Banco Primus Branch Office Hungary Statistical number: 22532404

Transcription

22532404-6419-226-01
Statistical number
Cg. 01-17-000490
Company Registration number
Banco Primus Branch Office Hungary
1134 Budapest Váci út 33
Annual Report
31.12.2014
4th. May 2015.
Banco Primus Fióktelep
Magyarország
Statistical number: 22532404-6419-226-01
Company Registration number: Cg. 01-17-000490
BALANCE SHEET
Assets
Number
a
1
2
Title of item
b
Liquid assets
Government securities
a) Negotiable
b) Investment
2/A
Evaluation difference of government securities
b) Other receivables from financial services
ba) Within one year of maturity
including: - to affiliated undertakings
- to other business associations in participation
- to MNB
- to the clearing house
bb) over a year of maturity
- to MNB
c) from investment services
3/A
4
Evaluation difference of receivables from credit institutions
Receivables form Clients
a) from financial services
aa) Within one year of maturity
ab) over a year of maturity
b) from investment services,
ba) Receivables from Exchange investment services activity
bb) Receivables from investment service activity over-the-counter
bc) Receivables from clients deriving from investment service activity
bd) Receivables from organisations performing clearing house activity
be) Receivables deriving from other investment services
4/A
5
Evaluation difference of receivables from clients
Debt securities, including fix-income securities as well
a) securities issued by local governments and other administrative bodies (not including government securities)
aa) Negotiable
ab) investment
b) Securities issued by other issuers
ba) Negotiable
including: - Issued by affiliated undertakings
- Issued by other business associations in participation
- Repurchased own issue
bb) investment
5/A
6
Evaluation difference of debt securities
Stocks and other variable-yield securities
a) Stocks and shareholding for negotiation
b) variable-yield securities
ba) Negotiable
bb) investment
31.12.2013
c
136 412
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
5 407 344
5 407 344
2 369 256
0
0
3 038 088
0
0
0
0
0
0
0
0
0
0
0
0
31.12.2014
d
106 127
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2 991 999
2 991 999
1 478 275
0
0
1 513 724
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
..............................................................
4th. May 2015
Banco Primus Fióktelep Magyarország
BALANCE SHEET
Assets
Number
Title of item
a
b
6/A
Evaluation difference of stocks and other variable-yield securities
7
Stocks and shareholding for investment
a) Stocks and shareholding for investment
including: Shareholding in credit institutions
b) Value adjustment of stocks and shareholding for investment
including: - Shareholding in credit institutions
7/A
8
Evaluation difference of stocks and shareholding for investment
Stocks and shareholding in affiliated undertakings
a) Stocks and shareholding for investment
b) Value adjustment of stocks and shareholding for investment
9
Intangible assets
a) intangible assets
b) Value adjustment of intangible assets
10
Tangible assets
a) Tangible assets for financial and investment service purposes
aa) land and buildings
ab) Technical equipment, machinery, vehicles
ac) Investments
ad) Advances on investments
b) Tangible assets for non-direct financial and investment service purposes
ba) land and buildings
bb) Technical equipment, machinery, vehicles
bc) Investments
bd) Advances on investments
c) Value adjustment of tangible assets
31.12.2013
c
0
0
0
0
0
0
0
0
0
0
0
0
82 120
82 120
0
30 977
30 977
18 186
12 791
0
0
0
0
0
0
0
0
0
31.12.2014
d
0
0
0
0
0
0
0
0
0
0
0
0
58 248
58 248
0
22 353
22 353
14 392
7 961
0
0
0
0
0
0
0
0
0
11
Own shares
12
34 056
29 560
a) Stocks
10
1
b) other receivables
34 046
29 559
including: - receivables from affiliated undertakings
0
0
- receivables from other business associations in participation
0
0
Evaluation difference of other receivables
0
0
Positive evaluation difference of derivative transactions
0
0
Accrued and deferred assets
377 553
184 918
a) Accrued income
37 523
19 034
b) Accrued costs and expenses
1 470
1 917
c) deferred expenses
338 560
163 967
TOTAL ASSETS
6 068 462
3 393 205
including: - CURRENT ASSETS [1. + 2.a)+- 3.a)+3.ba)+ 3.c)+4.aa)+4.b)+5.aa)+5.ha)+6.a)+6.ha);- 11.+12.+ a 2/A., 3/A.,5 4/A.,
955 365
5/A., 6/A., 3 312 604
12/A
12/B
13
Other assets
12/A AND 12/b related to the above subtitles]
- FIXED ASSETS
113 097
80 601
[values of 2.b)+3.hb)+4.ab)+5.aby- 5.bb)- 6.bb)=7.- - 8.+9.+ 10. a 2/A.,
3/A., 4/A., 5/A., 6/A., 7/A., 12/A. and 12/B related to the above subtitles]
related to the subtitles]
..............................................................
4th. May 2015
BALANCE SHEET
Liabilities
Number
Title of item
31.12.2013
31.12.2014
a
b
c
d
1
Liabilities to credit institutions
a) on demand
b) Liabilities due to financial services locked up for fixed period
- to MNB
- to MNB
c) from investment services
1/A
2
Evaluation difference of the liabilities to credit institutions
Liabilities to Clients
a) savings deposits
aa) on demand
ab) within one year of maturity
ac) over a year of maturity
b) Other liabilities from financial services
ba) on demand
bb) within one year of maturity
bc) over a year of maturity
c) from investment servicesl
ca) Liabilities from Exchange investment services activity
cb) Liabilities from investment services activity over the counter
cc) Liabilities to clients deriving from investment service activity
cd) Liabilities to organisations performing clearing house activity
ce) Liabilities due to other investment services
2/A
3
Evaluation difference of the liabilities to clients
Liabilities due to issue of securities
a) issued bonds
aa) within one year of maturity
ab) over a year of maturity
b) Issued other debt securities
c) Papers managed as securities in terms of accounting, but debt instruments not qualified as security according
to the Act on the capital market
ca) within one year of maturity
cb) over a year of maturity
5 137 459
0
5 137 459
5 092 923
5 092 923
0
0
0
44 536
44 536
0
0
0
0
0
0
0
0
6 878
0
0
0
0
6 878
2 508 054
0
2 508 054
1 213 105
1 213 105
0
0
0
1 294 949
1 294 949
0
0
0
0
0
0
0
0
1 575
0
0
0
0
1 575
0
0
0
6 878
0
0
0
0
0
0
0
0
0
1 575
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
..............................................................
4th. May 2015
BALANCE SHEET
Liabilities
Number
a
4
Title of item
b
Other liabilities
a) over a year of maturity
- other financial contribution of members in case of credit institutions operating in form of cooperative bank
b) over a year of maturity
4/A
5
Negative evaluation difference of derivative transactions
Accrued expenses
a) deferred income
b) deferred costs and expenses
c) deferred income
6
Provisions
a) provisions for pension and severance payment
b) Creation of risk provisions for pending and sure (future) liabilities
c) General risk provisions
d) other provisions
7
Subordinated liabilities
a) subordinated loan capital
b) Other financial contributions of members in case of credit institutions operating in form of cooperative bank
c) Other subordinated liabilities
8
Subscribed capital
including: - Ownership shares repurchased at face value
9
10
subscribed capital unpaid (-)
Capital reserve
a) Difference of the face value and the value at issue of stocks and shares (premium)
b) other
11
12
13
14
General reserve
Accumulated Profit reserve(±)
Tied-up reserve
Valuation reserve
a) Evaluation reserve of value adjustment
b) Evaluation reserve of real evaluation
15
Profit or loss of the year (±) TOTAL LIABILITIES
Total liabilities
31.12.2013
c
73 401
73 401
0
0
0
0
0
0
0
370 781
0
98 815
271 966
58 309
0
6 479
51 830
0
0
0
0
0
0
0
0
0
62 500
0
0
0
0
0
0
83 611
0
0
0
0
275 523
6 068 462
31.12.2014
d
77 341
77 341
0
0
0
0
0
0
0
188 018
0
51 212
136 806
539 367
0
512 174
27 193
0
0
0
0
0
0
0
0
0
62 500
0
0
0
0
0
0
359 134
0
0
0
0
-342 784
3 393 205
5 173 202
44 536
421 634
1 292 021
1 294 949
78 850
including: - SHORT-TERM LIABILITIES
[1 .a)+ l .ha)± l .c)+ l iA.+2.aa)+2.ab)- - 2.ha)- 2.bb)+2 .c)+21A.+3 .aa)+3.ha)T3 . ca)+4. a)+4/A. ]
- LONG-TERM LIABILITIES [1.bb) F 2.ac)- - 2.bc)- + 3- ab) i 3.bb)- + 3.cb) : 4.b) . 7.]
