Interim report 2016 Storebrand Boligkreditt AS

Half-yearly report	3
Income statement	5
Statement of comprehensive income	5
Statement of financial position. 6
Statement of changes in equity 7
Statement of cash flow 8

NOTES

	Note 1 Accounting principles. 9
	Note 2 Estimates. 9
	Note 3 Tax. 9
	Note 4 Related parties. 9
	Note 5 Financial risk. 10
	Note 6 Valuation of financial instruments. 10
	Note 7 Segment information. 11
	Note 8 Liabilities to credit institutions. 11
	Note 9 Commercial papers and bonds issued. 12
	Note 10 Capital adequacy 12
	Note 11 Loan to value rations and collateral 14
	Note 12 Key figures 15
	Note 13 Net interest income 15
	Note 14 Off balance sheet liabilities and contingent liabilities 16
	Note 15 Non-performing loans and loan losses 16
	Note 16 Quarterly profit and loss 17
	Declaration by the Board of Directors and the Chief Executive Officer 18
Audit report	19

Storebrand Boligkreditt AS

Half-yearly report for the first half year of 2016

(Profit figures for the corresponding period in 2015 are shown in parentheses. Balance sheet figures in parentheses are for the end of 2015.)

Profit before taxes of NOK 15 million in the second quarter and NOK 28 million for the year.
Good portfolio quality
Stable lending volume for the quarter

FINANCIAL PERFORMANCE

Profit before taxes in the second quarter was NOK 15 million (NOK 37 million) and NOK 28 million (NOK 87 million) for the first half year. This development is in line with the general market trend and the change in the management agreement with Storebrand Bank ASA.

Net interest income was NOK 32 million (NOK 43 million) for the second quarter and NOK 64 million (NOK 97 million) for the first half year. As a percentage of average total assets, net interest income was 0.84 per cent (1.19 per cent) for the second quarter and 0.84 per cent (1.33 per cent) for the half year.

Other operating income in the second quarter amounted to NOK 0 million (minus NOK 1 million) and minus NOK 2 million (minus NOK 1 million) for the first half year, resulting from commission income on loans and profit/ loss on financial instruments.

Operating costs increased in the second quarter as a result of higher fees paid to Storebrand Bank ASA for management of the company's loan portfolio from and including the fourth quarter of 2015, and totalled NOK 17 million (NOK 4 million) for the second quarter and NOK 33 million (NOK 8 million) for the first half year.

Losses in the portfolio are low, and in the second quarter the company recognised an expense of NOK 1 million (NOK 1 million recognised as an expense) in loan write-downs and recognised an expense of NOK 1 million (NOK 1 million recognised as an expense) for the first half year.

BALANCE SHEET PERFORMANCE

The lending volume increased in the second quarter and the first half of the year and amounted to NOK 15.7 billion (NOK 14.3 billion). Storebrand Bank ASA and Storebrand Boligkreditt AS operate with conservative lending practices. The average loan-to-value ratio in the portfolio was 49 per cent at the end of the half year, compared with 50 per cent at the end of 2015. On the date of transfer, the loan-to-value ratio never exceeds 75 per cent. The risk in the loan portfolio is considered to be very low. The company has over-collateralisation of 140 per cent (126 per cent).

Defaulted loans at the end of the half year amounted to NOK 25 million (NOK 27 million), equivalent to 0.16 per cent of gross loans in the company (0.19 per cent). Principally all the loans have a loan-to-value ratio within 75 per cent of market value or are generally written down. Individual loan write-downs amounted to NOK 3 million (NOK 2 million)

and group loan write-downs amounted to NOK 2 million (NOK 2 million) at the end of the half year.

The company invested in fixed-income securities totalling NOK 42 million in the second quarter of 2016. The investment was classified at FVO (fair value option) and assessed at market value with changes in value through ordinary profit or loss.

The company's total assets under management as at 30 June 2016 were NOK 16.4 billion compared with NOK 14.9 billion at the end of 2015.

Storebrand Boligkreditt AS issued covered bonds totalling NOK 2.5 billion (maturity 2021) during the first quarter of 2016 and redeemed bond loans of NOK 1.0 billion in June 2016. At the end of the half year, the company had issued covered bonds totalling NOK 11.7 billion, with remaining terms of approximately 11 months to 5 years. NOK 10.6 billion of these bonds has been placed in the market, while the remaining NOK 1.1 billion is being held in the parent bank.

