a n n u a l r e p o r t

Report of the Directors ... 4

Income Statement ...12

Balance Sheet ...12

Statement of Changes in Equity ...13

Cash Flow Statement ...13

NotES

1 Accounting policies ... 14

2 Interest and similar income...22

3 Interest expense and similar charges ...22

4 Change in value of financial instruments carried at fair value ...22

5 other operating income, gains and losses ...23

6 Salaries and general administrative expenses ...23

7 Related party disclosures ...24

8 Loans to employees and elected officers ...25

9 other operating expenses ...26

10 other expenses, gains and losses ...26

11 Impairment losses & write-downs on loans carried at amortised cost ....26

12 tax ...27

13 Cash and balances due from credit institutions ...29

14 Loans and advances ...29

15 Financial derivatives (assets and liabilities) ...29

16 Liabilities to credit institutions ... 30

17 Debt securities in issue ... 30

18 Subordinated loan capital ... 30

19 Shareholder structure and share capital ...31

20 Capital adequacy ...31

21 Financial instruments classified by category ...33

22 Fair value of financial instruments ...34

23 Risk in financial instruments - qualitative description ...36

24 Risk in financial instruments - quantitative description ...39

25 Events after the balance sheet date ...43

26 Elected officers and Executive Management ... 44

Auditor`s report for 2008 ... 46

Control Committee ... 47

contents

report

of the

SummAry of 2008

At the turn of the year 2008/2009, BN Boligkreditt AS’ owner, Glitnir Bank ASA,

changed its name to BNbank ASA (BNbank). The SpareBank 1 banking alliance

(SpareBank 1 SMN, SpareBank 1 SR-Bank, SpareBank 1 Nord-Norge, Sparebanken

Hedmark and Samarbeidende Sparebanker Bankinvest AS) were granted a licence to

acquire the bank, which took place on 5 December 2008. BNbank had been owned by

the Icelandic banking group, Glitnir banki hf, since 2005.

Glitnir Bank ASA was the result of a merger between Bolig- og Næringsbanken ASA

and Glitnir Bank ASA (formerly KredittBanken ASA). The merger was carried out

in March 2008. The former Bolig- og Næringsbanken was divided into two

busi-ness areas, retail market and commercial property, while the former KredittBanken,

which dealth largely with loans to the offshore, seafood and shipbuilding markets,

became a separate business area. KredittBanken’s retail and commercial property

activities were transferred to related activities in the other business areas.

Commercial property is financed largely through the credit institution Bolig- og

Næ-ringskreditt AS (BNkreditt), while residential mortgage loans are financed primarily

via the credit institution BN Boligkreditt. BNkreditt and BN Boligkreditt are separate

subsidiaries and in connection with the merger were retained without any changes

to the companies’ operations or articles of association.

The financial turmoil, the situation in Iceland and the general trend in the

Norwe-gian economy have had an impact on the BNbank Group and thus BN Boligkreditt

in 2008. After a number of international financial institutions applied for creditor

protection, failed, or had to be rescued by the authorities, parts of the financial

mar-ket stopped functioning towards the end of the third quarter. This caused challenges

for BNbank’s former owner, Glitnir banki hf., among others, and it was taken over

by the Icelandic government at the beginning of October 2008. At the same time, a

decision was made to sell all foreign subsidiaries, including the Norwegian banking

operations.

The situation in Iceland gave rise to liquidity challenges for the Norwegian banking

operations, and from 8 October 2008 the former Glitnir Bank ASA was secured

liqui-dity of up to NOK 5 billion through support from the Norwegian Banks’ Guarantee

Fund.

A process to sell the Norwegian banking operations was initiated immediately, and

on 20 October an agreement was signed with the SpareBank 1 banking alliance for

the acquisition of the former Glitnir Bank ASA with its subsidiaries BNkreditt, BN

Boligkreditt and Glitnir Factoring AS.

The Board of Directors of BNbank regards the new ownership as a sound solution

for customers, lenders, staff and the bank’s subsidiaries. The new ownership has

stabilised operations in the BNbank Group and laid a sound foundation for further

development of the Group. The SpareBank 1 banks have a strong basis for developing

the business and customer relationships. As new owners, they have expressed their

interest in continuing to build on the expertise that BNbank can offer.

The risk of negative consequences for the real economy

resulting from the financial turmoil increased

significantly in the fourth quarter of 2008. On a

nationwide basis, house prices fell in 2008 and

unemployment increased. On the other hand, the

start of 2009 saw a fall in interest rates. Group

write-downs increased during the fourth quarter by NOK

4 million and stood at NOK 7 million at 31 December.

This was 0.09 per cent of all loans at the same date.

Given the low risk associated with BN Boligkreditt’s

residential mortgage business, the Company’s loss

provisions are considered adequate to face the

econ-omic downturn in 2009.

operAtioNS, oBjectiveS ANd

StrAtegy

BN Boligkreditt has been granted a licence by the

Fi-nancial Supervisory Authority of Norway to operate

as a mortgage credit institution. BN Boligkreditt is

BNbank’s company for the issue of covered bonds.

The plan is to finance BNbank’s home loans chiefly

through BN Boligkreditt.

BN Boligkreditt’s strategy is to issue covered bonds

with a basis in BNbank’s well-secured residential

mortgage loans and provide the Group with access to

this financing instrument. The objective is to facilitate

an effective and more diversified form of funding for

the Group’s operations.

BN Boligkreditt does not provide loans itself, but

acquires home loans from BNbank. The Company

acquires loans which qualify for issuance of covered

bonds. The maximum loan disbursed at the date of

acquisition has a 75 per cent loan-to-value ratio. The

loan portfolio consists of home loans and

variable-rate credit lines secured on dwellings.

BN Boligkreditt was established in 2007, and the

first loan portfolio was acquired in January 2008.

The Company’s head office is in Trondheim. Borrowers

are geographically spread, but concentrated in the

largest Norwegian towns and cities.

StrAtegy withiN the SpAreBANk 1

BANkiNg AlliANce

Following the acquisition of the banking operations by

the SpareBank 1 alliance, a process has been carried

out to assess how best to co-ordinate and integrate the

operations with the owner banks. Various alternatives

have been considered.

In the further co-ordination process, the SpareBank 1

banks wish to develop BNbank further on the basis

of deposits, home loans and loans for commercial

properties. This is in line with BNbank’s original

strategy prior to the merger with the former

Kreditt-Banken.

The owners consider the desired structure moving

forward to be a robust and future-oriented structure.

BNbank has a long tradition in these banking areas,

based on cost-effectiveness, low risk, specialisation

and competitive terms. In collaboration with the

SpareBank 1 alliance, this will be developed further

and strengthened.

