Group

30.06.17 DKKm

16

30.06.16 DKKm

Full year 2016 DKKm

ASSETS

NOTE

9

11

Cash balances and demand deposits with central banks 1,393.1 1,346.4 595.3 Due from credit institutions and central banks 2,365.8 2,866.9 2,178.8 Lending, banking and leasing activities 36,350.7 35,003.6 35,092.2 Lending, reverse repo transactions 6,056.4 3,527.6 6,253.4 Loans, advances and other receivables at amortized cost, total 42,407.1 38,531.2 41,345.6 Bonds at fair value 13,825.7 16,281.0 14,936.1 Shares, etc. 1,551.8 1,528.6 1,557.2 Investments in associates 110.7 74.9 118.4 Assets linked to pooled schemes 15,016.2 13,354.0 14,541.5 Intangible assets 188.6 206.2 194.4 Investment properties 135.0 145.4 135.0 Domicile property 525.7 541.2 518.5 Land and buildings, total 660.7 686.6 653.5 Other property, plant and equipment 105.5 96.4 91.1 Current tax assets 24.1 39.7 17.9 Deferred tax assets 0.0 0.1 0.0 Temporary assets 27.1 19.8 33.9 Other assets 1,794.2 2,337.6 2,086.3 Deferred income 124.7 106.8 123.5 Total assets 79,595.3 77,476.2 78,473.5

EQUITY AND LIABILITIES DEBT 12

13

14

15 16 17

Due to credit institutions and central banks 2,821.3 3,364.3 2,429.8 Deposits and other payables 47,765.9 46,294.8 46,464.2 Deposits in pooled schemes 15,016.2 13,354.0 14,541.5 Other non-derivative financial liabilities at fair value 1,232.5 1,775.1 2,007.8 Other liabilities 2,908.3 3,588.0 3,084.1 Deferred income 20.4 15.9 24.0 Total debt 69,764.6 68,392.1 68,551.4 PROVISIONS Provision for deferred tax 108.4 123.1 108.5 Provision for losses on guarantees 41.4 59.2 67.0 Other provisions 26.4 9.4 26.3 Total provisions 176.2 191.7 201.8 SUBORDINATED DEBT Subordinated debt 1,089.0 1,093.2 1,093.2 Total liabilities 71,029.8 69,677.0 69,846.4 EQUITY Share capital 1,255.3 1,255.3 1,255.3 Revaluation reserves 92.1 97.1 91.3 Statutory reserves 0.0 1.8 22.3 Proposed dividend 0.0 0.0 627.7 Retained earnings 6,354.8 6,047.7 5,768.1 Equity 7,702.2 7,401.9 7,764.7 Holders of Additional Tier 1 (AT1) capital instruments 863.3 397.3 862.4 Total equity 8,565.5 7,799.2 8,627.1 Total equity and liabilities 79,595.3 77,476.2 78,473.5 OFF-BALANCE SHEET ITEMS Contingent assets 7.5 5.4 6.9 Contingent liabilities 12,303.8 10,847.4 12,334.1 Other binding/commitments 500.9 469.5 500.9

Spar Nord H1 2017

Statement of changes in equity -

17

Group

Statement of changes in equity – Group CHANGES IN EQUITY

The shareholders of the Parent Company Spar Nord Bank A/S

Revaluation Share capital reserve DKKm DKKm

Statutory reserves DKKm

Proposed dividends DKKm

Retained earnings DKKm

Total DKKm

Additional Tier 1 (AT1) capital *) DKKm

Total DKKm

Equity 30.06.17 Equity 01.01.17

1,255.3

91.3

22.3

627.7

5,768.1

7,764.7

862.4

8,627.1

Comprehensive income in 2017



Profit/loss for the period

- - 20.1 - 530.9 551.0 24.1 575.1

Other comprehensive income





- 0.8 - - - 0.8 - 0.8

Net revaluation of properties

Other comprehensive income, total

- 0.8 - - - 0.8 - 0.8

Total comprehensive income for the period

-

0.8 20.1

- 530.9 551.8 24.1 575.9

Transactions with owners



Interest paid on Additional Tier 1 (AT1) capital

- - - - - - -24.2 -24.2

Dividends paid

- - - -627.7 - -627.7 - -627.7

Dividends received, treasury shares

- - - - 12.8 12.8 - 12.8

Disposal upon acquisition of treasury shares and Additional Tier 1 (AT1) capital - - - - -257.5 -257.5 - -257.5 Addition upon sale of treasury shares and Additional Tier 1 (AT1) capital

- - - - 252.8 252.8 1.0 253.8

Revaluation reserves, associates

- - -13.6 - 13.6 0.0 - 0.0

Dividends received from associates recognized at net asset value

- - -28.8 - 28.8 0.0 - 0.0

Tax

- - - - 5.3 5.3 - 5.3

Total transactions with owners



0.0

- -42.4 -627.7

55.8 -614.3 -23.2 -637.5

Equity 30.06.17

1,255.3

92.1

0.0

0.0

6,354.8

7,702.2

863.3

8,565.5

The share capital consists of 125,529,918 shares with a nominal value of DKK 10.



Equity 30.06.16



Equity 01.01.16

1,255.3

96.3

23.2

376.6 5,723.3 7,474.7

412.3 7,887.0

Comprehensive income in 2016



Profit/loss for the period

- - 15.1 - 355.5 370.6 12.0 382.6

Other comprehensive income





- 0.8 - - - 0.8 - 0.8

Net revaluation of properties

Other comprehensive income, total



- 0.8 - - - 0.8 - 0.8

Total comprehensive income for the period

-

0.8 15.1

- 355.5 371.4 12.0 383.4

Transactions with owners





Interest paid on Additional Tier 1 (AT1) capital

- - - - - - -24.2 -24.2



Dividends paid

- - - -376.6 - -376.6 - -376.6



Dividends received, treasury shares

- - - - 1.9 1.9 - 1.9



Disposal upon acquisition of treasury shares and Additional Tier 1 (AT1) capital - - - - -277.8 -277.8 -2.8 -280.6



Addition upon sale of treasury shares and Additional Tier 1 (AT1) capital

- - - - 205.7 205.7 - 205.7



Dividends received from associates recognized at net asset value

- - -36.5 - 36.5 0.0 - 0.0

Tax

- - - - 2.6 2.6 - 2.6

Total transactions with owners



-

- -36.5 -376.6

-31.1 -444.2

-27.0 -471.2

Equity 30.06.16

1,255.3

97.1

1.8

0.0

6,047.7

7,401.9

397.3

7,799.2

The share capital consists of 125,529,918 shares with a nominal value of DKK 10. TREASURY SHARE PORTFOLIO Number of shares



Percentage of share capital



H1 2017

H1 2016

Full year 2016

2,647,586 1,471,262 2,591,335 2.1 1.2 2.1

The proposal by the Board to cancel the shares bought back under the Bank’s buyback programme for 2016 was adopted at Spar Nord Bank’s Annual General Meeting held on 26 April 2017. The reduction of the share capital by DKK 25,273,920, nominal value, through the cancellation of 2,527,392 shares of the Bank’s portfolio of treasury shares is awaiting filing with the Danish Business Authority.

Spar Nord H1 2017

Statement of changes in equity -

18

Group



Additional Tier 1 (AT1) capital

Currency

Note DKKm

Interest rate

Maturity

H1 2017 DKKm

DKK



a



400.0

6.052%



2015

Perpetual

400.3

397.3

412.7

DKK



b



450.0

5.500%



2016

Perpetual

463.0

-

449.7

863.3

397.3

862.4



Principal Received

Additional Tier 1 (AT1) capital issued under CRR, total

H1 2016 DKKm

Full year 2016 DKKm

a

Issued on 10 June 2015, with an option of early redemption as from 10 June 2020.



The loan carries interest at a rate of 6.052% p.a. until 10 June 2020, after which date interest will be fixed at CIBOR6 + a 5.400 % margin.

b

Issued on 6 December 2016, with an option of early redemption as from 6 December 2021. The loan carries interest at a rate of 5.500% p.a. until



6 December 2021, after which date interest will be fixed at CIBOR6 + a 5.166% margin.

If Spar Nord’s Common Equity Tier 1 (CET1) ratio falls below 5 1/8%, the loans will be written down. The loans can be written up again based on the rules laid down in CRR. H1 2017 DKKm

Additional Tier 1 (AT1) capital, specification of cash flows



Cash flows, beginning of period

816.9

H1 2016 DKKm

Full year 2016 DKKm

395.9

395.9

Movement during the period:



Issue of Additional Tier 1 (AT1) capital

-

Net transaction costs

-

Change in treasury share portfolio

1.0

Interest paid

-24.2

Total cash flows for the period



- 450.0 - -3.0 -2.8 -24.2

-1.8 -24.2

-23.2 -27.0 421.0

Cash flows, end of period

793.7

368.9

816.9

Spar Nord H1 2017

Cash flow statement - Group

Cash flow statement – Group

NOTE

H1 2017 DKKm

H1 2016 DKKm

19

Full year 2016 DKKm

OPERATING ACTIVITIES Profit/loss before tax



Fair value changes, investment properties and temporary assets

719.8 469.2 1,028.1 0.3 0.3 11.1

28.2 34.4 94.3 Amortization, depreciation and impairment of intangible assets and property, plant and equipment -2.1 -0.5 3.0 Gains and losses on the sale of intangible assets and property, plant and equipment Adjustment of loan impairment charges etc.