Storebrand Boligkreditt has two credit facilities with Storebrand Bank ASA. One of these is a normal overdraft facility, with a ceiling of NOK 6 billion. This has no expiry date, but can be terminated by the bank on 15 months' notice. The other facility must have a sufficient ceiling at all times to be able to cover interest and repayment on covered bonds and the associated derivatives for the next 31 days. This drawing right may not be terminated by Storebrand Bank until at least 3 months after the maturity date of the covered bond and the associated derivatives with the longest period to maturity. Standard covenant requirements are linked to the loan agreements entered into. All the terms and conditions have been satisfied for all signed loan agreements in the first half year. In accordance with the loan programme, the company's over-collateralisation requirement is satisfied at 109.5 per cent.

Equity in the company at the end of the half year amounted to NOK 996 million (NOK 975 million). The net primary capital at the end of the first half year amounted to NOK 975 million (NOK 975 million). Storebrand Boligkreditt AS' capital base consists entirely of pure core capital. The pure core capital adequacy ratio in the company was 14.7 per cent (16.2 per cent) at the end of June 2016. Due to the strong balance sheet growth in June 2016, Storebrand Boligkreditt AS did not satisfy the combined capital and capital buffer requirements at the end of June 2016 after the countercyclical capital buffer requirement increased from 14.5 per cent to 15 per cent on 30 June 2016. As a consequence of this, Storebrand Boligkreditt AS has sold loans to Storebrand Bank ASA, which has reduced gross lending to NOK 14.6 billion. Given a lending volume of NOK 14.6 billion as of 30 June 2016, the capital adequacy ratio is estimated at 15.7 per cent. The Storebrand Bank Group had a capital adequacy ratio of 17.7 per cent and a pure core capital adequacy ratio of 14.3 per cent at the end of the second quarter and therefore satisfies the capital and capital buffer requirements by a good margin.

The company aims to comply with the applicable buffer capital requirements at all times. The company has satisfactory liquidity based on the company's business activities.

The purpose of the liquidity coverage requirement (LCR) is to measure the size of the company's liquid assets, in relation to the net liquidity outflow 30 days in the future given a stress situation in the money and capital markets. The LCR was introduced for Storebrand Boligkreditt AS from 30 June 2016 with the minimum requirement for LCR with escalation of: 70 per cent from 30 June 2016, 80 per cent from 30 December 2016, and 100 per cent from December 2017. Storebrand Boligkreditt AS has measured and reported its monthly LCR figures to the Financial Supervisory Authority of Norway over the past year and is well within the future requirement. At the end of the first half year, the company's LCR was 165 per cent.

STRATEGY AND FUTURE PROSPECTS

Storebrand Boligkreditt will continue its core activity, which is the acquisition and management of home mortgages from Storebrand Bank. Developments in the Norwegian and international capital markets, interest rates, unemployment and the property market are regarded as the key risk factors that can affect the results of Storebrand Boligkreditt in 2016.

The housing market and developments in total non-performing loans will be closely monitored. Efforts to ensure good working procedures and high data quality will continue and thereby ensure that government and rating requirements continue to be fulfilled.

New issues of covered bonds will be made available when the company decides it is prudent to do so and there is sufficient security. Storebrand Boligkreditt will continue to contribute to Storebrand Bank ASA having diversified financing.

No events of importance to the preparation of the interim financial statements have occurred since the balance sheet date.

Lysaker, 13 July 2016 The Board of Directors of Storebrand Boligkreditt AS

Storebrand Boligkreditt AS Income statement

	Q2				Full Year
(NOK million) Note	2016	2015	30.06.2016	30.06.2015	2015
Interest income 4, 13	89.0	104.7	176.9	225.0	416.9
Interest expense 4, 13	-56.7	-62.1	-112.8	-128.5	-248.3
Net interest income 13	32.2	42.7	64.0	96.5	168.6

Net gains on financial instruments	-0.6	-1.6	-3.1	-1.8	-2.5
Other income	0.6	0.3	1.1	0.6	2.3
Total other operating income	0.0	-1.3	-2.0	-1.2	-0.2

Staff expenses	-0.1	-0.1	-0.1	-0.1	-0.2
General administration expenses	-0.1	-0.1	-0.1	-0.1	-0.3
Other operating costs 4	-16.5	-3.5	-32.3	-7.2	-26.9
Total operating costs	-16.6	-3.7	-32.5	-7.4	-27.4
Operating profit before loan losses	15.6	37.7	29.5	87.8	141.0
Loan losses for the period 15	-1.0	-1.0	-1.2	-1.1	-1.9
Profit before tax	14.7	36.6	28.3	86.8	139.2
Tax 3	-3.7	-9.9	-7.1	-23.4	-37.6
Profit for the year	11.0	26.7	21.3	63.3	101.6

