volksbank cz - Sberbank CZ

Transcription

Heršpická 5
658 26 Brno
Tel.: +420 543 525 111
Fax: +420 543 525 555
VOLKSBANK CZ
[email protected]
www.volksbank.cz
4
Dan Trantina (1965)
“Watcher“
• 25 x 40 cm, oil-painting on canvas, 1999
CONTENT
ANNUAL REPORT
Foreword from the Board of Directors
Key Figures in Summary
The Volksbank Group
Governing Bodies
Economic Environment
Lines of Business
Balance Sheet
Profit and Loss Account
Notes to the Financial Statements
Quantitative Indices
Risk Management
Report on Relationships
Independent Auditor‘s Report
Report of the Supervisory Board
1
8
9
10
11
14
16
28
31
34
91
92
95
96
98
SERVICE
101
International Desks
Our Network
102
104
6
Dan Trantina (1965)
“He is not afraid”
02
A N N U A L
R E P O R T
Austria
Bosnia and Herzegovina
Croatia
Hungary
CZECH REPUBLIC
Italy
Malta
Romania
Slovakia
Slovenia
France
2 0 0 2
Foreword from the Board of Directors
Ladies and Gentlemen,
Dear Clients, Business Partners and Colleagues,
For the sixth time we are delighted to be able to
announce in the Introduction to the Annual Report
that Volksbank CZ again achieved excellent annual
results.
These excellent results are due above all to growth
in deposits and lending as well as the expansion
of our branch network and the increase in our staff
numbers.
The rapid growth in our branch network in 2002
started in January, when the Plzeň branch was
opened to support business activity in western
thereby exceeding CZK 8 bil.
Loan assets also registered substantial increases:
compared to the year 2001 the value of loans
provided increased by 44% and reached CZK
12.3 bil.
The number of Bank staff had to be increased
during the year so that the Bank would be able to
provide appropriate timely and quality services to its
increasing number of clients and business partners.
The steady expansion in the range of banking
products we offered meant that our staff continually
received training both in the form of seminars in
the Bank and international training programmes
(Volksbanken Academy).
The achievement of successful results was based
particularly on two target groups: small and
medium-sized enterprises, and municipalities. The
International Desk activity has also substantially
contributed to our achievements.
In 2002 the Bank continued to have as its main aim
to offer all of its clients those products and services
which complement their interests and diverse
needs.
8
Bohemia. At the beginning of the second quarter
the Znojmo branch started its activities with the
advantage of its location near to the Austrian
border enabling the establishment of cross-border
business contacts. Although our branch expansion
plans were optimistic, one thing which we could
not foresee or control was the force of nature in the
form of the one-hundred-year flood. Our branch and
regional centre in Karlin, Prague, which had scarcely
been opened for a year, were so severely damaged
that we were forced to move our operations from
there to new representative premises in Lazarská
street. Thanks to the dedicated efforts of our
staff this move was completed very rapidly and
efficiently. Presently, the branch serves mainly
corporate clients. At the end of the year a fifteenth
branch was opened in an elegant historic building
in Hradec Králové near to Velké náměstí.
The opening of four further branches is planned for
2003: when we start doing business in Ostrava in
northern Moravia this will represent entry into a new
region for Volksbank CZ. Furthermore our market
presence in Prague will be further strengthened by
the opening of three new offices there.
This expansion would be unthinkable without
appropriate financial results. Total assets as
per 31 December 2002 exceeded CZK 16.2 bil.
representing an increase of more than a third over
the previous year. The dynamic growth in the area
of business activities was supported by the increase
in the Bank’s share capital by CZK 100 million to
CZK 750 million Compared to the previous year
clients’ deposits increased by a respectable 28%
Václav Vitha
Johann Lurf
In this respect we consider it important to mention
our co-operation with the Victoria-Volksbanken
Pojišťovna, a.s. insurance company, where the yearon-year increase in insurance policies concluded
amounted to 60% which resulted in us exceeding
a bold plan for the year 2002. The co-operation with
Českomoravská stavební spořitelna, with the yearon-year increase in the number of policies signed of
almost 20%, was also important.
The Bank’s development picture would be
incomplete without mentioning new products,
especially consumer loans and a new version of
electronic banking. Thanks to the simplification of
a number of administrative procedures we are also
able to place more emphasis on communication
with our clients. With regard to the above data and
permanent effort to increase service quality we
expect optimistic development in the year 2003. In
addition, next year we will most probably become
a Bank with an EU banking licence.
Thanks to the speed, flexibility and traditional
lending risk policies Volksbank CZ is and will
continue to be a safe, strong and growth-oriented
bank.
Reflecting this, we would like to thank you, our
esteemed business partners, clients and friends, as
well as our employees and our shareholders, for the
trust provided and the excellent co-operation we
have.
Herbert Skok
KEY FIGURES IN SUMMARY
2000
2001
2002
Total assets
9,743,128
11,899,124
16,222,235
Customers liabilities
4,718,015
6,342,717
8,087,434
Receivables from customers
6,652,689
8,544,076
12,308,368
Income from financial transactions
470,260
531,708
564,032
Administrative expenses
305,363
381,076
395,517
49,460
68,011
57,624
208
307
362
Number of branches
10
13
15
Number of organisational units
10
19
33
CZK´000
Profit on ordinary activities before taxation
9
Number of employees
TOTAL ASSETS (tsd. CZK)
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
2002
2001
2000
1999
1998
1997
1996
1995
0
The Volksbank Group
Volksbank CZ has been successfully active
on the Czech market since 1993. The
bank’s main shareholder is Volksbank
International AG (100% subsidiary of
Österreichische Volksbanken-AG, here in
after referred to as ÖVAG).
ÖVAG was founded in 1922 by commercial lending
cooperatives. The bank is the central institute
of one of the most important banking groups in
Austria and is majority-owned by more than 60
independent “Volksbanken”. Today Österreichische
Volksbanken-AG is an international commercial
bank and a strong partner in Central and Eastern
Europe.
10
More than 10 years ago ÖVAG began its successful
expansion into Central and Eastern Europe in
Slovakia. To date ÖVAG has an international
network comprising more than 100 offices in ten
countries. ÖVAG’s subsidiaries - with strategic
shareholdings held by German, French, Italian and
Turkish partner banks – are located in Slovenia,
Croatia, Bosnia-Herzegovina, the Czech Republic,
Slovakia, Hungary and Romania. As per December
31, 2002 these subsidiaries had combined total
assets of EUR 2.3 billion. In addition, in Italy ÖVAG
has a branch in Verona as well as a subsidiary in
Malta and a representative office in Paris.
Via its co-operation with the Confédération
Internationale des Banques Populaires, which has
a network of 45,000 banking outlets in the member
states in Europe, North Africa, Argentina, Canada
and Japan, Volksbank CZ is able to offer its clients
a presence in all major financial centres worldwide.
United in trust – our motto clearly reflects the very
special partnership which exists between us and
our clients. The mutual trust which is so important,
in particular in international business, is the result
of joint planning and activities. This trust is the
best basis for a long-lasting relationship and good
long-term business.
Shareholders
Volksbank International AG, Vienna
Banque Fédérale des Banques Populaires, Paris
DZ-Bank AG, Frankfurt
WGZ-Bank, Düsseldorf
Veneto Banca, Montebelluna
Banca Popolare dell´Emilia Romagna, Modena
Banca Agricola Mantovana, Mantova
Banca Popolare di Vicenza, Vicenza
Niederösterreichische
Landesbank-Hypothekenbank AG, St. Pölten
As at December 31, 2002
Shares in %
69.30
10.00
6.67
3.33
2.20
2.50
2.50
2.50
1.00
Governing Bodies
SUPERVISORY BOARD
CHAIRMAN
GD KR Dr. THALHAMMER Klaus
Chairman of the Supervisory Board
Appointed on: 11.10.1996
Experience: bank experience - 35 years, managerial position - 19 years
Membership in the bodies of other companies:
Österreichische Volksbanken-AG: General Manager; ARZ Allgemeines Rechenzentrum GmbH:
Member of council, Member of advisory committee; BP Investconsult GmbH: President of council for cooperation; CIBP (Confédération Internationale des Banques Populaires): Member of executive committee, Plate-Forme Internationale: Chairman; Industriellenvereinigung: full Member,
Member of Landesgruppe Wien; Investkredit Bank AG: Member of Supervisory Board; LeasingWest GesmbH & Co KG: Member of advisory committee; Ľudová Banka, a.s., Slovakia: Chairman
of Supervisory Board; Magyarországi Volksbank Rt., Budapest: Chairman of Supervisory Board;
Niederösterreichische Landesbank-Hypothekenbank AG: Vice-chairman of Supervisory Board,
Credit committee: Member; Österreichische Bankwissenschaftliche Gesellschaft: Member of Board
of Directors; Österreichischer Genossenschaftsverband, Council of cooperative unions: Vicechairman, Executive committee for spool Fund: Vice-chairman; Raiffeisen Zentralbank Österreich
AG: Member of Supervisory Board; Österreichische Kontrollbank: Member of Supervisory Board;
Schulze-Delitzsch Haftungsgenossenschaft: Vice-chairman of Supervisory Board; VICTORIAVOLKSBANKEN Versicherungs-AG: Vice-chairman of Supervisory Board; Volksbank CZ, a. s., Czech
Republic: Chairman of Supervisory Board; Volksbank BH d.d., Sarajevo: Chairman of Supervisory
Board; Volksbank d.d., Zagreb: Chairman of Supervisory Board; Volksbank Ljudska Banka d.d.,
Laibach: Chairman of Supervisory Board; Volksbank, Gewerbe- und Handelsbank Kärnten AG:
Member of Supervisory Board; Volksbank Alpelvorland, Amstetten: Vice-chairman of Supervisory
Board; Volksbank-BeteiligungsgesmbH: Vice-chairman of Supervisory Board; Wirtschaftsbund
Niederösterreich: Member of management of department; Wirtschaftskammer Niederösterreich,
Section Bank und Versicherung NÖ: Deputy Chairman manager in department, Fachvertretung
der Kreditgenossenschaften nach dem System Schulze-Delitzsch: Chairman; Wirtschaftskammer
Österreich, Bundessektion Bank und Versicherung: Member of branch conference, Fachverband
der Kreditgenossenschaften nach dem System Schulze-Delitzsch: Chairman of expert association,
Grundumlagenausschuss des Fachverbands der Kreditgenossenschaften nach dem System SchulzeDelitzsch: Chairman
DEPUTY CHAIRMAN
Dr. KALTENBRUNNER Christian
Vice-chairman of the Supervisory Board
11
Ľudová Banka, a.s., Slovakia, Volksbank CZ, a. s., Czech Republic, Volksbank-Ljudska Banka d.d.,
Slovenia, Volksbank d.d., Croatia, Magyarországi Volksbank Rt., Hungary, Volksbank BH d.d., Bosnia
and Herzegovina: Vice-chairman of Supervisory Board; Volksbank Romania SA, Romania: Member
of managing board; Volksbank Malta Ltd.: Director, Member of Board of Directors; ALB EDV-Service
GmbH: Member of Council, Volksbank International AG: Chairman of the Board of Directors
MEMBERS
Mag. JANESCHITZ Hans
Member of the Supervisory Board
Volksbank Linz-Mühlviertel rGmbH: Member of Supervisory Board; VB Factoring Bank AG: Chairman
of Board of Directors; VB Gewerbe- und Handelsbank Kärnten AG: Member of Supervisory Board;
Volksbank Wien AG: Member of Board of Directors; Ľudová Banka, a.s., Slovakia, Volksbank CZ, a. s.,
Czech Republic, Magyarországi Volksbank Rt., Hungary, Volksbank BH d.d., Bosnia and Herzegovina,
VB-Holding AG, Volksbank International AG: Member of Supervisory Board; Volksbank Romania SA,
Romania: Member of Managing Board; VB-Unternehmensholding GmbH: statutory representative
12
Rag. BRIONI Primo
Mantovana Ireland Ltd Dublin, Ireland, Voksbank International AG, Vienna, Austria, Volksbank CZ, a. s.
Czech Republic, Cosorzio Mantova Export, Mantova, Italy: Member of Supervisory Board
GD DUQUESNE Daniel
Banque Fédérale des Banques Populaires: Member of Managing Board; Natexis Banques Populaires:
Member of Managing Board, president of Audit committee; Volksbank CZ, a. s., Czech Republic:
Member of Supervisory Board; Group of companies Medef-Lyon: Vice-president
Dir. SCHON Rainer
Ľudová Banka, a.s., Slovakia, Volksbank CZ, a. s., Czech Republic: Member of Supervisory Board
Mgr. SCHAFFEROVÁ Jaroslava
Experience: experience total - 5 years, bank experience - 5 years, managerial position - 5 years
Membership in the bodies of other companies: None
Ing. ŠTĚRBOVÁ Irena
Ing. VLČEK Luboš
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BOARD OF DIRECTORS
LURF Johann
Chairman of the Board of Directors
SKOK Herbert
Member of the Board of Directors
Ing. VITHA Václav
Member of the Board of Directors
Economic Environment
The Czech Republic continued to grow in 2002
although at 2% growth was not as high as the
3.6% achieved in the year before. The growth in
the Czech economy, while still being shaped by
existing positive factors also had to contend with a
series of new factors, most of which were negative,
such as world wide economic weakness which led
to a stagnation in demand for Czech goods as well
as the catastrophic flooding in the summer of 2002.
On the other hand, positive factors influencing
the increase of GDP were visible during the whole
year, resulting in stability of price levels: inflation
during 2002, for example, 12-months inter-bank
PRIBOR fell from 4.50% p. a. to a level of about
2.50% p. a. This has also resulted in an increase
in volume of consumer loans provided, and also
in high consumption which in principle led to the
growth in GDP.
The influx of foreign investment decreased
especially in relation to the finalisation of the
privatisation of the remaining government stakes
in major companies. At the same time foreign
investors started to monitor more closely the
unfavourable development of the fiscal imbalance,
Interest rate 12 Month PRIBOR & PRIBID
PRIBOR
PRIBID
7%
6%
5%
4%
3%
2%
1%
almost stopped and later – in the beginning of the
year 2003 – the consumer price index fell almost
below zero in the deflationary range. This resulted
in further decreases in interest rates in the country
01.10.02
01.07.02
02.04.02
02.01.02
01.10.01
02.07.01
02.04.01
02.01.01
03.10.00
03.07.00
03.04.00
0%
03.01.00
14
and increased pressures on the Government to
make reforms in this area were also generally
expected in relation to compliance with the
Maastricht budget criteria requirements for
accession to the Eurozone. The foreign trade
deficit was maintained below CZK 80 billion which
was one half less than in the previous year. Total
current account balance of the overall balance of
payments reached an unfavourable deficit of USD
(3.7) billion, which was however covered more than
twice by the financial account surplus reaching
USD 10.4 billion.
Continuing very competitive labour prices in the
Czech Republic, combined with lower, however
still substantial, influx of foreign investments, were
not able to reduce the unemployment rate, which
in the whole period since the establishment of
a market economy.
GDP GROWTH (YEAR-ON-YEAR CHANGE)
15
108
106
104
102
100
98
96
fluctuated around 10%. More rapid growth of real
wages compared to the growth in productivity of
labour and GDP also played its role.
