Annual report 2006

Transcription

Annual report 2006

CONTENTS
contents
annual report 2006
Dear shareholders, clients and business partners,
On behalf of the Belvnesheconombank Supervisory and Management Boards we are pleased to submit to your attention
the Annual Report about the Bank’s operations in 2006.
This past year was of special significance for the Bank — it marked the 15th anniversary of its foundation.
Established by the decision of the Government of Belarus to service foreign trade operations of the State and
business entities, during the fifteen years of its existence Belvnesheconombank, alongside the rest of the national
economy, has gone through a taxing process of market-driven formation and subsequent consolidation of its positions
in the international and domestic financial markets.
Today Belvnesheconombank is ranked among the largest banks in Belarus and enjoys a high standing in the domestic
banking community.
The Bank is a member of the Brussels International Banking Club and the European Business Congress. It holds
a principal membership status with MasterCard International and Visa International and also acts as a Western Union
Financial Services Inc. representative. The Bank is a winner of special prizes awarded by a number of international
organizations.
Over these years, the Bank has acted as a driver of banking innovations that have eventually spread all across
the banking industry of Belarus.
In 2006, the Bank continued to focus its lending operations on export-oriented chemical, food, woodworking, engineering and electronics industries, efficiently performing small and medium businesses, and self-employed entrepreneurs.
Over Br 965 billion was channeled into the real sector of the economy.
The Bank consistently improved the quality of its loan portfolio and remained compliant with the guidelines set by
the National Bank of Belarus for problem assets and loans.
As an agent bank of the Government of Belarus, Belvnesheconombank continued to manage foreign credit lines opened
under government guarantees to finance major investment projects. The amount of loans disbursed in 2006 under
these credit lines totaled EUR 26.6 million.
The Bank made an extensive use of its many years’ international banking expertise gained from developing its banking
correspondent network that now comprises more than 600 partner banks in 81 countries across the world. Owing
to its broad correspondent network the Bank provided an efficient and prompt international settlement customer service and acted as a clearing house for local banks with regard to their US and EUR transactions and also non-resident
banks in effecting their Br-based payments.
Further improvements in the consumer banking services featured strongly on the Bank’s 2006 agenda. A number
of new investor-attractive deposit packages were introduced to the market. As a result, household savings attracted
by the Bank rose by 8.2% over the year. There was an increase in the sale of self-service retail banking products via
ATMs, CATs and Mobile Bank cell phone service. Consumer lending grew 1.6 times.
The Bank’s robust performance in the delivery of customer services, including those for the general public, was attained owing, above all, to the provision of a wide range of high-quality services and the application of a customer-centered approach to the implementation of banking products, all underpinned by the professional expertise of the Bank’s
staff, its extensive branch network and advanced banking technologies.
In 2007, the Bank’s strategic priorities will continue to be focused on raising its financial stability and competitiveness, increasing lending to the real sector of the economy, participating in the implementation of state
programs and major investment and socially significant projects, providing a broader spectrum of high-quality
banking products and services and building up a long-term and mutually beneficial relationship with its clients,
shareholders and business partners.
The Bank will take a more concerted action to expand its niche in the most important sectors of the domestic
market of banking services, increase lending to efficiently performing businesses, speed up the implementation
of state-of-the-art banking technologies and thereby ensure delivery of qualitatively new banking service standards.
The Bank’s market position will be further enhanced with the arrival of a strategic investor, Vnesheconombank, Moscow, one of Russia’s largest banks, that is to acquire a controlling stake in Belvnesheconombank.
On behalf of the Belvnesheconombank Supervisory and Management Boards we express our gratitude to all
shareholders, clients and business partners for a mutually advantageous and effective cooperation. We are
confident that our business relationship that we have jointly built will gain a further impetus and contribute
to a growing efficiency of the Bank and a successful implementation of its immediate and long-term goals, and
enhance its prestige and credibility.
Very truly yours,
A.N. Kosinets,
Chairman
Supervisory Board
G.A. Egorov,
Chairman
Management Board
annual report 2006
principal economic and monetary trends in Belarus in 2006
economic and
monetary trends
principal
in Belarus in 2006
Macroeconomic overview
In 2006, the national economy enjoyed a fairly favorable macroeconomic environment that led to an
upswing in business and investment activities in core
industries. Inflationary processes slowed down and
household real earnings and savings increased. Sales
of Belarusian goods were on the up both domestically
and internationally. All of the country’s main social and
economic projected targets were reached.
GDP grew by 9.9% at comparable prices. Investment
in fixed assets amounted to Br 19.2 trillion, that is 31.4%
as much as in 2005, while the share of investment
in capital goods reached 65.7%.
Foreign trade in goods and services rose to USD 45.9
billion, with exports amounting to USD 22.1 billion and
imports — USD 23.8 billion. As compared with 2005,
foreign trade grew 127.4% at actual prices with exports
rising 121.7% and imports — 133.3%.
Profitability generated from the sale of manufactured goods rose by 0.2 percentage points and
reached 15.6%.
As at January 1, 2007 overdue accounts payable
came down to Br 4.1 trillion, i.e. 15.8% of the total accounts payable, shrinking by 7.2% as compared with
the year before.
Household real cash earnings rose by 17.3% over 2006.
Consumer prices on goods and services increased 6.6%,
averaging a 0.5% monthly growth, that is the lowest level
reported for the past 16 years.
Monetary Overview
The official exchange rate of the Belarusian Ruble
to the US Dollar rose by 0.6% and was down by 8.4%
as regards the Russian Ruble due to a strong rallying
of the Russian Ruble against the US Dollar. The exchange
rate against the Euro was down by 10.6%.
Broad money supply increased by 39.3% and stood at Br
17.5 trillion at end-2006.
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Br money supply grew by 44.5%, or Br 3.8 trillion,
and stood at Br 12.4 trillion as at January 1, 2007.
Its share within the broad money rose from 68.4%
to 70.9%.
The amount of Br cash in circulation grew by
39.8% and reached Br 2.8 trillion as at January 1, 2007. Its share within the Br money supply
was 22.7%, that within the broad money supply
amounted to 16%.
The active portion of the domestic money
supply (cash in circulation and Br transferable
bank deposits) grew by 42% whilst its share
within the Br money supply shrunk to 56.6%
and was down to 40% within the broad
money supply.
2006 saw a continuing trend in the increment
of corporate and household Br term deposits — over the year they grew by 59.5% and
reached Br 1.3 trillion in the corporate sector and
increased by 47.9% and amounted to Br 4 trillion
in the household sector.
Corporate forex transferable deposits posted
a 22.9% growth over the year and amounted
to USD 997.6 million while household forex deposits
rose by 33.6% and reached USD 70.1 million. Corporate forex term deposits increased 26.8% and
totaled USD 203.1 million while household foreign
currency term deposits scored a 34.2% growth and
reached USD 1.1 billion.
Over 2006, the refinancing rate of the Belarus National Bank went down from 11% to 10% p.a.
Interest rates paid on newly placed household Br
term deposits decreased from 11.6% in December
of 2005 to 10.9% in December of 2006. Even so,
in real terms they remained at a positive value.
Returns generated by newly placed corporate forex
deposits rose by 1 percentage point and reached
7.2% p.a. at end-2006. Returns generated by similar household deposits declined by 0.4 percentage
points and stood at 7% p.a.
Average interest rates charged on newly issued
Br-denominated bank loans (other than soft loans)
fell by 0.6 percentage points from 13.4% p.a. at
end-2005 to 12.8% p.a. by the end of 2006. In real
terms, they amounted to 7.4% p.a. as compared
with 8.6% p.a. in the year before.
Average interest rates applied to newly issued forexdenominated loans remained unchanged over the year
at 10.6% p.a.
Banking Industry of Belarus
As at January 1, 2007, the banking industry of Belarus comprised 30 banks that operated a total
of 421 branches. 26 banks had foreign stakes in their
equity capital, including ten wholly foreign-owned
banks. There were eleven representative offices
of foreign banks in Belarus.
Over the year, the banks’ equity capital increased by
28.1% (Br 1,128.9 billion) and reached Br 5,150.2 billion
as at January 1, 2007.
The banks’ funding base grew by 41.6% and
reached Br 29 trillion.
ROE in the banking industry reached 9.55% against
6.75% in 2005 while ROA went up to 1.7% against
1.25% in 2005.
The share of doubtful loans stood at 1.16% at
the start of 2007 against 1.9% at the start
of 2006.
The amount of lending to the economy rose by
57.7% over 2006 and amounted to Br 19.7 trillion
at the start of 2007, with long-term loans scoring
a 65.6% growth and reaching a total of Br 10.6 trillion. Long-term loans accounted for 53.8% of the total loans disbursed and outstanding.
The share of Br-denominated loans within
the loan portfolio was 66,2% and grew by
65.8% over the year under review to reach
a total of Br 13 trillion. Loans issued in foreign
currencies increased by 44.8% and totaled USD
3.1 billion.
SUPERVISORY BOARD
CHAIRMAN
Aleksandr KOSINETS
Deputy Prime Minister of the Republic of Belarus
DEPUTY CHAIRMEN
Andrey ARSHINOV
Deputy Chairman of the Management Board, Member of the Board of
Directors, OAO Natsionalny Kosmichesky Bank, Moscow
Tatyana POLEGOSHKO
Director of the Banking Operations Regulation Directorate,
National Bank of the Republic of Belarus
MEMBERS OF THE SUPERVISORY BOARD
Nikolay ANDRIANOV
General Director, RUP Belarusian Steel Works, Zhlobin
Loran ARINICH
General Director, ZAO Pinskdrev, Pinsk
Sergey ARSHINOV
General Director, OOO Second Trading House,
General Director, OOO Archi Production Producer Firm, Member
of the Board of Directors, OAO Natsionalny Kosmichesky Bank, Moscow
Pavel KALLAUR
First Deputy Chairman of the Board, National Bank
of the Republic of Belarus
Oleg KASHEVSKY
General Director, OOO Kaskol-Holding, Moscow
Aleksandr KERNOZHITSKY
Director of the Financial Department,
Minsk City Executive Committee
Aleksandr KORSHUNOV
General Director, ZAO Astrasystems, Moscow
Anatoly SVERZH
General Director, BRUSP Belgosstrakh
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MANAGEMENT BOARD
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ORGANIZATIONAL CHART
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AUTHORIZED CAPITAL AND SHAREHOLDERS
As at January 1, 2007, the Bank’s authorized capital
amounted to Br 24,157.9 million.
Equity stakes of over 5% were held by:
Belvnesheconombank’s shareholders comprised 760 corporate entities and nearly 44,000 individuals. State-sector
companies and organizations accounted for 48.4% of the
authorized capital, with the Belarus National Bank holding a
33.5% stake, the State Property Committee of the Republic
of Belarus - a 6.3% stake, and other state-owned organizations and companies holding between them 8.6% of the
shares. Individual equity investments amounted to 13.7%.
•National Bank of the Republic of Belarus;
•OAO Natsionalny Kosmichesky Bank, Moscow;
•ZAO Pinskdrev;
•State Property Committee
of the Republic of Belarus; and
•RUP Belarusian Steel Works, Zhlobin.
AUTHORIZED CAPITAL BY TYPE OF OWNERSHIP
FUNDS MANAGEMENT POLICY
During the past year, the Bank’s funds management policy
was focused on the following key areas:
•enlargement of the scope of business cooperation with
large corporate customers, promotion and consolidation of newly-established and long-standing partnership
relations with SME-sector businesses;
•diversification and improvement of retail services, introduction of new deposit products based on competitively attractive terms and conditions of placing and
withdrawing funds, and closing deposit accounts;
•expansion of inter-bank borrowings, including untied
loans and foreign bank credit lines to effect uncovered
documentary and interbank transactions, i.e. those
that require no counter-commitment of funds by
the Bank or its customers; and
•increase of the Bank’s equity capital to bring down
funding costs, raise return on assets and reduce risk
exposures.
As at 01.01.2007, Belvnesheconombank’s funding resources amounted to Br 796 billion, scoring an increase of Br 17.1 billion, or 2.2%, over
the year. For the major part, that increase was
generated by domestic investors whose share
grew to 79.2% of the total, i.e. 0.5 percentage
points as high as in 2005. The rest was constituted by outside investment and the Bank’s
own resources (equity capital, internal provisions and funds), 8.5% and 12.3% respectively.
In the past year, the Bank had to manage its funding base amid directed transfers
of accounts and re-channeling of cash flows
of public-sector companies to state-owned
banks. It resulted in a certain outflow of relatively low-cost funds and a need to switch over
to more expensive substitutes. Transferable
corporate deposits fell by Br 41.5 billion over
the year. Given these circumstances, the Bank
stepped up its efforts to reengineer its funding
base structure. It was primarily achieved owing
to the attraction of term deposits of domestic
businesses and mobilization of household savings.
In 2006, term and conditional deposits opened
by domestic corporate entities rose by 41.8%,
or by Br 30.3 billion.
Household funds increased by Br 19.6 billion,
or 8.2%, and amounted to Br 259.6 billion,
accounting for 32.6% of the entire funding
resource base. The Bank raised household
funds both in foreign currency and Belarusian
rubles, offering competitive and customer-attractive terms and conditions. Concerted efforts undertaken by the Bank to sign up legal
entities to participate in its bankcard-based
payroll programs were also instrumental
in increasing household cash flows via payroll
current accounts.
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20 lending operations
LENDING OPERATIONS
At the start of 2007, customer loans outstanding
amounted to the equivalent of Br 454.7 billion, including
Br 163.6 billion, USD 109.1 million, EUR 16.9 million and RUR
123.1 million. In 2006, the Bank’s loan portfolio grew by Br
44.4 billion, or 10.8%, against 2005.
In 2006, the Bank continued to promote cooperation
with export-oriented companies in the chemical, food
processing, woodworking, machine-building and electronics
industries, as well as with efficiently performing SMEs and
self-employed entrepreneurs.
The share of public-sector companies in the loan portfolio
was 12.8% with the private and part-public sector
businesses accounting for 87.2%.
Over the past year, lending to the real sector
of the economy with leasing transactions factored
in amounted to the equivalent of Br 965.6 billion, including
Br 87.7 billion in long-term loans and leasing transactions
and Br 877.9 billion in short-term loans.
Loans were extended to major companies in the real
sector of the economy, including OAO Horizont, UP
Belryba, OAO Savushkin Produkt, OAO Khimvolokno-Mogilev, RUP Khimvolokno-Svetlogorsk, POOO StrominvestM, ZAO MAZcontract-leasing, ZAO MAZ-MAN JV, KSO
Vneshstroyinvest OOO, OAO Peleng, OAO Spartak JV, OAO
DOK-Borisov, UPP VKK Vitba, RUPP Avtogidrousilitel-Borisov and others.
Considerable lending resources were channeled to credit
day-to-day operations of companies within the Belneftekhim Concern. Loans granted to Khimvolokno-Mogilev amounted to USD 21.8 million and Br 4.9 billion. As
a result, in 2006 the company raised its production by
9% and attained a 133.2% growth in revenues, boosting its exports by 22.1% to USD 154.3 million and scoring
a 58.4% increase in profit.
In the past year, the amount of lending to replenish
the working capital of Horizont reached USD 25 million.
Largely owing to this support, Horizont managed to expand its presence in the domestic and export markets.
The company controls 47% of the domestic TV-set
market, 10% of the DVD-player market, 13.3% of the microwave oven market and 7.8% of the vacuum cleaner
market. In addition, it launched new products — LCD TVs
and monitors, and air conditioners, and is now in the development stage to start the production of four-wheeled
All-Terrain Vehicles (ATVs).
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Funds loaned by the Bank to MAZ-MAN enabled it
to start assembling MAN TGA truck tractors and
launch a mass production of 1.5‑ton capacity front-end
loaders.
Loans granted to Avtogidrousilitel-Borisov contributed
to its stable performance. As compared with 2005,
the company’s production volumes rose 14.8%, revenues
grew 23.5% and exports increased 9.2%.
Considerable financial support was rendered to the agribusiness sector during 2006. It totaled Br 163 billion,
i.e. 1.8 times as much as in the previous year.
Loan disbursements to one of the country’s dairy industry
leaders, Savushkin Produkt, allowed the company to attain
high growth rates and considerably improve on its core
economic indicators, with output and revenues going up
1.2 times. Owing to a successful penetration into Russian
markets, its exports recorded a 174% growth against
2005 and reached USD 33.8 million.
In 2006, a loan of USD 8.3 million extended to Spartak,
one of the country’s largest confectionery producers,
made it possible to boost its book profit 4.4 times, increase production volumes by 17% and raise revenues
by 20.7%.
The Bank rendered financial assistance to Belryba
to update its production base. Loan proceeds were
used to buy a packaging line that is unique for Belarus.
As a result, the company raised its output by 11% and
posted a 40% increase in revenues.
Over 2006, investment loans and financial leasing services
provided to the real sector of the economy totaled Br
160 billion, including the equivalent of Br 72.3 billion in foreign-originated loans.
In accordance with its business development strategy
the Bank continued to credit small and medium businesses. Loans extended to the SME sector totaled Br
239.2 billion and accounted for 52.6% of the entire
loan portfolio.
As at 01.01.2007, household loans issued and outstanding
amounted to the equivalent of Br 55.6 billion, including Br
39.9 billion in consumer loans and Br 15.7 billion in homepurchasing loans. They recorded a 59.8% growth compared with 2005, rising within the Bank’s loan portfolio
from 8.5% to 12% as at 01.01.2007.
The Bank continued to improve the quality of its loan
portfolio. As at 01.01.2007, problem assets accounted
for 2.8% of its total assets exposed to credit risk,
while problem loans made up 1.98% of the total customer and bank loans.