27.6 61.6 54.4

Provisions



-25.4 -7.4 17.3

Profit/loss on investments in associates and group enterprises

-20.2 -15.0 -29.6

Corporate income tax paid



-145.8 -26.5 -118.5

Operating activities, total



582.4 516.1 1,060.1





WORKING CAPITAL



Movement in credit institutions and central banks, net

401.5 -400.1 -1,326.2

-1,089.1 Movement in loans, advances and other receivables at amortized cost

14

-4.0 -2,811.2

Movement in bonds at fair value



1,110.4 -227.4 1,117.5

Movement in equity portfolio



Movement in other assets and other liabilities, net



Movement in deposits and other payables



1,301.7 1,558.5 1,727.9

Working capital, total



1,066.4 1,324.9 -967.8





Cash generated from operations, total







INVESTING ACTIVITIES



Acquisition of activities from FIH Erhvervsbank



0.0 -549.5 -549.5

Acquisition of associates and group enterprises



-2.9 -14.0 -25.8

Sale of associates and group enterprises



1.9 0.0 0.0

Acquisition of intangible assets



-0.2 -1.5 -5.6

Sale of intangible assets



Acquisition of property, plant and equipment



Sale of property, plant and equipment



16.5 14.4 22.9

Dividends from associates and group enterprises



28.8 36.4 37.6

Investing activities, total



-7.0 -534.9 -591.3





FINANCING ACTIVITIES



Subordinated debt



Additional Tier 1 (AT1) capital recognized in equity (see specification in Statement of changes in equity)



Dividends paid, excluding dividends on treasury shares



Share buyback programme



Acquisition of treasury shares



Sale of treasury shares



252.8 205.7 512.4

Financing activities, total



-647.0 -469.4 -95.1

5.3 129.6 82.8 -663.4 268.3 241.4

1,648.8 1,841.0

92.3

0.0 1.6 2.5 -51.1 -22.3 -73.4

-4.2 4.4 4.4 -23.2 -27.0 421.0 -614.9 -374.7 -374.7 0.0

0.0 -150.0

-257.5 -277.8 -508.2

Movements in cash and cash equivalents for the period







Cash and cash equivalents, beginning of period



Movements in cash and cash equivalents for the period



Cash and cash equivalents, end of period







Cash and cash equivalents, end of period



Cash, cash equivalents and demand deposits with central banks



Due from credit institutions and central banks within less than 3 months



2,302.8 2,785.5 2,105.8

Total



3,695.9 4,131.9 2,701.1



994.8 836.7 -594.1 2,701.1 3,295.2 3,295.2 994.8 836.7 -594.1 3,695.9 4,131.9 2,701.1

1,393.1 1,346.4

595.3

Spar Nord H1 2017

Notes – Group

20

Notes – Group NOTE

1

ACCOUNTING POLICIES The Interim Financial Statements of the Spar Nord Group covering the period from 1 January to 30 June have been prepared in accordance with IAS 34, “Interim Financial Reporting”, as adopted by the EU, and additional Danish disclosure requirements for interim reports of listed financial institutions. Other than as set out below, the Group has not changed its accounting policies from those followed in Annual Report 2016, which provides a full description of the Group’s accounting policies. Accounting policy changes The Spar Nord Group has implemented the IFRS standards and interpretations taking effect in the EU for 2017. The implementation of these standards and interpretations has not materially affected recognition and measurement. Information about standards not yet in force The analysis of the expected effect of implementing IFRS 9 has not yet been completed. IFRS 9 "Financial Instruments", replacing IAS 39, changes the classification and related measurement of financial assets and liabilities. IFRS 9 introduces a more logical approach to the classification of financial assets that is based on the Bank’s business model and the characteristics of the underlying cash flows. Based on the current business model and management of returns, IFRS 9 is not expected to materially affect the Bank’s financial reporting. Moreover, the standard introduces a new impairment model for all financial assets. The new impairment model means that impairment losses must be recognized on all the Bank’s loans, advances and guarantees based on the losses statistically expected (expected credit loss model). Based on the existing rules, impairment losses are not recognized until there is objective evidence of impairment (incurred loss model). IFRS 9 uses a three-stage impairment approach, meaning that expected credit losses (ECLs) are allocated to either stage 1, 2 or 3, depending on the risk of credit loss. The classification into stages and the calculation of expected credit losses will largely be based on the Bank’s existing rating models and credit control. Systems and models for determining impairment in accordance with IFRS 9 are being developed and will be adjusted in step with the Danish FSA giving more specific instructions about the interpretation of the standard. The new impairment models are being developed in cooperation with the Bank’s data processing centre and support the calculation of expected credit losses according to models based on loss ratios and the concepts of PD (Probability-of-Default), LGD (Loss-Given-Default) and EAD (Exposure-atDefault). Overall, the changed method for determining credit losses is estimated to result in an increase of the Bank’s impairment account for loans, advances and provisions on guarantees in the region of DKK 200-300 million, corresponding to a reduction of shareholders’ equity after tax of 2-3%. The effect after tax will be recognised as a reduction of shareholders’ equity at 1 January 2018. Finally, the standard introduces new rules for hedge accounting. Compared to the existing rules, the new model will provide a better link between an entity’s accounting treatment and risk management strategy. The new rules on hedge accounting are not expected to materially affect the Bank’s financial reporting.

2

JUDGMENTS AND ESTIMATES Measuring certain assets and liabilities requires Management to make an estimate of how future events will affect the value of such assets and liabilities. Estimates considered material in presenting the financial statements are, among other things, those made when determining loan impairments, the fair values of unlisted financial instruments as well as provisions. The applied estimates are based on assumptions deemed reasonable by Management but which are inherently uncertain. In the presentation of the condensed condensed Interim Financial Statements, the critical judgments made by Management in the application of the Group’s accounting policies, and the considerable uncertainty related thereto, are identical to those applying to the presentation of the Financial Statements at 31 December 2016.

Spar Nord H1 2017

NOTE

3

Notes – Group

Segment information BUSINESS SEGMENTS H1 2017 DKKm

Trading, Financial Markets & the Spar Nord’s International Local Banks Division

Other Areas

21

Core earnings*)

Reclassifications and other items after core earnings**)

Group, total

INCOME STATEMENT Net interest income



732.2 20.4 32.9 785.5 27.5 813.0

Net income from fees, charges and commissions

571.2 -0.4

Market value adjustments and dividends

83.4 151.1 50.6 285.1 0.0 285.1

Other operating income

10.2 0.5 13.8 24.5 0.0 24.5



Profit/loss on investments in associates and group enterprises Core income/revenue, total

2.4 573.2

0.0 573.2

0.0 0.0 20.2 20.2 0.0 20.2 1,397.0

171.6

119.9 1,688.5

27.5 1,716.0

Operating expenses, depreciation and amortization

798.5 29.0 149.9 977.4 0.0 977.4

Core earnings before impairment

598.5 142.6 -30.0 711.1 27.5 738.6

Loan impairment charges etc. Profit/loss before tax

*) **)



-8.1 0.0 -0.6 -8.7 27.5 18.8 606.6 142.6 -29.4 719.8

0.0 719.8

The core earnings column corresponds to the Group figures in the Management’s review. The relation to the Group is specified in the column Reclassifications and other items after core earnings. Reclassifications have impacted the items Net interest income and Loan impairment charges etc. in the amount of DKK 27.5 million. Trading, Financial Markets & the International Spar Nord’s Division Local Banks

BALANCE SHEET Loans, advances and other receivables at amortized cost Investments in associates and group enterprises Intangible assets and property, plant and equipment *)

Other Areas

36,181.4 6,077.4

Group, total

148.3 42,407.1

0.0 0.0 110.7 110.7 256.6

0.1 698.1 954.8

Other assets **)



16,424.1 18,330.7 1,367.9 36,122.7

Allocated assets, total



52,862.1 24,408.2 2,325.0 79,595.3

Deposits and other payables

46,756.9

494.7

514.3 47,765.9

Equity (allocated capital)



Other liabilities



15,396.8 4,578.1 3,289.0 23,263.9

Allocated equity and liabilities, total

66,950.3 5,743.1 6,901.9 79,595.3

4,796.6

670.3 3,098.6 8,565.5

Disclosures – income/revenue, total Internal income/revenue



Internal income and eliminations, offset against costs

-64.9 35.3 298.3 268.7 0.0 -25.8 -242.9 -268.7

Income/revenue, external customers

1,461.9 162.1 92.0 1,716.0

Income/revenue, total



1,397.0 171.6 147.4 1,716.0

Financial ratios



Return on equity, % ***)



26.3 45.6

-

-

Cost share of core income



0.57 0.17

-

-

Total risk exposure, end of period Number of employees (full-time equivalents, end of period)

39,971 7,374 2,327 49,672 1,067

74 414 1,555

As in previous years, the Group uses core earnings as a performance measure. The reporting segments correspond to the Group’s organizational entities, and an internal follow-up is carried out in this regard. DESCRIPTION OF BUSINESS AREA ACTIVITIES: - For a description of the activities of Spar Nord’s Local Banks and Trading, Financial Markets & the International Division, please see page 55 of 2016 Annual Report. - The activities of the Local Banks include the Group’s leasing activities, and the activities of Other areas include central staff and support functions. Intra-group settlement is determined based on the same principles as in previous years and expresses contributions to earnings from the activities carried out by the respective business areas. Internal management takes place based on a net-interest consideration, and accordingly interest income and expenses are not disclosed. *) All assets are located in Denmark. **) Temporary assets amount to DKK 27.1 million, of which DKK 13.0 million relates to the Group’s leasing activities and DKK 14.1 million relates to Other areas. ***) The rate of return on equity per annum has been calculated on allocated capital, which amounts to 12% of the average total risk exposure amount.

Spar Nord H1 2017

NOTE

3

Notes – Group

Segment information BUSINESS SEGMENTS – H1 2016 DKKm

Trading, Financial Markets & the Spar Nord’s International Local Banks Division

Other Areas

22

Core earnings*)

Reclassifications and other items after core earnings

Group, total

INCOME STATEMENT Net interest income



741.2 29.9 41.9 813.0 28.5 841.5

Net income from fees, charges and commissions

516.2

Market value adjustments and dividends Other operating income



8.2 0.1 9.0 17.3 0.0 17.3

Profit/loss on investments in associates and group enterprises Core income/revenue, total

-0.4 0.0 15.4 15.0 0.0 15.0 1,341.6 100.5 108.5 1,550.6

Operating expenses, depreciation and amortization Core earnings before impairment

28.5 1,579.1

797.6 25.9 124.5 948.0

0.0 948.0

544.0 74.6 -16.0 602.6 28.5 631.1

Loan impairment charges etc. Profit/loss before tax

2.6 -0.3 518.5 0.0 518.5

76.4 67.9 42.5 186.8 0.0 186.8

136.0 -0.5 -2.1 133.4 28.5 161.9 408.0 75.1 -13.9 469.2

0.0 469.2

*) The core earnings column corresponds to the Group figures in the Management’s review. **) The relation to the Group is specified in the column Reclassifications and other items after core earnings. Reclassifications have impacted the items Net interest income and Loan impairment charges etc. in the amount of DKK 28.5 million. Trading, Financial Markets & the Spar Nord’s International Local Banks Division

BALANCE SHEET Loans, advances and other receivables at amortized cost Investments in associates and group enterprises Intangible assets and property, plant and equipment *)

Other Areas

34,853.5 3,628.4

Group, total

49.3 38,531.2

0.0 0.0 74.9 74.9 248.1

0.3 740.8 989.2

Other assets **)