- EQUITY (8.- 9.+ 1 Q.+11.- f- 12.+ l 3.- F- 14.+ l 5. )
..............................................................
4th. May 2015
PROFIT AND LOSS STATEMENT
Number
Title
01.01.201331.12.2013
01.01.201431.12.2014
a
1
b
c
d
1 671 927
951 955
a) Received (due) interests on fixed income debt securities
0
0
including: - from affiliated undertakings
0
0
- from other business associations in participation
0
0
1 671 927
951 955
0
0
0
0
0
0
Paid interests and similar expenses
185 974
65 496
185 971
60 329
0
0
Received interests and similar income
b) Other received interests and similar income
2
Interest difference (1-2)
3
4
5
6
1 485 953
886 459
Income from securities
a) Income from transferable shares and profit-sharing (dividend, share)
0
0
0
0
b) Income from share in affiliated undertaking (dividend, share)
0
0
c) Income from other share (dividends and profit-sharing)
0
0
Received (due) commissions and fees
84 872
57 167
a) From the income on other financial services
84 872
57 167
0
0
b) from the income of investment services (except for the income of the commercial activity)
0
0
0
0
0
0
0
0
Paid (payable) commissions and fee expenses
414 655
277 051
a) From the expense on other financial services
414 655
277 051
0
0
0
0
b) from the expense of investment services (except for the expense of the commercial activity)
0
0
0
0
0
0
33 654
29 145
562 439
433 627
0
0
0
0
Net profit on financial transactions [6.a)-6.b)+6.c)-6.d)]
a) From the income on other financial services
- evaluation difference
0
0
528 785
404 482
0
0
- evaluation difference to other business associations in participation
0
0
c) from the income of investment services (income of the commercial activity)
0
0
0
0
0
0
- the reversal of the loss in value of the transferable securities
0
0
0
0
d) from the expenses of investment services (expense of the commercial activity)
0
0
0
0
0
0
- the loss in value of the transferable securities
0
0
0
0
b) From the expenses on other financial services
4th. May 2015
.....................................................................
PROFIT AND LOSS STATEMENT
Number
Title
a
7
b
01.01.201331.12.2013
c
Other income from business activity
129 621
a) Income from non-financial and investment services
0
0
0
0
0
0
237 956
129 621
0
0
0
0
- reversal of the loss in value on stocks
0
0
General administrative expenses
523 885
387 103
a) Staff costs
175 607
125 021
aa) Wages and salaries
124 471
89 320
12 135
7 056
including: - social security expenses
0
0
- Costs related to pension
0
0
ac) Contributions on wages and salaries
39 001
28 645
including: - social security expenses
36 234
25 409
- Costs related to pension
33 774
24 050
348 278
262 082
45 634
39 032
416 095
737 353
a) Expenses of non-financial and investment services
0
0
0
0
0
0
ab) Other payments to staff
b) other administrative expenses (material-type costs)
9
10
Depreciation
Other expenses from business activity
b) other expenses
11
12
416 095
737 353
0
0
0
0
- loss in value of stocks
0
0
Loss in value on receivables, and creation of risk provisions on pending and sure (future)
liabilities
325 993
72 489
a) Loss in value on receivables
317 343
72 489
b) risk provisions for pending and sure (future) liabilities
Reversal of the loss in value on receivables, and the utilisation of risk provisions on
pending and sure (future) liabilities
8 650
0
167410
52 411
a) Reversal of the loss in value on receivables
165239
52 411
2171
0
The difference of the creation and the utilisation of the general risk provisions
Loss in value on investment and debt securities, on shares and profit-sharing in affiliated
and other participating undertakings
Reversal of the loss in value on investment and debt securities, on shares and profitsharing in affiliated and other participating undertakings
-10 461
-24 637
0
0
0
0
PROFIT ON ORDINARY (BUSINESS) ACTIVITIES (1-14)
294 044
-333 588
including: - PROFIT ON FINANCIAL AND INVESTMENT SERVICES
0
0
[1.-2.+3.+4.-5.+6.+7.b)-8.-9.-10.b)-11.+12.-13.+14.]
0
0
PROFIT ON NON-FINANCIAL AND INVESTMENT SERVICES
0
0
[7.a)-10.a)]
0
0
Extraordinary income
0
0
Extraordinary expenses
0
0
Extraordinary Profit(16-17)
0
0
294 044
-333 588
18521
9 196
275 523
-342 784
General reserves creation and utilisation (+)
0
0
Profit reserves used for dividends and profit-sharing
0
0
Dividends and profit-sharing approved
0
0
0
0
0
275 523
0
-342 784
b) Utilisation of risk provisions on pending and sure (future) liabilities
12/A
13
14
15
16
17
18
19
20
21
22
23
24
25
4th. May 2015
d
237 956
b) other income
8
01.01.201431.12.2014
PROFIT BEFORE TAXES ((+15+18)
Tax payable
PROFIT AFTER TAXES (+19-20)
PROFIT OR LOSS OF THE YEAR (+ 21+22+23-24)
.....................................................................
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
1
THE INTRODUCTION OF THE COMPANY
BANCO PRIMUS BRANCH OFFICE HUNGARY (hereinafter: 'Branch Office') was founded by Banco
Primus S.A. (headquarters: Portugal, Oeiras, Paco de Arcos, Arcos da Quinta, do Quinta, No. 4. Edifício
D. Joao I, 1 A; registration number: 506178129) on 26 September, 2007. The Branch Office was
registered under the registration number Cg. 01-17-000490 by the Court of Registration on 5 December,
2007.
The headquarters of the Branch Office: 1134 Budapest, Váci út 33.
The taxation number of the Branch Office: 22532404-1-41
The Branch Office was founded with an initial investment of 62.500.000HUF. On December 2010 and
April 2011, Banco Primus, S.A. raised the investment in the amount of 1.423.884.755 HUF and
393.428.476 HUF, respectively. These investment increases were realized to compensate the negative
retaining earnings generated in previous years.
The sphere of business activity of the Branch Office is as follows:



6512’03 Other monetary intermediation (main activity)
6521’03 Financial leasing
6720’03 Auxiliary activity to insurance and pension funds
As at 31, December 2014, the executive officers of the Branch Office authorised to sign jointly
are as follows:
 Name:
Hugo Miguel Soares Carvalho da Silva
Mother’s name: Ana Bela Rosa Soares
Address:
Portugal, 1990 Lisbon, Rua do Congo Lote 4.53.02A 2 Esquerdo
 Name:
Gilles Joseph Scotto di Suoccio
Mother’s name: Jacqueline Bianchi
Address:
Portugal, 1350 Lisbon, Rua da Borja 133 Rdc C Bloco C
 Name:
Laurent Michel Lebreton
Mother’s name: Liliane Leverrier
Address:
Portugal, 1200 Lisbon, Rua da Vinha N25 RdC Dt
As of 2008 the person in charge of accounting tasks is Katalin Balázs (registration number at the Ministry of
Finance: 123933, address: 1107 Budapest, Bihari utca 3/D), Hungarian Branch Financial Director, who as
well is authorised to sign the report.
The auditor of the branch office in 2014 is KPMG Hungária Kft. (1134 Budapest, Váci út 31, company
registration number: 01-09-063183; registration number: 000202). The fee of the audit: 20 750 EUR+VAT.
Financial Statements of Branch Office are integrated in the global activity Financial Statements of Banco
Primus, S.A.. On the other hand, Banco Primus, S.A. is consolidated as a subsidary in Credit Foncier de
France.
9
Banco Primus, S.A and Credit Foncier de France annual financial statements report may be observed at each
headquarters (Banco Primus S.A. -Portugal, Oeiras, Paco de Arcos, Arcos da Quinta, do Quintá, No.4.
Edifício D. Joao I, 1 A. and Crédit Foncier de France - France, 75001 Paris, 19 rue des Capucines).
At the end of the year 2011 the mother company of the Branch Office started to review its business plans and
operations in an attempt to rationalize its targets and means and to minimize the impact of the continually
growing economic crisis and of the financial and liquidity problems the European banking system was
facing. As a result, Banco Primus Branch Office Hungary suspended its loan disbursement activity as of 20
December, 2011.