In 2002 the banking sector did not show any
dramatic fluctuations, total assets increased, as did
profitability, save for some exceptions. The situation
of most banks in the market was so far the best
02Q4
02Q1
01Q4
01Q1
00Q4
00Q1
99Q4
99Q1
1998
1997
1996
1995
94
Lines of Business
International Desk
After the necessary restructuring measures taken
in 2002, the International Desk´s most important
activities did not focus only on the Italian client
base which still remains the largest client group,
but also on French and Spanish clients. Thanks
to highly qualified and bilingual staff and thanks
16
to our international partner support, the outcome
was very positive. Presently, the International Desk
has more than 700 clients operating in various
branches of the economy, with more than 1,300
accounts open with Volksbank CZ. Even with
activities in the industrial and commerce sectors is
clearly visible.
The co-operation with Italian, French and Spanish
partner banks has expanded further as well as with
ÖVAG-branch in Italy and colleagues from the new
bureau de liaison in Paris.
Corporate clients
In the course of the year 2002 internal
restructuring resulted in a new organisational
structure. Its objective was the enhancement of
domestic and international corporate customer
care. The structuring of business activities
by territory to Moravia and Bohemia that had
commenced in the previous year turned out
to be beneficial, especially in supporting the
individual approach to business partners and
establishing closer and more open co-operation.
The international clientele administered at this
client department comes particularly from German
and English speaking countries (Germany, Austria,
Great Britain etc.).
Corporate Clients Department - Moravia and
Corporate Clients Department - Bohemia were
substantially supported by employees with
adequate professional and language skills, not
only in the Brno head office and Prague regional
head office, but also in departments operating at
selected branches. Consequently, the staff can
better understand individual regions, including
local clientele needs, and provide bank products,
services and related consulting services on the
spot, i.e. at the client premises or in the local
branch.
Teams are prepared to provide complex bank
services for all economic entities within defined
target client groups, including the partner
approach typical for the Volksbank group.
Corporate Clients - Moravia
The volume of year-on-year client deals in Moravia
increased by 76.4%, with the biggest increase
noted in the area of investment loans and current
and term deposits in Czech Crowns. New business
relationships were established with leading
business entities and co-operation with current
corporate clients was extended. In addition,
several projects in the area of real estate funding
commenced.
Corporate Clients - Bohemia
In the first six months of the year 2002 contact
has been established with a important supplier of
investment units and their technology parts and
appropriate mutually satisfactory implementation
forms of bank transactions were found. Bank
guarantees and operational funding with minimum
return risks for new partners active in industries
were provided. The Bank also participated in
its client’s business plan in the area of capacity
extension of foreign language schools in Prague.
Retail bank services
The goal of the „open branches“ concept already
used during the development of three new
branches opened in 2002, which will be gradually
introduced in all current branches, is to enhance
the personal approach to our clients.
With the assistance of the latest technology
Volksbank CZ clients can now use information
terminals which make it possible for them to trace
back their account balances for a period of up
to two years. In addition, clients may print their
account statements for themselves free of charge;
all this reflects Volksbank´s philosophy of treating
its customers as partners and its goal is to be
a modern bank with the latest technologies and
be prepared to share them with its clients for the
benefit of both sides.
The introduction of the revolutionary new Twin
Safes system, which renders the old cash systems
obsolete, can be used by our clients for all cash
transactions.
These innovations – Info-terminal and Twin Safe
– illustrated by the motto „We know how valuable
your time is“, will speed up client services in
branches and will enable more intensive focus on
the client himself, his needs and wishes.
Municipalities/Public Sector
In 2002 the Bank continued with its engagement
in the municipality sector and within the framework
of the municipality programme it acquired, as
new clients, a number of municipalities and their
subsidiary firms. Steps were taken to expand the
bank’s co-operation with housing co-operatives.
The Bank took part in most public tenders for
financing municipality projects and was successful
in many of them.
Overall, the Bank provides its banking and
NUMBER OF BRANCHES
16
14
12
10
8
6
4
2
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
17
branches and the Chamber of Commerce, several
presentations and specialised seminars.
CURRENT ACCOUNTS AND TERM
DEPOSITS (in 000 CZK)
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
Term deposits
2002
2001
2000
18
1999
1998
0
Current accounts
consulting services to more than two hundred
municipal organisations (municipalities and their
subsidiary firms).
Treasury
Despite the challenging environment that
predominated in 2002, the activities of the
Treasury Department were very successful. The
department had a significant share in the bank’s
total profits. Planned earnings from business
operations in financial markets were surpassed by
ca 67%. The number of transactions increased by
approximately 23%, and the value traded by 35%.
Concerning sales, the department concentrated on
direct product sales. The number of clients using
Treasury products almost doubled in the last year.
Trained branch staff participated in the work. The
department also organised, in co-operation with
Securities
The work of the Securities Department was also
affected by the volatility of financial markets.
Nonetheless, thanks to experienced staff it
managed to overcome this adverse trend in the
capital markets, to report an increase in securities
investments of more than 28%. Thanks to more
intense activity it achieved an increase in the
number of clients investing in securities. These
results could not have been achieved without
further staff training in the individual branches.
Another 35 staff members were trained in 2002.
Risk management
The Bank takes a conservative approach to risk
management. It has to cope with the following
risks, whose structure and impact it maintains at
a reasonable level: credit and market risk, liquidity
and operational risk.
In the process of risk management the Bank
follows the legislation in force, principles laid
down by the group headquarters, and the group
companies´ know-how.
The Bank’s Board of Directors approves the
Bank’s strategy in risk management in line with
the rules laid down by the Basel Committee.
It has developed a risk management system
in compliance with this strategy, based on
strict organisational separation of sales and
risk management. It operates a quality control
system based on the ‘four eyes principle’ and in
compliance with criteria for the assessment of
risks and internal limit adequacy.
in 2001 to 12.08% in 2002. At the same time,
according to figures issued by the Czech National
Bank per 31 December 2002, the proportion of
classified loans in the banking sector was 16.78%.
19
CLASSIFIED LOANS
35%
30%
25%
20%
15%
10%
5%
Average in Czech banking sector (CNB)
2002
2001
2000
1999
0%
1998
Credit risk management
The Bank’s credit policy applies the most
important principles of credit risk management.
These principles comply with the Group’s
credit policy and include a definition of target
client groups and limits set for the individual
sectors. In the credit process the principle of
clear organisational separation of sales and risk
management is maintained and both sections are
represented in the approval process. All the Bank’s
internal controls comply with measures of the
Czech National Bank, and together with specimen
contract documentation, they are up-dated on an
ongoing basis.
In the area of collateral valuation the Bank applies
a prudent approach, in particular in real estate
valuation.
In 2002 the Bank started in co-operation with the
group headquarters to implement the corporate
internal rating system, the so-called VB-Corporate
Rating System which is one of those projects to
be implemented as part of the rules laid down by
the Basel Commitee. The aim of the VB-Corporate
Rating System is to achieve an optimum risk
management process within the lending approval
procedure and at the same time to identify
possible loan losses early on. It is also preparing,
in co-operation with the group headquarters,
internal ratings for other client segments, such
as the municipality sector, project funding, and
private individuals.
Despite the Bank’s conservative approach
to risk management, new loans granted in
2002 increased the total loan value to CZK
12,672 million, which compared with the previous
period is an increase of approximately 44%.
During the same period the proportion of the
Bank’s classified loans decreased from 17.03%
Volksbank CZ
market the Bank’s transactions focus on hedging
of positions resulting from trading with clients. The
Bank did not exceed any open currency position
limit in 2002.
Currency risk
The Bank deals in currencies in both Czech and
international markets. All limits are included in the
Group’s structure of limits. In the FX area the Bank
concentrates on client trading. In the inter-bank
Equity market risk
The Bank has introduced and approved limits for
equity trading in Czech and international markets.
All limits are included in the Group’s structure of
limits. The Bank did not hold any equities in its
Interest rate risk
The Bank’s interest rate risk exposure is the
possibility of the Bank’s decrease in net profit due
to interest rate fluctuations.
The Bank monitors the risk daily using GAP
analysis. For the year 2003 the Bank is preparing
to introduce direct interest rate risk management
using a wide-spread GAP method (a set of
limits), stress scenarios and models, a system
for simulation of the impact of changes in market
conditions on the level of risk to be faced.
To hedge interest rate positions, the Bank uses
derivative transactions.
TOTAL LOANS STRUCTURE (in 000 CZK)
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
2002
2001
2000
1999
0
1998
20
Market risk management
Market risk represents the risk of a loss resulting
from changing prices, FX rates and financial
market rates. It comprises interest rate, currency,
share and other risks related to market price
fluctuations. Responsibilities and control
mechanisms in the market risk management
process are addressed by the Bank’s internal
regulations and the internal control system.
The main instrument used to manage market risks
are limits in respect of individual types of market
risk. Limit compliance is monitored on an ongoing
basis and is regularly reported to ALCO (Asset
and Liabilitie Committee) meetings that determine
market risk management strategy and objectives.
If any limits are exceeded “emergency” measures
are taken and open positions are closed or
secured by appropriate hedging instruments.
Standard
Classified
portfolio in 2002 and was not therefore exposed to
equity market risk.
Liquidity risk
Liquidity management is based on the planning
of future inflows and outflows of funds based
on agreements with the clients and on credit
agreements which oblige the Bank to undertake
activities. The Bank forecasts every day net
cash flows for the period of five business days in
advance for each main currency in its management
information system. An estimated cash flow, actual
liquidity report, basic and alternate scenarios are
processed for each main currency. Each currency
has its set limit which is monitored on a daily
basis.
Operational risk
Operational risk constitutes a substantial part of
the Bank’s risk policy. It may be defined as the
risk of a loss incurred as a result of inadequacy
or failure of internal procedures, as a result of
accidental human error or systems failures, or
due to external circumstances. The Bank is
going to take part in a project for comprehensive
management and monitoring of operational risks,
applying the Basel Committee rules and directed
by the group headquarters.
Payments
The most important event in the Payments
Department was without doubt the introduction
of new methods of communication with the Bank
in electronic banking – Internet banking and
Multicash – in the portfolio of banking products
and services, which took place in October 2002.
From the very beginning these products met with
great interest on the part of our clients.
The staff of the individual payments sections
(inland, foreign and electronic) were able to cope
with an increase in domestic and foreign payments
of approximately 15% thanks to suitable hardware
and software. The value of all payments processed
increased by a similar percentage.
Much interest was also noted in the Homebanking
service. The number of users increased by
36% in comparison with the preceding period.
Electronic banking has thus already become
one of our standard products as a modern and
almost irreplaceable form of communication
with the bank. This is best illustrated with
figures: of the total number of inland and foreign
transactions, 53% and 37%, respectively, were
sent electronically.
Thanks to co-operation with the Department of
Automation, which looked after the technical
aspects, our clients can place their orders with
any branch of Volksbank CZ no matter in which
branch they have their account. The work of the
department was further streamlined and the entire
process of payment processing was accelerated
by the implementation of electronic processing
of operations that had previously been done
manually. As a result, the time necessary to deal
with client matters in the branches was reduced.
Payment cards
Another three ATMs were put into service last year
in new branches in Znojmo and Hradec Kralove,
and the first ATM outside the branch network was
put into operation in the shopping centre Big Billa
in Brno.
An important moment, and probably the most
significant event of last year, which is going
to have an influence in the coming years, was
the conclusion of a contract with the Czech
21
representation of Diners Club and the issuing of
the first 250 pre-embossed charge cards in the
last quarter of 2002. The number of payment cards
issued increased by about 82%.
The activities of the Payment Card Department
were also influenced by the fact that an increasing
number of clients realise the advantages of
paying by a payment card for goods and services
in shops and prefer this payment method to
cash. A considerable increase of more than 55%
was reported for POS (point-of-sale) payments
(payments for goods and services in shops).
The total number of Volksbank payment card
transactions rose by a significant 35%. Their total
value increased by 32%.
22
Automation/EDP
The priority of the Department of Automation
was traditionally client service support in the area
of electronic and self-service payments and the
further development of the Bank’s infrastructure.
A new electronic banking product, Multi-cash, was
offered in the middle of the year in co-operation
with the Departments of Marketing and Payments.
It is a European standard product and it is primarily
designed for major and multinational clients. In the
second half of the year the portfolio of e-services
offered by Volksbank CZ was supplemented with
an Internet banking product addressed to the
broadest client base of the non-corporate type.
At the same time, there was a huge increase in
the number of information terminals which enable
clients to access information about their accounts
and print account statements for themselves.
All of the bank’s workplaces are equipped with
NUMBER OF PAYMENT TRANSACTIONS
2,500,000
2,000,000
1,500,000
1,000,000
500,000
Foreign payments
0
2002
2001
2000
1999
1998
Domestic electronic payments
Domestic payments excl. electronic
PAYMENT TRANSACTIONS STRUCTURE
100%
80%
60%
40%
20%
2002
2001
2000
1999
1998
0
state-of-the-art software and hardware. As
a result, the bank’s clients are served in any
branch with the same speed and comfort. Every
workplace has access to the intranet and the
Internet. Our staff thus have at their disposal
necessary and up-to-date information and are
able to give better service. The new services
together with a continual increase in the number of
branches, clients and transaction volume presaged
much higher demands on rapid and reliable
communication between the bank’s branches.
A brand-new interconnection structure was built
with quadruple speed of communication.
The increasing volume of electronic operations
brings in its wake growing demands for securing
data against misuse. Therefore an extensive audit
by a leading audit firm of international reputation
carried out several tests at the close of 2002 with
positive results.
All excl. electronic
payments
Electronic payments
Property Administration
The Property Administration Department was
responsible for the successful opening of three
new Volksbank CZ branches. One was opened in
January in Plzeň, the branch network expanded
further in May with one in Znojmo and at the end
of the year another branch was added in Hradec
Králové. All these points of sale meet the necessary
criteria, both regarding material equipment
- modern automatic teller machines, Twin Safe
facilities and self-service information terminals
were installed - and in corresponding to our „open
branch“ concept. Most branches are based in
buildings of historical value which were adapted
according the clients` requests.
The Property Administration Department faced
serious problems last year, having to cope with
the flooded regional centre and branch. Despite
the damage to the equipment that Volksbank CZ
sustained, it succeeded in saving part of the assets.
23
VOLUME OF TRANSACTIONS EFFECTED USING PAYMENT
CARDS (in CZK)
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
2002
2001
2000
1999
24
1998
0
Product Development
The Product Development Department collaborated
on signing an agreement with the European
Investment Bank for financing and opening a global
credit in the amount of EUR 20 million to refinance
projects for small and medium-sized enterprises. In
addition to Volksbank CZ, a loan was also granted
for the same amount to VB Leasing
spol. s r.o. Volksbank CZ was the first bank in the
Czech Republic to receive such a loan.
Human resources management
In view of the dynamic growth of the Bank, much
stress was placed on selection and engagement
of new staff in 2002. New vacancies were created
by the new branches in Plzen, Znojmo and Hradec
Kralove and new staff were taken on in parallel
with the growth in business activities for the
existing branches, sales departments, servicing
and administrative sections. When selecting staff
particular emphasis was placed on experience and
ATM
POS
1998-1999 ATM & POS total
professional skills.
In staff training we concentrated on further
development of the internal training system. With
the support of Volksbank Academy we prepared,
and put into practice, the educational project
Client Advisor. Participants in the project, under
the leadership of internal specialists, resolved
through case studies specific problems in
investment consulting and financing. The project
does not neglect personal development and selling
skills.
