KOMERCIJALNA BANKA AD SKOPJE Independent Auditors` Report

Transcription

KOMERCIJALNA BANKA AD SKOPJE
Independent Auditors’ Report and
Consolidated financial statements
For the year ended 31 December 2015
This is an English translation of the original Report in the Macedonian language
Consolidated financial statements for the Year Ended December 31, 2015
Contents
Page
Independent Auditors’ Report
Consolidated Income Statement
1
Consolidated Statement of Comprehensive Income
2
Consolidated Balance Sheet
3
Consolidated Statement of Changes in Equity and Reserves
4-7
Consolidated Statement of Cash Flows
8-9
Notes to the Consolidated Financial Statementsп
10 - 148
Independent
Auditor’s
Report
ABCD
KPMG Macedonia DOO Skopje
Soravia Center Skopje 7th floor
Filip Vtori Makedonski No.3
Skopje 1000
Republic of Macedonia
Telephone
+ 389 (2) 3135 220
Telefax
+389 (2) 3111 811
Email [email protected]
Website www.kpmg.com.mk
TRANSLATION of the Independent Auditors’ report to the shareholders of
Komercijalna Banka AD Skopje
We have audited the accompanying consolidated financial statements of Komercijalna Banka
AD Skopje (“the Bank”), which comprise the consolidated balance sheet as at 31 December
2015 and the consolidated income statement, statement of comprehensive income, statement of
changes in equity and reserves and cash flows statement for the year than ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with the regulations prescribed by the National Bank of the
Republic of Macedonia, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on
our audit. We conducted our audit in accordance with International Standards on Auditing.
Those standards require that we comply with relevant ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the consolidated financial statements
are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on our
judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
principles used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
KPMG Macedonia DOO Skopje is a Macedonian limited liability
company and a member firm of the KPMG network of
independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity.
Registered in the Trade
Registry of the Republic of
Macedonia with EMBS:
5078598
Tax No. MK4030996107850
ABCD
Independent Auditors’ report
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the
consolidated financial position of the Bank as at 31 December 2015 and of its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance
with the regulations prescribed by the National Bank of the Republic of Macedonia.
Report on other legal and regulatory requirements
As required under article 34(d) from the Law on Auditing, we report that the historical financial
information disclosed in the annual report of the Bank, prepared by management as required
under article 384 of the Trading Companies Law, is consistent, in all material aspects, with the
financial information disclosed in the consolidated annual account of the Bank and in the
audited consolidated financial statements of the Bank as of and for the year ended 31 December
2015. Management is responsible for the preparation of the consolidated annual account of the
Bank which was approved by the Supervisory Board of the Bank on 25 February 2016 and for
the preparation of the annual report of the activities of the Bank which was approved by the
Supervisory Board of the Bank on 25 February 2016.
Skopje, 26 February 2016
Certified auditor of the Republic of Macedonia
Gordana Nikushevska
KPMG Macedonia DOO
Managing Director
Gordana Nikushevska
Audited
Financial
Statements
CONSOLIDATED INCOME STATEMENT
For the period from 1 January 2015 to 31 December 2015
Note
Interest income
Interest expense
Interest income/(expense), net
6
in thousands of Denars
Current year
Previous year
2015
2014
3,894,642
3,926,431
(716,990)
(1,099,300)
3,177,652
2,827,131
Fee and commission income
Fee and commission expense
Fee and commission income/(expense), net
7
1,121,631
(205,856)
915,775
Net trading income
Net income from other financial instruments at fair value
Foreign exchange gains/(losses), net
Other operating income
Share of profit of associates
8
9
10
11
24
8,798
109,606
330,868
39,028
Impairment losses of financial assets, net
Impairment losses of non-financial assets, net
Personnel expenses
Depreciation and amortization
Other operating expenses
Share of loss of associates
Profit/(loss) before tax
12
13
14
15
16
24
(1,727,439)
(543,198)
(831,140)
(195,409)
(695,632)
588,909
(1,829,153)
(308,460)
(830,218)
(206,750)
(765,881)
111,969
Income tax expense
Profit for the year from continuing operations
17
(64,442)
524,467
(14,110)
97,859
Profit/(loss) form group of assets and liabilities held for sale
Profit/(loss) for the year
524,467
97,859
Profit/(loss) for the year attributable to*:
Shareholders of the Bank
Non-controlling interest
520,872
3,595
97,054
805
229
229
43
43
Earnings per share
basic earning per share (in Denars)
diluted earnings per share (in Denars)
1,090,276
(171,476)
918,800
(21,381)
115,880
175,405
36,596
41
* only for consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements.
1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
Current year
Previous year
2015
2014
524,467
97,859
Other gains/(losses) for the period, not recognized in the Income
statement (before tax)
Revaluation reserve for assets available for sale
- unrealized net- changes in fair value of assets available for sale
- realized net gains/(losses) from assets available for sale, reclassified to
profit or loss
Revaluation reserve for foreclosed assets
- revaluation reserve at the date of acquisition of the asset
- reduction of revaluation reserve, reclassified to profit or loss
Reserve for instruments for hedging net-investment in international operations
risk
-unrealized net-changes in fair value of hedging instruments of cash flow
risk
-realized net gains/(losses) on hedging instruments of cash flow,
reclassified in the Income statement
-
-
-
-
-
-
Reserve for instruments to protect against the risk of net investments in foreign
operations
-
Foreign exchange reserve of investment in foreign operations
Share in other gains/(losses) of associates not recognized in the income
statement
Other gains/(losses) not recognized in the income statement
Income tax on other gains/(losses) not recognized in the income statement
Total other gains/(losses) in the period not recognized in the income
statement
Total comprehensive income for the year
-
-
-
-
524,467
97,859
520,872
3,595
97,054
805
24
17
Total comprehensive income for the year, attributable to*:
Shareholders of the Bank
Non-controlling interest
.2
CONSOLIDATED BALANCE SHEET**
At 31 December 2015
in thousands of denars
Note
Assets
Cash and cash equivalents
Held-for-trading assets
Financial assets at fair value through profit or
loss upon initial recognition
Derivative assets held for risk management
Loans and advances to banks
Loans and advances to other customers
Investments in securities
Investments in associates
Income tax receivable (current)
Other receivables
Assets pledged as collateral
Foreclosed assets
Intangible assets
Property and equipment
Deferred tax assets
Non-current assets held-for-sale and disposal group
Total assets
Liabilities
Trading liabilities
Financial liabilities at fair value through profit
or loss upon initial recognition
Derivative liabilities held for risk management
Due to banks
Due to other customers
Debt instruments issued
Borrowings
Subordinated debt
Special reserve and provisions
Income tax payable (current)
Deferred tax liabilities
Other liabilities
Liabilities related to disposal group
Total liabilities
Equity and reserves
Subscribed capital
Share premium
Treasury shares
Other equity instruments
Revaluation reserves
Other reserves
Retained earnings/(Accumulated losses)
Total equity and reserves, attributable to the shareholders of
the Group
Non-controlling interest*
Total equity and reserves
Total liabilities and equity and reserves
Contingent liabilities
Contingent assets
Current year
31.12.2015
Previous
year***
01.01.2014
Previous year
31.12.2014
18
19
27,663,719
371,029
27,551,346
349,391
-
20
21
22.1
22.2
23
24
30.1
25
26
27
28
29
30.2
31
9,208,426
47,644,522
7,194,050
189,147
532,589
1,223,342
41,534
3,065,562
97,133,920
8,269,788
47,656,044
3,323,688
157,652
321,024
1,908,823
49,321
3,184,956
92,772,033
-
-
-
-
33
21
34.1
34.2
35
36
37
38
30.1
30.2
39
31
420,752
83,780,519
2,165,476
205,842
51,849
456,336
87,080,774
122,061
79,905,839
2,614,798
224,662
5,494
370,573
83,243,427
-
40
2,279,067
771,527
6,468,548
526,278
2,279,067
771,527
6,372,944
100,937
-
10,045,420
7,726
10,053,146
97,133,920
17,669,060
9,524,475
4,131
9,528,606
92,772,033
15,218,764
-
-
32
42
42
*
only for consolidated financial statements
** this statement is also known as “Statement of Financial Position”
*** this column is filled only if the Group: retrospectively applies accounting policy, makes retrospective correction of prior year errors or
makes retrospective reclassification of items in the financial statements.
The consolidated financial statetments were authorised by the Supervisory Board of the Bank on 25 February 2016.
Signed on behalf of Komercijalna Banka AD Skopje:
Maja Stevkova Sterieva
Chief Finance Officer
Ilija Iloski
Chief Operating Officer
Hari Kostov
Chief Executive Officer
_____________________
_____________________
_____________________
3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND RESERVES
Equity
In thousands of Denars
SubscriShare
bed capital premium
As at January 1, 2014 (previous year)
2,279,067
Opening balance restatement
As at January 1, 2014 (previous year),
restated
2,279,067
Total comprehensive income for the
year
Other gains/(losses) not recognized in the
income statement
Changes in fair value of financial assets
available for sale
Changes in fair value of instruments for
hedging cash flow risk
hedging net-investments in foreign
operations
Foreign exchange gains/(losses) of
foreign operations
Deferred tax assets/(liabilities)
recognized in equity
Other gains/(losses) not recognized in
the income statement
Total unrealized gains/(losses)
recognized directly in equity
year
-
Other reserves
Retained earnings
Total equity
Foreign
and
Revaluation Revaluaexchange
reserves,
reserve for tion surplus
reserves
Capital
attributable
foreclosed on financial
on
component
Available
Restricted
to the
Other
assets
assets
Reserves investment
Other
of hybrid
for
for
(Accumul
shareNonTotal equity
(Treasury
equity
available
for risk
in foreign revaluation Statutory
financial
Other
shareholder shareholder
ated
holders of controlling
and
shares) instruments
for sale
mitigation operations reserves
reserve instruments reserves distribution distribution losses) the Bank interest * reserves
771,527
-
-
-
-
-
-
-
-
455,813
-
- 5,838,268
-
82,746
-
-
- 9,427,421
-
3,326
771,527
-
-
-
-
-
-
-
455,813
- 5,838,268
82,746
-
- 9,427,421
3,326
9,430,747
-
-
-
-
-
-
-
-
-
-
-
97,054
-
-
97,054
805
97,859
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
97,054
-
-
-
-
-
-
-
-
97,054
805
9,430,747
-
-
4
97,859
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND RESERVES (continued)
Equity
Transactions with the shareholders,
recognized directly in equity and
reserves
Share issued in the period
Allocation of statutory reserve
Allocation of other reserves
Dividends
Purchase of treasury shares
Sale of treasury shares
Other changes in equity and reserves
(describe separately)
Revaluation reserve on the date of
foreclosure of the asset
Reduction of revaluation reserve,
reclassified to Profit and loss
Acquisition of subsidiary with noncontrolling interest
Income tax on paid dividend
Transactions with shareholders,
reserves
As at December 31, 2014 (previous
year)/ January 1, 2015 (current year)
SubscriShare
bed capital premium
Other reserves
Retained earnings
Total equity
Foreign
and
Revaluation Revaluatio
exchange
reserves,
reserve for n surplus
reserves
Capital
Available Restricted
attributable
on
component
for
for
to the
Other
assets
assets
Reserves investment
Other
of hybrid
shareholde shareholde
(Treasury
equity
available
for risk
financial
Other
r
r
(Accumulat holders of controlling
and
shares) instruments
for sale
reserve instruments reserves distribution distribution ed losses) the Bank interest * reserves
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(78,863)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,863
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,863
(78,863)
-
-
2,279,067
771,527
-
-
-
-
-
-
-
455,813
- 5,917,131
100,937
-
- 9,524,475
-
-
-
-
-
-
4,131 9,528,606
-
5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND RESERVES (Continued)
Equity
SubscriShare
In thousands of Denars bed capital premium
As at December 31, 2014 (previous
year)/January 1, 2015 (current year)
2,279,067 771,527
year
Other gains/(losses) not recognized in the
income statement
Changes in fair value of financial assets
available for sale
hedging cash flow risk
hedging net-investments in foreign
operations
Foreign exchange gains/(losses) of
foreign operations
Deferred tax assets/(liabilities)
recognized in equity
Other gains/(losses) not recognized in
the income statement
Total unrealized gains/(losses)
recognized directly in equity
year
-
-
Other reserves
Retained earnings
Total equity
Foreign
and
Revaluation Revaluaexchange
reserves,
reserve for tion surplus
reserves
Capital
attributable
on
component
for
for
to the
Other
assets
assets
Reserves investment
Other
of hybrid
(Treasury
equity
available
for risk
financial
Other
r
r
(Accumula- holders of controling
and
shares) instruments
for sale
reserve instruments reserves distribution distribution ted losses) the Bank interest * reserves
-
-
-
-
-
-
-
455,813
-
-
-
-
-
-
-
-
- 5,917,131
-
100,937
-
-
-
-
- 9,524,475
-
4,131 9,528,606
-
-
3,595
524,467
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
520,872
-
-
520,872
520,872
-
-
520,872
3,595
6
524,467
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND RESERVES (Continued)
Equity
Subscribe Share
In thousands of denars d capital premium
Transactions with the shareholders,
reserves
Share issued in the period
Other reserves
Retained earnings
Foreign
Revaluation Revaluatio
exchange
Total equity
reserve for n surplus
reserves
Capital
and reserves,
on
component
for
for
attributable to NonOther
assets
assets
Reserves investment
Other
of hybrid
the share- controllin Total equity
(Treasury
equity
available
for risk
financial
Other
r
r
(Accumulat holders of the g interest
and
shares) instruments
for sale
reserve instruments reserves distribution distribution ed losses)
Bank
*
reserves
-
-
-
-
-
-
-
-
-
-
-
Allocation of statutory reserve
-
-
-
-
-
-
-
-
-
-
-
-
Allocation of other reserves
-
-
-
-
-
-
-
-
-
-
-
95,604
Dividends
-
-
-
-
-
-
-
-
-
-
-
-
Purchase of treasury shares
-
-
-
-
-
-
-
-
-
-
-
-
Sale of treasury shares
Other changes in equity and reserves
(describe separately)
Revaluation reserve on the date of
foreclosure of the asset
Reduction of revaluation reserve,
reclassified to Profit and loss
Acquisition of subsidiary with noncontrolling interest
-
-
-
-
-
-
-
-
-
-
-
-
73
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
As at December 31, 2015 (current year) 2,279,067
771,527
-
-
-
-
-
Income tax on paid dividend
Transactions with shareholders,
reserves
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
73
-
73
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,604
-
-
73
-
-
-
455,813
(95,604)
(95,531)
526,278
-
-
10,045,420
-
73
7,726 10,053,145
-
-
- 6,012,735
-
-
7
CONSOLIDATED STATEMENT OF CASH FLOWS
Note
Operating cash flows
Profit/(Loss) before taxation
Adjusted for:
Minority share, included in the consolidated income statement*
Depreciation of:
Intangible assets
Capital gain from:
Sale of intangible assets
Sale of property and equipment
Sale of foreclosed assets
Capital loss from:
Sale of intangible assets
Sale of property and equipment
Sale of foreclosed assets
Interest income
Interest expense
Trading income, net
Additional impairment losses
Release of impairment losses
Additional impairment losses
Release of impairment losses
Special reserve:
Additional provisions
Release of provisions
Dividend income
Share of profit /(loss) of associates
Other adjustments
Interest received
Interest paid
Profit/(loss) from operations before changes in
operating assets:
(Increase)/decrease of operating assets:
Trading assets
Foreclosed assets
Obligatory deposit in foreign currency
Obligatory deposit held with NBRM according to special regulations
Other receivables
Deferred tax assets
Non-current assets held-for-sale and disposal group
Current year
Previous year
2015
2014
588,909
111,969
(3,595)
(805)
15/28
15/29
14,832
180,577
20,811
185,939
11
11
(457)
(26,198)
(581)
(44,273)
16
16
6
6
8
12
1,046
(3,894,642)
716,990
(8,798)
6,863
(3,926,431)
1,099,300
21,381
4,072,571
(2,345,132)
4,017,514
(2,188,361)
13
543,198
38
38
11
242,645
(262,885)
(4,533)
(39,028)
6,638
3,922,432
(806,598)
232,899
(211,775)
(4,971)
(36,596)
(7,309)
3,927,072
(1,118,388)
2,897,972
2,392,718
(13,810)
(939,978)
(1,599,684)
45,631
(154,615)
(245,464)
-
308,460
(287,160)
(7,276,560)
(4,277,250)
204,554
(179,531)
(62,425)
-
8
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
Note
Increase/(decrease) in operating liabilities:
Trading liabilities
Due to banks
Other liabilities
Liabilities directly related to group or assets for disposal
Net cash flow from operating activities before taxation
(Paid)/received income tax
Net cash flow from operating activities
Cash flow from investing activities
(Investments in securities)
Inflows from sale of investment in securities
(Outflows from investment in subsidiaries and associates)
Inflows from disposal of investment in subsidiaries and associates
(Purchase of intangible assets)
Inflows from sale of intangible assets
(Purchase of property and equipment)
Inflows from sale of property and equipment
(Outflows from non-current assets held-for-sale)
Inflows from non-current assets held-for-sale
(Other outflows from investing activity)
Other inflows from investing activity
Net cash flow from investing activities
Cash flow from financing activities
(Repayment of debt securities issued)
Issued debt securities
(Repayment of borrowings)
Increase of borrowings
(Repayment of issued subordinated debts)
Issued subordinated debts
Inflows from issued shares/equity instruments during the period
(Purchase of treasury shares)
Disposal of treasury shares
(Dividends paid)
(Other financing outflows)
Other financing inflows from financing
Net cash flow from financing activities
Effect from allowance for impairment of cash and cash equivalents
Effect from foreign exchange differences of cash and cash equivalents
Net increase/(decrease) of cash and cash equivalents
Cash and cash equivalents as of January, 1
Cash and cash equivalents as of December, 31
Current year
Previous year
2015
2014
298,682
3,962,861
85,764
4,337,359
(16,716
(16,716) (
4,320,643
(7,615,218)
3,744,856
(243,938)
6,857,033
(48,671)
(2,921,230)
(13,059)
(2,934,289)
(17,677)
(6,014,078)
7,884,598
(12,754)
(61,309)
635
-
(95,799)
630
-
13,216
(3,935,497)
35,896
1,798,493
(3,265,514)
2,816,192
-
(6,750,793)
6,023,456
(727,337)
(452)
(1,863,585)
25,350,138
23,486,553
18
(449,322)
400
18
(63,776)
23,486,553
23,422,777
9
Notes to the Consolidated Financial Statements for the Year Ended December 31, 2015
Note
1 Introduction
2
2.1
2.2
2.3
2.3.1
2.3.2
2.3.3
2.3.4
2.4
Risk management
Credit risk
Liquidity risk
Market risk
Senzitivity analysis of assets and liabilities on the change in market risk
Senzitivity analysis of changes in interest rates of financial assets and liabilities (excluding trading assets)
Currency risk
Other market risks
Operational risk
3 Capital adequacy
4 Segmented Reporting
5 Fair value of financial assets and liabilities
Income statement
6 Interest income/(expense), net
7 Fee and commission income/(expense), net
8 Net Trading income
9 Net income from other financial instruments at fair value
10 Foreign exchange gains/(losses), net
11 Other operating income
12 Impairment losses of financial assets, net
13 Impairment losses of non-financial assets, net
14 Personnel expenses
15 Depreciation and amortization
16 Other operating expenses
17 Income tax
Balance Sheet
Assets
18 Cash and cash equivalents
19 Held-for-trading assets
20 Financial assets at fair value through profit or loss upon initial recognition
21 Derivative assets held for risk management
22.1 Loans and advances to banks
22.2 Loans and advances to other customers
23 Investments in securities
24 Investments in associates
25 Other receivables
26 Assets pledged as collateral
27 Foreclosed assets
28 Intangible assets
29 Property and equipment
30 Current and deferred income tax assets and liabilities
31 Non-current assets held-for-sale and disposal group
Liabilities, equity and reserves
32 Trading liabilities
33 Financial liabilities at fair value through profit or loss upon initial recognition
21 Derivative liabilities held for risk management
34.1 Due to banks
34.2 Due to other customers
35 Debt instruments issued
36 Borrowings
37 Subordinated debt
38 Special reserve and provisions
30 Deferred tax liabilities
39 Other liabilities
31 Liabilities related to disposal group
40 Subscribed capital
Other disclosures
41 Earnings per share
42 Contingent liabilities and contingent assets
43 Operations on behalf and for account of third parties/commission operations
44 Related party transactions
45 Leases
46 Share based payments
47 The Group’s subsidiaries
48 Subsequent events
10
1.
Introduction
a)
General Information
Komercijalna Banka AD Skopje (hereinafter “the Bank”), is a shareholding company having its
registered office in the Republic of Macedonia. During 2013 the Bank’s headquarters was relocated
from Kej Dimitar Vlahov 4 to St. Orce Nikolov 3, 1000 Skopje. The Bank operates in the Republic of
Macedonia with a network of branch and sub-branches. These consolidated financial statements
include the Bank and its subsidiary KB Publikum Invest AD Skopje (“KB Publikum”) (together referred to
as the “Group”).
The Bank is registered as a universal type of commercial bank in accordance with the Macedonian
slaws. The principal activities of the Bank are as follows:
-
Collecting deposits and other recurrent sources of funds;
Financing in the country and abroad, including factoring and financing commercial transactions;
Issuance and administration of payment instruments (cards, cheque, travellers cheques, bills of
exchange);
Foreign exchange operations;
Domestic and international payment operations, including purchase/sale of foreign currency funds;
Fast money transfer;
Issuing payment guarantees, backing guarantees and other forms of security;
Providing services of renting safe deposit boxes, depositories and depot;
Trade in instruments on the money market;
Trading in foreign currency funds;
Trading in securities;
Rendering services of custody bank to investments and pension funds;
Safeguarding of securities for clients;
Intermediating in selling insurance policies;
Data collection and analysis of companies’ credit rating;
Sale of shares in investment funds;
Other financial services defined by law, which can be performed only by a bank.
The shares of the Bank are listed on the official market in the segment of super-listing on the
Macedonian Stock Exchange on the Market of joint stock companies with consolidated reporting
requirements, and is one of the ten companies which comprise the Macedonian Stock Exchange index
MBI-10. The ID quotation code is the following:
Code
KMB (common share)
ISIN code
MKKMBS101019
KB Publikum is licensed to establish and manage open and closed investment funds. The company
manages three open investment funds, KB Publikum – balanced, KB Publikum – bonds, and KB
Publikum – cash. These funds do not have a status of legal entities and do not perform specific
activities.
The consolidated financial statements of the Group for the year ending 31 December 2015 were authorised for
issue by the Supervisoary Board on 25 February 2016.
11
1.
Introduction (continued)
b)
Basis of Preparation of the Consolidated Financial Statements
Accounting Standards
The consolidated financial statements of the Group have been prepared in accordance with the Trade
Company Law (“Official Gazette of the Republic of Macedonia“ no. 28/04, 84/05, 25/07, 87/08, 42/10,
48/10, 24/11, 166/12, 70/13, 119/13, 120/13, 187/13, 38/14, 41/14, 138/14 and 192/15), Law on Banks
(„Official Gazette of the Republic of Macedonia “ no. 67/07, 90/09, 67/10, 26/13, 15/15 and 153/15), law
regulation passed by NBRM, the Decision on the Methodology for recording and valuation of
accounting items and for the preparation of financial statements (“Official Gazette of the Republic of
Macedonia“ no. 169/10, 165/12, 50/13 and 110/13), and the Decision on the types and content of
financial statements of the banks (“Official Gazette of the Republic of Macedonia“ no. 169/10, 152/11,
54/12 and 166/13), issued by the NBRM.
Standards in Issue not yet Adopted
At the date of authorisation of these consolidated financial statements, there were no standards in issue
but not yet effective.
Presentation of Consolidated Financial Statements
These financial statements represent consolidated financial statements of the Group. The Bank has
investments in associates and it also prepares separate financial statements in accordance with the
Methodology.
The consolidated financial statements of the Group have been presented in accordance with the form
prescribed in Decision on the types and content of the financial statements of banks.
The Group’s Management estimates the influence of the new and the changes in IFRS and their
interpretation on the consolidated financial statements, as well as the requirements on the form and
contents in accordance with the Guidelines and valuation of assets, liabilities, revenues and expenses
in accordance with the Methodology.
The presentation of the consolidated financial statements in accordance with the accounting standards
applicable in the Republic of Macedonia requires the use of best estimates and reasonable
assumptions by the Group’s management, which affects the presented values of assets and liabilities,
and the revenues and expenses in the reporting period. These estimates and assumptions are based
on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for estimation of the carrying amounts of assets and
liabilities for which no other data is available. Actual results in subsequent period may differ from these
estimates.
The estimates and assumptions are reviewed on a continues basis. The revised accounting estimates
are recognized in the period for which the estimate has been revised if it affects only that period, or in
the period of the estimate and future periods if the revised estimate affects both periods – the current
and future period.
Information regarding the critical judgments in the implementation of the accounting policies with the
most significant impact on the amounts disclosed in the consolidated financial statements are
presented in Note 1.d).
12
1.
b)
Basis of Preparation of the Consolidated Financial Statements (continued)
Presentation of Consolidated Financial Statements (continued)
The Group’s consolidated financial statements have been prepared in accordance with the accounting
policies disclosed in Note 1.c) to the consolidated financial statements.
Reporting and functional currency
The presented financial statements are expressed in thousands of Denars. The Denar represents the
functional and reporting currency of the Bank for the purpose of reporting to NBRM.
c)
Summary of Significant Accounting Policies
The accounting policies presented below have been applied consistently to all periods presented in
these financial statements, except for matters disclosed in Note 1.e).
Basis of consolidation
i)
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date – i.e.
when control is acquired by the Group. The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested
annually for impairment. Transaction costs are expensed as incurred, except if they are related to the
issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in profit or loss.
ii)
Non-controlling interests
Non-controlling interests are measured at their proportionate share of the acquired entity’s identifiable
net assets.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for
as equity transactions.
iii)
Subsidiaries
‘Subsidiaries’ are entities controlled by the Group. The Group ‘controls’ an entity if it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which the control commences until the date when
the control ceases.
iv)
Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the
subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain
or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair
value when the control was lost.
13
1.
c)
Summary of Significant Accounting Policies (continued)
Basis of consolidation (continued)
v)
Equity-accounted investees
The Group’s interest in equity-accounted investments comprise of investments in an associate.
Associates are those entities over which the Group has significant influence, but not control or joint
control, over the financial and operating policies. Investments in associates are measured using the
equity method. They are recorded initially at cost, which includes transaction costs. Subsequent to
initial recognition, the consolidated financial statements include the Group’s share of profit or loss of
equity-accounted investments, until the date on which significant influence ceases. Distributions from
associates are accounted as reductions of the carrying amount of the investment.
v)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.
Interest Income and Expense
Interest income and expense are recognized in the income statement for all interest bearing
instruments on accrual basis, measured at amortized cost using the effective interest rate method.
The effective interest rate method is a method of calculating the amortized cost of a financial asset or a
financial liability and of allocating the interest income or interest expense over the relevant period. The
effective interest rate is the rate that discounts estimated future cash payments or receipts through the
expected life of the financial instrument or, when appropriate, a shorter period to the net carrying
amount of the financial asset or financial liability. When calculating the effective interest rate, the Group
estimates cash flows considering all contractual terms of the financial instrument (for example,
prepayment options) but does not consider future credit losses. The calculation includes all fees and
commissions paid or received between parties to the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums or discounts.
Fee and Commission Income
Fees and commissions, except loan origination fees, are generally recognized on an accrual basis over
the period of service rendering. Other fees relating to the acquisition and origination of loans are
deferred over the life of the loan and amortized using the effective interest rate method.
Dividend Income
Dividend income is recognized when the right to receive payment is established for all shareholders
who participate in income distribution. Dividends are presented as part of net trading income or
dividend income depending on the classification of the instrument.
14
1.
c)
Foreign Currency Transactions
Transactions denominated in foreign currencies have been translated into Denars at rates set by the
National Bank of the Republic of Macedonia (“NBRM”) at the dates of the transactions. Assets and
liabilities denominated in foreign currencies are translated into Denars at the balance sheet date using
official rates of exchange ruling on that date. Foreign exchange gains or losses arising upon the
translation of transactions, and the translation of assets and liabilities denominated in foreign currencies
are recognized in the income statement in the period in which they occurred.
Commitments and contingent liabilities denominated in foreign currencies are translated into Denars by
applying the official exchange rates at the balance sheet date.
Official exchange rates applicable as at 31 December 2015 and 2014 for euro (EUR) and American
dollar (USD) are as follows:
1 EUR
1 USD
2015
MKD
2014
MKD
61,59
56,37
61,48
50,56
Financial assets and liabilities
(i) Recognition
Financial assets and liabilities are recognised at the settlement date, representing the date when the
assets is delivered by/to the Group.
(ii) Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or when it transfers the rights to the cash flows of the financial asset in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred. Any interest in transferred financial assets that qualify for de-recognition that is created or
retained by the Bank is recognised as a consolidated asset or liability.
The Group derecognises a financial liability when its contractual obligations are settled or cancelled or
expired.
(iii) Offsetting
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to set off the recognised amounts and it
intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted with the applicable accounting
standards, or for gains and losses arising from a group of similar transactions.
15
1.
c)
Financial assets and liabilities (continued)
(iv) Amortised cost measurement
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is
measured at initial recognition, less principal repayments, plus or minus the cumulative amortisation
using the effective interest method of any difference between the initial amount recognised and the
maturity amount, less any reduction for impairment.
(v) Fair value measurement
Measuring at fair value assumes that the asset or liability is exchanged among market participants, in a
common transaction, in accordance with current market conditions at the measurement date. Fair value
of financial assets and liabilities is determined in different ways depending if the asset or liability are
traded in the active market or not.
An active market is a market where transactions are carried out with the asset or liability with sufficient
frequency and volume to provide pricing information for the asset or liability.
The corresponding quoted market price for the asset or liability is the one that is within a range between
the purchase and selling price, which best represents fair value in the given circumstances. Typically
used is the current: the purchase price of the asset which is kept or the liability that should be issued,
namely retail/offered price for the asset that will be acquired or liability that is kept; the average market
price or other price in accordance with the usual, accepted market practice.
If there is no active market for the financial asset or liability, the Group, in order to determine the fair
value of the asset or liability, applies valuation techniques that have most available data, giving
preference to data that can be validated on the market.
The common valuation techniques are: market access (quoted prices are used or other relevant
information from market transactions with the same or similar assets or liabilities), expenditure
approach (known as the current replacement cost, represents the amount that would be required to
replace the current asset) and revenue approach (discounted value of current market expectations for
future amounts (cash flows or income and expense) of the asset or liability).
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and nostro accounts, that represent demand deposits
and placements with other banks and financial institutions, account balances with the NBRM and other
financial assets such as treasury and government bills, as highly liquid assets with maturity up to three
months and insignificant changes to fair value.
Held-for-trading Financial Assets
Held-for-trading financial assets, are securities included in a portfolio in which a pattern of short-term
profit making exists. Initially, these securities are recognized and subsequently measured at fair value,
and the transaction costs are directly recognized in the income statement.
All the respective realized and unrealized gains and losses are included under net trading income.
Interest, if realized, during the period of ownership of these securities, is recognized as net trading
income in the income statement. The purchase and disposal of securities held-for-trading is recognized
at settlement date, which represents the date when the asset is delivered to the Group.
16
1.
c)
Available-for-sale Financial Assets
Available-for-sale financial assets are those intended to be held for an indefinite period of time, which
may be sold in response to needs for liquidity or changes in interest rates, exchange rates or share
prices. This portfolio comprises of equity securities issued by banks, financial institutions and
companies, where the Bank does not exercise control, as well as debt securities issued by the Republic
of Macedonia.
Available-for-sale financial assets are recognised at their fair value, except those for which there is no
active market and quoted prices and whose fair value cannot be reliably measured, in which case they
are measured at cost less impairment.
Unrealized gains and losses arising on changes in the fair value of available-for-sale financial assets
are recognized in equity, until the financial asset is derecognized or impaired at which time the
cumulative gain or loss previously accumulated in the revaluation reserves should be recognized in
profit or loss for the period. Interest calculated using the effective interest method, impairment losses
and foreign exchange gains and losses are recognized in the income statement.
Held-to-maturity Financial Assets
Held-to-maturity financial assets are financial assets with fixed or determinable payments and fixed
maturity that the Bank has the positive intention and ability to hold to maturity. If the Group is to sell or
reclassify other than an insignificant amount of held-to-maturity assets, the entire category would be
reclassified as available-for-sale. This would prevent the Group from classifying investment securities
as held to maturity for the current and the following two financial years. These securities are measured
at amortized cost using the effective interest rate method.
Loans and Receivables
Loans and receivables include loans where cash is approved directly to the customer. Loans are initially
recognized at fair value, including any transaction costs, and are subsequently measured at amortized
cost using the effective interest rate method. Interest on loans and receivables is included in interest
income.
Loans to customers and financial institutions are stated at their net amount reduced by allowance for
impairment.
Impairment of Financial Assets
The Group, at least quarterly, assesses whether there is objective evidence that financial assets or
group of financial assets not carried at fair value through profit or loss are impaired. A financial asset or
a group of financial assets is (are) impaired when objective evidence demonstrates that a loss event
has occurred after the initial recognition of the asset(s), and that the loss event has an impact on the
future cash flows on the asset(s) that can be estimated reliably.
The Group considers evidence of impairment for loans and advances and investment securities on
individual basis.
17
1.
c)
Impairment of Financial Assets (continued)
Objective evidence that financial assets (including equity securities) are impaired can include
significant financial difficulty of the borrower or issuer, default or delinquency by a borrower,
restructuring of a loan or advance by the Group on terms that the Group would not otherwise consider,
indications that a borrower or issuer will enter bankruptcy, the disappearance of an active market for a
security, or other observable data relating to a group of assets such as adverse changes in the payment
status of borrowers or issuers in the group, or economic conditions that correlate with defaults in the
group.
Impairment losses on assets carried at amortised cost are measured as the difference between the
carrying amount of the financial asset and the present value of estimated future cash flows discounted
at the asset’s original effective interest rate.
Impairment losses are recognised in the income statement and reflected in an allowance account
against loans and advances.
Interest on the impaired asset continues to be recognised through the unwinding of the discount. When
a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment
loss is reversed through income statement.
Impairment losses on available-for-sale investment securities are recognised by transferring the
cumulative loss that has been recognised in the income statement to profit or loss. The cumulative loss
that is removed from the income statement and recognised in profit or loss is the difference between the
acquisition cost, less any impairment loss previously recognised in the income statement. Changes in
the allowance account which are result of the time value of money are recognised as part of interest
income.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and
the increase can be objectively related to an event occurring after the impairment loss was recognised
in profit or loss, the impairment loss is reversed, with the amount of the reversal recognised in profit or
loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity
security is recognised directly in equity.
Impairment Losses on Loans and Advances
Allowances for impairment and un-collectability are determined if there is objective evidence that the
Group cannot collect all amounts due on a claim according to the original contractual terms. A provision
for loan impairment is reported as a reduction of the carrying amount of the loan, whereas for offbalance sheet items are presented within the provisions. Additions to provisions are made through
impairment losses on financial assets in the income statement.
The allowances for impairment and un-collectability are determined according to the regulation of the
NBRM ruling on each balance sheet date, according to which the Group is liable to classify the assets
and off-balance sheet items in groups, according to their specific level of risk and to estimate the
outcome of potential losses which are calculated by applying objective and subjective metrics, as of
December 31, 2015 by applying the following percentages:
Risk
Category
Percentage
A
B
C
D
E
0% - 5%
5% - 20%
20% - 45%
45% - 70%
70% - 100%
18
1.
c)
Impairment Losses on Loans and Advances (continued)
The allowances for impairment and un-collectability are determined on the basis of the degree (size) of
the risk of un-collectability or specific country risk on the basis of the following principles:
-
Separate loan exposures (risks) are assessed on the basis of the type of loan applicant, his/her/its
overall financial position, resources and payment records and recoverable value of collaterals.
Allowances for losses on impairment and un-collectability are measured and determined for the
difference between the carrying amount of the loan and its estimated recoverable amount, which is,
in fact, the present value of expected cash flows;
-
Losses on impairment and un-collectability is termination of the calculation of interest income as
per agreed terms and conditions, while the loan is classified as non-performing since the
contractual liabilities for payment of the principal and/or interest are in default, i.e. uncollected for a
period longer than 90 days. All allowances for losses on impairment and un-collectability are
reviewed and tested at least quarterly, and any further changes in the amount and timing of
expected future cash flows in comparison to previous assessments result in changes in allowances
for losses on impairment and un-collectability recorded in the income statement;
-
The loan which is believed that is impossible to be collected is impaired against the relevant
allowance for losses on impairment and un-collectability . Further collections are recorded as
reduction of losses on impairment and un-collectability in the income statement;
-
In case of loans granted to borrowers in countries with increased risk of difficulties for servicing
external debt, the political and economic circumstances are assessed and additional allowances for
sovereign risk are allocated.
Financial Liabilities
Financial liabilities are classified in accordance with the substance of the contractual arrangement.
Financial liabilities are classified as deposits from banks, financial institutions and customers, loans
payable, other payables and derivative financial instruments.
Deposits from Banks and Other Financial Institutions and Customers
These financial liabilities are initially recognized at fair value, net of transaction costs incurred.
Subsequently they are measured at amortized cost, while applying an effective rate method.
Borrowings
Borrowings are initially recognized at fair value net of transaction costs incurred. Subsequent
measurement is at amortized cost and any difference between net proceeds and the redemption value
is recognized in the income statement over the period of the loan using the effective interest rate
method. The effective interest rate is the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability.
19
1.
c)
Property and equipment is recorded at cost, less accumulated depreciation and accumulated
impairment losses. Expenditure incurred to replace a component of an item of property and equipment
that is accounted for separately is capitalized. Other subsequent expenditure is capitalized only when it
increases the future economic benefits embodied in the item of property and equipment. All other
expenditures are recognized in the income statement as an expense as incurred. Depreciation is
charged at estimated rates so as to write off the cost of assets over their estimated useful lives, using
the straight-line method. No depreciation is charged on construction in progress until the constructed
assets are put into use.
The useful life of certain categories of property and equipment are as follows:
Buildings
Furniture and equipment
40 years
4-20 years
Depreciation methods, useful lives and residual value are reviewed at each financial reporting date.
The gain or loss arising on the disposal or retirement of an item of property and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in the profit and loss. The Bank annually reviews its property and equipment for impairment.
Where the carrying amount on an asset is greater than its estimated recoverable amount, it is written
down immediately to its recoverable amount.
Intangible Assets
Intangible assets are assets acquired separately and are reported at cost less accumulated
amortization and accumulated impairment losses, if any. Intangible assets include computer software
and software that was acquired apart from hardware. Expenditure on software is amortized on a
straight-line basis over the estimated useful life, which is five years. The Group annually reviews its
intangible assets and assess whether there is any indication for impairment. If such indications exist, an
estimate is performed to assess whether the carrying amount is recoverable. If the carrying amount
exceeds the recoverable amount, it is written down to the recoverable amount.
Impairment of Non-financial Assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists then the asset’s
recoverable amount is estimated.
An impairment loss is recognised if the net value of an asset or a cash generating unit, to which the
asset belongs, exceeds its recoverable amount. For asset that generates cash flows that largely are
independent, the recoverable amount is determined for cash-generating units to which the asset is
allocated.
A cash-generating unit is the smallest identifiable asset group that generates cash flows from
continuing use that are largely independent of the cash inflows of other assets or groups. Impairment
losses are recognised in profit or loss.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
20
1.
c)
Impairment of Non-financial Assets (continued)
An impairment loss is reversed if there is an indication that the loss no longer exists or there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined (net of amortisation) if no impairment loss had been
recognized in the previous years.
Foreclosed assets
Foreclosed assets include property and equipment obtained through foreclosing procedures in order to
fulfil customers’ liabilities, fully or partially, for the appropriate credit and are displayed in the item
foreclosures based on outstanding receivables (foreclosures). Foreclosed properties are initially
recognized at a lower than estimated value, reduced for the expected selling cost which are borne by
the Group and the value of the foreclosed property referred to in the act which is passed by the
competent authority, from which the legal basis for ownership rights arises. The appraised value is
determined by a certified valuator.
At the date of the assets initial recognition, the Group is obliged in accordance to the Decision on
accounting treatment of assets acquired based on outstanding receivables (Official Gazette of R.M. No.
50/13) to reduce the value of the foreclosed asset in the balance sheet by at least 20% of the initial
recognized value.
After the initial recognition, at least once in a twelve-month period, the Group performs a valuation of
the foreclosed property and determines a difference with the carrying amount. Simultaneously the
Group calculates 20% of the carrying amount of the foreclosed property and compares it with the
difference between the estimated and carrying amount. The greater amount is recognized in the income
statement as impairment loss.
If a foreclosed property becomes a property of the Group for own use, the value at which the asset will
be recognised is at the lower of the latest valuation determined by a certified valuator and the carrying
amount of the asset at the date of the change in use (determined at that date in accordance with the
Decision for accounting and regulatory treatment of foreclosed assets).
Managed funds for and on behalf of third parties
The Group acts as a fiduciary and in other fiduciary matters provides services for and on behalf of third
parties such as legal entities, individuals, investment and pension funds and other institutions for which
it keeps and manages assets or invests funds received in various financial instruments at the direction
of the customer. The Group receives fee income for providing these services. Managed funds are not
assets of the Group and are not recognized in the financial statements. The Group is not exposed to
any credit risk relating to such placements, as it does not guarantee them.
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. The amount recognized as a provision is the best estimate
of the consideration required to settle the present obligation at the balance sheet date, taking into account
the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
21
1.
c)
Employee benefits
(i)
Defined contribution plans
The Group contributes to its employees' post retirement plans as prescribed by the national legislation.
Contributions, based on salaries, are made to the national organisations responsible for the payment of
pensions. There is no additional liability in respect of these plans. Obligations for contributions to
defined contribution pension plans are recognised as an expense in the income statement when they
are due. In addition to pension contributions the Group also pays contributions for: health insurance,
professional additional contribution, contribution for employment in case of unemployment, contribution
for past work with increased term. The Group does not have additional liabilities related to these plans.