From the year 2012, the Company focused on portfolio management activities.
2
ACCOUNTING POLICY
The Branch Office is obliged for double-entry bookkeeping, and keeps its books in Hungarian forint.
The Branch Office keeps its books in compliance with the regulations of the several times amended Act
C as of 2000 on Accounting (hereinafter: Sztv.) and of the Government Decree Number 250/2000 (XII.
24.) on the peculiarities of the annual report preparation and accountancy obligations of credit
institutions and financial enterprises (hereinafter: Government Decree).
The Branch Office prepared its balance sheet in accordance with the form established in Annex 1 of the
Government Decree, whereas it prepared its profit and loss account in accordance with the vertical
breakdown stipulated in Annex 2 of the Government Decree. Year 2007 was not a full business year: the
preliminary company operated between 24 October, 2007 and 5 December, 2007; the registration of the
Branch Office at the Court of Registration entered into force as of 5 December, 2007.
The preparation date of the balance sheet: 08 January 2015.
10
3
DETAILS OF THE BALANCE-SHEET ITEMS
3.1.
Assets
3.1.1. Liquid assets
Name
Current account
Total
31.12.2013 31.12.2014
136 412
106 127
136 412
106 127
3.1.2. Receivables
Banco Primus Branch Office Hungary started its business activity for profit and the foundation of its
customer base on 1 October, 2008. From 2008 to 2011, the Branch Office provided loan solutions for
those buyers who wished to purchase new or used cars, motorbikes or scooters, as well as for car dealers
with Stock Finance and Prepaid Commission solutions. This is reflected by the balanced growing
portfolio. The portfolio grew in a smaller compass in 2011 than in 2010 as a result of the international
crisis. In 2012, as a result of Banco Primus Branch Office Hungary suspended its loan disbursement activity
as of 20 December, 2011, the Company activated only 1 contract already accepted in 2011 and,
consequently the outstanding amount started decreasing due to the repayments and anticipations on the
loan portfolio.
Name
Receivables form Clients
Other receivables
Total
31.12.2013 31.12.2014
5 407 344
2 991 999
34 046
29 559
5 441 390 3 021 558
3.1.2.1. Receivables form Clients
Name
Short term receivables
Loss in value
Total
31.12.2013 31.12.2014
3 750 955
3 113 139
-1 381 699
2 369 256
-1 634 864
1 478 275
Long term receivables
Loss in value
Total
3 411 540
-373 452
3 038 088
1 654 090
-140 366
1 513 724
Total
5 407 344
2 991 999
The Branch Office creates loss in value on the basis of the client rating and the expiration of the claim.
The basis of the loss in value corresponds to the overdue debt and the remaining capital sum; the measure
of the loss in value is different for each client category.
In 2014 year the loss in value related to long term receivables was classified to the over 1 year category,
matching with the Hungarian National Bank report.
11
1) Gross
Rating
Performing
Needs special attention
Substandard
Doubtful
Bad
Total
Claims
Obligation
towards Receivables
Investments Securities taken off the
credit
form Clients
balance sheet
institutions
106 127
2 778 332
0
0
114 631
0
133 021
0
0
0
0
52 447
0
0
0
0
59 339
0
0
0
0
1 744 089
0
0
0
106 127
4 767 228
0
0
114 631
Total
2 999 090
133 021
52 447
59 339
1 744 089
4 987 986
Proportion
60%
3%
1%
1%
35%
100%
2) Loss in value
Rating
Performing
Substandard
Doubtful
Bad
Total
Claims
Obligation
towards Receivables
credit
form Clients
balance sheet
institutions
0
24 246
0
0
0
0
35 125
0
0
0
0
29 313
0
0
0
0
44 108
0
0
0
0
1 642 437
0
0
0
0 1 775 229
0
0
0
Total
24 246
35 125
29 313
44 108
1 642 437
1 775 229
Proportion
1%
2%
2%
2%
93%
100%
3) Net
Rating
Performing
Substandard
Doubtful
Bad
Total
Claims
Obligation
towards Receivables
credit
form Clients
balance sheet
institutions
106 127
2 754 086
0
0
114 631
0
97 896
0
0
0
0
23 134
0
0
0
0
15 231
0
0
0
0
101 652
0
0
0
106 127
2 991 999
0
0
114 631
Total
2 974 844
97 896
23 134
15 231
101 652
3 212 757
Proportion
93%
3%
1%
0%
3%
100%
The Off Balance sheet Obligation includes the maintanance commissions payable to the car dealer
partners during the lifetime of the retail contracts they produced.
3.1.2.2. Other receivables:
Name
Advances to employees
Receivables from taxes and contributions
Advances to suppliers
Total
31.12.2013 31.12.2014
45
25
32 798
28 254
1 202
1 280
34 046
29 559
The Advances to suppliers include the advances paid to the executors.
12
3.1.2.3. Stocks:
Name
Other stocks
Total
31.12.2013 31.12.2014
10
1
10
1
The Other stocks line shows the stock value of the Erzsébet food tickets.
3.1.3. Accrued and deferred assets
Name
Other accrued income
Accrued income
Subscription fees
IT costs
Other
Deferral of costs and expenses
31.12.2013 31.12.2014
37 523
19 034
37 523
19 034
1 101
0
369
1 470
1 094
285
538
1 917
Deferral of commissions
Total deferred expenses
338 560
338 560
163 967
163 967
Total accrued and deferred assets
377 553
184 918
The 'Other' category of Deferral of costs, includes the annual bank card fees in the value of 9 thousand
HUF, the counter value of the envelope and paper purchase invoiced subsequently in the value of 94
thousand HUF, and the cost of the obligatory medical exam in the amount of 9 thousand HUF, the
cooling system maintenance costs in a value of 9 thousand HUF and the cost of printing service in an
amount of 417 thousand HUF.
Banco Primus shall release the amount of the commission related to the contract transferred to the dealers
on a monthly basis proportionately to the term to maturity. The balance of the deferral of the expenses
includes the deferral of the commissions related to the active contracts existing on 31.12.2014, which
were yet not released.
3.1.4. Fixed assets
We include the assets under fixed assets or current assets in compliance with the requirements of the
Accounting Act on the basis of their function and use. We state assets among fixed assets only in case its
function is to serve the business activity of the Company permanently for at least over one year.
13
3.1.4.1. Intangible assets
The lifespan and depreciation rate of certain software is included in the following table:
Name
Useful lifespan
Depreciation rate
Base software, Front and Back Office Software (Portfolio,
Navision, Decision, CRM, Advisesoft, Collector)
5 years
20%
Operation systems (Mailing system, Report making system,
Intranet, etc.)
4 years
25%
Management Software (M1S, Reporting, Risk)
4 years
25%
Other software (Backups, Anti-virus, etc.)
3 years
33%
The variation of the intangible assets in 2014 was as follows:
Gross value
Concessions, licenses and similar rights
Software
Total gross value of intangible assets
Cumulated normal depreciation
01.01.2014
14 247
Growth
Decrease 31.12.2014
0
0
14 247
163 350
6 461
0
169 811
177 597
6 461
0
184 058
01.01.2014
Growth
Decrease 31.12.2014
14 119
108
0
14 227
Software
79 685
30 225
0
109 910
93 804
30 333
0
124 137
Total depreciation of intangible assets
Cumulated extraordinary depreciation
01.01.2014
Growth
Decrease 31.12.2014
0
0
0
0
Software
1 673
0
0
1 673
Total extra depreciation of int. assets
1 673
0
0
1 673
Net Value
Software
Total net value of intangible assets
01.01.2014
128
81 992
82 120
Growth
Decrease 31.12.2014
0
108
20
6 461
30 225
58 228
6 461
30 333
58 248
The Branch Office does not have any investment on intangible assets as of 31 December, 2014. The
amount of investments on intangible goods in 2013 was 0 HUF as well.