Marketing
Contact with prospective and existing clients
exploited all available channels of communication.
Since an increasing number of inhabitants of the
Czech Republic have access to the Internet, due
attention was paid to this method of reaching
prospective clients. An extensive promotional
campaign was run in the autumn on the occasion
NUMBER OF EMPLOYEES
400
350
300
250
200
150
100
50
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
of the launch of our Internet banking service.
During the campaign the Marketing Department
collaborated with majority of the most visited news
and financial servers and organised a competition
and a quiz.
The originality of this campaign consisted in taking
advantage of all the possibilities the Internet offers
in the field of communication to promote new
services and new ways of obtaining necessary
information about Volksbank CZ through its
website at www.volksbank.cz which is continually
service information terminals and Twin Safe
facilities that begun towards the end of 2001,
whose key motive was the slogan ‘We know how
valuable your time is’ In collaboration with Retail
services department the promotion ‘66 – 99’ took
place achievinging its two goals: to expand the
use of payment cards by our clients and initiate the
use of information terminals in the branches. Other
activities of the Marketing Department included
giving support and publicity to three new branches
in Plzen, Znojmo and Hradec Kralové. The opening
updated. Thanks to this campaign the number of
visitors to the website doubled and awareness of
Volksbank increased in all target groups.
Our philosophy of personal client approach and
the will to meet their requirements was illustrated
by Internet banking not only thanks to the unique
five-language-version – Czech, German, English,
French, and Italian.
Support to sales force also continued for self-
of the Znojmo branch was connected with the PR
event ‘Jagr Team Show’.
As regards sponsoring, Volksbank CZ focused on
two important areas: culture and sport. Cultural
events supported by the bank included
co-operation with Moravian Gallery in Brno, the
Brno theatre G-studio and Prague’s theatre
Broadway, where the famous musical Cleopatra
was staged, and last but not least, a festival
25
METHOD USED TO OBTAIN ACCOUNT STATEMENTS
XII.02
XI.02
X.02
IX.02
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
VIII.02
26
organised by the Austrian Cultural Forum ‘Austrian
Months in Brno.’ The bank also supported
a number of exhibitions and concerts, e.g. the
Gustav Mahler Festival at Jihlava.
Concerning sport, Kaplice, Znojmo, Jihlava, Zlin
and Liberec received our support. Volksbank CZ
is also associated with competitions in disciplines
such as modern gymnastics, yachting and
swimming in Brno.
During the year the Bank worked hard at redesigning its corporate design and „adopted“
the changes made by the Volksbanken Group as
a whole, i.e. the new company slogan „United
in Trust“ was introduced which aims to further
highlight the fact that we wish to develop a
partnership with our clients in all our banking and
business relations.
Post
Desk
Infoterminal
Other
27
Dan Trantina (1965)
„Poor eyes“
BALANCE SHEET AS AT 31 DECEMBER 2002
ASSETS
2002
2002
2002
2001
2000
Gross amount
Provision
Net amount
Net amount
Net amount
385,062
-
385,062
375,781
211,434
2,902,745
-
2,902,745
2,571,998
2,364,022
80,516
-
80,516
38,797
54,511
2,822,229
-
2,822,229
2,533,201
2,309,511
12,672,443
(364,075)
12,308,368
8,544,076
6,652,689
338,895
-
338,895
228,032
784,197
12,333,548
(364,075)
11,969,473
8,316,044
5,868,492
4 Debt securities
227,404
-
227,404
-
189,241
a) issued by government institutions
178,009
-
178,009
-
-
b) issued by other entities
49,395
-
49,395
-
189,241
5 Shares, mutual shares and other interests
21,316
-
21,316
-
5,898
6 Participation interests with controlling influence 1,680
(1,179)
501
544
654
b) in other entities
1,680
(1,179)
501
544
654
87,953
(64,823)
23,130
17,047
20,787
a) establishment costs
-
-
-
-
-
b) goodwill
-
-
-
-
-
87,953
(64,823)
23,130
17,047
20,787
8 Tangible fixed assets
513,729
(249,772)
263,957
263,212
219,108
a) land and buildings for banking activities
165,333
(40,527)
124,806
133,354
142,286
b) other
348,396
(209,245)
139,151
129,858
76,822
65,454
-
65,454
55,209
38,337
-
-
-
-
-
24,298
-
24,298
71,257
40,958
16,902,084
(679,849)
16,222,235
11,899,124
9,743,128
CZK’000
1 Cash and deposits with central banks
2 Due from banks
a) repayable on demand
b) other receivables
3 Due from customers
b) other receivables
28
7 Intangible fixed assets
c) other
9 Other assets
10 Receivables from shareholders
11 Prepayments and accrued income
TOTAL ASSETS
BALANCE SHEET AS AT 31 DECEMBER 2002 - continued
LIABILITIES
CZK’000
2002
2001
2000
6,631,357
4,204,190
3,837,098
49,333
226,852
235,891
b) other payables
6,582,024
3,977,338
3,601,207
2 Due to customers
7,329,528
5,268,327
3,425,367
3,893,187
2,769,532
1,831,741
77,179
82,439
64,087
3,436,341
2,498,795
1,593,626
3,332
6,896
14,221
150,891
161,811
146,182
3,282,118
2,330,088
1,433,223
3 Liabilities from debt securities
757,906
1,074,390
1,292,648
a) issued debt securities
757,906
1,074,390
1,292,648
4 Other liabilities
524,650
550,582
385,557
5 Accruals and deferred income
17,990
38,022
48,855
6 Provisions
38,247
48,392
48,392
-
-
-
38,247
48,392
48,392
-
-
-
8 Share capital
750,000
650,000
650,000
of which: share capital paid up
750,000
650,000
650,000
9 Share premium
100,000
-
-
10 Reserve funds and other funds from profit
10,647
8,472
6,266
a) statutory reserve funds
10,377
8,472
6,177
b) other funds from profit
270
-
89
11 Retained earnings or accumulated losses from previous periods
26,344
18,650
3,037
12 Profit or loss for the accounting period
35,566
38,099
45,908
16,222,235
11,899,124
9,743,128
1 Due to banks
of which: saving accounts
b) other payables
of which: ba) saving accounts repayable on maturity
bb) saving accounts at notice
bc) term accounts repayable on maturity
a) provisions for pensions and similar liabilities
b) other provisions
7 Subordinated liabilities
Total liabilities
29
OFF-BALANCE SHEET AS AT 31 DECEMBER 2002
ASSETS
CZK’000
2002
2001
2000
1,579,661
675,035
530,745
373,881
871,539
625,468
214,420
31,651
754,113
509,912
233,615
10,586
Receivables from spot transactions
a) currency instruments
b) share instruments
187,121
187,121
-
63,435
63,435
-
69,581
69,508
73
Receivables from term instruments
a) interest instruments
b) currency instruments
287,726
228,571
59,155
381,965
136,824
245,141
301,575
284,482
17,093
5,407
1,371
1,025
Commitments and guarantees received
a) commitments
11,645,565
11,645,565
7,961,597
7,961,597
4,229,179
4,229,179
Collateral received
a) real estate pledges
b) cash pledges
c) securities pledges
d) other
10,039,564
3,387,899
599,560
259,710
5,792,395
3,646,391
3,202,756
228,319
51,105
164,211
2,973,593
2,698,411
141,724
8,373
125,085
Payables from spot transactions
a) currency instruments
b) share instruments
216,400
216,400
-
129,242
129,242
-
139,661
133,774
5,887
Payables from term instruments
a) interest instruments
b) currency instruments
347,043
288,571
58,472
378,392
136,824
241,568
301,503
284,482
17,021
Assets under custody
of which: securities
945,632
945,632
1,158,994
1,158,994
826,497
826,497
Commitments and guarantees given
a) commitments
b) guarantees and collaterals
c) guarantees from letters of credit
30
Receivables written-off
LIABILITES
Date:
21 March 2003
Statutory body
Person responsible
Person responsible
signature
for accounting
for financial statements
preparation
Alena Sládková
Eva Collardová
Johann Lurf
Herbert Skok
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2002
CZK’000
2002
2001
2000
772,482
751,828
596,962
7,946
1,423
12,315
(408,926)
(397,097)
297,028
(394)
(129)
(479)
3 Fee and commission income
100,682
78,263
68,700
4 Fee and commission expense
(32,934)
(33,731)
(24,995)
5 Gains less losses from financial transactions
132,728
132,445
126,621
9,215
3,631
253
(17,828)
(22,109)
(9,446)
(395,517)
(316,041)
(249,019)
(158,652)
(100,288)
(68,023)
(119,805)
(75,123)
(51,132)
ab) social and health insurance
(38,847)
(25,165)
(16,891)
b) other administrative expenses
(236,865)
(215,753)
(180,996)
and intangible fixed assets
(75,811)
(65,035)
(56,344)
a) depreciation of tangible fixed assets
(67,959)
(56,960)
(46,116)
(7,852)
(8,075)
(10,228)
110,524
25,930
77,635
a) utilization of specific provisions for loans and guarantees
12,098
-
50,300
b) utilization of other provisions for loans and guarantees
98,324
25,480
24,402
102
450
2,933
1 Interest receivable and similar income
of which: interest income from debt securities
2 Interest payable and similar expense
including: interest expense on debt securities
6 Other operating income
7 Other operating expense
8 Administrative expense
of which:
a) staff costs
aa) wages and salaries
9 Depreciation, additions to provisions for tangible
d) amortization of intangible fixed assets
10 Utilization of provisions for loans and guarantees, income from
ceded receivables and income from receivables already written-off
c) gains from ceded receivables and income
from receivables already written-off
31
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2002 - continued
CZK’000
2002
2001
2000
11 Write-offs, additions to provisions for loans and guarantees
(136,948)
(89,919)
(182,897)
a) additions to other provision for loans and guarantees
(110,589)
(89,112)
(182,561)
(1,953)
-
-
(24,406)
(807)
(336)
(43)
(154)
(982)
b) additions to specific provisions for guarantees
c) write-off of loans and payments from guarantees,
losses from ceded receivables
12 Additions to provisions for participating interests with significant
and controlling influence
13 Profit or loss on ordinary activities before taxation
32
57,624
68,011
49,460
14 Extraordinary income
-
4,353
28,395
15 Extraordinary expenses
-
(4,261)
(2,227)
16 Profit or loss on extraordinary activities before taxation
-
92
26,168
(22,058)
(30,004)
(29,720)
35,566
38,099
45,908
17 Income tax
18 Profit or loss for the year after taxation
Date:
21 March 2003
Statutory body
Person responsible
Person responsible
signature
for accounting
preparation
Alena Sládková
Eva Collardová
Johann Lurf
Herbert Skok
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2002
CZK’000
Share
capital
Share
premium
Reserve
fund
Social
fund
Retained
earnings
Profit
for the
period
Total
equity
650,000
-
6,048
136
8,994
2,572
667,750
Reserve fund allocation
-
-
129
-
(129)
-
-
Social fund allocation
-
-
-
400
(400)
-
-
Movements in revaluation
differences
-
-
-
-
2,572
(2,572)
-
Social fund use
-
-
-
(447)
-
-
(447)
Dividends declared
-
-
-
-
(8,000)
-
(8,000)
Profit for the year 2000
-
-
-
-
-
45,908
45,908
At 31 December 2000
650,000
-
6,177
89
3,037
45,908
705,211
-
-
2,295
-
(2,295)
-
-
-
-
-
500
(500)
-
-
differences
-
-
-
-
45,908
(45,908)
-
Social fund use
-
-
-
(589)
-
-
(589)
Dividends declared
-
-
-
-
(27,500)
-
(27,500)
-
-
-
-
-
38,099
38,099
At 31 December 2001
650,000
-
8,472
-
18,650
38,099
715,221
Share issue
100,000
100,000
-
-
-
-
200,000
-
-
1,905
-
(1,905)
-
-
-
-
-
1,000
(1,000)
-
-
differences
-
-
-
-
38,099
(38,099)
-
Social fund use
-
-
-
(730)
-
-
(730)
Dividends declared
-
-
-
-
(27,500)
-
(27,500)
-
-
-
-
-
35,566
35,566
At 31 December 2002
750,000
100,000
10,377
270
26,344
35,566
922,557
At 1 January 2000
33
NOTES TO FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Volksbank CZ, a.s. (hereinafter referred to as “the Bank”) was incorporated on 1 January 1997. The Bank
has its registered office at Brno and is organised as 15 domestic regional branches in the Czech Republic.
Its parent company is Volksbank International AG (100% subsidiary of Österreichische Volksbanken-AG),
incorporated in Austria.
The Bank’s operations primarily consist of:
34
•
•
•
•
•
•
•
providing Czech and foreign currency loans and guarantees;
accepting and placing deposits in Czech and foreign currency;
accepting current and term accounts denominated in Czech and foreign currency;
rendering of general banking services through a network of branches and agencies;
providing foreign exchange transactions on the inter-bank money market;
providing foreign trade finance and related banking services;
trading in securities and portfolio management.
2 ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements, comprising a balance sheet, statements of income and of changes in equity and
accompanying notes, are prepared in accordance with the Act on accounting and the applicable accounting
rules set by the Ministry of Finance of the Czech Republic. The financial statements are prepared under
the historical cost convention as modified by the revaluation of financial instruments held for trading and
available-for-sale to fair values.
The financial statements are rounded to thousands of Czech Crowns (“CZK’000”) unless otherwise stated and
are not consolidated.
(b) Foreign currencies
Financial assets and liabilities denominated in foreign currencies are translated to Czech Crowns at the
exchange rate announced by the Czech National Bank (“CNB”) effective at the balance sheet date. All
resulting foreign exchange gains and losses are recognised in gains less losses from financial transactions.
2 ACCOUNTING POLICIES - continued
(c) Fair value of securities
The fair value of a security is determined as the market value quoted by a relevant stock exchange or other
active public market. In other cases the fair value is estimated by:
•
•
the share on the investee’s equity for equities;
the risk adjusted net present value for debt securities and notes.
(d) Trading securities
Trading securities were either acquired for generating profit from short-term fluctuations in price or dealer’s
margin, or included in a portfolio in which a pattern of short-term profit taking exists. Trading securities are
initially recognised at cost, which includes expenses incurred in connection with their acquisition, and they
are further measured at fair value. All related gains and losses are included in gains less losses from financial
transactions. Spot purchases and sales are recognised on a settlement date basis. Forward trades are
treated as derivatives. Interest earned on trading securities is reported as interest income on securities.
(e) Available-for-sale investment securities
Available-for-sale investment securities are neither trading securities nor securities held to maturity. They
comprise mainly shares in companies other than in subsidiaries and associates and debt securities held for
liquidity management. Available-for-sale securities are measured in the same way as trading securities.
(f) Investment securities held-to-maturity
Investment securities held-to-maturity are securities with fixed maturity where the Bank has both the intent and
the ability to hold them to maturity.
They are measured at amortised cost.
35
(g) Transfers between portfolios
Transfers between portfolios are generally allowed if management intentions are changed, except as follows:
•
•
•
trading securities cannot be transferred;
on sale or transfer of any securities held-to-maturity, the Bank must transfer the rest of the
portfolio of securities held-to-maturity to available-for-sale securities and no securities can be
classified as held-to-maturity within the two following accounting periods;
exceptions to this rule are allowed within the last three months before maturity or in the case
of a significant deterioration in an issuer’s creditworthiness.