(ii)
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided. Short-term employee benefits include: salaries, compulsory social
security contributions, short term paid absences (paid annual holiday, sick leaves) and non-monetary
benefits (health insurance).
(iii)
Other long-term employee benefits
In accordance with local regulations the Group pays two average monthly net salaries paid in the
Republic of Macedonia in the preceding three months to its employees at the moment of retirement and
jubilee awards in accordance with the criteria stated in the General collective contract.
In accordance with IAS 19, these benefits are considered defined pension benefit plans. The carrying
amount of the Bank’s liabilities arising from employee benefits are calculated at the end of the reporting
period. The balance of these liabilities at the end of the reporting period presents the discounted
amount of future payments
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the
income statement except to the extent that it relates to items recognised directly in equity, in which case
it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date of 10%, and any adjustment to tax payable in respect
of previous years.
Deferred tax is provided using the balance sheet method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been enacted or substantively
enacted by the reporting date.
22
1.
c)
Income tax (continued)
Deferred tax assets are recognized for unused tax losses, unused tax credit and deductible temporary
differences to the extent for which is probable that the future taxable profits against which the asset can
be utilized. Deferred tax assets are estimated at the end of each reporting period and reduced to the
extent that is no longer probable that these tax revenues will be realized. Any such reduction should be
reversed to the extent that it is probable that sufficient taxable profit will be available. Unrecognised
deferred tax assets are assessed at the end of each reporting period and recognised to the extent it is
probable that future taxable income will be sufficient against which the asset can be utilised.
Income tax expense comprises of current tax and is recognised in the income statement.
Leases
The Group leases assets as operating leases. Rental income and expenses are recognized in the
income statement on a straight-line basis over the term of the lease.
d)
Critical Accounting Judgments and Estimates
The most significant areas for which judgments, estimates and assumptions are required, are:
Fair Value of Financial Instruments
The fair values of the financial instruments that are not quoted in active markets are determined using
internal valuation techniques. These include present value methods, models based on observable input
parameters. All valuation models are validated before they are used as a basis for financial reporting,
and periodically reviewed by qualified personnel independent of the area that created the model.
Wherever possible, the Group compares valuations derived from models with quoted prices of similar
instruments, and with actual values when realized, in order to further validate and standardize models.
A variety of factors are incorporated into the models, including actual or estimated market prices and
rates, such as time value and volatility, and market conditions and liquidity.
The Group applies its models consistently from one period to the next, ensuring comparability and
continuity of valuations over time, but estimating fair value inherently involves a significant degree of
judgment.
In the Republic of Macedonia sufficient market experience, stability and liquidity do not exist for the
purchase and sale of receivables and other financial assets or liabilities, for which published market
prices are presently not readily available.
The Management assesses its overall risk exposure and in instances in which it estimates that the
value in the books may not be realized, it recognizes a provision. In the opinion of management, the
reported carrying amounts for the assets that are not quoted in an active market represent the most
valid and useful reporting values under the present market conditions.
Allowance for Impairment of Loans
The Group reviews its loan portfolios to assess impairment on a monthly basis. In determining whether
an impairment loss should be recorded in the income statement, the Group makes judgments as to
whether there is any observable data indicating that there is a measurable decrease in the estimated
future cash flows from a portfolio of loans before the decrease can be identified with an individual loan
in that portfolio. This evidence may include observable data indicating that there has been an adverse
change in the payment status of borrowers in the Group, or national or local economic conditions that
correlate with defaults on assets in the Group.
23
1. Introduction (continued)
d) Critical Accounting Judgments and Estimates (continued)
Allowance for Impairment of Loans (continued)
Management uses estimates based on historical loss experience for assets with credit risk
characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its
future cash flows. The methodology and assumptions used for estimating both the amount and timing of
future cash flows are reviewed regularly to reduce any differences between loss estimates and actual
loss experience.
Useful Lives of Tangible and Intangible Assets
The Group’s management determines estimated useful lives and related depreciation and amortization
charges for its tangible and intangible assets. The appropriateness of the estimated useful lives is
reviewed whenever there is an indication of significant changes in the underlying assumptions, such as
anticipated technological developments and changes in the broad economic and industry factors.
Financial Crisis
Development on the financial markets may affect future cash flows of the Group that otherwise would
be expected under the regular public interest. As a result, future cash flows are subject to possible
fluctuations and whether the fluctuations are significant relative to the previously expected cash flows
remains uncertain.
Assessment of control of investments
The management makes an assessment to determine if the control indicators listed in the accounting
policies section 1.c). point out that the Group has control over certain investment or investment fund.
Investment funds
The Group act as a fund manager to three investment funds. Determining whether the Group has
control over the investment funds is usually focused on evaluating the total economic interest of the
Group with the funds (including any transferred interest and expected management provisions) and
investors rights. Assets of investment funds are legally separated from the Group’s assets. If the
operation of the Group cease, the assets of the investment funds belong to the holders of stakes in the
investment funds. Also, the Group has a low aggregate economic interest in the funds. As a result, the
Group concluded that it acts as an agent to the investors in all cases, and therefore does not
consolidate these funds.
Changes in the Accounting Policies
For the year ended 31 December 2015 there we no changes in the Accounting Policies, accounting
estimates and correction of errors.
e)
Compliance with Regulations
As at 31 December 2014 the Group’s exposure towards a single client and with their related parties is
above the regulatory prescribed limit of 25% of the Group’s own funds, and as at 31 December 2014
the exposure is 32.79% of the Group’s own funds. In accordance with the Memorandum signed with
NBRM on 25 December 2014, The Group undertakes activities to reduce its exposure within the
regulatory prescribed limits by 30 June 2015.
In accordance with a Memorandum agreed with the NBRM, as at 30 June 2015, the Group has
reconciled with the regulations regarding the Group’s limits of exposure for individual customers and
their related parties. Namely, as of 30 June 2015, the basis for connecting customers listed in the
Memorandum has ceased, which has resulted in indicators for customers exposures within the limits of
exposure, according to the regulations.
24
1.
e)
Compliance with Regulations (continued)
In July 2015, a change in the regulations has been made which affects the manner of determining
related parties, and according to the decisions of this regulations the same customers have to be
identified as related parties again and the limit has to be redetermined for both clients. The application
of these regulations, i.e the reconciliation of the approved exposures has to be made by 31 March
2016. The Group is obligated to reconcile the new regulations regarding the manner in which customer
connections are performed to their related parties, and as such, determine the limits of exposures in
accordance with the new decisions, no later than 31 March 2016. These activities are to be performed
in a way that does not clash with the current applicable regulations.
There are no other incompliances with the regulations prescribed by the NBRM in regards to the
solvency and capital adequacy of the Group, its limits of exposure, investments, liquidity and open
foreign currency position.
f)
Acquisition of subsidiaries
On 25 April 2013, the Group obtained control of KB Publiikum, an investment funds managing
company, by acquiring additional 14.29% of the shares and voting interests in the company. As a result,
the Bank’s equity interest in KB Publiikum increased from 50 to 64.29%.
In the period from 01 January 2015 to 31 December 2015, KB Publicum contributed revenue of 19,168
thousands of denars and loss of 10,065 thousands of denars to the Group’s results. In the period from
01 January 2014 to 31 December 2014, KB Publicum contributed revenue of 9,612 thousands of
denars and loss of 2,255 thousands of denars to the Group’s results.
Consideration transfered
The consideration transferred included MKD 12,309 thousand in cash, for 200 ordinary shares issued
by KB Publicum.
Measuring fair value
Held-for trading financial assets
Held for trading financial assets are measured at fair value at acquisition date.
Financial assets and liabilities
The carrying amount of cash and cash equivalents, bank deposits, other assets and liabilities to
suppliers and other liabilities, is identical to their fair value at acquisition date due to the short term
maturity.
Property, equipment, and intangible assets
The items of Property, equipment, and intangible assets are recognized at cost, less accumulated
amortization and accumulated impairment losses, if any. Due to their insignificant participation in total
assets their fair value is not expected to significantly alter the fair value of the net assets acquired.
25
2.
Risk Management
The Group’s activities expose it to a variety of financial risks and those activities involve identifying,
undertaking, measuring, monitoring and control of separate risks or their combination. Taking risk is
core business activity and the operational risks are an inevitable consequence of being in business.
The Group’s aim is therefore to achieve an appropriate balance between risk and return and minimize
potential adverse effects on the Group’s financial performance.
The Group has established Strategy for undertaking and managing risks, adopted by the Supervisory
Board that is revised regularly. The Strategy defines the main objectives and general directions in
undertaking and managing risks, general approach to the risk management, general approach to the
internal determining and assessment of the necessary capital adequacy, general review of the business
strategy of the bank, as well as the possible changes in the Group’s business strategy and acceptable
level of risk the Group can be exposed to during its operations.
Group’s Shareholders Assembly appoints the members of the Supervisory Board and the Audit
Committee. Supervisory Board has overall responsibility for the establishment and oversight of the
Group’s risk management framework. Supervisory Board has established the Board of Directors, Credit
Committee and Risk Management Committee. These bodies are responsible for monitoring and
developing risk management policies in specific areas. The Group has established organizational
structure, with clearly defined competences and responsibilities among organizational parts of the
Group where credit risk is originated and managed.
The most important types of risk are credit risk, liquidity risk, market risk (risk of change in the interest
rates in the banking book, currency risk and other market risks) and operational risk.
26
2.
Risk Management (continued)
2.1
Credit Risk
The Group is exposed to credit risk which represents the risk of financial loss due to customer’s default
on their contractual obligations. Credit risk is the most important risk for the Group’s operations,
therefore the management carefully manages the Group’s exposure to credit risk. The exposure to this
risk arises principally from lending activities and advances, as well as activities related to off-balance
sheet financial instruments, such as loan commitments to enterprises and households, guarantees and
letters of credit.
2.1.1
Credit Risk Management
The Group has established organizational structure, with clearly defined competences and
responsibilities of the Supervisory Board and the Board of Directors regarding credit risk management.
The organization of the credit risk management is established on the following levels of hierarchy:
- Strategic level - the risk management function shall be performed by the members of Supervisory
Board and the Board of Directors; Risk Management Committee and Audit Committee;
- Macro level - the risk management function at the level of business unit, or business line shall be
performed by other persons with special rights and responsibilities performing managing function
and/or by special organizational unit responsible for monitoring the credit risk management.
Credit risk management at the level of business unit in the Group includes each Division where the
credit risk is undertaking and the persons with special rights and responsibilities that performs the
management function in the Division. The duties of these organizational units in the Bank are regulated
in the appropriate Policies adopted from the Group’s Supervisory Board. Special organizational unit in
the Group competent for credit risk management is Risk Management and Planning Division – Credit
Risk Management Department.
2.1.2
Control of Risk Exposure, Limits and Risk Protection Policies
The Group manages and controls the concentration of credit risk to any number of clients, some
categories of clients, industries, currencies structure, geographic location, collateral instruments and
other bases. The Group structures the level of credit risk taken by setting limits on the amount of
acceptable risk of exposure to aforementioned concentrations.
Initially, when approving loans and loan commitments, different Credit Committees assess
creditworthiness of the clients depending on the type and size of the exposure based on defined
criteria. The Group has implemented different practices to mitigate credit risk in lending, including
mortgages and other collateral instruments. Given that the collateral itself is not sufficient to generate
cash flows, it is considered to be a secondary factor in the evaluation of creditworthiness. The value
and quality of collateral depends of the type of collateral (immovable, movable property, inventory,
accounts receivables) and the probability of activation in order of claim. For part of the credit exposures
classified in risk grades D and E which the Group expects to collect through foreclosure of the property,
and the property meets the criteria as defined in the Decision for credit risk management, the Group
takes into consideration the value of the property in determining the present value of the expected
future cash flows from those exposures. Collateral is divided into two types: first class, providing high
liquidity which is considered 100% when calculating net realizable value and other collateral.
27
2.
2.1
Credit Risk (continued)
2.1.2
Control of Risk Exposure, Limits and Risk Protection Policies (continued)
More significant types of collateral, for loans and other exposures, include:
a) Legal entities:
-
Cash;
Real estate property;
Equipment and motor vehicles;
Inventory;
Receivables;
Guarantees issued by banks and legal entities;
Securities, including: debt securities issued by the Government of the Republic of Macedonia,
NBRM and securities issued by other entities.
b) Individuals:
-
2.1.3
Real estate property;
Passenger vehicles;
Deposits;
Securities, including: debt securities issued by the Government of the Republic of Macedonia,
NBRM and securities issued by other entities.
Policies for calculation of impairment loss/ allowance for impairment
The impairment losses are identified losses of the Group credit portfolio that incurred at the balance
sheet date and for which there is objective evidence of impairment. The Group calculates the
impairment provision after making the classification of credit exposure in the appropriate risk category.
According to the Group policies, impairment and provisioning are defined on an individual basis, for all
credit risk exposures which are considered individually significant, for all exposures to credit risk of the
Group.
Exposures Classified on an Individual Basis
Classification in the risk category of individually significant exposures are made on the basis of the
assessment (score), based on certain parameters, including creditworthiness of the client, orderly
settlement of obligations and the quality of collateral.
Impairment/special reserve for individually assessed items are determined by evaluating the loss
generated on the date of the balance sheet, which is the difference between the carrying amount and
present value of estimated future cash flows. The effective interest rate is used to discount future cash
flows. Credit exposures to banks and investments in own shares, debt instruments, as well as
exposures classified as nonperforming are classified on an individual basis.
2.1.4.
Methodologies of assessment of credit risk.
The Methodology of the Group for the system of internal rating of clients developed through score
model includes a selection of criteria for assessment of credit risk of clients classified on individual
bases, in a form of score scheme.
28
2.
2.1
2.1.A
Analysis of Maximum Exposure to Credit Risk
I. Carrying amount of exposure
with an allowance for
impairment/special reserve
Carrying amount of
individually significant
exposures, before the
allowance for impairment
and the special reserve, on
individual basis
Risk category A
Risk category B
Risk category C
Risk category D
Risk category E
(Allowance for impairment and
special reserve, on individual basis)
Carrying amount of individually
significant exposures, reduced
by allowance for impairment and
the special reserve, on individual
basis
Carrying amount of exposures
assessed on group basis, before
allowance for impairment and the
special reserve on group basis
Individually insignificant exposures
(portfolio of small-amount loans)
Individually significant exposures
that are not impaired on individual
basis
(Allowance for impairment and
special reserve, group basis)
Carrying amount of exposures
assessed on group basis, less
the allowance for impairment and
the special reserve, group basis
Loans and advances to
banks
other customers
Current
year
2015
Current
year
2015
Previous
year
2014
Previous
year
2014
Investment in
financial assets
available-for-sale
Investment in financial
held-to-maturity
Current
year
2015
Previous
year
2014
Current
year
2015
Previous
year
2014
-
Fees and commission
receivables
Current
year
2015
-
Previous
year
2014
1,893
1,893
-
Current
year
2015
6,827
6,827
-
4,247
11
4,236
-
57,978,968
39,944,118
3,580,927
3,333,132
1,057,786
10,063,005
56,325,106
39,374,387
2,282,179
4,539,196
3,344,168
6,785,176
2,624
2,624
2,624
2,624
(1,884)
(1,169)
(12,236,390)
(10,492,157)
(2,624)
(2,624)
4,943
3,078
45,742,578
45,832,949
-
-
-
-
1,827
12,732
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,194
13,194
-
(66)
Previous
year
2014
Off balance sheet
exposures
Other receivables
Current
year
2015
Previous
year
2014
Total
Current
year
2015
Previous
year
2014
4,994,292
4,571,855
325,956
31,507
32,928
32,047
4,537,035
4,245,993
81,098
122,465
38,585
48,894
Current
year
2015
Previous
year
2014
63,434,086
44,703,005
3,962,939
3,373,786
1,098,440
10,295,917
61,162,587
43,709,736
2,390,280
4,668,755
3,386,672
7,007,144
(12,600,035)
(10,851,793)
45,506
3,662
3,294
1,651
2,351
34,548
36,694
6,613
1,782
2,639
3,065
22,595
403,976
181,476
52,763
668
5,375
163,693
243,687
69,538
25,221
219
854
147,855
(36,650)
(25,246)
(172,673)
(154,004)
8,856
11,448
231,302
89,683
4,844,545
4,360,905
50,834,052
50,310,795
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(462)
(149,748)
(176,130)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
-
-
2.
2.1
2.1.A
Analysis of Maximum Exposure to Credit Risk (continued)
banks
Loans and advances to other
customers
Current
year
2015
Current year
2015
Previous
year
2014
Previous
year
2014
assets available-for-sale
Current
year
2015
held-to-maturity
Previous
year
2014
Current
year
2015
Previous
year
2014
Current year
2015
Previous
year
2014
Fees and
commission
receivables
Current
year
2015
Previou
s year
2014
Off balance sheet
exposures
Other receivables
Current
year
2015
Previous
year
2014
Total
Current
year
2015
Previous
year
2014
Current
year
2015
Previous
year
2014
II. Carrying amount of
exposures without allowance for
impairment/special reserve
Past due receivables
Aging structure of past due
receivables for which there is no
allowance for impairment
up to 30 days
-
-
64,625
31,942
-
-
-
-
-
-
1,365
2,597
-
84
1,121,383
1,464,258
1,187,373
1,498,881
Carrying amount of receivables
for which there is no allowance
for impairment
-
-
64,625
31,942
-
-
-
-
-
-
1,365
2,597
-
84
1,121,383
1,464,258
1,187,373
1,498,881
9,203,527
8,266,557
2,091,520
2,037,381
7,191,534
3,319,079
2,515
4,608
19,022,418
17,677,911
1,881
1,872
242,165
172,097
9,481,167
7,462,977
47,236,727
38,942,482
9,203,527
8,266,557
2,091,520
2,037,381
7,191,534
3,319,079
2,515
4,608
19,022,418
17,677,911
1,881
1,872
242,165
172,097
9,481,167
7,462,977
47,236,727
38,942,482
9,210,354
8,270,804
60,135,113
58,394,429
7,194,158
3,321,703
2,515
4,608
19,024,311
17,691,105
48,752
41,163
646,140
415,868
15,596,842
13,464,270
111,858,186
101,603,950
(12,236,390)
(10,492,157)
(36,650)
(25,246)
(172,673)
(154,004)
47,898,722
47,902,272
12,103
15,917
473,468
261,864
non-matured receivables
Restructured receivables
Other receivables
Carrying amount of undue
receivables for which there is
no allowance for impairment
/special reserve
Total carrying amount of the
credit risk receivables before
the allowance for impairment
and special reserve
(Total allowance for
impairment and special
reserve)
Total Carrying amount of the
credit risk receivables less
the allowance for impairment
and special reserve
(1,884)
9,208,470
(1,169)
8,269,635
(2,624)
7,191,534
(2,624)
3,319,079
-
-
2,515
4,608
(66)
19,024,245
(462)
17,690,643
(149,748)
15,447,095
(176,130)
13,288,140
(12,600,035)
(10,851,792)
99,258,152
90,752,158
30
2.
2.1
2.1.B
Value of Collateral (Fair Value) for Mitigating of Credit Risk
Value of collateral of credit exposure assessed for
impairment on an individual basis
First-class collateral instruments
cash deposits (in depot and/or restricted in
accounts held with the Group)
government securities
government unconditional guarantees
bank guarantees
Guarantees from insurance companies and
insurance policies
Corporate guarantees (besides bank Guarantees
and guarantees from insurance companies)
Guarantees from individuals
Mortgage on real estate
property for private use (flats, houses)
business facility
Pledge over movables
Other types of collateral
Total value of collateral of credit exposure
assessed for impairment on an individual basis
Value of collateral of credit exposure assessed for
impairment on a group basis
accounts held with the Group)
bank guarantees
insurance policies
Corporate guarantees (besides bank Guarantees
and guarantees from insurance companies)
business facility
assessed for impairment on a group basis
assessed for impairment on group basis
banks
Current
Previous
year
year
2015
2014
customers
Current year
2015
Previous year
2014
assets available-for-sale
Current
Previous
year
year
2015
2014
held-to-maturity
Current
Previous
year
year
2015
2014
Cash and cash
equivalents
Current
Previous
year
year
2015
2014
Off balance sheet
exposures
Current
Previous
year
year
2015
2014
Other receivables
Current
Previous
year
year
2015
2014
Total
Current
year
2015
Previous
year
2014
-
-
1,158,521
83,356
1,077,037
74,638
-
-
-
-
192,333
-
36,239
-
9,232
1,205
16,746
1,202
216,198
206,627
166,031
205,207
1,576,284
291,188
1,296,053
281,047
-
-
398,984
361,313
-
-
-
-
-
-
-
19
-
21,656
-
382,988
-
-
14,544,572
38,637,826
15,899,516
1,572,739
-
-
-
-
-
-
-
17,225,271
33,907,303
15,463,763
657,330
-
-
68,894,528
72,167,641
-
-
-
-
192,333
51,732
48,212
127,991
1,451
46,100
82,181
39,955
1,377
995,716
6,233,196
3,292,001
271,638
1,189,215
5,129,513
3,760,635
237,348
398,984
18,272,719
40,188,711
18,883,754
930,418
15,779,887
43,849,520
19,700,106
1,811,464
36,239
239,823
187,580
11,215,375
10,709,605
80,542,060
83,101,065
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
2.
2.1
2.1.C
Concentration of Credit Risk by Industry
in thousands of
denars
Industry
Non-residents
Agriculture, hunting
and forestry
Ore and stone
extraction
Processing industry
Wholesale and retail
industry for clothing
and footwear
Chemical industry,
production of
construction materials,
production and
processing of fuels,
pharmaceutical
industry
Production
of metals, machines,
tools and equipment
Other processing
industry
Electricity supply,
gas, steam and air
conditioning
Water
supply, disposal
of wastewater, waste
management
and remediation
activities on the
environment
Construction
banks
Current
Previous
year
year
2015
2014
other customers
Current
Previous
year
year
2015
2014
assets available-forsale
Current
Previous
year
year
2015
2014
held-to-maturity
Current
Previous
year
year
2015
2014
Current
Previous
year
year
2015
2014
Fees and
commission
receivables
Current
Previou
year
s year
2015
2014
-
-
133,147
86,454
1,919
1,864
-
-
-
-
52
55
-
-
997,538
1,130,251
-
-
-
-
-
-
64
-
-
301,826
3,728,362
450,596
4,724,100
-
-
-
-
-
-
7
103
-
-
886,305
1,333,193
-
-
-
-
-
-
-
-
1,911,891
1,903,615
-
-
-
-
-
-
-
3,779,405
4,798,397
-
-
-
-
-
-
517,687
595,244
-
-
-
-
-
1,328,937
1,945,459
-
-
-
-
117,755
3,714,046
33,315
3,842,327
-
-
Other receivables
Current
Previous
year
year
2015
2014
Off balance sheet
exposures
Current
Previous
year
year
2015
2014
Current
year
2015
Total
Previous
year
2014
-
-
1,246,622
324,234
1,381,740
412,607
97
21
5
23,116
13,645
1,020,739
1,143,998
9
188
47,187
-
89
95,157
203,145
88,491
259,231
444,176
3,931,610
539,096
4,983,608
74
119
22
19
304,798
310,210
1,191,199
1,643,541
-
67
95
58
166
216,915
452,777
2,128,930
2,356,653
-
-
581
705
2
2
647,542
950,314
4,427,530
5,749,418
-
-
-
132
43
1
137
101,229
108,380
619,048
703,804
-
-
-
-
1,145
2,376
1
150
851,552
620,104
2,181,635
2,568,089
-
-
-
-
78
559
430
1,598
2,625
159
49,668
3,783,201
44,032
3,276,204
167,501
7,500,431
77,777
7,120,288
32
2.
2.1
2.1.C
Concentration of Credit Risk by Industry (continued)
in thousands of
denars
Wholesale and retail
trade; repair of motor
vehicles, motorcycles,
and items for personal
use and for
households
Transport and
warehousing
Hotels and
restaurants
Information
and communications
Finance and
insurance activities
Activities related to
real estate, renting
and business activities
Professional,
scientific and
technical activities
Administrative and
utility services
Public administration
and defense;
mandatory social
security
Education
Health care and social
work
Art, entertainment
and recreation
Other utility, cultural,
general and personal
service activities
banks
Current
Previous
year
year
2015
2014
other customers
Current
Previous
year
year
2015
2014
Current
Previous
year
year
2015
2014
held-to-maturity
Current
Previous
year
year
2015
2014
Current
Previous
year
year
2015
2014
Fees and
commission
receivables
Current
Previou
year
s year
2015
2014
Off balance sheet
exposures
Current
Previous
year
year
2015
2014
Other receivables
Current
Previous
year
year
2015
2014
-
-
8,902,102
9,890,732
-
-
-
-
-
-
1,322
1,610
167,193
-
-
1,770,009
1,384,277
-
-
-
-
-
-
255
325
-
-
520,567
516,594
-
-
-
-
-
-
88
81
Total
Current
year
2015
Previous
year
2014
25,578
3,835,441
2,884,506
12,906,058
12,802,426
137
4,750
773,627
714,279
2,544,027
2,103,631
800
44,554
6,874
7,289
528,330
568,518
-
-
529,201
498,374
-
-
-
-
-
-
673
474
52
43
85,129
66,876
615,054
565,767
9,208,470
8,269,635
316,653
132,151
63,054
63,054
-
-
19,024,245
17,690,643
2,553
2,547
11,717
10,566
13,172
26,167
28,639,864
26,194,763
-
-
1,968,271
754,637
-
-
-
-
-
-
64
402
10
2
24,603
38,312
1,992,948
793,353
-
-
395,791
361,002
-
-
-
-
-
-
200
175
7
-
147,529
151,835
543,527
513,012
-
-
352,435
432,445
-
-
-
-
-
-
53
37
1,040
1,066
85,473
73,292
439,001
506,840
-
-
1,517,483
459,715
1,379,384
546,800
7,126,56
1
-
3,254,16
1
-
2,515
-
4,608
-
-
-
103
6
220
13
1,803
3
378
1
2,649
2,253
3,597
3,580
8,651,115
461,977
4,642,348
550,394
-
-
1,037,828
629,939
-
-
-
-
-
-
113
134
1
-
10,574
2,041
1,048,516
632,114
-
-
119,868
140,772
-
-
-
-
-
-
93
36
2
7
59,033
24,924
178,995
165,739
-
-
41,854
80,075
-
-
-
-
-
-
59
44
709
791
6,291
4,058
48,913
84,968
33
2.
2.1
2.1.C
Concentration of credit risk by industry (continued)
in thousands of
denars
Private households
with employed
persons,
household activities
that
produce goods and
perform a
diverse range of
services for
own needs
Exterritorial
organizations and
bodies
Individuals
Individual merchants
and individuals not
regarded as
merchants
Total
banks
Current
Previous
year
year
2015
2014
Current
Previous
year
year
2015
2014
other customers
Current
Previous
year
year
2015
2014
held-to-maturity
Current
Previous
year
year
2015
2014
Current
Previous
year
year
2015
2014
Fees and
commission
receivables
Current
Previou
year
s year
2015
2014
Off balance sheet
exposures
Current
Previous
year
year
2015
2014
Other receivables
Current
Previous
year
year
2015
2014
Total
Current
year
2015
Previous
year
2014
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,512,320
10,264,696
-
-
-
-
-
-
3,564
4,008
240,072
173,398
2,868,271
2,837,406
15,624,227
13,279,508
-
-
37,726
47,443
-
-
-
95
96
6
3
3,233
2,356
41,060
49,898
8,269,635
47,898,722
47,902,272
3,319,07
9
-
9,208,470
7,191,53
4
2,515
4,608
19,024,245
17,690,643
12,103
15,917
473,468
261,864
15,447,095
13,288,140
99,258,152
90,752,158
34
2.
2.1
2.1.D
Concentration of Credit Risk by Geographic Location
in thousands of
denars
banks
other customers
Current
year
2015
Current
year
2015
Previous
year
2014
Current
year
2015
Previous
year
2014
Previous
year
2014
held-to-maturity
Current
year
2015
Previous
year
2014
Current
year
2015
Previous
year
2014
Fees and
commission
receivables
Current
year
2015
Other receivables
Previou
s year
2014
Current
year
2015
Off balance sheet exposures
Previou
s year
2014
Current year
2015
14,193,397
Total
Previous
year
2014
Current
year
2015
Previous
year
2014
12,946,548
79,915,501
71,597,563
Geographic
location
Republic of
Macedonia
143,294
140
47,765,576
47,815,817
7,189,61
6
3,317,216
2,515
4,608
10,136,327
7,236,520
11,308
14,850
473,468
261,864
EU member
countries
6,814,474
6,546,519
126,990
80,298
1,411
1,408
-
-
6,693,217
8,567,667
590
865
-
-
42,719
17,358
13,679,401
15,214,115
1,787,140
1,722,976
6,157
6,157
-
-
-
-
881,604
654,358
107
92
-
-
1,210,978
324,234
3,885,985
2,707,817
463,562
-
-
-
508
455
-
-
1,313,098
1,232,098
94
97
-
-
-
-
1,777,261
1,232,650
-
-
-
-
-
-
-
-
-
-
4
13
-
-
-
-
4
13
9,208,470
8,269,635
47,898,722
47,902,272
7,191,53
4
3,319,079
2,515
4,608
19,024,245
17,690,643
12,103
15,917
473,468
261,864
15,447,095
13,288,140
99,258,152
90,752,158
Europe (other)
OECD member
countries
(without
European OECD
member
countries)
Other
(the exposure
that represents
more than 10%
of total credit
exposure)
Total
35
2.
2.1
2.1.D
Concentration of Credit Risk by Geographic Location (continued)
Credit exposure and receivables by geographic location of debtors show that the highest
concentration is in the Republic of Macedonia, amounting to 80.51% as at 31 December 2015
(78.89% as of 31 December 2014). Exposure to debtors located in EU member amounts to
13.78% as at 31 December 2015 (16.76% as at 31 December 2014). Exposure to debtors
located in Other European countries and OECD countries amounts to 5.71% as at 31 December
2015 out of the total exposure to credit risk (4.34%as at 31 December 2014).
Unimpaired exposures that are past due, amount to 1,187,373 thousands of denars as of
December 31, 2015 (2014: 1,498,881 thousands of denars) and relate to receivables past due up
to 30 days and are off-balance sheet exposures in the amount of 1,121,383 thousands of denars
as of December 31, 2014 (2014: 1,464,258 thousands of denars). Undue unimpaired loans
amount to 47,236,727 thousands of denars (2014: 38,942,482 thousands of denars) and mainly
relate to cash and cash equivalents, off-balance sheet exposure, exposures to first class banks
and clients that have first class collateral, i.e. cash deposits.
2.2.
Liquidity Risk
Liquidity risk is when the Group cannot provide enough funds intended for settlement of its shortterm liabilities at their maturity, or it provides the necessary funds at very higher costs. Liquidity
risk arises, from both the disability for precise management with unsuspected changes in assets
and disability of the banks to convert the assets in monetary fund precisely and on time, at
minimal cost.
Process of Liquidity Risk Management
Liquidity risk management defines managing with assets and liabilities in a way that provides
regularly and on time payment of the liabilities, both in normal or exceptionally conditions.
Exposure on the liquidity risk depends on partial categories in balance sheet according to maturity
dates (residual maturity) and the level of compliance. Exposure to insolvency risk depends on the
level of capital and reserves, i.e. Group’s own funds. The purpose of managing this risk is to
maximize stability and profitability, by implementing optimal combination of maturity and foreign
currency structure of assets and liabilities.
The Group is exposed to daily calls on its available cash resources from deposits, current
accounts, and loan withdrawals. The Group does not seek to maintain cash resources to meet all of
these potential needs, estimating that a minimum level of reinvestment of maturing funds can be
predicted with a high level of certainty, estimating that the really due liabilities (stability of deposit
core) can be estimated with degree of certainty.
36
2.
2.2.
Liquidity Risk (continued)
Process of Liquidity Risk Management (continued)
The Group has established Liquidity risk undertaking and managing policy, passed by the
Supervisory board and the same is reviewed regularly. In the policy it is defined the manner of
liquidity management through determination of basic goals, capacity assessment for taking a
liquidity risk and assessment of risk profile, basic components of liquidity risk management
system, basic components of process of maintaining appropriate level of liquidity and
determination of acceptable instruments for protection from or decrease of liquidity risk.
The Group has established Procedures for identification, undertaking, assessment, monitoring
and control of the liquidity risk. This act is issued by the Board of directors and is subject of
regular revision. The Procedures gives in detail the proceedings (processes) for liquidity risk
management as: identification and undertaking the liquidity risk, assessment of the liquidity and
liquidity risk, testing the operational liquidity and liquidity stress-testing, monitoring, control and
reporting for the liquidity and liquidity risk.
The management of the Group uses the following methods to maintain an appropriate level of
liquidity: adequate maturity structure of its assets (claims) and liabilities (commitments), liquidity
ratios, internal liquidity indicators, level of concentration, movement and stability of liabilities and
their concentration, stress-testing, liquidity planning on a daily basis, meeting the legal
requirements for mandatory reserves in Denars and in foreign currency, analysis for operational
liquidity in Denars and in foreign currency, own funds and capital adequacy and other procedures
and methods.
The Group monitors the balances of the current accounts and deposits on a daily basis.
Management based on their experience determines the critical days that affect the Group’s
liquidity or significant dates affecting the outflow of funds. Based on the identification of available
funds and previous determined daily needs of money, the Group makes decision regarding the
appropriate use of funds.
Concurrence and controlling of mismatch of assets and liabilities is fundamental to the Group’s
management.
The Group manages liquidity risk by continuously monitoring the maturity of assets and liabilities.
In 2015 there are no changes in the regulation related to the management of the liquidity risk, just
as it was in 2014.
Maturity analysis of financial assets and liabilities (including both balance sheet and off-balance
items) as at 31 December 2015 and 2014 was made by remaining contractual maturity or the
remaining period from the date of notification to the agreed maturity date. Amounts in the
analysis are not reduced by the amounts of accumulated depreciation, impairment losses and
allocated special reserve. There are indications of significant gaps for the period up to three
months as at 31 December 2015 and 31 December 2014. The main reason for the above noncompliance is based on the fact that short-term sources of funds are used for approval of longterm loans. For the purposes of managing liquidity risk, Group prepares expected maturity
structure in which an integrated element are expectations and it indicates a stable liquidity
position.
37
2.
2.2.
Maturity Analysis of Financial Assets and Liabilities (Residual Maturity)
2015 (current year)
Financial assets
Financial assets at fair value through
profit or loss upon initial recognition
Derivative assets held for risk
management
customers
Other receivables
Deferred tax assets
Total financial assets
Financial liabilities
Trading liabilities
Financial liabilities at fair value
through profit or loss upon initial
recognition
Derivative liabilities held for risk
management
Due to banks
Borrowings
Subordinated debt
Other liabilities
Total financial liabilities
Off balance sheet items
Off balance sheet assets
Off balance sheet liabilities
Liquidity gap
Less than 1
month
From 1 to 3
months
From 3 to 12
months
From 1 to 2
years
From 2 to 5
years
Over 5 years
Total
23,430,230
2,187
-
1,760
4,233,555
1,490
4,469
361,123
27,663,785
371,029
-
-
-
-
-
-
-
639,680
3,145,999
4,468,130
250
-
956,319
9,210,378
2,854,343
900,000
418,671
28,245,111
3,373,088
1,810,000
100,083
8,429,170
25,860,542
4,074,467
217,839
34,622,738
5,761,523
344,609
3,773
10,345,200
12,222,772
613
12,227,854
10,009,007
67,597
189,147
932
11,584,125
60,081,275
7,196,673
189,147
741,911
105,454,198
-
-
-
-
-
-
-
-
-
-
-
-
-
-
235,958
43,332,520
172,903
478,857
44,220,238
184,794
11,145,956
12,531
51,849
3,901
11,399,031
22,054,844
413,072
266
22,468,182
5,450,227
449,005
(4,194)
5,895,038
1,796,372
940,795
(13,274)
2,723,893
600
177,170
(9,220)
168,550
420,752
83,780,519
2,165,476
51,849
456,336
86,874,932
9,512
6,890,458
(22,856,075)
7,228
2,034,387
(4,997,020)
162,223
3,302,193
1,310,193
84,970
826,861
8,762,070
11,415,575
8,375
4,261,509
7,901,422
38
272,307
17,315,407
1,536,165
2.
2.2.
Maturity Analysis of Financial Assets and Liabilities (Residual Maturity)
2014 (previous year)
Financial assets
management
customers
Other receivables
Deferred tax assets
Total financial assets
Trading liabilities
Financial liabilities at fair value
through profit or loss upon initial
recognition
management
Due to banks
Borrowings
Subordinated debt
Other liabilities
Total financial liabilities
Off balance sheet items
Off balance sheet assets
Off balance sheet liabilities
Liquidity gap
Less than 1
month
From 1 to 3
months
From 3 to 12
months
From 1 to 2
years
From 2 to 5
years
Over 5
years
Total
20,173,045
2,232
3,320,118
-
120
4,058,644
52
-
346,987
27,551,807
349,391
-
-
-
-
-
-
-
680,581
2,951,729
3,685,456
243
-
952,962
8,270,971
2,542,956
207,766
23,606,580
3,667,979
300,000
54,677
10,294,503
25,792,118
2,062,940
204,762
31,745,396
6,038,671
495,268
31,565
10,624,443
11,594,280
400,561
843
11,995,685
8,710,542
67,542
157,652
663
10,236,348
58,346,546
3,326,311
157,652
500,276
98,502,954
-
-
-
-
-
-
-
-
-
-
-
-
-
-
122,061
39,713,694
226,025
253
369,852
40,431,885
11,219,850
13,392
5,242
712
11,239,196
21,567,378
581,574
22,148,952
4,883,904
546,855
5,430,759
2,484,361
0
879,765
8
3,364,134
36,652
367,187
403,839
122,061
79,905,839
2,614,798
5,495
370,574
83,018,767
9,484
6,263,651
(23,079,472)
17,941
1,658,368
(2,585,120)
17,278
1,573,653
3,637,308
26,376
1,624,520
7,033,407
30,741
9,863,250
160,685
3,804,033
5,953,095
39
262,505
14,924,225
822,467
2.
2.3
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market risks arise from open positions in currency, interest
rate, and equity products, all of which are exposed to market movements and changes in the
level of volatility of market rates or prices (such as interest rates, interest margins, foreign
exchange rates and equity prices).
2.3.1
Sensitivity Analysis of Assets and Liabilities on the Change in Market Risk
A.
Sensitivity Analysis on the Changes of Market Risk on Assets and Liabilities
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
in thousands of in thousands of in thousands of
Denars
Denars
Denars
in %
2015 (current year)
Amount before sensitivity analysis
(as at December 31, 2015)
Effects from scenarios implementation
Currency risk
(list separately the various scenarios,
including the basic features of the scenario)
Stress-test scenarios
a)Regular (normal) work conditions
Scenario 1: Denar to depreciate by 5%
compared to other currencies
Scenario 2: Denar to appreciate by 5%
b) Extraordinary conditions
Interest rate risk
(list separately the
various scenarios, including the
basic features of the scenario)
Scenario 1a (I option): Interest rates
on balance sheet items with variable interest
rates to increase by 1,00 p.p.
Scenario 1a (II option): Interest rates
rates to decrease by 1,00 p.p.
on balance sheet items with adjustable
interest rates decided by the Bank’s
management to increase by 1,50 p.p.
management to decrease by 1,50 p.p.
9,279,998
67,175,188
13.81
9,258,778
69,354,152
13.35
9,301,218
64,996,220
14.31
9,152,676
80,248,984
11.41
9,407,320
54,101,388
17.39
103,873
9,383,871
67,175,188
13.97
(103,873)
9,176,125
67,175,188
13.66
(745,622)
8,534,376
67,175,188
12.70
745,622
10,025,620
67,175,188
14.92
(21,220)
21,220
(127,322)
127,322
40
2.
2.3
Market Risk (continued)
2.3.1
Sensitivity Analysis of Assets and Liabilities on the Change in Market Risk (continued)
A.
Sensitivity Analysis on the Changes of Market Risk on Assets and Liabilities (continued)
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
denars
denars
denars
in %
Scenario 1b (I option): Interest rates
Scenario 1b (II option): Interest rates
c) Combination of Scenario 1
and Scenario 2 in the regular work
conditions
Scenario 3a): Interest rates on balance
sheet items with variable interest rates to
increase by 1,00 p.p. and interest rates
Scenario 3b): Interest rates on balance
decrease by 1,00 p.p. and interest rates
Scenario 3c): Interest rates on balance
623,236
9,903,234
67,175,188
14.74
(623,236)
8,656,762
67,175,188
12.89
(1,615,515)
7,664,483
67,175,188
11.41
1,615,515
10,895,513
67,175,188
16.22
(641,750)
8,638,248
67,175,188
12.86
(849,495)
8,430,503
67,175,188
12.55
849,495
10,129,493
67,175,188
15.08
41
2.
2.3
2.3.1
A.
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
denars
denars
denars
in %
Scenario 3d):Interest rates on balance sheet
items with variable interest rates to decrease
by 1,00 p.p. and interest rates on balance
sheet items with adjustable
d) Combination of Scenario 1
and Scenario 2 in the extraordinary work
conditions
Scenario 3d): Interest rates on balance
641,750
9,921,748
67,175,188
14.77
(992,280)
8,287,718
67,175,188
12.34
(2,238,751)
7,041,247
67,175,188
10,48
2,238,751
11,518,749
67,175,188
17.15
992,280
10,272,278
67,175,188
15.29
42
2.
2.3
2.3.1
A.
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
denars
denars
denars
in %
Risk from changes in market prices in
investments in own shares
________________________________
________________________________
________________________________
________________________________
Combined scenarios, if any
________________________________
________________________________
________________________________
________________________________
43
2.
2.3
2.3.1
A.