14,728.3 21,780.8 1,371.8 37,880.9

Allocated assets, total



49,829.9 25,409.5 2,236.8 77,476.2

Deposits and other payables

45,490.2

339.9

464.7 46,294.8

Equity (allocated capital)



Other liabilities



13,257.7 6,551.3 3,573.2 23,382.2

Allocated equity and liabilities, total

63,100.2 7,469.8 6,906.2 77,476.2

4,352.3 578.6 2,868.3 7,799.2

Disclosures – income/revenue, total Internal income/revenue



Internal income and eliminations, offset against costs

-56.7 21.9 321.9 287.1 0.0 -22.1 -264.9 -287.0

Income/revenue, external customers

1,398.3 100.7 80.0 1,579.0

Income/revenue, total

1,341.6 100.5 137.0 1,579.1



Financial ratios



Return on equity, % ***)



19.3 22.2

-

-

Cost share of core income



0.59 0.26

-

-

Total risk exposure, end of period Number of employees (full-time equivalents, end of period)

36,269 4,821 5,733 46,823 1,108

68 380 1,556

As in previous years, the Group uses core earnings as a performance measure. The reporting segments correspond to the Group’s organizational entities, and an internal follow-up is carried out in this regard. DESCRIPTION OF BUSINESS AREA ACTIVITIES: - For a description of the activities of Spar Nord’s Local Banks and Trading, Financial Markets & the International Division, please see page 55 of 2016 Annual Report. - The activities of the Local Banks include the Group’s leasing activities, and the activities of Other areas include central staff and support functions. Intra-group settlement is determined based on the same principles as in previous years and expresses contributions to earnings from the activities carried out by the respective business areas. Internal management takes place based on a net-interest consideration, and accordingly interest income and expenses are not disclosed. *) All assets are located in Denmark. **) Temporary assets amount to DKK 19.8 million, of which DKK 0.3 million relates to the Group’s leasing activities and DKK 19.5 million relates to Other areas. ***) The rate of return on equity per annum has been calculated on allocated capital, which amounts to 12% of the average total risk exposure amount.

Spar Nord H1 2017

Notes – Group

NOTE

23

H1 2017 DKKm

4

5

H1 2016 DKKm

Full year 2016 DKKm

INTEREST INCOME Due from credit institutions and central banks



Loans, advances and other receivables



0.7 1.6 2.8

Bonds





Foreign-exchange contracts





Interest-rate contracts



-30.0 -38.9 -69.9

Derivative financial instruments, total



-28.4 -35.7 -66.7

Other interest income



Total interest income







Of which, income from genuine reverse repo transactions booked under



Due from credit institutions and central banks



-5.3 -4.2 -9.8

Loans, advances and other receivables



-6.9 -3.7 -10.0





INTEREST EXPENSES



Credit institutions and central banks



-0.9 -1.7 -4.1

Deposits and other payables



28.7 51.8 95.7

Subordinated debt



25.7 26.2 52.4

Other interest expenses



Total interest expenses







Of which, interest expenses from genuine repo transactions booked under



Due to credit institutions and central banks



Deposits and other payables



824.6 849.3 1,688.3 42.2 67.9 117.9 1.6 3.2 3.2

27.9 34.7 73.2 867.0

917.8 1,815.5

0.5 0.0 0.7 54.0 76.3 144.7

-4.4 -4.8 -11.0 0.0

1.2 -0.2

6

FEES, CHARGES AND COMMISSIONS RECEIVED



Securities trading and custody accounts



Payment services



76.2 59.5 140.5

Loan transaction fees



237.8 217.4 458.2





186.7 154.7 339.1

of which mortgage credit institutions

215.2 217.8 454.8

Guarantee commission



15.2 21.4 35.5

Other fees, charges and commissions



93.8 55.3 85.8

Total fees, charges and commissions received



Total fees, charges and commissions paid



Total net fees, charges and commissions received



638.2 571.4 1,174.8 65.0 52.9 122.1 573.2

518.5 1,052.7

7

MARKET VALUE ADJUSTMENTS



Other loans, advances and receivables at fair value



Bonds



42.9 77.4 163.3

Shares, etc.



114.9 45.5 131.7

Foreign currency



15.6 41.9 51.8

Foreign exchange, interest, share, commodity and other contracts and derivative financial instruments



Assets linked to pooled schemes



502.8 -426.0 380.6

Deposits in pooled schemes



-502.8 426.0 -380.6

Other assets



Other liabilities



Total market value adjustments





0.3 -1.1 -2.9

93.2 -26.0 39.5

0.0 0.0 0.2 0.0 0.2 2.2 266.9 137.9 385.8

Spar Nord H1 2017

Notes – Group

NOTE

H1 2017 DKKm 8

24

H1 2016 DKKm

Full year 2016 DKKm

STAFF COSTS AND ADMINISTRATIVE EXPENSES Staff costs



Administrative expenses



602.5 586.3 1,141.7

Total staff costs and administrative expenses







Staff costs:



Salaries



Share-based payment



Pensions



Social security costs



Total staff costs







342.1 322.4 647.1 944.6 908.7 1,788.8

481.2 493.8 933.3 - - 53.1 52.1 106.9 68.2 40.4 101.5 602.5 586.3 1,141.7

Remuneration to members of the Executive Board and Board of Directors amounts to: Board of Directors



Number



Fixed pay



Pension



Total remuneration







Executive Board



Number



Base salary *)



5.7 5.7 11.0

– less fees received from directorships



0.4 0.4 1.4

The Bank’s expense, base salary



5.3 5.3 9.6

Pension, ordinary contribution

9 9 9 1.6 1.6 3.2 - - 1.6 1.6 3.2

3 3 3

0.7 0.7 1.6

Total remuneration earned and paid



6.0 6.0 11.2





Breakdown of remuneration to Executive Board



Lasse Nyby



Base salary*)



2.1 2.1 4.1

– less fees received from directorships



0.1 0.1 0.4

The Bank’s expense, base salary



2.0 2.0 3.7

Pension, ordinary contribution



0.3 0.3 0.6

Total remuneration earned and paid



2.3 2.3 4.3

John Lundsgaard



Base salary



1.8 1.8 3.5

– less fees received from directorships



0.1 0.1 0.4

The Bank’s expense, base salary



1.7 1.7 3.1

Pension, ordinary contribution



0.2 0.2 0.5

Total remuneration earned and paid



1.9 1.9 3.6

Lars Møller



Base salary*)



1.8 1.8 3.4

– less fees received from directorships



0.2 0.2 0.6

The Bank’s expense, base salary



1.6 1.6 2.8

Pension, ordinary contribution



0.2 0.2 0.5

Total remuneration earned and paid



1.8 1.8 3.3

*)

The amount includes the value of a company car, etc. (comparative figures for H1 2016 have been restated)

The members of the Executive Board receive no variable pay. Members of the Executive Board receive remuneration for their Group executive board duties based on the management agreement with the subsidiary. Termination rules The members of the Executive Board have a term of notice of 12 months and will receive compensation on termination of employment corresponding to two years’ pay. Pension obligation Like the other employees, members of the Executive Board are comprised by defined contribution pension plans. Incentive schemes No new share-option schemes have been established for any of the Bank’s staff groups. Number of employees



The average number of employees in the financial year converted into full-time equivalents





1,537.6 1,550.6 1,547.8

Spar Nord H1 2017

NOTE

Notes – Group

H1 2017 DKKm

25

H1 2016 DKKm

Full year 2016 DKKm

Administrative expenses: IT expenses

167.2

167.0

332.9

Marketing costs

54.8

47.0

90.6

Cost of premises

48.1

39.1

85.8

Staff and travelling expenses

26.4

25.1

55.5

Office expenses

11.6

13.9

24.2

Other administrative expenses

34.0

Total administrative expenses

342.1

30.3 322.4

58.1 647.1

9

DUE FROM CREDIT INSTITUTIONS AND CENTRAL BANKS



Balances at notice with central banks

425.0

Due from credit institutions

1,940.8

2,866.9

2,178.8

Total due from credit institutions and central banks

2,365.8

2,866.9

2,178.8

0.0

0.0

10

IMPAIRMENT ACCOUNT



Individual loan impairment charges



Individual impairment, beginning of period

1,686.3

New individual impairment charges

203.5

381.7

Reversal of individual impairment charges

216.3

236.5

318.9

Previously impaired, now finally lost

134.6

155.2

304.2

Other movements

23.4

Individual impairment, end of period

1,562.3

1,645.6

37.1 1,672.7

1,645.6 600.7

63.1 1,686.3

Collective loan impairment charges



Collective impairment, beginning of period

123.6

New collective impairment charges

97.5

18.8

0.0

Reversal of collective impairment charges

3.6

0.0

15.2

Other movements

3.6

Collective impairment, end of period

221.1

137.5

0.0 156.3

137.5

1.3 123.6

Total loan impairment charges



Impairment, beginning of period

1,809.9

1,783.1

1,783.1

New impairment charges

301.0

400.5

600.7

Reversed impairment charges

219.9

236.5

334.1

Previously impaired, now finally lost

134.6

155.2

304.2

Other movements

27.0

Impairment, end of period

1,783.4

37.1 1,829.0

64.4 1,809.9

Impairment recognized in the income statement



New impairment charges

301.0

400.5

600.7

Reversed impairment charges

219.9

236.5

334.1

Loss without prior impairment

23.1

31.8

Amounts recovered on previously impaired receivables

59.1

49.7

Recognized in the income statement

45.1

146.1

114.3 115.9 265.0

Provisions for losses on guarantees



Provisions, beginning of period

67.0

42.9

42.9

New provisions

6.9

34.6

45.8

Reversed provisions

32.5

18.3

21.7

Provisions for losses on guarantees, end of period

41.4

59.2

67.0

Provisions for losses on guarantees recognized in the income statement



New provisions

6.9

34.6

Reversed provisions

32.5

18.3

21.7

Recognized in the income statement

-25.6

16.3

24.1

45.8

Impairment account for loans and provisions for losses on guarantees, total

1,824.8

1,888.2

1,876.9

Impairment, other credit risks



Impairment, other credit risks, beginning of period

14.0

New impairment charges

0.0

0.0

3.5

Reversed impairment charges

0.7

0.5

0.6

Other movements

0.7

Impairment, other credit risks, total

14.0

10.5

0.0 10.0

10.5

0.6 14.0

Impairment account for loans, provisions for losses on guarantees and other credit risks, total

1,838.8

1,898.2

1,890.9

Spar Nord H1 2017

Notes – Group

NOTE

H1 2017 DKKm

Loan impairment charges etc.