(h) Investments in subsidiary and associated undertakings
36
A subsidiary is an enterprise that is controlled by the Bank, which means that the Bank has the power to
govern the financial and operating policies so as to obtain benefits from its activities.
An associated undertaking is an enterprise where the Bank has significant influence, which is the power to
participate in the financial and operating policy decisions, but not control.
Investments in subsidiary and associated undertakings are measured at cost less any impairment other than
temporary.
(i) Securities financing arrangements
Securities borrowed or purchased under agreements to resell (resale or reverse repo agreements) are not
recognised on the balance sheet. Securities lent or sold under agreements to repurchase (repo agreements)
are retained in their original portfolio. The underlying cashflows are recorded as loans and borrowings
respectively on a settlement date basis.
(j) Derivative financial instruments and hedging
Derivative financial instruments including foreign exchange contracts, interest rate futures, forward rate
agreements, currency and interest rate swaps, currency and interest rate options and other derivative financial
instruments are initially recognised on balance sheet at cost and subsequently are remeasured at their fair
value. Fair values are obtained from quoted market prices, discounted cash-flow models and options pricing
models as appropriate. All derivatives are presented in other assets or in other liabilities when their fair value is
positive or negative respectively.
Certain derivatives embedded in other financial instruments, are treated as separate derivatives when their
risks and characteristics are not closely related to those of the host contract and the host contract is not
carried at fair value.
Changes in the fair value of derivatives held for trading are included in Gains less losses from financial
transactions.
The Bank designates prospectively certain derivatives as either a hedge of the fair value of a recognised asset
or liability (fair value hedge) or a hedge of a future cash flow attributable to a recognised asset or liability,
a forecasted transaction or a firm commitment (cash flow hedge). Hedge accounting is used for derivatives
designated in this way provided the following criteria are met.
1)
2)
3)
4)
formal documentation of the general hedging strategy, hedged risk, hedging instrument, hedged
item and their relationship is prepared before hedge accounting is applied;
the hedge documentation proves that it is expected to be highly effective in offsetting the risk in the
hedged item at inception and throughout the reporting period;
the hedge is effective on an ongoing basis;
the hedged item is not a security classified as held for trading.
Changes in the fair value of derivatives that qualify as effective fair value hedges are recorded in the income
statement, along with the corresponding change in fair value of the hedged asset or liability that is attributable
to that specific hedged risk.
37
(j) Derivative financial instruments and hedging - continued
Changes in the fair value of derivatives that qualify as effective cash flow hedges are recorded in the hedging
reserve in equity. Where a hedged forecasted transaction or firm commitment results in the recognition of
an asset or of a liability, the gains and losses previously deferred in the hedging reserve are transferred from
the hedging reserve and form a part of the cost of the asset or liability. Otherwise, amounts deferred in the
hedging reserve are transferred to the income statement and classified as income or expense in the periods
during which the hedged item affects the income statement.
(k) Interest income and expense
38
Interest income and expense are recognised for all interest bearing instruments on an accrual basis using the
effective yield method based on the acquisition cost. Interest income includes accrued coupons, discount and
premium on all fixed income instruments.
Income on non performing loans is also accrued and capitalised into the related loan balance. Such amounts
are considered in estimating the provision for non-performing loans.
(l) Penalty interest
Accrual of penalty interest income is suspended when loans become overdue by more than 90 days, or on
other events of a debtor’s default.
(m) Fee and commission income
Fixed fee income for arrangement of loans, guarantees and other activities is recognised immediately, whereas
commission is accrued over the period to maturity.
(n) Provisions and allowances
Specific provisions are recognised when the Bank has a present obligation as a result of past events, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate of the amount of the obligation can be made. In addition, general provisions for
banking risk recorded prior to 1 January 2002 are recognised in the balance sheet, however, these must be
utilised or written back to income by 31 December 2005. The Bank is reducing this balance by 25% each year
over the period 2002 - 2005. All provisions are presented in liabilities.
Allowances are deducted from the cost of each impaired asset. The amount of allowance for impaired
loans and other assets is based on appraisals of these assets at the balance sheet date after taking into
consideration the present forced sale value of collateral. The market in the Czech Republic for many
collaterals is at an early stage of development and there is a low level of liquidity for certain types of assets.
As a result, the realisable value on foreclosure may differ from the value ascribed in estimating allowances.
(o) Tangible and intangible fixed assets
Tangible and intangible fixed assets are recorded at cost, which includes costs incurred in bringing the assets
to their present location and condition and value added tax.
Tangible and intangible fixed assets are depreciated or amortised by applying the straight-line or accelerated
basis over the estimated useful lives. The accounting depreciation/amortisation rates used by the Bank equal
the depreciation/amortisation rates for tax straight-line depreciation/amortisation and for tax accelerated
depreciation/amortisation as appropriate. However, these tax depreciation rates are applied on a monthly
basis with respect to accounting depreciation/amortisation. Fixed assets purchased from 1993 until 1998
have been depreciated or amortised on the straight-line basis using the depreciation/amortisation rates for tax
straight-line depreciation/amortisation. Fixed assets purchased from 1999 until 2002 have been depreciated
or amortised on accelerated bases using the rates for tax accelerated depreciation/amortisation.
Low value tangible and intangible assets with a unit cost of less than CZK 25,000 are treated as fixed assets
and are fully depreciated or amortised upon the inception of use. Low value assets with a unit cost higher
than CZK 25,000 but lower than CZK 40,000 (for low value intangible assets) or CZK 60,000 (for low value
tangible assets) are depreciated/amortised based on professional judgement of useful life over 3, 4 or 6 years.
39
(o) Tangible and intangible fixed assets (continued)
The depreciation /amortisation periods used are as follows:
Purchased from
Purchased from
1993 until 1998
1999 until 2002
45
30
Hardware and equipment
4
4
Furniture and fittings
8
6
15
12
Motor vehicles
4
4
Software
4
4
In years
Buildings and constructions
40
Safes
Purchased licences are amortised over 4 years or over the life of licence agreement, if shorter.
Where the carrying amount of an asset is greater than its estimated recoverable amount, a provision
is established.
Tangible assets’ repairs and maintenance expenditures are charged to expense as incurred. Improvement
expenditures exceeding CZK 40,000 per unit in one year for tangible fixed assets and CZK 60,000 for
intangible fixed assets are capitalised.
(p) Value added tax
The Bank is registered for value added tax (“VAT”). Fixed tangible assets and intangible assets are
stated at cost including appropriate VAT. The Bank does not raise claims for input VAT, since the ratio of
income subject to VAT is lower than 5% of the total income of the Bank. Input VAT incurred is expensed
immediately.
(q) Deferred taxation
Deferred tax liability is recognised on all temporary differences between the carrying amount of an asset or
liability in the balance sheet and its tax base using the full liability method. Deferred tax asset is recognised
to the extent that it is probable that future taxable profit will be available against which this asset can be
utilised.
(r) Pensions
No formal or informal pension plan is currently in operation at the Bank. Regular contributions are made to
the state to fund the national pension plan.
(s) Related parties
41
Related parties are defined in accordance with the Act on Banks as follows:
•
•
•
•
•
board members, senior management and their relatives;
corporates controlling the Bank, their shareholders holding more than 10% of capital and their
senior management and its relatives;
corporates with 10% shareholding of the Bank’s board members, senior management or corporates
controlling the Bank;
shareholders holding more than 10% of the Bank and corporates controlled by them;
subsidiaries of the Bank.
Material transactions, outstanding balances and pricing policies with related parties are disclosed in Notes 4,
5(b), 10 ,12, 14, 15, 17, 18, 19, 20, 22, 23.
(t) Subsequent events
The effects of events, which occurred between the balance sheet date and the date of signing the financial
statements, are reflected in the financial statements in the case that these events provide further evidence of
conditions, which existed at the balance sheet date.
Where significant events occur subsequent to the balance sheet date prior to signing of the financial
statements, which are indicative of conditions, which arose subsequent to the balance sheet date, the effects
of these events are disclosed, but are not themselves reflected in the financial statements.
(u) Extraordinary items and changes in accounting policy
Extraordinary items include one-off effects of events outside the scope of the Bank’s activities and effects of
changes in accounting policies.
Changes in accounting policy have been adopted by the Bank prospectively, therefore comparative financial
information has not been restated.
There have been changes in accounting policies since 1 January 2002 as follows:
(1)
Direct transaction costs related to acquisition of financial assets are capitalised in their cost.
The final effect is that this is presented in the net income from financial operations, previously
presented in fees and commissions.
(2)
Accrued interest income and expense relating to assets and liabilities is presented in the
balance sheet together with those assets / liabilities.
42
Above described changes in accounting policies did not effected the Bank’s net equity at
1 January 2002 and did not materially change profit for the year ended 31 December 2002.
3 CASH AND DEPOSITS WITH CENTRAL BANKS
CZK’000
31.12.2002
31.12.2001
31.12.2000
Cash on hand
177,088
213,006
118,933
Obligatory reserves
168,118
128,258
67,809
39,856
34,517
24,692
385,062
375,781
211,434
Current accounts with central banks
Obligatory reserves are mandatory deposits with the CNB and they are not available for use in the Bank’s
day-to-day operations. These deposits were interest-free until 11 July 2001. Since that date they bear
interest at the CZK repo rate (currently 2.5% p.a.).
4 DUE FROM BANKS
CZK’000
Current accounts with banks
Term deposits with banks and central banks
Other due from banks
Allowance for impairment
43
31.12.2002
31.12.2001
31.12.2000
94,765
38,797
54,511
2,773,155
2,533,201
2,309,511
34,825
-
-
2,902,745
2,571,998
2,364,022
-
-
-
2,902,745
2,571,998
2,364,022
Receivables due from related parties
The Bank included CZK 315,726,000 due from related parties within receivables due from other banks as at
31 December 2002 (2001: CZK 329,168,000; 2000: CZK 31,817,000).
5 DUE FROM CUSTOMERS
CZK’000
31.12.2002
31.12.2001
31.12.2000
Standard loans to companies and individuals
9,863,525
6,281,633
4,044,093
Impaired loans to companies and individuals
1,273,201
1,210,740
1,083,077
5,901
-
-
Standard loans to municipalities
1,270,545
1,099,240
1,084,070
Impaired loans to municipalities
258,808
304,273
729,719
463
-
-
12,672,443
8,895,886
6,940,959
(364,075)
(351,810)
(288,270)
12,308,368
8,544,076
6,652,689
Loans to governmental entities
Other receivables from customers
44
Allowance for impaired loans (Note 11)
In addition to the allowance for impaired loans the Bank has reflected a general tax deductible provision for
loans of CZK 34,015,000 at 31 December 2002 (2001 and 2000: CZK 45,354,000). This provision has to be
utilised or written back to income by 31 December 2005 (Note 2(n), Note 11).
The Bank restructured loans and receivables in total amount of CZK 162,298,000 during 2002, which resulted
in changes in its payment schedules.
5 DUE FROM CUSTOMERS - continued
(a) Quality of loan portfolio
Loans are categorised in accordance with the definitions issued by the CNB in five categories (standard,
watch, substandard, doubtful, loss). Impaired loans include substandard, doubtful and loss loans and
represent total outstanding principal and accrued interest receivable with service payments overdue more than
90 days or other defaults in contractual terms or financial performance.
CZK’000
31.12.2002
31.12.2001
31.12.2000
Standard
11,140,269
7,380,872
5,128,163
Watch
743,565
722,957
1,161,765
Substandard
270,135
263,977
152,605
Doubtful
122,117
106,761
100,247
Loss
396,357
421,319
398,179
12,672,443
8,895,886
6,940,959
The value ascribed to assets received as collateral for loans to customers can be analysed as follows:
CZK’000
31.12.2002
31.12.2001
31.12.2000
Cash
65,921
108,844
141,724
Securities
76,223
58,925
8,373
Land and buildings
1,993,958
1,584,770
2,698,411
Bank guarantees
7,669,728
5,044,457
2,145,544
208,604
119,366
125,085
10,014,434
6,916,362
5,119,137
Other assets
45
5 DUE FROM CUSTOMERS - continued
(b) Loans to related parties and major shareholders
Standard loans to companies and individuals include the following loans to related parties and other
shareholders holding more than 10% of the share capital of the Bank:
CZK’000
Management of the Bank
VB Leasing, s.r.o.
Other related parties
46
Total loans to related parties
31.12.2002
31.12.2001
31.12.2000
856
980
-
4,838,093
3,254,638
1,532,067
864,062
-
-
5,703,011
3,255,618
1,532,067
All loans to related parties were made in the ordinary course of business on substantially the same terms and
conditions, including interest rates, as those prevailing at the same time for comparable transactions with
other customers, and did not, in the opinion of management, involve more than normal credit risk or present
other unfavourable features.
6 SYNDICATE LOANS
At 31 December 2002, 2001 and 2000 the Bank led syndicate loans, which can be analysed as follows:
At 31 December 2002:
Borrower
Loan
currency
Loan
balance
CZK’000
Share of
syndicate
manager (%)
Share of
syndicate
members (%)
EUR
14,258
80
20
- Hypothekenbank AG
CZK
99,998
50
50
Erste Bank Sparkasse CZ
EUR
13,979
80
20
Weinviertler Volksbank
EUR
10,580
50
50
EUR
6,063
50
50
DZ-Bank
EUR
2,908
40
60
Oesterreichische Volksbanken AG
EUR
22,635
1
99
EUR
182,553
1
99
EUR
104,191
1
99
Kommunalkredit AG
CZK
6,538
50
50
Niederoesterreichische Landesbank
- Hypothekenbank AG
463,703
47
6 SYNDICATE LOANS - continued
Borrower
Loan
currency
Loan
balance
CZK’000
Share of
syndicate
manager (%)
Share of
syndicate
members (%)
Hagebank VB Voecklabruck
EUR
24,527
-
100
Kommunalkredit AG
CZK
15,284
50
50
EUR
84,886
80
20
EUR
74,067
80
20
CZK
249,998
50
50
DZ-Bank ( former SGZ Bank)
EUR
8,175
40
60
EUR
25,966
50
50
EUR
25,256
1
99
EUR
204,000
1
99
EUR
16,734
50
50
EUR
115,640
1
99
48
- Hypothekenbank AG
- Hypothekenbank AG
844,533
6 SYNDICATE LOANS - continued
Borrower
Loan
currency
Loan
balance
CZK’000
Share of
syndicate
manager (%)
Share of
syndicate
members (%)
Welser Volksbank AG
DEM
6,728
-
100
Hagebank VB Voecklabruck
DEM
26,912
-
100
Kommunalkredit AG
ATS
18,018
50
50
DEM
108,665
80
20
- Hypothekenbank AG
49
DEM
94,275
80
20
SGZ Bank
DEM
12,558
40
60
ATS
33,224
50
50
EUR
29,105
1
99
EUR
211,686
1
99
EUR
24,480
50
50
EUR
132,704
1
99
698,355
7 SECURITIES
CZK’000
Trading
Bonds and similar
debt securities at 31 December
2002
2001
2000
Shares and similar
equity securities at 31 December
2002
2001
2000
227,404
-
189,241
-
-
5,898
Held to maturity
-
-
-
-
-
-
Available for sale
-
-
-
21,316
-
-
227,404
-
189,241
21 316
-
5,898
Total
(a) Trading securities
50
Bonds and similar debt securities
CZK’000
Net cost
Market value
224,362
227,404
Free market of recognised stock exchanges
-
-
Unquoted
-
-
224,362
227,404
Main or auxiliary market of recognised stock exchanges
There were no bonds and similar debt securities in the Bank’s trading portfolio as at 31 December 2001.