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
Denars
Denars
Denars
in %
Amount before sensitivity analysis
(as at December 31, 2014)
Effects from scenarios implementation
Currency risk
Interest rate risk
(list separately the
various scenarios, including the
basic features of the scenario)
9,214,801
68,314,755
13.49
80,341
9,295,142
70,614,886
13.16
(80,341)
9,134,460
66,014,623
13.84
482,049
9,696,850
82,115,546
11.81
(482,049)
8,732,752
54,513,963
16.02
88,559
9,303,360
68,314,755
13.62
(88,559)
9,126,242
68,314,755
13.36
(646,114)
8,568,687
68,314,755
12.54
646,114
9,860,915
68,314,755
14.43
44
2.
2.3
2.3.1
A.
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
denars
denars
denars
in %
c) Combination of Scenario 1
and Scenario 2 in the regular work
conditions
531,352
9,746,153
68,314,755
14.27
(123,982)
9,090,819
68,314,755
13.31
(1,399,914)
7,814,887
68,314,755
11.44
1,399,914
10,614,715
68,314,755
15.54
(557,555)
8,657,246
68,314,755
12.67
(734,673)
8,480,128
68,314,755
12.41
734,673
9,949,474
68,314,755
14.56
45
2.
2.3
2.3.1
A.
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
denars
denars
denars
in %
Scenario 3d):Interest rates on balance sheet
items with variable interest rates to decrease
by 1,00 p.p. and interest rates on balance
sheet items with adjustable
d) Combination of Scenario 1
and Scenario 2 in the extraordinary work
conditions
Scenario 3d): Interest rates on balance
557,555
9,772,356
68,314,755
14.30
(868,562)
8,346,239
68,314,755
12.22
(1,523,896)
7,690,905
68,314,755
11.26
1,931,266
11,146,067
68,314,755
16.32
1,275,932
10,490,733
68,314,755
15.36
46
2.
2.3
2.3.1
A.
Risk weighted
Capital
Profit/Loss
Own funds
assets
adequacy ratio
denars
denars
denars
in %
Risk from changes in market prices in
investments in own shares
________________________________
________________________________
________________________________
________________________________
Combined scenarios, if any
________________________________
________________________________
________________________________
________________________________
This table presents a sensitivity analysis to changes in the market risk of the assets and liabilities of the
Bank, because of the insignificant participation (below 1%) of the total assets of the subsidiary in the
Group's assets. The Group does not carry stress tests from risk of changes in interest rates for investments
in equity securities, as well as combined scenarios for changes in market risks.
47
2.
2.3
2.3.1
B.
Analysis of Value Exposed to Market Risk in Trading Portfolio
current year 2015
Amount of interest-bearing instruments exposed to risk
Amount of foreign currency instruments exposed to risk
Amount of equity instruments exposed to risk
Variance (off-setting effect)
Total
As at
December 31
previous year 2014
Average value Highest value Lowest value
for the period for the period for the period
-
-
-
-
As at
December 31
Average value Highest value
for the period for the period
-
-
-
Lowest value
for the
period
-
Pursuant to the “Decision on the methodology for determining capital adequacy," the Group does not define capital required to cover market risks for trading
portfolio, and consequently as at 31 December 2015 and 31 December 2014 the Group had not performed analysis of value exposed to market risk in trading
portfolio.
48
2.
2.3
2.3.2
Sensitivity analysis of Changes in Interest Rates of Financial Assets and Liabilities
(Excluding Trading Assets)
Interest rate risk considering the Group’s portfolio is risk of loss arising from the unfavourable
changes in the interest rates which influences the items in the Group’s portfolio. The risk of
change in the interest rates can also arise from the liquidity gap of assets and liabilities, which
may have long term negative influence on Group’s profitability and capital.
The Group is exposed to various risks associated with the effects of fluctuations in the prevailing
levels of market interest rates on its financial position and cash flow. Interest margins may
increase as a result of such changes but may reduce or create losses in the event that
unexpected movements arise. Assets and liabilities management is performed based on Group’s
sensitivity to changes in interest rates. The Group strives to maintain the interest margin above
the level defined as internal limit. However, the actual effect will depend on various factors,
including stability of the economy, environment and level of the inflation.
The exposure on this risk depends from the value of the balance and off-balance sheet items
which are sensitive to interest rates, interest rates oscillation and the time period of the interest
rate exposure.
The aim is maximization of the stability and profitability, through appliance of optimal structure
and optimal interest rates in the Group’s portfolio.
The Group has established Policy for undertaking and managing the risk of change in the interest
rates in the Group’s portfolio that is adopted by the Supervisory Board and is subject of regular
revision. The Policy defines the main objectives, assessment of the Group’s capacity to take the
risk of change in the interest rates as well as assessment of its risk profile, organizational
structure of the interest rate risk management function, basic elements of the interest rate risk
management (management system and management process), adequate instruments for
protection or reduction of the interest rate risk, as well as elements in the process of internal
assessment and evaluation of the required capital adequacy.
The Group has established Procedures for identification, assessment, measurement, monitoring
and control or mitigation the risk of change in the interest rates in the banking book. This act is
issued by Board of Directors and is reviewed on regular bases. The Procedures gives in detail
the proceedings (processes) for interest rate risk management as: identification and undertaking
of interest rate risk, measurement and monitoring of interest rate risk, control and reporting of the
interest rate risk exposure.
Methods used to measure this risk include: analysis of the realized interest income and expense,
weighted average interest rates, interest margin and net interest margin, analysis of the structure
and dynamics of interest bearing assets and interest bearing liabilities and assets quality
influence to Group’s profitability, ratio of the interest bearing assets and interest bearing
liabilities, interest rate gap, changing of the economic value of the portfolio of banking activities,
analysis of compliance in the interest rates of financial assets and liabilities and the maturity
(in)consistency of interest sensitive assets and liabilities positions, the risk of differences in the
level of reference interest rates of instruments with similar characteristics, the risk of movement of
the yield curve, risk arising from the options that are embedded in interest-bearing positions,
simulation models, stress-testing and other are methods used to measure this risk.
49
2.
2.3
2.3.2
Sensitivity analysis of Changes in Interest Rates of Financial Assets and Liabilities
(Excluding Trading Assets) (continued)
A.
Interest Rate Sensitivity Analysis
Schedules “VPV” prepared in accordance with the “Guidelines for implementing the Decision on
managing the interest rate risk in the banking portfolio“ for the years ended 31 December 2015
and 2014 are as follows:
1.1
1.2
1.3
1.4
2
3
4
1.1
1.2
1.3
1.4
2
3
4
Position
1
NET WEIGHTED POSITION FOR CURRENCY MKD
(FIR+VIR+AIR)
NET WEIGHTED POSITION FOR CURRENCY EUR
(FIR+VIR+AIR)
NET WEIGHTED POSITION FOR CURRENCY MKD cl EUR
(FIR+VIR+AIR)
NET WEIGHTED POSITION FOR OTHER CURRENCIES
(FIR+VIR+AIR)
TOTAL WEIGHTED VALUE – CHANGE IN THE ECONOMIC
VALUE OF THE BANKING PORTFOLIO
OWN FUNDS
TOTAL WEIGHTED VALUE/OWN FUNDS (2/3*100)
Position
1
NET WEIGHTED POSITION FOR CURRENCY MKD
(FIR+VIR+AIR)
NET WEIGHTED POSITION FOR CURRENCY EUR
(FIR+VIR+AIR)
NET WEIGHTED POSITION FOR CURRENCY MKD cl EUR
(FIR+VIR+AIR)
NET WEIGHTED POSITION FOR OTHER CURRENCIES
(FIR+VIR+AIR)
TOTAL WEIGHTED VALUE – CHANGE IN THE ECONOMIC
VALUE OF THE BANKING PORTFOLIO
OWN FUNDS
TOTAL WEIGHTED VALUE/OWN FUNDS (2/3*100)
Currency December 31, 2015
2
3
MKD
116,113
EUR
MKD cl
EUR
(20,140)
other
(7,712)
780,359
868,620
9,279,998
9.36%
Currency December 31, 2014
2
3
MKD
EUR
MKD cl
EUR
other
110,896
(6,831)
514,682
654
619,401
9,214,801
6.72%
The table above presents the sensitivity analyses of the Bank, due to the insignificant participation (under
1%) in total assets of the subsidiary in the assets of the Bank.
50
2.
2.3
2.3.2
Sensitivity analysis of Changes in Interest Rates of Financial Assets and Liabilities (Excluding Trading Assets) (continued)
B.
Interest Rates gap analyses
Less than 1
month
From 1 to 3
months
From 3 to 12
months
From 1 to 2 years
From 2 to 5 years
Total interest
bearing assets/
liabilities
Over 5 years
December 31, 2015 (current year)
FINANCIAL ASSETS
Financial assets at fair value through profit or loss upon initial
recognition
18,760,361
-
-
-
-
-
18,760,361
639,063
2,575,794
899,303
-
3,143,926
3,298,860
1,804,676
-
5,422,800
31,860,876
4,008,523
-
1,073,627
401,125
-
2,834,287
-
4,079,339
-
9,205,789
45,722,783
7,113,627
-
Total interest sensitive financial assets
22,874,521
8,247,462
41,292,199
1,474,752
2,834,287
4,079,339
80,802,560
FINANCIAL LIABILITIES
Financial liabilities at fair value through profit or loss upon initial
recognition
Due to banks
Borrowings
Subordinated debt
Other interest sensitive liabilities
192,333
42,362,538
168,978
-
184,784
11,161,232
12,512
-
28,561,229
420,945
-
441,132
-
824,825
-
168,361
-
377,117
82,084,999
2,036,753
-
42,723,849
(19,849,328)
11,358,528
(3,111,066)
28,982,174
12,310,024
441,132
1,033,620
824,825
2,009,462
168,361
3,910,978
84,498,869
(3,696,309)
(19,849,328)
(3,111,066)
-
3,910,978
(3,696,309)
Other interest sensitive assets
Net balance sheet gap
Off balance sheet interest sensitive assets
Off balance sheet interest sensitive liabilities
Net off-balance sheet gap
Total net-gap
12,310,024
1,033,620
2,009,462
51
2.
2.3
2.3.2
Sensitivity analysis of Changes in Interest Rates of Financial Assets and Liabilities (Excluding Trading Assets) (continued)
B.
Interest Rates gap analyses (continued)
Less than 1
month
December 31, 2014 (previous year)
FINANCIAL ASSETS
recognition
Other interest sensitive assets
FINANCIAL LIABILITIES
recognition
Due to banks
Borrowings
Subordinated debt
Other interest sensitive liabilities
Net balance sheet gap
Off balance sheet interest sensitive assets
Off balance sheet interest sensitive liabilities
Net off-balance sheet gap
Total net-gap
From 1 to 3
months
From 3 to 12
months
From 1 to 2 years
From 2 to 5 years
Total interest
bearing assets/
liabilities
Over 5 years
14,167,666
3,319,996
-
-
-
-
17,487,662
679,374
2,178,756
-
2,951,108
3,613,766
298,013
-
4,635,997
33,273,655
2,014,267
-
963,664
529,309
-
2,212,813
401,684
-
2,929,521
-
8,266,479
45,172,175
3,243,273
-
17,025,796
10,182,883
39,923,919
1,492,973
2,614,497
2,929,521
74,169,589
99,111
38,864,672
220,682
-
11,241,981
13,355
-
28,254,292
597,291
-
538,996
-
871,906
-
242,408
-
99,111
78,360,945
2,484,638
-
39,184,465
(22,158,669)
11,255,336
(1,072,453)
28,851,583
11,072,336
538,996
953,977
871,906
1,742,591
242,408
2,687,113
80,944,694
(6,775,105)
(22,158,669)
(1,072,453)
-
2,687,113
(6,775,105)
11,072,336
953,977
1,742,591
52
2.
2.3
2.3.3
Foreign Currency Risk
Foreign currency risk is risk of loss due to change in the cross-currency exchange rates and/or
change in the value of the Denar against other foreign currencies.
The exposure to currency risk depends on the value of both balance and off balance sheet items
denominated in foreign currency or in Denars with foreign currency clause, and fluctuation of
cross-currency rates and/or rate of the Denar compared to other currencies.
The purpose of the Group is to maximize the stability and profitability, by obtaining optimal
currency structure on both assets and liabilities.
The Group has established Policy for undertaking and managing market risk that is adopted by
the Supervisory Board and is subject of regular revision. The Policy defines the main objectives,
assessment of the Group capacity to undertake market risk as well as assessment of its risk
profile, organizational structure of the market risk management function, main elements of the
market risk management (system for market risk management and process for market risk
management), acceptable instruments for protection or reduction of the market risk, internal
control and main elements of the process for internal determining and assessment of the required
capital adequacy of the Group.
The Group has established Procedures for identification, undertaking, measurement, following
and control of foreign exchange risk issued by the Board of Directors and it is revised regularly. In
the Procedures processes for managing foreign exchange risk are thoroughly described as
follows: identification and undertaking foreign exchange risk, measurements and following,
control and reporting for exposure to foreign exchange risk.
Methods used to measure foreign exchange risk includes: exposure to foreign exchange risk both
by single positions and in total, foreign exchange structure of the balance sheet, foreign
exchange structure of FX assets, stress test and other methods.
The Group’s policy main principle for currency risk management is to achieve and maintain
compliance of its claims in foreign currency (foreign currency assets) as a minimum, the amount
of its total foreign currency liabilities (obligations in foreign currency). Also, this ratio is maintained
from the perspective of maturity of liabilities and assets in foreign currency. This principle in the
balance sheet provides that the Group is able to cover losses from foreign exchange differences
arising from its liabilities by exchange rate differences arising from its assets, even under
conditions of frequent changes in exchange rates. The tables below summarize the net foreign
currency position of monetary assets and liabilities of the Bank as at 31 December 2015 and
2014.
53
2.
2.3
2.3.3
Foreign Currency Risk (continued)
list separately the currencies that represent more than 10% of
total monetary assets/liabilities
2015 (current year)
Monetary Assets
Other receivables
Deferred tax assets
Total Monetary Assets
Monetary Liabilities
Trading liabilities
Due to banks
Borrowings
Subordinated debt
Other liabilities
Total Monetary Liabilities
Net-position
Other
currencies
MKD
EUR
USD
Total
13,447,252
356,182
8,110,102
14,847
3,651,715
-
-
-
-
-
-
2,454,650
-
27,663,719
371,029
143,317
31,195,824
6,849,842
189,147
320,354
52,501,918
9,065,109
15,458,528
343,700
115,479
33,107,765
-
-
-
-
-
-
990,170
508
96,636
4,739,029
-
120
2,454,770
9,208,426
47,644,522
7,194,050
189,147
532,589
92,803,482
-
-
-
-
-
-
-
-
-
-
8,893
45,553,642
124,779
51,849
297,741
46,036,904
6,465,014
207,626
31,293,927
2,040,697
137,932
33,680,182
(572,417)
92,384
4,612,010
8,026
4,712,420
26,609
-
-
-
-
-
-
-
-
-
111,849
2,320,940
12,637
2,445,426
9,344
420,752
83,780,519
2,165,476
51,849
456,336
86,874,932
5,928,550
-
54
2.
2.3
2.3.3
Foreign Currency Risk (continued)
list separately the currencies that represent more than 10% of
total monetary assets/liabilities
Monetary Assets
Other receivables
Deferred tax assets
Total Monetary Assets
Monetary Liabilities
Trading liabilities
Due to banks
Borrowings
Subordinated debt
Other liabilities
Total Monetary Liabilities
Net-position
Other
currencies
MKD
EUR
USD
12,597,505
349,390
10,610,291
1
2,430,065
-
-
-
-
-
-
1,913,485
-
27,551,346
349,391
305
7,937,223
1,473,313
-
-
-
-
-
332,260
8,269,788
30,770,262
3,007,736
157,652
167,855
47,050,705
15,412,077
315,496
74,423
34,349,511
456
78,629
3,982,463
-
-
-
-
-
392
117
2,246,254
47,656,044
3,323,688
157,652
321,024
87,628,933
-
-
-
-
-
-
-
-
-
-
14,349
1,891
30,357,216 3,980,455
2,490,019
117,959
8,669
32,979,543 3,991,015
1,369,968
(8,552)
-
-
-
-
-
104,554
2,032,928
12,566
2,150,048
96,206
122,061
79,905,839
2,614,798
5,494
370,573
83,018,765
4,610,168
1,267
43,535,240
124,779
5,494
231,379
43,898,159
3,152,546
Total
55
2.
2.3
2.3.4
Other Market Risks
Other market risks are risks of loss arising from the change in the price of trading financial
instruments i.e. instruments that are part of the trading portfolio.
The exposure depends on the trading portfolio value and on the movement of the price of the
financial instruments which constitute the portfolio.
The purpose of the Group is to maximize the stability and profitability, by applying the optimal
structure of trading portfolio.
The Group has established Policy for undertaking and managing market risk that is issued by the
Supervisory Board and is subject of regular revision. The Policy defines the main objectives,
assessment of the Group capacity to undertake market risk as well as assessment of its risk
profile, organizational structure of the market risk management function, main elements of the
market risk management (system for market risk management and process for market risk
management), acceptable instruments for protection or reduction of the market risk, internal
control and main elements of the process for internal determining and assessment of the required
capital adequacy of the Group.
The Group has established Procedures for identification, undertaking, assessment, monitoring
and control of the market risk. This act is issued by the Supervisory Board and is subject of
regular revision. The Procedures gives in detail the proceedings (processes) for market risk
management as: identification and undertaking the market risk, assessment and monitoring,
control and reporting for the market risk exposure.
Methods used to measure foreign exchange risk includes: analysis of each investment intended
for trade, analysis of the trading book (type of the securities, market segmentation, market value,
participation in the issuer capital etc.) currency structure, realized transactions of trading, fulfilling
the law limits, fulfilling the internal limits and exceptions, trading results, daily monitoring of the
trading book regarding the Group’s total activities, stress-testing and other are methods that are
used for market risk assessment.
As at 31 December 2015 and 2014, according to regulatory requirements, the Group does not
determine capital required to cover the market risk for portfolio trading.
2.4
Operational Risks
The operational risk is the risk of loss resulting from inadequate or failed internal processes,
people and systems, or from external events. The operational risk includes the legal risk,the risk
of money laundering and financing of terrorism, as well as IT risk and other operational risks
Legal risk denotes current or prospective risk to the Group’s profit and own funds, caused by
violation or non-adherence to the legal framework, agreements, prescribed practices, ethics
standards, or as a result of misinterpretation of the regulations, rules, agreements and other legal
documents.
The Group has established a framework for managing operational risk based on a strategy,
policy and methodology to manage this risks, and appropriate organizational structure and
established process. It allows, within the framework of different processes of the Group, different
risks to be identified resulting from these processes, their measurement and undertaking
corrective actions, in order to avoid the potential negative effect on the Group’s financial result
and capital position. The appropriateness of the established framework for operational risk
management is to regular revision.
56
2.
2.4
Operational Risks (continued)
The identification and measurement of the operational risk is performed by the Group through
analysis of collected data on loss events occurred in the Group, and Group’s key risk Indicators,
by using the self-assessment method through qualitative approach, as well as through analysis of
external loss data from other banks.
As at 30.09.2012 following the legal requirements the Group started to calculate capital required
for coverage of operational risk, applying the standardised approach. The amount of capital as at
31.12.2015 is presented under heading 3.1.1. Capital adequacy ratio report.
3.
Capital Adequacy
According to the Decision of the Central Bank for consolidated supervision, if the total assets of
the subordinate entity are less than 1% of the assets of the parent entity, subordinate entity does
not have to be included in the consolidated financial statements for purposes of consolidated
supervision. Based on the above, capital adequacy is not determined on a consolidated basis.
Capital management
The Bank’s objectives when managing capital, which is a broader concept than the ‘equity’ on the
face of balance sheet, are:
• To comply with the capital requirements set by NBRM;
• To safeguard the Bank’s ability to continue as a going concern so that it can continue to
provide returns for shareholders and benefits for other stakeholders; and
• To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are monitored regularly by the Bank’s
management, employing techniques based on the directives required by the regulator, for
supervisory purposes. The required information is filed with the NBRM on a quarterly basis. In
accordance with the law requirements, the capital adequacy ratio is minimum 8%.
Additionally, the Bank has established a process of determining the internal capital (PIC) in
accordance with the Decision on risk management specified by NBRM. The process of
determining the internal capital is based on enacted Policies and Procedures and within the same
reference frame, the Bank:
• Determines the required internal capital to cover the acceptable level of risk, in
accordance with its risk profile and the size and complexity of current and future financial
activities;
• Focuses on establishing a sustainable level of long term capital, while taking into account
the influence of all material risks and similar.
3.1
Determination of Capital Adequacy
The Bank determines its own funds and the capital adequacy in accordance to the Methodology
for determining the capital adequacy set by NBRM. In accordance with the regulation, the credit
risk weighted assets and the capital required for coverage of operational risks are calculated
based on the standardised approach.
Capital adequacy ratio indicates the level of coverage of risk operations of the Bank and it is
calculated as the relation between Bank’s own funds and risk weighted assets.
a) Own funds are category that is in function of determination the rate of the capital
adequacy and other prudential limits. Own funds represent a total of core capital and
additional capital, reduced for the net capital invested in banks and other financial
institutions as defined in the Decision for the methodology for determination of the capital
adequacy.
57
3.
Capital Adequacy (continued)
3.1
Determination of Capital Adequacy (continued)
b) Risk weighted assets represent a sum of assets weighted according to credit risk,
weighted assets by currency risk, weighted assets by operational risk and weighted
assets by other risks.
-
-
-
Risk weighted assets based on credit risk include the active balance and off-balance
sheet position, which allocated in appropriate risk categories are weighted with
appropriate risk weight depending on the credit quality rating of the debtor. The credit
quality rating of the debtor is determined based on issued credit rating of the debtor,
by an appropriate recognised external credit rating institution. The Bank uses the
credit ratings issued by the three recognised credit rating agencies: Standard&Poor`s
Ratings Services, Moody`s Investors Services Ltd. and Fitch Ratings.
Risk weighted assets based on currency risk are determined based on calculated
capital necessary for coverage of currency risk, which the Bank determines based on
the amount of the aggregate foreign currency position and the absolute amount of netposition in gold.
Risk weighted assets based on operational risk are determined based on capital
required for coverage of operational risks, which the Bank calculates using the
standardised approach.
Risk weighted assets based on other risks include the capital required for coverage
the risk of changes in prices of commodities and the capital required for coverage
market risks.
Determination of the capital adequacy according to the regulation is done on a quarterly basis,
but depending on internal needs, and towards the effective risk management, other reports,
analysis and simulations for potential changes of the rate of capital adequacy are made.
58
3.
3.1.1
Capital Adequacy Ratio Report
Nr.
Description
1
11.1.4
11.2
11.3
11.4
2
CREDIT RISK WEIGHTED ASSETS
Assets weighted according to credit risk using the standardised
approach
Capital required for credit risk covering
CURRENCY RISK WEIGHTED ASSETS
Aggregate foreign exchange position
Net-position in gold
Capital needed for currency risk covering
Assets weighted according to currency risk
OPERATIONAL RISKS WEIGHTED ASSETS
Capital needed for operational risk covering using the base
indicator approach
Capital needed for operational risk covering using the
standardised approach
Assets weighted according to operational risk
OTHER RISKS WEIGHTED ASSETS
Capital needed for covering the risk of changes in the prices of
commodities
Capital needed for covering market risks
(11.1+11.2+11.3+11.4+11.5)
Capital needed for covering position risk
( 11.1.1.+11.1.2+11.13+11.1.4)
Capital needed for covering the specific risk of investing in debt
instruments
Capital needed for covering the general risk of investing in debt
instruments
Capital needed for covering the specific risk of investing in
equity instruments
Capital needed for covering the general risk of investing in
equity instruments
Capital needed for covering settlement/delivery risk
Capital needed for covering counterparty risk
Capital needed for covering the surpass of exposure limits
11.5
12
13
V
14
VI
VII
Capital needed for covering market risks of positions in options
Capital needed for covering other risks (10+11)
Assets weighted according to other risks
RISK WEIGHTED ASSETS
Capital required to risk coverage
OWN FUNDS
CAPITAL ADEQUACY (VI/V)
I
1
2
II
3
4
5
6
III
7
8
9
IV
10
11
11.1
11.1.1
11.1.2
11.1.3
Current year
Previous year
2015
2014
3
4
59,137,539
4,731,003
59,377,307
4,750,184
493,000
39,440
493,000
1,612,948
129,036
1,612,948
-
-
603,572
7,544,649
-
585,960
7,324,500
-
-
-
-
-
-
-
-
-
-
-
-
-
67,175,188
5,374,015
9,279,998
13.81%
68,314,755
5,465,180
9,214,801
13.49%
59
3.
3.1.2
Report on Own Funds
Nr.
1
1.1
1.1.1
1.1.2
1.2
1.2.1
1.2.2
2
2.1
2.2
2.3
2.4
3
3.1
3.2
3.3
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
I
Description
Core Capital
Paid and registered ordinary and non-cumulative
preferred shares and their premium
Nominal value
Nominal value of ordinary shares
Nominal value of non-cumulative preferred shares
Premium
Premium from ordinary shares
Premium from non-cumulative preferred shares
Reserves and retained earnings or losses
Reserved Fund
Retained earnings restricted for distributions to shareholders
Accumulated loss from previous periods
Current profit
Items as result of consolidation
Minority interest
Exchange rate reserves
Other differences
Deductible items
Current loss
Stock Repurchased
Intangible assets
Difference between the necessary and the actual allowance
for impairment/special reserve
Amount of unallocated allowance for impairment and special
reserve as a result of accounting delay
Unrealised loss from available for sale equity instruments
Other Deductibles
Core Capital
Current year
Previous year
2015
2014
3,050,594
2,279,067
2,279,067
771,527
771,527
6,468,549
6,468,549
914
914
3,050,594
2,279,067
2,279,067
771,527
771,527
6,372,944
6,372,944
2,000
2,000
-
-
9,518,229
9,421,538
60
3.
3.1.2
Report on Own Funds (continued)
5
5.1
5.2
6
7
8
9
II
10
Additional Capital
Paid and registered cumulative preferred shares and
related premium
Nominal value
Premium
Revaluation reserve
Hybrid capital instruments
Subordinated instruments
Amount of cumulative preferred shares and subordinated
instruments that can be part of additional capital
Additional Capital
Deductible items from core and additional capital
Investments in capital of other banks or financial institutions
which represent more than 10% of the capital of those
institutions
Investments in subordinated and hybrid capital instruments
and other instruments of the aforementioned institutions
Current year
2015
-
-
-
-
238,231
206,737
-
-
-
-
-
-
-
-
238,231
9,279,998
-
206,737
9,214,801
-
9,279,998
9,279,998
9,214,801
9,214,801
11
12
13
14
15
16
III
IV
V
VI
VII
VIII
Aggregate amount of capital investment, subordinated and
hybrid capital instrument and other instruments which
exceeds 10% of core and additional capital (I+II)
Investments in the equity of companies for insurance and
reinsurance which exceed 10% of the capital of those
companies
Investment in financial instruments issued by the insurance
and reinsurance companies in which the bank owns over 10%
of their equity
Amount for exceeding the limits for investment in non-financial
institutions
Items as result of consolidation (negative amounts)
DEDUCTIBLE ITEMS
Core Capital After Deductions
Additional Capital After deductions
Own Funds
Core capital
Additional capital
OWN FUNDS
Previous year
2014
61
4.
Segmented Reporting
Segment reporting is carried out by the Group’s operating segments.
Operating segment is a component of the activities of the Group for which the following
conditions have been fulfilled:
• Performs activities as a result based on which incomes are generated and expenditures
arise;
• Reviews from the Group’s Supervisory Board, in order to assess the accomplishments
and decision making for future business activities of the segment; and
• Financial information for the segment is available.
The Group disclose the information independently for each significant operating segment. A
segment is considered significant if:
• The incomes of the segment participates with more than 10% of the total income of the
Group;
• The amount of the profit or loss represents 10% or more from the total income of all
operating segments which have made profit, or from the total loss of all the operating
segments which have made loss;
• Total assets of the segment participate with 10% or more in the Group’s total assets;
• Management has assessed that they are significant to follow for the
Group’s
management needs.
For the purposes of the financial reporting, the Group groups two or more segments into one
operating segment if those operating segments are similar in terms of the variety of the goods
and services, the type and the group of the users of the goods and the services and the methods
of distribution and offering of the goods and services. As at December 31, 2015 and 2014 the
Group does not group two or more operating segments into one.
The operating segments of the Group are equal as the business lines prescribed in the “Decision
on the methodology for determining capital adequacy”, using the standardized approach for the
determination of capital required for coverage of operational risk.
The Group discloses information for the concentration of the business activities towards
consolidated significant client. Significant client is an individual or a legal entity as well as the
parties related to them, if the Group realizes 10% or more from its total business income or
expenditure. As at 31 December 2015 and 2014 there are no significant clients in existence.
Geographical segments according to which the Group is reporting are:
• Member countries of the European Union;
• Other European countries, outside the EU;
• Countries outside Europe, members of the Organization for Economic Cooperation and
Development (OECD);
• Other countries.
62
4.
Segmented Reporting (continued)
A.
Operating Segments
Operating Segments
BL1:
Services related
to financing
middle and large
retailers
BL 3:
Retail banking
-
(2,279)
8,382
306,241
72,826
-
2,871,283
175,480
-
142
625,648
-
(14)
23,710
-
-
1,897
-
18,461
416
32
-
3,177,652
915,775
8,798
-
232,428
238,531
(472,734)
(93,667)
633,839
3,680,602
12,102
637,892
(256)
23,440
-
5
1,902
39,031
57,908
35,087
35,119
479,502
4,581,727
Restructuring costs
Investments in property and equipment
Other expenses
Total expenses by segment
-
(1,993)
(42,536)
(44,529)
(24,586)
(4,187)
(44,324)
(577,919)
(651,016)
(1,702,853)
(528,378)
(28,579)
(162,098)
(2,421,908)
(72,884)
(421,083)
(493,967)
(2,168)
(10,838)
(13,006)
-
(2,344)
(12,771)
(15,115)
(10,633)
(61)
(6,939)
(17,633)
(43,056)
(292,588)
(335,644)
(1,727,439)
(543,198)
(195,409)
(1,526,772)
(3,992,818)
Financial result by segment
Income tax
-
194,002
(744,683)
1,258,694
143,925
10,434
-
(13,213)
40,275
(300,525)
Total assets by segment
Unallocated assets by segment
Total assets
-
Total liabilities by segment
Unallocated liabilities by segment
Total liabilities
-
2015 (current year)
Net trading income
Net income from other financial instruments at
fair value
Inter segmented income
Total income by segment
BL 4:
Corporate
banking
BL 5:
Payment and
settlement
BL 6:
Agent
services
BL 7:
Asset
management
BL 8:
Retail
brokerage
All other
insignificant
operating
segments
BL2:
Trading and
sales
Unallocated
Total
588,909
(64,442)
524,467
402,656
13,401,192
79,636,426
2,650,551
38,960
-
39,945
193,550
96,363,280
770,640
-
64,498,024
21,993,579
125,404
266,690
-
7
1,012
770,640
97,133,920
86,884,716
196,058
196,058
87,080,774
63
4.
A.
Operating Segments (continued)
Operating Segments
BL1:
Services related
to financing
middle and large
retailers
BL2:
Trading and
sales
BL 3:
Retail banking
BL 4:
Corporate
banking
BL 5:
Payment and
settlement
BL 6:
Agent
services
BL 7:
Asset
management
All other
insignificant
operating
segments
BL 8:
Retail
brokerage
Unallocated
Total
-
-
(84,576)
2,911,556
161
(10)
-
-
-
-
2,827,131
-
(53)
46,771
182,740
659,344
18,477
-
1,850
9,356
315
918,800
Net trading income
Net income from other financial instruments at
fair value
-
(21,434)
-
-
-
-
-
-
53
-
(21,381)
-
-
-
-
-
-
-
-
-
-
-
Inter segmented income
-
153,200
-
(478,069)
-
601,425
-
(7,998)
-
(7,825)
-
-
6
-
36,600
-
30,542
-
327,881
-
Total income by segment
-
131,713
(515,874)
3,695,721
651,507
10,642
-
1,856
46,009
30,857
4,052,431
-
-
(44,310)
(1,828)
(1,784,843)
(306,632)
-
-
-
-
-
-
(1,829,153)
(308,460)
Restructuring costs
-
(2,045)
-
(36,667)
-
(30,160)
-
(88,022)
-
(2,603)
-
-
(2,045)
-
(175)
-
(45,033)
-
(206,750)
-
Other expenses
-
(29,302)
(548,362)
(187,314)
(514,818)
(13,008)
-
(11,635)
(5,928)
(285,732)
(1,596,099)
Total expenses by segment
-
(31,347)
(631,167)
(2,308,949)
(602,840)
(15,611)
-
(13,680)
(6,103)
(330,765)
(3,940,462)
Financial result by segment
Income tax
-
100,366
(1,147,041)
1,386,772
48,667
(4,969)
-
(11,824)
39,906
(299,908)
Total assets by segment
Unallocated assets by segment
Total assets
-
Total liabilities by segment
Unallocated liabilities by segment
Total liabilities
111,969
(14,110)
97,859
379,762
11,023,426
77,742,985
2,633,031
43,472
-
32,783
171,931
92,027,390
744,643
-
62,056,655
20,958,891
109,774
21,054
-
7
342
744,643
92,772,033
83,146,723
96,704
83,243,427
64
4.
B.
Concentration of Total Income and Expense by Significant Customer
Operating Segments
DL1:
Services related
to financing
middle and large
retailers
DL2:
Trading and
sales
DL 3:
Retail banking
DL 4:
Corporate
banking
DL 5:
Payment and
settlement
DL 6:
Agent
services
DL 7:
Asset
management
All other
insignificant
operating
segments
DL 8:
Retail
brokerage
Unallocated
Total
2015 (current year)
Customer 1
Income
(expenses)
Customer 2
Income
(expenses)
-
-
-
-
-
-
-
-
-
-
-
Total by segment
-
-
-
-
-
-
-
-
-
-
-
Customer 1
Income
(expenses)
Customer 2
Income
(expenses)
-
-
-
-
-
-
-
-
-
-
-
Total by segment
-
-
-
-
-
-
-
-
-
-
-
65
4.
C.
Geographical Location
2015 (current year)
Total income
Total assets
Republic of
Macedonia
EU member states
Europe (other
countries)
OECD
member states
(without EU
countriesmembers of
OECD
Other
(significant
geographical
segments)
Other
insignificant
geographical
segments
Unallocated
Total
4,261,117
78,959,117
138,701
13,722,423
147,302
2,674,712
34,995
1,777,668
-
(2,065)
-
1,677
-
4,581,727
97,133,920
Total income
3,641,503
190,576
110,420
106,492
-
2,193
1,247
4,052,431
Total assets
73,879,235
15,276,431
2,383,112
1,233,243
-
12
-
92,772,033
66
5.
Fair Value of Financial Assets and Liabilities
A.
Fair Value of Financial Assets and Liabilities
Current year 2015
Carrying amount
Fair value
Previous year 2014
Carrying amount
Fair value
Financial Assets
Financial assets at fair value through profit
Other receivables
Deferred tax assets
Trading liabilities
management
Due to banks
Borrowings
Subordinated debt
Other liabilities
27,663,719
371,029
27,663,719
371,029
27,551,346
349,391
27,551,346
349,391
9,208,426
47,644,522
7,194,050
189,147
9,208,426
47,644,522
7,194,016
189,147
8,269,788
47,656,044
3,323,583
157,652
321,024
-
532,589
532,589
8,269,788
47,656,044
3,323,688
157,652
321,024
-
-
-
-
-
-
-
-
-
-
-
420,752
83,780,519
420,752
83,780,519
122,061
79,905,839
122,061
79,905,839
-
-
-
-
-
-
2,165,476
51,849
456,336
2,165,476
51,849
456,336
2,614,798
5,494
370,573
2,614,798
5,494
370,573
Fair value represents the amount at which an asset could be replaced or a liability settled on
regular, market conditions between informed and voluntary parties. Fair value has been based on
management assumptions according to the profile of the asset and liability base.
67
5.
A.
Fair Value of Financial Assets and Liabilities (continued)
a) Cash and cash equivalents
The carrying amount of cash and cash equivalents equals their fair values as they include cash
and nostro accounts representing unrestricted demand deposits and placements with NBRM,
which mature in short periods.
b) Trading assets
Fair value as determined by reference to market prices equal to their carrying amount.
c) Loans and advances to banks
Due to the insignificant risk of change in value, the fair value of loans and advances to banks is
equal to their carrying amounts.
d) Loans and advances to customers
Loans and advances to customers are stated according to amortized purchase value less
impairment The major part of the loans and advances to customers is with variable interest rate.
The apprised fair value of loans and advances to customers is determined by the discounted
expected future cash flows. Apprised future cash flows for determining the fair value are
discounted using current market interest rate.
The Group provides loans from credit lines financed from the Macedonian Bank for
Reconstruction and Development, and these loans are offered on the market by other banks as
well, under the same conditions. Their interest rates are considered to be market interest rates.
Also, the Group provides retail loans with fixed interest rates in the first couple of years of the
loan. Loans with similar characteristics and interest rates are offered by other banks on the
market as well, thus their interest rates are considered to be market interest rates.
e) Investments in securities
Investments in securities include interest bearing assets held to maturity and assets classified as
available for sale are measure at fair value. Fair value for assets classified as available for sale is
based on published prices on active market or published prices available from stock exchange,
dealer and broker. In cases where this information is not available, fair value is estimated by:
information for realized prices of recent normal commercial transactions among voluntary parties;
analysis of discounted cash flows; other alternative models for price determination.
Investments in securities include the amount of 67,597 thousand of denars (2014: 67,542
thousands of denars) representing investment securities for which there is no active market and
no recent transactions which could be used when estimating their fair value. They are carried at
cost, less impairment losses. They participate with 0.94% in total investment securities available
for sale (2014: 2%), thus the carrying amount of investment securities available for sale
approximates their fair value.
f) Other receivables
The fair value of other receivables equals their carrying value as they will mature in short periods.
g) Due to banks
Due to the insignificant risk of changes in value, the fair value of demand and time deposits is
equal to their carrying amounts.
68
5.
A.
h) Due to other customers
The fair value of the demand deposits and the deposits with variable interest rate is their carrying
amount. Out of the total due to other customers, zero percent represents deposits with fixed
interest rates, thus the carrying amount of total deposits of other customers approximates their
carrying amount.
i) Borrowings
Fair value of borrowings with variable interest rate does not differ from its carrying value due to
interest rate adjustment for specific financial liabilities with market interest rates for similar
instruments. The fair value of credit lines regulated with special terms and for which the market
does not provide reliable estimates of prices for similar instruments, approximately presents their
carrying value.
j) Other liabilities
The fair value of other receivables equals their carrying value as they will mature shortly.
69
5.
Fair Value of Financial Assets and Liabilities (Continued)
B.
Levels of Fair Value of Financial Assets and Liabilities, Measured at Fair Value
B.1.
Levels of Fair Value of Financial Assets and Liabilities, Measured at Fair Value
Note
December 31, 2015 (current year)
Financial assets measured at fair value
Investments in available-for-sale securities
Total
Financial liabilities measured at fair
value
Trading liabilities
Financial liabilities at fair value through
management
Total
December 31, 2014 (previous year)
Financial assets measured at fair value
Investments in available-for-sale securities
Total
Financial liabilities measured at fair
value
Trading liabilities
management
Total
19
20
21
23.1
Level 1
Level 2
368,841
Level 3
7,495,402
371,028
2,187
7,126,561
2,187
Total
64,973
7,191,534
64,973
7,562,562
32
-
-
-
-
33
-
-
-
-
21
-
-
-
19
20
21
23.1
-
-
-
-
-
347,159
2,232
-
349,391
3,254,161
-
64,918
3,319,079
3,601,320
2,232
64,918
3,668,470
32
-
-
-
-
33
-
-
-
-
21
-
-
-
-
-
-
-
-
70
5.
B.
Levels of Fair Value of Financial Assets and Liabilities, Measured at Fair Value (continued)
B.1.
The Group classifies all financial assets and liabilities at fair value, using fair value hierarchy
which reflects the significance of inputs used in determining fair value. The fair value hierarchy
includes the following levels:
a) Level 1 – Fair value is determined directly with reference to quoted market prices of the
financial instruments in active markets;
b) Level 2 - Fair value is determined using valuation techniques that include active markets
inputs, which can be direct, i.e. prices, or indirect, i.e. derived from prices;
c) Level 3 - Fair value is determined using valuation techniques that include inputs that cannot
be directly or indirectly followed on the active markets, or are not visible.
B.2.
Transfers Between Levels 1 and 2 of Fair Values
Financial assets measured at fair
value
management
Investments in available-for-sale
securities
Total
Financial liabilities carried at fair
value
Trading liabilities
management
Total
Current year 2015
Transfers
Transfers
from level 1
from level 2
to level 2
to level 1
Previous year 2014
Transfers
Transfers
from level 1
from level 2
to level 2
to level 1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71
5.
B.
B.3.
Reconciliation of the Movements in Fair Values Measured at Level 3 During the Year
in tousands of denars
As of January 1, 2014 (previous year)
Gains/(losses) recognized in:
- Income statement
- Other comprehensive income in the period not
recognized in profit or loss
Purchase of financial instruments in the period
Disposals of financial instruments in the period
Issued financial instruments in the period
Paid financial instruments in the period
Reclassified financial instruments to/(from) Level 3
Reclassified in loans and advances
As of December 31, 2014 (previous year)
Total gains/(losses) recognized in income
statement for the assets and liabilities
outstanding as of December 31, 2014 (previous
year)
Financial assets
at fair value
through profit or
loss upon initial
recognition
Held-fortrading
assets
Investments in
available-forsale securities
Financial
liabilities at fair
value through
profit or loss
upon initial
recognition
Trading
liabilities
Total assets
Total
liabilities
-
-
54,664
56,664
-
-
-
-
-
53
53
-
-
-
-
-
10,201
10,201
-
-
-
-
-
-
-
-
-
-
64,918
64,918
-
-
-
-
-
53
53
-
-
-
72
5.
B.
B.3.
