UNLEASHING THE POTENTIALSpar Nord Roadshow Q2 2011

Lasse Nyby, CEO, lny@sparnord.dkOle Madsen, SVP, oma@sparnord.dk

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KEY MESSAGES • In spite of continued turmoil in Danish banking

sector, our performance is steadily returning to normal levels

• Our asset quality remains among the best in class –and costs are under firm control

• Future funding challenge solved completely through divestment of leasing operation

• In a market with relatively low demand, business growth is to come from increased market share

• Our investment in geographic expansion is beginning to pay off

• Amendments to Danish Bank Package 3 reduces uncertainty around Danish banking sector

• At a P/NAV of 0.5 and a 2012 P/E of 5.0, pricing looks attractive

side 3

SPAR NORD AT A GLANCE

5th largest retail bank in Denmark

285,000 customers – steadily growing– 253,000 household– 32,000 corporate

69 branches– 42 in North Jutland – 27 outside North Jutland– Since 2002, 25 new branches outside North Jutland opened or

acquired, 22 branches in North Jutland closed

Business volume: DKK 81.2 billion– Lending: DKK 41.0 billion– Deposits: DKK 36.3 billion– Guarantees: DKK: DKK 3.9 billion

Three business units– Retail banking– Trading and Markets– [Leasing]

1,475 employees

110,000 shareholders– Spar Nord Foundation: 29 per cent– Institutional & professional: 21 per cent– Private & employees: 50 per cent

Market leader in North Jutland30 percent market-share on personal customers25 percent market-share on corporate customers

spar nord

Herningspar nord

Århus

spar nord

Horsensspar nord

Vejlespar nord

Fredericiaspar nord

Kolding spar nord

Odense spar nord

Næstved

spar nord

Silkeborg

spar nord

København

spar nord

Skive

spar nord

Middelfart

spar nord

Slagelsespar nord

Køge

spar nord

Ikast

spar nord

Jebjergspar nord

Randers

spar nord

Esbjerg

spar nord

Århusspar nord

Helsingør

spar nord

Roskilde

spar nord

Holbæk

spar nord

Nyborgspar nord

Svendborg

Challenger outside North Jutland3 percent nationwide market-shareon personal customers4 percent nationwide market-share on corporate customers

spar nord

Hillerød

side 4

2008-10: THREE YEARS OF TURMOIL AND MODEST ROE- AND BLACK NUMBERS ON THE BOTTOM LINE

Growth in core earnings driven by higher lending margins

Hard times for agriculture and SME visible in impairment charges

DKK700 million contribution to sector bail-outs

But all in all, we have made it through the rough times in good shape

577

1.003 933

236

584454

291 324811331451240

250

500

750

1.000

1.250

2008 2009 2010

Core earnings before impairment ImpairmentsSector Fund Profit before tax

DKKmPeriod of Bank package I - results

3,6 3,23,1

0

5

2008 2009 2010

Pct.

Return on equity

side 5

CREDIT QUALITY AMONG BEST IN CLASS

side 6

HOW CREDIT QUALITY BECAME ONE OF OUR STRENGTHS

Firm focus on household customers and local SMEs

Cautious approach to commercial real-estate– Especially in the Copenhagen market

No customer commitments exceeding 10 per cent of equity (limit set at DKK 400 million)

– Unsecured portion never exceeding DKK 150 million

Centralized monitoring of all new commitments exceeding– DKK 300,000 (corporate)– DKK 100,000 (household)

LOAN BOOK – DIVERSIFIED EXPOSURE

Strong diversification in terms of lines of business and size of commitment

Household customers account for 30 per cent of loan book

Comfortably modest exposure to commercial real-estate

– Low exposure in Copenhagen market

• Bank exposure to agriculture above sector average

Specification of agricultural exposure– Cattle: DKK 1.2 bn. (2.6 per cent.)– Pigs: DKK 1.1 bn. (2.4 per cent.)– Plants: DKK 0.4 bn. (0.9 per cent.)– Others: 0.9 bn. (1.9 per cent.)

side 7

side 8

GREAT FOCUS ON STRATEGIC LIQUIDITY

Excess coverage relative to strategic target of DKK 3.3bn.

State-guaranteed bonds issues totaling DKK 7.2 billion

– Maturing gradually in 2011-13

Actions taken in Q2– 2 non-guaranteed bonds issues totaling

DKK 1.7 billion– Process towards divestment of leasing

activities

0

2

4

6

8

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2009 2010 2011

Strategic targetDKKb

1.491

992

3.727

2.519

831.000

20220

2.000

4.000

6.000

2011 2012 2013 2014 2015

Senior loans Step-up notes Issued bonds

DKKm Senior loans maturity

DKKbQ4

2010Q1

2011Q2

2011Bank deposits 30,4 30,6 30,1Seniorfunding 9,4 9,3 10,9Core capital and sub. capital 6,9 6,9 7,0Stable long term funding 46,6 46,8 48,0Bank loans 38,4 38,5 40,4

Maturity < 1 year -2,3 -4,2 -4,2

Strategic target (>0) 5,9 4,1 3,3

0

5

10

15

2007 2008 2009 2010 YTD2011

Core capital ratio Hybrid capital

Tier 1 ratioPct.

