SpareBank 1 - The Alliance – Status, Challenges and the Future

1. SpareBank 1 - The Alliance – Status, Challenges and the Future Kirsten Idebøen Group Executive Vice President SpareBank 1 Gruppen AS 14 June 2005

2. SpareBank 1 Alliance- established in 1996 Background for the co-operation The primary target of the Alliance Separate names and legal units Maintain local attachment Separate Boards of Directors and Management Secure each bank’s independence and regional attachment through competitive strength, profitability and solidity Utilize knowledge of local markets Share development costs Efficiency as competitors Achieve scale advantages Achieve critical competence

3. SpareBank 1 Alliance Svalbard SpareBank 1 Nord-NorgeSpareBank 1 Midt-NorgeSpareBank 1 SR-BankSpareBank 1 Oslo Co-operating savings banks: SpareBank 1 Vestfold SpareBank 1 Ringerike SpareBank 1 Moss SpareBank 1 Hallingdal SpareBank 1 Gran SpareBank 1 Gudbrandsdal SpareBank 1 Jevnaker Lunner SpareBank 1 Nordvest SpareBank 1 Kongsberg Halden SpareBank 1 GS-banken Modum Sparebank Sparebanken Grenland Lom og Skjåk Sparebank Nøtterø Sparebank Other distributors Sparebanken Vest Sparebanken Pluss Sparebanken Hedmark • Total assets: NOK 250 billion • No. of branches: 290 • No. of employees: 4500 • No. of customers: approx. 1,6 mill. • (of whom 820,000 insurance clients – Trade Unions/LO) • No. of Internet banking customers: 364,000 • January 2005

4. Size of financial institutions - Norway 1) 2) Source: Accounting reports - total assets. DnB NOR: incl. Vital. 1) Source: The Norwegian Savings Banks Association, 2) excl. Helgeland Sparebank.

5. Norwegian Banking Industry –Key elements goingforward • Expect increasing competition among the banks • In particular increased competition from the foreign banks. Fokus Bank and Handelsbanken seems to be the most aggressive ones • The merger process in DnB NOR has so far been successful, and the bank has been surprisingly customer oriented during the merger period and been able to keep the customer base and even keep good growth figures, in particular on the retail side • We expect to see increased competition from niche players in most areas (i.e. mutual funds, credit card businesses and smaller banks) • Margins will continue to be under pressure • New BASEL II requirements will be favourable for the capital ratios for most of the banks • More use of economic capital in the pricing models will give lower margins for high quality lenders • Will particularly be the situation for residential loans on the retail side • Introduction of a new legislation for covered bonds will give further pressure on the interest margins • Increased focus for the banks to increase other operating income • To compensate for lower interest margins, we expect the banks to continue the work to increase other operating income. Focus will be on cross sale of banking, savings and insurance products • Pressure for lower operating costs will continue • All in all we expect that the ROE within the banking industry will be reduced

6. The SpareBank 1 Alliance and Group SpareBank 1 SR-Bank SpareBank 1 Midt-Norge SpareBank 1 Nord-Norge Samarbeidende Sparebanker Förenings-Sparbanken LO 17,63 % 17,63 % 17,63 % 17,63 % 19,5 % 10 % SpareBank 1 Gruppen AS Bank 1 Oslo (100 %) SpareBank 1 Skadeforsikring (100 %) SpareBank 1 Livsforsikring (100 %) • Bank Co-operation Programme • Centres of Excellence • IT operations and development • Internet and telephone banking • Risk Management • Credit Systems • Competence building • Payment - cards and services • Brand building • Industrial and structural matters SpareBank 1 Fondsforsikring (100 %) Eiendoms-Megler 1 (Chain) ODIN Forvaltning (100 %) First Securities (24.5 %) SpareBank 1 Bilplan (19.9 %) Nordic Co-operation Agreement with Swedbank National Co-operation Agreement with Norwegian Federation of Trade Unions

7. The SpareBank 1 Alliance has been a success in essential areas • Strong brand • Co-ordinated marketing efforts have established focus on the SpareBank 1 brand and reduced marketing costs • Development in the banks • Broad line of products, marketing, profitability • Through common efforts the Alliance has achieved • Considerably reduced IT costs • Increased use of ”Best Practice” • Co-ordinated projects in essential areas like credit processes and Basel II • Mutual operations and administration of e.g. Internet banking • Development of skills

8. SpareBank 1: Success in cross sales means a high share of other income Other revenue in per cent of total revenue, excl. gains/losses on shares as per 1Q05 Spb Øst: excl. gains from shares in BNbank Source: Accounting reports – total assets

9. ... and yet maintained to control the level of costs Costs in per cent of total revenue, excl. gains/losses on shares as per 1Q05 Spb Øst: excl. gains from shares in BNbank Source: Accounting reports – total assets

10. SpareBank 1:Positive profit development Return on equity as per 1Q05 Spb Øst: excl. gains from shares in BNbank Source: Accounting reports – total assets