26

H1 2016 DKKm

Full year 2016 DKKm

The total recognition in the income statement under impairment of loans and reivables etc. can be broken down as follows:



Loan impairment charges etc.

45.1

Provisions for losses on guarantees

-25.6

16.3

24.1

Impairment, credit institutions

-0.7

-0.5

2.9

Total impairment of loans and receivables etc.



146.1

265.0

18.8 161.9 292.0

127.1

Loans with suspended interest payments

190.0

176.9

Interest on impaired receivables is calculated on the impaired balance only.



Recognised interest on impaired loans and receivables

27.7

37.1

65.0

11

OTHER ASSETS



Positive fair value of derivative financial instruments, etc.

1,055.8

Miscellaneous receivables

150.3

263.1

194.0

Interest and commissions receivable

205.1

219.8

229.0

Capital contribution to Foreningen Bankernes EDB Central (“BEC”)

316.0

316.0

316.0

Other assets

67.0

Total other assets

1,794.2

1,455.1

83.6 2,337.6

1,284.2

63.1 2,086.3

12

DEPOSITS AND OTHER PAYABLES



Demand deposits

41,392.1

Subject to notice

1,548.2

1,055.3

Time deposits

1,168.5

2,682.5

1,714.1

Special types of deposits

3,657.1

3,606.7

3,541.7

Total deposits and other payables

47,765.9 46,294.8 46,464.2

38,950.3

39,798.2 1,410.2

13

OTHER LIABILITIES



Miscellaneous payables

1,872.8

Negative fair value of derivative instruments, etc.

678.9

Interest and commissions payable

46.0

Other liabilities

310.6

Total other liabilities

2,908.3

2,168.0 952.3 87.1 380.6 3,588.0

1,856.8 865.5 18.8 343.0 3,084.1

14

SUBORDINATED DEBT



Currency

Principal Note DKKm Interest rate Received

Maturity



DKK

a

400.0

28.11.22

401.5

404.6

403.1

DKK

b

700.0

2013 18.12.23

698.8

698.0

698.4

6.043 % Floating

2012

Supplementary capital contributions, total

1,100.3

1,102.6

1,101.5

Portfolio of own bonds relating to subordinated debt

-11.3

Subordinated debt, total

1,089.0

-9.4 1,093.2

-8.3 1,093.2

Interest on subordinated debt

24.9

Costs of raising subordinated debt 0.8



25.4 0.8

50.8 1.6



a The loan is redeemable as from 28.11.2017. If the loan is not redeemed, interest will be fixed at CIBOR3 + a 5.000% margin. b The loan is redeemable as from 18.12.2018. If the loan is not redeemed, interest will remain fixed at CIBOR3 + a 3.900% margin. Subordinated debt, specification of cash flows



Beginning of period

1,093.2

1,088.8

1,088.8

Movement during the period:



Change in interest rate hedging

-2.0

Change in amortized costs

0.8

0.8

1.6

Change in portfolio of own bonds

-3.0

3.9

5.0

Total cash flows for the period



-0.3

-2.2

-4.2 4.4 4.4

Carrying amount, end of period

15

CONTINGENT ASSETS Deferred tax assets not recognized in the balance sheet in amounted to DKK 7.5 million at 30.06.17 (30.06.16: DKK 5.4 million, 2016: DKK 6.9 million).

1,089.0

1,093.2

1,093.2

Spar Nord H1 2017

NOTE

16

Notes – Group

27

CONTINGENT LIABILITIES The Bank and its wholly-owned subsidiary are jointly registered for payroll tax and VAT and are jointly and severally liable for the payroll tax and VAT payable.

H1 2017 DKKm

H1 2016 DKKm

Full year 2016 DKKm

Financial guarantees

4,562.6

3,813.3

3,999.8

Loss guarantees for mortgage loans

4,817.2

4,433.3

4,568.5

Registration and refinancing guarantees

1,927.8

1,702.4

2,885.3

Other contingent liabilities

996.2

Total contingent liabilities

12,303.8

898.4 10,847.4

880.5 12,334.1

Reference is made to note 8 regarding the Executive Board’s notice of termination and the associated compensation. In addition, the Spar Nord Group has contingent liabilities and other binding agreements corresponding to the relative ownership interest in associates. Spar Nord is taxed jointly with its Danish subsidiary in the Spar Nord Group. As management company, Spar Nord has unlimited, joint and several liability together with the other jointly taxed companies for the Danish corporate income tax payable. Due to the payment of tax on account, no tax was payable at 30 June 17, 30 June 16 and end-2016. The corporate income tax receivable within the group of jointly taxed companies amounted to DKK 24.1 million at 30 June 2017 (30 June 2016: DKK 39.7 million; end-2016: DKK 17.9 million). Any adjustments to the taxable income subject to joint taxation might entail an increase in the Parent Company’s liability. Spar Nord has made provisions for a deferred tax liability in respect of recaptured losses related to international joint taxation. The Bank participates in the national restructuring and resolution scheme, with separate contributions being paid to the Guarantee Fund and the Resolution Fund. For both funds, separate target levels have been set, based on the sector’s total deposits that are covered by the guarantee limit of EUR 100,000 (section 9(1) of the Act on a Depositor and Investor Guarantee Scheme). The Guarantee Fund covers customers’ deposits and securities pursuant to the Act on a Depositor and Investor Guarantee Scheme. The Bank’s costs for the Guarantee Fund are calculated based on the Bank’s pro-rata share. In future, the amount of the contribution will be adjusted by an individual risk factor. The Resolution Fund is to be used pursuant to the Act on Restructuring and Resolution of Certain Financial Enterprises for the purpose of covering the associated costs. The Bank’s costs for the Resolution Fund are calculated based on the Bank’s pro-rata share of the sector’s total equity and liabilities less own funds and covered deposits. This contribution will also be adjusted by an individually determined risk factor. The Bank’s costs for the Resolution Fund for 2017 have been included as a pro-rata share of the annual contributions. The Bank’s costs for the Resolution Fund at 30 June 2017 amounted to DKK 4.0 million (30 June 2016: DKK 4.5 million, 2016: DKK 8.9 million.). The amount of the contingent liabilities and the possible due dates are subject to uncertainty.

17

OTHER BINDING COMMITMENTS

H1 2017 DKKm

H1 2016 DKKm

Full year 2016 DKKm

Miscellaneous

500.9

469.5

500.9

Other binding commitments, total

500.9

469.5

500.9

Miscellaneous is composed of: Lease obligations, with the Group as lessee *) Spar Nord is the lessee in a number of operating leases. Under such leases, Spar Nord has the right of use of an asset for a specific period of time against lease payments without assuming the significant risks and rewards of ownership of the asset. The leases concern the lease of properties and operating equipment. The leases are not recognized in the balance sheet. The leases represent an amount of DKK 114.9 million until the legal notice of termination. Data-processing centre *) Spar Nord has entered into an agreement with Bankernes EDB Central a.m.b.a. regarding the provision of IT services. Spar Nord’s membership means that in case of termination of the Bank’s membership, it is liable to pay an exit fee. In addition, a capital contribution to Bankernes EDB Central a.m.b.a. has been recognized under Other assets. The Spar Nord Group has no other significant binding agreements. *) According to the most recent annual report.

Spar Nord H1 2017

Notes without reference –

28

Group

Notes without reference – Group Acquisition of businesses and customer portfolios There were no acquisitions of businesses or customer portfolios in H1 2017. FIH Erhvervsbank In January 2016, Spar Nord entered into an agreement with FIH Erhvervsbank A/S regarding the acquisition of 34 business customer exposures with total loans of DKK 526 million, gross guarantees amounting to DKK 319 million, equal to net guarantees of DKK 64 million, and derivatives of DKK 30 million. The acquisition of the portfolio has been recognized in accordance with the rules stipulated in IAS 39, according to which the loans acquired have been recognized at the agreed acquisition cost, equal to the fair value, which corresponds to an average price of the assets taken over of 100.

FAIR-VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS Financial instruments recognized at fair value The fair value is the amount at which a financial asset can be exchanged between knowledgeable, willing parties in an arm’s length transaction. If an active market exists, the market price in the form of a listed price or price quotation is used. If a financial instrument is quoted in a market that is not active, the measurement is based on the most recent transaction price. Adjustment is made for subsequent changes in market conditions, for instance by including transactions in similar instruments that are assumed to be motivated by normal business considerations. For a number of financial assets and liabilities, no effective market exists. In such situations, an estimated value is used instead, taking account of recent transactions in similar instruments, and discounted cash flows or other recognized estimation and valuation techniques based on the market terms existing at the balance sheet date. The most frequently used valuation models and estimation and valuation techniques include the pricing of transactions for future settlement and swap models that apply present value calculations, credit pricing models as well as option models, such as Black & Scholes models. In most cases, the valuation is largely based on observable input. Unlisted shares recorded at fair value comprise unlisted shares that are not included in the Group’s trading portfolio. These unlisted shares are recognized at fair value, using the Fair Value Option (FVO), and are measured in accordance with provisions in shareholders’ agreements and generally accepted valuation methods, etc. As regards derivative instruments with a positive fair value, the Bank makes a credit valuation adjustment (CVA) to allow for changes in the associated credit risk. The calculation of CVA is based on the customer’s PD (Probability of Default), LGD (Loss Given Default) and EPE (Expected Positive Exposure). In the event that the customer has no external rating, the customer’s PD is based on the Bank’s own credit models. The credit valuation adjustment (CVA) amounted to DKK 4.0 million at 30 June 2017 (30 June 2016: DKK 16.9 million; end-2016: DKK 9.9 million).

Spar Nord H1 2017

Notes without reference –

29

Group

Breakdown of financial instruments relative to the fair-value hierarchy classification and carrying amount.

Quoted prices Level 1 DKKm

Observable input Level 2 DKKm

Nonobservable input Level 3 DKKm

Fair value total DKKm

Carrying amount DKKm

30.06.17 Financial assets Bonds at fair value

10,896.0

Shares, etc.