Overseas Credit Lines
During 2006, as an agent bank of the Belarusian Government Belvnesheconombank continued to manage 22 government-guaranteed foreign loans to finance investment
projects, including:
•11 loans in the total amount of EUR 113.4 million extended by AKA Ausfuhrkredit-Gesellschaft mbH. As
at 01.01.2007, indebtedness remaining was EUR 31.6
million;
•5 loans totaling EUR 37.7 million advanced by Bayerische Hypo- und Vereinsbank AG, indebtedness remaining was EUR 33.5 million;
•2 loans in the total amount of EUR 12.4 million issued
by Austria Creditanstalt AG, indebtedness remaining
was EUR 2.1 million;
•a loan of USD 37.3 million from the Czech Export
Bank, indebtedness remaining was USD 11.2 million;
•a loan of KD 5.1 million provided by the Kuwait Fund
for Arab Economic Development, indebtedness remaining was KD 5.1 million;
•2 loans in the total amount of EUR 7.8 million extended
by Mediobanca — Banca di Credito Finanziario S.p.A.,
indebtedness remaining was EUR 6.9 million.
Foreign loan proceeds disbursed via Belvnesheconombank
in 2006 totaled EUR 26.6 million and were used to finance the following projects:
•EUR 25.2 million advanced under an agreement with
Bayerische Hypo- und Vereinsbank AG (Germany), EUR
0.3 million provided under an agreement with AKA
Ausfuhrkredit-Gesellschaft mbH (Germany), and EUR
0.5 million granted under an agreement with Mediobanca — Banca di Credito Finanziario S.p.A. (Italy)
were used to finance two investment projects at
Khimvolokno-Mogilev;
•EUR 0.6 million disbursed under an agreement with
Bayerische Hypo- und Vereinsbank AG (Germany) was
used to finance the third phase of the construction
of a teaching building for Belarusian State University.
In addition, during 2006 the Bank conducted work with
a view to signing a EUR 125 million framework agreement
with a Dresdner Bank-led syndicate of German banks.
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international settlements and trade finance
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INTERNATIONAL SETTLEMENTS AND TRADE FINANCE
Belvnesheconombank makes an active use of its many
years’ experience in the conduct of international settlements and documentary transactions to facilitate trade
business of Belarusian exporting companies.
The Bank’s competitive advantages in this market
segment are based on a high professional expertise
of the staff, availability of a considerable amount of documentary credit facilities set up by leading international
banks, efficiency and high quality of executing payment
orders of corporate customers and foreign banking
institutions, and a broad network of correspondent banks
and accounts. During the year under review the Bank
geared its efforts toward providing its customers with
a full suite of services in line with international best banking practices. The vast geographical spread and growing
volumes of documentary transactions as well as a high
standing gained among corporate customers and partner
banks marks Belvnesheconombank as an expert and fullfledged participant in this segment of the market.
export, Polimir, Savushkin Produkt, Mogilev Artificial Fibers
Plant and Khimvolokno-Svetlogorsk.
Efficient export L/C service rendered by the Bank
attracted customers of other domestic banks. Over
the year under review, 10 L/Cs to the tune of USD 7.7
million were processed by the Bank for such customers.
The Bank consistently promoted assignment-of-proceeds
and documentary credit products among its customers
as a way of effecting payments under their foreign trade
contracts. Customers with large volumes of documentary
business were offered special terms and conditions that
provided for a fast-track and simplified processing of their
payment transactions.
Within its foreign trade facilitation business the Bank
opened 286 import L/Cs totaling an equivalent of USD
56.6 million.
The Bank did uncovered documentary business with
29 banks in Europe, the US, Russia and Kazakhstan.
As a result, 219 uncovered import L/Cs were issued
to the equivalent value of USD 48.9 million. 226 L/Cs
in the amount of USD 48.1 million were confirmed by
prime international banks. 27 customer L/Cs provided for
a short-financing to the tune of USD 9.3 million.
In 2006, the Bank issued 186 guarantees worth USD
34.5 million and processed 121 export L/Cs to the value
of USD 80.7 million.
Among the Bank’s main documentary business customers
were the largest companies of Belarus, including Minsk
Automobile Plant, Horizont, Minsk Tractor Works, Beltekh-
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money and forex market operations
MONEY AND FOREX MARKET OPERATIONS
In 2006, the Bank was an active player both in the domestic and international markets, focusing its activities
on maintaining short-term liquidity to meet its current
commitments as an important element of its overall
operations.
Br average daily loans and borrowings amounted to Br
79.65 billion (an increase of 49.6% against 2005) and
Br 39.73 billion (an increase of 14% on the year before),
respectively.
Average interest rates generated by Br loans exceeded those applied to borrowed funds by 2.1 percentage
points.
Average daily foreign currency loan volumes over
the year were on a par with the previous year, totaling
an equivalent of USD 58.1 million. Average daily borrowings amounted to USD 28.6 million. Compared with
2005, there was an increase in the average volume
of lendings in the domestic forex market from USD 6.3
million to USD 18.6 million. Average interest rates generated by forex loans exceeded those applied to borrowed funds by 3.2 percentage points.
As in the preceding years, the Bank actively traded
in the stock exchange and interbank markets and was
also strongly present in the conversion transactions
segment. The year under review witnessed a tangible
growth in forex trading volumes. Average daily USD
purchases reached USD 1.6 million against USD 1.1 million in 2005, while average daily sales rose to USD 1.3
million against USD 1.0 million during the previous year.
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SECURITIES TRADING
Belvnesheconombank took part in National Bank
short-term bond placement auctions. Total purchases in the primary market reached Br 81.8
billion. Of these Br 69.2 billion worth of bonds
were purchased for the Bank’s portfolio. Customer-ordered bond purchases amounted to Br
12.6 billion.
Total purchases of government bonds in the primary market reached Br 40.5 billion. Of these
Br 36.6 billion worth of bonds were purchased
for the Bank’s portfolio. Customer-ordered bond
purchases amounted to Br 3.9 billion.
Transactions in the secondary market comprised
REPO and ‘held to maturity’ deals valued at Br
40.4 billion.
The Bank also traded in commercial bank
promissory notes in the secondary market with
payments effected in Br, USD and EUR, and also
continued to provide securities market intermediary services. It conducted registration of corporate share deals. A total of 65 such deals were
registered over the accounting year.
The Bank’s safe custody unit provided accounting, registering and clearing services
to securities holders.
The bulk of safe custody operations comprised
government bonds and bonds of the National
Bank of the Republic of Belarus. In 2006, their
total turnover in DEPO accounts reached around
12 million items.
As at January 1, 2006 the Bank managed
over 63.5 thousand DEPO accounts, including
70 accounts maintained for customers trading
in the government bond market. Safe custody
services were rendered to 54 joint-stock
companies.
CORRESPONDENT BANKING
In 2006, Belvnesheconombank’s cooperation with leading
financial institutions in the CIS region and beyond and also its
counterparts in Belarus was focused on securing the most
advantageous international settlement terms and conditions
for customers, developing and optimizing the correspondent
banking network and mobilizing foreign bank funds to finance
customer foreign trade operations.
At the start of 2007, Belvnesheconombank maintained correspondent relations with over 600 banks in 81 countries
across the world.
The Bank made an active use of its NOSTRO accounts
opened with such reputable banks as Bayerische Hypo- und
Vereinsbank AG (Munich, Germany), Commerzbank AG,
Deutsche Bank AG and Dresdner Bank AG (Frankfurt/Main,
Germany), American Express Bank Ltd., Deutsche Bank Trust
Company Americas and JP Morgan Chase Bank, N.A. (New
York, US), ING Bank N.V. (Amsterdam, Netherlands), Barclays
Bank PLC and HSBC Bank PLC (London, UK), Sberbank of Russia, Vneshtorgbank, and Promsvyazbank (Moscow, Russia).
For many years now, Belvnesheconombank has acted as
a USD and EUR clearing and settlement house for domestic
banks. 27 resident banks used their correspondent VOSTRO
accounts with Belvnesheconombank, considerably reducing
their operating costs and cutting transaction execution times.
Over 100 non-resident banks made use of their correspondent
accounts with Belvnesheconombank to effect Br payments.
Maintaining a broad correspondent banking network, the Bank
delivers a speedy international settlement service to its customers.
In managing its correspondent banking relations, the Bank
strictly adheres to the national regulations on combating laundering of proceeds of crime and financing of terrorism as well
as the relevant international standards.
In 2006, the Bank actively mobilized foreign bank funds to carry out uncovered documentary and interbank transactions.
Such lines were established by Banka Lombarda e Piemontese S.p.A., Italy, and Promsvyazbank, Hanti-Mansiyskiy Bank
and Svyazbank, Russia. The total value of such credit lines
over the accounting year amounted to about USD 78 million.
Especial y close cooperation within the opened credit lines was
established with Bayerische Hypo- und Vereinsbank AG (Munich, Germany), Commerzbank AG (Frankfurt/Main, Germany),
Bank Austria Creditanstalt AG (Vienna, Austria), BRE Bank SA
(Warsaw, Poland) and Hanti-Mansiyskiy Bank (Moscow, Russia).
CORPORATE BANKING
In the year under review, the Bank continued to focus its
efforts on the implementation of its strategy of serving
corporate customers of different types of ownership and
providing the widest possible array of corporate banking
services. The most important objectives were to build
up customer loyalty, raise customer satisfaction, improve
service culture and staff professionalism.
The core of Belvnesheconombank’s corporate customer
base in the past year consisted of the largest domestic
companies in manufacturing and export of finished goods
and raw materials, transportation, farming, construction
and trading sectors. Among them there were companies well-known across Belarus and abroad such as OAO
Khimvolokno-Mogilev, RUP Minsk Automobile Plant, OAO
Mozyr Oil Refinery, ZAO Beltechexport, ZAO Atlant, OAO
Savushkin Produkt, OOO Belita JV, GTPUP Belryba, ZAO
Pinskdrev, ZAO Milavitsa JV, OAO Borisov DOK, OAO Horizont, RUP Avtogidrousilitel, OAO Spartak JV, RPUP Nieman Tobacco Factory, RUP PO Khimvolokno-Svetlogorsk,
RUP Rechitsa Metalware Factory, OAO Khimvolokno-Grodno, RUP Belarusian Steel Works, RUP BelAZ, McDonald’s
Restaurants Foreign Company, PO Minsk Tractor Works,
Coca Cola Beverages Belorussiya Foreign Company, ZAO
Belarusian Shipping Company and OAO Belshina.
The Bank’s corporate customers make an active use
of the Client-Bank electronic service that incorporates
a remote access option, enabling them to monitor their
accounts in an on-line mode, save time and reduce operating costs.
In order to maintain its competitive edge and raise customer satisfaction, during the past year the Bank introduced several new service options such as:
•Mobile Inquiry, Bank-Supported Advertising and Business Partner Search Services,
•Ask the Bank Service accessible via the Bank’s
Web-site, and
•provision of new formats of current account statements for certain customers.
Over the accounting year, the Bank recruited 1,300 new
business entities, including over 800 self-employed entrepreneurs. As at January 1, 2007 the Bank had a total
of 10,481 business entities among its customers.
In 2006, the Bank continued to introduce improvements
in its corporate customer services. In particular, the entire customer service at the Bank’s head office was
reinvented to employ a system of integrated management of accounts and cash-and-settlement services with
each customer assigned to a single bank officer instead
of the previously used system of fragmenting such services among several bank officers. A similar system is
also being implemented in the Bank’s branches.
29
corporate banking
annual report 2006
30 retail banking
RETAIL BANKING
Retail banking has traditionally been a top-priority line
of business for Belvnesheconombank. The Bank enjoys
a robust retail market position that is secured, above
all, by delivering an ever broader spectrum of topquality services and exercising a flexible approach
to various types of retail products, and underpinned
by the proven expertise of its staff, extensive branch
network and application of state-of-the-art banking
technologies.
In the year under review, the Bank offered household
depositors over 20 Br- and foreign exchange-denominated deposit options. Several new deposit products
were designed and marketed, featuring a variety
of customer-attractive terms and conditions such as:
•deposit replenishment and partial withdrawal requiring
no prior consent of the Bank;
•option of the early termination of a deposit agreement
by the customer without re-computation of accrued
interest;
•fixed interest rate and choice of accrued interest
payment options from monthly to capitalized interest
payments;
•interest payment generated by progressively raised
interest rates;
•purchase of gold bars, travelers’ checks and bankcards
at reduced prices; and
•acquisition of discount cards entitling their holders
to holiday voucher rebates.
As at January 1, 2007, household funds raised by
the Bank reached an equivalent of Br 259.6 billion,
including Br 62 billion and an equivalent of USD 92.3
million in foreign currency.
2006 saw an increase in retail lending. Over the year,
retail loan disbursements amounted to an equivalent
of Br 52.2 billion. Especially strong was the demand for
real-estate loans to finance home building/purchasing
transactions, consumer loans to buy cars and household appliances, and student loans.
31
retail banking
annual report 2006
In 2006, retail loans issued and outstanding recorded
a 1.6‑fold growth and amounted to Br 55.6 billion.
adjust, where deemed necessary, service-providing
procedures.
Belvnesheconombank was the country’s first bank
to launch a bankcard-based revolving credit product
in 2004 targeted on its payroll program participants.
In 2006, after gaining sufficient experience, the Bank
expanded this product market segment to cover
a wider range of customers, including those that are
not Belvnesheconombank payroll card holders, and
began offering this guarantor-free lending service
to holders of Belvnesheconombank-issued domestic and
international Visa Electron and Visa Classic cards.
Self-service principle was used in dispensing standardized retail services including settlement of bills invoiced by 24 service providers via the Bank’s network
of 63 ATMs, 27 CATs, and the Mobile Bank cell-phone
service.
In order to increase its revenues from retail operations, the Bank continued to conduct a concerted campaign to sign up corporate entities to participate in its
bankcard-based payroll programs. As at January 1,
2007 the Bank had over 1,400 such programs in place
and handled a total of Br 26.5 billion via relevant payroll current accounts.
Retail services were dispensed by 27 banking outlets
and 12 cash-and-settlement centers. The Bank’s foreign-currency exchange network comprised 13 exchange offices and 120 cash desks.
Delivering services through a single point of contact,
one of potentially effective ways of managing customer
relations and raising customer satisfaction, has by
now found application in processing currency exchange
transactions, handling cash payments, trading in precious
metals, managing placement and withdrawal of funds by
bankcard holders, processing loan repayments at any
of the Bank’s outlets irrespective of where customer
loan accounts are actually maintained, and also selling
commemorative and jubilee coins.
The Bank’s Center of Banking Services No.1 launched
a computerized system of managing customer flows
and service-wait times. This system allows to deliver
greater convenience to customers, eliminate customer
standing in lines waiting to be served, reduce customer
wait times and make a more efficient use of staff
time. Computer-generated statistical data makes it
possible to exercise an objective and effective control over customer service quality and efficiency and
In order to expand its retail market penetration,
the Bank promoted its products among serviceproviding businesses, goods suppliers and production companies to process their customer-originated
bill-settlement payments. To date, a total of 271 such
companies have entered into banking service agreements with the Bank.
In the year under review, the Bank launched sales
of insurance products and began collecting insurance
premiums. The insurance products offered by the Bank
include Belgosstrakh compulsory motor third party
insurance policies and five Belvneshstrakh voluntary
insurance policy plans.
As at January 1, 2007, the Bank managed over
500 agreements with merchants accepting payments
by means of the Bank-issued Visa and MasterCard
plastic cards. Over the year, bankcard-based payments
made by the general public for goods and services
scored a 1.5‑fold growth and reached Br 104.9 billion.
Over the past year, retail foreign cash trading and
conversion transactions rose by 23% as compared
with 2005.
Precious metal trading was further expanded, with gold
bar sales reaching 78.1 kg in 2006 against 29.8 kg
in 2005. Silver sales reached 53.6 kg while platinum
sales amounted to 2 kg, exceeding the 2005 sale
volumes 11.7 and 25.5 times respectively. The amount
of gold purchased from the general public was 1 kg
against 0.6 kg in 2005.
Western Union retail network run by Belvnesheconombank and its subagent banks comprised 284 outlets
accounting for around 40% of all Western Union
money transfers in the country.
BRANCH NETWORK
A strong performance of the Bank in 2006 was facilitated
owing to a steady business growth generated by its branch network. As at January 1, 2007 it comprised five branches in regional capitals and 19 branches in major cities across the country. The branches accounted for 88% of all corporate current
accounts administered by the Bank, 56% of funds placed
therein, 73% of the total loan portfolio, including 88% in Belarusian Rubles. The branches managed nearly 73% of household
funds and 88% of all household loans outstanding that constituted 14.7% of the total branch-network loan portfolio.
The branches posted a profit of Br 5.3 bil ion that amounted
to 65% of the Bank’s consolidated profit. Major profit generators
were the Mogilev Regional Branch, Central Branch and Branch 2
in Minsk and also the branches operating in Borisov, Mozyr and
Bobruisk. The past year saw an increase in the share of customer funds within the branches’ funding base. As at January 1,
2007, they accounted for over 67% of the total funding resources of the branch network. The branches’ loan portfolio increased
by Br 35 bil ion and reached an equivalent of Br 332 bil ion.
There was a further expansion in retail sales driven by offering a broader spectrum of products, delivering service quality
improvements and ensuring greater customer convenience.
Household credit operations posted a dynamic growth with loans
outstanding scoring a 55% increase and reaching Br 48.7 bil ion
at end-2006. Household funds in current accounts and deposits
exceeded an equivalent of Br 188 bil ion and became the largest
single source of funding within the branch network debt structure.
The branches continued to dynamically expand their bankcard
business — cards in circulation rose by 29%, reaching a total
of 64 thousand. Sales of credit cards scored a 38% increase
over the year owing, among other things, to promotional discounts offered to payroll card holders. A total of 5.8 thousand
credit cards were sold by the branches as at January 1, 2007.
Bankcard-based revolving loans outstanding rose 1.8 times and
reached Br 7.5 bil ion at end-2006. That was the fastest-growing segment of the branch network business operations.
Precious metal bar sales to the general public grew in scale,
reaching Br 2.1 bil ion and recording a nearly three-fold increase
over the previous year.
In order to optimize its branch network, the Bank closed down
its inefficiently performing branches in Novopolotsk and Svetlogorsk and reorganized them into a cash-and-settlement center
and a center of banking services, respectively.