Statement of comprehensive income

	Q2				Full Year
(NOK million)	2016	2015	30.06.2016	30.06.2015	2015
Profit for the period	11.0	26.7	21.3	63.3	101.6
Other comprehensive income
Total comprehensive income for the period	11.0	26.7	21.3	63.3	101.6

Storebrand Boligkreditt AS Statement of financial position

(NOK million)	Note	30.06.2016	30.06.2015	31.12.2015
Loans to and deposits with credit institutions	6, 14	455.4	411.9	382.0

Financial assets designated at fair value through profit and loss:
Bonds and other fixed-income securities	6, 10, 14	41.5
Derivatives	6	194.6	190.4	173.2

Other current assets	4, 6	12.1	12.1	12.2

Gross lending	11	15 698.3	13 569.5	14 291.6
- Loan loss provisions on individual loans	15	-2.9	-1.6	-2.2
- Loan loss provisions on groups of loans	15	-2.3	-2.1	-1.8
Net lending to customers	6	15 693.1	13 565.8	14 287.6

Total assets		16 396.7	14 180.2	14 855.0

Liabilities to credit institutions	4, 6, 8	3 699.1	1 896.4	2 043.6

Other financial liabilities:
Commercial papers and bonds issued	6, 9	11 651.7	11 311.7	11 782.6
Other liabilities	4, 6	49.8	34.0	54.0

Deferred tax		0.3	1.7	0.3
Total liabilities		15 400.9	13 243.8	13 880.4
Paid in equity		949.4	844.0	844.0
Retained earnings		46.4	92.3	130.6
Total equity	10	995.9	936.3	974.6

Total liabilities and equity		16 396.7	14 180.2	14 855.0

Lysaker, 13 July 2016 The Board of Directors of Storebrand Boligkreditt AS

Storebrand Boligkreditt AS Statement of changes in equity

(NOK million)	Share capital	Share premium	Other paid-in equity	Total paid-in equity	Other equity	Total retained earnings	Total equity
Equity at 31.12.2014	455.0	270.1	118.9	844.0	192.7	192.7	1 036.8

Profit for the period					101.6	101.6	101.6
Other comprehensive income						0.0	0.0
Total comprehensive income for the period	0.0	0.0	0.0	0.0	101.6	101.6	101.6

Equity transactions with the owner:
Provision for group contribution					-163.8	-163.8	-163.8
Equity at 31.12.2015	455.0	270.1	118.9	844.0	130.6	130.6	974.6

Profit for the period					21.3	21.3	21.3
Other comprehensive income						0.0	0.0
Total comprehensive income for the period	0.0	0.0	0.0	0.0	21.3	21.3	21.3

Equity transactions with the owner:
Group contribution received			105.4	105.4			105.4
Provision for group contribution					-105.4	-105.4	-105.4
Equity at 30.06.2016	455.0	270.1	224.3	949.4	46.4	46.4	995.9

Storebrand Boligkreditt AS is 100 per cent owned by Storebrand Bank ASA. Number of shares are 35 000 000 of nominal value NOK 13 per share.

Equity at 31.12.2014	455.0	270.1	118.9	844.0	192.7	192.7	1 036.8

Profit for the period					63.3	63.3	63.3
Other comprehensive income						0.0	0.0
Total comprehensive income for the period	0.0	0.0	0.0	0.0	63.3	63.3	63.3

Equity transactions with the owner:
Provision for group contribution					-163.8	-163.8	-163.8
Equity at 30.06.2015	455.0	270.1	118.9	844.0	92.3	92.3	936.3

Storebrand Boligkreditt AS Statement of cash flow

(NOK million)	30.06.2016	30.06.2015
Cash flow from operations
Net receipts/payments of interest, commissions and fees from customers	178.6	229.6
Net disbursements/payments on customer loans	-1 433.0	737.8
Net receipts/payments on securities	-3.6	-0.3
Payments of operating costs	-18.8	-7.7
Net cash flow from operating activities	-1 276.8	959.4

Kontantstrømmer fra finansieringsaktiviteter
Payments - repayments of loans and issuing of bond debt	-2 647.6	-2 587.7
Receipts - new loans and issuing of bond debt	4 156.2	2 000.0
Payments - interest on loans	-119.3	-147.8
Receipts - group contribution	105.4
Payments - group contribution	-144.4	-224.4
Net cash flow from financing activities	1 350.2	-959.9

Net cash flow in the period	73.4	-0.4

Cash and bank deposits at the start of the period	382.0	412.3
Cash and bank deposits at the end of the period	455.4	411.9

Storebrand Boligkreditt AS has credit facility agreements with Storebrand Bank ASA

The amount drawn on the credit facilities is recognized in the item "Liabilities to credit institutions" as at 30.06.2016. See also Note 8.