BNbank’s head office will remain in Trondheim,

and the bank will retain a branch office in Oslo. The

operations in Ålesund, which largely comprise

loans to the corporate market, will be

organisatio-nally subordinate to SpareBank 1 SMN.

The work to further develop and co-ordinate the

operations of the credit institutions BNkreditt, BN

Boligkreditt and SpareBank 1 Boligkreditt aimed

at strengthening the funding of the Group’s and the

alliance’s operations, will continue.

fiNANciAl developmeNtS

BN Boligkreditt presents its financial statements in

compliance with International Financial Reporting

Standards (IFRS).

As a consequence of applying IFRS, the Company’s

results will fluctuate owing to changes in the value

of financial instruments.

profit performANce for 2008

BN Boligkreditt recorded a profit after tax for 2008 totalling NOK 33 million,

compared with a loss of NOK 2 million for 2007. The Company acquired its first loan

portfolio in January 2008, and the 2007 results reflect start-up and establishment

costs.

Net interest income for 2008 amounted to NOK 58 million. Net interest income in the

first half of the year was negatively impacted by the requirement to adjust interest

rates on home loans with six weeks’ notice. The situation improved in the second

half-year, when net interest income rose to NOK 37 million, compared with NOK 21

million for the first half-year.

The Company’s financial instruments that mature after one year are carried at fair

value. Interest rate risk in the Company is low, and fluctuations in interest rates

should have a limited net effect on earnings. During periods when interest rate

spreads between different instruments develop differently, effects on earnings may

arise. For 2008 as a whole, this had a positive effect of NOK 27 million on earnings.

In the fourth quarter, however, this had a negative effect of NOK 25 million. In the

long term, these effects will even out.

Other operating income was negatively affected by costs related to the issue of covered

bonds in the second quarter of 2008.

Other operating expenses amounted to NOK 22 million for 2008, while totalling

NOK 5 million for the fourth quarter. The Company purchases all its operation

management services from BNbank.

Impairment losses on loans came to NOK 7 million for 2008. The losses are chiefly

owing to the downturn in the Norwegian economy and are in their entirety group

write-downs. Group write-downs accounted for 0.09 per cent of loans at 31 December

2008.

BAlANce Sheet developmeNt ANd SolveNcy

Total assets were NOK 9.7 billion at the end of 2008.

The loan portfolio at 31 December 2008 stood at NOK 8.1 billion. Covered bonds

totalled NOK 6.6 billion at the same date.

The lending business is funded chiefly by the issue of covered bonds and by

inter-company funding. In January 2008, the Company acquired a portfolio of home loans

from the Parent Bank amounting to NOK 9.2 billion. Loans for a further NOK 2.5

billion were acquired during the year. The acquisitions were funded by the Parent

Bank by means of a capital increase, subordinated loans and ordinary loan capital.

The Parent Bank continues to manage these loans.

In 2007, the Company established a programme for

the issue of covered bonds. These were assigned an

AAA rating by Moody’s. Owing to the prevailing

market conditions, the bond issue planned for

January 2008 was not carried out. Following this,

Moody’s withdrew the rating as a matter of routine.

BN Boligkreditt carried out an issue of covered

bonds in the Norwegian market totalling NOK 6.6

billion in May 2008. Since the SpareBank 1 banks

acquired BNbank, any further issues and rating

processes will wait.

The capital base of BN Boligkreditt, on the basis of

the Board’s proposal for allocation of profits, was

NOK 371 million at the end of the period, giving a

capital adequacy ratio of 11.6 per cent. Tier 1 capital

totalled NOK 294 million, giving a tier 1 capital ratio

of 9.2 per cent at 31 December 2008. Risk-weighted

assets amounted to NOK 3 192 million at the same

date.

The Board considers that the Company’s solvency is

satisfactory. The financial statements give a true and

fair view of BN Boligkreditt’s assets and liabilities,

financial position and results. The assumptions for

continued operations are present, and the annual

accounts have therefore been prepared on a going

concern basis.

recommeNded AllocAtioN of profit

for the yeAr

The Board recommends that the Company’s profit for

the year of NOK 33 million be allocated as follows:

The Company has no unrestricted equity at year-end

2008.

riSk mANAgemeNt

It is part of BN Boligkreditt’s business strategy to

maintain a low risk profile in all its activities. This

policy remained unchanged through 2008, although

the financial turmoil, the situation in Iceland and

the general economic trend impacted on the

Com-pany in 2008.

BN Boligkreditt has guidelines for managing all the

relevant types of risk. These include risk tolerance

limits, choice of risk monitoring method, and

repor-ting requirements. The Board receives regular status

reports on all relevant risks.

The Company has no stock market exposure.

New capital adequacy rules for banks (Basel II) came

into force with effect from 2007. Financial

institu-tions with low credit risk and good risk

manage-ment systems may be subject to a lower capital base

requirement under the new rules. BN Boligkreditt

was planning to apply the advanced Internal

Ra-tings-Based (IRB) method for the majority of its loan

portfolio. As a result of developments in 2008, these

plans were shelved. During 2009, the Company will

re-assess its strategy within this area.

An assessment of the most important risks is

provi-ded below.

credit riSk

Credit risk in the loan portfolio is a product of two

factors, both of which must be present if a loss is to

arise. One factor is the possibility that the borrower

will be unable to repay the loan. The other is that

the value of the underlying asset will be

insuffici-ent to cover the amount owed to BN Boligkreditt in

the event of default and subsequent realisation of the

asset.

Creditworthiness assessments place emphasis

gene-rally on the borrower’s financial position, financial

results/cash flow, ability and willingness to pay,

amount of equity, and collateral.

The financial position of Norwegian households is still good overall, despite rising

interest rates. These are factors which will keep defaults at a low level, also among

the Bank’s personal customers.

Owing to falling interest rates, the financial position of households in general is

considered good, despite increased risk because of the downturn in the Norwegian

economy and rising unemployment.

Most of the loans given to retail customers are secured by a mortgage on residential

property. The Bank’s credit policy requires the property to be centrally located.

House prices fell slightly in 2008, and the trend for 2009 is uncertain. Historically,

house prices are high in relation to consumer prices and rents, but more moderate

viewed in the light of developments in households’ disposable income. 79 % of the

home loan portfolio consists of loans secured on up to 60 % of the appraised value of

the mortgaged property at the time the loan is granted, and the average loan

disbur-sed is 49 per cent of the loan-to-value.