7 SECURITIES - continued
(a) Trading securities - continued
Bonds and similar debt securities - continued
CZK’000
Net cost
Market value
187,200
184,189
-
-
Unquoted
-
-
5,052
5,052
192,252
189,241
Accrued interest on bonds
Provision for unrealised losses (Note 11)
(3,011)
189,241
Net cost represents acquisition cost including purchased accrued interest.
Bonds and similar debt securities in the trading portfolio at 31 December 2002 include CZK 55,039,000
of securities (24% of the total) earning fixed interest (2001: CZK nil; 2000: CZK 189,241,000 representing
100% of the total).
51
(a) Trading securities - continued
Bonds and similar debt securities - continued
There were no shares and similar equity securities in the Bank’s trading portfolio as at 31 December 2002 and
2001.
CZK’000
52
Net cost
Market value
5,934
5,898
-
-
Unquoted
-
-
5,934
5,898
Provision for unrealised losses (Note 11)
(36)
5,898
As a result of the low liquidity of many securities on the Czech market and high market volatility, realisable
prices may differ from the stated fair or market value.
(b) Securities available-for-sale
CZK’000
Net cost
Market value
-
-
-
-
27,161
21,316
27,161
21,316
Unquoted
53
The Bank held no available-for-sale securities portfolio as at 31 December 2001 and 2000.
As a result of the low liquidity of many securities on the Czech market and high market volatility, realisable
prices may differ from the stated fair or market value.
8 INVESTMENTS IN SUBSIDIARY AND ASSOCIATED UNDERTAKINGS
(a) Investments in subsidiary undertakings
Name and registered office
At cost
CZK’000
Nominal
value
CZK’000
Share
capital
CZK’000
Shareholding
%
1,680
10
1,000
100
VB Komunální poradenství a.s., Heršpická 5, Brno
Provision for diminution in value (Note 11)
(1,179)
501
54
At cost
CZK’000
1,680
(1,136)
544
Nominal
Share
Share-
value
CZK’000
capital
CZK’000
holding
%
10
1,000
100
8 INVESTMENTS IN SUBSIDIARY AND ASSOCIATED UNDERTAKINGS - continued
(a) Investments in subsidiary undertakings - continued
At 31 December 2000
At cost
CZK’000
Nominal
value
CZK’000
Share
capital
CZK’000
Shareholding
%
1,680
10
1,000
100
FX differences
(44)
(982)
55
654
Summary financial information on subsidiary undertakings
At 31 December 2002 and for the year then ended:
UNAUDITED SUBSIDIARY FINANCIAL DATA
Name
CZK’000
Net
book
amount
Equity
520
476
Net
Equity
VB Komunální poradenství a.s.
Total Revenues
assets
626
Profit/(loss)
before
tax
12
(25)
Total Revenues
Profit/(loss)
AUDITED SUBSIDIARY FINANCIAL DATA
Name
book
CZK’000
assets
before
amount
532
tax
501
631
12
(43)
8 INVESTMENTS IN SUBSIDIARY AND ASSOCIATED UNDERTAKINGS - continued
(a) Summary financial information on subsidiary undertakings - continued
UNAUDITED SUBSIDIARY FINANCIAL DATA
Name
CZK’000
Net
book
amount
Equity
581
544
Total Revenues
assets
666
17
Profit/loss
before
tax
(132)
(b) Investments in associated undertakings
56
There were no investments in associated companies as at 31 December 2002, 2001 and 2000.
9 INTANGIBLE AND TANGIBLE FIXED ASSETS
Intangible fixed assets
CZK’000
31 December 2001
Additions
Disposals
31 December 2002
68,509
13,729
(83)
82,155
-
246
-
246
5,618
263
(329)
5,552
74,127
14,238
(412)
87,953
51,925
7,525
(20)
59,430
5,155
343
(105)
5,393
57,080
7,868
(125)
64,823
Cost
Software
Intangible fixed assets in the course of construction
Other
Accumulated amortisation
Software
Other
Net book amount
17,047
23,130
9 INTANGIBLE AND TANGIBLE FIXED ASSETS - continued
Intangible fixed assets - continued
Low value intangible fixed assets (unit costs lower than CZK 25,000) fully written off at the inception of use
until 31 December 2002 totalled CZK 5,176,000 (2001: 5,001,000; 2000: 4,597,000).
Operating tangible fixed assets
CZK’000
31 December 2001
Additions
Disposals
31 December 2002
932
-
-
932
Buildings
164,122
279
-
164,401
Equipment
168,520
40,523
(13,813)
195,230
8,436
2,807
(8,436)
2,807
Technical improvements
36,041
11,933
(4,054)
43,920
Other
80,870
30,736
(5,167)
106,439
458,921
86,278
(31,470)
513,729
31,700
8,827
-
40,527
100,453
36,893
(13,813)
123,533
3,037
6,999
(4,054)
5,982
60,519
24,378
(5,167)
79,730
195,709
77,097
(23,034)
249,772
Cost
Land
Assets in course of construction
Accumulated depreciation
Buildings
Equipment
Technical improvements
Other
Net book amount
263,212
Low value tangible assets (unit costs lower than CZK 25,000) fully written off at the inception of use until
31 December 2002 totalled CZK 57,392,000 (2001: 47,185,000; 2000: 34,404,000).
263,957
57
9 INTANGIBLE AND TANGIBLE FIXED ASSETS - continued
Fixed assets held under lease contracts
The Bank does not use any material assets under finance lease contracts.
Assets under charge
The Bank owns no assets encumbered by lien as at 31 December 2002, 2001 and 2000.
10 OTHER ASSETS
CZK’000
58
31.12.2002
31.12.2001
31.12.2000
27,484
24,352
12,062
Rent deposit
5,972
6,044
6,632
Settlement clearance accounts
2,323
5,032
2,017
677
15
-
Deferred tax asset (Note 24)
6,918
10,587
14,359
Inventories
2,287
1,563
2,013
19,793
7,616
1,254
65,454
55,209
38,337
-
-
-
65,454
55,209
38,337
Advances granted
Derivative financial instruments (Note 26(d))
Other receivables
Allowance for impairment
Other assets as at 31 December 2002 includes CZK 1,300,000 due from related parties (2001: 3,047,000;
2000: 8,937,000).
11 ALLOWANCES, PROVISIONS AND WRITE OFFS
The Bank had the following provisions and allowances for assets at risk:
CZK’000
31.12.2002
31.12.2001
31.12.2000
34,015
45,354
45,354
General provisions for guarantees
2,279
3,038
3,038
Specific provisions for guarantees (Note 17)
1,953
-
-
38,247
48,392
48,392
364,075
351,810
288,270
-
-
3,047
1,179
1,136
982
365,254
352,946
292,299
403,501
401,338
340,691
Provisions
General provisions for loans (Note 5)
Allowances
Impaired loans to customers (Note 5)
Trading securities (Note 7)
Investments in subsidiaries & associates (Note 8)
59
11 ALLOWANCES, PROVISIONS AND WRITE OFFS - continued
The movements in provisions can be analysed as follows:
General provisions
for loans
General provisions
for guarantees
Specific provisions
for guarantees
Total
95,654
3,038
-
98,692
Additions
-
-
-
-
Usage
-
-
-
-
(50,300)
-
-
(50,300)
45,354
3,038
-
48,392
Additions
-
-
-
-
Usage
-
-
-
-
Write backs
-
-
-
-
45,354
3,038
-
48,392
Additions
-
-
1,953
1,953
Usage
-
-
-
-
(11,339)
(759)
-
(12,098)
34,015
2,279
1,953
38,247
CZK’000
At 1 January 2000
Write backs
60
At 31 December 2000
At 31 December 2001
Write backs
At 31 December 2002
The movements in allowances can be analysed as follows:
Impaired loans
to customers
Trading
securities
Investments
in subsidiaries
and associates
Allowance at 1 January 2000
131,513
-
-
Additions
182,561
3,047
982
(1,402)
-
-
(336)
-
-
Write backs
(24,066)
-
-
Allowance at 31 December 2000
288,270
3,047
982
89,112
-
154
(807)
-
-
Write backs
(24,673)
(3,047)
-
351,810
-
1,136
Addition
110,589
-
43
Usage
(24,406)
-
-
Write backs
(73,918)
-
-
364,075
-
1,179
CZK’000
Differences from FX revaluation
Usage
Additions
Differences from FX revaluation
Usage
(92)
Write-offs of loans and receivables by the Bank are covered by internal regulations. Loan receivables and
balances on debit accounts without any cash movements are considered for write-off. Any write-off must be
approved by Board of Directors or responsible officer within authority limits. Classified receivables are covered
by allowances in accordance with CNB’s regulation No. 193/1998. Allowances are released in case of
write-offs. Written-off receivables are recorded as off balance sheet asset.
61
Write-offs and recovery of amounts written off previously:
CZK’000
2002
Recovery of
Amounts amounts written
written off
off previously
Customers
24 406
102
2001
Recovery of
written off
off previously
807
450
2000
Recovery of
written off
off previously
336
2 933
Bad debts are written off against established general provisions, specific allowances or directly expensed in
the case that management asserts their recoverability as being remote.
62
12 DUE TO BANKS
CZK’000
Due to central banks
Due to other banks
31.12.2002
31.12.2001
31.12.2000
-
55,472
64,657
6,631,357
4,148,718
3,772,441
6,631,357
4,204,190
3,837,098
31.12.2002
31.12.2001
31.12.2000
6,126,499
3,967,691
3,415,766
Deposits from related parties
CZK’000
Subsidiary undertakings and other
companies under common control
Management considers that deposits from related parties were accepted on substantially the same terms
and conditions, including interest rates, as those prevailing at the same time for comparable transactions
with other customers, and did not, in the opinion of management, involve more than normal interest rate and
liquidity risk or present other unfavourable features.
13 DUE TO CUSTOMERS
CZK’000
Current accounts
Saving accounts
Term deposits
31.12.2002
31.12.2001
31.12.2000
3,816,008
2,687,094
1,767,654
231,402
257,909
237,535
3,282,118
2,323,324
1,420,178
7,329,528
5,268,327
3,425,367
31.12.2002
31.12.2001
31.12.2000
757,906
1,074,390
1,292,648
14 LIABILITIES FROM DEBT SECURITIES
CZK’000
Depository notes
Deposits and debt securities from related parties
CZK’000
31.12.2002
Management of the Bank
4,100
Subsidiary
Other related parties
515
442,611
447 226
Data for 2001 and 2000 is not presented because the preparation would require unreasonable additional cost
exceeding additional benefit from the disclosure.
Management considers that deposits from related parties were accepted on substantially the same terms
and conditions, including interest rates, as those prevailing at the same time for comparable transactions
with other customers, and did not, in the opinion of management, involve more than normal interest rate and
liquidity risk or present other unfavourable features.
63
15 OTHER LIABILITIES
CZK’000
31.12.2002
31.12.2001
31.12.2000
-
200,000
-
Suppliers
198,202
121,003
187,494
Settlement clearance accounts
263 065
182,727
150,013
60,478
45,031
48,050
2,905
1,821
-
524,650
550,582
385,557
Payables for subscribed shares
Other liabilities
Derivative financial instruments (Note 26(d))
64
Other liabilities as at 31 December 2002 includes 173,300,000 of related party liabilities (data for 2001
and 2000 is not presented because the preparation would require unreasonable additional cost exceeding
additional benefit from the disclosure).
16 EQUITY AND PROFIT DISTRIBUTION
Share capital
CZK’000
Issued and paid
31.12.2002
31.12.2001
31.12.2000
750,000
650,000
650,000
16 EQUITY AND PROFIT DISTRIBUTION - continued
Share capital - continued
Issues of shares
ISIN
Date of issue
Nominal value
of share
770980001406
Akcionáři
Number of
shares
CZK
Nominal value
CZK’000
23 October 1998
5,000
30,000
150,000
770980001406
7 August 2002
5,000
4,600
23,000
770980001414
23 October 1998
5,000
100,000
500,000
770980001414
7 August 2002
5,000
15,400
77,000
65
Shareholders:
66
Holding
%
1. Volksbank International AG, Vienna
69.30
2. Banque Fédérale des Banques Populaires, Paris
10.00
3. WGZ Bank , Düsseldorf
3.33
4. DZ-Bank AG, Frankfurt
6.67
5. Veneto Banca, Montebelluna
2.20
6. Banca Popolare di Vicenza, Vicenza
2.50
7. Banca Agricola Mantovana, Mantova
2.50
8. Banca Popolare dell’Emilia Romagna, Modena
2.50
9. Niederoesterreichische Landesbank-Hypothekenbank AG, St. Pölten
1.00
100.00
Bank shares are not owned by members of the Board of Directors, Supervisory Board and management.
Profit distribution
The 2001 and 2000 net profit were allocated as follows:
CZK’000
2001
2000
Statutory reserve
1,905
2,295
Social fund
1,000
500
27,500
27,500
7,694
15,613
38,099
45,908
Dividends
Retained earnings
Net profit
Distribution of 2002 profit in the amount of CZK 35,566,000 was not decided by the date of these financial
statements.
In accordance with the Commercial Code the Bank allocates 5% of its profit for the period to the Statutory
reserve until the balance reaches 20% of the share capital.
Social fund contributions are not charged to the income statement in accordance with Czech accounting rules
and are presented within equity.
67
16 CONTINGENCIES AND COMMITMENTS
Commitments to extend loans, loan guarantees to third parties and letters of credit include exposure to credit
loss in the event of a client’s default. Various commitments and contingent liabilities arise in the normal course
of business involving elements of credit risk, interest rate risk and liquidity risk.
Contingent liabilities include:
CZK’000
31.12.2002
31.12.2001
31.12.2000
-
-
-
On behalf of customers
530,745
214,420
233,615
Total guarantees granted
530,745
214,420
233,615
(1,953)
-
-
528,792
214,420
233,615
Guarantees granted
On behalf of banks
68
Provision for guarantees granted (Note 11)
Net after provisions
There were no guarantees granted to related parties as at 31 December 2002, 2001 and 2000.
CZK’000
31.12.2002
31.12.2001
31.12.2000
270,404
631,291
555,569
675,228
527,703
270,928
Assets placed in custody
Securities
Assets under custody
Securities
Management considers that no present obligations were associated with these fiduciary duties
at 31 December 2002.
18 INTEREST RECEIVABLE AND SIMILAR INCOME
CZK’000
2002
2001
2000
Interest on inter-bank transactions
106,830
133,167
91,832
Interest on loans to customers and state
657,706
617,238
492,815
7,946
1,423
12,315
772,482
751,828
596,962
Interest and discount on debt securities
At 31 December 2002 the amount of penalty interest not enforced amounted to CZK 73,902,000
(2001: CZK 113,000,000, 2000; CZK 123,000,000).
Interest income from related party transactions of CZK 268,549,000 was included in the Bank’s income in
2002 (2001: CZK 165,558,000; 2000: CZK 88,664,000).