Storebrand Boligkreditt AS Notes

Accounting principles

The financial statements are prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements do not include all the information required in the annual report.

The financial statements of Storebrand Boligkreditt AS have been prepared in accordance with International Financial Reporting Standards (IFRS) approved by the EU and appurtenant interpretations.

A description of the accounting policies applied in the preparation of the financial statements is provided in the 2015 annual report, and the interim financial statements are prepared with respect to these accounting policies. There are none new nor amended accounting standards that entered into effect as at 1 January 2016 that have caused significant effects on Storebrand Bank's interim financial statements.

Note 02

Estimates

Critical accounting estimates and judgements are described in the 2015 annual financial statements' note 2 and valuation of financial instruments at fair value are described in note 8.

In preparing financial statements the management are required to make judgements, estimates and assumptions of uncertain amounts. The estimates and underlying assumptions are reviewed on an ongoing basis and are based on historical experience and expectations of future events and represent the management's best judgment at the time the financial statements were prepared.

Actual results may differ from these estimates.

The company's critical estimates and judgements that could result in material adjustment of recognised amounts are discussed below:

Financial instruments at fair value

There will be some uncertainty associated with the pricing of financial instruments not priced in an active market. This is particularly true of the types of securities priced on the basis of non-observable assumptions. Various valuation techniques are applied to these investments in order to determine the fair value. They financial instruments where theoretical models are used for pricing. Any changes to the assumptions could affect recognised amounts.

Reference is also made to Note 6 in which the valuation of financial instruments at fair value is described in more detail.

Financial instruments at amortised cost

Financial instruments valued at amortised cost are assessed on the reporting date to see whether there is any objective evidence that a financial asset or group of financial assets is impaired.

A certain degree of judgement must be used in assessing whether impairment has occurred and the amount of the impairment loss. Uncertainty grows when there is turmoil in financial markets. The assessments include credit, market and liquidity risk. Changes in assumptions for these factors will affect an assessment of whether impairment is indicated. There will thus be uncertainty concerning the recognised amounts of individual and group write-downs. This will apply to provisions relating to loans in the private market.

Tax Note 03

Tax cost is based on an expected average tax rate of 25% of company's profit before tax adjusted for permanent difference if there are any differences.

Note 04

Related Parties

ISSUED COVERED BONDS

Storebrand Bank ASA has invested a total of NOK 1.1 billion in covered bonds issued by Storebrand Boligkreditt AS as of 30 June 2016.

LOANS TRANSFERRED FROM STOREBRAND BANK ASA

Storebrand Bank ASA sells loans to the mortgage company Storebrand Boligkreditt AS. The mortgages are transferred on commercial terms. Once the loans are transferred, Storebrand Boligkreditt AS assumes all the risks and benefits of owning the loan portfolio. It is Storebrand Boligkreditt AS that receives all the cash flows from the loan customer. Storebrand Bank ASA shall arrange the transfer and return of loans when changes have to be made, i.e. if there is a request to increase the loan amount, change from variable to fixed interest, conversion to employee loan or conversion to a flexible mortgage. The costs are included in the contractual administration fee. Non-performing loans in Storebrand Boligkreditt AS remain in the company. These loans will, pursuant to the service agreement with Storebrand Bank ASA, be treated in the same way as non-performing loans in the bank. Specific reports are prepared for non-performing loans in Storebrand Boligkreditt AS. These loans are not included in the cover pool.

Loans to employees can be transferred to Storebrand Boligkreditt AS. The difference between the market interest rate and the subsidised interest rate is covered monthly by the company in which the debtor is employed.

Storebrand Bank ASA has not pledged any guarantees in connection with loans to Storebrand Boligkreditt AS.

CREDIT FACILITIES WITH STOREBRAND BANK ASA

Storebrand Boligkreditt AS has two credit facilities with Storebrand Bank ASA. See note 8 for more information.

OTHER

Storebrand Boligkreditt AS has no employees, and purchases personnel resources from Storebrand Bank ASA and services including accounting functions from Storebrand Livsforsikring AS.

Storebrand Boligkreditt AS conducts transactions with close associates as part of its normal business activities. These transactions take place on commercial terms. The terms for transactions with senior employees and related parties are stipulated in note 27 in the 2015 annual report for Storebrand Boligkreditt AS.