The risk of non-performing loans and impairment losses on loans is considered low.

riSk clASSificAtioN

BN Boligkreditt has a risk classification system for home loans. The risk

classifica-tion model used by the Company classifies the loans in relaclassifica-tion to the probability of

default and the estimated loss which may arise from default. The model uses

quanti-tative methods such as logistical regression.

The risk classification system and analysis of risk in the loan portfolio, as well as

the new capital adequacy rules, are described in more detail in Notes 20, 22 and 23.

The portfolio divided into classes of risk, and other relevant information from the

system, is reported regularly to the Board.

expected loSSeS

The risk classification system estimates expected losses in the various portfolios.

Expected impairment losses on loans express an expectation of the size of the annual

average loss over an economic cycle.

At the end of 2008, expected impairment losses on loans in the entire portfolio was

0.06 per cent.

In 2008, write-downs on loans have been in line with the expected losses over an

economic cycle. Write-downs on loans were 0.08 per cent of average lending during

the year. The write-downs in 2008 were in their entirety group write-downs.

Historically, losses on loans have been lower than in 2008, and also lower than the

estimates of expected losses. The loss trend in 2008 must be taken in context with

the generally increased level of uncertainty following the economic downturn which

began to impact during the year.

The level of losses over time in BN Boligkreditt is

closely linked to macroeconomic trends. The trend

in the real economy and property prices will

there-fore influence the extent of losses in the time ahead.

It must be emphasised that there is uncertainty

attached to estimating the loss trend in 2009. BN

Bo-ligkreditt will remain highly focused on the quality

of the loan portfolio and on following up doubtful

loans and commitments.

liquidity riSk

The Board has adopted general guidelines for

con-trolling liquidity risk, including setting

require-ments for measuring, monitoring and reviewing

risk. In addition, the Board has adopted a

contin-gency plan for use in any liquidity emercontin-gency, and

has also set limits for net financing requirements

within given time horizons. The Company’s

liqui-dity position is reported monthly to the Board.

An important part of the Company’s funding

stra-tegy is to use the best-secured loans as a basis for

funding. A key element here will be the growth of

the market in covered bonds. Through the

establish-ment of the swap arrangeestablish-ment with Norway’s

cen-tral bank, Norges Bank, in 2008, the importance of

this financing instrument has become strengthened

even further.

The Group still has a challenging liquidity situation,

but the owners’ financial position and support, and

the measures taken by the authorities to improve

the liquidity in the market, will give the Group a

sound basis for funding the lending business.

iNtereSt rAte riSk ANd foreigN

exchANge riSk

BN Boligkreditt’s exposure to the interest rate

mar-ket is limited, and the Company has no foreign

ex-change exposure. Differentials in fixed interest rate

periods between BN Boligkreditt’s borrowing and

lending are equalised with the use of hedging

in-struments.

The Company’s unrestricted funds (equity) have a

short investment horizon. This means that the

re-turn on these funds will vary with short-term

inte-rest rates.

The Board has adopted guidelines and set limits for

the Company’s interest rate and foreign exchange

ex-posure. Interest rate and foreign exchange exposure

is reported monthly to the Board.

commerciAl riSk

Commercial risk is defined as the risk of loss owing

to changes in external conditions such as the

mar-ket situation or the authorities’ regulatory decisions.

The definition also includes reputational risk.

The most important factors that can be affected by

changes in the market situation or the authorities’

regulatory decisions are volume and margins in the

funding and lending businesses, impairment losses

on loans and operating expenses.

operAtioNAl riSk

The Company seeks to keep operational risk at a

low level through the use of standardised products

and services, the maintenance of a small, flexible

organisation with clear division of responsibilities,

and good working procedures and management and

control systems.

The Board receives an annual review of operational

risks in BN Boligkreditt, and is also regularly

up-dated on any significant operational disruption or

deviation.

BoArd ActivitieS

The Board of Directors of BN Boligkreditt held 7

board meetings in 2008. The liquidity situation, the

relationship with the Parent Bank, and the risk of

losses, were the main topics of focus in 2008.

workiNg eNviroNmeNt ANd orgANiSAtioN

The Company employed 3 full-time equivalents at 31 December 2008. The Company

also employs group functions in its operations.

The working relationship between management and employees is good. The Group

has a Working Environment and Liaison Committee, which consists of

representati-ves from group management and the salaried employees’ association. There were no

significant employee accidents or injuries in 2008.

The Company’s objective is to be an equal opportunities workplace with gender

equa-lity between women and men. There shall be no discriminatory treatment on grounds

of gender. Of the Company’s 4 employees, 2 are women. The Company aims to achieve

a balance between numbers of male and female employees at all levels.

The Board considers the working environment within the BN Boligkreditt to be good,

even though 2008 has been a demanding year for all employees.

BN Boligkreditt uses no products or energy sources in its operations that have a

sig-nificant adverse impact on the environment. The Company’s operations are therefore

not of such a nature as to pollute the external environment.

outlook

Further growth in lending will depend on the Company’s solvency and funding

opp-ortunities. Utilising the opportunity to issue covered bonds will be a prioritised area.

Continued turbulence in the credit markets may have a negative impact on funding

opportunities. The Board expects low growth in loans in 2009.

Future growth in margins and volumes in the lending business is burdened with

uncertainty. Interest rates, economic conditions, the general demand for credit, and

competition in the market all have an effect.

troNdheim 3 mArch 2009

Harald lundh terje Bostad olav s. austmo

(chair)

terje namtvedt trond søraas (Managing Director)

Balance sHeet at 31 DeceMBeR

Nok millioN Note 2008 2007

ASSetS

loans and advances 14, 21, 22, 23, 24 8 131 0

prepayments and accrued income 21, 22 0 3

Financial derivatives 15, 21, 22, 23, 24 212 0

cash and balances due from credit institutions 13, 21, 22, 23, 24 1 352 47

total assets 9 695 50

equity ANd liABilitieS

share capital 19 101 45

Retained earnings 207 0

total equity 308 45

Deferred tax liabilities 12 13 0

subordinated loan capital 18, 21, 22, 23, 24 77 0

liabilities to credit institutions 16, 21, 22, 23, 24 2 516 0

Debt securities in issue 17, 21, 22, 23, 24 6 781 0

other short-term liabilities 21, 22 0 5

total liabilities 9 387 5

total equity and liabilities 9 695 50

incoMe stateMent

Nok millioN Note 2008 2007

interest and similar income 2 605 2

interest expense and similar charges 3 547 0

Net income from interest and credit commissions 58 2

change in value of financial instruments carried at fair value 4 27 0

other operating income, gains and losses 5 -10 0

total other operating income 17 0

salaries and general administrative expenses 6, 7, 8 21 3

other operating expenses 9 1 2

total other operating expenses 22 5 operating profit/loss before impairment losses 53 -3