14
3.1.4.2. Tangible assets
The lifespan and depreciation rate of certain tangible assets is included in the following table:
Name
Useful lifespan
Depreciation rate
Office furniture and equipment
8 years
12.50%
Internal facilities
10 years
10%
- Telephones
5 years
20%
- PCs and laptops
4 years
25%
- Servers
4 years
25%
Vehicles
4 years
25%
Communication and IT equipment
The variation of the tangible assets in 2014 was as follows:
Gross value
Land and buildings
Furniture and fittings
Vehicles, transportation devices
Technical equipment of small value
Total gross value of tangible assets
01.01.2014
59 645
88 809
25 851
6 937
181 242
Growth
Decrease 31.12.2014
0
0
0
75
75
0
743
2 263
28
3 034
59 645
88 066
23 588
6 984
178 283
Cumulated normal depreciation
Land and buildings
Total depreciation of tangible assets
01.01.2014
25 330
68 091
25 834
6 027
125 282
Growth
Decrease 31.12.2014
3 794
0
29 124
4 890
743
72 238
0
2 263
23 571
15
28
6 014
8 699
3 034
130 947
Cumulated extraordinary depreciation
Land and buildings
Total extraordinary depr. of tangible assets
01.01.2014
16 129
8 837
17
0
24 983
Growth
Net Value
Land and buildings
Total net value of tangible assets
01.01.2014
18 186
11 881
0
910
30 977
Growth
0
0
0
0
0
Decrease 31.12.2014
0
16 129
0
8 837
0
17
0
0
0
24 983
0
743
2 263
103
3 109
Decrease 31.12.2014
3 794
14 392
5 633
6 991
2 263
0
43
970
11 733
22 353
15
The Branch Office stated zero HUF among the investments of the tangible assets as of 31 December,
2014. The amount of investments on tangible goods in 2014 was 0 HUF as well.
The significant reduction of the fixed assets is arising from the disposal and sales of the assets became
unnecessary due to the new strategy.
3.2.
Liabilities
As at 31 December, 2013 and 2014, the Branch liabilities are detailed as follows:
3.2.1. Liabilities to credit institutions
Name
Short-term HUF loans
Short-term CHF loans
Negative bank account balance (HUF)
Total short term liabilities to credit institutions
31.12.2013 31.12.2014
2 632 175
1 084 000
2 273 695
0
187 053
129 105
5 092 923 1 213 105
Name
Long term EUR loans
31.12.2013 31.12.2014
Long term CHF loans
Long-term liabilities to credit institutions Total
Total liabilities to credit institutions
44 536
0
44 536
47 234
1 247 715
1 294 949
5 137 459
2 508 054
The liabilities to affiliated undertakings from among the above liabilities correspond to 2 508 054
thousand HUF:
Name
Loan liabilities to Banco Primus S.A.
Loan liabilities to Credit Foncier de France
Total loan liabilities to affiliated undertakings
31.12.2013 31.12.2014
231 590
176 339
4 905 869
2 331 715
5 137 459 2 508 054
3.2.2. Other liabilities
Name
Liabilities due to founders
Liabilities due to other partners
including liabilities to dealers
liabilities to insurance companies
liabilities to suppliers
taxation and contribution payment liabilities
Total
31.12.2013 31.12.2014
0
63
73 401
77 278
54 732
60 432
12 209
10 040
1 532
4 117
4 928
2 689
73 401
77 341
The liabilities to affiliated undertakings are liabilities, which Banco Primus S.A. pays on behalf of Banco
Primus Branch Office Hungary.
16
The Branch Office shall state the amount of the commissions related to 2013 but not yet invoiced - until
the Balance sheet preparing date - by the dealers as liabilities.
3.2.3. Accrued and deferred liabilities
3.2.3.1. Accrued interest expenses to credit institutions
Name
Accrued interest expenses related to EUR refinancing loans
Accrued interest expenses related to CHF refinancing loans
Accrued interest expenses related to HUF refinancing loans
Total
31.12.2013
31.12.2014
1 236
168
217
634
53 960
11 792
55 413
12 594
The accrual of the interest expenses to credit institutions is related to the refinancing loans borrowed
from affiliated undertakings.
3.2.3.2. Accrual of costs and expenses
Name
Performance bonus
Audit fee
Database service
IT system maintanance and support
Telephone
Commission of cash circulation
Internet
Postal costs
Maintenance costs
Overhead costs
Lawyer costs
Accounting fee
Hired employee cost
Headoffice cost
Business travel and lodging
Other costs
Total
Total accrued expenses
31.12.2013 31.12.2014
15 752
21 684
6 525
0
671
390
180
0
146
172
1 651
1 095
34
39
863
539
125
116
0
-2 574
874
991
131
165
4 959
3 465
10 896
12 418
159
0
436
118
43 402
38 618
98 815
51 212
3.2.3.3. Accrued income
Name
Deferred income
Total
31.12.2013 31.12.2014
271 966
136 806
271 966
136 806
17
The opening fee of the loan contracts of the clients are stated among the accrued income, which Banco
Primus shall release on a monthly basis proportionately to the term to maturity. The balance of the
deferral of the income includes the deferral of the handling fee related to the active contracts existing on
31.12.2014, which were yet not released.
3.2.4. Provisions
3.2.4.1.
Other Provision
Name
Risk provisions for pending and sure (future) liabilities
Total
31.12.2013 31.12.2014
6 479
512 174
6 479
512 174
The risk provisions for pending and sure future liabilities includes the overpayments to AIM insurance
company in an amount of 5,4 million HUF and the special provision on the expected refund related to the
foreign currency spread of the foreign currency denominated loan contracts based on the calculations
defined in the 42/2014 MNB Decree in an amount of 506,8 million HUF. The unilateral interest
modification is not relevant for the bank branch.
Legal background of the provision on foreign currency spread:
The Parliament approved and published as of 6th of October 2014 the act on the settlement with the
foreign currency spread and the unilateral interest modification, which is supplementing the act on the
uniformity decision of the supreme court (the two together hereinafter”the Act”). In relation to this the
government decree of 250/2000 (XII.24) (hereinafter „Government Decree”) and the Act on Corporate
Income Tax were also modified.




The act refers to the foreign currency spread and in consideration of the unilateral interest increase
also to the forint loans and financial leasing contracts, furthermore to the loans anticipated at fix rate
and to the loans and leasing contracts under the national asset management.
The act is applicable to the full term of all the consumer contracts which ended after 26. July 2009 or
still active.
According to the Act, the usage of the foreign currency spread (gap between the buy and sell rate)
was unfair in case of foreign currency base or foreign currency consumer loan contracts.
Consequently the financial institutions have to do the settlement of the difference since the begining
of the loan. The financed and repaid amounts shall be recalculated at the officially published foreign
currency exchange rate of the Hungarian National Bank (MNB) to be able to define the refundable
amount.
The MNB published in its decree the detailed calculation methodology for the settlement. The
settlement and the financial repayment will take place during 2015 by the decrease of the total
outstanding debt as at the settlement debt or by repayment in case of already closed loans.
3.2.4.2.
General credit risk provision
Name
Provisions created for the portfolio of the receivables from clients
Total
31.12.2013 31.12.2014
51 830
27 193
51 830
27 193
In 2014 year in case of retail car loans with zero days delay, the Company creates a 1,06% provision on
the outstanding capital.
18
From the 1st January 2014 the Banco Primus Hungarian Bank Branch hasn’t booked any General Credit
Risk Provision based on the Section 32, Subsection 2 of the 518/2013 (XII.30) Government decree.
3.2.5. Shareholder’s equity
Name
Subscribed capital
Accumulated profit reserve
Profit or loss of the year
Total
31.12.2013 31.12.2014
62 500
62 500
83 611
359 134
275 523
-342 784
421 634
78 850
The investment in the Branch Office is 62 500 000 HUF stated as subsidy capital, which was paid on 23
January, 2008. The profit or loss of the year of 2008 was transferred to the accumulated profit reserve in
2009. The profit of the year of 2009 was transferred to the accumulated profit reserve in 2010, and the
mother company settled the negative accumulated profit reserve deriving from the losses of the previous
years by way of additional investment on 17 December, 2010. The negative retained earnings of the year
2010 were settled during the year 2011. The loss of 2011 year was also set off from the 2012 year profit.
At the end the of 2011, as a consequence of the new strategy to be implemented, the Company created a
significant amount of provision for the cancellation of the assets that would not be used in the future and
for the expected reorganization costs and lay off severance payments. These anticipated costs caused the
equity decreased under the level of the subscribed capital.
In 2012 and 2013 benefits were reported to the Accumulated Profit reserve in the amount of 115 258
THUF and 275 523 THUF.
Nevertheless, the Branch Office evidenced that the Going-Concern Principle would not be damaged,
since the loan portfolio would be maintained and assured by the funding and liquidity granted and by the
Mother company and its main Shareholder through an annual liquidty facility agreement .