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CAPITAL ADEQUACY – CURRENT STATE-OF-AFFAIRS AND FUTURE CONSIDERATIONS

Pct. 2009 2010Q1

2011Q2

2011Core capital ratio 9,3 9,3 9,8 9,7Hybrid capital 3,9 3,8 3,8 3,8Tier 1 ratio 13,2 13,2 13,6 13,6Subordinated debt 2,6 2,0 2,0 2,0Deductions -1,7 -1,8 -1,8 -1,7Solvency ratio 14,2 13,4 13,9 13,8

Solvency ratio at 13.8 – up from 13.4 at year-end

– Growth in core capital– Small reduction in RWA

Individual solvency requirement of 8.5 per cent

Excess coverage of DKK 2.3bn– Capital requirement DKK 3,7bn– Core capital after deductions DKK

6.0bn

Core Tier 1 below peers– Calculated using Basel II standard

method– Hybrid core capital vs. core capital

Capital ratioscompared to peers

9,7

13,6 13,8

12,8

14,5

16,0

12,5

14,1

15,1

0

5

10

15

20

Corecapitalratio

Tier 1ratio

Solvencyratio

Pct.

Spar Nord Bank Jyske Bank Sydbank

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DIVESTMENT OF LEASING ACTIVITIES TO SOLVE FUTURE FUNDING CHALLANGE AND STRENGTHEN CORE CAPITAL

Finans Nord has been a success story– Dominant position in several areas of Danish leasing market– Market-leader in operational car leasing (Easyfleet)– Growth in Sweden (Finans Nord AB)– Robust earnings for 20 years

Depressed funding market is threatening Spar Nord’s business case– Leasing is marginal funding – and funding has become scarce and expensive– Spar Nord is no longer the right owner for a leasing company with further growth potential

Expected effects of divestment– Improvement of strategic liquidity by approx DKK 7 billion – corresponding to the size of Spar

Nord’s state-guaranteed funding– Markedly reduced need for senior funding– Improvement of core tier 1 by approx 1.8 pp

2011: MOVING IN THE RIGHT DIRECTION ON MAJOR KPIs

0

200

400

600

800

1.000

YTD 07 YTD 08 YTD 09 YTD 10 YTD 11

DKKm Profit before tax

0

200

400

600

800

1.000

YTD 07 YTD 08 YTD 09 YTD 10 YTD 11

DKKm Costs ex. Depriciations from operational leasing

0

5

10

15

20

25

30

YTD 07 YTD 08 YTD 09 YTD 10 YTD 11

Pct. ROE before tax

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

YTD 07 YTD 08 YTD 09 YTD 10 YTD 11

Pct. Impairment in pct.

side 11

…IN A CHALLENGING ENVIRONMENT

side 12

Bankruptcies

UnemploymentBNP growth

Foreclosures

Sources: Spar Nord

-8,0

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

99 00 01 02 03 04 05 06 07 08 09 10 11 12

BNP, pct. y-y

Growth

2010: 1,7%2011: 1,2%2012: 1,4%

Spar Nord estimate

Trendgrowth: 1,0%!

0

100

200

300

400

500

600

700

93 95 97 99 01 03 05 07 09 11

Bankrupcies

Bankrupcies

0

200

400

600

800

1000

1200

1400

1600

93 96 99 02 05 08 11

Foreclosures

Foreclosures

0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12

Net unemployed Gross unemployed

PercentJobtraining!

INVESTMENT IN NATIONWIDE PRESENCE IS BEGINNING TO PAY OFF

Branches Volume PPP

2000

2006

2011

North Jutland Outside North Jutland

side 13

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THE LOCAL STRATEGY – OUR APPROACH TO RETAIL BANKING

We focus on core business

– Household customers and local SMEs– No large single exposures

We aim to combine the qualities of a local bank with the strengths of a nationwide chain

– Franchise philosophy – local decision making and “ownership”– Centralized credit granting and monitoring– Strong central support organisation– A nationwide local bank

We are genuinely involved in our customers’ lives and the life of the local area

– We let our local people front the bank in the local area (PR, marketing, networking etc.)– All local managers and key staff live in the local area (a strong local network is a key parameter

in our recruiting)– Strong support from the Spar Nord Foundation – money is put to work locally

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WE GROW IN NEW AREAS BECAUSE CUSTOMERS LIKE OUR DIFFERENT APROACH TO RETAIL BANKING