impairment losses on loans and advances 11 7 0

operating profit/loss after impairment losses 46 -3

tax 12 13 -1

profit/loss for the period/Net profit for the year 33 -2

troNdheim 3 mArch 2009

Harald lundh terje Bostad olav s. austmo

(chair)

terje namtvedt trond søraas (Managing Director)

stateMent oF cHanges in equity

ShAre other

ShAre premium pAid-up other totAl

Nok millioN cApitAl reServe ShAre cApitAl equity1 equity

Balance sheet at 1 January 2007 45 0 0 0 45

group contribution received 0 0 0 2 2

Result for the year 0 0 0 -2 -2

Balance Sheet at 31 december 2007 45 0 0 0 45

Result for the year 0 0 0 33 33

capital increase 56 174 0 0 230

Balance Sheet at 31 december 2008 101 174 0 33 308

1 _{the reserve for unrealised gains is included in other Reserves. at 31 December 2008 provision had been made totalling noK 19 million.}

(at 31 December 2007 no provision hade been made).

casH Flow stateMent

Nok millioN 2008 2007

Cash flows from operating activities

interest/commission received & fees received from customers 492 0

interest received on other investments 68 2

interest paid on other loans -490 0

Receipts/disbursements (-) on loans & advances to customers -8 094 0 Receipts/payments(-) on customer deposits and debt 1 4 Receipts/payments(-) on liabilities to credit institutions 2 383 -5

Receipts/payments(-) on securities in issue 6 539 0

other receipts/payments 133 0

payments to suppliers for goods and services -32 0

tax paid 0 0

Net cash flow from operating activities 1 000 1

Cash flows from investing activities

Receipts/payments(-) on balances at credit institutions 0 0

Net cash flow from investing activities 0 0

Cash flows from financing activities

subordinated loan capital receipts 75 0

change in capital (share issues, etc.) 230 0

Net cash flow from financing activities 305 0 Net cash flow for the period 1 305 1

cash and balances at credit institutions at 1 January 47 46

notes

to the

Note 1 – AccouNtiNg policieS etc.

iNformAtioN ABout the compANy

BN Boligkreditt AS is a limited liability company, established and domiciled in

Norway, and with its registered office in Trondheim. The credit institution BN

Boligkreditt is part of the BNbank Group. Within the framework of BN Boligkreditt’s

articles of association and subject to the legislation that is in force at any time, the

Company may carry on all business and perform all services that it is customary or

natural for credit institutions to perform.

BASiS for prepArAtioN of the fiNANciAl StAtemeNtS

BN Boligkreditt presents its annual financial statements for 2008 in compliance with

International Financial Reporting Standards (IFRS), as approved by the EU.

iNterpretAtioNS thAt BecAme effective iN 2008

IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding

Requi-rements and their Interaction provides guidance for assessing the amount of

over-funding that can be recognised as an asset on the balance sheet in compliance with

IAS 19. It also explains how pension assets or pension liabilities can be impacted

by statutory or contractual minimum funding requirements. This interpretation has

no implication for the BNbank Group or for BN Boligkreditt’s accounts since BNbank

has a net pension liability and is not subject to the minimum funding requirement.

the BNBANk group hAS choSeN eArly ApplicAtioN of the

followiNg StANdArdS ANd AmeNdmeNtS

IFRS 8 Operating Segments replaces IAS 14 Segment Reporting and co-ordinates

segment reporting with the requirements in the FASB standard SFAS 131 Disclosures

about Segments of an Enterprise and Related Information. The new standard requires

the adoption of a “management approach” to reporting in which segment information

is presented in the same way as in internal reporting. In addition, the segments

should be reported in a manner consistent with the internal reporting to the chief

operating decision maker.

StANdArdS ANd AmeNdmeNtS to, ANd iNterpretAtioNS of, exiStiNg

StANdArdS thAt Are Not yet effective ANd where the compANy

hAS Not choSeN eArly ApplicAtioN

The following standards and amendments to, and interpretations of, existing

standards have been published, and application will be obligatory for the Group

in their consolidated financial statements for the annual period beginning on

1 January 2009 or later, but without the Group having chosen early application:

IAS 1 (Revised) Presentation of Financial Statements

(effective 1 January 2009). The revised standard will

prohibit the presentation of income and expense

items in changes in equity (i.e. changes in equity

that are not related to the owners) and will require

changes in equity that are not owner-related to be

presented separately from transactions with the

owners. All non-owner changes in equity shall be

presented in an income statement, but entities can

elect to present income and expenses using a single

income statement (“statement of comprehensive

income”) or to adopt a two-statement approach

(a separate “income statement” and “statement of

comprehensive income” showing other (non-owner)

movements in equity). When entities change or

re-classify comparative information, they are also

required to present a changed opening balance for

the comparative periods in addition to the present

requirement to present the closing balance for the

relevant period and comparative periods. The

Com-pany will apply IAS 1 (Revised) from 1 January 2009.

The income statement and statement of compre-

hensive income will probably be presented as a

sin-gle statement of comprehensive income.

IAS 36 (Amended) Impairment of Assets (effective

1 January 2009). The amendment is part of IASB’s

annual improvement project published in May 2008.

When the fair value less the costs to sell (net selling

price) of an asset is calculated using discounted cash

flows, disclosures shall be made equivalent to those

made when calculating the value of the asset in use.

The Company will apply IAS 36 (Amended) and will

if necessary provide the obligatory disclosures at the

testing for write-downs from 1 January 2009.

IAS 19 (Amended) Employee Benefits (effective 1

January 2009). The amendment is part of IASB’s

an-nual improvement project published in May 2008.

- The amendment makes clear that a change to the

costs of a pension plan which results in a change in

whether a pension undertaking is impacted by

fu-ture wage increases is a reduction, while a change to

the costs of a pension plan which changes the

pen-sion attributable to service in prior periods results in

a negative cost to prior periods’ pensionable service

if it results in a reduction in the present value of a

defined benefit pension obligation.

- The definition of the return on pension plan assets

has been amended to establish that the costs of

administering the plan will be deducted from the

calculation of the return on pension plan assets only

to the extent that such costs have been excluded

from the measurement of the defined benefit pension

obligation.

- The difference between short-term and long-term

employee benefits will be based on whether the

benefits fall due within or after 12 months after the

service rendered by the employee.

- IAS 37 Provisions, Contingent Liabilities and

Contingent Assets requires that contingent

liabili-ties be disclosed in a note, and not recognised in the

balance sheet. IAS 19 has been amended for the sake

of consistency.