The 2014 business year was closed with a 342 784 thousand HUF negative result.
The termination of the company is not expected to happen in 12 months counting from the Balance Sheet
Turnover date.
4
DETAILS OF THE PROFIT AND LOSS ACCOUNT
The Branch Office closed the year 2014 with negative result (loss), its corporate tax was 9 196 thousand
HUF.
4.1.
Interest difference
Name
Received interests and similar income
Paid interests and similar expenses
Total
31.12.2013
1 671 927
-185 974
1 485 953
31.12.2014
951 955
-65 496
886 459
19
4.1.1. Received interests and similar income
Name
31.12.2013
Interest income from loan contracts
1 277 065
Interest income from deposits placed at domestic credit institutions
3 521
Default interest
58 091
Handling fee
189 158
Default charges
94 309
Anticipation fee
44 897
Income of other lending fees
4 886
Total
1 671 927
31.12.2014
655 241
1 392
76 504
121 506
65 985
26 691
4 636
951 955
The received interests and similar income does not include pending interests, the amount of which was
55 731 thousand HUF on 31.12.2014.
4.1.2. Paid interests and similar expenses
Name
Interest expenses related to EUR refinancing loans
Interest expenses related to CHF refinancing loans
Interest expenses related to HUF refinancing loans
Other interests and similar expenses
Default interest and default surcharges
Total
31.12.2013
4 696
3 915
31.12.2014
2 434
4 296
175 132
2 228
3
185 974
47 803
5 796
5 167
65 496
The interest expenses related to refinancing loans (54.533 thousand HUF) are related to the facility
borrowed from Banco Primus S.A and Crédit Foncier.
The early repayment fees paid to the mother company for repaying refinancing loan prior to maturity are
included on the line Other interests and similar expenses. These operations were performed in the scope
of Banco Primus SA ALM policies and practices in order to achieve a hedge balance between assets and
liabilities denominated foreign currencies.
4.2.
The result of the commissions and other fees
Name
Received (due) commissions and fees
Paid commissions and fees
Total
31.12.2013
84 872
-414 655
-329 783
31.12.2014
57 167
-277 051
-219 884
31.12.2013
2 961
81 911
84 872
31.12.2014
94
57 073
57 167
4.2.1 Received (due) commissions and fees
Name
Dealer commission reversal
Income of other lending fees
Total
20
4.2.2. Paid commissions and fees
Name
Commission of cash circulation
Dealer commission
Total
4.3.
31.12.2013
27 184
387 471
414 655
31.12.2014
20 253
256 798
277 051
31.12.2013
562 439
-528 785
33 654
31.12.2014
433 627
-404 482
29 145
31.12.2013
562 439
0
562 439
31.12.2014
411 538
22 089
433 627
Net result of financial transactions
Name
Income of financial services
Expenses of financial services
Total
4.3.1. Income of other financial services
Name
Realised exchange earnings
Non-realised exchange earnings
Total
The “Realised exchange earnings” also includes the realised exchange gains related to the refinancing
loans, foreign currency banks, foreign currency suppliers and foreign currency denominated client loans.
4.3.2. Expenses of other financial services
Name
Realised exchange losses
Non-realised exchange losses
Total
31.12.2013
96 784
432 001
528 785
31.12.2014
207 793
196 689
404 482
The “Realised exchange losses” also includes the realised exchange losses related to the refinancing
loans, foreign currency banks, foreign currency suppliers and foreign currency denominated client loans.
The „Non-realised exchange losses” includes the year end reevaluation result of the foreign currency
denominated banks, client portfolio, refinancing and other supplier liability balances.
4.4.
Net profit or loss from other business activity
Name
Other income from business activity
Other expenses from business activity
Total
31.12.2013
237 956
-416 095
-178 139
31.12.2014
129 621
-737 353
-607 732
21
4.4.1. Other income from business activity
Name
Cancellation of tangible assets
Extraordinary depreciation
Cancellation of stocks
Income from further invoicing
Other Provision
Various other income
Other income – Insurance
Total other income
31.12.2013
6 867
1308,6
140
148 863
0
80 108
669
237 956
31.12.2014
804
0
0
123 333
3 060
2 079
345
129 621
4.4.2. Other expenses from business activity
Name
Cancellation of tangible assets
Other Provision
Cancellation of stocks
Tax expenses
Expenses of further invoicing
Other administrative fees
Losses written off
Other expenses
Total other expenses
31.12.2013
3 641
0
140
61 804
143 740
751
204 859
1 160
416 095
31.12.2014
0
508 755
0
45 507
123 212
509
56 549
2 821
737 353
In 2014, the „Other Expenses” are related to the identification of the client payments in an amount of 2,8
million HUF.
The amount of the “Other Provision” is related to the amount of the expected refund related to the
foreign currency denominated loans based on the calculations defined in the 42/2014 MNB Decree in an
amount of 506,8 million HUF and the provision booked for the consumer loan protection penalty in the
amount of 2 million HUF (this last one was released still in 2014 in the other income line).
4.5.
General administrative expenses
Name
Staff costs
Other general administrative costs
Total
31.12.2013
175 607
348 278
523 885
31.12.2014
125 021
262 082
387 103
22
4.5.1. Staff costs
The average number of staff of the Branch Office in 2014 was 11,16 (in 2013: 18.42). The statistical
number of staff on 31 December, 2014 was 20 (in 2013: 23).
Name
Wages and salaries
including regular monthly salaries
performance bonus
31.12.2013
124 471
105 388
19 083
31.12.2014
89 320
70 808
18 512
including meal coupons
sick leave
refund of travel cost
health fund
representation
other payments
Cafeteria PIT (2013 year classification)
12 135
3 263
1 259
3 161
581
1 406
396
2 069
7 056
2 310
569
2 411
581
1 094
91
0
Contributions on wages and salaries
including pension contribution
health insurance contribution
training contribution
rehabilitation contribution
Cafeteria PIT
Total
39 001
33 774
2 460
1 879
888
0
175 607
28 645
24 050
1 359
1 335
642
1 259
125 021
31.12.2013
27 056
26 295
18 981
275 946
348 278
31.12.2014
25 203
24 217
17 188
195 474
262 082
Name
31.12.2013
Ordinary depreciation of intangible assets
33 522
Ordinary depreciation of land and buildings
3 208
Ordinary depreciation of technical equipment, machinery, vehicles
8 815
Ordinary depreciation of tangible assets of small value
89
Total
45 634
31.12.2014
30 333
3 794
4 890
15
39 032
Other payments to staff
4.5.2
Other general administrative costs
Name
Paid rent
IT costs
Expert’s fees
Other administrative costs
Total
4.6.
Depreciation
23
4.7.
Loss in value
The Branch Office creates loss in value on the basis of the client rating and the expiration of the claim.
The basis of the loss in value corresponds to the overdue debt and the remaining capital sum; the measure
of the loss in value is different for each client category.
Client rating
Substandard 1
Substandard 2
Doubtful
Bad
Total
Measure of the
loss in value in
2014
9,80%
9,80%
29,53%
55,36%
93,52%
Overdue period
1- 30 days
Opening
Balance
01.01.2014
54 428
16-30 days
31-60 days
60-90 days
over 90 days
Reversal
4 308
61 364
68 654
1 566 398
1 755 152
Closing Balance
31.12.2014
New Provision
0
-30 182
24 246
0
0
0
52 411
52 411
-2 034
-28 513
-39 341
172 559
72 489
2 274
32 851
29 313
1 686 546
1 775 230
In 2014 year the Branch office created loss in value of 9.8% with regard to the overdue claims of the
consumer sector, overdue between 16-30 days; therefore, paying special attention to the loans of the nonfinancial institutes and the private entrepreneurs.
4.8. General risk provisions
Based on the year end revision of the General Credit Risk Policy, in 2013 year the Branch Office created
overdue provisions for the outstanding capital of the contracts with zero day with a measure of 1.16% as
of 31.12.2013 whereas in 2014 there was no new General Risk Provision due to the Section 32,
Subsection 2 of the act 518/2013 (XII.30).
Opening
Balance
Name
Provisions created for the portfolio of the receivables
from clients
Total
4.9.
Reversal
Closing Balance
31.12.2014
New Provision
51 830
-24 637
0
27 193
51 830
-24 637
0
27 193
Net profit or loss of the extraordinary income and extraordinary expenses
The Branch Office had no extraordinary profit.
4.10.
