Banque Bemo Saudi Fransi

Transcription

BANQUE BEMO SAUDI FRANSI S.A.
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED DECEMBER 31, 2013
TRANSLATED FROM ORIGINAL ARABIC CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED DECEMBER 31, 2013
TABLE OF CONTENTS
Page
Independent Auditor’s Report
1-2
Consolidated Financial Statements:
Consolidated Statement of Financial Position
3
Consolidated Statement of Profit or Loss
4
Consolidated Statement of Profit or Loss and Other Comprehensive Income
5
Consolidated Statement of Changes in Equity
6
Consolidated Statement of Cash Flows
7-8
Notes to the Consolidated Financial Statements
9 - 90
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31,
Notes
2013
SYP
2012
SYP
ASSETS
Cash and balances with
Central Bank of Syria
Balances with banks
Deposits with banks
Held-for-trading financial assets
Net direct credit facilities
Available for sale financial assets
Held to maturity financial assets
Property and equipment
Intangible assets
Deferred tax assets
Other assets
Blocked deposit with Central Bank of Syria
5
6
7
8
9
10
11
12
13
20-B
14
15
Total assets
33,857,136,620
17,532,684,831
8,976,200,000
7,827,392
23,897,507,647
73,306,300
27,985,437,115
2,521,354,991
105,144,793
287,605,968
995,810,088
985,032,149
29,276,193,096
15,116,366,099
1,583,600,000
7,893,734
26,421,484,270
80,747,840
7,264,490,136
2,574,036,317
113,839,632
290,381,836
518,633,461
644,620,100
117,225,047,894
83,892,286,521
3,081,898,843
98,882,564,304
2,680,445,204
636,461,704
1,315,011
6,704,375
2,898,853,748
1,919,076,446
70,067,771,259
2,407,554,761
314,377,269
13,560,772
8,117,500
2,101,440,790
108,188,243,189
76,831,898,797
5,000,000,000
424,797,372
424,797,372
184,660,192
5,000,000,000
424,797,372
424,797,372
184,660,192
LIABILITIES
Banks’ deposits
Customers’ deposits
Cash margins
Miscellaneous provisions
Provision for income tax
Deferred tax liabilities
Other liabilities
16
17
18
19
20-A
20-C
21
Total liabilities
EQUITY
Capital
Legal reserve
Special reserve
General reserve for credit facilities impairment
Accumulative changes in fair value of
available for sale financial assets
Accumulated losses
Unrealized retained earnings
22
23
23
26
24
25
(
19,860,898
1,223,710,307)
4,123,759,292
(
23,065,511
310,866,622)
1,238,383,831
Total equity attributable to equity holders
of the parent
Non-controlling interests
8,954,164,819
82,639,886
6,984,837,656
75,550,068
Total equity
9,036,804,705
7,060,387,724
117,225,047,894
83,892,286,521
Total liabilities and equity
Chief Executive Officer
THE ACCOMPANYING NOTES FROM 1 TO 46 FORM AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
3
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Year ended December 31,
2013
2012
SYP
SYP
Notes
Interest income
Interest expense
Net interest income
27
28
(
Fees and commissions income
Fees and commissions expense
Net fees and commissions income
Net interest, fees and commissions income
29
30
(
Net realized exchange gain
Net unrealized exchange gain on
structural position
Gain from held-for-trading financial assets
Gain from available for sale financial assets
Other operating income
Other income
31
32
33
Total operating income
Salaries and related charges
Depreciation of property and equipment
Amortization of intangible assets
Provision for impairment of credit facilities
Other operating expenses
Other losses
Total operating expenses
Profit/ (loss) before tax
Net income tax
34
12
13
35
19
36
37
20-D
Net profit for the year
(
(
(
(
(
(
(
(
2,862,087,407
3,127,923,789
1,508,356,830) ( 1,539,318,214)
1,353,730,577
1,588,605,575
1,148,119,904
655,505,146
221,942,615) (
62,516,332)
926,177,289
592,988,814
2,279,907,866
2,181,594,389
495,961,464
282,550,191
2,885,375,461
4,367,189
4,679,500
44,490,039
48,301,403
5,763,082,922
946,225,080
8,999,146
5,031,800
44,109,190
3,468,509,796
1,314,734,174)
208,730,336)
14,382,533)
1,465,339,316)
30,098,148)
713,866,023)
37,176,774)
3,784,327,304)
( 1,086,633,118)
(
265,705,287)
(
13,294,110)
( 1,709,488,939)
(
56,236,016)
(
486,423,408)
(
81,790,737)
( 3,699,571,615)
1,978,755,618
514,896
(
231,061,819)
272,268,209
1,979,270,514
41,206,390
1,972,531,776
6,738,738
41,927,885
721,495)
Attributable to:
Equity holders of the parent
1,979,270,514
Basic and diluted earnings per share
38
39.45
(
41,206,390
0.84
4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
2013
2012
SYP
SYP
Notes
1,979,270,514
41,206,390
Other comprehensive income components:
Items that may be reclassified subsequently to profit or loss:
Changes in fair value of
available for sale financial assets
Change in deferred tax assets
Changes in deferred tax liabilities
20-C
Total comprehensive income for the year
(
(
3,797,290) (
469,368)
1,413,125
2,273,940)
550,294
-
1,976,416,981
39,482,744
1,969,327,163
7,089,818
40,640,896
1,158,152)
Attributable to:
Equity holders of the parent
1,976,416,981
(
39,482,744
5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
SYP
Balance as of
January 1, 2013
Comprehensive income
for the year
Allocation of net
profit for the year
Balance as of
December 31, 2013
Balance as of
January 1, 2012
Comprehensive income
for the year
Allocation of net
profit for the year
Balance as of
December 31, 2012
5,000,000,000
Legal
reserve
SYP
Special
reserve
SYP
424,797,372
424,797,372
Attributable to equity holders of the parent
General
Accumulative
reserve
changes
for credit
in fair value of
facilities
available for sale
Net profit
impairment
financial assets
for the year
SYP
SYP
SYP
184,660,192
-
-
-
-
-
-
-
-
23,065,511
(
-
3,204,613)
-
1,972,531,776
Accumulated
losses
SYP
Unrealized
retained
earnings
SYP
Total equity
attributable to
Non
equity holders controlling
of the parent
interests
SYP
SYP
( 310,866,622)
1,238,383,831
6,984,837,656
75,550,068
7,060,387,724
1,969,327,163
7,089,818
1,976,416,981
-
( 1,972,531,776) ( 912,843,685)
5,000,000,000
424,797,372
424,797,372
184,660,192
19,860,898
-
(1,223,710,307)
5,000,000,000
424,797,372
424,797,372
184,660,192
24,352,500
-
593,430,573
-
-
-
-
-
-
-
-
5,000,000,000
424,797,372
424,797,372
184,660,192
(
1,286,989)
-
41,927,885
(
23,065,511
-
41,927,885) ( 904,297,195)
-
( 310,866,622)
2,885,375,461
-
4,123,759,292
8,954,164,819
82,639,886
9,036,804,705
292,158,751
6,944,196,760
76,708,220
7,020,904,980
946,225,080
1,238,383,831
40,640,896 (
6,984,837,656
6
-
Total
equity
SYP
1,158,152)
75,550,068
-
39,482,744
7,060,387,724
CONSOLIDATED STATEMENT OF CASH FLOWS
2013
2012
SYP
SYP
Notes
Cash flows from operating activities:
Profit/ (loss) before income tax
1,978,755,618
(
231,061,819)
Adjustments to reconcile income to net cash
used in operating activities:
Amortization of premium and discount on
held to maturity financial assets
Unrealized gain on held-for-trading
financial assets
Loss on disposal of held-for-trading
financial assets
(Profit)/ loss on disposal of
property and equipment
Loss on disposal of intangible assets
Profit on disposal of available
for sale financial assets
Additions of miscellaneous provisions
12
13
35
31
(
265,705,287
13,294,110
1,709,488,939
30,954,124
15,039,085
6,081,599) (
8,574,486)
1,714,410
2,464,197
(
5,970,708)
-
6,048,201
2,144,019
(
28,100)
30,098,148
56,236,016
31
32
19
208,730,336
14,382,533
1,465,339,316
Profit before changes in operating
assets and liabilities
3,717,894,078
1,830,783,549
Changes in operating assets and liabilities:
Increase in compulsory cash reserve
Increase in deposits with banks
(with maturity over 3 months)
Decrease in direct credit facilities
Increase in other assets
Increase / (decrease)/ in cash margins
Increase in banks deposits
(with maturity more than 3 months)
Increase in customers’ deposits
Increase in other liabilities
Settlement of tax penalties
Net cash provided by operating activities
before income tax
Income tax paid
(
1,409,575,890) (
(
7,392,600,000) (
563,131,358)
908,613,999
4,846,198,664
477,176,627) (
48,113,928)
272,890,443 (
535,129,857)
(
19
20-A
Net cash provided by operating activities
1,728,312,713
28,814,793,045
797,421,263
-
527,813,600)
8,339,108,128
59,549,658
(
8,668,546)
26,960,573,024
13,392,782,710
(
9,424,365) (
218,125,325)
26,951,148,659
13,174,657,385
7
CONSOLIDATED STATEMENT OF CASH FLOWS / CONTINUED
2013
2012
SYP
SYP
Notes
Cash flows from investing activities
Purchase of held to maturity financial assets
Proceed from held to maturity financial assets
Purchase of property and equipment
12
Purchase of intangible assets
13
Proceed from disposal of property
and equipment
Purchase of held-for-trading financial assets
Sale of held-for-trading financial assets
Investment in available for sale
financial assets
( 44,203,914,033) ( 6,149,628,088)
32,213,125,400
1,426,800,000
(
161,453,931) (
93,660,494)
(
5,687,694) (
1,037,495)
(
11,375,629
7,891,686) (
12,325,217
3,672,350
16,778,313)
407,876,680
-
( 12,138,448,748) ( 4,426,427,710)
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
(
8,305)
-
Net cash provided by financing activities
(
8,305)
-
Difference in exchange rate of financial assets
(
Net increase in cash and cash equivalent
8,659,514,924) (
988,905,821)
6,153,176,682
7,759,323,854
Cash and cash equivalent at the beginning of year 39
38,737,624,590
30,978,300,736
Cash and cash equivalent at the end of year
44,890,801,272
38,737,624,590
2,825,206,178
1,543,548,319
-
3,088,842,118
1,394,984,664
5,031,800
39
Operational cash flow from interests and dividends
Interest received
Interest paid
Dividend income received
8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2013
1.
GENERAL INFORMATION
Banque Bemo Saudi Fransi S.A., “the Bank”, is a Syrian Joint stock company, registered under
commercial registration number 13901 on December 29, 2003 and under number 8 in the banks’
register. The Bank’s headquarters is located in 29 Ayyar Street, Damascus, Syria.
The Bank was established with an initial capital of SYP 1,500,000,000 divided into 3,000,000 shares
with SYP 500 par value each. The capital was gradually increased to SYP 5,000,000,000 divided into
10,000,000 shares listed in the Damascus Stock Exchange on February 2, 2009.
In December 11, 2012 the bank stocks have been splited to 50,000,000 shares with SYP 100 per value
each.
The Bank started its operations on January 4, 2004. The Bank offers several banking services through its
network of 43 branches and offices spread around Syria, twelve branches were closed at the date of
preparing the consolidated financial statements.
On November 5, 2007, Monetary and Credit Council circular number 324/MN/B4 was issued, which
allows the Bank to contribute in establishing a financial brokerage company called Bemo Saudi Fransi
Finance S.A. On February 5, 2008, the Bank settled its contribution that represents 74.67% of the
Subsidiary’s capital.
The bank’s shares were listed in the Damascus Stock Exchange on February 2, 2009.
On February 21, 2014, the board of directors and the audit committee have approved and authorized the
chief executive officer to approve and sign the consolidated financial statements for the year ended
December 31, 2013.
2.
ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRSs)
In the current year, the Bank has applied the following new and revised Standards issued by the
International Accounting Standards Board (IASB) that are mandatorily effective with a date of initial
application of January 1, 2013 and that are applicable to the Bank:
Amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities
The amendments to IFRS 7 require entities to disclose information about rights of offset and related
arrangements (such as collateral posting requirements) for financial instruments under an enforceable
master netting agreement or similar arrangement.
New and revised Standards on consolidation, joint arrangements, associates and disclosures
In May 2011, a package of five standards on consolidation, joint arrangements, associates and
disclosures was issued comprising IFRS 10 Consolidated Financial Statements, IFRS 11 Joint
Arrangements, IFRS 12 Disclosures of Interests in Other Entities, IAS 27 (as revised in 2011) Separate
Financial Statements and IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures.
Subsequent to the issue of these standards, amendments to IFRS 10, IFRS 11 and IFRS 12 were issued
to clarify certain transitional guidance on the first-time application of the standards.
9
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single framework for measuring fair value, and requires disclosures about fair
value measurement. The Standard defines fair value on the basis of an 'exit price' notion and uses a 'fair
value hierarchy', which results in a market-based, rather than entity-specific, measurement. IFRS 13 is
applicable for both financial and non-financial items for which other IFRSs require or permit fair value
measurement and disclosures about fair value measurements, except in specified circumstances. IFRS
13 requires prospective application from January 1, 2013.
Amendments to IAS 1 Presentation of Items of Other Comprehensive Income
The amendments require to group items presented in other comprehensive income on the basis of
whether they are potentially reclassifiable to profit or loss subsequently. Income tax on items of other
comprehensive income is required to be allocated on the same basis.
Parts of the Annual Improvements to IFRSs 2009 – 2011 Cycle
Amendments to IAS 32 Financial Instruments clarify that income tax relating to distributions to holders
of an equity instrument and to transaction costs of an equity transaction should be accounted for in
accordance with IAS 12 Income Taxes.
Amendments to IAS 1 Presentation of Financial Statements specify that related notes are not required to
accompany the third statement of financial position (as at the beginning of the preceding period) when
presented. A third statement of financial position is required to be presented when an entity applies an
accounting policy retrospectively, or makes a retrospective restatement or reclassification of items that
have a material effect on the information in the third statement of financial position.
New and revised IFRSs in issue but not yet effective
The Bank has not applied the following new and revised IFRSs that have been issued but not yet
effective:

Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets modify the
disclosure requirements in IAS 36 Impairment of Assets regarding the measurement of the
recoverable amount of impaired assets and require additional disclosures about the measurement of
impaired assets (or group of impaired assets) with a recoverable amount based on fair value less
costs of disposal. Effective for annual periods beginning on or after January 1, 2014.

Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities – Amendments define an
investment entity and require a reporting entity that meets the definition of an investment entity not
to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or
loss in its consolidated and separate financial statements. Effective for annual periods beginning on
or after January 1, 2014.

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities – Amendments clarify
the requirements relating to the offset of financial assets and financial liabilities. Effective for
annual periods beginning on or after January 1, 2014.

Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting allow the
continuations of hedge accounting when a derivative is novated to a clearing counterparty and
certain conditions are met. Effective for annual periods beginning on or after January 1, 2014.
10

IFRS 9 Financial Instruments (2013) – General Hedge Accounting. On November 19, 2013 a new
version of IFRS 9 was issued which includes the new hedge accounting requirements and some
related amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7
Financial Instruments: Disclosures. IFRS 9 (2013) also replicates the amendments in IAS 39 in
respect of novations. The mandatory effective date will be set when the IASB completes the
impairment phase of its project on the accounting for financial instruments.

IFRS 9 Financial Instruments. IFRS 9 is to replace IAS 39 Financial Instruments: Recognition and
Measurement and was split into a number of phases. Currently some of these phases have been
completed and available for early adoption. The mandatory effective date will be set when the
IASB completes the impairment phase of its project on the accounting for financial instruments.