The 2006 contest for the best retail service provider regularly
run among the Bank’s branches was won by the Mogilev Regional Branch, Minsk Central Branch and Pinsk Branch.
annual report 2006
branch network
34
35
branch network
annual report 2006
36
bankcard business development
BANKCARD
BUSINESS
DEVELOPMENT
Belvnesheconombank, a front-runner
in the introduction of bankcard-based payment services in Belarus, continues to maintain its leadership positions among domestic
banks in this market segment.
The Bank set up the country’s first bankcard
processing center and launched the first
MasterCard card, introduced the first payroll
and credit cards, installed the first ATMs
and POS-terminals, and pioneered bill-settlement payments via ATMs and CATs. Rather
than concentrating on sale volumes, the Bank
centers its bankcard business development
on the quality and diversity of its services
encompassing all international payment system participants, from individual cardholders
to partner banks, and fostering long-term customer relations based on good faith partnership and mutual interest.
2006 witnessed further advancements
in the development of Belvnesheconombank’s card business infrastructure.
The joint network run by the Bank and its
four partner banks — Tekhnobank, ITIBank, Moscow-Minsk Bank, and BelSwissBank — was expanded by over 40% and
now comprises 108 ATMs and 32 CATs.
The joint ATM/CAT network functionality allows customers to settle their utility bills, top
up mobile phone accounts, pay cable TV and
Internet bills invoiced by 22 service providers.
Unlike ATMs and CATs of most other domestic
banks, those run by Belvnesheconombank handle settlement payments effected by means
of cards issued by any bank across the country and the world. In addition, their menu
allows to make loan repayments and place
funds or withdraw call deposits. All of these
services are also accessible via the Bank-operated Mobile Bank cell-phone service. The Bank
is consistently working to increase the number
of service providers using ATM/CAT-enabled
customer bill-settlement service.
37
bankcard business development
annual report 2006
The Bank’s acquiring network comprised over
500 merchants nationwide.
COMMUNITY SUPPORT
AND SPONSORSHIP
Bankcard sales were kept proportional
to the growth of the ATM/POS network to ensure maximum customer satisfaction. The ratio
of cards sold to POS terminals installed at merchant locations meets international best practices
and the guidelines set by the Belarus National
Bank and stands at around 140 cards per POS
terminal.
In 2006, Belvnesheconombank sponsored various charity programs, sporting events and also made donations
to support the country’s spiritual life.
As compared with 2005, the total number of bank
cards in circulation increased 36.6% to 73.7 thousand, with Br-denominated cards scoring a 41%
growth and reaching 67.7 thousand items.
In the past year, the Bank launched international
Br debit and credit card sales and continued
to broaden the range of services offered to holders of cards issued by the Bank and its partner
banks.
In order to further expand its consumer lending
business, in 2006 the Bank continued to enlarge
the spectrum of bankcard-based lending instruments to reach out to a wider customer audience. As a result, the volume of bankcard-based
loans outstanding recorded a 1.7‑fold growth and
amounted to Br 8.9 billion.
Financial assistance was rendered to the Belarusian Tennis Association to stage a Davis Cup World Group match,
the Belarusian Soccer Federation to publish promotional
materials, and also toward the erection of the Ascension
of Our Lord Church in Nesvizh.
Over the year, donations were made to charity funds, civic organizations and professional unions, including, among
others, the Belarusian Fund of Benevolence and Health,
Belarusian Fund of Assistance to Disabled Athletes, and
the Civic Association of Veterans.
In 2006, the Bank provided assistance to Minsk Boarding
School No.10 for children in state care to purchase New
Year gifts.
The farming sector was a traditional recipient
of the Bank’s donations. In the year under review, funds
were donated to purchase a prize for awarding one
of the best-performing agricultural workers at the Dazhynki-2006 National Harvesting Fair and Folk Festival,
procure agricultural capital goods for Orda agrifarm
in Kletsk District, Minsk Region, and finance the construction of a communal sporting center in the village of Aleksandria in Shklov District, Mogilev Region.
The total amount of donations earmarked by
the Bank for community support and charitable objects
in 2006 amounted to Br 211 million.
annual report 2006
community support and sponsorship
38
SUBSIDIARIES
AND ASSOCIATED COMPANY
invested capital due to adverse weather conditions that
affected its planned agricultural output. The company is
currently working on a number of projects that promise
to ensure its sustainable and profit-yielding operation.
As at 01.01.07, Belvnesheconombank’s equity investments totaled Br 2.27 billion and covered 16 legal entities, including Br 2.12 billion invested in its subsidiaries
and associated company. The Bank’s subsidiaries comprise Belvneshstrakh Insurance Company (wholly owned
by the Bank), Interbranch Institute for Independent
Expertise of Investment Projects (52‑percent equity stake), Belinterfinance (51%), Vneshstroyinvest
(51%) and Vnesheconomstroy (51%) Joint Ventures.
The Bank’s associated company is Sivelga Closed Joint
Stock Company (25%).
Vneshstroyinvest runs a sporting and fitness facility
trademarked Mir Fitnesa / World of Fitness. In 2006,
the company’s earnings from the sale of its products
and services amounted to Br 4.9 billion. The company
managed to achieve certain improvements in its financial
position owing to the implementation of a program of annual season ticket credit incentives, introduction of new
season ticket plans, provision of extra services, application
of a flexible pricing policy, implementation of an external
marketing program, intensification of advertising activities
as well as the implementation of other initiatives.
During 2006, the Bank’s subsidiaries and associated company pursued their lines of business as defined by their Articles
of Association and business development strategies.
As an investor and ordering customer/owner
of a multifunctional complex construction project,
Vnesheconomstroy jointly with its general project designer embarked upon drafting design and cost estimate
Belvneshstrakh was engaged in insuring customer finandocumentation, identifying funding sources and obtaining
cial, property and foreign trade risks. In the past year,
requisite approvals and permits to start construction
the company concluded 4.2 thousand insurance policy con- works.
tracts; its paid-in premiums totaled Br 3.8 billion, scoring
an 8.2% increase compared with the year before and its Sivelga, the Bank’s associated company, is a robustly
earnings grew 5% over the year to reach Br 5.0 billion.
operating footwear manufacturer consistently delivering
a positive year-to-year revenue growth.
As at 01.01.07, earnings posted by the Interbranch
Institute for Independent Expertise of Investment Projects
from the sale of its products and services amounted
to Br 0.1 billion. During the past year, the Institute had
to provide its core business plan development and appraisal services in an increasingly deteriorating legal environment due to government-initiated regulatory changes,
obligating public-sector companies to contract these services out to organizations designated within their relevant
sector or industry.
Given these circumstances, the Bank resolved to restructure the Institute into an energy services company.
As at 01.01.07, Belinterfinance’s earnings totaled Br 6.1
billion. In 2006, the company was unable to improve its
business performance and generate return on the Bank-
39
subsidiaries and associated company
annual report 2006
40 banking technologies
BANKING TECHNOLOGIES
In 2006, banking technology improvements were geared
toward enhancing the Bank’s business capabilities. New
technological solutions and banking products were designed and implemented making it possible to considerably
broaden the spectrum of services and raise customer
satisfaction. To this end, a set of measures were implemented to:
41
banking technologies
•develop and improve software products to computerize retail services and enable cashiers to process
household loan repayments, service fees, penalties and
interest payments, irrespective of where relevant customer accounts are actually kept, and ensure uniformity of deposit agreements;
•develop and put in place a software technology to
screen and record details of financial transactions to
prevent laundering of proceeds of crime;
•expand unified straight-through processing technologies
to cover Treasury transactions with regard to collecting and granting loan/borrowing applications from the
Bank’s branches via the in-house EDP system;
•automate processing and accounting of penalties, costs
and fees originating from the Bank’s lending operations;
•introduce a software solution enabling to set up a
unified centralized database for accounting fixed and
intangible assets and other inventories;
•upgrade automated receipt, verification and analysis of
prudential banking reports;
•expand unified technologies to cover ATM and CATsupported bill settlement transactions;
•build up electronic payment documents archiving capabilities;
•encourage greater customer use of Client-Bank remote-access account-monitoring service;
•expand the ATM network and adapt it to processing
EMV cards;
•have EMV card service VISA-validated;
•enhance the system of security, monitoring, maintenance and administration of computers and other
network elements;
•upgrade the computer network and server equipment;
•enhance the software user counseling and technical
support service;
•implement a software application to analyze lending
operations;
•implement a software product to log operating risks;
•upgrade specialist computer systems;
•develop added automating capabilities to handle receipt,
verification and consolidation of banking reports;
•introduce new automated transaction-processing capabilities to reduce financial and labor costs;
•install own software products at the Bank’s branches; and
•update software applications to comport with applicable law modifications and user requirements.
annual report 2006
HUMAN RESOURCES DEVELOPMENT
The Bank’s personnel policy was geared toward building
up a dedicated and competent team of associates capable of tackling challenges facing the Bank, enhancing its
business performance and consistently expanding the mix
of top-quality products and services. Given these tasks,
the main emphasis was placed on the adequate staff
recruitment and deployment, optimization of the organizational structure, raising professional competencies, and
fostering in-house corporate culture.
As at January 1, 2007, Belvnesheconombank’s staff
comprised 2,216 employees, including 872 working
in the head office, 1,338 deployed in the Bank’s branches,
and 6 — in the Bank’s representative offices in Moscow
and Warsaw. Executive officers and all staff members
in the Bank’s core business areas held relevant university-level degrees. Among them there were 10 PhD and
2 MBA degree holders.
Employees under the age of 40 made up over 60%
of the total workforce.
With a view to raising staff skills the Bank’s training
center ran 24 workshops attended by 751 employees.
Candidates for managerial positions and branch staff
members were put through specially designed training programs in various divisions of the Bank. 105 staff
members attended off-site workshops and skills upgrading programs with 18 employees completing such training
programs abroad.
In order to maintain adequate English language staff competency and facilitate business communication with foreign
counterparts and customers, the Bank ran foreign language
proficiency courses attended by 67 staff members.
50 staff pursued university-degree courses, with 20
of them taking second university-degree studies. In 2005,
12 staff members completed their course of studies and
were awarded relevant academic credentials.
Belvnesheconombank continued to promote its collabora-
tion with domestic universities and colleges. 94 students
completed their traineeships at the Bank’s divisions.
Among them there were trainee students from Belarusian State Economic University, Belarusian State University, Belarusian State Technical University, Belarusian State
University of Informatics and Radioelectronics, Academy
of Management under the Republic of Belarus Presidency,
Minsk College of Finance and Economics, Pinsk Higher
Banking College, and also students from non-state educational establishments.
2007 BUSINESS OBJECTIVES
Belvnesheconombank’s 2007 key objectives comprise enhancement of the Bank’s financial soundness
and competitive advantages, expansion of volumes
of lending to the real sector of the economy, participation in the most important state-run programs and
investment and socially significant projects, extension
of the spectrum of high-quality banking products and
services, and consolidation of long-term and mutually
rewarding business relations with the Bank’s clients,
shareholders and business partners.
With a view to attaining these objectives and also meeting the target benchmarks set forth in the 2007 Guidelines of the Monetary Policy of the Republic of Belarus,
2006‑2010 Program of the Republic of Belarus Banking
Sector Development, and the Bank’s 2007 business plan,
it is envisaged to:
•generate profit growth by no less than 22% by raising operating efficiency through increasing return on
equity capital and assets and bringing down operating
expenses;
•increase equity capital by no less than 26% and
maintain it at a level adequate to cover the Bank’s risk
exposures;
•enlarge the funding base by no less than 20% by
increasing the volume of funds placed with the Bank
by its existing customers, recruiting exporting
companies and companies engaged in foreign trade,
corporate entities with foreign capital, and fast-growing private-sector companies, attracting household
savings and funds of foreign banks and non-bank
financial institutions;
•continue to pursue an interest rate and fee policy
to stimulate Br customer savings and ensure affordability of credit to all economic operators;
self-employed entrepreneurs as well as to households
by introducing new retail lending products;
•step up efforts to attract investment loans
to the country’s economy by making use of foreign
bank credit lines under state programs with due compliance with the prudent banking practices;
•generate improvements in the quality of the loan
portfolio and reduce the share of customer and interbank problem loans and that of problem assets within
the assets vulnerable to credit risks;
•maintain the assets/liabilities structure at a level
compliant with the Belarus National Bank regulations,
and ensure a timely and complete discharge of its
commitments toward customers and counteragent
banks, to develop and implement measures to further
advance the system of risk management, employing methods and instruments to identify, assess, duly
prevent and minimize bank risks, as well as to raise efficiency of internal controls and corporate governance;
•to continue to implement improvements in the Bank’s
organizational structure by optimizing staffing levels
at the head office and branches on the basis of their
functional expediency, profit generation, volumes of operations and individual workloads of employees within
structural units; further enhance the system of moral
and financial incentives and rewards to maintain
proper staff motivation levels with due account for
each employee’s contribution to the overall business
advancement of the Bank; and
•continue to implement stringent all-round cost-saving
measures and cut down administrative and operating
expenditures.
•increase the loan portfolio by no less than 23% by
expanding lending to export-oriented industries, efficiently operating small and medium businesses and
43 2007 business objectives
annual report 2006
balance sheet as at january 1, 2007
(Br, million)
2006
2005
Cash
Due from the National Bank
Securities:
for trading
held until maturity
available for sale
Loans and advances to other banks
Loans to clients
Long-term financial investments
Fixed and intangible assets
Other assets
TOTAL assets
27 511,1
65 302,4
22 542,5
6 141,2
16 401,3
166 167,6
452 366,6
2 267,1
56 520,5
19 835,5
812 513,3
23 364,5
55 186,1
81 557,4
55 836,6
25 720,8
144 561,7
410 824,6
1 022,6
49 522,6
26 969,2
793 008,7
Due to the National Bank
Loans and advances due to other banks
Due to clients
Securities issued by the Bank
Other liabilities
TOTAL liabilities
5 278,2
59 056,3
604 730,3
5,1
51 273,0
720 342,9
4 109,3
66 351,1
594 355,8
1 005,1
45 463,8
711 285,1
Authorized capital
Issuance difference
Reserve fund
Retained profit
Balance sheet items revaluation fund
Total capital
TOTAL LIABILITIES AND CAPITAL
24 122,1
11 873,5
18 659,7
37 515,1
92 170,4
812 513,3
24 124,0
11 053,1
16 834,0
29 712,5
81 723,6
793 008,7
260 802,0
200 868,7
184 705,8
201 834,1
Reference
Items
ASSETS
1101
1102
1103
11031
11032
11033
1105
1106
1107
1108
1109
110
LIABILITIES
1202
1205
1206
1208
1209
120
CAPITAL
1211
1212
1213
1214
1215
121
12
OFF-BALANCE SHEET CLAIMS AND LIABILITIES
1301
1302
Claims
Liabilities
Georgy A. Egorov
Chairman of the Board
Zinaida S. Kushnerova
Chief Accountant
PROFIT AND LOSS ACCOUNT as at January 1, 2007
(Br, million)
Reference
Items
2006
2005
2011
Interest income
65 232,2
60 215,4
2012
Interest expense
36 752,9
33 335,7
201
Net interest income
28 479,3
26 879,7
2021
Fee and commission income
34 467,1
33 991,9
2022
Fee and commission expense
3 120,3
2 299,1
202
Net fee and commission income
31 346,8
31 692,8
203
Net foreign exchange gain
13 725,2
8 868,6
204
Net gain from securities transactions
66,9
509,3
205
Dividend income
39,4
14,3
206
Net provision for reserves
7 479,9
1 919,9
207
Other income
6 358,5
10 584,9
208
Operating expense
54 291,2
51 940,7
209
Other expense
4 954,3
6 390,9
210
Income tax
5 085,4
10 651,0
PROFIT (LOSS)
8 205,3
7 647,1
34
32
-
-
2
Basic earnings per ordinary share (Br)
Diluted earnings per ordinary share
Georgy A. Egorov
Chief Accountant
47
annual report 2006
STATEMENT of changes in capital, 2006
(Br, million)
Reference
Capital items
Authorized
capital
Issuance difference
Reserve
fund
Retained
profit
Balance sheet
items revaluation fund
Total
capital
24124,0
-
11053,1
16834,0
29712,5
81723,6
Indicators
3011
Opening balance
3012
Change in capital for the
year, including:
-1,9
-
820,4
1825,7
7802,6
10446,8
30121
Profit for the year (loss
shown with minus sign)
х
х
х
8205,3
х
8205,3
30122
Profit appropriated for fund
replenishment
-
х
820,6
-820,6
х
-
30123
Dividend distribution
х
х
х
-5559,0**
х
-5559,0
30124
Founders’ (members’) contributions to authorized capital
-
-
х
х
х
-
30125
Revaluation of balance sheet
items
х
х
х
х
7802,7
7802,7
30126
Redistribution between capital items
-
-
-
-
-
х
30127
Other changes
-1,9***
-
-0,2*
-
-0,1*
-2,2
3013
Closing balance
24122,1
-
11873,5
18659,7
37515,1
92170,4
* round-off
** dividend distribution, including
3057.1 - for 2005
2501.9 - for 2006
*** purchased treasury shares
Georgy A. Egorov
Chief Accountant
STATEMENT OF CASH FLOWS AS AT JANUARY 1, 2007
(Br, million)
Items
2006
2005
Interest income
Interest expense
Net income from forex operations
Net income from securities operations
Dividend income
Other operating income
Other operating expense
Income tax paid
Total cash profit (loss) prior to changes in operating assets and liabilities
Net decrease (increase) of cash with the National Bank
Net decrease (increase) of cash in securities
Net decrease (increase) of loans and other cash advances with banks
Net decrease (increase) of customer loans
Net decrease (increase) of cash in other operating assets
Total cash flows from changes in operating assets
Net increase (decrease) of cash from the National Bank
Net increase (decrease) of loans and other cash advances from banks
Net increase (decrease) in customer accounts
Net increase (decrease) of cash from issuance of own securities
Net increase (decrease) of cash in other operating liabilities
Total cash flows from changes in operating liabilities
Net cash flows from (in) operating activities
64 979,5
-36 876,4
34 467,0
-3 118,0
13 725,7
66,9
39,4
3 157,0
-51 919,0
-5 257,7
19264.4
-9 954,5
59 023,2
-6 066,1
-42 802,9
6 709,6
6 909,3
1 125,7
-7 456,6
3 493,9
-999,4
3 340,9
-495,5
25 678,2
60 260,6
-32 066,9
33 992,0
-2 296,8
8 777,5
509,3
14,3
8 220,7
-51 934,2
-10 677,0
14799.5
-19 251,1
-70 187,9
4 856,2
-56 462,5
-10 688,8
-151 734,1
3 605,7
-19 164,6
188 463,6
54,8
8 121,7
181 081,2
44 146,6
-19 885,2
16 790,7
-1 245,1
—
-4 339,6
-17 049,0
8 943,8
-325,5
—
-8 430,7
—
-1,9
—
-5 474,2
-5 476,1
1 965,6
17 828,1
Х
90 498,7

—
-7,2
—
-5 290,5
-5 297,7
-1 677,0
28 741,2
72 670,6
Х
Reference
CASH FLOWS FROM OPERATING ACTIVITY
7010
7011
7012
7013
7014
7015
7016
7017
7018
7019
701
7020
7021
7022
7023
7025
702
7030
7032
7033
7034
7035
703
70
CASH FLOWS FROM INVESTMENT ACTIVITIES
7110
7111
7112
7113
71
Purchase of fixed, intangible and other long-term assets
Disposal of fixed, intangible and other long-term assets
Purchase of long-term financial investments
Disposal of long-term financial investments
Net cash flows from (in) investment activities
CASH FLOWS FROM FINANCING ACTIVITIES
7211
7212
7213
7214
72
73
74
740
741
Issuance of shares
Purchase of treasury shares
Sale of previously purchased treasury shares
Dividend distribution
Net cash flows from (in) financing activities
Effect of official rate on cash and cash equivalents
Net increase (decrease) of cash and cash equivalents
Cash and its equivalents at start of the period
Cash and its equivalents at end of the period
Georgy A. Egorov
Chief Accountant
OPEN JOINT STOCK COMPANY “BELVNESHECONOMBANK”
STATEMENT Of MANAGEMENT’S RESPONSIBILITIES FOR The PREPARATION
AND APPROVAL Of The CONSOLIDATED FINANCIAL STATEMENTS
FOR The YEAR ENDED 31 DECEMBER 2006
The following statement, which should be read in conjunction with the independent auditors’ responsibilities stated
in the independent auditors’ report set out on page 2‑3, is made with a view to distinguishing the respective responsibilities of management and those of the independent auditors in relation to the consolidated financial statements
of Open Joint Stock Company “Belvnesheconombank” (the “Bank”) and its subsidiaries (the “Group”).