Name
Pre-tax profit
Tax payable
Profit after tax
31.12.2013
294 044
18 521
275 523
275 523
31.12.2014
-333 588
9 196
-342 784
-342 784
The 2014 year was closed with a 333 588 thousand HUF negative result before tax profit. Since the Bank
Branch could take into consideration only the 50% of the deferred loss, its payable corporate tax liability
ended up with 9 196 thousand HUF.
24
4.10.1 . Items modifying the corporate tax base
Name
31.12.2013
294 044
31.12.2014
-333 588
Tax base decreasing items
Reversal of Provisions for future sure / pending liabilities
Depreciation according to the Act on corporate and dividend tax
Total tax base decreasing items
45 825
2 171
47 996
40 175
3 060
43 235
Tax base increasing items
Depreciation according to the Sztv.
Fined determined by legally binding resolution
Unrecoverable debt (loss in credit) - non private clients
Provisions for future sure / pending liabilities
Tax year expenditure determined during tax audit and self audit
Total tax base increasing items
44 327
13
71323
8 650
59
124 372
39 033
5 167
7 787
508 755
0
560 742
370 419
185209,198
10%
18 521
183 919
91 959
10%
9 196
Pre-tax profit
Adjusted tax base
Deferred Loss (maximum applicable amount)
Measure of the corporate tax
Corporate tax payable
The tax authorities may audit the books and the registration of the Company at any time within 6 years
after the tax year any may determine subsequent tax payment or penalty.
The management of the Company is not aware of any such conditions, from which the Company may
originate any significant obligations under such title.
25
5
CASH-FLOW STATEMENT
Banco Primus Branch Office Hungary prepares its cash-flow statement in accordance with the ‘A’ type
breakdown, the details of which are as follows:
Number
a
1
2
3
4
5
6
7
8
9
10
11,
12
13
14
15
16
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1
01.01.201331.12.2013
Title
01.01.201431.12.2014
b
Interest income
+ Income from other financial services (except for the reversal of the loss
in value of securities and the positive valuation difference of the
receivables)
+ Other income (except for the utilisation of the provisions and the back
marking of the extra provisions and the reversal of the loss in value of the
stock and the extraordinary depreciation)
+ Income from investment services (except for the reversal of the loss in
value of securities and the positive valuation difference)
+ Income of non-financial and investment services
+ Dividend income
+ Extraordinary income
- Interest expenses
- Expenses of other financial services (except for the loss in value of
securities and the negative valuation difference of the receivables)
- Other expenses (except for the creation of provisions, loss in value of
stocks and extraordinary depreciation)
- Expenses of investment services (except for the loss in value of
securities and the negative valuation difference)
- Expenses of non-financial and investment services
- General administrative expenses
- Extraordinary expenses (not including the amount of the corporation tax
payment obligation of the current year)
- Corporate tax payment obligation of the current year
- Paid dividend
- Operating Cash-flow
± Variation in liabilities
± Variation in receivables
± Variation in stocks
± Variation of securities stated among current assets
± Variation of securities stated among fixed assets
± Variation of assets in course of construction (including advances)
± Variation of intangible assets
± Variation of tangible assets (except for investments and advances for
investments)
± Variation of accrued and deferred assets
± Variation of accrued expenses
± Changes in Equity
c
1 671 927
d
951 955
562 439
433 627
84 872
57 167
0
237 956
0
0
-185 974
0
129 621
0
0
-65 496
-943 440
-681 533
-417 404
-737 353
0
0
-523 885
0
0
-387 103
0
-18 521
0
467 970
-4 011 937
3 684 358
3
0
0
0
-190
0
-9 196
0
-308 311
-1 797 139
2 347 343
9
0
0
0
-6 461
3 553
309 782
-374 852
-115 258
-75
192 635
-182 763
-275 523
+ Non-repayable assets received on the basis of the statutory provisions
0
0
- Non-repayable assets delivered on the basis of the statutory provisions
- Cancelled own shares, face value of property note
Net cash-flow
including:
- variation of cash (HUF and foreign currency cash box, cheques)
- amount on account
0
0
-36 571
0
0
-36 571
0
0
-30 285
0
0
-30 285
Budapest 04. May 2015.
26
Business report
31. December, 2014
SUMMARY
Banco Primus Branch Office Hungary (hereinafter “The Company”) started its business activity in
2008. From inception to 2011, the Company gradually established its market position on the
Hungarian car financing market.
At the end of the year 2011, the mother company of Banco Primus Branch Office Hungary started to
review its business plans and operations in an attempt to rationalize its targets and means and to
minimize the impact of the continually growing economic crisis and of the financial and liquidity
problems the European banking system was facing. As a result of this review, Banco Primus, S.A
decided to focus the Company´s activity in the loan portfolio management as of the 20. December,
2011.
After assuming the last remaining disbursement commitments signed before 20 December, 2011,
the Company suspended its commercial active activities in January 2012, and consequently started
to restructure its organization by downsizing its workforce and closing its regional branches network.
Since then, Banco Primus Branch Office Hungary has been concentrating all its resources on four key
priorities: clients’ satisfaction, efficient administration and servicing of the existing loan portfolio,
careful and conservative risk management, punctual and accurate performance of their existing
obligations towards their clients, partners and the authorities.
In accordance with the new strategy in Hungary, Banco Primus, S.A Board of Directors decided to
adjust the Company’s senior executive management with deeper and more direct involvement of
Headquarter top management.
As at 31 December, 2014, Banco Primus Branch Office Hungary was managing a loan portfolio of 4,8
billion HUF.
28
1. GLOBAL ECONOMIC ENVIRONMENT
The worsening geopolitical tensions in the volatile financial markets, low global commodity
prices and the moderate inflationary effects caused by the lower demand appreciably weakened
amid the global economic activity and deteriorated the economic expectations for next year.
Among the developed regions, in the US alone the temporary setback at the beginning of the
year was followed by an accelerated growth, while in the euro zone the recovery remained weak
and Germany and Japan has slowed down considerably.
Among the BRIC countries, the rate of growth was stagnating in China and India, around 7.5% 6%, however Brazil and Russia fell below 1%.
The Russian economy became particularly vulnerable due to the conflict in Ukraine, the
sanctions imposed by the international community and the oil price collapse, and started to
facing severe problems.
In Europe - due to the high unemployment, the not decreasing deflationary pressures, the
continuous weakness in the lending and the banking system, the persistent economic tensions in
the southern countries, and last but not least the loss of market share because of the embargo
imposed on Russia - the short-term growth prospects remained weak.
In the financial markets, the year 2014 was marked by the return of volatility and by an
increasing aversion to risk, especially in the second half of the year. Despite monetary policies
had continued to be expansionary in nearly all the developed countries - with the maintenance
of the almost zero rate policies -, relevant differences began to appear. In the USA, the Fed
stopped his third Quantitative Easing program (QE3) in October, as soon as the signs of a sharp
recovery in the US economy were confirmed, but also maintained a "dovish" line. The Bank of
Japan, for its part, increased further its bond-buying program at the end of October. The ECB
was probably the most active central bank in 2014 with two interest rates cuts that have
brought the refinancing rate at 0.05% and the deposit rate into negative territory at -0.20%. The
ECB has also implemented numerous quantitative easing measures (i.e. TLTRO, covered bonds
and asset backed securities purchasing program) and intensified its forward guidance with the
intention of increasing the size of its balance 1.000Md € to € 3.000Md through a European
Sovereign debt purchase plans. As a part of the monetary policy stimulus measures and partly
because of the much less favourable growth prospects than the American, in Europe and Japan
both the euro and the Japanese yen started the significant weakening against the dollar.
29
Unexpectedly, long-term rates significantly dropped in 2014, more moderately in the United
States (-85pb for the 10 years rates) but significantly in the euro area (- 133pb in Germany, 170pb in France, -218pb in Italy and -239pb in Spain), leading to a levelling of the European rate
curves and a strong reduction in risk premium. This drop was the result of the abundance of
liquidity in the markets, investors with higher risk aversion looking for more supposedly safer
assets, the weak potential growth perspectives, the risk of deflation and the anticipation of the
QE measures implemented by the ECB.
Due to the favorable data from the US economy from mid-October the risk appetite improved
markedly, and the world's major stock exchanges - mostly the Americans – started a volatile, but
steady and steep rise. In the low interest rate and yields environment, in the developed
countries the commercial bank lending rates have stagnated or declined as well. In the terms of
lending activity, however, there is a significant difference between the two sides of the ocean,
and this is reflected in the different expectations for economic growth in the two regions: there
was a significant increase in the corporate loan portfolio in the US (above 10%), as opposed to
the euro zone which decreased by about 2%.