Assets linked to pooled schemes

10,117.9

4,594.8

Positive fair value of derivative financial instruments



1,055.8

Total financial assets

21,200.9

2,929.7

187.0

12.6

0.0

8,592.9

0.0 13,825.7 13,825.7 1,352.2 1,551.8 1,551.8 303.5 15,016.2 15,016.2 0.0 1,055.8 1,055.8 1,655.7 31,449.5 31,449.5

Financial liabilities



Deposits in pooled schemes



0.0

15,016.2

0.0 15,016.2 15,016.2

Other non-derivative financial liabilities at fair value 926.6 305.9 0.0 1,232.5 1,232.5 Negative fair value of derivative financial instruments



Total financial liabilities



0.0 926.6

678.9

16,001.0

0.0 678.9 678.9 0.0 16,927.6 16,927.6

30.06.16 Financial assets



Bonds at fair value

13,962.3

Shares, etc.



Assets linked to pooled schemes

10,125.3

3,031.9

Positive fair value of derivative financial instruments



1,455.1

Total financial assets

24,228.1

2,318.7

140.5

0.0

0.0

6,805.7

0.0 16,281.0 16,281.0 1,388.1 1,528.6 1,528.6 196.8 13,354.0 13,354.0 0.0 1,455.1 1,455.1 1,584.9 32,618.7 32,618.7

Financial liabilities



Deposits in pooled schemes



0.0

13,354.0

0.0 13,354.0 13,354.0

1,579.8 195.3 0.0 1,775.1 1,775.1 Other non-derivative financial liabilities at fair value Negative fair value of derivative financial instruments



Total financial liabilities



0.0





31.12.16 Financial assets



Bonds at fair value

12,321.0

Shares, etc.

204.6

Assets linked to pooled schemes

10,663.3

3,679.6

Positive fair value of derivative financial instruments



1,284.2

Total financial assets

23,188.9

1,579.8

952.3

14,501.6

0.0

2,615.1 1.1

7,580.0

0.0 952.3 952.3 0.0 16,081.4 16,081.4

0.0 14,936.1 14,936.1 1,351.5 1,557.2 1,557.2 198.6 14,541.5 14,541.5 0.0 1,284.2 1,284.2 1,550.1 32,319.0 32,319.0

Financial liabilities



Deposits in pooled schemes



0.0

14,541.5

0.0 14,541.5 14,541.5

Other non-derivative financial liabilities at fair value 1,327.0 680.8 0.0 2,007.8 2,007.8 Negative fair value of derivative financial instruments



Total financial liabilities

1,327.0

0.0

865.5 16,087.8

0.0 865.5 865.5 0.0 17,414.8 17,414.8



Bonds, assets linked to pooled schemes, derivative financial instruments and other non-derivative financial liabilities are valued according to the following principles: - In case of quoted prices, the fair value is fixed as a quoted price or a price quotation by a recognized exchange or another external party. - In case of pricing based on observable inputs, the fair value is calculated by means of a market-based yield curve plus/minus a credit spread, which is also calculated based on market prices. - In case of pricing based on non-observable inputs, the calculation includes inputs based on the Bank’s own valuations of individual components, and also market data in some cases. Shares are valued according to the following principles: - In case of quoted prices, the fair value is fixed as a price quoted by a recognized exchange or an external party. - In case of pricing based on observable inputs, the fair value is calculated based on available prices for shares that are not listed. - In case of pricing based on non-observable inputs, the calculation includes shares valued according to generally accepted valuation principles, e.g., the discounting of expected future cash flows and market expectations as to required rate of return on equity. Shares that are priced on the basis of the prices recommended by Lokale Pengeinstitutter (the Association of Local Banks, Savings Banks and Cooperative Banks in Denmark) are included as non-observable inputs. The fair value has been reliably measured for all shares, and accordingly no shares have been recognized at cost. If an instrument is classified differently at the reporting date as compared to the beginning of the financial year, it is transferred to another category in the valuation hierarchy. Any reclassification is considered to have been made as of the reporting date. In 2016, shares recognized under assets linked to pooled schemes were transferred from a valuation category based on quoted prices (Level 1) to a valuation category based on non-observable inputs (Level 3). The adjustment to fair value is recognised in market value adjustments. The fair values recommended by Lokale Pengeinstitutter (Lopi) (the Association of Local Banks, Savings Banks and Cooperative Banks in Denmark) are based on shareholders’ agreements for the individual companies and share transactions completed. The fair value is often based on the companies’ book equity (intrinsic value), which is used as a basis for the transaction price between shareholders. Spar Nord makes an independent assessment of the prices recommended and verifies their consistency with the transactions made and official financial statements.

Spar Nord H1 2017

Notes without reference –

30

Group

30.06.17 DKKm Level 3

Fair value based on net asset value from Lopi

Fair value based on other value from Lopi

30.06.16 DKKm Fair value based on net asset value Other from Lopi

Fair value based on other value from Lopi

Other

Shares

994.6 6.2 351.4 1,183.6 5.8 198.7 - - 303.5 - - 196.8 Assets linked to pooled schemes Sensitivities Change in fair value of shares if the profit/loss of the companies changes by 10% (annualized) 8.8 - - 10.3 - -

A substantial portion of the shares included under “Other” are valued based on the discounting of expected future cash flows from dividends, selling prices or market expectations as to the required rate of return on equity. Financial instruments measured at fair value based on non-observable inputs (Level 3)

H1 H1 Full year 2017 2016 2016 At 30 June 2017, there were unrealized market value adjustments of DKK 47.9 million DKKm DKKm DKKm (30.06.16: DKK 23.6 million, 2016: DKK 64.9 million) regarding unlisted shares valued on the basis of non-observable input Carrying amount, beginning of period

1,550.1

Value adjustments through profit or loss

92.6

46.6

Purchase

109.3

35.4

Sale

96.3

220.1

Transferred to/from Level 3

0.0

Carrying amount, end of period

1,655.7

1,526.2

196.8 1,584.9

1,526.2 107.6 37.8 320.1 198.6 1,550.1



OWN FUNDS



Equity

8,565.5

Result not recognized

575.1

Additional Tier 1 (AT1) capital included in equity

863.3

Proposed dividend, excl. share as % of share repurchase programme Intangible assets, incl. share recognized in investments in associates Deferred tax assets *)

0.0

Other primary deductions

40.3

Unutilized portion of DKK 150 million share buyback facility

0.0

Deductions, equity investments

328.0

Common Equity Tier 1 (CET1) capital

6,567.0

7,799.2 -

8,627.1 -

397.3

862.4

0.0

255.1

615.0

191.8

205.6

196.4

0.1 48.6 76.4 250.4 6,565.7

0.0 48.3 0.0 240.4 6,664.6

Additional Tier 1 (AT1) capital **)

843.0

Other deductions

41.0

Tier 1 Capital

7,369.0

393.0 83.5 6,875.2

843.0 80.1 7,427.5

Subordinated debt, excl. Additional Tier 1 (AT1) capital **)

1,080.5

Other deductions

41.0

Own funds

8,408.5

1,078.9 83.5 7,870.6

1,079.6 80.1 8,427.0

Weighted risk exposure amount, credit risk etc.

39,872.8

Weighted risk exposure amount, market risk

4,107.7

3,172.7

3,537.7

Weighted risk exposure amount, operational risk

5,691.6

5,732.3

5,732.3

Total risk exposure amount

49,672.1

37,918.3

46,823.3

38,215.5

47,485.5

Common Equity Tier 1 (CET1) ratio, %

13.2

14.0

14.0

Tier 1 Capital ratio, %

14.8

14.7

15.6

Own funds ratio, %

16.9

16.8

17.7

The capital adequacy calculation for H1 2017 is exclusive of recognition of profit/loss for the period. *)

Amount relating to exceptional loss in a subsidiary.

**)

Including portfolio of own bonds

Spar Nord H1 2017

Notes without reference –

31

Group

COLLATERAL PROVIDED

H1 2017 DKKm

Collateral provided through clearing systems, with central counterparties and

H1 2016 DKKm

Full year 2016 DKKm

other infrastructure institutions: Bonds

0.0

Deposits, clearing

114.1

0.0 192.8

0.0 122.3

Collateral provided for the market value of derivatives transactions

452.1

654.3

523.2

Positive market value of derivative contracts subject to netting

199.6

265.9

249.8

Collateral provided as part of repo transactions

1,374.9

2,669.9

1,403.3

Other collateral provided

44.0

Total

2,184.7

47.3 3,830.2

44.3 2,342.9



HEDGE ACCOUNTING



Assets



Loans and advances



Carrying amount

78.7

82.1

80.3

Fair value

78.7

82.1

80.3

Nominal value

75.0

75.0

75.0

Interest risk-hedging financial instruments Derivatives (swap contracts)



Carrying amount

-3.6

-7.1

-5.3

Fair value

-3.6

-7.1

-5.3

Synthetic principal/nominal value

75.0

75.0

75.0

Liabilities



Subordinated debt



Carrying amount

394.4

400.4

401.0

Fair value

401.8

405.8

403.8

Nominal value

400.0

400.0

400.0

Interest risk-hedging financial instruments



Derivatives (swap contracts)



Carrying amount

1.8

5.8

Fair value

1.8

5.8

Synthetic principal/nominal value

400.0

400.0

OWNERSHIP at 30.06.17 Spar Nord Fonden, Aalborg, and Nykredit Realkredit A/S, Copenhagen, have disclosed that they each own more than 5% of the share capital of Spar Nord Bank A/S.

3.8 3.8 400.0

Spar Nord H1 2017

Performance indicators and financial ratios –

32

Parent Company

Performance indicators and financial ratios – Parent Company THE DANISH FSA’S LAYOUT AND RATIO SYSTEM H1 2017

INCOME STATEMENT DKKm

H1 2016

Change in %

H1 2017

H1 2016

H1 2015

H1 2014

H1 2013

Full year 2016

Interest income



863.1 913.7

Interest expenses



54.0 86.6 -37.6 54.0 86.6 123.6 269.5 363.8 164.9

Net interest income



Dividends on shares, etc.



Fees, charges and commissions received



Fees, charges and commissions paid



Net income from interest, fees, charges and commissions Market value adjustments



Other operating income



Staff costs and administrative expenses



Amortization, depreciation and impairment of intangible assets and property, plant and equipment

809.1

827.1

-5.5 863.1 913.7 1,024.9 1,140.5 1,493.5 1,807.1 -2.2 809.1

827.1 901.3 871.0 1,129.7 1,642.2

18.2 42.2 -56.9 18.2 42.2 33.5 21.9 638.2 571.4

6.1 41.2

11.7 638.2 571.4 610.1 432.7 404.1 1,174.8

65.0 52.9 22.9 65.0 52.9 40.9 32.2 30.8 122.1 1,400.5 1,387.8

0.9 1,400.5 1,387.8 1,504.0 1,293.4 1,509.1 2,736.1

265.7 114.8 131.4 265.7 114.8 373.5 106.2 105.0 340.2 19.9 14.0 42.1 19.9 14.0 13.7 24.8 53.6 30.9 947.7 913.0

3.8 947.7 913.0 933.1 880.6 882.7 1,795.2

27.4 33.6 -18.5 27.4 33.6 32.1 33.9 58.6 92.7

Other operating expenses



Loan impairment charges etc.