The Company will apply IAS 19 (Amended) from 1

January 2009.

IAS 1 (Amended) Presentation of Financial Statements

(effective 1 January 2009). The amendment is part

of IASB’s annual improvement project published

in May 2008. The amendment makes clear that there

is no direct connection between the classification

that held for trading purposes (part of the category

of fair value through profit or loss) in accordance

with IAS 39 Financial Instruments: Recognition

and Measurement and categorisation as short-term

or long-term items. The Company will apply IAS 1

(Amended) from 1 January 2009. The change is not

expected to impact the Company’s financial

state-ments.

A number of changes have been introduced in

IFRS 7 Financial Instruments: Disclosures, IAS 8

Accounting Policies, Changes in Accounting

Estimates and Errors, IAS 10 Events after the

Reporting Period, IAS 18 Revenue and IAS 34

Interim Financial Reporting, which are part of

IASB’s annual improvement project published in

May 2008 (not addressed above). As it is unlikely

that these changes will impact the Company’s

financial statements, they have not been analysed in

detail.

compArAtive figureS

All amounts stated in the income statement, balance sheet, cash flow statement and

disclosures are given with one year’s comparative figures. Comparative figures are

prepared on the basis of the same principles as figures for the most recent period.

diScretioNAry meASuremeNtS, eStimAteS ANd ASSumptioNS

In applying the consolidated accounting policies, the Company’s management have

in some areas exercised discretion and based the accounting on estimates and

assumptions regarding future events. There will naturally be an inherent uncertainty

associated with accounting items based on discretionary estimates and assumptions

regarding future events. In exercising discretion and determining assumptions

concerning future events, the management will have regard for the available

information at the balance sheet date, historical experience with similar

valua-tions, and market and third-party assessments of the matters in question. However,

although the management use their best discretion and build on the best available

estimates, in some cases the actual outcome may differ significantly from what the

accounting was based on. Measurements, estimates and assumptions that represent

a significant risk of material change in the capitalised value of assets and liabilities

during the next accounting year, are discussed below.

fAir vAlue of fiNANciAl iNStrumeNtS

The fair value of financial instruments is based partly on assumptions that are not

observable in the market. This applies particularly to setting a relevant premium

for credit risk when determining the fair value of fixed-rate securities in the form of

borrowing, lending and securities issued by others. In such cases, the management

have based their measurements on the information available in the market, combined

with their best discretionary estimates. Information of this kind will include credit

evaluations made by other credit institutions.

write-dowNS oN loANS

Write-downs for impairment losses are made when there is objective evidence that

a loan or group of loans is impaired. The write-down is calculated as the difference

between the capitalised balance sheet value and the net present value of estimated

future cash flows discounted by the effective interest rate.

Impairment losses on loans and advances are based on a review of the Bank’s loan

and guarantee portfolio according to the rules for valuing loans issued by the

Financial Supervisory Authority of Norway. The Bank specifically determines all

impairment losses on loans and guarantees at the end of every quarter.

Non-perfor-ming loans and doubtful commitments are followed up with continuous assessments.

AccouNtiNg policieS

recogNitioN of iNcome ANd expeNditure

Interest earned from variable-rate loans, including

loans with a rolling fixed-rate period, is taken to

income over the term of the loan using the loan’s

effective interest rate. Income from fees and

com-missions is included in the calculation of effective

interest. Interest earned from fixed-rate loans is

recognised as interest income as it is earned, and

changes in the fair value of expected future cash

flows are carried in the income statement through

the line for changes in the value of financial

instru-ments carried at fair value.

Fees, commissions etc., which are not included in

the effective interest rate calculation for borrowings

or loans, are recognised in the income statement as

they are earned as income or accrued as expense.

Premiums/discounts at the early redemption of

fixed-rate loans are recognised in the income

sta-tement as they arise. Premiums/discounts at the

repurchase of bond issues are recognised in the

income statement as they arise.

fiNANciAl iNStrumeNtS –

clASSificAtioN, etc.

On initial recognition on the balance sheet, financial

instruments will be assigned to a class of financial

instruments or assets as described in IAS 39. The

various classes defined in IAS 39 are Financial

instruments at fair value with value changes carried

through profit or loss, Loans and receivables

at amortised cost, Liabilities at amortised cost,

Held-to-maturity investments at amortised cost

and Available-for-sale financial assets with value

changes carried in equity. The two last-mentioned

classes are normally not relevant for BN

Boligkre-ditt.

Within the class Financial instruments at fair value

with value changes carried through profit or loss,

assigning the asset to a class may be obligatory, or

the assignment can be voluntary if other specific

criteria are fulfilled. In BN Boligkreditt, all

deriva-tives are obliged to be measured at fair value with

value changes carried through profit or loss. In

ad-dition, all fixed-rate securities in the bank

portfo-lio will be selected for measurement at fair value

through profit or loss, including own issued

securi-ties and fixed-rate borrowing and lending.

In this context, all securities that have a fixed rate

of interest over the entire term will be reckoned as

fixed-rate securities. Securities that have a fixed

rate on a rolling basis will not be reckoned as

fixed-rate securities. Fixed-fixed-rate securities are selected for

measurement at fair value through profit or loss in

order to avoid what would otherwise be accounting

asymmetry through the related interest rate hedging

instruments being recognised at fair value. In that

fair value recognition avoids the most material parts

of this accounting asymmetry, the criteria for

recog-nising the instruments at fair value are regarded as

fulfilled.

Financial instruments other than those measured at

fair value with value changes carried through profit

or loss, will be recognised at amortised cost using

the effective interest rate method.

All financial instruments are recognised initially

on the trading date of the instrument (and not the

settlement date).

curreNcy

Income and expenditure in foreign currencies is

translated into Norwegian kroner according to the

rate of exchange at the time of the transaction.

Balance sheet items in foreign currencies

are mainly hedged by corresponding items on

the opposite side of the balance sheet or by hedge

transactions. Forward-exchange contracts are used

only as hedges and are entered into in order to

hedge identified items. Assets and liabilities in

foreign currencies are translated into Norwegian

kroner at the banks’ middle rates for currencies on

the balance sheet date. Forward-exchange contracts

are measured at fair value with changes in value

carried through profit or loss.

loANS, impAirmeNt loSSeS ANd

provi-SioNS for impAirmeNt loSSeS meASured

At AmortiSed coSt

The Company capitalises loans on the balance sheet

at cost at the date of establishment. Cost includes

the principal of the loan, as well as fees and any

direct costs.