2. HUNGARIAN ECONOMY
Although the growth of the Hungarian economy is among the fastest in Europe, the impact of
unfavorable external environment appeared in the national GDP and slowing down the pace of
some of the components of the development as well. After the second half of 2014 the
Hungarian export growth declined due to the deteriorating external market conditions in, while
the domestic consumption increased due to increasing imports. The community infrastructure
development projects implemented via the EU funds has been contributing 3.0 percentage
points to the GDP growth. The high propensity to save and the significant debt reduction in
addition to the actual consumption of households grew slower than expected despite of the
favorable labor market and inflationary environment and rising wages.
The growth rate of retail purchases remain persistently high in the future as well, which may be
supported also by the foreign currency debt settlement packages approved by the Parliament at
the end of the year. As a result, the engine of growth can be switched from the domestic
investments to the household consumptions in the next year.
30
From the production side of the GDP, the industry showed a decreasing growth of around 5%,
the service sector is 1.7, while the growth in agriculture was 10.8%.
Some improvement seen in the evolution of corporate lending, that supports the conditions for
growth. In terms of the forint transactions the financing exceeded the repayments, in which the
Funding for Landing Program of the Hungarian National Bank (MNB) played a significant role. In
the meanwhile, the retail loan portfolios of the banks decreased. The forint loans pricing
gradually applied the MNB’s historical low level rate: the average interest rate on long-term
loans to enterprises sank to 4.50, while that of the household mortgage forint loans has molten
to 8% during 2014.
The acceleration of economic growth in the labor market data is reflected in the unemployment
rate which dropped to 7.2% in Hungary, to the pre-crisis levels. The improvement in the labor
market indicators is basically thank to the public employment and to the thousands of new jobs
created in the industrial sector.
While consumer prices in Hungary increased by 0.9% compared to the same period of the
previous year. Although there were negative inflation periods during the year the domestic
monetary policy does not have to count with a serious deflationary threat. The basic indicators
of inflation are permanently moving within a narrow range (around 1.5%), which indicates that
in the long run the inflationary environment expected to remain positive and moderate.
The balance indicators of the Hungarian economy are still favorable. The households and nonfinancial corporations remained net savers, while the government’s financing need of the 2014,
reached the 3.0% of GDP by the end of the year. It seems the proposed 2.9% budget deficit to
GDP ratio was kept, and apart of some additional risk factors the 2.4% projected to 2015 more
stringent budget deficit target is still considered to be realistic. The gross state debt was 79,2%
by the end of the year due to the repayment of two billion euro EU fund in November.
The National Bank's Monetary Policy Committee has completed the cycle of rate cuts initiated in
August 2012 with the last reduction of 20 basis points in July, which dropped the base rate to
2.10%, historic low level. The Hungarian low inflation, the relatively vivid global risk appetite, the
consequent rising domestic asset prices and the sinking risk premium jointly ensured favorable
conditions for the loose monetary policy. In the coming months the loose monetary conditions
31
will remain in Hungary and only in the second half of next year - in the wake of the global impact
of monetary tightening level on the Hungarian asset prices - the interests might increase again.
The expectations of favorable investment climate, the solid economic fundamentals, the Central
Bank to continue decreasing interest, and the maintenance of the fiscal austerity, in the autumn
months led to a fall in the yield level of the government securities.
Regarding the Hungarian currency the first half year was followed by a strengthening of the
forint from July to November 2014, and thus became the best-performing currency in the
region. The forint / euro exchange rate was much lower than expected, according to the
evolution of the real economy, as the base rate has fallen to a record level which broke down
the yield premium of the forint denominated assets.
From December the Hungarian currency started to weaken mainly due to the Fed decision of
maintaining the zero level interest but “not for a long run” and later as of 15th January 2015 due
to the unforeseen decision of the Swiss Central Bank abolishing the threshold rate against the
euro which was set up in 2011. As a consequence both the Hungarian Forint / Euro and Swiss
franc rates went above 327 heights.
Despite of the not at all boring 2015 start, according to the last revision of the IMF economists,
the Hungarian economy is beginning to come out of the crisis, but a long way to go in order to
achieve long-term economic activity.
3. HUNGARIAN CAR MARKET
The Hungarian car market closed its best year after the crises. The leasing companies had an
important role in the increase, considering that the 38% of the purchased cars and small vans
were financed by leasing contract.
In 2014, 90 560 new cars were sold in Hungary, which means the car market (including the
passenger cars, motorbikes, small and big vans) expanded by 21%.
In 2014 a significant number of companies leased new vehicle in fleet leasing under the auspices
of the Funding and Landing program of the Hungarian National Bank.
There was also a change in the price tendency of the new cars: namely the several year-long
increasing trend of the list prices has broken by the last quarter of 2014.
32
Regarding the used car market, almost half a million used cars changed owners in Hungary
during 2014. The average price of the cars increased by 9 percent exceeding the prior year’s
average 1,6 million HUF sales price.
The significant increase in the price level (well above the core inflation) is due to the declining
forint exchange rate and to the duty extended on the used car purchases.
The pick-up in sales of the new cars and in the used car import supported the increase of the
used car sales during 2014.
Regarding the prices the highest increase (15% comparing to the last year) is related to the lowmedium category cars.
4. HUNGARIAN BANK SECTOR
2014 was one of the most challenging year for the Hungarian Banks. Both internal and external
factors influenced the year. The Ukrainian-Russian conflict influenced sharply the credit
institutions having branches in that region.
In the middle-eastern European region Hungary’s return on equity (ROE) level was the lowest in
2014. The next year’s ratio is expected to be higher but still below the region’s average. During
the subject year the Hungarian return on equity decreased by third the region’s ROE level, which
also shows that the foreign currency loan settlements and the conversion of the foreign currency
loans to Hungarian Forint clearly pressed the profitability of the Hungarian Bank Sector. The
analysts expect 0,4 percent return on equity level for 2015 which is similar to the developed
western markets but it is still less than the half of the EU average.
By the end of 2014 became known the legislative framework related to the foreign currency
loans. The rules enacting from 2015 year (like the monthly revenue proportionate installment
maximum or the fair banking law) after the settlements and the conversion of the foreign
currency loans to Hungarian Forint will improve the risk profile of these portfolios which is a
positive sign. In the same time the settlements ordered by the Kúria Act will cause an extreme
operative workload.
The bank sector landscape is also under a rapid and deep reorganisation process: first the
Hungarian state bought a share in MKB and by the end of the year agreed to purchase Budapest
Bank as well. The integration of the cooperatives, the strategic partnership between the
Hungarian Post Office, the Corporative Bank and FHB and in the same time the Citibank’s private
sector withdrawal from several countries (amongst them from Hungary) coloured the year.
33
Although the bank tax is still representing a high burden on the Bank Sector it is expected to be
cancelled only in 2017.
2015 biggest challenge will be for those wishing to stay in this market environment, to find
opportunities for sustained profitable operation.
Another significant effect influencing the bank sector at the beginning of 2015, is the
skyrocketing of the Swiss Franc exchange rate due to the release of the 1,2 EUR/CHF parity by
the Swiss National Bank. While in 2008 the Hungarian financing sector felt the crises effect only
with a 3-6 months delay, this time – according to the Hungarian Leasing Association calculation –
the shock will come much faster, approximately in 1-3 months transit time if the Swiss franc rate
remains persistently high, since the household customers has less reserves than before the burst
of the crises.
5. BANCO PRIMUS S.A.
Banco Primus S.A., a Portuguese credit institution with headquarters in Lisbon, started its
operation in Portugal in 2005. As at 31 December 2014, Banco Primus S.A is 100% owned by the
French Financial Institution Crédit Foncier de France. Crédit Foncier de France is a company of
BPCE Group, the second largest French financial group employing 60.000 people on 5 continents.
In the beginning, Banco Primus S.A. offered mortgage products, but later the bank expanded its
portfolio and included car financing products as well. International organic growth started in
2006, when establishing a Branch in Spain aiming at the debt consolidation and mortgage
backed lending transactions. Later, in 2007, Banco Primus, S.A. decided to diversify its mortgage
backed debt consolidation activity by launching a car financing activity in Portugal and in
Hungary.