IFRIC 21 Levies defines a levy as a payment to a government for which an entity receives no
specific goods or services. A liability is recognized when the obligating event occurs. Effective for
annual periods beginning on or after January 1, 2014.
The Directors of the Bank do not anticipate that the application of these amendments will not have a
significant effect on the Bank’s consolidated financial statements.
Summary of IFRS 9
Financial assets
IFRS 9 introduces new classification and measurement requirements for financial assets that are within
the scope of IAS 39 Financial Instruments: Recognition and Measurement. Specifically. As a general
rule, IFRS 9 requires all financial assets to be classified and subsequently measured at either amortized
cost or fair value on the basis of the entity’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets. However, equity securities and derivatives
should all be measured at fair value.
As required by IFRS 9, debt instruments are measured at amortized cost only if the asset is held within a
business model whose objective is to hold assets in order to collect contractual cash flows and the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding. If either of the two criteria is not met, the
debt instruments are classified as at fair value through profit or loss (FVTPL).
However, the Bank may choose at initial recognition to designate a debt instrument that meets the
amortized cost criteria as at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch.
Debt instruments that are subsequently measured at amortized cost are subject to impairment.
Investments in equity instruments are classified and measured as at FVTPL except when the equity
investment is not held-for-trading and is designated by the Bank as at fair value through other
comprehensive income (FVTOCI). If the equity investment is designated as at FVTOCI, all gains and
losses, except for dividend income that is generally recognized in profit or loss in accordance with IAS
18 Revenue, are recognized in other comprehensive income and are not subsequently reclassified to
profit or loss.
For debt instruments not designated at fair value through profit or loss under the fair value option,
reclassification is required between fair value through profit or loss and amortized cost, or vice versa, if
the Bank’s business model objective for its financial assets changes so that its previous measurement
basis no longer applies.
11
IFRS 9 requires that derivatives embedded in contracts with a host that is a financial asset within the
scope of the standard are not separated. Instead the hybrid financial instrument is assessed in its entirety
as to whether it should be measured at amortized cost or fair value.
Financial liabilities
IFRS 9 also contains requirements for the classification and measurement of financial liabilities. One
major change in the classification and measurement of financial liabilities relates to the accounting for
changes in the fair value of a financial liability (designated as at fair value through profit or loss)
attributable to changes in the credit risk of that liability.
For financial liabilities that are designated as at fair value through profit or loss, the amount of change in
the fair value of the financial liability that is attributable to changes in the credit risk of that liability is
presented in other comprehensive income, unless the recognition of the effects of changes in the
liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in
profit or loss. Changes in the fair value attributable to a financial liability’s credit risk are not
subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in
the fair value of the financial liability designated as at fair value through profit or loss was presented in
profit or loss.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements were prepared in accordance with International Financial Reporting
Standards (IFRSs), the prevailing Syrian regulations and the instructions and decisions of Monetary and
Credit Council.
Basis of preparation
The consolidated financial statements have been prepared on historical cost basis except for the
following items measured at fair value:
- Assets and liabilities held for trading.
- Financial instruments designated at fair value through profit or loss.
- Investments in equities.
- Available-for-sale financial assets.
- Derivative financial instruments measured at fair value.
Assets and liabilities are grouped according to their nature and are listed in an approximate order that
reflects their relative liquidity.
The consolidated financial statements are presented in Syrian Pounds (SYP), which is the Bank’s
functional currency and reporting currency.
The fundamental accounting policies are listed below:
A-
Basis of consolidation
The consolidated financial statements of Banque Bemo Saudi Fransi Finance s.a. incorporate the financial
statements of the Bank and the entity controlled by the Bank (Bemo Saudi Fransi Finance).
Control is achieved when the Bank:
- has power over the investee;
- is exposed, or has rights, to variable returns from its involvement with the investee; and
- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
12
When the Company has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities
of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing
whether or not the Company's voting rights in an investee are sufficient to give it power, including:
- The size of the Company's holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
- Potential voting rights held by the Company, other vote holders or other parties;
- Rights arising from other contractual arrangements; and
- Any additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Bank obtains control over the subsidiary and ceases when
the Bank loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or
disposed of during the year are included in the consolidated statement of profit or loss and other
comprehensive income from the date the Bank gains control until the date when the Bank ceases to control
the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the
Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to
the owners of the Company and to the non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group's accounting policies.
When the Group loses control of a subsidiary, adjustments are made to the financial statements of
subsidiaries.
The consolidated subsidiaries are:
Company Name
Bemo Saudi Fransi Finance
B.
Legal
location
Equity
percentage
Syria
74,67 %
Company Activity
Providing consulting, analysis and publishing
information related to securities exchange in
addition to purchasing and selling securities for
the company and on behalf of others.
Foreign currencies
In preparing the financial statements of the Bank, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of
the transactions. At the end of each reporting period, monetary items denominated in foreign currencies
are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency
are not retranslated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise
except for exchange differences on transactions entered into in order to hedge certain foreign currency
risks, and except for exchange differences on monetary items receivable from or payable to a foreign
operation for which settlement is neither planned nor likely to occur in the foreseeable future, which are
recognized in other comprehensive income, and presented in the translation reserve in equity. These are
recognized in profit or loss on disposal of the net investment.
13
C.
Recognition and Derecognition of financial assets and liabilities
The Bank initially recognizes loans and advances, deposits; debt securities issued and subordinated
liabilities on the date that they are originated. All other financial assets and liabilities are initially
recognized on the trade date at which the Bank becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from
the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in profit or loss.
The Bank derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of
the asset to another entity. If the Bank neither transfers nor retains substantially all the risks and rewards
of ownership and continues to control the transferred asset, the Bank recognises its retained interest in
the asset and an associated liability for amounts it may have to pay. If the Bank retains substantially all
the risks and rewards of ownership of a transferred financial asset, the Bank continues to recognise the
financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount
and the sum of the consideration received and receivable and the cumulative gain or loss that had been
recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
The Bank derecognises financial liabilities when, and only when, the Bank’s obligations are discharged,
cancelled or they expire. The difference between the carrying amount of the financial liability
derecognised and the consideration paid and payable is recognised in profit or loss.
D.
Classification of financial assets
Subsequent to initial recognition, investment securities are accounted for depending on their classification
as either: held-to-maturity, loans and receivables, available-for-sale, or fair value through profit or loss.
Held to maturity investment
Held to maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that the Bank has the positive intent and ability to hold to
maturity, and which are not designated at fair value through profit or loss or available-for-sale.
Held to maturity investments are measured at amortized cost using the effective interest method
less any impairment.
Loans and receivables investment
Loans and receivables investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that the Bank has the positive intent and ability to hold to
maturity. Subsequent to initial recognition, loans and receivables investments are measured at
amortized cost using the effective interest method less any impairment.
Available-for-sale investments are non-derivative investments that are not designated as another
category of financial assets. Unquoted equity securities whose fair value cannot be readily
measured are carried at cost. All other available-for-sale investments are carried at fair value and
unrealized gains or losses are included in other comprehensive income.
14
The change in fair value on available-for-sale debt securities reclassified to held-to-maturity is
segregated from the change in fair value of available-for-sale debt securities under equity and is
amortized over the remaining term to maturity of the debt security as a yield adjustment.
Designation at fair value through profit or loss
The Bank designates financial assets and liabilities at fair value through profit or loss when either:
E.

The financial assets or liabilities are managed, evaluated and reported internally on a fair
value basis; or

The designation eliminates or significantly reduces an accounting mismatch which would
otherwise arise; or

The financial assets or liabilities contain an embedded derivative that significantly modifies
the cash flows that would otherwise be required under the contract.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Bank are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Bank are recognised at the proceeds
received, net of direct issue costs.
Repurchase of the Bank's own equity instruments is recognised and deducted directly in equity. No
gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Bank's
own equity instruments.
The component parts of compound instruments (convertible notes) issued by the Bank are
classified separately as financial liabilities and equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an equity instrument.
Conversion option that will be settled by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the Bank's own equity instruments is an equity instrument.
Financial liabilities
A financial liabilities that are not held-for-trading and are not designated as at FVTPL are
subsequently measured at amortized cost using the effective interest method.
Financial liabilities are classified as at FVTPL when the financial liability is either held-for-trading
or it is designated as at FVTPL.
A financial liability other than a financial liability held-for-trading may be designated as at FVTPL
upon initial recognition if:

Such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or

The financial liability forms part of a group of financial assets or financial liabilities or
both, which is managed and its performance is evaluated on a fair value basis, in
accordance with the Bank's documented risk management or investment strategy, and
information about the grouping is provided internally on that basis; or

It forms part of a contract containing one or more embedded derivatives, and the entire
combined contract (asset or liability) to be designated as at FVTPL according to IFRS 9.
15
F.
Offsetting between Financial Assets and Liabilities
Financial assets and liabilities are set-off and the net amount is presented in the consolidated statement of
financial position when, and only when, the Bank has a legal right to set-off the amounts or intends either
to settle on a net basis or to realize the asset and settle the liability simultaneously.
G.
Fair Value Measurement of Financial Assets
Fair value is the amount agreed to exchange an asset or to settle a liability between a willing buyer and a
willing seller in an arm’s length transaction.
When published price quotations exist, the Bank measures the fair value of a financial instrument that is
traded in an active market using quoted prices for that instrument. A financial instrument is regarded as
quoted in an active market if quoted prices are readily and regularly available and those prices represent
actual and regularly occurring market transactions on an arm’s length basis.
If the market for a financial instrument is not active, the Bank establishes fair value by using valuation
techniques. Valuation techniques include observable market data about the market conditions and other
factors that are likely to affect the instrument’s fair value.
The fair value of a financial instrument is based on one or more factors such as the time value of money
and the credit risk of the instrument, adjusted for any other factors such as liquidity risk.
H.
Impairment of Financial Assets
The Bank assesses the financial assets at each reporting date, except for those classified at fair value
through profit or loss, whether there is any objective evidence that the financial assets are impaired.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the asset, a loss event has occurred which has an impact on the
estimated future cash flows of the financial asset.
Objective evidence that an impairment loss related to financial assets has been incurred can include
information about the debtors’ or issuers’ liquidity, solvency and business and financial risk exposures and
levels of and trends in delinquencies for similar financial assets, taking into account the fair value of
collaterals and guarantees.
The Bank considers evidence of impairment for assets measured at amortized cost at both specific asset
and collective level.
Impairment losses on assets carried at amortized cost are measured as the difference between the carrying
amount of the financial assets and the corresponding estimated recoverable amounts. Losses are
recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases, the
previously recognized impairment loss is reversed through profit or loss to the extent that the carrying
amount of the financial asset at the date the impairment is reversed does not exceed what the amortized
cost would have been, had the impairment not been recognized.
For investments in equity securities, a significant or prolonged decline in fair value below cost is objective
evidence of impairment.
For available-for-sale investment securities, the cumulative losses previously recorded in other
comprehensive income and accumulated in equity were recognized in profit or loss in case the impairment
losses are substantiated by a prolonged decline in fair value of the investment securities. Any increase in
the fair value of available-for-sale equity securities, subsequent to an impairment loss, was not recognized
in profit or loss. Any increase in the fair value of available-for-sale debt securities, subsequent to an
impairment loss, was recognized in profit or loss.
16
I.
Derivatives financial instruments
Derivatives are initially recognized at fair value at the date the derivative contract are entered into and
are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or
loss is recognized in profit or loss immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature
of the hedge relationship.
Embedded derivatives
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when their
risks and characteristics are not closely related to those of the host contracts and the host contracts
are not measured at FVTPL.
Hedge accounting
The Bank enters into a variety of derivative financial instruments to manage the exposure to interest
The Bank designates certain hedging instruments, which include derivatives, embedded derivatives
and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges,
or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm
commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for
undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an
ongoing basis, the Bank documents whether the hedging instrument is highly effective in offsetting
changes in fair values or cash flows of the hedged item attributable to the hedged risk.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are
recognised in profit or loss immediately, together with any changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging
instrument and the change in the hedged item attributable to the hedged risk are recognised in the
line of the consolidated [statement of comprehensive income/income statement] relating to the
hedged item.
Hedge accounting is discontinued when the Bank revokes the hedging relationship, when the
hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for
hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from
the hedged risk is amortised to profit or loss from that date.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges is recognized in other comprehensive income and accumulated under the heading
of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized
immediately in profit or loss, and is included in the ‘other gains and losses' line item.
Amounts previously recognized in other comprehensive income and accumulated in equity are
reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss, in the
same line of the consolidated [statement of comprehensive income/income statement] as the
recognized hedged item. However, when the hedged forecast transaction results in the recognition of
a non-financial asset or a non-financial liability, the gains and losses previously recognized in other
comprehensive income and accumulated in equity are transferred from equity and included in the
initial measurement of the cost of the non-financial asset or non-financial liability.
17
Hedge accounting is discontinued when the Bank revokes the hedging relationship, when the
hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for
hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in
equity at that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or
loss accumulated in equity is recognised immediately in profit or loss.
J.
Loans and advances
Loans and receivables investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that the Bank has the positive intent and ability to hold to maturity.
Loans and receivables investments are measured at amortized cost using the effective interest method
net of unearned interest and provision for credit losses where applicable.
Bad and doubtful debts are carried on a cash basis because of doubts and the probability of noncollection of principal and/or interest.
K.
Financial guarantees
Financial guarantees contracts are contracts that require the Bank to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance
with the contractual terms. These contracts can have various judicial forms (guarantees, letters of credit,
credit-insurance contracts).
Financial guarantee liabilities are initially measured at their fair value, and subsequently carried at the
higher of this amortized amount and the present value of any expected payment (when a payment under
the guarantee has become probable). Financial guarantees are included within regularization accounts
under the assets and the liabilities.
L.
Property and equipment are stated at historical cost, less accumulated depreciation and impairment
losses, if any.
Depreciation is recognized so as to write off the cost of property and equipment, other than advance payments
on capital expenditures, over their estimated useful lives using the straight-line method as follows:
%
Buildings
Office equipment and furniture
Vehicles
Computer equipment
Leasehold improvement
5
10-20
25
20
20
The estimated useful lives, residual values and depreciation method are reviewed at the each year end,
with the effect of any changes in estimate accounted for on a prospective basis.
Gain or loss arising on the disposal or retirement of an asset is determined as the difference between the
sales proceeds and the carrying amount of the asset at that date and is recognized in the consolidated
income statement.
M.
Intangible assets
Intangible assets, other than goodwill, are amortized over their estimated useful lives, using the straightline method at the following rates:
%
Key money
Software
5
20
Intangible assets are subject to impairment testing.
18
N.
Impairment of Tangible and Intangible Assets (Other than Goodwill):
At the end of each reporting period, the Bank reviews the carrying amounts of its tangible and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying
amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately
in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit)
is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is
recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.
The fair value of the Bank’s owned properties and of properties acquired in satisfaction of loans debts, is
the estimated market value as determined by real estate appraisers on the basis of market compatibility
by comparing with similar transactions in the same geographical area and on the basis of the expected
value of a current sale between a willing buyer and a willing seller, that is, other than in a forced or
liquidation sale after adjustment of an illiquidity factor and market constraints.
O.
Contributions to social security and end of service indemnity
The Bank is registered in the Syrian Social Security Establishment and makes contributions on account of
its employees. These contributions include the Bank’s engagement towards its employees concerning endof-service indemnities that will be allocated to them by the Social Security Establishment. The Bank has
no other liability towards its employees’ end of service indemnity.
P.
Provisions
Provision is recognized if, as a result of a past event, the Bank has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
Q.
Revenue and expense recognition
Interest income and interest expense are recognized in the consolidated income statement using the
effective interest method, taking account of the principal outstanding and the rate applicable, except for
non-performing loans and advances for which interest income is only recognized upon realization. Interest
income and expense include the amortization of discount or premium.
Fees and commission income and expense that are integral to the effective interest rate on a financial asset
or liability (i.e. commissions and fees earned on loans) are included under interest income and expense.
Other fees and commission income are recognized when the related services are performed.
19
Interest income and expense presented in the income statement include:



Interest on financial assets or liabilities measured at amortized cost;
Interest on investment in available for sale financial assets; and
Changes in fair value for acceptable derivatives including effective and non-effective items when
interest rate risks have been hedged.
Interest income on financial assets designated at fair value through profit or loss and interest income on
trading portfolio are presented separately in the consolidated income statement.
Net other income on financial assets designated at fair value through profit or loss other than held-fortrading includes the following:



Dividends;
Realized and unrealized profit of loss; and
Difference in exchange.
Dividend income is recognized when the right to receive the payment is established and are presented
under available for sale financial assets in net other income.
R. Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
The Bank is computing its income tax in accordance with law number 28 dated April 16, 2001, which sets
the income tax rate at 25% of the net taxable income. Taxable profit differs from net profit as reported in
the statement of income 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.
Current tax is the expected tax payable on the taxable income for the year, using rates enacted at the
statement of financial position date. Income tax payable is reflected in the consolidated statement of
financial position net of taxes previously settled in the form of withholding tax.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax base used in the computation of taxable profit, and are
accounted for using the statement of financial position 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.
S. Fiduciary accounts
Fiduciary assets held or invested on behalf of individuals, others are non-discretionary basis, and related
risks and rewards belong to the account holders. Accordingly, these deposits are reflected as off-balance
sheet accounts.
T. Cash and cash equivalents
Cash and cash equivalents comprise balances with original maturity of a period of three months or less,
and include: cash and balances with Central Bank, balances with banks and financial institutions after
deducting deposits of banks and financial institutions (with original maturity of 3 months or less).
U. Earning per share
The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the
weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined
by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of
ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share
options granted to employees, where applicable.
20
4.
CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Bank’s accounting policies, management is required to make judgments,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the revision affects both current and future
periods.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation
uncertainty at the statement of financial position date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
(i)
Impairment losses on loans and advances
The Bank reviews its loan portfolios to assess impairment on a regular basis. In determining whether an
impairment loss should be recorded, the Bank makes judgments as to whether there is any observable
indications that there is a measurable decrease in the estimated future cash flows from a portfolio of
loans. This evidence may include observable data indicating that there has been an adverse change in
the payment status of the debtors of the Bank, or national or local economic conditions that correlate
with defaults on assets in the Bank.
Management uses judgment and estimates based on historical loss experience for assets with credit risk
characteristics and objective evidence of impairment similar to those in the portfolio when estimating its
cash flows. The methodology and assumptions used for estimating both the amount and the timing of
future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss
experience.
(ii)
Fair value of unquoted financial instruments
The fair values of financial instruments that are not quoted in active markets are determined by using
valuation techniques. To the extent practical, models use only observable data, however factors such as
credit risk (both own and counterparty), volatilities and correlations require management to make
estimates. Changes in assumptions about these factors could affect the reported fair value of financial
instruments.
(iii) Impairment of assets and required provisions
Under the current unrest situation witnessed in Syria, Management has assessed the recoverability of the
Bank’s assets, and is satisfied that no additional provisions for impairment are needed, other than those
included in the accompanying financial statements.
(iv) Going Concern principal:
Management has assessed the extent of the bank's ability to continue as a going concern, in accordance
with IAS 1. Management based its evaluation on a several financial and operational indicators.
Management believes that in spite of instability experienced within the Syrian Arab Republic and the
uncertainty of future, the Company has adequate resources to continue to operate in the for eseeable
future. Accordingly, the financial statements were prepared on the going concern principal.
21
5.
CASH AND BALANCES WITH CENTRAL BANK OF SYRIA
This caption includes the following:
December 31,
2013
SYP
Cash on hand
Cash in closed branches*
Balances with Central Bank of Syria
Current accounts and demand deposits
Cash compulsory reserve**
Blocked account with Central Bank of Syria
2012
SYP
2,630,349,308
38,926,911
1,253,162,319
215,253,466
26,042,426,352
5,126,984,081
18,449,968
24,071,919,152
3,717,408,191
18,449,968
33,857,136,620
29,276,193,096
* Cash in closed branches amounted to SYP 38,926,911 as of December 31, 2013 (compared to
SYP 215,253,466 as of December 31, 2012) knowing that insurance contract only covers cash and other
assets from fire and theft and doesn’t cover damages caused by exceptional events such as riot and
vandalism, so provisions were taken in varied proportions, according to excepted damages, which were
not fully recognized till the date of preparing the financial statements, those provisions were classified
under miscellaneous provision (note 19).
**According to banking laws and regulations in Syria, Circular No. 5938 dated May 2, 2011 issued by
the Prime Minister, Banks were required to decrease cash compulsory reserve with Central Bank of
Syria 5% of average accounts on demand, saving and term deposits excluding housing deposits.
This reserve is compulsory and cannot be used in the Bank’s operating activities.
6.
BALANCES WITH BANKS
This caption comprises the following:
Resident banks
SYP
Term deposits (with original maturity
of three months or less)
Total
SYP
1,471,039,906
9,032,909,906
10,503,949,812
859,476,709
6,169,258,310
7,028,735,019
2,330,516,615
15,202,168,216
17,532,684,831
Resident banks
SYP
of three months or less)
December 31, 2013
Non-resident banks
SYP
686,697,684
686,697,684
December 31, 2012
Non-resident banks
SYP
Total
SYP
5,942,948,925
6,629,646,609
8,486,719,490
8,486,719,490
14,429,668,415
15,116,366,099
Non-interest bearing balances with banks amounted to SYP 7,303,629,798 as of December 31, 2013
(compared to SYP 5,457,091,707 as of December 31, 2012).
Blocked accounts with banks associated with commercial transactions amounted to SYP 33,407,328 as
of December 31, 2013 (compared to SYP 17,995,896 as of December 31, 2012).
22
7.
DEPOSITS WITH BANKS
Resident banks
SYP
more than three months)
Total
SYP
1,850,000,000
7,126,200,000
8,976,200,000
1,850,000,000
7,126,200,000
8,976,200,000
Resident banks
SYP
more than three months)
8.
December 31, 2013
Non-resident banks
SYP
December 31, 2012
Non-resident banks
SYP
Total
SYP
500,000,000
1,083,600,000
1,583,600,000
500,000,000
1,083,600,000
1,583,600,000
HELD-FOR-TRADING FINANCIAL ASSETS
December 31,
Shares
23
2013
SYP
2012
SYP
7,827,392
7,893,734
7,827,392
7,893,734
9.
NET DIRECT CREDIT FACILITIES
December 31,
2013
SYP
Corporate
Overdrafts
Loans and advances
Unearned interest on loans
Discounted bills
Unearned interest on discounted bills
2012
SYP
5,583,168,575
6,581,218,596
13,592,761,267
8,854,873,303
(
311,507,865) (
144,317,902)
889,803,367
2,280,002,525
(
58,248,637) (
194,446,851)
19,695,976,707
Individuals and estate loans
Loans and advances
Credit cards
17,377,329,671
4,015,201,211
7,663,758,158
2,202,586,950
31,150,546
(
6,326,949) (
22,037,582)
6,211,461,212
Small & medium size enterprises
Overdrafts
Loans and advances
Discounted bills
Unearned interest on discounted bills
7,672,871,122
1,212,727,588
1,739,532,766
3,485,074,035
3,466,884,386
(
32,344,934) (
67,870,940)
107,448,195
367,889,415
(
6,765,842) (
31,942,513)
Total
Provision for impairment of direct credit facilities
Suspended interest
4,766,139,042
5,474,493,114
30,673,576,961
30,524,693,907
( 4,885,851,936) ( 3,270,489,312)
( 1,890,217,378) (
832,720,325)
23,897,507,647
24
26,421,484,270
Movement of the provision for impairment of direct credit facilities is as follows:
Corporate
SYP
2013
Individual
SYP
Total
SYP
Balance at the beginning of the year
Additions during the year
Difference in exchange rates
2,371,384,588
999,435,010
256,869,091
899,104,724
322,229,371
36,829,152
3,270,489,312
1,321,664,381
293,698,243
Balance at the end of the year
3,627,688,689
1,258,163,247
4,885,851,936
1,983,366,919
388,017,669
2,371,384,588
863,442,048
35,662,676
899,104,724
2,846,808,967
423,680,345
3,270,489,312
1,405,620,449
9,051,416
256,869,091
366,967,586
36,829,152
1,772,588,035
9,051,416
293,698,243
Balance – beginning of the year
Individually impaired loans
Collective impairment
Change during the year
Additions:
Write backs:
Collective Impairment
Balance – end of the year
( 415,236,855) (
(
1,256,304,101
35,686,799) ( 450,923,654)
9,051,416) (
9,051,416)
359,058,523
1,615,362,624
3,230,619,604
397,069,085
1,231,551,987
26,611,260
4,462,171,591
423,680,345
3,627,688,689
1,258,163,247
4,885,851,936
25
2012
Individual
SYP
Corporate
SYP
Total
SYP
Additions during the year
1,174,312,825
1,196,794,902
276,861
428,423,290
470,196,272
485,162
1,602,736,115
1,666,991,174
762,023
2,371,384,588
899,104,724
3,270,489,312
848,474,155
325,838,670
1,174,312,825
396,751,763
31,671,527
428,423,290
1,245,225,918
357,510,197
1,602,736,115
1,264,826,017
62,178,999
276,861
508,409,418
3,991,149
485,162
1,773,235,435
66,170,148
762,023
Balance – beginning of the year
Change during the year
Additions:
Write backs:
Balance – end of the year
( 130,210,114) (
1,197,071,763
42,204,295) ( 172,414,409)
470,681,434
1,667,753,197
1,983,366,919
388,017,669
863,442,048
35,662,676
2,846,808,967
423,680,345
2,371,384,588
899,104,724
3,270,489,312
Movement of suspend interest is as follows:
2013
SYP
Addition during the year
Write-backs during the year
2012
SYP
832,720,325
1,259,591,690
(
202,094,637) (
378,474,089
478,905,063
24,658,827)
1,890,217,378
832,720,325
Non-performing direct credit facilities amounted to SYP 11,381,593,615 as of December 31, 2013
representing 37.11% of total direct credit facilities balance (compared to SYP 9,735,084,012 as of
December 31, 2012 representing 31.89% of total direct credit facilities balance).
Non-performing direct credit facilities after deducting suspended interest amounted to
SYP 9,491,376,237 as of December 31, 2013 representing 32.98% of total direct credit facilities balance
after deducting suspended interest (compared to SYP 8,902,363,687 as of December 31, 2012
representing 29.98% of total direct credit facilities balance after deducting suspended interest).
Non-performing indirect credit facilities amounted to SYP 586,692,434 as of December 31, 2013
(compared to 218,281,504 as of December 31, 2012). The provision for these facilities amounted to
SYP 111,095,296 as of December 31, 2013 (compared to SYP 41,966,707 as of December 31, 2012)
which is recorded under miscellaneous provisions (Note 19).
Write back of provision due to settlement or redemption has been transferred to other debts amounted to
SYP 459,975,070 as of December 31, 2013(compared to SYP 172,414,409 as of December 31, 2012).
26
According to Monetary and Credit Council circular No. (902/MN/B4) dated November 13, 2012
amended by circular No. (1079/MN/B4) dated January 29, 2014, some of Monetary and Credit Council
circulars No. (597/MN/B4) and No. (650/MN/B4) instructions were amended, resulting the following:
1. Keep the excess of the minimum provisions required previously according to Monetary and
Credit Council circular No (902/MN/B4) and its amendments in the circular No. (1079/MN/B4)
amounted to SYP 694,383,659.
2. According to circular No. (902/MN/B4) and its amendments in the circular No. (1079/MN/B4)
the Bank prepared stress tests for the credit portfolio to identify the adequacy of the reserved
provisions, and found that the estimated provision amounted to SYP 246,396,566 as of
December 31, 2013 are properly adequate.
10.
AVAILABLE FOR SALE FINANCIAL ASSETS
December 31,
Unquoted financial assets
Shares
Quoted financial assets
Equity securities
2013
SYP
2012
SYP
3,988,800
5,777,840
69,317,500
74,970,000
73,306,300
80,747,840
Equity securities balance represents the Bank’s investment in United Insurance Company and
constitutes 5% of the company’s capital. These securities were revaluated at fair value according to the
stocks quote list published by Damascus Securities Exchange.
The caption named “shares” represents the bank’s investment in shares of local unlisted companies.
11.
HELD TO MATURITY FINANCIAL ASSETS
December 31,
2013
SYP
Quoted financial assets
Treasury bills – foreign government
Certificates of deposit – non-resident banks
2012
SYP
1,300,248,112
26,685,189,003
718,364,964
6,546,125,172
27,985,437,115
7,264,490,136
Treasury bills analysis
December 31,
2013
SYP
Fixed rate
27
2012
SYP
27,985,437,115
7,264,490,136
27,985,437,115
7,264,490,136
Financial assets that are held to maturity as of December 31, 2013 are as follows:
Treasury billforeign government
with fixed rate
USD
Certificates of
deposit issued by
non-resident bank
with fixed rate
EUR
Nominal value
Premium
9,000,000
711,000
134,807,724
-
Book value
Write back of premium
9,711,000
650,669)
134,807,724
-
9,060,331
134,807,724
1,300,248,112
26,685,189,003
(
Counter value in SYP at year end
Financial assets that are held to maturity as of December 31, 2012 are as follows:
Treasury billforeign government
with fixed rate
USD
Nominal value
Premium
Book value
Write back of premium
(
9,000,000
711,000
64,102,283
-
9,711,000
429,799)
64,102,283
-
9,281,201
64,102,283
718,364,946
6,546,125,172
Treasury bills - foreign government were obtained on December 15, 2010 as follows:
Nominal value: USD 9,000,000
Purchase price: USD 9,711,000
Coupon rate: 5.15%
Yield to maturity: 2.61%
Maturity date: April 9, 2014
28
Certificates of
deposit issued by
non-resident bank
with fixed rate
EUR
Certificates of deposit balance represents quoted financial assets with floating rate issued by a non-resident
bank and is held to maturity, which comprises the following as of December 31, 2013:
Maturity date
Nominal value (EUR)
January 22, 2014
February 10, 2014
February 24, 2014
February 25, 2014
February 28, 2014
March 3, 2014
March 24, 2014
March 26, 2014
April 24, 2014
April 28, 2014
May 27, 2014
July 2, 2014
9,996,339
3,994,016
9,994,080
4,996,952
2,995,354
12,987,393
25,977,921
9,988,975
11,973,092
16,972,527
14,976,115
9,954,960
134,807,724
26,685,189,003
During the year 2013, the certificates of deposit issued by non-resident bank held to maturity its maturity.
Accrued interest receivable on held to maturity financial assets amounted to SYP 15,350,031 as of
December 31, 2013 (compared to SYP 9,754,207 as of December 31, 2012). This balance is classified
under other assets in the consolidated statement of financial position (Note 14).
29
12.
PROPERTY AND EQUIPMENT
2013
Buildings
SYP
Office
equipment
and furniture
SYP
Computers’
equipment
SYP
Vehicles
SYP
Leasehold
improvement
SYP
Total
SYP
Historical Cost
Balance as of January 1, 2013
Additions
Disposal
Transfer
2,440,479,516
40,160,219
4,923,387
Balance as of December 31, 2013
2,485,563,122
402,796,005
21,502,083
(
36,300) (
3,245,473
427,507,261
70,751,168
268,643,341 490,145,908
38,284,104
1,276,865
16,155,216) (
10,000) ( 2,577,400) (
362,300
20,281,742
3,672,815,938
101,223,271
18,778,916)
28,812,902
54,595,952
3,784,073,195
307,279,745
509,127,115
Accumulated Depreciation
Additions, year’s charges
Disposal
(
(
273,885,211)
65,320,581)
-
(212,391,239) (
( 44,976,943) (
36,300
52,893,360) ( 204,627,871) ( 379,400,267) (
8,854,078) ( 26,127,070) ( 63,451,664) (
13,329,927
7,768
-
1,123,197,948)
208,730,336)
13,373,995
(
339,205,792)
(257,331,882) (
48,417,511) ( 230,747,173) ( 442,851,931) (
1,318,554,289)
Net Book Value
2,146,357,330
170,175,379
6,178,441
76,532,572
66,275,184
2,465,518,906
Advance payments on purchase of property and equipment
Additions
Disposal
Transfer
Net property and equipment
(
(
24,418,327
60,327,752
97,092)
4,923,387)
( 3,163,973)
-
79,725,600
( 3,163,973)
-
2,226,082,930
167,011,406
6,178,441
(
(
362,300) ( 20,363,242) (
24,418,327
60,327,752
97,092)
28,812,902)
(
362,300) ( 20,363,242)
55,836,085
76,170,272
45,911,942
2,521,354,991
As a result of the exceptional circumstances in some areas of the Syrian Arab Republic, 12 branches have been temporarily closed, after obtaining the
approval from the central Bank of Syria, and will be back to work after the demise of these exceptional circumstances.
Net book value of these branches’ assets amounted to SYP 390,720,046, all of them were amortized, except for the net book value of Al Raqqa branch,
which amounted to SYP 4,939,434. A similar amount was provided for and classified under miscellaneous provisions as provisions for potential losses.
30
2012
Buildings
SYP
Office
equipment
and furniture
SYP
2,390,907,231
440,467,387
Vehicles
SYP
Computers’
equipment
SYP
Leasehold
improvement
SYP
Total
SYP
278,055,225
500,746,915
3,682,828,457
6,644,477
9,400,314
69,242,167
Historical Cost
Additions
Disposal
49,572,285
2,440,479,516
3,625,091
( 41,296,473) (
402,796,005
72,651,699
1,900,531) (
70,751,168
16,056,361) ( 20,001,321) (
268,643,341
490,145,908
79,254,686)
3,672,815,938
Accumulated Depreciation
(208,779,374)
(181,556,967) (
39,924,392) ( 188,432,126) ( 318,001,055) ( 936,693,914)
( 65,105,837)
( 72,092,478) (
14,869,500) (
-
41,258,206
(273,885,211)
(212,391,239) (
Disposal
1,900,532
32,236,940) ( 81,400,532) ( 265,705,287)
16,041,195
20,001,320
79,201,253
52,893,360) ( 204,627,871) ( 379,400,267) (1,123,197,948)
Net Book Value
2,166,594,305
190,404,766
17,857,808
64,015,470
110,745,641
5,994,768
24,418,327
( 5,994,768)
-
-
-
-
24,418,327
-
-
-
-
2,191,012,632
190,404,766
2,549,617,990
Advance payments on purchase of property and equipment
Additions
Disposal
Net property and equipment
31
17,857,808
64,015,470
110,745,641
(
5,994,768
24,418,327
5,994,768)
24,418,327
2,574,036,317
13.
INTANGIBLE ASSETS
Software
SYP
Historical cost
Additions
Disposal
Additions
Disposal
(
(
Key money
SYP
64,753,138
1,037,495
2,338,319)
63,452,314
5,687,694
54,000)
69,086,008
Total
SYP
146,053,241
(
146,053,241
(
146,053,241
210,806,379
1,037,495
2,338,319)
209,505,555
5,687,694
54,000)
215,139,249
42,889,051)
7,302,662)
50,191,713)
7,302,662)
57,494,375)
82,566,113)
13,294,110)
194,300
95,665,923)
14,382,533)
54,000
109,994,456)
Accumulated amortization
Disposal
Disposal
(
(
(
(
(
39,677,062)
5,991,448)
194,300
45,474,210)
7,079,871)
54,000
52,500,081)
(
(
(
(
(
(
(
(
(
(
Net book value
16,585,927
17,978,104
88,558,866
95,861,528
Key money represents the consideration paid to landlord for some or all rented branches.
Key money might be re-sold according to the marked value at the end of lease contract.
32
105,144,793
113,839,632
14.
OTHER ASSETS
December 31,
2013
SYP
Accrued interest receivables
Banks and financial institutions
Direct credit facilities – corporate
Direct credit facilities – individual
Held to maturity –financial assets (Note 11)
Prepaid expenses
Recoverable cash margins
Stamps and prints inventory
Amounts under collection
Due from related parties (Note 40-A)
Advances to employees
VISA cards license
Advances to service suppliers
Other receivable*
Provision for other receivable*
Other debit balances
Assets acquired in satisfaction of debts**
Settlement account of currency’s swap contracts ***
*
(
2012
SYP
41,686,017
112,357,959
25,104,392
15,350,031
194,498,399
291,304,301
8,890
40,165,568
6,520,007
25,307,211
23,390,455
3,549,000
6,942,293
327,868,212
327,868,212) (
66,258,534
1,950,000
335,915,430
7,510,833
106,002,382
34,349,748
9,754,207
157,617,170
193,704,753
23,645,315
10,854,691
15,863,165
3,461,886
16,893,104
3,549,000
3,210,600
104,278,934
104,278,934)
77,746,777
12,087,000
995,810,088
518,633,461
The caption “other receivable“ represent balances resulting from various thefts, the bank was subject
to during the years 2011 and 2012, after taking into account the results of investigations and the
estimated cash inflows from insurance companies allowance have been taken to cover theses losses.
** This amount represents the value of acquired estates by auctions against the credit facilities granted
for three clients in 2013, these estates will be settled in two years from the date of acquisition