Profit/loss on investments in associates and



group enterprises



Profit/loss before tax



Tax



142.1 80.7 76.1 142.1 80.7 100.2 65.0 62.9 179.5

Profit/loss



575.9 383.4 50.2 575.9 383.4 633.1 441.0 260.5 839.0

4.6 4.9 -6.1 4.6 4.9 51.5 61.0 57.7 13.3 18.8 161.9 -88.4 18.8 161.9 188.1 194.0 411.1 292.0 30.4 60.9 -50.1 30.4 60.9 46.9 251.1 65.8 104.5 718.0 464.1

54.7 718.0 464.1 733.3 506.0 323.4 1,018.5

BALANCE SHEET



DKKm



Total assets



79,686 78,632

1.3 79,686 78,632 80,941 78,678 76,6 40 79,758

Loans and advances



42,280 38,404

10.1 42,280 38,404 34,286 36,808 37,684 41,219



Lending, banking and leasing activities



36,224 34,876



Lending, reverse repo transactions



6,056 3,528

3.9 36,224 34,876 33,808 35,039 37,112 34,966 71.7 6,056 3,528

478 1,769

572 6,253

Deposits



62,906 60,837

3.4 62,906 60,837 57,754 54,016 51,189 62,328



Deposits, banking activities



47,734 47,483

0.5 47,734 47,483 45,229 43,279 43,256 47,787



Deposits, repo transactions





Deposits in pooled schemes



Subordinated debt



Equity



Contingent liabilities



156 0 - 156 0 0 0 0 0 15,016 13,354

12.4 15,016 13,354 12,525 10,737 7,933 14,541

1,089 1,093 -0.4 1,089 1,093 1,351 1,711 2,329 1,093 8,565 7,799 12,304 10,847

9.8 8,565 7,799 7,618 6,855 6,249 8,627 13.4 12,304 10,847 10,349 5,957 5,693 12,334

Total risk exposure amount



Tier 1 capital *)



7,368 6,921

Loan impairment charges etc.



1,839 1,898 -3.1 1,839 1,898 1,819 1,688 1,585 1,891

Contractual loans with suspended interest payments

401 468 -14.2 401 468 536 628 997 443

*)

49,674 47,977

Tier 1 capital for H1 2017 is exclusive of recognition of profit/loss for the period.

3.5 49,674 47,977 49,288 45,526 44,382 48,694 6.5 7,368 6,921 6,898 6,633 7,327 7,428

Spar Nord H1 2017

Performance indicators and financial ratios –

33

Parent Company

Performance indicators and financial ratios – Parent Company THE DANISH FSA’S LAYOUT AND RATIO SYSTEM H1 2017

FINANCIAL RATIOS Own funds

H1 2016

H1 2017

H1 2016

H1 2015

H1 2014

H1 2013

Full year 2016

Own funds ratio *)



16.9 16.5 16.9 16.5 16.1 16.7 16.8 17.3

Tier 1 capital ratio *)



14.8 14.4 14.8 14.4 14.0 14.6 16.5 15.3

Earnings



Return on equity before tax, %



Return on equity after tax, %



6.7 4.9 6.7 4.9 8.6 6.6 4.3 10.2

Income/cost ratio



1.72 1.42 1.72 1.42 1.61 1.43 1.23 1.46

Return on assets, %



0.7 0.5 0.7 0.5 0.8 0.6 0.3 1.1

8.4 5.9 8.4 5.9 10.0 7.6 5.3 12.3

Market risk and liquidity



Interest rate risk, %



0.2 0.7 0.2 0.7 0.3 0.4 -0.7

Foreign-exchange position, %



3.9 3.0 3.9 3.0 3.6 2.3 5.6 3.2

Foreign-exchange risk, %



0.1 0.1 0.1 0.1 0.1 0.0 0.1 0.1

Excess coverage relative to statutory cash ratio requirement, %



320.8

277.6

320.8

277.6

263.1

227.0

206.0

1.1

301.9

Credit risk



Loans and advances as % of deposits, %



67.2 63.1 67.2 63.1 59.4 68.1 73.6 66.1

Loans and advances plus impairment as % of deposits, %

70.0 66.1 70.0 66.1 62.4 71.2 76.7 69.0

Loans and advances as % of equity, %



Increase in loans and advances for the period, %

4.9 4.9 4.9 4.9 4.5 5.4 6.0 4.8 3.6 3.3 3.6 3.3 -4.4 -2.3 -4.7 3.6

Sum of large exposures, %



14.0 14.6 14.0 14.6 15.3 0.0 14.2 0.0

Impairment ratio for the period



0.0 0.3 0.0 0.3 0.4 0.4 0.9 0.5

THE SPAR NORD SHARE



DKK per share of DKK 10



Profit/loss for the period



4.7 3.1 4.7 3.1 5.0 3.5 2.1 6.8

Net asset value (NAV)



63 60 63 60 58 55 50 63

Dividend



Share price/profit/loss for the period



Share price/NAV



*)

- - - - 2.0 - - 5.0 18.1 17.4 18.1 17.4 14.8 17.1 17.6 11.9 1.3 0.9 1.3 0.9 1.3 1.1 0.7 1.3

Own funds for H1 2017 is exclusive of recognition of profit/loss for the period.

Spar Nord H1 2017

Income statement –

34

Parent Company

Income statement – Parent Company NOTE

2

Interest income

3

Interest expenses Net interest income

H1 2017 DKKm

H1 2016 DKKm

Q2 2017 DKKm

Q2 2016 DKKm

Full year 2016 DKKm

863.1 913.7 428.7 472.7 1,807.1 54.0 86.6 26.5 40.9 164.9 809.1 827.1 402.2

431.8 1,642.2

Dividends on shares. etc, 4

Fees. charges and commissions received

4

Fees. charges and commissions paid

18.2 42.2 14.8 41.0 41.2 638.2 571.4 313.7 301.6 1,174.8 65.0 52.9 34.9 33.5 122.1

Net income from interest. fees. charges and commissions 1,400.5 1,387.8

695.8

740.9 2,736.1

5

Market value adjustments Other operating income

6

Staff costs and administrative expenses Amortization. depreciation and impairment of intangible assets and property. plant and equipment Other operating expenses

7

Loan impairment charges etc, Profit/loss on investments in associates and group enterprises Profit/loss before tax

265.7 114.8 106.6 43.9 340.2 19.9 14.0 11.3

8.3 30.9

947.7 913.0 487.8 455.5 1,795.2 27.4 33.6 13.5 16.9 92.7 4.6 4.9 2.2 2.9 13.3 18.8 161.9 30.4 60.9 718.0 464.1

0.9 101.0 292.0 11.8 45.0 104.5 321.1

261.8 1,018.5

Tax

142.1 80.7 62.4 43.5 179.5

Profit/loss

575.9 383.4 258.7 218.3 839.0



APPROPRIATION:



The shareholders of the Parent Company Spar Nord Bank A/S Holders of Additional Tier 1 (AT1) capital instruments



Profit/loss



551.8 371.4 246.7 212.2 812.9 24.1 12.0 12.0

6.1 26.1

575.9 383.4 258.7 218.3 839.0



STATEMENT OF COMPREHENSIVE INCOME Profit/loss for the period



575.9 383.4 258.7 218.3 839.0

Other comprehensive income Items that cannot be reclassified to the income statement: Net revaluation of domicile property



0.0 0.0 0.0 0.0 -5.8

Other comprehensive income after tax

0.0 0.0 0.0 0.0 -5.8

Total comprehensive income







Appropriation:



The shareholders of the Parent Company Spar Nord Bank A/S Holders of Additional Tier 1 (AT1) capital instruments



Total comprehensive income



575.9 383.4 258.7 218.3 833.2

551.8 371.4 246.7 212.2 807.1 24.1 12.0 12.0

6.1 26.1

575.9 383.4 258.7 218.3 833.2

Spar Nord H1 2017

Balance sheet –

35

Parent Company

Balance sheet – Parent Company

30.06.17 DKKm

30.06.16 DKKm

Full year 2016 DKKm

ASSETS

NOTE

8

Cash balances and demand deposits with central banks 1,393.1 1,346.4 595.3 Due from credit institutions and central banks 2,366.3 2,866.9 2,182.5 Lending, banking and leasing activities 36,223.7 34,876.6 34,965.2 Lending, reverse repo transactions 6,056.4 3,527.6 6,253.4 Loans, advances and other receivables at amortized cost 42,280.1 38,404.2 41,218.6 Bonds at fair value 13,825.7 16,281.0 14,936.1 Shares, etc. 1,551.8 1,471.4 1,557.2 Investments in associates 110.7 74.9 118.4 Investments in group enterprises 393.9 1,554.6 1,583.7 Assets linked to pooled schemes 15,016.2 13,354.0 14,541.5 Intangible assets 188.6 206.2 194.4 Investment properties 70.0 70.4 70.0 Domicile property 423.9 438.7 416.7 Land and buildings, total 493.9 509.1 486.7 Other property, plant and equipment 105.5 96.4 91.1 Current tax assets 26.7 33.6 20.4 Temporary assets 27.1 19.8 33.9 Other assets 1,781.6 2,303.8 2,074.3 Deferred income 124.7 109.6 123.5 Total assets 79,685.9 78,631.9 79,757.6

EQUITY AND LIABILITIES DEBT 9

10

11 12

Due to credit institutions and central banks 2,790.8 3,333.5 2,399.2 Deposits and other payables 47,890.5 47,482.9 47,787.0 Deposits in pooled schemes 15,016.2 13,354.0 14,541.5 Other non-derivative financial liabilities at fair value 1,232.5 1,775.1 2,007.8 Other liabilities 2,906.5 3,586.4 3,080.8 Deferred income 17.8 15.9 18.2 Total debt 69,854.3 69,547.8 69,834.5 PROVISIONS Provision for deferred tax 109.3 123.1 109.5 Provision for losses on guarantees 41.4 59.2 67.0 Other provisions 26.4 9.4 26.3 Total provisions 177.1 191.7 202.8 SUBORDINATED DEBT Subordinated debt 1,089.0 1,093.2 1,093.2 Total liabilities 71,120.4 70,832.7 71,130.5 EQUITY Share capital 1,255.3 1,255.3 1,255.3 Revaluation reserves 88.6 94.4 88.6 Statutory reserves 0.0 336.6 386.2 Proposed dividend 0.0 0.0 627.7 Retained earnings 6,358.3 5,715.6 5,406.9 Equity 7,702.2 7,401.9 7,764.7 Holders of Additional Tier 1 (AT1) capital instruments 863.3 397.3 862.4 Total equity 8,565.5 7,799.2 8,627.1 Total equity and liabilities 79,685.9 78,631.9 79,757.6 OFF-BALANCE SHEET ITEMS Contingent assets 5.7 3.6 5.1 Contingent liabilities 12,303.8 10,847.4 12,334.1 Other binding commitments 529.6 505.8 529.6