6. BANCO PRIMUS BRANCH OFFICE HUNGARY
Banco Primus Branch Office Hungary was founded at the end of 2007 and started its business
activity in 2008 with car financing products, which provided fast loan solutions for those buyers
who wished to purchase new or used cars, motorbikes or scooters. The Company was present in
almost all the country through its network of agencies and relations with cars dealers. The car
loan product was available at most of the Hungarian used car dealerships (and at some new car
dealerships as well), which could make a customised, fast and accurate financing proposal for
the interested buyers with the help of the on-line modelling system of Banco Primus.
34
The car loan products were available in Hungarian Forints as well as in Swiss Francs and Euros.
The Company financial solution offer also included specific financing solutions for car dealers
such as Stock Finance and Prepaid Commissions.
Customer’s loans were originated at the regional branch level as a result of direct contacts with
potential borrowers, and of transactions brought by affiliated cars dealers.
Regarding the credit application approval process, the Company also developed its own internal
credit scoring system which constituted a strong support for the credit analysts. The Credit
Division assessed each proposal submitted by the branches. During the review, further checks
were made regarding borrower delinquencies in respect of any loan facilities, total borrowing
and defaults communicated by the Credit Bureau and additional information collected by the
branch
officers.
An
individual
internal
rating
was
assigned
to
each
potential
borrower/transaction based on:
-
banking track record;
-
socio-occupational status;
-
indebtedness capacity;
-
appraisal of the vehicles securing the loans.
The decision was still subject to confirmation and satisfactory revision of all data to be provided.
After reviewing and validating all relevant documents and physical evidences, the application
was analysed and if approved the Branch executed the loan agreement.
In 2011, the Company launched new integrated software (core system), which replaced the
existing back office and accounting software. The management of the loan portfolio and the
related accounting has become much easier thanks to the application thereof. This software is
also allows market tracking and offers better flexibility to legislative changes.
At the end of the year 2011 the mother company of Banco Primus, in order to minimize the
impact of the continually growing economic crisis and of the financial and liquidity problems the
European banking system was facing, decided to suspend Banco Primus’s new loans distribution
activity in Hungary as of the 20 December, 2011. The Company suspended its commercial
activities in January, 2012, and consequently started to restructure its organization by
downsizing its workforce and closing its regional branches network.
Since then, Banco Primus Branch Office Hungary has been concentrating all its resources on
client’s satisfaction, efficient administration and servicing of the existing loans portfolio, careful
35
and conservative risk management, punctual and accurate performance of their existing
obligations towards their clients, partners and towards the authorities.
The Branch follows the Hungarian Government’s recommendation which intends to decrease
the foreign currency risk and its possible consequences on the credit risk side - an increase in the
delinquency.
Banco Primus Hungary booked 506,8 million HUF as other provision for the expected amount of
the settlement of the foreign currency loans. The amount booked was controlled by KPMG in the
framework of the annual audit works.
As at 31st, December 2014, Banco Primus Branch Office Hungary was managing a loan portfolio
of 4,8 billion HUF and having 20 employees and 5 rented staff, all located in its Budapest central
office.
7. RISKS ASSESSMENT
The most significant risks to which the Company is exposed are Credit/Lending risks, followed by
foreign exchange rate, market interest rate Funding/liquidity & cash risks.
Credit/Lending risks:
These risks arise from the financial loss incurred in case of default by any counterparty bearing
an obligation to the Company. From 2007 to 2012, the Company has applied lending policy that
served as the basis for the credit approval process, set out limits and responsibilities of the
departments or people involved in this process, set out standards for pre-screening and credit
workout, and assessed the Credit / lending risk by the application of a special scoring system and
individual assessment. Given that the lending activity was suspended in early 2012,
Credit/Lending risk will only consider the legacy portfolio and the assessment of the risk quality
evolution.
The Company closely tracks its loans for delinquency and fraud. From the moment a loan is
perceived as being delinquent or being part of a fraud case it enters immediately into the
collection process. The Company classifies its delinquent transactions based on the number of
instalments overdue, but this does not exclude that enforcement of collateral or legal
procedures can be started as soon as significant signs of impairment are present.
36
Delinquencies situations are mostly dealt with at the branch level. For all performing loans,
collection is made through direct debits with 5 payment dates spread along the month on the
5th, 10th, 15th, 20th and 25th of each month. Based on daily reports of “rejected direct debits”,
the Company starts taking actions aiming at accelerating the recovery process: from leveraging
on the existing relationship with the borrowers to a more severe attitude and finally to car
seizure and subsequent judicial action if needed.
The different stages of the collection process are directly linked with the number of overdue
installments:
-
With the first installment overdue and until two installments overdue: loans are transferred
to the credit recovery division, which handles contacts with delinquent borrowers and
proposes specific repayment schedules for the overdue installments.
-
If actions turn to be unsuccessful, the company can decide to transfer - including since the
second or the third installment overdue - the management of the delinquent loans to an
external collection company.
-
If the external collection cannot improve the collection effectiveness, the delinquent loans
are sent to the litigation department.
-
The litigation department offers an agreement to the clients forgiving late interest to help
the repayment of the debt. It this will not lead to success, it will start the enforcement
proceedings (exercise the options and sell the repossessed cars).
Foreign Exchange Risk management
The Company has currency-based assets and liabilities denominated in foreign currencies. Banco
Primus, S.A. in relation with the ALM Team of Credit Foncier de France is responsible for setting
and conducting the monitoring of the foreign exchange rate risk. The Company FX risk exposure
is minimized by financing Asset denominated in foreign currency by Liabilities denominated in
the same currency. As 31 December 2014, the Company has not entered in any FX hedging
transaction.
From 1st of July 2014 Banco Primus Hungary is taking into consideration the DMM (Foreign
Currency Adequacy Ratio) in the financing strategy.
37
Interest rate risk
Interest rate risk is measured by the way market interest rate impacts on the interest margins.
Gaps in the value of assets, liabilities, and off-balance sheet items that have different maturities
or re-pricing periods may generate interest rate risk. Banco Primus, S.A. in relation with the ALM
Team of Credit Foncier de France is responsible for setting and conducting the monitoring of the
IRR risk. The Company IRR exposure is minimized by matching the interest rate structure of
assets and liabilities denominated in the same currency.
As 31 December 2014, the Company has not entered in any IRR hedging transaction, and does
not bear trading portfolio securities neither financial assets held for sale.
Funding/Liquidity and Cash risks
Funding/Liquidity risk is driven by the possibility that over a specific horizon the company will
become unable to settle obligations without delay. The funding and liquidity risk is minimized
by:
-
The funding facility agreement agreed on an annual basis between Banco Primus, S.A and
Credit Foncier de France covering any rollover requirements from the Company in each
currency.
-
The daily monitoring of the cash and liquidity position of the Company that allows to
anticipate any cash needs.
-
A monthly monitoring is done at Banco Primus S.A level using a static approach, according to
which the balance sheet positions existing are analysed and projected for a time horizon of
10 years through contractual flows, for elements where the maturity is known, and through
a set of assumptions defined by the BPCE Group, for the other elements. Thus or several
buckets a liquidity gap positions is determined and compared to limits defined by the BPCE
Group.
8.
NOTES TO THE FINANCIAL RESULT
Compared to the previous years, in 2014, the performance of Banco Primus Branch Office
Hungary has been mainly affected by:
-
The macroeconomic environment mostly through the significant decrease of the National
Bank’s base rate
38
-
The anticipation of settlements of 2015 year due to the regulatory changes related to the
foreign currency loans caused an extraordinary cost to the Hungarian bank branch to be
compliant already in 2014.
-
The suspension of the termination and execution of the contracts based on the Act XL of
2014 influenced significantly the collection results.
9.
SIGNIFICANT CHANGES
There were no significant changes in the activity and the line of business of the Company during
the balance sheet preparation period compared to the condition as of 31 December, 2014,
which would influence the results of the Company closed with the Annual Report as for the year
2014.
10. FUTURE PLANS
The branch office shall allocate its resources to client’s satisfaction, efficient administration and
servicing of the existing loan portfolio, careful and conservative risk management, punctual and
accurate performance of their obligations existing towards their clients, partners and the
authorities and compliance with the legal framework.
Budapest 4. May 2015.
Hugo Carvalho Silva
Katalin Balázs
Managing Director
Financial Director
39

Banco Primus Branch Office Hungary Statistical number: 22532404

Transcription

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