69
19 INTEREST PAYABLE AND SIMILAR EXPENSE
CZK’000
2002
2001
2000
Interest on inter-bank transactions
287,747
246,245
183,916
Interest on deposits from customers and state
120,785
150,723
112,633
Interest and discount on debt securities issued
394
129
479
408,926
397,097
297,028
Interest expense from related party transactions of CZK 250,889,000 was included in the Bank’s expenses
in 2002 (2001: CZK 156,614,000; 2000: CZK 55,147,000).
20 COMMISSION AND FEE INCOME
COMMISSION AND FEE INCOME
CZK’000
31.12.2002
31.12.2001
31.12.2000
23,187
16,330
16,036
1,696
-
-
402
315
131
68,351
52,598
49,528
Foreign exchange fee
2,090
2,762
2,131
Other
4,956
6,258
874
100,682
78,263
68,700
Commission from loans
Brokerage income from purchase and sale
of securities
Custody fee income
Commission for incoming and outgoing payments
70
Commission and fee income in 2002 includes CZK 1,129,000 of fees and commissions from related parties
(2001: CZK 1,287,000; information is not available for 2000).
COMMISSION AND FEE EXPENSES
CZK’000
Fees for guarantees received
Other fee expenses
31.12.2002
31.12.2001
31.12.2000
26,924
24,841
21,207
6,010
8,890
3,788
32,934
33,731
24,995
Commission and fee expense in 2002 includes CZK 25,603,000 of fees and commissions to related parties
(2001: CZK 23,778,000; 2000: CZK 21,260,000).
21 NET GAINS FROM FINANCIAL TRANSACTIONS
CZK’000
Realised net gains / (losses) from the sale of securities
Unrealised net gains / (losses) from securities trading
Net gains from foreign currency transactions
Realised net gains / (losses) from other transactions
2002
2001
2000
2,460
5,653
(186)
(6,470)
3,047
(3,047)
139,626
124,717
129,279
(2,888)
(972)
575
132,728
132,445
126,621
22 OTHER OPERATING INCOME
71
CZK’000
2002
2001
2000
Income from fixed assets disposals
1,771
734
132
Insurance receipts
6,105
-
-
Other operating income
1,339
2,897
121
9,215
3,631
253
Other operation income in 2002 includes CZK 2,562,000 of income from related parties (2001: CZK 672,000;
2000: CZK 42,000).
23 ADMINISTRATIVE EXPENSES
CZK’000
2002
2001
2000
119,805
75,123
51,132
Social security and other social costs
38,847
25,165
16,891
Rent and lease charges
40,404
34,210
22,924
Advisory services
92,502
95,996
90,534
Promotion
25,042
12,541
7,168
IT costs
31,155
31,631
32,586
Other administration expenses
47,762
41,375
27,784
395,517
316,041
249,019
2002
2001
2000
317
256
188
Number of members of the Board of Directors
3
3
3
Number of members of the Supervisory Board
9
9
9
Wages and salaries
72
Staff statistics
CZK’000
Average number of employees
Analysis of remuneration of statutory representatives and the Supervisory Board members is treated as
confidential information by the Company. For this reason this information has not been disclosed.
Administrative expenses in 2002 include CZK 91,973,000 of expenses paid to related parties
(2001: CZK 79,055,000; 2000: CZK 89,180,000).
24 TAXATION
CZK’000
2002
2001
2000
57,624
68,011
49,460
(36,629)
(8,003)
(28,749)
Non-deductible expenses
45,337
12,131
78,873
Difference between depreciation and tax allowances
(6,522)
1,071
(7,613)
(2,127)
(3,329)
(941)
(159)
(408)
(62)
-
264
5,537
Net taxable profit
57,524
69,737
96,505
Corporate tax charge at 31%
17,832
21,618
29,917
Tax deduction (dividends)
(1,517)
(2,050)
-
(144)
(119)
(400)
16,171
19,449
29,517
Deferred income tax expense
3,669
3,772
23,393
Current income tax expense
16,171
19,449
29,517
2,218
6,783
203
22,058
30,004
53,113
(11,434)
(9,908)
(8,558)
18,352
20,495
22,917
6,918
10,587
14,359
Profit before taxation
Permanent differences between profit and tax base:
Non-taxable income
Deduction of 10% of the purchase price of newly
acquired fixed assets
Donations
Other
Tax deduction (employment of disabled)
Current income tax expense
The tax charge is comprised of:
Adjustment of prior year income tax expense
Deferred income tax liabilities:
Difference between net book value
and net tax book value of fixed assets
Deferred income tax assets:
Non-deductible portion of bad debts provision
Deferred tax receivable
Due to a change in accounting policy the Bank presented the creation of deferred tax as a part of its
extraordinary income in 2000.
73
25 EXTRAORDINARY ITEMS
EXTRAORDINARY EXPENSES
CZK’000
2002
2001
2000
Fines and penalties
-
1,123
588
Expenses of previous years
-
2,087
463
Other extraordinary expenses
-
1,051
1,176
-
4,261
2,227
Deferred tax – change in policy
-
-
22,917
Insurance receipts
-
1,359
224
Other extraordinary revenue
-
2,994
5,254
-
4,353
28,395
Extraordinary income
74
26 FINANCIAL RISKS
(a) Strategy in using financial instruments
The Bank’s activities are principally related to the use of financial instruments. The Bank accepts deposits
from customers at both fixed and floating rates and for various periods and seeks to earn above average
interest margins by investing these funds in high quality assets. The Bank seeks to increase these margins
by consolidating short-term funds and lending for longer periods at higher rates whilst maintaining sufficient
liquidity to meet all claims that might fall due.
The Bank also seeks to raise its interest margins by obtaining above average margins, net of provisions,
through lending to commercial and retail borrowers with a range of credit standing. Such exposures
involve not just on-balance sheet loans and advances but the Bank also enters into guarantees and other
commitments such as letters of credit and other similar liabilities.
The Bank also trades in financial instruments where it takes positions in traded and over the counter
instruments including derivatives to take advantage of short-term market movements in the equity and bond
markets and in currency, interest rate and commodity prices. The Board places trading limits on the level of
26 FINANCIAL RISKS - continuation
(a) Strategy in using financial instruments - continued
exposure that can be taken in relation to both overnight and intra-day market positions. With the exception of
specific hedging arrangements, foreign exchange and interest rate exposures associated with these derivatives
are normally offset by entering into counterbalancing positions, thereby controlling the variability in the net
cash amounts required to liquidate market positions.
(b) Credit risk
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in
relation to one borrower, or groups of borrowers, and to geographical and business segments. Such risks are
monitored on a revolving basis and are subject to an annual or more frequent review. Limits on the level of
credit risk by product, industry sector and by country are approved by the Board of Directors.
75
Geographical segmentation
At 31 December 2002
ASSETS
Domestic
European
union
Other
Europe
Other
Total
Cash
116,925
40,473
8,156
11,534
177,088
Balances with central bank
207,974
-
-
-
207,974
2,159,850
654,472
60,023
28,400
2,902,745
12,298,528
8,486
1,347
7
12,308,368
227,404
-
-
-
227,404
21,316
-
-
-
21,316
501
-
-
-
501
371,567
5,070
202
-
376,839
15,404,065
708,501
69,728
39,941
16,222,235
CZK’000
Due from banks
Due from customers
Trading securities
Securities available-for-sale
Investments
Other assets
26 FINANCIAL RISKS - continued
(b) Credit risk - continued
Geographical segmentation - continued
At 31 December 2001
ASSETS
Domestic
European
union
Other
Europe
Other
Total
Cash
116,418
69,671
6,674
20,243
213,006
162,775
-
-
-
162,775
Due from banks
2,050,587
464,667
50,039
6,705
2,571,998
Due from customers
8,536,642
7,362
67
5
8,544,076
544
-
-
-
544
406,436
282
7
-
406,725
11,273,402
541,982
56,787
26,953
11,899,124
Domestic
European
Other
Other
Total
union
Europe
CZK’000
76
Investments
Other assets
At 31 December 2000
ASSETS
CZK’000
Cash
79,354
25,123
3,401
11,055
118,933
92,501
-
-
-
92,501
Due from banks
2,298,894
47,920
12,458
4,750
2,364,022
Due from customers
6,626,367
20,380
940
5,002
6,652,689
189,325
5,814
-
-
195,139
654
-
-
-
654
317,469
1,715
6
-
319,190
9,604,564
100,952
16,805
20,807
9,743,128
Trading securities
Investments
Other assets
Business segmentation
At 31 December 2002
ASSETS
Retail
banking
Corporate
banking
Municipalities
Other
Total
Cash
-
-
-
177,088
177,088
-
-
-
207,974
207,974
Due from banks
-
-
-
2,902,745
2,902,745
230,124
10,547,551
1,518,669
12,024
12,308,368
Trading securities
-
-
-
227,404
227,404
-
-
-
21,316
21,316
Investments
-
-
-
501
501
Other assets
-
-
-
376,839
376,839
Total assets
230,124
10,547,551
1,518,669
3,925,891
16,222,235
CZK’000
Due from customers
77
Business segmentation - continued
At 31 December 2001
ASSETS
Retail
banking
Corporate
banking
Municipalities
Other
Total
Cash
-
-
-
213,006
213,006
-
-
-
162,775
162,775
Due from banks
-
-
-
2,571,998
2,571,998
172,740
6,972,474
1,397,586
1,276
8,544,076
Investments
-
-
-
544
544
Other assets
-
-
-
406,725
406,725
Total assets
172,740
6,972,474
1,397,586
3,356,324
11,899,124
CZK’000
78
Due from customers
Business segmentation - continued
At 31 December 2000
ASSETS
Retail
banking
Corporate
banking
Municipalities
Other
Total
Cash
-
-
-
118,933
118,933
-
-
-
92,501
92,501
Due from banks
-
-
-
2,364,022
2,364,022
215,501
4,785,323
1,651,610
255
6,652,689
Trading securities
-
-
-
195,139
195,139
Investments
-
-
-
654
654
Other assets
-
-
-
319,190
319,190
Total assets
215,501
4,785,323
1,651,610
3,090,694
9,743,128
CZK’000
Due from customers
(c) Market risk
The Bank takes on exposure to market risks which arise from open positions in interest rate, currency and
equity products.
79
(d) Derivative financial instruments
The Bank has outstanding derivative contracts, which can be analysed as follows:
Nominal
value
CZK’000
31.12.2002
Fair
value
positive
Fair
value
negative
Nominal
value
31.12.2001
Fair
value
positive
Fair
value
negative
-
31.12.2000
Nominal
value
(2,905)
136,824
-
(1,821)
284,482
TRADING AGREEMENTS
Interest rate derivatives
80
Swaps
228,571
Foreign exchange derivatives
Forwards
19,908
408
-
-
-
-
-
Swaps
39,247
269
-
245,141
15
-
17,093
59,155
677
-
245,141
15
-
17,093
287,726
677
(2,905)
381,965
15
(1,821)
301,575
Total
Fair value of trading derivatives is recognised in the income statement.
Certain derivative transactions, while providing effective economic hedges under the Bank’s risk management
positions, do not qualify for hedge accounting under the specific Czech accounting rules and are therefore
presented above as trading derivatives with fair value gains and losses recognised in the income statement.
The tables above provide a detailed breakdown of the nominal or notional amounts and the fair value of
the Bank’s derivative financial instruments outstanding at year end. These instruments, comprising foreign
exchange and interest rate derivatives allow the Bank and its customers to transfer, modify or reduce their
foreign exchange and interest rate risks.
The nominal or notional amounts provide a basis for volume comparison with instruments recognised on the
balance sheet but do not indicate the Bank’s exposure to credit or price risk.
(e) Currency risk
The Bank takes on exposure resulting from fluctuations in the prevailing foreign currency exchange rates on its
financial position and cash flows. The Board of Directors sets limits on the level of exposure by currency and
in total for both overnight and intra-day positions, which are monitored daily.
The table below summarises the Bank’s exposure to currency risk. Included in the table are the Bank’s
foreign currency denominated assets and liabilities at carrying amounts, categorised by currency.
As at 31 December 2002
ASSETS
CZK’000
CZK
EUR
USD
Other
Total
Cash
116,925
38,743
10,878
10,542
177,088
207,974
-
-
-
207,974
Due from banks
2,240,483
70,955
567,995
23,312
2,902,745
Due from customers
8,006,700
3,915,022
366,698
19,948
12,308,368
227,404
-
-
-
227,404
21,316
-
-
-
21,316
501
-
-
-
501
364,945
11,166
668
60
376,839
11,186,248
4,035,886
946,239
53,862
16,222,235
Due to banks
3,820,145
2,386,888
355,299
69,025
6,631,357
Due to customers
5,438,612
1,331,568
526,665
32,683
7,329,528
627,126
103,925
26,855
-
757,906
38,247
-
-
-
38,247
Other liabilities
317,340
183,688
29,840
11,772
542,640
Equity
922,557
-
-
-
922,557
11,116,267
4,006,069
938,659
161,240
16,222,235
Trading securities
Investments
Other assets
LIABILITIES AND EQUITY
Liabilities from debt securities
Provisions
81
(e) Currency risk - continued
ASSETS
CZK’000
82
CZK
EUR
USD
Other
Total
Cash
116,418
66,927
19,812
9,849
213,006
162,775
-
-
-
162,775
Due from banks
2,225,000
4,849
331,857
10,292
2,571,998
Due from customers
4,898,861
3,146,974
428,879
69,362
8,544,076
544
-
-
-
544
385,859
18,102
2,659
105
406,725
7,789,457
3,236,852
783,207
89,608
11,899,124
Due to banks
2,211,953
1,500,320
429,555
62,362
4,204,190
Due to customers
3,547,994
1,173,189
520,801
26,343
5,268,327
935,704
122,177
16,509
-
1,074,390
48,392
-
-
-
48,392
Other liabilities
346,089
211,084
30,527
904
588,604
Equity
715,221
-
-
-
715,221
7,805,353
3,006,770
997,392
89,609
11,899,124
Investments
Other assets
Provisions
(e) Currency risk - continued
ASSETS
CZK’000
CZK
EUR
USD
Other
Total
Cash
79,354
24,038
10,597
4,944
118,933
92,501
-
-
-
92,501
Due from banks
1,604,300
191,186
551,165
17,371
2,364,022
Due from customers
2,575,105
3,543,525
448,742
85,317
6,652,689
189,325
5,814
-
-
195,139
654
-
-
-
654
287,102
30,334
1,403
351
319,190
4,828,341
3,794,897
1,011,907
107,983
9,743,128
718,632
2,594,584
449,350
74,532
3,837,098
Due to customers
1,903,952
948,526
547,315
25,574
3,425,367
1,249,220
39,324
3,598
506
1,292,648
48,392
-
-
-
48,392
Other liabilities
202,263
213,135
11,644
7,370
434,412
Equity
705,211
-
-
-
705,211
4,827,670
3,795,569
1,011,907
107,982
9,743,128
Trading securities
Investments
Other assets
Due to banks
Provisions
83
(f) Interest rate risk
The Bank takes on exposure resulting from fluctuations in the prevailing levels of market interest rates on its
financial position and cash flows. Interest margins may increase as a result of such changes but may reduce
or create losses in the event that unexpected movements arise. The Board of Directors sets limits on the level
of mismatch of interest rate repricing that may be undertaken, which is monitored daily.
The table below summarises the Bank’s exposure to interest rate risks. Included in the table are the Bank’s
interest bearing assets and liabilities at carrying amounts, categorised by the earlier of contractual, repricing or
maturity dates.