In subsequent periods, loans are measured at amortised cost, and interest income is

recognised as income according to the effective interest rate method. The effective

interest rate is the rate by which the loan’s cash flows are discounted over the

ex-pected term of the loan at the amortised cost of the loan at the date of establishment.

The effective interest rate method also means that interest on written-down loans is

recognised as income. For such loans, the internal rate of interest at the date of

estab-lishment is adjusted for changes in interest rate up until the date of the write-down.

Interest is recognised as income based on the written-down value of the loan.

Write-downs for impairment losses are made when there is objective evidence that

a loan or a group of loans has become impaired. The write-down is calculated as the

difference between the balance sheet value and the net present value of estimated

future cash flows discounted by the effective interest rate.

In the income statement, the item “Impairment losses on loans and advances” consists

of write-offs, changes in write-downs on loans and provisions for guarantees, as well

as recoveries on previous write-offs.

NoN-performiNg loANS

Non-performing loans are defined as loans where the borrower defaults on the

loan agreement for reasons not due to normal delays or other chance circumstance

affecting the borrower. Loans that are not serviced 90 days after the due date are

in all events considered as non-performing loans. Doubtful commitments where

bankruptcy or debt settlement proceedings have been instituted, debt recovery has

been instituted through the courts, distress has been levied, the debtor’s assets have

been attached, or where there are other circumstances such as a failure of liquidity

or solvency or breach of other clause of the loan agreement with the Bank, are also

defined as non-performing loans. Renegotiated loans are treated as doubtful loans as

they are loans that could otherwise become non-performing loans.

write-offS

Write-offs are impairment losses on loans which are considered final and which

are booked as write-offs. These include losses where the Company has lost its claim

against the debtor as a result of bankruptcy or insolvency, affirmed voluntary

arrangement, unsuccessful execution proceedings, final and enforceable judgment,

or debt relief. This also applies in those cases where the Company has in some other

way stopped enforcement of payment or waived its claim for payment of some of the

loan or the entire loan.

loANS ANd impAirmeNt loSSeS meASured At fAir vAlue

Fixed-rate loans are capitalised on the balance sheet at fair value with changes

in value carried through profit or loss. With measurement at fair value, losses are

expressed through changes in the credit risk premium in the discount rate, and

through adjustments of expected cash flows on which the discount is based.

The objective evidence of a decline in value or

im-pairment, which forms the basis for writing down

the loan to amortised cost, is the same type of event

which forms the basis for changed assessments of

credit risk and expected cash flows at fair value

es-timations in the case of loans measured at fair value.

Impairment losses connected with loans measured

at fair value are presented as part of the fair value

change in loans.

fiNANciAl derivAtiveS

Financial derivatives are obliged to be measured

at fair value with changes in value carried through

profit or loss. Where BN Boligkreditt is concerned,

such financial instruments are interest rate swaps.

BoNdS ANd certificAteS – iN geNerAl

In the case of own bonds and certificates, a

distinc-tion is drawn between acquisidistinc-tion for refinancing

purposes and the purchase/sale of own bonds in

connection with the market promotion included in

the investment portfolio.

BoNdS ANd certificAteS –

clASSificAtioN

Bond loans where the decision to acquire the bonds

is taken on the basis of ordinary lending criteria

are classified as loans. The accounting treatment of

bond loans is thus analogous with that of ordinary

loans. Own bonds and certificates are deducted

from the bond debt and certificate debt respectively.

BoNdS ANd certificAteS – eStimAtioN of

gAiNS/loSSeS

When estimating gains/losses on the sale of bonds

and certificates, the opening value is set as the

weighted average purchase cost of the entire holding

of the bonds/certificates in question.

fiNANciAl iNStrumeNtS meASured At fAir

vAlue

Financial instruments which are sold in an active

market are valued at observed market prices.

Financial instruments which are not sold in an

active market are measured using a valuation

technique. Valuation techniques are based on recent

transactions between independent parties, and

reference to instruments with approximately the

same content or discounted cash flows. As far as

possible, valuations are based on externally

observa-ble parameter values. All loans, borrowings and

deposits which are measured at fair value are valued

on the basis of discounted cash flows.

Where the measurement of financial instruments at

fair value is performed using a valuation technique,

the valuation can potentially give rise to a gain or

a loss on day one if the fair value according to the

valuation model differs from the transaction price.

Such gains and losses cannot be recognised in the

accounts on day one. When measuring loans at fair

value, BN Boligkreditt will calculate a

customer-specific margin on each individual customer

com-mitment, and this margin will be included in all

subsequent valuations, so that what might otherwise

have given risen to a day-one gain or a day-one loss

will be amortised over the entire term of the loan.

In the case of borrowings, the result of the valuation

is checked against the transaction price, and where

there are not immaterial differences a specific

supplement will be calculated in the discount rate

per contract that is added to the discount rate in all

subsequent valuations, so that the day-one gain or

day-one loss is amortised over the entire term of the

security.

fiNANciAl iNStrumeNtS – clASSificAtioN

of Accrued iNtereSt

Accrued interest is shown throughout together with

the value of the related financial instruments, both

for borrowings, loans, and derivatives. In the case

of borrowings and loans, this classification applies

irrespective of whether the instrument is measured

at amortised cost or fair value.

tAx

Tax is accrued as an expense irrespective of the date it is paid. The tax charge thus

reflects the year’s and future tax payable as a result of the year’s activity. Tax which

it is estimated will be assessed on the year’s profit is included in the tax charge for

the year and designated as tax payable.

Deferred tax is calculated on the basis of differences between reported accounting

and taxable profits that will be off-set in the future. Tax-adding and tax-deducting

temporary differences within the same interval of time are valued against one

another. Any net deferred tax asset is stated as an asset on the balance sheet when it

is probable that the tax-deducting temporary differences will be realised.

preSeNtAtioN of divideNd

The proposed distribution of dividend is presented as equity until a final resolution

to distribute the dividend has been made. Distributed dividend is then presented as

provision for dividend until the dividend has been paid.

proviSioNS, coNtiNgeNt ASSetS ANd coNtiNgeNt liABilitieS

A provision is recognised only if it is a present obligation (legal or constructive)

resulting from a past event, it is probable that an outflow of resources from the

enter-prise embodying economic benefits would be required to settle the obligation, and

a reliable estimate can be made of the amount of the obligation. Provisions are

recognised in the amount that expresses the best estimate of the expenditure

required to settle the present obligation at the balance sheet date. Where the effect is

material, account is taken of the time value of money when calculating the amount

of provision.

There is no recognition of contingent assets or contingent liabilities.

cASh

The line for cash includes deposits and balances at credit institutions and central

banks.