Management is responsible for the preparation of the consolidated financial statements that present fairly the financial
position of the Group as of 31 December 2006, the results of its operations, cash flows and changes in equity for
the year then ended, in accordance with International Financial Reporting Standards (“IFRS”).
In preparing the consolidated financial statements, management is responsible for:
•Selecting suitable accounting principles and applying them consistently;
•Making judgements and estimates that are reasonable and prudent;
•Stating whether IFRS have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and
•Preparing the consolidated financial statements on a going concern basis, unless it is inappropriate to presume that
the Group will continue its business for the foreseeable future.
Management is also responsible for:
•Designing, implementing and maintaining an effective and sound system of internal controls, throughout the Group;
•Maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position
of the Group, and which enable them to ensure that the consolidated financial statements of the Group comply
with IFRS;
•Maintaining statutory accounting records in compliance with legislation and accounting standards of the Republic
of Belarus;
•Taking such steps as are reasonably available to them to safeguard the assets of the Group; and
•Detecting and preventing fraud, errors and other irregularities.
The consolidated financial statements for the year ended 31 December 2006 were authorised for issue on 2 May
2007 by the management of the Bank.
Georgy A. Egorov
Chief Accountant
INDEPENDENT AUDITORS’ REPORT
Foraign Enterprise
Deloitte & Touche
51 Korolya Street
Minsk, 220004
Belarus
Тel.: +375(0)17 200 0353
Fax: +375(0)17 200 0414
www.deloitte.by
To the Shareholders and Supervisory Council of the Open Joint Stock Company “Belvnesheconombank”:
We have audited the accompanying consolidated financial statements of the Open Joint Stock Company
“Belvnesheconombank” (the “Bank”) and its subsidiaries (the “Group”), which comprise the balance sheet as of 31 December 2006, and the income statement, statements of changes in equity and cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory notes.
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. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
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 whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks
of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the 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 financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Qualification
As discussed in Note 3,statements of income, changes in equity and cash flows for the year ended 31 December
2005 are not presented in these consolidated financial statements. In our opinion, this represents a departure from
International Accounting Standard 1 “Presentation of financial statements”.
Opinion
In our opinion, except for the omission of comparative information for the year ended 31 December 2005, the consolidated
financial statements present fairly, in all material respects the financial position of the Group as of 31 December 2006, and its
financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Without further qualifying our opinion, we draw attention to Note 3, describing the restatement effect of consolidation
of subsidiaries as of 31 December 2005.
Without further qualifying our opinion, we draw attention to Note 28, describing uncertainties currently existing
in the economic environment in the Republic of Belarus.
2 May 2007
Minsk
51
annual report 2006
(Br, million)
Notes
Year ended
31 December
2006
Interest income
Interest expense
4, 24
4, 24
NET INTEREST INCOME BEFORE PROVISION FOR IMPAIRMENT
LOSSES ON INTEREST BEARING ASSETS
Provision for impairment losses on interest bearing assets
29,353
5, 24
NET INTEREST INCOME
Net gain on foreign exchange operations
Net realized gain on investments available for sale
Other income
66,155
(36,802)
(6,211)
23,142
6
7, 24
7
8
14,054
34,688
(3,135)
66
19,131
NET NON-INTEREST INCOME
64,804
OPERATING INCOME
87,946
OPERATING EXPENSES
9, 24
OPERATING PROFIT
Recovery of provision for impairment losses on other transactions
12,861
5
PROFIT BEFORE INCOME TAXES
Income taxes expense
(75,085)
434
13,295
10
NET PROFIT
Attributable to:
Shareholders of the Bank
Minority interest
(6,425)
6,870
7,222
(352)
Georgy A. Egorov
Chief Accountant
The notes on pages 57-95 form an integral part of these consolidated financial statements. The Independent Auditors’ Report is on page 51
(Br, million)
Notes
31 December
31 December
2006
2005 (restated)
11, 24
90,933
87,296
12, 24
13, 24
14, 24
15
16
703
175,051
420,904
23,970
97,492
14,754
353
132,341
379,315
81,778
99,799
13,522
823,807
794,404
5,278
64,412
632,742
5
5,555
15,726
4,110
71,072
600,495
5
5,075
14,867
723,718
695,624
226,947
(556)
(127,594)
226,947
(554)
(129,257)
98,797
97,136
1,292
1,644
Total equity
100,089
98,780
TOTAL LIABILITIES AND EQUITY
823,807
794,404
ASSETS:
Cash and balances with the National Bank
Precious metals
Due from banks
Loans to customers
Investments in securities
Property, equipment and intangible assets
Other assets
TOTAL ASSETS
LIABILITIES AND EQUITY
LIABILITIES:
Due to the National Bank of the Republic of Belarus
Due to banks
Customer accounts
Debt securities issued
Deferred income tax liabilities
Other liabilities
17, 24
18, 24
19, 24
10
20, 24
Total liabilities
EQUITY:
Share capital
Treasury shares
Accumulated deficit
Total equity attributable to shareholders of the Bank
Minority interest
21
Georgy A. Egorov
Chief Accountant
53
сonsolidated financial statements
annual report 2006
(Br, million)
Notes
Share
capital
Treasury shares
Accumu-lated
deficit
Total equity
attributable
to shareholders
of the Bank
Minority interest
Total
equity
226,947
(45)
(132,118)
94,784
-
94,784
-
(509)
2,861
2,352
1,644
3,996
226,947
(554)
(129,257)
97,136
1,644
98,780
-
(2)
-
(2)
-
(2)
-
-
7,222
7,222
(352)
6,870
21
-
-
(3,057)
(3,057)
-
(3,057)
21
-
-
(2,502)
(2,502)
-
(2,502)
226,947
(556)
(127,594)
98,797
1,292
100,089
31 December
2005 as previously
reported
Effect of consolidation of subsidiaries
(Note 3)
31 December
2005 restated
Net profit
Dividends declared
for 2005
Interim dividends
declared for 2006
31 December
2006
Georgy A. Egorov
Chief Accountant
(Br, million)
Notes
Year ended
31 December
2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before income taxes
Adjustments for:
Provision for impairment losses on interest bearing assets
Recovery of provision for impairment losses on other transactions
Change in insurance reserves
Depreciation and amortisation
Loss on disposal of property and equipment
Change in accounting estimate on hyperinflation of property, equipment and
intangible assets
Change in interest accruals, net
Translation differences, net
13,295
Cash flows from operating activities before changes in operating assets and liabilities
26,405
Changes in operating assets and liabilities
(Increase)/decrease in operating assets:
Minimum reserve deposit with the National Bank of the Republic of Belarus
Precious metals
Due from banks
Loans to customers
Other assets
Increase/(decrease) in operating liabilities:
Due to banks
Customer accounts
Other liabilities
6,211
(434)
454
7,013
108
531
(1,115)
342
1,295
(350)
(49,369)
(42,793)
(1,444)
1,150
(6,822)
23,776
2,239
Cash outflow from operating activities before taxation
(45,913)
Income taxes paid
(6,066)
Net cash outflow from operating activities
(51,979)
CASH FLOWS FROM OPERATING ACTIVITIES:
Purchase of property, equipment and intangible assets
Proceeds on sale of property, equipment and intangible assets
Proceeds on sale and redemption of investments available for sale, net
(6,510)
67
57,829
Net cash inflow from investing activities
51,386
55
annual report 2006
(Br, million)
Notes
Year ended
31 December
2006
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid
(2)
(5,475)
Net cash outflow from financing activities
(5,477)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(6,070)
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATES ON CASH AND CASH
EQUIVALENTS
822
CASH AND CASH EQUIVALENTS, beginning of year (restated)
11
121,282
CASH AND CASH EQUIVALENTS, end of year
11
116,034
Interest paid and received by the Group during the year ended 31 December 2006 amounted to BYR 37,211 million and
BYR 65,449 million, respectively.
Georgy A. Egorov
Chief Accountant
(Br, million)
1. ORGANISATION
Open Joint Stock Company “Belvnesheconombank” (the “Bank”) was established on 12 December 1991 as a result
of the separation of the Belarus branch of the Bank for Foreign Economic Affairs of the USSR. The Bank is incorporated in the Republic of Belarus as a joint stock commercial bank, in which the shareholders have limited liability.
The Bank’s registered office is 32 Myasnikova Str., Minsk, Belarus.
The Bank provides a wide range of banking services to its clients, which are mainly local enterprises. The Bank’s primary areas of operations include granting loans to exporting and other industries, issuing and processing export and
import letters of credit, transferring payments, exchanging foreign currencies upon demand of its customers and for
currency trading purposes, attracting deposits and transactions with debt securities. The Bank has general and other
special banking licenses, which allow it to maintain accounts and attract demand and time deposits from individuals and
corporate customers, carry out transactions with precious metals and operations with securities.
As of 31 December 2006 and 2005 the Bank had 24 and 26 branches in Belarus and representative offices in Moscow (Russia) and Warsaw (Poland).
The Bank is a parent company of a group (the “Group”) which consists of the following enterprises consolidated
in the financial statements:
Name
Country
of registration and operation
The Bank effective
ownership interest, %
2006
2005
Type
of operation
USP “Belvneshstrah”
Republic of Belarus
100%
100%
Insurance
KSO “Vneshstrojinvest” OOO
Republic of Belarus
51%
51%
Operation of fitness-center
KSO “Vnesheconomstroj” OOO Republic of Belarus
51%
51%
Construction, real estate
transactions
CJSC “Belinterfinance”
Republic of Belarus
51%
51%
Wholesale trade
CJSC “Interecon-N”
Republic of Belarus
55.9%
55.9%
Property valuation services, rent of property, trade
PUE “Agrofirma “Orda”
Republic of Belarus
51.0%
51.0%
Agriculture
The Bank owns 10% of CJSC “Interecon-N” directly and 90% through CJSC “Belinterfinance”.
PUE “Agrofirma “Orda” is a 100% subsidiary of CJSC “Belinterfinance”.
ZAO “Mezhotraslevoj institut nezavisimoj expertisy investitionnyh proektov”(Interindustry institute of independent assessment of investment projects), of which the Bank owns 52% was not consolidated since the effect of consolidation
would not be significant (see Note 14).
57
annual report 2006
As of 31 December 2006 and 2005 the structure of the Bank’s share capital was the following:
Shareholder
31 December
31 December
2006, %
2005, %
National Bank of the Republic of Belarus
33.52%
33.52%
JSC Natsionalny Kosmichesky Bank (Russia)
20.00%
32.46%
Ministry of Economy of the Republic of Belarus
6.27%
6.26%
ZAO Pinskdrev
6.28%
6.28%
RUE Belarusian Metal Plant
5.27%
5.27%
Sergei M. Arshinov
4.153%
-
Viktor E. Grigoryev
4.153%
-
Sergei G. Nedoroslev
4.153%
-
Other
16.20%
16.21%
Total
100.00%
100.00%
The ultimate controlling party of the Bank as of 31 December 2006 and 2005 is the Republic of Belarus.
These consolidated financial statements were authorized for issue by the management of the Bank on 2 May 2007.
2. BASIS Of PRESENTATION
Accounting basis
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by
the International Financial Reporting Interpretations Committee (“IFRIC”), except for omission of comparative information
for the income statement, statement of changes in equity and statement of cash flows for the year ended 31 December 2005.
These financial statements are presented in millions of Belarusian roubles (“BYR”), unless otherwise indicated. These
financial statements have been prepared under the historical cost convention except for the measurement of certain
financial instruments at fair value and accounting for certain non-monetary assets that occurred before 31 December
2005 and are recognized according to International Accounting Standard 29 “Financial Reporting in Hyperinflationary
Economies” (“IAS 29”).
In accordance with IAS 29 the economy of the Republic of Belarus was considered to be hyperinflationary during
2005 and prior years. Starting 1 January 2006, the economy of the Republic of Belarus is no longer considered to be
hyperinflationary and the values of the Group’s non-monetary assets, liabilities and equity as stated in measuring units
as of 31 December 2005 have formed the basis for the amounts carried forward to 1 January 2006.
The Group maintains its accounting records in accordance with the legislation of the Republic of Belarus. These financial
statements have been prepared from the Belarusian statutory accounting records and have been adjusted to conform
to IFRS. These adjustments include certain reclassifications to reflect the economic substance of underlying transactions
including reclassifications of certain assets and liabilities, income and expenses to appropriate financial statement captions.
Key assumptions
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period.
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 readily apparent from other sources. Although these estimates are based on management’s best knowledge of current events and actions, actual results could differ from these estimates. Estimates that are
particularly susceptible to change relate to the provisions for losses and impairment and the fair value of financial instruments.
Key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date,
that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial period include:
31 December
Loans to customers
Equity investments
2006
420,904
1,428
31 December
2005
379,315
633
Loans to customers and equity investments are measured at amortized cost/cost less allowance for impairment losses.
The estimation of allowance for impairment losses involves an exercise of judgment. It is impracticable to assess the extent
of the possible effects of key assumptions or other sources of uncertainty on these balances at the balance sheet date.
Functional currency
The functional currency of these consolidated financial statements is the currency of the Republic of Belarus — Belarusian Rouble.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Bank and the entities controlled by
the Bank (its subsidiaries) made up to 31 December each year. Control is achieved where the Group has the power
to govern the financial and operating policies of an investee so as to obtain benefits from its activities.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by the Group.
All significant transactions, balances, income and expenses on transactions with the subsidiaries are eliminated on
consolidation.
Investments in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint
control, through participation in the financial and operating policy decisions of the investee.
The results and assets and liabilities of associates are incorporated in these consolidated financial statements using
the equity method of accounting.
59
annual report 2006
Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes
in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments.
Where the Group transacts with an associate of the Group, profits and losses are eliminated to the extent
of the Group’s interest in the relevant associate.
Investments in non-consolidated subsidiaries
Investments in corporate shares where the Group owns more than 50% of share capital, but non-consolidation
of such companies does not significantly affect the consolidated financial statements of the Group, as well as investments in corporate shares where the Group owns less than 20% of share capital, are accounted for at fair value. If
such value cannot be estimated, investments are accounted for at cost less allowance for impairment, if any.
Management periodically assesses recoverability of the carrying values of such investments and provides valuation allowances, if necessary. Such investments are accounted for as investments available for sale.
Recognition and measurement of financial instruments
The Group recognizes financial assets and liabilities on its balance sheet when it becomes a party to the contractual
obligation of the instrument. Regular way purchase and sale of the financial assets and liabilities are recognized using
settlement date accounting.
Financial assets and liabilities are initially recognized at fair value plus, in the case of a financial asset or financial liability
not at fair value through profit or loss, transaction costs that are directly attributable to acquisition or issue of the financial asset or financial liability. The accounting policies for subsequent re-measurement of these items are disclosed
in the respective accounting policies set out below.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, unrestricted balances on correspondent and time deposit accounts
with the National Bank of the Republic of Belarus with original maturity within 90 days, due from banks in countries
included in the Organization for Economic Co-operation and Development (“OECD”) with original maturity within 90 days,
except for guarantee deposits and other restricted balances, which may be converted to cash within a short period of time. For purposes of determining cash flows, the minimum reserve deposit required by the National Bank
of the Republic of Belarus is not included as a cash equivalent due to restrictions on its availability.
Due from banks
In the normal course of business, the Group maintains advances and deposits for various periods of time with other
banks. Balances due from banks with fixed maturity are subsequently measured at amortized cost using the effective
interest method. Those that do not have fixed maturities are carried at amortized cost based on expected maturities.