84
ASSETS
Within
3 - 12
1-5
Over
Unspe-
3 months
months
years
5 years
cified
Total
-
-
-
-
177,088
177,088
207,974
-
-
-
-
207,974
Due from banks
2,767,474
100,447
34,824
-
-
2,902,745
Due from customers
7,470,428
1,907,662
3,031,723
262,630
(364,075)
12,308,368
123,113
49,251
55,040
-
-
227,404
-
-
-
-
398,656
398,656
10,568,989
2,057,360
3,121,587
262,630
211,669
16,222,235
Due to banks
2,162,970
1,659,159
2,809,228
-
-
6,631,357
Due to customers
7,151,131
158,942
19,455
-
-
7,329,528
481,016
240,343
36,547
-
-
757,906
Provisions
-
-
-
-
38,247
38,247
Other liabilities
-
-
-
-
542,640
542,640
Equity
-
-
-
-
922,557
922,557
9,795,117
2,058,444
2,865,230
-
1,503,444
16,222,235
CZK’000
Cash
Deposits with central bank
Debt securities
Other assets
(f) Interest rate risk - continued
ASSETS
Within
3 months
3 - 12
months
1-5
years
Over
5 years
Unspecified
Total
-
-
-
-
213,006
213,006
162,775
-
-
-
-
162,775
2,371,998
200,000
-
-
-
2,571,998
865,633
1,349,391
4,688,545
1,992,317
(351,810)
8,544,076
-
-
-
-
407,269
407,269
3,400,406
1,549,391
4,688,545
1,992,317
268,465
11,899,124
Due to banks
1,250,793
71,193
2,882,204
-
-
4,204,190
Due to customers
5,194,810
71,450
2,067
-
-
5,268,327
903,965
169,375
1,050
-
-
1,074,390
Provisions
-
-
-
-
48,392
48,392
Other liabilities
-
-
-
-
588,604
588,604
Equity
-
-
-
-
715,221
715,221
7,349,568
312,018
2,885,321
-
1,352,217
11,899,124
CZK’000
Cash
Due from banks
Due from customers
Other assets
85
(f) Interest rate risk - continued
31. prosince 2000
ASSETS
Within
3 months
3 - 12
months
1-5
years
Over
5 years
Unspecified
Total
-
-
-
-
118,933
118,933
92,501
-
-
-
-
92,501
Due from banks
1,964,022
400,000
-
-
-
2,364,022
Due from customers
1,190,977
1,132,776
3,459,174
1,158,032
(288,270)
6,652,689
189,241
-
-
-
-
189,241
-
-
-
-
325,742
325,742
3,436,741
1,532,776
3,459,174
1,158,032
156,405
9,743,128
609,804
241,610
2,430,392
555,292
-
3,837,098
Due to customers
3,184,897
223,765
16,705
-
-
3,425,367
1,177,298
115,278
72
-
-
1,292,648
Provisions
-
-
-
-
48,392
48,392
Other liabilities
-
-
-
-
434,412
434,412
Equity
-
-
-
-
705,211
705,211
4,971,999
580,653
2,447,169
555,292
1,188,015
9,743,128
CZK’000
Cash
86
Debt securities
Other assets
Due to banks
(g) Liquidity risk
The Bank is exposed to daily calls on its available cash resources from overnight deposits, current accounts,
maturing deposits, loan draw downs, guarantees and from margin and other calls on cash settled derivatives.
The Bank does not maintain cash resources to meet all of these needs as experience shows that a minimum
level of reinvestment of maturing funds can be predicted with a high level of certainty. The Board sets limits
on the minimum proportion of maturing funds available to meet such calls and on the minimum level of
interbank and other borrowing facilities that should be in place to cover withdrawals at unexpected levels of
demand.
The table below analyses assets and liabilities of the Bank into relevant maturity bands based on the remaining
period at the balance sheet date to the contractual maturity date.
87
ASSETS
Within
3 - 12
1-5
Over
Unspe-
3 months
months
years
5 years
cified
Total
Cash
177,088
-
-
-
-
177,088
207,974
-
-
-
-
207,974
Due from banks
2,767,473
100,447
34,825
-
-
2,902,745
Due from customers
1,562,679
2,066,815
5,847,212
3,195,737
(364,075)
12,308,368
Debt securities
-
-
227,404
-
-
227,404
Other assets
-
-
-
-
398,656
398,656
4,715,214
2,167,262
6,109,441
3,195,737
34,581
16,222,235
Due to banks
1,328,453
1,704,644
3,051,666
546,594
-
6,631,357
Due to customers
7,085,595
212,871
31,062
-
-
7,329,528
481,016
240,343
36,547
-
-
757,906
Provisions
-
-
-
-
38,247
38,247
Other liabilities
-
-
-
-
542,640
542,640
Equity
-
-
-
-
922,557
922,557
8,925,064
2,157,858
3,119,275
546,594
1,503,444
16,222,235
CZK’000
(g) Liquidity risk - continued
ASSETS
Within
3 months
3 - 12
months
1-5
years
Over
5 years
Unspecified
Total
Cash
213,006
-
-
-
-
213,006
162,775
-
-
-
-
162,775
2,371,998
200,000
-
-
-
2,571,998
865,635
1,349,391
4,688,545
1,992,315
(351,810)
8,544,076
Debt securities
-
-
-
-
-
-
Other assets
-
-
-
-
407,269
407,269
3,613,414
1,549,391
4,688,545
1,992,315
55,459
11,899,124
Due to banks
1,164,423
824,067
2,214,330
1,370
-
4,204,190
Due to customers
4,886,571
351,583
30,173
-
-
5,268,327
903,965
169,375
1,050
-
-
1,074,390
Provisions
-
-
-
-
48,392
48,392
Other liabilities
-
-
-
-
588,604
588,604
Equity
-
-
-
-
715,221
715,221
6,954,959
1,345,025
2,245,553
1,370
1,352,217
11,899,124
CZK’000
88
Due from banks
Due from customers
(g) Liquidity risk - continued
ASSETS
Within
3 months
3 - 12
months
1-5
years
Over
5 years
Unspecified
Total
118,933
-
-
-
-
118,933
92,501
-
-
-
-
92,501
Due from banks
1,964,022
400,000
-
-
-
2,364,022
Due from customers
1,190,977
1,132,776
3,459,174
1,158,032
(288,270)
6,652,689
189,241
-
-
-
-
189,241
-
-
-
-
325,742
325,742
3,555,674
1,532,776
3,459,174
1,158,032
37,472
9,743,128
609,804
241,610
2,430,392
555,292
-
3,837,098
Due to customers
3,184,897
223,765
16,705
-
-
3,425,367
1,177,298
115,278
72
-
-
1,292,648
Provisions
-
-
-
-
48,392
48,392
Other liabilities
-
-
-
-
434,412
434,412
Equity
-
-
-
-
705,211
705,211
4,971,999
580,653
2,447,169
555,292
1,188,015
9,743,128
CZK’000
Cash
Debt securities
Other assets
Due to banks
89
27 SUBSEQUENT EVENTS
A new CNB regulation setting up the criteria for provisions for loan receivables became valid from 1 January
2003. The net impact of this regulation on the Bank effectively as at January 2003 result was a charge
of CZK 28,413,000.
Except as already described in these notes to financial statements, there were no other events, which have
occurred up to the date of signature of these financial statements, which would have a material impact on the
financial statements of the Bank as at 31 December 2002.
These financial statements have been approved for submission to the general meeting of shareholders by the
Board of Directors and have been signed on their behalf by:
90
Date:
21 March 2003
Statutory body
signature
Johann Lurf
Person responsible
for accounting
Herbert Skok
Alena Sládková
Person responsible
preparation
Eva Collardová
QUANTITATIVE INDICES
CZK’000
2002
2001
2000
Return on average assets ROAA
0.25%
0.34%
0.57%
Return on average equity ROAE
4.41%
5.71%
6.97%
Assets per employee in CZK’000
47,573
38,759
46,842
1,382
1,241
1,468
104
124
221
Tier 1
886,721
677,122
659,214
Paid up share capital
750,000
650,000
650,000
Share premium paid up
100,000
0
0
Statutory reserve funds
10,377
8,472
6,177
Retained profits
26,344
18,650
3,037
Tier 2
36,294
48,392
48,392
General risk reserve
36,294
48,392
48,392
Deductible items
23,130
17,047
20,787
Intangible fixed assets
23,130
17,047
20,787
899,885
708,467
686,819
A Capital requirement
637,911
450,881
495,341
B Capital requirement
8,642
4,370
6,614
Capital requirement for trading portfolio credit risk
4,795
57
236
11,13%
12,45%
10,95%
Administration costs per employee in CZK’000
Net profit per employee in CZK’000
Capital structure
Capital
Capital requirements
Capital adequacy
91
RISK MANAGEMENT
92
The Bank takes a conservative approach to risk
management. It has to cope with the following
risks, whose structure and impact it maintains at
a reasonable level: credit and market risk, liquidity
and operational risk.
In the process of risk management the Bank follows
the legislation in force, principles laid down by the
group headquarters, and the group companies’
know-how.
The Bank’s Board of Directors approves the Bank’s
strategy in risk management. It has developed
a risk management system in compliance with this
strategy, based on strict organisational separation
of sales and risk management. The strategy is also
in compliance with the Basle Committee rules. It
operates a quality control system based on the ‘four
eyes principle’ and in compliance with criteria for
the assessment of risks and internal limit adequacy.
Credit risk management
The Bank’s credit policy applies the most important
principles of credit risk management. These
principles comply with the Group’s credit policy and
include a definition of target client groups and limits
set for the individual sectors.
Furthermore, approval powers and responsibilities
in the credit process are clearly defined. In the
credit process the principle of clear organisational
separation of sales and risk management is
maintained and both sections are represented in
the approval process. Responsibilities and credit
process control mechanisms are defined by
internal regulations and the Bank’s internal control
system. All the Bank’s internal controls comply with
measures of the Czech National Bank, and together
with specimen contract documentation, they are
up-dated on an ongoing basis.
In the area of collateral valuation the Bank applies
a prudent approach, in particular in real estate
valuation.
In 2002 the Bank started in co-operation with the
group headquarters to implement the corporate
internal rating system, the so-called VB-Corporate
Rating System. This is one of projects of the
Basel Committee rules application and it will help
to improve risk management in the area of risk
procedures and identification of probable loan
losses. It is also preparing, in co-operation with
the group headquarters, internal ratings for other
client segments, such as the municipality sector,
self-employed individuals using single-entry
bookkeeping, project funding, and private
individuals.
The Bank’s Board of Directors and Management
are regularly informed about the quality and
development of the loan portfolio.
Despite the Bank’s conservative approach to risk
management, new loans granted in 2002 increased
the total loan value to CZK 12.672 bil., which
compared with the previous period is an increase
of approximately 44%. During the same period the
proportion of the Bank’s classified loans decreased
from 17.03% in 2001 to 12.08% in 2002. At the
same time, according to figures issued by the
Czech National Bank at 31 December 2002, the
proportion of classified loans in the banking sector
was 16.78%.
Market risk management
Market risk represents the risk of a loss resulting
from changing prices, FX rates and financial market
rates. It comprises interest rate, currency, share
and other risks related to market price fluctuations.
Responsibilities and control mechanisms in the
market risk management process are addressed
by the Bank’s internal regulations and the internal
control system.
The objectives of the market risk management
process include:
•
•
the Bank’s ability to cope with economic and
market changes;
maintain a positions structure which will not
expose the Bank to excessive market risks;
development and set up of GAP-analysis
systems which enable to react to the changes
in the market development quickly and flexibly;
identification of weak points, where the Bank
has to cope with excessive market risks.
•
The main instrument for market risks management
is a set of limits for individual types of market risks.
Limit compliance is monitored on an ongoing basis
and is regularly reported to Assets and Liabilities
Committee meetings that stipulate market risk
management strategy and objectives. If any limits
are exceeded emergency measures are taken and
open positions, the cause for excess is identified
and appropriate countermeasures are taken. In
2003 the Bank plans to implement the Kondor+
system in co-operation with the group headquarters
to support market risk management on the Group
level.
•
Currency risk
The Bank deals with currencies in both Czech and
international markets. All limits are included in the
Group’s structure of limits. In the FX area the Bank
concentrates on client trading. In the inter-bank
market the Bank’s transactions focus on hedging
of positions resulting from trading with clients
and further, to a limited extent, the Bank makes
transactions to hedge its own positions.
•
•
•
•
•
•
open positions are monitored and assessed
on an ongoing basis with regard to potential
risks;
•
•
•
the trading and banking portfolio is monitored
as a whole and operational management is
performed on a case-by-case basis;
the Bank has introduced internal limits for
currency risk management, based on limits
stipulated by the Czech National Bank;
currency risk management policy monitors
both intra day and overnight limits compliance;
the Bank does not conclude speculative
derivative contracts;
derivatives are used exclusively for hedging of
clients’
trading positions;
market valuation of derivatives follows the
policy of the Czech National Bank and
obligatory accounting principles;
currency positions are re-valued daily in
compliance with the effective policy.
Interest rate risk
The aim in the interest rate risk management is to
ensure that the interest rate structure is optimal
for the Bank considering the daily interest rate
fluctuations.
•
•
the Bank monitors the risk daily using GAP
analysis;
for the year 2003 the Bank is preparing
accession to the direct interest rate risk
management using a wide-spread GAP
method (a set of limits), stress scenarios and
models, a system for simulation of the impact
of changes in market conditions on the level of
risk to face;
the Bank uses internally developed
applications for interest rate risk assessment
and monitoring;
the trading and banking portfolio is monitored
as a whole, operational management is
performed on a case-by-case basis;
93
•
•
interest risk is monitored by key currencies
(CZK, EUR);
to hedge interest rate positions, the Bank uses
derivative transactions.
Limit compliance is monitored on a daily basis:
•
•
Equity market risk
The Bank has introduced and approved limits for
equity trading in Czech and international markets.
All limits are included in the Group’s structure of
limits.
The Bank did not hold any equities in its portfolio in
2002 and was not therefore exposed to this risk.
94
Liquidity risk
Liquidity risk is the risk of loss arising from the
Bank’s inability to meet its financial obligations.
Liquidity risk arises from financing which does
not impeach the imbalance between assets and
liabilities maturity or the permanent bank’s losses or
general liquidity crises on the whole market.
Liquidity management is based on the planning
of future inflows and outflows of funds based on
clients’ pay-off agreements, based on signed
contract loans that oblige the bank to certain
activities and also based on experience acquired
from analysis of past developments.
The Bank monitors every day net cash flows for
the period of five business days in advance for
each main currency in its management information
system.
An estimated cash flow, actual liquidity report, basic
and alternate scenarios are processed for each
main currency. The Bank sets limits for each main
currency separately and in the aggregate for all
currencies.
•
ratio of quick liquid assets to client deposits
up to 3 months
ratio of assets up to 3 months to client
deposits up to 3 months
ratio of assets up to 1 year to client deposits
up to 1 year.
Internal limits comply with measures of the Czech
National Bank.
In addition to the business plan and planned
balance structure, the Bank draws up a liquidity
plan. It is approved by the Board of Directors
together with the business plan and the two plans
are closely linked.
The Bank’s internal regulations clearly define the
process of emergency plan development and steps
to be taken to increase liquidity for the purpose of
liquidity management in an emergency threatening
the Bank’s liquidity.
In 2002 liquidity limits were complied with and
liquidity was sufficient.