Financial risk Note

The market value of Storebrand Boligkreditt AS's financial assets and liabilities varies due to financial market risks. Note 3 to note 7 of the 2015 Annual report explains the company's financial risks which also is representative of the financial risks as per 30 June 2016.

Note 06

Valuation of financial instruments

Storebrand Boligkreditt AS conducts a comprehensive process to ensure that financial instruments are valued as closely as possible to their market value. Publicly listed financial instruments are valued on the basis of the official closing price on stock exchanges, supplied by Reuters and Bloomberg. Bonds are generally valued based on prices obtained from Nordic Bond Pricing, Reuters and Bloomberg. Bonds that are not regularly quoted will normally be valued using recognised theoretical models. The latter is particularly applicable to bonds denominated in Norwegian kroner. Discount rates composed of the swap rates plus a credit premium are used as a basis for these types of valuations. The credit premium will often be specific to the issuer, and will normally be based on a consensus of credit spreads quoted by a selected brokerage firm.

Unlisted derivatives, including primarily interest rate and foreign exchange instruments, are also valued theoretically. Money market rates, swap rates, exchange rates and volatilities that form the basis for valuations are supplied by Reuters, Bloomberg and Norges Bank.

Storebrand Boligkreditt AS carries out continual checks to safeguard the quality of market data that has been collected from external sources. These types of checks will generally involve comparing multiple sources as well as controlling and assessing the likelihood of unusual changes.

The company categorises financial instruments on three different levels, for further information see note 8 in the 2015 annual report. The levels express the differing degrees of liquidity and different measurement methods used. The company has established valuation models to gather information from a wide range of well-informed sources with reference to minimising the uncertainty of valuations.

VALUATION OF FINANCIAL INSTRUMENTS AT AMORTISED COST

(NOK million)	Fair value 30.06.2016	Fair value 31.12.2015	Book value 30.06.2016	Book value 31.12.2015
Financial assets
Loans to and deposits with credit institutions	455.4	382.0	455.4	382.0
Net lending to customers	15 693.1	14 287.6	15 693.1	14 287.6
Other current assets	12.1	12.2	12.1	12.2

Financial liabilities
Liablities to credit institutions	3 699.1	2 043.6	3 699.1	2 043.6
Commercial papers and bonds issued	11 663.2	11 740.8	11 651.7	11 782.6
Other liabilities	49.8	54.0	49.8	54.0

VALUATION OF FINANCIAL INSTRUMENTS AT FAIR VALUE

	Level 1	Level 2	Level 3
	Quoted	Observable	Non-observable	Book value	Book value
(NOK million)	prices	assumptions	assumptions	30.06.2016	31.12.2015
Government and government guaranteed bonds 1)		41.5		41.5	0.0
Total bonds	0.0	41.5	0.0	41.5
Total bonds 31.12.2015		0.0
Interest rate derivatives		194.6		194.6	173.2
Total derivatives	0.0	194.6	0.0	194.6	173.2
Derivatives with a positive fair value		194.6		194.6	173.2
Derivatives with a negative fair value
Total derivatives 31.12.2015		173.2

There have not been any changes between quoted prices and observable assumptions on the various financial instruments in the quarter.

1) In second quarter of 2016, the company invested in bonds which are classified at FVO.

Note 07

Segment information

Business segments are the company's primary reporting segments. The company has only one segment, Retail Lending. This segment comprises lending to private individuals, and all loans are purchased from Storebrand Bank ASA. The company's accounts for the first half of 2016 therefore relate entirely to the Retail Lending segment.

Note 08

Liabilities to credit institutions

Storebrand Boligkreditt AS has two credit facilities with Storebrand Bank ASA. One of these is a normal overdraft facility, with a ceiling of NOK 6 billion. This has no expiry date, but can be terminated by the bank on 15 months' notice. The other facility must have a sufficient ceiling at all times to be able to cover interest and repayment on covered bonds and related derivatives for the next 31 days. This drawing right may not be terminated by Storebrand Bank ASA until at least 3 months after the maturity date of the covered bond and related derivatives with the longest period to maturity.

Note 09

Commercial papers and bonds issued

COVERED BONDS:

(NOK million) ISIN Code	Nominal value	Currency	Interest	Maturity 1)	Book value 30.06.2016
NO0010548373	1 250.0	NOK	Fixed	28.10.2019	1 446.4
NO0010635071	2 650.0	NOK	Floating	21.06.2017	2 656.3
NO0010660822	2 540.0	NOK	Floating	20.06.2018	2 554.4
NO0010736903	2 500.0	NOK	Floating	17.06.2020	2 493.8
NO0010760192	2 500.0	NOK	Floating	16.06.2021	2 500.8
Total commercial papers and bonds issued					11 651.7
Total commercial papers and bonds issued as at 31.12.2015					11 782.6

1) Maturity date in this summary is the first possible maturity date (Call date).

