Note 1 - Accounting principles
SpareBank 1 SMN prepares and presents its quarterly accounts in compliance with the Stock Exchange Regulations, Stock Exchange Rules and International Financial Reporting Standards (IFRS), including IAS 34, Interim Financial Reporting. As from 2007 the company accounts are also prepared and presented under IFRS. This entails that investments in associates and subsidiaries are recognised using the cost method. For this reason results recorded by associates and subsidiaries are not included in the parent bank's accounts. As from the first quarter of 2012, return on treasury bills is to be presented as net interest income instead of, as previously, capital gains or losses. Historical data have been correspondingly restated.
The quarterly accounts do not include all the information required in a complete set of annual financial statements and should be read in conjunction with the annual accounts for 2012. Further, the Group has in this quarterly report used the same accounting principles and calculation methods as in the latest annual report and accounts, except:
IAS 1 Presentation of Financial Statements
As from the first quarter the statement of other income and expenses displays items that are reclassified to profit/loss and items not reclassified to profit/loss separately from each other.
IAS 19R Benefits to employees
As from 1 January 2013 the Group has applied IAS 19R Benefits to Employees and changed the basis for calculation of pension liabilities and pension costs. The Group has previously utilised the corridor approach to account for unamortised estimate deviations. The corridor approach is no longer permitted, and all estimate deviations shall according to IAS 19R be entered in the statement on other income and expenses. Previously return on pension assets was calculated by applying long-term expected return on pension assets. As a result of the application of IAS 19R the period’s net interest expense is calculated by applying the discount rate for the liability at the start of the period to the net liability. Net interest cost consists therefore of interest on the liability and return on the assets, both calculated using the discount rate. Changes in the net pension liability as a result of premium payments and disbursement of pensions are taken into account. The difference between actual return on pension assets and the booked return is accounted for continuously against other income and expenses.
The corridor as of 1 January 2012 is calculated anew in accordance with the principles set out in IAS 19R by, in part, setting the return on assets for 2012 equal to the discount rate.
| Implementation has had the following balance sheet effects (Group): | |||
| (NOKm) | Original balance sheet value | Change on implementation | New balance sheet value |
| First quarter 2012 (1.1.2012) | |||
| Overfunded defined benefit pension plan (other assets) | 35 | -35 | 0 |
| Underfunded defined benefit pension plan (other liabilities) | 0 | 77 | 77 |
| Deferred tax | 10 | -31 | -21 |
| Other equity capital | 1,268 | -81 | 1,187 |
| 31 December 2012 | |||
| Overfunded defined benefit pension plan (other assets) | 15 | 57 | 72 |
| Underfunded defined benefit pension plan (other liabilities) | 0 | 0 | 0 |
| Deferred tax | 4 | 16 | 20 |
| Other equity capital | 1,303 | 41 | 1,343 |
| First quarter 2013 (impl. 1.1.13) | |||
| Overfunded defined benefit pension plan (other assets) | 15 | 57 | 72 |
| Underfunded defined benefit pension plan (other liabilities) | 0 | 0 | 0 |
| Deferred tax | 4 | 16 | 20 |
| Other equity capital *) | 1,303 | 41 | 1,343 |
| *) Entered in the accounts as a strengthening of the Group’s equity capital as of first quarter 2013, NOK 57m minus deferred tax NOK 16m. | |||
The balance sheet has been reworked as shown above.
Under the previous principle, the pension cost in 2012 amounted to NOK 32m. Due to the change in the principle for dealing with unamortised estimate deviations and calculating net interest expense, the booked pension cost increased to NOK 37m. Comparatives for profits/loss have not been reworked since the change is considered to be insignificant. Capital adequacy, EC-holder ratio (EC-holders’ share of total equity) and other key figures and ratios have not been reworked for previous periods.
IFRS 7 Offsetting of financial instruments
The Group has implemented the change in IFRS 7 entailing an extended note disclosure requirement relating to, respectively, netting of financial instruments and set-off arrangements related to financial instruments. See note 14.
IFRS 13 Fair value measurement
The Group has implemented IFRS 13 on the fair value measurement of financial instruments. The note disclosures build largely on corresponding notes in the last annual accounts. See note 15.
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