Spar Nord H1 2017

Statement of changes in equity -

36

Parent Company

Statement of changes in equity – Parent Company CHANGES IN EQUITY

The shareholders of the Parent Company Spar Nord Bank A/S

Revaluation Share capital reserve DKKm DKKm

Statutory reserves DKKm

Proposed dividends DKKm

Retained earnings DKKm

Additional Tier 1 (AT1) capital *) DKKm

Total DKKm

Total DKKm

Equity 30.06.17 Equity 01.01.17

1,255.3

88.6

386.2

627.7

5,406.9 7,764.7

862.4

8,627.1

Comprehensive income in 2017 Profit/loss for the period

- - 30.3 - 521.5 551.8 24.1 575.9

Other comprehensive income

- - - - - - - 0.0

Total comprehensive income for the period

- - 30.3 - 521.5 551.8 24.1 575.9

Transactions with owners



Interest paid on Additional Tier 1 (AT1) capital

- - - - - - -24.2 -24.2

Dividends paid

- - - -627.7 - -627.7 - -627.7

Dividends received, treasury shares

- - - - 12.8 12.8 - 12.8

Disposal upon acquisition of treasury shares and Additional Tier 1 (AT1) capital - - - - -257.5 -257.5 - -257.5 Addition upon sale of treasury shares and Additional Tier 1 (AT1) capital

- - - - 252.8 252.8 1.0 253.8

Dissolution of revaluation reserves in group enterprises

- - 825.9 - -825.9 0.0 - 0.0

Revaluation reserves, associates

- - -13.6 - 13.6 0.0 - 0.0

Dividends received from group enterprises



Dividends received from associates recognized at net asset value

- - -28.8 - 28.8 0.0 - 0.0

Tax

- - - - 5.3 5.3 - 5.3

Transactions with owners, total



-

0.0

- -1,200.0 1,200.0 0.0

-

-416.5

-627.7

429.9 -614.3

-

-23.2

0.0

-637.5

Equity 30.06.17

1,255.3

88.6

0.0

0.0

6,358.3 7,702.2

863.3

8,565.5

The share capital consists of 125,529,918 shares with a nominal value of DKK 10.



Equity 30.06.16



Equity 01.01.16

1,255.3

94.4

312.2

376.6

5,436.2 7,474.7

412.3

7,887.0

Comprehensive income in 2016



Profit/loss for the period

- - 60.9 - 310.5 371.4 12.0 383.4

Other comprehensive income

- - - - - - - 0.0

Total comprehensive income for the period

- - 60.9 - 310.5 371.4 12.0 383.4

Transactions with owners





Interest paid on Additional Tier 1 (AT1) capital

- - - - - - -24.2 -24.2



Dividends paid

- - - -376.6 - -376.6 - -376.6



Dividends received, treasury shares

- - - - 1.9 1.9 - 1.9



Disposal upon acquisition of treasury shares and Additional Tier 1 (AT1) capital - - - - -277.8 -277.8 -2.8 -280.6



Addition upon sale of treasury shares and Additional Tier 1 (AT1) capital

- - - - 205.7 205.7 - 205.7



Dividends received from associates recognized at net asset value

- - -36.5 - 36.5 0.0 - 0.0

Tax

- - - - 2.6 2.6 - 2.6

Transactions with owners, total



-

-

-36.5

-376.6

-31.1 -444.2

-27.0

-471.2

Equity 30.06.16

1,255.3

94.4

336.6

0.0

5,715.6 7,401.9

397.3

7,799.2

The share capital consists of 125,529,918 shares with a nominal value of DKK 10.

TREASURY SHARE PORTFOLIO

H1 2017

H1 2016

Full year 2016

Number of shares

2,647,586 1,471,262 2,591,335

Percentage of share capital

2.1 1.2 2.1

The proposal by the Board to cancel the shares bought back under the Bank’s buyback programme for 2016 was adopted at Spar Nord Bank’s Annual General Meeting held on 26 April 2017. The reduction of the share capital by DKK 25,273,920, nominal value, through the cancellation of 2,527,392 shares of the Bank’s portfolio of treasury shares is awaiting filing with the Danish Business Authority.

Spar Nord H1 2017

Statement of changes in equity -

37

Parent Company

The Parent Company applies the same accounting policies as the Group. The difference between the profit or loss in the Group and in the Parent Company is due to properties being classified as investment properties in subsidiaries and as domicile properties in the Group. The difference consists of depreciation on such properties. See below. PROFIT/LOSS H1 2017 DKKm

EQUITY H1 2016 DKKm 382.6

H1 2017 DKKm

H1 2016 DKKm

Spar Nord Bank Group

575.1

Depreciation, domicile property

0.8

Spar Nord Bank, Parent Company

575.9

383.4

Maturity

H1 2017 DKKm

Perpetual

400.3

397.3

412.7

Perpetual

463.0

-

449.7

863.3

397.3

862.4

0.8

8,565.5

7,799.2

0.0 8,565.5

0.0 7,799.2

Additional Tier 1 (AT1) capital

Principal

Currency

Note

DKKm

Interest rate

DKK



a

400.0

6.052%

DKK



b

450.0

5.500%

Received

2015 2016



Additional Tier 1 (AT1) capital issued under CRR, total

H1 2016 DKKm

Full year 2016 DKKm

a

Issued on 10 June 2015, with an option of early redemption as from 10 June 2020. The loan carries interest at a rate of 6.052% p.a. until 10 June 2010,



after which date interest will be fixed at CIBOR6 + a 5.400% margin.

b

Issued on 6 December 2016, with an option of early redemption as from 6 December 2021. The loan carries interest at a rate of 5.500% p.a. until



6 December 2021, after which date interest will be fixed at CIBOR6 + a 5.166% margin.

If Spar Nord’s Common Equity Tier 1 (CET1) ratio falls below 5 1/8%, the loans will be written down. The loans can be written up again based on the rules laid down in CRR.

Spar Nord H1 2017

Notes – Parent Company

38

Notes – Parent Company NOTE

1

ACCOUNTING POLICIES The Interim Financial Statements of the Parent Company, Spar Nord Bank, for the period from 1 January to 30 June 2017 are presented in accordance with the Danish Financial Business Act, incl. the Danish Executive Order on the Presentation of Financial Statements by Credit Institutions, etc. issued by the Danish Financial Supervisory Authority. The Parent Company’s accounting policies are identical to those of the Group. Reference is made to note 1 to the Consolidated Financial Statements. Reference is also made to note 2 to the Consolidated Financial Statements as concerns judgments and estimates. Accounting policy changes Spar Nord Bank has implemented the IFRS standards and interpretations taking effect in the EU for 2017. The implementation of these standards and interpretations has not materially affected recognition and measurement. Information about standards not yet in force Information about standards not yet in force is provided in the accounting policies for the Group on page 20. H1 2017 DKKm

2

3

H1 2016 DKKm

Full year 2016 DKKm

INTEREST INCOME Due from credit institutions and central banks



Loans, advances and other receivables



0.7 1.9 2.8

Bonds





Foreign-exchange contracts





Interest-rate contracts



-30.0 -38.9 -69.9

Derivative financial instruments, total



-28.4 -35.7 -66.7

Other interest income



Total interest income







Of which, income from genuine reverse repo transactions booked under



Due from credit institutions and central banks



-5.3 -4.2 -9.8

Loans, advances and other receivables



-6.9 -3.7 -10.0





INTEREST EXPENSES



Credit institutions and central banks



-0.9 -1.7 -4.1

Deposits and other payables



28.7 62.1 115.9

Subordinated debt



25.7 26.2 52.4

Other interest expenses



Total interest expenses







Of which, interest expenses from genuine repo transactions booked under



Due to credit institutions and central banks



Deposits and other payables



820.7 844.9 1,679.9 42.2 67.9 117.9 1.6 3.2 3.2

27.9 34.7 73.2 863.1 913.7 1,807.1

0.5 0.0 0.7 54.0 86.6 164.9

-4.4 -4.8 -11.0 0.0

1.2 -0.2

4

FEES, CHARGES AND COMMISSIONS RECEIVED



Securities trading and custody accounts



Payment services



76.2 59.5 140.5

Loan transaction fees



237.8 217.4 458.2





186.7 154.7 339.1

of which mortgage credit institutions

215.2 217.8 454.8

Guarantee commission



15.2 21.4 35.5

Other fees, charges and commissions



93.8 55.3 85.8

Total fees, charges and commissions received



Total fees, charges and commissions paid



Total net fees, charges and commissions received



638.2 571.4 1,174.8 65.0 52.9 122.1 573.2

518.5 1,052.7

5

MARKET VALUE ADJUSTMENTS



Other loans, advances and receivables at fair value



0.3 -1.1 -2.9

Bonds



42.9 77.4 163.3

Shares, etc.