Amounts due from banks are carried net of any allowance for impairment losses, if any.
Repurchase and reverse repurchase agreements
The Group enters into sale and purchase back agreements (“repos”) and purchase and sale back agreements (“reverse
repos”) in the normal course of its business. Repos and reverse repos are utilized by the Group as an element of its
treasury management.
A repo is an agreement to transfer a financial asset to another party in exchange for cash or other consideration
and a concurrent obligation to reacquire the financial assets at a future date for an amount equal to the cash or
other consideration exchanged plus interest. These agreements are accounted for as financing transactions. Financial
assets sold under repo are retained in the consolidated financial statements and consideration received under these
agreements is recorded as collateralized deposit received.
Assets purchased under reverse repos are recorded in the consolidated financial statements as cash placed on deposit which is collateralized by securities and other assets.
In the event that assets purchased under reverse repo are sold to third parties, the results are recorded with
the gain or loss included in net gains/(losses) on respective assets. Any related income or expense arising from
the pricing difference between purchase and sale of the underlying assets is recognized as interest income or expense.
Derivative financial instruments
The Group enters into derivative financial instruments to manage currency and liquidity risks. Derivatives entered into
by the Group include foreign currency forwards and swaps.
Derivative financial instruments are initially recorded and subsequently measured at fair value. Fair values are obtained from
the interest rates model. Most of the derivatives the Group enters into are of a short-term nature. The results of the valuation of derivatives are reported in assets (aggregate of positive market values) or liabilities (aggregate of negative market
values), respectively. Both positive and negative valuation results are recognized in the consolidated income statement for
the year in which they arise under net gain on foreign exchange operations for foreign currency derivatives.
Loans to customers
Loans to customers are non-derivative assets with fixed or determinable payments that are not quoted in an active
market other than those classified in other categories of financial assets.
Loans granted by the Group with fixed maturities are initially recognized at fair value plus related transaction costs.
Where the fair value of consideration given does not equal the fair value of the loan, for example where the loan is
issued at lower than market rates, the difference between the fair value of consideration given and the fair value
of the loan is recognized as a loss on initial recognition of the loan and included in the income statement according to nature of these losses. Subsequently, loans are carried at amortized cost using the effective interest method.
Loans to customers are carried net of any allowance for impairment losses.
Write off of loans
Loans are written off against allowance for loan losses in case of uncollectibility, including through repossession of collateral. Loans are written off after management has exercised all possibilities to collect amounts due to the Group.
In accordance with the Bank’s policy loans are written off after the respective decision of the Credit Committee,
which previously made decision on the issuance of the loan.
Allowance for impairment losses
The Group establishes an allowance for losses on financial assets when there is objective evidence that a financial
asset or group of financial assets is impaired. The allowance for impairment losses is measured as the difference
between carrying amounts and the present value of expected future cash flows, including amounts recoverable from
guarantees and collateral, discounted at the financial asset’s original effective interest rate, for financial assets which
are carried at amortized cost. If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting an allowance account. For financial assets carried at cost the allowance
61
annual report 2006
for impairment losses is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Such impairment losses are not reversed.
The determination of the allowance for impairment losses is based on an analysis of the risk assets and reflects
the amount which, in the judgment of management, is adequate to provide for losses incurred. Allowances are made
as a result of an individual appraisal of risk for financial assets that are individually significant, and an individual or collective assessment for financial assets that are not individually significant.
The change in the allowance for impairment losses is charged to the consolidated income statement and the total
of the allowance for impairment losses is deducted in arriving at assets as shown in balance sheet. Factors that
the Group considers in determining whether it has objective evidence that an impairment loss has been incurred
include information about the debtors’ or issuers’ liquidity, solvency and business and financial risk exposures, levels
of and trends in delinquencies for similar financial assets, national and local economic trends and conditions, and the fair
value of collateral and guarantees. These and other factors may, either individually or taken together, provide sufficient
objective evidence that an impairment loss has been incurred in a financial asset or group of financial assets.
It should be understood that estimates of losses involve an exercise of judgment. While it is possible that in particular periods the Group may sustain losses, which are substantial relative to the allowance for impairment losses, it is the judgment
of management that the allowance for impairment losses is adequate to absorb losses incurred on the risk assets.
Finance leases
Finance leases are leases that transfer substantially all the risks and rewards incidental to ownership of an asset.
Title may or may not eventually be transferred. Whether a lease is a finance lease or an operating lease depends on
the substance of the transaction rather than the form of the contract. The lease is classified as a finance lease if:
•The lease transfers ownership of the asset to the lessee by the end of the lease term;
•The lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than the fair
value at the date the option becomes exercisable such that, at the inception of the lease, it is reasonably certain
that the option will be exercised;
•The lease term is for the major part of the economic life of the asset even if title is not transferred;
•At the inception of the lease the present value of the minimum lease payments amounts to at least substantially
all of the fair value of the leased asset; and
•The leased assets are of a specialised nature such that only the lessee can use them without major modifications being made.
The Group as a lessor presents finance leases as loans and initially measures them in the amount equal to net investment in the lease. Subsequently the recognition of finance income is based on a pattern reflecting a constant periodic
rate of return on the Group’s net investment in the finance lease.
Operating leases
Leases of assets under which the risks and rewards of ownership are effectively retained with the lessor are classified as operating leases.
Lease payments/income under operating leases are recognized as expenses/income on a straight-line basis over
the lease term and included in operating expenses/income.
Investments available for sale
Investments available for sale represent debt and equity investments that are intended to be held for an
indefinite period of time. Such securities are initially recorded at fair value. Subsequently the securities are
measured at fair value, with such re-measurement recognized directly in equity (except for the cases when
total amount of re-measurement effect for the period is not material; then it is recognized in the income
statement) until sold when gain/loss previously recorded in equity recycles through the income statement,
except for impairment losses, foreign exchange gains or losses and interest income accrued using the effective interest method, which are recognized directly in the income statement. The Group uses quoted market
prices to determine the fair value for the Group’s debt investments available for sale. If the market for debt
investments is not active, the Group establishes fair value by using a valuation technique. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, reference
to the current fair value of another instrument that is substantially the same, discounted cash flow analysis
and option pricing models. If there is a valuation technique commonly used by market participants to price
the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained
in actual market transactions, the Group uses that technique. Dividends received are included in dividend income in the consolidated income statement.
Non-marketable debt and equity securities are stated at amortized cost and cost, respectively, less impairment losses,
if any, unless fair value can be reliably measured.
When there is objective evidence that such securities have been impaired, the cumulative loss previously recognized
in equity is removed from equity and recognized in the income statement for the period. Reversals of such impairment
losses on debt instruments, which are objectively related to events occurring after the impairment, are recognized
in the income statement for the period. Reversals of such impairment losses on equity instruments are not recognized
in the income statement.
Property, equipment and intangible assets, acquired after 1 January 2006 are carried at historical cost less accumulated depreciation and any recognized impairment loss, if any. Property, equipment and intangible assets, acquired
before 1 January 2006 are carried at historical cost restated for inflation less accumulated depreciation and any recognized impairment loss, if any. Depreciation on assets under construction and those not placed in service commences
from the date the assets are ready for their intended use.
Depreciation of property, equipment and intangible assets is charged on the carrying value of property, equipment and
intangible assets and is designed to write off assets over their useful economic lives. It is calculated on a straight line
basis at the following annual prescribed rates:
Buildings
Computer equipment
Vehicles
Agricultural machinery and equipment
Furniture and other assets
Intangible assets
63
1-2%
10-20%
11-20%
9-15%
8-25%
10-50%
annual report 2006
Leasehold improvements are amortized over the shorter of the lease period and the life of the related leased asset.
Expenses related to repairs and renewals are charged when incurred and included in operating expenses unless they
qualify for capitalization.
The carrying amounts of property, equipment and intangible assets are reviewed at each balance sheet date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount.
Taxation
Income taxes expense represents the sum of the current and deferred tax expense.
The current taxes expense is based on taxable profit for the year and is computed in accordance with legislation.
Taxable profit differs from net profit as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s current taxes expense is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets
and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor
the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments
in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or
the asset is realized. Deferred tax is charged or credited in the consolidated income statement, except when it relates
to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
The Republic of Belarus also has various other taxes, which are assessed on the Group’s activities. These taxes are
included as a component of operating expenses in the consolidated income statement.
Due to banks and customers
Balances due to banks and customers are initially recognized at fair value. Subsequently amounts due at fixed maturities are stated at amortized cost and any difference between net proceeds and the redemption value is recognized
in the consolidated income statement over the period of the borrowings using the effective interest method. Those
that do not have fixed maturities are carried at amortized cost based on expected maturities.
Debt securities issued represent promissory notes, certificates of deposit and debentures issued by the Group. They
are accounted for according to the same principles used for customer and bank deposits.
Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events,
and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate of the obligation can be made.
Financial guarantee contracts issued and letters of credit
Financial guarantee contracts and letters of credit issued by the Group are credit insurance that provides for specified
payments to be made to reimburse the holder for a loss it incurs because a specified debtor fails to make payment
when due under the original or modified terms of a debt instrument. Such financial guarantee contracts and letters
of credit issued are initially recognized at fair value. Subsequently they are measured at the higher of (a) the amount
recognized as provision and (b) the amount initially recognized less, where appropriate, cumulative amortization of initial
premium revenue received over the financial guarantee contracts or letter of credit issued.
Insurance operations
Premiums written — Upon inception of a contract, premiums are recorded as written and are earned primarily on
a pro-rata basis over the term of the related policy coverage through changes in provision for unearned premiums.
Provision for unearned premiums — Provision for unearned premiums represent the proportion of premiums written
in the period that relates to unexpired terms of policies in force as at the balance sheet date, calculated on a time
apportionment basis.
Claims paid — Claims paid including claims handling expenses are charged to the consolidated income statement as
incurred.
Insurance loss provision — Loss provision represents the accumulation of estimates for ultimate losses and includes outstanding claims provision and provision for losses incurred but not yet reported. The estimation is made on
the basis of investigation of insurance cases on a claim-by-claim basis. Once the provision is created, the Group keeps
insurance liabilities in its balance sheet until they are discharged or cancelled, or expire. The methods of determining
such estimates and establishing the resulting provisions are continually reviewed and updated. Resulting adjustments
are reflected in the consolidated income statement as they arise. The loss reserves are estimated on an undiscounted
basis due to the relatively quick pattern of claims notification and payment.
Share capital
Contributions to share capital, made before 1 January 2006 are recognized at their cost restated for inflation.
Contributions to share capital after 1 January 2006 are recognized at cost. Non-cash contributions are included into
the share capital at fair value of the contributed assets. Treasury shares are recognized at cost. Treasury shares
repurchased before 1 January 2006 are carried at cost restated for inflation.
Dividends on ordinary shares are recognized in equity as a reduction in the period in which they are declared. Dividends
that are declared after the balance sheet date are treated as a subsequent event under International Accounting
Standard 10 “Events after the Balance Sheet Date” (“IAS 10”) and disclosed accordingly.
65
annual report 2006
Retirement and other benefit obligations
In accordance with the requirements of the Belarusian legislation, the Group withholds amounts of pension contributions from employee salaries and pays them to the state pension fund. Such pension system provides for
calculation of current payments by the employer as a percentage of current total disbursements to staff. Such
expense is charged in the period the related salaries are earned. Upon retirement all retirement benefit payments are made by the State. The Group does not have any pension arrangements separate from the State
pension system of the Republic of Belarus. In addition, the Group has no post-retirement benefits or other significant compensated benefits requiring accrual.
Recognition of income and expense
Interest income and expense are recognized on an accrual basis using the effective interest method. The effective
interest method is a method of calculating the amortized cost of a financial asset or a financial liability (or group
of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant
period. The effective interest rate is the rate that exactly 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.
Once a financial asset or a group of similar financial assets has been written down (partly written down) as a result
of an impairment loss, interest income is thereafter recognized using the rate of interest used to discount the future
cash flows for the purpose of measuring the impairment loss. Interest income also includes income earned on investments in securities.
Loan servicing fees are recognized as an adjustment to the effective interest rate of the loan. All other commissions
are recognized when services are provided. Other income is credited to consolidated income statement when the related transactions are completed.
Revenue and expenses from non-banking activities (fitness services, wholesale trade, agriculture) are recognized
on accrual basis.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into BYR at the appropriate rates
of exchange ruling at the balance sheet date. Foreign currency transactions are accounted for at the exchange rates
prevailing at the date of the transaction. Profits and losses arising from these translations are included in net gain on
foreign exchange operations.
Rates of exchange
The exchange rates at year-end used by the Group in the preparation of the consolidated financial statements
are as follows:
31 December
31 December
2006
2005
BYR/USD
2,140.00
2,152.00
BYR/EUR
2,817.31
2,546.35
BYR/RUB
81.13
74.86
Offset of financial assets and liabilities
Financial assets and liabilities are offset and reported net on the balance sheet when the Group has a legally enforceable right to set off the recognized amounts and the Group intends either to settle on a net basis or to realize
the asset and settle the liability simultaneously. In accounting for a transfer of a financial asset that does not qualify
for derecognition, the Group does not offset the transferred asset and the associated liability.
Accounting for the effects of hyperinflation
The Republic of Belarus was considered to be hyperinflationary in 2005 and prior years as defined by IAS 29. Accordingly, the comparative amounts to these financial statements were adjusted and reclassified to include restatement,
in accordance with IAS 29, for changes in the general purchasing power of the Belarusian Rouble for the hyperinflationary years ended 31 December 2005.
The restatement was made using the Consumer Price Index (“CPI”), published by the Ministry of Statistics and Analysis
of the Republic of Belarus. The CPI for the five years ended 31 December 2005 were as follows:
Year
% change
2005
8%
2004
14%
2003
25%
2002
35%
2001
46%
Monetary assets and liabilities were not restated because they were already expressed in terms of the monetary
unit current as of 31 December 2005. Non-monetary assets and liabilities (items which were not already expressed
in terms of the monetary unit current as of 31 December 2005) were restated by applying the relevant index.
The effect of inflation on the Group’s net monetary position was included in the consolidated income statement as loss
on net monetary position for the respective reporting period. Amounts included in the consolidated income statement
have been indexed by the change in the CPI based on the following assumptions:
•inflation has occurred evenly over the year;
•income and expenses have accrued evenly over the year.
Adoption of new and revised International Financial Reporting Standards
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by
the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (the IFRIC) of the IASB that are relevant to its operations and effective for annual reporting periods beginning
on 1 January 2006. The adoption of these new and revised Standards and Interpretations had the following impact
on the consolidated financial statements of the Group: amendments to IAS 39 “Financial Instruments: Recognition and
Measurement” (“IAS 39”) effective for accounting periods beginning on 1 January 2006 imposed restrictions on designation of financial assets or financial liabilities as at fair value through profit or loss at initial recognition.
The Group de-designated all its financial assets previously designated at fair value through profit or loss since they do
not qualify for such designation in accordance with amended IAS 39. These financial assets are classified as invest-
67
annual report 2006
ments available for sale and accounted for as such (Note 14). De-designation was made retrospectively as required by
transitional provisions of IAS 39.
Changes in accounting estimates
In the financial statements for the year ended 31 December 2006 the Group adjusted the effect of hyperinflation on
property, equipment and intangible assets due to change in accounting estimate related to application of more precise
method of restatement of the item under International Accounting Standard 29 “Financial reporting in hyperinflationary economies”. Adjustments to cost and accumulated depreciation of property, equipment and intangible assets are
presented in Note 15. Net effect in the amount of BYR 531 million was recognized in operating expenses (Note 9).
Prior period restatements
In the financial statements as of and for the year ended 31 December 2005 the Bank did not consolidate the subsidiaries. The Bank performed consolidation of subsidiaries in the financial statements for the year ended 31 December 2006 and restated the comparative balance sheet. Comparative information for the year ended 31 December
2005 for the statements of income, changes in equity and cash flows was not presented. The restatement effect
of consolidation of subsidiaries as of 31 December 2005 is as follows:
Balance sheet item
Amount as per
the previous report
Effect on the balance sheet
items
Amount
as per current report
Total assets as of 31 December 2005
784,660
9,744
794,404
Total liabilities as of 31 December 2005
(689,876)
(5,748)
(695,624)
Equity attributable to shareholders
of the Bank as of 31 December 2005
94,784
2,352
97,136
—
1,644
1,644
94,784
3,996
98,780
Minority interest as of 31 December 2005
Total equity as of 31 December 2005
Reclassifications
Certain reclassifications have been made to the financial statements as of 31 December 2005 to conform to the presentation as of 31 December 2006 as current year presentation provides better view of the financial position of the Group.
The amount of deposit in the National bank of the Republic of Belarus in excess of daily minimum deposit requirement
was included into the cash and cash equivalent. As a result cash and cash equivalents as of 31 December 2005 increased by BYR 11,663 million.
Adoption of new standards
At the date of authorization of these financial statements, the following Standards and Interpretations applicable
to the Group were issued but not yet effective for these financial statements: International Financial Reporting Standard 7 «Financial Instruments: Disclosure» effective from 1 January 2007 requires disclosure of additional information
on financial instruments. Amendments to International Accounting Standard 1 “Presentation of Financial Statements”
effective 1 January 2007 requires disclosure of the objectives, policies and practices for managing capital. Currently
the Group estimates the effect of these new and amended standards on its financial statements and develops an
action plan to modify its accounting and reporting systems to provide a reliable disclosure of the required information.
The Group anticipates that the adoption of other Standards and Interpretations effective in future periods will have no
material financial impact on the financial statements of the Group.