The loan agreements contain standard covenants. In 2016, Storebrand Boligkreditt AS met all terms and conditions with respect to the loan agreements. The company's overcollateralisation requirement of 109.5 per cent is fulfilled and in accordance with the loan programme. See note 11.

Note 10

Capital Adequacy

NET PRIMARY CAPITAL

(NOK million)	30.06.2016	31.12.2015
Share capital	455.0	455.0
Other equity	540.9	519.6
Total equity	995.9	974.6

Deductions:
Provision for group contribution		-105.4
Profit not included in the calculation of net primary capital	-21.3
Additions
Core capital exc. Hybrid Tier 1 capital		105.4
Kjernekapital uten fondsobligasjoner (ren kjernekapital)	974.6	974.6

Additional Tier 1 capital:
Capital instruments eligible as Additional Tier 1 capital
Additions
Core capital	974.6	974.6
Subordinated loan capital less own holdings
Tier 2 capital
Tier 2 capital deductions
Net primary capital	974.6	974.6

MINIMUM CAPITAL REQUIREMENT

(NOK million)	30.06.2016	31.12.2015
Credit risk	484.6	438.1
Of which:
International organisations	0.0
Institutions	15.5	13.5
Loans secured against real estate	449.3	411.0
Loans past-due	2.0	2.2
Other	17.8	11.5
Total minimum requirement for credit risk	484.6	438.1
Total minimum requirement for market risk	0.0	0.0
Operational risk	32.5	31.4
CVA risk *)	11.6	11.8
Deductions
Loan loss provisions on groups of loans	-0.2	-0.1
Minimum requirement for net primary capital	528.6	481.2

CAPITAL ADEQUACY

	30.06.2016	31.12.2015
Capital ratio	14.7 %	16.2 %
Core (tier 1) capital ratio	14.7 %	16.2 %
Core capital ratio excl. Hybrid Tier 1 capital	14.7 %	16.2 %

*) Regulation on own funds requirements for credit valuation adjustment risk.

The standard method is used for credit risk and market risk, and the basic method for operational risk. The overall requirements for core tier 1 capital and the capital base are 11.5 and 15 per cent respectively as of 30 June 2016, through the increase of counter-cyclical capital buffer by 0.5 percent from 30 June 2016.

The capital base of Storebrand Boligkreditt AS consists entirely of pure core capital. Due to the strong balance sheet growth in June 2016, Storebrand Boligkreditt AS did not satisfy the combined capital and capital buffer requirements at the end of June 2016. As a consequence of this, Storebrand Boligkreditt AS sold loans to Storebrand Bank ASA that have reduced gross lending to NOK 14.6 billion. Given a lending volume of NOK 14.6 billion as of 30 June 2016, the capital adequacy ratio is estimated at 15.7 per cent. The Storebrand Bank Group had a capital adequacy ratio of 17.7 per cent and a pure core capital adequacy ratio of 14.3 per cent at the end of the second quarter and therefore satisfies the capital and capital buffer requirements by a good margin.

BASIS OF CALCULATION (RISK-WEIGHTED VOLUME)

(NOK million)	30.06.2016	31.12.2015
Credit risk	6 057.9	5 476.6
Of which:
International organisations	0.0
Institutions	193.9	168.5
Loans secured against real estate	5 616.1	5 137.7
Loans past-due	25.2	26.9
Other	222.7	143.5
Total basis of calculation credit risk	6 057.9	5 476.6
Total basis of calculation market risk	0.0	0.0
Operational risk	406.6	392.2
CVA risk *)	145.3	147.5
Deductions
Loan loss provisions on groups of loans	-2.3	-1.8
Total basis of calculation of minimum requirements for capital base	6 607.5	6 014.5

Note 11

Loan to value ratios and collateral

(NOK million)	30.06.2016	31.12.2015
Gross lending 1)	15 698.3	14 291.6
Average loan balance	1.7	1.6
No. of loans	9 143	8 705
Weighted average seasoning (months)	36	39
Weighted average remaning term (months)	226	219
Average loan to value ratio	49 %	50 %
Over-collateralisation 2)	140.2 %	126.2 %

Cover pool:
Residential mortgages 1)	15 646.7	14 188.9
Supplementary security	411.2	380.3
Total	16 057.9	14 569.2