according to article 100/2/B of law No. 23 for the year 2002.
***The Bank agreed on several contracts for currency swap with a related party, this caption comprises
the fair value of the derivatives for the swap contracts resulting from the bank’s commitment to
purchase foreign currencies against Syrian Pounds at the exchange rate agreed upon in the swap
contracts at the end of the maturity date which are shown in the following schedule as of
December 31, 2012:
Maturity Date
January 9, 2014
January 22, 2014
January 24, 2014
February 18, 2014
February 28, 2014
April 25, 2014
May 14, 2014
July 2, 2014
Equivalent
to future value
SYP
Negative
fair value
SYP
Positive
fair value
SYP
1,947,574,210
4,702,822,700
1,888,591,600
8,903,976,057
1,344,114,660
9,915,823,450
2,499,944,200
2,535,671,015
(
(
(
(
(
(
(
(
57,289,250)
326,397,500)
122,330,000)
3,773,943)
69,056,260)
152,815,800)
73,405,800)
37,678,985)
25,363,460
80,470,200
31,421,600
27,520,920
171,139,250
-
33,738,517,892
33
(
842,747,538)
335,915,430
The positive fair value is shown in the “Other Assets” caption as a settlement of account of the
currency’s swap contracts, while the negative fair value is shown as a commitments for currency’s swap
contracts in the “Other Liabilities” caption (Note 21).
The Net negative fair value for the financial instruments derivatives amounted to SYP 506,832,108 for
the year ended December 31, 2013 is shown in the net realized exchange gain in the consolidated
statement of profit or loss.
Profits from currencies swap contracts amounted to SYP 40,371,859 for the year ended
December 31, 2013 were recorded in the net realized exchange gain in the consolidated statement of
profit or loss.
15.
BLOCKED DEPOSIT WITH CENTRAL BANK OF SYRIA
According to section B of Article 12 of Law No. 28 for the year 2001, private sector banks are required
to maintain 10% of their capital as blocked deposit at Central Bank of Syria with no interest, and which
is refundable upon liquidation of the Bank.
This blocked deposit at Central Bank of Syria caption comprises the following:
December 31,
2013
SYP
Balances in SYP
Balances in USD
16.
2012
SYP
246,073,850
738,958,299
246,073,850
398,546,250
985,032,149
644,620,100
BANKS' DEPOSITS
Resident
banks
SYP
more than 3 months)*
Total
SYP
1,341,155,944
12,430,186
1,353,586,130
1,705,485,000
22,827,713
1,728,312,713
3,046,640,944
35,257,899
3,081,898,843
Resident
banks
SYP
of 3 months or less)
December 31, 2013
Non-resident
banks
SYP
1,106,791,917
65,000,000
1,171,791,917
December 31, 2012
Non-resident
banks
SYP
747,284,529
747,284,529
Total
SYP
1,854,076,446
65,000,000
1,919,076,446
* Term deposits (with original maturity more than 3 months) from non-resident banks represents blocked
deposits as cash margins against issued guarantees.
34
17.
CUSTOMERS’ DEPOSITS
December 31,
Term deposits*
Saving accounts
Total
2013
SYP
2012
SYP
72,712,760,041
22,425,059,263
3,744,745,000
39,538,973,347
27,853,097,446
2,675,700,466
98,882,564,304
70,067,771,259
Public sector’s deposits amounted to SYP 2,040,005,139 representing 2,06% of total deposits as of
December 31, 2013 (compared to SYP 349,786,532 representing 0.50% of total deposits as of December
31, 2012).
Non- interest bearing deposits amounted to SYP 72,712,760,041 representing 73,53% of total deposits as
of December 31, 2013 (compared to SYP 39,088,512,546 representing 55.79% of total deposits as of
December 31, 2012).
* Term deposits includes blocked deposits from exchange companies amounted to SYP 71,277,975 as of
December 31, 2013 representing 0.7% of total deposits. Under the provision of decision No. 24 dated
April 24, 2006 exchange companies have to keep cash reserve amounting to 25% of their capital at the
banks operating in Syria Arab Republic.
18.
CASH MARGINS
December 31,
2013
SYP
Cash margins against direct credit facilities
Cash margins against indirect credit facilities
35
2012
SYP
1,560,232,753
1,120,212,451
1,353,964,752
1,053,590,009
2,680,445,204
2,407,554,761
19. MISCELLANEOUS PROVISIONS
Miscellaneous provisions movement is as follows:
Balance at
beginning of year
SYP
Provided during
the year
SYP
Difference in
exchange
SYP
Utilized
during the year
SYP
Write-backs
SYP
Balance at
year end
SYP
December 31, 2013
Indirect credit facilities:
Provision for liabilities arising from
financial guarantees- customers
financial guarantees- banks
Provision for operational foreign
exchange position
Tax penalties provisions
Provision for potential losses*
Other provisions
41,966,707
82,213,448
12,796,741
-
( 25,881,600)
111,095,296
172,216,121
87,343,087
95,381,966
-
-
354,941,174
2,001,418
41,534,512
56,658,511
314,377,269
1,843,570
24,653,273
3,601,305
199,654,683
2,833,978
37,298,667
148,311,352
-
( 25,881,600)
3,844,988
41,534,512
27,487,251
97,558,483
636,461,704
31,141,240
212,694
10,612,773
-
-
41,966,707
110,566,740
2,743,458
43,549,036
1,202,197
189,202,671
42,285,071
5,542,859
51,435,197
99,475,821
December 31, 2012
Indirect credit facilities:
financial guarantees- customers
financial guarantees- banks
Provision for operational foreign exchange position
Tax penalties provisions
Other provisions
19,364,310
(
5,132,280 (
35,109,363 (
(
7,557,383)
1,111,163)
8,668,546) (
742,040)
742,040)
172,216,121
2,001,418
41,534,512
56,658,511
314,377,269
* Provision for potential losses represents the amount provided for against the cash in the closed branches.
Provision for operational foreign exchange position was calculated based on article No. 7 of circular No. 362/MN/B1 issued by Monetary and Credit
Council on February 4, 2008. According to this circular, banks operating in Syria are required to establish a provision for exchange rate fluctuations
equal to 5% of average operational exchange rates position during the month.
Provision for liabilities arising from financial guarantees- banks represents a provision against two letters of guarantees with total amount of
SYP 1,004,795,731 as of December 31, 2013. These guarantees are granted to local customer and are guaranteed by foreign bank.
The caption “others provisions” includes provisions against additional rent for one of the bank branches.
During the year, stamps and legal fees have been reviewed. Tax penalties have been imposed by the related authorities amounted to SYP 43,549,036 but
the Bank submitted an objection. The final decision was not issued by the time the consolidated financial statements were approved.
36
20.
INCOME TAX
A- Provision for income tax
2013
SYP
Balance at beginning of the year
Income tax paid during the year
Income tax due
Net adjustments of prior year income tax
Balance at end of the year
(
(
2012
SYP
13,560,772
9,424,365) (
2,821,396)
1,315,011
230,484,649
218,125,325)
1,201,448
13,560,772
Net adjustments of prior year income tax comprises the following:
2013
2012
SYP
SYP
Write- back of provisions for income tax
for the year 2005 and 2011
Addition on provisions for income tax for the year 2006
Write- back of provisions for income tax for the year 2006
2,821,396
2,821,396
(
(
10,386,808
11,588,256)
1,201,448)
During the year 2012, the Bank had a tax review for the year 2006, where a preliminary decision was
made where the bank was levied SYP 11,588,256 as additional taxes.
Accordingly the Bank provided for the amount of SYP 12,245,761 and submitted an objection to the tax
authorities. During 2013 a reply has been received to reduce the amount to be SYP 9,424,365 and an
amount of SYP 2,821,396 has been recovered as write-back of provision for income tax in the
consolidated statement of profit or loss.
The objection for the year 2004 is still pending by the time the consolidated financial statements were
approved.
B- Deferred tax assets
2013
SYP
Movement resulting from related bank’s
operations during the year
Reverse against differed income tax
Movement resulting from related parties’
operations during the year
(
(
37
2012
SYP
290,381,836
16,361,885
205,606,703
205,606,703)
265,775,850
-
2,775,868)
287,605,968
8,244,101
290,381,836
C- Deferred tax liabilities
Changes resulting from the change in fair value
of available for sale financial assets during the year
(
2013
SYP
2012
SYP
8,117,500
8,117,500
1,413,125)
-
6,704,375
8,117,500
D- Reconciliation between accounting and taxable profits
The income tax shown in comprehensive statement of profit or loss was calculated as follows:
2013
2012
SYP
SYP
Profit / (loss) before tax
1,978,755,618
Additions:
Depreciation of buildings (Note 12)
65,320,581
Amortization of key money (Note 13)
7,302,662
Provision for performing loans
Provision for non-performing loans exceeding the percentages
set in circular No. 597/MN/B4 and its amendments
110,133,467
Tax penalties
333,604
(Gain)/ loss from investment in subsidiaries
(
28,906,783)
Deductions:
Unrealized gain of financial assets held-for-trading
Gain on available for sale financial assets
(
4,250,000)
Unrealized gain on structural position
( 2,885,375,461)
Write-back of suspended interest for 2009 and before
Write- back of provision for credit losses from 2009
(
28,420,890)
(Write back) / addition to provision for foreign exchange
1,843,570
Taxable loss
Income tax on loss of the year
(
(
Reserve against deferred income tax
(
65,105,837
7,302,662
66,170,148
25,357,691
5,542,859
10,541,812
(
(
(
(
(
(
-
-
Write-back to prior year’s provision
(
Income tax revenue related to subsidiary
38
11,588,256
2,821,396) (
2,306,500
(
9,580,176)
4,675,000)
946,225,080)
1,340,049)
49,500,245)
742,040)
783,263,632) ( 1,063,103,400)
205,606,703) (
265,775,850)
205,606,703
Addition to prior year’s provision
231,061,819)
10,386,808)
(
7,693,807)
514,896) (
272,268,209)
21.
OTHER LIABILITIES
December 31,
2013
SYP
Accrued interest payables:
Cash margin accounts
Certified and payable checks
Transfers and amounts under payable
Accrued expenses
Contributions payable to tax and social security
Due to related parties
Advances from customers
Unearned commission income
Top management and board of directors accrued
expenses (Note 40-A)
Settlements for due from ATM agents
Dividends payable (Note 40-A)
Commitments for currency’s swap contracts (note 14)
Other credit balances
22.
2012
SYP
283,079,676
21,320,763
304,400,439
293,213,056
46,378,872
339,591,928
954,730,033
27,394,236
153,728,957
239,794,458
3,311,650
47,807,258
26,250,359
872,529,742
178,290,289
163,175,357
170,778,487
38,804,395
42,733,368
121,913,123
1,612,795
842,747,538
175,162,902
94,333,643
1,323,009
1,621,100
166,620,510
31,638,962
2,898,853,748
2,101,440,790
CAPITAL
The Bank’s authorized, issued and fully paid capital is SYP 5,000,000,000.
The shares were split on December 11, 2012 such that the par value of each share was SYP 100 and the
total number of shares was 50,000,000 shares.
The Bank’s capital shares are split into two categories:
Category A: This type of shares should only be owned by Syrian Citizens or Syrian companies and
their value should only be paid in Syrian Pounds except for Syrian non-residents who should pay in
foreign currency based on prevailing exchange rates in neighboring markets.
Category B: This type of shares can be owned by foreign individuals or companies according to Prime
Minister’s decision and their value should be paid in foreign currency based on prevailing exchange
rates in neighboring markets.
Banque Bemo SAL (Lebanon) shares represent 22% of the Bank’s capital and are from category B.
Banque Saudi Fransi (Saudi) shares represent 27% of the Bank’s capital and are from category B.
Banque Saudi Fransi board of directors decided on November 26, 2011 to sell their stake at Banque
Bemo Saudi Fransi s.a. and to quit from its board of directors. This decision was made according to their
estimate for the risks in Syria as it was mentioned in their website. No shares have been sold up to the
date of approval on these consolidated financial statements.
39
On January 4, 2010, law number 3 was issued which amend some of the provisions included in law No.
28 for the year 2001 and Circular No. 35 for the year 2005 and required increasing the minimum capital
for all banks operating in Syria to SYP 10 Billion. All licensed banks were granted a grace period of
three years to adhere to the new law, this period has been extended to four years according to Law No.
17 for the year 2011. On 2013, legislative decree No. 63 was issued which increased the deadline given
to conventional banks to increase the minimum capital till the end of 2014.
Capital is divided between Syrian pound and USD as:
Number
of shares
SYP
USD
28,602,690
21,397,310
Original
currency
Historical
cost
2,860,268,991
43,645,071
2,860,268,991
2,139,731,009
50,000,000
23.
5,000,000,000
LEGAL AND SPECIAL RESERVES
According to article 197 of corporate law No.29 dated February 24, 2011, legal reserve is set up at 10% of
annual net income and up to 25% of capital.
Special reserve is set up at 10% of annual net income and up to 100% of capital in accordance with
Monetary and Credit Council Law No. 23, article No. 97 for the year 2002.
Annual net income was defined in accordance with article 200 of corporate law No.29 dated
February 24, 2011, to be equal to the difference between realized revenues and the total of expenses and
depreciation before income tax.
Reference to above and to the circulars issued by Central Bank of Syria No.(369/100/3) dated
January 20, 2009 and No. (952/100/1) dated February 12, 2009, legal and special reserves were
calculated as follows:
December 31,
2013
SYP
Profit/ (loss) before income tax
(Deduct) / Add:
Net unrealized exchange gain on structural position
Non-controlling interests of subsidiary’s (profit)/ loss
before income tax
1,978,755,618
(
231,061,819)
( 2,885,375,461) (
946,225,080)
(
(
Legal / Special reserve 10%
24.
2012
SYP
7,323,052)
2,670,592
913,942,895) ( 1,174,616,307)
-
-
ACCUMULATIVE CHANGES IN FAIR VALUE OF AVAILABLE FOR SALE FINANCIAL ASSETS
2013
SYP
Unrealized loss during the year
Changes interfered tax assets
Changes in deferred tax liabilities (Note 20-C)
(
(
23,065,511
4,267,277) (
350,461)
1,413,125
19,860,898
40
2012
SYP
24,352,500
1,697,875)
410,886
23,065,511
25.
ACCUMULATED LOSSES AND RETAINED EARNINGS AVAILABLE FOR DISTRIBUTION
According to the regulations of Central Bank of Syria and Monetary and Credit Council No. 362 for
year 2008 and No.(952/100/1) dated February 12, 2009, unrealized retained earnings / (accumulated
losses) on structural position are segregated from retained earnings.
Total accumulated losses as of December 31, 2013 amounted to SYP 1,223,710,307 compared to
SYP 310,866,622 as of December 31, 2012.
26.
GENERAL RESERVE FOR CREDIT FACILITIES IMPAIRMENT
According to Monetary and Credit Council circular No.(902/MN/B4) dated November 13, 2012 and
decision No. (1079/MN/B4) dated January 29, 2014 the suspension of formation of the General reserve for
credit facilities impairment was still in work till the end of 2014 and that the balance of the General reserve
for credit facilities impairment up to December 31, 2013 amounted to SYP 184,660,192. Knowing that the
bank is committed to continue holding the General reserve for credit facilities impairment agreed upon at
the end of operating of law number 902/MN/B4.
27.
INTEREST INCOME
2013
2012
SYP
SYP
Direct credit facilities- corporate
Overdraft
Loans and advances
Discounted bills
Direct credit facilities - individual
Balances and deposits with banks
28.
968,618,523
1,123,700,800
114,093,389
367,742,688
175,389,561
112,542,446
800,892,231
1,099,459,722
352,196,171
802,205,523
40,076,171
33,093,971
2,862,087,407
3,127,923,789
INTEREST EXPENSE
2013
2012
SYP
SYP
Banks’ deposits
Current accounts
Saving accounts
Term deposits
Cash margins
41
38,187
12,981,571
4,318,878
222,026,751
1,178,193,910
103,779,104
90,888,149
188,273,194
1,168,684,876
78,490,424
1,508,356,830
1,539,318,214
29.
FEES AND COMMISSIONS INCOME
2013
2012
SYP
SYP
Commissions on direct credit facilities
Commissions on indirect credit facilities
Commissions on transfers and banking services
Miscellaneous commissions income
30.
44,461,985
620,716,936
416,640,728
66,300,255
19,673,499
283,812,153
349,436,944
2,582,550
1,148,119,904
655,505,146
FEES AND COMMISSIONS EXPENSES
2013
2012
SYP
SYP
Commission paid to banks
Commission paid on transfers and banking services
Miscellaneous commissions expenses
31.
33,847,987
187,226,940
867,688
7,383,439
53,396,075
1,736,818
221,942,615
62,516,332
GAIN FROM HELD-FOR-TRADING FINANCIAL ASSETS
2013
2012
SYP
SYP
Interest from bonds
Unrealized revaluation gain- Bonds
Unrealized revaluation (loss)/ gain- Shares
Loss on disposal of shares
(
6,081,599 (
1,714,410) (
2,888,857
9,580,176
1,005,690)
2,464,197)
4,367,189
8,999,146
The interest’s from bonds represent interests from held-for trading financial assets accrued during year
2012.
32.
GAIN ON AVAILABLE FOR SALE FINANCIAL ASSETS
2013
2012
SYP
SYP
Dividend income from United Insurance Company (Note 40-B)
Dividend income from other Companies
Gain on sales of available for sale non-current stocks
42
4,250,000
401,400
28,100
4,675,000
356,800
-
4,679,500
5,031,800
33.
OTHER OPERATING INCOME
2013
2012
SYP
SYP
Write-back of accrued expenses
Net profits from sale of fixed assets
Other income
34.
7,368,149
5,970,708
31,151,182
37,223,729
6,885,461
44,490,039
44,109,190
SALARIES AND RELATED CHARGES
2013
2012
SYP
SYP
Salaries and related charges
Medical expenses
Top management compensation and bonuses (Note 40-C)
Bank’s portion of Social Security
Training expenses
35.
829,240,262
20,121,338
362,838,927
97,399,604
5,134,043
733,864,129
14,621,086
239,898,348
95,860,041
2,389,514
1,314,734,174
1,086,633,118
PROVISION FOR IMPAIRMENT OF CREDIT FACILITIES
2013
2012
SYP
SYP
Performing direct credit facilities (Note 9)
Non-performing direct credit facilities (Note 9)
Non-performing indirect credit facilities (Note 19)
43
1,321,664,381
143,674,935
66,170,148
1,600,821,026
42,497,765
1,465,339,316
1,709,488,939
36.
OTHER OPERATING EXPENSES
2013
2012
SYP
SYP
Rent
Legal Fees
Advertising
Telephone and communication expenses
Travel and transportation
Maintenance
Utilities
Professional fees
Board of Directors' compensation and bonuses (Note 40-C)
Credit cards expenses
Stationery and office expenses
Insurance
Administrative fees (Note 40-B)
Cleaning and security expenses
Network and computer installation
Donations
Other expenses
37.
158,200,475
40,060,065
3,332,681
44,817,083
104,066,404
37,960,989
59,754,426
58,233,532
24,798,092
30,528,366
28,511,077
30,777,799
21,016,809
19,999,752
20,821,492
30,986,981
138,139,391
33,814,765
3,056,277
39,558,870
44,207,173
43,561,255
32,196,423
17,886,622
16,390,865
18,877,413
12,006,417
20,232,490
16,919,750
12,336,350
17,609,343
6,500
19,623,504
713,866,023
486,423,408
OTHER LOSSES
During 2011, 2012 and 2013, the Bank reported robberies in several branches. The Bank recorded a full
provision for the loss taking into consideration the preliminary results of investigation and the expected
future cash inflows from the insurance company. This provision was recorded in the consolidated income
statement under other provisions.
38.
BASIC AND DILUTED EARNINGS PER SHARE
The basic and diluted earnings per share on profits available for equity holders of the parent were
calculated as follows:
2013
2012
Net profit for the year attributable to equity holders of
the parent (SYP)
Weighted average number of ordinary shares outstanding
during the year
Basic and diluted earnings per share (SYP)
1,972,531,776
41,927,885
50,000,000
50,000,000
39.45
0.84
Basic and diluted earnings per share are identical due to the absence of instruments issued by the Bank
that would impact earnings per share when converted.
44
39.
CASH AND CASH EQUIVALENT
December 31,
2013
SYP
2012
SYP
Cash and balances with Central Bank of Syria
(except for cash compulsory reserve and blocked deposit) 28,711,702,571
25,540,334,937
Add: Balances with banks (with original maturity
17,532,684,831
15,116,366,099
Less: Banks' deposits (with original maturity
( 1,353,586,130) ( 1,919,076,446)
44,890,801,272
38,737,624,590
The cash compulsory reserve with Central Bank of Syria is not used in bank’s daily operating activities, so
it is not considered part of cash and cash equivalent.
40.
TRANSACTIONS WITH RELATED PARTIES
In the ordinary course of business, the Bank enters into transactions with top management, major
shareholders and other related parties within the allowed commercial engagement limits. Credit facilities
granted to related parties are performing loans except for the direct credit facilities of
SYP 286,851,612 that was granted to two member of Board of Directors and was classified as bad debt
as of December 31, 2013 (compared to SYP 259,123,476 as of December 31, 2012). A provision has