4. NET INTEREST INCOME
Year ended 31 December
2006
Interest income
Interest on loans to customers
Interest on due from banks
Interest on debt securities
Other interest income
52,593
8,752
4,300
510
Total interest income
66,155
Interest expense
Interest on customer accounts
Interest on due to banks
Interest on debt securities issued
32,295
4,095
412
Total interest expense
36,802
Net interest income before provision
for impairment losses on interest bearing assets
29,353
5. ALLOWANCE FOR IMPAIRMENT LOSSES, OTHER PROVISIONS
The movements in allowance for impairment losses on interest earning assets were as follows:
Due
from banks
Loans
to customers
Total
31 December 2005
4
13,197
13,201
Provision/ (recovery of provision)
Write-off of assets
Exchange rate changes effect
(4)
-
6,215
(2,174)
55
6,211
(2,174)
55
-
17,293
17,293
31 December 2006
The movements in allowances for impairment losses on other transactions were as follows:
Other assets
Guarantees and other commitments
Total
31 December 2005
1,134
2,118
3,252
Provision/ (recovery of provision)
Write-off of assets
1,090
(111)
(1,524)
-
(434)
(111)
31 December 2006
2,113
594
2,707
Allowances for impairment losses on other assets are deducted from the related assets. Provisions for guarantees
and other commitments are recorded in other liabilities.
69
annual report 2006
6. NET GAIN ON FOREIGN EXCHANGE OPERATIONS
Net gain on foreign exchange operations comprises:
2006
Dealing, net
14,396
Translation differences, net
(342)
Total net gain on foreign exchange operations
14,054
7. FEE AND COMMISSION INCOME AND EXPENSE
Fee and commission income and expense comprise:
2006
Fee and commission income:
Customer accounts services
12,137
Cash operations
5,852
Documentary transactions
5,808
Plastic cards servicing
4,024
Payments processing
3,748
Foreign exchange operations
2,325
Settlements with other banks
170
Securities operations
90
Other
534
Total fee and commission income
34,688
Fee and commission expense:
Cash operations
2,577
Correspondent bank services
282
Foreign exchange operations
243
Securities operations
31
Other
2
Total fee and commission expense
3,135
8. OTHER INCOME
Other income comprises:
2006
Revenue on non-banking services rendered by subsidiaries
Wholesale trade
Fitness services
Agriculture
Rental income
Insurance premiums earned, net
4,415
4,043
2,403
1,087
732
Other income
Repayment of loans previously written off
Net gain from sale of other assets
Fines and penalties received
Net gain on transactions with precious metals
Rental income
Other
3,967
832
348
261
224
819
Total other income
19,131
Net insurance premiums earned
comprised the following:
Year ended 31 December 2006
Gross premiums written
3,933
Gross premiums ceded
(418)
Change in provision for unearned premiums, gross
(370)
Change in reinsurer’s share of provision for unearned premiums
(10)
Net premiums earned
3,135
Gross claims paid
Claims ceded
Net claims paid
(2,634)
305
(2,329)
Change in loss provision, gross
(47)
Change in reinsurer’s share of loss provision
(27)
Net change in loss provision
(74)
Premiums earned net of losses incurred and net of claims paid
732
71
annual report 2006
Movement in insurance reserves is presented as follows:
Provision for
unearned premiums,
gross
(Note 20)
Reinsurer’s portion in
provision for unearned
premiums (Note 16)
Loss provision,
gross
(Note 20)
Reinsurer’s portion in
loss provision
(Note 16)
Technical reserves, net
707
370
(131)
-
312
47
(68)
-
820
417
-
10
-
27
37
1,077
(121)
359
(41)
1,274
As of 31 December 2005
Increase in reserves, gross
Decrease in reinsurer’s
portion of reserves
As of 31 December 2006
9. OPERATING EXPENSES
Operating expenses comprise:
Year ended
31 December
2006
Payroll, bonuses and other short-term employee benefits
25,999
Social security contributions
8,713
Depreciation and amortization
7,013
Utilities, rentals and maintenance
5,500
Taxes, other than income tax
5,350
Cost of goods sold (subsidiaries — wholesale trade)
3,573
Expenses on maintenance of banking software
3,192
Security expenses
2,365
Stationery and other office expenses
1,703
Contributions to Deposit Insurance Fund
1,577
Raw materials and inventory consumed in non-banking activities
1,527
Professional services
1,197
Vehicles maintenance and fuel expenses
1,089
Communications
952
Change in accounting estimate of hyperinflation effect on property, equipment and intangible assets
(Note 3)
531
Charity and sponsorship expenses
211
Loss on disposal of property and equipment
108
Other expenses
4,485
Total operating expenses
75,085
10. INCOME TAXES
The Group provides for current taxes based on the statutory tax accounts maintained and prepared in accordance
with the Belarusian statutory tax regulations. During the years ended 31 December 2006 and 2005, tax rate for
Belarusian banks was 24% and 30% for the republican tax, and 3% for the municipal tax. The rates were charged
successively. Therefore, in 2006 and 2005 the combined rate was 26.28% and 32.8%. Republican tax rate for USP
“Belvneshstrah” was 30% during 2006 and 2005, and was changed to 24% from 1 January 2007. PUE “Agrofirma
“Orda” was not subject to income taxes.
The Group is subject to certain permanent tax differences due to non-tax deductibility of certain expenses and tax
exemptions for certain income.
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for tax purposes. Temporary differences as of 31 December 2006 and 2005 relate mostly to different methods of income and expense recognition as well as to recorded values of certain assets.
The components of deferred assets and liabilities as of 31 December 2006 and 2005 are as follows:
31 December
31 December
2006
2005
Loans to banks and customers
1,686
2,620
962
371
1,829
861
Other assets
1,656
1,337
Due to banks
857
-
Other liabilities
213
1,446
Deferred assets
7,203
6,635
Less deferred tax assets not recognized
(2,532)
(1,464)
4,671
5,171
Accrued interest and commission income
(2,925)
(2,430)
(1,174)
(1,174)
(5,721)
(6,170)
Other assets
(29)
-
Other liabilities
(377)
(472)
Deferred liabilities
(10,226)
(10,246)
Net deferred liability
(5,555)
(5,075)
Deferred assets:
Deferred liabilities:
73
annual report 2006
Relationships between tax expenses and accounting profit for the year ended 31 December 2006
are explained as follows:
2006
Profit before income taxes
13,295
Effect of intragroup eliminations
(329)
Aggregated profit before income taxes
12,966
Combined statutory tax rate for Bank
26.28%
Tax at the statutory tax rate
3,407
Change in deferred tax assets not recognized
1,068
Effect of change in tax rate for USP “Belvneshstrah”
(25)
Tax effect on expenses not deductible for current income tax purposes
2,121
Tax effect of statutory losses not carried forward
8
Tax effect of other permanent differences
(126)
Effect of different tax rates applied to subsidiaries
(28)
Income tax expense
6,425
Current income taxes expense
5,945
Deferred income tax expense
480
Income tax expense
6,425
2006
At beginning of the period
5,075
Deferred income tax expense
480
At end of the period
5,555
Deferred tax assets not recognized
2006
At beginning of the period
1,464
Change in deferred tax assets not recognized
1,068
At end of the period
2,532
11. CASH AND BALANCES WITH The NATIONAL BANK Of The REPUBLIC Of BELARUS
Cash and balances with the National Bank comprise:
31 December
2006
31 December
2005
Cash
25,631
22,703
Balances with the National Bank
65,302
64,593
Total cash and balances with the National Bank
of the republic of Belarus
90,933
87,296
Included in balances with the National Bank is accrued interest in the amount of BYR 41 million and BYR 33 million as
of 31 December 2006 and 2005, respectively.
As of 31 December 2006 and 2005 included in balances with the National Bank are deposits denominated in platinum
of BYR 3,916 million and BYR 3,414 million, respectively.
The balance with the National Bank as of 31 December 2006 and 2005 included amounts of BYR 60,501 million
and BYR 51,551 million, respectively, of which minimum reserve deposit amounted to BYR 38,593 million and BYR
39,888 million, respectively. The Bank is required to maintain the minimum reserve deposit at all times.
Cash and cash equivalents for the purposes of the consolidated statement of cash flows comprise:
31 December
2006
31 December
2005
90,933
87,296
Due from banks in OECD countries
63,694
73,874
154,627
161,170
Less minimum reserve deposit with the National Bank
(38,593)
(39,888)
Total cash and cash equivalents, net
116,034
121,282
12. DUE FROM BANKS
Due from banks comprise:
31 December
2006
31 December
2005
Loans and time deposits from other banks
100,449
54,997
Correspondent accounts and advances to banks
70,772
77,348
Due from other financial institutions
3,830
-
175,051
132,345
-
(4)
175,051
132,341
Less allowance for impairment losses
Total due from banks, net
Movements in allowances for impairment losses for the year ended 31 December 2006 are disclosed in Note 5.
75
annual report 2006
Included in balances due from banks is accrued interest in the amount of BYR 186 million and BYR 105 million as
As of 31 December 2006 and 2005 the Group had loans and advances to 8 banks in the amount of BYR 132,035 million
and 3 banks in the amount of BYR 32,798 million, respectively, which individually exceeded 10% of the Group’s equity.
As of 31 December 2006 and 2005 included in balances due from banks were fixed amounts of BYR 4,574 and
BYR 41,520 million, respectively, placed as guarantee deposits on letters of credit, operations with plastic cards
and travel cheques and settlements with the international payment systems. As of 31 December 2006 and
2005 a maximum credit risk exposure of balances due from banks amounted to BYR 175,051 million and BYR
132,341 million, respectively.
13. LOANS To CUSTOMERS
Loans to customers comprise:
31 December
Originated loans
Net investment in finance lease
Total loans to customers, net
2006
31 December
2005
416,404
377,031
21,793
15,481
438,197
392,512
(17,293)
(13,197)
420,904
379,315
As of 31 December 2006 and 2005 accrued interest income included in loans to customers amounted
to BYR 3,589 million and BYR 2,280 million, respectively.
Movements in allowances for impairment losses for the year ended 31 December 2006 are disclosed in Note 5.
31 December
2006
31 December
2005
Loans collateralized by equipment and goods in turnover
175,777
183,749
Loans collateralized by real estate
106,080
80,742
Loans collateralized by corporate and individual guarantees
47,730
1,728
Loans collateralized by other types of collateral
31,645
32,626
Loans collateralized by cash and securities
11,387
317
Loans collateralized by guarantees of state bodies and local
authorities
7,352
20,144
Loans collateralized by liens over receivables
6,168
3,477
34,765
56,532
420,904
379,315
Unsecured loans
31 December
2006
31 December
2005
Analysis by industry:
Manufacturing
216,391
197,496
Trade
70,303
40,374
Individuals
54,242
34,731
Construction
19,951
22,835
Agriculture
11,479
5,042
Communications
1,788
3,761
46,750
75,076
420,904
379,315
Other
As of 31 December 2006 and 2005 the Group provided loans to 4 and 5 clients totalling BYR 74,944 million and
BYR 64,233 million, respectively, which individually exceeded 10% of the Group’s equity.
All loans are granted to companies operating in the Republic of Belarus, which represents significant geographical concentration in one region.
Loans to individuals comprise the following products:
31 December
2006
31 December
2005
Consumer loans
38,104
23,924
Mortgage loans
15,715
8,530
Car purchase loans
1,768
2,350
55,587
34,804
(1,345)
(73)
Total loans to individuals, net
54,242
34,731
The components of net investment in finance lease as of 31 December 2006 and 2005 are as follows:
31 December
2006
31 December
2005
Not later than one year
4,286
7,429
From one year to five years
21,871
11,246
Minimum lease payments
26,157
18,675
Less: unearned finance income
(4,364)
(3,194)
Net investment in finance lease
21,793
15,481
As of 31 December 2006 and 2005 a maximum credit risk exposure of loans to customers amounted to BYR
420,904 million and BYR 379,315 million, respectively.
77
annual report 2006
14. INVESTMENTS In SECURITIES
Investments in securities comprise:
Interest
to nominal
%
31 December
2006
Interest
to nominal
%
31 December
2005
Debt securities available for sale:
Short-term government bonds (“GKO”)
7.7‑12.0%
22,542
8.0‑18.5%
9,431
Long-term government bonds (“GDO”)
-
14.9‑17.0%
8,956
Short-term bonds of the National Bank
-
10.1%
53,833
Bills of exchange issued by Belarusian banks
-
7.4‑21.6%
8,925
Equity securities available for sale:
Corporate shares available for sale
151
620
Investment in unconsolidated subsidiary
13
13
22,706
81,778
1,264
-
23,970
81,778
Total investments available for sale
Investment in associate
Total investments in securities
As of 31 December 2006 and 2005 interest income on debt securities amounting to BYR 823 million and BYR
1,507 million, respectively, was accrued and included in the investments available for sale.
Short-term government bonds (“GKO”) — government securities with short-term maturities that are issued at discount to face value by the Ministry of Finance of the Republic of Belarus.
Long-term government bonds (“GDO”) — government securities with original maturity of one year that are sold at
discount to face value that are issued by the Ministry of Finance of the Republic of Belarus.
Investment in an associate comprises:
Share %
JSC “Sivelga”
25%
31 December
1,264
2006
Type of operation
Footwear manufacturing
As of 31 December 2005 the Group’s share in JSC “Sivelga” was 17.24% and the investment in the amount of BYR
469 million was included in shares available for sale. In October 2006 the Group acquired significant influence over JSC
“Sivelga”. The associate was recorded in the consolidated financial statements using equity method.
ZAO “Mezhotraslevoj institut nezavisimoj expertisy investitionnyh proektov”(Interindustry institute of independent assessment of investment projects), where as of 31 December 2006 and 2005 the Group owned 52% was not consolidated since the effect of consolidation would not be significant. The Institute provides investment projects assessment
services in the Republic of Belarus.
15. PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
Buildings
Computer
equipment
Vehicles
Agricultural
machinery and
equipment
Furniture and
other assets
Construc-tion
in progress
Intangible
assets
Total
67,568
4,357
13,724
75,049
5,832
733
94
167,357
Effect of change
in accounting estimate
(Note 3)
514
2,580
(2,991)
(16,849)
-
500
-
Additions
307
1,922
919
1,314
605
334
11
5,412
Disposals
(50)
(795)
(450)
(2,625)
-
-
(25)
(3,945)
68,339
8,064
11,202
56,889
6,437
1,567
80
152,578
3,509
1,119
11,748
48,935
2,190
-
57
67,558
Effect of change
in accounting estimate
(Note 3)
553
(85)
(2,731)
(13,452)
-
-
-
(15,715)
Charge for the year
835
1,633
644
3,075
818
-
8
7,013
Eliminated on disposals
(16)
(785)
(427)
(2,520)
-
-
(22)
(3,770)
4,881
1,882
9,234
36,038
3,008
-
43
55,086
31 December 2006
63,458
6,182
1,968
20,851
3,429
1,567
37
97,492
31 December 2005
64,059
3,238
1,976
26,114
3,642
733
37
99,799
At initial cost
31 December 2005
31 December 2006
(16,246)
Accumulated depreciation
31 December 2005
31 December 2006
Net book value
79
annual report 2006
16. OTHER ASSETS
Other assets comprise:
31 December
2006
31 December
2005
Trade receivables and other debtors in non-banking activities
5,637
4,997
Tax settlements, other than income tax
3,339
2,368
Inventory and goods for resale in non-banking activities
2,739
1,939
Prepayments and other debtors in banking activities
2,331
2,228
Prepaid expenses
1,444
770
Prepayments for property and equipment
722
363
Current income taxes asset
481
28
Reinsurer’s portion in insurance reserves — provision for unearned premiums
121
131
Reinsurer’s portion in insurance reserves — loss provision
41
68
Assets received through repossession of collateral
12
1,764
16,867
14,656
(2,113)
(1,134)
Total other assets, net
14,754
13,522
Movements in allowances for impairment losses on other assets for the years ended 31 December 2006 are disclosed in Note 5.
Movements in insurance reserves for the years ended 31 December 2006 are disclosed in Note 8.
As of 31 December 2006 and 2005 tax settlements, other than income tax mainly include input value added tax balances relating to lease operations of the Group and inventory purchases of the subsidiaries.
17. DUE To The NATIONAL BANK Of The REPUBLIC Of BELARUS
As of 31 December 2006 and 2005 balances due to the National Bank of the Republic of Belarus were represented
by correspondent accounts.
18. DUE To BANKS
Due to banks comprise:
31 December
2006
31 December
2005
Correspondent accounts of other banks
17,210
12,788
Loans from other banks and financial institutions
47,202
58,284
Total due to banks
64,412
71,072
As of 31 December 2006 and 2005 accrued interest expenses included in due to banks amounted to BYR 45 million
and BYR 80 million, respectively.
As of 31 December 2006 and 2005 included in due to banks was BYR 40,703 million and BYR 45,192 million denominated
in USD due to International Commercial Bank of China (the Republic of China) with the final maturity in 2016 and interest rate
of LIBOR+1%, which represents significant concentration (63% and 65% of total due to banks, respectively).
As of 31 December 2006 and 2005 included into loans from other banks and financial institutions is liability due to an
Italian insurance company in the total amount of BYR 2,854 million and BYR 3,690 million, respectively, with the final
maturity in June 2010. The liability was recognized as a result of execution of a letter of guarantee issued under international trade transaction.
19. CUSTOMER ACCOUNTS
Customer accounts comprise:
31 December
2006
2005
31 December
Time deposits
337,025
314,416
Current deposits and deposits repayable on demand
295,717
286,079
Total customer accounts
632,742
600,495
As of 31 December 2006 and 2005 accrued interest expenses included in customers accounts amounted to BYR
1,094 million and BYR 1,468 million, respectively.
As of 31 December 2006 customer accounts amounting to BYR 121,950 million (19%) were due to 5 customers.
As of 31 December 2006 and 2005, customer accounts of BYR 38,577 million and BYR 26,077 million, respectively,
were held as security against letters of credit issued or planned to be issued in nearest future by the Group.
Analysis by industry:
31 December
2006
2005
31 December
Manufacturing
315,571
312,952
Individuals
259,603
246,622
Trade
26,090
12,156
Transport and communications
21,948
23,320
Construction
7,208
3,909
Other
2,322
1,536
632,742
600,495
Total customer accounts
20. OTHER LIABILITIES
Other liabilities comprise:
81
annual report 2006
31 December
2006
31 December
2005
Trade payables on non-banking activities
7,494
6,860
Settlements on capital investments
1,127
1,866
Taxes payable, other than income taxes
1,122
2,004
Insurance reserves — provision for unearned premiums
1,077
707
Provision for guarantees and other commitments
594
2,118
Current income taxes liability
383
51
Insurance reserves — loss provision
359
312
Dividends payable
128
44
Other creditors
3,442
905
Total other liabilities
15,726
14,867
Movements in provisions for losses on guarantees and other commitments for the year ended 31 December
2006 are disclosed in Note 5.