SegmeNt reportiNg

Operating segments at group level are reported in the same way as with internal

reporting to the Company’s chief operating decision maker. The Company’s chief

operating decision maker, who is responsible for allocating resources for and

assessing performance in the operating segments, has been identified as the Group

Executive Management.

Note 2. iNtereSt ANd SimilAr iNcome

Nok millioN 2008 2007

Interest from financial instruments carried at amortised cost:

interest and similar income from loans to and balances due from credit institutions 68 2 interest and similar income from loans to and receivables from customers 537 0

total interest from financial instruments carried at amortised cost 605 2

Interest from financial instruments selected for fair value carrying through profit or loss:

interest and similar income from loans to and balances due from credit institutions 0 0 interest and similar income from loans to and receivables from customers 0 0

total interest from financial instruments selected for fair value carrying through profit or loss 0 0 total interest and similar income 605 2

Note 3. iNtereSt expeNSe ANd SimilAr chArgeS

Nok millioN 2008 2007

Interest expense for financial instruments carried at amortised cost:

interest expense and similar charges on liabilities to credit institutions 276 0 interest expense and similar charges on securities issued 155 0 interest expense and similar charges on subordinated loan capital 6 0

total interest expense for financial instruments carried at amortised cost 437 0

Interest expense for financial instruments selected for fair value carrying through profit or loss:

interest expense and similar charges on securities issued 110 0 interest expense and similar charges on subordinated loan capital 0 0

total interest expense for financial instruments selected for fair value carrying through profit or loss 110 0 total interest expense and similar charges 547 0

Note 4. chANge iN vAlue of fiNANciAl iNStrumeNtS cArried At fAir vAlue

Nok millioN 2008 2007

change in value interest rate derivatives carried oblig at fair value through profit or loss 116 0 change in value borrowings selected for fair value carrying through profit or loss -89 0

Note 5. other operAtiNg iNcome, gAiNS ANd loSSeS

Nok millioN 2008 2007

income from payment transfer commissions 0 0

total income and commission from banking services 0 0

commission charges on payment services and loan brokerage 10 0

total commission charges and banking services expenses 10 0 Net commission income/charges 10 0 total other operating income, gains and losses 10 0

Note 6. SAlArieS ANd geNerAl AdmiNiStrAtive expeNSeS

Nok millioN 2008 2007

salaries to employees and fees to elected officers1 _{1 1}

Salaries and other staff costs 1 1

computing costs 1 1

office expenses 19 1

general administrative expenses 20 2 total salaries and general administrative expenses 21 3

number of permanent full-time employees at 31 December 0 0 number of permanent part-time employees at 31 December 3 3

number of temporary staff at 31 December 0 0

number of full-time equivalents (Ftes) at 31 December 3 0,5

average number of Ftes during the year 0,5 0

Ftes including share of joint group functions at 31 December 0,5 0

1 _{the company’s employees have a shared employment relationship between Bnbank asa and Bn Boligkreditt as. salaries are paid by the parent Bank, which charges}

Note 7. relAted pArty diScloSureS

Bn Boligkreditt has entered into transactions with related parties, as described in this note, and in note 8. in addition, there are transactions with controlling companies as the parent company, compare note 8. all transactions with related parties are entered into on commercial terms. apart from the transactions identified in this note and note 8, there are no transactions or outstanding matters of significance with related parties.

remuNerAtioN to the mANAgiNg director, elected officerS ANd Auditor

ReMuneRation to senioR executives

NoN-cASh

remuN. & totAl

performANce- other peNSioN pAy ANd loANS

relAted tAxABle premiumS remuNe- ANd

feeS SAlArieS pAy 1, 2 pAymeNtS pAid rAtioN Security

Senior executives

Managing Director3 _{0 746 688 149 047 14 492 43 191 953 418 1 471 586}

Board of directors

chair 0 1 942 057 1 500 000 155 544 328 299 3 925 900 0 other board members 100 000 1 034 375 542 021 88 541 262 887 2 027 824 700 000 Former chair 0 528 668 671 331 114 800 108 936 1 423 735 0

control committee

chair 20 000 0 0 0 0 20 000 1 932 670

other members 0 0 0 0 0 0 205 977

total 120 000 4 251 788 2 862 399 373 377 743 313 8 350 877 4 310 233

1 _{see note 6 for more details.}

2 _{the note refers to the amount of performance-related pay and bonus paid out in the financial year, accrued in previous years.} 3 _{the Managing Director is also appointed as Director of Finance in Bnbank. the company is charged a share of labor coast.}

the note shows received total salary from the the group.

loans to senior executives are provided on the same terms as other employees.

Fees to appointeD auDitoR

Nok ´000 2008 2007

Fees to appointed Auditor

normal audit fees for statutory audit 127 13

tax advice 3 0

other certification services 480 124

Fees for other assistance 1 _{15 383}

total fees paid to appointed Auditor (including vAt) 625 520

iNcome, expeNSeS, receivABleS ANd commitmeNtS with coNtrolliNg compANieS

Nok millioN 2008 2007

interest income

Bnbank parent company 69 2

other income

Bnbank parent company 0 0

interest expense

Bnbank parent company 283 2

other expense

Bnbank parent company 19 0

receivables at 31 december

Bnbank parent company 1 355 3

liabilities at 31 december

Bnbank parent company 2 637 3

8. loANS to employeeS ANd elected officerS

Nok ´000 2008 2007

loans to employees at 31 December 3 208 0

loans to elected officers at 31 December 0 0

loans to companies where elected officers had controlling influence at 31 December 0 0

interest subsidy on loans to employees1 _{19 136}

1 _{this subsidy cost is not shown in the income statement because the interest income from loans to employees is stated at the actual agreed interest.}

the criteria for making loans to employees, including senior executives, are the same as for ordinary retail customers, i.e. all employees are subject to the same creditworthiness and borrowing amount assessment as other customers. the only difference is that the employees receive a subsidised interest rate on loans up to noK 1 750’ up until 1 august 2008. the interest rate on these loans is set equal to the group’s interest expense on the loan, less 0.5 percentage points. after 1 august 2008 the interest rate on these loans will be set equal to the standard interest rate. loans to elected officers and to companies where elected officers are board members and/or have a controlling influence, are provided on normal customer terms.

loANS to the chAir of the SuperviSory BoArd, chAir of the coNtrol committee,

the BoArd of directorS ANd executive mANAgemeNt

Nok ’000 office/poSitioN priNcipAl

Jan Kaare tapper chair of control committee 1 932

Note 9. other operAtiNg expeNSeS

Nok millioN 2008 2007

Miscellaneous operating expenses 1 2

total other operating expenses 1 2

Note 10. other expeNSeS, gAiNS ANd loSSeS

the company has no other expenses, gains or loss than those stated in note 5.