Among large banks, our customer satisfaction and loyalty among household customers is best-in-class

– Many Danes tend to prefer small and local enterprises – and retail banking is all about personal relations

– We have had very little bad publicity – and as a result our image has been relatively strengthened during the rough years

Corporate customers (SME segment) rate Spar Nord top – overall and in several specific categories

– Level of professional competence– Quality of personal relation– Decision speed

Great potential for growing – if we make more potential customers aware of our existence and qualities

Sources: Ritzau Economy, CEM institute - Aalund Research

CUSTOMER INFLUX GAINING MOMENTUM THANKS TO EXPANSION AND INCREASED VISIBILITY IN THE MARKET

Net customer intake

49475 -25

1225

3209

4409

5583

-1000

0

1000

2000

3000

4000

5000

6000

7000

Jan Feb Mar Apr May Jun Jul

2011

Net customer intake (Private)

Net customer intake (Corporate)

Net customer intake (Accumulated)

150

200

250

300

01 02 03 04 05 06 07 08 09 10 YTD 11

Thousands Number of customers

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TIME FOR CUSTOMERS – OUR STRATEGY PLAN FOR 2011-13

More customers – more business

– Capitalizing on our investment in geographical expansion– 10,000 new household customers and 1,000 new corporate customers net per year– 5 per cent annual growth in average business volume per customer

Sharper focus – stronger chain

– Increasing advisors’ customer time to 55 per cent– Investment in IT systems facilitating customer service– Increasing attention to economics of scale in branch networks

Better bank – better bottom line

– Cost/Income Ratio of 0.55– Impairment percentage in top third of peer group– Basis for repaying State funded hybrid core capital

side 18side 18

H1 2011: PTP OF DKK191 MILLIONS AND ROE OF 8.7 PER CENT

SPAR NORD BANK Realized Realized

DKKm YTD 2010 YTD 2011

Net interest income 804 796 -1Netfees, charges and commissions 250 252 1Market-value adjustments 160 98 -39Other income 59 62 5Core income Ex. operational leasing 1.272 1.208 -5Earnings from operational leasing 33 69 108Core income 1.305 1.277 -2Staff costs 505 494 -2Costs ex. depriciations from operational leasing 826 806 -3Depriciations from operational leasing 26 55 110Total costs 853 861 1Core earnings before impairment 452 416 -8Impairments of loans and advances, etc. 230 191 -17Core earnings 223 225 1Investment income -9 3 127Profit/loss on ordinary activities 213 227 7Sector Fund -163 -36 78Profit before tax 50 191 282

Changein pct.

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NET INTEREST INCOME SUSTAINED IN SPITE OF EXTERNAL CHALLENGES

Net interest income of DKK 796 million in H1(H1 2010: DKK 803 million)

Positive impact from– Net customer intake– Margin increases

Negative impact from– Increase in funding costs– Lower interest income from financial

instruments

Two interest hikes in July– Expected effect: DKK 8 million per month

38,8 39,0 38,4 38,5 40,4

0

200

400

600

800

Q22010

Q32010

Q42010

Q12011

Q22011

0

10

20

30

40

50

Net interest income Bank loans

Net interest income and loans volumeDKKm DKKb

Q308 Q 08 Q 09 Q 09 Q309 Q 09 Q 0 Q 0 Q3 0 Q 0 Q Q

Interest margin Interest margin (loans)

Rentemarginal

3,83 3,87 3,803,95 4,04

4,28 4,18 4,09

3,61 3,78 3,78 3,94 3,94 3,95 3,82 3,60

Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211

å

2

1

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

Q

pct. Interest margin

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NET FEE INCOME KEPT UP BY ASSET MANAGEMENT AND MORTGAGE LENDING

• Net fee income of DKK 252 m (H110: DKK 249 m)

• Growth in asset management and mortgage-credit fees

• Lower guarantee commissions due to fewer land registration applications

• Decrease from Q1 to Q2 attributable to insurance sales commission being booked in Q1

0

50

100

150

200

Q2 10 Q3 10 Q4 10 Q1 11 Q2 11

Netfees, charges and commissionsDKKmQ1/Q2: -11 pct.

0

10

20

30

40

50

60

Q210

Q310

Q410

Q111

Q211

YTD10

YTD11

Assets managementQ1/Q2: -6 pct.

0

20

40

60

80

100

Q210

Q310

Q410

Q111

Q211

YTD10

YTD11

Other feesQ1/Q2: -38

0

20

40

60

80

100

Q210

Q310

Q410

Q111

Q211

YTD10

YTD11

Loan transaction feesQ1/Q2: 7 pct.

DKKm

0

10

20

30

40

50

60

Q210

Q310

Q410

Q111

Q211

YTD10

YTD11

DKKm

Securities trading and custody accounts

Q1/Q2: 16 pct.