1) In accordance with the Regulation for credit institutions that issue covered bonds, lending cannot exceed 75% of the value of collateral (i.e. value of properties pledged as collateral). As per 30 June 2016 the company had NOK 16.2 million that exceeds the loan to value limit and has therefore not been included in the cover pool. As per 30 June 2016, the company has 5 non-performing loans without evidence of impairment, equivalent to NOK 9.3 million. There are 10 non-performing loans with evidence of impairment of NOK 15.4 million where the impairment is assessed to be NOK 2.9 million. Non-performing loans with and without evidence of impairment, are not included in the cover pool. Deposits with credit institutions includes received collateral by NOK 39.6 million. See note 14. The collateral is not a part of the cover pool.

2) Over-collateralisation has been calculated based on total volume of issued covered bonds of NOK 11.4 billion (nominal value).

The company reduced the lending volume on 7 July 2016 due to a breach of the buffer capital requirements. Given a reduction in the lending volume of NOK 14.6 billion, overcollateralization is calculated at 130.4%

Note 12

Key figures

	Q2
(NOK million)	2016	2015	30.06.2016	30.06.2015	2015
Profit and loss account: (as % of avg. total assets) 1)
Net interest income	0.84 %	1.19 %	0.84 %	1.33 %	1.16 %

Main balance sheet figures:
Total assets			16 396.7	14 180.2	14 855.0
Average total assets	15 473.5	14 345.6	15 253.3	14 584.7	14 573.2
Gross lending to customers			15 698.3	13 569.5	14 291.6
Equity			995.9	936.3	974.6

Other key figures:
Loan losses and provisions as % of average total lending	0.03 %	0.03 %	0.02 %	0.02 %	0.01 %
Individual loan loss provisions as % of gross loss-exposed
loans 3)			23.8 %	5.2 %	22.7 %
Cost/income ratio	51.5 %	8.8 %	52.4 %	7.8 %	16.3 %
Return on equity before tax 2)			5.8 %	17.9 %	14.3 %
Core (tier 1) capital ratio			14.7 %	15.0 %	16.2 %

Definitions:

1) Average total assets is calculated on the basis of monthly total assets for the year.

2) Annualised profit before tax adjusted for hedging ineffectiveness as % of average equity.

3) Gross loss-exposed loans with evidence of impairment.

Net interest income Note 13

	Q2				Full Year
(NOK million)	2016	2015	30.06.2016	30.06.2015	2015
Interest and other income on loans to and deposits with credit institutions	1.1	2.2	2.3	3.8	6.8
Interest and other income on loans to and due from custo mers	87.7	102.6	174.4	221.2	410.1
Interest on short-term debt instruments, bonds and other interest-bearing securities	0.2		0.2
Other interest income
Total interest income	89.0	104.7	176.9	225.0	416.9
Interest and other expenses on debt to credit institutions	-7.5	-10.1	-16.3	-22.4	-39.5
Interest and other expenses on deposits from and due to customers
Interest and other expenses on securities issued	-49.2	-52.0	-96.6	-106.1	-208.8
Interest and other expenses on subordinated loan capital
Other interest expenses
Total interest expenses	-56.7	-62.1	-112.8	-128.5	-248.3
Net interest income	32.2	42.7	64.0	96.5	168.6

Note 14

Off balance sheet liabilities and contingent liabilities

(NOK million)	30.06.2016	31.12.2015
Undrawn credit limits	1 902.0	1 684.6
Total contingent liabilities	1 902.0	1 684.6

Undrawn credit limits relate to the unused portion of credit limits on flexible mortgage loans.

The company has received collateral by NOK 39.6 million. Per 30 June 2016, the company has not pledged any collateral.

Non-performing loans and loan losses

(NOK million)	30.06.2016	31.12.2015
Non-performing loans
Non-performing loans without evidence of impairment	9.3	9.8
Loss-exposed loans with evidence of impairment	15.4	16.7
Gross non-performing and loss-exposed loans	24.7	26.5
Loan loss provisions on individual loans	-2.9	-2.2
Net non-performing and loss-exposed loans	21.8	24.3

Key figures
Net non-performing and loss-exposed loans as % of gross lending	0.16 %	0.19 %

Loans are regarded as non-performing and loss-exposed:

when a credit facility has been overdrawn for more than 90 days
when an ordinary mortgage has arrears older than 90 days
when a credit card has arrears older than 90 days and the credit limit has been overdrawn. If a repayment plan has been agreed with the customer and is being adhered to, the overdraft is not regarded as a non-performing loan. When one of the three situations described above occurs, the loans and the rest of the customer's commitments are regarded as non-performing. The number of days is counted from when the arrears exceed NOK 2,000. The account is regarded as active when there are no longer any arrears. The amount in arrears at the time of reporting can be less than NOK 2,000.