11. SpareBank 1 has maintained its strong position in the bank market and has assumed a challenging position in new product areas • Excl. Sparebanken Vest • Unit Link and traditional pension insurance • Source: Accounting reports – total assets, Norwegian Financial Services Association (FNH), Norwegian Mutual Fund Association, Norges Bank

12. The Parliament decided this spring both a reform in the state pension system and a mandatory occupational pension system • 100 000 enterprises with 600 000 employees have to establish a scheme • The scheme will be ”a minimum requirement” scheme yielding a minimum increase in annual premiums of NOK 3 bn. Large upside potential • 40 % of all private enterprises have already a pension scheme • Broad coverage in large enterprises • Little coverage in small and medium sized companies i.e. the market in focus for SpareBank 1 Alliance • In addition approximately 170 000 self employed persons will be offered a scheme with tax incentives Per cent • 1 to 4 5 to 19 20 to 99 100 + • Number of employees • With a scheme today • Without a scheme

13. Very competitive returns in SpareBank 1 Livsforsikring Value-adjusted return per quarter (excl. value change system) Source: Norwegian Financial Services Association (FNH), SpareBank 1

14. Satisfactory ability to carry risk in SpareBank 1 Livsforsikring Buffer capital in per cent of insurance provisions excl. supplementary allocations Definition buffer capital: 1) core capital above that which is required to fulfill valid capital coverage requirements and solvency margin requirements 2) interim profits which are not included in eligible primary capital3) total additional provisions 4) securities adjustment reserve 7.7% 7.7 % 7.5 % 7.3% 6.7% 5.9 % 6.1% 5.8 % 5.2% 5.5% 5.2% NA SpareBank 1 Storebrand Vital Nordea Source: Norwegian Financial Services Association (FNH), SpareBank 1

15. The SpareBank 1 Alliance is allocating large resources to be competitive the vast increase in the Pension Market • Detailed plans have been made • A large potential number of customers of the mandatory scheme among the banks’ present customers • 13,400 enterprises with 160,000 employees • Ambitious targets • Offer to 95 pct of enterprises, sale to 50 pct before the end of 2006 (”95/50/06”) • A large increase in dedicated resources From 10 to more than 100 man-years in the Alliance • Pensions Specialists - Enterprise Relationship Managers - Saving Specialists • A large joint recruiting and educational program between the Life Insurance Company and the banks • An expected 10-fold increase in sales and portfolio NOK 400 mill / 7 500 enterprises in 2006

16. SpareBank 1 GruppenHighlights 1st quarter 2005 Very satisfactory profit development • SpareBank 1 Gruppen had a pre-tax profit of NOK 122.3 million, an improvement of NOK 92.7 million from 1st quarter last year – IFRS-related consequences amounted to NOK 30.8 million before tax, of which NOK 25.1 million was due to the elimination of goodwill write-downs • Return on equity (before amortization of goodwill and added value, but after tax) was 19.4 % p.a. • Generally good cost control – Operating costs in the holding company were reduced by 45 % to NOK 7.9 million (14.5) • Income growth and increased total assets • Capital adequacy ratio of 11.8 %

17. SpareBank 1 GruppenHighlights 1st quarter 2005 Strong improvements in all operational areas a good platform for profitable growth in the years to come • Stable net interest and positive loss development in Bank1 Oslo – Systematic use of credit score models and risk pricing reduce the risk in the loan portfolio and allows for careful growth • Good sales and strong profit development in the life company – Good risk control and attractive returns gives a good platform for pension sales • Good profits in the non-life insurance company – Allows for careful reduction of reassurance programs • Strong improvement in profits in ODIN. Market share in unit trusts increased to 18.8 % – Keep up the good work

18. SpareBank 1 GruppenProfit and loss1st quarter 2005 *) The subsidiaries’ results are shown by NGAAP standards. The total result from subsidiaries is corrected for changes from IFRS standards. Other items are shown by IFRS standards. Results from 1st quarter 2004 and the year 2004 are shown by NGAAP standards.

19. What does SpareBank 1 see as the most important challenges going forward? • To continue to generate profitable growth in the banks and product companies • To increase cross selling • To successfully implement the skills strategy. The skills in the customer consultancy section of the organisation will be crucial • To further develop the benchmark systems • Toimprove and incorporate “best practice”in the banks and product companies • To succeed with the heavy investment in the market for company pensions for small and medium sized enterprises • To successfully implement and further develop IT projects such as the Internet portal and credit process in the retail and commercial markets • To increase sales of electronic BankID

20. The SpareBank 1 Alliance is well positioned for profitable growth • The SpareBank 1 banks generate high ordinary operating incomes and still have considerable potential for cross-sales • The SpareBank 1 Alliance will attain greater economies of scale, best practice and benchmarking • SpareBank 1 will investment heavily in sales of company pensions to small and medium sized companies • Access to loans and equity financing is good and competitive SpareBank 1: A future winner in the Norwegian financial market!