Note 11. impAirmeNt loSSeS ANd write-dowNS oN loANS cArried At AmortiSed coSt

the various elements included in impairment losses and write-downs on loans are set out in note 1. loans past due more than 3 months are defined as loans that have not been serviced under the loan agreement for 3 months or more. as a first mortgage lender, the company can however gain access to revenue, either through the courts or by some voluntary solution. impairment losses and write-downs on loans described in this note apply to loans carried at amortised cost.

Nok millioN 2008 2007

write-offs in excess of prior-year write-downs 0 0

write-offs on loans without prior write-downs 0 0

Write-downs for the period:

change in group write-downs 7 0

increase in loans with prior-year write-downs 0 0

provisions against loans without prior write-downs 0 0

Decrease in loans with prior-year write-downs 0 0

total change in individual write-downs 0 0

gross impairment losses 7 0

Recoveries on previous write-offs 0 0

impairment losses 7 0

Revenue recognition of interest on written-down loans 0 0

Nok millioN 2008 2007

individual write-downs to cover impairment losses at 1 January 0 0 write-offs covered by prior-year individual write-downs 0 0

Write-downs for the period:

increase in loans with prior-year individual write-downs 0 0 write-down on loans without prior individual write-downs 0 0 Decrease in loans with prior-year individual write-downs 0 0

individual write-downs to cover impairment losses at 31 december 0 0

group write-downs to cover impairment losses at 1 January 0 0 group write-downs for the period to cover impairment losses 7 0

loANS pASt due more thAN 3 moNthS At 31 decemBer

Nok millioN 2008 2007

gross principal 55 0

individual write-downs 0 0

Net principal 55 0

other loANS with iNdividuAl write-dowNS At 31 decemBer

Nok millioN 2008 2007

gross principal 0 0

individual write-downs 0 0

Net principal 0 0

loANS pASt due more thAN 3 moNthS By Sector ANd AS A perceNtAge of loANS

groSS groSS

Nok millioN outStANdiNg 2008 % outStANdiNg 2007 %

retail customers 55 0,01 0 0,00

Note 12. tAx

computAtioN of tAx pAyABle

Nok millioN 2008 2007

profit/loss before tax 46 -3

Permanent differences:

income from interests in associates 0 0

income from interests in group companies 0 0

non-deductible expenses 0 0

non-taxable income 0 0

Changes in temporary differences relating to:

current assets/short-term liabilities -26 0

Fixed assets/long-term liabilities 0 0

Other items recognised in equity

taxable income 19 -3

tax payable (28 %) 5 -1

Nok millioN 2008 2007

tax payable 5 0

change in deferred tax 7 -1

tax charge 13 -1

recoNciliAtioN from NomiNAl to ActuAl tAx rAte (28%)

Nok millioN 2008 2007

profit/loss before tax 46 -3

expected income tax at nominal tax rate (28%) 13 -1

income tax effect of permanent differences 0 0

income tax effect of transitional effect relating to transition to iFRs etc. 0 0

tax charge 13 -1

effective tax rate 28 % 28 %

computAtioN of deferred tAx liABilitieS/deferred tAx ASSetS

Nok millioN 2008 2007

Tax-adding temporary differences:

profit and loss account 0 0

short-term securities investments 26 0

total tax-adding temporary differences 26 0

Tax-deducting temporary differences:

long-term liabilities 0 0

total tax-deducting temporary differences 0 0

tax base for computing deferred tax liabilities (+)/deferred tax assets (-) 26 0

computed deferred tax liabilities (+)/deferred tax assets (-) (28 % of the computation base) 7 0

deferred tAx liABilitieS (+)/deferred tAx ASSetS (-) iN the BAlANce Sheet

Nok millioN 2008 2007

Deferred tax at 1 January 0 0

change in deferred tax in income statement 7 -1

income tax effect of group contribution 6 1

change in deferred tax recognised in equity 0 0

Note 13. cASh ANd receivABleS due from credit iNStitutioNS

Nok millioN 2008 2007

Financial assets carried at amortised

Receivables from sister companies/parent company 1 352 47

total cash and receivables due from credit institutions carried at amortised cost 1 352 47

Financial assets carried at fair value

Receivables from subsidiaries 0 0

cash and receivables due from credit institutions selected for fair value carrying 0 0 total cash and receivables with credit institutions 1 352 47

Note 14. loANS ANd AdvANceS

Nok millioN 2008 2007

Loans carried at amortised cost:

amortised loans 8 131 0

total loans carried at amortised cost 8 131 0

Loans selected for fair value carrying through profit or loss:

amortised loans 0 0

total loans and advances 8 131 0

Note 15. fiNANciAl derivAtiveS (ASSetS)

Nok millioN 2008 2007

interest rate derivatives 212 0

Note 16. liABilitieS to credit iNStitutioNS

All fiNANciAl ASSetS iNcluded here Are cArried At AmortiSed coSt

Nok millioN 2008 2007

liabilities to parent Bank 2 516 0

liabilities to credit institutions 2 516 0

Note 17. deBt SecuritieS iN iSSue

fAce vAlueS

Nok millioN 2008 2007

Face value of bonds 6 554 0

Face value of own bonds 0 0

Net face value of bonds 6 554 0

Net face value of debt securities in issue 6 554 0

recogNiSed vAlueS

Nok millioN 2008 2007

Bonds carried at amortised cost 3 605 0

Bonds selected for fair value carrying 3 176 0

total recognised value of bonds 6 781 0 total recognised value of debt securities in issue 6 781 0

18. SuBordiNAted loAN cApitAl

SuBordiNAted loANS cArried At AmortiSed coSt

2008 2007

recogNiSed Nom. vAlue recogNiSed Nom. vAlue

loAN deSigNAtioN vAlue 31.12.08 (Nokm) vAlue 31.12.07 (Nokm) curreNcy mAturity

subordinated loan 77 75 0 0 noK 04.01.2018

Subordinated loans carried at amortised cost 77 75 0 0

the loan was provided in its entirety by the parent Bank. the interest rate is adjusted every three months, and is set at 3-month niBoR (norwegian interbank offered Rate) plus 1.50 percentage points in arrears for the first 5 years, thereafter plus 2.25 percentage points in arrears for the last 5 years. the loan may be fully or partially redeemed after 5 years. Redemption requires the consent of the Financial supervisory authority of norway. the interest rate on the loan at 31 December 2008 was 9.23 per cent. the loan is included in Bn Boligkreditt’s capital base as supplementary capi-tal (tier 2 capicapi-tal), see note 20.