been taken against these facilities amounted to SYP 72,375,334 as of December 31, 2013 and these
facilities are fully covered with accepted bank guarantees.
The consolidated financial statements include the financial statements of Bemo Saudi Fransi Finance
S.A. The Bank’s share in the subsidiary’s capital is show below:
Contribution
Percentage
%
Bemo Saudi Fransi Finance S.A.
74.67
45
December 31,
2013
SYP
2012
SYP
224,000,000
224,000,000
224,000,000
224,000,000
A. Consolidated statement of financial position items
December 31, 2013
Bank Saudi
Fransi
SYP
Financial position items
Debit balances
Current accounts
Term deposits
Credit facilities balances
Credit balances
Current accounts
Term deposits
Due to related parties (Note 21)
Dividends payable (Note 21)
Accrued expenses
Blocked account
Bank Bemo
SYP
United
Insurance
Company
SYP
Top
management
SYP
Board of
directors
SYP
Related
parties
SYP
Shareholders
SYP
Total
SYP
4,674,737
229,620,000
-
3,174,968,044
2,177,450,000
-
-
-
121,314,255
340,337,703
-
3,179,642,781
2,407,070,000
461,651,958
234,294,737
5,352,418,044
-
-
121,314,255
340,337,703
-
6,048,364,739
3,311,650
10,615,069
21,526,500
-
150,490,286
29,251,034
-
94,936,845
-
13,187,525
1,000,000
26,976,278
-
1,720,301
9,265,337
-
1,612,795
-
165,398,112
39,516,371
3,311,650
1,612,795
143,439,623
10,615,069
13,926,719
21,526,500
179,741,320
94,936,845
41,163,803
10,985,638
1,612,795
363,893,620
Off-Balance sheet items
Inward guarantees
Issued letters of guarantees
Realstate letters of guarantees
Inward letters of guarantees
117,603,647
16,639,940
Issued LCs
( 46,338,064) (
773,193,901)
Export bills
50,483,188
Foreign currencies to be paid against
the currencies Foreign to be received
( 34,245,350,000)
Foreign currencies to be received against
the currencies Foreign to be paid
33,738,517,892
-
-
-
( 304,800,000)
42,000,000
(
6,570,000)
-
-
(
-
-
-
-
-
( 34,245,350,000)
-
-
-
-
-
33,738,517,892
46
(
(
304,800,000)
42,000,000
6,570,000)
134,243,587
819,531,965)
50,483,188
December 31, 2012
Bank Saudi
Fransi
SYP
Financial position items
Debit balances
Current accounts
Term deposits
Credit facilities balances
Debit balances (Note 14)
Credit balances
Current accounts
Term deposits
Dividends payable (Note 21)
Accrued expenses
Blocked account
Bank Bemo
SYP
United
Insurance
Company
SYP
Top
management
SYP
Board of
directors
SYP
Related
parties
SYP
Shareholders
SYP
Total
SYP
7,227,256
206,400,000
-
1,105,820,889
1,083,600,000
3,461,886
-
-
288,753,684
-
264,432,961
-
-
1,113,048,145
1,290,000,000
553,186,645
3,461,886
213,627,256
2,192,882,775
-
-
288,753,684
264,432,961
-
2,959,696,676
5,476,185
480,924,554
43,239,543
-
78,054,127
283,479,401
-
65,289,196
-
18,876,528
29,044,447
-
3,974,258
3,935,315
-
1,621,100
-
581,829,467
287,414,716
1,621,100
137,573,186
5,476,185
5,476,185
524,164,097
361,533,528
65,289,196
47,920,975
7,909,573
1,621,100
1,013,914,654
Off-Balance sheet items
Inward guarantees
Issued letters of guarantees
Real Estate letters of guarantees
Inward letters of guarantees
63,766,890
14,165,780
Issued LCs
177,218,382
Checks under collection
139
Import bills
( 24,991,731) (
439,152,336)
Export bills
27,202,210
Foreign currencies to be paid against
the currencies Foreign to be received
( 15,164,820,000)
Foreign currencies to be received against
the currencies Foreign to be paid
15,010,286,490
-
-
-
-
-
-
-
-
47
( 304,800,000)
18,866,579
287,607
( 335,000,000) (
6,570,000)
-
-
(
-
-
(15,164,820,000)
-
-
15,010,286,490
(
(
(
304,800,000)
19,154,186
341,570,000)
77,932,670)
177,218,382
139
464,144,067)
27,202,210
B. Consolidated statement of comprehensive income items
Year ended December 31, 2013
Bank Saudi
Fransi
SYP
Interest income
Interest expense
Insurance expense
Dividends (Note 32)
Administrative fees (Note 36)
Salaries and bonuses
Income from financial
instruments derivatives
Bank Bemo
SYP
United
Insurance
Company
SYP
Top
management
SYP
Board of
directors
SYP
Related
parties
SYP
Shareholders
SYP
Total
SYP
-
62,136,879
( 32,194,626)
( 44,957,187)
4,250,000
( 21,016,809)
(387,637,019)
-
-
40,371,859
Related
parties
SYP
Shareholders
SYP
Total
SYP
-
48,791,245
( 4,304,177)
( 32,017,806)
( 16,919,750)
(256,289,213)
4,675,000
-
17,335,665
355,720
592,182
16,168
9,097,199
52,075,610
(
168,492) (31,902,416)
(
123,718)
(44,957,187)
4,250,000
( 21,016,809)
(362,838,927) ( 24,798,092)
-
40,371,859
-
-
-
Bank Saudi
Fransi
SYP
Interest income
Interest expense
Insurance expense
Administrative fees (Note 36)
Salaries and bonuses
Dividends (Note 32)
Income from financial
instruments derivatives
(
Bank Bemo
SYP
United
Insurance
Company
SYP
Top
management
SYP
Board of
directors
SYP
522,633
3,234,129
59,796
12,428,601
32,546,086
34,071) (
286,914) ( 3,757,149)
(
146,017) (
80,026)
(32,017,806)
( 16,919,750)
(239,898,348) ( 16,390,865)
4,675,000
-
17,335,665
-
-
48
-
-
C. Executive management's benefits
2013
2012
SYP
SYP
Management compensations and bonuses (Note 34)
Board of Directors compensations and bonuses (Note 36)
362,838,927
24,798,092
239,898,348
16,390,865
387,637,019
256,289,213
In compliance with circular No (500/MN/B4) dated May 10, 2009, the Bank is working on closing out
all credit facilities granted to related parties within a maximum period specified as the date of maturity.
Interest rate charged on credit facilities granted to related parties is in the range of 11% to 16%.
Interest expense rate on current accounts and deposits for related parties is in the range of 1.18% to 10%.
49
41.
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
(a) Fair value of financial assets and liabilities which are not shown in the consolidated financial statements at fair value
Carrying value
SYP
December 31, 2013
Fair value
SYP
Difference
SYP
Carrying value
SYP
December 31, 2012
Fair value
SYP
Difference
SYP
Financial assets:
Balances with banks
Deposits with banks
33,857,136,620
17,532,684,831
8,976,200,000
23,897,507,647
27,985,437,115
985,032,149
33,857,136,620
17,532,684,831
9,056,994,883
80,794,883
22,754,387,705 (1,143,119,942)
27,985,437,115
985,032,149
-
29,276,193,096
15,116,366,099
1,583,600,000
26,421,484,270
7,264,490,136
644,620,100
29,276,193,096
15,116,366,099
1,580,867,806 (
25,628,993,555 (
7,264,490,136
644,620,100
3,081,898,843 3,081,898,843
98,882,564,304 99,366,535,140 ( 483,970,836)
2,680,445,204 2,759,467,423 ( 79,022,219)
1,919,076,446
70,067,771,259
2,407,554,761
1,919,076,446
70,063,595,109
2,405,420,553
2,732,194)
792,490,715)
-
Financial liabilities:
Banks’ deposits
Cash margins
50
4,176,150
2,134,208
(b) Fair value measurements for financial assets recognized at fair value in the consolidated statement
of financial position (according to IFRS 7)
December 31, 2013
Level 2
Level 3
SYP
SYP
Level 1
SYP
7,827,392
69,317,500
3,988,800
-
7,827,392
73,306,300
77,144,892
3,988,800
-
81,133,692
December 31, 2012
Level 2
Level 3
SYP
SYP
Level 1
SYP
Total
SYP
Total
SYP
7,893,734
74,970,000
5,777,840
-
7,893,734
80,747,840
82,863,734
5,777,840
-
88,641,574
Evaluation and assumption techniques used for determining fair value:
Fair values of financial assets and liabilities are determined using the following hierarchy:
Level one: fair value measurements are those derived from quoted prices (unadjusted) in active markets
for identical assets or liabilities.
Level two: fair value measurements are those derived from inputs other than quoted prices included in
level one, that are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level three: fair value measurements are those derived from valuation techniques that include inputs that
are not based on observable market data (unobservable inputs).
Financial assets whose fair value approximates its book value:
They represent monetary financial assets and liabilities with maturity less than one year and with a book
value that approximates fair value.
Financial assets with fixed interest rate:
Fair value of financial assets and liabilities carried at amortized cost with fixed interest rate is calculated
by conducting a comparison between cash flows generated by the financial instrument at issuance
(discounted using market interest rates) and the current market prices for comparable financial
instruments.
51
42.
RISK MANAGEMENT
Overview of risk management
The activities of Banque Bemo Saudi Fransi S.A contains a number of risks, that is why risk management
plays crucial role in maintaining the strength of the bank and its continuing profitability.
The process of risk management consists of recognizing, measuring, monitoring financial and nonfinancial risks that may adversely affect the Bank’s performance and reputation and ensuring an efficient
distribution of capital to achieve optimal rates of return.
The Bank’s risks mainly fall under the following types:
A.
B.
C.
D.
E.
Credit risk
Market risk
Liquidity risk
Operational Risk
Compliance Risk
General strategy for risk management
The Bank’s risk management policies are set according to the size and complexity of its activities and
instructions of Syria monetary authorities, Syrian laws and applicable international banking standards.
The board of directors is responsible for guiding and approving risk management strategies which are then
monitored by independent risk management department,
Risk management policies in the Bank are subject to continuous improvement to keep pace with all
developments and growth in the Bank's activities, and for the expansion of its services; the philosophy of
risk management in the Bank is based on the knowledge, experience and management's ability to supervise
and judge, and the existence of clear manual of authorities defined by the Board of Directors.
Organizational structure and the role of parties responsible of risk management
Board of directors
Board of directors is responsible for risk management and approval of strategies and policies in the Bank.
In addition to board of directors, there are committees responsible for managing and monitoring risks.
Risk management
Risk management is responsible for proper execution and control of risks and it ensures the compatibility
of existing risks with adopted policies. Risk management contains the following departments:
- Credit and market risks department
This department is responsible of reviewing the credit facilities files which are in the process of
obtaining credit facilities from the Bank as well as other financial institutions in which the Bank is
willing to maintain financial interest whether in the form of current account or investment account. The
department submits its recommendation to the appropriate management level. Moreover, the department
conducts a periodic review on existing files at least once per year.
- Credit management department
This department is responsible of managing credit files to ensure its conformity with the approval terms
granted from the appropriate managerial level by confirming the existence and legitimacy of the required
documents and guarantees and compliance with the corresponding credit procedures and policies of the
Bank. The department activates the credit facilities granted to customer and record the inward guarantees
on the banking system and save the documents in secure location.
52
- Retail credit risk department
This department is responsible for the credit facilities files of individual and retail facilities aiming to
obtain credit facilities from the Bank. The department will submit its recommendation to the appropriate
management level.
- Credit monitoring department
This department monitors credit facilities, follow-up on payments after approval, assures timely
settlement of customers’ obligations according to their amounts and maturities. It prepares and sends
reports to relevant department that include information on due and unpaid amounts, excesses over
defined limits. In addition, the department assigns credit ratings to existing customers and calculates
provisions for impaired credit facilities. The department also prepares reports regarding risk management
especially credit risk management and submits them to senior management and Central bank of Syria.
- Operational risk department
This department monitors overall activities and departments of the Bank where operational risk may
arise due to human or automation errors from within or outside the Bank. It monitors these risks by
measuring them to ensure they are either non-existed or still in the minimum possible level acceptable.
In additions, it takes all possible decisions to mitigate these risks in which it include according to each
case, transfer the risk to third parties or insurance companies.
Treasury
Responsible for the assets and liabilities management and financial structure of the Bank, basically it is
responsible of liquidity and financing risks.
Internal audit department
This department audits the risk management process on regular basis. It reviews the compatibility of the
procedures and policies set by the Bank. The audit results are discussed with the management, reports and
suggestions are submitted to the Audit Committee.
Risk management and reporting system
The Bank’s risks are measured in a way that reflects the expected losses, which may arise in normal
conditions, and the unexpected losses based on estimates of total actual losses using statistical methods.
These methods are based on the probabilities of previous experiences, and are adjusted to reflect the
economic conditions. It also examines the worst-case scenario that may arise from exceptional
circumstances.
Managing and controlling risks are based on approved limits that reflect the Bank strategy, limits and
levels of acceptable risks. The Bank measures total risk-taking capability and compares it to overall risks
of all types.
Information is collected from all business lines for the purposes of analyzing, monitoring and determining
risks at early stage as it submits reports to the board of directors, risk management department and heads
of departments that contain total credit and liquidity risks.
Detailed analysis is prepared on a monthly basis according to business lines and geographical sectors;
Management reviews provision for impairment of credit losses quarterly. Board of directors receives a
comprehensive report on risks on a quarterly basis to use it in assessing the overall risks of the Bank.
Detailed risk reports are prepared and distributed to all departments to ensure that all necessary
information is up to date and available to all levels of the Bank.
53
Risk management procedures and mitigation methods
A- Credit Risk:
Credit risk 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. There are three main types of credit risk: the risk of counter-party
default, settlement risk, and country risk.
Key factors for effectively managing credit risk are as follows:
- locating a suitable environment for credit risk management,
- Having a clear and proper framework of approvals and permissions,
- Maintaining an appropriate credit administration, and providing appropriate mechanisms for
measurement and control and
- Ensuring adequate controls are in place over the procedures of credit risk management.
In order to achieve the above, The Bank attempts to develop a clear credit policy which includes
maximum credit exposure granted (for individuals or entities) and for each sector and geographical area.
The Bank attempts to control credit risk by monitoring credit exposures, limiting transactions with specific
counter-parties, and continually assessing the creditworthiness of counter-parties.
Basic hypotheses of stress testing for credit risks
Bank uses several hypotheses for stress testing of credit portfolio that generally covers the expected credit
risks and the increase in provision for impairment of credit losses required to cover these risks.
These hypotheses also cover the changes in non-performing loans in various scenarios according to their
expected credit risks. In addition, it examines the deterioration in credit quality of credit exposures per
economic sector and the decrease in market value of real estate mortgage of non-performing loans.
Risk Management procedure comprises the following:
1- Defining credit risk limits and concentrations:
The Bank’s credit risk policy set up maximum exposure that can be assigned to individual customer or
group of customers, in accordance with the limits specified in the decree No. 395 issued by Monetary and
Credit Council. In addition, it includes limits by economic segments as well as specifying credit limits
that can approved by each level of management.
Credit rating of customers
The Bank reviews the portfolio of granted loans on regular basis and classifies it in accordance with
Monetary and Credit Council circular No. 597/MN/ B4 dated December 9, 2009 amended by circular
No. 650/MN/B4 dated April 14, 2010, and circular No. 902/MN/B4 dated November 13, 2012 and
circular No.1079/MN/B4 dated January 29, 2014, which sets up the criteria for classification of facilities
and calculation of required provisions.
The following are the loan classification categories in accordance with Monetary and Credit Council
instructions:
2-1. performing loans
- Low risk loans
- Normal risk loans
- Watch list (special mention) loans
2-2. Non-performing loans
- Substandard loans
- Doubtful loans
- Bad loans
54
Basis of credit facilities classification
1. Commitment of debtors with credit facilities terms;
2. Movements of overdraft account;
3. Customer commitment for timely payment;
4. Updated financial position of the customer;
5. Cash inflows of the financed projects;
6. Classification of customer by recognized rating companies, if available; and
7. Customer status in terms of payment with other financial institutions.
2- Credit risk mitigation methods
The Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these
are:
- Guarantees requested against granted facilities. The Bank implements guidelines on the acceptability
of specific classes of collateral based on their liquidity and percentage of coverage of the underlying
facility. Guarantees monitored and evaluated on an ongoing basis.
- Credit Committees assigned to extend or approve credit facilities based on the size of the client’s
portfolio, maturity of facilities and client’s rating.
Portfolio diversification is fundamental factor to mitigate credit risks. The Bank’s annual plan includes a
targeted distribution of credit and investment among different sectors and markets with a special focus on
promising sectors.
The Bank uses several policies to mitigate credit risk such as monitoring credit concentrations according to
economic and geographical sectors and according to guarantees in order to take proper preventive and
corrective actions when needed.
In addition, the Bank attempts, through credit departments and credit committees, to obtain proper
guarantees sufficient to cover credit risk, these guarantees are determined for each customer according to
the activities and the type and amount of granted facilities.
Real estate are revaluated by an expert if the granted facilities were less than 25 million Syrian Pounds,
and by two experts if the facilities were equal to or exceeds 25 million Syrian Pounds. For the purpose of
calculating provision for impairment of credit losses, 25% of real estate and stocks and 50% of vehicles,
machines and equipments that is pledged as securities in favor of the bank are discounted.
Collaterals and credit enhancements
The Bank uses several practices to mitigate credit risk such as obtaining collaterals in accordance with
applicable standards.
The major types of collaterals are as follows:
 For commercial loans: real estate, inventory and cash collaterals.
 For individuals: real estates, apartments, vehicles, salaries and cash collaterals.
Management monitors the market value of the collateral, additional guarantees may be granted according
to contract’s terms. The market value of these guarantees is reviewed during the study of adequacy of the
provision for impairment of credit losses.
Assessment of loans impairment granted to individual
The main indicators for loan impairment are:
- When the principal or interest is due for a period more than 180 days;
- When the customer faces financial or cash flow difficulties; and
- Disruption of contract’s terms.
The bank evaluates the impairment in facilities either individually or collectively.
55
Individual provision on non-performing loans
The Bank sets the appropriate provision for all loans and facilities individually in accordance with
circulars No (597/MN/B4) dated December 9, 2009 and No. (650/MN/B4) dated April 14, 2010 and
No. (902/M.N/B4) dated November 13, 2012 and circular No. (1079/MN/B4) dated January 29, 2014
issued by Monetary and Credit Council, taking into consideration the following indicators:

Delays in the completion of the project;

Customer’s ability to improve his position when facing financial difficulties;

Expected return in case of bankruptcy;

Availability of other financial sources and the expected realizable value of the guarantees; and

Period of expected cash inflows.
Credit losses are reviewed at each consolidated financial position’s date or whenever the need arises.
Collective provision on performing loans
The Bank evaluates the collective provision for impairment of credit losses for loans that are not
significant individually, or in case there is no objective evidence of the impairment individually. The Bank
reviews this provision at each consolidated financial position’s date.
The Bank takes into account upon overall assessment, the possible impairment in portfolio even where
there is no objective evidence.
Impairment of credit losses is assessed using the following factors:
Date of losses, current economic situation, current levels of doubtful debts, the delay between the date
when losses occurred and the date the Management decided to record a provision, and the expected
payments. Management is responsible to determine this period which may extend to one year.
Credit management department reviews the impairment of credit losses to ensure its compliance with the
Bank’s general policies.
Provision for financial commitments and letters of credit are evaluated in a similar method of evaluating
loans.
Credit analysis, control and follow-up
The Bank improves the methods used in credit analysis and ensures objectivity and integrity in decisionmaking, risk assessment and review of credit facilities. The credit risk framework includes establishing an
authorization structure, imposing limits for the approval and renewal of credit facilities and setting policies
to determine the degree of risk. The process of managing credit is handled as a separate function to ensure
proper implementation of credit operations, effective control over maturities and the accurate assessment
of securities.
56
Quantitative disclosures of credit risk
1. Exposure to credit risk (after provision for impairment and before guarantees and other risk mitigation
factors)
December 31,
2013
SYP
2012
SYP
31,187,860,401
17,532,684,831
8,976,200,000
27,807,777,311
15,116,366,099
1,583,600,000
2,810,880,846
1,788,420,521
15,359,431,554
3,938,774,726
4,629,729,222
2,048,347,729
15,033,600,758
4,709,806,561
27,985,437,115
685,544,487
985,032,149
7,264,490,136
518,633,461
644,620,100
389,746,730
581,830,618
3,456,025,056
14,513,914,722
49,399,412
5,665,315,922
3,537,784,126
9,773,061,357
252,886,836
6,792,217,735
135,324,668,472
100,294,752,049
Statement of financial position items:
Balances with banks
Deposits with Banks
Individual
Real estate
Large companies
Small and medium enterprises
Financial assets and other assets
Other assets
Blocked deposit with Central bank of Syria
Off-balance sheet items
Letter of credit- import
Issued letters of guarantee:
Customers
Banks
Acceptances
Unutilized direct credit facilities limits
Total
57
2. Credit risk exposure based on risk rating:
According to circular No (597/MN/B4) issued by Monetary and Credit Council dated December 9, 2009 which was amended by circular
No (650/MN/B4) dated April 14, 2010 and No. (902/MN/B4) dated November 13, 2012 and Circular No. (1079/MN/B4) dated January 29, 2014,
credit facilities portfolio should be classified into six grades based on the indicators and specifications featuring each type of debt. Circular
No.(1079/MN/B4) was implemented on the consolidated financial statement as of December 31, 2013.
The table below illustrates the exposure to direct credit risk by degree of risk as of December 31, 2013 as follows:
Individual
SYP
Direct credit facilities
Normal (low risk)
Normal (acceptable risk)
Watch (special mention)
Not due
Overdue:
Less than 30 days
31 days to 60 days
61 days to 90 days
91 days to 179 days
10,915,923
1,196,987,489
161,866,919
161,357,472
-
498,495
10,952
Total
126,078
1,126,053,522
145,559,405
145,559,405
-
Non-performing:
Substandard
Doubtful
Bad
Total non-performing
Less:
Suspended interest
Provision for impairment
of direct credit facilities
Real estate
SYP
(
Large
companies
SYP
Corporate
Small and medium
enterprises
SYP
Total
SYP
671,037
5,967,641,156
7,975,824,395
7,681,626,857
506,282
554,543,496
2,151,287,644
1,928,394,425
12,219,320
8,845,225,663
10,434,538,363
9,916,938,159
9,014,381
2,398,499
1,469,352
281,315,306
61,135,923
7,372,710
106,841,543
47,543,043
70,150,304
9,771,209
108,809,390
328,869,301
98,339,283
259,054,261
2,538,208,929
2,895,602,473
83,109,601
159,095,482
432,144,320
674,349,403
115,305,542
969,047,415
4,667,487,162
5,751,840,119
43,420,113
265,733,761
1,750,647,746
2,059,801,620
340,174,539
1,652,930,919
9,388,488,157
11,381,593,615
4,265,372,804
1,946,088,408
19,695,976,707
4,766,139,042
30,673,576,961
276,454,277) (
58,459,884) (
1,140,370,905) (
414,932,312) (
1,890,217,378)
( 1,178,037,681) (
99,208,003) (
3,196,174,248) (
412,432,004) (
4,885,851,936)
2,810,880,846
1,788,420,521
58
15,359,431,554
3,938,774,726
23,897,507,647
The table below illustrates the exposure to direct credit risk by degree of risk as of December 31, 2012 as follows:
Individual
SYP
Direct credit facilities
Normal (low risk)
Not due
Overdue:
Less than 30 days
31 days to 60 days
61 days to 90 days
91 days to 179 days
12,815,789
3,143,931,332
482,719,118
19,842,457
Non-performing:
Substandard
Doubtful
Bad
Total
Less:
Suspended interest
Provision for impairment
of direct credit facilities
Real estate
SYP
2,664,880
1,448,959,839
188,736,940
52,467,800
-
Large
companies
SYP
Corporate
Small and medium
enterprises
SYP
Total
SYP
81,273,829
2,718,342,604
9,848,369,972
9,077,243,579
20,513,157
998,008,935
1,843,273,500
1,652,613,563
117,267,655
8,309,242,710
12,363,099,530
10,802,167,399
32,909,049
11,834,395
16,017,932
129,898,561
292,219,287
64,169,910
22,920,162
1,181,622,772
462,876,661
67,824
136,201,316
259,310,238
52,335,515
6,834,406
452,646,234
329,843,751
581,217,524
1,000,007,871
1,911,069,146
115,043,591
212,707,544
154,222,943
481,974,078
1,639,491,816
1,089,519,195
2,000,332,255
4,729,343,266
436,389,572
1,022,749,798
1,153,558,152
2,612,697,522
2,520,768,730
2,906,194,061
4,308,121,221
9,735,084,012
5,550,535,385
2,122,335,737
17,377,329,671
5,474,493,114
30,524,693,907
(
90,803,484) (
4,885,963) (
493,468,354) (
243,562,524) (
832,720,325)
(
830,002,679) (
69,102,045) (
1,850,260,559) (
521,124,029) (
3,270,489,312)
4,629,729,222
2,048,347,729
59
15,033,600,758
4,709,806,561
26,421,484,270
The table below illustrates the exposure to indirect credit risk by degree of risk as of December 31, 2013 as follows:
Individual
SYP
Large
companies
SYP
Real estate
SYP
Corporate
Small and medium
enterprises
SYP
Total
SYP
Indirect credit facilities
Normal (low risk)
Not due
Overdue:
Less than 30 days
31 days to 60 days
61 days to 90 days
91 days to 179 days
Non- performing
Substandard
Doubtful
Bad
175,637,576
22,569,010
752,210
752,210
69,312,203
69,312,203
-
5,033,000
337,919,123
91,520,119
434,472,242
3,500,000
44,962,119
34,445,870
82,907,989
8,533,000
382,881,242
195,278,192
586,692,434
Total
Less:
Provision for impairment of
indirect credit facilities
268,270,999
-
2,708,144,822
918,755,377
3,895,171,198
Net indirect credit facilities
268,270,999
-
-
-
286,179,173
590,231,935
1,397,261,472
1,397,261,472
-
-
273,757,966
66,200,892
495,888,530
495,888,530
-
(
-
106,500,905)
2,601,643,917
60
735,574,715
679,001,837
1,893,902,212
1,893,902,212
-
(
4,594,391)
914,160,986
-
(
111,095,296)
3,784,075,902
The table below illustrates the exposure to indirect credit risk by degree of risk as of December 31, 2012 as follows:
Individual
SYP
Large
companies
SYP
Real estate
SYP
Corporate
Small and medium
enterprises
SYP
Total
SYP
Indirect credit facilities
Normal (low risk)
Not due
Overdue:
Less than 30 days
31 days to 60 days
61 days to 90 days
91 days to 179 days
Non- performing
Substandard
Doubtful
Bad
342,786,126
22,804,847
306,360
-
-
306,360
-
300,000
41,625,474
41,925,474
-
87,171,490
1,800,000
48,112,128
137,083,618
27,609,656
11,358,756
304,000
39,272,412
114,781,146
13,458,756
90,041,602
218,281,504
Total
Less:
Provision for impairment of
indirect credit facilities
407,822,807
-
2,636,112,487
1,328,566,286
4,372,501,580
Net indirect credit facilities
407,822,807
-
-
141,516,536
354,762,200
2,002,750,133
2,002,750,133
308,036,849
399,537,535
581,719,490
581,719,490
-
(
-
41,373,072)
2,594,739,415
61
792,339,511
777,104,582
2,584,775,983
2,584,469,623
-
(
306,360
593,635)
1,327,972,651
(
41,966,707)
4,330,534,873
In accordance with circular No (650/MN/B4) issued by Monetary and Credit Council dated April 14, 2010
which amended circular No (597/MN/B4) dated December 9, 2009, banks are required, if profits are
reported, to establish a General reserve for credit facilities impairment as follows:
1- 1% of normal direct credit facilities
2- 0.5% of normal indirect credit facilities
3- An additional 0.5% on the part of performing direct credit facilities (special mention) granted
against personal guarantees or no guarantees.
In accordance with section B of article 1 of circular No (650/MN/B4), banks were granted a maximum
period until end of year 2013 to gradually allocate the required reserve and provision on performing credit
facilities that were outstanding as of December 31, 2009 amounting to SYP 25,482,000. Yearly allocations
should not go below 25% of the above-mentioned provision and reserve and are equally allocated between
quarters.
62
3. Fair value of guarantees against credit facilities
The table below illustrates the fair value of guarantees against credit facilities as of December 31, 2013 as follows:
Individual
SYP
Real estate
SYP
Large
companies
SYP
Corporate
Small and medium
enterprises
SYP
Total
SYP
Normal (low risk)
Overdue:
61 days to 90 days
91 days to 179 days
Not due
Non-performing
Substandard
Doubtful
Bad
186,553,499
1,102,016,727
151,554,150
126,078
1,089,067,801
127,492,368
286,850,210
2,194,391,269
4,163,223,549
274,264,248
579,573,478
2,256,614,931
747,794,035
4,965,049,275
6,698,884,998
6,736,912
123,972,917
20,844,321
12,277,184
115,215,184
-
38,521,525
779,127,134
3,345,574,890
577,925,636
448,089,445
1,230,599,850
635,461,257
1,466,404,680
4,597,019,061
89,080,586
237,600,862
2,157,265,875
83,115,394
162,812,835
448,855,597
116,720,538
784,305,434
2,732,955,461
46,920,113
263,789,957
1,511,261,306
335,836,631
1,448,509,088
6,850,338,239
Total
3,924,071,699
1,911,470,073
10,278,446,461
4,932,424,033
21,046,412,266
Cash margins
Acceptable banks’ guarantees
Real estate’s guarantees
Shares
Vehicles
Other guarantees
278,337,640
1,587,505,916
1,197,863,129
860,365,014
429,319
1,808,378,269
101,234,436
1,428,049
1,120,884,162
4,263,702
6,035,239,406
8,184,568
1,344,061,873
1,765,812,750
500,710,974
3,368,059,194
425,071,000
450,947,781
187,635,084
1,900,362,095
4,263,702
12,799,182,785
433,255,568
3,094,107,219
2,815,240,897
Total
3,924,071,699
1,911,470,073
10,278,446,461
4,932,424,033
21,046,412,266
63
The table below illustrates the fair value of guarantees against credit facilities as of December 31, 2012 as follows:
Individual
SYP
Real estate
SYP
Large
companies
SYP
Corporate
Small and medium
enterprises
SYP
Total
SYP
Normal (low risk)
Overdue:
61 days to 90 days
91 days to 179 days
Not due
Non-performing
Substandard
Doubtful
Bad
355,601,915
2,899,167,541
430,798,520
2,664,880
1,355,632,098
142,490,920
222,790,365
1,914,741,797
4,808,267,612
328,550,005
1,178,871,009
2,054,051,354
909,607,165
7,348,412,445
7,435,608,406
412,522,582
18,275,938
130,934,324
11,556,596
165,829,814
876,209,646
3,766,228,152
130,896,940
260,263,140
1,662,891,274
296,726,754
1,679,929,692
5,458,951,960
309,935,452
542,032,336
793,631,103
105,321,887
204,030,283
148,643,694
1,535,394,810
593,949,546
1,094,696,048
391,336,067
888,105,611
983,996,631
2,341,988,216
2,228,117,776
3,020,967,476
Total
5,331,166,867
1,958,783,762
10,169,840,178
5,824,910,677
23,284,701,484
Cash margins
Acceptable banks’ guarantees
Real estate’s guarantees
Shares
Vehicles
Other guarantees
421,957,547
2,015,013,009
1,792,544,147
1,101,652,162
3,515,780
1,955,267,983
-
891,132,313
85,523,829
5,467,478,660
10,380,650
2,239,217,382
1,476,107,345
615,808,069
4,059,385,515
425,071,000
498,021,688
226,624,405
1,932,413,709
85,523,829
13,497,145,167
435,451,650
4,529,783,217
2,804,383,912
Total
5,331,166,865
1,958,783,763
10,169,840,179
5,824,910,677
23,284,701,484
64
Rescheduled facilities:
These balances represent facilities that had previously been classified as non-performing facilities and
were reclassified later as watch list. These facilities amounted to SYP 1,772,381,551 as of
December 31, 2013 (compared to SYP 702,788,755 as of December 31, 2012).
Restructured facilities:
These balances represent facilities for which credit terms have been changed such as changes in
installments, maturity, rescheduled payments or grace period extension. These facilities were classified as
watch list and amounted to SYP 997,401,227 as of December 31, 2013 (compared to SYP 922,110,503 as
of December 31, 2012).
4. Quality of financial assets in terms of credit risk:
The quality of financial assets in terms of credit risk exposure is measured based on an internal rating
mechanism for credit risk as shown below (impairment provisions are not included below)
Good
SYP
December 31, 2013
Normal
Impaired
SYP
SYP
Total
SYP
Balances with banks
31,187,860,401
5,415,183,329
12,117,501,502
-
31,187,860,401
17,532,684,831
Deposits with banks
21,072,628,726
985,032,149
8,976,200,000
6,912,808,389
-
-
8,976,200,000
27,985,437,115
985,032,149
58,660,704,605
28,006,509,891
-
86,667,214,496
Good
SYP
Balances with banks
Deposits with banks
December 31, 2012
Normal
Impaired
SYP
SYP
Total
SYP
27,807,777,311
4,322,324,546
10,794,041,553
-
27,807,777,311
15,116,366,099
2,484,011,034
644,620,100
1,583,600,000
4,780,479,102
-
-
1,583,600,000
7,264,490,136
644,620,100
35,258,732,991
17,158,120,655
-
52,416,853,646
65
5. Credit risk exposure based on internal risk rating:
December 31,
S&P Rating
2013
SYP
2012
SYP
Good
Class 1*
Class 2
Class 3
AAA
AA- To AA+
A- To A+
32,172,892,550
1,353,608,612
25,134,203,443
58,660,704,605
28,452,397,411
999,539,155
5,806,796,425
35,258,732,991
Normal
Class 4**
Class 5
Class 6
BBB- To BBB+
BB- To BB+
less than B-
22,066,871,581
5,939,638,310
-
11,615,135,272
28,267,872
5,514,717,511
28,006,509,891
17,158,120,655
86,667,214,496
52,416,853,646
* Balances with Central Bank of Syria were classified under class 1.
** Balances with local banks were classified under class 4.
Bills, bonds and treasury bills
Credit rating
Rating agency
A
AA+
AABBB
None
S&P
S&P
S&P
S&P
S&P
S&P
Credit rating
Rating agency
A+
AAABBB
BBB+
BBB-
S&P
S&P
S&P
S&P
S&P
S&P
66
Held to maturity
financial assets
SYP
Total as of
December 31, 2013
SYP
15,223,530,077
3,559,694,642
989,155,895
1,300,248,112
3,953,077,500
2,959,730,889
15,223,530,077
36,559,694,642
989,155,895
1,300,248,112
3,953,077,500
2,959,730,889
27,985,437,115
27,985,437,115
Held to maturity
financial assets
SYP
Total as of
December 31, 2012
SYP
214,523,659
718,364,964
1,551,122,411
1,020,400,400
1,210,738,922
2,549,339,780
214,523,659
718,364,964
1,551,122,411
1,020,400,400
1,210,738,922
2,549,339,780
7,264,490,136
7,264,490,136
6.
Concentration of assets and liabilities by geographical region
The table below illustrates credit exposure concentration by geographical region as follows:
Syria
SYP
Middle East
SYP
Balances with banks
Deposits with banks
Net direct credit facilities:
Individual
Real estate
Corporate:
Large companies
Small and medium enterprises
Other assets
Blocked deposit with Central
Bank of Syria
31,187,860,401
2,330,516,616
1,850,000,000
10,129,738,185
7,126,200,000
2,810,880,846
1,788,420,521
-
Total 2013
Total 2012
Europe
SYP
5,042,019,194
-
Asia *
SYP
America
SYP
15,137,039 15,273,797
-
-
-
-
21,749,110,616
37,737,657
4,265,742,167
15,361,512
-
-
-
-
-
60,542,758,469
17,596,541,847
26,828,867,467
56,334,126,849
13,964,022,609
8,830,444,012
15,359,431,554
3,938,774,726
291,841,656
985,032,149
340,603,662
* Except for Middle East countries
67
Australia
SYP
Total
SYP
-
31,187,860,401
17,532,684,831
8,976,200,000
-
2,810,880,846
1,788,420,521
15,359,431,554
3,938,774,726
1,970,584,332 27,985,437,115
685,544,487
-
985,032,149
4,296,240,718 15,273,797 1,970,584,332 111,250,266,630
10,312,588
6,746,275
-
79,145,652,333
7. Concentration by Industry Sector
The table below illustrates credit exposure by industry sector as follows:
Financial
SYP
Industrial
SYP
Commercial
SYP
Total
SYP
31,187,860,401
17,532,684,831
8,976,200,000
4,493,562,668
26,685,189,003
443,083,116
25,847,704
85,810,049,500 4,519,410,372
7,075,888,878
74,372,246
1,315,598,147 12,454,947,487 111,250,266,630
51,775,460,571 5,129,915,189
6,304,764,997
62,594,467
728,119,171 15,356,116,982 79,356,971,377
-
-
68
73,946,891
425,355
Individual,
services
and others
SYP
Balances with banks
Deposits with banks
Other assets
Blocked deposit with
985,032,149
7,035,419,998
40,468,880
Agricultural
SYP
Government
and public sector
(non-resident)
SYP
-
31,187,860,401
17,532,684,831
8,976,200,000
12,294,578,090 23,897,507,647
1,300,248,112
27,985,437,115
15,350,035
160,369,397
685,544,487
-
-
985,032,149
B- Market Risk
Market risk arises mainly by fluctuations in interest and foreign exchange rates.
Board of directors has set limits on the acceptable levels of exposure to market risk. Changes in rates are
monitored and compared against these limits on a daily basis.
Mitigating market risk
The Bank considers that continuous monitoring of internal and external reports, in addition to daily
follow up of news (mainly issued by international rating agencies) regarding correspondent banks, is
sufficient to provide alert for any potential risk. The Bank avoids concentration in specific currency or
segment in accordance with predetermined limits.
Market risk management
Market risk policies and procedures determine the treatment with various types of market risks that may
arise from the Bank’s operations, whether in assets or liabilities, in case of changes in exchange rates or
interest rates. Regular assurance of the availability of acceptable levels of liquidity and compliance with
the required capital adequacy ratio determined by Central Bank of Syria also help in market risk
management.
Interest rate risk
The Bank is exposed to interest rate risk which arises from interest bearing financial instruments and
reflects the possibility that changes in interest rates will adversely affect the value of financial
instruments and related income.
The Bank manages this risk principally through monitoring interest rate gaps and by matching the repricing profile of assets and liabilities. Interest rate risk positions are managed by a specialized
committee that periodically monitors interest rate sensitivity. Interest rate and maturity gaps between
assets and liabilities are regularly assessed and checked against established limits. In addition, hedging
solutions are implemented against interest rate risk whenever deemed necessary.
The Bank manages these risks through follow up of re-pricing of the assets and liabilities that earns
interest through the policy of risk management, which is revised periodically by the risk management
committee in the Bank.
Interest rate risk (sensitivity analysis) 2% change in interest rate
2% increase in interest rate
December 31, 2013
Currency
Gap
SYP
USD
EUR
GBP
JPY
CHF
SYP
( 33,838,595,697)
32,900,858,102
(
4,763,027)