Reconciliation of the Movements in Fair Values Measured at Level 3 During the Year
in tousands of denars
As of January 1, 2015 (current year)
Gains/(losses) recognized in:
- Income statement
- Other comprehensive income in the period not
recognized in profit or loss
Purchase of financial instruments in the period
Disposals of financial instruments in the period
Issued financial instruments in the period
Paid financial instruments in the period
Reclassified financial instruments to/(from) Level 3
Reclassified in loans and advances
As of December 31, 2015 (current year)
Total gains/(losses) recognized in income
statement for the assets and liabilities
outstanding as of December 31, 2015 (current
year)
Financial assets
at fair value
through profit or
loss upon initial
recognition
Held-fortrading
assets
Investments in
available-forsale securities
Financial
liabilities at fair
value through
profit or loss
upon initial
recognition
Trading
liabilities
Total assets
Total
liabilities
-
-
64,918
64,918
-
-
-
-
-
55
55
-
-
-
-
-
-
-
-
64,973
-
-
64,973
-
-
-
-
-
55
55
-
-
-
73
6.
Net interest income/(expense)
A.
Structure of interest income and expense according to the type of financial instrument
Current year
Previous year
2015
2014
Interest income
Other receivables
(Impairment on interest income, net)
Collected interest previously written off
Total interest income
226,950
174,101
12,684
3,279,496
107,279
(109,512)
377,745
3,894,642
5,792
3,393,467
159,625
(173,340)
366,786
3,926,431
213
695,054
21,723
716,990
1,798
1,069,210
28,292
1,099,300
3,177,652
2,827,131
Interest expense
Due to banks
Borrowings
Subordinated debt
Other liabilities
Total interest expense
74
6
Net interest income/(expense), (continued)
B.
Sector analysis of interest income and expense according to sector
Current year 2015
Previous year 2014
Interest income
Non-financial companies
Government
Not for profit institutions that serve to household
Banks
Other financial institutions (non-banks)
Households
Non-residents
(Allowance for impairment of Interest Income, net)
Collected interest previously written off
Total interest income
2,321,086
171,255
3,740
219,471
116
879,486
31,255
(109,512)
377,745
3,894,642
2,490,291
216,353
4,590
158,112
20
834,154
29,465
(173,340)
366,786
3,926,431
53,069
566
13,330
21,579
16,418
595,543
16,485
716,990
84,045
2,813
19,728
29,415
21,463
923,060
18,776
1,099,300
3,177,652
2,827,131
Interest expense
Government
Banks
Households
Non-residents
Total interest expense
75
7
Fee and Commission Income/(Expense), Net
A
Structure of Fee and Commission Income and Expense According to the Type of Financial
Activity
Current year 2015
Previous year 2014
Loans
Payment operations
domestic
international
Letter of credit and guarantees
Brokerage operations
Asset management
Fiduciary activities
Issuing securities
Other
(describe separately income which represent more than 10% of the
total fees and commissions income)
Total fee and commission income
202,932
176,834
386,541
206,276
174,818
2,821
18,255
23,749
106,239
388,587
223,355
179,287
6,189
9,208
18,144
88,672
1,121,631
1,090,276
Loans
Payment’s operation
domestic
international
Letter of credit and guarantees
Brokerage operations
Asset management
Issuing securities
Other
(describe separately expenses which represent more than 10% of the
total fees and commissions expense)
Total fee and commission expense
117,510
86,718
65,195
12,661
717
1,070
8,703
62,295
11,546
1,937
510
8,470
205,856
171,476
Net fee and commission income/(expense)
915,775
918,800
76
7
B
Sector analysis of fee and commission income and expense
Current year 2015
Previous year 2014
Government
Banks
Households
Non-residents
Total fee and commission income
665,526
5,014
15,104
55,569
45,946
239,797
94,675
1,121,631
691,881
4,534
14,791
44,939
31,534
213,742
88,855
1,090,276
Government
Banks
Households
Non-residents
Total fee and commission expense
906
1,749
29,276
72,660
101,265
205,856
686
1,749
21,576
70,168
1
77,296
171,476
915,775
918,800
77
8
Net trading income/(expense)
Current year
Previous year
2015
2014
Trading assets
Profit/(loss) from fair value changes on debt securities, net
realized
unrealized
Profit/(loss) from fair value changes of equity instruments, net
realized
unrealized
Income from dividends from trading assets
Income from interest of trading assets
311
-
321
6,860
1,150
156
17
(22,489)
1,091
-
-
-
-
-
-
-
-
-
8,798
(21,381)
Trading liabilities
realized
unrealized
Profit/(loss) from fair value changes of trading deposits, net
realized
unrealized
Profit/(loss) from fair value changes of remaining financial liabilities for
trading, net
realized
unrealized
Interest expense of financial liabilities held for trading
Profit/(loss) from fair value change of derivatives held for trade, net
realized
unrealized
Net income/(expense) from trading
78
9
Current year
Previous year
2015
2014
recognition
realized
unrealized
Gains/(losses) from changes in fair value of equity instruments, net
realized
unrealized
Dividend income from trading assets at fair value through profit or loss
Profit/(loss) from changes in fair value of loans and receivables at fair value
through profit and loss, net
realized
unrealized
recognition
realized
unrealized
Profit/(loss) from the changes in fair value of deposits at fair value through
profit and loss, net
realized
unrealized
Profit/(loss) from the changes in fair value of borrowings at fair value
through profit and loss, net
realized
unrealized
Profit/ s(loss) from the changes in fair value of other financial liabilities at
fair value through profit and loss
realized
unrealized
Profit/(loss) from fair value change of derivatives held for risk management
at the fair value through profit and loss, net
realized
unrealized
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79
10
Net foreign exchange gains/ (losses)
Current year
Previous year
2015
2014
Realized foreign exchange gains/(losses), net
Unrealized foreign exchange gains/(losses), net
Foreign exchange differences of allowance for impairment of
financial assets, net
Foreign exchange differences of special reserve for off balance
exposure, net
Other foreign exchange differences, net
Net foreign exchange gain/(loss)
11
170,225
141,973
(20,245)
(7,767)
(1,420)
(38,954)
109,606
(1,463)
(16,863)
115,880
Other Operating Income
Current year
Previous year
2015
2014
Gain from sale of available-for-sale assets
Dividends from equity instruments available-for-sale
Net income from investment in subsidiaries and associates
Capital gain from the sale of:
Intangible assets
Foreclosed assets
Non-current assets held-for-sale and group for disposal
Income from rent
Income from litigations
Collected receivables previously written off
Release from the special reserve and provisions for:
Off-balance credit exposure
Contingent commitments based on litigations
Pensions and other employee benefits
Restructuring
Onerous contracts
Other provisions
Other
(income that represents more than 10% of the total remaining
operating income)
Income from foreign exchange operations
Income for credit cards membership
income that does not represent more than 10% of the total remaining
operating income
Total other operating income
-
-
4,533
-
4,971
-
457
26,198
14,864
3,504
99,412
581
44,273
15,545
11,505
27,802
-
-
86,149
37,660
34,001
37,969
30,289
330,868
26,560
175,405
80
12
Net impairment loss on financial assets
2015 (current year)
Allowance for impairment on individual basis
Additional allowance for impairment
(Release of allowance for impairment)
Allowance for impairment on group basis
Total allowance for impairment on financial
assets, net
Allowance for impairment on individual basis
Allowance for impairment on group basis
Total allowance for impairment on financial
assets, net
Loans and
advances to
other
customers
Loans and
advances to
banks
Investments in
financial assets
available for sale
Investments in
financial assets
held to maturity
Cash and
cash
equivalents
Fees and
commission
receivables
Other
receivables
Total
5,156
(4,441)
715
3,997,935
(2,305,764)
1,692,171
-
-
323
(723)
(400)
24,051
(10,789)
13,262
45,106
(23,415)
21,691
4,072,571
(2,345,132)
1,727,439
-
-
-
-
-
-
-
-
715
1,692,171
-
-
(400)
13,262
21,691
1,727,439
8,442
(13,952)
(5,510)
3,933,728
(2,128,173)
1,805,555
-
-
1,564
(1,112)
452
14,917
(7,517)
7,400
58,863
(37,607)
21,256
4,017,514
(2,188,361)
1,829,153
-
-
-
-
-
-
-
-
(5,510)
1,805,555
-
-
452
7,400
21,256
1,829,153
81
13
Net impairment loss on non-financial assets
Property and
equipment
Intangible assets
Foreclosed
assets
Non-current
assets held for
sale and group
for sale
Other nonfinancial assets
Noncontrolling
interest*
Total
2015 (current year)
Additional impairment loss
(Release of impairment loss)
Total impairment loss of non-financial assets, on
net-basis
-
10,633
-
532,565
-
-
-
-
543,198
-
-
10,633
532,565
-
-
-
543,198
-
-
308,460
-
-
-
-
308,460
-
-
-
308,460
-
-
-
308,460
Additional impairment loss
(Release of impairment loss)
Total impairment loss of non-financial assets, on
net-basis
*) only for consolidated financial statements
82
14
Personnel expenses
current year
previous year
2015
2014
Short-term benefits for employees
Salaries
Compulsory social and health insurance contributions
Short-term paid absences
Costs for temporary employment
Share in profit and remuneration
Non-monetary benefits
570,499
207,129
1,911
2,101
781,640
579,101
207,634
2,074
66
788,875
-
-
7,572
41,928
14,169
27,174
831,140
830,218
Benefits after termination of employment
Defined pension benefit plans
Retirement benefits
Increase of liability for defined pension benefit plans
Increase of liability for other long term benefits
Other benefits upon termination of employment
Termination benefits
Equity settled share-based payments
Cash settled share-based payments
Other
(costs for employees that represent more than 10% of the total costs for
employees)
Total costs for employees
83
15
current year
previous year
2015
2014
Depreciation of intangible assets
Internal developed software
Software acquired from external suppliers
Other internal developed intangible assets
Other intangible assets
Investments in intangible assets taken under lease
Depreciation of property and equipment
Buildings
Vehicles
Other equipment
Other items of property and equipment
Investments in property and equipment taken under lease
Total depreciation
13,355
1,477
14,832
16,957
3,854
20,811
78,283
9,733
30,953
53,522
8,086
180,577
195,409
74,399
17,246
32,004
52,919
9,371
185,939
195,409
84
16
Other operating expense
current year
previous year
2015
2014
Loss from sale of assets available-for-sale
Software licensing expense
Deposit insurance premium
Premium for property and employee insurance
Materials and services
Administrative and marketing expense
Other taxes and contributions
Rental expense
Court litigation expense
Special reserve for off – balance sheet exposure, on a net basis
Provisions for pension and other employee benefits, on a net basis
Provisions for contingent liabilities based on court litigations, on a net basis
Other provisions, on a net basis
restructuring
onerous contracts
other provisions
Loss from sale of:
Intangible assets
foreclosed assets
non – current assets held for sale and group for sale and disposal
group
Other
(expenses that represent more than 10% of total other operating expense)
Expenses under F/X operations
(expenses that do not represent more than 10% of total other operating
expense)
Other operating expense
84
12,291
306,944
5,138
207,531
77,161
2,242
23,052
8,172
11,510
-
14,668
337,842
5,703
234,810
89,884
2,202
23,920
3,746
12,910
8,214
-
-
-
1,046
6,863
-
-
23,727
9,452
16,734
695,632
15,667
765,881
85
17
Income tax
A
Expense/income based on current and deferred tax
current year previous year
2015
2014
Current income tax
Expense/(income) based on current income tax for the year
Adjustments for previous years
Benefits of previous unrecognized tax losses, tax loans or temporary
differences from previous years
Changes in accounting policies and errors
Other
Deferred income tax
Deferred income tax that arises from temporary differences for the year
Recognition of previous unrecognized tax losses
Change in tax rate
Introduction of new taxes
Benefits of previous unrecognized tax losses, tax loans or temporary
differences from previous years
Other
Total expense/(return) on income tax
64,442
-
14,110
-
64,442
14,110
-
-
64,442
14,110
current year previous year
2015
2014
Current income tax
Recognized in the income statement
Recognized in equity and reserves
Deferred income tax
Recognized in the income statement
Recognized in equity and reserves
64,442
64,442
14,110
14,110
64,442
14,110
86
17
Income tax (continued)
B
Reconciliation between average effective tax rate and applicable tax rate
in
thousands
in %
of denars
current year 2015
Profit/ (loss) before taxation
Income tax as per applicable tax rate
Effects from different tax rates in other countries
Corrections for previous years and changes in tax rate
Taxed income abroad
Expense unrecognized for tax purposes
Tax-exempt income
Tax exemption unrecognized in income statement
Recognition of previous unrecognized tax losses
Benefits of previous unrecognized tax losses, tax loans or
temporary differences from previous years
Changes in deferred tax
Other
Average effective tax rate
C
100.00
10
0.8
(0.1)
10.7
in
thousands
in %
of denars
previous year 2014
599,616
59,962
5,087
(607)
64,442
100.00
10
3.1
0.5
-
111,969
11,197
3,517
(604)
-
12.6
14,110
-
Income tax from other profit/(losses)in the period which are not disclosed in the Income
statement
Current year 2015
Revalued reserve for assets available
for sale
Reserve for instruments for protection
against cash flow risk
Reserve for instruments for protection
against the risk net-investment in
international operations
Reserve from currency differences
from investment in international
operations
Share in the remaining profits/(losses)
from affiliates which are not disclosed
in the Income statement
Other profits/(losses) which are not
disclosed in the Income statement
Total other
profits/(losses)
which are not
disclosed in the
Income statement
Previous year 2014
(expenditure)/re
turn of income
tax
Less
income tax
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Before
taxation
(expenditure
)/return of
income tax
Before
taxation
87
Less
income tax
18
current year
previous year
2015
2014
Cash on hand
Accounts and deposits with NBRM, besides obligatory FC deposits
Current accounts and transaction deposits with foreign banks
Current accounts and transaction deposits with local banks
Treasury bills that may be traded on the secondary market
Government bills that may be traded on the secondary market
Time deposits up to 3 months
Other short-term highly liquid assets
Interest receivables
(Allowance for impairment)
Included in cash and cash equivalents for the needs of the
Statement of cash flows
Obligatory FC deposits
Restricted deposits
(Impairment)
Total
1,365,784
3,238,591
5,453,070
8,492
6,299,613
7,052,595
2,952
1,746
(66)
1,228,971
4,752,557
3,367,404
4,267
4,869,850
9,262,003
1,643
320
(462)
23,422,777
23,486,553
4,032,146
208,796
-
3,877,531
187,262
-
27,663,719
27,551,346
current year
previous year
2015
2014
Movements in allowance for impairment
As at January 1
Impairment loss for the year
Additional impairment
(Release of impairment)
(Foreclosed assets)
Foreign exchange gain/losses
(written-off receivables)
As at December 31
462
-
323
(723)
4
66
1,564
(1,112)
10
462
88
19
Trading assets (continued)
A.
Structure of trading assets by the type of the financial instrument
current year
previous year
2015
2014
Trading securities
Debt securities for trading
Treasury bills for trading
Government bills for trading
Other instruments in the money market
Government bonds
Corporate bonds
Other debt instruments
Quoted
Unquoted
Equity instruments for trading
Equity instruments issued by banks
Quoted
Unquoted
Trading derivatives
Agreements dependent on interest rate change
Agreements dependent on exchange rate change
Agreements dependent on changes in price of securities
Other agreements that meet IAS 39 criteria
Total trading assets
14,847
14,847
14,847
-
1
1
1
-
66
356,116
356,182
47,334
308,848
52
349,338
349,390
49,569
299,821
371,029
349,391
Government bonds in the amount of 14,847 thousands of denars (2014: 1 thousands of denars)
refers to structural government bonds, bearing interest rate at the rate of 2% per year.
The other unquoted equity investments in the amount of 308,848 thousands of denars (2014:
299,821 thousands of denars) are related with investments in participations in investment funds
of 308,848 thousands of denars (2014: 299,821 thousands of denars). The investment in
investment funds include investments in the Open-end investment fund KB Publikum –
Balansiran in the amount of 7,241 thousands of denars (2014: 6,928 thousands of denars),
investments in the Open-end investment fund KB Publikum - Paricen in the amount of 299,419
илјади thousands of denars (2014: 290,661 thousands of denars), and investments in KD Funds
AD Skopje - KD Cash deposit in the amount of 2,187 thousand of denars (2014: 2,232 thousand
of denars).
The quoted equity investments held for trading in the amount of 47,334 thousands of denars
(2014: 49,569 thousands of denars) relate to investments in shares issued by domestic banks in
the amount of 66 thousands of denars (2014: 52 thousands of denars) and investments in shares
issued by domestic non-financial entities in the amount of 47,268 thousands of denars (2014:
49,517 thousands of denars).
All income from financial assets held for trading is recognized as net trading income.
89
19
B.
Reclassified trading assets
B.1
Condition of reclassified trading assets
Trading assets reclassified in 2015 (current year)
in:
- financial assets available for sale
- loans and advances to banks
- loans and advances to other clients
Current year 2015
carrying amount
fair value
31.12.2015
31.12.2015
(current year)
(current year)
Reclassified
amount (date of
reclassification)
Previous year 2014
carrying amount
31.12. 2014
fair value 31.12.2014
(previous year)
(previous year)
-
-
-
-
-
-
-
-
-
-
Trading assets reclassified in 2014 (previous
year) in:
- financial assets available for sale
90
19
Trading assets
B.
Reclassification of trading assets (continued)
B.2
Gains and losses from reclassification of trading assets
Reclassified during 2015 (current year)
Income statement
2015 (current year)
Other gains/ (losses)
2015 (current year)
Reclassified during 2014 (previous year)
Other gains/
Income
(losses) 2015
statement 2014
Other gains/ (losses)
(current year)
(previous year)
Income statement
2015 (current year)
Period before reclassification
Trading assets reclassified in financial assets available
for sale
- net-income from trading
Trading assets reclassified in loans and advances from
banks
other clients
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Period after reclassification
Trading assets reclassified in financial assets available
for sale
- interest income
- impairment of the value of the financial assets, on netbasis
- changes in the fair value, on net-basis
banks
- interest income
other clients
- interest income
91
19
B.
Reclassified assets for trading (continued)
B.3
Gains or losses which would have been recognized in the Income statement if the assets
have not been reclassified
Reclassified during
2015 (current year)
Trading assets reclassified in financial assets available for
sale
Trading assets reclassified in loans and advances from banks
Trading assets reclassified in loans and advances from other
clients
Income statement
2015 (current year)
Reclassified during 2014 (previous
year)
Income
Income
statement 2015
statement 2014
(current year)
(previous year)
-
-
-
-
-
-
-
-
-
92
20
Financial assets at fair value via the income statement determined as such at initial
recognition
current year
previous year
2015
2014
Debt securities
Treasury bills
Government bills
Government bonds issued
Corporate bonds
Other debt instruments
-
-
-
-
-
-
Total financial assets at fair value through the income statement
determined as such as initial recognition
-
-
Quoted
Unquoted
Equity instruments
Equity instruments issued by banks
Quoted
Unquoted
93
21
Derivative assets and liabilities held for risk management
current year 2015
derivative
assets
A
A.1
Derivatives for protection against
risk/Derivatives held for risk management
By type of the variable
Derivatives held for risk management
Agreements dependent on exchange rate
change
Agreements dependent on changes in price of
securities
Other agreements that meet the IAS 39 criteria
Total derivatives held for risk management
A.2
B
By type of protection against risk
Protection against risk to fair value
Protection against risk to cash flows
Protection against risk to net investment in
international operations
Inherent derivatives
Agreements dependent on exchange rate
change
Agreements dependent on changes in price of
securities
Other agreements that meet the IAS 39 criteria
Total inherent derivatives
previous year 2014
(derivative
liabilities)
derivative
assets
(derivative
liabilities)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
94
22
Loans and advances (continued)
22.1
current year 2015
Short term
Loans to banks
Domestic banks
Foreign banks
Time deposits over 3 months
Domestic banks
Foreign banks
Repo
Domestic banks
Foreign banks
Other receivables
Domestic banks
Foreign banks
Current maturity
Total loans and advances to banks before
impairment
(Allowance for impairment)
Total loans and advances to banks after
impairment
previous year 2014
Long term
Short term
Long term
143,000
-
51
-
11
-
51
-
8,099,703
250
956,319
7,310,389
243
952,961
-
-
-
-
8,533
2,454
51
(51)
4,223
3,079
51
(51)
8,253,741
(1,884)
956,569
-
7,317,753
(1,169)
953,204
-
8,251,857
956,569
7,316,584
953,204
current year
previous year
2015
2014
Movement of allowance for impairment
As at January 1
Impairment loss for the year
(Foreclosed assets)
Foreign exchange gains/losses
(Written off receivables)
As at December 31
1,169
6,598
5,156
(4,441)
1,884
8,442
(13,952)
81
1,169
95
22
22.2
A
Structure of the loans and advances to other customers by the type of the debtor
current year 2015
short-term
Receivables upon principal
Government
Non-profit institutions that serve
households
Financial companies, besides banks
Households
Housing loans
Customer loans
Vehicle loans
Mortgage loans
Credit cards
Other loans
Non-residents, except banks
Current maturity
Total loans and advances to other
customers before impairment
(Impairment)
Total loans and advances to other
customers reduced by impairment
previous year 2014
long-term
short-term
long-term
21,876,486
221,316
22,398,116
-
21,652,834
253,643
23,222,871
-
17,305
1,618
1,542,082
-
27,390
906
1,449,263
-
2,510
347
38,413
-
12,236
271
39,172
-
1,351
14
14,301
-
869
4
315
-
520
655,124
58
262,138
1,353,644
40,141
4,080,802
5,880,173
10,236
1,045,197
212,971
-
551
651,621
30
281,880
1,359,667
37,449
2,433,705
5,347,695
15,808
1,057,327
123,423
-
183,022
143
7,245,863
42,884
(7,245,863)
179,218
53
7,245,605
(7,245,605)
31,861,600 28,019,312
(11,291,424)
(944,966)
31,704,227
(9,226,653)
26,443,974
(1,265,504)
22,477,574
25,178,470
20,570,176
27,074,346
Out of the total loans and advances to other customers the Group has pledged a lien with regard to the
sub-loans approved from the credit lines from the European Investment Bank ("EIB") and Italian Credit
Line (“IKL”) in favour of Macedonian Bank for Development Promotion ("MBDP"). As at 31 December
2015 the amount of the pledged loans and advances is in the amount of 1,980,236 thousands of denars
(2014: 2,396,530 thousands of denars).
96
22
22.2
Loans and advances to other customers (continued)
A
Structure of the loans and advances to other customers by the type of the debtor
(continued)
current year 2015
previous year 2014
Movements in impairment on an individual basis
As at January 1
Impairment for the year
(Release of impairment )
(Foreclosed assets)
(Written of receivables)
As at December 31
Movements in impairment on a group basis
As at January 1
(Release of impairment )
(Foreclosed assets based on outstanding receivables)
As at December 31
Total impairment for loans and advances to other customers
10,492,157
8,958,903
3,997,934
(2,305,764)
81,266
20,122
(49,325)
12,236,390
3,933,728
(2,128,173)
(218,124)
7,697
(61,874)
10,492,157
-
-
12,236,390
10,492,157
The item “(Foreclosed assets)” is positive due to the reversal of the, in previous period (2013), closed
impairment of a foreclosed asset. The reversal is made after a Verdict from the Primary Court II Skopje,
in the amount of 109,710 thousand denars (explained in more detail in Note 27).
Since this is not a monetary transaction, it does not appear in the Statement of Cash Flows.
97
22
22.2
Loans and advances to other customers (continued)
B
Structure of loans and advances to other clients by type of collateral
current year 2015
previous year 2014
(current carrying amount of loans and advances)
First-class security instruments
Cash deposits (in vault and/or restricted in accounts held
with the group)
Government securities
Government unconditional guarantees
Bank guarantees
Guarantees from insurance companies and insurance policies
Corporate guarantees (besides banks and guarantees from
insurance companies)
Property for private use( flats, houses)
Property for business activity
Other types of security
Unsecured
Total loans and advances to other customers reduced by
impairment
832,774
-
767,572
-
50,252
6,545
44,856
42,760
7,186,304
17,797,963
7,714,164
145,587
13,910,933
5,932,577
17,837,643
8,549,102
319,682
14,161,852
47,644,522
47,656,044
98
23
23.1
Investments in financial assets available-for-sale
A.
Structure of the investments in financial assets available for sale according to type of
financial instrument
current year
previous year
2015
2014
Debt securities
Treasury bills
Government bills
Government bonds
Corporate bonds
Other equity investments
Quoted
Unquoted
6,183,998
942,563
7,126,561
7,126,561
-
2,312,126
942,036
3,254,162
3,254,162
-
67,597
67,597
67,597
67,542
67,542
67,542
7,194,158
(2,624)
3,321,704
(2,624)
7,191,534
3,319,080
Equity investments
Equity investments issued by banks
Other equity investments
Quoted
Unquoted
Total investment in financial instruments available for sale before
impairment
(Impairment)
Total investment in financial instruments available for sale reduced by
impairment
current year
previous year
2015
2014
Movement in allowance for impairment
As at January 1
(Foreclosed assets)
As at December 31
2,624
4,354
2,624
(1,730)
2,624
99
23
Investment in securities (continued)
23.1
Investment in financial assets available for sale (continued)
B.
Reclassified financial assets available for sale
B.1
Balance of reclassified assets available for sale
Trading assets reclassified in 2015 (current year) in:
Trading assets reclassified in 2014 (previous year) in:
Reclassified amount
(date of
reclassification)
Current year 2015
carrying amount
fair value
31.12.2015
31.12.2015
(current year)
(current year)
Previous year 2014
carrying amount
fair value
31.12.2014
31.12.2014
(previous year)
(previous year)
-
-
-
-
-
-
-
-
-
-
100
23
Investment in securities (continued)
23.1
Investment in financial assets available for sale (continued)
B.
Reclassified financial assets available for sale (continued)
B.2
Gains and losses from the reclassified assets available for sale
Period before reclassification
Assets available for sale reclassified in loans and advances from banks
- Interest income
- Impairment of the financial assets, on net-basis
Assets available for sale reclassified in loans and advances from other clients
- Interest income
Period after reclassification
Assets available for sale reclassified in loans and advances from banks
- Interest income
- Amounts reversed from revaluation reserves
Assets available for sale reclassified in loans and advances from other clients
- Interest income
- Amounts reversed from revaluation reserves
Income statement
2015 (current
year)
Other gains/
(losses) 2015
(current year)
Income statement
2014 (previous
year)
Other gains/
(losses) 2014
(previous year)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
101
23
Investments in securities (continued)
23.1
Investments in financial assets available for sale (continued)
B.
Reclassified financial assets available for sale (continued)
B.2
Gains or losses which would have been recognized if the assets have not been
reclassified
Assets available for sale reclassified in loans and
advances from banks
- Interest income
- impairment of the financial assets, on netbasis
- changes in fair value, on net-basis
Assets available for sale reclassified in loans and
advances from other clients
- Interest income
- changes in the value of the financial assets,
on net-basis
- changes in fair value, on net-basis
Income
Statement
2015 (current
year)
Income
Statement
2014
(previous
year)
Other gains/
losses 2015
(current year)
Other gains/
losses 2014
(previous year)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Investments in debt securities available-for-sale in the amount of 7,126,561 thousands of denars
(2014: 3,254,162 thousands of denars) are related to the investments in government bills in the
amount of 6,183,998 thousands of denars (2014: 2,312,126 thousands of denars) and
investments in government bonds in the amount of 942,563 thousands of denars (2014: 942,036
thousands of denars).
The investments in equity instruments available-for-sale in amount of 67,597 thousands of
denars (2014: 67,542 thousands of denars) relate to investments in securities issued by financial
and non-financial companies, which the Group has acquired according the positive legal
provisions, as well as investments in securities, which the Group has bought on the primary
market based upon basic investment in the capital of the companies or on the secondary market.
Taking into account that for these investments there is no active market, as well as a lack of
recent transactions that could be applied in determination the fair value, the investments in
available-for-sale securities are stated at their fair value, less any impairment. The market for
these securities is irregular and is not fully developed, so that the fair value cannot be reliably
measured.
The Group does not plan to sell part of investments in available-for-sale equity instruments
issued by financial companies whose operations are related to the regular operations of the
Group, and the rest of the investments will be sold when the Group will estimate that there are
favourable conditions at the capital market for their disposal.
102
23
Investments in securities (continued)
23.2
Investments in financial assets held to maturity
Current year
Previous year
2015
2014
Debt securities
Treasury bills
Government bills
Government bonds
Corporate bonds
Other debt securities
Quoted
Unquoted
Total investment in financial instruments held to maturity
before impairment
(Impairment)
Total investment in financial instruments held to maturity
after impairment
2,516
2,516
2,516
-
4,608
4,608
4,608
-
2,516
-
4,608
-
2,516
4,608
current year
previous year
2015
2014
Movement in allowance for impairment
As at January 1
(Foreclosed assets)
As at December 31
-
-
-
-
Debt securities include government bonds for denationalisation in the amount of 2,516 thousands
of denars (2014: 4,608 thousands of denars). Government bonds for denationalisation are from
the V and VI emission with maturity in 2017 (2014: 2017) and interest rate of 2% per annum
(2014: 2% per annum).
Income from debt securities held-to-maturity is recognized as interest income.
103
24
Investment in subsidiaries and associates
A
Percentage of Bank’s share in associates
in %
Share of ownership in %
Name of subsidiaries and associates
Country
KB PRVO PENZISKO DRUSTVO AD SKOPJE
KB PUBLIKUM INVEST AD SKOPJE
Republic of
Macedonia
Republic of
Macedonia
Percentage of voting right
previous year
current year 2015
2014
current year 2015
previous year 2014
49,00%
49,00%
49,00%
49,00%
64,29%
64,29%
64,29%
64,29%
On 25 April 2013, the Group acquired control of KB Publikum, company for managing investment funds, by acquiring additional 14.29% of the voting share
capital. As a result, the Groups share in KB Publikum’s capital increased from 50% to 64.29%. For more information see to Note 47.
B
Financial information for associates - 100%
Name of associates
Total assets
Current year 2015
Total liabilities
Total capital and
reserves
Income
Profit/(loss) for the
financial year
394,212
394,212
14,963
14,963
379,249
379,249
204,442
204,442
79,649
79,649
334,116
334,116
19,141
19,141
314,975
314,975
188,624
188,624
74,687
74,687
Previous year 2014
104
25
Other receivables
current year
previous year
2015
2014
Trade receivables
Prepaid expenses
Deferred income
Fees and commission receivables
227,243
-
88,606
-
47,705
122
39,993
Receivables from employees
Advances for intangible assets
Advances for property and equipment
Other
(receivables representing more than 10% of the total other
receivables)
Other receivables by other basis in foreign exchange
currency
Suspicious and doubtful receivables from receivables from
clients and other receivables
Inventory of materials, petty inventory and numismatic
collections
(state separately the receivables representing more than
10% of the total other receivables)
Total other receivables before value adjustment
(Value adjustment)
Total other receivables reduced by value adjustment
-
147
3,383
203,995
144,800
170,744
150,104
37,004
30,676
55,098
741,911
(209,322)
532,589
42,565
500,274
(179,250)
321,024
current year
previous year
2015
2014
Movement of allowance for impairment
Balance at January 1
Impairment loss for the year:
additional impairment
(release of impairment)
(Foreclosed assets)
Foreign exchange differences
(Written-off receivables)
Balance at December 31
179,251
152,257
69,157
(34,204)
175
118
(5,175)
209,322
73,780
(45,124)
(801)
(21)
(841)
179,250
The item “(Foreclosed assets)” is positive due to the reversal of the, in previous period (2013),
closed impairment of a foreclosed asset. The reversal is made after a Verdict from the Primary
Court II Skopje, in the amount of 177 thousand denars (explained in more detail in Note 27).
105
26
current year
previous year
2015
2014
Debt securities
Equity instruments
Total collateralized assets
-
-
106
27
Foreclosed assets
Land
Buildings
Equipment
Residential
buildings and
apartments
Other
valuables
Total
Begining carrying amount
As at January 1 2014 (previous year)
Foreclosed during the year
(sold during of the year)
(transfer into assets for own use)
As at December 31, 2014 (previous year)
194,614
911
(14,420)
181,105
2,388,901
265,741
(244,728)
2,409,914
208,952
356
(16,150)
193,158
219,024
7,897
(25,828)
201,093
-
3,011,491
274,905
(301,126)
2,985,270
As at January 1, 2015 (current year)
Foreclosed during the year
(sold during of the year)
As at December 31, 2015 (current year)
181,105
3,364
(5,000)
179,469
2,409,914
40,218
(435,068)
2,015,064
193,158
(1,664)
191,494
201,093
725
(34,444)
167,374
-
2,985,270
44,307
(476,176)
2,553,401
25,826
504,506
44,180
52,552
-
627,064
18,973
(5,753)
39,046
39,046
41,848
(1,871)
79,023
482,784
(94,152)
893,138
893,138
416,702
(254,153)
1,055,687
36,422
(7,207)
73,395
73,395
41,097
(684)
113,808
25,590
(7,274)
70,868
70,868
34,829
(24,156)
81,541
-
563,769
(114,386)
1,076,447
1,076,447
534,476
(280,864)
1,330,059
168,788
142,059
100,446
1,884,395
1,516,776
959,377
164,772
119,763
77,686
166,472
130,225
85,833
-
2,384,427
1,908,823
1,223,342
Impairment
Impairment loss during the year
(sold during the year)
(sold during the year)
Net carrying amount
As at December 31 2015 (current year)
107
27
Foreclosed assets (continued)
The fair value of the acquired assets through foreclosure procedure as at 31 December 2015 is in the
amount of 2,188,535 thousands of denars (as at 31 December 2014 is in the amount of 2,709,760
In 2015, the item (Foreclosed assets) includes a reversal of the foreclosure of an asset - a building in
2013 on the basis of a Verdict from the Primary Court II Skopje from 2015. The reversed cost of the
building was 110,766 thousand denars. The closed impairment of the asset was in the amount of
109,887 denar thousand and it also reflects on Notes 22.2 and 25.
Since this is not a monetary transaction, it does not appear in the Statement of Cash Flows.
Part of the recognised impairment in 2015 in the amount of 532,565 thousands of denars (2014:
308,460 thousands of denars) is recognized as an expense in the consolidated statement of
comprehensive income (see note 13), and the remainder is recognized in the consolidated balance
sheet.
In accordance with the deadlines prescribed with the Decision on accounting and regulatory treatment
of foreclosed assets for allocating impairment losses in January 2016 the Group is required to
recognize additional 100,000 thousands of denars (2014: 338,093 thousands of denars) as impairment
loss.
108
28
Intangible assets
A
Reconciliation of the present carrying amount
Internally
developed
software
Software
from external
suppliers
Other
internally
developed
intangible
assets
Other
intangible
assets
Intangible
assets in
progress
Investments
in intangible
assets taken
under lease
Noncontrolling
interest *
Total
Purchase value
Increases by new supplies
Increases by internal development
Increases by business combinations
(Disposal and write off)
(disposal through business combination)
(transfer to non-current assets held for sale)
Transfer from non-current assets held for sale
-
216,616
10,886
(70)
227,432
-
Increases by new supplies
Increases by internal development
Increases by business combinations
(disposal through business combinations)
Transfer from non-current assets held for sale)
-
-
42,241
1,400
43,641
2,700
468
3,168
-
-
261,557
12,754
(70)
274,241
227,432
14,186
-
-
43,641
-
3,168
3,492
-
-
-
274,241
17,678
-
-
-
-
-
-
-
-
43,641
6,660
-
-
241,618
291,919
109
28
A
Intangible assets (continued)
Reconciliation of the present carrying amount (continued)
Internally
developed
software
Software
from external
suppliers
Other internally
developed
intangible
assets
Depreciation for the year
(Release of impairment loss during the year)
-
177,415
16,957
(70)
194,302
-
26,764
3,854
30,618
-
-
-
204,179
20,811
(70)
224,920
Balance at December 31, 2015 (current year)
Current carrying amount
Balance at January 1, 2014
Balance at December 31, 2014 (previous
year)
*only for consolidated financial statements
-
194,302
13,356
207,657
-
30,618
1,477
10,633
42,728
-
-
-
224,920
14,832
10,633
250,385
-
39,201
-
15,477
2,700
-
-
57,378
-
33,130
33,961
-
13,023
913
3,168
6,660
-
-
49,321
41,534
Other
intangible
assets
Investments in
intangible
assets taken
under lease
Intangible
assets in
progress
Noncontrolling
interest *
Total
Depreciation and impairment
Impairment loss during the year in the position other intangible assets in the amount of 10,633 thousand denars refers to goodwill which was
acquired from the consolidation.
110
28
Intangible assets (continued)
B
Carrying amount of the intangible assets where there is a limit of ownership and / or are pledged as collateral for liabilities of the Bank
Internally
developed
software
Other internally
developed
intangible
assets
Software from
external
suppliers
Other
intangible
assets
Intangible
assets in
progress
Investments in
intangible assets
taken under lease
Total
Present carrying value as at:
As at December 31 2014 (previous year)
-
-
-
-
-
-
111
-
29
A
Reconciliation of the present carrying amount
Land
Furniture and
office
equipment
Transport
vehicles
Buildings
Other
equipment
Other items of
property and
equipment
Investments in
property and
equipment taken
under lease
Property and
equipment in
progress
Total
Purchase value
As at 1 January 2014 (previous year)
Increases
Increase through business combinations
88,565
-
2,991,379
-
(Disposal through business combinations))
(transfer from non-current assets held for sale)
Other transfers
As at 31 December 2014 (previous year)
88,565
-
As at 1 January 2015 (current year)
Increases
Increase through business combinations
(Disposal through business combinations)
(transfer from non-current assets held for sale)
Other transfers
As at 31 December 2015 (current year)
152,951
95,799
-
70,528
-
4,473,310
95,799
-
1,648
13,327
(221,011)
27,739
(10,064)
1,421
61,885
(60,192)
4,508,917
682,981
-
13,327
-
27,739
61,309
-
61,885
-
4,508,917
61,309
-
(11,198)
36,292
708,075
13,327
(1,577)
60,308
(21,880)
4,548,346
148,126
-
338,405
-
671,677
-
11,679
-
159,821
3,151,200
(11,156)
136,970
(8,673)
16,518
346,250
(30,299)
41,603
682,981
88,565
-
3,151,200
-
136,970
-
346,250
-
70
88,635
25,346
3,176,546
(9,105)
9,046
346,191
-
-
136,970
-
-
-70,754
18,294
112
29
A
Reconciliation of the present carrying amount (continued)
Land
Depreciation and impairment
(Disposal and write off )
(Transfer to non-current assets held for sale )
Transfer for non-current assets held for sale
Other transfers
Balance at 31 December 2014 (previous year)
Balance at 1 January 2015 (current year)
(Transfer to non-current assets held for sale)
Transfer for non-current assets held for sale
Other transfers
Balance at 31 December 2015 (current year)
As at 1 January 2014(previous year)
Transport
vehicles
Buildings
88,565
88,565
88,635
296,041
74,399
370,440
370,440
78,283
448,723
2,695,338
2,780,760
2,727,823
Furniture and
office
equipment
Other
equipment
111,185
17,246
(11,156)
117,275
117,275
9,733
127,008
230,825
32,004
(8,673)
254,156
254,156
30,953
(9,105)
276,004
516,686
52,919
(30,277)
539,328
539,328
53,522
(11,198)
581,652
36,941
19,695
9,962
107,580
92,094
70,187
154,991
143,653
126,423
Other items of
property and
equipment
Investments in
property and
equipment taken
under lease
Property and
equipment in
progress
-
-
-
-
-
-
-
-
11,679
13,327
13,327
152,951
27,739
18,294
Total
43,428
9,371
(10,037)
42,762
42,762
8,086
(1,451)
49,397
1,198,165
185,939
(60,143)
1,323,961
1,323,961
180,577
(21,754)
1,482,784
27,100
19,123
10,911
3,275,145
3,184,956
3,065,562
113
Property and equipment (continued)
B
Carrying amount of the items of property, plant and equipment ovew which there is limited ownership and/or are pledged as collateral/pledge for bank’s
liabilities
Land
Current carrying amount at:
As at December 31 2014 (previous year)
Transport
vehicles
Buildings
-
Furniture
and office
equipment
-
-
Other equipment
-
Other items of
property and
equipment
-
-
Investments in
property and
equipment taken
under lease
Property and
equipment in
progress
-
Total
-
-
The amount of commitments for the purchase of property and equipment in 2015 is in the amount of 7,503 thousands of denars (2014: 343 thousands of denars).
.