Movements in insurance reserves for the years ended 31 December 2006 are disclosed in Note 8.
21. SHARE CAPITAL
As of 31 December 2006 and 2005 the authorized, issued and fully paid share capital comprised 241,579,330 ordinary shares with a par value of BYR 100 each (at historical cost). All shares are ranked equally and carry one vote.
The Bank and its subsidiaries held 5,402,974 and 5,384,368 treasury shares as of 31 December 2006 and 2005,
respectively.
During the years ended 31 December 2006 and 2005 the Bank repurchased 18,606 and 72,428 treasury ordinary
shares, respectively.
During the year ended 31 December 2006 and 2005 the Bank declared BYR 3,057 million dividends on ordinary
shares for the year 2005 and interim dividends for the year 2006 in the amount of BYR 2,502 million.
22. FINANCIAL COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Group is a party to financial instruments with off-balance sheet risk in order
to meet the needs of its customers. These instruments, involving varying degrees of credit risk, are not reflected
in the balance sheet.
The Group’s maximum exposure to credit loss under contingent liabilities and commitments to extend credit,
in the event of non-performance by the other party where all counterclaims, collateral or security prove valueless, is
represented by the contractual amounts of those instruments.
The Group uses the same credit control and management policies in undertaking off-balance sheet commitments as it
does for on-balance sheet operations.
Provision for losses on letters of credit and guarantees amounted to BYR 594 million and BYR 2,118 million as
The risk-weighted amount is obtained by applying credit conversion factor and counterparty risk weightings according
to the principles employed by the Basle Committee on Banking Supervision.
As of 31 December 2006 and 2005, the nominal or contract amounts and risk-weighted amounts were:
31 December
2006
31 December
2005
Nominal Amount
Risk Weighted
Amount
Nominal Amount
Risk Weighted
Amount
Guarantees issued and similar commitments
66,839
66,839
59,829
59,829
Letters of credit
45,758
8,842
70,926
18,854
Commitments on loans and unused credit lines
52,374
9,905
55,204
4,550
Total contingent liabilities and credit commitments
164,971
85,586
185,959
83,233
Contingent liabilities and credit commitments
Operating lease commitments — Where the Group is the lessee, the future minimum lease payments under non-cancellable operating leases are as follows:
31 December
2006
31 December
Not later than 1 year
630
651
Later than 1 year and not later than 5 years
298
339
Total operating lease commitments
928
990
2005
Legal proceedings — From time to time and in the normal course of business, claims against the Group are received
from customers and counterparties. Management is of the opinion that no material unaccrued losses will be incurred
and accordingly no provision has been made in these consolidated financial statements.
As of 31 December 2006 and 2005, the Bank has a contingent liability relating to the lawsuit that was filed
in June 2005 by an executing bank in Austria under letter of credit issued by order of a Belarusian importer.
The Austrian bank claimed that the Bank should compensate its losses under another lawsuit lost to the exporter, on the grounds that the Bank did not comply with the terms of the letter of credit and did not make
settlement thereon. The claim amounted to EUR 644,297 (BYR 1,815 million as of 31 December 2006). Based
on the opinion of legal advisors management assessed likelihood of the loss as possible and, therefore, provision was not created.
Agent activities — The Bank performs agent functions in a number of transactions concluded on behalf
of the government for attraction of the state foreign borrowings for investment projects. The Bank’s func-
83
annual report 2006
tions comprise the support of settlements for receipts and repayment of loans between foreign banks, authorized government bodies (primarily the Ministry of Finance) and ultimate borrowers (Belarusian enterprises). As
of 31 December 2006 and 2005 total amount of such borrowings serviced by the Bank amounted to BYR
270,543 million and BYR 283,791 million respectively.
Pensions and retirement plans — Employees receive pension benefits in accordance with the laws and regulations
of the Republic of Belarus. As of 31 December 2006 and 2005, the Group was not liable for any supplementary pensions, post-retirement health care, insurance benefits, or retirement indemnities to its current or former employees.
23. SUBSEQUENT EVENTS
As of 27 March 2007 the president of Belarus, Alexander Lukashenko, has issued a decree on selling shares
of the Bank to Vnesheconombank of the USSR (the Russian Federation), including the shares owned by the State
Committee on Property in the amount of 16,090,563, the shares owned by the National Bank in the amount
of 80,967,459 and the shares owned by state-controlled legal entities in the amount of 17,413,367. Total ownership
interest to be sold amounts to 47.4%.
In March 2007 final dividends for the year 2006 were declared in the amount of BYR 3,282 million. Part of the dividends in the amount of BYR 2,502 million was paid during 2006 as interim dividend. In accordance with IAS 10
“Events after the balance sheet date” additional final dividends in the amount of BYR 780 have not been accrued
in the consolidated financial statements for the year ended 31 December 2006.
24. TRANSACTIONS WITH RELATED PARTIES
Related parties or transactions with related parties, as defined by IAS 24 “Related party disclosures”, represent:
(a)Parties that directly, or indirectly through one or more intermediaries: control, or are controlled by, or are under common control with, the Group (this includes parents, subsidiaries and fellow subsidiaries); have an interest
in the Group that gives then significant influence over the Group; and that have joint control over the Group;
(b)Associates — enterprises on which the Group has significant influence and which are neither a subsidiary nor
a joint venture of the Group;
(c)Joint ventures in which the Group is a venturer;
(d)Members of key management personnel of the Group or its parent;
(e)Close members of the family of any individuals referred to in (a) or (d);
(f) Parties that are entities controlled, jointly controlled or significantly influenced by, or for which significant voting
power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
(g)Post-employment benefit plans for the benefit of employees of the Group, or of any entity that is a related
party of the Group.
In considering each possible related party relationship, attention is directed to the substance of the relationship,
and not merely the legal form. The Group had the following transactions outstanding as of 31 December 2006 and
2005 with related parties:
31 December
2006
31 December
2005
Related party
balances
Total category as
per financial statements caption
Related party
balances
Total category as
per financial statements caption
Due from the National Bank of the Republic of Belarus
65,302
65,302
64,593
64,593
Due from banks
39,856
175,051
37,157
132,341
- shareholders
16
1,621
- state entities (under common control
of the State) — other banks
39,840
35,536
Loans to customers, gross
147,472
- state entities (under common control of the State)
146,812
159,352
660
566
- key management personnel
438,197
Allowance for impairment losses
(3,063)
(3,047)
(3,146)
(16)
(1)
Investments in securities, net
23,806
- associates
(17,293)
159,918
23,970
(3,147)
81,145
392,512
(13,197)
81,778
1,264
-
-
53,833
22,542
27,312
5,278
5,278
4,110
4,110
Due to banks
3,931
64,412
2,574
71,072
- shareholders
-
24
3,931
2,550
- shareholders (National Bank)
Customer accounts
116,700
115,359
154,875
1,341
1,421
Financial commitments and contingencies, net
73,332
73,332
Provision for guarantees and other off-balance sheet
commitments
474
474
632,742
164,971
156,296
108,004
600,495
185,959
108,004
594
1,693
2,118
1,693
Included in the consolidated income statement for the year ended 31 December 2006 are the following amounts which
arose due to transactions with related parties:
85
annual report 2006
2006
Related party transactions
Total category as per financial statements
caption
Interest income
15,934
66,155
- shareholders
931
14,995
8
7,264
- shareholders
1
7,263
Interest expenses
5,014
- National Bank
34,688
36,802
2
4,871
141
Provision for impairment losses on loans to customers
99
99
Operating expenses
2,999
- state entities (under common control of the State)- contributions to Deposits Insurance Fund
1,577
- key management personnel (remuneration)
1,422
6,211
75,085
During the year ended 31 December 2006 key management personnel remuneration included in operating expenses
caption in the table above comprised short-term employee benefits.
25. FAIR VALUE Of FINANCIAL INSTRUMENTS
Estimates of fair value disclosures of financial instruments are made in accordance with the requirements of IAS 32
“Financial Instruments: Disclosure and Presentation” and IAS 39 “Financial Instruments: Recognition and Measurement”.
Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between
knowledgeable willing parties in an arm’s length transaction, other than in forced or liquidation sale. The estimates
presented herein are not necessarily indicative of the amounts the Group could realize in a market exchange from
the sale of its full holdings of a particular instrument.
The fair value of financial assets and liabilities compared with the corresponding carrying amount in the balance sheet
of the Group is presented below:
31 December
2006
31 December
2005
Carrying value
Fair
value
Carrying value
Fair
value
Cash and balances with the National Bank of the Republic
of Belarus
90,933
90,933
87,296
87,296
Due from banks
175,051
175,051
132,341
132,341
Debt securities available for sale
22,542
22,542
81,145
81,145
Due to National Bank of the Republic of Belarus
5,278
5,278
4,110
4,110
Due to banks
64,412
64,412
71,072
71,072
Customer accounts
632,742
632,742
600,495
600,495
5
5
5
5
The fair value of loans to customers and equity investments available for sale can not be measured reliably as it is not
practicable to obtain market information or apply any other valuation techniques on such instruments.
26. REGULATORY MATTERS
Quantitative measures established by regulation to ensure capital adequacy require the Group to maintain minimum
amounts and ratios of total (8%) and tier 1 capital (4%) to risk weighted assets.
The ratio was calculated according to the principles employed by the Basle Committee by applying the following risk
estimates to the assets and off-balance sheet commitments net of allowances for impairment losses:
Estimate
Description of position
0%
Cash and balances with the NB RB
0%
Loans to banks and customers secured by cash, highly liquid securities or guaranteed by the Government
0%
State debt securities denominated in BYR
0%
Letters of credit secured by customers deposits
20%
Loans and advances to banks for up to 1 year and securities issued by banks
50%
Letters of credit not secured by customers deposits
50%
Obligations and commitments on unused loans with the initial maturity of over 1 year
100%
Loans to customers
100%
Other assets
100%
Guarantees issued and similar commitments
As of 31 December 2006 the Group’s total capital amount for capital adequacy purposes was BYR 100,089 million
and tier 1 capital amount was BYR 100,089 million with ratios of 15.4% and 15.4%, respectively.
87
annual report 2006
As of 31 December 2005 the Group’s total capital amount for capital adequacy purposes was BYR 98,780 million and
tier 1 capital amount was BYR 98,780 million with ratios of 16.0% and 16.0%, respectively.
27. RISK MANAGEMENT POLICIES
Management of risk is fundamental to the banking business and is an essential element of the Group’s operations.
The main risks inherent to the Group’s operations are those related to credit exposures, liquidity and market movements in interest rates and foreign exchange rates. A description of the Group’s risk management policies in relation
to those risks follows.
The Group manages the following risks:
Liquidity risk
Liquidity risk refers to the availability of sufficient funds to meet deposit withdrawals and other financial commitments
associated with financial instruments as they actually fall due.
The Group manages this risk in accordance with the National Bank of the Republic of Belarus regulations and internal
control procedures through the Department for Strategic Planning and Management of Banking Risks. The Banking
Risks Management Committee performs regular monitoring of this risk and develops overall policies and strategies as
a part of assets/liabilities management process.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect the value of the financial instruments. The Bank’s interest rate policy is analyzed and developed by the Banking Risks Management Committee and
approved by the Board of the Bank.
The following table presents an analysis of interest rate risk and thus the potential of the Group for gain or loss. Effective interest rates are presented by categories of financial assets and liabilities to determine interest rate exposure and effectiveness of the interest rate policy used by the Group.
31 December
2006
31 December
2005
BYR
Foreign
currencies
BYR
Foreign
currencies
Due from banks
12.5%‑12.75%
3.3%‑11.4%
3%‑26%
2%‑11.5%
Loans to customers
11.0%‑25.0%
9.5%‑18.0%
12.0%‑21.0%
16.6%‑18.5%
Debt securities available for sale
7.7%‑12.0%
-
12.0%‑56.1%
6.6%‑8.2%
Due to banks
0.0%‑5.5%
0.2%‑7.1%
3%‑22%
2.9%‑8.5%
Customer accounts
0.9%‑11.4%
0.2%‑8.2%
2.8%‑20.9%
2.0%‑9.0%
2.40%
-
10.40%
-
ASSETS
LIABILITIES
The analysis of assets and liabilities of the Group by contractual maturities and interest rate risk is presented
in the following table:
Up
1 month to 3 month to 1 year to
to 1 month 3 months
1 year
5 years
Over 5
years
Overdue
Maturity
undefined
31
December
2006
Total
ASSETS
Cash and balances with the National
844
Bank of the Republic of Belarus
Due from banks
78,139
Loans to customers
56,720
22,542
4,815
127,471
-
Total interest bearing assets
158,245
51,496
Precious metals
703
Due from banks
67,606
Property, equipment and intangible
assets
Other assets
788
TOTAL ASSETS
-
-
-
-
-
-
844
18,178
6,313
143,692 81,070
-
7,113
-
4,838
-
-
107,445
420,904
22,542
132,286
161,870
87,383
7,113
4,838
-
551,735
-
-
-
-
-
38,593
90,089
-
-
-
-
-
1,428
703
67,606
1,428
-
-
-
-
-
97,492
97,492
2,496
8,565
166
-
-
2,739
14,754
7,113
4,838 140,252 823,807
278,838
134,782
170,435 87,549
Due to banks
Customer accounts
112,860
5
81,290
-
3,282
2,613 40,660
153,096 45,966
136
-
-
-
46,555
393,348
5
Total interest bearing liabilities
112,865
81,290
156,378 48,579 40,796
-
-
439,908
LIABILITIES
Due to banks
Customer accounts
Other liabilities
5,278
-
-
-
-
-
-
5,278
17,290
222,028
1,507
321
6,221
16,505
7,998
567
540
5,555
-
-
-
-
17,857
239,394
5,555
15,726
TOTAL LIABILITIES
358,968
87,832
180,881
55,241
40,796
-
-
723,718
Liquidity gap
(80,130)
46,950
(10,446) 32,308 (33,683)
Interest sensitivity gap
45,380
50,996
Cumulative interest sensitivity gap
as a percentage of total assets
45,380
96,376
5.5%
11.7%
89
5,492
38,804 (33,683)
101,868 140,672 106,989
12.4%
17.1%
13.0%
annual report 2006
Up to 1
month
1 month to 3 month 1 year to
3 months to 1 year 5 years
Over 5
years
Overdue
Maturity
undefined
31 December
2005
Total
ASSETS
Cash and balances with National
Due from banks
Loans to customers
9,096
1,227
34,423
53,151
81,145
2,782
112,376
-
Total interest bearing assets
177,815
Cash and balances with National
Precious metals
Due from banks
assets
Other assets
2,187
-
-
-
-
12,510
37,511
8,151
141,138 64,743
-
1,978
-
5,929
-
-
82,867
379,315
81,145
116,385 180,836 72,894
1,978
5,929
-
555,837
34,898
-
-
-
-
-
39,888
74,786
353
49,474
-
-
-
-
-
-
633
353
49,474
633
-
-
-
-
-
-
99,799
99,799
1,615
296
7,064
1,859
-
-
2,688
13,522
TOTAL ASSETS
264,155
116,681 187,900 74,753
LIABILITIES
Due to banks
Customer accounts
55,930
5
2,706
85,112
-
5,298 1,298 48,882
140,661 35,054
-
-
-
58,184
316,757
5
Total interest bearing liabilities
55,935
87,818
145,959 36,352 48,882
-
-
374,946
Due to National Bank of the Repub4,110
lic of Belarus
Due to banks
12,888
Customer accounts
283,738
Other liabilities
2,773
1,978
794,404
-
-
-
-
-
-
4,110
2,476
7,812
5,075
1,412
394
-
-
12,888
283,738
5,075
14,867
-
-
695,624
TOTAL LIABILITIES
359,444 90,294 153,771 42,839 49,276
Liquidity gap
(95,289) 26,387
34,129
Interest sensitivity gap
121,880
34,877 36,542 (46,904)
as a percentage of total assets
121,880 150,447 185,324 221,866 174,962
15.3%
5,929 143,008
28,567
18.9%
23.3%
31,914 (47,298)
27.9%
22.0%
Currency risk is defined as the risk that the value of a financial instrument will fluctuate due to changes in foreign
exchange rates. The Group is exposed to the effects of fluctuations in the prevailing foreign currency exchange rates
on its financial position and cash flows.
In order to minimize currency risk, the Group applies limits comprising the open currency position limit set for
the Bank, and open currency position limits of the Bank’s branches. The limits are set in compliance with requirements
of the National Bank of the Republic of Belarus and approved by the Board.