	Q2		Full Year
(NOK million)	2016	2015	30.06.2016	30.06.2015	2015
Change in individual loan loss provisions	-0.6	-0.6	-0.6	-0.6	-1.7
Change in grouped loan loss provisions	-0.3	-0.5	-0.5	-0.5	-0.2
Other effects on loan loss provisions
Realised losses specifically provided for previously
Realised losses not specifically provided for previously
Recoveries on previous realised losses
Loan losses for the period	-1.0	-1.0	-1.2	-1.1	-1.9

Note Quarterly income statement

	Q2	Q1	Q4	Q3	Q2
(NOK million)	2016	2016	2015	2015	2015
Interest income	89.0	87.9	92.8	99.1	104.7
Interest expense	-56.7	-56.1	-57.8	-62.0	-62.1
Net interest income	32.2	31.8	35.1	37.1	42.7

Net gains on financial instruments	-0.6	-2.5	-0.4	-0.3	-1.6
Other income	0.6	0.5	1.4	0.3	0.3
Total other operating income	0.0	-2.0	1.0	0.0	-1.3
Staff expenses	-0.1		-0.1		-0.1
General administration expenses	-0.1	-0.1	-0.1		-0.1
Other operating cost	-16.5	-15.8	-16.0	-3.8	-3.5
Total operating costs	-16.6	-15.9	-16.1	-3.9	-3.7
Operating profit before loan losses	15.6	13.9	19.9	33.3	37.7
Loan losses for the period	-1.0	-0.2	-0.9	0.1	-1.0
Profit before tax	14.7	13.7	19.0	33.3	36.6
Tax	-3.7	-3.4	-5.1	-9.0	-9.9
Profit for the year	11.0	10.2	13.9	24.3	26.7

Storebrand Boligkreditt AS - Declaration by the Board of Directors and the Chief Executive Officer

The Board of Directors and the Chief Executive Officer have today considered and approved the half-yearly report and half-yearly accounts of Storebrand Boligkreditt AS for the first six months as at 30 June 2016 (the 2016 half-yearly report).

The half-yearly report has been prepared in accordance with the requirements of IAS 34 Interim Financial Reporting as approved by the EU, as well as the additional Norwegian requirements set out in the Securities Trading Act.

The Board of Directors and the Chief Executive Officer hereby confirm that, to the best of their knowledge, the half-yearly accounts for 2016 have been prepared in accordance with the current accounting standards, and the information contained in the accounts gives a true and fair view of the company's assets, liabilities, and financial position taken as a whole as at 30 June 2016. The Board of Directors and the Chief Executive Officer confirm that, to the best of their knowledge, the half-yearly report gives a true and fair summary of important events during the accounting period and their effect on the half-yearly accounts. The Board of Directors and the Chief Executive Officer also confirm that, to the best of their knowledge, the description of the most important risk and uncertainty factors that the business faces in the next accounting period, together with the description of material transactions with close associates, provide a true and fair summary.

Lysaker, 13 July 2016 The Board of Directors of Storebrand Boligkreditt AS

Odd Arild Grefstad Chairman of the Board

Hege Hodnesdal Leif Helmich Pedersen Deputy Chairman of the Board

Thor Bendik Weider

Åse Jonassen Chief Executive Officer

Storebrand Boligkreditt AS Audit report

Finansiell kalender 2015 Financial Calender 2016

11. februar Resultat 4. kvartal 2014 15. april Generalforsamling 11 February 29 April Result Q4. 2014 Result Q1. 2015 26 October Result Q3 2016 February 2017 Result Q4 2016

kontakter Contacts

Kjetil Ramberg Krøkje Head of IR [email protected] +47 9341 2155 Sigbjørn Birkeland Finance Director [email protected] +47 9348 0893 Kjetil Ramberg Krøkje Head of IR [email protected] +47 9341 2155 Åse Jonassen CEO [email protected] +47 4157 7397 Kjetil Ramberg Krøkje Head of IR [email protected] +47 9341 2155 Åse Jonassen CEO [email protected] +47 4157 7397

Storebrand Boligkreditt AS Professor Kohts vei 9 P.O Box 474, N-1327 Lysaker, Norway Telephone 08880 Storebrand Boligkreditt AS Professor Kohts vei 9 P.O. Box 474, N-1327 Lysaker, Norway Telephone 08880

storebrand.no storebrand.no