114
30
Current and deferred tax assets and liabilities
30.1
Current tax assets and current tax liabilities
current year
previous year
2015
2014
Income tax receivables (current)
Income tax liabilities (current)
51,849
30.2
Deferred tax assets and deferred tax liabilities
A
Recognized deferred tax assets and deferred tax liabilities
current year 2015
(Deferred
Deferred
tax
tax assets
liabilities)
5,494
previous year 2014
(Deferred
Deferred
tax
On net basis
tax assets
liabilities)
On net
basis
management
Loans and advances to other clients
Intangible assets
Other receivables
management
Other liabilities
Unutilized tax losses and unutilized
tax loans
Other
Deferred tax assets/liabilities
recognized in the income statement
Investments in financial assets
available for sale
Protection against cash flow risk
Deferred tax assets liabilities
recognized in the capital
Total recognized tax
assets/liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115
30
Deferred tax assets and deferred tax liabilities (continued)
B
Unrecognized deferred tax assets
current year
Previous year
2015
2014
Tax losses
Tax credits
Total unrecognized deferred tax assets
-
-
116
30
Deferred tax assets and deferred tax liabilities (continued)
C
Reconciliation of movements deferred tax assets and deferred tax liabilities in the course
of the year
Previous year 2014
Loans and advances to other clients
Other receivables
As at January 1
Recognized in the course of
the year in:
Income
Capital
statement
As at December
31
-
-
-
-
Other liabilities
Unutilized tax losses and utilized tax credits
Other
Investments in financial assets available for sale
Total recognized deferred tax assets-liabilities
Current year 2015
Placement with and loans to banks
Placements with and loans to other clients
Investment in securities
Intangible assets
Other receivables
-
-
-
-
-
-
-
-
Other liabilities
Unutilized tax losses and unutilized tax credits
Other
Investments in financial assets available for sale
Total recognized deferred tax assets/liabilities
-
-
-
-
117
31
Non-current assets held for sale and disposal group
A
Non-current assets held for sale
current year
previous year
2015
2014
Intangible assets
Total non current assets held for sale
B
-
-
Disposal Group
current year
previous year
2015
2014
Group of assets for disposal
Financial assets
Intangible assets
Property, plant and equipment
Investment in associates
Income tax receivables
Other assets
Total group of assets for disposal
-
-
Liabilities directly related to group of assets for disposal
Special reserve
Income tax liabilities
Other liabilities
Total liabilities directly related to the group of assets for disposal
-
-
C
Profit/(loss) recognized from the sale of assets held-for-sale and disposal group
current year
previous year
2015
2014
Profit/(loss) recognized from the sale of assets held-for-sale and
disposal group
-
-
118
32
Trading liabilities
current year
previous year
2015
2014
Deposits from banks
Current accounts, demand deposits and overnight deposits
Time deposits
Other deposits
Deposits from other clients
Current accounts, demand deposits and overnight deposits
Time deposits
Other deposits
Money market instruments
Deposit certificates
Issued bonds
Other
Other financial liabilities
Trading derivatives
Agreements depending on interest rate change
Agreements depending on exchange rate change
Agreements depending on the securities price change
Other agreements that fulfil the IAS 39 criteria
Total trading liabilities
-
-
-
-
-
-
-
-
119
33
Financial liabilities at fair value through the profit and loss determined as such at initial
recognition
current year 2015
Contractual
value, paid at
maturity
Current carrying
amount
Due to banks
Current accounts, demand deposits
and overnight deposits
Time deposits
Other deposits
previous year 2014
Contractual
value, paid at
maturity
Current carrying
amount
-
-
-
-
-
-
-
-
-
-
-
-
Subordinated debt
Other financial liabilities
-
-
-
-
Total financial liabilities at fair value
through the profit and loss
determined as such at initial
recognition
-
-
-
-
Due to customers
Current accounts, demand deposits
and overnight deposits
Time deposits
Other deposits
Issued bonds
Other
120
34
Deposits
34.1
Due to banks
current year 2015
previous year 2014
short-term
long-term
short-term
long-term
Current accounts
domestic banks
foreign banks
Demand deposits
domestic banks
foreign banks
Time deposits
domestic banks
foreign banks
Restricted deposits
domestic banks
foreign banks
Other deposits
domestic banks
foreign banks
Deposit interest liabilities
domestic banks
foreign banks
Current maturity
Total deposits from banks
16,770
26,850
-
8,863
14,082
-
-
-
-
-
184,785
-
-
62,872
-
-
192,333
-
-
36,239
-
-
-
-
-
-
14
420,752
-
5
122,061
-
121
34
Deposits (continued)
34.2
Other deposits
current year 2015
previous year 2014
short-term
long-term
short-term
long-term
Current accounts
Demand deposits
Time deposits
Restricted deposits
Other deposits
Interest payable on deposits
Government
Current accounts
Demand deposits
Time deposits
Restricted deposits
Other deposits
Non-profit institutions in service of households
Current accounts
Demand deposits
Time deposits
Restricted deposits
Other deposits
Financial companies, other than banks
Current accounts
Demand deposits
Time deposits
Restricted deposits
Other deposits
Households
Current accounts
Demand deposits
Time deposits
Restricted deposits
Other deposits
Non-residents, other than banks
Current accounts
Demand deposits
Time deposits
Restricted deposits
Other deposits
Current maturity
Total other deposits
15,297,845
15,971
1,399,954
400,226
18,572
17,132,568
496,619
408,897
905,516
13,376,784
62,768
1,714,205
264,395
23,186
15,441,338
413,484
391,874
805,358
165,966
2,441
187
1
168,595
-
216,805
2,308
25,000
222
57
244,392
-
1,030,287
676
430,960
140,759
7,704
1,610,386
226,621
9,397
236,018
795,535
640
450,065
143,791
5,368
1,395,399
194,059
259
194,318
448,843
7
86,070
41,346
1,060
577,326
350,000
2,689
352,689
363,623
5
322,000
8,298
2,215
696,141
345,000
277
345,277
10,606,464
5,601,551
34,105,658
271,024
257,055
50,841,752
9,837,126
703,597
10,540,723
8,916,573
5,304,181
34,416,943
244,619
340,175
49,222,491
9,203,097
654,723
9,857,820
763,157
1,497
248,829
88,712
2,994
1,105,189
5,097,504
76,533,320
308,802
955
309,757
(5,097,504)
7,247,199
940,992
1,491
256,836
100,883
4,571
1,304,773
4,196,388
72,500,922
397,192
1,340
398,532
(4,196,388)
7,404,917
122
34
Deposits (continued)
34.2
Other deposits (continued)
Restricted deposits are deposits that the Group in behalf of its clients makes payments abroad,
opens letters of credit, acquires foreign currency assets for payment, and part of it serve as a
collateral under loans and guaranties issued that the Group has approved to certain companies,
deposits as collateral under approved consumption loans and retail loans and earlier received
payments under consumption and housing loans.
35
current year
previous year
2015
2014
Issued bonds
Other
Interest payable on issued securities
Total issued debt securities
-
-
123
36.
Borrowings
A
Borrowings structure according to liability type and creditor’s sector
current year 2015
previous year 2014
short-term
long-term
short-term
long-term
Banks
Residents
Borrowings
Repo-transactions
Interest payables
Non-residents
Borrowings
Repo-transactions
Interest payables
Borrowings
Repo-transactions
Interest payables
Government
Borrowings
Repo-transactions
Interest payables
Non-profit institutions in service of
households
Borrowings
Interest payables
Financial entities, other than banks
Borrowings
Repo-transactions
Interest payables
Non-residents, except for banks
Non-financial entities
Borrowings
Repo-transactions
Interest payables
Government
Borrowings
Repo-transactions
Interest payables
Non-profit institutions in service of
households
Borrowings
Repo-transactions
Interest payables
Financial companies, other than
banks
Borrowings
Repo-transactions
Interest payables
Households
Borrowings
Interest payables
Current maturity
Total Borrowings
19,833
3,925
2,009,983
-
16,386
5,343
2,446,000
-
-
-
-
-
-
-
-
-
19
131,716
-
37
147,032
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
574,729
598,506
(574,729)
1,566,970
799,225
820,991
(799,225)
1,793,807
124
36
Borrowings (continued)
B
Borrowings according to the creditor
current year 2015
previous year 2014
short-term
long-term
short-term
long-term
domestic sources:
MBPR
MBPR-IKL
MBPR- ZKDF
MF-FSR
NBRM – Primary issue
MBPR-EIB
Agency for Managing
Accounts
111
135
19,934
19
3,578
15,405
21,250
60,376
15,746
8,809
1,904,143
220
197
16,544
37
4,768
26,010
31,048
109,442
31,062
8,809
2,270,691
23,777
115,970
2,141,699
21,766
115,970
2,593,032
-
-
foreign sources:
Current maturity
574,729
(574,729)
799,225
(799,225)
Total borrowings
598,506
1,566,970
820,991
1,793,807
Lender
Currency
Interest rate
Year of maturity
Type of collateral
MBPR
MKD/ЕUR
3.0%, 5.0%
According to the
agreements concluded
with final users
8 bills of exchange
ЕUR
3%
According to the
with final users
MKD/ЕUR
0,5%
According to the
with final users
ЕUR
3month ЕURIBOR
+ 1.44%
30.05.2017
МKD
-
2020
12 bills of exchange
MBPR – IKL
MBPR – ZKDF
MF - FSR
NBRM – Primary
issue
* Pledge of receivables under
sub-loan agreements with final
users in the form of Notary deed
3 bills of exchange
3 bills of exchange
1 bill of exchange
16 bills of exchange in form of
Notary deed
MBPR - ЕIB
EUR
Agency for accounts
management
MKD
1%
-
According to the
with final users
2020
* Pledge of receivables under
sub-loan agreements with final
users in the form of Notary deed
Unsecured
125
36
Borrowings (continued)
B
Borrowings according to the creditor (continued)
The Group has pledged a lien in the form of a notary deed in favour of MBDP based on receivables from
sub-loan agreements concluded with final users approved from the credit lines from EIB and IKL, both
administered through MBDP. As at 31 December 2015 the amount of borrowings for which the Group has
pledged receivables is 1,597,845 thousands of denars (2014: 1,955,914 thousands denars).
37
Subordinated liabilities
current year
previous year
2015
2014
Subordinated deposits liabilities
Interest payables
-
-
Subordinated loans liabilities
Interest payables
-
-
Subordinated issued debt securities liabilities
Interest payables
-
-
Redeemable preference shares
-
-
Total subordinated debt
-
-
126
38
Special reserves and provisions
Special reserves
for off-balance
sheet credit
exposures
Provisions for
contingent
liabilities based
on litigations
Provisions for
pensions and
other employee
benefits
Provisions for
unfavourable
agreements
Provisions for
restructuring
Other
provisions
Total
Balance at January 1, 2014 (previous
year)
Additional provisions during the year
(used provisions during the year)
(release of provisions during the year)
Exchange rate effect
161,757
219,546
(206,636)
1,463
176,130
-
40,318
13,353
(2,930)
(2,209)
48,532
-
-
-
202,075
232,899
(2,930)
(208,845)
1,463
224,662
Balance at January 1, 2015 (current
year)
(used provisions during the year)
176,130
230,469
(258,271)
1,420
149,748
-
48,532
12,176
(3,948)
(666)
56,094
-
-
-
224,662
242,645
(3,948)
(258,937)
1,420
205,842
127
38
Special reserves and provisions (continued)
Off-balance sheet items in the assets, exposed to credit risk for which the special reserve is
determined, are classified in different risk categories appropriately to the estimated risk for
potential losses. As at 31 December 2015, 97.29% of total off-balance sheet items in the assets
are classified in the risk category A, risk category B participates with 2.09%, and risk categories
C, D and E with 0.62%.
39
Other liabilities
current year
previous year
2015
2014
Trade payables
Received advances
Fee and commission liabilities
Accrued expenses
Deferred income from previous years
Short - term liabilities to employees
Short - term liabilities for employee benefits
24,175
2,464
8,333
14,795
2
18,516
8,672
8,837
40,828
4
199,937
117,757
30,755
18,268
19,199
135,524
96,286
2,563
17,399
20,187
20,651
456,336
21,757
370,573
Other:
(liabilities more than 10% of the total other liabilities)
Other liabilities on other basis
Delayed payments liabilities based on collections from abroad
VAT liabilities
Liabilities in foreign currency for establishing legal entities
Liabilities upon card operations
Other liabilities
(liabilities less than 10% of the total other liabilities)
Total other liabilities
128
40
Subscribed Capital
A
Subscribed Capital
in Denars
Nominal value per share
ordinary shares
Preference
shares- nonredeemable
As at 1 January-fully paid
Subscribed shares during the year
Realization of share options
Division/ increase of nominal value
per share
Other changes during the year
Conversion of preference in ordinary
shares
As at 31 December – fully paid
number of issued shares
Preference shares nonOrdinary shares
redeemable
current year
previous year 2014 current year
previous
2015
2015
year 2014
Total subscribed capital
current year
previous
2015
year 2014
1,000
-
-
2,279,067
-
2,279,067
-
-
-
2,279,067
-
2,279,067
-
-
-
-
-
-
-
-
-
1,000
-
2,279,067
2,279,067
-
-
2,279,067
2,279,067
The holders of ordinary shares are entitled to receive dividends and are entitled to one vote per share at Shareholders Assembly . All shares rank equally with
regard to the Group’s residual assets. According to the shareholders book as at 31 December 2015, 128,228 ordinary shares i.e 5.63% from the total
shareholders equity of the Group (as at 31 December 2014, 136,273 ordinary shares i.e 5.98%) there is limitation of the rights established based on the law
and/or Decision or act of the competent body (for example limitation of the vote right according to the Governor decision).
As at 31 December 2015 the Group does not hold treasury shares. The Open-end Investment Fund KB Publikum - Balanced managed by the Group’s
subsidiary, KB Publikum Invest AD owns 2.109 shares, i.e. 0.0925% of the total share capital (as at 31 December 2014 owns 1,346 shares, i.e. 0.059%).
129
40
Subscribed Capital (continued)
B
Dividends
B.1
Announced and paid dividends by the Bank
current year
previous year 2014
2015
-
Declared dividends and paid dividends for the year
in Denars
current year
2015
Dividend per ordinary share
Dividend per preference share
B.2
previous year 2014
-
-
Announced dividend after the balance sheet date (the liabilities for dividends are not
shown in the Balance sheet)
current year
previous year 2014
2015
284,883
-
Announced dividends after December 31
in Denars
current year
2015
125
-
B
previous year 2014
-
Shareholders with ownership over 5% of the shares with the right of vote
previous year
current year 2015
2014
Shareholder’s name
East Capital Explorer
Investment AB
European Bank for
Reconstruction and
Development
Total
Subscribed capital
(nominal value)
Subscribed
capital (nominal
value)
in %
current year
2015
previous year
2014
voting right
voting right
227,907
227,907
10.00%
10.00%
119,540
347,447
119,540
347,447
5.25%
15.25%
5.25%
15.25%
130
40
Subscribed Capital (continued)
Statutory reserve
Under local statutory legislation, the Group is required to set aside 5 percent of its net profit for
the year in a statutory reserve until the level of the reserve reaches 1/10 of the shareholders
equity. Until achieving the minimum required level the statutory reserve could only be used for
loss recovery. When the statutory reserve exceeds the minimum required level and when all
losses are covered, the statutory reserve can also be used for distribution of dividends, based on
a decision of the shareholders’ Assembly, but only if the amount of the dividends for the current
business year has not reached the minimum for distribution as prescribed in the Trade Company
Law.
Other reserves
The other reserves are formed in addition to statutory reserve, based on decisions by the bodies
for management for distribution of profit, and can be used to cover certain losses or for other
expenditures.
131
41
Earnings per share
A
Basic earnings per share
current year
previous year
2015
2014
Net - Profit attributable to holders of ordinary shares
Net gain for the year
(Dividend for non-redeemable non-voting shares)
Correction of net gain entitled to the holders of the ordinary shares
Value of emitted shares
Value of withdrawn shares
Value of dividend paid in shares
Net - Profit attributable to holders of ordinary shares
520,872
97,054
520,872
97,054
Number of shares
current year
previous year
2015
2014
Weighted average number of ordinary shares
Issued ordinary shares as of January 1
Effects of the changes in the number of ordinary shares during the
year
Effect from conversion of non-redeemable non-voting shares into
ordinary shares
Effect from sale of own shares on the market
Effects of new issue of ordinary shares
Weighted average number of ordinary shares on 31 December
Basic earnings per share (in Denars)
2,279,067
2,279,067
2,279,067
229
2,279,067
43
B Diluted earnings per share
Current year
Previous year
2015
2014
Net gain entitled to the holders of the ordinary shares (diluted)
Net gain for the year entitled to the holders of the ordinary shares
(diluted)
Correction of net gain entitled to the holders of the ordinary shares for
effects of all emitted potential ordinary shares (list separately)
Dividend from non-voting shares converted into ordinary shares
Incomes from realized options
Value of redeemable own shares
Net gain entitled to the holders of the ordinary shares (diluted)
Weighted average number of the ordinary shares (diluted)
Ordinary shares issued on 1 January
Effect from issue of potential ordinary shares
Weighted average number of the ordinary shares (diluted) on 31
December
Diluted earnings per share (in Denars)
520,872
97,054
520,872
97,054
number of shares
current year
previous year
2015
2014
2,279,067
2,279,067
2,279,067
229
2,279,067
43
132
42
Contingent liabilities and contingent assets
42.1
current year
previous year
2015
2014
Unsecured payment guarantees
in Denars
in foreign currency
in Denars with foreign currency clause
Unsecured performance guarantees
in Denars
in foreign currency
Unsecured letter of credit
in Denars
in foreign currency
Unused overdraft on current accounts
Unused credit card limits
Foreclosed liabilities for crediting and unused credit limits
Issued secured guarantees
Covered letter of credit
Other secured contingent liabilities
Total contingent liabilities before special reserve
(Provisions)
Total contingent liabilities less special reserve
581,854
1,551,140
29,332
516,225
1,822,175
72,549
4,048,793
1,828,179
683,056
3,371,295
1,703,303
726,861
2,237,829
1,751,450
1,247,322
1,637,888
476,943
26,455
1,718,567
17,818,808
(149,748)
17,669,060
1,077,768
1,735,073
1,253,075
1,185,947
415,051
55,616
1,459,956
15,394,894
(176,130)
15,218,764
For part of the contingent liabilities in the amount of 258,680 thousands of denars there is a court
case upon issued letter of guarantee for Granit AD Skopje. The case was initiated in front of an
authorized court in Poland on September 16th 2011 by the State Treasury – General Directorate for
National Roads and Motorways from Warsaw (beneficiary of the guarantee) against Komercijalna
Banka AD Skopje, which was received in the Bank on July 2 nd 2012, requesting a payment upon the
issued letter of guarantee in the amount of 17.897.404,09 PLN, equivalent to 258,680 thousands of
denars. The letter of guarantee was issued based on a contract for building a motorway concluded
on May 5th, 2010 between the plaintiff (State Treasury – General Directorate for State Roads and
Motorways) and Granit AD Skopje (requestor of the guarantee).
The guarantee has been activated and a payment is requested as a result of a breach of contract for
building a motorway between the State Treasury – General Directorate for National Roads and
Motorways of Warsaw and Granit AD Skopje. There is a separate legal dispute related to this
contract, which is handled in front of the authorized courts in Poland. The outcome of this court case
can not be foreseen at the moment.
The Bank has not performed a payment upon this issued letter of guarantee as a result of a Decision
for temporary suspension issued on the 4th of February 2011 by the Basic Court in Skopje 2, on
request of Granit AD Skopje. The temporary suspension prohibits the beneficiary of the guarantee to
undertake any activities which would protest or enforcement of the guarantee, at the same time
imposing a restriction on the Bank to make payments upon the issued letter of guarantee. The Bank
has an obligation to follow the ruling of the Macedonian court, as long as it is in force. If the Bank is
to make a payment upon this issued letter of guarantee, the amount will be transformed into a
receivable from Granit AD Skopje, and the Bank does not expect collection problems and adverse
financial effects.
133
42.2
Contingent Assets
current year
previous year
2015
2014
List separately the more significant contingent assets:
Total contingent assets
-
-
The Group provides banks guarantees and letters of credit to guarantee the operation of customers to
third parties. These agreements have fixed limits and generally are approved for a period up to one year.
Due dates are not concentrated in any period.
These contingent liabilities have off balance sheet credit risk, because in the balance sheet are
recognized only the fees and accruals for potential losses until such contingent liabilities and
commitments are fulfilled or expire. A large part of the contingent liabilities and commitments will expire
without being advanced in whole or in part. Therefore, the amounts do not represent expected future
cash flows.
The amount of the revocable potential liabilities is in the amount of 1,718,567 thousands of denars, and
amount of irrevocable are in the amount of 4,543,264 tthousands of denars (2014: 1,459,956 thousands
of denars, and the amount of irrevocable is 4,136,913 thousands of denars).
43
Operations on behalf and for account of third parties/commission operations
current year 2015
Assets
Administration of assets on behalf and
for account of third parties
Denar deposits
Foreign currency deposits
Denar loans
Foreign currency loans
Other Denar claims
Other foreign currency receivables
Asset management on behalf and for
account of third parties
Denar deposits
Foreign currency deposits
Denar loans
Foreign currency loans
Other Denar claims
Other foreign currency receivables
Trust accounts
Other
Total
Liabilities
previous year 2014
Net position
Assets
Liabilities
Net
position
46,376
220,511
-
49,837
218,081
-
(3,461)
2,430
-
46,376
9,030
-
49,836
6,276
-
(3,460)
2,754
-
44,066
504
311,457
44,066
2,489
314,473
(1,985)
(3,016)
41,894
97,300
41,894
1,939
99,945
(1,939)
(2,645)
134
44
Related party transactions
A
Balance sheet
Assets
Current accounts
Trading assets
Loans and claims
mortgage loans
consumer loans
receivables under financial leasing
factoring and forfeiting of receivables
other loans and receivables
(Impairment)
Other assets
Total
Liabilities
Trading liabilities
Deposits
Issued securities
Liabilities under loans
Subordinated debt
Other liabilities
Total
Parent
company
Subsidiaries
Management
personnel of
the bank
Associates
Other related
parties
Total
-
-
-
-
-
-
-
-
130
189,146
(3)
189,273
64,265
28,437
89,939
(26,967)
155,674
-
64,265
28,437
90,069
189,146
(26,970)
344,947
-
-
450
450
544,552
544,552
-
545,002
545,002
135
44
Related party transactions (continued)
A
Balance sheet (continued)
In thousands of denars
Issued guarantees
Issued letters of credit
Other contingent liabilities
(Special reserve)
Total
Parent
company
Contingent assets
Received guarantees
Other contingent assets
Total
Assets
Current accounts
Trading assets
Loans and claims
mortgage loans
consumer loans
receivables under financial leasing
Factoring and forfeiting of receivables
other loans and receivables
Impairment
Other assets
Total
Subsidiaries
Management
personnel of the
bank
Associates
Other related
parties
Total
-
-
298
(7)
291
9,540
31,572
(328)
40,784
-
9,540
31,870
(335)
41,075
-
-
-
-
-
-
Parent
company
Subsidiaries
-
Associates
-
163
157,653
(2)
157,813
Management
personnel of the
bank
47,187
25,210
133,223
(26,561)
179,059
Other related
parties
Total
-
47,187
25,210
133,385
157,653
(26,563)
336,872
136
44
Related party transactions (continued)
A
Balance sheet (continued)
Parent
company
Liabilities
Trading liabilities
Deposits
Issued securities
Liabilities under loans
Subordinated debt
Other liabilities
Total
Issued guarantees
Issued letters of credit
Other contingent liabilities
(Special reserve)
Total
Contingent assets
Received guarantees
Other contingent assets
Total
Subsidiaries
Management
personnel of the
bank
Associates
Other related
parties
Total
-
-
169
169
544,173
544,173
-
544,342
544,342
-
-
264
(4)
260
22,134
23,405
(290)
45,249
-
22,134
23,669
(294)
45,509
-
-
-
-
-
-
137
44
Related parties transactions (continued)
B
Income and expenditures arising from related party transactions
Parent
company
Subsidiaries
Associates
Management
personnel of
the bank
Other
related
parties
Total
Income
Interest Income
Income from fees and commissions
Net gains from trading
Dividend income
-
-
154
-
9,512
4,264
-
-
9,512
4,418
-
Capital gains from sale of non-current assets
Other income
Transfers between entities
Total
-
-
39,115
39,269
8,816
22,592
-
47,931
61,861
Expenditures
Interest expenditures
Expenditures for fees and commissions
Net losses from trading
Expenditures for procurement of non-current assets
-
-
2
-
8,322
-
-
8,324
-
Impairment of financial assets, on net basis
Other expenditures
Total
-
-
4
80
86
444
8,320
17,086
-
448
8,400
17,172
138
44
B
Income and expenditures arising from related party transactions (continued)
Income
Interest Income
Income from fees and commissions
Net gains from trading
Dividend income
Parent
company
-
Subsidiaries
Associates
Management
personnel of
the bank
-
230
-
10,720
4,339
-
-
36,653
36,883
4,583
19,642
Other
related
parties
Total
-
10,720
4,569
41,236
56,525
Capital gains from sale of non-current assets
Other income
Total
-
Expenditures
Interest expenditures
Expenditures for fees and commissions
Net losses from trading
Expenditures for procurement of non-current assets
-
-
1
-
13,607
-
-
13,608
-
Impairment of financial assets, on net basis
Other expenditures
Total
-
-
(71)
13
(57)
25,429
4,735
43,771
-
25,358
4,748
43,714
-
139
44
C
Remuneration for the management of the bank
current year
2015
Short-term benefits for employees
Benefits after employment termination
Benefits due to employment termination
Payments to employees on the basis of shares, settled by equity
instruments
Payments to employees on the basis of shares, settled by monetary
funds
Other
Total
previous year
2014
129,709
87
119,010
2,187
-
-
80
129,876
121,197
140
45
Leases
A
Lessor
A.1
Receivables from financial leases
Total finance lease
receivables
Current value of minimum payment for the
leasehold
Total
Current value of minimum payment for the
leasehold
Total
A.2
Maturity period for financial lease
receivables
up to 1
from 1 to 5
up to 1
year
years
year
-
-
-
-
-
-
-
-
Receivables from irrevocable operating leases
Value of property given under operating
leasehold:
Total
Value of property given under operating
leasehold:
Total finance
lease
receivables
Maturity period for financial lease receivables
up to 1 year
from 1 to 5 years
up to 1 year
-
-
-
-
-
-
-
-
-
-
-
-
141
45
Leases (continued)
A
Lessor (continued)
A.2
Irrevocable operating lease receivables (continued)
Buildings
Means of
transportation
Furniture
and office
equipment
Other
equipment
Other items
of property
and
equipment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Land
Value of property given
under operating
leasehold:
As at 31 December 2015
(current year)
(previous year)
Total
B
Lessee
B.1
Liabilities from financial leases
Total
Total
Total finance
lease
receivables
-
receivables
up to 1
from 1 to
year
5 years
up to 1 year
-
142
Total
45
Lease (continued)
B
Lessee (continued)
B.1
Liabilities under financial lease (continued)
Land
Value of the property taken under financial leasehold:
Cost value
Increase
(disposal and write- off)
Other
As at 1 January 2015 (current year)
Increase
(disposal and write- off)
Other
Buildings
-
-
Means of
transportation
Furniture and
office
equipment
-
-
Other items of
property and
equipment
Other
equipment
-
Total
-
-
143
45
Lease (continued)
B
Leasee (continued)
B.1
Liabilities from financial lease (continued
Land
Means of
transportation
Buildings
Accumulated depreciation and impairment
Balance at January 1, 2014
depreciation for the year
impairment loss during the year
(release of impairment loss during the year)
(disposal and write offs)
Other
Balance at December 31, 2014 (previous year)
Balance at January 1, 2015 (current year)
depreciation for the year
impairment loss during the year
(release of impairment loss during the year)
(disposal and write offs)
Other
at January 1, 2014 ( previous year )
At December 31, 2014 (previous year)
At December 31, 2015 (current year)
Furniture and office
equipment
Other
equipment
Other items of
property and
equipment
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
144
45
Leases (continued)
B
Leasee (continued)
B.2
Irrevocable operating lease liabilities
Total finance
lease
receivables
receivables
up to 1
from 1 to
year
5 years
up to 1 year
Total
66,733
66,733
2,495
2,495
9,979
9,979
54,259
54,259
Balance at December 31, 2014 (previous year)
Total
69,114
69,114
2,491
2,491
9,962
9,962
56,661
56,661
145
46
Share based payments
Date of granting of option
Date of option expiry
Price of option realization
Share price on the date the option is granted
Variance
Expected dividend return
Interest rate
Fair value on the date the option is granted
As at 1 January
Changes during the year:
options given to the members of Supervisory
Board
options given to the members of Board of
Directors
other given options
forfeited options
realized options
options with expired deadline
As at 31 December
47
current year 2015
previous
-
current year 2015
Weighted
number of
average prices
options for
of options for
share
share
-
year 2014
-
previous year 2014
number of
options
for share
Weighted
average prices of
options for share
-
-
-
-
-
-
-
-
-
-
The Group’s subsidiaries
See accounting policies 1.(c).
Significant subsidiaries
KB Publikum is a significant subsidiary of the Group. It executes its activities in the Republic of
Macedonia. The Bank holds 64.29% of the shares with voting right in the subsidiary (2014:
64.29%).
Significant restrictions
The Group has no significant restrictions in its ability to use assets or to settle liabilities.
146
47
The Group’s subsidiaries (continued)
Non-controlling interest in subsidiaries
The table below provides information for subsidiaries that have tangible significant noncontrolling interest
KB Publikum
Note
Assets
Held for trading financial assets
Bank deposits
Intangible assets
Other assets
29
28
Total assets
Liabilities
Liabilities to suppliers and other liabilities
Total liabilities
Net assets
Carrying amount of non-controlling
participation
31 December
2015
16
2,277
18,200
146
270
1,735
22,644
1,010
1,010
21,634
7,725
For the 2015
Revenue
Expenses
Profit/(loss)
Total comprehensive income/(loss)
Profit/(loss) of non-controlling interest
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities, before
dividends to non-controlling interest
Cash flows from financing activities, dividends
to non-controlling interest
Net increase of cash and cash equivalents
19,168
9,103
10,065
3,595
For the year
ended 31
December
2015
10,729
(10,759)
(30)
147
47
The Group’s subsidiaries (continued)
KB Publikum
Note
Assets
Bank deposits
Intangible assets
Other assets
29
28
Total assets
Liabilities
Total liabilities
Net assets
participation
Revenue
Expenses
Profit/(loss)
Cash flows from financing activities, dividends
to non-controlling interest
48
31 December
2014
46
2,352
8,200
31
1,281
11,910
341
341
11,569
4,131
For the 2014
9,612
(7,357)
2,255
2,255
805
For the year
ended 31
December
2014
1,789
(3,541)
(1,752)
Events after the date of the balance sheet
No events occurred which would require to be disclosed between the balance sheet date and the
date when the financial statements were approved for issuing.
148
Consolidated financial statements and
for the year ended December 31, 2015
CONTENTS
Page
Consolidated statement of profit or loss and other comprehensive Income
1
Consolidated statement of financial position
2
Consolidated statement of changes in equity
3
Consolidated statement of cash flows
Notes to the consolidated financial statements
4-5
6 - 84
Independent
Auditor’s
Report
ABCD
KPMG Macedonia DOO Skopje
Soravia Center Skopje 7th floor
Filip Vtori Makedonski No.3
Skopje 1000
Telephone
Telefax
E-mail
Internet
+389 (2) 3135 220
+389 (2) 3111 811
[email protected]
www.kpmg.com.mk
Independent auditors’ report to the shareholders of Komercijalna Banka AD
Skopje
We have audited the accompanying consolidated financial statements of Komercijalna Banka
AD Skopje and its subsidiary (“the Group”), which comprise the consolidated statement of
financial position as at 31 December 2015, the consolidated statements of profit and loss and
other comprehensive income, changes in equity and cash flows for the year then ended, and
notes, comprising a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards, and for
such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on
our audit. We conducted our audit in accordance with International Standards on Auditing.
Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on our
judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
KPMG Macedonia DOO Skopje is a Macedonian limited liability
company and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative
("KPMG International"), a Swiss entity.
Registered with the
Commercial Register of the
Republic of Macedonia with
EMBS: 5078598
Tax No. MK4030996107850
ABCD
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2015, and of its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance
with International Financial Reporting Standards.
KPMG Macedonia DOO
26 February 2016
Skopje
2
Audited
Financial
Statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year Ended December 31, 2015
(In thousands of Denars)
Notes
Interest income
Interest expense
Net interest income
Net fee and commission income
Dividend income
Foreign exchange gains, net
Net (losses) /gainson financial instruments classified as
held for trading
Personnel expenses
Net impairment loss on financial assets
Net impairment loss on non-financial assets
Operating profit
2014
6
3,894,798
(716,990)
3,177,808
3,926,431
(1,099,300)
2,827,131
7
1,121,631
(205,856)
915,775
1,090,276
(171,476)
918,800
5,683
131,269
6,062
125,111
8
9
10
22,23,24
11
12
Share of profit of associates accounted for using the equity
method
Profit before tax
Income tax expense
2015
13
Profit for the year
7,492
274,806
(831,140)
(195,409)
(671,905)
(1,721,300)
(563,751)
529,328
(22,472)
160,982
(830,218)
(206,750)
(743,521)
(1,658,367)
(308,460)
268,298
39,028
36,596
568,356
304,894
(62,386)
(33,403)
505,970
271,491
Other comprehensive income for the period, net of
income tax
Items that are or may be reclassified to profit and loss
Fair value reserve (available for sale financial assets):
Net change in fair value
Related tax
Other comprehensive income, net of tax
-
-
10,475
(1,048)
9,427
515,397
271,491
Profit attributable to:
Shareholders’ of the Bank
Profit
502,375
3,595
505,970
270,686
805
271,491
511,802
3,595
515,397
270,686
805
271,491
220
220
119
119
Total comprehensive income attributable to:
Shareholders’ of the Bank
Earnings per share
Basic (in Denars)
Diluted (in Denars)
14
1
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At December 31, 2015
Notes
ASSETS
Financial assets at fair value through profit and loss
Financial assets available-for-sale
Financial assets held-to-maturity
Loans and advances to customers
Investment property
Intangible assets
Current tax assets
Other assets
Assets acquired through foreclosure procedures
2015
2014
15
16
17
18
19
20
21
22
23
24
27,663,719
371,029
7,202,009
2,516
9,208,426
47,644,522
189,147
3,037,777
27,785
41 ,534
27,551,346
349,391
3,319,080
4,608
8,269,788
47,656,044
157,652
3,156,333
28,623
49,321
25
26
532,589
1,395,714
321 ,024
2,101 ,748
97,316,767
92,964,958
1,363,581
82,837,690
2, 165,476
51 ,849
18,285
149,748
512,430
87,099,059
1,167,161
78,860,740
2,614,798
5,494
19,293
176,130
419,104
83,262,720
2,279,067
771 ,527
681,413
9,427
6,468,548
10,209,982
7,726
10,217,708
2,279,067
771 ,527
274,569
6,372,944
9,698,107
4,131
9,702,238
97,316,767
92,964,958
15,447,095
13,288,141
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Deposits from banks and other financial institutions
Deposits from customers
Borrowings
Other tax liabilities
Provisions
Other liabilities
Total liabilities
EQUITY
Share capital
Share premium
Reta ined earnings
Revaluation reserve
Reserves
Total equity attributable to shareholders' of the Bank
Total equity
27
28
29
33
30
31
Total liabilities and equity
Commitments and contingent liabilities
33
The consolidated financial statements were authorised by the Supervisory Board of the Bank on 25
February 2016.
Signed on behalf of Komercijalna banka AD Skopje:
Maia st~~Wa sterieva
ChOffl~~
2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended December 31, 2015
Share
capital
Balance, January 1, 2014
Profit for the year
2,279,067
771,527
Balance, December 31, 2014
Balance, January 1, 2015
Total comprehensive income
-
-
-
-
-
-
-
2,279,067
771,527
2,279,067
771,527
-
-
Tax on other comprehensive income
Retained
earnings
reserves
--
-
Fair value reserve (available-for-sale financial assets)
Net change in fair value
Statutory
reserve
-
-
Profit for the year
Other
-
Transactions with owners, recognized directly in equity
Transfer to other reserve
Total contributions by and distributions to owners
Fair value
reserve
Share
premium
455,813
-
Total equity,
attributable to the
shareholders of
the Group
Noncontrolling
Interest*
Total equity
-
82,746
270,686
9,427,421
270,686
3,326
805
9,430,747
271,491
-
270,686
270,686
805
271,491
(78,863)
-
5,838,268
78,863
-
-
78,863
(78,863)
-
-
-
-
455,813
5,917,131
274,569
9,698,107
4,131
9,702,238
-
455,813
5,917,131
274,569
9,698,107
4,131
9,702,238
-
-
-
502,375
502,375
3,595
505,970
10,475
-
-
-
10,475
-
10,475
(1,048)
(1,048)
(1,048)
Total other comprehensive income
-
-
9,427
-
-
-
9,427
-
9,427
-
-
9,427
-
-
502,375
511,802
3,595
515,397
Transactions with owners, recognized directly in equity
Treasury shares sold
-
-
-
-
-
73
73
-
73
-
95,604
95,604
(95,604)
(95,531)
9,500
-
9,500
10,209,982
7,726
10,217,708
Transfer to other reserve
Total contributions by and distributions to owners
Balance, December 31, 2015
-
-
-
-
-
9,427
-
2,279,067
771,527
9,427
455,813
6,012,735
681,413
-
-
-
3
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes
Profit before tax
Non – controlling interest, included in consolidated profit and
loss
Adjustments for:
Depreciation of property and equipment and amortization of
intangible assets
Gain on sale of property and equipment
Gain on sale of assets acquired through foreclosure procedure
Loss on sale of assets acquired through foreclosure procedure
Impairment losses on assets acquired through foreclosure
procedure
Depreciation of investment property
Impairment losses
Dividend income
Interest income
Interest expense
Net trading income
Share of profit from associates accounted for using the equity
method
Interest received
Interest paid
Income tax paid
Operating profit before changes in operating assets and
liabilities:
Restricted accounts
Mandatory reserves in foreign currency with NBRM
Collected collateral
Other assets
Amounts owed to other depositors
Other liabilities
22,24
9
9
11
11
23
12
6
6
2015
2014
568,356
304,894
(3,595)
(805)
194,571
(457)
(26,198)
1,046
205,912
(581)
(44,273)
6,863
563,751
838
1,721,300
(5,683)
(3,894,798)
716,990
(7,492)
308,460
838
1,658,367
(6,062)
(3,926,431)
1,099,300
22,472
(39,028)
3,922,588
(806,598)
(16,716)
(36,596)
3,928,534
(1,118,384)
(13,059)
2,888,875
(21,534)
(154,615)
(14,145)
(939,978)
(1,582,020)
45,631
(245,464)
196,411
4,065,131
93,327
2,389,449
(9,577)
(179,315)
(287,213)
(7,276,560)
(4,086,974)
11,629
(62,425)
(500,868)
7,113,961
(40,459)
Net cash (used in)/from operating activities
Acquisition of property and equipment
Acquisition of intangible assets
Proceeds from sale of property and equipment
Acquisition of investments securities
Proceeds from sale of investments
Dividends received
Net cash from/(used in) investing activities
4,331,619
(2,928,352)
(61,309)
(17,677)
635
(7,625,693)
3,744,856
13,115
(3,946,073)
(95,799)
(12,754)
629
(6,019,164)
7,884,598
35,896
1,793,406
Cash flows from financing activities
Proceeds from borrowed funds
Repayments of borrowed funds
Dividends paid
Net cash (used in)/from financing activities
2,816,192
(3,265,514)
(449,322)
6,023,456
(6,751,879)
(728,423)
4
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
Notes
Net change of cash and cash equivalents
Cash and cash equivalents at beginning of year
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at the end of the year
15
2015
2014
23,486,553
(63,776)
25,349,922
(1,863,369)
23,422,777
23,486,553
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
1.
General Information
Komercijalna Banka AD - Skopje (hereinafter “the Bank”), is a shareholding company having its
registered office in the Republic of Macedonia. The head office of the Bank was relocated during 2013
from Kej Dimitar Vlahov 4, 1000 Skopje to Orce Nikolov str. No. 3, 1000 Skopje. The Bank operates in
the Republic of Macedonia with a network of branch and sub-branches. These consolidated financial
statements include the Bank and its subsidiary KB Publicum Invest AD Skopje (“KB Publikum”) (together
referred to as the “Group”).
The Bank is registered as a universal type of commercial bank in accordance with the Macedonian laws.
The principal activities of the Bank are as follows:
Collecting deposits and other recurrent sources of funds;
Placing loans and advances domestically and abroad, including factoring and financing commercial
transactions;
Issuance and administration of payment instruments (cards, cheques, traveler cheques, bills of
exchange);
Foreign exchange operations;
Domestic and international payment operations, including purchase/sale of foreign currency funds;
Fast money transfer;
Issuing payment guarantees, backing guarantees and other forms of security;
Providing services of renting safe deposit boxes, depositories and depot;
Trade in instruments on the money market;
Trading with foreign currencies;
Trading with securities;
Providing services of a bank-custodian of investment and pension funds;
Keeping of securities for clients;
Intermediating in selling insurance policies;
Data collection and analysis of companies’ credit rating;
Sale of shares in investment funds;
Other financial services defined by law, which are within the scope of activities only by a bank.
The shares of the Bank are listed on the Macedonian Stock Exchange official market in the segment of
super- listing of joint stock companies with special reporting requirements, and is one of the ten
companies comprising the Macedonian Stock Exchange index MBI-10. The ID quotation code is the
following:
Code
KMB (common share)
ISIN code
MKKMBS101019
KB Publicum is licensed to set up and manage open and closed ended investment funds as approved
by the Securities and Exchange Commission. It manages three open-end investment funds, KB
Publikum-Balanced, KB Publikum-Bonds and KB Publikum-Cash. These funds are not legal entities and
do not perform specific activities
The consolidated financial statements of the Bank for the year ended 31 December 2015 were
authorised for issue by the Supervisory Board on 25 February 2016.
6
December 31, 2015
2.
Basis of Preparation of Consolidated Financial Statements
(a)
Statement on Compliance
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standard Board (“IASB”).
(b)
Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis except for the
following:
• financial instruments at fair value through profit or loss are measured at fair value;
• available-for-sale financial assets are measured at fair value.
• foreclosed assets measured at the lower of cost or fair value less costs to sale.
(c)
Functional and Presentation Currency
The presented consolidated financial statements are expressed in thousands of Denars. The Denar
represents the functional and presentation currency of the Group.
(d)
Use of Estimates and Judgments
The preparation of consolidated financial statements in conformity with IFRS requires management to
make judgments, estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgments about carrying values of
assets and liabilities that are not available from other sources. Actual results in subsequent periods may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the revision affects both current and future
periods.
Information about significant areas of estimation uncertainty and critical estimates in applying
accounting policies that have the most significant effect on the amount recognized in the consolidated
financial statements are described in Note 3.20 to the consolidated financial statements.
A summary of the principal accounting policies applied in preparing the consolidated financial
statements are set out within Note 3 to the consolidated financial statements. The accounting policies
set out below have been applied consistently for all periods presented in these consolidated financial
statements.
(e)
Changes in accounting policies
The Group consistently applied the accounting policies as set out in Note 3 to all periods presented in
these consolidated financial statements.
7
December 31, 2015
2.
(f)
Basis of Preparation of Consolidated Financial Statements (Continued)
Changes in accounting estimates
For the year ended 31 December 2015, there were no changes in accounting estimates.
(g)
New Standards and Interpretations not yet adopted
A number of new standards and amendments to standards are effective for annual periods beginning
after 1 January 2016; however, the Group has not applied the following new or amended standards in
preparing these consolidated financial statements.