The Group’s exposure to foreign currency exchange rate risk is presented in the table below:
BYR
and non-monetary items
31
December
USD
1USD=
BYR
2,140
EUR
1EUR=
BYR
2,817.31
RUB
1RUB=
BYR
81.13
Other
currencies
81,410
6,118
2,067
1,136
202
90,933
Precious metals
703
-
-
-
-
703
Due from banks
35,143
85,358
33,808
15,853
4,889
175,051
Loans to customers
159,968
206,067
46,215
8,654
-
420,904
23,970
-
-
-
-
23,970
97,492
-
-
-
-
97,492
Other assets
14,082
313
290
49
20
14,754
TOTAL ASSETS
412,768
297,856
82,380
25,692
5,111
823,807
-
1,634
267
-
3,377
5,278
9,522
50,024
2,628
2,154
84
64,412
223,125
283,779
100,231
25,454
153
632,742
5
-
-
-
-
5
5,555
-
-
-
-
5,555
Other liabilities
9,717
2,583
3,397
4
25
15,726
TOTAL LIABILITIES
247,924
338,020
106,523
27,612
3,639
723,718
CURRENCY POSITION
164,844
(40,164)
(24,143)
(1,920)
1,472
2006
Total
ASSETS
Cash and balances with the National Bank of the Republic of Belarus
LIABILITIES
Due to banks
Customer accounts
91
annual report 2006
Derivative financial instruments and spot contracts
Fair value of the derivatives is included in the currency analysis presented above and the following table presents further
analysis of currency risk to types of derivative financial instruments and spot contracts as of 31 December 2006:
BYR
USD
1USD=
BYR 2,140
EUR 1EUR=
BYR 2,817.31
35,898
-
-
-
-
35,898
Accounts receivable on spot and forward
contracts
-
15,986
19,912
-
-
35,898
NET SPOT AND DERIVATIVE FINANCIAL
INSTRUMENTS POSITION
(35,898)
15,986
19,912
-
-
-
TOTAL CURRENCY POSITION
128,946 (24,178)
(4,231)
(1,920)
1,472
EUR 1EUR=
BYR
2,546.35
RUB 1RUB=
BYR 74.86
Other currencies
Accounts payable on spot and forward
contracts
BYR and non- USD 1USD=
monetary items BYR 2,152
RUB 1RUB=
BYR 81.13
Other currencies
31 December
2006
Total
31 December
2005
Total
ASSETS
Precious metals
Due from banks
Loans to customers
assets
Other assets
TOTAL ASSETS
65,882
16,857
3,085
1,131
341
87,296
353
13,510
121,863
73,201
58,530
214,044
1,915
43,660
35,775
6,662
11,966
7,633
-
4,675
-
353
132,341
379,315
81,778
99,799
-
-
-
-
99,799
13,339
104
37
22
20
13,522
387,947
291,450
89,219
20,752
5,036
794,404
LIABILITIES
Due to banks
Customer accounts
Other liabilities
-
547
8
-
3,555
4,110
7,764
233,698
5
5,075
8,194
57,759
253,202
5,827
4,869
93,966
520
639
19,257
318
41
372
8
71,072
600,495
5
5,075
14,867
TOTAL LIABILITIES
254,736
317,335
99,363
20,214
3,976
695,624
CURRENCY POSITION
133,211
(25,885)
(10,144)
538
1,060
Derivative financial instruments and spot contracts
Fair value of the derivatives is included in the currency analysis presented above and the following table presents further
analysis of currency risk to types of derivative financial instruments and spot contracts as of 31 December 2005:
BYR
Accounts payable on spot and forward
contracts
Accounts receivable on spot and forward contracts
NET SPOT AND DERIVATIVE
FINANCIAL INSTRUMENTS POSITION
TOTAL CURRENCY POSITION
USD
1USD=
BYR
2,152
EUR
1EUR=
BYR 2,546.35
RUB
1RUB=
BYR
74.86
Other
currencies
31 December
249
9,090
-
-
-
9,339
-
172
9,179
-
-
9,351
(249)
(8,918)
9,179
-
-
12
132,962
(34,803)
(965)
538
1,060
2005
Total
Market Risk
Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices
whether those changes are caused by factors specific to the individual security or its issuer or factors affecting all
securities traded in the market. The Group is exposed to market risks of its products which are subject to general
and specific market fluctuations.
The Group manages market risk through periodic estimation of potential losses that could arise from adverse changes
in market conditions and establishing and maintaining appropriate stop-loss limits and margin and collateral requirements.
Credit risk
The Group is exposed to credit risk which is the risk that one party to a financial instrument will fail to discharge an
obligation and cause the other party to incur a financial loss.
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 industry segments. Limits on the level of credit risk by a borrower
are monthly reviewed and approved by the Board. The exposure to any one borrower is also restricted by limits covering on and off-balance sheet exposures which are set by the Credit Committee. Actual exposures against limits are
monitored daily.
Where appropriate, and in the case of most loans, the Group obtains collateral and corporate and personal guaranties.
Credit risk and the value of collateral are monitored on a continuous basis.
Commitments to extend credit represent unused portions of loans and credit lines, guarantees and letters of credit.
The credit risk on off-balance sheet financial instruments is defined as a probability of losses due to the inability
of the counterparty to comply with the contractual terms and conditions. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused commitments.
However, the likely amount of loss is less than the total unused commitments since most commitments to extend
credit are contingent upon customers maintaining specific credit standards. The Group applies the same credit policy
to the contingent liabilities as it does to the balance sheet financial instruments, i.e. the one based on the proce-
93
annual report 2006
dures for approving the grant of loans, using limits to mitigate the risk, and current monitoring. The Group monitors
the term to maturity of credit commitments because longer term commitments generally have a greater degree
of credit risk than shorter-term commitments.
The maximum credit risk exposure, ignoring the fair value of any collateral, in the event other parties fail to meet their
obligations under financial instruments is equal to the carrying value of the financial asset as presented in the consolidated financial statements and the disclosed financial commitments.
Geographical concentration
The geographical concentration of assets and liabilities is set out below:
Belarus
Other CIS
countries
OECD countries Other non-OECD
countries
31
December
2006
Total
ASSETS
90,933
-
-
-
90,933
Precious metals
703
-
-
-
703
Due from banks
74,858
31,794
68,268
131
175,051
420,904
-
-
-
420,904
23,970
-
-
-
23,970
97,492
-
-
-
97,492
Other assets
14,754
-
-
-
14,754
TOTAL ASSETS
723,614
31,794
68,268
131
823,807
Due to the National Bank of the Republic
of Belarus
5,278
-
-
-
5,278
Due to banks
10,613
7,641
3,428
42,730
64,412
620,739
3,276
1,165
7,562
632,742
5
-
-
-
5
5,555
-
-
-
5,555
Other liabilities
12,708
-
3,018
-
15,726
654,898
10,917
7,611
50,292
723,718
68,716
20,877
60,657
(50,161)
Loans to customers
LIABILITIES
Customer accounts
TOTAL LIABILITIES
NET BALANCE SHEET POSITION
Belarus
Other CIS countries
OECD
countries
Other non-OECD
countries
31 December
2005
Total
ASSETS
Precious metals
Due from banks
Loans to customers
Other assets
87,296
-
-
-
87,296
353
43,931
379,315
81,778
99,799
13,522
9,168
-
78,878
-
364
-
353
132,341
379,315
81,778
99,799
13,522
TOTAL ASSETS
705,994
9,168
78,878
364
794,404
LIABILITIES
Due to the National Bank of the Republic
of Belarus
Due to banks
Customer accounts
Other liabilities
4,110
-
-
-
4,110
7,355
586,849
5
5,075
12,801
7,139
2,909
75
9,693
4,308
1,991
46,885
6,429
-
71,072
600,495
5
5,075
14,867
TOTAL LIABILITIES
616,195
10,123
15,992
53,314
695,624
NET BALANCE SHEET POSITION
89,799
(955)
62,886
(52,950)
28. UNCERTAINTY
Economy of the Republic of Belarus — The economy of the Republic of Belarus is characterized by relatively high rates
of taxation and extensive statutory regulation. Laws and regulations defining the business environment in the Republic of Belarus are at the stage of development and subject to frequent changes. The future economic development depends to a large extent on the efficiency of the measures taken by the Government of Belarus and other actions beyond
the Group’s control. The future direction of the economic policy of the Government of the Republic of Belarus can have an
effect on the recoverability of the Group’s assets and the ability of the Group to maintain or pay its debts as they mature.
The management of the Group made its best estimate on the recoverability and classification of recorded assets and
completeness of recorded liabilities. However, the uncertainty described above still exists and the Group may continue
to be affected by it. Legislation — Certain provisions of Belarusian commercial legislation and tax legislation in particular may give rise to varying interpretations and inconsistent application. In addition, as management’s interpretation of legislation may differ from that of the authorities, statutory compliance may be challenged by the authorities,
and as result the Group may face additional taxes and charges and other preventive measures. The management
of the Group believes that it has already made all tax and other payments or accruals, and therefore no additional allowance has been made in the financial statements. Past fiscal years remain open to review by the authorities.
95
annual report 2006
CONТACT INFORMATION
BELVNESHECONOMBANK BRANCHES, CENTERS OF BANKING SERVICES, SUBSIDIARIES AND
ASSOCIATED COMPANY
BRANCHES
BREST REGION
GOMEL REGION
Brest Regional Branch
tel.: (8-0162) 23-89-89
fax: (8-0162) 21-51-90
Gomel Regional Branch
tel.: (8-0232) 74-71-75
fax: (8-0232) 74-71-20
ul. Pushkinskaya 16/1, 224005, Brest
e-mail: [email protected]
ul. Gagarina 55, 246050, Gomel
Brest Regional Branch
Cash Settlement Center
Central Cash Settlement Center
tel.: (8-0162) 20-84-58
tel.: (8-0232) 74-08-01
ul. Kuibysheva 13, Brest
ul. Internatsionalnaya 10a, 246050, Gomel
Brest Banking Units
Spartak Cash Settlement Center
tel.: (0162) 28-34-44
ul. Lieutenanta Ryabtseva 108/1, Brest
tel.: (8-0232) 55-22-89
tel.: (0162) 48-40-64
ul. Sovetskaya 63, 246658, Gomel
ul. Volgogradskaya 19, Brest
Branch in Baranovichi
tel./fax: (8-0163) 41-20-30
ul. Sovetskaya 82, 225320, Baranovichi
Branch in Kobrin
tel./fax: (8-01642) 2-74-19
ul. Dzerzhinskogo 61, 225860, Kobrin
Branch in Pinsk
tel./fax: (8-0165) 32-43-78
ul. Brestskaya 9, 225710, Pinsk
Branch in Pinsk Cash Settlement Center
tel.: (8-0165) 32-33-50
ul. Pervomaiskaya 66, Pinsk
Novobelitsky Cash Settlement Center
tel.: (8-0232) 36-40-53
ul. Ilyicha 2, 246021, Gomel
Mashinostroitel Cash
Settlement Center
tel.: (8-0232) 74-53-86
ul. Krestyanskaya 1, 246017, Gomel
Branch in Mozyr
tel./fax: (8-02351) 2-98-80
ul. Sayeta 4, 247760, Mozyr
Mozyr Banking Unit
tel.: (8-02351) 2-20-95
ul. Sovetskaya 27a, Mozyr
(riverside station building)
Branch in Rechitsa
tel./fax: (8-02340) 3-22-08
ul. 10 Let Oktyabrya 6, 247500, Rechitsa
Minsk Branch 2
tel.: (8-017) 292-34-45
fax: (8-017) 292-56-31
ul. Kulman 2, 220013, Minsk
Rechitsa Banking Unit
tel.: (8-02340) 4-15-61
Minsk Branch 2 Luch Cash Settlement Center
ul. Snezhkova 16a, Rechitsa
tel.: (8-017) 280-68-68
prosp. Nezavisimosti 95, Minsk
GRODNO REGION
Minsk Banking Unit
tel.: (8-017) 237-98-43
Grodno Regional Branch
tel./fax: (8-0152) 79-07-59
prosp. Nezavisimosti 95, Minsk (MTS office)
ul. B. Troitskaya 51, 230023, Grodno
Minsk Branch 3
tel.: (8-017) 275-13-45
fax: (8-017) 275-54-31
Grodno Banking Units
ul. Serova 4, 220024, Minsk
tel.: (8-0152) 75-09-84
pl. Sovetskaya 1, 1st floor, Grodno
tel.: (8-0152) 210-84-23
ul. Sovetskaya 18, 2nd floor, Grodno (Neman Trade Center)
Branch in Volkovysk
tel./fax: (8-01512) 2-22-19
ul. Lenina 37, 231900, Volkovysk
Branch in Lida
tel./fax: (8-01561) 2-15-80
ul. Mitskevicha 23, 231300, Lida
MINSK AND MINSK REGION
Minsk Branch 3 MITSO Cash Settlement Center
tel.: (8-017) 278-61-43
ul. Kazintsa 21/3, 220099, Minsk
Minsk Branch 3
Kolyadichi-Avto Cash Settlement Center
tel.: (8-017) 291-89-18
ul. Babushkina 39, Kolyadichi Industrial Park, Minsk
Minsk Branch 4
tel.: (8-017) 220-90-21
fax: (8-017) 220-92-21
ul. Yakubova 10, 220101, Minsk
Minsk Banking Unit
tel.: (8-017) 248-45-64
Minsk Central Branch
tel.: (8-017) 203-22-77
fax: (8-017) 203-16-90
ul. Zaslavskaya 10, 220004, Minsk
Minsk Branch 1
tel.: (8-017) 288-51-55
fax: (8-017) 288-56-52
ul. Bogdanovicha 153, 220040, Minsk
99
contact information
ul. Malinina 35, Minsk (Svelta Market)
Minsk Branch 5
tel./fax: (8-017) 209-24-33
ul. Skryganova 6, 220073, Minsk
Minsk Banking Unit
tel.: (8-017) 251-53-81
prosp. Pobediteley 20/1, Mir Fitnesa, Minsk
annual report 2006
Branch in Borisov
tel./fax: (8-0177) 74-36-27
Bobruisk Banking Units
ul. Gagarina 46a, 222120, Borisov
ul. Dneprovskoy Flotilii 40, Bobruisk
tel.: (8-0225) 58-33-30
tel.: (8-0225) 43-51-30
ul. Ulianovskaya 64, Bobruisk
Branch in Borisov
Cash Settlement Center 2
tel.: (8-029) 162-69-36
ul. K. Marksa 49, Bobruisk
tel.: (8-0177) 78-13-24
ul. Zavodskaya 45, 222120, Borisov
Borisov Banking Units
tel.: (8-0177) 76-15-86
VITEBSK REGION
ul. Truda 7, Borisov
tel.: (8-0177) 78-70-40
ul. Serebrennikova 26B, Borisov (store #5)
tel.: (8-0177) 73-22-59
ul. Chapayeva 1, Borisov (consumer services center)
Vitebsk Regional Branch
tel./fax: (8-0212) 36-47-28
ul. Zamkovaya 4, 210602, Vitebsk
tel.: (8-0177) 75-83-77
ul. Gagarina 105a, Borisov
tel.: (8-0177) 76-52-89
ul. Chapayeva 1, Borisov (Velcom sales and service center)
Branch in Molodechno
tel./fax: (8-01773) 7-28-21
ul. Vilenskaya 10, 222310, Molodechno
Branch in Molodechno
Chist Cash Settlement Center
tel./fax: (8-01773) 9-01-39
ul. Zavodskaya 1, 222321, Chist, Molodechno District
MOGILEV REGION
Mogilev Regional Branch
tel./fax: (8-0222) 22-91-46
Vitebsk Banking Unit
tel.: (8-0212) 26-18-78
prosp. Frunze 81, Vitebsk (Evikom Market)
tel.: (8-0212) 36-39-331
ul. Leningradskaya 2, Vitebsk
Branch in Verkhnedvinsk
tel./fax: (8-02151) 5-12-64
ul. Sovetskaya 173, 211620, Verkhnedvinsk
Branch in Glubokoye
tel./fax: (8-02156) 2-21-36
ul. Engelsa 2, 211800, Glubokoye
Branch in Glubokoye
Cash Settlement Center 1
tel.: (8-0214) 52-83-68
ul. Pionerskaya 26, 212030, Mogilev
ul. Ya. Kolasa 48, 211440, Novopolotsk
Mogilev Banking Units
Branch in Orsha
tel./fax: (8-0216) 21-68-29
tel.: (8-0222) 22-96-73
ul. Chelyuskintsev 105, Mogilev
ul. Shmidta 20, Mogilev
ul. Lazarenko 73, Mogilev
Branch in Bobruisk
tel./fax: (8-0225) 12-28-12
ul. Internatsionalnaya 49, 213819, Bobruisk
ul. Mira 30, 211392, Orsha
Banking Unit
tel.: (8-02137) 2-29-16
Dubrovno District, Vitebsk Region
(“Redki” Border Checkpoint)
CENTERS OF BANKING
SERVICES
SUBSIDIARIES
AND ASSOCIATED COMPANY
Center of Banking
Services 1
tel.: (8-017) 209-28-12
Belvneshstrakh
Insurance Company
tel.: (8-017) 209-24-16
fax: (8-017) 209-25-65
ul. Moskovskaya 13, 220007, Minsk
Kolyadichi Center
of Banking Services
tel.: (8-017) 291-87-11
fax: (8-017) 291-87-52
ul. Babushkina 37,
Kolyadichi Industrial Park 220024, Minsk
Svetlogorsk Center
of Banking Services
tel. / fax: (8-02342) 2-75-08
ul. Lenina 45a,
247400, Svetlogorsk, Gomel Region
ul. Skryganova 6, office 405,
220073, Minsk
Vneshenergoservice
Joint Venture
tel.: (8-017) 209-24-15
ul. Skryganova 6, office 511, 220073, Minsk
Belinterfinance
Joint Venture
tel.: (8-017) 222-76-47
fax: (8-017) 222-80-24
ul. Moskovskaya 13, office 402,
220007, Minsk
Vneshstroyinvest
tel./fax: (8-017) 207-11-37
prosp. Pobediteley 20/1, 220020, Minsk
Vnesheconomstroy
tel.: (8-017) 256-15-51, 256-15-52
prosp. Pobediteley 20/1, office 317,
220020, Minsk
Sivelga
tel./fax: (8-017) 200-69-77
ul. Korolya 2, 220004, Minsk
101 contact information
annual report 2006
BELVNESHECONOMBANK
Head office
ul. Myasnikova, 32
Minsk, 220050, Republic of Belarus
tel. + 375 17 209-29-44
fax + 375 17 226-48-09
telex 252194, 252426, BVB BY
www.bveb.by
© 2007 Belvnesheconombank
tel. + 375 17 209-24-23
DESIGN:
Design studio «ZEPPELIN»
ul. Y. Kolasa 21, office 1
Minsk, 220013, Republic of Belarus
tel./fax: + 375 17 231-58-97
mobile:. + 375 29 612-78-34
www.zeppelin.by
PHOTO: Andrey Schukin
Signed to go to press on
PUBLISHER - OOO Evolventa
Publisher’s License No. 02330/0133046
dated 04.30.2004
PRINTED at Orekh Press
Printer’s License No. 02330/005 dated 04.30.2004
Print run of 725 copies. Order No.

Annual report 2006

Transcription

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