Operational risk
Operational risk constitutes a substantial part of the
Bank’s risk policy. It may be defined as the risk of
a loss incurred as a result of inadequacy or failure
of internal procedures, people or systems, or due to
external circumstances. The Bank is going to take
part in a project for comprehensive management
and monitoring of operational risks, applying the
Basel Committee rules and directed by the group
headquarters.
Report on Relationships
According to § 66a article 9
The relationship between the controlled and
controlling company.
Relationship with other controlled
companies.
The company Volksbank CZ, a. s. is part of the
international financial group Österreichische
Volksbanken-Aktiengesellschaft (hereafter
mentioned only as ÖVAG).
Volksbank CZ, a. s. operates on the Czech market
as a bank as defined in the Banking Code, Law no.
21/1992 of the Coll. and is the person controlled as
defined in the Business Code. The controlling entity
is the company ÖVAG, which controls Volksbank CZ, a. s.
indirectly via Volksbank International AG.
In April 1997, Volksbank CZ, a. s. signed
a co-operation agreement with ÖVAG. Based on
this agreement, Volksbank CZ, a. s. may use the
know-how as well as international representation
including promotional activities of the financial
group ÖVAG. Volksbank CZ, a. s. pays appropriate
fees for receiving this service.
In 2002, ÖVAG granted bank guarantees for loans
given by Volksbank CZ, a. s.
Volksbank CZ, a. s. pays fees for these guarantees,
which are usual within the ÖVAG Group.
Volksbank CZ, a. s. suffered no detriment as
a result of the business relationships between itself
and its controlling company.
The company Volksbank CZ, a. s. also has
commercial relations with some trading or financial
companies, which are also controlled by ÖVAG.
It concerns mainly the banks in Slovakia, Hungary,
Croatia, Slovenia and Bosnia-Herzegovina,
belonging to the ÖVAG group. Volksbank CZ, a. s.
is in regular banking contact with the
above-mentioned banks and it performs usual
banking business.
Volksbank CZ, a. s. suffered no detriment as a result
of the business relationships with these companies.
Furthermore, Volksbank CZ, a. s. has commercial
relations with VB Leasing CZ, spol. s r. o., VB
Komunální poradenství a.s., Niederösterreichische
Landesbank – Hypothekenbank AG,
Volksbanken Kapitalanlagegesellschaft m.b.H.,
Immoconsult Leasinggesellschaft m.b.H. Group,
VB ManagementBeratung GmbH.,
VB – Pojišťovací servis, s.r.o. and DZ Bank AG.
These are usual banking and credit services.
Interest rates on loans granted to these companies
comprise the cost of funding plus a reasonable
margin. Volksbank CZ, a. s. suffered no detriment
as a result of the business relationships with the
above-mentioned companies.
ÖVAG did not ask Volksbank CZ, a. s. to adopt
any specific measures as defined in Section 66a
paragraph 14 of the Business Code nor to sign any
agreement at its expense.
31 March 2003
Václav Vitha
Johann Lurf
Herbert Skok
95
Independent Auditor’s Report
96
97
Report of the Supervisory Board
98
In the year 2002 in two sessions held on
13 May and 18 November, the Supervisory
Board of the Bank inquired about the correctness, appropriateness and the economic
efficiency of the Bank´s management. It has
noted the regular reports drawn up by the
Board of Directors and issued resolutions
necessary for the business year 2002.
The Financial Statements as at 31 December
2002 were examined by the auditing
company PricewaterhouseCoopers Audit,
s. r. o. The auditor issued an unqualified
audit opinion.
The Supervisory Board notes the Report
presented by the Board of Directors and
reviewed the Report on Affiliated Companies
pursuant to Section 66a (9) of the Commercial Code. Based on the Report of the Board
of Directors, the Supervisory Board presents
a positive evaluation to the General Meeting of Shareholders and recommends that
appropriate resolutions be adopted.
The Supervisory Board thanks the Board
of Directors and all the Bank personnel for
their efforts in the year 2002.
Brno, May 2003
General Director
KR Dr. Klaus Thalhammer
Chairman of the Supervisory Board
99
Dan Trantina (1965)
“Her desires“
100
Dan Trantina (1965)
“Spilled Coffee”
02
S E R V I C E
Austria
Croatia
Hungary
CZECH REPUBLIC
Italy
Malta
Romania
Slovakia
Slovenia
France
101
International Desks
UNA PARTNERSHIP DINAMICA: IL SUCCESSO DEGLI
INTERNATIONAL DESK
Lo scorso anno l’eccezionale concetto di
stata inaugurata una rappresentanza della ÖVAG
cooperazione, emerso dal contesto globale
a Parigi.
dell’associazione internazionale delle banche
popolari e manifestatosi soprattutto nella
La risultante di questo straordinario sistema
Confédération Internationale des Banques
di cooperazione a livello internazionale, volto
Populaires (CIBP) nonché nella partecipazione
a ottimizzare l’assistenza alla clientela, e emersa
delle banche popolari tedesche, francesi e
chiaramente in Ungheria e a Praga, dove ciascuno
italiane nelle affiliate estere della Österreichische
degli international desk puo vantare attualmente
Volksbanken-AG (ÖVAG), ha dato vita in piu casi
circa 1.000 conti attivi. Quale risposta alla forte
a esempi concreti di una cooperazione dinamica.
presenza di aziende italiane nell’area sud-ovest
Cio ha contribuito non solo al conseguimento di
della Romania e stato organizzato un Italian Desk
utili da parte delle affiliate ma anche allo standing
a Timisoara, che in breve tempo ha aperto, nella
dei nostri partner di cooperazione, i quali sono
filiale, oltre 200 rapporti con clienti italiani.
stati in grado di offrire con professionalita ai
102
propri clienti una gamma di servizi in costante
Dall’acquisizione di un cliente alla sottoscrizione
miglioramento, anche nel mercato internazionale.
di un contratto di credito, i compiti da svolgere
sono numerosi e complessi e devono soddisfare
Per individuare e assistere al meglio, i clienti
di volta in volta i vari requisiti, a seconda delle
potenziali nei singoli paesi, il personale delle
esigenze del cliente e della portata dell’impegno
banche popolari e stato trasferito nei Paesi
creditizio. Un credito a breve termine nell’ambito
dell’Europa Centrale a tempo determinato
di un conto corrente non richiede certamente lo
con compiti specifici, dimostrando, con il
stesso know-how necessario per la strutturazione
loro successo, l’attuazione del concetto di
di un credito d’investimento superiore a
cooperazione, riconosciuto dai clienti e dal
milioni o per la gestione del finanziamento di un
management quale giusto complemento di
progetto. La collaborazione col reparto „mercato
un’assistenza integrale alla clientela. L’esperienza
estero“ all’interno della ÖVAG a Vienna fa si che
maturata dagli addetti ai desk internazionali nei
tutti i reparti specialistici pertinenti apportino il
Paesi dell’Europa Centrale, presentata in occasione
proprio know-how; al beneficiario del credito e
di fiere settoriali, di eventi per la clientela nell’Italia
dunque offerto un elevato grado di professionalita
settentrionale e dei seminari della CIBP o durante
ed efficienza nonché l’opportunita di trattare
il seminario bancario di Praga, hanno condotto allo
nella propria lingua madre. Cio da vita a un
stesso risultato, vale a dire all’ottimizzazione dei
concetto di politica fondamentale delle banche
rapporti esistenti con la clientela.
popolari internazionali, volto a contribuire in
50
modo eccezionale al raggiungimento dell’obiettivo
Nell’ottica dello sviluppo e del rafforzamento
principale, ovvero l’assistenza ottimale alla
del rapporto nell settore delle banche popolari
clientela.
francesi e del loro istituto leader Banque Fédérale
des Banques Populaires, all’inizio del 2002 e
Dr. Raimund Solonar
Les desks internationaux
UNE COOPERATION CONCRETE : LA REUSSITE DES DESKS
INTERNATIONAUX
En référence aux idées de coopération
Dans le cadre du développement et de
particulierement dominantes au regard du contexte
l’intensification de notre relation avec les Banques
international, prévalant au sein des Fédérations
Populaires françaises, un Bureau de représentation
internationales des Banques Populaires, et
de la ÖVAG fut créé a Paris au début 2002 et
concrétisées dans la Confédération Internationale
hébergé aupres de Natexis Banques Populaires.
des Banques Populaires (CIBP) et dans les
participations des Banques Populaires allemandes,
De nombreuses répercussions de ce systeme
françaises et italiennes au capital des filiales
international unique de coopération, dédié au
étrangeres de la Österreichischen Volksbanken-AG
service optimal du client, sont reconnaissables
(ÖVAG), l’année qui vient de s’écouler fut marquée
en Hongrie et a Prague, qui enregistrent chacun
a nouveau par des exemples notables qui
pres d’un millier de comptes actifs dans leurs
témoignent du concret de cette coopération. Le
desks internationaux. La concentration particuliere
succes de ces opérations réalisées conjointement
d’entreprises italiennes dans le sud-ouest de
s’est reflété au final tant dans les résultats de nos
la Roumanie motiva la création d’un desk
filiales que dans l’image de nos partenaires aupres
italien a Timisoara, qui permit en peu de temps
de leurs clients, par leur capacité et leur crédibilité
l’acquisition de plus de 200 clients italiens au profit
a apporter des services en constante amélioration
de la succursale locale.
également dans le domaine international.
De l’acquisition d’un client jusqu’a la signature
Dans un souci d’appréhender de maniere optimale
d’un contrat de crédit, diverses procédures
la clientele potentielle dans des pays donnés,
complexes doivent etre initiées et qui varient en
des collaborateurs des Banche Popolare furent
fonction des desiderata du client et du montant de
ponctuellement détachés aupres de certaines
l’engagement concerné. Ainsi un petit découvert en
filiales d’Europe centrale. Cette démarche
compte ne requiert pas le meme savoir-faire que la
s’est révélée etre un vecteur de réussite de la
mise en place d’un crédit d’investissement de 50
coopération et fut jugée tant par les clients que par
millions d’euros ou encore que la structuration d’un
le management comme un complément nécessaire
financement de projet. Le département « Marchés
a la relation globale avec la clientele. Les
Etrangers » de la ÖVAG a Vienne, par son travail
présentations réalisées par les collaborateurs des
de coordination, assure que chaque département
desks d’Europe centrale lors de salons spécialisés
spécialisé contribue par son expertise a garantir au
ou de colloques avec les clients en Italie du Nord,
client une efficacité et un grand professionnalisme,
ont eu le meme but que les séminaires de la CIBP
conjoints a la possibilité de négocier dans sa
ou un séminaire de banque a Prague, a savoir:
langue d’origine. Ainsi se trouve parfaitement
l’optimisation de la relation client existante.
valorisé, un des fondements politique du concept
des Banques populaires internationales, a savoir: le
service optimal du client.
Dr. Raimund Solonar
103
Our Network
HEAD OFFICE
BRANCHES
Brno
M-palác, Heršpická 5
Brno
658 26 Brno
658 26 Brno
Tel.: +420 543 525 222
Fax: +420 543 525 553
Tel.: +420 543 525 111
Fax: +420 543 525 555
Brno
Palackého 38
612 00 Brno
Tel.: +420 549 210 686
REGIONAL HEAD OFFICE
104
Fax: +420 549 210 687
Brno
Panská 2/4
Praha
Lazarská 8, budova AB
120 00 Praha 2
602 00 Brno
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Fax: +420 221 969 951
Brno
Zvonařka, 658 33 Brno
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České Budějovice
nám. Přemysla Otak. II. č. 27
370 01 České Budějovice
Tel.: +420 386 105 811
Fax: +420 386 105 829
BRANCHES
BRANCHES
Hradec Králové
Plzeň
Na Kropáčce 30
Anglické nábřeží 12
(Velké náměstí)
301 00 Plzeň
500 03 Hradec Králové
Tel.: +420 377 350 211
Tel.: +420 495 000 361
Fax: +420 377 350 219
Fax: +420 495 000 351
Praha
Jihlava
Spálená 8
Benešova 15
110 00 Praha
586 01 Jihlava
Tel.: +420 224 900 111
Tel.: +420 567 584 511
Fax: +420 224 900 155
Fax: +420 567 584 519
Praha
Kaplice
Václavské náměstí 1
Linecká 218
110 00 Praha
382 41 Kaplice
Tel.: +420 224 490 282
Tel.: +420 380 309 011
Fax: +420 224 490 289
Fax: +420 380 309 019
Zlín
Liberec
Štefánikova 5293
1. máje 59/5
760 01 Zlín
460 01 Liberec
Tel.: +420 577 002 111
Tel.: +420 482 428 341
Fax: +420 577 002 155
Fax: +420 482 428 355
Znojmo
Olomouc
Mariánské náměstí 6
Křížkovského 5
669 02 Znojmo
771 11 Olomouc
Tel.: +420 515 282 511
Tel.: +420 585 208 311
Fax: +420 515 282 519
Fax: +420 585 208 355
105
VOLKSBANK
VB LEASING
IMMOCONSULT
CZECH REPUBLIC
Volksbank CZ, a. s.
CZ-658 26 Brno
Tel.: +420 543 525 111
Fax: +420 543 525 555
[email protected]
www.volksbank.cz
106
France
Croatia
Italy
Hungary
Volksbank BH d.d.
Fra Andela
Zvizdoviça 1
BH-71000 Sarajewo
Tel.: +387/33 295 601
Fax: +387/33 295 603
www.volksbank.ba
Österreichische
Volksbanken-AG
Bureau de Liaison Paris
45, rue Saint-Dominique
F-75007 Paris
Tel.: +33/1/44 18 98 75
Fax: +33/1/45 51 40 76
Volksbank d.d.
Varsavska 9
HR-10000 Zagreb
Tel.: +3851/4801 300
Fax: +3851/4801 365
www.volksbank.hr
Österreichische Volksbanken-AG
sede italiana
Via Enrico Fermi 11
I-37135 Verona
www.oevag-volksbank.it
Magyarországi
Volksbank Rt.
Rákóczi út 7
H-1088 Budapest
Tel.: +361/328 6666
Fax: +361/328 6660
www.volksbank.hu
107
Malta
Austria
Romania
Slovakia
Slovenia
Volksbank Malta Ltd.
53 Dingli Street
SLM-09 Sliema
Tel.: +356/21/336 100
Fax: +356/21/336 090
[email protected]
Österreichische
Volksbanken-AG
Peregringasse 3
A-1090 Vienna
Tel.: +431/313 40-0
Fax: +431/313 40-3682
www.oevag.com
Volksbank Romania S.A.
Str. Coltei 8, Sector 3
RO-70446 Bukarest
Tel.: +401/303 93 04
Fax: +401/303 93 93
www.volksbank.com.ro
Ľudová Banka, a.s.
Vysoká 9
SK-810 00 Bratislava
Tel.: +421/2/5965 1111
Fax: +421/2/5441 2453
www.luba.sk
Volksbank-Ljudska Banka d.d.
Dunajska 128a
SLO-1000 Ljubljana
Tel.: +3861/530 74 00
Fax: +3861/530 75 50
www.volksbank.si
Publisher:
Volksbank CZ, a. s.
M-Palác, Heršpická 5
CZ-658 26 Brno
IMPRESSUM
Production:
BonnyPress
Graphic studio
Heinrichova 16
CZ-602 00 Brno

volksbank cz - Sberbank CZ

Transcription

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