113.7 22.4 86.0

Investment properties



0.0 0.0 0.1

Foreign currency



15.6 41.9 51.8

Foreign exchange, interest, share, commodity and other contracts and derivative financial instruments



Assets linked to pooled schemes



502.8 -426.0 380.6

Deposits in pooled schemes



-502.8 426.0 -380.6

Other assets



Other liabilities



Total market value adjustments





93.2 -26.0 39.5

0.0 0.0 0.2 0.0 0.2 2.2 265.7 114.8 340.2

Spar Nord H1 2017

Notes – Parent Company

NOTE

H1 2017 DKKm 6

39

H1 2016 DKKm

Full year 2016 DKKm

STAFF COSTS AND ADMINISTRATIVE EXPENSES Staff costs



602.5 586.3 1,141.7

Administrative expenses



345.2 326.7 653.5

Total staff costs and administrative expenses



947.7





Staff costs:



Salaries



Share-based payment



Pensions



Social security costs



Total staff costs







913.0 1,795.2

481.2 493.8 933.3 - - 53.1 52.1 106.9 68.2 40.4 101.5 602.5 586.3 1,141.7

Remuneration to members of the Executive Board and Board of Directors amounts to: Board of Directors



Number



Fixed pay



Pension



Total remuneration







Executive Board



Number



Base salary *)



5.7 5.7 11.0

– less fees received from directorships



0.4 0.4 1.4

The Bank’s expense, base salary



5.3 5.3 9.6

Pension, ordinary contribution

9 9 9 1.6 1.6 3.2 - - 1.6 1.6 3.2

3 3 3

0.7 0.7 1.6

Total remuneration earned and paid



6.0 6.0 11.2





Breakdown of remuneration to Executive Board



Lasse Nyby



Base salary*)



2.1 2.1 4.1

– less fees received from directorships



0.1 0.1 0.4

The Bank’s expense, base salary



2.0 2.0 3.7

Pension, ordinary contribution



0.3 0.3 0.6

Total remuneration earned and paid



2.3 2.3 4.3

John Lundsgaard



Base salary



1.8 1.8 3.5

– less fees received from directorships



0.1 0.1 0.4

The Bank’s expense, base salary



1.7 1.7 3.1

Pension, ordinary contribution



0.2 0.2 0.5

Total remuneration earned and paid



1.9 1.9 3.6

Lars Møller



Base salary*)



1.8 1.8 3.4

– less fees received from directorships



0.2 0.2 0.6

The Bank’s expense, base salary



1.6 1.6 2.8

Pension, ordinary contribution



0.2 0.2 0.5

Total remuneration earned and paid



1.8 1.8 3.3

*)

The amount includes the value of a company car, etc. (comparative figures for H1 2016 have been restated)

Termination rules The members of the Executive Board have a term of notice of 12 months and will receive compensation on termination of employment corresponding to two years’ pay. Pension obligation Like the other employees, members of the Executive Board are comprised by defined contribution pension plans. Incentive schemes No new share-option schemes have been established for any of the Bank’s staff groups. Number of employees



The average number of employees in the financial year converted into full-time equivalents





1,537.6 1,550.6 1,547.8

Spar Nord H1 2017

Notes – Parent Company

NOTE

H1 2017 DKKm

40

H1 2016 DKKm

Full year 2016 DKKm

Administrative expenses: IT expenses

167.2

167.0

332.9

Marketing costs

54.8

47.0

90.6

Cost of premises

51.3

43.4

92.2

Staff and travelling expenses

26.4

25.1

55.5

Office expenses

11.6

13.9

24.2

Other administrative expenses

33.9

Total administrative expenses

345.2

30.3 326.7

58.1 653.5

7

IMPAIRMENT ACCOUNT



Individual loan impairment charges



Individual impairment, beginning of period

1,686.3

New individual impairment charges

203.5

381.7

Reversal of individual impairment charges

216.3

236.5

318.9

Previously impaired, now finally lost

134.6

155.2

304.2

Other movements

23.4

Individual impairment, end of period

1,562.3

1,645.6

37.1 1,672.7

1,645.6 600.7

63.1 1,686.3

Collective loan impairment charges



Collective impairment, beginning of period

123.6

New collective impairment charges

97.5

18.8

0.0

Reversal of collective impairment charges

3.6

0.0

15.2

Other movements

3.6

Collective impairment, end of period

221.1

137.5

0.0 156.3

137.5

1.3 123.6

Total loan impairment charges



Impairment, beginning of period

1,809.9

1,783.1

1,783.1

New impairment charges

301.0

400.5

600.7

Reversed impairment charges

219.9

236.5

334.1

Previously impaired, now finally lost

134.6

155.2

304.2

Other movements

27.0

Impairment, end of period

1,783.4

37.1 1,829.0

64.4 1,809.9

Impairment recognized in the income statement



New impairment charges

301.0

400.5

600.7

Reversed impairment charges

219.9

236.5

334.1

Loss without prior impairment

23.1

31.8

Amounts recovered on previously impaired receivables

59.1

49.7

Recognized in the income statement

45.1

146.1

114.3 115.9 265.0

Provisions for losses on guarantees



Provisions, beginning of period

67.0

42.9

42.9

New provisions

6.9

34.6

45.8

Reversed provisions

32.5

18.3

21.7

Provisions for losses on guarantees, year-end

41.4

59.2

67.0

Provisions for losses on guarantees recognized in the income statement



New provisions

6.9

34.6

Reversed provisions

32.5

18.3

21.7

Recognized in the income statement

-25.6

16.3

24.1

45.8

Impairment account for loans and provisions for losses on guarantees, total

1,824.8

1,888.2

1,876.9

Impairment, other credit risks



Impairment, other credit risks, beginning of period

14.0

New impairment losses

0.0

0.0

3.5

Reversed impairment losses

0.7

0.5

0.6

Other movements

0.7

0.0

0.6

Impairment, other credit risks, total



10.5

10.5

14.0 10.0 14.0

Impairment account for loans, provisions for losses on guarantees and other credit risks, total

1,838.8

1,898.2

1,890.9

Spar Nord H1 2017

Notes – Parent Company

NOTE

H1 2017 DKKm

Loan impairment charges etc.

41

H1 2016 DKKm

Full year 2016 DKKm

The total recognition in the income statement under loan impairment charges etc. can be broken down as follows:



Loan impairment charges etc.

45.1

Provisions for losses on guarantees

-25.6

16.3

Impairment, credit institutions

-0.7

-0.5

2.9

Total loan impairment charges etc.

18.8

161.9

292.0

146.1

265.0 24.1

Loans with suspended interest payments

127.1

190.0

176.9

Interest on impaired receivables is calculated on the impaired balance only.



Recognized interest on impaired loans and receivables

27.7

37.1

65.0



8

OTHER ASSETS



Positive fair value of derivative financial instruments, etc.

1,055.8

Miscellaneous receivables

142.0

239.6

186.0

Interest and commissions receivable

201.2

209.8

225.0

Capital contribution to Foreningen Bankernes EDB Central (“BEC”)

316.0

316.0

316.0

Other assets

66.6

Other assets, total

1,781.6

1,455.1

1,284.2

83.3 2,303.8

63.1 2,074.3

9

DEPOSITS AND OTHER PAYABLES



Demand deposits

41,516.7

39,138.4

41,121.0

Subject to notice

1,548.2

1,055.3

1,410.2

Time deposits

1,168.5

3,682.5

1,714.1

Special types of deposits

3,657.1

3,606.7

3,541.7

Deposits and other payables, total

47,890.5

47,482.9

47,787.0

10

OTHER LIABILITIES



Miscellaneous payables

1,871.9

Negative fair value of derivative financial instruments, etc.

678.9

Interest and commissions payable

46.0

Other liabilities

309.7

Total other liabilities

2,906.5

2,167.2

1,854.3

952.3

865.5

87.1

18.8

379.8 3,586.4

342.2 3,080.8

11

CONTINGENT LIABILITIES



The Bank and all major wholly-owned subsidiaries are jointly registered for payroll tax and VAT



and are jointly and severally liable for the payroll tax and VAT payable. Financial guarantees



Loss guarantees for mortgage loans

4,817.2

4,433.3

4,568.5

Registration and refinancing guarantees

1,927.8

1,702.4

2,885.3

Other contingent liabilities

996.2

Total contingent liabilities

12,303.8

4,562.6 3,813.3 3,999.8

898.4 10,847.4

880.5 12,334.1

12

OTHER BINDING COMMITMENTS



Miscellaneous

529.6

505.8

529.6

Other binding commitments, total

529.6

505.8

529.6

Miscellaneous is composed of: Rent obligations *) The Bank has concluded lease agreements with real property lessors regarding a number of the Bank’s branches. The rent obligation until the legal notice of termination date amounts to DKK 143.6 million. Data-processing centre *) Spar Nord has entered into an agreement with Bankernes EDB Central a.m.b.a. regarding the provision of IT services. Spar Nord’s membership means that in case of termination of the Bank’s membership, it is liable to pay an exit fee. In addition, a capital contribution to Bankernes EDB Central a.m.b.a. has been recognized under Other assets. The Spar Nord Group has no other significant binding agreements. *) According to the most recent annual report.

Spar Nord H1 2017

Notes without reference

42

Parent Company

OWN FUNDS

H1 2017 DKKm

H1 2016 DKKm

Full year 2016 DKKm

Equity

8,565.5

Result not recognized

575.9

-

-

Additional Tier 1 (AT1) capital included in equity

863.3

397.3

862.4

Proposed dividend, excl. share re. share repurchase programme

0.0

255.1

615.0

Intangible assets, incl. share recognized in investments in associates

191.8

205.6

196.4

Other primary deductions

40.2

48.5

48.2

Unutilized portion of DKK 150 million share buyback facility

0.0

76.4

Deductions, equity investments

328.0

216.1

Common Equity Tier 1 (CET1) capital

6,566.3

7,799.2

6,600.2

8,627.1

0.0 240.4 6,664.7

Additional Tier 1 (AT1) capital *)

843.0

Other deductions

41.0

Tier 1 Capital

7,368.3

393.0 72.0 6,921.2

843.0 80.1 7,427.6

Subordinated debt, excl. Additional Tier 1 (AT1) capital *)

1,080.5

Other deductions

41.0

Own funds

8,407.8

1,078.9 72.0 7,928.1

1,079.6 80.1 8,427.1

Weighted risk exposure amount, credit risk etc.

39,960.6

Weighted risk exposure amount, market risk

4,107.7

Weighted risk exposure amount, operational risk

5,605.3

Total risk exposure amount

49,673.6

39,137.4 3,177.0 5,662.3 47,976.7

39,494.0 3,537.7 5,662.3 48,694.0

Common Equity Tier 1 (CET1) ratio, %

13.2

13.8

13.7

Tier 1 Capital ratio, %

14.8

14.4

15.3

Own funds ratio, %

16.9

16.5

17.3

The capital adequacy calculation for H1 2017 is exclusive of recognition of profit/loss for the period. *) Including portfolio of own bonds

Spar Nord Bank A/S Skelagervej 15 P.O. Box 162 DK-9100 Aalborg

Spar Nord H1 2017

Tel. +45 9634 4000 Fax +45 9634 4560 www.sparnord.dk [email protected] CVR no. 13 73 75 84

The Annual Report has been prepared in a Danish and an English version. In case of discrepancy between the Danish-language original text and the English-language translation, the Danish text shall prevail.

43