New or amended standards
Summary of the requirements
Possible
impact
on
consolidated
financial
statements
IFRS 9 Financial Instruments
(2014)*
(Effective for annual periods
beginning on or after 1
January 2018; to be applied
retrospectively
with
some
exemptions. The restatement
of prior periods is not required,
and is permitted only if
information is available without
the use of hindsight. Early
application is permitted.)
This Standard replaces IAS 39,
Financial Instruments: Recognition and
Measurement, except that the IAS 39
exception for a fair value hedge of an
interest rate exposure of a portfolio of
financial assets or financial liabilities
continues to apply, and entities have
an accounting policy choice between
applying
the
hedge
accounting
requirements of IFRS 9 or continuing
to apply the existing hedge accounting
requirements in IAS 39 for all hedge
accounting.
Although the permissible measurement
bases for financial assets – amortised
cost, fair value through other
comprehensive income (FVOCI) and
fair value through profit and loss
(FVTPL) – are similar to IAS 39, the
criteria for classification into the
appropriate measurement category are
significantly different.
A financial asset is measured at
amortized cost if the following two
conditions are met:
the assets is held within a business
model whose objective is to hold
assets in order to collect contractual
cash flows; and,
its contractual terms give rise on
specified dates to cash flows that are
solely payments of principal and
interest on the principal outstanding.
In addition, for a non-trading equity
instrument, a company may elect to
irrevocably
present
subsequent
changes in fair value (including foreign
exchange gains and losses) in OCI.
These are not reclassified to profit or
loss under any circumstances.
For debt instruments measured at
FVOCI, interest revenue, expected
credit losses and foreign exchange
gains and losses are recognised in
profit or loss in the same manner as for
amortised cost assets. Other gains and
losses are recognised in OCI and are
reclassified to profit or loss on
derecognition.
The impairment model in IFRS 9
replaces the ‘incurred loss’ model in
It is expected that the new
Standard, when initially
applied,
will
have
a
significant impact on the
financial statements, since
the classification and the
measurement
of
the
Groups’s
financial
instruments are expected
to change. However, the
Group is not able to
prepare an analysis of the
impact this will have on the
financial statements until
the
date
of
initial
application.
The Group
has not yet decided on the
date that it will initially
apply the new Standard.
8
December 31, 2015
IAS 39 with an ‘expected credit loss’
model, which means that a loss event
will no longer need to occur before an
impairment allowance is recognised.
IFRS 9 includes a new general hedge
accounting model, which aligns hedge
accounting more closely with risk
management. The types of hedging
relationships – fair value, cash flow
and foreign operation net investment –
remain unchanged, but additional
judgment will be required.
The
standard
contains
new
requirements to achieve, continue and
discontinue hedge accounting and
allows additional exposures to be
designated as hedged items.
Extensive
additional
disclosures
regarding an entity’s risk management
and hedging activities are required.
IFRS 15 Revenue from
contracts with customers
January
2018.
Earlier
The new Standard provides a
framework that replaces existing
revenue recognition guidance in IFRS.
Entities will adopt a five-step model to
determine when to recognise revenue,
and at what amount. The new model
specifies that revenue should be
recognised when (or as) an entity
transfers control of goods or services
to a customer at the amount to which
the entity expects to be entitled.
Depending on whether certain criteria
are met, revenue is recognised:
over time, in a manner that depicts the
entity’s performance; or
at a point in time, when control of the
goods or services is transferred to the
customer.
The Group is assessing the
potential impact on its
consolidated
financial
statement resulting from
IFRS 15.
IFRS 15 also establishes the principles
that an entity shall apply to provide
qualitative and quantitative disclosures
which provide useful information to
users of financial statements about the
nature, amount, timing, and uncertainty
of revenue and cash flows arising from
a contract with a customer.
IFRS 14 Regulatory deferral
accounts
January
2016.
Earlier
Amendments to IAS 1
IFRS 14 is a new Standard which
permits an entity that is a first-time
adopter of International Financial
Reporting Standards to continue to
account, with some limited changes,
for
'regulatory
deferral
account
balances' in accordance with its
previous GAAP, both on initial
adoption of IFRS and in its subsequent
financial statements.
The Amendments to IAS 1 include the
following
five,
narrow-focus
improvements to the disclosure
requirements
contained
in
the
The Group does not expect
the Standard to have any
impact on the consolidated
financial statements since
it does have any regulatory
deferral account balances.
The Group expects that the
amendments, when initially
applied, will not have a
material impact on the
9
December 31, 2015
January
2016.
Early
application is permitted)
standard.
The guidance on materiality in IAS 1
has been amended to clarify that:
Immaterial information can detract
from useful information.
Materiality applies to the whole of the
Materiality applies to each disclosure
requirement in an IFRS.
presentation
of
the
consolidated
financial
statements of the Group.
The guidance on the order of the notes
(including the accounting policies)
have been amended, to:
Remove language from IAS 1 that has
been interpreted as prescribing the
order of notes to the financial
statements.
Clarify that entities have flexibility
about where they disclose accounting
policies in the financial statements.
Amendments to IFRS 11:
Accounting for Acquisitions of
Interests in Joint Operations
prospectively.
Early
Amendments to IFRS 10 and
IAS 28 Sale or contribution of
assets between an investor
and its associate or joint
venture
(The effective date has not yet
been determined by the IASB,
but
early
adoption
is
permitted.)
Amendments to IFRS 10, 12
and IAS 28: Investment
entitiesapplying
the
consolidation exception
(The
Amendments
are
These Amendments require business
combination accounting to be applied
to acquisitions of interests in a joint
operation that constitutes a business.
Business combination accounting also
applies to the acquisition of additional
interests in a joint operation while the
joint operator retains joint control. The
additional interest acquired will be
measured at fair value. The previously
held interests in the joint operation will
not be remeasured.
The Amendments clarify that in a
transaction involving an associate or
joint venture, the extent of gain or loss
recognition depends on whether the
assets sold or contributed constitute a
business, such that:
a full gain or loss is recognised when a
transaction between an investor and its
associate or joint venture involves the
transfer of an asset or assets which
constitute a business (whether it is
housed in a subsidiary or not), while
a partial gain or loss is recognised
when a transaction between an
investor and its associate or joint
venture involves assets that do not
constitute a business, even if these
assets are housed in a subsidiary.
These amendments to these standards
clarify that:
An investment entity parent is required
to fair value a subsidiary providing
investment-related services that is
itself an investment entity.
The impact of the adoption
of the Amendments can
only be assessed in the
year of initial application of
the Amendments, as this
will
depend
on
the
acquisition
of
joint
operations that take place
during
that
reporting
period. The Group does
not intend to adopt the
Amendments
early;
therefore it is not possible
to estimate the impact
adoption
of
the
Amendments will have on
the Group’s consolidated
The Group is assessing the
potential impact on its
consolidated
financial
statement resulting from
amendments to IFRS 10
and IAS 28.
However, the quantitative
impact of the adoption of
the Amendments can only
be assessed in the year of
initial application of the
Amendments, as this will
depend on the transfer of
asset or businesses to the
associate or joint venture
that take place during that
reporting period.
that
the
amendments,
when initially applied, will
have material impact on
the consolidated financial
statements as the Group is
10
December 31, 2015
effective for annual periods
January 2016 and apply
prospectively.
Earlier
Amendments to IAS 16 and
IAS
38:
Clarification
of
Acceptable
Methods
of
Depreciation and Amortisation
prospectively.
Early
Amendments to IAS 16
Property Plant and equipment
and IAS 41 Agriculture
January
2016.
Earlier
Amendments to IAS 27: Equity
method in the separate
financial statements**
January 2016 and apply
retrospectively.
Early
An intermediate parent (holding)
owned by an investment entity group
can be exempt from preparing
consolidated financial statements.
A non-investment entity investor can
retain the fair value accounting applied
by its investment entity associate or
joint venture.
Revenue-based depreciation banned
for property, plant and equipment
The amendments explicitly state that
revenue-based
methods
of
depreciation cannot be used for
property, plant and equipment.
New restrictive test for intangible
assets
The
amendments
introduce
a
rebuttable presumption that the use of
revenue-based amortisation methods
for intangible assets is inappropriate.
This presumption can be overcome
only
when
revenue
and
the
consumption of the economic benefits
of the intangible asset are ‘highly
correlated’, or when the intangible
asset is expressed as a measure of
revenue.
These amendments result in bearer
plants being in the scope of IAS 16
Property, Plant and Equipment,
instead of IAS 41 Agriculture, to reflect
the fact that their operation is similar to
that of manufacturing.
not an investment entity,
nor
does
it
have
investments in associates
or joint ventures which are
investment entities.
The amendments to IAS 27 allow an
entity to use the equity method in its
separate financial statements to
account
for
investments
in
subsidiaries, associates and joint
ventures.
that
the
amendments,
statements as the Group
intends to continue to carry
its
investments
in
subsidiaries, associates or
joint ventures at cost.
It is expected that the
Amendments, when initially
applied, will not have
material impact on the
Group’s
consolidated
financial statements as the
Group does not apply
revenue-based methods of
amortisation/depreciation.
that
the
amendments,
statements as the Group
has no bearer plants.
11
December 31, 2015
2.
Basis of Preparation of Consolidated Financial Statements (Continued)
(g)
New Standards and Interpretations not yet adopted (Continued)
Annual Improvements to IFRSs
The improvements introduce five amendments to four standards and consequential amendments to
other standards and interpretations. These amendments are applicable to annual periods beginning on
or after 1 January 2016, with earlier adoption permitted.
None of these amendments are expected to have a significant impact on the financial statements of the
Group.
3.
Summary of Significant Accounting Policies
3.1
Basis of consolidation
3.1.1
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date – i.e.
when control is transferred to the Group. The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested
annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if they are related to the issue of debt or equity
securities.
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent
consideration is classified as equity, then it is not remeasured and settlement is accounted for within
equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised
in profit or loss.
3.1.2
Non-controlling interests (“NCI”)
NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition
date.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for
as equity transactions.
3.1.3
Subsidiaries
‘Subsidiaries’ are investees controlled by the Group. The Group ‘controls’ an investee if it is exposed to,
or has rights to, variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control commences until the date when control
ceases.
3.1.4
Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the
subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognised
in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is
lost.
12
December 31, 2015
3.
3.1
Basis of consolidation (consolidation)
3.1.5
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses (except for foreign
currency transaction gains or losses) arising from intra-group transactions, are eliminated in preparing
the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
3.2
Interest Income and Expense
Interest income and expense are recognized in profit or loss for all interest bearing instruments on
accrual basis, measured at amortized cost using the effective interest rate method.
The effective interest rate method is a method of calculating the amortized cost of a financial asset or a
financial liability and allocating the interest income or interest expense over the relevant period. The
effective interest rate is the rate that discounts estimated future cash payments or receipts through the
expected life of the financial instrument or, when appropriate, a shorter period to the carrying amount of
the financial asset or financial liability. When calculating the effective interest rate, the Group estimates
cash flows considering all contractual terms of the financial instrument (for example, prepayment
options) but does not consider future credit losses. The calculation includes all fees and commissions
paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts.
3.3
Fee and Commission Income
Fees and commissions, except loan origination fees, are generally recognized on an accrual basis over
the period of service rendering. Other fees relating to the acquisition and origination of loans are
deferred over the life of the loan and amortized using the effective interest rate method.
3.4
Dividend Income
Dividend income is recognized when the right to receive payment is established for all shareholders who
participate in distribution of profit.
3.5
Foreign currency Transactions
Transactions denominated in foreign currencies have been translated into Denars at rates set by the
National Bank of the Republic of Macedonia (“NBRM”) at the dates of the transactions. Assets and
liabilities denominated in foreign currencies are translated into Denars at the end of the reporting period
using official rates of exchange ruling on that date. Foreign exchange gains or losses arising upon the
translation of transactions, and the translation of assets and liabilities denominated in foreign currencies
are recognized in the profit or loss in the period in which they occurred.
Commitments and contingent liabilities denominated in foreign currencies are translated into Denars by
applying the official exchange rates at the end of the reporting period.
3.6
Financial Assets
Financial assets are classified into the following specified categories: cash and cash equivalents,
financial assets at fair value through profit or loss, held-to-maturity financial assets, available-for-sale
financial assets, loans and receivables. The classification depends on the nature and the purposes of
the financial assets and is determined at initial recognition. Financial assets are recognized and
derecognized on settlement date, which represents the date when the asset is delivered to the Group.
3.6.1
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and nostro accounts, that represent demand deposits
and placements with other banks and financial institutions, account balances with the National Bank of
the Republic of Macedonia (“NBRM”) and other financial assets such as treasury and government bills,
as highly liquid assets with maturity up to three months and insignificant changes to fair value.
13
December 31, 2015
3.
Summary of Significant Accounting Policies (Continued)
3.6
Financial Assets (Continued)
3.6.2
Financial Assets at Fair Value through Profit or Loss
Financial assets at fair value through profit or loss include held-for-trading financial assets. Held-fortrading financial assets are securities included in a portfolio in which a pattern of short-term profit
making exists. Initially, these securities are recognized at cost and subsequently measured at fair value
as determined based on their market price.
All the respective realized and unrealized gains and losses are included in profit or loss for the period.
Interest, if realized, during the period of ownership of these securities, is recognized as net trading
income in the profit or loss for the period. The purchase and disposal of securities held-for-trading is
recognized at settlement date, which represents the date when the asset is delivered to the Group.
When the settlement date and the trade date are different, then the Group recognizes the changes in
fair value from the trade date to the settlement date through profit and loss.
3.6.3
Available-for-sale Financial Assets
Available-for-sale financial assets are those intended to be held for an indefinite period of time, which
may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity
prices. This portfolio comprises quoted and unquoted equity investments in shares of banks and other
financial institutions and enterprises, where the Group does not exercise control.
Available-for-sale financial assets are initially recognized at cost, including all transaction costs, and
subsequently re-measured at fair value based on quoted prices in active markets or amounts derived
from cash flow models for unquoted equity investments. Transaction costs represent the costs that are
directly attributable to acquisition of the financial asset.
Unrealized gains and losses arising on changes in the fair value of available-for-sale financial assets are
recognized in other comprehensive income, until the financial asset is derecognized or impaired at
which time the cumulative gain or loss previously accumulated in the other comprehensive income
should be recognized in profit or loss for the period. Interest calculated using the effective interest
method and impairment losses are recognized in the profit or loss for the period.
3.6.4
Held-to-maturity Financial Assets
Held-to-maturity financial assets are financial assets with fixed or determinable payments and fixed
maturity that the Group has the positive intention and ability to hold to maturity. If the Group is to sell
other than, an insignificant amount of held-to-maturity assets, the entire category would be reclassified
as available-for-sale and the Group will not be able to classify financial assets held-to-maturity for the
current and next two years. These financial assets are measured at amortized cost using the effective
interest rate method.
3.6.5
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and that the Bank does not intend to sell immediately or in the near term.
Loans are initially recognized at fair value, including any transaction costs, and are subsequently
measured at amortized cost using the effective interest rate method. Interest on loans originated by the
Group is included in interest income.
Loans to customers and financial institutions are stated at their net amount reduced by allowance for
impairment and un-collectability.
3.6.6
Impairment of Financial Assets
The Group assesses at end of each reporting period whether there is objective evidence that a financial
asset is impaired.
In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the
fair value of the security below its cost is considered in determining whether the assets are impaired.
14
December 31, 2015
3.
3.6
Financial Assets (Continued)
3.6.6
Impairment of Financial Assets (Continued)
If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on that
Financial asset previously recognized in profit or loss – is removed from other comprehensive income
and recognized in the profit or loss. If, in a subsequent period, the fair value of a debt instrument
classified as available-for-sale increases and the increase can be objectively related to an event
occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed
through the profit or loss for the period. However, any subsequent recovery in the fair value of an
impaired available-for-sale equity security is recognized in other comprehensive income.
The amount of the impairment loss for financial assets carried at amortized cost is calculated as the
difference between the asset’s carrying amount and the present value of expected future cash flows
discounted at the financial instrument’s original effective interest rate. Interest of the impaired assets
continues to be recognized through the unwinding of the discount.
3.6.7
Impairment Losses on Loans and Receivables
Allowances for impairment and un-collectability are determined if there is objective evidence that the
Group cannot collect all amounts due on a claim according to the original contractual terms. A “claim”
means a loan, a commitment such as a letter of credit, guarantee or commitment to extend the credit. A
provision for loan impairment is reported as a reduction of the carrying amount of the loan, whereas for
off-balance sheet items are presented within the provisions. Additions to provisions are made through
impairment losses on financial assets in the profit or loss.
The allowances for impairment and un-collectability are determined on the basis of the degree (size) of
the risk of un-collectability or specific country risk on the basis of the following principles:
-
Separate loan exposures (risks) are assessed on the basis of the type of loan applicant, his/her/its
overall financial position, resources and payment records and recoverable value of collaterals.
Allowances for losses on impairment and un-collectability are measured and determined for the
difference between the carrying amount of the loan and its estimated recoverable amount, which is,
in fact, the present value of expected cash flows;
-
All allowances for losses on impairment and un-collectability are reviewed and tested monthly, and
any further changes in the amount and timing of expected future cash flows in comparison to
previous assessments result in changes in allowances for losses on impairment and uncollectability recorded in profit or loss;
-
Any loan which, is considered impossible to be collected, is written off against the relevant
allowance for losses on impairment. Further collections are recorded in the profit or loss;
-
In case of loans granted to borrowers in countries with increased risk of difficulties for servicing
external debt, the political and economic circumstances are assessed and additional allowances for
sovereign risk are allocated.
For more details, refer to 4.1. Credit risk.
3.6.8
De-recognition of Financial Assets
The Group derecognizes financial assets when the right to receive cash from the financial asset has
expired or has transferred its rights to receive cash flows from the asset and substantially all the risks
and rewards of ownership of the assets to another entity.
15
December 31, 2015
3.
3.7
Financial liabilities are classified in accordance with the substance of the contractual arrangement.
Financial liabilities are classified as deposits from banks, financial institutions and customers, loans
payable, other payables and derivative financial instruments.
3.7.1
Deposits from Banks and Other Financial Institutions and Customers
These financial liabilities are initially recognized at fair value, net of transaction costs incurred.
Subsequently they are measured at amortized cost.
3.7.2
Borrowings
Borrowings payable are initially recognized at fair value net of transaction costs incurred. Subsequent
measurement is at amortized cost and any difference between net proceeds and the redemption value is
recognized in profit or loss over the period of the loan using the effective interest rate method. The
effective interest rate is the rate that exactly discounts estimated future cash payments through the
expected life of the financial liability.
3.7.3
Other Payables
Other payables are stated at amortised cost.
3.7.4
De-recognition of Financial Liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or have expired.
3.8
Fair value measurement
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence, the
most advantageous market to which the Group has access at that date. The fair value of a liability reflects
its non-performance risk.
When available, the Group measures the fair value of an instrument using the quoted price in an active
market for that instrument. A market is regarded as active if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the
use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation
technique incorporates all of the factors that market participants would take into account in pricing a
transaction.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction
price – i.e. the fair value of the consideration given or received. If the Group determines that the fair value
at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted
price in an active market for an identical asset or liability nor based on a valuation technique that uses only
data from observable markets, then the financial instrument is initially measured at fair value, adjusted to
defer the difference between the fair value at initial recognition and the transaction price. Subsequently,
that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no
later than when the valuation is wholly supported by observable market data or the transaction is closed
out.
If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures
assets and long positions at a bid price and liabilities and short positions at an ask price.
The fair value of a demand deposit is not less than the amount payable on demand, discounted from the
first date on which the amount could be required to be paid.
16
December 31, 2015
3.
3.8
Fair value measurement (Continued)
The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting
period during which the change has occurred.
3.9
Investments in Associates
An associate is an entity, over which the Group has significant influence and that is neither a subsidiary
nor an interest in a joint venture. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control over those policies. If the
Group holds, directly or indirectly, 20 per cent or more of the voting power of the investee, it is presumed
that the Group has significant influence. A substantial or majority ownership by another investor does
not necessarily preclude the Group from having significant influence.
Investments in associates are measured using the equity method, by which the investment is initially
recognized at cost. Subsequent to the initial measurement, carrying amount is increased or decreased
to recognize the Group’s share of the profit or loss of the investee after the date of acquisition.
Distributions received from an investee reduce the carrying amount of the investment.
3.10
Property and Equipment
Property and equipment is recorded at cost, less accumulated depreciation and accumulated
impairment losses. Expenditure incurred to replace a component of an item of property and equipment
that is accounted for separately is capitalized. Other subsequent expenditure is capitalized only when it
increases the future economic benefits embodied in the item of property and equipment. All other
expenditures are recognized in the profit or loss as an expense as incurred. When parts of an item of
property or equipment have different useful lives, they are accounted for as separate items (major
components) of property and equipment.
Depreciation is charged at estimated rates so as to write off the cost of assets over their estimated
useful lives, using the straight-line method. Land is not depreciated. No depreciation is charged on
construction in progress until the constructed assets are put into use.
The useful life of certain categories of property and equipment are as follows:
Buildings
Leasehold improvements
40 years
4-20 years
40 years
The gain or loss arising on the disposal or retirement of an item of property and equipment is
determined as the difference between the net sales proceeds and the carrying amount of the asset and
is recognized in the profit and loss. The Group annually reviews its property and equipment for
impairment. Where the carrying amount of an asset is greater than its estimated recoverable amount, it
is written down immediately to its recoverable amount.
3.11
Intangible Assets and goodwill
Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets. Subsequent to
initial recognition, goodwill is measured at cost less accumulated impairment losses.
Intangible assets are reported at cost less accumulated amortization and accumulated impairment
losses, if any. Intangible assets include computer software and software that was acquired apart from
hardware. Software is amortized on a straight-line basis over the estimated useful life, which is five
years. The Group annually reviews its intangible assets and assess whether there is any indication for
impairment. If such indications exist, an estimate is performed to assess whether the carrying amount is
recoverable. If the carrying amount exceeds the recoverable amount, it is written down to the
recoverable amount.
17
December 31, 2015
3.
3.12
Impairment of non-financial assets
The management of the Group regularly reviews the carrying amounts of the Group’s non-financial
assets. If there is any indication that such assets have been impaired, the recoverable amount of the
asset is estimated to determine the extent of the impairment loss. If the recoverable amount of an asset
is estimated to be less than its carrying amount, the carrying amount of the asset is written down to its
recoverable amount. An impairment loss is recognized as an expense of the current period. If the
recoverable amount of an asset is increased due to change in the indications and factors of impairment
at the moment the last impairment loss is recognized, the carrying amount of the asset is increased to
its current recoverable amount. A reversal of an impairment loss is recognized as income immediately.
3.13
Investment property
Investment property includes buildings owned by the Group with the intention of earning rentals or for
capital appreciation or both, and is initially recorded at cost, which includes transaction costs. The
classification of the investment property is based on the criteria that the property is mostly held to earn
rentals when compared to the property used by the Group for its own needs.
Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation
and any accumulated impairment losses. The depreciation of investment property is calculated on a
straight-line basis in a way to write off the cost value of assets over their estimated useful lives, which
approximates the useful life of similar assets included in property and equipment.
Investment property is annually reviewed for impairment. If there is any indication that such assets have
been impaired, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying value, the
carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized as
an expense of the current period.
3.14
Assets Acquired Through Foreclosure Proceedings
Foreclosed assets include property and equipment acquired through foreclosure proceedings in full or
partial recovery of a related loan and is disclosed in assets acquired through foreclosure proceedings.
These assets are initially measured at the lower of the appraised value, less estimated cost to sell,
charged to the Group, and the cost of the foreclosed asset. The appraised value is determined by local
certified appraiser on the date of foreclosure.
After initial recognition, foreclosed assets are reviewed for impairment at least annually and are
measured at the lower of their carrying amount and fair value less estimated costs to sell.
3.15
Managed funds for and on behalf of third parties
The Group acts as a fiduciary and in other fiduciary matters provides services for and on behalf of third
parties such as legal entities, citizens, investment and pension funds and other institutions for which it
keeps and manages assets or invests funds received in various financial instruments at the direction of
the customer. The Group receives fee income for providing these services. Managed funds are not
assets of the Bank and are not recognized in the financial statements. The Group is not exposed to any
credit risk relating to such placements, as it does not guarantee them.
18
December 31, 2015
3.
3.16
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can
be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the
consideration required to settle the present obligation at the end of the reporting period, taking into account
the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
3.17
Employment benefits
Health, pension and social insurance contributions from gross wages and salaries are being paid by the
Group during the year to the national organizations at the statutory rates. Such contributions represent
defined contribution plans and are recognized as an expense when employees have rendered services
entitling them to the contributions. There is no additional liability to these plans.
The Group is obliged to pay to its employees a termination lump sum upon retirement equal to two
monthly average salaries paid in the Republic of Macedonia. The Group records provisions for
retirement to allocate such costs by periods to which they relate. In accordance with IAS 19, these
benefits are considered defined pension benefit plans. The carrying amount of the Group’s liabilities
arising from employee benefits is calculated at the end of the reporting period. The balance of these
liabilities at the end of the reporting period presents the discounted amount of future payments.
The calculations are made under the following parameters and used indicators (bases) valid on 31
December each year:
Rate of growth of average monthly salary per year in the Republic of Macedonia: 1% for the Year
2014 and 1% for the Year 2015, estimated growth of future salaries in Republic of Macedonia,
taking into consideration the rate of inflation;
Discount rate: 5.3% for the Year 2014 and 3.8% for the Year 2015, derived from long-term risk-free
securities;
Severance pay for retiring to the extent of 2 average net salaries per employee in the Republic of
Macedonia, paid out in the previous 3 months: MKD 21.403,00 for the Year 2014 and MKD
22.040,00 for the Year 2015, published by the State Statistical Office of the Republic of Macedonia
in December for each year respectively.
3.18
Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or
loss except to the extent that it relates to items recognised directly in equity or other comprehensive
income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date of 10%, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax is not recognised for taxable temporary differences arising on the initial recognition of
goodwill.
Deferred tax assets are recognized for unused tax losses, unused tax credit and deductible temporary
differences to the extent for which is probable that the future taxable profits against which the asset can
be utilized. Deferred tax assets are estimated at the end of each reporting period and reduced to the
extent that is no longer probable that these tax revenues will be realized. Any such reduction should be
reversed to the extent that it is probable that sufficient taxable profit will be available. Unrecognised
deferred tax assets are assessed at the end of each reporting period and recognised to the extent it is
probable that future taxable income will be sufficient against which the asset can be utilised.
19
December 31, 2015
3.
3.19
Leases
Assets leased out under operating lease are included in the statement of financial position as
investment property. The Group leases assets as operating leases. Rental income and expenses is
recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received
are recognized as an integral part of the total lease expense, over the term of the lease.
3.20
Critical Accounting Judgments and Estimates
The most significant areas, for which judgments, estimates and assumptions are required, are:
Fair Value of Financial Instruments
The fair values of the financial instruments that are not quoted in active markets are determined using
internal valuation techniques. These include present value methods, models based on observable input
parameters. All valuation models are validated before they are used as a basis for financial reporting,
and periodically reviewed by qualified personnel independent of the area that created the model.
Wherever possible, the Group compares valuations derived from models with quoted prices of similar
instruments, and with actual values when realized, in order to further validate and standardize models. A
variety of factors are incorporated into the models, including actual or estimated market prices and
rates, such as time value and volatility, and market conditions and liquidity.
The Group applies its models consistently from one period to the next, ensuring comparability and
continuity of valuations over time, but estimating fair value inherently involves a significant degree of
judgment.
In the Republic of Macedonia sufficient market experience, stability and liquidity do not exist for the
purchase and sale of receivables and other financial assets or liabilities, for which published market
prices are presently not readily available.
The Management assesses its overall risk exposure and in instances in which it estimates that the value
in the books may not be realized, it recognizes a provision. In the opinion of management, the reported
carrying amounts for the assets that are not quoted in an active market represent the most valid and
useful reporting values under the present market conditions.
Allowance for Impairment of Loans
The Group reviews its loan portfolios to assess impairment on a monthly basis. In determining whether
an impairment loss should be recorded in the profit and loss, the Group makes judgments as to whether
there is any observable data indicating that there is a measurable decrease in the estimated future cash
flows from a portfolio of loans before the decrease can be identified with an individual loan in that
portfolio. This evidence may include observable data indicating that there has been an adverse change
in the payment status of borrowers in the Group, or national or local economic conditions that correlate
with defaults on assets in the Group.
Management uses estimates based on historical loss experience for assets with credit risk
characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its
future cash flows. The methodology and assumptions used for estimating both the amount and timing of
future cash flows are reviewed regularly to reduce any differences between loss estimates and actual
loss experience. For more details, refer to 4.1. Credit risk.
Useful Lives of Tangible and Intangible Assets
The Group’s management determines estimated useful lives and related depreciation and amortization
charges for its tangible and intangible assets. The appropriateness of the estimated useful lives is
reviewed whenever there is an indication of significant changes in the underlying assumptions, such as
anticipated technological developments and changes in the broad economic and industry factors.
Investment property and assets acquired through foreclosure procedures
Information about the assumptions made in measuring fair value are included in the following notes:
• Note 23 – investment property;
•
Note 26 – assets acquired through foreclosure procedure.
20
December 31, 2015
3.
3.20
Critical Accounting Judgments and Estimates (Continued)
Determination of control over investees
Management applies its judgment to determine whether the control indicators set out in accounting
policy 3.1 indicate that the Group has a control over an investee or an investment fund.
Investment funds
The Group acts as fund manager to three investment funds. Determining whether the Group controls
such an investment fund usually focuses on the assessment of the aggregate economic interests of the
Group in the funds (comprising any carried interests and expected management fees) and the investors’
rights. The assets of the investment funds are legally separated from the assets of the Group, In case of
bankruptcy of the Group, the assets of the investment funds belong to the holders of stakes in the
investment funds. In addition, the Group has week aggregate economic interests in the funds. As a
result, the Group has concluded that it acts as agent for the investors in all cases, and therefore has not
consolidated these funds.
21
December 31, 2015
4.
FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks and those activities involve analysis,
evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is a
core business activity and the operational risks are an inevitable consequence of being in business. The
Group’s aim is therefore to achieve an appropriate balance between risk and return and minimize
potential adverse effects on the Group’s financial performance.
The most important types of risks identified, evaluated and mitigated by the Group’s risk management
policies are credit risk, liquidity risk, market risk and operational risk.
Risk Management Framework
The Group has established a Strategy for risk management, adopted by the Supervisory Board that is
revised regularly. The Strategy defines the main objectives and general directions in undertaking and
managing risks, general approach to the risk management, general approach to the internal determining
and assessment of the Group's necessary capital adequacy, general review of the business strategy of
the Group, as well as the possible changes in the Group's business strategy and acceptable level of risk
the Group can be exposed to during its operations.
The Shareholders Assembly appoints the members of the Supervisory Board and the Audit Committee.
The Supervisory Board has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The Supervisory Board has established the Board of Directors, Credit
Committee and Risk Management Committee These bodies are responsible for monitoring and
developing risk management policies in specific areas. The Group has established an organizational
structure, with clearly defined competences and responsibilities. The Risk Management and Planning
Division is responsible for monitoring and reporting of global risk exposure, while the organizational units
of the Group, which create risk exposure are responsible for practical application of risk management.
The Internal Audit Department is responsible for review of risk management.
4.1
Credit Risk
The Group is exposed to credit risk, which represents the risk of financial loss due to customer’s default
on their contractual obligations. Credit risk is the most important risk for the Group’s operations;
therefore, the management carefully manages the Group’s exposure to credit risk. The exposure to this
risk arises principally from lending activities and advances, as well as activities related to off-balance
sheet financial instruments, such as loan commitments to enterprises and households, guarantees and
letters of credit.
Taking into consideration the latest events arising from the global financial crisis, the Group applies
more restrictive credit policy, higher precautions in assessing the creditworthiness of each customer and
projects subject to financing.
A
Credit Risk Management
The Group has an established organizational structure, with clearly defined competences and
responsibilities of the Supervisory Board and the Board of Directors regarding credit risk management.
The organization of the credit risk management is established on the following levels of hierarchy:
Strategic level - the risk management function is performed by the members of Supervisory Board
and the Board of Directors; Risk Management Committee and Audit Committee;
Macro level - the risk management function at the level of business unit, or business line is
performed by other persons with special rights and responsibilities performing managing function
and/or by special organizational unit responsible for monitoring the credit risk management.
Credit risk management at the level of business unit in the Group includes each Division where the
credit risk is undertaken and the persons with special rights and responsibilities that performs the
management function in the Division. The duties of these organizational units in the Group are regulated
in the appropriate Policies adopted from the Supervisory Board. The organizational unit in the Group
responsible for credit risk management is Risk Management and Planning Division – Credit Risk
Management Department.
22
December 31, 2015
4.
FINANCIAL RISK MANAGEMENT (Continued)
4.1
Credit Risk (Continued)
A
Credit Risk Management (Continued)
All credit exposures exceeding 10% of the Group’s own funds up to the legally determined limit of
exposure towards a single client (up to 25% of regulatory capital) are subject to approval by the
Supervisory Board.
The Credit Committee oversees the overall credit operation of the Group. Also, the Credit Committee is
mainly responsible for approving and proposing to the Risk Management Committee and Board of
Directors, all policies, procedures and amendments thereto relating to the extension of credit, to ensure that
these policies are applied consistently and complied with throughout the Group, to approve credit exposure
between 3% and 10% from own funds.
Board of directors, Corporate Lending Division Manager and Department Managers are authorized for
approving credit exposures up to 3% of the Group's own funds.
B
Credit Risk Assessment
(a)
Loans and Advances
In assessing credit risk of loans and advances to customers and banks at a counterparty level, the
Group uses three components:
(I)
(II)
(III)
the ‘probability of default’ by the client or counterparty on its contractual obligation (expected
cash flows);
the likely recovery ratio on the defaulted obligations, the ‘loss given default’;
the amount and quality of the collateral for the exposure.
These credit risk measurements, which reflect expected loss, i.e. the ‘expected loss model’ and are
required by the Basel Committee on Banking Regulations and the Supervisory Practices (the Basel
Committee), are embedded in the Group’s daily operational management. The operational
measurements can be contrasted with impairment allowances required under IAS 39, which are based
on losses that have been incurred at the end of the reporting period (the ‘incurred loss model’) rather
than expected losses (Note 4.1.D).
(i) The Group assesses the probability of default of individual counterparties using internal rating tools
tailored to the various categories of counterparty. They have been developed internally and combine
statistical analysis with credit officer judgment and are validated, where appropriate, by comparison with
externally available data. Clients of the group are segmented in four rating classes. The Group’s rating
scale, which is shown below, reflects the range of default probabilities defined for each rating class. This
means that, in principal, exposures migrate between classes as the assessment of their probability of
default changes. The rating tools are kept under review and upgraded as necessary. The Group
regularly validates the performance of the rating and their predictive power with regard to default events.
Group’s internal rating scale
Group’s rating
A
B
C
D+E
Description of the grade
Pass/acceptable for financing
Watch (careful)
Sub-standard
Suspicious (doubtful)+Loss
23
December 31, 2015
4.
4.1
B
Credit Risk Assessment (Continued)
(a)
Loans and Advances (Continued)
Group’s rating grade A (pass/acceptable for financing) includes:
•
•
•
•
•
Amounts owing to the European Central Bank and the central governments and central banks of
countries whose claims pursuant to the methodology for determining the capital adequacy have a
risk weight of 0%
Part of credit exposure that is secured by first-rate collateral instruments, if the instrument is
activated within 60 days of the date of maturity of the exposure;
Financial position and cash flows of the client allows its further operation and opportunity to cover
the current and future liabilities to the group;
Liabilities based on credit exposure are settled within the maturity period or with a delay of 31 days,
or
In the last twelve months, no credit exposure for that client has been restructured.
Group’s rating grade B (Watch (careful)) includes:
•
•
•
The client shows financial weaknesses, but its cash flows are sufficient for regular settlement of
due liabilities;
Liabilities based on credit exposure are commonly settled with a delay of 60 days, or 90 days as an
exception, if the delay only occasionally ranges from 61 to 90 days, or
In the last six months, the credit exposure has not been restructured.
Group’s rating grade C (Sub-standard) includes:
•
•
•
•
•
•
•
Cash inflows of client are unsuitable for regular settlement of liabilities;
There is an inadequate maturity structure between the sources of funding of the program/project
for which financial support has been requested from the Group and proceeds generated from the
program/project;
The Group does not hold the necessary and updated information to assess the creditworthiness of
the client;
The credit exposure is restructured;
Liabilities based on credit exposure are commonly settled with a delay of up to 120 days, or 180
days as an exception, if the delay only occasionally ranges from 121 to 180 days;
The client - nonfinancial entity has claims based on financial loan on entity enjoying a credit rating
equal to or lower than CCC+ (according to the rating of "Standard & Poor's" or "Fitch") or Caa1
(according to the rating of "Moody's") or an entity enjoying a higher credit rating, but its domicile
country's credit rating equal to or lower than CCC+ (according to the rating of "Standard & Poor's"
or "Fitch") or Caa1 (according to the rating of "Moody's"), or
The client - nonfinancial entity has claims based on financial loan is entity for which no credit rating
has been established, but its domicile country's credit rating equal to or lower than B- (according to
the rating of "Standard & Poor's" or "Fitch") or B3 (according to the rating of "Moody's") or its
domicile country's credit rating has not been established yet.
The Group may not classify credit exposure to the client under bullet points 6 and 7 in C risk category, if:
•
•
•
The exposure is based on a customs guarantee or bid guarantee;
The financial loan does not exceed Denar 31,000,000 (in case of foreign currency financial loan,
the Denar equivalent of the loan shall be taken into consideration), or
The financial loan is equal to or greater than Denar 31,000,000, and the Group's exposure is
greater than the amount of financial loan and the Group has calculated impairment or allocated
special reserve, at least in the amount exceeding 20% of the amount of financial loan, whereby the
credit exposure or the client meets the criteria for classification in another risk category.
24
December 31, 2015
4.
4.1
B
(a)
Group’s rating grade D (Suspicious (doubtful) loss) includes:
•
•
•
•
•
•
The client is illiquid;
The collection of credit exposure depends on the use of collateral instruments;
The liabilities based on credit exposure are commonly settled with a delay of up to 240 days, or
300 days, as an exception, if the delay only occasionally ranges from 241 to 300 days;
The client (including governments and central banks) enjoys a credit rating equal to or lower than
CCC+ (according to the rating of "Standard & Poor's" or "Fitch") or Caa1 (according to the rating of
"Moody's");
The client's credit rating is higher than the rating referred to in the sentence above, but its domicile
country's credit rating is equal to or lower than CCC+ (according to the rating of "Standard &
Poor's" or "Fitch") or Caa1 (according to the rating of "Moody's"), or
The client has not been given any credit rating, but its domicile country's credit rating is equal to or
lower than B- (according to the rating of "Standard & Poor's" or "Fitch") or B3 (according to the
rating of "Moody's") or its domicile country has not been given any credit rating yet.
Group is rating grade E (Suspicious (doubtful) loss) includes:
•
•
•
•
Liabilities based on credit exposure are commonly settled with a delay of over 241 days
The client has undergone bankruptcy or liquidation proceedings;
The client denies the existence of credit exposure (in court or out-of-court proceedings), or
The Group expects to collect only an insignificant portion of credit exposure from the client.
(ii) Loss given default or loss severity represent the Group’s expectations of the extent of loss on a claim
should default occurs. It is expressed as percentage loss per unit of exposure and typically varies by
type of counterparty, type and seniority of claim and availability of collateral or other credit mitigations.
(iii) Amount and quality of the collateral depends on the terms, type (immovable property, movable
property, inventories, receivables) and the possibility for its enforcement. The Group divides the clients
in two groups: one where the exposure of the Group is secured with value of the collateral that is lower
than the amount of the exposure and second where the value of the collateral is higher than the amount
of the exposure. The collateral is not taken into calculation of the expected cash flows from the financial
assets, only as an input into the internal rating of the client.
25
December 31, 2015
4.
4.1
B
(b)
Debt Securities and Other Bills
The Group is striving to maintain acceptable level of credit risk exposure regarding debt securities, so
investment activities are primarily in government debt securities.
C
Risk Limit Control and Mitigation Policies
The Group manages and controls concentration of credit risk to clients, and to industries and countries.
The Group 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 industry
segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent
review.
Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential
borrowers to meet interest and capital repayment obligations and by changing these lending limits
where appropriate.
Measures for specific control and mitigation of credit risk are prescribed in the act that regulates credit
activities and procedures are obtaining collateral and credit-related contingencies
(a)
Collateral
Collateral is considered as a secondary factor in granting a credit facility. Security by itself, with its lack of
ability to generate cash flow, is insufficient to justify the granting of credit facilities. The principal collateral
types for loans and advances are:
(i) For corporate entities
•
Cash
•
Property
•
Equipment and vehicles
•
Inventory
Receivables
•
Guarantees (Bank guarantees, guarantees from legal entities)
•
Securities (Debt securities issued by the Government of RM, Securities issued by legal entities).
Loans to corporate entities are generally secured.
26
December 31, 2015
4.
4.1
C
Risk Limit Control and Mitigation Policies (Continued)
(ii) For individuals
•
Property
•
Cars
•
Deposits
•
Securities (Debt securities issued by the Government of RM, Securities issued by legal entities)
•
In some cases draft or draft with endorsers covering the total receivables.
Loans to individuals are generally secured.
(b)
Credit-related contingencies
The primary purpose to these instruments is to ensure that funds are available to a customer as
required. Guarantees and standby letters of credit carry the same credit risk as loans. The Group issues
collateralized and uncollateralized guarantees and letters of credit. The Group monitors the term of
maturity of these credit commitments, because long-term commitments have greater degree of credit
risk than short-term commitments, also as uncollateralized commitments regarding collateralized
commitments.
D
Impairment and Provisioning Policies
The Group establishes an allowance for impairment losses that represents its estimate of incurred
losses in its loan portfolio. The main components of this allowance are specific loss component that
relates to individually significant exposures.