LOWER MARKET-VALUE ADJUSTMENTS IN A CHALLENGING MARKET

0

25

50

75

100

Q22010

Q32010

Q42010

Q12011

Q22011

Market-value adjustmentsDKKm

DKKmYTD

2010YTD

2011 Change

Market-valued adjustments in Trading, Financial Markets & The International Division 65 38 -27Tangible assets 40 18 -22Currency trade and -agio 43 32 -11Total 147 88 -60

Market-value adjustments of DKK 98 million (H110: DKK 160 million)

Lower Market-value adjustments in Trading/Markets Division

– Unfavorable development in spreads– Exposure to higher interest rates

Lower market-value adjustments on sector holdings

– 2010 was unusually high

Slightly lower earnings on customers’ hedging of interest risk and FX risk

side 21

Bonds shown by rating (DKKm) *Q1

2011Q2

2011AAA 7.055 6.174AA 3.864 4.694A 1.045 1.379BBB 2 4B 130 129CC 6 5Not rated 11 1Bonds 12.113 12.386* Incl. spots and forwards

Receivables from credit institutions shown by rating (DKKm)

Q12011

Q22011

AAA 1.013 2.365AA 583 1.144A 957 674BBB 1 4BBNot rated 365 467Not allocated 29 14Receivables from credit institutions 2.948 4.668

AAA50%

AA38%

A11%

B1%

Q22011

AAA51%

A14%

AA25%

Not rated10%

Not allocated0%

Q22011

99 percent of bonds portfolio is attributable to issuers rated A or higher No bonds exposure to Portugal, Italy, Ireland, Greece or Spain

FINANCIAL CREDIT RISK MAINTAINED AT LOW LEVEL

side 22

COST REDUCTION PROCEEDS AS PLANNED

* Costs ex. operational leasing

0,630,55

0,700,65

0,70

0

200

400

600

Q22010

Q32010

Q42010

Q12011

Q22011

0,0

0,9Costs* and Cost/Income ratioDKKm

Operating expenses(DKKm)

YTD2010

YTD2011 Change

Staff-related expenses 18 18 0Travel expenses 8 8 0Marketing costs 40 49 10IT expenses 124 120 -4Cost of premises 41 39 -2Other administrative expenses 61 42 -19Operating expenses 292 277 -15

Costs(DKKm) YTD 10 YTD 11

Change in pct.

Staff costs 505 494 -2Operating expenses 292 277 -5Depriciations from other assets 30 35 18

Costs ex. depriciations from operational leasing 826 806 -3

Depriciations from operational leasing 26 55 110

Total costs 853 861 1

Total costs reduced by 3 percent (q/q)

Staff costs down 2 percent– Payroll in local banks and support units

reduced by 40 FTE (YoY)

Operating expenses down 5 percent– Reductions on most cost items– Increased marketing spending

Goals– Zero cost growth in 2011– Cost/Income Ratio of 0.55 (long-term)

side 23

IMPAIRMENT PERCENTAGE DOWN TO 0.83 – GUIDANCE LOWERED

0,91 0,85 1,04 0,83 0,85

0

50

100

150

200

250

300

Q22010

Q32010

Q42010

Q12011

Q22011

-8,00

-1,40

5,20

Impairment and impairment in pct.DKKm

Impairment charges of DKK 191 million YTD – DKK 39 million (17 per cent.) lower than H1 10

Impairment percentage on customer segments– Household: 0.3 p.a.– Corporate incl. agriculture: 1.1 p.a.– Agriculture stand alone: 2.7 p.a.

Improved market conditions for milk producers and plant producers – challenges continue for pig producers

No new areas of credit quality concern

Full-year impairment percentage now expected in the range 0.75-1.0

side 24

side 25

AMENDMENTS TO BANK PACKAGE 3 EXPECTED TO REDUCE UNCERTAINTY AROUND DANISH BANKING SECTOR

• Aim to facilitate sector consolidation– Minimizes risk of defaults and senior debt haircuts

• Cap on sector contribution to depositor guarantee fund– Reduces uncertainty around the financial costs of future collapses

• Official list of systemically important banks– Hopefully, Spar Nord is on the list due to market-share and importance as wholesale provider to

smaller savings banks

Danish National Bank has expanded the collateral basis for banks with sound asset quality

– Not a viable long-term option, but useful if divestment of Finans Nord wears out– Implemented per 1 October 2011

side 26side 26

KEY MESSAGES • In spite of continued turmoil in Danish banking

sector, our performance is steadily returning to normal levels

• Our asset quality remains among the best in class –and costs are under firm control

• Future funding challenge solved completely through divestment of leasing operation

• In a market with relatively low demand, business growth is to come from increased market share

• Our investment in geographic expansion is beginning to pay off

• Amendments to Danish Bank Package 3 reduces uncertainty around Danish banking sector

side 27

QUESTIONS?