4,291,035
(
2,236,213)
( 36,071,590,086)
69
Interest income
sensitivity
(profit and loss)
SYP
(
(
(
(
676,771,914)
658,017,162
95,261)
85,821
44,724)
721,431,802)
Equity
sensitivity
SYP
( 507,578,936)
493,512,872
(
71,446)
64,366
(
33,543)
( 541,073,852)
2% decrease in interest rate
December 31, 2013
Currency
USD
EUR
GBP
JPY
CHF
SYP
Gap
SYP
( 33,838,595,697)
32,900,858,102 (
(
4,763,027)
4,291,035 (
(
2,236,213)
( 36,071,590,086)
Interest income
sensitivity
(profit and loss)
SYP
Equity
sensitivity
SYP
676,771,914 507,578,936
658,017,162) ( 493,512,872)
95,261
71,446
85,821) (
64,366)
44,724
33,543
721,431,802 541,073,852
2% increase in interest rate
December 31, 2012
Currency
Gap
SYP
USD
EUR
GBP
JPY
CHF
SYP
( 20,688,894,409) (
9,793,663,489
3,306,939
351,435
(
2,092,543) (
( 23,381,555,182) (
Interest income
sensitivity
(profit and loss)
SYP
Equity
sensitivity
SYP
413,777,888) ( 310,333,416)
195,873,270 146,904,953
66,139
49,604
7,029
5,272
41,851) (
31,388)
467,631,104) ( 350,723,328)
2% decrease in interest rate
December 31, 2012
Currency
USD
EUR
GBP
JPY
CHF
SYP
Gap
SYP
( 20,688,894,409)
9,793,663,489 (
3,306,939 (
351,435 (
(
2,092,543)
( 23,381,555,182)
Interest income
sensitivity
(profit and loss)
SYP
Equity
sensitivity
SYP
413,777,888 310,333,416
195,873,270) ( 146,904,953)
66,139) (
49,604)
7,029) (
5,272)
41,851
31,388
467,631,104 350,723,328
Currency risk
Currency risk arises from the fluctuations in exchange rates. The Bank functional currency is Syrian
Pounds and the Management sets limits for foreign currency positions and monitors these positions
regularly.
The Bank performs sensitivity analysis to control the effects of changes on profit or loss. A negative
number below indicates net burden that would affect consolidated income statement and consolidated
statement of changes in equity, where the positive number reflects the opposite.
70
Currency exchange rate risk (sensitivity analysis) 10% change in currency exchange rate
10% increase
Currency
USD
EUR
GBP
JPY
CHF
Others
December 31, 2013
Currency
Effect on
position
profit and loss
SYP
SYP
6,327,418,083
20,924,289
2,354,976
3,381,838
(
524,941)
(
7,001,046)
632,741,808
2,092,429
235,498
338,184
(
52,494)
(
700,105)
Equity
sensitivity
SYP
631,143,950
1,569,322
176,624
253,638
(
39,371)
(
525,079)
10% decrease
Currency
USD
EUR
GBP
JPY
CHF
Others
December 31, 2013
Currency
Effect on
position
profit and loss
SYP
SYP
6,327,418,083
20,924,289
2,354,976
3,381,838
(
524,941)
(
7,001,046)
( 632,741,808)
(
2,092,429)
(
235,498)
(
338,184)
52,494
700,105
Equity
sensitivity
SYP
( 631,143,950)
(
1,569,322)
(
176,624)
(
253,638)
39,371
525,079
10% increase
Currency
USD
EUR
GBP
JPY
CHF
Others
December 31, 2012
Currency
Effect on
position
profit and loss
SYP
SYP
3,407,995,993
( 43,414,804)
5,719,137
(
246,891)
1,734,747
( 168,190,452)
340,799,599
4,341,480)
571,914
(
24,689)
173,475
( 16,819,045)
(
Equity
sensitivity
SYP
(
(
(
68,010,581
3,256,110)
428,936
18,517)
130,106
12,614,284)
10% decrease
Currency
USD
EUR
GBP
JPY
CHF
Others
December 31, 2012
Currency
Effect on
position
profit and loss
SYP
SYP
3,407,995,993
( 43,414,804)
5,719,137
(
246,891)
1,734,747
( 168,190,452)
71
( 340,799,599)
4,341,480
(
571,914)
24,689
(
173,475)
16,819,045
Equity
sensitivity
SYP
(
(
(
68,010,581)
3,256,110
428,936)
18,517
130,106)
12,614,284
Stock prices risks
The bank is exposed to stocks’ price risks arising from investment in stocks.
Stock prices risks represent a decrease in the fair value of portfolio investment as a result of possible
changes in stock indexes and stock prices.
The following table analyzes the impact of changes in stock prices acquired as equity instruments with
the changes in stocks prices, with other variables remains constant:
Index
Changes
in stock index
%
Damascus Stocks Exchange
Increase 5%
Damascus Stocks Exchange
Decrease 5%
72
Effect on
share price
SYP
(
Effect on
equity
SYP
4,056,685
3,042,514
4,056,685) (
3,042,514)
Interest rate re-pricing gap
Classification is determined according to interest rate re-pricing frequency or maturity whichever is earlier:
December 31, 2013
Within
1 month
SYP
Between 1
and
3 months
SYP
Between 3
and
6 months
SYP
Between 6
and
9 months
SYP
Between 9
months and
1 year
SYP
Between
1year and
2 years
SYP
Between
2 years and
3 years
SYP
Between
3 years and
4 years
SYP
Assets
Balances with banks
Deposits with banks
Intangible assets
Deferred tax assets
Other assets
Total assets
26,042,426,352
17,532,684,831
5,248,750,000 2,677,450,000
6,013,559,225 1,933,732,537
1,978,775,394 14,041,522,032
-
-
1,050,000,000
1,772,913,752
9,994,555,357
-
1,372,310,008
1,970,584,332
-
-
-
905,856,074
-
2,182,372,090
-
1,584,225,765
1,584,225,765
1,360,616,049
-
56,816,195,802 18,652,704,569 12,817,469,109
3,342,894,340
905,856,074
2,182,372,090
1,360,616,049
Banks’ deposits
Cash margins
Other liabilities
1,551,536,130
90,459,754,490
347,068,929
-
464,090,000
3,238,269,169
255,515,164
-
1,058,772,713
2,903,126,656
1,311,930,008
-
7,500,000
1,213,764,757
267,106,697
-
945,510,261
467,780,131
-
122,138,971
31,044,275
-
-
-
Total liabilities
92,358,359,549
3,957,874,333
5,273,829,377
1,488,371,454
1,413,290,392
153,183,246
-
-
( 35,542,163,747) 14,694,830,236
7,543,639,732
1,854,522,886 ( 507,434,318)
Liabilities and equity
73
2,029,188,844
1,584,225,765
1,360,616,049
Interest rate re-pricing gap/ (Continued)
December 31, 2013
Between
4 years and
5 years
SYP
More than
5 year
SYP
Non interest
sensitive
SYP
1,543,522,211
69,317,500
-
7,814,710,268
7,827,392
4,281,090,486
3,988,800
2,521,354,991
105,144,793
287,605,968
995,810,088
33,857,136,620
17,532,684,831
8,976,200,000
7,827,392
23,897,507,647
73,306,300
27,985,437,115
2,521,354,991
105,144,793
287,605,968
995,810,088
985,032,149
985,032,149
17,002,564,935
117,225,047,894
Total
SYP
Assets
Balances with banks
Deposits with banks
Intangible assets
Deferred tax assets
Other assets
Total assets
947,309,450
947,309,450
1,612,839,711
Banks’ deposits
Cash margins
Other liabilities
-
-
636,461,704
1,315,011
6,704,375
2,898,853,748
3,081,898,843
98,882,564,304
2,680,445,204
636,461,704
1,315,011
6,704,375
2,898,853,748
Total liabilities
-
-
3,543,334,838
108,188,243,189
13,459,230,097
9,036,804,705
947,309,450
1,612,839,711
74
Classification is determined according to interest rate re-pricing frequency or maturity whichever is earlier:
December 31, 2012
Within
1 month
SYP
Between 1
and
3 months
SYP
Between 3
and
6 months
SYP
Between 6
and
9 months
SYP
Between 9
months and
1 year
SYP
Between
1year and
2 years
SYP
Between
2 years and
3 years
SYP
Between
3 years and
4 years
SYP
Assets
Balances with banks
Deposits with banks
Intangible assets
Deferred tax assets
Other assets
24,071,919,152
15,116,366,099
7,678,437,667
4,408,800
500,000,000
2,498,522,622
6,140,850,788
-
1,083,600,000
2,952,361,302
405,274,384
7,678,200
1,222,830,694
-
-
-
-
-
46,871,131,718
9,139,373,410
4,448,913,886
1,222,830,694
810,860,592
3,128,084,640
Banks’ deposits
Cash margins
Other liabilities
1,869,076,446
59,786,266,396
239,812,865
-
4,001,341,054
214,167,884
166,620,510
3,342,755,185
1,458,733,568
-
1,526,916,302
94,758,244
-
50,000,0001,077,143,077
372,969,087
-
333,349,245
27,113,113
-
-
-
Total liabilities
61,895,155,707
4,382,129,448
4,801,488,753
1,621,674,546
1,500,112,164
360,462,358
-
-
Total assets
810,860,592
-
2,409,719,676
718,364,964
-
1,384,734,167
1,384,734,167
703,389,993
703,389,993
( 15,024,023,989)
4,757,243,962 (
352,574,867) (
75
398,843,852) ( 689,251,572)
2,767,622,282
1,384,734,167
703,389,993
Interest rate re-pricing gap/ (Continued)
December 31, 2012
Between
4 years and
5 years
SYP
More than
5 year
SYP
Non interest
sensitive
SYP
Total
SYP
Assets
Balances with banks
Deposits with banks
Intangible assets
Deferred tax assets
Other assets
Total assets
532,306,604
532,306,604
920,829,649
74,970,000
995,799,649
5,204,273,944
7,893,734
5,307,491,304
5,777,840
2,574,036,317
113,839,632
290,381,836
506,546,461
29,276,193,096
15,116,366,099
1,583,600,000
7,893,734
26,421,484,270
80,747,840
7,264,490,136
2,574,036,317
113,839,632
290,381,836
815,633,461
644,620,100
644,620,100
14,654,861,168
83,892,286,521
Banks’ deposits
Cash margins
Other liabilities
-
-
314,377,269
13,560,772
8,117,500
1,934,820,280
1,919,076,446
70,067,771,259
2,407,554,761
314,377,269
13,560,772
8,117,500
2,101,440,790
Total liabilities
-
-
2,270,875,821
76,832,898,797
12,383,985,347
7,060,387,724
532,306,604
995,799,649
76
Concentration in foreign currency risk
USD
SYP
Assets
Balances with banks
Deposits with banks
Other assets
Bank of Syria
6,014,224,755
2,912,186,184
54,292,684
1,300,248,112
57,867,390
EUR
SYP
2,381,808,198
11,371,918,407
7,126,200,000
33,869,459
26,685,189,003
5,951,612
738,958,299
-
December 31, 2013
GBP
JPY
SYP
SYP
8,398,944
354,328,775
49,257
-
209,105
7,783,978
-
Others
SYP
98,747,192
1,888,576,359
979,201
11,476
-
Total
SYP
8,503,388,194
16,534,793,703
7,126,200,000
89,190,601
27,985,437,115
63,830,478
738,958,299
Total assets
11,077,777,424
47,604,936,679
362,776,976
7,993,083
1,988,314,228
61,041,798,390
Liabilities
Banks’ deposits
Cash margins
Other liabilities
519,935,023
37,126,937,609
574,664,228
116,382,124
150,958,249
1,942,526,756
10,133,347,882
791,781,781
293,261,935
177,744,036
14,219,146
344,877,474
1,182,750
142,630
3,492,945
1,118,300
-
151,400
1,954,315,347
37,833,791
944,638
2,595,039
2,476,832,325
49,562,971,257
1,406,580,850
410,588,697
331,439,954
38,488,877,233
13,338,662,390
360,422,000
4,611,245
1,995,840,215
54,188,413,083
Total liabilities
Net statement of financial
position concentration
Foreign currencies to be paid
Foreign currencies to be received
( 27,411,099,809) 34,266,274,289
( 34,245,350,000)
33,738,517,892
-
Net statement of financial position concentration
including off-balance sheet items
6,327,418,083
20,924,289
77
2,354,976
-
3,381,838 (
-
7,525,987)
-
2,354,976
3,381,838 (
7,525,987)
6,853,385,307
( 34,245,350,000)
33,738,517,892
6,346,553,199
USD
SYP
Assets
Balances with banks
Deposits with banks
Other assets
Bank of Syria
8,199,290,019
3,052,290,789
1,083,600,000
254,335,628
718,364,964
48,390,044
EUR
SYP
5,684,382,335
10,529,431,221
459,428,637
6,546,125,172
7,916,281
398,546,250
-
December 31, 2012
GBP
JPY
SYP
SYP
3,137,160
258,425,761
44,227
7,285
-
137,608
2,507,095
-
Others
SYP
132,225,573
1,160,263,725
45,778,179
12,040
-
Total
SYP
14,019,172,695
15,002,918,591
1,083,600,000
759,586,671
7,264,490,136
56,325,650
398,546,250
Total assets
13,754,817,694
23,227,283,646
261,614,433
2,644,703
1,338,279,517
38,584,639,993
Liabilities
Banks’ deposits
Cash margins
Other liabilities
388,865,712
24,170,140,070
569,200,456
80,397,779
148,504,174
793,831,986
6,509,381,863
586,980,464
103,395,172
112,288,965
7,517,423
247,619,141
625,300
133,432
2,155,660
735,934
-
3,504,559
1,479,976,488
19,794,568
1,459,607
1,193,719,680
32,409,273,222
1,177,336,722
183,792,951
262,386,178
25,357,108,191
8,105,878,450
255,895,296
2,891,594
1,504,735,222
35,226,508,753
Total liabilities
Net statement of financial
position concentration
Foreign currencies to be paid
Foreign currencies to be received
( 11,602,290,497) 15,121,405,196
( 15,164,820,000)
15,010,286,490
-
Net statement of financial position concentration
including off-balance sheet items
3,407,995,993 (
43,414,804)
78
5,719,137 (
-
246,891) ( 166,455,705)
-
5,719,137 (
246,891) ( 166,455,705)
3,358,131,240
( 15,164,820,000)
15,010,286,490
3,203,597,730
Business Risk
Business risk arises from several factors that generally affect the banking sector such as political and
economic conditions, which have negative indicators on business results. Management revaluates risks
regularly to take appropriate actions to minimize their effects on business results and financial position
of the Bank.
Early settlement risk
Financial losses may arise from an early settlement by customers before maturity, such as mortgages
with fixed interest rates when the interest rates deteriorate. An early settlement that may result from
other market factors is not material in the markets in which the Bank operates. Thus, the Bank considers
the impact of an early settlement on net interest income immaterial after taking into consideration any
received penalties that may result from an early settlement.
C- Liquidity Risk
Liquidity risk is the risk that the Bank will be unable to meet its obligations associated with its financial
liabilities when they fall due. To limit liquidity risk, the management diversifies sources of funding,
efficiently manages assets and monitors liquidity position on a daily basis and forecast future cash
inflows/outflows. The availability of collateral is assessed as well to secure additional funding if needed.
The Bank maintains highly marketable assets that can be easily liquidated into cash in the event of any
shortage of liquidity. The Bank also maintains compulsory cash reserves with Central Bank of Syria in
the form of deposits equal to 5% of average customers’ deposits and 10% of capital. In addition, regular
liquidity stress testing is conducted by management under a variety of scenarios covering both normal
and stressed market conditions. The liquidity ratio is calculated based on Monetary and Credit Council’s
circular No 588 dated November 22, 2009 while limits are set by management on the ratio of net current
assets to clients’ liabilities and weighted off- balance sheet commitments.
December 31
Average during the year
Highest percentage
Lowest percentage
79
2013
%
2012
%
80
76
84
67
68
63
68
58
First: This table summarizes the distribution of assets and liabilities according to contractual maturity period at the date of consolidated financial statements
as follows:
December 31, 2013
On demand
Less than
8 days
SYP
8 days to
1 month
SYP
1 month to
3 months
SYP
3 months to
6 months
SYP
6 months to
9 months
SYP
Assets
Cash and balances with Central Bank of Syria 28,711,702,570
Balances with Banks
10,823,136,765 6,709,548,066
Deposits with Banks
4,777,656,274 1,235,902,951 1,933,732,537
1,978,775,395 14,041,522,032
Intangible assets
Deferred tax assets
Other assets
139,237,563
18,148,482
17,815,068
-
8,976,200,000
1,772,913,752
9,994,555,356
25,817,297
-
1,372,310,008
1,970,584,332
264,639,015
-
Total assets
44,451,733,172
9,942,374,894
15,993,069,637
20,769,486,405
Liabilities
Banks' deposits
Cash margins
Other liabilities
1,353,586,130
197,950,000
80,334,579,905 10,125,174,588
19,203,258
327,865,671
29,159,780
5,919,555
464,090,000
3,238,269,169
255,515,164
956,762,448
Total liabilities
81,736,529,073 10,656,909,814
4,914,636,781
Net
(37,284,795,901) ( 714,534,920) 11,078,432,856
9 months to
1 year
SYP
more than
1 year
SYP
Without
maturity
SYP
905,856,074
7,935,893
-
7,618,045,565
12,703,533
-
5,145,434,050
7,827,392
4,281,090,486
73,306,300
2,521,354,991
105,144,793
287,605,968
509,513,237
985,032,149
33,857,136,620
17,532,684,831
8,976,200,000
7,827,392
23,897,507,647
73,306,300
27,985,437,115
2,521,354,991
105,144,793
287,605,968
995,810,088
985,032,149
3,607,533,355
913,791,967
7,630,749,098
13,916,309,366
117,225,047,894
1,058,772,713
2,903,126,656
1,311,930,008
1,565,919,476
7,500,000
1,213,764,754
267,106,697
251,930,438
945,510,261
467,780,131
3,720,811
122,138,971
31,044,275
636,461,704
1,315,011
6,704,375
85,441,240
-
3,081,898,843
98,882,564,304
2,680,445,204
636,461,704
1,315,011
6,704,375
2,898,853,748
6,839,748,853
1,740,301,889
1,417,011,203
883,105,576
-
108,188,243,189
13,929,737,552 1,867,231,466 ( 503,219,236) 6,747,643,522
80
13,916,309,366
Total
SYP
9,036,804,705
December 31, 2012
On demand
Less than
8 days
SYP
8 days to
1 month
SYP
1 month to
3 months
SYP
3 months to
6 months
SYP
6 months to
9 months
SYP
9 months to
1 year
SYP
more than
1 year
SYP
Without
maturity
SYP
Total
SYP
Assets
Cash and balances with Central Bank of Syria 25,540,334,937
Balances with Banks
12,757,068,985
Deposits with Banks
6,577,609,254
Intangible assets
Deferred tax assets
Other assets
140,543,612
-
2,359,297,114
500,000,000
1,100,828,413
11,728,155
-
2,498,522,622
6,546,125,172
1,383,398
-
1,083,600,000
2,952,361,302
18,532,891
-
1,222,830,694
192,289,455
-
810,860,592
-
5,950,980,089
718,364,964
8,370,810
-
3,735,858,159
7,893,734
5,307,491,304
80,747,840
2,574,036,317
113,839,632
290,381,836
145,785,140
644,620,100
29,276,193,096
15,116,366,099
1,583,600,000
7,893,734
26,421,484,270
80,747,840
7,264,490,136
2,574,036,317
113,839,632
290,381,836
518,633,461
644,620,100
Total assets
45,015,556,788
3,971,853,682
9,046,031,192
4,054,494,193
1,415,120,149
810,860,592
6,677,715,863
12,900,654,062
83,892,286,521
Liabilities
Banks' deposits
Cash margins
Other liabilities
1,854,076,446
15,000,000
44,622,464,696 13,424,596,397
84,576,034
168,399,798
376,847,446
206,209,004
50,000,000
4,402,696,124
220,393,214
314,377,269
906,892,177
3,744,110,255
1,472,710,271
13,560,772
478,490,931
1,928,271,372
97,656,338
91,858,799
1,344,713,123
337,838,136
12,393,711
600,919,292
25,980,970
8,117,500
28,748,722
-
1,919,076,446
70,067,771,259
2,407,554,761
314,377,269
13,560,772
8,117,500
2,101,440,790
Total liabilities
46,937,964,622
13,814,205,199
5,894,358,784
5,708,872,229
2,117,786,509
1,694,944,970
663,766,484
-
76,831,898,797
Net
( 1,922,407,834) (9,842,351,517)
3,151,672,408
(1,654,378,036) ( 702,666,360) ( 884,084,378) 6,013,949,379
12,900,654,062
7,060,387,724
81
Second: Off-balance sheet items
December 31, 2013
From 1
More than
to 5 years
5 years
SYP
SYP
Up to one year
SYP
Letters of credit and acceptances
Unutilized direct credit facilities
Issued guarantees
Contractual obligations
439,146,142
5,665,315,922
17,893,406,018
103,584,503
76,533,760
232,047,961
439,146,142
5,665,315,922
17,969,939,778
114,558,621
450,191,085
24,101,452,585
308,581,721
114,558,621 24,524,592,927
December 31, 2012
From 1
More than
to 5 years
5 years
SYP
SYP
Up to one year
SYP
Issued guarantees
Total
SYP
Total
SYP
834,717,454
6,792,217,735
12,792,420,392
86,451,072
518,425,092
280,694,837
834,717,454
6,792,217,735
13,310,845,484
150,974,821
518,120,730
20,505,806,653
799,119,929
150,974,821 21,455,901,403
Fair value
Fair value represents the amount at which an asset can be exchanged, or a liability is settled, between
knowledgeable, willing parties in an arm’s length transaction. Differences can therefore arise between
book value under the historical cost method and fair value estimates.
Financial instruments are presented in the consolidated financial statements depending on their
classification in compliance with IAS 39. Financial assets held-for-trading and available for sale are
measured at fair value, while financial assets held to maturity are measured at amortized cost after
deducting permanent impairment losses on their fair value.
Operational risk
Operational risk represents any losses that can be incurred as a result of deficiencies in procedures,
human errors, financial system, technical infrastructure and external factors. Operational risks are
measured using statistical methods that are consistent with the nature of the Bank’s operations. The Bank
cannot eliminate all types of operation risks but it can be controlled by a comprehensive control system.
The Bank uses Basic Indicator Approach according to Basel II, which states that private money of the
Bank should cover a minimum fixed percentage of 15% of the average total income for the three
preceding years.
82
Mitigating operational risk
The Bank gives high attention to operational risk which characterized with low probability of occurance
and financial losses. The Bank selects these types of operational risks and sorts them into the following
two types:

Controllable operational risk in which losses can be determined, or to determine the amounts of
activities that would be better if the Bank transfers their operational risks to a third party or to
determine the amounts that the Bank can obtain from insurance companies.

Non-controllable operational risk in which the Bank would either reduce the level of its riskassociated activities or eliminates them, or transfers these activities to third party or determine the
amounts that the Bank can obtain from insurance companies, whatever applicable.
Operational risk management
Operational risk management’s policies and procedures determine how to deal with the causes of
potential losses that may result from the ordinary course of business which is called “operational
incidents”. These incidents result from human errors, weakness in internal control, weakness in the
system, or from external factors such as disasters or fraud. These policies and procedures identify how to
measure these types of risks, ensure to minimize or eliminate them, and determine how to transfer these
risks to third party, if possible.
Overview of emergency plan and business continuity plan
The Bank prepared a comprehensive plan for business continuity, which includes the procedures should
be followed in case of emergencies. Top and middle management committees were established to
manage crisis, and a team was selected to be available in an alternative premise in case of emergencies
that is called “Business Continuity Team”. This team is trained to deal with extraordinary circumstances.
In addition, the bank periodically tests the plan by a business continuity team in the alternative premise,
where this team tests all operations that should be executed and all programs that should be used in case
of emergencies using different scenarios. The procedures are developed according to tests’ results.
83
43.
SEGMENT REPORTING ANALYSIS
A. Information on the Bank’s business segments
The Bank is organized for administrative purposes through its major lines of business:
 Individual accounts
 Corporate accounts
 Treasury
Individual
SYP
Total interest, fees and commissions income
Total interest, fees and commissions expense
Transfers between sectors
Net unrealized exchange gain
on structural position
Income not allocated to segments
(
773,226,566
1,422,231,778)
1,336,916,149
(
(
-
Corporate
SYP
Treasury
SYP
2,717,802,974
274,190,844) (
96,039,101) (
519,177,771
33,876,823)
1,240,877,048)
-
-
2,885,375,461
495,961,464
4,367,189
4,679,500
-
92,791,442
2,347,573,029
1,579,132,038)
2,634,807,514
-
92,791,442
92,791,442
Total Income
687,910,937
113,792,722
Net income
801,703,659
768,440,991
2,634,807,514
Operating expenses not allocated to segments
Profit/ (loss) before tax
Income tax
801,703,659
-
768,440,991
-
2,634,807,514
-
801,703,659
768,440,991
2,634,807,514
(
Others
SYP
- 84 -
Total
SYP
(
4,010,207,311
1,730,299,445) (
2,885,375,461
495,961,464
4,367,189
4,679,500
92,791,442
Year ended
December 31,
2012
SYP
3,783,428,935
1,601,834,546)
946,225,080
282,550,191
8,999,146
5,031,800
44,109,190
5,763,082,922
1,465,339,316) (
3,468,509,796
1,709,488,939)
4,297,743,606
1,759,020,857
( 2,318,987,988) (
( 2,226,196,546)
514,896
2,318,987,988) (
1,978,755,618 (
514,896
1,990,082,676)
231,061,819)
272,268,209
( 2,225,681,650)
1,979,270,514
(
41,206,390
December 31, 2013
Individual
SYP
Corporate
SYP
Treasury
SYP
Others
SYP
Total
SYP
December 31,
2012
SYP
Segments’ assets
Assets not allocated to segments
4,581,156,186
-
19,453,813,815
-
89,474,660,450
-
3,715,417,443
113,509,630,451
3,715,417,443
80,565,099,426
3,327,187,095
Total assets
4,581,156,186
19,453,813,815
89,474,660,450
3,715,417,443
117,225,047,894
83,892,286,521
Segments’ liabilities
Liabilities not allocated to segments
90,910,958,473
-
11,929,937,016
-
3,081,898,843
-
2,265,448,857
105,922,794,332
2,265,448,857
75,445,523,311
1,386,375,486
Total liabilities
90,910,958,473
11,929,937,016
3,081,898,843
2,265,448,857
108,188,243,189
76,831,898,797
Capital expenditure
-
-
-
167,141,625
167,141,625
94,697,989
-
-
-
208,730,336
208,730,336
265,705,287
-
-
-
14,382,533
14,382,533
13,294,110
Other information
- 85 -
B. Information on geographical distribution
This note illustrates the geographical distribution of the Bank’s activities. The Bank mainly operates
through its main branch and its network of branches spread around Syria.
The following table shows the distribution of the Bank’s profits, total assets and capital expenditures by
geographical segment:
Domestic
Syria
SYP
Other income
Total income
Net income
Total assets
Outside
Syria
Total
SYP
SYP
2,042,594,166
2,885,375,461
455,589,606
4,367,189
4,679,500
40,994,205
48,301,403
5,481,901,530
( 1,465,339,316)
4,016,562,214
237,313,700
40,371,858
3,495,834
-
2,279,907,866
2,885,375,461
495,961,464
4,367,189
4,679,500
44,490,039
48,301,403
281,181,392
5,763,082,922
( 1,465,339,316)
281,181,392
4,297,743,606
66,513,990,732 50,711,057,162 117,225,047,894
Capital expenditure
167,141,625
Domestic
Syria
SYP
-
167,141,625
Outside
Syria
Total
SYP
SYP
2,060,513,918
265,214,526
Loss from held-for-trading financial assets
(
3,469,886)
946,225,080
5,031,800
44,109,190
121,080,471
17,335,665
12,469,032
-
Total income
150,885,168
3,468,509,796
( 1,709,488,939)
Net income
Total assets
3,317,624,628
( 1,709,488,939)
1,608,135,689
2,181,594,389
282,550,191
8,999,146
946,225,080
5,031,800
44,109,190
150,885,168
1,759,020,857
61,065,125,037 22,827,161,484
83,892,286,521
Capital expenditure
94,697,989
86
-
94,697,989
44.
CAPITAL ADEQUACY
The Bank maintains adequate capital to face risks inherent in its nature of activities. Capital adequacy
ratios are monitored on a regular basis by the Bank’s management and are checked against Basel II
International Banking Standards (adopted by Central Bank of Syria).
All banks operating in Syria are required to maintain a capital adequacy ratio at a minimum of 8%
according to circular No (253/MN/B4) issued by Monetary and Credit Council on January 24, 2007 in
accordance with Basel guidelines. The Bank’s capital adequacy has exceeded the minimum requirement of
8%. In addition, the Bank tracks credit concentration ratios that use regulatory capital as an indicator.
The Bank manages its capital structure and amends it according to the changes in the economic conditions
and risk characteristics in its activities.
The following table illustrates the calculation of capital adequacy:
December 31,
2013
SYP ‘000
Registered and paid in capital
Legal reserve
Special reserve
Accumulated losses
Intangible assets (net)
The greater of facilities granted to or used by
major shareholders and Board of Directors
Net basic private money
(
(
(
Supplementary capital items:
Net unrealized profit of available for sale financial
assets after deducting 50% discount
General reserve for credit facilities impairment
Supplementary private money
2012
SYP ‘000
5,076,000
424,797
424,797
4,123,759
1,223,710) (
105,145) (
5,076,000
424,797
424,797
310,867)
113,840)
461,652) (
8,258,846
358,998)
5,141,889
9,930
184,660
194,590
11,533
184,660
1,238,384
1,434,577
Net private money (organizational capital)
Credit risk and other assets risk
Risk weighted off-balance sheet assets and liabilities
Market risk
Operational risk
8,453,436
33,110,166
2,129,773
167,923
2,556,455
6,576,466
24,126,829
2,486,254
339,884
2,642,192
Total
37,964,317
29,595,159
-
Capital adequacy ratio (%)
22.27%
22.22%
Basic capital ratio (%)
21.76%
17.37%
Basic capital to total shareholders’ equity ratio
91.39%
72.83%
The Monetary and Credit Council issued the Circular No. (1088/MN/B4) dated February 26, 2014, which
amended the section eight of the circular No. (362/MN/B1) dated February 4, 2008, to include the
unrealized retained earnings within the net basic private money for capital adequacy calculation purposes
according to circular No. (253/MN/B4) issued in 2007.
87
45.
MATURITY OF ASSETS AND LIABILITIES
The following tables illustrate the allocation of financial assets and liabilities according to their maturities
as of December 31, 2013:
A. Consolidated statement of financial position items:
Up to one year
SYP
More than
1 year
SYP
Balances with banks
Deposits with banks
Intangible assets
Deferred tax assets
Other assets
28,711,702,570
17,532,684,831
8,976,200,000
11,998,371,596
27,985,437,115
473,593,318
-
5,145,434,050
7,827,392
11,899,136,051
73,306,300
2,521,354,991
105,144,793
287,605,968
522,216,770
985,032,149
33,857,136,620
17,532,684,831
8,976,200,000
7,827,392
23,897,507,647
27,985,437,115
73,306,300
2,521,354,991
105,144,793
287,605,968
995,810,088
985,032,149
Total assets
95,677,989,430
21,547,058,464
117,225,047,894
3,081,898,843
98,760,425,333
2,649,400,929
2,813,412,508
122,138,971
31,044,275
636,461,704
1,315,011
6,704,375
85,441,240
3,081,898,843
98,882,564,304
2,680,445,204
636,461,704
1,315,011
6,704,375
2,898,853,748
107,305,137,613
883,105,576
108,188,243,189
( 11,627,148,183) 20,663,952,888
9,036,804,705
Total
SYP
Assets
Liabilities
Banks’ deposits
Cash margins
Other liabilities
Total liabilities
Net
B. Off- Balance sheet items:
From 1
to 5 years
SYP
Up to one year
SYP
Issued guarantees
More than
5 years
SYP
Total
SYP
439,146,142
5,665,315,922
17,893,406,018
103,584,503
76,533,760
232,047,961
439,146,142
5,665,315,922
17,969,939,778
114,558,621
450,191,085
24,101,452,585
308,581,721
114,558,621 24,524,592,927
88
The following tables illustrate the allocation of financial assets and liabilities according to their maturities
as of December 31, 2012:
A. Consolidated statement of financial position items:
Up to one year
SYP
More than
1 year
SYP
Balances with banks
Deposits with banks
Intangible assets
Deferred tax assets
Other assets
25,540,334,937
15,116,366,099
1,583,600,000
15,163,012,877
6,546,125,172
364,477,511
-
3,735,858,159
7,893,734
11,258,471,393
718,364,964
80,747,840
2,574,036,317
113,839,632
290,381,836
154,155,950
644,620,100
29,276,193,096
15,116,366,099
1,583,600,000
7,893,734
26,421,484,270
7,264,490,136
80,747,840
2,574,036,317
113,839,632
290,381,836
518,633,461
644,620,100
Total assets
64,313,916,596
19,578,369,925
83,892,286,521
Banks’ deposits
Cash margins
Other liabilities
1,919,076,446
69,466,851,967
2,381,573,791
314,377,269
13,560,772
2,072,692,068
600,919,292
25,980,970
8,117,500
28,748,722
1,919,076,446
70,067,771,259
2,407,554,761
314,377,269
13,560,772
8,117,500
2,101,440,790
Total liabilities
76,168,132,313
663,766,484
76,831,898,797
( 11,854,215,717) 18,914,603,441
7,060,387,724
Total
SYP
Assets
Liabilities
Net
B. Off- Balance sheet items:
From 1
to 5 years
SYP
Up to one year
SYP
Issued guarantees
More than
5 years
SYP
Total
SYP
834,717,454
6,792,217,735
12,792,420,392
86,451,072
518,425,092
280,694,837
834,717,454
6,792,217,735
13,310,845,484
150,974,821
518,120,730
20,505,806,653
799,119,929
150,974,821 21,455,901,403
89
46. OFF-BALANCE SHEET COMMITMENTS
A. Off-balance sheet commitments (Face value):
December 31,
2013
SYP
Contingent liabilities on behalf of customers:
Letters of credit
Acceptances
Letters of guarantee:
Primary guarantees
Payment guarantees
Performance guarantees
Contingent liabilities on behalf of banks
Letters of guarantee:
Primary guarantees
Payment guarantees
Performance guarantees
Unutilized limits of direct credit facilities:
Overdrafts
Discounted bills
Loans
2012
SYP
389,746,730
49,399,412
581,830,618
252,886,836
324,696,886
467,900,668
2,663,427,502
186,320,239
607,789,461
2,743,674,426
498,812,515
663,748,218
13,351,353,989
282,015,856
448,355,070
9,042,690,431
1,800,760,754
85,919,946
3,778,635,222
1,748,566,720
948,019,664
4,095,631,351
24,074,401,842
20,937,780,672
B. Commitments and contractual obligations:
December 31,
2013
SYP
Operational lease contracts due within one year
Operational lease contracts due between one to five years
Operational lease contracts due in more than five years
103,584,503
232,047,961
114,558,621
86,451,072
280,694,837
150,974,821
450,191,085
518,120,730
These operational lease contracts represent rent of the Bank’s branches.
90
2012
SYP

Banque Bemo Saudi Fransi

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