According to the Group’s policy, there are four internal rating grades. The majority of the impairment
provision comes from the bottom two grades. The table below shows the structure of the Group’s loans
and advances portfolio regarding internal rating system and the associated impairment provision for
each internal rating grade:
December 31, 2015
Loans %
Impairment %
Pass/acceptable for
financing (A)
Watch (careful) (B)
Sub-standard (C)
Suspicious (doubtful)+
Loss (D) +(E)
Total
December 31, 2014
Loans %
Impairment %
69.9
6.0
5.6
1.1
9.6
28.4
70.9
3.9
7.8
1.1
10.7
28.4
18.6
94.1
17.4
84.1
100.00
20.4
100.00
16.5
27
December 31, 2015
4.
4.1
E
Maximum Exposure to Credit Risk Before Collateral Held or Other Credit Enhancements
Year ended December 31,
2015
2014
Credit risk exposure relating to balance sheet assets
Loans to customers
Loans to individuals
- overdrafts (exemption off-balance sheet exposure)
- credit cards (exemption off-balance sheet
exposure)
- loans
Loans to corporate entities
- Large corporate clients
- Small and medium size companies (SMEs)
Financial assets available for sale
Financial assets held to maturity
Other assets
Credit risk exposure relating to off-balance sheet
assets/liabilities
Guarantees
Letters of credit
Unused overdrafts on current accounts
Unused credit cards limits
Unused credit limits-noncallable
Total credit risk exposure
9,208,426
8,269,788
1,146,181
1,152,827
1,052,866
10,202,735
1,069,085
7,940,912
17,056,906
18,185,834
371,029
7,202,009
2,516
532,589
19,388,712
18,104,508
349,391
3,319,080
4,608
321,024
64,961,091
59,919,935
8,685,206
2,231,977
1,722,585
1,186,358
1,620,969
8,146,865
1,074,074
1,705,782
1,186,572
1,174,848
15,447,095
13,288,141
80,408,186
73,208,076
The above table presents a worst case scenario of credit risk exposure to the Group as at 31 December
2015 and 2014, without taking account of any collateral held or other credit enhancements attached. For
on-balance-sheet items, the exposures set out above are based on net carrying amounts as reported in
the statement of financial position.
As shown above, 71% of the total maximum exposure is derived from loans and advances to banks and
customers (2014: 76%); 19% represents off-balance-sheet items (2014: 18%).
Management is confident in its ability to continue to control and sustain minimum exposure to credit risk
to the Group resulting from both loans and advances portfolio and off balance sheet items based on the
following:
•
75.9% of the loans and advances are categorized in top two grades on the internal rating
system (2014: 74.8%)
•
Loans and advances to customers are collateralized and loans to banks are mostly in
investment grade-high credit worthiness banks;
•
57.27% of loans and advances are considered to be neither past due nor impaired (2014:
58.65%).
•
The increase of off-balance-sheet items generally resulting in increase of financial guarantees
and Letters of credit.
28
December 31, 2015
4.
4.1
F
Loans and Advances
Loans and advances are summarized as follows:
Neither past due nor impaired
Past due but not impaired
Impaired
Gross
Less: allowance for impairment
Net
2015
Loans and
advances
Loans and
to
advances
customers
to banks
31,494,194
9,201,777
64,453
28,322,265
8,533
59,880,912
9,210,310
(12,236,390)
(1,884)
47,644,522
9,208,426
2014
Loans and
advances
Loans and
to
advances
customers
to banks
31,647,592
8,266,734
31,867
26,468,742
4,223
58,148,201
8,270,957
(10,492,157)
(1,169)
47,656,044
8,269,788
Further information on the impairment allowance for loans and advances is provided in Notes 20 and 21.
(a)
Loans and advances neither past due nor impaired
The credit quality of the portfolio of loans and advances that were neither past due nor impaired can be
assessed by reference to the Group’s internal rating system.
December 31,
December 31,
2015
2014
Loans to customers
- Loans
Loans to corporate entities
- Large corporate clients
- Small and medium size companies (SMEs)
Total
9,201,777
8,266,734
9,740,977
7,534,334
12,075,818
9,677,399
14,068,155
10,045,103
40,695,971
39,914,326
29
December 31, 2015
4.
4.1
F
(b)
Loans and advances past due but not impaired
The amount of past due but not impaired loans included exposures which are past due up to 30 days,
and are mostly cash covered. Gross amount of loans and advances by class of customer that were past
due but not impaired were as follows:
Up to 30
days
64,453
Loans to customers
December 31, 2015
Over 90
days
Total
64,453
Up to 90
days
-
Value of collateral
96,443
Up to 30
days
31,867
Loans to customers
December 31, 2014
Over 90
days
Total
31,867
Up to 90
days
-
Value of collateral
(c)
58,215
Loans and advances individually impaired
i) Loans and advances
The breakdown of individually impaired loans and advances by class and the fair value of related
collateral held by the Group as security, are as follows:
December 31, 2015
Large
corporate
clients
Small and
medium
size
companies
(SMEs)
Gross amount 8,477,209
16,097,844
Value of
collateral
16,755,089
9,694,951
Loans
and
advances
to banks Overdrafts
8,533
-
Credit
cards
Retail
loans
Total
Allowance
for
Individuall
y impaired
loans
12,238,274
1,168,026
1,181,863
1,397,322
28,330,797
-
1,376
1,892,154
28,343,570
30
December 31, 2015
4.
4.1
F
(c)
Loans and advances individually impaired (Continued)
December 31, 2014
Large
corporate
clients
Small and
medium
size
companies
(SMEs)
Gross amount 8,119,855
14,638,813
Value of
collateral
14,508,321
9,441,815
Loans
and
advances
to banks Overdrafts
4,223
-
Credit
cards
Retail
loans
Total
Allowance
for
Individuall
y impaired
loans
10,493,326
1,189,254
1,219,464
1,301,355
26,472,964
4,304
2,093
1,535,619
25,492,152
31
December 31, 2015
4.
4.1
F
The disclosed fair value of collateral is determined by certified appraisals and represents estimated
value realizable by the legal owners of the assets. The Group makes valuations of the market value of
residential property or commercial real estate at least once a year. The Group shall provide an appraisal
of the market value of the property in a shorter period as well, in case of a significant decline of market
prices of similar properties.
Breakdown of the collateral:
• Most of the Retail loans are covered by the property for private use (flats, houses),
•
Loans for corporate clients are covered by: 1) commercial real estate 2) property for private use and
pledge over movables.
Value of collateral for mitigating of credit risk
Current year
Previous year
2015
2014
Value of collateral of credit exposure assessed
for impairment on an individual basis
accounts held with the Bank)
1,158,521
1,077,037
-
-
-
-
83,356
74,638
-
-
398,984
361,313
bank guarantees
insurance policies
Corporate guarantees (besides bank
Guarantees and guarantees from insurance
companies)
-
-
17,225,271
14,544,572
business facility
33,907,303
38,637,826
15,463,763
15,899,516
657,330
1,572,739
68,894,528
72,167,641
assessed for impairment on an individual
basis
ii) Loans and advances to banks
The total gross amount of individually impaired loans and advances to banks as at 31 December 2015
amounts to Denar 8,553 thousand (2014: Denar 4,223 thousand). Generally, no collateral is held by the
Group for these placements.
32
December 31, 2015
4.
4.1
F
(d)
Loans and advances renegotiated
The contractual terms of a loan may be modified for a number of reasons, including changing market
conditions, customer retention and other factors not related to a current or potential credit deterioration
of the customer.
For the purposes of disclosures in these financial statements, ‘loans with renegotiated terms’ are
defined as loans that have been restructured due to a deterioration in the borrower’s financial position,
for which the Bank has made concessions by agreeing to terms and conditions that are more favourable
for the borrower than the Bank had provided initially and that it would not otherwise consider.
Once the loan is restructured it is classified as substandard in at least C risk grade and remains in the
same rating grade at least two quarters independent of satisfactory performance after restructuring. The
increase in the balance of restructured loans in 2015 compared to 2014 is a result of more strict criteria
introduced by the Group for reclassification to regular loans, a substantial improvement in the financial
position of the client is required to be reclassified to regular loans, not only regular repayment for 6
months. The restructured loans as at 31 December 2015 and 31 December 2014 are as follows:
December 31,
December 31,
2015
2014
Carrying
Carrying
amount
amount
3,424,111
1,247,109
Restructured loans
G
Debt Securities, Treasury Bills and Other Eligible Bills
The table below presents an analysis of debt securities, treasury bills and other eligible bills based on
the respective issuer as at 31 December2015. Issuer of the investment securities is the Central Bank of
the Republic of Macedonia and the Republic of Macedonia. Fitch Ratings assigned its BB+ long term
default rating and BB+ local currency long term default rating to the Republic of Macedonia.
December 31, 2015
Cash and
cash
equivalents
Trading
securities
Investment
securities
Total
Central bank of Republic of
Macedonia
6,299,613
-
14,847
7,139,551
6,299,613
7,154,398
Total
6,299,613
14,847
7,139,551
13,454,011
Issuer
G
Debt Securities, Treasury Bills and Other Eligible Bills (Continued)
December 31, 2014
Cash and
cash
equivalents
Trading
securities
Investment
securities
Total
Central bank of Republic of
Macedonia
4,869,850
-
1
3,258,769
4,869,850
3,258,770
Total
4,869,850
1
3,258,769
8,128,620
Issuer
33
December 31, 2015
4.
4.1
H
Repossessed Collateral
As at December 31, 2015 and 2014 the Group assets obtained through foreclosure procedures amount
to:
December 31,
December 31,
2015
2014
Carrying
Carrying
amount
amount
1,395,714
2,101,748
I
Concentration of Risks of Financial Assets with Credit Risk Exposure
a)
Geographical sectors
The following table breaks down the Group’s credit exposure at their carrying amount, categorized by
geographic region, based on the country of domicile of counterparties:
Total
ASSETS
Cash and cash
equivalents
Financial assets at fair
value through P&L
banks
customers
- Term Loans
- Overdrafts
- Credit cards
Loans to corporate
entities
- Large corporate
customers
- SMEs
Financial assets heldto-maturity
Other assets
Total assets at 31
December 2015
Republic of
Macedonia
Non-EU
Countries
in Europe
EU
Countries
Other
countries
27,663,719
18,315,962
6,914,444
998,421
1,434,892
371,029
371,029
-
-
-
9,208,426
141,365
6,816,359
2,250,702
-
10,202,735
1,146,181
1,052,866
10,202,735
1,146,181
1,052,866
-
-
-
17,056,906
18,185,834
17,056,906
18,053,045
6,145
-
2,516
532,589
2,516
532,589
-
-
-
85,422,801
66,875,194
13,857,447
3,255,268
1,434,892
126,644
34
December 31, 2015
4.
4.1
I
Concentration of Risks of Financial Assets with Credit Risk Exposure (Continued)
a)
Geographical sectors (Continued)
The following table breaks down the Group’s credit exposure at their carrying amount, categorized by
geographic region, based on the country of domicile of our counterparties:
Total
ASSETS
Cash and cash
equivalents
Financial assets at fair
value through P&L
banks
customers
- Term Loans
- Overdrafts
- Credit cards
Loans to corporate
entities
- Large corporate
customers
- SMEs
Financial assets held-tomaturity
Other assets
Total assets at 31
December 2014
Republic of
Macedonia
Non-EU
Countries
in Europe
EU
Countries
Other
countries
27,551,346
17,077,702
8,586,104
654,357
1,233,183
349,391
349,391
-
-
-
8,269,788
305
6,546,507
1,722,976
-
7,940,912
1,152,827
1,069,085
7,940,912
1,152,827
1,069,085
-
-
-
19,388,712
18,104,508
19,388,712
18,018,082
-
-
4,608
321,024
4,608
321,024
-
-
-
84,152,201
65,322,648
15,219,037
2,377,333
1,233,183
86,426
35
December 31, 2015
`
4.
4.1
I
b)
Industry sector
The following table breaks down the Group’s credit exposure at their carrying amount, categorized by industry sector of our counterparties:
Total
ASSETS
Cash and cash
equivalents
Financial assets at
fair value through
profit and loss
Loans and advances
to banks
Loans and advances
to customers
- Term Loans
- Overdrafts
- Credit cards
Loans to corporate
entities
- Large corporate
customers
- SMEs
Financial assets held
to maturity
Other assets
Total assets at 31
December 2015
Manufac
-turing
Commerce
and finance
Retail
customers
Govern
ment
and
local
authorit
ies
Agriculture
Construc
-tion
Transport
Trade
Other
27,663,719
-
27,663,719
-
-
-
-
-
-
-
371,029
-
371,029
-
-
-
-
-
-
-
9,208,426
-
9,208,426
-
-
-
-
-
-
-
10,202,735
1,146,181
1,052,866
-
-
10,202,735
1,146,181
1,052,866
-
-
-
-
-
-
17,056,906
18,185,834
6,315,463
4,475,312
19,980
376,743
-
135,414
860,192
1,478,449
38,208
959,716
2,740,068
287,913
1,473,478
3,913,771
5,004,787
3,946,200
3,217,046
2,516
532,589
-
2,516
532,589
-
-
-
-
-
-
-
85,422,801
10,790,775
38,175,002
12,401,782
995,606
1,516,657
3,699,784
1,761,391
8,918,558
7,163,246
36
December 31, 2015
`
4.
4.1
I
b)
Industry sector (Continued)
The following table breaks down the Group’s credit exposure at their carrying amount, categorized by industry sector of our counterparties:
Total
ASSETS
Cash and cash
equivalents
27,551,346
Financial assets at
fair value through
profit and loss
349,391
Loans and advances
to banks
8,269,788
Loans and advances
to customers
- Term Loans
7,940,912
- Overdrafts
1,152,827
- Credit cards
1,069,085
Loans to corporate
entities
- Large corporate
customers
19,388,712
- SMEs
18,104,508
Financial assets held
to maturity
4,608
Other assets
321,024
Total assets at 31
December 2014
84,152,201
Manufac
-turing
Commerce
and finance
Retail
customers
Govern
ment
and
local
authorit
ies
Agriculture
Construc
-tion
Transport
Trade
Other
-
27,551,346
-
-
-
-
-
-
-
-
349,391
-
-
-
-
-
-
-
-
8,269,788
-
-
-
-
-
-
-
-
-
7,940,912
1,152,827
1,069,085
-
-
-
-
-
-
8,212,600
5,101,571
-
-
144,999
983,334
1,377,320
1,179
1,005,303
2,824,233
668,466
708,547
4,800,677
5,061,938
3,179,347
3,423,706
-
4,608
321,024
-
-
-
-
-
-
-
13,314,171
36,496,157
10,162,824
1,128,333
1,378,499
3,829,536
1,377,013
9,862,615
6,603,053
37
December 31, 2015
`
4.
4.2.
Market Risk
The Group takes on exposure to market risk. Market risk arises from open positions in interest rate,
currency, and price risk, all of which are exposed to general and specific market movements. The Group
estimates the market risk of positions held and the maximum losses expected based upon a number of
assumptions for various changes in market conditions. The Board of Directors sets limits on the value of
risk that may be accepted, which is monitored on a regular basis.
A
Market Risk Measurement
Regarding market risk managing and measuring, the Group’s management on a regular basis through
adequate analysis and reporting process, is monitoring:
•
•
interest rate changes regarding market movements and internal decisions, and the influence on
interest bearing assets and liabilities and the net interest margin;
changes of foreign currency rates regarding foreign currency assets and liabilities and maintain
of adequate structure regarding foreign exchange risk exposure;
The aim of the Group is maximizing the stability and profitability, by applying the optimum combination
of foreign currency and interest rate structure of the assets and liabilities.
B
Foreign Currency Risk
The Group takes on exposure to effects of 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 overnight position, which are monitored daily. The table below summarizes the
Group’s exposure to foreign currency exchange rate risk at 31 December 2015 and 2014. Included in
the table are the Group’s assets and liabilities at carrying amounts categorized by currency.
38
December 31, 2015
`
4.
4.2.
Market Risk (Continued)
B
Foreign Currency Risk (Continued)
(i)
Concentrations of assets and liabilities
The Group had the following significant currency positions:
EUR
Assets
Financial assets at fair value
through profit and loss
Investment property
Intangible assets
Current tax assets
Other assets
Assets acquired through
foreclosure procedures
Total assets
USD
MKD
December 31, 2015
Other
Total
8,110,102
3,651,715
13,447,252
2,454,650
27,663,719
14,847
344,085
2,516
9,065,109
15,458,528
115,479
508
990,170
96,636
356,182
6,857,416
143,317
31,195,824
189,147
3,037,777
27,785
41,534
320,354
120
371,029
7,202,009
2,516
9,208,426
47,644,522
189,147
3,037,777
27,785
41,534
532,589
33,110,666
4,739,029
1,395,714
57,012,302
2,454,770
1,395,714
97,316,767
Liabilities
Deposits from banks and other
financial institutions
Borrowings
Other taxes liabilities
Deffered tax liabilities
Provisions
Other liabilities
Total liabilities
227,358
31,274,195
2,040,697
17,481
137,931
33,697,662
133,116
4,571,278
3,848
8,026
4,716,268
890,508
44,672,027
124,779
51,849
18,285
128,420
353,835
46,239,703
112,599
2,320,190
12,638
2,445,427
1,363,581
82,837,690
2,165,476
51,849
18,285
149,748
512,430
87,099,060
Net on-balance sheet financial
position
(586,996)
22,761
10,772,599
9,343
10,217,707
Contingencies and commitments
6,162,866
400,312
8,883,917
-
15,447,095
39
December 31, 2015
`
4.
4.2.
B
Foreign Currency Risk (Continued)
(i)
Concentrations of assets and liabilities
December 31, 2014
EUR
USD
MKD
Other
Total
34,349,510
33,014,722
3,982,462
4,003,906
52,386,732
44,094,046
2,246,254
2,150,046
92,964,958
83,262,720
Net on-balance sheet
financial position
1,334,788
(21,444)
8,292,686
96,208
9,702,238
Contingencies and
commitments
5,381,190
197,549
7,709,402
-
13,288,141
Total assets
Total liabilities
The table below summarizes the sensitivity analysis for foreign currency risk and the effect on the profit
or loss:
Increase 2015
EUR
USD
Other
C
0.5%
5.0%
1.0%
Increase 2014
0.5%
5.0%
1.0%
Effect on profit and loss and
equity
2015
2014
(2,935)
6,674
1.138
(1,072)
93
962
Interest Rate Risk
The Group’s operations are subject to the risk of interest rate fluctuations to the extent that interestbearing assets and interest-bearing liabilities mature or re-price at different times or in differing amounts.
In the case of floating rate assets and liabilities, the Group is also exposed to basis risk, which is the
difference in re-pricing characteristics of the various floating rates, such as the savings rates,
LIBOR/EURIBOR and different types of interest. Risk management activities are aimed at optimizing net
interest income, given market interest rate levels consistent with the Group’s business strategies.
Assets-liability risk management activities are conducted in the context of the Group’s sensitivity to
interest rate changes. In general, the Group is asset sensitive because of the majority of the interestbearing assets; the Group has the right simultaneously to change the interest rates. In decreasing
interest rate environments, margins earned will narrow as liabilities interest rates will decrease with a
lower percentage compared to assets interest rate. However the actual effect will depend on various
factors, including stability of the economy, environment and level of the inflation.
40
December 31, 2015
`
4.
4.2.
C
Interest Rate Risk (Continued)
Assets
profit and loss
Financial assets available –for-sale
Customers
Other assets
Total assets
Liabilities
Deposits from banks and other financial
institutions
Borrowings
Other liabilities
Total liabilities
Total interest repricing gap
Total assets
Total liabilities
Total interest repricing gap
Up to 1
month
1-3 months
3-12 months
1-5 years
Over 5 years
Non-interest
bearing
Total
18,760,361
-
-
-
-
8,903,358
27,663,719
371,029
90,868
30
2,637
371,029
7,202,009
2,516
9,208,426
1,921,739
189,147
532,589
12,011,397
47,644,522
189,147
532,589
92,813,957
1,363,581
82,837,690
2,165,476
512,430
.
-
-
-
-
899,303
639,063
1,804,676
3,143,926
4,007,162
1,361
5,422,800
400,000
1,125
-
-
2,575,794
3,298,860
31,860,876
3,907,914
4,079,339
-
-
-
-
-
22,874,521
8,247,462
41,292,199
4,309,039
4,079,339
662,545
41,892,326
168,978
196,712
11,149,304
12,512
407,674
28,153,555
420,945
1,265,957
168,361
-
-
-
-
-
96,650
1,642,505
128,723
512,430
42,723,849
11,358,528
28,982,174
1,265,957
168,361
2,380,308
86,879,177
(19,849,328)
(3,111,066)
12,310,025
3,043,082
3,910,978
9,631,089
5,934,780
17,025,796
39,184,465
10,182,883
11,255,336
39,923,919
28,851,583
4,107,471
1,410,902
2,929,521
242,408
13,459,343
2,117,109
87,628,933
83,061,803
(22,158,669)
(1,072,453)
11,072,336
2,696,569
2,687,113
11,342,234
4,567,130
41
December 31, 2015
`
4.
4.2.
C
Interest Rate Risk (Continued)
The interest rate sensitivity analysis has been determined based on the exposure to interest rate risk at
the reporting date. At 31 December 2015, if variable interest rates had been 100 basis points
higher/lower (2014: 100 basis points higher/lower) with all other variables held constant, the profit or
loss for the twelve month period ended 31 December 2015 would increase/decrease by approximately
Denar 103,873 thousand (2014: increase/decrease by approximately Denar 88,559 thousand). If
adjustable interest rates had been 150 basis points (2014: 150 basis points) higher/lower with all other
variables held constant, the profit or loss for the twelve month period ended 31 December 2015 would
respectively decrease /increase by approximately Denar 745,622 thousand (2014: Denar 646,114
thousand).
The sensitive analysis refers to the Bank, because of the insignificant participation (under 1%) of total
assets of the subsidiary in the assets of the Bank.
4.3.
Liquidity Risk
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its
financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence
of liquidity risk may be the failure to meet obligations to repay depositors and fulfill commitments to lend.
A
Liquidity Risk Management Process
Liquidity risk management policy of the Group defines the method of managing the Group’s liquidity.
Perception and monitoring of the Group’s liquidity is an essence of its stability and successful working.
Implementation of the liquidity risk management policy is done using defined risk management process
which includes planning and managing with cash flows, maintaining adequate structure of assets and
liabilities, financial instruments for liquidity risk management, adequate diversification of deposits and
other liabilities by maturity and client, procedures for identification and monitoring the deposit’s stability,
monitoring the maturity of assets and liabilities, monitoring the off-balance sheet items, monitoring
liquidity ratios, internal liquidity indicators, liquidity stress testing and continuity plan in irregular
conditions reporting to Group’s bodies and adequate management information system and
responsibilities of Group’s organizational units in liquidity risk management process. The aim of the
Group is maximizing the profitability, by applying the optimum combination of maturity and foreign
currency structure of the assets and liabilities.
However, the Group strives to use adequate term structure of funds adjusted to term structure of
placements, based on contractual and expected maturity of the deposit base. The primary strategy of
the Group is to maintain its liquidity at the highest level.
The table below analyses the undiscounted contractual cash flows of assets and liabilities of the Group
into relevant maturity buckets based on the remaining period at the date of the statement of financial
position to the contractual maturity date for assets and liabilities. The presented information represents
undiscounted cash flows, which include estimated interest payments
Although the Group has a shortage of short-term assets over short-term liabilities maturing within one
month, one to three months, the Group’s management considers its deposit base as being stabile and
liquidity not jeopardized. This is based on statistical data and calculations of expected maturity in order
to determine the funding and stability of the deposit base.
42
December 31, 2015
`
4.
4.3.
Liquidity Risk (Continued)
A
Liquidity Risk Management Process (Continued)
Maturities of assets and liabilities
December 31,2015
Over 5
years
Total
Up to 1
month
1-3
months
3-12
months
1-5 years
758,058
196,724
131,843
281,789
-
1,368,414
42,810,420
172,903
49,532
11,134,026
12,531
18,848
21,923,001
413,072
41,362
7,127,007
1,421,320
39,945
674
179,645
61
82,995,128
2,199,471
149,748
478,714
4,309
5,056
(3,510)
27,861
512,430
Total
liabilities
(contractual
maturity
dates)
44,269,627
11,366,438
22,514,334
8,866,551
208,241
87,225,191
Total
assets
(contractual
maturity
dates)
28,125,485
8,370,660
21,904,697
11,161,206
92,624,810
Liabilities
Deposits
from
banks and
other
financial
institutions
Deposits
from
customers
Borrowings
Provisions
Other
liabilities
23,062,762
December 31,2014
Over 5
years
Total
Up to 1
month
1-3
months
3-12
months
1-5 years
521,751
38,142
402,263
215,849
-
1,178,005
39,314,004
226,025
62,311
11,181,709
13,392
22,466
21,165,115
581,574
50,407
7,414,638
1,462,052
40,946
36,718
369,365
-
79,112,184
2,652,408
176,130
370,068
883
3,448
14,345
30,360
419,104
Total
liabilities
(contractual
maturity
dates)
40,494,159
11,256,592
22,202,807
9,147,830
436,443
83,537,831
Total
assets
(contractual
maturity
dates)
23,466,508
10,232,959
21,781,337
9,687,937
87,471,281
Liabilities
Deposits
from
banks and
other
financial
institutions
Deposits
from
customers
Borrowings
Provisions
Other
liabilities
22,302,540
43
December 31, 2015
`
4.
4.3.
Liquidity Risk (Continued)
B
Assets Held for Managing Liquidity Risk
The Group holds a diversified portfolio of cash, highly marketable assets and highly-liquid securities to
support payment obligations in stressed market environment. The Group’s assets held for managing
liquidity risk comprise:
•
Cash and balances with the National Bank of Republic of Macedonia;
•
Treasury bills;
•
Government bills and Government bonds that are readily acceptable in repurchase agreements
with the National Bank of Republic of Macedonia;
•
Short-term Loans and advances to banks.
C
Off-balance Sheet Items (Uncollateralized)
(a)
Guarantees
The maturity buckets are based on the remaining contractual maturity date of the guarantees i.e. the
earliest period in which the guarantees could be called.
(b) Letter of credit
The maturity groupings based on the remaining contractual maturity date of letter of credit are also
included in the table below.
(c) Other
This item includes approved undistributed overdrafts on current accounts and cards and loans in
Denars. The maturity buckets based on the remaining contractual maturity date are summarized in the
table below:
Guarantees
Letter of credit
Other
Total
Up to 1
year
1-5 years
4,640,804
2,152,544
4,636,660
4,075,123
85,285
-
6,426
-
8,722,353
2,237,829
4,636,660
11,430,008
4,160,408
6,426
15,596,842
Up to 1
year
Guarantees
Letter of credit
Other
Total
December 31, 2015
Over 5
years
Total
1-5 years
5,226,015
934,025
4,174,095
2,984,485
143,743
10,334,135
December 31, 2014
Over 5
years
Total
1,908
-
-
8,212,408
1,077,768
4,174,095
3,128,228
1,908
13,464,271
44
December 31, 2015
`
4.
4.4.
Financial instruments
A
Fair value
Fair value represents the amount at which an asset could be replaced or a liability settled on regular,
market conditions between informed and voluntary parties. Fair value has been based on management
assumptions according to the profile of the asset and liability base.
The following table summarizes the carrying amounts and fair values of financial assets and liabilities.
Financial instruments not measured at fair value
Carrying amount
As at 31
As at 31
December
December
2015
2014
Fair value
As at 31
As at 31
December
December
2015
2014
Financial assets
- Retail customers(individuals)
- large corporate customers
- SMEs
9,208,426
47,644,522
12,401,782
18,185,834
17,056,906
2,516
8,269,788
47,656,044
10,162,824
18,104,508
19,388,712
4,608
9,208,426
47,641,292
12,401,782
18,185,701
17,053,809
2,483
8,269,788
47,656,044
10,162,824
18,104,508
19,388,712
4,503
Deposits from banks and other
financial institutions
Borrowings
1,363,581
82,837,690
2,165,476
1,167,161
78,860,740
2,614,798
1,363,581
82,837,690
2,165,476
1,167,161
78,860,740
2,614,798
The fair value of the above presented financial assets and liabilities are determined within level 2 fair
value measurement hierarchy, except for financial assets held-to-maturity within level 1 fair value
hierarchy.
a) Loans and advances to banks
Due to the insignificant risk of change in value, the fair value of loans and advances to banks is equal to
their carrying amounts.
b) Loans and advances to customers
Loans and advances to customers are stated according to amortized cost less impairment. A major part
of the loans and advances to customers is with adjustable interest rate. The appraised fair value of
loans and advances to customers is determined by the discounted expected future cash flows.
Apprised future cash flows for determining the fair value are discounted using current market interest
rate.
45
December 31, 2015
`
4.
4.4.
Financial instruments (Continued)
A
Fair value (Continued)
c) Financial assets held-to-maturity
Fair value for assets classified as held-to-maturity is based on published prices on active market or
published prices available from stock exchange, dealer and broker. In cases where this information is
not available, fair value is estimated by: information for realized prices of recent normal commercial
transactions among voluntary parties; analysis of discounted cash flows; other alternative models for
price determination.
d) Deposits from banks and other financial institutions
Due to their short-term maturity and the insignificant risk of changes in value, the fair value of demand
and time deposits is equal to their carrying amounts.
e) Deposits from customers
The fair value of the sight deposits and the deposits with adjustable interest rate is their carrying
amount. The amount of deposits with fixed interest rates is nil, thus the carrying amount of total deposits
of other customers approximates their carrying amount.
f) Borrowings
Fair value of borrowings with variable interest rate does not differ from its carrying value due to interest
rate adjustment for specific financial liabilities with market interest rates for similar instruments. The fair
value of credit lines regulated with special terms and for which the market does not provide reliable
estimates of prices for similar instruments, approximately presents their carrying value.
B
Fair value hierarchy
The Group classifies all financial assets and liabilities at fair value, using fair value hierarchy which
reflects the significance of inputs used in determining fair value. The fair value hierarchy includes the
following levels:
a)
Level 1 – Fair value is determined directly with reference to quoted market prices of the financial
instruments in active markets;
b)
Level 2 - Fair value is determined using valuation techniques that include active markets inputs,
which can be direct, i.e. prices, or indirect, i.e. derived from prices;
c)
Level 3 - Fair value is determined using valuation techniques that include inputs that cannot be
directly or indirectly followed on the active markets, or are not observable.
46
December 31, 2015
`
4.
4.4.
Financial instruments (Continued)
B
Fair value hierarchy (Continued)
For financial instruments carried at fair value, the level in the fair value hierarchy into which the fair
values are categorised are as follows:
December 31,2015
Level 1
Level 2
Level 3
Total
profit and loss
- Debt and other fixed income
14,847
investments securities
14,847
356,181
- Equity investments
353,994
2,187
6,186,040
- Government bills
6,186,040
950,996
- Government bonds
950,996
Total assets
profit and loss
- Debt and other fixed income
investments securities
- Government bills
- Government bonds
Total assets
368,841
7,139,223
-
7,508,064
December 31,2014
Level 3
Total
Level 1
Level 2
1
347,158
2,232
-
1
349,390
-
2,312,126
942,035
-
-
2,312,126
942,035
-
347,159
3,256,393
-
3,603,552
47
December 31, 2015
`
4.
4.5
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and
systems or from external events. The operational risk includes legal risk, as well the risk of money
laundering and terrorist financing, risk of inadequacy of IT systems and other operational risk.
Legal risk is current or prospective risk to the Group's profit and own funds, caused by violation or nonadherence to the legal framework, agreements, prescribed practices, ethics standards, or as a result of
misinterpretation of the regulations, rules, agreements and other legal documents.
The Group had established a framework for managing the operational risk that is based on Strategy,
Policy and Methodology; appropriate organizational structure and established process for managing this
risk. The established framework allows within the various Group processes to identify risks arising from
these processes, their measurement and taking corrective actions in order to avoid the potential adverse
effect on the financial results and capital position of the Group. The adequacy of the established
framework for managing operational risk is regularly reviewed.
The Group is identifying and measuring the operational risk by analyzing the collected data on loss
events and key risk indicators, as well as applying the method of self-assessment through a qualitative
approach and analysis of external data losses at other banks.
The Group sets the capital requirement for operational risk, using the standardized approach in
accordance with national legislation.
4.6.
Capital management
According to the Decision on consolidated supervision of the Central Bank, if total assets of the
subordinate entity represent less than 1% of the assets of the parent entity, subordinate entity will not be
included in the consolidated financial statements for purposes of consolidated supervision. Based on the
above, capital adequacy is not determined on a consolidated basis.
The Bank’s objectives regarding capital management, which is a broader concept than the ‘equity’ on
the face of the statement of financial position are:
•
•
•
To comply with the capital requirements by the regulator;
To safeguard the Bank’s ability to continue as a going concern so that it can continue to
provide returns for shareholders and benefits for other stakeholders; and;
To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are regularly monitored by the Bank’s management,
employing techniques prescribed by national regulatory authority, i.e. the National Bank of Republic of
Macedonia (NBRM). The required information is submitted to regulatory authority on a quarterly basis.
In addition, the Bank has established a Process of determining the Internal Capital (PIC) in accordance
with the Decision on risk management, prescribed by the NBRM. The process of determining the
internal capital is based on adopted Policy and Procedures and within the process, the Bank:
• determines the internal capital required to cover the acceptable level of risk, in accordance with
its risk profile and the size and complexity of current and future financial activities;
• is aiming to establishing a sustainable level of capital in long term, taking into account the impact
of all material risks, etc.
The Bank determines its own funds and capital adequacy in accordance with the Methodology for
determining capital adequacy and own funds prescribed by the NBRM. In accordance with the
regulation, the credit risk weighted assets and the capital required for coverage of operational risks are
calculated based on the standardized approach.
The regulatory authority requires that each bank has to maintain capital adequacy ratio above 8%.
The Bank’s regulatory capital is divided in two groups:
48
December 31, 2015
`
4.
4.6.
Capital management (Continued)
•
•
Tier 1 that includes: ordinary and non-cumulative non-voting shares and share premium,
statutory reserves and retained earnings or loss, items as result of consolidation, less:
intangible assets;
Tier 2 that includes: cumulative non-voting shares and share premium, hybrid capital liabilities
and subordinated liabilities.
Investments in other Banks or financial institutions and investments in insurance and re-insurance
companies over 10% of capital of such institutions are deducted from Tier 1 and Tier 2 capital to arrive
at the regulatory capital.
Total risk-weighted asset is a sum of credit risk-weighted assets, currency risk weighted assets,
operational risk weighted assets and other risk-weighted assets.
According to national regulations, credit risk-weighted assets (on-balance and off-balance) are
distributed by appropriate risk weights according to the level of credit quality (credit rating) of the debtor,
taking into consideration credit protection instruments.The capital adequacy ratio is calculated as a ratio
between the Bank's regulatory capital and the risk weighted assets.
The table below summarizes the compositions of regulatory capital and the capital adequacy ratio of the
Bank for the years ended 31 December 2015 and 2014 in accordance with the requirements of
regulatory authority. During these two years, the Bank complied with all of the regulatory imposed capital
requirements to which the Bank is subject.
49
December 31, 2015
`
4.
4.6.
Capital management (Continued)
Tier 1 capital
Ordinary and non-cumulative non-voting shares and share premium
Statutory reserves and retained earnings or loss
Deductions from Tier 1 capital
Total qualifying Tier 1 capital
Tier 2 capital
Cumulative non-voting shares and share premium
Hybrid capital liabilities
Deductions from regulatory capital
Total regulatory capital
Credit risk-weighted assets
FX risk-weighted assets
Operational risk-weighted assets
Other risks weighted assets
Capital adequacy ratio
Tier 1 capital
Ordinary and non-cumulative non-voting shares and share premium
Statutory reserves and retained earnings or loss
Deductions from Tier 1 capital
Tier 2 capital
Cumulative non-voting shares and share premium
Hybrid capital liabilities
Deductions from regulatory capital
December 31,
2015
3,050,594
6,468,549
(914)
9,518,229
(238,231)
9,279,998
59,137,539
493,000
7,544,649
13.8%
December 31,
2014
3,050,594
6,372,944
(2,000)
9,421,538
(206,737)
Total regulatory capital
9,214,801
Credit risk-weighted assets
FX risk-weighted assets
Operational risk-weighted assets
Other risks weighted assets
Capital adequacy ratio
59,570,232
1,612,948
7,324,500
13.5%
50
December 31, 2015
`
5.
SEGMENT REPORTING
Segment reporting is carried out by the Group’s operating segments.
Operating segment is a component of the activities of the Group for which the following conditions have
been fulfilled:
•
Performs activities as a result based on which incomes are generated and expenditures arise;
•
Is being reviewed by the Group’s Supervisory Board, in order to assess the accomplishments
and make decisions for future business activities of the segment; and
•
Financial information for the segment is available.
The Group discloses the information independently for each significant operating segment. A
segment is considered significant if:
•
•
•
•
The income of the segment participates with more than 10% of the total income of the Group;
The amount of the profit or loss represents 10% or more from the total income of all operating
segments which have made profit, or from the total loss of all the operating segments which
have made loss;
Total assets of the segment participate with 10% or more of the Group’s total assets;
Management has assessed that they are significant to follow for the Group’s management
needs.
For the purposes of the financial reporting, the Group groups two or more segments into one operating
segment if those operating segments are similar in terms of the variety of the goods and services, the
type of the users of the goods and of the services and the methods of distribution and offering of the
goods and services. As at December 31, 2015 and 2014 the Group does not group two or more
operating segments into one.
The operating segments of Komercijalna banka are the same as the business lines (BL) prescribed in
the “Decision on the methodology for determining capital adequacy”, using the standardized approach
for the determination of capital required for coverage of operational risk.
Geographical areas according to which the Group is reporting are:
•
Member countries of the European Union;
•
Other European countries, outside the EU;
•
Countries outside Europe, members of the Organization for Economic Cooperation and
Development (OECD);
•
Other countries.
As at December 31, 2015 and 2014 there are no significant clients upon which the Group realizes 10%
or more from its total business income or expenditure.
51
December 31, 2015
`
5.
SEGMENT REPORTING (Continued)
A.
Operating segments
December 31, 2015
BL 1: Services
related to
financing of
medium and
large sized
enterprises
BL 2: Trading
and sales
Net interest income
Dividend income
Net gains/(losses) on financial
instruments classified as held for trading
Share of profit of associates accounted
for using the equity method
Income realized between the segments
Total income per segment
-
156
(2,279)
5,515
306,241
72,826
-
2,871,283
175,480
67
142
625,648
-
(14)
23,710
-
-
1,897
-
18,461
101
32
-
3,177,808
915,775
5,683
-
7,177
204,235
(478,530)
633,165
12,365
(256)
-
5
315
3
35,088
7,492
406,075
-
214,804
(99,463)
3,679,995
638,155
23,440
-
1,902
39,028
57,908
35,120
39,028
4,551,861
Impairment charge for credit losses
Personnel expenses
Total expenses per segment
Financial result per segment
Income tax expense
Profit for the year
-
(8,423)
(1,993)
(10,386)
(18,790)
(187,381)
(44,324)
(394,724)
(1,702,510)
(120,820)
(28,579)
(590,209)
(308,117)
(72,884)
(112,967)
(9,166)
(2,168)
(1,672)
-
(9,910)
(2,344)
(2,861)
(5,310)
(61)
(12,262)
(182,013)
(43,056)
(110,575)
(1,721,300)
(831,140)
(195,409)
(1,235,656)
-
(20,802)
194,002
(645,219)
(744,682)
(2,442,118)
1,237,877
(493,968)
144,187
(13,006)
10,434
-
(15,115)
(13,213)
(17,633)
40,275
(335,644)
(300,524)
(3,983,505)
568,356
(62,386)
505,970
Total assets per segment
Unallocated assets per segment
Total assets
-
402,656
13,401,192
79,819.273
2,650,551
38,960
-
39,945
193,550
Total liabilities per segment
Unallocated liabilities per segment
Total liabilities
-
-
BL 3: Retail
banking
64,498,024
BL 4: Corporate
banking
21,994,628
BL 5: Payment and
settlement
125,404
BL 6:
Custody
services
266,690
BL 7: Asset
management
Other
insignificant
operating
segments
BL 8: Retail
brokerage
-
7
Total
Unallocated
770,640
96,546,127
770,640
97,316,767
213,294
86,885,765
213,294
87.099,059
1,012
52
December 31, 2015
`
5.
A.
Operating segments (Continued)
December 31, 2014
BL 1: Services
related to
financing of
medium and
large sized
enterprises
BL 2: Trading
and sales
Net interest income
Dividend income
Net gains/(losses) on financial
instruments classified as held for trading
Share of profit of associates accounted
for using the equity method
Income realized between the segments
Total income per segment
-
(53)
6,031
(84,576)
46,771
-
2,911,556
182,740
31
161
659,344
-
(10)
18,477
-
-
1,850
-
9,356
-
315
-
2,827,131
918,800
6,062
-
(22,525)
138,808
(478,219)
610,604
(7,827)
(7,825)
-
6
53
3
30,543
(22,472)
286,093
-
122,261
(516,024)
3,704,931
651,678
10,642
-
1,856
36,596
-
46,008
30,858
36,596
4,052,210
Impairment charge for credit losses
-
-
(42,945)
(1,615,422)
-
-
-
-
-
-
(1,658,367)
Personnel expenses
-
(8,177)
(146,596)
(120,580)
(351,910)
(10,407)
-
(8,177)
(4,327)
(180,044)
(830,218)
-
(2,045)
(36,667)
(30,160)
(88,022)
(2,603)
-
(2,045)
(175)
(45,033)
(206,750)
-
(11,673)
-
(404,809)
-
(359,243)
-
(162,907)
-
(2,602)
-
-
(3,459)
-
(1,601)
-
(105,687)
-
(1,051,981)
-
Total expenses per segment
-
(21,895)
(631,017)
(2,125,405)
(602,839)
(15,612)
-
(13,681)
(6,103)
(330,764)
(3,747,316)
Financial result per segment
Income tax expense
Profit for the year
-
100,366
(1,147,041)
1,579,526
48,839
(4,970)
-
(11,825)
39,905
(299,906)
304,894
(33,403)
271,491
Total assets per segment
Unallocated assets per segment
Total assets
-
379,762
11,023,426
77,935,910
2,633,031
43,472
-
32,783
171,931
Total liabilities per segment
Unallocated liabilities per segment
Total liabilities
-
BL 3: Retail
banking
BL 4: Corporate
banking
BL 5: Payment and
settlement
BL 6:
Custody
services
BL 7: Asset
management
Other
insignificant
operating
segments
BL 8: Retail
brokerage
Total
Unallocated
92,220,315
744,643
92,964,958
744,643
-
62,056,655
20,958,891
109,774
21,054
-
7
83,146,723
115,997
83,262,720
342
115,997
53
December 31, 2015
`
5.
B.
Geographical areas
December 31, 2015
Republic of
Macedonia
Total income
Non-current assets*
4,231,128
4,502,810
EU member
countries
138,804
-
Europe (other)
147,318
-
OECD member
countries (without
EU members of
OECD)
34,999
-
Other (insignificant
geographical
areas)
(2,065)
-
Unallocated
1,677
-
Total
4,551,861
4,502,810
December 31, 2014
Total income
Non-current assets*
3,641,210
5,336,025
190,568
-
110,420
-
106,497
-
2,268
-
1,247
-
4,052,210
5,336,025
*Non-current assets include items of property and equipment, investment property, intangible assets and assets acquired through foreclosure procedure.
54
December 31, 2015
`
6.
NET INTEREST INCOME
December 31,
December 31,
2015
2014
Interest and similar income
Loans and advances:
- To banks
- To customers
Investment securities
Interest expense and similar charges
Other borrowed funds
12,684
3,547,729
226,950
107,435
5,792
3,586,913
174,101
159,625
3,894,798
3,926,431
19,164
676,103
21,723
20,749
1,050,259
28,292
716,990
1,099,300
Interest income from collected previously written off interest amounts to Denar 377,745 thousand (2014:
Denar 366,786 thousand).
As at 31 December 2015 the interest income from financial assets at fair value through profit or loss is
Denar 156 thousand (2014: none).
As a result of the market movements, the Group has decreased its passive interest rates during 2015,
resulting in decrease in interest expense.
7.
NET FEE AND COMMISSION INCOME
December 31,
December 31,
2015
2014
Payment operations
-in the country
-abroad
Letters of credit and guarantees
Credit cards
Brokerage fees
Other
Loans
Payment operations
-in the country
-abroad
Brokerage fees
Other
386,541
206,276
174,818
187,752
2,821
23,749
139,674
388,587
223,355
179,287
164,326
6,189
18,144
110,388
1,121,631
1,090,276
117,510
86,718
65,195
12,661
717
1,070
8,703
62,295
11,546
1,937
510
8,470
205,856
171,476
55
December 31, 2015
`
8.
NET (LOSSES)/GAINS ON FINANCIAL
INSTRUMENTS CLASSIFIED AS HELD FOR TRADING
December 31,
December 31,
2015
2014
Gains/(losses) from changes in fair value of equity securities,
net (realized/unrealized)
Net (losses)/gains on financial instruments classified as
held for trading
9.
7,492
7,492
(22,472)
(22,742)
OTHER OPERATING INCOME
December 31,
December 31,
2015
2014
Membership fee for credit cards
Net foreign currency transactions
Rental income
Recoveries on loans and advances previously written – off
Gain on sale of Property Plant and Equipment, and assets acquired
through foreclosure procedures
Other
10.
37,660
62,422
14,864
99,412
37,969
24,549
15,544
11,505
26,655
33,793
44,854
26,561
274,806
160,982
PERSONNEL EXPENSES
December 31,
December 31,
2015
2014
Wages and salaries
Contributions to defined contribution plans
Other staff costs
Taxes and contributions
11.
524,610
138,567
51,602
116,361
532,732
138,817
41,409
117,260
831,140
830,218
OTHER OPERATING EXPENSES
December 31,
December 31,
2015
2014
Insurance premiums for deposits
Services
Administration and marketing costs
Materials
Loss on sale of assets acquired through foreclosure procedure
Tax and contributions
Court litigation expenses
Provisions for pension and other employee benefits, net
Loss from sale of securities available-for-sale
Other
306,944
165,778
77,161
82,054
1,046
2,242
8,172
11,510
84
16,914
337,842
179,226
90,000
99,846
6,863
2,195
3,746
8,214
15,589
671,905
743,521
56
December 31, 2015
`
12.
IMPAIRMENT CHARGE FOR CREDIT LOSSES
December 31,
December 31,
2015
2014
Loans and advances to banks (Note 19)
Loans and advances to customers (Note 20)
Other assets (Note 25)
Contingencies and commitments (Note 33)
Cash and Cash equivalents (Note 15)
13.
715
1,712,291
35,071
(26,382)
(395)
(5,429)
1,620,327
28,635
14,373
461
1,721,300
1,658,367
INCOME TAX EXPENSE
The major components of income taxes in profit or loss are as follows:
December 31,
December 31,
2015
2014
Current tax expense
Current year
Deferred tax expense
Origination of temporary differences
Total income tax expenses
(64,442)
(14,110)
2,056
(19,293)
(62,386)
(33,403)
The total charge for the year can be reconciled to the accounting profit as follows:
In
December
% December 31,
In %
31,
2015
2014
Profit before tax
304,894
579,063
Tax calculated at a tax rate of 10% (2014: 10%)
Non-deductible expenses
Tax-exempt income
Tax exemption on profit for the current period,
payable upon distribution of profit
10.00
0.9
(0.1)
57,906
5,087
(607)
10.00
1.2
(0.2)
30,489
3,568
(654)
-
-
-
-
10.8
62,386
11.0
Income tax expense
33,403
Recognized deferred tax liabilities
Deferred tax liabilities are attributable to the following:
Assets Liabilities
Net
In thousands of
2015
denars
Assets acquired
through foreclosure
procedures
Available-for-sale
financial assets
Net tax assets
(liabilities)
-
(17,237)
Assets Liabilities
Net
2014
(17,237)
-
(19,293)
(19,293)
-
(1,048)
(1,048)
-
-
-
-
(18,285)
(18,285)
-
(19,293)
(19,293)
57
December 31, 2015
`
13.
INCOME TAX EXPENSE (CONTINUED)
Movements in temporary differences during the year
2015
Assets acquired through
foreclosure procedures
Available-for-sale
financial assets
14.
Net balance at
1 January
Recognised in
profit or loss
Recognised
in OCI
Balance at
31
December
19,293
(2,056)
-
17,237
19,293
(2,056)
1,048
1,048
1,048
18,285
EARNINGS PER SHARE
The calculation of earnings per share for the year ended 31 December 2015 was based on the net profit
attributable to ordinary shareholders of Denar 502,375 thousand (2014: 270,686 thousand) and a
weighted average number of ordinary shares outstanding during the year ended 31 December 2015 of
2,279,067 shares (2014: 2,279,067 shares). The calculation of the basic and diluted earnings per share
is:
Net profit attributable to shareholders for basic and diluted earnings
per share (in thousands of Denars)
Weighted average number of shares for basic and diluted earnings
per share
Basic earnings per share (in Denars)
Diluted earnings per share (in Denars)
December 31,
2015
December 31,
2014
502,375
270,686
2,279,067
220
220
2,279,067
119
119
The calculation of the weighted average number of ordinary shares for the years ended December 31,
2015 and 2014 is as follows:
Number of shares
2015
2014
Issued ordinary shares at 1 January
2,279,067
2,279,067
At 31 December
2,279,067
2,279,067
58
December 31, 2015
`
15.
CASH AND CASH EQUIVALENTS
December 31,
December 31,
2015
2014
Cash on hand
Accounts and deposits with NBRM, except mandatory reserves in
foreign currency
Current accounts with local banks
Current accounts with foreign banks
Time deposits held with banks up to 3 months
Treasury bills up to 3 months
Other short term highly liquid investments
Included in cash and cash equivalents
Restricted accounts
Mandatory reserves in foreign currency
1,365,784
1,228,971
3,238,591
8,492
5,453,004
7,054,341
6,299,613
2,952
4,752,557
4,267
3,366,943
9,262,322
4,869,850
1,643
23,422,777
23,486,553
208,796
4,032,146
187,262
3,877,531
27,663,719
27,551,346
The level of mandatory reserves in foreign currency held with the Central Bank in the amount of Denar
4,032,146 thousand (2014: Denar 3,877,531 thousand) is determined by the Decision for mandatory
reserves prescribed by the Central Bank. Those reserves are calculated based on the average amount
of deposits in foreign currencies existing during one calendar month. Starting from 1 January 2014 the
Central Bank does not pay any interest on these reservеs.
Accounts and deposits with NBRM, except mandatory reserves in foreign currency in the amount of
Denar 3,238,591 thousand (2014: Denar 4,752,557 thousand) represent current account in Denars with
NBRM. Starting from 1 January 2014 the Central Bank does not pay any interest on these reservеs..
Time deposits up to 3 months in the amount of Denar 7,054,341 thousand (2014: Denar 9,262,322
thousand) relate to deposits placed with domestic and foreign banks, with original maturities from 1 day
to 3 month, bearing interest at rates in the range from 0,01% to 2,3% per annum (2014 from 0.1% to
2.5% p.a.).
Treasury bills up to 3 months in the amount of Denar 6,299,613 thousand (2014: 4,869,850 thousand)
are debt securities issued by the National Bank of Republic of Macedonia with maturity due of 28 days,
bearing interest at rate of 3,25% per annum (2014: 3.25% p.a.).
Restricted accounts in the Denar 208,796 thousand (2014: Denar 187,262 thousand) represent
collateral for Visa International and MasterCard.
Movement in specific allowance for impairment is as follows:
Balance at 1 January
Net charge/ (release) to profit or loss (Note 12)
Write-off
Balance at 31 December
2015
2014
461
-
(395)
461
66
461
59
December 31, 2015
`
16.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Held for trading
Debt securities
Government bonds
Total debt securities
Equity investments
December 31,
December 31,
2015
2014
14,847
1
14,847
1
356,182
349,390
371,029
349,391
Government bonds in the amount of Denar 14,847 thousand (2014: Denar 1 thousand) refers to
structural government bonds, bearing interest at the rate of 2% per year.
The quoted equity investments held for trading in the amount of Denar 47,334 thousand (2014: Denar
49,569 thousand) relates to investments in shares issued by domestic banks in the amount of Denar 66
thousand (2014: Denar 52 thousand) and investments in shares issued by domestic non-financial
entities in the amount of Denar 47,268 thousand (2014: Denar 49,517 thousand).
The other unquoted equity investments in the amount of Denar 308,848 thousand (2014: Denar
299,821 thousand) relate to investments in the open-end investment fund KB Publikum – Balansiran in
the amount of Denars 7,241 thousand (2014: Denar 6.928 thousand), investments in the open-end
investment fund KB Publikum - Paricen in the amount of Denar 299,419 thousand (2014: Denar
290,661 thousand), and investments in KD Funds AD Skopje - KD Cash deposit in the amount of 2,187
thousand of denars (2014: 2,232 thousand of denars).
17.
FINANCIAL ASSETS AVAILABLE-FOR-SALE
December 31,
December 31,
2015
2014
Government bills
Government bonds
Equity investments
Less: Specific allowance for impairment
6,186,040
950,996
67,597
7,204,633
(2,624)
7,202,009
2,312,126
942,036
67,542
3,321,704
(2,624)
3,319,080
Investments in available-for-sale debt securities includes government bills in the amount of 6,186,040
thousands of denars (2014: 2,312,126 thousands of denars) as well as government bonds in the
amount of 950,996 thousands of denars (2014: 942,036 thousands of denars).
The investments in equity instruments available-for-sale in amount of 67,597 thousands of denars
(2014: 67,542 thousands of denars) relate to the investments in securities issued by financial and nonfinancial companies for which there is no active market, as well as a lack of recent transactions that
could be applied in determination of the fair value. Accordingly, the investments in available-for-sale
securities are stated at their cost, less any impairment. The market for these securities is irregular and is
not fully developed, so that the fair value cannot be reliably measured.
The Group does not plan to sell those investments whose operations are related to the regular
operations of the Group, while the rest of the investments will be sold only when the Group will estimate
that there are favourable conditions for their disposal.
60
December 31, 2015
`
17.
FINANCIAL ASSETS AVAILABLE-FOR-SALE (Continued)
Year ended
Year ended
December 31
December 31
2015
2014
Write-offs
18.
2,624
4,354
-
-
2,624
(1,730)
2,624
FINANCIAL ASSETS HELD-TO-MATURITY
December 31,
December 31,
2015
2014
Government bonds
2,516
4,608
2,516
4,608
The bonds issued by the Government of the Republic of Macedonia in the amount of 2,516 thousands of
denars include bonds for denationalisation V and VI emission (2014: 4,608 thousands of denars) with
maturity date up to 2017 (2014: 2015 - 2017), which bear interest at an annual rate of 2% (2014: 2%
annually).
Total current portion of the financial assets held-to-maturity amounts to Denar 1,953 thousand (2014:
61
December 31, 2015
`
19.
LOANS AND ADVANCES TO BANKS
December 31,
December 31,
2015
2014
Placements with foreign banks
Placements with domestic banks
Less: Specific allowance for impairment
9,066,993
143,317
9,210,310
8,270,652
305
8,270,957
(1,884)
(1,169)
9,208,426
8,269,788
Total current portion of the loans and advances to banks amounts to Denar 8,251,857 thousand (2014:
Denar 7,316,584 thousand).
2015
2014
1,169
6,598
715
1,884
(5,429)
1,169
Write off
20.
LOANS AND ADVANCES TO CUSTOMERS
December 31,
December 31,
2015
2014
Individuals (retail customers):
- Overdrafts
- Credit cards
- Term loans
Corporate entities:
- Large corporate customers
- SMEs
Less: Allowance for impairment
Current
Non- current
1,344,399
1,307,334
10,849,770
1,352,737
1,339,207
8,570,156
13,501,503
11,262,100
20,553,029
25,826,380
24,698,086
22,188,015
46,379,409
46,886,101
59,880,912
(12,236,390)
58,148,201
(10,492,157)
47,644,522
47,656,044
20,561,201
27,083,321
22,539,476
25,116,568
62
December 31, 2015
`
20.
LOANS AND ADVANCES TO CUSTOMERS (Continued)
Loans and advances to customers include accrued interest and other receivables of Denar 248,196
thousand (2014: Denar 271,609 thousand).
Out of the total loans and advances to other customers the Bank has pledged a lien with regard to the
sub-loans approved from the credit line of the European Investment Bank ("EIB"), and from the Italian
credit line (IKL), in favour of MBDP. As at 31 December 2015 the amount of the pledged loans and
advances is in the amount of 1,980,236 thousands of denars (2014: 2,396,530 thousands of denars).
Movement of allowance for impairment is as follows:
Retail customers
Loans
Total
Overdrafts
Credit cards
Balance at 1 January 2014
Net charge/(release) to profit or
loss (Note 12)
196,881
269,305
595,078
1,061,264
3,028
818
34,165
38,011
199,909
270,123
629,243
1,099,275
Net charge/ (release) to profit or
loss (Note 12)
(1,691)
(15,655)
17,792
446
Balance at 31 December 2015
198,218
254,468
647,035
1,099,721
Corporate entities
Large corporate
customers
SMEs
Total
loss (Note 12)
Release upon foreclosure
procedures
Write offs
2,426,121
5,471,518
7,897,639
373,183
1,209,133
1,582,316
-
(25,199)
(61,874)
(25,199)
(61,874)
2,799,304
6,593,578
9,392,882
696,819
1,015,026
1,711,845
-
81,266
(49,324)
81,266
(49,324)
7,640,546
11,136,669
loss (Note 12)
Release upon foreclosure
procedures
Write offs
Balance at 31 December 2015
3,496,123
63
December 31, 2015
`
21.
INVESTMENTS IN ASSOCIATES
The Bank owns 49% of equity interest, which is equal to 49% of the voting rights in KB Prvo Penzisko
Drustvo AD Skopje. The principle place of business of KB Prvo is Republic of Macedonia.
The shares of KB Prvo Penzisko Drustvo AD Skopje are not publicly listed and consequently do not
have published price quotations.
December 31,
December 31,
2015
2014
KB Prvo Penzisko Drustvo AD Skopje
157,652
150,890
Share of results for the year ended 31 December
39,028
36,596
Dividends received
(7,533)
(29,834)
189,147
157,652
Summary financial information on the associates is presented below:
KB Prvo
Penzisko
Drustvo AD
Skopje
KB Prvo
Penzisko
Drustvo AD
Skopje
December 31, 2015
Interest
held
Profit/Loss
Assets
Liabilities
Equity
Revenues
394,212
14,963
379,249
204,442
79,649
394,212
14,963
379,249
204,442
79,649
49%
December 31, 2014
Interest
held
Profit/Loss
Assets
Liabilities
Equity
Revenues
334,116
19,141
314,975
188,624
74,687
334,116
19,141
314,975
188,624
74,687
49%
There are no significant restrictions on the ability of the associates to transfer funds to the Bank in the
form of cash dividends or repayment of loans and advances.
64
December 31, 2015
`
22.
PROPERTY AND EQUIPMENT
Land and
Buildings
Carrying amount 1 January 2014
Additions
Transfers
Disposals and write off
Depreciation charge
2,754,443
159,821
(73,561)
Carrying amount 31 December 2014
2,840,703
At 31 December 2014
Cost
Accumulated depreciation
Carrying amount for
31 December 2014
Carrying amount 1 January 2015
Additions
Transfers
Disposals and write off
Depreciation charge
Assets in
course of
construction
Furniture &
Equipment
59,769
(21)
(102,170)
1,421
(27)
(9,371)
3,245,684
95,799
(48)
(185,102)
268,768
27,739
19,123
3,156,333
1,181,326
(912,558)
27,739
-
62,779
(43,656)
4,478,100
(1,321,767)
2,840,703
268,768
27,739
19,123
3,156,333
2,840,703
25,417
268,768
45,337
27,739
61,309
(70,754)
19,123
-
3,156,333
61,309
-
(77,445)
(94,208)
-
(126)
(8,086)
(126)
(179,739)
219,897
18,294
10,911
3,037,777
1,226,663
(1,006,766)
18,294
-
62,653
(51,742)
4,539,283
(1,501,506)
219,897
18,294
10,911
3,037,777
Carrying amount 31 December 2015
2,788,675
At 31 December 2015
Cost
3,231,673
(442,998)
Carrying amount
31 December 2015
2,788,675
-
27,100
Total
152,951
95,799
(221,011)
-
3,206,256
(365,553)
311,190
Leasehold
improvements
The amount of commitments for the purchase of property and equipment in 2015 amounts to Denar 7,503 thousand (2014: Denar 343 thousand). As at 31 December 2015 and
31 December 2014 the Bank does not have any property and equipment pledged as collateral.
65
December 31, 2015
`
23.
INVESTMENT PROPERTY
2015
2014
At 1 January
Cost
33,510
(4,887)
33,510
(4,049)
Carrying amount
28,623
29,461
Carrying amount 1 January
Depreciation charge
28,623
(838)
29,461
(838)
Carrying amount 31 December
27,785
28,623
At 31 December
Cost
33,510
(5,725)
33,510
(4,887)
Carrying amount
27,785
28,623
Fair value of investment property amounts to Denar 29,019 thousand as at December 31, 2015 (2014:
Investment property comprises of property leased by Komercijalna banka AD Skopje. The lease
contains an initial non-cancellable period of 90 days. The contract is on indefinite period. The fair value
of investment property was determined by external, independent property valuation specialist, having
appropriate recognised professional qualifications and recent experience in the location and category of
the property being valued. The independent valuation specialist provide the fair value of the Bank's
investment property portfolio once a year.
The fair value measurement for investment property of Denar 29,019 thousand has been categorised as
a Level 2 fair value based on the inputs to the valuation technique used (see Note 5.B).
Valuation technique and inputs used are based on the cost method, according to the methodology for
valuation of investment property.
The fair value measurement of investment property has been categorised as a Level 3 fair value based
on the inputs to the valuation technique used.
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of investment
property, as well as the significant unobservable inputs used.
Valuation technique
Significant unobservable inputs
Inter-relationship between key
unobservable inputs and fair value
measurement
Discounted cash flows: The
valuation model considers the
present value of net cash flows to
be generated from the property,
taking into account expected
rental growth rate, occupancy
rate, lease incentive costs such
as rent-free periods and other
costs not paid by tenants. The
expected net cash flows are
discounted using risk-adjusted
discount rates. Among other
factors, the discount rate
estimation considers the quality of
a building and its location (prime
vs secondary) and lease terms.
• Expected market rental growth
(2%).
• Occupancy rate (100%, based
on signed leased contracts with
the Bank)
• Risk-adjusted discount rates
(8%)
The estimated fair value would
increase (decrease) if:
••expected market rental growth were
higher (lower);
••the occupancy rate were higher
(lower); or
••the risk-adjusted discount rate were
lower (higher).
66
December 31, 2015
`
24.
INTANGIBLE ASSETS
2015
2014
Cost
Other additions
Disposals and write offs
274,241
17,678
(10,633)
261,557
12,754
(70)
281,286
274,241
224,920
14,832
239,752
41,534
49,321
204,179
20,811
(70)
224,920
49,321
57,378
Accumulated amortisation
Charge for the year
Disposals and write-offs
Carrying amount at 31 December
Carrying amount at 1 January
As at 31 December 2015 the Group does not have any commitments for the intangible assets (31
December 2014: none).
67
December 31, 2015
`
25.
OTHER ASSETS
December 31,
December 31,
2015
2014
Credit card receivables
Other bad and doubtful receivables
Trade receivables
Receivable from insurance company
Inventory of office materials
Inventory of numismatic collections
Fee and commission receivables
Advances for property and equipment
Other assets
Less: Allowance for impairment
199,872
170,744
227,243
7,821
18,941
18,063
47,705
51,522
741,911
141,677
150,104
88,606
7,718
11,616
19,060
39,993
3,383
38,117
500,274
(209,322)
(179,250)
532,589
321,024
The current portion of other assets amounts to Denar 527,270 thousand (2014: Denar 287,952
thousand).
Year ended
Year ended
December 31
December 31
2015
2014
Release upon foreclosure procedures
Write-off
179,250
152,257
35,071
28,635
(4,999)
209,322
(801)
(841)
179,250
68
December 31, 2015
`
26.
ASSETS ACQUIRED THROUGH FORECLOSURE PROCEDURES
December 31,
December 31,
2015
2014
Foreclosed collateral
Land
Buildings
Residential buildings and apartments
Other
100,446
1,131,749
85,833
77,686
142,059
1,709,701
130,225
119,763
1,395,714
2,101,748
The fair value of the acquired assets through foreclosure procedure as at 31 December 2015 is in the
amount of 2,055,462 thousands of denars (as at 31 December 2014 is in the amount of 2,671,049
Certified property valuators, having appropriate recognised professional qualifications and recent
experience in the location and category of the property being valued, determined the fair value of
foreclosed assets.
The fair value measurement for foreclosed assets has been categorised as a Level 3 fair value based
on the inputs to the valuation technique used.
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of foreclosed
assets, as well as the significant unobservable inputs used.
Valuation technique
Significant unobservable inputs
Inter-relationship between key
unobservable inputs and fair value
measurement
Discounted cash flows: The
valuation model considers the
present value of net cash flows to
be generated from the property,
taking into account expected
rental growth rate, occupancy
rate, lease incentive costs such
as rent-free periods and other
costs not paid by tenants. The
expected net cash flows are
discounted using risk-adjusted
discount rates. Among other
factors, the discount rate
estimation considers the quality of
a building and its location (prime
vs secondary) and lease terms.
• Expected market rental growth
(2%).
• Occupancy rate (25%-65%
depending on the season, for
hotels, and 58% - 80% for
business facilities and
warehouses)
• Risk-adjusted discount rates
(8%, 9,5%,13 depending on the
type of real estate which is
estimated, 8% for hotels, 9,5% for
business facilities, 13% for
warehouses)
The estimated fair value would
increase (decrease) if:
••expected market rental growth were
higher (lower);
••the occupancy rate were higher
(lower); or
••the risk-adjusted discount rate were
lower (higher).
69
December 31, 2015
`
27.
DEPOSITS FROM BANKS AND OTHER FINANCIAL INSTITUTIONS
December 31,
December 31,
2015
2014
Demand deposits
Banks and other financial institutions
Insurance companies
Time deposits
Insurance companies
Restricted deposits
Insurance companies
Current
Non-current
425,108
80,479
328,236
70,127
223,507
398,274
295,089
437,470
232,208
4,005
1,363,581
36,239
1,167,161
1,086,625
276,956
962,156
205,005
Deposits from banks and other financial institutions include accrued interest payable of Denar 1,073
thousand (2014: Denar 2,220 thousand).
70
December 31, 2015
`
28.
DEPOSITS FROM OTHER CUSTOMERS
December 31, December 31,
2015
2014
Public institutions
Current / settlement accounts
Time deposits
243,836
-
266,266
25,053
Companies
Current / settlement accounts
Time deposits
17,080,111
2,584,483
15,025,557
2,805,013
Retail customers
Current / demand accounts
Time deposits
16,154,091
44,755,766
14,319,106
44,613,363
1,180,080
839,323
1,104,932
701,450
82,837,690
78,860,740
Restricted deposits
Citizens
Companies
Deposits from other customers include accrued interest payable of Denar 286,327 thousand (2014:
Restricted deposits in the total amount of Denar 2,019,403 thousand (2014: Denar 1,806,382 thousand)
relate to Deposits from other customers, placed for payments abroad, letters of credit, deposits placed
as collateral for securing repayment of loans and guarantees, and received early repayments of loans.
Current portion of deposits from other customers amounts to Denar 75,867,447 thousand (2014: Denar
71,660,828 thousand).
71
December 31, 2015
`
29.
BORROWINGS
December 31, 2015
Short-term
Long-term
December 31, 2014
Short-term
Long-term
Domestic borrowings:
MBDP (Macedonian Bank for
Development Promotion)
MBPR- ZKDF (Macedonian Bank for
Development Promotion funds granted
from Agriculture Credit Discount Fund)
Agency for Managing Accounts
NBRM- Primary issue
Foreign borrowings administered
through domestic financial and
government institutions:
MBDP – IKL (Macedonian Bank for
from Italian Credit Line)
MBDP – EIB (Macedonian Bank for
from EIB)
MF - FSR (Ministry of finance funds
granted from former lender Council of
Europe Social Development Fund)
Current
Non-current
111
15,405
220
26,010
19,934
-
60.376
115,970
8,809
16,544
-
109,442
115,970
8,809
135
21,250
197
31,048
3,578
1,904,143
4,768
2,270,691
19
23,777
15,746
2,141,699
37
21,766
31,062
2,593,032
598,506
-
1,566,970
820,991
1,793,807
Borrowings include accrued interest payable of Denar 3,944 thousand (2014: Denar 5,381 thousand).
Current portion of long-term borrowings is Denar 574,729 thousand (2014: Denar 799,225 thousand).
72
December 31, 2015
`
29.
BORROWINGS (Continued)
Creditor
Currency
Interest rate
MBDP
MKD/EUR
3.0%, 5.0%
MBDP –
IKL
MBDP –
ZKDF
MF –
FSR
NBRM –
Primary issue
MBDP EIB
Agency for
Managing
Accounts
EUR
MKD/EUR
EUR
MKD
0.5%
According to the agreements
concluded with final users
Type of security
8 bills of
exchange
12 bills of
exchange
* Pledge of
receivables under
sub-loan
agreements with
final users in the
form of Notary
deed
3 bills of
exchange
+ 1.4%; 3months
EURIBOR
+ 1.44%;
30.05.2017
3 bills of
exchange
2020
1 bill of exchange
3%
-
ЕUR
MKD
Year of maturity
1%
-
2020
16 bills of
exchange in form
of Notary deed
* Pledge of
receivables under
sub-loan
agreements with
final users in the
form of Notary
deed
unsecured
The Group has pledged a lien in the form of a notary deed in favour of MBDP based on receivables from
sub-loan agreements concluded with final users approved from the credit lines with EIB and IKL, both
administered through MBDP. As at 31 December 2015 the amount of borrowings for which the Group
has pledged receivables is 1,597,845 thousands of denars (2014: 1,955,914 thousands denars).
30.
OTHER LIABILITIES
December 31,
December 31,
2015
2014
Credit card liabilities
Liabilities to Ministry of Finance
Suppliers payable
Advances received
Fee and commission
Provision for pension and other employee benefit
Liabilities for VAT
Undistributed foreign payments from legal companies and citizens
Other liabilities
Current
Non-current
170,426
11,885
24,175
2,464
8,333
56,094
30,755
117,757
90,541
512,430
488,079
24,351
125,698
12,911
18,514
8,638
8,837
48,532
2,563
96,286
97,125
419,104
374,399
44,705
73
December 31, 2015
`
31.
EQUITY
(a)
Share capital
Ordinary shares
December
December
31, 2015
31, 2014
In number of issued shares
Non-voting shares
December
December
31, 2015
31, 2014
In number of shares
At 1 January
Issued shares during the year
2,279,067
-
2,279,067
-
-
-
At 31 December
2,279,067
2,279,067
-
-
At 31 December 2015 the authorised share capital comprised of 2,279,067 (2014: 2,279,067) ordinary
shares. Ordinary shares have a par value of Denar 1,000 (2014: Denar 1,000). All issued shares are
fully paid. The holders of ordinary shares are entitled to receive dividends as declared and are entitled to
one vote per share at Shareholders’ Assembly. All shares rank equally with regard to the Group’s
residual assets.
According to the shareholders book as at 31 December 2015, on 128,228 ordinary shares i.e 5.63%
from the total shareholder capital of the Bank (as at 31 December 2014, 136,273 ordinary shares i.e
5.98%) there is limitation of the rights established based on the law and/or Decision or act of the
competent body (for example limitation of the vote right according to the Governor decision).
As at 31 December 2015 the Bank does not hold treasury shares. The Open-end Investment Fund KB
Publikum – Balansiran managed by the Bank's subsidiary, KB Publikum Invest AD owns 2,109 shares,
i.e. 0,0925% of the total share capital of the Bank (as at 31 December 2014 owns 1,346 shares, i.e.
0.059%).
The below stated shareholders have more than 5% ownership of the Bank’s ordinary shares:
In %
December 31,
December 31,
Shareholder
2015
2014
East Capital Explorer Investments AB, Stockholm
10,0
10,0
European Bank for Reconstruction and
Development, London
5,25
5,25
(b)
Reserves
Statutory reserve
Under local statutory legislation, the Group is required to set aside 5 percent of its net profit for the year
in a statutory reserve until the level of the reserve reaches 1/10 of the court registered capital. Until
achieving the minimum required level the statutory reserve could only be used for loss recovery. When
the statutory reserve exceeds the minimum required level and when all losses are covered, the statutory
reserve can also be used for distribution of dividends, based on a decision of the shareholders’ meeting,
but only if the amount of the dividends for the current business year has not reached the minimum for
distribution as prescribed in the Trade Company Law. The Group has reached the regulatory minimum.
Other reserves
The other reserves are formed in addition to statutory reserve, based on decisions by the bodies of the
Group for distribution of profit, and can be used to cover certain losses or for other expenses.
74
December 31, 2015
`
31.
EQUITY (Continued)
(c)
Dividends
Announced and paid dividends by the Bank
Announced dividends and paid dividends for the year
December 31,
December 31,
2015
2014
Denars
December 31,
December 31,
2015
2014
-
-
Announced dividend after the balance sheet date (the liabilities for dividends are not shown in the
Balance sheet).
Announced dividends after December 31
.
32.
December 31,
December 31,
2015
2014
284,883
December 31,
2015
125
-
In Denars
December 31,
2014
-
GROUP SUBSIDIARIES
See accounting policy Note 3.1.
(a)
Significant subsidiaries
The significant subsidiary of the Group is KB Publikum. Its principle place of business is the Republic of
Macedonia. The Bank holds 64.29% of ownership interest (2014: 64.29%).
(b)
Significant restrictions
The Group does not have significant restrictions on its ability to access or use its assets and settle its
liabilities.
75
December 31, 2015
`
32.
GROUP SUBSIDIARIES (Continued)
(c)
NCI in subsidiaries
The following table summarises the information relating to the Group’s subsidiary that has material
NCI.
KB Publikum
Assets
Bank deposits
Intangible assets
Other assets
Total assets
Liabilities
Total liabilities
Net assets
participation
Note
22
24
31 December 2015
16
2,277
18,200
146
270
1,735
22,644
1,010
1,010
21,634
7,725
For the period
from 01.01.2015 31.12.2015
Revenue
Expenses
Profit/(loss)
Cash flows from financing activities, dividends to
non-controlling interest
19,168
9,103
10,065
10,065
3,595
For the year
ended 31
December 2015
10,729
(10,759)
(30)
76
December 31, 2015
`
32.
GROUP SUBSIDIARIES (Continued)
(d)
NCI in subsidiaries (Continued)
Assets
Bank deposits
Intangible assets
Other assets
Total assets
Liabilities
Total liabilities
Net assets
participation
Note
22
24
31 December 2014
46
2,352
8,200
31
1,281
11,910
341
341
11,569
4,131
For the period
from 01.01.2014 31.12.2014
Revenue
Expenses
Profit/(loss)
Cash flows from financing activities, dividends to
non-controlling interest
9,612
(7,357)
2,255
2,255
805
For the year
ended 31
December 2014
1,789
(3,541)
(1,752)
77
December 31, 2015
`
33.
CONTIGENCIES AND COMMITMENTS
(a) Off-balance sheet items
The following table indicates the contractual amounts of the Group’s contingencies and commitments by
category:
December 31
December 31,
2015
2014
Guarantees
in domestic currency
in foreign currency
Letters of credit
Unused credit card limits
Unused overdrafts on current accounts
Unused credit limits – non cancelable
Total
Less: provision for off-balance sheet items
5,343,035
3,379,319
8,722,354
2,237,829
1,247,322
1,751,450
1,637,888
3,887,520
4,324,888
8,212,408
1,077,768
1,253,075
1,735,073
1,185,947
15,596,843
(149,748)
13,464,271
(176,130)
15,447,095
13,288,141
The Group provides banks guarantees and letters of credit to guarantee the performance of customers
to third parties. These agreements have fixed limits and generally extend for a period of up to one year.
Expirations are not concentrated in any period.
These commitments and contingent liabilities have off balance-sheet credit risk because only
organisation fees and accruals for probable losses are recognised in the statement of financial position
until the commitments are fulfilled or expire. Many of the contingent liabilities and commitments will
expire without being advanced in whole or in part. Therefore, the amounts do not represent expected
future cash flows.
Movement in provision is as follows:
Balance at January 1
As at 31 December
Year ended
December 31
2015
176,130
230,469
(258,271)
1,420
149,748
(a) Litigations
There is a court case in the amount of 258,680 thousands of denars, related to a letter of guarantee for
Granit AD Skopje. The case was initiated in front of an authorized court in Poland on 16th of September
2011 by the State Treasury – General Directorate for State Roads and Motorways from Warsaw
(beneficiary of the guarantee) against Komercijalna Banka AD Skopje. The request was received in the
Bank on 2nd of July 2012, and requested payment upon the issued letter of guarantee in the amount of
17.897.404,09 PLN, equivalent to 258,680 thousands of denars. The letter of guarantee was issued
based on a contract for building a motorway concluded between the plaintiff (State Treasury – General
Directorate for State Roads and Motorways) and Granit AD Skopje (requestor of the guarantee).
The guarantee has been activated and a payment is requested as a result of a breach of contract for
building a motorway between the State Treasury – General Directorate for State Roads and Motorways
of Poland and Granit AD Skopje. There is a separate legal dispute related to this contract, which is
handled in front of the authorized courts in Poland. The outcome of this court case cannot be foreseen
at the moment.
78
December 31, 2015
`
33.
CONTIGENCIES AND COMMITMENTS (continued)
a)
Litigations (continued)
The Bank has not performed a payment upon this issued letter of guarantee as a result of a Decision for
temporary suspension issued on the 4th of February 2011 by the Basic Court in Skopje 2, on request of
Granit AD Skopje. The temporary suspension prohibits the beneficiary of the guarantee to undertake
any activities which would mean enforcement of the guarantee, at the same time imposing a restriction
on the Bank to make payments upon the issued letter of guarantee. The Bank has an obligation to follow
the ruling of the Macedonian court, as long as it is in force. If the Bank is to make a payment upon this
issued letter of guarantee, the amount will be transformed into a receivable from Granit AD Skopje, and
the Bank does not expect collection problems and adverse financial effects.
In addition to the above, the Bank is involved in legal proceedings from its daily operations. As of
December 31, 2015 the legal proceedings filed against the Bank amounted to Denar 150,056 thousand
(2014: Denar 307,338 thousand). This amount does not include any penalty interest. The Bank’s
management believes that the final outcome of the filed legal proceedings will be favorable, and that no
material losses will result from the settlement of the aforementioned litigations and has not allocated any
provision for litigations as of 31 December 2015 and 2014.
34.
RELATED PARTY TRANSACTIONS
Persons related to the Group are the following: persons with special rights and responsibilities and
persons related thereto (classified as key management personnel), shareholders with qualified holding
in the Group (direct or indirect ownership of at least 5% of the total number of shares or the issued
voting shares in a Group or which makes it possible to exercise a significant influence in the Group) and
entities related thereto and responsible persons of those shareholders – legal entities (classified as
other related parties). In addition, the Group has investments in associates.
A number of banking transactions are entered into with related parties in the normal course of business.
These include loans, deposits and borrowings. The volumes of related party transactions and
outstanding balances at the year-end, are as follows:
Placements
as at
1 January
2015
1
Placements
during the
year
Withdrawals
during the year
2
3
Placements
as at 31
December
2015
4=(1+2-3)
1. Assets
Current accounts
a) Associates
b) Key management personnel
of the Group
-
-
-
-
-
-
-
-
c) Other related parties
-
-
-
-
a) Associates
of the Group
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,087
39,611
22,433
64,265
-
-
-
-
Trading assets
Mortgage loans
a) Associates
of the Group
79
December 31, 2015
`
34.
RELATED PARTY TRANSACTIONS (Continued)
Balance sheet (Continued)
Placements
as at
1 January
2015
Placements
as at 31
December
2015
Placements
during the
year
Withdrawals
during the year
-
-
-
-
25,210
11,141
8,187
28,437
-
-
-
-
163
114
147
130
133,223
119,217
162,500
89,940
-
-
-
-
157,653
39,028
7,534
189,147
-
-
-
-
-
-
-
-
169
443,945
443,663
450
544,173
4,577,366
4,576,986
544,552
-
-
-
-
Consumer loans
a) Associates
of the Group
Other loans and claims
a) Associates
of the Group
a) Associates
of the Group
2.Liabilities
Deposits
a) Associates
of the Group
80
December 31, 2015
`
34. RELATED PARTY TRANSACTIONS (Continued)
Income and expenses arising from related party transactions
Asso
ciates
Key
management
personnel of
the Group
Other
related
parties
Total
Associates
Key
management
personnel of
the Group
Other
related
parties
Total
-
9,512
-
9,512
-
10,720
-
10,720
154
4,264
-
4,418
230
4,339
-
4,569
Net gains from
trading
-
-
-
-
-
-
-
-
Dividend income
-
-
-
-
-
-
-
-
Capital gains from
sale of noncurrent assets
-
-
-
-
-
-
-
-
36,653
4,583
-
41,236
Income
Interest Income
Income from fees
and commissions
Other income
Transfers
between entities
Total Income
39,115
8,816
-
47,931
-
-
-
-
-
-
-
-
39,269
22,592
-
61,861
36,883
19,642
-
56,525
81
December 31, 2015
`
34. RELATED PARTY TRANSACTIONS (Continued)
Income and expenses arising from related party transactions (Continued)
Key
management
personnel of
the Group
Other
related
parties
Total
Associates
Key
management
personnel of
the Group
Other
related
parties
Total
2
8,322
-
8,324
1
13,607
-
13,608
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Asso
ciates
Expenses
Interest expense
Fee and commission
expense
Net losses from
trading
Expenditures for
procurement of noncurrent assets
Impairment of
financial assets, on
net basis
-
-
-
-
-
-
-
-
4
444
-
448
(71)
25,429
-
25,358
Other expenditures
80
8,320
-
8,400
13
4,735
-
4,748
Total Expenses
86
17,086
-
17,172
(57)
43,771
-
43,714
82
December 31, 2015
`
34.
RELATED PARTY TRANSACTIONS (Continued)
Key management personnel
Year ended
Year ended
December 31,
December 31,
2015
2014
Salaries and other short - term benefits
35.
129,876
121,197
129,876
121,197
FUNDS MANAGED ON BEHALF OF THIRD PARTIES
December 31,
December 31,
2015
2014
Companies
Individuals
28,013
236,941
46,504
24,905
56,325
16,070
311,458
97,300
The Group manages assets on behalf of third parties which are in the form of loans to companies for
various investments. The Group receives fee income for providing these services. Funds managed on
behalf of third parties are not assets of the Group and are not recognized in the statement of financial
position. The Group is not exposed to any credit risk relating to such placements, as it does not
guarantee these investments, however, has a fiduciary responsibility to properly handle and invest client
funds.
Income and expenses of the Funds managed on behalf of third parties are accrued to the account of the
respective third party and the Group has no liability in connection with these transactions.
36.
LEASE COMMITMENTS
At the end of the reporting period, the future minimum lease payments under non-cancellable operating
leases are payable as follows
Total
37.
Maturity period for operating lease
payments
from 1 to 5
up to 1 year
years
over 5 years
Balance at December 31, 2015
Total
66,733
66,733
2,495
2,495
9,979
9,979
54,259
54,259
Balance at December 31, 2014
Total
69,114
69,114
2,491
2,491
9,962
9,962
56,661
56,661
SUBSEQUENT EVENTS
No material events subsequent to the reporting date have occurred which require disclosure in the
consolidated financial statements.
83
December 31, 2015
`
38.
EXCHANGE RATES
Official exchange rates used in the translation of the items denominated in foreign currencies in the
statement of financial position were as follows:
1 EUR
1 USD
December 31,
2015
In Denars
December 31,
2014
61,5947
56,3744
61,4814
50,5604
84

KOMERCIJALNA BANKA AD SKOPJE Independent Auditors` Report

Transcription

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